SCHEDULE 14A INFORMATION
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Dollar Tree Stores, Inc.
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[LOGO]
DOLLAR TREE STORES, INC.
500 Volvo Parkway
Chesapeake, Virginia 23320
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on
Thursday, May 24, 2001
To Our Shareholders:
We will hold the annual meeting of the shareholders of Dollar Tree
Stores, Inc. at the Norfolk Waterside Marriott, Norfolk, Virginia, on Thursday,
May 24, 2001 at 10:00 a.m. local time. Shareholders will consider and vote on
the following proposals:
o elect three directors; and
o act upon any other business that may properly come before the
meeting.
Shareholders of record at the close of business on March 30, 2001 will
receive notice of and be allowed to vote at the meeting.
Your vote is important to us. We encourage you to read this Proxy
Statement then sign, date and return your proxy card in the enclosed envelope at
your earliest convenience. Sending in your proxy card will not prevent you from
voting your stock at the meeting if you desire to do so.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Frederick C. Coble
----------------------------------
Frederick C. Coble
Chief Financial Officer
and Secretary
Chesapeake, Virginia
April 16, 2001
DOLLAR TREE STORES, INC.
500 Volvo Parkway
Chesapeake, Virginia 23320
PROXY STATEMENT
We sent you this proxy statement and the enclosed proxy card because
Dollar Tree's Board of Directors is soliciting your proxy to vote your shares at
the Annual Meeting. We will bear all costs for this solicitation. On or about
April 23, 2001, we began mailing these proxy materials to all stockholders of
record at the close of business on March 30, 2001.
VOTING PROCEDURES
Shareholders of record have one vote per share of stock held. On March
30, 2001, there were 112,142,690 shares of common stock outstanding.
If you vote by proxy, that is, by signing, dating and returning the
enclosed proxy card, the individuals named on the card (your "proxies") will
vote your shares in the manner you indicate. If you do not indicate instructions
on the card, then your shares will be voted FOR the election of three nominees
for director in Class III. If any other matter is presented, then your proxy
will vote in accordance with your proxies' best judgment. At this time, the
Board of Directors is unaware of any other business to be brought before the
meeting. If you send more than one proxy card, then your shares will be voted in
accordance with the proxy card bearing the latest date.
As shown in the Notice of Annual Meeting, the 2001 Annual Meeting of
Shareholders of Dollar Tree Stores, Inc. will be held on Thursday, May 24, 2001,
at the Norfolk Waterside Marriott in Norfolk, Virginia, at 10:00 a.m. local
time. A quorum of shareholders is necessary to hold a valid meeting. If holders
of a majority of the outstanding shares of common stock are present in person or
by proxy, a quorum will exist. Abstentions and broker non-votes are counted as
present for establishing a quorum. A broker non-vote occurs when a broker votes
on some matters on the proxy card but not on others because he does not have the
authority to do so.
If you send in your proxy card, you may revoke your proxy by providing
a written notice of revocation to the Secretary of Dollar Tree Stores, Inc.
prior to the Annual Meeting or by attending the annual meeting to cast your vote
in person.
ELECTION OF DIRECTORS
Directors and Nominees
Our Board of Directors is divided into three staggered classes for
purposes of election. One class is elected at each annual meeting of
shareholders to serve for a three-year term.
At the 2001 Annual Meeting of Shareholders, the terms of three Class
III directors are expiring. Class III directors elected at this annual meeting
will hold office for a three-year term expiring in 2004. The other directors
will continue in office following this annual meeting and their terms will
expire in 2002 (Class I) and 2003 (Class II). Officers are appointed by the
Board of Directors.
The nominees have indicated their willingness to serve as directors. If
a nominee becomes unable to stand for reelection, the persons named in the proxy
will vote for any substitute nominee proposed by the Board of Directors.
Vote Required
A director is elected at the meeting, so long as a quorum is present,
if the votes cast favoring the election of that director exceed those cast in
opposition. Abstentions and broker non-votes are not "cast" for this purpose.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE NOMINEES FOR
DIRECTOR.
1
INFORMATION CONCERNING NOMINEES, DIRECTORS AND EXECUTIVE OFFICERS
NOMINEES
H. Ray Compton
Class of Director: III
Director Since: 1986
Principal Occupation: Executive Vice President, Dollar Tree
Stores, Inc.
Recent Business Experience: Mr. Compton, age 58, has been Executive
Vice President since 1986 when he founded
Dollar Tree with Mr. Perry and Mr. Brock.
Mr. Compton has reduced his day-to-day
responsibilities with the company, but
still remains active in special projects.
From 1986 until 1998, he also served as
Dollar Tree's Chief Financial Officer.
From 1979 until 1991, he was employed in a
similar role with K&K Toys. Prior to 1979,
he was associated for 15 years with a
manufacturing company in various
accounting and management positions.
Other Directorships: Hibbett Sporting Goods, Inc.
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John F. Megrue
Class of Director: III
Director Since: 1993
Principal Occupation: Member, Saunders Karp & Megrue Partners,
L.L.C.
Recent Business Experience: Mr. Megrue, age 42, has been Vice Chairman
of the Board of Dollar Tree since 1993. He
also serves as Chairman of the Board for
Hibbett Sporting Goods, Inc. Mr. Megrue
has been a member of Saunders Karp &
Megrue Partners, L.L.C., which serves as
the general partner of the general partner
of The SK Equity Fund, L.P., since 1992.
From 1989 to 1992, he served as a Vice
President and Principal at Patricof & Co.
Prior to 1989, he served as a Vice
President at C.M. Diker Associates.
Other Directorships: Hibbett Sporting Goods, Inc.; Children's
Place Retail Stores, Inc.
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Alan L. Wurtzel
Class of Director: III
Director Since: 1995
Principal Occupation: Private investor; corporate director
Recent Business Experience: Mr. Wurtzel, age 67, has served as the
Vice Chairman of the Board of Circuit City
Stores, Inc., a large consumer electronics
retailing chain. From 1986 to 1994, he
served as Chairman of the Board of Circuit
City. Prior to 1986, he served in several
other capacities with Circuit City,
including Chief Executive Officer from
1973 to 1986. From 1986 to 1988, he served
as President of Operation Independence, a
non-profit organization. Mr. Wurtzel was a
director of Office Depot, Inc. from 1989
to 1996.
Other Directorships: None
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2
CONTINUING DIRECTORS
Macon F. Brock, Jr.
Class of Director: I
Director Since: 1986
Principal Occupation: President and Chief Executive Officer,
Dollar Tree Stores, Inc.
Recent Business Experience: Mr. Brock, age 59, has been Chief
Executive Officer since 1993 and a
Director and President since 1986 when he
founded Dollar Tree with Mr. Perry and Mr.
Compton. He directs the overall operations
of Dollar Tree. Until 1991, he was
employed in a similar role with K&K Toys.
Other Directorships: First Union National Bank of
Virginia/Maryland/Washington, D.C.
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J. Douglas Perry
Class of Director: II
Director Since: 1986
Principal Occupation: Chairman of the Board, Dollar Tree Stores,
Inc.
Recent Business Experience: Mr. Perry, age 53, has been Chairman of
the Board since 1986 when he founded
Dollar Tree with Mr. Brock and Mr.
Compton. He retired as an employee and
officer of the company as of March 1,
1999. However, he still continues his
duties as Chairman of the Board. He is
also Chairman of the Board of Old Dominion
Trust Company. Until 1991, he was an
executive officer of K&K Toys, which he,
along with Mr. Brock, Mr. Compton and Mr.
Perry's father, built from the company's
original single store to 136 stores.
Other Directorships: None
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Thomas A. Saunders, III
Class of Director: II
Director Since: 1993
Principal Occupation: Member, Saunders Karp & Megrue Partners,
L.L.C.
Recent Business Experience: Mr. Saunders, age 64, has been a member of
Saunders Karp & Megrue Partners, L.L.C.,
which serves as the general partner of the
general partner of The SK Equity Fund,
L.P., since 1990. Before founding Saunders
Karp & Megrue, he served as a Managing
Director of Morgan Stanley & Co. from 1974
to 1989. Mr. Saunders is a member of the
Board of Visitors of the University of
Virginia. He is Vice President of the
Board of Visitors of the Virginia Military
Institute. He is a former Chairman of the
University of Virginia's Darden Graduate
School of Business Administration. Mr.
Saunders is a Chairman Elect of The Thomas
Jefferson Foundation (Monticello).
Other Directorships: Hibbett Sporting Goods, Inc.
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3
Frank Doczi
Class of Director: II
Director Since: 1995
Principal Occupation: President, Dive Quarters, Inc.; private
investor; corporate director
Recent Business Experience: Mr. Doczi, age 63, has been President of
Dive Quarters, Inc. since 1997. He served
as the President and Chief Executive
Officer of Home Quarters Warehouse, Inc.
(HQ), a subsidiary of Hechinger Company,
from 1988 until 1995. Mr. Doczi had been
with HQ since it began in 1984. He also
served as a member of the Management
Committee for the Hechinger Company. Prior
to 1984, Mr. Doczi spent seven years with
Moore's, a chain of home centers operated
by Evans Products Company, where he was
the Senior Vice President, General
Merchandise Manager.
Other Directorships: None
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Richard G. Lesser
Class of Director: I
Principal Occupation: Chairman, The Marmaxx Group and Executive
Vice President, The TJX Companies, Inc.
Recent Business Experience: Mr. Lesser, age 66, has been Chairman of
The Marmaxx Group (T.J.Maxx and Marshalls)
since 2001. He served as President of The
Marmaxx Group from 1995 to 2001 and
Executive Vice President of The TJX
Companies, Inc. since 1991. From 1981 to
1991, he held various executive positions
within The TJX Companies, Inc.
Other Directorships: The TJX Companies, Inc.; Reebok
International Ltd.; A.C. Moore Arts &
Crafts, Inc.
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Executive Officers
(Other than those listed above)
Frederick C. Coble
Principal Occupation: Chief Financial Officer and Secretary,
Dollar Tree Stores, Inc.
Recent Business Experience: Mr. Coble, age 40, became Senior Vice
President, Chief Financial Officer in
1998. Prior to that, he served as Senior
Vice President, Finance from 1997 and as
Vice President, Controller from 1991.
Before joining Dollar Tree in 1989, Mr.
Coble served as Internal Audit Manager
with Royster Company, a manufacturing
company, and as Audit Manager for KPMG
LLP.
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Bob Sasser
Principal Occupation: Chief Operating Officer, Dollar Tree
Stores, Inc.
Recent Business Experience: Mr. Sasser, age 49, became Chief Operating
Officer in 1999. Before joining Dollar
Tree, he served as Senior Vice President,
Merchandise and Marketing of Roses Stores,
Inc. from 1997. From 1994 to 1996, he was
Vice President, General Merchandise
Manager for Michaels Stores, Inc. Prior to
1994, he held several positions at Roses
Stores, Inc., ranging from Store Manager
to Vice President, General Merchandise
Manager.
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Mr. Brock is married to Mr. Perry's sister. There are no additional
family relationships among the Directors and Executive Officers.
4
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, officers and persons who own more than 10% of our stock to file
reports of ownership and changes in ownership of our stock with the Securities
and Exchange Commission and Nasdaq, and to provide us with copies of these
reports.
SEC regulations require us to identify anyone who filed a required
report late during the most recent fiscal year. Based solely on our review of
the reports and written representations furnished to us, we believe that all of
these reporting persons complied with their filing requirements for 2000, except
that cashless conversions of warrants to stock in December 2000 by trusts
related to Messrs. Brock, Perry, Compton and Saunders were reported in March
2001 on the annual stock ownership filings with the SEC.
OWNERSHIP OF COMMON STOCK
The table below shows the number of shares of our common stock
beneficially owned on March 30, 2001 by
o each of the Directors and nominees for director;
o each of the Executive Officers;
o all Directors and Executive Officers as a group; and
o each other person who has reported beneficial ownership of more than
five percent of the outstanding common stock.
The address of each Director and Executive Officer of Dollar Tree is
c/o Dollar Tree Stores, Inc., 500 Volvo Parkway, Chesapeake, Virginia 23320.
BENEFICIAL OWNERSHIP (1)
------------------------
DIRECTORS AND EXECUTIVE OFFICERS SHARES PERCENT
- -------------------------------- ------ -------
J. Douglas Perry............................... 3,868,661 (2) 3.4%
Macon F. Brock, Jr............................. 4,843,165 (3) 4.3%
H. Ray Compton................................. 403,258 (4) *
John F. Megrue................................. 4,352,755 (5) 3.9%
Thomas A. Saunders, III........................ 4,997,587 (6) 4.4%
Alan L. Wurtzel................................ 96,469 (7) *
Frank Doczi.................................... 130,219 (8) *
Richard G. Lesser.............................. 49,219 (9) *
Frederick C. Coble............................. 201,294 (10) *
Bob Sasser..................................... 140,000 (11) *
All current Directors and Named
Officers (10 persons)..................... 14,900,712 13.3%
Other 5% Shareholders
Putnam Investments, Inc........................ 12,219,986 (12) 10.9%
One Post Office Square
Boston, MA 02109
- ------------
* less than 1%
(1) As used in this table, "beneficial ownership" means the sole or shared
power to vote or direct the voting or to dispose or direct the disposition
of any security. A person is deemed as of any date to have "beneficial
ownership" of any security that such person has a right to acquire within
60 days after such date. Any security that any person named above has the
right to acquire within 60 days is deemed to be outstanding for purposes of
calculating the ownership percentage of such person, but is not deemed to
be outstanding for purposes of calculating the ownership percentage of any
other person.
(2) Includes 1,856,246 shares owned by trusts for the benefit of certain Perry
family members, of which Mr. Perry is a trustee, 130,900 shares owned by a
private foundation over which Mr. Perry and his wife, Patricia W. Perry,
exercise shared control, and 30,750 shares issuable upon exercise of
certain stock options granted pursuant to The Dollar Tree Stores, Inc.
Stock Incentive Plan.
(3) Includes 1,868,603 shares owned by trusts for the benefit of certain Brock
family members, of which Mr. Brock is a trustee, 109,064 shares owned by a
private foundation over which Mr. Brock and his wife, Joan P. Brock,
exercise shared control, and 120,000 shares issuable upon exercise of
certain stock options granted pursuant to The Dollar Tree Stores, Inc.
Stock Incentive Plan, but excludes 814,763 shares owned by Mr. Brock's
wife, Joan P. Brock.
5
(4) Includes 343,259 shares owned by a trust for the benefit of certain Compton
family members, over which Mr. Compton may indirectly exercise investment
or voting power.
(5) Represents 9,802 shares owned by Mr. Megrue's sister as Custodian for his
children. Also includes 4,294,552 shares owned by The SK Equity Fund, L.P.
Mr. Megrue is a member of the general partner of the general partner of The
SK Equity Fund, L.P.
(6) Includes 17,273 shares owned by an irrevocable trust for the benefit of
certain Saunders family members, of which Mr. Saunders is a trustee. Also
includes 4,294,552 shares owned by The SK Equity Fund, L.P. Mr. Saunders is
a member of the general partner of the general partner of The SK Equity
Fund, L.P.
(7) Includes 24,469 shares held in a revocable trust of which Mr. Wurtzel is a
trustee and 72,000 shares issuable upon exercise of certain stock options
granted pursuant to The Dollar Tree Stores, Inc. Stock Incentive Plan.
(8) Represents 130,219 shares issuable upon exercise of certain stock options
granted pursuant to The Dollar Tree Stores, Inc. Stock Incentive Plan.
(9) Represents 49,219 shares issuable upon exercise of certain stock options
granted pursuant to The Dollar Tree Stores, Inc. Stock Incentive Plan.
(10) Includes 140,000 shares issuable upon exercise of certain stock options
granted pursuant to The Dollar Tree Stores, Inc. Stock Incentive Plan.
(11) Represents 140,000 shares issuable upon exercise of certain stock options
granted pursuant to The Dollar Tree Stores, Inc. Stock Incentive Plan.
(12) Includes shares held or controlled by Putnam Investments, Inc. and its
affiliates including Marsh & McLennan Companies, Inc., Putnam Investments
parent holding company, and Putnam Investment Management, Inc. and The
Putnam Advisory Company, Inc., investment advisors and subsidiaries of
Putnam Investments, Inc. Based on Schedule 13G/A filed by Putnam
Investments for the period ended December 2000.
INFORMATION ABOUT THE BOARD OF DIRECTORS
Director Compensation
Each Director who is not a founder or an employee of the company or an
affiliate of The SK Equity Fund, L.P., is paid a fee of $15,000 per year and
$1,000 plus expenses for each meeting of the Board of Directors or of any
committee thereof the Director attends. Such Directors also receive options for
shares of common stock under the company's Stock Incentive Plan. Mr. Perry
receives $75,000 per year to serve as Chairman of the Board, but he receives no
per meeting fee. In 2000, he also received options for shares of common stock
under the company's Stock Incentive Plan comparable to those granted to the
outside Directors, as disclosed above.
On October 1, 1999, the company entered into a consulting agreement
with Mr. Perry, which provides for annual compensation of $30,000 over the term
of the agreement. At the request of Mr. Perry on each anniversary date, the
company will review his annual compensation, and in its discretion, shall
determine whether or not to increase such compensation. The agreement
automatically renews each year and is cancelable at the option of Mr. Perry. The
annual compensation of $30,000 was reviewed by the company in 2000 and was not
adjusted.
Meetings of the Board of Directors
The Board of Directors has scheduled four regular meetings in 2001 and
will hold special meetings when company business requires. During 2000, the
Board held four regular meetings and one special meeting. Each member of the
Board attended at least 75% of all Board meetings and meetings of Committees of
which each was a member.
Committees of the Board of Directors
The Board of Directors currently appoints an Audit Committee and a
Compensation Committee. The memberships and functions of these committees are
set forth below. The Board has no standing Executive or Nominating Committees.
6
AUDIT COMMITTEE
The Audit Committee has four members: Thomas Saunders (Chairman), Alan
Wurtzel, Frank Doczi and Richard Lesser. This membership satisfies the rule of
the National Association of Securities Dealers, Inc. (NASD) that governs audit
committee composition, Rule 4350(d)(2)(A), including the requirement that audit
committee members all be "independent directors" as that term is defined by NASD
Rule 4200(a)(14). The functions of this committee include:
o reviewing the company's financial reporting process and internal
control system;
o reviewing the quarterly and annual financial statements of the
company;
o reviewing the audit efforts of the company's independent accountants
and internal finance department;
o reviewing all related party transactions; and
o recommending the selection of the independent public accountants to
the Board of Directors.
The Audit Committee met two times in 2000.
Report of the Audit Committee
The Audit Committee's main purpose (in accordance with its written
charter adopted by the Board of Directors and attached to this proxy statement
as Appendix A) is to assist the Board of Directors in fulfilling its oversight
responsibilities regarding the quality and integrity of the accounting, auditing
and financial reporting practices of the company.
In connection with these responsibilities, the Audit Committee:
o met with management and KPMG LLP, the company's independent public
accountants, to review and discuss the audited financial statements
of the company for the year ended December 31, 2000;
o discussed with KPMG LLP the matters required by Codification of
Statements on Auditing Standards No. 61 (Communication with Audit
Committees);
o discussed with KPMG LLP the quality, not just the acceptability, of
the company's accounting principles;
o received from KPMG LLP written disclosures and the letter regarding
its independence as required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees); and
o discussed with KPMG LLP any relationships that may impact their
objectivity and independence.
Based upon the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements for the year ended December 31, 2000 be included in the company's
Annual Report on Form 10-K, as filed with the Securities and Exchange
Commission.
SUBMITTED BY THE AUDIT COMMITTEE
Thomas A. Saunders, III Alan L. Wurtzel Frank Doczi Richard G. Lesser
The information contained in the above Audit Committee Report shall not
be deemed to be `soliciting material' or to be `filed' with the Securities and
Exchange Commission, nor shall such information be incorporated by reference
into any future filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that Dollar
Tree specifically incorporates it by reference in such filing.
COMPENSATION COMMITTEE
The Compensation Committee also has four members: John Megrue
(Chairman), Alan Wurtzel, Frank Doczi and Richard Lesser. The functions of this
committee include:
o meeting as necessary to oversee the company's compensation and
benefit practices;
o recommending to the full Board the compensation arrangements for the
company's senior officers;
o administering the company's executive compensation plans and Employee
Stock Purchase Plan; and
o administering and considering awards under the company's Stock
Incentive Plan.
The Compensation Committee met two times in 2000.
7
Compensation Committee Interlocks and Insider Participation
No executive officer of the company currently serves or has served on
the Compensation Committee. Mr. Megrue is an affiliate of Saunders Karp &
Megrue, L.P., which has entered into an advisory agreement with the company, as
disclosed below.
Report of the Compensation Committee
COMPENSATION POLICY
Our management compensation policy, in general, is to offer a package
including a competitive salary, an incentive cash bonus based upon performance
goals, competitive benefits and an efficient workplace environment. We also
encourage broad-based employee ownership of Dollar Tree stock through the
Employee Stock Purchase Plan and by granting stock options to employees at most
levels within the company.
The Compensation Committee of the Board of Directors (comprised of four
independent directors as that term is defined by NASD Rule 4200(a)(14)) reviews
and approves individual officer salaries, bonus plan and financial performance
goals, and stock option grants. This committee also reviews guidelines for
compensation, bonus and stock option grants for non-officer employees. It
employs compensation consultants to assist the committee in evaluating
compensation plans in comparable companies.
Key personnel of our company are paid salaries in line with their
responsibilities. These salaries are structured to be competitive with salaries
paid by a peer group consisting of similar companies in the discount retail
industry. Management employees participate in our Management Compensation
Program, which includes cash and long-term incentives based on performance.
Benefits extended to officers may include disability, split-dollar life
insurance and participation in our 401(k) and Profit Sharing plans. In addition,
the Compensation Committee may, from time to time, approve a discretionary bonus
or grant of stock options to be paid to the executive officers in recognition of
their contributions.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Compensation Committee reviews and approves the compensation of
Macon F. Brock, Jr., Dollar Tree's Chief Executive Officer. For the year ended
December 31, 2000, Mr. Brock received a base salary of $562,500, an increase of
8.4% from the prior year. The Committee believes Mr. Brock is paid a reasonable
salary. Mr. Brock, together with his spouse, currently owns or otherwise
controls over 5% of our outstanding common stock. Our company's performance and
return on equity are of vital importance to him due to his substantial equity
holdings. At the beginning of each year, the Compensation Committee establishes
certain operational and managerial goals for Mr. Brock. In recognition of his
achievement of these goals and the company's performance in 2000 and 1999, Mr.
Brock received discretionary bonuses of $255,000 and $302,439, respectively. In
each of 2000 and 2001, the Committee granted him the option to purchase 60,000
shares of common stock as incentive compensation.
DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code imposes a limitation on the
deductibility of nonperformance-based compensation in excess of $1 million paid
to executive officers. The Committee believes that we will be able to continue
to manage our executive compensation program to preserve federal income tax
deductions.
SUBMITTED BY THE COMPENSATION COMMITTEE
John F. Megrue Alan L. Wurtzel Frank Doczi Richard G. Lesser
8
COMPENSATION OF EXECUTIVE OFFICERS
Compensation of Executive Officers
The following table sets forth the compensation earned by our executive
officers for the years ended December 31, 2000, 1999 and 1998:
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------- ------------
SECURITIES
NAME AND OTHER UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS ANNUAL (1) OPTIONS (2) COMPENSATION (3)
- ------------------ ---- ------ ----- ---------- ----------- ----------------
Macon F. Brock, Jr. 2000 $562,500 $255,000 --- 60,000 $34,718
President and 1999 518,750 302,439 --- --- 35,177
Chief Executive Officer 1998 450,000 285,000 --- --- 32,307
H. Ray Compton 2000 $125,000 $ 50,000 --- --- $22,566
Executive Vice President 1999 135,416 50,000 --- --- 23,025
1998 250,000 84,875 --- --- 19,833
Frederick C. Coble 2000 $191,250 $ 59,135 --- 30,000 $17,493
Chief Financial Officer 1999 175,000 71,358 --- 26,250 17,952
1998 146,250 77,012 --- 33,750 14,530
Bob Sasser (4) 2000 $306,250 $101,801 --- 45,000 17,493
Chief Operating Officer 1999 180,929 125,815 --- 75,000 ---
1998 --- --- --- --- ---
- ---------------
(1) The value of perquisites or other personal benefits have been excluded
because they do not exceed the lesser of $50,000 or 10% of the total annual
salary and bonus for any Named Executive Officer.
(2) Stock options were granted pursuant to the company's Stock Incentive Plan.
(3) For 2000, this column includes $17,493 each for Messrs. Brock, Compton,
Coble and Sasser, respectively, for the company's discretionary and
matching contributions allocated to the owners' 401(k) and Profit Sharing
Plan accounts. Also included are $17,225 and $5,073 for Messrs. Brock and
Compton, respectively, for life insurance premiums on policies of which the
officer is the owner.
(4) Mr. Sasser was hired as Chief Operating Officer in April 1999.
OPTIONS GRANTED IN 2000
Of the Named Executive Officers, only Messrs. Brock, Coble and Sasser
received options under the company's stock compensation plans. The following
table provides information as to options granted to Messrs. Brock, Coble and
Sasser during 2000:
INDIVIDUAL GRANTS GRANT DATE VALUE
-------------------------------------------- -------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO PER SHARE GRANT DATE
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION PRESENT
NAME GRANTED (1) FISCAL YEAR PRICE DATE VALUE (2)
- ---- ----------- -------------- ----- ---- ---------
Macon F. Brock, Jr. 60,000 3.1% $23.21 03/07/2010 $860,664
Frederick C. Coble 30,000 1.5% $23.21 03/07/2010 $430,332
Bob Sasser 45,000 2.3% $23.21 03/07/2010 $645,498
- ---------------
(1) Options to acquire shares of Dollar Tree common stock are granted under the
company's Stock Incentive Plan. The exercise price equals the closing price
of Dollar Tree stock on the day preceding the date of grant, which reflects
fair market value at the date of grant. Options granted in 2000 and later
are exercisable in five approximately equal annual installments beginning
one year after grant. They expire ten years after grant.
9
(2) The fair value of these options at the date of grant was estimated using a
Black-Scholes option-pricing model. The following weighted-average
assumptions were used to estimate the value of options: a 6 year expected
life of the options; expected volatility for Dollar Tree common stock of
61.6%; and a risk-free rate of return of 5.2%. The company does not pay
dividends.
OPTION EXERCISES IN 2000 AND YEAR END OPTION VALUES
The following table provides information regarding options exercised
by Messrs. Coble and Sasser during the calendar year ended December 31,
2000, and the number and value of options held by Messrs. Brock, Coble and
Sasser at the end of the year:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUES
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money
Acquired Options at Year End Options at Year End (2)
on Value ---------------------------- ----------------------------
Name Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- ------------ ----------- ------------- ----------- -------------
Macon F. Brock, Jr. --- --- 0 60,000 $ 0 $ 77,502
Frederick C. Coble 51,782 $1,766,703 56,875 58,125 $443,402 $141,576
Bob Sasser 20,000 $ 448,750 1,300 98,700 $ 6,500 $326,627
- ---------------
(1) The value realized equals the difference between the option exercise price
and the closing price of Dollar Tree common stock on the day prior to
exercise, multiplied by the number of shares to which the exercise relates.
(2) The value of unexercised "in-the-money" options equals the difference
between the option exercise price and the closing price of Dollar Tree
common stock at December 31, 2000, multiplied by the number of shares
underlying the options. The closing price of Dollar Tree common stock on
December 31, 2000, as reported by Nasdaq, was $24.50.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Leases
As described below, we lease our former corporate headquarters and
distribution center facility and three stores from various lessors who are
affiliated with officers or directors of our company, including leases with a
partnership controlled by the father of Mr. Perry and Mrs. Brock and a
partnership controlled by Mr. Perry and Mr. Brock. In addition, we lease our
Philadelphia, Pennsylvania office and warehouse and ten stores from lessors
affiliated with the former owners of Dollar Express, Inc.
Lease on Former Headquarters and Distribution Center: Located in
Norfolk, Virginia, this facility is leased from DMK Associates, a partnership
controlled by Mr. Perry and Mr. Brock; the lease expires in December 2009.
Rental payments under the lease are adjusted every other lease year to reflect
certain changes in a consumer price index. The lease currently provides for an
aggregate minimum annual rental of $656,250. We replaced our Norfolk location
with an expanded facility in Chesapeake, Virginia, in early 1998. In March 1998,
we subleased the Norfolk facility through March 2008 for an amount that exceeds
our annual obligation under the prime lease.
Lease on Philadelphia, Pennsylvania Office and Warehouse: This facility
is leased from lessors affiliated with the former owners of Dollar Express, Inc.
The lease expires in April 2001 and calls for annual lease payments of $403,750.
We plan to continue leasing this facility on a month-to-month basis until we
replace our Philadelphia distribution center with our new facility in Briar
Creek, Pennsylvania.
Store and Other Leases: We currently lease three stores from lessors
who are affiliated with officers or directors of our company. We lease a store
from Suburban Management Company, controlled by the father of Mr. Perry and Mrs.
Brock. In addition, we rent two stores from DMK Associates. Rental payments on
the three stores totaled approximately $140,000 in 2000. The lease with Suburban
Management expires in August 2005, with two five-year renewal options. The store
leases with DMK Associates expire in November 2003, with two four-year renewal
options, and January 2003, respectively.
In 2000, we leased ten stores from lessors affiliated with the former
owners of Dollar Express, Inc. Rental payments on the ten stores totaled
approximately $806,000 in 2000. Leases for nine of these stores were either
renegotiated in early 2001, are on month-to-month terms, or are on annual terms
resetting on January 1, 2001. As a result, only one store continues on terms
negotiated by the former owners of Dollar Express, Inc.
10
While we believe that the terms of these leases are fair to us, their
respective terms were not negotiated on an arms-length basis and accordingly the
terms of the leases may not be as favorable to us as those that we could have
obtained from an independent third party.
Advisory Agreements
On September 30, 1993, we entered into a financial and management
advisory agreement with Saunders Karp & Megrue, L.P., (the Advisor), a limited
partnership under the control of SKM Partners, L.P., of which Messrs. Saunders,
Karp and Megrue are limited partners. In consideration for certain financial
advisory services, the Advisor was entitled to receive an initial annual fee of
$250,000, reduced to $200,000 in 1995, payable quarterly, and is reimbursed for
certain of its out-of-pocket expenses. In addition, we have agreed to indemnify
the Advisor for certain losses arising out of the provision of advisory
services. The agreement is terminable by a majority of the Board of Directors of
our company upon 30 days notice to the Advisor.
Employment Agreements
There are currently no employment or non-competition agreements in
force between the company and Messrs. Brock, Compton or Coble. Under a severance
arrangement, Mr. Sasser is prohibited from competing with the company following
termination, and, if he is terminated without cause before April 2004, we will
be obligated to pay him an amount equal to one year's salary.
COMPARISON OF SHAREHOLDER RETURNS
The following graph shows a comparison of the cumulative total
shareholder returns on our common stock against a cumulative total return of the
S&P Retail Composite and the Nasdaq U.S. Index for the past five years. The
comparison assumes $100 was invested in our common stock and in each of the
indexes on December 31, 1995.
TOTAL SHAREHOLDER RETURNS
[LINE CHART OMITTED]
DOLLAR TREE STORES INC RETAIL COMPOSITE NASDAQ US INDEX
Data Points:
12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
Dollar Tree 100 231.81 376.13 595.73 660.50 501.12
S&P Retail Composite 100 117.83 170.44 274.98 333.18 280.12
Nasdaq U.S. Index 100 123.04 150.69 212.51 394.92 237.62
11
OTHER MATTERS
Costs of the Proxy Solicitations
The cost of the solicitation of proxies will be borne by us. Proxies
may be solicited by officers, directors and regular employees of our company or
our affiliates, none of whom will receive any additional compensation for their
services. Such solicitations may be made personally, or by mail, facsimile,
telephone, telegram or messenger. We will reimburse brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses incurred by them in
sending proxy material and annual reports to the beneficial owners of stock in
accordance with the schedule of charges approved by the National Association of
Securities Dealers, Inc.
Shareholder Nominations for Election of Directors
Our Bylaws provide that any shareholder of record entitled to vote
generally in the election of directors may nominate persons for election as
directors at a meeting if written notice of such shareholder's intent to make
such nomination has been given, either by personal delivery or by United States
certified mail, postage prepaid, to the Secretary of our company. We must
receive the notice not less than 120 days nor more than 150 days before the
first anniversary of the date of our proxy statement in connection with the last
annual meeting of stockholders, or if no annual meeting was held in the previous
year or the date of the applicable annual meeting has been changed by more than
30 days from the date contemplated at the time of the previous year's proxy
statement, not less than 90 days before the date of the applicable annual
meeting.
Each such shareholder's notice to the Secretary of his or her intent to
nominate must set forth:
o the name and address of record of the shareholder who intends to make
the nomination;
o a representation that the shareholder is a shareholder of record of
our company's capital stock and intends to appear in person or by
proxy at such meeting to nominate the person or persons specified in
the notice;
o the class and number of shares of our capital stock beneficially
owned by the shareholder; and
o a description of all arrangements or understandings between such
shareholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or
nominations are to be made by such shareholder.
For each person nominated, each such shareholder's notice to the
Secretary must also set forth:
o the name, age, business address and, if known, residence address, of
such person,
o his or her principal occupation or employment,
o the class and number of shares of our capital stock beneficially
owned by such person,
o any other information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors or is
otherwise required by the rules and regulations of the Securities and
Exchange Commission promulgated under the Securities Exchange Act of
1934, as amended, and
o the written consent of such person to be named in the proxy statement
as a nominee and to serve as a director if elected.
Shareholder Proposals
Shareholder proposals for the Annual Meeting of Shareholders to be held
in 2002 will not be included in our Proxy Statement for that meeting unless
received by us at our executive office in Chesapeake, Virginia, on or prior to
December 31, 2001. Such proposals must also meet the other requirements of the
rules of the Securities and Exchange Commission relating to shareholder
proposals.
12
Our Independent Certified Public Accountants
KPMG LLP has audited our accounts and our subsidiaries' accounts since
1986 and will continue in that capacity during 2001. A representative of KPMG
LLP will be present at the 2001 Annual Meeting of Shareholders. The
representative will have the opportunity to make a statement and will be
available to respond to appropriate questions.
INDEPENDENT PUBLIC ACCOUNTANTS' FEES (for the year ended December 31, 2000)
- ------------------------------------
Audit Fees $283,488
Financial Information Systems
Design and Implementation Fees $0
All Other Fees $740,243 (a)(b)
(a) Includes fees for a merger and acquisition, a secondary public
offering and `Supply Chain' consulting, all of which are one-time
only fees. Other fees included are for tax compliance, planning and
consulting.
(b) The audit committee has considered whether the provision of these
services is compatible with maintaining the independence of our
principal accountants.
By order of the Board of Directors,
/s/ Frederick C. Coble
-------------------------------------
Frederick C. Coble
Chief Financial Officer and Secretary
Chesapeake, Virginia
April 16, 2001
13
Appendix A
DOLLAR TREE STORES, INC.
AUDIT COMMITTEE CHARTER
I. Purpose of the Audit Committee
The purpose of the Dollar Tree Stores, Inc. Audit Committee (the
"Committee") is to assist the Board of Directors (the "Board") in
fulfilling its oversight responsibilities. The Audit Committee's primary
duties and responsibilities are to:
o serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control
system;
o review and appraise the audit efforts of the Corporation's
independent accountants and internal finance department; and
o provide an open avenue of communication among the independent
accountants, financial and senior management and the Board of
Directors.
The Committee will periodically report to the Board regarding the results
of its review of:
o the financial reports and periodic financial information provided by
Dollar Tree to the Securities and Exchange Commission or the public;
o Dollar Tree's systems of internal controls regarding finance,
accounting, legal compliance and ethics; and
o Dollar Tree's auditing, accounting and financial reporting processes
generally.
II. Composition of the Audit Committee
The Committee will consist of three or more independent directors.
Directors may be considered to be independent if they have no relationship
with Dollar Tree that may interfere with the exercise of their independence
from management and the Company, as determined by the Board. Committee
members and the chairman are appointed by the Board. All members of the
Committee shall have a working familiarity with basic finance and
accounting practices, and at least one member of the Committee shall have
accounting or related financial management expertise. Each member should be
able to adequately perform the Committee's Roles and Responsibilities as
outlined below and be knowledgeable of the Company's business and its
related risks. Committee members may enhance their familiarity with finance
and accounting by requesting additional training from management or other
sources.
III. Number and Nature of Meetings
The Audit Committee will strive to effectively use valuable meeting time
through appropriate planning by the chairman, establishment of a focused
agenda and advance distribution of relevant materials/information. The
Committee will formally meet at least twice annually. Committee members may
participate in Committee meetings in person or via telephone. There will be
one meeting to review the proposed audit scope and approach by the
independent accountants, and to review estimated audit fees and additional
services. The other scheduled meeting will be to review the results of the
annual audit and the independent accountants' letter to management. At each
meeting, the Committee will meet privately with the independent accountants
and may also meet with management.
On a quarterly basis, prior to the public release of earnings information
and the filing of the Form 10-Q, the Committee or Chairman will review
results with financial management and the independent accountants. This
review may take place in person or via telephone. Other special meetings
with the Board, management or independent accountants are encouraged in
order to address any concerns or issues that may arise and to enhance
communications. Such special meetings will be called by the Chairman as
needed.
i
IV. Roles and Responsibilities
To fulfill its responsibilities and duties, the Audit Committee shall,
alone or in conjunction with management, the Company's independent
accountants and/or counsel:
1. Internal control structure:
a. evaluate management's tone and responsiveness toward internal
controls;
b. review the number, nature and proper implementation by
management of internal control recommendations from
independent accountants;
c. inquire as to the adequacy and effectiveness of information
system controls and security; and
d. consider the appropriateness of a formalized internal
auditing function.
2. Financial reporting practices:
a. review and understand significant accounting and reporting
issues, including changes in accounting methods;
b. review the integrity of the Company's financial reporting
process;
c. assess new accounting pronouncements and their impact on the
financial statements;
d. review the accounting treatment of unusual or complex
transactions;
e. specifically inquire of independent accountants about
significant risks and exposures;
f. discuss the appropriateness and acceptability of the
Company's accounting and disclosure practices;
g. assess management's use of estimates in financial reporting
and the degree of conservatism or aggressiveness in its
practices;
h. review annual and interim financial statements, including
Management's Discussion and Analysis, for completeness and
consistency;
i. evaluate the number and nature of any proposed audit
adjustments identified by independent accountants;
j. ensure that the independent accountants communicate to the
Committee any significant audit adjustments, disagreements
with management, difficulties encountered in conducting the
audit or other matters included in Statement of Auditing
Standard No. 61;
k. review interim financial statements for consistency, unusual
items, etc.; and
l. review SEC required documents, prior to their filing, with
management and independent accountants. The Chairman may
represent the entire Committee for purposes of this review.
3. The audit process:
a. review the performance and independence of independent
auditors and recommend the annual appointment of auditors to
the Board;
b. review the adequacy and the quality of the annual audit
process; and
c. review and assess audit fees.
4. Compliance with laws and regulations:
a. be satisfied that all regulatory compliance matters have been
considered in the preparation of the financial statements;
b. review the Company's compliance with loan covenants; and
c. inquire of management, and legal counsel if necessary, as to
any legal or compliance matters, including corporate
securities trading policies, that could have a significant
impact on the Company's financial statements.
5. Ethical conduct:
a. propose, for Board review, a formalized written code of
ethics; and
b. inquire about compliance with the code of ethics, once
established.
6. Audit committee effectiveness:
a. review Audit Committee charter annually, revise as necessary
and submit for approval by full Board;
b. assess adequacy of committee members' financial literacy and
determine any additional training needs;
c. report to Board on Committee's activities, specifically as
they relate to its charter; and
d. if required, disclose Committee's activities in SEC
documents.
ii
Our 2000 Annual Report to Shareholders is mailed to our shareholders.
It includes audited financial statements for the years ended December 31, 2000,
1999 and 1998 reported on by KPMG LLP, together with the related Management's
Discussion and Analysis of Financial Condition and Results of Operations.
A copy of Dollar Tree Stores, Inc. 2000 Form 10-K will be supplied
without charge upon request. Requests for such annual reports, interim reports,
or other information should be directed to:
Shareholder Services
Dollar Tree Stores, Inc.
500 Volvo Parkway
Chesapeake, Virginia 23320
(757) 321-5000
DOLLAR TREE STORES, INC. 2001
THIS IS YOUR PROXY
YOUR VOTE IS IMPORTANT
Regardless of whether you plan to attend the Annual Meeting of Shareholders, you
can be sure your shares are represented at the meeting by promptly returning
your proxy in the enclosed envelope.
To assist us in planning, please indicate in the appropriate block on your proxy
whether you plan to attend the Annual Meeting of Shareholders. We look forward
to seeing you there.
DOLLAR TREE STORES, INC.
500 Volvo Parkway
Chesapeake, Virginia 23320
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
For Annual Meeting, May 24, 2001
The undersigned hereby appoints J. Douglas Perry, Macon F. Brock, Jr. and H. Ray
Compton, jointly and severally, each with full power of substitution, as proxies
to represent the undersigned at the Annual Meeting of Shareholders of DOLLAR
TREE STORES, INC. to be held at the Norfolk Waterside Marriott, Norfolk,
Virginia, on Thursday, May 24, 2001 at 10:00 a.m. local time, and at any
adjournment thereof, on any matters coming before the Meeting.
Please specify your choice by marking the appropriate box for each matter on the
reverse side. Any boxes not marked will be voted in accordance with the
recommendations of the Board of Directors. The Proxies cannot vote your shares
unless you sign and return this card.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
This proxy, when properly executed, will be voted in the manner directed herein
and authorizes the Proxies to take action in their discretion upon other matters
that may properly come before the Meeting. If no direction is made, this proxy
will be voted FOR the election of the directors listed in proposal 1.
1. Election of Directors.
Nominees: Class III - H. Ray Compton, John F. Megrue and Alan L. Wurtzel
[ ] FOR [ ] WITHHELD [ ] FOR, except withheld from the
following nominees:
----------------------------------
2. If you will be attending the Annual Meeting, please mark [ ] YES
CHANGE OF ADDRESS:
NAME OF SHAREHOLDER ___________________________________
STREET ADDRESS ___________________________________
CITY, STATE AND ZIP CODE ___________________________________
Signature(s): ________________________________________ Date: __________________
Please sign exactly as your name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.