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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
OFFICEMAX, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
N/A
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(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: ...........................................................
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[OfficeMax Logo]
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 2001
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To Our Shareholders:
Notice is hereby given that the 2001 Annual Meeting of Shareholders of
OfficeMax, Inc., an Ohio corporation, will be held at our PowerMax distribution
facility, 2861 Marion Drive, Las Vegas, Nevada, on Monday, May 21, 2001, at 9:00
a.m. local time. At the meeting, shareholders will act on the following matters:
(1) The election of four directors;
(2) Consideration of a shareholder proposal, if presented at the meeting;
and
(3) Any other matters that properly come before the meeting.
We describe the proposals in more detail in this proxy statement, which you
should read in its entirety before voting.
Only shareholders of record at the close of business on April 6, 2001, are
entitled to notice of, and to vote at, the meeting or any adjournment or
postponement thereof.
By Order of the Board of Directors,
/s/ Ross H. Pollock
Ross H. Pollock
Secretary
April 19, 2001
Shaker Heights, Ohio
YOUR VOTE IS VERY IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. YOU
CAN VOTE OVER THE INTERNET, BY TELEPHONE OR BY USING A TRADITIONAL PROXY CARD.
Detailed voting instructions appear on the next page.
Holders whose shares are held in "street name" who plan to attend the
meeting will be required to produce a copy of a brokerage statement reflecting
share ownership as of the record date.
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OfficeMax, Inc.
3605 Warrensville Center Road
Shaker Heights, Ohio 44122 [OFFICEMAX LOGO]
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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TIME............................................ 9:00 a.m. on Monday, May 21, 2001
PLACE........................................... PowerMax Distribution Facility
2861 Marion Drive
Las Vegas, Nevada 89115
ITEMS OF BUSINESS............................... (1) Election of four directors;
(2) Consideration of a shareholder proposal, if
presented at the meeting; and
(3) Any other matters that properly come before the
meeting.
RECORD DATE..................................... You are entitled to vote if you were a shareholder
of record at the close of business on April 6,
2001.
ANNUAL REPORT................................... Our 2000 Annual Report to Shareholders for the
fiscal year ended January 27, 2001, which is not a
part of the proxy soliciting material, is enclosed.
PROXY VOTING.................................... Shareholders of record can vote by one of the
following methods:
- VISIT THE WEB SITE AT
http://www.eproxyvote.com/omx to vote over the
Internet anytime up to 12:00 midnight New York
time on May 17, 2001;
OR
- CALL 1-877-779-8663 from the U.S. and Canada
(this call is free) or 001-1-201-536-8073 from all
other countries to vote by telephone anytime up
to 12:00 midnight New York time on May 17, 2001;
OR
- MARK, SIGN, DATE AND RETURN the enclosed proxy
card in the envelope provided.
You may revoke your proxy in the manner described in the accompanying proxy
statement at any time up to the time your proxy is voted on the date of the
meeting.
April 19, 2001
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SAVE OUR COMPANY TIME AND MONEY
Please take advantage of two cost effective and convenient ways to vote
your shares:
- via the Internet
- by telephone
PLEASE VOTE YOUR SHARES PROMPTLY
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[OFFICEMAX LOGO]
3605 Warrensville Center Road
Shaker Heights, Ohio 44122
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
MAY 21, 2001
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We are furnishing this proxy statement in connection with the solicitation
of proxies on behalf of our board of directors for use at the Annual Meeting of
Shareholders to be held at our PowerMax distribution facility, 2861 Marion
Drive, Las Vegas, Nevada, on Monday, May 21, 2001, at 9:00 a.m. local time. This
proxy statement and the accompanying proxy card, together with our Annual Report
to Shareholders for the fiscal year ended January 27, 2001, are being mailed to
shareholders on or about April 19, 2001.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At our annual meeting, shareholders will act upon the matters outlined in
the notice of meeting on the cover page of this proxy statement, including the
election of directors. In addition, our management will report on our
performance during fiscal year 2000 and respond to questions from shareholders.
WHO IS ENTITLED TO VOTE?
Only shareholders of record at the close of business on the record date,
April 6, 2001, are entitled to receive notice of the annual meeting and to vote
their shares that they held on that date at the meeting, or any adjournment or
postponement thereof. Each outstanding common share or Series A Voting
Preference Share entitles its holder to cast one vote on each matter to be voted
upon.
WHO CAN ATTEND THE MEETING?
All shareholders as of the record date, or their duly appointed proxies,
may attend the meeting. Registration will begin at 8:00 a.m. Only shareholders
of record at the close of business on April 6, 2001, are entitled to notice of,
and to vote at, the meeting or any adjournment or postponement thereof.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the voting power of all shares outstanding on the record date will
constitute a quorum, permitting the meeting to conduct its business. As of the
record date, 113,173,447 common shares, 3,076,923 Series A Voting Preference
Shares and 2,000,000 Series B Serial Preferred Shares were outstanding. Each
common share and Series A Voting Preference Share is entitled to one vote at the
meeting. 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 meeting.
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HOW DO YOU VOTE?
Shareholders of record can vote by one of the following methods:
- VISIT THE WEB SITE AT http:www.eproxyvote.com/omx to vote over the
Internet anytime up to 12:00 midnight New York time on May 17, 2001; or
- CALL 1-877-779-8663 from the U.S. and Canada (this call is free) or
001-1-201-536-8073 from all other countries to vote by telephone anytime
up to 12:00 midnight New York time on May 17, 2001; or
- MARK, SIGN, DATE AND RETURN the enclosed proxy card in the envelope
provided.
If you are a registered shareholder and attend the meeting, you may deliver
your completed proxy card in person or you may vote in person. Holders whose
shares are held in "street name" who wish to vote at the meeting must obtain a
proxy from the institution that holds their shares.
CAN YOU CHANGE YOUR VOTE OR REVOKE YOUR PROXY AFTER YOU RETURN YOUR PROXY VOTE?
Yes. Even after you have voted your proxy by the Internet or telephone, or
have executed and returned your proxy card, you may change your vote at any time
prior to its exercise by giving written notice to OfficeMax or in open meeting,
by executing and forwarding a later-dated proxy card to OfficeMax, or by voting
a later proxy by the Internet or telephone. Attendance at the meeting will not
by itself revoke a previously granted proxy.
HOW DO YOU VOTE YOUR 401(k) AND EXECUTIVE SAVINGS PLAN SHARES?
If you participate in our 401(k) Savings Plan or Executive Savings Deferral
Plan, you will receive a proxy card which will include the number of common
shares equivalent to the value of the interest credited to your account. If you
complete and properly sign the proxy card and return it by May 17, 2001 or vote
by telephone or the Internet, the trustee of the plan will vote your shares in
accordance with your proxy. If you do not return your proxy, or vote by
telephone or the Internet, the share equivalents credited to your account will
be voted by the trustee in the same proportion in which it votes share
equivalents for which timely proxies were delivered.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
- Election of Directors. The four nominees that receive the most votes will
be elected. 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, although it will be
counted for purposes of determining whether there is a quorum.
- Other Items. For each other item, the affirmative vote of the holders of
a majority of the shares represented in person or by proxy and entitled to
vote on the item will be required for approval. A properly executed proxy
marked "ABSTAIN" with respect to any such matter will not be voted,
although it will be counted for purposes of determining whether there is a
quorum. Accordingly, an abstention will have the effect of a negative
vote.
If you hold your shares in "street name" through a broker or other nominee,
your broker or nominee may not be permitted to exercise voting discretion with
respect to some of the matters to be acted upon. Thus, if you do not give your
broker or nominee specific instructions, your shares may not be voted on those
matters and will not be counted in determining the number of votes necessary for
approval. Shares represented by such "broker non-votes" will, however, be
counted in determining whether there is a quorum.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Unless you give other instructions on your proxy card, or with your vote by
telephone or the Internet, the persons named as proxies on the proxy card will
vote in accordance with the recommendations of our board of directors. Our
board's recommendation for each item is set forth together with the description
of each item in this proxy statement. In summary, our board recommends a vote:
- for election of the four nominated directors; and
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- against approval of the shareholder proposal.
With respect to any other matters that properly come before the meeting,
the proxies will vote as recommended by the board of directors or, if no
recommendation is made, using their own discretion.
WHOM DO YOU CONTACT IF YOU HAVE ADDITIONAL QUESTIONS?
If you have any questions prior to the annual meeting, please call the
OfficeMax Investor Relations Department at (216) 471-6697 or via email at:
investor@officemax.com.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
COMMON SHARES. Except as set forth below, we know of no single person or
group that is the beneficial owner of more than 5% of our common shares.
NUMBER OF
NAME AND ADDRESS COMMON SHARES PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
------------------- ------------------ --------
Orient Star Holdings LLC................................... 16,910,000(1) 14.94%
1000 Louisiana Street
Suite 565
Houston, TX 77002
Mellon Financial Corporation............................... 6,488,637(2) 5.73%
c/o Mellon Financial Corporation
One Mellon Center
Pittsburgh, PA 15258
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(1) Based on information obtained from a Form 4 filed on February 9,
2001, by the following: Carlos Slim Helu, Carlos Slim Domit, Marco
Antonio Slim Domit, Patrick Slim Domit, Maria Soumaya Slim Domit,
Vanessa Paola Slim Domit, Johanna Monique Slim Domit, Inmobiliaria
Carso, S.A. de C.V., a Mexican corporation, and Orient Star
Holdings LLC, a Delaware limited liability company.
(2) Based on information obtained from a Schedule 13G/A filed on
January 18, 2001, by Mellon Financial Corporation, Boston Safe
Deposit and Trust Company, Mellon Bank, N.A., Mellon Capital
Management Corporation, The Dreyfus Corporation, The Boston
Company Asset Management, LLC and MBC Investments Corporation.
SERIES A VOTING PREFERENCE SHARES. On April 28, 2000, in a private
placement, the Company issued 3,076,923 Series A Voting Preference Shares to
Gateway Companies, Inc.
NUMBER OF
NAME AND ADDRESS SERIES A SHARES PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
------------------- ------------------- --------
Gateway Companies, Inc.................................... 3,076,923 100%
4545 Towne Centre Court
San Diego, CA 92121
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SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as to each director, each executive officer
named in the Summary Compensation Table and the directors and executive officers
as a group, information regarding the amount and nature of common shares
beneficially owned (unless otherwise indicated) at April 6, 2001.
NUMBER OF
COMMON SHARES ACQUIRABLE
BENEFICIALLY WITHIN 60 PERCENT OF SHARES
NAME OWNED (1)(2) DAYS (3) OUTSTANDING
---- ------------- ---------- -----------------
Michael Feuer..................................... 2,437,224 1,782,916 3.7%
Carl D. Glickman.................................. 75,921 -- *
Sydell L. Miller.................................. 48,727 -- *
James F. McCann................................... 43,906 -- *
Raymond L. Bank................................... 30,889 -- *
Burnett W. Donoho................................. 30,654 -- *
Ivan J. Winfield.................................. 20,816 -- *
Philip D. Fishbach................................ 12,403 -- *
Jerry Sue Thornton................................ 12,090 -- *
Gary J. Peterson.................................. 15,000 -- *
Jeffrey L. Rutherford............................. 29,264 131,250 *
Harold L. Mulet................................... 22,713 -- *
Eugene J. O'Donnell............................... 3,027 -- *
All executive officers and directors as a group
(16 persons).................................... 2,855,232 2,242,746 4.5%
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* Less than 1%.
(1) The number of shares shown includes shares that are individually or jointly
owned, as well as shares over which the individual has either sole or shared
investment or voting authority. Certain of our executive officers disclaim
beneficial ownership of some of the shares included in the table as follows:
- Mr. Feuer - 3,225 shares owned by a trust for the benefit of Mr.
Feuer's son and 3,000 shares owned by a trust for the benefit of Mr.
Feuer's daughter, as to each of which trust Mr. Feuer's wife is the
trustee, and 1,500 shares owned directly by his wife.
(2) For executive officers, includes interests in our 401(k) Plan and Executive
Savings Deferral Plan with respect to which participants have voting power
but no investment rights: Mr. Feuer - 1,300 shares; Mr. O'Donnell - 177
shares; and all current executive officers as a group - 4,072 shares.
(3) Reflects the number of shares that could be purchased by exercise of options
available at April 6, 2001, or within 60 days thereafter, under our
Equity-Based Award Plan.
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ITEM 1 -- ELECTION OF DIRECTORS
Our board of directors currently consists of eight members, divided into
two classes of four members each. At the meeting, common shares or Series A
Voting Preference Shares represented by proxies delivered to us, unless
otherwise specified, will be voted for the election of the four nominees
hereinafter named, each to serve for a term of two years or until his or her
successor is duly elected and qualified. If any nominee becomes unavailable to
serve as a director, the board may designate a substitute nominee. In that case,
the persons named as proxies will vote for the substitute nominee designated by
the board. Proxies may not be voted at the annual meeting for more than four
persons.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR ALL FOUR NOMINEES.
NOMINEES STANDING FOR ELECTION FOR TERM EXPIRING 2003
The directors standing for election are:
DIRECTOR TERM
NAME AGE PRINCIPAL OCCUPATION SINCE EXPIRES
---- --- -------------------- -------- -------
Raymond L. Bank 46 Mr. Bank, is President and Chief 1994 2001
Operating Officer of Merchant Development
Corporation, a venture capital and
buy-out firm focusing on consumer retail,
direct marketing and service companies.
Mr. Bank is also a director of Regency
Realty, Inc.
Michael Feuer 55 Mr. Feuer, is the Company's Co-founder, 1988 2001
Chairman of the Board and Chief Executive
Officer. Prior to becoming Chairman in
1995, Mr. Feuer served as President of
the Company.
Philip D. Fishbach 59 Mr. Fishbach, is currently a private 2000 2001
investor and business consultant. From
February 1995 to April 2000, Mr. Fishbach
served as Vice President and Corporate
Controller of Xerox Corporation.
Jerry Sue Thornton 54 Dr. Thornton, has served as President of 2000 2001
Cuyahoga Community College since 1992.
She is also a director of American
Greetings Corporation, Applied Industrial
Technologies Incorporated, National City
Bank and RPM Incorporated.
Carl Glickman, age 74, a director of the Company since it went public in
1994, has informed the Company that he plans to retire from the board of
directors at the end of his present term (which expires in 2001) and will not
stand for re-election to the board at the 2001 Annual Meeting of Shareholders.
Mr. Glickman has begun reducing his work schedule and will be retiring from a
number of other boards on which he serves. Mr. Glickman has served tirelessly
and with his extensive business experience has provided the Company with
valuable insight for which the Company is very appreciative.
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DIRECTORS CONTINUING IN OFFICE
The following directors were elected at our 2000 annual meeting for a term
ending in 2002:
DIRECTOR TERM
NAME AGE PRINCIPAL OCCUPATION SINCE EXPIRES
---- --- -------------------- -------- -------
Burnett W. Donoho 61 Mr. Donoho, is currently a management 1995 2002
consultant. From March 1999 to September
2000, Mr. Donoho served as Chairman and
Chief Executive Officer of Wellbridge (fka
Club Sports International). From January
1998 to February 1999 and from January
1996 to February 1997, Mr. Donoho was a
retail consultant. From February 1997 to
January 1998, Mr. Donoho served as Vice
Chairman and Chief Operating Officer of
Montgomery Ward & Co. Mr. Donoho also
served as Vice Chairman, Chief Operating
Officer of Macy's East, a then division of
R.H. Macy & Co. He is also a director of
GTECH Corporation and Socket
Communications, Inc.
James F. McCann 49 Mr. McCann, is President of 1996 2002
1-800-Flowers.com. He is also a director
of Gateway, Inc.
Sydell L. Miller 63 Ms. Miller, 63, is currently a private 1994 2002
investor and consultant. Prior to
September 1995, Ms. Miller served as
Chairman of the Board and Chief Executive
Officer of Matrix Essentials, Inc., a
subsidiary of L'Oreal
Ivan J. Winfield 66 Mr. Winfield, has been an Associate 1998 2002
Professor at Baldwin-Wallace College,
Cleveland, Ohio and business consultant
since September 1995. From 1970 until
October 1994, Mr. Winfield was a partner
with the accounting firm of Coopers &
Lyband where he served as a Managing
Partner from July 1978 to October 1994.
Mr. Winfield is also a director of Boykin
Lodging Co., HMI Industries, Inc. and
Rainbow Rentals, Inc.
HOW OFTEN DID OUR BOARD MEET DURING FISCAL YEAR 2000?
During the fiscal year ended January 27, 2001, our board of directors held
eight meetings. Each director attended at least 75% of the meetings of our board
of directors and committees on which he or she served, except Ms. Miller who was
able to attend 67% of the meetings because of personal scheduling conflicts.
WHAT COMMITTEES HAS OUR BOARD ESTABLISHED?
Audit Committee. Messrs. Bank (Chairman), Donoho, Glickman and Winfield are
the current members of our board's Audit Committee, which is empowered to
exercise all powers and authority of our board of directors with respect to our
annual audit, accounting policies, financial reporting and internal controls.
During the past fiscal year, the board examined the composition of the Audit
Committee in light of the adoption by the New York Stock Exchange of new rules
governing audit committees. Based on this examination, the board confirmed that
all members of the Audit Committee are "independent" within the meaning of the
NYSE's new rules. The Audit Committee met three times and consulted informally
on other occasions during the last fiscal year.
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Compensation Committee. Messrs. Glickman (Chairman) and Bank and Ms. Miller
are the current members of our board's Compensation Committee, which is
empowered to exercise all powers and authority of our board with respect to
compensation of our officers. The Compensation Committee met one time and
consulted informally on other occasions during the last fiscal year.
Nominating Committee. Messrs. Fishbach (Chairman), McCann and Dr. Thornton
are the current members of our board's Nominating Committee, which is
responsible for conducting searches for prospective board members, reviewing
background information for candidates and recommending nominees to the full
board for election as directors of the Company. The Nominating Committee has not
undertaken to consider nominees recommended by shareholders. The Nominating
Committee was established in March 2001.
HOW ARE DIRECTORS COMPENSATED?
Directors who are not officers or associates of OfficeMax receive an annual
retainer fee of $25,000 payable in restricted common shares of OfficeMax, and a
fee of $1,000 for each quarterly meeting of the board attended, and a fee of
$500 for each committee meeting of the board attended, each of which is payable
in common shares of OfficeMax.
AUDIT COMMITTEE REPORT
The following Audit Committee Report does not constitute soliciting
material and should not be deemed filed or incorporated by reference into any
other of our filings under the Securities Act of 1933 or the Securities Exchange
Act of 1934, except to the extent we specifically incorporate this report by
reference therein.
The board of directors of the Company has adopted a written Audit Committee
Charter, a copy of which is included with this proxy statement as Appendix A.
All members of the Audit Committee are independent as defined in Section
303.01(B)(2)(a) and (3) of the New York Stock Exchange's listing standards.
The Audit Committee has reviewed and discussed with the Company's
management and PricewaterhouseCoopers LLP, the Company's independent
accountants, the audited financial statements of the Company contained in the
Company's Annual Report to Shareholders for the fiscal year ended January 27,
2001. The Audit Committee has also discussed with the Company's independent
accountants the matters required to be discussed pursuant to Statement on
Auditing Standards No. 61, as amended ("Communication with Audit Committees").
The Audit Committee has received and reviewed the written disclosures and
the letter from PricewaterhouseCoopers LLP required by Independence Standards
Board Standard No. 1 ("Independence Discussions with Audit Committees") and has
discussed with PricewaterhouseCoopers their independence. The Audit Committee
has also considered whether the provision of information technology services and
other non-audit services to the Company by PricewaterhouseCoopers is compatible
with maintaining their independence.
Based on the review and discussions referred to above, the Audit Committee
recommended to the board of directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
January 27, 2001, filed with the U.S. Securities and Exchange Commission.
Members of the Audit Committee
Raymond L. Bank (Chairman)
Burnett W. Donoho
Carl D. Glickman
Ivan J. Winfield
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EXECUTIVE COMPENSATION
The following Compensation Committee Report and the performance graph
included elsewhere in this proxy statement do not constitute soliciting material
and should not be deemed filed or incorporated by reference into any other of
our filings under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent we specifically incorporate this report or the
performance graph by reference therein.
COMPENSATION COMMITTEE REPORT
Our compensation program is administered by the Compensation Committee of
our board of directors, which has responsibility for reviewing all aspects of
compensation paid by us to our executive officers. The Compensation Committee is
composed of the three directors listed at the end of this report.
The Compensation Committee's primary objective with respect to executive
compensation is to work with our senior management to establish programs which
attract and retain key managers and align their compensation with our overall
business strategies, values and performance. To this end, the compensation
committee has adopted an executive compensation philosophy which includes the
following considerations:
- A program that differentiates compensation based on corporate and
individual performance;
- An emphasis on equity incentives as a significant component of total
compensation in order to align the interests of our executives closely
with the long-term interests of shareholders;
- An emphasis on total compensation versus cash salary compensation,
under which base salaries are generally set at or somewhat below
competitive levels, but which motivates and rewards our executives
with total compensation (including year-end bonuses) at or above
competitive levels if Company and individual performance reach
predetermined objectives;
- Recognition that, as an executive's level of responsibility increases,
a greater portion of his or her total compensation opportunity should
be based on equity and other performance incentives and less on base
salary; and
- An appropriate mix of short-term and long-term compensation which
facilitates retention of talented executives and encourages share
ownership and capital accumulation.
The primary components of our executive compensation program are: (i) base
salaries, (ii) annual bonuses, and (iii) long-term equity incentive
opportunities. Each component of compensation is discussed below.
Base Salaries. Base salaries for our executives are subject to annual
review and adjustment on the basis of individual and Company performance, level
of responsibility, and competitive, inflationary, and internal equity
considerations. The Compensation Committee generally attempts to set base
salaries of executive officers at a level which is at or below the "market"
rate, as determined from information gathered by us from independent
compensation consulting firms and published surveys. With respect to the
$950,000 base salary established for Mr. Feuer in May 1997, the Compensation
Committee took into account the factors described above for other executive
officers, as well as Mr. Feuer's expanded responsibilities associated with our
rapid growth. In lieu of a salary increase in each of fiscal 1998, 1999 and
2000, Mr. Feuer chose to receive stock options. This arrangement serves to
continue to align Mr. Feuer's interests with the long-term interests of our
shareholders. In addition, Mr. Feuer and all other officers of the Company have
not received a salary increase for fiscal 2001, except for instances where an
officer has been promoted or assumed increased responsibility. Any consideration
of such has been deferred until the third quarter of this year with no assurance
that any increases will be granted at that time.
Annual Bonuses. Under our Annual Incentive Bonus Plan, our executives are
eligible to receive annual cash bonus awards to focus attention on and provide a
reward for achieving key individual and Company goals. Target incentive bonus
amounts for executives are established at the beginning of each year, either as
a dollar amount or a percentage of the executive's salary, depending upon each
executive's level of responsibility and function.
Performance objectives were established for OfficeMax at the beginning of
the fiscal year and are designed to provide competitive bonuses on a
"pay-for-performance" basis. In addition, individual performance objectives
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were established for each executive, which included both specific performance
goals and other more qualitative and developmental criteria. The actual amount
of bonus payable is generally expressed as a percentage of the executive's base
salary and varies depending on the extent to which the Company and individual
performance goals have been achieved.
In fiscal 2000, the Company did not reach its primary financial earnings
before interest and taxes (EBIT) target. Accordingly, no bonuses were paid to
officers and other associates eligible to participate in the Annual Incentive
Bonus Plan.
For fiscal 2001 the Company performance goals are based on improvement in
the following metrics: earnings before interest, taxes, depreciation and
amortization (EBITDA); comparable-store sales; and cash flow.
Prior to the beginning of each fiscal year, all executives are required to
designate at least 20%, and may elect to designate up to 100%, of their annual
bonus to purchase restricted shares in accordance with our Management Share
Purchase Plan (the "Management Share Purchase Plan").
Long-Term Equity Incentives. We endeavor to foster an ownership culture
that encourages superior performance by our executive officers and have adopted
the Equity-Based Award Plan to provide for common share ownership at all levels.
Pursuant to the Equity-Based Award Plan, the types of awards that can be made
range from ordinary stock options to grants of restricted stock and stock
appreciation rights.
We intend to make annual grants of equity awards to our management
personnel, including our executive officers. This annual grant program is
designed to provide Company managers, over a number of years, with multiple
stock options and related equity incentives. Each stock option will be granted
with an exercise price equal to the fair market value of the common shares at
the time of grant. Individual option grants are determined by the Compensation
Committee based on a manager's current performance, potential for future
responsibility, and salary multiples designed to increase the portion of the
total compensation opportunity represented by equity incentives as a manager's
level of responsibility increases. The Compensation Committee intends to place
substantial emphasis on equity awards as a percentage of total compensation,
consistent with its philosophy that equity awards more closely align the
interests of our managers with the long-term interests of the Company's
shareholders.
In fiscal 2000, the annual grant of stock options to senior management
personnel, including the named executive officers, was approved by the
Compensation Committee. These options vest 50% on the second anniversary of the
date of grant and an additional 25% on each of the third and fourth
anniversaries of the date of grant. In granting Mr. Feuer options in fiscal
2000, the Compensation Committee considered the fact that Mr. Feuer chose to
receive stock options in lieu of a salary increase.
Under the Management Share Purchase Plan, our executives and other key
associates of OfficeMax designated by the Compensation Committee are required to
designate in advance a minimum of 20%, and may designate up to 100%, of their
annual bonuses for the purchase of restricted shares at a 20% discount from fair
market value on the date of purchase. Shares purchased under the Management
Share Purchase Plan are generally subject to forfeiture for three years from the
date of purchase.
Section 162(m). Section 162(m) of the Internal Revenue Code generally
disallows a tax deduction to public corporations for compensation over
$1,000,000 paid for any fiscal year to the corporation's chief executive officer
and the five other most highly compensated executive officers as of the end of
the fiscal year. However, the statute exempts qualifying performance-based
compensation from the deduction limit if certain requirements are met. The
Compensation Committee currently intends to structure performance-based
compensation, including stock option grants and annual bonuses, to executive
officers who may be subject to Section 162(m) in a manner that satisfies those
requirements.
Our board and the Compensation Committee reserve the authority to award
nondeductible compensation in other circumstances as they deem appropriate.
Further, because of ambiguities and uncertainties as to the application and
interpretation of Section 162(m) and the regulations issued thereunder, no
assurance can be given,
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notwithstanding our efforts, that compensation intended by us to satisfy the
requirements for deductibility under Section 162(m) will, in fact, satisfy such
requirements.
Conclusion. In conclusion, our executive compensation program is designed
to provide a significant link between total compensation and our performance and
long-term share price appreciation consistent with the compensation philosophies
set forth above.
Members of the Compensation Committee
Carl D. Glickman (Chairman)
Raymond L. Bank
Sydell L. Miller
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the compensation committee is, or has been, an
officer or employee of OfficeMax.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------- AWARDS
OTHER ------------------------ PAYOUT ALL
ANNUAL RESTRICTED SECURITIES ------- OTHER
COMPEN- STOCK UNDERLYING LTIP COMPEN-
NAME AND FISCAL SALARY BONUS SATION AWARDS OPTIONS PAYOUTS SATION
PRINCIPAL POSITION YEAR(1) ($) ($) ($) ($)(2) (#) ($) ($)(3)
------------------ ------- -------- -------- ------- ---------- ---------- ------- -------
Michael Feuer 2000 $968,269 -- $4,839 $14,871 400,000 -- $ 2,542
Chairman and 1999 $950,000 $475,000 $4,747 $(4,530) 400,000 -- $ 1,965
Chief Executive 1998 $950,000 $712,500 -- $73,101 700,000 -- $ 5,000
Officer
Gary J. Peterson (4) 2000 $542,308 -- -- -- 500,000 -- --
President and 1999 -- -- -- -- -- -- --
Chief Operating 1998 -- -- -- -- -- -- --
Officer
Jeffrey L. Rutherford 2000 $407,692 -- -- $ 6,147 80,000 -- --
Senior Executive Vice 1999 $306,154 $ 78,542 -- $(4,034) 175,000 -- $23,602
President 1998 $253,462 $126,880 -- $41,143 275,000 -- --
Chief Financial
Officer
Harold L. Mulet (5) 2000 $375,577 -- -- $ 3,110 75,000 -- $36,086
Executive Vice 1999 $249,039 $ 79,476 -- -- 200,000 -- --
President 1998 -- -- -- -- -- -- --
Retail Sales and Store
Productivity
Eugene J. O'Donnell
(6) 2000 $387,865 -- -- $ 2,387 75,000 -- $ 885
Executive Vice 1999 $115,385 -- -- -- 100,000 -- --
President 1998 -- -- -- -- -- -- --
Merchandising and
Marketing
- ---------------
(1) Includes compensation earned, awarded or paid for the fiscal years ended
January 27, 2001 (fiscal 2000), instead of 52 weeks, (salaries appear
higher), January 22, 2000 (fiscal 1999), and January 23, 1999 (fiscal 1998),
respectively. Because fiscal 2000 included 53 weeks, salaries in the table
include an extra week of pay. However, no salary increases have been made
and their respective annual base salaries remain as follows: Mr. Feuer
$950,000; Mr. Peterson $600,000; Mr. Rutherford $400,000; Mr. Mulet
$370,000; and Mr. O'Donnell $381,000.
(2) Amounts shown reflect the difference between the closing market price for
the common shares on the date of purchase and the purchase price paid by
each of the named executive officers for the purchase of restricted shares
under our Management Share Purchase Plan. Amounts for fiscal 1999 were
negative. The aggregate restricted share holdings and values (net of
consideration paid) at January 27, 2001 for the named executive officers are
as follows: Mr. Feuer - 46,679 shares, $(222,364); Mr. Peterson - no shares,
$0; Mr. Rutherford - 29,014 shares, $(148,374); Mr. Mulet - 3,713 shares,
$(7,333); and Mr. O'Donnell - 2,850 shares, $(5,629). With respect to the
restricted shares so purchased, if employment is terminated by the executive
(other than as a result of death, disability or retirement after age 65) or
if employment is terminated by
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OfficeMax for "cause" before the third anniversary of the purchase date, the
executive will receive unrestricted shares having a value equal to the
lesser of the current fair market value for the common shares or the price
paid initially for such restricted shares. If the executive's employment is
terminated by OfficeMax without cause before the third anniversary of the
purchase date, the executive will receive unrestricted shares having a value
equal to (i) the then current fair market value of a percentage of the
restricted shares (based on the number of months of employment completed
during the restricted period), plus (ii) as to the balance of the restricted
shares the lesser in value of the restricted shares at their current fair
market value or the price paid initially for such restricted shares.
Dividends, if any, will be paid on restricted shares at the same rate as
common shares.
(3) We provide the named executive officers with certain group life, health,
medical and other non-cash benefits generally available to all salaried
employees and not included in this column pursuant to SEC rules. The amounts
shown in this column for fiscal 2000 include the following: (a) matching
contributions by OfficeMax under our 401(k) Savings Plan and our Executive
Savings Deferral Plan for Messrs. Feuer and O'Donnell, all of which are
invested in common shares of OfficeMax (Messrs. Peterson, Rutherford and
Mulet did not participate in the plans); and (b) forgiveness of a portion of
the principal and accrued interest on a relocation loan provided to Mr.
Mulet.
(4) Mr. Peterson joined OfficeMax in March 2000.
(5) Mr. Mulet joined OfficeMax in May 1999.
(6) Mr. O'Donnell joined OfficeMax in October 1999.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
---------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE VALUE AT
NUMBER OF TOTAL OPTIONS ASSUMED ANNUAL RATES OF
SECURITIES GRANTED TO STOCK PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(1)
OPTIONS IN FISCAL PRICE EXPIRATION -----------------------------
NAME GRANTED(#) YEAR(2) ($/SHARE) DATE 5%($) 10%($)
---- ---------- ------------- --------- ---------- ------------- -------------
Michael Feuer.............. 400,000(3) 7.3% $6.625 1/24/10 $1,666,571 $4,223,418
Gary J. Peterson........... 500,000(3) 9.1% $6.25 3/6/10 $1,965,296 $4,980,445
Jeffrey L. Rutherford...... 80,000(4) 1.5% $6.625 1/24/10 $ 333,314 $ 844,684
Harold L. Mulet............ 75,000(4) 1.4% $6.625 1/24/10 $ 312,482 $ 791,891
Eugene J. O'Donnell........ 75,000(4) 1.4% $6.625 1/24/10 $ 312,482 $ 791,891
- ---------------
(1) The dollar amounts under these columns are the result of the calculations at
the 5% and 10% rates set by the SEC and therefore are not intended to
forecast possible future appreciation, if any, of our stock price.
(2) Based on approximately 5.5 million options granted to all employees during
the fiscal year ended January 27, 2001. The options are transferable to
members of the executive's family, to a trust or trusts for the benefit of
members of the executive's family or to a partnership or partnerships of
members of the executive's family.
(3) These options vest 25% per year beginning on March 6, 2002.
(4) These options vest 50% on the second anniversary of the date of grant plus
an additional 25% on each of the third and fourth anniversaries of the date
of grant.
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AGGREGATED OPTION EXERCISES DURING FISCAL YEAR 2000
AND FISCAL YEAR-END OPTION VALUES
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES JANUARY 27, 2001 JANUARY 27, 2001(1)
ACQUIRED ------------------- -------------------
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
---- -------- -------- ------------------- -------------------
Michael Feuer...................... -- -- 1,782,916/1,500,000 $0/$0
Gary J. Peterson................... -- -- 0/500,000 $0/$0
Jeffrey L. Rutherford.............. -- -- 131,250/473,750 $0/$0
Harold L. Mulet.................... -- -- 0/275,000 $0/$0
Eugene J. O'Donnell................ -- -- 0/175,000 $0/$0
- ---------------
(1) The value of unexercised in-the-money options is based on the difference
between the fair market value of the our common shares as of January 27,
2001 ($3.375) per share, and the option exercise price. None of the
unexercised options where in-the-money as of January 27, 2001.
EMPLOYMENT AGREEMENT WITH MICHAEL FEUER
OfficeMax and Mr. Feuer executed a new Amended and Restated Employment
Agreement on January 3, 2000 (the "Employment Agreement"). The Employment
Agreement provides for the employment of Mr. Feuer on a rolling five-year
"evergreen" basis. Mr. Feuer's current salary is $950,000 per year and is
subject to increase at the discretion of the compensation committee.
If Mr. Feuer's employment is terminated for any reason (other than for
"cause" or death), Mr. Feuer is entitled to payment of his base salary and bonus
amounts equal to the highest bonus compensation paid or payable to him in
respect of the three fiscal years immediately preceding the fiscal year during
which such termination occurs, plus continuation of all other rights and
benefits for the remainder of the term. The Employment Agreement also provides
for the payment of a "gross-up" payment with respect to excise taxes on the
foregoing payments. "Cause" is defined as fraud, commission of a felony or act
that results in material injury to the business reputation of OfficeMax, willful
and repeated failure to perform duties under the Employment Agreement, or
material breach of the agreement.
In the event of a material change in Mr. Feuer's position, duties or
reporting relationship or a "change in control" of OfficeMax, Mr. Feuer is
entitled to terminate the agreement and to treat the termination as a
termination by OfficeMax without cause. "Change in control," as defined in the
Employment Agreement, may occur when any person or group of commonly controlled
persons controls 30% or more of OfficeMax or any transaction results in a change
in ownership of 30% or more of the outstanding common shares or a sale or
disposition of all, or substantially all, of our assets.
The Employment Agreement also contains provisions prohibiting Mr. Feuer
from competing with OfficeMax, soliciting or hiring our officers or disclosing
confidential information of OfficeMax during the term of the agreement,
including any periods during which he is not providing services but is receiving
salary and bonus payments under the agreement.
SEVERANCE AGREEMENTS WITH OTHER KEY EXECUTIVES
To ensure continuity and the continued dedication of key executives during
any period of uncertainty caused by the possible threat of a takeover, we have
entered into severance agreements with certain key executives, including each of
the executive officers named in the Summary Compensation Table (other than Mr.
Feuer). In the event there is a Change in Control (as that term is defined in
the agreements) of OfficeMax and the employment of the executive terminates
under certain conditions described in the agreements at any time during the 24
months following the Change in Control, the executive will continue to receive
the executive's monthly
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base pay for an agreed upon amount of time as follows: Mr. Peterson - 24 months;
Mr. Rutherford - 24 months; Mr. Mulet - 24 months; and Mr. O'Donnell - 12
months. Each agreement also contains a covenant by the executive not to compete
with OfficeMax for 12 months following termination of employment. If an
executive violates the covenant not to compete, the executive is no longer
entitled to receive the monthly severance payments described below.
In addition, Mr. Peterson's agreement provides that upon termination of his
employment by OfficeMax (other than for Cause or Disability (as such terms are
defined in the severance agreements)) or by Mr. Peterson for Good Reason (as
defined in the severance agreement), he will continue to receive his monthly
base salary as of such date for: 12 months if such termination occurs prior to
the first anniversary of his date of hire; 24 months if such termination occurs
during his second year of employment with the Company; or 36 months if such
termination occurs following the third anniversary of his date of hire. For
Messers. Rutherford, Mulet and O'Donnell, the severance agreements provide that
upon termination of their employment by OfficeMax (other than for Cause or
Disability) or by them for Good Reason, they will continue to receive their
monthly base salary as of such date for 12 months.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In fiscal 1999, the Company provided a $100,000 collateralized loan to
Harold Mulet, Executive Vice President, Retail Sales and Store Productivity, in
connection with his acquisition of 19,000 common shares of OfficeMax. In fiscal
2000, the Company provided a $164,412 loan to Gary Peterson, President and Chief
Operating Officer, to facilitate his relocation to Cleveland. Interest is
charged on both loans at the federal short-term interest rate published by the
Internal Revenue Service. As of April 5, 2001, the outstanding principal amount
of Mr. Mulet's loan was $100,000 and the outstanding principal amount of Mr.
Peterson's loan was $164,412.
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SHAREHOLDER PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return on
our common shares with the cumulative total return of the Standard & Poor's
Composite--500 Stock Index and an index based on a "line of business" peer group
of companies consisting of Office Depot, Inc. and Staples, Inc. The graph
assumes in each case an initial investment of $100 on January 27, 1996, with the
peer group investment weighted on the basis of market capitalization at
January 27, 1996.
[LINE GRAPH]
JAN. 27, 1996 JAN. 25, 1997 JAN. 24, 1998 JAN. 23, 1999 JAN. 22, 2000 JAN. 27, 2001
------------- ------------- ------------- ------------- ------------- ------------
OfficeMax, Inc. 100 82 95 72 45 23
Peer Group 100 119 133 277 213 152
S&P 500 100 126 161 209 249 237
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our executive
officers and directors to file reports of beneficial ownership and changes in
beneficial ownership with the SEC and the New York Stock Exchange. We believe
that during fiscal 2000, our executive officers and directors complied with the
applicable Section 16(a) reporting requirements. This conclusion is based solely
on a review of filings with the SEC and certain written representations received
by us from our executive officers and directors.
ITEM 2 -- SHAREHOLDER PROPOSAL
Mr. Javier Epstein, of 2287 Johnson Avenue, Riverdale, New York 10463 and
the owner of 5,000 shares of the Company's common stock, has submitted the
following proposal:
PROPOSAL
"The stockholders of OfficeMax, Inc. ("OfficeMax" or the "Company") request
the Board of Directors to redeem the stockholders purchase rights distributed on
March 17, 2000 unless such distribution is approved by the affirmative vote of
stockholders, to be held as soon as may be practicable."
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SUPPORTING STATEMENT
"As of December 26, 2000, OfficeMax's share price stood at 2 7/8, a drop of
76% since June 1999. Stockholders experienced a loss of over $1 billion in the
market value of their stock during this period when OfficeMax management started
announcing a series of negative earnings surprises due to several new
initiatives aimed to improve the Company's operational and financial
performance.
As the implementation of these initiatives are almost completed, I believe
this is a particularly prudent moment for our Board of Directors to begin to
eliminate management-entrenching corporate governance structures, particularly
OfficeMax's poison pill.
The Board of Directors created the Company's current poison pill rights
plan in March 17, 2000 with the distribution of Preference Share Purchase Rights
to common stockholders when they learnt [sic] that a shareholder requested
approval to purchase up to 25% of the Company's outstanding shares. I do not
share the Board's view that our Company' should have put a poison pill rights
plan into effect without stockholder approval.
I believe the terms of the rights are designed to discourage or thwart an
unwanted takeover of our Company. While management and the Board of Directors
should have appropriate tools to ensure that all shareholders benefit from any
proposal to buy the Company, I do not believe that the future possibility of a
takeover justifies the unilateral implementation of such a poison pill type
device.
Although the members of the Board of Directors have been elected
representatives of the stockholders, they have been really selected by the
management of the Company who holds a natural conflict of interest under an
unwanted takeover scenario. Given that the stockholders of the Company have
taken the risk of investing their own capital in the Company, they should also
have the right to decide if a proposed purchase price is satisfactory to them.
Obviously, the management of the Company should share their views and beliefs on
such a proposal but ultimately the Company's owners should have the final
decision rather than the Company's Board.
Rights plans like ours have become increasingly unpopular in recent years.
In 1999 a majority of stockholders at seventeen companies, including J.C.
Penney, Quaker Oats, Venator, and Novell, voted in favor of stockholder
proposals asking management to redeem or repeal poison pills.
Given the undeniably undemocratic way in which the share rights have been
assigned to stockholders and maintained, I believe these rights should either be
redeemed or voted on by shareholders.
I urge shareholders to vote for this resolution!"
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "AGAINST" THE ABOVE
PROPOSAL FOR THE FOLLOWING REASONS.
The board of directors unanimously adopted the Company's Shareholder Rights
Plan in March 2000 to improve the board's ability, in a manner consistent with
its fiduciary duties, to protect and advance the interests of the Company and
its shareholders in the event of a proposal to acquire a significant interest in
the Company. The Rights Plan is designed to provide the board with a tool to
encourage potential bidders to negotiate with the board before attempting an
acquisition of control of the Company and to protect the Company's shareholders
in the event of certain unsolicited attempts to acquire control of the Company,
including a partial or two-tier tender offer that fails to treat all
shareholders equally, a "creeping acquisition" of the Company by the purchase of
stock on the open market and other acquisition tactics that the board believes
are unfair to the Company's shareholders and are not in their best interests.
The Rights Plan is also designed to provide the board with adequate time and
flexibility to negotiate on behalf of all of the Company's shareholders and
enhances the boards' ability to negotiate the highest possible offer from a
potential acquiror, develop alternatives which may better maximize shareholder
values, preserve the long-term value of the Company for its shareholders, and
ensure that all shareholders are treated fairly.
The Rights Plan is not intended to prevent a takeover of the Company. Nor
does the Rights Plan diminish the fiduciary obligations of the Company's board
of directors. Because the board, prior to the acquisition of 15% of
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the Company's common shares by an acquirer, has the power to redeem the rights
issued under the Rights Plan and thereby remove the impediment to the completion
of an acquisition of the Company, a prospective acquirer seeking to persuade the
board to redeem the Rights may propose a higher takeover price, an offer for all
shares rather than a partial offer, or better takeover terms than would be
proposed in the absence of the Rights Plan. The board's fiduciary duty to the
shareholders dictates that it evaluate the merits of each and every acquisition
proposal presented to the board and seek to insure that any proposed business
combination or acquisition delivers full value to the shareholders.
In adopting the Rights Plan, the directors received the advice of outside
legal counsel as to their fiduciary obligations to shareholders. The Rights Plan
was not adopted nor will it be used for entrenchment purposes. The board does
not believe that the Rights Plan will deter an acquisition offer that adequately
reflects the underlying value of the Company and that is fair to all
shareholders. Merger and acquisition activity over the last ten years shows that
Rights Plans neither prevent unsolicited offers from occurring, nor prevent
companies from being acquired at prices that are fair and adequate to
shareholders. Therefore, rather than deterring good-faith negotiations between a
potential acquiror and the board, the Rights Plan encourages a would-be acquiror
to meet and negotiate in good faith with the Company's board of directors. It
thereby enhances the board's ability to obtain a better price for all
shareholders in the event the Company is to be acquired.
The board believes that the adoption of a Rights Plan is appropriately
within the scope of responsibilities of the board of directors, acting on behalf
of the shareholders. The adoption of such a plan is in accord with the boards'
responsibilities for the management of the Company's affairs and the issuance of
the rights and does not require shareholders approval. Redeeming the rights
would remove an important tool that the board should have for the protection of
the shareholders. The board, therefore, believes that any decision to redeem the
rights should be the board's and should be made in the context of a specific
acquisition proposal.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "AGAINST" THIS
PROPOSAL, AND YOUR PROXY WILL BE SO VOTED IF THE PROPOSAL IS PRESENTED UNLESS
YOU SPECIFY OTHERWISE.
Approval of a shareholder proposal requires the affirmative vote of a
majority of the votes actually cast by the shareholders present (in person or by
proxy) at the meeting and entitled to vote. Because Item 2 is a request that the
board take steps to implement the proposal, approval of Item 2 may not result in
the requested action being taken, nor is the board required to initiate such
steps to take that action. If no voting instructions are given, the accompanying
proxy will be voted AGAINST Item 2. Under New York Stock Exchange rules, brokers
who hold street name shares cannot vote in their discretion on Item 2.
OTHER MATTERS TO COME BEFORE THE ANNUAL MEETING
As of the date of this proxy statement, we know of no business that will be
presented for consideration at the annual meeting other than the items referred
to above. If any other matter is properly brought before the meeting for action
by shareholders, proxies in the enclosed proxy card returned to us will be voted
in accordance with the recommendation of the board of directors or, in the
absence of such a recommendation, in accordance with the judgment of the proxy.
ADDITIONAL INFORMATION
ADVANCE NOTICE PROCEDURES
Under our code of regulations, no business may be brought before an annual
meeting unless it is specified in the notice of the meeting (which includes
shareholder proposals that we may be required to include in our proxy statement
pursuant to Rule 14a-8 under the Securities Exchange Act of 1934) or is
otherwise brought before the meeting by, or at the direction of, the board of
directors or by a shareholder entitled to vote who has delivered notice to us
(containing certain information specified in our code of regulations) not less
than 60 or more than 90 days prior to the anniversary date of the preceding
year's annual meeting. These requirements are separate from and in addition to
the SEC's requirements that a shareholder must meet in order to have a
shareholder proposal included in our proxy statement.
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SHAREHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING
Shareholders interested in submitting a proposal for inclusion in proxy
materials for the Company's annual meeting of shareholders in 2002 may do so by
following the procedures prescribed in SEC Rule 14a-8. To be eligible for
inclusion, shareholder proposals must be received at our headquarters, 3605
Warrensville Center Road, Shaker Heights, Ohio 44122, Attention: Corporate
Secretary, no later than December 13, 2001. In order to prevent any question as
to the date on which a proposal was received by us, it is suggested that
proposals be submitted by certified mail, return receipt requested.
INDEPENDENT ACCOUNTANTS
Representatives of PricewaterhouseCoopers LLP, our independent accountants,
are expected to be present at the meeting with the opportunity to make a
statement about our financial condition, if they desire to do so, and to respond
to appropriate questions from shareholders.
AUDITOR FEES FOR FISCAL 2000
During the fiscal year ended January 27, 2001, the Company retained its
principal accountants, PricewaterhouseCoopers LLP, to provide professional
services in the categories and for the aggregate amounts set forth below:
Year End Audit and Interim Review Fees...................... $459,200
Financial Information Systems Design and Implementation
Fees...................................................... $ 0
All Other Fees.............................................. $ 90,900
EXPENSE AND METHOD OF PROXY SOLICITATION
The solicitation of proxies is made by and on our behalf. We have retained
Corporate Investor Communications, Inc. ("CIC") at an estimated cost of $6,000,
plus reimbursement of expenses, to assist in the solicitation of proxies from
brokers, nominees, institutions and individuals. In addition to solicitation by
mail, CIC and our regular employees may solicit proxies by telephone, or by
facsimile. Proxies may be solicited by directors, officers and employees of
OfficeMax without additional compensation. We will, upon request, reimburse
brokerage firms and others for their reasonable expenses in forwarding
solicitation materials to the beneficial owners of shares.
ANNUAL REPORT ON FORM 10-K
WE WILL PROVIDE TO EACH SHAREHOLDER WHO IS SOLICITED TO VOTE AT THE 2001
ANNUAL MEETING OF SHAREHOLDERS, UPON THE WRITTEN REQUEST OF SUCH PERSON AND
WITHOUT CHARGE, A COPY OF OUR 2000 ANNUAL REPORT ON FORM 10-K. PLEASE DIRECT
REQUESTS TO US AT OFFICEMAX, INC., P.O. BOX 228070, CLEVELAND, OHIO 44122-8070,
ATTENTION: INVESTOR RELATIONS DEPARTMENT.
By Order of the Board of Directors,
/s/ Ross H. Pollock
Ross H. Pollock
Secretary
April 19, 2001
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APPENDIX A
OFFICEMAX, INC.
AUDIT COMMITTEE CHARTER
I. PURPOSE
The primary function of the Audit Committee ("Committee") is to act on
behalf of the Board of Directors ("Board") in fulfilling its oversight
responsibilities by reviewing: the annual and quarterly financial reports
provided by OfficeMax, Inc. ("Corporation") to the Securities and Exchange
Commission ("SEC") or the public; the Corporation's systems of internal controls
that management and the Board have established; and the Corporation's auditing,
accounting and financial reporting processes generally.
The Committee's primary duties and responsibilities are to:
- Review and appraise the audit efforts of the Corporation's independent
accountants and internal audit department.
- Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal audit
department, and the Board.
The Corporation and the Committee confirm that the Corporation's
independent accountants are ultimately accountable to the Board and the
Committee, and that the Committee and the Board have the ultimate authority and
responsibility to select, evaluate and, when appropriate, replace the
independent accountants.
The Committee will fulfill its responsibilities primarily by carrying out
the activities enumerated in Section IV of this Charter.
II. COMPOSITION AND TERM
The Committee shall consist of three or more directors as determined by the
Board. Each Committee member shall be free of any relationship with the
Corporation that may interfere with the exercise of his or her independence from
management and the Corporation, and, for so long as the Corporation's common
shares are listed for trading on the New York Stock Exchange ("NYSE"), shall
otherwise qualify for Committee membership under the rules of the NYSE
applicable from time to time to the Corporation and the Committee. Each
Committee member shall be financially literate, or become financially literate
within a reasonable time after his or her appointment to the Committee, and at
least one Committee member shall have accounting or related financial management
expertise, in each case as determined by the Board in its business judgment.
The Board shall elect the members of the Committee at the annual
organizational meeting of the Board, and each Committee member shall serve until
his or her successor is duly elected and qualified. Unless a Chair is elected by
the full Board, the members of the Committee may designate a Chair by majority
vote of the full Committee membership.
III. MEETINGS
The Committee shall hold at least four meetings annually (which may be in
person or by telephone) and shall meet more frequently as it considers
necessary. If the Committee considers it necessary, it may meet in executive
session. Members of the Committee and the Committee's secretary, and only those
advisors and members of management designated by a Committee member, shall
attend executive sessions. The Committee shall meet at least annually in a
separate executive session with each of management, the senior member of the
internal audit department, and the independent accountants, to discuss any
matter that the Committee or the applicable other participant believes should be
discussed privately. The minutes of each meeting will be distributed to all of
the Directors.
A-1
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IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Committee shall:
Documents/Reports Review
1. Review this Charter at least annually, and update it as conditions
dictate.
2. Review with financial management and the independent accountants the
Corporation's audited financial statements to be included in its Annual Report
on Form 10-K, prior to its filing.
3. Comply with all requirements applicable to the Committee or its
activities under the Securities Act of 1934, as amended, or under other
applicable law, and under the rules of the NYSE applicable from time to time to
the Corporation and the Committee.
Independent Accountants
4. Recommend to the Board the selection of the independent accountants,
considering independence and effectiveness, and approve the fees and other
compensation to be paid to the independent accountants. The Committee shall
ensure that the independent accountants submit on a periodic basis to the
Committee a formal written statement delineating all relationships between the
independent accountants and the Corporation. The Committee shall actively engage
in a dialogue with the independent accountants with respect to any disclosed
relationship or service that may affect the independent accountants' objectivity
and independence and shall recommend that the Board take appropriate action in
response to the independent accountants' report to satisfy itself of the
independent accountants' independence.
5. Review the performance of the independent accountants and approve any
nonaudit engagement by the Corporation of the independent accountants and any
proposed discharge of the independent accountants.
6. Periodically consult with the independent accountants out of the
presence of management about internal controls and the fullness and accuracy of
the Corporation's financial statements.
7. Evaluate together with the Board the performance of the independent
accountants, and if so determined by the Committee, recommend that the Board
replace the independent accountants.
Financial Reporting Processes
8. Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied in its
financial reporting.
9. Consider major changes to the Corporation's auditing and accounting
principles and practices as suggested by the independent accountants,
management, or the internal auditing department.
10. Review the Corporation's accounting treatment of unusual or
nonrecurring transactions.
Process Improvement
11. Establish regular and separate systems of reporting to the Committee by
each of management, the independent accountants and the internal auditors
regarding any significant judgments made in management's preparation of the
financial statements and the view of each as to the appropriateness of such
judgments.
12. Review with the independent accountants any problems or difficulties
the accountants may have encountered in any management letter provided by the
accountants and the Corporation's response to that letter.
13. Following completion of the annual audit, review separately with each
of management, the independent accountants and the internal auditing department
any significant difficulty encountered during the course of the audit, including
any restriction on the scope of work or on access to required information.
14. Review any significant disagreement among management and the
independent accountants or the internal auditing department in connection with
the preparation of the financial statements.
A-2
23
15. Meet periodically with the head of the Corporation's management
information systems department regarding systems and processes affecting or
affected by the Corporation's accounting processes.
16. Review with the independent accountants, the internal auditing
department and management the extent to which changes or improvements in
financial or accounting practices, as approved by the Committee, have been
implemented. (This review should be conducted at an appropriate time subsequent
to the implementation of changes or improvements, as determined by the
Committee.)
Compliance Matters
17. Obtain reports (written or oral) from management, the Corporation's
Senior Internal Auditing Executive and the independent accountants that the
Corporation's subsidiaries and foreign affiliated entities are in conformity
with applicable legal requirements.
18. Review the activities, organizational structure, and qualifications of
the internal audit department.
19. Review, with the Corporation's counsel, any legal matter that the
Committee has been advised may have a significant impact on the Corporation's
financial statements.
A-3
24
OFFICEMAX, INC.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS - MAY 21, 2001 - 9:00 A.M.
POWERMAX DISTRIBUTION FACILITY,
2861 MARION DRIVE
P LAS VEGAS, NEVADA
R
O Your shares will be voted as recommended by the Board of Directors unless
X you indicate otherwise in which case they will be voted as marked. The
Y undersigned hereby appoints MICHAEL FEUER, ROSS POLLOCK AND MICHAEL
WEISBARTH as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated on the
reverse side hereof, all the Common Shares of OfficeMax, Inc. held by the
undersigned on April 6, 2001, at the Annual Meeting of Shareholders to be
held on May 21, 2001, or any adjournment or postponement.
CHANGE OF ADDRESS:
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
- --------------------------------------------------------------------------------
-FOLD AND DETACH HERE-
OFFICEMAX, INC.
ANNUAL MEETING OF SHAREHOLDERS
MAY 21, 2001 AT 9:00 A.M.
POWERMAX DISTRIBUTION FACILITY
2861 MARION DRIVE
LAS VEGAS, NEVADA
[MAP]
25
[X] PLEASE MARK YOUR
VOTES AS IN THIS 0925
EXAMPLE.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEM 1 AND "AGAINST" ITEM 2.
- --------------------------------------------------------------------------------
FOR WITHHELD FOR AGAINST ABSTAIN
1. ELECTION OF [ ] [ ] Nominees: 01 R.L. Bank, 02 M. Feuer, 2. TO APPROVE THE SHAREHOLDER [ ] [ ] [ ]
DIRECTORS 03 P.D. Fishbach, 04 J.S. Thornton PROPOSAL WITH RESPECT TO THE
REDEMPTION OF PREFERRED SHARE
PURCHASE RIGHTS.
For, except vote withheld from the following nominee(s):
- -------------------------------------------------------------
Check box for change of address [ ]
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. Joint
owners must each sign. When signing as attorney,
executor, administrator, trustee or guardian, please
give full title as such.
---------------------------------------------------
---------------------------------------------------
SIGNATURE(S) DATE
- --------------------------------------------------------------------------------
-FOLD AND DETACH HERE-
OfficeMax encourages you to take advantage of two cost-effective and convenient
ways to vote your shares.
You may now vote your proxy 24 hours a day, 7 days a week, either over the
Internet or using a touch-tone telephone. Your Internet or telephone vote must
be received by 12:00 midnight New York time on May 17, 2001. Your Internet or
telephone vote authorizes the Proxies named on the above proxy card to vote your
shares in the same manner as if you marked, signed and returned your proxy card.
VOTE BY INTERNET: POINT YOUR BROWSER TO THE WEB ADDRESS:
http://www.eproxyvote.com/omx
Click on the "PROXY VOTING" icon. You will be asked to
enter the Voter Control Number located in the box just
below the perforation on the proxy card. Then follow the
instructions.
OR
VOTE BY PHONE: ON A TOUCH-TONE TELEPHONE, DIAL 1-877-779-8683 FROM
THE U.S. AND CANADA OR DIAL 001-1-201-536-8073 FROM
OTHER COUNTRIES. You will be asked to enter the Voter
Control Number located in the box just below the
perforation on the proxy card. Then follow the
instructions.
OR
VOTE BY MAIL: Mark, sign and date your proxy card and return it in the
envelope provided. If you are voting by the Internet or
telephone, please do not mail your proxy card.