Dick's Sporting Goods, Inc. DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE
14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement. |
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)). |
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Definitive Proxy Statement. |
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Definitive Additional Materials. |
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Soliciting Material Pursuant to §240.14a-12. |
Dicks Sporting Goods, Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined): |
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Proposed maximum aggregate value of transaction: |
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Fee paid previously with preliminary materials. |
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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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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
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NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 6, 2007
To our Stockholders:
The 2007 annual meeting of stockholders of Dicks Sporting
Goods, Inc., a Delaware corporation (the Company),
will be held at the Hyatt Regency, 1111 Airport Boulevard,
Pittsburgh, PA 15231,
(724) 899-1234,
June 6, 2007, beginning at 1:30 p.m. local time. At
the meeting, the holders of the Companys issued and
outstanding Class B common stock and common stock will act
on the following matters:
(1) Election of three (3) Class B Directors, each
for terms that expire in 2010 and one (1) Class A
Director for a term that expires in 2009;
(2) Approval of the Companys Amended and Restated
Employee Stock Purchase Plan; and
(3) Any other matters that properly come before the meeting.
All holders of record of shares of Dicks Sporting
Goods Class B common stock and common stock
(NYSE: DKS) at the close of business on April 16, 2007
are entitled to vote at the meeting and any postponements or
adjournments of the meeting.
A list of stockholders entitled to vote at the meeting may be
examined by any stockholder, for any purpose germane to the
meeting, at 300 Industry Drive, RIDC Park West, Pittsburgh, PA
15275 beginning on May 25, 2007.
By order of the Board of Directors,
Edward W. Stack
Chairman of the Board
May 3, 2007
Pittsburgh, PA
TABLE OF
CONTENTS
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i
300 Industry Drive, RIDC Park West
Pittsburgh, Pennsylvania 15275
PROXY STATEMENT
This proxy statement contains information related to the annual
meeting of stockholders of Dicks Sporting Goods, Inc., a
Delaware corporation, to be held at the Hyatt Regency, 1111
Airport Boulevard, Pittsburgh, PA 15231,
(724) 899-1234,
June 6, 2007, beginning at 1:30 p.m. local time, and
at any postponements or adjournments thereof. This proxy
statement is being mailed to stockholders on or about
May 3, 2007.
ABOUT THE
MEETING
What is
the purpose of the annual meeting?
At our annual meeting, stockholders will act upon the matters
outlined in the notice of meeting on the cover page of this
proxy statement, including the election of three
(3) Class B Directors and one (1) Class A
Director, approval of the Amended and Restated Employee Stock
Purchase Plan and to act on any other matter to properly come
before the meeting. In addition, management will report on the
performance of the Company and respond to questions from
stockholders.
Who is
entitled to vote at the meeting?
Only stockholders of record at the close of business on
April 16, 2007, the record date for the meeting, are
entitled to receive notice of and to participate in the annual
meeting. If you were a stockholder of record on that date, you
will be entitled to vote all of the shares that you held on that
date at the meeting or any postponements or adjournments of the
meeting.
What are
the voting rights of the holders of Dicks Sporting Goods
common stock and Class B common stock?
Holders of our common stock and Class B common stock have
identical rights, except that holders of the common stock are
entitled to one (1) vote for each share held of record and
holders of Class B common stock are entitled to ten
(10) votes for each share held of record on all matters
submitted to a vote of the stockholders, including the election
of directors. Stockholders do not have cumulative voting rights.
Holders of common stock and Class B common stock vote
together as a single class on all matters presented to the
stockholders for their vote or approval, except as may be
required by Delaware law.
Who can
attend the meeting?
Subject to space availability, all common stockholders and
Class B stockholders as of the record date, or their duly
appointed proxies, may attend the meeting. Since seating is
limited, admission to the meeting will be on a first-come,
first-served basis. Registration will begin at 1:00 p.m. If
you attend, please note that you may be asked to present valid
picture identification, such as a drivers license or
passport. Cameras, recording devices and other electronic
devices will not be permitted at the meeting.
1
Please also note that if you hold your shares in street
name (that is, through a broker or other nominee), you
will need to bring a copy of a brokerage statement reflecting
your stock ownership as of the record date and check in at the
registration desk at the meeting.
What
constitutes a quorum?
The presence at the meeting, in person or by proxy, of the
holders of record of the issued and outstanding shares of
capital stock representing a majority of the votes entitled to
be cast at the meeting constitutes a quorum, permitting the
meeting to conduct its business. As of the record date,
April 16, 2007, 40,673,760 shares of common stock
representing the same number of votes and 13,283,840 shares
of Class B common stock representing 132,838,400 votes were
issued and outstanding. Thus, the presence of the holders of
common stock or Class B common stock or the combination
thereof representing at least 86,756,081 votes will be required
to establish a quorum.
Proxies received but marked as abstentions and broker non-votes
will be included in the calculation of the number of votes
considered to be present at the meeting to establish a quorum,
but will not be deemed a vote cast with respect to the matters
to be acted upon at the meeting.
How do I
vote?
If you complete and properly sign the accompanying proxy card
and return it to the Company, it will be voted as you direct. If
you are a registered stockholder and attend the meeting, you may
deliver your completed proxy card in person. Street
name stockholders who wish to vote at the meeting will
need to obtain a proxy form from the institution that holds
their shares.
Can I
change or revoke my vote after I return my proxy card?
Yes. Even after you have submitted your proxy, you may change or
revoke your vote at any time before the proxy is exercised by
filing with the Corporate Secretary of the Company either a
notice of revocation or a duly executed proxy bearing a later
date. The powers of the proxy holders will be suspended if you
attend the meeting in person and so request, although attendance
at the meeting will not by itself revoke a previously granted
proxy.
What are
the Boards recommendations?
Unless you give other instructions on your proxy card, the
persons named as proxy holders on the proxy card will vote in
accordance with the recommendation of the Board of Directors.
The Boards recommendation is set forth together with the
description of each item in this proxy statement. In summary,
the Board recommends a vote:
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for election of the nominated slate of Class B
Directors and Class A Director (see Item 1); and
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for approval of the Amended and Restated Employee Stock
Purchase Plan (see Item 2).
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With respect to any other matter that properly comes before the
meeting, the proxy holders will vote as recommended by the Board
of Directors or, if no recommendation is given, in their own
discretion.
What vote
is required to approve each item?
Election of Directors. The affirmative vote of
a plurality of the votes cast at the meeting is required for the
election of directors. A properly executed proxy marked
WITHHOLD with respect to the election of one or more
directors will not be voted with respect to the director or
directors indicated, although it will be counted for purposes of
determining whether there is a quorum.
Other Items. For any other item, including
approval of the Amended and Restated Employee Stock Purchase
Plan, the affirmative vote of a majority of the votes
represented in person or by proxy and entitled to vote on the
item will be required for approval. A properly executed proxy
marked ABSTAIN with respect to any such matter will
not be voted, although it will be counted for purposes of
determining whether there is a quorum. Accordingly, an
abstention will have the effect of a negative vote.
2
If you hold your shares in street name through a
broker or other nominee, your broker or nominee may not be
permitted to exercise voting discretion with respect to some of
the matters to be acted upon. Thus, if you do not give your
broker or nominee specific instructions, your shares may not be
voted on those matters and will not be counted in determining
the number of shares necessary for approval. Shares represented
by such broker non-votes will, however, be counted
in determining whether there is a quorum.
We are a
controlled Company under the New York Stock Exchange
rules.
Because as of March 1, 2007, Edward W. Stack, our Chairman
and Chief Executive Officer, controlled approximately 68% of the
combined voting power of our common stock and Class B
common stock, we are a controlled company under the
New York Stock Exchanges Corporate Governance Standards,
and we have chosen to take advantage of all of the exemptions
available to controlled companies under
Section 303A of the New York Stock Exchange Corporate
Governance Standards.
3
STOCK
OWNERSHIP
Who are
the largest owners of the Companys stock?
Based on a review of filings with the Securities and Exchange
Commission (the SEC) and information known to us
about our Class B common stock, the following are the
non-management beneficial holders of more than 5% of the
outstanding shares of Dicks Sporting Goods, Inc.
(i) common stock (or Class B common stock that is
convertible into more than 5% of the outstanding shares of our
common stock) or (ii) Class B common stock, as of
December 31, 2006 (the date on which holders of more than
5% of our outstanding common stock report their ownership):
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Percentage
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Amount and Nature
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Percentage
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of Class B
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Name and Address
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of Beneficial
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of Common
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Common
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Title of Class
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of Beneficial Owner
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Ownership(5)
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Stock(6)
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Stock(6)
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Common Stock
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Ronald Baron and Baron Capital
Group, Inc.(1)
767 Fifth Avenue,
New York, NY 10153
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4,425,900 shares of common
stock(1)
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11.30
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Common Stock
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Stephen F. Mandel, Jr. and
Lone Pine Associates LLC(2) Two Greenwich Plaza, Greenwich, CT
06830
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2,339,410 shares of common
stock shared power to vote and direct disposition(2)
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6.00
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%
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Common Stock
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AXA Financial, Inc.(3)
1290 Avenue of the Americas New York, NY 10104
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2,880,715 shares of common
stock(3)
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7.35
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%
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Common Stock
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BlackRock, Inc.(4)
40 East 52nd Street
New York, NY 10022
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2,448,329 shares of common
stock shared power to vote and direct disposition(4)
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6.25
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%
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Class B Common Stock
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Frederick C. Heichemer &
Nancy M. Heichemer
c/o Dicks Sporting Goods, Inc.
300 Industry Drive,
RIDC Park West
Pittsburgh, PA 15275
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700,000 shares of
Class B common stock shared voting and dispositive power
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(7)
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5.19
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%
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Class B Common Stock
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Kim Myers
c/o Dicks Sporting Goods, Inc.
300 Industry Drive,
RIDC Park West
Pittsburgh, PA 15275
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869,905 shares of
Class B common stock sole power to vote and direct
disposition
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(7)
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6.45
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Of the shares beneficially owned, the beneficial owner has sole
power to vote and direct disposition with respect to
50,000 shares, and has shared voting and dispositive power
with respect to 4,375,900 shares of common stock. Amount
includes 4,425,900 shares of common stock owned by Baron
Capital Group, Inc., 4,154,300 shares of common stock owned
by BAMCO, Inc., 271,600 shares of common stock owned by
Baron Capital Management, Inc. and 2,500,000 shares of
common stock owned by Baron Growth Fund. BAMCO and Baron Capital
Management, Inc. are subsidiaries of Baron Capital Group. Baron
Growth Fund is an advisory client of BAMCO, Inc. Ronald Baron
owns a controlling interest in Baron Capital Group. Share
ownership amounts are based on figures set forth in Amendment
No. 2 to Schedule 13G filed by Baron Capital Group,
Inc., BAMCO, Inc., Baron Capital Management, Inc., Baron Growth
Fund and Ronald Baron filed on February 14, 2007. |
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Includes 34,566 shares of common stock owned by Lone
Spruce, L.P., 75,860 shares of common stock owned by Lone
Balsam, L.P., 63,376 shares of common stock owned by Lone
Sequoia, L.P., 697,232 shares of |
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common stock owned by Lone Cascade, L.P., 58,034 shares of
common stock owned by Lone Sierra, L.P., 173,802 shares of
common stock owned by Lone Pine Associates LLC,
755,266 shares of common stock owned by Lone Pine Members
LLC and 1,410,342 shares of common stock owned by Lone Pine
Capital LLC. Lone Pine Associates LLC is the general partner of
Lone Balsam, L.P., Lone Sequoia, L.P., and Lone Spruce, L.P.,
and has the power to direct the affairs of each, including
decisions respecting the disposition of the proceeds from the
sale of shares. Lone Pine Members, LLC, the general partner of
Lone Cascade, L.P. and Lone Sierra, L.P., has the power to
direct the affairs of each, including decisions respecting the
dispositions of the proceeds from the sale of the shares.
Stephen F. Mandel, Jr. is the Managing Member of each of
Lone Pine Associates LLC, Lone Pine Members LLC and Lone Pine
Capital LLC and in that capacity directs their operations. Share
ownership amounts are based on figures set forth in the
Schedule 13G/A filed by Mr. Mandel, Jr., Lone
Spruce, L.P., Lone Balsam, L.P., Lone Sequoia, L.P., Lone
Cascade, L.P., Lone Sierra, L.P., Lone Pine Associates LLC, Lone
Pine Members LLC, and Lone Pine Capital LLC on February 14,
2007. |
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Of the shares beneficially owned, the beneficial owner is deemed
to have sole power to vote or to direct the vote with respect to
1,948,231 shares, and is deemed to have sole power to
dispose or to direct the disposition with respect to
2,880,715 shares. Amount includes 2,880,715 shares of
common stock owned by AXA Assurances I.A.R.D. Mutuelle,
2,880,715 shares of common stock owned by AXA Assurances
Vie Mutuelle, 2,880,715 shares of common stock owned by AXA
Courtage Assurance Mutuelle, 2,880,715 shares of common
stock owned by AXA, and 2,825,515 shares of common stock
owned by AXA Financial, Inc. AXA Financial, Inc., is a
subsidiary of AXA, and AXA Assurances I.A.R.D Mutuelle, AXA
Assurances Vie Mutuelle and AXA Courtage Assurance Mutuelle, as
a group, control AXA, and act as a parent holding company with
respect to the holdings of AXA Rosenberg Investment Management
LLC. AXA Financial, Inc. acts as a parent holding company with
respect to the holdings of AllianceBernstein L.P., an investment
advisor registered under Section 203 of the Investment
Advisors Act of 1940 and AXA Equitable Life Insurance Company,
an insurance company and an investment advisor registered under
Section 203 of the Investment Advisors Act of 1940. Share
ownership amounts are based on figures set forth in
Schedule 13G filed by AXA Financial, Inc. AXA Assurances
I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, AXA Courtage
Assurance Mutuelle and AXA filed on February 14, 2007. |
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BlackRock, Inc. is a parent holding company for a number of
investment management subsidiaries. The following subsidiaries
of BlackRock, Inc. are investment advisors which hold shares of
our common stock: BlackRock Advisors LLC, BlackRock Capital
Management, Inc., BlackRock Investment Management LLC, BlackRock
(Netherlands) B.V., BlackRock Fund Managers Ltd, BlackRock
Investment Management UK Ltd and State Street
Research & Management Co. Share ownership amounts are
based on figures set forth in Schedule 13G filed by
BlackRock, Inc. and its subsidiaries on February 14, 2007. |
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A person has beneficial ownership of shares if he has the power
to vote or dispose of the shares. This power can be exclusive or
shared, direct or indirect. In addition, a person is considered
by SEC rules to beneficially own shares underlying options or
convertible securities that are presently exercisable or will
become exercisable within 60 days of December 31,
2006. The shares listed in this table above include shares
issuable upon the exercise of options or other rights that are
exercisable or will become exercisable within 60 days of
December 31, 2006. |
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As of December 31, 2006, there were 39,168,694 shares
of our common stock outstanding and 13,482,940 shares of
Class B common stock outstanding. To calculate a
stockholders percentage of beneficial ownership of common
stock, we must include in the numerator and denominator those
shares of common stock underlying options or convertible
securities (such as our Class B common stock) that the
stockholder is considered to beneficially own. Shares of common
stock underlying options or convertible securities held by other
stockholders, however, are disregarded in this calculation.
Therefore, the denominator used in calculating beneficial
ownership among our stockholders may differ. |
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Less than 5%. |
How much
stock do the Companys directors, nominees and executive
officers own?
The following table shows the amount of Dicks Sporting
Goods common stock and Class B common stock beneficially
owned (unless otherwise indicated) by our directors, nominees
for director, the executive officers
5
named in the Summary Compensation Table below and the directors
and executive officers as a group. Except as otherwise
indicated, all information is as of March 1, 2007.
A person has beneficial ownership of shares if he or she has the
power to vote or dispose of the shares. This power can be
exclusive or shared, direct or indirect. In addition, a person
is considered by the SEC rules to beneficially own shares
underlying options and convertible securities that are presently
exercisable or will become exercisable within 60 days of
March 1, 2007. The shares listed in this table below
include shares of common stock issuable upon the exercise of
options or other rights that are exercisable or will become
exercisable within 60 days of March 1, 2007.
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Shares Beneficially Owned
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Number
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Percent(12)
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Voting
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Name of Beneficial Owner
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Common Stock
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Class B
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Common Stock
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Class B
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Power
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Executive Officers, Nominees
and Directors
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Edward W. Stack
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2,177,500
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(1)
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11,747,790
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(2)
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25.94%
(includes Class B common shares owned by Mr. Stack)(12)
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87.71
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%
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67.64
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%
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William J. Colombo
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695,303
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(3)
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1.72%
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*
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William R. Newlin
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529,630
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(4)
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1.31%
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*
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Michael F. Hines
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159,385
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(5)
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*
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*
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Gwen K. Manto
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15,625
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(6)
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*
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*
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Emanuel Chirico
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30,000
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(7)
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*
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*
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David I. Fuente
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101,500
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(8)
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*
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|
|
|
|
|
*
|
|
Walter Rossi
|
|
|
327,600
|
(9)
|
|
|
|
|
|
*
|
|
|
|
|
|
|
*
|
|
Lawrence J. Schorr
|
|
|
171,076
|
(10)
|
|
|
|
|
|
*
|
|
|
|
|
|
|
*
|
|
Brian J. Dunn
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry D. Stone
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Executive Officers and
Directors as a group (9 persons)
|
|
|
4,207,619
|
(11)
|
|
|
11,747,790
|
|
|
30.81%
|
|
|
87.71
|
%
|
|
|
69.44
|
%
|
|
|
|
* |
|
Percentage of shares of common stock beneficially owned does not
exceed one percent (1%). |
|
(1) |
|
Includes 2,171,500 shares of common stock issuable upon
exercise of options that were exercisable within 60 days of
March 1, 2007. Also includes 5,000 shares held by
Mr. Stacks minor children. Mr. Stack disclaims
beneficial ownership of those securities, and the inclusion of
such shares shall not be an admission that the reporting person
is the beneficial owner for the purposes of Section 16
under the Securities Exchange Act of 1934. Pursuant to an
agreement dated December 2, 2002, Mr. Stack provided
his brother Martin Stack an option exercisable for common stock
owned by Mr. Stack which may range from 290,000 to
669,900 shares. The option is exercisable on or before
December 2, 2007 and at 75% of the then per share market
price on the date of exercise. Market price for the purposes of
that agreement means the mean between the high and low prices of
the common stock on the national securities exchange on the day
on which the option is exercised, if the common stock is then
being traded on a national securities exchange, and if the
common stock is then being traded on such an exchange but there
are no sales on such day, the market price shall be deemed to be
the mean between the high and low prices of the common stock on
the national securities exchange on the day on which the most
recent sales occurred prior to the date of exercise; and if the
common stock is not then traded on such an exchange, then the
market price shall be deemed to be the mean between the high and
low bid and asked prices for the common stock on the
over-the-counter
market on the day on which the option is exercised. |
|
(2) |
|
Includes 385,100 shares of Class B Common Stock held
by Richard T. Stack, over which Edward W. Stack maintains sole
voting power. Amount also includes 250,000 shares which
have been pledged by Edward W. Stack in connection with a loan
facility established in January of 2007. |
6
|
|
|
(3) |
|
Includes 585,759 shares of common stock issuable upon
exercise of options that were exercisable within 60 days of
March 1, 2007. Also includes 1,200 shares held by
Mr. Colombos children. Mr. Colombo disclaims
beneficial ownership of those securities, and the inclusion of
such shares shall not be an admission that the reporting person
is the beneficial owner for the purposes of Section 16
under the Securities Exchange Act of 1934. |
|
(4) |
|
Includes 524,000 shares of common stock issuable upon the
exercise of options that were exercisable within 60 days of
March 1, 2007. Also includes 3,040 shares held by
Mr. Newlins spouse. Mr. Newlin disclaims
beneficial ownership of those securities, and the inclusion of
such shares shall not be an admission that the reporting person
is the beneficial owner for the purposes of Section 16
under the Securities Exchange Act of 1934. |
|
(5) |
|
Includes 75,125 shares of common stock issuable upon
exercise of options that were exercisable within 60 days of
March 1, 2007. |
|
(6) |
|
Includes 15,625 shares of common stock issuable upon
exercise of options that were exercisable within 60 days of
March 1, 2007. |
|
(7) |
|
Includes 30,000 shares of common stock issuable upon the
exercise of options that were exercisable within 60 days of
March 1, 2007. |
|
(8) |
|
Includes 88,400 shares of common stock issuable upon
exercise of options that were exercisable within 60 days of
March 1, 2007. |
|
(9) |
|
Includes 315,300 shares of common stock issuable upon
exercise of options that were exercisable within 60 days of
March 1, 2007. |
|
(10) |
|
Includes 135,750 shares of common stock issuable upon
exercise of options that were exercisable within 60 days of
March 1, 2007. |
|
(11) |
|
A total of 3,941,459 shares of common stock are issuable
upon the exercise of options for all nine (9) executive
officers and directors as a group within 60 days of
March 1, 2007. |
|
(12) |
|
As of March 1, 2007, there were 39,770,657 shares of
common stock outstanding and 13,393,840 shares of
Class B common stock outstanding. To calculate an
individual director or executive officers percentage of
beneficial ownership of common stock, we must include in the
numerator and denominator those shares of common stock
underlying options or convertible securities (such as our
Class B common stock) that the director or executive
officer is considered to beneficially own. Shares of common
stock underlying options or convertible securities held by other
directors, executive officers and stockholders, however, are
disregarded in this calculation. Therefore, the denominator used
in calculating beneficial ownership among our directors and
executive officers may differ. |
Section 16(a)
Beneficial Ownership Reporting Compliance.
The Companys directors and its executive officers are
required under Section 16(a) of the Securities Exchange Act
of 1934 to file reports of ownership and changes in ownership of
the Companys common stock with the SEC. Based upon a
review of filings with the SEC and written representations that
no other reports were required to be filed, we believe that all
of our directors and executive officers complied during the
Companys 2006 fiscal year with the reporting requirements
of Section 16(a) of the Securities Exchange Act of 1934.
ITEM 1
ELECTION OF DIRECTORS
The Board is divided into three (3) classes, each
containing as nearly as possible an equal number of directors.
The current term of office of our Class B Directors expires
at the 2007 annual meeting while the Class C Directors
expires at the 2008 annual meeting and the Class A
Directors expires at the 2009 annual meeting. Upon
recommendation by the Governance and Nominating Committee of the
Board of Directors, the Board of Directors proposes that the
following nominees, Emanuel Chirico (a Class B Director),
Walter Rossi (a Class B Director) and Brian J. Dunn (a
newly nominated director) be elected for new terms of three
(3) years and that Larry D. Stone (a newly nominated
director) be elected for a term of two (2) years and until
their successors are duly elected and qualified as Class B
or Class A Directors, respectively. Each of the nominees
has consented to serve if elected. If any
7
of them becomes unavailable to serve as a director, the Board
may designate a substitute nominee. In that case, the persons
named as proxies will vote for the substitute nominee designated
by the Board.
Directors
Standing for Election.
The directors standing for election at the annual meeting are:
Emanuel Chirico, 49, has served on the Board since
December 2003. On June 14, 2005, Mr. Chirico became a
director of the Phillips-Van Heusen Corporation (apparel and
footwear company listed on the NYSE) and was named its Chief
Executive Officer on February 27, 2006. Previously,
Mr. Chirico had been Phillips-Van Heusens President
and Chief Operating Officer since June of 2005. Mr. Chirico
had been the Executive Vice President and Chief Financial
Officer of Phillips-Van Heusen Corporation from 1999 until June
2005. From 1993 until 1999, Mr. Chirico was Phillips-Van
Heusen Corporations controller. Prior to that, he was a
partner at Ernst & Young LLP. Mr. Chiricos
current term of office as a Class B Director expires at the
2007 annual meeting.
Walter Rossi, 64, has served on the Board since
1993. In 2004, Mr. Rossi became a director of
Guitar Center, Inc. (a retailer of musical instruments listed on
Nasdaq). Mr. Rossi formerly served as Chief Executive
Officer of Naartjie Custom Kids, Inc. (a childrens apparel
retailer), Chief Executive Officer of Home Express (a retailer
of home furnishings), Chairman of the Retail Group at
Phillips-Van Heusen Corporation (apparel and footwear company
listed on the NYSE) and Chairman and Chief Executive Officer of
Mervyns (a department store chain). Mr. Rossis
current term of office as a Class B Director expires at the
2007 annual meeting.
Brian J. Dunn, 46, has been employed by Best Buy
Co., Inc. (a technology and entertainment products retailer
listed on the NYSE) since 1985. He has served as President and
Chief Operating Officer of Best Buy since February 26,
2006, overseeing more than 800 stores in the United States and
Canada as well as several corporate groups that directly support
Best Buys stores. Mr. Dunn is also responsible for
overseeing the merchandising, customer centricity, services and
small business functions of Best Buy. Prior to this appointment
as President and Chief Operating Officer, Mr. Dunn served
as the companys President Retail, North
America from 2004 to 2006. From 2002 to 2004, Mr. Dunn
served as Executive Vice President Best Buy
U.S. Retail.
Larry D. Stone, 55, has served as President and
Chief Operating Officer for Lowes Companies Inc. (a home
improvement retailer listed on the NYSE) since December 2006,
and before that served as Senior Executive Vice President
Merchandising/Marketing since 2005. Mr. Stone served as
Senior Executive Vice President Store Operations for Lowes
from 2003 to 2005, and from 2001 to 2003, served as Executive
Vice President, Store Operations.
The Board of Directors
unanimously recommends that the stockholders vote
For the persons nominated by the Board as
Class B and Class A Directors.
Other
Directors Not Standing for Election at this Meeting.
Other than the current nominees, the four (4) remaining
members of the Board of Directors who served during fiscal 2006
will continue to serve as members of our Board. Our other
directors who will serve after the 2007 annual meeting are:
William J. Colombo, 51, became our President and a board
member in 2002 in addition to being Chief Operating Officer.
From late in 1998 to 2000, Mr. Colombo served as President
of dsports.com LLC, our internet commerce subsidiary. Mr.
Colombo served as Chief Operating Officer and an Executive Vice
President from 1995 to 1998. Mr. Colombo joined us in 1988.
From 1977 to 1988, he held various field and district positions
with J.C. Penney Company, Inc. (a retailing company listed on
the NYSE). He is also on the board of directors of Gibraltar
Industries (a leading processor, manufacturer and provider of
high value-added, high margin steel products and services listed
on Nasdaq). Mr. Colombos term as a Class A
Director expires at the 2009 annual meeting.
David I. Fuente, 61, has served on the Board since 1993.
Mr. Fuente is currently a member of the board of Office
Depot, Inc. (an office supply retailer listed on the NYSE) and
was Chairman of Office Depot from 1987 to 2001 and its Chief
Executive Officer from 1987 to 2000. He currently serves as a
director for Ryder System, Inc. (a
8
truck leasing and logistics company listed on the NYSE).
Mr. Fuentes term as a Class A Director expires
at the 2009 annual meeting.
Edward W. Stack, 52, has served as our Chairman and Chief
Executive Officer since 1984 when the founder and Edward
Stacks father, Richard Dick Stack, retired
from our then two store chain. Mr. Edward Stack has served
us full time since 1977 in a variety of positions, including
President, Store Manager and Merchandise Manager.
Mr. Stacks current term of office as a Class C
Director expires at the 2008 annual meeting.
Lawrence J. Schorr, 53, has served on the Board since
1985. Mr. Schorr currently serves as Chief Executive
Officer of Boltaron Performance Products, LLC (formerly, Empire
Plastics, Inc.) (a privately owned plastics manufacturing
company) and as co-managing partner of the law firm of Levene,
Gouldin and Thompson LLP. Mr. Schorr has held both of these
positions for the last five years. He previously was President
of RRT-Recycle America, a subsidiary of WMX Technologies, Inc.
He formerly served in the same position for Resource Recycling
Technologies, Inc. (a solid waste material management company
listed on the American Stock Exchange). Prior to that he served
as a partner in the law firm of Levene, Gouldin and Thompson
LLP. Mr. Schorrs term as a Class C Director
expires at the 2008 annual meeting.
How are
directors compensated?
Director
Compensation 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Non-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
qualified
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
Stock
|
|
|
|
|
|
Incentive Plan
|
|
|
Deferred
|
|
|
All Other
|
|
|
|
|
|
|
Paid in Cash
|
|
|
Awards
|
|
|
Option Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Compensation
|
|
|
|
|
Name(1)
|
|
($)
|
|
|
($)
|
|
|
($)(2)(3)
|
|
|
($)
|
|
|
Earnings
|
|
|
($)(4)
|
|
|
Total ($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
Emanuel Chirico
|
|
$
|
99,750
|
|
|
|
|
|
|
$
|
113,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
213,194
|
|
David I. Fuente
|
|
$
|
90,500
|
|
|
|
|
|
|
$
|
201,833
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
292,333
|
|
Walter Rossi
|
|
$
|
71,000
|
|
|
|
|
|
|
$
|
201,833
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
272,833
|
|
Lawrence J. Schorr
|
|
$
|
100,250
|
|
|
|
|
|
|
$
|
201,833
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
302,083
|
|
|
|
|
(1) |
|
Mr. Stack and Mr. Colombo are members of the Board of
Directors of the Company. Each of Mr. Stack and
Mr. Colombos compensation is reported in the Summary
Compensation Table and the other tables set forth herein. As
employees of the Company, neither Mr. Stack nor
Mr. Colombo receive any additional compensation in
connection with their service on the Board of Directors of the
Company. |
|
(2) |
|
The values set forth in this column represents the dollar amount
recognized for financial statement reporting purposes in fiscal
2006 for the fair value of stock options granted to each
director in 2006 and in prior fiscal years, in accordance with
FAS 123R. A discussion of the relevant assumptions made in
the valuation may be found in the Stock-Based
Compensation section of Note 1 of the footnotes to
the Companys financial statements, in the Companys
Annual Report on
Form 10-K
for the fiscal year ended February 3, 2007. |
|
|
|
The aggregate number of shares underlying Company option awards
outstanding as of February 3, 2007 for each director is:
Emanuel Chirico, 50,000; David I. Fuente, 103,400; Walter Rossi,
330,300; and Lawrence J. Schorr, 150,750. |
|
(3) |
|
The aggregate grant date fair value for those options awarded to
each director set forth above in the fiscal year ended
February 3, 2007, computed in accordance with FAS 123R
was $161,800. A discussion of the relevant assumptions made in
the valuation may be in the Stock-Based Compensation
section of Note 1 of the footnotes to the Companys
financial statements, in the Companys Annual Report on
Form 10-K
for the fiscal year ended February 3, 2007. |
|
(4) |
|
Use by our officers and directors of aircraft that are owned or
leased by us for non-business purposes is governed by our travel
policy for non-business use of corporate aircraft, which is
described on page 30 of this proxy statement. Except where
indicated in the table above, all non-business use of aircraft
by any executive officer or director during fiscal 2006 was
billed to and paid for by the executive officer or director in
accordance with our travel policy. Prior to October 2006, one of
our aircraft leases provided that we were paid $2,000 per |
9
|
|
|
|
|
hour by our aircraft management company for each hour of
non-Company affiliated third party charter time on that
aircraft. In cases where that aircraft was chartered by a third
party, our aircraft management company also permitted us to, and
as a matter of practice our executives and directors did, use a
substitute aircraft from the aircraft management companys
fleet, instead of our leased aircraft, at specified rates. In
such instances, our third party aircraft management company
reduced the $2,000 per hour fee for third party charter
time owed to us for each hour a substitute aircraft was used.
Under our policy we have reviewed the charges with our Audit
Committee and our internal audit staff and we do not believe
that the substitute aircraft deduction is an incremental cost to
the Company. |
Understanding
Our Director Compensation Table.
Beginning in fiscal 2001, non-employee directors were
compensated by means of an annual retainer of $20,000 plus
$7,500 per meeting ($3,750 for teleconferences) both paid
in cash. In addition to the annual retainer and per meeting fees
(Board and committee per meeting fee is reduced if attended by
teleconference), each committee chair receives $15,000 per
committee chairmanship per year, except that the audit committee
chair receives an annual retainer of $25,000. Each committee
member also receives a per committee meeting fee of $1,500 ($750
for teleconferences). There are generally six (6) Board
meetings per year. Prior to fiscal 2001, non-employee directors
received no cash compensation. Instead, directors typically
received an initial stock option grant of 46,200 shares and
annual stock option grants thereafter of 23,100 shares.
Currently, each director receives an initial option grant
exercisable for 20,000 shares of common stock upon his
first election to the Board, with an additional annual option
grant exercisable for 10,000 shares for each year of
service thereafter. In accordance with our practice, each of
Messrs. Fuente, Chirico, Rossi and Schorr received option
grants exercisable for 10,000 shares of the Companys
common stock at an exercise price of $56.46 as part of their
annual stock option grant made in fiscal 2007. In each case
these options vest over four (4) years from the date of
grant. Additionally, members of our Board of Directors are
reimbursed for their expenses incurred in connection with
attending any meeting.
How often
did the Board meet during fiscal 2006?
The Board of Directors met eight (8) times during fiscal
2006. Each director attended all Board of Director meetings
either in person or via teleconference except that one
(1) director failed to attend one (1) meeting. The
Audit Committee met nine (9) times during fiscal 2006. Each
Audit Committee member attended all Audit Committee meetings.
During fiscal 2006, the Compensation Committee met four
(4) times. Each Compensation Committee member attended all
of the Compensation Committee meetings. The Governance and
Nominating Committee met three (3) times during fiscal
2006. Each Governance and Nominating Committee member attended
all of the Governance and Nominating Committee meetings.
10
What
committees has the Board established?
The Board of Directors has standing Compensation and Audit
Committees that were established prior to our initial public
offering, and in March 2003 we constituted a standing Governance
and Nominating Committee. The following sets forth Committee
memberships as of the date of this proxy statement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
Audit
|
|
Governance and
|
Director
|
|
Committee
|
|
Committee
|
|
Nominating Committee
|
|
Edward W. Stack
|
|
|
|
|
|
|
|
|
|
|
|
|
William J. Colombo
|
|
|
|
|
|
|
|
|
|
|
|
|
David I. Fuente
|
|
|
X
|
(c)
|
|
|
|
|
|
|
X
|
|
Emanuel Chirico
|
|
|
|
|
|
|
X
|
(c)
|
|
|
|
|
Walter Rossi
|
|
|
|
|
|
|
X
|
|
|
|
|
|
Lawrence J. Schorr
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
(c)
|
The Audit
Committee
Messrs. Chirico (Chairperson), Schorr and Rossi were
members of the Audit Committee during fiscal 2006, which has
been established in accordance with Section 3(a)(58)A of
the Securities Exchange Act of 1934. We adopted an Audit
Committee charter that was effective upon completion of our
initial public offering, which we amended and restated after the
adoption of the final New York Stock Exchange rules relating to
corporate governance in December 2003, amended further in
December 2004 to reflect additional changes in the New York
Stock Exchange rules relating to corporate governance under
which the Audit Committee reviews with management our internal
financial controls, accounting procedures and reports, and
amended again in March 2007 to address revised rules promulgated
by the SEC relating to review and approval of related party
transactions as set forth in Item 404 of
Regulation S-K.
The Audit Committee also reviews the engagement of our
independent auditors, makes recommendations to the Board of
Directors regarding the selection of independent auditors and
reviews the scope, fees and results of any audit. Emanuel
Chirico is qualified as the audit committee financial expert
within the meaning of the SEC regulations, and the Board has
determined that he has accounting and financial management
expertise within the meaning of the standards of the New York
Stock Exchange. The Board has determined that Mr. Chirico
is independent as the term is defined in Item 7(d)(3)(iv)
of Schedule 14A, and the Board has determined that all
members of our Audit Committee are independent within the
meaning of the SEC regulations relating to audit committee
independence, the listing standards of the New York Stock
Exchange and the Companys Corporate Governance Guidelines.
Our Audit Committee Charter is available on the Investor
Relations portion of our website (www.dickssportinggoods.com),
and a printed copy may be obtained by contacting our Investor
Relations Department, at 300 Industry Drive, RIDC Park West,
Pittsburgh, PA 15275, or via email at investors@dcsg.com.
The
Compensation Committee
Messrs. Fuente (Chairperson) and Schorr comprise our
Compensation Committee. Our Compensation Committee monitors our
stock option and stock purchase plans, establishes the terms and
conditions of all stock option grants, recommends an overall
compensation policy for the Company, discharges the Boards
responsibilities relating to compensation of the officers and
directors of the Company and advises the Board regarding
management succession. The Compensation Committee does have the
authority under its charter to delegate any of its duties and
responsibilities (or functions) to a subcommittee of the
Compensation Committee consisting of one or more members, as
appropriate. The Companys compensation program for
executives generally has consisted of three key elements: a base
salary, a performance-based annual bonus, which is payable in
cash, and periodic grants of stock-based compensation, such as
stock options. Under this approach, compensation for these
officers involves a high proportion of pay that is at
risk, in the form of the annual bonus, which takes into
account personal performance but is also based, in significant
part, on our performance. In addition, stock-based compensation
such
11
as stock options relate a significant portion of long-term
remuneration directly to stock price appreciation realized by
all of the Companys stockholders.
Base salaries for our executive officers other than the Chief
Executive Officer, including any annual or other adjustments,
are based upon recommendations by the Chief Executive Officer,
taking into account such factors as salary norms in comparable
businesses, a subjective assessment of the nature of the
position and the contribution and experience of the officer.
During fiscal 2006, recommendations relating to executive
officers subject to Section 162(m) of the Internal Revenue
Code were reviewed by the Compensation Committee. Awards of
annual bonuses to executive officers who are subject to
Section 162(m) of the Internal Revenue Code were made by
the Compensation Committee and all other bonuses paid to
non-executive officers were made in accordance with a formula
established by the Compensation Committee and Chief Executive
Officer. Neither the Company nor the Compensation Committee has
engaged, whether on a formal or informal basis, any compensation
consultants to assist in determining or recommending the amount
or form of executive and director compensation for fiscal 2006.
Under the Companys annual bonus program, executive
officers and certain other employees are eligible to receive
cash bonuses based upon the Companys attainment of
specific performance goals, primarily total company earnings, as
recommended by the Chief Executive Officer and approved by the
Compensation Committee. Target incentive bonus opportunities are
established at the beginning of the fiscal year as measured
generally by earnings before taxes at the total Company level. A
specified percentage of a bonus program participants
annual salary is used to determine any amount to be paid. A
threshold level of performance is established below which no
bonus award is paid, levels of performance at which specified
percentages of the target bonus will be paid, and a maximum
level of performance above which no additional bonus would be
paid. For additional information regarding our Compensation
Committee processes and procedures for the consideration and
determination of executive officer compensation, see
Compensation Discussion and Analysis starting
on page 19 of this proxy statement.
During fiscal 2006, the Compensation Committee operated under
guidelines for stock option grants which are generally
applicable to all eligible employees. Under these guidelines,
stock option grants are generally made on an annual basis in
amounts that take into account such factors as market data on
total compensation packages, the value of stock option grants at
targeted external companies, total stockholder return, share
usage and stockholder dilution. In appropriate cases, however,
special grants may be authorized outside of the annual-grant
framework. All decisions to grant stock options are in the sole
discretion of the Compensation Committee and, except for grants
to the Chief Executive Officer, based upon recommendation from
the Chief Executive Officer. In limited circumstances, the Chief
Executive Officer has been delegated authority to grant stock
options to non-executive officers in accordance with Delaware
law.
Mr. Stack, Chairman and Chief Executive Officer, is
eligible to participate in the same executive compensation
program available to other Company executives and his total
annual compensation, including compensation derived from the
annual bonus program, was set by the Compensation Committee
based on the same factors as other executives. Payments earned
by Mr. Stack are included in the Summary Compensation
Table. Mr. Stack, as a greater than 5% stockholder, is
ineligible to participate in the Companys employee stock
purchase plan.
Our Compensation Committee Charter, which was amended in
December 2004 to reflect changes in the New York Stock Exchange
Rules relating to corporate governance and in March 2007 to
reflect changes to Section 402 of
Regulation S-K
made by the SEC relating to compensation disclosure and
discussion, is available on the Investor Relations portion of
our website (www.dickssportinggoods.com), and a printed copy may
be obtained by contacting our Investor Relations Department, at
300 Industry Drive, RIDC Park West, Pittsburgh, PA 15275,
or via email at investors@dcsg.com.
The
Governance and Nominating Committee
Messrs. Fuente and Schorr (Chairperson) currently comprise
our Governance and Nominating Committee. This Committee provides
oversight and guidance to our Board of Directors to ensure that
the membership, structure, policies and processes of the Board
and its committees facilitate the effective exercise of the
Boards role in our governance. The Committee reviews and
evaluates the policies and practices with respect to the size,
composition and functioning of the Board, evaluates the
qualifications of and recommends to the full Board candidates
for election as directors, and reviews and recommends to the
full Board the compensation and benefits for non-
12
employee directors. Our Governance and Nominating Committee
recommended to the Board of Directors that Messrs. Chirico,
Rossi and Dunn stand for election as Class B Directors, and
that Mr. Stone stand for election as a Class A
Director. Our Governance and Nominating Committee charter is
available on the Investor Relations portion of our website
(www.dickssportinggoods.com), and a printed copy may be obtained
by contacting our Investor Relations Department, at 300 Industry
Drive, RIDC Park West, Pittsburgh, PA 15275, or via email at
investors@dcsg.com. Because the Company is a controlled
company under the New York Stock Exchanges Corporate
Governance Standards, we are not required to have an independent
nominating committee. However, both Messrs. Chirico and
Rossi would qualify as independent under the standards
applicable to non-controlled companies under the New York Stock
Exchanges Corporate Governance Standards.
On March 21, 2007, the Board named David I. Fuente to act
as the presiding non-management director for a one-year term
(until the 2008 annual meeting proxy statement is filed or until
his successor is duly appointed and qualified).
How does
the Board select nominees for the Board?
Our Governance and Nominating Committee will consider candidates
for Board membership suggested by its members and other Board
members and management. This Committee will consider director
candidates from stockholders for election at the 2008 annual
meeting if such nominees are submitted in accordance with the
procedures set forth in Additional
Information Advance Notice Procedures on
page 40 of this proxy statement.
Our Governance and Nominating Committee, at the direction of the
Committee Chair, makes an initial determination as to whether to
conduct a full evaluation of a prospective candidate. This
initial determination is based on whatever information is
provided to the Committee with the recommendation of the
prospective candidate, as well as the Committees own
knowledge of the prospective candidate, which may be
supplemented by inquiries to the person making the
recommendation or others. The preliminary determination is based
primarily on the need for additional Board members to fill
vacancies or to expand the size of the Board and the likelihood
that the prospective nominee can satisfy the evaluation factors
described below. If the Committee determines, in consultation
with the other Board members as appropriate, that additional
consideration is warranted, it may request that additional
information about the prospective nominees background and
experience be gathered and a report be prepared for the
Committee, and may utilize a third party search firm to assist
in such evaluation. The Committee then would evaluate the
prospective nominee against the standards and qualifications set
out in the Companys Corporate Governance Guidelines,
including independence, integrity, experience, sound judgment in
areas relevant to the Companys businesses and willingness
to commit sufficient time to the Board, all in the context of an
assessment of the perceived needs of the Board at that point in
time. The Committee will also measure candidates against the
criteria it sets, including skills and attributes that reflect
the values of the Company. Our Governance and Nominating
Committee will also be responsible for reviewing with the Board,
on an annual basis, the criteria it believes appropriate for
Board membership.
Our Governance and Nominating Committee will also consider such
other relevant factors as it deems appropriate, including the
current composition of the Board, the balance of management and
independent directors, the need for Audit Committee expertise
and the evaluations of other prospective nominees. Depending on
the needs of the Company at the time, the prospective nominees
and such other factors as the Committee deems in its business
judgment to be relevant, the Committee will take such other
steps as are necessary to evaluate the prospective nominee,
including, if warranted, one or more Committee members
interviewing the prospective nominee. After completing this
evaluation and other steps of the process the Committee would
make a recommendation to the full Board as to the persons who
should be nominated by the Board, and the Board determines the
nominees after considering the recommendation and report of the
Committee.
Our Governance and Nominating Committee determined, given the
growth of the Company in recent years, that expanding the size
of the Board by two (2) members was advisable. Our
Governance and Nominating Committee utilized a third party
search firm, to assist the Committee in finding candidates for
nomination to our Board who possessed the qualities that the
Committee and the Board desires in members, which includes
experience and sound judgment in areas relevant to our business,
independence and integrity. The search firm helped to
13
identify, evaluate and assist in building the recommendations
for Messrs. Dunn and Stone as candidates. Both
Mr. Dunn and Mr. Stone were interviewed by members of
the Governance and Nominating Committee, and were determined to
be outstanding candidates who possessed the qualities desired by
the Committee for inclusion on our Board, and as such were
recommended to the Board for nomination. Both were determined
not to have any affiliations or conflicts if interest which
would impact their ability to exercise independent business
judgment as members of our Board.
Does the
Company have a Code of Ethics?
Our Code of Business Conduct and Ethics is applicable to all of
our officers, directors and employees, including our principal
executive officer, principal financial officer and principal
accounting officer. The Code of Business Conduct and Ethics is
available on the Investor Relations portion of our website
(www.dickssportinggoods.com), and a printed copy may be obtained
by contacting our Investor Relations Department, at
300 Industry Drive, RIDC Park West, Pittsburgh,
PA 15275, or via email at investors@dcsg.com. We intend to post
amendments to or waivers from the Code (to the extent applicable
to our chief executive officer, principal financial officer or
principal accounting officer or directors).
How do
stockholders communicate with the Board?
Stockholders and other parties interested in communicating
directly with our Board, the presiding non-management director
or with the non-management directors as a group may do so by
writing to the Board or Presiding Director (as the case may be),
c/o General Counsel Office, Dicks Sporting Goods,
Inc., 300 Industry Drive, RIDC Park West, Pittsburgh, PA 15275
or e-mail at
investors@dcsg.com to the attention of the legal department.
Under our process for handling letters received by the Company
and addressed to non-management members of the Board, our
Governance and Nominating Committee has instructed the legal
department to (i) review any such correspondence,
(ii) regularly forward to the Board a summary of all such
correspondence and (iii) regularly forward to the presiding
non-management director copies of all correspondence that is
addressed to the presiding director or the non-management
directors as a group or that, in the opinion of the legal
department, is intended for the presiding director or the
non-management directors or that otherwise requires their
attention. Directors may at any time review a log of all
correspondence received by the Company that is addressed to
members of the Board and request copies of any such
correspondence. Concerns relating to accounting, internal
controls or auditing matters are immediately brought to the
attention of the Companys internal audit department and
handled in accordance with procedures established by the Audit
Committee with respect to such matters.
How does
the Board determine which directors are considered
independent?
On December 4, 2003, the Board adopted its Corporate
Governance Guidelines, which were amended on December 1,
2004 to reflect certain changes made by the New York Stock
Exchange to its listing standards and in March 2007 to reflect
changes made by the SEC relating to independence determinations.
The Guidelines adopted by the Board meet the listing standards
adopted by the New York Stock Exchange for controlled
companies, and the full text of the Guidelines can be
found in the Investor Relations section of the Companys
website (www.dickssportinggoods.com), and a printed copy may be
obtained by contacting our Investor Relations Department, at 300
Industry Drive, RIDC Park West, Pittsburgh, PA 15275, or via
email at investors@dcsg.com.
Pursuant to the Guidelines, the Board undertook its annual
review of existing director independence on March 20,
2007, and a review of independence of nominees for
director on April 27, 2007. During this review, the Board
considered transactions and relationships between each director
or nominee for director with the Company (either directly or as
a partner, stockholder or officer of any organization that has a
relationship with the Company). As provided in the Guidelines,
the purpose of this review was to determine whether any such
relationships or transactions were inconsistent with a
determination that the director or nominee for director is
independent in accordance with independence requirements
implemented by the New York Stock Exchange.
As a result of this review, the Board affirmatively determined
that Messrs. Chirico, Fuente, Rossi and Schorr are, and
that Messrs. Dunn and Stone would be if elected,
independent directors, in accordance with the standards
14
set forth in the Guidelines and in accordance with independence
requirements implemented by the New York Stock Exchange Listing
Standards.
Policy on
Annual Meeting Attendance
The Boards official policy with respect to Board
attendance at the annual meeting of stockholders is that the
Board strongly encourages its members to attend the
Companys annual meeting of stockholders; the Company also
expects that most of its directors will attend its 2007 annual
meeting. All of the current members of the Board were in
attendance at last years annual meeting.
Compensation
Committee Interlocks and Insider Participation
Our Compensation Committee currently consists of
Messrs. Fuente and Schorr. Neither Mr. Fuente nor
Mr. Schorr has ever been an officer or employee of ours or
any of our subsidiaries. None of our executive officers serve or
have served as a member of the board of directors, compensation
committee or other board committee performing equivalent
functions of any entity that has one or more executive officers
serving as one of our directors or on our Compensation
Committee. Our Compensation Committee customarily has met and
discussed matters relating to the compensation of our employees
and key officers.
Certain
Relationships and Transactions with Related Persons
Some of our stockholders who own more than 5% of a class of our
common stock have registration rights to register shares of our
common stock under the Securities Act of 1933. They may request
that we register their shares of common stock with the SEC, and,
if all conditions under our registration rights agreement are
met, we must register their shares. We would be required to bear
specified expenses related to those registrations.
In 2006 we paid in full the remaining balance on a $1,251,000
(the largest aggregate amount of indebtedness outstanding under
the promissory note) in principal amount loan granted to us by
entities established by the estate of Richard Dick
Stack, our founder and father of Edward W. Stack, in 1986, which
was payable at an annual interest rate of 12% in monthly
installments of approximately $14,000 through May 1, 2006.
The loan was subordinated to all of our senior indebtedness. At
the time the loan was granted to us, we believed the terms were
consistent with the terms that we would have received from an
unaffiliated third party in an arms length transaction.
We also lease two locations from Stack Associates, LLC, a New
York limited liability company established by Dick Stacks
estate, one of which continues to operate as one of our stores
and the second of which has been subleased to a third party. Our
total monthly lease payments for the two locations is $20,000.
We paid $240,000 under these leases in fiscal year 2006. The
amount we are paying per square foot under these leases is
comparable to the amounts we agreed to pay to unaffiliated third
parties for other new leases that were entered into around the
same time period.
We entered into an agreement with Edward W. Stack and Richard T.
Stack, dated November 12, 1992, which gives Edward W. Stack
an irrevocable proxy to vote all of our shares owned (including
shares acquired in the future) by Richard T. Stack. Also,
pursuant to an agreement dated December 2, 2002, Edward W.
Stack provided his brother Martin Stack an option exercisable
for common stock which may range from 290,000 to
669,900 shares. The option is exercisable on or before
December 2, 2007 and at 75% of the then per share market
price on the date of exercise. Market price for purposes of that
agreement is defined as the mean between the high and low prices
of the common stock on the national securities exchange on the
day on which the option is exercised, if the common stock is
then being traded on a national securities exchange, and if the
common stock is then being traded on such an exchange but there
are no sales on such day, the market price shall be deemed to be
the mean between the high and low prices of the common stock on
the national securities exchange on the day on which the most
recent sales occurred prior to the date of exercise; and if the
common stock is not then traded on such an exchange, then the
market price shall be deemed to be the mean between the high and
low bid and asked prices for the common stock on the
over-the-counter
market on the day on which the option is exercised.
15
Kim Myers, the sister of our Chairman and Chief Executive
Officer and a holder of our Class B common stock, is
married to Tim Myers, our Director of Reverse Logistics, an
employee in our Conklin, New York facility. During fiscal 2006,
Mr. Myers was paid an aggregate salary and bonus of
$130,083 for his services during the year.
During fiscal 2006 we and our subsidiaries paid Buchanan
Ingersoll & Rooney PC (a law firm with over
500 attorneys) an aggregate of $1,009,535 for legal
services that were provided to us. Jeremiah Garvey is an equity
shareholder of that law firm and Mr. Newlins
son-in-law.
Buchanan Ingersoll & Rooneys representation of us
predates the companys initial public offering in 2002 and
Mr. Newlins hire in 2003.
On February 13, 2006, we entered into an Aircraft Sublease
Agreement with Corporate Air, LLC (Corporate Air).
Under that sublease we charter for business use an aircraft
owned by EWS, LLC (EWS), an entity owned by Edward
W. Stack. Corporate Air, an independent airline charter company,
has a master lease with EWS under which Corporate Air operates
and maintains this aircraft, hires pilots and other staff for
flight operations and also may act to charter the aircraft for
use by third parties. During the five (5) year sublease
term, we have the right to use this aircraft on a flight
available basis for one thousand five hundred (1,500) hours for
travel purposes. The sublease may be terminated on certain
conditions as set forth in the sublease and terminates
automatically if Corporate Air no longer has the right to
operate the aircraft under the master lease. Under this
arrangement, we will pay Corporate Air (i) a base fee of
$150,000 per month and (ii) an hourly charter rate of
$1,900 per block hour of actual usage. The hourly charter
rate is subject to a fuel surcharge adjustment, as set forth in
the sublease. During fiscal 2006, we paid Corporate Air
$2,528,144 under the sublease.
We, along with two of our subsidiaries, currently sublease one
(1) store to and lease two (2) stores from Best Buy
Co, Inc., where Mr. Dunn serves as President and Chief
Operating Officer. Each lease was entered into pursuant to
arms length transactions prior to Mr. Dunns
current relationship with us. The sublease was entered into in
1999 for an initial term of five (5) years, with four
(4) extension options thereafter, each for an additional
five (5) year term. The annual rent that Best Buy pays to
us under this sublease is $201,811. The first lease was entered
into by our subsidiary Galyans Trading Company, Inc. in
1999, for a twenty (20) year term and annual rent of
$1,464,995 per year. The second lease is held through our
wholly-owned subsidiary, Golf Galaxy, Inc. The lease, entered
into in 2004, has a term of ten (10) years and two
(2) months, and has annual rent payments of $232,498.
On February 1, 2006, we entered into a consulting and
separation agreement with Gary M. Sterling, our former Senior
Vice President of Merchandising. The agreement amended
Mr. Sterlings existing arrangement with us. During
the term of the agreement (from January 1, 2006 to
January 31, 2007), Mr. Sterling was required to
provide us consulting services relating to transitioning his
responsibilities at the Company. The agreement confirmed that
150,000 shares of the Companys common stock
underlying his January 21, 2004 stock option grant would
remain exercisable for a period of ninety (90) days
following January 31, 2007. The remaining
150,000 shares of common stock underlying the
January 21, 2004 stock option grant were forfeited as part
of the agreement. During the term of the agreement
Mr. Sterling was eligible to participate in the
Companys health coverage plans. In consideration of the
forgoing, Mr. Sterling agreed to non-competition covenants,
provided us releases and waivers of claims and agreed to
confidentiality provisions contained in the agreement.
Prior to the implementation of our related party policy, which
is discussed below, the Audit Committee, through its committee
charter, had the ability in its discretion to review and ratify,
approve or disapprove the Company entering into any transaction
between the Company or its subsidiaries and any related persons
that were required to be reported under SEC
Regulation S-K
Item 404, or any rules or regulations issued in connection
therewith. The Audit Committee reviewed and approved or ratified
the transactions set forth above in accordance with the terms of
its committee charter, with the exception of the retail lease
agreements entered into with Best Buy, which were reviewed and
approved by the full Board following the Governance and
Nominating Committees recommendation of Mr. Dunn as a
nominee for election to our Board, in accordance with the
Companys related party policy. As of March 2007, the Audit
Committees review and ratification, approval or
disapproval of transactions required to be reported under SEC
Regulation S-K
Item 404 must be conducted in accordance with the terms of
the Companys related party policy, which is discussed
below. Any potential related party transactions that are not
reviewed by the Audit Committee must be reviewed by the full
Board or another committee thereof, in accordance with the terms
of the policy.
16
In March of 2007, the Companys Board approved a policy
related to notification, review and approval or disapproval of
related party transactions that are reportable under SEC
Regulation S-K
Item 404. This related party policy covers our directors,
nominees, executive officers, and immediate family members of
our directors, nominees and executive officers. The policy also
may apply to any outside third party company or entity in which
any of these persons owns more than 10% of the equity, serves as
an officer or equivalent or, in the case of directors or
immediate family members, is employed. Transactions with these
outside entities will initially be reviewed by the office of
General Counsel to determine if they are within the scope of the
policy. We obtain information regarding potential related party
transactions as part of our annual director and executive
officer questionnaires.
Transactions (or series of related transactions) that would fall
within the scope of the policy include those in which the amount
exceeds $120,000, other than compensation between a person
covered by the policy and the Company (and its subsidiaries).
Any new transaction and any amendment to a transaction that
falls within the scope of the policy is to be reviewed, and
approved or disapproved by the Audit Committee (or the full
Board in lieu of the Audit Committee).
Report of
the Audit Committee
The following Report of the Audit Committee does not
constitute soliciting material and should not be deemed filed or
incorporated by reference into any other Company filing under
the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent the Company specifically incorporates
this Report by reference therein.
The charter of the Audit Committee of the Board of Directors,
the full text of which is available on the Investor Relations
portion of our website (www.dickssportinggoods.com), specifies
that the purpose of the Committee is to assist the Board of
Directors in its responsibility to:
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oversee the integrity of the audit process, financial reporting
and internal accounting controls of the Company;
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oversee the work of the Companys financial management, the
internal auditors employed by the Company and any registered
public accounting firm employed by the Company for the purpose
of preparing or issuing an audit report or related work;
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oversee managements development of, and adherence to, a
sound system of internal accounting and financial controls and
that internal auditors and outside auditors objectively assess
the Companys financial reporting, accounting practices and
internal controls; and
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provide an open avenue of communication between outside
auditors, internal auditors and the Board.
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In carrying out these responsibilities, the Audit Committee,
among other things:
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provides oversight on matters relating to its appointment of and
oversight of the outside auditors;
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reviews matters concerning the appointment and oversight of the
internal auditors;
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provides oversight and review of accounting principles and
practices and internal controls;
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provides oversight and monitoring of the Companys
financial statements and audits;
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oversees matters relating to communications with the outside
auditors and management;
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prepares an annual report to be included in the Companys
proxy statement relating to the annual report; and
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provides oversight to the extent it deems necessary on certain
other matters related to certain related party transactions.
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The Audit Committee met nine (9) times during fiscal 2006.
The Audit Committee schedules its meetings with a view to
ensuring that it devotes appropriate attention to all of its
tasks. The Committees meetings include, whenever
appropriate, executive sessions with the Companys
independent auditors without the presence of the Companys
management.
17
As part of its oversight of the Companys financial
statements, the Committee reviews and discusses with both
management and the Companys independent auditors all
annual financial statements and quarterly operating results
prior to their issuance. During fiscal 2006, management advised
the Committee that each set of financial statements reviewed had
been prepared in accordance with generally accepted accounting
principles, and reviewed significant accounting and disclosure
issues with the Committee. These reviews included discussion
with the outside auditors of matters required to be discussed
pursuant to Statement on Auditing Standards No. 61
(Communication with Audit Committees), including the
adoption of, or changes to, the Companys significant
internal auditing and accounting principles and procedures as
suggested by the outside auditors, internal audit and management
and any management letters provided by the outside auditors and
the response to those letters. The Committee also discussed with
Deloitte & Touche LLP matters relating to its
independence, including a review of audit and non-audit fees and
the disclosures made to the Committee pursuant to
Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) and the
Audit Committee has received a written disclosure letter as
required by that standard. The Audit Committee has also
received, reviewed and discussed with Deloitte & Touche
LLP the report required by section 10A(k) of the Securities
Exchange Act of 1934.
Taking all of these reviews and discussions into account, the
undersigned Committee members recommended to the Board of
Directors that the Board approve the inclusion of the
Companys audited financial statements in the
Companys Annual Report on
Form 10-K
for the fiscal year ended February 3, 2007, for filing with
the SEC.
Members of the Audit Committee
Emanuel Chirico (Chairperson)
Lawrence J. Schorr
Walter Rossi
Audit and
Non-Audit Fees and Independent Public Accountants
The following table presents fees for professional audit
services rendered by Deloitte & Touche LLP (we
sometimes refer to Deloitte & Touche LLP as D&T)
for the audit of the Companys annual financial statements
for fiscal 2005 and 2006, and fees billed for other services
rendered by D&T for fiscal 2005 and 2006.
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Fiscal 2005
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Fiscal 2006
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Audit Fees
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$
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890,074
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$
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849,019
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Audit-Related Fees
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49,000
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37,482
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Tax Fees
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336,723
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321,863
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All Other Fees
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Total all Fees
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$
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1,275,797
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$
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1,208,364
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Audit Fees. Amounts presented for fiscal 2005
and 2006 includes $345,324 and $320,487 of fees incurred in
connection with review of Company compliance under the
Sarbanes-Oxley Act in fiscal 2005 and 2006, respectively.
Audit-Related Fees. Audit related fees paid in
both fiscal year 2005 and 2006 principally include fees relating
to audits of employee benefit plans.
Tax Fees. Tax fees set forth for fiscal 2005
and 2006 are for tax-related services related primarily to tax
compliance (including U.S. federal and state returns), tax
consulting and tax planning.
The Audit Committee pre-approves the terms of all auditing
services and the terms of any non-audit services which the
independent registered public accounting firm is permitted to
render under Section 10A(h) of the Securities Exchange Act
of 1934. The Audit Committee may delegate the pre-approval to
one of its members, provided that if such delegation is made,
the full Audit Committee at the next regularly scheduled meeting
shall be presented with any pre-approval decision made by that
member. During fiscal 2006, both on an annual basis and as it
relates to specific engagements, the Audit Committee
pre-approved 100% of the terms (including compensation) of all
auditing services included in Audit Fees and Audit-Related Fees
(including the provision of any comfort
18
letters in connection with securities underwritings), and 100%
of the terms (including compensation) of any permissible
non-audit services included in Tax Fees.
D&T has served as our independent accountants since the
audit for the
11-month
period ended January 30, 1999. D&T has been selected by
the Audit Committee to act as our independent public accountant
for fiscal 2007. Representatives of D&T will be present at
the Annual Meeting of stockholders to respond to questions and
to make statements as they desire.
Executive
Compensation
Compensation
Committee Report
The following Report of the Compensation Committee does not
constitute soliciting material and should not be deemed filed or
incorporated by reference into any other Company filing under
the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent the Company specifically incorporates
this Report by reference therein.
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis set forth below with the
Companys management and, based upon such review and
discussion, the Compensation Committee recommended to our Board
that the Compensation Discussion and Analysis be included in
this Proxy Statement.
The full text of the Compensation Committees charter is
available on the Investor Relations portion of our website
(www.dickssportinggoods.com).
Respectfully submitted,
Members of the Compensation Committee
David I. Fuente (Chairperson)
Lawrence J. Schorr
Compensation
Discussion and Analysis
Overview
This section of our proxy statement discusses the compensation
awarded to, earned by, or paid to the named executive officers
(we refer to the individuals who served as the Companys
Chief Executive Officer and Chief Financial Officer during
fiscal 2006, as well as the other individuals included in the
Summary Compensation Table on page 26, as the named
executive officers).
Our Compensation Committee is responsible for reviewing the
corporate goals and objectives relevant to the compensation of
the Chief Executive Officer, evaluating the Chief Executive
Officer based on those goals and objectives and setting his
compensation based on that performance. The Compensation
Committee makes recommendations to our Board and the Chairman
and Chief Executive Officer related to the compensation of other
named executive officers. Additionally, as it relates to all
employee compensation other than his own, our Chairman and Chief
Executive Officer plays a central role in establishing,
reviewing and evaluating compensation matters. Because our
Chairman and Chief Executive Officer is key to our business,
holds in excess of 68% of the voting power of our capital stock
and has been operating the Company since 1984, he plays an
extremely significant role in establishing all policies at the
Company, including those related to other employees
compensation.
Objectives
and Philosophy
General. The Companys compensation
objectives and philosophy are grounded in our overall
goal which is to be the number one sports and
fitness specialty retailer for all athletes and outdoor
enthusiasts, through the relentless improvement of everything we
do. We believe that, in order to pursue and maintain that goal,
we need
19
to continue to grow our business in a very disciplined way.
Because we believe that financial discipline and focus are
critical elements to the Companys overall success, we use
pre-tax earnings as the primary metric to measure our business
goals for compensation purposes.
Changes. Material increases or decreases in
our named executive officers compensation (other than our
Chairman and Chief Executive Officer) are determined by our
Chairman and Chief Executive Officer (through his
recommendations to the Compensation Committee). He determines
these changes based on the circumstances related to the named
executive officer
and/or the
overall performance of the named executives. Changes in our
Chairman and Chief Executive Officers compensation are
determined based on performance of our Company and our
subsidiaries.
Components. The Compensation Committee, in
consultation with the Chairman and Chief Executive Officer, has
designed our executive compensation program to reward the
achievement of specific annual Company financial metrics and
align executives interests with those of the stockholders
by rewarding performance that increases stockholder value. We
assess compensation to ensure that we continue to attract and
retain best in class employees in key positions and remain
competitive. With those goals in mind, the Companys
compensation program for executives consists of these elements:
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a base salary,
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a performance-based annual bonus, which is payable in cash,
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periodic grants of stock-based compensation, such as stock
options,
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retirement and other benefits, and
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some perquisites and other personal benefits.
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As a result of our objectives and philosophy, historically a
large portion of total executive compensation is allocated to
incentives (cash bonus and stock options). Under this approach,
compensation for our named executive officers involves a high
proportion of pay that is at risk, in the form of
the annual bonus, payment of which is based on our financial
performance. In addition, stock options the other
significant component of our compensation relate
directly to stock price appreciation realized by all of the
Companys stockholders.
We historically have not had a pre-established policy or target
for the allocation between either cash and non-cash or
short-term and long-term incentive compensation. Rather, the
Compensation Committee, in consultation with our Chairman and
Chief Executive Officer, has maintained the flexibility to make
allocation between these variables as circumstances dictate.
Additionally, our historic use of stock option grants as
long-term compensation has resulted in our not needing to make
any determinations for allocating long-term compensation to
different forms of awards. The Company has not historically
adjusted or permitted recovery of awards or payments where the
relevant performance measures upon which they are based are
restated or otherwise adjusted in a manner that would reduce the
size of an award or payment and the Company has no policy
related to those matters. We use these elements because we
believe they track and retain best in class employees. Our Chief
Executive Officer and Compensation Committee determine amounts
of compensation based on Company and individual performance.
Written Employment Arrangements. We
historically have not entered into employment agreements with
our named executive officers. Except for some of the officers of
Golf Galaxy, Inc. (which we acquired in February 2007) who
had employment agreements in place prior to our acquisition of
Golf Galaxy, and with whom we negotiated continuing employment
agreements in connection with the acquisition, and in some
limited instances for new hires, we have generally only provided
our executive officers with limited severance payments upon
termination of employment. In most cases, upon the termination
of an officers employment by us we are only obligated to
pay to that officer an amount equal to the greater of
(i) four (4) weeks of pay at the officers base
salary or (ii) one (1) week of pay for every year of
employment with us. The severance payment is payable bi-weekly
over the
12-month
period following the officers termination. No severance
payment is payable to the officer if the officer voluntarily
terminates employment with us, retires or is terminated due to
cause (as defined in the agreement), death, or
permanent disability. The Company in its discretion may offer
other arrangements to employees who end employment with the
Company.
20
In some instances in connection with the negotiation of new
hires we have entered into offer letters with our executive
officers which have provided them written assurances of
additional elements of compensation as they join our Company. In
November 2005, the Company agreed to terms of employment with
Gwen Manto, our Executive Vice President & Chief
Merchandising Officer. Under her offer letter, Ms. Manto
receives a gross annual salary of $600,000, and is be eligible
to participate in the Companys management bonus plan.
Ms. Manto received a signing bonus of $385,000, payable in
two (2) installments, which was required to be refunded if
her employment was voluntarily terminated within one
(1) year of starting employment, and an initial stock grant
of 75,000 shares of common stock, which are cliff vested at
three (3) years from her starting employment date. The
Company has also agreed to pay to Ms. Manto the value of
8,000 units of unvested restricted stock held by
Ms. Manto in connection with her previous employment at
Sears, Roebuck & Company. These payments were made in
two (2) installments during 2006 and 2007, with the first
payment of $609,250 being paid on February 15, 2006 and the
second installment of $450,000 being paid on February 15,
2007.
On February 13, 2007, we acquired Golf Galaxy as our
wholly-owned subsidiary. Following our acquisition of Golf
Galaxy, Randall K. Zanatta, Golf Galaxys President and
Chief Executive Officer, continued to serve in that capacity. In
connection with Mr. Zanattas continuation as
President and Chief Executive Officer of Golf Galaxy (and the
fact that Mr. Zanatta previously had an employment
agreement in place with Golf Galaxy), we negotiated and entered
into an employment agreement with him, which was based on his
pre-merger agreement with Golf Galaxy, for an initial term of
three (3) years. Under the terms of his employment
agreement, Mr. Zanatta is entitled to receive a base salary
(initially $355,000 per year), specified benefits, the
option and restricted stock grants discussed below, and will be
entitled to receive an annual bonus, based primarily on the
performance of Golf Galaxy but also the performance of the
overall Company goals, in an amount equal to 0 to 150% of base
salary. Mr. Zanatta will also be entitled to severance if
he is terminated without cause (as defined in the employment
agreement), and is subject to certain non-compete and
non-solicitation covenants set forth in the employment
agreement. If Mr. Zanattas employment is terminated
for a reason other than cause or he resigns under certain
specified circumstances (good reason), he is entitled to a lump
sum severance payment equal to two (2) times his
then-current base salary and incentive bonus for the fiscal year
in which termination occurred (if and to the extent certain
specified performance targets are achieved), continuation of
benefits for two (2) years, and all stock options
previously granted that were exercisable for Golf Galaxy common
stock prior to the merger (now converted to options exercisable
for our common stock) will vest. Additionally, the shares of
restricted stock described below that vest based only on the
passage of time (i.e., no performance or other conditions are
imposed) will also accelerate. The shares of restricted stock
described below that vest only if certain performance targets
are achieved will vest to the extent that the performance
targets have been met
and/or the
Company is on target to meet the performance targets as of the
termination date. The agreement has a term ending at the end of
our third full fiscal year following February 13, 2007.
On November 16, 2006, Mr. Zanatta was granted, subject
to the completion of the merger, a one-time special option
exercisable for 165,000 shares of our common stock, which,
subject to vesting, is exercisable at any time prior to
February 13, 2012 or, if he is still employed by Golf
Galaxy at that time, for such longer period as is prescribed by
our 2002 Stock Plan. Additionally, under his employment
agreement, Mr. Zanatta received 75,000 shares of our
restricted common stock, which, if he continues to be employed
by the Company on February 13, 2010, will, with respect to
half of the shares, vest automatically, and will, with respect
to the other half of the shares, vest if certain performance
targets are achieved. This employment arrangement, including the
elements of severance in the agreement, arose out of the
assumption of Mr. Zanattas employment agreement with
Golf Galaxy that existed prior to our acquisition of Golf Galaxy
and as a result of negotiations between us and Mr. Zanatta.
The performance targets for Mr. Zanattas performance
based restricted stock award was arrived at through negotiations
with Mr. Zanatta. Those criteria are based on Golf Galaxy
and Company earnings metrics and savings and synergies
achievement. We believe that these targets represent goals
developed as the result of arms length negotiations and as
such are difficult to reach.
In February 2007, we agreed to employment terms with Timothy E.
Kullman, whereby Mr. Kullman agreed to join us as Senior
Vice President & Chief Financial Officer to replace
Mr. Hines. Mr. Kullman joined the Company in April
2007. The offer letter provided to Mr. Kullman indicated
that he would receive a gross annual salary of
21
$450,000, and is eligible to participate in the Companys
discretionary management incentive plan. Mr. Kullman also
received an initial stock option grant exercisable for
50,000 shares, which vests at 25% per year starting on the
first anniversary of the grant, and an option grant exercisable
for 25,000 shares, which vests in its entirety on the
fourth anniversary of the date of grant. Mr. Kullman is
also eligible to participate in the full range of benefits and
401(k) plans offered to other Company officers.
Compensation
Components
We believe that this multi-part approach to compensation best
serves the interests of our Company and its stockholders and at
the same time meets our need to attract and retain talent needed
to run our Company. It also enables us to meet our requirements
for management and creative talent while ensuring that our named
executive officers are compensated in a way that advances both
the short- and long-term interests of stockholders.
Base Salary. Base salaries for our executive
officers, other than the Chairman and Chief Executive Officer,
including any annual or other adjustments, are based upon
recommendations by our Chairman and Chief Executive Officer,
taking into account a subjective assessment of the nature of the
position and the contribution and experience of the officer.
During fiscal 2006, recommendations relating to executive
officers subject to Section 162(m) of the Internal Revenue
Code were reviewed by the Compensation Committee.
Annual Bonus. Awards of annual bonuses to
executive officers who are subject to Section 162(m) of the
Internal Revenue Code are set by the Compensation Committee, and
all other bonuses paid to non-executive officers are made in
accordance with a formula established by the Compensation
Committee and Chairman and Chief Executive Officer.
Under our annual bonus program, executive officers and certain
other employees are eligible to receive cash bonuses based upon
the Companys attainment of specific performance goals
related to total Company pre-tax earnings, as recommended by the
Chairman and Chief Executive Officer and approved by the
Compensation Committee. Target incentive bonus opportunities are
established at the beginning of the fiscal year as measured by
earnings before taxes at the total Company level. A specified
percentage of a bonus program participants annual salary
is used to determine any amount to be paid. A threshold level of
performance is established below which no bonus award is paid,
levels of performance at which specified percentages of the
target bonus will be paid, and a maximum level of performance
above which no additional bonus would be paid. In fiscal 2006,
threshold was set at 1.6 times annual salary for our Chief
Executive Officer and 0.6 times for our President and Chief
Operating Officer, Executive Vice President and Chief
Merchandising Officer and Executive Vice President and Chief
Financial Officer. Target was set at two (2) times annual
salary for our Chief Executive Officer and 0.75 times annual
salary for our President and Chief Operating Officer, Executive
Vice President and Chief Merchandising Officer and Executive
Vice President and Chief Financial Officer. In accordance with
the requirements of Section 162(m) of the Internal Revenue
Code and our 2002 Stock Plan, each target level for a fiscal
year is established by the Compensation Committee prior to the
end of the first quarter of that fiscal year. In addition, each
of the bonus payments are generally made for the most recently
completed fiscal year (assuming the target levels have been met)
as soon as is practicable after the bonus amounts are determined
and the Compensation Committee has taken the action required
under Section 162(m) of the Internal Revenue Code. The
Compensation Committee has retained the right to pay bonuses
outside of the Companys 2002 Stock Plan and that do not
qualify and are not deductible by the Company as compensation
under Section 162(m) of the Internal Revenue Code because
the requirements of Section 162(m) have not been met.
The fiscal 2006 bonus targets specified that the maximum bonus
payable to our Chief Executive Officer is limited to four
(4) times annual salary, the maximum bonus payable to our
President and Chief Operating Officer, Executive Vice President
and Chief Merchandising Officer and Executive Vice President and
Chief Financial Officer is limited to 1.5 times annual salary.
As a result of the Companys fiscal 2006 operating results,
and in connection with our 2006 bonus program we paid
Messrs. Stack, Colombo, Hines, Newlin and Ms. Manto
cash bonuses of $2,650,000, $944,712, $687,981, $100,000 and
$917,307 respectively.
The Compensation Committee does retain the right to pay bonuses
outside of the Companys annual bonus program. In fiscal
2005, no bonuses were paid under the Company annual bonus
program, however, the Compensation Committee paid discretionary
awards to each of Messrs. Stack, Colombo, Newlin and Hines.
22
Over the past three (3) years, we have achieved the maximum
performance level twice. In fiscal 2005, we did not meet the
threshold level of performance; however, we paid a discretionary
award to Mr. Stack at 1.6 times his annual salary and we
paid discretionary awards to each of Messrs. Colombo,
Newlin and Hines at 0.6 times their annual salaries. Generally,
the Compensation Committee believes it sets the minimum, target
and maximum levels such that the relative difficulty of
achieving the target level is consistent from year to year.
Stock Options. Our 2002 Stock Plan is designed
to assist us in developing a link between the creation of
stockholder value and long-term incentive compensation, provide
our employees an opportunity for increased equity ownership and
provide incentive to attract and retain our key employees.
During fiscal 2006, the Compensation Committee operated under
guidelines for stock option grants which are generally
applicable to all eligible employees. Under these guidelines,
stock option grants are generally made on an annual basis in
amounts that take into account such factors as historical
operations, total stockholder return, share usage and
stockholder dilution. Special grants may also be authorized by
the Compensation Committee outside of the annual-grant
framework. In limited circumstances, our Chief Executive Officer
has been delegated authority to grant stock options to
non-executive officers in accordance with Delaware law.
Generally, all decisions to grant stock options to our named
executive officers are in the sole discretion of the
Compensation Committee and, except for grants to the Chairman
and Chief Executive Officer, are based upon recommendation from
the Chief Executive Officer. Historically, most options have
vested over four (4) years, but in some instances options
for new hires have vested over a three (3) year period as a
result of negotiations with the new hire. Vesting ceases upon
termination of employment. Options that have vested are
exercisable for ninety (90) days following termination except in
the case of death or disability, in which case vested options
are exercisable for twelve (12) months, but in no event can an
option be exercised following its expiration date. Prior to the
exercise of an option, the holder has no rights as a stockholder
with respect to the shares subject to such option, including
voting rights and the right to receive dividends or dividend
equivalents. All options granted to our named executive officers
are made with exercise prices equal to the fair market value of
the Companys common stock in accordance with the plan
under which they are granted. Historically, annual awards of
stock options to named executive officers have been made at a
regularly scheduled Compensation Committee meeting in January or
March of each year. Grants of stock options to newly hired named
executive officers who are eligible to receive them have been
made at special Compensation Committee meetings, in connection
with Board meetings or by unanimous written consent. We do not
have equity or other security ownership requirements or
guidelines applicable to our named executive officers nor do we
have any Company policies regarding hedging the economic risk of
such ownership. In connection with the Golf Galaxy acquisition,
Mr. Zanatta was granted a stock option and restricted stock
award as mentioned above. In addition, Mr. Kullman was
granted two (2) stock option awards in connection with his
employment as Senior Vice President and Chief Financial Officer,
also as discussed above.
Retirement and Other Benefits. The
Companys retirement savings plan, established pursuant to
Section 401(k) of the Internal Revenue Code, covers all
employees (including named executive officers) who have
completed one year of service, have attained 21 years of
age and work at least 1,000 hours per year. Under the terms of
the retirement savings plan, the Company provides a matching
contribution equal to 50% of each participants
contribution up to 10% of the participants compensation,
and may make a discretionary contribution. All Company
contributions to the savings plan vest over a five (5) year
period, at 20% per year of service.
Supplemental Smart Savings Plan. On
July 1, 2006, the Companys Supplemental Smart Savings
Plan became effective, which allows certain members of
management to annually defer a portion of their existing
compensation. We implemented the Supplemental Smart Savings Plan
because certain members of management had historically been
restricted in their ability to participate in the Companys
existing 401(k) Plan because of qualified plan testing rules.
The Supplemental Smart Savings Plan was amended on
December 7, 2006, to exclude executive officers from being
eligible to participate in the Supplement Smart Savings Plan
after December 31, 2006.
Prior to the effectiveness of the amendment, executive officers
had the opportunity to defer up to 15% of their compensation
(defined as base salary, quarterly bonus compensation and annual
incentive bonus payments), and could elect to receive
distributions from the Supplemental Smart Savings Plan on the
earlier of (i) a specific date which occurs no earlier than
the second plan year following the plan year in which deferrals
designated for distribution were credited or the date the
employees employment is terminated for any reason, or
(ii) the date the
23
employees employment is terminated for any reason. The
form of distribution could, at the executives election, be
paid in a single lump sum payment, or monthly, quarterly,
semi-annual or annual installments, with any installment term
between two (2) and fifteen (15) years.
Under the Supplemental Smart Savings Plan, the Company has the
ability to match amounts deposited into plan accounts, up to a
discretionary percentage of compensation determined annually by
the Company, not to exceed 7% of a participants
compensation, and less any matching amounts contributed through
the Companys 401(k) Plan. We have established a rabbi
grantor trust, with a third party trust company as trustee, for
the purpose of providing the Company with funds for the payment
of matching amounts under the Supplemental Smart Savings Plan.
Officers Supplemental Savings Plan. On
March 21, 2007, our Compensation Committee approved the
implementation of the Dicks Sporting Goods Officers
Supplemental Savings Plan, a voluntary nonqualified deferred
compensation plan, effective April 1, 2007. The
Officers Plan was implemented for the purpose of
attracting high quality executives and promoting in our key
executives increased efficiency and an interest in the
successful operation of the Company. Certain key executives,
including our named executive officers, are eligible to
participate in the Officers Plan. These executives are
being afforded the opportunity to participate in the
Officers Plan because, as discussed above, they are no
longer eligible to participate in our Supplemental Smart Savings
Plan.
Under the Officers Plan, eligible participants have the
opportunity to defer under it up to 25% of their base salary and
up to 100% of their annual bonus, and may allocate amounts
deferred under the Officers Plan among a range of
investment choices. Participant deferral amounts are 100%
vested, and matching contributions become 100% vested after five
(5) years of plan participation, or upon participants
death, disability or upon our change in control. Eligible
participants may elect to receive distributions of discretionary
contributions from the Officers Plan as a lump sum, in
annual installments, with any installment term between two
(2) and twenty (20) years, or a combination of the two
options. Matching contributions may be distributed only after
age 55. Distributions are also triggered upon a
participants death or disability (as defined in applicable
treasury regulations) or in the event of certain hardships or
changes of control (each as defined under Section 409A of
the Internal Revenue Code).
Under the Officers Plan, we are required to match amounts
deposited into plan accounts at a rate of 20% of the
participants annual deferral, up to a $200,000 maximum
match per year. Matching amounts are contributed as one lump sum
at the end of the year, and the participant must be an eligible
participant as of December 31st to receive the matching
contribution for that year. We also have the ability to make a
discretionary matching contribution as we, through our Board,
may determine from time to time. We may at any time direct the
Officers Plans administrator to amend or terminate
the Officers Plan, except that no amendment or termination
may reduce a participants account balance.
Employee Stock Purchase Plan. The Company has
an employee stock purchase plan, which provides that eligible
employees (including named executive officers) may purchase
shares of our common stock at a discount. There are two offering
periods in a fiscal year, one ending on June 30th and the
other on December 31st, or as otherwise determined by the
Companys Compensation Committee. The employees
purchase price is 85% of the lesser of the fair market value of
the stock on the first business day or the last business day of
the semi-annual offering period. Employees may purchase shares
having a fair market value of up to $25,000 for all purchases
ending within the same calendar year. Mr. Stack is not
eligible to participate in the stock purchase plan because he
owns more than 5% of our voting stock. Our Board of Directors
has recommended that the stockholders approve amending and
restating the Companys employee stock purchase plan, as
discussed in Item 2 on page 37 of this proxy statement.
Life Insurance. We pay the insurance premiums
on life insurance policies for the benefit of Messrs. Stack
and Colombo. The beneficiaries under the policies, upon the
executives death, are the executives respective
spouses. For Mr. Stack, we also pay for the premiums on an
additional life insurance policy for which a personal
beneficiary chosen by Mr. Stack is, upon his death, the
beneficiary or where prior to death, Mr. Stack may receive
the cash surrender value of the policy, and a policy where, upon
his death, we are the beneficiary. Attributed costs of the
personal benefits described above for the named executive
officers for the fiscal year ended February 3, 2007, are
included in column (i) of the Summary Compensation Table on
page 26 of this proxy statement.
24
Perquisites and Other Personal Benefits. The
Company provides named executive officers with perquisites and
other personal benefits that our Chairman and Chief Executive
Officer and the Compensation Committee believe are reasonable
and consistent with its overall compensation program to better
enable us to attract and retain our employees for key positions.
The named executive officers are provided use of Company leased
automobiles and in certain instances tax preparation service,
reimbursement for certain club dues, personal use of Company
owned or leased aircraft in accordance with our aircraft policy
and the use of administrative assistant services for personal
matters. Attributed costs of these benefits described above for
the named executive officers for the fiscal year ended
February 3, 2007, are included in column (i) of the
Summary Compensation Table and the related footnotes to the
column on page 26 of this proxy statement.
Tax and
Accounting Implications
Deductibility of Executive
Compensation. Section 162(m) of the Internal
Revenue Code generally disallows a tax deduction to public
corporations for compensation over $1,000,000 paid for any
fiscal year to the corporations chief executive officer
and four (4) other most highly compensated executive
officers as of the end of any fiscal year. However, the statute
exempts qualifying performance-based compensation from the
deduction limit if certain requirements are met.
The Compensation Committee believes that it is generally in the
Companys best interest to attempt to structure
performance-based compensation, including stock option grants
and annual bonuses, to executive officers who may be subject to
Section 162(m) in a manner that satisfies the
statutes requirements. However, the Compensation Committee
also recognizes the need to retain flexibility to make
compensation decisions that may not meet Section 162(m)
standards when necessary to enable the Company to meet its
overall objectives, even if the Company may not deduct all of
the compensation. Accordingly, the Compensation Committee
expressly reserves the authority to approve non-deductible
compensation in appropriate circumstances. Further, because of
ambiguities and uncertainties as to the application and
interpretation of Section 162(m) and the regulations issued
thereunder, no assurance can be given, notwithstanding the
Companys efforts, that compensation intended by the
Company to satisfy the requirements for deductibility under
Section 162(m) does in fact do so.
Nonqualified Deferred Compensation. On
October 22, 2004, the American Jobs Creation Act of 2004
was signed into law, changing the tax rules applicable to
nonqualified deferred compensation arrangements. The Company
believes it is operating in good faith compliance with the
statutory provisions which were effective January 1, 2005.
25
Summary
Compensation Table 2006
The following table discloses the compensation for Edward W.
Stack, the principal executive officer of the Company, Michael
F. Hines, the principal financial officer of the Company, and
the other three (3) most highly compensated executive
officers of the Company or its subsidiaries who were serving as
executive officers at the fiscal year ended February 3,
2007 and whose total annual compensation (excluding items
described in column (h) below) exceeded $100,000 (the
named executive officers).
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Change in
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Pension Value
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and
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Nonqualified
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Non-Equity
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Deferred
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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Name and
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Salary
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Bonus
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Awards
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Awards(2)
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Compensation
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Earnings
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Compensation
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Total
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Principal Position
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Year
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($)(1)
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($)
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($)
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($)
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($)(3)
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($)
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($)(4)
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($)
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
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(h)
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(i)
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(j)
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Edward W. Stack,
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2006
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$
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662,500
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$
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7,739,441
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$
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2,650,000
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$
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93,165
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(6)
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$
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11,145,106
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Chairman and Chief Executive
Officer(5)
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Michael F. Hines,
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2006
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$
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458,654
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$
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894,378
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$
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687,981
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$
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24,874
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(7)
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$
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2,065,887
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Executive Vice President and Chief
Financial Officer
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William R. Colombo,
|
|
|
2006
|
|
|
$
|
629,808
|
|
|
|
|
|
|
|
|
|
|
$
|
894,378
|
|
|
$
|
944,712
|
|
|
|
|
|
|
$
|
26,169
|
(8)
|
|
$
|
2,495,067
|
|
President and Chief Operating
Officer(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William R. Newlin,
|
|
|
2006
|
|
|
$
|
209,615
|
|
|
|
|
|
|
|
|
|
|
$
|
1,300,618
|
|
|
$
|
100,000
|
|
|
|
|
|
|
$
|
26,917
|
(9)
|
|
$
|
1,637,150
|
|
Executive Vice President and Chief
Administrative Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gwen K. Manto,
|
|
|
2006
|
|
|
$
|
611,538
|
|
|
|
|
|
|
|
|
|
|
$
|
625,037
|
|
|
$
|
917,307
|
|
|
|
|
|
|
$
|
599,626
|
(10)
|
|
$
|
2,753,508
|
|
Executive Vice President and Chief
Merchandising Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Salary amounts reflect payments earned during fiscal 2006, which
represented a 53 week fiscal year. |
|
(2) |
|
The values set forth in this column represents the dollar amount
recognized for financial statement reporting purposes in fiscal
2006 for the fair value of stock options granted to each named
executive officer in 2006 and in prior fiscal years, in
accordance with FAS 123R (disregarding any estimate of
forfeitures related to service-based vesting conditions). A
discussion of the relevant assumptions made in the valuation may
be found in the Stock-Based Compensation section of
Note 1 of the footnotes to the Companys financial
statements, in the Companys Annual Report on
Form 10-K
for the fiscal year ended February 3, 2007. |
|
(3) |
|
Includes bonus payments earned in fiscal year 2006, regardless
of when paid. Under our 2002 Stock Plan, the relevant
performance measures for the incentive bonus awards are
satisfied in fiscal 2006 and thus reportable in fiscal 2006,
even though payments are made, if any, in fiscal 2007. |
|
(4) |
|
Use by our officers and directors of aircraft that are owned or
leased by us for non-business purposes is governed by our travel
policy for non-business use of corporate aircraft, which is
described on page 30 of this proxy statement. Except where
indicated in the table above, all non-business use of aircraft
by any executive officer or director during fiscal 2006 was
billed to and paid for by the executive officer or director in
accordance with our travel policy. Prior to October 2006, one of
our aircraft leases provided that we were paid $2,000 per
hour by our aircraft management company for each hour of
non-Company affiliated third-party charter time on that
aircraft. In cases where that aircraft was chartered by a third
party, our aircraft management company also permitted us to, and
as a matter of practice our executives and directors did, use a
substitute aircraft from the aircraft management companys
fleet, instead of our leased aircraft, at specified rates. In
such instances, our third party aircraft management company
reduced the $2,000 per hour fee for third party charter
time owed to us for each hour a substitute aircraft was used.
Under our policy we have reviewed the charges with our Audit
Committee and our internal audit staff and we do not believe
that the substitute aircraft deduction is an incremental cost to
the Company. |
26
|
|
|
(5) |
|
Neither Mr. Stack nor Mr. Colombo receives any
compensation from the Company in connection with their services
as directors on the Companys Board of Directors. |
|
(6) |
|
Personal benefits include an annual vehicle allowance and
country club dues. The amount shown also includes a tax payment
of $33,052 incurred as a result of insurance and country club
dues, $33,541 of insurance premiums paid in fiscal 2006 by us on
two life insurance policies for the benefit of Mr. Stack,
for which the beneficiaries under the policies, upon the
executives death, are the executives spouse and a
personal beneficiary of his choosing, respectively, $6,371
insurance premium paid in fiscal 2006 by us on a disability
insurance policy, and $7,500 of matching contributions under the
Companys 401(k) Plan. |
|
(7) |
|
Personal benefits include professional fees and an annual
vehicle allowance. The amount shown also includes a tax payment
of $8,724 incurred as a result of professional fees. |
|
(8) |
|
Personal benefits include professional fees and an annual
vehicle allowance. The amount shown also includes a tax payment
of $7,938 incurred as a result of professional fees, $4,590 of
insurance premiums paid in fiscal 2006 by us on a life insurance
policy for the benefit of Mr. Colombo, the beneficiary of
which under the policy, upon the executives death, is the
executives spouse, and $1,659 of matching contributions
under the Companys 401(k) Plan. |
|
(9) |
|
Personal benefits include an annual vehicle allowance and
country club dues. The amount shown also includes a tax payment
of $5,451 incurred as a result of country club dues and $7,500
of matching contributions under the Companys 401(k) Plan. |
|
(10) |
|
The Company agreed pursuant to Ms. Mantos offer
letter to pay her the value of 8,000 units of unvested
restricted stock held by Ms. Manto in connection with her
previous employment at Sears, Roebuck & Company, to be
paid in two installments in 2006 and 2007. The first payment of
$609,250 was included in our fiscal 2005 summary executive
compensation table. The second payment of $ 450,000 is included
above. The amount shown also includes relocation expenses paid
of $89,448, commuting expenses of $17,619, a tax payment of
$37,367 that was incurred as a result of the relocation expenses
and $5,192 of matching contributions under the Companys
401(k) Plan. |
Grants of
Plan-Based Awards 2006
The following table sets forth each grant of awards made to a
named executive officer in the 2006 fiscal year under plans
established by the Company.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
|
|
|
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
Exercise
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
All Other
|
|
|
or Base
|
|
|
of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
of
|
|
|
Option
|
|
|
Price of
|
|
|
Stock
|
|
|
|
|
|
|
Estimated Future Payouts Under Non-
|
|
|
Under Equity Incentive
|
|
|
Shares
|
|
|
Awards:
|
|
|
Option
|
|
|
and
|
|
|
|
|
|
|
Equity Incentive Plan Awards(1)
|
|
|
Plan Awards
|
|
|
of Stock
|
|
|
Securities
|
|
|
Awards
|
|
|
Option
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
or Units
|
|
|
Underlying
|
|
|
($/Sh)
|
|
|
Awards
|
|
Name
|
|
Date
|
|
|
($)
|
|
|
Target ($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
Options (#)
|
|
|
(2)
|
|
|
(3)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
(k)
|
|
|
(l)
|
|
|
Edward W. Stack,
|
|
|
3/1/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
$
|
37.90
|
|
|
$
|
16.18
|
|
Chairman and
|
|
|
|
|
|
$
|
1,060,000
|
|
|
$
|
1,325,000
|
|
|
$
|
2,650,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael F. Hines,
|
|
|
3/1/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,500
|
|
|
$
|
37.90
|
|
|
$
|
16.18
|
|
Executive Vice
|
|
|
|
|
|
$
|
275,192
|
|
|
$
|
343,991
|
|
|
$
|
687,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President and Chief Financial
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William R. Colombo,
|
|
|
3/1/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,500
|
|
|
$
|
37.90
|
|
|
$
|
16.18
|
|
President and
|
|
|
|
|
|
$
|
377,885
|
|
|
$
|
472,356
|
|
|
$
|
944,712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William R. Newlin,
|
|
|
|
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President and Chief
Administrative Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
|
|
|
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
Exercise
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
All Other
|
|
|
or Base
|
|
|
of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
of
|
|
|
Option
|
|
|
Price of
|
|
|
Stock
|
|
|
|
|
|
|
Estimated Future Payouts Under Non-
|
|
|
Under Equity Incentive
|
|
|
Shares
|
|
|
Awards:
|
|
|
Option
|
|
|
and
|
|
|
|
|
|
|
Equity Incentive Plan Awards(1)
|
|
|
Plan Awards
|
|
|
of Stock
|
|
|
Securities
|
|
|
Awards
|
|
|
Option
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
or Units
|
|
|
Underlying
|
|
|
($/Sh)
|
|
|
Awards
|
|
Name
|
|
Date
|
|
|
($)
|
|
|
Target ($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
Options (#)
|
|
|
(2)
|
|
|
(3)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
(k)
|
|
|
(l)
|
|
|
Gwen K. Manto,
|
|
|
3/1/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,500
|
|
|
$
|
37.90
|
|
|
$
|
16.18
|
|
Executive Vice
|
|
|
|
|
|
$
|
366,923
|
|
|
$
|
458,654
|
|
|
$
|
917,307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President and Chief Merchandising
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Payments were made pursuant to our 2002 Stock Plan, as set forth
in column (g) of our Summary Compensation Table. Amounts
were earned in fiscal 2006, but were paid in fiscal 2007. |
|
(2) |
|
The exercise price of the options awarded on March 1, 2006
was determined in accordance with our 2002 Stock Plan, which
provides that the exercise price for each share covered by an
option shall be the closing sale price for our common stock as
quoted on the New York Stock Exchange for the last market
trading day prior to the time of determination. $37.90 was the
closing price for our common stock on February 28, 2006. |
|
(3) |
|
The full grant date fair value calculations are computed in
accordance with FAS 123R for those options awarded to the
named executive officers in fiscal 2006 under the Companys
2002 Stock Plan (disregarding any estimates of forfeitures
related to service-based vesting conditions). A discussion of
the relevant assumptions made in the valuation may be found in
the Stock-Based Compensation section of Note 1
of the footnotes to the Companys financial statements in
the Companys Annual Report on
Form 10-K
for the fiscal year ended February 3, 2007. |
Understanding
Our Summary Compensation and Grants of Plan-Based Awards
Tables.
Offer
Letters for Executive Officers
On November 28, 2005, the Company agreed to terms of
employment with Gwen Manto, whereby Ms. Manto agreed to
join the Company as Executive Vice President & Chief
Merchandising Officer. Ms. Manto joined the Company in
January 2006. Under the offer letter, Ms. Manto receives a
gross annual salary of $600,000, and is eligible to participate
in the Companys management bonus plan. Ms. Manto
received a signing bonus of $385,000, and an initial stock grant
of 75,000 shares, which are cliff vested at three
(3) years from her starting employment date. The Company
also agreed to pay to Ms. Manto the value of
8,000 units of unvested restricted stock held by
Ms. Manto in connection with her previous employment at
Sears, Roebuck & Company. These payments were made in
two installments during 2006 and 2007, with the first payment of
$609,250 having been paid on February 15, 2006 and the
second payment being made in fiscal 2007. Additionally,
Ms. Manto is eligible to participate in the full range of
benefits and 401(k) plan offered to other Company officers.
We executed an offer letter with William R. Newlin, our Chief
Administrative Officer and Executive Vice President who joined
the Company on October 22, 2003. As part of his offer
letter, Mr. Newlin received a non-qualified stock option
grant exercisable for 600,000 shares of our common stock,
which vested 50%, 25% and 25% on the first, second and third
anniversaries of the grant and is exercisable for not less than
six years from the dates of vesting. All of the option vests
upon the occurrence of an event where Edward W. Stack (whether
by reason of stock ownership or position) is no longer in a
position to make controlling judgments concerning the
employees responsibilities with our Company.
Other than the offer letters referenced above, none of our named
executive officers had employment agreements in place with us as
of the end of the 2006 fiscal year. Randall K. Zanatta,
President and Chief Executive Office of our wholly-owned
subsidiary, Golf Galaxy, who became one of our executive
officers in 2007, has an employment agreement with us, and
Timothy E. Kullman, who became our Senior Vice President and
Chief Financial Officer in 2007, entered into an offer letter
with the Company, each as described in Compensation
28
Discussion and Analysis beginning on page 19
of this proxy statement. All of our executive officers as of the
end of fiscal 2006 have executed agreements with us providing
them with severance payments upon termination of employment with
us under certain circumstances. See Potential
Payments Upon Termination or
Change-in-Control
on page 33 of this proxy statement for a description of
these severance payment agreements.
Option
Awards
The Companys 2002 Stock Plan permits the granting of
options, both incentive stock options and non-qualified stock
options, to purchase shares of our common stock. The
Companys 1992 Stock Plan also permitted the granting of
both incentive stock options and non-qualified stock options.
The 1992 Stock Plan terminated in 2002, such that no new options
can be granted under the 1992 Stock Plan, although certain
options previously granted under the 1992 Stock Plan remain
exercisable. Non-qualified stock options were granted to the
Companys named executive officers in fiscal 2006 as set
forth in the Summary Compensation Table above. The option
exercise price for each share covered by an option was
determined, in accordance with the Companys 2002 Stock
Plan, as the closing sale price for our common stock as quoted
on the New York Stock Exchange for the last market trading day
prior to the time of determination, as reported in The Wall
Street Journal or such other source as they deem reliable.
The term of the option may not exceed ten (10) years from
the date of the grant. Generally, options vest 25% per year
over a four (4) year period on each anniversary of the date
of grant. See Potential Payments Upon Termination or
Change-in-Control
beginning on page 33 of this proxy statement for a
description of the effects of employment termination or a change
in control on stock option awards.
Incentive
Bonus Award
The Companys 2002 Stock Plan allows for the payment of
incentive bonus awards to executive officers. Incentive bonus
awards payable to named executive officers in fiscal 2006 are
reflected in column (g) of the above Summary Compensation
Table. Each incentive bonus award confers the opportunity to
earn a future payment tied to the level of achievement with
respect to one or more performance criteria established for a
performance period, which is typically the fiscal year,
established by the Compensation Committee. Each incentive bonus
award is documented with respect to the threshold, target and
maximum amount payable, the performance criteria and level of
achievement versus these criteria that shall determine the
amount of such payment, the term of the performance period as to
which performance shall be measured for determining the amount
of any payment and the timing of any payment earned by virtue of
performance. The maximum amount payable as a bonus may be a
multiple of the target amount payable, but the maximum amount
payable pursuant to that portion of an incentive bonus award
granted under the 2002 Stock Plan for any fiscal year that is
intended to satisfy the requirements for performance-based
compensation under Section 162(m) of the Code shall
not exceed $5,000,000.
The Compensation Committee establishes the performance criteria
and level of achievement versus these criteria that shall
determine the target and maximum amount payable under an
incentive bonus award, which criteria may be based on financial
performance
and/or
personal performance evaluations. The Compensation Committee may
specify the percentage of the target incentive bonus that is
intended to satisfy the requirements for performance-based
compensation under Section 162(m) of the Code. For
additional detail regarding the targets and criteria utilized in
connection with the payment of the incentive bonus awards in
fiscal 2006, see Compensation Discussion and
Analysis on page 19 of this proxy statement.
The Compensation Committee determines the timing of payment of
any incentive bonus, and may provide for or may permit an
election for the payment of any incentive bonus to be deferred
to a specified date or event. An incentive bonus may be payable
in equity or in cash or other property, including any award
permitted under the 2002 Stock Plan. Notwithstanding
satisfaction of any performance goals, the amount paid under an
incentive bonus award on account of either financial performance
or personal performance evaluations may be reduced by the
Compensation Committee on the basis of such further
considerations as the Compensation Committee shall determine.
29
Travel
Policy
Our Compensation Committee and Board of Directors approved a
Company Travel Policy for Non-Business Use of Corporate Aircraft
in November 2004, which was filed with the SEC on a
Form 8-K.
Under the policy, certain of our executives (including the Chief
Executive Officer, President, Executive Vice Presidents, members
of the Board of Directors and other officers designated by the
Chief Executive Officer) may use any aircraft owned or leased by
us for non-business purposes. The frequency and priority of the
non-business use of the aircraft by these executives will be
determined by our Chief Executive Officer. Except as approved by
our Chief Executive Officer or the Companys Compensation
Committee, the value of the non-business trip is billed to the
executive (done directly through our aircraft management company
to the executive or director and paid by the executive or
director to our third-party aircraft management company) at the
aggregate incremental cost to the Company determined in
accordance with Item 402 of
Regulation S-K,
as amended (but no less than $500 per hour for each hour of
flight time), and in accordance with Federal Aviation
Association regulations. In any limited instances where the
executive or director is not billed, any non-reimbursed travel
will be considered income to the executive or director and
reported in the executives earnings in accordance with the
base aircraft valuation formula, which is also known as the
standard industry fare level formula.
At least yearly, the Companys director of internal audit
conducts an internal audit of the non-business use of the
corporate aircraft to confirm adherence to the travel policy,
and prepares a report to the Companys Compensation
Committee relating to such audit.
Reference is also made to our Compensation Discussion
and Analysis on page 19 of this proxy statement,
which discusses compensation paid to our executive officers, and
how each component of executive officer compensation is
structured, and the rationale for such structure.
Outstanding
Equity Awards At Fiscal Year End 2006
The following table sets forth all unexercised options that have
not vested which have been awarded to our named executive
officers by the Company and that are outstanding as of
February 3, 2007.
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Option Awards
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Stock Awards
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Equity
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Equity
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Incentive
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Incentive
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Equity
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Plan
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Plan Awards:
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Incentive
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Awards:
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Market or
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Plan Awards:
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Market
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Number of
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Payout Value
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Number of
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Number of
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Number of
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Number of
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Value
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Unearned
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of Unearned
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Securities
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Securities
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Securities
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Shares or
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of Shares or
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Shares, Units
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Shares, Units
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Underlying
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Underlying
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Underlying
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Units of
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Units of
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or Other
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or Other
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Unexercised
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Unexercised
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Unexercised
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Option
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Option
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Stock That
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Stock That
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Rights That
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Rights That
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Options (#)
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Options (#)
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Unearned
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Exercise
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Expiration
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Have Not
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Have Not
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Have Not
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Have Not
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Name
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Exercisable
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Unexercisable
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Options (#)
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Price ($)
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Date
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Vested (#)
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Vested ($)
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Vested (#)
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Vested ($)
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
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(h)
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(i)
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(j)
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Edward W. Stack,
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169,500
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$
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2.16
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01/27/2010
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Chairman and Chief
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1,848,000
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$
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6.00
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10/15/2012
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Executive Officer
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1,848,000
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(1)
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$
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22.87
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10/21/2013
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54,000
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18,000
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(2)
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$
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25.25
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01/21/2014
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31,250
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93,750
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(3)
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$
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35.95
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03/02/2015
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150,000
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(4)
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$
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37.90
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03/01/2016
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Michael F. Hines,
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34,500
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11,500
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(2)
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$
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25.25
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01/21/2014
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Executive Vice President
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12,500
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37,500
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(3)
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$
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35.95
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03/02/2015
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and Chief Financial
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62,500
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(4)
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$
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37.90
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03/01/2016
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Officer
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William R. Colombo,
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48,634
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$
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1.08
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11/12/2012
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President and Chief
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462,000
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$
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6.00
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10/15/2012
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Operating Officer
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34,500
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11,500
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(2)
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$
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25.25
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01/21/2014
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12,500
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37,500
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(3)
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$
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35.95
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03/02/2015
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62,500
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(4)
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$
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37.90
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03/01/2016
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William R. Newlin,
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500,000
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$
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18.38
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09/22/2013
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(5)
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Executive Vice
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11,500
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11,500
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(2)
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$
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25.25
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01/21/2014
|
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President and Chief
|
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37,500
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(3)
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$
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35.95
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03/02/2015
|
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Administrative Officer
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Gwen K. Manto,
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75,000
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(6)
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$
|
35.99
|
|
|
|
01/09/2016
|
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|
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|
|
|
Executive Vice
|
|
|
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62,500
|
(4)
|
|
|
|
|
|
$
|
37.90
|
|
|
|
03/01/2016
|
|
|
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|
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|
|
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|
|
President and Chief Merchandising
Officer
|
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30
|
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(1) |
|
Stock option vests in its entirety on October 21, 2007. |
|
(2) |
|
Stock Option vests at the rate of 25% per year, with
vesting dates of 1/21/2005, 1/21/2006, 1/21/2007 and 1/21/2008. |
|
(3) |
|
Stock Option vests at the rate of 25% per year, with
vesting dates of 3/2/2006, 3/2/2007, 3/2/2008 and 3/2/2009. |
|
(4) |
|
Stock Option vests at the rate of 25% per year, with
vesting dates of 3/1/2007, 3/1/2008, 3/1/2009 and 3/1/2010. |
|
(5) |
|
Stock Option is exercisable for a six (6) year period from
the date of vesting, regardless of termination or retirement. |
|
(6) |
|
Stock Option vests in its entirety on January 9, 2009. |
Option
Exercises And Stock Vested 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired on
|
|
|
Value Realized
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
Name
|
|
Exercise (#)
|
|
|
on Exercise ($)
|
|
|
Acquired on Vesting (#)
|
|
|
on Vesting ($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
Edward W. Stack,
Chairman and Chief Executive Officer(1)
|
|
|
201,000
|
|
|
|
9,531,420
|
|
|
|
|
|
|
|
|
|
Michael F. Hines,
Executive Vice President and Chief Financial Officer(2)
|
|
|
737,640
|
|
|
|
34,910,731
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|
|
|
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|
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|
|
|
William R. Colombo,
President and Chief Operating Officer(3)
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|
|
300,000
|
|
|
|
13,917,152
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|
|
|
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|
|
William R. Newlin,
Executive Vice President and Chief Administrative Officer(4)
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|
|
135,500
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|
|
|
4,599,555
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|
|
|
|
|
|
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|
|
Gwen K. Manto,
Executive Vice President and Chief Merchandising Officer
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(1) |
|
Mr. Stack exercised a stock option for 201,000 shares
on January 8, 2007, with an exercise price of $2.16 and
market price of $49.58. |
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(2) |
|
Mr. Hines exercised stock options for 78,700 shares on
May 18, 2006, with an exercise price of $2.16 and market
price of $40.3669; stock options for 116,200 shares on
August 31, 2006, with an exercise price of $2.16 and market
prices of $41.4043 (for 70,000 shares) and $41.4250 (for
46,200 shares), stock options for 400,000 shares on
November 16, 2006, with exercise prices of $2.16 (for
80,740 shares) and $6.00 (for 319,260 shares) and
market prices of $55.8919 (for 200,000 shares), $55.7145
(for 28,671 shares), $55.8765 (for 71,329 shares) and
$56.0499 (for 100,000 shares), and stock options for
142,740 shares on November 17, 2006, with an exercise
price of $6.00 and a market price of $55.5046. |
|
(3) |
|
Mr. Colombo exercised stock options for 100,000 shares
on August 17, 2006, with an exercise price of $1.08 and
market price of $41.3355, stock options for 100,000 shares
on September 15, 2006, with an exercise price of $1.08 and
market price of $45.0010, stock options for 96,316 shares
on November 16, 2006, with an exercise price of $1.08 and
market price of $56.0886, and stock options for
3,684 shares on November 17, 2006, with an exercise
price of $1.08 and market price of $55.72. |
|
(4) |
|
Mr. Newlin exercised stock options for 60,500 shares
on November 16, 2006, with exercise prices of $18.38 (for
25,000 shares), $25.25 (for 23,000 shares) and $35.95
(for 12,500 shares) and market prices of $55.9606
(25,000 shares) and $55.6906 (35,500 shares), stock
options for 25,000 shares on November 17, 2006, with
an exercise price of $18.38 and market price of $55.5446, stock
options for 13,573 shares on November 21, 2006, with
an exercise price of $18.38 and market prices of $54.0918
(10,000 shares) and $54.5501 (3,573 shares), |
31
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|
|
|
|
stock options for 11,427 shares on November 27, 2006,
with an exercise price of $18.38 and market price of $54.0120,
stock options for 13,000 shares on November 30, 2006
with an exercise price of $18.38 and market price of $54.001,
and stock options for 12,000 shares on December 1,
2006 with an exercise price of $18.38 and market price of $54.00. |
Pension
Benefits 2006
The Company did not have in fiscal 2006, and currently does not
have, any plans that provide for payments or other benefits at,
following, or in connection with the retirement of our named
executive officers, other than tax qualified defined
contributions plans and/or nonqualified defined contribution
plans.
Nonqualified
Deferred Compensation 2006
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Aggregate
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Executive
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Registrant
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Aggregate
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Balance
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Contributions
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Contributions
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Earnings
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Aggregate
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at Last Fiscal
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in Last Fiscal
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in Last Fiscal
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in Last Fiscal
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Withdrawals/
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Year
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Name
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Year ($)
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Year ($)
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Year ($)
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Distributions ($)
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End ($)
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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Edward W. Stack,
Chairman and Chief Executive Officer
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Michael F. Hines,
Executive Vice President and Chief Financial Officer
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William R. Colombo,
President and Chief Operating Officer
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William R. Newlin,
Executive Vice President and Chief Administrative Officer(1)
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$
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3,385
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(2)
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$
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1,692
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(2)
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$
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240
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(2)
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$
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5,317
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(2)
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Gwen K. Manto,
Executive Vice President and Chief Merchandising Officer
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(1) |
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Amounts set forth in this table reflect amounts deferred and
contributed under the Companys Supplemental Smart Savings
Plan, which became effective July 2006. |
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(2) |
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These amounts are not included as compensation in the Summary
Compensation Table located on page 26 of this proxy
statement. |
Dicks
Sporting Goods Supplemental Smart Savings Plans
On July 1, 2006, the Companys Supplemental Smart
Savings Plan became effective, which allows certain members of
management to annually defer a portion of their existing
compensation. We implemented the Supplemental Smart Savings Plan
because certain members of management had historically been
restricted in their ability to participate in the Companys
existing 401(k) Plan because of qualified plan testing rules.
Under the Supplemental Smart Savings Plan, as amended, we give
eligible employees the opportunity to enter into agreements to
defer up to 15% of their compensation (defined as base salary,
quarterly bonus compensation and annual incentive bonus
payments) up to a maximum of $12,000 for calendar year 2007.
Employees may elect to receive distributions from the
Supplemental Smart Savings Plan on the earlier of (i) a
specific date which occurs no earlier than the second plan year
following the plan year in which deferrals designated for
distribution were credited or the date the employees
employment is terminated for any reason, or (ii) the date
the employees employment is terminated for any reason. The
form of distribution may be, at the employees election,
paid in a single lump sum
32
payment, or monthly, quarterly, semi-annual or annual
installments, with any installment term between two (2) and
fifteen (15) years.
Once the deferral has been made, deferred amounts are recorded
in accounts maintained by the Company. The Companys
Executive Benefits Committee is responsible for administration
of the plan, subject to Rule 303A.05 of the New York Stock
Exchange Listed Company Manual and the Companys
Compensation Committee Charter. The Company has the ability to
match amounts deposited into plan accounts, up to a
discretionary percentage of compensation determined annually by
the Company, not to exceed 7% of a participants
compensation, and less any matching amounts contributed through
the Companys 401(k) Plan. We have established a rabbi
grantor trust, with a third party trust company as trustee, for
the purpose of providing the Company with funds for the payment
of matching amounts under the Supplemental Smart Savings Plan.
The Supplemental Smart Savings Plan is intended to constitute a
non-qualified, unfunded plan for federal tax purposes and for
purposes of Title I of the Employee Retirement Income
Security Act of 1974, as amended and is also intended to comply
with Internal Revenue Code Section 409A, and contains
restrictions to help ensure compliance. Our obligations to pay
deferred compensation under the Supplemental Smart Savings Plan
are unsecured general obligations of the Company. We may amend
or terminate the Supplemental Smart Savings Plan at any time in
whole or in part; provided that no amendment or termination may
reduce the amount credited to accounts at the time of such
amendment or termination.
The Supplemental Smart Savings Plan was amended on
December 7, 2006, to provide that all executive officers
were ineligible to participate in the Supplement Smart Savings
Plan after December 31, 2006. As a result of the amendment,
in March of 2007 our Compensation Committee approved the
implementation of the Dicks Sporting Goods Officers
Supplemental Savings Plan, which allows certain key executives,
including our named executive officers, the opportunity to defer
under it up to 25% of their base salary and up to 100% of their
annual bonus under the plan, to be allocated among a range of
investment choices. For additional discussion of the terms of
the Officers Plan, see Compensation Discussion
and Analysis on page 19 of this proxy statement.
Potential
Payments Upon Termination or
Change-in-Control
As described under Compensation Discussion and
Analysis on page 19 of this proxy statement, our
executive officers do not have employment agreements with the
Company, with the exception of Randall Zanatta, who became an
executive officer of the Company in fiscal 2007 and whose
contract entitles him to severance if he is terminated without
cause or if he resigns for good reason, as defined in the
employment agreement. There are no contracts, agreements, plans
or arrangements, whether written or unwritten, that provide for
payments to a named executive officer at, following, or in
connection with a change in control of the company. The
information below describes and quantifies certain compensation
that would become payable under our existing plans and
arrangements if the named executives employment had
terminated on February 3, 2007, given the named executive
officers compensation and service levels as of such date
and, if applicable, based on our closing stock price on that
date. These benefits are in addition to benefits available
generally to salaried employees, such as distributions under our
401(k) savings plan, subsidized retiree medical benefits,
disability benefits and accrued vacation pay.
Due to the number of factors that affect the nature and amount
of any benefits provided upon the events discussed below, such
as the timing during the year of any such event and the
Companys stock price, any actual amounts paid or
distributed may be different.
Severance Agreements. Other than
Mr. Zanatta, all of our executive officers have executed
agreements with us providing them with limited severance
payments upon termination under certain circumstances.
Terminated officers are not provided with severance if the
officer voluntarily terminates employment with us, retires, is
terminated as a result of death or permanent disability or the
officer is terminated for the following reasons: (i) fraud
or felonious conduct, (ii) embezzlement or misappropriation
of Company funds or property, (iii) material breach of the
non-competition, non-disclosure and confidentiality covenants
set forth in the severance agreement or any material violation
of the provisions of the Companys employee handbook,
(iv) gross negligence, or (v) employees
consistent inability or refusal to perform, or willful
misconduct in or disregard of the performance of his or her
duties and obligations, under certain circumstances. Upon the
termination of employment of a named executive
33
officer for any reason other than those set forth above, we are
obligated to pay to that officer an amount equal to the greater
of (i) four (4) weeks of pay at the officers
base salary or (ii) one (1) week of pay for every year
of employment with us. The severance payment is payable
bi-weekly over the
12-month
period following the officers termination. The Company in
its discretion may offer other arrangements to employees who end
employment with the Company. Each officer has agreed to comply
with certain non-competition covenants in connection with
execution of the severance agreements.
The amounts that would be payable to each named executive
officer if their employment had been terminated on
February 3, 2007, assuming that the named executive officer
had not been terminated for any of the reasons set forth above
which would nullify our obligation to pay severance, as is the
case with Messrs. Hines and Newlin each of whom retired or
voluntarily terminated employment, is approximately as follows:
Edward W. Stack $362,500, William J. Colombo $216,350 and Gwen
Manto $46,150.
Stock Option Awards. The following sets forth
the applicable provisions of our 1992 Stock Plan and 2002 Stock
Plan with respect to exercisability of options upon termination
or
change-in-control.
1992 Stock Plan. In the event that a named
executive officer is terminated without cause as determined by
the committee charged with administering the 1992 Stock Plan,
currently the Compensation Committee, the non-vested portion of
any stock option will be deemed cancelled on the termination
date and the vested portion, if any, of the stock option as of
the date of such termination will remain exercisable for the
lesser of a period of thirty (30) days following
termination or until the expiration date of the stock option. In
the event that the named executive officer is terminated for
cause as determined by the Compensation Committee (defined as
(i) fraud or felonious conduct; (ii) embezzlement or
misappropriation of funds or property; (iii) consistent
refusal to perform, or willful misconduct in or disregard of the
performance of duties and obligations; (iv) gross
negligence; or (v) breach of employment agreement, if
applicable), all outstanding options, whether or not vested,
shall be immediately forfeited. In the event that the named
executive officer voluntarily terminates his employment due to a
total and permanent disability (within the Companys
standard guidelines) or due to the employees death, the
non-vested portion of any stock option will be deemed cancelled
on the termination date and the vested portion, if any, of the
stock option as of the date of such termination will remain
exercisable for the lesser of a period of ninety (90) days
following termination or until the expiration date of the stock
option.
In the event of a merger or consolidation of the Company with or
into another corporation or the sale of all or substantially all
of the Companys assets, the holder of options under the
1992 Stock Plan is entitled to receive, at their
election (a) upon the due exercise of the option or
(b) upon the effective date of the reorganization, sale,
merger, consolidation or similar transaction, the cash,
securities, evidence of indebtedness, other property or any
combination of those items that optionee would have been
entitled to receive for common stock acquired through the
exercise of said option (net of exercise price) immediately
prior to the effective date of the transaction.
2002 Stock Plan. In the event that a named
executive officers continuous status as an employee is
terminated (defined in the 2002 Stock Plan as the absence of any
interruption or termination of the employment relationship,
except in the case of (i) sick leave, (ii) military
leave, (iii) any other leave of absence approved by the
Board, provided such period does not exceed ninety
(90) days, unless reemployment is guaranteed by contract,
statute or Company policy, or (iv) transfers between
locations of the Company or between the Company and its
subsidiaries), the non-vested portion of any stock option will
be deemed cancelled on the termination date and the vested
portion, if any, of the stock option as of the date of such
termination will remain exercisable for the lesser of a period
of ninety (90) days following termination or until the
expiration date of the stock option. Except as otherwise set
forth in the option award itself, in the event that the named
executive officer voluntarily terminates employment due to a
total and permanent disability (as defined in
Section 22(e)(3) of the Internal Revenue Code of 1986, as
amended) or due to the employees death, the non-vested
portion of any stock option will be deemed cancelled on the
termination date and the vested portion, if any, of the stock
option as of the date of such termination will remain
exercisable for the lesser of a period of twelve
(12) months following termination or until the expiration
date of the stock option. In each case, our 2002 Stock Plan
grants the administrator of the plan the ability to set other
periods of time with respect to the period in which an award can
be exercised, as set forth in the document evidencing such
option or award.
34
In the event of a merger or consolidation of the Company with or
into another corporation or the sale of all or substantially all
of the Companys assets, the Board may authorize all
outstanding options or awards to be assumed or an equivalent
option or right to be substituted by the successor corporation
or parent or subsidiary of such successor corporation. In the
event that the successor corporation does not agree to assume
the options or rights, or to substitute an equivalent option or
stock appreciation right, the Board shall provide for employees
to have the right to exercise all options previously granted to
such employee, including those not otherwise exercisable at the
time.
The following table provides the value of equity awards that
each named executive officer would be eligible to receive via
exercise if the executive was terminated or became totally
disabled or died as of February 3, 2007.
|
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|
|
Executive Officer
|
|
Upon Termination, Death or Disability(1)
|
|
Edward W. Stack
|
|
$
|
97,147,225
|
|
Michael F. Hines
|
|
$
|
1,162,510
|
|
William J. Colombo
|
|
$
|
25,314,780
|
|
William R. Newlin
|
|
$
|
17,542,710
|
|
Gwen Manto
|
|
$
|
|
|
|
|
|
(1) |
|
Amounts are based on the closing sale price of the
Companys Common Stock on February 2, 2007, and assume
full exercise of all options exercisable, but do not include any
acceleration of vesting which could occur pursuant to a
change-in-control
under the terms of our stock option plans. |
Employee Stock Purchase Plan. Under the terms
of our Employee Stock Purchase Plan, referred to as our ESPP,
upon a participants termination of service, defined as the
earliest of his or her retirement (defined as voluntary
termination of employment on or after attaining age 55),
death, resignation, discharge or permanent separation from
service with the Company, for any reason other than death or
resignation, no payroll deductions may be made from his or her
payroll, and the entire balance credited under his or her ESPP
account will be automatically refunded. Upon a
participants retirement, the participant may elect to have
the entire amount credited to his or her account (as of the date
of retirement) refunded, or to have the entire amount credited
under his or her account held in the account and used to
purchase shares as provided under the ESPP in accordance with
all applicable requirements of the Internal Revenue Code that
apply to the ESPP.
In the event that the Company is dissolved or liquidated, or is
a party to a merger or consolidation in which the Company is not
the surviving entity, every purchase right outstanding under the
ESPP will terminate.
Supplemental
Savings Plans.
Company Supplemental Savings Plan. Under the
terms of the Companys Supplemental Smart Savings Plan,
which as of December 7, 2006 excludes executive officers
from eligibility to participate, if a participant experiences a
separation from service, which is defined in the
plan as a termination of employment from the Company resulting
from death, retirement or otherwise, but does not include
absence for military leave, sick leave, or other bona fide leave
of absence of less than six (6) months, then the
participant shall receive the associated distribution from his
or her accounts created under the plan. Such distribution may
take the form of a single lump sum payment or monthly,
quarterly, semi-annual or annual installments, with any
installment terms between two (2) and fifteen
(15) years. In the event a participant becomes permanently
and totally disabled, as determined under the Companys
long term disability plan, the entire value of his or her
accounts and the matching deferral account, will be distributed
in a single lump sum.
In the event of a
change-in-control
of the Company (defined below), then all plan benefits are
immediately payable in the form of a single lump sum or,
according to the times and in the forms of distribution
originally elected by the participant each year. Should a
participant during an annual election period fail to make an
election for time and form of payment, the benefit distribution
will be made in the form of a single lump sum for the applicable
year. A
change-in-control
of the Company is defined under the plan as a change in
ownership or control of the Company or one of the following
events (as objectively determined): (i) the acquisition of
the Companys stock that, together with the stock already
held by such person, entity or group, constitutes more than 50%
of the total fair market value or total voting power of the
stock of the Company; provided that the acquisition of
additional stock by a person,
35
entity or group already owning more than 50% of the
Companys stock is not considered a change in ownership of
the Company; (ii) during any
12-month
period, the acquisition by any person, entity or group of stock
of the Company that constitutes 35% or more of the total voting
power of the stock of the Company, or a majority of the members
of the Board of Directors is replaced by directors whose
appointment or election was not endorsed by a majority of the
members of the Board of Directors as constituted prior to the
date of such appointment or election; or (iii) during any
12-month
period, the acquisition by any person, entity or group of assets
of the Company that have a total gross fair market value equal
to more than 40% of the total gross fair market value of all of
the assets of the Company immediately prior to such acquisition;
provided that, notwithstanding the foregoing, a
change-in-control
shall not occur under this section where there is a transfer of
assets to an entity that is controlled by the stockholders of
the Company immediately after the transfer.
Prior to the December 7, 2006 amendment, the only executive
officer who participated in the Supplemental Savings Plan was
Mr. Newlin, who retired at the end of March 2007. In
connection with his retirement, Mr. Newlin will receive a
distribution, which as of February 3, 2007 totaled of
$5,317.
Officers Supplemental Savings
Plan. Under the terms of the Officers Plan,
which became effective in fiscal year 2007, in the event of a
participants retirement or early retirement (defined
below), the participant is entitled to receive an amount equal
to the total balance of the participants account and
matching company account, which is payable in a single lump sum
unless the participant has elected to receive the distribution
in installments. Upon termination of employment other than by
reason of retirement, early retirement, death or termination for
cause (defined below), the participant is entitled to receive a
termination benefit equal to the vested balance of the
participants accounts, payable in a single lump sum;
provided, that the vested portion of the Companys matching
account is payable in a single lump sum on the date the
participant attains age fifty-five (55). If a participant is
terminated for cause, the participant forfeits to the Company
all rights to both vested and unvested contributions of the
Company credited to the participants accounts, and is
entitled to receive a benefit equal to the remaining balance of
the participants accounts, payable in a single lump sum.
Retirement is defined in the Officers Plan as termination
of employment, other than a termination for cause, on or after
the date on which the participant has both attained age
fifty-five (55) and completed at least five (5) years
of participation in the Officers Plan, and early
termination is termination of employment, other than for cause,
on or after the date on which the participant has completed at
least five (5) years of participation. Termination for
cause is defined in the Officers Plan as termination of
employment by reason of (a) a substantial intentional
failure to perform duties as an employee or to comply with any
material provision of his or her employment agreement with the
Company, where such failure is not cured within thirty
(30) days after receiving written notice from the Company
specifying in reasonable detail the nature of the failure,
(b) a breach of fiduciary duty to the Company by reason of
receipt of personal profits, (c) conviction of a felony, or
(d) any other willful and gross misconduct committed by the
participant.
Distributions are also triggered upon a participants death
or disability (as defined in applicable treasury regulations) or
in the event of certain hardships or changes of control (each as
defined under Section 409A of the Internal Revenue Code). A
change in control is defined in the Officers Plan as any
of: (i) the dissolution or liquidation of the Company;
(ii) a reorganization, merger or consolidation of the
Company with one or more corporations as a result of which the
Company is not the surviving corporation; (iii) approval by
the stockholders of the Company of any sale, lease, exchange or
other transfer (in one or a series of transactions) of all or
substantially all of the assets of the Company;
(iv) approval by the stockholders of the Company of any
merger or consolidation of the Company in which the holders of
voting stock of the Company immediately before the merger or
consolidation will not own 50% or more of the voting shares of
the continuing or surviving corporation immediately after such
merger or consolidation; or (v) a change of 50% (rounded to
the next whole person) in the membership of the Board of
Directors of the Company within a twelve (12) month period,
unless the election or nomination for election by stockholders
of each new director within such period was approved by the vote
of two-thirds
(2/3)
(rounded to the next whole person) of the directors then still
in office who were in office at the beginning of the twelve
(12) month period. Notwithstanding the foregoing, no event
shall constitute a change in control for purposes of
acceleration of distributions on termination of the Plan if it
is not a change in the ownership or effective control of
the corporation, or in the ownership of a
substantial portion of the assets of the corporation,
corporate dissolution,
36
or with approval of a bankruptcy court pursuant to
11 U.S.C. Section 503(b)(1)(A) within the
meaning of Code Section 409A.
Life Insurance Benefits. The Company currently
pays the premiums for life insurance policies for the benefit of
Messrs. Stack and Colombo, for which the beneficiaries
under the policies, upon each executives death, is the
executives respective spouses, and for an additional life
insurance policy for which a personal beneficiary designated by
Mr. Stack is, upon the executives death, the
beneficiary. For detail regarding the premiums paid by the
Company, see footnotes 6 and 8 of the Summary Compensation
Table on page 26. If Messrs. Stack and Colombo had
died on February 3, 2007, the spouses of Mr. Stack and
Mr. Colombo would have received $2,413,407 and $1,250,510,
respectively, under this arrangement, and a personal beneficiary
designated by Mr. Stack would have received $4,000,000 with
respect to Mr. Stacks additional policy.
ITEM 2
APPROVAL OF AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE
PLAN
Amended
and Restated Employee Stock Purchase Plan
Our Board of Directors has adopted, subject to stockholder
approval, an Amended and Restated Employee Stock Purchase Plan.
The original Employee Stock Purchase Plan, or ESPP, was approved
by our stockholders at our 2003 annual meeting. The purpose for
amending and restating our prior ESPP is to: (i) establish
a new term for the Amended and Restated ESPP through
June 30, 2012, (ii) remove restrictions regarding
minimum hourly employment levels previously required for
employee eligibility, (iii) provide the Compensation
Committee the ability to implement a cap with respect to the
number of shares to be purchased in each purchase period and
(iv) allow for the purchase of fractional shares of stock
in lieu of carrying forward balances in ESPP accounts. The
complete text of the Amended and Restated ESPP is attached as
Appendix A to this proxy statement. The Amended and
Restated ESPP provides our employees with an opportunity to
purchase our common stock through accumulated payroll deductions
and at a discount from fair market value. The total number of
shares of common stock with respect to which purchases may be
made under the Amended and Restated ESPP is 817,895 (the number
of shares remaining under the original ESPP), which amount shall
be adjusted in the event of a change in the number of
outstanding shares of common stock resulting from a stock split
or other subdivision or consolidation of shares or other capital
adjustment, the payment of stock dividends or distributions, or
other change in the number of outstanding shares of common stock
effected without receipt of consideration of the Company in
accordance with the terms of the Amended and Restated ESPP. The
Amended and Restated Amended and Restated ESPP is administered
by our Compensation Committee.
Eligible employees may purchase shares having a fair market
value of up to $25,000 for all purchases ending within the same
calendar year under this plan. Our employees are eligible to
participate if they are employees of Dicks Sporting Goods,
Inc. whose customary employment is for more than five
(5) months in a calendar year and do not own 5% or more of
our voting stock. As of January 1, 2007, the most recent
purchase period start date, we had 8,470 employees who were
eligible for participation under the Amended and Restated ESPP.
Offering periods have commenced every six (6) months from
December 31, 2002, or as otherwise determined by the
Compensation Committee. The purchase price per share for our
common stock under the plan will be equal to the lower of 85% of
the fair market value of our common stock on the first or last
day of each offering period. A cap on the number of shares to be
purchased during any particular purchase period may be
implemented by the Compensation Committee prior to an offering
period, and amounts to be purchased which are in excess of the
cap will be reduced on a pro rata basis. Employees may end their
participation under the Amended and Restated ESPP at any time
prior to the last date of any one offering period and,
generally, such participation will be automatically terminated
on termination of employment.
In the event we are the surviving corporation in a merger,
reorganization or other business combination, the right to
purchase shares issued under the Amended and Restated ESPP will
be assumed, such that they will cover the securities or other
property that common stock holders are entitled to pursuant to
the terms of the merger, reorganization or other business
combination. A dissolution or liquidation or a merger or
consolidation in which we are not the surviving entity will
cause each purchase right then outstanding to terminate.
Although generally our Board of Directors has the power to
amend, modify or terminate the Amended and Restated ESPP at any
time so long as previously granted purchase rights of plan
participants are not impaired, certain proposed amendments to
37
the Amended and Restated ESPP, including extending the term as
is proposed here, do require approval from our stockholders. The
Company receives continued employment by the employees as
consideration for the Amended and Restated ESPP. The Amended and
Restated ESPP will terminate on June 30, 2012 unless
earlier terminated by our Board of Directors.
For U.S. federal income tax purposes, an employee does not
realize income at the time of entry into the Amended and
Restated ESPP or purchase of a share. If no disposition of the
stock is made within two (2) years from the first day of an
offering period, or one year from the date the share is
purchased by the employee, upon subsequent disposition of the
stock, ordinary income will be realized to the extent of the
lesser of (i) 15% of the average market value on the first
business day of the offering period, or (ii) the amount by
which the net proceeds of the sale exceed the price paid. Any
further gain will be treated as capital gain. No income tax
deduction will be allowed by the Company for shares purchased by
the employee, provided such shares are held for the periods
described above. If the shares are disposed of within the
periods described above, the employee will recognize ordinary
income for the taxable year of the disposition equal to the
excess of the fair market value of the shares on the date of
purchase over the price paid, and in these circumstances, the
Company will be entitled to a deduction equal to the amount of
ordinary income recognized by the employee. Tax treatment in
jurisdictions outside the U.S. will be governed by local
laws.
The affirmative vote of the holders of a majority of the votes
represented in person or by proxy and entitled to vote on this
item is required for approval of the Amended and Restated ESPP.
The Board has approved the Amended and Restated ESPP and
believes it to be in the best interests of the Company and the
stockholders.
The
Board of Directors unanimously recommends a vote FOR
the approval of the Amended and Restated Employee Stock Purchase
Plan.
Plan
Benefits
The following table presents the benefits or amounts that have
been received by or allocated to each person or group set forth
below, to the extent these amounts or benefits are currently
determinable.
Amended
and Restated Employee Stock Purchase Plan
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Number of Shares
|
|
|
|
of Common Stock
|
|
|
|
Purchased under
|
|
Name and Position
|
|
the Plan(1)
|
|
|
Edward W. Stack, Chairman and
Chief Executive Officer and Director(2)
|
|
|
|
|
Michael F. Hines, Executive Vice
President and Chief Financial Officer
|
|
|
5,875
|
|
William J. Colombo, President and
Chief Operating Officer and Director
|
|
|
5,855
|
|
William R. Newlin, Executive Vice
President and Chief Administrative Officer
|
|
|
2,490
|
|
Gwen K. Manto, Executive Vice
President and Chief Merchandising Officer
|
|
|
|
|
Executive Group
|
|
|
14,220
|
|
Non-Executive Director Group(3)
|
|
|
|
|
Non-Executive Officer Employee
Group
|
|
|
924,830
|
|
|
|
|
(1) |
|
Eligible employees currently may purchase shares having a fair
market value of up to $25,000 for all purchases ending within
the same calendar year under the Amended and Restated ESPP. The
purchase price per share for our common stock under the Amended
and Restated ESPP will be equal to the lower of 85% of the fair
market value of our common stock on the first or last day of
each purchase period. Amounts reflect aggregate purchases made
under the ESPP. |
|
(2) |
|
Edward W. Stack is ineligible due to his percentage ownership of
Class B common stock and common stock. |
|
(3) |
|
Non-Executive Directors and Non-Executive Director Group are not
eligible under the Amended and Restated ESPP because they are
not employees of the Company. |
38
The market value of the Companys common stock on
April 19, 2007 was $56.77 per share (the closing price
as reported on the NYSE). The Amended and Restated ESPP is not
exclusive and does not limit the authority of the Board or its
committees to grant awards or authorize any other compensation,
with or without reference to shares, under any other plan or
authority.
Equity
Compensation Plans
The following table summarizes information, as of
February 3, 2007, relating to compensation plans (including
individual compensation arrangements) of the Company under which
equity securities of the Company are authorized for issuance.
EQUITY
COMPENSATION PLAN INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities
|
|
|
|
|
|
|
remaining available for
|
|
|
Number of securities
|
|
|
|
future issuance under
|
|
|
to be issued upon
|
|
Weighted-average
|
|
equity compensation
|
|
|
exercise of
|
|
exercise price of
|
|
plans (excluding
|
|
|
outstanding options,
|
|
outstanding options,
|
|
securities reflected in
|
|
|
warrants and rights
|
|
warrants and rights
|
|
column(a))
|
Plan Category
|
|
(a)
|
|
(b)
|
|
(c)
|
|
Equity compensation plans approved
by security holders(1)
|
|
|
9,816,414
|
(2)
|
|
$
|
19.76
|
|
|
|
9,561,313
|
(2)
|
Equity compensation plans not
approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
9,816,414
|
(2)
|
|
$
|
19.76
|
|
|
|
9,561,313
|
(2)
|
|
|
|
(1) |
|
Includes 1992 Stock Plan, 2002 Stock Plan and ESPP. |
|
(2) |
|
Shares of common stock. Under the 2002 Stock Plan and the ESPP
no options have been granted that are exercisable for
Class B common stock. |
OTHER
MATTERS
As of the date of this proxy statement, we know of no business
that will be presented for consideration at the annual meeting
other than the items referred to above. If any other matter is
properly brought before the meeting for action by stockholders,
proxies in the enclosed form returned to the Company will be
voted in accordance with the recommendation of the Board of
Directors or, in the absence of such a recommendation, in
accordance with the judgment of the proxy holder.
ADDITIONAL
INFORMATION
Householding of Proxy
Materials. The SEC has adopted rules that permit
companies and intermediaries such as brokers to satisfy delivery
requirements for proxy statements with respect to two
(2) or more stockholders sharing the same address by
delivering a single proxy statement addressed to those
stockholders. This process, which is commonly referred to as
householding, potentially provides extra convenience
for stockholders and cost savings for companies. The Company and
some brokers household proxy materials, delivering a single
proxy statement to multiple stockholders sharing an address
unless contrary instructions have been received from the
affected stockholders. Once you have received notice from your
broker or us that they or we will be householding materials to
your address, householding will continue until you are notified
otherwise or until you revoke your consent. If, at any time, you
no longer wish to participate in householding and would prefer
to receive a separate proxy statement, please notify your broker
if your shares are held in a brokerage account or us if you hold
registered shares. We will deliver promptly upon written or oral
request a separate copy of the annual report or proxy statement,
as applicable, to a security holder at a shared address to which
a single copy of the documents was delivered. You can notify us
by sending a written request to Dicks Sporting Goods,
Inc., Investor Relations, 300 Industry Drive, RIDC Park West,
Pittsburgh, PA 15275 or call us at
(724) 273-3400
if (i) you wish to receive a
39
separate copy of an annual report or proxy statement for this
meeting; (ii) you would like to receive separate copies of
those materials for future meetings; or (iii) you are
sharing an address and you wish to request delivery of a single
copy of annual reports or proxy statements if you are now
receiving multiple copies of annual reports or proxy statements.
Advance Notice Procedures. Under our bylaws,
no business may be presented by any stockholder before an annual
meeting unless it is properly presented before the meeting by or
at the direction of the Board or by a stockholder entitled to
vote who has delivered written notice to our General Counsel
(containing certain information specified in the bylaws about
the stockholder and the proposed action) at least 150 days
prior to the anniversary date of the preceding years
annual meeting that is, with respect to the 2008
annual meeting, by January 7, 2008. These requirements are
separate from and in addition to the SECs requirements
that a stockholder must meet in order to have a stockholder
proposal included in the Companys proxy statement.
Stockholder Proposals for the 2008 Annual
Meeting. Stockholders interested in submitting a
proposal for inclusion in the proxy materials for the annual
meeting of stockholders in 2008 may do so by following the
procedures prescribed in SEC
Rule 14a-8.
To be eligible for inclusion, stockholder proposals must be
received by the Companys Office of General Counsel no
later than January 4, 2008. Proposals should be sent to General
Counsel, Dicks Sporting Goods, Inc., 300 Industry Drive,
RIDC Park West, Pittsburgh, Pennsylvania 15275.
Proxy Solicitation and Costs. The proxies
being solicited hereby are being solicited by the Board of
Directors of the Company. The cost of soliciting proxies in the
enclosed form will be borne by the Company. We have not retained
an outside firm to aid in the solicitation. Officers and regular
employees of the Company may, but without compensation other
than their regular compensation, solicit proxies by further
mailing or personal conversations, or by telephone, telex,
facsimile or electronic means. We will, upon request, reimburse
brokerage firms and others for their reasonable expenses in
forwarding solicitation material to the beneficial owners of
stock.
40
APPENDIX A
Dicks
Sporting Goods, Inc.
Amended
and Restated Employee Stock Purchase Plan
I. DEFINITIONS
Account means the Employee Stock Purchase Plan Account
established for a Participant under Section IX hereunder.
Board of Directors shall mean the Board of Directors of
the Company.
Code shall mean the Internal Revenue Code of 1986, as
amended.
Committee shall mean the Compensation Committee of the
Board of Directors.
Common Stock shall mean shares of the common stock, par
value $.01 per share, and any security into which such
stock shall be converted or shall become by reason of changes in
its nature such as by way of recapitalization, reclassification,
changes in par value, merger, consolidation or similar
transaction.
Company shall mean Dicks Sporting Goods, Inc., a
Delaware corporation. When used in the Plan with reference to
employment, Company shall include Subsidiaries.
Compensation shall mean the total of such Eligible
Employees base salary plus bonus payments paid to an
Eligible Employee by the Company.
Effective Date shall mean the date of effectiveness of
the Companys Registration Statement relating to the
initial public offering of the Companys Common Stock.
Eligible Employees shall mean only those persons who, as
of the first day of a Purchase Period, are Employees of the
Company and who are not, as of the day preceding the first day
of the Purchase Period, deemed for purposes of
Section 423(b)(3) of the Code to own stock possessing 5% or
more of the total combined voting power or value of all classes
of stock of the Company.
Employees shall mean all persons who are employed by the
Company as regular, common-law employees whose customary
employment is for more than five (5) months in a calendar
year.
Exercise Date shall mean the last day of a Purchase
Period.
Fair Market Value shall mean: (i) as of the
Effective Date the initial public offering price of the
Companys Common Stock as approved by the Board of
Directors; or (ii) as of any date subsequent to the
Effective Date, the last reported sales price of the Common
Stock on such date as reported by the Nasdaq National Market or
the principal national securities exchange on which such stock
is listed and traded, or in each such case where there is no
trading on such date, on the first previous date on which there
is such trading.
Participant shall mean an Eligible Employee who elects to
participate in the Plan under Section VII hereunder.
Plan shall mean the Dicks Sporting Goods, Inc.
Employee Stock Purchase Plan, as set forth herein and as amended
from time to time.
Purchase Period shall mean: (a) for the initial
purchase period, the period commencing on July 1, 2007 and
ending on December 31, 2007; and (b) thereafter,
purchase periods shall be semi-annual or as otherwise elected by
the Committee not less than 60 days in advance of the
commencement of such period. A Purchase Period shall begin on
the first business day of, and end on the last business day of,
each such calendar period. The last Purchase Period under the
Plan shall terminate on or before the date of termination of the
Plan provided in Section XXIII.
Subsidiary shall mean any corporation which is a
subsidiary of the Company within the meaning of
Section 424(f) of the Code.
Termination of Service shall mean the earliest of the
following events with respect to a Participant: his or her
retirement, death, quit, discharge or permanent separation from
service with the Company.
A-1
The masculine gender includes the feminine, the singular number
includes the plural and the plural number includes the singular
unless the context otherwise requires.
II. PURPOSE
It is the purpose of this Plan to provide a means whereby
Eligible Employees may purchase Common Stock through payroll
deductions. It is intended to provide a further incentive for
Employees to promote the best interests of the Company and to
encourage stock ownership by Employees in order to participate
in the Companys economic progress.
It is the intention of the Company to have the Plan qualify as
an employee stock purchase plan within the meaning
of Section 423 of the Code and the provisions of the Plan
shall be construed in a manner consistent with the Code.
III. ADMINISTRATION
The Plan shall be administered by the Committee. The Committee
shall have authority to make rules and regulations for the
administration of the Plan, and its interpretations and
decisions with regard thereto shall be final and conclusive. The
Committee shall have all necessary authority to communicate,
from time to time, with Eligible Employees and Participants for
purposes of administering the Plan, and shall notify Eligible
Employees promptly of its election of the term of each
forthcoming Purchase Period, if other than semi-annual.
IV. SHARES
OF COMMON STOCK
There shall be 817,895 shares of Common Stock reserved for
issuance to and purchase by Participants under the Plan, subject
to adjustment in accordance with Section XXI hereof. The
shares of Common Stock subject to the Plan shall be either
shares of authorized but unissued Common Stock or shares of
Common Stock reacquired by the Company. Shares of Common Stock
covered by the unexercised portion of any terminated purchase
right may again be subject to purchase rights granted under the
Plan.
V. PURCHASE
PRICE
The purchase price per share of the shares of Common Stock sold
to Participants under this Plan for any Purchase Period shall be
the lesser of (a) 85% of the Fair Market Value of a share
of Common Stock on the first day of such Purchase Period, or
(b) 85% of the Fair Market Value of a share of Common Stock
on the Exercise Date of such Purchase Period.
VI. GRANT
OF PURCHASE RIGHT TO PURCHASE COMMON STOCK
Each Eligible Employee shall be granted a purchase right
effective on the first day of each Purchase Period to purchase a
number of full
and/or
fractional shares of Common Stock (subject to adjustment as
provided herein). No Eligible Employee shall be permitted to
purchase shares of Common Stock under this Plan (or under any
other employee stock purchase plan within the
meaning of Section 423(b) of the Code, of the Company) with
an aggregate Fair Market Value (as determined as of the first
day of the Purchase Period) in excess of $25,000 for any one
calendar year within the meaning of Section 423(b)(8) of
the Code. For a given Purchase Period, payroll deductions shall
commence on the first day of the Purchase Period and shall end
on the related Exercise Date, unless sooner altered or
terminated as provided in the Plan.
Anything herein to the contrary notwithstanding, if, as of the
first day of a Purchase Period, any Eligible Employee entitled
to purchase Common Stock hereunder would be deemed for the
purposes of Section 423(b)(3) of the Code to own stock
(including any number of shares of Common Stock which such
person would be entitled to purchase hereunder) possessing 5% or
more of the total combined voting power or value of all classes
of stock of the Company, the maximum number of shares of Common
Stock which such person shall be entitled to purchase pursuant
to the Plan shall be reduced to that number which when added to
the number of shares of stock of the Company which such person
is so deemed to own (excluding any number of shares of Common
Stock which such person would be entitled to purchase
hereunder), is one less than such 5%.
A-2
VII. ELECTION
TO PARTICIPATE
An Eligible Employee may elect to become a Participant in this
Plan by completing a Stock Purchase Agreement form
within the defined enrollment period prior to the first day of
the Purchase Period. In the Stock Purchase Agreement, the
Eligible Employee shall authorize regular, after tax
payroll deductions from his Compensation subject to the
limitations in Section VIII below. Purchase rights granted
to Eligible Employees who fail to authorize payroll deductions
will automatically lapse. If a Participants payroll
deductions allow him to purchase fewer than the maximum number
of shares of Common Stock to which his purchase rights entitle
him, the purchase rights with respect to the Common Stock which
he does not purchase will lapse as of the last day of the
Purchase Period.
The execution and delivery of the Stock Purchase Agreement as
between the Participant and the Company shall be conditioned
upon the compliance by the Company at such time with Federal
(and any applicable state) securities laws.
The Stock Purchase Agreement and its submission may be
accomplished through electronic or other media, and may be
administered by the Company or another entity designated by the
Company for this purpose.
VIII. PAYROLL
DEDUCTIONS
An Eligible Employee may authorize payroll deductions from his
Compensation for each payroll period of a specified percentage
of such Compensation, not less than 1.0% and not more than 25%,
in multiples of 1.0%.
The amount of payroll deduction shall be established at the
beginning of a Purchase Period and may not be altered, except
for complete discontinuance under Section XI, XIII or XIV
hereunder.
IX. EMPLOYEE
STOCK PURCHASE ACCOUNT
An Employee Stock Purchase Account will be established for each
Participant in the Plan. Payroll deductions made under
Section VIII will be credited to the individual Accounts.
No interest or other earnings will be credited to a
Participants Account and the assets of all such Accounts
shall remain general assets of the Company until such assets are
used to purchase Common Stock in accordance with Section X
hereunder.
X. PURCHASE
OF COMMON STOCK
As of any Exercise Date, the Participant shall buy and the
Company shall sell at the purchase price determined in
Section V the number of whole
and/or
fractional shares of Common Stock which can be purchased with
the amount in the Participants Account; provided that in
no event shall all Participants be permitted to purchase during
any Purchase Period more than the amount or number of shares
determined to be the maximum permissible by the Committee, if
the Committee via resolution makes such a determination with
respect to the Purchase Period as provided in Section XXII.
Anything herein to the contrary notwithstanding, no Participant
may, in any calendar year, purchase a number of shares of Common
Stock under this Plan which, together with all other shares of
stock of the Company and its Subsidiaries which he may be
entitled to purchase in such year under all other employee stock
purchase plans of the Company and its Subsidiaries which meet
the requirements of Section 423(b) of the Code, have an
aggregate Fair Market Value (measured as of the first day of
each applicable Purchase Period) in excess of $25,000. The
limitation described in the preceding sentence shall be applied
in a manner consistent with Section 423(b)(8) of the Code.
XI. WITHDRAWAL
A Participant may withdraw from the Plan at any time prior to
the Exercise Date of a Purchase Period by filing a notice of
withdrawal. Upon a Participants withdrawal, the payroll
deductions shall cease for the next payroll period and the
entire amount credited to his Account shall be refunded to him.
No refund of an Account balance made pursuant to the Plan shall
include any amount in respect of interest or other imputed
earnings.
Any Participant who withdraws from the Plan may again become a
Participant hereunder at the start of the next Purchase Period
in accordance with Section VII.
A-3
XII. ISSUANCE
OF STOCK CERTIFICATES
(a) The shares of Common Stock purchased by a Participant
shall, for all purposes, be deemed to have been issued and sold
at the close of business on the Exercise Date. Prior to that
date, none of the rights or privileges of a stockholder of the
Company shall exist with respect to such Common Stock.
(b) Following the end of each Purchase Period, the number
of shares of Common Stock purchased by each Participant shall be
deposited into an account established in the Participants
name at an entity designated by the Company for this purpose.
The Participant may transfer these shares of Common Stock to
another brokerage account of Participants choosing or
request that a stock certificate be issued and delivered to the
Participant.
(c) Notwithstanding any provision hereof to the contrary,
no shares of Common Stock shall be issued, sold, registered or
delivered pursuant to this Section XII or otherwise under
the Plan unless such issuance, sale, registration or delivery
shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder,
and the requirements of any stock exchange upon which the shares
of Common Stock may then be listed, and shall be further subject
to the approval of counsel for the Company with respect to such
compliance.
XIII. TERMINATION
OF SERVICE
(a) Upon a Participants Termination of Service for
any reason other than death or voluntary termination of
employment on or after attaining age 55
(Retirement), no payroll deduction may be made from
any Compensation due him as of the date of his Termination of
Service and the entire balance credited to his Account shall be
automatically refunded to him.
(b) Upon a Participants Retirement, no payroll
deduction shall be made from any Compensation due him as of the
date of his retirement. Such a Participant may, prior to
Retirement, elect:
(1) to have the entire amount credited to his Account as of
the date of his Retirement refunded to him, or
(2) to have the entire amount credited to his Account held
therein and utilized to purchase Common Stock on the Exercise
Date as provided in Section X and in accordance with all
applicable requirements of the Code relating to the Plan.
(c) Upon the death of a Participant, no payroll deduction
shall be made from any Compensation due him at time of death,
and the entire balance in the deceased Participants
Account shall be paid to the Participants designated
beneficiary, or otherwise to his estate.
XIV. TEMPORARY
LAYOFF, AUTHORIZED LEAVE OF ABSENCE, DISABILITY
Payroll deductions shall cease during a period of absence
without pay from work due to a Participants temporary
layoff, authorized leave of absence, disability or for any other
reason. If such Participant shall return to active service prior
to the Exercise Date for the current Purchase Period, payroll
deductions shall be resumed in accordance with his prior
authorization.
If the Participant shall not return to active service prior to
the Exercise Date for the current Purchase Period, the balance
of his Stock Purchase Account will be used to purchase Common
Stock on the Exercise Date as provided in Section X and in
accordance with all applicable requirements of the Code relating
to the Plan, unless the Participant elects to withdraw from the
Plan in accordance with Section XI.
XV. PROCEDURE
IF INSUFFICIENT COMMON STOCK AVAILABLE
In the event that on any Exercise Date the aggregate funds
available for the purchase of shares of Common Stock pursuant to
Section X hereof would result in purchases of shares of
Common Stock in excess of the number of shares of Common Stock
then available for purchase under the Plan, the Committee shall
proportionately reduce the number of shares which would
otherwise be purchased by each Participant on the Exercise Date
in order to eliminate such excess, and the provisions of the
second paragraph of Section X shall apply.
A-4
XVI. RIGHTS
NOT TRANSFERABLE
The right to purchase shares of Common Stock under this Plan is
exercisable only by the Participant during his lifetime and is
not transferable by him. If a Participant attempts to transfer
his right to purchase shares of Common Stock under the Plan, he
shall be deemed to have requested withdrawal from the Plan and
the provisions of Section XI hereof shall apply with
respect to such Participant.
XVII. NO
OBLIGATION TO EXERCISE PURCHASE RIGHTS
Granting of a purchase right under this Plan shall impose no
obligation on an Eligible Employee to exercise such purchase
right.
XVIII. NO
GUARANTEE OF CONTINUED EMPLOYMENT
Granting of a purchase right under this Plan shall imply no
right of continued employment with the Company for any Eligible
Employee.
XIX. NOTICE
Any notice which an Eligible Employee or Participant files
pursuant to this Plan shall be in writing and shall be delivered
personally or by mail addressed to the Compensation Committee,
c/o Vice President-Finance at Dicks Sporting Goods,
Inc., or such other person or location as may be specified by
the Committee.
XX. REPURCHASE
OF STOCK
The Company shall not be required to repurchase from any
Participant shares of Common Stock acquired under this Plan.
XXI. ADJUSTMENT
FOR RECAPITALIZATION, MERGER, ETC.
The aggregate number of shares of Common Stock which may be
purchased pursuant to purchase rights granted hereunder, the
number of shares of Common Stock covered by each outstanding
purchase right, and the purchase price thereof for each such
purchase right shall be appropriately adjusted for any increase
or decrease in the number of outstanding shares of Common Stock
resulting from a stock split or other subdivision or
consolidation of shares of Common Stock or for other capital
adjustments or payments of stock dividends or distributions or
other increases or decreases in the outstanding shares of Common
Stock affected without receipt of consideration of the Company.
Subject to any required action by the stockholders, if the
Company shall be the surviving corporation in any merger,
reorganization or other business combination, any purchase right
granted hereunder shall cover the securities or other property
to which a holder of the number of shares of Common Stock would
have been entitled pursuant to the terms of the merger. A
dissolution or liquidation of the Company or a merger or
consolidation in which the Company is not the surviving entity
shall cause every purchase right outstanding hereunder to
terminate.
The foregoing adjustments and the manner of application of the
foregoing provisions shall be determined by the Committee in its
sole discretion. Any such adjustment shall provide for the
elimination of any fractional share which might otherwise become
subject to a purchase right.
XXII. AMENDMENT
OF THE PLAN
The Board of Directors may, without the consent of the
Participants, amend the Plan at any time, provided that no such
action shall adversely affect purchase rights theretofore
granted hereunder, and provided that no such action by the Board
of Directors, without approval of the Companys
stockholders, may:
(a) increase the total number of shares of Common Stock
which may be purchased by all Participants, except as
contemplated in Section XXI;
(b) change the class of Employees eligible to receive
purchase rights under the Plan;
A-5
(c) decrease the minimum purchase price under
Section V;
(d) extend a Purchase Period hereunder; or
(e) extend the term of the Plan.
In addition, the Compensation Committee may, without the consent
of the Participants, amend the Plan via Committee resolution at
any time to require that the amount of stock which may be
purchased by any Participant bear a uniform relationship to the
total compensation, or the basic or regular rate of compensation
or to provide that no Participant may purchase more than a
maximum amount of stock.
XXIII. INTERNATIONAL
PARTICIPANTS
With respect to Eligible Employees who reside or work outside
the United States of America, the Committee may, in its sole
discretion, amend the terms of the Plan with respect to such
Eligible Employees in order to conform such terms with the
requirements of local law.
XXIV. TERM
OF THE PLAN
This Plan shall become effective as of the Effective Date upon
its adoption by the Board of Directors, provided that it is
approved at a duly-held meeting of stockholders of the Company,
by an affirmative majority of the total votes present and voting
thereat, within 12 months after the earlier of the
Effective Date or the date of adoption by the Board of
Directors. If the Plan is not so approved, no Common Stock shall
be purchased under the Plan and the balance of each
Participants Account shall be promptly returned to the
Participant. The Plan shall continue in effect through
June 30, 2012, unless terminated prior thereto pursuant to
the next succeeding sentence. The Board of Directors shall have
the right to terminate the Plan at any time, effective as of the
next succeeding Exercise Date. In the event of the expiration of
the Plan or its termination, outstanding purchase rights shall
not be affected, except to the extent provided in
Section XV and any remaining balance credited to the
Account of each Participant as of the applicable Exercise Date
shall be refunded to each such Participant.
XXV. GOVERNING
LAW
The validity, constrictions and effect of the Plan, agreements
entered into pursuant to the Plan, and of any rules,
regulations, determinations or decisions made by the Committee
relating to the Plan or such agreements, and the rights of any
and all persons having or claiming to have any interest therein
or thereunder, shall be determined exclusively in accordance
with applicable federal laws and the laws of the state of
Delaware, without regard to its conflict of laws principles.
A-6
DICKS SPORTING GOODS, INC. ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 6, 2007 THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Edward W.
Stack, William J. Colombo and Joseph Oliver, and each of them individually, as proxies for the
undersigned, each with full power of substitution, to represent and vote as designated on the
reverse side, all of the shares of Common Stock of Dicks Sporting Goods, Inc. (the Company), and
hereby appoints Edward W. Stack as proxy for the undersigned, with full power of substitution, to
represent and vote as designated on the reverse side, all of the shares of Class B Common Stock of
the Company, held of record by the undersigned on April 16, 2007, at the Annual Meeting of
Stockholders to be held on June 6, 2007, at 1:30 p.m., local time, at the Hyatt Regency, 1111
Airport Boulevard, Pittsburgh, PA 15231, or any adjournment or postponement thereof. (Continued and
to be signed on the reverse side.) |
ANNUAL MEETING OF STOCKHOLDERS OF DICKS SPORTING GOODS, INC. June 6, 2007 Please date, sign and
mail your proxy card in the envelope provided as soon as possible. Please detach along perforated
line and mail in the envelope provided. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
ELECTION OF DIRECTORS AND FOR PROPOSAL 2. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x FOR AGAINST ABSTAIN 1.
Election of Directors: 2. Approval of the Companys Amended and Restated Employee Stock Purchase
Plan. NOMINEES: FOR ALL NOMINEES O Emanuel Chirico O 3. In their discretion, the Proxies are
authorized to vote upon such other business Walter Rossi O as may properly come before the meeting.
WITHHOLD AUTHORITY Brian J. Dunn FOR ALL NOMINEES O Larry D. Stone This proxy is solicited on
behalf of the Board of Directors of the Company. FOR ALL EXCEPT This proxy, when properly executed,
will be voted in accordance with the (See instructions below) instructions given above. If no
instructions are given, this proxy will be voted FOR election of the Directors and FOR proposal
2. INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark FOR ALL EXCEPT
and fill in the circle next to each nominee you wish to withhold, as shown here: To change the
address on your account, please check the box at right and indicate your new address in the address
space above. Please note that changes to the registered name(s) on the account may not be
submitted via this method. Signature of Stockholder Date: Signature of Stockholder Date: Note:
Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each
holder should sign. When signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person. |