DOLLAR GENERAL CORPORATION
Nashville, Tennessee
Telephone (615) 783-2000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 5, 1995
The Annual Meeting of Stockholders of Dollar General
Corporation will be held in the auditorium of Dollar General
Corporation, 427 Beech Street, Scottsville, Kentucky, on June 5,
1995, at 11:00 a.m., local time, for the following purposes:
1. To elect nine (9) directors to serve until the next
Annual Meeting of Stockholders and until their successors are duly
elected and qualified;
2. To consider and act upon a proposal to ratify, confirm
and approve the Company's 1995 Employee Stock Incentive Plan;
3. To consider and act upon a proposal to ratify, confirm
and approve the Company's 1995 Outside Directors Stock Option Plan;
4. To ratify the appointment of Coopers & Lybrand L.L.P. as
independent accountants for the Company for the current fiscal
year; and
5. To transact such other business as properly may come
before the meeting or any adjournments thereof.
Only stockholders of record at the close of business on April
14, 1995 are entitled to notice of and to vote at the Annual
Meeting. Your attention is directed to the Proxy Statement
accompanying this notice for a more complete statement regarding
matters to be acted upon at the Annual Meeting.
By order of the Board of
Directors
April 28, 1995 BOB CARPENTER,
Chief Administrative Officer and
Corporate Secretary
We urge you to attend the Annual Meeting. Whether you plan to
attend, please complete, date and sign the enclosed proxy card and
return it in the enclosed postage-paid envelope. You may revoke
the proxy at any time before it is voted.
1
DOLLAR GENERAL CORPORATION
Nashville, Tennessee
Telephone (615) 783-2000
Proxy Statement for
Annual Meeting of Stockholders
The enclosed proxy is solicited by the Board of Directors of
Dollar General Corporation (the "Company") for use at the Annual
Meeting of Stockholders to be held in the corporate auditorium at
Dollar General Corporation, 427 Beech Street, Scottsville,
Kentucky, on June 5, 1995, at 11:00 a.m., local time, and any
adjournment thereof. This proxy material was first mailed to
stockholders on or about April 28, 1995.
The purposes of the Annual Meeting are: to elect nine(9)
directors; to approve the 1995 Employee Stock Incentive Plan; to
approve the 1995 Outside Directors Stock Option Plan; to ratify
the appointment of Coopers & Lybrand L.L.P. as the Company s
independent accountants for the current fiscal year; and to
transact such other business as may properly be brought before the
Annual Meeting or and adjournment thereof. The Board of Directors
recommends a vote FOR the election of the nominees as directors,
FOR each of the stock plans and FOR
the appointment of Coopers & Lybrand L.L.P.
All valid proxies which are received will be voted in
accordance with the recommendations of the Board of Directors
unless otherwise specified thereon. Any stockholder giving a proxy
is entitled to revoke it by giving the Secretary of the Company
written notice of such revocation at any time before it has been
voted.
Only holders of the Company's common stock, $.50 par value per
share (the "Common Stock"), and of Series A Convertible Junior
Preferred Stock, no par value (the "Series A Preferred Stock"), of
record at the close of business on April 14, 1995 are entitled to
vote at the meeting. On such date, the Company had 67,365,900
outstanding shares of Common Stock, the holders of which are
entitled to one vote for each share held and to cumulative voting
in the election of directors. On such date, the Company had
1,715,742 (or an aggregate voting power equal to 10,723,387 shares
of Common Stock) issued and outstanding shares of Series A
Preferred Stock, the holders of which are entitled to 6.25 votes
for each share of Series A Preferred Stock held and to cumulative
voting in the election of directors. Pursuant to the Company's
Restated Articles of Incorporation, each share of Series A
Preferred Stock shall entitle the holder thereof to vote with the
holders of Common Stock on all matters submitted to a vote of the
holders of the Common Stock. The number of shares of Common Stock
issued and outstanding, and the voting rights of the holders of the
Series A Preferred Stock, reflect the five-for-four stock split
declared by the Board of Directors February 6, 1995, paid March 6,
1995 to stockholders of record on February 23, 1995. All
references to shares of Common Stock have been adjusted
accordingly.
The mailing address of the principal executive office of the
Company is 104 Woodmont Boulevard, Suite 500, Nashville, Tennessee
37205. The Company also maintains a company operations office at
427 Beech Street, Scottsville, Kentucky 42164.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information furnished to the Company as of January 31, 1995 concerning persons who are
the beneficial owners of more than five percent (5%) of the Company's Common Stock and/or Series A Preferred Stock.
Amount and Nature of Beneficial Percent of Class - Common
Name and Address of Ownership-Common Stock/Series Stock/Series A Preferred
Beneficial Owner A Preferred Stock() Stock
Cal Turner, Jr. 13,093,838/1,715,7429() 19.5%/100.0%
104 Woodmont Blvd.,
Suite 500
Nashville, TN 37205
James Stephen Turner 11,468,970/1,643,037() 17.1%/95.8%
138 Second Avenue,
Suite 500
Nashville, TN 37201
Turner Children Trust dated 10,085,887/1,613,742() 15.0%/94.1%
January 21, 1980, Cal Turner,
Jr. and James Stephen Turner,
Co-Trustees
104 Woodmont Blvd., Suite 355
Nashville, TN 37205
SECURITY OWNERSHIP BY OFFICERS AND DIRECTORS
The following table contains certain information (furnished by the individuals named) concerning each of the nominees, the
executive officers named in the Summary Compensation Table and all executive officers and directors as a group.
Shares of Stock Beneficially Owned on January
31, 1995
Director
Nominee/Executive or Off. Series A(1) Percent of Common Percent of
Officers Age Principal Occupation Since Preferred Class Stock Class(2)
James L.Clayton 61 Chairman and CEO, 1989 185,5313(3) *
Clayton Homes, Inc.
James D. Cockman 62 Chairman and CEO, Ocean 1988 10,814(4) *
Fresh Express International,
Inc.
Reginald D. Dickson 49 Chairman New Age Bank Corp. 1993 11,716(5) *
and President Emeritus,
Inroads, Inc.
John B. Holland 63 President and COO, Fruit of 1988 108,052(6) *
Fruit of the Loom, Inc.
Wallace N. Rasmussen 80 Retired Chairman of the 1990 17,768(7) *
Board, Beatrice Foods, Inc.
Cal Turner 79 Chairman Emeritus of the 1955 1,433,557(8) 2.1
Company
Cal Turner, Jr. 55 Chairman, President and 1966 1,715,742(9) 100.0% 13,093,839(10)19.5%(11)
Chief Executive Officer
David M. Wilds 54 Principal, Nelson Capital 1991 45,947(12)*
Corp.
William S. Wire, II 63 Retired Chairman of Genesco, 1989 39,233(13)*
Inc.
(1)Reflects the Series A Preferred Stock issued August 22,1994.
(2)Unless otherwise noted in the following footnotes, the persons for whom information is provided had sole voting and investment
power over the shares of Common Stock or Series A Preferred Stock shown as beneficially owned. Computations are based upon
67,186,39 shares of Common Stock and 1,715,742 shares of Series A Preferred Stock outstanding as of January 3, 1995. * - denotes
less than 1% of class.
(3) Includes options to acquire 56,021 shares of the Company's Common Stock which are currently exercisable or exercisable within
60 days.
(4) Includes options to acquire 7,187 shares of the Company's Common Stock which are currently exercisable or exercisable within 60
days.
(5) Includes options to acquire 7,560 shares of the Company's Common Stock which are currently exercisable or exercisable within 60
days.
(6) Includes options to acquire 7,560 shares of the Company's Common Stock which are currently exercisable or exercisable within 60
days.
(7) Includes options to acquire 7,187 shares of the Company's Common Stock which are currently exercisable or exercisable within 60
days.
(8) Includes 1,433,527 shares for which Mr. Turner has sole voting and investment rights as trustee of trusts established for the
benefit of his children.
(9) See Notes 1 and 2 on page 2. Cal Turner, Jr.is the sone of Cal Turner.
(10)See Notes 1 and 2 on page 2.
(11)Percentage of class reflects Common Stock beneficially owned, including full conversion of the Series A Preferred Stock.
(12)Includes options to acquire 35,880 shares of the Company's Common Stock which are currently exercisable or exercisable within
60 days.
(13)Includes options to acquire 35,880 shares of the Company's Common Stock which are currently exercisable or exercisable within 60
days.
SECURITY OWNERSHIP BY OFFICERS AND DIRECTORS (CONTINUED)
The following table contains certain information (furnished by the individuals named) concerning each of the nominees, the
executive officers named in the Summary Compensation Table and all executive officers and directors as a group.
Shares of Stock Beneficially Owned on January
31, 1995
Director
Nominee/Executive or Off. Series A(2) Percent of Common Percent of
Officers Age Principal Occupation Since Preferred Class Stock Class(3)
Bob Carpenter 47 Vice President and 1981 237,134(1) *
Chief Administrative
Officer
Mike Ennis 41 Vice President, Merchandising 1988 114,398(2) *
Operations
C. Kent Garner 48 Vice President and Chief 1992 143,104(3) *
Financial Officer
Leigh Stelmach 55 Executive Vice President, 1989 126,215(4) *
Operations
All directors and executive
officers as a group (20 persons) 1,715,742(5) 100.0% 16,804,765(6) 25.0%
(1) Includes options to acquire 88,652 shares of the Company's Common Stock which are currently exercisable or exercisable within
60 days. Also includes 116,821 shares for which Mr. Carpenter has shared voting and investment rights as a Co-Trustee of the
Calister Turner, III 1994 Generation Skipping Trust.
(2) Includes options to acquire 31,640 shares of the Company's Common Stock which are currently exercisable or exercisable within 60
days.
(3) Includes options to acquire 124,292 shares of the Company's Common Stock which are currently exercisable or exercisable within
60 days.
(4) Includes options to acquire 43,358 shares of the Company's Common Stock which are currently exercisable or exercisable within
60 days.
(5) See Notes 1 and 2 on page 2.
(6) Includes 826,482 shares of the Company's Common Stock subject to option exercise which are currently exercisable or
exercisable within 60 days and full conversion of the Series A Preferred Stock deemed to be beneficially held by Cal Turner, Jr.
<PAGE
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Directors are elected each year to hold office until the next
annual meeting of stockholders and until their successors are duly
elected and qualified. The Company's bylaws provide for a minimum
of three and a maximum of fifteen directors, the exact number to be
set by the Board of Directors. The current Board of Directors
consists of nine members, and at its March 1995 meeting the Board
of Directors nominated those same nine individuals to stand for
election at the 1995 Annual Meeting of Stockholders.
In the election of directors, pursuant to the Kentucky
Business Corporation Act, each stockholder shall have the right to
cast as many votes in the aggregate as he shall hold shares of
Common Stock (or Series A Preferred Stock as adjusted for its
voting rights) multiplied by the number of directors to be elected;
and each stockholder may cast the whole number of votes for any one
nominee or distribute such votes among two or more nominees.
Unless contrary instructions are received, the enclosed proxy will
be voted in favor of electing as directors the nominees listed
below. Each nominee has consented to be a candidate and to serve,
if elected. While the Board has no reason to believe that any
nominee will be unable to accept nomination or election as a
director, if such an event should occur, the proxies will be voted
with discretionary authority for a substitute or substitutes as
shall be designated by the current Board of Directors.
The following sets forth certain information concerning each
of the nominees:
James L. Clayton has served for more than the past five years
as Chief Executive Officer of Clayton Homes, Inc. Clayton Homes,
Inc. produces, sells and finances manufactured homes. Mr. Clayton
served as President of Clayton Homes, Inc. from 1956 through 1993.
Mr. Clayton has served as Chairman of First Heritage Bank since
1992, is a director of ROC Communities, Inc., a manufactured homes
company and Goody's Family Clothing, Inc.
James D. Cockman, Chairman and Chief Executive Officer of
Ocean Fresh Express International, Inc., has served as an executive
of the following divisions of Sara Lee Corporation: Chairman, Food
Service (1989 to September, 1992); Chairman, President and Chief
Executive Officer, PYA/Monarch, Inc. (1985 to 1989). Mr. Cockman
is also a member of the boards of directors of Clayton Homes, Inc.
and Ryan's Family Steak House, a family restaurant chain.
Reginald D. Dickson is Chairman of the New Age Bank Corp. and
President Emeritus of Inroads, Inc., a non-profit organization
supporting minority education. Mr. Dickson served as President
and Chief Executive Officer of Inroads, Inc. from 1983 to 1993. He
also serves as a director of First American Corporation, Nashville,
Tennessee.
John B. Holland has served since 1992 as President and Chief
Operating Officer of Fruit of the Loom, Inc., a manufacturer of
underwear and other soft goods. Mr. Holland has served since 1975
as Chairman and Chief Executive Officer of Union Underwear Co.,
Inc., a subsidiary of Fruit of the Loom, Inc. Mr. Holland is a
member of the board of directors of National City Bank Kentucky, a
bank holding company, and Fruit of the Loom, Inc.
Wallace N. Rasmussen served as Chairman of the Board and Chief
Executive Officer of Beatrice Foods, Inc. until his retirement in
June, 1979, at which time he became a consultant to that
corporation. He serves as a member of the board of directors of
Shoney's, Inc., a family restaurant chain, and NationsBank -
Tennessee, N.A.
6
Cal Turner, founder of the Company, served as Chairman of the
Board from 1955 until December, 1988. He is currently a consultant
to the Company. See "Transactions with Management and Others."
Cal Turner, Jr. joined the Company in 1965 and was elected
President and Chief Executive Officer in 1977. Mr. Turner has
served as Chairman of the Board since January, 1989. Mr. Turner is
a member of the board of directors of First American Corporation,
Nashville, Tennessee, Thomas Nelson, Inc., a publishing company,
and Shoney's Inc.
David M. Wilds is a principal of Nelson Capital Corp. From
1990 to 1995, Mr. Wilds served as Chairman of the Board of
Cumberland Health Systems, Inc., an owner and operator of
psychiatric hospitals. From 1969 until 1990, Mr. Wilds was a
partner with J. C. Bradford & Co., an investment banking company.
Mr. Wilds is also a director of LDDS Communications, Inc.
William S. Wire, II served from 1986 until January 31, 1994 as
Chairman of the Board of Genesco, Inc., a manufacturer, wholesaler
and retailer of footwear and clothing. Mr. Wire served as Chief
Executive Officer of Genesco, Inc. from April, 1986 to January 31,
1993. Mr. Wire serves as a director of First American Corporation,
Nashville, Tennessee and Genesco, Inc.
COMMITTEES OF THE BOARD. The Company has a Corporate
Governance and Compensation Committee ("CGC Committee") and an
Audit Committee. The current members of the CGC Committee are
Messrs. Wire (Chairman), Wilds and Rasmussen. The CGC Committee
reviews and recommends policies and practices for the Corporation's
corporate governance profile. The CGC Committee sets the total
compensation of, and reports to the Board of Directors initial and
proposed salary changes paid to all executive officers and any
employee whose annual compensation exceeds that of the lowest paid
executive officer. The CGC Committee reviews the compensation
policies of the Company and compensation programs in which officers
may participate. In addition, the CGC Committee develops general
criteria concerning the qualifications and selection of Board
members and officers, and recommends candidates for such positions
to the Board of Directors. The CGC Committee will consider persons
recommended by stockholders as potential nominees for directors, if
the names of such persons are submitted in writing to the Chairman
of the CGC Committee or the Secretary of the Company. These
recommendations must be accompanied by a full statement of
qualifications and an indication of the person's willingness to
serve.
The CGC Committee also administers the Company's stock option
plans, excluding the 1988 Outside Directors' Plan and the 1993
Outside Directors' Plan which are administered by Cal Turner and
Cal Turner, Jr. At least annually, the CGC Committee specifically
reviews the standards of performance of the President and Chief
Executive Officer ("CEO") for compensation purposes. (See "Report
of the Corporate Governance and Compensation Committee of the Board
of Directors on Executive Compensation.") The CGC Committee met
four times during fiscal 1995.
The Audit Committee is composed of Messrs. Holland (Chairman),
Cockman, Clayton and Dickson. The functions of the Audit Committee
include providing advice and assistance regarding accounting,
auditing, corporate compliance and financial reporting practices of
the Company. Each year it will recommend to the Board a firm of
independent certified public accountants to serve as auditors. The
Audit Committee will review with the auditors the scope and results
of their annual audit, fees in connection with their audit and
nonaudit services, and the independence of the Company's auditors.
The Audit Committee met three times during fiscal 1995.
7
During fiscal 1995, the Board of Directors held five meetings.
All directors attended more than 75% of the aggregate number of
meetings of the Board and committees on which they serve.
COMPENSATION OF DIRECTORS. Directors receive a $5,000
quarterly retainer, an additional $1,250 for attending each regular
meeting of the Board, and an additional $1,250 for members
attending each committee meeting. Committee Chairmen receive an
additional $250 per Committee meeting. Compensation for telephonic
meetings is one-half the above rates. Board members who are
officers of the Company do not receive any separate compensation
for attending Board or committee meetings. In addition, the
directors who are not employees of the Company are entitled to
receive stock options pursuant to the terms of the Company's 1993
Outside Directors Stock Option Plan. Subject to stockholder
approval, the non-employee directors shall be entitled to receive
stock option grants pursuant to the 1995 Outside Directors Stock
Option Plan. Each non-employee director is entitled to the
nondiscretionary grants set forth therein. See Proposal No. 3 and
Exhibit B attached hereto.
DEFERRED COMPENSATION PLAN FOR DIRECTORS. In December 1993,
the Board of Directors unanimously approved a voluntary,
nonqualified compensation plan for Director compensation. All
outside Directors are eligible to participate in the plan. Under
the plan, each Director may voluntarily defer receipt of all or a
part of any fees normally paid by the Company to the Director. The
fees eligible for deferral are defined as retainer, Board meeting
fees and committee meeting fees. The compensation deferred is
credited to a liability account which is increased quarterly at a
minimum rate of 6% per year. The benefits will be paid, upon
termination from the Board, as deferred compensation to the
Director as follows: (a)upon attaining age 65 or any age
thereafter as a lump sum of the accumulated account; (b) in the
event of total disability, as a lump sum of the accumulated
account; (c) in the event of death, as a lump sum of the
accumulated account; or (d) in the event of voluntary termination,
as a lump sum of the accumulated account.
8
REPORT OF THE CORPORATE GOVERNANCE AND COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The three-member Corporate Governance and Compensation
Committee of the Board of Directors ("Committee") prepared the
following executive compensation report.
A. COMPENSATION PHILOSOPHY
The Company has adopted the concept of pay-for-performance
linking management compensation, Company performance and
stockholder return. This strategy reflects the Company's desire to
pay for results that are consistent with the key goals of the
Company and the stockholders. The Committee and the Company
believe that combining variable, direct and indirect pay components
of its compensation program enables the Company to attract, retain
and motivate results-oriented employees to achieve higher levels of
performance.
1. VARIABLE COMPENSATION PHILOSOPHY
At nearly all levels of the Company, a significant portion of
pay is variable, being contingent upon Company (or store)
performance. The performance-based component, whether annual
incentive or long-term incentive, is significant enough to serve as
a strong incentive. Additionally, performance-based compensation
through the granting of stock options to employees serves to
increase employee ownership of the Company.
2. DIRECT COMPENSATION PHILOSOPHY
Though performance-based compensation is to be emphasized,
base pay is competitive. The Company believes base pay should
relate to the skills required to perform a job and to the value of
each job performed relative to the market, industry, and strategic
importance to the Company. This method of valuation allows the
Company to respond to changes in its needs and changes in the labor
market. Increases in base pay require a satisfactory or better
level of performance as determined by the Committee.
3. INDIRECT COMPENSATION PHILOSOPHY
The Company's indirect-compensation programs protect its
employees from extreme financial hardship in the event of a
catastrophic illness or injury and provide limited income security
for retirement years. Health, life and disability benefit programs
should provide competitive levels of protection without
jeopardizing the Company's position as a low-cost retailer. The
Company manages health care costs aggressively and enlists employee
assistance in cost management. Employees have various
opportunities to share in health care cost- reductions and are
encouraged to adopt healthy lifestyles.
The Company's retirement benefit plans should provide limited
income security at retirement for the typical employee. The
Employee Stock Ownership Plan reflects the Company's commitment to
widespread stock ownership of the Company by employees at all
levels of employment. Employees are also invited to share in
ownership of the Company through participation in the Dollar
General Stock Purchase Plan.
9
B. EXECUTIVE OFFICER COMPENSATION
Under the supervision of the Committee, the Company has
developed compensation polices and programs designed to provide
competitive levels of compensation that integrate pay with the
Company's annual and long-term performance goals. The Company is
committed to creating an incentive for its employees to contribute
to the overall results of the Company thereby encouraging a team
approach toward accomplishment of corporate objectives and creating
value for stockholders.
The executive officers' compensation for fiscal 1995 reflected
the Company's increasing emphasis on tying pay to both short-term
and long-term incentives. The short-term incentive is an annual
cash bonus based on a percentage of the executive officer's salary.
The long-term incentives are performance-based stock options.
Incentive pay awarded to the CEO and the other officers named in
the Summary Compensation Table in fiscal 1995 (or the "Named
Executive Officers") was controlled by Company performance goals
which are established annually. While the Committee's approach to
base compensation is to offer competitive (although slightly lower-
than-average) salaries to the CEO and the other Named Executive
Officers in comparison with market practices, base salaries have
become a relatively smaller element in the total executive officer
compensation package as the Company's pay-for-performance component
plays a more significant role. The fiscal 1995 average base
salaries for the Named Executive Officers (not including the CEO)
increased 12%. The increase in base salaries in fiscal 1995 was
determined based upon recommendations made by the human resources
department to the Committee, a review of peer group comparison data
(using the peer group compensation survey published by Management
Compensation Services) and the subjective analysis of the
Committee after evaluating the recommendations, peer group data,
the Company's overall performance and the respective individual
performance criteria of the Named Executive Officers.
1. ANNUAL CASH BONUSES
The Company's annual cash bonuses paid to the executive
officers make up the short-term incentive component of their fiscal
1995 cash compensation. The payment of annual cash bonuses is
based on both objective and subjective criteria.
Objective criteria include actual earnings per share results
versus target earnings per share results as established by the
Committee at the end of the prior fiscal year. The Company uses
earnings per share improvement for determining target goals for the
executive officer's variable pay for primarily two reasons: First,
it is a defined measure of total Company performance and second, it
can be easily identified and reviewed by stockholders.
10
Under the cash bonus incentive program effective for cash
bonuses paid in fiscal 1995, there were two earnings per share
goals established by the Committee, both of which exceeded the
prior year's performance. If the Company reached the first
established or "target" goal, which was considered by the Committee
to be challenging, then 50% of the total possible payout was
awarded. If the Company reached the second or "stretch" goal,
which was considered by the Committee to be extremely challenging,
then the total possible payout was awarded.
In fiscal 1995, the Committee approved an enhancement to the
existing program, which will be applicable for fiscal 1996, that
establishes an additional earnings-per-share goal between the
target goal and stretch goal and enhances the cash bonuses
available for participants. Under the enhanced program, if the
target goal is met, the executive officer will receive 25% of
salary as a cash bonus. If the mid-level goal is met, the
executive officer will receive 50% of fiscal 1996 salary as a cash
bonus and, if the stretch goal is met, the executive officer will
receive 75% of fiscal 1996 salary as a cash bonus. The enhanced
program for the CEO differs. If the Company meets or exceeds its
stretch earnings-per-share goal, the CEO's cash bonus will be equal
to 100% of his salary.
Subjective performance criteria include the results of each
executive officer's performance review pursuant to the Company's
Performance Development Process ("PDP"). The Company's PDP is a
comprehensive program that focuses on total performance improvement
by concentrating on "Key Development Areas" ("KDA") and "Key Result
Areas" ("KRA"). KDAs emphasize skill enhancement, leadership
development, and career goal aspirations of employees. KRAs focus
on the key results required to actively pursue the Company's
mission. KDAs and KRAs are set annually for each management
employee by the employee's supervisor, and the payment of an annual
bonus is dependent upon each executive officer achieving his
individual goals. That is, Company performance is not the sole
criterion by which an executive officer's annual cash bonus payout
is determined. Two factors determine whether an executive officer
would receive an annual cash bonus: (1) the Company must achieve
an established earnings-per-share improvement goal; AND (2) the
individual must achieve a satisfactory performance evaluation based
upon the above-described PDP factors. Therefore, full weight is
given to each of these factors. For each executive officer, both
Company and individual goals for fiscal 1995 were met or exceeded.
Because the Company exceeded its stretch earnings-per-share
improvement goals for fiscal 1995, and because each executive
officer achieved his previously-established subjective performance
goals, the maximum cash bonus award was paid. This cash bonus
component represents 30% of the total cash compensation paid to
each executive officer.
2. EMPLOYEE STOCK INCENTIVE PLAN
The Company's 1989 Employee Stock Incentive Plan ("1989
Plan") and 1993 Employee Stock Incentive Plan ("1993 Plan") award
non-qualified performance-based stock options to the executive
officers, department directors and other personnel considered to be
in key positions, as approved by the Compensation Committee.
In fiscal 1994, the Committee granted performance-based stock
options under its "Stock Incentive" program with three annual
vesting schedules (fiscal 1995, fiscal 1996 and fiscal 1997) based
on corporate performance goals (as measured by earnings-per-share
improvement) and individual performance goals (as measured by a
comprehensive review process, the "PDP"). To further encourage
outstanding performance, the Committee adopted a compensation
program that ties stock option awards to target and stretch
earnings-per-share goals. If the Committee-established target
earnings per share goal is met and the individual performance goals
are met, 67% of the total possible stock option benefit (based on
stock options with a fair market value of approximately three times
salary) will be earned. If the Committee-established stretch
earnings-per-share goal is met and the individual performance goals
are met, 100% of the total possible stock option benefit (based on
stock options with a fair market value of approximately four and
one-half times salary) will be earned. Except for certain stock
options
11
granted to Mr. Garner, all stock options granted in fiscal years
1993, 1994 and 1995 to the officers identified in the summary
compensation table were granted at market price.
In fiscal 1993, the Company hired Mr. Garner to take the
position of Chief Financial Officer. His initial salary was deemed
to be below-market for such a position; however, he was awarded
stock options at an exercise price below the then current market
price (as provided for in the 1989 and 1993 Plan). The value of
the below-market portion of the options granted to Mr. Garner is
presented in the summary compensation table in the "Other Annual
Compensation" column.
In fiscal 1995, the Committee approved an enhancement to the
existing stock option program that establishes incremental
earnings-per-share goals between the target goal and stretch goal.
Under the enhanced program, if the target goal is exceeded but the
stretch goal is not met, then a payout greater than 50% of the
total possible payout but less than 100% of the total possible
payout is awarded. The percentage payout above 50% of the total
possible payout increases commensurately with the rate at which the
target goal is exceeded up to the total possible payout that is
tied to the Committee-established stretch goal.
In determining the number of the shares subject to stock
options granted to the employees eligible to participate in the
Plan, the Committee takes into account the respective scope of
accountability, the strategic and operational responsibilities of
such employees, as well as the salary levels of such employees.
Compensation data from the Management Compensation Services
compensation survey reveals that annual stock grants (calculated as
grant price times the number of shares granted) are typically
expressed as a multiple of salary. For the CEO, annual grant
amounts fall within a range of one to three times the CEO's annual
salary, and executive officer's grant amounts fall within a range
of one-half to one and one-half times the executive officer's
salary. Because the Committee has decided to place greater
emphasis on the performance-based component of compensation, it
pays lower-than-average salaries for the CEO and executive officers
but sets incentive compensation multiples at or above the high end
of the peer group survey ranges for these positions. Specifically,
the Committee has established an incentive compensation multiple of
approximately three to four and one-half times salary for
determining annual stock option grants for the CEO and the other
executive officers. These options are valued by multiplying the
option exercise price (fair market value at the time of grant) by
the number of shares granted.
In addition, in fiscal 1995 the Committee established a stock-
option program called the "Stock Plus" program. This program,
which is composed of option grants under the 1989 Plan and the 1993
Plan, awards additional stock options to executive officers who
maintain a level of Company-stock ownership (determined by the fair
market value as set by the New York Stock Exchange trading price at
the close of business on April 1) equal to at least two and one-
half times their salary. The CEO is required to maintain ownership
of four times his salary to be eligible to participate in this
program. Each executive officer earns additional options for the
purchase of Common Stock equal to 25% of the annual number of
options for the purchase of Common Stock earned by the executive
officer through the Stock Incentive program if he maintains his
required ownership level from May 1 to April 30 of the vesting
year. Because the stock options available under the Stock Plus
program are based on the number of Stock Incentive program options
that vest in a given year, if the Company fails to meet any of its
earnings-per-share goals or the executive officer fails to meet his
individual performance goals, the Stock Plus stock options will not
be awarded even if the executive officer has maintained his
required level of Company-stock
12
ownership. That is, the Stock Plus program rewards the CEO and the
Named Executive Officers with a premium of 25% of the number of
options for the purchase of Common Stock shares that vest under the
provisions of the Stock Incentive program if he maintains the
required level of Company stock.
Because (1) the Company exceeded its stretch earnings-per-
share improvement goals for fiscal 1995, (2) each named executive
officer achieved his previously-established subjective performance
goals and (3) each Named Executive Officer met the ownership
requirements to be eligible for the Stock Plus program grants, the
maximum number of options which could vest in fiscal 1995 became
fully vested. These grants do not provide for the power to
accelerate vesting by the Committee based upon the achievement of
only one of the two vesting criteria--each must be met or the
options designated for that year are canceled.
C. CHIEF EXECUTIVE OFFICER COMPENSATION
As with the other executive officers, the CEO's compensation
reflects the Company's increasing emphasis on tying compensation to
both short-term and long-term performance goals. When determining
the CEO's salary, the Committee considers the CEO's prior year
performance and expected future contributions to the Company as
well as peer-industry survey results published annually. As
compared to the industry comparison group, the CEO's salary was 6%
less than the group median. The 19% increase in the CEO's salary
in 1995 was a result of the Committee's decision to reward him for
his leadership and the Company's outstanding performance as
measured by, but not limited to, such factors as earnings-per-share
improvement, sales and profit increases and expense reduction. The
CEO's salary increase is also a result of the Committee's effort to
bring his salary closer to the industry average which, prior to the
increase, was 22% below the comparison year peer-industry average.
The Committee, believing that the CEO should have some
compensation at risk in order to encourage performance that
maximizes stockholder return, has created a significant opportunity
for additional compensation through performance-based incentives.
The performance-based compensation for which the CEO is eligible
takes the form of both short-term and long-term incentives. Like
the other executive officers, the CEO is eligible for a cash bonus-
- -the short-term incentive--based on the attainment of individual
goals and earnings-per-share improvement goals. In fiscal 1995,
this incentive linked 30% of the CEO's total cash compensation to
performance. Also like the other executive officers, the CEO is
eligible for non-qualified performance-based stock options--the
long-term incentive--awarded upon the attainment of Committee-
established earnings-per-share improvement goals, individual
performance goals and, for "Stock Plus" program eligibility,
certain ownership level requirements.
The Committee believes that in order to maximize the CEO's
performance, a substantial portion of the CEO's compensation should
be tied directly to overall Company performance. Consistent with
this philosophy, the Committee has established a slightly lower-
than-average salary for the CEO (as compared to CEOs of the peer-
group compensation survey participants) while emphasizing the pay-
for-performance components of the CEO's total compensation package.
When considering the CEO's pay-for-performance component of his
compensation package, the Committee took into consideration prior
pay-for-performance awards. The Committee determined that based on
the CEO's individual performance and the performance of the
Company, it was important to continue its incentive compensation
program in a manner that is competitive in the industry and that
continues to motivate and reward outstanding performance. In fact,
in fiscal 1995, upon reviewing the CEO's fiscal 1994 performance,
and the CEO's compensation package including past stock option
grants, the Committee decided to grant him additional stock options
under the Stock Incentive program as a reward for past outstanding
performance and as an incentive for future outstanding performance.
Like all Stock Incentive program grants, vesting is
13
contingent upon both the Company's achievement of earnings-per-
share goals and the CEO's achievement of individual performance
goals. This additional grant is set forth in the stock option
grant table in the "number of options granted" column.
The CEO's short-term incentive compensation program effective
for performance of fiscal 1994 and paid in fiscal 1995 rewarded the
CEO with a cash bonus of 50% of his annual salary. To be eligible
for this cash bonus award, the CEO was required to achieve personal
performance goals established by the Committee, and the Company had
to meet its stretch earnings-per-share goal.
The CEO's long-term incentive compensation program effective
for fiscal 1995 rewards the CEO with stock option grants up to
approximately three to four and one-half times his annual salary.
If the Committee-established "target" earnings-per-share goals are
met and the CEO meets his individual performance goals, he will
earn 67% of the total possible payout (based on three times his
annual salary). If both individual and "stretch" earnings per
share goals are met, then the CEO will earn 100% of the total
possible stock option benefit (based on four and one-half times his
annual salary).
In fiscal 1995, the Committee enhanced both its short-term
incentive program (cash bonus) and long-term incentive program
(stock option grants). Under the Company's enhanced cash bonus
program, the Committee added a "mid-level" earnings-per-share goal
between the target goal and stretch goal and increased the CEO's
total possible cash-bonus incentive to 100% of his salary. To be
eligible for this cash bonus award, the CEO must achieve personal
performance goals established by the Committee, and the Company
must meet at least one of its earnings-per-share goals. If the CEO
meets his individual performance goals and the Company meets its
Committee-established "target" goal, the CEO will receive a cash
bonus equal to 25% of his annual salary. If the CEO's individual
goals and the Committee-established "mid-level" earnings-per-share
goal is met, then the CEO will receive a cash bonus equal to 50% of
his annual salary. If the CEO's individual goals are met and the
Committee-established "stretch" earnings-per-share goal is met,
then the CEO will receive a cash bonus equal to 100% of his annual
salary.
The Committee's enhancement to the existing Stock Incentive
program establishes incremental earnings-per-share goals between
the target earnings-per-share goal and stretch earnings-per-share
goal. Under the enhanced program, if the target goal is exceeded
but the stretch goal is not met, then a payout greater than 50% of
the total possible payout but less than 100% of the total possible
payout is awarded. The percentage payout above 50% of the total
possible payout increases commensurately with the rate at which the
target goal is exceeded up to the total possible payout that is
tied to the Committee-established stretch goal.
The CEO is also eligible to participate in the Company's Stock
Plus program. This program, which is composed of option grants
under the 1989 Plan and the 1993 Plan, rewards the CEO with
additional stock options if he maintains a level of Company-stock
ownership equal to at least four times his salary. The CEO earns
additional options for the purchase of Common Stock equal to 25% of
the maximum number of options for the purchase of Common Stock that
he earns through the Stock Incentive program if he maintains his
required ownership level from May 1 to April 30 of the vesting
year. Because the stock options available under the Stock Plus
program are based on the number of Stock Incentive program options
that vest in a given year, if the Company fails to meet any of its
earnings per share goals or the executive officer fails to meet his
individual performance goals, the Stock Plus stock options will not
be rewarded even if the executive officer has maintained his
required level of Company-stock ownership. That is, the Stock Plus
program rewards the CEO with a premium of 25% of the shares that
vest under the provisions of the Stock Incentive program if he
maintains the required level of Company stock.
14
For fiscal 1995, the Company exceeded its established
performance goals with a 26.6% increase in total store sales, a
13.5% increase in same-store sales and a 47.9% increase in earnings
per share. Because the Company exceeded the Committee-established
"stretch" earnings-per-share improvement goals, the CEO achieved
previously-established subjective performance goals, and the CEO
met the share ownership requirement, he received the maximum amount
of the available variable component.
D. DEDUCTIBILITY
The Committee continues to analyze the potential impact of the
$1,000,000 limit on the deductibility of executive compensation for
federal income tax purposes enacted as part of the 1993 Omnibus
Budget Reconciliation Act ("OBRA"). Under the regulations proposed
by the Department of the Treasury, particularly the transition
rules, compensation pursuant to the Company's stock plans should
qualify as "performance-based" and, therefore, excluded from the
$1,000,000 limit. The Board has proposed certain per-participant
limitations on grants pursuant to the proposed 1995 Employee Stock
Incentive Plan (see Proposal No. 2) so that awards of stock options
should be considered "performance based" following expiration of
the transition rules.
Other forms of compensation provided by the Company to its
executives, however, are not excluded from such limit. Because the
Company does not believe it is in any immediate danger of losing
any deductions, no definitive determinations have been made by the
Committee as to whether it will approve any compensation
arrangements that will cause the $1,000,000 limit to be exceeded in
the future.
William S. Wire, II - Committee Chairman
Wallace N. Rasmussen
David M. Wilds
15
COMMON STOCK PERFORMANCE
As a part of the executive compensation information presented
in this Proxy Statement, the Securities and Exchange Commission
requires the Company to prepare a performance graph that compares
its cumulative total shareholders' return during the previous five
years with a performance indicator of the overall stock market and
the Company's peer group. For the overall stock market performance
indicator, the Company has chosen to use the S&P Midcap 400 index.
For the peer group, the Company has chosen to use the publicly-held
participants of the compensation survey published by Management
Compensation Services used by the Committee when reviewing and
establishing the Company's executive compensation policies.
1/90 1/91 1/92 1/93 1/94 1/95
Dollar General 100 122 308 467 715 1066
Corporation
Peer Group (see 100 112 193 244 231 198
Note 1)
S & P Midcap 400 100 108 158 176 203 193
16
EXECUTIVE COMPENSATION
The following table provides information as to annual, long-term or other compensation during fiscal 1995, 1994 and 1993 for
the Company's Chief Executive Officer and the persons who, at the end of fiscal 1995, were the other four most highly-compensated
executive officers of the Company (collectively the "Named Executive Officers"). The Company awarded no SARs in fiscal 1995, and no
Named Executive Officer holds any SARs. (Please see table notes on following page.
Annual Compensation Long-Term Compensation
Awards Payouts
Re-
Other stricted Sec. All
Annual Stock Under- Other
Name and Principal Fiscal Salary Bonus Comp. Awards lying LTIP Comp.
Position Year ($) ($) ($) ($) Options Pay ($)
Cal Turner, Jr., 1995 474,220 200,000 10,034 312,741 59,420
Chairman, President 1994 400,000 177,500 10,599 357,420 92,509
and Chief Executive 1993 355,000 177,500 12,133 -0- 86,838
Officer
Bob Carpenter, Chief 1995 147,083 70,000 8,773 41,317 6,000
Administrative Officer, 1994 140,000 62,500 8,625 165,466 14,903
Corporate Secretary and 1993 125,000 62,500 6,677 -0- 11,650
Chief Counsel
Mike Ennis, Vice 1995 139,379 62,500 2,636 30,153 6,000
President 1994 125,000 44,800 2,636 120,623 15,148
Merchandising 1993 112,000 44,800 1,146 -0- 9,830
Operations
C. Kent Garner, 1995 166,720 80,000 830,942 41,317 6,000
Chief Financial 1994 155,274 -0- 294,834 165,466 1,179
Officer 1993 9,952 -0- 1,027 170,897 -0-
Leigh Stelmach, 1995 212,832 87,500 8,851 41,317 6,000
Executive Vice 1994 175,000 75,000 8,851 165,466 8,254
President Operations 1993 150,000 75,000 3,858 -0- 8,010
17
NOTES TO SUMMARY COMPENSATION TABLE:
OTHER ANNUAL COMPENSATION - The amounts reported in this column
reflect gross-ups for tax reimbursements. The 1995 amount reported
for Mr. Garner includes $825,315 representing the above-market
value of stock options paid or payable to him during this period
(see Corporate Governance and Executive Compensation Committee
Report for a discussion of Mr. Garner's stock option grants) and a
$5,727 gross-up for tax reimbursement. The 1994 amount reported
for Mr. Garner includes $228,825 representing the above-market
value of stock options paid or payable to him during this period
(see Corporate Governance and Executive Compensation Committee
Report for a discussion of Mr. Garner's stock option grants), a
$5,727 gross-up for tax reimbursement, the forgiveness of a $56,600
relocation loan, and $3,782 in other perquisites. The 1993 amount
reported for Mr. Garner reflects the forgiveness of a $1,027
moving-expenses loan.
SECURITIES UNDERLYING OPTIONS - The Stock Incentive Program options
granted in fiscal 1994 and 1995 are to vest in three increments
upon the attainment of individual and Company performance
(earnings-per-share improvement) goals established for fiscal years
1995, 1996 and 1997. The Stock Plus program options granted in
fiscal 1995 are to vest in fiscal 1996 upon the holder s
maintaining the required stock ownership level, the holder s
attaining individual perform fully vested.
RESTRICTED STOCK AWARDS - The Company granted no restricted stock
awards in fiscal 1995, fiscal 1994 or fiscal 1993. No executive
officer holds any restricted stock awards.
LTIP PAYOUTS - None paid.
ALL OTHER COMPENSATION - Includes $5,250 contributed to each
executive officer's retirement account in fiscal 1995, $8,254
contributed to each executive officer's retirement account in
fiscal 1994 and $8,010 contributed to each executive officer's
retirement account in fiscal 1993 (with the exception of Mr. Garner
who was ineligible because of length of service to receive a
contribution in fiscal 1994 or fiscal 1993). Includes the
Company's contribution to each executive officer's Employee Stock
Ownership Plan (ESOP) account for the following fiscal years: Mr.
Turner: 1995 - $750, 1994 - $8,965, 1993 - $3,836; Mr. Carpenter:
1995 - $750, 1994 - $6,649, 1993 - $3,640; Mr. Ennis: 1995 - $750,
1994 - $6,894, 1993 - $1,820; Mr. Garner: 1995 - $750, 1994 -
$1,179, 1993 - $-0-; Mr. Stelmach: 1995 - $750, 1994 - $6,867, 1993
- - $3,897. Includes for Mr. Turner the following amounts paid as
premiums on a split-dollar life insurance policy: 1995 - $53,420,
1994 - $75,290 and 1993, $75,290.
18
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table provides information as to options granted to the Named Executive Officers during fiscal 1995. The Company
granted no SARs in fiscal 1995.
& of Potential
Total Realizable Value
No.of Options at Assumed
Securities Granted to Exercise Rates of Stock
Underlying Employees or Price Appreciation
Options in Fiscal Base Price Expiration for Option Term(1)
Name Granted(#)(2) Year 1995 ($/Sh) Date 5%($) 10%($)
<
Cal 312,741 40.24% $19.28 4/11/04 $3,792,012 $9,609,704
Turner, Jr.
Bob 41,317 2.67% $19.04 3/21/04 $ 494,736 $1,253,758
Carpenter
Mike 30,153 1.95% $19.04 3/21/04 $ 361,057 $ 914,988
Ennis
C. Kent 41,317 2.67% $19.04 3/21/04 $ 494,736 $1,253,758
Garner
Leigh 41,317 2.67% $19.04 3/21/04 $ 494,736 $1,253,758
(1) Based on actual option term and annual compounding.
(2) Grants for exercutive officers and stock grants based on personal performance goals, corporate performance goals, and personal
ownership. In addition, Cal Turner, Jr. received additional performance-based stock options. Of the 312,741 shares granted,,7
178,709, although tied to performance are not tied to personal ownership. See Corporate Governance
and Compensation Committee report for discussion of these grants.
19
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND AND YEAR-END OPTION VALUES
The following table provides information as to options exercised or held by the Named Executive Officers during fiscal 1995.
Number of Unexercised Value of Unexercised
Shares Options at In-the-Money Options at
Acquired on Value Fiscal Year-End(#) Fiscal Year-End($)
Name Exercise(#) Realized($)* Exercis. Unexercis. Exercis. Unexercis.*
Cal Turner, Jr. 353,061 $6,978,355 -0- 670,161 -0- $3,793,829
Bob Carpenter 135,333 $2,470,254 45,293 206,783 $911,852 $1,396,840
Mike Ennis 82,022 $1,433,743 -0- 150,776 -0- $1,018,409
C. Kent Garner 89,963 $1,099,080 80,934 206,783 $1,202,938 $1,396,840
Leigh Stelmach 164,043 $2,782,480 -0- 206,783 -0- $1,396,840
*Market value of underlying securities at exercise or year-end, minus the exercise price.
20
EMPLOYEE RETIREMENT PLAN
The Company has a non-contributory defined contribution plan
which covers substantially all employees, including the Named
Executive Officers. The plan provides retirement, disability,
termination and death benefits. Each year, as of December 31, the
Company contributes for the benefit of each eligible participating
employee 3-1/2% of calendar year gross wages to such participant's
retirement account under the plan. At least once each year, each
participating employee's retirement account is adjusted to reflect
investment gains or losses.
A participating employee will be paid the full value of his
account if the employee retires at the normal retirement age of 65,
dies while an active member of the plan, or becomes totally and
permanently disabled. If a participating employee leaves the
Company for reasons other than retirement, death or disability, the
employee will be entitled to the full value of his vested pension
account. The employee's right to all or part of the value of his
retirement account will depend on his years of service with the
Company as provided in the following chart:
Years of Credited Non-forfeitable
Service Percentage
Less than 4 0%
4 40%
5 or more 00%
As of January 31, 1995, Messrs. Cal Turner, Jr., Bob
Carpenter, Mike Ennis, C. Kent Garner and Leigh Stelmach had 29,
14, 7, 2 and 5 years of credited service, respectively. The
estimated present value of benefits under the plan as of January
31, 1995 was $222,250 for Cal Turner, Jr., $77,939 for Bob
Carpenter, $42,713 for Mike Ennis, $13,399 for C. Kent Garner and
$35,762 for Leigh Stelmach. Upon retirement, each participant has
the option of taking a lump sum or an average annual payment over a
ten-year period.
OTHER EXECUTIVE BENEFIT PLANS
Since 1988, the Company has provided the Master Retirement
Plan for Select Key Employees a salary continuation plan (the
"Select Retirement Plan"), for eligible employees which will
continue to operate in fiscal 1996. The Select Retirement Plan
generally provides for an annual retirement benefit of 100% of the
employee's salary on the date of entry into the plan with
adjustments based on certain subsequent salary increases. The
retirement benefit for each eligible participant, which cannot
exceed an amount greater than the cash value of the life insurance
policy for such participant, is payable over 10 years commencing at
age 65. The Select Retirement Plan also provides that in the event
an employee dies while in the employ of the Company after entering
the Select Retirement Plan but before retirement, his beneficiaries
will receive 50% of such employee's salary annually, for a period
of 10 years. The Named Executive Officers are eligible to
participate in the Select Retirement Plan, which is funded by life
insurance purchased by the Company and payable to the Company on
the life of the employee. Participants in the Select Retirement
Plan are vested only upon reaching retirement age or, if retirement
occurs prior to age 65, the Compensation Committee may decide in
its sole discretion whether to pay benefits under the plan equal to
a value no greater than the cash value of the life insurance policy
for such person. Directors of the Company who are not also
executive officers or employees do not participate in the Select
Retirement Plan. If the annual salary levels reported in the
Summary Compensation Table
21
for the Named Executive Officers were applicable at retirement, the
estimated annual benefits payable over a ten-year period for
Messrs. Cal Turner, Jr., Bob Carpenter, Mike Ennis, C. Kent Garner
and Leigh Stelmach are $474,220, $147,082, $139,379, $166,720, and
$212,832, respectively.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Cal Turner, Chairman Emeritus, is engaged as a consultant to
the Company and receives annual compensation of $60,000. This
amount is for consulting services unrelated to Mr. Turner's service
as a member of the Company's Board of Directors.
On August 22, 1994, the Company announced the issuance of
1,715,742 shares of a newly authorized series of convertible junior
preferred stock, as approved by the Board of Directors. The shares
of Series A Convertible Junior Preferred Stock (the "Series A
Preferred Stock") were issued in exchange for the 8,578,710
(10,723,387 split adjusted) shares of Dollar General Common Stock,
owned by C.T.S., Inc., a personal holding company controlled by
members of the Turner family (founders of the Company). The
exchange, negotiated and recommended by a special committee of
independent directors of the Company's Board of Directors, came in
response to a request from C.T.S., Inc. to consider a transaction
to meet certain estate planning needs of the Turner family. In
connection with the exchange, the Board of Directors obtained an
opinion from its financial advisor that the exchange was fair, from
a financial point of view, to the stockholders of the Company.
The Articles of Amendment to the Restated Articles of
Incorporation setting forth the terms, rights and conditions of the
Series A Preferred Stock were approved by the Board of Directors.
The Series A Preferred Stock was designated from the undesignated
preferred stock previously authorized by the Company's
stockholders. The transaction was effected through an Exchange
Agreement dated August 22, 1994 by and among the Company,
Dolgencorp, Inc., a wholly-owned subsidiary of the Company, C.T.S.,
Inc. and the shareholders of C.T.S., Inc. On August 22, 1994, the
Company filed with the Securities and Exchange Commission a Current
Report on Form 8-K detailing this exchange transaction and
including copies of the Exchange Agreement, the Articles of
Amendment to the Restated Articles of Incorporation and
Registration Rights Agreement which contain the terms and
conditions of the exchange, the rights and preferences of the
Series A Preferred Stock and certain limited registration rights
for the underlying Common Stock for the benefit of the
beneficiaries of the Turner Children Trust.
John B. Holland, a director, is President and Chief Operating
Officer of Fruit of the Loom, Inc., a manufacturer of underwear and
other soft goods. In fiscal 1995, the Company purchased
approximately $28,500,000 in goods from Fruit of the Loom, Inc.
During 1986, the Company moved certain of its executive
personnel to Nashville, Tennessee. In connection with such
relocation, the Company agreed to make a loan to Cal Turner, Jr. to
assist in the purchase of a new home. The loan is in the form of a
junior mortgage secured by the real property and home. The
mortgage will be fully paid upon a 15-year amortization of the
loan. The borrower is liable for the unpaid balance of the
mortgage at all times. The Company will forgive a portion of the
amortized principal and interest annually, and such amount will be
included as income to the borrower. The Company's agreement to
periodically forgive mortgage amounts will terminate if the
borrower leaves the Company. In the opinion of management, the
loan was made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and
22
does not involve more than the normal risk of collectability or
present other unfavorable features. The outstanding loan carries
an annual interest rate of 9.0% and the amount forgiven by the
Company last year was $30,100.50. On January 31, 1995, the current
balance of this junior mortgage was $84,933.00. The largest
aggregate amount of indebtedness outstanding at any time during
fiscal 1995 was $93,933.00.
PROPOSAL NO. 2: APPROVAL OF THE 1995 EMPLOYEE STOCK INCENTIVE PLAN
The Board believes that a key element of officer and key
employee compensation is stock-based incentive compensation. Such
compensation advances the interests of the Company by encouraging,
and providing for, the acquisition of equity interests in the
Company by officers and key employees, thereby providing
substantial motivation for superior performance. In order to
provide the Board with greater flexibility, to adapt to changing
economic and competitive conditions, and to implement stock-based
compensation strategies which will attract and retain those
employees who are important to the long term success of the
Company, the Board, at its March, 1995 meeting, adopted, subject to
stockholder approval, the 1995 Employee Stock Incentive Plan (the
"1995 Employee Plan"). If approved by the stockholders, the 1995
Employee Plan will become effective as of March 27, 1995 and will
terminate ten years after that date. The full text of the 1995
Employee Plan is reproduced and attached to this proxy statement as
Exhibit A.
The 1995 Employee Plan authorizes the issuance of up to
2,900,000 shares of the Company's Common Stock, subject to
adjustment for events affecting all of the outstanding Common
Stock. The 1995 Employee Plan shall be administered by the
Company's Corporate Governance and Compensation Committee(the
"Committee") and all grants made are at the discretion of the
Committee.
The 1995 Employee Plan is proposed because of the limited
number of shares remaining available for grant under the 1989 and
1993 Plans. Assuming full vesting of the maximum number of shares
granted under the 1989 and 1993 Plans, essentially all shares
authorized under the 1989 and 1993 Plans shall be allocated. The
1995 Employee Plan will allow the Committee the flexibility to
continue the Company s stock-based compensation strategy to incent
those employees who are important to the long term success of the
Company.
Awards under the 1995 Employee Plan may be made to officers
and key employees of the Company, its subsidiaries and affiliates
(currently approximately 245 persons), but may not be granted to
any director who is a member of the Committee (as defined in the
1995 Employee Plan) or to any other director unless the director is
also a regular employee of the Company, it subsidiaries or
affiliates. The 1995 Employee Plan imposes no limit on the number
of officers and other key employees to whom awards may be made.
The 1995 Employee Plan does limit the number of shares that
may be granted to any one person in a single fiscal year to options
for the purchase of 500,000 shares. Under OBRA, compensation
expense with respect to stock options, stock appreciation rights
and other stock-based awards having an exercise price that is
greater than or equal to the fair market value of the underlying
stock at the time of grant are exempt from the $1,000,000
limitation on deductibility if, among other things, the options or
stock appreciation rights are granted pursuant to a plan approved
by stockholders which contains a per person limit on the number of
shares underlying stock-based award which may be granted during a
specific period to a particular executive. This limitation to the
plan is anticipated to make stock-based compensation to Named
Executive Officers not subject to the limitations of OBRA.
23
The Committee will have the authority to grant the following
type of awards under the 1995 Employee Plan: (1) Stock Options; (2)
Stock Appreciation Rights; (3) Restricted Stock and (4) Other
Stock-Based Awards.
1. Stock Options. Incentive stock options ("ISOs") and non-
qualified stock options may be granted for such number of shares as
the Committee will determine and may be granted alone, in
conjunction with, or in tandem with, other awards under the 1995
Employee Plan, but subject to the per person limitation on awards.
A stock option will be exercisable at such times and subject
to such terms and conditions as the Committee will determine and
over a term to be determined by the Committee, which term will be
no more than ten years after the date of grant, or no more than
five years in the case of an ISO awarded to certain 10%
shareholders. The option price for any ISO will not be less than
100% (110% in the case of certain 10% shareholders) of the fair
market value of the Company's Common Stock as of the date of grant
and for any non-qualified stock option, will be not less than 50%
of the fair market value as of the date of grant. Payment of the
option price may be in cash, or, in the case of a non-qualified
stock option, as determined by the Committee, in shares of Company
Common Stock having a fair market value equal to the option price.
Upon termination of an optionholder's employment for cause,
such employee's stock options will terminate. If an optionholder's
employment is involuntarily terminated without cause, stock options
will be exercisable for three months following termination or until
the end of the option period, whichever is shorter. Upon the
disability of an employee, stock options will be exercisable within
the lesser of the remainder of the option period or, in the case of
a non-qualified stock option, three years and, in the case of an
ISO, one year from the date of disability. Upon the retirement of
an employee, stock options will be exercisable within the lesser of
the remainder of the option period or, in the case of a non-
qualified stock option, three years and, in the case of an ISO,
three months from the date of retirement. Upon the retirement of
an employee, stock options will be exercisable within the lesser of
the remainder of the option period or, in the case of a non-
qualified stock option, three years and, in the case of an ISO,
three months from the date of retirement. Upon the death of an
employee, stock options will be exercisable by the deceased
employee's representative within the lesser of the remainder of the
option period or one year from the date of the employee's death.
Unless otherwise determined by the Committee, only options which
are exercisable on the date of termination, death, disability, or
retirement may be subsequently exercised.
2. Stock Appreciation Rights. Stock appreciation rights
("SARs") may be granted alone or in conjunction with all or part of
a stock option. Once a SAR has been exercised, the related portion
of the stock option, if any, underlying the SAR will terminate.
Upon the exercise of an SAR, the Committee will pay to the employee
in cash, Company Common Stock or a combination thereof (the method
of payment to be at the discretion of the Committee), an amount of
money equal to the excess between the fair market value of the
stock on the exercise date and the SAR exercise price, multiplied
by the number of SARs being exercised. An SAR granted in tandem
with all or part of a stock option will be exercisable only when
the underlying option is exercisable, subject to any conditions
specified by the Committee at the time of grant.
3. Restricted Stock. Restricted stock may be granted alone,
in conjunction with, or in tandem with, other awards under the 1995
Employee Plan and may be conditioned upon the attainment of
specific performance goals or such other factors as the Committee
may determine. Upon the termination of the
24
employee's employment for any reason during the restriction period,
all restricted stock either will vest or be subject to forfeiture,
in accordance with the terms and conditions of the initial award.
During the restriction period, the employee will have the right to
vote the restricted stock and to receive any cash dividends. At
the time of award, the Committee may require the deferral and
reinvestment of any cash dividends in the form of additional shares
of restricted stock. Stock dividends will be treated as additional
shares of restricted stock and will be subject to the same terms
and conditions as the initial grant.
4. Other Stock-Based Awards. The Committee may also grant
other types of awards that are valued, in whole or in part, by
reference to or otherwise based on the Company's Common Stock.
These awards may be granted alone, in addition to, or in tandem
with, stock options, SARs and restricted stock. Such awards will
be made upon terms and conditions as the Committee may in its
discretion provide.
Federal Income Tax Aspects of the 1995 Employee Plan. The
following is a brief summary of the federal income tax aspects of
awards made under the 1995 Employee Plan based upon the federal
income tax laws in effect on the date hereof. This summary is not
intended to be exhaustive, and does not describe state or local tax
consequences.
1. Incentive Stock Options. No taxable income is realized
by the participant upon the grant or exercise of an ISO. If Common
Stock is issued to a participant pursuant to the exercise of an
ISO, and if no disqualifying disposition of the shares is made by
the participant within two years of the date of grant or within one
year after the transfer of the shares to the participant, then: (a)
upon the sale of the shares, any amount realized in excess of the
option price will be taxed to the participant as a long-term
capital gain, and any loss sustained will be a capital loss, and
(b) no deduction will be allowed to the Company for federal income
tax purposes. The exercise of an ISO will give rise to an item of
tax preference that may result in an alternative minimum tax
liability for the participant unless the participant makes a
disqualifying disposition of the shares received upon exercise.
If Common Stock acquired upon the exercise of an ISO is
disposed of prior to the expiration of the holding periods
described above, then generally: (a) the participant will realize
ordinary income in the year of disposition in an amount equal to
the excess, if any, of the fair market value of the shares at
exercise (or, if less, the amount realized on the disposition of
the shares) over the option price paid for such shares, and (b) the
Company will be entitled to deduct any such recognized amount. Any
further gain or loss realized by the participant will be taxed as
short-term or long-term capital gain or loss, as the case may be,
and will not result in any deduction by the Company.
Subject to certain exceptions for disability or death, if an
ISO is exercised more than three months following the termination
of the participant's employment, the option will generally be taxed
as a non-qualified stock option.
2. Non-Qualified Stock Options. Except as noted below, with
respect to non-qualified stock options: (a) no income is realized
by the participant at the time the option is granted; (b) generally
upon exercise of the option, the participant realizes ordinary
income in an amount equal to the difference between the option
price paid for the shares and the fair market value of the shares
on the date of exercise and the Company will be entitled to a tax
deduction in the same amount; and (c) at disposition, any
appreciation (or
25
depreciation) after the date of exercise is treated either as
short-term or long-term capital gain or loss, depending upon the
length of time that the participant has held the shares. See
"Restricted Stock" for tax rules applicable where the spread value
of an option is settled in an award of restricted stock.
3. Stock Appreciation Rights. No income will be realized by
a participant in connection with the grant of an SAR. When the SAR
is exercised, the participant will generally be required to include
as taxable ordinary income in the year of exercise an amount equal
to the amount of cash and the fair market value of any shares
received. The Company will be entitled to a deduction at the time
and in the amount included in the participant's income by reason of
the exercise. If the participant receives Common Stock upon
exercise of a SAR, the post-exercise appreciation or depreciation
will be treated in the same manner discussed above under "Non-
Qualified Stock Options."
4. Restricted Stock. A participant receiving restricted
stock generally will recognize ordinary income in the amount of the
fair market value of the restricted stock at the time the stock is
no longer subject to forfeiture, less the consideration paid for
the stock. However, a participant may elect, under Section 83(b)
of the Code within 30 days of the grant of the stock, to recognize
taxable ordinary income on the date of grant equal to the excess of
the fair market value of the shares of restricted stock (determined
without regard to the restrictions) over the purchase price of the
restricted stock. Thereafter, if the shares are forfeited, the
participant will be entitled to a deduction, refund, or loss, for
tax purposes only, in an amount equal to the purchase price of the
forfeited shares regardless of whether he made a Section 83(b)
election. With respect to the sale of shares after the forfeiture
period has expired, the holding period to determine whether the
participant has long-term or short-term capital gain or loss
generally begins when the restriction period expires and the tax
basis for such shares will generally be based on the fair market
value of such shares on such date. However, if the participant
makes an election under Section 83(b), the holding period will
commence on the date of grant, the tax basis will be equal to the
fair market value of shares on such date (determined without regard
to restrictions), and the Company generally will be entitled to a
deduction equal to the amount that is taxable as ordinary income to
the participant in the year that such income is taxable.
5. Dividends and Dividend Equivalents. Dividends paid on
restricted stock generally will be treated as compensation that is
taxable as ordinary income to the participant, and will be
deductible by the Company. If, however, the participant makes a
Section 83(b) election, the dividends will be taxable as ordinary
income to the participant but will not be deductible by the
Company.
6. Other Stock-Based Awards. The federal income tax
treatment of other stock-based awards will depend on the nature of
any such award and the restrictions applicable to such award. Such
an award may, depending on the conditions applicable to the award,
be taxable as an option, an award of restricted stock, or in a
manner not described herein.
Section 162(m) Provisions. OBRA, passed by Congress in 1993,
imposes a limitation, included as Section 162(m) of the Code, on
the deductibility of certain compensation paid to the chief
executive officer and certain other executive officers of publicly
traded companies. Compensation paid to these officers in excess of
$1,000,000 cannot be claimed as a tax deduction by such companies
unless such compensation qualifies for an exemption as performance-
based compensation under Section 162(m) of the Code. It is
anticipated that
26
compensation in respect of stock options and SARs granted under the
1995 Employee Plan will qualify for an exemption as performance-
based compensation under Section 162(m) of the Code, if the
exercise price per share for such options and SARs is at least
equal to the fair market value per share of the Common Stock on the
date of grant. Other awards (if any) granted under the 1995
Employee Plan are not expected to qualify for an exemption as
performance-based compensation.
Other Provisions of the 1995 Employee Plan. Options and other
rights that may be granted under the 1995 Employee Plan will vest
and become immediately exercisable (to the extent not theretofore
vested and exercisable and the restrictions and forfeiture
provisions applicable to restricted stock and other stock-based
awards will lapse) if:
(a) any person or entity (including a "group" as defined
in Section 13 (d) (3) of the Exchange Act), other than the
Company or a wholly owned subsidiary of the Company or an
employee benefit plan of the Company or any of its
subsidiaries, becomes the beneficial owner of the Company's
securities having 20% or more of the combined voting power of
all securities that may be cast in the election of directors
of the Company;
(b) as a result of or in connection with a cash tender
or exchange offer, merger or other business combination, sale
of assets or contested election, or any combination of the
foregoing transactions, less than a majority of the combined
voting power of the then outstanding securities of the Company
or any successor entity entitled to vote generally in the
election of directors or any such successor are held in the
aggregate by holders of the Company's securities entitled to
vote generally in the election of directors immediately prior
to such transaction;
(c) during any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board of Directors cease for any reason to constitute the
majority thereof, unless the election or nomination for
election of such individuals was approved by a vote of at
least two-thirds of the directors then still in office who
were directors at the beginning of such period; or
(d) the Committee determines that a potential change in
control has occurred as a result of either (i) shareholder
approval of an agreement that would result in one of the
events described above or (ii) the acquisition of beneficial
ownership by any person, entity or group (other than the
Company, any of its subsidiaries or any Company employee
benefit plan) of the Company's securities representing 10% or
more of the combined voting power of the then outstanding
securities.
Following the occurrence of any event that would result in the
acceleration of vesting and exercisability as described above, the
holders of stock options and other rights (to the extent that they
have been held for at least six months in the case of options and
other rights held by executive officers and directors or other
persons subject to Section 16 of the Exchange Act) will, unless
otherwise determined by the Committee, receive cash equal to the
difference between the highest price paid per share of Common Stock
in any transaction during the 60 days prior to the change in
control or potential change in control event and the exercise price
of the option or other right.
The 1995 Employee Plan may be amended by the Company's Board
of Directors; provided, however, that the approval of the Company's
shareholders shall be required for any amendment that would (a)
increase the total number of shares
27
of Common Stock reserved for the purposes of the 1995 Employee Plan
or increase the number of shares that may be issued thereunder to
any single participant in any year or over the life of the 1995
Employee Plan (except as a result of a stock split, stock dividend
or similar change in the capital structure of the Company affecting
the Common Stock); (b) materially increase the benefits accruing to
participants under the 1995 Employee Plan or (c) materially modify
the requirements as to eligibility for participation in the 1995
Employee Plan.
In March 1995, the Committee authorized options for the
purchase of Common Stock under the 1995 Employee Plan subject to
shareholder approval at the 1995 Annual Meeting. These options
were granted to employees, none of whom were executive officers.
This grant information is presented in the table below.
1995 Employee Stock Incentive Plan
Name and Position Dollar Value Number of Units
Non-Executive Officer
Employee Group $6,093,937 232,150
The 1995 Employee Plan will expire on March 27, 2005.
On April 14, 1995, the last reported sale price of the
Company's Common Stock reported on the New York Stock Exchange was
$25.375 per share.
Vote Required: The affirmative vote of the holders of a
majority of the Company's Common Stock (including the Series A
Preferred Stock voting with the Common Stock) present and entitled
to vote at the Annual Meeting is required to approve the 1995
Employee Plan. The Board of Directors recommends a vote FOR
ratification and approval of the 1995 Employee Plan.
PROPOSAL NO. 3: THE 1995 OUTSIDE DIRECTORS STOCK OPTION PLAN
The Company believes that a key element to ensuring its
continued success and advancing value to its stockholders, is its
ability to attract and retain the highest quality of experienced
person as directors of the Company. The Company believes that a
crucial step to achieving this goal is to provide such directors
with the incentive for outstanding performance inherent in stock
options and to increase the opportunity for proprietary interest in
the Company through stock ownership.
The Board, at its March 1995 meeting, adopted, subject to
stockholder approval, the 1995 Outside Directors Stock Option Plan
(The "1995 Outside Directors Plan"). If approved by the
stockholders, the 1995 Outside Directors Plan will become effective
as of March 27, 1995 and will terminate ten years after that date.
The full text of the 1995 Outside Directors Plan is reproduced and
attached to this proxy statement as Exhibit B.
The 1995 Outside Directors Plan authorizes the issuance of up
to 450,000 shares of the Company's Common Stock. The 1995 Outside
Directors Plan provides for a grant of an option to each non-
employee director (currently 7 persons) once each year based upon
the following nondiscretionary formula (as set forth in the plan):
Each non-employee director s annual option grant will be equal to
the number of shares determined by dividing (i) the annual retainer
for such non-employee director payable during the year in which the
grant is made by (ii) the fair market value of a share of Common
Stock on the date of the option grant, multiplying the result (the
quotient) by three (3) in the case of an option grant to a non-
employee director other than the Chairman of the Board,
28
or by four in the case of the Chairman of the Board (only in the
event the Chairman is not an employee), rounding the resulting
number of shares up to the nearest whole share. All options
granted under the 1995 Outside Directors Plan will have an exercise
price per share equal to the fair market value of the underlying
Common Stock of the Company on the dates of grant. No options may
be granted under the 1995 Outside Directors Plan after March 26,
2005, and no option will be exercisable more than ten years after
it is granted. Additionally, no option will be exercisable prior
to the optionee having completed at least one year of continual
service as a director after the date such option is granted.
The number of shares subject to each option and the exercise
price will be adjusted upon the occurrence of certain changes in
the Company's capital structure as a result of a stock dividend,
stock split or similar transaction affecting the Common Stock.
Each option will vest one year following the date of grant and will
expire on the tenth year following the date of grant. If the
optionholder's service as a director terminates by reason of death
or disability, the options will be exercisable for a period of
three years following the date of death or one year following the
date of disability, but in no event later than the expiration date
of the option. If an optionholder's service as a director
terminates for cause, the options will immediately terminate. If
an optionholder's service as director terminates for any reason
other than death, disability or cause, the options will remain
exercisable for a period of one year, but in no event later than
the expiration date of the option. Options granted under the 1995
Outside Directors Plan will be treated in the same way as non-
qualified stock options under the 1995 Employee Plan for federal
income tax purposes.
The Board of Directors may amend the 1995 Outside Directors
Plan; provided, however, that (a) no change in any option
theretofore granted may be made that would impair the rights of an
optionholder without the optionholder's consent; (b) amendments may
be made not more than once every six months other than to comport
with changes in the Code, the Employee Retirement Income Security
Act of 1974 or the rules thereunder, and (c) the approval of the
shareholders of the Company will be required for any amendment that
would materially increase the benefits accruing to participants,
increase the number of shares that may be issued under the 1995
Outside Directors Plan (except as a result of a stock dividend,
stock split or other change in the capital structure of the
Company) or extend the term of the 1995 Outside Directors Plan.
On April 14, 1995, the last reported sales price of the
Company's Common Stock reported on the New York Stock Exchange was
$25.375 per share.
Vote Required: The affirmative vote of the holders of a
majority of the Company's Common Stock (including the Series A
Preferred Stock voting with the Common Stock) present and entitled
to vote at the Annual Meeting is required to approve the 1995
Outside Directors Plan. The Board of Directors recommends a vote
FOR ratification and approval of the 1995 Outside Directors Plan.
PROPOSAL NO. 4: RATIFICATION OF COOPERS & LYBRAND L.L.P. AS
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected Coopers &
Lybrand L.L.P. to serve as its independent auditor for the current
fiscal year. Coopers & Lybrand L.L.P. has served as the Company's
independent auditor for more than the past 30 years. The Company
has no information that Coopers & Lybrand L.L.P. has any direct or
material indirect financial interest in the Company or any of its
subsidiaries, in the capacity of promoter, underwriter, voting
trustee, director, officer or employee.
29
Representatives of Coopers & Lybrand L.L.P. are expected to be
present at the Annual Meeting and will be given the opportunity to
make a statement if they desire to do so and to respond to
appropriate questions.
Vote Required. Under Kentucky law, the affirmative vote of
the holders of a majority of the votes cast by the holders of the
Company's Common Stock represented and entitled to vote at the
Annual Meeting is required to adopt Proposal 4.
The Board of Directors recommends a vote FOR approval of this
appointment.
STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Stockholders' proposals intended for presentation at the 1996
Annual Meeting of Stockholders must be received by Bob Carpenter,
Chief Administrative Officer and Corporate Secretary, at 104
Woodmont Boulevard, Suite 500, Nashville, Tennessee 37205 not later
than December 29, 1995 for inclusion in the proxy statement and
form of proxy relating to that meeting. All such proposals must be
in writing and mailed by certified mail, return receipt requested,
and must comply with Rule 14a-8 of Regulation 14A of the proxy
rules of the Securities and Exchange Commission.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF
1934
Section 16(a) of the Securities Exchange Act of 1934 and the
disclosure requirements of Item 405 of Regulation S-K require the
Company's executive officers and directors, and any person who owns
more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership
on Forms 3, 4 and 5 with the Securities and Exchange Commission,
the applicable market or exchange upon which the Company's shares
are listed, and the Company. Based solely on the Company's review
of copies of such forms it has received and based on written
representations from certain reporting persons that they were not
required to file Forms 5 for specified fiscal years, the Company
believes that all its officers, directors, and greater than ten
percent beneficial owners complied with all filing requirements
applicable to them with respect to transactions during fiscal 1995
with the exception that James L. Clayton did not timely report on
Form 4 a sale of 2,000 shares of stock sold by his wife. With
respect to the inadvertent omission, the required Form 4 has been
filed.
METHOD OF COUNTING VOTES
Unless a contrary choice is indicated, all duly executed proxies
will be voted in accordance with the instructions set forth on the
back side of the proxy card. Abstentions and "non-votes" are counted
as present only for purposes of determining a quorum. Abstentions
and "non-votes" will be treated as votes against the proposed 1995
Employee Stock Incentive Plan and the 1995 Outside Directors Stock
Option Plan. Because directors are elected by a plurality of the
votes cast, abstentions are not considered in the election of
directors. In addition, the ratification of Coopers & Lybrand L.L.P.
is determined by the number of votes cast; therefore, an absention
or withholding of authority to vote will have no effect on such
outcome. A "non-vote" occurs when a nominee holding shares for a
beneficial owner votes on one proposal, but does not vote on another
proposal because the nominee does not have discretionary voting power
and has not received instruction from the beneficial owner.
30
OTHER MATTERS
The cost of soliciting proxies will be borne by the Company. In
addition to this solicitation by mail, proxies may be solicited by
officers, directors and regular employees of the Company, without
extra compensation, personally and by mail, telephone or telegraph.
Brokers, nominees, fiduciaries and other custodians will be requested
to forward soliciting material to the beneficial owners of shares and
will be reimbursed for their expenses. The Company's regularly
retained investor relations firm, Corporate Communications, Inc., may
also be called upon to solicit proxies by telephone and mail.
The Board of Directors is not aware of any matter to be
submitted for consideration at the Annual Meeting other than those
set forth in the accompanying notice. If any other matter properly
comes before the meeting for action, proxies will be voted on such
matter in accordance with the best judgment of the persons named as
proxies. Any stockholder has the unconditional right to revoke his
or her proxy at any time prior to the voting thereof by giving the
Secretary of the Company written notice of such revocation.
The Annual Report of the Company is mailed herewith. A copy of
the Company's Annual Report on Form 10-K for the year ended January
31, 1995 (as filed with the Securities and Exchange Commission) is
available without charge to any stockholder on request. Requests for
the Company's Annual Report on Form 10-K should be directed to Bob
Carpenter, Chief Administrative Officer and Corporate Secretary.
Whether or not you expect to be present at the meeting in
person, please sign, date and return the enclosed proxy promptly in
the enclosed business reply envelopment. No postage is necessary if
the proxy is mailed in the United States.