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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.DC 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION
Proxy Statement Pursuant to Section14(a) OF THE SECURITIES EXCHANGE ACT OFof the Securities
Exchange Act of 1934 Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
(Amendment No. )
[X] Filed by the Registrant S | | | | |
Filed by a Party other than the Registrant £ | | | | |
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Check the appropriate box: | | | | |
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S | | Preliminary Proxy Statement [ ] | | £ | | Confidential, for useUse of the Commission Only (as |
£ | | Definitive Proxy Statement | | | | (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] |
£ | | Definitive Additional Materials
[ ] | | | | |
£ | | Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
§ 240.14a-12 | | | | |
Venator Group,Foot Locker, Inc.
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(Name
(Name of Registrant as Specified In Itsin its Charter)
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(Name
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of filing fee (Check the appropriate box): |
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S | | No fee required. |
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£ | | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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| (1 | ) | | Title of each class of securities to which transaction applies: |
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| (2 | ) | | Aggregate number of securities to which transaction applies: |
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| (3 | ) | | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): |
| | | | |
| (4 | ) | | Proposed maximum aggregate value of transaction: |
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| (5 | ) | | Total fee paid: |
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£ | | Fee paid previously with preliminary materials. |
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£ | | 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. |
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| | | (1 | ) | | Amount previously paid: |
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| | | (2 | ) | | Form, schedule or registration statement no.: |
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| | | (3 | ) | | Filing party: |
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| | | (4 | ) | | Date filed: |
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NOTICE OF 2009 ANNUAL MEETING
AND
PROXY STATEMENT
112 West 34th Street
New York, New York 10120
NOTICE OF 2009 ANNUAL MEETING OF SHAREHOLDERS
| | | | |
DATE: | | May 20, 2009 |
TIME: | | 9:00 A.M., local time |
PLACE: | | Foot Locker, Inc., 112 West 34th Street, New York, New York 10120 |
RECORD DATE: | | Shareholders of record on March 27, 2009 can vote at this meeting. |
ITEMS OF BUSINESS: | | • | | Elect three members to the Board of Directors to serve for three-year terms and one member to serve for a two-year term. |
| | • | | Ratify the appointment of KPMG LLP as our independent registered public accounting firm for the 2009 fiscal year. |
| | • | | Approve an amendment to our By-Laws to reduce the required number of directors. |
| | • | | Transact such other business as may properly come before the meeting and at any adjournment or postponement. |
PROXY VOTING: | | YOUR VOTE IS IMPORTANT TO US.Please vote as soon as possible in one of these ways: |
| | • | | Use the toll-free telephone number shown on the Notice of Internet Availability of Proxy Materials for the 2009 Annual Meeting of Foot Locker, Inc. (your “Foot Locker Notice”) or on your proxy card; |
| | • | | Visit the web site shown on your Foot Locker Notice or on your proxy card to vote via the Internet; |
| | • | | If you received a printed copy of the proxy card, you may mark, sign and return the enclosed proxy card using the postage-paid envelope provided; or |
| | • | | Follow the instructions on your proxy materials if your shares are held in the name of your bank, broker, or other holder of record. |
| | Even if you plan to attend the annual meeting, we encourage you to vote in advance using one of these methods. |
April 9, 2009
TABLE OF CONTENTS
112 West 34th Street
New York, New York 10120
PROXY STATEMENT
GENERAL INFORMATION
We are providing these proxy materials to you for the solicitation of Filing Fee (Checkproxies by the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)Board of Directors of Foot Locker, Inc. for the 2009 Annual Meeting of Shareholders and 0-11.
(1) Titlefor any adjournments or postponements of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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PRELIMINARY COPY, SUBJECT TO COMPLETION, DATED MAY 28, 1999
[VENATOR GROUP LOGO]
June , 1999
Dear Shareholder:this meeting. We invite you to attend the 1999are holding this annual meeting of shareholders of Venator
Group, Inc., which will be held on , 1999,May 20, 2009 at 10:9:00 A.M., local time, at our corporate headquarters located at 112 West 34th Street, New York, New York 10120. In this proxy statement we refer to Foot Locker, Inc. as “Foot Locker,” “the Company,” “we,” “our,” or “us.”
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting
To Be Held on May 20, 2009
The Company’s Proxy Statement and 2008 Annual Report/Form 10-K are available at
http://materials.proxyvote.com/344849
We are pleased to be using again this year a procedure approved by the Securities and Exchange Commission that allows companies to furnish their proxy materials to shareholders over the Internet instead of mailing full sets of the printed materials. We believe that this procedure will reduce costs, provide greater flexibility to our shareholders, and lessen the environmental impact of our Annual Meeting. On or about April 9, 2009, we started mailing to most of our shareholders in the United States a Notice of Internet Availability of Proxy Materials (the “Foot Locker Notice”). The itemsFoot Locker Notice contains instructions on how to access and read our 2009 Proxy Statement and our 2008 Annual Report to Shareholders on the Internet and to vote online.If you received a Foot Locker Notice by mail, you will not receive paper copies of the proxy materials in the mail unless you request them.Instead, the Foot Locker Notice instructs you on how to access and read the Proxy Statement and Annual Report and how you may submit your proxy over the Internet. If you received a Foot Locker Notice by mail and would like to receive a printed copy of the materials, please follow the instructions on the Foot Locker Notice for requesting the materials, and we will promptly mail the materials to you.
We are mailing to shareholders, or making available to shareholders via the Internet, this Proxy Statement, form of proxy card, and our 2008 Annual Report/Form10-K on or about April 9, 2009.
QUESTIONS AND ANSWERS ABOUT THIS ANNUAL MEETING AND VOTING
What is included in these proxy materials?
The proxy materials include our 2009 Proxy Statement and 2008 Annual Report/Form 10-K. If you received printed copies of these materials by mail, these materials also include the proxy card for this annual meeting.
May I obtain an additional copy of the Form 10-K?
Our Form 10-K for the 2008 fiscal year ended January 31, 2009 is included with the 2008 Annual Report. You may obtain an additional copy of our 2008 Form 10-K without charge by writing to our Investor Relations Department at Foot Locker, Inc., 112 West 34th Street, New York, New York 10120. It is also available free of charge through our corporate web site athttp://www.footlocker-inc.com/ IR_index.htm.
What constitutes a quorum for the Annual Meeting?
We will have a quorum and will be considered and voted onable to conduct the business of the Annual Meeting if the holders of a majority of the shares outstanding are present at the meeting, either in person or by proxy. We will count abstentions and broker non-votes, if any, as present and entitled to vote in determining whether we have a quorum.
What is the record date for this meeting?
The record date for this meeting is March 27, 2009. If you were a Foot Locker shareholder on this date, you are entitled to vote on the items of business described in the
notice of the 1999 annual meeting of shareholders andthis proxy statement
accompanying this letter.
We understand that you may receive proxy soliciting materials from Greenway
Partners, L.P. ("Greenway") in connection with items Greenway intends to present
at the meeting. These items arestatement.
Do I need a slate of directors chosen by Greenway and
proposals relating to a change of the Company's name and the Company's
shareholder rights plan. The Board of Directors believes that these proposals
are not in the best interests of the Company and its shareholders and urges you
to vote against these proposals.
If you planticket to attend the annual meeting, please mark the appropriate box
on the proxy card and return your completed card promptly so we can mailAnnual Meeting?
You will need an admission ticket to you. If your shares are not registered in your own name and
you would like to attend the meeting, please ask the broker, trust, bank or
other nominee that holds the shares to provide you with evidence of your share
ownership, as of the record date, in order to be admitted to the meeting.Annual Meeting. Attendance at the meeting will be limited to shareholders as of the record dateon March 27, 2009 (or their authorized representatives) having an admission ticket or evidenceproof of their share ownership, and guests of the Company. YOUR VOTE IS IMPORTANT. WE ENCOURAGE YOU TO VOTE YOUR SHARES AS SOON AS
POSSIBLE. IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE IN VOTING YOUR SHARES,
PLEASE CALL OUR PROXY SOLICITOR, INNISFREE M&A INCORPORATED, AT 1-888-750-5834.
SINCERELY,
If you plan to attend the meeting, please indicate this when you are voting by telephone or Internet or check the box on your proxy card, and we will promptly mail an admission ticket to you.
If your shares are held in the name of a bank, broker, or other holder of record and you plan to attend the meeting, you can obtain an admission ticket in advance by providing proof of your ownership, such as a bank or brokerage account statement, to the Corporate Secretary at Foot Locker, Inc., 112 West 34th Street, New York, New York 10120. If you do not have an admission ticket, you must show proof of your ownership of the Company’s Common Stock at the registration table at the door.
What are shareholders voting on at this meeting?
You are being asked to vote on the following items:
/s/ Roger N. Farah /s/ Dale W. Hilpert
ROGER N. FARAH DALE W. HILPERT
Chairman | | | | |
• | | Proposal 1: | | Election of three directors in Class III and one director in Class II; |
• | | Proposal 2: | | Ratification of the Boardappointment of KPMG LLP as our independent registered public accountants for 2009; and President and
Chief Executive Officer Chief Operating Officer
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TABLE OF CONTENTS
PAGE
----
Notice• | | Proposal 3: | | Approval of Meeting........................................... 1
Voting and Revocability of Proxy............................ 2
Outstanding Voting Stock.................................... 2
Vote Required............................................... 2
Method of Counting Votes.................................... 2
Method and Cost of Proxy Solicitation....................... 3
Beneficial Ownership of the Company's Stock................. 3
Directors and Executive Officers.......................... 3
Persons Owning More than 5 Percent........................ 4
Section 16(a) Beneficial Ownership Reporting Compliance..... 6
Corporate Governance........................................ 6
Board of Directors.......................................... 7
Organization and Powers................................... 7
Committees of the Board................................... 7
Audit Committee........................................ 7
Acquisitions and Finance Committee..................... 8
Compensation Committee................................. 8
Executive Committee.................................... 8
Nominating and Organization Committee.................. 8
Retirement Investment Committee........................ 8
Directors Compensation and Benefits.................... 9
Directors and Officers Indemnification and Insurance... 9
Transactions with Management and Others..................... 10
PROPOSAL 1 -- ELECTION OF DIRECTORS......................... 10
Nominees.................................................. 11
Directors Continuing in Office............................ 11
Executive Compensation...................................... 13
Summary Compensation Table................................ 13
Long-Term Incentive Plan Awards in Last Fiscal Year....... 14
Option Grants in Last Fiscal Year......................... 15
Aggregated Option Exercises and Fiscal Year-End Option
Values................................................. 16
Retirement Plans.......................................... 16
Employment Contracts and Change-in-Control Arrangements... 18
Compensation Committee Interlocks and Insider
Participation.......................................... 20
Compensation Committee Report............................. 20
Performance Graphs........................................ 24
PROPOSAL 2 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT
ACCOUNTANTS............................................... 25
Greenway Solicitation....................................... 25
Participants in the Solicitation............................
Deadlines for Director Nominations and Shareholder
Proposals................................................. 28
Other Business.............................................. 28
Appendix A.................................................. A-1
an amendment to our By-Laws. |
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VENATOR GROUP, INC.
233 BROADWAY
NEW YORK, NEW YORK 10279
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
DATE: , 1999
TIME: 10:00 A.M., local time
PLACE:
RECORD DATE: June 7, 1999
The meeting is being held for the following purposes:
1. To elect four directors in Class II to serve for three-year terms
expiring at the 2002 annual meeting of shareholders. The Board of Directors
recommends a vote FOR the election of the existing director nominees proposed
for reelection by the Company, as described in the Company's proxy statement.
2. To ratify the appointment byHow does the Board of Directors of KPMG LLP as
independent accountantsrecommend that I vote on the proposals?
The Board recommends that you vote “FOR” each of the Company forthree proposals being voted on at the 1999 fiscal year. The Boardmeeting.
Could other matters be voted on at the Annual Meeting?
We do not know of Directors recommends a vote FOR this proposal.
3. To vote on certain proposals of Greenway Partners, L.P., if properly
presented, as described in the Company's proxy statement relating to (i) a
change in the Company's name and (ii) the Company's Rights Plan. The Board of
Directors recommends a vote AGAINST each of these proposals.
4. To transact suchany other business as maythat will be presented at the 2009 annual meeting. If any other matters are properly comebrought before the meeting or any adjournments or any postponements thereof.
The abovefor consideration, then the persons named as proxies will have the discretion to vote on those matters are more fully described in the accompanying proxy
statement.
By Order of the Board of Directors
GARY M. BAHLER
Secretary
, 1999
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VENATOR GROUP, INC.
233 BROADWAY
NEW YORK, NEW YORK 10279
PROXY STATEMENT
This proxy statement is being furnished to shareholders of Venator Group,
Inc., a New York corporation (the "Company"), in connection with the
solicitation by the Board of Directors of proxies to be votedfor you using their best judgment.
Who may vote at the annual
meeting of shareholders to be held on , 1999, and for any adjournments
or postponements thereof. This proxy statement and the proxy card are first
being mailed to shareholders on or about , 1999.
The Company's Annual Report for the fiscal year ended January 30, 1999
("1998") has been mailed to each shareholder of record. You may obtain without
charge a copy of the Company's 1998 Form 10-K, exclusive of certain exhibits, by
writing to the Investor Relations Department, Venator Group, Inc., 233 Broadway,
New York, New York 10279.
VOTING AND REVOCABILITY OF PROXIES
You are urged to sign and date the enclosed proxy card and return it in the
enclosed prepaid envelope whether or not you attend the meeting. You have the
right to revoke your proxy at any time prior to the annual meeting by submitting
a later dated proxy or by voting in person by ballot at the meeting.
The enclosed proxy card shows the number of shares of Common Stock
registered in the name of each shareholder of record on June 7, 1999. Proxies
furnished to employees also show the number of shares held in the Company's
401(k) Plan, if applicable.
Greenway Partners, L.P. ("Greenway") has informed the Company that Greenway
intends to appear at the annual meeting to nominate four individuals for
election to the Board of Directors in opposition to the Company's nominees for
election to the Board of Directors and make certain shareholder proposals
concerning (i) a non-binding recommendation that the Company change its name and
(ii) a non-binding recommendation concerning the termination of the Shareholder
Rights Plan (the "Greenway Proposals"). Accordingly, the Board of Directors is
soliciting votes FOR the Company's slate of nominees for election to the Board
of Directors, FOR the ratification of the appointment of KPMG LLP as independent
accountants for the 1999 fiscal year ("1999") and AGAINST the Greenway
Proposals. Unless contrary instructions are indicated on the proxy card, all
shares represented by valid proxies received pursuant to this solicitation (and
not revoked) will be voted FOR the election of all of the Company's nominees for
directors named in this proxy statement, FOR the ratification of the appointment
of KPMG LLP as independent accountants for 1999 and AGAINST the Greenway
Proposals. If you specify a different choice on the proxy card, your shares will
be voted as specified.
OUTSTANDING VOTING STOCK
Meeting?
The only voting securities of the CompanyFoot Locker are theour shares of Common Stock. Only shareholders of record on the books of the Company at the close of business
on June 7, 1999March 27, 2009 are entitled to vote at the annual meeting and any adjournments or postponements thereof.postponements. Each share is entitled to one vote. There were 154,xxx,xxx shares of Common Stock outstanding on March 27, 2009.
What are the record date. Undervoting requirements to elect directors and to approve the Company's By-laws, the holders ofother proposals?
Directors must be elected by a majorityplurality of the shares entitled to vote
thereat must be present in person or by proxy to constitute a quorum for the
transaction of business.
VOTE REQUIRED
Director nominees who receive the greatest number of votes cast by shareholders. (Please see our policy described on Page 7 regarding resignations by directors who do not receive more “for” votes than
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“withheld” votes.) The other proposals being voted on at this meeting require the meeting will be elected as directors. The affirmativefavorable vote of the holders of a majority of the votes cast atby shareholders to be approved.
How will the meeting willvotes be required to approve each other
proposal.
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METHOD OF COUNTING VOTES
counted?
Votes will be counted and certified by independentrepresentatives of our transfer agent, BNY Mellon Shareowner Services, as inspectors of election. Under SEC rules, boxesThe inspectors of election are independent and a designated blank space are provided on the proxy
card for you to mark if you wish to vote "for" or "against" or "abstain" from
voting on one or more of the proposals, or to withhold authority to vote for one
or more of the nominees for director. New York law and the Company's By-laws
require the presence of a quorum at the annual meeting. Under New York law,
abstentions are not countedemployees of Foot Locker.
We do not count abstentions and broker non-votes, if any, in determining the votes cast for any proposal. Votes withheld in connection withfor the election of one or more of the nominees for director will not be counted as votes cast for those individuals. them.
Broker non-votes which occur when brokers or other entities holding shares for an owner in street name do not receive voting instructions from their customersthe owner on non-routine matters and, consequently, have no discretion to vote on those matters, arematters. If a proposal is routine under the rules of The New York Stock Exchange, then the brokers or other entities may vote the shares held by them even though they have not counted as votes cast for any proposal.
received instructions from the owner.
The Company'sCompany’s Certificate of Incorporation and By-laws do not contain any provisions with respect toon the effect of abstentions or broker non-votes.
METHOD AND COST OF PROXY SOLICITATION
Proxies
Will my vote be confidential?
We maintain the confidentiality of our shareholders’ votes. All proxy cards, electronic voting, voting instructions, ballots and voting tabulations identifying shareholders are kept confidential from the Company, except:
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• | | | | as necessary to meet any applicable legal requirements, |
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• | | | | when a shareholder requests disclosure or writes a comment on a proxy card, |
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• | | | | in a contested proxy solicitation, and |
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• | | | | to allow independent inspectors of election to tabulate and certify the vote. |
How do I vote my shares?
You may be solicited, without additional compensation, by directors,
officers or employeesvote using any of the Companyfollowing methods:
•Telephone
If you are located within the United States or Canada, you can vote your shares by telephone by calling the toll-free telephone number printed on your Notice of Internet Availability of Proxy Materials (“Notice”), on your proxy card, or in the instructions that accompany your proxy materials, as applicable, and following the recorded instructions. You will need the control number printed on your Notice, on your proxy card, or in the instructions that accompany your proxy materials, as applicable. Telephone voting is available 24 hours a day and will be accessible until 9:00 A.M. on May 20, 2009. The telephone voting system has easy to follow instructions and allows you to confirm that the system has properly recorded your vote.If you vote by telephone, you do NOT need to return a proxy card or voting instruction form.If you are an owner in street name, please follow the instructions that accompany your proxy materials.
•Internet
You can also choose to vote your shares by the Internet. You will need the control number printed on your Notice, on your proxy card, or in the instructions that accompany your proxy materials, as applicable. The web site for Internet voting is listed on your Notice, proxy card, or in the instructions that accompany your proxy materials. Internet voting is available 24 hours a day and will be accessible until 9:00 A.M. on May 20, 2009. As with telephone voting, you will be able to confirm that the system has properly recorded your vote.If you vote via the Internet, you do NOT need to return a proxy card or voting instruction form.
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•Mail
If you are a holder of record and received printed copies of the materials by mail, you may choose to vote by mail. Simply mark your proxy card, date and sign it, and return it in the postage-paid envelope that we included with your materials. If you hold your shares through a bank or brokerage account, please complete and mail the voting instruction form in the envelope provided.
•Ballot at the Annual Meeting
You may also vote by ballot at the Annual Meeting if you decide to attend in person. If your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy, executed in your favor, from the holder of record to be able to vote at the meeting.
All shares that have been properly voted and not revoked will be voted at the Annual Meeting. If you sign and return a proxy card but do not give voting instructions, the shares represented by that proxy card will be voted as recommended by the Board of Directors.
Can I change my mind after voting my shares?
You may revoke your proxy at any time before it is used by (i) sending a written notice to the Company at its corporate headquarters, (ii) delivering a valid proxy card with a later date, (iii) providing a later dated vote by telephone facsimile, telegram,or Internet, or (iv) voting by ballot at the Annual Meeting.
Are shares held in personemployee plans included on the proxy card?
If you hold shares of Foot Locker Common Stock through the Foot Locker 401(k) Plan or otherwise.the Foot Locker Puerto Rico 1165(e) Plan, you received a proxy card showing the number of shares allocated to your plan account. Your proxy card will serve as a voting instruction card for the trustees of the plans, who will vote the shares. The Companytrustees will bearvote only those shares for which voting instructions have been given. To allow sufficient time for voting by the trustees of these plans, your voting instructions must be received by May 15, 2009.
Who pays the cost of this proxy solicitation?
We will pay for the cost of the solicitation of proxies, including the preparation, printing and mailing of the proxy materials.
In addition, the Company
Proxies may be solicited, without additional compensation, by our directors, officers, or employees by mail, telephone, fax, in person, or otherwise. We will request banks, brokers and other custodians, nominees and fiduciaries to forwarddeliver proxy material to the beneficial owners of the Company's stockFoot Locker’s Common Stock and obtain their voting instructions. The Companyinstructions, and we will reimburse those firms for their expenses in accordance withunder the rules of the SECSecurities and Exchange Commission and The New York Stock Exchange. In addition, the Company haswe have retained Innisfree M&A Incorporated ("Innisfree") to assist us in the solicitation of proxies for a fee of $$10,000 plus out ofout-of- pocket expenses. Innisfree will employ approximately
people to solicit the Company's shareholders.
Expenses related to the solicitation of shareholders, in excess of those
normally spent for an annual meeting, are expected to aggregate approximately
$ , of which approximately $ has been spent to date. Appendix
A sets forth certain information relating to the Company's directors, nominees,
officers and other employees of the Company who will be soliciting proxies on
the Company's behalf ("Participants").
A shareholder may revoke any proxy at any time prior to its use by filing
with the Company a written revocation or duly executed proxy bearing a later
date. In addition, any shareholder who attends the meeting in person may vote by
ballot at the meeting, thereby canceling any proxy previously given.
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BENEFICIAL OWNERSHIP OF THE COMPANY'SCOMPANY’S STOCK
DIRECTORS AND EXECUTIVE OFFICERS
Directors and Executive Officers
The following table sets forth, as reported to the Company,shows the number of shares of Common Stock reported to us as beneficially owned as of May 5, 1999, by each of theour directors and named executive officers.officers as of March 27, 2009. The table also shows the beneficial ownership of the Company's stock by all directors, named executive officers, and executive officers as a group on that date, including shares of Common Stock that they have a right to acquire within 60 days after May 5, 1999March 27, 2009 by the exercise of options that have been granted understock options.
Matthew D. Serra beneficially owned [1.xx] percent of the Company's stock option
plans.
Excluding Roger N. Farah, nototal number of outstanding shares of Common Stock as of March 27, 2009. No other director, named executive directorofficer, or executive officer beneficially owned one percent or more of the total number of outstanding shares of Common Stock as of May 5, 1999. Mr. Farah beneficially
owned 1.01 percent as of thisthat date.
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Except as otherwise noted in a footnote below, each
Each person has sole voting and investment power with respect tofor the number of shares shown.
shown unless otherwise noted.
| | | | | | | | |
Amount and Nature of Beneficial Ownership |
Name | | Common Stock
Beneficially Owned
Excluding
Stock Options(a) | | Stock Options
Exercisable Within
60 Days After
3/27/2009 | | RSUs and
Deferred
Stock Units(b) | | Total |
Gary M. Bahler | | | | 126,766 | | | | | 251,668 | | | | | — | | | | | 378,434 | |
Nicholas DiPaolo | | | | 21,349 | (c) | | | | | 16,542 | | | | | 6,869 | | | | | 44,760 | |
Alan D. Feldman | | | | 22,801 | | | | | 6,314 | | | | | 6,869 | | | | | 35,984 | |
Jarobin Gilbert Jr. | | | | 18,433 | | | | | 25,520 | | | | | 6,869 | | | | | 50,822 | |
Ronald J. Halls | | | | 115,128 | | | | | 155,000 | | | | | — | | | | | 270,128 | |
Robert W. McHugh | | | | 135,163 | | | | | 175,666 | | | | | — | | | | | 310,829 | |
Matthew M. McKenna | | | | 26,352 | | | | | 4,287 | | | | | 6,869 | | | | | 37,508 | |
Richard T. Mina | | | | 237,357 | (d) | | | | | 395,171 | | | | | — | | | | | 632,972 | |
Laurie J. Petrucci | | | | 92,055 | | | | | 146,147 | | | | | — | | | | | 238,202 | |
James E. Preston | | | | 65,400 | | | | | 25,520 | | | | | 6,869 | | | | | 97,789 | |
David Y. Schwartz | | | | 15,979 | | | | | 25,520 | | | | | 21,216 | | | | | 62,715 | |
Matthew D. Serra | | | | 700,258 | | | | | 1,197,333 | | | | | — | | | | | 1,897,591 | |
Cheryl Nido Turpin | | | | 9,668 | | | | | 20,815 | | | | | 24,586 | | | | | 55,069 | |
Dona D. Young | | | | 11,060 | | | | | 20,815 | | | | | 35,074 | | | | | 66,949 | |
All 19 directors and executive
officers as a group, including
the named executive officers | | | | 1,843,146 | | | | | 3,126,167 | | | | | 115,221 | | | | | 5,084,534 | (e) | |
Notes to Beneficial Ownership Table
AMOUNT AND
NATURE OF BENEFICIAL
NAME OWNERSHIP
- ---- --------------------
J. Carter Bacot............................................. 4,490
M. Jeffrey Branman.......................................... 226,773(a)
Purdy Crawford.............................................. 11,782
John E. DeWolf III.......................................... 106,666(b)
Roger N. Farah.............................................. 1,379,697(c)
Philip H. Geier Jr. ........................................ 11,782
Jarobin Gilbert Jr. ........................................ 2,008
Dale W. Hilpert............................................. 667,351(d)
Reid Johnson................................................ 21,666(e)
Allan Z. Loren.............................................. 888
Margaret P. MacKimm......................................... 5,990
John J. Mackowski........................................... 6,855
James E. Preston............................................ 25,915(f)
Christopher A. Sinclair..................................... 3,882
All 21 |
(a) | | | | This column includes shares held in the Company’s 401(k) Plan, as well as the executives’ unvested shares of restricted stock listed below over which they have sole voting power but no investment power: |
| | Name | | Number of Unvested
Shares of Restricted
Stock |
|
M. Serra | | 150,000 |
|
R. McHugh | | 50,000 |
|
R. Halls | | 70,000 |
|
G. Bahler | | 50,000 |
|
L. Petrucci | | 50,000 |
5
|
(b) | | | | This column includes (i) the number of deferred stock units credited as of March 27, 2009 to the account of the directors who elected to defer all or part of their annual retainer fee and executive officers as a group,
including(ii) directors’ unvested restricted stock units (“RSUs”). The deferred stock units and RSUs do not have current voting or investment power. |
|
(c) | | | | Includes 150 shares held by his spouse. |
|
(d) | | | | Information based on the named executive officers.................... 2,993,901(g)
last beneficial ownership report filed by Mr. Mina with the SEC on March 18, 2008. |
|
(e) | | | | This number represents approximately [x.xx] percent of the shares of Common Stock outstanding at the close of business on March 27, 2009. |
- ---------------
(a) Includes 40,000 shares of restricted stock granted on February 1, 1999;
141,666 shares that may be acquired by the exercise of stock options; 29,786
shares issued on April 16, 1999 in payment of 50 percent of his long-term
bonus for 1996-1998; and 275 shares held in the Company's 401(k) Plan.
(b) Includes 40,000 shares of restricted stock granted on February 1, 1999, and
66,666 shares that may be acquired by the exercise of stock options.
(c) Includes 275,000 shares of restricted stock granted on April 26, 1999;
115,488 shares issued on April 16, 1999 in payment of 50 percent of his
long-term bonus for 1996-1998; 800,000 shares that may be acquired by the
exercise of stock options; and 314 shares held in the Company's 401(k) Plan.
(d) Includes 100,000 shares of restricted stock granted on February 1, 1999;
57,744 shares issued on April 16, 1999 in payment of 50 percent of his
long-term bonus for 1996-1998; 499,999 shares that may be acquired by the
exercise of stock options and 2,239 shares held in the Company's 401(k)
Plan.
(e) Includes 16,666 shares that may be acquired by the exercise of stock
options. The options expire on May 26, 1999.
(f) Excludes 50 shares of Common Stock owned by Mr. Preston's stepchildren, with
respect to which Mr. Preston disclaims beneficial ownership.
(g) This figure represents approximately 2.18 percentPersons Owning More Than Five Percent of the shares of CommonCompany’s Stock outstanding at the close of business
The following table provides information on May 5, 1999. It includes all
of the shares referred to in footnotes (a) through (f) above, a total of
316,961 shares that may be acquired within 60 days after May 5, 1999 by
executive officers of the Company (excluding the named executive officers)
by the exercise of stock options, and 2,991 shares held by executive
officers (excluding the named executive officers) in the Company's 401(k)
Plan.
4
8
PERSONS OWNING MORE THAN FIVE PERCENT OF THE COMPANY'S STOCK
Following is information with respect to shareholders who beneficially own more than five percent of the Company'sour Common Stock. This information is
derived from documentsStock according to reports filed by those shareholders with the SEC.Securities and Exchange Commission (“SEC”). To the best knowledge of the Company,our knowledge, there are no other shareholders who beneficially own more than five percent of a class of the Company'sCompany’s voting securities.
AMOUNT AND
NAME AND ADDRESS NATURE OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------------- -------------------- --------
Greenway Partners, L.P. 19,649,612(a) 14.4%(a)
Greentree Partners, L.P.
Greenhut, L.L.C., Greenbelt Corp.,
Greenhouse Partners, L.P.,
Greenhut Overseas, L.L.C.,
Alfred D. Kingsley,
Gary K. Duberstein, | | | | |
Name and Howard Stein
277 Park Avenue
New York, NY 10172
Andrew P. Hines (a)
100 Sea Horse Drive
Waukegan, IL 60085
AXA Assurance I.A.R.D. Mutuelle 13,684,101(b) 10.4%(b)
and AXA Assurances Vie Mutuelle
21, rue de Chateaudin
75009 Paris, France
AXA Conseil Vie Assurance Mutuelle (b)
100-101 Terasse Boieldieu
92042 Paris La Defense France
AXA Courtage Assurance Mutuelle (b)
26, rue Louis le Grand
75002 Paris, France
The Equitable Companies Incorporated (b)
1290 Avenue Address
of the Americas
New York, New York 10104
AXA (b)
9 Place Vendome
75001 Paris, France
Mellon BankBeneficial Owner | | Amount and
Nature of
Beneficial Ownership | | Percent
of Class |
Mackenzie Financial Corporation 7,795,653(c) 5.74%(c)
One Mellon Bank Center
Pittsburgh, PA 15258
| | | | 12,813,116(a) | | | | | 8.27 | %(a) | |
180 Queen Street West | | | | |
Toronto, Ontario M5V 3K1 | | | | |
Sasco Capital, Inc. 6,940,213(d) 5.1%(d)
| | | | 8,732,892(b) | | | | | 5.60 | %(b) | |
10 Sasco Hill Road | | | | |
Fairfield, CT 06430
06824 | | | | |
Harris Associates L.P. and | | | | 7,575,300(c) | | | | | 5.43 | %(c) | |
Harris Associates Inc. | | | | |
Two North LaSalle Street, Suite 500 | | | | |
Chicago, IL 60602-3790 | | | | |
First Pacific Advisors, LLC, | | | | 7,864,416(d) | | | | | 5.10 | %(d) | |
Robert L. Rodriguez, and J. Richard Atwood | | | | |
11400 West Olympic Blvd., Suite 1200 | | | | |
Los Angeles, CA 90064 | | | | |
- ---------------
(a) Reflects shares beneficially owned as of April 30, 1999, accordingNotes to a
preliminary proxy statement dated April 30, 1999 filed by Greenway Partners,
L.P. with the SEC. As reported, Greenway Partners, L.P. holds sole voting
and dispositive power with respect to 2,350,000 shares; Greentree Partners,
L.P. holds sole voting and dispositive power with respect to 1,500,900
shares; Greenhouse Partners, L.P. holds shared voting and dispositive power
with respect to 2,350,000 shares; Greenhut, L.L.C. holds shared voting and
dispositive power with respect to 1,500,900 shares; Greenbelt Corp. holds
sole voting and dispositive power with respect to 12,886,322 shares;
Greensea Offshore, L.P. holds sole voting and dispositive power with respect
to 2,250,000 shares; Greenhut Overseas, L.L.C. holds shared voting and
dispositive power with respect to 2,250,000 shares; Alfred D. Kingsley holds
sole voting and dispositive power with respect to 541,800 shares; Alfred D.
Kingsley and Gary K. Duberstein hold shared voting and
5
9
dispositive power with respect to 18,987,222 shares; Andrew P. Hines holds
sole voting and dispositive power with respect to 590 shares; and Howard
Stein holds sole voting and dispositive power with respect to 120,000
shares.
(b) Reflects shares beneficially owned as of January 31, 1999 according to a
statementTable on Schedule 13G filed with the SEC. As reported in the 13G, the
parent holding companies -- AXA Assurances I.A.R.D. Mutuelle, AXA Assurances
Vie Mutuelle, AXA Conseil Vie Assurance Mutuelle, AXA Courtage Assurance
Mutuelle and AXA -- hold sole voting power with respect to 1,020,101 shares;
sole dispositive power with respect to 13,257,001 shares; shared voting
power with respect to 12,632,900 shares and shared dispositive power with
respect to 427,100 shares. The Equitable Companies Incorporated, a parent
holding company, holds sole voting power with respect to 590,001 shares;
sole dispositive power with respect to 13,254,001 shares and shared voting
power with respect to 12,632,900 shares.
(c) Reflects shares beneficially owned as of December 31, 1998, according to a
statement on Schedule 13G filed with the SEC. Mellon Bank Corporation, a
parent holding company, reported that it holds sole voting power with
respect to 6,138,212 shares; sole dispositive power with respect to
7,501,655 shares; shared voting power with respect to 841 shares and shared
dispositive power with respect to 107,243 shares. AllPersons Owning More than Five Percent of the shares are held
by Mellon Bank Corporation and its direct or indirect subsidiaries in their
various fiduciary capacities.
(d) Reflects shares beneficially owned as of February 22, 1999 according to a
statement on Schedule 13G filed with the SEC. Sasco Capital, Inc. reported
that it has beneficial ownership to direct the disposition of 6,940,213
shares and has the sole power to vote 4,294,621 shares.
SECTIONCompany’s Stock
|
(a) | | | | Reflects shares beneficially owned as of December 31, 2008 according to Amendment No. 1 to Schedule 13G filed with the SEC. As reported in this schedule, Mackenzie Financial Corporation, an investment adviser, holds sole voting and dispositive power with respect to 12,813,116 shares. |
|
(b) | | | | Reflects shares beneficially owned as of December 31, 2008 according to Amendment No. 1 to Schedule 13G filed with the SEC. As reported in this schedule, Sasco Capital, Inc., an investment adviser, holds sole voting power with respect to 3,985,500 shares and sole dispositive power with respect to 8,732,892 shares. |
|
(c) | | | | Reflects shares beneficially owned as of December 31, 2008, according to Amendment No. 1 to Schedule 13G filed with the SEC by Harris Associates L.P. (“Harris”) and Harris Associates Inc. As reported in this schedule, Harris, an investment adviser, holds sole voting and dispositive power with respect to 7,575,300 shares. |
|
(d) | | | | Reflects shares beneficially owned as of December 31, 2008, according to Amendment No. 1 to Schedule 13G filed with the SEC on behalf of First Pacific Advisors, LLC (“FPA”), an investment advisor, Robert L. Rodriguez and J. Richard Atwood, Managing Members of FPA. As reported in |
6
| | | | this schedule, FPA, Mr. Rodriguez and Mr. Atwood hold shared voting power with respect to 3,628,300 shares and shared dispositive power with respect to 7,864,416 shares |
Section 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires that the Company'sour directors and executive officers and beneficial owners
of more than 10 percent of the Company's common stock file with the SECSecurities and the
New York Stock Exchange Commission reports of ownership and changes in ownership of Foot Locker’s Common StockStock. Based on our records and other equity securities of the Company. These persons are required by
SEC rules to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on a review of the copies of those reports furnished to the
Company or written representations that no other reports were required, the
Company believesinformation, we believe that during the 19982008 fiscal year, the directors and executive officers and beneficial owners of more than 10 percent of the Company's common
stock complied with all applicable SEC filing requirements.
CORPORATE GOVERNANCE INFORMATION
Corporate Governance Guidelines
The following is a summaryBoard of Directors has adopted Corporate Governance Guidelines. The Board periodically reviews the guidelines and may revise them when appropriate. The Corporate Governance Guidelines are available on the corporate governance section of the Company's principalCompany’s corporate web site athttp://www.footlocker-inc.com/IR_index.htm. You may also obtain a printed copy of the guidelines by writing to the Corporate Secretary at the Company’s headquarters.
Policy on Voting for Directors
Our Corporate Governance Guidelines provide that if a nominee for director in an uncontested election receives more votes “withheld” from his or her election than votes “for” election (a “Majority Withheld Vote”), then the director must offer his or her resignation for consideration by the Nominating and Corporate Governance Committee (the “Nominating Committee”). The Nominating Committee will evaluate the resignation, weighing the best interests of the Company and its shareholders, and make a recommendation to the Board of Directors on the action to be taken. For example, the Nominating Committee may recommend (i) accepting the resignation, (ii) maintaining the director but addressing what the Nominating Committee believes to be the underlying cause of the withheld votes, (iii) resolving that the director will not be re-nominated in the future for election, or (iv) rejecting the resignation. When making its determination, the Nominating Committee will consider all factors that it deems relevant, including (i) any stated reasons why shareholders withheld votes from the director, (ii) any alternatives for curing the underlying cause of the withheld votes, (iii) the director’s tenure, (iv) the director’s qualifications, (v) the director’s past and expected future contributions to the Board and to the Company, and (vi) the overall composition of the Board, including whether accepting the resignation would cause the Company to fail to meet any applicable Securities and Exchange Commission or New York Stock Exchange requirements. We will promptly disclose the Board’s decision on whether or not to accept the director’s resignation, including, if applicable, the reasons for rejecting the offered resignation.
Stock Ownership Guidelines
The Board of Directors has adopted Stock Ownership Guidelines. These guidelines cover the Board of Directors, the Chief Executive Officer, and Other Principal Officers, as follows:
| | | Board of Directors.Each non-employee director must beneficially own shares of our Common Stock having a value of at least three times the annual retainer fee paid to the non-employee directors. | |
• | | | | Chief Executive Officer.The CEO must beneficially own shares of our Common Stock having a value of at least four times his annual base salary. |
|
• | | | | Other Principal Officers. Other Principal Officers of the Company must beneficially own shares of our Common Stock having a value of at least two times their individual annual base salaries. The category of Other Principal Officers includes all corporate officers at the senior vice president level or higher and the chief executive officers of our operating divisions. |
Shares of restricted stock, restricted stock units, and deferred stock units are counted towards beneficial ownership. Stock options are disregarded in calculating beneficial ownership.
7
The target date for full compliance with these guidelines is February 2011, which is five years after the effective date of these guidelines. Non-employee directors who are elected to the Board after February 2006, as well as employees who are elected or appointed after this date to positions covered by these guidelines, must be in compliance within five years after their initial election or appointment.
Committee Charters
The Board of Directors has adopted charters for the Audit Committee, the Compensation and Management Resources Committee, the Finance and Strategic Planning Committee, the Nominating and Corporate Governance Committee, and the Retirement Plan Committee. Copies of the charters for these committees are available on the corporate governance practices and policies.
INDEPENDENT BOARD OF DIRECTORS AND COMMITTEES
Only twosection of the 11Company’s corporate web site athttp://www.footlocker-inc.com/IR_index.htm. You may also obtain printed copies of these charters by writing to the Corporate Secretary at the Company’s headquarters.
Director Independence
The Board believes that a significant majority of the members of the Board should be independent, as determined by the Board based on the criteria established by The New York Stock Exchange. Each year, the Nominating Committee reviews any relationships between outside directors and the Company that may affect independence. Currently, one of the current nine members of the Board of Directors also serveserves as an officer of the Company, and the remaining eight directors are independent under the criteria established by The New York Stock Exchange.
Lead Director
James E. Preston has served as lead director since May 30, 2007. As lead director, Mr. Preston presides at executive sessions of the independent and non-management directors, reviews and provides input on the Board meeting agendas, and may perform other duties and responsibilities as the Board may determine.
Executive Sessions of Non-Management Directors
The Board of Directors holds regularly scheduled executive sessions of non-management directors. James E. Preston, as the lead director, presides at executive sessions of the independent and non-management directors.
Board Members’ Attendance at Annual Meetings
Although we do not have a policy on our Board members’ attendance at annual shareholders’ meetings, we encourage each director to attend these important meetings. The annual meeting is normally scheduled on the same day as a Board of Directors’ meeting. In 2008, 9 out of the 10 directors who were then serving attended the annual shareholders’ meeting.
New Director Orientation
We have an orientation program for new directors that is intended to educate a new director on the Company and the Board’s practices. At the orientation, the newly elected director generally meets with the Company’s Chief Executive Officer, the Chief Financial Officer, the General Counsel and Secretary, as well as with other senior financial officers of the Company, to review the business operations, financial matters, investor relations, corporate governance policies, and at present, all of the committeescomposition of the Board (other thanand its committees. Additionally, he or she has the Executive Committee andopportunity to visit our stores at the Retirement Administration Committee)
are composed entirelyCompany’s New York headquarters, or elsewhere, with a senior division officer for an introduction to store operations.
8
Payment of outside directors. All members of the Compensation
Committee are directors meeting the criteria established for outside directorsDirectors Fees in the regulations under Section 162(m) of the Internal Revenue Code and forStock
The non-employee directors under Section 16 of the Exchange Act. The Audit Committee
is composed entirely of non-employee directors, as required by the rules of the
New York Stock Exchange. At least once a year, the outside directors meet
without the presence of management.
PAYMENT OF DIRECTORS FEES IN STOCK
Under the Directors Stock Plan,receive one-half of thetheir annual fee payable to
directors for their Board service is paidretainer fees, including committee chair and lead director retainer fees, in shares of the Company'sCompany’s Common Stock, with the balance payable in cash. Directors may elect to receive up to 100 percent of their fees in stock.
6
10
DIRECTOR RETIREMENT
Director Retirement
The Company's mandatory retirementBoard has established a policy in its Corporate Governance Guidelines that directors retire from the Board at the annual meeting of shareholders following the director’s 72nd birthday. As part of the Nominating Committee’s regular evaluation of the Company’s directors and the overall needs of the Board, the Nominating Committee may ask a director to remain on the Board for directors is that no person
may be nominatedan additional period of time beyond age 72, or to stand for election as a directorre-election after reaching age 72. However, a director may not remain on the Board beyond the date of the annual meeting of shareholders following his or her 75th birthday. As described on Page 58, the Board has waived the retirement policy for one director, James E. Preston, who currently serves as the lead director.
Change in a Director’s Principal Employment
The Company discontinued its retirement planBoard has established a policy that any director whose principal employment changes is required to advise the Chair of the Nominating and Corporate Governance Committee of this change. If requested, the director will submit a letter of resignation to the Chair of the Committee, and the Committee would then meet to consider whether to accept or reject the letter of resignation.
Communications with the Board of Directors
The Board has established a procedure for directors in 1995,shareholders and only fourother interested parties to send communications to the non-management members of the Board of Directors. Shareholders and other interested parties who wish to communicate directly with the non-management directors who were then serving and had at least five years of service, will
receive payments under the plan. In the event a non-employee director of the Company changes his or her principal business position or affiliation, including
through retirement,should send a letter to:
Board of Directors
c/o Secretary, Foot Locker, Inc.
112 West 34th Street
New York, NY 10120
The Secretary will promptly send a copy of the communication to the lead director, who may direct the Secretary to send a copy of the communication to the other non-management directors and may determine whether a meeting of the non-management directors should be called to review the communication.
A copy of the Procedures for Communications with the Board of Directors reviews and considersis available on the appropriatenesscorporate governance section of the individual's continued participation asCompany’s corporate web site athttp://www.footlocker-inc.com/ IR_index.htm. You may obtain a memberprinted copy of the procedures by writing to the Corporate Secretary at the Company’s headquarters.
Retention of Outside Advisors
The Board under those changed circumstances.
CONFIDENTIAL VOTING
of Directors and all of its committees have authority to retain outside advisors and consultants that they consider necessary or appropriate in carrying out their respective responsibilities. The independent accountants are retained by the Audit Committee and report directly to the Audit Committee. In addition, the internal auditors are selected by the Audit Committee and are ultimately accountable to the Audit Committee. Similarly, consultants retained by the Compensation and Management Resources Committee to assist it in the evaluation of senior executives’ compensation report directly to that committee.
Code of Business Conduct
The Company has adopted a policy that shareholders be provided privacy in voting.
All proxy cards, voting instructions, ballotsCode of Business Conduct for directors, officers and voting tabulations identifying
shareholders are held permanently confidential from the Company, except as (i)
as necessary to meet any applicable legal requirements, (ii) when disclosure is
expressly requested by a shareholder or where a shareholder makes a written
comment on a proxy card, (iii) in a contested proxy solicitation, or (iv) to
allow independent election inspectors to tabulateemployees, including our Chief Executive Officer, Chief Financial Officer, and certify the vote. The
tabulators and inspectors of election are independent and are not employeesChief Accounting Officer. A copy of the Company.
SHAREHOLDER RIGHTS PLAN
The Company has had a Shareholder Rights Plan in place since 1988, and,
last year,Code of Business Conduct is available on the Board of Directors adopted a new Rights Plan along the linescorporate governance section of the Plan originally adopted in 1988.
The Board recently adopted certainCompany’s
9
corporate web site athttp://www.footlocker-inc.com/IR_index.htm.You may obtain a printed copy of the Code of Business Conduct by writing to the Corporate Secretary at the Company’s headquarters.
Any waivers of the Code of Business Conduct for directors and executive officers must be approved by the Audit Committee. We intend to disclose promptly amendments to the Rights Plan that would
make the Rights Plan inapplicable to certain kindsCode of offers to purchase allBusiness Conduct and any waivers of the Company's Common Stock that meetCode for directors and executive officers on the criteria specified for "qualifying
offers." In general, the requirements for a qualifying offer are as follows:
- The purchase price is composed only of cash or of cash and securities.
- The person making the offer to purchase the stock (the "Offeror") has
provided firm written financial commitments from responsible financial
institutions for any cash portioncorporate governance section of the purchase price and the opinion
of a nationally recognized investment bank with respect to the value of
any securities portion of the purchase price.
- The offer to purchase the Company's Common Stock remains open forCompany’s corporate website at
least 120 days.
- The Offeror makes an irrevocable written commitment (1) to purchase those
shares that were not acquired through the original offer for the same
price paid for the shares that were acquired through the original offer,
(2) that the Offeror will not materially amend the offer except to
increase the offering price, and (3) that the Offeror will not make any
offer for the Company's stock for six months after the commencement of
the original offer.
- After the consummation of the transaction, the Offeror owns at least 80
percent of the outstanding Common Stock.
In addition, the Independent Directors, defined in the Rights Plan as
directors who are not current or former officers of the Company, holders of five
percent or more of the Company's shares, or the persons making the tender offer,
have the discretion to shorten the time periods related to the qualifying offer
provisions.
http://www.footlocker-inc.com/IR_index.htm.
BOARD OF DIRECTORS
ORGANIZATION AND POWERS
Organization and Powers
The Board of Directors has responsibility for establishing broad corporate policies, reviewing significant developments affecting the Company,Foot Locker, and monitoring the general performance of the Company. The
7
11
Company'sOur By-laws provide for a Board of Directors consisting of not less thanbetween 9 nor more thanand 17 directors, thedirectors. The exact number to beof directors is determined from time to time by resolution adopted by a majority of the entire Board. The sizeOur Board currently has 9 members. Shareholders are being asked to approve at this annual meeting an amendment to our By-Laws that would reduce the minimum number of directors from 9 to 7 and reduce the Boardmaximum number of directors from 17 to 13. Detailed information on this proposal is presently fixed at 11 directors.
In 1999 theprovided beginning on Page 62.
The Board of Directors is scheduled to hold six regular meetings.
During 1998, the Board held eight meetings. During 1998, each director, other
than Allan Z. Loren,five meetings during 2008. All of our current directors attended at least 75 percent of the aggregate total number
of meetings of the Board and committees on which they served in 2008.
Directors’ Independence
A director is considered independent under the rules of meetings held by all committees of whichthe The New York Stock Exchange if he or she has no material or immaterial relationship to the Company that would impair his or her independence. In addition to the independence criteria established by The New York Stock Exchange, the Board of Directors has adopted categorical standards to assist it in making its independence determinations regarding individual members of the Board. These categorical standards are contained in the Corporate Governance Guidelines, which are posted on the Company’s corporate web site athttp://www.footlocker-inc.com/IR_index.htm.
The Board of Directors has determined that the following categories of relationships are immaterial for purposes of determining whether a director is independent under the listing standards adopted by The New York Stock Exchange.
10
| | |
Categorical Relationship | | Description |
|
Investment Relationships with the Company | | A director and any family member may own equities or other securities of the Company. |
|
Relationships with Other Business Entities | | A director and any family member may be a director, employee (other than an executive officer), or beneficial owner of less than 10 percent of the shares of a business entity with which the Company does business, provided that the aggregate amount involved in a fiscal year does not exceed the greater of $1,000,000 or 2 percent of either that entity’s or the Company’s annual consolidated gross revenue. |
|
Relationships with Not-for-Profit Entities | | A director and any family member may be a director or employee (other than an executive officer or the equivalent) of a not-for-profit organization to which the Company (including the Foot Locker Foundation) makes contributions, provided that the aggregate amount of the Company’s contributions in any fiscal year do not exceed the greater of $1,000,000 or 2 percent of the not-for-profit entity’s total annual receipts. |
The Board of Directors, upon the recommendation of the Nominating and Corporate Governance Committee, has determined that the following directors are independent under the rules of The New York Stock Exchange because they have no material or immaterial relationship to the Company that would impair their independence:
| | | | |
Nicholas DiPaolo | | James E. Preston | | |
Alan D. Feldman | | David Y. Schwartz | | |
Jarobin Gilbert Jr. | | Cheryl Nido Turpin | | |
Matthew M. McKenna | | Dona D. Young | | |
Christopher A. Sinclair served as a director of the Company during 2008 until the end of his term on May 21, 2008. The Board determined, upon the recommendation of the Nominating and Corporate Governance Committee, that Mr. Sinclair was independent under the rules of The New York Stock Exchange through the end of his term as a director because he had no material or immaterial relationship to the Company that would impair his independence.
In making its decisions on independence, the Board of Directors considered the following relationships between the Company and organizations with which the current members of our Board are affiliated:
|
• | | | | Nicholas DiPaolo, Jarobin Gilbert Jr., Matthew M. McKenna, David Y. Schwartz, and Cheryl Nido Turpin are non-employee directors of companies with which Foot Locker does business. The Board has determined that each of these relationships meets the categorical standard for Relationships with Other Business Entities and are immaterial for determining independence. |
| | | Dona D. Young was a member. Becausenon-employee director during 2008 of a company with which Foot Locker did business. The Board has determined that Mrs. Young’s relationship met the categorical standard for Relationships with Other Business Entities and was immaterial for determining independence. | |
• | | | | Matthew M. McKenna is affiliated with a not-for-profit institution to which the Company made payments in 2008. The Board has determined that Mr. Loren was unable to attend two non-regular
meetings, his attendance fell below 75 percent.
COMMITTEES OF THE BOARD OF DIRECTORS
McKenna’s relationship meets the |
11
| | | | categorical standard for Relationships with Not-for Profit Entities and is immaterial for determining independence. |
|
• | | | | The Board of Directors, upon the recommendation of the Nominating and Corporate Governance Committee, has determined that Matthew D. Serra is not independent because Mr. Serra is an executive officer of the Company. |
The Board of Directors has determined that all members of the Audit Committee, the Compensation and Management Resources Committee and the Nominating and Corporate Governance Committee are independent as defined under the listing standards of The New York Stock Exchange and the director independence standards adopted by the Board.
Committees of the Board of Directors
The Board has delegated certain duties to committees, which assist the Board in carrying out its responsibilities. Each director serves on one or more
committees. There are six standing committees of the Board. Each director serves on at least two committees. The committee memberships, the number of meetings held in 1998,during 2008, and the functions of the committees are described below.
AUDIT COMMITTEE.
| | | | | | | | | | |
Audit
Committee | | Compensation
and
Management
Resources
Committee | | Finance and
Strategic
Planning
Committee | | Nominating
and Corporate
Governance
Committee | | Retirement
Plan
Committee | | Executive
Committee |
N. DiPaolo* | | J. Preston* | | D. Schwartz* | | J. Gilbert Jr.* | | J. Gilbert Jr.* | | M. Serra*** |
J. Gilbert Jr. | | A. Feldman | | N. DiPaolo | | J. Preston | | N. DiPaolo | | N. DiPaolo |
M. McKenna | | M. McKenna | | A. Feldman | | D. Schwartz | | R. McHugh** | | J. Gilbert Jr. |
D. Schwartz | | C. Turpin | | M. McKenna | | C. Turpin | | L. Petrucci** | | J. Preston |
D. Young | | | | | | D. Young | | M. Serra** | | D. Schwartz |
|
* | | | | Designates Committee Chair |
|
** | | | | Designates Executive Officer of the Company |
|
*** | | | | Designates Committee Chair and Executive Officer of the Company |
Audit Committee
The memberscommittee held nine meetings in 2008. The Audit Committee has a charter, which is available on the corporate governance section of our corporate web site athttp://www.footlocker-inc.com/ IR_index.htm. The report of the Audit Committee appears on Page 61.
This committee are John J. Mackowski
(Chairman), Purdy Crawford, Jarobin Gilbert Jr.appoints the independent accountants and Allan Z. Loren. the internal auditors and is responsible for approving the independent accountants’ and internal auditors’ compensation. This committee also assists the Board in fulfilling its oversight responsibilities in the following areas:
|
• | | | | accounting policies and practices, |
|
• | | | | the integrity of the Company’s financial statements, |
|
• | | | | compliance with legal and regulatory requirements, |
|
• | | | | the qualifications, independence, and performance of the independent accountants, and |
|
• | | | | the qualifications and performance of the internal audit function. |
The committee met five times during 1998.
The committee evaluatesAudit Committee has established procedures for the receipt, retention and reviews such matters as the Company's systemstreatment of complaints regarding accounting, internal accounting controls or auditing matters.
The Board of Directors has determined that the Company has at least one audit committee financial expert, as defined under the rules of the Securities Exchange Act of 1934, serving on the Audit Committee. David Y. Schwartz has been designated as the audit committee financial expert. Mr. Schwartz is independent under the rules of The New York Stock Exchange and the scopeSecurities Exchange Act of 1934.
12
Compensation and results of the Company's
internal audit procedures. Management Resources Committee
The committee also recommends to the Board the
appointment of the Company's independent accountants, reviews the scopeCompensation and results of their audit and approves their audit and non-audit fees.Management Resources Committee (the “Compensation Committee”) held four meetings in 2008. The committee has direct channels of communication witha charter, which is available on the Company's independent
accountants and internal audit staff, including meeting with them, both with and
without the presence of Company management, to discuss and review issues as
appropriate. The committee also meets with the Company's financial personnel and
general counsel to review their various activities and findings. While it is the
responsibility of management to design and implement an effective system of
internal accounting controls, it is the responsibilitycorporate governance section of the committee to
ensure that management has done so. It is also the responsibility of the
committee to review periodically the adequacy, management and effectiveness of
the Company's information systems.
ACQUISITIONS AND FINANCE COMMITTEE. Company’s corporate web site athttp://www.footlocker-inc.com/IR_index.htm.
The members of the committee are J.
Carter Bacot (Chairman), James E. Preston and Christopher A. Sinclair. The
committee held one meeting in 1998.
The committee considers proposals concerning mergers, combinations,
acquisitions, sales, or offers to purchase the Company's shares or significant
assets. In addition, the committee reviews certain proposed acquisitions by the
Company of shares or assets of third parties, and it considers proposed debt or
equity issues of the Company.
COMPENSATION COMMITTEE. The members of the committee are James E. Preston
(Chairman), Philip H. Geier Jr. and Margaret P. MacKimm. The committee met three
times during 1998.
The committee establishes and approves compensation plans and goals,
salaries, incentives and other forms ofCompensation Committee determines all compensation for the Company'sCompany’s executive management group, which consists of the executive officers and for certain other executivescorporate officers, and determines significant elements of the Company and its major subsidiaries andcompensation of the chief executive officers of our operating divisions. Decisions regarding equity compensation for other employees are also the Compensation Committee’s responsibility. Decisions regarding non-equity compensation of the Company’s other associates are made by the Company’s management.
The committee administers the Annual Incentive Compensation Plan, the Long-Term Incentive Compensation Plan, the Supplemental Executive
Retirement Plan, the Executive Supplemental Retirement Plan, the Voluntary
Deferred Compensation Plan, and may take certain actions with respect to the
Trust (as defined on page ). The committeeCommittee also administers Foot Locker’s various compensation plans, including the 1994 Venator
Group Employees Stock Purchase Plan, administers and grants options underincentive plans, the 1995 Stock Option and Award Planequity-based compensation plans, the employees stock purchase plan, and the 1998 Stock Option and Award Plan and
administers the 1986 Stock Option Plan and the Eastbay, Inc. 1994 Stock
Incentive Plan. Members of the committeedeferred compensation plan. Committee members are not eligible to participate in any of these plans. EXECUTIVE COMMITTEE. This committee also reviews and makes recommendations to the Board of Directors concerning executive development and succession, including for the position of Chief Executive Officer.
The Compensation Committee normally holds two meetings each year to review and approve the executive compensation program, the Chief Executive Officer’s compensation, annual salaries and bonuses for the executive management group and division CEOs, and to grant equity awards. In addition, at another meeting during the year, the committee reviews directors’ compensation and makes recommendations to the Nominating and Corporate Governance Committee concerning the form and amount of directors’ compensation. Additional meetings of the Compensation Committee may be called during the year as necessary.
The Compensation Committee has retained Mercer as its consultant on executive compensation matters and, with regard to executive and director compensation, Mercer reports directly to the Compensation Committee and provides the Committee with information on general executive compensation trends, trends in the retail industry, and reports on Foot Locker’s executive compensation program. Mercer also advises the committee on non-employee director compensation matters, including payment levels and trends. In preparing its material for the committee, Mercer consults with the Company’s Chairman of the Board and Chief Executive Officer, Senior Vice President—Human Resources, Senior Vice President and General Counsel, and Vice President—Human Resources. The Senior Vice President-Human Resources, working with the Chairman of the Board and Chief Executive Officer, prepares compensation recommendations to the committee, covering all elements of compensation for all corporate officers and heads of the Company’s operating divisions, other than the Chief Executive Officer himself, which are forwarded to the Chair of the Compensation Committee for his review. The Chair of the Compensation Committee also discusses these recommendations with the Chief Executive Officer. Based on input from the Chair of the Committee, the Senior Vice President-Human Resources then finalizes the compensation recommendations to review with the full committee. Separately, the Company retains Mercer for outsourcing services related to the administration of our U.S. and Canadian pension plans.
Compensation Committee meeting agendas are developed by the committee chair in consultation with the Chief Executive Officer and the Corporate Secretary. Committee members may suggest agenda items by communicating with one of these individuals. Agendas and related materials are circulated to Committee members prior to meetings. The committee chair regularly reports on the committee’s meetings to the full Board. The Company’s CEO, Senior Vice President and General Counsel, Senior Vice President—Human Resources, Vice President—Human Resources, and Vice President and Associate General Counsel generally attend all meetings of the committee. Mercer also attends meetings at which the Committee reviews the executive compensation program and non-employee director compensation.
The Compensation Committee has the authority to delegate authority and responsibilities as it considers appropriate. The committee has delegated to the Committee Chair the authority to approve stock option grants between meetings of the committee. This authority is limited to executives who are not subject to Section 16 of the Securities Exchange Act of 1934 and is further limited to individual option awards of 25,000 shares or less.
13
The Company’s Corporate Human Resources Department and the Corporate Secretary’s staff support the Compensation Committee in performing its duties.
Compensation Committee Interlocks and Insider Participation
Alan D. Feldman, Matthew M. McKenna, James E. Preston, Christopher A. Sinclair and Cheryl Nido Turpin served on the Compensation and Management Resources Committee during 2008. Mr. Sinclair’s term as a director ended at the 2008 annual shareholders’ meeting. None of the committee are Roger N. Farah
(Chairman) and allmembers was an officer or employee of the non-employee directors. Company or any of its subsidiaries, and there were no interlocks with other companies within the meaning of the SEC’s proxy rules.
Executive Committee
The committeeExecutive Committee did not meet in 1998.
8
122008. Except for certain matters reserved to the Board, thethis committee has all of the powers of the Board in the management of the business of the Company during intervals between Board meetings.
NOMINATING AND ORGANIZATION COMMITTEE.
Finance and Strategic Planning Committee
The members of the committee are
Jarobin Gilbert Jr. (Chairman), J. Carter BacotFinance and James E. Preston. The
committeeStrategic Planning Committee held one meetingfour meetings in 1998.
The committee makes recommendations to the Board with respect to the size
and composition of the Board and the Company's internal organizational
structure. In addition, the2008. This committee reviews the qualificationsoverall strategic and financial plans of candidates,the Company, including capital expenditure plans, proposed debt or equity issues of the Company, and the Company’s capital structure. The committee also considers and makes recommendations to the Board with respectof Directors concerning dividend payments and share repurchases, and reviews acquisition and divestiture proposals.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee held four meetings in 2008. This committee has responsibility for overseeing corporate governance matters affecting the Company, including developing and recommending criteria and policies relating to nominees, for election asservice and tenure of directors. The committee is responsible for collecting the names of potential nominees to the Board, reviewing the background and qualifications of potential candidates for Board membership, and making recommendations to the Board for the nomination and election of directors. The committee also reviews membership on the Board committees and makes recommendations on committee members and chairs. In addition, the committee reviews recommendations from the Compensation and Management Resources Committee and makes recommendations to the Board concerning the form and amount of directors’ compensation.
The Nominating and Corporate Governance Committee may alsoestablish criteria for candidates for Board membership. These criteria may include area of expertise, diversity of experience, independence, commitment to representing the long-term interests of the Company’s stakeholders, and other relevant factors, taking into consideration the needs of the Board and the Company and the mix of expertise and experience among current directors. From time to time the committee may retain the services of a third party search firm to identify potential director candidates.
The committee will consider nominees to the Board of Directors recommended by shareholders in accordancethat comply with the provisions of the Company’s By-Laws and relevant law, regulation, and stock exchange rules. The procedures for shareholders to follow to propose a potential director candidate are described on page .
RETIREMENT INVESTMENT COMMITTEE. ThePage 63.
After a potential nominee is identified, the Committee Chair will review his or her biographical information and discuss with the other members of the committee are Margaret
P. MacKimm (Chairman), Purdy Crawfordwhether to request additional information about the individual or to schedule a meeting with the potential candidate. The committee’s screening process for director candidates is the same regardless of the source who identified the potential candidate. The committee’s determination on whether to proceed with a formal evaluation of a potential candidate is based on the person’s experience and John J. Mackowski. qualifications, as well as the current composition of the Board and its anticipated future needs.
14
Retirement Plan Committee
The Retirement Plan Committee held four meetings in 2008. This committee met
three times in 1998.
The committee has responsibility to superviseis responsible for supervising the investment of the assets of the Company’s United States retirement plans of the Company and to appoint, reviewappointing, reviewing the performance of and, if appropriate, replace,replacing, the trustee of the Company'sCompany’s pension trust and the managersinvestment manager responsible for managing the funds of suchthe trust. In addition, the BoardThe committee also has established a Retirement Administration
Committee, composed of certain officers of the Company, to which the Board has
delegated certain administrative responsibilities with regard to thefor our United States retirement plans of the Company.
DIRECTORS COMPENSATION AND BENEFITS
Non-employee directors of the Company receive an annual retainer of
$40,000. The committee chairmen receive an additional annual retainer of $3,000.
No separate fees are paid for attendance at Board or committee meetings.
One-half of the annual retainer is required to be paid in shares of the
Company's Common Stock under the Directors' Stock Plan, with the balance payable
in cash. Directors may elect to receive up to 100 percent of their annual
retainer in shares of stock. The number of shares received under the plan is
determined by dividing the applicable retainer amount by the average price of a
share of stock on the last business day preceding July 1plans.
RELATED PERSON TRANSACTIONS
Policies and Procedures
We individually inquire of each year. In
addition, directors are reimbursed for their reasonable expenses in attending
meetings of the Board and committees, including travel expenses to and from
meetings.
The Directors' Retirement Plan was frozen as of December 31, 1995.
Consequently, only four of the current directors are entitled to receive a
retirement benefit under this plan because they had completed at least five
years of service as a director on the date the plan was frozen and they are not
entitled to receive a retirement benefit under any of the Company's other
retirement plans or programs. Under the Directors' Retirement Plan, an annual
retirement benefit of $24,000 will be paid to a qualified director for the
lesser of the number of years of his or her service as a director or 10 years.
Payment of benefits under this plan generally begins on the later of the
director's termination of service as a director or the attainment of age 65.
Directors with less than five years of service at December 31, 1995 and
directors who are elected after this date are not eligible to participate in the
Directors' Retirement Plan.
At the Company's request, during 1998 Jarobin Gilbert Jr. served on the
Supervisory Board of F.W. Woolworth Co. GmbH ("FWW Germany"), a former
subsidiary of the Company. In connection with this service, Mr. Gilbert received
a fee of DM 11,250 (approximately U.S. $6,325) and reimbursement for reasonable
expenses in attending meetings of the Supervisory Board. The Company sold FWW
Germany in October 1998, and Mr. Gilbert's membership on the Supervisory Board
ended at that time. Pursuant to a consulting arrangement with DBSS Group, Inc.
("DBSS"), of which Mr. Gilbert is the President and Chief Executive Officer, the
Company paid a fee of $15,000 to DBSS for consulting services rendered by Mr.
Gilbert during 1998 related to the Company's businesses in Germany. The Company
and DBSS terminated this consulting arrangement following the Company's sale of
FWW Germany in October 1998.
9
13
DIRECTORS AND OFFICERS INDEMNIFICATION AND INSURANCE
The Company has purchased directors and officers liability and corporation
reimbursement insurance from National Union Fire Insurance Company of
Pittsburgh, Pa., The Great American Insurance Companies, The Chubb Group of
Insurance Companies and Executive Risk Indemnity, Inc. These policies insure the
Company and all of the Company's wholly owned subsidiaries. They also insure all
of the directors and officers of the Company and the covered subsidiaries. The
policies were written for a term of 36 months, from September 12, 1998 until
September 12, 2001. The total annual premium for these policies is $419,903.
Directors and officers of the Company, as well as all other employees with
fiduciary responsibilities under the Employee Retirement Income Security Act of
1974, as amended, are insured under policies issued by Federal Insurance Company
and National Union Fire Insurance Company, which have a total premium of
$104,249 for the 12-month period ending September 12, 1999.
In accordance with the indemnification provisions of the Company's By-laws,
the Company paid legal fees and expenses totaling approximately $58,265 during
1998 on behalf of certain of the Company's former officers who were named as
individual defendants in the litigation captioned In re Woolworth Corporation
Securities Class Action Litigation, which had been settled during 1998. The
amounts paid in 1998 were covered under the Company's directors and officers
liability insurance policies in effect during the applicable period.
The Company has entered into indemnification agreements with itsour directors and executive officers as approved by shareholders atabout any transactions in which Foot Locker and any of these related persons or their immediate family members are participants. We also make inquiries within the 1987 annual meeting.
TRANSACTIONS WITH MANAGEMENT AND OTHERSCompany’s records for information on any of these kinds of transactions. Once we gather the information, we then review all relationships and transactions in which Foot Locker and any of our directors, executive officers or their immediate family members are participants to determine, based on the facts and circumstances, whether the Company or the related persons have a direct or indirect material interest. The CompanyGeneral Counsel’s office coordinates the related party review process. The Nominating and Corporate Governance Committee reviews any reported transactions involving directors and their immediate families in making its recommendation to the Board of Directors on the independence of the directors.
Related Person Transactions
Foot Locker and its subsidiaries have had transactions in the normal course of business with various other corporations,organizations, including certain corporationsorganizations whose directors or officers are also directors of Foot Locker. However, the Company. The amounts involved in these transactions have not been material in relation to the
businesses of the Company or its subsidiaries,our business, and it is believed that these amounts have not been material in relation to the businesses of the other corporations.organizations. In addition, it is believed that these transactions have been on terms no less favorable to the Company than if they had been entered into with disinterested parties. It is anticipated that transactions with such other corporationsorganizations will continue in the future. Mr. Serra’s son-in-law is employed as a buyer in the Company’s Foot Locker division, and the Company provided compensation and benefits to him in 2008 of approximately $161,000.
DIRECTORS’ COMPENSATION AND BENEFITS
Non-employee directors are paid an annual retainer fee and meeting fees for attendance at each Board and committee meeting. The lead director and the committee chairs are paid an additional retainer fee for service in these capacities. We do not pay additional compensation to any director who is also an employee of the Company for service on the Board or any committee. The following table summarizes the fees paid to the non-employee directors.
15
Summary of Directors’ Compensation
| | |
Annual Retainer | | $100,000 |
| | The annual retainer is payable 50 percent in cash and 50 percent in shares of our Common Stock. Directors may elect to receive up to 100 percent of their annual retainer, including committee chair retainer, in stock. |
| | We calculate the number of shares paid to the directors for their annual retainer by dividing their retainer fee by the closing price of a share of our stock on the last business day preceding the July 1 payment date. |
|
Committee Chair Retainers | | $20,000: Audit Committee |
| | $10,000: Compensation and Management Resources Committee |
| | $10,000: Finance and Strategic Planning Committee |
| | $10,000: Nominating and Corporate Governance Committee |
| | $10,000: Retirement Plan Committee |
| | N/A: Executive Committee |
| | The committee chair retainers are paid in the same form as the annual retainer. |
|
Lead Director | | $50,000 payable in the same form as the annual retainer. |
|
Meeting Fees | | $1,500 for attendance at each Board and committee meeting. |
|
Restricted Stock Units | | In fiscal 2008, the directors received a grant of 3,704 restricted stock units (“RSUs”). The number of RSUs granted was calculated by dividing $50,000 by the closing price of a share of our stock on the date of grant. The RSUs vested in February 2009, which was one year following the date of grant. Each RSU represented the right to receive one share of the Company’s common stock on the vesting date. |
| | In fiscal 2009, the directors received a grant of 6,869 RSUs, calculated in the same manner as the 2008 grant. The RSUs granted in 2009 will vest one year following the date of grant in February 2010. |
Deferral Election
Non-employee directors may elect to receive all or a portion of the cash component of their annual retainer fee, including committee chair retainers, in the form of deferred stock units or to have these amounts placed in an interest account. Directors may also elect to receive all or part of the stock component of their annual retainer fee in the form of deferred stock units. The interest account is a hypothetical investment account bearing interest at the rate of 120 percent of the applicable federal long-term rate, compounded annually, and set as of the first day of each plan year. A stock unit is an accounting equivalent of one share of the Company’s Common Stock.
Miscellaneous
Directors and their immediate families are eligible to receive the same discount on purchases of merchandise from our stores, catalogs and Internet sites that is available to Company employees. The Company hadreimburses non-employee directors for their reasonable expenses in attending meetings of the Board and committees, including their transportation expenses to and from meetings, hotel accommodations, and meals.
Fiscal 2008 Director Compensation
The amounts paid to each non-employee director for fiscal 2008, including amounts deferred under the Company’s stock plans, and the options granted to each director are reported in the tables below.
16
DIRECTOR COMPENSATION
| | | | | | | | | | |
(a) | | (b) | | (c) | | (d) | | (e) | | (f) |
Name | | Fees Earned
or Paid in Cash
($) | | Stock
Awards
($)(1) | | Option
Awards
($)(2) | | Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings | | Total
($) |
N. DiPaolo | | | | 93,003 | | | | | 110,001 | | | | | 89 | | | | | — | | | | | 203,093 | |
A. Feldman | | | | 15,002 | | | | | 150,002 | | | | | 89 | | | | | — | | | | | 165,093 | |
J. Gilbert Jr | | | | 94,503 | | | | | 110,001 | | | | | 89 | | | | | 5,987 | | | | | 210,580 | |
M. McKenna | | | | 30,002 | | | | | 150,002 | | | | | 89 | | | | | — | | | | | 180,093 | |
J. Preston | | | | 99,509 | | | | | 129,995 | | | | | 89 | | | | | — | | | | | 229,593 | |
D. Schwartz | | | | 81,833 | | | | | 110,598 | (3) | | | | | 89 | | | | | — | | | | | 192,520 | |
C. Sinclair (4) | | | | 18,344 | | | | | 22,908 | | | | | 89 | | | | | — | | | | | 41,341 | |
C. Turpin. | | | | 43,583 | | | | | 128,229 | (5) | | | | | 89 | | | | | — | | | | | 171,901 | |
D. Young | | | | 28,167 | | | | | 165,145 | (3) | | | | | 89 | | | | | — | | | | | 193,401 | |
Notes to Director Compensation Table
|
(1) | | | | Column (c) reflects the following three items: |
| | | The fiscal 2008 compensation expense recognized by the Company for the portion of the annual retainer fees and committee chair retainer fees paid in shares of the Company’s common stock or deferred by the director, as shown in the table below. In 2008, we made the annual stock payment to each director on July 1. Under the terms of the 2007 Stock Incentive Plan, the stock payment was valued at the closing price of a consulting arrangementshare of the Company’s common stock on June 30, which was $12.45. The 2008 expense is equal to the number of shares received or deferred by the director multiplied by $12.45, the grant date fair value of the payment under FAS 123R. Directors who deferred the stock portion of their annual retainer were credited with DBSS,deferred stock units on the annual payment date valued at $12.45 per unit. | Stock Portion of Retainer Fee
| | | | | | Name | | Number of
Shares | | Number of
Deferred
Stock Units | | Expense
($) |
N. DiPaolo | | | | 4,819 | | | | | — | | | | | 59,997 | |
A. Feldman | | | | 8,032 | | | | | — | | | | | 99,998 | |
J. Gilbert Jr. | | | | 4,819 | | | | | — | | | | | 59,997 | |
M. McKenna | | | | 8,032 | | | | | — | | | | | 99,998 | |
J. Preston | | | | 6,425 | | | | | — | | | | | 79,991 | |
D. Schwartz | | | | — | | | | | 4,250.3349 | | | | | 52,917 | |
C. Sinclair | | | | 1,840 | | | | | — | | | | | 22,908 | |
C. Turpin | | | | — | | | | | 4,016.0643 | | | | | 50,000 | |
D. Young | | | | — | | | | | 8,032.1285 | | | | | 100,000 | |
|
• | | | | The fiscal 2008 compensation expense shown in the table below for (i) dividend equivalents credited to three directors during the year on the quarterly dividend payment dates, valued at the fair market value of the Company’s common stock on the dividend payment dates, and (ii) stock units credited to one director during the year on the cash retainer payment date, valued at the fair market value on the payment date. The total number of deferred stock units credited to directors’ accounts in fiscal 2008, as well as the total number of units held at the end of fiscal 2008, is reported in the following table: |
17
Deferred Stock Units
| | | | | | | | | | | | | | | | | | Director | | 04/01/08
FMV:
$12.25 | | 05/02/08
FMV:
$13.21 | | 07/01/08
FMV:
$12.48 | | 08/01/08
FMV:
$15.10 | | 10/01/08
FMV:
$16.15 | | 10/31/08
FMV:
$14.62 | | 01/30/09
FMV:
$7.36 | | Total # of
Units
Credited in
2008 | | Total # of
Units
Held at
01/31/09 |
D. Schwartz | | | | — | | | | | 106.9983 | | | | | — | | | | | 136.8905 | | | | | — | | | | | 142.7894 | | | | | 286.5488 | | | | | 4,923.5619 | | | | | 14,346.5436 | |
C. Turpin | | | | 510.2014 | | | | | 136.0564 | | | | | 500.8013 | | | | | 165.2479 | | | | | 386.9969 | | | | | 176.3392 | | | | | 353.8764 | | | | | 6,245.5835 | | | | | 17,717.4140 | |
D. Young | | | | — | | | | | 213.9966 | | | | | — | | | | | 269.1267 | | | | | — | | | | | 280.7238 | | | | | 563.3548 | | | | | 9,359.3304 | | | | | 28,205.2949 | |
|
• | | | | The fiscal 2008 compensation expense recognized for financial statement reporting purposes for the fair value of the restricted stock units (“RSUs”) granted to the nonemployee directors in 2008. The number of RSUs granted was calculated by dividing $50,000 by $13.50, which was the closing price of a share of our stock on the date of grant. The RSUs vested in February 2009. As provided under the SEC’s rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For additional information on the valuation assumptions, please refer to Note [25] to the Company’s financial statements in our 2008 Form 10-K. The grant date fair value was calculated under FAS 123R. The RSUs granted to Mr. Sinclair in 2008 were forfeited in connection with the expiration of his term as a director prior to the vesting date of the award. The following table provides information on the aggregate number of RSUs granted in 2008 and the number of RSUs outstanding at the end of the 2008 fiscal year: |
Restricted Stock Units
| | | | Name | | Number of RSUs
Granted in 2008 | | Number of RSUs
Outstanding on
1/31/2009 |
N. DiPaolo | | | | 3,704 | | | | | 3,704 | |
A. Feldman | | | | 3,704 | | | | | 3,704 | |
J. Gilbert Jr. | | | | 3,704 | | | | | 3,704 | |
M. McKenna | | | | 3,704 | | | | | 3,704 | |
J. Preston | | | | 3,704 | | | | | 3,704 | |
D. Schwartz | | | | 3,704 | | | | | 3,704 | |
C. Sinclair | | | | 3,704 | | | | | - 0 - | |
C. Turpin | | | | 3,704 | | | | | 3,704 | |
D. Young | | | | 3,704 | | | | | 3,704 | |
|
(2) | | | | No stock options were granted to the nonemployee directors in 2008. The amounts shown in this column represent the residual expense for the stock options granted to the nonemployee directors in 2007, which vested in February 2008. The table below provides information on the number of stock options outstanding at the end of the 2008 fiscal year: |
| | Name | | Number of Stock Options
Outstanding on 1/31/2009 |
N. DiPaolo | | | | 16,542 | |
A. Feldman | | | | 6,314 | |
J. Gilbert Jr. | | | | 25,520 | |
M. McKenna | | | | 4,287 | |
J. Preston | | | | 25,520 | |
D. Schwartz | | | | 25,520 | |
C. Sinclair | | | | 8,336 | |
C. Turpin | | | | 20,815 | |
D. Young | | | | 20,815 | |
|
(3) | | | | Stock payment deferred in the form of stock units issued under Foot Locker’s stock plan. |
|
(4) | | | | Term as a director ended on May 21, 2008. |
|
(5) | | | | Stock payment and portion of cash payment for fiscal 2008 services deferred under Foot Locker’s stock plan. |
18
Directors’ Retirement Plan
The Directors’ Retirement Plan was frozen as of December 31, 1995. Consequently, only Jarobin Gilbert Jr. and James E. Preston are entitled to receive a benefit under this plan when their service as directors ends because they had completed at least five years of service as directors on December 31, 1995. Messrs. Gilbert and Preston will receive an annual retirement benefit of $24,000 for a period of 10 years after they leave the Board or until their death, if sooner.
Directors and Officers Indemnification and Insurance
We have purchased directors and officers liability and corporation reimbursement insurance from a group of insurers comprising ACE American Insurance Co., Zurich American Insurance Co., St. Paul Mercury Insurance, RLI Insurance Co., Federal Insurance Co., Axis Insurance Co., Navigators Insurance Co., XL Bermuda Ltd., and Valiant Insurance Co. These policies insure the Company and all of the Company’s wholly owned subsidiaries. They also insure all of the directors and officers of the Company and the covered subsidiaries. The policies were written for a term of 12 months, from October 12, 2008 until October 12, 2009. The total annual premium for these policies, including fees, is $1,471,250. Directors and officers of the PresidentCompany, as well as all other employees with fiduciary responsibilities under the Employee Retirement Income Security Act of 1974, as amended, are insured under policies issued by a group of insurers comprising Arch Insurance Co., St. Paul Mercury Insurance Co., Continental Casualty Co. and RLI Insurance Co., which have a total premium, including fees, of $455,052 for the 12-month period ending October 12, 2009.
The Company has entered into indemnification agreements with its directors and officers, as approved by shareholders at the 1987 annual meeting. Richard Mina, a former executive officer of the Company, requested indemnification with regard to an investigation being conducted by the Company. In February 2009, the Board of Directors authorized the indemnification of Mr. Mina for this investigation, subject to the provisions of the indemnification agreement. To date, the Company has paid fees and expenses of $27,199 for indemnification of Mr. Mina.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This is a discussion and analysis of our compensation program as it applies to the executive officers named in the Summary Compensation Table on Page 32.
Summary
While we reported a net loss on a GAAP basis of $79 million for 2008, our income from continuing operations, before non-cash impairment charges and store closing expenses, was $106 million, a 71 percent improvement over the comparable income from continuing operations in 2007. (Income from continuing operations before non-cash impairment charges and store closing expenses is a non-GAAP financial measure. Our fourth quarter earnings release, issued March 4, 2009 and available on our website www.footlocker-inc.com, contains a schedule reconciling these amounts with our GAAP income.)
This performance resulted in the payment of annual bonuses to the named executive officers discussed below. We also took certain other actions with regard to 2008 compensation for our named executive officers.
|
• | | | | We increased the annual base salary of one of the named executive officers (Mr. Halls) by $100,000—$50,000 at the time of annual salary reviews and an additional $50,000 later in the year when he assumed additional responsibilities. The base salaries of the other named executive officers remained unchanged from 2007. |
|
• | | | | We paid an annual bonus to Matthew D. Serra, our Chief Executive Officer, of $1,728,300, or 115 percent of his base salary, compared to a target pay-out of 125 percent of base salary. We paid annual bonuses for 2008 to the senior vice presidents of 72 percent of base salary, compared to a target pay-out of 75 percent of base salary. These pay-outs were made at a level slightly |
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| | | | below target bonus, and were the result of the Company’s pre-tax income and return-on-invested-capital performance in 2008 compared to performance targets established by the Compensation and Management Resources Committee for that year. |
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• | | | | We paid an annual bonus to Mr. Halls of $312,700, or [44] percent of base salary, compared to a target of 75 percent of base salary. This pay-out was made at a level between threshold and target bonus, and was the result of the divisional profit of the divisions for which Mr. Halls had responsibility in 2008 compared to performance targets established by the Compensation Committee. Mr. Mina’s employment with the Company terminated prior to the end of 2008, and he was therefore not eligible to receive an annual bonus payment. |
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• | | | | As the Company did not achieve the performance targets established by the Compensation Committee in 2006 under the Long-Term Incentive Compensation Plan for the 2006-2008 performance period, we did not pay long-term bonuses to any of our named executive officers. |
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• | | | | For 2008, as we did in 2007, we provided for an increased target pay-out under the annual bonus plan for all of the named executive officers, other than the Chief Executive Officer, of 75 percent of base salary. The Chief Executive Officer’s target pay-out remained 125 percent of base salary. |
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• | | | | We made stock option awards to five of the named executive officers—100,000 shares to the Chief Executive Officer; and 25,000 shares to each of the President—International and the three senior vice presidents. These options were priced at fair market value on the date of grant ($11.66 per share). With regard to all of the executive officers other than Mr. Serra, these options vest in three equal installments on the first, second, and third anniversary of the grant date, subject to continued employment with us through each date. The options granted to Mr. Serra vest in two equal installments on the first anniversary of the grant date and on January 30, 2010, the final day of the term of his current employment contract, provided he continues to be employed by us on that date. In light of the 2007 performance of the U.S. retail store operations, for which he had responsibility, we did not make a stock option grant to Mr. Mina in 2008. |
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• | | | | We made restricted stock awards to five of the named executive officers—50,000 shares to the Chief Executive Officer; 20,000 shares to the President—International; and 10,000 shares to each of the senior vice presidents. With regard to all of the named executive officers other than Mr. Serra, the restrictions on these shares lapse if the executive continues to be employed by us for three years from the date of grant. The restrictions on Mr. Serra’s shares lapse on January 30, 2010, the final day of the term of his current employment contract, provided he continues to be employed by us on that date. We did not make a restricted stock grant to Mr. Mina in 2008. |
Objectives of our compensation program
The objectives of our compensation program are to attract, motivate, and retain talented retail industry executives in order to maintain and enhance the Company’s performance and its return to shareholders. The Compensation and Management Resources Committee, currently composed of four independent directors, oversees the compensation program.
What is our compensation program designed to reward and not reward?
We have designed our compensation program to align the financial interests of our executives, including the named executive officers, with those of our shareholders. For that reason, it is designed to reward the overall effort and contribution of our executives as measured by the Company’s performance in relation to targets established by the Compensation Committee, more than individual performance. Key concepts underlying our program are:
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• | | | | Executive compensation should be balanced between annual and long-term compensation and between cash and equity-based compensation (stock options and restricted stock). |
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• | | | | The compensation program should align the interests of executives with those of the Company’s shareholders by rewarding both efforts to increase the Company’s share price and the achievement of performance factors that contribute to the company’s long-term health and growth (even if not immediately translated into increases in share price). |
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• | | | | A substantial portion of the compensation of our executives, whether paid out currently or on a long-term basis, should be dependent on the Company’s performance. |
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• | | | | More-senior executives should have a greater portion of their compensation at risk, whether through performance-based bonus programs or through stock price appreciation. |
Elements of compensation
The elements of compensation for the named executive officers are:
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• | | | | base salary |
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• | | | | performance-based annual cash bonus |
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• | | | | performance-based long-term bonus, payable in cash or stock |
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• | | | | long-term equity-based compensation consisting of stock options and restricted stock |
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• | | | | retirement and other benefits |
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• | | | | perquisites |
Why do we pay each element of compensation and how do we determine the amount for each element of compensation, or the formula that determines the amount?
We establish benchmarks for base salary and total compensation for each named executive officer based upon a study conducted by Mercer, a nationally recognized compensation consultant that, for executive compensation purposes, reports directly to our Compensation Committee. These benchmarks are based upon compensation for comparable positions at national retail companies with annual sales of $1 billion to $11 billion. The Compensation Committee, with the advice of Mercer, has determined that these companies are the appropriate peer group for executive compensation purposes based upon the nature of their business, their revenues, and the pool from which they recruit their executives. The 18 companies included in the study that the Compensation Committee reviewed in setting 2008 compensation for the named executive officers were:
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Abercrombie & Fitch | | Ross Stores Inc. |
AnnTaylor Stores Corp. | | American Eagle Outfitters Inc. |
Brown Shoe Company, Inc. | | Borders Group Inc. |
Collective Brands Inc. | | Charming Shoppes |
Dillards Inc. | | Dick’s Sporting Goods Inc. |
Family Dollar Stores | | Finish Line Inc. |
Genesco Inc. | | Limited Brands Inc. |
RadioShack Corp. | | Saks Inc. |
Talbots Inc. | | Timberland Co. |
Two companies that were included in the peer group in 2007—Claires Stores Inc. and Dollar General Corp.—ceased to be publicly traded companies and were not included in the peer group in 2008. No companies were added to the peer group. The upper dollar limit of revenues of peer group companies was increased from $10 billion to $11 billion as the revenues of peer company Limited Brands Inc. had risen above the $10 billion level.
The goal of the Compensation Committee is for the total compensation of each named executive officer to approximate the 75th percentile of comparable peer group compensation if the Company achieves its performance targets, with an opportunity to exceed that for outstanding performance, and with compensation falling closer to the median if the Company does not achieve its performance targets. The Compensation Committee established this goal based upon the Company’s size in relation to the other companies in the peer group and the relative complexity of our business, which includes multiple retail divisions, a direct-to-customer business, and a significant international business with operations in 21 countries.
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Base Salaries
We pay base salaries to provide our named executive officers with current, regular compensation that is appropriate to their position, experience, and responsibilities. We benchmark base salaries for each named executive officer, other than the Chief Executive Officer, at approximately the 75th percentile of the peer companies included in the annual Mercer study, and the base salaries of the named executive officers, other than the Chief Executive Officer, approximate this benchmark. The Compensation Committee has benchmarked the Chief Executive Officer’s base salary at the 90th percentile of the peer companies in light of his experience, length of service, and other opportunities that are available to him in the retail sector. We pay higher base salaries to those named executive officers with greater overall responsibility.
Performance-Based Annual Cash Bonus
We pay performance-based annual cash bonuses to our named executive officers under the Annual Incentive Compensation Plan (“Annual Bonus Plan”) in order to provide incentive for them to work toward the Company’s achievement of annual performance goals established by the Compensation Committee.
Target payments under the Annual Bonus Plan for named executive officers were set for 2008 as follows:
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| | Target | | Annual Bonus Range |
Chief Executive Officer | | 125% of Base Salary | | 31.25% to 200% of Base Salary |
Other Named Executive Officers | | 75% of Base Salary | | 18.75% to 131.25% of Base Salary |
If the Company does not achieve threshold performance then no annual bonus is paid. Executives who do not receive a “meets expectations” rating or higher in their annual performance review are normally ineligible to receive an annual bonus payment for that year.
In 2007, the Compensation Committee increased the target payment under the Annual Bonus Plan for the named executive officers other than the Chief Executive Officer to 75 percent of base salary from 50 percent after having reviewed the likely status of pay-outs under the Company’s incentive plans, including the Long-Term Plan, for 2007 and considering the need to provide appropriate financial incentive to the Company’s senior executive group. This also resulted in an increase in both threshold and maximum payment levels for this group. For the same reasons, the Compensation Committee continued to set the target payment under the Annual Bonus Plan at 75 percent of base salary for these named executive officers in 2008. The Chief Executive Officer’s payment levels have remained unchanged in each of those years. The Compensation Committee expects to review the appropriate target payment under the Annual Bonus Plan each year.
Our Annual Bonus Plan allows the Compensation Committee, in establishing performance targets under the plan, to choose one or more performance measures from a list of nine factors that have been approved by our shareholders. For 2008, for the named executive officers other than Mr. Halls, the Compensation Committee established a performance target under the Annual Bonus Plan based upon the Company’s achievement of prescribed levels of pre-tax income and return-on-invested-capital. Seventy percent of a participant’s award is based upon the pre-tax income target and 30 percent on the return-on- invested-capital target. All bonus targets and calculations are based on the results of continuing operations. The Annual Bonus Plan targets for 2008 were as follows:
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| | Threshold | | Target | | Maximum |
Pre-tax income | | $141.4 million | | $157.1 million | | $188.5 million |
Return-on-invested-capital | | 4.6% | | 4.8% | | 5.3% |
For example, if the Company had achieved pre-tax income of $157.1 million and return-on-invested-capital of 4.8 percent in 2008, the Chief Executive Officer would have received an annual bonus of 125
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percent of his base salary. Bonus pay-outs are calculated on the basis of straight-line interpolation between the threshold, target, and maximum points.
In 2008, the Company achieved pre-tax income from continuing operations slightly below the target level, and return-on-invested capital from continuing operations slightly below the maximum level, as follows:
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| | Actual | | Target | | Maximum |
Pre-tax income | | $150.6 million | | $157.1 million | | $188.5 million |
Return-on-invested-capital | | 5.2% | | 4.8% | | 5.3% |
This resulted in annual bonus payments to Messrs. Serra, McHugh and Bahler, and Ms. Petrucci at a level slightly below target.
Mr. Halls’s target under the Annual Bonus Plan for 2008 was based upon the achievement by the operating divisions for which he had responsibility at the beginning of the year of a prescribed level of division profit. (Mr. Halls’s responsibilities were expanded during the course of 2008; however, his annual bonus for 2008 was based only on the results of the divisions for which he had responsibility for the entire year. Beginning in 2009, Mr. Halls’s performance target under the Annual Bonus Plan will be the same as that for all other named executive officers.)
As Mr. Mina was not employed by us on the bonus payment date, he was ineligible to receive an annual bonus payment.
Division profit is a non-GAAP financial measure. It reflects income from continuing operations before income taxes, corporate expense, non-operating income, and net interest expense. A reconciliation of division profit to income from continuing operations is contained in the segment information footnote to our financial statements.
One of the performance measures we use in determining annual bonuses, return-on-invested-capital (“ROIC”), is also a non-GAAP financial measure. For purposes of calculating the annual bonus, we define ROIC as follows:
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ROIC | | | | = | | | Operating Profit after Taxes |
| | | | Average Invested Capital |
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Operating Profit after Taxes (Numerator)= | | Average Invested Capital (Denominator)= |
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Pre-tax income | | Average total assets |
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+/- interest expense/income | | - average cash, cash equivalents, and short-term investments |
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+ implied interest portion of operating lease payments | | - average year-end inventory |
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+/- Unusual/non-recurring items | | + 13-month average inventory |
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= Earnings before interest and taxes (EBIT) | | + average estimated asset base of capitalized operating leases |
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- Estimated income tax expense | | = Average Invested Capital |
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= Operating Profit after Taxes | | |
Certain items used in the calculation of ROIC, such as the implied interest portion of operating lease payments, certain unusual or non-recurring items, average estimated asset base of capitalized operating leases, and 13-month average inventory, while calculated from the financial records of the Company, cannot be calculated from our audited financial statements. Prior to the Compensation Committee determining whether bonus targets have been achieved, the Company’s independent registered public accounting firm, at the request, and for the restricted use, of the Compensation Committee, reviews the bonus calculations.
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The performance targets established by the Compensation Committee are based upon the business plan and budget reviewed and approved each year by the Finance and Strategic Planning Committee and the Board of Directors. In the case of Mr. Halls’s bonus target for 2008, the target slightly exceeded the combined divisional profits contained in the annual business plan and budget for the businesses for which he had responsibility. We believe that these targets are reasonably demanding, and that bonus pay-outs are correlated to Company performance, as evidenced by our pay-out history over the past five years. During that time, we have paid an annual bonus to corporate officers between threshold and target twice, between target and maximum once, and we have paid no annual bonus twice.
Performance-Based Long-Term Bonus
We pay performance-based long-term bonuses to our named executive officers under our Long-Term Incentive Compensation Plan (“Long-Term Plan”) in order to provide incentive for them to work toward the Company’s achievement of performance goals established by the Compensation Committee for each three-year performance period. While bonuses under the Long-Term Plan may be paid in either cash or stock, in recent years, we have made these payments in cash.
For many years, target payments under the Long-Term Plan for senior corporate officers have been at the following levels:
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Target | | Range of Payments |
90% of Initial Base Salary | | 22.5% to 180% of Initial Base Salary |
If the Company does not achieve threshold performance, as was the case for the 2006-2008 performance period, then no long-term bonus is paid.
Pay-out levels are based on an executive’s rate of base salary payable in the first year of the three-year performance period. For example, if an executive’s base salary is set at $500,000 at the time executive salaries are reviewed in the first year of the performance period, that executive’s target pay-out under the Long-Term Plan would be $450,000. In addition, we adjust on a pro rata basis, the rate of base salary on which pay-out levels are based for salary increases during the performance period related to promotions.
Our Long-Term Plan allows the Compensation Committee, in establishing performance targets under the plan, to choose one or both of consolidated net income or return-on-invested-capital, factors approved by our shareholders. In 2008, the Committee established a performance target for the 2008-2010 performance period under the long-term plan based upon return-on-invested capital. Off of the planned invested capital base, the Company must achieve 80 percent of target after-tax income before a threshold-level bonus is paid, and the maximum pay-out level is reached if after-tax income reaches 120 percent of target. It should be noted that the actual invested capital base will also fluctuate, and the final pay-out for the performance period will also depend upon the invested capital base achieved during the period. Return-on-invested-capital is calculated using the same methodology as is used for the Annual Bonus Plan, as described on Page 23, except that, in addition, long-term bonus expense is excluded from the operating profit calculation.
These performance targets are based upon the business plan and budget for the three-year period reviewed and approved by the Finance and Strategic Planning Committee and the Board of Directors. We believe that these targets are reasonably demanding, and that bonus pay-outs are correlated to Company performance, as evidenced by our pay-out history over the last five years. During that time, we have paid long-term bonuses between threshold and target once, between target and maximum twice, and there has been no pay-out twice.
In 2006, the Compensation Committee established the following return-on-invested-capital target for the 2006-2008 performance period under the Long-Term Plan:
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| | Threshold | | Target | | Maximum |
Three-year average return-on-invested-capital | | | | 8.9 | % | | | | | 10.5 | % | | | | | 12.1 | % | |
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As the Company did not achieve the threshold level of return-on-invested capital for the performance period, we did not pay long-term bonuses to the participants in the Long-Term Plan, including the named executive officers, for the 2006-2008 performance period.
We do not have a formal policy with regard to the adjustment or recovery of bonus payments if it is determined, at a future date, that the relevant performance measures upon which the payments are based are restated or adjusted. We have not had this situation arise, and if it were to arise, we would expect to make an evaluation at that time based upon the circumstances and the role of each individual executive in the events that gave rise to the restatement or adjustment.
In preparing our financial statements for 2008, we discovered an error in the calculation of income tax expense for 2007, which resulted in a restatement of our results for 2007, pursuant to Staff Accounting Bulletin 108, that decreased our 2007 net income by approximately $6 million. As we did not pay the named executive officers annual bonuses for 2007 or long-term bonuses for the 2005-2007 performance period, this misstatement of 2007 income did not affect the amount of any bonuses paid to the named executive officers.
Items Disregarded for Annual and Long-Term Bonus Calculations
Under normal circumstances, the Compensation Committee has no discretion to increase annual or long-term bonus payments, which are formula-driven based upon Company performance, and our program for the named executive officers does not provide for discretionary adjustments based upon individual performance. The Compensation Committee has not adjusted, either upward or downward, any of the annual or long-term bonus payments to the named executive officers shown in the summary compensation table from pay-outs calculated based upon the applicable formula. The Committee has limited authority when determining bonus payments, consistent with Section 162(m) of the Internal Revenue Code, to disregard certain events that it determines to be unusual or non-recurring. When establishing the targets, the Committee normally specifies certain items that it considers to be unusual or non-recurring, and these events, if they occur, are automatically excluded when calculating payments. For example, in recent years targets have excluded the effect of acquisitions or dispositions, any non-cash impairment charges, and changes in accounting and tax rules.
In 2008, in addition to disregarding tax regulatory changes, results of the CCS business acquired during the year, and results of disposed operations, we excluded the following items in calculation of annual bonus pay-outs:
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Item | | Pre-Tax Amount
(in millions) | | After-Tax Amount
(in millions) |
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Goodwill and other intangible asset impairments | | | $ | | 169 | | | | $ | | 123 | |
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Impairment of Northern Group note | | | | 15 | | | | | 15 | |
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Impairment of money market fund investment | | | | 3 | | | | | 3 | |
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Impairment of U.S. store long-lived assets | | | | 67 | | | | | 41 | |
Long-Term Equity-Based Awards
A.Stock Options
We make stock option awards to our named executive officers in order to more closely align the interests of our named executive officers with those of our shareholders. Equity-based awards are the responsibility of the Compensation Committee, which is composed entirely of independent directors.
Stock option awards of the same size are normally made each year to named executive officers holding comparable positions, with larger awards being made to those with greater responsibility. The Compensation Committee awards stock options with exercise prices equal to the fair market value of our stock on the date of grant. Under the 2007 Stock Incentive Plan, fair market value is defined as the
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closing price on the grant date. The Compensation Committee has not granted options with an exercise price of less than the fair market value on the grant date. Options normally vest at the rate of one-third of the total grant per year over the first three years of the ten-year option term, subject to accelerated vesting in certain circumstances. The Compensation Committee does not normally consider an executive’s gains from prior stock awards in making new awards.
B.Restricted Stock Awards
We make restricted stock awards to our named executive officers in order to more closely align the interests of our named executive officers with those of our shareholders, to provide our executives with an opportunity to increase their equity ownership, and to ensure the retention of key executives.
In recent years, the Compensation Committee has made annual grants of restricted stock to the Company’s Chief Executive Officer. In 2008, the Committee also made restricted stock awards to four of the other named executive officers. In making these grants, the Committee considers an executive’s past performance, an executive’s expected ability to contribute to the Company’s performance in the future, retention, and the desire to provide equity-based compensation through both stock options and restricted stock. When making restricted stock awards for retention purposes, the Compensation Committee considers an executive’s prior awards and their vesting schedule. The restrictions on restricted stock normally lapse a specified period following the grant date (normally three years). The holders of restricted stock receive dividends on their restricted shares at the time the dividends are paid.
C.Stock Ownership Guidelines
We have adopted stock ownership guidelines for our directors and senior executives, including the named executive officers. The target date for compliance with these guidelines is February 2011. The guidelines require that the Chief Executive Officer own shares having a value at least equal to four times his base salary and that the other named executive officers own shares having a value at least equal to two times base salary. In determining whether an executive meets the guidelines, we consider owned shares and restricted stock, but we do not consider stock options. As of the end of 2007, all of the named executive officers met these stock ownership guidelines. In light of the decline in our share price in 2008, however, all of the named executive officers subject to the guidelines at year-end had fallen below the prescribed ownership level. When the guidelines were adopted in 2006, executives were given five years, until February 2011, to meet the ownership levels.
We do not permit our executive officers to take short or long positions in our shares; however, we do not otherwise have a formal policy with regard to executive officers hedging their economic interest in company stock or options. To our knowledge, none of the named executive officers hedged their position in our shares or options during 2008, although some of the named executive officers may hold their shares in accounts that permit margin loans to the executive.
Retirement and Other Benefits
A.Retirement Plan and Excess Cash Balance Plan
All United States-based associates of the Company who meet the eligibility requirements are participants in the Foot Locker Retirement Plan. The Retirement Plan and the method of calculating benefits payable under it are described on Page 54. All of the named executive officers are participants in the Retirement Plan. The Internal Revenue Code limits the amount of compensation that may be taken into consideration in determining an individual’s retirement benefits. Therefore, those participants in the Retirement Plan, including the named executive officers, whose compensation exceeds the Internal Revenue Service limits are also participants in the Excess Cash Balance Plan, described on Page 54, which pays the difference between the amount a participant receives from the Retirement Plan and the amount the participant would have received were it not for the Internal Revenue Service limits.
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B.401(k) Plan
The Company maintains a 401(k) Plan for its eligible U.S. associates, and all of the named executive officers participate in it. The Plan permits participants to contribute the lesser of 40 percent of eligible compensation or the limit prescribed by the Internal Revenue Service to the 401(k) Plan on a before-tax basis. The Company will match 25 percent of the first 4 percent of pay that is contributed to the 401(k) Plan, and the Summary Compensation Table on Page 32 includes, in All Other Compensation, the amount of the company-match for each of the named executive officers. The Company match is made in shares of Company stock, valued on the last trading day of the plan year.
C.Supplemental Executive Retirement Plan
The Company maintains a Supplemental Executive Retirement Plan, described on Page 55, for certain senior officers of the Company and other key employees, including the named executive officers. The Supplemental Plan is an unfunded plan administered by the Compensation Committee, which sets an annual target incentive award for each participant consisting of a percentage of salary and annual bonus based on the Company’s performance against target. Contributions may range from 4 percent to 12 percent of salary and annual bonus, depending on the Company’s performance against the established target, with an 8 percent contribution being made for target performance. The target established by the Compensation Committee under the Supplemental Plan is normally the same as the target performance under the annual bonus plan. Participant accounts accrue simple interest at the rate of 6 percent annually. The Supplemental Plan also provides for the continuation of medical insurance benefits to vested participants following their retirement.
Based upon the Company’s performance in 2008, a credit of 7.65 percent of 2008 base salary and annual bonus was made to the Supplemental Plan for each of the named executive officers. As of the end of 2008, the account balances of the named executive officers ranged from $122,306 for Mr. McHugh to $2,639,252 for Mr. Serra. Under the terms of the Supplemental Plan, executives are vested in their account balances based upon a combination of age and service. Of the named executive officers, Messrs. Serra, and Bahler are currently vested, and Mr. Mina was vested at the time of the termination of his employment.
The Retirement Plan takes into account only base salary and annual bonus in determining pension benefits. Credits to our Supplemental Executive Retirement Plan are based only on base salary and annual bonus. Therefore, stock awards have no effect on the calculation of pension payments.
Perquisites
We provide the named executive officers with certain perquisites, which the Compensation Committee believes are reasonable and consistent with its overall objective of attracting and retaining talented retail industry executives. The Company provides the named executive officers with an automobile allowance, financial planning, medical expense reimbursement, annual physical, supplemental long-term disability insurance, and life insurance. In addition, the Company provides Mr. Serra with a driver and reimburses Mr. Halls for a limited amount of travel expenses of his spouse when she accompanies him on business trips. Given Mr. Halls’s responsibility for our international businesses and the amount of time he spends traveling outside the United States on Company business, we consider this to be a reasonable perquisite uniquely applicable to his situation and responsibilities.
We generally do not gross up executives for the income tax liability they incur due to the perquisites they receive. Given Mr. Halls’s extensive international travel obligations, as an exception to our general policy, through the end of 2008, we grossed up Mr. Halls for his income tax liability related to spousal travel. We have discontinued this as of the beginning of 2009.
How does each element of compensation fit into our overall compensation objectives? How does each element affect our decisions regarding other elements?
As stated at the beginning of this discussion and analysis, the objectives of our compensation program are to attract, motivate, and retain talented retail industry executives in order to maintain and enhance the Company’s performance and its return to shareholders.
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• | | | | Base salaries fit into these compensation objectives by attracting and retaining talented retail company executives by paying them base salaries commensurate with their position, experience and responsibilities. |
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• | | | | The performance-based annual and long-term cash bonus plans are designed to reward executives for enhancing the company’s performance through the achievement of performance targets. |
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• | | | | Long-term equity-based awards (stock options and restricted stock) are designed to reward executives for increasing our return to our shareholders through increases in our stock price, and restricted stock awards may, in addition, serve to help retain key executives. |
Base salaries of named executive officers rarely change materially from year-to-year unless there has been a change in responsibility or other special factors apply. As discussed above, the Compensation Committee continued for 2008 the increased annual bonus target payment for the named executive officers other than Mr. Serra. Long-term bonus target payments, as a percentage of base salary, have been consistent based upon position during the prior three-year period. Mr. Serra’s target bonus payments were the subject of negotiation between him and the Company and are specified in his employment agreement. In determining total compensation, stock options are valued by the Committee’s outside compensation consultant using the Black-Scholes model. Restricted stock awards are valued based upon the share price at the time of grant.
Compensation Plans and Risk
We believe that our compensation program encourages our named executive officers to take energetic action to improve the Company’s performance without encouraging them to take undue risk. The cash incentive elements of the program—annual bonus and long-term bonus—are paid based upon performance as compared to the Company’s annual and three-year business plans, which are prepared each year by the Company’s management and reviewed and approved by the Finance and Strategic Planning Committee and the Board of Directors. While in some years these business plans have proven to be aggressive—as shown in hindsight when the plans are not achieved and bonuses are not paid—our history suggests that, on balance, they are reasonably achievable under normal business conditions. This encourages management to manage the business well without pressuring them to take undue risks in order to obtain a bonus payment.
Our equity-based compensation for the named executive officers is designed with a similar goal in mind. Equity grants are relatively modest in relation to overall compensation. Stock options normally vest ratably over a three-year period and have a 10-year term, reducing the risk that an executive will take short-term action to inflate the price of the Company’s stock for a brief period. Restricted stock awards normally vest after three years of continued service, and do not depend upon achieving a pre-set performance goal.
In addition, there are certain other factors related to our compensation programs for the named executive officers that we believe help reduce the likelihood that compensation opportunity will encourage our executives to take undue risk:
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• | | | | As the bonus targets are based on the business plan, any significant deviation from the plan undertaken by management during the course of the year must be reviewed and approved by the Board of Directors. |
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• | | | | As a retail company, we believe that one of the larger risks we run is to encourage management to achieve profit without taking into account the capital used, particularly working capital invested in inventory. We have therefore designed our bonus plans for senior management, including the named executive officers, to take into account return-on-invested-capital as well as pre-tax profit in determining whether a bonus will be paid. |
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• | | | | We have designed our plans so that executives who receive a “Not Meeting Expectations” or “Unsatisfactory” rating under the company’s annual performance appraisal process are not eligible to receive a bonus payment. This helps prevent an individual executive from taking any action inconsistent with the business plan or otherwise exposing the company to undue risk. |
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• | | | | Finally, cash incentive payments and equity grants are not outsized in relation to base salary. At target, the Chief Executive Officer has the opportunity to earn 125 percent of his base salary in annual bonus and 90 percent of his base salary in long-term bonus. Comparable percentages for the other named executive officers are 75 percent and 90 percent. |
Compensation Committee Procedure
The Compensation Committee normally holds two scheduled meetings for the purpose of considering executive compensation. In 2008, as discussed below, the Committee held three meetings for this purpose.
At the first meeting, held in February, the Committee reviewed a report from its outside compensation consultant on the Company’s executive compensation program, general executive compensation trends, trends in the retail industry, and specific background information on each senior management position.
Based upon the material reviewed and the discussion of the Committee at this meeting, our Sr. Vice President—Human Resources, working with our Chairman of the Board and Chief Executive Officer. UnderOfficer, then prepared compensation recommendations to the Committee, covering all elements of compensation, for all corporate officers and heads of our operating divisions, other than the Chief Executive Officer himself, which were forwarded to the Chair of the Compensation Committee for his review. There were also discussions between the Chairman of the Board and Chief Executive Officer and the Chair of the Compensation Committee with regard to these proposals. Based upon input from the Chair of the Compensation Committee, the Human Resources Department then finalized these recommendations and prepared material for review by the Compensation Committee.
The Compensation Committee then held a second regularly scheduled meeting in March to consider these recommendations and set compensation for the Company’s executives. At this arrangement, Mr. Gilbert provided consultingmeeting, the Committee reviewed a tally sheet that set out all elements of proposed compensation for each of the Company’s senior executives, including the named executive officers, in order to assist in its evaluation of the compensation proposals for 2008.
At this meeting the Committee also discussed among themselves (with the Sr. Vice President, General Counsel and Secretary also present) compensation for the Chairman of the Board and Chief Executive Officer for 2008, and decided to make the stock option and restricted stock awards to him shown in the table on Page 34.
Except in the case of promotions or other unusual circumstances, the Compensation Committee considers stock awards only at this meeting, which is normally held within a few weeks following the issuance of the Company’s full-year earnings release for the prior year. It is also at this meeting that the Compensation Committee determined whether performance targets under the Annual Bonus Plan for the prior year and under the Long-Term Incentive Compensation Plan that ended in the prior year had been achieved, determined the amount of annual and long-term bonus pay-outs, adjusted base salaries for the upcoming year, and established targets under the Annual and Long-Term Plans for the upcoming year and three-year performance period.
In 2008, the Committee made all stock option and restricted stock awards to the named executive officers at its regularly scheduled meeting in March. The Compensation Committee has delegated authority to its Chair to approve stock option awards of up to 25,000 shares to any single individual other than a corporate officer. The Chair generally uses this authority to approve stock option grants made during the course of the year in connection with promotions or new hires. In 2008, the Chair used this authority to approve grants of options to three executives, none of whom was a named executive officer, to purchase a total of 22,000 shares. Those options are priced at fair market value on the date the Chair signs the approval. Neither the Compensation Committee nor its Chair has delegated authority to management to make stock option or restricted stock awards.
In 2008, the Compensation Committee held a third meeting, in the fall, attended by its outside compensation consultant, to discuss possible changes to the executive compensation program to take effect in 2009. [After consideration, the Committee decided not to make any changes to the program.]
29
The Compensation Committee directly retains Mercer as its consultant on executive compensation matters. In addition to advising the Committee, other consultants and employees within Mercer provide U.S. and Canadian pension administration services to the Company, relatedand in 2008 fees paid to Mercer for advising the Committee represented approximately 15 percent of total fees paid by the Company to Mercer. In preparing its material for the Compensation Committee, Mercer consults with the Company’s Chairman of the Board and Chief Executive Officer, Sr. Vice President—Human Resources, Sr. Vice President and General Counsel, and Vice President—Human Resources.
Executive Employment Agreements
As more fully described on Pages 39 to 42, we have employment agreements with each of our named executive officers. In 2008, we entered into a new agreement with Mr. Serra, our Chief Executive Officer, solely to make changes to comply with Internal Revenue Code Section 409A. In 2008, we also entered into new agreements with the other named executive officers in order to make changes required to comply with Internal Revenue Code Section 409A and Section 162(m), to make certain provisions consistent in our executive employment agreements, and to make other changes.
Our employment agreements with the named executive officers provide for severance payments to the Company's businessesexecutive if we terminate the executive’s employment without cause or if we give the executive good reason to terminate employment. These payments to the named executive officers, calculated as if termination of employment occurred at the end of our last fiscal year, are set out in Germany. the tables on Pages 43 to 53.
The named executive officers other than Mr. Serra, whose arrangements are discussed in the next paragraph, receive an enhanced severance payment if the executive’s employment is terminated without cause or if the executive terminates employment for good reason within two years following a change-in- control. For an executive to receive the enhanced severance payment, two events must occur: first, employment must be terminated for one of the specified reasons, and second, this termination must occur within two years following a change-in-control. We believe that these provisions, which we have had in place for a number of years, provide appropriate protection to our executives, comparable to that available at peer companies, and, with regard to the enhanced severance following a change-in-control, protect us from losing key executives during a period when a change-in-control may be threatened or pending.
Mr. Serra’s employment agreement also provides for an enhanced severance payment if his employment is terminated without cause or if he terminates his employment for good reason within two years following a change-in-control. In addition, his agreement provides that, following a change-in-control, there is a 30-day period during which Mr. Serra may elect to terminate his employment and receive this enhanced severance payment. We believe that this payment mechanism, which has been in Mr. Serra’s employment agreement since he became our Chief Executive Officer, is comparable to that provided to many chief executive officers of public companies and benefits us, if a potential change-in-control were to arise, by allowing him to focus fully on the best interests of our Company and DBSS terminated this
arrangementshareholders while a change-in-control is pending without being distracted by concerns about his personal situation.
All of the named executive officers have agreed in their employment contracts not to compete with the Company for two years following the saletermination of FWW Germanyemployment and not to hire Company employees during that same period. This restriction does not apply following a change-in-control.
None of the named executive officers, other than Mr. Serra, is entitled to a gross-up payment upon a change-in-control. As noted above, Mr. Serra’s employment agreement has not been materially modified and the gross-up provision included in October 1998. During 1998,Mr. Serra’s employment agreement has remained unchanged.
Accounting and Tax Considerations
While we review both the Companyaccounting and tax effects of various components of compensation, these effects are not a significant factor in the Compensation Committee’s allocation of compensation among the different components. In general, it is our position that compensation paid feesto executive officers
30
should be fully deductible for U.S. tax purposes, and we have structured our bonus and option programs so that payments made under them are deductible. In certain instances, however, we believe that it is in the Company’s best interests, and that of $15,000its shareholders, to DBSS.
Purdy Crawfordhave the flexibility to pay compensation that is Honorary Counselnot deductible under the limitations of Section 162(m) of the Internal Revenue Code in order to provide a compensation package consistent with our program and objectives. The portion of Mr. Serra’s base salary that exceeds $1,000,000, the Canadian law firmvalue of Osler,
Hoskin & Harcourt, which provided legal servicesrestricted stock awards made to him, and potentially a portion of the Company in 1998. Mr.
Crawford received no remuneration fromvalue of restricted stock awards made to one or more of the firm in 1998.
PROPOSAL 1. ELECTION OF DIRECTORS
other named executive officers, are not expected to be deductible.
Compensation Committee Report
The Company's Certificate of Incorporation provides that the membersCompensation and Management Resources Committee of the Board of Directors be divided into three classes serving staggered three-year
terms, each classhas reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on that review and discussion, has recommended to be as nearly equal in number as the other two. The terms of
the four directors who constitute Class II expire at the 1999 annual meeting
upon the election and qualification of their successors.
J. Carter Bacot, Purdy Crawford, Philip H. Geier Jr. and Dale W. Hilpert
will be considered for election as directors in Class II, each to hold office
for a three-year term expiring at the annual meeting in 2002. The seven
remaining directors will continue in office, in accordance with their previous
elections, until the expiration of the terms of their classes at the 2000 or
2001 annual meeting. Each nominee has been nominated by the Board of Directors for electionthat the Compensation Discussion and has consentedAnalysis be included in this proxy statement.
James E. Preston,Chair
Alan D. Feldman
Matthew M. McKenna
Cheryl Nido Turpin
31
SUMMARY COMPENSATION TABLE
| | | | | | | | | | | | | | | | | | |
(a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) |
Name and Principal Position(1) | | Year | | Salary
($) | | Bonus
($)(2) | | Stock
Awards
($)(3) | | Option
Awards
($)(4) | | Non-Equity
Incentive Plan
Compensation($)(5) | | Change
in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings($)(6) | | All Other
Compensation($)(7) | | Total
($) |
Matthew Serra | | | | 2008 | | | | | 1,500,000 | | | | | — | | | | | 1,129,402 | | | | | 341,212 | | | | | 1,728,339 | | | | | 417,593 | | | | | 245,964 | | | | | 5,362,510 | |
Chairman, President | | | | 2007 | | | | | 1,500,000 | | | | | — | | | | | 1,613,477 | | | | | 444,589 | | | | | — | | | | | 227,515 | | | | | 75,717 | | | | | 3,861,298 | |
and CEO | | | | 2006 | | | | | 1,500,000 | | | | | — | | | | | 1,637,369 | | | | | 679,752 | | | | | 1,547,582 | | | | | 225,627 | | | | | 82,573 | | | | | 5,672,903 | |
Robert McHugh | | | | 2008 | | | | | 525,000 | | | | | — | | | | | 523,656 | | | | | 85,832 | | | | | 376,464 | | | | | 82,615 | | | | | 300,653 | | | | | 1,894,220 | |
Senior VP and CFO | | | | 2007 | | | | | 518,750 | | | | | — | | | | | 517,331 | | | | | 116,289 | | | | | — | | | | | 34,348 | | | | | 20,211 | | | | | 1,206,929 | |
| | | | 2006 | | | | | 500,000 | | | | | — | | | | | 480,033 | | | | | 146,012 | | | | | 272,839 | | | | | 34,550 | | | | | 23,447 | | | | | 1,456,881 | |
Ronald Halls | | | | 2008 | | | | | 704,167 | | | | | — | | | | | 627,928 | | | | | 167,251 | | | | | 312,675 | | | | | 102,678 | | | | | 533,847 | | | | | 2,448,546 | |
President and CEO– | | | | 2007 | | | | | 650,000 | | | | | — | | | | | 537,128 | | | | | 278,443 | | | | | — | | | | | 50,217 | | | | | 292,142 | | | | | 1,807,930 | |
Foot Locker, Inc.– | | | | 2006 | | | | | 528,409 | | | | | 250,000 | | | | | 215,406 | | | | | 226,254 | | | | | 141,252 | | | | | 47,111 | | | | | 29,119 | | | | | 1,437,551 | |
International | | | | | | | | | | | | | | | | | | |
Gary Bahler | | | | 2008 | | | | | 524,975 | | | | | — | | | | | 344,856 | | | | | 95,441 | | | | | 376,446 | | | | | 147,421 | | | | | 327,999 | | | | | 1,817,138 | |
Senior VP, General | | | | 2007 | | | | | 524,975 | | | | | — | | | | | 302,531 | | | | | 138,485 | | | | | — | | | | | 92,659 | | | | | 36,080 | | | | | 1,094,730 | |
Counsel and | | | | 2006 | | | | | 517,400 | | | | | — | | | | | 270,925 | | | | | 177,051 | | | | | 380,724 | | | | | 86,081 | | | | | 32,604 | | | | | 1,464,785 | |
Secretary | | | | | | | | | | | | | | | | | | |
Laurie Petrucci | | | | 2008 | | | | | 468,573 | | | | | — | | | | | 344,656 | | | | | 95,441 | | | | | 336,002 | | | | | 84,802 | | | | | 319,743 | | | | | 1,649,217 | |
Senior VP–Human | | | | 2007 | | | | | 468,573 | | | | | — | | | | | 302,531 | | | | | 138,485 | | | | | — | | | | | 43,853 | | | | | 37,368 | | | | | 990,810 | |
Resources | | | | 2006 | | | | | 461,942 | | | | | — | | | | | 270,925 | | | | | 177,051 | | | | | 340,156 | | | | | 42,390 | | | | | 26,821 | | | | | 1,319,285 | |
Former Executive Officer | | | | | | | | | | | | | | | | | | |
Richard Mina | | | | 2008 | | | | | 656,250 | | | | | — | | | | | 595,767 | | | | | 108,879 | | | | | — | | | | | 225,918 | | | | | 1,924,861 | | | | | 3,511,675 | |
Former President & | | | | 2007 | | | | | 868,750 | | | | | — | | | | | 1,140,060 | | | | | 251,060 | | | | | — | | | | | 137,457 | | | | | 49,370 | | | | | 2,446,697 | |
CEO–Foot Locker, | | | | 2006 | | | | | 837,500 | | | | | — | | | | | 1,342,247 | | | | | 365,167 | | | | | 609,418 | | | | | 127,945 | | | | | 49,453 | | | | | 3,331,730 | |
Inc.–USA | | | | | | | | | | | | | | | | | | |
Notes to serve for the specified term. All of the
nominees
10
14
are presently servingSummary Compensation Table
|
(1) | | | | Ronald Halls has served as directors, having been elected to serve for their
present terms at the annual meeting in 1996.
If, prior to the annual meeting, any of the four nominees becomes unable to
serve as a director for any reason, the persons designated as proxies on the
enclosed proxy card will have full discretion to vote the shares represented by
proxies held by them for another person to serve as a director in place of that
nominee.
Biographical information follows for each of the four nominees and for each
of the seven other directors of the Company whose present terms as directors
will continue after the 1999 annual meeting. Any reference to a person's tenure
as a director of the Company includes service as a director of Venator Group
Specialty, Inc. (formerly named F.W. Woolworth Co.) for the period prior to the
1989 share exchange between the Company and Venator Group Specialty, Inc.
There are no family relationships among the directors or executive officers
of the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE ELECTION TO THE BOARD OF DIRECTORS OF EACH OF THE COMPANY'S NOMINEES
IDENTIFIED FOR REELECTION.
NOMINEES FOR DIRECTORS
TERMS EXPIRING IN 2002
[BACOT PHOTO] J. CARTER BACOT. Age 66. Director since 1993. Chairman of
the Board of The Bank of New York Company, Inc. (bank
holding company) and of The Bank of New York, its wholly
owned subsidiary, from 1982 to February 7, 1998; Chief
Executive Officer of The Bank of New York Company, Inc. and
of The Bank of New York from 1982 to July 1, 1997. He is a
trustee of Atlantic Mutual Insurance Company and a director
of its subsidiaries, Atlantic Specialty Insurance Company
and Centennial Insurance Company; and a director of The Bank
of New York Company, Inc., Time Warner, Inc., Associates
First Capital Corporation, Phoenix Home Life Mutual
Insurance Company and United Way of New York City. He is
also a Trustee of Hamilton College.
[CRAWFORD PHOTO] PURDY CRAWFORD. Age 67. Director since 1995. Chairman of
the Board of Imasco Limited (Canada) (consumer products and
services) since 1987 and its Chief Executive Officer from
1987 to 1995. He is also Chairman of the Board of CT
Financial Services Inc. and Canada Trustco Mortgage Company,
both of which are financial services companies and
subsidiaries of Imasco Limited. Mr. Crawford is a director
of Camco Inc., Canadian National Railway Company, Inco
Limited, Maple Leaf Foods Ltd., Petro-Canada and Nova Scotia
Power Inc. He is Governor Emeritus of McGill University;
Chancellor of Mount Allison University; a member of the
Advisory Board of Oxford Frozen Foods Limited; and Honorary
Counsel to the Canadian law firm of Osler, Hoskin &
Harcourt.
[GEIER PHOTO] PHILIP H. GEIER JR. Age 64. Director since 1994. Chairman
of the Board and Chief Executive Officer of Interpublic
Group of Companies, Inc. (advertising agencies and other
marketing communication services) since 1980. He is a
director of Fiduciary Trust Company International, AEA
Investors, Inc. and the International Tennis Hall of Fame.
He is also a member of the Board of Overseers and Managers
of Memorial Sloan Kettering Cancer Center, the Board of
Overseers of Columbia Business School, and of the Board of
Trustees of the Whitney Museum of American Art.
11
15
[HILPERT PHOTO] DALE W. HILPERT. Age 56. Director since 1995. The Company's
President and Chief Operating Officer since May 15, 1995.
Mr. Hilpert was Chairman and Chief Executive Officer of the
Payless Shoe Source division of The May Department Stores
Company (retail merchants) from 1985 to April 1995.
DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRING IN 2001
[FARAH PHOTO] ROGER N. FARAH. Age 46. Director since 1994. The Company's
Chairman of the Board and Chief Executive Officer since
December 1994. Mr. Farah was President and Chief Operating
Officer of R. H. Macy & Co., Inc. (retail merchants) from
July 1994 to October 1994. He was Chairman of the Board and
Chief Executive Officer of Federated Merchandising Services,
a division of Federated Department Stores, Inc. (retail
merchants), from July 1991 to July 1994. He is a director of
Liz Claiborne, Inc. and a member of the Undergraduate
Executive Board of the Wharton School of the University of
Pennsylvania.
[PRESTON PHOTO] JAMES E. PRESTON. Age 66. Director since 1983. Chairman of
the Board of Avon Products, Inc. (manufacture and sale of
beauty and related products) from 1989 to May 6, 1999, and
Chief Executive Officer of Avon Products, Inc. from 1989 to
June 1998. He is a director of ARAMARK Corporation, Reader's
Digest Association, the Cosmetic, Toiletry and Fragrance
Association, and Project Hope; and a member of the Advisory
Board of the Salvation Army of Greater New York.
[SINCLAIR PHOTO] CHRISTOPHER A. SINCLAIR. Age 48. Director since 1995. President and Chief Executive Officer of Caribiner
Foot Locker, Inc.—International (business communications) from December 22,
1998 to present. Hesince October 9, 2006. Previously, he was President and Chief Executive Officer of Quality Food Centers, Inc. (supermarket chain)
from September 12, 1996 to March 1998. Mr. Sinclair was
Chairman and Chief Executive Officer of Pepsi-Cola Company,
a division of PepsiCo, Inc. ("PepsiCo") (beverages, snack
foods and restaurants) from April 1996 to July 1996; andthe Company’s Champs Sports division. | | | | | Richard Mina served as President and Chief Executive Officer of PepsiCo FoodsFoot Locker, Inc.—USA from February 2003 until September 30, 2008. | | (2) | | | | Guaranteed retention bonus paid to executive for 2006. | | (3) | | | | The amounts in this column represent the compensation expense recognized for financial statement reporting purposes for the designated fiscal years for the restricted stock awards granted in those years, as well as in prior years, in accordance with FAS 123R. As provided under the SEC’s rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions and Beverages International,include expected dividend payments at the same rate as paid on our shares of Common Stock. For more information on the valuation of the restricted stock awards, please refer to Notes [25], 23, and 22, respectively, of the Company’s financial statements in our Forms 10-K filed with the SEC for 2008, 2007 and 2006. The amounts shown in the table reflect the Company’s accounting expense for these awards and do not necessarily reflect the actual value that may be recognized by the named executives. A total of 90,000 shares of unvested restricted stock granted in 2006 and 2007 to Mr. Mina were forfeited in 2008 in connection with the termination of his employment. | | (4) | | | | The amounts in this column represent the compensation expense recognized for financial statement reporting purposes for the designated fiscal years for the stock options granted to each of the named executives in those fiscal years, as well as in prior fiscal years, in accordance with FAS 123R. As provided under the SEC’s rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For additional information on the valuation assumptions with respect to the grants covered in this table, please refer to Notes [25], 23 and 22, respectively, of the Company’s financial statements in our Forms 10-K filed with the SEC for 2008, 2007 and 2006. Please also refer to the Grants of Plan-Based Awards Table on Page XX for information on the |
32
| | | | options granted in 2008. The amounts shown in the table reflect the Company’s accounting expense for these awards and do not necessarily reflect the actual value that may be recognized by the named executives. | | (5) | | | | For 2008, this column includes payments made under the Annual Incentive Compensation Plan (the “Annual Bonus Plan”). For 2006, the amounts include payments made under the Annual Bonus Plan and the Long-Term Incentive Compensation Plan for the 2004-2006 Performance Period. | | (6) | | | | Amounts shown in column (h) represent the annual change in pension value during each of our last thee fiscal years for each of the executives. Please see Page XX for more information on 2008 pension benefits. | | (7) | | | | This column includes perquisites, and the amounts attributable to the executives for 2008 are shown in the table below. We valued these perquisites at the incremental cost to the Company of providing the personal benefits to the executives, which represents the actual cost attributable to providing these personal benefits. Please note: |
| • | | | | The amount shown in the table for Mr. Serra’s auto allowance includes the incremental cost to the Company of providing him with the personal use of a division of PepsiCo, from 1993 to
April 1996. Hedriver, who is a directorfull time employee of Caribiner International,
Mattel, Inc.the Company and who also performs other regular duties for the Company. | | • | | | | The amount shown below in the table under Tax Gross-Ups represents the tax gross up amounts paid to Mr. Halls related to his wife’s travel expenses. Beginning in 2009, we no longer provide a tax gross up to Mr. Halls for this benefit. | | • | | | | The amounts shown in the table under the 401(k) Match column represent the dollar value of the Company’s matching contribution under the Foot Locker 401(k) Plan made to the named executive’s account in shares of Common Stock. The shares of stock for the 2008 matching contribution were valued at $7.34 per share. | | • | | | | The amounts shown for each individual under the column Accrual for Post-Termination Medical reflect the amounts accrued in 2008 for the actuarial present value of the future cost of providing this benefit to these individuals. | | • | | | | The amounts shown in this column for Mr. Mina include the perquisites attributable to him for 2008 prior to the termination of his employment. In addition, this column includes post-termination medical benefits and unpaid severance and other benefits in connection with the termination of his employment, assuming that Mr. Mina would be entitled to such benefits. No post-termination benefits have been paid to him as of [ , 2009]. Additional information on termination payments for Mr. Mina is provided on Page XX under the heading Potential Payments upon Termination or Change in Control. |
| | | | | | | | | | | | | | | | | | | | | | | Name | | Auto
Allowance | | Financial
Planning | | Medical
Expense
Reimbursement
and Executive
Physical | | Supp. LTD
Insurance
Premiums | | Accrual
for Post-
Termination
Medical | | Spousal
Travel
Reimbursement | | Tax
Gross-Up
on
Spousal
Travel
Expense | | Universal
Life
Insurance
Premium | | Emp.
Agreement
Legal Fees | | 401(k)
Match | | Total | M. Serra | | | | 61,540 | | | | | — | | | | | 13,605 | | | | | — | | | | | 164,597 | | | | | — | | | | | — | | | | | — | | | | | 3,922 | | | | | 2,300 | | | | | 245,964 | | R. McHugh | | | | 9,393 | | | | | — | | | | | 5,394 | | | | | — | | | | | 283,566 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 2,300 | | | | | 300,653 | | R. Halls | | | | 30,084 | | | | | — | | | | | 3,412 | | | | | — | | | | | 261,898 | | | | | 123,736 | | | | | 112,417 | | | | | — | | | | | — | | | | | 2,300 | | | | | 533,847 | | G. Bahler | | | | 15,210 | | | | | 7,500 | | | | | 3,786 | | | | | 5,565 | | | | | 291,020 | | | | | — | | | | | — | | | | | 2,618 | | | | | — | | | | | 2,300 | | | | | 327,999 | | L. Petrucci | | | | 22,500 | | | | | 9,168 | | | | | 4,366 | | | | | — | | | | | 279,104 | | | | | — | | | | | — | | | | | 2,305 | | | | | — | | | | | 2,300 | | | | | 319,743 | |
| | | | | | | | | | | | | | | | | | | Name | | Auto
Allowance | | Vacation
Payout | | Executive
Physical | | Medical
Expense
Reimbursement | | Supp. LTD
Insurance
Premiums | | Universal
Life
Insurance
Premium | | Accrual
for Post-
Termination
Medical | | Accrued
Severance
Benefits | | Total | Former Executive Officer | | | | | | | | | | | | | | | | | | | R. Mina | | | | 28,191 | | | | | 16,827 | | | | | 855 | | | | | 5,000 | | | | | 2,641 | | | | | 3,526 | | | | | 348,372 | | | | | 1,519,449 | | | | | 1,924,861 | |
The followingGrants of Plan-Based Awards Tableshows the awards made to the named executive officers in 2008 under the Annual Bonus Plan and the Long-Term Bonus Plan, as well as the restricted stock and stock option awards under the Company’s stock option and award plans. 33
GRANTS OF PLAN-BASED AWARDS | | | | | | | | | | | | | | | | | | | | | | | (a) | | (b) | | Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards | | Estimated Future Payouts
Under Equity Incentive
Plan Awards | | (i) | | (j) | | (k) | | (l) | | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | Name | | Grant
Date | | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | All
Other
Stock
Awards:
Number of
Shares
of Stock
or Units
(#) | | All
Other
Option
Awards:
Number of
Securities
Under-
lying
Options
(#) | | Exercise
or Base
Price of
Option
Awards
($/Sh) | | Grant
Date
Fair
Value of
Stock
and
Option
Awards(5) | M. Serra | | 03/26/08(1) | | | | 468,750 | | | | | 1,875,000 | | | | | 3,000,000 | | | | | | | | | | | | | | | | | | 03/26/08(2) | | | | 337,500 | | | | | 1,350,000 | | | | | 2,700,000 | | | | | | | | | | | | | | | | | | 03/26/08(3) | | | | | | | | | | | | | | | | 50,000 | | | | | | | | | 583,000 | | | | 03/26/08(4) | | | | | | | | | | | | | | | | | | 100,000 | | | | | 11.66 | | | | | 241,430 | | | R. McHugh | | 03/26/08(1) | | | | 98,438 | | | | | 393,750 | | | | | 689,063 | | | | | | | | | | | | | | | | | | 03/26/08(2) | | | | 118,125 | | | | | 472,500 | | | | | 945,000 | | | | | | | | | | | | | | | | | | 03/26/08(3) | | | | | | | | | | | | | | | | 10,000 | | | | | | | | | 116,600 | | | | 03/26/08(4) | | | | | | | | | | | | | | | | | | 25,000 | | | | | 11.66 | | | | | 61,828 | | | R. Halls | | 03/26/08(1) | | | | 131,250 | | | | | 525,000 | | | | | 918,750 | | | | | | | | | | | | | | | | | | 03/26/08(2) | | | | 157,500 | | | | | 630,000 | | | | | 1,260,000 | | | | | | | | | | | | | | | | | | 03/26/08(3) | | | | | | | | | | | | | | | | 20,000 | | | | | | | | | 233,200 | | | | 03/26/08(4) | | | | | | | | | | | | | | | | | | 25,000 | | | | | 11.66 | | | | | 61,828 | | | G. Bahler | | 03/26/08(1) | | | | 98,438 | | | | | 393,750 | | | | | 689,063 | | | | | | | | | | | | | | | | | | 03/26/08(2) | | | | 118,125 | | | | | 472,500 | | | | | 945,000 | | | | | | | | | | | | | | | | | | 03/26/08(3) | | | | | | | | | | | | | | | | 10,000 | | | | | | | | | 116,600 | | | | 03/26/08(4) | | | | | | | | | | | | | | | | | | 25,000 | | | | | 11.66 | | | | | 61,828 | | | L. Petrucci | | 03/26/08(1) | | | | 87,863 | | | | | 351,450 | | | | | 615,038 | | | | | | | | | | | | | | | | | | 03/26/08(2) | | | | 105,435 | | | | | 421,740 | | | | | 843,480 | | | | | | | | | | | | | | | | | | 03/26/08(3) | | | | | | | | | | | | | | | | 10,000 | | | | | | | | | 116,600 | | | | 03/26/08(4) | | | | | | | | | | | | | | | | | | 25,000 | | | | | 11.66 | | | | | 61,828 | | | Former Executive Officer | | | | | | | | | | | | | R. Mina | | 03/26/08(1) | | | | 164,063 | | | | | 656,250 | | | | | 1,148,438 | | | | | | | | | | | | | | | | | | 03/26/08(2) | | | | 196,875 | | | | | 787,500 | | | | | 1,575,000 | | | | | | | | | | | | | | | |
Notes to Grants of Plan-Based Awards Table | (1) | | | | Annual Bonus Awards | | | | | | Amounts shown reflect the payment levels at threshold, target, and maximum performance for the 2008 fiscal year under the Company’s Annual Bonus Plan and reflect the potential amounts that would be paid at the end of the period if the applicable performance goals were achieved. The estimated bonus payouts under the Annual Bonus Plan are based on a percentage of the executive’s base salary. For Mr. Serra, the threshold, target, and maximum amounts represent 31.25 percent, 125 percent, and 200 percent, respectively, of his annual base salary. For the other named executive officers shown in the table, the threshold, target, and maximum amounts represent 18.75 percent, 75 percent, and 131.25 percent, respectively, of each executive’s annual base salary. Although Mr. Mina participated in the Annual Bonus Plan in 2008, he was not eligible to receive a payment under the plan because his employment terminated prior to the completion of the plan year. | | (2) | | | | Long-Term Bonus Awards | | | | | | Amounts shown reflect the estimated payment levels at threshold, target, and maximum performance for the three-year performance period of 2008-2010 under the Company’s Long-Term Bonus Plan and reflect the potential amounts that would be paid at the end of the performance period if the applicable performance goals are achieved. For each executive, the amounts shown under threshold, target, and maximum represent 22.5 percent, 90 percent, and 180 percent, respectively, of each executive’s annual base salary as of May 1 in the first year of the performance period. No amounts are paid to the executives under the Long-Term Bonus Plan unless the performance goals for the three-year performance period are achieved. Although Mr. Mina participated in the Long-Term Bonus Plan, his award for the 2008-2010 performance period was cancelled upon the termination of his employment. |
34
| (3) | | | | Restricted Stock Awards | | | | | | Amounts shown in the table under column (i) represent the number of shares of restricted stock awarded to the executive on the grant date. The restricted stock awards were granted under the 2007 Stock Incentive Plan. The shares of restricted stock granted to Mr. Serra in 2008 will vest on January 30, 2010 and the Amos Tuck Schoolshares awarded on this date to the other executives will vest on March 26, 2011, provided that the executives remain employed by the Company from the date of Business
Administrationgrant through the applicable vesting dates of the awards. The executives have the right to receive all regular cash dividends payable after the date of grant to all record holders of our Common Stock. The grant date fair value of the restricted stock awards shown in column (l) includes expected dividend payments on the shares. Mr. Mina forfeited 90,000 shares of unvested restricted stock in connection with the termination of his employment in October 2008. | | (4) | | | | Stock Option Grants | | | | | | The amounts in column (j) reflect the number of stock options granted in 2008 under the Company’s stock option and award plans. The stock options were granted under the 2007 Stock Incentive Plan. The exercise price reflected in column (k) is equal to the closing price of a share of the Company’s Common Stock on the grant date. In general, no portion of any stock option may be exercised until the first anniversary of its date of grant. The options granted in 2008 become exercisable in three installments, beginning on the first annual anniversary of the date of grant. | | | | | | Vested options may be exercised for ten years following the date of grant, unless the option is cancelled or exercised sooner than this. If the executive retires, becomes disabled, or dies while employed by the Company or one of its subsidiaries, all unexercised options that are then exercisable, plus those options that would have become exercisable on the next anniversary of the grant date, will remain (or become) exercisable as of that date. Moreover, upon the occurrence of a Change in Control, all outstanding options will become immediately exercisable as of that date. In general, options may remain exercisable for up to three years following a participant’s retirement or termination due to disability, and for up to one year for any other termination of employment for reasons other than cause. | | (5) | | | | Grant Date Fair Value | | | | | | The amounts shown in column (l) reflect the grant date fair value of the full restricted stock and stock option awards granted in 2008, calculated in accordance with FAS 123R. As provided under the SEC’s rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions and include expected dividend payments on shares of restricted stock at Dartmouth College.
the same rate as paid on our shares of Common Stock. For option awards, that number is calculated by multiplying the Black-Scholes value by the number of options granted. The Black-Scholes value for the options granted in 2008 to Matthew Serra was $2.41, and the Black-Scholes value for the options granted in 2008 to the other named executive officers was $2.47. For information on the valuation assumptions with respect to the 2008 grants, please refer to [Note 25] of the Company’s financial statements in our Form 10-K for the 2008 fiscal year as filed with the SEC. | | | | | | For restricted stock awards, the fair value is calculated by multiplying the closing price of our Common Stock on The New York Stock Exchange on the award date by the number of shares granted. The closing price of our Common Stock on the date of grant was $11.66. |
DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRING IN Salary.The annual base salaries paid to our named executives in 2008 are set forth in the Summary Compensation Table. For 2008, their salaries represented the following percentages of their total compensation: Mr. Serra (28%), Mr. McHugh (27.7%,) Mr. Halls (28.8%), Mr. Bahler (28.9%), Ms. Petrucci (28.4%), and Mr. Mina (18.7%). Information on the named executives’ employment agreements appears beginning on Page 32. The following table,Outstanding Equity Awards at Fiscal Year-Endshows the number of outstanding stock options, both vested and unvested, and the number of unvested shares of restricted stock held by the named executives at the end of the 2008 fiscal year. 35
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END | | | | | | | | | | | | | | | | | | | (a) | | Option Awards | | Stock Awards | | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | Name | | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable(1) | | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable(1) | | Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#) | | Option
Exercise
Price
($) | | Option
Expiration
Date | | Number
of Shares
or Units
of Stock
That Have
Not
Vested
(#)(2) | | Market
Value of
Shares or
Units of
Stock
That Have
Not Vested
($)(3) | | Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
(#) | | Equity Incentive
Plan Awards:
Market or
Payout
Value of
Unearned
Shares, Units
or Other Rights
That Have
Not Vested
($) | M. Serra | | | | 500,000 | | | | | 0 | | | | | — | | | | | 11.905 | | | | | 02/12/2011 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 200,000 | | | | | 0 | | | | | — | | | | | 16.02 | | | | | 04/18/2012 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 100,000 | | | | | 0 | | | | | — | | | | | 16.19 | | | | | 09/11/2013 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 100,000 | | | | | 0 | | | | | — | | | | | 25.365 | | | | | 02/18/2014 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 115,000 | | | | | 0 | | | | | — | | | | | 27.01 | | | | | 02/09/2015 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 66,666 | | | | | 33,334 | | | | | — | | | | | 23.92 | | | | | 03/22/2016 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 16,166 | | | | | 32,334 | | | | | — | | | | | 23.42 | | | | | 03/28/2017 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 0 | | | | | 100,000 | | | | | — | | | | | 11.66 | | | | | 03/26/2018 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 18,834 | | | | | 138,618 | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 100,000 | | | | | 736,000 | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 50,000 | | | | | 368,000 | | | | | — | | | | | — | | R. McHugh | | | | 4,000 | | | | | 0 | | | | | — | | | | | 7.1875 | | | | | 01/03/2010 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 20,000 | | | | | 0 | | | | | — | | | | | 11.3125 | | | | | 04/12/2010 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 20,000 | | | | | 0 | | | | | — | | | | | 12.985 | | | | | 04/11/2011 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 20,000 | | | | | 0 | | | | | — | | | | | 16.02 | | | | | 04/18/2012 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 20,000 | | | | | 0 | | | | | — | | | | | 10.245 | | | | | 04/16/2013 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 20,000 | | | | | 0 | | | | | — | | | | | 25.385 | | | | | 04/01/2014 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 20,000 | | | | | 0 | | | | | — | | | | | 28.155 | | | | | 03/23/2015 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 30,000 | | | | | 0 | | | | | — | | | | | 21.48 | | | | | 11/21/2015 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 6,666 | | | | | 13,334 | | | | | — | | | | | 23.42 | | | | | 03/28/2017 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 0 | | | | | 25,000 | | | | | — | | | | | 11.66 | | | | | 03/26/2018 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 40,000 | | | | | 294,400 | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 10,000 | | | | | 73,600 | | | | | — | | | | | — | | R. Halls | | | | 10,000 | | | | | 0 | | | | | — | | | | | 16.02 | | | | | 04/18/2012 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 16,667 | | | | | 0 | | | | | — | | | | | 10.065 | | | | | 02/02/2013 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 20,000 | | | | | 0 | | | | | — | | | | | 25.385 | | | | | 04/01/2014 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 30,000 | | | | | 0 | | | | | — | | | | | 28.155 | | | | | 03/23/2015 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 20,000 | | | | | 10,000 | | | | | — | | | | | 23.92 | | | | | 03/22/2016 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 20,000 | | | | | 10,000 | | | | | — | | | | | 24.755 | | | | | 10/12/2016 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 10,000 | | | | | 20,000 | | | | | — | | | | | 23.42 | | | | | 03/28/2017 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 0 | | | | | 25,000 | | | | | — | | | | | 11.66 | | | | | 03/26/2018 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 20,000 | | | | | 147,200 | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 30,000 | | | | | 220,800 | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 20,000 | | | | | 147,200 | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 20,000 | | | | | 147,200 | | | | | — | | | | | — | | G. Bahler | | | | 20,002 | | | | | 0 | | | | | — | | | | | 11.3125 | | | | | 04/12/2010 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 47,500 | | | | | 0 | | | | | — | | | | | 12.985 | | | | | 04/11/2011 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 47,500 | | | | | 0 | | | | | — | | | | | 16.02 | | | | | 04/18/2012 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 33,000 | | | | | 0 | | | | | — | | | | | 10.245 | | | | | 04/16/2013 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 32,000 | | | | | 0 | | | | | — | | | | | 25.385 | | | | | 04/01/2014 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 25,000 | | | | | 0 | | | | | — | | | | | 28.155 | | | | | 03/23/2015 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 16,666 | | | | | 8,334 | | | | | — | | | | | 23.92 | | | | | 03/22/2016 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 6,666 | | | | | 13,334 | | | | | — | | | | | 23.42 | | | | | 03/28/2017 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 0 | | | | | 25,000 | | | | | — | | | | | 11.66 | | | | | 03/26/2018 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 40,000 | | | | | 294,400 | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 10,000 | | | | | 73,600 | | | | | — | | | | | — | | L. Petrucci | | | | 15,834 | | | | | 0 | | | | | — | | | | | 16.02 | | | | | 04/18/2012 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 26,667 | | | | | 0 | | | | | — | | | | | 10.245 | | | | | 04/16/2013 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 32,000 | | | | | 0 | | | | | — | | | | | 25.385 | | | | | 04/01/2014 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 25,000 | | | | | 0 | | | | | — | | | | | 28.155 | | | | | 03/23/2015 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 16,666 | | | | | 8,334 | | | | | — | | | | | 23.92 | | | | | 03/22/2016 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 6,666 | | | | | 13,334 | | | | | — | | | | | 23.42 | | | | | 03/28/2017 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 0 | | | | | 25,000 | | | | | — | | | | | 11.66 | | | | | 03/26/2018 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 40,000 | | | | | 294,400 | | | | | — | | | | | — | | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 10,000 | | | | | 73,600 | | | | | — | | | | | — | | R. Mina | | | | 21,838 | | | | | 0 | | | | | — | | | | | 11.3125 | | | | | 10/31/2009 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 50,000 | | | | | 0 | | | | | — | | | | | 12.985 | | | | | 10/31/2009 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 50,000 | | | | | 0 | | | | | — | | | | | 16.02 | | | | | 10/31/2009 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 100,000 | | | | | 0 | | | | | — | | | | | 10.065 | | | | | 10/31/2009 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 80,000 | | | | | 0 | | | | | — | | | | | 25.385 | | | | | 10/31/2009 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 50,000 | | | | | 0 | | | | | — | | | | | 28.155 | | | | | 10/31/2009 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 33,333 | | | | | 0 | | | | | — | | | | | 23.92 | | | | | 10/31/2009 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | 10,000 | | | | | 0 | | | | | — | | | | | 23.42 | | | | | 10/31/2009 | | | | | — | | | | | — | | | | | — | | | | | — | |
36
Notes to Table on Outstanding Equity Awards at Fiscal Year End | (1) | | | | TheVesting Schedulesfor the options shown in columns (b) and (c) are as follows: |
| | | | | | | | | | Name | | Total Number of
Securities Underlying
Unexercised Options | | Date of Grant | | Vesting Date for 1/3
of Total Grant | | Vesting Date for 1/3
of Total Grant | | Vesting Date for 1/3
of Total Grant | M. Serra | | | | 500,000 | | | | | 02/12/2001 | | | | | 02/12/2002 | | | | | 02/12/2003 | | | | | 02/12/2004 | | | | | | 200,000 | | | | | 04/18/2002 | | | | | 04/18/2003 | | | | | 04/18/2004 | | | | | 04/18/2005 | | | | | | 100,000 | | | | | 09/11/2003 | | | | | 09/11/2004 | | | | | 09/11/2005 | | | | | 09/11/2006 | | | | | | 100,000 | | | | | 02/18/2004 | | | | | 02/18/2005 | | | | | 02/18/2006 | | | | | 02/18/2007 | | | | | | 115,000 | | | | | 02/09/2005 | | | | | 02/09/2006 | | | | | 02/09/2007 | | | | | 02/01/2008 | | | | | | 100,000 | | | | | 03/22/2006 | | | | | 03/22/2007 | | | | | 03/22/2008 | | | | | 03/22/2009 | | | | | | 48,500 | | | | | 03/28/2007 | | | | | 03/28/2008 | | | | | 03/28/2009 | | | | | 01/30/2010 | | | | | | 100,000 | | | | | 03/26/2008 | | | | | 03/26/2009 | * | | | | | 01/30/2010 | * | | | | | — | | R. McHugh | | | | 5,000 | | | | | 02/10/1999 | | | | | 02/10/2000 | | | | | 02/10/2001 | | | | | 02/10/2002 | | | | | | 4,000 | | | | | 01/03/2000 | | | | | 01/03/2001 | | | | | 01/03/2002 | | | | | 01/03/2003 | | | | | | 20,000 | | | | | 04/12/2000 | | | | | 04/12/2001 | | | | | 04/12/2002 | | | | | 04/12/2003 | | | | | | 20,000 | | | | | 04/11/2001 | | | | | 04/11/2002 | | | | | 04/11/2003 | | | | | 04/11/2004 | | | | | | 20,000 | | | | | 04/18/2002 | | | | | 04/18/2003 | | | | | 04/18/2004 | | | | | 04/18/2005 | | | | | | 20,000 | | | | | 04/16/2003 | | | | | 04/16/2004 | | | | �� | 04/16/2005 | | | | | 04/16/2006 | | | | | | 20,000 | | | | | 04/01/2004 | | | | | 04/01/2005 | | | | | 04/01/2006 | | | | | 04/01/2007 | | | | | | 20,000 | | | | | 03/23/2005 | | | | | 03/23/2006 | | | | | 03/23/2007 | | | | | 03/23/2008 | | | | | | 30,000 | | | | | 11/21/2005 | | | | | 11/21/2006 | | | | | 11/21/2007 | | | | | 11/21/2008 | | | | | | 20,000 | | | | | 03/28/2007 | | | | | 03/28/2008 | | | | | 03/28/2009 | | | | | 03/28/2010 | | | | | | 25,000 | | | | | 03/26/2008 | | | | | 03/26/2009 | | | | | 03/26/2010 | | | | | 03/26/2011 | | R. Halls | | | | 10,000 | | | | | 04/18/2002 | | | | | 04/18/2003 | | | | | 04/18/2004 | | | | | 04/18/2005 | | | | | | 16,667 | | | | | 02/02/2003 | | | | | 02/02/2004 | | | | | 02/02/2005 | | | | | 02/02/2006 | | | | | | 20,000 | | | | | 04/01/2004 | | | | | 04/01/2005 | | | | | 04/01/2006 | | | | | 04/01/2007 | | | | | | 30,000 | | | | | 03/23/2005 | | | | | 03/23/2006 | | | | | 03/23/2007 | | | | | 03/23/2008 | | | | | | 30,000 | | | | | 03/22/2006 | | | | | 03/22/2007 | | | | | 03/22/2008 | | | | | 03/22/2009 | | | | | | 30,000 | | | | | 10/12/2006 | | | | | 10/12/2007 | | | | | 10/12/2008 | | | | | 10/12/2009 | | | | | | 30,000 | | | | | 03/28/2007 | | | | | 03/28/2008 | | | | | 03/28/2009 | | | | | 03/28/2010 | | | | | | 25,000 | | | | | 03/26/2008 | | | | | 03/26/2009 | | | | | 03/26/2010 | | | | | 03/26/2011 | | *Option granted with 2-year vesting schedule
[GILBERT PHOTO] JAROBIN GILBERT JR. Age 52. Director since 1981. | | | | | | | | | | | Name | | Total Number of
Securities Underlying
Unexercised Options | | Date of Grant | | Vesting Date for 1/3
of Total Grant | | Vesting Date for 1/3
of Total Grant | | Vesting Date for 1/3
of Total Grant | G. Bahler | | | | 20,002 | | | | | 04/12/2000 | | | | | 04/12/2001 | | | | | 04/12/2002 | | | | | 04/12/2003 | | | | | | 47,500 | | | | | 04/11/2001 | | | | | 04/11/2002 | | | | | 04/11/2003 | | | | | 04/11/2004 | | | | | | 47,500 | | | | | 04/18/2002 | | | | | 04/18/2003 | | | | | 04/18/2004 | | | | | 04/18/2005 | | | | | | 33,000 | | | | | 04/16/2003 | | | | | 04/16/2004 | | | | | 04/16/2005 | | | | | 04/16/2006 | | | | | | 32,000 | | | | | 04/01/2004 | | | | | 04/01/2005 | | | | | 04/01/2006 | | | | | 04/01/2007 | | | | | | 25,000 | | | | | 03/23/2005 | | | | | 03/23/2006 | | | | | 03/23/2007 | | | | | 03/23/2008 | | | | | | 25,000 | | | | | 03/22/2006 | | | | | 03/22/2007 | | | | | 03/22/2008 | | | | | 03/22/2009 | | | | | | 20,000 | | | | | 03/28/2007 | | | | | 03/28/2008 | | | | | 03/28/2009 | | | | | 03/28/2010 | | | | | | 25,000 | | | | | 03/26/2008 | | | | | 03/26/2009 | | | | | 03/26/2010 | | | | | 03/26/2011 | | L. Petrucci | | | | 15,834 | | | | | 04/18/2002 | | | | | 04/18/2003 | | | | | 04/18/2004 | | | | | 04/18/2005 | | | | | | 26,667 | | | | | 04/16/2003 | | | | | 04/16/2004 | | | | | 04/16/2005 | | | | | 04/16/2006 | | | | | | 32,000 | | | | | 04/01/2004 | | | | | 04/01/2005 | | | | | 04/01/2006 | | | | | 04/01/2007 | | | | | | 25,000 | | | | | 03/23/2005 | | | | | 03/23/2006 | | | | | 03/23/2007 | | | | | 03/23/2008 | | | | | | 25,000 | | | | | 03/22/2006 | | | | | 03/22/2007 | | | | | 03/22/2008 | | | | | 03/22/2009 | | | | | | 20,000 | | | | | 03/28/2007 | | | | | 03/28/2008 | | | | | 03/28/2009 | | | | | 03/28/2010 | | | | | | 25,000 | | | | | 03/26/2008 | | | | | 03/26/2009 | | | | | 03/26/2010 | | | | | 03/26/2011 | | Former Executive Officer | | | | | | | | | R. Mina | | | | 21,838 | | | | | 04/12/2000 | | | | | 04/12/2001 | | | | | 04/12/2002 | | | | | 04/12/2003 | | | | | | 50,000 | | | | | 04/11/2001 | | | | | 04/11/2002 | | | | | 04/11/2003 | | | | | 04/11/2004 | | | | | | 50,000 | | | | | 04/18/2002 | | | | | 04/18/2003 | | | | | 04/18/2004 | | | | | 04/18/2005 | | | | | | 100,000 | | | | | 02/02/2003 | | | | | 02/02/2004 | | | | | 02/02/2005 | | | | | 02/02/2006 | | | | | | 80,000 | | | | | 04/01/2004 | | | | | 04/01/2005 | | | | | 04/01/2006 | | | | | 04/01/2007 | | | | | | 50,000 | | | | | 03/23/2005 | | | | | 03/23/2006 | | | | | 03/23/2007 | | | | | 03/23/2008 | | | | | | 50,000 | | | | | 03/22/2006 | | | | | 03/22/2007 | | | | | 03/22/2008 | | | * | | | | | 30,000 | | | | | 03/28/2007 | | | | | 03/28/2008 | | | * | | * |
*Unvested portion of option cancelled upon termination of employment. 37
| (2) | | | | The vesting dates for the restricted stock awards shown in column (g) are as follows: |
| | | | | | Name | | Date of Grant | | Number of Shares | | Vesting Date | M. Serra | | | | 03/22/2006 | | | | | 18,834 | | | | | 03/15/2009 | | | | | | 03/28/2007 | | | | | 100,000 | | | | | 01/30/2010 | | | | | | 03/26/2008 | | | | | 50,000 | | | | | 01/30/2010 | | R. McHugh | | | | 03/28/2007 | | | | | 40,000 | | | | | 03/15/2010 | | | | | | 03/26/2008 | | | | | 10,000 | | | | | 03/26/2011 | | R. Halls | | | | 03/22/2006 | | | | | 20,000 | | | | | 03/15/2009 | | | | | | 10/12/2006 | | | | | 30,000 | | | | | 10/12/2009 | | | | | | 03/28/2007 | | | | | 20,000 | | | | | 03/15/2010 | | | | | | 03/26/2008 | | | | | 20,000 | | | | | 03/26/2011 | | G. Bahler | | | | 03/28/2007 | | | | | 40,000 | | | | | 03/15/2010 | | | | | | 03/26/2008 | | | | | 10,000 | | | | | 03/26/2011 | | L. Petrucci | | | | 03/28/2007 | | | | | 40,000 | | | | | 03/15/2010 | | | | | | 03/26/2008 | | | | | 10,000 | | | | | 03/26/2011 | | | (3) | | | | Value calculated by multiplying the number of unvested shares by the closing price of $7.36 on January 30, 2009, which was the last business day of the 2008 fiscal year. |
The following table,Option Exercises and Stock Vested, provides information on the stock options exercised by the named executives during 2008 and shares of restricted stock that vested during the year. OPTION EXERCISES AND STOCK VESTED | | | | | | | | |
(a) | | Option Awards | | Stock Awards |
| (b) | | (c) | | (d) | | (e) |
Name | | Number of Shares
Acquired on Exercise(#) | | Value Realized
on Exercise($) | | Number of Shares
Acquired on Vesting(#) | | Value Realized
on Vesting($) |
M. Serra | | | | — | | | | | — | | | | | 18,833 | | | | | 206,786 | |
R. McHugh | | | | 5,000 | | | | | 12,194 | | | | | 30,000 | | | | | 200,400 | |
R. Halls | | | | — | | | | | — | | | | | — | | | | | — | |
G. Bahler | | | | — | | | | | — | | | | | — | | | | | — | |
L. Petrucci | | | | — | | | | | — | | | | | — | | | | | — | |
Former Executive Officer | | | | | | |
R. Mina | | | | — | | | | | — | | | | | 40,000 | | | | | 439,200 | |
38
EMPLOYMENT AGREEMENTS
We have employment agreements with each of the named executive officers, excluding Richard Mina, and we describe the material terms of each of these agreements below. Information on potential payments and benefits on termination of the agreements is described under the section “Potential Payments upon Termination or Change in Control,” beginning on Page 43.
Matthew D. Serra
|
• | | | | Position.We entered into a new agreement in December 2008 with Mr. Serra in his position as Chairman of the Board, President and Chief Executive OfficerOfficer. This agreement contains substantially the same terms and conditions as the agreement entered into with Mr. Serra in 2006, except for changes made to comply with Section 409A of DBSS Group, Inc. (management,
planningthe Internal Revenue Code. |
|
• | | | | Term.The term of this agreement began on October 1, 2006 and trade consulting services) since 1992.ends on January 30, 2010. |
|
• | | | | Base Salary and Bonus.We pay Mr. Serra an annual base salary of not less than $1.5 million during the term of the agreement. Mr. Serra’s annual bonus at target is 125 percent of his base salary, and his bonus at target under the long-term bonus plan for any three-year performance period is 90 percent of his base salary at the beginning of the performance period. If Mr. Serra remains employed by Foot Locker through the end of his contract term, he will be eligible for a pro-rata payout under the Long-Term Bonus Plan for the 2008-2010 and 2009-2011 performance periods, provided the performance goals are met. |
|
• | | | | Benefit Plans and Perquisites.Mr. Serra is entitled to participate in all bonus, incentive, and equity plans offered to senior executives. He is also eligible to participate in all pension, welfare, and fringe benefit plans and perquisites offered to senior executives. The benefits and perquisites available to Mr. Serra include: |
|
— | | | | Company-paid life insurance in the amount of his annual base salary; |
|
— | | | | Long-term disability insurance coverage of $25,000 per month; |
|
— | | | | Annual out-of-pocket medical expense reimbursement of up to $20,000; |
|
— | | | | Financial planning expenses of up to $7,500 annually; |
|
— | | | | Reimbursement of dues and membership fees of one private club of up to $20,000 annually; |
|
— | | | | Automobile expense allowance of up to $40,000 annually and the services of a directordriver; |
|
| | | | Although Mr. Serra is eligible for these perquisites under his agreement, he chose not to receive some of Whitman Corp.these benefits in 2008. |
|
• | | | | Non-Compete Provision.Mr. Serra’s agreement provides that he may not compete with Foot Locker or solicit our employees for two years following the termination of his employment agreement. |
|
• | | | | Certain Defined Terms in the Agreement: |
“Cause” means Mr. Serra:
|
— | | | | willfully and Midas, Inc. He continuously fails to perform his duties; |
|
— | | | | willfully takes part in misconduct that significantly harms the Company; |
|
— | | | | willfully breaches his employment agreement and does not correct the breach; or |
|
— | | | | is convicted of a trusteefelony (other than a traffic violation). |
“Change in Control” means any of the following:
|
— | | | | a person or group makes a tender offer to purchase at least 20 percent of Atlantic Mutual Insurancethe Company’s outstanding stock; |
|
— | | | | the Company and a directormerges with another company or sells all (or substantially all) of its subsidiaries, Atlantic Specialty Insurance Company and
Centennial Insurance Company. Mr. Gilbert is also a directorassets. This event would exclude, for example, mergers (or similar transactions) in which no one becomes the beneficial owner of Valley Agency for Youth, and a permanent membermore than 20 percent of the Council on Foreign Relations.
|
12
16
[MacKIMM PHOTO] MARGARET P. MACKIMM. Age 65. Director since 1977. Senior
Vice President -- Communicationsstock outstanding; |
— | | | | the acquisition of Kraft Foods, Inc.
(multinational marketer and processor of food products) and
its predecessor, Kraft, Inc., from 1986 to 1989. She is a
director of Chicago Title Corporation, The World Press
Institute, and the Human Relations Foundation of Chicago.
[LOREN PHOTO] ALLAN Z. LOREN. Age 61. Director since 1998. Executive Vice
President and Chief Information Officer of American Express
Company (travel and financial services) since May 1994. He
was President and Chief Executive Officer of Galileo
International (global computer reservation system company)
from 1991 to 1994. He is a director of Reynolds & Reynolds
Company and Hershey Foods Corp.
[MACKOWSKI PHOTO] JOHN J. MACKOWSKI. Age 73. Director since 1986. Chairman20 percent or more of the outstanding stock. (The Board and Chief Executive Officermay, however, increase this threshold up to 40 percent); |
39
|
— | | | | shareholder approval of Atlantic Mutual
Insurance Company and its subsidiary, Centennial Insurance
Company (property, liability and marine insurance) from 1985
to 1988; and Chairmana plan of liquidation, dissolution, or sale of substantially all of the assets of the Company; or |
|
— | | | | during any period of two consecutive years, the directors at the start of the period, plus any new director whose election or nomination for election was approved by at least two-thirds of the directors then remaining on the Board who either were directors at the beginning of the period or whose election or nomination was approved in this manner, do not comprise at least a majority of the Board. |
“Disability” means:
|
— | | | | Mr. Serra is incapacitated due to physical or mental illness and, Chief Executive
Officeras a result, has not performed his duties on a full-time basis for six months and does not return to perform his duties after the Company gives him notice. |
“Good Reason” means, following a Change in Control,
| | | a material demotion or reduction in Mr. Serra’s authority or responsibility (except temporarily because of illness or other absence); | |
— | | | | a decrease in his base salary rate; |
|
— | | | | a reduction in his annual bonus classification level; |
|
— | | | | failure to continue the benefit plans and programs that apply to him, or the reduction of his benefits, without providing substitute comparable plans, programs and benefits; |
|
— | | | | failure by a successor company to confirm in writing that it will assume the Company’s obligations under the agreement; or |
|
— | | | | the Company breaches a material provision of the agreement and does not correct the breach. |
Robert W. McHugh, Ronald J. Halls, Gary M. Bahler, and Laurie J. Petrucci
|
• | | | | Position/Term/Base Salary.We have employment agreements with these executives in their current positions, as follows: |
| | | | | | Name | | Position | | Term of Agreement | | 2008 Base Salary Rate |
|
R. McHugh | | Senior VP and CFO | | 1/1/2009–1/31/2010 | | $525,000 |
|
R. Halls | | President and CEO, Foot Locker, Inc.–International | | 5/1/2008–1/31/2010 | | $750,000 |
|
G. Bahler | | Senior VP, General Counsel and Secretary | | 1/1/2009–1/31/2010 | | $525,000 |
|
L. Petrucci | | Senior VP–Human Resources | | 1/1/2009–1/31/2010 | | $468,600 |
|
• | | | | Term.The terms of Atlantic Specialty Insurancethe agreements will automatically be extended for another year unless notice of non-renewal is given three months prior to the expiration date. |
|
• | | | | Base Salary.We pay these executives annual base salaries at rates not less than their salaries at the start of their agreements. The executives’ base salaries for 2008 are shown in the table. |
|
• | | | | Benefit Plans and Perquisites.These executives are entitled to participate in all benefit plans and arrangements in effect at the start of the agreement, including retirement plans, annual and long-term bonus plans, medical, dental, and disability plans, and any other plans subsequently offered to our senior executives. |
|
• | | | | Spousal Travel.Mr. Halls’s wife may accompany him on up to eight business trips each fiscal year at the Company’s expense. In 2008, we grossed up Mr. Halls’s salary for a percentage of this spousal travel expense. Beginning in 2009, the Company (formerly
Atlantic Reinsurance Company) (issuerdiscontinued the gross-up of reinsurance
contracts),this expense. |
|
• | | | | Non-Compete Provision.The executives’ agreements provide that they may not compete with Foot Locker or solicit our employees for two years following the termination of their employment agreements. |
40
•Certain Defined Terms in the Agreement:
“Cause” means the executive’s:
|
— | | | | refusal or willful failure to substantially perform his duties; |
|
— | | | | dishonesty, willful misconduct, or fraud with regard to the Company’s business or assets; |
|
— | | | | willful breach of his employment agreement and he does not correct the breach; or |
|
— | | | | conviction of a subsidiaryfelony (other than a traffic violation) or any crime involving moral turpitude. |
“Change in Control” means any of the following:
|
— | | | | the Company merges with another company or sells all (or substantially all) of Atlantic Mutual Insuranceits assets. This event excludes, for example, mergers (or similar transactions) in which no one becomes the beneficial owner of more than 50 percent of the stock outstanding; |
|
— | | | | the acquisition of 35 percent or more of the outstanding stock; or |
|
— | | | | during any period of two consecutive years, the directors at the start of the period, plus any new director whose election or nomination for election was approved by at least two-thirds of the directors then remaining on the Board who either were directors at the beginning of the period or whose election or nomination was approved in this manner, do not comprise at least a majority of the Board. |
“Disability” means:
|
— | | | | The executive is incapacitated due to physical or mental illness and, as a result, has not performed his duties on a full-time basis for six months, and does not return to perform his duties after the Company from 1986gives him notice. |
“Good Reason” means:
Prior to a Change in Control,
| | | a reduction in base salary, other than an across-the-board reduction in senior executive salaries over a three-year period and the reduction is less than 20% of the executive’s salary from the beginning of the three-year period; | |
— | | | | material change in the executive’s authority or responsibilities, except temporarily as a result of illness or other absence; |
Following a Change in Control,
|
— | | | | any reduction in base salary; |
|
— | | | | failure to 1988. He is continue the benefit plans and programs that apply to the executive, or the reduction of his benefits, without providing substitute comparable plans and benefits; |
|
— | | | | a directormaterial demotion or reduction in executive’s authority or responsibility (except temporarily because of Northern
Trustillness or other absence); |
At any time,
|
— | | | | a reduction in the executive’s annual bonus classification level, other than in connection with a redesign that affects all other employees in the executive’s bonus level; |
|
— | | | | failure by a successor to the Company of Connecticut,to confirm in writing that it will assume the Company’s obligations under the agreement; |
|
— | | | | failure by the Company to renew the agreement. |
41
Richard T. Mina
We had an employment agreement with Mr. Mina as President and of Transatlantic Holdings,
Inc.
EXECUTIVE COMPENSATION
The following Summary Compensation Table provides certain compensation
information for the Company's Chief Executive Officer during 1998 andof Foot Locker, Inc.–U.S.A. substantially in the four
other most highly compensated executive officers ofsame form as the Company at January 30,
1999,agreements described above for services rendered in all capacities during 1998 and the fiscal years
ended January 31, 1998 ("1997") and January 25, 1997 ("1996").
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------- -----------------------
AWARDS
-----------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION OPTION/SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($) ($)
- --------------------------- ---- --------- ------- ------------ ----------- --------- ------------
Roger N. Farah(a)........... 1998 1,500,000 0 3,884(b) 0 1,671,670(m) 6,032(c)
Chairman of the Board and 1997 1,500,000 702,150 3,886(b) 0 0 5,610(c)
Chief Executive Officer 1996 1,500,000 780,900 3,372(b) 0 0 5,688(c)
Dale W. Hilpert............. 1998 825,000 0 0 100,000 835,835(m) 10,860(c)
President and Chief 1997 806,250 377,406 0 100,000 0 9,718(c)
Operating Officer 1996 750,000 390,450 0 100,000 0 8,506(c)
M. Jeffrey Branman(d)....... 1998 435,000 200,000(e) 0 150,000 431,158(m) 2,595(c)
Senior Vice President- 1997 415,000 394,262(e) 0 75,000 0 3,113(c)
Corporate Development 1996 365,079 390,060(e) 0 75,000 0 1,513(f)
13
17
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------- -----------------------
AWARDS
-----------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION OPTION/SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($) ($)
- --------------------------- ---- --------- ------- ------------ ----------- --------- ------------
Reid Johnson(g)............. 1998 434,000 0 9,191(h) 43,000 179,570(n) 14,561(i)
Former Senior Vice President 1997 169,034 200,000(j) 21,445(h) 50,000 0 126,664(k)
and Chief Financial Officer
John E. DeWolf III(d)....... 1998 406,250 0 0 50,000 374,805(m) 2,959(f)
Senior Vice President 1997 361,250 169,101 0 30,000 0 1,343(f)
Real Estate 1996 319,444 166,303 28,242(h) 30,000 0 254,620(l)
- ---------------
(a) On January 9, 1995, the Company granted to Mr. Farah 200,000 shares of
Common Stock (the "Restricted Stock"), which are subject to a Restricted
Stock Agreement. The shares vest over a five-year period beginning January
31, 1996 through January 31, 2000, in increments of 40,000 shares on each
vesting date. Mr. Farah has the right to vote the Restricted Stock and to
receive and retain all regular cash dividends payable after January 1995 to
holders of Common Stock of record. At January 30, 1999, Mr. Farah held
80,000 shares of Restricted Stock (120,000 shares having previously vested),
having a value of $410,000, based upon a $5.125 closing price of the
Company's Common Stock as reported on the New York Stock Exchange on January
29, 1999, the last business day prior to the end of the fiscal year.
(b) Tax gross-up payment related to commuting use of company car.
(c) Includes the dollar value of the premium paid by the Company for a term life
insurance policy for the benefit of the named executive officers other than Mr. Serra. Mr. Mina’s service as President and CEO of Foot Locker, Inc.–U.S.A. ended on September 30, 2008, and his employment with the dollar valueCompany was terminated on October 31, 2008. Certain obligations under this agreement continue post-termination, such as Mr. Mina’s non-competition obligation.
| | | | | | |
Name | | Position | | Term of Agreement | | 2008 Base Salary Rate |
|
R. Mina | | President and CEO, Foot Locker, Inc.–U.S.A. | | 5/1/2008—1/31/2010 | | $875,000 |
42
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The executives’ employment agreements and certain of the Company's matching contribution underplans and programs that executives participate in require the 401(k) Plan madeCompany to pay compensation to the executives if their employment terminates in certain circumstances. The estimated amount of compensation and benefits that would be payable to the named executive's accountexecutives following termination of their employment, including amounts already vested, is stated in sharesthe tables below. Except for Richard Mina, whose information appears on Page 53, the information in the tables assumes a termination date of Common Stock. The dollar valuesJanuary 31, 2009.
MATTHEW D. SERRA
| | | | | | | | | | | | | | | | |
Reason for
Termination | | Severance
Payment
and
Annual
Bonus | | Accelerated
Vesting of
Restricted
Stock and
Options | | SERP
Benefit | | Benefit under Excess Cash Balance Plan | | Continuation of Health Benefits | | Outplacement
Services | | Tax Gross-Up
Payment | | Total |
|
By Company
Without
Cause | | $3,228,339 | | Restricted
Stock:
$1,242,618 | | $2,639,252 | | $453,204 | | $164,597 | | $25,000 | | — | | $7,753,010 |
Or | | | | Stock Options:
No acceleration
of vesting | | | | | | | | | | | | |
By Executive
if Company
Breaches
Employment
Agreement | | (1) | | (2) | | (3) | | (4) | | (5) | | (6) | | | | |
|
Executive
Resigns
Before End
of Term | | — | | — | | $2,639,252 | | $453,204 | | $164,597 | | — | | — | | $3,257,053 |
| | | | | | (3) | | (4) | | (5) | | | | | | |
|
Termination
following
Change in
Control | | $5,062,500 | | Restricted
Stock:
$1,242,618 | | $2,639,252 | | $453,204 | | $164,597 | | $25,000 | | — | | $9,587,171 |
| | | | Stock Options:
Accelerated
vesting of
165,668 shares:
$0 value | | | | | | | | | | | | |
(7) | | (8) | | (2)(9) | | (3) | | (4) | | (5) | | (6) | | (10) | | |
|
Disability | | — | | Restricted
Stock:
$1,242,618 | | $2,639,252 | | $453,204 | | $164,597 | | — | | — | | $4,499,671 |
| | | | Stock Options:
Accelerated
vesting of
99,501 shares:
$0 value | | | | | | | | | | | | |
| | | | (11)(9) | | (12) | | (4) | | (5) | | | | | | |
|
Death | | — | | Restricted
Stock:
$1,242,618 | | $2,639,252 | | $453,204 | | — | | — | | — | | $4,335,074 |
| | | | Stock Options:
Accelerated
vesting of
99,501 shares:
$0 value | | | | | | | | | | | | |
| | | | (11)(9) | | (12) | | (4) | | | | | | | | |
|
Cause | | — | | — | | — | | $453,204 | | — | | — | | — | | $453,204 |
| | | | | | | | (4) | | | | | | | | |
Notes to Table on Matthew D. Serra
|
(1) | | The severance amount equals: |
|
| | — | | $1,500,000, which reflects the total remaining monthly salary payments through the end of the employment contract term on January 30, 2010. Payment of the first six months of salary |
43
| | | continuation would be made six months following termination, and the remaining payments would then be made on a monthly basis; plus |
|
| | | — | $1,728,339, which reflects Mr. Serra’s annual bonus of $1,728,339 for 2008, which would be payable at the time the bonus payments for the plan year are made to other participants in the plan. |
|
(2) | | | This amount is the value of 168,834 shares of restricted stock that would vest on termination. The shares were valued at $7.36. |
|
(3) | | | This amount is the total benefit payable under the Supplemental Executive Retirement Plan (“SERP”). The payments would be made quarterly over a three-year period. The first two quarterly payments would be made six months following the executive’s termination date, with the remaining payments made quarterly during the remainder of the three-year period. |
|
(4) | | | Benefit payable as of January 31, 2009 in a lump sum under the Foot Locker Excess Cash Balance Plan six months following the executive’s termination date. No information is provided with respect to the benefit under the Foot Locker Retirement Plan because that plan is available generally to all salaried employees and does not discriminate in terms of scope, terms, or operation in favor of the executive officers. |
|
(5) | | | Mr. Serra would be entitled under the SERP to the continuation of medical and dental insurance benefits following termination. The benefits would be substantially the same as those benefits to which senior executives are entitled under Foot Locker’s medical and dental plans for active employees. Mr. Serra would be required to pay the insurance premium applicable to actively employed senior executives, including any subsequent increases in the premiums. The continuation of benefits would terminate if Mr. Serra engages in competition during the one-year period following termination or becomes a participant in a new employer’s health plan. The amount shown in the table represents the amount accrued by the Company for Mr. Serra’s post-termination medical and dental benefits. |
|
(6) | | | This amount reflects the approximate cost of one year of outplacement services. |
|
(7) | | | This covers (i) termination by the Executive within the 30-day period occurring three months after a Change in Control and (ii) by the Company without Cause or by Executive for Good Reason during the two-year period following a Change in Control. |
|
(8) | | | This amount equals 1.5 times Executive’s annual base salary plus annual bonus at target, which is the minimum amount payable to the executive for termination following a Change-in-Control. Payment would be made as provided in Note 1 above for the $1,500,000 in remaining salary payments and the $1,728,339 annual bonus payment. For the excess amount of $1,834,161, payment would be made in a lump sum six months following the executive’s termination date. |
|
(9) | | | The fair market value of a share of the Company’s stock on January 31, 2009 was less than the exercise price of each of the unvested options that would be accelerated, so the intrinsic value of the option on that date was $0. |
|
(10) | | | If Mr. Serra receives payments or benefits following a Change in Control that are subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, we would pay him a gross-up payment to put him in the same after-tax position he would have been in had no excise tax been imposed. Based on current estimates, no excise tax would be payable by executive; therefore, there would be no tax gross-up payment. This provision has been in Mr. Serra’s employment agreement since he joined the Company in 1998. |
|
(11) | | | The Compensation and Management Resources Committee may, but is not obligated to, accelerate the vesting of some or all of executive’s restricted stock. The number shown in the table assumes approval of the accelerated vesting of 168,834 shares of restricted stock, valued at $7.36. |
|
(12) | | | SERP benefit payable in a lump sum following the determination of disability or the date of death. |
44
ROBERT W. MCHUGH
| | | | | | | | | | | | | | | | |
Reason for
Termination | | Severance
Payment | | Accelerated
Vesting of
Restricted
Stock and
Options | | SERP
Benefit | �� | Benefit under
Excess Cash
Balance Plan | | Continuation
of Health
Benefits | | Outplacement
Services | | Tax Gross-Up
Payment | | Total |
|
By Company
Without
Cause | | $525,000 | | Restricted
Stock:
No acceleration
of vesting | | — | | $75,810 | | $8,100 | | — | | — | | $608,910 |
| | | | Stock Options:
No acceleration
of vesting | | | | | | | | | | | | |
| | (1) | | | | | | (2) | | (3) | | | | | | |
|
By Executive
for Good
Reason | | $525,000 | | Restricted
Stock:
No acceleration
of vesting | | — | | $75,810 | | $8,100 | | — | | — | | $608,910 |
| | | | Stock Options:
Accelerated
vesting of
15,000 shares:
$0 value | | | | | | | | | | | | |
| | (1) | | (4) | | | | (2) | | (3) | | | | | | |
|
Executive
Resigns
Before End
of Term | | — | | — | | — | | $75,810 | | — | | — | | — | | $75,810 |
| | | | | | | | (2) | | | | | | | | |
|
Termination
following
Change in
Control | | $1,575,000 | | Restricted
Stock:
$368,000 | | — | | $75,810 | | $8,100 | | — | | — | | $2,026,910 |
| | | | Stock Options:
Accelerated
vesting of
38,834 shares:
$0 value | | | | | | | | | | | | |
| | (5) | | (6)(4) | | | | (2) | | (3) | | | | (7) | | |
|
Disability | | — | | Restricted
Stock:
$368,000 | | $122,306 | | $75,810 | | $8,100 | | — | | — | | $574,216 |
| | | | Stock Options:
Accelerated
vesting of
15,000 shares
$0 value | | | | | | | | | | | | |
| | | | (8)(4) | | (9) | | (2) | | | | | | | | |
|
Death | | — | | Restricted
Stock:
$368,000 | | $122,306 | | $75,810 | | — | | — | | — | | $566,116 |
| | | | Stock Options:
Accelerated
vesting of
15,000 shares:
$0 value | | | | | | | | | | | | |
| | | | (8)(4) | | (9) | | (2) | | | | | | | | |
|
Cause | | — | | — | | — | | $75,810 | | — | | — | | — | | $75,810 |
| | | | | | | | (2) | | | | | | | | |
Notes to Table on Robert W. McHugh
|
(1) | | | | The severance amount equals 52 weeks’ salary and would be payable six months following termination. |
|
(2) | | | | Benefit payable as of January 31, 2009 in a lump sum under the Foot Locker Excess Cash Balance Plan six months following the executive’s termination date. No information is provided with respect to the benefit under the Foot Locker Retirement Plan because that plan is available generally to all salaried employees and does not discriminate in terms of scope, terms, or operation in favor of the executive officers. |
45
|
(3) | | | | The amount in the table reflects the estimated cost to the Company of payments to Mr. McHugh to reimburse him for the difference between the cost of the COBRA continuation coverage premium and the amount he would have paid for medical and dental coverage as an active associate for 18 months following his termination. |
|
(4) | | | | The fair market value of a share of the Company’s stock on January 31, 2009 was less than the exercise price of each of the unvested options that would be accelerated, so the intrinsic value of the option on that date was $0. |
|
(5) | | | | The severance amount equals three times the executive’s annual salary. |
|
(6) | | | | This amount represents the value of 50,000 shares of restricted stock that would vest on termination. The shares were valued at $7.36. |
|
(7) | | | | If the payments or benefits received by the executive following a Change in Control are subject to the excise tax under Section 4999 of the Internal Revenue, then the Company would automatically reduce Mr. McHugh’s payments and benefits to an amount equal to $1 less than the amount that would subject him to the excise tax, as long as the reduced amount would result in a greater benefit to him compared to the unreduced amount on a net after-tax basis. |
|
(8) | | | | The Compensation and Management Resources Committee may, but is not obligated to, accelerate the vesting of some or all of executive’s restricted stock. The number shown in the table assumes approval of the accelerated vesting of 50,000 shares of restricted stock, valued at $7.36. |
|
(9) | | | | SERP benefit payable in a lump sum following determination of disability or the date of death. |
46
RONALD J. HALLS
| | | | | | | | | | | | | | | | |
Reason for
Termination | | Severance
Payment | | Accelerated
Vesting of
Restricted
Stock and
Options | | SERP
Benefit | | Benefit under
Excess Cash
Balance Plan | | Continuation
of Health
Benefits | | Outplacement
Services | | Tax Gross-Up
Payment | | Total |
|
By Company
Without
Cause | | $750,000 | | Restricted
Stock:
No acceleration
of vesting | | — | | $86,862 | | $8,100 | | — | | — | | $844,962 |
| | | | Stock Options:
No acceleration
of vesting | | | | | | | | | | | | |
| | (1) | | | | | | (2) | | (3) | | | | | | |
|
By Executive
for Good
Reason | | $750,000 | | Restricted
Stock:
No acceleration
of vesting | | — | | $86,862 | | $8,100 | | — | | — | | $844,962 |
| | | | Stock Options:
Accelerated
vesting of
38,333 shares:
$0 value | | | | | | | | | | | | |
| | (1) | | (4) | | | | (2) | | (3) | | | | | | |
|
Executive
Resigns
Before End
of Term | | — | | — | | — | | $86,862 | | — | | — | | — | | $86,862 |
| | | | | | | | (2) | | | | | | | | |
|
Termination
following
Change in
Control | | $2,250,000 | | Restricted
Stock:
$662,400 | | — | | $86,862 | | $8,100 | | — | | — | | $3,007,362 |
| | | | Stock Options:
Accelerated
vesting of
65,000 shares:
$0 value | | | | | | | | | | | | |
| | (5) | | (6)(4) | | | | (2) | | (3) | | | | (7) | | |
|
Disability | | — | | Restricted
Stock:
$662,400 | | $336,408 | | $86,862 | | $8,100 | | — | | — | | $1,093,770 |
| | | | Stock Options:
Accelerated
vesting of
38,333 shares:
$0 value | | | | | | | | | | | | |
| | | | (8)(4) | | (9) | | (2) | | | | | | | | |
|
Death | | — | | Restricted
Stock:
$662,400 | | $336,408 | | $86,862 | | — | | — | | — | | $1,085,670 |
| | | | Stock Options:
Accelerated
vesting of
38,333 shares:
$0 value | | | | | | | | | | | | |
| | | | (8)(4) | | (9) | | (2) | | | | | | | | |
|
Cause | | — | | — | | — | | $86,862 | | — | | — | | — | | $86,862 |
| | | | | | | | (2) | | | | | | | | |
Notes to Table on Ronald J. Halls
|
(1) | | | | The severance amount equals 52 weeks’ salary and would be payable six months following termination. |
|
(2) | | | | Benefit payable as of January 31, 2009 in a lump sum under the Foot Locker Excess Cash Balance Plan six months following the executive’s termination date. No information is provided with respect to the benefit under the Foot Locker Retirement Plan because that plan is available generally to all salaried employees and does not discriminate in terms of scope, terms, or operation in favor of the executive officers. |
47
|
(3) | | | | This amount reflects the estimated cost to the Company of payments to Mr. Halls to reimburse him for the difference between the cost of the COBRA continuation coverage premium and the amount he would have paid for medical and dental coverage as an active associate for 18 months following his termination. |
|
(4) | | | | The fair market value of a share of the Company’s stock on January 31, 2009 was less than the exercise price of each of the unvested options that would be accelerated, so the intrinsic value of the option on that date was $0. |
|
(5) | | | | The severance amount equals three times the executive’s annual salary. |
|
(6) | | | | This amount represents the value of 90,000 shares of restricted stock that would vest on termination. The shares were valued at $7.36. |
|
(7) | | | | If the payments or benefits received by the executive following a Change in Control are subject to the excise tax under Section 4999 of the Internal Revenue Code, then the Company would automatically reduce Mr. Halls’s payments and benefits to an amount equal to $1 less than the amount that would subject him to the excise tax, as long as the reduced amount would result in a greater benefit to him compared to the unreduced amount on a net after-tax basis. |
|
(8) | | | | The Compensation and Management Resources Committee may, but is not obligated to, accelerate the vesting of some or all of executive’s restricted stock. The number shown in the table assumes approval of the accelerated vesting of 90,000 shares of restricted stock, valued at $7.36. |
|
(9) | | | | SERP benefit payable in a lump sum following determination of disability or the date of death. |
48
GARY M. BAHLER
| | | | | | | | | | | | | | | | |
Reason for
Termination | | Severance
Payment | | Accelerated
Vesting of
Restricted
Stock and
Options | | SERP
Benefit | | Benefit under
Excess Cash
Balance Plan | | Continuation
of Health
Benefits | | Outplacement
Services | | Tax Gross-Up
Payment | | Total |
|
By Company
Without
Cause | | $848,077 | | Restricted
Stock:
No acceleration
of vesting | | $691,748 | | $289,032 | | $291,020 | | — | | — | | $2,119,877 |
| | | | Stock Options:
No acceleration
of vesting | | | | | | | | | | | | |
| | (1) | | | | (2) | | (3) | | (4) | | | | | | |
|
By Executive
for Good
Reason | | Severance:
$848,077 | | Restricted
Stock:
No acceleration
of vesting | | $691,748 | | $289,032 | | $291,020 | | — | | — | | $2,119,877 |
| | | | Stock Options:
Accelerated
vesting of
23,334 shares:
$0 value | | | | | | | | | | | | |
| | (1) | | (5) | | (2) | | (3) | | (4) | | | | | | |
|
Executive
Resigns
Before End
of Term | | — | | — | | $691,748 | | $289,032 | | $291,020 | | — | | — | | $1,271,800 |
| | | | | | (2) | | (3) | | (4) | | | | | | |
|
Termination
following
Change in
Control | | $1,575,000 | | Restricted
Stock:
$368,000 | | $691,748 | | $289,032 | | $291,020 | | — | | — | | $3,214,800 |
| | | | Stock Options:
Accelerated
vesting of
46,668 shares:
$0 value | | | | | | | | | | | | |
| | (6) | | (7)(5) | | (2) | | (3) | | (4) | | | | (8) | | |
|
Disability | | — | | Restricted
Stock:
$368,000 | | $691,748 | | $289,032 | | $291,020 | | — | | — | | $1,639,800 |
| | | | Stock Options:
Accelerated
vesting of
23,334 shares:
$0 value | | | | | | | | | | | | |
| | | | (9)(5) | | (10) | | (3) | | (4) | | | | | | |
|
Death | | — | | Restricted
Stock:
$368,000 | | $691,748 | | $289,032 | | — | | — | | — | | $1,348,780 |
| | | | Stock Options:
Accelerated
vesting of
23,334 shares:
$0 value | | | | | | | | | | | | |
| | | | (9)(5) | | (10) | | (3) | | | | | | | | |
|
Cause | | — | | — | | — | | $289,032 | | — | | — | | — | | $289,032 |
| | | | | | | | (3) | | | | | | | | |
Notes to Table on Gary M. Bahler
|
(1) | | | | The severance amount equals three times weekly salary multiplied by executive’s 28 years of service and would be payable six months following termination. |
|
(2) | | | | This amount is the total benefit payable under the Supplemental Executive Retirement Plan (“SERP”). The payments would be made quarterly over a three-year period. The first two quarterly payments would be made six months following the executive’s termination date, with the remaining payments made quarterly during the remainder of the three-year period. |
49
|
(3) | | | | Benefit payable as of January 31, 2009 in a lump sum under the Foot Locker Excess Cash Balance Plan six months following executive’s termination date. No information is provided with respect to the benefit under the Foot Locker Retirement Plan because that plan is available generally to all salaried employees and does not discriminate in terms of scope, terms, or operation in favor of the executive officers. |
|
(4) | | | | Mr. Bahler would be entitled under the SERP to the continuation of medical and dental insurance benefits following termination. The benefits would be substantially the same as those benefits to which senior executives are entitled under Foot Locker’s medical and dental plans for active employees. Mr. Bahler would be required to pay the insurance premium applicable to actively employed senior executives, including any subsequent increases in the premiums. The amount shown in the table represents the amount accrued by the Company for Mr. Bahler’s post-termination medical and dental benefits. |
|
(5) | | | | The fair market value of a share of the Company’s stock on January 31, 2009 was less than the exercise price of each of the unvested options that would be accelerated, so the intrinsic value of the option on that date was $0. |
|
(6) | | | | The severance amount equals three times the executive’s annual salary. |
|
(7) | | | | This amount represents the value of 50,000 shares of restricted stock that would vest on termination. The shares were valued at $7.36. |
|
(8) | | | | If the payments or benefits received by the executive following a Change in Control are subject to the excise tax under Section 4999 of the Internal Revenue, then the Company would automatically reduce Mr. Bahler’s payments and benefits to an amount equal to $1 less than the amount that would subject him to the excise tax, as long as the reduced amount would result in a greater benefit to him compared to the unreduced amount on a net after-tax basis. |
|
(9) | | | | The Compensation and Management Resources Committee may, but is not obligated to, accelerate the vesting of some or all of executive’s restricted stock. The number shown in the table assumes approval of the accelerated vesting of 50,000 shares of restricted stock, valued at $7.36. |
|
(10) | | | | SERP benefit payable in a lump sum following the determination of disability or the date of death. |
50
LAURIE J. PETRUCCI
| | | | | | | | | | | | | | | | |
Reason for
Termination | | Severance
Payment | | Accelerated
Vesting of
Restricted
Stock and
Options | | SERP
Benefit | | Benefit under
Excess Cash
Balance Plan | | Continuation
of Health
Benefits | | Outplacement
Services | | Tax Gross-Up
Payment | | Total |
|
By Company
Without
Cause | | $468,600 | | Restricted
Stock:
No acceleration
of vesting | | — | | $65,171 | | $5,603 | | — | | — | | $539,374 |
| | | | Stock Options:
No acceleration
of vesting | | | | | | | | | | | | |
| | (1) | | | | | | (2) | | (3) | | | | | | |
|
By Executive
for Good
Reason | | $468,600 | | Restricted
Stock:
No acceleration
of vesting | | — | | $65,171 | | $5,603 | | — | | — | | $539,374 |
| | | | Stock Options:
Accelerated
vesting of
23,334 shares:
$0 value | | | | | | | | | | | | |
| | (1) | | (4) | | | | (2) | | (3) | | | | | | |
|
Executive
Resigns
Before End
of Term | | — | | — | | — | | $65,171 | | — | | — | | — | | $65,171 |
| | | | | | | | (2) | | (3) | | | | | | |
|
Termination
following
Change in
Control | | $1,405,800 | | Restricted
Stock:
$368,000 | | — | | $65,171 | | $5,603 | | — | | — | | $1,844,574 |
| | | | Stock Options:
Accelerated
vesting of
46,668 shares:
$0 value | | | | | | | | | | | | |
| | (5) | | (6)(4) | | | | (2) | | (3) | | | | (7) | | |
|
Disability | | — | | Restricted
Stock:
$368,000 | | $436,698 | | $65,171 | | $5,603 | | — | | — | | $875,472 |
| | | | Stock Options:
Accelerated
vesting of
23,334 shares:
$0 value | | | | | | | | | | | | |
| | | | (8)(4) | | | | (2) | | (3) | | | | | | |
|
Death | | — | | Restricted
Stock:
$368,000 | | $436,698 | | $65,171 | | — | | — | | — | | $869,869 |
| | | | Stock Options:
Accelerated
vesting of
23,334 shares:
$0 value | | | | | | | | | | | | |
| | | | (8)(4) | | | | (2) | | | | | | | | |
|
Cause | | — | | — | | — | | $65,171 | | — | | — | | — | | $65,171 |
| | | | | | | | (2) | | | | | | | | |
Notes to Table on Laurie J. Petrucci
|
(1) | | | | The severance amount equals 52 weeks’ salary and would be payable six months following termination. |
|
(2) | | | | Benefit payable as of January 31, 2009 in a lump sum under the Foot Locker Excess Cash Balance Plan six months following the executive’s termination date. No information is provided with respect to the benefit under the Foot Locker Retirement Plan because that plan is available generally to all salaried employees and does not discriminate in terms of scope, terms, or operation in favor of the executive officers. |
51
|
(3) | | | | This amount reflects the estimated cost to the Company of payments to Ms. Petrucci to reimburse her for the difference between the cost of the COBRA continuation coverage premium and the amount she would have paid for medical and dental coverage as an active associate for 18 months following her termination. |
|
(4) | | | | The fair market value of a share of the Company’s stock on January 31, 2009 was less than the exercise price of each of the unvested options that would be accelerated, so the intrinsic value of the option on that date was $0. |
|
(5) | | | | The severance amount equals three times the executive’s annual salary. |
|
(6) | | | | This amount represents the value of 50,000 shares of restricted stock that would vest on termination. The shares were valued at $7.36. |
|
(7) | | | | If the payments or benefits received by the executive following a Change in Control are subject to the excise tax under Section 4999 of the Internal Revenue, then the Company would automatically reduce Ms. Petrucci’s payments and benefits to an amount equal to $1 less than the amount that would subject her to the excise tax, as long as the reduced amount would result in a greater benefit to her compared to the unreduced amount on a net after-tax basis. |
|
(8) | | | | The Compensation and Management Resources Committee may, but is not obligated to, accelerate the vesting of some or all of executive’s restricted stock. The number shown in the table assumes approval of the accelerated vesting of 50,000 shares of restricted stock, valued at $7.36. |
52
RICHARD MINA
On September 30, 2008, we notified Mr. Mina that the Company was terminating his employment without Cause as of amounts reported for 1998 are stated below. The sharesOctober 31, 2008. Subsequently, the Audit Committee retained counsel to conduct an investigation into an anonymous allegation communicated to the Company with regard to Mr. Mina. Mr. Mina subsequently brought an action against the Company in connection with the termination of Common Stock for
the matching contribution were valued at $6.50 per share, which represents
the closing price of a share of Common Stock on December 31, 1998, the last
dayhis employment. As of the plan year.
EMPLOYER MATCHING
CONTRIBUTION UNDER
NAME LIFE INSURANCE PREMIUM 401(K) PLAN
- ---- ---------------------- ------------------
R. N. Farah.................... $5,012 $1,020
D. W. Hilpert.................. $9,840 $1,020
M. J. Branman.................. $1,575 $1,020
(d) Elected todate of this position in March 1996.
(e) Includes $200,000 paid as a discretionary bonusproxy statement, no severance benefit, payments under the terms ofSERP, or payment under the Excess Cash Balance Plan have been made to Mr. Branman's employment.
(f) Dollar value of premium paid by the Company for term life insurance policy
for the benefitMina. In addition, as of the named executive.
(g) Helddate of this position from September 8, 1997 untilproxy statement, no final determination has been made with regard to the status of his resignation, effective
February 26, 1999.
(h) Tax gross-up payment related to relocation.
(i) Amount includes reimbursement for relocation expenses of $11,149 and payment
of premium of $3,412 for term life insurance policy for the benefit of named
executive.
(j) Guaranteed bonus paid pursuant to terms of employment.
(k) Amount includes a sign-on bonus of $100,000 and reimbursement for relocation
expenses of $26,664.
(l) Amount includes a sign-on bonus of $200,000 and reimbursement for relocation
expenses of $54,620.
(m) This payout was made for the 1996-1998 Performance Period. Fifty percent of
the total payout listed was made in cash and fifty percent was made in
shares of the Company's Common Stock.termination. The amounts shown in the table reflect the totalamount of the cash payment andpayments that the valueCompany anticipates that it would make to Mr. Mina as a consequence of the shares receivedtermination of his employment without Cause. Mr. Mina forfeited all of his unvested restricted stock on the
payment date. In accordance with the provisionshis termination date, and there was no acceleration of the Long-Term Incentive
Compensation Plan, the average of the daily closing prices of a share of the
Company's Common Stock in the 60-day period immediately preceding the
payment date of April 16, 1999 ($5.91228 per share) was used to determine
14
18
the stock portion of the payout. If the payouts had been made fully in cash,
the cash payment would have been: $1,365,600 for Mr. Farah; $682,800 for Mr.
Hilpert; $352,216 for Mr. Branman; and $306,181 for Mr. DeWolf.
(n) Represents prorated cash payout for the 1996-1998 Performance Period.
LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR(a)
PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF PERIOD NON-STOCK PRICE-BASED PLAN
SHARES, UNITS UNTIL -------------------------------------
NAME OR OTHER RIGHTS PAYOUT THRESHOLD TARGET MAXIMUM
- ---- --------------- ----------- --------- ---------- ----------
R. N. Farah.................. 1,500,000 1998-2000 $337,500 $1,350,000 $2,490,000
D. W. Hilpert................ 825,000 1998-2000 185,625 742,500 1,369,500
M. J. Branman................ 435,000 1998-2000 97,875 391,500 722,100
J. E. DeWolf III............. 406,250 1998-2000 91,406 365,625 674,375
R. Johnson(b)................ 434,000 1998-2000 N/A N/A N/A
- ---------------
(a) The named executive officers, excluding Mr. Johnson, and eight other
executive officers and key employees of the Company participate in the
Long-Term Incentive Compensation Plan ("Long-Term Plan"). Mr. Johnson
participated in this plan prior to his resignation. Under the Long-Term
Plan, individual target awards are expressed as a percentage of the
participant's annual base salary. The amounts shown in the table above under
the column headed "Number of Shares, Units or Other Rights" represent the
annual rate of base salary for 1998 for each of the named executive
officers. The amounts shown in the columns headed "Threshold," "Target" and
"Maximum" represent 22.5 percent, 90 percent and 166 percent, respectively,
of the named executive officer's annual base salary in the first year of the
Performance Period and represent the amount that would be paid to him at the
end of the Performance Period if the established performance goals are
attained.
Any payout under the Long-Term Plan is calculated based upon the Company's
performance in the Performance Period and measured against the performance
criteria set for the participant at the beginning of the Performance Period
by the Compensation Committee. These performance goals are based on one or
more of the following criteria: (i) the attainment of certain target levels
of, or percentage increase in, consolidated net income; or (ii) the
attainment of certain levels of, or a specified increase in, return on
invested capital. In addition, to the extent permitted by Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code")
(if applicable), the Compensation Committee has the authority to incorporate
provisions in the performance goals allowing for adjustments in recognition
of unusual or non-recurring events affecting the Company or the Company's
financial statements, or in response to changes in applicable laws,
regulations or accounting principles. Unless otherwise determined by the
Compensation Committee, payment in connection with such awards shall be made
only if and to the extent performance goals for the Performance Period are
attained and generally only if the participant remains employed by the
Company throughout the Performance Period. The Compensation Committee may
award, after completion of the Performance Period, a pro-rata payment to any
participant whose employment terminated during the Performance Period.
Upon a Change in Control, as defined in the Long-Term Plan, the Compensation
Committee may, to the extent permitted under Section 162(m) of the Internal
Revenue Code (if applicable), pay out an amount equal to or less than a
pro-rata portion (through the date of the Change in Control) of the
individual target award based on the actual performance results achieved
from the beginning of the Performance Period to the date of the Change in
Control and the performance results that would have been achieved had the
performance goals been met for the balance of the Performance Period.
Payment to a participant under the Long-Term Plan for each Performance
Period will be made, at the discretion of the Compensation Committee, either
in cash or in shares of Common Stock. If payment is made in shares of Common
Stock, the number of shares to be paid to the participant will be determined
by dividing the achieved percentage of a participant's annual base salary by
the fair market value, as
15
19
defined in the Long-Term Plan, of the Common Stock on the date of payment.
The amountvesting of any payout for the performance period may not exceed the
lesser of 300 percent of the participant's annual base salary or $5,000,000.
(b) Although Mr. Johnson was granted an award under the Long-Term Plan for the
1998-2000 Performance Period, hehis unvested stock options. He is not entitled to receive any payment
under this plan as a result of his resignation.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS(A)
-------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES PRICE EXPIRATION PRESENT
NAME GRANTED(#) IN FISCAL YEAR ($/SHARE) DATE VALUE($)(B)
- ---- ---------- -------------- --------- ---------- -----------
R. N. Farah...................... 0 N/A N/A N/A N/A
D. W. Hilpert.................... 100,000 3.9 25.2813 04/08/08 896,065
M. J. Branman.................... 50,000 2.0 25.2813 04/08/08 448,033
100,000 3.9 13.50 08/12/08 443,685
R. Johnson(c).................... 43,000 1.7 25.2813 02/26/99 N/A
J. E. DeWolf III................. 50,000 2.0 25.2813 04/08/08 448,033
- ---------------
(a) During 1998, stock options were grantedtax gross-up payment.
| | | | | | | | | | | | | | | | |
Reason for
Termination | | Severance
Payment | | SERP
Benefit | | Benefit under
Excess Cash
Balance Plan | | Continuation
of Health
Benefits | | Continuation of
Automobile
Expense
Reimbursement | | Outplacement
Services | | Insurance
Premiums | | Total |
|
By Company
Without
Cause | | $1,463,942 | | $914,620 | | $527,391 | | $348,372 | | $30,000 | | $20,000 | | $5,507 | | $3,309,832 |
| | (1) | | (2) | | (3) | | (4) | | (5) | | | | (6) | | |
Notes to the named executive officers,
except Mr. Farah,Table on April 8, 1998 under the 1998 Stock Option and Award
Plan (the "1998 Award Plan") and the 1995 Stock Option and Award Plan (the
"1995 Award Plan"). In addition, a stock option was granted to Mr. Branman
on August 12, 1998.
The per-share exercise price of each stock option may not be less than the
fair market value of a share of Common Stock on the date of grant. In
general, no portion of any stock option may be exercised until the first
anniversary of its date of grant. The options granted on April 8, 1998 will
become exercisable in three equal annual installments, beginning April 8,
1999. The option granted on August 12, 1998 will become exercisable in two
equal installments on April 12, 2000 and August 12, 2000. If an option
holder retires, becomes disabled, or dies while employed by the Company or
one of its subsidiaries, all unexercised options that are then immediately
exercisable, plus those options that would have become exercisable on the
next succeeding anniversary of the date of grant of each option, will remain
(or become) immediately exercisable as of that date. Moreover, upon the
occurrence of a "Change in Control," as defined in the 1995 Award Plan and
the 1998 Award Plan, all outstanding options will become immediately
exercisable as of that date.
Options may remain exercisable for up to three years following an option
holder's retirement orRichard Mina
|
(1) | | | | The severance amount equals three weeks’ salary multiplied by Mr. Mina’s 29 years of service. |
|
(2) | | | | This amount is the total benefit payable under the Supplemental Executive Retirement Plan (“SERP”). The payments would be made quarterly over a three-year period. The first two quarterly payments would be made six months following Mr. Mina’s termination date, with the remaining payments made quarterly during the remainder of the three-year period. |
|
(3) | | | | Benefit payable in a lump sum under the Foot Locker Excess Cash Balance Plan six months following the Mr. Mina’s termination due to disability, and for up to one year
for any other termination of employment for reasons other than cause.
However, under no circumstances may an option remain outstanding for more
than ten years from its date of grant.
(b) Values were calculated as of the date of grant using a Black-Scholes option
pricing model. The values shown in the table are theoretical and do not
necessarily reflect the actual values that the named executive officers may
ultimately realize. Any actual value to the officer will depend on the
extent to which the market value of the Company's Common Stock at a future
date exceeds the option exercise price. In addition to the fair market value
of the Common Stock on the date of grant and the exercise price, which are
identical, the following assumptions were used to calculate the values shown
in the table: a weighted-average risk-free interest rate of 4.57 percent; a
stock price volatility factor of 35 percent; a two year weighted-average
expected award life and a zero dividend yield. The assumptions and
calculations used for the model are consistent with the assumptions for
reporting stock option valuations in the Company's 1998 Annual Report.
16
20
(c) Mr. Johnson resigned from the Company on February 26, 1999. In accordance
with the terms of the 1995 Award Plan and the 1998 Award Plan, the entire
option granted to him on April 8, 1998 was cancelled as of his resignation
date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FY-END(#) FY-END($)(A)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
R. N. Farah.......... 0 N/A 800,000 0 0 0
D. W. Hilpert........ 0 N/A 399,999 200,001 0 0
M. J. Branman........ 0 N/A 75,000 225,000 0 0
J. E. DeWolf III..... 0 N/A 30,000 80,000 0 0
R. Johnson........... 0 N/A 16,666 76,334 0 0
- ---------------
(a) The fair market value (the average of the high and low prices of the
Company's Common Stock) on Friday, January 29, 1999, the last business day
of 1998, was $4.8438. No unexercised options were in-the-money on that date. No information is provided with respect to the benefit under the Foot Locker Retirement Plan because that plan is available generally to all salaried employees and does not discriminate in terms of scope, terms, or operation in favor of the executive officers. |
|
(4) | | | | For a termination without Cause, Mr. Mina would be entitled under the SERP to the continuation of medical and dental insurance benefits. The benefits would be substantially the same as those benefits to which senior executives are entitled under Foot Locker’s medical and dental plans for active employees. Mr. Mina would be required to pay the insurance premium applicable to actively employed senior executives, including any subsequent increases in the premiums. The amount shown in the table represents the amount accrued by the Company for post-termination medical and dental benefits. |
|
(5) | | | | The amount shown in the table represents the maximum reimbursement Mr. Mina is eligible to receive for the continuation of his automobile expense reimbursement. |
|
(6) | | | | The Company paid the annual premiums through December 2008 on a long-term disability insurance policy and through July 2009 on a universal life insurance policy for Mr. Mina. |
53
RETIREMENT PLANS
Foot Locker Retirement Plan
The Company maintains the Venator GroupFoot Locker Retirement Plan (the "Retirement
Plan"“Retirement Plan”), is a defined benefit plan with a cash balance formula, which covers associateseligible employees of the Company and substantially all of itsour United States subsidiaries. All qualified associatesemployees who are at least 21 years old with one year of ageservice are covered by the Retirement Plan. Plan and plan participants become fully vested in their benefits under this plan generally upon completion of five years of service or upon attainment ofreaching normal retirement age 65(age 65) while actively employed.
Under the cash balance formula, each participant has an account, for record keeping purposes only, to which credits are allocated annually based upon a percentage of the participant'sparticipant’s W-2 Compensation, as defined in the Retirement Plan. This percentage is determined by the participant'sparticipant’s years of service with the Company as of the beginning of each calendar year. The following table shows the percentage used to determine credits at the years of service indicated.
PERCENT OF W-2
PERCENT OF ALL COMPENSATION
YEARS OF SERVICE W-2 COMPENSATION OVER $22,000
- ---------------- ---------------- + --------------
Less than 6................................................. 1.10 0.55
6-10........................................................ 1.50 0.75
11-15....................................................... 2.00 1.00
16-20....................................................... 2.70 1.35
21-25....................................................... 3.70 1.85
26-30....................................................... 4.90 2.45
31-35....................................................... 6.60 3.30
More than 35................................................ 8.90 4.45
| | | | | | |
Years of
Service | | Percent of All
W-2 Compensation | | + | | Percent of W-2
Compensation
Over $22,000 |
Less than 6 | | | | 1.10 | | | | | | | 0.55 | |
6–10 | | | | 1.50 | | | | | | | 0.75 | |
11–15 | | | | 2.00 | | | | | | | 1.00 | |
16–20 | | | | 2.70 | | | | | | | 1.35 | |
21–25 | | | | 3.70 | | | | | | | 1.85 | |
26–30 | | | | 4.90 | | | | | | | 2.45 | |
31–35 | | | | 6.60 | | | | | | | 3.30 | |
More than 35 | | | | 8.90 | | | | | | | 4.45 | |
In addition, all balances in the participants'participants’ accounts earn interest at the fixed rate of six6 percent, which is credited annually. At retirement or other termination of employment, an amount equal to the vested balance then credited to the account under the Retirement Plan is payable to the participant in the form of a qualified joint and survivor annuity (if the participant is married) or a life annuity (if the participant is not married). The participant may elect to waive the annuity form of benefit described above and receive benefits under the Retirement Planplan upon retirement in an optional annuity form or an immediate or deferred lump sum, or, upon other termination of employment, in a lump sum. Participants may elect
17
21
one of theAdditional optional forms of benefit with respectpayment are available to the accrued benefit as of
December 31, 1995 if the individual participatedparticipants who were participating in the Retirement Plan as of that date.
December 31, 1995.
Foot Locker Excess Cash Balance Plan
The Internal Revenue Code limits annual retirement benefits that may be paid to, and the compensation that may be taken into account in the determination ofcalculating benefits for, any person under a qualified retirement plan such as the Foot Locker Retirement Plan. Accordingly, for any person covered by the Retirement Plan whose annual retirement benefit, calculated in accordance with the terms of this
plan,the Retirement Plan, exceeds the limitations of the Internal Revenue Code, the Company has adopted the Venator GroupFoot Locker Excess Cash Balance Plan (the "Excess Plan"“Excess Plan”). The Excess Plan is an unfunded, nonqualified benefit plan, under which the individual is paid the difference between the Internal Revenue Code limitations and the retirement benefit to which he or she would otherwise be entitled under the Retirement Plan.
Early Retirement Eligibility
The Foot Locker Retirement Plan provides for a reduced benefit payment to a participant who retires after reaching early retirement age but prior to normal retirement age. Early retirement age is defined under the Retirement Plan and Excess Plan as age 55 with at least 5 years of vesting service. Mr. Serra and Mr. Bahler are the only named executive officers currently eligible for early retirement under these plans.
54
Foot Locker Supplemental Executive Retirement Plan
In addition, the Foot Locker Supplemental Executive Retirement Plan (the "SERP"“SERP”), which is an unfunded, nonqualified benefit plan, provides for payment by the Company of supplemental retirement, death and disability benefits to certain executive officers and certain other key employees of the Company and its subsidiaries.subsidiaries who participate in this plan. The named executive officers, excluding Richard T. Mina, and five of thethree other executive officers of the Company are participantscurrently participate in the SERP. Under the SERP, theThe Compensation and Management Resources Committee
of the Board of Directors sets an annual targeted incentive award under the SERP for each participant consisting of a percentage of salary and bonus based on the Company'sCompany’s performance against target. Achievement of the target causes an eight8 percent credit to a participant's account.participant’s account for that year. The applicable percentage for the year increases or decreases proportionately to the percentage of the Company'sCompany’s performance belowin relation to the target, but may not belowbe less than 4 percent and increases proportionately to the percentage of the
Company's performance above target, but not aboveor more than 12 percent. Participants'percent in any year. Participants’ accounts accrue simple interest at the rate of 6 percent annually.
The table below provides the estimated annual benefit for each of the named
executive officers stated as a single life annuity under the Retirement Plan,
the Excess Plan, and the SERP. Except for R. Johnson, the projections contained
in the table assume each person's continued employment with the Company to his
normal retirement date and that compensation earned during each year after 1998
to the individual's normal retirement date remains the same as compensation
earned by him during 1998. The projections in the table below are based upon the
greater of the accrued benefit as of December 31, 1995 or a single life annuity
determined by converting the account balance projected to normal retirement date
using a 6.00 percent interest rate at normal retirement age based on the average
rate as published in Federal statistical release H.15 (519) for 30-year U.S.
Treasury Bills for December 1998. The applicable interest rate
A participant is the rate
specified in sec.417(e)(3)(A)(ii)(II) of the Internal Revenue Code.
TOTAL ANNUAL BENEFIT TOTAL ANNUAL BENEFIT
FOR YEARS 1-3 FOR YEARS 4 AND SUBSEQUENT
NAMED EXECUTIVE OFFICER FOLLOWING RETIREMENT(A) FOLLOWING RETIREMENT(A)
- ----------------------- ----------------------- --------------------------
R. N. Farah...................................... $2,025,362 $222,816
D.W. Hilpert..................................... $ 422,520 $ 34,336
M.J. Branman..................................... $ 756,118 $ 92,484
J.E. DeWolf III.................................. $ 613,743 $ 60,692
R. Johnson(b).................................... N/A N/A
- ---------------
(a) The amounts stated for years 1-3 following retirement include the SERP
benefits, payable as a lump sum spread over a three-year period. The SERP
projections include a 4 percent credit to the participants' accounts for
1998 and assume an annual 8 percent credit going forward. Beginning with the
fourth year following retirement, the individuals' annual benefits will not
include any SERP payments and, therefore, their annual benefits for those
years will be reduced accordingly.
(b) As a result of Mr. Johnson's resignation on February 26, 1999, he is
ineligibleeligible to receive a benefit under the Retirement Plan.
18
22
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
The Company presently has employment agreements with R. FarahSERP only if his or her age plus years of service at retirement equals at least 65. Currently, Messrs. Serra and D.
Hilpert. In addition,Bahler have age plus years of service totaling at least 65. Mr. Mina had age plus years of service exceeding 65 at the Company has severance agreements with M.J. Branman and
J.E. DeWolf III.
R.N. FARAH
The Company has entered into an employment agreement with Mr. Farah as
Chairman of the Board and Chief Executive Officer for a term ending on January
31, 2003. This agreement supersedes the agreement entered into with Mr. Farah in
1994 (the "1994 Agreement"). The new compensation arrangements reflect a
decision by the Company and Mr. Farah to reconfigure his compensation package to
reduce significantly his base salary and to increase the amounttime of his compensation that is tiedtermination of employment. If a participant’s employment terminates due to the performance of the Company and the price of the
Company's Common Stock. During the contract term, Mr. Farah will receive a base
salary of not less than $1 million per year, which is a reduction of $500,000
per year from the base salarydeath or disability he was paid under the 1994 Agreement. In addition,
Mr. Farah participates in the Annual Incentive Compensation Plan (the "Annual
Plan") and the Long-Term Plan. His payout at budget under the Annual Plan is 100
percent of base salary.
Under(or his new employment agreement, Mr. Farah will receive an annual stock
option grant to purchase that number of shares of Common Stock having a market
value of $5,000,000 on the date of grant. He will also receive a one-time grant
of 275,000 shares of restricted stock under the 1998 Award Plan. The shares of
restricted stock will be subject to a restriction related to Mr. Farah's
continued employment with the Company, and will vest in three equal annual
installments beginning January 31, 2000.
In the event Mr. Farah's employment is terminated by him for good reason or
by the Company without cause, then Mr. Farahestate) would be entitled to paymentspayment of any unpaid base salaryhis SERP balance. A participant’s SERP benefit is paid in 12 quarterly installments following retirement, with the first two quarters payable six months following retirement. Upon death or disability, a participant’s SERP benefit is paid in a lump sum.
The SERP provides for the period prior to termination, any declared but
unpaid bonuses,continuation of medical and amounts due under any employee benefit or incentive plan.
Also, to the extent any sharesdental insurance benefits if an executive’s age plus years of restricted stock which were granted to Mr.
Farah are unvested, these shares will immediately vest. Thereafter, for a period
ending on the earliest of (a) the later of January 31, 2003 or two years from
the date of termination, (b)service total at least 65 when his death, or (c) the violation of any
post-employment contract requirements, Mr. Farahemployment terminates. The benefits would be substantially the same as those benefits to which senior executives are entitled under Foot Locker’s medical and dental plans for active employees. The terminated executive would be required to receive
payments equalpay the insurance premium applicable to his annual base salary immediately prior to termination. Ifactively employed senior executives, including any increases in the sum of the foregoing payments is less than the guaranteed severance amount
provided for under the agreement,premiums, and the Company willwould pay the difference to Mr.
Farah. between the actual premium rate and the active employee rate.
Payment of Retirement Benefits
The guaranteed severance amounts are as follows: (i) if Mr. Farah's
employment is terminated earlier than January 31, 2000, his guaranteed severance
amount is $4,500,000; (ii) if his termination date is from February 1, 2000 to
January 31, 2001, his guaranteed severance amount is $4,000,000; and (iii) if
his termination date is after January 31, 2001, his guaranteed severance amount
is $3,000,000.
Intable below provides the event Mr. Farah's employment is terminated, whether by the Company
or by Mr. Farah, following a Change in Control, as defined in the agreement, Mr.
Farah would receive the same payments he would have received as if he had
terminated his employment for good reason. Also, all of Mr. Farah's unvested
shares of restricted stock and all of his unvested stock options would
immediately vest. If the sumpresent value of the paymentsaccumulated benefit payable to be made to Mr. Farah ineach of the event of his termination following a Change in Control is less than three times
his then current base salary plus annual bonus at target in the year of
termination, then the Company will pay the difference to Mr. Farah. In the event
he becomes entitled to the payments in this paragraphnamed executives and the payments are
determinedyears of service credited to constitute payments under Section 280G(b)(2)each of the Internal
Revenue Code and subject to an excise tax under Section 4999 of the Internal
Revenue Code, the Company will provide him with a gross-up payment for the
excise and related income taxes incurred in connection with the gross-up
payment.
Finally, if the Company does not offer to extend his employment agreement
for at least one year beyond January 31, 2003them under the same terms and
conditions then existing, then the Company will pay Mr. Farah the sum of
$1,500,000.
19
23
D.W. HILPERT
The Company has entered into a new employment agreement with Mr. Hilpert as
President and Chief Operating Officer for a term ending on January 31, 2002.
This agreement supersedes the agreement entered into with Mr. Hilpert in 1997.
During the contract term, Mr. Hilpert will receive a base salary of not less
than $825,000 per year. In addition, Mr. Hilpert participates in the Annual Plan
and the Long-Term Plan. His payout at budget under the Annual Plan is 75 percent
of base salary.
In the event Mr. Hilpert's employment is terminated by him for good reason
or by the Company without cause (or if the Company does not extend the term of
the employment agreement for at least one year beyond January 31, 2002 under
substantially similar terms and conditions), Mr. Hilpert would be entitled to
payments of any unpaid base salary for the period prior to termination, any
declared but unpaid bonuses, and amounts due under any employee benefit or
incentive plan. Thereafter, for a period ending on the earliest of (a) the later
of January 31, 2002 or one year from his termination date (b) his death, or (c)
the violation of any post-employment contract requirements, Mr. Hilpert would be
entitled to receive payments equal to his annual base salary immediately prior
to termination.
Mr. Hilpert would receive the payments described in the paragraph above (a)
in the event of the termination of his employment within one year following a
Change in Control, as defined in the agreement, or (b) if within one year
following a Change in Control the Company's Chief Executive Officer immediately
prior to a Change in Control ceases to hold this position and Mr. Hilpert
terminates his employment within 90 days of this change in the Company's Chief
Executive Officer. If the sum of the payments to be made to Mr. Hilpert in the
event of his termination following a Change in Control if the payments continued
until the later of January 31, 2002 or one year following termination is less
than three times his then current base salary plus annual bonus at target in the
year of termination, then the Company will pay the difference to Mr. Hilpert. In
the event he becomes entitled to the payments in this paragraph and the payments
are determined to constitute payments under Section 280G(b)(2) of the Internal
Revenue Code and subject to an excise tax under Section 4999 of the Internal
Revenue Code, the Company will provide him with a gross-up payment for the
excise and related income taxes incurred in connection with the gross-up
payment.
Finally, if Mr. Hilpert's employment is terminated by him for good reason
or by the Company without cause, or following a Change in Control, or if his
employment with the Company is not extended beyond January 31, 2002, and the
amount of retirement benefits Mr. Hilpert is then entitled to under theFoot Locker Retirement Plan, the Excess Plan, and the SERP determined using interest rate and mortality rate assumptions consistent with those used in our 2008 financial statements. With regard to Mr. Mina, the SERP amount assumes that Mr. Mina is less than $1,300,000, the
Company will increase the amount in his SERP account so that this total is
reached. This provision compensates Mr. Hilperteligible for the SERP benefit he would have
received underand reflects his previous employer's supplementary plan.
M.J. BRANMAN AND J.E. DEWOLF III
account balance at February 1, 2008 with no interest or pay credit for 2008.
55
PENSION BENEFITS
| | | | | | | | |
(a) | | (b) | | (c) | | (d) | | (e) |
Name | | Plan
Name | | Number of Years
Credited Service
(#)(1) | | Present Value of
Accumulated Benefit
($)(1) | | Payments During
Last Fiscal Year
($) |
M. Serra | | Retirement Plan | | | | 9 | | | | | 41,737 | | | | | 0 | |
| | Excess Plan | | | | 9 | | | | | 450,300 | | | |
| | SERP | | | | 11 | | | | | 2,415,210 | | | |
| | | | | | | | |
| | | | | | | | 2,907,247 | | | |
| | | | | | | | |
R. McHugh | | Retirement Plan | | | | 10 | | | | | 44,118 | | | | | 0 | |
| | Excess Plan | | | | 10 | | | | | 71,460 | | | |
| | SERP | | | | 4 | | | | | 111,261 | | | |
| | | | | | | | |
| | | | | | | | 226,839 | | | |
| | | | | | | | |
R. Halls | | Retirement Plan | | | | 7 | | | | | 31,890 | | | | | 0 | |
| | Excess Plan | | | | 7 | | | | | 83,453 | | | |
| | SERP | | | | 6 | | | | | 307,641 | | | |
| | | | | | | | |
| | | | | | | | 422,984 | | | |
| | | | | | | | |
G. Bahler | | Retirement Plan | | | | 27 | | | | | 224,935 | | | | | 0 | |
| | Excess Plan | | | | 27 | | | | | 279,245 | | | |
| | SERP | | | | 11 | | | | | 633,027 | | | |
| | | | | | | | |
| | | | | | | | 1,137,207 | | | |
| | | | | | | | |
L. Petrucci | | Retirement Plan | | | | 10 | | | | | 40,920 | | | | | 0 | |
| | Excess Plan | | | | 10 | | | | | 61,412 | | | |
| | SERP | | | | 8 | | | | | 397,755 | | | |
| | | | | | | | |
| | | | | | | | 500,087 | | | |
| | | | | | | | |
Former Executive Officer | | | | | | |
R. Mina | | Retirement Plan | | | | 27 | | | | | 178,209 | | | | | 0 | |
| | Excess Plan | | | | 27 | | | | | 524,837 | | | |
| | SERP | | | | 10 | | | | | 933,128 | | | |
| | | | | | | | |
| | | | | | | | 1,636,174 | | | |
| | | | | | | | |
Notes to Pension Benefits Table
|
(1) | | | | In general, the present value of accumulated benefits was determined using the same measurement date (January 31, 2009) and assumptions used for financial reporting purposes. Expected retirement age for the Retirement Plan and the Excess Plan is equal to normal retirement age as defined by the plans. For the SERP, the age at which Participants become eligible for retirement under the plan is used as the expected retirement age. The following are the key assumptions that were used in calculating the values in the table: |
| | | FAS 87 Discount rate of 6.5 percent for the Retirement Plan and the SERP;
FAS 87 Discount rate of 6.4 percent for the Excess Plan. | |
• | | | | Retirement age is assumed to be 65 for the Retirement Plan and the Excess Plan; for the SERP the retirement age is assumed to be when age plus years of service equal 65. |
|
• | | | | 417(e) interest rate of 6 percent. |
|
• | | | | Form of payment for the Retirement Plan and the Excess Plan is a lump sum; the form of payment for the SERP is 12 quarterly installments. |
The Companyyears of service for the SERP reflect the number of years that the executive has entered into Senior Executive Severance Agreements with
M.J. Branman, J.E. DeWolf III and five other executive officers, which provide
for severance payments if their employment is terminatedbeen approved by the Company without
cause or by them for good reason. In the event such officer's employment is
terminated within 24 months followingCompensation Committee as a Changeparticipant in Control, he will receive 2
weeks' salary plus prorated annual bonus for each yearthat plan. Mr. Serra’s years of service with a
minimum of 104 weeks. If such termination does not occur within 24 months
following a Change in Control, he will be entitled to receive 2 weeks' salary
plus prorated annual bonus for each year of service, with a minimum of 26 weeks.
The severance benefit payable tounder the executive under this agreement may not be
less than 12 months' salary. With respect to Mr. Branman, ifRetirement Plan and the total severance
benefit he would be entitled to isExcess Plan are less than the sumnumber of years of credited service under the SERP because of the following amounts in
therequirement that an employee must complete a year of termination: (i) his annual base salary, (ii) his expected annual
bonus at target and (iii) $200,000, then he would be entitled to receive
additional payments from the Companyeligibility service before becoming eligible for participation in the amount of the difference.
The Company also had a Senior Executive Severancethese plans.
56
Trust Agreement with R. Johnson
providing for severance payments upon his termination by the Company or by him
for good reason. As a result of Mr. Johnson's resignation, however, this
agreement is of no further force and effect, and no payments were made to Mr.
Johnson under the agreement.
20
24
Certain Benefit Plans
The Company has established a trust (the "Trust") in connection withfor certain of its benefit plans, arrangements, and agreements, including certain of
those described above,the Supplemental Executive Retirement Plan, the Foot Locker Excess Cash Balance Plan, the executive employment agreements, and other benefit plans, agreements or arrangements that may at the request of the Company, hereafter be covered at a later date (collectively, the "Benefit Obligations"“Benefit Obligations”). Under the Trusttrust agreement, in the event ofif there is a Change in Control of the Company (as defined in the Trust Agreement)agreement), the trustee would pay to the persons entitled to the Benefit Obligations out of funds held in the
Trust, the amounts to which such personsthey may become entitled under the Benefit Obligations. Upon the occurrence of a Potential Change in Control of the Company (asas defined in the Trust agreement),trust agreement, the Company is required to fund the Trusttrust with an amount sufficient to pay the total amount of the Benefit Obligations. Following the occurrence, and during the pendency, of a Potential Change in Control, the trustee iswould be required to make payments of Benefit Obligations to the extent suchthese payments are not made by the Company.
EQUITY COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998,PLAN INFORMATION
The following table provides information as of January 31, 2009 for compensation plans under which equity securities may be issued.
| | | | | | |
| | (a) | | (b) | | (c) |
|
Plan Category | | Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights | | Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights | | Number of Securities
Remaining Available
For Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in
Column(a)) |
|
Equity Compensation Plans Approved by Security Holders | | | | 6,079,819 | | | | $ | | 18.6431 | | | | | 7,352,414 | (1)(2) | |
Equity Compensation Plans Not Approved by Security Holders | | | | 0 | | | | | 0 | | | | | 0 | |
Total | | | | 6,079,819 | | | | $ | | 18.6431 | | | | | 7,352,414 | |
Notes to Equity Compensation Plan Table
|
(1) | | | | Includes 2,462,275 shares available for future issuance under the 2003 Employees Stock Purchase Plan (the “2003 Purchase Plan”) other than upon the exercise of an option, warrant or right. |
Participating employees under the following individuals (none2003 Purchase Plan may contribute up to 10 percent of whom hadtheir annual compensation to acquire shares of the Company’s Common Stock at 85 percent of the lower market price on one of two specified dates in each plan year.
| | | The 2007 Stock Incentive Plan (the “2007 Plan”) currently is the only plan under which stock awards may be granted to directors, officers and other employees of Foot Locker. The 2007 Plan limits the number of shares that may be awarded to participants in the form of restricted stock or Other Stock-Based Awards to 1.5 million shares out of the total number of shares authorized. As of the end of the 2008 fiscal year, a total of 1,172,868 shares remained available for issuance as restricted stock and Other Stock-Based Awards, and these shares are included in the total number of shares disclosed in column (c). | Payouts under the Long-Term Incentive Compensation Plan may be made in cash or shares of Common Stock. If shares are used, they would be issued as Other Stock-Based Awards under the 2007 Stock Incentive Plan.
57
ITEMS TO BE VOTED ON BY SHAREHOLDERS
PROPOSAL 1:
ELECTION OF DIRECTORS
Our Certificate of Incorporation provides that the Board of Directors be divided into three classes serving staggered three-year terms, each class to be as nearly equal in number as the other two. The terms of the four directors constituting Class III expire at the 2009 annual meeting.
Alan D. Feldman, Jarobin Gilbert Jr., and David Y. Schwartz will be considered for election as directors in Class III, to serve for three-year terms expiring at the annual meeting in 2012. In order to make the classes equal in number, Cheryl Nido Turpin, who has been an officer or
employeea director of the Company since 2001, will be considered for election as a director in Class II, to hold office for a two-year term expiring at the annual meeting in 2011. Each nominee has been nominated by the Board of Directors for election and has consented to serve. All of the nominees were elected to serve for their present terms at the 2006 annual meeting. The five remaining directors will continue in office until the expiration of their terms at the 2010 or 2011 annual meeting. If, prior to the annual meeting, any nominee is not able to serve, then the persons designated as proxies for this meeting (Gary M. Bahler, Robert W. McHugh and Matthew D. Serra) will have full discretion to vote for another person to serve as a director in place of its subsidiaries) servedthat nominee.
Under the retirement policy for directors, which is described on Page 9, Mr. Preston would be required to retire from the Board following the 2009 Annual Meeting because he has reached age 75. Mr. Preston, who was elected to a three-year term ending in 2010, currently serves as the lead director. Last year, on the Compensation
Committee: Philip H. Geierrecommendation of the Nominating and Corporate Governance Committee, the Board of Directors waived the retirement policy for Mr. Preston and provided that the Board would review the waiver prior to the 2009 annual meeting of shareholders. This year, the Board reviewed the waiver for Mr. Preston and, upon the recommendation of the Nominating and Corporate Governance Committee, approved a continuation of the waiver so that Mr. Preston may continue to serve on the Board and as lead director. Mr. Preston did not participate in the deliberations or decisions of either the Board or the committee on this matter.
Biographical information follows for the four nominees and for each of the five other directors of the Company whose terms will continue after the 2009 annual meeting. The ages shown are as of April 9, 2009. There are no family relationships among the directors or executive officers of the Company.
The Board of Directors recommends that shareholders vote FOR the election of the four identified
nominees to the Board of Directors.
Nominee for Director
Term Expiring in 2011
Cheryl Nido Turpin.Age 61. Director since 2001. President and Chief Executive Officer of the Limited Stores (retail merchants), a division of Limited Brands, Inc., from June 1994 to August 1997. Ms. Turpin is a director of The Warnaco Group, Inc.
Nominees for Director
Terms Expiring in 2012
Alan D. Feldman.Age 57. Director since 2005. Chairman, President and Chief Executive Officer of Midas, Inc. (automotive repair and maintenance services) since May 1, 2006. He was President and Chief Executive Officer of Midas from January 13, 2003 to April 30, 2006. He was an independent consultant from March 2002 to January 2003. He is a director of Midas, Inc. and JBT Corporation.
Jarobin Gilbert Jr.Age 63. Director since 1981. President and Chief Executive Officer of DBSS Group, Inc. (management, planning and trade consulting services) since 1992. He is a director of PepsiAmericas, Inc. and Midas, Inc. He is Chairman of the Board of Trustees of Atlantic Mutual
58
Insurance Company. Mr. Gilbert is also a director of Harlem Partnership, Inc. and a permanent member of the Council on Foreign Relations.
David Y. Schwartz.Age 68. Director since 2000. Independent business adviser and consultant, principally in the retail, distribution and service industries, since July 1997. He was a partner with Arthur Andersen LLP from 1972 until he retired from that public accounting firm in 1997. Mr. Schwartz is a director of Walgreen Co., Margaret P. MacKimmStage Stores, Inc., and True Value Company.
Directors Continuing in Office
Terms Expiring in 2010
James E. Preston. There
were no interlocks with other companies within the meaningAge 75. Director since 1983. Chairman of the SEC's proxy
rules.
COMPENSATION COMMITTEE'S REPORT TO SHAREHOLDERS
ON EXECUTIVE COMPENSATIONBoard of Avon Products, Inc. (manufacture and sale of beauty and related products) from 1989 to May 6, 1999, and Chairman and Chief Executive Officer of Avon Products, Inc. from 1989 to June 1998.
Matthew D. Serra.Age 64. Director since 2000. The CompensationCompany’s Chairman of the Board since February 1, 2004, President since April 12, 2000, and Chief Executive Officer since March 4, 2001. He was the Company’s Chief Operating Officer from February 9, 2000 to March 3, 2001.
Dona D. Young.Age 55. Director since 2001. Chairman of the Board, President and Chief Executive Officer of The Phoenix Companies, Inc. (provider of wealth management products and services to individuals and institutions) to April 15, 2009. Mrs. Young has held the positions of Chairman of the Board since April 1, 2003, President since February 2000, and Chief Executive Officer since January 1, 2003. Mrs. Young is also Chairman of the Board since April 1, 2003 and Chief Executive Officer since January 1, 2003 of Phoenix Life Insurance Company. She previously served as President of Phoenix Life Insurance Company from February 2000 to March 31, 2003 and Chief Operating Officer from February 2001 to December 31, 2002. She is a director of The Phoenix Companies, Inc. until April 15, 2009.
Directors Continuing in Office
Terms Expiring in 2011
Nicholas DiPaolo.Age 67. Director since 2002. Vice Chairman of Bernard Chaus, Inc. (apparel designer and manufacturer) from November 1, 2000 to June 23, 2005; Chief Operating Officer of Bernard Chaus from November 1, 2000 to October 18, 2004. Mr. DiPaolo is a director of JPS Industries and R.G. Barry Corporation.
Matthew M. McKenna.Age 58. Director since 2006. President and Chief Executive Officer of Keep America Beautiful, Inc. (non-profit community improvement and educational organization) since January 1, 2008. He was Senior Vice President of Finance of PepsiCo, Inc. (global snack and beverage company) from August 6, 2001 through December 31, 2007. He is a director of PepsiAmericas, Inc. Mr. McKenna is also a member of the Duke University Library Advisory Board and serves on the board of the Manhattan Theater Club. He is also an adjunct professor at Fordham Business School and Fordham Law School in New York.
59
PROPOSAL 2:
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Audit Committee of the Board of Directors (the "Committee"),
composed of the directors listed below, has responsibility for all compensation
matters involving the Company's executive officers and for significant elements
of the compensation of the chief executive officers of its operating units. None
of the members of the Committee are officers or employees of the Company or any
of its subsidiaries. This is our report on the Company's executive compensation
in 1998.
Compensation Policy. It is the policy of the Committee to design and
maintain a compensation policy that will enable the Company to attract,
motivate, and retain executive officers and the chief executive officers of its
operating units by providing a fully competitive total compensation opportunity.
This policy provides for (i) competitive base salaries, which reflect the
responsibilities of the position held and performance in the position; (ii)
annual incentive opportunities payable in cash, which are based on the Company's
achievement of previously specified performance goals; (iii) long-term incentive
opportunities, payable in stock or cash, which are based on the Company's
achievement of previously specified performance goals; and (iv) long-term
stock-based incentive opportunities, which are designed to strengthen the
mutuality of interest between participating associates and the shareholders. The
Committee strives to balance short- and long-term incentive objectives and to
employ prudent judgment in establishing performance criteria, evaluating
performance, and determining actual incentive payment levels. For senior level
management associates the compensation policy provides that a greater percentage
of total compensation will be at risk, dependent upon the Company's performance
in relation to targets established under incentive compensation plans, or, in
the case of stock options, increases in the price of the Company's Common Stock.
Compensation Program. The Committee has established a total compensation
program for senior executive officers (the Chairman of the Board and Chief
Executive Officer, President and Chief Operating Officer, and Senior Vice
Presidents) and the chief executive officers of its operating businesses
consisting of five components: base salary, participation in the Annual Plan,
participation in the Long-Term Plan, grants under the 1995 and 1998 Award Plans,
and the opportunity to participate in the employee stock purchase program. We
note that the Company's shareholders, at annual meetings in prior years, have
approved the Annual Plan, the Long-Term Plan, the 1995 Award Plan, the 1998
Award Plan, and the 1994 Employees Stock Purchase Plan (the "Stock Purchase
Plan"). The Company has a substantially similar compensation program for its
other officers and senior management employees.
21
25
A performance evaluation of each management associate is conducted at the
beginning of each year, based upon goals, responsibilities, and other
performance criteria established at the beginning of the prior year. Salary
recommendations are then made based upon the results of this performance review.
With regard to executive officers and the chief executive officers of the
Company's operating units, management makes these salary recommendations to the
Committee. The Committee then reviews the base salaries of these individuals and
determines the changes, if any, that should be made to those base salaries based
upon the officer's performance and to maintain a competitive position with other
national retail companies.
At the beginning of each year, the Committee also establishes the
performance goals under the Annual Plan for that year and under the Long-Term
Plan for the performance period then beginning. The performance goals under the
Annual Plan for 1998 were based on a combination of pre-tax earnings and
percentage return on invested capital of the Company in relation to targets
established by the Committee. In 1998, these targets for executive officers were
equal to the pre-tax earnings and percentage return on invested capital set in
the Company's operating budget for the year. Approximately 800 key management
employees, including executive officers, are participants in the Annual Plan.
The chief executive officers of the operating units participate in annual bonus
plans with goals tied to operating results of their respective units. Payments
under the Long-Term Plan have been based on a combination of cumulative net
income and percentage return on invested capital of the Company during the
performance period, in relation to targets established by the Committee.
Each year the Committee considers granting options to purchase Common Stock
to key employees, including executive officers. Stock option grants are intended
to provide additional incentive for superior performance by officers and key
employees who have the most impact on the management and success of the
Company's businesses. Stock options granted by the Committee in 1998 generally
vest in three equal annual installments beginning on the first anniversary of
the date of grant. Approximately 450 employees participate. Also, qualified
executive officers and other employees may purchase shares of Common Stock under
the Stock Purchase Plan.
In determining the number of options to be granted to executive officers,
the Committee considered a number of factors, including the position held by the
individual, his or her performance, the number of options granted in previous
years, the financial results of the Company for the prior year, the price of a
share of Common Stock, and the fact that management was implementing a
turn-around plan for the Company. In 1998, the Committee granted to the named
executive officers the stock options shown in the table on page . In January
1999 the Committee approved grants of restricted stock to a group of 35 senior
managers and key employees of the Company, not including the Chief Executive
Officer. The size of the individual grants ranged from 5,000 shares to 100,000
shares, with the average grant being for 24,000 shares. Restrictions on the
shares lapse for each individual if that individual continues to be employed by
the Company on the fifth anniversary of the grant date. The restrictions will
lapse on the third anniversary of the grant date if certain performance targets,
set by the Committee, are met. In the view of the Committee, the granting of
this restricted stock was to the benefit of the Company and its shareholders by
providing a means of retaining key managers, many of whom had been recruited to
the Company in the past several years, and by motivating key managers to achieve
performance goals.
The performance of the Company's continuing operations in 1998 did not meet
the performance targets established by the Committee under the Annual Plan, and
therefore no payments were made to the executive officers under that plan.
Principally as a result of the Company's performance in 1996 and 1997, the
performance of the Company's continuing operations in the 1996-1998 performance
period under the Long-Term Plan was above the threshold levels established by
the Committee for cumulative net income and percentage return on invested
capital for the performance period, and therefore, below-target payments were
made to the participants in that plan, including the named executive officers
shown in the table on page .
Chief Executive Officer's Compensation. Mr. Farah's compensation
arrangements in 1998 were unchanged from those negotiated by the Company and Mr.
Farah at the time he joined the Company in 1994, which were embodied in an
employment agreement entered into at that time (the "1994 Agreement"). In 1998,
Mr. Farah was paid a base salary of $1,500,000, and was eligible to earn a bonus
at target under the
22
26
Annual Plan of 50 percent of his base salary. Options to purchase 800,000 shares
of Common Stock and 200,000 shares of restricted stock were issued to him in
1994, and no additional stock options were granted to him in 1998. The shares of
restricted stock are subject to a restriction related to Mr. Farah's continued
employment, and vest at 20 percent per year at the end of the first through
fifth years of employment. As of January 31, 1999, the restrictions have lapsed
on 160,000 of these shares and the restrictions on the remaining shares lapse in
January 2000. Also, in 1998 Mr. Farah purchased 1,046 shares of Common Stock at
$16.58 per share under the Stock Purchase Plan, which was the maximum number of
shares he was permitted to purchase under the terms of that plan.
Based upon the Company's performance in 1998 compared to targets
established under the Annual Plan, as discussed above, no payment was made to
Mr. Farah under the Annual Plan for 1998. The target payout under the Long-Term
Plan for the 1996-98 performance period was 163 percent of base salary. Because
the performance of the Company in 1998 was significantly below plan, following
two years of essentially on-plan performance in 1996 and 1997, the Company's
performance did not meet the targets established by the Committee for the
1996-98 performance period. Consequently, the Long-Term Plan payout to Mr. Farah
for the performance period was 91.04 percent of his base salary, which would
translate to a cash amount of $1,365,600. This compares to the 163 percent of
base salary that he would have earned had the performance targets been achieved.
Fifty percent of this bonus was paid to Mr. Farah in cash and 50 percent in
shares of Common Stock.
As noted, Mr. Farah's compensation arrangements in 1998 were unchanged from
those negotiated by the Company and Mr. Farah at the time he joined the Company
in 1994. In approving these compensation arrangements at that time, the
Committee considered that the elements of Mr. Farah's compensation package were
the result of negotiation between the Company and Mr. Farah, following a search
that identified Mr. Farah as the best candidate for the Chief Executive
Officer's position.
It has been the Company's practice, with regard to its senior executives,
to negotiate new employment agreements approximately one year prior to the end
of the then-current agreement, so as to be assured of securing, on an ongoing
basis, the services of its key executives. Consequently, the Company and Mr.
Farah have entered into a new employment agreement, the terms of which are
summarized on page , for a term ending January 31, 2003 (the "1999
Agreement"). In the 1999 Agreement, the Company and Mr. Farah have agreed to
reconfigure his compensation package to reduce significantly his base salary and
to increase the amount of his compensation that is "at risk" based upon the
performance of the Company (through increased "at target" payouts under the
Annual Plan and the Long-Term Plan) and the price of the Company's shares
(through a restricted stock grant and ongoing stock option grants). It was the
view of the Committee that it was in the best interests of the Company and its
shareholders to enter into a new employment agreement with Mr. Farah in order to
secure his services for a reasonable future period and, after consulting with
independent compensation consultants, to reconfigure the components of his
compensation to provide greater incentives tied to the performance of the
Company and its share price. In approving the compensation arrangements for Mr.
Farah contained in the 1999 Agreement, the Committee considered the compensation
arrangements with Mr. Farah reflected in the 1994 Agreement, the importance to
the Company of retaining Mr. Farah's services for a reasonable period in the
future, compensation arrangements of chief executive officers of other companies
in the retail and athletic footwear and apparel industries, and the benefits to
the Company and its shareholders that it expected to result from providing Mr.
Farah with a meaningful incentive compensation opportunity tied to the
performance of the Company and the price of its Common Stock.
23
27
One Million Dollar Pay Deductibility Cap. Under Section 162(m) of the
Internal Revenue Code, public companies are precluded from receiving a federal
tax deduction on compensation paid to certain executive officers in excess of $1
million per year unless certain requirements are met. It is generally the
Committee's view that the compensation plans and programs of the Company should
be designed and administered in a manner that ensures the tax deductibility by
the Company of compensation paid to its executives. As a consequence, the Annual
Plan, the Long-Term Plan, and the 1995 and 1998 Award Plans are structured so
that cash compensation paid and stock options granted under those plans qualify
for an exemption from the $1 million pay deductibility limit. The Committee
recognizes, however, that situations may arise when it is in the best interests
of the Company and its shareholders to pay compensation to an executive that
cannot be deducted for tax purposes. Most of the compensation related to the
restricted stock grants made to Mr. Farah, and potentially some portion of the
restricted stock grants made to certain other officers, is not expected to be
deductible. It was the view of the Committee that the benefits of securing the
services of Mr. Farah and these officers outweighs the Company's inability to
obtain a tax deduction for those elements of compensation.
James E. Preston, Chairman
Philip H. Geier Jr.
Margaret P. MacKimm
PERFORMANCE GRAPHS
The following performance graph compares the cumulative total shareholder
return on the Company's Common Stock against the cumulative total return of the
S&P 500 Index and the S&P Retail Stores Composite Index from January 31, 1994
through January 31, 1999. The graph assumes an investment of $100 in the
Company's Common Stock and in each index on January 31, 1994, and that all
dividends were reinvested.
VENATOR GROUP S&P 500 S&P RETAIL
------------- ------- ----------
Jan 94 100.00 100.00 100.00
Jan 95 60.87 97.68 91.13
Jan 96 43.48 132.06 96.72
Jan 97 78.74 163.24 114.05
Jan 98 84.06 203.54 167.35
Jan 99 19.81 265.70 272.34
24
28
The next graph compares the cumulative total shareholder return on the
Company's Common Stock against the Russell 2000 Index and a selected peer group
from September 27, 1996 (the date on which all peer group members were publicly
held) through January 31, 1999. The peer group consists of the Company, The
Finish Line, Inc., Footstar, Inc., Just For Feet, Inc., and The Sports
Authority, Inc. The Company believes that this selected group reflects the
Company's peers as retailers in the athletic footwear and apparel industry.
VENATOR GROUP RUSSELL 2000 PEER
------------- ------------ ----
Sept 96 100.00 100.00 100.00
Jan 97 98.79 106.93 86.27
Jan 98 105.45 124.46 61.30
Jan 99 24.85 123.65 49.21
On January 29, 1999, which was the last trading day of the Company's most
recently completed fiscal year and the final date used in the above performance
graph, the closing price of a share of the Company's Common Stock was $5.125. On
May 27, 1999, the price of a share of the Company's Common Stock was $10.00.
PROPOSAL 2. RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT ACCOUNTANTS
The Board of Directors, on the recommendation of the Audit Committee, has appointed KPMG LLP ("KPMG") as our independent registered public accountants of the Company for the 2009 fiscal year that began January 31, 1999, subject to ratification by theyear. We are asking shareholders at the 1999 annual meeting. A resolutionthis meeting to ratify this appointment of KPMG LLP for ratification will be
presented at the 1999 annual meeting.
KPMG has no interest, financial or otherwise, direct or indirect, in the
Company other than as independent accountants.
2009.
Representatives of KPMG are expected to be present at the annual meeting and will have an opportunity to make a statement and respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
The Board of Directors recommends that shareholders vote FOR PROPOSALProposal 2.
25
29
GREENWAY SOLICITATION
Greenway
Audit and Non-Audit Fees
The following table shows the fees we paid to KPMG for the audit of Foot Locker’s annual financial statements for 2008 and 2007, as well as the fees billed for other services KPMG provided during these two fiscal years.
| | | | |
Category | | 2008 | | 2007 |
Audit Fees (1) | | | $ | | 3,005,000 | | | | $ | | 2,780,000 | |
Audit-Related Fees (2) | | | | 346,000 | | | | | 198,000 | |
Tax Fees (3) | | | | 4,000 | | | | | 4,000 | |
All Other Fees (4) | | | | 225,000 | | | | | 0 | |
| | | | |
Total | | | $ | | 3,580,000 | | | | $ | | 2,982,000 | |
| | | | |
Notes to Audit and Non-Audit Fees Table
|
(1) | | | | Audit fees consisted of professional services provided in connection with the audit of our annual financial statements, reviews of financial statements included in our Form 10-Qs, reviews of registration statements and issuances of consents, as well as work generally only the independent auditor can reasonably be expected to provide, such as statutory audits. |
|
(2) | | | | Audit-related fees consisted principally of audits of financial statements of certain employee benefit plans. |
|
(3) | | | | Tax fees consisted principally of assistance with matters related to tax compliance. |
|
(4) | | | | All other fees consisted of due diligence services related to an acquisition in 2008. |
Audit Committee Pre-Approval Policies and Procedures
The Audit Committee has nominated four individualsa policy that all audit and non-audit services to be provided by our independent accountants, including services for electionour subsidiaries and affiliates, are to be approved in advance by the Audit Committee, regardless of the estimated cost for providing such services. Between meetings of the Committee, the Audit Committee has delegated this authority to the Chair of the Committee. In practice, these fees are normally approved by the Committee Chair and reviewed with the Audit Committee at a subsequent meeting. Management reviews with the Audit Committee at regularly scheduled meetings the total amount and nature of the audit and non-audit services provided by the independent accountants, including services for our subsidiaries and affiliates, since the Committee’s last meeting. None of the services pre-approved by the Audit Committee or the Chair of the Committee during 2008 utilized thede minimisexception to pre-approval contained in the applicable rules of the Securities and Exchange Commission.
60
Audit Committee Report
In accordance with the charter adopted by the Board of Directors, the Audit Committee assists the Board in fulfilling its oversight responsibilities in the areas of the Company’s accounting policies and practices and financial reporting. The Committee has responsibility for appointing the independent accountants and internal auditors. The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting.
The Audit Committee consists of five independent directors, as independence is defined under the rules of The New York Stock Exchange. All of the Committee members meet the expertise requirements under the rules of The New York Stock Exchange.
The Audit Committee held nine meetings in 2008. At its meetings during 2008, the Committee discussed with management, KPMG LLP, the Company’s independent registered public accountants, and the Company’s internal auditors the assessment of the Company’s internal control over financial reporting. The Committee also discussed with KPMG its attestation report and opinion on the Company’s internal control over financial reporting contained in the Company’s 2008 Annual Report on Form 10-K.
The Audit Committee reviewed and discussed with management and KPMG the audited financial statements for the 2008 fiscal year, which ended January 31, 2009. The Committee also discussed with KPMG the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. The Audit Committee, both with and without management present, discussed and reviewed the results of KPMG’s examination of the financial statements and the overall quality of the Company’s financial reporting.
The Audit Committee obtained from KPMG the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with KPMG its independence and any relationships that may affect its objectivity. The Audit Committee also considered whether the non-audit services provided by KPMG to the Company are compatible with maintaining KPMG’s independence. The Committee has satisfied itself that KPMG is independent.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in opposition toFoot Locker’s Annual Report on Form 10-K for the Company's nominees for election to the Board of
Directors. Greenway has also stated that it intends to present the Greenway
Proposals.
FOR THE REASONS GIVEN BELOW, THE BOARD OF DIRECTORS BELIEVES THAT THE
ELECTION OF THE GREENWAY SLATE OF NOMINEES AND THE 2008 fiscal year.
| | |
| | Nicholas DiPaolo,Chair |
| | Jarobin Gilbert Jr. |
| | Matthew M. McKenna
David Y. Schwartz |
| | Dona D. Young |
61
PROPOSAL 3:
APPROVAL OF THE GREENWAY
PROPOSALS WOULD BE HARMFULAMENDMENT TO THE COMPANY AND ITS SHAREHOLDERS AND UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF THE SLATE OF DIRECTORS PROPOSED BY
THE BOARD (SEE PAGE ) AND AGAINST THE GREENWAY PROPOSALS.
ELECTION OF DIRECTORS. The Company believes that its Board of Directors
should be composed of individuals who are business leaders, representing a broad
range of business and community experience, and bringing to Board membership
background, experience, and skills that enable them to contribute to the
Company's long-term objectives. Each of the existing directors being proposed
for reelection in Class II is a world-class business leader, with the depth of
experience to represent all of the Company's shareholders. All of the directors
being proposed for reelection were first elected to the Board within the past
six years.
- Carter Bacot served for over 15 years as the Chairman of the Board and
Chief Executive Officer of The Bank of New York Company, Inc., and is a
director of a number of other public companies.
- Purdy Crawford is the Chairman of the Board of Imasco Limited, a $10
billion (Canadian) corporation, and served as that company's Chief
Executive Officer for eight years. As a Canadian business leader and a
director of a number of leading Canadian corporations, he brings an
international perspective to the Board, which, given the global nature of
the Company's operations, is an important contribution.
- Philip Geier is the Chairman of the Board and Chief Executive Officer of
Interpublic Group of Companies, an advertising and marketing
communications company, a position he has held for nineteen years. He is
also an active community leader, participating on the boards of a number
of community organizations.
- Dale Hilpert, the Company's President and Chief Operating Officer, has
over 20 years experience as a senior executive of retail companies,
including 10 years as the Chief Executive Officer of Payless Shoe Source,
then a division of May Department Stores Company.
In contrast, Greenway, a minority shareholder of the Company, is proposing
to replace these directors with Greenway's nominees, two of whom are principals
of Greenway, one of whom is an officer of a company controlled by Greenway, and
one of whom is a limited partner of Greenway. The Company believes that these
individuals have limited and overlapping business experience, represent a
limited point of view concerning the Company, and do not have the background or
experience to represent the interests of all of the Company's shareholders.
Since being advised of the Greenway proposals, the Company has engaged in
discussions with Greenway in an effort to resolve this matter. These discussions
included an offer by the Company that two of the Greenway nominees -- Alfred D.
Kingsley and Gary K. Duberstein -- be included as additional directors on the
slate recommended for election byBY-LAWS
On November 19, 2008, the Board of Directors approved, subject to shareholder approval at the 19992009 annual meeting. Asmeeting, an amendment to Article II, Section 1 of the Company’s By-Laws to reduce the number of directors from a resultrange of certain issues raised in9 to 17 persons to a range of 7 to 13 persons, with the course of those
discussions, however,exact number within this range to be determined by the Board became concerned that Mr. Kingsley's and Mr.
Duberstein's membership on theentire Board of Directors would result in their being a
destabilizing influence on the Company, and not in the best interestsDirectors. The number of all
shareholders. Therefore, the Board finally concluded that there was not an
acceptable basis on which it could invite Mr. Kingsley and Mr. Duberstein to
join the Board.
FOR THESE REASONS, THE BOARD OF DIRECTORS BELIEVES THAT SHAREHOLDERS WOULD
BE FAR BETTER SERVED BY ELECTING CARTER BACOT, PURDY CRAWFORD, PHILIP GEIER, AND
DALE HILPERT TO THE BOARD, AND YOU ARE URGED TO VOTE FOR THESE INDIVIDUALS ON
THE ENCLOSED PROXY CARD.
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30
PROPOSAL 3. GREENWAY PROPOSAL RELATING TO CHANGE IN NAME
CHANGE OF COMPANY NAME. Greenwaydirectors is seeking shareholder approval for a
proposal recommending that the Company change its name back to Woolworth
Corporation.
At the 1998 annual meeting, 69.6 percent of the holders of the Company's
outstanding shares (and 79.4 percent of the shares votingcurrently fixed at the meeting)nine. Shareholders approved an amendment to the CertificateBy-Laws in 1997 setting the range of Incorporation changingdirectors at between 9 and 17 persons. For the Company's
name to Venator Group, Inc.
In the view ofreasons described below, the Board of Directors, the Company's new name better
reflects its current portfolio of businesses and its position as a leading
global retailer of merchandise designed for active lifestyles.
The restructuring of the Company's businessbelieves that occurred between 1994 and
1997 led the Company to consider the need for a change in its corporate name. In
particular, it closed its Woolworth operations in the United States in 1997. In
1998, after the change in the Company's name, the Company sold its Woolworth
operations in Germany and Austria, so that it no longer operates Woolworth
stores anywhere in the world.
Following careful study, the Company changed its name to Venator Group.,
Inc. As part of the process of identifying a new name, the Company conducted a
study which showed that there was a negative perception of the Woolworth name
among key stakeholders, including real estate developers, employees, and
institutional investors. Further, it showed that investors did not associate the
Woolworth name with the type of business the Company had become. Having carried
out the name change in 1998, now to change the Company's name yet again would be
costly and disruptive and serve no useful purpose. Also, as there are businesses
operating in various parts of the world under the Woolworth name that are not
related to the Company, the Company's use of Woolworth as its corporate name
would be confusing to stakeholders, real estate developers and suppliers.
For these reasons, the Board of Directors unanimously recommends a vote
AGAINST the Greenway Proposal concerning a change in the Company's name
(Proposal 3).
PROPOSAL 4. GREENWAY PROPOSAL RELATING TO RIGHTS PLAN
SHAREHOLDER RIGHTS PLAN. Greenway is also proposing that shareholders
approve a resolution recommending that the Board of Directors terminate the 1998
Rights Plan, redeem the rights distributed thereunder, and not adopt any new
rights agreement unless approved by the affirmative vote of the then-holders of
a majority of the outstanding shares of the Company.
The Company has had a Rights Plan in place since 1988. In the view of the
Board of Directors, the Rights Plan maximizes shareholder value and protects
shareholders and the Company from abusive takeover tactics. Last year, the Board
of Directors adopted a new Rights Plan along the lines of the plan originally
adopted in 1988. The Rights Plan is designed to ensure that, if there is a sale
of the Company, the Board of Directors will have the opportunity to effect a
transaction on optimal terms.
At the 1998 annual meeting shareholders voted in favor of a non-binding
proposal requesting that the Board of Directors terminate the Rights Plan. Since
the last annual meeting, the Board has given very careful consideration to its
decision to continue to maintain a Rights Plan. The Board has concluded that,
given the volatility of the share price of the Company's Common Stock in the
past year, caused at least in part by industry and market factors outside the
control of the Company's managers, it is in the best interests of all
shareholders to have some form of Rights Plan in place. As a result of the
Board's analysis, and taking into account the views expressed by shareholders at
last year's annual meeting, the Board recently adopted certain amendments to the
Rights Plan that would make the Rights Plan inapplicable to certain kinds of
qualifying offers to purchase all of the Company's Common Stock. In general, the
requirements for a qualifying offer are as follows:
- The offer is composed only of cash or of cash and securities.
- The person making the offer to purchase the stock (the "Offeror") has
provided firm written financial commitments from responsible financial
institutions for any cash portion of the offer and the opinion of a
nationally recognized investment bank with respect to any securities
portion of the offer.
27
31
- The offer to purchase the Company's Common Stock remains open for at
least 120 days.
- The Offeror makes an irrevocable written commitment (1) to purchase those
shares that were not acquired through the original offer for the same
price paid for the shares that were acquired through the original offer,
(2) that the Offeror will not materially amend the offer except to
increase the offering price, and (3) that the Offeror will not make any
offer for the Company's stock for six months after the commencement of
the original offer.
- After the consummation of the transaction, the Offeror owns at least 80
percent of the outstanding common stock.
In addition, the Independent Directors, defined in the Rights Plan as directors
who are not current or former officers of the Company, holders of five percent
or more of the Company's shares, or the persons who have made the tender offer,
have the discretion to shorten the time periods related to the qualifying offer
provision.
The Rights Plan is not intended to prevent or deter an offer to acquire the
Company's stock at a price and on terms that would be in the best interests of all shareholders. It is designed to ensure that, if there is a sale of the Company and its shareholders to reduce the minimum and maximum number of directors at this time.
Reasons for Amendment
The Board of Directors will havestrongly believes that a smaller board is more effective in facilitating communications and decision making, which is particularly important in maintaining a highly functional board. A board of directors consisting of between 7 and 13 persons would be consistent with the opportunity to effect a
transactionway the Board has operated since 1997, where the exact number of directors on the optimal terms. IfBoard during this time ranged from a minimum of 9 persons to a maximum of 12 persons. It would also be consistent with the continuing trend towards smaller boards, with the average board size of major corporations decreasing over the past ten years.
We currently have nine members on our Board of Directors. The Board believes that a reduction in the board size would also avoid the potential situation of having to quickly fill any unexpected vacancies in order to meet the existing minimum size requirements. Given the importance of recruiting qualified, independent directors to serve as directors of your company, we believe that it is prudent to conduct an organized search for a replacement when vacancies occur in order to preserve the high quality of the Board determinesand maintain its diversity of experience. Reducing the range of the minimum and maximum number of directors would provide added flexibility in determining the appropriate size of the Board from time to time.
The Board of Directors believes that an unsolicited
offerthe adoption of the proposed amendment to the By-Laws is fair, and on terms that reflect full value, and that are otherwise in the best interests of the shareholders, the Board can redeem the Rights issued
to shareholders pursuant to the provisionsCompany and our shareholders. Article II, Section 1 of the Rights AgreementBy-Laws is a shareholder-approved by-law, and permitwe would continue to be required to seek our shareholders’ approval for any future amendments to this by-law.
The full text of Article II, Section 1 of the offerBy-Laws, as proposed to proceed. Asbe amended, is as follows:
“SECTION 1. The number of directors constituting the Rights Plan wouldentire Board of Directors shall be not apply in any eventless than 7 or more than 13, the exact number of directors to an offer that metbe determined from time to time by resolution adopted by a majority of the criteria forentire Board of Directors. At each annual meeting of shareholders, directors shall be elected to hold officeby a qualifying offer.
plurality of the votes cast.”
The Board considers the continuation of the Rights Plan, as amended, to be
in the best interests of all shareholders and, therefore, unanimouslyDirectors recommends a vote AGAINST the GreenwayFOR Proposal relating3.
62
DEADLINES AND PROCEDURES FOR NOMINATIONS AND
SHAREHOLDER PROPOSALS
Deadlines and Procedures
Under SEC Rule 14a-8, if a shareholder would like us to the Rights Plan (Proposal 4).
PARTICIPANTS IN THE SOLICITATION
Under applicable regulations of the SEC, each member of the Board of
Directors, certain executive officers of the Company and certain other corporate
officers of the Company may be deemed to beinclude a "participant"proposal in the Company's
solicitation of proxies. The principal occupation and business address of each
person who may be deemed a participant are set forth in Appendix A hereto.
Information about the present ownership by the directors and named executive
officers of the Company of the Company's securities is provided in thisour proxy statement and form of proxy for the present ownership2010 Annual Meeting of Shareholders, our Corporate Secretary must receive the Company's securitiesproposal at our corporate headquarters at 112 West 34th Street, New York, New York 10120 by other
participants is listed in Appendix A.
DEADLINES FOR NOMINATIONS AND SHAREHOLDER PROPOSALS
The Company's By-laws require that notice of nominations to the Board of
Directors proposed by shareholders be received by the Secretary of the Company,
along with certain other specified material, at least 75 days prior to the
meeting of shareholders at which directors are to be elected. Any shareholder
who wishes to nominate a candidate for election to the Board should obtain a
copy of the relevant section of the By-laws from the Secretary of the Company.
Proposals of shareholders intended to be presented pursuant to Rule 14a-8
under the Exchange Act at the 2000 annual meeting must be received by the
Secretary of the Company no later than February , 2000December 10, 2009 in order to be considered for inclusion in the 20002010 proxy statement. In order for proposals of
shareholders made outside of
| | | Other Proposals | For any shareholder proposal that is not submitted under SEC Rule 14a-8, to be considered "timely" withinincluding nominations for directors, our By-laws describe the meaning of Rule 14a-4(c) under the Exchange Act, such proposalsprocedures that must be received
byfollowed. Under these procedures, we must receive notice of a shareholder’s intention to introduce a nomination or proposed item of business for an annual meeting not less than 90 days nor more than 120 days before the Secretaryfirst anniversary of the Companyprior year’s annual meeting. For 2010, we must receive this notice no earlier than January 20, 2010 and no later than April , 2000. All proposalsFebruary 19, 2010, assuming that our 2010 annual meeting is held on schedule. However, if we hold the annual meeting on a date that is not within 30 days before or after the first anniversary of the prior year’s annual meeting, then we must receive the notice no later than ten days after the earlier of the date we first provide notice of the meeting to shareholders or announce it publicly.
Proposals for nomination for directors and other items of business should be addressed to the Corporate Secretary, Venator Group, Inc., 233 Broadway,112 West 34th Street, New York, New York 10279.
28
32
OTHER BUSINESS
The Board10120 and must contain the information specified in the Company’s By-Laws, which are available on the corporate governance section of Directors knows of no other business which willour corporate website athttp://www.footlocker-inc.com/IR_index.htm or may be presented
atobtained from the 1999 annual meeting. If other matters properly come before the meeting,
the persons named as proxies will exercise their discretionary authority to vote
on such matters in accordance with their best judgment.
Corporate Secretary.
| | | | By Order of the Board of Directors
GARY |
| | GARY M. BAHLER
BAHLER |
| | Secretary
, 1999
29
|
April 9, 2009
63
33
APPENDIX A
INFORMATION CONCERNING THE DIRECTORS AND CERTAIN OFFICERSLOCATION OF THE COMPANY WHO MAY
ALSO SOLICIT PROXIES
The following table sets forth2009 ANNUAL MEETING OF SHAREHOLDERS OF
FOOT LOCKER, INC.
Our corporate headquarters is the name, principal business address and the
present office or other principal occupation or employment, and the name,
principal business and the address of any corporation or other organization in
which their employment is carried on,site of the directors and certain officers2009 Annual Meeting of the Company who may also solicit proxies from shareholders of the Company.
Unless otherwise indicated, the principal occupation refers to such person's
position with the Company and the business address is Venator Group, Inc., 233
Broadway,Shareholders. We are located at 112 West 34th Street, New York City, New York.
BY SUBWAY
Take any of these subway lines: the A, B, C, D, E, F, N, Q, R, V, W or the Number 1, 2, or 3 trains to 34th Street. The A, C, E, 1, 2, and 3 trains stop at 34th Street–Penn Station. The B, D, F, N, Q R, V, and W trains stop at 34th Street–Herald Square. Our building is on the south side of 34th Street between 7th Avenue and Broadway.
BY CAR OR TAXI
Take the Lincoln Tunnel into New York 10279.
DIRECTORS
The principal occupationsCity, following the signs for 34th Street. Turn left onto West 34th Street. Our building is on the south side of 34th Street between 7th Avenue and Broadway.
64
YOUR VOTE IS IMPORTANT
PLEASE VOTE YOUR PROXY
| | | |
| Mark, Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope. |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| DIRECTORS RECOMMEND A VOTE “FOR” PROPOSALS 1, 2 AND 3. |
| 1. | ELECTION OF DIRECTORS. | |
| | NOMINEES FOR
3-YEAR TERMS: | FOR all
nominees
listed below | WITHHOLD AUTHORITY
to vote for all nominees
listed below | EXCEPTIONS* |
| | | | | | | |
| | 01 | Alan D. Feldman | o | o | o |
| | 02 | Jarobin Gilbert Jr. |
| | 03 | David Y. Schwartz | | | |
| | NOMINEE FOR
2-YEAR TERM: | | | |
| | 04 | Cheryl Nido Turpin | | | |
| | | | | |
| | (INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the “Exceptions” box and write that nominee’s name in the space provided below). |
| | *Exceptions | |
| | | | | | | |
| | | | Please mark
your votes as
indicated in
this example | x | |
| | | | | | | |
| | | | FOR | AGAINST | ABSTAIN | |
| | | | | | | |
| 2. | RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS. | | o | o | o | |
| | | | | | | |
| 3. | APPROVAL OF AMENDMENT TO THE BY-LAWS. | | o | o | o | |
| | | | | | | |
| | THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3. | |
| | | | | | | |
| | I plan to attend meeting | | | o | | |
| | |
| Mark Here for Address
Change or Comments
SEE REVERSE | o |
| | |
| Signature ___________________________________ Signature ___________________________________ Date _________________ | |
| NOTE: Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, give full title as such. If signing on behalf of a corporation, sign the full corporate name by authorized officer. The signer hereby revokes all proxies heretofore given by the signer to vote at the 2009 Annual Meeting of Shareholders of Foot Locker, Inc. and any adjournment or postponement thereof. | |
|
▲FOLD AND DETACH HERE ▲
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING,
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet and telephone voting is available through 9:00 AM Eastern Time
on the Company's directors who are deemed
participants in the solicitation are set forth on pages 11 through 13 of this
proxy statement. The principal business address of Messrs. Farah and Hilpert is
that of the Company. The name, business and address of the other
director-participants' organization of employment are as follows:
annual meeting day.
NAME ADDRESS
- ---- -------
J. Carter Bacot......................................... | | |
| | |
| | |
| | |
| 
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| | |
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| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders | |
| | |
| The BankProxy Statement and the 2008 Annual Report to Shareholders are available at: | |
| | |
| http://materials.proxyvote.com/344849 | |
| |
| |
INTERNET
http://www.eproxy.com/fl | |
| |
Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site. | |
| |
| |
OR | |
| |
| |
TELEPHONE
1-866-580-9477 | |
| |
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call. | |
| |
| |
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card. | |
| |
To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope. | |
| |
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. | |
47608
| | | | | | |
| | | | | | |
| | | FOOT LOCKER, INC.
P R O X Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR THE ANNUAL MEETING TO BE HELD ON MAY 20, 2009 | |
| | | | |
| | | Gary M. Bahler, Robert W. McHugh, Mathew D. Serra, or any of New York Company,them, each with power of substitution, are hereby authorized to vote the shares of the undersigned at the Annual Meeting of Shareholders of Foot Locker, Inc.
One Wall, to be held on May 20, 2009, at 9:00 A.M., local time, at Foot Locker, Inc., 112 West 34th Street, New York, NY 10286
Purdy Crawford.......................................... Imasco Limited
Royal Bank Plaza
200 Bay Street
North Tower, Suite 2000
Toronto, Ontario M5J 2J2
Canada
Philip H. Geier Jr...................................... Interpublic GroupNew York 10120, and at any adjournment or postponement thereof, upon the matters set forth in the Foot Locker, Inc. Proxy Statement and upon such other matters as may properly come before the Annual Meeting, voting as specified on the reverse side of Companies,
Inc.
1271 Avenuethis card with respect to the matters set forth in the Proxy Statement, and voting in the discretion of the Americas
New York, NY 10020
Jarobin Gilbert Jr...................................... DBSS Group,above-named persons on such other matters as may properly come before the Annual Meeting. IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET, PLEASE SIGN AND DATE THE REVERSE SIDE OF THIS PROXY CARD AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE. THE PERSONS NAMED ABOVE AS PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD OR VOTE BY TELEPHONE OR INTERNET. YOU MAY SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS’ RECOMMENDATIONS. EMPLOYEE PLANS IF YOU ARE A PARTICIPANT IN THE FOOT LOCKER 401(k) PLAN OR THE FOOT LOCKER PUERTO RICO 1165(e) PLAN, THIS PROXY CARD COVERS THOSE SHARES ALLOCATED TO YOUR PLAN ACCOUNT. BY SIGNING AND RETURNING THIS PROXY CARD (OR VOTING BY TELEPHONE OR THE INTERNET), YOU WILL AUTHORIZE THE PLAN TRUSTEES TO VOTE THOSE SHARES ALLOCATED TO YOUR ACCOUNT AS YOU HAVE DIRECTED. | |
| | | | | | |
| | | (Continued and to be marked, dated and signed, on the other side) | |
| | | | | | |
| | | | | BNY MELLON SHAREOWNER SERVICES | |
| | | Address Change/Comments | | P.O. BOX 3550 | |
| | | (Mark the corresponding box on the reverse side) | | SOUTH HACKENSACK, NJ 07606-9250 | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
You can now access yourBNY Mellon Shareowner Servicesaccount online. |
Access your BNY Mellon Shareowner Services shareholder/stockholder account online via Investor ServiceDirect® (ISD).
|
The transfer agent for Foot Locker, Inc.
301 East 57th Street
New York, NY 10022
Allan Z. Loren.......................................... American Express Company
200 Vesey Street
New York, NY 10285
Margaret P. MacKimm..................................... c/o Venator Group, Inc.
233 Broadway
New York, NY 10279
John J. Mackowski....................................... c/o Venator Group, Inc.
233 Broadway
New York, NY 10279
James E. Preston........................................ Nine Maple Street
Kent, CT 06757
Christopher A. Sinclair................................. Caribiner International
16 West 61st Street
New York, NY 10023
|
A-1
34
EXECUTIVE OFFICERS AND CERTAIN CORPORATE OFFICERS
NAME PRINCIPAL OCCUPATION
- ---- --------------------
Gary M. Bahler.............................. Senior Vice President, General Counsel, now makes it easy and Secretary
M. Jeffrey Branman.......................... Senior Vice President -- Corporate Development
John E. DeWolf III.......................... Senior Vice President -- Real Estate
S. Ronald Gaston............................ Senior Vice Presidentconvenient to get current information on your shareholder account.
| | | |
• | View account status | • | View payment history for dividends |
• | View certificate history | • | Make address changes |
• | View book-entry information | • | Obtain a duplicate 1099 tax form |
| | • | Establish/change your PIN |
| | | | | | |
Visit us on the web at http://www.bnymellon.com/shareowner/isd
For Technical Assistance Call 1-877-978-7778 between 9am-7pm
Monday-Friday Eastern Time
****TRY IT OUT****
www.bnymellon.com/shareowner/isd
Investor ServiceDirect®
Available 24 hours per day, 7 days per week |
|
| | ChooseMLinkSMfor fast, easy and Chief Information Officer
John F. Gillespie........................... Senior Vice President -- Human Resources
Bruce L. Hartman............................ Senior Vice Presidentsecure 24/7 online access to your future proxy materials, investment plan statements, tax documents and Chief Financial Officer
Maryann M. McGeorge......................... Senior Vice President -- Merchandise Operations
John H. Cannon.............................. Vice President and Treasurer
Lauren B. Peters............................ Vice President and Controller
Juris Pagrabs............................... Vice President -- more. Simply log on toInvestor Relations
Frances E. Trachter......................... Vice President -- Public Affairs
Sheilagh M. Clarke.......................... Counsel and Assistant Secretary
ServiceDirect® atwww.bnymellon.com/shareowner/isd where step-by-step instructions will prompt you through enrollment. | | |
| | | | | | |
| | | | | | |
47608 |
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INFORMATION REGARDING OWNERSHIP OF THE COMPANY'S SECURITIES BY PARTICIPANTS
None of the participants owns any of the Company's securities of record but
not beneficially. The number of shares of Common Stock held by directors and the
named executive officers is set forth on page of this proxy statement. The
number of shares of Common Stock held by the other participants as of May 5,
1999 is set forth below. The information includes shares that may be acquired by
the exercise of stock options within 60 days of May 5, 1999:
SHARE
NAME OWNERSHIP
- ---- ---------
Gary M. Bahler.............................................. 128,143
John H. Cannon.............................................. 112,207
S. Ronald Gaston............................................ 40,000
John F. Gillespie........................................... 114,477
Bruce L. Hartman............................................ 64,597
Maryann M. McGeorge......................................... 73,355
Lauren B. Peters............................................ 8,332
Juris Pagrabs............................................... 16,999
Frances E. Trachter......................................... 62,467
Sheilagh M. Clarke.......................................... 8,499
INFORMATION REGARDING TRANSACTIONS IN THE COMPANY'S SECURITIES BY PARTICIPANTS
The following table sets forth purchases and sales of the Company's
securities by the participants listed below during the past two years. Unless
otherwise indicated, all transactions are in the public market.
NUMBER OF
SHARES OF COMMON
COMMON STOCK
NAME DATE PURCHASED OR (SOLD) FOOTNOTE
- ---- -------- ------------------- --------
DIRECTORS
J. Carter Bacot...................................... 07/01/97 879 (1)
07/01/98 1,129 (1)
Purdy Crawford....................................... 07/01/97 818 (1)
07/01/98 1,050 (1)
A-2
35
NUMBER OF
SHARES OF COMMON
COMMON STOCK
NAME DATE PURCHASED OR (SOLD) FOOTNOTE
- ---- -------- ------------------- --------
Roger N. Farah....................................... 06/01/97 1,223 (2)
03/19/98 (15,000) (3)
06/01/98 1,046 (2)
02/10/99 500,000 (4)
04/14/99 275,000 (11)
04/14/99 314 (6)
04/16/99 115,488 (10)
04/26/99 275,000 (11)
Philip H. Geier Jr................................... 07/01/97 818 (1)
07/01/98 1,050 (1)
04/01/99 6,000 (7)
Jarobin Gilbert Jr................................... 07/01/97 879 (1)
09/10/97 (982) (3)
07/01/98 1,129 (1)
Dale W. Hilpert...................................... 04/09/97 100,000 (4)
06/01/97 1,223 (1)
04/08/98 100,000 (4)
06/01/98 1,046 (1)
06/12/98 100 (7)
02/01/99 100,000 (5)
02/10/99 150,000 (4)
04/14/99 2,239 (6)
04/16/99 57,744 (10)
Allan Z. Loren....................................... 04/09/98 100 (7)
07/01/98 788 (1)
Margaret P. MacKimm.................................. 07/01/97 879 (1)
07/01/98 1,129 (1)
John J. Mackowski.................................... 07/01/97 879 (1)
07/01/98 1,129 (1)
10/01/98 1,000 (7)
James E. Preston..................................... 07/01/97 1,759 (1)
07/01/98 2,259 (1)
10/28/98 8,000 (7)
03/15/99 5,000 (7)
Christopher A. Sinclair.............................. 07/01/97 818 (1)
07/01/98 1,050 (1)
EXECUTIVE OFFICERS AND CERTAIN CORPORATE OFFICERS
Gary M. Bahler....................................... 04/09/97 25,000 (4)
06/01/97 603 (2)
02/10/98 2,000 (8)
02/10/98 (1,793) (9)
04/08/98 25,000 (4)
06/01/98 729 (2)
02/01/99 30,000 (5)
02/10/99 35,000 (4)
04/14/99 314 (6)
04/16/99 3,253 (10)
A-3
36
NUMBER OF
SHARES OF COMMON
COMMON STOCK
NAME DATE PURCHASED OR (SOLD) FOOTNOTE
- ---- -------- ------------------- --------
M. Jeffrey Branman................................... 04/09/97 75,000 (4)
04/22/97 5,000 (7)
04/08/98 50,000 (4)
06/01/98 1,046 (2)
08/12/98 100,000 (4)
09/25/98 7,000 (7)
12/04/98 7,000 (7)
12/28/98 (5,000) (3)
02/01/99 40,000 (5)
02/10/99 50,000 (4)
04/14/99 275 (6)
04/16/99 29,786 (10)
John E. DeWolf III................................... 04/09/97 30,000 (4)
04/08/98 50,000 (4)
02/01/99 40,000 (5)
02/10/99 50,000 (4)
04/16/99 25,893 (10)
04/23/99 (11,000) (3)
04/26/99 (14,893) (3)
S. Ronald Gaston..................................... 11/30/98 30,000 (4)
02/01/99 40,000 (5)
John F. Gillespie.................................... 04/09/97 30,000 (4)
04/08/98 30,000 (4)
06/01/98 632 (2)
02/01/99 30,000 (5)
02/10/99 35,000 (4)
04/14/99 275 (6)
04/16/99 23,566 (10)
04/29/99 (23,000) (3)
Bruce L. Hartman..................................... 04/09/97 25,000 (4)
04/08/98 25,000 (4)
02/01/99 30,000 (5)
02/10/99 35,000 (4)
04/14/99 865 (6)
Maryann M. McGeorge.................................. 04/09/97 10,000 (4)
04/08/98 10,000 (4)
02/01/99 30,000 (5)
02/10/99 35,000 (4)
04/14/99 284 (6)
04/16/99 3,072 (10)
John H. Cannon....................................... 04/09/97 17,000 (4)
02/09/98 5,357 (8)
02/09/98 (4,952) (9)
04/08/98 17,000 (4)
10/07/98 10,000 (7)
01/22/99 10,000 (7)
02/10/99 17,000 (4)
04/14/99 1,250 (6)
Lauren B. Peters..................................... 03/11/97 10,000 (4)
04/08/98 5,000 (4)
09/01/98 12,000 (4)
02/10/99 25,000 (4)
Juris Pagrabs........................................ 04/09/97 17,000 (4)
04/08/98 17,000 (4)
02/10/99 30,000 (4)
A-4
37
NUMBER OF
SHARES OF COMMON
COMMON STOCK
NAME DATE PURCHASED OR (SOLD) FOOTNOTE
- ---- -------- ------------------- --------
Frances E. Trachter.................................. 04/09/97 10,000 (4)
02/10/98 2,000 (8)
02/10/98 (1,793) (9)
04/08/98 10,000 (4)
02/10/99 10,000 (4)
04/14/99 314 (6)
Sheilagh M. Clarke................................... 04/09/97 2,000 (4)
04/08/98 2,000 (4)
02/10/99 3,000 (4)
- ---------------
FOOTNOTES:
(1) Acquisition of shares under the Directors Stock Plan.
(2) Acquisition of shares under the 1994 Employees Stock Purchase Plan.
(3) Open market sale.
(4) Stock option grant.
(5) Restricted stock award granted under the 1998 Stock Option and Award Plan
and pursuant to a Restricted Stock Agreement dated as of February 1, 1999.
(6) The aggregate number of shares owned, as of the dated indicated, which were
purchased through periodic payments and/or the annual Company Match under
the Company's 401(k) Plan.
(7) Open market purchase.
(8) Stock option exercise.
(9) Shares swapped in to the Company to exercise stock option.
(10) Payment under the Long-Term Incentive Plan in shares of Common Stock of a
portion of the bonus earned for the 1996-1998 Performance Period.
(11) Restricted stock award granted under the 1998 Stock Option and Award Plan
and pursuant to a Restricted Stock Agreement dated as of April 26, 1999.
MISCELLANEOUS INFORMATION CONCERNING PARTICIPANTS
Except as described in this Appendix A or in the proxy statement, none of
the participants nor any of their respective affiliates or associates (together,
the "Participant Affiliates"), (i) directly beneficially owns any shares of
Common Stock of the Company or any securities of any subsidiary of the Company
or (ii) has had any relationship with the Company in any capacity other than as
a shareholder, employee, officer or director. Furthermore, except as described
in this Appendix A or in the proxy statement, no Participant Affiliate is either
a party to any transaction or series of transactions since February 1, 1998, or
has knowledge of any currently proposed transaction or series of transactions,
(i) to which the Company or any of its subsidiaries was or is to be a party,
(ii) in which the amount involved exceeds $60,000, and (iii) in which any
Participant Affiliate had or will have, a direct or indirect material interest.
Except for the employment agreements described in the proxy statement, no
Participant Affiliate has entered into any agreement or understanding with any
person respecting any future employment by the Company or its affiliates or any
future transactions to which the Company or any of its affiliates will or may be
a party. Except as described in this Appendix A or in the proxy statement, there
are no contracts, arrangements or understandings by any Participant Affiliate
within the past year with any person with respect to the Company's Common Stock.
A-5
38
PROXY
VENATOR GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
THE ANNUAL MEETING TO BE HELD ON 1999.
Gary M. Bahler, Roger N. Farah, Bruce L. Hartman, or any of them, each with
power of substitution, are hereby authorized to vote the shares of the
undersigned at the Annual Meeting of Shareholders of Venator Group, Inc., to be
held on , 1999, at 10:00 A.M., local time, at and at any
adjournment or postponement thereof, upon the matters set forth in the Venator
Group, Inc. Proxy Statement and upon such other matters as may properly come
before the Annual Meeting, voting as specified on the reverse side of this card
with respect to the matters set forth in the Proxy Statement, and voting in the
discretion of the above-named persons on such other matters as may properly come
before the Annual Meeting.
PROPOSAL 1. - ELECTION OF DIRECTORS.
Nominees for Terms Expiring at the Annual Meeting in 2002: J. Carter Bacot,
Purdy Crawford, Philip H. Geier Jr., Dale W. Hilpert
PLEASE COMPLETE, SIGN AND DATE THE REVERSE SIDE OF THIS PROXY CARD AND PROMPTLY
RETURN IT IN THE ENCLOSED ENVELOPE.
YOU MAY SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE REVERSE SIDE,
BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD
OF DIRECTORS' RECOMMENDATIONS. THE PERSONS NAMED ABOVE AS PROXIES CANNOT VOTE
YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
(continued on reverse side)
39
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2 AND
AGAINST PROPOSALS 3 AND 4.
DIRECTORS RECOMMEND A VOTE "FOR" PROPOSALS 1 AND 2
FOR WITHHELD
1. ELECTION OF [ ] [ ]
DIRECTORS
(see reverse
side)
FOR, except vote withheld from the following nominee(s):
- -------------------------------------------------------
FOR AGAINST ABSTAIN
2. APPOINTMENT OF INDEPENDENT ACCOUNTANTS [ ] [ ] [ ]
DIRECTORS RECOMMEND A VOTE "AGAINST"
PROPOSALS 3 AND 4
FOR AGAINST ABSTAIN
3. GREENWAY PROPOSAL TO [ ] [ ] [ ]
CHANGE THE COMPANY'S
NAME
FOR AGAINST ABSTAIN
4. GREENWAY PROPOSAL TO [ ] [ ] [ ]
TERMINATE THE RIGHTS
AGREEMENT.
I plan to attend [ ]
meeting.
SIGNATURE(S) DATE , 1999
---------------------------------- ---------------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, give
full title as such. If signing on behalf of a corporation, sign the full
corporate name by authorized officer. The signer hereby revokes all proxies
heretofore given by the signer to vote at the 1999 Annual Meeting of
Shareholders of Venator Group, Inc. and any adjournment or postponement thereof.