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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/[x]
Filed by a Party other than the Registrant / /[ ]
Check the appropriate box:
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (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
WILLIAMS-SONOMA, INC.
- - --------------------------------------------------------------------------------[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Williams-Sonoma, Inc.
---------------------------------------------------------------------------
(Name of Registrant as Specified Inin Its Charter)
- - -----------------------------------------------------------------------------------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Feefiling fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ /[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee iswas calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ /---------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
/ /---------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
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WILLIAMS-SONOMA, INC.LOGO
---------------------------------------------------------
W I L L I A M S - S O N O M A
---------------------------------------------------------
3250 VAN NESS AVENUE
SAN FRANCISCO, CALIFORNIA 94109
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Williams-Sonoma, Inc., a California
corporation (the "Company"), will be held at the Company's offices, 3250 Van
Ness Avenue, San Francisco, California 94109, Wednesday, May 24, 1995,28, 1997,
commencing at 10:00 a.m. (Pacific Daylight Time) for the following purposes:
(1) To elect ten directors to serve until the next annual meeting of
shareholders or until their respective successors shall be elected and
qualified.
(2) To act on a proposal to amendapprove the Company's Articles of
Incorporation to add a par value of $.01 per share of common
stockAmended and preferred stock.
(3) To act on a proposal to amend the Company'sRestated 1993 Stock
Option Plan to increase the size of the stock options awarded
annually to nonemployee directors upon their reelection from
2,250 shares of Common Stock to 5,250 shares of Common Stock.
(4)Plan.
(3) To ratify the selection of Deloitte & Touche as independent accountants
for the fiscal year ending January 28, 1996.
(5)February 1, 1998.
(4) To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on March 31, 1995,1997,
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting or any adjournment or postponement thereof.
Financial and other information concerning the Company is contained in the
enclosed Annual Report for the fiscal year ended January 29, 1995.February 2, 1997.
By Order of the Board of Directors,
Russell Solt,Dennis A. Chantland, Secretary
San Francisco, California
April 18, 199522, 1997
WHETHER YOU PLAN TO ATTEND THE MEETING OR NOT, PLEASE DATE AND SIGN THE
ENCLOSED PROXY CARD AND RETURN IT AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
STAMPED ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY ORALLY REVOKE THE PROXY AND
VOTE IN PERSON EVEN THOUGH YOU HAVE RETURNED YOUR PROXY.
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WILLIAMS-SONOMA, INC.
3250 VAN NESS AVENUE
SAN FRANCISCO, CALIFORNIA 94109
------------------------------
PROXY STATEMENT
Williams-Sonoma, Inc.
3250 Van Ness Avenue
San Francisco, California 94109------------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, MAY 24, 199528, 1997
This proxy statement (the "Proxy Statement") and the enclosed proxy are
furnished in connection with the solicitation of proxies by the Board of
Directors of Williams-Sonoma, Inc., a California corporation (the "Company"),
for use at the Annual Meeting of Shareholders of the Company (the "Annual
Meeting"), to be held on Wednesday, May 24, 1995,28, 1997, and any adjournment or
postponement thereof. The Annual Report to the shareholders of the Company for
the fiscal year ended January 29, 1995,February 2, 1997, including the financial statements of,
and other information concerning the Company, is also enclosed. The Company
anticipates that this Proxy Statement and accompanying form of proxy will first
be mailed or given to its shareholders on or about April 18, 1995.22, 1997.
A proxy may be revoked by filing with the Secretary of the Company a
written notice of revocation or a duly executed proxy bearing a later date, or
by attending the Annual Meeting and voting in person. Attendance in person at
the Annual Meeting does not itself revoke an otherwise valid proxy; however, any
shareholder who attends such meeting may orally revoke his proxy at the Annual
Meeting and vote in person. If a shareholder specifies a choice on any matter to
be acted upon by means of the accompanying proxy, and the proxy is properly
executed and received prior to the Annual Meeting, the proxy will be voted in
accordance with the specifications made. If an executed proxy is returned
without any specifications as to how shares should be voted, votes will be cast
for the election of the directors named in this Proxy Statement, for the approvalin favor of the
amendment to the Company's Articles of Incorporation,
for the approval of the amendment to the Company'sAmended and Restated 1993 Stock Option Plan, and in favor of the ratification of
the selection of Deloitte & Touche as the Company's independent accountants. In
addition, the proxyholders will vote in their sole discretion upon such other
business as may properly come before the meeting and any adjournments or
postponements thereof.
All of the expenses involved in preparing, assembling and mailing this
Proxy Statement and the material enclosed will be paid by the Company. Copies of
solicitation material will be furnished to brokers and others holding common
stock of the Company to forward to their principals, and the Company will
reimburse them for reasonable expenses in doing so. The Company expects that
some of its officers or employees (none of whom will receive special
compensation) will solicit proxies personally and by telephone or other means.
In addition, the Company has retained the services of Skinner & Company to
assist in the solicitation of proxies at an estimated cost of $3,500.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
Only shareholders of record at the close of business on March 31, 1995,1997,
will be entitled to notice of and to vote at the Annual Meeting. At the close of
business on March 31, 1995,1997, there 4
were ________outstanding25,557,094 outstanding shares of the
Company's common stock (the "Common Stock"), the only class of stock
outstanding. The closing sales price for the Common Stock on March 27, 1997, as
reported by the National Association of Securities Dealers Automated Quotation
(NASDAQ) National Market System, was $30.75 per share.
4
Each share of Common Stock is entitled to one vote, except that
shareholders may cumulate their votes for the election of directors. Under
California law, no shareholder may cumulate votes unless the candidate's name
has been placed in nomination prior to the voting and at least one shareholder
at the meeting has given notice of the intention to cumulate votes prior to the
voting. If such notice is given, every shareholder present, in person or by
proxy, at the meeting may cumulate votes. The accompanying proxy grants
authority to the proxyholders to cumulate votes and allocate them in the
proxyholders' discretion to one or more nominees, if the proxyholders believe
that such action will maximize the number of nominees who will be elected. The
proxyholders do not, at this time, intend to give such notice nor to cumulate
the votes they may hold pursuant to the proxies solicited in this Proxy
Statement unless the required notice by a shareholder is given at the meeting,
in which instance such proxyholders intend to vote cumulatively all the proxies
held by them in favor of some or all of the nominees for office set forth in
this Proxy Statement. If cumulative voting is utilized at the Annual Meeting,
each shareholder voting at the election of directors may cumulate their votes
and cast a number of votes equal to the number of directors to be elected
multiplied by the number of shares held. All such votes may be cast for a single
candidate or may be distributed among any or all of the candidates.
The following table sets forth information as to the beneficial ownership
of the Common Stock, as of March 31, 1995,27, 1997, by (a) persons known to the Company
to be beneficial owners of more than 5% of the Common Stock, (b) executive
officers named in the "Summary Compensation Table" below, and (c) executive
officers and directors as a group. Unless otherwise noted, the persons listed
below have sole voting and investment power.
Percent
Number of Shares of
Name and Address of Beneficial Owner Beneficially Owned ClassPERCENT
NUMBER OF SHARES OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED CLASS
- - ------------------------------------------------------------------------------------------------------- ------------------ -------
W. Howard Lester . . . . . . . . . . . . . . . 2,909,972(1) 11.5%Lester................................................... 2,903,385(1) 11.3%
c/o Williams-Sonoma, Inc.
3250 Van Ness Avenue
San Francisco, CA 94109
James A. McMahan . . . . . . . . . . . . . . . 3,402,175(2) 13.4%McMahan................................................... 3,412,675(2) 13.3%
2237 Colby Avenue
Los Angeles, CA 90064
Fidelity Investments . . . . . . . . . . . . . 1,522,375(3) 6.00%
82 Devonshire Street
Boston, MA 02109-3614
Gary G. Friedman . . . . . . . . . . . . . . . 141,657(4) *Patrick J. Connolly................................................ 527,937(3) 2.1%
c/o Williams-Sonoma, Inc.
3250 Van Ness Avenue
San Francisco, CA 94109
Patrick J. Connolly . . . . . . . . . . . . . 525,822(5) 2.1%Gary G. Friedman................................................... 319,677(4) 1.2%
c/o Williams-Sonoma, Inc.
3250 Van Ness Avenue
San Francisco, CA 94109
Dennis A. Chantland................................................ 25,000(5) *
c/o Williams-Sonoma, Inc.
3250 Van Ness Avenue
San Francisco, CA 94109
Robert K. Earley . . . . . . . . . . . . . . . 124,578(6)Earley................................................... 154,300(6) *
c/o Williams-Sonoma, Inc.
3250 Van Ness Avenue
San Francisco, CA 94109
32
5
PERCENT
NUMBER OF SHARES OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED CLASS
- -------------------------------------------------------------------
Nicholas Applegate Capital Management. . . . . . . 1,483,699(7) 5.85%Management.............................. 1,876,381(7) 7.3%
600 West Broadway, 29th Floor.Floor
San Diego, CA 92101
Husic Capital Management/Frank J. Husic & Co/Frank J. Husic........ 1,726,200(8) 6.8%
555 California Street, Suite 2900
San Francisco, CA 92101
James E. Riley 19,571(8) *
c/o Williams-Sonoma, Inc. . . . . . . . . . . .
3250 Van Ness Avenue
San Francisco, CA 94109
Charles Williams . . . . . . . . . . . . . . . . . 282,178(9) 1.1%
c/o Williams-Sonoma, Inc.
3250 Van Ness Avenue
San Francisco, CA 9410994104
All Executive Officers and Directors as a Group. . 7,575,987(10) 29.9%
(14Group (13 persons)....... 7,738,601(9) 29.4%
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6- ---------------
* Less than 1%.
(1) Includes 32,40064,800 and 39,00093,500 shares subject to nonqualified stock options
granted under the Company's 1976 Stock Option Plan (the "1976 Plan") and the
1993 Stock Option Plan (the "1993 Plan"), respectively, which are currently
exercisable or exercisable within 60 days. Includes 6,0276,940 shares in the
Company's Employee Profit Sharing and Stock Incentive plan (the "Profit
Sharing Plan") that are allocable to Mr. Lester and fully vested. Does not
include 1,743 and 557,773 shares owned by Mr. Lester's wife and by trusts
established by Mr. Lester for the benefit of his children, respectively, in
which shares Mr. Lester disclaims any beneficial interest.
(2) Includes 6,750 and 4,50015,000 shares subject to nonqualified stock options
granted under the 1976 Plan and the 1993 Plan, respectively, which are
currently exercisable or exercisable within 60 days.
(3) Based on information furnished in a Schedule 13G filed with the
SecuritiesIncludes 68,625 and Exchange Commission on or about February 14, 1995.
According to such Schedule 13G, Fidelity Management Trust Company, a
wholly-owned subsidiary of FMR Corp. and an investment adviser
registered under Section 203 of the Investment Advisers Act of 1940,
is beneficial owner as a result of acting as investment adviser to
several investment companies registered under Section 8 of the
Investment Company Act of 1940. Edward C. Johnson 3d and FMR Corp.,
through its control of Fidelity Management Trust Company, have sole
voting and dispositive power over 14,850 shares of common stock and
FMR Corp has sole dispositive power only (and no voting power) of
1,522,375 shares of Common Stock.
(4) Includes 37,775 and 50,625 shares subject to nonqualified stock
options granted under the 1976 Plan and the 1993 Plan, respectively
and, 48,000 shares subject to incentive stock option granted under the
1983 Incentive Stock Option Plan (the "1983 Plan") which are currently
exercisable or exercisable within 60 days. Also includes 5,257 shares
in the Profit Sharing Plan that are allocable to Mr. Friedman and
fully vested.
(5) Includes 59,625 and 14,25036,500 shares subject to nonqualified stock options
granted under the 1976 Plan and the 1993 Plan, respectively, which are
currently exercisable or exercisable within 60 days. Also includes 4,0524,917
shares in the Profit Sharing Plan that are allocable to Mr. Connolly and
fully vested. Does not include 2,619 shares owned by a trust established for
the benefit of Mr. Connolly's children, in which shares Mr. Connolly
disclaims any beneficial interest.
(6)(4) Includes 61,87594,925 and 10,800168,000 shares subject to nonqualified stock options
granted under the 1976 Plan and the 1993 Plan, respectively, which are currently exercisable or exercisable within 60 days. Also
includes 5,328 shares in the Profit Sharing Plan that are allocable to
Mr. Earley and fully vested.
(7) Based on information furnished in a Schedule 13G filed with the
Securities and Exchange Commission on or about February 14, 1995.
According to such Schedule 13G, Nicholas Applegate Capital Management,
an investment adviser registered under Section 203 of the Investment
Advisers Act of 1940, has sole voting power over 1,022,649 shares of
Common Stock, and sole dispositive power only (and no voting power)
over 1,483,669 shares of Common Stock.
(8) Includes 7,200 and 7,200 shares subject to nonqualified stock options
granted under the 1976 Plan and the 1993 Plan, respectively, which are
currently exercisable or exercisable within 60 days. Also includes
5,171 shares in the Profit Sharing Plan that are allocable to Mr.
Riley and fully vested.
(9) Includes 178 shares in Profit Sharing Plan that are allocable to Mr.
Williams and fully vested.
(10) Includes 227,855 and 147,975 shares subject to nonqualified stock
options granted under the 1976 Plan and the 1993 Plan, and 48,00050,625
shares subject to incentive stock options granted under the 1983 Incentive
Stock Option Plan (the "1983 Plan"), which are currently exercisable or
exercisable within 60 days. Also includes 23,6906,127 shares in the Profit Sharing
Plan that are allocable to Mr. Friedman and fully vested.
(5) Includes 20,000 shares subject to nonqualified stock options granted under
the 1993 Plan which are currently exercisable or exercisable within 60 days.
Also includes 5,000 shares owned by a trust established for the joint
benefit of Mr. Chantland and his wife.
(6) Includes 73,125 and 28,400 shares subject to nonqualified stock options
granted under the 1976 Plan and the 1993 Plan, respectively, which are
currently exercisable or exercisable within 60 days. Also includes 6,200
shares in the Profit Sharing Plan that are allocable to Mr. Earley and fully
vested.
(7) The information above and in this footnote is based on the Schedule 13G of
Nicholas Applegate Capital Management, filed February 3, 1997. Nicholas
Applegate Capital Management, a registered investment adviser, has sole
voting and dispositive power over 1,868,113 shares of Common Stock and sole
dispositive power (but no voting power) over 8,268 shares.
(8) The information above and in this footnote is based on the Schedule 13G of
Husic Capital Management, Frank J. Husic and Co., and Frank J. Husic, a
registered investment adviser, a California corporation, and a shareholder,
respectively, filed February 4, 1997. Each has shared voting and dispositive
power over
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1,414,000 shares of Common Stock and shared dispositive power (but no voting
power) over 312,200 shares.
(9) Includes 262,100 and 414,250 shares subject to nonqualified stock options
granted under the 1976 Plan and 1993 Plan, respectively, and 50,625 shares
subject to incentive stock options granted under the 1983 Plan, which are
currently exercisable or exercisable within 60 days. Also includes 18,216
shares in the Profit Sharing Plan that are allocable to the executive
officers and fully vested.
5
7
The closing sales price for the Common Stock on March 31, 1995, as
reported by the National Association of Securities Dealers Automated Quotation
(NASDAQ) National Market System, was $_________ per share.SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and the
rules promulgated thereunder, directors and certain officers of the Company and
persons who beneficially own more than 10% of a registered class of the
Company's equity securities are required to file with the Securities and
Exchange Commission and the NASDAQ Stock Market and furnish to the Company
reports of ownership and changes in ownership of all classes of the Company's
equity securities. Based solely on its review of the copies of such reports
received by it during or with respect to the fiscal year ended January 29, 1995,February 2, 1997,
and/or written representations from such reporting persons, the Company believes
that, except as described below, all reports required to be filed by such
reporting persons during or with respect to the fiscal year ended January 29, 1995February 2,
1997 were filed on a timely basis. James E. Riley inadvertently filed late one Form 43 registering Richard Hunter as a
beneficial owner and reporting a single stock option grant covering 9,000of 50,000 shares of
Common Stock, and H. Peter
Youngwas inadvertently filed late his Form 3 initially reporting his beneficial
ownership of Common Stock. Claudia Abrams inadvertentlylate. Also filed late her Formswere Form 4
reporting six transactions involving less than 10,000Patrick J. Connolly's sale of 30,000 shares of Common Stock in
the aggregate.and Form 5 reporting
summarized annual activity for Gary G. Friedman.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, ten directors are to be elected to serve until the
next annual meeting of shareholders or until the election and qualification of
their successors. The Company's Bylaws provide for not less than six nor more
than eleven directors, the exact number having been fixed by the Board of
Directors at ten. Under California law, the ten nominees receiving the highest
number of affirmative votes of the shares entitled to vote shall be elected
directors. Abstentions and broker non-votes will have no effect on the outcome
of the vote. Unless otherwise instructed, the proxyholders will vote the proxies
received by them for the ten nominees named below, all of whom are
currently directors of the Company.below. If any of the listed nominees
is unable or declines to serve as a director at the time of the Annual Meeting,
the proxies will be voted for such person or persons as the proxyholders may
designate. The Board of Directors has no reason to believe that any of the
nominees will be unable or decline to serve as a director.
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7
The following table sets forth information as of March 31, 199527, 1997, with
respect to each person nominated for election as a director which has been
furnished to the Company by the nominees. All nominees, with the exception of
Adrian D.P. Bellamy, were elected directors at the Annual Meeting of
Shareholders held on May 25, 1994.June 19, 1996.
Amount and
Nature of
Beneficial Percent
Nominee Age Principal Occupation Director Since Ownership of Class
-------AMOUNT AND
NATURE OF
DIRECTOR BENEFICIAL PERCENT
NOMINEE AGE PRINCIPAL OCCUPATION SINCE OWNERSHIP OF CLASS
- ------------------------- --- -------------------- -------------------------------------------------- -------- ---------- --------
Charles E. Williams 79Williams...... 81 Founder of the Company and its Vice 1973 282,178(1)282,232(1) 1.1%
Chairman since 1986.
W. Howard Lester 59Lester......... 61 Chairman of the Company since 1986 1979 2,909,972(2) 11.5%2,903,385(2) 11.3%
and Chief Executive Officer since
1979. Director of The Good Guys,
Inc., CKE Restaurants, Inc., and
Conner PeripheralsHarold's Stores, Inc.
Adrian D.P. Bellamy...... 55 Director of The Gap, Inc., Gucci new 5,000 *
Group N.V., Paragon Trade Brands, nominee
Inc., and The Body Shop Intl., PLC
since 1995. Chairman and CEO of DFS
Group Ltd., from 1983-1995.
James M. Berry 64 Vice Chairman of Nations Bank from 1987 13,275(3) *
1988 to 1990. CorporateBerry........... 66 Executive
6
8
Vice President of Nations Bank from
1985 to 1990.Finance 1987 23,775(3) *
of Belk Stores Services since 1995.
Director of Nations
Bank Texas and HCC Insurance Holdings,
Inc., since 1993.
Nathan Bessin 69Bessin............ 71 Managing Partner of J. Arthur 1983 18,075(3)28,575(3) *
Greenfield & Co., Certified Public
Accountants, since 1978. Director
of Mercury General Corp.
Patrick J. Connolly 48 SeniorConnolly...... 50 Executive Vice President, of Mail OrderGeneral 1983 525,822(4)527,937(4) 2.1%
Manager, Catalog, and Assistant
Secretary of the Company since 19911995
and 1983, respectively; Vice President of
Mail Order from 1979 to 1990.respectively.
Millard S. Drexler 50Drexler....... 52 Chief Executive Officer, President 1990 24,000(3) *
and Director of The Gap, 1990 13,500(3) *
Inc.,
since 1995, 1987 and 1983,
respectively.
Gary G. Friedman 37 Executive ViceFriedman......... 39 Chief Merchandising Officer and 1993 319,677(5) 1.2%
President, Retail Stores since
1993 141,657(5) *
1993; Senior Vice President of
Stores from 1991 to 1992; and Vice
President of Stores from 1988 to
1990. Regional Manager of The Gap,
Inc. from 1985 to 1988.
F. Warren Hellman 60 General Partner of Hellman & 1987 101,595(3)(6) *
Friedman, investment bankers, since
1984. Partner of Matrix Partners
(venture capital) since 1982.
Partner of other venture capital
and risk arbitrage firms.
Director of American President
Companies, Ltd., Eagle Industries,
Inc., Franklin Resources, Inc.,
Great American Management &
Investment Inc. and Levi Strauss
Associates.1995.
John E. Martin 49Martin........... 51 Chairman and Chief Executive 1994 74,250(6) *
Officer of Pepsico Casual
Restaurants since 1996. President
and Chief Executive 1994 33,750(7) * Officer of Taco
Bell, a wholly-
ownedwholly-owned subsidiary of
PepsiCo, since
1983.from 1983-1996. Director
of The Good Guys, Inc.
James A. McMahan 72 President andMcMahan......... 74 Chief Executive 1979 3,402,175(3) 13.4%
Officer of McMahan 1979 3,412,675(3) 13.3%
Furniture Stores since 1947.
- - ----------------------------
* Less than 1%.
(1) Includes 178232 shares in the Profit Sharing Plan that are allocable to Mr.
Williams and fully vested.
5
8
(2) Includes 32,40064,800 and 39,00093,500 shares subject to nonqualified stock options
granted under the Company's 1976 Stock Option Plan (the "1976
Plan") and the 1993 Stock Option Plan, (the "1993 Plan"), respectively, which
are currently exercisable or exercisable within 60 days. Includes 6,0276,940
shares in the Company's Employee Profit Sharing and
Stock Incentive plan (the "Profit Sharing Plan")Plan that are allocable to Mr. Lester and fully
vested. Does not include 1,743 and 557,773 shares owned by Mr. Lester's wife
and by trusts established by Mr. Lester for the benefit of his children,
respectively, in which shares Mr. Lester disclaims any beneficial interest.
(3) Includes 6,750 and 4,50015,000 shares subject to nonqualified stock options
granted under the 1976 Plan and the 1993 Plan, respectively, which are
currently exercisable or exercisable within 60 days.
(4) Includes 59,62568,625 and 14,25036,500 shares subject to nonqualified stock options
granted under the 1976 Plan and the 1993 Plan, respectively, which are
currently exercisable or exercisable within 60 days. Also includes 4,0524,917
shares in the Profit Sharing Plan that are allocable to Mr. Connolly and
fully vested. Does not include 2,619 shares owned by a trust established for
the benefit of Mr. Connolly's children, in which shares Mr. Connolly
disclaims any beneficial interest.
(5) Includes 37,77594,925 and 50,625168,000 shares subject to nonqualified stock options
granted under the 1976 Plan and the 1993 Plan, respectively, and 48,00050,625
shares subject to incentive stock options granted under the 1983 Incentive Stock Option Plan, (the "1983 Plan"),
7
9 which
are currently exercisable or exercisable within 60 days. Also includes 5,2576,127
shares in the Profit Sharing Plan that are allocable to Mr. Friedman and
fully vested.
(6) Shares listed are owned by Hellman Family Revocable Trust of which Mr.
Hellman is a co-trustee.
(7) Includes 6,75017,250 shares subject to nonqualified stock options granted under
the 1993 Plan.Plan which are currently exercisable or exercisable within 60 days.
COMPENSATION OF DIRECTORS
Directors who areThe Company's directors do not officersreceive any cash compensation for services
provided as a member of the CompanyBoard. Directors (other than employee directors) are
entitled to be paid,
in addition to their expenses incurred in connection with such meeting, $1,000
for each Board Meeting and for each meeting of a committee attended which does
not occur on the same day as a Board Meeting. If the Proposal 3 is approved
at the annual meeting, the Company will eliminate the $1,000 per meeting
attendance fee.
Underawarded nonqualified stock options annually under the 1993 Stock Option Plan (the "1993 Plan"), each nonemployee
director who is elected to the Company's Board of Directors for the first time
is granted a nonqualified stockPlan.
Eligible directors are awarded an option to purchase 6,750 shares of Common
Stock which shall be exercisable in full beginning six months afterupon their initial election to the dateBoard and an option to purchase 5,250
shares of grant. Nonemployee directors whoCommon Stock each time they are re-elected to the Board of Directors
(i) at the Annual Meeting or (ii) on the date of each subsequent Annual Meeting
of Shareholders, will each receive a nonqualified stock option to purchase an
additional 2,250 shares of Common Stock, which option shall be exercisable in
full beginning six months after the date of grant of such option.Board. The exercise
price of each option granted to a nonemployee director shall be equal tothese options is fixed at the fair market value of the Common Stock on
the date of grant of such option. The term of
each option granted to a nonemployee director shall be ten years from the date
of grant of such option. Nonemployee directors are only eligible for grants of
options under the 1993 Plan in accordance with the preceding formula. The 1993
Plan replaced the 1976 Stock Option Plan (the "1976 Plan"), which had provided
for option grants to nonemployee directors under a formula substantially
similar to the one in the 1993 Plan described above. Messrs. Berry, Bessin,
Drexler, Hellman and McMahan were each granted nonqualified stock options to
purchase 6,750 shares of Common Stock at the 1992 Annual Meeting under the 1976
Plan and nonqualified options to purchase 2,250 shares of Common Stock at the
1993 and 1994 Annual Meetings under the 1993 Plan. Mr. Martin was granted
non-qualified stock options to purchase 6,750 shares of Common Stock at the
1994 Annual Meeting under the 1993 Plan.relevant annual meeting.
INDEMNIFICATION
Under the Company's Restated Articles of Incorporation, as amended
(the "Articles"), a director is not liable to
the Company or its shareholders for monetary damages for breach of fiduciary
duty as a director. However, the Articles of Incorporation do not eliminate a
director's liability for breach of the duty of loyalty, acts or omissions not in
good faith, certain payments not permitted under the California General Corporation Law (the "Law"),Corporations
Code or transactions in which the director derives an improper personal benefit.
The Articles of Incorporation also provide that the Company has the authority to
indemnify its directors, officers, employees and agents beyond the circumstances
permitted under Section 317 of the Law.
8
10California Corporations Code.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of 76 meetings during the
fiscal year ended January 29, 1995.February 2, 1997. The Board of Directors has two standing
Committees: Audit and Compensation. There is no nominating committee or any
other committee performing those functions.
During the last fiscal year, the Audit Committee of the Board of Directors
met once. The Audit Committee is currently comprised of Messrs. Bessin
(Chairman) and Berry. This Committee is primarily
6
9
responsible for reviewing the services performed by the Company's independent
accountants and evaluating the Company's accounting principles and its system of
internal accounting controls.
During the last fiscal year, the Compensation Committee of the Board of
Directors (the "Compensation Committee") met twice.four times. The Compensation
Committee is currently comprised of Messrs. McMahan (Chairman), Drexler, Hellman
and Martin. This Committee is primarily responsible for officers' compensation
matters and for administering the Company's stock option plans.
No director attended fewer than 75% of all meetings of the Board of
Directors and the committees upon which such director served during the fiscal
year ended January 29, 1995,February 2, 1997, except directordirectors Drexler, Hellman and Martin who
each attended 57% of all such meetings70%, 73% and Drexler who attended 60%50%, respectively, of all such meetings.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE ABOVE-NAMED
NOMINEES.
CERTAIN TRANSACTIONS
The Company leases its distribution center in Memphis, Tennessee, from two
partnerships whose partners include directors,two executive officers and/or significant shareholdersa director of
the Company. See "Executive Compensation--Compensation -- Compensation Committee Interlocks
and Insider Participation."
9
11
INFORMATION CONCERNING EXECUTIVE OFFICERS
Executive officers of the Company are elected by the Board of Directors and
serve at the pleasure of the Board. Certain information concerning such
executive officers is set forth below:
Name Age Present Position with the Company and Business Experience
----NAME AGE PRESENT POSITION WITH THE COMPANY AND BUSINESS EXPERIENCE
- ------------------------ --- --------------------------------------------------------------------------------------------------------------------
Charles E. Williams. . . . . . . 79Williams..... 81 Founder of the Company and Vice Chairman since 1986.
W. Howard Lester . . . . . . . . 59Lester........ 61 Chairman since 1986 and Chief Executive Officer since 1979.
Gary G. Friedman . . . . . . . . 37Friedman........ 39 Chief Merchandising Officer and President, Retail Stores
since 1995; Executive Vice President since 1993;1993-1995; Senior Vice
President-Stores,President -- Stores, 1991-1992; and Vice
President-Stores,President -- Stores, 1988-1990.
Patrick J. Connolly. . . . . . . 48Connolly..... 50 Executive Vice President and General Manager, Catalog since
1995; Senior Vice President-MailPresident -- Mail Order, since 1991;1991-1995; Vice
President-MailPresident -- Mail Order, 1979-1990; and Assistant
Secretary since 1983.
Robert K. Earley . . . . . . . . 48 Senior Vice President-Distribution since 1991; andDennis A. Chantland..... 54 Executive Vice President Distribution 1983-1990.
Russell Solt . . . . . . . . . . 47 Senior Vice President-Finance and Administration, Chief FinancialAdministrative Officer
since 1995; and Secretary since 1994.
H. Peter Young. . . . . . . . . . 481996.
G. Andrew Rich.......... 49 Senior Vice President-Logistics since 1994.
Claudia Abrams. . . . . . . . . . 50 Vice President-HumanPresident -- Human Resources since 1985.1995.
Richard C. Hunter....... 51 Senior Vice President -- International Operations and
Development since 1996.
107
1210
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation of the
Company's Chief Executive Officer and its four other most highly compensated
executive officers who served as executive officers during the fiscal year ended
January 29, 1995February 2, 1997 and whose total annual salaries and bonuses exceeded $100,000
forduring such fiscal year.
ANNUAL LONG TERM
COMPENSATION (3) COMPENSATION
---------------------- -------------
AWARDS
------
Name and Securities All Other
Principal Underlying Compensation
Position(1) Year(2) Salary($ANNUAL -------------------
COMPENSATION(3) SECURITIES
NAME AND -------------------- UNDERLYING ALL OTHER
PRINCIPAL POSITION(1) YEAR(2) SALARY($) Bonus($BONUS($) Options(#)OPTIONS(#)(4) ($COMPENSATION($)
- - --------------------------------------------------- ------- --------- -------- ------------- ------------------------------- ---------------
W. Howard Lester..............Lester........................ 1996 498,077 100,000 30,000 7,638(5)
Chief Executive Officer, 1995 471,210 0 20,000 10,451
Chairman and Director 1994 386,538 0 37,500 10,066(5)
Chief Executive Officer, 1993 350,000 125,000 78,750 11,554
Chairman and Director 1992 350,000 0 81,000 010,066
Gary G. Friedman..............Friedman........................ 1996 399,580 75,000 20,000 1,226(6)
Chief Merchandising Officer, 1995 386,119 0 50,000 4,823
President Retail Stores and Director 1994 323,076 0 15,000 5,163(6)5,163
Dennis A. Chantland..................... 1996 342,244 75,000 25,000 4,930(7)
Executive Vice President, 1993 250,0001995 31,250 0 100,000 337,500 6,071
1992 163,442 50,000 30,375 0183(8)
Chief Administrative Officer and 1994 -- -- -- --
Secretary
Patrick J. Connolly...........Connolly..................... 1996 229,080 75,000 15,000 7,478(9)
Executive Vice President 1995 224,009 0 10,000 4,325
and General Manager, Catalog, 1994 200,615 0 15,000 8,769(7)
Senior Vice President- 1993 180,808 100,000 28,125 7,003
Mail Order,8,769
Assistant 1992 177,700 0 22,500 0 Secretary and Director
Robert K. Earley..............Earley........................ 1996 208,080 50,000 5,000 3,832(10)
Senior Vice President -- Distribution 1995 201,284 0 10,000 7,348
1994 187,308 0 9,000 7,084(8)
Senior Vice President- 1993 178,270 50,000 22,500 10,043
Distribution 1992 172,845 0 28,125 0
Charles Williams.............. 1994 125,000 0 0 10,770(9)
Founder and Vice Chairman 1993 125,000 25,000 0 3,897
of the Board of the 1992 125,000 0 0 0
Company
James E. Riley(10)............ 1994 175,000 0 0 7,241(11)
Former Senior Vice President 1993 171,539 50,000 45,000 9,900
Finance and Administration, 1992 165,000 0 0 0
Chief Financial Officer
and Secretary7,084
11
13- ---------------
(1) None of the executives named in this table held any shares of restricted
stock of the Company as of January 29, 1995.February 2, 1997.
(2) Rows specified "1994,"1996," "1993""1995" and "1992""1994" represent fiscal years ended
February 2, 1997, January 28, 1996, and January 29, 1995, January 30, 1994, and January 31, 1993, respectively.
(3) While the named executive officers enjoy certain perquisites, the aggregate
value of such perquisites for each of the fiscal years shown did not exceed the
lesser of $50,000 or 10% of such officer's salary and bonus for the
applicable year.
(4) Figures have been adjusted to reflect the 3-for-2 stock splitsplits in February
1994 and September 1994 (the "Stock Split"Splits").
(5) Comprised of the Company's matching contributions under the Profit
Sharing Plan, the Company's profit-sharing contributions under the
Profit Sharing Plan, premiums paid by the Company for term life insurance for the benefitin excess
of the named officer, and benefits received
under the Company's executive supplemental medical plan, $3,000,
$1,500, $3,029, and $2,537, respectively.
(6) Comprised of the Company's matching contributions under the Profit
Sharing Plan, the Company's profit-sharing contributions under the
Profit Sharing Plan, premiums paid by the Company for term life
insurance$50,000 and benefits received under the Company's executive supplemental
medical plan of $3,000, $1,500, $444,$4,914 and $219,$2,724, respectively.
(7)(6) Comprised of the Company's matching contributions under the Profit
Sharing Plan, the Company's profit-sharing contributions under the
Profit Sharing Plan, premiums paid by the Company for term life insurance in excess
of $50,000 and benefits received under the Company's executive supplemental
medical plan of $3,000, $1,500, $1,171,$462 and $3,098,$764, respectively.
(8)(7) Comprised of the Company's matching contributions under the Profit
Sharing Plan, the Company's profit-sharing contributions under the
Profit Sharing Plan, premiums paid by the Company for term life insurance in excess
of $50,000 and benefits received under the Company's executive supplemental
medical plan of $3,000, $1,500, $1,104,$449 and $1,480,$4,481, respectively.
(9)(8) Comprised of the Company's profit-sharing contributions under the
Profit Sharing Plan, premiums paid by the Company for term life insurance in excess
of $50,000 of $183.
(9) Comprised of premiums paid by the Company for the benefitterm life insurance in excess
of the named officer,$50,000 and benefits received under the Company's executive supplemental
medical plan of $1,250,
$8,677,$2,016 and $843, respectively$5,462, respectively.
(10) On November 11, 1994, Mr. Riley changed his employment status to
part-time and concurrently relinquished his position as an officer of
the Company. Mr. Riley is included in this table because he would
have been among the four other most highly compensated executive
officers had he been an executive officer on January 29, 1995.
(11) Comprised of the Company's matching contributions under the Profit
Sharing Plan, the Company's profit-sharing contributions under the
Profit Sharing Plan, premiums paid by the Company for term life insurance in excess
of $50,000 and benefits received under the Company's executive supplemental
medical plan of $3,000, $1,500, $1,142,$445 and $1,599,$3,387, respectively.
128
1411
OPTION GRANTS IN LAST FISCAL YEAR
The 1993 Plan, which was approved by the shareholders of the Company
at the 1993 Annual Meeting, is currently the only stock option plan under which
the Company may grant options.
The following table sets forth the information noted for all grants of
stock options made to the Chief Executive Officer and each of the other
executive officers named in the Summary Compensation Table during the fiscal
year ended January 29, 1995:February 2, 1997:
Potential Realizable Value at
Assumed Annual Rates of Stock Price
Individual Grants(1) Appreciation for Option TermINDIVIDUAL GRANTS POTENTIAL REALIZABLE
- - --------------------------------------------------------------------------- -----------------------------------
Percentage of
Number of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted------------------------------------------------------------------------------------------ VALUE
NUMBER OF AT ASSUMED ANNUAL
SECURITIES PERCENTAGE OF RATES OF STOCK PRICE
UNDERLYING TOTAL OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OR OPTION TERM
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME (#) Fiscal Year(%FISCAL YEAR (%) ($/Sh) DateSH) DATE 5% ($) 10% ($)
- - ------------------------ ----------- --------------------------------------------- ---------- --------------- ----------- ---------- ----------------- ----------
W. Howard Lester 37,500 13.2% $22.00 3/16/2004 $518,838 $1,314,838Lester............... 30,000 5.8 23.25 6/19/2006 $438,654 $1,111,635
Chief Executive Officer,
Chairman and Director
Gary G. Friedman 15,000 5.3 22.00 3/16/2004 207,535 525,935Dennis A. Chantland............ 25,000 4.9 23.25 6/19/2006 365,545 926,363
Executive Vice President,
Chief Administrative Officer
and Secretary
Gary G. Friedman............... 20,000 3.9 18.00 3/12/2006 226,402 573,747
Chief Merchandising Officer,
President -- Retail Division,
and Director
Patrick J. Connolly 15,000 5.3 22.00Connolly............ 5,000 1.0 18.00 3/16/2004 207,535 525,935
Senior12/2006 56,601 143,437
Executive Vice President-
Mail Order, Assistant
SecretaryPresident, 10,000 1.9 23.25 6/19/2006 146,218 370,545
General Manager, Catalog, and
Director
Robert K. Earley 9,000 3.2 22.00Earley............... 5,000 1.0 18.00 3/16/2004 124,521 315,56112/2006 56,601 143,437
Senior Vice President-President --
Distribution
(1) Figures have been adjusted to reflect the stock split.
139
1512
AGGREGATE OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUE
The following table sets forth the fiscal year-end value of unexercised
options held by the Chief Executive Officer and each of the other executive
officers named in the Summary Compensation Table:
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options
Fiscal Year-End (#)NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
SHARES YEAR-END(#)(1) at Fiscal Year-End ($AT FISCAL YEAR-END($)
Shares Acquired Value
Name on Exercise (#) Realized ($ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) Exercisable Unexercisable Exercisable UnexercisableEXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---------------- --------------- -------------------------------------------- ----------- ----------- ----------- ------------- ----------- -------------
W. Howard Lester 48,150 149,100Lester................ 0 0 131,050 116,200 $ 869,025 $2,029,1683,072,381 $ 1,875,578
Chief Executive Officer,
Chairman and Director
Gary G. Friedman 70,000 2,039,896 110,900 303,225 1,725,236 3,782,416Friedman................ 0 0 274,050 210,075 5,862,174 3,797,079
Chief Merchandising Officer,
President -- Retail Division,
and Director
Patrick J. Connolly............. 0 0 93,500 47,750 2,380,450 751,481
Executive Vice President,
Patrick J. Connolly 65,250 51,000 1,104,553 402,994General Manager, Catalog, and
Director
Dennis A. Chantland............. 0 0 20,000 105,000 272,500 1,299,375
Executive Vice President,
Chief Administrative Officer
and Secretary
Robert K. Earley................ 0 0 92,225 33,025 2,393,929 592,402
Senior Vice President-Mail
Order, Assistant Secretary
and Director
Robert K. Early 66,375 43,875 1,296,166 632,562
Senior Vice President-President --
Distribution
James E. Riley (2) 87,750 2,489,964 0 36,000 0 634,230
Senior Vice President-
Finance and
Administration, Chief
Financial Officer and
Secretary
- ---------------
(1) Figures have been adjusted to reflect the Stock Split.
(2) On November 11, 1994,Splits.
EXECUTIVE EMPLOYMENT AGREEMENTS
The Company does not have employment agreements with any of its executive
officers. However, the Company recently entered into a severance agreement with
Mr. Riley changedEarley. Under the terms of this agreement, Mr. Earley will continue to
receive his employment status to
part-timenormal base salary and concurrently relinquished his position as an officerbenefits until the end of the Company. Mr. Riley is included incurrent fiscal
year. His stock options will also continue to vest during this table because he would have
been among the four other most highly compensated executive officers
had he been an executive officer on January 29, 1995.period.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the Committee) is
responsible for setting executive compensation policy and determining the
compensation paid to executive officers of the Company. The Compensation Committee is
currently comprised of the directors named below, all of whom are non employee directors.
14
16
In 1992, with the assistance of an independent executive compensation
advisor, the Compensation Committee conducted a major review of its executive
compensation programs and philosophies. As a result of this review the
Committee established its current approach to executive compensation at the
company with one exception. During its review of executive pay practices in
1994, the Committee decided to reinstate the annual cash incentive plan. The
Committee determined that it was necessary to combine the three elements of
compensation -- base salary, annual cash incentive and stock options -- to
achieve its objectives.non-employee
Directors.
The Company's executive compensation programs are designed to enable itthe
Company to attract, retain, motivate and reward highly qualified executives
while maintaining strong and direct links amongbetween executive pay, individual
performance, the Company's financial performance and shareholder returns. The
Compensation Committee believes that officers and other key employees should
have a significant stake in the Company's stock price performance under programs
which link executive compensation to shareholder return. Notably, the Chief
Executive Officer, Mr. Lester, beneficially owned 2,909,972owns 2,903,385 shares (including
options which are currently exercisable or exercisable within 60 days)
representing 11.5%11.3% of the shares of Common Stock as
10
13
of March 31, l995.27, 1997. Mr. Lester (together with the undersigned Mr. McMahan)
purchased the Company from its founder Charles E. Williams in 1979. The Company
first offered stock to the public in 1983.
The Company competes with a number of different companies, both within and
outside the retail industry, for talented executives. Accordingly, when
assessing the competitiveness of the Company's compensation programs, the Committee
considers both pay practices ofat retailers of comparable size who are part of the
Center offor Research in Security Prices ("CRSP") Index for NASDAQ Retail Trade
Stock),Stock, one of the Indicesindices used in the Performance Graph, andas well as pay
practices ofat other companies considered comparable based on the industry,
revenues and other factors (together, the " Comparable"Comparable Companies"). when assessing
the competitiveness of the Company's compensation programs. The Committee
consults withutilizes an independent executive compensation advisor for information on
competitive compensation levels of Comparable Companies.levels.
The Committee considers three major elements in its compensation program:
base salaries, annual cash incentive opportunities, and long-term incentives via
stock options. Base salaries are generally targeted at average competitivethe median levels of the
Comparable Companies, withand actual base salaries determined based on an
assessment ofare adjusted for individual
performance and contributions.contributions to the Company's success. In May of 1994 the
Committee reviewed executive officer salaries and increased the Chief
Executive's salary 14%. Prior to this increase, his salary had not been
increased since August 1991. In determining the Chief Executive's 1994 salary,1996, the
Committee reviewed the company's 1993 performance. Specifically,salaries of its executive officers, including the Committee notedNamed
Executive Officers. Based on the Company's performance in fiscal year 1995,
which fell short of targets, no base salary increases in revenues, comparable store sales, mail order
sales and 536% increase in pre-tax earnings.were granted at that time.
The Committee also noted that
shareholder value significantly increased during Fiscal 1993 with the stock
pricesecond component of the company increasing 194% as compared to increases of 13.7% and 6.6%
inCompany's executive compensation program is the
CRSP IndexProfit Incentive Plan, which rewards participants for NASDAQ Stock Market (U.S. Companies) and the CRSP Index
for NASDAQ Retail Trade Stock, respectively. Gary Friedman's salary was
increased 40% based on his key leadership role in merchandising which
contributed to the Company's turnaround. Other executive officers received
increases averaging 6.5%,extraordinary results
based on the Committee's assessment of their
individual contributions.
As mentioned above, the annual cash incentive plan was reinstated for
the l994 fiscal year. It is designed to reward for extraordinary results,
linking annual cash incentives to specific corporate and/or divisional
financial goals. Specific pre-tax earnings goals and payout levels are
established
15
17
to reflect the Company's objectives. These goals and the potential incentive
awards for executive officers were reviewed and approved by the Committee.
While the Company had record earnings this year, none of the executive
officers named in the Summary Compensation Table were awarded bonuses under the
annual cash incentive plan because the Company's overall results did not meet
the agreed upon goals. However, various divisional officers did receive cash
bonuses due to the fact that their respective divisions met or exceeded pre-tax
earnings goals set for their individual divisions. The Committee believes it
is important to link annual cash bonuses for the executive officers and
divisional officers to the annual performance of the companyCompany. Based on the Company's
performance in fiscal year 1995, which fell short of targets, no awards were
made to any of the Named Executive Officers or a
division, respectively.any other participants under the
Plan.
Stock ownership and the link to shareholder value is an integral part of
the Company's executive compensation program. Accordingly, the number of stock
options granted to the Chief Executive Officer and other executive officers
reflect competitive practices for Comparable Companies and the assessment of
their individual contributions. The Chief Executive OfficerIn 1996, Mr. Lester was granted an option for
37,500 shares.30,000 shares, Mr. Chantland was granted an option for 25,000 shares, Mr.
Friedman was granted an option for 20,000 shares, and Mr. Connolly was granted
an option for 15,000 shares in recognition of their contributions and to further
link a significant portion of their compensation to shareholder returns. Grants
to the other executive officersExecutive Officers averaged 10,5005,000 shares. All stock options were
granted with an exercise price equal to the fair market value of aone share of
Common Stock on the date of the grant.
11
14
The Omnibus Budget and Reconciliation Act of 1993 amended Section 162(m) of
the Internal Revenue Code and could, depending on future compensation levels,
result in limits on the Company's ability to deduct compensation in excess of
$1,000,000 paid to certain executive officers. Exceptions to this deductibility
limit may be made for various forms of performance-based compensation. Based on
19941996 compensation levels, no such limits on the deductibility of compensation
applied for any officer of the Company. While
theThe Company has not adopted a policy
specifically prohibiting compensation at a level that would limit deductions, the Committee does not currently anticipate
any restrictions on the future deductibility of compensation for the Company's
officers.deductions.
While the Committee cannot predict with certainty how the deductibility limit may impact the
Company's compensation program in future years, the Committee intends to
maintain an approach to executive compensation which strongly links pay to
performance. ThisThe approach should preserve the deductibility of the Company's
executive compensation while maintaining highly motivational compensation
programs which support the Company business objectives and strategies and
reinforce the creation of shareholder value.
Respectfully submitted,
James A. McMahan
Millard S. Drexler
F. Warren Hellman
John E. Martin
Members of the Compensation Committee
1612
1815
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS OF THE COMPANY,
CRSP* INDEX FOR THE NASDAQ STOCK MARKET (U.S. COMPANIES), AND
CRSP INDEX FOR NASDAQ RETAIL TRADE STOCKS
[Performance Graph for Williams-Sonoma, Inc.]
1/29/90 1/29/91 1/29/92 1/29/93 1/28/94 1/27/95MEASUREMENT PERIOD NASDAQ RETAIL NASDAQ STOCK
(FISCAL YEAR COVERED) TRADE MARKET WILLIAMS-SONOMA
Williams-Sonoma 100.0 115.9 91.4 72.3 212.7 292.2
NASDAQ Stock Market 100.0 99.3 156.1 177.5 201.8 194.6
NASDAQ Retail Trade 100.0 114.9 204.5 186.5 198.9 178.42/2/92 100.00 100.00 100.00
1/31/93 90.30 113.10 81.50
1/30/94 96.10 129.40 240.00
1/29/95 86.10 124.70 329.70
1/28/96 94.80 172.30 214.60
2/2/97 118.70 229.90 437.90
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day,
the preceding trading day is used.
D. The index level for all series was set to $100.0$100.00 on 1/29/90.
*Center2/2/92.
* Center for Research in Security Prices, The University of Chicago, Graduate
School of Business.
17
19
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's warehouse and distribution center is located in Memphis,
Tennessee and leased from two partnerships whose partners include directors,
executive officers, and/or significant shareholders of the
13
16
Company. The distribution center consists of two separate facilities --- one for
mail order operations and one for retail store operations.
Mail Order Facility
In July 1983,1984, the Company entered into an agreement to lease a 243,000
square foot distribution center from a partnership (the lessor). The lessor is a
partnership comprised of W. Howard Lester, Chairman, Chief Executive Officer and
significant shareholder of the Company, and James A. McMahan, a director and
significant shareholder of the Company and member of the Compensation Committee.
The partnership financed the construction through the sale of $6,300,000
principal amount of industrial development bonds due June 2008. The lease had an
initial, non-cancelable term of ten years expiring on June 30, 1994, with two
optional fire-yearfive-year renewals by the Company. In December 1985, the partnership
financed the construction of an additional 190,000 square feet of space through
the sale of $2,900,000 principal amount of industrial development bonds due
2010. The Company's lease with the partnership was amended to include additional
rent plus interest on the new bonds for the same lease term as the original
lease. In December 1993, the Company exercised the two five-year renewal options
and is now obligated to lease the space until June 30, 2004. Effective July 1,
1994, the fixed basic monthly rent is $51,500. Rental payments consist of basic
monthly rent, plus interest on the bonds (a floating rate equal ofto 55% of the
prime rate of a designated bank), applicable taxes, insurance and maintenance
expenses. In connection with the December 1993 transaction, both the partnership
and the Company provided to an unaffiliated bank an indemnity against certain
environmental liabilities.
Retail Store Facility
In August 1990, the Company entered into a separate agreement to lease a
second distribution center, consisting of approximately 307,000 square feet,
adjacent to the existing distribution center in Memphis, Tennessee. The lessor
is a partnership comprised ofthat includes Messrs. Lester, McMahan, and Robert K. Earley,
Senior Vice President of Distribution, and Gary H. Hewson.Distribution. The partnership financed the construction
of the distribution center through the sale of $10,550,000, 10.36% principal
amount of individualindustrial development bonds due in August 2015.
In September 1994, this lease was amended to include an approximately
306,000 square feetsquare-foot expansion of the facility. The expansion is currently
under construction and expected to bewas completed in
JulyOctober 1995. The lessor is
financingfinanced the construction of the expansion through a
$500,000 capital contribution from its partners and the sale of $12,500,000,$9,825,000,
9.01% principal amount of industrial development bonds due in August 2015. The
amended lease has an initial, non-cancelable term of 15 years beginning August
1991 and ending in July 2006, with three optional five yearfive-year renewals. Rentals
(including interest on the bonds, sinking fund payments, and fees) for the
primary term are payable at an average rate of $623,895$711,000 per quarter plus
applicable taxes, insurance and maintenance expenses.
18
20
Both facilities (including the 1994 expansion) areexpansions) were constructed to the
Company's specifications. After the option periods, the Company is obligated to
renew each lease annually so long as the bonds which financed the specific
projects remain outstanding. The Company accounts for the facility leases qualify as operating leases.leases for
accounting purposes. The Company believes that the facility leases are on terms
no less favorable thatthan the Company could have obtained from third parties in
arm's-length transactions.
1914
2117
PROPOSAL 2
AMENDMENTAPPROVAL OF THE COMPANY'S ARTICLES OF INCORPORATION TO ADD A
PAR VALUE OF $.01 PER SHARE OF COMMON STOCKAMENDED AND
PREFERRED STOCK
The Board of Directors of the Company has unanimously adopted a resolution
to amend Article III(a) of the Company's Articles of Incorporation to add a par
value of $.01 per share of common and preferred stock. If the amendment is
approved, Article III(a) of the Company's Articles of Incorporation will read
as follows:
This corporation is authorized to issue two classes of shares:
Common and Preferred. The number of Preferred shares
authorized to be issued is 7,500,000, with a par value of one
cent ($.01) per share, and the number of Common shares
authorized to be issued is 126,562,500, with a par value of
one cent ($.01) per share.
Like most California corporations, the Company's Articles of Incorporation
do not specify a par value for any of its authorized shares of stock because a
par value is not required for a legal purpose under the California General
Corporation Law. In those instances where a par value is required for purposes
of the laws of other states, Section 205 of the General Corporation Law
provides, in part:
Solely for the purpose of any statute or regulation imposing
any tax or fee based upon the capitalization of a corporation,
all authorized shares of a corporation organized under this
division shall be deemed to have a nominal or par value of one
dollar ($1) per share.
However, in at least one instance, a state taxing authority has declined
to apply Section 205 for the purpose of calculating a license fee based upon
the Company's capitalization. As a result, the Company was assessed (and paid)
a significantly higher license fee than would have been assessed had the
Company's shares been deemed to have the par value specified in Section 205.
Accordingly, the Company proposes to amend its Articles of Incorporation
to add a par value of $.01 per share of common and preferred stock. Although
the Company believes this amendment will significantly reduce the
aforementioned license fee, there can be no assurance that the applicable
taxing authority will not assert a contrary position.
Under California law, the adoption of an amendment to the Company's
Articles of Incorporation requires the affirmative vote of a majority of the
outstanding shares entitled to vote thereon. Thus, abstentions and broker
non-votes will have the same effect as a vote against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT OF THE
COMPANY'S ARTICLES OF INCORPORATION.
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PROPOSAL 3
AMENDMENT OF THERESTATED 1993 STOCK OPTION PLAN
The Company believes that overofficers and other key employees should have a
significant stake in the years, itsCompany's stock price performance under programs which
link compensation to shareholder return. As a result, stock option plans have
made a significant contribution to the abilitygrants are an
integral part of the Company's compensation program. The Company to attract and
retain highly competent individualscurrently
relies on whose judgment, initiative, leadership
and continued effortsa single plan -- the growth and profitability of the Company depend.
Consistent with that view, the Company's 1993 Stock Option Plan (the "1993
Plan") currently awards nonemployee directors nonqualified stock options to
purchase 6,750-- for these grants and
has less than 150,000 shares of Common Stock on the date of the annual meeting at
which they are first elected and 2,250 shares of Common Stock on the date of
each annual meeting at which they are re-elected. For the reasons discussed
below, the Company proposes to amend the 1993 Plan to increase the size of the
stock options awarded annually to nonemployee directors upon their reelection
from 2,250 shares of Common Stock to 5,250 shares of Common Stock (the
"Amendment").
The Company believes that the compensation currently paid to its
nonemployee directors is significantly less than amounts paid by comparable
companies. In addition to expense reimbursements and the annual stock options
currently awardedremaining under the 1993 Plan,plan for future
grants. Rather than adopting a new stock option plan at the Company pays each nonemployee
director $1,000 for each Board Meeting attended and for each committee meeting
attended which does not occur on the same day as a Board Meeting. The Company
does not pay its nonemployee directors the customary annual retainer paid by
many comparable companies.
In lieu of paying an annual cash retainer,present time, the
Company proposes to increase the sizenumber of shares available for grant under the
stock options awarded annually to nonemployee
directors upon their reelection by 3,000existing plan from 2,250,000 shares of Common Stock.Stock to 2,750,000 shares of
Common Stock, an increase of 500,000 shares or 22%. The Company believes thatalso proposes to
make several other changes to the amountplan (discussed below), some of which are
intended to conform the increase is reasonable in light ofplan to new regulations adopted by the director
compensation paid by comparable companies. Furthermore, if this proposal is
approved atSecurities and
Exchange Commission and the Annual Meeting, the Company will eliminate the $1,000 per
meeting attendance fee.
The Company believes that an increase in the compensation of
nonemployee directors is advisable to maintain a competitive compensation
package for these individuals. By awarding the increase in the form of stock
options rather than cash, the Company believes that it can enhance the
nonemployee directors' interest in the success of the Company and further align
their interests with those of the Company's shareholders. The Company would
also avoid expending additional cash resources on director compensation.
DESCRIPTION OF THE 1993 PLANInternal Revenue Service.
The following is a brief descriptionsummary of the material features of the 1993 Plan in its present formplan and the
proposed amendments. The summary is qualified in its entirety by reference to
the full text of the 1993 Planamended plan which is attached as set forth in Exhibit A to this Proxy
Statement. (The following description and Exhibit A include all adjustments
required underThe attached copy of the 1993 Planplan is restated to reflect the proposed
amendments as well as all prior amendments.
SUMMARY DESCRIPTION OF THE PROPOSED AMENDMENTS
The Company proposes to amend the plan to implement the following changes:
- increase the number of shares of Common Stock available for grant under
the plan from 2,250,000 shares to 2,750,000 shares;
- increase the minimum exercise price of nonqualified stock options from
75% to 100% of the fair market value of a share of Common Stock on the
date of grant;
- limit the size of stock option grants to individual officers to 200,000
shares of Common Stock per fiscal year;
- change the eligibility requirements for members of the committee which
administers the plan; and
- revise the formula for stock option awards to non-employee directors (i)
to increase the vesting period for the initial grant to new directors
from six months to three years and (ii) expressly grant the administering
committee authority to amend the formula from time to time without
further shareholder approval.
These changes are discussed in more detail below in the relevant section of the
summary plan description. Some of these changes are intended to conform the plan
to recent developments in the law.
In 1996, the Securities and Exchange Commission significantly amended the
rules under Section 16 of the Securities Exchange Act of 1934 (the "Section 16
Rules"). These amendments simplified the procedures for officers, directors and
principal shareholders to report transactions in the Company's two stock splits sinceCommon Stock and
broadened the originalexemptions from the short-swing profit recovery provisions of
Section 16 for transactions under employee benefit plans. Prior to the adoption
of the 1993 Plan.new Section 16 Rules, option grants to executive officers under the plan
were exempt from the short-swing profit recovery provisions of Section 16. The
Company believes that the changes to the plan will preserve this exemption for
future stock option grants.
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Also in 1996, the Internal Revenue Service finalized the regulations under
Section 162(m) of the Internal Revenue Code of 1986 (the "Section 162(m)
Regulations"). Section 162(m) limits the ability of publicly held companies to
deduct compensation expenses in excess of $1,000,000 paid to certain executive
officers. The term "compensation" generally includes all cash and non-cash
compensation deductible by the Company on its tax return, including the amounts
realized by executives (and normally deductible by the Company) upon the
exercise of non-qualified stock options. However, the $1,000,000 limit does not
apply to the amounts realized upon the exercise of stock options that qualify as
performance-based compensation under the Section 162(m) Regulations. The Company
believes that the exercise of stock options granted under the amended plan will
qualify for this exemption from the limit on deductibility.
SUMMARY DESCRIPTION OF THE PLAN
Shares Subject to the 1993 Plan. UnderThe plan currently authorizes the 1993 Plan, upCompany
to an
aggregate of 2,250,000 shares of the Common Stock may be awarded or issued upon
the exercise of all options under the 1993
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Plan. As of March 20, 1995, the aggregate market valueissue a maximum of 2,250,000 shares of Common Stock was $51,750,000. If any optionupon the exercise of
stock options granted under the 1993 Plan shall
expire or terminate for any reason without having been exercised in full, the
unpurchased shares subject to such option may thereafter be available for
future grantsplan. As a result of options previously granted
under the 1993 Plan. The Plan provides for appropriate
adjustment of shares available underplan, the 1993 Plan in the event of any change
in the number of outstandingCompany has issued approximately 95,000 shares of Common
Stock through option exercises and reserved approximately 2,005,000 shares of
Common Stock for outstanding options. There are less than 150,000 shares of
Common Stock presently remaining under the Company resulting
from reorganizations, recapitalizations, reclassifications, stock dividends,
stock splits or other similar events.plan for future option grants,
although some additional shares may become available to the extent options
expire unexercised. The amended plan would increase the maximum number of shares
issuable by 500,000 shares (or 22%) to a total of 2,750,000 shares.
Types of Awards. TwoThe Company may award two types of options may be awarded under the
1993
Plan:plan: (i) options intended to qualify as incentive stock options under Section
422A of the Internal Revenue Code of 1986, as amended (the "Code"), and (ii) nonqualified stock options. The plan
does not permit the award of "phantom stock," "stock appreciation rights" or
other similar awards.
Administration. The 1993 Planplan is administered by the Compensation
Committee, which isa committee (the "Committee")
composed of two or more disinterested directors appointed
byof the Company's Board of Directors. Except for options granted to nonemployee
directors (which is described under "Grants to Nonemployee Directors" below),
the CompensationCompany. The Committee has the
authority to (i) to construe and interpretselect the Plan,recipients of awards, (ii) to define the terms used herein, (iii) to prescribe, amend and
rescind rules and regulations relating to the Plan, (iv) to determine the
individuals to whom and the time or times at which options shall be granted,
whether such options will be incentive stock options or nonqualified stock
options, the number of shares to be subject to each option, the option price,
the number of installments, if any, in which each option may be exercised, and
the duration of each option, (v) to approve and determine the duration of
leaves of absence which may be granted to participants without constituting a
termination of their employment for the purposes of the Plan, (vi) to amendfix the terms of any outstanding option, with consent ofall
awards, (iii) construe, interpret and prescribe rules for the option holder,plan and (vii)
to(iv) make
all other determinations necessary or advisable for the administration of the
Plan.plan. The plan currently restricts Committee membership to "disinterested
directors" as defined by the Section 16 Rules. However, the Securities and
Exchange Commission eliminated this term when it amended the Section 16 Rules.
The amendments to the plan would instead restrict Committee membership to
"non-employee directors" as defined in the new Section 16 Rules. The amendments
would further restrict Committee membership to "outside directors" as defined in
the Section 162(m) Regulations adopted by the Internal Revenue Service.
Eligibility and Participation. All directors, executives and other key
employees of the Company or any of its Affiliates (as defined in the 1993
Plan)plan) are
eligible for selection to participate in the 1993 Plan.
Approximately 875 full-time employees and 6 nonemployee directorsplan. There are approximately 100
individuals currently
eligible to participate under the 1993 Plan. Nonemployee directors are only eligible to participate in the 1993 Plan underplan. Stock options are
awarded to non-employee directors (as defined in the plan) in accordance with a
formula described below in
"Grants to Nonemployee Directors." Incentive stock options(discussed below). Under the applicable tax rules, the Committee may
only be grantedgrant incentive stock options to employees of the Company or its
Affiliates.
An individual who has been
granted an option may, if such individual is otherwise eligible, be granted an
additional option or options if the Compensation Committee shall so determine,
subject to the other provisions of the 1993 Plan.
Duration of Options. Except for options granted to nonemployee
directors,The Committee generally determines the duration of
each option, is of a duration specified in the option agreement by
the Compensation Committee, but no option has an expiration date latermay have a term of more than the
tenth (10th) anniversary of the date of its grant and noten years. No incentive
stock option granted to an employee who ownsis exercisable for more than 10%three months after termination of the
votingoption holder's employment unless the termination is due to death or disability.
In that case, an incentive stock of the
Company may be exercisedoption is exercisable for no more than one year
after the five-year period following the date of the
grant. Nonqualified stock options granted to nonemployee directors may be
exercised for a period of ten years after the date of grant.option holder's death or disability.
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19
Duration and Amendment of the 1993 Plan. The 1993 Plan shall remain
in effect until terminated by the Compensation Committee or until allmay continue to grant
stock subject to it shall have been issued pursuant to options granted under the 1993
Plan; provided that no options may be granted afterplan until the earlier of (i) March 17, 22
24
2003. Subject to certain restrictions with respect to nonqualified2003 (ten years
from the original date of adoption) or (ii) all the stock options granted to nonemployee directors described below,available under the
Compensationplan has been issued. The Committee may amend or suspend the 1993 Planplan at any time; provided thattime,
but shareholder approval is required for amendments which (i) increase the
maximum number of shares available for grant under the 1993 Plan,plan, (ii) changeschange the
minimum exercise price of an incentive stock option,options, (iii) permitspermit the grant of
options to persons other than employees or directors or (iv) materially increasesincrease
the benefits accruing to participantsemployees under the 1993 Plan must beplan.
Exercise Price. Options granted under the plan are subject to shareholder approval.
Exercise Price. In the case of incentive stock options, theminimum
exercise price must be at least equal toprices based on the fair market value of the stock on the date
the option is granted. In addition, grantsa share of incentive stock options to
employees owning over 10% of the voting stock of the Company must be at an
exercise price of not less than 110% of the fair market valueCommon Stock on the
date of the grant. The minimum exercise price of aprices for incentive and nonqualified option must be at least equal
tostock
options are currently 100% and 75%, respectively, of the fair market value of the stocka
share of Common Stock on the date of grant. The amended plan would increase the
option is granted.
Uponminimum exercise price for nonqualified stock options to 100% of the fair market
value of a share of Common Stock on the date of grant. The exercise price of anyan
option the purchase price must be paid in full either in cash or in the Company'swith shares of Common Stock valued
at fair market value (unless the
Compensationvalue. The Committee permits exercisemay permit "cashless exercises" and
authorize payment with a secured note or a "cashless
exercise"). The aggregate fair market value (determined at the time the
options are granted) of the shares covered by incentive stock options granted
to any one employee under the 1993 Plan (or any other incentive stock option
plan of the Company) which may become exercisable for the first time in any one
calendar year may not exceed $100,000.
Basicpromissory note.
Other Terms. Options granted under the 1993 Plan mayplan are only be
exercisedexercisable by the
optioneeoriginal recipient and are nontransferable,not transferable, except by will or the laws of
descent and distribution or, in the case of nonqualified stock options, pursuant
to a qualified domestic relations order. Except for nonqualified
stock options granted to nonemployee directors as described below, options may
beOptions are generally exercisable in
such installments as may be determined by the Compensation
Committee decides, but not within six months of the
date of grant, except in cases of death or disability of the optioneeoption holder or
dissolution, liquidation, reorganization, merger or consolidation of the
Company.
To the extent that an
option isAwards to Directors. The Company's directors do not exercised when it becomes exercisable, the option shall continue
to be exercisable until the option terminates or expires. No incentive stock
option is exercisablereceive any cash
compensation for more than three months after terminationservices provided as a member of the employment of the optionee except that, if such termination is due to death or
disability of theBoard. Directors (other
than employee then it is exercisable for no more than one year
after such employee's death or disability. Except for options granted to the
nonemployee directors,directors) are automatically awarded nonqualified stock options
terminate in accordance withannually under the terms of the relevant stock option agreement, as determined by the
Compensation Committee.
Grants to Nonemployee Directors. Nonemployeeplan. Eligible directors are eligible
for grants of options under the 1993 Plan only in accordance with the following
formula. Nonemployee directors who are elected to the Board of Directors for
the first time at any special or annual meeting of shareholders will each
receive, on such date,awarded an option to purchase
6,750 shares of Common Stock which shall be exercisable in full beginning six months afterupon their initial election to the date of
grant. In addition, each nonemployee director presently receivesBoard and an
option to purchase an additional 2,2505,250 shares of Common Stock each time such director is
reelectedthey are re-elected to
the BoardBoard. The term of Directorsthe options is ten years, and the exercise price is fixed
at any annual meetingthe fair market value of shareholders. If
the Amendment is approved, the size of these annual option awards will be
increased to 5,250 sharesa share of Common Stock. AllStock on the date of the relevant
annual meeting. The plan currently provides that these options granted to nonemployee
directors are exercisable in full beginningvest six months
after the date of grant. The priceamended plan would change the vesting period for
the initial grant to three years. The amended plan would also expressly
authorize the Committee to amend the terms and number of eachfuture option grantedawards to
a nonemployee director shall be equal to
the fair market value of the Common Stock on the date
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25
of grant. The term of each option granted to a nonemployee director shall be
ten years from the date of grant. Pursuant to Rule 16b-3 promulgated under
Section 16(b) of the Securities Exchange Act of 1934, as amended, the
provisions of the 1993 Plan with respect to the preceding formula mayeligible directors without further shareholder approval, but not be
amended more than once
every six months other thanunless required to comportcomply with changes underin certain laws.
Special Terms Applicable to Large Shareholders. In addition to the Code or ERISA, orother
restrictions contained in the rules thereunder.
PROPOSED AMENDMENT
If this proposal is approved,plan, the second paragraph of Section 5plan requires that incentive stock
options granted to persons possessing more than 10% of the 1993 Plan would be amended to read in its entirety as follows:
During the termtotal combined voting
power of all classes of stock of the Plan, a Non-Employee Director shall
also be granted a nonqualified stock option to purchase 5,250
sharesCompany (i) have an exercise price of Common Stock, subject to adjustment pursuant to
Section 16, on the date of each annual meetingnot
less than 110% of the Company's shareholders, at which such Non-Employee Director is
re-elected to continue to serve on the Company's Boardfair market value of Directors.
PLAN BENEFITS
If the proposed Amendment is approved, Messrs. Berry, Bessin, Drexler,
Hellman, Martin and McMahan, the incumbent nonemployee directors, will each
receive a nonqualified stock option to purchase 5,250 sharesshare of Common Stock on the date
of each Annual Meetinggrant and (ii) expire not later than five years from the date of the Company's shareholders, including this
year's Annual Meeting, at which he is reelected as a nonemployee director.grant.
FEDERAL INCOME TAX CONSEQUENCES.CONSEQUENCES
Nonqualified Stock Options. Under current federal income tax law, the
grant of a nonqualified stock option has no tax effect on the Company or the
optionee to whom it is granted.option holder. If the shares received on exercise of an option are not subject
to restrictions on transfer or risk of forfeiture imposed by the Compensation Committee, the
exercise of a nonqualified stock option will result in ordinary income to the
optioneeoption holder equal to the excess of the fair market value of the shares at the
time of exercise over the option price. The amount taxed to the optioneeoption holder
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20
as ordinary income is treated as earned income. The optionee'soption holder's tax basis in
the shares will be equal to the aggregate exercise price paid by the optioneeoption
holder plus the amount of taxable income recognized upon the exercise of the
option. Upon any subsequent disposition of the shares, any further gain or loss
recognized by the optioneeoption holder will be treated as capital gain or loss and will
be long-term capital gain or loss if the shares are held for more than one year
after exercise. The Company will normally be allowed, at the time of recognition
of ordinary income by the optioneeoption holder upon exercise, to take a deduction for
federal income tax purposes in an amount equal to such recognized income.
Incentive Stock Options. The federal income tax consequences associated
with incentive stock options are generally more favorable to the optionee and
less favorable to the employer than those associated with stock
options which are not incentivenonqualified stock
options. Under current federal income tax law, the grant of an incentive stock
option does not result in income to the optionee or in a deduction for the
Company at the time of the grant. The exercise of an incentive stock option will
24
26
not result in income for the optioneeoption holder if the optionee (a)option holder (i) does not
dispose of the shares within two years after the date of grant nor within one
year after exercise and (b)(ii) is an employee of the Company or any of its
Affiliates from the date of grant until three months before the exercise date.
If these requirements are met, the basis of the shares upon later disposition
would be the option price. Any gain will be taxed to the optioneeoption holder as
long-term capital gain and the Company will not be entitled to a deduction. The
excess of the market value on the exercise date over the option price is an item
of tax preference, potentially subject to the alternative minimum tax. If the
optioneeoption holder disposes of the shares prior to the expiration of either of the
holding periods described above, the optioneeoption holder would have compensation
taxable as ordinary income, and the Company would be entitled to a deduction
equal to the lesser of the fair market value of the shares on the exercise date
minus the option price or the amount realized on disposition minus the option
price. If the price realized in any such premature sale of the shares exceeds
the fair market value of the shares on the exercise date, the excess will be
treated as long-term or short-term capital gain depending on the optionee'soption holder's
holding period for the shares.
VOTE REQUIRED
FOR APPROVAL OF THE 1993 PLAN
The affirmative voteUnder the Company's Bylaws and the terms of the plan, the amended plan must
be approved by the shareholders holding (i) a majority of outstanding shares present, or
represented, and entitled to votevoting at the Annual Meeting, is
required under the termsand (ii) a majority of the
1993 Plan and for the 1993 Plan to qualify for
the Rule 16b-3 exemption promulgated under Section 16(b) of the 1934 Act,
relating to the disgorgement of short-swing profits realized by officers,
directors or beneficial owners of 10% of the Common Stock of the Company.required quorum. For this purpose, abstentions and broker non-votes wouldwill have no
effect on the outcome of the vote unless such shares are necessary to satisfy
the quorum requirement, in which case abstentions and broker non-votes will have
the effect of a vote against the proposal. A majority of the shares entitled to
vote, represented in person or by proxy, constitutes a quorum. The Company
believes that shareholder approval in accordance with its Bylaws will also
satisfy the shareholder approval requirement of the Section 162(m) Regulations.
Furthermore, because certainthe directors would benefit from the proposed 1993 Plan,amended plan,
under Section 310 of the California General Corporation
Law,Corporations Code, the person asserting the
validity of the grant of an option under the 1993
Plan to a director under the amended plan would
have the burden of proving that such grant was just and reasonable as to the
Company at the time that the grant was authorized, approved or ratified, unless
the amendmentamended plan is approved by the shareholders holding (a) a majority of shares
present, or represented, and voting at the Annual Meeting, with the shares owned
by the directors not being entitled to vote thereon, and (b) a majority of the
required quorum, which, in this case, is the majority of outstanding shares
other than the shares owned by the directors. For this purpose, abstentions and
broker non-votes will have no effect on the outcome of the vote unless such
shares are necessary to satisfy the quorum requirement, in which case such
abstentions and broker non-votes will have the effect of a vote against the
proposal.
Under the California
General Corporation Law, a majority of the shares entitled to vote, represented
in person or by proxy, shall constitute a quorum.18
21
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT OFPROPOSAL TO APPROVE THE
AMENDED AND RESTATED 1993 STOCK OPTION PLAN.
Unless otherwise instructed, the proxyholders will vote the proxies
received by them for this proposal.
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PROPOSAL 43
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
As recommended by its Audit Committee, the Board of Directors has selected
Deloitte & Touche as independent accountants for the fiscal year ending January 28, 1996,February
1, 1998, subject to ratification by the shareholders.
Deloitte & Touche, formerly known as Touche Ross & Co., has audited the
Company's financial statements since the fiscal year ended March 31, 1980. It is
expected that their representative will be present at the meeting and will have
the opportunity to make a statement if he or she desires to do so. The
representative will be available to respond to appropriate questions.
In the event that the selection of Deloitte & Touche as independent
accountants for the fiscal year ending January 28, 1996,February 1, 1998, is not ratified by the
shareholders, the Board of Directors will select other independent accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THIS
REAPPOINTMENT.
OTHER MATTERS
The Company knows of no other matters to be acted upon at the meeting other
than those referred to in the accompanying notice of the meeting. However, if
any other matter should properly come before the meeting, holders of the proxies
solicited hereby will vote thereon in their discretion.
PROPOSALS OF SHAREHOLDERS
Proposals intended to be presented by shareholders at the 19961998 Annual
Meeting of Shareholders and included in the Company's proxy statement for such
meeting must be received by the Secretary of the Company at 3250 Van Ness
Avenue, San Francisco, California 94109, on or before December 20, 1995.
26January 28, 1998.
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2822
AVAILABILITY OF REPORT ON FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR 19941996 AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS AVAILABLE UPON WRITTEN
REQUEST AND WITHOUT CHARGE TO ANY SHAREHOLDER BY WRITING TO:
Secretary
Williams-Sonoma, Inc.
3250 Van Ness Avenue
San Francisco, CACalifornia 94109
By Order of the Board of Directors
Russell Solt,Dennis A. Chantland, Secretary
San Francisco, California
April 18, 1995
2722, 1997
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2923
EXHIBIT A
WILLIAMS-SONOMA, INC.
AMENDED AND RESTATED 1993 STOCK OPTION PLAN
1. Purpose.PURPOSE
The purpose of this Amended and Restated 1993 Stock Option Plan (the
"Plan") of WILLIAMS-SONOMA, INC., a California corporation (the "Company"), is
to secure for the Company and its shareholders the benefits arising from stock
ownership by selected key employees and directors of the Company or any of its
Affiliates (as defined below). The Plan will provide a means whereby such
employees and directors may purchase shares of the common stock of the Company
(or any class of stock into which such common stock is converted or reclassified
as provided in Section 16)17) (the "Common Stock") pursuant to (i) options which
will qualify as "incentive stock options" under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and (ii) "non-incentive" or
"nonqualified" stock options ("nonqualified stock options").
From and after the date this Plan is
approved by the shareholders of the Company pursuant to Section 18, the Company
shall cease to grant new options to purchase Common Stock of the Company under
the 1976 Stock Option Plan of the Company.
2. Administration.ADMINISTRATION
The Plan shall be administered by a committee (the "Committee") appointed
by the Board of Directors of the Company consisting of two or more directors of
the Company, all of whom shall be "disinterested persons"(i) "non-employee directors" within the
meaning of Rule 16b-3 ("Rule 16b-3") promulgated under the Securities Exchange Act of 1934, as
amended, ("Exchange Act"). No memberand (ii) "outside directors" within the meaning of Section 162(m) of
the Committee,
during the one year prior to service as a member of the Committee, shall have
received, or during such service shall receive, any equity securities of the
Company pursuant to this Plan or any other plan of the Company or any
Affiliate, except if such receipt would not disqualify such director as a
"disinterested person" under Rule 16b-3. Committee members may be granted
options pursuant to the formula set forth in Section 5, which formula is
intended to satisfy the requirements of Rule 16b-3(c)(2)(ii).Code. Any action of the Committee with respect to administration of the Plan
shall be taken by a majority vote or unanimous written consent of its members.
Subject to the provisions of the Plan, the Committee shall have the
authority (i) to construe and interpret the Plan, (ii) to define the terms used
herein, (iii) to prescribe, amend and rescind rules and regulations relating to
the Plan, (iv) to determine the individuals to whom and the time or times at
which options shall be granted, whether such options will be incentive stock
options or non-qualified stock options, the number of shares to be subject to
each option, the option price, the number of installments, if any, in which each
option may be exercised, and the duration of each option, (v) to approve and
determine the duration of leaves of absence which may be granted to participants
without constituting a termination of their employment for the purposes of the
Plan, (vi) to amend the terms of any outstanding option, with consent of the
option holder, and (vii) to 28
30
make all other determinations necessary or advisable
for the administration of the Plan. All determinations and interpretations made
by the Committee shall be binding and conclusive on all participants in the Plan
and their legal representatives and beneficiaries.
3. Shares Subject to the Plan.SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 16,17, the shares to be offered
under the Plan shall consist of the Company's authorized but unissued Common
Stock, and the aggregate amount of such stock which may be issued upon exercise
of all options under the Plan shall not exceed two million two hundred
fifty thousand (2,250,000) shares.Two Million Seven Hundred Fifty
Thousand (2,750,000) shares; provided, however, that no officer (within the
meaning of Rule 16a-1 promulgated under the Securities Exchange Act of 1934, as
amended) shall be granted in any fiscal year options to purchase more than
200,000 shares of Common Stock. If any option granted under the Plan shall
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24
expire or terminate for any reason without having been exercised in full, the
unpurchased shares subject thereto shall again be available for options to be
granted under the Plan.
4. Eligibility and Participation.
Subject to Section 5, allELIGIBILITY AND PARTICIPATION
All key employees and directors of the Company or any Affiliate shall be
eligible for selection to participate in the Plan. An "Affiliate" shall mean any
parent or subsidiary of the Company as defined in Section 424(e) and (f) of the
Code. An individual who has been granted an option may, if such individual is
otherwise eligible, be granted an additional option or options if the Committee
shall so determine, subject to the other provisions of the Plan. No incentive
stock option may be granted to any person who, at the time the incentive stock
option is granted, is not an employee of the Company. Subject to Section 5, nonqualifiedNonqualified stock options
may be granted to persons who have agreed in writing to become officers or key
employees of the Company or any Affiliate at the time of the grant and who
become officers or key employees of the Company or any Affiliate within 120 days
thereafter. Spouses to whom a nonqualified stock option is transferred pursuant
to a qualified domestic relations order pursuant to Section 11 shall also be
eligible to participate in the Plan with regard to such option, but only to the
extent the original option holder would have been able to participate had such
original option holder continued to hold the option, and to the extent permitted
by the Committee or by the terms of the option agreement.
The aggregate fair market value (determined at the time the option is
granted) of the stock with respect to which incentive stock options (whenever
granted) are exercisable for the first time by an option holder during any
calendar year (under all incentive stock option plans of the Company and its
Affiliates) shall not exceed $100,000.
All incentive stock options granted under the Plan shall be granted within
ten years from the original date of adoption of this Plan.
5. Formula Awards to Non-Employee DirectorsAWARDS TO DIRECTORS
Any person who is or becomes a director and who is not an employee of the
Company is referred to herein as a "Non-Employeean "Eligible Director." During the term of the
Plan, each Non-EmployeeEligible Director who becomes for the first time a director of the
Company on or after the 1993 Annual Meeting of Shareholders shall automatically
be granted, on the date he or she first becomes a Non-Employee Director,director, a nonqualified stock
option to purchase 6,750 shares of Common Stock, subject to adjustment pursuant to Section 16.
29
31Stock. During the term of the Plan,
a Non-Employeeeach Eligible Director shall also be granted a nonqualified stock option to
purchase 2,2505,250 shares of Common Stock
subject to adjustment pursuant to Section 16, on the date of each annual meeting of the
Company's shareholders at which such Non-EmployeeEligible Director is re-elected to continue
to serve on the Company's Board of Directors.
The purchase price under each nonqualified stock option granted to Non-EmployeeEligible
Directors shall be equal to the fair market value of the stock subject to the
option on the date the option is granted. A nonqualified stock
optionOptions initially granted to Non-EmployeeEligible
Directors upon their joining the Board of Directors shall not bevest and become
exercisable untilin three equal installments on each anniversary of the grant date.
Options granted annually to Eligible Directors upon their re-election to the
Board of Directors shall vest and become exercisable in one installment six
months after the date of grant of such option, at which time such optiongrant. All options granted to Eligible Directors shall
be fully exercisable for a period ofexpire ten (10) years from the date of grant.
Except as specifically provided in this Section 5, no options shall be
granted underThe Committee may at any time amend or revise the Plan to any Non-Employee Director. The provisions of this
Section 5 maybut not be amended more than once every six months other thanunless required to comply with
changes in the Internal Revenue Code of 1986, as amended,or the Employee Retirement Income Security Act ("ERISA"), or
the rules promulgated thereunder.under the Code or ERISA.
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25
6. Duration of Options.DURATION OF OPTIONS
Subject to SectionSections 5 and 16, each option and all rights associated
therewith shall expire on such date as the Committee may determine, and shall be
subject to earlier termination as provided herein; provided, however, that all
stock options shall expire within ten (10) years from the date on which such
options are granted and provided further that in the case of incentive stock options
granted to any person possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company (or an Affiliate,
as applicable) (a "10% Shareholder"), each incentive stock option shall expire
in any event within five (5) years from the date on which such incentive stock
option is granted.
7. Purchase Price.PURCHASE PRICE
Subject to SectionSections 5 and 16, the purchase price of the stock covered by
each option shall be determined by the Committee but (a) in the case of incentive
stock options, shall not be less than one
hundred percent (100%) of the fair market value of such stock (as determined
under Section 9) on the date the
incentive stock option is granted, (b) in the case of incentive stock options
granted to 10% Shareholders, shall not be less than one hundred and ten percent
(110%) of the fair market value of such stock (as determined under Section 9)
on the date the incentive stock option is granted, and (c) in the case of
nonqualified stock options, shall not be less than seventy-five percent (75%)
of the fair market value of such stock (as determined under Section 9) on the
date the nonqualified stock option is granted.grant. The purchase price of the shares upon
exercise of an option shall be paid in full at the time of exercise (i) in cash
or by check payable to the order of the Company, (ii) by delivery of shares of
Common Stock of the Company already owned by, and in the possession of the
option holder, or (iii) if authorized by the Committee or if specified in the
option being exercised, (x) by a promissory note made by option holder in favor
of the Company, upon the terms and conditions determined by the Committee
including, to the extent the Committee determines appropriate, a security
interest in the shares issuable upon exercise or other property, or (y) through
a "cashless exercise," in either case complying with applicable law (including,
30
32
without limitation, state and federal margin requirements), or any combination
thereof. Shares of Common Stock used to satisfy the exercise price of an option
shall be valued at their fair market value determined (in accordance with
Section 9) on the date of exercise (or if such date is not a business day, as of
the close of the business day immediately preceding such date).
8. Exercise of Options.EXERCISE OF OPTIONS
In no event shall any option be exercisable earlier than six months after
the date of grant except in the case of the death or disability of the option
holder, in which case such option may be exercisable in accordance with Section
14. Subject to Section 5, each option granted under this Plan may be exercisable
in full upon the expiration of such six month period or in such installments
during the period prior to its expiration date as the Committee shall determine.
Furthermore, unless otherwise determined by the Committee, if the option holder
shall not in any given installment period purchase all of the shares which the
option holder is entitled to purchase in such installment period, then the
option holder's right to purchase any shares not purchased in such installment
period shall continue until the expiration date or sooner termination of the
option holder's option. No option may be exercised for a fraction of a share and
no partial exercise of any option may be for less than (i) one hundred (100)
shares or (ii) the total number of shares then eligible for exercise, if less
than one hundred (100) shares.
9. Fair Market Value of Common Stock.FAIR MARKET VALUE OF COMMON STOCK
The fair market value of a share of Common Stock of the Company shall be
determined for purposes of the Plan by reference to the closing price on the
principal stock exchange on which such shares are then listed or, if such shares
are not then listed on a stock exchange, by reference to the closing price (if
approved for quotation on the NASDAQ National Market System) or the mean between
the bid and asked price (if other over-the-counter issue) of a share as supplied
by the National Association of Securities Dealers, Inc. through NASDAQ (or its
successor in function), in each case as reported by The Wall Street Journal, for
the business day immediately preceding the date on which the option is granted
(which, for all purposes, shall be the date on which the Committee makes the
determination granting the option) or exercised (or, if for any reason no
23
26
such price is available, in such other manner as the Committee may deem
appropriate to reflect the then fair market value thereof).
10. Withholding Tax.WITHHOLDING TAX
Upon (i) the disposition by an employee or other person of shares of Common
Stock acquired pursuant to the exercise of an incentive stock option granted
pursuant to the Plan within two years of the granting of the incentive stock
option or within one year after exercise of the incentive stock option or (ii)
the exercise of non-qualified stock options, the Company shall have the right to
require such employee or such other person to pay the Company the amount of any
taxes which the Company may be required to withhold with respect to such shares.
31
33
11. Nontransferability.NONTRANSFERABILITY
An incentive stock option granted under the Plan shall, by its terms, be
non-transferable by the option holder, either voluntarily or by operation of
law, otherwise than by will or the laws of descent and distribution, and shall
be exercisable during the option holder's lifetime only by the option holder,
regardless of any community property interest therein of the spouse of the
option holder, or such spouses's successors in interest. If the spouse of the
option holder shall have acquired a community property interest in such option,
the option holder, or the option holder's permitted successors in interest, may
exercise the option on behalf of the spouse of the option holder or such
spouse's successors in interest.
A non-qualified stock option granted under the Plan shall, by its terms, be
non-transferable by the option holder, either voluntarily or by operation of
law, otherwise than by will or the laws of descent and distribution or pursuant
to a qualified domestic relations order as defined by the Code or Title I of
ERISA, or the rules thereunder, and shall be exercisable during the option
holder's lifetime only by the option holder or, to the extent permitted by the
Committee or by the terms of the option agreement, the spouse of the option
holder who obtained the option pursuant to such a qualified domestic relations
order described herein or pursuant to Section 14.
12. Shares to be Issued in Compliance with Federal Securities Laws
and Exchange Rules.SHARES TO BE ISSUED IN COMPLIANCE WITH FEDERAL SECURITIES LAWS AND
EXCHANGE RULES
At the discretion of the Committee, any option may provide that the option
holder (and any transferee), by accepting such option, represents and agrees
that none of the shares purchased upon exercise of the option will be acquired
with a view to any sale, transfer or distribution of said shares in violation of
the Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations promulgated thereunder, or any applicable state "blue sky" laws, and
the person entitled to exercise the same shall furnish evidence satisfactory to
the Company (including a written and signed representation) to that effect in
form and substance satisfactory to the Company, including an indemnification of
the Company in the event of any violation of the Securities Act or state blue
sky laws by such person. The Company shall use its reasonable efforts to take
all necessary and appropriate action to assure that the shares issuable upon the
exercise of any option shall be issued in full compliance with the Securities
Act, state blue sky laws and all applicable licensing requirements of any
principal securities exchange on which shares of the same class are listed.
13. Termination of Employment.TERMINATION OF EMPLOYMENT
If a holder of an incentive stock option ceases to be employed by the
Company or any of its Affiliates for any reason other than the option holder's
death or permanent disability (within the meaning of Section
24
27
22(e)(3) of the Code), the option holder's incentive stock option shall be
exercisable for a period of three (3) months after the date the option holder
ceases to be an employee of the Company or such Affiliate (unless by its terms
it sooner expires) to the extent exercisable on the date of such cessation of
employment and shall thereafter expire and be void and of no further force or
effect. A leave of absence approved in writing by the Committee shall not be
deemed a termination of employment for the purposes of this Section 13, but no
option may be exercised during any such leave of absence, except during the
first three (3) months thereof. Termination of employment or other relationship
with the Company by the holder of a 32
34
nonqualified stock option will have the
effect specified in the individual option agreement, as determined by the
Committee, subject to Section 5.Committee. Any option transferred pursuant to a qualified domestic relations
order pursuant to Section 11 shall continue to be subject to the provisions
governing the grant to the original grantee, including without limitation, the
provisions governing exercisability, vesting and termination (which shall be
determined by reference to the employment status of the original grantee),
unless the option agreement or the Committee provides otherwise.
14. Death or Permanent Disability of Option Holder.DEATH OR PERMANENT DISABILITY OF OPTION HOLDER
If the holder of an incentive stock option dies or becomes permanently
disabled (within the meaning of Section 22(e)(3) of the Code) while the option
holder is employed by the Company or any of its Affiliates, the option holder's
option shall be exercisable for a period of one (1) year after the date of such
death or permanent disability (unless by its terms it sooner expires) to the
extent exercisable on the date of death or permanent disability and shall
thereafter expire and be void and of no further force or effect. During such
period after death, such incentive stock option may, to the extent that it
remained unexercised (but exercisable by the option holder according to such
option's terms) on the date of such death, be exercised by the person or persons
to whom the option holder's rights under the option shall pass by the option
holder's will or by the laws of descent and distribution. The death or
disability of a holder of a nonqualified stock option will have the effect
specified in the individual option agreement, as determined by the Committee,
subject to Section 5.Committee.
15. Privileges of Stock Ownership.PRIVILEGES OF STOCK OWNERSHIP
No person entitled to exercise any option granted under the Plan shall have
any of the rights or privileges of a shareholder of the Company in respect of
any shares of stock issuable upon exercise of such option until certificates
representing such shares shall have been issued and delivered. No shares shall
be issued and delivered upon the exercise of any option unless and until there
shall have been full compliance with all applicable requirements of the
Securities Act (whether by registration or satisfaction of exemption
conditions), all applicable listing requirements of any national securities
exchange on which shares of the same class are then listed and any other
requirements of law or of any regulatory bodies having jurisdiction over such
issuance and delivery.
16. Adjustments.SPECIAL TERMS APPLICABLE TO LARGE SHAREHOLDERS
Notwithstanding any other provision of this Plan, each incentive stock
option granted to a person possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company (or an Affiliate,
as applicable) (a "Large Shareholder") shall (i) have an exercise price of not
less than one hundred and ten percent (110%) of the fair market value of the
stock covered by the option (as determined under Section 9) on the date of grant
and (ii) expire not later than five (5) years from the date of grant.
25
28
17. ADJUSTMENTS
If the outstanding shares of the Common Stock of the Company (or any other
class of shares or securities which shall have become eligible for grant under
the Plan pursuant to this sentence) are increased or decreased or changed into
or exchanged for a different number or kind of shares or securities of the
Company through reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar transaction, an
appropriate and proportionate adjustment shall be made in the maximum number and
kind of shares as to which options may be granted under this Plan. A
corresponding adjustment changing the number or kind of shares allocated to
unexercised options or portions thereof, which shall have been granted prior to
any such change, shall likewise be made. Any such adjustment in the outstanding
options shall be made without change in the aggregate purchase price applicable
to the unexercised portion
33
35 of the option but with a corresponding adjustment in
the price for each share or other unit of any security covered by the option.
Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all the property or more than eighty percent
(80%) of the then outstanding stock of the Company to another corporation, the
Plan shall terminate, and all options theretofore granted hereunder shall
terminate; provided, however, that notwithstanding the foregoing, the Committee
shall provide in writing in connection with such transaction for any or all of
the following alternatives (separately or in combinations): (i) for the options
theretofore granted to become immediately exercisable notwithstanding the
provisions of Section 8; (ii) for the assumption by the successor corporation of
the options theretofore granted or the substitution by such corporation for such
options and rights of new options and rights covering the stock of the successor
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and prices; (iii) for the continuance of the
Plan by such successor corporation in which event the Plan and the options
theretofore granted shall continue in the manner and under the terms so
provided; or (iv) for the payment in cash or stock in lieu of and in complete
satisfaction of such options.
Adjustments under this Section 1617 shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive. No fractional shares of stock shall be
issued under the Plan on any such adjustment.
17. Amendment and Termination of Plan.18. AMENDMENT AND TERMINATION OF PLAN
The Committee may at any time suspend or terminate the Plan. Subject
to Section 5, theThe Committee
may also at any time amend or revise the terms of the Plan, provided that no
such amendment or revision shall, unless appropriate shareholder approval of
such amendment or revision is obtained, increase the maximum number of shares in
the aggregate which may be sold pursuant to options granted under the Plan,
except as permitted under the provisions of Section 16,17, or change the minimum
purchase price of incentive stock options set forth in SectionSections 7 and 16, or
increase the maximum term of incentive stock options provided for in SectionSections 6
and 16, or permit the granting of options to anyone other than as provided in
Sections 4 or 5, or otherwise materially increase the benefits accruing to
participantsemployees under the Plan.
Notwithstanding the foregoing, no amendment, suspension or termination of
the Plan shall, without specific action of the Committee and the consent of the
option holder, in any way modify, amend, alter or impair any rights or
obligations under any option theretofore granted under the Plan.
34
36
Effective Date of Plan.19. EFFECTIVE DATE OF PLAN
The Plan, as hereby amended, shall be submitted for approval by the holders
of the outstanding voting stock of the Company within twelve (12) months from
the date the Plan isamendments are adopted by the Board of Directors.
The Plan shall be deemed
approved by the holders of the outstanding voting stock of the Company by the
affirmative vote of the holders of a majority of the voting shares of the
Company present, or represented, and entitled to vote at a meeting duly held in
accordance with the California Corporations Code, excluding from such vote all
shares held by directors of the Company.
Approved and adopted by
Board of Directors on
March 17, 1993
Shareholder approvals
received on
May 26
1993
Amended on
- - --------------------------------
35
3729
PROXY
WILLIAMS-SONOMA, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORSDIRECTORS.
The undersigned shareholder of Williams-Sonoma, Inc. (the "Company") hereby
appoints W. HOWARD LESTERHoward Lester and RUSSELL SOLT,Dennis A. Chantland, and each of them, with full
power of substitution to each, true and lawful attorneys, agents and
proxyholders of the undersigned, and hereby authorizes them to represent and
vote, as specified herein, all shares of Common Stock of the Company held of
record by the undersigned on March 31, 1995,1997, at the 19951997 Annual Meeting of
Shareholders of the Company, to be held on Wednesday, May 24, 199528, 1997 at 10:00
a.m. (Pacific Daylight Time) at 3250 Van Ness Avenue, San Francisco, California
94109, and any adjournment or postponements thereof.
(Please dateThe Proxy when properly signed will be voted in the manner directed on this
Proxy by the undersigned. If no direction is made, this Proxy will be voted for
the election of the named directors, FOR proposal 2, FOR proposal 3, and sign on reverse side.in the
manner described in item 4 of this Proxy.
(PLEASE DATE AND SIGN ON REVERSE SIDE.)
---------------
SEE REVERSE
SIDE
---------------
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
38
THE PROXY WHEN PROPERLY SIGNED WILL BE VOTED IN THE MANNER DIRECTED ON THIS
PROXY BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NAMED DIRECTORS, FOR PROPOSALS 2, 3, AND 4 AND IN THE
MANNER DESCRIBED IN ITEM 5 OF THIS PROXY.
PLEASE MARK YOUR CHOICES LIKE
[ ] ________________________ ____________ THIS [ ] IN BLUE OR BLACK INK
ACCOUNT NUMBER COMMON
30
Please mark
your votes as
indicated in
this example /X/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1, 2 3, AND 4.
1. CHARLES E. WILLIAMS, W. HOWARD LESTER, WITHHOLD AUTHORITY
FOR the election as JAMES A. MCMAHAN, NATHAN BESSIN, to vote for all nominees
directors of all nominees PATRICK J. CONNOLLY, GARY G. FRIEDMAN, listed.
listed (except as marked to F. WARREN HELLMAN, JAMES M. BERRY,
the contrary). MILLARD S. DREXLER, JOHN E. MARTIN.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST ABOVE.)
[ ] [ ]
2. Proposal to amend the Company's 4. Proposal to ratify the 5. In their discretion, the
Articles of Incorporation to add a selection of Deloitte & Touche Proxyholders are authorized to
par value of $.01 per share of as independent accountants for vote upon such other business as
common stock and preferred stock. for the 1995 Fiscal Year. may properly come before this
meeting, or any adjournments or
For Against Abstain postponements thereof.
[ ] [ ] [ ]
3. Proposal to amend the Company's
1993 Stock Option Plan to increase the
size of the stock options awarded
annually to nonemployee directors upon
their reelection from 2,250 shares of
Common Stock to 5,250 shares of Common
Stock.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ] Dated: _________________________ 1995.
PLEASE SIGN THIS PROXY EXACTLY AS YOUR
NAME OR NAMES APPEAR ON THIS PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
______________________________________
Signature
Signature
______________________________________
Please Print Name(s)
______________________________________
NOTE: WHEN STOCK HAS BEEN ISSUED IN
THE NAME OF TWO OR MORE PERSONS, ALL
SHOULD SIGN. WHEN SIGNING AS ATTORNEY,
ADMINISTRATOR, TRUSTEE OR GUARDIAN,
GIVE FULL TITLE AS SUCH. A CORPORATION
SHOULD HAVE ITS NAME SIGNED BY ITS
PRESIDENT OR OTHER AUTHORIZED OFFICER,
WITH THE OFFICE HELD DESIGNATED.
THE ABOVE-SIGNED HEREBY ACKNOWLEDGES RECEIPT3.
1. ELECTION OF THE NOTICE OF ANNUAL
MEETING OF SHAREHOLDERS, THE PROXY STATEMENT AND THE ANNUAL REPORTDIRECTORS
FOR THE 1994 FISCAL YEAR FURNISHED HEREWITH.ELECTION AS WITHHOLD
DIRECTORS OF ALL NOMI- AUTHORITY
NEES LISTED (EXCEPT AS TO VOTE FOR ALL
MARKED TO THE CONTRARY). NOMINEES LISTED.
/ / / /
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike
a line through that nominee's name in the list below):
Charles E. Williams Patrick J. Connolly James M. Berry
W. Howard Lester Gary G. Friedman Millard S. Drexler
James A. McMahan Adrian D.P. Bellamy John E. Martin
Nathan Bessin
2. Proposal to approve the Amended and Restated 1993 Stock Option Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. Proposal to ratify the selection of Deloitte & Touche as independent
accountants for the 1997 fiscal year.
FOR AGAINST ABSTAIN
/ / / / / /
4. In their discretion, the Proxyholders are authorized to vote upon such
other business as may properly come before this meeting, or any
adjournments or postponements thereof.
NOTE: When stock has been issued in the name of two or more persons, all
should sign. When signing as attorney, administrator, trustee or guardian,
give full title as such. A corporation should have the name signed by its
president or other authorized officer, with the office held designated. The
undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders, the Proxy Statement and the Annual Report for the 1996 Fiscal
Year furnished herewith.
- -------------------------------------------------------------------------------
Please Print Name(s)
Signature(s) Date , 1997
-------------------------------------------- ------------
Please sign exactly as your name or names appear on this proxy and return it
promptly in the enclosed envelope.
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- FOLD AND DETACH HERE -