0000930661-95-000308.txt : 19950905 0000930661-95-000308.hdr.sgml : 19950905 ACCESSION NUMBER: 0000930661-95-000308 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950926 FILED AS OF DATE: 19950830 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: 50 OFF STORES INC CENTRAL INDEX KEY: 0000735584 STANDARD INDUSTRIAL CLASSIFICATION: 5331 IRS NUMBER: 742640559 STATE OF INCORPORATION: TX FISCAL YEAR END: 0202 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-13076 FILM NUMBER: 95569050 BUSINESS ADDRESS: STREET 1: 8750 TESORO DRIVE CITY: SAN ANTONIO STATE: TX ZIP: 78217-0555 BUSINESS PHONE: 2108059300 MAIL ADDRESS: STREET 1: 8750 TESORO DR PO BOX 17555 STREET 2: 8750 TESORO DR PO BOX 17555 CITY: ANTONIO STATE: TX ZIP: 78217 FORMER COMPANY: FORMER CONFORMED NAME: SHOPPERS WORLD STORES INC DATE OF NAME CHANGE: 19871214 DEF 14A 1 NOTICE & PROXY SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO.) Filed by the Registrant [X ] Filed by a Party other than the Registrant [ ] Check the Appropriate box: [ ] Preliminary Proxy Statement [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to 240.1a-11(c) or 240.1a-12 50-OFF STORES, INC. (Name of Registrant as Specified In Its Charter) 50-OFF STORES, INC. (Name of Person(s) Filing Proxy Statement) Payment of Filing Fee (check the appropriate box): [X] $125 per Exchange Act Rules 0-11(c)(l)(ii), 14a-6(i)(l), or 14a-6(j)(2). [ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3) [ ] Fee computed in table below per Exchange Act Rule 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: *Set forth amount on which the filing is calculated and state how it was determined. [ ] 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: Notes: 50-OFF STORES, INC. SAN ANTONIO, TEXAS NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD SEPTEMBER 26, 1995 To the Stockholders of 50-OFF STORES, INC.: NOTICE IS HEREBY GIVEN that the 1995 Annual Meeting of Stockholders of 50- OFF STORES, INC., a Delaware corporation (the "Company"), will be held Tuesday, September 26, 1995 at 10:00 a.m., at the San Antonio Airport Hilton, 611 NW Loop 410, San Antonio, Texas 78216, for the following purposes: 1. To elect six directors of the Company. 2. To transact such other business as may properly come before the meeting or any adjournment thereof. Only stockholders of record at the close of business on August 24, 1995 are entitled to notice of and to vote at the meeting. You are cordially invited to attend the meeting. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, WE ASK THAT YOU SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. By order of the Board of Directors Joseph Lehrman Secretary San Antonio, Texas August 25, 1995 50-OFF STORES, INC. SAN ANTONIO, TEXAS PROXY STATEMENT ANNUAL MEETING OF STOCKHOLDERS TO BE HELD SEPTEMBER 26, 1995 This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of 50-OFF STORES, INC., a Delaware corporation (the "Company" or "50-OFF"), for use at the Annual Meeting of Stockholders of the Company to be held at the San Antonio Airport Hilton, 611 NW Loop 410, San Antonio, Texas 78216 on September 26, 1995 commencing at 10:00 a.m. and at all adjournments thereof. The mailing address of the Company is 8750 Tesoro Drive, San Antonio, Texas 78217, and its telephone number is (210) 805-9300. This Proxy Statement is to be mailed on or about August 31, 1995. The Board has fixed the close of business on August 24, 1995 as the record date for the meeting. Only Stockholders of record of outstanding shares of the Company's common stock, $.01 par value ("Common Stock"), at the close of business on Thursday, August 24, 1995 will be entitled to vote at the meeting. In deciding all questions, a holder of Common Stock is entitled to one vote, in person or by proxy, for each share held in his name on the record date. At August 24, 1995, there were 12,200,915 shares of Common Stock entitled to vote. 1 ELECTION OF DIRECTORS At the Annual Meeting, pursuant to which this Proxy Statement is being distributed and assuming the presence of a quorum, six directors are to be elected by a plurality of the votes cast by the holders of the outstanding Common Stock. Under applicable Delaware law, in tabulating the vote, broker nonvotes will be disregarded and have no effect on the outcome of the vote. Each outstanding share of Common Stock entitles the holder thereof to one vote with respect to the election of the six director positions to be filled at the meeting. The nominees for director are Charles Siegel, Charles J. Fuhrmann II, Joseph Lehrman, James M. Raines, Cecil Schenker and Richard Sherman. All of the nominees are presently directors of the Company. Michael Moffitt and Stanley Spigel, current directors, are not standing for reelection and, accordingly, will not serve on the Board or any committee thereof after the Annual Meeting. For information concerning the backgrounds of the current directors and nominees, see "DIRECTORS AND EXECUTIVE OFFICERS." THE ENCLOSED PROXY, IF PROPERLY SIGNED AND RETURNED, AND UNLESS AUTHORITY TO VOTE IS WITHHELD, WILL BE VOTED FOR THE ELECTION OF THESE SIX NOMINEES. The Board of Directors has no reason to believe that any of such nominees will be unable to serve if elected. In the event any of such nominees become unavailable for election, votes will be cast, pursuant to authority granted by the enclosed proxy, for such substitute nominee as may be designated by the Board of Directors. All directors will serve until the Annual Meeting of Stockholders to be held in 1996 or until their successors are elected. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF EACH OF THE SIX NOMINEES. - --- DIRECTORS AND EXECUTIVE OFFICERS The directors and executive officers of the Company are: NAME AGE POSITION(S) HELD/BUSINESS EXPERIENCE - ----------------------- ----- -------------------------------------------- Charles Siegel 56 Chairman of the Board, President and Chief Executive Officer. A co-founder of the Company and has served as President and Chief Executive Officer of the Company since December of 1982, as a director since March 1975 and as Chairman of the Board since March 1991. Served in various executive capacities in the retail discount industry for over 35 years . Joseph Lehrman 70 Secretary, Treasurer and Director. A co-founder of the Company and has served as Treasurer of the Company since January 1976, as Secretary since September 1982 and as a director since March 1975. Served as a Vice-President of the Company since January 1976. Engaged in various executive capacities in the retail discount industry for over 40 years. Dennis Barringer 47 Executive Vice-President. Has served as Executive Vice-President since July 1993 and served as Director of Stores since July 1992. Joined the Company from McCrory Stores where he served as Vice President of Merchandise since December 1986. Served as a District and Store Manager with K-Mart from 1968 to 1986. Allen Fields 38 Vice-President - Store Operations. Has served as Vice-President - Store Operations since January 1995. Joined the Company from Hill Department Stores where he served as a District Manager since January 1994. Served as a District Manager with McCrory Stores from May 1989 to December 1993 and, from February 1987 until April 1989, served as a Store Manager with Jamesway Corp. Joe Goldstein 49 Vice-President - Divisional Merchandise Manager (Softlines). Has served as Vice-President - Division Merchandise Manager (Softlines) since September 1993. Served as Merchandise Manager for Value City from November 1992 to September 1993 and, from April 1987 to November 1992, served as Vice President - General Merchandise Manager for Alden's. Has over 20 years of retail experience, primarily in buying and general merchandising capacities. 2 Richard Kelly 45 Vice-President - Distribution and Transportation. Has served as Vice-President - Distribution and Transportation since November 1994. Joined the Company from Grossman's where he served as Logistics Facility Manager since January 1994. Served as a management consultant for Center City Consolidators from January 1993 to December 1993. Served as Assistant Vice President, Distribution Services for T.J. Maxx, Inc. from October 1992 to December 1992. Served as Director, Logistics Operations for Rent-A-Center Inc. from March 1991 to September 1992 and as General Manager of southwestern/western regional distribution from September 1988 to February 1991. David Siegel 50 Vice-President - Advertising and Public Relations. Has served as Vice-President - Advertising and Public Relations of the Company since August 1984 and served as Advertising Director since 1975. David Siegel is the brother of Charles Siegel, President of the Company. Doug Sims 47 Vice-President - Loss Prevention and Internal Audit. Has served as Vice-President - Loss Prevention and Internal Audit since March 1994 and served as Director of Loss Prevention since June 1990. Self-employed in polygraph/ investigations for numerous retail corporations from July 1980 to June 1990. Roy E. Springer 47 Vice-President - Human Resources. Has served as Vice-President-Human Resources since July 1993. Served as Director of Human Resources since 1989 and as District Store Manager of the Company from 1988 until 1989. Held various multiunit management positions for other retail organizations for 10 years prior to joining the Company. Anthony Tramontano 61 Vice-President - Inventory Control. Has served as Vice-President -Inventory Control since February 1995. Served as Vice-President - Hardlines Merchandise since September 1983 and as merchandise manager for hardlines, linens and domestics since June 1979. Served as buyer of all hardlines, linens and domestics from 1975 to June 1979. Has over 35 years of retail experience, primarily in buying and general merchandising capacities. Ray Trevino 51 Vice-President-Real Estate and Construction. Has served as Vice-President Real Estate and Construction since February 1995. Served as Vice- President - Store Operations of the Company since September 1989. Served as District Manager for the Company's border stores from 1982 to 1989 and, from 1975 to 1982, served in various capacities for the Company at store level. James G. Scogin 34 Controller - Chief Accounting Officer. Has served as Controller-Chief Accounting Officer since February 1995 and served as Controller since June 1992. A Certified Public Accountant, was employed by Deloitte & Touche LLP from August 1985 to June 1992. Charles J. Fuhrmann II 50 Director. Has served as a director of the Company since October 1994. Since May 1991, has been a private investor and independent, strategic and financial consultant to private and public companies. See "Certain Relationships and Related Transactions." From 1978 through May 1991, was Vice President and Managing Director, Investment Banking of Merrill Lynch & Co., Inc., New York City, New York. Michael Moffitt 58 Director. Has served as a director of the Company since August 1990. Since January 1994, has served as President of Travelfest Superstores, Inc. (a retail store for leisure travel). Served as President, Chief Operating Officer and Director of Tuesday Morning, Inc. (a chain of deep discount retail stores specializing in home and gift products) from January 1985 until March 1989 and as Vice President-Buying for two years beginning in 1983. Has almost 30 years of retail experience, primarily with department stores in various buying and general merchandising capacities. 3 James M. Raines 55 Director. Has served as a director of the Company since March 1991. Since September 1988, has been actively involved in investments in both private and public companies through his own investment firm, James M. Raines & Company. See "Certain Relationships and Related Transactions." From 1985 through 1988, was Senior Vice President of Lovett, Mitchell Webb & Garrison, an investment banking firm in Houston, Texas. Cecil Schenker 53 Director. Has served as a director since July 1991. Previously served as a director from October 1983 until July 1986. A corporate securities attorney and the managing partner of the San Antonio, Texas office of the law firm of Akin, Gump, Strauss, Hauer & Feld, L.L.P. of which he has been a partner, through his professional corporation, for more 10 years. Akin, Gump, Strauss, Hauer & Feld, L.L.P. has regularly performed legal services for the Company. See "Certain Relationships and Related Transactions." Serves as a director of Taco Cabana, Inc. (a Mexican patio cafe chain). Richard Sherman 51 Director. Has served as a director since July 1991. A retail consultant, has served as President and Chief Executive Officer of Rally's, Inc. (a fast-food restaurant chain) from September 1987 until January 1991. From August 1989 until January 1991, served as Chairman of the Board of Rally's, Inc. From April 1984 until April 1986, was President, Chief Operating Officer and Director of San Antonio based Church's Fried Chicken, Inc. (a fast-food restaurant chain) and from April 1986 until July 1987 served as that company's Chief Executive Officer. Serves as a member of the Board of Trustees of Paul Quinn College in Dallas, Texas and as a director of Reed's Jeweler's, Inc., Taco Cabana, Inc. (a Mexican patio cafe chain) and Papa John's International Inc. (a fast food restaurant chain). Stanley Spigel 49 Director. Has served as a director since July 1991. Since 1980, has owned Spigel Properties which owns and manages over 3,000,000 square feet of shopping center space in Texas, including certain space leased to the Company for two stores. See "Certain Relationships and Related Transactions." Serves as a director of First Interstate Bank San Antonio and is a member of the International Council of Shopping Centers. Pat L. Ross, who served as Vice President - Chief Financial Officer, resigned from such position effective August 15, 1995. COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") requires each director and executive officer of the Company, and each person who owns more than 10% of the Common Stock to file by specific dates with the Securities and Exchange Commission (the "SEC") initial reports of ownership and reports of change in ownership of Common Stock. Officers, directors and 10% stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. The Company is required to report in this report any failure of its directors, executive officers and 10% stockholders to file by the relevant due date any of these reports during the Company's fiscal year. To the Company's knowledge, based solely on review of the copies of such reports furnished to the Company, all Section 16(a) filing requirements applicable to the Company's officers, directors and 10% stockholders were complied with for the fiscal year ended February 3, 1995. 4 DIRECTORS' MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS The Board held ten meetings in fiscal 1995. The Board has three standing committees to assist it in the discharge of its responsibilities: the Audit Committee, the Compensation Committee and the Executive Committee. During fiscal 1995, the Audit Committee held one meeting, the Compensation Committee held two meetings and the Executive Committee held eight meetings. These three committees are described in more detail below. The Audit Committee is responsible for monitoring the financial condition of the Company and reviewing its financial policies and procedures, its internal accounting controls and the objectivity of its financial reporting. The Audit Committee currently consists of Michael Moffitt, James M. Raines and Charles J. Fuhrmann II. The Compensation Committee is responsible for administering the Stock Option Plan, reviewing the salary and benefit structure of the Company with respect to its executive officers and recommending specific actions concerning that structure to the Board. The Compensation Committee currently consists of Cecil Schenker, Richard Sherman and Stanley Spigel. The Executive Committee reviews and analyzes business strategy and business development and makes recommendations to the Board. The Executive Committee currently consists of Richard Sherman, Chairman, Michael Moffitt, Charles J. Fuhrmann II and Charles Siegel with Dennis Barringer serving as a non-voting member. The Company has no nominating committee. Each outside director received $700 per Board meeting attended and, if serving on the Executive Committee, $1,000 per Executive Committee meeting attended (and $500 per telephone meeting in excess of two hours in duration). Effective May 1, 1995, each outside director receives $750 per Board meeting attended (and $500 per telephone meeting in excess of two hours duration). In addition, each outside director receives $750 per meeting for services as members of, or $1,000 per meeting for chairing, the Audit and Compensation Committees. Outside members of the Executive Committee receive $1,000 per meeting attended, the Chairman $1,500, (and $500 per telephone meeting in excess of two hours duration). Each outside director also receives stock option grants. See "Stock Option Plan." For the fiscal year ended February 3, 1995, no director attended fewer than 75% of the aggregate of the total number of meetings of the Board and the total number of meetings of all committees on which he served. 5 EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table sets forth certain information concerning the compensation earned during the Company's last three fiscal years by the Company's Chief Executive Officer and Executive Vice-President, the only executive officers earning compensation in excess of $100,000 in fiscal 1995 (collectively the "named executive officers").
ANNUAL COMPENSATION LONG-TERM COMPENSATION ---------------------- ------------------------------------- AWARDS PAYOUTS ------------------------ ------------ LONG-TERM RESTRICTED INCENTIVE STOCK PLAN ALL OTHER NAME AND PRINCIPAL FISCAL SALARY BONUS AWARD(S) OPTIONS PAYOUTS COMPENSATION POSITION YEAR ($) ($) ($) (#) ($) ($) (1) - -------------------------------------------------------------------------------------------------------------------- CHARLES SIEGEL 1995 250,000 - - - - 308 CHAIRMAN, PRESIDENT AND CEO 1994 250,000 - - - - 1,444 1993 250,000 100,000 - 40,000 - 3,857 DENNIS BARRINGER 1995 120,774 - - 40,000 - - EXECUTIVE VICE PRESIDENT 1994 102,885 5,592 - 20,000 - - 1993(2) 46,042 10,000 - 15,000 - -
(1) Represents Company matching contributions under the Company's Profit Sharing Plan and Trust. (2) Represents partial year compensation. Perquisites and other personal benefits did not exceed the lesser of either $50,000 or 10% of the total of annual salary and bonus reported for any named executive officer. The Company has an amended employment agreement (the "Agreement") with Charles Siegel, effective February 18, 1995, which expires on June 15, 1996. The Agreement may be extended by the Company and Charles Siegel year to year by written agreement. The Company will automatically offer a one year extension in 1996 if the Company achieves certain operating results. Pursuant to the Agreement, Mr. Siegel receives a base salary of $200,000 and is eligible to participate in a bonus plan adopted by the Board of Directors. Upon termination of the Agreement, Mr. Siegel is entitled to $50,000 additional compensation payable immediately and unless terminated for a "material breach" as defined in the Agreement, severance pay of $250,000 payable monthly over a two year period. STOCK OPTION PLAN Under the Company's Stock Option Plan (the "Option Plan"), stock options may be granted to full-time employees, directors, advisors and outside consultants of the Company for the purchase or acquisition of up to 3,000,000 shares of Common Stock in the aggregate. Shares that by reason of the expiration of an option (other than by reason of exercise) or which are no longer subject to purchase pursuant to an option granted under the Option Plan may be reoptioned thereunder. The Company's Compensation Committee (the "Committee") sets specific terms and conditions of options granted under the Option Plan and administers the Option Plan, as well as the Company's other employee benefit plans which may be in effect from time to time. Employees of the Company are eligible to receive either incentive stock options or nonqualified stock options or a combination of both, as the Committee determines. Non-employee participants may be granted only nonqualified stock options. Stock options may be granted for a term not to exceed ten years (five years with respect to a holder of 10% or more of the Company's shares in the case of an incentive stock option) and are not transferable other than by will or the laws of descent and distribution. Each option may be exercised within the term of the option pursuant to which it is granted, or within thirty days after the termination of employment of the optionee, or within one year after termination in case of termination because of death or disability, in each case to the extent the option was then exercisable. 6 The exercise price of all incentive stock options must be at least equal to the fair market value of the Common Stock on the date of grant, or 110% of fair market value with respect to any incentive stock option issued to a holder of 10% or more of the Company's shares. Any nonqualified stock option to be issued pursuant to the Option Plan must be at an exercise price equal to at least 85% of the fair market value of the Common Stock. Stock options may be exercised by payment in cash of the exercise price with respect to each share to be purchased, by delivering Common Stock already owned by such optionee with a market value equal to the exercise price, or by methods in which a concurrent sale of the acquired stock is arranged with the exercise price payable in cash from such sale proceeds, or by a combination of the foregoing methods. The Option Plan provides that each outside director would automatically receive a grant of 75,000 nonqualified stock options. In accordance with the terms of the Option Plan, in April 1991, all current outside directors, excluding Mr. Fuhrmann, received options for 75,000 shares each. Mr. Fuhrmann, who joined the Board in October 1994, also received options for 75,000 shares in accordance with the Option Plan. Subject to availability of shares allocated to the Option Plan and not already reserved for other outstanding stock options, outside directors who join the Board in the future will also receive a grant of options for 75,000 shares, vesting in the same manner as the prior awards, effective upon their appointment or election to the Board. Such directors' options vest ratably in five equal annual installments, with the first such installment vesting on the date of grant. Options granted to outside directors become exercisable in five equal annual installments commencing with the first anniversary following the date of grant through the sixth anniversary following the date of grant. Options, once granted and to the extent vested, remain exercisable throughout their term, regardless of whether the holder continues as a director. The exercise price of the options is equal to 100% of the fair market value of the covered shares of Common Stock at the time of grant. If following five years of service as an outside director of the Company the director continues as such, then for each of the next five years for which such director serves he will be automatically granted in such year nonqualified stock options for an additional 15,000 shares. Such additional nonqualified options will be granted to each outside director on the business day following the next annual meeting of stockholders at which such director is reelected following the expiration of the five-year period from the date of initial option grant. Such options will be granted at an exercise price equal to the then prevailing fair market value of the Common Stock. Each such option will vest in full immediately and become exercisable on the first anniversary date following its grant and will continue to be exercisable in whole or in part until the third anniversary of the grant date. The Option Plan terminates on August 28, 2000. The Board of Directors may, however, terminate the Option Plan at any time prior to such date. Termination of the Option Plan will not alter or impair, without the consent of the optionee, any of the rights or obligations pursuant to any option granted under the Option Plan. The Company repriced employee stock options (excluding executive officer options) at $4.125 per share effective December 5, 1994. As of August 18, 1995, stock options covering an aggregate of 1,506,260 shares of Common Stock were outstanding. During the fiscal year ended February 3, 1995, stock options for 7,500 shares of Common Stock were exercised at a share price of $5.08, and stock options covering an aggregate of 110,085 shares were terminated. Stock options for 273,250 shares of Common Stock were granted during the 1995 fiscal year. Options for 213,550 shares of Common Stock have been granted, and options for 33,850 shares of Common Stock have been terminated, during the 1996 fiscal year. 7 OPTION GRANTS IN LAST FISCAL YEAR The following table sets forth certain information concerning options granted to the named executive officers during the Company's fiscal year ended February 3, 1995:
OPTION GRANTS IN FISCAL 1995 ---------------------------------------------------------- POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF STOCK PRICE APPRECIATION FOR OPTION TERM (3) ----------------------------------------------- % OF TOTAL OPTIONS GRANTED TO EXERCISE OPTIONS EMPLOYEES PRICE EXPIRATION NAME GRANTED (#) (1) IN FISCAL 1995 (2) ($/SH) DATE 5% 10% ---- --------------- ------------------ -------- ---------- -- --- CHARLES SIEGEL - - - - - - DENNIS BARRINGER 40,000 18% $4.13 10-18-2001 $67,200 $156,400
(1) Mr. Barringer's 40,000 options vest ratably in five equal annual installments beginning with the October 18, 1994 date of grant and become exercisable one year after vesting. (2) In fiscal 1995, options for an aggregate 223,250 were granted to employees. (3) The dollar amounts under these columns use the 5% and 10% rates of appreciation prescribed by the Securities and Exchange Commission. The 5% rate of appreciation would result in a per share price of $5.81. The 10% rate of appreciation would result in a per share price of $8.04. This presentation is not intended to forecast possible future appreciation of the Common Stock. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES The following table sets forth certain information concerning the value of unexercised options held by the named executive officers at February 3, 1995 (no options were exercised by such officers during the fiscal year ended on such date):
Value of Unexercised Number of Unexercised In-the-Money Options at FY-End (#) Options at FY-End ($) (1) --------------------------- --------------------------- Name Exercisable Unexercisable Exercisable Unexercisable ---- ----------- ------------- ----------- ------------- Charles Siegel 130,000 60,000 (2) (2) Dennis Barringer 16,000 59,000 (2) (2)
(1) Values stated are based on the $2.875 closing price of the Common Stock as reported on the NASDAQ National Market System on February 3, 1995 and equal the aggregate amount by which the market value of the option shares exceeds the exercise price of such options at the end of the fiscal year. (2) The exercise price of the option shares exceeds the market value of such options. 8 PROFIT SHARING PLAN AND TRUST The Company's Profit Sharing Plan and Trust (the "Profit Sharing Plan") was adopted effective April 1, 1990 and is intended to constitute a qualified cash or deferred profit sharing plan within the meaning of Section 401(a) and 401(k) of the Internal Revenue Code of 1986. The Profit Sharing Plan is subject to the Employee Retirement Income Security Act of 1974. All employees of the Company who have attained the age of 21, and, with respect to employees hired on or after April 1, 1990, who have also completed at least 1,000 hours of service in a 12-month period (a "year of service"), are eligible to participate. Each eligible employee is allowed to contribute up to 15% of his earnings as shown on the employee's W-2 form. Through February 1995, the Company matched 25% of the participating employees' contributions up to a maximum of 6% of the employees' earnings and will determine any future matching after the financial results are known each year. All participating employees' contributions to the Profit Sharing Plan are at all times fully vested and nonforfeitable. Contributions made by the Company and credited to employees' accounts are vested 20% after two years of service, 40% after three years of service, 60% after four years of service, 80% after five years of service and 100% after six years of service, but all such Company contributions are fully vested and nonforfeitable upon (i) the employee's reaching the normal retirement age of 65, (ii) the employee's death or disability prior to age 65 or (iii) termination of the Profit Sharing Plan. All forfeitures of non-vested Company contributions are reallocated to nonforfeiting participants' accounts. Participating employees may choose among alternative investment vehicles (Company Common Stock is not an option). Distributions may be made prior to normal retirement age upon a showing of hardship. The annual benefits payable upon retirement at normal retirement age cannot be estimated due to the number of variables which operate under the Profit Sharing Plan. The Company made aggregate contributions of $33,575 to the Profit Sharing Plan during fiscal 1995, $67,998 during fiscal 1994 and $49,835 during fiscal 1993. 9 COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION Executive compensation is structured to provide incentives for executive officer performance that result in improvements in the Company's financial results, both short term and long term. Compensation is set at levels which are believed to be sufficiently competitive with companies of similar size and type to attract and retain the best executives. Incentive compensation in the form of stock options is used to align the interests of the Company's executives and its shareholders. Each executive's compensation is based upon both individual and Company performance. The compensation of executive officers consists of three principal parts, each of which is reviewed regularly by the Committee. Salaries represent the fixed portion of compensation for executive officers. Changes in salary depend upon individual performance, level of responsibility, experience, seniority and Company performance. Bonuses are paid in cash, and, in fiscal 1995, participants, excluding the Chief Executive Officer, who were rated excellent or outstanding were to share in a pool equal to 25% of pre-tax, pre-bonus profits over $3,600,000. No bonus was paid under this bonus plan in fiscal 1995. For fiscal 1996, participants, including the Chief Executive Officer, who are rated excellent or outstanding will share in a pool equal to 25% of pre-tax, pre-bonus profits over $538,000. The third principal part of compensation is stock option grants. The number of options granted is based on a number of factors, including salary level, Company and individual performance, competitive considerations and individual levels of stock ownership. All options are granted at fair market value, and, therefore, any value which ultimately accrues to executive officers is based entirely on Company performance as perceived by the Company's investors who establish the price for the Common Stock. The three principal components of compensation and the written employment agreement with Mr. Siegel, the Company's Chief Executive Officer, were the basis for the fiscal 1995 compensation of Mr. Siegel. Mr. Siegel's compensation for fiscal 1995 was a salary of $250,000. No options were granted to Mr. Siegel in fiscal 1995. The Committee noted that Mr. Siegel's direct and beneficial ownership of 369,249 shares provides a significant incentive for executive officer performance structured to achieve improved financial results. In fiscal 1996, an amended employment agreement was entered into with Mr. Siegel providing for a base salary of $200,000, a decrease of 20 percent from fiscal 1995, and a change in bonus structure. See "Executive Compensation." This report is submitted by the Compensation Committee: Cecil Schenker Richard Sherman Stanley Spigel 10 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During fiscal 1995, Cecil Schenker, Richard Sherman and Stanley Spigel served on the Company's Compensation Committee. The Company has two real estate leases in force with Spigel Properties, whose owner is Stanley Spigel, a director of the Company and a member of the Company's Compensation Committee. The leases for such store locations cover an aggregate of approximately 47,000 square feet, expire at February 1999 and December 1999 and provide for one five-year renewal option and an aggregate annual rental of approximately $144,000 in fiscal 1996. The leases also provide for percentage rental payments which, along with minimum rentals and the Company's pro-rata share of taxes, insurance and property maintenance, typically do not exceed 4% of sales. The Company paid an aggregate of $136,000 in minimum rental and an aggregate of $14,000 in percentage rental for these locations during fiscal 1995. During fiscal periods prior to August 1988, and again since February 1991, the law firm of Akin, Gump, Strauss, Hauer & Feld, L.L.P. has regularly performed legal services as counsel to the Company. Cecil Schenker, a director of the Company and a member of the Company's Compensation Committee, is the sole shareholder of Cecil Schenker, P.C., a partner with Akin, Gump, Strauss, Hauer & Feld, L.L.P. The Company believes that the abilities of Mr. Schenker and Mr. Spigel to make fair compensation decisions have not been compromised by the relationships referred to above. 11 STOCK PERFORMANCE GRAPH The following graph reflects a comparison of the cumulative total stockholder return (change in stock price) of the Common Stock from February 2, 1990 through February 3, 1995 with the Nasdaq Stock Market (United States companies only) and the Nasdaq Retail Trade Stocks. The comparison assumes $100 was invested on February 2, 1990 in the Common Stock and in each of the foregoing indices. The comparisons in this table are required by the Securities and Exchange Commission and, therefore, are not intended to forecast or be indicative of possible future performance of the Common Stock. Comparison of the Five Year Cumulative Total Stockholder Return Among 50-OFF-Stores Inc., Nasdaq Stock Market, and Nasdaq Retail Trade Stocks ----------------------------------------------------------------------- [GRAPH APPEARS HERE]
February 2, 1990 1991 1992 1993 1994 1995 - ------------------------------------------------------------------------------ 50-Off Stores, Inc. 100 210.19 768.04 347.93 204.12 79.34 Nasdaq Stock Market 100 103.27 157.98 178.58 196.42 179.98 Nasdaq Retail 100 120.42 210.26 189.69 204.08 195.98
12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth the beneficial ownership (as defined by the rules of the Securities and Exchange Commission) of the Common Stock as of August 18, 1995 by each person known by the Company to be a beneficial owner of more than 5%, all directors, the named executive officers, and all directors and executive officers as a group. Number of Shares Percent of Name Beneficially Owned Class (1) Charles Siegel 369,249 (2) 3.0% Joseph Lehrman 300,500 (2) 2.5% Charles J. Fuhrmann II 15,000 (2) * Michael Moffitt 61,250 (2) * James M. Raines 45,000 (2) * Cecil Schenker 60,000 (2) * Richard Sherman 45,000 (2) * Stanley Spigel 55,000 (2) * Dennis Barringer 24,000 (2) * All executive officers and directors as a group (18 persons) 1,090,049 8.5% * Less than 1% (1) This calculation is the quotient of: (a) the number of shares of Common Stock currently beneficially owned by the named individual or group plus the number of shares of Common Stock, if any, for which options held by such person or group are currently exercisable or become exercisable within 60 days of August 18, 1995; divided by (b) the total number of shares of Common Stock outstanding and the number of shares of Common Stock, if any, for which options held by such person or group are currently exercisable or become exercisable within 60 days of August 18, 1995. (2) Includes 160,000 shares, in the case of Mr. Siegel, 80,000 shares in the case of Mr. Lehrman, 60,000 shares in the cases of Mr. Moffitt and Mr. Schenker, 55,000 shares in the case of Mr. Spigel, 45,000 shares in the cases of Mr. Raines and Mr. Sherman and 24,000 shares in the case of Mr. Barringer and 15,000 shares in the case of Mr. Fuhrmann which are issuable pursuant to presently exercisable options (or those exercisable within 60 days of August 18, 1995). CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The investment firm of James M. Raines & Company, the owner of which is a director of the Company, performed consulting services for a fee in connection with the Company's Regulation S offering conducted during the fiscal year ended February 3, 1995. Charles J. Fuhrmann II, a director of the Company, performed certain financial and strategic advisory services for a fee during fiscal 1995 and the first six and one-half months of fiscal 1996. On August 18, 1995, the Company entered into a consulting agreement with Mr. Fuhrmann covering an expansion of these services to include certain services typically performed by the Chief Financial Officer. The agreement is for a term of up to seven months. As compensation, Mr. Fuhrmann will receive $12,500 per month, including any fees for services as a director or committee member during the term of the agreement, and received options to acquire up to 35,000 shares of Common Stock at an exercise price equal to the fair market value on the date of grant. Such options will be fully vested and exercisable by August 18, 1996 and will expire on August 17, 2000. The agreement is cancellable by either party on one month's notice commencing on November 15, 1995. 13 See "Compensation Committee Interlocks and Insider Participation" for additional relationships and related transactions. INDEPENDENT AUDITORS The financial statements and schedules of the Company as of February 3, 1995 and for the year then ended were audited by Deloitte & Touche LLP. It is anticipated that if the management nominees are elected as directors, the new Board of Directors will reappoint such firm as independent certified public accountants for the current fiscal year. Representatives of Deloitte & Touche LLP will be present at the Annual Stockholders' Meeting, will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions. REVOCABILITY OF PROXY A stockholder giving a proxy has the power to revoke it at any time before its exercise. A proxy may be revoked by filing with the Secretary of the Company a written revocation or duly executed proxy bearing a later date. A proxy will be revoked if the stockholder who executed it is present at the Meeting and elects to vote in person. SPECIFICATIONS BY STOCKHOLDERS Properly executed proxies in the accompanying form which are filed before the Meeting and not revoked will be voted in accordance with the directions and specifications contained therein. Unless a different direction or specification is given, properly executed proxies which are filed and not revoked will be voted as hereinabove described. SUBMISSION OF STOCKHOLDER PROPOSALS The Company intends to conduct the next annual meeting in approximately July 1996. Any stockholder proposal to be presented at such 1996 annual meeting should be directed to Joseph Lehrman, Secretary of the Company, 8750 Tesoro Drive, San Antonio, Texas 78217, and must be received by the Company on or before March 1, 1996. Any such proposal must comply with the requirements of Rule 14a-8 promulgated under the Securities Exchange Act of 1934. SOLICITATION OF PROXIES This solicitation is made on behalf of the Board of Directors of the Company. The cost of soliciting these proxies will be borne by the Company. In addition to solicitation by mail, the Company may make arrangements with brokerage houses and other custodians, nominees and fiduciaries to forward proxies and proxy materials to their principals and may reimburse them for their expenses in doing so. ANNUAL REPORT This Proxy Statement is accompanied by the Annual Report of the Company on Form 10-K for its fiscal year ended February 3, 1995. Stockholders are referred to such Report for financial information about the activities of the Company, but such Report is not incorporated into this Proxy Statement and is not to be deemed a part of the proxy soliciting material. OTHER MATTERS The Board of Directors does not intend to present and does not have any reason to believe that others will present at the Annual Meeting any items of business other than as stated in the Notice of Annual Meeting of Stockholders. If, however, other matters are properly brought before the Meeting, it is the intention of the persons named in the accompanying proxy to vote the shares represented thereby in accordance with their best judgment and discretionary authority to do so as included in the proxy. The foregoing notice and proxy statement are sent by order of the Board of Directors. Joseph Lehrman Secretary San Antonio, Texas August 25, 1995 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS ON TUESDAY, SEPTEMBER 26, 1995 The undersigned hereby appoints Charles Siegel and Joseph Lehrman as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated below and on all other subjects as may properly come before the meeting, all the shares of common stock of 50-OFF Stores, Inc. held of record by the undersigned on the record date, August 24, 1995, at the annual meeting of stockholders of the Company to be held on Tuesday, September 26, 1995 at 10:00 a.m. or at any adjournments thereof. 1. ELECTION OF DIRECTORS [_]FOR all nominees listed below [_] WITHHOLD AUTHORITY to vote for all nominees listed below: (except as marked to the contrary below):
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW): CHARLES SIEGEL JOSEPH LEHRMAN RICHARD SHERMAN CECIL SCHENKER JAMES M. RAINES CHARLES J. FUHRMANN II The undersigned acknowledges receipt of the formal notice of such meeting and the accompanying Proxy Statement and fiscal 1995 Annual Report on Form 10-K of the Company. This proxy when properly executed will be voted in the manner directed by the undersigned stockholder. IF THE SIGNED CARD IS RETURNED AND NO DIRECTION IS MADE, THE PROXIES WILL VOTE FOR ALL NOMINEES LISTED IN 1. ABOVE AND AT THEIR DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF. Dated:__________________, 1995. ------------------------------- Signature ------------------------------- Signature Please sign exactly as name appears on the certificate. When shares are held by joint tenants, both should sign. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person. When signing as attorney, executor, administrator, trustee, guardian, officer or partner, please give full title as such. PLEASE DO NOT FOLD OR MUTILATE THIS CARD