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 Section 240.14a-11(c) or Section 240.14a-12
CHICO'S
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than 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:
[GRAPHIC APPEARS HERE]
CHICO'S(R)
CHICO'S FAS, INC.
11215 METRO PARKWAY
FT. MYERS, FLORIDA 33912
April 20, 2000
TO OUR STOCKHOLDERS:
You are cordially invited to attend our 2000 annual meeting of stockholders
which will be held at the 'Tween Waters Inn, 15951 Captiva Road, Captiva Island,
Florida, 33924, on June 13, 2000 at 2:00 p.m., local time.
This year we have selected the 'Tween Waters Inn on Captiva as the venue
for the annual meeting because we believe it offers a perfect setting for the
meeting. I look forward to this opportunity to let you become better acquainted
with Chico's, our directors and officers, our achievements and our plans for the
future.
Please read these materials so that you'll know what we plan to do at the
meeting. Also, please sign and return the accompanying proxy card. This way,
your shares will be voted as you direct even if you can't attend the meeting.
/s/ MARVIN GRALNICK
MARVIN J. GRALNICK
CHIEF EXECUTIVE OFFICER, PRESIDENT
AND CHAIRMAN OF THE BOARD
[GRAPHIC APPEARS HERE]
CHICO'S(R)
CHICO'S FAS, INC.
11215 METRO PARKWAY
FT. MYERS, FLORIDA 33912
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 13, 2000
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To the Stockholders of
Chico's FAS, Inc.:
TIME 2:00 p.m., Local Time, on Tuesday, June 13, 2000
PLACE The 'Tween Waters Inn
Captiva, Florida
ITEMS OF BUSINESS 1. To elect two Class I directors to each serve for a three-year
term;
2. To ratify the appointment of Arthur Andersen LLP as the
Company's independent certified public accountants for
fiscal year 2001;
3. To ratify amendments to the Non-Employee Directors' Stock
Option Plan
4. To transact such other business as may properly come before
the meeting or any adjournments or postponements thereof.
RECORD DATE You can vote if you are a shareholder of record on April 19,
2000.
ANNUAL REPORT Our 2000 Annual Report, which is not a part of the
proxy soliciting material, is enclosed.
PROXY VOTING It is important that your shares be represented
and voted at the Annual Meeting. Please vote by
dating, signing and mailing the enclosed proxy
promptly in the enclosed postage paid pre-addressed
envelope. If you should be present at the meeting
and desire to vote in person, you may withdraw your proxy.
By Order of the Board of Directors,
CHARLES J. KLEMAN, SECRETARY
April 20, 2000
[GRAPHIC APPEARS HERE]
CHICO'S(R)
CHICO'S FAS, INC.
11215 METRO PARKWAY
FT. MYERS, FLORIDA 33912
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 13, 2000
To the Stockholders of
Chico's FAS, Inc.:
April 20, 2000
These proxy materials are delivered in connection with the solicitation by
the Board of Directors of Chico's FAS, Inc. ("Chico's," the "Company," "we," or
"us"), a Florida corporation, of proxies to be voted at our 2000 Annual Meeting
of Stockholders and at any adjournments or postponements thereof.
You are invited to attend our Annual Meeting of Stockholders on June 13,
2000, beginning at 2:00 p.m., Local Time. The Annual Meeting will be held at
the 'Tween Waters Inn, Captiva, Florida. Stockholders will be admitted
beginning at 1:30 p.m.
It is important that proxies be returned promptly to avoid unnecessary
expense to the Company. Therefore, whether you plan to attend the Annual Meeting
or not and regardless of the number of shares of stock you own, please date,
sign and return the enclosed proxy promptly.
ABOUT THE ANNUAL MEETING
WHAT IS THE PURPOSE OF THE MEETING?
At the Annual Meeting, stockholders will act upon the matters outlined in
the accompanying notice of meeting, including the election of directors,
ratification of the Company's independent auditors, and ratification of
amendments to the Non-Employee Directors' Stock Option Plan. In addition, the
Company's management will report on the performance of the Company during fiscal
2000 and respond to questions from stockholders.
WHEN ARE THESE MATERIALS BEING MAILED?
This Proxy Statement, form of proxy and voting instructions are being
mailed starting on approximately May 1, 2000.
WHO IS ENTITLED TO VOTE?
Only stockholders of record at the close of business on the record date,
April 19, 2000, are entitled to receive notice of the annual meeting and to vote
at the Annual Meeting (or any adjournment or postponement thereof) the shares of
common stock that they held on that date. As of that date, there were 17,180,936
common shares outstanding. Each common share is entitled to one vote on each
matter properly brought before the Annual Meeting. Shares of common stock, par
value $.01 per share (the "Common Stock") are the only outstanding voting
securities of the Company.
1
WHAT CONSTITUTES A QUORUM?
The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the shares of common stock outstanding on the record date will
constitute a quorum, permitting the meeting to conduct its business. Proxies
received but marked as abstentions and broker non-votes will be included in the
calculation of the number of shares considered to be present at the Annual
Meeting. A broker non-vote occurs when a nominee holding shares for a beneficial
owner does not vote on a particular proposal because the nominee does not have
discretionary voting power for that particular item and has not received
instructions as to that item from the beneficial owner.
HOW DO I VOTE?
If you complete and properly sign the accompanying proxy card and return it
to the Company's transfer agent, it will be voted as you direct. If you are a
registered stockholder and attend the Annual Meeting, you may vote at the Annual
Meeting either by delivering your completed proxy card in person or by voting
instead by ballot. If your shares are held in the name of a bank, broker or
other holder of record, you must obtain a proxy, executed in your favor, from
the holder of record to be able to vote at the Annual Meeting.
CAN I VOTE BY TELEPHONE OR ELECTRONICALLY?
The Company has not established procedures to allow telephone or electronic
voting, but we may do so for future stockholder meetings if we determine that
the added convenience to our stockholders would justify the additional costs to
the Company associated with these voting methods.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after you have submitted your proxy, you may revoke the proxy and
you may change your vote at any time before the proxy is exercised by filing
with the Secretary of the Company either a written notice of revocation or a
duly executed proxy bearing a later date or by attending the Annual Meeting and
voting the shares in person. No such notice of revocation or later-dated proxy,
however, will be effective until received by the Company at or prior to the
Annual Meeting. Unless the proxy is revoked, the shares represented thereby will
be voted at the Annual Meeting or any adjournment thereof. The giving of the
proxy does not affect the right to vote in person should the stockholder attend
the meeting, although attendance at the meeting will not by itself revoke a
previously granted proxy.
IF I SUBMIT A PROXY, HOW WILL MY SHARES BE VOTED?
Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the recommendations
of the Board of Directors.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
The Board's recommendations are set forth together with the description of
each item in this proxy statement. In summary, The Board recommends a vote:
o FOR election of the nominees for the Class I Director positions (see
page 3);
o FOR ratification of the appointment of Arthur Andersen LLP as the Company's
independent auditors (see page 6); and
o FOR ratification of the amendments to the Non-Employee Directors' Stock
Option Plan (see page 6).
With respect to any other matter that properly comes before the meeting,
the proxy holders will vote as recommended by the Board of Directors or, if no
recommendation is given, in their own discretion. At the date this proxy
statement went to press, we do not know of any other matter to be raised at the
Annual Meeting.
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WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS. The affirmative vote of a plurality of the votes
cast at the Annual Meeting is required for the election of directors. A properly
executed proxy marked "WITHHOLD AUTHORITY" with respect to the election of one
or more directors will not be voted with respect to the director or directors
indicated, even though it will be counted for purposes of determining whether
there is a quorum present at the Annual Meeting.
OTHER ITEMS. For each other item, the item will be approved if the
affirmative votes in favor of the item are greater than the votes cast opposing
the item. A properly executed proxy marked "ABSTAIN" with respect to any such
matter will not be voted, even though it will be counted for purposes of
determining whether there is a quorum present at the Annual Meeting.
Accordingly, for purposes of the vote, an abstention will have the same effect
as does a share that is not present.
HOW WILL VOTES BE COUNTED?
All votes will be tabulated by employees of The Registrar and Transfer
Company, the Company's transfer agent for the Common Stock, whose
representatives will serve as one or more of the inspectors of election.
Although abstentions and broker non-votes are each included in the determination
of the number of shares present, they are not counted on any matters brought
before the meeting.
WHO IS PAYING FOR THE PREPARATION AND MAILING OF THE PROXY MATERIALS AND HOW
WILL SOLICITATIONS BE MADE?
We will pay the expenses of soliciting proxies. Proxies may be solicited on
our behalf by directors, officers or employees in person or by telephone, mail,
electronic transmission, facsimile transmission or telegram. The Company will
request brokerage houses and other custodians, nominees and fiduciaries to
forward soliciting material to stockholders and the Company will reimburse such
institutions for their out-of-pocket expenses incurred thereby.
1. ELECTION OF DIRECTORS -- ITEM ONE ON YOUR PROXY CARD
DIRECTORS STANDING FOR ELECTION
The Board of Directors is divided into three classes, currently consisting
of two directors in each class, whose terms expire at successive annual
meetings. The current terms of the three classes of directors expire in 2000
(Class I directors), 2001 (Class II directors), and 2002 (Class III directors).
Directors are generally elected for three-year terms.
Two Class I directors are to be elected at the 2000 Annual Meeting. The
Board of Directors has nominated the following persons to stand for election at
the 2000 Annual Meeting for the two director seats (terms expiring in 2003):
Charles J. Kleman
Ross E. Roeder
The persons named in the enclosed form of proxy intend, unless otherwise
directed, to vote such proxy "FOR" the election of Charles J. Kleman and Ross E.
Roeder as Class I directors of the Company, each to serve for the term described
above. The nominees that receive a plurality of the votes cast by the shares
entitled to vote at the Annual Meeting shall be elected as the directors.
Each of the proposed nominees for election as directors has consented to
serve if elected. If, as a result of circumstances not now known or foreseen,
the nominees shall be unavailable or unwilling to serve as a director, proxies
may be voted for the election of such other persons as the Board of Directors
may select. The Board of Directors has no reason to believe that the nominees
will be unable or unwilling to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THESE NOMINEES
FOR ELECTION AS DIRECTORS.
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NOMINEES FOR ELECTION AT THIS MEETING TO TERMS EXPIRING IN 2003:
CHARLES J. KLEMAN, 49, is Executive Vice President-Finance, Chief Financial
Officer and Secretary/Treasurer of the Company. Charles J. Kleman has been
employed by Chico's since January 1989, when he was hired as the Company's
Controller. In 1991, he was elected as Vice President/Assistant Secretary. In
1992, Mr. Kleman was designated as the Company's Chief Financial Officer. In
September 1993, he was elected to the additional position of
Secretary/Treasurer, served as Senior Vice President-Finance from January 1996
through November 1996 and effective December 1996, was promoted to the position
of Executive Vice President-Finance. Prior to joining Chico's, Mr. Kleman was an
independent accounting consultant in 1988, and from 1986 to 1988 Mr. Kleman was
employed by Electronic Monitoring & Controls, Inc., a manufacturer and
distributor of energy management systems, as its Vice President/Controller.
Prior to 1986, Mr. Kleman was employed by various independent certified public
accounting firms, spending over four years of that time with Arthur Andersen &
Co. Mr. Kleman is responsible for accounting, financial reporting, management
information systems, investor relations and overall management of the
distribution center.
Director since 1993.
ROSS E. ROEDER, 62, is Chairman and Chief Executive Officer of Smart &
Final, Inc., having held these positions since 1999 and having served as a
director of SFI Corporation, the parent corporation of Smart & Final, since
1984. From 1986 to 1998, Mr. Roeder served as a director of Morgan-Kaufman
Publishers, Inc., a publisher of computer science text and reference books, and
from 1993 to 1998 served as its chairman of the board. Since the late 1970's,
he also served and continues to serve as Chairman of the Board and Chief
Executive Officer of MDR, Inc., International Consulting Group. Mr. Roeder is
also a director of Gulf West Banks, Inc. From 1986 until February 1993, Mr.
Roeder was President and Chief Executive Officer of Federal Construction
Company. Prior to 1986, he was President, Chief Executive Officer and Chief
Operating Officer of Fotomat Corp.
Director since 1997.
DIRECTORS CONTINUING IN OFFICE
DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 2001:
HELENE B. GRALNICK, 52, is Senior Vice President-Design and Concept for
the Company. Helene B. Gralnick was a co-founder of Chico's, together with her
husband, Marvin J. Gralnick, and has served the Company in various senior
executive capacities throughout its history. She was first elected Vice
President/Secretary in 1983. Ms. Gralnick was elected as Senior Vice
President-Merchandise Concept in 1992. In September 1993, Ms. Gralnick stepped
down from all officer positions with the Company. In connection with the
resignation of Jeffrey J. Zwick as Chief Executive Officer, President and a
director of the Company in November 1994, Ms. Gralnick returned to the Company
on a full time basis to head up merchandise design, marketing and image for the
Company. In February 1995, Ms. Gralnick was elected as Senior Vice
President-Design and Concept.
Director since 1983.
VERNA K. GIBSON, 57, presently is a retailing consultant. From 1985 to
1991, Ms. Gibson was President and Chief Executive Officer of the Limited
Stores Division of The Limited, Inc., a retail apparel specialty chain. From
January 1991 through 1995, she served as President of Outlook Consulting Int.,
Inc. and in January 1999, she resumed the position of President of Outlook
Consulting Int., Inc. From December 1994 to July 1996, Ms. Gibson was the
Chairman of the Board of Petrie Retail, Inc. On October 12, 1995, Petrie
Retail, Inc. filed a petition under Chapter 11 of the Bankruptcy Code. From
1993 to fall 1999, Ms. Gibson was a partner of Retail Options, Inc., a New York
based retail consulting firm. Ms. Gibson also serves as a director of Today's
Man, Inc., Mothers Work, Inc., and the National Retail Federation.
Director since 1993.
DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 2002:
MARVIN J. GRALNICK, 65 is Chief Executive Officer, President and Chairman
of the Board of the Company. Marvin J. Gralnick, together with his wife, Helene
B. Gralnick, founded Chico's in December 1983. He served
4
the Company as its Chief Executive Officer until September 1993, at which time
Jeffrey J. Zwick succeeded Mr. Gralnick in this position. In connection with the
resignation of Jeffrey J. Zwick as Chief Executive Officer, President and a
director of the Company in November 1994, Mr. Gralnick returned to the Company
on a full time basis to head up merchandise design, marketing and image for the
Company. In February 1995, Mr. Gralnick reassumed the role of Chief Executive
Officer and in March 1997 reassumed the position of President following the
departure of Melissa Payner. Mr. Gralnick served as President from the Company's
founding until 1990 when he became Chairman of the Board and was given the
official title of Chief Executive Officer. Mr. and Ms. Gralnick's vision and
creative talents led the development and evolution of the Company's philosophy
and the design and feel of Chico's merchandise and Chico's stores through
September 1, 1993 and since November 1994 again are leading the Company in this
regard.
Director since 1983.
JOHN W. BURDEN, 63, is currently an independent retailing consultant,
having served as a consultant and partner in Retail Options, Inc. from November
1993 to December 1997. From December, 1990 to March 1993, Mr. Burden's
principal occupation was as an officer in Pelican Palms Realty Company, a real
estate sales company he owned. In 1990, he retired as the Chairman of both
Federated Department Stores, Inc., and Allied Department Stores, Inc.,
following a 19 year career in various merchandising positions in the Federated
organization, including as President of Burdines and Chairman of the Abraham
and Strauss Division. Prior to that time, he spent 12 years with Macy's. Mr.
Burden is also director of Danskin, Inc., Hills Stores Co., Carson Pirie Scott,
Inc., J. Crew and Saks Incorporated.
Director since 1997.
MEETINGS OF THE BOARD OF DIRECTORS AND STANDING COMMITTEES
The Board of Directors held six meetings during fiscal 2000. In fiscal
2000, each incumbent Director attended at least 75% of the total number of Board
and Committee meetings.
The Board of Directors has a standing Audit Committee and Compensation and
Benefits Committee but does not have a Nominating Committee. The Board of
Directors functions as a Nominating Committee, and the Board will consider
written recommendations from stockholders for positions on the Board of
Directors in accordance with the procedures set forth in the Amended and
Restated Articles of Incorporation of the Company. See "Stockholder Proposals
for Presentation at the 2000 Annual Meeting" for further information.
The current members of the Audit Committee are Mr. Burden, Ms. Gibson and
Mr. Roeder. The Audit Committee held three meetings during fiscal 2000. The
Audit Committee's principal responsibilities are to recommend annually a firm
of independent certified public accountants to the Board of Directors, to
review the annual audit of the Company's financial statements and to meet with
the independent certified public accountants of the Company from time to time
in order to review the Company's internal controls and financial management
practices.
The current members of the Compensation and Benefits Committee are Mr.
Burden, Ms. Gibson and Mr. Roeder. The Compensation and Benefits Committee held
four meetings during fiscal 2000. The principal responsibilities of the
Compensation and Benefits Committee are to review and make recommendations to
the Board of Directors concerning the compensation of all officers of the
Company; to review and make recommendations with respect to the Company's
existing and proposed compensation plans, and to serve as the committee
responsible for administering the Company's 1992 Stock Option Plan, the
Company's 1993 Stock Option Plan and the Company's 1993 Employee Stock Purchase
Plan.
COMPENSATION OF DIRECTORS
BASE COMPENSATION. Each non-employee director receives $6,000 per quarter
to cover all Board and committee meetings. All directors are also entitled to
reimbursement of their reasonable out-of-pocket expenses.
OPTIONS. Each non-employee director receives an automatic grant each year
following the annual meeting of stockholders of options to purchase 10,000
shares of common stock. For fiscal 2000, Ms. Gibson and Messrs. Burden and
Roeder received grants under this plan. Each such option grant, which vested in
full on December 8,
5
1999 and has a ten-year term, permits the holder to purchase shares at their
fair market value on the date of grant, which in the case of these particular
options was $13.5625 (as adjusted to account for the Company's two-for-one stock
split).
INDEMNIFICATION. We indemnify our directors and officers to the fullest
extent permitted by law so that they will serve free from undue concern that
they will not be indemnified. This is authorized under our By-laws, and
accordingly we have signed agreements with each of those individuals
contractually obligating us to provide this indemnification to them.
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS -- ITEM TWO ON YOUR PROXY CARD
The firm of Arthur Andersen LLP has been our independent certified public
accountants for many years. Arthur Andersen LLP has been recommended by the
Audit Committee and approved by the Board of Directors as our independent
certified public accountants for the year ending January 27, 2001, subject to
ratification of such appointment by the stockholders. Representatives of Arthur
Andersen LLP are expected to be present at the Annual Meeting of Stockholders.
They will have the opportunity to make a statement if they desire to do so and
are expected to be available to respond to appropriate questions by
stockholders. Ratification of the Company's independent certified public
accountants is not required by the Company's By-Laws or otherwise, but the Board
of Directors has decided to seek such ratification as a matter of good corporate
practice.
The persons named in the enclosed form of proxy intend, unless otherwise
directed, to vote such proxy "FOR" ratification of the appointment of Arthur
Andersen LLP as independent certified public accountants for the period
specified. If the stockholders do not ratify this appointment, other certified
public accountants will be considered by the directors upon recommendations of
the Audit Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF ARTHUR
ANDERSEN LLP AS OUR INDEPENDENT AUDITORS FOR THE PERIOD SPECIFIED.
3. PROPOSAL TO RATIFY AMENDMENTS TO THE NON-EMPLOYEE DIRECTORS' STOCK OPTION
PLAN -- ITEM THREE ON YOUR PROXY CARD
In order to be in a position to continue to effectively attract and retain
members of the Board of Directors who are not employees of the Company or its
subsidiaries (the "Non-Employee Directors"), the Board of Directors adopted and
the stockholders approved the Chico's FAS, Inc. Non-Employee Directors' Stock
Option Plan (the "Plan") in 1999. In August 1999, the Board of Directors
authorized and adopted certain amendments to the Plan, and authorized submission
of same at the 2000 Annual Meeting of Stockholders for ratification by the
stockholders.
THE AMENDMENT
The Plan provides that the Board of Directors or a committee of two or more
members of the Board of Directors (the "Committee") will administer the Plan. As
originally adopted, the Plan provided that certain options would be
automatically issued to Non-Employee Directors following each annual meeting of
stockholders and that the Committee also could grant discretionary stock options
to Non-Employee Directors. The terms of these discretionary options, including
as to the number of shares of common stock covered, exercise price, and vesting,
were to be determined at the time of each grant. The Plan also originally
empowered the Board of Directors to revise, amend, suspend, discontinue or
terminate the Plan as desired without further action.
The amendments to the Plan 1) eliminate the Committee's ability to grant
discretionary stock options under the Plan and 2) prohibit the Company from
revising or amending the Plan without stockholder approval if the revision or
amendment to the Plan would change the number of shares subject to the Plan,
change the designation of the class of persons eligible to receive options under
the Plan, decrease the price at which options may be granted, otherwise
materially increase the benefits accruing to Non-Employee Directors under the
Plan, or remove the administration of the Plan from the Committee. As under the
existing terms of the Plan, the Company would continue to be permitted to make
certain adjustments in connection with stock splits or divisions, stock
dividends,
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recapitalizations, reorganizations, mergers, consolidations, split-ups,
combinations, share exchanges, or similar changes affecting the Company's
capital stock.
The Board recommends that you vote "FOR" ratification of the amendments to
the Plan. The amendments to the Plan will be ratified if the votes cast "FOR"
ratification of the amendments to the Plan by holders entitled to vote exceed
the votes cast opposing the ratification of the amendments to the Plan.
SUMMARY OF THE PLAN
An aggregate of 300,000 shares of Common Stock have been reserved for
issuance under the Plan.
All Non-Employee Directors are eligible to receive options under the Plan.
All options issued under the Plan shall be nonqualified options. Each
Non-Employee Director will automatically be granted an option for 10,000 shares
of Chico's common stock upon his or her appointment to the Board. In addition,
each year, as of the date of the Company's Annual Meeting of Stockholders, each
Non-Employee Director who is then re-elected or who is continuing as a member of
the Board following the Annual Meeting shall receive an option for 10,000 shares
of Chico's common stock. There is no limit as to the number of options that may
be granted any one eligible individual. The Committee may also make
discretionary grants of options to Non-Employee Directors from time to time. The
Company will not receive any consideration for the granting of the options under
the Plan, other than the services rendered to the Company by the Non-Employee
Director in that capacity.
The per share exercise price of each of the options automatically granted
under the Plan shall be the fair market value of the stock on the date of grant.
On March 31, 2000, the reported last sale price of the Company's Common Stock on
the Nasdaq National Market System was $16 61/64.
Options automatically granted under the Plan become fully vested six months
after the date of the grant, and are exercisable for up to ten years after the
date of the grant. If exercised, an option must be exercised within the exercise
period by payment of the option price in cash, by check or by other means
prescribed by the Committee.
If the individual's affiliation with the Company as a director is
terminated during the term of the option, the end of the option period will be
accelerated. Notwithstanding the foregoing general rules, the Committee may
permit the earlier exercise of outstanding options.
An individual may not transfer any option granted under the Plan, although,
in some circumstances after the individual's death, the individual's personal
representative may exercise the option and, in certain other circumstances,
options can be exchanged for new options.
The aggregate number of shares covered by the Plan, as well as the number
of shares covered by outstanding options (and the per share purchase price
thereof) are subject to automatic adjustment, without further action of the
Board of Directors, the Committee or the stockholders, in the event of a stock
dividend, a stock split or certain other recapitalizations with respect to the
Company's stock.
The Board of Directors may amend the Plan (or suspend or discontinue it)
without further stockholder approval, but certain amendments will require
stockholder approval (see "The Amendment"). No amendment may adversely affect
any then outstanding option.
The Plan will continue for 10 years, unless the Board of Directors votes to
terminate the Plan at some earlier time.
FEDERAL INCOME TAX CONSEQUENCES
Because all options under the Plan will be nonqualified stock options and
because the Company does not anticipate that any such options will have a
readily ascertainable fair market value when issued, the recipient of such an
option should not recognize any taxable income or loss for federal income tax
purposes at the time the option is granted. The exercise of the nonqualified
stock option will, however, result in the immediate recognition of taxable
income by its holder at ordinary income rates based on the difference between
the purchase price for shares covered by the option and the fair market value of
the shares received at the time of exercise. The Company
7
will receive a corresponding income tax deduction at the same time. Additional
gain or loss, determined under general rules of taxation, may be realized upon
the sale of the shares.
The specific application and impact of the tax rules may vary depending on
the personal situation of individual directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
AMENDMENTS OF THE NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN.
PLAN BENEFITS TABLE -- NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
The following table provides information regarding the number and value of
the securities to be granted or purchased under the Non-Employee Directors'
Stock Option Plan.
NON-EMPLOYEE DIRECTORS'
STOCK OPTION PLAN
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NUMBER
NAME AND POSITION DOLLAR VALUE OF UNITS
- -------------------------------------------------------- -------------- ---------
Marvin J. Gralnick, * *
Chairman of the Board, Chief Executive
Officer and President
Charles J. Kleman, * *
Executive Vice President-Finance, Chief
Financial Officer
Helene B. Gralnick, * *
Senior Vice President-Design and Concept
Scott A. Edmonds, * *
Chief Operating Officer and
Assistant Secretary
Patricia A. Murphy, * *
Vice President-General Merchandise Manager
Executive Group (1) * *
Non-Executive Director Group (2) (2)
Non-Executive Officer Employee Group * *
- --------
* Not eligible for participation
(1) Consists of the five executive officers listed above.
(2) The grant of options under the Non-Employee Directors' Stock Option Plan
will occur automatically, in the amount of 10,000 options upon the
director's initial appointment to the Board, and 10,000 options each year
thereafter during the director's continued service. The Board of Directors
has discretion to make additional grants under the plan, but the Company
cannot determine the nature or amount of any discretionary awards that will
be made in the future. During fiscal 2000, 60,000 stock options were granted
under the plan, taking into account the Company's two-for-one stock split
distributed on or about January 14, 2000. The dollar value of such stock
options cannot be determined.
OTHER BUSINESS
It is not expected that any other matters are likely to be brought before
the meeting. However, if any other matters are presented, it is the intention of
the persons named in the proxy to vote the proxy in accordance with their best
judgment.
8
COMPENSATION COMMITTEE REPORT
To: The Board of Directors
OVERVIEW AND PHILOSOPHY
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is composed of three members, each of whom is an outside director of
the Company. The Compensation Committee provides overall guidance on the
Company's compensation and benefits philosophy. In addition, the Committee
approves and monitors the Company's
o executive compensation and benefits programs
o executive employment agreements
o stock option plan
o profit sharing plan
o stock purchase plan
The primary objectives of the Compensation Committee are to assure that the
Company's executive compensation and benefits program
o reflects the Company's unique, entrepreneurial, customer-focused,
orientation
o is competitive with other profitable, growing specialty retail companies
o safeguards the interests of the company and its stockholders
o is effective in driving performance to achieve financial goals and create
stockholder value
o fosters teamwork on the part of management
o is cost-effective and fair to employees, management, and stockholders
o is well communicated and understood by program participants
The Company's executive compensation policies are designed to attract,
motivate, and retain highly qualified executive officers who can enhance
stockholder value, and to support a performance-oriented environment that
rewards achievement of the Company's planned financial goals. The Compensation
Committee meets periodically during each fiscal year to review the Company's
existing compensation and benefits programs and to consider modifications that
seek to provide a direct relationship between executive compensation and
sustained corporate performance.
The Company compensates its executive officers through three principal
types of compensation: annual base salary, annual incentive bonuses and
long-term incentive awards through stock options. The Company, as a matter of
policy, places substantial emphasis on incentive bonuses and long-term stock
options since these two forms of compensation are viewed as very effective at
correlating executive officer compensation with corporate performance and
increases in stockholder value.
In addition to the three types of compensation just mentioned, certain
executive officers are eligible to participate in the Company's Employee Stock
Purchase Plan.
BASE SALARY
The annual base salary of each executive officer is based on the scope of
his or her responsibility and accountability within the Company, as well as on
performance and experience criteria. In addition, the Compensation Committee
considers salary and other compensation arrangements of other speciality
retailers of similar size and similar growth to determine appropriate levels
required to attract, motivate, and retain the most qualified management
personnel.
The Compensation Committee believes that the Company's most direct
competitors for executive talent are not necessarily all of the companies that
would be included in a peer group established to compare stockholder returns.
Thus, the compensation peer group is not the same as the peer group index in the
"Comparison of Cumulative Total Return" graph included in this proxy statement.
The Compensation Committee, upon the recommendation by the Chief Executive
Officer, determines and makes final decisions regarding base salary of
executives on an annual basis. The Compensation Committee recognizes that, to
some degree, the determination of an executive officer's base salary involves
subjective considerations.
9
INCENTIVE BONUSES
A significant component of an executive officer's total cash compensation
consists of an incentive bonus, which is intended to make the executive
compensation dependent on the Company's performance and to provide executive
officers with incentives to achieve Company goals, increase stockholder value,
and work as a team. The bonuses are based on the Company's achievement of its
targeted pre-tax income goal, which is part of the Company's overall plan. The
pre-tax income goal, as well as the overall plan, is reviewed and approved by
the Compensation Committee prior to the start of each bi-annual period. To
encourage high levels of performance, the targeted pre-tax income goal is
established at a level which builds in, among other things, a conservatively
aggressive growth in sales and comparable store sales.
Bonuses are awarded to the executive team based on the Company's attainment
of specific pre-determined pre-tax income levels relative to the targeted
pre-tax income goal established in the Company's overall plan. If the Company
does not match its minimum pre-tax income goal level, then no bonuses are
awarded. Bonuses are awarded on a bi-annual basis. The executive team was
awarded a total of approximately $736,000 in fiscal 2000.
LONG TERM STOCK OPTION COMPENSATION
The Compensation Committee believes that providing key employees, including
executive officers, with the opportunity to acquire stock ownership over time is
the most desirable way to align their interests with those of the Company's
stockholders. Stock options, awarded under the Company's 1992 and 1993 Stock
Option Plans and in some limited cases outside of the plans pursuant to separate
individual stock option agreements, provide an incentive that focuses the
attention of executive officers on managing the Company from the perspective of
an owner with an equity interest in the business. In addition, stock options are
a key part of the Company's program for motivating and rewarding managers over
the long term. Stock options granted to key employees are tied to future
performance of the Company's stock and will provide value only when the price of
the Company's stock exceeds the option grant price.
The Compensation Committee, upon the recommendation by the Chief Executive
Officer, determines and makes final decisions regarding stock option awards made
under the Company's stock option plans. Such factors as performance and
responsibilities of individual managers and the management team as a whole as
well as general industry practices play an integral role in the determination of
the number of options awarded to a particular senior executive. In determining
the size of the individual award of options, the Compensation Committee also
considers the amounts of options outstanding and previously granted, the amount
of options remaining available for grant under the Stock Option Plans, the
aggregate amount of current awards, and the amount necessary to retain qualified
management.
In accordance with its business strategy and compensation philosophy, the
Company has granted stock options to a significant number of employees in
managerial positions to afford them an opportunity to participate in the
Company's future growth and to focus them on the contributions which are
necessary for the financial success and business growth of the Company and,
thereby, the creation of value for its stockholders. In fiscal 2000, a total of
337,000 options (split adjusted) were granted to employees, including 240,000
options (split adjusted) which were awarded to senior executives.
Stock options are typically awarded each year based on an assessment of
each recipient's ongoing contribution to overall corporate performance. As a
means to encourage a stock option recipient to remain in service with the
company, stock option awards vest over time, in equal amounts over a period of
three years from the date of grant. All stock options have exercise prices at
least equal to the market value of the Company's stock on the date of grant.
PROFIT SHARING PLAN, 401(K) PLAN AND STOCK PURCHASE PLAN FOR EMPLOYEES
In 1992, the Company adopted a profit sharing plan to provide a means for
all eligible employees at all levels of the Company to share in the Company's
profits and accumulate retirement savings. Effective as of January 1, 1999, the
Company incorporated a 401(k) feature into its profit sharing plan as a further
means for all eligible employees at all levels of the Company to accumulate
retirement savings. Under the 401(k) aspect of the plan, eligible employees can
elect to defer up to 20% of their respective compensation and have it
contributed to the plan. The Company is obligated to match a portion of the
deferral and can elect to make additional contributions
10
over and above the mandatory match, based on the amount it deems appropriate in
light of the results of the Company's operations for the respective year. In
fiscal 2000, the Company's aggregate matching contributions, including both
mandatory and additional matching contributions, were approximately $276,000,
which amounted to approximately 1.1% of its pre-tax profits for fiscal 2000.
In 1993, the Company adopted a stock purchase plan to provide all eligible
employees at all levels an opportunity to become stockholders of the Company.
This plan is viewed as an effective way to help align the interest of all
employees with those of the Company's stockholders. As an inducement, eligible
employees may purchase shares of stock in the Company at a 15% discount to the
value of the stock established during the exercise period. In fiscal 1999, the
stock purchase plan was extended on the same terms until November of 2001.
FISCAL 2000 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
The general policies described above for the compensation of the executive
officers also apply to the compensation approved by the Compensation Committee
with respect to the fiscal 2000 compensation for Mr. Gralnick, the Company's
Chairman of the Board and Chief Executive Officer.
Mr. Gralnick's base salary was increased to $450,000 in fiscal 2000, which
reflected a $100,000 increase from his base salary in fiscal 1999. In fiscal
2000, Mr. Gralnick also was awarded an aggregate bonus of $274,667, as a result
of the Company having reached certain targeted performance incentive goals.
Notwithstanding Mr. Gralnick's substantial ownership position in the Company,
the Compensation Committee awarded him 100,000 stock options in fiscal 2000 in
order to continue to recognize his efforts in leading the Company in achieving a
very strong financial performance.
Mr. Gralnick's compensation was based on industry comparisons as well as on
the Company's performance over the most recent years, as reflected in the
Company's Annual Report to Stockholders which accompanies this proxy statement.
Under the leadership of Mr. Gralnick and the rest of the management team, total
revenues for Chico's increased from approximately $59 million in 1994 to
approximately $155 million in fiscal 2000. Between 1994 and fiscal 2000, pre-tax
income grew from approximately $5.6 million to a profit of $25.0 million, and
net income grew from approximately $3.3 million to a profit of $15.5 million, or
$0.88 diluted earnings per share (as adjusted for the 2 for 1 stock split with a
record date of December 27, 1999).
In February 2000, in further recognition of Mr. Gralnick's contribution to
the Company's improved performance and taking into account the industry
comparisons, the Company reached agreement with Mr. Gralnick with respect to a
new three year employment contract, under which Mr. Gralnick's base compensation
was increased to $600,000, with subsequent scheduled annual increases and
certain commitments to the grant of additional stock options.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
The Compensation Committee has reviewed the applicability of Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code"), which disallows a
tax deduction for compensation to an executive officer when the included
compensation exceeds $1 million per year. No executive officer of the Company
exceeded this threshold in fiscal 2000. Although Mr. Gralnick's compensation
earned could exceed this threshold during fiscal 2001, depending on the
Company's performance, the provisions of Mr. Gralnick's new employment agreement
will provide that any cash compensation in excess of the threshold that would
otherwise be payable will be deferred instead until such date as such deferred
amount can be paid without exceeding the applicable threshold. The Committee
intends to periodically continue further review of the potential consequences of
Section 162(m) and, depending upon the risk of applicability of this provision
to the Company, may elect to structure the performance-based portion of its
executive officer compensation in a manner so as to comply with certain
exemptions provided for in Section 162(m) and possibly modify the provisions
which effectuate deferral of certain portions of the cash compensation amounts.
This report has been provided by the Compensation Committee.
COMPENSATION AND BENEFITS COMMITTEE:
John W. Burden
Verna K. Gibson
Ross E. Roeder
11
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Company's
Common Stock with the cumulative total return of the companies in the Standard &
Poor's 500 Index and the S&P 500 Retail Stores-Specialty-Apparel Industry Index.
Cumulative total return for each of the periods shown in the Performance Graph
is measured assuming an initial investment of $100 on January 28, 1995 and the
reinvestment of dividends. The performance graph reflects the change in the
Company's year end from the Sunday closest to December 31 to the Saturday
closest to January 31 and uses pro forma fiscal year end dates for periods prior
to the 1997 fiscal year.
COMPARISON OF CUMULATIVE TOTAL RETURN
[CHART APPEARS HERE]
1/28/1995 2/3/1996 2/1/1997 1/31/1998 1/30/1999 1/29/2000
----------- ---------- ---------- ----------- ----------- ----------
Chico's FAS, Inc. ........................ 100.00 58.93 57.14 100.90 435.72 462.53
S&P 500 Index ............................ 100.00 138.58 175.04 222.13 294.29 316.74
Retail (Specialty-Apparel) Index ......... 100.00 119.07 148.67 269.89 558.80 521.56
12
EXECUTIVE OFFICERS AND KEY EMPLOYERS
The following table sets forth certain information regarding the Company's
continuing executive officers, continuing directors, nominees for director and
certain other key employees.
YEARS WITH
THE
EXECUTIVE OFFICERS AGE POSITION COMPANY
- ----------------------------- ----- ----------------------------------------------------------- -----------
Marvin J. Gralnick ......... 65 Chief Executive Officer, President, Chairman of the 16
Board and Director
Helene B. Gralnick ......... 52 Senior Vice President-Design and Concept and Director 16
Charles J. Kleman .......... 49 Executive Vice President-Finance, Chief Financial Officer, 11
Secretary/Treasurer and Director
Scott A. Edmonds ........... 42 Chief Operating Officer and Assistant Secretary 6
Mori C. MacKenzie .......... 50 Vice President-Director of Stores 4
Patricia A. Murphy ......... 56 Vice President-General Merchandise Manager 2
Karen M. Glass ............. 44 Vice President-Product Development and Design 7
NON-DIRECTOR EXECUTIVE OFFICERS
Scott A. Edmonds has been employed by Chico's since September 1993, when he
was hired as Operations Manager. In February 1994, he was elected to the
position of Vice President-Operations and effective January 1, 1996, he was
promoted to the position of Senior Vice President-Operations. In February 2000,
he was promoted again to Chief Operating Officer. Mr. Edmonds is responsible for
human resources, store development and operations, leasing and maintenance,
franchise operations, and management of the headquarters. From March 1985 until
September 1993, he was President/General Manager of the Ft. Myers branch of
Ferguson Enterprises, Inc. an electric and plumbing wholesaler.
Mori C. MacKenzie has been with the Company since October 1995, when she
was hired as the Director of Stores. In June 1999, she was elected Vice
President-Director of Stores. Ms. MacKenzie is responsible for store and field
operations management, hiring and training. From January 1995 until October
1995, Ms. MacKenzie was the Vice President of Store Operations for Canadians
Corporation. From August 1994 until December 1994, she was the Vice President of
Store Development for Goody's Family Clothing. From April 1992 until August
1994, Ms. MacKenzie was the Vice President of Stores for United Retail Group
("URG") and from August 1991 until April 1992 she was employed by Conston Corp.,
a predecessor of URG. In addition, Ms. MacKenzie was Vice President-Stores for
Park Lane from November 1987 until July 1991, and was Regional Director of
Stores for the Limited, Inc. from June 1976 until October 1987.
Patricia A. Murphy has been with the Company since September 1997, when she
was hired as the Senior Merchant. In April 1998, she was promoted to the
position of General Merchandise Manager, and in June 1999, she was elected Vice
President-General Merchandise Manager. Ms. Murphy is principally responsible for
the buying, planning and distribution activities associated with procurement of
merchandise. From February 1987 until September 1997, Ms. Murphy was Vice
President of Merchandising and Director of Fashion for Doncaster and from
October 1985 until February 1987 was Merchandiser and National Sales Manager for
Caribou Sportswear. From 1981 until 1985, she was Director of Fashion
Coordination for Lane Bryant, a division of the Limited.
Karen M. Glass has been with the Company since January 1993, when she was
hired as the Manager of Quality Control in the Company's Istanbul, Turkey office
which was closed in 1995. In 1995 she moved to the United States and was
promoted to Director of Production. In June 1999 she was elected Vice
President-Product Development and Design. From 1979-1991, she was involved in
design and production of sportswear lines for several New York- and Ohio-based
companies in the sportswear industry.
Marvin J. Gralnick and Helene B. Gralnick are husband and wife. None of the
other executive officers or directors are related to one another. Executive
officers are elected by and serve at the discretion of the Board of Directors.
13
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides information concerning the annual compensation
of each of the named executive officers of the Company, as defined under
applicable Securities and Exchange Commission Rule, for services rendered to the
Company in each of the Company's last three fiscal years.
LONG TERM
COMPENSATION
ANNUAL COMPENSATION(1) AWARDS
--------------------------- -------------
SECURITIES
NAME AND FISCAL YEAR UNDERLYING ALL OTHER COM-
PRINCIPAL POSITION ENDED SALARY($) BONUS($)(2) OPTIONS(#) PENSATION($)(3)
- ----------------------------- ------------------ ----------- ------------- ---------- ----------------
Marvin J. Gralnick, January 29, 2000 426,923 274,667 100,000 5,000
Chairman of the Board, January 30, 1999 339,423 272,080 100,000 6,756
Chief Executive Officer and January 31, 1998 267,307 132,000 200,000 4,821
President
Helene B. Gralnick, January 29, 2000 193,077 93,000 40,000 5,000
Senior Vice President- January 30, 1999 151,961 90,200 20,000 6,459
Design and Concept January 31, 1998 126,923 45,900 50,000 4,382
Charles J. Kleman, January 29, 2000 255,384 122,800 20,000 5,000
Executive Vice President- January 30, 1999 235,768 141,600 20,000 6,587
Finance and Chief Financial January 31, 1998 209,375 76,275 80,000 4,821
Officer
Scott A. Edmonds, January 29, 2000 205,385 98,800 30,000 5,000
Chief Operating Officer and January 30, 1999 186,826 112,200 20,000 6,510
Assistant Secretary January 31, 1998 166,828 60,750 70,000 4,821
Patricia A. Murphy, January 29, 2000 188,077 60,400 30,000 5,000
Vice President- January 30, 1999 124,614 57,533 30,000 6,178
General Merchandise Manager January 31, 1998 31,923 10,560 10,000 -0-
- --------
(1) Other Annual Compensation, other than salary and bonuses, was not paid or
did not exceed the minimum amounts required to be reported pursuant to
Securities and Exchange Commission Rules.
(2) Amounts in this column consist of certain bonuses including bonuses earned
under the semi-annual management incentive plan which is keyed to the
Company's performance. Amounts earned with respect to a particular fiscal
year are accrued as expenses in such fiscal year.
(3) This category includes the Company's contributions to the Profit Sharing
Plan / 401(k) Plan.
OPTION/SAR GRANTS TABLE
The following table shows all options to purchase our common stock granted
to each of our named executive officers in fiscal 2000 and the potential value
of such grants at stock price appreciation rates of 5% and 10%, compounded
annually over the maximum ten-year term of the options. The 5% and 10% rates of
appreciation are required to be disclosed by SEC rules and are not intended to
forecast possible future appreciation, if any, in our stock price.
14
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
INDIVIDUAL GRANTS PRICE APPRECIATION FOR OPTION TERM
------------------------------- ----------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(#)(1) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- -------------------- --------------- ------------- ---------- ----------- --------- ----------
Marvin J. Gralnick 100,000 29.7% 11.344 4/16/2009 713,418 1,807,941
Helene B. Gralnick 40,000 11.9% 11.344 4/16/2009 285,367 723,177
Charles J. Kleman 20,000 5.9% 11.344 4/16/2009 142,684 361,588
Scott A. Edmonds 30,000 8.9% 11.344 4/16/2009 214,025 542,382
Patricia A. Murphy 30,000 8.9% 11.344 4/16/2009 214,025 542,382
- --------
(1) The grants of options above were made in April 1999. All of the options vest
annually at a rate of 33 1/3% on each anniversary date of the grant
beginning on the first anniversary.
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
The following table shows information concerning stock option exercises and
values as of the end of fiscal 2000.
AGGREGATED FISCAL YEAR-END
OPTION VALUES
-----------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END(#) AT FISCAL YEAR-END ($)
SHARES
ACQUIRED ON VALUE
NAME EXERCISE (#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(2)
- --------------------- -------------- -------------- ------------------------------- -----------------------------
Marvin J. Gralnick -- -- 196,667 / 233,333 2,730,208 / 2,226,017
Helene B. Gralnick -- -- 70,000 / 70,000 965,625 / 590,615
Charles J. Kleman -- -- 392,320 / 60,000 5,217,896 / 639,371
Scott A. Edmonds 53,998 509,158 15,335 / 66,667 223,311 / 639,271
Patricia A. Murphy 16,666 287,488 -- / 53,334 -- / 419,272
- --------
(1) This represents the excess of the fair market value of the Company's Common
Stock as of the date of exercise above the exercise price of the options.
(2) This represents the excess of the fair market value of the Company's Common
Stock of $16.1875 per share as of January 29, 2000, above the exercise price
of the options.
EMPLOYMENT AGREEMENTS
Effective February 7, 2000, the Company entered into new employment
agreements with Mr. Gralnick and Ms. Gralnick, which replace employment
agreements that had been in effect since February 15,1995 and which each provide
for an annual base salary and certain other benefits. Pursuant to the employment
agreements, the 2000 annualized base salaries of Mr. Gralnick and Ms. Gralnick
are $600,000 and $230,000, respectively, subject to scheduled annual increases
and any further increases as may be set by the Board of Directors. Under each
agreement, bonus compensation is to be determined through a bonus formula
adopted by the Compensation Committee. Under each of the employment agreements,
the period of employment extends through February 1, 2003, which period, under
the express terms of the agreement, is automatically extended for additional
one-year periods until the respective employment agreement is terminated by the
Company or the executive. The employment agreements contemplate the granting of
stock options to each of Mr. Granick and Ms. Gralnick under the Company's 1993
Stock Option Plan, as amended, of which stock options with respect to a total of
75,000 shares and 25,000 shares respectively, have been granted and stock
options with respect to a total of 225,000 additional shares and 60,000
additional shares, respectively, are to be granted in the additional years of
the initial term under the contract.
15
The employment agreements provide that Mr. Gralnick and Ms. Gralnick are
entitled to certain severance benefits in the event that their employment is
terminated by the Company "without cause" or by the Company or such executive
within a certain period following a "change of control" (both terms as defined
in the employment agreements). If the employment is terminated "without cause,"
the executive would receive his or her salary for the remainder of the then
effective term (or, if longer, for 12 months). If the employment is terminated
within the specified period following a "change of control," the executive would
receive a lump sum equal to the aggregate salary that he or she would otherwise
have been entitled to receive over the remainder of then effective term (or, if
longer, over 12 months) plus one year's bonus. Each such employment agreement is
also subject to termination in the event of disability, death or voluntary
retirement by the individual or his or her termination for cause. Each such
employment agreement provides for a covenant not to compete which is to continue
for two years following any termination.
Effective April 1, 1993, the Company entered into an employment agreement
with Mr. Kleman which provides for an annual base salary and certain other
benefits. Pursuant to the employment agreement and certain further actions of
the Board of Directors, Mr. Kleman's current base salary is $285,000 and is
subject to annual increases as set from time to time by the Board of Directors.
Under the terms of the employment agreement, the Company contracted to employ
Mr. Kleman for a period which currently extends through December 31, 2000, and
which period, by the terms of the agreement is automatically extended for
additional one year periods until the employment agreement is terminated by the
Company or Mr. Kleman.
Effective, June 28, 1995, the Company entered into an employment agreement
with Mr. Edmonds which provides for an annual base salary and certain other
benefits. Pursuant to the employment agreement and certain further actions of
the Board of Directors, Mr. Edmonds' current base salary is $275,000 and is
subject to annual increases as set from time to time by the Board of Directors.
Under the terms of Mr. Edmonds' employment agreement, the Company contracted to
employ Mr. Edmonds for a period which currently extends through December 31,
2000, and which period, by the terms of the agreement, is automatically extended
for additional one year periods until the employment agreement is terminated by
the Company or Mr. Edmonds.
The employment agreements for Messrs. Kleman and Edmonds provide that such
executives are entitled to certain severance benefits in the event that their
employment is terminated by the Company "without cause" or by such executive
within a specified period following a "change of control" (both as defined in
the employment agreements). In such cases, the executive would receive his or
her salary for the remainder of the then effective employment term (or, if
longer, for 6 months, if the termination is without cause, and for 12 months, if
the termination follows a change in control). Each employment agreement is also
subject to termination in the event of disability, death or voluntary retirement
by the individual or his or her termination for cause. Each employment agreement
provides for a covenant not to compete which is to continue for two years
following any termination.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Company's Compensation and Benefits Committee
are John W. Burden, Verna K. Gibson and Ross E. Roeder. Neither Mr. Burden, Ms.
Gibson nor Mr. Roeder has at any time been an officer or employee of the
Company.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
To the Company's knowledge, based solely on a review of the forms, reports
and certificates filed with the Company by the Company's directors and officers
and the holders of more than 10% of the Company's Common Stock, all Section
16(a) filing requirements were complied with by such persons in fiscal 2000
except that one report on Form 4 was filed late by Patricia A. Murphy to report
the sale of 600 shares.
16
SECURITY OWNERSHIP
The following table sets forth, as of April 19, 2000, the number of shares
of the Company's Common Stock beneficially owned by 1) each person known to the
Company as having beneficial ownership of more than 5% of the Company's Common
Stock together with such person's address, 2) each of its directors and nominees
to become a director, 3) each named executive officer as defined under
applicable Securities and Exchange Commission rules and 4) all directors and
executive officers as a group.
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNER OF BENEFICIAL PERCENT
OR NUMBER IN GROUP OWNERSHIP(1) OF CLASS
- -------------------------------------------------------- --------------- ---------
Marvin J. Gralnick
c/o Chico's FAS, Inc.
11215 Metro Parkway
Ft. Myers, Florida 33912 ...................... 3,158,155(2) 17.93
Helene B. Gralnick
c/o Chico's FAS, Inc.
11215 Metro Parkway
Ft. Myers, Florida 33912 ...................... 3,158,155(2) 17.93
Rodin, Ltd.
301 Congress, Suite 1900
Austin, Texas 78701 ........................... 2,721,488(2) 15.84
Chase Manhattan Corporation
270 Park Avenue
New York, NY 10017 ............................ 1,006,525(3) 5.86
FMR Corp.
Edward C. Johnson, III
Abigail P. Johnson
82 Devonshire Street
Boston, MA 02109
and
Fidelity International Limited.
Pembroke Hall, 42 Crowlane
Hamilton, Bermuda ............................. 980,320(4) 5.71
Charles J. Kleman ............................. 447,476(5) 2.54
Scott A. Edmonds .............................. 63,735(6) *
Patricia A. Murphy ............................ 20,000(7) *
Verna K. Gibson ............................... 356,000(8) 2.07
Ross E. Roeder ................................ 82,000(9) *
John W. Burden ................................ 70,000(10) *
All Directors and Executive Officers as a Group
(10 persons) .................................. 4,258,340(11) 23.22
- --------
* Less than one percent
(1) Beneficial ownership of shares, as determined in accordance with applicable
Securities and Exchange Commission rules, includes shares as to which a
person has or shares voting power and/or investment power. Except as
otherwise indicated, all shares are held of record with sole voting and
investment power. All share amounts reflect the effect of the two-for-one
stock split distributed on January 14, 2000 to stockholders of record on
December 27, 1999.
(2) Marvin J. Gralnick and Helene B. Gralnick are husband and wife. The number
of shares shown for Marvin J. Gralnick and the number of shares shown for
Helene B. Gralnick each represent the aggregate of all shares held by
Rodin, Ltd., a Texas Limited Partnership. A limited liability company
established by Mr. Gralnick
17
and Ms. Gralnick and of which Mr. Gralnick and Ms. Gralnick are the sole
members and managing members, is the sole general partner of Rodin, Ltd.,
owning an aggregate of 1% of the partnership interests. Mr. Gralnick owns
limited partnership interests representing approximately 49.3% of the
partnership interests, Ms. Gralnick owns separate limited partnership
interests representing approximately 49.3% of the partnership interests and
the remaining partnership interests are owned by a series of irrevocable
intervivos trusts established by Mr. Gralnick and Ms. Gralnick for the
benefit of their respective children. Also includes a total of 436,667
shares for Mr. Gralnick and Ms. Gralnick which are deemed to be
beneficially owned by them by virtue of certain stock options that are
currently exercisable or become exercisable within 60 days.
(3) This information is derived from a Schedule 13G dated February 10, 2000,
filed by Chase Manhattan Corporation and its wholly-owned subsidiary, The
Chase Manhattan Bank. Chase Manhattan Corporation and The Chase Manhattan
Bank are each shown to have sole voting power with respect to 1,006,175 of
the shares shown and sole dispositive power with respect to all of the
shares shown.
(4) This information is derived from (a) an Amendment to Schedule 13G dated as
of January 14, 2000 (the "FMR Schedule 13G Amendment") filed by FMR
Corporation ("FMR Corp."), Edward C. Johnson 3d and Abigail P. Johnson, and
joined in by Fidelity Management & Research Company ("FMRC") and Fidelity
International Limited ("FIL") and (b) a separate Amendment to Schedule 13G
dated as of January 14, 2000 (the "FIL Schedule 13G Amendment") filed by
FIL, Edward C. Johnson 3d, Abigail P. Johnson and joined in by FMR Corp. The
Schedule 13G Amendments did not take into account the impact of the
Company's two for one stock split which was effective on or about January
14, 2000. The reported number of shares reflected in the chart and in this
footnote have been adjusted to take into account the effect of this stock
split. FMR Corp. is shown to have sole power to vote or direct the voting of
139,900 of the shares shown and sole dispositive power with respect to
491,500 of the shares shown. FIL is shown to have sole power to vote or
direct the voting of and sole dispositive power with respect to 488,820 of
the shares. FMRC, a subsidiary of FMR Corp., is identified in each of the
Schedule 13D Amendments as the beneficial owner of 351,700 shares as the
result of acting as investment advisor to various investment companies (the
"Fidelity Funds") registered under Section 8 of the Investment Company Act
of 1940. Edward C. Johnson 3d (Chairman of FMR Corp.), FMR Corp., through
its control of FMRC and the Fidelity Funds each have sole power to dispose
of 351,700 of the shares (which are a part of the 491,500 shares for which
FMR Corp. is shown as having sole dispositive power). Neither FMR Corp. nor
Edward C. Johnson 3d has the sole power to vote or direct the voting of the
shares owned directly by the Fidelity Funds. The sole power to vote or
direct the voting of the shares owned directly by the Fidelity Funds resides
with the Board of Trustees of such funds. Fidelity Management Trust Company,
a subsidiary of FMR Corp., is identified in the Schedule 13D Amendments as
the beneficial owner of 139,800 of the shares as the result of its serving
as investment manager of institutional accounts. Edward C. Johnson 3d and
FMR Corp., through its control of Fidelity Management Trust Company, each
has sole power to vote or to direct the voting and sole dispositive power
over the 139,800 shares owned by the institutional accounts.
(5) Includes 4,800 shares owned by Mr. Kleman's son, 4,800 shares owned by his
daughter, 400 shares owned by his stepdaughter and 1,286 shares owned by Mr.
Kleman's spouse. In addition, includes 432,320 shares deemed to be
beneficially owned by Mr. Kleman by virtue of stock options that are
currently exercisable or become exercisable within 60 days and 3,400 shares
deemed to be beneficially owned by virtue of stock options that are
currently exercisable or become exercisable within 60 days by Mr. Kleman's
spouse.
(6) Includes 500 shares owned by each of Mr. Edmonds' two daughters. In
addition, includes 55,335 shares deemed to be beneficially owned by Mr.
Edmonds by virtue of certain stock options that are currently exercisable or
become exercisable within 60 days.
(7) Includes 20,000 shares deemed to be beneficially owned by Ms. Murphy by
virtue of certain stock options that are currently exercisable or become
exercisable within 60 days.
(8) Includes 52,000 shares deemed to be beneficially owned by Ms. Gibson by
virtue of certain stock options that are currently exercisable.
(9) Includes 70,000 shares deemed to be beneficially owned by Mr. Roeder by
virtue of stock options that are currently exercisable.
(10)Includes 40,000 shares deemed to be beneficially owned by Mr. Burden by
virtue of stock options that are currently exercisable.
18
(11) Pursuant to applicable Securities and Exchange Commission rules, the
2,721,488 shares of Common Stock owned by Rodin, Ltd. and the 436,667
exercisable options which are deemed to be beneficially owned by each of
Marvin J. Gralnick and Helene B. Gralnick, are counted only once for
purposes of this calculation.
STOCKHOLDER PROPOSALS FOR PRESENTATIONS AT THE 2001 ANNUAL MEETING
Pursuant to the General Rules under the Securities Exchange Act of 1934,
proposals of stockholders intended to be presented at the 2001 Annual Meeting of
Stockholders and in the proxy statement for that meeting must be received by
management of the Company at its executive offices on or before December 21,
2000.
The Company's Amended and Restated Articles of Incorporation also require
certain advance notice to the Company of any stockholder proposal and of any
nominations by stockholders of persons to stand for election as directors at a
stockholders' meeting. Notice of stockholder proposals and of director
nominations must be timely given in writing to the Secretary of the Company
prior to the meeting at which the directors are to be elected. To be timely,
notice must be received at the principal executive offices of the Company not
less than 60 days prior to the meeting of stockholders; provided, however, that
in the event that less than 70 days' notice prior to public disclosure of the
date of the meeting is given or made to the stockholders, notice by the
stockholder, in order to be timely, must be so delivered or received not later
than the close of business on the tenth day following the day on which such
notice of the date of the annual meeting was mailed or public disclosure of the
date of the annual meeting was made, whichever first occurs.
A stockholder's notice with respect to a proposal to be brought before the
annual meeting must set forth in addition to the matters required to be set
forth by the General Rules under the Securities Exchange Act of 1934; (a) a
brief description of the proposal and the reasons for conducting such business
at the annual meeting, (b) the name and address, as they appear on the Company's
books, of the stockholder proposing such business and any other stockholders
known by such stockholder to be supporting such proposal, (c) the class and
number of shares of the Company which are beneficially owned by such stockholder
on the date of such stockholder notice and by any other stockholders known by
such stockholder to be supporting such proposal on the date of such stockholder
notice, and (d) any financial interest of the stockholder in such proposal.
A stockholder's notice with respect to a director nomination must set forth
(1) the name, age, business address and residence address of the person, (2) the
principal occupation or employment of the person, (3) the class and number of
shares of the Company which are beneficially owned by such person, (4) all
information that would be required to be included in a proxy statement
soliciting proxies for the election of the nominee director (including such
person's written consent to serve as a director if so elected). As to the
stockholder providing such notice, such stockholder must set forth (1) the name
and address, as they appear on the Company's books, of the stockholder and (2)
the class and number of shares of the Company which are beneficially owned by
such stockholder on the date of such stockholder notice.
The complete Amended and Restated Articles of Incorporation provisions
governing these requirements are available to any stockholder without charge
upon request from the Secretary of the Company.
By Order of the Board of Directors,
CHARLES J. KLEMAN, SECRETARY
Dated: April 20, 2000
19
REVOCABLE PROXY
CHICO'S FAS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 13, 2000
The undersigned, a stockholder of CHICO'S FAS, INC. (the "Company"),
hereby appoints Marvin J. Gralnick, Charles J. Kleman and Scott A. Edmonds, and
each of them, attorney and proxy of the undersigned, each with full powers of
substitution, for and on behalf of the undersigned, to represent the undersigned
at the Annual Meeting of Stockholders of the Company to be held at the 'Tween
Waters Inn, Captiva, Florida at 2:00 P.M., local time, on June 13, 2000 and any
adjournments or postponements thereof (the "Annual Meeting"), and to vote at the
Annual Meeting all the shares of Common Stock of the Company that the
undersigned is entitled to vote at the Annual Meeting, with the same effect as
if the undersigned were personally present at the Annual Meeting, all as
described in the Company's Proxy Statement dated April 20, 2000 relating to the
Annual Meeting, and the undersigned hereby authorizes and instructs the above
named proxies to vote as specified to the right;
The Board of Directors recommends voting FOR the following nominees and
proposals:
1. ELECTION OF DIRECTORS:
Nominees for Class I Directors:
Charles J. Kleman and Ross E. Roeder
WITH- FOR ALL
FOR HOLD EXCEPT
[ ] [ ] [ ]
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided below.
________________________________________________________________________________
FOR AGAINST ABSTAIN
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR
ANDERSEN LLP AS THE COMPANY'S INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS FOR FISCAL
YEAR 2001 [ ] [ ] [ ]
3. PROPOSAL TO RATIFY THE AMENDMENTS TO THE
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN [ ] [ ] [ ]
4. OTHER MATTERS: Unless a line is stricken
through this sentence, the proxies herein named
may in their discretion vote the shares
represented by this Proxy upon such other matters
as may properly come before the Annual Meeting.
Please be sure to sign and date Date
this Proxy in the box below.
-------------------------------- --------------------------------
Stockholder sign above Co-holder (if any) sign above
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
The shares represented by this Proxy will be voted in the manner directed
herein only if this Proxy is properly executed and timely returned. IF THE
UNDERSIGNED DOES NOT SPECIFY A CHOICE, THE SHARES WILL BE VOTED FOR THE NOMINEES
FOR DIRECTOR LISTED HEREON, FOR THE PROPOSAL TO RATIFY THE APPOINTMENT OF THE
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS, FOR THE PROPOSAL TO RATIFY THE
AMENDMENTS TO THE NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN, AND IN THE
DISCRETION OF THE PROXIES FOR OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE
ANNUAL MEETING.
The stockholder signing above acknowledges receipt of (1) the Company's
2000 Annual Report to Stockholders and (2) the Company's Notice of Annual
Meeting and Proxy Statement dated April 20, 2000 relating to the Annual Meeting.
The stockholder signing above does hereby revoke any proxy previously given with
respect to the shares represented by this Proxy.
NOTE: Your signature should appear as your name appears hereon. As to
shares held in joint names, each joint owner should sign. If the signer is a
corporation, please sign full corporate name by a duly authorized officer. If a
partnership, please sign in partnership name by an authorized person. If signing
as attorney, executor, administrator, trustee, guardian, or in other
representative capacity, please give full title as such.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD
AND PROMPTLY RETURN IT USING THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
CHICO'S FAS, INC.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
ARTICLE 1
GENERAL
1.1 PURPOSE. The purpose of the Chico's FAS, Inc. Non-Employee Directors'
Stock Option Plan is to secure for Chico's FAS, Inc. and its stockholders the
benefits of the incentive inherent in increased common stock ownership by the
members of the Board of Directors of the Company who are not employees of the
Company or any of its Subsidiaries.
1.2 MAXIMUM NUMBER OF SHARES. The maximum number of shares of Common Stock
that may be offered under the Plan is 150,000, subject to adjustment as provided
in Section 3.1 below. The Common Stock to be issued may be either authorized and
unissued shares or issued shares acquired by the Company or its Subsidiaries. In
the event that Options granted under the Plan shall terminate or expire without
being exercised in whole or in part, new Options may be granted covering the
shares not purchased under such lapsed Options.
1.3 DEFINITIONS. The following words and terms as used herein shall have
that meaning set forth therefor in this Section 1.3 unless a different meaning
is clearly required by the context. Whenever appropriate, words used in the
singular shall be deemed to include the plural and vice versa, and the masculine
gender shall be deemed to include the feminine gender.
1.3.1 "BOARD" or "BOARD OF DIRECTORS" shall mean the Board of
Directors of the Company.
1.3.2 "CODE" shall mean the Internal Revenue Code of 1986, as it may
be amended from time to time, or any successor statute. Reference to a specific
section of the Code shall include a reference to any successor provision.
1.3.3 "COMMITTEE" is defined in Section 1.4.
1.3.4 "COMMON STOCK" shall mean the common stock of the Company.
1.3.5 "COMPANY" shall mean Chico's FAS, Inc. and its successors.
1.3.6 "EFFECTIVE DATE" is defined in Section 3.9.
1.3.7 "FAIR MARKET VALUE" of the shares of Common Stock shall mean
the closing price, on the date in question (or, if no shares are traded on such
day, on the next preceding day on which shares were traded), of the Common Stock
on the principal securities exchange in the United
States on which such stock is listed, or if such stock is not listed on a
securities exchange in the United States, the closing price on such day in the
over-the-counter market as reported by the National Association of Security
Dealers Automated Quotation System (NASDAQ), or NASDAQ's successor, or if not
reported on NASDAQ, the fair market value of such stock as determined by the
Committee in good faith and based on all relevant factors.
1.3.8 "NSO" shall mean a nonqualified stock option granted in
accordance with the provisions of Article 2 of this Plan.
1.3.9 "NON-EMPLOYEE DIRECTOR" shall mean a member of the Board of
Directors who is not an employee of the Company or any Subsidiary.
1.3.10 "OPTION" shall mean an NSO, as defined in Section 1.3.8
above.
1.3.11 "OPTIONEE" shall mean a Non-Employee Director to whom an
Option is granted under the Plan.
1.3.12 "PLAN" shall mean the Chico's FAS, Inc. Non-Employee
Directors' Stock Option Plan, as set forth herein and as amended from time to
time.
1.3.13 "SUBSIDIARY" shall mean any corporation that at the time
qualifies as a subsidiary of the Company under the definition of "subsidiary
corporation" contained in Section 424(f) of the Code.
1.4 ADMINISTRATION. The Plan shall be administered by the Board or by a
committee of two or more members of the Board, as may be designated as such by
the Board (in either case, referred to for purposes of this Plan as the
"Committee").
1.4.1 The Committee shall have all the powers vested in it by the
terms of the Plan, such powers to include authority (within the limitations
described herein) to prescribe the form of the agreement embodying awards of
nonqualified stock options made under the Plan. The Committee shall, subject to
the provisions of the Plan, grant Options, and have the power to construe the
Plan, to determine all questions arising thereunder and to adopt and amend such
rules and regulations for the administration of the Plan as it may deem
desirable. Any decision of the Committee in the administration of the Plan, as
described herein, shall be final and conclusive. The Committee may act only by a
majority of its members in office, except that the members thereof may authorize
any one or more of their number or the Secretary or any other officer of the
Company to execute and deliver documents on behalf of the Committee.
1.4.2 To the fullest extent permitted by law, each person who is or
shall have been a member of the Committee shall be indemnified and held harmless
by the Company against and from any loss, cost, liability, or expense that may
be imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
2.
a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan and against and from any and all amounts paid by
him or her in settlement thereof, with the Company's approval, or paid by him or
her in satisfaction of any judgment in any such action, suit, or proceeding
against him or her, provided that the person shall give the Company an
opportunity, at its own expense, to handle and defend the same before the person
undertakes to handle and defend it on his or her own behalf. The foregoing right
of indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled under the Company's Certificate of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the
Company may have to indemnify them or hold them harmless.
1.5 ELIGIBILITY REQUIREMENTS. Each Non-Employee Director shall be eligible
to receive Options in accordance with Article 2 below. The adoption of this Plan
shall not be deemed to give any director any right to or be granted options to
purchase Common Stock, except to the extent and upon such terms and conditions
as set forth in this Plan.
ARTICLE 2
TERMS AND CONDITIONS OF OPTIONS
-------------------------------
2.1 GRANT. Options granted under the Plan shall be evidenced by an
agreement in such form as the Board or the Committee shall prescribe from time
to time in accordance with the Plan and shall comply with the terms and
conditions set forth under this Article 2.
2.2 NONQUALIFIED STOCK OPTIONS. Options granted under the Plan shall be an
NSO which are intended to be options that do not qualify as "incentive stock
options" under Section 422 of the Code.
2.3 AUTOMATIC GRANTS.
2.3.1 Each Non-Employee Director shall be granted an Option for
10,000 shares of Common Stock upon his or her initial appointment to the Board.
In addition, each year, as of the date of the Annual Meeting of Stockholders of
the Company, each Non-Employee Director who is then reelected or who is
continuing as a member of the Board after the adjournment of the Annual Meeting
shall be granted an Option for 10,000 shares of Common Stock.
2.3.2 The Option exercise price for each such automatic grant shall
be the Fair Market Value of the Common Stock on the date of the grant of the
Option.
2.3.3 One hundred percent (100%) of the total number of shares of
Common Stock covered by an automatic grant Option shall become exercisable
beginning with the date which is six (6) months after the date of the grant of
the Option and shall be exercisable by the Non-Employee Director for a period of
ten (10) years from the date of grant. Not less than one hundred (100) shares
3.
may be exercised at any one time unless the number exercised is the total number
at the time exercisable under the Option.
2.3.4 Notwithstanding the foregoing, no automatic grant Option or
any part of an automatic grant Option shall be exercisable (a) before the
Non-Employee Director has served one term-year as a member of the Board (as
used herein, the term "term-year" means that period from one Annual Meeting to
the subsequent Annual Meeting), (b) after the expiration of ten (10) years from
the date the Option was granted, and (c) unless written notice of the exercise
is delivered to the Company specifying the number of shares to be purchased and
payment in full is made for the shares of Common Stock being acquired thereunder
at the time of exercise.
2.4 DISCRETIONARY GRANTS. The Committee may also make discretionary grants
of Options to Non-Employee Directors. The number of shares of Common Stock
underlying such discretionary Options and the exercise price, vesting and other
terms and conditions of such Options shall be determined by the Committee at the
time such Options are granted.
2.5 METHOD OF EXERCISE. An Option may be exercised by a Non-Employee
Director during such time as may be permitted by the Option and the Plan by
providing written notice to the Board and tendering the purchase price in
accordance with the provisions of Section 2.6, and complying with any other
exercise requirements contained in the Option or promulgated from time to time
by the Board.
2.6 METHOD OF PAYMENT. Each Option shall state the method of payment of
the Option price upon the exercise of the Option. The method of payment stated
in the Option shall include payment in full (a) in United States dollars in cash
or by check, bank draft or money order payable to the order of the Company, (b)
in the discretion of and in the manner determined by the Board, by the delivery
of shares of Common Stock already owned by the Optionee, (c) by any other
legally permissible means acceptable to the Board at the time of the grant of
the Option (including cashless exercise as permitted under the Federal Reserve
Board's Regulation T, subject to applicable legal restrictions), or (d) in the
discretion of the Board, through a combination of (a), (b) and (c) of this
Section 2.6. If the option price is paid in whole or in part through the
delivery of shares of Common Stock, the decision of the Board with respect to
the Fair Market Value of such shares shall be final and conclusive.
2.7 DEATH OR OTHER TERMINATION OF POSITION AS A DIRECTOR. Subject to the
specific term, vesting and exercise provisions of Section 2.5:
2.7.1 In the event that a Non-Employee Director (a) is removed as a
director for dishonesty or violation of his or her fiduciary duty to the
Company, (b) voluntarily resigns under or followed by such circumstances as
would constitute a violation of his or her fiduciary duty to the Company, or (c)
commits an act of dishonesty not discovered by the Company prior to the
cessation of his or her services as a director of the Company but that would
have resulted in his or her removal if discovered prior to such date, then
forthwith from the happening of any such event, any Option then
4.
held by him or her and which was issued under this Plan shall terminate and
become void to the extent that it then remains unexercised.
2.7.2 If a person shall cease to be a director of the Company as a
result of such person's death or disability while such person is a member of the
Board of Directors and before the date of expiration of the Option, the Option
shall terminate and all rights to exercise thereunder shall terminate on the
earlier of (i) such date of expiration or (ii) one year following the date of
such death or disability. After the death of the director, his executors or
administrators, or any person or persons to whom the Option may be transferred
by will or by the laws of descent and distribution, shall have the right, at any
time prior to such termination, to exercise the Option pursuant to its terms.
2.7.3 If a person shall cease to be a director of the Company for
any reason other than one or more of the reasons set forth in sections 2.7.1 and
2.7.2 and before the date of expiration of the Option, the Option shall
terminate and all rights to exercise thereunder shall terminate on the earlier
of (i) such date of expiration or (ii) one (1) year following the date such
person ceases to be a director of the Company.
2.7.4 If prior to the time a person shall cease to be a director of
the Company, there shall occur a change in control of the Company and at such
time shares of Common Stock remain subject to the Option, then the Option shall
become immediately exercisable without regard to the other vesting provisions of
the Option and such exercisability shall thereafter terminate only at the end of
the initial term of the Option without regard to the other provisions of this
article 2. For purposes hereof, a "change in control" of the Company shall mean
a change in control of a nature that would be required to reported in response
to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1933 (the "Exchange Act") as in effect on the date hereof;
provided, that, without limitation, such a change in control shall be deemed to
have occurred if (i) any "person" (as such term is used in Section 13(d) and
14(d)(2) of the Exchange Act and other than the persons who are directors on the
date of the Option) is or becomes the beneficial owner, directly or indirectly,
of securities of the Company representing 20% or more of the combined voting
power of the Company's then outstanding securities or (ii) during any period of
two consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the Company cease for any reason to
constitute at least a majority thereof.
2.7.5 In the event any Option is exercised by the executors,
administrators, legatees or distributees of the estate of a deceased Optionee,
the Company shall be under no obligation to issue Common Stock thereunder unless
and until the Company is satisfied that the person or persons exercising the
Option are the duly appointed legal representatives of the deceased Optionee's
estate or the proper legatees or distributees thereof.
2.8 TRANSFERABILITY OF OPTIONS. The Option shall not be transferable by
the Optionee otherwise than by will or the laws of descent and distribution, and
shall be exercisable during his lifetime only by him or her.
5.
2.9 DELIVERY OF CERTIFICATES REPRESENTING SHARES. As soon as practicable
after the exercise of an Option, the Company shall deliver, or cause to be
delivered, to the Non-Employee Director exercising the Option, a certificate or
certificates representing the shares of Common Stock purchased upon the
exercise. Certificates representing shares of Common Stock to be delivered to a
Non-Employee Director shall be registered in the name of such director.
2.10 RIGHTS AS A STOCKHOLDER. A Non-Employee Director shall have no rights
as a stockholder with respect to any shares of Common Stock covered by his or
her Option until the date on which he or she becomes a record owner of the
shares purchased upon the exercise of the Option (the "record ownership date").
No adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property), distributions, or other rights for which
the record date is prior to the record ownership date.
ARTICLE 3
MISCELLANEOUS
-------------
3.1 STOCK ADJUSTMENTS.
3.1.1 In the event of any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split or other division or
consolidation of shares or the payment of a stock dividend (but only on Common
Stock) or any other increase or decrease in the number of such shares effected
without any receipt of consideration by the Company, then, in any such event,
the number of shares of Common Stock that remain available under the Plan, the
number of shares of Common Stock covered by each outstanding Option, and the
purchase price per share of Common Stock covered by each outstanding Option
shall be proportionately and appropriately adjusted for any such increase or
decrease.
3.1.2 Subject to any required action by the stockholders, if any
change occurs in the Common Stock by reason of any recapitalization,
reorganization, merger, consolidation, split-up, combination or exchange of
shares, or of any similar change affecting Common Stock, then, in any such
event, the number and type of shares covered by each outstanding Option, and the
purchase price per share of Common Stock covered by each outstanding Option,
shall be proportionately and appropriately adjusted for any such change. A
dissolution or liquidation of the Company shall cause each outstanding Option to
terminate.
3.1.3 In the event of a change in the Common Stock as presently
constituted that is limited to a change of all of its authorized shares with par
value into the same number of shares with a different par value or without par
value, the shares resulting from any change shall be deemed to be shares of
Common Stock within the meaning of the Plan.
6.
3.1.4 To the extent that the foregoing adjustments relate to stock
or securities of the Company, such adjustments shall be made by, and in the
discretion of, the Committee, whose determination in that respect shall be
final, binding and conclusive.
3.1.5 Except as hereinabove expressly provided in this Section 3.1,
a Non-Employee Director shall have no rights by reason of any division or
consolidation of shares of stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock of
any class or by reason of any dissolution, liquidation, merger or consolidation,
or spin-off of assets or stock of another corporation; and any issuance by the
Company of shares of stock of any class, securities convertible into shares of
stock of any class, or warrants or options for shares of stock of any class
shall not affect, and no adjustment by reason thereof shall be made with respect
to, the number or price of shares of Common Stock subject to the Option.
3.1.6 The existence of the Plan, and the grant of any Option
pursuant to the Plan, shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure or to merge or to consolidate, or to dissolve,
to liquidate, to sell, or to transfer all or any part of its business or assets.
3.2 LISTING AND REGISTRATION OF COMMON STOCK. Each Option shall be subject
to the requirement that if at any time the Board of Directors shall determine,
in its discretion, that the listing, registration or qualification of the Common
Stock covered thereby upon any securities exchange or under any state or federal
laws, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting of
such Option or the issuance or purchase of shares thereunder, such Option may
not be exercised unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Board. Notwithstanding anything in the Plan to the
contrary, if the provisions of this Section 3.2 become operative, and if, as a
result thereof, the exercise of an Option is delayed, then and in that event,
the term of the Option shall not be affected. Notwithstanding the foregoing or
any other provision in the Plan, the Company shall have no obligation under the
Plan to cause any shares of Common Stock to be registered or qualified under any
federal or state law or listed on any stock exchange or admitted to any national
marketing system.
3.3 TERM OF THE PLAN. The Plan shall terminate upon the earlier of the
following dates or events: (a) upon the adoption of a resolution of the Board
terminating the Plan; or (b) ten years from the Effective Date.
3.4 AMENDMENT OF THE PLAN; TERMINATION. The Board may, insofar as
permitted by law, from time to time, with respect to any shares of Common Stock
at the time not subject to Options, suspend, discontinue or terminate the Plan
or revise or amend it in any respect whatsoever.
3.5 APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of shares of Common Stock pursuant to Options will be used for general
corporate purposes.
7.
3.6 NO OBLIGATION TO EXERCISE. The granting of any Option under the Plan
shall impose no obligation upon any Optionee to exercise such Option.
3.7 NO IMPLIED RIGHTS TO DIRECTORS. Except as expressly provided for in
the Plan, no Non-Employee Director or other person shall have any claim or right
to be granted an Option under the Plan. Neither the Plan nor any action taken
hereunder shall be construed as giving any Non-Employee Director any right to
be retained as a Director or in any other capacity.
3.8 WITHHOLDING. Whenever the Company proposes or is required to issue or
transfer shares of Common Stock under the Plan, the Company shall have the right
to require the Optionee to remit to the Company an amount sufficient to satisfy
any federal, state or local withholding tax liability prior to the delivery of
any certificate or certificates for such shares. Whenever under the Plan
payments are to be made in cash, such payments shall be made net of an amount
sufficient to satisfy any federal, state or local withholding tax liability.
3.9 CONDITIONS PRECEDENT TO EFFECTIVENESS. The Plan shall become effective
upon the adoption of the Plan by the Board of Directors.
8.
EXHIBIT A
FIRST AMENDMENT TO CHICO'S FAS, INC.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
This First Amendment to the Chico's FAS, Inc. Non-Employee Directors'
Stock Option Plan, which effectively eliminates the ability to set the option
price at below fair market value, eliminates discretionary option grants from
the Plan, and requires stockholder approval of certain plan amendments, is
hereby adopted, the 20th day of August, 1999, but effective retroactive to the
date of initial adoption of the Non-Employee Directors' Stock Option Plan (i.e.
October 9, 1998), as follows:
1. Section 2.4 of the Plan is hereby amended in its entirety to read
as follows:
2.4 [Reserved]
2. Section 3.4 of the Plan is hereby amended in its entirety to read as
follows:
3.4 AMENDMENT OF THE PLAN; TERMINATION. The Board may, insofar
as permitted by law, from time to time, with respect to any shares
of Common Stock at the time not subject to Options, suspend,
discontinue or terminate the Plan or revise or amend it in any
respect whatsoever, except that, without approval of the
stockholders of the Company, no such revision or amendment shall
change the number of shares subject to the Plan, change the
designation of the class of persons eligible to receive Options,
decrease the price at which Options may be granted, otherwise
materially increase the benefits accruing to non-employee directors
under the Plan, or remove the administration of the Plan from the
Committee. The foregoing prohibitions shall not be affected by
adjustments in shares and purchase price made in accordance with the
provisions of Section 3.1.