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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 (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 Rule 14a-11(c) or Rule 14a-12
CROWLEY, MILNER AND COMPANY
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(Name of Registrant as Specified in Its Charter)
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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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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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CROWLEY, MILNER and COMPANY LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Crowley,
Milner and Company, a Michigan corporation (the "Company"), will be held at the
principal offices of the Company, 2301 West Lafayette Boulevard, Detroit,
Michigan 48216, on Tuesday, May 19, 1998, at 11:00 a.m., Eastern Daylight
Savings Time, for the following purposes:
1. To elect four directors to hold office until the Annual Meeting of
Shareholders in 2001;
2. To appoint the firm of Ernst & Young LLP to audit the financial records
of the Company for the fiscal year ending January 30, 1999; and
3. To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 17, 1998,
as the record date for the determination of shareholders entitled to vote at the
Annual Meeting and any adjournment thereof (the "Record Date").
You are cordially invited to attend the meeting in person. If you do not
expect to be present, please sign, date and mark the enclosed proxy and return
it immediately. Your proxy may be revoked by filing with the Secretary a written
revocation or a proxy bearing a later date at any time prior to the time it is
voted or by attending the Annual Meeting and voting in person.
By order of the Board of Directors,
J. DALLACQUA
JOHN R. DALLACQUA, Secretary
Detroit, Michigan
April 29, 1998
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CROWLEY, MILNER and COMPANY LOGO
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1998
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Crowley, Milner and Company, a Michigan corporation
(the "Company"), of proxies to be used at the Annual Meeting of Shareholders
which will be held on May 19, 1998, or at any adjournment of the meeting. The
mailing address of the principal executive offices of the Company is 2301 West
Lafayette Boulevard, Detroit, Michigan 48216. This Proxy Statement and the
enclosed Proxy were first sent or given to shareholders on April 29, 1998.
The cost of soliciting proxies, whether by mail, telephone, telegraph, in
person or otherwise, will be borne by the Company. In addition to solicitation
by mail, the Company will reimburse brokerage houses and other nominees for
their expenses incurred in sending proxies and proxy material to the beneficial
owners of shares held by them.
Holders of Common Stock of record at the close of business on April 17,
1998, the record date for the determination of shareholders entitled to vote at
the Annual Meeting and any adjournment thereof, will be entitled to vote at the
meeting (the "Record Date"). On that Record Date, 1,544,462 shares of Common
Stock were issued and outstanding. Each shareholder is entitled to one vote for
each share of Common Stock held by him. Cumulative voting for the election of
directors is not available under the Company's Articles of Incorporation. Shares
cannot be voted at the meeting unless the holder is present in person or
represented by proxy. Any shareholder giving a proxy may revoke it at any time
prior to its use. Unless revoked, the shares represented by the proxy will be
voted in accordance with the specifications made. If no specifications are made,
such shares will be voted (i) FOR the election of the Company's nominees as
directors, and (ii) FOR the appointment of Ernst & Young LLP as auditors. The
Board of Directors does not intend to present any other matters at the Annual
Meeting. However, should any other matters properly come before the Annual
Meeting, the proxy holders will have discretionary authority to vote upon such
matters and, in such event, it is the intention of such proxy holders to vote
the proxy in accordance with their best judgment.
Any proxy given pursuant to 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 Secretary of the Company, at or before the taking of the vote at the
Annual Meeting, a written notice of revocation bearing a later date than the
proxy, (ii) duly executing a later dated proxy relating to the same shares and
delivering it to the Secretary of the Company before the taking of the vote at
the Annual Meeting, or (iii) attending the Annual Meeting and voting in person
(although attendance at the Annual Meeting will not in and of itself constitute
a revocation of a proxy). Any written notice of revocation or subsequent proxy
should be sent so as to be delivered to Crowley, Milner and Company, 2301 West
Lafayette Boulevard, Detroit, Michigan 48216, Attention: Secretary, or hand
delivered to the Secretary of the Company at or before the taking of the vote at
the Annual Meeting.
For purposes of determining the number of votes cast with respect to any
voting matter, except as otherwise expressly described herein, (a) only those
cast "for" or "against" are included, (b) abstentions are counted only for
purposes of determining whether a quorum is present at the Annual Meeting, and
(c) broker non-votes are not counted for any purpose. A majority of the
outstanding shares of the Company Common Stock, represented in person or by
proxy, will constitute a quorum at the meeting.
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MATTERS TO COME BEFORE THE MEETING
PROPOSAL 1: ELECTION OF DIRECTORS.
General; Plurality and Voting
The Bylaws of the Company provide that the Board of Directors shall consist
of not less than nine members nor more than twelve members as shall be fixed
from time to time by the Board and that the Board of Directors shall be divided
into three classes as nearly equal in number as possible. The term of office of
each class of directors is three years, and the terms of office of the three
classes overlap. The Board of Directors is presently comprised of twelve
directors. Four directors will be elected at this year's Annual Meeting to hold
office until the Annual Meeting in 2001. The nominees named below have been
selected by the Board of Directors. If, due to circumstances not now foreseen,
any of the nominees named below will not be available for election, the proxies
will be voted for such other person or persons as the Board of Directors may
select. Provided that a quorum is present, the four nominees receiving the
highest number of votes cast at the Annual Meeting will be elected as directors
of the Company. If no instructions are indicated in any properly executed proxy,
such proxy will be voted FOR the election of the individuals nominated by the
Board of Directors.
The following table sets forth the name, age, principal occupation for the
past five years, other directorships with publicly owned companies and with
public institutions, term of service as a director of the Company, and
beneficial shareholdings with respect to the four individuals who will be
nominated for election and the eight directors who were previously elected or
appointed and who will continue for the terms indicated, as provided to the
Company by each such person. Except as otherwise described, the individuals
named above have been principally engaged in the occupations described above for
the past five years. For purposes of computing the applicable percentages of the
named persons, shares which can be acquired upon the exercise of any option are
added to the shares owned beneficially by such persons and to the total shares
outstanding on that date, provided that such shares are not deemed to be
outstanding for purposes of computing the percentages of any other person.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES FOR
ELECTION.
SHARES BENEFICIALLY
OWNED AS OF
HAS APRIL 17, 1998
SERVED -----------------------
NOMINEE FOR ELECTION AS A PERCENT
AS A DIRECTOR UNTIL THE PRINCIPAL OCCUPATION DIRECTOR OF
2001 ANNUAL MEETING AND OTHER DIRECTORSHIPS AGE SINCE NUMBER CLASS
----------------------- ----------------------- --- -------- ------ -------
Dennis P. Callahan............. Chairman, President and Chief
Executive Officer of the Company
since November 1992; previously
employed as Senior Vice President
-- Merchandising of Hess's
Department Stores, Allentown,
Pennsylvania, from May 1990 to
November 1992.................... 54 1992 183,486(1) 11.25%
JoAnn S. Cousino............... Private investor; former buyer for
the Company...................... 59 1983 119,960(2) 7.74%
Alfred M. Entenman, Jr. ....... Executive Consultant to BEI
Associates, Inc. (architectural
and engineering services)........ 77 1973 7,000(2) *
Benton E. Kraner............... Partner, Swanson, Kraner & Gesler,
Inc., Certified Public
Accountants, Columbus, Ohio...... 43 1996 0 *
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SHARES BENEFICIALLY
OWNED AS OF
HAS APRIL 17, 1998
SERVED -----------------------
DIRECTORS WHOSE TERMS AS A PERCENT
CONTINUE UNTIL THE PRINCIPAL OCCUPATION DIRECTOR OF
1999 ANNUAL MEETING AND OTHER DIRECTORSHIPS AGE SINCE NUMBER CLASS
--------------------- ----------------------- --- -------- ------ -------
Joseph C. Keys................. Buyer for the Company.............. 57 1983 115,875(3) 7.48%
Richard S. Keys................ Buyer for the Company.............. 59 1981 116,430(3) 7.52%
Paul R. Rentenbach............. Member of the firm of Dykema
Gossett PLLC, Detroit, Michigan
(attorneys)...................... 52 1991 21,100(3) 1.36%
James L. Schaye, Jr. .......... Managing Director and Senior Vice
President,
Schottenstein/Bernstein Capital
Group, L.L.C. since 1990......... 49 1993 4,600(3) *
DIRECTORS WHOSE TERMS
CONTINUE UNTIL THE
2000 ANNUAL MEETING
---------------------
Donald N. Bailey............... President and Chief Operating
Officer, NBD Bank Community
Development Corporation since
June 1997; First Vice President,
NBD Bank since April 1997; Vice
President and General Manager NBD
Bank Community Development
Corporation from 1990 to June
1997. Also serves as Director of
Michigan Capital Fund for
Housing.......................... 57 1997 0 *
Thomas R. Ketteler............. Chief Operating Officer,
Schottenstein Stores Corporation
since February 1995; Vice
President -- Finance and
Treasurer of Schottenstein Stores
Corporation since October 1981.
Also serves as Director of
Schottenstein Stores Corporation
and American Eagle Outfitters,
Inc. and as an officer and
director of various other
corporations owned or controlled
by the Schottenstein family.
Serves on the Board of Directors
of International Mass Retail
Association (IMRA)............... 55 1997 0 *
Julius L. Pallone.............. Management consultant since June
1993; President and Chief
Executive Officer of Royal
Financial Services, Inc. from
January 1989 to June 1993;
Chairman of the Board and
President of its wholly-owned
subsidiary, Royal Maccabees Life
Insurance Co. from 1968 to June
1993. Also serves as a trustee of
the Pegasus Funds and a director
of Oakland Commerce Bank......... 67 1988 10,000(2) *
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SHARES BENEFICIALLY
OWNED AS OF
HAS APRIL 17, 1998
SERVED -----------------------
DIRECTORS WHOSE TERMS AS A PERCENT
CONTINUE UNTIL THE PRINCIPAL OCCUPATION DIRECTOR OF
2000 ANNUAL MEETING AND OTHER DIRECTORSHIPS AGE SINCE NUMBER CLASS
--------------------- ----------------------- --- -------- ------ -------
Jerome L. Schostak............. Executive Officer of Schostak
Brothers & Company, Inc.
(commercial and industrial real
estate sales, leasing, and
development). Also serves as a
director and the Vice Chairman of
Charter One Financial, Inc. ..... 64 1995 3,000(4) *
- -------------------------
* Less than 1%.
(1) Includes shares held indirectly by members of Mr. Callahan's immediate
family and 86,667 shares as to which Mr. Callahan has the right to acquire
pursuant to outstanding stock options.
(2) Includes options to purchase 6,000 shares of Common Stock granted under the
1995 Director Stock Option Plan.
(3) Includes options to purchase 4,000 shares of Common Stock granted under the
1995 Director Stock Option Plan.
(4) Includes options to purchase 2,000 shares of Common Stock granted under the
1995 Director Stock Option Plan.
Richard S. and Joseph C. Keys are brothers and JoAnn S. Cousino is their
cousin.
The law firm of Dykema Gossett PLLC, of which Mr. Rentenbach is an equity
member, has performed legal services for the Company during its last fiscal year
and is expected to perform such services during the current year. The amounts
paid to Dykema Gossett during the fiscal year ended January 31, 1998 by the
Company for legal services did not exceed five percent of that firm's gross
revenues for its last fiscal year.
Meetings and Committees of the Board.
The Board of Directors has established an Executive Committee, a
Compensation Committee, an Audit Committee, and a Nominating Committee. During
the fiscal year ended January 31, 1998, the Board of Directors met five times,
the Executive Committee met six times, the Nominating Committee met once, the
Compensation Committee met two times and the Audit Committee met once.
Directors other than officers are currently paid a retainer of $12,000 per
year and $500 per meeting for attending meetings of the Board and any committees
on which they serve. In the case of Mr. Rentenbach, amounts paid to him as
director's fees are credited against fees for legal services charged by the law
firm of which he is a member.
The present members of the Executive Committee are Messrs. Callahan
(Chairman), Rentenbach, Pallone, Schaye and Schostak. The function of the
Executive Committee is to exercise the authority of the Board of Directors in
the management of the business of the Company between meetings of the Board of
Directors.
The present members of the Compensation Committee are Messrs. Pallone
(Chairman), Bailey, Entenman, Ketteler, Kraner and Ms. Cousino. The Compensation
Committee establishes from time to time the salaries of the Company's executive
officers, recommends to the Board of Directors the schedule of discretionary
annual bonuses to be paid under the Company's discretionary bonus program, and
administers the 1992 Incentive Stock Plan and the Crowley, Milner and Company
1995 Director Stock Option Plan.
The present members of the Audit Committee are Messrs. Entenman (Chairman),
Bailey, Joseph C. Keys, Ketteler and Kraner. The Audit Committee nominates the
independent auditors, reviews with the
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independent auditors the scope and results of the auditing engagement and any
non-audit services to be performed by the independent auditors and evaluates the
independence of the independent auditors and their fees for audit and non-audit
services.
The present members of the Nominating Committee are Messrs. Rentenbach
(Chairman), Callahan, Pallone, Schaye, Richard S. Keys and Schostak. The
Nominating Committee is responsible for identifying and recommending to the
Board qualified candidates for election as directors of the Company. In carrying
out its responsibilities, the Nominating Committee will consider candidates
suggested by other directors, employees and shareholders. Suggestions for
candidates, accompanied by biographical material for evaluation, may be sent to
the Secretary of the Company at the Company's principal executive offices.
PROPOSAL 2: APPOINTMENT OF AUDITORS
The Board of Directors, upon the recommendation of its Audit Committee,
will propose at the meeting that the shareholders appoint the firm of Ernst &
Young LLP to audit the financial records of the Company for the fiscal year
ending January 30, 1999. Ernst & Young audited the Company's financial records
for the prior fiscal year.
A representative of Ernst & Young LLP is expected to be present at the
meeting and will have the opportunity to make a statement, if he or she so
desires, and will be available to answer appropriate questions by shareholders.
The affirmative vote of a majority of the shares present at the meeting is
required to appoint Ernst & Young LLP as the Company's auditors. If the
necessary approval by shareholders is not received the Board of Directors will
select and appoint another independent public accounting firm for such purpose
without further shareholder action. If no instructions are indicated in any
properly executed proxy, such proxy will be voted FOR the appointment of Ernst &
Young LLP as auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPOINTMENT OF ERNST &
YOUNG LLP AS AUDITORS.
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FURTHER INFORMATION
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information concerning the ownership
of the Company's Common Stock as of April 17, 1998 (i) by those persons who were
believed by the Company to be beneficial owners of more than 5% of the Company's
outstanding Common Stock, as reported to the Securities and Exchange Commission
and/or to the Company by such persons, (ii) by the Named Executive Officers (as
defined below in "Executive Compensation"), and (iii) by all directors and
officers (including the Named Executive Officers) of the Company as a group.
SHARES
BENEFICIALLY OWNED
AS OF APRIL 17, 1998(2)
--------------------------
NUMBER PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OF SHARES OF CLASS
--------------------------------------- --------- --------
Jay L. Schottenstein(3)..................................... 514,800 33.33%
c/o 1800 Moler Road
Columbus, Ohio 43207
Dennis P. Callahan(4)....................................... 183,486 11.25%
JoAnn S. Cousino(5)......................................... 119,960 7.74%
Richard S. Keys(6).......................................... 116,430 7.52%
Joseph C. Keys(6)........................................... 115,875 7.48%
Dimensional Fund Advisors, Inc.(7).......................... 82,000 5.31%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
John R. Dallacqua(8)........................................ 17,333 1.12%
All directors and executive officers (including the Named
Executive Officers) of the Company as a group (17 in
number)(9)................................................ 615,118 36.64%
- -------------------------
(1) The persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
unless otherwise noted in the footnotes to this table. Except as otherwise
noted, the address for all executive officers and directors is c/o the
Company, 2301 West Lafayette Boulevard, Detroit, Michigan 48216.
(2) For purposes of computing the applicable percentages of the named persons,
shares which can be acquired upon the exercise of any option are added to
the shares owned beneficially by such persons and to the total shares
outstanding on that date, provided that such shares are not deemed to be
outstanding for purposes of computing the percentages of any other person.
(3) Mr. Schottenstein, as the sole trustee of several trusts, is deemed to be
the beneficial owner of 514,800 shares. Mr. Schottenstein, as the sole
trustee for such trusts, acquired the 514,800 shares of the Company's Common
Stock pursuant to an Agreement and Plan of Reorganization between the
Company and such trusts as the sole shareholders of Steinbach Stores, Inc.,
dated November 17, 1995 (the "Steinbach Acquisition Agreement"). The
issuance of the 514,800 shares was approved by the Company's shareholders at
the Company's 1996 Annual Meeting. The acquisition of such shares by Mr.
Schottenstein, as sole trustee for such trusts, may be deemed to have been a
change in ownership of the Company under the rules and regulations of the
Securities Exchange Commission. In addition, pursuant to the terms of the
Steinbach Acquisition Agreement, the Company agreed to either appoint or
nominate for election as directors of the Company individuals selected by
Mr. Schottenstein, as the sole trustee for such trusts, so that the
percentage of representation by such individuals on the Board approximates
the percentage ownership by such trusts of the Common Stock. The Company's
obligation relative to the foregoing terminates when such trusts own less
than 10% of the Common Stock. As of April 17, 1998, such trusts beneficially
owned an aggregate of 34.1% of the Common Stock. The current
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individuals selected by Mr. Schottenstein in connection with the foregoing
as representatives of such trusts on the Company's Board consist of Messrs.
Ketteler, Kraner and Schaye. See "Proposal 1: Election of Directors".
(4) Includes shares held indirectly by members of Mr. Callahan's immediate
family and 86,667 shares as to which Mr. Callahan has the right to acquire
pursuant to outstanding stock options.
(5) Includes options to purchase 6,000 shares of Common Stock granted under the
1995 Director Stock Option Plan.
(6) Includes options to purchase 4,000 shares of Common Stock granted under the
1995 Director Stock Option Plan.
(7) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 82,000 shares of the
Company as of December 31, 1997, all of which shares are held in portfolios
of DFA Investment Dimensions Group Inc., a registered open-end investment
company, or in series of the DFA Investment Trust Company, a Delaware
business trust, or the DFA Group Trust and DFA Participation Group Trust,
investment vehicles for qualified employee benefit plans, all of which
Dimensional Fund Advisors, Inc. serves as investment manager. Dimensional
disclaims beneficial ownership of all such shares.
(8) Includes options to purchase 2,333 shares of Common Stock granted under the
1992 Incentive Stock Plan.
(9) Includes a total of 134,334 shares which may be acquired pursuant to stock
options.
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EXECUTIVE OFFICERS
Set forth below is certain information concerning the Company's present
executive officers, including name, age, principal occupation and business
experience during the past five years and length of service as an officer of the
Company.
NAME AND AGE OFFICE(S) AND LENGTH OF SERVICE
------------ -------------------------------
Dennis P. Callahan, 54.................... President and Chief Executive since November 1992.
Previously employed as Senior Vice President --
Merchandising of Hess's Department Stores, Allentown,
Pennsylvania, from May 1990 to November 1992, and as
President of Bon Ton Stores, York, Pennsylvania, from
July 1985 to January 1989.
John R. Dallacqua, 42..................... Vice President -- Finance, Chief Financial Officer,
Secretary and Treasurer since July 1996. Previously self
employed as an attorney, Livonia, Michigan, from
February 1995 to July 1996 and as Vice President --
Portfolio Manager, Great Lakes Bancorp, FSB, from
December 1990 to February 1995.
Nancy L. Borchers, 51..................... Senior Vice President -- Stores (Steinbach) since March
1998; Vice President -- Stores (Steinbach) from March
1996 through March 1998; and Store Manager, Steinbach,
from June 1995 to December 1995. Previously employed as
a real estate salesperson, Johnson & Johnson, Point
Pleasant, New Jersey, from May 1994 to May 1995 and as
Merchandise Manager -- Stores, Royal Doulton, Somerset,
New Jersey, from January 1991 to May 1994.
June A. Ley, 46........................... Senior Vice President -- General Merchandise Manager
since March 1998; Vice President -- General Merchandise
Manager from March 1995 through March 1998; General
Merchandise Manager from April 1994 to March 1995; and
Divisional Merchandise Manager from June 1993 to April
1994. Previously self-employed as Retail Consultant,
Pittsburgh, Pennsylvania, from February 1992 to June
1993.
Ray Attebery, 56.......................... Senior Vice President -- Operations and Chief
Information Officer since March 1998; and as Vice
President -- Operations from November 1996 through March
1998. Previously employed as President, Wholesale
Windows and Siding, Kalamazoo, Michigan, from April 1996
to November 1996; General Manager, Men's Clothing
Warehouse, Royal Oak, Michigan, January 1994 to March
1996 and as Vice President -- Sales, Mrs. Kay's Windows
& Blinds, Farmington Hills, Michigan, from December 1992
to January 1994.
John Freudenthal, 57...................... Senior Vice President -- Stores (Crowley's) since April
20, 1998. Previously employed as Executive Vice
President -- Merchandising, Carson, Pirie, Scott & Co.,
from 1990 to January 1997 and as Senior Vice President
-- General Merchandise Manager, Filene's Department
Store, a division of May Department Stores, Boston,
Massachusetts, 1985-1990.
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EXECUTIVE COMPENSATION
The following information about the Company's method of compensating its
executive officers is intended to both comply with the disclosure rules of the
Securities and Exchange Commission ("SEC") and provide shareholders with a
better understanding of the Company's objectives, policies and arrangements for
executive compensation.
Summary Compensation Table
The following table sets forth, for the fiscal years ended January 31,
1998, February 1, 1997 and February 3, 1996, information with respect to the
cash and other compensation paid to, or accrued for, the Executive Officers
whose total annual salary and bonuses exceeded $100,000 (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL -----------------------
COMPENSATION
------------------ RESTRICTED SECURITIES
STOCK UNDERLYING LTIP
NAME AND PRINCIPAL AWARDS OPTIONS PAYOUTS ALL OTHER
POSITION FISCAL YEAR SALARY BONUS ($) (#) ($) COMPENSATION($)
- ----------------------------- ----------- -------- ------- ---------- ---------- ------- ---------------
Dennis P. Callahan........... 1997 $393,317 -- 82,500 -- -- $4,770(1)
President and Chief 1996 $329,980 $75,000 -- 100,000 -- $7,797(1)
Executive Officer 1995 $292,677 $50,000 -- 30,000 -- $4,901(1)
John R. Dallacqua............ 1997 $111,881 -- 24,750 2,000 -- $ 167(2)
Vice-President -- Finance, 1996(3) $ 59,231 $ 5,000 -- 5,000 $ 195(2)
Chief Financial Officer,
Secretary and Treasurer
- -------------------------
(1) Includes $4,200 (or $350 per month) for a car allowance for the years 1997,
1996 and 1995, $370, $511 and $501 of premiums paid by the Company on a term
life insurance policy maintained for the benefit of Mr. Callahan for the
years 1997, 1996 and 1995, and $200, $3,086 and $200 contributed by the
Company on Mr. Callahan's behalf to the Company's profit-sharing plan for
the years 1997, 1996 and 1995.
(2) Consists of $167 and $195 of premiums paid by the Company on term life
insurance policy maintained for the benefit of Mr. Dallacqua for the years
1997 and 1996.
(3) Mr. Dallacqua became Vice-President -- Finance, Chief Financial Officer,
Secretary and Treasurer of the Company effective July 15, 1996. The
compensation listed includes all compensation paid to, or accrued for, Mr.
Dallacqua for the period of July 15, 1996 through January 31, 1997.
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Stock Option Grants
The following table sets forth information with respect to stock options
granted in March 1998 pursuant to the Crowley, Milner and Company 1992 Incentive
Stock Plan in the fiscal year ended January 31, 1998 to the Named Executive
Officers. In addition, in accordance with regulatory requirements, hypothetical
gains that would exist for the respective options are shown using assumed rates
of appreciation of 5% and 10% respectively (see note 3 below.) The ultimate
value of the options will depend on the actual market value of the Company's
Common Stock at a future date.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
----------------------------------------------------------- ANNUAL RATES OF
PERCENT OF TOTAL STOCK PRICE
NUMBER OF OPTIONS APPRECIATION
SECURITIES GRANTED TO EXERCISE FOR OPTION TERM (3)
UNDERLYING EMPLOYEES PRICE ($/ EXPIRATION ---------------------
NAME OPTIONS IN FISCAL YEAR SHARE)(2) DATE 5%($) 10%($)
---- ---------- ---------------- --------- ---------- ----- ------
Dennis P. Callahan............. -- -- -- -- -- --
John R. Dallacqua.............. 2,000 8% $8.25 03/25/02 $4,559 $10,073
- -------------------------
(1) Options granted under the 1992 Incentive Stock Plan are either "Incentive
Stock Options" (which may afford tax benefits to the recipients but do not
provide tax deductions to the Company) or "Nonqualified Stock Options"
(which do not afford tax benefits to the recipients but may provide tax
deductions to the Company). The options held by Mr. Dallacqua are Incentive
Stock Options and are exercisable on a cumulative basis in equal annual
installments of 33%, beginning on the anniversary of the grant date.
However, if employment with the Company terminates for any reason, other
than a "Change in Control" (as defined in the Plan), before the option is
exercisable, the right to exercise the option ends at the earlier of the
expiration of the option or (i) one year after termination due to death or
disability, or (ii) three months after termination for any other reason.
Upon a Change in Control, options become immediately exercisable, subject to
reduction to avoid classification as an excess parachute payment under the
Internal Revenue Code. Options exercised within any one calender year for
stock with a fair market value over $100,000 shall be deemed Nonqualified
Stock Options to the extent over $100,000.
(2) The exercise price shown represents the closing price of the Common Stock
reported on the American Stock Exchange on the date of the grant.
(3) The potential realizable value is reported net of the option exercise price,
but before income taxes associated with exercise. The estimated amounts
presented represent assumed annual compounded rates of appreciation in the
market price for the Company's Common Stock from the date of grant through
the expiration of the options (in each case, although exercisable as
described in Note (1) above, the options expire on the fifth anniversary of
the date of grant). Actual gains on exercise, if any, are dependent on the
future performance of the Company's Common Stock. Based on the closing price
of $8.25 per share for the Company's Common Stock as reported on the
American Stock Exchange on March 25, 1997, the 5% and 10% rates of
appreciation for a period of five years from such date would result in per
share prices of $10.53 and $13.29, respectively. The presentation is based
on the disclosure format prescribed by the SEC and is not intended to
forecast possible appreciation of the Company's Common Stock.
Unexercised Options and Holdings
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options previously granted under
the 1992 Incentive Stock Plan during the fiscal year ended January 31, 1998, and
unexercised options held as of that date.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND 1997 FISCAL YEAR-END OPTION VALUES
NUMBER OF VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
---- ----------- ----------- ------------------------- ----------------------------
Dennis P. Callahan......... -- -- 86,667/33,333 $27,500/$0
John R. Dallacqua.......... -- -- 2,333/4,667 $0/$0
- -------------------------
(1) The estimated value of the unexercised option shares (i.e., the difference
between the fair market value of the securities underlying the options and
the exercise price of the options at fiscal year-end) was based on the
closing price of the Common Stock reported on the American Stock Exchange on
January 31, 1998, or $5.50 per share. The dollar values in this table (and
all others contained in this report) are calculated on a pre-tax basis.
Employment Contracts, Termination of Employment, and Change-in-Control
Arrangement
Executive officers of the Company (including the Named Executive Officers)
are appointed annually by the Board of Directors and, subject to the employment
agreement with Mr. Callahan, described below, and the one year rolling contract
with Mr. Dallacqua, serve at the pleasure of the Board.
The Company has entered into a written employment agreement with Mr.
Callahan employing him as the President and Chief Executive Officer of the
Company. This agreement provides for a two year term of employment (initially,
from November 1, 1992 to October 31, 1994, subject to certain automatic renewal
provisions) unless he is terminated due to permanent disability (as defined in
the agreement), he is terminated without cause (as defined in the agreement), he
voluntarily terminates his employment or he is terminated for good reason or for
cause (as defined in the agreement, including the willful engagement in
dishonest or fraudulent actions or omissions). Termination for good reason
includes (a) a change in control (generally, (i) the acquisition by a person or
group of more than 50% of the fair market value or total voting power of the
Company, (ii) the acquisition within a twelve-month period by a person or group
of more than one-third in fair market value of the Company's assets, or (iii)
the replacement of a majority of the directors within a twelve-month period)
followed by a diminution or adverse change in the employee's duties and
responsibilities, in the employee's rights or benefits under certain bonus,
stock, and other employee benefit plans or by a requirement that the employee
relocate his principal place of employment beyond a 100 mile radius of Detroit,
Michigan, (b) a material breach of the employment agreement, and (c) the failure
by the Company to obtain a satisfactory agreement from any successor to perform
the employment agreement. If the employee is terminated without cause or for
good reason, the employee would be entitled to receive a single cash payment,
within ten business days following the date of termination, equal to the present
value of two years' base salary and, further, the employee would be entitled to
exercise any previously granted outstanding stock options. The agreement
restricts employee disclosure of material or secret information and employee
competition within a fifteen-mile radius of any of the Company's stores for a
period of one year after employment.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee currently consists of Messrs. Pallone
(Chairman), Bailey, Entenman, Ketteler, Kraner and Ms. Cousino. None of these
individuals was an employee of the Company during 1997.
Compensation Committee Report on Executive Compensation
General. The compensation of the Company's executive officers (including
the Named Executive Officers) is determined annually by the Compensation
Committee of the Board of Directors. The Compensation Committee consists of six
directors, none of whom are employed by the Company or are eligible to
participate in any of the Company's benefit plans except for the 1995 Director
Stock Plan. The Board of Directors, with the guidance and supervision of the
Compensation Committee, has developed and implemented compensation policies that
seek to provide fair and competitive compensation, encourage the retention
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of qualified individuals and enhance stockholder value by encouraging executive
officers to focus their effort on achieving profitability for the Company. The
Company's compensation policies are intended to align the financial interest of
the Company's officers (including its executive officers) with those of the
shareholders as well as to create an atmosphere which recognizes the individual
contribution and/or performance of each executive officer.
In addition to merit-based promotions, the essential components of the
compensation policy for the Company's executive officers are base compensation,
discretionary annual cash bonus awards and long-term stock incentive awards in
the form of stock options and/or restricted stock.
Base Compensation. The base compensation for the executive officers of the
Company, including the Chief Executive Officer, is reviewed in March of each
year by the Compensation Committee. Each year, the Compensation Committee
reviews with the Chief Executive Officer and approves, with any modifications it
deems appropriate, annual salaries for the Company's executive officers
(excluding the Chief Executive Officer) for the following year. Annual salaries
are developed after a review of several factors, including the overall salary
increase for Company personnel, comparative competitive industry data and
assessments of the executive's individual performance. The general salary
increase for Company employees as a whole is primarily dependent upon the
Company's earnings performance, the inflation rate for southeastern Michigan and
any reported trends reflecting general increases in compensation among retailers
of comparable size. The peer group of retailers used for compensation analysis
is not generally the same as the Peer Group Index discussed below in the Stock
Performance Graph. The Compensation Committee believes that the Company's most
direct competitors for executive talent are not necessarily comprised of all of
the companies included in a peer group established for comparing shareholder
returns, due primarily to the fact that most of the public companies included in
the peer index are much larger than the Company. In particular, the Compensation
Committee believes that approximately eight to twelve retailers of relatively
the same size as the Company and approximately fifteen to twenty other
non-manufacturing companies doing business in Southeastern Michigan are the
Company's most direct competitors for executive talent, and therefore
information about compensation levels paid by such organizations is considered
by the Committee. The Compensation Committee, where appropriate, also considers
certain other non-financial measures, such as increases in market share,
improvements in service quality, and improvements in relations with customers,
suppliers and employees. During 1997, the Company engaged an independent
consulting firm to evaluate the compensation paid to its executive officers and
senior management employees. However, due to the poor operating results which
the Company experienced in 1997, the Compensation Committee did not believe it
would be appropriate to implement all of the increases recommended by the
consultant. Selective increases in base compensation were approved for three
executive officers.
The base compensation of the Chief Executive Officer under his employment
agreement is determined by reference to the same factors applicable to the
executive officers, but such determination is made by the Compensation Committee
without the involvement of the Chief Executive Officer. Each year the
Committee's determination on base compensation is presented to and approved by
the Company's Board of Directors, without participation by any affected employee
directors.
Discretionary Cash Bonus Awards. For several years, the Company has
maintained a program of providing incentives to selected officers and employees
who have principal responsibility for profitability and growth in the form of
annual discretionary cash bonuses. In prior years, annual cash bonuses were
recommended to the Compensation Committee in March each year by the Chief
Executive Officer for all officers, which assessed the appropriateness of the
recommended bonuses in light of each person's performance evaluation for the
prior fiscal year, as well as general market and economic considerations. For
the fiscal year 1997, no discretionary bonuses were awarded to the Chief
Executive Officer or any other executive officers.
For the fiscal year ended January 30, 1999, the Board of Directors has
approved a short-term incentive cash bonus program in which 11 executive
officers and senior management employees (including the Chief Executive Officer)
will participate. Under this program, participants will be eligible to receive a
cash bonus calculated as a percentage of the participant's base salary (the
bonuses range from 20% of base salary to 60% of base salary in the case of Mr.
Callahan, provided that the Company achieves at least 90% of a
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predetermined net income target. A portion of this bonus will be based on the
Company's achievement of targeted earnings per share of Common Stock, a portion
of the bonus will be based on the participant's performance evaluation for the
year and a portion will be based on the participant's peer group evaluation for
the year. If the Company does not achieve net income at least equal to 90% of
the targeted amount, the bonus will be zero. If the Company achieves 90% of
targeted net income, the bonus will be 50% of the maximum amount. If targeted
net income is at least 90% of the targeted amount but less than 100% of the
targeted amount, the bonus will be appropriately adjusted on a straight-line
basis, increasing by 5% for each percentage point that actual net income
approaches 100% of targeted net income. For example, in the case of Mr.
Callahan, 80% of his incentive bonus will be based on the Company's achievement
of targeted net income, and the remaining portion will be awarded by the
Compensation Committee on the basis of an evaluation of his performance. If the
Company achieves 94% of the targeted amount, Mr. Callahan will be entitled to an
incentive bonus amount of 34% of his base salary (maximum bonus amount [60% of
base salary] times 80% times 70%).
Stock Incentive Awards. The Company's incentive program includes the 1992
Incentive Stock Plan, which is intended to retain qualified executive officers
and to motivate such officers to improve the operating results of the Company
and, thereby, improve the long term stock performance of the Company through the
grant of stock options and/or the award of restricted stock. Under this Plan,
which is administered by the Compensation Committee, grants of incentive stock
options and awards of restricted stock have been made to eligible participants
as follows: (i) during the fiscal year ended February 3, 1996, options were
granted to executive officers to acquire 40,000 shares (of which, options to
acquire 30,000 shares were made to the Chief Executive Officer and, in
connection therewith, options previously granted to the Chief Executive Officer
on April 13, 1994, to acquire 20,000 shares at a per share exercise price of
$10.00 were canceled), (ii) during the fiscal year ended February 1, 1997,
options were granted to executive officers to acquire 128,000 shares (of which,
options to acquire 100,000 shares were made to the Chief Executive Officer), and
(iii) during the fiscal year ended January 31, 1998, options were granted to
executive and other officers to acquire 24,500 shares (none of which were made
to the Chief Executive Officer) and restricted stock awards totaling 10,000
shares of common stock were made to four executive and other officers.
As is the case with respect to cash compensation, the amount of any grants
of stock options and/or awards of restricted stock to the Chief Executive
Officer will be established separately by the Compensation Committee without the
participation of the Chief Executive Officer. Any such award will be based,
among other things, upon factors applicable to executive officer awards as well
as information regarding option grants to chief executive officers of retailers
of similar size or performance, the Chief Executive Officer's base compensation
and his anticipated future contribution to the Company.
Conclusion. Through the compensation programs described above, a
significant portion of the executive compensation is based on individual and
corporate performance and on stock performance. The Compensation Committee
intends to continue the policy of linking the executive compensation to
corporate performance and shareholder returns.
Members of the Compensation Committee:
Jules L. Pallone, Chairman
Donald N. Bailey
JoAnn S. Cousino
Alfred M. Entenman, Jr.
Thomas R. Ketteler
Benton E. Kraner
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Stock Performance Graph
The following graph compares the percentage change in the cumulative total
shareholder return on the Company's Common Stock during the Company's last five
fiscal years with the cumulative total return on the American Stock Exchange
(the "AMEX Index") and the Media General Retail Trade -- Department Stores Index
(the "Peer Group Index"), which is comprised of 23 department stores, many of
which are of significantly larger size than the Company, in terms of total
revenues. The comparison assumes the investment of $100 in the Company's Common
Stock and in each index on February 1, 1993, and the reinvestment of all
dividends, if any, through January 31, 1998.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
CROWLEY, MILNER AND COMPANY, THE AMERICAN STOCK EXCHANGE INDEX,
AND MEDIA GENERAL RETAIL TRADE -- DEPARTMENT STORES INDEX
PERFORMANCE RESULTS FROM FEBRUARY 1, 1993
THROUGH JANUARY 31, 1998)
CROWLEY,
MEASUREMENT PERIOD MILNER AND PEER GROUP
(FISCAL YEAR COVERED) COMPANY INDEX AMEX INDEX
1993 100.00 100.00 100.00
1994 127.59 128.49 119.40
1995 56.90 108.82 104.21
1996 68.97 140.96 133.57
1997 87.93 156.09 143.76
1998 75.86 189.75 163.98
CERTAIN TRANSACTIONS
Pursuant to a long-term store lease (which was executed in 1964 and
terminates in 2013) between the Company and two partnerships in which Jerome L.
Schostak, a director of the Company since 1995, is a partner, the Company paid
an aggregate of $737,233 in rentals during the fiscal year ended January 31,
1998. Mr. Schostak has a substantial interest in such partnerships. The term of
the lease was negotiated by the Company with such partnerships at a time when
the partnerships were not an affiliated person or entity.
SECTION 16(A) BENEFICIAL OWNERSHIP AND REPORTING COMPLIANCE
Under the federal securities laws, the Company's directors and executive
officers and any persons holding more than 10% of the Company's Common Stock
(collectively, the "Reporting Persons") are required to file reports with the
Securities and Exchange Commission and with the American Stock Exchange relative
to their ownership of the Common Stock. Specific due dates for filing these
reports have been established and the Company is required to disclose in this
Proxy Statement any failure to timely file these reports.
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Based upon the written representations of its Reporting Persons and on
copies of the reports filed with the Securities and Exchange Commission, the
Company believes that all of these requirements were satisfied by the Company's
Reporting Persons.
OTHER MATTERS AND SHAREHOLDER PROPOSALS
At the date of this Proxy Statement, management is not aware of any matters
to be presented for action at the meeting other than those described above,
except for routine matters. If other business does properly come before the
meeting, however, the persons named in the accompanying proxy intend to vote the
proxy in accordance with their best judgment on such matters.
Any proposals of shareholders to be presented at the Annual Meeting to be
held in May 1999 which are eligible for inclusion in the Company's proxy
statement for that meeting under applicable rules of the Securities and Exchange
Commission must be received by the Company no later than 120 days prior to April
22, 1999 (the anticipated mailing date for the 1998 Annual Meeting proxy
materials), and should be sent to the Secretary of the Company at its principal
executive offices by certified mail, return-receipt requested.
Detroit, Michigan
April 29, 1998
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CROWL-98-PS
19
CROWLEY, MILNER AND COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CROWLEY, MILNER
AND COMPANY
The undersigned shareholder hereby appoints DENNIS P. CALLAHAN and JOHN R.
DALLACQUA, or either one of them, the attorneys and proxies of the undersigned,
with power of substitution, to vote all of the shares of Common Stock of
Crowley, Milner and Company standing in the name of the undersigned at the
close of business on April 17, 1998, at the Annual Meeting of Shareholders of
the Company to be held on Tuesday, May 19, 1998 at 11:00 a.m., Eastern Daylight
Saving Time, and at any and all adjournments thereof, with all the powers the
undersigned would possess if then and there present.
The shareholder instructs the proxies to vote as specified on this proxy on the
matters described in the Proxy Statement dated April 29, 1998. Proxies will be
voted as instructed.
IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
COMPANY'S NOMINEES AS DIRECTORS AND FOR THE APPOINTMENT OF ERNST & YOUNG LLP AS
AUDITORS.
BY EXECUTION OF THIS PROXY, THE UNDERSIGNED SHAREHOLDER CONFERS UPON THE ABOVE
APPOINTED PROXIES THE DISCRETIONARY AUTHORITY TO VOTE UPON ANY OTHER MATTERS
WHICH MAY PROPERLY COME BEFORE THE MEETING.
The undersigned acknowledges receipt of the Proxy Statement and Notice of said
Meeting, both dated April 29, 1998.
Brokers executing proxies should indicate on the reverse the number of shares
with respect to which authority is conferred by this Proxy if less than all
shares held as nominees are to be voted.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on the reverse side. If acting
as attorney, executor, trustee or in other representative capacity, sign
name and title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------- ---------------------------------
- ------------------------------- ---------------------------------
- ------------------------------- ---------------------------------
20
X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- ------------------------------------------------ 1. Election of directors to hold office until the Annual
CROWLEY, MILNER AND COMPANY Meeting of Shareholders in 2001. For All With- For All
- ------------------------------------------------ Nominees hold Except
Dennis P. Callahan [ ] [ ] [ ]
Jo Ann S. Cousino
Alfred M. Entenman, Jr.
Benton E. Kraner
Mark box at right if an address change or [ ]
comment has been noted on the reverse
side of this card. NOTE: If you do not wish your shares voted "For" a particular
nominee, mark the "For All Except" box and strike a line through
RECORD DATE SHARES: the name(s) of the nominee(s). Your shares will be voted for the
remaining nominee(s).
For Against Abstain
2. Appointment of Ernst & Young LLP [ ] [ ] [ ]
as independent auditors for the
fiscal year ending January 30, 1999.
----------------
Please be sure to sign and date this Proxy. | Date
- ----------------------------------------------------------------------
- --------Shareholder sign here--------------------Co-owner sign here---
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