SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<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 Section 240.14a-11c or Section 240.14a-12
</Table>
ODD JOB STORES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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July 22, 2002
Dear Fellow Shareholder:
It is a pleasure to extend to you a cordial invitation to attend the
2002 Annual Meeting of Shareholders of Odd Job Stores, Inc., formerly Mazel
Stores, Inc. This year's annual meeting will be held at Odd Job Stores, Inc.
offices at 200 Helen Street, South Plainfield, NJ 07080 on Wednesday, September
4, 2002 at 9:00 am.
Shareholders will be asked to approve the election of Directors, ratify
the appointment of auditors and approve an amendment to the 1996 Stock Option
Plan. Following the meeting, management will be pleased to answer your questions
regarding the Company. Please carefully review the enclosed Proxy Statement.
I hope you will be able to attend this meeting in person. Whether or
not you expect to attend, I urge you to sign, date and return the enclosed proxy
card so that your shares will be represented.
I look forward to seeing you on September 4th.
Sincerely,
Peter J. Hayes
Chief Executive Officer
ODD JOB STORES, INC.
200 Helen Street
South Plainfield, NJ 07080
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held September 4, 2002
The Annual Meeting of Shareholders of Odd Job Stores, Inc., an Ohio
corporation (the "Company"), will be held at Odd Job Stores, Inc. at the
Company's offices at 200 Helen Street, South Plainfield, NJ 07080 on Wednesday,
September 4, 2002 at 9:00 a.m.
The purposes of the meeting will be to:
1. Elect four Directors for a term expiring in 2005
2. Ratify the appointment of KPMG LLP as auditors of the
Company for the fiscal year ending February 1, 2003.
3. Approve an amendment to the 1996 Stock Option Plan to
reserve for issuance under such plan an additional
1,000,000 Common Shares of the Company.
4. Transact such other business as is properly brought
before the meeting.
Only holders of shares of Common Stock of record at the close of
business on July 12, 2002 will be entitled to notice of and to vote at the
meeting. A list of such shareholders will be open for examination by any
shareholder at the meeting.
ALL SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. TO ENSURE
YOUR REPRESENTATION AT THE MEETING, HOWEVER, PLEASE MARK, SIGN AND DATE YOUR
PROXY CARD AND RETURN IT WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
Any shareholder present at the meeting may withdraw his or her proxy and vote
personally on each matter brought before the meeting.
By Order of the Board of Directors
Marc H. Morgenstern
Secretary
South Plainfield, NJ
July 22, 2002
ODD JOB STORES, INC.
200 HELEN STREET
SOUTH PLAINFIELD, NJ 07080
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Odd Job Stores, Inc., formerly Mazel
Stores, Inc. (the "Company") for use at the Annual Meeting of Shareholders to be
held at the time and place, and for the purposes, set forth in the accompanying
Notice of Annual Meeting of Shareholders (the "Annual Meeting"). It is
anticipated that the Proxy Statement together with the proxy card and the fiscal
2001 Annual Report to Shareholders will be mailed to the Company's shareholders
commencing on July 22, 2002.
Pursuant to the Ohio General Corporation Law, a person has the power to
revoke its proxy at any time before it is exercised by (1) attending the Annual
Meeting and voting in person, (2) executing and delivering a proxy bearing a
later date, or (3) delivering written notice of revocation to the Secretary of
the Company prior to the Annual Meeting.
The Company will bear the cost of this solicitation of proxies,
including the charges and expenses of brokerage firms and others for forwarding
solicitation materials to beneficial owners of the Company's shares of Common
Stock (the "Common Shares"). In addition, proxies may be solicited by mail,
personal interview, or telephone by Directors, officers or employees of the
Company and its subsidiaries without additional compensation therefore.
PURPOSES OF ANNUAL MEETING
The Annual Meeting has been called for the purposes of (1) electing
four (4) Directors of the class whose three-year term of office will expire in
2005; (2) ratifying the appointment of KPMG LLP as auditors of the Company for
fiscal 2002; (3) approving an amendment to the 1996 Stock Option Plan increasing
by 1,000,000 the number of Common Shares authorized for issuance under the plan;
and (4) transacting such other business as may properly come before the meeting.
The persons named in the enclosed proxy have been selected by the Board
of Directors and will vote Common Shares represented by valid Board of
Directors' proxies. They have indicated that, unless otherwise indicated in the
enclosed proxy, they intends to vote for the election of the Director nominees
named herein and in favor of the proposals listed in Items 2 and 3 above.
VOTING SECURITIES
The close of business on July 12, 2002 has been fixed as the record
date for the determination of holders of record of the Common Shares of the
Company entitled to notice of and to vote at the Annual Meeting. On the record
date, 9,060,695 Common Shares were outstanding and eligible to be voted at the
Annual Meeting. A quorum for the transaction of business at the Annual Meeting
is a majority of the outstanding Common Shares. Votes cast by proxy or in person
at the Annual Meeting will be tabulated by the election inspector appointed for
the Annual Meeting. The election of Directors and the proposal to ratify the
appointment of auditors require approval only by a plurality of the votes cast.
The amendment of stock option plan requires the approval of the majority of the
common shares present at the meeting. As a consequence, abstentions and broker
non-votes will not be counted in determining the outcome of the vote with
respect to election of Directors or appointment of the auditors, but abstentions
will have the effect of a negative vote on the proposal to amend the stock
option plan.
INFORMATION REGARDING THE BOARD OF DIRECTORS
GENERAL
The business of the Company is managed under the direction of the
Company's Board of Directors. The number of Directors is currently fixed at 10.
The Company's Amended and Restated Code of Regulations ("Code of Regulations")
divides the Board of Directors into three classes of three or four Directors
each. The Directors serve staggered terms of three years, with the members of
one class being elected each year, as follows: (i) Reuven D. Dessler, Mark J.
Miller, William A. Shenk, and Ned L. Sherwood serve until the 2002 Annual
Meeting; (ii) Peter J. Hayes, Jacob Koval and Joseph Nusim serve until the 2003
Annual Meeting; and (iii) Charles Bilezikian, Steve Furner, and Robert Horne
serve until the 2004 Annual Meeting; and in each case until their respective
successors are elected and qualified.
The Board of Directors has established two standing committees: an
Audit Committee and Compensation Committee.
Audit Committee. For fiscal 2001, the committee was chaired by Mr.
Sherwood. The Committee operates pursuant to a written charter (a copy of which
was attached as Appendix A to the 2001 Proxy Statement), and is responsible for
monitoring and overseeing the Company's internal controls and financial
reporting processes, as well as the independent audit of the Company's
consolidated financial statements by the Company's independent auditors, KPMG
LLP. Each committee member is an "Independent Director" as defined in Rule
4200(a)(15) of the National Association of Securities Dealers, Inc. listing
standards. As part of fulfilling its responsibilities, the Audit Committee
reviewed and discussed the audited consolidated financial statements for fiscal
2001 with management and discussed those matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with Audit Committees)
with the Company's independent auditors. The Audit Committee received the
written disclosures and the letter required by Independent Standards Board
Standard No. 1 (Independence Discussions with Audit Committee) from KPMG LLP and
discussed that firm's independence with representatives of the firm.
Based upon the Audit Committee's review of the audited consolidated
financial statements and its discussions with management and the Company's
independent auditors, the Audit Committee recommended that the Board of
Directors include the audited consolidated financial statements for the fiscal
year ended February 2, 2002 in the Company's Annual Report on Form 10-K filed
with the Securities and Exchange Commission.
Ned L. Sherwood, Chairman
Charles Bilezikian
Mark Miller
Compensation Committee. The Compensation Committee has the authority
to: (i) administer the Company's stock option plan and restricted stock plan;
(ii) review and monitor key employee compensation and benefits policies; and
(iii) administer the Company's management compensation plans. The Compensation
Committee consists of Messrs. Horne, Miller and Shenk.
The Board of Directors of the Company held thirteen (13) meetings in
fiscal 2001. All of the current Directors attended at least 75% of the Board and
applicable committee meetings held during fiscal 2001, with the exception of Mr.
Bilezikian, who attended 73% of such meetings. In addition to holding regular
Board and committee meetings, the Board members also reviewed and considered
matters and documents and communicated with each other wholly apart from the
meetings. Various actions were taken by unanimous written consent.
COMPENSATION OF DIRECTORS
The Company pays each outside Director an annual fee of $15,000 payable
quarterly in payments of $3,750, together with reimbursement of out-of-pocket
expenses incurred in connection with the Directors' attendance at such meetings.
In addition, each outside Director receives $1,500 per meeting for each meeting
attended in excess of the four quarterly meetings. No additional compensation is
to be paid for committee meetings held on the same day as a Board of Directors'
meeting. Officers of the Company who are also Directors will receive no
additional compensation for serving as Directors.
Each outside Director of the Company, upon their initial election as a
Director, receives a stock option to purchase 15,000 Common Shares at the time
of their election to the Board. Director options vest ratably over a period of
five years and expire ten years from date of grant.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors has nominated Reuven Dessler, Mark Miller,
William Shenk and Ned Sherwood, the Directors whose terms of office expire this
year, to stand for re-election as Directors. The three-year term will end upon
the election of Directors at the 2005 Annual Meeting of Shareholders.
At the Annual Meeting, the Common Shares represented by valid proxies,
unless otherwise specified, will be voted to re-elect the Directors. Each
individual nominated for election as a Director of the Company has agreed to
serve if elected. However, if any nominee becomes unable or unwilling to serve
if elected, the proxies will be voted for the election of such other person as
may be recommended by the Board of Directors. The Board of Directors has no
reason to believe that the persons listed as nominees will be unable or
unwilling to serve.
The Board of Directors recommends that each shareholder vote "FOR" the
Board of Directors' nominees.
PRINCIPAL OCCUPATION PAST FIVE YEARS, DIRECTOR
NAME OF DIRECTOR AGE OTHER DIRECTORSHIPS SINCE
- ---------------- --- ------------------- -----
NOMINEES FOR TERM EXPIRING IN 2005
Reuven D. Dessler 54 Chief Executive Officer of MZ Wholesale Acquisition, LLC d/b/a 1996
Mazel Company, which purchased the Company's Wholesale Division
in February 2002. Mr. Dessler served as Chairman of Board of
the Company from November 1996 to February 2002 and as its Chief
Executive Officer from November 1996 to May 2001.
Mark Miller 49 Executive Vice President of RedTagBiz.com since 2000. 1999
Previously, he was Executive Vice President and Chief Operating
Officer for the Home Products Division of Value City Department
Stores from July 1999 to July 2000 and President of the Closeout
Division of Consolidated Stores from the 1998 acquisition of
MacFrugal's Bargain Close-out's, Inc. through March 1999.
William A. Shenk 59 A private investor for over 5 years. Prior thereto, Mr. Shenk 2001
served as an attorney in Columbus and Atlanta, and previously as
Vice President and General Counsel for Consolidated Stores
Corporation.
Ned L. Sherwood 52 A principal and President of ZS Fund L.P., a company engaged in 1996
making private investments, for more than five years.
NOMINEES FOR TERM EXPIRING IN 2004
Charles Bilezikian 65 President of Christmas Tree Shops, Inc., a New England-based 1997
specialty retailer of housewares and gourmet foods since 1971.
Steve Furner 54 Vice President of Alliance Consulting, a company providing 2002
consulting services for retail companies, since 1998. From 1977
to 1998, he served in various operational and merchandising
roles with Wal-Mart Stores, Inc.
Robert Horne 43 A principal of ZS Fund, L.P., a company engaged in making 1996
private investments, for more than five years.
DIRECTORS WHOSE TERM EXPIRES IN 2003
Peter J. Hayes 59 Chief Executive Officer of the Company since May 2001 and its 2001
Chairman since February 2002. From October 1999 until joining
the Company, he served as President of Sales of
RetailExchange.com, Inc., an internet B2B exchange. From
September 1995 to October 1999, he served as President and
founder of Lemax Hong Kong Ltd., a manufacturer and importer of
household ceramic products and candles.
Jacob Koval 54 Chief Operating Officer of MZ Wholesale Acquisition, LLC d/b/a 1996
Mazel Company, which purchased the Company's Wholesale Division
in February 2002. Mr. Koval served as Executive Vice President
- Wholesale of the Company from November 1996 to May 2001.
Joseph Nusim 68 Co-Chairman of the Board of Loehmann's Stores since October 2000 2002
and Co-Chairman of the Board of Woodworkers Warehouse Stores
since November 2001. From 1985 through 1995, he had been CEO
for Channel Home Centers and CEO for Makro USA.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Common Shares as of July 12, 2002. Unless otherwise
indicated below, the persons named below have the sole voting and investment
power with respect to the number of shares set forth opposite their names. All
information with respect to beneficial ownership has been furnished by the
respective Director, officer or 5% or greater shareholder, as the case may be.
Names and, where necessary, Number of Shares
Addresses of Beneficial Owners Beneficially Owned Percentage
- ------------------------------ ------------------ ----------
ZS Fund L.P. ...................................... 2,731,783(1) 30.1%
54 Morris Lane, Scarsdale, NY 10583
Ned L. Sherwood ................................... 2,746,783(2) 30.3%
54 Morris Lane, Scarsdale, NY 10583
Robert Horne ...................................... 2,746,783(2) 30.3%
54 Morris Lane, Scarsdale, NY 10583
Mazel/D&K, Inc. ................................... 2,058,105(3) 22.7%
31000 Aurora Road, Solon, Ohio 44139
Reuven D. Dessler ................................. 1,560,755(4) 17.2%
31000 Aurora Road, Solon, Ohio 44139
Jacob Koval ....................................... 800,697(5) 8.8%
31000 Aurora Road, Solon, Ohio 44139
Dimensional Fund Advisors, Inc. ................... 712,300(6) 7.9%
1299 Ocean Avenue, Santa Monica, CA 90401
William Shenk ..................................... 634,758(7) 7.0%
7675 La Jolla Blvd., La Jolla, CA 92037
Westport Asset Management ......................... 617,090(6) 6.8%
253 Riverside Avenue, Westport, CT 06880 .....
Peter Hayes ....................................... 100,000(8) 1.1%
Edward Cornell .................................... 2,000 *
Charles Bilezikian ................................ 30,000(9) *
Mark Miller ....................................... 6,000(10) *
Steve Furner ...................................... ----
Joseph Nusim ...................................... ----
Brady Churches .................................... 280,504 3.1%
Jerry Sommers ..................................... 192,276 2.1%
Mark Hanners ...................................... 60,658(11) *
All Current Directors and ......................... 5,895,993(12) 64.0%
Executive Officers of the Company (11 Persons)
*Less than one percent.
(1) The shares beneficially owned by ZS Fund L.P. include 1,978,530 shares held
by ZS Mazel L.P., 450,698 shares held by ZS Mazel II L.P., and 302,555
shares held by ZS Mazel, Inc. Messrs. Horne and Sherwood are officers of ZS
Fund L.P.
(2) Includes the shares beneficially owned by ZS Fund L.P. as officers and/or
equity owners of the entities holding such shares. Messrs. Sherwood and
Horne have voting power with respect to such shares. Except to the extent
of their equity interests in the entities holding. Also includes 15,000
shares each subject to options currently exercisable or exercisable within
60 days hereof.
(3) Mazel/D&K, Inc. is a corporation owned by Messrs. Dessler and Koval and
members of their families. Messrs. Dessler and Koval are the Directors and
officers of Mazel/D&K, Inc.
(4) Includes 1,372,304 shares owned by Mazel/D&K, Inc. for the benefit of Mr.
Dessler and family members.
(5) Includes 685,801 shares owned by Mazel/D&K, Inc. for the benefit of Mr.
Koval and family.
(6) Based on 13G's filed in February 2002.
(7) Includes 3,000 shares subject to options currently exercisable or
exercisable within 60 days hereof. National City Corp. is the shareholder
of record of 630,000 of Mr. Shenk's shares.
(8) Includes 100,000 shares subject to options currently exercisable or
exercisable within 60 days hereof.
(9) Includes 15,000 shares subject to options currently exercisable or
exercisable within 60 days hereof.
(10) Includes 6,000 shares subject to options currently exercisable or
exercisable within 60 days hereof.
(11) Includes 7,000 shares subject to options currently exercisable or
exercisable within 60 days hereof.
(12) Includes 154,000 shares subject to options currently exercisable or
exercisable within 60 days hereof.
EXECUTIVE OFFICERS' COMPENSATION
The following table sets forth certain information with respect to the
compensation earned during each of the last three fiscal years by the Chief
Executive Officer and certain other named executive officers of the Company:
SUMMARY COMPENSATION TABLE
Name and Fiscal Annual Compensation Option All Other
Principal Position Year Salary Bonus Awards(#) Compensation
- ------------------ ---- ------ ----- --------- ------------
Peter J. Hayes 2001 $412,500 $150,000 500,000 $ 1,263
Chief Executive Officer
Edward Cornell 2001 191,154 41,250 100,000 ---
Chief Financial Officer
Executive Vice President
Reuven D. Dessler 2001 217,832 --- ---- 14,029
Former Chief Executive Officer 2000 491,394 --- 54,000 1,962
1999 466,220 187,451 --- 1,334
Brady Churches 2001 550,557 --- --- 7,661
President 2000 441,252 --- 22,000 1,703
1999 401,293 104,438 --- 2,998
Jerry Sommers 2001 399,398 --- --- 2,108
Executive Vice President - 2000 327,950 --- 23,000 904
Retail 1999 299,139 78,440 --- 2,244
Mark Hanners 2001 303,025 --- --- 4,664
Executive Vice President - 2000 249,684 15,000 17,500 9,491
Wholesale 1999 228,626 35,030 5,000 2,254
STOCK OPTION GRANTS IN FISCAL 2001
The following were stock option grants by the Company to executive
officers during the fiscal year ended February 2, 2002.
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees Base Price Expiration
Name Granted(#) In Fiscal 2000 ($/Share) Date
---- ---------- -------------- -------
Peter Hayes 500,000(a) 76.3 $2.60 05/05/11
Edward Cornell 50,000(a) 7.6 1.67 10/31/11
50,000(b) 7.6 4.50 10/31/11
Reuven Dessler ---- ---- ---- ----
Brady Churches ---- ---- ---- ----
Jerry Sommers ---- ---- ---- ----
Mark Hanners ---- ---- ---- ----
(a) Options are exercisable upon vesting 20% each year, commencing in March,
2002.
(b) Options are exercisable upon vesting 20% commencing in October 2002.
AGGREGATED OPTION EXERCISES IN FISCAL 2001 AND FISCAL YEAR-END OPTION VALUES
The following table summarizes the fiscal year-end value of unexercised
options for each of the executive officers identified in the Summary
Compensation Table. No options were exercised by any executive officer in fiscal
2001.
Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options
at February 2, 2002 (#) at February 2, 2002 ($)(1)
----------------------- ---------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Peter Hayes --- 500,000 $ 0 $295,000
Edward Cornell --- 100,000 0 76,000
Reuven Dessler --- --- 0 0
Brady Churches 104,400 17,600 0 0
Jerry Sommers 113,600 24,400 0 0
Mark Hanners 34,000 3,500 2,415 2,415
(1) The closing price of Odd Job Stores, Inc. Common Shares on February 1,
2002, the last trading day prior to the fiscal year end, was $3.19.
Equity Compensation Plan Information
------------------------------------
Number of securities Number of shares
issuable upon exercise of available for future
outstanding options at Weighted Average issuances at
Name of Plan February 2, 2002 Exercise Price February 2, 2002
------------ ---------------- -------------- ----------------
Plans approved by Shareholders: 1,764,675* $7.31 735,325*
1996 Stock Option Plan
Plans not approved by Shareholders: None N/A N/A
None
* Includes the shares subject to shareholder approval at the 2002 Annual
Meeting. At July 12, 2002, there were options for 1,489,650 shares outstanding
and 840,788 shares available for future grants.
EMPLOYMENT ARRANGEMENTS
Peter J. Hayes entered into a three-year employment agreement effective
May 7, 2001 providing him an annual base salary of $550,000 (subject to annual
cost of living adjustments). Mr. Hayes is entitled to receive an annual bonus of
up to $250,000 per year, subject to the Company achieving pre-determined annual
performance target. Under the employment agreement, Mr. Hayes received ten-year
stock options of 500,000 Common Shares at an exercise price of $2.60; the
options vest in 20% annual increments commencing May 2002. Mr. Hayes is entitled
to one year's salary in the event of his termination without cause. He is also
receiving $55,000 to cover the relocation costs of his family.
The Company has entered into an agreement with Mr. Cornell, its Chief
Financial Officer, that provides for payment of six months severance in the
event of a "change in control" or, in connection with the consolidation of
management and administrative functions and he is not offered a position similar
to his current position.
The Company and Brady Churches, former President of Mazel Stores, Inc.,
entered into a severance agreement dated June 10, 2002 (the "Agreement"),
terminating his February 2000 employment agreement. Under the Agreement, Mr.
Churches received a cash payment of $500,000. The parties executed mutual
releases and Mr. Churches non-competition restriction has expired.
The Company and Jerry D. Sommers, former Executive Vice President -
Retail, entered into a severance agreement dated May 3, 2002 (the "Agreement"),
terminating his February 2000 employment agreement. Under the Agreement, Mr.
Sommers received a cash payment of $728,000, and effected a sale to the Company
of 100,000 shares of Common Stock at $3.50 per share. The parties executed
mutual releases and, in general, Mr. Sommer's non-competition restriction has
expired.
In connection with the sale of the Company's Wholesale Division, the Company
and Mark Hanners, Executive Vice President - Wholesale, entered into a severance
agreement dated February 12, 2002 (the "Agreement") terminating his February
2000 employment agreement. Under the Agreement, Mr. Hanners received $250,000
cash payment, and is entitled to an additional $100,000 payment if any person
(other than existing principal shareholders) acquire more than 50% of the
Company's Common Stock on or before October 31, 2003. Moreover, Mr. Hanners has
the option to require the Company to repurchase up to 53,658 shares of Common
Stock at $3.00 per share on or prior to October 31, 2003. The Company's
obligation is secured by a letter of credit. Mr. Hanners was indebted to the
Company at fiscal 2001 year-end in the amount of $34,835, which amount was
repaid as part of the agreement.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Act of 1934 requires the Company's
Directors, executive officers and persons who own 10% or more of the Company's
Common Shares to file reports of ownership and changes of ownership with the
Securities and Exchange Commission and the Company. Based upon a review of these
filings and written representations from such individuals, the Company
understands that all such filers have adhered to all applicable filing
requirements.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is generally
responsible for determining the nature and amount of compensation for executive
officers.
The Company's compensation philosophy ties a significant portion of
executive compensation to the Company's success in meeting specified profit
growth and performance goals and to appreciation in the Company's stock price.
The Company's compensation objectives include attracting and retaining the best
possible executive talent, motivating executive officers to achieve the
Company's performance objectives, rewarding individual performance and
contributions, and linking executive and shareholder interests through
equity-based plans.
The Company's executive compensation consists of three key components:
base salary, annual bonus and stock options and restricted stock awards, each of
which is intended to complement the others and, taken together, to satisfy the
Company's compensation objectives.
BASE SALARY. The Compensation Committee led the Company's search for a
new Chief Executive Officer in fiscal 2001. Once Mr. Hayes was selected, his
employment agreement was negotiated by the Committee. The terms of his agreement
were deemed reasonable and necessary to attract a candidate of Mr. Hayes'
stature. Salaries for the other executive officers were also set by the
Committee, giving consideration to the salaries of other similar size retailers.
ANNUAL BONUS. The Company has established a management incentive plan
that based its executives' annual bonus on specified profit growth and
performance goals. Although the corporate target goals for fiscal 2001 were not
met, the Compensation Committee elected to pay certain officers' bonuses based
on individual accomplishments. The 2002 bonus program is again based on a
corporate target, but contains elements that would pay a portion of the bonus
based solely on achievement of individual goals.
STOCK-RELATED COMPENSATION. The Compensation Committee believes that
equity-based compensation ensures that the Company's executives have a
continuing stake in the long-term success of the Company. Stock option awards
contain vesting provisions that ensures the executives have a financial
incentive to remain with the Company during the vesting period and beyond. In
determining the size of option awards, the Committee looks at several
measurements, including the value of options awarded to individuals in
comparable position in peer group companies, individual and Company performance
against plan, the number of shares and options currently held by the officer and
the relative proportion of long-term incentives within the total compensation
mix. An aggregate of 600,000 stock options were awarded to Mr. Hayes and Mr.
Cornell in connection with their initial employment.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. The Committee uses the same
procedures described above for the other executive officers in setting the
annual salary, bonus, and stock-incentive awards for the Chief Executive
Officer.
COMPENSATION COMMITTEE:
Robert Horne, Chairman
Mark Miller
William A. Shenk
CERTAIN TRANSACTIONS
On February 11, 2002, the Company sold to MZ Wholesale Acquisition,
LLC, an enterprise involving Reuven Dessler, former Chairman and Chief Executive
Officer, and Jacob Koval, former Executive Vice President, of the Company (the
"Buyer"), the assets of its Wholesale Division and certain other assets,
including the notes receivable from Messrs. Dessler and Koval valued (together
with accrued interest at fiscal 2001 fiscal year end) at $1,147,136 and
$808,586, respectively. Under the sale agreement, Company received a cash
payment of $22,292,000, based primarily on the book value of the acquired assets
and assumed liabilities. A post-closing adjustment payment of approximately $5
million based on the audited book value of such assets and liabilities on the
closing date was made in June 2002. Under the terms of the sale agreement, the
Company has agreed not to compete in the wholesale sale of closeout merchandise,
subject to certain limitations, for a period expiring on the earlier of (i) the
three-year anniversary of the sale or (ii) the sale of a majority of the
Company's stock or assets to a third-party (the "Restricted Period"). In the
event the Company purchases closeout merchandise in quantities exceeding those
required by its retail operations, during the Restricted Period, it has the
right to put up to $3.5 million of such merchandise annually to a joint venture
(equally owned by Buyer and Company and managed by Buyer). Under the sale
agreement, Company has assigned the "Mazel" name to Buyer, but may continue the
use of the name on its retail stores for up to five (5) years. Messrs. Dessler,
Koval and Jay L. Schottenstein (the "Buyers' Related Parties") and ZS Fund LP.,
the Company's largest beneficial shareholder, have entered into a Standstill
Agreement pursuant to which: (i) the Buyer's Related Parties have agreed not to
purchase additional shares of Common Stock that would cause their aggregate
ownership to exceeed thirty-three percent (33%) of the outstanding shares of
Company without the consent of ZS Fund and a majority of the disinterested
directors of Company; and (ii) ZS Fund has agreed not to purchase additional
shares of Common Stock that would cause its aggregate ownership to exceed
thirty-six percent (36%) of the Company's outstanding shares without the consent
of Buyer's affiliates and a majority of the disinterested directors of Company.
The parties entered into an interim services agreement with respect to certain
transitional services, shared personnel and facilities. Finally, as part of the
sale, the Company and Messrs. Dessler and Koval each of who remains a director
of the Company, executed mutual releases resolving various compensatory and
other claims of the parties.
Messrs. Dessler and Koval are partners in Aurora Road Realty
Development Company, a partnership that leases the office and warehouse facility
located in Solon, Ohio, to the Company prior to its assignment in the Buyer.
Messrs. Dessler and Koval own 40.0% and 6.0% interests, respectively, in such
partnership. The Company made rent payments totaling $1.9 million pursuant to
the lease for fiscal 2001. The Company believes the payments under the leases
are on terms no less favorable to the Company than could be obtained from
unrelated parties.
The Company's warehouse in South Plainfield, New Jersey is leased from
a limited liability company in which Messrs. Dessler and Koval own approximately
34% and 10% membership interest, respectively. Neither Mr. Dessler or Mr. Koval
is involved in the management of the lessor and the Company believes the terms
are no less favorable than could be obtained from unrelated parties.
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the cumulative total
shareholder return on the Company's Common Shares against the cumulative total
return of the Nasdaq U.S. Composite Index and the Nasdaq Retail Trade Stock
Index from the date of the Company's IPO in November 1996 through January 2002.
The stock price performance graph below shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into and filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference and shall not otherwise
be deemed filed under such Acts.
- --------------------------------------------------------------------------------
COMPARISON OF CUMULATIVE TOTAL RETURNS
Odd Job Stores, Inc., Nasdaq Retail Trade Stock Index and Nasdaq U.S. Composite
Index
- --------------------------------------------------------------------------------
[GRAPH]
From November 29, 1996 through January 31, 2002
- -----------------------------------------------------------------------------------------------------------------------------
11/29/96 1/31/97 1/31/98 1/31/99 1/31/00 1/31/01 01/31/02
- -------------------- ------------- -------------- ------------- --------------- -------------- --------------- --------------
Odd Job Stores, Inc. $100.00 $164.06 $ 86.72 $ 95.31 $ 56.64 $ 15.63 $ 15.63
- -------------------- ------------- -------------- ------------- --------------- -------------- --------------- --------------
Nasdaq Retail Trade $100.00 $ 97.67 $113.92 $139.68 $113.61 $ 88.03 $103.67
Index
- -------------------- ------------- -------------- ------------- --------------- -------------- --------------- --------------
Nasdaq U.S. $100.00 $107.01 $126.25 $197.62 $308.85 $216.65 $152.22
Composite Index
- -----------------------------------------------------------------------------------------------------------------------------
PROPOSAL TWO
INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee,
has selected KPMG LLP as auditors for the fiscal year ending February 2, 2003.
The Board of Directors requests the ratification of the appointment of KPMG LLP
by the shareholders at the Annual Meeting. The Board of Directors recommends
that each shareholder vote "FOR" ratification of KPMG LLP as auditors for fiscal
2001.
Aggregate fees billed for the audits of the Company's annual financial
statements and the Wholesale Division closing balance sheet and quarterly
reviews of the financial statements in fiscal 2001 were $215,687.00.
All non-audit aggregate fees billed for professional services rendered
during fiscal year 2001, including fees relating to the audit of the Company's
employee benefit plan totaled $10,000.00. The Audit Committee has considered
whether the provision of services for these fees is compatible with maintaining
the independent accountants' independence and has determined that such services
have not adversely affected KPMG LLP's independence.
KPMG LLP has audited the Company's financial statements for each fiscal
year since the fiscal year ended December 31, 1987. Representatives of KPMG LLP
are expected to be present at the meeting with the opportunity to make a
statement if they desire to do so, and are expected to be available to respond
to appropriate questions.
PROPOSAL THREE
APPROVAL OF THE AMENDMENT TO
THE 1996 STOCK OPTION PLAN
On June 5, 2002, the Board of Directors approved, subject to
shareholder approval, an amendment to the Mazel Stores, Inc. 1996 Stock Option
Plan (the "Plan"). The amendment to the Plan increases the number of Common
Shares reserved for issuance thereunder from 1,500,000 shares to 2,500,000
shares. The amendment is summarized below.
The shareholders of the Company approved the Plan in 1996 to advance
the interests of the Company and its shareholders by encouraging and enabling
directors and key employees to acquire or increase financial interests in the
Company through the stock options granted under the Plan. As of July 13, 2002
the Company had options with respect to 1,489,650 shares outstanding and 840,788
shares available for grant, assuming passage of the amendment.
The Board of Directors believes that it is in the best interests of the
Company to increase the number of Common Shares reserved for issuance under the
Plan to 2,500,000 shares, an increase of 1,000,000 shares. The Board of
Directors believes that the success of the Company is greatly dependent upon its
ability to attract and retain key personnel of outstanding ability who
are motivated to exert their best efforts on behalf of the Company and that the
Plan has been effective in achieving this goal. In the opinion of the Board of
Directors, the authorization of the additional shares will give the Company
sufficient stock reserved for issuance under the Plan to allow the Company to
attract and retain employees, including employees of potential acquisition
candidates, which will contribute to the successful conduct of the Company's
operations.
At July 12, 2002, the Company estimates that approximately 200 persons,
of which 2 are executive officers, are currently eligible to participate in the
Plan.
The Plan is administered by the Company's Compensation Committee ("Committee").
Options granted under the Plan represent rights to purchase Common
Shares of the Company within a fixed period of time and at a specified price per
share which will be determined by the Committee but shall be no less than the
market price of the Common Shares of the Company on the date of grant of the
option.
Options granted under the Plan become vested and exercisable as
determined by the Committee, generally at 20% per year increments. Options
terminate, as determined by the Committee, generally at the end of ten years
following the date of grant, subject to earlier termination in certain
circumstances. Pursuant to the Plan, in the event of a "change of control" of
the Company, the Committee in its discretion may declare that all outstanding
options become exercisable immediately and shall terminate if not exercised
prior to the control change. Options may be exercised with cash or, at the sole
discretion of the Committee, by delivery of Common Shares of the Company owned
by the option holder.
The options granted under the Plan are, during the lifetime of the
optionee, exercisable only by the optionee (or by an appointed guardian or legal
representative) and are not transferable or assignable in whole or in part
except by will or by the laws of descent and distribution. In general, the
unexercised portion of any option granted under the Plan will terminate upon the
earlier to occur of (i) the expiration of the option in accordance with its
terms or (ii) the expiration of three months from the date of termination of the
option holder's employment; provided, however, that unless otherwise determined
by the Committee, all options held by an optionee shall terminate immediately
upon cessation of employment if the optionee provides services to a competitor
of the Company.
The Board of Directors has the right at any time to terminate or amend
the Plan, but no such action may terminate options already granted or otherwise
affect the rights of any optionee under an outstanding option without the
optionee's consent. Without shareholder approval, the Board may not amend the
Plan to (i) increase the total number of shares of stock subject to option
(except for an adjustment of shares for stock splits, stock dividends or the
like), (ii) change or modify the class of eligible participants or (iii)
materially increase the benefits accruing to Plan participants. Unless the Plan
is terminated earlier by the Board, no options may be granted under the Plan
after September 9, 2006.
Common Shares to be issued upon exercise of options granted under the
Plan are registered under the Securities Act of 1933, as amended (the "Act").
Therefore, shares received by optionees upon exercise of the options will be
freely transferable; provided that officers,
directors and other "affiliates" of the Company must also comply with the resale
restrictions of Rule 144 promulgated under the Act.
There are no federal income tax consequences to an optionee or to the
Company on the granting of options. Generally, when an optionee exercises a
non-qualified stock option, the optionee recognizes income in the amount of the
aggregate fair market value of the shares received upon exercise, less the
aggregate amount paid for those shares, and the Company may deduct as an expense
the amount of income so recognized by the optionee, provided that the Company
satisfies certain tax withholding requirements. The holding period of the
acquired shares begins upon the exercise of the option, and the optionee's basis
in the shares is equal to the fair market value of the acquired shares on the
date of exercise.
OTHER MATTERS
The Board of Directors of the Company is not aware that any matters
other than those listed in the Notice of Annual Meeting of Shareholders is to be
presented for action at the meeting. If any of the Board's nominees are
unavailable for election as a Director or any other matter should properly come
before the meeting, it is intended that votes will be cast pursuant to the proxy
in respect thereto in accordance with the best judgment of the person or persons
acting as proxies.
SHAREHOLDERS' PROPOSALS
The deadline for shareholders to submit proposals to be considered for
inclusion in the Proxy Statement for the 2003 Annual Meeting of Shareholders is
expected to be December 31, 2002.
OTHER INFORMATION
The Company's fiscal 2001 Annual Report is being mailed to shareholders
with this Notice of the Annual Meeting of Shareholders and Proxy Statement.
MARC H. MORGENSTERN
Secretary
By Order of the Board of Directors
July 22, 2002
PROXY
Odd Job Stores, Inc.
Annual Meeting of Shareholders
September 4, 2002
The undersigned shareholder of ODD JOB STORES, INC. (the "Company")
hereby appoints Peter J. Hayes and Edward Cornell, or either one of them, each
with full power of substitution and revocation as Proxies to represent and vote
all the Common Shares of the Company held of record by the undersigned at the
above-stated Annual Meeting and at any adjournment(s) thereof with all of the
powers the undersigned would possess if present, as specified on the reverse
side.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE
VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE ON THE REVERSE SIDE HEREOF.
UNMARKED PROXIES WILL BE VOTED IN FAVOR OF EACH OF THE MATTERS LISTED ON THE
REVERSE SIDE UNLESS SPECIFIED TO THE CONTRARY. THE PROXIES WILL USE THEIR
DISCRETION WITH RESPECT TO ANY MATTER REFERRED TO IN ITEM (4). THIS PROXY IS
REVOCABLE AT ANY TIME BEFORE IT IS EXERCISED.
The undersigned hereby acknowledges receipt of the Notice of Meeting
and Proxy Statement dated July 22, 2002 for the Annual Meeting of Shareholders.
(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE)
Please sign, date and mail your proxy
card back as soon as possible!
ANNUAL MEETING OF SHAREHOLDERS
ODD JOB STORES, INC.
SEPTEMBER 4, 2002
Please Detach and Mail in the Envelope Provided
[ X ] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
For Withhold
ITEM 1. ELECTION OF DIRECTORS [ ] [ ]
Nominees: Reuven D. Dessler Mark J. Miller
William Shenk Ned L. Sherwood
WITHHELD FOR: (Write that nominee's name in the space provided below)
---------------------------------
For Withhold Abstain
ITEM 2. APPROVAL OF THE APPOINTMENT OF KPMG LLP [ ] [ ] [ ]
as auditors for the fiscal year ending February 1, 2003
ITEM 3. APPROVE AMENDMENT IN THE 1996 STOCK For Withhold Abstain
Option Plan to increase the authorized [ ] [ ] [ ]
number of Common Shares
ITEM 4. UPON SUCH OTHER BUSINESS AS MAY BE PROPERLY COME before said
meeting or any adjournment thereof.
The Board of Directors recommends a vote FOR the nominees and FOR proposals 2
and 3.
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
CHANGE OF ADDRESS, COMMENTS AT LEFT [ ]
I PLAN TO ATTEND THE MEETING [ ]
I DO NOT PLAN TO ATTEND THE MEETING [ ]
SIGNATURE(S) DATE , 2002
------------------------------------ ----------
NOTE: Please sign EXACTLY as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.