-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GdBWFZ/M9EaRy++Wls6uNop3lWLpv+mlsxW2WSmGBKtKK25/Gz7DtLR6v1CWKExd lTDoXGV8Q1BK/WTH6r0CZA== 0000950152-99-003498.txt : 19990427 0000950152-99-003498.hdr.sgml : 19990427 ACCESSION NUMBER: 0000950152-99-003498 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990528 FILED AS OF DATE: 19990426 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ELDER BEERMAN STORES CORP CENTRAL INDEX KEY: 0000032020 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DEPARTMENT STORES [5311] IRS NUMBER: 310271980 STATE OF INCORPORATION: OH FISCAL YEAR END: 0201 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-02788 FILM NUMBER: 99600779 BUSINESS ADDRESS: STREET 1: 3155 ELBEE RD CITY: DAYTON STATE: OH ZIP: 45439 BUSINESS PHONE: 9372962700 MAIL ADDRESS: STREET 1: 3155 EL BEE ROAD CITY: DAYTON STATE: OH ZIP: 45439 DEF 14A 1 THE ELDER-BEERMAN STORES CORP. 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SCHEDULE 14A (RULE 14a) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12.
THE ELDER-BEERMAN STORES CORP. (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: ....... (2) Aggregate number of securities to which transaction applies: .......... (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ............ (4) Proposed maximum aggregate value of transaction: ...................... (5) Total fee paid: ....................................................... [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ............................................... (2) Form, Schedule or Registration Statement No.: ......................... (3) Filing Party: ......................................................... (4) Date Filed: ........................................................... - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 THE ELDER-BEERMAN STORES CORP. [ELDER-BEERMAN LOGO] 3155 El-Bee Road Dayton, Ohio 45439 --------------------------------------------------- NOTICE OF ANNUAL MEETING AND PROXY STATEMENT --------------------------------------------------- ANNUAL MEETING OF SHAREHOLDERS FRIDAY, MAY 28, 1999 AT 8:00 A.M. EASTERN DAYLIGHT TIME ELDER-BEERMAN DAYTON MALL 2700 STATE ROUTE 725 DAYTON, OHIO 45459 3 THE ELDER-BEERMAN STORES CORP. 3155 El-Bee Road Dayton, Ohio 45439 (937) 296-2700 ------------------------ NOTICE OF ANNUAL MEETING ------------------------ The Annual Meeting of Shareholders of The Elder-Beerman Stores Corp. ("Elder-Beerman" or the "Company") will be held on May 28, 1999 at 8:00 a.m., eastern daylight time, at Elder-Beerman Dayton Mall, 2700 State Route 725, Dayton, Ohio 45459. The principal business of the meeting will be: (1) To elect three Directors for a three-year term expiring in 2002. (2) To act upon a proposal of the Board of Directors to adopt an amendment to Elder-Beerman's Amended Code of Regulations. (3) To transact any other business that may properly come before the meeting. The matters expected to be acted upon at the meeting are described in the enclosed Proxy Statement. In addition, there will be a report on current developments in the Company. Only shareholders of record on April 13, 1999 will be entitled to notice of and to vote at the annual meeting and at any adjournments or postponements of the meeting. If you own shares through a nominee, you must instruct your nominee to vote if you wish to have your vote counted. By Order of the Board of Directors /s/ Frederick J. Mershad Frederick J. Mershad Chairman of the Board and Chief Executive Officer April 26, 1999 YOUR VOTE IS IMPORTANT Please promptly fill out, sign, date and mail the enclosed form of proxy whether or not you plan to attend the annual meeting. A self-addressed envelope is enclosed for your convenience. No postage is required if mailed in the United States. Returning a signed proxy will not prevent you from attending the meeting and voting in person, if you desire. ------------------------ Also enclosed is a copy of our Annual Report for the year ended January 30, 1999. The Annual Report contains financial and other information about Elder-Beerman, but is not incorporated into the proxy statement. The Annual Report is not a part of the proxy soliciting material. 4 THE ELDER-BEERMAN STORES CORP. 3155 El-Bee Road Dayton, Ohio 45439 ------------------------ PROXY STATEMENT ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 28, 1999 DATE OF THE PROXY STATEMENT -- APRIL 26, 1999 INFORMATION ABOUT THE ANNUAL MEETING INFORMATION ABOUT ATTENDING THE ANNUAL MEETING Our annual meeting (the "Annual Meeting") will be held on Friday, May 28, 1999 at 8:00 a.m., eastern daylight time, at Elder-Beerman Dayton Mall, 2700 State Route 725, Dayton, Ohio 45459. INFORMATION ABOUT THIS PROXY STATEMENT We sent you this proxy statement (the "Proxy Statement") and the enclosed proxy card because Elder-Beerman's Board of Directors is soliciting your permission to vote your shares of common stock at the Annual Meeting. If you own Elder-Beerman common stock in more than one account, such as individually and also jointly with your spouse, you may receive more than one set of these proxy materials. To assist us in saving money and to provide you with better shareholder services, we encourage you to have all your accounts registered in the same name and address. You may do this by contacting Elder-Beerman's Investor Relations Department at (937) 296-2700. This Proxy Statement summarizes information that we are required to provide to you under the rules of the Securities and Exchange Commission and is designed to assist you in voting your shares. This Proxy Statement, together with the Notice of Annual Meeting of Shareholders and proxy card, are first being mailed on or about April 26, 1999, to all shareholders of record at the close of business on April 13, 1999. PROPOSALS YOU MAY VOTE ON 1. The election of three directors in Class I, with terms expiring in 2002; AND 2. An amendment to Elder-Beerman's Amended Code of Regulations. The Board recommends you vote FOR each of the director nominees and FOR the amendment to the Code of Regulations. INFORMATION ABOUT VOTING Shareholders can vote on matters presented at the Annual Meeting in two ways: - BY PROXY -- You can vote by signing, dating and returning the enclosed proxy card. If you do this, the individuals named on the card (your "proxies") will vote your shares in the manner you indicate. You may specify on your proxy card whether your shares should be voted for all, some or none of the nominees for director and whether your shares should be voted for or against the amendment to the Code of Regulations to be presented at the meeting. If you do not indicate instructions on the card, your shares will be voted for the election of the directors and for the amendment to the Code of Regulations. - IN PERSON -- You may come to the Annual Meeting and cast your vote there. You may revoke your proxy at any time before the vote at the Annual Meeting by sending a written notice of revocation to Elder-Beerman's Secretary prior to the Annual Meeting or by attending the Annual Meeting and voting in person. 5 Each share of Elder-Beerman common stock is entitled to one vote. As of April 22, 1999, there were 16,037,880 shares of common stock outstanding. INFORMATION REGARDING TABULATION OF THE VOTE Elder-Beerman has a policy that all proxies, ballots and votes tabulated at a meeting of the shareholders are confidential. Representatives of Norwest Bank Minnesota, NA will tabulate votes and act as Inspectors of Election at the Annual Meeting. QUORUM REQUIREMENTS A quorum of shareholders is necessary to hold a valid meeting. Under Elder-Beerman's Code of Regulations, if shareholders who are entitled to cast a majority of all the votes able to be cast at the Annual Meeting are present in person or by proxy, a quorum will exist to conduct all business at the Annual Meeting. Abstentions are counted as present for establishing a quorum but broker nonvotes are not. A broker nonvote occurs when a broker votes on some matters on the proxy card but not on others because the broker does not have the authority to do so. The holders of a majority of the votes represented at the Annual Meeting, whether or not a quorum is present, may adjourn the meeting without notice other than by announcement at the meeting of the date, time and location at which the meeting will be reconvened. INFORMATION ABOUT VOTES NECESSARY FOR ACTION TO BE TAKEN ELECTION OF DIRECTORS The three nominees for director receiving the greatest number of votes will be elected at the Annual Meeting. AMENDMENT TO CODE OF REGULATIONS A majority of all the votes cast at the meeting will be required for the approval of the amendment to Elder-Beerman's Code of Regulations. Abstentions and broker nonvotes will have no effect on the result of the vote on the two items to be presented at the Annual Meeting. OTHER MATTERS The Board of Directors does not know of any other matter that will be presented at the Annual Meeting other than the proposals discussed in this Proxy Statement. Under our Code of Regulations, generally no business besides the two items discussed in this Proxy Statement may be conducted or considered at the Annual Meeting. However, if any other matter properly comes before the Annual Meeting, the persons you have designated as your proxies will act on such proposal in their discretion. REVOCATION OF PROXY If you give a proxy, you may revoke it at any time before the vote at the Annual Meeting by giving notice to Elder-Beerman's Secretary in writing prior to the Annual Meeting or by voting in person at the Annual Meeting. COSTS OF PROXY SOLICITATION Elder-Beerman will pay all the costs of soliciting these proxies. In addition to solicitation by mail, proxies may be solicited personally, by telegram, telephone or personal interview by an officer or regular employee of the Company. Elder-Beerman will also ask banks, brokers and other institutional nominees and fiduciaries to forward the proxy material to their principals and to obtain authority to execute proxies, and reimburse them for their expenses. In addition, Elder-Beerman has retained Morrow & Co. to aid in the distribution and solicitation of proxies, and has agreed to pay them a fee of approximately $5,000, plus reasonable expenses. 2 6 ITEM NO. 1 ELECTION OF DIRECTORS ELECTION OF DIRECTORS The Board of Directors has nine members and is divided into three classes. Each class consists of three members. A single class of directors is elected annually for a three-year term. The terms of the following Class I directors expire at the Annual Meeting: Thomas J. Noonan, Jr., Bernard Olsoff and Laura H. Pomerantz. For election as Class I directors at the Annual Meeting, the Nominating and Corporate Governance Committee has recommended, and the Board of Directors has approved, the re- nominations of Messrs. Noonan and Olsoff and Mrs. Pomerantz to serve as directors for the three-year term of office that will expire at the Annual Meeting of Shareholders in the year 2002. Each director elected will serve until the term of office of the class to which he or she is elected expires and until the election and qualification of his or her successor. The directors to be elected will be elected by a plurality of the votes cast for directors. Except to the extent that shareholders indicate otherwise on their proxies solicited by Elder-Beerman's Board of Directors, the holders of such proxies intend to vote the proxies for the election of the director nominees named in the following table as nominees for election. The Board believes that the persons nominated will be available to serve. If a vacancy among the nominees occurs prior to the Annual Meeting, shares of common stock of Elder-Beerman (the "Common Stock") represented by such proxies will be voted for such other person or persons to be determined by the holders of such proxies in their discretion or, so long as such action does not conflict with the provisions of Elder-Beerman's Amended Articles of Incorporation, the Board of Directors may, at its discretion, reduce the number of directors to be elected. The Board of Directors recommends that you vote FOR the three nominees for director. Listed below are the names of the three nominees for election to the Board of Directors in Class I, and those continuing directors in Classes II and III who have previously been elected to terms that will expire in the year 2000 and the year 2001, respectively. Also listed is the year in which each individual first became a director of the Company and the individual's principal occupation and other directorships. NOMINEES FOR DIRECTOR FOR THREE-YEAR TERMS ENDING IN 2002:
DIRECTOR NAME SINCE AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS ---- -------- --- ---------------------------------------------------- Thomas J. Noonan, Jr...... 1997 59 Mr. Noonan serves as Chief Restructuring Officer of WSR, Inc., an automotive aftermarket retailer, and has served in this capacity since August 1998. He also serves as the Managing Director of the Coppergate Group, a financial investment and management company, and has served in this capacity since April 1993. Mr. Noonan also serves as Executive Vice President and Chief Financial Officer of Herman's Sporting Goods, Inc., a sporting goods retailer that filed for protection under chapter 11 of the United States Bankruptcy Code and is currently being liquidated, and served in this capacity since August 1994. Prior to this time, Mr. Noonan served as Managing Director and Chief Executive Officer of TFGII, a financial investment and management company, from January 1993 to October 1994, and as Executive Vice President of Intrenet Inc., a trucking holding company, from September 1990 to March 1993. Mr. Noonan is also currently a Director of Intrenet Inc.
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DIRECTOR NAME SINCE AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS ---- -------- --- ---------------------------------------------------- Bernard Olsoff............ 1997 70 Mr. Olsoff retired from Frederick Atkins, Inc. ("Frederick Atkins"), a retail marketing and consulting company, in 1997. Prior to this time, Mr. Olsoff served as President, Chief Executive Officer and Chief Operating Officer of Frederick Atkins, from 1994 to April 1997, and President and Chief Operating Officer from 1983 to 1994. Mr. Olsoff is also currently a Director of The Leslie Fay Companies, Inc., an apparel design and manufacturing company ("Leslie Fay"). Laura H. Pomerantz........ 1997 51 Mrs. Pomerantz currently serves as President of LHP Consulting & Management, a real estate consulting firm, and has served in this capacity since 1995. Through LHP Consulting & Management, Mrs. Pomerantz is also associated with Newmark Real Estate Co., Inc., a commercial real estate company, as Senior Managing Director and has served in this capacity since August 1996. Prior thereto, Mrs. Pomerantz served as Senior Managing Director of S.L. Green Real Estate Company, a commercial real estate company, from August 1995 to July 1996, and was affiliated with Koeppel Tenor Real Estate Services, Inc., a commercial real estate company, from March 1995 through July 1995. Prior to this time, Mrs. Pomerantz served as Executive Vice President and a Director of Leslie Fay, from January 1993 to November 1994, and as Senior Vice President and Vice President of Leslie Fay from 1986 through 1992.
DIRECTORS IN CLASS II CONTINUING IN OFFICE UNTIL 2000:
DIRECTOR NAME SINCE AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS ---- -------- --- ---------------------------------------------------- Stewart M. Kasen....... 1997 59 Mr. Kasen is currently the Chairman, President and Chief Executive Officer of Factory Card Outlet Corp. ("Factory Cards"), and has served in this capacity since May 1998. Factory Cards filed for protection under chapter 11 of the United States Bankruptcy Code in March 1999 and is developing a reorganization plan. Mr. Kasen served as Chairman of the Board, President, and Chief Executive Officer of Best Products Co., Inc. ("Best Products"), a Richmond, Virginia, retail catalogue showroom company, from June 1994 through April 1996, President and Chief Executive Officer from June 1991 to June 1994, and President and Chief Operating Officer from 1989 to June 1991. Best Products filed for protection under chapter 11 of the United States Bankruptcy Code in January 1991. Best Products' plan of reorganization was confirmed in June 1994, and it filed a petition for bankruptcy under chapter 11 again on September 24, 1996. Mr. Kasen also currently serves as a Director of Markel Corp., O'Sullivan Industries Holdings, Inc. and K2 Inc.
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DIRECTOR NAME SINCE AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS ---- -------- --- ---------------------------------------------------- John A. Muskovich...... 1997 52 Mr. Muskovich has served as President and Chief Operating Officer of Elder-Beerman since December 1997 and, in addition, served as Chief Financial Officer from December 1997 through March 1999. He served as Executive Vice President of Administration of Elder-Beerman from February 1996 to December 1997. Prior to this time, Mr. Muskovich served as Director of Business Process for Kmart Corp. from September 1995 to February 1996; President of the Federated Claims Services Group with Federated Department Stores, Inc. ("Federated") from February 1992 to August 1995; Vice President of Benefits of Federated from 1994 to 1995; and Vice President, Corporate Controller of Federated from 1988 to 1992. John J. Wiesner........ 1997 60 Mr. Wiesner retired from C.R. Anthony, a regional apparel retailer, in June 1997. Prior to retirement, Mr. Wiesner served as Chairman of the Board of Directors, President and Chief Executive Officer of C.R. Anthony, from April 1987 to June 1997. Mr. Wiesner is also currently a Director of Stage Stores, Inc. and Lamonts Apparel, Inc.
DIRECTORS IN CLASS III CONTINUING IN OFFICE UNTIL 2001:
DIRECTOR NAME SINCE AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS ---- -------- --- ---------------------------------------------------- Steven C. Mason........ 1997 63 Mr. Mason retired from Mead Corp., a forest products company, in November 1997. Prior to retirement, Mr. Mason served as Chairman of the Board and Chief Executive Officer of Mead Corp. from April 1992 to November 1997. Mr. Mason is also currently a Director of PPG Industries, Inc. and Convergys. Frederick J. Mershad... 1997 56 Mr. Mershad has served as Chief Executive Officer of Elder-Beerman since January 1997 and as President of Elder-Beerman from January 1997 to December 1997. Prior to this time, Mr. Mershad served as President and Chief Executive Officer of the Proffitt's division of Saks, Inc. ("Proffitt's") from February 1995 to December 1996; Executive Vice President, Merchandising Stores for Proffitt's from May 1994 to January 1995; Senior Vice President, General Merchandise Manager, Home Store for the Rich's Department Store Division of Federated from August 1993 to May 1994; and Executive Vice President, Merchandising and Marketing of the McRae's Department Stores division of Proffitt's from June 1990 to August 1993. Jack A. Staph.......... 1997 53 Mr. Staph is currently a consultant, lawyer and private investor. Mr. Staph has also served in an unrestricted advisory capacity to CVS Corp. since June 1997. Prior to this time, Mr. Staph served as Senior Vice President, Secretary, and General Counsel of Revco D.S., Inc., a retail pharmacy company, from October 1972 to August 1997.
5 9 MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS The Board of Directors oversees the business and affairs of Elder-Beerman and monitors the performance of management. The Board met six times during 1998. BOARD COMMITTEES The Board of Directors has an Executive Committee, an Audit and Finance Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Each Committee reports to the Board of Directors at its first meeting after the Committee meeting. Executive Committee During fiscal year 1998, the members of the Executive Committee were Messrs. Mershad (Chairman), Mason, Muskovich and Staph. The Executive Committee held no formal meetings in 1998. Except to the extent that its powers are limited by law, by Elder-Beerman's Amended Articles of Incorporation or Amended Code of Regulations (the "Regulations") or by the Board of Directors, during the intervals between meetings of the Board of Directors, the Executive Committee may exercise, subject to the control of the Board of Directors, all of the powers of the Board of Directors in the management and control of the Company's business. All action taken by the Executive Committee is to be reported to the Board of Directors at its first meeting thereafter. Audit and Finance Committee During fiscal year 1998, the members of the Audit and Finance Committee were Messrs. Noonan (Chairman), Kasen and Olsoff. The Audit and Finance Committee held six formal meetings in 1998. The Audit and Finance Committee is responsible for: (i) reviewing the professional services to be provided by the Company's auditors and the independence of such firm from management of the Company; (ii) reviewing the scope of the audit by the Company's independent auditors; (iii) reviewing the annual financial statements of the Company; (iv) reviewing and evaluating the Company's systems of internal accounting controls; (v) reviewing and evaluating the Company's internal audit function and meeting from time to time with the internal auditors outside the presence of other employees; (vi) such other matters with respect to accounting, auditing and financial reporting practices and procedures of the Company as it may find appropriate or as may be brought to its attention; and (vii) reviewing the Company's financing plans. The Audit and Finance Committee is also responsible for the Company's corporate compliance program to ensure compliance with all applicable laws. Compensation Committee During fiscal year 1998, the members of the Compensation Committee were Messrs. Olsoff (Chairman), Staph and Wiesner. The Compensation Committee held five formal meetings in 1998. The Compensation Committee is responsible for: (i) reviewing executive salaries; (ii) approving the salaries and other benefits of the executive officers of the Company; (iii) administering the bonus, stock option and other incentive compensation plans of the Company, as well as the employee stock purchase plan; and (iv) advising and consulting with the Company's management regarding pension and other benefit plans and compensation policies and practices of the Company. Nominating and Corporate Governance Committee During fiscal year 1998, the members of the Nominating and Corporate Governance Committee were Messrs. Mershad (Chairman) and Mason and Mrs. Pomerantz. The Nominating and Corporate Governance Committee held three formal meetings in 1998. The Nominating and Corporate Governance Committee is responsible for the selection, evaluation and nomination of candidates for election to the Board of Directors. The Nominating and Corporate Governance Committee is also responsible for recommending to the Board the members and chair of each Board Committee. In addition, the Nominating and Corporate Governance Committee is responsible for the process of evaluating the overall performance of the Board of Directors and its individual members to ensure effective operations of the Board of Directors and overall corporate governance. 6 10 COMPENSATION OF ELDER-BEERMAN'S DIRECTORS Compensation Directors who are employees of Elder-Beerman do not receive any separate fees or other remuneration for serving as a director or a member of any Committee of the Board. For fiscal year 1998, nonemployee directors were paid a retainer of $15,000 for their service on the Board of Directors. Nonemployee directors were also each paid a meeting fee of $1,500 for each board meeting attended, plus $500 for each committee meeting attended. Nonemployee directors may elect to take their annual retainer as cash or in the form of discounted stock options. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION None of the members of the Compensation Committee was or ever has been an officer or employee of Elder-Beerman or engaged in transactions with Elder-Beerman (other than in his capacity as a director). None of Elder- Beerman's executive officers serves as a director or member of the compensation committee of another entity, one of whose executive officers serves as a member of the Compensation Committee or a director of Elder-Beerman. 7 11 SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS The Company's Common Stock is the only outstanding class of voting securities. The following table sets forth information regarding ownership of our Common Stock as of April 22, 1999 (except as otherwise noted) by: (a) each person who owns beneficially more than 5% of Common Stock of the Company to the extent known to management, (b) each executive officer and director of the Company, and (c) all directors and executive officers as a group. Except as noted, all information with respect to beneficial ownership has been furnished by each director or officer or is based on filings with the Securities and Exchange Commission.
AMOUNT AND NATURE OF PERCENT BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS ---------------- ----------------------- -------- Snyder Capital Management, Inc.............................. 1,696,950(2) 10.80 350 California Street, Suite 460 San Francisco, CA 94104 Lord, Abbett & Co........................................... 1,227,989(3) 7.81 767 Fifth Avenue New York, NY 10153 Lazard Freres & Co. LLC..................................... 789,100(4) 6.22 30 Rockefeller Plaza New York, NY 10020 Mellon Bank Corporation..................................... 955,900(5) 6.07 One Mellon Bank Center Pittsburgh, PA 15258 Whippoorwill Associates, Inc................................ 829,034(6) 5.30 11 Martine Avenue White Plains, NY 10606 PPM America, Inc............................................ 786,765(7) 5.003 225 West Wacker Drive, Suite 1100A Chicago, IL 60606 Stewart M. Kasen............................................ 7,737(8) * Steven C. Mason............................................. 8,414(8) * Frederick J. Mershad........................................ 242,128(8) 1.51 John A. Muskovich........................................... 152,828(8) * Thomas J. Noonan, Jr........................................ 6,576(8) * Bernard Olsoff.............................................. 6,576(8) * Laura H. Pomerantz.......................................... 14,414(8)(9) * Jack A. Staph............................................... 6,976(8) * John J. Wiesner............................................. 5,962(8) * James M. Zamberlan.......................................... 28,038(8) * Scott J. Davido............................................. 10,398(8) * Steven D. Lipton............................................ 5,131(8) * - ------------------------------------------------------------------------------------------------- All directors and executive officers as a group (12 persons):................................................. 495,178 3.09%
- --------------- * less than 1% 8 12 (1) Information about beneficial ownership is based on information furnished to the Company by each shareholder included in this table. "Beneficial ownership" is a technical term broadly defined by the Securities and Exchange Commission to mean more than ownership in the usual sense. So, for example, you not only "beneficially" own the Elder-Beerman Common Stock that you hold directly, but also the Elder-Beerman Common Stock that you indirectly (through a relationship, a position as a director or trustee, or a contract or understanding), have (or share) the power to vote or sell or that you have the right to acquire within 60 days. (2) Snyder Capital Management, Inc. ("SCMI") is the general partner of Snyder Capital Management, L.P. ("SCMLP"), a registered investment advisor. SCMI and SCMLP reported the beneficial ownership (as of February 28, 1999) of such shares in a Schedule 13G dated March 3, 1999. (3) Lord, Abbett & Co. reported the beneficial ownership (as of December 31, 1998) of such shares in a Schedule 13G dated February 12, 1999. (4) Lazard Freres & Co. LLC reported the beneficial ownership (as of December 31, 1998) of such shares in a Schedule 13G dated February 16, 1999. (5) Mellon Bank reported the beneficial ownership (as of December 31, 1998) of such shares in a Schedule 13G dated January 29, 1999. (6) Whippoorwill Associates, Inc. ("Whippoorwill"), in its capacity as investment advisor, reported the beneficial ownership (as of December 31, 1998) of such shares in a Schedule 13G dated February 16, 1999. Whippoorwill disclaims beneficial ownership of such shares. (7) PPM America, Inc. ("PPM"), a registered investment advisor, reported the beneficial ownership (as of February 11, 1999) of such shares in a Schedule 13G dated February 22, 1999. All such shares are held in portfolios of PPM America Special Investments Fund, L.P. ("SIF I") and PPM America Special Investments CBO II, L.P. ("CBO II"). PPM serves as investment advisor to both SIF I and CBO II. PPM, PPM America CBO II Management Company (general partner of CBO II) and PPM American Fund Management GP, Inc. (general partner of SIF I) disclaim beneficial ownership of all such shares. (8) These amounts include shares of Common Stock that the following persons had a right to acquire within 60 days after January 31, 1999.
STOCK OPTIONS EXERCISABLE NAME BY APRIL 1, 1999 ---- ------------------------- Mr. Kasen............................................... 2,334 Mr. Mason............................................... 6,011 Mr. Mershad............................................. 53,800 Mr. Muskovich........................................... 31,200 Mr. Noonan.............................................. 4,173 Mr. Olsoff.............................................. 4,173 Mrs. Pomerantz.......................................... 6,011 Mr. Staph............................................... 4,173 Mr. Wiesner............................................. 3,559 Mr. Zamberlan........................................... 15,200 Mr. Davido.............................................. 4,200 Mr. Lipton.............................................. 4,200
(9) Includes 1,000 shares of Common Stock with shared voting or investment power. 9 13 COMPENSATION OF EXECUTIVE OFFICERS SUMMARY OF EXECUTIVE COMPENSATION The table below shows the before-tax compensation for the years shown for Elder-Beerman's Chief Executive Officer and the four next highest paid executive officers (the "Named Executive Officers") at the end of fiscal year 1998. SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION -------------------------------- --------------------------------- AWARDS PAYOUTS ----------------------- ------- SECURITIES OTHER RESTRICTED UNDERLYING ALL ANNUAL STOCK OPTIONS/ LTIP OTHER NAME AND SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION PRINCIPAL POSITION YEAR ($) ($) ($)(2) ($) (#) ($) ($)(7)(8) ------------------ ---- ------- ------- ------------ ---------- ---------- ------- ------------ Frederick J. Mershad....... 1998 559,263 120,000 29,403 1,050,000 75,000 9,970 Chairman and 1997 503,344 500,000 51,251 683,703 194,000 Chief Executive Officer 1996 19,321 633,632 0 0 John A. Muskovich.......... 1998 412,207 85,000 473,127(3) 30,000 9,950 President, Chief 1997 267,335 598,750 505,325 126,000 Operating Officer and 1996 183,974 67,908 0 0 Chief Financial Officer James M. Zamberlan......... 1998 278,803 79,650 234,892(4) 15,000 8,050 Executive Vice 1997 139,944 41,313 20,386 61,000 President -- Stores 1996 Scott J. Davido............ 1998 174,076 21,280 26,626 26,599(5) 0 4,585 Senior Vice President -- 1997 15,935 27,500(1) 3,124 21,000 General Counsel and 1996 Secretary Steven D. Lipton........... 1998 154,976 21,132 26,412(6) 0 7,985 Senior Vice President -- 1997 132,897 19,763 26,699 21,000 Controller 1996 103,143 45,820 0 0
- --------------- (1) Includes a $25,000 signing bonus paid in fiscal year 1997. (2) Moving expense reimbursement. (3) Includes 4,755 deferred shares and 1,189 restricted shares awarded to Mr. Muskovich as the deferred portion of his 1998 bonus pursuant to the Equity and Performance Incentive Plan. (4) Includes 2,228 deferred shares and 557 restricted shares awarded to Mr. Zamberlan as the deferred portion of his 1998 bonus pursuant to the Equity and Performance Incentive Plan. (5) Includes 2,381 deferred shares and 595 restricted shares awarded to Mr. Davido as the deferred portion of his 1998 bonus pursuant to the Equity and Performance Incentive Plan. (6) Includes 2,364 deferred shares and 591 restricted shares awarded to Mr. Lipton as the deferred portion of his 1998 bonus pursuant to the Equity and Performance Incentive Plan. (7) Includes life insurance premium payments paid by the Company in 1998 in the following amounts: Mr. Mershad $6,570, Mr. Muskovich $6,550, Mr. Zamberlan $6,550, Mr. Davido $4,585 and Mr. Lipton $4,585. (8) Includes matching contributions paid by the Company in 1998 under the Company's Retirement Savings Plan in the following amounts: Mr. Mershad $3,400, Mr. Muskovich $3,400, Mr. Zamberlan $1,500 and Mr. Lipton $3,400. 10 14 STOCK OPTIONS The following table sets forth information concerning stock option grants made to the Named Executive Officers during fiscal year 1998 pursuant to The Elder-Beerman Stores Corp. Equity and Performance Incentive Plan (the "Plan"). OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS ------------------------------------------------------- NUMBER OF PERCENT OF POTENTIAL REALIZABLE VALUE SECURITIES TOTAL AT ASSUMED ANNUAL RATE OF UNDERLYING OPTIONS/SARS STOCK PRICE APPRECIATION OPTIONS/SARS GRANTED TO EXERCISE FOR OPTION TERM GRANTED EMPLOYEES IN OF BASE EXPIRATION ----------------------------- NAME (#)(1) FISCAL YEAR PRICE($/SH) DATE 0%($) 5%($) 10%($) ---- ------------- ------------ ----------- ---------- ----- -------- ---------- Frederick J. Mershad......... 75,000 45.45 $21.00 3/11/08 $0.00 $990,509 $2,510,144 John A. Muskovich............ 30,000 18.18 $21.00 3/11/08 $0.00 $396,204 $1,004,058 James M. Zamberlan........... 15,000 9.09 $21.00 3/11/08 $0.00 $198,102 $ 502,029
- --------------- (1) Options vest one-fifth annually, beginning one year from date of grant. STOCK OPTION EXERCISES AND FISCAL YEAR-END VALUES The following table sets forth information about stock options exercised during fiscal year 1998 by the Named Executive Officers and the fiscal year-end value of unexercised options held by the Named Executive Officers. All of such options were granted under the Plan. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY SHARES OPTIONS/SARS HELD AT OPTIONS/SARS HELD AT ACQUIRED VALUE JANUARY 30, 1999 (#) JANUARY 30, 1999($)(1) ON REALIZED --------------------------- --------------------------- NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ---- ----------- -------- ----------- ------------- ----------- ------------- Frederick J. Mershad................. 0 $0.00 38,800 230,200 $0.00 $0.00 John A. Muskovich.................... 0 $0.00 25,200 130,800 $0.00 $0.00 James M. Zamberlan................... 0 $0.00 12,200 63,800 $0.00 $0.00 Scott J. Davido...................... 0 $0.00 4,200 16,800 $0.00 $0.00 Steven D. Lipton..................... 0 $0.00 4,200 16,800 $0.00 $0.00
- --------------- (1) Based on the closing price on NASDAQ of the Company's Common Stock on January 29, 1999 (the last trading day in fiscal year 1998) of $8.938. EMPLOYMENT AND SEVERANCE AGREEMENTS WITH CERTAIN OFFICERS The Company has entered into employment agreements with Frederick J. Mershad, Chairman and Chief Executive Officer, and John A. Muskovich, President and Chief Operating Officer, and several of its other executive officers as described below (the "Employment Agreements"). These Employment Agreements set forth (a) the executive's compensation and benefits, subject to increases at the discretion of the Board of Directors, (b) the Company's right to terminate the executive for cause or otherwise; (c) the amounts to be paid by the Company in the event of the executive's termination, death, or disability while rendering services; (d) the executive's duty of strict confidence and to refrain from conflicts of interest; (e) the executive's obligations not to compete for the term of the agreement plus one year unless the executive terminated his employment for good reason or the employer terminates the executive other than for cause; and (f) the executive's right to receive severance payments. In general, these Employment Agreements provide that if Mr. Mershad or Mr. Muskovich is terminated for any reason other than for cause or following a "change in control" (as defined in the Employment 11 15 Agreements), he will receive payments equal to the remaining base salary that would have been distributed to him by the Company under the remaining term of his Employment Agreement and the incentive compensation earned by the executive for the most recent fiscal year. If such executive (a) is terminated within two years of a change in control without cause, (b) voluntarily terminates within two years of a change in control, or (c) is terminated in connection with but prior to a change in control and termination occurs following the commencement of any discussions with any third party that ultimately results in a change in control, he will receive a severance payment equal to the greater of 2.99 times the Internal Revenue Code "base amount" as described in Section 280G of the Internal Revenue Code or two times his most recent base salary and bonus and the executive will continue to be eligible for health benefits, perquisites, and fringe benefits generally made available to senior executives following his termination, unless the executive obtains new employment providing substantially similar benefits. A tax gross-up on excise taxes also will be paid if the severance pay exceeds the limits imposed by the Internal Revenue Code. The Company has also entered into Employment Agreements that include severance pay provisions with each of Messrs. Zamberlan, Davido and Lipton. These Employment Agreements set forth (a) the executive's compensation and benefits, subject to review at the discretion of the Board of Directors, (b) the Company's right to terminate the executive for cause or otherwise; (c) the amounts to be paid by the Company in the event of the executive's termination, death, or disability while rendering services; (d) the executive's duty of strict confidence and to refrain from conflicts of interest; (e) the executive's obligations not to compete for the term of the agreement plus one year unless the executive terminated his employment for good reason or the employer terminates the executive other than for cause; and (f) the executive's right to receive severance payments if he (i) is terminated within two years of a change in control without cause, (ii) voluntarily terminates for defined good reasons within two years of a change of control, (iii) terminates his employment for any reason, or without reason, during the thirty-day period immediately following the first anniversary of a change in control, or (iv) is terminated in connection with but prior to a change in control and termination occurs following the commencement of any discussions with any third party that ultimately results in a change in control. Specifically, under the Employment Agreements, the amount of any severance payment by the Company will be the greater of 2.99 times the Internal Revenue Code "base amount" as described in Section 280G of the Internal Revenue Code or two times his most recent base salary and bonus. Severance payments made under the Employment Agreements will reduce any amounts that would be payable under any other severance plan or program, including the master severance plan for certain key employees. A tax gross-up on excise taxes also will be paid if the severance pay exceeds the limit imposed by the Internal Revenue Code. In addition, the executive will continue to be eligible for health benefits, perquisites, and fringe benefits generally made available to senior executives for two years following his termination, unless the executive waives such coverage, fails to pay any amount required to maintain such coverage, or obtains new employment providing substantially similar benefits. The Company has also entered into Indemnification Agreements with each current member of the Board of Directors as well as each of the Company's executive officers. These agreements provide that, to the extent permitted by Ohio law, the Company will indemnify the director or officer against all expenses, costs, liabilities and losses (including attorneys' fees, judgments, fines or settlements) incurred or suffered by the director or officer in connection with any suit in which the director or officer is a party or is otherwise involved as a result of the individual's service as a member of the Board of Directors or as an officer so long as the individual's conduct that gave rise to such liability meets certain prescribed standards. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION OVERVIEW AND PHILOSOPHY The Compensation Committee of the Board (the "Committee") has responsibility for setting and administering the policies that govern executive compensation. The Committee has authority, among other things, to review, analyze and recommend compensation programs to the Board of Directors and to administer and grant awards under the Company's Equity and Performance Incentive Plan (the "Plan"). The Committee is composed entirely of outside directors. Reports of the Committee's actions and decisions are recommended to the full Board. The purpose of this report is to summarize the philosophical principles, specific program objectives and 12 16 other factors considered by the Committee in reaching its determination regarding the executive compensation of the Chief Executive Officer and the Company's executive officers. The Committee's goal is to ensure the establishment and administration of executive compensation policies and practices that will enable Elder-Beerman to attract, retain and motivate the management talent necessary to achieve the Company's goals and objectives. The Committee's philosophy is that executive compensation should include the following: - A competitive mix of short-term (base salary and annual incentive bonus) and long-term (stock options and restricted and deferred shares) compensation that helps the Company attract and retain executive talent. - Cash compensation that generally reflects competitive industry levels, with annual incentive bonus opportunities that may produce total compensation at or above competitive levels if performance against predetermined objectives exceeds expectations. - Opportunities for ownership of Elder-Beerman's common stock (the "Common Stock") that align the interests of Company executives with the long-term interests of shareholders. The Company's executive compensation is comprised primarily of (i) salaries, (ii) annual cash incentive bonuses and (iii) long-term incentive compensation in the form of stock options, deferred shares and restricted shares granted under the Plan. Each year the Committee reviews market data and assesses the Company's competitive position for each of these three components. To assist in benchmarking the competitiveness of its compensation programs, the Committee retains a third-party consultant to compile an executive compensation survey for comparably sized retail companies. Because the Committee believes that compensation in the retail industry is more directly tied to the size of enterprise than the type of retail business, these surveys include comparably sized retailers outside of the department store business. Each of the components of executive compensation is discussed below. COMPONENTS OF COMPENSATION BASE SALARY Base salaries for Company executives were initially established in each of the executive's employment agreements, which were approved pursuant to the Third Amended Joint Plan of Reorganization, as modified (the "Plan of Reorganization") of the Company, confirmed by an order entered by the United States Bankruptcy Court for the Southern District of Ohio on December 16, 1997. The Committee reviews base salaries annually and makes adjustments on the basis of the performance of both the individual executive and the Company, the executive's level of responsibility in the Company, the executive's importance to the Company and the general level of executive compensation in the retail industry. The base salaries and increases in the base salaries of the Company's executive officers (other than the Chief Executive Officer) are reviewed and approved by the Committee after considering recommendations made by the Chief Executive Officer in light of the criteria discussed above. ANNUAL BONUS - GENERAL PARAMETERS Annual bonus awards are designed to promote the achievement of the Company's business objectives. In setting each year the bonus award targets that the Company must meet before it can make any bonus payments, the Committee considers the Company's prior year's performance and objectives, as well as its expectations for the upcoming year. Additionally, individual performance goals are established for each participant. Bonus program participants receive no payments unless minimum thresholds are achieved. Bonus targets are fixed as a percentage of annual salary based on comparable incentives paid by other retail companies. Target bonus percentages for the executive officers ranged from 35% to 50%. The target percentage increases with the level of responsibility of the executive. Bonus payments may range from 0% to 150% of the target annual bonus, with payments increasing as performance improves. 13 17 - DEFERRED SHARES AND RESTRICTED SHARES An executive may elect to defer up to 50% of his annual bonus in the form of deferred shares. Deferred shares are subject to a deferral period of three years, which is accelerated in the event of death, permanent disability, termination of employment, or change of control of Elder-Beerman. Holders of deferred shares do not have voting rights for their deferred shares, but the terms of the deferred shares may provide for dividend equivalents. The Company matches 25% of the deferred shares in restricted shares. Restricted shares typically vest in three years from the date of grant, which is accelerated in the event of death, permanent disability, or a change of control of Elder-Beerman. Prior to vesting, restricted shares are forfeitable upon termination of employment. The restricted shares provide for dividend equivalents and voting rights. The deferred shares and restricted shares are granted to executives in accordance with the Plan. - 1998 BONUS OBJECTIVES Annual bonuses for 1998 were based on meeting weighted objectives for the following measurements: - Corporate operating profit; - Financial goals in the applicable executive's area of responsibility; and - Individual performance goals for the applicable executive. For 1998, the Company achieved less than the target award level established for operating profit, which allowed the Company to pay only 40% of the target amount for that bonus component of annual compensation. Many executives were able to achieve some or all of their respective area of responsibility and individual performance goals, which resulted in each executive earning in total between 50% and 60% of his respective target bonus amounts. LONG-TERM INCENTIVE AWARDS - STOCK OPTIONS, DEFERRED SHARES AND RESTRICTED SHARES The Committee administers the Plan, which provides for long-term incentives to executive officers in the form of stock options, deferred shares and restricted shares. The awards of stock options and deferred shares provide compensation to executives only if shareholder value increases. To determine the number of stock options, deferred shares and restricted shares awarded, the Committee reviews a survey prepared by a third-party consultant of awards made to individuals in comparable positions at other retail companies and the executive's past performance, as well as the number of long-term incentive awards previously granted to the executive. The deferred shares and restricted shares are subject to the terms and conditions described above. EXECUTIVE PLAN At the beginning of fiscal year 1999, the Committee adopted a long-term incentive award plan (the "Executive Plan") for Mr. Mershad, its Chief Executive Officer, and Mr. Muskovich, its Chief Operating Officer. This plan consists of performance-based restricted shares and premium priced stock options. This plan was developed to achieve two key objectives: - Create strong incentives that will drive shareholder value and - Create a retention mechanism for the top two officers of the Company. To establish benchmarks for a competitive long-term incentive plan for Messrs. Mershad and Muskovich, the Committee engaged a third-party consultant to conduct an analysis of executive compensation at 12 peer retail companies. The Committee then reviewed the current compensation packages of Messrs. Mershad and Muskovich. Finally, the Committee evaluated the Company's 1998 performance and future performance objectives. Bearing in mind these factors and the two key objectives for the Executive Plan, the Committee formulated the amounts of restricted shares and stock options to be granted under the Executive Plan to Messrs. Mershad and Muskovich and the earnings per share and stock price targets that must be met for Messrs. Mershad and Muskovich to earn their respective awards. Pursuant to the terms of the Executive Plan, any 14 18 restricted shares granted to Messrs. Mershad and Muskovich will vest at the end of three years only if the Company meets target earnings per share levels. The premium price stock options will vest over a period of five years and the vesting is not contingent on performance goals. COMPENSATION OF CHIEF EXECUTIVE OFFICER The base salary and increases in the base salary of the Chief Executive Officer are reviewed annually and approved by the Committee and the nonemployee members of the Board of Directors after review of the Chief Executive Officer's performance against predetermined performance criteria set by the nonemployee Directors. Under the terms of Mr. Mershad's employment agreement, which was approved pursuant to the Plan of Reorganization, his annual salary was initially established at $500,000. 1998 BASE SALARY AND ANNUAL BONUS On March 11, 1998, the Committee increased Mr. Mershad's annual base salary to $600,000, an increase of 20% from his prior level. Mr. Mershad is also eligible for an annual bonus of up to 50% of his base salary. Mr. Mershad's bonus is determined in the same manner described above for the executive officers. For fiscal year 1998, Mr. Mershad's bonus was $120,000. LONG-TERM INCENTIVE AWARDS In March 1998, as part of his long-term compensation for fiscal year 1998, Mr. Mershad was granted 50,000 restricted shares and options to purchase 75,000 shares of Elder-Beerman stock at $21.00 per share. The restricted shares and stock options were granted pursuant to the Plan. The restricted shares vest one-third annually beginning February 1, 1999 and are otherwise subject to the same terms as those granted to the executive officers. One-fifth of the stock options vest annually, beginning one year from the date of grant. The Committee determined the number of restricted shares and stock options granted to Mr. Mershad based in part on its review of the compensation survey prepared by the third-party consultant, which set forth awards made to chief executive officers at comparably-sized retail companies. The Committee also reviewed the performance of Mr. Mershad during the fiscal year. EXECUTIVE PLAN Pursuant to the Executive Plan, the Committee established a stock ownership goal of Elder-Beerman Common Stock worth 200% of Mr. Mershad's base salary. In February 1999, Mr. Mershad was granted 75,000 restricted shares and options to purchase 300,000 shares of Elder-Beerman stock under the Executive Plan. The restricted shares granted to Mr. Mershad will vest at the end of three years only if the Company meets target earnings per share levels. The premium price stock options will vest over a period of five years and the vesting is not contingent on performance goals. At the date of the grant approximately one-third of the options had an exercise price equal to the then-current stock price. The remaining two-thirds of the options were set with exercise prices of 20% to 40% above current market price. TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION Under Section 162(m) of the Internal Revenue Code, the Company is precluded from deducting compensation in excess of $1 million per year paid to each of the Chief Executive Officer and the four next highest paid executive officers (the "Named Executive Officers"). Qualified performance-based compensation is excluded from this deduction limitation if certain requirements are met. The Plan is designed to permit (but not require) the Committee to grant awards that will qualify as performance-based compensation that is excluded from the limitation in Section 162(m). The Committee believes that Section 162(m) should not cause the Company to be denied a deduction for 1998 compensation paid to the Named Executive Officers. The Committee will work to structure components of its executive compensation package to achieve maximum deductibility under Section 162(m) while at the same time considering the goals of its executive compensation policies. The foregoing is the report of the Compensation Committee of the Board of Directors. Bernard Olsoff Jack A. Staph John J. Wiesner 15 19 STOCK PRICE PERFORMANCE The following graph depicts the value of $100 invested in Elder-Beerman Common Stock (trading symbol "EBSC") beginning February 17, 1998 (the first trading day of the Common Stock) through January 30, 1999 (the last day of the Company's fiscal year). Comparisons are made to: 1. The Standard & Poor's SmallCap 600 Index, a market-value weighted index of 600 domestic companies with an average equity market value of approximately $400 million. 2. A Regional Department Store Peer Group, consisting of The Bon-Ton Stores, Inc., Stage Stores, Inc., Gottschalks Inc., and Jacobson Stores Inc. The return for this group was calculated assuming an equal dollar amount was invested in each retailer's stock based on closing prices as of February 17, 1998.
REGIONAL DEPT. STORE PEER S&P SMALLCAP 600 INDEX GROUP INDEX EBSC ---------------------- ------------------------- ---- Feb 17 100 100 100 May 2 107 116 165 Aug 1 93 91 140 Oct 31 84 57 71 Jan 30 93 59 54
REGIONAL S&P DEPT STORE SMALLCAP PEER GROUP QUARTER-END 600 INDEX INDEX EBSC ----------- --------- ---------- ---- February 17, 1998.............................. 100 100 100 May 2, 1998.................................... 107 116 165 August 1, 1998................................. 93 91 140 October 31, 1998............................... 84 57 71 January 30, 1999............................... 93 59 54
16 20 ITEM NO. 2 AMENDMENT TO CODE OF REGULATIONS The second proposal to be acted upon at the Annual Meeting is a proposal to amend Elder-Beerman's Regulations. Shareholders are being asked to approve and adopt an amendment to Section 2 of the Regulations so that the annual meeting of shareholders is not required to be held during the month of May. The Company's Board of Directors unanimously approved the amendment on February 25, 1999 and recommends that the shareholders approve the amendment. Section 2 of the Company's Regulations currently requires that the annual meeting of shareholders be held in May of each year. The amendment to Section 2 of the Regulations has been proposed so that the Company will have more flexibility in the timing of its annual meeting. The amendment does not in any way modify the rights of any shareholder. The Board of Directors recommends that you vote FOR the proposal to amend the Regulations. Approval of the amendment requires the affirmative vote of the holders of a majority of shares of Common Stock present or represented, and entitled to vote on the matter at the Annual Meeting. The full text of the proposed amendment is set forth below: "2. Annual Meeting. Commencing with the year 1999, an annual meeting of the shareholders will be held on such date and at such time as may be designated by the Board of Directors, at which meeting the shareholders will elect directors to succeed those directors whose terms expire at such meeting and will transact such other business as may be brought properly before the meeting in accordance with Regulation 7." The Company will provide a complete copy of its Regulations without charge upon written request by a shareholder. Requests should be directed to us at 3155 El-Bee Road, Dayton, Ohio 45439, Attention: Secretary. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers and persons who own more than 10 percent of a registered class of our equity securities to file reports of ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission. The Securities and Exchange Commission requires this group to furnish us with copies of all such filings. We periodically remind this group of its reporting obligation and assist in making the required disclosure once we are notified that a reportable event has occurred. We are required to disclose in this Proxy Statement any failure by any of the above mentioned persons to make timely Section 16 reports. Based upon its review of such forms received by Elder-Beerman and written representations from the directors and executive officers that no other reports were required, Elder-Beerman is unaware of any instances of noncompliance, or late compliance, with such filings during fiscal year 1998 by its directors, executive officers or 10 percent shareholders. INDEPENDENT AUDITORS In February, 1998, Deloitte & Touche LLP was appointed by the Board of Directors of the Company, on the recommendation of the Audit and Finance Committee, as the Company's independent auditors for the fiscal year ended January 30, 1999. Representatives of Deloitte & Touche are expected to be present at the Annual Meeting and will have the opportunity to make a statement if they so desire. They are expected to be available to respond to proper questions regarding the independent auditors' responsibilities. 17 21 SUBMISSION OF SHAREHOLDER PROPOSALS Pursuant to our Regulations, for any shareholder proposal to be eligible for inclusion in our proxy statement and form of proxy for our next annual meeting, the proposals must be received at our executive offices not less than 60 nor more than 90 calendar days prior to the date of next year's annual meeting. If public notice of the date of the annual meeting is not given at least 105 days prior to the annual meeting, submissions must be delivered to Elder-Beerman no later than 10 days following the public announcement of the meeting date. Such proposals should be submitted by certified mail, return receipt requested, addressed to us at 3155 El-Bee Road, Dayton, Ohio 45439, Attention: Secretary. OTHER MATTERS The Board of Directors knows of no other matters that are likely to be brought before the Annual Meeting, but if other matters do properly come before the meeting, the proxies, or their substitutes, will vote the proxy in accordance with their best judgment. The Company's 1998 Annual Report, including financial statements, has been mailed along with this Proxy Statement. ------------------------ It is important that the proxies be returned promptly. If you do not plan to attend the meeting, we urge you to fill out, date and mail the enclosed proxy in the enclosed envelope, which requires no postage if mailed in the United States. 18 22 [LOGO] ELDER-BEERMAN THE ELDER-BEERMAN STORES CORP. ANNUAL MEETING OF SHAREHOLDERS FRIDAY, MAY 28, 1999 8:00 A.M. ELDER-BEERMAN DAYTON MALL STORE 2700 STATE ROUTE 725 DAYTON, OHIO 45459 [LOGO] ELDER-BEERMAN THE ELDER-BEERMAN STORES CORP. 3155 EL-BEE ROAD, DAYTON, OHIO 45439 PROXY - -------------------------------------------------------------------------------- This proxy is solicited by the Board of Directors for use at the Annual Meeting on Friday, May 28, 1999. The shares of stock you hold in your account will be voted as you specify on this card. If no choice is specified, the proxy will be voted "FOR" Items 1 and 2. By signing the proxy, you revoke all prior proxies and appoint each of John A. Muskovich and Scott J. Davido with full power of substitution, to vote your shares on matters shown on the reverse side and any other matters that may come before the Annual Meeting and all adjournments. See reverse for voting instructions. 23 * Please detach here * - -------------------------------------------------------------------------------- SHARE AMOUNTS THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
1. Election of directors 01 Thomas J. Noonan, Jr 02 Bernard Olsoff [ ] Vote FOR [ ] Vote WITHHELD 03 Laura H. Pomerantz all nominees from all nominees (INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, ------------------------------------------- WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) ------------------------------------------- 2. Proposal #2 Amendment to Code of Regulations [ ] For [ ] Against [ ] Abstain THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL. Attending the Annual Meeting? Mark Box [ ] Address change? Mark Box [ ] Indicate changes below: Date___________________________________ [ ] Signature(s) in Box Please sign exactly as your name(s) appears on Proxy. If held in joint tenancy, all persons must sign. Trustees, "administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the proxy.
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