DUTY FREE INTERNATIONAL, INC.
63 Copps Hill Road
Ridgefield, Connecticut 06877
_____________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 19, 1995
To the Stockholders of
DUTY FREE INTERNATIONAL, INC.:
You are cordially invited to attend the Annual Meeting of
Stockholders of DUTY FREE INTERNATIONAL, INC., a Maryland corporation,
which will be held on May 19, 1995, at 1:30 p.m., Baltimore time, at the
Sheraton Inner Harbor Hotel, 300 South Charles Street, Baltimore, Maryland
21201, for the following purposes:
(1) To elect two (2) Class C Directors, each to serve for a
term of three years and until their successor is duly elected and
qualified;
(2) To ratify the appointment of KPMG Peat Marwick LLP as
the Company's Independent Auditors for the fiscal year ending
January 28, 1996; and
(3) To transact such other business as may properly come
before the Annual Meeting or any adjournments or postponements
thereof.
A copy of the Company's Annual Report to Stockholders, Proxy
and Proxy Statement are being mailed together with this notice.
Only stockholders of record at the close of business on
March 31, 1995 are entitled to notice of, and to vote at, the Annual
Meeting and any adjournments or postponements thereof. Such stockholders
may vote in person or by Proxy.
You are cordially invited to be present at the Annual Meeting.
It is important to you and to the Company that your shares be voted at the
Annual Meeting.
By Order of the Board of Directors
Gerald F. Egan, Secretary
April 14, 1995
IMPORTANT NOTICE
PLEASE READ THE ATTACHED PROXY STATEMENT CAREFULLY AND THEN SIGN,
DATE AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED STAMPED AND
ADDRESSED ENVELOPE. THE GIVING OF THE PROXY WILL NOT AFFECT YOUR
RIGHT TO VOTE AT THE ANNUAL MEETING IF THE PROXY IS REVOKED, AS SET
FORTH IN THE PROXY STATEMENT.
1
DUTY FREE INTERNATIONAL, INC.
____________________
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 19, 1995
This Proxy Statement and the accompanying proxy materials are
being furnished to the stockholders of Duty Free International, Inc., a
Maryland corporation, in connection with the solicitation of Proxies by
the Board of Directors of the Company for use at the Annual Meeting of
Stockholders to be held at the Sheraton Inner Harbor Hotel, 300 South
Charles Street, Baltimore, Maryland 21201, on May 19, 1995, at 1:30 p.m.,
Baltimore time, and any adjournments or postponements thereof. Only
stockholders of record at the close of business on March 31, 1995 (the
"Record Date") will be entitled to notice of, and to vote at, the Annual
Meeting. Management anticipates that the mailing to stockholders of this
Proxy Statement and the accompanying Proxy materials, together with a copy
of the Company's Annual Report to Stockholders for the fiscal year ended
January 29, 1995, will occur on or about April 20, 1995.
At the Annual Meeting, the stockholders of the Company will be
asked to (i) consider and vote upon the election of two (2) Class C
Directors of the Company; (ii) ratify the appointment of KPMG Peat Marwick
LLP as the Company's Independent Auditors for the fiscal year ending
January 28, 1996; and (iii) consider and vote upon any other business that
may properly come before the Annual Meeting.
The principal executive offices of the Company are located at
63 Copps Hill Road, Ridgefield, Connecticut 06877, and its telephone
number at that address is (203) 431-6057.
The date of this Proxy Statement is April 14, 1995.
STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE
AND SIGN THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY
TO THE COMPANY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
2
VOTING AND PROXIES
Voting Rights
Holders of record of the Company's common stock, par value
$0.01 per share (the "Common Stock"), on the Record Date will be entitled
to one vote for each share held on all matters to come before the Annual
Meeting of Stockholders. At the close of business on the Record Date,
there were outstanding 27,243,550 shares of Common Stock. The presence,
in person or by Proxy, of stockholders entitled to cast a majority of all
votes entitled to be cast at the Annual Meeting will constitute a quorum.
Assuming a quorum, the affirmative vote of a plurality of votes cast at
the Annual Meeting is required to elect the nominees for Director, and the
affirmative vote of a majority of votes cast at the Annual Meeting is
required to ratify the appointment of the Independent Auditors. Any
shares not voted, whether by abstention, broker non-vote (which results
when a broker holding shares for a beneficial owner casts no vote because
it has not received timely voting instructions on certain matters from
such beneficial owner) or otherwise, will have no impact on the vote.
Proxies
If the accompanying Proxy is properly executed and returned,
the shares represented by the Proxy will be voted in accordance with the
instructions specified in the Proxy. In the absence of instructions to
the contrary, such shares will be voted in favor of (i) all of the
nominees for election to the Board of Directors listed in this Proxy
Statement and named in the accompanying Proxy and (ii) the ratification of
KPMG Peat Marwick LLP as the Company's Independent Auditors for the fiscal
year ending January 28, 1996. The Board does not intend to bring any
other matters before the Annual Meeting and is not aware of any matters
which will come before the Annual Meeting other than as described herein.
In the absence of instructions to the contrary, however, it is the
intention of each of the persons named in the accompanying Proxy to vote
the shares each Proxy represents in accordance with such persons'
discretion with respect to any other matters properly coming before the
Annual Meeting.
Any stockholder may revoke his or her Proxy at any time prior
to the voting thereof on any matter (without, however, affecting any vote
taken prior to such revocation). A Proxy may be revoked by filing with
Gerald F. Egan, Vice President of Finance, Chief Financial Officer,
Treasurer and Secretary of the Company at 63 Copps Hill Road, Ridgefield,
Connecticut 06877, a written notice of revocation or a subsequently dated
Proxy at any time prior to the time it has been voted at the Annual
Meeting, or by attending the Annual Meeting and voting in person (although
attendance at the Annual Meeting will not in and of itself constitute
revocation of a Proxy).
3
PROPOSAL 1 - ELECTION OF DIRECTORS
The Company currently has a classified Board of Directors
consisting of three Class A Directors, two Class B Directors and three
Class C Directors. The current terms of the Directors continue until the
Annual Meetings of Stockholders to be held in 1996, 1997 and 1995,
respectively, and until their respective successors are elected and
qualified. At each Annual Meeting of Stockholders, a class of Directors
is elected for a full term of three years to succeed the class of
Directors whose terms expire at such Annual Meeting. Morris W. Offit has
advised the Company that he will not stand for re-election to the Board of
Directors when his term expires on May 19, 1995. William E. Hurst, Sr.,
a Director of the Company since 1985, resigned from the Company's Board of
Directors in December 1994. As of May 19, 1995, the Company's Board of
Directors will consist of three Class A Directors, two Class B Directors
and two Class C Directors.
The following information is furnished with respect to the two
nominees for Class C Director and with respect to the Directors who will
continue in office after the Annual Meeting until the expiration of their
respective terms. The Board of Directors has unanimously recommended the
re-election of the nominees named below. Unless otherwise instructed, it
is the intention of the persons named in the accompanying Proxy to vote
all shares of Common Stock represented by properly executed Proxies for
the two nominees to the Board of Directors named below. Although each of
the nominees has indicated that he or she will serve as a Director of the
Company, should any one or more of them be unable to serve, the Proxies
will be voted for the election of a substitute nominee or nominees
designated by the Board of Directors.
Nominees for Class C Director - Terms to Expire in 1998
Alfred Carfora, age 44, was elected President and Co-Chief
Executive Officer of the Company in October 1993 and became Chief
Executive Officer in May 1994. Previously, he served as Executive Vice
President and Chief Operating Officer, and he has been a Director of the
Company since 1985. Prior to 1992, Mr. Carfora had principal operating
responsibilities for the Company's Northern Border Division and Airport
Division. Mr. Carfora was employed by IDF Services, Inc. ("IDF Services")
from 1973 to 1988 and served as its Vice President, Secretary and
Treasurer and as a director until the merger of that corporation with the
Company in 1992.
Susan H. Stackhouse, age 41, has been President of Fenton Hill
Florida, Inc. since 1986 and a Director of the Company since 1992. Ms.
Stackhouse joined Fenton Hill Florida, Inc., formerly known as Bonanni
Exports, Inc., in 1980 as General Manager and served as its Executive Vice
President from 1984 until her election as President in 1986. Fenton Hill
Florida, Inc., in which the Company has a 25% interest, operates duty free
and retail concessions in eight airports. Ms. Stackhouse has also served
as a director of the International Association of Airport Duty Free
Stores, Inc. since 1986.
Vote Required
The affirmative vote of a plurality of votes cast at the
Annual Meeting of Stockholders is required to elect the nominees for
Director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR EACH OF THE NOMINEES FOR CLASS C DIRECTOR
4
Other Directors
The remaining Directors of the Company, whose terms expire in 1996
and 1997, respectively, are:
Class A Directors - Terms to Expire in 1996
David H. Bernstein, age 60, has been the Chairman of the
Executive Committee of the Board of Directors since October 1993, was the
Chairman of the Board from 1986 to 1993, and has been a Director since the
Company's formation in 1983. He served until 1992 as President of Samuel
Meisel and Company, Inc., a wholly owned subsidiary of the Company
("Meisel"), with which he had been associated since 1957. Mr. Bernstein
currently serves as the President of the International Association of
Airport Duty Free Stores, Inc., the trade association representing all
major airport duty free operators in North, South and Central America, and
the Caribbean. He has served in this capacity for the past twelve years.
Mr. Bernstein is a member of the Board of Trustees of The Johns Hopkins
University and is Chairman of the Board of Trustees of Sinai Hospital.
John A. Couri, age 54, has been a Director since the Company's
formation. Mr. Couri was Co-Chief Executive Officer from October 1993 to
May 1994 and served as Chairman of the Board of the Company from October
1993 to December 1994. He was Chief Executive Officer of the Company from
1987 to 1993, President from 1983 to 1993 and Chief Financial Officer from
1987 until 1990. In addition, he served as President of the Northern
Border Division from its formation until 1989. Mr. Couri was employed by
IDF Services from 1972 to 1987, and served as a director of that
corporation until the merger of that corporation with the Company in 1992.
Mr. Couri is also a director of Cannondale Corporation.
Heribert Diehl, age 61, has been a Director since the
Company's formation. Mr. Diehl has been an employee of Gebr. Heinemann,
a stockholder of the Company, since 1962 and has been a managing director
of that firm since 1983. Gebr. Heinemann is a major wholesale supplier of
duty free merchandise and an operator of duty free concessions in Europe.
Class B Directors - Terms to Expire in 1997
Jack Africk, age 66, was the Vice Chairman of the Board of the
Company from May 1993 through December 1994, and was the Vice Chairman of
UST Inc. from 1990 to 1993. Mr. Africk was a director and Executive Vice
President of UST Inc. from 1987 to 1990, and previously served as the
President and Chief Executive Officer of United States Tobacco Company, a
wholly owned subsidiary of UST Inc. Mr. Africk is also a director of
Crown Central Petroleum Corp., Tanger Factory Outlets and Transmedia
Network, Inc.
Carl Reimerdes, age 54, has been a Vice President and a
Director of the Company since its formation and the principal operating
officer of the Company's Airport Division and its predecessor since 1983.
Mr. Reimerdes was employed by IDF Services from 1972, and served as its
President and as a director, until the merger of that corporation with the
Company in 1992.
5
Board and Committee Meetings
The Board of Directors met seven times during the fiscal year
ended January 29, 1995. All of the Directors attended at least 75% of the
aggregate of all meetings of the Board of Directors and the Committees on
which they served during the fiscal year ended January 29, 1995.
The members of the Audit Committee presently consist of
Messrs. Africk, Diehl and Offit. The Audit Committee is responsible for
reviewing, with the Company's Independent Auditors, (i) the general scope
of the accountants' audit services and the annual results of their audit,
(ii) the reports and recommendations made to the Audit Committee by the
Independent Auditors and the Company's Internal Audit Department, and
(iii) the Company's internal controls structure. The Audit Committee held
three meetings during the fiscal year ended January 29, 1995.
The Executive Committee currently consists of Messrs. Africk,
Bernstein, Carfora, Couri and Reimerdes. The Executive Committee may
exercise all powers of the Board of Directors between meetings of the
Board except as otherwise provided by law or by the By-laws of the
Company. The Executive Committee held three meetings during the fiscal
year ended January 29, 1995.
The Compensation Committee presently consists of Mr. Diehl and
Ms. Stackhouse. The Compensation Committee is responsible for reviewing
and making recommendations to the Board of Directors concerning
remuneration to the Company's executive officers. The Compensation
Committee also determines the bonuses awarded under the Company's
Incentive Compensation Plan and administers and makes awards of stock
options under the Company's stock option plans. The Compensation
Committee held one meeting during the fiscal year ended January 29, 1995.
The Nominating Committee currently consists of Messrs. Africk
and Reimerdes. The Nominating Committee reviews the qualifications of,
and recommends to the Board, candidates for election to the Board. The
Nominating Committee considers suggestions from many sources, including
stockholders, regarding possible candidates for Director. Such
suggestions, together with appropriate biographical information, may be
submitted to the Secretary of the Company. The Nominating Committee held
one meeting during the fiscal year ended January 29, 1995.
EXECUTIVE OFFICERS
The Company's executive officers include Alfred Carfora,
President and Chief Executive Officer; David H. Bernstein, Chairman of the
Executive Committee of the Board of Directors; Carl Reimerdes, Vice
President; Gerald F. Egan, Vice President of Finance, Treasurer, Chief
Financial Officer and Secretary; and Seymour S. Yaffe, Vice President.
Information concerning each executive officer's age and length of service
with the Company, other than Messrs. Egan and Yaffe, can be found herein
under the section entitled "ELECTION OF DIRECTORS". Each of these
executive officers was elected by, and serve at the pleasure of, the Board
of Directors.
6
Gerald F. Egan, age 47, joined the Company in August 1989 as
Vice President of Finance. He was elected Chief Financial Officer by the
Board of Directors in January 1990, Treasurer in May 1993 and Secretary in
June 1994. Prior to joining the Company, Mr. Egan had served, since 1985,
as chief financial officer of H.B. Ives Company, a manufacturer of
architectural and builders hardware. Mr. Egan previously had been
employed by Cadbury-Schweppes, Inc., a beverage and confectionery
producer, in various financial management positions prior to becoming its
Vice President-Controller in 1984. Mr. Egan is a certified public
accountant.
Seymour S. Yaffe, age 58, has been a Vice President of the
Company since 1986. Mr. Yaffe has had general administrative
responsibilities for the various support services which Meisel provides to
the Company and has had operating responsibility for Meisel. Mr. Yaffe
joined Meisel in 1968 and became an officer and Director of the Company in
1983. Mr. Yaffe retired as a Director in May 1994.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following Summary Compensation Table sets forth certain information
about the cash and non-cash compensation earned by or awarded to Alfred
Carfora, President and Chief Executive Officer, and the four other most
highly compensated executive officers of the Company for the fiscal years
ended January 1995, 1994 and 1993. John A. Couri resigned from his
position as Co-Chief Executive Officer of the Company, effective May 23,
1994, and resigned as Chairman of the Board of Directors in December
1994.
Long-term
Compensation
Annual compensation(1) Awards
---------------------- ----------
Securities
Name and Fiscal Underlying All Other
Principal Position Year Salary Bonus Options(2) Compensation(3)
- - ------- ----- ----- ------ ----- ------- -----------
Alfred Carfora, President 1995 $299,000 $150,000 125,000 $ 7,477
and Chief Executive 1994 $275,000 $ 0 20,000 $13,383
Officer 1993 $275,000 $140,000 --- $20,550
John A. Couri, former 1995 $310,000 $125,000 125,000 $ 9,345
Chairman of the Board 1994 $325,000 $ 0 25,000 $13,345
and former Co-Chief 1993 $325,000 $200,000 --- $20,670
Executive Officer
David H. Bernstein,
Chairman of the 1995 $256,000 $ 75,000 125,000 $11,844
Executive Committee 1994 $325,000 $ 0 25,000 $15,358
Of the Board 1993 $325,000 $175,000 --- $22,189
Carl Reimerdes, 1995 $275,000 $125,000 125,000 $ 8,942
Vice President 1994 $275,000 $ 25,000 20,000 $13,795
1993 $275,000 $115,000 --- $20,458
Gerald F. Egan, Vice 1995 $170,000 $125,000 60,000 $ 7,051
President of Finance, 1994 $150,000 $100,000 20,000 $12,595
Treasurer, Secretary 1993 $132,000 $100,000 --- $14,444
and Chief Financial
Officer
Seymour S. Yaffe, 1995 $175,000 $ 30,000 10,000 $ 9,499
Vice President 1994 $175,000 $ 25,000 7,500 $13,593
1993 $235,000 $ 25,000 --- $21,527
7
(1) Salary and bonus amounts relate to the year in which earned,
regardless of when paid.
(2) This column represents options to purchase the stated number of
shares of Common Stock.
(3) This column includes other compensation that could not properly
be reported in any other column of the Summary Compensation Table. The
amounts for fiscal 1995 include for Mr. Carfora: $3,539 contributed by
the Company to the Duty Free International, Inc. Profit Sharing Plan
and Trust (the "Profit Sharing Plan") and $3,938 contributed by the
Company as a matching contribution to the Profit Sharing Plan's
401(k) savings feature, known as the Duty Free International, Inc.
Employees' Savings Plan (the"Employees' Savings Plan"); for
Mr. Couri: $3,974 contributed by the Company to the Profit Sharing
Plan and $5,371 contributed by the Company as a matching contribution
to the Employees' Savings Plan; for Mr. Bernstein: $4,779
contributed by the Company to the Profit Sharing Plan, $5,502
contributed by the Company as a matching contribution to the Employees'
Savings Plan and $1,563 in life insurance premiums paid by the
Company; for Mr. Reimerdes: $4,779 contributed by the Company to the
Profit Sharing Plan and $4,163 contributed by the Company as a
matching contribution to the Employees' Savings Plan; for
Mr. Egan: $2,864 contributed by the Company to the Profit Sharing
Plan and $4,187 contributed by the Company as a matching contribution
to the Employees' Savings Plan; and for Mr. Yaffe: $3,998 contributed
by the Company to the Profit Sharing Plan, $4,586 contributed by the
Company as a matching contribution to the Employees' Savings Plan
and $915 in life insurance premiums paid by the Company.
The following table summarizes for the named executive officers
information about the grant of options during the fiscal year ended
January 29, 1995 and the potential realizable value of the options.
Option Grants in the Last Fiscal Year
Individual Grants
- - ---------------------------------------------------------------------
Potential Realizable
Number of %of Total Value at Assumed Annual
Securities Options Rates of Stock Price
Underlying Granted to Exercise Appreciation for
Options Employees in Price Expiration Option Term ($)(1)
Name Granted(#)(2) Fiscal Year ($/Sh) Date 5% 10%
- - -------------- -------- -------- ------- -------- ------- -------
Alfred Carfora 125,000 9% $12.875 11/24/04 $1,012,127 $2,564,929
John A. Couri 125,000 9% $12.875 11/24/04 $1,012,127 $2,564,929
David H. Bernstein 125,000 9% $12.875 11/24/04 $1,012,127 $2,564,929
Carl Reimerdes 125,000 9% $12.875 11/24/04 $1,012,127 $2,564,929
Gerald F. Egan 60,000 4% $12.875 11/24/04 $ 485,821 $1,231,166
Seymour S. Yaffe 10,000 1% $11.000 09/22/04 $ 69,178 $ 175,312
__________
(1) These values have been determined based upon assumed rates of
appreciation and are not intended to forecast the possible future
appreciation, if any, of the price or value of the Company's Common Stock.
(2) The options entitle the holder to purchase shares of the Company's
Common Stock at an exercise price which is equal to the closing price on
the New York Stock Exchange of the Company's Common Stock on the day
preceding the date the stock option was granted. The options vest
in three equal annual installments commencing November 24, 1995 for all
named executive officers except Mr. Yaffe whose options vest in
three equal annual installments commencing September 22, 1995.
No stock option may be exercised after the expiration of 10 years
after the date of grant.
8
The following table summarizes for the named executive officers
information about the exercise of stock options by the named executive
officers during the fiscal year ended January 29, 1995 and the value of
stock options they held at January 29, 1995.
Aggregated Option Exercises in Last Fiscal Year
and January 29, 1995 Option Values
Number of Securities
Underlying Unexercised Value of Unexercised In-the-Money(1)
Shares Acquired Value Options at January 29, 1995 Options at January 29, 1995(2)
Name On Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- - -------------- ----------- -------- --------- ----------- -------- --------- ------------
Alfred Carfora 0 $0 43,333 138,333 $ 9,999 $0
John A. Couri 30,000 $150,000 48,334 141,666 $ 0 $0
David H. Bernstein 0 $0 48,334 141,666 $ 0 $0
Carl Reimerdes 0 $0 43,333 138,333 $ 9,999 $0
Gerald F. Egan 0 $0 30,667 73,333 $ 0 $0
Seymour S. Yaffe 0 $0 44,100 15,000 $17,400 $0
______________
(1) Options are "in-the-money" if the closing market price of the Company's
Common Stock on January 27, 1995 exceeded the exercise prices of the options.
(2) The value of exercisable options represents the difference between the
exercise price of the options and the closing market price of the Company's
Common Stock on January 27, 1995.
Compensation of Directors
Each Director who was not an officer of or consultant to the
Company or a holder of more than 3% of the Company's Common Stock received
$10,000 for serving on the Board of Directors and $1,000 for each Board of
Directors meeting and each committee meeting attended during the fiscal
year ended January 29, 1995.
Each non-employee Director is granted stock options annually
under the 1989 Stock Option Plan to purchase (i) 1,000 shares of Common
Stock, plus (ii) an additional 5,000 shares if the non-employee Director
serves on any one or more of the Audit, Compensation, Executive or
Nominating Committees of the Board of Directors, and (iii) an additional
2,500 shares if the non-employee Director serves on three or more of such
Board committees. The exercise price per share of such options will be
the fair market value of the Common Stock on the day before the date of
the grant; such exercise price will be payable in cash or in shares of
Common Stock. The options will become exercisable for one-third of the
underlying shares on each of the first three anniversaries of the date of
grant. The options will expire at the earlier of ten years after the date
of grant, one-year after cessation of service on the Board of Directors
due to death or disability, or upon cessation of service on the Board of
Directors for any other reason.
John A. Couri, who resigned as Chairman of the Board and Co-Chief
Executive of the Company during 1994, will serve as a consultant to the
Company's Chief Executive Officer and Board of Directors. The consulting
agreement provides for an annual consulting fee of $150,000 from
January 1, 1995 through December 31, 1999 with automatic extensions for
successive one-year periods unless written notice is given by either party
of its intention not to further extend the agreement.
9
Compensation Committee Interlocks and Insider Participation
The Compensation Committee presently consists of Mr. Diehl
and Ms. Stackhouse. The Compensation Committee is responsible for
reviewing and making recommendations to the Board of Directors about
remuneration of the Company's executive officers as well as for
determining the amount and distribution of bonuses paid under the
Company's Incentive Compensation Plan and stock options awarded under the
Company's stock option plans. The Compensation Committee held one meeting
during the fiscal year ended January 29, 1995. Ms. Stackhouse, a
Director, is the President and an owner of Fenton Hill Florida, Inc.,
which is 25% owned by the Company and which has certain arrangements for
the purchase of merchandise and services from the Company. For the
Company's fiscal year ended January 29, 1995, such arrangements included
the payment of approximately $180,000 for services rendered and the
purchase of approximately $671,000 of merchandise, at cost. On April 28,
1994, Fenton Hill Florida, Inc. redeemed 3.2 shares of its own stock from
the Company for $775,000, leaving the Company with 1.7 shares or 25% of
the outstanding common stock. A total of $75,000 was paid to the Company
upon execution of the agreement and a promissory note for $700,000 was
signed. The note is payable in five equal installments beginning April
1997. Mr. Diehl is a member of the executive committee of Gebr.
Heinemann, a partnership which is a greater than five percent stockholder
of the Company.
Compensation Committee Report on Executive Compensation
The Compensation Committee is responsible for reviewing and making
recommendations to the Board of Directors with respect to the Company's
executive compensation policies. In addition, the Compensation Committee
determines on an annual basis the compensation to be paid to the Chief
Executive Officer and each of the other executive officers of the Company.
Compensation Philosophy
The Company's compensation programs for executive officers are
designed to enable the Company to:
* Hire, reward, motivate and retain the highest quality managers
possible.
* Match the Company's compensation plans to its business
strategies, as well as to the external business environment.
* Align the executive officers' interest with those of
stockholders by providing a significant portion of incentive
compensation in the form of Company stock options.
* Emphasize the relationship between pay and performance by
placing a significant portion of compensation at risk through
the Company's Incentive Compensation Plan.
Executive annual compensation levels (base salary and incentive
compensation awards) are targeted at the median of compensation paid by
comparably positioned companies for like jobs including the companies used
in the performance graph on page 12 of this Proxy Statement (the "Peer
Group").
10
Compensation Elements
Base Salary
In determining an executive officer's base salary, the
responsibilities of the position, the officer's experience, individual
performance, and the competitive marketplace, including a comparison of
salaries paid within the Peer Group, are considered. Based on the most
recent information available, the base salary for the Chief Executive
Officer, Alfred Carfora, ranked below the median base salary relative to
the compensation paid by the Peer Group, and the four other most highly
compensated executive officers' base salaries ranked at the median
relative to the compensation paid by the Peer Group.
Incentive Compensation Plan
Cash bonuses are provided to senior and other key executives under
the Company's Incentive Compensation Plan (the "Plan") which rewards
employees based on performance relative to predetermined objectives
established for the year. Under the Plan, the amount for distribution to
employees can be up to five percent of the Company's net pre-tax profits,
as defined in the Plan; except a lesser percentage applies if pre-tax
profits do not exceed $6,000,000. The Compensation Committee decided to
exclude from the determination of the applicable net pre-tax profits the
effects of the restructuring charges and the change in method of
evaluating the recoverability of intangible assets, which the Compensation
Committee considered extraordinary items resulting from factors outside of
the Company's control. For fiscal 1995, $1,180,000 was set aside for
distribution as bonuses under the Plan. Individual bonus awards were
determined by subjectively evaluating each employee's performance toward
Company, divisional or departmental objectives established for the year.
No specific performance measures were defined.
Stock Options
The last principal component of compensation arises from the
Company's grant of stock options under the Company's 1989 Stock Option
Plan. Stock option grants are designed to more closely align the interests
of management with those of stockholders, and because the full value of an
employee's compensation package cannot be realized unless stock price
appreciation occurs over a number of years, stock option grants are
utilized to retain key employees and to provide an incentive for them to
create long-term shareholder value. In granting stock options under the
1989 Stock Option Plan, the Committee considered (i) the recipient's level
of responsibility, (ii) the recipient's specific function within the
Company's overall organization; (iii) the recipient's performance toward
Company, divisional or departmental objectives established for the year;
(iv) the number of options granted to executive officers by the other
companies included in the Peer Group; and (v) the amount of options
currently held by the executive officer. The 1989 Stock Option Plan is
administered by the Compensation Committee and provides that no one
person, including executive officers, may be granted options for the
purchase of more than 250,000 shares in any fiscal year (subject to
adjustments as noted in the 1989 Stock Option Plan in order to prevent
dilution or enlargement of the rights of optionees).
Benefits
The Company provides its executives with medical and other benefits
that are generally available to its employees.
11
Tax Compliance Policy
Section 162(m) of the Internal Revenue Code generally limits to
$1,000,000 the tax deductible compensation paid to the Chief Executive
Officer and the four other most highly paid executive officers who are
employed as executive officers on the last day of the year. However,
the limitation does not apply to performance-based compensation
provided certain conditions are satisfied.
The Company's policy is generally to preserve the federal income tax
deductibility of compensation paid, to the extent feasible. The
Compensation Committee believes that the incentive compensation and stock
option awards earned for the fiscal year 1995 and compensation arising
from exercise of stock options granted in fiscal 1995 will be deductible
by the Company.
The Compensation Committee considers its primary goal to be the
design of compensation strategies that further the best interests of the
Company and its stockholders. To the extent not inconsistent with that
goal, the Compensation Committee will attempt where practical to use
compensation policies and programs that preserve the deductibility of
compensation expenses. The Compensation Committee reserves the right to
use its judgment, where merited by the Compensation Committee's need for
flexibility to respond to changing business conditions or by an
executive's individual performance, to nevertheless authorize compensation
payments which may not, in a specific case, be fully deductible by the
Company.
Chief Executive Officer Compensation
The compensation program for Alfred Carfora, the Company's Chief
Executive Officer, including salary, annual cash incentive and stock
options was determined using the criteria set forth above. As with the
other executive officers, emphasis is placed on incentive compensation,
with approximately 33% of his fiscal year 1995 compensation (salary and
cash bonus) being incentive based.
Three major factors affected the actions of the Compensation
Committee in fiscal 1995 regarding the compensation of Mr. Carfora :
* On May 1, 1994, the Company purchased Inflight Sales Group
Limited which became the Company's fourth
operating division.
* On May 23, 1994, John A. Couri resigned as Co-Chief Executive
Officer and announced his retirement as Chairman of the Board
effective December 31, 1994. The Board of Directors appointed
Alfred Carfora Chief Executive Officer effective May 23, 1994.
* On November 2, 1994, the Company announced that the Board of
Directors had approved a restructuring plan for the Company
which included store and business closures and workforce
reductions.
Acknowledging the significant increase in Mr. Carfora's
responsibilities, the Compensation Committee established an initial base
salary for the Chief Executive Officer of $325,000. Mr. Carfora's base
salary increased 18% during fiscal 1995, but remains below the median base
salary for Chief Executive Officers included in the Peer Group.
Mr. Carfora earned an incentive compensation award of $150,000 for
the fiscal year ended January 29, 1995, which falls below the median bonus
award of Chief Executive Officers that are included in the Peer Group. Mr.
12
Carfora was also granted options to purchase 125,000 shares of the
Company's Common Stock under the 1989 Stock Option Plan, out of a
potential range of zero to 250,000 shares. The exercise price of the stock
options was equal to the fair market value per share on the date preceding
the grant.
The Compensation Committee determined the size of the awards after
an evaluation of Mr. Carfora's increased responsibilities, his
leadership in the implementation of plans to control costs and streamline
operations reflected in the Company's restructuring plan and his overall
ability to manage and lead the Company.
Heribert Diehl
Susan H. Stackhouse
Members of the Compensation Committee.
Performance Graph
The following graph compares the cumulative total return on a
$100 investment in the Company's Common Stock against the cumulative total
return on a similar investment in (i) the Standard & Poor's Mid-Cap 400
Stock Index and (ii) a group of five other specialty retail companies,
consisting of: CML Group, Inc., Pier 1 Imports, Inc., Sharper Image Corp.,
Tiffany & Co. and Williams-Sonoma, Inc. The graph assumes that all
investments were made on January 31, 1990 and are held through the
Company's fiscal year ended January 29, 1995 and that all dividends are
reinvested.
[Insert Graph]
Duty Free Specialty Retail Standard & Poor's
Date International Companies Mid-Cap 400
- - --------------- ------------- --------------- ----------------
January 31, 1990 $100 $100 $100
January 31, 1991 $142 $ 87 $112
January 31, 1992 $437 $127 $158
January 31, 1993 $195 $151 $176
January 31, 1994 $171 $148 $203
January 29, 1995 $ 82 $136 $193
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS,
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information as to the
number of shares of Common Stock owned, as of March 31, 1995 (except as
noted in notes (4) and (5) below), by each person who is known by the
Company to beneficially own more than 5% of the Common Stock, each
Director of the Company, each executive officer named in the Summary
Compensation Table and all executive officers and Directors of the Company
as a group. A person is a beneficial owner if such person has or shares
voting power or investment power. Each beneficial owner has sole voting
and investment power unless otherwise noted. At March 31, 1995, there
were 27,243,550 shares of Common Stock outstanding. Except as noted in
the footnotes below, the address of all stockholders, Directors, executive
officers, nominees and voting trustees identified in the table and
accompanying footnotes is in care of the Company's principal executive
offices at 63 Copps Hill Road, Ridgefield, Connecticut 06877.
Number of Shares Percentage of
of Common Stock Outstanding
Name of Beneficial Owner Beneficially Owned Common Stock
Gebr. Heinemann(1)(2) 4,571,664 16.8%
John A. Couri(2)(3) 3,408,458 12.4
FMR Corp.(4) 3,157,000 11.6
The Capital Group Companies,
Inc.(5) 2,541,500 9.3
David H. Bernstein(2)(6) 2,303,191 8.4
Carl Reimerdes(2)(7) 1,714,431 6.3
Heribert Diehl(1)(2)(8) 909,456 3.3
Alfred Carfora(2)(9) 225,895 *
Seymour S. Yaffe(10) 203,996 *
Jack Africk(11) 44,767 *
Gerald F. Egan(12) 38,434 *
Morris W. Offit(13) 15,000 *
Susan H. Stackhouse(14) 7,000 *
All executive officers and
Directors as a group
(10 persons)(15) 7,080,302 25.6%
* Represents less than 1% of the issued and outstanding Common
Stock.
13
(1) Heribert Diehl, a member of the executive committee of Gebr.
Heinemann, a partnership, is a Director of the Company. The Company believes
that certain members of the Heinemann family who are partners in Gebr.
Heinemann may be deemed to be indirect beneficial owners of the Common Stock
owned
by Gebr. Heinemann.
(2) The Stockholders' Agreement, among certain of the principal
stockholders of the Company (including Gebr. Heinemann, Heribert Diehl,
David H. Bernstein, Patricia B. Bernstein (Mr. Bernstein's wife),
trusts for two of the children of Mr. and Mrs. Bernstein (who are the
trustees), the Bernstein Family Voting Trust of which Mr. Bernstein is
voting trustee, John A. Couri, Elaine Couri (Mr.Couri's wife), a trust
for the son of Mr. and Mrs. Couri (who are the trustees), the Jeffrey
A. Bernstein Voting Trust of which Mr. Couri is voting trustee, Carl
Reimerdes, Patricia A. Reimerdes (Mr. Reimerdes' wife), Alfred Carfora,
John Tilson, Mr.Tilson as trustee of trusts for two of the children of
Mr. and Mrs. Reimerdes, and Shale D. Stiller as trustee of a trust for
Jeffrey A. Bernstein), imposes certain restrictions on the parties'
ability to transfer their shares of Common Stock subject to the Stockholders'
Agreement, other than transfers to certain permitted transferees, certain de
minimis transfers and certain transfers by the estate of a stockholder or a
stockholder's spouse. Because of these restrictions, the parties to the
Stockholders' Agreement may be deemed to beneficially own, as a group through
shared dispositive power only, the 11,047,017 shares of Common Stock, or
approximately 41% of the outstanding class of Common Stock, subject
to the Stockholders' Agreement. The number of shares of Common Stock
reported in this table excludes, however, any deemed beneficial ownership by
virtue of the Stockholders' Agreement. The Stockholders' Agreement will
terminate no later than September 17, 1995.
(3) This amount includes 203,080 shares of Common Stock held in the
Jeffrey A. Bernstein Voting Trust, for which Mr. Couri is the sole voting
trustee as described below in footnote (6). Mr. Couri disclaims any
economic interest in the shares of Common Stock held in the
Jeffrey A. Bernstein Voting Trust. The amount also includes 1,790,326
shares of Common Stock beneficially owned by Messrs. Reimerdes
and Carfora pursuant to the IDF Services Voting Trust, for which
Mr. Couri is sole voting trustee, and 24,947 shares of Common Stock
held by former stockholders of IDF Services under an escrow agreement
pursuant to which Mr.Couri has been appointed sole voting trustee for
such shares. Mr. Couri disclaims any economic interest in such 1,790,326
and 24,947 shares of Common Stock. The IDF Services Voting Trust will
terminate no later than September 17, 1995, and the escrow agreement
will terminate on June 2, 1997. The amount also includes stock options
exercisable within 60 days after March 31, 1995 to purchase approximately
56,666 shares of Common Stock.
(4) The information as to the number of shares beneficially owned as
of December 31, 1994 is provided in a Schedule 13D filed with the
Securities and Exchange Commission dated February 9, 1995 by FMR
Corporation ("FMR") and certain of its affiliates and associates. Fidelity
Management & Research Company ("Fidelity"),a registered investment
advisor and wholly owned subsidiary of FMR, is the beneficial owner of
2,748,600 shares as a result of acting as investment advisor to the
Fidelity Funds, voting power over which resides with the Funds' Board of
Directors. Edward C. Johnson 3rd owns 24.9% of the outstanding voting
common stock of FMR, of which Mr. Johnson serves as chairman. The
principal offices of FMR and Fidelity are 82 Devonshire Street, Boston,
Massachusetts 02109. All of the foregoing information is based
upon FMR's 13D dated February 9, 1995.
(5) The Capital Group Companies, Inc. has reported that it is the
parent company of Capital Research and Management Company ("CRMC") and Capital
Guardian Trust Company ("CGTC"). This stockholder has reported that its
address is 333 South Hope Street, Los Angeles, California 90071. It
further states that CRMC and CGTC exercise investment discretion with
respect to 1,776,500 and 765,000 shares, respectively, of Common Stock
which is owned by various institutional investors. All of the
foregoing information is based on the number of shares reported as
beneficially owned at December 31, 1994 by The Capital Group Companies,
Inc., CRMC and CGTC, and upon information contained in this
stockholder's Schedule 13G dated February 8, 1995.
(6) This amount includes 1,170,720 shares of Common Stock held in
the Bernstein Family Voting Trust, for which Mr. Bernstein is the sole
voting trustee and has sole voting and dispositive powers. This amount
excludes 203,080 shares of Common Stock held in the Jeffrey A.
Bernstein Voting Trust, for which Mr. Couri is the sole voting trustee
and has sole voting and dispositive powers as described above in
14
footnote (3). Both voting trusts will terminate on September 17, 1995.
The amount also includes stock options exercisable within 60 days after
March 31, 1995 to purchase approximately 56,666 of Common Stock.
(7) This amount includes 600 shares of Common Stock owned by Mr.
Reimerdes's wife and children and 65,712 shares of Common Stock held
in a voting trust for which Mr.Reimerdes is the sole voting trustee
and has sole voting and dispositive powers. The voting trust will
terminate on September 17, 1995. The amount also includes stock
options exercisable within 60 days after March 31, 1995 to purchase
approximately 50,000 shares of Common Stock.
(8) This amount includes stock options exercisable within 60 days
after March 31, 1995 to purchase approximately 34,334 shares of
Common Stock.
(9) This amount includes stock options exercisable within 60 days
after March 31, 1995 to purchase approximately 50,000 shares of Common
Stock.
(10) This amount includes 45,404 shares of Common Stock held in the
Yaffe Voting Trust, for which Mr. Yaffe is the sole voting trustee and
has sole voting and dispositive powers. The Yaffe Voting Trust will
terminate on September 17, 1995. The amount also includes stock options
exercisable within 60 days after March 31, 1995 to purchase
approximately 46,600 shares of Common Stock.
(11) This amount includes stock options exercisable within 60 days
after March 31, 1995 to purchase approximately 40,667 shares of Common
Stock.
(12) This amount includes stock options exercisable within 60 days
after March 31, 1995 to purchase approximately 37,334 shares of Common
Stock.
(13) This amount includes stock options exercisable within 60 days
after March 31, 1995 to purchase approximately 11,000 shares of Common
Stock.
(14) This amount includes 100 shares of Common Stock owned by Ms.
Stackhouse's husband. The amount also includes 100 shares of Common Stock
held in the Fenton Hill Florida Profit Sharing Trust, for which Ms.
Stackhouse is the trustee and one of the beneficiaries. This amount
includes stock options exercisable within 60 days after March 31, 1995
to purchase approximately 6,000 shares of Common Stock.
(15) This amount excludes Common Stock owned by Gebr. Heinemann.
The amount also includes stock options exercisable within 60 days
after March 31, 1995 to purchase approximately 389,267 shares of Common
Stock.
15
CERTAIN TRANSACTIONS
See "Compensation of Directors" on page 8 and "Compensation
Committee Interlocks and Insider Participation" on page 9.
PROPOSAL 2 - RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
At the Annual Meeting, the Company's stockholders will be
asked to ratify the appointment of KPMG Peat Marwick LLP as the Company's
Independent Auditors for the fiscal year ending January 28, 1996. The
Company has been advised by KPMG Peat Marwick LLP that none of its members
has any financial interest in the Company. For the fiscal year ended
January 29, 1995, KPMG Peat Marwick LLP was not engaged by the Company for
any professional services other than audit, tax and other related
services. It is expected that representatives of KPMG Peat Marwick LLP,
the Company's Independent Auditors, will be present at the Annual Meeting
to respond to appropriate questions of stockholders and to make a
statement if they so desire.
Vote Required
The affirmative vote of a majority of votes cast is required
to ratify the appointment of KPMG Peat Marwick LLP as the Company's
Independent Auditors for the fiscal year ending January 28, 1996.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE RATIFICATION OF THE APPOINTMENT OF
KPMG PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING JANUARY 28, 1996.
OTHER MATTERS
The Board of Directors does not know of any matters to be
presented for consideration other than the matters described in the Notice
of Annual Meeting, but if other matters are presented, it is the intention
of the persons named in the accompanying Proxy to vote on such matters in
accordance with their judgment.
16
STOCKHOLDER PROPOSALS FOR THE 1996
ANNUAL MEETING OF STOCKHOLDERS
Stockholder proposals to be presented at the 1996 Annual
Meeting of Stockholders must be received, in writing, by the Secretary of
the Company at the Company's principal executive offices no later than
December 22, 1995 in order to be included in the Company's proxy materials
relating to that meeting.
REPORT ON FORM 10-K
The Company's Annual Report on Form 10-K for the fiscal year
ended January 29, 1995, filed with the Securities and Exchange Commission,
is available to stockholders, without charge, upon written request.
Exhibits to the Form 10-K will be furnished upon payment of $.50 per page,
with a minimum charge of $5.00. Requests for copies should be directed to
Duty Free International, Inc., 63 Copps Hill Road, Ridgefield, Connecticut
06877, Attention: Investor Relations Administrator.
SOLICITATION OF PROXIES
The accompanying Proxy is solicited by the Company and the
cost of such solicitation will be borne by the Company. Proxies may be
solicited by officers, Directors and employees of the Company, none of
whom will receive any additional compensation for their services.
Solicitation of Proxies may be made personally or by mail, telephone,
telegraph, facsimile or messenger. The Company will pay persons holding
shares of Common Stock in their names or in the names of nominees, but not
owning such shares beneficially, such as brokerage houses, banks and other
fiduciaries, for the reasonable expense of forwarding soliciting materials
to their principals.
Ridgefield, Connecticut
April 14, 1995
17
PROXY PROXY
DUTY FREE INTERNATIONAL, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD AT THE SHERATON INNER HARBOR HOTEL,
300 SOUTH CHARLES, STREET, BALTIMORE, MARYLAND 21201, FRIDAY, MAY 19,
1995 AT 1:30P.M., BALTIMORE TIME.
The undersigned hereby appoints ALFRED CARFORA and JOHN A. COURI,
jointly and severally, proxies, with full powers of substitution, to
represent and vote all shares of Common Stock which the undersigned would be
entitled to vote at the 1995 Annual Meeting of Stockholders of Duty Free
International, Inc., and any adjournments of postponements thereof, upon
any and all matters which may properly be brought before this Meeting,
provided that said shares shall be voted as specified on the matters
referred to below which are more fully set forth in the Proxy Statement
dated April 14, 1995.
The Board of Directors Recommends a Vote FOR Items 1 and 2.
Item 1 - Election of Directors: Alfred Carfora, Susan H. Stackhouse
FOR all nominees listed WITHHOLD AUTHORITY
(except as marked below)[ ] to vote for all nominees listed [ ]
(To withhold authority for any individual nominee, write that nominee's
name immediately below)
- - ----------------------------------------------------------------------------
Item 2 - Ratification of Appointment of KPMG Peat Marwick,
LLP as the Company's Independent Auditors for the fiscal year ended
January 28, 1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
FOR ITEMS 1 AND 2. THE PROXIES MAY VOTE, IN THEIR SOLE DISCRETION, UPON ANY
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THIS MEETING AND ANY ADJOURNMENTS
OR POSTPONEMENTS THEREOF. THE UNDERSIGNED HEREBY REVOKES ALL PROXIES
PREVIOUSLY GRANTED.
Please sign exactly as your name appears hereon.
Executors, administrators, trustees, etc. should so
indicate when signing. If shares are held
jointly, each holder should sign.
-------------------------------------------
Signature
-------------------------------------------
(Signature)
Dated:
------------------, 1995