1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement (Revocation of Consent Statement)
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
KMART CORPORATION
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
KMART CORPORATION
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rules 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------
(2) Aggregate number of securities to which transaction applies:
------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
--------------
(4) Proposed maximum aggregate value of transactions:
-----------------------
(5) Total fee paid:
---------------------------------------------------------
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------
(3) Filing Party:
-----------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------
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[KMART LETTERHEAD]
April 5, 1996
VIA ELECTRONIC TRANSMISSION
Securities and Exchange Commission
450 Fifth Street, N. W.
Washington, D.C. 20549
Re: Soliciting Material of Kmart Corporation
Relating to the Possible Solicitation of Proxies
by the Kmart Independent Shareholders' Committee
Ladies and Gentlemen:
On behalf of Kmart Corporation, a Michigan corporation ("Kmart"),
we transmit herewith via electronic transmission for filing, pursuant to
Item 101(a)(1)((iii) of Regulation S-T and Rules 14a-11(b) and 14a-12(b)
of the Securities Exchange Act of 1934, as amended, soliciting materials
(the "Soliciting Materials") of Kmart relating to the possible solicitation
by the Kmart Independent Shareholders' Committee of proxies from the holders of
Kmart common stock. The Soliciting Materials include a cover page in the form
set forth in Schedule 14A.
Three copies of each of this letter and the Soliciting Materials are
being filed with each of The New York Stock Exchange, The Pacific Stock
Exchange and The Chicago Stock Exchange.
If you have any questions or comments concerning the foregoing or the
materials being transmitted herewith, please contact the undersigned at (810)
643-1792 or David J. Friedman at (212) 735-2218.
Very truly yours,
Nancie W. LaDuke
Nancie W. LaDuke
Enclosures
cc: Robert M. Burton
David J. Friedman
Anthony N. Palizzi
The New York Stock Exchange
The Pacific Stock Exchange
The Chicago Stock Exchange
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[NEWS RELEASE] [KMART LETTERHEAD]
RELEASE DATE
April 5, 1996
CONTACT
Robert M. Burton
Director, Investor Relations
(810) 643-1040
Shawn M. Kahle
Vice President, Corporate Affairs
(810) 643-1021
KMART OPPOSES UNIONS' PROXY PROPOSALS AND BOARD NOMINEE
Troy, Mich., April 5, 1996 -- Kmart Corporation (NYSE: KM) today released the
following letter from Floyd Hall, Chairman, President, and Chief Executive
Officer, which is being mailed to the company's institutional stockholders:
"Dear Kmart Stockholder:
Two labor unions, the International Brotherhood of Teamsters and the Union of
Needletrades, Industrial and Textile Employees, acting together, may soon
attempt to communicate with you to solicit your vote in connection with Kmart's
annual meeting in May. Since you may be receiving their proxy solicitation
materials, we thought it important that we give you our view as to what this
solicitation is really about.
We believe the true objective of the unions' proxy solicitation is clear: they
are attempting to pressure Kmart's Board of Directors and management in an
effort to gain concessions on local labor issues, which should be addressed in
other more appropriate arenas, and not through the use of the proxy process.
The unions are proposing the election of a new director to the Kmart Board.
They are also sponsoring several shareholder proposals. The Kmart Board
opposes these proposals for the following reasons:
- - The unions have proposed the election of their own nominee to replace
Gloria Shatto on the Kmart Board. In fact, Dr. Shatto decided several
months ago - well before the unions targeted her for their attack - not
to stand for reelection this year. As her successor, Kmart has
nominated Stephen F. Bollenbach, President and CEO of Hilton Hotels
Corporation and the former Senior Executive Vice President and Chief
Financial Officer of The Walt Disney Company and the former President
and Chief Executive Officer of Host Marriott.
Mr. Bollenbach is widely recognized as a leading authority in the
hospitality and entertainment industries. His expertise in real estate,
finance and customer service will be a tremendous asset to Kmart.
Mr. Bollenbach is one of six new independent directors who have joined
Kmart's Board in the past year, bringing a fresh perspective and
relevant business experience to the company. Unlike the unions'
hand-picked nominees, each of these directors is truly independent; they
have no affiliation with Kmart nor an outside agenda to pursue.
[RECYCLED LOGO]
4
- - The unions have proposed a resolution requesting that the company
eliminate its retirement plan for non-employee directors. In fact, the
Board acted to do that last September. As a result, the Directors
Retirement Plan has been frozen since January 1, 1996, subject to
shareholder approval of a new program that increases the ties between
director benefits and shareholder value.
- - The unions have proposed a resolution requesting that the Kmart Board
undertake a comprehensive study of the feasibility of a sale or merger
of the company. It is ill-advised and short-sighted to ask the Board to
effectively hand a "For Sale" sign on the company at a time when it is
not in the best interest of our shareholders. Kmart's operations are in
the process of being revitalized, the results of this turnaround have
only begun to reach the bottom line, and the company's share price is
just beginning to respond.
As you know, virtually everything at Kmart today is new or is being renewed. I
have been on the job for less than a year. Most of our talented new managers
have been here for less than two years - and many for less than a year. During
that time, we have made significant progress to turn Kmart around. We have
completed the disposition of $3.5 billion in non-core assets, closed 214
underperforming stores, cleared out $700 million in aged and discontinued
inventory, achieved more than $500 million in permanent cost reductions, and
reached an agreement for Chemical Bank to arrange a new, three-year $3.7
billion bank facility to replace the company's existing bank lines and other
obligations.
We have also assembled a highly talented and committed management team. This
team has begun to implement merchandising, promotional and operational
initiatives that are designed to result in improved merchandise assortments,
better in-stock positions, cleaner and more orderly stores, and dramatic gains
in customer satisfaction.
I recognize that the past year has been a difficult one for Kmart
shareholders,but I believe the company is now making great progress toward a
lasting turnaround. I hope you will concur with me that we should not add a
special-interest, union-sponsored director to the Board. I also hope you agree
that the proxy process is not the proper forum to debate or resolve local
disputes that periodically arise between labor and management.
Please reject the unions' proxy solicitation by not signing or returning any
blue proxy card that may be sent to you by the unions or their so-called
"committee." Kmart's annual report, proxy statement and WHITE proxy card
will be sent to you shortly. If you have any questions, or require assistance
in voting your shares, please contact D. F. King & Co. at (800) 714-3310.
Thanks for your continued interest and support."
Kmart Corporation serves America with 2,172 Kmart and 169 Builders Square
retail outlets. In addition to serving all 50 states, Puerto Rico, Guam and the
U.S. Virgin Islands, Kmart operations extend to Canada, and through joint
ventures, to Mexico and Singapore.
The participants in this solicitation include Kmart Corporation ("Kmart") and
the following directors: James B. Adamson, Lilyan H. Affinito, Stephen F.
Bollenbach, Joseph A. Califano, Jr., Richard G. Cline, Willie D. Davis, Enrique
C. Falla, Joseph P. Flannery, David B. Harper, Robert D. Kennedy, F. James
McDonald, J. Richard Munro, Lawrence Perlman, Gloria M. Shatto, William P.
Weber and James O. Welch, Jr. Employee participants include: Floyd Hall,
Chairman of the Board, President and Chief Executive Officer; Warren Flick,
Executive Vice President and President and General Merchandise Manager, U.S.
Kmart Stores; Ronald Floto, Executive Vice President and President, Super Kmart
Centers; Anthony N. Palizzi, Executive Vice President and General Counsel;
Marvin P. Rich, Executive Vice President, Strategic Planning, Finance and
Administration; Martin Welch III, Senior Vice President and Chief Financial
Officer; Shawn M. Kahle, Vice President, Corporation Affairs; Nancie W. LaDuke,
Vice President and Secretary; and Robert M. Burton, Director, Investor
Relations. All such persons are deemed to own beneficially less than 1 percent
of the outstanding shares of Kmart's common stock in the aggregate. For a
further description of the foregoing interests, see Kmart's Preliminary Proxy
Statement, filed with the Securities and Exchange Commission on April 1, 1996,
including the annexes thereto.
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April 5, 1996
Dear Kmart Stockholder:
Two labor unions, the International Brotherhood of Teamsters and the Union of
Needletrades, Industrial and Textile Employees, acting together, may soon
attempt to communicate with you to solicit your vote in connection with Kmart's
annual meeting in May. Since you may be receiving their proxy solicitation
materials, we thought it important that we give you our view as to what this
solicitation is really about.
We believe the true objective of the unions' proxy solicitation is clear: they
are attempting to pressure Kmart's Board of Directors and management in an
effort to gain concessions on local labor issues, which should be addressed in
other more appropriate arenas, and not through the use of the proxy process.
The unions are proposing the election of a new director to the Kmart Board.
They are also sponsoring several shareholder proposals. The Kmart Board opposes
these proposals for the following reasons:
- - The unions have proposed the election of their own nominee to replace
Gloria Shatto on the Kmart Board. In fact, Dr. Shatto decided several
months ago - well before the unions targeted her for their attack - not
to stand for reelection this year. As her successor, Kmart has nominated
Stephen F. Bollenbach, president and CEO of Hilton Hotels Corporation
and the former Senior Executive Vice President and Chief Financial
Officer of The Walt Disney Company and the former President and Chief
Executive Officer of Host Marriott.
Mr. Bollenbach is widely recognized as a leading authority in the
hospitality and entertainment industries. His expertise in real estate,
finance and customer service will be a tremendous asset to Kmart.
Mr. Bollenbach is one of six new independent directors who have joined
Kmart's Board in the past year, bringing a fresh perspective and
relevant business experience to the company. Unlike the unions'
hand-picked nominees, each of these directors is truly independent; they
have no affiliation with Kmart nor an outside agenda to pursue.
- - The unions have proposed a resolution requesting that the company
eliminate its retirement plan for non-employee directors. In fact, the
Board acted to do that last September. As a result, the Directors
Retirement Plan has been frozen since January 1, 1996, subject to
shareholder approval of a new program that increases the ties between
director benefits and shareholder value.
- - The unions have proposed a resolution requesting that the Kmart Board
undertake a comprehensive study of the feasibility of a sale or merger
of the company. It is ill-advised and short-sighted to ask the Board to
effectively hand a "For Sale" sign on the company at a time when it is
not in the best interest of our shareholders. Kmart's operations are in
the process of being revitalized, the results of this turnaround have
only begun to reach the bottom line, and the company's share price is
just beginning to respond.
As you know, virtually everything at Kmart today is new or is being renewed. I
have been on the job for less than a year. Most of our talented new managers
have been here for less than two years - and many for less than a year. During
that time, we have made significant progress to turn
6
Kmart around. We have completed the disposition of $3.5 billion in non-core
assets, closed 214 underperforming stores, cleared out $700 million in aged and
discontinued inventory, achieved more than $500 million in permanent cost
reductions, and reached an agreement for Chemical Bank to arrange a new,
three-year $3.7 billion bank facility to replace the company's existing bank
lines and other obligations.
We have also assembled a highly talented and committed management team. This
team has begun to implement merchandising, promotional and operational
initiatives that are designed to result in improved merchandise assortments,
better in-stock positions, cleaner and more orderly stores, and dramatic gains
in customer satisfaction.
I recognize that the past year has been a difficult one for Kmart shareholders,
but I believe the company is now making great progress toward a lasting
turnaround. I hope you will concur with me that we should not add a
special-interest, union-sponsored director to the Board. I also hope you agree
that the proxy process is not the proper forum to debate or resolve local
disputes that periodically arise between labor and mangement.
Please reject the unions' proxy solicitation by not signing or returning any
blue proxy card that may be sent to you by the unions or their so-called
"committee." Kmart's annual report, proxy statement and WHITE proxy card will
be sent to you shortly. If you have any questions, or require assistance in
voting your shares, please contact D. F. King & Co. at (800) 714-3310.
Thanks for your continued interest and support.
Sincerely,
Floyd Hall
Floyd Hall
Chairman, President
and Chief Executive Officer
The participants in this solicitation include Kmart Corporation ("Kmart") and
the following directors: James B. Adamson, Lilyan H. Affinito, Stephen F.
Bollenbach, Joseph A. Califano, Jr., Richard G. Cline, Willie D. Davis, Enrique
C. Falla, Joseph P. Flannery, David B. Harper, Robert D. Kennedy, F. James
McDonald, J. Richard Munro, Lawrence Perlman, Gloria M. Shatto, William P.
Weber and James O. Welch, Jr. Employee participants include: Floyd Hall,
Chairman of the Board, President and Chief Executive Officer; Warren Flick,
Executive Vice President and President and General Merchandise Manager, U.S.
Kmart Stores; Ronald Floto, Executive Vice President and President, Super Kmart
Centers; Anthony N. Palizzi, Executive Vice President and General Counsel;
Marvin P. Rich, Executive Vice President, Strategic Planning, Finance and
Administration; Martin Welch III, Senior Vice President and Chief Financial
Officer; Shawn M. Kahle, Vice President, Corporation Affairs; Nancie W. LaDuke,
Vice President and Secretary; and Robert M. Burton, Director, Investor
Relations. All such persons are deemed to own beneficially less than 1 percent
of the outstanding shares of Kmart's common stock in the aggregate. For a
further description of the foregoing interests, see Kmart's Preliminary Proxy
Statement, filed with the Securities and Exchange Commission on April 1, 1996,
including the annexes thereto.