DEF 14A
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g66704ddef14a.txt
LOWE'S COMPANIES, INC.
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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Lowe's Companies, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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[ ] 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.
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[LOWE'S LOGO]
April 16, 2001
TO LOWE'S SHAREHOLDERS:
It is my pleasure to invite you to the 2001 Annual Meeting to be held at
The Park Hotel located at 2200 Rexford Road, Charlotte, North Carolina, on
Friday, May 25, 2001 at 10:00 a.m. Directions to The Park Hotel are printed on
the back of the Proxy Statement.
This year for the first time we intend to broadcast the meeting live on the
Internet. To participate, visit Lowe's website (www.lowes.com) during the last
few days before the May 25th meeting in order to register. We will post specific
information there regarding the webcast.
The formal Notice of Annual Meeting and Proxy Statement are enclosed with
this letter. There are three items of business, as described in detail in the
Proxy Statement; so your vote or attendance is important. I look forward to
reporting on Fiscal Year 2000, as well as commenting on the results of our first
Fiscal Quarter of 2001.
Yours cordially,
/s/ ROBERT L. TILLMAN
Robert L. Tillman
Chairman of the Board,
President & Chief
Executive Officer
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LOWE'S COMPANIES, INC.
P.O. BOX 1111
NORTH WILKESBORO, NC 28656
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 25, 2001
The Annual Meeting of Shareholders of Lowe's Companies, Inc. (the
"Company") will be held at The Park Hotel, 2200 Rexford Road, Charlotte, North
Carolina, on Friday, May 25, 2001 at 10:00 a.m. to consider and act upon the
following proposals:
1. To elect four Class III Directors to a term of three years and one
Class I Director for a one-year term. The Board of Directors recommends
a vote "FOR" the election of the Director nominees proposed by the
Board.
2. To approve the Lowe's Companies, Inc., 2001 Incentive Plan (the
"Plan"). The Board of Directors recommends a vote "FOR" the approval of
the Plan.
3. To vote on a shareholder proposal concerning global workplace labor
standards, if presented. The Board of Directors recommends a vote
"AGAINST" this proposal.
4. To transact such other business as may be properly brought before the
Annual Meeting.
Shareholders of record at the close of business on March 23, 2001 are
entitled to notice of and to vote at the meeting. All properly executed proxies
delivered pursuant to this solicitation will be voted at the meeting in
accordance with instructions, if any. If two or more proxies are submitted by
the same shareholder, the proxy bearing the later date will revoke the prior
proxy. Any proxy delivered before the meeting may be revoked by attending the
meeting and voting in person.
You are cordially invited to attend, and we look forward to seeing you at
the meeting.
By order of the Board of Directors,
/s/ Stephen A. Hellrung
Stephen A. Hellrung
Senior Vice President, General
Counsel & Secretary
Wilkesboro, North Carolina
April 16, 2001
IF YOU DO NOT PLAN TO ATTEND THE MEETING, PLEASE DATE AND SIGN THE PROXY AND
MAIL AT ONCE IN THE ENCLOSED ENVELOPE.
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LOWE'S COMPANIES, INC.
P. O. BOX 1111
NORTH WILKESBORO, NORTH CAROLINA 28656
(336) 658-4000
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
MAY 25, 2001
This Proxy Statement is being furnished in connection with the solicitation
by the Board of Directors of Lowe's Companies, Inc. (the "Company") of proxies
to be voted at the Annual Meeting of Shareholders to be held at The Park Hotel,
2200 Rexford Road, Charlotte, North Carolina, on Friday, May 25, 2001 at 10:00
a.m. It is anticipated that this Proxy Statement and the enclosed form of proxy
will first be sent to shareholders on or about April 16, 2001.
Only shareholders of record at the close of business on March 23, 2001 are
entitled to notice of and to vote at the meeting or any adjournment thereof. On
March 23, 2001 there were 384,585,740 shares of Common Stock of the Company
outstanding and entitled to vote. Shareholders are entitled to one vote for each
share held on all matters to come before the meeting.
The shares represented by a proxy will be voted as directed unless the
proxy is revoked. Any proxy may be revoked before it is exercised by filing with
the Secretary of the Company an instrument revoking the proxy or a proxy bearing
a later date. A proxy is revoked if the person who executed the proxy is present
at the meeting and elects to vote in person.
Abstentions and shares held of record by a broker or its nominee ("broker
shares") that are voted on any matter are included in determining the number of
votes present or represented at the meeting. Broker shares that are not voted on
any matter at the meeting are not included in determining whether a quorum is
present. The vote required on matters to be considered is disclosed under the
caption for such matters. Votes that are withheld and broker shares that are not
voted (commonly referred to as "broker non-votes") are not included in
determining the number of votes cast in the election of Directors or on other
matters.
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PROPOSAL 1
ELECTION OF DIRECTORS
There are currently 11 members of the Board of Directors, which is divided
into three classes: Class I (three members), Class II (four members) and Class
III (four members), with one class being elected each year for a three-year
term.
To satisfy the legal requirement that the three Board classes be as nearly
equal in size as possible, four nominees are standing for election as Class III
Directors and one nominee is standing for election as a Class I Director. All
five nominees are currently Directors. The four nominees standing as Class III
Directors are: Leonard L. Berry, Paul Fulton, Dawn Hudson and Robert L. Tillman.
Robert A. Ingram is the Class I Director nominee. (Mr. Ingram and Ms. Hudson
were elected by the Board since the 2000 Annual Meeting.)
If elected, each Class III nominee will serve three consecutive years with
his/her term expiring in 2004 or until a successor is elected and qualified. If
elected as a Class I Director, Mr. Ingram will serve a one-year term with his
term expiring in 2002 or until a successor is elected and qualified. The
election of each nominee requires the affirmative vote of the holders of the
plurality of the shares of Common Stock cast in the election of Directors.
Unless authority to vote in the election of Directors is withheld, it is the
intention of the persons named as Proxies to vote "FOR" the five nominees. If at
the time of the meeting any of these nominees is unavailable for election as a
Director for any reason, which is not expected to occur, the persons named as
Proxies will vote for such substitute nominee or nominees, if any, as shall be
designated by the Board of Directors.
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INFORMATION CONCERNING THE NOMINEES
The nominees for election for a three-year term as a Class III Director to
serve until the 2004 Annual Meeting are Leonard L. Berry, Paul Fulton, Dawn
Hudson, and Robert L. Tillman. The nominee for a one-year term as a Class I
Director to serve until the 2002 Annual Meeting is Robert A. Ingram.
CONCERNING CLASS III NOMINEES
(Term Expiring in 2004)
DIRECTOR BUSINESS EXPERIENCE, DIRECTORSHIPS, AND
NAME AND AGE SINCE POSITIONS WITHIN THE LAST FIVE YEARS
---------------------------------- -------- ------------------------------------------------------
Leonard L. Berry, 58.............. 1998 Member of Audit Committee and Governance Committee of
the Company. Distinguished Professor of Marketing and
(BERRY PHOTO) M.B. Zale Chair in Retailing and Marketing Leadership,
Texas A&M University, since 1982. Other directorships:
Genesco Inc.
Paul Fulton, 66................... 1996 Chairman of Compensation and Organization Committee
and member of Executive Committee and Governance
(FULTON PHOTO) Committee of the Company. Chairman since 2000 and
Director since 1997 of Bassett Furniture Industries,
Inc., Chief Executive Officer of Bassett Furniture
from 1997 until 2000. Dean, Kenan-Flagler Business
School, University of North Carolina, Chapel Hill,
N.C., 1994-1997. Other directorships: Sonoco Products
Company, Bank of America Corp., The Cato Corporation,
and Coach, Inc.
Dawn Hudson, 43................... 2001 Member of Audit Committee and Governance Committee of
the Company. Senior Vice President, Strategy and
(HUDSON PHOTO) Marketing for Pepsi Cola North America (International
Beverage Company) since 1996.
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DIRECTOR BUSINESS EXPERIENCE, DIRECTORSHIPS, AND
NAME AND AGE SINCE POSITIONS WITHIN THE LAST FIVE YEARS
---------------------------------- -------- ------------------------------------------------------
Robert L. Tillman, 57............. 1994 Chairman of the Board since January 1998, President
and Chief Executive Officer since 1996. Chairman of
(TILLMAN PHOTO) Executive Committee of the Company.
CONCERNING CLASS I NOMINEE
(Term Expiring in 2002)
Robert A. Ingram, 59.............. 2001 Member of Compensation and Organization Committee and
Governance Committee. Chief Operating Officer and
(INGRAM PHOTO) President, Pharmaceutical Operations, of
GlaxoSmithKline (International Pharmaceutical
Corporation) since January 2001, having previously
served as Chief Executive of Glaxo Wellcome plc
(1997-2000), Chairman of Glaxo Wellcome Inc., (Glaxo
Wellcome plc's United States subsidiary) (1999-2000);
Chairman, President and Chief Executive Officer of
Glaxo Wellcome Inc. (1997-1999), and President and
Chief Executive Officer of Glaxo Wellcome Inc. prior
thereto. Other directorships: Nortel Networks
Corporation and Wachovia Corporation.
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INFORMATION CONCERNING CONTINUING DIRECTORS
Directors whose terms expire after 2001 are:
Class I Directors, term expiring in 2002
DIRECTOR BUSINESS EXPERIENCE, DIRECTORSHIPS, AND
NAME AND AGE SINCE POSITIONS WITHIN THE LAST FIVE YEARS
---------------------------------- -------- ------------------------------------------------------
Richard K. Lochridge, 57.......... 1998 Chairman of Audit Committee and member of Executive
Committee and Governance Committee of the Company.
(LOCHRIDGE PHOTO) President, Lochridge & Company, Inc., (General
Management Consulting Firm) since 1986. Other
directorships: PetsMart, Inc., John H. Harland
Company, and Dover Corporation.
Claudine B. Malone, 64............ 1995 Member of Compensation and Organization Committee and
Governance Committee of the Company. President and
(MALONE PHOTO) Chief Executive Officer, Financial & Management
Consulting, Inc., since 1984. Other directorships:
Former Chairman, Federal Reserve Bank, Richmond, Va.,
1996-1999 (Member since 1994); Houghton Mifflin,
LaFarge Corporation, Science Applications
International Corporation, and Hasbro, Inc.
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Class II Directors, term expiring in 2003
DIRECTOR BUSINESS EXPERIENCE, DIRECTORSHIPS, AND
NAME AND AGE SINCE POSITIONS WITHIN THE LAST FIVE YEARS
---------------------------------- -------- ------------------------------------------------------
Peter C. Browning, 59............. 1998 Chairman of Governance Committee and member of
Compensation and Organization Committee and Executive
(BROWNING PHOTO) Committee of the Company. Chairman of the Board of
Nucor Corporation (Steel Manufacturer) since 2000.
President and Chief Executive Officer, Sonoco Products
Company (Global Packaging Company) (1998-2000), having
previously served as President and Chief Operating
Officer (1995-1998). Director of Sonoco 1995-2000.
Other directorships: National Service Industries,
Inc., and Wachovia Corporation.
Kenneth D. Lewis, 54.............. 2000 Member of Audit Committee and Governance Committee of
the Company. Chairman and Chief Executive Officer
(LEWIS PHOTO) Elect of Bank of America Corp. (previously NationsBank
Corporation) since January 2001 and will assume the
duties of those offices in April 2001, having
previously served as President and Chief Operating
Officer (Oct. 1999 to April 2001), President (Jan.
1999--Oct. 1999), President, Consumer and Commercial
Banking (1998-1999) of that Company, and President of
NationsBank Corporation (1993-1998). Director of Bank
of America Corp. since 1999. Other directorships:
Health Management Associates, Inc.
Thomas D. O'Malley, 59............ 2000 Member of Audit Committee and Governance Committee of
the Company. Chairman of the Board and Chief Executive
(O'MALLEY PHOTO) Officer of Tosco Corporation (Oil Refiner and
Marketer) since 1990. Director of Tosco Corporation
since 1988.
Robert G. Schwartz, 73............ 1973 Member of Compensation and Organization Committee and
Governance Committee of the Company. Former Director
(SCHWARTZ PHOTO) (1980-2000) and Chairman of the Board (1983-1993) of
Metropolitan Life Insurance Company. President and
Chief Executive Officer (1989-1993) of that company.
(Mr. Schwartz retired from employment in March 1993
and as a Director in April 2000.)
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INFORMATION ABOUT THE BOARD OF DIRECTORS AND
COMMITTEES OF THE BOARD
CLASSIFICATION OF DIRECTORS. Each Lowe's Director is classified as an
"Independent Director" or a "Management Director". A "Management Director" is a
present or former employee who serves as a Director. An "Independent Director"
is a Director within the scope of Securities and Exchange Commission rules
defining "non-employee directors". Directors Berry, Browning, Fulton, Hudson,
Ingram, Lewis, Lochridge, Malone, O'Malley, and Schwartz are Independent
Directors. Mr. Tillman is a Management Director.
COMPENSATION OF DIRECTORS--STANDARD ARRANGEMENTS. Mr. Tillman receives no
Director or Committee compensation. Directors who are not employed by the
Company are paid an annual retainer of $50,000, plus $10,000 annually for
serving as a Committee Chairman (with the maximum annual amount payable to any
one Director being $60,000).
COMPENSATION OF DIRECTORS--OTHER ARRANGEMENTS. In 1989, shareholders
approved the Lowe's Companies, Inc. 1989 Non-Employee Directors' Stock Option
Plan. Under this Plan, eligible Directors were granted annually an immediately
exercisable stock option to purchase 8,000 shares of Common Stock at the first
Directors' Meeting following the Annual Meeting in 1989, 1990, 1991, 1992, and
1993. The option price was the shares' fair market value on the date of grant.
In accordance with a formula set forth in the option agreement, the Company
makes a federal income tax deposit on behalf of Directors who exercise options.
Four hundred thousand shares of Common Stock were reserved under the Plan for
the granting of options, and options covering 280,000 shares were granted. There
are options for 16,000 shares still outstanding and exercisable. No options were
granted under this Plan during Fiscal Year 2000, and no options will be granted
under this Plan in the future.
In 1994, the Board adopted the Lowe's Companies, Inc. Directors' Deferred
Compensation Plan. This Plan allows each non-employee Director to defer receipt
of all, but not less than all, of the annual retainer and meeting fees otherwise
payable to the Director. Deferrals are credited to a bookkeeping account and
account values are adjusted based on the investment measure selected by the
Director. One investment measure adjusts the account based on the Wachovia Bank
and Trust Company prime rate plus 1%. The other investment measure assumes that
the deferrals are invested in the Company's Common Stock. A Director may
allocate deferrals between the two investment measures in 25% multiples. Account
balances are paid in cash following the termination of a Director's service.
In 1999, shareholders approved the Lowe's Companies, Inc. Directors' Stock
Option Plan. This Plan provides for each eligible Director to be awarded a stock
option to purchase 2,000 shares of Company Common Stock at the first Directors'
Meeting following the Annual Meeting (the "Award Date"). Two hundred fifty
thousand shares of Common Stock are reserved under the Plan, with 28,000 shares
being reserved for options granted in Fiscal Years 1999 and 2000, of which
13,326 options for shares are exercisable. An option will become exercisable
with respect to 666 of the shares of Common Stock subject to the option on May
15 of the first and second calendar years following the Award Date and with
respect to the remaining 668 shares subject to the option on May 15 of the third
calendar year following the option's Award Date. The options have a seven-year
term. The exercise price is set based on the closing price of a share of common
stock as reported on the New York Stock Exchange composite tape on the Award
Date, which was $45.75 as of May 26, 2000. Options for 2,000 shares each were
granted to Directors Berry, Browning, Fulton, Lewis, Lochridge, Malone,
O'Malley, and Schwartz.
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BOARD OF DIRECTORS--During Fiscal Year 2000, the Board of Directors held
six meetings. The Board has four standing committees, which met the number of
times set forth in parentheses: Executive (2), Audit (4), Compensation and
Organization (7) and Governance (3). All incumbent Directors attended at least
75% of the meetings of the Board and the Committees on which they served.
AUDIT COMMITTEE--The Audit Committee has five members: Richard K. Lochridge
(Chairman), Leonard L. Berry, Dawn Hudson, Kenneth D. Lewis, and Thomas D.
O'Malley. The Audit Committee meets with the internal auditing staff and
representatives of the Company's independent accounting firm without senior
management present and with representatives of senior management. The Committee
reviews the general scope of the Company's annual audit and the fees charged by
the independent accountants for audit services, financial information systems
design and implementation services, and all other services; determines the
duties and responsibilities of the internal auditors; reviews financial
statements and the accounting principles being applied; and reviews audit
results and other matters relating to internal control and compliance with the
Company's code of ethics. In addition, the Audit Committee recommends annually
the engagement of the Company's independent accountants. The Board of Directors
adopted a written Audit Committee charter on March 31, 2000, which is attached
to this proxy statement as Appendix A.
COMPENSATION AND ORGANIZATION COMMITTEE--The Compensation and Organization
Committee has five members: Paul Fulton (Chairman), Peter C. Browning, Robert A.
Ingram, Claudine B. Malone, and Robert G. Schwartz. This Committee reviews and
sets the compensation of Directors who are employees of the Company; reviews the
compensation of senior management; reviews and approves all annual bonus plans;
reviews and approves all forms of compensation which exceed one year in
duration, including employee stock option and deferred compensation awards;
administers and interprets all provisions of all compensation, employee stock
option, stock appreciation rights and other incentive plans; and approves awards
pursuant to the terms of any employee stock option or stock appreciation rights
plan.
EXECUTIVE COMMITTEE--The Executive Committee has four members: Robert L.
Tillman (Chairman), Peter C. Browning, Paul Fulton, and Richard K. Lochridge.
The Executive Committee exercises all of the powers of the Board of Directors
between meetings, except as otherwise limited by law.
GOVERNANCE COMMITTEE--The Governance Committee has ten members: Peter C.
Browning (Chairman), Leonard L. Berry, Paul Fulton, Dawn Hudson, Robert A.
Ingram, Kenneth D. Lewis, Richard K. Lochridge, Claudine B. Malone, Thomas D.
O'Malley, and Robert G. Schwartz. This Committee's responsibilities include
screening suggestions for new Board members and making recommendations to the
full Board; conducting an annual performance evaluation of the Chief Executive
Officer; and conducting an annual review of the performance of the full Board
and structure of Board Committees. This Committee functions as a nominating
committee by recommending nominees for election as Directors of the Company. The
Committee considers nominees recommended by shareholders. Any such
recommendation should be submitted in writing to the Secretary of the Company no
later than 120 days prior to the date of mailing the proxy materials for each
annual meeting (generally, not later than the middle of December preceding the
Annual Meeting). The recommendation should include information that will enable
the Committee to evaluate the qualifications of the proposed nominee.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the beneficial ownership as of March 23, 2001,
except as noted, of Common Stock of each Director of the Company, each nominee
for election as a Director of the Company, the Officers named in the Summary
Compensation Table, each shareholder known to the Company to be the beneficial
owner of more than 5% of the Company's Common Stock, and Directors and Executive
Officers as a group:
NAME OR NUMBER NUMBER OF PERCENT
OF PERSONS IN GROUP SHARES(1)(2) OF CLASS
------------------- ------------ --------
Leonard L. Berry 5,749 *
Peter C. Browning 5,268 *
Paul Fulton 12,998 *
Dawn Hudson -0- *
Robert A. Ingram -0- *
Kenneth D. Lewis 666 *
Richard K. Lochridge 5,998 *
Claudine B. Malone 6,998 *
Thomas D. O'Malley 5,666 *
Dale C. Pond 116,508(3) *
Robert G. Schwartz 86,998 *
Larry D. Stone 245,431 *
Robert L. Tillman 506,187 *
William C. Warden, Jr. 171,813 *
Thomas E. Whiddon 175,615 *
Incumbent Directors, Director Nominees and
Executive Officers as a Group (32 in total) 2,889,395(4) *
Lowe's Companies Employee Stock
Ownership Trust
P.O. Box 1111
North Wilkesboro, NC 28656 26,313,608(4) 6.87
State Street Bank and
Trust Company, Trustee
225 Franklin Street
Boston, MA 02110 35,824,492(5) 9.4
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071 46,876,250(6) 12.2
---------------
* Less than 1%.
(1) Includes shares that may be acquired within 60 days under the Company's
Stock Option Plans as follows: Mr. Pond 47,986 shares; Mr. Schwartz 17,998
shares; Mr. Stone 128,134 shares; Mr. Tillman 302,468 shares; Mr. Warden
94,001 shares; Mr. Whiddon 131,151 shares; Directors Berry, Browning,
Fulton, Lochridge, and Malone 1,998 shares each; Directors Lewis and
O'Malley 666 shares each with aggregate shares for all Executive Officers
and Directors as a group (32) being 1,256,925. Also includes Stock Awards
(Performance Stock and Performance Accelerated Restricted Stock) that have
been granted but not vested for all Executive Officers and Directors as a
group (32) being 25,300.
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(2) Does not include phantom shares credited to the accounts of Executive
Officers and Directors under the Company's Deferred Compensation Plans as
follows: Mr. Browning 2,200 shares; Mr. Fulton 2,233 shares; Mr. Tillman
99,680 shares; Mr. Warden 25,016 shares; Mr. Whiddon 60,141 shares with
aggregate shares for all Executive Officers and Directors as a group (32)
being 276,705.
(3) Includes 470 shares of shared voting and investment power.
(4) Shares allocated to participants' ESOP accounts are voted by the
participants by giving voting instructions to State Street Bank (the
"Trustee"). The ESOP's Management Committee directs the Trustee in the
manner in which shares not voted by participants or not allocated to
participants' accounts are to be voted. The Management Committee has ten
members, including Messrs. Stone and Tillman. At March 23, 2001, there were
300,616 unallocated shares.
(5) Shares held at February 9, 2001, according to Schedule 13G filed with the
Securities and Exchange Commission, which total includes those shares held
by the Lowe's Companies Employee Stock Ownership Trust and described in
footnote 4.
(6) Shares held at February 9, 2001, according to Schedules 13G filed with the
Securities and Exchange Commission.
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company pursuant to Rule 16a-3(e) of the Securities Exchange
Act of 1934 during Fiscal Year 2000 and Form 5 and amendments thereto furnished
to the Company with respect to Fiscal Year 2000, and written representations
from certain reporting persons, the Company believes that all filing
requirements under Section 16(a) applicable to its Officers, Directors and
beneficial owners have been complied with.
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COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received by the Company's Chief
Executive Officer and the four other most highly paid Executive Officers for the
three fiscal years ended February 2, 2001:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-----------------------------------------
NAME & PRINCIPAL FISCAL YEAR OTHER ANNUAL
POSITION ENDED SALARY ($) BONUS ($) COMPENSATION ($)
---------------- ----------- ---------- --------- ----------------
Robert L. Tillman.... 02/02/01 935,000 690,030 184,000(3)
Chairman of the 01/28/00 850,000 1,700,000 406,711
Board, President 01/29/99 800,000 1,015,200 290,084
and Chief
Executive Officer
Larry D. Stone....... 02/02/01 600,000 442,800 102,004(4)
Executive Vice 01/28/00 500,000 1,000,000 221,984
President, Store 01/29/99 434,616 507,600 133,135
Operations
William C. Warden,
Jr................. 02/02/01 460,000 339,480 73,995(5)
Executive Vice 01/28/00 400,000 800,000 173,890
President, 01/29/99 360,000 456,840 114,808
Administration
Thomas E. Whiddon.... 02/02/01 450,000 332,100 75,070(6)
Executive Vice 01/28/00 390,000 780,000 167,904
President,
Logistics 01/29/99 350,000 444,150 113,235
and Technology
Dale C. Pond......... 02/02/01 400,000 295,200 62,430(7)
Executive Vice 01/28/00 350,000 700,000 148,637
President, 01/29/99 300,000 380,700 89,940
Merchandising
Footnotes:
LONG-TERM COMPENSATION
----------------------------------------------------------------
AWARDS PAYOUTS
----------------------------------- -------
SECURITIES
NAME & PRINCIPAL RESTRICTED STOCK UNDERLYING LTIP ALL OTHER
POSITION AWARDS ($) (1) OPTIONS/SARS (#) PAYOUTS COMPENSATION (2)
---------------- ---------------- ---------------- ------- ----------------
Robert L. Tillman.... 0 160,000 0 11,900
Chairman of the 0 0 0 19,200
Board, President 0 200,000 0 19,200
and Chief
Executive Officer
Larry D. Stone....... 0 77,000 0 11,900
Executive Vice 0 0 0 19,200
President, Store 0 100,000 0 19,200
Operations
William C. Warden,
Jr................. 0 59,000 0 11,900
Executive Vice 0 0 0 19,200
President, 0 57,800 0 19,200
Administration
Thomas E. Whiddon.... 0 58,000 0 11,900
Executive Vice 0 0 0 19,200
President,
Logistics 0 56,200 0 19,200
and Technology
Dale C. Pond......... 0 52,000 0 11,900
Executive Vice 0 0 0 19,200
President, 0 48,200 0 19,200
Merchandising
Footnotes:
---------------
(1) No Restricted Stock Awards were granted during Fiscal Years 1998, 1999, or
2000.
(2) Amounts shown are employer contributions to the Employee Stock Ownership
Plan.
(3) Amount shown is the total of an amount earned but deferred under the
Company's Benefit Restoration Plan ($162,313), dividends on restricted
stock shares awarded in grants effective January 31, 1996 and January 30,
1998 ($7,613), taxable value of group term life insurance in excess of
$50,000 ($1,724), and taxable value of personal use of corporate aircraft
($12,350).
(4) Amount shown is the total of a payment under the Company's Benefit
Restoration Plan ($97,456), dividends on restricted stock shares awarded in
grants effective January 31, 1996 and January 30, 1998 ($4,340), and
taxable value of group term life insurance in excess of $50,000 ($208).
(5) Amount shown is the total of an amount earned but deferred under the
Company's Benefit Restoration Plan ($70,347), dividends on restricted stock
shares awarded in grants effective January 31, 1996 and January 30, 1998
($3,465), and taxable value of group term life insurance in excess of
$50,000 ($183).
(6) Amount shown is the total of an amount earned but deferred under the
Company's Benefit Restoration Plan ($68,410), dividends on restricted stock
shares awarded in grants effective January 31, 1996 and January 30, 1998
($3,150), taxable value of group term life insurance in excess of $50,000
($177), and director fees paid by LF Corporation, a subsidiary of Lowe's
Companies, Inc. ($3,333).
(7) Amount shown is the total of a payment under the Company's Benefit
Restoration Plan ($58,729), dividends on restricted stock shares awarded in
grants effective January 31, 1996 and January 30, 1998 ($3,220), and
taxable value of group term life insurance in excess of $50,000 ($481).
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OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information with respect to stock options and
SARs granted to the named Executive Officers during Fiscal 2000:
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
------------------------------------------------------------------------------- AT ASSUMED ANNUAL RATES
% OF TOTAL OF STOCK PRICE
OPTIONS/SARS APPRECIATION FOR
GRANTED TO EXERCISE OR OPTION/SAR TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION --------------------------
NAME GRANTED FISCAL YEAR $/SH DATE 5% 10%
---- ------------ ------------ ----------- ---------- ---------- ----------
Robert L. Tillman...... 160,000 4.34 $47.13 2/2/07 $3,068,119 $7,149,491
Larry D. Stone......... 77,000 2.09 $47.13 2/2/07 $1,476,532 $3,440,692
William C. Warden,
Jr................... 59,000 1.60 $47.13 2/2/07 $1,131,369 $2,636,375
Thomas E. Whiddon...... 58,000 1.57 $47.13 2/2/07 $1,112,193 $2,591,690
Dale C. Pond........... 52,000 1.41 $47.13 2/2/07 $ 997,139 $2,323,584
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table provides information concerning options exercised
during Fiscal Year 2000 and the unexercised options/SARs held by each of the
named Executive Officers at February 2, 2001:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR-END
AND FISCAL YEAR-END OPTION/SAR VALUES
VALUE OF UNEXERCISED
IN-THE-MONEY
OPTIONS/SARS AT FY-END
NUMBER OF UNEXERCISED ($)
SHARES OPTIONS/SARS AT FY-END ($53.84 ON 2/2/01)
ACQUIRED ON VALUE ------------------------------- ---------------------------
NAME EXERCISE (1) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- ------------ -------------- -------------- ----------- -------------
Robert L. Tillman.............. 0 Shares 0 566,668 Shares 173,332 Shares 14,074,760 1,305,590
Larry D. Stone................. 0 Shares 0 212,334 Shares 84,666 Shares 4,711,240 639,365
William C. Warden, Jr.......... 15,000 Shares $329,063 163,201 Shares 58,599 Shares 3,908,092 434,433
Thomas E. Whiddon.............. 5,350 Shares $120,041 167,151 Shares 57,399 Shares 4,079,808 425,242
Dale C. Pond................... 15,000 Shares $450,938 102,986 Shares 52,214 Shares 2,149,811 387,907
---------------
(1) All shares acquired on exercise are stock options. There are no currently
outstanding stock appreciation rights (SAR) grants.
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LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
No awards were made under any long-term incentive plans for the Company
during Fiscal Year 2000.
REPORT OF THE COMPENSATION AND ORGANIZATION COMMITTEE
This report by the Compensation and Organization Committee is required by
rules of the Securities and Exchange Commission. It is not to be deemed
incorporated by reference by any general statement which incorporates by
reference this Proxy Statement into any filing under the Securities Act of 1933
or the Securities Exchange Act of 1934, and it is not to be otherwise deemed
filed under either such Act.
The Compensation and Organization Committee (the "Committee") of the Board
of Directors comprises five Independent Directors and is responsible for
administering the Company's Executive Compensation Program for all executives at
a compensation level set by the Committee. In carrying out its responsibilities,
the Committee:
-- Articulates the Company's executive compensation philosophies and policies
to executive management, participates in compensation program development,
and has authority for approval of awards under the Company's plans and
programs;
-- Monitors and approves on-going base salary and incentive compensation
programs for executive management, including participation, performance
goals and criteria, interpretation of provisions and determination of
award payouts;
-- Reviews and approves base salary recommendations for Executive Officers of
the Company; and
-- Initiates all compensation actions for the Chairman of the Board,
President and Chief Executive Officer, subject to final Board approval.
The Committee has retained a national consulting firm (which reports to the
Committee) to be a source of on-going advice to both the Committee and
management.
EXECUTIVE COMPENSATION PRINCIPLES
The Company's Executive Compensation Program has been designed to establish
a strong link between the creation of shareholder value and the compensation
earned by its senior executives. It is the intention of the Committee that all
compensation paid under the Executive Compensation Program of the Company (other
than incentive stock options) will be tax deductible to the Company in the year
paid to the executive. The fundamental objectives of the Program are to:
-- Align executive compensation with the Company's mission, values and
business strategies;
-- Attract, motivate, retain and reward the executives whose leadership and
performance are critical to the Company's success in enhancing shareholder
value; and
-- Provide compensation which is commensurate with the Company's performance
and the contributions made by executives toward this performance.
The Program is intended to provide compensation which is competitive with
comparable companies in the retailing industry (with particular emphasis on
specialty hardgoods retailers and major U.S. retailers) when the Company is
meeting its targeted financial goals. At the same time, the Program seeks to
provide
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above average compensation when the Company's targeted goals are exceeded, and
below average compensation when targeted performance goals are not achieved.
The Program provides for larger portions of total compensation to vary on
the basis of Company performance for higher levels of executives (i.e., the most
senior Executive Officers have more of their total compensation at risk on the
basis of Company performance than do lower levels of executives). All Executive
Officers participate in the same direct compensation programs as the other
executives of the Company, with the only differences being the degree of
compensation risk and the overall magnitude of the potential awards.
The Committee believes that Executive Officers of the Company should be
encouraged to own significant holdings of the Company's Common Stock to align
their interests with those of the Company's shareholders. Through the operation
of the Company's Employee Stock Ownership Plan, the Employee Savings and
Investment Plan, the Employee Stock Purchase Plan, the 1994 Incentive Plan, and
the 1997 Incentive Plan, vehicles are provided to enable executives to acquire
Common Stock, subject to regulatory limitations. The Committee has established
informal ownership guidelines for Executive Officers and will take into account
each executive's progress toward attaining those goals when considering future
stock option or restricted stock awards.
ELEMENTS IN THE EXECUTIVE COMPENSATION PROGRAM
The Company's Executive Compensation Program comprises the following
elements:
Base Salary
Salaries for Executive Officers are established on the basis of the
qualifications and experience of the executive, the nature of the job
responsibilities and salaries for competitive positions in the retailing
industry.
Executive Officers' base salaries are reviewed annually and are approved by
the Committee. Salaries of Executive Officers are compared with those of
comparable executive positions in the retailing industry throughout the United
States. The Committee uses the median level of base salary as a guideline, in
conjunction with the executive's performance and qualifications, for
establishing salary levels.
1994 and 1997 Incentive Plans
The 1994 and 1997 Incentive Plans, which were approved by shareholders in
1994 and 1997, respectively, are intended to attract, motivate, retain and
reward the executives whose leadership and performance are critical to the
Company's success in enhancing shareholder value. The Incentive Plans help to
place further emphasis on executive ownership of the Company's Common Stock. The
Incentive Plans are designed to assure the deductibility of executive
compensation for federal and state income tax purposes.
Short-Term Incentives. The Management Bonus Program is administered
pursuant to the Incentive Plans. The Management Bonus Program provides bonus
opportunities that can be earned upon the achievement by the Company of
predetermined annual earnings growth objectives. No bonuses are paid if
performance is below the threshold level of corporate profitability. If the
financial goals are fully met, 100% of the stated bonus opportunity is earned.
Bonuses equal to 73.8% of January 22, 2000 base salary were paid to the Chief
Executive Officer and the four other most highly paid Executive Officers for the
year ended February 2, 2001 because the Company's financial results did not
fully meet the predetermined annual earnings growth objectives.
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Long-Term Incentives. The Incentive Plans authorize the grant of stock
options. The option price cannot be less than the market price of the Company's
Common Stock on the date on which the option is granted. Consequently, stock
options granted under the Incentive Plans measure performance and provide
compensation solely on the basis of the appreciation in the price of the
Company's Common Stock. During Fiscal 2000, the Committee approved a broad-based
stock option grant to executive and senior management, middle managers and
professionals, and retail store managers and assistant managers.
Stock appreciation rights also may be granted under the Incentive Plans.
These rights entitle the recipient to receive a payment based solely on the
appreciation in the Company's Common Stock following the date of the award.
Stock appreciation rights thus measure performance and provide compensation only
if the price of the Company's Common Stock appreciates. No stock appreciation
rights grants were made during Fiscal Year 2000 nor are any previous grants
outstanding.
The Incentive Plans also authorize awards of Company Common Stock. Shares
of Performance Accelerated Restricted Stock (PARS) and Performance Stock Awards
have been issued pursuant to this authorization. PARS awards are nontransferable
and subject to forfeiture for a period of time (either five or seven years)
except that earlier vesting is permitted if certain financial objectives are
achieved. The 1997 and 1998 Performance Stock Awards to the Chairman of the
Board, President and Chief Executive Officer and members of the Executive Staff
provide that the shares will vest only if certain financial objectives are met
during the three-year performance period following the award. The vesting of the
grants identified in this paragraph is tied to a targeted achievement in return
on assets. No Performance Accelerated Restricted Stock (PARS) or Performance
Stock Awards were issued during Fiscal Year 2000.
The 1994 Incentive Plan and the 1997 Incentive Plan include a Deferral
Program. The Deferral Program, available to executives with the title of Vice
President or higher, permits deferral of receipt of certain stock incentives
(vested performance stock awards and performance accelerated restricted stock
and gain on non-qualified stock options), but not salary or bonus. The single
exception to this provision is that the Deferral Program will accept the
mandatory deferral of cash compensation to the extent that it would not be a tax
deductible item for the Company under the Internal Revenue Code Section 162(m).
The Deferral Program requires that the executive make a deferral election
in the year prior to the year in which a stock option is exercised or the year a
restricted stock grant vests. Deferred shares are cancelled upon the
participant's election and tracked as phantom shares. During the deferral
period, the participant's account is credited with amounts equal to the
dividends paid on actual shares. Shares are reissued when distributable to the
executive. Unless a participant elects otherwise, deferred benefits are
generally payable beginning on the March 15 following the earlier of the
executive's retirement or other termination of employment or his 65th birthday.
The Deferral Program is unfunded. A deferred benefit under the Program is
at all times a mere contractual obligation of the Company. A participant and his
beneficiaries have no right, title, or interest in the benefits deferred under
the Program or any claim against them.
Benefit Restoration Plan
The Benefit Restoration Plan, adopted by the Company in May 1990 and
amended and restated as of February 1, 1997, is intended to provide qualifying
executives with benefits equivalent to those received by all other employees
under the Company's basic qualified employee retirement plans. Qualifying
executives are those executives who are selected by the Committee to participate
in the Plan and whose annual additions and other benefits, as normally provided
to all participants under those qualified plans, would be curtailed by the
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effect of Internal Revenue Code restrictions. The Benefit Restoration Plan
benefits are determined annually. Participating executives may elect annually to
defer benefits or to receive a current cash payment.
Other Compensation
The Company's Executive Officers participate in the various qualified and
non-qualified employee benefit plans sponsored by the Company. The Company makes
only nominal use of perquisites in compensating its Executive Officers.
The CEO's Compensation in the Fiscal Year Ended February 2, 2001
The Committee made no change to Mr. Tillman's annual base salary of
$935,000. The Committee made its decision based upon the operating performance
of the Company.
The Committee authorized payment to Mr. Tillman of an annual bonus of
$690,030 under the 2000 Management Bonus Program. The Committee determined Mr.
Tillman's bonus solely on the basis of the Company's earnings performance versus
the goals for such performance which the Committee established at the beginning
of the year.
Mr. Tillman was granted options for 160,000 shares of Company Stock on
February 3, 2000 at $47.125, the fair market value of the Stock on the date of
the grant; 4,244 shares of the grant are incentive stock options and the
remaining 155,756 shares are non-qualified stock options. The options become
exercisable in thirds after one, two and three years from the date of the grant.
The options expire after seven years.
Mr. Tillman earned a Benefit Restoration Plan payment of $162,323 for the
fiscal year ended February 2, 2001. This amount was mandatorily deferred due to
tax deductibility limitations of IRC Section 162(m). Mr. Tillman was paid a
Benefit Restoration Plan benefit of $49,000 which had been mandatorily deferred
in prior years due to IRC Section 162(m) limitations.
The Committee believes that the payments and stock incentives described
herein were necessary to maintain the competitiveness of Mr. Tillman's
compensation package in comparison to those of other chief executive officers of
similarly situated companies.
* * *
The Committee believes that the Company's Executive Compensation Program
has been strongly linked to the Company's performance and the enhancement of
shareholder value. The Committee intends to continually evaluate the Company's
compensation philosophies and plans to ensure that they are appropriately
configured to align the interests of executives and shareholders and to ensure
that the Company can attract, motivate and retain talented management personnel.
Paul Fulton, Chairman
Peter C. Browning
Robert A. Ingram
Claudine B. Malone
Robert G. Schwartz
March 29, 2001
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AUDIT COMMITTEE MATTERS
REPORT OF THE AUDIT COMMITTEE
This report by the Audit Committee is required by the rules of the
Securities and Exchange Commission. It is not to be deemed incorporated by
reference by any general statement which incorporates by reference this Proxy
Statement into any filing under Securities Act of 1933 or the Securities
Exchange Act of 1934, and it is not to be otherwise deemed filed under either
such Act.
The Audit Committee has five members, all of which are independent
directors as defined by Section 303.01(B)(2)(a) and (3) of the New York Stock
Exchange Listed Company Manual: Richard K. Lochridge (Chairman), Leonard L.
Berry, Dawn Hudson, Kenneth D. Lewis, and Thomas D. O'Malley. The Audit
Committee meets regularly with (1) the internal auditing staff, (2)
representatives of the Company's independent accounting firm (Deloitte & Touche
LLP, the member firms of Deloitte Touche Tohmatsu, and their respective
affiliates (collectively, "Deloitte")) without senior management present and (3)
representatives of senior management. The Committee reviews the general scope of
the Company's annual audit and the fees charged by the independent accountants,
determines duties and responsibilities of the internal auditors, reviews
financial statements and accounting principles being applied, and reviews audit
results and other matters relating to internal control and compliance with the
Company's code of ethics.
In carrying out its responsibilities, the Committee has
-- reviewed and discussed the audited financial statements with management,
-- discussed with the independent auditors the matters required to be
communicated to audit committees by Statement on Auditing Standards No.
61, and
-- received the written disclosures and the letter from Deloitte required by
Independence Standards Board Standard No. 1 and has discussed with
Deloitte that firm's independence.
Based on the review and discussions noted above and the report of Deloitte
to the Audit Committee, the Audit Committee has recommended to the Board of
Directors that the Company's audited financial statements be included in the
Company's Annual Report on Form 10-K for the fiscal year ended February 2, 2001.
Richard K. Lochridge (Chairman) Kenneth D. Lewis
Leonard L. Berry Thomas D. O'Malley
Dawn Hudson
March 29, 2001
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AUDIT FEES
The Audit Committee has reviewed and approved the following aggregate fees
billed to the Company during the fiscal year ended February 2, 2001 by the
Company's principal accounting firm, Deloitte & Touche, LLP, the member firms of
Deloitte Touche Tohmatsu, and their respective affiliates (collectively,
"Deloitte"):
Audit Fees.................................................. $415,000
Financial Information Systems Design and Implementation
Fees...................................................... $ 0
All Other Fees (tax services, benefit plan audits, and fees
associated with the registration and issuance of debt
securities)............................................... $293,011
The Committee has considered whether the provision of the information
technology services and other non-audit services to the Company is compatible
with Deloitte's independence.
PROPOSAL 2
APPROVAL OF THE LOWE'S COMPANIES, INC.,
2001 INCENTIVE PLAN
The Board of Directors proposes that shareholders approve the Lowe's
Companies, Inc., 2001 Incentive Plan (the "2001 Plan"), adopted by the Board on
February 1, 2001, subject to the approval of the Company's shareholders. The
2001 Plan permits the grant of options to purchase shares of Common Stock from
the Company, stock appreciation rights ("SARs"), Stock Awards, Performance
Shares and Incentive Awards.
The shareholders approved the 1994 Incentive Plan at the 1994 Annual
Meeting and the 1997 Incentive Plan at the 1997 Annual Meeting. As of the date
of this proxy statement, 65,530 shares of Common Stock remain available for
awards under the 1994 Incentive Plan and 257,602 shares of Common Stock remain
available for awards under the 1997 Incentive Plan. The Board believes it needs
additional shares available for officer and employee incentive programs.
Approval of the 2001 Plan will not affect the Company's ability to make
additional awards under the 1994 Incentive Plan or the 1997 Incentive Plan,
subject to their respective share authorizations.
The Board believes that the 2001 Plan will benefit the Company by (i)
assisting it in recruiting and retaining the services of employees with ability
and initiative, (ii) providing greater incentive for employees who provide
valuable services to the Company and (iii) associating the interests of such
persons with those of the Company through opportunities for increased stock
ownership and performance-based incentive compensation. The more significant
features of the 2001 Plan are described below.
The 2001 Plan must be approved by holders of a majority of the shares of
Common Stock represented at the Annual Meeting.
ADMINISTRATION
The Compensation and Organization Committee of the Board (the "Compensation
Committee") will administer the 2001 Plan. The Compensation Committee will have
the authority to select the individuals who will participate in the 2001 Plan
("Participants") and to grant Options and SARs and to make Stock Awards, awards
of Performance Shares and Incentive Awards upon such terms (not inconsistent
with the terms of the 2001 Plan), as the Compensation Committee considers
appropriate. In addition, the Compensation Committee will have complete
authority to interpret all provisions of the 2001 Plan, to prescribe the form of
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agreements evidencing awards under the 2001 Plan, to adopt, amend and rescind
rules and regulations pertaining to the administration of the 2001 Plan and to
make all other determinations necessary or advisable for the administration of
the 2001 Plan.
The Compensation Committee may delegate its authority to administer the
2001 Plan to a special committee consisting of one or more directors who are
also officers of the Company. The Compensation Committee, however, may not
delegate its authority with respect to grants and awards to individuals who are
subject to "covered employees" under IRC Section 162(m) or Section 16 of the
Securities Exchange Act of 1934. As used in this summary, the term
"Administrator" means the Compensation Committee and any delegate, as
appropriate.
ELIGIBILITY
Any employee of the Company or any subsidiary is eligible to participate in
the 2001 Plan if the Administrator, in its sole discretion, determines that such
person has contributed significantly or can be expected to contribute
significantly to the profits or growth of the Company or a subsidiary. Directors
who are employees of the Company or a subsidiary may be selected to participate
in the 2001 Plan.
AWARDS
Options. Options granted under the 2001 Plan may be incentive stock
options ("ISOs") or nonqualified stock options. A stock option entitles the
Participant to purchase shares of Common Stock from the Company at the option
price. The option price will be fixed by the Administrator at the time the
option is granted, but the price cannot be less than the shares' fair market
value on the date of grant. The option price may be paid in cash or, with the
Administrator's consent, with shares of Common Stock, or a combination of cash
and Common Stock. Options may be exercised at such times and subject to such
conditions as may be prescribed by the Administrator. The maximum period in
which an option may be exercised will be fixed by the Administrator at the time
the option is granted but cannot exceed ten years.
No employee may be granted ISOs (under the 2001 Plan or any other plan of
the Company) that are first exercisable in a calendar year for Common Stock
having an aggregate fair market value (determined as of the date the option is
granted) exceeding $100,000. In addition, no Participant may be granted options
in any calendar year for more than 500,000 shares of Common Stock; provided,
that in connection with his or her initial employment with the Company, a
Participant may be granted Options with respect to up to an additional 500,000
shares of Common Stock, which will not count against the foregoing annual limit.
SARs. SARs generally entitle the Participant to receive the excess of the
fair market value of a share of Common Stock on the date of exercise over the
initial value of the SAR. The initial value of the SAR is the fair market value
of a share of Common Stock on the date of grant. The 2001 Plan provides that the
Administrator may prescribe that the Participant will realize appreciation on a
different basis. For example, the Administrator may limit the amount of
appreciation that may be realized upon the exercise of an SAR.
SARs may be granted in relation to option grants ("Corresponding SARs") or
independently of option grants. The difference between these two types of SARs
is that to exercise a Corresponding SAR, the Participant must surrender
unexercised that portion of the stock option to which the Corresponding SAR
relates and vice versa.
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SARs may be exercised at such times and subject to such conditions as may
be prescribed by the Administrator. The maximum period in which an SAR may be
exercised will be fixed by the Administrator at the time the SAR is granted but
cannot exceed ten years.
No Participant may be granted SARs in any calendar year for more than
500,000 shares of Common Stock. For purposes of this limitation (and the
limitation on individual option grants), an option and a Corresponding SAR are
treated as a single award.
Stock Awards. The 2001 Plan also permits the grant of shares of Common
Stock as Stock Awards. A Stock Award shall be forfeitable or otherwise
restricted until certain conditions are satisfied. These conditions may include,
for example, a requirement that the Participant complete a specified period of
service or that certain objectives be achieved. The objectives may be based on
the performance criteria described below. A Stock Award will be restricted for a
period of at least three years; provided, however, that the period shall be at
least one year in the case of a Stock Award that is subject to objectives based
on one or more performance criteria. No Participant may be granted Stock Awards
in any calendar year for more than 150,000 shares.
Performance Shares. The 2001 Plan also permits the award of Performance
Shares. A Performance Share is an award stated with reference to a number of
shares of Common Stock that entitles the holder to receive a payment equal to
the fair market value of the Common Stock if the performance objectives are
achieved. The performance objectives may be stated with respect to the criteria
described below. The performance measurement period shall be at least one year.
To the extent that a Performance Share award is earned, it may be settled in
cash, with Common Stock, or a combination of cash and Common Stock. No
Participant may receive an award of Performance Shares in any calendar year for
more than 150,000 shares.
Incentive Awards. Incentive Awards also may be granted under the 2001
Plan. An Incentive Award is an opportunity to earn a bonus, payable in cash,
upon the attainment of stated performance objectives. The performance objectives
will be stated with reference to one or more of the performance measures
described below. No Participant may receive an Incentive Award payment in any
calendar year that exceeds the lesser of (i) 300% of the Participant's base
salary (prior to any salary reduction or deferral election) as of the date of
grant of the Incentive Award or (ii) $3,000,000.
DEFERRAL PROGRAM
The Deferral Program included in the 1994 Incentive Plan and the 1997
Incentive Plan is also included in the 2001 Plan. The Deferral Program is
available to certain executive officers and permits the deferral of stock
incentives, including certain awards granted under the 2001 Plan. The Deferral
Program is described in greater detail under the "Report of the Compensation and
Organization Committee".
PERFORMANCE MEASURES
As noted above, a Participant's rights under a Stock Award, Performance
Shares or an Incentive Award may be subject to the satisfaction of performance
objectives. Those performance objectives may be stated with reference to one or
any combination of the following:
-- the Company's pre-tax earnings
-- the Company's pre-tax earnings in relation to non-cash beginning assets
(beginning assets less beginning cash and short term investments)
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-- the achievement by Company, an affiliate or an operating unit of stated
objectives with respect to return on equity, earnings per share, total
earnings, earnings growth, return on capital, or return on assets
-- fair market value of the Company's Common Stock
TRANSFERABILITY
Options, SARs, Stock Awards, Performance Shares and Incentive Awards
generally will be nontransferable except by will or the laws of descent and
distribution. The Administrator may (but need not) permit other transfers where
the Administrator concludes that such transferability (i) does not result in
accelerated taxation, (ii) does not cause any Option intended to be an ISO to
fail to be treated an ISO, and (iii) is otherwise appropriate and desirable,
taking into account any factors deemed relevant, including without limitation,
state or federal tax or securities laws applicable to transferable awards.
SHARE AUTHORIZATION
Under the 2001 Plan, a maximum of 15,000,000 shares of Common Stock may be
issued upon the exercise of options and SARs and the grant of Stock Awards and
the settlement of Performance Shares. No more than 3,500,000 shares of Common
Stock may be issued as Stock Awards and in settlement of Performance Shares.
These limitations will be adjusted, as the Administrator determines is
appropriate, in the event of a corporate transaction involving the Company
(including any stock dividend, stock split, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination or exchange of share). The terms of outstanding awards and the
limitations on individual grants also may be adjusted by the Administrator to
reflect such changes.
AMENDMENT AND TERMINATION
No options, SARs, Stock Awards or Performance Shares may be granted under
the 2001 Plan after January 31, 2011. The Committee may, at any time and from
time to time, amend, modify or terminate the Plan without shareholder approval;
provided, however, that the Committee may condition any amendment or
modification on the approval of shareholders of the Company if such approval is
necessary or deemed advisable with respect to tax, securities or other
applicable laws, policies or regulations. No termination, amendment, or
modification of the Plan shall adversely affect any award previously granted
under the Plan, without the written consent of the Participant.
ACCELERATION OF AWARDS
Except as otherwise provided in the Agreement, upon termination of a
Participant's employment by the Company without "cause", or by the Participant
for "good reason," each as defined in the 2001 Plan, within a period of one year
following the occurrence of a Change in Control, as defined in the Plan, all
outstanding Options and SARs held by such Participant shall become fully
exercisable and all restrictions and performance conditions on outstanding Stock
Awards, Performance Shares and Incentive Awards held by such Participant shall
lapse. However such acceleration will not occur if, in the opinion of the
Company's accountants, such acceleration would preclude the use of "pooling of
interest" accounting treatment for a Change in Control transaction that (a)
would otherwise qualify for such accounting treatment, and (b) is contingent
upon qualifying for such accounting treatment. Awards will also accelerate upon
the death or disability of a Participant.
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FEDERAL INCOME TAX CONSEQUENCES
The following is a brief general description of the consequences under the
Internal Revenue Code and current federal income tax regulations of the receipt
or exercise of awards under the 2001 Plan.
Nonqualified Stock Options. There will be no federal income tax
consequences to either the Company or the Participant upon the grant of a
non-discounted nonqualified stock option. However, the Participant will realize
ordinary income on the exercise of the nonqualified stock option in an amount
equal to the excess of the fair market value of the Common Stock acquired upon
the exercise of such option over the exercise price, and the Company will
receive a corresponding deduction (subject to IRC Section 162(m) limitations).
The gain, if any, realized upon the subsequent disposition by the Participant of
the Common Stock will constitute short-term or long-term capital gain, depending
on the Participant's holding period.
Incentive Stock Options. There will be no federal income tax consequences
to either the Company or the Participant upon the grant of an ISO or the
exercise thereof by the Participant, except that upon exercise of an ISO, the
Participant may be subject to alternative minimum tax on certain items of tax
preference. If the Participant holds the shares of Common Stock for the greater
of two years after the date the option was granted or one year after the
acquisition of such shares of Common Stock (the "required holding period"), the
difference between the aggregate option price and the amount realized upon
disposition of the shares of Common Stock will constitute long-term capital gain
or loss, and the Company will not be entitled to a federal income tax deduction.
If the shares of Common Stock are disposed of in a sale, exchange or other
disqualifying disposition during the required holding period, the Participant
will realize taxable ordinary income in an amount equal to the excess of the
fair market value of the Common Stock purchased at the time of exercise over the
aggregate option price, and the Company will be entitled to a federal income tax
deduction equal to such amount (subject to IRC Section 162(m) limitations).
SARs. A Participant receiving a SAR will not recognize income, and the
Company will not be allowed a tax deduction, at the time the award is granted.
When a Participant exercises the SAR, the amount of cash and the fair market
value of any shares of Common Stock received will be ordinary income to the
Participant and will be allowed as a deduction for federal income tax purposes
to the Company (subject to IRC Section 162(m) limitations).
Performance Shares. A Participant receiving performance shares will not
recognize income and the Company will not be allowed a tax deduction at the time
the award is granted. When a Participant receives payment of performance shares,
the amount of cash and the fair market value of any shares of Common Stock
received will be ordinary income to the Participant and will be allowed as a
deduction for federal income tax purposes to the Company (subject to IRC Section
162(m) limitations).
Incentive Awards. A Participant receiving Incentive Awards will not
recognize income and the Company will not be allowed a tax deduction at the time
the award is granted. When a Participant receives payment for Incentive Awards,
the amount of cash received will be ordinary income to the Participant and will
be allowed as a deduction for federal income tax purposes to the Company
(subject to IRC Section 162(m) limitations).
Stock Awards. Unless the Participant makes an election to accelerate
recognition of the income to the date of grant, a Participant receiving a Stock
Award will not recognize income, and the Company will not be allowed a tax
deduction, until such time as the shares first become transferable or are no
longer subject to a substantial risk of forfeiture. At such time, the
Participant will recognize ordinary income equal to the fair
22
26
market value of the Common Stock and the Company will be entitled to a
corresponding tax deduction at that time (subject to IRC Section 162(m)
limitations).
The Committee may, but is not required to, permit the transfer of
nonqualified stock options and other awards granted under the 2001 Plan. Based
on current tax and securities regulations, such transfers, if permitted, are
likely to be limited to gifts of nonqualified stock options to members of the
Participant's immediate family or certain entities controlled by the Participant
or such family members. The following paragraphs summarize the likely income,
estate, and gift tax consequences to the Participant, the Company, and the
transferee, under present federal tax regulations, upon the transfer and
exercise of such options. The tax effect of transferring nonqualified stock
options may vary depending upon the particular circumstances. Under the Internal
Revenue Code, ISOs cannot be transferred other than by will or the laws of
descent and distribution.
Federal Income Tax. There will be no federal income tax consequences to
the Participant, the Company or the transferee upon the transfer of a
nonqualified stock option. However, the Participant will recognize ordinary
income when the transferee exercises the option, in an amount equal to the
excess of (a) the fair market value of the option shares upon the exercise of
such option over (b) the exercise price, and the Company will be allowed a
corresponding deduction, subject to certain limitations under IRC Section
162(m). The gain, if any, realized upon the transferee's subsequent sale or
disposition of the option shares will constitute short-term or long-term capital
gain to the transferee, depending on the transferee's holding period. The
transferee's basis in the stock will be the fair market value of such stock at
the time of exercise of the option.
Federal Estate and Gift Tax. If a Participant transfers a nonqualified
stock option to a transferee during the Participant's life but before the option
has become exercisable, the Participant will not be treated as having made a
completed gift for federal gift tax purposes until the option becomes
exercisable. However, if the Participant transfers a fully exercisable option
during life, the Participant will be treated as having made a completed gift for
federal gift tax purposes at the time of the transfer. If a Participant
transfers an option by reason of the Participant's death, the option will be
included in the Participant's gross estate for federal estate tax purposes. The
value of such option for federal estate or gift tax purposes may be determined
using a "Black-Scholes" or other appropriate option pricing methodology, in
accordance with IRS requirements.
BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS
As of the date of this Proxy Statement, no awards had been granted or
approved for grant under the 2001 Plan. Any awards under the 2001 Plan will be
made at the discretion of the Compensation Committee or the Administrator, as
the case may be. Consequently, it is not presently possible to determine either
the benefits or amounts that will be received by any particular person or group
pursuant to the 2001 Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE 2001 INCENTIVE PLAN.
PROPOSAL 3
SHAREHOLDER PROPOSAL ON
GLOBAL WORKERS' RIGHTS STANDARDS
The third proposal to be voted upon at the Annual Meeting asks the
shareholders to consider a proposal of the Comptroller of the City of New York,
as custodian and trustee of the New York City Teachers'
23
27
Retirement System (the "System"), 1 Centre Street, New York, NY 10007-2341,
owner of 1,361,292 shares, who has notified the Company in writing of the
System's intent to present the following resolution at the Annual Meeting:
"Whereas, Lowe's Companies, Inc. currently has extensive overseas
operations, and
Whereas, reports of human rights abuses in the overseas subsidiaries and
suppliers of some U.S.-based corporations has led to an increased public
awareness of the problems of child labor, "sweatshop" conditions, and
the denial of labor rights in U.S. corporate overseas operations, and
Whereas, corporate violations of human rights in these overseas
operations can lead to negative publicity, public protests, and a loss
of consumer confidence which can have a negative impact on shareholder
value, and
Whereas, a number of corporations have implemented independent
monitoring pilot programs with respected local human rights and
religious organizations to strengthen compliance with international
human rights norms in selected supplier factories, and
Whereas, the Council on Economic Priorities has established a program of
independent monitoring known as the SA8000 Social Accountability
Standards, and
Whereas, these standards incorporate the conventions of the
International Labor Organization (ILO) on workplace human rights which
include the following principles:
1. All workers have the right to form and join trade unions and to
bargain collectively. (ILO Conventions 87 and 98)
2. Workers representatives shall not be the subject of
discrimination and shall have access to all workplaces necessary
to enable them to carry out their representation functions. (ILO
Convention 135)
3. There shall be no discrimination or intimidation in employment.
Equality of opportunity and treatment shall be provided
regardless of race, color, sex, religion, political opinion, age,
nationality, social origin, or other distinguishing
characteristics. (ILO Convention 100 and 111)
4. Employment shall be freely chosen. There shall be no use of
force, including bonded or prison labor. (ILO Conventions 29 and
105)
5. There shall be no use of child labor. (ILO Convention 138), and,
Whereas, independent monitoring of corporate adherence to these
standards is essential if consumer and investor confidence in our
Company's commitment to human rights is to be maintained,
Therefore, be it resolved that the Company commit itself to the full
implementation of the aforementioned human rights standards by its
international suppliers and in its own international production
facilities and commit to a program of outside, independent monitoring of
compliance with these standards."
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COMPANY RESPONSE
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"AGAINST" THE GLOBAL WORKERS' RIGHTS STANDARDS PROPOSAL FOR THE FOLLOWING
REASONS:
The Company has a long history of supporting human rights in the workplace,
and the Company's policies and procedures have reflected those values for many
years. These polices and procedures, set forth in the Company's Code of Ethics,
its Statement of Business Ethics, and its buying agreements with domestic and
international suppliers, require all suppliers and suppliers' vendors not to use
child or forced labor and to comply with all applicable laws and regulations in
the production of goods and services for, and in their conduct of business with,
the Company. The Company is committed, and expects its suppliers to be similarly
committed, to operating within the spirit and letter of laws and regulations
affecting the Company's business and employees. To fulfill its commitment,
beginning in 1997 the Company implemented a five-part compliance program for its
international suppliers consisting of (i) informing suppliers of the Company's
policy, (ii) inquiring into suppliers' policies, (iii) verifying suppliers'
responses to the Company's inquiries, (iv) entering into contracts containing
representations on this issue, and (v) randomly and periodically inspecting
suppliers' manufacturing facilities for compliance during contract fulfillment.
The Company regularly conducts seminars on the requirements of the Code of
Ethics and Statement of Business Ethics for the Company's merchants/buyers,
distributes Code of Ethics and Statement of Business Ethics in both hard copy
and/or electronic format to management employees, and provides and explains the
Company's policies and procedures to all suppliers. Through its buying
agreements, the Company obtains representations from suppliers (both domestic
and international) that they, and their vendors, do not permit the use of child
or forced labor and that their operations comply with all applicable laws and
regulations.
Because of the Company's high ethical standards and ongoing efforts in
these areas, the Company does not believe that adoption of the standards in the
shareholder proposal is necessary. Further, the proposal calls for third party
monitoring of compliance by the Company, its suppliers, and their vendors, which
would require expenditures beyond any benefit such third party compliance
procedures reasonably could be expected to provide.
FOR THESE REASONS, THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "AGAINST" THIS SHAREHOLDER PROPOSAL.
25
29
PERFORMANCE GRAPH
The following graph compares the total returns (assuming reinvestment of
dividends) of the Company's Common Stock, the S&P 500 Index and the S&P Retail
Index. The graph assumes $100 invested on January 31, 1996, in the Company's
Common Stock and each of the indices.
LOWE'S S&P 500 S&P RETAIL INDEX
------ ------- ----------------
1/31/1996 100.00 100.00 100.00
1/31/1997 106.43 123.61 118.92
1/30/1998 162.45 154.13 180.66
1/29/1999 374.70 201.19 296.57
1/28/2000 286.35 213.85 317.60
2/02/2001 345.96 212.17 305.90
Source: Bloomberg Financial Services
INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors has
reappointed Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu,
and their respective affiliates (collectively, "Deloitte") as independent
auditors to audit the consolidated financial statements of the Company and its
subsidiaries for 2001. Deloitte has served in such capacity continuously since
1982.
Representatives of Deloitte are expected to be present at the Annual
Meeting, where they will have the opportunity to make a statement, if they
desire to do so, and be available to respond to appropriate questions.
GENERAL
The cost of solicitations of proxies will be borne by the Company. In
addition to the use of the mail, proxies may be solicited personally, by
telephone, by telegraph or by certain employees of the Company. The Company may
reimburse brokers or other persons holding stock in their names or in the names
of nominees for their expense in sending proxy materials to principals and
obtaining their proxies. The Company has engaged the proxy soliciting firm of D.
F. King & Co., Inc. to solicit proxies for the Annual Meeting at an anticipated
cost of $8,500 (plus handling fees).
26
30
The shares represented by a proxy will be voted as directed unless the
proxy is revoked. Any proxy may be revoked before it is exercised by filing with
the Secretary of the Company an instrument revoking the proxy or a proxy bearing
a later date. A proxy is revoked if the person who executed the proxy is present
at the meeting and elects to vote in person.
Where a choice is specified with respect to any matter to come before the
meeting, the shares represented by the proxy will be voted in accordance with
such specifications.
Where a choice is not so specified, the shares represented by the proxy
will be voted "FOR" proposals 1 and 2 and "AGAINST" proposal 3 as set forth in
the Notice of Annual Meeting and Proxy Card.
Management is not aware that any matters other than those specified herein
will be presented for action at the meeting, but if any other matters do
properly come before the meeting, the persons named as Proxies will vote upon
such matters in accordance with their best judgment.
In the election of Directors, a specification to withhold authority to vote
for the slate of management nominees will not constitute an authorization to
vote for any other nominee.
SHAREHOLDER PROPOSALS
FOR THE 2002 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 2002 Annual
Meeting must be received by the Board of Directors for consideration for
inclusion in the Proxy Statement and form of proxy relating to that meeting on
or before December 14, 2001. In addition, if the Company receives notice of a
shareholder proposal after March 6, 2002, the persons named as Proxies in the
Proxy Statement for the 2002 Annual Meeting will have discretionary voting
authority to vote on such proposal at the 2002 Annual Meeting.
ANNUAL REPORT
The Annual Report to shareholders accompanies this Proxy Statement. The
Company's report to the Securities and Exchange Commission on Form 10-K for the
Fiscal Year ended February 2, 2001, is available upon written request addressed
to Lowe's Companies, Inc., Investor Relations Department, P. O. Box 1111, North
Wilkesboro, NC 28656.
By order of the Board of Directors,
/s/ Stephen A. Hellrung
Stephen A. Hellrung
Senior Vice President, General
Counsel & Secretary
Wilkesboro, North Carolina
April 16, 2001
27
31
APPENDIX A
AUDIT COMMITTEE CHARTER
ADOPTED MARCH 31, 2000
LOWE'S COMPANIES, INC.
BOARD OF DIRECTORS AUDIT COMMITTEE
CHARTER
MISSION
The Audit Committee is established by the Board as an independent and
objective Committee of the Board of Directors. Its primary function is to assist
the Board of Directors in monitoring (1) the integrity of the financial
statements of the Company, (2) compliance by the Company with its established
internal controls, legal and regulatory requirements and (3) the independence
and performance of the Company's internal and external auditors.
COMPOSITION
The Audit Committee shall consist of at least three (3) directors who shall
be appointed in accordance with the Bylaws of the Company. The members of the
Audit Committee shall meet the independence and experience requirements of the
New York Stock Exchange. The Committee shall meet at such times as it deems
necessary.
AUTHORITY
The Committee is authorized to have full and unrestricted access to all
personnel, records, operations, properties, and other informational sources of
the Company as required to properly discharge its responsibilities. Further, the
Committee is granted the authority to investigate any activity of the Company,
and all employees are directed to cooperate as requested by members of the
Committee. Upon Board approval, the Committee will also be empowered to retain
outside counsel or persons having special competencies as necessary to assist
the Committee in fulfilling its responsibility. The Audit Committee shall make
regular reports to the Board of Directors of the Company.
DUTIES AND RESPONSIBILITIES
The Audit Committee shall:
1. Provide a focal point for communication between the independent
auditor, Internal Audit, management and the Board of Directors.
2. Review and reassess the adequacy of this Charter annually and submit it
to the Board for approval.
3. Review the annual audited financial statements with management,
including major issues regarding accounting and auditing principles and
practices, as well as the adequacy of internal controls that could
significantly affect the Company's financial statements.
4. Discuss with management, the independent auditor, and Internal Audit
their qualitative judgments about the appropriateness, not just the
acceptability, of accounting principles and financial
28
32
disclosure practices used or proposed to be adopted by the Company,
particularly the degree of aggressiveness or conservatism of its
accounting principles and underlying estimates.
5. Meet periodically with management to review the Company's major
financial risk exposures and the steps management has taken to monitor
and control such exposures.
6. As necessary, review an analysis prepared by management and the
independent auditor of significant financial reporting issues and
judgments made in connection with the preparation of the Company's
financial statements.
7. Review major changes to the Company's auditing and accounting
principles and practices as suggested by the independent auditor,
internal auditors or management.
8. With respect to the independent public accountants, the Committee
shall:
-- Recommend to the Board the appointment of the independent auditor,
which firm is ultimately accountable to the Audit Committee and
the Board.
-- Approve the fees to be paid to the independent auditor.
-- Approve any change of the lead client service/audit partner.
-- Receive periodic reports from the independent auditor regarding
the auditor's independence, discuss such reports with the auditor,
and if so determined by the Audit Committee, recommend that the
Board take appropriate action to insure the independence of the
auditor.
-- Review the scope and general extent of the independent public
accountants' audit examination prior to the annual audit. This
review should also include the Vice President of Internal Audit's
evaluation of the performance of the independent accountants,
including the degree of audit coordination and overall audit
coverage. The Committee should also consider management's plans
for engaging the independent accountants for management advisory
services to determine whether such services could impair the
public accountants' independence.
-- Discuss with the independent auditor the matters required to be
discussed by Statement of Auditing Standards No. 61 relating to
the conduct of the audit.
9. Review and concur in the appointment, annual performance appraisal,
replacement, reassignment or discharge of the Vice President of
Internal Audit.
10. Review with the Vice President of Internal Audit the department's
scope, staffing, training/ development, budget and audit schedule.
This review should include the risk assessment upon which the audit
schedule was developed, as well as plans for reviews of the Company's
information systems, procedures and controls. The Committee shall
review and approve the initial audit plan and any significant
subsequent changes in the plan, the results of internal audit
activities, including the independence, objectivity and qualifications
of the internal audit staff, and periodically review and approve the
Internal Audit Department's charter.
11. Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the
auditor and the Company's response to that letter. Such review should
include:
(a) Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access to
required information.
29
33
(b) Any changes required in the planned scope of the internal audit.
(c) The internal audit department responsibilities, budget and
staffing.
12. Prepare the report required by the rules of the Securities and
Exchange Commission to be included in the Company's annual proxy
statement.
13. Review management's monitoring of compliance with the Company's Code
of Ethics, and conduct or monitor any special investigations of
conflict of interest and compliance with federal, state and local laws
and regulations as may be warranted.
14. Obtain reports from management, the Company's senior internal auditing
executive and the independent auditor that the Company's subsidiaries
are in conformity with applicable legal requirements and the Company's
Code of Conduct.
15. Review with the Company's General Counsel legal matters that may have
a material impact on the financial statements, the Company's
compliance policies and any material reports or inquiries received
from regulators or governmental agencies.
16. Meet at least annually with the chief financial officer, the senior
internal auditing executive and the independent auditor in separate
executive sessions.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit 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 auditor. Nor is it
the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditor or to
assure compliance with laws and regulations and the Company's Code of Conduct.
30
34
DIRECTIONS TO THE PARK HOTEL
FROM CHARLOTTE DOUGLAS INTERNATIONAL AIRPORT:
Take airport freeway to Billy Graham Parkway South. Follow Billy Graham
until the road name changes to Woodlawn Road. Cross 3 intersections (Old
Pineville Road, South Boulevard and Park Road). Woodlawn becomes Runnymede at
the intersection of Selwyn Avenue. Continue straight on Runnymede. At the second
light turn right onto Colony Road. Turn right onto Roxborough Road. Turn right
onto Rexford, and The Park Hotel is on the left.
FROM I-85 NORTH:
Take Billy Graham Parkway exit #33. Follow Billy Graham until the road name
changes to Woodlawn Road. Cross 3 intersections (Old Pineville Road, South
Boulevard and Park Road). Woodlawn becomes Runnymede at the intersection of
Selwyn Avenue. Continue straight on Runnymede. At the second light turn right
onto Colony Road. Turn right onto Roxborough Road. Turn right onto Rexford, and
The Park Hotel is on the left.
FROM I-85 SOUTH:
Take Billy Graham Parkway exit #33. Follow Billy Graham until the road name
changes to Woodlawn Road. Cross 3 intersections (Old Pineville Road, South
Boulevard and Park Road). Woodlawn becomes Runnymede at the intersection of
Selwyn Avenue. Continue straight on Runnymede. At the second light turn right
onto Colony Road. Turn right onto Roxborough Road. Turn right onto Rexford, and
The Park Hotel is on the left.
FROM I-77 SOUTH:
Take exit #5, Tyvola Road and turn left at the end of the ramp. Continue on
Tyvola Road. At the intersection of Park Road and Tyvola Road, cross Park Road,
Tyvola becomes Fairview Road. Continue on Fairview. At Barclay Downs (First
Union is on the left) turn left. Turn right at the light (second intersection)
onto Morrison Boulevard. Turn left onto Coca-Cola Boulevard (first left). Turn
right onto Rexford Road, and The Park Hotel is on the right.
[Recycled Paper LOGO] Lowcm-PS-01
35
COMMON STOCK LOWE'S COMPANIES, INC. COMMON STOCK
P.O. Box 1111, North Wilkesboro, NC 28656
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned hereby appoints Stephen A. Hellrung and Robert A. Niblock as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and vote, as designated on the reverse side, all the shares of
Common Stock of Lowe's Companies, Inc. held of record by the undersigned on
March 23, 2001, at the Annual Meeting of Shareholders to be held on May 25,
2001, or any adjournment thereof. The Board of Directors recommends a vote FOR
Proposals 1, and 2 and a vote AGAINST Proposal 3.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted FOR Proposals 1 and 2 and AGAINST Proposal 3.
--------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Please sign exactly as your name appears on the books of the Company. Joint
owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
--------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED?
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
PROXY VOTING INSTRUCTIONS
Lowe's Companies, Inc. encourages all stockholders to vote. We provide three
convenient methods for voting listed below:
-------------------
1. Vote by Internet
-------------------
It's fast, convenient, and your vote is immediately
confirmed and posted.
Follow these four easy steps:
--------------------------------------------------------
1. Read the accompanying Proxy Statement and Proxy Card.
2. Go to the Website
http://www.eproxyvote.com/low
3. Enter your Control Number located on your Proxy Card.
4. Follow the instructions provided.
--------------------------------------------------------
Your vote is important!
Go to http://www.eproxyvote.com/low anytime!
--------------------
2. Vote by Telephone
--------------------
It's fast, convenient, and immediate!
Call Toll-Free on a Touch-Tone Phone
Follow these four easy steps:
---------------------------------------------------------
1. Read the accompanying Proxy Statement and Proxy Card.
2. Call the toll-free number
1-877-PRX-VOTE (1-877-779-8683).
There is NO CHARGE for this call.
3. Enter your Control Number located on your Proxy Card.
4. Follow the recorded instructions.
---------------------------------------------------------
Your vote is important!
Call 1-877-PRX-VOTE anytime!
Do not return your Proxy Card if you are voting by Telephone or Internet
---------------
3. Vote by Mail
---------------
Complete, sign, date and return the Proxy Card attached above in the enclosed
envelope.
RECEIVE FUTURE PROXY MATERIALS ELECTRONICALLY. Receiving stockholder material
electronically reduces mailing and printing costs and is better for the
environment. Would you like to receive future proxy materials electronically? If
so go to http://www.econsent.com/low and follow the instructions provided.
Stockholders who elect this option will be notified each year by e-mail how to
access the proxy materials and how to vote their shares on the Internet.
You may access Lowe's Companies, Inc's. 2000 Annual Report at:
www.lowes.com/annualreport and Proxy Statement at: www.lowes.com/proxy
36
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
--------------------------------------------------------------------------------
LOWE'S COMPANIES, INC.
--------------------------------------------------------------------------------
Common Stock
Mark box at right if an address change has been noted on the [ ]
reverse side of this card.
CONTROL NUMBER:
---------------------------
Please be sure to sign and date this Proxy. Date
--------------------------------------------------------------------------------
--------------Shareholder sign here----------------Co-owner sign here-----------
--------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposals 1 and 2.
--------------------------------------------------------------------------------
1. Election of Directors. Nominees: For All With- For All
Nominees hold Except
CLASS III DIRECTORS
(Three-year Term 2001-2004) [ ] [ ] [ ]
(01) Peter C. Browning
(02) Kenneth D. Lewis
(03) Thomas D. O'Malley
(04) Robert L. Tillman
CLASS I DIRECTOR
(One-year Term 2001-2002)
(05) Robert A. Ingram
NOTE: If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the name(s) of the
nominee(s). Your shares will be voted for the remaining nominee(s).
For Against Abstain
2. Proposal to approve the Company's 2001 Incentive Plan. [ ] [ ] [ ]
--------------------------------------------------------------------------------
The Board of Directors recommends a vote AGAINST proposal 3.
--------------------------------------------------------------------------------
3. Proposal concerning global workplace labor standards. [ ] [ ] [ ]
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
--------------------------------------------------------------------------------
DETACH CARD DETACH CARD
Important Proxy voting instructions on reverse side.
37
ESOP LOWE'S COMPANIES, INC. ESOP
P.O. Box 1111, North Wilkesboro, NC 28656
This Proxy is Solicited on Behalf of the Board of Directors.
TO: STATE STREET BANK AND TRUST COMPANY, TRUSTEE OF THE LOWE'S COMPANIES
EMPLOYEE STOCK OWNERSHIP PLAN ("ESOP")
As a participant in the Lowe's Companies Employee Stock Ownership Plan, I direct
State Street Bank and Trust Company, Trustee, to vote the shares of Lowe's
Companies, Inc. Common Stock allocated to my ESOP account at the Annual Meeting
of Shareholders to be held on May 25, 2001, and at any adjournment thereof, in
accordance with the direction on the reverse side of this card. Any allocated
shares for which no written instructions are timely received and any unallocated
shares held in the trust will be voted by the Trustee in the manner directed by
the Lowe's Companies ESOP Management Committee.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted FOR Proposals 1 and 2 and AGAINST Proposal 3.
--------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Please sign exactly as your name appears on the books of the Company. Joint
owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
--------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED?
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
PROXY VOTING INSTRUCTIONS
Lowe's Companies, Inc. encourages all stockholders to vote. We provide three
convenient methods for voting listed below:
-------------------
1. Vote by Internet
-------------------
It's fast, convenient, and your vote is immediately
confirmed and posted.
Follow these four easy steps:
--------------------------------------------------------
1. Read the accompanying Proxy Statement and Proxy Card.
2. Go to the Website
http://www.eproxyvote.com/low
3. Enter your Control Number located on your Proxy Card.
4. Follow the instructions provided.
--------------------------------------------------------
Your vote is important!
Go to http://www.eproxyvote.com/low anytime!
--------------------
2. Vote by Telephone
--------------------
It's fast, convenient, and immediate!
Call Toll-Free on a Touch-Tone Phone
Follow these four easy steps:
---------------------------------------------------------
1. Read the accompanying Proxy Statement and Proxy Card.
2. Call the toll-free number
1-877-PRX-VOTE (1-877-779-8683).
There is NO CHARGE for this call.
3. Enter your Control Number located on your Proxy Card.
4. Follow the recorded instructions.
---------------------------------------------------------
Your vote is important!
Call 1-877-PRX-VOTE anytime!
Do not return your Proxy Card if you are voting by Telephone or Internet
---------------
3. Vote by Mail
---------------
Complete, sign, date and return the Proxy Card attached above in the enclosed
envelope.
RECEIVE FUTURE PROXY MATERIALS ELECTRONICALLY. Receiving stockholder material
electronically reduces mailing and printing costs and is better for the
environment. Would you like to receive future proxy materials electronically? If
so go to http://www.econsent.com/low and follow the instructions provided.
Stockholders who elect this option will be notified each year by e-mail how to
access the proxy materials and how to vote their shares on the Internet.
You may access Lowe's Companies, Inc's. 2000 Annual Report at:
www.lowes.com/annualreport and Proxy Statement at: www.lowes.com/proxy
38
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
--------------------------------------------------------------------------------
LOWE'S COMPANIES, INC.
--------------------------------------------------------------------------------
ESOP
Mark box at right if an address change has been noted on the [ ]
reverse side of this card.
CONTROL NUMBER:
---------------------------
Please be sure to sign and date this Proxy. Date
--------------------------------------------------------------------------------
--------------Shareholder sign here----------------Co-owner sign here-----------
--------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposals 1 and 2.
--------------------------------------------------------------------------------
1. Election of Directors. Nominees: For All With- For All
Nominees hold Except
CLASS III DIRECTORS
(Three-year Term 2001-2004) [ ] [ ] [ ]
(01) Peter C. Browning
(02) Kenneth D. Lewis
(03) Thomas D. O'Malley
(04) Robert L. Tillman
CLASS I DIRECTOR
(One-year Term 2001-2002)
(05) Robert A. Ingram
NOTE: If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the name(s) of the
nominee(s). Your shares will be voted for the remaining nominee(s).
For Against Abstain
2. Proposal to approve the Company's 2001 Incentive Plan. [ ] [ ] [ ]
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The Board of Directors recommends a vote AGAINST proposal 3.
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3. Proposal concerning global workplace labor standards. [ ] [ ] [ ]
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
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DETACH CARD DETACH CARD
Important Proxy voting instructions on reverse side.