Filed On 4/22/05 12:55pm ET · SEC File 1-14770 · Accession Number 950137-5-4767
As Of Filer Filing As/For/On Docs:Pgs Issuer Agent
4/22/05 Payless Shoesource Inc/DE DEF 14A 5/26/05 1:38 950137
Definitive Proxy Solicitation Material · Schedule 14A
Filing Table of Contents
Document/Exhibit Description Pages Size
1: DEF 14A Definitive Proxy Statement HTML 250K
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OMB APPROVAL |
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OMB Number:
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3235-0059 |
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Expires:
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August 31, 2004 |
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14.73 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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o Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
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x Definitive Proxy Statement |
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o Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
Payless ShoeSource, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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x No fee required. |
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o
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11. |
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1) Title of each class of securities to which transaction applies: |
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2) Aggregate number of securities to which transaction applies: |
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): |
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4) Proposed maximum aggregate value of transaction: |
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o Fee paid previously with preliminary materials. |
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o 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. |
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1) Amount Previously Paid: |
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2) Form, Schedule or Registration Statement No.: |
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| SEC 1913 (02-02) |
Persons who potentially are to respond to the collection of information
contained in this form are not required to respond unless the form displays a currently valid
OMB control number. |
3231 Southeast Sixth Avenue
Dear Fellow Shareowner,
On behalf of the Board of Directors and Management of Payless
ShoeSource, Inc., I cordially invite you to attend the Annual
Meeting of Shareowners to be held at the Payless ShoeSource,
Inc. Worldwide Headquarters, at 3231 Southeast Sixth Avenue,
Topeka, Kansas on Thursday,
May 26, 2005, at
10:00 a.m., Central Daylight Saving Time. At the meeting,
you will hear a report on
the Company’s progress during
fiscal 2004, and our strategies for the future, and you will
have a chance to meet
the Company’s directors and
executives. In addition, we will conduct the following business:
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Elect three directors each for a three-year term; |
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Ratify the appointment of Deloitte & Touche LLP as the
Company’s independent registered public accountants for
fiscal year 2005; and |
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Conduct other business, if properly raised. |
In the following pages you will find the formal notice of the
meeting and the proxy statement. The proxy statement provides
more detail about the agenda and procedures for the meeting and
includes biographical information about the director candidates.
Even if you only own a few shares, we want your shares to be
represented at the meeting. I encourage you to vote via the
Internet. Voting by the Internet is fast and convenient. More
importantly, voting by the Internet saves
the Company money. If
you prefer, you can sign, date and return your proxy card
promptly in the enclosed envelope. To attend the meeting in
person, please follow the instructions on page 1.
Thank you for your investment in Payless ShoeSource, Inc.
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Sincerely, |
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Steven J. Douglass |
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Chairman of the Board and Chief Executive Officer |
TABLE OF CONTENTS
DIRECTIONS TO PAYLESS WORLDWIDE HEADQUARTERS
The Pozez Auditorium is located at the Payless Worldwide
Headquarters located at 3231 Southeast Sixth Avenue, Topeka,
Kansas.
Parking is available for you in the Visitor’s parking lot.
From the parking lot, you may enter the Payless Worldwide
Headquarters from the Visitor’s entrance.
NOTICE OF PAYLESS SHOESOURCE, INC., ANNUAL MEETING OF
SHAREOWNERS
Date:
Time:
10:00 a.m.,
Central Daylight Saving Time
Place:
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Payless ShoeSource, Inc. Worldwide Headquarters
Pozez Auditorium
3231 Southeast Sixth Avenue
Topeka, Kansas |
Purposes:
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I. |
Elect three directors each for a three-year term |
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II. |
Ratify the appointment of Deloitte & Touche LLP as the |
Company’s independent registered public accountants for
fiscal year 2005
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III. |
Conduct other business, if properly raised |
Who may vote?
Your vote is important. I encourage you to vote via the
Internet. Voting by the Internet is fast and convenient. More
importantly, voting by the Internet saves
the Company money. If
you prefer, you can sign, date and return your proxy card
promptly in the enclosed envelope or vote via the Internet at
http://www.eproxyvote.com/umb-bank/. If you attend
the meeting, you may revoke your proxy and vote in person, if
you wish to do so.
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Michael J. Massey |
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Secretary |
PROXY STATEMENT
What are the purposes of this meeting?
The purposes of this meeting are to (i) elect three
directors each for a three-year term; (ii) ratify the
appointment of Deloitte & Touche LLP as the
Company’s independent registered public accountants for
fiscal year 2005; and (iii) conduct other business, if
properly raised.
Who may vote?
Shareowners of Payless ShoeSource, Inc., a Delaware corporation
(
“Payless” or the
“Company”), as recorded in
our stock register on
April 1, 2005, may vote at the
meeting.
How to vote?
Proxies may be submitted either via the Internet at
http://www.eproxyvote.com/umb-bank/ or United States mail. Also,
you may vote in person at the meeting. We recommend you vote by
proxy even if you plan to attend the meeting. If you attend the
meeting, you may revoke your proxy and vote in person, if you
wish to do so.
How do proxies work?
The Board of Directors is asking for your proxy. Giving us your
proxy means you authorize us to vote your shares at the meeting
in the manner you direct. You may vote for or withhold voting
authority with respect to each director candidate. You also may
vote for, or against or abstain from voting on the proposal to
ratify the appointment of Deloitte & Touche LLP, as the
Company’s independent registered public accountants. If you
sign and return the enclosed proxy card, but do not specify how
to vote, we will vote your shares in favor of our director
candidates and in favor of Management’s proposal.
Why did I receive multiple proxy cards?
You may receive more than one proxy or voting instruction card
depending on how you hold your shares. You will receive a proxy
card for shares registered in your name. Payless employees will
receive voting instruction cards for the aggregate number of
shares they hold in
the Company’s profit sharing plans and
for shares held in the employee stock purchase plan. If you hold
shares through someone else, such as a stockbroker, you may also
get material from them asking how you want to vote. Please vote
each proxy or voting instruction card.
How do I revoke my proxy?
You may revoke your proxy before it is voted by submitting a new
proxy card with a later date or subsequently voting via the
Internet. Record holders may also revoke their proxy by voting
in person at the meeting or by notifying
the Company’s
Secretary in writing at the address listed under
“Questions” on page 22.
What is a quorum?
In order to carry on the business of the meeting, we must have a
quorum. This means at least a majority of the outstanding shares
eligible to vote must be represented at the meeting, either in
person or by proxy. Shares owned by Payless affiliated companies
are not voted and do not count for this purpose.
How many votes are needed?
The director candidates receiving the most votes will be elected
to fill the seats on the Board. The other Management proposal
will pass if a majority of the votes are in favor of it. We
count abstentions and broker non-votes to determine if a quorum
is present, but not to determine if a proposal passes. When a
broker returns a proxy, but does not have authority to vote on a
particular proposal, we call it a “broker non-vote.”
Who may attend the meeting?
Only shareowners, their proxy holders and
the Company’s
guests may attend the meeting. The lower half of your proxy or
voting instruction card is your admission ticket. Please bring
the admission ticket with you to the meeting.
If you hold your shares through someone else, such as a
stockbroker, send proof of your ownership to the Secretary at
the address listed under
“Questions” on page 22,
and we will send you an admission ticket. Alternatively, you may
bring proof of ownership with you to the meeting. Acceptable
proof could include an account statement showing that you owned
Payless shares on
April 1, 2005.
This Proxy Statement and the enclosed form of proxy are being
mailed to shareowners
PROPOSAL I: ELECTION OF DIRECTORS
Proposal I on the accompanying proxy card.
Directors and Nominees for Director
The Board currently consists of ten Directors divided into three
classes serving staggered terms. Seven of
the Company’s
current Directors are serving in two classes with terms that
continue beyond the Annual Meeting, and they are not subject to
election at the Annual Meeting. Three of
the Company’s
Directors who served in the preceding year, Messrs. Steven
J. Douglass and Howard R. Fricke and Ms. Judith K. Hofer,
serve in a class with a term that expires at the Annual Meeting.
Messrs. Douglass and Fricke and Ms. Hofer are the
nominees of the Board for reelection at the Annual Meeting. If
elected at the Annual Meeting, each of Messrs. Douglass and
Fricke and Ms. Hofer will serve a term of three years to
expire at the Annual Meeting of Shareowners to be held in the
year 2008 or until his or her successor is elected and
qualifies. During 2004, Mr. Cantrell resigned as a Director.
Ms. Mylle H. Mangum and Messrs. Michael A. George and
John F. McGovern have terms expiring at the 2006 Annual Meeting
of Shareowners. Messrs. Daniel Boggan Jr., Michael E.
Murphy, Michael A. Weiss, and Robert C. Wheeler have terms
expiring at the 2007 Annual Meeting of Shareowners.
Each nominee has consented to being named as a nominee and to
serve, if elected. If any nominee should subsequently become
unavailable for election, the holders of proxies may, in their
discretion, vote for a substitute or the Board may reduce the
number of Directors to be elected.
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Directors Subject to Election: |
STEVEN J. DOUGLASS is 55 years old and has served as
Chairman of the Board and Chief Executive Officer of Payless
since
May 4, 1996, the date on which the Payless Common
Stock was distributed in a spin-off by The May Department Stores
Company (
“May”) to its shareowners (the
“Spin-off”). Mr. Douglass served as Chairman and
Chief Executive Officer of Payless from April 1995 to the
Spin-off. He joined Payless in 1993 and served as Senior Vice
President/ Director of Retail Operations from 1993 to January
1995 and as Executive Vice President/ Director of Retail
Operations from January 1995 to April 1995. Prior to his
association with Payless, Mr. Douglass held several
positions at divisions of May, including Chairman of May
Company, Ohio from 1990 to 1993 and Senior Vice President and
Chief Financial Officer of J.W. Robinsons from 1986 to 1990.
Mr. Douglass is a director of The Security Benefit Group of
Companies (
“Security Benefit”). Mr. Douglass has
served as a Director of Payless since April 1996.
HOWARD R. FRICKE is 69 years old and has been
Chairman of the Board of Security Benefit since 1988. He has
been Secretary of Commerce for the State of Kansas since
September 2004. Mr. Fricke was Secretary of Administration
for the State of Kansas from
December 29, 2002 until
September 2004. Mr. Fricke served as Chief Executive
Officer of Security Benefit from 1988 to January 2001. He also
serves as a director of Security Benefit. Mr. Fricke has
served as a Director of Payless since April 1996.
JUDITH K. HOFER is 65 years old and has served as a
retail consultant for May since 2002. From 2000 to 2002,
Ms. Hofer served as President and CEO of May Merchandising
Corporation. From 1978 to 2000, Ms. Hofer served in a
number of positions of increasing responsibility with May and
its various
subsidiaries. Ms. Hofer serves as a director of
Viad Corporation, MoneyGram International and Ashworth, Inc.
Ms. Hofer has served as a director of Payless since July
2004.
THE BOARD UNANIMOUSLY RECOMMENDS THAT HOLDERS OF PAYLESS
COMMON STOCK VOTE IN FAVOR OF THE ABOVE NOMINEES.
DANIEL BOGGAN JR. is 58 years old and has served as
Director of Business Development of Siebert Branford
Shank & Co., LLC since September 2003. Mr. Boggan
served as Senior Vice President of the National Collegiate
Athletic Association (“NCAA”) from 1998 through his
retirement in August 2003. He joined the NCAA in 1994 as Group
Executive Director for Education Services and served as Chief
Operating
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Officer from January 1996 to August 1998. Prior to his tenure
with the NCAA, Mr. Boggan was Vice Chancellor of the
University of California from 1986 to 1994, and City Manager of
Berkeley, California from 1982 to 1986. Mr. Boggan is a
director of The Clorox Company and Viad Corporation.
Mr. Boggan has served as a Director of Payless since
September 1997.
MICHAEL A. GEORGE is 43 years old and has served as
Chief Marketing Officer and General Manager, U.S. Consumer
business of Dell Inc. (“Dell”) since February 2004.
Mr. George joined Dell in March 2001. He served as Chief
Marketing Officer from May 2001 to February 2004 and Executive
Assistant to Michael Dell from March 2001 to May 2001. Prior to
joining Dell, Mr. George was a senior partner at
McKinsey & Co., Inc. from August 1985 to February 2001.
Mr. George has served as a Director of Payless since
February 2004.
MYLLE H. MANGUM is 56 years old and has served as
Chief Executive Officer of True Services Holdings, LLC and
International Banking Technologies since October 2003. In
October 2003, True Services Holdings, LLC entered into a
partnership with International Banking Technologies. Prior to
the partnership, Ms. Mangum served as Chief Executive
Officer of True Marketing Services, LLC since July 2002. She
served as Chief Executive Officer of MMS Incentives, Inc. from
1999 to 2002. From 1997 to 1999 she served as President-Global
Payment Systems and Senior Vice President-Expense Management and
Strategic Planning for Carlson Wagonlit Travel, Inc. From 1992
to 1997 she served as Executive Vice President-Strategic
Management for Holiday Inn Worldwide. Ms. Mangum was
previously employed with BellSouth Corporation as
Director-Corporate Planning and Development from 1986 to 1992.
She is a director of Barnes Group Inc., Emageon, Inc.,
Respironics, Inc., Scientific-Atlanta, Inc. and Haverty
Furniture Companies, Inc. Ms. Mangum has served as a
Director of Payless since November 1997.
JOHN F. MCGOVERN is 58 years old and is the founder,
and since 1999 a partner, of Aurora Capital LLC, a private
investment and consulting firm based in Atlanta, GA. Prior to
founding Aurora Capital, Mr. McGovern served in a number of
positions of increasing responsibility at Georgia-Pacific
Corporation from 1981 to 1999, including Executive Vice
President/ Chief Financial Officer from 1994 to 1999.
Previously, Mr. McGovern had been Vice President and
Director, Forest Products and Package Division of Chase
Manhattan Bank. He currently serves as Director of Genetek,
Inc., and Chart Industries, Inc. Mr. McGovern served as a
director and officer of ChannelLinx, Inc., which filed
bankruptcy subsequent to his resignation. Mr. McGovern has
served as a Director of Payless since June 2003.
MICHAEL E. MURPHY is 68 years old and is the former
Vice Chairman and Chief Administrative Officer of Sara Lee
Corporation (“Sara Lee”). He served in such capacity
from 1994 to 1997. In addition, he served as a director of Sara
Lee from 1979 to October 1997. Mr. Murphy joined Sara Lee
in 1979, serving as Executive Vice President and Chief Financial
and Administrative Officer from 1979 to 1993 and as Vice
Chairman and Chief Financial and Administrative Officer from
1993 to 1994. Mr. Murphy is a director of Coach, Inc., CNH
Global N.V., and GATX Corporation. Mr. Murphy is also a
member of the Board of Trustees of Northern Funds (a family of
mutual funds). Mr. Murphy has served as a Director of
Payless since April 1996.
MICHAEL A. WEISS is 63 years old and is the former
President and Chief Executive Officer of Express, a subsidiary
of Limited Brands, Inc. (“Limited”). He served in such
capacity from 1997 to 2004. Mr. Weiss joined Limited in
1981 and served in a number of positions of increasing
responsibility including Vice Chairman from 1993 to 1997 and
President of Express from 1982 to 1993. Previously, he had been
General Manager for Trousers Up, a subsidiary of Apparel
Industries, Inc., and Merchandise Manager for Casual Corner
Group, Inc. Mr. Weiss began his career at
Abraham & Straus, a subsidiary of Federated Department
Stores. Mr. Weiss has served as a Director of Payless since
January 2005.
ROBERT C. WHEELER is 63 years old and has
served as President of Hill’s Pet Nutrition, Inc. since
1981. He assumed the title of Chairman and Chief Executive
Officer in June 1996. From 1987 to 1992, he served as Vice
President of Colgate-Palmolive Company and has been a Corporate
Officer since 1992. Mr. Wheeler currently serves as a
Director of Security Benefit. Mr. Wheeler has served as a
Director of Payless since September 2001.
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Corporate Governance Principles
At its February meeting, the Board of Directors reviewed its
charter and amended its governance guidelines for
the Company
and the Board. The full text of
the Company’s governance
guidelines, and the charters for the Board, Audit and Finance
Committee and the Compensation, Nominating and Governance
Committee are each posted on
the Company’s investor
relations
website at
www.paylessinfo.com.
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Purpose of the Board of Directors |
The business of Payless is managed under the direction of the
Board. The purpose of the Board is to oversee management’s
conduct of the business of Payless.
The Board’s responsibilities (acting as a whole and through
its standing committees) include:
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Reviewing management’s determination of objectives,
strategies, policies and plans for the Company. |
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Electing, monitoring, evaluating, compensating and, if
necessary, replacing the Chief Executive Officer and other
senior executives. |
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Reviewing management’s plans for guarding and preserving of
the Company’s assets including intangibles such as the
Company’s reputation and maintaining a reservoir of
successor management talent. |
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Reviewing and approving plans, plans for major changes in the
senior corporate organizational structure. |
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Reviewing and approving management’s strategic and business
plans and conducting continuing appraisals of management’s
performance against their established plans and objectives. |
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Through the Audit and Finance Committee, recommending outside
auditors for approval by shareowners. |
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Reviewing and approving strategic business plans, major
transactions, changes in corporate financial structure affecting
balance sheet items, financial plans, objectives and actions,
including significant capital allocations and expenditures. |
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Designating and appointing members of committees of the Board,
establishing appropriate limits of authority, and receiving
reports from such committees and reviewing and approving such
committee’s recommendations where necessary. |
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Reviewing management’s recommendations for maintenance and
revision of the Company’s Certificate of Incorporation and
By-laws. |
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Reviewing the Compensation, Nominating and Governance
Committee’s recommendations for perpetuation of a sound
Board through planned and orderly recruitment activities,
regular election and the filing of interim vacancies. |
The Board consists of a substantial majority of independent
directors who the Board has determined meet the New York Stock
Exchange’s (the
“NYSE”) definition of
independence. Mr. Douglass serves as
the Company’s
Chief Executive Officer and is currently the only management
director. He therefore is the only director that does not meet
the NYSE’s definition of independence. In 2002, the Board
created the position of Lead Director, whose primary
responsibility is to be available to consult with the Chief
Executive Officer about concerns of the Board of Directors, to
be available to consult with any of the Senior Executives of the
Company regarding concerns, and to preside over executive
sessions of the Board in which Management Directors and other
members of Management do not participate. Director Fricke has
served in this position during fiscal 2004. The Board elects the
Lead Director at its May meeting.
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The Board maintains two standing committees, the Audit and
Finance Committee and the Compensation, Nominating and
Governance Committee. Each of these committees is composed
entirely of independent directors. Assignments to, and chairs
of, the committees are recommended by the Compensation,
Nominating and Governance Committee and selected by the Board.
All committees regularly report on their activities to the Board.
The Board generally has six regularly scheduled meetings per
year. The committee meetings are normally held in conjunction
with Board meetings. The Board and committee chairs are
responsible for conducting meetings and informal consultations
in a fashion that encourages informed, meaningful and probing
deliberations. Directors generally receive the agenda and
materials in advance of meetings and may ask for additional
information from, or meet with, senior executives at any time.
The Board and its committees (consistent with their respective
charters) may retain their own advisors as they determine
necessary to carry out their responsibilities.
The Compensation, Nominating and Governance Committee
coordinates an annual evaluation process of the Board and each
of the Board’s standing committees’ performance and
procedures. The Board and each committee annually performs a
review of the adequacy of its charter.
In recommending candidates for election to the Board, the
Compensation, Nominating and Governance Committee considers the
following criteria:
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Personal qualities and characteristics, accomplishments and
reputation in the business community; |
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Current knowledge and contacts in the communities in which the
Company does business and in the Company’s industry or
other industries relevant to the Company’s business; |
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Ability and willingness to commit adequate time to Board and
committee matters; |
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The fit of the individual’s skills and personality with
those of other directors and potential directors in building a
Board that is effective, collegial and responsive to the needs
of the Company; |
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Diversity of viewpoints, background, experience and other
demographics; and |
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A commitment to represent the Company’s shareowners as a
whole. |
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Independence of Nominees for Director |
The Board has determined that each of the nominees other than
Mr. Douglass standing for election at the 2005 Annual
Meeting is independent of
the Company. The Board has made this
determination based on the following:
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No nominee for director is or has been an officer or employee of
the Company or its subsidiaries or affiliates since the
Company’s spin-off from May; |
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No nominee for director has an immediate family member who is an
officer of the Company or its subsidiaries or has any current or
past material relationship with the Company; |
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No nominee for director has worked for, consulted with, been
retained by, or received anything of substantial value from the
Company aside from his or her compensation as a director; |
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No nominee for director is, or was within the past five years,
employed by the independent auditors for the Company; |
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No executive officer of the Company serves on the compensation
committee of any corporation that employs a nominee for director
or a member of the immediate family member of any nominee for
director; |
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No nominee for director is an executive officer of any entity
which the Company’s annual sales to or purchases from
exceeded one percent of either entity’s annual
revenues for the last fiscal year; and |
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No nominee for director serves as a director, trustee, executive
officer or similar position of a charitable or non-profit
organization to which the Company or its subsidiaries made
charitable contributions or payments in fiscal year 2004 in
excess of $5,000.00. |
None of the nominees has any material relationship with the
Company either directly, as a partner, shareowner, or affiliate
of an organization that has a relationship with
the Company, or
indirectly.
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Communications with the Board of Directors |
The Board believes that Management speaks for
the Company. The
Board and individual members may, from time to time, meet or
otherwise communicate with various constituencies. However, it
is expected that Board members will speak for
the Company only
with the knowledge of Management and, in most instances, at the
request of Management. Shareowners may contact Non-Management
members of the Board by sending written correspondence to the
director at the following address:
Payless ShoeSource, Inc.
c/o Secretary
3231 Southeast Sixth Avenue
The Secretary will review and forward such correspondence to the
Board members. The Secretary will also direct inquiries most
properly addressed by other departments, such as customer
service or accounts payable, to those departments to ensure that
the inquiries are responded to in a timely manner. Any inquiry
that presents a matter relevant to accounting, audit or internal
controls, or similar issues that is not addressed to a specific
director, will be forward to the Chairman of the Audit and
Finance Committee.
The Board and Committees of the Board
The Board of Directors of
the Company held a total of ten
meetings during fiscal 2004. No Director attended less than 75%
of the aggregate of (i) the total number of board meetings
held during the period for which such Director held such office
and (ii) the total number of meetings held by all Board
committees on which such Director served during the periods that
such Director served on such committee.
The Board of Directors expects all directors to attend the
Company’s Annual Meeting of Shareowners. While the Board of
Directors understands that there may be situations that prevent
a director from attending an Annual Meeting of Shareowners, the
Board strongly encourages all directors to make attendance at
all Annual Meetings of Shareowners’ a priority. All
directors nominated by the Board of Directors for election to
the Board of Directors in 2004, as well as all other directors
that did not stand for re-election, attended
the Company’s
Annual Shareowners’ Meeting held on
May 27, 2004.
Compensation of Directors. Management directors are not
entitled to additional compensation for their service as a
Director, attendance at Board or committee meetings or at
meetings of the shareowners. Under
the Company’s Restricted
Stock Plan for Non-Management Directors, each Director who is
not an officer of Payless receives 1,000 shares of Payless
Common Stock upon joining the Board. For 2004, as of the date of
the Annual Meeting, non-management directors were awarded an
annual fee of $35,000 payable in Payless Common Stock and cash
compensation of $35,000. All such shares of Payless Common Stock
are subject to
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restrictions on transferability and to forfeiture. For 2004, the
restricted stock portion of the annual fee was paid as
2,215 shares of Payless Common Stock per non-management
director, as determined based upon the average of the high and
low trading prices of the shares on the date of the Annual
Meeting,
May 27, 2004. The cash portion of the annual fee
is earned (or vests if deferred) one-fifth on the date of each
regular meeting of the Board following the Annual Meeting. The
Deferred Compensation Plan for Non-Management Directors allows
each Non-Management Director to defer receipt of any fee
received for services as a Director, whether payable as
restricted stock or cash, until after the calendar year in which
the person ceases to serve as a Director.
The Restricted Stock Plan for Non-Management Directors referred
to above provides for the issuance of not more than
900,000 shares of Payless Common Stock, subject to
adjustment for changes in
the Company’s capital structure.
Initial grant shares vest 20% per year over a five-year
period following the date of the grant. The annual retainer
shares vest on May 1 following the date of the grant.
Shares awarded under the plan may not be sold during a
person’s tenure as a Director. The Restricted Stock Plan
for Non-Management Directors may not be amended in a manner that
would increase the number of shares of Payless Common Stock
issuable thereunder, change the class of persons eligible to
participate thereunder or otherwise materially increase benefits
or modify eligibility requirements without shareowner approval.
Audit and Finance Committee. At its February 2005
meeting, the Audit and Finance Committee reviewed its Charter.
Pursuant to its charter, the Audit and Finance Committee is
solely responsible for selecting
the Company’s independent
registered public accountants, reviewing their independence,
approving all engagements, and evaluating their performance. The
Audit and Finance Committee reviews results of the audit for
each fiscal year, all material accounting policies of the
Company, the coordination between the independent registered
public accountants and
the Company’s internal auditing
group, the scope and procedures of
the Company’s internal
audit work, the quality and composition of
the Company’s
internal audit staff, and maintains procedures for the
confidential and anonymous receipt of employee concerns
regarding questionable accounting or auditing matters. The Audit
and Finance Committee is responsible for reviewing and making
recommendations to the Board with respect to matters such as the
following: the financial policies of
the Company; debt ratings;
short-term versus long-term debt positions;
debt-to-capitalization ratios; fixed charge coverage; working
capital and bank lines; dividend policy; the long-range
financial plans of
the Company;
the Company’s capital
expenditure program, including rate of return standards and
evaluation methods; specific debt and/or equity placement
activities; external financial relationships with investment
bankers, commercial bankers, insurance companies, etc.;
financial public relations and communication programs; profit
sharing plan investments; financial aspects of proposed
acquisitions and/or divestitures; and
the Company’s
insurance and risk management program.
At each regularly scheduled meeting, the Audit and Finance
Committee provides the internal and external auditors, the Chief
Financial Officer and the General Counsel with opportunities to
privately meet with the Committee. The Audit and Finance
Committee is also authorized to retain legal, accounting or
other advisors as it determines appropriate at the
Company’s expense. The members of the Audit and Finance
Committee, during the 2004 fiscal year, were Messrs. Murphy
(Chairman), Fricke, McGovern, and Boggan (effective May 2004),
each of whom the Board determined was an independent director as
required by the rules of the NYSE. In addition, because
Mr. Murphy serves on the audit committees of more than
three public companies, pursuant to the listing standards of the
NYSE, and after reviewing meeting attendance records and other
matters it deemed relevant, the Board has determined that such
simultaneous service on such audit committees would not impair
Mr. Murphy’s ability to serve effectively on the
Company’s Finance and Audit Committee. During the 2004
fiscal year, the Audit and Finance Committee met ten times.
Compensation, Nominating and Governance Committee. At its
February 2005 meeting, the Compensation, Nominating and
Governance Committee (the
“CN&G Committee”)
reviewed its charter. The functions of the CN&G Committee
include such matters as considering and recommending to the
Board and
the Company’s management the overall compensation
programs of
the Company, reviewing and approving the
compensation payable to senior management of
the Company and
reviewing and monitoring the executive development efforts of
the Company to assure development of a pool of management and
executive personnel adequate for orderly management succession.
The CN&G Committee reviews significant changes in employee
7
benefit plans and stock related plans; serves as the
“Committee” under
the Company’s stock incentive
plan, stock appreciation and phantom stock plan for
international employees, executive incentive compensation plans,
supplementary retirement plan and a deferred compensation plan.
The CN&G Committee identifies and recommends candidates for
Directors of the Board, Lead Director, members and chairpersons
of committees and the successor to the Chief Executive Officer.
The CN&G Committee considers suggestions as to nominees for
Directors from any source, including any shareowner. The
CN&G Committee also reviews performance of the Board of
Directors, reviews the mandatory retirement policy for
Directors, reviews conflicts of interest and develops and
recommends a set of corporate governance principles. To be
considered for the 2005 Annual Meeting, Director recommendations
must be in writing, submitted to the Corporate Secretary of
Payless at 3231 Southeast Sixth Avenue, Topeka, Kansas,
66607, at least 75 and not more than 90 days prior to the
2005 Annual Meeting, and otherwise comply with the terms of the
Company’s
Bylaws.
The CN&G Committee has authority to seek external
professional advice. The Committee may from time to time and is
solely responsible for retaining and determining the
compensation of any consulting firm used to identify director
candidates or assist in evaluation of CEO, director or executive
compensation. The members of the CN&G Committee during the
last fiscal year were Ms. Mangum (Chairman) and
Ms. Hofer (effective
July 23, 2004), and
Messrs. Boggan (February 2004 to May 2004), George
(effective
May 27, 2004), Wheeler, and Weiss (effective
January 27, 2005) each of whom was a
“non-employee
director” within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934 (the
“Exchange Act”),
an
“outside director” within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the
“Code”), and met the independence
requirements of the NYSE. During the 2004 fiscal year, the
CN&G Committee met 12 times.
Other Committees. In connection with the refinancing of
the term portion of
the Company’s credit facility in, and
in connection with the refinancing of
the Company’s
revolving credit facility,
the Company established a special
pricing committee composed of Messrs. Fricke, Murphy and
Wheeler. The Board may, from time to time, establish certain
other committees to act on behalf of the Board of Directors.
Report of the Audit and Finance Committee
The following Report of the Audit and Finance Committee does not
constitute soliciting material and should not be deemed filed or
incorporated by reference into any other Company filing under
the Securities Act of 1933 or the Exchange Act, except to the
extent
the Company specifically incorporates this Report by
reference therein.
In February 2005, the Audit and Finance Committee of the Board
of Directors reviewed its charter. The complete text of the
charter is available on
the Company’s Investor Relations
website at
www.paylessinfo.com.
Management has the primary responsibility for the financial
statements and the reporting process, including the systems of
internal control and
the Company’s independent accountants
have the responsibility for the examination of the
Company’s financial statements. On behalf of the Board of
Directors, the Audit and Finance Committee monitors the
Company’s financial reporting processes and systems of
internal control, the independence and performance of the
independent accountants, and the performance of the internal and
external auditors.
The Committee met ten times during fiscal 2004. The Committee
schedules its meetings with a view to ensuring that it devotes
appropriate attention to all of its tasks. The Committee
regularly meets with
the Company’s internal and external
auditors, Chief Financial Officer and General Counsel each
without the presence of Management.
As part of its oversight of
the Company’s financial
statements, the Committee reviews and discusses with both
Management and
the Company’s independent auditors all
annual and quarterly financial statements prior to their
issuance. During fiscal 2004, the Committee reviewed significant
accounting and disclosure issues with Management and
Deloitte & Touche LLP (
“D&T”). These
reviews included discussion with D&T of matters required to
be discussed pursuant to Statement on Auditing Standards
No. 61 (Communication with Audit Committees), including the
quality of
the Company’s accounting principles, the
reasonableness of significant
8
judgments and the clarity of disclosures in the financial
statements. The Committee also discussed with D&T matters
relating to its independence, including a review of audit and
non-audit fees and received a letter from D&T to the
Committee pursuant to Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees).
In addition, the Committee reviewed initiatives and programs
aimed at strengthening the effectiveness of
the Company’s
internal and disclosure control structure. As part of this
process, the Committee continued to monitor the scope and
adequacy of
the Company’s internal auditing program.
Taking all of these reviews and discussions into account, the
Committee members recommended to the Board that the Board
approve the inclusion of
the Company’s audited financial
statements in
the Company’s Annual Report on Form 10-K
for the fiscal year ended
January 29, 2005, for filing with
the Securities and Exchange Commission.
The Committee believes its membership complies with the
requirements of the New York Stock Exchange with respect to
independence, financial literacy and financial management
expertise, but its members are not professionally engaged in the
practice of accounting and are not experts in the fields of
accounting or auditing.
The Committee also recommended the reappointment, subject to
shareowner approval, of Deloitte & Touche LLP as the
Company’s independent registered public accountants for
fiscal 2005.
Audit
and Finance Committee:
Michael E. Murphy — Chairman
Howard R. Fricke
John F. McGovern
Report of the Compensation, Nominating and Governance
Committee
The following Report of the Compensation, Nominating and
Governance Committee does not constitute soliciting material and
should not be deemed filed or
incorporated by reference into any
other Company filing under the Securities Act of 1933 or the
Exchange Act, except to the extent
the Company specifically
incorporates this Report by reference therein.
The Compensation, Nominating and Governance Committee (the
“CN&G Committee”) reviews and approves, among
other things, the compensation payable to each of the executive
officers named in the Summary Compensation Table on page 14.
Compensation Philosophy. The Company’s basic
compensation philosophy is that the compensation program should:
1) attract, retain and motivate highly qualified
executives; 2) be competitive; 3) align the
executive’s compensation with
the Company’s
objectives; and 4) be related to the value created for
shareowners. Compensation for executive officers is comprised of
a base salary, annual cash incentive opportunity and long-term
cash and/or equity incentive opportunities. The CN&G
Committee regularly reviews compensation based on the
Company’s compensation philosophy, the performance of
Payless and competitive practices. As part of its review of
competitive pay levels, the CN&G Committee looks at the base
salary levels and annual and long-term incentive levels of a
broad group of companies, including some of the companies in the
peer group represented in the Stock Price Performance graph on
page 13 (the
“Peer Group”), and other retail
companies of similar size to Payless (the
“Survey
Companies”).
Base Salary. Base salaries are targeted at approximately
the 50th percentile of base salaries for comparable executive
officer positions at the Survey Companies. The CN&G
Committee annually reviews and may adjust base salaries based on
the CN&G Committee’s discretionary assessment of each
individual executive’s performance and competitive pay
levels. Base salaries for all executive officers with the
Company in their current position for more than one year
increased an average of 4.9% percent during fiscal 2004.
9
Cash Incentive Opportunities. The Payless ShoeSource,
Inc. Incentive Compensation Plan (the “ICP”) provides
an opportunity for all executive officers to earn incentives
based on both annual and long-term results. The annual and
long-term incentive opportunities are targeted between the 50th
and 75th percentile of opportunities for comparable positions at
the Survey Companies. Executive officers are eligible to receive
annual cash awards for each fiscal year and long-term cash
awards for long-term performance periods, typically of three
years.
The following paragraphs outline a summary of the incentive
plans; the eligible participants; the compensation comparison
group of companies; and the results from each of the plans.
Compensation Comparison Group. For the ICP, the
comparison group of companies consists of the following
14 companies (the “CCG”): The Gap, Inc., Limited
Brands, Inc., Ross Stores, Inc., The TJX Companies, Inc., Brown
Shoe Company, Inc., Footstar, Inc., Genesco, Inc., Shoe
Carnival, Inc., The Finish Line, Inc., Foot Locker, Inc., Target
Corporation, Dollar General Corporation, Family Dollar Stores,
Inc., and Wal-Mart Stores, Inc.
Summary of the Incentive Plans. The ICP provides for
annual and long-term awards based on actual results as compared
to pre-established financial performance measures. Awards under
the ICP will be paid in cash. For fiscal year 2004, the annual
component of the ICP award was based on
the Company’s
performance with respect to earnings before interest and taxes
(
“EBIT”). The long-term component of the ICP uses
long-term performance periods, which operate concurrently (that
is, a new performance period commences each year). Generally,
each long-term performance period consists of three consecutive
fiscal years. The long-term ICP award for 2004 was based upon a
combination of
the Company’s performance with respect to
return on net assets (
“RONA”) and EBIT over the
long-term performance period. In addition, the long-term award
is subject to adjustment based upon
the Company’s total
shareowner return as compared to the CCG over the performance
period.
The CN&G Committee reserves the right to adjust upward or
downward any award as determined under the ICP; except that with
respect to an employee deemed a “covered employee”
under Section 162(m) and the ICP, no adjustments can be
made to increase an award to that covered employee.
Participants. The CN&G Committee in its sole
discretion designates eligible employees as participants for a
particular annual and/or long-term performance period under the
ICP. For fiscal 2004, all executive officers were eligible to
receive annual awards under the ICP. For the long-term period,
fiscal 2004-2006, thirteen associates, including all executive
officers, will be eligible to receive long-term awards under
the ICP.
For fiscal 2004 the target long-term incentive opportunity for
the CEO was 45% of eligible base salary, the target long-term
incentive opportunity for the President was 35% of eligible base
salary, and the target long-term incentive opportunity for other
executive officers participating in the long-term portion of the
ICP was 25% of eligible base salary.
Annual Incentive Compensation Plan Calculations. Awards
for the annual component of the ICP for fiscal 2004 were
calculated entirely based on actual performance as compared to
the performance measure established at the beginning of the
fiscal year under the ICP. The performance measure for the
fiscal 2004 was EBIT. The annual target opportunity for fiscal
2004 was 75% of eligible base salary for the CEO, 50% of
eligible base salary for the President and 45% of eligible base
salary for the other executive officers named in the Summary
Compensation Table. For fiscal 2004 the threshold opportunity
level was 25% of the target opportunity. The maximum award any
individual can receive for the annual component of the ICP is
$1,850,000. For the 2004 annual performance period, the
Company’s performance was at the target performance level
for EBIT. As a result, all eligible executive officers received
an annual incentive award based on Company performance for
fiscal 2004.
Long-Term Incentive Calculations. The performance
measures for the long-term portion of the ICP are RONA and EBIT.
For the ICP, once threshold RONA is met, the long-term incentive
is determined by multiplying EBIT by the appropriate percentage
outlined in the Long-Term Incentive Plan Awards table. Awards
between each RONA performance level are interpolated based on
actual results. Awards under the
10
ICP are also subject to automatic upward or downward adjustment
based on
the Company’s total shareholder return percentile
rank as compared to the CCG.
With respect to the ICP for the three-year long-term performance
period, fiscal years 2002 through 2004,
the Company’s
performance was below the threshold performance level for RONA.
As a result, no incentive was awarded based on Company
performance. For the three-year long-term performance period,
the Company’s total shareholder return percentile rank
would have resulted in a 50% decrease in long-term cash
incentives, if any were being paid.
Incentive Payouts. The above performance resulted in the
following annual and long-term incentive awards before any
adjustments by the CN&G Committee:
| |
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|
|
|
|
|
|
| |
|
Annual Incentive Award | |
|
Long-Term Incentive Award | |
| |
|
(Percentage of Base Salary) | |
|
(Percentage of Base Salary) | |
| |
|
| |
|
| |
|
CEO
|
|
|
75.0 |
% |
|
|
0.0 |
% |
|
President(1)
|
|
|
33.6 |
% |
|
|
0.0 |
% |
|
Each other Executive Officer
|
|
|
45.0 |
% |
|
|
0.0 |
% |
|
|
| (1) |
The annual incentive award for Mr. Cantrell was prorated
based on the number of days he was employed during the
performance period. |
Annual Lump Sum Merit Awards. Each executive officer is
eligible for a bonus of up to five percent of his or her base
salary based upon achieving clearly exceeds ratings on both
individual results and
the Company’s guiding values during
the annual performance appraisal process. For performance in
2004, Mr. Pavelka received such ratings and was awarded a
lump sum payment of $18,000, which is reflected in the Summary
Compensation Table under Annual Bonus.
Long-Term Stock Incentives. Payless may provide long-term
incentives with stock options, restricted stock, stock
appreciation rights, phantom stock and/or performance units,
which are designed to attract, retain and motivate management
employees and relate their compensation directly to the
performance of
the Company’s Common Stock. The CN&G
Committee, in its sole discretion, determines the mix of such
awards. The CN&G Committee has adopted a program for
long-term stock incentives with the goals of retaining and
motivating executives, providing rewards commensurate with the
growth in the value of Payless and aligning management interests
more closely with those of Payless’ shareowners.
In fiscal 2004,
the Company reviewed its long-term stock
incentive plan. As a result of this review, the CN&G
Committee authorized a grant to management employees in May
2004, including executive officers, except the CEO, intended to
serve as the long-term stock incentives for fiscal 2004. The
authorized grant was awarded in stock options and restricted
stock shares to domestic management employees in proportions as
set forth by the CN&G Committee, in its sole discretion.
These grants, as authorized by the CN&G Committee in 2004,
will vest in equal installments over the next three years on the
anniversary date of the grant. The exercise price for stock
option grants is the average of
the Company’s high and low
stock price on the date of grant. The CN&G Committee plans
to review data on long-term stock incentive awards from the
competitive marketplace on a periodic basis and authorize
awards, if appropriate, within its sole discretion.
CEO Pay. Based on
the Company’s performance in
fiscal 2003, the base salary for the CEO was not increased in
fiscal 2004. The base salary remained at $905,000, the same
level set by the CN&G Committee effective
April 27,
2003.
The CEO’s incentive award (both annual and long-term) of
$678,750 for fiscal 2004 was determined entirely by the
quantitative criteria set forth above.
Executive Stock Ownership. The Company believes that it
is important for every executive of Payless to establish and
maintain an equity ownership interest in
the Company. In 2004,
the CN&G Committee completed its review of stock ownership
guidelines in light of changes in market conditions since 2000,
11
proposed changes in rules regarding equity based compensation,
and changes in relative competitiveness in compensation packages
and implemented the following ownership guidelines:
| |
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|
| |
|
Value of Payless ShoeSource | |
| |
|
Shares Owned as a | |
| Position |
|
Multiple of Base Salary | |
| |
|
| |
|
CEO
|
|
|
5.0 Times |
|
|
President
|
|
|
3.5 Times |
|
|
Executive Vice President
|
|
|
2.0 Times |
|
|
Senior Vice President
|
|
|
1.5 Times |
|
|
Vice President
|
|
|
1.0 Times |
|
Executives are expected to attain the guideline multiple within
seven years of appointment to one of the above positions. The
stock ownership guidelines may be satisfied through the direct
ownership of shares of Payless Common Stock, shares owned in the
Payless ShoeSource, Inc. Stock Ownership Plan, share equivalents
under the Profit Sharing Plan, stock units under the Payless
ShoeSource, Inc. Deferred Compensation 401(k) Mirror Plan, all
unvested performance units granted by Board of Directors’
resolution (reduced by 40% to represent the executive’s tax
liability) and unvested restricted shares provided under the
Payless ShoeSource, Inc. 1996 Stock Incentive Plan (reduced by
40% to represent the executive’s tax liability).
Outstanding stock options and stock appreciation rights
(“SARs”) are not counted toward ownership
requirements. Base Salary means the executive’s base salary
at the time the guideline is established for such executive.
Ownership levels and stock transactions for executive officers
will be reviewed twice a year by the Board of Directors.
Deductibility of Compensation. Section 162(m) of the
Internal Revenue Code generally disallows a tax deduction to
public corporations for compensation over $1,000,000 paid for
any fiscal year to the corporation’s chief executive
officer and four other most highly compensated executive
officers as of the end of any fiscal year. However, the statute
exempts qualifying performance-based compensation from the
deduction limit if certain requirements are met. The CN&G
Committee currently intends to structure performance-based
compensation, including equity grants, stock appreciation
rights, performance units and annual and long-term incentives,
to executive officers who may be subject to Section 162(m)
in a manner that satisfies those requirements. The CN&G
Committee, however, may award non-deductible compensation in
circumstances as it deems appropriate. Further, because of
ambiguities and uncertainties as to the application and
interpretation of Section 162(m) and the regulations issued
thereunder, and other uncertainties including but not limited to
the Company’s stock price, no assurance can be given,
notwithstanding
the Company’s stated intentions, that
compensation intended by
the Company to satisfy the requirements
for deductibility under Section 162(m) will do so.
|
|
| |
Compensation, Nominating and Governance Committee:
Mylle H. Mangum — Chairman |
Daniel Boggan Jr.*
Michael A. George**
Judith K. Hofer***
Michael A. Weiss****
Robert C. Wheeler
|
|
|
| |
* |
Served on the CN&G Committee from February to May 2004 |
12
Stock Price Performance
The graph below compares the cumulative total shareowner return
on Payless Common Stock against the cumulative returns of the
Standard and Poor’s Corporation Composite Index (the
“S&P 500 Index”), and the Peer Group, some of
which are competitors and many of which were used in determining
bonuses under
the Company’s performance based incentive
plans.
Comparison of Five Fiscal Year Cumulative Returns of the
Company,
the S&P 500 Index and Peer Group
Investment Value at End of Fiscal Year
| |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
1999 | |
|
2000 | |
|
2001 | |
|
2002 | |
|
2003 | |
|
2004 | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Payless
|
|
$ |
100.00 |
|
|
$ |
169.13 |
|
|
$ |
142.30 |
|
|
$ |
116.17 |
|
|
$ |
97.89 |
|
|
$ |
83.76 |
|
|
S&P 500
|
|
|
100.00 |
|
|
|
99.11 |
|
|
|
83.10 |
|
|
|
63.97 |
|
|
|
86.09 |
|
|
|
91.44 |
|
|
Peer Group
|
|
|
100.00 |
|
|
|
98.02 |
|
|
|
75.16 |
|
|
|
67.94 |
|
|
|
93.84 |
|
|
|
108.08 |
|
The graph assumes $100 was invested on
January 29, 2000,
(the end of fiscal 1999) in Payless Common Stock, in the S&P
500 Index, and the Peer Group and assumes the reinvestment of
dividends.
Companies comprising the Peer Group are: The Gap, Inc., Limited
Brands, Inc., Ross Stores, Inc., The TJX Companies, Inc., Brown
Shoe Company, Inc., Footstar, Inc., Genesco Inc., Shoe Carnival,
Inc., The Finish Line, Inc., Foot Locker, Inc., The Stride Rite
Corporation.
13
Executive Compensation
The table below shows the compensation paid or accrued by the
Company on behalf of the CEO and
the Company’s five other
most highly compensated executive officers (determined as of the
end of the last fiscal year) for the last three fiscal years
ended
January 29, 2005 (
“2004”),
January 31,
2004 (
“2003”), and
February 1, 2003
(
“2002”), respectively or such shorter time as may be
required.
SUMMARY COMPENSATION TABLE
| |
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|
| |
|
|
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|
|
|
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|
|
Awards | |
| |
|
|
|
|
|
| |
| |
|
|
|
Annual Compensation | |
|
|
|
Payouts | |
|
|
| |
|
|
|
| |
|
|
|
Securities | |
|
| |
|
|
| |
|
|
|
|
|
Other | |
|
Restricted | |
|
Underlying | |
|
Long-Term | |
|
|
| Name and |
|
Fiscal | |
|
|
|
Annual | |
|
Annual | |
|
Stock | |
|
Stock | |
|
Incentive | |
|
All Other | |
| Principal Position |
|
Year | |
|
Salary(1) | |
|
Bonus(2) | |
|
Compensation(3) | |
|
Awards(4) | |
|
Options | |
|
Payouts(5) | |
|
Compensation(6) | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Steven J. Douglass
|
|
|
2004 |
|
|
$ |
905,000 |
|
|
$ |
678,750 |
|
|
$ |
64,596 |
|
|
$ |
0 |
|
|
|
0 |
|
|
$ |
0 |
|
|
$ |
1,501 |
|
| |
Chairman of the Board |
|
|
2003 |
|
|
|
894,615 |
|
|
|
0 |
|
|
|
155,523 |
|
|
|
1,821,400 |
|
|
|
420,000 |
|
|
|
0 |
|
|
|
0 |
|
| |
and Chief Executive Officer |
|
|
2002 |
|
|
|
860,000 |
|
|
|
0 |
|
|
|
46,354 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
4,163 |
|
|
Darrel J. Pavelka
|
|
|
2004 |
|
|
|
345,038 |
|
|
|
171,945 |
|
|
|
— |
|
|
|
24,285 |
|
|
|
9,900 |
|
|
|
0 |
|
|
|
1,530 |
|
| |
Senior Vice President |
|
|
2003 |
|
|
|
322,115 |
|
|
|
0 |
|
|
|
— |
|
|
|
21,608 |
|
|
|
6,500 |
|
|
|
0 |
|
|
|
0 |
|
| |
Merchandise Distribution, Planning and Supply Chain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ullrich E. Porzig
|
|
|
2004 |
|
|
|
342,977 |
|
|
|
155,565 |
|
|
|
— |
|
|
|
24,285 |
|
|
|
9,900 |
|
|
|
0 |
|
|
|
1,539 |
|
| |
Senior Vice President |
|
|
2003 |
|
|
|
331,154 |
|
|
|
0 |
|
|
|
— |
|
|
|
21,608 |
|
|
|
6,500 |
|
|
|
0 |
|
|
|
0 |
|
| |
Chief Financial Officer |
|
|
2002 |
|
|
|
322,000 |
|
|
|
0 |
|
|
|
— |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
4,163 |
|
| |
and Treasurer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jay A. Lentz
|
|
|
2004 |
|
|
|
334,977 |
|
|
|
152,505 |
|
|
|
— |
|
|
|
24,285 |
|
|
|
9,900 |
|
|
|
0 |
|
|
|
1,486 |
|
| |
Senior Vice President |
|
|
2003 |
|
|
|
316,846 |
|
|
|
0 |
|
|
|
— |
|
|
|
21,608 |
|
|
|
6,500 |
|
|
|
0 |
|
|
|
0 |
|
| |
Human Resources |
|
|
2002 |
|
|
|
257,692 |
|
|
|
15,000 |
|
|
|
— |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
24,996 |
|
|
Michael J. Massey
|
|
|
2004 |
|
|
|
263,115 |
|
|
|
116,730 |
|
|
|
— |
|
|
|
24,285 |
|
|
|
9,900 |
|
|
|
0 |
|
|
|
1,614 |
|
| |
Senior Vice President |
|
|
2003 |
|
|
|
244,231 |
|
|
|
0 |
|
|
|
— |
|
|
|
21,608 |
|
|
|
6,500 |
|
|
|
0 |
|
|
|
71,346 |
|
| |
General Counsel and Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Duane L. Cantrell(7)
|
|
|
2004 |
|
|
|
437,500 |
|
|
|
218,150 |
|
|
|
— |
|
|
|
60,713 |
|
|
|
25,000 |
|
|
|
0 |
|
|
|
1,713,992 |
|
| |
|
|
|
2003 |
|
|
|
644,231 |
|
|
|
0 |
|
|
|
— |
|
|
|
54,019 |
|
|
|
17,500 |
|
|
|
0 |
|
|
|
00 |
|
| |
|
|
|
2002 |
|
|
|
544,231 |
|
|
|
0 |
|
|
|
— |
|
|
|
0 |
|
|
|
48,000 |
|
|
|
0 |
|
|
|
4,163 |
|
|
|
| (1) |
“Salary” reflects amounts paid to or deferred by the
named executive officers during each fiscal year. Annual salary
changes for each of the named executive officers normally occur
on or about May 1 of each year. |
| |
| (2) |
“Annual Bonus” reflects the annual portion of the
bonus paid under the Company’s Incentive Compensation Plan,
lump sum award as determined by the Performance Management
System and any signing bonus pursuant to any executive
officer’s employment agreement. It also includes amounts
deferred by the particular officer. |
| |
| (3) |
“Other Annual Compensation” includes forms of
compensation required to be reported under applicable SEC rules.
Amounts for any specific personal benefit representing at least
25% of the personal benefits provided for a given year are as
follows: Mr. Douglass; personal use of airplane $28,863 in
2004, $34,823 in 2003 and $13,363 in 2002; automobile allowance
of $13,991 in 2002 and $92,225 for reimbursement of professional
fees in 2003. |
| |
| (4) |
The dollar value of restricted stock/performance unit awards is
equal to the average of the high and low prices of Payless
Common Stock on the date of the grant, multiplied by the total
number of shares/units granted to the named executive officer.
The aggregate number of shares/units of restricted stock on
which the restrictions and performance units have not lapsed and
the value of such restricted stock and performance units owned
by each of the named executive officers as of the end of fiscal
2004 (at $11.48, the average of the high and low price) was
$1,205,400 for Mr. Douglass, representing 105,000
performance units; $28,700 for Mr. Lentz, representing
2,500 shares; $28,700 for Mr. Porzig representing
2,500 shares; $28,700 for Mr. Pavelka representing
2,500 shares; and $28,700 for Mr Massey, representing
2,500 shares. Mr. Cantrell’s employment ended and
all restricted stock was forfeited effective October 2,
2004. |
| |
| (5) |
“Long-term Incentive Payouts” represents the long-term
portion of the bonus paid. It includes long-term incentive
payout deferred by the particular officers. For all named
executive officers the long-term performance period is fiscal
2002-2004. |
| |
| (6) |
“All Other Compensation” represents the Company’s
contribution to the named executive officer’s account in
the Company’s profit sharing plan. In addition, “All
Other Compensation” includes continued base salary and
certain other benefits to be paid pursuant to the terms of Duane
L. Cantrell’s employment contract, which expires on
May 31, 2007, and $1,492 which was contributed to his
account in the profit sharing plan. In addition, “All Other
Compensation” includes payments to relocate Mr. Massey
in 2003 ($71,346) and Mr. Lentz in 2002 ($20,833). |
| |
| (7) |
Mr. Cantrell’s employment ended on October 2,
2004. |
14
Stock Option Awards. The following table provides certain
information concerning individual grants of stock options made
to the named executive officers during the last fiscal year.
STOCK OPTION GRANTS IN FISCAL 2004
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Number of | |
|
Percent of | |
|
|
|
|
|
|
| |
|
Securities | |
|
Total Options | |
|
|
|
|
|
|
| |
|
Underlying | |
|
Granted to | |
|
|
|
|
|
|
| |
|
Options | |
|
Employees in | |
|
Exercise Price | |
|
Expiration | |
|
Grant Date | |
| Name |
|
Granted(1) | |
|
Fiscal Year | |
|
per Share | |
|
Date | |
|
Fair Value(2) | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Steven J. Douglass
|
|
|
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
Darrel J. Pavelka
|
|
|
9,900 |
|
|
|
1.9 |
% |
|
|
16.19 |
|
|
|
5/28/14 |
|
|
|
77,374 |
|
|
Ullrich E. Porzig
|
|
|
9,900 |
|
|
|
1.9 |
% |
|
|
16.19 |
|
|
|
5/28/14 |
|
|
|
77,374 |
|
|
Jay A. Lentz
|
|
|
9,900 |
|
|
|
1.9 |
% |
|
|
16.19 |
|
|
|
5/28/14 |
|
|
|
77,374 |
|
|
Michael J. Massey
|
|
|
9,900 |
|
|
|
1.9 |
% |
|
|
16.19 |
|
|
|
5/28/14 |
|
|
|
77,374 |
|
|
Duane L. Cantrell(3)
|
|
|
25,000 |
|
|
|
4.8 |
% |
|
|
16.19 |
|
|
|
5/28/14 |
|
|
|
195,390 |
|
|
|
| (1) |
Options granted under the 1996 Stock Incentive Plan, have a term
of 10 years and will vest in equal installments on each of
the first three anniversaries of the grant. The option exercise
price equals the average of the high and low trading prices of
the Company’s stock on the grant date. |
| |
| (2) |
The grant date fair value was determined using the Black-Scholes
option pricing model. The estimated values under the model are
based on assumptions as to variables such as option term,
risk-free interest rates, stock price volatility and dividend
yield. The actual value, if any, the option holder may realize
will depend on the excess of the actual market price of the
stock over the exercise price on the date the option is
exercised. The model assumes: (a) an option term of
10 years, which represents the length of time between the
grant date of options and the latest possible exercise date by
the named executive officers; (b) a risk-free interest rate
that represents the interest rate on a U.S. Treasury Bond
with a maturity date corresponding to that of the option’s
term; (c) stock price volatility calculated based on the
historic volatility of the Company’s stock price since
April 1996; and (d) dividends at the rate of $0 per
share, the annual dividend rate with respect to a share of the
stock on the grant date. |
| |
| (3) |
Mr. Cantrell’s employment ended and all options
granted in 2004 were forfeited effective October 2, 2004. |
The following table presents information with respect to options
exercised in fiscal year 2004 and unexercised and exercised
options held by the named executive officers on
January 29,
2005:
AGGREGATED STOCK OPTION EXERCISES IN FISCAL 2004
AND FISCAL YEAR-END OPTION VALUES
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Number of Shares of Payless | |
|
|
| |
|
|
|
|
|
Common Stock Underlying | |
|
Value of Unexercised | |
| |
|
|
|
|
|
Unexercised Options at | |
|
In-The-Money Options at | |
| |
|
Shares | |
|
|
|
Fiscal-Year End | |
|
Fiscal-Year End(1) | |
| |
|
Acquired on | |
|
Value | |
|
| |
|
| |
| Name |
|
Exercise | |
|
Realized | |
|
Unexercisable | |
|
Exercisable | |
|
Unexercisable |
|
Exercisable | |
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
| |
|
Steven J. Douglass
|
|
|
— |
|
|
$ |
— |
|
|
|
525,000 |
|
|
|
1,056,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
Darrel J. Pavelka
|
|
|
— |
|
|
|
— |
|
|
|
14,233 |
|
|
|
96,106 |
|
|
|
— |
|
|
|
15,479 |
|
|
Ullrich E. Porzig
|
|
|
— |
|
|
|
— |
|
|
|
14,233 |
|
|
|
154,417 |
|
|
|
— |
|
|
|
50,040 |
|
|
Jay A. Lentz
|
|
|
— |
|
|
|
— |
|
|
|
25,483 |
|
|
|
87,817 |
|
|
|
— |
|
|
|
— |
|
|
Michael J. Massey
|
|
|
— |
|
|
|
— |
|
|
|
14,233 |
|
|
|
37,016 |
|
|
|
— |
|
|
|
— |
|
|
Duane L. Cantrell(2)
|
|
|
44,814 |
|
|
|
41,502 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
| (1) |
“In-The-Money Options” are options outstanding at the
end of fiscal 2004 for which the fair market value of Payless
Common Stock at the end of fiscal 2004 ($11.48 per share)
exceeded the exercise price of the options. Value is determined
based on the difference between fair market value at the end of
fiscal 2004 and the option exercise price. |
| |
| (2) |
Mr. Cantrell’s employment ended and all unexercised
options were forfeited effective October 2, 2004. |
15
Long-Term Awards. During fiscal 2004, each of the named
executive officers became eligible to receive a potential
long-term cash award for the three fiscal year period 2004-2006.
The following table shows the maximum long-term cash awards
payable to each of them for these long-term periods.
LONG-TERM INCENTIVE PLAN AWARDS IN FISCAL 2004
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Estimated Target | |
|
Estimated Maximum | |
| |
|
Performance or | |
|
Estimated Threshold Future | |
|
Future Payouts | |
|
Future Payouts | |
| |
|
Other Period | |
|
Payouts Under Non-Stock | |
|
Under Non-Stock | |
|
Under Non-Stock | |
| Name |
|
Until Maturation of Payout | |
|
Price Based Plan(1,2) | |
|
Price Based Plan(1,3) | |
|
Price Based Plan(1,4) | |
| |
|
| |
|
| |
|
| |
|
| |
|
Steven J. Douglass
|
|
Three Fiscal Year Period (2004-2006) Ending 1/27/07 |
|
0.0994% of 3 yr. Cumulative EBIT |
|
0.1416% of 3 yr. Cumulative EBIT |
|
0.241% of 3 yr. Cumulative EBIT |
|
Darrel J. Pavelka
|
|
Three Fiscal Year Period (2004-2006) Ending 1/27/07 |
|
0.0209% of 3 yr. Cumulative EBIT |
|
0.0297% of 3 yr. Cumulative EBIT |
|
0.0506% of 3 yr. Cumulative EBIT |
|
Ullrich E. Porzig
|
|
Three Fiscal Year Period (2004-2006) Ending 1/27/07 |
|
0.0211% of 3 yr. Cumulative EBIT |
|
0.0301% of 3 yr. Cumulative EBIT |
|
0.0512% of 3 yr. Cumulative EBIT |
|
Jay A. Lentz
|
|
Three Fiscal Year Period (2004-2006) Ending 1/27/07 |
|
0.0207% of 3 yr. Cumulative EBIT |
|
0.0295% of 3 yr. Cumulative EBIT |
|
0.0502% of 3 yr. Cumulative EBIT |
|
Michael J. Massey
|
|
Three Fiscal Year Period (2004-2006) Ending 1/27/07 |
|
0.0158% of 3 yr. Cumulative EBIT |
|
0.0226% of 3 yr. Cumulative EBIT |
|
0.0384% of 3 yr. Cumulative EBIT |
|
Duane L. Cantrell(5)
|
|
Three Fiscal Year Period (2004-2006) Ending 1/27/07 |
|
0.0555% of 3 yr. Cumulative EBIT |
|
0.0791% of 3 yr. Cumulative EBIT |
|
0.1346% of 3 yr. Cumulative EBIT |
|
|
| (1) |
The estimates above assume that the individuals remain eligible
to participate throughout the long-term performance period.
Actual payments may range from $0 to a maximum award value of
$1,500,000. |
| |
| (2) |
Individual percentages of the 3 yr. Cumulative EBIT are based on
annual base salaries as of May 1, 2004, achievement of
threshold 3 year Average RONA performance goals, and
Company stock performance compared to the compensation
comparison group such that no downward adjustment is required
for any award. |
| |
| (3) |
Individual percentages of the 3 yr. Cumulative EBIT are based on
annual base salaries as of May 1, 2004, achievement of
target 3 year Average RONA performance goals, and Company
stock performance compared to the compensation comparison group
such that no downward adjustment is required for any award. |
| |
| (4) |
Individual percentages of the 3 yr. Cumulative EBIT are based on
annual base salaries as of May 1, 2004, achievement of
maximum 3 year Average RONA performance goals, and the
Company’s stock price has appreciated significantly
relative to the compensation comparison group to result in a
maximum incentive adjustment. |
| |
| (5) |
The Long-Term Incentive award payment for Mr. Cantrell will
be prorated by 8/36. |
Profit Sharing Plans and Supplementary Retirement Plan.
The Company’s executive officers may participate in the
Payless ShoeSource, Inc. 401(k) Profit Sharing Plan. Company
contributions to this plan are related to
the Company’s
performance each year. Subject to
the Company’s discretion
each year,
the Company expects to contribute annually 2.5% of
its pretax net profits to this plan and the plan for Puerto Rico
associates. At the discretion of the Board of Directors, the
2004 contributions was determined to be 2.5% of pre-tax earnings
from continuing operations. Eligible employees are able to
contribute voluntarily to the profit sharing plans on both a
before-tax and after-tax basis under Section 40l
(k) of the Code. Eligible employees are also able to direct
that
the Company’s contribution to their accounts and/or
their voluntary contributions be invested in a Payless Common
Stock fund or in one of several other investment funds.
The Company does not have a broad-based, defined benefit
retirement plan.
The Company does, however, have a supplementary
retirement plan (the
“Supplementary Plan”) covering a
select group of management and highly compensated employees who
have had compensation in a calendar year equal to at least twice
the amount of
“wages” then subject to the payment of
old age, survivor and disability insurance Social Security
taxes. Under the Supplementary Plan, covered employees become
entitled to a single life annuity retirement benefit equal to
(i) 2% of the average of the highest three out of the last
five fiscal years of total annual salary and cash incentives
(reported as salary and annual and long-term bonus in the
Summary Compensation Table) multiplied by their years of
service, up to a maximum of 25 years, reduced by
(ii) primary Social Security benefits, benefits provided
under
the Company’s profit sharing plan and, benefits
16
under retirement plans operated by May which may be payable to
the employee and, if appropriate, by amounts to reflect early
retirement. Benefits are payable upon retirement after reaching
age 55 and completing at least 5 years of service. The
minimum benefit under the Supplementary Plan is the amount of
benefits provided by
the Company which would have been payable
under
the Company’s profit sharing plan and employer
provided benefits under the May Profit Sharing Plan and May
Retirement Plan, determined without regard to any statutory
limits, less the amount of benefits actually payable under those
plans.
The Supplementary Plan provides that, in the event of a
“Change in Control of the Company,” vesting would be
accelerated in limited circumstances and benefits would not be
forfeitable. The following table shows the estimated aggregate
annual benefits payable upon retirement (assuming a retirement
in 2005 at age 65) for persons in specified compensation
and years of service classifications covered by the
Company’s profit sharing plan and, if eligible, the
Supplementary Plan. The individuals named in the Summary
Compensation Table had, as of
December 31, 2004, the
following years of service, respectively: Mr. Douglass,
29 years; Mr. Lentz, 16 years; Mr. Porzig,
20 years; Mr. Massey, 14 years; and
Mr. Pavelka, 24 years. Mr. Cantrell is ineligible
for benefits under the plan.
| |
|
|
|
|
|
|
|
|
| |
|
Years of Service | |
| |
|
| |
| Average Annual Earnings |
|
20 | |
|
25 or more | |
| |
|
| |
|
| |
|
$ 500,000
|
|
$ |
200,000 |
|
|
$ |
250,000 |
|
|
600,000
|
|
|
240,000 |
|
|
|
300,000 |
|
|
700,000
|
|
|
280,000 |
|
|
|
350,000 |
|
|
800,000
|
|
|
340,000 |
|
|
|
400,000 |
|
|
900,000
|
|
|
360,000 |
|
|
|
450,000 |
|
|
1,000,000
|
|
|
400,000 |
|
|
|
500,000 |
|
|
1,100,000
|
|
|
440,000 |
|
|
|
550,000 |
|
|
1,200,000
|
|
|
480,000 |
|
|
|
600,000 |
|
|
1,300,000
|
|
|
520,000 |
|
|
|
650,000 |
|
|
1,400,000
|
|
|
560,000 |
|
|
|
700,000 |
|
|
1,500,000
|
|
|
600,000 |
|
|
|
750,000 |
|
Employment Contracts, Termination of Employment and Change of
Control Arrangements. Each of the executive officers named
in the Summary Compensation Table other than Mr. Cantrell
have individual
contracts of employment with
the Company which
automatically renew unless otherwise terminated. If not
otherwise terminated, Mr. Douglass’ agreement
terminates when he attains the age of 65. Each of the agreements
provide for annual base salaries at rates not less than the
amounts reported in the Summary Compensation Table, annual and
long-term bonuses as described in the Report of the CN&G
Committee, equity grants and other benefits generally available
to
the Company’s executive officers and described in their
respective employment agreements. In addition, each of the
agreements prohibit each of the executives from entering into
competing activities. Mr. Douglass’ employment
agreement modifies the definition of compensation for purposes
of
the Company’s Supplementary Plan by excluding the value
of his performance units and stock appreciation rights from the
definition of compensation and providing for a lump sum cash
payment under certain circumstances.
Payless has also entered into Change of Control agreements with
the executive officers named in the Summary Compensation Table.
The Change of Control agreements generally provide that the
executive is entitled to benefits if the executive is terminated
for other than cause, death, or disability or if the executive
terminates for
“Good Reason” (as defined in the
agreement) (i) within three years of a
“Change of
Control” (as defined in the agreement) occurring; or
(ii) within twelve months of a
“Potential Change of
Control” (as defined in the agreement). A termination by an
executive within 30 days after the first anniversary of a
Change of Control will be deemed a termination for Good Reason.
Under the agreements, a Change of Control would include any of
the following events: (i) any
“person,” as
defined in the Exchange Act, acquires 20% or more of the
Company’s common stock or voting securities; (ii) a
majority of
the Company’s Directors are replaced and not
approved by the
“Incumbent Board” (as defined in the
agreement); (iii) consummation of certain mergers or a sale
of all or substantially all of
the Company’s assets; or
(iv) shareowners approve a
17
liquidation of
the Company. Upon a covered termination of
employment, the agreements provide a lump sum payment equal to
the aggregate of (i) three times the sum of (
x) base
salary at termination or, if greater, base salary immediately
prior to the change of control plus (y) highest bonus in
previous three years or the bonus paid in the most recently
completed fiscal year following a Change of Control and
(ii) a cash payment for cancellation of stock options or
stock appreciation rights.
Each agreement provides that the executive shall receive
(i) three years of continued participation (or such longer
period as is provided in such plan) in
the Company’s
welfare benefit plans plus any benefit the executive would
receive with an additional five years of age and service under
the Company’s post retirement programs; (ii) unreduced
benefits under
the Company’s Supplementary Retirement Plan
if the executive is between 50 and 55 and is terminated
within five years of a Change of Control other than for Cause
(as defined in the agreement) or Executive terminates his or her
employment for Good Reason; and (iii) outplacement
benefits. The agreements also provide a
“tax gross-up”
payment if such payment would result in the executive receiving
at least 110 percent of the safe harbor amount and in the
event that any payment does not meet the 110 percent
threshold, the payments are reduced so that no excise tax is
imposed.
In addition, in the event of a Change of Control,
(i) amounts deferred under
the Company’s deferred
compensation plan will be distributed to participants in a lump
sum cash payment subject to certain distribution time limits
under Section 409A of the Internal Revenue Code;
(ii) all options and stock appreciation rights outstanding
on that date will become immediately and fully exercisable;
(iii) all restrictions on any restricted or phantom stock
units will lapse and such shares and units will become fully
vested; and (iv) any performance units will be earned and
become fully payable.
Employment Cessation of Duane L. Cantrell. On
October 2, 2004, the active employment of Duane L. Cantrell
ended. His base salary and certain other benefits continue to be
paid pursuant to the terms of his employment
contract, which
will expire on
May 31, 2007.
18
Beneficial Stock Ownership of Directors, Nominees, Executive
Officers and Persons Owning More Than Five Percent of Common
Stock
The following table sets forth certain information known to the
Company regarding beneficial ownership of Payless Common Stock
as of
April 1, 2005, (including shares of the
Company’s Common Stock held in the Payless Profit Sharing
Plan account for executive officers) by (a) each person
known by Payless to own beneficially more than 5% of the Payless
Common Stock, (b) each Director and nominee for election as
a Director of Payless and each of the executive officers named
in the Summary Compensation Table on page 14, and all
current Directors, nominees and executive officers as a group.
The shares allocated to the accounts of participants named below
in the Payless Profit Sharing Plan constitute less than one
percent of Payless Common Stock (see note (6) below).
On
April 1, 2005, there were 67,152,540 shares of
Common Stock outstanding.
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|
|
|
|
|
|
|
|
| |
|
Shares Beneficially | |
|
|
| |
|
Owned as of | |
|
Percent | |
| Name |
|
April 1, 2005 | |
|
of Class | |
| |
|
| |
|
| |
|
Holders of More than Five Percent of Common Stock
|
|
|
|
|
|
|
|
|
|
Lord, Abbett & Co. LLC(1)
|
|
|
5,427,000 |
|
|
|
8.1 |
|
|
AXA Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle,
AXA Courtage Assurance Mutuelle(2)
|
|
|
4,588,436 |
|
|
|
6.8 |
|
|
Artisan Partners Limited Partnership(3)
|
|
|
4,199,400 |
|
|
|
6.3 |
|
|
PEA Capital LLC(4)
|
|
|
4,190,000 |
|
|
|
6.2 |
|
|
Olstein & Associates, L.P.(5)
|
|
|
3,549,800 |
|
|
|
5.3 |
|
| |
|
Directors, Nominees and Executive Officers(6)
|
|
|
|
|
|
|
|
|
|
Daniel Boggan Jr.(7)
|
|
|
— |
|
|
|
* |
|
|
Judith K. Hofer(7)
|
|
|
— |
|
|
|
* |
|
|
Michael A. George(7)
|
|
|
— |
|
|
|
* |
|
|
Howard R. Fricke(7)(8)
|
|
|
21,210 |
|
|
|
* |
|
|
Mylle H. Mangum(7)
|
|
|
300 |
|
|
|
* |
|
|
John F. McGovern(7)
|
|
|
— |
|
|
|
* |
|
|
Michael E. Murphy(7)(9)
|
|
|
21,538 |
|
|
|
* |
|
|
Michael A. Weiss(7)
|
|
|
— |
|
|
|
* |
|
|
Robert C. Wheeler(7)
|
|
|
— |
|
|
|
* |
|
|
Steven J. Douglass(10)
|
|
|
1,201,188 |
|
|
|
1.8 |
|
|
Jay A. Lentz(10)
|
|
|
111,119 |
|
|
|
* |
|
|
Michael J. Massey(10)
|
|
|
50,195 |
|
|
|
* |
|
|
Ullrich E. Porzig(10)(11)
|
|
|
218,416 |
|
|
|
* |
|
|
Darrel J. Pavelka (10)(12)
|
|
|
122,685 |
|
|
|
* |
|
|
All directors, nominees and Executive officers as a group
(14 Persons)(7)(10)(12)
|
|
|
1,746,651 |
|
|
|
2.5 |
|
|
|
|
| |
(1) |
This information based on Amendment 2 to Schedule 13G filed
with the SEC on February 14, 2005. The address of Lord,
Abbett & Co. LLC is 90 Hudson Street, Jersey City, NJ
07302. |
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| |
(2) |
This information based on Schedule 13G filed with the SEC
on February 14, 2005 by AXA Assurances I.A.R.D. Mutuelle,
AXA Assurances Vie Mutuelle, AXA Courtage Assurance Mutuelle
(collectively, the “Mutuelle AXA”), AXA and AXA
Financial, Inc. pursuant to a joint filing agreement. Mutuelle
AXA, located at 26, rue Drouot, 75009 Paris, France, as a
group controls AXA. AXA is the parent holding company of AXA
Financial, Inc., AXA Investment Managers Paris and AXA Rosenberg
Investment Management LLC. Advest, Inc., Alliance Capital
Management L.P. and AXA Equitable Life Insurance Company are
subsidiaries |
19
|
|
|
| |
|
of AXA Financial, Inc. and operate
under independent management and make independent voting and
investment decisions. The AXA stock ownership is as follows:
|
| |
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|
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|
|
| |
|
|
|
|
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(iii) | |
|
(iv) | |
| |
|
(i) | |
|
(ii) | |
|
Deemed to have | |
|
Deemed to have | |
| |
|
Deemed to have | |
|
Deemed to have | |
|
Sole Power to | |
|
Shared Power to | |
| |
|
Sole Power to | |
|
Shared Power to | |
|
Dispose or to | |
|
Dispose or to | |
| |
|
Vote or to | |
|
Vote or to | |
|
Direct the | |
|
Direct the | |
| |
|
Direct the Vote | |
|
Direct the Vote | |
|
Disposition | |
|
Disposition | |
| |
|
| |
|
| |
|
| |
|
| |
|
The Mutuelles AXA, as a group
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
AXA
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
AXA Entity or Entities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AXA Financial, Inc.
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Advest, Inc.
|
|
|
0 |
|
|
|
289 |
|
|
|
0 |
|
|
|
289 |
|
| |
Alliance Capital Management, L.P.
|
|
|
3,598,615 |
|
|
|
41,820 |
|
|
|
4,585,053 |
|
|
|
0 |
|
| |
Boston Advisors, Inc.
|
|
|
0 |
|
|
|
0 |
|
|
|
192 |
|
|
|
0 |
|
| |
AXA Equitable Life Insurance Company
|
|
|
2,902 |
|
|
|
0 |
|
|
|
2,902 |
|
|
|
0 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
3,601,517 |
|
|
|
42,109 |
|
|
|
4,588,147 |
|
|
|
289 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
(3) |
This Information based on Amendment 1 to a Schedule 13G
filed with the SEC on January 26, 2005, Artisan Partners
Limited Partnership (“Artisan Partners”), Artisan
Investment Corporation, (“Artisan Corp.”), Andrew A.
Ziegler and Carlene Murphy Ziegler (together,
“Artisan”) reported beneficial ownership of
4,199,400 shares. Artisan Partners is an investment adviser
registered under Section 203 of the Investment Advisers Act
of 1940; Artisan Corp. is the General Partner of Artisan
Partners; and Mr. Ziegler and Ms. Ziegler are the
principal stockholders of Artisan Corp. Artisan has shared power
to vote or to direct the vote and shared power to dispose or to
direct disposition of all 4,199,400 shares. These shares
have been acquired on behalf of discretionary clients of Artisan
Partners. Persons other than Artisan Partners are entitled to
receive all dividends from, and proceeds from the sale of, these
shares. Artisan’s address is 875 East Wisconsin
Avenue, Suite 800, Milwaukee, WI 53202. |
| |
| |
(4) |
This information based on Schedule 13G filed with the SEC
on March 15, 2005. The address of PEA Capital LLC is
1345 Avenue of the Americas, 49th Floor, New York, New
York 10105. |
| |
| |
(5) |
This information based on Schedule 13G filed with the SEC
on February 11, 2005. The address of Olstein &
Associates, L.P. is 4 Manhattanville Road, Purchase, New
York 10577. |
| |
| |
(6) |
The Payless profit sharing plans provide for an investment fund
which is invested in shares of Payless Common Stock (the
“Payless Profit Sharing Plan Common Stock Fund”). As
of April 1, 2005, the trusts under the Payless profit
sharing plans owned approximately 1,330,930 shares of
Payless Common Stock (approximately 2.0% of the shares of
Payless Common Stock outstanding) in the Payless Profit Sharing
Plan Common Stock Fund. Shares shown as beneficially owned by
the persons referred to in the table include any shares
allocated to their accounts under the Payless profit sharing
plans. |
| |
| |
(7) |
Does not include units credited to non-employee Director’s
accounts under the Deferred Compensation Plan for Non-Management
Directors. As of April 1, 2005, the following Directors had
the indicated units credited to their account under the plan:
Mr. Boggan — 19,306 units;
Mr. Fricke — 19,904 units;
Mr. George — 3,908 units;
Ms. Hofer — 3,347 units;
Ms. Mangum — 17,416 units;
Mr. McGovern — 10,866 units;
Mr. Murphy — 4,242 units,
Mr. Weiss — 2,013 units, and
Mr. Wheeler — 10,786 units. At the end of
the deferral period, the units will be paid out in an equivalent
number of shares of Payless common stock. |
| |
| |
(8) |
Includes 12,000 shares owned by Mr. Fricke’s
spouse. |
| |
| |
(9) |
Includes 3,000 shares held by a limited partnership of
which Mr. Murphy and his spouse are the sole partners. |
|
|
| (10) |
Shares shown as beneficially owned include shares subject to
options which are presently exercisable or which will become
exercisable on or before May 31, 2005 as follows: Steven J.
Douglass — 1,011,000 shares; Jay A.
Lentz — 104,533 shares; Darrel
Pavelka — 94,633 shares, Ullrich E.
Porzig — 159,833 shares; Michael J.
Massey — 41,842 shares, and all Directors,
nominees and executive officers as a group —
1,411,531 shares. |
| |
| (11) |
Mr. Porzig’s ownership includes 45,465 shares
held by family trusts and 384 owned by his children. |
| |
| (12) |
Does not include units credited to accounts under the
Company’s Deferred Compensation Plan. As of April 1,
2005, Mr. Pavelka had 2,639 units credited to his
account. At the end of the deferral period, the units will be
paid out in an equivalent number of shares of Payless Common
Stock. |
20
Principal Accounting Fees and Services
The following table presents fees for professional services
rendered by Deloitte & Touche LLP the member firms of
Deloitte Touche Tohmatsu, and their respective affiliates
(collectively “DT”) for the audit of the
Company’s annual financial statements for fiscal 2004 and
fiscal 2003 and fees billed for audit-related services, tax
services and all other services rendered by DT for fiscal 2004
and fiscal 2003.
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|
|
|
|
|
|
|
|
| |
|
Fiscal 2004 | |
|
Fiscal 2003 | |
| |
|
| |
|
| |
| |
|
(in thousands) | |
|
Audit fees
|
|
$ |
1,676 |
|
|
$ |
997 |
|
|
Audit-related fees(a)
|
|
|
1,026 |
|
|
|
589 |
|
|
Tax fees(b)
|
|
|
55 |
|
|
|
38 |
|
|
All other fees(c)
|
|
|
— |
|
|
|
176 |
|
| |
|
|
|
|
|
|
|
Total audit-related fees & non-audit fees
|
|
$ |
2,757 |
|
|
$ |
1,800 |
|
| |
|
|
|
|
|
|
|
|
| (a) |
Audit-Related Fees consist of attest and related services that
are reasonably related to the performance of the audit or review
of the Company’s financial statements. In 2004, this
category includes fees related to audits for international
subsidiaries and joint ventures for partial year 2002 and fiscal
years 2003 and 2004 ($762), Sarbanes-Oxley advisory services
($164), and audit of employee benefit plans for the 2003 and
2004 plan years ($100). In 2003, this category includes fees
related to audits for international subsidiaries and joint
ventures for fiscal year 2001 and partial year 2002 ($399),
Sarbanes-Oxley advisory services ($118), audit of employee
benefit plans for the 2002 plan year ($47), and other fees ($25). |
| |
| (b) |
Tax Fees consist of the aggregate fees billed for professional
services for expatriate tax return preparation, tax advice and
tax planning (domestic and international). |
| |
| (c) |
All Other Fees consist principally of international consulting
services. |
The Audit and Finance Committee’s policy on the use of the
Company’s independent public accountant requires
pre-approval of all services. The policy authorizes the
Committee to delegate to one or more of its members pre-approval
authority with respect to permitted services. All audit related
services, tax services and other services were pre-approved by
the Audit and Finance Committee consistent with its policy.
Prior to approving services, the Committee or its designee
concluded that the provision of such services by DT was
compatible with the maintenance of that firm’s independence
in the conduct of its auditing functions.
* * * * * * * * * *
PROPOSAL II: RATIFY THE APPOINTMENT OF
DELOITTE & TOUCHE LLP
AS THE COMPANY’S INDEPENDENT REGISTERED ACCOUNTANTS FOR
FISCAL YEAR 2005
Proposal II on the accompanying proxy card.
The Audit and Finance Committee appointed DT to serve as the
Company’s independent registered public accountants for the
fiscal year ending
January 28, 2006, subject to
ratification by the shareowners at the Annual Meeting. DT served
as
the Company’s independent registered public accountants
for fiscal 2004.
A member of the firm of DT will be present at the meeting to
make such statements as that firm may desire and to answer
appropriate shareowner questions.
The affirmative vote of holders of a majority of shares
represented and entitled to vote at the meeting will be required
to approve this proposal. Abstentions will have the same effect
as a vote against this proposal. Broker non-votes are counted
towards a quorum, but are not counted in determining whether
this proposal has been approved.
THE BOARD UNANIMOUSLY RECOMMENDS THAT HOLDERS OF PAYLESS
COMMON STOCK VOTE IN FAVOR OF PROPOSAL II, AND YOUR PROXY
WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
21
* * * * * * * * * *
ADDITIONAL INFORMATION
Section 16(a) Beneficial Ownership Reporting
Compliance:
Section 16(a) of the Exchange Act requires the
Company’s Directors, executive officers and greater than
ten percent beneficial owners (
“Reporting Persons”) to
file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of Payless
Common Stock. Specific due dates for these reports have been
established and
the Company is required to report in this Proxy
Statement any failure by the Reporting Persons to file by these
dates. To
the Company’s knowledge, all Section 16(a)
filing requirements applicable to Reporting Persons were timely
met during the fiscal year ended
January 29, 2005.
Other Business:
Under the laws of the State of Delaware, where Payless is
incorporated, no business other than procedural matters may be
raised at the annual meeting unless proper notice to the
shareowners has been given. We do not expect any business to
come up for shareowner vote at the meeting other than the items
described in this booklet. If other business is properly raised,
your proxy card authorizes the people named as proxies to vote
as they think best.
Persons with Disabilities:
We can provide reasonable assistance to help you participate in
the meeting if you tell us about your disability and your plans
to attend. Please call or write the Secretary at least two weeks
before the meeting at the number or address under
“Questions” below.
Outstanding Shares:
On
April 1, 2005, the record date, 67,152,540 shares
of common stock were outstanding. Each share of common stock has
one vote.
How We Solicit Proxies:
Proxies will be solicited on behalf of the Board of Directors by
mail, telephone, other electronic means or in person. The
Company pays the costs of soliciting this proxy. We are paying
D.F. King & Co., Inc. a fee of $7,500 plus expenses to
help with the solicitation. We also reimburse brokers and other
nominees for their expenses in sending these materials to you
and getting your voting instructions.
Shareowner Proposals for Next Year:
The deadline for shareowner proposals for next year’s
meeting is
December 19, 2005. On written request, the
Secretary will provide detailed instructions for submitting
proposals.
Questions:
If you have questions or need more information about the Annual
Meeting of Shareowners, write to:
|
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| |
Secretary
Payless ShoeSource, Inc.
3231 Southeast Sixth Avenue
Topeka, KS 66607 |
or call us at (
785) 233-5171.
22
For information about your record holdings you may call Payless
Shareowner Services at 1-
800-884-4225. For information about
your holdings in the Payless Stock Ownership Plan you may call
1-
888-744-7463. We also invite you to visit
the Company’s
Investor Relations
website at
http://www.paylessinfo.com.
Internet site materials are for your general information and are
not part of this proxy solicitation.
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By Order of the Board of Directors, |
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| |
Michael J. Massey |
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Secretary |
23
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PSS
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PROXY CARD
PAYLESS SHOESOURCE, INC. |
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS FOR THE
ANNUAL MEETING TO BE HELD ON MAY 26, 2005
Shareowners of Payless ShoeSource, Inc.:
By signing this card, each of Jay A. Lentz, Ullrich E. Porzig, and Aaron G. Hove, with full power of substitution, are appointed as proxies for the
undersigned to vote all common shares held by the undersigned in Payless ShoeSource, Inc. at the May 26, 2005, Annual Meeting of
Shareowners and at any adjournment of the Meeting, on all subjects that may properly come before the Annual Meeting, subject to the
directions on the other side of this card.
The Board of Directors recommends a vote FOR election of the listed director nominees, Proposal I, and a vote FOR Proposal II on the other
side of this card. IF NO DIRECTIONS ARE GIVEN, AND THIS CARD IS RETURNED SIGNED, THE UNDERSIGNED UNDERSTANDS THAT
THE PROXIES WILL VOTE IN ACCORDANCE WITH THE ABOVE RECOMMENDATIONS OF THE BOARD OF DIRECTORS AND IN THEIR
DISCRETION ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING.
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HAS YOUR ADDRESS CHANGED?
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DO YOU HAVE ANY COMMENTS? |
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To the Shareowners of Payless ShoeSource, Inc.:
You are cordially invited to attend the Annual Meeting of Payless ShoeSource Shareowners which will be held at Payless ShoeSource, Inc.,
Pozez Auditorium, 3231 SE Sixth Avenue, Topeka, Kansas on Thursday, May 26, 2005, at 10:00 a.m., Central Daylight Saving Time.
Provided with this proxy card is a return envelope, the Company's 2004 Annual Report to Shareowners and the Proxy Statement for the 2005
Annual Meeting. It is important that you vote either by returning the proxy card or by using the Internet. Management's recommendation on each
issue and the reasons for the recommendations are described in the Proxy Statement.
PLEASE PROMPTLY SIGN, DATE AND RETURN THE PROXY CARD
USING THE ENCLOSED ENVELOPE OR VOTE BY USING THE INTERNET.
Please sign the proxy card exactly as your name(s) appear(s) on the reverse side of this card.
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x
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Please mark
votes as in |
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this example. |
PAYLESS SHOESOURCE, INC.
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Please be sure to sign and date this Proxy.
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Date |
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Shareowner sign here
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Co-owner sign here |
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PYLCM
The Board of Directors recommends a vote FOR Proposals I and II.
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I.
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Election of Directors. |
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Election of Steven J. Douglass, Howard R. Fricke, and Judith K. Hofer, each for a
three-year term expiring in 2008. |
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FOR
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WITHHELD |
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ALL
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FROM ALL
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EXCEP- |
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NOMINEES
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NOMINEES
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TIONS |
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INSTRUCTIONS: To withhold authority to vote for any
individual nominee(s), mark the exceptions box and
write the name(s) in the space provided below.
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o
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o
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Exceptions: |
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FOR
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AGAINST
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ABSTAIN |
II.
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Ratify the appointment of Deloitte & Touche LLP as
independent registered public accountants for fiscal
year 2005.
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o
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o
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o |
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Mark box at right if you plan to attend the Annual Meeting. |
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o |
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Mark box at right if an address change or comment has been
noted on the reverse side of this card. |
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To vote by mail, please detach the proxy card above and return it in the enclosed envelope. To
vote by Internet, please visit http://www.eproxyvote.com/umb-bank/. If you
are planning to attend the Annual Meeting, please save this Admission Ticket and bring it to the
meeting for admission.
The Payless ShoeSource Annual Meeting of Shareowners will be held at:
PAYLESS SHOESOURCE, INC., POZEZ AUDITORIUM
3231 S.E. SIXTH AVENUE
TOPEKA, KANSAS
THURSDAY, MAY 26, 2005
10:00 A.M., CENTRAL DAYLIGHT SAVING TIME
TO VOTE USING THE INTERNET:
1. Read the accompanying Proxy Statement.
2. Visit the Internet voting site at http://www.eproxyvote.com/umb-bank/ and follow the
instructions on the screen.
Your Internet vote authorizes the named proxies to vote your shares to the same extent as if you
marked, signed, dated and returned the above proxy card. Please note that all votes cast by using
the Internet must be submitted prior to 5:00 p.m., Central Daylight Saving Time, May 25, 2005. Your
Internet vote is quick, convenient and submitted immediately.
If you vote using the Internet, please do not return your proxy card by mail.
THANK YOU FOR YOUR VOTE.
ADMISSION TICKET
Dates Referenced Herein and Documents Incorporated By Reference
Filing Submission - Alternative Formats (Word / Rich Text, HTML, Plain Text, SGML, XML, et al.)
Copyright © 2010 Fran Finnegan & Company. All Rights Reserved.
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