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:
<Table>
[ ] 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-12
</Table>
Chico's FAS, 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:
(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 transaction:
(5) Total fee paid:
[ ] 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:
(CHICO'S LOGO)
CHICO'S FAS, INC.
11215 METRO PARKWAY
FT. MYERS, FLORIDA 33912
April 29, 2002
TO OUR STOCKHOLDERS:
You are cordially invited to attend our 2002 annual meeting of stockholders
which will be held at the Sanibel Harbour Resort, 17260 Harbour Pointe Drive,
Fort Myers, Florida, on June 25, 2002 at 2:00 P.M., local time.
This year we have again selected the Sanibel Harbour Resort as the venue
for the annual meeting because it proved to be a particularly nice setting for
our meeting last year. I look forward to this opportunity to let you become
better acquainted with Chico's, our directors and officers, our achievements and
our plans for the future.
Please read these materials so that you'll know what we plan to do at the
meeting. Also, please sign and return the accompanying proxy card. This way,
your shares will be voted as you direct even if you can't attend the meeting.
/s/ Marvin Gralnick
MARVIN J. GRALNICK
Chief Executive Officer and
Chairman of the Board
(CHICO'S LOGO)
CHICO'S FAS, INC.
11215 METRO PARKWAY
FT. MYERS, FLORIDA 33912
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 25, 2002
To the Stockholders of Chico's FAS, Inc.:
<Table>
TIME 2:00 P.M., Local Time, on Tuesday, June 25, 2002
PLACE Sanibel Harbour Resort
17206 Harbour Pointe Drive
Ft. Myers, Florida 33908
ITEMS OF 1. To elect two Class III directors, each to serve for a
three-year term;
BUSINESS 2. To approve the Company's 2002 Employee Stock Purchase Plan;
To approve the Company's 2002 Omnibus Stock and Incentive
Plan;
3.
To transact such other business as may properly come before
the meeting or any adjournments or postponements thereof.
4.
RECORD DATE You can vote if you are a stockholder of record on April 29,
2002.
ANNUAL REPORT Our 2001 Annual Report, which is not a part of the proxy
soliciting material, is enclosed.
PROXY VOTING It is important that your shares be represented and voted at
the Annual Meeting. Please vote by dating, signing and
mailing the enclosed proxy promptly in the enclosed postage
paid pre-addressed envelope. If you should be present at the
meeting and desire to vote in person, you may withdraw your
proxy.
</Table>
By Order of the Board of Directors,
/s/ Charles J. Kleman
Charles J. Kleman
Secretary
April 29, 2002
(CHICO'S LOGO)
CHICO'S FAS, INC.
11215 METRO PARKWAY
FT. MYERS, FLORIDA 33912
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 25, 2002
To the Stockholders of April 29, 2002
Chico's FAS, Inc.:
These proxy materials are delivered in connection with the solicitation by
the Board of Directors of Chico's FAS, Inc. ("Chico's," the "Company," "we," or
"us"), a Florida corporation, of proxies to be voted at our 2002 Annual Meeting
of Stockholders and at any adjournments or postponements thereof.
You are invited to attend our Annual Meeting of Stockholders on June 25,
2002, beginning at 2:00 P.M., Local Time. The Annual Meeting will be held at the
Sanibel Harbour Resort, Fort Myers, Florida. Stockholders will be admitted
beginning at approximately 1:30 P.M.
It is important that proxies be returned promptly to avoid unnecessary
expense to the Company. Therefore, whether you plan to attend the Annual Meeting
or not and regardless of the number of shares of stock you own, please date,
sign and return the enclosed proxy promptly.
ABOUT THE ANNUAL MEETING
WHAT IS THE PURPOSE OF THE MEETING?
At the Annual Meeting, stockholders will act upon the matters outlined in
the accompanying notice of meeting, including the election of directors,
approval of the Company's 2002 Employee Stock Purchase Plan and approval of the
Company's 2002 Omnibus Stock and Incentive Plan. In addition, the Company's
management will report on the performance of the Company during the fiscal year
ended February 2, 2002 and respond to questions from stockholders.
WHEN ARE THESE MATERIALS BEING MAILED?
This Proxy Statement and the form of proxy are being mailed starting on
approximately May 3, 2002.
WHO IS ENTITLED TO VOTE?
Only stockholders of record at the close of business on the record date,
April 29, 2002, are entitled to receive notice of the annual meeting and to vote
at the Annual Meeting (or any adjournment or postponement thereof) the shares of
common stock that they held on that date. As of that date, there were 41,035,913
common shares outstanding. Each common share is entitled to one vote on each
matter properly brought before the Annual Meeting. Shares of common stock, par
value $.01 per share, are the only outstanding voting securities of the Company.
WHAT CONSTITUTES A QUORUM?
The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the shares of common stock outstanding on the record date will
constitute a quorum, permitting the meeting to conduct its business. Proxies
received but marked as abstentions and broker non-votes will be included in the
calculation of the number of shares considered to be present at the Annual
Meeting. A broker non-vote occurs when a nominee holding shares for a beneficial
owner does not vote on a particular proposal because the nominee does not have
discretionary voting power for that particular item and has not received
instructions as to that item from the beneficial owner.
HOW DO I VOTE?
If you complete and properly sign the accompanying proxy card and return it
to the Company's transfer agent, it will be voted as you direct. If you are a
registered stockholder and attend the Annual Meeting, you may vote at the Annual
Meeting either by delivering your completed proxy card in person or by voting
instead by ballot. If your shares are held in "street name" (that is, through a
bank, broker or other nominee holder of record) and you want to be able to cast
your vote in person at the Annual Meeting, you must either (i) obtain a "legal
proxy," executed in your favor, from the bank, broker, or nominee, as the case
may be, or (ii) obtain a proxy direction form from the bank, broker, or nominee,
as the case may be, and follow the instructions on the form so as to provide
such bank, broker or nominee with your directions as to how you want such shares
to be voted.
CAN I VOTE BY TELEPHONE OR ELECTRONICALLY?
The Company has not established procedures to allow telephone or electronic
voting, but we may do so for future stockholder meetings if we determine that
the added convenience to our stockholders would justify the additional costs to
the Company associated with these voting methods.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after you have submitted your proxy, you may revoke the proxy and
you may change your vote at any time before the proxy is exercised by filing
with the Secretary of the Company either a written notice of revocation or a
duly executed proxy bearing a later date or by attending the Annual Meeting and
voting the shares in person. No such notice of revocation or later-dated proxy,
however, will be effective until received by the Company at or prior to the
Annual Meeting. Unless the proxy is revoked, the shares represented thereby will
be voted at the Annual Meeting or any adjournment thereof. The giving of the
proxy does not affect the right to vote in person should the stockholder attend
the meeting, although attendance at the meeting will not by itself revoke a
previously granted proxy.
IF I SUBMIT A PROXY, HOW WILL MY SHARES BE VOTED?
Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the recommendations
of the Board of Directors.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
The Board's recommendations are set forth together with the description of
each item in this proxy statement. In summary, the Board recommends a vote:
- for election of the nominees for the Class III Director positions (see
page 3);
- for approval of the Company's 2002 Employee Stock Purchase Plan (see page
6); and
- for approval of the Company's 2002 Omnibus Stock and Incentive Plan (see
page 8).
With respect to any other matter that properly comes before the meeting,
the proxy holders will vote as recommended by the Board of Directors or, if no
recommendation is given, in their own discretion. At the date this proxy
statement went to press, we did not know of any other matter to be raised at the
Annual Meeting.
2
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
Election of Directors. The affirmative vote of a plurality of the votes
cast at the Annual Meeting is required for the election of directors. A properly
executed proxy marked "WITHHOLD AUTHORITY" with respect to the election of one
or more directors will not be voted with respect to the director or directors
indicated, even though it will be counted for purposes of determining whether
there is a quorum present at the Annual Meeting.
Other Items. For each other item, the item will be approved if the
affirmative votes in favor of the item are greater than the votes cast opposing
the item. A properly executed proxy marked "ABSTAIN" with respect to any such
matter will not be voted, even though it will be counted for purposes of
determining whether there is a quorum present at the Annual Meeting.
Accordingly, for purposes of the vote, an abstention will have the same effect
as does a share that is not present or is not voted.
HOW WILL VOTES BE COUNTED?
All votes will be tabulated by employees of The Registrar and Transfer
Company, the Company's transfer agent for the common stock, whose
representatives will serve as one or more of the inspectors of election.
Although abstentions and broker non-votes are each included in the determination
of the number of shares present, they are not counted on any matters brought
before the meeting.
WHO IS PAYING FOR THE PREPARATION AND MAILING OF THE PROXY MATERIALS AND HOW
WILL SOLICITATIONS BE MADE?
We will pay the expenses of soliciting proxies. Proxies may be solicited on
our behalf by directors, officers or employees in person or by telephone, mail,
electronic transmission, facsimile transmission or telegram. The Company will
request brokerage houses and other custodians, nominees and fiduciaries to
forward soliciting material to stockholders and the Company will reimburse such
institutions for their out-of-pocket expenses incurred thereby. The Company has
engaged Georgeson Shareholder to assist in the solicitation of proxies at a fee
estimated not to exceed $10,000.
1. ELECTION OF DIRECTORS -- ITEM ONE ON YOUR PROXY CARD
DIRECTORS STANDING FOR ELECTION
The Board of Directors is divided into three classes, currently consisting
of two directors in each class, whose terms expire at successive annual
meetings. The current terms of the three classes of directors expire in 2002
(Class III directors), 2003 (Class I directors), and 2004 (Class II directors).
Directors are generally elected for three-year terms.
Two Class III directors are to be elected at the 2002 Annual Meeting. The
Board of Directors has nominated the following persons to stand for election at
the 2002 Annual Meeting for the two director seats (terms expiring in 2005):
Marvin J. Gralnick
John W. Burden
The persons named in the enclosed form of proxy intend, unless otherwise
directed, to vote such proxy "FOR" the election of Marvin J. Gralnick and John
W. Burden as Class III directors of the Company, each to serve for the term
described above.
Each of the proposed nominees for election as directors has consented to
serve if elected. If, as a result of circumstances not now known or foreseen,
the nominees shall be unavailable or unwilling to serve as a director, proxies
may be voted for the election of such other persons as the Board of Directors
may select. The Board of Directors has no reason to believe that the nominees
will be unable or unwilling to serve.
3
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THESE
NOMINEES FOR ELECTION AS DIRECTORS. The nominees that receive a plurality of the
votes cast by the shares entitled to vote at the Annual Meeting shall be elected
as the directors.
NOMINEES FOR ELECTION AT THIS MEETING TO TERMS EXPIRING IN 2005:
Marvin J. Gralnick, 67, is Chief Executive Officer and Chairman of the
Board of the Company. Marvin J. Gralnick, together with his wife, Helene B.
Gralnick, founded Chico's in December 1983. He served the Company as its Chief
Executive Officer until September 1993, at which time Jeffrey J. Zwick succeeded
Mr. Gralnick in this position. In connection with the resignation of Mr. Zwick
as Chief Executive Officer, President and a director of the Company in November
1994, Mr. Gralnick returned to the Company on a full time basis to head up
merchandise design, marketing and image for the Company. In February 1995, Mr.
Gralnick reassumed the role of Chief Executive Officer. In March 1997, Mr.
Gralnick reassumed the position of President and served in that position until
September 2001, at which time Scott A. Edmonds was promoted to the position of
President. Mr. Gralnick also served as President from the Company's founding
until 1990 when he became Chairman of the Board and was given the official title
of Chief Executive Officer. Mr. and Ms. Gralnick's vision and creative talents
led the development and evolution of the Company's philosophy and the design and
feel of Chico's merchandise and Chico's stores through September 1, 1993 and
since November 1994 have again been leading the Company in this regard.
DIRECTOR SINCE 1983.
John W. Burden, 65, is currently an independent retailing consultant,
having served as a consultant and partner in Retail Options, Inc. from November
1993 to December 1997. From December 1990 to March 1993, Mr. Burden's principal
occupation was as an officer in Pelican Palms Realty Company, a real estate
sales company he owned. In 1990, he retired as the Chairman of both Federated
Department Stores, Inc., and Allied Department Stores, Inc., following a 19 year
career in various merchandising positions in the Federated organization,
including President of Burdines and Chairman of the Abraham and Strauss
Division. Prior to that time, he spent 12 years with Macy's. Mr. Burden is also
director of J. Crew Group, Inc. and Saks Incorporated.
DIRECTOR SINCE 1997.
DIRECTORS CONTINUING IN OFFICE
DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 2003:
Charles J. Kleman, 51, is Executive Vice President-Finance, Chief Financial
Officer and Secretary/ Treasurer of the Company. Charles J. Kleman has been
employed by Chico's since January 1989, when he was hired as the Company's
Controller. In 1991, he was elected as Vice President/Assistant Secretary. In
1992, Mr. Kleman was designated as the Company's Chief Financial Officer. In
September 1993, he was elected to the additional position of
Secretary/Treasurer, served as Senior Vice President-Finance from January 1996
through November 1996 and, effective December 1996, was promoted to the position
of Executive Vice President-Finance. Prior to joining Chico's, Mr. Kleman was an
independent accounting consultant in 1988, and from 1986 to 1988 Mr. Kleman was
employed by Electronic Monitoring & Controls, Inc., a manufacturer and
distributor of energy management systems, as its Vice President/Controller.
Prior to 1986, Mr. Kleman was employed by various public accounting firms,
spending over four years of that time with Arthur Andersen & Co. Mr. Kleman is
responsible for accounting, financial reporting, management information systems
and investor relations.
DIRECTOR SINCE 1993.
Ross E. Roeder, 64, is Chairman and Chief Executive Officer of Smart &
Final, Inc., having held these positions since 1999 and having served as a
director of SFI Corporation, the parent corporation of Smart & Final, since
1984. From 1986 to 1998, Mr. Roeder served as a director of Morgan-Kaufman
Publishers, Inc., a
4
publisher of computer science text and reference books, and from 1993 to 1998
served as its Chairman of the Board. Since the late 1970's, he also served and
continues to serve as Chairman of the Board and Chief Executive Officer of MDR,
Inc., International Consulting Group. From 1986 until February 1993, Mr. Roeder
was President and Chief Executive Officer of Federal Construction Company. Mr.
Roeder is also a director of Gulf West Banks, Inc.
DIRECTOR SINCE 1997.
DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 2004:
Helene B. Gralnick, 54, is Senior Vice President-Design and Concept for the
Company. Helene B. Gralnick was a co-founder of Chico's, together with her
husband, Marvin J. Gralnick, and has served the Company in various senior
executive capacities throughout its history. She was first elected Vice
President/ Secretary in 1983. Ms. Gralnick was elected as Senior Vice
President-Merchandise Concept in 1992. In September 1993, Ms. Gralnick stepped
down from all officer positions with the Company. In connection with the
resignation of Jeffrey J. Zwick as Chief Executive Officer, President and a
director of the Company in November 1994, Ms. Gralnick returned to the Company
on a full time basis to head up merchandise design, marketing and image for the
Company. In February 1995, Ms. Gralnick was elected as Senior Vice
President - Design and Concept.
DIRECTOR SINCE 1983.
Verna K. Gibson, 59, presently is a retailing consultant. From 1985 to
1991, Ms. Gibson was President and Chief Executive Officer of the Limited Stores
Division of The Limited, Inc., a retail apparel specialty chain. From January
1991 through 1995, she served as President of Outlook Consulting Int., Inc. and
in January 1999, she resumed the position of President of Outlook Consulting
Int., Inc. From December 1994 to July 1996, Ms. Gibson was the Chairman of the
Board of Petrie Retail, Inc. From 1993 to fall 1999, Ms. Gibson was a partner of
Retail Options, Inc., a New York based retail consulting firm. Ms. Gibson also
serves as a director of Today's Man, Inc. and Mothers Work, Inc.
DIRECTOR SINCE 1993.
MEETINGS OF THE BOARD OF DIRECTORS AND STANDING COMMITTEES
The Board of Directors held five meetings during the fiscal year ended
February 2, 2002. During the fiscal year ended February 2, 2002, each incumbent
Director attended at least 75% of the total number of Board and Committee
meetings.
The Board of Directors has a standing Corporate Governance Committee (which
acts as the Company's Nominating Committee), Audit Committee and Compensation
and Benefits Committee. The Corporate Governance Committee was established as a
standing committee during the fiscal year ended February 2, 2002. The current
members of the Corporate Governance Committee are Mr. Burden, Ms. Gibson and Mr.
Roeder. Although the Corporate Governance Committee did not meet during the
fiscal year ended February 2, 2002, the Corporate Governance Committee has held
one meeting following February 2, 2002 to evaluate the nominations at this
year's annual meeting of stockholders. The Corporate Governance Committee's
principal responsibilities from the perspective of its role as a Nominating
Committee are to interview, evaluate, nominate, and recommend individuals for
membership on the Company's Board of Directors and committees thereof, and to
evaluate and provide input with respect to individuals to be elected as officers
of the Company by the Board of Directors. The Corporate Governance Committee
will consider written recommendations from stockholders for positions on the
Board of Directors in accordance with the procedures set forth in the Amended
and Restated Articles of Incorporation of the Company. See -- "Stockholder
Proposals for Presentation at the 2003 Annual Meeting" for further information.
The current members of the Audit Committee are Mr. Burden, Ms. Gibson and
Mr. Roeder. The Audit Committee held six meetings during the fiscal year ended
February 2, 2002. The Audit Committee's principal
5
responsibilities are to recommend annually a firm of independent certified
public accountants to the Board of Directors, to review the annual audit of the
Company's financial statements and to meet with the independent certified public
accountants of the Company from time to time in order to review the Company's
internal controls and financial management practices. See the Audit Committee
Report on page 14 for further information.
The current members of the Compensation and Benefits Committee are Mr.
Burden, Ms. Gibson and Mr. Roeder. The Compensation and Benefits Committee held
five meetings during the fiscal year ended February 2, 2002. The principal
responsibilities of the Compensation and Benefits Committee are to review and
make recommendations to the Board of Directors concerning the compensation of
all officers of the Company; to review and make recommendations with respect to
the Company's existing and proposed compensation and bonus plans, and to serve
as the committee responsible for administering the Company's 1992 Stock Option
Plan, 1993 Stock Option Plan and 1993 Employee Stock Purchase Plan.
COMPENSATION OF DIRECTORS
Base Compensation. Each non-employee director receives $7,500 per quarter
to cover all Board and committee meetings. All directors are also entitled to
reimbursement of their reasonable out-of-pocket expenses.
Options. Each non-employee director receives an automatic grant each year
following the annual meeting of stockholders of options to purchase 10,000
shares of common stock. In the fiscal year ended February 2, 2002, Ms. Gibson
and Messrs. Burden and Roeder received automatic grants under the Company's
Non-Employee Directors' Stock Option Plan. Each such option grant, which vested
in full on December 19, 2001 and has a ten-year term, permits the holder to
purchase shares at their fair market value on the date of grant, which in the
case of these particular options was $21.60 after adjusting for the Company's
3-for-2 stock split distributed in January 2002.
In addition, Ms. Gibson and Messrs. Burden and Roeder may occasionally
receive option grants at the discretion of the Board of Directors under the
Company's Non-Employee Directors' Stock Option Program, although none of these
persons received any such discretionary grants during fiscal 2001.
Indemnification. We indemnify our directors and officers to the fullest
extent permitted by law so that they will serve free from undue concern that
they will not be indemnified. This is authorized under our By-laws, and
accordingly we have signed agreements with each of those individuals
contractually obligating us to provide this indemnification to them.
2. PROPOSAL TO APPROVE THE COMPANY'S 2002 EMPLOYEE STOCK PURCHASE
PLAN -- ITEM TWO ON YOUR PROXY CARD
The Company's 2002 Employee Stock Purchase Plan (the "2002 ESPP") was
adopted by the Board of Directors on February 18, 2002, upon recommendation of
the Compensation and Benefits Committee. The purpose of the 2002 ESPP is to
provide the Company's employees with an opportunity, through the purchase of
stock, to become part owners of the Company, or to increase the amount of their
stock ownership. The Company believes that employees finding themselves in the
dual roles of part owners and employees will have every reason to do all that
they can to maintain and increase the success of the Company. The 2002 ESPP
replaces the Company's 1993 Employee Stock Purchase Plan, which has essentially
no additional shares remaining available thereunder and was set to expire by its
terms in 2002. Upon the approval of the 2002 ESPP by the stockholders at the
Annual Meeting, the 1993 Employee Stock Purchase Plan will be considered to have
terminated.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THE 2002 ESPP. The
2002 ESPP will be approved if the votes cast "FOR" approval of the 2002 ESPP by
holders entitled to vote exceed the votes cast opposing the approval of the 2002
ESPP.
6
SUMMARY OF THE 2002 ESPP
An aggregate of 400,000 shares of common stock have initially been reserved
for issuance under the 2002 ESPP. In addition, the aggregate number of shares
that may be offered under the 2002 ESPP will be increased automatically, without
further action of the Board of Directors or the stockholders, at the beginning
of each fiscal year of the Company by a number of shares equal to (i) one-half
of one percent (1/2%) of the Company's total outstanding shares as of the last
day of the immediately preceding fiscal year or (ii) such lesser number of
shares as may be specified by the Board of Directors prior to the last day of
such preceding fiscal year. The number of shares reserved under the 2002 ESPP is
also subject to automatic adjustment, without further action of the Board of
Directors or the stockholders, in the event of a stock dividend, a stock split
or certain other recapitalizations with respect to the Company's stock.
Under the 2002 ESPP, which is intended to qualify as an employee stock
purchase plan under the provisions of Section 423 of the Internal Revenue Code
of 1986, as amended (the "Code"), eligible employees are given the right to
purchase shares of the common stock of the Company twice each year at a price
equal to 85% of the fair market value of the stock immediately prior to the
beginning of each exercise period. The 2002 ESPP also provides that the
Compensation and Benefits Committee may, for any offering period and provided
that action is taken at least one month before the beginning of such offering
period, elect to utilize an alternative purchase price equal to 85% of the
lesser of (a) the fair market value of the stock immediately prior to the
beginning of the exercise period or (b) the fair market value of the stock
immediately prior to the last day of the exercise period. The fair market value
of a share of common stock on any date will be the closing price on the
immediately preceding trading day of the common stock on the New York Stock
Exchange or, if the common stock is not traded on the New York Stock Exchange,
as otherwise determined in accordance with the 2002 ESPP. On April 19, 2002, the
closing price of the Company's common stock on the New York Stock Exchange was
$35.06.
During 2002 the exercise periods will occur from July 1, 2002 through July
31, 2002, and from September 1, 2002 through September 30, 2002. Thereafter the
offering periods will start on the first day and conclude on the last day of the
months of March and September in each of the years 2003 through 2011, inclusive.
All employees of the Company and its subsidiaries are eligible to
participate except for those who have been employed by the Company for less than
one year, customarily work 20 hours or less per week, customarily work five
months or less per year, or own at least 5% of the Company's stock. Rights to
acquire stock are to terminate if the employee's employment is terminated for
any reason, and the rights are not to be transferable by the employees. No
consideration will be received by the Company for the granting of the right to
acquire stock under the 2002 ESPP other than the services rendered to the
Company by the employee in such capacity.
During each exercise period, an eligible employee is entitled to purchase
one share of common stock of the Company for each $250 of compensation received
by him or her for the calendar year preceding the exercise period. However, no
eligible employee is entitled to purchase fewer than 10 shares or more than 400
shares in any one exercise period. In addition, the terms of an offering may not
allow an employee's right to purchase shares under all stock purchase plans of
the Company and its subsidiaries to which Section 423 of the Code applies to
accrue at a rate that exceeds $25,000 of fair market value of shares, as
determined on the offering date, for each calendar year in which the offering is
outstanding. Within these limits, an eligible employee is able to elect to
purchase as many or as few shares in each exercise period as he or she chooses.
Unlike the number of shares reserved under the 2002 ESPP, these dollar amounts
and share limits are not impacted, and are not automatically adjusted, in the
event of any stock dividend, stock split or other recapitalization with respect
to the Company's stock.
Payment for the shares must be made at the time of the exercise of the
rights and may be made in cash, by check or by withdrawal from a payroll
deduction account established by the employee under the terms of the 2002 ESPP.
Payroll deductions may not exceed an aggregate of $25,000 in any calendar year.
7
The Committee may from time to time determine that any shares issued
pursuant to the 2002 ESPP will only be issued in certificated form and that such
certificates will be held in safekeeping by the Company until two years after
the date of issuance or, if earlier, the date on which such shares are sold or
transferred by the employee.
The 2002 ESPP will terminate upon the earlier of when all of the shares
reserved for purposes of the 2002 ESPP have been purchased or following the
offering period in September 2011, provided that the Board of Directors in its
sole discretion may terminate the 2002 ESPP at any time. The Board may at any
time amend the 2002 ESPP in any and all respects, provided that without
stockholder approval, the Board may not increase the number of shares reserved
for under the 2002 ESPP, change the formula by which the price at which the
shares shall be sold is determined, increase the maximum number of shares that
an employee may purchase, materially modify the requirements to become eligible
to participate under the 2002 ESPP, otherwise materially increase the benefits
to employees under the 2002 ESPP or remove the administration of the 2002 ESPP
from the Compensation and Benefits Committee.
The 2002 ESPP is administered by the Compensation and Benefits Committee,
whose members currently are Verna K. Gibson, Ross E. Roeder and John W. Burden,
none of whom are eligible to participate in the 2002 ESPP.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of some of the more significant federal income
tax consequences under present law of the acquisition of shares under the 2002
ESPP.
Generally, no gain or loss is recognized until the stock is sold or
otherwise disposed of by its owner.
If the shares acquired under the 2002 ESPP are held by the employee for the
holding period required by the Code (two years from the beginning of the
exercise period in which the shares were acquired), upon the disposition of the
stock, the employee will recognize ordinary income (as compensation) to the
extent of the lesser of: (i) the amount by which the fair market value of the
stock at the beginning of the exercise period exceeded 85% of such fair market
value or (ii) the amount by which the fair market value of the stock at the time
of disposition exceeds the purchase price. Any further gain will be taxed as a
capital gain. If the sales price is less than the purchase price, there will be
no ordinary income; and the employee will recognize a long-term capital loss
equal to the difference between the purchase price and the disposition price. If
the holding period is satisfied, the Company will not be entitled to an income
tax deduction at any time.
If the two-year holding period is not satisfied, the employee will
generally recognize in gross income (as compensation) in the year of disposition
the amount by which the fair market value of the stock on the date of transfer
exceeded the purchase price. Any difference between the fair market value of the
stock on the date of transfer and the sales price upon disposition will be taxed
as a capital gain or loss. The Company will be entitled to an income tax
deduction in the year of disposition equal to the amount of ordinary income
recognized by the employee.
The specific application and impact of the tax rules will vary depending on
the specific personal situation of individual employees.
3. PROPOSAL TO APPROVE THE COMPANY'S 2002 OMNIBUS STOCK AND INCENTIVE
PLAN -- ITEM THREE ON YOUR PROXY CARD
Upon recommendation of the Compensation and Benefits Committee, the Board
of Directors approved the Chico's FAS, Inc. 2002 Omnibus Stock and Incentive
Plan (the "Omnibus Plan") in April 2002, subject to stockholder approval at the
Annual Meeting of Stockholders. The Omnibus Plan provides for awards of
nonqualified stock options, incentive stock options, restricted stock awards and
restricted stock units. If the Omnibus Plan is approved by the stockholders, no
new grants will thereafter be made under the Company's existing 1992 Stock
Option Plan, 1993 Stock Option Plan or Non-Employee Directors' Stock Option Plan
and
8
such existing plans will remain in effect only for purposes of administering
options that are outstanding thereunder on the date the Omnibus Plan is approved
by the stockholders.
The purposes of the Omnibus Plan are to optimize the profitability and
growth of the Company through annual and long-term incentives that are
consistent with the Company's goals and to provide the potential for levels of
compensation that will enhance the Company's ability to attract, retain, and
motivate employees and directors. All employees, officers and directors will be
eligible to participate in the Omnibus Plan; provided however that no incentive
stock options may be awarded to any non-employee director or to any employee who
is ineligible to receive an incentive stock option by reason of the provisions
of Section 422 of the Code (e.g., an employee owning or who, upon the exercise
of such option, would own more than 10% of the outstanding common stock of the
Company, unless the option price is at least 110% of the fair market value of
the common stock subject to the option and the option is not exercisable after
five years from the date of grant).
The Board recommends that you vote "FOR" approval of the Omnibus Plan. The
Plan will be approved if the votes cast "FOR" adoption of the Omnibus Plan by
holders entitled to vote exceed the votes cast opposing the adoption of the
Omnibus Plan.
SUMMARY OF THE OMNIBUS PLAN
General. The Omnibus Plan shall be considered effective as of the date on
which it is approved by the Company's stockholders, if such approval is obtained
at the 2002 Annual Meeting of Stockholders. An aggregate of 2,000,000 shares of
common stock have been reserved for issuance under the Omnibus Plan, in addition
to an indeterminate number of shares that will include both (i) the number of
shares that, as of the date on which the stockholders approve the Omnibus Plan,
remain available for future grants under the 1992 Stock Option Plan, the 1993
Stock Option Plan and the Non-Employee Directors' Stock Option Plan and (ii) any
shares that are represented by options granted under any of the 1992 Stock
Option Plan, the 1993 Stock Option Plan or the Non-Employee Directors' Stock
Option Plan, which, after such adoption of the Omnibus Plan, are forfeited,
expire or are canceled without delivery of shares of common stock. If the
Omnibus Plan were to have been effective on April 19, 2002, the aggregate number
of shares of common stock that would have been reserved for issuance under such
Plan would have been 2,427,570, representing the base of 2,000,000 shares along
with an additional 427,570 shares which then remained available for future
grants under the 1992 Stock Option Plan, the 1993 Stock Option Plan and the
Non-Employee Directors' Stock Option Plan and thus would have carried over into
the Omnibus Plan. In addition, as of April 19, 2002, there were an aggregate of
3,836,492 shares covered by previously issued and outstanding options under the
Company's various option plans and programs, including under the 1992 Stock
Option Plan, the 1993 Stock Option Plan and the Non-Employee Directors' Stock
Option Plan.
Under the Omnibus Plan, the maximum number of shares of common stock that
may be the subject of any option award to a participant during any calendar year
is 250,000 shares of common stock and of any other award to a participant during
any calendar year is 100,000 shares of common stock. Also, no more than 400,000
of the shares of common stock covered by the Omnibus Plan may be granted in the
aggregate in the form of restricted stock awards or restricted stock units.
The aggregate number of shares covered by the Omnibus Plan, as well as the
number of shares covered by outstanding options (and the per share purchase
price thereof) and the number of shares covered by outstanding restricted share
units (and the per share purchase price thereof, if any) are subject to
automatic adjustment, without further action of the Board of Directors or the
stockholders, in the event of a stock dividend, a stock split, or certain other
recapitalizations with respect to the common stock.
Plan Administration. Generally, the Omnibus Plan will be administered by
the Compensation and Benefits Committee; provided however, with respect to
matters concerning awards to non-employee directors, the authority for the
administration of the Omnibus Plan rests with the Board of Directors. The
committee administering the Omnibus Plan (except with respect to matters
concerning awards to non-employee directors) must consist of not less than two
(2) nor more than five (5) persons, each of whom must be a member of the Board
of Directors and a "disinterested person" (as such term is defined in Rule 16b-3
under the Securities Exchange Act of 1934) and who also qualify as outside
directors within the meaning of
9
Section 162(m) of the Code and the related regulations. The Compensation and
Benefits Committee currently consists of three directors of the Company who are
not employees of the Company or its subsidiaries (i.e., Verna K. Gibson, Ross
Roeder and John W. Burden). The Committee has broad authority to administer and
interpret the Omnibus Plan, including authority to make awards, determine the
size and terms applicable to awards, establish performance goals, determine and
certify the degree of goal achievement, and amend the terms of awards consistent
with the terms of the Omnibus Plan, except that, without further approval of the
stockholders of the Company, the Omnibus Plan does not permit the repricing of
previously granted stock options or the cancellation and regrant of stock
options.
Amendment and Termination. The Board of Directors may amend the Omnibus
Plan (or suspend or discontinue it) at any time, without further stockholder
approval except with respect to certain major changes such as increasing the
total number of shares of the common stock available for grants under the
Omnibus Plan, changing the designation of the class of employees eligible to
receive incentive stock options or non-qualified stock options, decreasing the
minimum option price set forth in the Omnibus Plan, extending the period during
which an option may be granted or exercised beyond the maximum period specified
in the Omnibus Plan or withdrawing from the Committee the authority to
administer the Omnibus Plan as to awards made to employees.
The Omnibus Plan will continue indefinitely until the Board of Directors
terminates the plan, but generally no awards may be made under the plan after
the ten-year anniversary of the effective date of the plan.
TYPES OF AWARDS
Stock Options. Stock options entitle the participant to purchase up to the
number of shares of common stock specified in the grant at a specified price
(the "Exercise Price").
The Committee (or the Board, as the case may be) may grant incentive stock
options or nonqualified stock options. The Committee (or the Board, as the case
may be) will establish the terms of stock options including the Exercise Price,
vesting, duration, transferability, and exercise procedures. Non-employee
directors shall be automatically granted 10,000 nonqualified stock options upon
initial appointment to the Board of Directors and at each annual stockholders
meeting at which the director continues to serve or is reelected as a director.
Incentive stock options are intended to comply with Section 422 of the
Code. Incentive stock options may not be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution. Further, all incentive stock options granted to a
participant under the plan shall be exercisable during his or her lifetime only
by such participant.
The Exercise Price of each incentive stock option may not be less than the
fair market value of the common stock on the date of grant or, in the case of a
employee owning more than 10% of the outstanding common stock of the Company,
not less than 110% of such fair market value. Also, the aggregate fair market
value of the stock with respect to which options are exercisable for the first
time by a employee in any calendar year may not exceed $100,000.
The per share exercise price of each nonqualified stock option may not be
less than the fair market value of the stock on the date of grant.
If exercised, an option must be exercised within the exercise period by
payment of the option price in cash, by check or by other means prescribed by
the Committee.
Options are generally exercisable based on vesting schedules established by
the Committee, except that the options granted automatically to non-employee
directors will vest on the later of (i) the date six months after the date of
the option grant, or (ii) the completion of the director's first year of
service. If an individual's affiliation with the Company as a employee is
terminated during the term of the option, the end of the option period will be
accelerated. Notwithstanding the foregoing general rules, the Committee may
issue options for shorter periods of time and may permit the earlier exercise of
outstanding options.
10
An individual may not transfer any option granted under the plan, although,
in some circumstances after the individual's death, the individual's personal
representative may exercise the option.
Restricted Stock. Restricted Stock grants are shares awarded subject to
the fulfillment of a certain time or price/time goal or a performance goal or
other conditions. The Committee also can impose other restrictions and
conditions on the restricted stock awards such as payment of a stipulated
purchase price. Generally, when the conditions are fulfilled, the shares are
delivered free and clear of all restrictions. If such conditions are not
satisfied, restricted stock may be forfeited.
Restricted Stock Units. A restricted stock unit entitles the recipient,
upon achievement of a time or price/time goal or a performance goal established
by the Committee, to receive cash and/or shares of common stock based on the
market price of the common stock at the time of achievement of the applicable
goal. If the goal is not achieved, restricted stock units may be forfeited.
Except for voting and dividend rights, they may have all of the characteristics
of restricted stock, as described above.
As of April 19, 2002, the market value of a share of common stock was
$35.06.
FEDERAL INCOME TAX CONSEQUENCES OF STOCK OPTION GRANTS
The following is a summary of some of the more significant federal income
tax consequences under present law of the granting and exercise of stock options
under the plan.
The recipient of an incentive stock option should not recognize any taxable
income or loss for federal income tax purposes at the time the incentive stock
option is granted or exercised; however, upon exercise, the difference between
the Exercise Price and the fair market value of the shares received may be
subject to the alternative minimum tax. If the common stock purchased upon the
exercise of an incentive stock option is held for at least two years after the
granting of the option and at least one year after exercise, the recipient
should receive a long term capital gain or loss upon the sale or disposition of
the common stock based on the difference between the fair market value of the
common stock on the date of sale or other disposition and the purchase price of
the common stock under the option. The Company will not be entitled to any
deductions with respect to the granting or exercise of the incentive stock
option in such cases.
If the recipient of an incentive stock option does not hold the shares for
two years after the grant of the option and one year after exercise, the
recipient will generally recognize as ordinary income in the year of disposition
the difference between (i) the purchase price of common stock covered by the
option and (ii) the lesser of the sales price or the fair market value of the
shares on the date of exercise; and the Company will be entitled to a
corresponding deduction for such amount in that year, subject in certain cases
to applicable limitations for deductibility of executive compensation exceeding
$1,000,000. Any remaining gain would be taxable to the recipient as capital
gain. However, if the sales price is less than the purchase price under the
option, no income will be recognized; the recipient would generally realize a
capital loss equal to the difference between the purchase price and the
disposition price; and the Company will not receive any deduction.
The general rules described in the preceding paragraph apply only when the
sale is made to an unrelated party, such as a sale on the New York Stock
Exchange made through a stockbroker. If the recipient makes a sale or other
disposition to certain related persons or entities before the end of the
applicable holding periods, then the recipient will be treated as having
received ordinary income (with a corresponding deduction to the Company) in the
year of disposition in an amount equal to the difference between the sales price
and the fair market value of the shares on the date of exercise (even if the
fair market value of the shares is less on the date of sale or other
disposition).
Because the Company does not anticipate that any nonqualified stock option
will have a readily ascertainable fair market value when issued, the recipient
of such an option should not recognize any taxable income or loss for federal
income tax purposes at the time the option is granted. The exercise of the
nonqualified stock option, however, will result in the immediate recognition of
taxable income by its holder at ordinary income rates based on the difference
between the purchase price for shares covered by the option and the fair market
value of the shares received at the time of exercise. The Company will receive a
corresponding deduction at the same time, subject in certain cases to applicable
limitations for deductibility of executive
11
compensation exceeding $1,000,000. Additional gain or loss, determined under
general rules of taxation, may be realized upon the sale of the shares.
The Company is required to withhold and remit to the Internal Revenue
Service income taxes on all compensation that is taxable as ordinary income.
Upon exercise of nonqualified stock options, as a condition of such exercise, a
participant must pay or arrange for payment to the Company of cash representing
the appropriate withholding taxes generated by the exercise.
The specific application and impact of the tax rules will vary depending on
the specific personal situation of individual employees.
PARTICIPATION IN THE 2002 ESPP AND THE OMNIBUS PLAN
The grant of options under the Omnibus Plan is entirely within the
discretion of the Compensation and Benefits Committee. The Company cannot
determine the nature or amount of awards that will be made in the future.
However, under the Company's employment agreement with Marvin Gralnick, the
Company is obligated to grant to Mr. Gralnick 78,500 stock options in July 2002,
provided the Omnibus Plan is approved, and 125,000 stock options in February
2003, in each case with an exercise price equal to the then current market price
of the stock. Also, under the Company's employment agreement with Helene
Gralnick, the Company is obligated to grant to Ms. Gralnick 30,000 stock options
in February 2003 with an exercise price equal to the then current market price
of the stock. Stock options granted under the Company's existing stock option
plans in fiscal 2001 to Messrs. Gralnick, Kleman, and Edmonds and Mmes. Gralnick
and Murphy are reflected in the Summary Compensation Table, Option/SAR Grants
Table and Option/SAR Exercises and Year-End Value Table. During fiscal 2001,
stock options covering 161,000 shares were granted under the Company's existing
stock option plans to employees who are not executive officers. The dollar value
of such stock options cannot be determined.
The purchase of shares under the 2002 ESPP is discretionary, so the Company
cannot determine the amount of shares that will be purchased in the future by
officers or other employees. With the exception of Mr. and Ms. Gralnick, who are
not eligible to participate in the 2002 ESPP as long as their beneficial
ownership of the Company's common stock exceeds 5% of shares outstanding, each
of the Company's executive officers is currently eligible to purchase shares
under the 2002 ESPP on the same terms as the Company's other employees, subject
to the applicable limitations described on pages 7 through 8 under the heading
"Summary of the 2002 ESPP."
EQUITY COMPENSATION PLAN INFORMATION
The following table shows information concerning the Company's equity
compensation plans as of the end of the fiscal year ended February 2, 2002.
<Table>
<Caption>
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER EQUITY
BE ISSUED UPON EXERCISE EXERCISE PRICE OF COMPENSATION PLANS
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS($) REFLECTED IN COLUMN(A))
- ------------- ------------------------ ----------------------- -----------------------------
(A) (B) (C)
Equity compensation
plans approved by
security
holders(1)(3)...... 3,486,113 7.44 878,303
Equity compensation
plans not approved
by security
holders(2)(3)...... 139,500 4.36 -0-
--------- ---- -------
Total(3)............. 3,625,613 7.32 878,303
========= ==== =======
</Table>
12
- ---------------
(1) Includes shares authorized for issuance under the Company's 1992 Stock
Option Plan, 1993 Stock Option Plan, and Non-Employee Directors' Stock
Option Plan.
(2) Includes shares authorized for issuance under the Company's Non-Employee
Directors' Stock Option Program, which is described below.
(3) All share amounts are adjusted to reflect the Company's 3-for-2 stock splits
delivered in May 2001 and January 2002.
NON EMPLOYEE DIRECTORS' STOCK OPTION PROGRAM
The Company's independent directors have in the past been granted options
to purchase the Company's common stock under the Non-Employee Directors' Stock
Option Program, at the discretion of the Board of Directors. These options have
an exercise price equal to the fair market value on the date of the grant and
generally become exercisable six months after the date of grant. The options
expire ten years after the date of grant. Other than the shares subject to
outstanding options issued under the Non-Employee Directors' Stock Option
Program, no shares are currently authorized to be issued under the Non-Employee
Directors' Stock Option Program.
OTHER BUSINESS
The Company does not expect any other matters to be brought before the
meeting. However, if any other matters are presented, it is the intention of the
persons named in the proxy to vote the proxy in accordance with their best
judgment.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Arthur Andersen LLP has audited the accounts of the Company since 1992.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting, will have the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate questions.
The Company's Board of Directors and the Audit Committee have been
monitoring the situation arising from Arthur Andersen LLP's role as auditors of
Enron Corporation and the indictment of Arthur Andersen LLP by the United States
Government on charges of obstructing justice. In addition, representatives of
management and representatives of the Audit Committee have discussed these
matters with senior representatives of Arthur Andersen LLP. Although
historically the Company has submitted the appointment of our independent
auditors for stockholder approval, given the uncertainty and the pace of
developments related to Arthur Andersen LLP's recent challenges, the Audit
Committee has made no final decision regarding the retention of Arthur Andersen
LLP to audit the Company's accounts for 2002 and thus it has been determined
that seeking shareholder approval of an appointment of Arthur Andersen LLP would
not be appropriate at this time. The Audit Committee, however, will continue to
monitor and evaluate Arthur Andersen LLP's response to its challenges and
further developments to determine whether Arthur Andersen LLP's ability to
perform a satisfactory audit for fiscal 2002 could be impaired. The Audit
Committee has informed management that, during this monitoring and evaluation
period, it will be prepared to consider engaging another independent auditing
firm to audit the Company's consolidated financial statements for 2002 if it
were to be determined necessary or appropriate to replace Arthur Andersen LLP.
AUDIT FEES
The aggregate fees billed by Arthur Andersen LLP for professional services
rendered in conjunction with the audit of the Company's consolidated financial
statements as of and for the fiscal year ended February 2, 2002, and for the
reviews of the consolidated financial statements included in the Company's
Quarterly Reports on Form 10-Q for that fiscal year, were approximately
$143,000.
13
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Arthur Andersen LLP did not render professional services relating to
financial information systems design and implementation for the fiscal year
ended February 2, 2002.
ALL OTHER FEES
The aggregate fees with respect to services rendered to the Company by
Arthur Andersen LLP, other than the services described above under "Audit Fees"
for the fiscal year ended February 2, 2002, were approximately $120,000 and
primarily relate to income tax compliance, review and related advisory services
and risk assessment advisory services. The Audit Committee of the Board of
Directors has considered whether the provision of the services described in this
paragraph is compatible with maintaining the independence of Arthur Andersen
LLP.
AUDIT COMMITTEE REPORT
The Audit Committee of the Company's Board of Directors is comprised of
three directors and operates under a written charter adopted by the Board of
Directors, which was included in the Proxy Statement for our 2001 Annual Meeting
of Stockholders. The charter is required to be provided to stockholders every
three years, unless amended earlier. The members of the Audit Committee are Ross
E. Roeder (Chair), Verna K. Gibson and John W. Burden. Each member of the Audit
Committee is independent in the judgment of the Company's Board of Directors and
as required by the listing standards of the New York Stock Exchange. The Audit
Committee recommends to the Board of Directors, subject to stockholder
ratification, the selection of the Company's independent accountants. Management
is responsible for the Company's internal controls and the financial reporting
process. The independent accountants are responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with auditing standards generally accepted in the United States and
for expressing an opinion thereon. The Audit Committee's responsibility is to
monitor and oversee these processes. In this context, the Audit Committee has
met and held discussions with management and the independent accountants.
Management represented to the Audit Committee that the Company's
consolidated financial statements were prepared in accordance with accounting
principles generally accepted in the United States, and the Committee has
reviewed and discussed the consolidated financial statements with management and
the independent accountants. Discussions regarding the Company's audited
financial statements included the independent accountant's judgments about the
quality, not just the acceptability of the Company's accounting principles and
underlying estimates used in the Company's financial statements, as well as
other matters, as required by Statement on Auditing Standards (SAS) No. 61
(Communication with Audit Committees), as amended by SAS No. 90 (Audit Committee
Communications) and by the audit committee charter. The Company's independent
accountants also provided to the Committee the written disclosures required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and the Committee discussed with the independent accountants that
firm's independence.
Based upon the Committee's discussion with management and the independent
accountants, the Committee's review of the representations of management, and
the report of the independent accountants to the Committee, the Committee
recommended that the Board of Directors include the audited consolidated
financial statements in the Company's annual report on Form 10-K filed with the
Securities and Exchange Commission as of and for the year ended February 2,
2002.
MEMBERS OF THE AUDIT COMMITTEE
Ross E. Roeder, Chair
Verna K. Gibson
John W. Burden
14
COMPENSATION COMMITTEE REPORT
To: The Board of Directors
OVERVIEW AND PHILOSOPHY
The Compensation and Benefits Committee of the Board of Directors (the
"Compensation Committee") is composed of three members, each of whom is an
outside director of the Company. The Compensation Committee provides overall
guidance on the Company's compensation and benefits philosophy. In addition, the
Committee approves and monitors the Company's
- executive compensation and benefits programs
- executive employment agreements
- stock option plans
- profit sharing and 401(k) plan
- stock purchase plan for employees
- deferred compensation plan
The primary objectives of the Compensation Committee are to assure that the
Company's executive compensation and benefits program
- reflects the Company's unique, entrepreneurial, customer-focused,
orientation
- is competitive with other profitable, growing specialty retail companies
- safeguards the interests of the Company and its stockholders
- is effective in driving performance to achieve financial goals and create
stockholder value
- fosters teamwork on the part of management
- is cost-effective and fair to employees, management, and stockholders
- is well communicated and understood by program participants
The Company's executive compensation policies are designed to attract,
motivate, and retain highly qualified executive officers who can enhance
stockholder value, and to support a performance-oriented environment that
rewards achievement of the Company's planned financial goals. The Compensation
Committee meets periodically during each fiscal year to review the Company's
existing compensation and benefits programs and to consider modifications that
seek to provide a direct relationship between executive compensation and
sustained corporate performance.
The Company compensates its executive officers through three principal
types of compensation: annual base salary, semi-annual incentive bonuses and
long-term incentive awards through stock options, restricted stock and/or
restricted stock units. The Company, as a matter of policy, places substantial
emphasis on incentive bonuses and long-term stock-based awards since these two
forms of compensation are viewed as very effective at correlating executive
officer compensation with corporate performance and increases in stockholder
value.
In addition to the three types of compensation just mentioned, certain
executive officers are eligible to participate in the Company's Employee Stock
Purchase Plan and Deferred Compensation Plan.
15
BASE SALARY
The annual base salary of each executive officer is based on the scope of
his or her responsibility and accountability within the Company, as well as on
performance and experience criteria. In addition, the Compensation Committee
considers salary and other compensation arrangements of other specialty
retailers of similar size and similar growth to determine appropriate levels
required to attract, motivate, and retain the most qualified management
personnel.
The Compensation Committee believes that the Company's most direct
competitors for executive talent are not necessarily all of the companies that
would be included in a peer group established to compare stockholder returns.
Thus, the compensation peer group is not the same as the peer group index in the
"Comparison of Cumulative Total Return" graph included in this proxy statement.
The Compensation Committee, upon the recommendation by the Chief Executive
Officer, determines and makes final decisions regarding base salary of
executives on an annual basis. The Compensation Committee recognizes that, to
some degree, the determination of an executive officer's base salary involves
subjective considerations.
INCENTIVE BONUSES
A significant component of an executive officer's total cash compensation
consists of an incentive bonus, which is intended to make the executive
compensation dependent on the Company's performance and to provide executive
officers with incentives to achieve Company goals, increase stockholder value,
and work as a team. The bonuses are based on the Company's achievement of its
targeted pre-tax income goal, which is part of the Company's overall plan. The
pre-tax income goal, as well as the overall plan, is reviewed and approved by
the Compensation Committee prior to the start of each bi-annual period. To
encourage high levels of performance, the targeted pre-tax income goal is
established at a level which builds in, among other things, a conservatively
aggressive growth in sales and comparable store sales.
Bonuses are awarded to the executive team based on the Company's attainment
of specific pre-determined pre-tax income levels relative to the targeted
pre-tax income goal established in the Company's overall plan. If the Company
does not match its minimum pre-tax income goal level, then no bonuses are
awarded. Bonuses are awarded on a bi-annual basis. The Company's executive
officers were awarded a total of approximately $2,378,000 in bonuses in the
fiscal year ended February 2, 2002.
DEFERRED COMPENSATION PLAN
The Company recently adopted an unfunded, nonqualified plan that permits
executive officers to defer current compensation for retirement savings
beginning in fiscal 2002. Pursuant to the deferred compensation plan,
participants may defer all or a portion of qualifying remuneration payable by
the Company. A book account is then maintained for each such executive officer
in which there is an accounting of such deferred compensation and deemed
earnings thereon based upon selection of deemed investment options by the
executive officer. In accordance with the terms of the plan, the deferral must
be placed in a "rabbi" trust. This trust arrangement offers a degree of
assurance for ultimate payment of benefits without causing constructive receipt
of the deferral or earnings thereon for income tax purposes. The assets in the
trust remain subject to the claims of creditors of the Company and are not the
property of the executive officer.
LONG TERM STOCK BASED COMPENSATION
The Compensation Committee believes that providing key employees, including
executive officers, with the opportunity to acquire stock ownership over time is
the most desirable way to align their interests with those of the Company's
stockholders. Stock options awarded under the Company's 1992 and 1993 Stock
Option Plans, the Executive Officers' Supplementary Stock Option Program, and in
some limited cases outside of the plans pursuant to separate individual stock
option agreements, provide an incentive that focuses the attention of executive
officers on managing the Company from the perspective of an owner with an equity
interest in the business. In addition, stock options have been and continue to
be a key part of the Company's
16
program for motivating and rewarding managers over the long term. The Company
intends to continue to have stock options serve as an important part of the
compensation program for key employees and, to this end, has adopted and is
submitting to the stockholders for approval a new Omnibus Stock and Incentive
Plan. This Omnibus Plan expands the type of stock based awards that may be
granted to include restricted stock and restricted stock units, in addition to
stock options. Stock based compensation that has been and that may in the future
be granted to key employees, including stock options previously issued and
awards that may be granted under the Omnibus Plan, is tied to future performance
of the Company's common stock and will provide increased value as the price of
the Company's common stock increases.
The Compensation Committee, upon the recommendation by the Chief Executive
Officer, has in the past determined and made, and expects to continue to
determine and make, final decisions regarding stock based awards (including
those made in the past and those that will be made in the future under the
Company's stock based plans). Such factors as performance and responsibilities
of individual managers and the management team as a whole as well as general
industry practices play an integral role in the determination of the number of
options, restricted stock and/or restricted stock units awarded to a particular
senior executive. In determining the size of the individual award of options,
restricted stock and/or restricted stock units, the Compensation Committee also
considers the amounts of stock based awards outstanding and previously granted,
the amount of stock based awards remaining available for grant under the Stock
Option Plans, the aggregate amount of current awards, and the amount necessary
to retain qualified management.
In accordance with its business strategy and compensation philosophy, the
Company has previously granted stock options to a significant number of
employees in managerial positions to afford them an opportunity to participate
in the Company's future growth and to focus them on the contributions which are
necessary for the financial success and business growth of the Company and,
thereby, the creation of value for its stockholders. In the fiscal year ended
February 2, 2002, a total of 933,500 (split adjusted) options were granted to
employees, including 772,500 (split adjusted) options that were awarded to
senior executives.
Stock options have typically been awarded each year based on an assessment
of each recipient's ongoing contribution to overall corporate performance and it
is contemplated that stock options and any other stock based awards will
continue to be awarded on a similar basis and following a similar process. As a
means to encourage the recipient of a stock based award to remain in service
with the Company, stock based awards vest over time. Most stock options granted
to key employees in the past vest in equal amounts over a period of three years
from the date of grant. All stock options have exercise prices at least equal to
the market value of the Company's stock on the date of grant.
PROFIT SHARING PLAN, 401(K) PLAN AND STOCK PURCHASE PLAN FOR EMPLOYEES
In 1992, the Company adopted a profit sharing plan to provide a means for
all eligible employees at all levels of the Company to share in the Company's
profits and accumulate retirement savings. Effective January 1, 1999, the
Company incorporated a 401(k) feature into its profit sharing plan as a further
means for all eligible employees at all levels of the Company to accumulate
retirement savings. Under the 401(k) aspect of the plan, eligible employees can
elect to defer up to 20% of their respective compensation and have it
contributed to the plan. The Company is obligated to match a portion of the
deferral and can elect to make additional contributions over and above the
mandatory match, based on the amount it deems appropriate in light of the
results of the Company's operations for the respective year. During the fiscal
year ended February 2, 2002, the Company's aggregate matching contributions,
including both mandatory and additional matching contributions, were
approximately $425,000, which amounted to approximately 0.6% of its pre-tax
profits for the fiscal year ended February 2, 2002.
In 1993, the Company adopted a stock purchase plan to provide all eligible
employees at all levels an opportunity to become stockholders of the Company.
This plan is viewed as an effective way to help align the interest of all
employees with those of the Company's stockholders. As an inducement, eligible
employees may purchase shares of stock in the Company during each exercise
period at a 15% discount to the value of the stock. In February 2002, because
there were essentially no shares remaining under the 1993 stock purchase plan,
the Company adopted a new stock purchase plan to replace the 1993 plan. This new
plan, which is being
17
submitted for approval by the stockholders, operates in substantially the same
manner as the 1993 plan in that eligible employees may continue to purchase
shares of stock in the Company during specified exercise periods at a 15%
discount to the value of the stock.
COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER FOR THE FISCAL YEAR ENDED FEBRUARY
2, 2002
The general policies described above for the compensation of the executive
officers also apply to the compensation approved by the Compensation Committee
with respect to the compensation for Mr. Gralnick, the Company's Chairman of the
Board and Chief Executive Officer, for the fiscal year ended February 2, 2002.
Pursuant to a three-year employment contract entered into in February 2000,
Mr. Gralnick's base salary was increased to $750,000 in the fiscal year ended
February 2, 2002, which reflected a $150,000 increase from his base salary in
the prior fiscal year. For the fiscal year ended February 2, 2002, Mr. Gralnick
also was awarded an aggregate bonus of $750,000, as a result of the Company
having reached certain targeted performance incentive goals. Consistent with the
provisions of the new employment contract, the Compensation Committee awarded
him 225,000 stock options in the fiscal year ended February 2, 2002 in order to
continue to recognize his efforts in leading the Company in achieving a very
strong financial performance. Mr. Gralnick's contract has recently been extended
for an additional one-year term ending in February 2004.
Mr. Gralnick's compensation was based on industry comparisons as well as on
the Company's performance over the most recent years, as reflected in the
Company's Annual Report to Stockholders which accompanies this proxy statement.
Under the leadership of Mr. Gralnick and the rest of the management team, total
revenues for Chico's increased from approximately $59 million in 1994 to
approximately $378 million during the fiscal year ended February 2, 2002.
Between 1994 and the fiscal year ended February 2, 2002, income before income
taxes grew from approximately $5.6 million to approximately $67.5 million, and
net income grew from approximately $3.3 million to approximately $42.2 million.
Under Mr. Gralnick's employment contract, and again taking into account the
industry comparisons, Mr. Gralnick's base compensation has been further
increased to $850,000 for the fiscal year ending February 1, 2003. Because of
certain limits on the availability of options under the Company's then existing
option plans, pursuant to the Company's request and recommendation, the Company
and Mr. Gralnick agreed to modify the commitments in Mr. Gralnick's employment
contract with respect to option grants for February 2002. Accordingly, only
46,500 options were granted to Mr. Gralnick in February 2002 and the additional
78,500 options are to be granted (with an exercise price equal to the then
current market price of the stock) in July 2002 following approval of the new
stock option plan by the Company's stockholders. The extension of Mr. Gralnick's
employment contract provides for a further specified annual increase in base
salary during the fiscal year ending February 1, 2004 and a commitment to the
grant of additional stock options in February 2003.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
The Compensation Committee has reviewed the applicability of Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code"), which disallows a
tax deduction for compensation to an executive officer when the included
compensation exceeds $1 million per year. Although Mr. Gralnick's compensation
earned during the fiscal year ended February 2, 2002 exceeded this threshold
during such fiscal year and could exceed this threshold in future years,
depending of course on the Company's performance, the provisions of Mr.
Gralnick's employment agreement provide that any cash compensation in excess of
the threshold that would otherwise be payable will be deferred instead until
such date as such deferred amount can be paid without exceeding the applicable
threshold. The Committee intends to periodically continue further review of the
potential consequences of Section 162(m) and, depending upon the risk of
applicability of this provision to the Company, may elect to structure the
performance-based portion of its executive officer compensation in a
18
manner so as to comply with certain exemptions provided for in Section 162(m)
and possibly modify the provisions which effectuate deferral of certain portions
of the cash compensation amounts.
This report has been provided by the Compensation Committee.
COMPENSATION AND BENEFITS COMMITTEE:
John W. Burden
Verna K. Gibson
Ross E. Roeder
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Company's
common stock with the cumulative total return of the companies in the Standard &
Poor's 500 Index and the S&P 500 Apparel Retail Index. Cumulative total return
for each of the periods shown in the Performance Graph is measured assuming an
initial investment of $100 on February 1, 1997 and the reinvestment of
dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
(PERFORMANCE GRAPH)
<Table>
<Caption>
- ------------------------------------------------------------------------------------------------
2/1/1997 1/31/1998 1/30/1999 1/29/2000 2/3/2001 2/2/2002
- ------------------------------------------------------------------------------------------------
Chico's FAS, Inc. $100.00 $176.58 $762.50 $809.38 $1,718.75 $3,307.50
S&P 500 Index $100.00 $126.90 $168.13 $180.96 $ 181.62 $ 153.09
S&P 500 Apparel Retail
Index $100.00 $181.54 $375.61 $350.58 $ 331.01 $ 233.32
</Table>
19
EXECUTIVE OFFICERS AND KEY EMPLOYEES
The following table sets forth certain information regarding the Company's
continuing executive officers, continuing directors, nominees for director and
certain other key employees.
<Table>
<Caption>
YEARS WITH
THE
EXECUTIVE OFFICERS AGE POSITION COMPANY
- ------------------ --- -------- ----------
Marvin J. Gralnick............... 67 Chief Executive Officer, Chairman 18
of the Board and Director
Helene B. Gralnick............... 54 Senior Vice President-Design and 18
Concept and Director
Scott A. Edmonds................. 44 President and Chief Operating 8
Officer
Charles J. Kleman................ 51 Executive Vice President-Finance, 13
Chief Financial Officer,
Secretary/ Treasurer and Director
Patricia A. Murphy............... 58 Senior Vice President-General 4
Merchandise Manager
Mori C. MacKenzie................ 51 Senior Vice President-Stores 6
James P. Frain................... 53 Vice President-Marketing 3
Ajit Patel....................... 48 Vice President-Chief Information 1
Officer
</Table>
NON-DIRECTOR EXECUTIVE OFFICERS
Scott A. Edmonds has been employed by Chico's since September 1993, when he
was hired as Operations Manager. In February 1994, he was elected to the
position of Vice President-Operations and effective January 1996, he was
promoted to the position of Senior Vice President-Operations. In February 2000,
Mr. Edmonds was further promoted to Chief Operating Officer, and in September
2001 he was promoted to President. In addition to his general responsibilities
as President, Mr. Edmonds is responsible for oversight of human resources, store
development and operations, store leasing and maintenance, franchise operations,
and management of general headquarters activities. From March 1985 until
September 1993, he was President/General Manager of the Ft. Myers branch of
Ferguson Enterprises, Inc., an electrical and plumbing wholesaler.
Patricia A. Murphy has been with the Company since September 1997, when she
was hired as the Senior Merchant. In April 1998, she was promoted to the
position of General Merchandise Manager, in June 1999, she was promoted to Vice
President-General Merchandise Manager, and in August 2000, she was promoted to
Senior Vice President-General Merchandise Manager. Ms. Murphy is principally
responsible for the buying, planning and distribution activities associated with
procurement of merchandise. From February 1987 until September 1997, Ms. Murphy
was Vice President of Merchandising and Director of Fashion for Doncaster and
from October 1985 until February 1987 was Merchandiser and National Sales
Manager for Caribou Sportswear. From 1981 until 1985, she held various positions
including Divisional Merchandise Manager and Director of Fashion Coordination
for Lane Bryant, a division of the Limited.
Mori C. MacKenzie has been with the Company since October 1995, when she
was hired as the Director of Stores. From June 1999 until October 2001, she
served as Vice President-Director of Stores. In October 2001, she was promoted
to Senior Vice President-Stores. Ms. MacKenzie is responsible for store and
field operations management, hiring and training. From January 1995 until
October 1995, Ms. MacKenzie was the Vice President of Store Operations for
Canadians Corporation. From August 1994 until December 1994, she was the Vice
President of Store Development for Goody's Family Clothing. From April 1992
until August 1994, Ms. MacKenzie was the Vice President of Stores for United
Retail Group ("URG") and from August 1991 until April 1992 she was employed by
Conston Corp., a predecessor of URG. In addition, Ms. MacKenzie was Vice
President-Stores for Park Lane from November 1987 until July 1991, and was
Regional Director of Stores for the Limited, Inc. from June 1976 until October
1987.
20
James P. Frain has been employed by the Company since June 1999, when he
was hired as the Company's Director of Marketing. In April 2000 he was promoted
to the position of Vice President-Marketing. Mr. Frain is principally
responsible for the overall and detailed marketing of the Chico's brand. During
1998 and 1999, Mr. Frain was the Vice President-Marketing and Creative for
Current, Inc. and during 1997 and 1998 he was Vice President-Operations and
Marketing for A.H. Riise. From 1994 to 1996, Mr. Frain was Vice
President-Marketing for Easyriders and from 1993 to 1994 he was Vice
President-Marketing for NBO. Mr. Frain held various marketing positions prior to
1994 at Alfred Dunhill, Gucci, Laura Ashley, Conran's and Paragon Sporting
Goods.
Ajit Patel joined the Company in June 2001, when he was hired as Vice
President-Chief Information Officer. From June 1995 to January 1999, Mr. Patel
was Vice President-Chief Information Officer of Speedo Swimwear, Inc., where he
was responsible for management of the company's entire information system
infrastructure. From February 1999 through June 2000, he was President and Chief
Executive Officer of Seal Consulting, Inc., an information systems consulting
practice. From June 2000 through June 2001, Mr. Patel was an independent
management consultant.
Marvin J. Gralnick and Helene B. Gralnick are husband and wife. None of the
other executive officers or directors are related to one another. Executive
officers are elected by and serve at the discretion of the Board of Directors.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides information concerning the annual compensation
of each of the named executive officers of the Company, as defined under the
applicable Securities and Exchange Commission Rule, for services rendered to the
Company in each of the Company's last three fiscal years.
<Table>
<Caption>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION(1) AWARDS
----------------------- -------------
SECURITIES
NAME AND FISCAL YEAR UNDERLYING ALL OTHER
PRINCIPAL POSITION ENDED SALARY($) BONUS($)(2) OPTIONS(#)(3) COMPENSATION($)(4)
- ------------------ ----------------- --------- ----------- ------------- ------------------
Marvin J. Gralnick,........ February 2, 2002 745,385 750,000 225,000 5,250
Chairman of the Board and February 3, 2001 605,769 600,000 168,750 5,250
Chief Executive Officer January 29, 2000 426,923 274,667 225,000 5,000
Helene B. Gralnick,........ February 2, 2002 249,384 200,000 67,500 5,250
Senior Vice President -- February 3, 2001 233,269 184,000 56,250 5,250
Design and Concept January 29, 2000 193,077 93,000 90,000 5,000
Scott A. Edmonds,.......... February 2, 2002 367,347 325,000 168,750 5,250
President and Chief February 3, 2001 277,788 220,000 56,250 5,250
Operating Officer January 29, 2000 205,385 98,800 67,500 5,000
Charles J. Kleman,......... February 2, 2002 299,077 240,000 56,250 5,250
Executive Vice February 3, 2001 289,019 228,000 56,250 5,250
President --
Finance and Chief January 29, 2000 255,384 122,800 45,000 5,000
Financial Officer
Patricia A. Murphy,........ February 2, 2002 302,653 245,000 112,500 5,250
Senior Vice President -- February 3, 2001 240,000 189,500 56,250 5,250
General Merchandise January 29, 2000 188,077 60,400 67,500 5,000
Manager
Tedford G. Marlow,......... February 2, 2002 326,923 200,000 -- --
Executive Vice February 3, 2001 186,177 216,667 562,500 --
President --
Merchandising, Marketing, January 29, 2000 -- -- -- --
and Product
Development(5)
</Table>
(footnotes on following page)
21
- ---------------
(1) Other Annual Compensation, other than salary and bonuses, was not paid or
did not exceed the minimum amounts required to be reported pursuant to
Securities and Exchange Commission Rules.
(2) Amounts in this column consist of certain bonuses including bonuses earned
under the semi-annual management incentive plan which is linked to the
Company's performance. Amounts earned with respect to a particular fiscal
year are accrued as expenses in such fiscal year.
(3) Amounts in this column reflect the effects of any stock splits occurring
after the date of grant.
(4) This category includes the Company's contributions to the Profit
Sharing/401(k) Plan.
(5) Mr. Marlow began his employment with the Company in September 2000.
Effective as of September 2001, Mr. Marlow ceased to be employed by the
Company.
OPTION/SAR GRANTS TABLE
The following table shows all options to purchase common stock of the
Company granted to each of our named executive officers during the fiscal year
ended February 2, 2002 and the potential value of such grants at stock price
appreciation rates of 5% and 10%, compounded annually over the maximum ten-year
term of the options. The 5% and 10% rates of appreciation are required to be
disclosed by SEC rules and are not intended to forecast possible future
appreciation, if any, in our stock price.
OPTION GRANTS IN LAST FISCAL YEAR
<Table>
<Caption>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT
---------------------------- ASSUMED ANNUAL RATES
NUMBER OF % OF TOTAL OF STOCK
SECURITIES OPTIONS EXERCISE PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED(1)(2) FISCAL YEAR ($/SH)(2) DATE 5%($) 10%($)
- ---- ------------- ------------ --------- ---------- --------- ---------
Marvin J. Gralnick....... 225,000 24.1% 15.7220 02/04/2011 2,224,683 5,637,784
Helene B. Gralnick....... 67,500 7.2% 15.7220 02/04/2011 667,405 1,691,335
Scott A. Edmonds......... 168,750 18.1% 17.2087 03/19/2011 1,826,290 4,628,177
Charles J. Kleman........ 56,250 6.0% 17.2087 03/19/2011 608,763 1,542,726
Patricia A. Murphy....... 112,500 12.1% 17.2087 03/19/2011 1,217,527 3,085,452
Tedford G. Marlow(3)..... -0- -- -- -- -- --
</Table>
- ---------------
(1) The grants of options to Marvin and Helene Gralnick described above were
made in February 2001, and the grants to the other officers were made in
March 2001. All of the options vest annually at a rate of 33 1/3% on each
anniversary date of the grant beginning on the first anniversary.
(2) Amounts and prices shown reflect the Company's 3-for-2 stock splits
delivered in May 2001 and January 2002.
(3) Effective as of September 2001, Mr. Marlow ceased to be employed by the
Company.
22
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
The following table shows information concerning stock option exercises and
values as of the end of the fiscal year ended February 2, 2002.
<Table>
<Caption>
AGGREGATED FISCAL YEAR-END
OPTION VALUES
----------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE OPTIONS AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(2)
- ---- ----------- -------------- ------------------------------ ----------------------------
Marvin J. Gralnick... -- -- 948,749/412,501 25,959,270/4,518,685
Helene B. Gralnick... -- -- 303,750/135,000 8,268,918/1,628,014
Charles J. Kleman.... 567,720 11,441,952 228,750/108,750 6,152,787/1,916,132
Scott A. Edmonds..... 93,750 1,532,242 -0-/271,250 -0-/2,169,392
Patricia A. Murphy... 76,202 1,577,754 40,050/172,500 951,326/2,784,578
Tedford G.
Marlow(3).......... 187,500 1,483,114 -0-/-0- -0-/-0-
</Table>
- ---------------
(1) This represents the excess of the fair market value of the Company's common
stock as of the date of exercise above the exercise price of the options.
(2) This represents the excess of the fair market value of the Company's common
stock of $29.40 per share as of February 2, 2002, above the exercise price
of the options.
(3) Effective as of September 2001, Mr. Marlow ceased to be employed by the
Company.
EMPLOYMENT AGREEMENTS
Effective February 7, 2000, the Company entered into new employment
agreements with Mr. Gralnick and Ms. Gralnick that each provide for an annual
base salary and certain other benefits. These employment agreements were amended
effective September 26, 2001 to extend the term of employment by one year. In
addition, the Company and Mr. Gralnick agreed to a modification to his
employment agreement to allow the Company to grant to him only 46,500 options in
February 2002 and to contemplate an additional grant of 78,500 options (with an
exercise price equal to the then current market price of the stock) in July 2002
following approval of the new stock option plan by the Company's stockholders.
Pursuant to the employment agreements, the 2002 annualized base salaries of Mr.
Gralnick and Ms. Gralnick are $850,000 and $275,000, respectively, subject to
scheduled annual increases and any further increases as may be set by the Board
of Directors. Under each agreement, bonus compensation is to be determined
through a bonus formula adopted by the Compensation Committee. Under each of the
employment agreements, the period of employment extends through February 1,
2004, which period, under the express terms of the agreement, is automatically
extended for additional one-year periods until the respective employment
agreement is terminated by the Company or the executive. The employment
agreements contemplate the granting of stock options each year to each of Mr.
Gralnick and Ms. Gralnick under the Company's stock option plan. All of the
stock options required to be granted to Mr. Gralnick and Ms. Gralnick prior to
the date of this proxy statement have been granted. Stock options with respect
to a total of 203,500 additional shares and 30,000 additional shares,
respectively, are to be granted in the remaining extended term of the employment
agreements.
Effective April 1, 1993, the Company entered into an employment agreement
with Mr. Kleman which provides for an annual base salary and certain other
benefits. This employment agreement was amended effective as of August 21, 2000.
Pursuant to the amended employment agreement and certain further actions of the
Board of Directors, Mr. Kleman's current base salary is $340,000 and is subject
to annual increases as set from time to time by the Board of Directors. Under
the terms of the amended employment agreement, the Company contracted to employ
Mr. Kleman for a period which currently extends through December 31, 2002, and
which period, by the terms of the agreement is automatically extended for
additional one year periods until the employment agreement is terminated by the
Company or Mr. Kleman.
23
Effective June 28, 1995, the Company entered into an employment agreement
with Mr. Edmonds which provides for an annual base salary and certain other
benefits. This employment agreement was amended effective as of August 21, 2000.
Pursuant to the amended employment agreement and certain further actions of the
Board of Directors, Mr. Edmonds' current base salary is $500,000 and is subject
to annual increases as set from time to time by the Board of Directors. Under
the terms of Mr. Edmonds' amended employment agreement, the Company contracted
to employ Mr. Edmonds for a period which currently extends through February 28,
2003, and which period, by the terms of the agreement, is automatically extended
for additional one year periods until the employment agreement is terminated by
the Company or Mr. Edmonds.
Effective August 21, 2000, the Company entered into an employment agreement
with Ms. Murphy which provides for an annual base salary and certain other
benefits. Pursuant to the employment agreement and certain further actions of
the Board of Directors, Ms. Murphy's current base salary is $365,000 and is
subject to annual increases as set from time to time by the Board of Directors.
Under the terms of Ms. Murphy's employment agreement, the Company contracted to
employ Ms. Murphy for a period which currently extends through December 31,
2002, and which period, by the terms of the agreement, is automatically extended
for additional one year periods until the employment agreement is terminated by
the Company or Ms. Murphy.
The employment agreements for Messrs. Gralnick, Kleman and Edmonds and Ms.
Gralnick and Ms. Murphy provide that such executives are entitled to certain
severance benefits in the event that their employment is terminated by the
Company "without cause" or by such executive within a specified period following
a "change of control" (both as defined in the employment agreements). In the
case of Mr. Gralnick and Ms. Gralnick (a) if the executive is terminated
"without cause," the executive would receive his or her salary for the remainder
of the then effective employment term (or, if longer, for 12 months) and, (b) if
the executive's employment is terminated within the specified period following a
"change of control," the executive would be entitled to receive a lump sum equal
to the aggregate salary that he or she would otherwise have been entitled to
receive over the remainder of the then effective term (or, if longer, over 12
months), plus one year's bonus. In the case of Messrs. Kleman and Edmonds and
Ms. Murphy, (1) if the executive is terminated "without cause," the executive
would receive his or her salary for the remainder of the then effective
employment term (or, if longer, for 12 months) and, (2) if the executive's
employment is terminated within the specified period following a "change of
control," the executive would be entitled to receive a lump sum equal to the
aggregate salary that he or she would otherwise have been entitled to receive
over the remainder of the then effective term (or, if longer, over 36 months),
plus three times his annual target bonus. Each employment agreement is also
subject to termination in the event of disability, death or voluntary retirement
by the individual or his or her termination for cause. Each employment agreement
provides for a covenant not to compete which is to continue for two years
following any termination.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Company's Compensation and Benefits Committee
are John W. Burden, Verna K. Gibson and Ross E. Roeder. Neither Mr. Burden, Ms.
Gibson nor Mr. Roeder has at any time been an officer or employee of the
Company.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
To the Company's knowledge, based solely on a review of the forms, reports
and certificates filed with the Company by the Company's directors and officers
and the holders of more than 10% of the Company's common stock, all Section
16(a) filing requirements were complied with by such persons during or with
respect to the fiscal year ended February 2, 2002, except that Mr. Burden filed
one late Form 4 reporting ten transactions, Mr. Roeder filed one late Form 4
reporting one gift transfer, and Ms. Gibson timely filed one Form 5 that
included reports of five gift transfers that were required to have been reported
in previous fiscal years.
24
SECURITY OWNERSHIP
The following table sets forth, as of March 31, 2002, the number of shares
of the Company's common stock beneficially owned by (1) each person known to the
Company as having beneficial ownership of more than 5% of the Company's common
stock together with such person's address, (2) each of its directors and
nominees to become a director, (3) each named executive officer as defined under
applicable Securities and Exchange Commission rules and (4) all directors and
executive officers as a group.
<Table>
<Caption>
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNER OF BENEFICIAL PERCENT
OR NUMBER IN GROUP OWNERSHIP(1) OF CLASS
- ------------------------ ----------------- --------
Marvin J. Gralnick......................................... 3,835,638(2) 9.0
c/o Chico's FAS, Inc.
11215 Metro Parkway
Ft. Myers, Florida 33912
Helene B. Gralnick......................................... 3,835,638(2) 9.0
c/o Chico's FAS, Inc.
11215 Metro Parkway
Ft. Myers, Florida 33912
Rodin, Ltd................................................. 2,328,138(2) 5.7
301 Congress, Suite 1900
Austin, Texas 78701
Wasatch Advisors, Inc...................................... 1,687,936(3) 6.2
150 Social Hall Avenue
Salt Lake City, UT 84111
Scott A. Edmonds........................................... 35,100(4) *
Charles J. Kleman.......................................... 333,253(5) *
Patricia A. Murphy......................................... 134,056(6) *
Tedford G. Marlow.......................................... -0- *
Verna K. Gibson............................................ 452,427(7) 1.1
Ross E. Roeder............................................. 132,800(8) *
John W. Burden............................................. 60,000(9) *
All Directors and Executive Officers as a Group (11
persons)................................................. 5,009,131(10) 11.6
</Table>
- ---------------
* Less than one percent
(1) Beneficial ownership of shares, as determined in accordance with applicable
Securities and Exchange Commission rules, includes shares as to which a
person has or shares voting power and/or investment power. Except as
otherwise indicated, all shares are held of record with sole voting and
investment power.
(2) Marvin J. Gralnick and Helene B. Gralnick are husband and wife. The number
of shares shown for Marvin J. Gralnick and the number of shares shown for
Helene B. Gralnick each include the aggregate of all shares held by Rodin,
Ltd., a Texas Limited Partnership. A limited liability company established
by Mr. Gralnick and Ms. Gralnick and of which Mr. Gralnick and Ms. Gralnick
are the sole members and managing members, is the sole general partner of
Rodin, Ltd., owning an aggregate of 1% of the partnership interests. Mr.
Gralnick owns limited partnership interests representing approximately
49.3% of the partnership interests, Ms. Gralnick owns separate limited
partnership interests representing approximately 49.3% of the partnership
interests and the remaining partnership interests are owned by a series of
irrevocable intervivos trusts established by Mr. Gralnick and Ms. Gralnick
for the benefit of their respective children. Also includes a total of
1,507,500 shares for Mr. Gralnick and Ms. Gralnick
25
that are deemed to be beneficially owned by them by virtue of certain stock
options that are currently exercisable or become exercisable within 60
days.
(3) This information is derived from a Schedule 13G dated as of February 14,
2002 filed by Wasatch Advisors, Inc. Wasatch Advisors, Inc. is shown to
have voting and dispositive power with respect to all the shares shown.
(4) Includes 1,125 shares owned by each of Mr. Edmonds' two daughters. In
addition, includes 15,000 shares deemed to be beneficially owned by Mr.
Edmonds by virtue of certain stock options that are currently exercisable
or become exercisable within 60 days.
(5) Includes 12,453 shares owned by Mr. Kleman's son, 12,640 shares owned by
his daughter, 2,962 shares owned by his stepdaughter and 1,393 shares owned
by Mr. Kleman's spouse. In addition, includes 281,250 shares deemed to be
beneficially owned by Mr. Kleman by virtue of stock options that are
currently exercisable or become exercisable within 60 days.
(6) Includes 118,800 shares deemed to be beneficially owned by Ms. Murphy by
virtue of certain stock options that are currently exercisable or become
exercisable within 60 days.
(7) Includes 177,000 shares deemed to be beneficially owned by Ms. Gibson by
virtue of certain stock options that are currently exercisable and 111,150
shares owned by a profit sharing trust.
(8) Includes 4,500 shares owned by an Individual Retirement Account and 105,000
shares deemed to be beneficially owned by Mr. Roeder by virtue of stock
options that are currently exercisable.
(9) Includes 45,000 shares owned by an Individual Retirement Account and 15,000
shares deemed to be beneficially owned by Mr. Burden by virtue of stock
options that are currently exercisable.
(10) Pursuant to applicable Securities and Exchange Commission rules, the
2,328,138 shares of common stock owned by Rodin, Ltd. and the 1,507,500
exercisable options which are deemed to be beneficially owned by each of
Marvin J. Gralnick and Helene B. Gralnick, are counted only once for
purposes of this calculation.
STOCKHOLDER PROPOSALS FOR PRESENTATION AT THE 2003 ANNUAL MEETING
Pursuant to the General Rules under the Securities Exchange Act of 1934,
proposals of stockholders intended to be presented at the 2003 Annual Meeting of
Stockholders and in the proxy statement for that meeting must be received by
management of the Company at its executive offices on or before December 30,
2002.
The Company's Amended and Restated Articles of Incorporation also require
certain advance notice to the Company of any stockholder proposal and of any
nominations by stockholders of persons to stand for election as directors at a
stockholders' meeting. Notice of stockholder proposals and of director
nominations must be timely given in writing to the Secretary of the Company
prior to the meeting at which the directors are to be elected. To be timely,
notice must be received at the principal executive offices of the Company not
less than 60 days prior to the meeting of stockholders; provided, however, that
in the event that less than 70 days' notice prior to public disclosure of the
date of the meeting is given or made to the stockholders, notice by the
stockholder, in order to be timely, must be so delivered or received not later
than the close of business on the tenth day following the day on which such
notice of the date of the annual meeting was mailed or public disclosure of the
date of the annual meeting was made, whichever first occurs.
A stockholder's notice with respect to a proposal to be brought before the
annual meeting must set forth in addition to the matters required to be set
forth by the General Rules under the Securities Exchange Act of 1934; (a) a
brief description of the proposal and the reasons for conducting such business
at the annual meeting, (b) the name and address, as they appear on the Company's
books, of the stockholder proposing such business and any other stockholders
known by such stockholder to be supporting such proposal, (c) the class and
number of shares of the Company which are beneficially owned by such stockholder
on the date of such stockholder notice and by any other stockholders known by
such stockholder to be supporting such proposal on the date of such stockholder
notice, and (d) any financial interest of the stockholder in such proposal.
26
A stockholder's notice with respect to a director nomination must set forth
(i) the name, age, business address and residence address of the person, (ii)
the principal occupation or employment of the person, (iii) the class and number
of shares of the Company which are beneficially owned by such person, and (iv)
all information that would be required to be included in a proxy statement
soliciting proxies for the election of the nominee director (including such
person's written consent to serve as a director if so elected). As to the
stockholder providing such notice, such stockholder must set forth (1) the name
and address, as they appear on the Company's books, of the stockholder and (2)
the class and number of shares of the Company which are beneficially owned by
such stockholder on the date of such stockholder notice.
The complete Amended and Restated Articles of Incorporation provisions
governing these requirements are available to any stockholder without charge
upon request from the Secretary of the Company.
By Order of the Board of Directors,
/s/ Charles J. Kleman
CHARLES J. KLEMAN
Secretary
Dated: April 29, 2002
27
APPENDIX A
REVOCABLE PROXY
CHICO'S FAS, INC.
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 25, 2002
The undersigned, a stockholder of CHICO'S FAS, INC. (the "Company"),
hereby appoints Marvin J. Gralnick, Charles J. Kleman and Scott A. Edmonds, and
each of them, attorney and proxy of the undersigned, each with full powers of
substitution, for and on behalf of the undersigned, to represent the
undersigned at the Annual Meeting of Stockholders of the Company to be held at
the Sanibel Harbour Resort, Fort Myers, Florida at 2:00 P.M., local time, on
June 25, 2002 and any adjournments or postponements thereof (the "Annual
Meeting"), and to vote at the Annual Meeting all the shares of Common Stock of
the Company that the undersigned is entitled to vote at the Annual Meeting,
with the same effect as if the undersigned were personally present at the
Annual Meeting, all as described in the Company's Proxy Statement dated April
29, 2002 relating to the Annual Meeting, and the undersigned hereby authorizes
and instructs the above named proxies to vote as specified herein.
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE FOLLOWING NOMINEES AND
PROPOSALS:
WITHHOLD
1. ELECTION OF DIRECTORS AUTHORITY
FOR ALL FOR ALL FOR
Nominees for Class NOMINEES NOMINEES ALL
III Directors: LISTED LISTED EXCEPT
Marvin J. Gralnick and John W. Burden [ ] [ ] [ ]
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided below.
- -------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. PROPOSAL TO APPROVE THE COMPANY'S 2002 [ ] [ ] [ ]
OMNIBUS STOCK AND INCENTIVE PLAN
FOR AGAINST ABSTAIN
3. PROPOSAL TO APPROVE THE COMPANY'S 2002 [ ] [ ] [ ]
EMPLOYEE STOCK PURCHASE PLAN
4. OTHER MATTERS: Unless a line is stricken through this sentence, the
proxies herein named may in their discretion vote the shares
represented by this Proxy upon such other matters as may properly
come before the Annual Meeting.
Please be sure to sign and date Date
this Proxy in the box below.
---------------------------
- -------------------------------------------------------------------------------
Stockholder sign above Co-holder (if any) sign above
- -------------------------------------------------------------------------------
- DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED -
CHICO'S FAS, INC.
The shares represented by this Proxy will be voted in the manner
directed herein only if this Proxy is properly executed and timely returned. IF
THE UNDERSIGNED DOES NOT SPECIFY A CHOICE, THE SHARES WILL BE VOTED FOR THE
NOMINEES FOR DIRECTOR LISTED ABOVE, FOR THE PROPOSAL TO APPROVE THE COMPANY'S
2002 EMPLOYEE STOCK PURCHASE PLAN, FOR THE PROPOSAL TO APPROVE THE COMPANY'S
2002 OMNIBUS STOCK AND INCENTIVE PLAN, AND IN THE DISCRETION OF THE PROXIES FOR
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
The stockholder signing above acknowledges receipt of (1) the
Company's 2001 Annual Report to Stockholders and (2) the Company's Notice of
Annual Meeting and Proxy Statement dated April 29, 2002 relating to the Annual
Meeting. The stockholder signing above does hereby revoke any proxy previously
given with respect to the shares represented by this Proxy.
NOTE: Your signature should appear as your name appears hereon. As to
shares held in joint names, each joint owner should sign. If the signer is a
corporation, please sign full corporate name by a duly authorized officer. If a
partnership, please sign in partnership name by an authorized person. If
signing as attorney, executor, administrator, trustee, guardian, or in other
representative capacity, please give full title as such.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD
AND PROMPTLY RETURN IT USING THE ENCLOSED ENVELOPE
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
- --------------------------------
- --------------------------------
- --------------------------------
APPENDIX B
CHICO'S FAS, INC.
2002 OMNIBUS STOCK AND INCENTIVE PLAN
CHICO'S FAS, INC.
2002 OMNIBUS STOCK AND INCENTIVE PLAN
ARTICLE 1........................................................................................1
Establishment; Purpose; Awards...........................................................1
1.1 Establishment; Purpose....................................................1
1.2 Types of Awards Under Plan................................................1
ARTICLE 2........................................................................................1
DEFINITIONS..............................................................................1
2.1 "Award(s)"................................................................1
2.2 "Award Agreement(s)"......................................................1
2.3 "Board" or "Board of Directors"...........................................1
2.4 "Change in Control".......................................................2
2.5 "Code"....................................................................2
2.6 "Committee"...............................................................2
2.7 "Common Stock"............................................................2
2.8 "Company" ................................................................2
2.10 "Exchange Act"............................................................3
2.11 "Fair Market Value".......................................................3
2.12 "Incentive Stock Option" or "ISO".........................................3
2.13 "Insider".................................................................3
2.14 "Non-Employee Director"...................................................3
2.15 "Non-Qualified Stock Option" or "NSO".....................................3
2.16 "Option"..................................................................3
2.17 "Option Period"...........................................................4
2.18 "Participant".............................................................4
2.19 "Performance-Based Exception".............................................4
2.20 "Plan"....................................................................4
2.21 "Plan Administrator"......................................................4
2.22 "Restricted Stock"........................................................4
2.23 "Restricted Stock Units"..................................................4
2.24 "Restriction Agreement"...................................................4
2.25 "Restriction Period"......................................................4
2.26 "Securities Exchange Act of 1934".........................................4
2.27 "Stock Option Agreement"..................................................4
2.28 "Subsidiary"..............................................................4
ARTICLE 3........................................................................................4
Eligible Persons.........................................................................4
3.1 Eligibility...............................................................4
3.2 Selection of Participants.................................................5
3.3 General Effect of Award...................................................5
ARTICLE 4........................................................................................5
Shares Subject to the Plan and Maximum Awards............................................5
4.1 Sources of Shares Available for Grants and Limits on Shares Subject to the
Plan......................................................................5
4.2 Maximum Awards............................................................6
4.3 Adjustments to Limitations................................................6
ARTICLE 5........................................................................................7
Administration...........................................................................7
5.1 General...................................................................7
5.2 Power and Authority.......................................................7
5.3 Other Factors; Determinations Final.......................................8
5.4 Quorum; Actions...........................................................9
5.5 Delegation................................................................9
5.6 No Liability; Indemnification.............................................9
ARTICLE 6.......................................................................................10
Stock Options...........................................................................10
6.1 General Method of Grant..................................................10
6.2 Automatic Grants - Non-Employee Directors................................10
6.3 Number of Shares.........................................................10
6.4 Option Price.............................................................11
6.5 Date of Grant............................................................11
6.6 Method of Payment........................................................11
6.7 Option Exercise Period...................................................12
6.8 Certain Interpretations..................................................13
6.9 Exercise and Vesting of Options..........................................13
6.10 Multiple Grants in Single Agreement......................................14
6.11 Minimum Exercise.........................................................14
6.12 Other Provisions.........................................................14
6.13 Special Provisions for Incentive Stock Options...........................15
ARTICLE 7.......................................................................................15
Restricted Stock and Restricted Stock Units.............................................15
7.1 Awards of Restricted Stock or Restricted Stock Units;
Restriction Period.......................................................15
7.2 Restricted Stock.........................................................16
7.3 Restricted Stock Units...................................................16
7.4 Lapse of Restrictions; Awards Subject to Time Goal.......................17
7.5 Lapse of Restrictions; Awards Subject to Price/Time Goal or Performance
Goal.....................................................................17
7.6 Forfeitures..............................................................17
ARTICLE 8.......................................................................................18
Miscellaneous...........................................................................18
8.1 Adjustment of Number of Shares, Etc......................................18
8.2 Transferability..........................................................19
8.3 Change in Control........................................................19
8.4 Performance Based Compensation...........................................19
8.5 Beneficiary Designation..................................................19
8.6 Tax Withholding..........................................................20
8.7 Gender and Number........................................................20
8.8 Choice of Law............................................................20
8.9 No Stockholder Rights....................................................20
8.10 Amendments; Exchanges, Termination or Suspension.........................21
8.11 Listing and Registration of Common Stock.................................21
8.12 Compliance with Applicable Laws..........................................22
8.13 Stock Certificates; Book Entry...........................................22
8.14 No Implied Rights to Employees...........................................22
8.15 Necessity for Delay......................................................22
8.16 Use of Proceeds..........................................................23
8.17 No Obligation to Exercise................................................23
8.18 Assignment by Company; Third Party Beneficiaries.........................23
8.19 Effective Date...........................................................23
8.20 Term of the Plan.........................................................23
CHICO'S FAS, INC.
2002 OMNIBUS STOCK AND INCENTIVE PLAN
ARTICLE 1
ESTABLISHMENT; PURPOSE; AWARDS
1.1 Establishment; Purpose. Chico's FAS, Inc. (the "Company")
hereby establishes the 2002 Omnibus Stock and Incentive Plan (the "Plan") in
order to (i) attract and retain Participants as long-term employees or
directors; (ii) motivate Participants, by means of appropriate incentives, to
achieve long-range goals; (iii) provide incentive compensation opportunities
that are competitive with those of other similar companies; and (iv) further
identify Participants' interests with those of the Company's other stockholders
through compensation based on the Company's common stock; and, as a result of
the foregoing, promote the long-term financial interest of the Company and its
stockholders.
1.2 Types of Awards Under Plan. Under the Plan, the Company may
grant Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock,
and Restricted Stock Units.
ARTICLE 2
DEFINITIONS
The following words and terms as used herein shall have that meaning
set forth in this Article 2, unless a different meaning is clearly required by
the context. Whenever appropriate, words used in the singular shall be deemed
to include the plural and vice versa, and the masculine gender shall be deemed
to include the feminine gender.
2.1 "Award(s)" shall mean any award or benefit granted or awarded
under the Plan, including, without limitation, Options, Restricted Stock, and
Restricted Stock Units.
2.2 "Award Agreement(s)" shall mean any document, agreement or
certificate deemed by the Committee as necessary or advisable to be entered
into with or delivered to a Participant in connection with or as a condition
precedent to the valid completion of the grant of an Award under the Plan.
Award Agreements include Stock Option Agreements and Restriction Agreements.
2.3 "Board" or "Board of Directors" shall mean the Board of
Directors of the Company.
Chico's FAS, Inc. Page 1
Omnibus Stock and Incentive Plan
2.4 "Change in Control" shall mean:
(a) a change in control of the Company of a nature that
is required, pursuant to the Exchange Act to be
reported in response to Item 1(a) of a Current
Report on Form 8-K or Item 6(e) of Schedule 14A, in
each case, as such requirements are in effect on
January 1, 2002;
(b) the adoption by the Company of a plan of dissolution
or liquidation;
(c) the closing of a sale of all or substantially all of
the assets of the Company;
(d) the closing of a merger, reorganization or similar
transaction (a "Transaction") involving the Company
in which the Company is not the surviving
corporation or, if the Company is the surviving
corporation, immediately following the closing of
the Transaction, persons who were stockholders of
the Company immediately prior to the Transaction own
less than 75% of the combined voting power of the
surviving corporation's voting securities; or
(e) the acquisition of "Beneficial Ownership" (as
defined in Rule 13d-3 under the Exchange Act as in
effect on January 1, 2002) of the Company's
securities comprising 25% or more of the combined
voting power of the Company's outstanding securities
by any "person" (as that term is used in Sections
13(d) and 14(d)(2) of the Exchange Act and the rules
and regulations promulgated thereunder, but not
including any trustee or fiduciary acting in that
capacity for an employee benefit plan sponsored by
the Company) and such person's "affiliates" and
"associates" (as those terms are defined under the
Exchange Act).
Notwithstanding any provision above to the contrary, no Change in Control shall
be deemed to have occurred with respect to any particular Participant by virtue
of a transaction, or series of transactions, that results in the Participant,
or a group of persons including the Participant, acquiring the Beneficial
Ownership of more than 25% of the combined voting power of the Company's
outstanding securities.
2.5 "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated thereunder.
Reference to a specific section of the Code shall include a reference to any
successor or replacement provision.
2.6 "Committee" shall mean the Compensation and Benefits
Committee of the Board of Directors, as defined in Article 5.
Chico's FAS, Inc. Page 2
Omnibus Stock and Incentive Plan
2.7 "Common Stock" shall mean the common stock, par value $.01
per share, of the Company.
2.8 "Company" shall mean Chico's FAS, Inc. and its successors.
2.9 "Employee" shall mean any employee of the Company or of a
Subsidiary. Directors who are employed by the Company or by a Subsidiary shall
be considered Employees under the Plan.
2.10 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time, or any successor statute.
2.11 "Fair Market Value" of a share of Common Stock means, as of
any date, the value of a share of the Common Stock determined as follows:
(a) if the Common Stock is publicly traded and is then
listed on a national securities exchange, its
closing price on the date of determination on the
principal national securities exchange on which the
Common Stock is listed or admitted to trading as
reported in The Wall Street Journal or such other
source as the Committee deems reliable;
(b) if the Common Stock is then quoted on the Nasdaq
National Market or Nasdaq SmallCap Market, its
closing price on such market on the date of
determination as reported in The Wall Street Journal
or such other source as the Committee deems
reliable;
(c) if the Common Stock is publicly traded but is not
quoted on the Nasdaq National Market or the Nasdaq
SmallCap Market and is not listed or admitted to
trading on a national securities exchange, the
average of the closing bid and asked prices on the
date of determination as reported in The Wall Street
Journal or such other source as the Committee deems
reliable; or
(d) if none of the foregoing is applicable, by the
Committee in good faith.
2.12 "Incentive Stock Option" or "ISO" shall mean an Option that
is intended to qualify as an "incentive stock option" under Section 422 of the
Code.
2.13 "Insider" shall mean an individual who is, on the relevant
date, subject to the reporting requirements of Section 16(a) of the Exchange
Act.
2.14 "Non-Employee Director" shall mean (a) a member of the Board
of Directors who is not an Employee or (b) a member of the board of directors
(or comparable governing body) of a Subsidiary who is not an Employee.
Chico's FAS, Inc. Page 3
Omnibus Stock and Incentive Plan
2.15 "Non-Qualified Stock Option" or "NSO" shall mean an Option
that is not intended to qualify as an "incentive stock option" under Section
422 of the Code.
2.16 "Option" shall mean an Incentive Stock Option or a
Non-Qualified Stock Option granted in accordance with the provisions of Article
6.
2.17 "Option Period" is defined in Section 6.6.
2.18 "Participant" shall mean any Employee or any Non-Employee
Director to whom an Award is granted under the Plan or who holds an outstanding
Award.
2.19 "Performance-Based Exception" shall mean the
performance-based exception from the tax deductibility limitation imposed by
Section 162(m) of the Code, as set forth in Section 162(m)(4)(C) of the Code.
2.20 "Plan" shall mean the Chico's FAS, Inc. 2002 Omnibus Stock
and Incentive Plan, as set forth herein and as amended from time to time.
2.21 "Plan Administrator" shall mean the Company's Vice President
- - Human Resources, or such other person designated by the Committee to act as
Plan Administrator.
2.22 "Restricted Stock" shall mean shares of Common Stock subject
to the provisions of Article 7 and granted in an Award in accordance with the
provisions of Article 7.
2.23 "Restricted Stock Units" shall mean the right to receive
shares of Common Stock or the cash equivalent thereof subject to the provisions
of Article 7 granted as an Award in accordance with the provisions of Article
7.
2.24 "Restriction Agreement" is defined in Section 7.4.
2.25 "Restriction Period" is defined in Section 7.3.
2.26 "Securities Exchange Act of 1934" shall mean the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder, or any successor or replacement statute or regulation of similar
import.
2.27 "Stock Option Agreement" is defined in Section 6.1.
2.28 "Subsidiary" shall mean any corporation that at the time
qualifies as a subsidiary of the Company under the definition of "subsidiary
corporation" contained in Section 424(f) of the Code.
Chico's FAS, Inc. Page 4
Omnibus Stock and Incentive Plan
ARTICLE 3
ELIGIBLE PERSONS
3.1 Eligibility. All Employees and Non-Employee Directors are
eligible to participate in the Plan. The Company may grant an Award to any
Employee who is in the employ of the Company or any Subsidiary on the date of a
grant of such Award. The Company may grant an Award (other than an Incentive
Stock Option) to any person who is a Non-Employee Director on the date of a
grant of such Award. During the term of the Plan, the Company shall
automatically grant Non-Qualified Stock Options to Non-Employee Directors at
such times, in such amounts and in accordance with such terms as are
hereinafter provided in the Plan.
3.2 Selection of Participants.
(a) Subject to the provisions of the Plan, the Committee
may, from time to time, select from all Employees those to whom Awards shall be
granted and shall determine the nature and size of each Award.
(b) The Board of Directors shall determine the
discretionary Awards to be granted to the Non-Employee Directors in accordance
with the Company's compensation program for Non-Employee Directors, as such
program may be determined from time to time.
3.3 General Effect of Award. Each Participant to whom the
Committee or the Board of Directors has granted an Award shall be bound by the
terms of the Plan and the Award Agreement applicable to him or her.
ARTICLE 4
SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
4.1 Sources of Shares Available for Grants and Limits on Shares
Subject to the Plan. The Common Stock for which Awards are granted under the
Plan shall be subject to the following conditions and limitations:
(a) The shares of Common Stock with respect to which
Awards are made under the Plan shall be shares
currently authorized but unissued or currently held
or subsequently acquired by the Company as treasury
shares, including shares purchased in the open
market or in private transactions for use under the
Plan.
Chico's FAS, Inc. Page 5
Omnibus Stock and Incentive Plan
(b) The maximum aggregate number of shares of Common
Stock that may be delivered to Participants and
their beneficiaries under the Plan shall be equal to
the sum of: (i) two million (2,000,000) shares of
Common Stock; (ii) any shares of Common Stock
available for future awards under any prior option
plan of the Company (the "Prior Plans") as of the
Effective Date (including without limitation the
1992 Stock Option Plan, the 1993 Stock Option Plan
and the Non-Employee Directors' Stock Option Plan);
and (iii) any shares of Common Stock that are
represented by options granted under any Prior Plans
which are forfeited, expire or are canceled without
delivery of shares of Common Stock.
(c) To the extent provided by the Committee (or by the
Board with respect to any Awards granted to
Non-Employee Directors), any Award may be settled in
cash rather than Common Stock. To the extent any
shares of Common Stock covered by an Award are not
delivered to a Participant or beneficiary because
the Award is forfeited or canceled, or the shares of
Common Stock are not delivered because the Award is
settled in cash or used to satisfy the applicable
tax withholding obligation, such shares shall not be
deemed to have been delivered for purposes of
determining the maximum number of shares of Common
Stock available for delivery under the Plan.
(d) If the exercise price of any Option granted under
the Plan or any Prior Plan is satisfied by tendering
shares of Common Stock to the Company (by either
actual delivery or by attestation), only the number
of shares of Common Stock issued net of the shares
of Common Stock tendered shall be deemed delivered
for purposes of determining the maximum number of
shares of Stock available for delivery under the
Plan.
4.2 Maximum Awards. Subject to Section 4.3, the following
additional limitations on the maximum numbers of shares of Common Stock in the
case of certain Awards are imposed under the Plan:
(a) The maximum number of shares of Common Stock that
may be issued in conjunction with Awards granted
pursuant to Article 7 (relating to Restricted Stock
and Restricted Stock Units) shall be four hundred
thousand (400,000) shares.
(b) The maximum number of shares of Common Stock that
may be covered by Awards granted to any one
individual pursuant to Article 6 (relating to
Options) shall be two hundred fifty thousand
(250,000) shares during any one calendar-year
period.
Chico's FAS, Inc. Page 6
Omnibus Stock and Incentive Plan
(c) For Restricted Stock and Restricted Stock Units that
are intended to be "performance-based compensation"
(as that term is used for purposes of Section 162(m)
of the Code), no more than one hundred thousand
(100,000) shares of Common Stock may be subject to
such Awards granted to any one individual during any
one-calendar-year period. If, after shares have been
earned, the delivery is deferred, any additional
shares attributable to dividends during the deferral
period shall be disregarded.
4.3 Adjustments to Limitations. The number of shares and the
limitations on the number of shares set forth in each of the foregoing
provisions of this Article 4 shall be subject to adjustment as provided in
Section 8.1.
ARTICLE 5
ADMINISTRATION
5.1 General. Except as otherwise determined by the Board of
Directors in its discretion or as otherwise expressly provided for in this
Article 5, the Plan shall be administered by the Committee, or if no Committee
is appointed and serving as provided herein, by the full Board of Directors.
The Committee shall consist of not less than two (2) nor more than five (5)
persons, each of whom shall be a member of the Board and a "disinterested
person" (as such term is defined in Rule 16b-3 under the Securities Exchange
Act of 1934) and who also qualify as outside directors within the meaning of
Section 162(m) of the Code and the related regulations. The Board of Directors
may from time to time remove members from, or add members to, the Committee.
Vacancies on the Committee, howsoever caused, shall be filled by the Board of
Directors.
5.2 Power and Authority. Subject to the express provisions of the
Plan, the Committee shall have complete authority, in its discretion:
(a) to interpret the Plan and the Awards granted
hereunder, and to prescribe, amend and rescind rules
and regulations relating to the Plan and the Awards
granted hereunder;
(b) to determine the terms and provisions of Awards
granted hereunder and to make such determinations as
to the Participants to receive Awards, the form,
amount and timing of such Awards, the terms and
provisions of such Awards, and the Award Agreements
evidencing the same, which need not be uniform and
which the Committee may make selectively among
Participants who receive, or who are to receive,
Awards under the Plan, whether or not the
Participants are similarly situated;
Chico's FAS, Inc. Page 7
Omnibus Stock and Incentive Plan
(c) to determine to whom Options shall be granted, the
times and the prices at which Options are granted,
the Option periods, the number of shares of Common
Stock to be subject to each Option, whether each
Option shall be an Incentive Stock Option or a
Non-Qualified Stock Option, and to determine the
terms and provisions of each Option (which need not
be identical);
(d) to determine to whom Restricted Stock and Restricted
Stock Units shall be granted, the Restriction
Period, the number of shares of Restricted Stock,
the terms and provisions (which need not be
identical) of awards of Restricted Stock and
Restricted Stock Units and whether the Participant
has met the goals on or before the close of the
Restriction Period;
(e) to impose such limitations with respect to Options,
shares issued pursuant to Options, and Restricted
Stock, including without limitation, any relating to
the application of federal or state securities laws,
as the Committee may deem necessary or desirable;
(f) to condition the granting of any Award upon a
Participant's entering into a confidentiality,
noncompetition, nonsolicitation, nonacceptance,
and/or "lock-up" agreement, including without
limitation, a confidentiality, noncompetition,
nonsolicitation, nonacceptance, and/or "lock-up"
agreement included as part of the Award Agreement;
(g) to determine the dates of employment or service of
any Participant, and the reasons for termination of
any Participant;
(h) to determine whether any leave of absence
constitutes a termination of employment or service
for purposes of the Plan and Awards made pursuant to
the Plan and the impact, if any, of such leave of
absence on awards theretofore made under the Plan;
(i) to determine when a person's change of status with
respect to the Company constitutes a termination of
such person's employment or service for purposes of
the Plan and Awards made pursuant to the Plan;
(j) to make such determinations as it deems equitable
with respect to the impact, if any, of leaves of
absence from the Company upon Awards hereunder;
(k) to grant dividend equivalents upon Awards (other
than Restricted Stock for which Participants are
entitled to receive dividends and other
distributions paid with
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respect to shares of Common Stock so held), provided
that any such dividend equivalents shall be subject
to the terms and conditions imposed by the
Committee;
(l) to amend the terms and conditions of any Award
Agreement after the grant of the Award to which such
Award Agreement relates, subject to the terms and
conditions of the Plan, in a manner that is not
adverse to the rights of the Participant receiving
such Award as set forth in the Award Agreement or
under the Plan; and
(m) to make all other determinations necessary or
advisable for the administration of the Plan and
Awards.
With respect to the Non-Employee Directors, the authority conferred by
this Section 5.2 shall rest with the Board of Directors and not the Committee.
5.3 Other Factors; Determinations Final. In making determinations
under this Article 5, the Committee or the Board, as the case may be, may take
into account the nature of the services rendered by the respective Participant,
their present and potential contributions to the success of the Company and
such other factors as the Committee or the Board, in its discretion, deems
relevant. The Committee's determination and the Board's determination on all of
the matters referred to in this Article 5 shall be final, conclusive and
binding on all persons.
5.4 Quorum; Actions. The Committee shall select one of its
members as chairman, and shall hold meetings at such times and places as it may
determine. The acts of a majority of the Committee in meetings at which a
quorum is present, or acts reduced to or approved in writing by a majority of
the members of the Committee, shall be valid acts of the Committee.
5.5 Delegation. Except to the extent prohibited by applicable law
or the applicable rules of a stock exchange, the Committee and the Board shall
have the authority to delegate administrative duties, including the authority
to respond to and decide claims or appeals under the Plan and to interpret the
Plan terms, to one or more of its members, to the Plan Administrator or to any
other person or persons selected by it. Notwithstanding the foregoing, neither
the Committee or the Board may delegate its authority with respect to (a)
non-ministerial actions with respect to Insiders; (b) non- ministerial actions
with respect to Awards that are intended to qualify for the Performance-Based
Exception; and (c) certifying that any performance goals and other material
terms attributable to Awards intended to qualify for the Performance-Based
Exception have been satisfied. Any such allocation or delegation may be revoked
by the Committee or the Board, as the case may be, at any time.
5.6 No Liability; Indemnification. No member of the Committee or
the Board shall be liable for any action or determination made in good faith
with respect to the Plan. To the fullest extent permitted
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by law, each person who is or shall have been a member of the Committee or the
Board shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgment in any such action, suit, or proceeding against him or her, provided
that the person shall give the Company an opportunity, at its own expense, to
handle and defend the same before the person undertakes to handle and defend it
on his or her own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the Company's Articles of Incorporation or Bylaws, by contract
or under a policy of insurance, as a matter of law, or otherwise, or any power
that the Company may have to indemnify them or hold them harmless.
ARTICLE 6
STOCK OPTIONS
6.1 General Method of Grant. Each Option granted under the Plan
to Employees shall be authorized by the Committee and each Option granted under
the Plan to Non-Employee Directors shall be authorized by the Board (other than
automatic grants to Non-Employee Directors which are considered to have been
authorized by the adoption of the Plan). Each Option shall be evidenced by a
written agreement or option certificate in such form as the Committee or the
Board, as the case may be, from time to time shall approve or authorize (the
"Stock Option Agreement"), which shall be executed by the Company and by the
Participant, and shall be subject to the terms and conditions of this Article
6.
6.2 Automatic Grants - Non-Employee Directors.
(a) Each Non-Employee Director shall be granted
automatically (and following the adoption of the Plan by the Board of
Directors, without the need for any further action on the part of the Board of
Directors) an NSO for 10,000 shares of Common Stock upon his or her initial
appointment to the Board and the grant date of such Option shall be the date of
such initial appointment.
(b) In addition, each year, as of the date of the Annual
Meeting of Stockholders of the Company, each Non-Employee Director who
immediately prior to the Annual Meeting is then serving as a member of the
Board and who is either reelected or continues as a member of the Board after
the adjournment of the Annual Meeting shall be granted automatically (and
following the adoption of the Plan by the Board of Directors, without the need
for any further action on the part of the Board of Directors) an NSO for 10,000
shares of Common Stock and the grant date of such Option shall be the date of
such Annual Meeting.
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(c) The number of shares of Common Stock which are to be
initially reflected in each automatic grant under this Section 6.2 shall remain
at 10,000 shares and shall not be adjusted as a result of the types of events
covered by Section 8.1. For example, if the Company were to effectuate a
two-for-one stock split, the then outstanding NSO's previously granted to
Non-Employee Directors under this Section 6.2 would be proportionately and
appropriately adjusted as provided for in Section 8.1. However, any
Non-Employee Director newly-elected after such stock split would receive an NSO
for 10,000 shares upon his or her initial appointment and at the next following
Annual Meeting, each of the Non-Employee Directors entitled to receive
automatic grants under Section 6.2(b) would receive an NSO for 10,000 shares of
Common Stock.
6.3 Number of Shares.
(a) The number of shares of Common Stock covered by an
Option granted to an Employee shall be established in each case by the
Committee on the date of grant.
(b) Except as otherwise provided with respect to
automatic grants provided for in Section 6.2, the number of shares of Common
Stock covered by an Option granted to a Non-Employee Director shall be
established in each case by the Board on or as of the date of grant.
6.4 Option Price.
(a) The price at which shares of Common Stock covered by
each Option granted to an Employee may be purchased pursuant thereto shall be
established or determined by a method established in each case by the Committee
on or as of the date of grant and such price or method shall be stated in the
Stock Option Agreement; provided, however, that the purchase price shall be an
amount not less than the Fair Market Value of the shares of Common Stock at the
time the Option is granted.
(b) The price at which shares of Common Stock covered by
each Option automatically granted to a Non-Employee Director pursuant to
Section 6.2 shall be the Fair Market Value of a share of Common Stock on the
date of grant.
(c) With respect to Options granted to a Non-Employee
Director other than automatic grants pursuant to Section 6.2, the price at
which shares of Common Stock covered by each such Option may be purchased
pursuant thereto shall be established or determined by a method established in
each case by the Board on or as of the date of grant and such price or method
shall be stated in the Stock Option Agreement; provided, however, that the
price at which shares of Common Stock may be purchased shall not be less than
the Fair Market Value of a share of Common Stock on the date of grant.
6.5 Date of Grant. Except as otherwise provided in Section 6.2
with respect to automatic grants of Options to Non-Employee Directors, the date
on which or as of which the Committee or the
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Board, as the case may be, approves the grant of an Option shall be considered
to be the respective "date of grant" for all purposes under the Plan.
6.6 Method of Payment. The purchase price of the shares of Common
Stock which may be purchased pursuant to each Option shall be subject to the
following:
(a) Subject to the other provisions of this Section 6.6,
the full option price for shares of Common Stock purchased upon exercise of any
Option shall be paid at the time of exercise (except that, in the case of an
exercise arrangement approved by the Committee or the Board, as the case may
be, and described in Section 6.6(c), payment may be made as soon as practicable
after the exercise).
(b) The option price shall be payable (A) in United
States dollars in cash or by check, bank draft or money order payable to the
order of the Company, (B) by the delivery of shares of Common Stock already
owned by the Participant, in a manner acceptable to the Committee or the Board,
as the case may be; (C) by any other legally permissible means acceptable to
the Committee or the Board, as the case may be, specified in the Stock Option
Agreement; or (D) at the discretion of the Committee or the Board, as the case
may be, through a combination of some or all of the preceding payment methods
provided such combination is specified in the Stock Option Agreement. Shares of
Common Stock delivered as payment will be valued at their Fair Market Value on
the day of delivery for the purpose of determining the extent to which the
option purchase price has been paid thereby, or as otherwise determined by the
Committee or the Board, as the case may be, in its respective discretion
pursuant to any reasonable method contemplated by Section 422 of the Code.
(c) To the extent permitted by applicable law and
regulations, the Committee or the Board, as the case may be, may permit a
Participant to elect to pay the option purchase price upon the exercise of an
Option by irrevocably authorizing a third party to sell shares of Common Stock
(or a sufficient portion of the shares) acquired upon exercise of the Option
and remit to the Company a sufficient portion of the sale proceeds to pay the
entire option purchase price and any tax withholding resulting from such
exercise and sale.
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6.7 Option Exercise Period.
(a) Each Stock Option Agreement with respect to each
Option automatically granted to a Non-Employee Director pursuant to Section 6.2
shall provide that the Option may be exercised by the Participant in such
portions and at such times as may be specified in such Stock Option Agreement,
within a period ending ten (10) years after the date of grant (the "Option
Period"). Subject to the Option Period specified in this Section 6.7(a) and the
vesting and exercise provisions of Section 6.9, if a Participant ceases to be a
director of the Company for any reason before the date of expiration of the
Option Period of any Option automatically granted to a Non-Employee Director
pursuant to Section 6.2, all rights to exercise such Option and purchase Common
Stock thereunder shall terminate on the earlier of (i) the date of expiration
of the applicable Option Term or (ii) five (5) years following the date on
which such person ceases to be a director of the Company.
(b) Each Stock Option Agreement with respect to any
Option other than an Option automatically granted to a Non-Employee Director
pursuant to Section 6.2 shall provide that the Option may be exercised by the
Participant in such portions and at such times as may be specified in such
Stock Option Agreement, subject to an Option Period ending not later than ten
(10) years after the date of grant; provided, however, that the Option Period
shall end on the date specified in such Stock Option Agreement or, with respect
to any Option granted to an Employee, if earlier, the ending date of the period
specified in the next sentence. An Option granted to an Employee may be
exercised only during the Option Period and only:
(1) during the continuance of the Participant's
employment with the Company or a
Subsidiary;
(2) if the Participant terminates employment
with the Company or a Subsidiary other than
by reason of death, during the period
ending ninety (90) days after the date of
termination of employment, but only to the
extent that the right to exercise such
Options had vested on or before the date of
termination and had not previously been
exercised; provided, that if the
Participant's' employment is terminated by
reason of disability (within the meaning of
Section 22(e)(3) of the Code), or if the
Participant dies during the ninety (90) day
period, the ninety (90) day exercise period
shall be extended to one (1) year; or
(3) if the Participant dies while employed by
the Company or a Subsidiary, during the
period ending on the first anniversary of
the Participant's death, but only to the
extent that the right to exercise such
Options had vested on or before the date of
death and had not previously been
exercised.
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6.8 Certain Interpretations.
(a) Whether an authorized leave of absence or absence
for military or governmental service shall constitute termination of employment
for purposes of the Plan shall be determined by the Committee, whose
determination shall be final, conclusive and binding on all persons. Transfers
of employment between the Company and any of its Subsidiaries shall not be
considered to be a termination of employment for the purposes of the Plan.
(b) In the event of the death of a Participant, Options
held by the Participant may be exercised, to the extent permitted in the Stock
Option Agreement and in Section 6.7, by the person or persons entitled to do so
under the Participant's will, or, if the Participant fails to make testamentary
disposition of said Options or dies intestate, by the Participant's legal
representative or representatives.
6.9 Exercise and Vesting of Options.
(a) One hundred percent (100%) of the total number of
shares of Common Stock covered by each Option automatically granted to a
Non-Employee Director pursuant to Section 6.2 shall become exercisable on the
last to occur of (i) the date which is six (6) months after the date of the
grant of the Option or (ii) the completion of the Non-Employee Director's first
one term-year as a member of the Board (as used herein, the term "term-year"
means that period from one Annual Meeting to the subsequent Annual Meeting).
(b) Unless otherwise specified by the Committee or the
Board, as the case may be, and reflected in the Stock Option Agreement, the
right to exercise each Option other than an Option automatically granted to a
Non-Employee Director pursuant to Section 6.2 shall accrue in accordance with
the following vesting schedule:
TIME AFTER SHARES VESTED
DATE OF GRANT AND EXERCISABLE
------------- ---------------
Less than 1 year 0%
1 year but less than 2 years 33 1/3%
2 years but less than 3 years 66 2/3%
3 years or more 100%
(c) Notwithstanding the foregoing, a Participant shall
be 100% vested in the number of shares of Common Stock originally covered by an
Option in the event Participant dies or becomes totally and permanently
disabled (as determined in the sole discretion of the Committee) while still
employed by
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the Company or upon a Change in Control while the Participant is still so
employed. When it deems other special circumstances to exist, the Committee or
the Board, as the case may be, in its discretion may accelerate the time at
which an Option may be exercised or may modify the terms of the Option to
provide for other special circumstances under which the right to exercise the
Option would be accelerated if, under previously established exercise terms,
such Option was not immediately exercisable in full, even if the acceleration
would permit the Option to be exercised more rapidly than the vesting set forth
above in the vesting schedule set forth above or in the Stock Option Agreement,
or as otherwise specified by the Committee or the Board, would permit.
6.10 Multiple Grants in Single Agreement. In the discretion of the
Committee, a single Stock Option Agreement may include both Incentive Stock
Options and Non-Qualified Stock Options, or separate Stock Option Agreements
may be set forth for Incentive Stock Options and Non-Qualified Stock Options.
6.11 Minimum Exercise. Notwithstanding anything contained herein
to the contrary, if an Option covers 100 or more shares of Common Stock, then
the Participant may exercise such Option only with respect to at least 100
shares at any one time, and if any Option covers fewer than 100 shares, then
the Participant must exercise such Option for all shares covered by the Option
at one time.
6.12 Other Provisions. The Stock Option Agreements under the Plan
may contain such other terms, provisions and conditions not inconsistent with
the Plan as shall be determined by the Committee or the Board, as the case may
be, in its discretion, including, without limitation, provisions: (i) relating
to the vesting and termination of Options; (ii) relating to exercisability of
Options, including without limitation immediate exercisability and separate
vesting of the rights to shares of Common Stock acquired upon exercise; (iii)
restricting the transferability of such shares during a specified period; and
(iv) requiring the resale of such shares to the Company, at a price as specified
in the Stock Option Agreement, if the Participant's employment by the Company
terminates prior to a time specified in the Stock Option Agreement.
6.13 Special Provisions for Incentive Stock Options. Each Option
that is intended to qualify as an Incentive Stock Option pursuant to Section
422 of the Code, and each Option that is intended to qualify as another type of
incentive stock option that may subsequently be authorized by law, shall comply
with the applicable provisions of the Code pertaining to such options.
Accordingly, the provisions of the Plan with respect to Incentive Stock Options
shall be construed in a manner consistent with such requirements, and no person
shall be eligible to receive any Incentive Stock Options under the Plan if such
person would not be able qualify for the benefits of incentive stock options
under Section 422 of the Code. Without limitation on the foregoing, and
notwithstanding the foregoing provisions of this Section 6.13, if any Incentive
Stock Option is granted to any person at a time when such person owns, within
the meaning of Section 424(d) of the Code, more than ten percent (10%) of the
total combined voting power of all classes of stock of the employer corporation
(or a parent or subsidiary of such corporation within the meaning of Section
424 of the Code), the price at which each share of Common Stock covered by such
Option may be purchased pursuant to such Option shall not be less than one
hundred ten percent (110%) of the Fair
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Market Value of the shares of Common Stock at the time the Option is granted,
and such Option must be exercised no event later than the fifth anniversary of
the date on which the Option was granted. Moreover, as long as and to the
extent required by the Code, the aggregate Fair Market Value (determined as of
the time an Incentive Stock Option is granted) of the shares of Common Stock
with respect to which Incentive Stock Options are exercisable for the first
time by any Participant in any calendar year under the Plan and under all other
incentive stock option plans of the Company and any parent and subsidiary
corporations of the Company (as those terms are defined in Section 424 of the
Code) shall not exceed $100,000.
ARTICLE 7
RESTRICTED STOCK AND RESTRICTED STOCK UNITS.
7.1 Awards of Restricted Stock or Restricted Stock Units;
Restriction Period.
(a) At the time of an Award of Restricted Stock or
Restricted Stock Units, there shall be established for each Participant a
restriction period (the "Restriction Period"), which shall lapse (i) upon the
completion of a period of time ("Time Goal") as shall be determined by the
Committee or the Board, as the case may be, (ii) upon the achievement of stock
price goals within certain time periods ("Price/Time Goal") as shall be
determined by the Committee or the Board, as the case may be, or (iii) upon
achievement of performance or other objectives ("Performance Goal") as shall be
determined by the Committee or the Board, as the case may be.
(b) Notwithstanding the foregoing provisions of Section
7.1(a) and except a otherwise provided in Section 7.4, Section 7.5 or Section
8.3, with respect to any Award of Restricted Stock or Restricted Stock Units
which is to be subject to a Time Goal, such Time Goal established by the
Committee or the Board, as the case may be, at the time of grant shall not
provide for a lapse of the applicable restrictions more rapidly than would be
permitted by the following schedule:
TIME AFTER SHARES AS TO WHICH
DATE OF GRANT RESTRICTION LAPSES
------------- ------------------
Less than 1 year 0%
1 year but less than 2 years 33 1/3%
2 years but less than 3 years 66 2/3%
3 years or more 100%
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7.2 Restricted Stock. The Committee or the Board, as the case may
be, may award to any Participant shares of Common Stock, subject to this
Article 7 and such other terms and conditions as the Committee or the Board may
prescribe ("Restricted Stock"). Each certificate for Restricted Stock shall be
registered in the name of the Participant and deposited by the Participant,
together with a stock power endorsed in blank, with the Plan Administrator.
Restricted Stock awarded under the Plan shall be evidenced by a signed written
agreement containing such terms and conditions as the Committee or the Board,
as the case may be, may from time to time determine in its discretion (the
"Restriction Agreement"). Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as hereinafter provided,
during the Restriction Period. Except for such restrictions on transfer, the
Participant as owner of such Restricted Stock shall have all the rights of a
holder of such Common Stock. If provided in the Restriction Agreement approved
by the Committee at the time of grant, a Participant may transfer Restricted
Stock to a trust, provided that the Committee or the Board, as the case may be,
may require that the Participant submit an opinion of his or her legal counsel,
satisfactory to the Committee or the Board, as the case may be, that such
holding has no adverse tax or securities law consequences for the Company. With
respect to Restricted Stock that is issued subject to a Time Goal, a Price/Time
Goal or a Performance Goal, the Plan Administrator shall redeliver to the
Participant (or the Participant's legal representative or designated
beneficiary) the certificates deposited pursuant to this subsection (b) at the
expiration of the Restriction Period. Notwithstanding the foregoing, if
Restricted Stock is issued subject to a Time Goal, a Price/Time Goal or
Performance Goal and the Committee or the Board, as the case may be, determines
that a Participant has not achieved the Time Goal, the Price/Time Goal or the
Performance Goal before the end of the Restriction Period, the Participant
shall have no further rights with respect to the Restricted Stock, all such
shares shall be forfeited and the Committee shall have the right to complete a
blank stock power in order to return such shares to the Company.
7.3 Restricted Stock Units. The Committee or the Board, as the
case may be, may award to a Participant a right to receive Common Stock or the
cash equivalent of the Fair Market Value of the Common Stock, in the
Committee's or the Board's discretion, at the end of the Restriction Period
("Restricted Stock Units") subject to achievement of a Time Goal, a Price/Time
Goal or a Performance Goal established by the Committee or the Board, as the
case may be. Restricted Stock Units awarded under the Plan shall be evidenced
by a signed written agreement containing such terms and conditions as the
Committee or the Board, as the case may be, may from time to time determine in
its discretion (the "Restriction Agreement"). With respect to Restricted Stock
Units that are subject to a Time Goal, a Price/Time Goal or a Performance Goal,
the Plan Administrator shall deliver notice to the Participant (or the
Participant's legal representative or designated beneficiary) at the end of the
Restriction Period as to whether the Participant has achieved the Time Goal,
the Price/Time Goal or the Performance Goal, as the case may be. If the
Committee or the Board, as the case may be, determines that a Participant has
not achieved the Time Goal, the Price/Time Goal or the Performance Goal, as the
case may be, before the end of the Restriction Period, the Participant shall
have no further rights with respect to the Restricted Stock Units.
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7.4 Lapse of Restrictions; Awards Subject to Time Goal. In the
event a Participant ceases employment or service with the Company with the
consent of the Committee or the Board, as the case may be, or upon the
Participant's death or permanent disability (as determined in the sole
discretion of the Committee) before the end of the Restriction Period and the
Participant has received an Award subject to a Time Goal, the restrictions
imposed under this Article 7 shall lapse with respect to the number of those
shares or units subject to a Time Goal as shall be determined by the Committee
or the Board, as the case may be. In no event, however, shall the number of
shares or units be less than a number equal to the product of (i) a fraction,
the numerator of which is the number of completed months elapsed after the date
of the Award subject to a Time Goal to the date of termination and the
denominator of which is the number of months in the Restriction Agreement,
multiplied by (ii) the number of shares of Restricted Stock or Restricted Stock
Units awarded to the Participant subject to the Time Goal.
7.5 Lapse of Restrictions; Awards Subject to Price/Time Goal or
Performance Goal. In the event a Participant ceases employment or service with
the Company with the consent of the Committee or the Board, as the case may be,
or upon the Participant's death or permanent disability (as determined in the
sole discretion of the Committee) before the end of the Restriction Period and
the Participant has received an Award subject to a Price/Time Goal or a
Performance Goal, the restrictions imposed under this Article 7 shall lapse
upon the achievement of the Price/Time Goal or the Performance Goal within two
(2) years of the Participant's termination of employment or service with
respect to such number of shares or units subject to a Price/Time Goal or the
Performance Goal, as the case may be, as shall be determined by the Committee
or the Board, as the case may be. In no event, however, shall the number of
shares or units be less than a number equal to the product of (i) a fraction,
the numerator of which is the number of completed months elapsed after the date
of the Award subject to a Price/Time Goal or the Performance Goal, as the case
may be, to the date of termination and the denominator of which is the number
of months elapsed after the date of the Award subject to a Price/Time Goal or
the Performance Goal to the date of achievement of the Price/Time Goal or the
Performance Goal, as the case may be, multiplied by (ii) the number of shares
of Restricted Stock or Restricted Stock Units awarded to the Participant
subject to the Price/Time Goal or the Performance Goal, as the case may be.
7.6 Forfeitures. In the event a Participant ceases employment or
service with the Company for any other reason, all Restricted Stock or
Restricted Stock Units theretofore awarded to that Participant that are still
subject to restrictions shall be forfeited and the Committee shall have the
right to complete the blank stock power with respect to any such Restricted
Stock.
ARTICLE 8
MISCELLANEOUS
8.1 Adjustment of Number of Shares, Etc.
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(a) Division/Combination of Shares. In the event of any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split or other division or consolidation of shares or the payment
of a stock dividend (but only on Common Stock) or any other increase or
decrease in the number of shares of Common Stock effected without any receipt
of consideration by the Company, then, in any such event, the number of shares
of Common Stock that remain available under the Plan, the number of shares
covered by each outstanding Option, the exercise price per share covered by
each outstanding Option, the purchase price per share and the number and any
purchase price for any other Awards involving Common Stock (or equivalents)
granted but not yet issued, in each case, shall be proportionately and
appropriately adjusted for any such increase or decrease.
(b) Change Affecting Shares of Common Stock. Subject to
any required action by the stockholders, if any change occurs in the Common
Stock by reason of any recapitalization, reorganization, merger, consolidation,
split-up, combination or exchange of shares, or of any similar change affecting
Common Stock, then, in any such event, the number and type of shares of Common
Stock then covered by each outstanding Option, the purchase price per share
covered by each outstanding Option and the purchase price per share and the
number and any purchase price for any other Awards involving Common Stock (or
equivalents) granted but not yet issued, in each case, shall be proportionately
and appropriately adjusted for any such change.
(c) Change in Par Value. In the event of a change in the
Common Stock as presently constituted that is limited to a change of all of its
authorized shares with par value into the same number of shares with a
different par value or without par value, the shares resulting from any change
shall be deemed to be Common Stock within the meaning of the Plan.
(d) Discretion Concerning Adjustments. To the extent
that the foregoing adjustments relate to stock or securities of the Company,
such adjustments shall be made by, and in the discretion of, the Board of
Directors, whose determination in that respect shall be final, binding and
conclusive; provided, however, that any Incentive Stock Option granted pursuant
to Article 6 shall not be adjusted in a manner that causes such Option to fail
to continue to qualify as an incentive stock option within the meaning of
Section 422 of the Code.
(e) No Additional Rights Upon Stock Adjustments. Except
as hereinabove expressly provided in this Section 8.1, a Participant shall have
no rights by reason of any division or consolidation of shares of stock of any
class or the payment of any stock dividend or any other increase or decrease
the number of shares of stock of any class or by reason of any dissolution,
liquidation, merger or consolidation, or spin-off of assets or stock of another
corporation; and any issuance by the Company of shares of stock of any class,
securities convertible into shares of stock of any class, or warrants or
options for shares of stock of any class shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number or price of shares of
Common Stock, any Option, any other Award (or equivalents) granted but not yet
issued.
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(f) No Affect on Company's Right to Adjust. The
existence of the Plan, or the grant of an Option or other Award under the Plan,
shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge or to consolidate, or to dissolve, to liquidate,
to sell, or to transfer all or any part of its business or assets.
8.2 Transferability. Except as otherwise provided by the
Committee or the Board, as the case may be, Awards granted under the Plan shall
be non-transferable, and its terms shall state that it is non-transferable and
that, during the lifetime of the Participant, shall be exercisable only by the
Participant; notwithstanding the foregoing, Awards shall be transferable by
will or the laws of descent and distribution.
8.3 Change in Control. In the event of a Change in Control, any
Option, Restricted Stock or Restricted Stock Units subject to a Time Goal shall
immediately become fully vested without regard to any other terms of the Award.
8.4 Performance Based Compensation. The Committee may designate
whether any Restricted Stock and Restricted Stock Units being granted to any
Participant is intended to be "performance-based compensation" as that term is
used in section 162(m) of the Code. Any such Restricted Stock or Restricted
Stock Units designated as intended to be "performance-based compensation" shall
be conditioned on the achievement of one or more performance measures, to the
extent required by Section 162(m) of the Code. For Restricted Stock or
Restricted Stock Units intended to be "performance-based compensation," the
grant of the Restricted Stock or Restricted Stock Units and the establishment
of the performance measures shall be made during the period required under
Section 162(m) of the Code.
8.5 Beneficiary Designation. Each Participant under the Plan may
name, from time to time, any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit (other than an Option) under
the Plan is to be paid in case of his or her death before the Participant
receives any or all of such benefit. Each designation will be effective only
with the written consent of the Participant's spouse and will revoke all prior
designations by that Participant, shall be in the form prescribed by the Plan
Administrator, and will be effective only when filed by the Participant in
writing with the Plan Administrator during his or her lifetime. In the absence
of any such designation, benefits (other than those under Options) that are
vested and remain unpaid at the Participant's death shall be paid to his or her
estate.
8.6 Tax Withholding.
(a) Power to Withhold; Methods to Satisfy. The Company
shall have the power to withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy any federal, state or local
withholding or other tax due from the Company with respect to any amount
payable and/or shares issuable under the Plan, and the Company may defer such
payment or issuance unless indemnified to its satisfaction. Whenever under the
Plan payments are to be made in cash, such payments shall be made net
Chico's FAS, Inc. Page 20
Omnibus Stock and Incentive Plan
of an amount sufficient to satisfy any federal, state or local withholding tax
liability. The Committee or the Board, as the case may be, in its discretion,
and subject to such requirements as the Committee or the Board may impose prior
to the occurrence of such withholding, may permit such withholding obligations
to be satisfied through cash payment by the Participant, through the surrender
of shares of Common Stock which the Participant already owns, or through the
surrender of shares of Common Stock to which the Participant is otherwise then
entitled under the Plan.
(b) Irrevocable Elections by Participants. Subject to
the consent of the Committee or the Board, as the case may be, with respect to
(i) the exercise of a Non-Qualified Stock Option, (ii) the lapse of
restrictions on Restricted Stock, or (iii) the issuance of any other stock
Award under the Plan, a Participant may make an irrevocable election (an
"Election") to (A) have shares of Common Stock otherwise issuable under (i)
withheld, or (B) tender back to the Company shares of Common Stock received
pursuant to (i), (ii), or (iii), or (C) deliver back to the Company pursuant to
(i), (ii), or (iii) previously acquired shares of Common Stock having a Fair
Market Value sufficient to satisfy all or part of the Participant's estimated
tax obligations associated with the transaction. Such Election must be made by
a Participant prior to the date on which the relevant tax obligation arises.
The Committee or the Board, as the case may be, may disapprove of any Election,
may suspend or terminate the right to make Elections, or may provide with
respect to any Award under the Plan that the right to make Elections shall not
apply to such Awards.
8.7 Gender and Number. Except where otherwise indicated by the
context, words in the masculine gender when used in the Plan will include the
feminine gender, the singular shall include the plural, and the plural shall
include the singular.
8.8 Choice of Law. All questions concerning the construction,
validity and interpretation of the Plan and all Awards made under the Plan
shall be governed by the substantive laws of the State of Florida (but any
provision of Florida law shall not apply if the application of such provision
would result in the application of the law of a state or jurisdiction other
than Florida).
8.9 No Stockholder Rights. No Participant hereunder shall have
any rights of a stockholder of the Company by reason of being granted an Award
under the Plan until the date on which he or she becomes a record owner of
shares of Common Stock purchased upon the exercise of an Option or otherwise
received under the Plan (the "record ownership date"). No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
other property), distributions, or other rights for which the record date is
prior to the record ownership date.
8.10 Amendments; Exchanges, Termination or Suspension.
(a) Amendment. The Plan may be amended from time to time
by written resolution of the Board of Directors; provided, however, that no
Participant's existing rights are adversely affected thereby without the
consent of such person, and provided further that, without approval of the
stockholders
Chico's FAS, Inc. Page 21
Omnibus Stock and Incentive Plan
of the Company, no amendment shall (i) increase the total number of shares of
Common Stock that may be issued pursuant to Awards granted under the Plan, (ii)
change the designation of the class of employees eligible to receive Incentive
Stock Options or Non-Qualified Stock Options, (iii) decrease the minimum Option
price set forth in Section 6.4 of the Plan, (iv) extend the period during which
an Option may be granted or exercised beyond the maximum period specified in
the Plan, (v) otherwise materially modify the requirements as to eligibility
for participation in the Plan, (vi) otherwise materially increase the benefits
under the Plan, or (vii) withdraw the authority to administer the Plan as to
Awards made to Employees from the Committee. Notwithstanding the foregoing, the
Board may amend the Plan to incorporate or conform to requirements imposed by
and amendments made to the Code or regulations promulgated thereunder which the
Board deems to be necessary or desirable to preserve (A) incentive stock option
status for outstanding Incentive Stock Options and to preserve the ability to
issue Incentive Stock Options pursuant to the Plan, (B) the deductibility by
the Company of amounts taxed to Plan Participants as ordinary compensation
income, and (C) the status of any Award as exempt from registration
requirements under any securities law for which the Award was intended to be
exempt. The foregoing prohibitions in this Section 8.10 shall not be affected
by adjustments in shares and purchase price made in accordance with the
provisions of Section 8.1.
(b) Certain Exchanges, Etc. , Stockholder Approval
Required. Subject to the terms and conditions and within the limitations of the
Plan, the Committee may modify, extend or renew outstanding Awards or accept
the surrender by the affected Participants of outstanding Awards (to the extent
not previously exercised) and authorize the granting of a new Award in
substitution therefor; provided, however, any such modification or surrender
and substitution which reduces the exercise price of an outstanding Award or
cancels an outstanding Award and grants one or more replacement Awards with a
lower exercise price shall require the approval of the stockholders of the
Company. Notwithstanding the foregoing, no modification of an Award shall,
without the consent of the affected Participant, adversely affect or otherwise
impair any of the rights of the Participant or obligations of the Company under
any outstanding Award previously granted under the Plan.
(c) Termination; Suspension. The Board of Directors may
terminate the Plan or any portion thereof at any time by written resolution. No
suspension or termination shall impair the rights of Participants under
outstanding Awards without the consent of the Participants affected thereby.
8.11 Listing and Registration of Common Stock. Each Award shall be
subject to the requirement that if at any time the Board of Directors shall
determine, in its discretion, that the listing, registration or qualification of
the Common Stock that is the subject thereof or that is covered thereby upon any
securities exchange or under any state or federal laws, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such Award or the issuance
or purchase of Common Stock thereunder, such Award may not be exercised unless
and until such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Board of Directors. Notwithstanding anything in the Plan to the contrary, if the
provisions of this Section 8.11 become operative, and if, as a result thereof,
the exercise
Chico's FAS, Inc. Page 22
Omnibus Stock and Incentive Plan
of an Award is delayed, then and in that event, the term of the Award shall not
be affected. Notwithstanding the foregoing or any other provision in the Plan,
the Company shall have no obligation under the Plan to cause any shares of
Common Stock to be registered or qualified under any federal or state law or
listed on any stock exchange or admitted to any national marketing system.
8.12 Compliance with Applicable Laws. Notwithstanding any other
provision of the Plan, the Company shall have no liability to deliver any
shares of Common Stock under the Plan or make any other distribution of
benefits under the Plan unless such delivery or distribution would comply with
all applicable laws (including, without limitation, the requirements of the
Securities Act of 1933), and the applicable requirements of any securities
exchange or similar entity.
8.13 Stock Certificates; Book Entry. To the extent that the Plan
provides for issuance of stock certificates to reflect the issuance of shares
of Common Stock, the issuance may be effected on a non-certificated basis, to
the extent not prohibited by applicable law or the applicable rules of any
stock exchange.
8.14 No Implied Rights to Employees.
(a) Existence of Plan. The existence of the Plan shall
in no way give any employee the right to continued employment, give any
director the right to continued service on the Board, give any employee or
director the right to receive any Awards or any compensation under the Plan, or
otherwise provide any employee or director any rights not specifically set
forth in the Plan or in any Award Agreement.
(b) Granting of Awards. The granting of Awards under the
Plan shall in no way give any employee the right to continued employment, give
any director the right to continued service on the Board, give any employee or
director the right to receive any additional Awards or any additional
compensation under the Plan, or otherwise provide any employee or director any
rights not specifically set forth in the Plan or in any Award Agreement.
8.15 Necessity for Delay. If at any time the Committee or the
Board, as the case may be, shall determine, in its discretion, that the listing,
registration or qualification of the shares of Common Stock covered by the Plan
or any Award upon any securities exchange or under any state or federal law or
the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the Plan, the offer, issue
or purchase of shares of Common Stock thereunder, or the grant or exercise of
any Award, the Plan shall not be effective as to later offerings of shares of
Common Stock and grants of Awards to which such determination is applicable, and
each outstanding Award to which such determination is applicable, by its terms,
shall not be exercisable, unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee or the Board, as the case may be.
Notwithstanding the foregoing or any other provision in the Plan, the Company
shall have no obligation under the Plan to cause any shares of
Chico's FAS, Inc. Page 23
Omnibus Stock and Incentive Plan
Common Stock to be registered or qualified under any federal or state law or
listed on any stock exchange or admitted to any national marketing system.
8.16 Use of Proceeds. The proceeds received by the Company from
the sale of Common Stock pursuant to an Award will be used for general
corporate purposes.
8.17 No Obligation to Exercise. The granting of any Award under
the Plan shall impose no obligation upon any Participant to exercise such
Award.
8.18 Assignment by Company; Third Party Beneficiaries. The
Company's rights, benefits and remedies under the Plan and any Award Agreements
shall be enforceable by the Company's successors and assigns, whether by merger
or otherwise, including without limitation, the Company's rights to enforce and
obtain the benefit of any restrictive covenants arising under any
confidentiality, noncompetition, nonsolicitation, nonacceptance and/or
"lock-up" agreement to which a Participant is a party (including without
limitation, any agreement included as a part of the Award Agreement). It is the
specific intent of the Company that any successor or assignee of the Company be
a third-party beneficiary of any such agreement and that any restrictive
covenants and other provisions in any such agreements are intended to benefit
any such successors and assigns.
8.19 Effective Date. The Plan has been approved by the Board of
Directors and shall be effective upon the approval of the stockholders of the
Company at the Company's 2002 annual meeting (the "Effective Date").
8.20 Term of the Plan. The Plan shall be unlimited in duration
and, in the event of complete Plan termination pursuant to Section 8.10 shall
remain in effect as long as any Awards under it are outstanding; provided,
however, that no Awards may be granted under the Plan after the earlier of (a)
the ten-year anniversary of the Effective Date (except for Awards granted
pursuant to commitments entered into prior to such ten-year anniversary) or (b)
the date of a complete Plan termination pursuant to Section 8.10; and, provided
further however that, upon any termination of only a portion of the Plan
pursuant to Section 8.10 occurring prior to the ten year anniversary of the
Effective Date, no Awards may be granted under the portion of the Plan so
terminated after the date of such partial termination pursuant to Section 8.10.
Chico's FAS, Inc. Page 24
Omnibus Stock and Incentive Plan
APPENDIX C
CHICO'S FAS, INC.
2002 EMPLOYEE STOCK PURCHASE PLAN
APPROVED FEBRUARY 8, 2002
CHICO'S FAS, INC.
2002 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE 1............................................................................................ 1
ESTABLISHMENT, PURPOSE AND SHARES COVERED................................................... 1
1.1 Plan Established........................................................... 1
1.2 Purpose.................................................................... 1
1.3 Shares Covered; Annual Adjustment.......................................... 1
1.4 Source of Shares........................................................... 1
1.5 Section 423 Plan........................................................... 1
ARTICLE 2............................................................................................ 1
DEFINITIONS................................................................................. 1
2.1 "Account".................................................................. 2
2.2 "Board" or "Board of Directors"............................................ 2
2.3 "Code"..................................................................... 2
2.4 "Committee"................................................................ 2
2.5 "Common Stock"............................................................. 2
2.6 "Company".................................................................. 2
2.7 "Compensation"............................................................. 2
2.8 "Eligible Employee"........................................................ 2
2.9 "Fair Market Value"........................................................ 2
2.10 "Offering Period".......................................................... 3
2.11 "Participant".............................................................. 3
2.12 "Plan"..................................................................... 3
2.13 "Plan Administrator"....................................................... 3
2.14 "Purchase Documents"....................................................... 3
2.15 "Section 423".............................................................. 3
2.16 "Securities Exchange Act of 1934" ......................................... 3
2.17 "Shares"................................................................... 3
2.18 "Subsidiary"............................................................... 3
ARTICLE 3............................................................................................ 3
ADMINISTRATION.............................................................................. 3
3.1 Committee.................................................................. 3
3.2 Organization............................................................... 4
3.3 Power and Authority........................................................ 4
3.4 No Liability; Indemnification.............................................. 4
ARTICLE 4............................................................................................ 5
EMPLOYEES ELIGIBLE TO PARTICIPATE........................................................... 5
4.1 General Eligibility Standards.............................................. 5
4.2 Certain Exclusions......................................................... 5
ARTICLE 5........................................................................................... 6
OFFERING PERIODS; PURCHASE PRICE; NUMBER OF SHARES OFFERED................................. 6
5.1 Offering Periods.......................................................... 6
5.2 Number of Shares Available for Purchase................................... 6
5.3 Purchase Price Generally.................................................. 6
5.4 Alternative Purchase Price................................................ 6
5.5 Number of Shares Offered to Eligible Employees............................ 6
ARTICLE 6........................................................................................... 7
PARTICIPATION AND PAYMENT.................................................................. 7
6.1 Election To Participate................................................... 7
6.2 No Revocation of Election................................................. 8
6.3 No Interest............................................................... 8
6.4 Custodial Safekeeping Arrangement......................................... 8
6.5 Delivery of Certificates Representing Shares.............................. 9
6.6 Rights as Stockholder..................................................... 9
6.7 Termination of Employment................................................. 9
6.8 Rights Not Transferable................................................... 9
ARTICLE 7........................................................................................... 10
PAYROLL DEDUCTIONS......................................................................... 10
7.1 Election of Payroll Deduction............................................ 10
7.2 Maintenance of Accounts.................................................. 10
7.3 Use of Accounts To Purchase Common Stock................................. 10
7.4 Withdrawals.............................................................. 10
ARTICLE 8.......................................................................................... 11
MISCELLANEOUS............................................................................. 11
8.1 Stock Adjustments........................................................ 11
8.2 Necessity for Delay...................................................... 12
8.3 Term of Plan............................................................. 12
8.4 Amendment of the Plan; Termination....................................... 12
8.5 Application of Funds..................................................... 12
8.6 No Obligation to Participate............................................. 12
8.7 No Implied Rights to Employees........................................... 12
8.8 Withholding.............................................................. 13
8.9 Participants' Personal Tax Responsibilities.............................. 13
8.10 Designation of Beneficiary............................................... 13
8.11 Choice of Law............................................................ 13
8.12 Effective Date of Plan; Stockholder Approval............................. 13
CHICO'S FAS, INC.
2002 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE 1
ESTABLISHMENT, PURPOSE AND SHARES COVERED
1.1 Plan Established. Chico's FAS, Inc. (the "Company") hereby
establishes an employee stock purchase plan, subject to the terms and
conditions set forth herein, to be known as the Chico's FAS, Inc. 2002 Employee
Stock Purchase Plan (the "Plan").
1.2 Purpose. The purpose of the Plan is to provide eligible
employees of the Company and its subsidiaries with a convenient way to purchase
of the Company's stock, in order to provide an incentive for their continued
employment and to enhance such employees' sense of participation in the affairs
of the Company and interest in assuring the continued success of the Company.
1.3 Shares Covered; Annual Adjustment. Subject to adjustment as
provided in this Section 1.3 and elsewhere in the Plan, the maximum number of
shares of Common Stock that may be offered under the Plan is 400,000. On the
first day of each new fiscal year, the aggregate number of shares that may be
offered under the Plan shall be increased automatically by a number of shares
equal to (1) one-half of one percent (1/2%) of the Company's total outstanding
shares as of the last day of the immediately preceding fiscal year or (2) such
lesser number of shares (which may be zero) as may be specified by the Board of
Directors prior to the last day of such preceding fiscal year.
1.4 Source of Shares. The shares subject to the Plan and issued
under the Plan may be authorized and previously unissued shares or may be
previously issued shares acquired in the open market or from other sources.
1.5 Section 423 Plan. It is the intention of the Company to have
the Plan qualify as an "employee stock purchase plan" under Section 423 of the
Internal Revenue Code of 1986, as amended. The provisions of the Plan,
accordingly, shall be construed so as to extend and limit participation in a
manner consistent with the requirements of such Section 423. Any term not
expressly defined in the Plan but defined for purposes of such Section 423
shall have the same definition in the Plan, unless a different meaning is
clearly required by the context.
ARTICLE 2
February 8, 2002 Chico's FAS, Inc. 2002 ESPP Page 1
DEFINITIONS
The following words and terms as used in the Plan shall have that
meanings set forth therefor in this Article 2 unless a different meaning is
clearly required by the context. Whenever appropriate, words used in the
singular shall be deemed to include the plural and vice versa, and the
masculine gender shall be deemed to include the feminine gender.
2.1 "Account" shall mean the payroll deduction account maintained
for an electing Eligible Employee as provided in Article 7.
2.2 "Board" or "Board of Directors" shall mean the Board of
Directors of the Company.
2.3 "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated thereunder.
Reference to a specific section of the Code shall include a reference to any
successor or replacement provision.
2.4 "Committee" shall mean the Compensation and Benefits
Committee of the Board.
2.5 "Common Stock" shall mean the common stock, par value $.01
per share, of the Company.
2.6 "Company" shall mean Chico's FAS, Inc., a Florida
corporation, and any successor.
2.7 "Compensation" shall mean an Eligible Employee's regular
salary and wages, overtime pay, bonuses and commissions (in all cases, before
any reduction for elective contributions to any Code Section 401(k) or Code
Section 125 Plan), but shall not include credits or benefits under the Plan, or
any amount contributed by the Company to any pension, profit sharing or
employee stock ownership plan, or any employee welfare, life insurance or
health insurance plan or arrangement, or any deferred compensation plan or
arrangement.
2.8 "Eligible Employee" shall mean any individual employed by the
Company or any Subsidiary who meets the eligibility requirements and is not
excluded under the limitations set forth in Article 4. The Committee shall have
the sole power to determine who is and who is not an Eligible Employee.
2.9 "Fair Market Value" of a share of Common Stock means, as of
any date, the value of a share of the Common Stock determined as follows:
(a) if the Common Stock is publicly traded and is then
listed on a national securities exchange, its
closing price on the date of determination on the
principal national securities exchange on which the
Common Stock is listed or admitted to trading
February 8, 2002 Chico's FAS, Inc. 2002 ESPP Page 2
as reported in The Wall Street Journal or such other
source as the Committee deems reliable;
(b) if the Common Stock is then quoted on the Nasdaq
National Market or Nasdaq SmallCap Market, its
closing price on such market on the date of
determination as reported in The Wall Street Journal
or such other source as the Committee deems
reliable;
(c) if the Common Stock is publicly traded but is not
quoted on the Nasdaq National Market or the Nasdaq
SmallCap Market and is not listed or admitted to
trading on a national securities exchange, the
average of the closing bid and asked prices on the
date of determination as reported in The Wall Street
Journal or such other source as the Committee deems
reliable; or
(d) if none of the foregoing is applicable, by the
Committee in good faith.
2.10 "Offering Period" shall mean any of the periods during which
subscriptions for Shares may be tendered, as more particularly described in
Section 5.1.
2.11 "Participant" shall mean an Eligible Employee who has become
a participant in the Plan through the purchase of Shares in accordance with the
provisions of the Plan.
2.12 "Plan" shall mean this Chico's FAS, Inc. 2002 Employee Stock
Purchase Plan, as set forth herein and as amended from time to time.
2.13 "Plan Administrator" shall mean the Company's Vice President
- - Human Resources, or such other person designated by the Committee to act as
Plan Administrator.
2.14 "Purchase Documents" shall mean the documents as defined in
Section 6.1.
2.15 "Section 423" shall mean Section 423 of the Code, or any
amendment thereto, or any replacement or successor statute of similar import.
2.16 "Securities Exchange Act of 1934" shall mean the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder, or any successor or replacement statute or regulation of similar
import.
2.17 "Shares" shall mean shares of the Common Stock.
2.18 "Subsidiary" shall mean any corporation that at the time
qualifies as a subsidiary of the Company under the definition of "subsidiary
corporation" contained in Section 424(f) of the Code.
February 8, 2002 Chico's FAS, Inc. 2002 ESPP Page 3
ARTICLE 3
ADMINISTRATION
3.1 Committee. The Plan shall be administered by the Committee,
or if no Committee is appointed and serving as provided herein, by the full
Board of Directors. The Committee shall consist of not less than two (2) nor
more than five (5) persons, each of whom shall be a member of the Board and a
"disinterested person" (as such term is defined in Rule 16b-3 under the
Securities Exchange Act of 1934), and none of whom shall be eligible to
participate under the Plan. The Board of Directors may from time to time remove
members from, or add members to, the Committee. Vacancies on the Committee,
howsoever caused, shall be filled by the Board of Directors.
3.2 Organization. The Committee shall select one of its members
as chairman, and shall hold meetings at such times and places as it may
determine. The acts of a majority of the Committee in meetings at which a
quorum is present, or acts reduced to or approved in writing by a majority of
the members of the Committee, shall be valid acts of the Committee.
3.3 Power and Authority. Subject to the provisions of the Plan,
the Committee shall have full authority, in its discretion: (a) to determine
the employees of the Company and its Subsidiaries who are eligible to
participate in the Plan; (b) to determine the purchase price of the Common
Stock being offered; and (c) to interpret the Plan, and to prescribe, amend and
rescind rules and regulations with respect thereto. The interpretation and
construction by the Committee of any provision of the Plan over which it has
discretionary authority shall be final and conclusive. All actions and policies
of the Committee shall be consistent with the qualification of the Plan at all
times as an employee stock purchase plan under Section 423 of the Code.
3.4 No Liability; Indemnification. No member of the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan. To the fullest extent permitted by law, each person who is or
shall have been a member of the Committee shall be indemnified and held
harmless by the Company against and from any loss, cost, liability, or expense
that may be imposed upon or reasonably incurred by him or her in connection
with or resulting from any claim, action, suit, or proceeding to which he or
she may be a party or in which he or she may be involved by reason of any
action taken or failure to act under the Plan and against and from any and all
amounts paid by him or her in settlement thereof, with the Company's approval,
or paid by him or her in satisfaction of any judgment in any such action, suit,
or proceeding against him or her, provided that the person shall give the
Company an opportunity, at its own expense, to handle and defend the same
before the person undertakes to handle and defend it on his or her own behalf.
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under the
Company's Certificate of Incorporation or Bylaws, by contract or under a policy
of insurance, as a matter of law, or otherwise, or any power that the Company
may have to indemnify them or hold them harmless.
February 8, 2002 Chico's FAS, Inc. 2002 ESPP Page 4
ARTICLE 4
EMPLOYEES ELIGIBLE TO PARTICIPATE
4.1 General Eligibility Standards. Any person, including any
officer but not a person who is solely a director, who is employed by the
Company or any Subsidiary on the first day of an Offering Period is eligible to
participate in the Plan with respect to that offering, except (a) a person who
has been employed less than one year; (b) a person whose customary employment
is 20 hours or fewer per week; and (c) a person whose customary employment is
for not more than five months in any calendar year.
4.2 Certain Exclusions. Notwithstanding any provision of the Plan
to the contrary, no person shall be eligible to participate in the Plan, to
subscribe for or purchase any Common Stock under the Plan if:
(a) immediately after the subscription, the person,
together with any other person whose stock would be attributed to such employee
pursuant to Section 424(d) of the Code, would own stock and/or hold outstanding
options to purchase stock, possessing 5% or more of the total combined voting
power or value of all classes of stock of the Company or of any Subsidiary (as
determined in accordance with the provisions of Section 423(b)(3) of the Code);
(b) the subscription would provide the person rights to
purchase shares under all employee stock purchase plans of the Company and any
parent and subsidiary corporations to accrue at a rate that exceeds $25,000 of
Fair Market Value of such shares (or such other limit as may be imposed by the
Code), determined at the time such right to subscribe accrues, in respect of
any calendar year in which such right to subscribe is outstanding at any time;
(c) the person provides services to the Company or any
of its Subsidiaries as an independent contractor who is reclassified as a
common law employee for any reason except for federal income and employment tax
purposes;
(d) the subscription is otherwise prohibited by law; or
(e) the person's employment is terminated for any reason
prior to the time revocation or cancellation of participation in an Offering is
prohibited under Section 6.2 (in which event such person no longer shall be an
Eligible Employee and any previous subscription for Shares in such Offering
Period shall be null and void).
February 8, 2002 Chico's FAS, Inc. 2002 ESPP Page 5
ARTICLE 5
OFFERING PERIODS; PURCHASE PRICE; NUMBER OF SHARES OFFERED
5.1 Offering Periods. There shall be 20 Offering Periods under
the Plan. The first Offering Period shall commence on July 1, 2002 and shall
conclude on July 31, 2002. The second Offering Period shall commence on
September 1, 2002 and shall conclude on September 30, 2002. Thereafter, a
separate Offering Period shall commence on the first day and conclude on the
last day of the months of March and September in each of the years 2003 through
2011, inclusive.
5.2 Number of Shares Available for Purchase. Subject to the other
terms and conditions of the Plan limiting the number of Shares which may be
purchased hereunder, there shall be no limit on the aggregate number of Shares
for which subscriptions may be made with respect to any particular Offering
Period. The right of an Eligible Employee to subscribe for Shares in an
Offering Period shall not accrue until the first day of that Offering Period.
5.3 Purchase Price Generally. Unless the Committee acts to set
the purchase price as provided in Section 5.4, the per Share purchase price
applicable to an Offering Period shall be 85% of the Fair Market Value of the
Common Stock on the last trading day immediately preceding the first day of the
Offering Period.
5.4 Alternative Purchase Price. The Committee, in its discretion,
may decide not to set the per Share purchase price under Section 5.3 but
instead to set the per Share purchase price for an Offering Period on an
alternative basis, such per Share purchase price being equal to 85% of the
lesser of:
(a) the Fair Market Value of the Common Stock on the
last trading day immediately preceding the first day of the Offering Period, or
(b) the Fair Market Value of the Common Stock on the
last trading day immediately preceding the last day of the Offering Period.
Any decision to employ the alternative per Share purchase price determination
under this Section 5.4 shall be made by the Committee not less than one month
prior to the commencement of the Offering Period(s) to which the alternative
purchase price procedure is to apply. The Committee shall notify Eligible
Employees promptly of any decision to set the per Share purchase price pursuant
to this Section 5.4.
5.5 Number of Shares Offered to Eligible Employees.
(a) Subject to the limitations set forth in this
Section 5.5 and any adjustments required by other provisions of the Plan, in
each Offering Period, an Eligible Employee shall be entitled to subscribe for
one share of Common Stock for each Two Hundred Fifty ($250.00) of Compensation
paid to
February 8, 2002 Chico's FAS, Inc. 2002 ESPP Page 6
him for the calendar year immediately preceding the year in which the Offering
Period occurs. Subscriptions shall be allowed for full Shares only. Any rights
to subscribe for fractional shares of Common Stock shall be void and
disregarded; and, any computation resulting in fractional shares shall be
rounded down to the next lowest whole number of Shares.
(b) Notwithstanding the provisions of Section 5.5(a), in
any Offering Period, no Eligible Employee shall be entitled to subscribe for
more than four hundred (400) Shares; no Eligible Employee who is entitled to
subscribe for ten (10) or more Shares shall be permitted to subscribe for fewer
than ten (10) Shares; and, no Eligible Employee who is entitled to subscribe
for fewer than ten (10) Shares shall be entitled to subscribe for fewer than
the maximum number of Shares he or she is entitled to purchase.
(c) Notwithstanding the provisions of Section 8.1, no
stock adjustment referred to therein shall operate to change (i) from ten (10)
the minimum number of Shares required to be subscribed for by an Eligible
Employee in any Offering Period, (ii) from four hundred (400) the maximum
number of Shares that may be subscribed for by an Eligible Employee in any
Offering Period, or (iii) from Two Hundred Fifty ($250.00) the dollar amount
used in computing the number of Shares for which an Eligible Employee is
entitled to subscribe in any Offering Period.
(d) If, with respect to any Offering Period, the
aggregate Shares subscribed for by Eligible Employees computed in accordance
with other provisions of the Plan exceed the number of Shares available for
issuance under the Plan, the aggregate number of Shares covered by such
subscriptions shall be reduced to such lower number of Shares as may be
necessary to eliminate the over-subscription. Such reduction shall be effected
in respect of the subscriptions of Eligible Employees participating in such
Offering Period on a proportionate basis as equitably as possible; but, in no
event shall such reduction result in a subscription for fewer than the minimum
number of Shares or a subscription for fractional Shares. In the event of an
over-subscription and cutback as provided in this Section 5.5(d), the Company
shall refund any excess payments for subscribed Shares as soon as practicable
after closing of the Offering Period.
February 8, 2002 Chico's FAS, Inc. 2002 ESPP Page 7
ARTICLE 6
PARTICIPATION AND PAYMENT
6.1 Election To Participate.
(a) During any Offering Period, an Eligible Employee
desiring to become a Participant must (1) complete a subscription agreement,
indicating the number of shares of Common Stock to be purchased, and such other
documents as the Company may require (the "Purchase Documents") and (2) tender
to the Plan Administrator the Purchase Documents and cash or a check (payable
in U.S. funds) for the full purchase price for the Shares covered by the
Purchase Documents (less any amount to be withdrawn from such Eligible
Employee's Payroll Deduction Account pursuant to Section 7.3) at any time
before the conclusion of the Offering Period. Such Eligible Employee will
become a Participant upon acceptance by the Company of the Purchase Documents
and consideration for the Shares being purchased under the Plan immediately
after the close of the Offering Period.
(b) With respect to any Offering Period in which the
Committee has elected to employ the alternative per Share purchase price
determination pursuant to Section 5.4, the Eligible Employee shall tender an
amount equal to the purchase price based on the Fair Market Value of the Common
Stock on the last trading day before the commencement of the Offering Period.
If the final purchase price is less than the amount tendered, the Company shall
refund the excess amount to the Eligible Employee as soon as practicable after
the close of the Offering Period.
(c) Purchase Documents and cash or check received by the
Plan Administrator before or after an Offering Period shall be void and shall
be given no effect with respect to the particular Offering Period; and, the
Plan Administrator shall return such documents and cash or check to the
involved person as soon as practicable after receipt.
6.2 No Revocation of Election. No election to participate in an
Offering Period may be revoked or cancelled by an Eligible Employee once the
Purchase Documents and full payment have been tendered to the Company. Any such
election, however, is subject to cancellation or reduction by the Company as
provided elsewhere in the Plan.
6.3 No Interest. No interest shall be payable on the purchase
price of the Shares subscribed for or on the funds returned to employees as a
result of an over-subscription, an overpayment, or pursuant to Section 6.1 for
early or late delivery.
6.4 Custodial Safekeeping Arrangement.
(a) For the purpose of assuring compliance with
applicable provisions of the tax laws, the Committee in its discretion may
condition the issuance of Shares under the Plan upon the delivery of
certificates representing such Shares to the Company as temporary custodial
safekeeping agent for the benefit of the Eligible Employee purchasing the
Shares under the Purchase Documents.
February 8, 2002 Chico's FAS, Inc. 2002 ESPP Page 8
(b) Such custodial safekeeping arrangement shall not
affect the right of the affected Participants as owners of such Shares and such
shares may be sold or otherwise transferred by the owners thereof during the
pendency of the custodial safekeeping arrangement. A written safekeeping
receipt evidencing the Shares so held in safekeeping, bearing the name of the
Participant, indicating the number of the certificate or certificates and the
number of Shares so represented shall be delivered promptly to each
Participant. In its capacity as safekeeping agent for Participants purchasing
Shares, the Company shall act in accordance with instructions received from
such Participants, which instructions are to be confirmed in writing if deemed
appropriate by the Company.
(c) The custodial safekeeping arrangement shall
terminate upon the first to occur of (1) the sale or other transfer of the
Shares by the owner or (2) the second anniversary of the issuance of the
Shares.
6.5 Delivery of Certificates Representing Shares.
(a) Subject to the provisions of Section 6.5(b), as soon
as practicable after the completion of each Offering Period, the Company shall
cause a certificate or certificates representing the Common Stock purchased in
the Offering Period to be issued in the name of each Participant.
(b) If determined by the Committee in its discretion to
be appropriate in order to administer the custodial safekeeping arrangements of
Section 6.4, but only for so long as such provisions remain in effect,
certificates representing Shares shall not be delivered to Participants but
shall be delivered to the Company to be held by the Company as temporary
custodial safekeeping agent for the benefit of each Participant pursuant to
Section 6.4.
(c) Upon the termination of any custodial safekeeping
arrangement applicable to Shares issued to any Participant pursuant to
Section 6.4, the certificate(s) representing the Shares owned by the
Participant, registered in the name of the Participant, shall be delivered
promptly to such Participant.
(d) Certificate(s) representing shares of Common Stock
to be delivered to a Participant under the Plan will be registered in the name
of the Participant, or if the Participant so directs, by written notice to the
Company prior to the termination date of the pertinent offering, and to the
extent permitted by applicable law, in the names of the Participant and one
such other person as may be designated by the Participant, as joint tenants
with rights of survivorship.
6.6 Rights as Stockholder. No Eligible Employee participating in
the Plan shall have any right as a stockholder until after the completion of
the Offering Period in which he or she participated and the date on which he or
she becomes a record owner of the Shares purchased under the Plan (the "Record
Ownership Date"). No adjustment shall be made for dividends or other rights for
which the record date is prior to the Record Ownership Date.
February 8, 2002 Chico's FAS, Inc. 2002 ESPP Page 9
6.7 Termination of Employment. An Eligible Employee whose
employment is terminated for any reason (including but not limited to
termination because of death, retirement or disability) shall have no right to
participate in the Plan after termination. However, the termination shall not
affect any election to participate in the Plan that is made prior to
termination in accordance with the provisions of Section 6.1 and as to which,
at the time of such termination, the Eligible Employee's right to withdraw from
or cancel his or her purchase of Common Stock in the Offering Period is no
longer permitted under Section 6.2.
6.8 Rights Not Transferable. The right of an Eligible Employee to
participate in the Plan shall not be transferable, and no right of an Eligible
Employee under the Plan may be exercised after his death, by his Personal
Representative or anyone else, or during his lifetime by any person other than
the Eligible Employee.
ARTICLE 7
PAYROLL DEDUCTIONS
7.1 Election of Payroll Deduction. Each Eligible Employee may
elect to have a portion of his or her Compensation deducted from each paycheck
(or, if the Company so permits, from only the first paycheck in each month),
which amounts shall not exceed in the aggregate Twenty-Five Thousand Dollars
($25,000.00) in any calendar year. Elections to begin, change or terminate
payroll deductions may be made on such forms as may be provided from time to
time by the Company and in accordance with rules established by the Committee,
which rules may include, among other things, limitations on the number of times
changes are permitted and when changes are permitted and effective. A change
shall be effective no earlier than the first full payroll period following
receipt of the new form by the Committee. The Committee may, however, on a
uniform and non-discriminatory basis delay the effective date of any change if
it determines that such a delay is either necessary or appropriate for the
proper administration of the Plan.
7.2 Maintenance of Accounts. A separate Account shall be
maintained for each Eligible Employee who has amounts withheld from his
Compensation under this Article 7. The maintenance of separate Accounts shall
not require the segregation of any assets from any other assets held under this
Article 7. The Accounts shall not bear interest. Each Account shall be adjusted
from time to time to reflect the amounts withheld from the Compensation of the
Eligible Employee to whom the Account relates, the amounts withdrawn by such
Eligible Employee for purchases of Common Stock under the Plan, and for other
amounts withdrawn by such Eligible Employee from the Account.
7.3 Use of Accounts To Purchase Common Stock. At the time that an
Eligible Employee elects to participate in an offering under Section 6.1, the
Eligible Employee may elect to have a specified
February 8, 2002 Chico's FAS, Inc. 2002 ESPP Page 10
amount from his Account (up to the whole amount thereof) used to pay all or a
portion of the purchase price.
7.4 Withdrawals. At any time that a person is no longer an
employee (including by reason of death) or an Eligible Employee, the balance in
such person's Account shall be paid to such person or his legal representative.
In addition, the Committee may also permit the complete withdrawal of the
amounts in an Account under such uniform and non-discriminatory conditions as
it may impose from to time to time (including, without limitation, not
permitting the Eligible Employee making such withdrawal from again electing
payroll deductions for a specified period of time). Except as otherwise
provided in Section 7.3 and this Section 7.4, an Eligible Employee shall not
withdraw any amount from his Account, in whole or in part.
ARTICLE 8
MISCELLANEOUS
8.1 Stock Adjustments.
(a) In the event of any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split or other
division or consolidation of shares or the payment of a stock dividend (but
only on the Common Stock) or any other increase or decrease in the number of
such shares effected without any receipt of consideration by the Company, then,
in any such event, the number of shares of Common Stock that remain available
under the Plan, and the number of shares of Common Stock and the purchase price
per share of Common Stock then subject to subscription by Eligible Employees,
shall be proportionately and appropriately adjusted for any such increase or
decrease.
(b) Subject to any required action by the stockholders,
if any change occurs in the shares of Common Stock by reason of any
recapitalization, reorganization, merger, consolidation, split-up, combination
or exchange of shares, or of any similar change affecting the shares of Common
Stock, then, in any such event, the number and type of shares then subject to
subscription by Eligible Employees, and the purchase price thereof, shall be
proportionately and appropriately adjusted for any such change.
(c) In the event of a change in the Common Stock as
presently constituted that is limited to a change of all of its authorized
shares with par value into the same number of shares with a different par value
or without par value, the shares resulting from any change shall be deemed to
be shares of Common Stock within the meaning of the Plan.
(d) To the extent that the foregoing adjustments relate
to stock or securities of the Company, such adjustments shall be made by, and
in the discretion of, the Committee, whose determination in that respect shall
be final, binding and conclusive.
February 8, 2002 Chico's FAS, Inc. 2002 ESPP Page 11
(e) Except as hereinabove expressly provided in this
Section 8.1, an Eligible Employee shall have no rights by reason of any
division or consolidation of shares of stock of any class or the payment of any
stock dividend or any other increase or decrease in the number of shares of
stock of any class or by reason of any dissolution, liquidation, merger or
consolidation, or spin-off of assets or stock of another corporation; and any
issuance by the Company of shares of stock of any class, securities convertible
into shares of stock of any class, or warrants or options for shares of stock
of any class shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number or price of shares of Common Stock subject to
any subscription.
(f) The existence of the Plan, and any subscription for
Shares hereunder, shall not affect in any way the right or power of the Company
to make adjustments, reclassifications, reorganizations or changes of its
capital or business structure or to merge or to consolidate, or to dissolve, to
liquidate, to sell, or to transfer all or any part of its business or assets.
8.2 Necessity for Delay. If at any time the Committee shall
determine, in its discretion, that the listing, registration or qualification
of the Shares covered by the Plan upon any securities exchange or under any
state or federal law or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection with, the
Plan or the offering, issue or purchase of Shares thereunder, the Plan shall
not be effective as to later offerings unless and until such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.
Notwithstanding anything in the Plan to the contrary, if the provisions of this
Section 8.2 become operative and if, as a result thereof, an Offering Period is
missed in whole or in part, then and in that event, the missed portion of the
Offering Period shall be passed and the term of the Plan shall not be affected.
Notwithstanding the foregoing or any other provision in the Plan, the Company
shall have no obligation under the Plan to cause any Shares to be registered or
qualified under any federal or state law or listed on any stock exchange or
admitted to any national marketing system.
8.3 Term of Plan. The Plan, unless sooner terminated as provided
in Section 8.4, shall commence upon its adoption by the Board and shall
terminate on the conclusion of the Offering Period commencing on September 1,
2011.
8.4 Amendment of the Plan; Termination. The Board shall have the
right to revise, amend or terminate the Plan at any time without notice,
provided that no Eligible Employee's existing rights are adversely affected
thereby without the consent of the Eligible Employee, and provided further
that, without approval of the stockholders of the Company, no such revision or
amendment shall (1) increase the total number of Shares to be offered other
than with evergreen increases provided for in Section 1.3; (2) change the
formula by which the price at which the Shares shall be sold is determined; (3)
increase the maximum number of Shares that an Eligible Employee may purchase;
(4) materially modify the requirements as for becoming an Eligible Employee
under the Plan; (5) otherwise materially increase the benefits under the Plan
to Eligible Employees; or (6) remove the administration of the Plan from the
Committee. The foregoing prohibitions shall not be affected by adjustments in
Shares and purchase price made in accordance with the provisions of
Section 8.1. It is expressly contemplated that the Board may
February 8, 2002 Chico's FAS, Inc. 2002 ESPP Page 12
amend the Plan in any respect the Board deems necessary or advisable to provide
Eligible Employees with the benefits available under Section 423 of the Code
relating to employee stock purchase plans or to bring the Plan or rights
granted under the Plan into compliance therewith.
8.5 Application of Funds. The proceeds received by the Company
from the sale of Common Stock pursuant to the Plan will be used for general
corporate purposes.
8.6 No Obligation to Participate. The offering of Shares under
the Plan shall impose no obligation upon any Eligible Employee to subscribe to
purchase any such Shares.
8.7 No Implied Rights to Employees. The existence of the Plan,
and the offering of Shares under the Plan, shall in no way give any employee
the right to continued employment, give any employee the right to receive any
Common Stock or any additional Common Stock under the Plan, or otherwise
provide any employee any rights other than those specifically set forth in the
Plan.
8.8 Withholding. Whenever (1) the Company proposes or is required
to issue, transfer or approve the transfer or Shares issued under the Plan or
(2) if a Participant previously receiving Shares under the Plan makes any
disposition of such Shares prior to the expiration of the holding periods
required under Section 423(a)(1) of the Code, and such Participant is then
employed by the Company, then in either event, the Company shall have the
right, but shall not be obligated, to require a Participant to remit to the
Company an amount sufficient to satisfy any federal, state or local withholding
tax liability. Pending receipt of such payment, the Company may delay the
delivery of any certificate or certificates for such Shares or may deduct the
required amount from amounts otherwise due and payable to the Participant by
the Company. Whenever under the Plan payments are to be made in cash, such
payments shall be made net of an amount sufficient to satisfy any federal,
state or local withholding tax liability.
8.9 Participants' Personal Tax Responsibilities. Each Participant
shall be personally responsible to pay or make adequate provision to pay any
individual foreign, federal, state or local tax obligations which may arise as
a result of his or her acquisition or disposition of Shares.
8.10 Designation of Beneficiary. A Participant may file a written
designation of a beneficiary who is to receive any Shares and, if applicable,
funds from the Participant's Account in the event of the Participant's death
subsequent to the end of an Offering Period but prior to delivery to the
Participant of such Shares and funds. In addition, a Participant may file a
written designation of a beneficiary who is to receive any cash from the
Participant's Account in the event of the Participant's death during an
Offering Period. Such designation of beneficiary may be changed by the
Participant at any time by written notice in the form prescribed by the
Committee. In the event of the death of a Participant and in the absence of a
beneficiary validly designated under the Plan who is living (or if an entity,
is otherwise in existence) at the time of the Participant's death, the Company
shall deliver such Shares and funds to the executor or administrator of the
estate of the Participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its sole
discretion, may deliver such shares and/or cash to the spouse or to any one or
more dependents or relatives of the Participant, or if no
February 8, 2002 Chico's FAS, Inc. 2002 ESPP Page 13
spouse, dependent or relative is known to the Company, then to such other
person as the Company may determine
8.11 Choice of Law. All questions concerning the construction,
validity and interpretation of the Plan shall be governed by the substantive
laws of the State of Florida (but any provision of Florida law shall not apply
if the application of such provision would result in the application of the law
of a state or jurisdiction other than Florida).
8.12 Effective Date of Plan; Stockholder Approval. The Plan shall
become effective upon its adoption by the Board of Directors, with such date
being the effective date of the Plan; provided that (1) the Plan is approved by
the stockholders of the Company within 12 months after its adoption by the
Board and (2) no Purchase Documents may be tendered and no Shares may be
purchased prior to such approval by the Company's stockholders.
February 8, 2002 Chico's FAS, Inc. 2002 ESPP Page 14