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SCHEDULE 14A INFORMATION
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 sec.240.14a-11(c) or sec.240.14a-12
BARNES & NOBLE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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)(1) and 0-11.
1) Title of each class 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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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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[BARNES & NOBLE LOGO]
122 FIFTH AVENUE
NEW YORK, NEW YORK 10011
April 30, 2001
Dear Stockholder:
You are cordially invited to attend the 2001 Annual Meeting of Stockholders
of Barnes & Noble, Inc. The meeting will be held at 10:00 a.m., Eastern Standard
Time, on Monday, June 11, 2001 at the Marriott Marquis, 1535 Broadway at West
45th Street, New York, New York.
Information about the meeting and the various matters on which the
stockholders will act is included in the Notice of Annual Meeting of
Stockholders and Proxy Statement which follow. Also included is a Proxy Card and
postage paid return envelope.
Whether or not you plan to attend the meeting, we hope you will have your
shares represented at the meeting by completing, signing and returning your
Proxy Card in the enclosed postage paid return envelope promptly.
Sincerely,
/s/ Michael N. Rosen
MICHAEL N. ROSEN
Secretary
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[BARNES & NOBLE LOGO]
122 FIFTH AVENUE
NEW YORK, NEW YORK 10011
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 11, 2001
The Annual Meeting of Stockholders of Barnes & Noble, Inc. (the "Company")
will be held at the Marriott Marquis, 1535 Broadway at West 45th Street, New
York, New York, at 10:00 a.m., Eastern Standard Time, on Monday, June 11, 2001
for the following purposes:
1. To elect three Directors to serve until the 2004 annual meeting of
stockholders and until their respective successors are duly elected and
qualified;
2. To ratify the appointment of BDO Seidman, LLP as independent certified
public accountants for the Company's fiscal year ending February 2,
2002; and
3. To transact such other business as may be properly brought before the
meeting and any adjournment or postponement thereof.
Only holders of record of Common Stock as of the close of business on April
23, 2001 are entitled to notice of and to vote at the meeting and at any
adjournment or postponement thereof.
MICHAEL N. ROSEN
Secretary
New York, New York
April 30, 2001
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD.
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BARNES & NOBLE, INC.
122 FIFTH AVENUE
NEW YORK, NEW YORK 10011
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 11, 2001
INTRODUCTION
This Proxy Statement and enclosed Proxy Card are being furnished commencing
on or about April 30, 2001 in connection with the solicitation by the Board of
Directors of Barnes & Noble, Inc., a Delaware corporation (the "Company"), of
proxies for use at the Annual Meeting of Stockholders to be held on June 11,
2001 (the "Meeting") for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders. Any proxy given pursuant to such solicitation
and received in time for the Meeting will be voted as specified in such proxy.
If no instructions are given, proxies will be voted FOR the election of the
nominees listed below under the caption "Election of Directors -- Information
Concerning the Directors and Nominees -- Nominees for Election as Director," FOR
the ratification of the appointment of BDO Seidman, LLP as independent certified
public accountants for the Company's fiscal year ending February 2, 2002
(collectively, the "Proposals"), and in the discretion of the proxies named on
the Proxy Card with respect to any other matters properly brought before the
Meeting and any adjournments thereof. Any proxy may be revoked by written notice
received by the Secretary of the Company at any time prior to the voting thereof
by submitting a subsequent proxy or by attending the Meeting and voting in
person.
Only holders of record of the Company's voting securities as of the close
of business on April 23, 2001 are entitled to notice of and to vote at the
Meeting. As of the record date, 65,401,406 shares of Common Stock, par value
$.001 per share ("Common Stock"), were outstanding. Each share of Common Stock
entitles the record holder thereof to one vote on each of the Proposals and on
all other matters properly brought before the Meeting. The presence of a
majority of the combined outstanding shares of the Common Stock represented in
person or by proxy at the Meeting will constitute a quorum.
The three nominees for Director receiving the highest vote totals will be
elected as Directors of the Company to serve until the 2004 annual meeting of
stockholders.
The proposal to ratify the appointment of the Company's independent
certified public accountants, and all other matters that may be voted on at the
Meeting, will be decided by the affirmative vote of a majority of the shares of
Common Stock voting on the proposal in person or by proxy at the Meeting. Thus,
abstentions and broker non-votes will not be included in vote totals with
respect to such proposals and will have no effect on the outcome of the votes
with respect thereto. It should be noted that all of the Directors and executive
officers of the Company, together with principal stockholders of the Company
with which they are affiliated, own or control the voting power of approximately
29.3% of the Common Stock outstanding as of March 31, 2001, and have advised the
Company that they intend to vote in favor of all of the Proposals.
A Proxy Card is enclosed for your use. YOU ARE SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS TO COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD IN THE
ACCOMPANYING ENVELOPE, which is postage paid if mailed in the United States.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT, AND, IF
GIVEN OR MADE, SUCH INFORMATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THE DELIVERY OF THIS PROXY STATEMENT SHALL, UNDER NO CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE OF THIS PROXY STATEMENT.
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ELECTION OF DIRECTORS
PROPOSAL 1
INFORMATION CONCERNING THE DIRECTORS AND NOMINEES
The Board of Directors currently consists of nine Directors. The Directors
currently are divided into three classes, consisting of three members whose
terms expire at the Meeting, three members whose terms expire at the 2002 annual
meeting of stockholders and three members whose terms expire at the 2003 annual
meeting of stockholders.
Background information with respect to the Board of Directors and nominees
for election as Directors, all of whom are incumbent Directors, appears below.
See "Security Ownership of Certain Beneficial Owners and Management" for
information regarding such persons' holdings of equity securities of the
Company.
DIRECTOR
NAME AGE SINCE POSITION
- ---- --- -------- --------
Leonard Riggio......................... 60 1986 Chairman of the Board and Chief Executive
Officer
Stephen Riggio......................... 46 1997 Vice Chairman
Matthew A. Berdon(2)(3)................ 81 1992 Director
Michael J. Del Giudice(3).............. 58 1999 Director
William Dillard II(1).................. 56 1993 Director
Irene R. Miller........................ 49 1995 Director
Margaret T. Monaco(2).................. 53 1995 Director
Michael N. Rosen....................... 60 1986 Secretary and Director
William Sheluck, Jr.(1)(2)(3).......... 60 1993 Director
- ---------------
(1) Member of Nominating Committee
(2) Member of Compensation Committee
(3) Member of Audit Committee
At the Meeting, three Directors will be elected, each to hold office for a
term of three years and until his or her successor is elected and qualified.
Leonard Riggio, Michael J. Del Giudice and William Sheluck, Jr. are nominees for
election as Directors at the Meeting, each to hold office for a term of three
years until the annual meeting of stockholders to be held in 2004. The terms of
Stephen Riggio, Matthew A. Berdon and Margaret T. Monaco expire in 2002, and the
terms of William Dillard II, Irene R. Miller and Michael N. Rosen expire in
2003. Each of the nominees has consented to serve, if elected. However, if any
nominee is unable to stand for election, proxies may be voted for a substitute
designated by the Board of Directors.
Nominees for Election as Director
The following individuals are nominees for Director at the Meeting:
LEONARD RIGGIO has been Chairman of the Board, Chief Executive Officer and
a principal stockholder of the Company since its inception in 1986. Mr. Riggio
has also been Chairman of the Board of barnesandnoble.com inc. ("Barnes &
Noble.com") since its inception in February 1997. Since 1965, Mr. Riggio has
been Chairman of the Board, Chief Executive Officer and the principal
stockholder of Barnes & Noble College Bookstores, Inc. ("B&N College"), one of
the largest operators of college bookstores in the country.* Since 1985, Mr.
Riggio has been Chairman of the Board and a principal beneficial owner of MBS
Textbook Exchange, Inc. ("MBS"), one of the nation's largest wholesalers of
college textbooks.*
MICHAEL J. DEL GIUDICE has been a Director of the Company since 1999. Mr.
Del Giudice is a co-founder and Senior Managing Director at Millennium Credit
Markets LLC, an investment banking firm specializing
- ---------------
* Based upon sales reported in trade publications and public filings.
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in acquiring and financing real estate, corporate and project finance
properties. From 1986 to 1996, Mr. Del Giudice was a General Partner and
Managing Director at Lazard Freres & Co. LLC. He is a member of the Board of
Directors of the Consolidated Edison Company of New York, Curran & Connors, Inc.
and Earth Alliance Inc. He is Chairman of the Governor's Committee on Scholastic
Achievement and a member of the Board of Trustees of the Institute for Public
Administration. Mr. Del Giudice was Chief-of-Staff to New York Governor Mario
Cuomo from 1983 to 1985, Director of State operations for Governor Hugh Carey
from 1979 to 1981 and Chief-of-Staff to the Assembly Speaker from 1975 to 1979.
Mr. Del Giudice was Chairman of the Board of Orange & Rockland Utilities Corp.
from 1997 to 1999.
WILLIAM SHELUCK, JR. has been a Director of the Company since November
1993. Mr. Sheluck formerly was the President, Chief Executive Officer and a
director of Nationar, a New York State-chartered commercial bank providing
services to financial institutions and corporations, from 1983 until his
retirement in April 1993. Mr. Sheluck is also a director of New Life of New York
City, Inc., a not-for-profit organization which provides services to
disadvantaged teenagers.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF EACH NOMINEE FOR DIRECTOR NAMED ABOVE. PROXIES SOLICITED BY THIS
PROXY STATEMENT WILL BE VOTED FOR EACH NOMINEE NAMED ABOVE UNLESS A VOTE AGAINST
A NOMINEE OR AN ABSTENTION IS SPECIFICALLY INDICATED.
Other Directors whose Terms of Office Continue after the Meeting
STEPHEN RIGGIO has been a Director of the Company since September 1993 and
was appointed Vice Chairman of the Company in December 1997. Mr. Riggio was
Chief Operating Officer of the Company from February 1995 until December 1997.
Since January 2000, he has been Vice Chairman and Acting Chief Executive Officer
of Barnes & Noble.com. Mr. Riggio has been a director of Barnes & Noble.com
since its inception in February 1997. Mr. Riggio was President of B. Dalton
Bookseller, Inc. ("B. Dalton"), a wholly owned subsidiary of the Company, from
July 1993 to February 1995, and he was Executive Vice President, Merchandising
of the Company from January 1987 to February 1995. Mr. Riggio is Leonard
Riggio's brother.
MATTHEW A. BERDON has been a Director of the Company since June 1992. As of
January 1998, Mr. Berdon had been a partner in the certified public accounting
firm of Ferro Berdon & Company ("Ferro Berdon") for more than five years. In
January 1998, Ferro Berdon merged into the accounting firm of Urbach, Kahn &
Werlin, and Mr. Berdon became Chairman of the New York Division of that firm.
Mr. Berdon is also a director of B&N College and a trustee of Beth Israel
Hospital.
WILLIAM DILLARD, II has been a Director of the Company since November 1993.
Mr. Dillard is the Chief Executive Officer of Dillard's, Inc., and he has been a
director of Dillard's Inc. since 1968. Mr. Dillard is also a director of J.P.
Morgan Chase & Co. Texas Region (formerly Chase Bank of Texas, NA) and Acxiom
Corp.
IRENE R. MILLER has been a Director of the Company since May 1995. Ms.
Miller is Chief Executive Officer of Akim, Inc., an investment management and
consulting firm, and until June 1997 was Vice Chairman and Chief Financial
Officer of the Company. She joined the Company in January 1991 and held various
positions until she was appointed Chief Financial Officer in September 1993 and
Vice Chairman in September 1995. From 1986 to 1990 Ms. Miller was an investment
banker at Morgan Stanley & Co. Incorporated, most recently as a Principal. Ms.
Miller is also a director of Oakley, Inc. and The Body Shop International Plc.
MARGARET T. MONACO has been a Director of the Company since May 1995. Ms.
Monaco has been the Vice President and Chief Operating Officer of Merrill Lynch
Ventures, LLC (formerly KECALP, Inc.), a wholly owned subsidiary of Merrill
Lynch & Co., Inc., since November 1999. She had been the Chief Administrative
Officer from April 1998 to November 1999. Merrill Lynch Ventures, LLC is the
General Partner for a number of limited partnerships which are operated
exclusively for the benefit of Merrill Lynch employees. Ms. Monaco had been the
Principal of Probus Advisors, a management and financial consulting firm, from
July 1993 to April 1998, and Vice President and Treasurer of The Limited prior
to July 1993.
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MICHAEL N. ROSEN has been Secretary and a Director of the Company since its
inception in 1986 and the Chairman of Robinson Silverman Pearce Aronsohn &
Berman LLP, counsel to the Company, for more than the past five years. Mr. Rosen
is also a director of Barnes & Noble.com, B&N College and MBS.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors met eight times during the fiscal year ended
February 3, 2001. All Directors attended at least 75% of all of the meetings of
the Board of Directors and the committees thereof on which they served during
the fiscal year ended February 3, 2001.
The Board of Directors has three standing committees: the Audit Committee,
the Compensation Committee and the Nominating Committee.
Audit Committee. The Audit Committee has the principal function of
reviewing the adequacy of the Company's internal system of accounting controls,
conferring with the independent certified public accountants concerning the
scope of their examination of the books and records of the Company, recommending
to the Board of Directors the appointment of independent certified public
accountants, reviewing related party transactions and considering other
appropriate matters regarding the financial affairs of the Company. The Board
has adopted a written charter (attached to this Proxy Statement as Annex A)
setting out the audit-related functions of the Audit Committee. The current
members of the Audit Committee are Messrs. Sheluck (Chairman), Berdon and Del
Giudice, none of whom is, or has ever been, an officer or employee of the
Company and are all considered "Independent" for the purposes of the New York
Stock Exchange listing standards. The Audit Committee met four times during the
fiscal year ended February 3, 2001.
Compensation Committee. The principal function of the Compensation
Committee is to make recommendations to the Board of Directors with respect to
matters regarding the approval of employment agreements, management and
consultant hiring and executive compensation. The Compensation Committee is also
responsible for determining grants of options to purchase Common Stock and for
determining grants of restricted shares of Common Stock under the Barnes &
Noble, Inc. 1991 Employee Incentive Plan and the Barnes & Noble, Inc. 1996
Incentive Plan, as awarded (the "1996 Incentive Plan"). The current members of
the Compensation Committee are Mr. Berdon (Chairman), Ms. Monaco and Mr.
Sheluck, none of whom is, or has ever been, an officer or employee of the
Company. The Compensation Committee met three times during the fiscal year ended
February 3, 2001 and acted by unanimous written consent on two additional
occasions.
Nominating Committee. The function of the Nominating Committee is to seek
qualified individuals to serve as Directors of the Company. The current members
of the Nominating Committee are Messrs. Dillard and Sheluck. The Nominating
Committee met once during the fiscal year ended February 3, 2001.
COMPENSATION OF DIRECTORS
Non-employee Directors received a fee of $20,000 with no additional fees
for attendance at Board or committee meetings during the fiscal year ended
February 3, 2001. All Directors of the Company are reimbursed for travel,
lodging and related expenses incurred in attending Board meetings.
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EXECUTIVE OFFICERS
The Company's executive officers, as well as additional information with
respect to such persons, is set forth in the table below:
NAME AGE POSITION
- ---- --- --------
Leonard Riggio....................... 60 Chairman of the Board and Chief Executive Officer
Stephen Riggio....................... 46 Vice Chairman
J. Alan Kahn......................... 54 Chief Operating Officer
Mitchell S. Klipper.................. 43 Executive Vice President, and President of Barnes &
Noble Development
Maureen E. O'Connell................. 39 Chief Financial Officer
Michael P. Berry..................... 52 President of Barnes & Noble Booksellers
Mary Ellen Keating................... 44 Senior Vice President, Corporate Communications and
Public Affairs
Michael G. Archbold.................. 40 Vice President and Chief Financial Officer of Barnes &
Noble Booksellers
David S. Deason...................... 42 Vice President of Barnes & Noble Development
Joseph Giamelli...................... 51 Vice President and Chief Information Officer
Michael N. Rosen..................... 60 Secretary
Information with respect to executive officers of the Company who also are
Directors is set forth in "Information Concerning the Directors and Nominees"
above.
J. ALAN KAHN joined the Company as Chief Operating Officer in December
1997. He joined B&N College in 1988 as President and Chief Operating Officer and
was made Chief Executive Officer in 1995. Prior to that, he was Executive Vice
President of B&N Trade and Mail Order from 1978 to 1988, and Vice President of
Merchandising for B. Dalton from 1971 to 1978.
MITCHELL S. KLIPPER has been President of Barnes & Noble Development, the
group responsible for selecting, designing and constructing new store locations,
since December 1995 and is an Executive Vice President of the Company. From
March 1993 to December 1995, Mr. Klipper was President of Barnes & Noble
Booksellers, Inc. ("B&N Booksellers"), a wholly owned subsidiary of the Company.
Until September 1993, Mr. Klipper also was Chief Financial Officer of the
Company, a position to which he was elected in September 1988. He was Vice
President, Chief Financial Officer of B&N College from June 1986 to September
1988. Prior to June 1986, Mr. Klipper was an Audit Manager at the certified
public accounting firm of KMG Main Hurdman.
MAUREEN E. O'CONNELL joined the Company as Chief Financial Officer in March
2000. Prior to joining Barnes & Noble, Inc., Ms. O'Connell held the Chief
Financial Officer position at Publisher Clearing House from October 1998 to
March 2000, BMG Direct from October 1997 to October 1998 and two Primedia
companies from November 1993 to October 1997. From April 1990 to October 1997,
Ms. O'Connell played a key role at Primedia, as it grew from a startup to a
leading media and publishing company. Ms. O'Connell is a Certified Public
Accountant.
MICHAEL P. BERRY became the President of Barnes & Noble Booksellers in
February 2001. Prior to joining the Company, Mr. Berry was Senior Vice President
of Operations for The Disneyland Resort and Downtown Disney from January 1998 to
February 2001 and Vice President of Food Operations and Concept Development from
April 1996 to January 1998. Prior to joining Disney, Mr. Berry held several
senior positions at Harvard University, the University of California at Irvine
and the University of California at Los Angeles.
MARY ELLEN KEATING joined the Company as Senior Vice President, Corporate
Communications and Public Affairs in January 1998. Previously, she was an
executive with Hill and Knowlton, Inc., a worldwide public relations firm, from
1991 to 1998, where she served as Executive Vice President and General Manager
of Hill and Knowlton's flagship New York Office.
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MICHAEL G. ARCHBOLD has been Vice President and Chief Financial Officer of
Barnes & Noble Booksellers since May 2000. Prior to that, he was Vice President
and Treasurer of the Company from May 1999 and Vice President and Controller of
the Company from May 1998. He joined the Company in April 1996 as Director of
Accounting. Prior to joining the Company, Mr. Archbold was with Woolworth
Corporation (now the Venator Group) from October 1988 through April 1996. Mr.
Archbold is a Certified Public Accountant.
DAVID S. DEASON joined the Company in January 1990 as a Director of Real
Estate and became Vice President of Barnes & Noble Development in January 1997.
Prior to joining the Company, Mr. Deason was a Director of Real Estate for S&A
Restaurant Corporation, a national restaurant chain.
JOSEPH GIAMELLI joined the Company in October 1998 as Vice President and
Chief Information Officer. Prior to joining the Company, he was Vice President
and Chief Information Officer of Toys R Us from May 1985 to September 1998.
Prior to that he was a Vice President at Citibank NA from September 1976 to
April 1985. Mr. Giamelli is a Trustee of the New York Medical College, in
Valhalla, NY, and serves as a board member of the IAHD/St. Judes Rehabilitation
Institute.
The Company's officers are elected annually by the Board of Directors and
hold office at the discretion of the Board of Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of shares of Common Stock, as of March 31, 2001, by each person known
by the Company to own beneficially more than five percent of the Company's
outstanding Common Stock, by each Director and nominee for Director, by each
executive officer named in the Summary Compensation Table contained in
"Executive Compensation," and by all Directors and executive officers of the
Company as a group. Except as otherwise noted, each person named in the table
has sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by him, her or it.
SHARES
BENEFICIALLY PERCENT OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) BENEFICIALLY OWNED(1)
- ------------------------------------ ------------ ---------------------
Leonard Riggio.............................................. 16,169,722(2) 24.3%
c/o Barnes & Noble, Inc.
122 Fifth Avenue
New York, New York 10011
Forstmann-Leff Associates, Inc.............................. 9,117,303(3) 14.0%
590 Madison Avenue
New York, New York 10022
Stephen Riggio.............................................. 1,941,004(4) 2.9%
Mitchell S. Klipper......................................... 1,333,870(4) 2.0%
J. Alan Kahn................................................ 412,139(5) *
Irene R. Miller............................................. 310,000(4) *
Matthew A. Berdon........................................... 117,000(6) *
William Sheluck, Jr......................................... 82,640(9) *
William Dillard II.......................................... 70,000(4) *
David S. Deason............................................. 69,521(4) *
Michael N. Rosen............................................ 62,000(8) *
Margaret T. Monaco.......................................... 56,000(7) *
Maureen E. O'Connell........................................ 50,000(4) *
Michael J. Del Giudice...................................... 3,000(4) *
All directors and executive officers as a group (17
persons).................................................. 20,803,005(10) 29.3%
- ---------------
* Less than 1%.
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(1) Shares of Common Stock that an individual or group has a right to acquire
within 60 days after March 31, 2001 pursuant to the exercise of options,
warrants or other rights are deemed to be outstanding for the purpose of
computing the percentage ownership of such individual or group, but are not
deemed to be outstanding for computing the percentage ownership of any
other person or group shown in the table.
(2) Includes (i) 2,652,334 shares owned by B&N College (Mr. Riggio owns all of
the voting securities of B&N College), (ii) 1,281,500 shares owned by The
Riggio Foundation, a charitable trust established by Mr. Riggio, with
himself and his wife as trustees, and (iii) 1,318,750 shares issuable upon
the exercise of stock options. The shares of Common Stock owned by Mr.
Riggio are, and in the future may be, pledged as collateral for certain
loans, including loans which were used to purchase Common Stock. The
failure of Mr. Riggio to repay such loans, together with any sale by the
pledgees of the pledged common stock, could result in a change of control
of the Company.
(3) Forstmann-Leff Associates, Inc. ("FLA"), a New York corporation, is a
registered investment adviser under Section 203 of the Investment Advisers
Act of 1940 (the "1940 Act"), and has sole voting power with respect to
2,303,535 of its shares. FLA shares voting power with respect to 1,036,125
of its shares, and dispositive power with respect to 2,449,875 of its
shares, with its subsidiary, FLA Asset Management, Inc. ("FLA Management"),
a registered investment adviser under the 1940 Act. FLA shares voting and
dispositive power with respect to 29,300 of its shares with its subsidiary
Stamford Advisers Corp., a registered investment adviser under the 1940
Act. FLA shares voting and dispositive power with respect to 62,900 of its
shares with Forstmann-Leff Associates, L.P., a registered investment
advisor under the 1940 Act. FLA Management is the general partner of
Forstmann-Leff Associates L.P. FLA shares voting and dispositive power with
respect to 4,481,325 of its shares with FLA Advisers L.L.C., a New York
limited liability company. FLA Advisers L.L.C. is a registered investment
adviser under the 1940 Act whose managing members are principals of FLA.
The foregoing information is based upon a Schedule 13G filed by FLA with
the Company in February 2001.
(4) All of these shares are issuable upon the exercise of stock options.
(5) Of these shares, 411,139 shares are issuable upon the exercise of options.
(6) Of these shares, 70,000 are issuable upon the exercise of stock options.
One thousand shares are owned by Mr. Berdon's wife. Mr. Berdon disclaims
any beneficial ownership of those shares.
(7) Of these shares, 50,000 are issuable upon the exercise of stock options.
(8) Of these shares, 50,000 shares are issuable upon the exercise of stock
options. Of the other 12,000 shares, 10,000 are owned by Mr. Rosen's wife
and 2,000 are owned by Mr. Rosen's daughter. Mr. Rosen disclaims any
beneficial ownership of these shares.
(9) Of these shares, 70,000 are issuable upon the exercise of stock options. Of
the other 12,640 shares, Mr. Sheluck shares voting and dispositive power
with respect to 8,000 of these shares with his wife, and the remaining
4,640 shares are owned by minor children of Mr. Sheluck.
(10) Includes 5,872,493 shares issuable upon the exercise of stock options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee of the Board of Directors
are Mr. Berdon (Chairman), Mr. Sheluck and Ms. Monaco, none of whom is an
officer or employee or former officer or employee of the Company. See "Meetings
and Committees of the Board -- Compensation Committee."
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EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued by the
Company for services rendered during the years indicated to the Company's Chief
Executive Officer and the Company's four other most highly compensated executive
officers. The Company did not grant any restricted stock awards or free-
standing stock appreciation rights or make any long-term incentive plan payouts
during the years indicated.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
FISCAL YEAR AWARDS
ENDED ON ANNUAL COMPENSATION SECURITIES
OR ABOUT --------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION JANUARY 31 SALARY BONUS OPTIONS/SARS COMPENSATION
- --------------------------- ----------- -------- -------- ------------ ------------
Leonard Riggio................... 2001 $500,000 $300,000 -- $ --
Chairman of the Board and 2000 538,462(1) 450,000 -- --
Chief Executive Officer 1999 773,077 450,000 -- --
J. Alan Kahn..................... 2001 600,000 360,000 19,920 10,516(2)
Chief Operating Officer 2000 584,615 300,000 224,900 7,805(3)
1999 500,000 300,000 24,945 9,232(4)
Mitchell S. Klipper.............. 2001 500,000 300,000 16,600 12,605(5)
Executive Vice President, and 2000 500,000 300,000 24,900 9,586(6)
President, Barnes & Noble 1999 493,846 300,000 22,949 8,842(7)
Development
Maureen E. O'Connell............. 2001 372,115 100,000 200,000 234(8)
Chief Financial Officer 2000 -- -- -- --
1999 -- -- -- --
David S. Deason.................. 2001 355,769 140,000 11,620 12,026(9)
Vice President of Barnes & 2000 301,539 116,000 37,225 4,964(10)
Noble Development 1999 297,116 110,000 4,573 4,236(11)
- ---------------
(1) Effective March 28, 1999, Mr. Riggio voluntarily reduced his annual salary
to $500,000.
(2) Represents (a) $8,400 paid by the Company as a contribution to Mr. Kahn's
account under the Company's 401(k) Savings Plan ("401(k) Plan"), (b) $936
paid by the Company as a premium on a term life insurance policy for the
benefit of Mr. Kahn and (c) $1,180 paid by the Company as a premium on a
long-term disability insurance policy for the benefit of Mr. Kahn.
(3) Represents (a) $4,885 paid by the Company as a contribution to Mr. Kahn's
account under the Company's 401(k) Plan, (b) $1,740 paid by the Company as
a premium on a term life insurance policy for the benefit of Mr. Kahn and
(c) $1,180 paid by the Company as a premium on a long-term disability
insurance policy for the benefit of Mr. Kahn.
(4) Represents (a) $3,760 paid by the Company as a contribution to Mr. Kahn's
account under the Company's 401(k) Plan and (b) $5,472 paid by the Company
as a premium on a term life insurance policy for the benefit of Mr. Kahn.
(5) Represents (a) $8,400 paid by the Company as a contribution to Mr.
Klipper's account under the Company's 401(k) Plan, (b) $936 paid by the
Company as a premium on a term life insurance policy for the benefit of Mr.
Klipper and (c) $3,269 paid by the Company as a premium on a long-term
disability insurance policy for the benefit of Mr. Klipper.
(6) Represents (a) $4,577 paid by the Company as a contribution to Mr.
Klipper's account under the Company's 401(k) Plan, (b) $1,740 paid by the
Company as a premium on a term life insurance policy for the benefit of Mr.
Klipper and (c) $3,269 paid by the Company as a premium on a long-term
disability insurance policy for the benefit of Mr. Klipper.
(7) Represents (a) $3,635 paid by the Company as a contribution to Mr.
Klipper's account under the Company's 401(k) Plan, (b) $1,938 paid by the
Company as a premium on a term life insurance policy
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for the benefit of Mr. Klipper and (c) $3,269 paid by the Company as a
premium on a long-term disability insurance policy for the benefit of Mr.
Klipper.
(8) Represents $234 paid by the Company as a premium on a term life insurance
policy for the benefit of Ms. O'Connell.
(9) Represents (a) $11,792 paid by the Company as a contribution to Mr.
Deason's account under the Company's 401(k) Plan and (b) $234 paid by the
Company as a premium on a term life insurance policy for the benefit of Mr.
Deason.
(10) Represents (a) $4,529 paid by the Company as a contribution to Mr. Deason's
account under the Company's 401(k) Plan and (b) $435 paid by the Company as
a premium on a term life insurance policy for the benefit of Mr. Deason.
(11) Represents (a) $3,771 paid by the Company as a contribution to Mr. Deason's
account under the Company's 401(k) Plan and (b) $465 paid by the Company as
a premium on a term life insurance policy for the benefit of Mr. Deason.
The following table sets forth certain information concerning options
granted during the 53 weeks ended February 3, 2001 to the executive officers
named in the Summary Compensation Table above. The Company did not grant any
free-standing stock appreciation rights during the 53 weeks ended February 3,
2001.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
----------------------------------------------------------
PERCENTAGE OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS PRESENT VALUE OF
UNDERLYING GRANTED TO GRANT AT DATE OF
OPTIONS/SARS EMPLOYEES IN EXERCISE PRICE EXPIRATION GRANT USING THE
NAME GRANTED FISCAL 2000 PER SHARE DATE BLACK-SCHOLES MODEL
- ---- ------------ ------------- -------------- ---------- -------------------
Leonard Riggio............ -- --% $ -- -- $ --
J. Alan Kahn.............. 19,920 0.79% 16.75 3/06/10 154,579(1)
Mitchell S. Klipper....... 16,600 0.66% 16.75 3/06/10 128,816(1)
Maureen E. O'Connell...... 200,000 7.92% 16.75 3/06/10 1,552,000(1)
David S. Deason........... 11,620 0.46% 16.75 3/06/10 90,171(1)
- ---------------
(1) Calculated using the Black-Scholes option-pricing model with the following
assumptions: volatility of 35.0%, risk-free interest rate of 6.59% and an
expected life of six years. The Black-Scholes option valuation model was
developed for use in estimating the fair value of traded options which have
no vesting restrictions and are fully transferable. In addition, option
valuation models require the input of highly subjective assumptions
including the expected stock price volatility. Because the Company's stock
options have characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the
Black-Scholes model does not necessarily provide a reliable measure of the
fair value of the Company's stock options.
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The following table sets forth information concerning option exercises and
the value of unexercised options as of February 3, 2001 for the executive
officers named in the Summary Compensation Table above.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND
FISCAL YEAR END OPTION/SAR VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
SHARES AT FEBRUARY 3, 2001 AT FEBRUARY 3, 2001
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ---------- ----------- ------------- ----------- -------------
Leonard Riggio........... -- $ -- 1,318,750 -- $18,174,752 $ --
J. Alan Kahn............. -- -- 406,198 313,568 1,267,061 1,423,044
Mitchell S. Klipper...... 122,000 2,420,531 1,313,933 50,575 17,541,328 179,735
Maureen E. O'Connell..... -- -- -- 200,000 -- 1,774,000
David S. Deason.......... 60,000 820,938 62,087 43,405 495,635 213,459
EMPLOYEES' RETIREMENT PLAN
As of December 31, 1999, substantially all employees of the Company were
covered under the Company's Employees' Retirement Plan (the "Retirement Plan").
The Retirement Plan is a defined benefit pension plan. As of January 1, 2000,
the Retirement Plan was amended so that employees no longer earn benefits for
subsequent service. Subsequent service continues to be the basis for vesting of
benefits not yet vested at December 31, 1999 and the Retirement Plan will
continue to hold assets and pay benefits. The amendment was treated as a
curtailment in fiscal 1999.
A participant's annual benefit is determined for an employee, including an
officer, generally as (i) 0.7% of the participant's average annual pay as
determined in accordance with the Retirement Plan up to Social Security-covered
compensation, multiplied by the participant's years of credited service, plus
(ii) 1.3% of the participant's average annual pay as determined in accordance
with the Retirement Plan in excess of Social Security-covered compensation,
multiplied by the participant's years of credited service. A participant's
maximum benefit is limited pursuant to Section 415 of the Internal Revenue Code
of 1986, as amended (the "Code") to $130,000 for 1999, indexed annually.
Compensation recognized is limited to $160,000 based upon the Retirement Plan.
Credited years of service under the Retirement Plan as of February 3, 2001
for the individuals named in the Summary Compensation Table above are: Leonard
Riggio -- 12 years; J. Alan Kahn -- 2 years; Mitchell S. Klipper --11 years;
Maureen E. O'Connell is not a participant; and David S. Deason -- 10 years.
The following table illustrates the maximum annual amounts payable at age
65 under the Retirement Plan, based on various levels of highest average annual
salary and years of credited service:
YEARS OF CREDITED SERVICE
----------------------------------------------
ASSUMED HIGHEST AVERAGE SALARY 15 20 25 30 35
- ------------------------------ ------ ------ ------ ------ ------
$125,000...................................... 21,135 28,180 35,225 42,270 49,315
$150,000...................................... 26,010 34,680 43,350 52,020 60,690
$160,000 and above(1)......................... 27,960 37,280 46,600 55,920 65,240
- ---------------
(1) The benefits shown corresponding to this compensation reflect the
compensation limit under Section 401(a)(17) of the Code. A participant's
compensation in excess of $150,000 (as adjusted to reflect cost-of-living
increases) is disregarded for purposes of determining highest average
earnings in plan years beginning in 1994 through 1996; a participant's
compensation in excess of $160,000 (as adjusted to reflect cost-of-living
increases) is disregarded for purposes of determining highest average
earnings in plan years beginning in 1997 through 1999. Benefits accrued as
of the last day of the plan year beginning in 1993 on the basis of
compensation in excess of $150,000 are preserved.
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EMPLOYMENT AGREEMENTS
Stephen Riggio and Mitchell S. Klipper have employment agreements that
expire in 2005 and 2002, respectively. The agreements with Mr. Riggio and Mr.
Klipper provide for their employment at an annual salary of $500,000 or such
higher amount as determined by the Company. Each is also entitled to an annual
bonus determined in accordance with the Barnes & Noble, Inc. Supplemental
Compensation Plan. Mr. Riggio's principal duties are to oversee and develop
investments in the Company's existing and future affiliates, including Barnes &
Noble.com and iUniverse.com. Accordingly, under his agreement, Mr. Riggio is
eligible to receive stock options and similar incentives from such affiliates,
and any cash compensation received by Mr. Riggio from any such affiliates is
credited against the Company's salary payment obligations. The agreements also
provide for life and long-term disability insurance, a two-year severance
arrangement and a two-year post-employment, non-competition agreement. Each
agreement renews annually upon expiration, unless terminated by either party on
12 months prior notice.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive officer compensation program is administered by the
Compensation Committee of the Board of Directors, consisting of the three
non-employee directors listed below. The program is based upon the following
guiding principles:
1. The pay and benefits provided by the Company to its executive
officers should be competitive and allow the Company to attract and retain
individuals whose skills are critical to the long-term success of the
Company.
2. The compensation offered by the Company should reward and motivate
individual and team performance in attaining business objectives and
maximizing stockholder value.
The Compensation Committee reviews the Company's executive compensation
program each year. This review includes a comparison of the Company's executive
compensation, corporate performance, stock appreciation and total return to the
stockholders with that of other companies, including other retailers.
The key elements of the Company's executive compensation package consist of
base salary, annual bonus and stock options. The Company's policies with respect
to each of these elements are discussed below. In addition, while the elements
of compensation described below are considered separately, the Compensation
Committee also considers and reviews the full compensation package afforded by
the Company to its executive officers, including pension, insurance and other
benefits. The Compensation Committee makes its determinations after receiving
and considering the recommendations of the Company's chief executive officer.
Base Salaries. An executive officer's base salary is determined by
evaluating the responsibilities of the position held, the individual's
experience and the competitive marketplace for executive talent. The base salary
is intended to be competitive with base salaries paid to executive officers with
comparable qualifications, experience and responsibilities at other companies.
Annual Bonuses. In addition to a base salary, each executive officer is
eligible for an annual cash bonus. Bonuses for senior executive officers of the
Company are based upon annual net earnings of the Company and are determined
pursuant to the Barnes & Noble, Inc. Supplemental Compensation Plan (the
"Supplemental Compensation Plan"), which was approved by the Company's
shareholders at their annual meeting on May 31, 1995.
The Supplemental Compensation Plan provides that senior executive officers
designated by the Compensation Committee are entitled to a cash bonus in
accordance with a sliding scale formula based on the extent to which a
preestablished earnings-per-share target is attained. In general, not later than
90 days after the commencement of each fiscal year of the Company (and before
25% of the relevant period of service has elapsed), the Compensation Committee
establishes in writing a target earnings-per-share (the "Target"), the
attainment of which is substantially uncertain. The Target which is established
for each fiscal year must exceed the earnings-per-share for the immediately
previous fiscal year. Targets are subject to adjustment for recapitalizations,
dividends, stock splits and reverse splits, reorganizations, issuances of
additional shares,
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redemptions of shares, option or warrant exercises, reclassifications,
significant acquisitions and divestitures and other extraordinary events.
Each participating executive officer is entitled to receive a cash bonus
based on a percentage of his or her base salary for the fiscal year ("Base
Salary") as follows:
THEN THE AMOUNT OF
IF ACTUAL EARNINGS-PER-SHARE ARE: THE CASH BONUS IS:
- --------------------------------- ------------------
Less than 80% of Target..................................... None
80% or more but less than 91% of Target..................... 30% of Base Salary
91% or more but less than 100% of Target.................... 45% of Base Salary
100% or more but less than 109% of Target................... 60% of Base Salary
109% or more but less than 118% of Target................... 70% of Base Salary
118% or more of Target...................................... 80% of Base Salary
Notwithstanding the foregoing, in no event will the maximum cash bonus
payable to any participating executive officer under the Supplemental
Compensation Plan exceed $900,000 with respect to any fiscal year. In addition,
no participating executive officer is entitled to receive any bonus under the
Supplemental Compensation Plan with respect to any fiscal year unless the
Company's actual earnings-per-share for such fiscal year (subject to adjustment
as provided above) exceeds earnings-per-share for the prior fiscal year. No
bonuses are paid until the Compensation Committee certifies the extent to which
the Target has been attained.
Leonard Riggio, Stephen Riggio, J. Alan Kahn, Mitchell S. Klipper and
Maureen E. O'Connell are the senior executive officers of the Company currently
participating in the Supplemental Compensation Plan.
Stock Options. The general purpose of long-term awards, currently in the
form of stock options, is to align the interests of the executive officers with
the interests of the Company's stockholders. Additionally, long-term awards
offer executive officers an incentive for the achievement of superior
performance over time and foster the retention of key management personnel. In
determining annual stock option grants, the Incentive Plan Committee has based
its decision on the individual's performance and potential to improve
stockholder value. The issuance of options at 100 percent of the fair market
value also assures that executives will receive a benefit only when the stock
price increases.
Compensation of Chief Executive Officer. Leonard Riggio's compensation is
determined pursuant to the principles noted above, including a bonus as
determined by the Supplemental Compensation Plan. Specific consideration is
given to Mr. Riggio's responsibilities and experience in the industry and the
compensation package awarded to chief executive officers of other comparable
companies.
Impact of Section 162(m) of the Internal Revenue Code. The Compensation
Committee has considered the potential impact of Section 162(m) of the Code,
adopted under the Revenue Reconciliation Act of 1993. This section disallows a
tax deduction for any publicly held corporation, for individual compensation
exceeding $1,000,000 in any taxable year paid to its chief executive officer or
any of its four other highest paid officers unless (i) the compensation is
payable solely on account of the attainment of performance goals, (ii) the
performance goals are determined by a Compensation Committee of two or more
outside directors, (iii) the material terms under which compensation is to be
paid are disclosed to and approved by stockholders and (iv) the Compensation
Committee certifies that the performance goals were met. Because it is in the
best interests of the Company to qualify to the maximum extent possible the
compensation of its executives for deductibility under applicable tax laws, the
Company has implemented the Supplemental Compensation Plan, which provides for
the payment of compensation in compliance with the above guidelines.
COMPENSATION COMMITTEE
Matthew A. Berdon, Chairman
Margaret T. Monaco
William Sheluck, Jr.
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PERFORMANCE GRAPH
The following table compares the cumulative total stockholder return on the
Common Stock for the period commencing January 26, 1996 through February 2, 2001
(the last trading date during the Company's last completed fiscal year) with the
cumulative total return on the Standard & Poor's 500 Stock Index (the "S&P 500")
and the Dow Jones Retailers, Other Specialty Industry Group Index (the "Dow
Jones Specialty Retailers Index") over the same period. Total return values were
calculated based on cumulative total return assuming (i) the investment of $100
in the Common Stock, the S&P 500 and the Dow Jones Specialty Retailers Index on
January 26, 1996 and (ii) reinvestment of dividends.
[Performance Graph]
DOW JONES
BARNES & NOBLE S&P 500 INDEX SPECIALTY RETAILERS
-------------- ------------- -------------------
01/26/1996 100 100 100
01/31/1997 112.67 126.47 124.85
01/30/1998 114.93 157.7 173.74
01/29/1999 271.04 205.86 280.12
01/28/2000 152.04 218.81 280.99
02/2/2001 186.21 217.09 294.09
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases space for its executive offices in properties in which
Leonard Riggio, chairman, chief executive officer and principal stockholder of
the Company, has a minority interest. The space was rented at an aggregate
annual rent including real estate taxes of approximately $3,198,000 in fiscal
year ended February 3, 2001 ("fiscal 2000").
The Company leases a 75,000 square foot office/warehouse from a partnership
in which Leonard Riggio has a 50 percent interest, pursuant to a lease expiring
in 2023. Pursuant to such lease, the Company paid $648,000 in fiscal 2000.
The Company is provided with certain package shipping services by the LTA
Group, Inc. ("LTA"), a company in which a brother of Leonard Riggio owns a 20
percent interest. The Company paid LTA $16,661,000 for such services during
fiscal 2000.
The Company leases retail space in a building in which B&N College, a
company owned by Leonard Riggio, subleases space for its executive offices from
the Company. Occupancy costs allocated by the Company to B&N College for this
space totaled $709,000 for fiscal 2000.
B&N College allocated to the Company certain operating costs incurred on
the behalf of the Company. These charges approximated $264,000 in fiscal 2000.
B&N College purchased $17,198,000 of merchandise from the Company during fiscal
2000. The Company charged B&N College $1,331,000 in fiscal 2000 for capital
expenditures, business insurance and other operating costs incurred on its
behalf.
The Company uses a jet aircraft owned by B&N College and pays for the costs
and expenses of operating the aircraft based upon the Company's usage. Such
costs which include fuel, insurance, personnel and other costs approximated
$2,401,000 in fiscal 2000.
On October 28, 1999, the Company acquired Babbage's Etc., one of the
nation's largest operators of video game and entertainment software stores, a
company majority owned by Leonard Riggio, for $208,670,000. If financial
performance targets are met over fiscal 2001, the Company will make an
additional payment of approximately $10,000,000 in 2002.
Barnes & Noble.com purchased $110,462,000 of merchandise from the Company
during fiscal 2000 and Barnes & Noble.com expects to source purchases through
the Company in the future. The Company has entered into an agreement (the
"Supply Agreement") with Barnes & Noble.com whereby the Company charges Barnes &
Noble.com the costs associated with such purchases plus incremental overhead
incurred by the Company in connection with providing such inventory. The Supply
Agreement is subject to certain termination provisions.
The Company has entered into agreements whereby Barnes & Noble.com receives
various services from the Company, including, among others, services for payroll
processing, benefits administration, insurance (property and casualty, medical,
dental and life), tax, traffic, fulfillment and telecommunications. In
accordance with the terms of such agreements the Company has received, and
expects to continue to receive, fees in an amount equal to the direct costs plus
incremental expenses associated with providing such services. The Company
received $1,699,000 for such services in fiscal 2000.
The Company subleases to Barnes & Noble.com approximately one-third of a
300,000 square foot warehouse facility located in New Jersey. The Company has
received from Barnes & Noble.com $489,000 for such subleased space in fiscal
2000.
Since 1993, the Company has used the music distributor AEC One Stop Group,
Inc. ("AEC") as its primary music and video supplier and to provide a music and
video database. In 1999, AEC's parent corporation was acquired by an investor
group in which Leonard Riggio was a minority investor. The Company paid AEC
$159,179,000 in connection with this agreement during fiscal 2000.
Michael N. Rosen, the Secretary and a Director of the Company, is the
Chairman of Robinson Silverman Pearce Aronsohn & Berman LLP, which law firm has
represented the Company since its organization.
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The Company believes that the transactions discussed above, as well as the
terms of any future transactions and agreements (including renewals of any
existing agreements) between the Company and its affiliates, are and will be at
least as favorable to the Company as could be obtained from unaffiliated
parties. The Board of Directors will be advised in advance of any such proposed
transaction or agreement and will utilize such procedures in evaluating the
terms and provisions of such proposed transaction or agreement as are
appropriate in light of the fiduciary duties of directors under Delaware law. In
addition, the Board of Directors has established an Audit Committee, which
consists of three independent directors. One of the responsibilities of the
Audit Committee is to review related party transactions. See "Election of
Directors -- Meetings and Committees of the Board -- Audit Committee."
INDEPENDENT ACCOUNTANTS
The firm of BDO Seidman, LLP ("BDO Seidman") has been selected as
independent accountants for the Company.
The independent accountants examine annual financial statements and provide
other non-audit and tax-related services for the Company. The Company and the
Audit Committee have considered whether other non-audit services by BDO Seidman
are compatible with maintaining the independence of BDO Seidman in its audit of
the Company.
Audit Fees. For the fiscal year ended February 3, 2001, the Company paid
BDO Seidman $400,770 for professional services rendered for the Company's audit
of the annual financial statements and for reviews of the Company's financial
statements included in the Company's quarterly reports on Form 10-Q filed with
the Securities and Exchange Commission ("SEC").
All Other Fees. For the fiscal year ended February 3, 2001, the Company
paid BDO Seidman $401,810 for tax-related services, $79,550 for transactions and
acquisition related costs and $36,860 for all other non-audit services.
AUDIT COMMITTEE REPORT
The Audit Committee reviews the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and reporting process. The Company's independent
auditors are responsible for expressing an opinion on the conformity of the
Company's audited financial statements to generally accepted accounting
principles.
In this context, the Audit Committee has reviewed and discussed with
management and the independent auditors the Company's audited financial
statements. The Audit Committee has discussed with the independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61
(communication with audit committees). In addition, the Audit Committee has
received from the independent auditors the written disclosures required by
Independence Standards Board Standard No. 1 (independence discussions with audit
committees) and discussed with them their independence from the Company and its
management.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board has approved that
the Company's audited financial statements be included in the Company's Annual
Report on Form 10-K for the fiscal year ended February 3, 2001, for filing with
the SEC.
AUDIT COMMITTEE
William Sheluck, Jr., Chairman
Matthew A. Berdon
Michael J. Del Giudice
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RATIFICATION OF APPOINTMENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
PROPOSAL 2
The Board of Directors has appointed the firm of BDO Seidman, which firm
was engaged as independent certified public accountants for the fiscal year
ended February 3, 2001, to audit the financial statements of the Company for the
fiscal year ending February 2, 2002. A proposal to ratify this appointment is
being presented to the stockholders at the Meeting. A representative of BDO
Seidman, will be present at the Meeting and will have the opportunity to make a
statement and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS CONSIDERS BDO SEIDMAN TO BE WELL QUALIFIED AND
RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR RATIFICATION. PROXIES SOLICITED HEREBY
WILL BE VOTED FOR THE PROPOSAL UNLESS A VOTE AGAINST THE PROPOSAL OR ABSTENTION
IS SPECIFICALLY INDICATED.
OTHER MATTERS
The Company does not intend to present any other business for action at the
Meeting and does not know of any other business intended to be presented by
others. If any matters other than the matters described in the Notice of Annual
Meeting of Stockholders and this Proxy Statement should be presented for
stockholder action at the Meeting, it is the intention of the persons designated
in the proxy to vote thereon according to their best judgment.
Proxy Solicitation. Solicitation may be made personally, by telephone, by
telegraph or by mail by officers and employees of the Company who will not be
additionally compensated therefor. The Company will request persons such as
brokers, nominees and fiduciaries holding stock in their names for others, or
holding stock for others who have the right to give voting instructions, to
forward proxy materials to their principals and request authority for the
execution of the proxy. The Company will reimburse such persons for their
expenses in so doing.
Financial and Other Information. The Company's Annual Report for the
fiscal year ended February 3, 2001, including financial statements, is being
sent to stockholders together with this Proxy Statement.
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of
the Securities Exchange Act of 1934, as amended requires the Company's executive
officers and Directors, and persons who own more than 10 percent of a registered
class of the Company's equity securities, to file initial statements of
beneficial ownership (Form 3) and statements of changes in beneficial ownership
(Forms 4 and 5) of Common Stock of the Company with the Securities and Exchange
Commission. Executive officers, Directors and greater than 10-percent
stockholders are required to furnish the Company with copies of all such forms
they file.
To the Company's knowledge, based solely on its review of the copies of
such forms received by it, or written representations from certain reporting
persons that no additional forms were required, all filing requirements
applicable to its executive officers, Directors, and greater than 10-percent
stockholders were complied with.
Stockholder Proposals. Proposals of stockholders intended to be presented
at the Annual Meeting of Stockholders to be held in 2002 must be received by the
Secretary, Barnes & Noble, Inc., 122 Fifth Avenue, New York, New York 10011, no
later than December 31, 2001.
In addition, the Company's By-Laws provide that, in order for a stockholder
to nominate a person for election to the Board of Directors at an annual meeting
of stockholders or to propose business for consideration at such meeting, such
stockholder must give written notice to the Secretary of the Company not less
than 30 days nor more than 60 days prior to the meeting; provided, however, that
in the event that less than 40 days notice or prior public disclosure of the
date of the meeting is given to stockholders, notice by the stockholder must be
given not later than the close of business on the tenth day following the day on
which such notice of the date of the meeting was mailed or such public
disclosure was made. Such notice must
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contain the proposing stockholder's record name and address, and the class and
number of shares of the Company which are beneficially owned by such
stockholder. Such notice must also contain: (1) in the case of nominating a
person for election to the Board of Directors, all information relating to such
nominee that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended, including
such person's written consent to being a nominee and to serving as a director if
elected; and (2) in the case of proposing business for consideration, (i) a
brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, and
(ii) any material interest of the proposing stockholder in such business.
STOCKHOLDERS ARE URGED TO FORWARD THEIR PROXIES WITHOUT DELAY. A PROMPT
RESPONSE WILL BE GREATLY APPRECIATED.
By Order of the Board of Directors
LEONARD RIGGIO
Chairman
April 30, 2001
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ANNEX A
BARNES & NOBLE, INC.
AUDIT COMMITTEE CHARTER
There shall be a committee of the Board of Directors (the "Board") of
Barnes & Noble, Inc. (the "Company") to be known as the Audit Committee (the
"Audit Committee" or the "Committee").
COMPOSITION
The Audit Committee shall be comprised of at least three directors of the
Board who are independent of the management of the Company and free of any
relationship which in the opinion of the Board would interfere with their
exercise of independent judgement as a Committee member. The members of the
Audit Committee shall be selected by the Board, and each member shall serve
until his or her successor has been selected by the Board.
AUTHORITY
The Audit Committee is granted the authority to perform each of the
specific duties enumerated in these guidelines. All employees of the Company are
directed to cooperate when and as requested by members of the Committee. The
Committee is empowered to retain persons having special competence as necessary
to assist the Committee in fulfilling its responsibilities. The Company's
independent auditors and the Committee may communicate with each other at all
times and the Committee chairman may call a meeting of the Committee whenever he
or she deems it necessary.
RESPONSIBILITIES
The Audit Committee will assist the Board in fulfilling fiduciary
responsibilities as to accounting policies and reporting practices of the
Company and its subsidiaries. The Audit Committee shall periodically report to
the Board as to its activities and recommendations.
MEETINGS
The Audit Committee will meet at least three times per year, and as many
additional times as the Committee deems necessary.
MINUTES
Minutes of each meeting of the Audit Committee will be prepared and sent to
all Committee members and may be submitted to all other members of the Board.
SPECIFIC DUTIES
The Audit Committee will:
1. Review with the Company's management and independent auditors the
Company's general policies and procedures to reasonably assure the
adequacy of internal accounting and financial reporting controls.
2. Be familiar with and review the appropriateness of the accounting and
reporting principles and practices applied by the Company in preparing
its financial statements.
3. Review and discuss the scope and general extent of the Company's
independent auditors' audit examination. The auditors' fees will be
discussed with the Company's management and annually submitted for
Committee review and approval. The Committee's review should entail
understanding the factors considered by the auditor in determining the
audit scope.
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4. Review with the Company's management and auditors the extent of
non-audit related services provided by the auditors, including but not
limited to consulting services relating to information technology, tax
issues, compensation matters and the magnitude of fees associated with
such non-audit services to the extent that such fees might influence
the independence of the auditors.
5. Review with the Company's management and independent auditors, upon
completion of their audit, annual and quarterly financial results prior
to their release to the public. This review is to encompass:
- The Company's annual financial statements and supplemental disclosures
required by generally accepted accounting principles;
- Significant transactions not a normal part of the Company's
operations;
- Changes, if any, during the year in the Company's accounting
principles or their application and whether any second opinions were
sought on significant accounting or auditing issues;
- Significant adjustments proposed by the independent auditors (whether
recorded or not recorded by the Company); and
- Report of the independent auditors.
6. Evaluate the cooperation received by the independent auditors during
their audit examination, including their access to all requested
records, data and information. Elicit the comments of management
regarding the responsiveness of the independent auditors to the
Company's needs. Inquire of the independent auditors whether there have
been any disagreements with management which if not satisfactorily
resolved would have caused them to issue a nonstandard report with
respect to the Company's financial statements. Sufficient opportunity
should be made available for the independent auditors to meet with the
Audit Committee without the Company's management present.
7. Discuss with the independent auditors the quality of the Company's
financial and accounting personnel, any relevant recommendations which
the independent auditors may have (including those in their "Management
Letter", if any) and their assessment of the quality of the Company's
internal financial controls.
8. Discuss with the Company's management the scope and quality of internal
auditing and financial reporting controls in effect.
9. Review the terms of any future material transactions between the
Company and related parties prior to submission of such transactions to
the Board.
10. Apprise the Board, through minutes or special presentations if
necessary, of significant developments in the course of performing the
above duties.
11. Recommend to the Board any appropriate extensions or modifications in
the duties of the Audit Committee.
12. Recommend to the Board the retention or non-retention of the Company's
independent auditors.
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1. ELECTION OF DIRECTORS
FOR all nominees / / WITHHOLD AUTHORITY to vote / / *EXCEPTIONS / /
listed below for all nominees listed below
Nominees: Leonard Riggio, Michael J. Del Giudice and William Sheluck, Jr.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
MARK THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE
PROVIDED BELOW.)
*Exceptions ________________________________________________________________
2. RATIFICATION OF THE APPOINTMENT OF BDO SEIDMAN, LLP, as the independent
certified public accountants of the company for the fiscal year ending
February 2, 2002.
FOR / / AGAINST / / ABSTAIN / /
Change of Address and
or Comments Mark Here / /
Please sign exactly as name appears to the left. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: ___________________________________________________________________, 2001
________________________________________________________________________________
Signature
________________________________________________________________________________
Signature if held jointly
VOTES MUST BE INDICATED
(X) IN BLACK OR BLUE INK. /X/
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
BARNES & NOBLE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Leonard Riggio and Stephen Riggio, and each
of them, as his true and lawful Agents and Proxies, with full power of
substitution in each, and hereby authorizes them to represent and to vote, as
designated on the reverse side hereof, all the shares of common stock of Barnes
& Noble, Inc. held of record by the undersigned on April 23, 2001, at the Annual
Meeting of Stockholders to be held on June 11, 2001, and any adjournments or
postponements thereof, with the same effect as if the undersigned were present
and voting such shares, on all matters as further described in the accompanying
Proxy Statement.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the accompanying Proxy Statement.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE. IF THIS PROXY IS EXECUTED BUT NO SPECIFICATION IS MADE, THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" EACH OF THE BOARD OF
DIRECTORS' NOMINEES, AND "FOR" PROPOSAL 2. THE PROXIES, IN THEIR DISCRETION, ARE
AUTHORIZED TO VOTE UPON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE
ANNUAL MEETING.
By executing this proxy, the undersigned hereby revokes all prior proxies.
(Continued, and to be signed and dated on the reverse side.)
BARNES & NOBLE, INC.
P.O. BOX 11280
NEW YORK, N.Y. 10203-0280