BWS Preliminary Proxy Statement
| |
OMB
APPROVAL
|
| |
OMB
Number:
|
3235-0059
|
| |
Expires:
Estimated
average burden
hours
per response
|
January
31, 2008
14.
|
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. )
Filed
by
the Registrant T
Filed
by
a Party other than the Registrant £
Check
the
appropriate box:
T
Preliminary Proxy Statement
£ Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
£
Definitive Proxy Statement
£
Definitive Additional Materials
£
Soliciting Material Pursuant to §240.14a-12
BROWN
SHOE COMPANY, 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):
T No
fee
required.
£ Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1)
Title
of
each class of securities to which transaction applies:
2)
Aggregate
number of securities to which transaction applies:
3) Per
unit
price or other underlying value of transaction computed pursuant to Exchange
Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state
how it was determined):
4)
Proposed
maximum aggregate value of transaction:
£
Fee paid
previously with preliminary materials.
£ Check
box
if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and
identify the filing for which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or the Form or Schedule
and the date of its filing.
1)
Amount
Previously Paid:
2)
Form,
Schedule or Registration Statement No.:
3)
Filing
Party:
4)
Date
Filed:
|
SEC
1913 (04-05)
|
Persons
who 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.
|
Brown
Shoe Company, Inc.
BROWN
SHOE 8300
Maryland Avenue,
St.
Louis
MO 63105-3693
Ronald
A.
Fromm
Chairman
of the Board
and
Chief Executive Officer
[LOGO]
April
__,
2007
To
Brown
Shoe Shareholders:
You
are
cordially invited to attend the Annual Meeting of Shareholders of Brown Shoe
Company, Inc. to be held at our headquarters at 8300 Maryland Avenue, St. Louis,
Missouri, in the Conference Center, on Thursday, May 24, 2007, at 11:00 a.m.,
St. Louis time. The formal Notice of the Annual Meeting, the Proxy Statement
and
a proxy card accompany this letter. Our Annual Report for fiscal year 2006
is
also enclosed.
I
hope
you will be present at the meeting. Whether or not you plan to attend, please
cast your vote by telephone or on the Internet, or complete, sign and return
the
enclosed proxy card in the postage-prepaid envelope, also enclosed. The prompt
execution of your proxy will be greatly appreciated.
|
Sincerely
yours,
|
| |
|
/s/
RONALD A. FROMM
|
|
Ronald
A. Fromm
|
|
Chairman
of the Board and
|
|
Chief
Executive Officer
|
[BROWN
SHOE LOGO]
Brown
Shoe Company, Inc.
8300
Maryland Avenue, St. Louis, Missouri 63105-3693
NOTICE
OF ANNUAL
MEETING OF SHAREHOLDERS
|
DATE:
|
Thursday,
May 24, 2007
|
|
TIME:
|
11:00
a.m., St. Louis Time
|
|
PLACE:
|
8300
Maryland Avenue
|
| |
Conference
Center
|
| |
St.
Louis, Missouri 63105
|
Matters
to be voted on:
| |
1. |
Election of four
directors |
| |
2.
|
Approval
of an amendment to the Company’s certificate of incorporation to reduce
the par value of the common stock from $3.75 per share to $.01 per
share
|
| |
3. |
Ratification of the appointment of Ernst & Young LLP
as the Company’s independent registered public
accountants |
| |
4. |
Any
other matters if properly raised |
Only
shareholders of record at the close of business on April 9, 2007 may vote at
the
meeting. Your vote is important. Whether you plan to attend the annual meeting
or not, please
cast your vote by phone or on the Internet, or complete, date
and sign your proxy card and return it in the envelope provided.
If
you
attend the meeting and prefer to vote in person, you may do so even if you
have
previously submitted a proxy.
It
is our
policy that all proxies, ballots and vote tabulations that identify the vote
of
any shareholder will be kept strictly confidential until after a final vote
is
tabulated and announced, except in extremely limited circumstances. Such limited
circumstances include contested solicitation of proxies, when disclosure is
required by law, to defend a claim against us or to assert a claim by us, and
when a shareholder’s written comments appear on a proxy or other voting
material.
|
/s/
MICHAEL I. OBERLANDER
|
|
Michael
I. Oberlander
|
|
Senior
Vice President, General Counsel and
|
|
Corporate
Secretary
|
April
__,
2007
TABLE
OF CONTENTS
PROXY
STATEMENT - 2007 ANNUAL MEETING OF
SHAREHOLDERS
|
|
Page
No.
|
| |
|
|
|
5-8
|
|
|
|
|
|
8
|
|
|
8-9
|
|
|
9
|
|
|
9
|
|
|
9
|
|
|
9-10
|
|
|
10
|
|
|
10-11
|
|
|
11
|
|
|
11
|
|
|
12
|
|
|
12-13
|
|
|
13
|
|
|
13
|
|
|
14
|
|
|
14-15
|
|
|
15-16
|
|
|
16
|
|
|
16
|
| |
|
|
|
16
|
|
|
16
|
|
|
16-17
|
|
|
17
|
|
|
17-18
|
|
|
18
|
|
|
18
|
| |
|
|
|
19
|
| |
|
|
|
19
|
|
|
19-20
|
|
|
20
|
|
|
20-21
|
| |
|
|
|
21
|
|
Compensation
Discussion and Analysis
|
|
|
Report
of the Compensation Committee
|
|
|
Summary
Compensation
|
|
|
Grants
of Plan-Based Awards
|
|
|
Outstanding
Equity Awards at Fiscal Year-End
|
|
|
Option
Exercises and Stock Vested
|
|
|
Retirement
Plans
|
|
|
Pension
Plan
|
|
|
Supplemental
Executive Retirement Plan
|
|
|
Pension
Benefits Table
|
|
|
Savings
Plan
|
|
|
Non-Qualified
Deferred Compensation
|
|
|
Payments
on Termination or Change in Control
|
|
|
Severance
Agreements
|
|
|
Benefits
Under Company Plans Following a Change in Control
|
|
|
Early
Retirement Agreement with Andrew M. Rosen
|
|
|
Estimate
of Severance Payments and Benefits
|
|
|
|
21
|
|
|
|
| |
|
|
|
22
|
| |
|
|
|
22
|
|
|
22-23
|
|
|
23
|
| |
|
PROXY
STATEMENT
FOR
THE BROWN SHOE COMPANY, INC.
2007
ANNUAL MEETING OF SHAREHOLDERS
Why
am I receiving these proxy materials?
Your
board of directors is soliciting proxies to be voted at the 2007 Annual Meeting
of Shareholders. This proxy statement includes information about the issues
to
be voted upon at the meeting.
On
April
__, 2007, we began distributing these proxy materials to all shareholders of
record at the close of business on April 9, 2007. There were _____ shares of
our
common stock issued and outstanding on April 9, 2007.
Where
and when is the annual meeting?
The
Annual Meeting of Shareholders will take place on May 24, 2007 in the Conference
Center at our headquarters, located at 8300 Maryland Avenue, St. Louis, Missouri
63105. The meeting will begin at 11:00 a.m., St. Louis time.
What
am I voting on?
We
are
aware of three items to be voted on by shareholders at the annual
meeting:
| · |
The
election of four directors (Ward M. Klein, W. Patrick McGinnis and
Hal J.
Upbin, each for a three-year term, and
Julie C. Esrey for a two-year
term),
|
| · |
Amendment
to our Certificate of Incorporation to reduce par value of our Common
Stock to $.01 per share, and
|
| · |
Ratification
of independent registered public
accountants
|
How
many votes do I have?
You
have
one vote for each share of our common stock that you owned at the close of
business on March 28, 2007, the record date. These shares include:
•
Shares
held directly in your name as the “shareholder of record,” and
•
Shares
held for you as the “beneficial owner” through a broker, bank, or other nominee
in “street name.”
What
is the difference between holding shares as a “shareholder of record” and as a
“beneficial owner”?
If
your
shares are registered directly in your name with our transfer agent, Mellon
Investor Services, LLC, you are considered, with respect to those shares, the
“shareholder of record.” The Notice of Annual Meeting, Proxy Statement, 2006
Annual Report and proxy card have been sent directly to you by the
Company.
If
your
shares are held in a stock brokerage account or by a bank or other holder of
record, you are considered the “beneficial owner” of the shares held in street
name. The Notice of Annual Meeting, Proxy Statement, 2006 Annual Report and
proxy card or voting instruction card have been forwarded to you by your broker,
bank or other holder of record who is considered, with respect to those shares,
the shareholder of record. As the beneficial owner, you have the right to direct
your broker, bank or other holder or record on how to vote your shares by using
the voting instruction card included in the mailing or by following their
instructions for voting by telephone or the Internet.
If
I am a shareholder of record, how can I vote my shares?
You
can
vote by proxy or in person.
How
do I vote by proxy?
If
you
are a shareholder of record, you may vote your proxy by telephone, Internet,
or
mail. Our telephone and Internet voting procedures are designed to authenticate
shareholders by using individual control numbers that can be found on the proxy
card. Voting by telephone or Internet will help us reduce costs. If you vote
promptly, you can save us the expense of a second mailing.
•
Voting
your proxy by telephone
In
the
U.S. and Canada, you can vote your shares by telephone by calling the toll-free
telephone number on your proxy card. Telephone voting is available 24 hours
a
day, 7 days a week until 11:59 pm Eastern Time on the day before the meeting.
Easy-to-follow voice prompts allow you to vote your shares and confirm that
your
instructions have been properly recorded. If you vote by telephone, you do
not
need to return your proxy card.
•
Voting
your proxy by Internet
You
can
also choose to vote via the Internet. The web site for Internet voting is on
your proxy card. Internet voting is available 24 hours a day, 7 days a week
until 11:59 pm Eastern Time on the day before the meeting. If you vote via
the
Internet, you do not need to return your proxy card.
•
Voting
your proxy by mail
If
you
choose to vote by mail, simply mark your proxy card, date and sign it, and
return it in the postage-paid envelope provided.
If
you
vote by proxy using any of these three methods, the persons named on the card
(your “proxies”) will vote your shares in the manner you indicate. You may
specify whether your shares should be voted for all, some or none of the
nominees for director and for or against any other proposals properly brought
before the annual meeting. If you vote by telephone or Internet and choose
to
vote with the recommendation of your board of directors, or if you vote by
mail,
sign your proxy card, and do not indicate specific choices, your shares will
be
voted “FOR” the election of all nominees for director, “FOR” the reduction in
par value per share, and “FOR” the ratification of the Company’s registered
independent public accountants. If any other matter is properly brought before
the meeting, your proxies will vote in accordance with their best judgment.
At
the time this proxy statement went to press, we knew of no matter that is
required to be acted on at the annual meeting other than those discussed in
this
proxy statement.
If
you
wish to give a proxy to someone other than the persons named on the enclosed
proxy card, you may strike out the names appearing on the card and write in
the
name of any other person, sign the proxy, and deliver it to the person whose
name has been substituted.
May
I revoke my proxy?
If
you
give a proxy, you may revoke it in any one of three ways:
•
Submit
a valid, later-dated proxy,
•
Notify
our Corporate Secretary in writing before the annual meeting that you have
revoked your proxy, or
•
Vote
in
person at the annual meeting.
How
do I vote in person?
If
you
are a shareholder of record, you may cast your vote in person at the annual
meeting.
If
I hold shares in street name, how can I vote my shares?
You
can
submit voting instructions to your broker, bank or nominee. In most instances,
you will be able to do this over the Internet, by telephone, or by mail. Please
refer to the voting instruction card included in these materials by your broker,
bank or nominee.
What
shares are included on the proxy card?
If
you
are a shareholder of record you will receive only one proxy card for all the
shares you hold. This includes shares in certificate form as well as shares
in
book-entry form.
Is
my vote confidential?
Yes. Voting
tabulations are confidential, except in extremely limited circumstances. Such
limited circumstances include contested solicitation of proxies, when disclosure
is required by law, to defend a claim against us or to assert a claim by us,
and
when a shareholder’s written comments appear on a proxy or other voting
material.
What
is a “quorum” for the meeting?
In
order
to have a valid shareholder vote, a quorum must exist at the annual meeting.
Under the New York Business Corporation Law and our bylaws, a quorum will exist
when shareholders holding a majority of the outstanding shares of our stock
are
present or represented at the meeting. For these purposes, shares that are
present or represented by proxy at the annual meeting will be counted towards
a
quorum, regardless of whether the holder of the shares or proxy fails to vote
on
a particular matter or whether a broker with discretionary voting authority
fails to exercise such authority with respect to any particular matter.
What
vote is required to approve each proposal?
|
Item
1 -
Election of Four Directors
|
|
The
nominees who receive the most votes for the available positions will
be
elected. If you do not vote for a particular nominee or you indicate
“withheld” for a particular nominee on your proxy card, your vote will not
count either “for” or “against” the nominee.
|
|
Item
2 -
Reduce Par Value of our Common Stock
|
|
The
affirmative vote of a majority of the outstanding shares entitled
to vote
at the annual meeting is required for approval of the proposed amendment
to our Certificate of Incorporation to reduce the par value of our
Common
Stock to $.01 per share.
|
|
Item
3 -
Ratification of the Appointment of
Independent Registered Public Accountants
|
|
The
affirmative vote of a majority of the shares voting either for or
against
Proxy Item 3 is required for approval of the proposed ratification
of the
appointment of independent registered public
accountants.
|
|
Other
matters
|
|
The
affirmative vote of a majority of the shares voting either for or
against
such matters at the annual meeting is required to act on any other
matter
properly brought before the
meeting.
|
If
a
broker indicates on its proxy that it does not have authority to vote certain
shares held in “street name” on particular proposals, the shares not voted
(“broker non-votes”) will not have any effect with respect to such proposals.
Broker non-votes occur when brokers do not have discretionary voting authority
on certain proposals under the rules of the New York Stock Exchange and the
beneficial owner has not instructed the broker how to vote on these proposals.
If you are a beneficial owner, your bank, broker or other holder of record
is
permitted to vote your shares on the election of directors and ratification
of
appointment of independent registered public accountants, even if the holder
does not receive voting instructions from you. The record holder may not vote
on
the amendment to our Certificate of Incorporation to reduce the par value of
our
common stock absent instructions from you; therefore, without your voting
instructions, a broker non-vote will occur on that proposal.
Shares
represented by proxies that are marked vote “withheld” with respect to the
election of any person to serve on the board of directors, will not be
considered in determining whether such a person has received the affirmative
vote of a plurality of the shares. Shares represented by proxies that are marked
“abstain” with respect to any other proposal will not be considered in
determining whether such proposal has received the affirmative vote of a
majority of the shares and such proxies will not have the effect of a “no” vote.
Shares represented by proxies which deny the proxy-holder discretionary
authority to vote on any other proposal (broker non-votes) will not be
considered in determining whether such proposal has received the affirmative
vote of a majority of the shares and such proxies will not have the effect
of a
“no” vote.
Can
I access the Notice of Annual Meeting, Proxy Statement and 2006 Annual Report
to
Shareholders on the Internet?
The
Notice of Annual Meeting and Proxy Statement are accessible on the Internet
as a
single document identified as “2007 Proxy Statement,” and the 2006 Annual
Reports is also available, on our website at www.brownshoe.com/investor.
Shareholders
of Record:
If you
vote on the Internet at www.proxyvoting.com/bws,
simply
follow the prompts for enrolling in the electronic proxy delivery service.
Beneficial
Owners:
If you
hold your shares in a brokerage account, you also may have the opportunity
to
receive copies of these documents electronically. Please check the information
provided in the proxy materials mailed to you by your broker, bank or other
holder of record regarding the availability of this service.
What
are the costs of soliciting these proxies?
We
are
paying the cost of preparing, printing, and mailing these proxy materials.
We
will reimburse banks, brokerage firms, and others for their reasonable expenses
in forwarding proxy materials to beneficial owners and obtaining their
instructions.
Proxies
will be solicited by mail and also may be solicited by our executive officers
and other employees personally, by telephone or by electronic means, but such
persons will not be specifically compensated for such services. It is
contemplated that brokerage houses, custodians, nominees and fiduciaries will
be
requested to forward the soliciting material to the beneficial owners of stock
held of record by such persons and we will reimburse them for their reasonable
expenses incurred therein. If we decide to retain a proxy solicitor, we will
pay
the fees charged by the proxy solicitor.
Where
can I find the voting results of the meeting?
We
intend
to announce preliminary voting results at the meeting. We will publish the
final
results in our Report on Form 10-Q for the first quarter of 2007, which we
expect to file on or before June 14, 2007. You can obtain a copy of the Form
10-Q on our website at www.brownshoe.com/investor,
by
calling the Securities and Exchange Commission at (800) SEC-0330 for the
location of the nearest public reference room, or through the EDGAR system
at
www.sec.gov.
Information on our website does not constitute part of this proxy
statement.
How
can I reduce the number of copies of proxy materials delivered to
my household?
Securities
and Exchange Commission rules allow delivery of a single annual report and
proxy
statement to households at which two or more shareholders reside. Accordingly,
shareholders sharing an address who have been previously notified by their
broker or its intermediary will receive only one copy of the annual report
and
proxy statement, unless the shareholder has provided contrary instructions.
Individual proxy cards or voting instruction forms (or electronic voting
facilities) will, however, continue to be provided for each shareholder account.
This procedure, referred to as “householding,” reduces the volume of duplicate
information you receive, as well as our expenses. If your family has multiple
accounts, you may have received householding notification from your broker
earlier this year and, consequently, you may receive only one proxy statement
and annual report. If you prefer to receive separate copies of our proxy
statement or annual report, either now or in the future, we will promptly
deliver, upon your written or oral request, a separate copy of the proxy
statement or annual report, as requested, to any shareholder at your address
to
which a single copy was delivered. Notice should be given to us by mail at
8300
Maryland Avenue, St. Louis, Missouri 63105, attention: Senior Vice President,
General Counsel and Corporate Secretary, or by telephone at (314) 854-4000.
If
you are currently a shareholder sharing an address with another shareholder
and
wish to have only one proxy statement and annual report delivered to the
household in the future, please contact us at the same address or telephone
number.
Since
1878, we have been guided by a value system that emphasizes integrity and trust
at all levels of our organization. We have longstanding policies and practices
to promote the management of our Company with integrity and in our shareholders’
best interests. The board has adopted and adheres to Corporate Governance
Guidelines that the board and senior management believe represent sound
practices. The corporate governance guidelines are available on our website
at
www.brownshoe.com/governance.
The
board periodically reviews
these
guidelines, New York law (the state in which we are incorporated), the rules
and
listing standards of the New York Stock Exchange, and SEC regulations, as well
as best practices suggested by recognized governance authorities. The guidelines
reflect the board’s policy that all directors are expected to attend the annual
meeting of shareholders and all of them attended last year’s annual meeting. The
charters for the Board’s Executive, Audit, Compensation and Governance and
Nominating Committees are also available on our website at www.brownshoe.com/governance,
and
copies of these charters will be provided to shareholders, upon written or
oral
request to our Senior Vice President, General Counsel and Corporate Secretary,
8300 Maryland Avenue, St. Louis, Missouri 63105, or by telephone at (314)
854-4000. Information on our website shall not be deemed to constitute part
of
this proxy statement.
Currently,
of the ten members of the board of directors, nine meet the New York Stock
Exchange standards for independence. A director is considered to be an
independent director only if the director does not have a material relationship
with the Company, as determined by the board. The board has adopted standards
for independence to assist it in making this determination. These standards
are
described in the Company’s Corporate Governance Guidelines, available on our
website at www.brownshoe.com/governance.
As of
the date of this proxy statement, the board has determined that, except for
our
Chairman and Chief Executive Officer, Ronald A. Fromm, each of the other members
of the board of directors is independent, including Mr. Bower, Ms. Esrey, Ms.
Hendra, Mr. Klein, Mr. Korn, Ms. McGinnis, Mr. McGinnis, Mr. Neidorff and Mr.
Upbin. In making its determination of independence, the Board considered that
Ms. Hendra is affiliated with OgilvyOne LLC, which provided services to the
Company in fiscal 2006. The board determined that the amount paid by the Company
to Ogilvy was not material to the Company or to Ogilvy. Assuming all nominees
are elected as directors, there will be 9 independent directors out of 10,
which
satisfies the Company’s goal, as set forth in the Corporate Governance
Guidelines, that two-thirds of the directors will be independent under the
New
York Stock Exchange standards.
The
independent members of the board meet regularly without any members of
management present. In accordance with our Corporate Governance Guidelines,
Mr.
Bower, as chair of the Executive Committee, usually presides at such executive
sessions, and if he is absent, then another director who is a member of the
Executive Committee presides in his place. Only independent directors serve
on
our Audit, Compensation, and Governance and Nominating Committees.
We
have a
Code of Business Conduct, which is applicable to all directors, officers and
employees of the Company. We have an additional Code of Ethics, which is
applicable to the principal executive officer, principal financial officer
and
principal accounting officer. Both the Code of Business Conduct and the Code
of
Ethics are available on the Company’s website at www.brownshoe.com/governance.
We
intend to post amendments to or waivers from (to the extent applicable to an
executive officer of the Company) either code on our website.
Shareholders
and other parties interested in communicating directly with an individual
director or with the non-management directors as a group may write to the
individual director or group, c/o Corporate Secretary, Brown Shoe Company,
Inc.,
8300 Maryland Avenue, St. Louis, Missouri 63105 or by sending an e-mail to
directors@brownshoe.com.
The
board approved a process for handling communications received by the Company
and
addressed to non-management members of the board. Under that process, the
Corporate Secretary of the Company reviews all such correspondence and regularly
forwards to the board a summary of all such correspondence and copies of all
correspondence that, in the opinion of the Corporate Secretary, deals with
the
functions of the board or its committees or that he otherwise determines
requires their attention. Directors may at any time review a log of all
correspondence received by the Company that is addressed to members of the
board
and request copies of any such correspondence. Concerns relating to accounting,
internal controls or auditing matters are immediately brought to the attention
of the Company’s internal audit department and handled in accordance with
procedures established by the Audit Committee with respect to such
matters.
The
board
has the following four committees: Audit, Compensation, Executive and Governance
and Nominating. The table below indicates the current membership of each
committee and how many times the board and each committee met in fiscal 2006.
Each director attended at least 75 percent of the total number of meetings
of
the board and of the committees on which he or she serves, during his or her
term.
|
|
Board
|
Audit
|
Compensation
|
Executive
|
Governance
and
Nominating
|
|
Current
|
|
|
|
|
|
|
Joseph
L. Bower
|
Member
|
|
Member
|
Chair
|
Chair
|
|
Julie
C. Esrey
|
Member
|
|
Member
|
|
Member
|
|
Ronald
A. Fromm
|
Chair
|
|
|
Member
|
|
|
Carla
Hendra(1)
|
Member
|
|
|
|
|
|
Ward
M. Klein(2)
|
Member
|
|
|
|
|
|
Steven
W. Korn
|
Member
|
Member
|
|
|
Member
|
|
Patricia
G. McGinnis
|
Member
|
|
Member
|
|
Member
|
|
W.
Patrick McGinnis
|
Member
|
Member
|
Chair
|
|
|
|
Michael
F. Neidorff(3)
|
Member
|
|
Member
|
|
|
|
Hal
J. Upbin
|
Member
|
Chair
|
|
Member
|
|
|
Number
of 2006 Meetings
|
9
|
7
|
6
|
1
|
3
|
| |
|
|
|
|
|
|
Retired
|
|
|
|
|
|
|
Richard
A. Liddy
(4)
|
Member
|
|
|
Chair
|
Member
|
|
Jerry
E. Ritter
(4)
|
Member
|
Chair
|
|
Member
|
|
______________________
| (1) |
Ms.
Hendra served as a member of the Audit Committee from May 25, 2006
through
November 28, 2006.
|
| (2) |
Mr.
Klein joined the board on March 7, 2007. Mr. Klein was recommended
to the
Governance and Nominating Committee by our retired directors Richard
A.
Liddy and Jerry E. Ritter.
|
| (3) |
Mr.
Neidorff joined the board on March 2, 2006. Mr. Neidorff was recommended
to the Governance and Nominating Committee by Mr.
Ritter.
|
| (4) |
Mr. Liddy and Mr. Ritter served as directors from
January
29, 2006 through May 25, 2006, and each retired at the end of his
three-year term and did not stand for re-election at the 2006 annual
meeting. |
The
Audit
Committee’s primary responsibilities are to monitor (a) the integrity of the
Company’s financial statements, (b) the financial reporting process and systems
of internal accounting and financial controls, (c) compliance with ethics
policies and legal and regulatory requirements and the Company’s independent
registered public accountants’ qualifications and independence and (d) the
performance of the Company’s internal audit function and independent registered
public accountants. The audit committee is directly responsible for the
appointment, compensation and oversight of the work of the independent
registered public accountants. The board has determined, in its judgment, that
the audit committee is composed solely of independent directors as defined
in
the NYSE listing standards and Rule 10A-3 of the Exchange Act and operates
under
a written charter adopted by the entire board. The board has determined, in
its
judgment, that Mr. Upbin qualifies as an “audit committee financial expert.” The
board, in the Corporate Governance Guidelines, has established the policy that
no member of the Audit Committee may serve on the audit committees of more
than
three public companies (including our audit committee). Also see “Audit
Committee Report.”
The
Compensation Committee’s primary responsibility is to establish the executive
officers’ compensation. The committee also reviews changes in the compensation
of other key management employees, approves the participation of executives
and
other key management employees in the various compensation plans, reviews our
compensation programs, and monitors our promotion and management development
practices. The committee meets several times each year (5 times in fiscal 2006),
and committee agendas are established in consultation between the committee
chair and the Company’s Chief Talent Officer. The Company, through its human
resources department and the committee, has retained Hewitt Associates as its
independent compensation consultant to assist in evaluating executive
compensation programs and in setting executive officers’ compensation. The
consultant usually prepares a benchmarking report for the committee’s use in
setting executive compensation and makes a presentation to the committee
concerning compensation trends and best practices, plan design and the
reasonableness of individual compensation awards. As requested by the committee
from time to time, the consultant prepares specific compensation recommendations
for the committee’s consideration. The Company’s Chief Executive Officer gives
the committee a performance assessment and compensation recommendation for
each
of the other named executive officers. Those recommendations are then considered
by the committee with the assistance of the Company’s Chief Talent Officer. The
Chief Executive Officer, Chief Talent Officer and Vice President, Total Rewards
generally attend committee meetings, but the committee meets in executive
session when discussing compensation for the Chief Executive Officer.
The
board
has determined, in its judgment, that the Compensation Committee is composed
solely of independent directors as defined in the NYSE listing standards and
operates under a written charter adopted by the entire board. Also see “Report
of the Compensation Committee.”
The
Executive Committee may exercise all of the powers and duties of the board
in
the direction of the management of our business and affairs during the intervals
between board meetings that may lawfully be delegated to it by the board of
directors. However, certain categories of matters have been expressly reserved
to the full board. The Executive Committee operates under a written charter
adopted by the entire board.
The
Governance and Nominating Committee develops criteria for membership on the
board, recommends candidates for membership on the board and its committees,
evaluates the structure and composition of the board, reviews and recommends
compensation of non-employee directors, oversees the evaluation of executive
management, and reviews the effectiveness of board governance. A candidate
should possess the highest personal and professional ethics, integrity and
values, and be committed to representing the long-term interests of
shareholders. In evaluating the suitability of individual nominees, the
Governance and Nominating Committee will also take into account, among other
things, the nominee’s personal and professional attributes, ability to provide
necessary stewardship over business strategies and programs adopted to ensure
the coordination of interests among employees, management and shareholders,
ability to respect and maintain adherence to the Code of Business Conduct,
and
ability to balance short-term goals and long-term goals of the Company and
its
shareholders. The Governance and Nominating Committee will consider a candidate
for director proposed by a shareholder, provided that the proposing shareholder
submits the information by the specified deadline, and provides appropriate
information, as discussed in more detail in the section “Shareholder Proposals
for the 2007 Annual Meeting.” A shareholder wishing to propose a candidate for
the committee’s consideration should forward the candidate’s name and
information about the candidate’s qualifications to our Corporate Secretary. The
board has determined, in its judgment, that the Governance and Nominating
Committee is composed solely of independent directors as defined in the NYSE
listing standards and operates under a written charter adopted by the entire
board.
A
director who is an employee does not receive payment for service as a director.
The following table summarizes compensation paid to non-employee directors
during fiscal 2006:
DIRECTOR
COMPENSATION
|
Name
|
Fees
Earned or Paid
in Cash ($)(1)
|
Stock
Awards
($)(2)
|
Total
($)
|
|
Current
|
|
|
|
|
Joseph
L. Bower
|
$72,625
|
$205,983
|
$278,608
|
|
Julie
C. Esrey
|
59,500
|
205,983
|
265,483
|
|
Carla
Hendra
|
54,500
|
128,939
|
183,439
|
|
Ward
M. Klein(3)
|
--
|
--
|
--
|
|
Steven
W. Korn
|
60,500
|
144,742
|
205,242
|
|
Patricia
G. McGinnis(4)
|
54,500
|
699,858
|
754,358
|
|
W.
Patrick McGinnis
|
62,500
|
205,983
|
268,483
|
|
Michael
F. Neidorff(4)
|
50,363
|
59,465
|
109,828
|
|
Hal
J. Upbin
|
67,875
|
144,928
|
212,803
|
|
Retired
|
|
|
|
|
Richard
A. Liddy(5)
|
23,375
|
74,052
|
97,427
|
|
Jerry
E. Ritter(6)
|
25,125
|
34,985
|
60,110
|
___________________
| (1)
|
Cash
fees include fees for attending board and committee meetings in Fiscal
2006 as well as the annual retainer amount for serving on the board
and as
the chairperson for a committee during fiscal 2006. Cash retainers
and
committee chair retainers are paid at the end of each fiscal quarter,
which results in three payments being made during the fiscal year
of
election and the remaining payment being made in the following fiscal
year. These cash fee amounts have not been reduced to reflect a director’s
election to defer receipt of cash fees pursuant to the Deferred
Compensation Plan for Non-Employee Directors these deferrals are
indicated
in note (4) below.
|
| (2)
|
Amounts in the Stock Awards column reflect the change
in
cumulative liability for financial statement reporting purposes with
respect to fiscal 2006 for the fair value of restricted stock units
and
phantom stock units outstanding as of fiscal 2005 year-end and additional
restricted stock units granted during fiscal 2006; these amounts exclude
the grant date fair value of phantom units granted during fiscal 2006
and
as to which the value of the cash compensation being deferred is included
in “Fees Earned or Paid in Cash” column and also exclude dividend
equivalents granted in fiscal 2006 on both the restricted stock units
and
phantom stock units. Pursuant to SEC rules, the amounts shown exclude
the
impact of estimated forfeitures related to service-based vesting
conditions. The change in cumulative liability for these awards is
calculated in accordance with FAS 123R, which provides that the fair
value
of the restricted stock units is spread over the number of months of
service required for the grant to be non-forfeitable; for restricted
stock
units that are no longer forfeitable and for phantom units that are
fully
vested upon grant, FAS 123R calculates the liability (being the change
in
fair value) based on the change in the closing price of the stock between
the measurement dates. These amounts reflect the Company’s expense under
FAS 123R for these awards, and do not correspond to the actual value
that
may be recognized by the director. Additional information regarding
stock
and option awards granted to directors during fiscal 2006 and outstanding
at fiscal 2006 year-end is provided under the heading “Non-Employee
Director Equity Awards.” |
| (3)
|
Mr.
Klein was elected to the Board in March 2007; accordingly he did not
serve
on the Board or receive compensation as a director during fiscal
2006. |
| (4) |
Ms. McGinnis and Mr. Neidorff elected to defer all
of
their directors’ fees paid during fiscal 2006 pursuant to the Deferred
Compensation Plan for Non-Employee Directors; and pursuant to that
plan
they received a number of fully vested phantom stock units on the last
day
of each fiscal quarter based on the total retainer and meeting fees
earned
for the quarter divided by the market value (mean of the high and low
price) of the Company’s common stock on the last trading day of the fiscal
quarter. The cash value of these units is included within Fees Earned
or
Paid in Cash column and is excluded from the calculations in the Stock
Awards column. Ms. McGinnis shows a substantially higher stock award
amount than other directors because she has a substantial number of
accumulated phantom stock units and accrued dividends thereon and the
previously granted units have increased in value based on the increase
in
our common stock price. |
| (5) |
Mr. Liddy served as director until May 25, 2006
and
did not stand for re-election at the 2006 annual meeting. In connection
with his retirement, as adjusted for our recent stock split, Mr. Liddy
exercised stock options for 19,500 shares, and he received a cash payment
of $231,699 upon tender of 8,943 restricted stock units.
|
| (6) |
Mr. Ritter served as director until May 25, 2006
and did not stand for re-election at the 2006 annual meeting. In
connection with his retirement, as adjusted for our recent stock split,
Mr. Ritter exercised stock options for 19,500 shares, and he received
a
cash payment of $70,667 upon tender of 2,727 restricted stock units.
|
The
following table shows stock options and other stock awards (restricted stock
units and phantom stock units) granted to directors during fiscal 2006 and
those
held by directors at the end of Fiscal 2006 (February 3, 2007). All unit and
stock option numbers have been adjusted for the recent stock split. For our
directors who retired in fiscal 2006, no equity awards were granted during
fiscal 2006 or were outstanding at our fiscal year-end.
| |
Options
|
Stock
Awards
|
|
Name
|
Number
of Securities Underlying Unexercised Options
(#)
Exercisable
At
February 3,
2007(1)
|
Phantom
Stock Units
|
Restricted
Stock Units
|
|
Fiscal
2006 Cash Deferred
($)
|
Number
Granted in Fiscal 2006 (#)(2)
|
Number
of Phantom Stock Units (#) Held
At
February 3,
2007
|
Restricted
Stock Units Granted in Fiscal 2006
(#)(3)
|
Grant
Date Fair Value
($)(4)
|
Number
of Restricted Stock Units (#) Vested at February 3, 2007
(#)
|
Number
of Restricted Stock Units (#) Unvested at February 3,
2007
(#)
|
|
Joseph
L. Bower
|
28,125
|
|
|
|
1,650
|
$42,746
|
8,943
|
1,717
|
|
Julie
C. Esrey
|
28,125
|
|
|
|
1,650
|
42,746
|
8,943
|
1,717
|
|
Carla
Hendra
|
|
|
|
|
1,650
|
42,746
|
2,725
|
1,663
|
|
Ward
M. Klein(5)
|
|
|
|
|
|
|
|
|
|
Steven
W. Korn
|
|
|
|
|
1,650
|
42,746
|
5,254
|
1,692
|
|
Patricia
G. McGinnis
|
25,425
|
54,500
|
1,568
|
20,436
|
1,650
|
42,746
|
8,943
|
1,717
|
|
W.
Patrick McGinnis
|
18,900
|
|
|
|
1,650
|
42,746
|
8,943
|
1,717
|
|
Michael
F. Neidorff
|
|
50,363
|
1,293
|
1,293
|
1,650
|
42,746
|
--
|
1,660
|
|
Hal
J. Upbin
|
|
|
|
|
1,650
|
42,746
|
5,260
|
1,693
|
____________________
(1)
No
stock options have been granted to non-employee directors since 2002; options
granted to non-employee directors were fully vested upon grant. These stock
options have a term of ten years, were granted as of the date of approval
by the
Governance and Nominating Committee, have an exercise price based on the
average
of the high and low price for our stock on the grant date, and terminate
60 says
following retirement as a director. Because these options were fully vested
prior to fiscal 2006, the Company did not recognize any compensation expense
in
fiscal 2006 with respect to these options.
(2)
The
number of phantom stock units granted as deferred compensation was based on
the
fair market value (average of the high and low prices) on the grant date, which
is the quarter-end date for the quarter during which the cash fees would
otherwise have been paid. The number of units shown in this table does not
include dividend equivalent units paid in fiscal 2006.
(3)
Annual awards of restricted stock units were granted on May 26, 2006 as
compensation for service during the May 2006-May 2007 term. The number of units
shown in this table also includes dividend equivalent units paid in fiscal
2006.
(4)
The
grant date fair value has been determined by multiplying the average of the
high
and low sale price ($25.91) of our stock on the date of grant (May 25, 2006)
by
the number of units, and excludes the value of dividend equivalent units paid
in
fiscal 2006.
(5) Mr.
Klein
was not a member of the board during fiscal 2006.
For
fiscal 2006, commencing with the 2006 Annual Meeting on May 25, 2006, the
following compensation guidelines were in effect for non-employee directors,
with cash retainers payable quarterly in arrears:
•
$30,000
as an annual retainer,
•
Chairs
of the Compensation, Executive and Governance and Nominating Committees each
received an additional $7,500 annual retainer,
•
Chair
of the Audit Committee received an additional $12,500 annual
retainer
•
As
adjusted for our recent stock split, an award of 1,650 restricted stock units
granted on May 26, 2006. This was valued at $25.91 per unit and $42,746 in
total
(based on the average of the high and low prices for the Company’s common stock
on that date).
•
$1,500
fee for each board meeting attended, or each day of such meeting if such meeting
was over multiple days, and $1,000 for each committee meeting attended,
regardless of whether serving as a member of the committee.
•
Reimbursement of customary expenses (such as travel expenses, meals and lodging)
for attending board, committee and shareholder meetings.
During
the portion of fiscal 2006 prior to last year’s annual meeting, the director
compensation approved in May 2005 was in effect, and provided for substantially
the same cash compensation payments to non-employee directors.
We
also
carry liability insurance and travel accident insurance that covers our
directors. We do not maintain a directors’ retirement plan or a directors’
legacy or charitable giving plan, although directors are permitted to
participate in our employee matching gift program on the same terms as
employees, thereby providing a match for charitable giving to institutions
of
higher education and arts and cultural organizations aggregating up to $5,000
per year per individual. Directors do not participate in the Company’s pension
plan, Supplemental Executive Retirement Plan (SERP), annual cash incentive
plan
or performance share plan.
Directors’
compensation is established by the board of directors upon the recommendation
of
the Governance and Nominating Committee. In March 2007, the Governance and
Nominating Committee recommended that compensation for non-employee directors
remain the same for the year following the annual meeting, except to adjust
the
number of restricted stock units granted for the year. As of the date of this
proxy statement, no determination has been made with respect to a 2007 grant
of
restricted stock units to non-employee directors, although this matter is
expected to be considered by the board prior to the annual meeting.
A
director who is an employee does not receive payment for service as a
director.
To
align
the directors’ interests with those of our stockholders, in connection with the
annual meeting of shareholders, the board has approved an equity based grant
to
directors, as recommended by the Governance and Nominating Committee, with
grants made in the board’s discretion at other times only for new directors
appointed between annual meetings.
The
restricted stock units granted to non-employee directors are the economic
equivalent of a grant of restricted stock; however, no actual shares of stock
are issued at the time of grant or upon payment. Rather, the award entitles
the
non-employee director to receive cash, at a future date, equal to the future
market value of one share of our common stock for each restricted stock unit,
subject to satisfaction of a one-year vesting requirement. For this grant,
the
Governance and Nominating Committee has established an approximate aggregate
cash value for the grant, and then determined the exact number of restricted
stock units granted to each non-employee director by dividing the aggregate
value of the award by the fair market value of the common stock on the date
of
grant (average of the high and low prices). The units vest in full one year
after the date of grant, and the payout will be on the date that service as
director terminates or such earlier date as a non-employee director may elect.
Dividend equivalents are paid on restricted stock units at the same rate as
dividends on the Company’s common stock, and are automatically re-invested in
additional restricted stock units as of the payment date for the dividend.
In
1999,
the board adopted a deferred compensation plan for non-employee directors.
Under
the plan, we credit each participating director’s account with the number of
“phantom
units”
that is equal to the number of shares of our stock which the participant could
purchase or receive with the amount of the deferred compensation, based upon
the
fair market value (calculated as the average of the high and low price) of
our
stock on the last trading day of the fiscal quarter when the cash compensation
was earned. Dividend equivalents are paid on phantom stock units at the same
rate as dividends on the Company’s common stock, and are re-invested in
additional phantom stock units at the next fiscal quarter-end. When the
participating director terminates his or her service as a director, we will
pay
the cash value of the deferred compensation to the director (or to the
designated beneficiary in the event of death) in annual installments over a
five-year or ten-year period, or in a lump sum, at the director’s election. The
cash amount payable will be based on the number of units of deferred
compensation credited to the participating director’s account, valued on the
basis of the fair market value at fiscal quarter-end on or following termination
of the director’s service, and calculated based on the average of the high and
low price of an equivalent number of shares of our stock on the last trading
day
of the fiscal quarter. The plan also provides for earlier payment of a
participating director’s account if the board determines that the participant
has a demonstrated financial hardship.
The
following table shows the amount of our common stock beneficially owned as
of
April _, 2007, by each director, each of the named executive officers listed
in
the Summary Compensation Table, and all current directors and executive officers
as a group. In general, “beneficial ownership” includes those shares a person
has or shares the power to vote, or the power to dispose. The table also shows
the number of options to purchase shares of our stock that are exercisable,
either immediately or by June __, 2007. For our non-employee directors, the
table shows the total number of share units held, as these units have an
investment value that mirrors the value of our common stock. All share, unit
and
option numbers have been adjusted for the recent stock split.
|
|
Amount
of Common Stock Beneficially Owned
|
|
Name
|
Number
of
Shares(1)
|
Exercisable
Options(2)
|
Total
|
%
of Shares
Outstanding
|
Share
Units(3)
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
L. Bower
|
|
|
|
|
|
|
|
|
|
|
|
Julie
C. Esrey
|
|
|
|
|
|
|
|
|
|
|
|
Ronald
A. Fromm
|
|
|
|
|
|
|
|
|
|
|
|
Carla
Hendra
|
|
|
|
|
|
|
|
|
|
|
|
Mark
E. Hood
|
|
|
|
|
|
|
|
|
|
|
|
Ward
M. Klein
|
|
|
|
|
|
|
|
|
|
|
|
Steven
W. Korn
|
|
|
|
|
|
|
|
|
|
|
|
Patricia
G. McGinnis
|
|
|
|
|
|
|
|
|
|
|
|
W.
Patrick McGinnis
|
|
|
|
|
|
|
|
|
|
|
|
Michael
F. Neidorff
|
|
|
|
|
|
|
|
|
|
|
|
Gary
M. Rich
|
|
|
|
|
|
|
|
|
|
|
|
Diane
M. Sullivan
|
|
|
|
|
|
|
|
|
|
|
|
Hal
J. Upbin
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
W. Wood
|
|
|
|
|
|
|
|
|
|
|
|
Current
Directors and Executive Officers as a group (18 persons, including
persons
named above)
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
Retired
|
|
|
|
|
|
|
|
|
|
|
|
Andrew
M. Rosen
|
|
|
|
|
|
|
|
|
|
|
_________________
* Represents
less than 1% of the outstanding shares of common stock.
| |
(1)
|
Includes
restricted stock as to which the holder has voting rights but no
investment power, and which are subject to forfeiture based on service,
as
follows: Mr. Fromm- ____ shares; Mr. Hood- ___ shares; Mr. Rich -
____;
Ms. Sullivan - ____ shares; Mr. Wood - ____; and Current Directors
and
Executive officers as a group - ____ shares. Also includes shares
held by
the trustee of the Company’s 401(k) plan for the account of individuals,
but as to which the employee does not have the right to vote, as
follows:
Mr. Fromm- ___ shares; Mr. Hood- __shares; Mr. Rich - ___shares;
Ms.
Sullivan - ___ shares; Mr. Wood - ___; and Current Directors and
Executive
officers as a group - ___ shares.
|
| (2) |
Shares
that could be acquired by exercising stock options through June __,
2007.
|
| |
(3)
|
Share
units include phantom units under our deferred compensation plan
for
non-employee directors and restricted stock units issued to our
non-employee directors, all of which are denominated to be comparable
to
shares of Company common stock and are vested or will be vested through
June __, 2007. The share units are ultimately paid in cash and have
no
voting rights. The value of a director’s units is measured by the price of
our common stock.
|
The
board
recently adopted a written related party transaction policy that provides for
the board to review all transactions expected to exceed $100,000 in which a
related party has a material interest, or for such a transaction continuing
into
a subsequent fiscal year, is expected to extend beyond six months or exceed
$100,000 in the subsequent year. For purposes of this policy, related parties
include the Company’s executive officers, directors or nominees, or 5%
beneficial owner of the Company’s common stock, as well as any immediate family
member of any of the foregoing, or entity controlled by them or in which they
have a 10% beneficial interest. In making its determination whether to approve
a
related party transaction, the Board shall consider such factors as the extent
of the person’s interest in the transaction, the aggregate value, the
availability of other sources of comparable products or services, whether the
terms of the transaction are no less favorable than terms generally available
in
unaffiliated transaction under like circumstances, and the benefit to the
Company.
During
fiscal 2006, the Company engaged OgilvyOne LLC (“Ogilvy”) to provide certain
marketing and consulting services. One of our directors, Carla Hendra,
is Co-Chief
Executive Officer of Ogilvy North America
and
president of OgilvyOne N.A., both of which are affiliates of Ogilvy. During
Fiscal 2006, the Company incurred $665,500 of fees payable to Ogilvy. Although
this transaction with Ogilvy was entered into by the Company prior to the
board’s adoption of a written policy on related party transaction, the
transaction was ratified following the adoption of such written
policy.
The
Company’s employee matching gift program generally provides a match for
charitable giving to institutions of higher education and arts and cultural
organizations aggregating up to $5,000 per year per individual. In 2006,
the
board approved a special match for a charitable gift commitment made by Mr.
Fromm to Barnes-Jewish Hospital Foundation, in an aggregate amount of $250,000
over seven years. For fiscal 2006, the Company’s special matching contribution
was $35,000. Mr. Fromm does not have a direct, material interest in this
matching gift.
In
fiscal
2006, there were no other material transactions between the Company and its
executive officers, directors or principal shareholders.
Section
16(a) of the Securities Exchange Act of 1934 requires our executive officers
and
directors, and any persons beneficially owning more than ten percent of our
common stock to report their ownership of stock and any changes in ownership
to
the Securities and Exchange Commission, New York Stock Exchange and Chicago
Stock Exchange. The SEC has established specific due dates for these reports,
and we are required to report in this proxy statement any failure to file by
these dates. Based solely on a review of the copies of the reports furnished
to
us and written representations that no other such statements were required,
we
believe that all such other reports of our executive officers and directors
were
filed on a timely basis.
Our
certificate of incorporation and bylaws provide for a board of directors that
is
divided into three classes as equal in size as possible. This classified board
structure was adopted on November 2, 1954. Each of the classes has a three-year
term, and the term of one class expires each year in rotation at that year’s
annual meeting. We may change the size of the board by amending our bylaws.
Persons elected by a majority of the remaining directors may fill vacancies
on
the board. A director elected by the board to fill a vacancy, or a new
directorship created by an increase in the size of the board, serves until
the
next annual meeting of shareholders. Our bylaws can be amended by a majority
of
shareholders acting at a meeting of shareholders or by a majority of the board.
On
March
8, 2007, your board amended the bylaws to increase the number of directors
from
nine to ten, thereby creating one vacancy on the board, and appointed Ward
M.
Klein to fill the vacancy until the upcoming 2007 annual meeting. In searching
for a new director, Mr. Bower, as the Chair of the Governance and Nominating
Committee, compiled a list of possible candidates and solicited input from
all
directors. Mr. Klein was recommended as a nominee by former directors Jerry
E.
Ritter and Richard A. Liddy. The Governance and Nominating Committee reviewed
and considered potential candidates. Mr. Bower then contacted Mr. Klein to
initiate discussions about joining the board, and Mr. Klein met with several
of
the independent directors. Upon the recommendation of the Governance and
Nominating Committee, the board appointed Mr. Klein as a director.
There
are
no family relationships between any of our directors and executive
officers.
With
a
ten person Board, the class of directors whose term will expire in 2008 will
have three members; the class whose term will expire in 2009 will have four
members; and the class whose term will expire in 2010 will have three members.
Your board of directors has nominated three individuals, Ward M. Klein, W.
Patrick McGinnis and Hal J. Upbin for election as directors for a three-year
term at the 2007 Annual Meeting. Your board of directors also has nominated
another current director, Julie C. Esrey, for a two-year term. Each of these
nominees currently serves on the Board for a term expiring at the 2007 Annual
Meeting.
Your
board is not aware that any nominee named in this proxy statement is unwilling
or unable to serve as a director. If, however, a nominee is unavailable for
election, your proxy authorizes the proxies to vote for a replacement nominee
if
the board names one. As an alternative, the board may reduce the number of
directors to be elected at the meeting. Proxies may not be voted for a greater
number of persons than the nominees identified below.
[PHOTO
OF
WARD M. KLEIN}
WARD
M.
KLEIN, 52, has been a director since March 2007. He is a member of the Board
of
Directors of Energizer Holdings, Inc., a manufacturer of primary batteries,
flashlights and men’s and women’s wet shave products, and also serves as Chief
Executive Officer of Energizer Holdings, Inc., a position he has held since
January 2005. Prior to that time, he served as President and Chief Operating
Officer from 2004 to 2005, and as President, International from 2002 to 2004.
having first joined Energizer in 1986.
[PHOTO
OF
W.
PATRICK MCGINNIS]
W.
PATRICK McGINNIS, 59,
has
been a director since 1999. He is a member of the Board of Directors and Chief
Executive Officer and President of Nestlé Purina PetCare Company, a manufacturer
of pet products. From 1997 until 2001, he was a member of the Board of Directors
and Chief Executive Officer and President of Ralston Purina Company. He served
as President and Chief Executive Officer of the Pet Products Group of Ralston
Purina Company from 1992 to 1997, when he was elected to the Board of Directors
and to the additional office of Co-Chief Executive Officer of Ralston Purina
Company. Mr. McGinnis serves on the Board of Directors of Energizer Holdings,
Inc.
[PHOTO
OF
HAL J. UPBIN]
HAL
J. UPBIN, 68,
has
been a director since 2004 and is Chairman Emeritus of the Board of Directors
of
Kellwood Company, a marketer of apparel and consumer soft goods. From 1999
to
January 31, 2006 Mr. Upbin served as Chairman of the Board of Kellwood Company,
and from December 1997 through June 2005, he was Chief Executive Officer of
Kellwood Company. From 1994 until 1997, he was President and Chief Operating
Officer of Kellwood Company, and from 1992 until 1994, he was Executive Vice
President Corporate Development of Kellwood Company. He served as Vice President
Corporate Development of Kellwood Company from 1990 to 1992 and was President
of
American Recreation Products, Inc., a subsidiary of Kellwood, from 1988 to
1992.
Mr. Upbin is also a member of the Board of Trustees for Pace University and
a
Council Member of Washington University’s Olin School of Business.
[PHOTO
OF
JULIE C. ESREY]
JULIE
C. ESREY, 68,
has
been a director since 1995. From 1962 to 1976, she was employed as an
International Economist for Exxon Corporation, where she subsequently was
engaged as a consultant. Ms. Esrey has served as a member of the Executive
Committee of the Board of Trustees of Duke University and a director of the
Duke
Management Company. She also has served as a director of Bank IV Kansas,
National Association, in Wichita, Kansas.
|
Your
Board of Directors recommends a vote “FOR” these
nominees.
|
[PHOTO
OF
RONALD A. FROMM]
RONALD
A. FROMM, 56,
has
been our Chairman of the Board of Directors and Chief Executive Officer and
a
director since 1999. From 1999 until January 2004, he also served as our
President, and during 1998 served as a President of our branded wholesale
division. From 1992 until 1998, he served as Executive Vice President of our
Famous Footwear division, and prior to that time served as its Chief Financial
Officer. He currently serves as Chairman Emeritus and member of the Board of
Directors of the Footwear Distributors and Retailers of America (FDRA), Chairman
of the Board of Directors of the Fashion Footwear Association of New York
(FFANY), and Chairman of the Board of Directors of the Two/ Ten
International Footwear Foundation.
[PHOTO
OF
STEVEN W. KORN]
STEVEN
W. KORN,
53, has
been a director since 2004. He has been the Publisher of the Daily Report,
a
legal newspaper located in Atlanta, Georgia, since 2005. Until 2000, he was
Vice
Chairman and Chief Operating Officer of CNN, a position he held starting in
1996. Previously, he served as the Vice President, General Counsel and Secretary
at Turner Broadcasting System, Inc. (TBS). Mr. Korn has also served as an
attorney specializing in civil litigation involving media, entertainment and
telecommunications issues. Mr. Korn currently serves on the boards of Public
Broadcasting System, Vassar College, SV Investment Partners, LLC, and Precision
IR Group.
[PHOTO
OF
PATRICIA G. MCGINNIS]
PATRICIA
G. McGINNIS, 59,
has
been a director since 1999. She is the President and Chief Executive Officer
of
The Council for Excellence in Government, a national membership organization
of
private sector leaders who have served as senior officials in government. She
has held that position since May 1994. From 1982 until May 1994, she was a
principal at the FMR Group, a public affairs consulting firm.
[PHOTO
OF
JOSEPH L. BOWER]
JOSEPH
L. BOWER, 68,
has
been a director since 1987. Since 1973, he has been the Donald Kirk David
Professor of Business Administration at Harvard Business School. Mr. Bower
serves as a director of Anika Therapeutics, Loews Inc., the New America High
Income Fund, Sonesta International Hotels Corporation and the TH Lee Putnam
EOP
Fund.
[PHOTO
OF
CARLA HENDRA]
CARLA
HENDRA,
50, has
been a director since November 2005. Since July 2005, she has been the Co-Chief
Executive Officer of Ogilvy North America, a one-to-one marketing services
network and since 1998, she has been the President of OgilvyOne N.A. Ms. Hendra
leads the North American region of OgilvyOne Worldwide, the world’s leading.
Prior to joining Ogilvy in 1996, Ms. Hendra served as Executive Vice President,
Grey Direct, a division of Grey Advertising from 1992 to 1996. Ms. Hendra serves
as a director of Ogilvy & Mather Worldwide and OgilvyOne Worldwide. She also
serves as a director of Unica Corporation, a company engaged in the enterprise
marketing management software business.
[PHOTO
OF
MICHAEL F. NEIDORFF]
MICHAEL
F. NEIDORFF,
64, has
been a director since March 2006. Since 1996, he has been the President and
Chief Executive Officer of Centene Corporation, a government services managed
care company; and since May 2004, has also served as Centene’s Chairman of the
Board.
Your
board has approved, and recommends the adoption by shareholders of, an amendment
to the Company's Restated Certificate of Incorporation to reduce the par value
of the common stock to $.01 per share. The Restated Certificate of Incorporation
currently authorizes the issuance of shares of common stock with a par value
of
$3.75 per share. Your board believes it is in the best interests of shareholders
to amend the Certificate of Incorporation to reduce the par value of the common
stock to $.01 per share to provide flexibility for future
dividends.
Historically,
the concept of par value served to protect creditors and senior security holders
by ensuring that a company received at least the par value as consideration
for
issuance of stock. Over time, the concept of par value has lost its significance
for the most part. Many companies that incorporate today use a nominal par
value
or have no par value.
The
reduction in the par value of the common stock would result in a reduction
in
the capital stock account (approximately $162 million as of April 4, 2007)
on
the Company's balance sheet and a corresponding increase in the additional
paid-in (or surplus) capital account. The reduction in the par value would
reduce the amount required to be carried by the Company as capital, thereby
potentially increasing the Company's surplus capital available for dividends
and
other distributions and for other corporate purposes. Your board has not
proposed the reduction in the par value with the intention of declaring special
or additional dividends on the common stock.
The
reduction in the par value should have no effect on the rights of the holders
of
the common stock except for the minimum amount per share the Company may receive
upon the issuance of authorized but unissued shares and added dividend
flexibility. The reduction in the par value would not change the number of
authorized shares of common stock. Also, no change to the par value is proposed
with respect to the authorized preferred stock, none of which is issued and
outstanding.
If
this
proposal is approved, the fourth article of the Restated Certificate of
Incorporation will be amended and restated to read as follows:
| |
"FOURTH:
The aggregate number of shares which the Corporation shall have the
authority to issue is 101,000,000 of which 100,000,000 shares shall
be
Common Stock having a par value of $.01 per share and 1,000,000 shares
shall be Preferred Stock having a par value of $1.00 per
share."
|
The
amendment to the Restated Certificate of Incorporation will become effective
upon the filing of such amendment with the Secretary of State for the State
of
New York.
If
this
proposal is approved, certificates representing shares of common stock, $3.75
par value per share, issued and outstanding prior to the effective date of
filing of the amendment to the Restated Certificate of Incorporation, will
be
changed to represent the same number of shares of the common stock, $.01 par
value per share, as they did prior to such effective date. Existing certificates
will not be exchanged for new certificates. Please do
not
return
any
certificates to the Company.
|
The
Board of Directors recommends a vote “FOR” the amendment to the
certificate of incorporation to reduce par value of the common stock.
|
The
Audit
Committee has appointed Ernst & Young LLP as the independent registered
public accountants to audit the company’s consolidated financial statements for
the fiscal year ending February 2, 2008. The Audit Committee and the board
are
requesting that shareholders ratify this appointment as a means of soliciting
shareholders’ opinions and as a matter of good corporate practice. If the
shareholders do not ratify the selection of Ernst & Young LLP, the audit
committee will consider any information submitted by the shareholders in
connection with the selection of the independent registered public accountants
for the next fiscal year. Even if the selection is ratified, the audit
committee, in its discretion, may direct the appointment of different
independent registered public accountants at any time during the fiscal year
if
the audit committee believes such a change would be in the best interest of
the
Company and its shareholders.
Representatives
of Ernst & Young LLP do not plan to make a formal statement at the annual
meeting. However, we expect that they will attend the meeting and be available
to respond to appropriate questions.
|
The
Board of Directors recommends a vote “FOR” the ratification of the
appointment of Ernst & Young LLP as the Company’s independent
registered public accountants.
|
During
fiscal 2006 and fiscal 2005, Ernst & Young LLP were our independent
registered public accountants and charged fees for services rendered to us
as
follows:
|
Service
Fees
|
2006 Fees
|
2005 Fees
|
|
Audit
Fees(1)
|
|
$1,111,119
|
$1,438,603
|
|
Audit-related
Fees(2)
|
|
89,097
|
67,987
|
|
Tax
Fees(3)
|
|
107,298
|
125,700
|
|
All
Other Fees
|
|
--
|
--
|
|
Total
|
|
$1,307,514
|
$1,632,290
|
| |
|
|
|
_____________
|
(1)
|
The
audit services performed in 2005 included services in connection
with our
acquisition of Bennett Footwear and our offering of 8.75% senior
notes.
|
| (2) |
The audit-related services performed in 2006 and
2005
were audits of our employee benefit plans. |
| (3) |
The tax services in 2006 and 2005 included tax compliance (including
preparation and/or review of tax returns), tax planning and tax advice,
including assistance with tax audits. |
In
2006,
all of the audit, audit-related and tax services were pre-approved in accordance
with the Audit Committee’s audit and non-audit services pre-approval policy that
requires the committee, or the chair of the committee to pre-approve services
to
be provided by the Company’s independent registered public accountants. Pursuant
to this policy, the committee will consider whether the services to be provided
by the independent registered public accountants are prohibited by the SEC
and
consistent with the SEC’s rules on auditor independence and whether the
independent registered public accountants are best positioned to provide the
most effective and efficient services. The committee is mindful of the
relationship between fees for audit and non-audit services in deciding whether
to pre-approve such services. The committee has delegated to the chair of the
committee pre-approval authority between committee meetings and the chair must
report any pre-approval decisions to the committee at the next scheduled
committee meeting.
The
Audit
Committee oversees the Company’s financial reporting process on behalf of your
board of directors. Management is primarily responsible for the financial
statements and reporting process including the systems of internal controls,
while the independent registered public accountants are responsible for
performing an independent audit of the Company’s consolidated financial
statements in accordance with auditing standards generally accepted in the
United States, and expressing an opinion on the conformity of those financial
statements with accounting principles generally accepted in the United
States.
In
this
context, the committee has met and held discussions with management and the
internal auditors and independent registered public accountants. The committee
discussed with the Company’s internal and independent registered public
accountants the overall scopes and plans for their respective audits. The
committee met, at least quarterly, with the internal and independent registered
pubic accountants, with and without management present, and discussed the
results of their examinations, their evaluations of the Company’s internal
controls, and the overall quality of the Company’s financial reporting.
Management represented to the committee that the Company’s consolidated
financial statements were prepared in accordance with accounting principles
generally accepted in the United States. The committee has reviewed and
discussed the consolidated financial statements with management and the
independent registered public accountants, including their judgments as to
the
quality, not just the acceptability, of the Company’s accounting principles; the
reasonableness of significant judgments and clarity of disclosures; and such
other matters as are required to be discussed with the committee under auditing
standards generally accepted in the United States.
The
Company’s independent registered public accountants also provided to the
committee the written disclosures required by the Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and the
committee discussed with the independent registered public accountants that
firm’s independence, including those matters required to be discussed by
Statement on Auditing Standards No. 61, as amended by Statement on Auditing
Standards No. 90. The Audit Committee considered whether the provision by Ernst
& Young, LLP of non-audit services, including tax services, was compatible
with their independence.
In
reliance on the reviews and discussions referred to above, the committee
recommended to the board of directors and the board approved including the
audited financial statements in the Annual Report on Form 10-K for the fiscal
year ended February 3, 2007 for filing with the Securities and Exchange
Commission. The committee has retained Ernst & Young LLP as the Company’s
independent registered public accountants for fiscal 2007.
While
the
committee has the responsibilities and powers set forth in its charter, it
is
not the duty of the committee to plan or conduct audits or to determine that
the
Company’s financial statements are complete and accurate and are in accordance
with generally accepted accounting principles. This is the responsibility of
management and the independent registered public accountants. Nor is it the
duty
of the committee to conduct investigations or to assure compliance with laws
and
regulations and the Company’s business conduct policies.
| |
Audit Commitee
|
| |
Hal
J. Upbin , Chair
|
| |
Steven
W. Korn
|
| |
W. Patrick McGinnis |
| |
|
| · |
Executive
Compensation disclosures to be included in Definitive Schedule
14A
|
The
members of the compensation committee for fiscal 2006 were those indicated
in
the table under the heading “Board Meetings and Committees.” None of the members
of the Compensation Committee has been an officer or employee of ours. No
executive officer of ours has served on the board of directors or Compensation
Committee of any other entity that has or has had one or more executive officers
serving as a member of your board.
The
following table shows all persons or entities that we know to beneficially
own
more than 5% of our common stock on April __, 2007, with shareholdings adjusted
for the recent stock split:
|
Name
and Address of Beneficial
Owner
|
Number
of
Shares
of
Common
Stock
|
Percent
of
Outstanding
Common
Stock
|
| |
|
|
|
Barclays
Global Investors, N. A. and related persons
Barclays
Global Fund Advisors
45
Fremont Street
San
Francisco, California 94105
|
|
|
|
2,450,557(1)
|
%
|
| |
|
| |
|
|
FMR
Corp. and other related persons
82
Devonshire Street
Boston,
Massachusetts 02109
|
|
|
|
2,274,285(2)
|
%
|
| |
|
| |
|
|
|
Goldman
Sachs Asset Management, L.P.
|
|
|
|
32
Old Slip
|
2,537,083(3)
|
%
|
|
New
York, New York 10005
|
|
|
| |
|
|
| |
|
|
__________________
(1) Based
on
its filings with the SEC, the group including Barclays Global Investors, N.A.
possessed sole voting power over 2,262,292 shares and sole dispositive power
over 2,450557 shares
(2) Based
on
its filings with the SEC, the group including FMR Corp. possessed sole power
to
vote 654,585 shares and sole power to dispose of 2,274,285 shares, and disclaims
that certain named persona are acting as a group.
(3)
Based
on its filings with the SEC, Goldman Sachs Asset Management, L.P. is an
investment advisor and disclaims beneficial ownership of any securities managed
on its behalf by third parties.
We
know
of no other matters to come before the annual meeting. If any other matters
properly come before the annual meeting, the proxies solicited hereby will
be
voted on such matters in accordance with the judgment of the persons voting
such
proxies.
According
to our bylaws, proposals of eligible shareholders intended to be presented
at
the 2008 annual meeting, currently scheduled to be held on May 22, 2008, must
be
received by us no less than 90 days (by February 22, 2008) and no more than
120
days (by January 23, 2008) prior to the meeting. According to the rules of
the
SEC, we must receive any such proposal by December __, 2007 for inclusion in
our
proxy statement and proxy relating to that meeting. Upon receipt of any such
proposal, we will determine whether or not to include such proposal in the
proxy
statement and proxy in accordance with regulations governing the solicitation
of
proxies.
A
shareholder’s notice is required to set forth as to each matter the shareholder
proposes to bring before the meeting various information regarding the proposal,
including (a) a brief description of the business desired to be brought before
the meeting and the reasons therefor, (b) the name and address of such
shareholder proposing such business, (c) the number of shares of our stock
beneficially owned by such shareholder and (d) any material interest of such
shareholder in such business. These requirements are separate from and in
addition to the SEC’s requirements a shareholder must meet to have a proposal
included in our proxy statement.
In
order
for a shareholder to nominate a candidate for director, under our bylaws, timely
notice of the nomination must be received by us in advance of the meeting.
In
order to be timely, we must receive such notice not less than 90 days (by
February 22, 2008) and no more than 120 days (by January 23, 2008) prior to
the
meeting. However, if we give you notice or publicly disclose the meeting date
less than 100 days’ prior to the date of the meeting, you must give us notice by
no later than the close of business on the 10th day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure was made. The shareholder filing the notice of nomination must
describe various matters regarding the nominee, including such information
as
(a) the name, age, business and residence addresses, occupation and shares
held
of such person; (b) any other information relating to such nominee required
to
be disclosed in the proxy statement; and (c) the name, address and shares held
by the shareholder.
In
each
case, notice must be given to our Senior Vice President, General Counsel and
Corporate Secretary, whose address is 8300 Maryland Avenue, St. Louis, Missouri
63105. We will send a copy of our bylaws to any shareholder, without charge,
upon written request. Our bylaws are also available on our website at
www.brownshoe.com/governance.
The
New
York Business Corporation Law requires that New York corporations, including
the
Company, provide information to their shareholders regarding any policies of
directors’ and officers’ liability insurance which have been purchased or
renewed. Accordingly, we want to notify our shareholders that, effective October
31, 2006, we purchased policies of directors’ and officers’ liability insurance
from Federal Insurance Company, National Union Fire Insurance Company of
Pittsburgh, PA, St. Paul Mercury Insurance Company and Allied World Assurance
Company (U.S.) Inc.. These policies cover all duly elected directors and all
duly elected or appointed officers and non-officer employees (if a co-defendant
with an officer or director) of Brown Shoe Company, Inc. and its subsidiary
companies. The policy premiums for the term ending on October 31, 2007 are
$602,575.
To date,
no claims have been paid under any policy of directors’ and officers’ liability
insurance.
The
Company undertakes to provide, without charge, to each shareholder a
copy of
the Company’s report on Form 10-K for fiscal 2006, including the
financial statements
and financial statement schedule. For your copy, please write to
our Corporate
Secretary at 8300 Maryland Avenue, St. Louis, Missouri 63105 or you may access
such report on the Company’s website at www.brownshoe.com/secfilings.
Even
though you plan to attend the meeting in person, please sign, date and return
the enclosed proxy promptly or vote by telephone or over the Internet in
accordance with the instructions shown on the enclosed proxy. You have the
power
to revoke your proxy, at any time before it is exercised, by giving written
notice of revocation to our Senior Vice President, General Counsel and Corporate
Secretary or by duly executing and delivering a proxy bearing a later date,
or
by attending the annual meeting and casting a contrary vote. All shares
represented by proxies received in time to be counted at the annual meeting
will
be voted. A postage paid, return addressed envelope is enclosed for your
convenience. Your cooperation in giving this your immediate attention will
be
appreciated.
|
/s/
MICHAEL I. OBERLANDER
|
|
MICHAEL
I. OBERLANDER
|
|
Senior
Vice President, General Counsel
|
|
and
Corporate Secretary
|
| |
|
8300
Maryland Avenue
|
|
St.
Louis, Missouri 63105
|
| |
THIS
PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL
BE VOTED
“FOR” THE PROPOSALS.
Mark
Here
For
Address
Change
or Comments
PLEASE
SEE REVERSE SIDE
WITHHELD
FOR FOR
ALL
ITEM
1. ELECTION OF DIRECTORS
ITEM
2. REDUCE PAR VALUE OF BROWN FOR AGAINST ABSTAIN
Nominees: SHOE
COMMON
STOCK
o
o
o
01
Julie C. Esrey
02 Ward
M. Klein
ITEM
3. RATIFICATON OF INDEPENDENT FOR AGAINST ABSTAIN
03 W.
Patrick McGinnis ACCOUNTANTS
o
o
o
04 Hal
J. Upbin
Withheld
for the nominees you list below: (Write that nominee’s
name
in the space provided below.)
________________________________________
┐
Signature_________________________________________
Signature____________________________________Date__________________________
NOTE:
Please
sign as name appears hereon. Joint owners should each sign. When signing
as
attorney, executor, administrator, trustee or guardian, please give full
title
as such.
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
>
FOLD AND DETACH HERE >
WE
ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE
VOTING,
BOTH
ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet
and telephone voting is available through 11:59 PM Eastern Time
the
day
prior to annual meeting day.
Your
Internet or telephone vote authorizes the named proxies to vote your shares
in
the same manner
as
if you marked, signed and returned your proxy card.
|
INTERNET
http://www.proxyvoting.com/bws
Use
the internet to vote your proxy. Have your proxy card in hand
when you
access the web site.
|
OR
|
TELEPHONE
1-866-540-5760
Use
any touch-tone telephone to vote your proxy. Have your proxy
card in hand
when you call
|
If
you
vote your proxy by Internet or by telephone, you do NOT need to mail back
your
proxy card.
To
vote
by mail, mark, sign and date your proxy card and return it in the enclosed
postage-paid envelope.
|
Choose
MLinkSM
for fast, easy and secure 24/7 online access to your future proxy
materials, invest-ment plan statements, tax documents and more.
Simply log
on to Investor
ServiceDirect® at
www.melloninvestor.com/isd
where step-by-step instructions will prompt you through
enrollment.
|
You
can view the Annual Report and Proxy Statement
on
the Internet at www.brownshoe.com/investor
PROXY
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
BROWN
SHOE COMPANY, INC.
The
undersigned hereby appoints Ronald A. Fromm, Mark E. Hood and Richard C.
Schumacher, and each of them, with power to act without the other and with
power
of substitution, as proxies and attorneys-in-fact and hereby authorizes
them to
represent and vote, as provided on the other side, all the shares of Brown
Shoe
Company, Inc. Common Stock which the undersigned is entitled to vote and,
in
their discretion, to vote upon such other business as may properly come
before
the Annual Meeting of Shareholders of the Company to be held May 24, 2007
or at
any adjournment or postponement thereof, with all powers that the undersigned
would possess if present at the Meeting.
(Continued
and to be marked, dated and signed, on the other side)
|
Address
Change/Comments (Mark
the corresponding box on the reverse side)
|
|
|
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
>
FOLD AND DETACH HERE >
You
can now access your Brown
Shoe Company, Inc.
account online.
Access
your Brown
Shoe Company, Inc.
shareholder account online via Investor ServiceDirect®
(ISD).
Mellon
Investor Services LLC, Transfer Agent for Brown
Shoe Company, Inc.,
now
makes it easy and convenient to get current information on your shareholder
account.
|
· View
account status
|
· View
payment history for dividends
|
|
· View
certificate history
|
· Make
address changes
|
|
· View
book-entry information
|
· Obtain
a duplicate 1099 tax form
|
| |
· Establish/change
your PIN
|
Visit
us on the web at http://www.melloninvestor.com/
For
Technical Assistance Call 1-877-978-7778 between
9am-7pm
Monday-Friday
Eastern Time
***TRY
IT OUT***
www.melloninvestor.com/isd/
Investor
ServiceDirect®
Available
24 hours per day, 7 days per week
TOLL
FREE NUMBER: 1-800-370-1163
Investor
ServiceDirect® is
a registered trademark of Mellon Investor Services LLC