SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /_/
Filed by a Party other than the Registrant /_/
Check the appropriate box:
/_/ Preliminary Proxy Statement
/x/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
DUTY FREE INTERNATIONAL, INC.
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/_/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
/_/ $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
/_/ 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:*
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
/_/ 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 No. ______________________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
___________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
DUTY FREE INTERNATIONAL, INC.
63 Copps Hill Road
Ridgefield, Connecticut 06877
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 22, 1997
To the Stockholders of
DUTY FREE INTERNATIONAL, INC.:
You are cordially invited to attend the Annual Meeting of Stockholders of
DUTY FREE INTERNATIONAL, INC., a Maryland corporation, which will be held on May
22, 1997, at 10:00 a.m., Baltimore time, at the Renaissance Harborplace Hotel,
202 East Pratt Street, Baltimore, Maryland 21202, for the following purposes:
(1) To elect three (3) Class B Directors for terms expiring at the
2000 Annual Meeting of Stockholders;
(2) To ratify the appointment of KPMG Peat Marwick LLP as the
Company's Independent Auditors for the fiscal year ending January 25, 1998;
and
(3) To transact such other business as may properly come before the
Annual Meeting or any adjournments or postponements thereof.
A copy of the Company's Annual Report to Stockholders, Proxy and Proxy
Statement are being mailed together with this notice.
Only stockholders of record at the close of business on March 31, 1997 are
entitled to notice of, and to vote at, the Annual Meeting and any adjournments
or postponements thereof. Such stockholders may vote in person or by Proxy. It
is important to you and to the Company that your shares be voted at the Annual
Meeting.
By Order of the Board of Directors
Gerald F. Egan, Secretary
April 14, 1997
================================================================================
IMPORTANT NOTICE
PLEASE READ THE ATTACHED PROXY STATEMENT CAREFULLY AND THEN SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED STAMPED AND ADDRESSED ENVELOPE.
THE GIVING OF THE PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE AT THE ANNUAL MEETING
IF THE PROXY IS REVOKED, AS SET FORTH IN THE PROXY STATEMENT.
================================================================================
-1-
DUTY FREE INTERNATIONAL, INC.
--------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 1997
This Proxy Statement and the accompanying proxy materials are being
furnished to the stockholders of Duty Free International, Inc., a Maryland
corporation, in connection with the solicitation of Proxies by the Board of
Directors of the Company for use at the Annual Meeting of Stockholders to be
held at the Renaissance Harborplace Hotel, 202 East Pratt Street, Baltimore,
Maryland 21202, on May 22, 1997, at 10:00 a.m., Baltimore time, and any
adjournments or postponements thereof. Only stockholders of record at the close
of business on March 31, 1997 (the "Record Date") will be entitled to notice of,
and to vote at, the Annual Meeting. Management anticipates that the mailing to
stockholders of this Proxy Statement and the accompanying Proxy materials,
together with a copy of the Company's Annual Report to Stockholders for the
fiscal year ended January 26, 1997, will occur on or about April 22, 1997.
At the Annual Meeting, the stockholders of the Company will be asked to (i)
consider and vote upon the election of three (3) Class B Directors; (ii) ratify
the appointment of KPMG Peat Marwick LLP as the Company's Independent Auditors
for the fiscal year ending January 25, 1998; and (iii) consider and vote upon
any other business that may properly come before the Annual Meeting.
The principal executive offices of the Company are located at 63 Copps Hill
Road, Ridgefield, Connecticut 06877, and its telephone number at that address is
(203) 431-6057.
The date of this Proxy Statement is April 14, 1997.
STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE
AND SIGN THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY
TO THE COMPANY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
-2-
VOTING AND PROXIES
Voting Rights
Holders of record of the Company's common stock, par value $0.01 per share
(the "Common Stock"), on the Record Date will be entitled to one vote for each
share held on all matters to come before the Annual Meeting of Stockholders. At
the close of business on the Record Date, there were outstanding 27,308,380
shares of Common Stock. The presence, in person or by proxy, of stockholders
entitled to cast a majority of all votes entitled to be cast at the Annual
Meeting will constitute a quorum. Directors will be elected by a plurality of
the votes cast. Action on a matter other than the election of Directors,
including the ratification of the appointment of KPMG Peat Marwick LLP as
Independent Auditors, will be approved if the number of shares cast for the
proposal exceeds the number of shares cast against the proposal. Abstentions and
broker non-votes will not be included in determining the outcomes of matters
being acted upon.
Proxies
If the accompanying Proxy is properly executed and returned, the shares
represented by the Proxy will be voted in accordance with the instructions
specified in the Proxy. In the absence of instructions to the contrary, such
shares will be voted in favor of (i) all of the nominees for election to the
Board of Directors listed in this Proxy Statement and named in the accompanying
Proxy and (ii) the ratification of KPMG Peat Marwick LLP as the Company's
Independent Auditors for the fiscal year ending January 25, 1998. The Board does
not intend to bring any other matters before the Annual Meeting and is not aware
of any matters which will come before the Annual Meeting other than as described
herein. In the absence of instructions to the contrary, however, it is the
intention of each of the persons named in the accompanying Proxy to vote the
shares each Proxy represents in accordance with such person's discretion with
respect to any other matters properly coming before the Annual Meeting.
Any stockholder may revoke his or her Proxy at any time prior to the voting
thereof on any matter (without, however, affecting any vote taken prior to such
revocation). A Proxy may be revoked by filing with Gerald F. Egan, Vice
President of Finance, Chief Financial Officer, Treasurer and Secretary of the
Company at 63 Copps Hill Road, Ridgefield, Connecticut 06877, a written notice
of revocation or a subsequently dated Proxy at any time prior to the time it has
been voted at the Annual Meeting, or by attending the Annual Meeting and voting
in person (although attendance at the Annual Meeting will not in and of itself
constitute revocation of a Proxy).
-3-
PROPOSAL 1 - ELECTION OF DIRECTORS
The Company currently has a classified Board of Directors consisting of
three Class A Directors, three Class B Directors and three Class C Directors.
The current terms of the Directors continue until the Annual Meetings of
Stockholders to be held in 1999, 1997 and 1998, respectively, and until their
respective successors are elected and qualified.
The following information is furnished with respect to the three nominees
for Class B Director, and the Directors who will continue in office after the
Annual Meeting until the expiration of their respective terms. The Board of
Directors has unanimously recommended the election of the nominees named below.
Unless otherwise instructed, it is the intention of the persons named in the
accompanying Proxy to vote all shares of Common Stock represented by properly
executed Proxies for all the nominees to the Board of Directors named below.
Although each of the nominees has indicated that they will serve as a Director
of the Company, should any one or more of them be unable to serve, the Proxies
will be voted for the election of a substitute nominee or nominees designated by
the Board of Directors, or the size of the Board maybe reduced accordingly.
Nominees for Election
Nominees for Class B Directors - Terms to Expire in 2000
Jack Africk, age 68, is Chairman of Evolution Consulting Group, Inc. Mr.
Africk was the Vice Chairman of the Board of the Company from May 1993 through
December 1994, and was the Vice Chairman of UST, Inc. from 1990 to 1993. He was
a director and Executive Vice President of UST, Inc. from 1987 to 1990, and
previously served as the President and Chief Executive Officer of United States
Tobacco Company, a wholly owned subsidiary of UST, Inc. Mr. Africk is also a
director of Crown Central Petroleum Corp., Tanger Factory Outlets and Transmedia
Network, Inc.
Carl Reimerdes, age 56, has been a Vice President and a Director of the
Company since its formation and the principal operating officer of the Company's
Airport Division and its predecessor since 1983. Mr. Reimerdes was employed by
IDF Services, Inc. ("IDF Services") from 1972, and served as its President and
as a director, until the merger of that corporation with the Company in 1992.
Lowell P. Weicker, Jr., age 65, is a teacher at the University of Virginia.
Mr. Weicker was the Governor of the State of Connecticut from 1990 to 1994; a
U.S. Senator from Connecticut from 1970 to 1988; and a U.S. Congressman from
1968 to 1970. Mr. Weicker is also a director of Compuware, HPSC, Phoenix Home
Life Mutual Fund and UST, Inc.
-4-
Vote Required
Directors are elected by a plurality of votes cast at the Annual Meeting of
Stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH
OF THE NOMINEES FOR ELECTION AS DIRECTORS
Continuing Directors
The remaining Directors of the Company, whose terms expire in 1999 and
1998, respectively, are:
Class A Directors - Terms to Expire in 1999
David H. Bernstein, age 62, was the Chairman of the Board of the Company
from 1986 to 1993 and has been a Director since the Company's formation in 1983.
He served until 1992 as President of Samuel Meisel and Company, Inc., a wholly
owned subsidiary of the Company ("Meisel"), with which he had been associated
since 1957. He currently serves as the President of the International
Association of Airport Duty Free Stores, Inc., the trade association
representing all major airport duty free operators in North, South and Central
America, and the Caribbean. He has served in this capacity for the past thirteen
years. Mr. Bernstein is a member of the Board of Trustees of The Johns Hopkins
University and is a trustee of Sinai Hospital and Johns Hopkins Medicine. Mr.
Bernstein is a director of Fenton Hill Florida, Inc.
John A. Couri, age 55, is a consultant to the Company and has been a
Director since the Company's formation. Mr. Couri was Co-Chief Executive Officer
from October 1993 to May 1994 and served as Chairman of the Board of the Company
from October 1993 to December 1994. He was Chief Executive Officer of the
Company from 1987 to 1993, President from 1983 to 1993 and Chief Financial
Officer from 1987 until 1990. In addition, he served as President of the
Northern Border Division from its formation until 1989. Mr. Couri was employed
by IDF Services from 1972 to 1987, and served as a director of that corporation
until the merger of that corporation with the Company in 1992.
Heribert Diehl, age 63, has been a Director since the Company's formation.
Mr. Diehl has been an employee of Gebr. Heinemann, a stockholder of the Company,
since 1962 and has been a managing director of that firm since 1983. Gebr.
Heinemann is a major wholesale supplier of duty free merchandise and an operator
of duty free concessions in Europe.
-5-
Class C Directors - Terms to Expire in 1998
Alfred Carfora, age 46, was elected President and Co-Chief Executive
Officer of the Company in October 1993 and became Chief Executive Officer in May
1994. Previously, he served as Executive Vice President and Chief Operating
Officer, and he has been a Director of the Company since 1985. Prior to 1992,
Mr. Carfora had principal operating responsibilities for the Company's Northern
Border Division and Airport Division. Mr. Carfora was employed by IDF Services
from 1973 to 1988 and served as its Vice President, Secretary and Treasurer and
as a director until the merger of that corporation with the Company in 1992.
Susan H. Stackhouse, age 43, has been President of Fenton Hill Florida,
Inc. since 1986 and a Director of the Company since 1992. Ms. Stackhouse joined
Fenton Hill Florida, Inc., formerly known as Bonanni Exports, Inc., in 1980 as
General Manager and served as its Executive Vice President from 1984 until her
election as President in 1986. Fenton Hill Florida, Inc., operates duty free and
retail concessions in eight airports. Ms. Stackhouse has served as a director of
the International Association of Airport Duty Free Stores, Inc. since 1986.
Stephen M. Waters, age 50, is a Managing Partner of Compass Partners
International, L.L.C., a financial services firm. He was Co-Chief Executive of
Morgan Stanley U.K. Group from 1992 to 1996 and a Managing Director of Morgan
Stanley & Company, Inc. from 1988 to 1996. He is a member of the Chancellor's
City Promotion Panel in the United Kingdom, a member of the Harvard Business
School Visiting Committee and Chairman of the Financial Aid Council at Harvard
College.
Board and Committee Meetings
The Board of Directors met five times during the fiscal year ended January
26, 1997. All of the Directors attended at least 75% of the aggregate of all
meetings of the Board of Directors and the Committees on which they served
during the fiscal year ended January 26, 1997.
The members of the Audit Committee presently consist of Messrs. Africk,
Diehl and Waters. The Audit Committee is responsible for reviewing, with the
Company's Independent Auditors, (i) the general scope of the accountants' audit
services and the annual results of their audit, (ii) the reports and
recommendations made to the Audit Committee by the Independent Auditors and the
Company's Internal Audit Department, and (iii) the Company's internal controls
structure. The Audit Committee held three meetings during the fiscal year ended
January 26, 1997.
The Executive Committee currently consists of Messrs. Africk, Bernstein,
Carfora, Couri and Reimerdes. The Executive Committee may exercise all powers of
the Board of Directors between meetings of the Board except as otherwise
provided by law or by the By-laws of the Company. The Executive Committee held
one meeting during the fiscal year ended January 26, 1997.
-6-
The Compensation Committee presently consists of Messrs. Africk, Diehl and
Waters. The Compensation Committee is responsible for reviewing and making
recommendations to the Board of Directors concerning remuneration paid to the
Company's executive officers. The Compensation Committee determines the bonuses
awarded under the Company's Incentive Compensation Plan and administers and
makes awards of stock options under the Company's stock option plans. The
Compensation Committee held two meetings during the fiscal year ended January
26, 1997.
The Nominating Committee currently consists of Messrs. Couri and Reimerdes.
The Nominating Committee reviews the qualifications of, and recommends to the
Board, candidates for election to the Board. The Nominating Committee considers
suggestions from many sources, including stockholders, regarding possible
candidates for Director. Such suggestions, together with appropriate
biographical information, may be submitted to the Secretary of the Company. The
Nominating Committee held one meeting during the fiscal year ended January 26,
1997.
EXECUTIVE OFFICERS
The Company's executive officers include Alfred Carfora, President and
Chief Executive Officer; John Edmondson, Executive Vice President and Chief
Operating Officer; Carl Reimerdes, Vice President; Gerald F. Egan, Vice
President of Finance, Treasurer, Chief Financial Officer and Secretary; and
David H. Bernstein, Chairman of the Executive Committee of the Board of
Directors. Information concerning each executive officer's age and length of
service with the Company, other than Messrs. Edmondson and Egan, can be found
herein under the section entitled "ELECTION OF DIRECTORS". Each of these
executive officers was elected by, and serve at the pleasure of, the Board of
Directors.
John Edmondson, age 52, was appointed Executive Vice President and Chief
Operating Officer of the Company in September 1995. From June 1992 to September
1995, Mr. Edmondson had principal operating responsibilities for the Company's
Southern Border Division. He also had principal operating responsibilities for
the Company's Northern Border Division from May 1994 to September 1995. Before
joining the Company in 1992, Mr. Edmondson was a Senior Vice President for Host
Marriott Corporation with complete responsibility for over 150 retail and duty
free airport locations.
Gerald F. Egan, age 49, joined the Company in August 1989 as Vice President
of Finance. He was elected Chief Financial Officer by the Board of Directors in
January 1990, Treasurer in May 1993 and Secretary in June 1994. Prior to joining
the Company, Mr. Egan had served, since 1985, as chief financial officer of H.B.
Ives Company, a manufacturer of architectural and builders hardware. Mr. Egan
previously had been employed by Cadbury-Schweppes, Inc., a beverage and
confectionery producer, in various financial management positions prior to
becoming its Vice President-Controller in 1984. Mr. Egan is a certified public
accountant.
-7-
EXECUTIVE COMPENSATION
Summary Compensation Table
The following Summary Compensation Table sets forth certain information
about the cash and non-cash compensation earned by or awarded to Alfred Carfora,
President and Chief Executive Officer, and the four other most highly
compensated executive officers of the Company for the fiscal years ended January
1997, 1996, and 1995.
Long-term
Compensation
Annual compensation(1) Awards
---------------------- ------
Securities
Name and Fiscal Underlying All other
Principal Position Year Salary Bonus Options(2) Compensation(3)
- ------------------ ---- ------ ----- ---------- ---------------
Alfred Carfora, President 1997 $325,000 $250,000 50,000 $18,415
and Chief Executive 1996 $325,000 $175,000 -- $ 7,954
Officer 1995 $299,000 $150,000 125,000 $ 7,477
John Edmondson, 1997 $265,000 $175,000 35,000 $12,953
Executive Vice 1996 $245,000 $150,000 -- $ 2,491
President and Chief 1995 $216,000 $100,000 40,000 $ 2,270
Operating Officer
Carl Reimerdes, 1997 $288,000 $125,000 25,000 $21,015
Vice President 1996 $288,000 $100,000 -- $ 7,394
1995 $275,000 $125,000 125,000 $ 8,942
Gerald F. Egan, Vice 1997 $206,000 $ 75,000 20,000 $17,464
President of Finance 1996 $182,000 $125,000 -- $ 6,734
Treasurer, Secretary 1995 $170,000 $125,000 60,000 $ 7,051
and Chief Financial
Officer
David H. Bernstein, 1997 $ 50,000 $ -- -- $12,105
Chairman of the 1996 $150,000 $ -- -- $ 6,091
Executive Committee 1995 $256,000 $ 75,000 125,000 $11,844
of the Board, former
Chairman of the Board
(1) Salary and bonus amounts relate to the year in which earned, regardless of
when paid.
(2) This column represents options to purchase the stated number of shares of
Common Stock.
(3) This column includes other compensation that could not properly be reported
in any other column of the Summary Compensation Table. The amounts for
fiscal 1997 include the contributions by the Company to the Duty Free
International, Inc. Employees' Retirement Savings Plan for all named
executives, the cost of life and disability insurance premiums paid by the
Company for all named executives, and professional fees paid by the Company
on behalf of Mr. Bernstein.
-8-
The following table summarizes for the named executive officers
information about the grant of options during the fiscal year ended January 26,
1997 and the potential realizable value of the options.
Option Grants in the Last Fiscal Year
Individual Grants Potential Realizable
------------------------------------------------ Value at Assumed Annual
Number of % of Total Rates of Stock Price
Securities Options Appreciation for
Underlying Granted to Exercise Option Terms (1)
Options Employees in Price Expiration ---------------------
Name Granted(2) Fiscal Year ($/Sh) Date 5% 10%
---- ---------- ----------- ------ ---- -- ---
Alfred Carfora 50,000 20% $14.00 9/25/06 $440,226 $1,115,620
John Edmondson 35,000 14% $14.00 9/25/06 $308,158 $780,934
Carl Reimerdes 25,000 10% $14.00 9/25/06 $220,113 $557,810
Gerald F. Egan 20,000 8% $14.00 9/25/06 $176,090 $446,248
David H. Bernstein -0- N/A N/A N/A N/A N/A
- ------------
(1) These values have been determined based upon assumed rates of appreciation
and are not intended to forecast the possible future appreciation, if any, of
the price or value of the Company's Common Stock.
(2) The options entitle the holder to purchase shares of the Company's Common
Stock at an exercise price which is equal to the closing price on the New York
Stock Exchange of the Company's Common Stock on the day preceding the date the
stock option was granted. The options vest in three equal annual installments
commencing September 25, 1997 for all named executive officers. No stock option
may be exercised after the expiration of 10 years after the date of grant.
The following table summarizes for the named executive officers information
about the exercise of stock options by the named executive officers during the
fiscal year ended January 26, 1997 and the value of stock options they held at
January 26, 1997.
Aggregated Option Exercises in Last Fiscal Year
and January 26, 1997 Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money(1)
Options at January 26, 1997 Options at January 26, 1997(2)
Shares Acquired Value --------------------------- ------------------------------
Name On Exercise(#) Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------------- -------- ----------- ------------- ----------- -------------
Alfred Carfora 6,666 $67,493 133,334 91,666 $114,584 $69,791
John Edmondson 0 $0 46,667 48,333 $86,668 $52,082
Carl Reimerdes 0 $0 140,000 66,666 $163,746 $63,541
Gerald F. Egan 0 $0 80,000 40,000 $55,000 $32,500
David H. Bernstein 0 $0 148,334 41,666 $114,584 $57,291
(1) Options are "in-the-money" if the closing market price of the Company's
Common Stock on January 24, 1997 exceeded the exercise prices of the
options.
(2) The value of options represents the difference between the exercise price
of the options and the closing market price of the Company's Common Stock
on January 24, 1997.
-9-
Compensation of Directors
Each Director who was not an officer of or consultant to the Company or a
holder of more than 3% of the Company's Common Stock received $10,000 for
serving on the Board of Directors and $1,000 for each Board of Directors meeting
and each committee meeting attended during the fiscal year ended January 26,
1997.
Each non-employee Director is granted stock options annually under the 1989
Stock Option Plan to purchase (i) 1,000 shares of Common Stock, plus (ii) an
additional 5,000 shares if the non-employee Director serves on any one or more
of the Audit, Compensation, Executive or Nominating Committees of the Board of
Directors, and (iii) an additional 2,500 shares if the non-employee Director
serves on three or more of such Board committees. The exercise price per share
of such options will be the fair market value of the Common Stock on the day
before the date of the grant; such exercise price will be payable in cash or in
shares of Common Stock. The options will become exercisable for one-third of the
underlying shares on each of the first three anniversaries of the date of grant.
The options will expire at the earlier of ten years after the date of grant,
one-year after cessation of service on the Board of Directors due to death or
disability, or upon cessation of service on the Board of Directors for any other
reason.
John A. Couri is a consultant to the Company's Chief Executive Officer and
the Board of Directors. His consulting agreement provides for an annual
consulting fee of $150,000 through December 31, 1999 with automatic extensions
for successive one-year periods unless written notice is given by either party
of an intention not to further extend the agreement.
Certain Relationships and Related Transactions
Ms. Stackhouse, a Director, is the President and an owner of Fenton Hill
Florida, Inc. which has certain arrangements for the purchase of merchandise and
services from the Company. For the fiscal year ended January 26, 1997, such
arrangements included the payment of approximately $43,000 for services rendered
and the purchase of approximately $658,000 of merchandise. On April 28, 1994 and
May 1, 1996, Fenton Hill Florida, Inc. redeemed 4.9 shares of its own stock from
the Company, which was all of the stock owned by the Company, for a total of
$1,425,000. Fenton Hill Florida, Inc. paid the Company $75,000 in 1994 and
promissory notes for $1,350,000 were signed in 1994 and 1996. The notes are
payable in installments starting April 30, 1997 through April 30, 2006. Mr.
Bernstein, a Director and executive of the Company, is a director of Fenton Hill
Florida, Inc.
-10-
Compensation Committee Interlocks and Insider Participation
The Compensation Committee presently consists of Messrs. Africk, Diehl and
Waters. The Compensation Committee is responsible for reviewing and making
recommendations to the Board of Directors about the salary of the Company's
executive officers. It also determines the amount of bonuses paid under the
Company's Incentive Compensation Plan and administers and makes awards of stock
options under the Company's stock option plans. The Compensation Committee held
two meetings during the fiscal year ended January 26, 1997. Mr. Diehl is a
member of the executive committee of Gebr. Heinemann, a partnership which is a
greater than five percent stockholder of the Company.
Compensation Committee Report on Executive Compensation
The Compensation Committee is responsible for reviewing and making
recommendations to the Board of Directors with respect to the Company's
executive compensation policies. In addition, the Compensation Committee
determines on an annual basis the compensation to be paid to the Chief Executive
Officer and each of the other executive officers of the Company.
Compensation Philosophy
The Company's compensation programs for executive officers are designed to
enable the Company to:
* Hire, reward, motivate and retain the highest quality managers
possible.
* Match the Company's compensation plans to its business strategies, as
well as to the external business environment.
* Align the executive officers' interest with those of stockholders by
providing a significant portion of incentive compensation in the form
of Company stock options.
* Emphasize the relationship between pay and performance by placing a
significant portion of compensation at risk through the Company's
Incentive Compensation Plan.
Executive annual compensation levels (base salary and incentive
compensation awards) are targeted at the median of compensation paid by
comparably positioned companies for like jobs including the companies used in
the performance graph on page 15 of this Proxy Statement (the "Peer Group").
-11-
Compensation Elements
Base Salary
In determining an executive officer's base salary, the responsibilities of
the position, the officer's experience, individual performance, and the
competitive marketplace, including a comparison of salaries paid within the Peer
Group, are considered. Based on the most recent information available, the base
salary for the Chief Executive Officer, Alfred Carfora, ranked below the median
base salary relative to the compensation paid by the Peer Group, and the four
other most highly compensated executive officers' base salaries ranked at the
median relative to the compensation paid by the Peer Group.
Incentive Compensation Plan
Cash bonuses are provided to senior and other key executives under the
Company's Incentive Compensation Plan (the "Plan") which rewards employees based
on performance relative to financial and other predetermined objectives
established for the year. For fiscal 1997, approximately $2,897,000 was set
aside for distribution as bonuses under the Plan. Individual bonus awards were
determined by evaluating each employee's performance toward Company, divisional
or departmental objectives established for the year and specific performance
measures related to both revenue and profitability.
Stock Options
The last principal component of compensation arises from the Company's
grant of stock options under the Company's Stock Option Plans. Stock option
grants are designed to more closely align the interests of management with those
of stockholders, and because the full value of an employee's compensation
package cannot be realized unless stock price appreciation occurs over a number
of years, stock option grants are utilized to retain key employees and to
provide an incentive for them to create long-term shareholder value. In granting
stock options under the Stock Option Plans, the Committee considers (i) the
recipient's level of responsibility, (ii) the recipient's specific function
within the Company's overall organization; (iii) the recipient's performance
toward Company, divisional or departmental objectives established for the year;
(iv) the number of options granted to executive officers by the other companies
included in the Peer Group; and (v) the amount of options currently held by the
executive officer. The Stock Option Plans are administered by the Compensation
Committee and provide that no one person, including executive officers, may be
granted options for the purchase of more than 250,000 shares in any fiscal year
(subject to adjustments as noted in the Stock Option Plans in order to prevent
dilution or enlargement of the rights of optionees).
-12-
Benefits
The Company provides its executives with medical and other benefits that
are generally available to its employees. The Company also pays premiums for
life and disability insurance for certain executive officers.
Tax Compliance Policy
Section 162(m) of the Internal Revenue Code generally limits to $1,000,000 the
tax deductible compensation paid to the Chief Executive Officer and the four
highest-paid executive officers who are employed as executive officers on the
last day of the year. However, the limitation does not apply to
performance-based compensation provided certain conditions are satisfied.
The Company's policy is generally to preserve the federal income tax
deductibility of compensation paid, to the extent feasible. The Compensation
Committee believes that the incentive compensation and stock option awards
earned for fiscal 1997 and compensation arising from exercise of stock options
granted in fiscal 1997 will be deductible by the Company.
The Compensation Committee considers its primary goal to be the design of
compensation strategies that further the best interests of the Company and its
stockholders. To the extent not inconsistent with that goal, the Compensation
Committee will attempt, where practical, to use compensation policies and
programs that preserve the deductibility of compensation expenses. The
Compensation Committee reserves the right to use its judgment, where merited by
the Compensation Committee's need for flexibility to respond to changing
business conditions or by an executive's individual performance, to nevertheless
authorize compensation payments which may not, in a specific case, be fully
deductible by the Company.
Chief Executive Officer's Compensation
The compensation program for Alfred Carfora, the Company's Chief Executive
Officer, including salary, annual cash incentive and stock options was
determined using the criteria set forth above. As with the other executive
officers, emphasis is placed on incentive compensation, with approximately 43%
of his fiscal year 1997 compensation (salary and cash bonus) being incentive
based.
Three major factors affected the actions of the Compensation Committee in
fiscal 1997 regarding the compensation of Mr. Carfora:
* The Company's operating results improved significantly in fiscal 1997.
* The Company successfully continued a series of cost reduction programs
which contributed to the Company's 34% improvement in profitability.
* Progress was made in each of the Company's businesses.
-13-
The Compensation Committee has increased Mr. Carfora's base salary to
$350,000. Mr. Carfora's base salary is below the median base salary for Chief
Executive Officers included in the Peer Group.
Mr. Carfora earned an incentive compensation award of $250,000 for the
fiscal year ended January 26, 1997, which falls below the median bonus award of
chief executive officers who are included in the Peer Group. The Compensation
Committee determined the size of the award after an evaluation of the factors
mentioned above.
Jack Africk
Heribert Diehl
Stephen M. Waters
Members of the Compensation Committee
-14-
Performance Graph
The following graph compares the cumulative total return on a $100
investment in the Company's Common Stock against the cumulative total return on
a similar investment in (i) the Standard & Poor's Mid-Cap 400 Stock Index and
(ii) a group of five other specialty retail companies, consisting of: CML Group,
Inc., Pier 1 Imports, Inc., Sharper Image Corp., Tiffany & Co. and
Williams-Sonoma, Inc. The graph assumes that all investments were made on
January 31, 1992, are held through the Company's fiscal year ended January 26,
1997 and that all dividends are reinvested.
[THE FOLLOWING TABLE WAS REPRESENTED BY A GRAPH IN THE PRINTED MATERIAL]
Duty Free Specialty Retail Standard & Poor's
Date International Companies Mid-Cap 400
---- ------------- -------------- ----------------
January 31, 1992 $100 $100 $100
January 31, 1993 $45 $119 $111
January 31, 1994 $39 $117 $128
January 29, 1995 $19 $107 $122
January 28, 1996 $33 $104 $161
January 26, 1997 $32 $155 $196
-15-
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS,
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information as to the number of
shares of Common Stock owned, as of March 31, 1997 (except as noted in note (2)
below), by each person who is known by the Company to beneficially own more than
5% of Common Stock, each Director of the Company, each executive officer named
in the Summary Compensation Table and all executive officers and Directors of
the Company as a group. A person is a beneficial owner if such person has or
shares voting power or investment power. Each beneficial owner has sole voting
and investment power unless otherwise noted. At March 31, 1997, there were
27,308,380 shares of Common Stock outstanding. Except as noted in the footnotes
below, the addresses of all stockholders, Directors, executive officers and
nominees identified in the table and accompanying footnotes are in care of the
Company's principal executive offices at 63 Copps Hill Road, Ridgefield,
Connecticut 06877.
Number of Shares Percentage of
of Common Stock Outstanding
Name of Beneficial Owner Beneficially Owned Common Stock
- ------------------------ ------------------ ------------
Gebr. Heinemann(1) 4,571,664 16.7%
FMR Corporation (2) 2,454,600 9.0%
John A. Couri(3) 1,241,334 4.5%
David H. Bernstein(4) 1,205,423 4.4%
Carl Reimerdes(5) 1,167,293 4.3%
Heribert Diehl(1)(6) 921,756 3.4%
Alfred Carfora(7) 309,229 1.1%
Gerald F. Egan(8) 81,100 *
Jack Africk(9) 56,101 *
John Edmondson(10) 46,667 *
Susan H. Stackhouse(11) 17,234 *
Stephen M. Waters(12) 4,000 *
All executive officers and
Directors as a group
(10 persons)(13) 5,050,137 18.0%
______________
* Represents less than 1% of the issued and outstanding Common Stock.
(1) Heribert Diehl, a member of the executive committee of Gebr.
Heinemann, a partnership, is a Director of the Company. The Company
believes that certain members of the Heinemann family who are partners
in Gebr. Heinemann may be deemed to be indirect beneficial owners of
the Common Stock owned by Gebr. Heinemann.
(2) Fidelity Management & Research Company ("Fidelity"), 82 Devonshire
Street, Boston, Massachusetts 02109, a wholly-owned subsidiary of FMR
Corp. and an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940, is the beneficial owner of 2,454,600
shares of the Company's Common Stock as of December 31, 1996 as a
result of acting as investment adviser to various investment companies
registered under Section 8 of the Investment Company Act of 1940. The
ownership of one investment company, Fidelity Value Fund, amounted to
1,825,700 shares of the Company's common stock.
-16-
Fidelity Value Fund has its principal business office at 82 Devonshire
Street, Boston, Massachusetts 02109. Edward C. Johnson 3d, FMR Corp.,
through its control of Fidelity, and the funds each has sole power to
dispose of the 2,454,600 shares owned by the Funds. Neither FMR Corp.
nor Edward C. Johnson 3d, Chairman of FMR Corp., has the sole power to
vote or direct the voting of the shares owned directly by the Fidelity
Funds, which power resides with the Funds' Board of Trustees. Fidelity
carries out the voting of the shares under written guidelines
established by the Funds' Boards of Trustees. Members of the Edward
C.Johnson 3d family and trusts for their benefit are the predominant
owners of Class B shares of common stock of FMR Corp., representing
approximately 49% of the voting power of FMR Corp. Mr. Johnson 3d owns
12.0% and Abigail Johnson owns 24.5% of the aggregate outstanding
voting stock of FMR Corp. Mr. Johnson 3d is chairman of FMR Corp. and
Abigail P. Johnson is a director of FMR Corp. The Johnson family group
and all other Class B shareholders have entered into a shareholders'
voting agreement under which all class B shares will be voted in
accordance with the majority vote of Class B shares. Accordingly,
through their ownership of voting common stock and execution of the
shareholders' agreement, members of the Johnson family may be deemed,
under the Investment Company Act of 1940, to form a controlling group
with respect to FMR Corp. All of the foregoing information is based
on FMR Corporation's schedule 13G dated February 14, 1997.
(3) This amount includes 337,000 shares of Common Stock beneficially owned
by Mr. Couri as Trustee for the Couri Charitable Remainder Trust and
Couri Charitable Lead Unitrust; 32,485 shares of Common Stock as
trustee with his wife for their children; and 17,515 shares of Common
Stock held beneficially for his son. This amount also includes stock
options exercisable within 60 days after March 31, 1997 to purchase
approximately 150,334 shares of Common Stock.
(4) This amount includes stock options exercisable within 60 days after
March 31, 1997 to purchase approximately 148,334 shares of Common
Stock.
(5) This amount includes 1,027,093 shares of Common Stock held by trustees
for the benefit of Mr. Reimerdes' children and stock options
exercisable within 60 days of March 31, 1997 to purchase approximately
140,000 shares of Common stock.
(6) This amount includes stock options exercisable within 60 days after
March 31, 1997 to purchase approximately 46,334 shares of Common
Stock.
(7) This amount includes stock options exercisable within 60 days after
March 31, 1997 to purchase approximately 133,334 shares of Common
Stock.
(8) This amount includes stock options exercisable within 60 days after
March 31, 1997 to purchase approximately 80,000 shares of Common
Stock.
(9) This amount includes stock options exercisable within 60 days after
March 31, 1997 to purchase approximately 52,001 shares of Common
Stock.
(10) This amount includes stock options exercisable within 60 days after
March 31, 1997 to purchase approximately 46,667 shares of Common
Stock.
(11) This amount includes stock options exercisable within 60 days after
March 31, 1997 to purchase approximately 16,334 shares of Common
Stock.
-17-
(12) This amount includes stock options exercisable within 60 days after
March 31, 1997 to purchase approximately 2,000 shares of Common Stock.
(13) This amount excludes Common Stock owned by Gebr. Heinemann. The amount
includes stock options exercisable within 60 days after March 31, 1997
to purchase approximately 815,338 shares of Common Stock.
PROPOSAL 2 - RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
At the Annual Meeting, the Company's stockholders will be asked to ratify
the appointment of KPMG Peat Marwick LLP as the Company's Independent Auditors
for the fiscal year ending January 25, 1998. The Company has been advised by
KPMG Peat Marwick LLP that none of its members has any financial interest in the
Company. For the fiscal year ended January 26, 1997, KPMG Peat Marwick LLP was
not engaged by the Company for any professional services other than audit, tax
and other related services. It is expected that representatives of KPMG Peat
Marwick LLP, the Company's Independent Auditors, will be present at the Annual
Meeting to respond to appropriate questions of stockholders and to make a
statement if they so desire.
Vote Required
The affirmative vote of a majority of votes cast is required to ratify the
appointment of KPMG Peat Marwick LLP as the Company's Independent Auditors for
the fiscal year ending January 25, 1998.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE RATIFICATION OF THE APPOINTMENT OF
KPMG PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING JANUARY 25, 1998.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented for
consideration other than the matters described in the Notice of Annual Meeting,
but if other matters are presented, it is the intention of the persons named in
the accompanying Proxy to vote on such matters in accordance with their
judgment.
STOCKHOLDER PROPOSALS FOR THE 1998
ANNUAL MEETING OF STOCKHOLDERS
Stockholder proposals to be presented at the 1998 Annual Meeting of
Stockholders must be received, in writing, by the Secretary of the Company at
the Company's principal executive offices no later than December 19, 1997 in
order to be included in the Company's proxy materials relating to that meeting.
-18-
REPORT ON FORM 10-K
The Company's Annual Report on Form 10-K for the fiscal year ended January
26, 1997, filed with the Securities and Exchange Commission, is available to
stockholders, without charge, upon written request. Exhibits to the Form 10-K
will be furnished upon payment of $.50 per page, with a minimum charge of $5.00.
Requests for copies should be directed to Duty Free International, Inc., 645
Madison Avenue, 6th Floor, New York, New York 10022, Attention: Investor
Relations Administrator.
SOLICITATION OF PROXIES
The accompanying Proxy is solicited by the Company and the cost of such
solicitation will be borne by the Company. Proxies may be solicited by officers,
Directors and employees of the Company, none of whom will receive any additional
compensation for their services. Solicitation of Proxies may be made personally
or by mail, telephone, telegraph, facsimile or messenger. The Company will pay
persons holding shares of Common Stock in their names or in the names of
nominees, but not owning such shares beneficially, such as brokerage houses,
banks and other fiduciaries, for the reasonable expense of forwarding soliciting
materials to their principals.
Ridgefield, Connecticut
April 14, 1997
-19-
PROXY
DUTY FREE INTERNATIONAL, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD AT THE RENAISSANCE HARBORPLACE HOTEL, 202 EAST PRATT
STREET, BALTIMORE, MARYLAND 21202, ON THURSDAY, MAY 22, 1997 AT 10:00 A.M.,
BALTIMORE TIME.
The undersigned hereby appoints each of ALFRED CARFORA and JOHN A. COURI,
proxies, each with full power of substitution, to represent and vote all shares
of Common Stock which the undersigned would be entitled to vote at the 1997
Annual Meeting of Stockholders of Duty Free International, Inc., and any
adjournment or postponements thereof, upon any and all matters which may
properly be brought before this Meeting, provided that said shares shall be
voted as specified on the matters referred to below which are more fully set
forth in the Proxy Statement dated April 14, 1997.
The Board of Directors Recommends a Vote FOR Items 1 and 2.
1. Election of Directors: Jack Africk, Carl Reimerdes, Lowell P.
Weicker, Jr. for terms ending in 2000.
FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ]
listed at right except as marked to the for all nominees listed at right.
contrary.
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
2. Ratification of Appointment of KPMG Peat Marwick LLP as the Company's
Independent Auditors for the fiscal year ending January 25, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
ITEMS 1 AND 2. THE PROXIES MAY VOTE, IN THEIR SOLE DISCRETION, UPON ANY OTHER
MATTERS WHICH MAY PROPERLY COME BEFORE THIS MEETING AND ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF. THE UNDERSIGNED HEREBY REVOKES ALL PROXIES PREVIOUSLY
GRANTED.
Please sign exactly as your name
appears hereon. Executors,
administrators, trustees, etc.
should so indicate when signing. If
shares are held jointly, each holder
should sign.
Dated: , 1997
-------------------
------------------------------------
Signature
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Signature