SCHEDULE 14 INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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
Proffitt's, Inc.
--------------------------
(Name of Registrant as Specified in Its Charter)
Proffitt's, Inc.
---------------------------
(Name of Person(s) Filing Proxy Statement)
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:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form of Schedule and the date
of its filing.
1) Amount Previously Paid: _______________________
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4) Date filed: ________________________
PROFFITT'S
INCORPORATED
750 Lakeshore Parkway
Birmingham, Alabama 35211
April 30, 1998
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of the
Shareholders to be held at 8:30 a.m. Eastern Daylight Time on
Wednesday, June 10, 1998, at Proffitt's West Town Mall Store, 7600
Kingston Pike, Knoxville, Tennessee 37919.
The notice of the meeting and proxy statement accompanying this
letter describe the specific business to be acted upon. Your vote
is very important, and your cooperation in completing, signing, and
returning your proxy promptly in the enclosed return envelope will
be appreciated.
At the meeting, there will be a report on the progress of the
Company and an opportunity to ask questions of general interest to
the shareholders.
Shareholders attending the meeting are invited to shop at both our
West Town Mall Proffitt's and Parisian stores and will be given a
special discount on the day's purchases.
I hope you will be able to join us, and I look forward to seeing
you.
Sincerely,
/s/ R. Brad Martin
R. Brad Martin
Chairman of the Board and
Chief Executive Officer
PROFFITT'S
INCORPORATED
750 Lakeshore Parkway
Birmingham, Alabama 35211
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Proffitt's, Inc.:
Notice is hereby given that the Annual Meeting of the Shareholders
of Proffitt's, Inc. (the "Company") will be held at 8:30 a.m.
Eastern Daylight Time on Wednesday, June 10, 1998, at Proffitt's
West Town Mall Store, 7600 Kingston Pike, Knoxville, Tennessee
37919, for the following purposes:
1. To elect five Directors to hold office for the terms
specified or until their respective successors have been
elected and qualified;
2. To approve the Proffitt's, Inc. 1998 Senior Executive
Bonus Plan;
3. To ratify the appointment of Coopers & Lybrand as the
Company's independent accountants for the current fiscal
year ending January 30, 1999; and
4. To transact such other business as may properly come
before the meeting or any adjournment thereof.
Shareholders of record at the close of business on April 20, 1998
are entitled to notice of, and to vote at, the meeting.
Shareholders are cordially invited to attend the meeting in person.
By order of the Board of Directors,
/s/ Julia Bentley
Julia Bentley
Secretary
April 30, 1998
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, YOU ARE
URGED TO MARK, SIGN, AND DATE THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ENVELOPE PROVIDED.
PROFFITT'S
INCORPORATED
750 Lakeshore Parkway
Birmingham, Alabama 35211
Information Concerning the Solicitation
This proxy statement is furnished in connection with the
solicitation of proxies to be used at the Annual Meeting of the
Shareholders (the "Annual Meeting") of Proffitt's, Inc.
("Proffitt's" or the "Company"), a Tennessee corporation, to be
held on June 10, 1998.
The solicitation of proxies in the enclosed form is made on behalf
of the Board of Directors of the Company. Certain Directors,
officers, and employees of the Company may solicit proxies by
telephone, telecopier, telegram, mail, or personal contact. In
addition, the Company has retained Georgeson & Company, Inc., New
York, New York, to assist in the solicitation of proxies and will
pay such firm a fee, estimated not to exceed $8,000, plus
reimbursement of expenses. Arrangements will be made with brokers,
nominees, and fiduciaries to send proxies and proxy materials at
the Company's expense to their principals. The proxy materials are
first being mailed to shareholders on or about May 1, 1998.
A shareholder signing and returning a proxy on the enclosed form
has the power to revoke it at any time before the shares subject to
it are voted by notifying the Secretary of the Company in writing.
Attendance at the Annual Meeting by a shareholder who has given a
proxy will not have the effect of revoking it unless he or she
gives such written notice of revocation to the Secretary before the
proxy is voted. Votes cast by proxy or in person at the Annual
Meeting will be tabulated by the election inspectors appointed for
the meeting and will determine whether or not a quorum is present.
The election inspectors will treat abstentions as shares that are
present and entitled to vote for purposes of determining the
presence of a quorum. If a broker indicates on the proxy that it
does not have discretionary authority as to certain shares to vote
on a particular matter, those shares will not be considered as
present and entitled to vote with respect to that matter. The
nominees for Director receiving a plurality of the votes cast at
the meeting in person or by proxy shall be elected. Abstentions and
broker non-votes have no affect on the plurality vote for the
election of Directors. All other matters will be approved if the
votes cast favoring the action exceed the votes opposing the
action.
Outstanding Voting Securities
Only shareholders of record at the close of business on April 20,
1998 are entitled to vote at the Annual Meeting. On that day, there
were issued and outstanding 89,637,101 shares of Common Stock. Each
share has one vote.
Listed in the following table are the number of shares owned by
each Director, certain executive officers, and all Directors and
officers of the Company as a group as of March 16, 1998. The table
also includes the beneficial owners as of March 16, 1998 of more
than 5% of the Company's outstanding Common Stock who are known to
the Company.
Name of Beneficial Owner Total Shares Percentage of
(and Address if "Beneficial Beneficially Common Stock
Ownership" Exceeds 5%) Owned (1) Ownership
------------------------ ----------- -----------
Directors:
Bernard E. Bernstein 34,402(2) *
Stanton J. Bluestone 508,058 *
John W. Burden, III 7,687 *
Edmond D. Cicala 21,007 *
Ronald de Waal 2,506,230 2.80%
Gerard K. Donnelly 7,912 *
Donald F. Dunn 19,554 *
Julius W. Erving 3,349 *
Michael S. Gross 6,189 *
Donald E. Hess 815,328(3) *
G. David Hurd 15,248 *
R. Brad Martin 2,681,083(4) 2.98%
C. Warren Neel 16,737 *
Marguerite W. Sallee 5,200 *
Gerald Tsai, Jr. 12,000 *
Named Executive Officers:
James A. Coggin 207,413 *
Douglas E. Coltharp 80,500(7) 1.0*
Brian J. Martin 104,413(8) *
Robert M. Mosco 372,208(5) *
All Directors and Officers
as a group (21 persons) 7,612,507 8.36%
Other 5% Owner:
Fidelity Management and 13,364,166(6) 14.93%
Research Corporation 1,698,206 6.04%
82 Devonshire Street
Boston, Massachusetts
______________________________
* Owns less than 1% of the total outstanding Common Stock of the
Company.
(1)Includes shares that the following persons have a right to
acquire within sixty days after March 16, 1998 through the exercise
of stock options: Bernstein (6,000), Bluestone (502,000), Cicala
(4,000), de Waal (7,000), Donnelly (5,340), Dunn (5,340), Erving
(400), Gross (4,000), Hurd (5,340), R. Brad Martin (582,000), Neel
(6,000), Sallee (1,200), Tsai (6,000), Coggin (68,000), Coltharp
(28,000), Brian J. Martin (50,000), and Mosco (226,211).
(2)Includes 6,000 shares owned by the Bernard E. Bernstein Defined
Benefit Pension Plan.
(3)Includes: (i) 361,816 shares owned directly by Mr. Hess, (ii)
348,444 shares held by Mr. Hess as trustee or co-trustee for his
children, and (iii) 105,068 shares held by him as trustee for the
children of his sister, Jo Ann H. Morrison. Does not include: (i)
4,580 shares owned directly by his wife, (ii) 14,660 shares held by
his wife as co-trustee for one of their children, and (iii) 176,116
shares held by another individual as trustee for Mr. Hess'
children, with respect to which shares Mr. Hess disclaims
beneficial ownership.
(4)Includes: (i) 20,227 shares held by the RBM Family Limited
Partnership, (ii) 3,750 shares owned by RBM Venture Company, a
company of which Mr. Martin is sole shareholder, (iii) 230,000
shares held by Mr. Martin as trustee or co-trustee for his
children, (iv) 13,880 shares owned by the R. Brad and Jean L.
Martin Family Foundation, (v) 25,000 shares of restricted stock
which will fully vest by January 30, 2001, and (vi) 200,000 shares
of restricted stock, the restrictions on which lapse based on
performance measurements and length of service.
(5)Excludes 32,564 shares reserved by the Company for issuance to
Mr. Mosco with respect to a deferred compensation arrangement.
(6)Based solely on information provided by the beneficial owner, as
of March 20, 1998.
ELECTION OF DIRECTORS
(Proposal No. 1)
The Company's Charter, as amended, provides that the Board of
Directors be divided into three classes, designated as Class I,
Class II, and Class III. The terms of Class I, II, and III will
expire in 2001, 1999, and 2000, respectively. Concurrent with the
Annual Meeting, the Board of Directors will reduce the size of the
Board from 15 to 13. The Board of Directors proposes the election
of four Directors to Class I and one Director to Class II. These
five Directors, together with the eight Directors whose terms
continue beyond this year's Annual Meeting, will comprise the Board
of Directors. Two Directors, Gerard K. Donnelly and Donald F. Dunn,
were elected as Class I Directors at the June 1997 Annual Meeting.
Their terms expire concurrent with the June 1998 Annual Meeting.
Both Mr. Donnelly and Mr. Dunn will retire from the Company's Board
at that time. Each Director will hold office for the term specified
and until his or her successor is elected and qualified. Each
Director nominee is currently a Director. Unless otherwise
instructed by the shareholder, the persons named in the enclosed
form of proxy intend to vote for the election of the persons listed
in this proxy statement. If any nominee becomes unavailable for any
reason or should a vacancy occur before the election (which events
are not anticipated), the proxies will be voted for the election of
a substitute nominee to be selected by the persons named in the
proxy.
Nominees for the term expiring in 2001 (Class I): Bernard E.
Bernstein, Stanton J. Bluestone, Julius W. Erving, and Donald E.
Hess. Nominee for the term expiring in 1999 (Class II): John W.
Burden, III.
We have provided below certain information about the nominees and
Directors. The business association as shown has been continued for
more than five years unless otherwise noted.
Director
Name, Principal Occupation, and Directorship Age Since
- -------------------------------------------- ------ ------
NOMINEES FOR DIRECTOR
Class I (terms expiring in 2001):
Bernard E. Bernstein 67 1987
Partner in the Knoxville, Tennessee
law firm of Bernstein, Stair & McAdams.
Stanton J. Bluestone 63 1998
Chairman of the Carson Pirie Scott group of
Proffitt's, Inc. since February 1998.
Mr. Bluestone served as Chairman and
Chief Executive Officer of Carson Pirie
Scott & Co. ("Carson's") between March 1996
and January 1998. He was the President and
Chief Executive Officer of Carson's between
August 1993 and March 1996 and was President
and Acting Chief Executive Officer from May 1991
to August 1993. Mr. Bluestone serves on the
Board of Directors of Hills Stores Company.
Julius W. Erving 48 1997
President of the Erving Group and Executive
Vice President of the Orlando Magic since
September 1997. Mr. Erving was employed by the
National Broadcasting Company between December
1994 and June 1997, and by the National
Basketball Association between 1987 and September
1997. Mr. Erving serves on the Boards of Directors
of Converse, Inc., The Sports Authority, and L.C.I.
International.
Donald E. Hess 49 1996
Chairman of the Parisian group of Proffitt's, Inc.
Mr. Hess served as President and Chief Executive
Officer of Parisian from 1986 to April 1997. Mr.
Hess serves on the Board of Directors of AmSouth
Bancorporation.
Class II (term expiring in 1999):
John W. Burden, III 61 1998
Retail consultant. Mr. Burden was a partner in
Retail Options between November 1993 and October
1997. Mr. Burden served as Vice President of
Pelican Palm Realty Corporation, a real estate
sales company, between December 1990 and March 1993.
Mr. Burden is the Retired Chairman of Federated
Department Stores, Inc. and Allied Stores Corporation.
He serves on the Boards of Directors of Hills Stores
Company and Chico's, Inc.
THE BOARD OF DIRECTORS RECOMMENDS THE SHAREHOLDERS VOTE "FOR" THE
ELECTION AS DIRECTORS THE ABOVE LISTED NOMINEES.
CONTINUING DIRECTORS
Class II (terms expiring in 1999):
Edmond D. Cicala 72 1987
President of Edmond Enterprises, Inc. Retired
Chairman and Chief Executive Officer of the
Goldsmith's Division of Federated Department
Stores. Mr. Cicala is a Director of
Evans, Inc. and National Commerce Bancorporation.
Michael S. Gross 36 1994
Vice President of Apollo Capital Management,
Inc., the general partner of Apollo Advisors,
L.P. Mr. Gross serves on the Boards of Directors
of Allied Waste Industries, Inc., Converse, Inc.,
Florsheim Group, Inc., Furniture Brands
International, Inc., and Imagyn Medical
Technology, Inc.
G. David Hurd 68 1996
Chairman and Chief Executive Officer of The
Principal Financial Group, an insurance and
financial services company, from 1989 until
his retirement in December 1994. Mr. Hurd is
the Emeritus Chairman of The Principal Financial
Group.
Gerald Tsai, Jr. 69 1993
Private investor. Mr. Tsai served as Chairman,
President, and Chief Executive Officer of Delta
Life Corporation from February 1993 to October
1997. Mr. Tsai serves on the Boards of Directors of
Meditrust, Rite Aid Corporation, Sequa Corporation,
Triarc Companies, Inc., United Rentals, Inc.,
and Zenith National Insurance Corporation.
Class III (terms expiring in 2000):
Ronald de Waal 46 1985
Chairman of We International, B.V., a
Netherlands corporation, which operates more
than 250 fashion specialty stores in Belgium,
the Netherlands, Switzerland, Germany, and France.
R. Brad Martin 46 1984
Chief Executive Officer of the Company since
1989, Chairman of the Board of the Company since
1987, and President from July 1989 until
March 1994 and from September 1994 to March 1995.
Mr. Martin serves on the Boards of Directors of
First Tennessee National Corporation and Harrah's
Entertainment, Inc.
C. Warren Neel 59 1987
Dean of the College of Business Administration
at the University of Tennessee, Knoxville. Dr.
Neel serves on the Boards of Directors of
American Healthcorp, Inc., Clayton Homes, Inc.,
O'Charley's, Inc., and The Promus Companies, Inc.
Marguerite W. Sallee 52 1996
President and Chief Executive Officer of
CorporateFamily Solutions. Ms. Sallee serves
on the Boards of Directors of MagneTek, Inc.
and NationsBank of Tennessee and Kentucky.
Further Information Concerning Directors
Directors' Fees
Directors who are not officers of the Company each receive an
annual fee of $15,000 and $1,000 for attendance at each board
meeting or meeting of a committee of which he is a member (or $750
for participation by telephone in a board or committee meeting).
Committee chairpersons each receive an additional annual fee of
$2,500. Directors are reimbursed for expenses in connection with
their services as Directors of the Company. Directors not employed
by the Company may elect to: (i) receive fees earned in Company
Common Stock, (ii) receive one-half of fees earned in Company
Common Stock with the balance in cash, or (iii) participate in the
Company's Deferred Compensation Plan for Non-Employed Directors of
Proffitt's, Inc. and defer all such compensation in lieu of
immediate cash payments. The deferred compensation is tied to the
value of the Company's Common Stock.
Pursuant to the Company's 1994 Long-Term Incentive Plan (the "1994
Plan") and the 1997 Stock-Based Incentive Plan (the "1997 Plan"),
each non-employee Director of the Company annually is granted a
nonqualified stock option to purchase 2,000 shares of Company
Common Stock (7,000 shares for the Company's Vice Chairman of the
Board). Options are priced at fair market value at the date of
grant and vest in one-fifth installments commencing six months from
the date of grant (with each subsequent installment vesting on the
anniversary date of grant) with full vesting occurring on the
fourth anniversary date of grant. In addition, each non-employee
Director has been awarded 2,000 shares of restricted Common Stock
which vest in one-tenth installments commencing on the first
anniversary of the award date. The Company's Vice Chairman of the
Board also receives an annual Common Stock grant of 2,000 shares
which vests immediately upon grant.
Committees of the Board of Directors and Meeting Attendance
The Board met seven times during the last fiscal year. Effective
June 19, 1997, the Board of Directors established Audit, Human
Resources/Option, Strategic Planning/Corporate Governance, and
Executive Committees. All Committees except the Executive Committee
are comprised of non-employee Directors. Each non-employee Director
is required to serve on at least one Board Committee.
The Audit Committee includes C. Warren Neel (Chairman), Bernard E.
Bernstein, and Gerard K. Donnelly. The Committee met three times
during the last fiscal year. The Audit Committee: (i) recommends
the appointment of the Company's independent accountants; (ii)
reviews the scope, results, and recommendations of the audits
conducted by the independent accountants and the internal auditors;
(iii) oversees the scope and adequacy of the Company's internal
accounting controls and record-keeping systems; (iv) reviews the
objectivity, effectiveness, and resources of the internal audit
function, which reports directly to the Committee; (v) confers
independently with the independent accountants and internal
auditors; (vi) reviews the nature and scope of non-audit services
to be performed by independent accountants or consultants; (vii)
determines the appropriateness of fees for audit and non-audit
services performed by the independent accountants; and (viii)
determines when it is appropriate to accept proposals from
different independent accountants for audit and non-audit services
to be performed.
The Human Resources/Option Committee includes Edmond D. Cicala
(Chairman), Donald F. Dunn, Julius W. Erving, Marguerite W. Sallee,
and Gerald Tsai, Jr. The Committee met four times during the last
fiscal year. The Committee: (i) evaluates the performance of the
Chief Executive Officer ("CEO") annually; (ii) reviews and
recommends to the Board salary and incentive compensation,
including bonus, stock options, and stock grants, for the CEO;
(iii) reviews the salaries and incentive compensation for certain
senior corporate officers and executives; (iv) reviews and approves
the incentive compensation programs; (v) reviews and makes
decisions regarding the structure of and awards granted under the
Company's stock option and incentive plans; and (vi) recommends
Director compensation to the Board.
The Strategic Planning/Corporate Governance Committee includes
Ronald de Waal (Chairman), John W. Burden, III, Michael S. Gross,
and G. David Hurd. The Committee met for the first time in March
1998. The Committee: (i) reviews the Company's strategic plan with
management and coordinates presentation of the strategic plan to
the full Board; (ii) assesses Board and Committee effectiveness;
(iii) screens and recommends new Director candidates; and (iv)
provides counsel to the Chairman of the Board on Committee
composition. The Committee does not consider nominees for Director
recommended by shareholders.
The Executive Committee includes R. Brad Martin (Chairman), Edmond
D. Cicala, Ronald de Waal, and C. Warren Neel. The Committee acted
by unanimous written consent ten times during the last fiscal year.
The Executive Committee exercises all of the powers of the full
Board of Directors (with certain specified exceptions required by
law) during intervals between full Board meetings.
Prior to June 19, 1997, the Company had standing Audit, Human
Resources/Compensation, and Nominating Committees.
All Directors attended 75% or more of the aggregate number of
meetings of the Board of Directors and the committee(s) on which he
or she served, except for Mr. Erving and Mr. Hess. Mr. Erving and
Mr. Hess each were unable to participate in one telephonic Board
meeting and one regular Board meeting due to unavoidable personal
conflicts. The overall average percentage for all Directors'
meeting attendance was 91%.
Executive Compensation
Summary Compensation Table
The following table sets forth, for the fiscal years ended January
31, 1998 ("1997"), February 1, 1997 ("1996"), and February 3, 1996
("1995"), the cash compensation paid by the Company, as well as
other compensation paid or accrued for these years, as to the
Company's Chief Executive Officer and to each of the other four
highest compensated executive officers ("Named Officers"). As used
in this Proxy Statement, the term "executive officer" has the
meaning set forth in Rule 3b-7 under the Securities Exchange Act of
1934. As a consequence, the table is not a list of the most highly
compensated employees of the Company.
Long-Term
Annual Compensation Compensation Awards
--------------------------------------- --------------------------------
All
Other Restricted Securities Other
Annual Stock Underlying Compensa-
Name & Salary Bonus Compensation Award(s) Options tion
Principal Position Year ($) ($) (1) ($) ($) Granted (#) ($)
- ------------------ ----- --------- -------- ---------- ---------- ----------- ---------
R. Brad Martin 1997 613,474 1,629,882(2) 134,282(3) 1,223,968(4)(5) 400,000 19,742(6)
Chairman of the Board 1996 536,031 606,882(7) 27,700(3) 664,589(4)(8) 7,800(6)
and Chief Executive 1995 445,833 233,250(9) 27,700(3) 312,000 (10) 40,000 7,140(6)
Officer
James A. Coggin 1997 508,667 440,945(2) 587,500(4)(5)
President and Chief 1996 450,000 375,200(7) 362,500(4)(8)
Operating Officer 1995 358,333 108,600(9) 40,000
Robert M. Mosco(11) 1997 510,090 300,000 538,532(4)(5) 50,000(12)
President and Chief 1996 450,000 229,167 151,036(4) 120,000 37,500(12)
Executive Officer of 1995
Proffitt's Merchand-
ising Group
Douglas E. Coltharp(11) 1997 281,318 134,063 514,063(4)(5)
Executive Vice Pres- 1996 28,205 70,000 239,688(13)
ident and Chief Finan- 1995
cial Officer
Brian J. Martin 1997 250,333 128,500 470,000(4)(5)
Executive Vice Pres- 1996 213,981 108,500 199,375(4)(8) 30,000 164,875(12)
ident of Law and 1995 150,648 30,000 20,000
General Counsel
(1) Amounts awarded under the Company's incentive compensation
plans and arrangements for the respective fiscal years, even if
deferred.
(2) Includes stock grants to R. Brad Martin ("Martin") and Coggin
of 40,000 and 5,000 shares of Proffitt's Common Stock,
respectively. These grants were priced as of January 31, 1998 and
were valued at $1,175,000 and $146,875 for Martin and Coggin,
respectively (at a market price of $29.375).
(3) In February 1989, the Company entered into a compensation
agreement with Martin which provided for a $500,000 interest-free
loan due January 31, 1999 or upon Martin's termination of
employment with the Company. Pursuant to Martin's amended
employment agreement, beginning in 1997, one-fifth of the loan
balance is being forgiven annually. Other Annual Compensation
represents one-fifth of the principal balance being forgiven and
imputed interest on that interest-free loan.
(4) In 1996, Martin, Coggin, Mosco, and Brian Martin were granted
50,000, 30,000, 25,000, and 18,000 shares of Company Common Stock
under a Restricted Stock Grant Agreement under the Company's 1994
Long-Term Incentive Plan. Restrictions lapse as a function of the
Company achieving certain performance goals and time. Shares shall
be earned ("Earned Shares") on the basis of achieving these goals
for 1996, 1997, and 1998. Restrictions shall be removed from 25% of
such Earned Shares at the time they are earned, and restrictions
shall be removed from an additional 25% of such Earned Shares at
the end of each of the following three years. In 1996, 16,667,
10,000, 8,333, and 6,000 shares were earned for Martin, Coggin,
Mosco, and Brian Martin, respectively. As of February 1, 1997, the
market price of the Common Stock was $18.125, and the value of the
shares earned was $302,089, $181,250, $151,036, and $108,750 for
Martin, Coggin, Mosco, and Brian Martin, respectively, as of that
date. In late 1996, Coltharp was granted 15,000 shares of Company
Common Stock under a Restricted Stock Grant Agreement. In 1997,
16,667, 10,000, 8,333, 5,000, and 6,000 shares were earned for
Martin, Coggin, Mosco, Coltharp, and Brian Martin, respectively. As
of January 31, 1998, the market price of the Common Stock was
$29.375, and the value of the shares earned was $489,593, $293,750,
$244,782, $146,875, and $176,250 for Martin, Coggin, Mosco,
Coltharp, and Brian Martin, respectively. The value of the Earned
Shares is included in total Restricted Stock Awards, even if not
fully vested.
(5) Includes restricted stock awards of 25,000, 10,000, 10,000,
12,500, and 10,000 for Martin, Coggin, Mosco, Coltharp, and Brian
Martin, respectively, which were granted at the market price of
$29.375 on the January 30, 1998 date of grant (valued at $734,375,
$293,750, $293,750, $367,188, and $293,750 for Martin, Coggin,
Mosco, Coltharp, and Brian Martin, respectively). 25% of these
awards vest on the date of grant, with 25% vesting on the following
three anniversary dates.
(6) Economic benefit of split dollar life insurance policy for
1995 and 1996. Economic benefit of split dollar life insurance
policy ($9,480) and estate planning services ($10,262) for 1997,
which was payable under Martin's amended employment agreement.
(7) Includes stock grants to Martin and Coggin of 10,000 and 5,000
shares of Proffitt's Common Stock, respectively. These grants were
priced as of April 9, 1997 and were valued at $190,000 and $95,000
for Martin and Coggin, respectively (at a market price of $19.00).
(8) Includes restricted stock awards of 20,000, 10,000, and 5,000
shares of Proffitt's Common Stock for Martin, Coggin, and Brian
Martin, respectively, which were granted at the market price of
$18.125 on the January 31, 1997 date of grant (valued at $362,500,
$181,250, and $90,625 for Martin, Coggin, and Brian Martin,
respectively). The awards fully vested one year from the date of
grant.
(9) Includes stock grants to Martin and Coggin of 10,000 and 3,000
shares of Proffitt's Common Stock, respectively, which were granted
at the market price of $16.125 on the March 21, 1996 date of grant
(valued at $161,250 and $48,375 for Martin and Coggin,
respectively).
(10) Represents a restricted stock award of 26,000 shares of
Proffitt's Common Stock which was granted at the market price of
$12.00 on the February 12, 1996 date of grant. The award fully
vested one year from the date of grant.
(11) The initial date of employment with the Company for Mosco was
February 3, 1996 and for Coltharp was November 25, 1996.
(12) Relocation reimbursements and bonuses.
(13) Initial bonus comprised of $150,000 in cash compensation and
a stock grant of 5,000 shares of Proffitt's Common Stock which was
granted at the market price of $17.9375 on the January 3, 1997 date
of grant (valued at $89,688).
Note 1: As of January 31, 1998, the number and value (based on the
$29.375 closing price of Common Stock as of January 31, 1998) of
shares of restricted stock held by each of the Named Officers were
as follows: Martin, 206,251 shares ($6,058,623); Coggin, 105,000
shares ($3,084,375); Mosco, 101,252 shares ($2,974,278); Coltharp,
43,125 shares ($1,266,797); and Brian Martin, 41,000 shares
($1,204,375).
Note 2: All Common Stock amounts reflect the 2-for-1 stock split
effected in October 1997.
Employment Contracts
All of the Named Officers and certain other officers have
employment agreements with the Company. All agreements fix the
Named Officers' minimum base compensation for the fiscal year and
provide for participation by such officers in employment benefit
plans as the Company may adopt. The current agreement for Martin
expires on February 2, 2003 and the current agreements for Coggin,
Mosco, Coltharp, and Brian Martin expire on February 2, 2001. Under
the terms of each agreement, each Named Officer is entitled to
receive his base salary for the remainder of his employment period
in the event he is terminated without cause. If the termination is
involuntary and due to a change in control or a potential change in
control, he is entitled to receive his base salary then in effect
for the greater of the remaining term of his agreement or
twenty-four months (thirty-six months in the case of Coltharp).
Annual base salaries currently in effect are as follows: Martin,
$825,000; Coggin, $700,000; Mosco, $700,000; Coltharp, $350,000;
and Brian Martin, $350,000. A "Change in Control" is defined as:
(i) the acquisition of 25% or more of the combined voting power of
the Company's outstanding securities, (ii) a tender offer, merger,
sale of assets, or other business combination which results in the
transfer of a majority of the combined voting power of the Company
or any successor entity, or (iii) during any two consecutive year
period, the failure to elect a majority of the individuals
constituting the Board of Directors of the Company prior to the
commencement of such period, unless the election or nomination of
any replacement Directors was approved by vote of at least
two-thirds of the Directors of the Company then still in office who
were Directors of the Company at the beginning of such period. A
"Potential Change in Control" is defined as: (i) the approval by
the shareholders of the Company of an agreement which, if
consummated, will result in a change of control or (ii) the
acquisition of 5% or more of the outstanding voting securities of
the Company and the adoption by the Company's Directors of a
resolution to the effect that a potential change in control of the
Company has occurred.
The Company entered into an employment agreement with Robert M.
Mosco in conjunction with the Company's February 3, 1996 business
combination with Younkers, Inc. Under the terms of that Employment
Agreement, Mr. Mosco had the right to terminate his employment with
the Company in the 13th month after the business combination. In
such event, he would have received a lump-sum severance payment in
an amount equal to (i) salary through the date of termination and
bonus for the then-current year, (ii) three times Mr. Mosco's
highest annual salary in effect during the 12-month period prior to
termination and three times Mr. Mosco's average bonus in respect of
the three immediately preceding fiscal years, (iii) any unvested
benefit under Younkers' defined benefit pension plan, and (iv) any
unvested employer contributions under Younkers' defined
contribution plan. In connection with Mr. Mosco entering into a new
Employment Contract, Mr. Mosco waived his right to terminate
employment and receive such compensation. In connection with that
waiver, the Company paid Mr. Mosco $1,064,387 on February 3, 1997.
Stock Options
The following table contains information concerning the grant of
stock options under the Company's incentive plans to the Named
Officers as of fiscal year end.
Option Grants in Last Fiscal Year
Potential
Realizable Value
at Assumed
Annual Rates
of Stock Price
Appreciation for
Individual Grants Option Term(3)
--------------------------------------------- --------------------
Exercise
% of Total or Base
Options Options Price Expir-
Granted Employees in ($/share) ation
Name (#)(1) Fiscal Year (2) Date 5%($) 10%($)
- ------------- --------- ------------- ------- ------ ------- -------
R. Brad Martin 400,000(4) 25.4 19.00 4/9/07 4,779,599 12,112,443
James A. Coggin - - - - - -
Robert M. Mosco - - - - - -
Douglas E. Coltharp - - - - - -
Brian J. Martin - - - - - -
___________________________
(1) Under the terms of the 1994 Plan and the 1997 Plan, the Human
Resources/Option Committee retains discretion, subject to Plan
limits, to modify the terms of outstanding options and to reprice
the options.
(2) All options were granted at the market closing price on the
date of grant. No incentive stock options were granted. The
exercise price and tax withholding obligations related to exercise
may be paid by delivery of already owned shares, subject to certain
conditions.
(3) Potential gains are reported net of the option exercise price
but before taxes associated with exercise. These amounts represent
certain assumed rates of appreciation only. Actual gains, if any,
on stock option exercises are dependent on the future performance
of the Common Stock of the Company and overall stock conditions, as
well as the optionholder's continued employment through the vesting
period. The amounts reflected in this table may not necessarily be
achieved.
(4) Options are exercisable in cumulative one-fifth installments
commencing six months from the date of grant (with each subsequent
installment vesting on the anniversary date of grant) with full
vesting occurring on the fourth anniversary of the date of grant.
Option Exercises and Holdings
The following table sets forth information with respect to the
Named Officers concerning the exercise of options during 1997 and
unexercised options held at fiscal year end.
Aggregated Option Exercises in Last Fiscal Year End
and Fiscal Year-End Option Values
Value
Unexercised of Unexercised
Options In-the-Money
Held at Fiscal Options at
Year End(#) Year End ($)(1)
Shares -------------- -------------
Acquired on Value Exercisable/ Exercisable/
Name Exercise(3) Realized($) Unexercisable Unexercisable
-------------- ------------- -------------- --------------- --------------
R. Brad Martin 10,000 123,750 456,000/374,000 7,298,500/4,237,750
James A. Coggin 80,000 1,144,838 56,000/24,000 948,500/404,000
Robert M. Mosco 0 0 206,211/72,000 4,470,046/1,141,500
Douglas E. Coltharp 0 0 28,000/42,000 276,500/414,750
Brian J. Martin 0 0 40,000/30,000 679,750/510,250
(1) Represents the difference between the closing price of the
Company's Common Stock on January 30, 1998 and the exercise price
of the options.
Comparison of Five-Year Cumulative Total Return
The following graph and table compare cumulative total shareholder
return among Proffitt's, Inc., the S&P Midcap 400 Index, the S&P
Retail Stores - Department Index, the NASDAQ Stock Market - U.S.
Index, and the NASDAQ Retail Index, assuming an initial investment
of $100 and reinvestment of dividends.
Starting Basis
Description 1/30/93 1/29/94 1/28/95 2/3/96 2/1/97 1/31/98
- -------------- -------- ------- -------- ------- ------- ------
Proffitt's, Inc. $100.00 $89.32 $98.88 $98.31 $162.92 $264.04
S&P Midcap 400 $100.00 $115.16 $109.64 $144.15 $175.72 $219.73
S&P Retail Stores-
Department $100.00 $114.66 $101.64 $121.39 $130.41 $171.04
NASDAQ U.S. $100.00 $115.00 $109.71 $155.06 $203.27 $240.40
NASDAQ Retail $100.00 $107.28 $94.58 $106.90 $131.46 $153.72
These comparisons are not intended to forecast or be indicative of
possible future performance of the Company's stock.
Effective July 7, 1997, the Company's Common Stock began trading on
the New York Stock Exchange under the symbol PFT. Until that time,
the Company's Common Stock was traded on the NASDAQ National Market
tier of The NASDAQ Stock Market under the symbol PRFT. Accordingly,
it is no longer appropriate to compare the Company's performance
only to the NASDAQ indices.
Report of the Human Resources/Option Committee of
the Board of Directors on Executive Compensation
Executive Compensation
The Human Resources/Option Committee of the Board of Directors (the
"Committee") is composed of five independent Directors who are not
employees of the Company: Mr. Cicala, Chairman of the Committee;
Mr. Dunn; Mr. Erving; Ms. Sallee; and Mr. Tsai. The Committee
determines the amount and form of compensation for executive
officers of the Company. The Committee at least annually evaluates
the Company's performance and executive officers' compensation
compared with results of the Company. The Committee reviews the key
performance standards of the executives of the corporation and
measures individual and corporate achievement of these standards.
The Committee also annually meets to evaluate the performance of
the Chief Executive Officer ("CEO").
The compensation programs of the Company are designed to align
compensation with business objectives and performance and to enable
the corporation to attract, retain, and reward executives who
contribute to the long-term success of the Company. The Committee
believes that executive pay should be linked to level of
responsibility and performance. Therefore, the Company provides an
executive compensation program which includes base pay, annual
bonuses, and long-term incentive opportunities. Individual
executive performance is evaluated by reviewing organization and
management development progress against the established objectives.
Consistent with the compensation philosophy of the corporation,
salaries for executives are established at levels for comparable
positions in the department store and specialty retailing industry.
Generally, executive cash bonus programs provide the opportunity
for executives to earn from 20% to 50% of annual base compensation.
Bonuses are earned as the result of the achievement of specific
corporate and/or division objectives and individual objectives.
Long-term incentives are provided through awards of stock options,
stock grants, and restricted stock awards (containing provisions
for acceleration of vesting upon achievement of corporate
performance criteria) to the Named Officers and other key employees
pursuant to the Proffitt's, Inc. 1994 Long-Term Incentive Plan
("1994 Plan") and the 1997 Stock-Based Incentive Plan ("1997
Plan"). This component is intended to provide added incentive to
secure, retain, and reward those responsible for the successful
leadership of the Company. Stock options are granted at or above
the prevailing market value and will only have value if the
Company's stock price increases. Currently, options vest in five
equal installments, and executives must be employed by the Company
at the time of vesting in order to exercise the option grants. The
Human Resources/Option Committee of the Board of Directors
administers the plans.
CEO Compensation
R. Brad Martin has served as Chairman and CEO of the corporation
since July 1989. While serving in this capacity, the Company's
revenues have grown from $94.8 million for the year ended February
3, 1990 ("1989") to $3.5 billion for the year ended January 31,
1998 ("1997"). Net income (before non-routine charges) has
increased from $.8 million in 1989 to $119.4 million in 1997.
Shareholders' equity has grown from $20.2 million in 1989 to $1.1
billion in 1997. The price of the Company's Common Stock has
increased from $3.00 at February 3, 1990 to $38.38 at March 16,
1998. Market capitalization of the Company has increased from $22.8
million at February 3, 1990 to over $3.4 billion at March 16, 1998.
The compensation program of the Chairman and CEO of the corporation
through 1997 was set forth in an Employment Agreement dated May 9,
1997, approved by the Committee and the Board of Directors. The
terms of this agreement provided for an annual base salary of not
less than $625,000. Effective February 2, 1998, Mr. Martin entered
into a new Employment Agreement ("Agreement") and his annual base
salary was increased to $825,000. The CEO may earn an annual cash
bonus of up to 75% of base salary based upon the achievement of
specific annual objectives. For 1997, 50% of the potential bonus
award was based on achievement of targeted earnings per share of
the corporation; 50% of the potential bonus award was based upon
the achievement by the CEO of certain objectives in his personal
plan. These objectives included specified goals in such areas as
corporate growth, human resources, acquisition assimilation,
merchandising, management information systems, and shareholder
relations. For 1997, Mr. Martin was awarded 97% of his total bonus
potential. For 1997, Mr. Martin's cash compensation totaled
$1,068,162 which was comprised of $613,474 in base salary and
$454,688 in bonus.
Pursuant to the terms of the Agreement, the CEO is also eligible
for an annual award of up to 40,000 shares of Company Common Stock,
20,000 of which is based upon the achievement of earnings per share
growth rates and 20,000 of which is based upon the achievement of
growth in the intrinsic value of the corporation. For 1997, Mr.
Martin was awarded all 40,000 shares of Common Stock of the
corporation pursuant to this provision, valued at $1,175,000 as of
the January 31, 1998 grant date.
During 1996, the CEO was granted 50,000 additional restricted
shares of Company Common Stock under a Restricted Stock Grant
Agreement under the 1994 Plan. Restrictions lapse as a function of
the Company achieving certain performance goals and time. Shares
shall be earned ("Earned Shares") on the basis of achieving those
goals for 1996, 1997, and 1998. Restrictions shall be removed from
25% of such Earned Shares at the time they are earned, and
restrictions shall be removed from an additional 25% of such Earned
Shares at the end of each of the following three years. As of
January 31, 1998, 33,333 shares were earned, with 12,500 vested.
The Earned Shares were valued at $979,157 on January 31, 1998.
In recognition of the extraordinary efforts of the CEO in
completing the business combination with Carson Pirie Scott & Co.
during 1997, the CEO was granted 25,000 restricted shares of
Company Common Stock under the 1997 Plan. These shares were valued
at $734,375 on the January 30, 1998 grant date. 25% of these shares
vested on the date of grant, with 25% vesting on the following
three anniversary dates.
In conjunction with the renewal and extension of Mr. Martin's
Employment Agreement, he was granted the option to purchase 400,000
shares of Company Common Stock under the 1994 Plan and the 1997
Plan. These options were priced at $19.00, the market price of the
Company's stock on the April 9, 1997 date of grant.
Effective January 31, 1998, under the 1997 Plan, the Company
entered into another Restricted Stock Grant Agreement with the CEO.
The CEO was granted 150,000 restricted shares of Company Common
Stock under this agreement. Restrictions lapse as a function of the
Company achieving certain performance goals and time. Shares shall
be earned on the basis of achieving those goals for 1998, 1999, and
2000. Restrictions shall be removed from 25% of such Earned Shares
at the time they are earned, and restrictions shall be removed from
an additional 25% of such Earned Shares at the end of each of the
following three years. As of January 31, 1998, no shares were
earned under this agreement.
Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code (the "Code") limits the
tax deductibility of compensation in excess of $1 million paid to
the Named Officers, unless the payments are made under a
performance-based plan as defined in Section 162(m). The Committee
believes the payments in 1997 under the 1994 Plan (as previously
approved by the shareholders of the Company) meet the requirements
of deductibility as specified under the applicable provisions of
the Code. While some portion of other compensation may not qualify
as wholly-deductible in certain years, any such amount is not
expected to be material to the Company. Awards under the Restricted
Stock Grant Agreements will not qualify as performance-based
compensation under Section 162(m); however, these agreements
qualify for favorable accounting treatment, thus reducing the
program's expense. It is the Committee's intention to continue to
utilize performance-based compensation in order to obtain maximum
deductibility of executive compensation, while providing a
compensation program that will attract, retain, and reward the
executive talent necessary to maximize shareholder return. The
Committee and the Board of Directors have adopted and are
recommending for shareholder approval a Senior Executive Bonus Plan
that will comply with Section 162(m) of the Code.
Human Resources/Option Committee
Edmond D. Cicala, Chairman
Donald F. Dunn
Julius W. Erving
Marguerite W. Sallee
Gerald Tsai, Jr.
March 16, 1998
Approval of the Proffitt's, Inc.
1998 Senior Executive Bonus Plan
(Proposal No. 2)
1. Introduction
On March 25, 1998, the Board unanimously adopted the 1998 Senior
Executive Bonus Plan ("1998 Bonus Plan") and unanimously
recommended that it be submitted to the shareholders for approval.
The purpose of the 1998 Bonus Plan is to provide a select group of
executive officers with an annual incentive opportunity, based on
achievement of pre-established, objective performance goals, to
earn additional compensation so as to attract and retain such
executive officers and to motivate them to enhance the value of the
Company's business. The 1998 Bonus Plan is intended to provide an
annual incentive compensation opportunity that is not subject to
the limitation on deductions for federal income tax purposes
contained in Section 162(m) of the Internal Revenue Code (the
"Code"). The Plan will govern annual cash bonus arrangements and
certain annual performance-based stock grants between the Company
and its executive officers.
The Board believes that a significant portion of the compensation
of the Company's executive officers should be tied to achieving
specific objective performance measures that enhance shareholder
value. This belief flows from the Company's stated Mission "to
create value for its shareholders through the exceptional operation
of retail enterprises." The 1998 Bonus Plan is intended to set the
rules for such incentive compensation and to preserve, to a large
extent, the Company's federal income tax deduction for such
compensation.
The provisions of the 1998 Bonus Plan are generally described
below. This description is qualified in its entirety by reference
to the provisions of the plan, a copy of which is attached to this
Proxy Statement as Exhibit A.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE 1998 BONUS PLAN.
2. Eligibility to Participate
The participants in the 1998 Bonus Plan will be those executive
officers of the Company who are selected for participation by the
committee administering the plan. See "Administration" below.
Selection of the participants in the plan will be made by the Human
Resources/Option Committee of the Board of Directors (the
"Committee") generally within the first 90 days of each fiscal year
of the Company. There currently are seven executive officers of the
Company from among whom participants may be selected. An executive
officer will automatically cease to be a participant in the 1998
Bonus Plan upon the earliest of the officer's: (i) death, (ii)
permanent and total disability, or (iii) termination of employment.
3. Bonus Amounts and Performance Goals
Prior to the 90th day of each fiscal year of the Company, the
Committee will establish for each participant (a) bonus potential
amounts expressed as a percentage of the participant's annual base
salary or a number of shares of common stock and (b) one or more
Performance Goals. The Committee is to establish Performance Goals
expressed in terms of the achievement of any of one or more of the
following business criteria: revenue; net or gross sales;
comparable store sales; gross margin; operating profit; earnings
before all or any of interest, taxes, depreciation and/or
amortization; cash flow; working capital; return on equity, assets,
capital or investment; market share; earnings or book value per
share; earnings from continuing operations; net worth; turnover in
inventory; expense control within budgets; appreciation in the
price of the Company's common stock; total shareholder return
(stock price appreciation plus dividends); new unit growth; and
implementation of critical projects or processes. Where applicable,
the Performance Goals may be expressed in terms of attaining a
specified level of the selected criterion or the attainment of a
percentage increase or decrease in the selected criterion, or may
be applied to the performance of the Company relative to a market
index, a group of other companies or a combination thereof, all as
determined by the Committee. Performance Goals may include a
threshold level of performance below which no award payment will be
made and levels of performance at which specified percentage of the
target award will be paid. Each of the foregoing Performance Goals
will be determined in accordance with generally accepted accounting
principles and will be subject to certification by the Committee.
The Performance Goals established by the Committee may be different
with respect to different Annual Performance Periods and different
goals may be applicable to different Participants. The Committee is
authorized to make adjustments to the Performance Goals that will
result in a reduction in bonus amounts or that will make the
Participant whole in accordance with the original Performance Goal
in the event the Company experiences an extraordinary and
nonrecurring event affecting the Company or its financial
statements.
4. Bonus Awards
(a) Each Participant shall be eligible to receive the bonus
amount (a "Bonus Award") determined by the Committee,
payable in cash or stock, if and to the extent, with
respect to such bonus amount, the Performance Goal or the
Performance Goals established for the Participant for the
Annual Performance Period are achieved in accordance with
the objective criteria set forth in the specific
Performance Goal. If the Performance Goal does not have
an otherwise established objective method for calculating
the amount of the Bonus Award, the payment shall be
determined as follows:
(i) below the established minimum level of performance,
no Bonus Award will be paid;
(ii) equal to or greater than the maximum level of
performance, the maximum Bonus Award will be paid;
(iii) between the minimum and maximum levels of
performance, the Bonus Award will be prorated.
(b) The Maximum Bonus Award payable to a Participant in cash
is the amount equal to 100% of the Participant's annual
base salary or shares of common stock in the following
amounts (subject to adjustment in the case of stock
splits): 50,000 shares of common stock if the Participant
is the Company's Chief Executive Officer and (ii) 25,000
shares of common stock if the Participant is any other
executive officer.
5. Payment of Bonus Awards
Payment of any Bonus Award under the 1998 Bonus Plan may only be
made if the participant is employed by the Company on the date the
Committee administering the plan certifies that the participant met
the applicable performance goal(s) for the fiscal year and that all
other material terms of the bonus were satisfied. The participant
may defer receipt of all or part of the bonus for such period in
accordance with plans and policies of the Company or any employment
agreement between the participant and the Company.
6. New Plan Benefits
The Plan is intended to replace most current annual bonus
arrangements between the Company and its Executive Officers. The
Maximum Dollar Value column below reflects the dollar value of cash
Bonus Awards that would have been paid to the groups and
individuals indicated had the Bonus Plan been in place for 1997,
and had the groups and individuals received the maximum cash
payout. Under the Bonus Plan, if the minimum performance level is
not attained, no participant will receive a payout at the end of
the Annual Performance Period. The maximum number of shares any
individual would have received under the Plan would have been
50,000 shares. The dollar value of 50,000 shares would have been
$1,468,750 based on the January 31, 1998 stock price of $29.375.
Maximum
Name and Position Dollar Value
- ---------------------- ------------
R. Brad Martin $625,000
Chairman of the Board and Chief Executive Officer
James A. Coggin $517,000
President and Chief Operating Officer
Robert M. Mosco $500,000
President and Chief Executive Officer of Proffitt's
Merchandising Group
Douglas E. Coltharp $275,000
Executive Vice President and Chief Financial Officer
Brian J. Martin $250,000
Executive Vice President of Law and General Counsel
Current Executive Officer $2,351,000
Group (7 persons)
7. Administration
The 1998 Bonus Plan will be administered by the Human
Resources/Option Committee, or a subcommittee thereof, consisting
solely of two or more members of the Board, each of whom shall be
an "outside director" within the meaning of Section 162(m) of the
Code. The Committee is authorized to take all actions necessary or
desirable to effect the purposes of the plan.
8. Amendment or Termination
The 1998 Bonus Plan may be amended or terminated by the Committee
administering the plan with the approval of the Board, subject to
any shareholder approval required by law; provided, that the
Committee may not amend the plan to change the material terms of a
Performance Goal without the approval of shareholders.
9. Effective Date
Subject to shareholder approval, the 1998 Bonus Plan will be
effective as of February 1, 1998.
Ratification of Appointment of Independent Accountants
(Proposal No. 3)
Subject to ratification by the shareholders, the Board of Directors
has reappointed Coopers & Lybrand as independent accountants to
audit the financial statements of the Company for the fiscal year
ending January 30, 1999. Coopers & Lybrand has examined the
financial statements of the Company since 1991.
Representatives of Coopers & Lybrand will be present at the Annual
Meeting and will have an opportunity to make a statement, if they
so desire, and will be available to respond to appropriate
questions.
The Audit Committee and the Board of Directors recommend the
shareholders vote "FOR" such ratification.
Section 16(a) of the Securities Exchange Act of 1934
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors, executive officers, and persons who own more
than 10% 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 stock of the Company.
To the Company's knowledge, based solely on a review of copies of
reports provided by such individuals to the Company and written
representations of such individuals that no other reports were
required, during the fiscal year ended January 31, 1998, all
Section 16(a) filing requirements applicable to its officers,
Directors, and 10% or greater beneficial owners were satisfied.
Other Matters
The Board of Directors of the Company knows of no other matters
that may come before the meeting. However, if any other matters
should properly come before the meeting or any adjournment thereof,
it is the intention of the persons named in the proxy to vote the
proxy in accordance with their best judgment.
Shareholders' Proposals for 1999 Annual Meeting
Proposals for shareholder action which eligible shareholders wish
to have included in the Company's proxy mailed to shareholders in
connection with the Company's 1999 Annual Meeting must be received
by the Company at its corporate headquarters on or before January
4, 1999.
Listing of Shareholders
A complete list of the shareholders entitled to vote at the Annual
Meeting of the Shareholders, to be held on June 10, 1998, will be
available for inspection during normal business hours at the
principal office of the Company for a period of at least 10 days
prior to the meeting, upon written request to the Company by a
shareholder, and at all times during the Annual Meeting at the
place of the meeting.
Annual Report
The Company's annual report for the year ended January 31, 1998 is
being mailed with this proxy statement but is not to be considered
as a part hereof.
A copy of the Company's annual report on Form 10-K, including the
financial statements and schedules thereto, required to be filed
with the Securities and Exchange Commission, may be obtained
without charge by any shareholder whose proxy is solicited upon
written request to:
Senior Vice President of Investor Relations
Proffitt's, Inc.
P.O. Box 9388
Alcoa, Tennessee 37701-9388
By order of the Board of Directors,
/s/Julia Bentley
Julia Bentley
Secretary
Birmingham, Alabama
April 30, 1998
Exhibit A
Proffitt's, Inc.
1998 Senior Executive Bonus Plan
1. Purpose
The purpose of the 1998 Senior Executive Bonus Plan (the "Plan") is
to provide a select group of executive officers with an annual
incentive opportunity, based on the achievement of pre-established,
objective performance goals described in Section 4 ("Performance
Goals"), to earn additional compensation so as to attract and
retain such executive officers and to motivate them to enhance the
value of the business of Proffitt's, Inc. (the "Company"). The Plan
is intended to provide an annual incentive compensation opportunity
which is not subject to the limitation on deductions for federal
income tax purposes contained in Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), and is to be
construed to the extent possible as providing for remuneration
which is "qualified performance-based compensation" within the
meaning of Section 162(m) of the Code and regulations thereunder.
The Plan will govern annual cash bonus arrangements and certain
annual performance-based stock grants between the Company and its
executive officers. The Plan is not intended to be subject to the
Employee Retirement Income Security Act of 1974, as amended.
2. Eligibility to Participate
(a) The participants in the Plan ("Participants") for any
annual performance period (an "Annual Performance
Period") shall be those executive officers of the Company
who are selected by the Committee (as defined in Section
8) to participate in the Plan for such Annual Performance
Period. Such selection shall be made by the Committee
within 90 days following the commencement of each Annual
Performance Period (or within such earlier period as
shall be required under Section 162(m)). No executive
officer shall have any right to participate in the Plan
for any Annual Performance Period unless selected to
participate in the Plan by the Committee.
(b) An executive officer shall automatically cease to be a
Participant, without notice to or consent of such
executive officer, upon the earliest to occur of the
following events: (i) the Participant's death; (ii) the
Participant's permanent and total disability; and (iii)
the Participant's termination of employment with the
Company.
3. Annual Performance Period
Each Annual Performance Period shall be a fiscal year of the
Company, commencing with the fiscal year beginning February 1,
1998.
4. Bonus Amounts and Performance Goals
Prior to the 90th day following the start of each Annual
Performance Period (or within such earlier period as shall be
required under Section 162(m)) and while the outcome of the
Performance Goals is substantially uncertain, the Committee will
establish, in writing, for each Participant (i) bonus potential
amounts, expressed as a percentage of annual rate of base salary or
a number of shares of Company common stock, payable in accordance
with the Plan and (ii) one or more Performance Goals with respect
to such bonus potential amounts. Each Performance Goal will consist
of, and achievement of each Performance Goal will be measured
against, one or more of the following business criteria: revenue;
net or gross sales; comparable store sales; gross margin; operating
profit; earnings before all or any of interest, taxes, depreciation
and/or amortization or a percentage thereof to revenue; cash flow;
working capital; return on equity, assets, capital or investment;
market share; earnings or book value per share; earnings from
continuing operations; net worth; turnover in inventory; expense
control within budgets; appreciation in the price of the Company's
common stock; total shareholder return (stock price appreciation
plus any dividends); new unit growth; and implementation of
critical projects or processes. Where applicable, the Performance
Goals may be expressed in terms of attaining a specified level of
the selected criterion or the attainment of a percentage increase
or decrease in the selected criterion, or may be applied to the
performance of the Company relative to a market index, a group of
other companies or a combination thereof, all as determined by the
Committee. Performance Goals may include a threshold level of
performance below which no award payment will be made and levels of
performance at which specified percentages of the target award will
be paid, and may also include a maximum level of performance above
which no additional award will be paid. Each of the foregoing
Performance Goals will be determined in accordance with generally
accepted accounting principles and will be subject to certification
by the Committee. The Performance Goals established by the
Committee may be different with respect to different Annual
Performance Periods and different goals may be applicable to
different Participants. The Committee is authorized to make
adjustments to the Performance Goals that will result in a
reduction in bonus amounts or that will make the Participant whole
in accordance with the original Performance Goal in the event the
Company experiences an extraordinary and nonrecurring event
affecting the Company or its financial statements.
5. Bonus Awards
(a) Each Participant shall be eligible to receive the bonus
amount (a "Bonus Award") determined by the Committee in
accordance with Section 4, payable in cash or stock
pursuant to Section 6, if and to the extent, with respect
to such bonus amount, the Performance Goal or the
Performance Goals established for the Participant for the
Annual Performance Period are achieved in accordance with
the objective criteria set forth in the specific
Performance Goal. If the Performance Goal does not have
an otherwise established objective method for calculating
the amount of the Bonus Award, the payment shall be
determined as follows:
(i) below the established minimum level of performance,
no Bonus Award will be paid;
(ii) equal to or greater than the maximum level of
performance, the maximum Bonus Award will be paid;
(iii) between the minimum and maximum levels of
performance, the Bonus Award will be prorated.
(b) The Committee, in its sole discretion, may reduce the
amount of, or eliminate, a Bonus Award of any
Participant. In determining whether a Bonus Award will be
reduced or eliminated, the Committee may consider any
extraordinary changes that may also have occurred during
the Annual Performance Period, including without
limitation changes in accounting practices or the law,
and may consider such business performance criteria that
it deems appropriate, including without limitation the
Company's net income, cash flow, earnings per share and
other relevant operating and strategic business results.
(c) The maximum Bonus Award payable to a Participant in cash
is the amount equal to 100% of the Participant's annual
base salary or shares of common stock in the following
amounts (subject to adjustment in the case of stock
splits): 50,000 shares of common stock if the
Participant is the Company's Chief Executive Officer and
(ii) 25,000 shares of common stock if the Participant is
any other executive officer.
6. Payment of Bonus Awards
Subject to any shareholder approval required by law, payment of any
Bonus Award for an Annual Performance Period in accordance with the
Plan shall be made in cash or stock to a Participant who is
employed by the Company after the Committee shall have certified
that the Performance Goal or Performance Goals for the Annual
Performance Period were achieved and any other material terms of
the Bonus Award were satisfied. The Company may defer, for such
period of time as the Participant may request at the time of such
deferral, in accordance with the plans and policies of the Company,
the payment of all or any portion of any Bonus Award which may
become payable to the Participant, with respect to the Annual
Performance Period. If a Participant has the right to defer payment
of all or any portion of the Participant's compensation from the
Company in accordance with an employment or similar agreement, then
the right to defer any Bonus Award and the terms of such deferral
will be governed by that agreement.
7. Deferral of Bonus Awards
(a) The Committee may, subject to such limits as the
Committee may specify, permit a Participant to defer all
or part of the Bonus Award payable to him or her with
respect to any Annual Performance Period by executing and
delivering to the Company a deferral election form
provided by the Committee no later than the date
specified in the notification to the Participant of his
or her participation for the Annual Performance Period.
(b) The deferred Bonus Award will be credited to a special
book account maintained for each Participant and will be
accounted for as a number of shares or cash that will
accrue earnings based on a reasonable rate of interest or
on the rate of return of one or more predetermined actual
investments (whether or not assets associated with the
amount originally owed are actually invested therein)
such that the amount payable by the Company at the end of
the deferral period will be based on the actual rate of
return of the specific investment (including any decrease
as well as any increase in the value of the investment).
Distribution of the deferred Bonus Award plus accrued
earnings will be made at such time or times and in such
manner as the Participant shall specify at the time he or
she files the deferral election forms, subject, however,
to such restrictions and limitations as the Committee may
from time to time impose.
(c) The obligation to pay a deferred Bonus Award plus
earnings shall at all times be an unfunded and unsecured
obligation of the Company. The Participant and his or her
beneficiary(ies) shall look exclusively to the general
assets of the Company, as general creditors of the
Company. The Plan is intended to be unfunded for purposes
of the Employee Retirement Income Security Act of 1974
and the Internal Revenue Code of 1986. The Participant
shall have no right to assign, pledge or encumber his or
her interest in the amount credited to the deferred bonus
account. The Participant may, however, designate one or
more beneficiaries to receive the account balance in the
event of his or her death.
8. Administration
(a) The Human Resources/Option Committee of the Board of
Directors of the Company (the "Committee"), or a
subcommittee thereof, consisting solely of two or more
members of the Board, each of whom shall be an "outside
director" within the meaning of Section 162(m) of the
Code shall administer the Plan and be authorized to take
all actions necessary or desirable to effect the purposes
of the Plan, in its sole discretion, including but not
limited to:
(i) providing rules for the management, operation, and
administration of the Plan and all pre-existing
bonus arrangements incorporated into the Plan;
(ii) interpreting the Plan in its sole discretion to the
fullest extent permitted by law; and
(iii) correcting any defect or omission or
reconciling any inconsistency in the Plan in
such manner and to such extent as it shall
deem appropriate in its sole discretion.
(b) The decisions of the Committee shall be final and
conclusive for all purposes of the Plan and upon all
persons and will not be subject to any appeal or review.
9. Amendment and Termination
(a) The Company hereby reserves the right, exercisable by the
Committee, to amend the Plan at any time and in any
respect or to discontinue and terminate the Plan in whole
or in part at any time, subject to Section 8(b).
Amendment or termination may be effective with respect to
any amount which has not yet been paid out, except that
amounts which have been credited to a deferred bonus
account shall be paid out in accordance with the
applicable deferral election or, if the Committee so
determines, upon termination of the Plan, distributed to
such Participant as soon as practicable after termination
of the Plan. In no event shall any award be increased,
other than pursuant to Section 4, after the last day that
a Bonus Award must be specified for qualification as
performance-based compensation under Section 162(m).
(b) In no event shall any Bonus Award be made under the Plan
for any Annual Performance Period after the Annual
Performance Period beginning in 2002. The Plan, awards
under the Plan, and any amendment to the Plan which would
change the class of executives who are eligible to
receive awards under the Plan or the permissible amount
of such awards shall be subject to approval of the
Company's shareholders in such manner and with such
frequency as shall be required under Section 162(m).
10. Miscellaneous
(a) Neither the establishment of the Plan nor participation
herein shall be construed as conferring any legal rights
upon any Participant or other person for continuation of
employment, and the Company reserves its right to
discharge any executive officer without regard to the
effect such discharge might have upon such executive
officer as a Participant in the Plan. However, nothing
contained herein shall affect any contractual right of a
Participant pursuant to a written employment agreement.
(b) The Company shall withhold from any amounts payable under
the Plan all federal, state, local and other taxes as may
be required to be withheld by applicable law.
(c) Subject to any applicable law, no benefit under the Plan
shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to do so shall be
void, nor shall any such benefit in any manner liable for
or subject to the debts, contracts, liabilities,
engagements or torts of the Participant. In the event
that the Committee shall find that any Participant has
attempted to violate such provision or has become
bankrupt, such benefit may, in the sole discretion of the
Committee, be forfeited.
(d) The Plan shall be interpreted and construed in accordance
with the laws of the State of Tennessee, without regard
to principles of conflicts of laws.
(e) If a provision of the Plan shall be held illegal or
invalid, the illegality or invalidity shall not affect
the remaining provisions of the Plan and the Plan shall
be construed and enforced as if the illegal or invalid
provision had not been included in the Plan.
(f) The Plan is designed and intended to comply with Section
162(m) of the Code and all provisions hereof shall be
construed in a manner so to comply.
11. Effective Date
The Plan shall be submitted to the shareholders of the Company for
approval and, if approved by the shareholders, shall be effective
as of February 1, 1998.
Proffitt's, Inc.
750 Lakeshore Parkway
Birmingham, Alabama 35211
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, JUNE 10, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R. Brad Martin and Julia A. Bentley, or either of them with
full power of substitution, are hereby authorized to represent and
vote all the shares of common stock held of record by the
undersigned on April 20, 1998 at the Annual Meeting of Shareholders
of Proffitt's, Inc. to be held on June 10, 1998, at 8:30 a.m.,
local time, or any adjournment thereof, with all powers which the
undersigned would possess if personally present, in the following
manner:
1. ELECTION OF DIRECTORS.
FOR all nominees listed below
(Except as marked to the contrary below)
WITHHOLD AUTHORITY
to vote for all nominees listed below
(INSTRUCTION: To withhold authority to vote for any
individual nominee, strike a line through the nominee's
name on the list below.)
CLASS I (term expiring in 2001): Bernard E. Bernstein,
Stanton J. Bluestone, Julius W. Erving, Donald E. Hess
CLASS II (term expiring in 1999): John W. Burden, III
2. PROPOSAL TO APPROVE THE PROFFITT'S, INC. 1998 SENIOR
EXECUTIVE BONUS PLAN.
___FOR ____AGAINST ___ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND
as the independent accountants of the Company.
___FOR ____AGAINST ___ABSTAIN
4. In their discretion, the Proxies are authorized to vote
upon such other business (none at the time of
solicitation of this Proxy) as may properly
come before the meeting or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE
LISTED PROPOSITIONS. THIS PROXY SHALL BE VOTED AS DIRECTED. IN THE
ABSENCE OF A CONTRARY DIRECTION, IT SHALL BE VOTED FOR THE
PROPOSALS AND THE PROXIES MAY VOTE IN THEIR DISCRETION UP0N SUCH
OTHER MATTERS AS PROPERLY MAY COME BEFORE THE MEETING OR
ADJOURNMENT THEREOF.
The undersigned acknowledges receipt of Notice of said Annual
Meeting and hereby revokes all proxies heretofore given by the
undersigned for said Annual Meeting.
THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO VOTING THEREOF.
Dated:__________________________, 1998
______________________________________
Signature of Shareholder
(Signature of Shareholder (if held jointly))
PLEASE DATE THIS PROXY AND SIGN YOUR NAME OR
NAMES EXACTLY AS SHOWN HEREON. WHEN SIGNING AS
AN ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE
OR GUARDIAN, PLEASE SIGN YOUR FULL TITLE AS
SUCH. IF THERE ARE MORE THAN ONE TRUSTEE, OR
JOINT OWNERS, ALL MUST SIGN. PLEASE RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.