SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of
the Commission Only (as
permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Stein Mart, Inc.
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
Stein Mart, Inc.
---------------
NOTICE AND PROXY STATEMENT
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 12, 1997
TO THE HOLDERS OF COMMON STOCK:
PLEASE TAKE NOTICE that the annual meeting of stockholders of Stein
Mart, Inc. will be held on Monday, May 12, 1997, at 2:00 P.M., local time, at
The Jacksonville Hilton Towers, 1201 Riverplace Boulevard, Jacksonville,
Florida.
The meeting will be held for the following purposes:
1. To elect a Board of Directors for the ensuing year and until their
successors have been elected and qualified.
2. To approve an increase in the number of shares authorized for
issuance under the Stein Mart Employee Stock Plan by 1,500,000
shares.
3. To approve the adoption of the Stein Mart, Inc. Employee
Stock Purchase Plan.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The stockholders of record at the close of business on March 31, 1997,
will be entitled to vote at the annual meeting.
It is hoped you will be able to attend the meeting, but in any event we
will appreciate it if you will date, sign and return the enclosed proxy, as
promptly as possible. If you are able to be present at the meeting you may
revoke your proxy and vote in person.
By Order of the Board of Directors,
James G. Delfs
Secretary
Dated: April 4, 1997
Stein Mart, Inc.
1200 Riverplace Boulevard
Jacksonville, Florida 32207
---------------
PROXY STATEMENT FOR ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD MAY 12, 1997.
This Proxy Statement and the enclosed form of proxy are being sent to
stockholders of Stein Mart, Inc. on or about April 4, 1997 in connection with
the solicitation by the Company's Board of Directors of proxies to be used at
the Annual Meeting of Stockholders of the Company. The meeting will be held
on Monday, May 12, 1997 at 2:00 P.M., local time, at The Jacksonville Hilton
Towers, 1201 Riverplace Boulevard, Jacksonville, Florida.
The Board of Directors has designated Jay Stein and John H. Williams,
Jr., and each or either of them, as proxies to vote the shares of common
stock solicited on its behalf. If the enclosed form of proxy is executed and
returned, it may nevertheless be revoked at any time insofar as it has not
been exercised by (i) giving written notice to the Secretary of the Company,
(ii) delivery of a later dated proxy, or (iii) attending the meeting and
voting in person. The shares represented by the proxy will be voted unless
the proxy is mutilated or otherwise received in such form or at such time as
to render it not votable.
VOTING SECURITIES
The record of stockholders entitled to vote was taken at the close of
business on March 31, 1997. At such date, the Company had outstanding and
entitled to vote 22,967,016 shares of common stock, $.01 par value. Each
share of common stock entitles the holder to one vote. Holders of a majority
of the outstanding shares of common stock must be present in person or
represented by proxy to constitute a quorum at the annual meeting.
The following table shows the name, address and beneficial ownership as
of February 20, 1997 of each person known to the Company to be the beneficial
owner of more than 5% of its outstanding common stock:
Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
---------------- -------------------- --------
Jay Stein 9,086,459(1) 39.8%
1200 Riverplace Boulevard
Jacksonville, Florida 32207
FMR Corp. 2,574,400(2) 11.3%
82 Devonshire Street
Boston, Massachusetts 02109
----------------
(1) Includes 8,329,109 shares held by Stein Ventures Limited Partnership
which is 100% controlled by Mr. Stein and 757,350 shares held by the Jay
and Cynthia Stein Foundation Trust over which Mr. Stein has sole voting
and dispositive power as trustee of the Foundation.
(2) According to a Schedule 13G filed February 14, 1997, Fidelity
Management & Research Company ("Fidelity") a wholly owned
subsidiary of FMR Corp. and an investment advisor registered under
Section 203 of the Investment Advisors Act of 1940 along with
Fidelity Management Trust Company, a wholly-owned subsidiary of FMR
Corp. and a bank as defined in Section 3(a)(6) of the Securities
Exchange Act of 1934 are considered "beneficial owners" in the
aggregate of 2,574,400 shares, or 11.3% of shares outstanding of the
Company's common stock, which shares were acquired for investment
purposes by certain advisory clients.
1
As of February 20, 1997, all directors and executive officers of the
Company as a group owned beneficially 9,610,739 shares of the Company's
common stock, or 41.2% of the total shares outstanding. In computing the
number of shares owned beneficially by directors and executive officers of
the Company as a group, shares subject to options that are not exercisable
within 60 days have been excluded.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons owning more than ten
percent of the Company's common stock to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of common stock and other equity securities of the Company and to
furnish the Company with copies of all such reports. To the Company's
knowledge, based solely on review of copies of such reports furnished to the
Company, all Section 16(a) filing requirements applicable to its directors,
officers and greater than ten percent beneficial owners have been complied
with.
ELECTION OF DIRECTORS
At the meeting, a Board of eight (8) directors will be elected for one
year and until the election and qualification of their successors. Directors
will be elected by a plurality of votes cast by shares entitled to vote at
the meeting. The accompanying proxy will be voted, if authority to do so is
not withheld, for the election as directors of the persons named below who
have been designated by the Board of Directors as nominees. Each nominee is
at present available for election, is a member of the Board and, with the
exceptions of Pete Carpenter and Michael D. Rose who were appointed to the
Board in late 1996 and early 1997, was elected to the Board by the Company's
stockholders. If any nominee should become unavailable, which is not now
anticipated, the persons voting the accompanying proxy may in their
discretion vote for a substitute. There are no family relationships between
any directors or executive officers of the Company. After four successful
years of serving on the Stein Mart board, Robert D. Davis retired at the end
of 1996. Information concerning the Board's nominees, based on data furnished
by them, is set forth below.
The Board of Directors of the Company recommends a vote "for" the
election of each of the following nominees. Proxies solicited by the Board
will be so voted unless stockholders specify in their proxies a contrary
choice.
Shares of
Year Company Common
Positions with the First Stock Owned
Company; Principal Became Beneficially as
Occupations During Director of February 20,
Name Past Five Years; of the 1997
Age Other Directorships Company(1) (% of Class)(2)
Jay Stein*# Chairman of the Board of 1968 9,086,459(3)
(51) the Company since 1989; (39.8%)
President of the Company
from 1979 to 1990; director
of American Heritage Life
Insurance Company and Barnett
Bank of Jacksonville, N.A.,
both based in Jacksonville,
Florida and Promus Hotel
Corporation based in Memphis,
Tennessee
John H. President (since 1990) and 1984 401,500(4)
Williams, Jr.* director of the Company; (1.7%)
(59) Executive Vice President
from 1980 to 1990; director
of SunTrust Bank, North
Florida, N.A. in
Jacksonville, Florida
2
Mason Allen* Senior Executive Vice 1991 71,900(4)(5)
(53) President and Chief (0.3%)
Merchandising Officer
(since 1990) and director
of the Company; Executive
Vice President and General
Merchandise Manager from
1986 to 1990
Pete Carpenter# Director of the Company; 1996 -
(55) President and Chief
Executive Officer of CSX
Transportation, Inc. since
1992; director of Barnett
Banks, Inc., Barnett Bank
of Jacksonville, N.A.,
American Heritage Life
Insurance Company, Regency
Realty Corporation and
Florida Rock Industries,
Inc.
Albert Ernest, Director of the Company; 1991 17,960(4)
Jr. +# President of Albert Ernest (0.1%)
(66) Enterprises; President and
Chief Operating Officer of
Barnett Banks, Inc., a bank
holding company in Jacksonville,
Florida, from 1988 to 1991;
director of Florida Rock
Industries, Inc., a publicly-
held construction materials
company, Florida Rock Industries,
Inc.'s affiliate, FRP Properties, Inc.,
a transportation and real estate
company, Emerald Funds, Wickes
Lumber Company and Regency Realty
Corporation
Mitchell W. Director of the Company; 1991 9,960(4)(6)
Legler# sole shareholder of
(54) Mitchell W. Legler, P.A.,
general counsel to the
Company since 1991; partner
of Foley & Lardner from
1991 to 1995; partner of
Commander Legler Werber
Dawes Sadler & Howell from
1976 until its merger with
Foley & Lardner in 1991;
director of IMC Mortgage
Company
Michael D. Rose+ Director of the Company; 1997 -
(54) Chairman of Promus Hotel
Corporation; Chairman of
Harrah's Entertainment,
Inc. from 1995 to January
1997; Chairman of The
Promus Companies,
Incorporated from 1990 to
1995; Chief Executive
Officer of The Promus
Companies, Incorporated
from 1990 to 1994; director
of Ashland, Inc., Darden
Restaurants, Inc., First
Tennessee National
Corporation, General Mills,
Inc. and Promus Hotel
Corporation
3
James H. Winston+# Director of the Company; 1991 22,960(4)(7)
(63) Chairman of LPMC, a real (0.1%)
estate investment firm
based in Jacksonville,
Florida, since 1979;
President of Omega
Insurance Company, Citadel
Life & Health Insurance
Company and Wellington
Investments since 1983;
director of Barnett Bank of
Jacksonville, N.A., FRP
Properties, Inc. and
Winston Hotels
------------------------
* Member of the Executive Committee, any meeting of which also must
include any one of the outside directors.
+ Member of the Audit Committee.
# Member of the Compensation Committee.
(1) Directors are elected for one-year terms.
(2) Where percentage is not indicated, amount is less than 0.1% of total
outstanding common stock. Unless otherwise noted, all shares are owned
directly, with sole voting and dispositive powers. Excludes shares
subject to options that are not exercisable within 60 days.
(3) Includes 8,329,109 shares held by Stein Ventures Limited Partnership
which is 100% controlled by Mr. Stein and 757,350 shares held by the Jay
and Cynthia Stein Foundation Trust over which Mr. Stein has sole voting
and dispositive power as trustee of the Foundation.
(4) Includes the following shares which are not currently outstanding but
which the named holders are entitled to receive upon exercise of
options:
John H. Williams, Jr 398,500
Mason Allen 71,000
Albert Ernest, Jr. 3,960
Mitchell W. Legler 3,960
James H. Winston 3,960
The shares described in this note are deemed to be outstanding for the
purpose of computing the percentage of outstanding Common Stock owned by
each named individual and by the group, but are not deemed to be
outstanding for the purpose of computing the percentage ownership of any
other person.
(5) Excludes 150 shares held by Mr. Allen's wife in an Individual
Retirement Account.
(6) These shares are owned by Mr. Legler and his wife as tenants by the
entirety.
(7) Includes 6,450 shares owned through corporations of which Mr. Winston
is the sole stockholder.
Executive Officers
The executive officers of the Company are:
Jay Stein Chairman and Chief Executive Officer
John H. Williams, Jr. President and Chief Operating Officer
Mason Allen Senior Executive Vice President and Chief
Merchandising Officer
Michael D. Fisher Executive Vice President, Stores
James G. Delfs Senior Vice President, Finance and Chief
Financial Officer
4
For additional information regarding Messrs. Stein, Williams and Allen see
the Directors' table on the preceding pages.
Mr. Fisher joined the Company in August, 1993 as Executive Vice President,
Stores. From 1988 to 1993, Mr. Fisher was Senior Vice President of Stores
for Millers Outpost, Inc., a California based chain of apparel stores.
Mr. Delfs joined the Company in May, 1995 as Senior Vice President, Finance
and Chief Financial Officer. From 1993 to 1994 he was Vice President, Chief
Financial Officer for Helzberg's Diamond Shops, Inc., a chain of jewelry
stores and from 1988 to 1992 he was Vice President, Chief Financial Officer
for Abercrombie & Fitch, Inc., a division of The Limited, Inc.
Board of Directors and Standing Committees
Regular meetings of the Board of Directors are held four times a year,
normally in the first month of each quarter. During 1996, the Board held a
total of four regular meetings. All directors attended at least 75% of all
meetings of the Board and Board committees on which they served during 1996.
The Board of Directors has established three standing committees: an
Executive Committee, an Audit Committee and a Compensation Committee, which
are described below. Members of these committees are elected annually at the
regular Board meeting held in conjunction with the annual stockholders'
meeting. The Board of Directors presently does not have a nominating
committee.
Executive Committee. The Executive Committee is comprised of Messrs.
Stein (Chairman), Williams and Allen, plus any one outside director. Subject
to the limitations specified by the Florida Business Corporation Act, the
Executive Committee is authorized by the Company's bylaws to exercise all of
the powers of the Board of Directors when the Board of Directors is not in
session. The Executive Committee held no meetings during 1996.
Audit Committee. The Audit Committee is comprised of Messrs. Winston
(Chairman), Ernest and Rose, none of whom is an officer of the Company.
Regular meetings of the Audit Committee are held twice a year, with one
meeting scheduled in conjunction with the annual stockholders' meeting.
During 1996, the Audit Committee held two meetings. The principal
responsibilities of and functions generally performed by the Audit Committee
are reviewing the Company's internal controls and the objectivity of its
financial reporting, making recommendations regarding the Company's
employment of independent auditors, and reviewing the annual audit with the
auditors.
Compensation Committee. The Compensation Committee is comprised of
Messrs. Stein (Chairman), Carpenter, Ernest, Legler and Winston. The
Compensation Committee generally holds four regular meetings per year. During
1996, the Compensation Committee held four meetings. This Committee has the
responsibility for approving the compensation arrangements for senior
management of the Company, including annual bonus compensation. It also
recommends to the Board of Directors, adoption of any compensation plans in
which officers and directors of the Company are eligible to participate. A
subcommittee of the Compensation Committee, comprised of Messrs. Carpenter,
Ernest and Winston ("Option Committee") makes grants of stock options under
the Company's Employee Stock Plan.
COMPENSATION COMMITTEE REPORT TO SHAREHOLDERS
Compensation Philosophy
The Compensation Committee believes that the Company should continue and
further emphasize its philosophy of rewarding performance within the Company,
and of encouraging a long-term view by all the Company's officers and other
managerial personnel.
5
The Company's 1996 fiscal year was a year of considerable achievement
with the Company having increased its net income from $17.8 million for
fiscal year 1995 to $26.0 million for fiscal year 1996, constituting a 46%
increase in net income.
Over the last year, the Company had moved more of its officers to bonus
formulas which were quantitatively driven applying factors which the Company
believed would positively impact the profitability of the Company. That
approach produced excellent results for 1996 and bonuses to officers were
awarded in accordance with those formulas.
Employee Stock Ownership
The Compensation Committee determined that the Company's philosophy of
focusing on long-term value through the grant of stock options and involving
employees in direct ownership of the Company's shares contributed materially
to the Company's success. At the same time, the Compensation Committee noted
that substantially all options available under the Company's current option
plan had been awarded to associates and officers of the Company and, a
substantial portion of those were fully vested. In order to continue to
achieve an alignment of the interest of key employees with the Company's
stockholders, and continue to provide a meaningful incentive for key
employees to remain with the Company, the Compensation Committee determined
that the Company should increase the number of options available for
associates and officers of the Company. In addition, the Compensation
Committee reviewed proposals by management to establish an employee stock
purchase plan enabling employees to acquire ownership of shares of the
Company's common stock at a 15% discount from market. The Compensation
Committee determined that there was a material advantage in adding an
employee stock purchase plan to the Company's option plan and that such plans
would enhance the interest of associates and officers in the Company and
motivate the behavior designed to increase value for the Company's
shareholders.
Accordingly, the Compensation Committee recommended to the Company's
Board of Directors that the Board seek shareholder approval (i) to increase
the number of shares which could be made subject to options under the
Company's stock option plan from 3,000,000 to 4,500,000 (subject to a per
person limit of 500,000 options per year) and (ii) to adopt an employee stock
purchase plan making 400,000 shares available to employees under the plan
over the next four years.
Senior Executives
The Company achieved outstanding results for 1996. Nevertheless, in view
of the Company's bottom-up compensation philosophy, the Compensation
Committee determined that compensation increases for the Company's Chief
Executive Officer and Chief Operating Officer should be modest with rewards
for the excellent achievement of 1996 being reflected in increased bonuses
over bonuses paid in prior years. More specifically, the Compensation
Committee determined:
1. Jay Stein, Chairman and Chief Executive Officer, was awarded an
increase of $30,000, bringing his total compensation to $405,000 per year.
The Compensation Committee also approved a bonus for Mr. Stein of $150,000
(compared to $90,000 for the prior year) in view of the Company's excellent
performance. The Compensation Committee believed the total compensation to be
conservative for a Chief Executive Officer of a corporation with gross sales
in excess of $600,000,000 per annum and was even more conservative when
compared to other entities in the Company's peer group of retailers.
2. John H. Williams, Jr., the Company's President and Chief Operating
Officer, was awarded an increase of $30,000, bringing his total compensation
to $395,000 per year. The
6
Compensation Committee also approved a bonus for Mr. Williams of $150,000
(compared to $90,000 for the prior year) in view of the Company's excellent
performance. As is true for the Company CEO, the Compensation Committee
believed the total compensation to be conservative for a Chief Operating
Officer of a corporation with gross sales in excess of $600,000,000 per
annum and was even more conservative when compared to other entities in the
Company's peer group of retailers.
3. Mason Allen, The Company's Chief Merchandising Officer, received an
increase in base salary of $25,000, bringing his total compensation to
$340,000 per year. Last year, the Compensation Committee had changed the
bonus philosophy for the position of Chief Merchandising Officer from that of
discretionary bonus to a bonus primarily driven by quantitative factors tied
to sales, maintained margin and inventory management. As a result of that
formula and the Company's excellent performance over the year, Mason Allen
was awarded a bonus of $120,000.
4. Michael Fisher, the Company's Executive Vice President of Stores,
received an increase in base salary of $15,000, bringing his total
compensation to $195,000 per year. As is true in the case of the Company's
Chief Merchandising Officer and substantially all positions below that of
Chief Operating Officer, the Executive Vice President of Stores' bonus
compensation was driven by a quantitative formula tied to sales, expenses and
inventory management. As a result of the application of that formula and the
Company's success for the year, the Company's Executive Vice President of
Stores was awarded a bonus of $85,000.
5. James G. Delfs, the Company's Chief Financial Officer, received an
increase in base salary of $10,000, bringing his total compensation to
$145,000 per year. As a result of the Company's success for the year, the
Company's Chief Financial Officer was awarded a discretionary bonus of
$35,000.
Long-Term Incentive Compensation
The Company has an Employee Stock Plan, the purpose of which is to
provide long-term incentives to the Company's key employees. The Compensation
Committee believes that these options are a principal vehicle for motivating
management to work toward long-term growth in stockholder value. Consistent
with the Company's philosophy of providing incentives to key employees at all
levels, options are awarded to a relatively broad base of employees, down
through store managers. Options have been awarded based on positions within
the Company, ability to contribute to the Company's profitability and prior
tenure with the Company. For additional information as to the options held by
executive officers, see the Option Table under "Executive Compensation"
attached to this report.
The employee stock options reflect the Company's philosophy that
officers' and employees' incentive compensation should reflect the same
long-term interests as the Company's shareholders. To encourage continued
service with the Company, the options become exercisable ratably on the
third, fourth and fifth anniversary dates of grant. Additional increases in
the value of the Company's common stock, which benefit all shareholders, will
best serve as the primary incentive to its executive officers.
The Compensation Committee noted that virtually all options available
under the Company's current option plan had been granted and that in order to
continue to achieve the increase in shareholder value resulting from the
advantages of aligning the interest of associates and officers with the
interest of shareholders, it was appropriate to increase the number of shares
subject to the Company's stock option plan to afford shares not only for new
employees of the Company but also to "reload" options for persons who had
exercised options in the past.
7
Additional options would also have new vesting schedules again creating a
material aid in the Company's retention of its key officers and associates.
Accordingly, the Compensation Committee determined that it was appropriate
to recommend to the Company's Board of Directors the addition of 1,500,000
shares to the Company's existing stock option plan.
The Compensation Committee believed that additional benefits could be
obtained consistent with the Company's overall philosophy by facilitating the
actual purchase of shares of the Company's common stock by associates and
officers of the Company. Accordingly, the Compensation Committee agreed to
recommend to the Board of Directors the adoption of an employee stock
purchase plan to enable employees to acquire shares of the Company's common
stock through a payroll withholding plan.
CEO Compensation
The Compensation Committee's policies with respect to the Chief
Executive Officer, Jay Stein, were the same as for the Company's other
executive officers except that the application of the Company's bottom-up
compensation philosophy resulted in the compensation of the Chief Executive
Officer being conservative when compared to the Chief Executive Officers of
other Companies with similar sales in the retail industry. However, in view
of Jay Stein's continuing substantial ownership of shares of the Company's
common stock, the Compensation Committee believed that Mr. Stein's primary
motivation remained that of stock ownership which is most aligned with the
interest of other shareholders of the Company and that conservative
compensation continued to be appropriate under the circumstances.
Mr. Stein is a member of the Compensation Committee. See "Certain
Transactions; Compensation Committee Interlock and Insider Participation."
Mr. Stein abstained from voting on his own compensation at the meeting of
the Compensation Committee at which the annual cash bonuses described
above were awarded.
Certain Tax Matters
Section 162(m) of the Internal Revenue Code, enacted in 1993, precludes
a public corporation from deducting compensation of more than $1 million
each, for its chief executive officer or for any of its four other highest
paid officers. Certain performance-based compensation is exempt from this
limitation. The Company believes that compensation in the form of options to
be granted under the Company's Employee Stock Plan qualifies as performance
based compensation and, consequently, is exempt from this limitation. Because
other forms of compensation to the Company's officers are nowhere near $1
million, the Compensation Committee does not presently have a policy
regarding whether it would authorize compensation that would not be
deductible for the Company for federal income tax purposes by reason of
Section 162(m).
STEIN MART, INC.
COMPENSATION COMMITTEE
Jay Stein, Chairman
Pete Carpenter
Albert Ernest, Jr.
Mitchell W. Legler
James H. Winston
8
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued by the
Company for services rendered during the years indicated to each of the
Company's executive officers whose total salary and bonus exceeded $100,000
during the year ended December 28, 1996. The Company did not grant any
restricted stock awards or stock appreciation rights or make any long-term
incentive plan payouts during the years indicated.
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
------------------- ------------
Name and Other Number
Principal Annual of All Other
Position Year Salary(1) Bonus Compensation Options Compensation(2)
-------- ---- --------- ----- ------------ ------- ---------------
Jay Stein 1996 $372,917 $150,000 (3) - $2,375
Chairman & Chief 1995 $343,750 90,000 (3) - 4,306
Executive Officer 1994 $295,000 90,000 (3) - 4,386
John H. Williams, Jr. 1996 $361,667 $150,000 (3) - $2,375
President & Chief 1995 320,833 90,000 (3) - 4,306
Operating Officer 1994 275,000 90,000 (3) - 4,403
Mason Allen 1996 $313,750 $120,000 (3) - $2,186
Senior Executive 1995 296,250 90,000 (3) - 3,872
Vice President & 1994 255,000 90,000 (3) - 4,499
Chief Merchandising
Officer
Michael D. Fisher 1996 $185,625 $ 85,000 (3) - $1,600
Executive Vice 1995 168,750 50,000 (3) 10,000 3,226
President, Stores 1994 154,000 50,000 $19,008(4) 20,000 -
James G. Delfs 1996 $138,893 $35,000 $26,720(6) - $ 683
Senior Vice President, 1995 96,635(5) 15,000 25,085(6) 25,000 -
Finance & Chief
Financial Officer
-----------------
(1) Includes amounts deferred under the 401(k) features of the Company's
profit sharing plan.
(2) The Company has not yet made a contribution to its profit sharing
plan for 1996, and, accordingly, it is not possible as of the date of
this Proxy Statement to determine the amount of Company contributions
that will be allocated to the accounts of the named executives for
1996. The amounts shown for 1996 represent matching contributions
made by the Company in 1996 for voluntary contributions made by the
named executives. The amounts shown for 1995, include a base
contribution of $1,500 and a discretionary contribution of $496 to
the Profit Sharing plan for Messrs. Stein, Williams, Allen and Fisher
as well as matching contributions made by the Company to the 401(k)
portion of the plan for voluntary contributions made of $2,310 for
Messrs. Stein and Williams, $1,876 for Mr. Allen and $1,230 for Mr.
Fisher. The amounts shown for 1994, include a base contribution of
$1,500 and a discretionary contribution of $822 to the Profit Sharing
plan for Messrs. Stein, Williams and Allen as well as matching
contributions made by the Company to the 401(k) portion of the plan
for voluntary contributions made of $2,064 for Mr. Stein, $2,081 for
Mr. Williams and $2,177 for Mr. Allen.
(3) Excludes certain personal benefits, the total value of which was less
than ten percent of the total annual salary and bonus for each of the
named executives.
(4) The amount shown for 1994 includes $7,613 medical claims, $4,772
personal use of company automobile, $5,174 moving expense reimbursement
and $1,449 miscellaneous.
9
(5) Includes a $20,000 reporting bonus; annualized salary is $135,000.
(6) The amount shown for 1996 includes $4,512 medical claims, $4,751
personal use of company automobile, $16,073 moving expense
reimbursement, and $1,384 miscellaneous. The amount shown for 1995
includes $2,725 personal use of company automobile, $21,514 moving
expense reimbursement and $846 miscellaneous.
Options. None of the executive officers named in the "Summary
Compensation Table" received any stock options or stock appreciation rights
during the year ended December 28, 1996.
The following table sets forth information concerning stock options
exercised by the named executives during the year ended December 28, 1996 and
the number and value of unexercised options as of December 28, 1996 held by
the named executives in the Summary Compensation Table above.
Option Exercises and Year-End Values Table
Value of Unexercised
Number of Unexercised In-the-Money
Shares Options at Options at
acquired December 28, 1996 December 28, 1996
on Value (#) ($)(2)
-- ----- --- ------
exercise realized
Name # ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- - ------ ----------- ------------- ----------- -------------
Jay Stein,
Chairman &
Chief Executive Not Not Not
Officer 0 Applicable None None Applicable Applicable
John H.
Williams, Jr.,
President &
Chief Operat-
ing Officer 500,000 $8,050,051 398,500 76,500 $5,277,085 $833,582
Mason Allen,
Senior
Executive Vice
President &
Chief
Merchandising
Officer 178,000 $2,453,466 0 51,000 $0 $555,722
Michael D.
Fisher,
Executive Vice
President, Not
Stores 0 Applicable 9,900 50,100 $0 $192,500
James G. Delfs,
Senior Vice
President,
Finance &
Chief Financial Not
Officer 0 Applicable 0 25,000 $0 $202,188
-----------------
(1) Value realized is calculated based on the difference between the option
exercise price and the market price of the Company's Common Stock on the
date of exercise multiplied by the number of shares to which the
exercise relates.
(2) Value of unexercised in-the-money options is calculated based on the
difference between the option exercise price and the closing price of
the Company's Common Stock at December 27, 1996, multiplied by the
number of shares underlying the options. The closing price on December
27, 1996 of the Company's Common Stock as reported on the Nasdaq
National Market was $19.5625.
Compensation of Directors. The outside directors receive director's fees
of $10,000 per year, plus $1,500 for each meeting of the Board or any
committee thereof which they attend, and are reimbursed for out-of-pocket
expenses incurred in connection with attending meetings. Pursuant to the
Company's director stock option plan, each outside director receives
non-qualified options to purchase 4,000 shares of common stock of the Company
upon becoming a director.
10
Approximately one-third of the options become exercisable on each of the
third, fourth and fifth anniversary dates of grant at an exercise price
equal to the fair market value of the common stock on the date of grant.
A total of 42,000 shares is reserved for issuance under this plan.
Certain Transactions; Compensation Committee Interlocks and Insider
Participation
The Audit Committee of the Board of Directors is responsible for
evaluating the appropriateness of all related-party transactions.
Set forth below are various transactions involving the Company and
members of the Compensation Committee of the Board of Directors or their
related parties. The Board of Directors does not believe that the
relationships and transactions described below regarding members of the
Compensation Committee adversely affect the performance by the committee of
its duties.
Mr. Stein. Mr. Stein serves as chairman of the Compensation
Committee of the Board of Directors and also serves as the Chairman of the
Board and Chief Executive Officer. Mr. Stein does not participate in
decisions of the Compensation Committee regarding his own compensation as
an executive officer of the Company.
Mr. Stein owns an apartment in New York City which is used periodically
by him and other executives of the Company for business purposes. The Company
reimburses Mr. Stein for the monthly maintenance fees associated with
maintaining the apartment. The aggregate reimbursement for these fees during
1996 was $52,000. Management is not able to determine whether these
arrangements are on terms at least as favorable to the Company as could be
obtained from unaffiliated third parties, but believes that the Company's use
of the apartment benefits the Company by substantially reducing its
executives' incurrence of hotel charges.
Mr. Stein, Chairman of Stein Mart, Inc., serves on the Board of
Directors and is a member of the Compensation Committee of Promus Hotel
Corporation, a Company whose chairman, Michael D. Rose, serves on the
Board of Directors of Stein Mart, Inc.
Mr. Legler. Mr. Legler is the sole shareholder of the law firm of
Mitchell W. Legler, P.A., which serves as general counsel to the Company.
Legal fees received by that firm from the Company were $42,000 for 1996.
COMPARATIVE STOCK PERFORMANCE
The following graph compares the cumulative total stockholder return on
the Company's common stock with the cumulative total return on the Nasdaq
Stock Market (U.S.) Index and the Nasdaq Stock Market Retail Trades Stock
Index, for the period beginning April 22, 1992, the date that trading first
began in the common stock on the Nasdaq National Market following the
Company's initial public offering, and ending December 28, 1996, assuming the
reinvestment of any dividends and assuming the investment of $100 in each.
11
Comparison of Cumulative Total Return Among
Stein Mart, Inc., NASDAQ Stock Market (U.S.) Index
and NASDAQ Stock Market Retail Trade Stocks Index
NASDAQ NASDAQ
Date Stein Mart, Inc. (U.S.) Retail
---- ---------------- ------ ------
04/22/92(1) 100.0 100.0 100.0
06/26/92 87.7 94.6 86.5
09/25/92 133.0 100.4 90.6
12/31/92 213.2 118.0 101.8
03/26/93 205.7 118.6 94.5
06/25/93 228.3 121.0 93.7
09/27/93 271.7 131.9 103.4
12/31/93 217.9 135.5 107.4
03/25/94 220.8 136.8 104.4
06/27/94 192.5 123.1 92.3
09/27/94 158.5 132.4 100.7
12/30/94 144.3 132.4 97.8
03/27/95 116.0 145.4 95.3
06/27/95 155.0 162.6 105.3
09/27/95 124.5 182.0 112.6
12/29/95 124.5 187.3 107.8
03/27/96 167.0 194.5 119.5
06/27/96 203.8 208.6 126.5
09/27/96 251.2 220.3 137.7
12/27/96 221.5 230.7 128.8
-----------------
(1) First date traded
PROPOSAL TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR
ISSUANCE UNDER EMPLOYEE STOCK PLAN
Proposed Amendment. In March, 1997, the Company's Board of Directors
adopted, subject to stockholder approval, an amendment to the Stein Mart
Employee Stock Plan (the "Employee Plan"), increasing the number of shares
authorized for issuance under the Employee Plan by 1,500,000 shares to a
total of 4,500,000 shares (subject to a per person limit of 500,000 options
per year). The Board of Directors believes that the Employee Plan has
substantial benefit for the Company and its stockholders as the plan (i) has
a beneficial effect in aligning the interest of the Company's employees with
those of the Company's stockholders, and (ii) has a vesting schedule which
provides an incentive for the Company's key employees to remain with Stein
Mart to realize the benefit of their options.
Substantially all options available under the existing Employee Plan
have been issued. Moreover, many of those options were issued approximately
five years ago and are now approaching full vesting. Accordingly, to continue
to align the interest of associates and officers with the interest of
shareholders and create a material aid in the Company's retention of officers
and associates, the Compensation Committee determined it is appropriate to
increase the number of shares subject to the Employee Plan. Moreover, the
Company's rapid expansion has created a need for additional shares to be
available for issuance under the Employee Plan to new employees and to those
who have been promoted.
Thus, the Company's Board of Directors approved the proposed increase in
shares authorized for issuance under the Employee Plan to achieve the dual
benefits for the Company and its stockholders described above. The proposed
amendment will be adopted if a majority of the shares voted with respect to
the amendment are voted in favor thereof. For this purpose, abstentions and
broker "non-votes" will not be counted.
12
Option Awards. The Company's Option Committee is made up of Pete
Carpenter, Albert Ernest and James H. Winston. In awarding options for shares
from the increase in number of shares eligible for issuance under the
Employee Plan if the proposed increase is approved by the stockholders, the
Option Committee considered the purposes of the Employee Plan, and
particularly the goal of providing an incentive and reward to key employees
in a position to contribute materially to improving company profits, and the
goal of attracting and retaining employees of outstanding ability. Based on
those considerations, and after reviewing recommendations of management, the
Option Committee voted to award options to those employees shown in the table
set forth below. All of those options were granted at $27.625 per share, the
closing price of the Company's shares on March 14, 1997 (the day of grant).
Moreover, all of the options were granted with five year vesting schedules
providing for no vesting in the first two years and then vesting at 33%, 33%
and 34% in years three, four and five, respectively. All of those grants are
subject to stockholder approval of the proposed increase in shares eligible
for issuance under the Employee Plan described above.
NEW BENEFITS
Stein Mart Employee Stock Plan
Name Number of
Position Options Awarded
-------- ---------------
John H. Williams, Jr. 300,000
President & Chief Operating Officer
Mason Allen 150,000
Senior Executive Vice President
& Chief Merchandising Officer
Michael D. Fisher 100,000
Executive Vice President, Stores
James G. Delfs 50,000
Senior Vice President, Finance
& Chief Financial Officer
All Current Executive Officers 600,000
All Other Employees 587,500
Summary of Employee Plan
Purpose; Eligibility. The purpose of the Employee Plan is to (1) provide
an incentive and reward to key employees in a position to contribute
materially to improving Company profits, (2) aid in attracting and retaining
employees of outstanding ability, and (3) encourage ownership of the
Company's common stock by employees.
Key employees of the Company are eligible for awards under the Employee Plan
other than Jay Stein and any other employees who own more than 10% of the
total combined voting power of the Company's stock. As of March 1, 1997 there
were 226 key employees of the Company, including four executive officers,
considered eligible to receive awards under the Employee Plan.
Administration. The Employee Plan is administered by a committee of at
least three directors who are not eligible to receive awards under the
Employee Plan and who otherwise qualify as "disinterested" persons under Rule
16b-3 under the Securities Exchange Act of 1934. The Option Committee serves
as the administrative committee of the Employee Plan. Subject to the
provisions of the Employee Plan, the Option Committee determines who
qualifies as key
13
employees for purposes of awards, the type and timing of
awards, vesting schedules and other terms and conditions of awards. All
awards are non-transferable.
Stock Options. Options awarded under the Employee Plan may be either
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, which permits the deferral of taxable income related to
the exercise of such options, or non-qualified options not entitled to such
deferral. The Option Committee determines the exercise price of options,
which cannot be less than 100% of the fair market value of the common stock
on the date of grant for incentive stock options, or 50% in the case of
non-qualified options, and also determines the term of options, which cannot
exceed ten years. Options expire three months after termination of employment
with the Company (twelve months in the case of death or disability).
As of February 28, 1997, there were outstanding non-qualified options to
acquire 1,439,680 shares of common stock and incentive options to acquire
182,700 shares of common stock. See the "Options" Table under "Executive
Compensation" above for information on options held by the Company's
executive officers. The following table sets forth information concerning
options held by the groups listed therein as of February 28, 1997:
Group (1) Non-qualified Options Incentive Options
--------- --------------------- -----------------
All current executive
officers 570,800 40,200
All other employees 868,880 142,500
-------------------
(1) Directors who are not employed by the Company are not eligible to
participate in the Employee Plan. No recipients of awards are
associates of either directors or executive officers of the Company.
No person other than John H. Williams, Jr. holds 5% or more of the
total options outstanding under the Employee Plan.
The number of options awarded to each participant was based on the
recipient's potential ability to contribute to the Company's success,
including position within the Company, and, in a number of instances,
previous length of service with the Company.
All outstanding options have exercise prices equal to the fair market
value of the common stock on the date of grant, ranging from $5.00 per share
to $23.50 per share.
14
The following table sets forth information relating to presently
outstanding options:
Outstanding Options
-------------------
No. of Exercise
Type Shares Price
---- ------ -----
Non-qualified 575,641 $ 5.00
Non-qualified 240,550 8.666
Non-qualified 16,500 10.25
Non-qualified 51,000 11.00
Non-qualified 94,000 11.4375
Non-qualified 31,000 11.50
Non-qualified 26,000 13.125
Non-qualified 30,000 13.50
Non-qualified 30,000 14.00
Non-qualified 15,301 15.25
Non-qualified 43,000 15.50
Non-qualified 29,000 15.75
Non-qualified 33,175 16.50
Non-qualified 10,000 17.75
Non-qualified 24,263 18.166
Non-qualified 46,500 19.25
Non-qualified 68,250 20.00
Non-qualified 19,500 20.25
Non-qualified 31,500 22.375
Non-qualified 24,500 23.50
Incentive 182,700 8.666
Approximately one-third of all outstanding options awarded under the Employee
Plan become exercisable on each of the third, fourth, and fifth anniversary
dates of grant. Outstanding options expire if not exercised prior to the
tenth anniversary date of grant. The option exercise price may be paid in
whole or in part in shares of common stock, valued at their closing sale
price on the date of exercise.
As of February 28, 1997, the closing sale price of the common stock on
the Nasdaq National Market was $23.75 per share.
Other Types of Awards. The Employee Plan also permits the award of stock
appreciation rights ("SARs") and restricted stock awards. An SAR entitles the
recipient to receive the difference between the fair market value of the
common stock on the date of exercise and the SAR price, in cash or in shares
of common stock, or a combination of both, as determined in the discretion of
the Option Committee. The SAR price must be at least 50% of the fair market
value of the common stock on the date of grant (100% in the case of SARs
issued in tandem with incentive options). Restricted stock awards entitle the
recipient to receive shares of common stock, subject to forfeiture
restrictions that lapse over time or upon the occurrence of events specified
by the Option Committee, with the shares required to be forfeited if the
recipient ceases to be an employee of the Company before the restrictions
lapse. No SARs or restricted stock awards have been granted under the
Employee Plan and none are presently contemplated, although the Option
Committee has the right to make such grants, subject to the availability of
shares under the Plan.
15
Federal Income Tax Consequences of Options
An optionee does not recognize income for federal income tax purposes
upon the grant of a non-qualified option but must recognize ordinary income
upon exercise, to the extent of the excess of the fair market value of the
underlying shares of common stock on the date of exercise over the exercise
price. The amount of compensation includable in gross income by an optionee
is generally deductible by the Company during the Company's taxable year in
which the income is includable by the optionee provided among other things
that the applicable information reporting requirements are satisfied. Upon
the sale of shares acquired pursuant to the exercise of non-qualified
options, the optionee recognizes capital gain or loss to the extent the
amount realized exceeds the fair market value of the shares on the date of
exercise. If an optionee pays the exercise price of a non-qualified option
solely with cash, the tax basis of the shares received will equal the sum of
the cash plus the amount of compensation income includable by the optionee as
a result of the exercise.
The holder of an incentive option generally recognizes no income for
federal income tax purposes at the time of the grant or exercise of the
option (but the spread between the exercise price and the fair market value
of the underlying shares on the date of exercise generally will constitute a
tax preference item for purposes of the alternative minimum tax). The
optionee generally will be entitled to long term capital gain treatment upon
the sale of shares acquired pursuant to the exercise of an incentive stock
option, if the shares have been held for more than two years from the date of
grant of the option and for more than one year after exercise. Generally, if
the optionee disposes of the stock before the expiration of either of these
holding periods (a "disqualifying disposition"), the gain realized on
disposition will be compensation income to the optionee to the extent the
fair market value of the underlying stock on the date of exercise exceeds the
applicable exercise price. The Company will not be entitled to an income tax
deduction in connection with the exercise of an incentive stock option but
will generally be entitled to a deduction equal to the amount of any ordinary
income recognized by an optionee upon a disqualifying disposition. If an
optionee pays the exercise price of an incentive option solely with cash, the
optionee's tax basis in the stock received is equal to the amount of cash
paid.
If the optionee pays the exercise price with shares of Common Stock, the
optionee should not recognize capital gain or loss on the shares delivered in
payment of the exercise price, and the optionee's basis in the number of
shares purchased upon exercise equal to the number of shares exchanged will
be equal to the optionee's original basis in the shares exchanged. The
optionee's basis in any shares purchased upon exercise in excess of the
amount will be the fair market value of the Common Stock on the date of
exercise.
The Board of Directors recommends a vote "for" the proposal to increase
the number of shares for issuance under the Employee Plan by 1,500,000
shares. Proxies solicited by the Board will be so voted unless stockholders
specify in their proxies a contrary choice.
PROPOSAL TO ADOPT EMPLOYEE STOCK PURCHASE PLAN
Proposal. In February, 1997, the Company's Board of Directors adopted,
subject to stockholder approval, the Stein Mart, Inc. Employee Stock Purchase
Plan (the "Stock Purchase Plan"). The Stock Purchase Plan is intended to
encourage an alignment of the interest of the Company's employees with those
of the Company's stockholders by encouraging ownership of the Company's
shares by its employees. The Company believes the Stock Purchase Plan will
provide a convenient method, through payroll deduction, for employees to
acquire shares in the Company and provide an excellent complement to the
Company's Stock Option Plan for employees.
16
The adoption of the Stock Purchase Plan is subject to approval by the
Company's stockholders. The Stock Purchase Plan will be adopted if a majority
of the shares voted with respect to the Plan are voted in favor thereof. For
this purpose, abstentions and broker "non-votes" will not be counted.
Summary of Plan. All employees who complete 90 days employment with the
Company and who work on a full-time basis or are regularly scheduled to work
more than 20 hours per week are eligible to participate in the Stock Purchase
Plan. No employee is eligible to participate in the Stock Purchase Plan if
the employee possesses 5% or more of the voting power of the Company's
shares. In addition, no employee may accrue rights to purchase shares under
the Stock Purchase Plan which exceed $25,000 in market value of stock
(determined at the time of the option grant) for any calendar year.
The Company will make annual offerings under the Stock Purchase Plan
(the "Offerings"). The Offerings will be for a period of six or twelve months
each. Shares eligible under the Plan are limited to 400,000 shares in the
aggregate and the Plan will be effective for the years of 1997 through 2000,
with no more than 100,000 shares being made available in each calendar year.
Participants in the Stock Purchase Plan are permitted to use their
payroll deductions to acquire shares at 85% of the fair market value of the
Company's stock determined at either the beginning or end of each option
period. An employee who is a participant in the Stock Purchase Plan may
withdraw from participation at any time prior to the last day of each
Offering.
The Board of Directors recommends a vote "for" the proposal to adopt the
Stein Mart, Inc. Employee Stock Purchase Plan. Proxies solicited by the Board
will be so voted unless stockholders specify a contrary choice in their
proxies.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Company has selected the firm of Price Waterhouse LLP to serve as
the independent certified public accountants for the Company for the current
fiscal year ending January 3, 1998. That firm has served as the auditors for
the Company since 1983. Representatives of Price Waterhouse are expected to
be present at the annual meeting of stockholders and will be accorded the
opportunity to make a statement, if they so desire, and to respond to
appropriate questions.
OTHER MATTERS
The Board of Directors does not know of any other matters to come before
the meeting; however, if any other matters properly come before the meeting
it is the intention of the persons designated as proxies to vote in
accordance with their best judgment on such matters. If any other matter
should come before the meeting, action on such matter will be approved if the
number of votes cast in favor of the matter exceeds the number opposed.
STOCKHOLDER PROPOSALS
Regulations of the Securities and Exchange Commission require proxy
statements to disclose the date by which stockholder proposals must be
received by the Company in order to be included in the Company's proxy
materials for the next annual meeting. In accordance with these regulations,
stockholders are hereby notified that if they wish a proposal to be included
in the Company's proxy statement and form of proxy relating to the 1998
annual meeting, a written copy of their proposal must be received at the
principal executive offices of the Company no later than December 5, 1997. To
ensure prompt receipt by the Company, proposals should be sent certified mail
return receipt requested. Proposals must comply with the proxy rules relating
to stockholder proposals in order to be included in the Company's proxy
materials.
17
ANNUAL REPORT
A copy of the Company's Annual Report for the year ended December 28,
1996 accompanies this proxy statement. Additional copies may be obtained by
writing to Ms. Susan Datz Edelman, the Company's Director of Stockholder
Relations, at 1200 Riverplace Boulevard, Jacksonville, Florida 32207.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. The Company
does not expect to pay any compensation for the solicitation of proxies but
may reimburse brokers and other persons holding stock in their names, or in
the names of nominees, for their expenses for sending proxy material to
principals and obtaining their proxies.
Dated: April 4, 1997.
STOCKHOLDERS ARE URGED TO SPECIFY THEIR CHOICES, DATE, SIGN AND RETURN
THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, POSTAGE FOR WHICH HAS BEEN
PROVIDED. YOUR PROMPT RESPONSE WILL BE APPRECIATED.
18
STEIN MART, INC. EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I - PURPOSE
1.01 Purpose.
The Stein Mart, Inc. Employee Stock Purchase Plan (the "Plan") is
intended to provide a method whereby employees of Stein Mart, Inc., and its
Subsidiary Corporations (hereinafter referred to, unless the context otherwise
requires, as the "Company") will have an opportunity to acquire a proprietary
interest in the Company through the purchase of shares of the Common Stock of
the Company. It is the intention of the Company to have the Plan qualify as an
"employee stock purchase plan" under Section 423 of the Internal Revenue Code of
1986, as amended (the "Code"). The provisions of the Plan shall be construed so
as to extend and limit participation in a manner consistent with the
requirements of that section of the Code.
ARTICLE II - DEFINITIONS
2.01 Base Pay.
"Base Pay" shall mean regular straight-time earnings excluding payments
for overtime, shift premium, bonuses and other special payments, commissions and
other marketing incentive payments.
2.02 Committee.
"Committee" shall mean the individuals described in Article XI.
2.03 Employee.
"Employee" means any person who is customarily employed on a full-time
or part-time basis by the Company and is regularly scheduled to work 20 or more
hours per week.
2.04 Subsidiary Corporation.
"Subsidiary Corporation" shall mean any present or future corporation
which (i) would be a "subsidiary corporation" of the Company as that term is
defined in Section 424(f) of the Code and (ii) is designated as a participant in
the Plan by the Committee.
ARTICLE III - ELIGIBILITY AND PARTICIPATION
3.01 Initial Eligibility.
19
Any employee who shall have completed ninety (90) days' employment and
shall be employed by the Company on the date his participation in the Plan is to
become effective shall be eligible to participate in offerings under the Plan
which commence on or after such ninety day period has concluded. The Committee
may provide that, each person who, during the course of an offering, first
becomes an eligible employee of the Company will, on a date or dates specified
in the offering which coincides with the day on which such person becomes an
eligible employee or occurs thereafter, receive a right under that offering
which right shall thereafter be deemed to be a part of that offering. Such right
shall have the same characteristics as any rights originally granted under that
offering, as described herein, except that:
(i) the date on which such right is granted shall be the
offering date of such right for all purposes, including determination
of the exercise price of such right; and
(ii) the period of the offering with respect to such right
shall begin on its offering date and end coincident with the end of
such offering.
Officers of the Company shall be eligible to participate in offerings
under the Plan, provided, however, that the Committee may provide in an offering
that certain employees who are highly compensated employees within the meaning
of Section 423(b)(4)(D) of the Code shall not be eligible to participate.
3.02 Leave of Absence.
For purposes of participation in the Plan, a person on leave of absence
shall be deemed to be an employee for the first ninety (90) days of such leave
of absence and such employee's employment shall be deemed to have terminated at
the close of business on the 90th day of such leave of absence unless such
employee shall have returned to regular full-time or part-time employment (as
the case may be) prior to the close of business on such 90th day. Termination by
the Company of any employee's leave of absence, other than termination of such
leave of absence on return to full-time or part-time employment, shall terminate
an employee's employment for all purposes of the Plan and shall terminate such
employee's participation in the Plan and right to exercise any option.
20
3.03 Restrictions on Participation.
Notwithstanding any provisions of the Plan to the contrary, no employee
shall be granted an option to participate in the Plan:
(a) if, immediately after the grant, such employee would own
stock, and/or hold outstanding options to purchase stock, possessing 5%
or more of the total combined voting power or value of all classes of
stock of the Company (for purposes of this paragraph, the rules of
Section 424 (d) of the Code shall apply in determining stock
ownership of any employee, and stock which the employee may
purchase under all outstanding options shall be treated as
stock owned by such employee); or
(b) which permits his rights to purchase stock under all
employee stock purchase plans of the Company to accrue at a rate which
exceeds $25,000 in fair market value of the stock (determined at the
time such option is granted) for each calender year in which such
option is outstanding.
3.04 Commencement of Participation.
An eligible employee may become a participant by completing an
authorization for a payroll deduction on the form provided by the Company and
filing it with the Vice President of Human Resources of the Company on or before
the date set therefor by the Committee, which date shall be prior to the
Offering Commencement Date for the Offering (as such terms are defined below).
Payroll deductions for a participant shall commence on the applicable Offering
Commencement Date when his authorization for a payroll deduction becomes
effective and shall end on the Offering Termination Date of the Offering to
which such authorization is applicable unless sooner terminated by the
participant as provided in Article VIII.
ARTICLE IV - OFFERINGS
4.01 Annual Offerings.
The Plan will be implemented by four annual offerings of the Company's
Common Stock (the "Offerings") beginning on the 1st day of January in each of
the years 1998, 1999 and 2000, and on July 1 for the year 1997, each offering
terminating on December 31 of the same year, provided, however, that each annual
Offering may, in the discretion of the Committee exercised prior to the
commencement thereof, be divided into two six-month Offerings commencing,
21
respectively, on January 1 (or March 1 as to 1997) and July 1 of such year and
terminating on June 30 of such year and December 31 of the same year,
respectively. The maximum number of shares issued in the respective years shall
be:
o From March 1, 1997 to December 31, 1997: 100,000 shares.
o From January 1, 1998 to December 31, 1998: 100,000 shares plus
unissued shares from the prior Offerings, whether offered or not.
o From January 1, 1999 to December 31, 1999: 100,000 shares plus
unissued shares from the prior Offerings, whether offered or not.
o From January 1, 2000 to December 31, 2000: 100,000 shares plus unissued
shares from prior Offerings, whether offered or not.
If a six-month Offering is made, the maximum number of shares to be
issued shall be 1/2 of the number of shares set forth for the annual period in
which the six-month Offering falls, plus, if the Offering is a July 1 to
December 31 Offering, unissued shares, whether offered or not, from the
immediately preceding six-month Offering. As used in the Plan, "Offering
Commencement Date" means the January 1 (or March 1 as to 1997) or July 1, as the
case may be, on which the particular Offering begins and "Offering Termination
Date" means the June 30 or December 31 as the case may be, on which the
particular Offering terminates.
ARTICLE V - PAYROLL DEDUCTIONS
5.01 Amount of Deduction.
At the time a participant files his authorization for payroll
deduction, he shall elect to have deductions made from his pay on each payday
during the time he is a participant in an Offering at the rate of 1, 2, 3, 4, 5,
6, 7, 8, 9 or 10% of his base pay in effect at the Offering Commencement Date of
such Offering; provided, however, that the minimum payroll deduction shall be $5
per week or $260 per year and the maximum payroll deduction shall be $20,000 per
year. In the case of a part-time hourly employee, such employee's base pay
during an Offering shall be determined by multiplying such employee's hourly
rate of pay in effect on the Offering Commencement Date by the number of
regularly scheduled hours of work for such employee during such Offering.
22
5.02 Participant's Account.
All payroll deductions made for a participant shall be credited to his
account under the Plan. A participant may not make any separate cash payment
into such account except when on leave of absence and then only as provided in
Section 5.04.
5.03 Changes in Payroll Deductions.
A participant may discontinue his participation in the Plan as provided
in Article VIII, but no other change can be made during an Offering and,
specifically, a participant may not alter the amount of his payroll deductions
for that Offering.
5.04 Leave of Absence.
If a participant goes on a leave of absence, such participant shall
have the right to elect: (a) to withdraw the balance in his or her account
pursuant to Section 7.02, (b) to discontinue contributions to the Plan but
remain a participant in the Plan, or remain a participant in the Plan during
such leave of absence, authorizing deductions to be made from payments by the
Company to the participant during such leave of absence and undertaking to make
cash payments to the Plan at the end of each payroll period to the extent that
amounts payable by the Company to such participant are insufficient to meet such
participant's authorized Plan deductions.
ARTICLE VI - GRANTING OF OPTION
6.01 Number of Option Shares.
On the Commencement Date of each Offering, a participating employee
shall be deemed to have been granted an option to purchase a maximum number of
shares of the stock of the Company equal to an amount determined as follows: an
amount equal to (i) that percentage of the employee's base pay which he has
elected to have withheld (but not in any case in excess of 10%) multiplied by
(ii) the employee's base pay during the period of the offering (iii) divided by
85% of the market value of the stock of the Company on the applicable Offering
Commencement Date. The market value of the Company's stock shall be determined
as provided in paragraphs (a) and (b) of Section 6.02 below. An employee's base
pay during the period of an offering shall be determined by multiplying, in the
case of a one-year offering, his normal weekly rate of pay (as in effect on the
last day prior to the Commencement Date of the particular offering)
23
by 52 or the hourly rate by 2,080 or, in the case of a six-month offering, by
26 or 1040, as the case may be, provided that, in the case of a part time hourly
employee, the employee's base pay during the period of an offering shall be
determined by multiplying such employee's hourly rate by the number of
regularly scheduled hours of work for such employee during such Offering.
6.02 Option Price.
The option price of stock purchased with payroll deductions made during
such Offering for a participant therein shall be the lower of:
(a) 85% of the closing price of the stock on the Offering
Commencement Date or the nearest prior business day on which trading
occurred on the NASDAQ National Market System; or
(b) 85% of the closing price of the stock on the Offering
Termination Date or the nearest prior business day on which trading
occurred on the NASDAQ National Market System. If the Common Stock of
the Company is not admitted to trading on any of the aforesaid dates
for which closing prices of the stock are to be determined, then
reference shall be made to the fair market value of the stock on that
date, as determined on such basis as shall be established or specified
for the purpose by the Committee.
ARTICLE VII - EXERCISE OF OPTION
7.01 Automatic Exercise.
Unless a participant gives written notice to the Company as hereinafter
provided, his option for the purchase of stock with payroll deductions made
during any Offering will be deemed to have been exercised automatically on the
Offering Termination Date applicable to such Offering, for the purchase of the
number of full shares of stock which the accumulated payroll deductions in his
account at that time will purchase at the applicable option price (but not in
excess of the number of shares for which options have been granted to the
employee pursuant to Section 6.01), and any excess in his account at that time
will be returned to him.
7.02 Withdrawal of Account.
By written notice to the Vice President for Human Resources of the
Company, at any time prior to the Offering Termination Date applicable to any
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Offering, a participant may elect to withdraw all the accumulated payroll
deductions in his account at such time upon thirty (30) days prior written
notice.
7.03 Fractional Shares.
Fractional Shares will not be issued under the Plan and any accumulated
payroll deductions which would have been used to purchase fractional shares will
be returned to any employee promptly following the termination of an Offering,
without interest.
7.04 Transferability of Option.
During a participant's lifetime, options held by such participant shall
be exercisable only by that participant.
7.05 Delivery of Stock.
As promptly as practicable after the Offering Termination Date of each
Offering, the Company will deliver to each participant, as appropriate,
certificates for the stock purchased upon exercise of his option.
ARTICLE VIII - WITHDRAWAL
8.01 In General.
As indicated in Section 7.02, a participant may withdraw payroll
deductions credited to his account under the Plan at any time by giving written
notice to the Vice President for Human Resources of the Company. All of the
participant's payroll deductions credited to his account will be paid to him
promptly after receipt of his notice of withdrawal, and no further payroll
deductions will be made from his pay during such Offering. The Company may, at
its option, treat any attempt to borrow by an employee on the security of his
accumulated payroll deductions as an election, under Section 7.02, to withdraw
such deductions.
8.02 Effect on Subsequent Participation.
A participant's withdrawal from any Offering will not have any effect
upon his eligibility to participate in any succeeding Offering or in any similar
plan which may hereafter be adopted by the Company.
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8.03 Termination of Employment.
Upon termination of the participant's employment for any reason,
including retirement (but excluding death while in the employ of the Company or
continuation of a leave of absence for a period beyond 90 days), the payroll
deductions credited to his account will be returned to him, or, in the case of
his death subsequent to the termination of his employment, to the person or
persons entitled thereto under Section 12.01.
8.04 Termination of Employment Due to Death.
Upon termination of the participant's employment because of this death,
his beneficiary (as defined in Section 12.01) shall have the right to elect, by
written notice given to the Vice President for Human Resources of the Company
prior to the earlier of the Offering Termination Date or the expiration of a
period of sixty (60) days commencing with the date of the death of the
participant; either:
(a) to withdraw all of the payroll deductions credited to the
participant's account under the Plan with interest as provided in
Section 9.01 hereof, or
(b) to exercise the participant's option for the purchase of
stock on the Offering Termination Date next following the date of the
participant's death for the purchase of the number of full shares of
stock which the accumulated payroll deductions in the participant's
account at the date of the participant's death will purchase at the
applicable option price, and any excess in such account will be
returned to said beneficiary, without interest.
In the event that no such written notice of election shall be duly
received by the Vice President for Human Resources of the Company, the
beneficiary shall automatically be deemed to have elected, pursuant to paragraph
(b), to exercise the participant's option.
8.05 Leave of Absence.
A participant on leave of absence shall, subject to the election made
by such participant pursuant to Section 5.04, continue to be a participant in
the Plan so long as such participant is on continuous leave of absence. A
participant who has been on leave of absence for more than 90 days and who
therefore is not an employee for the purpose of the Plan shall not be entitled
to participate in any Offering commencing after the 90th day of such leave of
absence.
26
Notwithstanding any other provisions of the Plan, unless a participant
on leave of absence returns to regular full time or part time employment with
the Company at the earlier of: (a) the termination of such leave of absence or
(b) three months from the 90th day of such leave of absence, such participant's
participation in the Plan shall terminate on whichever of such dates first
occurs.
ARTICLE IX - INTEREST
9.01 Payment of Interest.
No interest will be paid or allowed on any money paid into the Plan or
credited to the account of any participant employee; provided, however, that
interest shall be paid on any and all money which is distributed to an employee
or his beneficiary pursuant to the provisions of Sections 7.02, 8.01, 8.03,
8.04(a) and 10.01. Such distributions shall bear simple interest during the
period from the date of withholding to the date of return at the regular
passbook saving account rates per annum in effect at the Barnett Bank of
Jacksonville, Florida, during the applicable offering period or, if such rates
are not published or otherwise available for such purpose, at the regular
passbook saving account rates per annum in effect during such period at another
major commercial bank in Jacksonville, Florida selected by the Committee. Where
the amount returned represents an excess amount in an employee's account after
such account has been applied to the purchase of stock, the employee's
withholding account shall be deemed to have been applied first toward purchase
of stock under the Plan, so that interest shall be paid on the last withholdings
during the period which results in the excess amount.
ARTICLE X - STOCK
10.01 Maximum Shares.
The maximum number of shares which shall be issued under the Plan,
subject to adjustment upon changes in capitalization of the Company as provided
in Section 12.04 shall be 100,000 shares in each annual Offering (50,000 shares
in each six-month Offering) plus in each Offering all unissued shares from prior
Offerings, whether offered or not, not to exceed 400,000 shares for all
Offerings. If the total number of shares for which options are exercised on any
Offering Termination Date in accordance with Article VI exceeds the maximum
number of shares for the applicable Offering, the Company shall make a pro rata
allocation of the shares available for delivery and distribution in an nearly a
uniform manner as shall be practicable and as it shall determine to be
equitable, and the balance of
27
payroll deductions credited to the account of each participant under the Plan
shall be returned to him as promptly as possible.
10.02 Participant's Interest in Option Stock.
The participant will have no interest in stock covered by his option
until such option has been exercised.
10.03 Registration of Stock.
Stock to be delivered to a participant under the Plan will be
registered in the name of the participant, or, if the participant so directs by
written notice to the Vice President of Human Resources of the Company prior to
the Offering Termination Date applicable thereto, in the names of the
participant and one such other person as may be designated by the participant,
as joint tenants with rights of survivorship or as tenants by the entireties, to
the extent permitted by applicable law.
10.04 Restrictions on Exercise.
The Board of Directors may, in its discretion, require as conditions to
the exercise of any option that the shares of Common Stock reserved for issuance
upon the exercise of the option shall have been duly listed, upon official
notice of issuance, upon a stock exchange or NASDAQ and that either:
(a) a Registration Statement under the Securities Act of 1933,
as amended, with respect to said shares shall be effective, or
(b) the participant shall have represented at the time of
purchase, in form and substance satisfactory to the Company, that it is
his intention to purchase the shares for investment and not for resale
or distribution.
ARTICLE XI - ADMINISTRATION
11.01 Appointment of Committee.
The Board of Directors shall appoint a committee (the "Committee") to
administer the Plan, which shall consist of no fewer than three members of the
Board of Directors. No members of the Committee shall be eligible to purchase
stock under the Plan.
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11.02 Authority of Committee.
Subject to the express provisions of the Plan, the Committee shall have
plenary authority in its discretion to interpret and construe any and all
provisions of the Plan, to adopt rules and regulations for administering the
Plan, and to make all other determinations deemed necessary or advisable for
administering the Plan. The Committee's determination on the foregoing matters
shall be conclusive.
11.03 Rules Governing the Administration of the Committee.
The Board of Directors may from time to time appoint members of the
Committee in substitution for or in addition to members previously appointed and
may fill vacancies, however caused, in the Committee. The Committee may select
one of its members as its Chairman and shall hold its meetings at such times and
places as it shall deem advisable and may hold telephonic meetings. A majority
of its members shall constitute a quorum. All determinations of the Committee
may correct any defect or omission or reconcile any inconsistency in the Plan,
in the manner and to the extent it shall deem desirable. Any decision or
determination reduced to writing and signed by a majority of the members of the
Committee shall be as fully effective as if it had been made by a majority vote
at a meeting duly called and held. The Committee may appoint a secretary and
shall make such rules and regulations for the conduct of its business as it
shall deem advisable.
11.04 Third Party Administration.
The Committee may employ the services of a third party administrator
("TPA") to maintain records and accounts and to perform ministerial
administrative services for the Plan.
ARTICLE XII - MISCELLANEOUS
12.01 Designation of Beneficiary.
A participant may file a written designation of a beneficiary who is to
receive any stock and/or cash. Such designation of beneficiary may be changed by
the participant at any time by written notice to the Vice President for Human
Resources of the Company. Upon the death of a participant and upon receipt by
the Company of proof of identity and existence at the participant's death of a
beneficiary validly designated by him under the Plan, the Company shall deliver
29
such stock and/or cash to such beneficiary. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such stock and/or cash to the executor or administrator of the estate of
the participant, or if no such executor or administrator has been appointed (to
the knowledge of the Company), the Company, in its discretion, may deliver such
stock and/or cash to the spouse or to any one or more dependents of the
participant as the Company may designate. No beneficiary shall, prior to the
death of the participant by whom he has been designated, acquire any interest in
the stock or cash credited to the participant under the Plan.
12.02 Transferability.
Neither payroll deductions credited to a participant's account nor any
rights with regard to the exercise of an option or to receive stock under the
Plan may be assigned, transferred, pledged, or otherwise disposed of in any way
by the participant other than by will or the laws of descent and distribution.
Any such attempted assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an election to
withdraw funds in accordance with Section 7.02.
12.03 Use of Funds.
All payroll deductions received or held by the Company under this
Plan may be used by the Company for any corporate purpose and the Company
shall not be obligated to segregate such payroll deductions.
12.04 Adjustment Upon Changes in Capitalization.
(a) If, while any options are outstanding, the outstanding shares of
Common Stock of the Company have increased, decreased, changed into, or been
exchanged for a different number or kind of shares or securities of the Company
through reorganization, merger, recapitalization, reclassification, stock split,
reverse stock split or similar transaction, appropriate and proportionate
adjustments may be made by the Committee in the number and/or kind of shares
which are subject to purchase under outstanding options and in the option
exercise price or prices applicable to such outstanding options. In addition, in
any such event, the number and/or kind of shares which may be offered in the
Offerings described in Article IV hereof shall also be proportionately adjusted.
No adjustments shall be made for dividends except those payable in the Company's
common stock.
30
(b) In the event of: (1) a dissolution or liquidation of Stein Mart,
Inc.; (2) a merger or consolidation in which Stein Mart, Inc., is not the
surviving corporation; (3) a reverse merger in which Stein Mart, Inc., is the
surviving corporation but the shares of Stein Mart, Inc.'s common stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise; or (4) the acquisition by any person, entity or group within the
meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") or any comparable successor provisions (excluding any employee
benefit plan, or related trust, sponsored or maintained by the Company) of the
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act, or comparable successor rule) of securities of Stein Mart, Inc.,
representing at least fifty percent (50%) of the combined voting power entitled
to vote in the election of directors, then, as determined by the Committee in
its sole discretion (i) any surviving or acquiring corporation may assume
outstanding rights or substitute similar rights for those under the Plan, (ii)
such rights may continue in full force and effect, or (iii) participants'
accumulated payroll deductions may be used to purchase common stock immediately
prior to the transaction described above and the participants' rights under the
ongoing Offering will be terminated.
12.05 Amendment and Termination.
The Board of Directors shall have complete power and authority to
terminate or amend the Plan; provided, however, that the Board of Directors
shall not, without the approval of the stockholders of the Corporation (i)
increase the maximum number of shares which may be issued under any Offering
(except pursuant to Section 12.04); (ii) amend the requirements as to the class
of employees eligible to purchase stock under the Plan (to the extent such
modification requires shareholder approval in order for the Plan to obtain
employee stock purchase plan treatment under Section 423 of the Code or to
comply with the requirements of Rule 16b-3 of the Securities Exchange Act of
1934 ) or permit the members of the Committee to purchase stock under the Plan.
No termination, modification or amendment of the Plan may, without the consent
of an employee then having an option under the Plan to purchase stock, adversely
affect the rights of such employee under such option.
12.06 Effective Date.
The Plan shall become effective as of March 1, 1997, subject to
approval by the holders of the majority of the Common Stock present and
represented at a
31
special or annual meeting of the shareholders held on or before
December 31, 1997. If the Plan is not so approved, the Plan shall not become
effective.
12.07 No Employment Rights.
The Plan does not, directly or indirectly, create any right for the
benefit of any employee or class of employees to purchase any shares under the
Plan, or create in any employee or class of employees any right with respect to
continuation of employment by the Company, and it shall not be deemed to
interfere in any way with the Company's right to terminate, or otherwise modify,
an employee's employment at any time.
12.08 Effect of Plan.
The provisions of the Plan shall, in accordance with its terms, be
binding upon, and inure to the benefit of, all successors of each employee
participating in the Plan, including, without limitation, such employee's estate
and the executors, administrators or trustees thereof, heirs and legatees, and
any receiver, trustee in bankruptcy or representative of creditors of such
employee.
12.09 Governing Law.
The law of the State of Florida will govern all matters relating to
this Plan except to the extent it is superseded by the laws of the United
States.
32
STEIN MART, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS IN CONNECTION WITH
THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 12, 1997
The undersigned hereby appoints Jay Stein and John H. Williams, Jr.,
and each of them, with full power of substitution and revocation, as true and
lawful agents and proxies of the undersigned to attend and vote all shares of
Common Stock of Stein Mart, Inc., a Florida Corporation, that the undersigned
would be entitled to vote if then personally present at the Annual Meeting of
Shareholders of Stein Mart, Inc., a Florida Corporation, to be held on May 12,
1997 at 2:00 P.M., local time, at The Jacksonville Hilton Towers, 1201
Riverplace Boulevard, Jacksonville, Florida, and at any adjournment or
adjournments thereof, hereby revoking any proxy heretofore given.
(Continued and to be signed on the reverse side)
FOLD AND DETACH HERE
33
This Proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder. Please mark [x]
If no direction is made, this proxy will be voted FOR Proposals 1, 2 and 3. The Board of Directors recommends your votes as
a vote FOR items 1, 2 and 3. indicated in
this example
1. Election of Directors as recommended in the Proxy Statement: Jay Stein, John H. Williams, Jr., Mason Allen, Pete Carpenter,
Albert Ernest, Jr., Mitchell W. Legler, Michael D. Rose and
James H. Winston
FOR all WITHHOLD
nominees AUTHORITY
listed (except to vote for
as marked to all nominees INSTRUCTIONS: To withhold authority to vote for any individual nominee, write that
the contrary) listed nominee's name in the space provided below.
[ ] [ ]
2. To increase the number of shares 3. To approve the adoption of the Stein 4. Should any other matters requiring a vote of the
authorized for issuance under Mart, Inc. Employee Stock Purchase shareholders arise, the above named proxies are
the Stein Mart Employee Stock Plan. authorized to vote the same in accordance with
Plan by 1,500,000 shares. their best judgment in the interest of the
Company. The Board of Directors is not aware of
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN any matter which is to be presented for action
[ ] [ ] [ ] [ ] [ ] [ ] at the meeting other than the matters set forth
herein.
Please insert the date and sign your name
exactly as it appears hereon. If shares are held
jointly each joint owner should sign. Executors,
administrators, trustees, guardians, etc.,
should so indicate when signing. Corporations
should sign full corporate name by an authorized
officer. Partnership should sign partnership
name by an authorized Partner.
Unless the date has been inserted below, this
Proxy shall be deemed to be dated for all
purposes as of the date appearing on the
postmark on the envelope in which it is
enclosed. In such a case the Proxies named
above are authorized to insert the date in
accordance with these instructions.
Dated: _____________________________ , 1997
____________________________________
____________________________________
Signature(s) of Shareholder(s)
"PLEASE MARK INSIDE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES"
FOLD AND DETACH HERE
34