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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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 (S) 240.14a-11(c) or (S) 240.14a-12
RadioShack Corporation
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(Name of Registrant as Specified In Its Charter)
RadioShack Corporation
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(5) Total fee paid:
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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
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
[RADIOSHACK LOGO]
RadioShack Corporation
100 Throckmorton Street, Suite 1800
Fort Worth, Texas 76102
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Thursday, May 17, 2001
10:00 am
Renaissance Worthington Hotel
200 Main Street
Fort Worth, Texas 76102
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AGENDA
(1) To elect 12 directors to serve until the next annual meeting of
stockholders or until their successors are elected;
(2) To adopt the RadioShack Corporation 2001 Incentive Stock Plan; and
(3) To transact any other business properly brought before the meeting
or any adjournment of the meeting.
Stockholders of record at the close of business on March 21, 2001, will be
entitled to notice of the meeting and the right to vote at the meeting.
By Order of the Board of Directors
Mark C. Hill
Senior Vice President, Corporate
Secretary and General Counsel
April 6, 2001
Regardless of whether you plan to attend the annual meeting, please VOTE OVER
THE TELEPHONE OR THE INTERNET AS INSTRUCTED ON THE ENCLOSED PROXY CARD OR YOU
MAY COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE
PROVIDED. In the event you decide to attend the meeting, you may, if desired,
revoke the proxy and vote your shares in person.
Table of Contents
PROXY STATEMENT Page
.Item 1 Election of Directors 1
Security Ownership of Certain Beneficial Owners of Company Voting
Securities 4
Section 16(a) Beneficial Ownership Reporting Compliance 5
Director Attendance 5
Director Compensation 5
Board of Directors Committees 6
Statement on Corporate Governance 8
Audit and Compliance Committee Matters 9
Independence of Company's Auditors 10
Organization and Compensation Committee Report on Executive Compensation 11
Executive Compensation 13
Option Grants in the Last Fiscal Year 14
Option Exercises in the Last Year and Year-End Option Values 15
Retirement and Deferred Compensation 15
Executive Deferred Compensation Plans and Other Agreements 16
Change in Control Protections 17
Compensation Committee Interlocks and Insider Participation 18
Performance Graph 19
Certain Transactions with Management and Others 19
.Item 2 Approval of the Adoption of the RadioShack Corporation
2001 Incentive Stock Plan 20
RadioShack Corporation 2001 Incentive Stock Plan 20
Federal Income Tax Consequences 23
Appointment of Independent Accountants 24
Voting Rights and Proxy Information 24
Stockholder Proposals and Nominations for Directors for the
2002 Annual Meeting 26
Annual Report 26
Other Matters 26
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.Denotes item to be voted on at the meeting.
PROXY STATEMENT
RADIOSHACK CORPORATION
100 Throckmorton Street, Suite 1800
Fort Worth, Texas 76102
ANNUAL MEETING OF STOCKHOLDERS OF RADIOSHACK CORPORATION
TO BE HELD ON THURSDAY, MAY 17, 2001
This Proxy Statement is being furnished to stockholders of RadioShack
Corporation, a Delaware corporation, in connection with the solicitation of
proxies by the Board of Directors of the Company from holders of record of the
Company's voting securities as of the close of business on March 21, 2001, for
use at the Annual Meeting of Stockholders of the Company to be held on
Thursday, May 17, 2001, at 10:00 a.m. (Central Daylight Savings Time) at the
Renaissance Worthington Hotel, 200 Main Street, Fort Worth, Texas 76102, and
at any resumption of the meeting after adjournment or postponement thereof.
This Proxy Statement is first being mailed to the holders of the Company's
voting securities on or about April 6, 2001.
PURPOSES OF THE ANNUAL MEETING
Holders of shares of Company common stock entitled to vote at the Annual
Meeting will be asked to consider and to vote upon the following matters:
I. the election of 12 directors of the Company to serve until the next
annual meeting of stockholders or until their successors are
elected;
II. the adoption of the RadioShack Corporation 2001 Incentive Stock
Plan; and
III. such other business as may properly come before the meeting.
The Board unanimously recommends a vote FOR the election of the Board's
nominees for election as directors of the Company and has unanimously approved
and advises the adoption of the RadioShack Corporation 2001 Incentive Stock
Plan and recommends that holders of the Company's voting securities vote FOR
the RadioShack Corporation 2001 Incentive Stock Plan.
As of the date of this Proxy Statement, the Board knows of no other business
that will come before the Annual Meeting.
ITEM 1
ELECTION OF DIRECTORS
The Board of Directors Recommends a Vote "FOR" All Nominees Proxies submitted
by the Board of Directors will be so voted unless stockholders specify
otherwise in their proxies.
All 12 directors of the Company are to be elected at the Annual Meeting to
hold office until the next annual meeting of stockholders and until their
successors have been duly elected and qualified. Currently, there are 12
directors. It is the intention of the persons named in the accompanying form
of proxy card to vote for the election of all 12 nominees listed below as
directors of the Company unless authority to so vote is withheld. All nominees
have indicated their willingness to serve for the ensuing term.
The nominees for directors of the Company are listed below:
Name (1) Principal Occupation Age Director
(2)Publicly Held Company Since
Board Memberships
- --------------------------------------------------------------------------------------
Frank J. Belatti (1) Chairman and Chief Executive Officer of 53 1998
AFC Enterprises, Inc. (parent company of
Popeyes Chicken & Biscuits, Church's
Chicken, Seattle Coffee Company and
Cinnabon International).
(2) AFC Enterprises, Inc.
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Ronald E. Elmquist (1) Consultant since February 2001. Chairman, 54 1997
President and Chief Executive Officer of
Keystone Automotive, Inc. from June 1998
to February 2001. Previously President,
Global Food Service-Campbell Soup Company
and Corporate Vice President, Campbell
Soup Company from January 1994 to April
1998.
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Lawrence V. Jackson (1) Senior Vice President of Supply Operations 47 2000
of Safeway, Inc. since October 1997.
Previously Senior Vice President and COO
of Worldwide Operations PepsiCo. Food
Systems, Inc. from December 1994 to
October 1997.
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Robert J. Kamerschen (1) Chairman & Chief Executive Officer DIMAC 65 1999
Holdings, Inc. since October 1999.* Senior
Consultant ADVO, Inc. since June 1999.
Previously Chairman ADVO, Inc. from
January 1999 to June 1999 and Chief
Executive Officer ADVO, Inc. from November
1988 to January 1999.
(2) coolsavings.com inc.; IMS Health, Inc.; R.
H. Donnelley Corp. and Synavant Inc.
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Lewis F. Kornfeld, Jr. (1) Retired Vice Chairman, RadioShack 84 1975
Corporation and Retired President,
RadioShack Division.
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Jack L. Messman (1) President and Chief Executive Officer of 61 1993
Cambridge Technology Partners, Inc. since
July 1999. Previously Chairman and Chief
Executive Officer, Union Pacific Resources
Group Inc. from October 1996 until July
1999. Previously President and Chief
Executive Officer of Union Pacific
Resources Group Inc. from May 1995, to
October 1996.
(2) Cambridge Technology Partners, Inc.;
Novell, Inc.; Safeguard Scientifics, Inc.
and US Data Corporation.
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William G. Morton, Jr. (1) Chairman Emeritus, Boston Stock Exchange, 64 1987
Inc. since March 2001. Previously Chairman
and Chief Executive Officer, Boston Stock
Exchange, Inc. until March 2001.
(2) 12 funds managed by Morgan Stanley Dean
Witter Investment Management, Inc.
2
Name (1) Principal Occupation Age Director
(2)Publicly Held Company Since
Board Memberships
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Thomas G. Plaskett (1) Managing Director, Fox Run Capital 57 1986
Associates and Business Consultant since
November 1991. Chairman of Probex
Corporation from November 1999 to December
2000 and President and CEO of Probex
Corporation from November 1999 to August
2000. Vice Chairman, Legend Airlines, Inc.
since June 1997 and Executive Vice
President since September 1999.**
Previously Chairman Greyhound Lines, Inc.,
from March 1995 to March 1999.
(2) Probex Corporation and Smart & Final, Inc.
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Leonard H. Roberts (1) Chairman of the Board of Directors, 52 1997
RadioShack Corporation since May 1999;
Chief Executive Officer of RadioShack
Corporation since January 1999; President,
RadioShack Corporation from December 1995
to December 2000.
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Alfred J. Stein (1) Start-up Consultant for the high tech 68 1981
industry since June 1999. Previously
Chairman and Chief Executive Officer, VLSI
Technology, Inc. until June 1999.
(2) Advanced Power Technology, Inc.
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William E. Tucker (1) Chancellor Emeritus, Texas Christian 68 1985
University since July 1998. Previously
Chancellor, Texas Christian University
until June 1998.
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Edwina D. Woodbury (1) President, The Chapel Hill Press, Inc. 49 1998
since July 1999. Previously, Consultant
from January 1999 through January 2000 and
Executive Vice President-Business Process
Redesign, Avon Products, Inc. from
February 1998, through December 1998.
Senior Vice President, Chief Financial and
Administrative Officer, Avon Products,
Inc. from November 1993, to February 1998.
(2) Click Commerce, Inc.
* DIAMAC Holdings, Inc. filed for Chapter 11 bankruptcy protection on April 6,
2000 and emerged from bankruptcy protection on February 27, 2001.
** Legend Airlines, Inc. filed for Chapter 11 bankruptcy protection on
December 3, 2000.
3
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
OF COMPANY VOTING SECURITIES
The following table sets forth, as of February 28, 2001, certain information
with respect to the beneficial ownership of the Company's voting securities
held by (i) each current director of the Company, (ii) the Chairman and Chief
Executive Officer and the three most highly compensated current Executive
Officers of the Company for the year ended December 31, 2000, (iii) the
Company's current directors and Executive Officers as a group, and (iv) persons
known to the Company to own beneficially more than 5% of any class of the
Company's voting securities, except for the Tandy Fund Trustee, which holds
100% of the Company's outstanding Series B TESOP Convertible Preferred Stock
for the benefit of Tandy Fund participants.
-------------------------------
Amount and Nature of
Common Stock Beneficially
Owned(2)(3)
-------------------------------
Number of Right to Percent of Common
Shares Acquire Class Stock Units
Held of (1) (4)
Record
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Directors and Other Named
Executive Officers
Frank J. Belatti, Director 500 29,332 * -0-
Ronald E. Elmquist, Director 268 35,999 * 4,254
Lawrence V. Jackson, Director 900 -0- * -0-
Robert J. Kamerschen, Director 7,000 11,999 * 1,351
Lewis F. Kornfeld, Jr.,
Director (5) 20,400 31,999 * -0-
Jack L. Messman, Director 13,524 31,999 * 11,748
William G. Morton, Jr., Director 12,000 73,999 * 8,444
Thomas G. Plaskett, Director 15,992 31,999 * -0-
Leonard H. Roberts, Chairman and
Chief Executive Officer 136,712 872,040 * 264,526
Alfred J. Stein, Director 16,454 107,999 * 2,953
William E. Tucker, Director 33,117 83,999 * -0-
Edwina D. Woodbury, Director 1,000 29,332 * 3,299
David J. Edmondson, President and
Chief Operating Officer 23,553 159,607 * 13,728
David Christopher, Executive Vice
President (6) 375,713 316,078 * 41,665
Mark C. Hill, Senior Vice
President, Corporate
Secretary and General Counsel 13,876 114,527 * 44,688
Directors and Executive Officers
as a Group (19 people) (7) 690,440 2,091,767 1.50% 418,959
Stockholders
Putnam Investments, LLC., One Post
Office Square,
Boston, Massachusetts 02109(8) 14,273,967 7.70%
Massachusetts' Financial Services
Company, 500 Boylston Street
Boston, Massachusetts (9) 11,824,044 6.40%
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* Less than 1%
(1) Shares Executive Officers and directors could acquire by exercising stock
options within 60 days of February 28, 2001.
(2) The address of each director and named executive officer is c/o RadioShack
Corporation, 100 Throckmorton Street, Suite 1800, Fort Worth, Texas 76102.
(3) Unless otherwise noted, each person has sole investment and voting power
with respect to the shares indicated.
(4) Common stock units are not shares of common stock and have no voting power
and this information is set forth as of December 31, 2000. The units for
directors represent director fee deferrals and partial Company matches
under the Directors' Unfunded Deferred Compensation Plan. The units for
Executive Officers represent in some cases restricted stock deferrals and
also salary and bonus deferrals and Company partial matches under either or
both the Company's Executive Deferred Compensation Plan and the Executive
Deferred Stock Plan.
4
(5) Includes 15,000 shares of Company common stock owned by a trust of which
Mr. Kornfeld is the sole beneficiary.
(6) Includes 12,000 shares held by Mr. Christopher's spouse.
(7) Mr. Dwain H. Hughes, formerly Senior Vice President and Chief Financial
Officer of the Company, died on January 30, 2001.
(8) According to an Amendment to Schedule 13G dated February 14, 2001, Putnam
Investments, LLC., a Massachusetts limited liability company and a wholly
owned subsidiary of Marsh & McLennan Companies, Inc., owns Putnam
Investment Management, LLC. and The Putnam Advisory Company, LLC.,
investment advisers which hold shared dispositive powers over all the
shares. The Trustees of Putnam Advisory Company, LLC. and Putnam
Investment Management, LLC. have sole voting power over the shares held by
them, except for The Putnam Advisory Company, LLC., which shares voting
power with its institutional clients.
(9) According to Schedule 13G dated February 12, 2001 Massachusetts Financial
Services Company, a Delaware corporation, has sole voting and dispositive
power over all the shares and shares beneficial ownership with certain
other non-reporting entities.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States the Company's directors,
Executive Officers and all persons holding 10% or more of Company common stock
are required to report their ownership of the Company's securities and any
changes in that ownership to the Securities and Exchange Commission and the
New York Stock Exchange. Specific due dates for these reports have been
established and the Company is required to report in this Proxy Statement any
failure to file by these dates during the year ended December 31, 2000. To the
Company's knowledge, these filing requirements were satisfied by the Company's
present directors and Executive Officers.
DIRECTOR ATTENDANCE
The Board held five meetings during 2000. All nominees for director, after
being elected or appointed to office in 2000, attended at least 75% of the
meetings of the Board and committee meetings of which they were a member.
DIRECTOR COMPENSATION
The following table represents components of non-employee director
compensation:
Components Note Compensation
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Annual Board Retainer 1 $24,000
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Annual Option Grant 2 One option to purchase 16,000 shares.
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Annual Retainer for Committee Chair $2,500
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Board Attendance Fee (each in person $1,000
meeting)
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Board Attendance Fee (each conference 3 $250
call meeting)
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Committee Attendance Fee (each in person 3 $500
meeting)
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Committee Attendance Fee (each 3 $250
conference call meeting)
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Expenses of Attendance Reimbursement of actual expenses
incurred.
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New Director Option Grant 4 One-time option grant to purchase
20,000 shares of common stock.
- ------------------
5
1. Each non-employee director may elect before May 1 of each year to have 50%
or 100% of this annual retainer fee paid in shares of Company common stock.
2. Each non-employee director is automatically granted a non-qualified stock
option to purchase 16,000 shares of Company common stock on the first
business day in September of each year that he or she serves as a director.
The option exercise price of all options granted to non-employee directors
is set at the fair market value (average of the high and low sales prices)
of a share of Company common stock on the first business day in September
of the year of grant. The options vest in three equal increments on the
first, second and third annual anniversaries of the date of grant.
3. These fees only apply if the committee meeting is held more than 24 hours
before or after a board meeting.
4. Each new non-employee director receives a one-time grant of an option to
purchase 20,000 shares of Company common stock on the date he or she
attends his or her first Board meeting. The option exercise price is set at
the fair market value (average of the high and low sales prices) of a share
of Company common stock on the date of grant. These options vest in three
equal increments on the first, second and third anniversaries of the date
of grant.
Unfunded Deferred Compensation Plan for Directors
Under the Company's Unfunded Deferred Compensation Plan for Directors, non-
employee directors may elect to defer payment of all or a specified part of
their annual retainer fees and meeting fees payable for services rendered to
the Company. Interest is credited for fees deferred in cash at the rate of 1%
below the prime rate. If a director elects to defer payment of fees payable in
Company common stock in excess of three years, the Company will make an
additional contribution of 25% of the amount deferred in Company common stock.
Upon a change in control of the Company, a director will receive any deferred
fees and the additional Company contribution in a lump sum.
BOARD OF DIRECTORS COMMITTEES
The Board has four standing committees: the Audit and Compliance Committee;
the Corporate Governance Committee; the Executive Committee and the
Organization and Compensation Committee. Actions taken by any of these
Committees are reported to the Board and the Board receives a copy of the
minutes of all Committee meetings. Membership in each of the committees is as
follows:
Audit and Compliance Committee Executive Committee
Mr. Elmquist (Chair) Mr. Roberts (Chair)
Mr. Jackson Mr. Elmquist
Mr. Messman Mr. Kornfeld
Mr. Plaskett Mr. Messman
Ms. Woodbury Mr. Morton
Corporate Governance Committee Organization and Compensation Committee
Mr. Tucker (Chair) Mr. Messman (Chair)
Mr. Belatti Mr. Kamerschen
Mr. Elmquist Mr. Morton
Mr. Kornfeld Mr. Stein
Mr. Plaskett Ms. Woodbury
Mr. Stein
6
Audit and Compliance Committee 6 meetings in calendar year 2000
1. Reviews the engagement of the independent accountants;
2. Reviews the scope and timing of the audit of the independent accountants;
3. Reviews the non-audit related services provided by the independent
accountants;
4. Reviews the report of the independent accountants upon completion of its
audit;
5. Reviews the Company's policies and procedures with respect to internal
auditing, accounting and financial controls, and compliance with applicable
laws and ethical business practices;
6. Reviews major litigation and risk management policies and procedures,
including insurance coverages; and
7. Reviews with the independent accountants and management the Company's
policies and procedures with respect to laws and ethical business
practices.
Executive Committee 1 meeting in calendar year 2000
Exercises all powers of the Board when it is impractical to assemble the full
Board unless otherwise prohibited by law or involves amending the charter of
any Board Committee.
Organization and Compensation Committee 5 meetings in calendar year 2000
1. Reviews and makes recommendations to the Board concerning compensation
plans for executive management;
2. Reviews management's appointments and promotions to officer positions; and
3. Approves annual salary increases, bonuses, stock option and restricted
stock awards in accordance with existing applicable plans.
Corporate Governance Committee 4 meetings in calendar year 2000
1. Reviews and nominates to the Board candidates to be directors of the
Company and compensation of Board members;
2. Approves or denies requests by Company officers to serve on the boards of
outside companies;
3. Recommends to the Board the members and chair persons of all standing
committees;
4. Recommends the duties to be included in the charter of new standing
committees;
5. Assists the independent directors in conducting a self-evaluation of the
effectiveness of the Board and each of its members; and
6. Reviews with management the overall effectiveness of the organization of
the Board and the conduct of the Board's business and makes recommendations
to the Board based on its evaluation.
7
STATEMENT ON CORPORATE GOVERNANCE
The Board of Directors has for many years followed specific policies regarding
corporate governance. The Board of Directors has incorporated these policies
and procedures into its Statement on Corporate Governance. To obtain a
complete copy of the Statement on Corporate Governance, please contact Ms.
Carolyn Hoopes, Vice President and Assistant Corporate Secretary, 100
Throckmorton Street, Suite 1724, Fort Worth, Texas 76102-2816, Telephone (817)
415-2758 or visit our website at www.radioshackcorporation.com. The following
is a summary of certain material items in the Statement on Corporate
Governance.
Board Responsibilities
The principal responsibility of the Board of Directors is as follows:
Promote and act in the best interests of all stockholders of the Company
through careful selection and oversight of executive management including the
further development of compensation plans based on performance. To consider
and monitor the potential impact of Board and executive management decisions
on the Company's stockholders, employees, customers, suppliers, lenders and
the communities in which it operates.
Board Oversight of Management
1. Evaluate the Chief Executive Officer and other corporate officers annually.
2. Review and approve the broad strategic and financial objectives of the
Company through a collaborative process with executive management.
3. Review and approve compensation plans of any officer of the Company who is
paid $125,000 or more per year. The Board believes that compensation plans
should be tied directly to the Company's performance.
4. Review the succession plans for executive management so that continuity in
the operation of the Company can be maintained in the event of untimely
displacement of key management members.
Board Composition
1. The Company's By-Laws provide that the Board of Directors must have at
least three and not more than 14 members.
2. Four standing committees have been established by the Board: Audit and
Compliance Committee; Organization and Compensation Committee; Corporate
Governance Committee and the Executive Committee.
3. New committees may be established by the Board at any time.
Board Independence
1. It is the Board's goal that at least 75% of the members of the Board be
independent.
2. Each of the independent directors, in the opinion of the Board, is
independent of management and free from any relationship that would
interfere with the exercise of independent judgment.
8
3. Only independent directors are eligible to serve as members of the Audit
and Compliance Committee, the Organization and Compensation Committee, and
the Corporate Governance Committee under the applicable rules and
regulations of the Securities and Exchange Commission, the New York Stock
Exchange and the Internal Revenue Service. Each independent director is
eligible to serve on each of these Committees.
Directors
1. Under the Company's By-Laws, all directors stand for re-election every
year.
2. The Board of Directors has exclusive responsibility for selecting its own
members.
3. Within three years of their election to the Board, directors are required
to own shares of Company common stock that are at least equal in value to
200% of the Board of Director's annual retainer fee then in effect.
4. Directors should not stand for re-election after age 70. This policy does
not apply to directors who were over the age of 70 as of January 1, 1998.
AUDIT AND COMPLIANCE COMMITTEE MATTERS
Audit and Compliance Committee Report
The Audit and Compliance Committee reports as follows with respect to the
Company's 2000 audited financial statements:
. The Committee has reviewed and discussed with the Company's management
the Company's 2000 audited consolidated financial statements;
. The Committee has discussed with the independent auditors
(PricewaterhouseCoopers LLP) the matters required to be discussed by SAS
61 which includes, among other items, matters related to the conduct of
the audit of the Company's consolidated financial statements;
. The Committee has received written disclosures and the letter from the
independent auditors required by ISB Standard No. 1 (which relates to
the auditor's independence from the Company and its related entities)
and has discussed with the auditors the auditors' independence from the
Company; and
. Based on a review and discussions of the Company's 2000 audited
consolidated financial statements with management and discussions with
the independent auditors, the Audit and Compliance Committee recommended
to the Board of Directors that the Company's 2000 audited consolidated
financial statements be included in the Company's Annual Report on Form
10-K.
Audit and Compliance Committee Members
Ronald E. Elmquist (Chair) Thomas G. Plaskett
Lawrence V. Jackson Jack L. Messman
Edwina D. Woodbury
9
Independence of Audit and Compliance Committee Members
Messrs. Elmquist, Jackson, Messman, Plaskett and Ms. Woodbury, all of whom are
members of the Audit and Compliance Committee, are independent as defined by
the applicable New York Stock Exchange listing standards.
Mr. Messman is President and Chief Executive Officer of Cambridge Technology
Partners, Inc. a supplier to the Company of software products and related
consulting services. The Board of Directors has determined that this
relationship is not material either to the Company or Cambridge Technology
Partners, Inc. and that the relationship does not interfere with Mr. Messman's
exercise of independent judgment.
Mr. Jackson, appointed to the Board on October 20, 2000, is Senior Vice
President of Supply Operations of Safeway, Inc. The Company rents space for
one of the RadioShack retail stores from Safeway, Inc. The Board of Directors
has determined that this relationship is not material to either the Company or
Safeway, Inc. and that the relationship does not interfere with Mr. Jackson's
exercise of independent judgment.
Mr. Elmquist was Chairman, President and Chief Executive Officer of Keystone
Automotive, Inc. until his resignation on February 24, 2001. On February 2,
2001, the Company leased from Keystone Automotive, Inc. certain property for
use as a service center. The Board of Directors has determined that this
relationship is not material to either the Company or Keystone Automotive,
Inc. and that the relationship does not interfere with Mr. Elmquist's exercise
of independent judgment.
INDEPENDENCE OF COMPANY'S AUDITORS
PricewaterhouseCoopers LLP has been the independent accounting firm that
audits the financial statements of the Company and its predecessors since
1899. In accordance with standing policy, PricewaterhouseCoopers periodically
changes the personnel who work on the Company's audit.
In addition to performing the audit of the Company's consolidated financial
statements, PricewaterhouseCoopers provided various other services during
2000. The aggregate fees billed for 2000 for each of the following categories
of services are set forth below:
Audit in connection with the $522,622
Annual Report on Form 10-K and
limited review of the Company's
quarterly reports
All other fees $572,120
PricewaterhouseCoopers did not provide any services related to financial
information systems design and implementation during 2000.
"All other fees" includes (i) tax planning and advice, (ii) benefit plan
audit, and (iii) evaluating the effects of various accounting issues and
changes in professional standards.
The Audit and Compliance Committee reviews summaries of the services provided
by PricewaterhouseCoopers and the related fees and has considered whether the
provision of non-audit services is compatible with maintaining the
independence of PricewaterhouseCoopers.
The Audit and Compliance Committee has determined the provision of these non-
audit services are compatible with maintaining PricewaterhouseCoopers'
independence.
10
ORGANIZATION AND COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Organization and Compensation Committee is appointed by the Board of
Directors and is composed entirely of independent directors.
Compensation Philosophy and Overall Objectives
The Company's executive compensation program is designed to encourage and
reward enhancement of stockholder value. The program focuses on four key
objectives:
. Motivate executives toward effective long-term management of the Company;
. Align the interests of management and key employees with stockholders;
. Reward effective ongoing management of the Company; and
. Attract and retain key executives through competitive salary and incentive
plans.
Annual Incentive Bonus
Four performance measures are used to determine the incentive bonuses for the
named Executive Officers and the Chief Executive Officer;
. Increase in operating income (before income taxes) over the previous year;
. Increase in earnings per share over the previous year;
. Increase in share price over the previous year; and
. Stock price performance in relation to a similar group of other retail
companies.
Two named Executive Officers, other than the Chief Executive Officer, had one
additional performance measure that took into account net income (before
income taxes) of the business unit for which the Executive Officer was
responsible.
Base Salary
The Company's executive compensation program includes a competitive base
salary based on a review of pay practices of similar companies as well as the
Executive Officer's past performance and an assessment of his or her ability
to contribute to the Company's progress.
Long Term Incentives
The Company's executive compensation program also includes long term
incentives, such as stock options and other types of stock-based awards.
In 2000, the Committee granted a total of 4,462,350 stock options to over
5,900 employees under the Company's 1997 Incentive Stock Plan ("1997 ISP") and
1999 Incentive Stock Plan ("1999 ISP"), including all of the currently serving
named Executive Officers. The quantity of options granted to officers was
determined by the Committee based on its evaluation of the individual's
performance following consultation with the Chief Executive Officer. The grant
of options to the Chief Executive Officer was determined solely by the
Committee.
11
Under the 1997 ISP, the Company may also grant various types of other stock-
based awards, including performance shares, stock appreciation rights,
restricted stock and performance units, to eligible participants in amounts to
be determined by the Committee, subject to the restrictions set forth in the
plan. The 1999 ISP provides only for the grants of non-statutory stock options
and stock appreciation rights. Under the present and any contemplated
incentive stock plans of the Company, all options and awards will only be
awarded at their fair market value (average of the high and low sales prices)
on the date of grant and will not be repriced.
The Committee continues to believe that stock options are very important in
motivating and rewarding creation of long-term stockholder value. The
Committee has awarded in the past, and plans to award in the future, stock
options to a broad spectrum of employees based on continuing progress of the
Company and improvements in individual performance.
Compensation of the Chief Executive Officer and Executive Officers
For the year ending December 31, 2000, the compensation of the Chief Executive
Officer and Executive Officers was determined under the compensation plan
approved by the Committee on December 16, 1998, and by the stockholders on May
20, 1999. The stockholders on May 18, 2000 also approved an amendment to this
compensation plan. The bonus factors utilized in the compensation plan, as
amended, were increases in the Company's operating income (before income
taxes) over the previous year, increases in the Company's earnings per share
over the previous year, increases in the Company's average share price during
2000 over 1999's average share price and the Company's stock price performance
in relation to a similar group of other retail companies. Based on these
factors, in 2000, Mr. Roberts received a base salary of $1,000,000 and a bonus
of $1,705,547 and a grant of options to purchase 350,000 shares of Company
common stock. In addition, Mr. Roberts received a grant of 25,000 shares of
restricted Company common stock. One third of these shares vest on each of the
three anniversary dates of the grant date if certain bonus targets are met.
Mr. Roberts was paid a base salary of $850,000 and a bonus of $850,000 for the
year 1999.
Policy Regarding Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code generally limits corporate
deductions to $1 million dollars for compensation, except for qualified
performance-based compensation, for compensation paid to a person who on the
last day of fiscal years beginning on or after January 1, 1994, is either the
Chief Executive Officer or among the four most highly compensated officers
other than the Chief Executive Officer.
The Committee does not believe that compensation decisions should be
constrained necessarily by how much compensation is deductible for federal
income tax purposes and as such, has not and will not make compensation
decisions based solely on the deductibility of compensation.
Organization and Compensation Committee
Jack L. Messman, Chairman William G. Morton, Jr.
Robert J. Kamerschen Alfred J. Stein
Edwina D. Woodbury
12
EXECUTIVE COMPENSATION
The following table reflects the cash and non-cash compensation attributable
to the Chief Executive Officer of the Company and the four other most highly
compensated Executive Officers of the Company for the year ending December 31,
2000.
Summary Compensation Table
--------------------------
Annual Compensation (1) Long-Term Compensation
-------------------------- ------------------------------------
Restricted Securities
Name and Stock Underlying All Other
Principal Fiscal Salary Bonus Awards Options/SARs Compensation
Position Year ($) ($) ($)(2)(3) (#)(4) ($)(5)
- -----------------------------------------------------------------------------------------
Leonard H. Roberts 2000 1,000,000 1,705,547 1,178,125 350,000 313,387
Chairman and Chief 1999 850,000 850,000 0 325,000 113,789
Executive Officer 1998 610,000 610,000 2,949,372 600,000 84,088
David J. Edmondson 2000 420,000 547,782 84,825 160,000 68,581
President and Chief 1999 350,000 350,000 0 140,000 35,564
Operating Officer (6)
David Christopher 2000 349,800 370,255 183,788 100,000 94,355
Executive Vice President
(7) 1999 330,000 330,000 0 100,000 199,856
1998 308,000 247,953 0 100,000 94,474
Dwain H. Hughes 2000 381,700 390,598 197,925 100,000 135,750
Senior Vice President 1999 360,000 360,000 0 100,000 65,589
and Chief Financial
Officer (8) 1998 320,000 320,000 411,875 100,000 79,090
Mark C. Hill 2000 302,000 309,057 160,225 100,000 106,044
Senior Vice President, 1999 285,000 285,000 0 100,000 66,821
Corporate Secretary and 1998 257,292 250,000 411,875 80,000 18,116
General Counsel
- ------------------
(1) Other than restricted stock awards (see #2 and #3 below) for the years
shown, the named Executive Officers did not receive any annual compensation
other than salary and bonus, except for certain perquisites and other personal
benefits. The amounts for perquisites and other personal benefits for the
named Executive Officers are not shown because the aggregate amount of such
compensation, if any, for each of the named Executive Officers during the
fiscal year shown does not exceed $50,000.
(2) On October 23, 1998, Mr. Roberts was granted an award of 60,000 shares of
restricted stock. The 60,000 share award vests in equal one-third increments
annually on the anniversary dates of grant over a three year period. The
remaining one-third of this restricted stock award to Mr. Roberts vests only
if he is still employed by the Company on the date of vesting. In addition,
Messrs. Hill and Hughes were granted awards of restricted stock on December
16, 1998, attributable to their performance. These awards of 20,000 shares
each vest in equal one-third increments annually on the anniversary date of
grant over a three year period; provided, the named Executive Officer is
employed by the Company on the vesting date. Dividends are payable on these
shares. The closing price of shares of Company common stock on December 31,
2000 was $42.8125. The value of these unvested restricted stock holdings of
Messrs. Roberts, Hughes and Hill as of December 31, 2000 were $856,250,
$285,430 and $285,430, respectively.
(3) On May 10, 2000, Messrs. Roberts, Edmondson, Christopher, Hughes and Hill
were granted 25,000, 1,800, 3,900, 4,200 and 3,400 shares of restricted stock,
respectively. These shares vest in equal one-third increments annually on the
anniversary date of grant over a three year period only if certain bonus
targets are met and the named executive officer is still employed by the
Company. Dividends are payable on these shares.
(4) Includes all options granted during the year under the 1997 ISP,
regardless of whether the options are incentive stock options or non-qualified
stock options.
(5)Includes the Company's contributions allocated to the accounts of the named
Executive Officers participating in the following employee benefit plans: the
Stock Plan, Tandy Fund, the Employees Supplemental Stock Plan ("SUP"),
Executive Deferred Compensation Plan, Executive Deferred Stock Plan, several
deferred compensation agreements and insurance premiums for medical-life
insurance. The applicable amounts allocated in 2000 to the named Executive
Officers in the Stock Plan, Tandy Fund, SUP, the deferral plans, deferral
agreements and insurance premiums, respectively, are: $3,040, $6,437, $1,877,
$292,887 and $9,146 for Mr. Roberts; $4,378, $17,880,
13
$20,784, $18,648 and $6,891 for Mr. Edmondson; $8,174, $7,526, $5,799, $65,260
and $7,596 for Mr. Christopher; $19,555, $17,880, $13,948, $75,844 and $8,523
for Mr. Hughes; and $1,402, $3,122, $1,494, $91,205 and $8,821 for Mr. Hill.
Amounts do not include amounts payable in the event of a change in control of
the Company. See "Change in Control Protections."
(6) On December 13, 2000, Mr. Edmondson was appointed President and Chief
Operating Officer of the Company. Prior to that, Mr. Edmondson was appointed
by the Board on October 23, 1998 as Senior Vice President of the Company and
Executive Vice President and Chief Operating Officer of the Company's
RadioShack division.
(7) Mr. Christopher was appointed by the Board on October 23, 1998, as
Executive Vice President of the Company. Prior to his appointment, Mr.
Christopher was Executive Vice President of the Company's RadioShack division.
(8) Mr. Dwain H. Hughes, formerly Senior Vice President and Chief Financial
Officer of the Company, died on January 30, 2001.
OPTION GRANTS IN THE LAST FISCAL YEAR
Options were granted on May 18, 2000, under the 1997 ISP to the Executive
Officers named in the Executive Compensation table. The potential value of
these options at the specified rates of appreciation is shown in the table
below. The 1997 ISP also provides for the grant of restricted stock awards and
stock appreciation rights; however, no stock appreciation rights were granted
in 2000 to the named Executive Officers.
Potential Realizable
Value at Assumed
Annual Rates or Stock
Price Appreciation
for Option
Term (2)
---------------------
% of Total
Number of Options/SARs
Securities Granted Exercise
Name and Underlying To Employees or Base
Type of Options/SARs in Price Expiration 5% 10%
Option (1) Granted Fiscal Year ($/Share) Date ($) ($)
- ------------------------------------------------------------------------------------------
Leonard H. Roberts 350,000 7.8434 46.03 5/18/10 10,132,082 25,676,685
David J. Edmondson 160,000 3.5856 46.03 5/18/10 4,631,808 11,737,913
David Christopher 100,000 2.2410 46.03 5/18/10 2,894,880 7,336,195
Dwain H. Hughes 100,000 2.2410 46.03 5/18/10 2,894,880 7,336,195
Mark C. Hill 100,000 2.2410 46.03 5/18/10 2,894,880 7,336,195
- ------------------
(1) All options shown were granted on May 18, 2000 under the 1997 ISP. These
options vest in annual increments of one-third beginning on May 18, 2001. For
persons who continue to serve as employees of the Company, options expire 10
years from the date of grant.
(2) The dollar gains under these columns result from calculations assuming 5%
and 10% growth rates as set by the Securities and Exchange Commission and are
not intended to forecast future price appreciation of Company common stock.
The gains reflect a future value based upon growth, compounded annually during
the 10-year option period, at these prescribed rates. The Company did not use
an alternative formula for a grant date valuation, an approach which would
state gains at present, and therefore lower, value. The Company is not aware
of any formula which will determine with reasonable accuracy a present value
based on future unknown or volatility factors. Consequently, the potential
realizable value has not been discounted to present value.
14
OPTION EXERCISES IN THE LAST YEAR AND YEAR-END OPTION VALUES
The following table summarizes individual option exercises during the year
ended December 31, 2000, by each of the named Executive Officers and the year-
end value of the unexercised options. These options were periodically granted
between 1992 and 1998.
Number of Value of
Unexercised Unexercised
Options at In-The-Money
Year-End Options/SARs
(#) at Year-End ($)(1)
Shares
Acquired on Value
Exericse Realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------
Leonard H. Roberts 105,000 5,126,952 872,040 1,033,864 19,477,909 8,695,697
David J. Edmondson 23,962 1,407,482 159,607 304,531 2,311,127 1,028,072
David Christopher 59,364 3,410,157 316,078 226,358 7,780,275 1,330,818
Dwain H. Hughes 43,973 1,942,681 234,201 226,358 5,377,078 1,330,818
Mark C. Hill -0- -0- 114,527 200,883 1,741,546 702,787
- ------------------
(1) For purposes of calculating whether an option was "in-the-money" this
chart uses the December 31, 2000, average of the high and low trading prices
on the New York Stock Exchange for Company common stock of $43.1563.
RETIREMENT AND DEFERRED COMPENSATION
The Plans
Under the Company's Salary Continuation Plan for Executive Employees and its
Officers Deferred Compensation Plan, the Organization and Compensation
Committee may select full-time executive employees for participation in these
Plans. The Plans generally provide for the payment of reduced benefits
following a participant's early retirement between the ages of 55 and 65, full
benefits between the ages of 65 and 70, reduced benefits between the ages of
70 and 75, and for payment of a death benefit to the participant's designated
beneficiary in the event of death prior to age 75 during employment. Benefits
are payable in 120 equal monthly installments.
Under the Plans, the Committee determines an amount designated as the
"Retirement Compensation Amount" for each participant. The amount established
by the Committee does not necessarily bear any relationship to the
participant's present compensation, final compensation or years of service.
The annual Retirement Compensation at retirement at age 65 for the Executive
Officers listed in the Executive Compensation table at December 31, 2000,
would have been as follows:
Salary Deferred
Continuation Plan Compensation Plan Total
--------------------------------------
Leonard H. Roberts $-0- $1,000,000 1,000,000
David J. Edmondson 162,500 200,000 362,500
David Christopher 100,000 200,000 300,000
Dwain H. Hughes -0- 300,000 300,000
Mark C. Hill -0- 237,500 237,500
- ------------------
Special Provisions of the Salary Continuation Plan
The Salary Continuation Plan provides for payments to be made to certain
executive employees in the event of their voluntary or involuntary termination
of employment following
15
a Change in Control, as defined in a 1984 letter of amendment to the Plan. In
the event of a Change in Control, each executive employee who is subject to
such letter amendment becomes immediately vested at the age 65 benefit level
for a period of three years; and if his or her employment with the Company
ceases, whether voluntarily or involuntarily, during this three year period,
he or she will receive payments equal to the annual retirement benefit at age
65. Payment is made in 120 equal monthly installments to the participant or to
his or her beneficiary.
Special Provisions of the Deferred Compensation Plan
The Deferred Compensation Plan provides that, for one year following the
occurrence of a Change in Control, (as defined in the Plan), the Plan shall
not be terminated or amended in any way, nor shall the manner in which the
Plan is administered be changed in any way which adversely affects the rights
of its participants or beneficiaries. Upon a Change in Control, the provisions
of the Deferred Compensation Plan provide that any benefit due under it shall
be (1) offset by any outstanding loan of the participant, and (2) forfeited,
if the participant engages in any activity that is in competition with the
Company. In the event of a Change in Control, each participant in this Plan
becomes immediately vested at the age 65 benefit level. Additionally, if the
participant's employment is terminated for any reason following a Change in
Control, the Company must make a lump-sum payment equal to the present value
of the age 65 benefit level.
EXECUTIVE DEFERRED COMPENSATION PLANS AND OTHER AGREEMENTS
The Company's Executive Deferred Compensation Plan and Executive Deferred
Stock Plan permit Executive employees of the Company to defer, on a pre-tax
basis, up to 100% of their base salary and/or bonuses. These plans are
distinct from the Salary Continuation and Deferred Compensation Plans
described above. The major features of these plans are:
. Deferral of the receipt of up to 100% of certain Executive employee's
base salary or bonus;
. Deferral of any restricted stock that would otherwise vest and any
gain realized upon exercise of any nonqualified stock option;
. Investment of cash deferrals in either Company common stock or mutual
funds;
. Company matching payments on salary and bonus as follows: 12% match
on salary and bonus deferrals in the form of Company common stock and
an additional 25% match on salary or bonus deferrals in the form of
Company common stock if salary and/or bonus deferrals are deferred
for more than five years and are invested in Company common stock;
. Selection of a future distribution date to receive the deferrals and
matches in either a lump sum or annual installment payments not
exceeding 20 years; and
. In the event the Company experiences a Change in Control, these plans
provide that, within two weeks of this event, each Executive employee
participant will be paid the full value of his or her accounts in the
plans in the form of cash or Company common stock, as the case may
be.
Agreement with Mr. Roberts. Upon Mr. Robert's appointment as Chief Executive
Officer of the Company, the Board of Directors determined that it is in the
best interests of the
16
Company and its stockholders to provide for an orderly transition if Mr.
Roberts should leave the employ of the Company. Should Mr. Roberts
involuntarily leave the Company under defined circumstances, the Agreement
provides salary and bonus payments and acceleration of certain stock awards.
In the event Mr. Roberts voluntarily leaves the Company or leaves under other
defined circumstances, Mr. Roberts receives no payments or accelerations under
the Agreement. In no event would Mr. Roberts receive benefits under both this
Agreement and the Termination Protection Agreement described below under
"Change in Control Protections".
CHANGE IN CONTROL PROTECTIONS
In addition to the change in control protections contained in the Salary
Continuation Plan, the Deferred Compensation Plan, the Executive Deferred
Compensation Plan and the Executive Deferred Stock Plan described above, the
Company has also implemented the following change in control protections:
Bonus Guarantee Letter Agreements. The Company currently has Bonus Guarantee
Letter Agreements with all of the currently serving Executive Officers named
in the Executive Compensation table. Each Agreement provides that if the
Executive Officer is employed by the Company on the date of a Change in
Control, then for the following fiscal year he/she will receive an annual
bonus at least equal to the highest annual bonus paid or payable to him/her in
respect of any of the three full fiscal years ended prior to a Change in
Control, if certain conditions are met. Assuming a Change in Control occurred
on the date of this Proxy Statement, and the currently serving named Executive
Officers' employment had terminated on that date, it is estimated that the
minimum bonuses payable under the Bonus Guarantee Letter Agreements would be
approximately $1,705,547 for Mr. Roberts, $549,532 for Mr. Edmondson, $370,255
for Mr. Christopher, and $309,057 for Mr. Hill.
Benefit Protections. The Board also has included change in control protections
in the Tandy Fund, the Employees Supplemental Stock Program, Stock Plan, Post
Retirement Death Benefit Plan, 1993 Incentive Stock Plan, 1997 ISP, 1999 ISP
and several other plans. The Tandy Fund provides that for a period of one year
following a Change in Control, the plan may not be terminated or amended in
any way that would adversely affect the amount or entitlement of benefits. The
Supplemental Stock Program and the Stock Plan contain similar protections and
also provide that the Company may not reduce the level of its contributions to
these Plans. The Stock Plan additionally provides that in the event of a
Change in Control or a tender offer, the Company shall distribute to
participants all Company common stock credited to each participant's account.
The change in control provisions of the 1993 Incentive Stock Plan, 1997 ISP
and 1999 ISP provide that all outstanding options become immediately vested
and exercisable in the event of a "Change in Control".
Termination Protection Agreements. As of December 31, 2000, the Company
entered into Termination Protection Agreements with all of the currently
serving Executive Officers named in the Executive Compensation table. The
Agreements remain in effect unless terminated by either party. If the
employment of any Executive is terminated (with certain exceptions) within 24
months following a Change in Control, each Executive will be entitled to
receive cash payments (amounts equal to two times current annual salary and
the amount of the bonus guarantee under the Bonus Guarantee Letter Agreement
and an amount equal to the contributions that the Company would have made to
the Stock Plan, Tandy Fund and SUP over a 24-month period assuming the
foregoing salary and bonus guarantee were used to calculate the Company's
contributions), as well as the continuation
17
of fringe benefits (including life insurance, disability, medical, dental and
hospitalization benefits) for a period of up to 24 months. Additionally, all
outstanding incentive awards and stock options will become fully vested, and
the Company will be required to purchase for cash, on demand, any shares of
unrestricted stock and shares purchased upon the exercise of options at the
then per-share fair market value.
The Termination Protection Agreements also provide that the Company shall make
an additional "Gross-Up Payment" to the Executives covered by these Agreements
to offset fully the effect of any excise tax imposed under Section 4999 of the
Internal Revenue Code. In addition, the Company will pay all legal fees and
related expenses incurred by any of the Executives arising out of the
employment of any of the Executives or termination of employment under certain
circumstances.
Payments Upon A Change In Control. Assuming a Change in Control occurred on
the date of this Proxy Statement and all of the currently serving named
Executive Officers' employment had terminated on that date, the approximate
cash payment that would have been made by virtue of all change in control
protections implemented by the Company (not including the Gross-Up Payments)
to Messrs. Roberts, Edmondson, Christopher and Hill would have been
approximately $3,971,550; $1,307,758; $897,277 and $758,969, respectively. The
amount of the Gross-Up Payment, if any, to be paid may be substantial and will
depend upon numerous factors.
Rabbi Trust. In connection with the benefits described above, and several
other plans and agreements, the Company is authorized to enter into a Rabbi
Trust, which is intended to be a grantor trust under Section 671 of the
Internal Revenue Code. The Rabbi Trust may be funded by the Company at any
time, but is required to be funded upon a "Threatened Change in Control" or
upon a "Change in Control" in an amount sufficient to provide for the payment
of all benefits described above in "Change in Control Protections" and several
other plans and agreements. The Rabbi Trust will be a trust of which the trust
assets will be subject to the claims of the Company's creditors in the event
of the Company's bankruptcy or insolvency.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None.
18
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
Company common stock against the cumulative total return on the S&P Corporate
500 Stock Index and the S&P Retail Composite Stock Index (assuming $100 was
invested on December 31, 1995, in Company common stock and in the stocks
comprising the S&P Corporate 500 Stock Index and the S&P Retail Composite
Stock Index and also assuming the reinvestment of all dividends). The S&P
Retail Composite Stock Index, as well as the S&P Corporate 500 Stock Index,
include the Company.
The historical stock price performance of Company common stock shown on the
graph below is not necessarily indicative of future price performance.
Any general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or the Securities Exchange Act of 1934
shall not be deemed to incorporate by reference this graph and this graph
shall not otherwise be deemed filed under such Acts. The Company may, however,
specifically incorporate this graph by reference in filings under such Acts.
[PERFORMANCE GRAPH]
Total Return Analysis
12/31/1995 12/31/1996 12/31/1997 12/31/1998 12/31/1999 12/31/2000
------------------------------------------------------------------------------------------
RadioShack Corporation $ 100.00 $ 107.94 $ 191.69 $ 206.44 $ 495.43 $ 433.06
------------------------------------------------------------------------------------------
S & P Retail Comp. $ 100.00 $ 118.04 $ 170.88 $ 275.73 $ 334.29 $ 279.50
------------------------------------------------------------------------------------------
S & P 500 $ 100.00 $ 122.96 $ 163.99 $ 210.85 $ 255.22 $ 231.97
CERTAIN TRANSACTIONS WITH MANAGEMENT AND OTHERS
None.
19
ITEM 2
APPROVAL OF THE ADOPTION OF THE RADIOSHACK CORPORATION 2001 INCENTIVE STOCK
PLAN
The Board of Directors unanimously recommends a vote "FOR" the proposal to
adopt the RadioShack 2001 Incentive Stock Plan. Proxies solicited by the Board
of Directors will be so voted unless stockholders specify otherwise in their
proxies.
RADIOSHACK CORPORATION 2001 INCENTIVE STOCK PLAN
Introduction
At the Annual Meeting, the stockholders will be requested to approve the
RadioShack 2001 Incentive Stock Plan ("2001 ISP"). The Board of Directors has
unanimously adopted resolutions approving, and recommending to the
stockholders for their approval, the 2001 ISP. A copy of the 2001 ISP is
attached as Exhibit A.
Key Features of the 2001 ISP
. Allows continuation of broad-based stock option program.
. Permits options grants only.
. Forbids re-pricing or discounting of options.
The 2001 ISP is in the Company's Best Interest and its Stockholders.
. Key to the fulfillment of the Company's mission to demystify
technology for the mass market is the ability to attract and retain
employees and store managers capable of providing answers in an
increasingly complex consumer electronics marketplace.
. Given the small store format of a typical RadioShack store (averaging
2,400 square feet), the store manager is often one of the top sales
makers in the store, as well as being the manager of a team of sales
associates. Management believes that an equity stake in the Company
is a strong incentive for these experienced store managers to remain
with the Company.
. To address the potential disruption that unacceptable store manager
turnover might have on achievement of strategic goals and to align
the financial interest of these key employees with those of its
stockholders, the Company instituted equity based incentive
compensation for store managers in 1997.
. Management believes that as a result of these incentive compensation
programs, voluntary annual store manager turnover has dropped from
annual turnover of 12% in 1996 to 5% in 2000.
. This reduced turnover was a key contributor to the Company achieving
same store sales gains of 7%, 12%, and 11% for the years ending 1998,
1999 and 2000 and to the Company experiencing EPS growth of over 20%
in each of these three years.
. In a tightened labor market, the Company must compete with companies
in the telecommunications and other high technology segments in the
retention and
20
recruitment of these key employees and providing equity based
incentive compensation to remain competitive.
. The 2001 ISP will enable the Company to continue meeting its long
stated goal of attracting and retaining well trained and professional
retail store management. It is anticipated that over 55% of stock
options that will be granted under the 2001 ISP will be to retail
store management and other non-officer employees. This is consistent
with past Company practice of broad-based grants and has resulted in
retaining valuable retail store managers. Stockholder approval of the
2001 ISP will enable the Company to build on its past success by
aligning the interests of a broad base of employees from the retail
to senior management levels, with those of the Company's stockholders
in enhancing growth and creating stockholder value.
. Under the Company's present Incentive Stock Plans there are, as of
February 28, 2001, only 1,828,800 shares remaining for awards and
grants. In the absence of stockholder approval of the 2001 ISP, this
remaining number of shares is insufficient to continue broad-based
stock option grants. The success of the Company since 1997 has in
large part resulted from a committed, professional and energetic work
force at all levels of the Company, particularly at the retail level.
Management believes discontinuation of stock option grants to retail
store personnel and key non-officer employees will have an adverse
effect on employee turnover and poses a risk to the Company's ability
to sustain continued sales and profit growth.
. The 2001 ISP makes no provision for restricted stock, stock
appreciation or performance awards. Only stock options will be
authorized to be granted under the 2001 ISP. In addition, upon
stockholder approval of the 2001 ISP, management commits to strongly
recommend to the Board that it amend the Company's 1993 and 1997
Incentive Stock Plans to remove authority to make further grants of
performance awards and stock appreciation rights. Also management
will seek an amendment to the each of these Plans to limit future
restricted stock awards under both plans to no more than a total of
700,000 shares in the aggregate under both Plans.
. Under the 2001 ISP, all options will only be granted at their fair
market value on the date of grant and will not be re-priced or
discounted, without prior stockholder approval. The Company has never
repriced or discounted stock options and other awards.
. As in the past, stock options granted to retail store management
under the 2001 ISP will vest two-thirds (2/3) on the second
anniversary date of grant and one-third (1/3) on the third
anniversary date of grant. For other employees, stock options will
vest one-third each on the first, second and third anniversary dates
after grant. This long term vesting schedule has provided, and will
continue to provide, a Company-wide work force with a commitment to
the long-term growth of the Company.
Summary of 2001 ISP
The following general description of certain features of the 2001 ISP is
qualified in its entirety by reference to the provisions of the 2001 ISP fully
set forth in Exhibit A.
Eligibility and Limits on Stock Option Grants. Employees of the Company, its
subsidiaries and its affiliates, who are responsible for or contribute to the
management,
21
growth and profitability of the Company, its subsidiaries and affiliates, will
be eligible to receive stock option grants under the 2001 ISP. No
determination has yet been made as to the amount of grants to be allocated to
any individual or to any group of employees, but as stated above it is
anticipated that over 55% of stock options will be granted to retail store
management and other non-officer employees. Also, the 2001 ISP will place a
limit on the maximum amount of grants that may be made to any one employee in
any calendar year.
Under the 2001 ISP, no employee may receive grants of stock options that cover
in the aggregate more than 500,000 shares in any calendar year.
Administration. The Organization and Compensation Committee of the Company's
Board will administer the 2001 ISP. This Committee will select the eligible
employees to whom options will be granted and will set the terms of such
grants, including any performance goals applicable to stock option grants. The
Committee may delegate its authority under the 2001 ISP to officers of the
Company subject to guidelines.
Shares Reserved for Grants. The number of shares of Common Stock reserved and
available for grants under the 2001 ISP will be 9,200,000. During the term of
the 2001 ISP, if any grant terminates, expires or is forfeited, the shares
subject to such grant will again be available for grants under the 2001 ISP.
Stock options may be exercised by tendering cash or Company common stock to
the Company in full or partial payment of the exercise price.
In the event of any transaction or event that affects Company common stock,
including but not limited to a merger, share exchange, reorganization,
consolidation, recapitalization, reclassification, distribution, stock
dividend, stock split, or issuance of rights or warrants, then the Committee
is authorized, to the extent it deems appropriate, to make substitutions or
adjustments in the number and kind of shares reserved for issuance under the
2001 ISP as well as to the number, kind and price of shares subject to
outstanding grants under the 2001 ISP all within the limits on individual
grants described above.
Stock Options. The 2001 ISP will permit the granting to eligible employees of
incentive stock options ("ISOs"), which qualify for special tax treatment, and
nonqualified stock options. Options may be exercised by tendering cash or
shares of Company common stock already owned by the employee to pay all or a
portion of the exercise price of a stock option and/or to cover any
withholding tax (including Social Security and Medicare) liabilities resulting
from the exercise of the stock option. The exercise price for any stock option
will not be less than the fair market value (average of the high and low sales
prices) of Company common stock on the date of grant and will not be repriced
without stockholder approval.
Director Options. The 2001 ISP also provides that each non-employee director
of the Company is automatically granted a non qualified stock option to
purchase 16,000 shares of Company common stock on the first business day in
September of each year that he or she serves as a director. Additionally, the
2001 ISP provides that each new non-employee director receives a one time
grant of a non qualified stock option to purchase 20,000 shares of Company
common stock on the date he or she attends his or her first meeting.
The option exercise price of director options will not be less than the fair
market value (average of the high and low sales prices) of a share of Company
common stock on the date of grant and will not be repriced without stockholder
approval. Director options vest in three equal installments on the first,
second, and third anniversaries of the date of grant. The 2001 ISP also
provides that at the election of a director all or one-half of a director's
retainer and meeting fees may be paid in Company common stock.
22
No annual grant of 16,000 shares, one-time grant of 20,000 shares or retainer
or meeting fee payments will be made under more than one incentive stock plan
of the Company in the same year.
Change in Control Provisions. The 2001 ISP provides, unless an agreement
evidencing the stock option grant provides otherwise, that in the event of a
"Change in Control" (as defined in the 2001 ISP), all stock options will
become fully vested and immediately exercisable. If stock options vest in the
event of a "Change in Control" the nature of any "cash out" by the Company
will be determined by the terms of the applicable agreement with the holder of
the grant.
Other Awards. The 2001 ISP does not provide for the grant or award of
restricted stock, stock appreciation rights nor performance awards.
FEDERAL INCOME TAX CONSEQUENCES
Nonqualified Stock Options. Nonqualified stock options granted under the
2001 ISP will not be taxable to an employee at grant but generally will result
in taxation at exercise, at which time the employee will recognize ordinary
income in an amount equal to the difference between the option's exercise
price and the sales price of the shares realized on the exercise date. The
Company will be entitled to deduct a corresponding amount as a business
expense in the year the employee recognizes this income.
Incentive Stock Options. An employee will generally not recognize ordinary
income on receipt or exercise of an ISO so long as he or she has been an
employee of the Company or its subsidiaries from the date the ISO was granted
until three months before the date of exercise; however, the amount by which
the sales price of the shares on the exercise date exceeds the exercise price
is an adjustment in computing the employee's alternative minimum tax in the
year of exercise. If the employee holds the shares of Company common stock
received on exercise of the ISO for one year after the date of exercise (and
for two years from the date of grant of the ISO), any difference between the
amount realized upon the disposition of the shares and the amount paid for the
shares will be treated as long-term capital gain (or loss, if applicable) to
the employee. If the employee exercises an ISO and satisfies these holding
period requirements, the Company may not deduct any amount in connection with
the ISO.
If an employee exercises an ISO but engages in a "disqualifying disposition"
by selling the shares acquired on exercise before the expiration of the one
and two-year holding periods described above, the employee generally will
recognize ordinary income (for regular income tax purposes only) in the year
of the disqualifying disposition equal to the excess, if any, of the sales
price of the shares on the date of exercise over the exercise price; and any
excess of the amount realized on the disposition over the sales price on the
date of exercise will be taxed as long-or short-term capital gain (as
applicable). If, however, the fair market value of the shares on the date of
disqualifying disposition is less than on the date of exercise, the employee
will recognize ordinary income equal only to the difference between the amount
realized on the disqualifying disposition and the exercise price. In either
event, the Company will be entitled to deduct an amount equal to the amount
constituting ordinary income to the employee in the year of the disqualifying
disposition.
Other Information
If approved by stockholders, the 2001 ISP will be effective on June 1, 2001,
and shall terminate on May 31, 2011. Any grants made before May 31, 2011 may
extend beyond the expiration or termination date. The Board may amend the
2001 ISP at any time provided
23
that no such amendment will be made without stockholder approval if such
approval is required under applicable law, or if such amendment would: (i)
decrease the grant or exercise price of any stock option to less than fair
market value (average of the high and low sales prices) on the date of grant;
(ii) provide for the awards of restricted stock, stock appreciation rights or
performance awards; or (iii) increase the number of shares that may be
distributed under the 2001 ISP. Without stockholder approval, an option may
not be canceled and a new option issued at a lower price as a substitute
therefor, except as may be necessary to comply with a change in law,
regulations or accounting principles of a foreign country applicable to
participants subject to the laws of such country.
The 2001 ISP provides that a stock option may not be transferred except in the
event of the employee's death or unless otherwise required by law. Other terms
and conditions of each stock option grant will be set forth in an agreement.
On February 28, 2001, the closing price for Company common stock as reported
in the Wall Street Journal on the New York Stock Exchange-Composite
Transactions was $42.80.
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board has selected PricewaterhouseCoopers, which has previously audited
the Company's books annually, as independent accountants for 2001.
Representatives of PricewaterhouseCoopers are expected to be present at the
Annual Meeting with an opportunity to make a statement and/or respond to
appropriate questions.
VOTING RIGHTS AND PROXY INFORMATION
Only holders of record of shares of the Company's common stock and the
Company's TESOP Stock as of the Annual Meeting Record Date will be entitled to
notice of, and to vote at, the Annual Meeting and at any resumption of the
Annual Meeting after adjournment or postponement thereof. The holders of
shares of Company common stock are entitled to one vote per share (a "Common
Stock Vote") on any matter which may properly come before the Annual Meeting.
The holders of TESOP Stock are also entitled to 87.072 Common Stock Votes per
share on any matter which may properly come before the Annual Meeting.
As of the Annual Meeting Record Date, the total number of Common Stock Votes
represented by the voting securities of the Company entitled to vote were
191,509,151. Specifically, there were 184,583,373 shares of Company common
stock outstanding, representing 184,583,373 Common Stock Votes; and 68,174
shares of TESOP Stock outstanding, representing 5,936,062 Common Stock Votes.
As of the Annual Meeting Record Date, a total of 68,174 shares of TESOP Stock
were held in the Tandy Fund. Each participant in the Tandy Fund is entitled to
direct the Tandy Fund Trustee with respect to the voting of the TESOP Stock
allocated to his or her account. If a participant does not direct the Tandy
Fund Trustee with respect to the voting of the TESOP Stock, the Trustee will
vote such securities in the same proportion as other participants who have
directed the Trustee with respect to allocated shares. The Trustee will also
vote all unallocated TESOP Stock held by the Tandy Fund in such proportion.
The presence, either in person or by properly executed proxy, of the holders
of a majority of the Common Stock Votes as of the Annual Meeting Record Date
is necessary to constitute a quorum at the Annual Meeting. Shares held by
holders who are either present in person or represented by proxy who abstain
will be treated as present for quorum purposes on all matters. For purposes of
determining whether a proposal has received a majority vote, abstentions will
be included in the vote total, with the result that an abstention will have
the same effect as a negative vote. For purposes of determining whether a
proposal has received
24
a majority vote, in instances where brokers are prohibited from exercising
discretionary authority for beneficial holders of Company common stock who
have not returned a proxy (so-called "broker non-votes"), those shares will
not be included in the vote totals and, therefore, will have no effect on the
outcome of the vote.
The affirmative vote of a plurality of the Common Stock Votes entitled to vote
and represented in person or by properly executed proxy at the Annual Meeting
is required to approve the election of each of the Company's nominees for
election as a director. With respect to the election of directors, shares that
abstain will be included in the vote total as withholds (i.e., votes against
the Company's nominees for election).
The affirmative vote of a majority of the Common Stock Votes entitled to vote
and represented in person or by properly executed proxy at the Annual Meeting
is required to approve all matters other than the election of directors.
Stockholders are urged to sign and date the enclosed proxy and return it as
promptly as possible in the envelope enclosed for that purpose. Registered
stockholders can also deliver proxies by calling a toll-free telephone number
or by using the Internet. The telephone and Internet voting procedures are
designed to authenticate stockholders' identities, to allow stockholders to
give their voting instructions and to confirm that stockholders' instructions
have been recorded properly. A proxy by telephone or over the Internet is a
properly executed proxy. Instructions for voting by telephone or over the
Internet are on the enclosed proxy card. Please note that holders of Common
Stock Votes in the Company's 401(k) Plan are not registered stockholders and
therefore may not vote by telephone or over the Internet. In order to vote,
these holders must sign and date the enclosed proxy and return it by mail.
All voting securities that are represented at the Annual Meeting by properly
executed proxies (including a proxy by telephone or over the Internet)
received by the Corporate Secretary prior to or at the Annual Meeting and not
revoked will be voted at the Annual Meeting in accordance with the
instructions indicated in such proxies. If no instructions are indicated, such
proxies will be voted FOR the election of the Board's nominees for election as
directors of the Company and FOR the adoption of the RadioShack Corporation
2001 Incentive Stock Plan.
Any proxy given under this solicitation may be revoked by the person giving it
at any time before it is voted. Proxies may be revoked by: (i) filing with the
Company, at or before the Annual Meeting, a written notice of revocation
bearing a later date than the proxy; (ii) duly executing a subsequent proxy
relating to the same voting securities and delivering it to the Company at or
before the Annual Meeting; (iii) submitting another subsequent timely proxy by
telephone or the Internet; or (iv) attending the Annual Meeting, filing a
written revocation of proxy and voting in person (attendance at the Annual
Meeting and voting will not in and of itself constitute a revocation of a
proxy). Any written notice revoking a proxy or subsequent proxies should be
received by mail or other method of delivery or hand delivered to RadioShack
Corporation, Attention: Ms. Carolyn Hoopes, Vice President and Assistant
Corporate Secretary, 100 Throckmorton Street, Suite 1724, Fort Worth, Texas
76102-2818.
The Company will bear the cost of the solicitation. In addition to
solicitation by mail, the Company will request banks, brokers and other
custodian nominees and fiduciaries to supply proxy material to the beneficial
owners of Company common stock, restricted Company common stock and TESOP
Stock, and will reimburse them for their expenses in so doing. In addition,
the Company may engage D.F. King & Co., Inc., for a fee anticipated not to
exceed $10,000 plus out-of-pocket expenses, to provide proxy services. Certain
directors, officers and other employees of the Company may solicit proxies,
without additional remuneration therefor, by personal interview, mail,
telephone, facsimile or other electronic means.
25
STOCKHOLDER PROPOSALS AND NOMINATIONS
FOR DIRECTORS FOR THE 2002 ANNUAL MEETING
In order for proposals of stockholders to be considered for inclusion in the
proxy statement for the 2002 Annual Meeting of Stockholders of the Company,
which is now scheduled to be held on May 16, 2002, such proposals must be
received by the Corporate Secretary of the Company by December 7, 2001. With
respect to stockholder proposals for the 2002 Annual Meeting that are not to
be included in the Proxy Statement, these proposals must be received by the
Corporate Secretary not less than 60 nor more than 90 days before the
anniversary date of the preceding year's annual meeting, or by March 18, 2002,
but no sooner than February 16, 2002.
Stockholders who wish to nominate persons for election as directors at the
2002 Annual Meeting, which is now scheduled to be held on May 16, 2002, must
give notice of their intention to make a nomination in writing to the
Corporate Secretary of the Company on or before February 16, 2002. Each notice
shall set forth: (a) the name and address of the stockholder who intends to
make the nomination and the name and address of the person or persons to be
nominated; (b) a representation that the stockholder is a holder of record of
stock of the Company entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to nominate the person or persons specified
in the notice; (c) a description of all arrangements or understandings between
the stockholder and each nominee and any other person or persons (naming such
person or persons) under which the nomination or nominations are to be made by
the stockholder; (d) such other information regarding each nominee proposed by
such stockholder as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission as
then in effect; and (e) the consent of each nominee to serve as director of
the Company, if so elected. The Corporate Governance Committee will consider
director nominees made by stockholders pursuant to procedures set forth in the
Corporate Governance Committee Charter.
ANNUAL REPORT
A copy of the Company's Annual Report for the year ended December 31, 2000, is
being mailed to stockholders with this Proxy Statement. Stockholders who do
not receive a copy of the Annual Report may obtain a copy without charge by
writing or calling Shareholder Services, RadioShack Corporation, 100
Throckmorton Street, Suite 1700, Fort Worth, Texas 76102-2818, telephone
number (817) 415-3022.
OTHER MATTERS
As of the date of this Proxy Statement, management of the Company has no
knowledge of any other business to be presented to the Annual Meeting. If
other business is properly brought before the meeting, the persons named in
the Proxy will vote according to their discretion.
RADIOSHACK CORPORATION
Fort Worth, Texas
April 6, 2001
26
Exhibit A
RADIOSHACK CORPORATION
2001 INCENTIVE STOCK PLAN
(includes Directors)
1. Purpose.
The purpose of this Plan is to strengthen RadioShack Corporation (the
"Company") by providing an incentive to its Eligible Employees (as hereinafter
defined), and directors and thereby encouraging them to devote their abilities
and industry to the success of the Company's business enterprise. It is
intended that this purpose be achieved by extending to, Eligible Employees of
the Company and its subsidiaries and to Eligible Directors (as defined below)
an added long-term incentive for high levels of performance and unusual
efforts through the grant of Incentive Stock Options and Nonqualified Stock
Options (as each term is defined below).
2. Definitions.
For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the event of a Change in
Control, the greater of (i) the highest price per Share paid to holders of the
Shares in any transaction (or series of transactions) constituting or
resulting in a Change in Control or (ii) the highest Fair Market Value of a
Share during the ninety (90) day period ending on the date of a Change in
Control.
2.2 "Agreement" means the written agreement between the Company and an
Optionee evidencing the grant of an Option and setting forth the terms and
conditions thereof.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Cause" means the commission of an act of fraud or intentional
misrepresentation or an act of embezzlement, misappropriation or conversion of
assets or opportunities of the Company or any Subsidiary.
2.5 "Change in Capitalization" means any increase or reduction in the
number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, cash dividend, property dividend, combination or exchange
of shares, repurchase of shares, change in corporate structure or otherwise.
2.6 A "Change in Control" shall mean the occurrence during the term of
the Plan and during the term of any Option issued under the Plan of:
(a) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any "Person" (as
the term person is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately
after which such Person has "Beneficial Ownership" (within the meaning of Rule
13d-3 promulgated under the 1934 Act) of fifteen percent (15%) or more of the
combined voting power of the Company's then outstanding Voting Securities;
provided, however, in determining whether a Change in Control has occurred,
Voting Securities which are acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an acquisition which would cause a
Change in Control. A "Non-Control Acquisition" shall mean an acquisition by
(i) an employee benefit plan (or a trust forming a part thereof) maintained by
(A) the Company or (B) any corporation or other Person of which a majority of
its voting power or its voting equity securities or equity interest is owned,
directly or indirectly, by the Company (for purposes of this definition, a
"Subsidiary"), (ii) the Company or its Subsidiaries, or (iii) any Person in
connection with a "Non-Control Transaction" (as hereinafter defined).
(b) The individuals who, as of May 18, 2001, are members of the Board
(the "Incumbent Board"), cease for any reason to constitute at least two-
thirds of the Board; provided, however, that if the election, or nomination
for election by the Company's stockholders, of any new director was approved
by a vote of at least two-thirds of the Incumbent Board, such new director
shall, for purposes of this Plan, be considered as a member of the Incumbent
Board; provided further, however, that no individual shall be considered a
member of the Incumbent Board if such individual initially assumed office as a
result of either an actual or threatened "Election Contest" (as described in
Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board (a "Proxy Contest") including by reason of any agreement intended to
avoid or settle any Election Contest or Proxy Contest; or
(c) Approval by stockholders of the Company of:
(i) A merger, consolidation or reorganization involving the
Company, unless
(A) the stockholders of the Company, immediately before such
merger, consolidation or reorganization, own, directly or indirectly
immediately following such merger, consolidation or reorganization, at least
sixty percent (60%) of the combined voting power of the outstanding voting
securities of the corporation resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in substantially the same
proportion as their ownership of the Voting Securities immediately before such
merger, consolidation or reorganization,
(B) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for such merger,
consolidation or reorganization constitute at least two-thirds of the members
of the board of directors of the Surviving Corporation,
(C) no Person other than the Company, any Subsidiary, any
employee benefit plan (or any trust forming a part thereof) maintained by the
Company, the Surviving Corporation, or any Subsidiary, or any Person who,
immediately prior to such merger, consolidation or reorganization had
Beneficial Ownership of fifteen percent (15%) or more of the then outstanding
Voting Securities has Beneficial Ownership of fifteen percent (15%) or more of
the combined voting power of the Surviving Corporation's then outstanding
voting securities, and
(D) A transaction described in clauses (A) through (C) shall
herein be referred to as a "Non-Control Transaction";
(ii) A complete liquidation or dissolution of the Company; or
(iii) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person (other than a
transfer to a Subsidiary).
2
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding
Voting Securities as a result of the acquisition of Voting Securities by the
Company which, by reducing the number of Voting Securities outstanding,
increases the proportional number of shares Beneficially Owned by the Subject
Person, provided that if a Change in Control would occur (but for the operation
of this sentence) as a result of the acquisition of Voting Securities by the
Company, and after such share acquisition by the Company, the Subject Person
becomes the Beneficial Owner of any additional Voting Securities which
increases the percentage of the then outstanding Voting Securities Beneficially
Owned by the Subject Person, then a Change in Control shall occur.
2.7 "Code" means the Internal Revenue Code of 1986, as amended.
2.8 "Committee" means a committee of the Board consisting of at least two
(2) members, all of who are Disinterested Directors, appointed by the Board to
administer the Plan and to perform the functions set forth herein.
2.9 "Company" means RadioShack Corporation, a Delaware Corporation.
2.10 "Director Option" means an Option granted pursuant to Section 5.
2.11 "Disability" means the suffering from a physical or mental condition
which, in the opinion of the Committee based upon appropriate medical advice
and examination and in accordance with rules applied uniformly to all employees
of the Company, totally and permanently prevents the Optionee from performing
the customary duties of his or her regular job with the Company.
2.12 "Disinterested Director" means a director of the Company who is both
a "Non-Employee Director" within the meaning of Rule 16b-3 under the Exchange
Act, and a "Outside Director" within the meaning of Section 162(m) of the Code.
2.13 "Division" means any of the operating units or divisions of the
Company.
2.14 "Eligible Employee" means any officer or other key employee or
consultant or advisor of the Company or a Subsidiary designated by the
Committee as eligible to receive Options subject to the conditions set forth
herein.
2.15 "Eligible Director" means a director of the Company who is not an
employee at the time of grant of the Company or any Subsidiary.
2.16 "Employee Option" means an Option granted pursuant to Section 6.
2.17 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.18 "Fair Market Value" on any date means the average of the high and low
sales prices of the Shares on such date on the principal national securities
exchange on which such Shares are listed or admitted to trading, or if such
Shares are not so listed or admitted to trading, the arithmetic mean of the per
Share closing bid price and per Share closing asked price on such date as
quoted on the National Association of Securities Dealers Automated Quotation
System or such other market in which such prices are regularly quoted, or, if
there have been no published bid or asked quotations with respect to Shares on
such date, the Fair Market Value shall be the value established by the Board in
good faith and, in the case of an Incentive Stock Option, in accordance with
Section 422 of the Code.
3
2.19 "Incentive Stock Option" means an Option satisfying the requirements
of Section 422 of the Code and designated by the Committee as an Incentive
Stock Option.
2.20 "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.
2.21 "Option" means an Employee Option, a Director Option, or either or
both of them.
2.22 "Optionee" means a person to whom an Option has been granted under
the Plan.
2.23 "Parent" means any corporation which is a parent corporation (within
the meaning of Section 424(e) of the Code) with respect to the Company.
2.24 "Plan or 2001 ISP" means the RadioShack Corporation 2001 Incentive
Stock Plan.
2.25 "Retirement" means a Director must have attained sixty (60) yeas of
age and served as a Director for sixty (60) consecutive months preceding his
or her resignation or retirement as a Director.
2.26 "Shares" means the common stock, par value $1.00 per share, of the
Company.
2.27 "Subsidiary" means any corporation which is a subsidiary corporation
(within the meaning of Section 424(f) of the Code) with respect to the
Company.
2.28 "Successor Corporation" means a corporation, or a parent or
subsidiary thereof within the meaning of Section 424(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 424(a) of
the Code applies.
2.29 "Ten-Percent Stockholder" means an Eligible Employee, who, at the
time an Incentive Stock Option is to be granted to him or her, owns (within
the meaning of Section 422(b)(6) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of
the Company, or of a Parent or a Subsidiary.
3. Administration.
3.1 The Plan shall be administered by the Committee which shall hold
meetings at such times as may be necessary for the proper administration of
the Plan. No member of the Committee shall be liable for any action, failure
to act, determination or interpretation made in good faith with respect to
this Plan or any transaction hereunder, except for liability arising from his
or her own willful misfeasance, gross negligence or reckless disregard of his
or her duties. The Company hereby agrees to indemnify each member of the
Committee for all costs and expenses and, to the extent permitted by
applicable law, any liability incurred in connection with defending against,
responding to, negotiation for the settlement of or otherwise dealing with any
claim, cause of action or dispute of any kind arising in connection with any
actions in administering this Plan or in authorizing or denying authorization
to any transaction hereunder.
3.2 Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time to:
4
(a) determine those individuals to whom Employee Options shall be
granted under the Plan and the number of Incentive Stock Options and/or
Nonqualified Stock Options to be granted to each Eligible Employee and to
prescribe the terms and conditions (which need not be identical) of each
Employee Option, including the purchase price per Share subject to each
Employee Option, and make any amendment or modification to any Agreement
consistent with the terms of the Plan; and
(b) grant Shares to Eligible Employees, that are the subject of
Options upon such terms and conditions as may be determined by the Committee
in its sole and absolute discretion.
3.3 Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time:
(a) to construe and interpret the Plan and the Options granted
thereunder and to establish, amend and revoke rules and regulations for the
administration of the Plan, including, but not limited to, correcting any
defect or supplying any omission, or reconciling any inconsistency in the Plan
or in any Agreement, in the manner and to the extent it shall deem necessary
or advisable to make the Plan fully effective, and all decisions and
determinations by the Committee in the exercise of this power shall be final,
binding and conclusive upon the Company, its Subsidiaries, the Optionees and
all other persons having any interest therein;
(b) to determine the duration and purposes for leaves of absence
which may be granted to an Optionee on an individual basis without
constituting a termination of employment or service for purposes of the Plan;
(c) to exercise its discretion with respect to the powers and
rights granted to it as set forth in the Plan; and
(d) generally, to exercise such powers and to perform such acts as
are deemed necessary or advisable to promote the best interests of the Company
with respect to the Plan.
3.4 During any calendar year no Eligible Employee may be granted Options
in the aggregate in respect of more than 500,000 Shares.
4. Stock Subject to the Plan.
4.1 The maximum number of Shares that may be made the subject of Options
granted under the Plan is 9,200,000 Shares. Upon a Change in Capitalization
the maximum number of Shares shall be adjusted in number and kind pursuant to
Section 9. The Company shall reserve for the purposes of the Plan, out of its
authorized but unissued Shares or out of Shares held in the Company's
treasury, or partly out of each, such number of Shares as shall be determined
by the Board.
4.2 Upon the granting of an Option, the number of Shares available under
Section 4.1 for the granting of further Options shall be reduced by the number
of Shares in respect of which the Option is granted.
4.3 Whenever any outstanding Option or portion thereof expires, is
canceled or is otherwise terminated for any reason without having been
exercised or payment having been made in respect of the entire Option, the
Shares allocable to the expired, canceled or otherwise terminated portion of
the Option may again be the subject of Options granted hereunder.
5
5. Director Plans.
5A. Option Grants to Eligible Directors.
5A.1 Annual Grant. Subject to the provisions of Section 5C.1
hereof, Director Options shall be granted to each Eligible Director on the
first trading day of September of each year the Plan is in effect. Each
Director Option granted shall be in respect of 16,000 Shares. The purchase
price of each Director Option shall be as provided in Section 5A.3 and such
Options shall be evidenced by an Agreement containing such other terms and
conditions not inconsistent with the provisions of this Plan as determined by
the Board; provided, however, that such terms shall not vary the timing of
awards of Director Options, including provisions dealing with forfeiture or
termination of such Director Options, and further such terms may not provide
for a modification of a Director Option and the grant of a new Director Option
in substitution for them which results in a Purchase Price (as defined in
Section 5A.3 hereof) that is lower than the Purchase Price of the originally
issued Director Option until authorized by the stockholders of the
Corporation.
5A.2 One Time Grant. Subject to the Provisions of Section 5C.1
hereof, each newly appointed or elected Eligible Director who has not
previously received a one-time grant under the Company's 1993 Incentive Stock
Plan, 1997 Incentive Stock Plan, 1999 Incentive Stock Plan or hereunder, shall
be granted an option on the date the Eligible Director attends his or her
first Company Board meeting. Each Director Option granted under this Section
shall be in respect of 20,000 Shares. The Purchase Price of each Director
Option shall be as provided in Section 5A.3 and such Options shall be
evidenced by an Agreement containing such other terms and conditions not
inconsistent with the provisions of this Plan as determined by the Board;
provided, however, that such terms shall not vary the timing of awards of
Director Options, including provisions dealing with forfeiture or termination
of such Director Options.
5A.3 Purchase Price. The "Purchase Price" for Shares under each
Director Option shall be equal to 100% of the Fair Market Value of such Shares
on the date of grant.
5A.4 Vesting. Subject to Section 7.4, each Director Option shall
become exercisable with respect to one third (1/3) of the Shares effective as
of each of the first, second and third annual anniversaries of the grant date;
provided, however, that the Optionee continues to serve as a Director as of
such dates. Notwithstanding the foregoing, if a Director's service terminates
by reason of his death, Disability or Retirement, all Director Options then
held by the Director shall be fully vested.
5A.5 Duration. Each Director Option shall terminate on the date
which is the tenth annual anniversary of the grant date, unless terminated
earlier as follows:
(a) If an Optionee's service as a Director terminates for any
reason other than Retirement, Disability, death or Cause, the Optionee may,
for a period of three (3) months after such termination, exercise his or her
Option to the extent, and only to the extent, that such Option or portion
thereof was vested and exercisable as of the date the Optionee's service as a
Director terminated, after which time the Option shall automatically terminate
in full.
(b) If an Optionee's service as a Director terminates by reason of
the Optionee's Retirement or by resignation or removal from the Board due to
Disability, the Optionee may, for a period of three (3) years after such
termination, exercise his or her Option after which time the Option shall
automatically terminate in full.
6
(c) If an Optionee's service as a Director terminates for Cause,
the Option granted to the Optionee hereunder shall immediately terminate in
full and no rights thereunder may be exercised.
(d) If an Optionee dies while a Director or within three (3) months
after termination of service as a Director as described in clause (a) of this
Section 5A.5, or within three (3) years after termination of service as a
Director as described in clause (b) of this Section 5A.5, the Option granted
to the Optionee may be exercised at any time within 12 months after the
Optionee's death by the person or persons to whom such rights under the Option
shall pass by will, or by the laws of descent or distribution, after which
time the Option shall terminate in full.
5B. Stock Purchase for Director Retainer and/or Meeting Fees.
5B.1 Election to Participate.
(a) Initial Year Election. Each Eligible Director may participate
in this Section 5B by filing an election to participate with the Company
Secretary (the "Initial Year Election") at any time following his or her
appointment or election. An Initial Year Election shall become effective with
respect to either or both of the Eligible Director's meeting fees or annual
retainer payable to him or her under the Eligible Director compensation plan
in respect of each calendar month commencing with the first calendar month
commencing after the receipt of the Initial Year Election by the Company
Secretary and ending the subsequent May 31. An Eligible Director may, pursuant
to an Initial Year Election, participate in this Section 5B only at either a
50% or 100% level and may not change his or her level of participation except
as provided in Section 5B.1 (b) below.
(b) Annual Election. Each Eligible Director may, prior to May 1 of
any year, elect to participate (or cease to participate ) or change his or her
level of participation in this Section 5B (an "Annual Election"). An Annual
Election shall become effective with respect to either or both of the Eligible
Director's meeting fees or annual retainer payable to him or her under the
Eligible Director compensation plan in respect of the year commencing on June
1 next subsequent to the receipt of the Annual Election by the Company
Secretary and shall continue for subsequent years unless changed pursuant to
this Section 5B.1 (b). An Eligible Director may, pursuant to an Annual
Election, participate in this Section 5B only at either a 50% or 100% level
and may not change his or her level of participation except as provided in
this Section 5B.1(b).
5B.2 Payment in Stock.
(a) For the period commencing on the effective date of a Eligible
Director's Initial Year Election through the next subsequent May 31, (i)
Shares will be issued to each Eligible Director participating at the 100%
level having a Fair Market Value (as of the first trading day immediately
preceding the date of issuance) equal to the Eligible Director's annual
retainer divided by twelve (12), then multiplied by the number of calendar
months from the effective date of the Initial Year Election through the
subsequent May 31; and (ii) Shares will be issued to each Eligible Director
participating at the 50% level according to the calculation in clause (i) of
this Section 5B.2 (a) but reduced by one-half. Shares will be issued as of the
effective date of the Initial Year Election.
(b) For each year commencing on June 1 in respect of which an
Eligible Director has elected to participate in this Section 5B pursuant to an
Annual Election, (i) Shares will be issued to each Eligible Director
participating at the 100% level having a Fair
7
Market Value (as of the first trading day immediately preceding the date of
issuance) equal to the Eligible Director's annual retainer; and (ii) Shares
will be issued to each Eligible Director participating in this Section 5B at
the 50% level according to the calculation in clause (i) of this Section
5B.2(b) but reduced by one-half. Shares will be issued as of June 1.
(c) For the period commencing on the effective date of an Eligible
Director's Initial Year Election through the next subsequent May 31, (i)
Shares will be issued to each Eligible Director participating at the 100%
level having a Fair Market Value (as of the date of the meeting or if not a
trading day then the first trading day immediately preceding the date of the
meeting) equal to the Eligible Director's fee for attending the meeting; and
(ii) Shares will be issued to each Eligible Director participating at the 50%
level according to the calculation in clause (i) of this Section 5B.2 (c) but
reduced by one-half. Shares will be issued as soon as practicable after the
date of each such meeting;
(d) For each year commencing on June 1 in respect of which an
Eligible Director has elected to participate in this Section 5B pursuant to an
Annual Election, (i) Shares will be issued to each Eligible Director
participating at the 100% level having a Fair Market Value (as of the date of
the meeting or if not a trading day then the first trading day immediately
preceding the date of the meeting) equal to the Eligible Director's fee for
attending the meeting; and (ii) Shares will be issued to each Eligible
Director participating in this Section 5B at the 50% level according to the
calculation in clause (i) of this Section 5B.2(d) but reduced by one-half.
Shares will be issued as soon as practicable after the date of each such
meeting.
(e) The issuance of Shares to an Eligible director participating in
this Section 5B shall represent payment in advance of, and shall be in lieu
of, 50% or 100%, as applicable, of the Eligible Director's annual retainer for
the period in respect of which the Initial Year Election or the Annual
Election is in effect.
(f) The issuance of Shares to an Eligible director participating in
this Section 5B shall represent payment of, and shall be in lieu of, 50% or
100%, as applicable, of the Eligible Director's meeting fees for each meeting
attended in respect of which the Initial Year Election or the Annual Election
is in effect.
5B.3 Distribution. Shares will be distributed to the Eligible
Director as soon as practicable after issuance. No fractional Share will be
issued to any Eligible Director. Any amount not used for the acquisition of a
Share will be paid to the Eligible Director in cash.
5C.1 No Duplication. Notwithstanding any provision in this Plan to
the contrary, no Director Option shall be granted to any Eligible Director
pursuant to Section 5A, of this Plan on any day if such Director is granted a
Director Option pursuant to Section 5A. of the Company's 1993 Incentive Stock
Plan, 1997 Incentive Stock Plan or 1999 Incentive Stock Plan on such day. In
addition, no Shares shall be issued pursuant to Section 5B. of this Plan in
respect of an Eligible Director's meeting or retainer fees if Shares are or
will be issued pursuant to Section 5B, of the Company's 1993 Incentive Stock
Plan, 1997 Incentive Stock Plan or 1999 Incentive Stock Plan in respect of
such meeting or retainer fees.
6. Option Grants for Eligible Employees.
6.1 Authority of Committee. Subject to the provisions of the Plan, the
Committee shall have full and final authority to select those Eligible
Employees who will receive Options (each an "Employee Option"), the terms and
conditions of which shall be set forth in an Agreement; provided, however,
that no person shall receive any Incentive Stock Options unless he or she is
an employee of the Company, a Parent or a Subsidiary at the time the Incentive
Stock Option is granted.
8
6.2 Purchase Price. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Employee Option shall
be determined by the Committee and set forth in the Agreement; provided,
however, that the purchase price per Share under each Incentive Stock Option
shall not be less than 100% of the Fair Market Value of a Share on the date
the Incentive Stock Option is granted (110% in the case of an Incentive Stock
Option granted to a Ten-Percent Stockholder) and the purchase price per Share
under each Nonqualified Stock Option shall not be less than the Fair Market
Value of a Share on the date the Nonqualified Stock Option is granted.
6.3 Maximum Duration. Employee Options granted hereunder shall be for
such term as the Committee shall determine, provided that an Incentive Stock
Option shall not be exercisable after the expiration of ten (10) years from
the date it is granted (five (5) years in the case of an Incentive Stock
Option granted to a Ten-Percent Stockholder) and a Nonqualified Stock Option
shall not be exercisable after the expiration of ten (10) years from the date
it is granted. The Committee may, subsequent to the granting of any Employee
Option, extend the term thereof but in no event shall the term as so extended
exceed the maximum term provided for in the preceding sentence.
6.4 Vesting. Subject to Section 7.4 hereof, each Employee Option shall
become exercisable in such installments (which need not be equal) and at such
times as may be designated by the Committee and set forth in the Agreement. To
the extent not exercised, installments shall accumulate and be exercisable, in
whole or in part, at any time after becoming exercisable, but not later than
the date the Employee Option expires. The Committee may accelerate the
exercisability of any Option or portion thereof at any time.
6.5 Modification or Substitution. The Committee may, in its discretion,
modify outstanding Employee Options or accept the surrender of outstanding
Employee Options (to the extent not exercised) and grant new Options in
substitution for them. Notwithstanding the foregoing, (i) no modification of
an Employee Option shall adversely alter or impair any rights or obligations
under the Employee Option without the Optionee's consent, and (ii) no
modification or surrender of an outstanding option and the grant of new
options in substitution for them which results in a purchase price (as defined
in Section 6.2 hereof) that is lower than the purchase price of the originally
issued Option shall be effective until authorized by the stockholders of the
Corporation.
7. Terms and Conditions Applicable to All Options.
7.1 Transferability. Unless otherwise provided by the Committee, no
Option granted hereunder shall be transferable by the Optionee to whom granted
otherwise than by will or the laws of descent and distribution, and an Option
may be exercised during the lifetime of such Optionee only by the Optionee or
his or her guardian or legal representative. The terms of such Option shall be
final, binding and conclusive upon the beneficiaries, executors,
administrators, heirs and successors of the Optionee.
7.2 Method of Exercise. The exercise of an Option shall be made only by a
written notice delivered in person, by facsimile, electronic means, or by mail
to such person, entity and location as may be designated by the Corporate
Secretary of the Company, specifying the number of Shares to be purchased and
accompanied by payment therefor and otherwise in accordance with the Agreement
pursuant to which the Option was granted. The purchase price for any Shares
purchased pursuant to the exercise of an Option shall be paid in full upon
such exercise by any one or a combination of the following: (i) cash or (ii)
transferring Shares to the Company upon such terms and conditions as
determined by the Committee. Notwithstanding the foregoing, the Committee
shall have discretion to determine at the time
9
of grant of each Employee Option or at any later date (up to and including the
date of exercise) the form of payment acceptable in respect of the exercise of
such Employee Option. The written notice pursuant to this Section 7.2 may also
provide instructions from the Optionee to the Company that upon receipt of the
purchase price in cash from the Optionee's broker or dealer, that has been
approved by the Company, designated as such on the written notice, in payment
for any Shares purchased pursuant to the exercise of an Option, the Company
shall issue such Shares directly to the designated broker or dealer that has
been approved by the Company. Any Shares transferred to the Company as payment
of the purchase price under an Option shall be valued at their Fair Market
Value on the day preceding the date of exercise of such Option. If requested
by the Committee, the Optionee shall deliver the Agreement evidencing the
Option to the Secretary of the Company who shall endorse thereon a notation of
such exercise and return such Agreement to the Optionee. No fractional Shares
(or cash in lieu thereof) shall be issued upon exercise of an Option and the
number of Shares that may be purchased upon exercise shall be rounded to the
nearest number of whole Shares.
7.3 Rights of Optionees. No Optionee shall be deemed for any purpose to
be the owner of any Shares subject to any Option unless and until (i) the
Option shall have been exercised pursuant to the terms thereof, (ii) the
Company shall have issued and delivered the Shares to the Optionee or his
designated broker or dealer that has been approved by the Company and (iii)
the Optionee's name or the name of his designated broker or dealer that has
been approved by the Company shall have been entered as a stockholder of
record on the books of the Company. Thereupon, the Optionee shall have full
voting, dividend and other ownership rights with respect to such Shares.
7.4 Effect of Change in Control. Notwithstanding anything contained in
the Plan to the contrary, unless an Agreement evidencing an Option provides
otherwise, in the event of a Change in Control the Option shall become
immediately and fully exercisable. In addition, an Agreement evidencing an
Option may provide that the Optionee will be permitted to surrender for
cancellation within sixty (60) days after such Change in Control, the Option
or portion of the Option to the extent not yet exercised and the Optionee will
be entitled to receive a cash payment in an amount equal to the excess, if
any, of (x) (A) in the case of a Nonqualified Stock Option, the greater of (1)
the Fair Market Value, on the date preceding the date of surrender, of the
Shares subject to the Option or portion thereof surrendered or (2) the
Adjusted Fair Market Value of the Shares subject to the Option or portion
thereof surrendered or (B) in the case of an Incentive Stock Option, the Fair
Market Value, on the date preceding the date of surrender, of the Shares
subject to the Option or portion thereof surrendered, over (y) the aggregate
purchase price for such Shares under the Option or portion thereof
surrendered. In the event an Optionee's employment with, or service as a
Director of, the Company terminates following a Change in Control, each Option
held by the Optionee that was exercisable as of the date of termination of the
Optionee's employment or service shall remain exercisable for a period ending
not before the earlier of (A) the first annual anniversary of the termination
of the Optionee's employment or service or (B) the expiration of the stated
term of the Option.
8. Effect of a Termination of Employment. The Agreement evidencing the
grant of each Employee Option shall set forth the terms and conditions
applicable to such Employee Option upon a termination or change in the status
of the employment of the Optionee by the Company, a Subsidiary or a Division
(including a termination or change by reason of the sale of a Subsidiary or a
Division), as the Committee may, in its discretion, determine at the time the
Employee Option is granted or thereafter.
10
9. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change in Capitalization, the Committee shall
conclusively determine the appropriate adjustments, if any, to the (i) maximum
number and class of Shares or other stock or securities with respect to which
Options may be granted under this Plan, (ii) the number and class of Shares or
other stock or securities which are subject to Director Options issuable under
Section 5; and (iii) the number and class of Shares or other stock or
securities which are subject to outstanding Options granted under this Plan,
and the purchase price therefor, if applicable; and (iv) the maximum number
and class of Shares or other stock or securities with respect to which Options
may be granted to any Eligible Employee.
(b) Any such adjustment in the Shares or other stock or securities
subject to outstanding Incentive Stock Options (including any adjustments in
the purchase price) shall be made in such manner as not to constitute a
modification as defined by Section 424(h)(3) of the Code and only to the
extent otherwise permitted by Sections 422 and 424 of the Code.
(c) Any stock adjustment in the Shares or other stock or securities
subject to outstanding Director Options (including any adjustments in the
purchase price) shall be made only to the extent necessary to maintain the
proportionate interest of the Optionee and preserve, without exceeding, the
value of such Director Option.
(d) If, by reason of a Change in Capitalization, an Optionee shall
be entitled to exercise an Option with respect to, new, additional or
different shares of stock or securities, such new additional or different
shares shall thereupon be subject to all of the conditions, restrictions and
performance criteria which were applicable to the Shares subject to the Option
prior to such Change in Capitalization.
10. Effect of Certain Transactions. Subject to Section 7.4, in the event
of (i) the liquidation or dissolution of the Company or (ii) a merger or
consolidation of the Company (a "Transaction"), this Plan and the Options
issued hereunder shall continue in effect in accordance with their respective
terms and each Optionee shall be entitled to receive in respect of each Share
subject to any outstanding Options upon exercise of any Option, the same
number and kind of stock, securities, cash, property, or other consideration
that each holder of a Share was entitled to receive immediately prior to the
Transaction in respect of a Share.
11. Termination and Amendment of the Plan. The Plan shall terminate May
31, 2011 and no Option may be granted thereafter. The Board may sooner
terminate the Plan and the Board may at any time and from time to time amend,
modify or suspend the Plan; provided, however, that:
(a) No such amendment, modification, suspension or termination
shall impair or adversely alter any Options therefore granted under the Plan,
except with the consent of the Optionee, nor shall any amendment,
modification, suspension or termination deprive any Optionee of any Shares
which he or she may have acquired through or as a result of the Plan;
(b) To the extent necessary under applicable law, no amendment
shall be effective unless approved by the stockholders of the Company in
accordance with applicable law and regulations;
(c) The provisions of Section 5 shall not be amended more often
than once every six (6) months, other than to comport with changes in the
Code, the Employee Retirement Income Security Act of 1974, as amended, or the
rules and regulations promulgated thereunder; and
11
(d) Unless theretofore approved by the stockholders of the Company,
no amendment or modification of the Plan shall provide for: (i) the purchase
price per Share of an Option to be less than 100% of the Fair Market Value of
a Share on the date the Option was granted; (ii) the provision for the awards
of restricted stock, stock appreciation rights or performance awards; or (iii)
subject to Section 9. of the Plan, an increase the number of Shares subject to
Option grants under the Plan.
12. Non-Exclusivity of the Plan. The adoption of the Plan by the Board
shall not be construed as amending, modifying or rescinding any previously
approved incentive arrangements or as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or
only in specific cases.
13. Limitation of Liability. As illustrative of the limitations of
liability of the Company, but not intended to be exhaustive thereof, nothing
in the Plan shall be construed to:
(i) give any person any right to be granted an Option other than at
the sole discretion of the Committee;
(ii) give any person any rights whatsoever with respect to Shares
except as specifically provided in the Plan;
(iii) limit in any way the right of the Company or any Subsidiary
to terminate the employment of any person at any time; or
(iv) be evidence of any agreement or understanding, expressed or
implied, that the Company will employ any person at any particular rate of
compensation or for any particular period of time.
14. Regulations and Other Approvals; Governing Law.
14.1 Except as to matters of federal law, this Plan and the rights of all
persons claiming hereunder shall be construed and determined in accordance
with the laws of the State of Texas without giving effect to conflict of laws
principles.
14.2 The obligation of the Company to sell or deliver Shares with respect
to Options granted under the Plan shall be subject to all applicable laws,
rules and regulations, including all applicable federal and state securities
laws, and the obtaining of all such approvals by governmental agencies as may
be deemed necessary or appropriate by the Committee.
14.3 The Plan is intended to comply with Rule 16b-3 promulgated under the
Exchange Act and Section 162 (m) of the Code, and the Committee shall
interpret and administer the provisions of the Plan or any Agreement in a
manner consistent therewith. Any provisions inconsistent with such Rule and
Section 162(m) of the Code shall be inoperative and shall not affect the
validity of the Plan.
14.4 The Board may make such changes as may be necessary or appropriate
to comply with the rules and regulations of any government authority, or to
obtain for Eligible Employees granted Incentive Stock Options the tax benefits
under the applicable provisions of the Code and regulations promulgated
thereunder.
12
14.5 Each Option is subject to the requirement that, if at any time the
Committee determines, in its discretion, that the listing, registration or
qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option, no Options shall
be granted, in whole or in part, unless listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions as
acceptable to the Committee.
14.6 Notwithstanding anything contained in the Plan or any Agreement to
the contrary, in the event that the disposition of Shares acquired pursuant to
the Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended, and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the extent
required by the Securities Act of 1933, as amended, and Rule 144 or other
regulations thereunder. The Committee may require any individual receiving
Shares pursuant to an Option granted under the Plan, as a condition precedent
to receipt of such Shares, to represent and warrant to the Company in writing
that the Shares acquired by such individual are acquired without a view to any
distribution thereof and will not be sold or transferred other than pursuant
to an effective registration thereof under said Act or pursuant to an
exemption applicable under the Securities Act of 1933, as amended, or the
rules and regulations promulgated thereunder. The certificates evidencing any
of such Shares shall be appropriately legended to reflect their status as
restricted securities as aforesaid.
15. Pooling Transactions. Notwithstanding anything contained in the Plan
or any Agreement to the contrary, in the event of a Change in Control which is
also intended to constitute a pooling transaction under the Code, the
Committee shall take such actions, if any, as are specifically recommended by
an independent accounting firm retained by the Company to the extent
reasonably necessary to assure that the pooling transaction will qualify as
such, including but not limited to (i) deferring the vesting, exercise,
payment, settlement or lapsing of restrictions with respect to any Option,
(ii) providing that the payment or settlement in respect of any Option be made
in the form of cash, Shares or securities of a successor or acquirer of the
Company, or a combination of the foregoing, and (iii) providing for the
extension of the term of any Option to the extent necessary to accommodate the
foregoing, but not beyond the maximum term permitted for any Option.
16. Miscellaneous.
16.1 Multiple Agreements. The terms of each Option may differ from other
Options granted under this Plan at the same time, or at some other time. The
Committee may also grant more than one Option to a given Eligible Employee
during the term of this Plan, either in addition to, or in substitution for,
one or more Options previously granted to that Eligible Employee.
16.2 Withholding of Taxes.
(a) The Company shall have the right to deduct from any
distribution of cash to any Director or Optionee, an amount equal to the
federal, state and local income taxes and other amounts as may be required by
law to be withheld (the "Withholding Taxes") with respect to the receipt of
any retainer fee or Option. If a Director or Optionee is to experience a
taxable event in connection with the receipt of Shares pursuant to a payment
in stock or Option exercise (a "Taxable Event"), the Director or Optionee
shall pay the Withholding Taxes to the Company prior to the issuance, or
release from escrow, of such Shares. In satisfaction of the obligation to pay
Withholding Taxes to the Company, the Director or
13
Optionee may make a written election (the "Tax Election"), which may be
accepted or rejected in the discretion of the Committee or Company Secretary,
as applicable, to have withheld a portion of the Shares then issuable to him
or her having an aggregate Fair Market Value, on the date preceding the date
of such issuance, equal to the Withholding Taxes. The Committee may, by the
adoption of rules or otherwise, (i) modify the provisions of this Section 16.2
(other than as regards Director Options) or impose such other restrictions or
limitations on Tax Elections as may be necessary to ensure that the Tax
Elections will be exempt transactions under Section 16(b) of the Exchange Act,
and (ii) permit Tax Elections to be made at such other times and subject to
such other conditions as the Committee determines will constitute exempt
transactions under Section 16(b) of the Exchange Act.
(b) If an Optionee makes a disposition, within the meaning of
Section 424(c) of the Code and regulations promulgated thereunder, of any
Share or Shares issued to such Optionee pursuant to the exercise of an
Incentive Stock Option within the two-year period commencing on the day after
the date of the grant or within the one-year period commencing on the day
after the date of transfer of such Share or Shares to the Optionee pursuant to
such exercise, the Optionee shall, within ten (10) days of such disposition,
notify the Company thereof, by delivery of written notice to the Secretary of
the Company at the Company's principal executive office.
(c) The Committee shall have the authority, at the time of grant of
an Employee Option under the Plan or at any time thereafter, to award tax
bonuses to designated Optionees, to be paid upon their exercise of Employee
Options granted hereunder. The amount of any such payments shall be determined
by the Committee. The Committee shall have full authority in its absolute
discretion to determine the amount of any such tax bonus and the terms and
conditions affecting the vesting and payment thereof.
17. Effective Date. The effective date of the Plan shall be June 1, 2001,
after the date of its adoption by the Board, and the approval by the
affirmative vote of the holders of a majority of the securities of the Company
present, or represented, and entitled to vote at the meeting of stockholders
duly held in accordance with the applicable laws of the State of Delaware on
May 17, 2001.
14
[LOGO AND LETTERHEAD OF RADIOSHACK CORPORATION]
- --------------------------------------------------------------------------------
THIS IS YOUR PROXY
YOUR VOTE IS IMPORTANT
RadioShack Corporation's 2001 Annual Meeting of Stockholders will be held at
the Renaissance Worthington Hotel, 200 Main Street, Fort Worth, Texas 76102, on
Thursday, May 17, 2001, at 10:00 a.m.
Please keep in mind that your vote is important to us. Whether or not you are
able to attend the meeting in person, please either:
. use our toll-free telephone voting system;
. use our Internet voting system or
. mark the attached proxy card to indicate your voting preferences, then sign,
detach and return the proxy card in the accompanying postage-paid envelope.
We encourage you to vote by telephone or over the Internet. These are two quick
and easy methods to vote your shares that are available 24 hours a day, seven
days a week, and your vote is recorded as if you mailed in your proxy card.
Voting by one of these convenient methods eliminates the need to return the
proxy card and will also save the Company money. On the reverse side of this
card are instructions on how to vote by telephone and over the Internet.
- --------------------------------------------------------------------------------
RADIOSHACK CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON MAY 17, 2001
The undersigned hereby appoints Leonard H. Roberts, Ronald E. Elmquist, Jack L.
Messman and William E. Tucker, and each or any of them, attorneys and proxies of
the undersigned, with full power of substitution, to vote all the shares of
common stock of the Company held by the undersigned at the Annual Meeting of
Stockholders of RadioShack Corporation at Fort Worth, Texas on May 17, 2001, or
any resumption of the Annual Meeting after any adjournment thereof, as indicated
on this proxy, and in their discretion on any other matters which may properly
come before the meeting. If no directions are given, this Proxy will be voted
"FOR" Items 1 and 2.
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS, JUST SIGN ON
THE REVERSE SIDE - NO BOXES NEED TO BE CHECKED.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
[LOGO AND LETTERHEAD OF RADIOSHACK CORPORATION]
100 Throckmorton Street, Suite 1800
Post Office Box 17180
Fort Worth, Texas 76102-0180
VOTE YOUR SHARES BY TELEPHONE OR INTERNET!
QUICK * EASY * IMMEDIATE * AVAILABLE 24 HOURS A DAY * 7 DAYS
RadioShack Corporation encourages you to take advantage of three convenient ways
to vote your shares. If voting by proxy, you may vote by mail, vote by telephone
or vote by Internet. Your telephone or Internet vote authorizes the named
proxies to vote your shares in the same manner as if you marked, signed, and
returned your proxy card. To vote read the accompanying proxy statement and then
follow these easy steps:
VOTE BY PHONE - 1-877-779-8683 VOTE BY INTERNET - http://www.eproxyvote.com/rsh
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Use any touch-tone telephone to vote your proxy 24 Use the Internet to vote your proxy 24 hours a day, 7 days a
hours a day, 7 days a week. Have your proxy card in week. Have your proxy card in hand when you access the
hand when you call. You will be prompted to enter website. You will be prompted to enter your 14-digit Voter
your 14-digit Voter Control Number, which is located above Control Number, which is located above your name and then
your name and then follow the simple recorded instructions. follow the simple instructions provided.
For stockholders outside the United States, call collect on a
touch-tone phone 1-201-536-8073.
VOTE BY MAIL - Mark, sign and date your proxy card and return it in the postage-
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paid envelope we've provided.
If you vote by phone or vote using the Internet,
Please do not mail your proxy card.
THANK YOU FOR VOTING.
DETACH HERE
Please mark
[X] your vote as
in this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR:
1. Election of Directors 2. Adoption of the RadioShack Corporation 2001
Nominees: Frank J. Belatti, Ronald E. Elmquist, Lawrence V. Jackson, Incentive Stock Plan.
Robert J. Kamerschen, Lewis F. Kornfeld, Jr., Jack L. Messman,
William G. Morton, Jr., Thomas G. Plaskett, Leonard H. Roberts, FOR [ ] AGAINST [ ] ABSTAIN [ ]
Alfred J. Stein, William E. Tucker, Edwina D. Woodbury
FOR WITHHELD
[ ] ALL [ ] FROM ALL
NOMINEES NOMINEES
[ ]
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For all nominees except those written on line above
MARK HERE
FOR ADDRESS [ ]
CHANGE AND
NOTE AT LEFT
Please Sign Exactly as Your Name(s) Appears on This
Proxy,
Date and Promptly Return This Proxy in the Enclosed
Envelope.
Signature:__________________ Date:______ Signature:_________________ Date:______