DSW Inc. DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
DSW 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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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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(1) |
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Title of each class of securities to which transaction applies: |
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(2) |
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Aggregate number of securities to which transaction applies: |
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(3) |
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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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(4) |
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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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(1) |
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Amount Previously Paid: |
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(2) |
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Form, Schedule or Registration Statement No.: |
DSW INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
May 22, 2008
AND
PROXY STATEMENT
IMPORTANT
Please complete, sign and date your proxy and promptly return it in the enclosed
envelope. No postage is necessary if mailed in the United States.
DSW INC.
810 DSW Drive
Columbus, Ohio 43219
(614) 237-7100
April 21, 2008
To
Our Shareholders:
The 2008 Annual Meeting of Shareholders of DSW Inc. will be held at DSWs corporate
office, 810 DSW Drive, Columbus, Ohio, on Thursday, May 22, 2008, at 11:00 a.m.,
Eastern Daylight Savings Time, for the following purposes:
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1. |
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To elect four Class I directors, each to serve until the
2011 Annual Meeting of Shareholders and until their successors are duly
elected and qualified. |
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2. |
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To elect three Class III directors, each to serve until the
2010 Annual Meeting of Shareholders and until their successors are duly
elected and qualified. |
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To transact such other business as may properly come before
the meeting or any adjournment thereof. |
Only the holders of record of Class A and Class B Common Shares at the close of
business on April 1, 2008, our record date, are entitled to notice of and to vote at
the meeting. Each shareholder is entitled to one vote for each share of Class A
common stock held as of the record date, and eight votes for each share of Class B
common stock held as of the record date.
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By Order of the Board of Directors,
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/s/ William L. Jordan
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William L. Jordan |
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Secretary |
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YOUR VOTE IS IMPORTANT
You are urged to date, sign and promptly return the enclosed form of proxy in the
enclosed envelope to which no postage need be affixed if mailed in the United States.
Voting your shares by the enclosed proxy does not affect your right to vote in person
in the event you attend the meeting. You are cordially invited to attend the meeting.
If you attend, you may revoke your proxy and vote in person if you wish, even if you
have previously returned your proxy.
Contents
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS |
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i
DSW INC.
810 DSW Drive
Columbus, Ohio 43219
(614) 237-7100
PROXY STATEMENT
The enclosed proxy is being solicited on behalf of our Board of Directors for use at
our 2008 Annual Meeting of Shareholders to be held at 11:00 a.m., Eastern Daylight
Savings Time, on Thursday, May 22, 2008, and any postponements or adjournments thereof
(the Annual Meeting). This proxy statement, including the Notice of Meeting and our
Annual Report on Form 10-K for the fiscal year ended February 2, 2008 (fiscal 2007)
was first mailed to shareholders on April 21, 2008.
We have two classes of securities outstanding and entitled to vote at the Annual
Meeting, our Class A Common Shares, no par value, and our Class B Common Shares, no
par value. Only shareholders of record at the close of business on April 1, 2008, our
record date, are entitled to notice of and to vote at the meeting or any adjournments
thereof. The total number of outstanding Class A Common Shares entitled to vote at
the meeting is 16,225,633 and the total number of Class B Common Shares entitled to
vote at the meeting is 27,702,667. Each outstanding Class A Common Share is entitled
to one vote with respect to each matter to be voted on at the meeting and each
outstanding Class B Common Share is entitled to eight votes with respect to each
matter to be voted on at the meeting. Class A Common Shares and Class B Common Shares
vote together as a single class with respect to all matters submitted to a vote of
shareholders.
Prior to the completion of our initial public offering in July 2005, we were operated
as a direct wholly-owned subsidiary of Retail Ventures. As of April 1, 2008, Retail
Ventures owned 27,702,667 of our Class B Common Shares, constituting all of our issued
and outstanding Class B Common Shares, or in excess of 63% of our total outstanding shares and 93% of the combined voting power of our outstanding Common Shares. Retail
Ventures has the power acting alone to approve any action requiring a vote of the
majority of our voting shares and to elect all our directors.
Without affecting any vote previously taken, the proxy may be revoked by the
shareholder by giving a written notice of revocation to us in writing (attention:
William L. Jordan, Secretary). A shareholder may also change his or her vote by
executing and returning to us a later-dated proxy or by giving notice of revocation in
person at the meeting.
All properly executed proxies received by the Board of Directors will be voted as
directed by the shareholder. All properly executed proxies received by the Board of
Directors which do not specify how shares should be voted will be voted FOR the
election as directors of the nominees listed below under Election of Directors and
in the discretion of the proxies on any other business properly brought before the
meeting or any adjournments thereof.
The presence, in person or by proxy, of a majority of the outstanding common shares is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum. A broker non-vote occurs when a broker who holds its
customers shares in street name signs and submits a proxy for such shares and votes
such shares on some matters, but not others for which the broker does not have
discretionary voting power under rules applicable to broker-dealers. This would occur
when a broker has not received voting instructions from a customer with respect to a
particular proposal, in which case the broker, as the holder of record, is only
permitted to vote in its discretion on routine matters, which includes the election
of directors.
Solicitation of proxies may be made by mail, personal interview and telephone by our
officers, directors and regular employees, and by the employees of our transfer agent,
National City Bank. We will bear the cost of the solicitation of proxies, including
the charges and expenses of brokerage firms and others for forwarding solicitation
material to beneficial owners of shares.
1
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
The following table sets forth information with respect to the only persons known to
us to own beneficially more than five percent of our outstanding Class A or Class B
Common Shares as of April 1, 2008, unless as otherwise specified:
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Percentage of |
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Combined Voting |
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Number of Shares |
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Percentage of Shares |
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Power of All |
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Beneficially Owned |
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Beneficially Owned |
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Classes of |
Name and beneficial owner |
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Class A |
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Class B |
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Class A |
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Class B |
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Common Stock |
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Retail Ventures, Inc.
3241 Westerville Road
Columbus, Ohio 43224 |
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27,702,667 |
(1) |
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100 |
% |
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93.2 |
% |
Schottenstein Stores Corporation
1800 Moler Road
Columbus, Ohio 43207 |
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2,302,600 |
(2) |
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12.4 |
% |
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1.0 |
% |
Jay L. Schottenstein
1800 Moler Road
Columbus, Ohio 43207 |
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2,671,820 |
(2) |
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14.1 |
% |
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1.1 |
% |
FMR LLC
82 Devonshire Street
Boston, Massachusetts 02109 |
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2,438,369 |
(3) |
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15.0 |
% |
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1.0 |
% |
Buckingham Capital Management
Incorporated
750 Third Avenue
Sixth Floor
New York, New York 10017 |
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1,851,187 |
(4) |
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11.4 |
% |
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0.8 |
% |
Baron Capital Management, Inc.
767 Fifth Avenue
New York, New York 10153 |
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1,756,166 |
(5) |
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10.8 |
% |
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0.7 |
% |
Reid S. Walker
G. Stacey Smith
300 Crescent Court, Suite 1111
Dallas, Texas 75201 |
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1,255,879 |
(6) |
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7.7 |
% |
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0.5 |
% |
1346049 Ontario Limited
22 St. Clair Avenue East
18th Floor
Toronto, Ontario, Canada M4T 2s3 |
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1,151,000 |
(7) |
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7.1 |
% |
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0.5 |
% |
Artisan Partners Limited
Partnership
875 East Wisconsin Avenue
Suite 800
Milwaukee, Wisconsin 53202 |
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1,076,900 |
(8) |
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6.6 |
% |
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0.5 |
% |
Wellington Management Company, LLP
75 State Street
Boston, Massachusetts 02109 |
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1,021,300 |
(9) |
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6.3 |
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0.4 |
% |
2
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(1) |
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Class B Common Shares of DSW held by Retail Ventures are
exchangeable into a like number of Class A Common Shares of DSW. |
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As of April 1, 2008, Mr. Schottenstein was the beneficial owner of
approximately 78.4% of the outstanding common shares of Schottenstein Stores
Corporation or SSC. SSC has the right to acquire 2,302,600 Class A Common
Shares of DSW (subject to adjustment) from Retail Ventures pursuant to certain
warrant agreements. Mr. Schottenstein is also the sole beneficial owner of
165,300 Retail Ventures common shares and holds 52,500 Retail Ventures common
shares through Glosser Brothers Acquisition, Inc., or GBA, of which Mr.
Schottenstein is Chairman of the Board, President, a director and a trustee or
co-trustee of family trusts that own 100% of the stock of GBA. Mr.
Schottenstein has voting and investment power as co-trustee of a family trust
that owns 30,000 Retail Ventures common shares. As of April 1, 2008, SSC owned
approximately 39.5% of the outstanding shares and beneficially owned
approximately 50.2% of the outstanding shares of Retail Ventures (assumes
issuance of (i) 8,333,333 Retail Ventures common shares issuable upon the
exercise of convertible warrants, (ii) 1,731,460 Retail Ventures common shares
issuable upon the exercise of term loan warrants, and, (iii) 342,709 Retail
Ventures common shares issuable pursuant to the term loan warrants). Includes
19,120 Class A Common Shares which Mr. Schottenstein has the right to acquire
upon the exercise of stock options within 60 days of April 1, 2008. |
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Fidelity Management & Research Company, a wholly owned subsidiary of
FMR LLC and an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940, is the beneficial owner of 2,408,369 Class A
Common Shares as a result of acting as investment adviser to various
investment companies registered under Section 8 of the Investment Company Act
of 1940. The ownership of one investment, VIP Growth, amounted to 1,064,552
Class A Common Shares. Edward C. Johnson and FMR LLC, through its control of
Fidelity and the funds each has sole power to dispose of 2,408,369 Class A
Common Shares. Based upon information contained in a Schedule 13G filed with
the Securities and Exchange Commission on February 14, 2008. |
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Buckingham Capital Management Incorporated is a registered
investment adviser which acts as the general partner and investment manager
for various private investment funds and which also manages other accounts on
a discretionary basis. Buckingham Research Group Incorporated, a registered
broker-dealer, is the parent company of Buckingham Capital Management
Incorporated and thus may be deemed to be the beneficial owner of the
securities reported herein. Based upon information contained in a Schedule
13G filed with the Securities and Exchange Commission on February 12, 2008. |
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Baron Capital Group, Inc. (BCG) is the parent company of BAMCO,
Inc. (BAMCO) and Baron Capital Management, Inc. (BCM). BAMCO and BCM are
investment advisors registered under Section 203 of the Investment Advisors
Act of 1940. BAMCO beneficially owns 1,584,166 Class A Common Shares, and BCM
beneficially owns 172,000 Class A Common Shares. Baron Small Cap Fund (BCS)
and Baron Growth Fund (BGF) are investment companies registered under
Section 8 of the Investment Company Act and are advisory clients of BAMCO and
own 1,091,096 and 1,756,166 Class A Common Shares, respectively. Ronald Baron
owns a controlling interest in BCG. BCG and Ronald Baron disclaim beneficial
ownership of shares held by their controlled entities (or the investment
advisory clients thereof) to the extent such shares are held by persons other
than BCG and Ronald Baron. BAMCO and BCM disclaim beneficial ownership of
shares held by their investment advisory clients to the extent such shares are
held by persons other than BAMCO, BCM and their affiliates. Based on
information contained in a Schedule 13G filed with the Securities and Exchange
Commission on April 9, 2008. |
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As of December 31, 2007, Walker Smith Capital, L.P. (WSC), Walker
Smith Capital (Q.P.), L.P. (WSCQP), Walker Smith International Fund, Ltd.
(WS International) and HHMI Investments, L.P. (HHMI and collectively with
WSC, WSCQP and WS International, the WS Funds) owned in the aggregate
1,096,579 Class A Common Shares. WS Capital Management, L.P. (WSC
Management) is the general partner of WSC and WSCQP, the agent and
attorney-in-fact for WS International, and the investment manager for HHMI. WS
Capital, L.L.C. (WS Capital) is the general partner of WSC Management. Reid
S. Walker and G. Stacy Smith are principals of WS Capital. As a result, WSC
Management, WS Capital, and Messrs. Reid S. Walker and G. Stacy Smith possess
shared power to vote and to direct the disposition of the securities held by
the WS Funds. In
addition, WS Opportunity Fund, L.P. (WSO), WS Opportunity Fund (Q.P.), L.P.
(WSOQP), and |
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WS Opportunity Fund International, Ltd. (WSO International and
collectively with WSO and WSOQP, the WSO Funds) owned in the aggregate
159,300 Shares. WS Ventures Management, L.P. (WSVM) is the general partner of
WSO and WSOQP and the agent and attorney-in-fact for WSO International. WSV
Management, L.L.C. (WSV) is the general partner of WSVM. Reid S. Walker, G.
Stacy Smith and Patrick P. Walker are principals of WSV. As a result, WSVM,
WSV, and Messrs. Reid S. Walker, Patrick P. Walker and G. Stacy Smith possess
shared power to vote and to direct the disposition of the securities held by
the WSO Funds. Thus, for the purposes of Reg. Section 240.13d-3, (i) Messrs.
Reid S. Walker and G. Stacy Smith are deemed to beneficially own 1,255,879
Class A Common Shares, (ii) WS Capital and WSC Management are deemed to
beneficially own 1,096,579 Class A Common Shares, and (iii) WSVM, WSV, and Mr.
Patrick P. Walker are deemed to beneficially own 159,300 Shares. Each of the
reporting persons has expressly disclaimed membership in a group under
Section 13(d) of the Act and the rules and regulations thereunder with respect
to the Shares reported herein. Based upon information contained in a Schedule
13G filed with the Securities and Exchange Commission on February 14, 2008. |
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(7) |
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1346049 Ontario Limited (Holdco) is a parent holding company for
its operating subsidiaries, Trapeze Asset Management Inc. (TAMI), and
Trapeze Capital Corp. (TCC). TAMI is a Canadian investment adviser and is
also registered as an investment adviser under the Investment Advisers Act of
1940. TCC is a Canadian investment dealer. TAMI and TCC have sole voting and
dispositive power over 908,800 and 242,200 Class A Common Shares,
respectively. Randall Abramson serves as Director, Chief Executive Officer,
President, Secretary and Treasurer of Holdco; Director, President, Chief
Executive Officer, Secretary, Treasurer and Portfolio Manager of TAMI; and
Director, President, Portfolio Manager and Compliance Officer of TCC. Holdco
owns 100% of the outstanding voting stock of each of TCC and TAMI. Abramson
owns 82% of the outstanding capital stock of Holdco. Based upon information
contained in a Schedule 13G filed with the Securities and Exchange Commission
on February 6, 2008. |
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(8) |
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Artisan Partners Limited Partnership (Artisan Partners) is an
investment adviser registered under section 203 of the Investment Advisers Act
of 1940; Artisan Investment Corporation (Artisan Corp.) is the general
partner of Artisan Partners; ZFIC, Inc. (ZFIC ) is the sole stockholder of
Artisan Corp.; Andrew A. Ziegler and Carlene M. Ziegler are the principal
stockholders of ZFIC. Based on information contained in a Schedule 13G filed
with the Securities and Exchange Commission on February 13, 2008. |
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(9) |
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Wellington Management is an investment advisor and may be deemed to
beneficially own 1,021,300 Class A Common Shares on behalf of its clients.
Wellington Management reported it had shared voting power over 477,700 Class A
Common Shares and shared dispositive power over 1,021,300 Class A Common
Shares. Based on information contained in a Schedule 13G filed with the
Securities and Exchange Commission on February 14, 2008. |
The information with respect to beneficial ownership is based
upon information furnished by the
shareholder or information contained in filings made with the Securities and
Exchange Commission.
4
Security Ownership of Management
The following table sets forth, as of April 1, 2008, information with respect to our
Class A Common Shares owned beneficially by each director and director nominee
individually, by the executive officers named in the Summary Compensation Table of
this proxy statement and by all directors and executive officers as a group:
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Percentage of |
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Combined Voting |
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Number of Shares |
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Percentage of Shares |
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Power of All |
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Beneficially Owned(1) |
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Beneficially Owned(2) |
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Classes of |
Name |
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Class A |
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Class B |
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Class A |
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Class B |
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Common Stock |
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Elaine Eisenman |
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Deborah Ferrée |
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90,680 |
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* |
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* |
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Carolee Friedlander |
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9,342 |
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* |
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* |
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Peter Z. Horvath |
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130,680 |
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* |
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* |
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Joanna T. Lau |
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Kevin Lonergan |
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41,079 |
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* |
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* |
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Roger Markfield |
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Philip B. Miller |
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16,842 |
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* |
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* |
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Douglas J. Probst |
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51,140 |
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* |
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* |
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James D. Robbins |
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12,342 |
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* |
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* |
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Jay L. Schottenstein (3) |
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2,671,820 |
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14.1 |
% |
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1.1 |
% |
Harvey L. Sonnenberg |
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8,342 |
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* |
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* |
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Allan J. Tanenbaum |
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13,568 |
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* |
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* |
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Heywood Wilansky |
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25,000 |
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* |
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* |
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All directors and executive
officers as a group (16 persons) |
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3,103,114 |
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16.5 |
% |
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1.3 |
% |
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* |
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Represents less than 1% of outstanding common shares. |
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(1) |
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Except as otherwise noted, the persons named in this table have sole
power to vote and dispose of the shares listed. |
Includes the following number of Class A Common Shares as to which the named
person has the right to acquire beneficial ownership upon the exercise of stock
options and the amount of restricted shares that could be issued within 60 days
of April 1, 2008:
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Restricted Shares |
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Stock Options |
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that could be issued |
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Exercisable within 60 |
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within 60 days of |
Beneficial Owner |
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days of April 1, 2008 |
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April 1, 2008 |
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Deborah Ferrée |
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70,680 |
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Carolee Friedlander |
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6,342 |
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Peter Z. Horvath |
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100,680 |
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Kevin Lonergan |
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28,260 |
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Philip B. Miller |
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6,342 |
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Douglas J. Probst |
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46,640 |
|
|
|
|
|
James D. Robbins |
|
|
|
|
|
|
6,342 |
|
Jay L. Schottenstein |
|
|
19,120 |
|
|
|
|
|
Harvey L. Sonnenberg |
|
|
|
|
|
|
6,342 |
|
Allan J. Tanenbaum |
|
|
|
|
|
|
12,568 |
|
All directors and
executive officers as
a group (16 persons) |
|
|
295,660 |
|
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|
37,936 |
|
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|
|
(2) |
|
The percent is based upon 16,225,633 Class A Common Shares and
27,702,667 Class B Common Shares outstanding, plus the number of shares a person
has the right to acquire within 60 days of April 1, 2008. |
5
|
|
|
(3) |
|
Includes 350,000 Class A Common Shares held by family trusts and
2,302,600 Class A Common Shares that SSC has the right to acquire from Retail
Ventures pursuant to certain warrant agreements. As of April 1, 2008, Mr.
Schottenstein was the beneficial owner of approximately 78.4% of the outstanding
common shares of SSC. |
The information with respect to beneficial ownership is based upon
information furnished by each director,
director nominee or executive officer, or information contained in filings made with
the Securities and Exchange Commission.
6
ELECTION OF DIRECTORS
Our Board of Directors currently consists of ten members and is divided into three
classes, designated Class I, Class II and Class III. The members of the three
classes are elected to serve for staggered terms of three years. Pursuant to Section
2.02 of our Code of Regulations, the number of directors constituting each class will,
as nearly as practicable, be equal.
On March 13, 2008, in accordance with our Code of Regulations, the Board of Directors
increased the size of the Board from 7 to 10 directors and established a third class
of directors. The Board appointed Elaine J. Eisenman, Joanna T. Lau and Roger S.
Markfield to fill the Class III vacancies on the Board created by the increase in the
number of directors and to serve as directors until the 2008 Annual Meeting of
Shareholders.
At the Annual Meeting, three directors are nominated for election as Class III
directors with a term to expire in 2010 and four directors are nominated for election
as Class I directors with a term to expire in 2011. Each of the nominees for director
to be elected at the Annual Meeting currently serves as a director of the Company.
Ms. Eisenman, Ms. Lau and Mr. Markfield were first appointed to the Board on March 13,
2008 on the recommendation of the Nominating and Corporate Governance Committee. Each
of Ms. Eisenman, Ms. Lau and Mr. Markfield was recommended for consideration by the
Nominating and Corporate Governance Committee by the current Board members. The names
and ages of the Nominees and the Continuing Directors, their principal occupations
during the past five years and certain other information are listed below.
Nominees for Class I Directors for term to Expire in 2011:
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Our Directors and Their Positions with Us/ |
|
Director |
Name |
|
Age |
|
Principal Occupations / Business Experience |
|
Since |
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Carolee Friedlander*
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66 |
|
|
Ms. Friedlander
serves as a founding
partner of Circle
Financial Group, a
membership
organization that
provides wealth
management services,
and has held that
position since August
2004. From July 2001
to August 2004, Ms.
Friedlander served as
Senior Vice President
of Retail Brand
Alliance, Inc., and
as President and
Chief Executive
Officer of Carolee
Designs, Inc., a
subsidiary of Retail
Brand Alliance.
Prior to that Ms.
Friedlander served as
President and Chief
Executive Officer of
Carolee Designs, a
fashion accessory
company she founded
in 1973 and sold to
Retail Brand Alliance
in July 2001.
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2005 |
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Harvey L. Sonnenberg
|
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66 |
|
|
Mr. Sonnenberg has
been a partner in the
certified public
accounting firm,
Weiser, LLP since
November 1994. Mr.
Sonnenberg is active
in a number of
professional
organizations,
including the
American Institute of
Certified Public
Accountants and the
New York State
Society of Certified
Public Accountants,
and has long been
involved in rendering
professional services
to the retail and
apparel industry.
Mr. Sonnenberg is a
certified public
accountant. Mr.
Sonnenberg is a
director of Retail
Ventures.
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2005 |
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Allan J. Tanenbaum*
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61 |
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|
Mr. Tanenbaum
currently serves as
General Counsel and
Managing Partner of
Equicorp Partners,
LLC, an Atlanta-based
private investment
and advisory firm.
From February 2001 to
December 31, 2005,
Mr. Tanenbaum served
as Senior Vice
President, General
Counsel and Corporate
Secretary for AFC
Enterprises, Inc., a
franchisor and
operator of
quick-service
restaurants. From
June 1996 to February
2001, Mr. Tanenbaum
was a shareholder in
Cohen Pollock Merlin
Axelrod & Tanenbaum,
P.C., an Atlanta,
Georgia law firm,
where he represented
corporate clients in
connection with
mergers and
acquisitions and
other commercial
transactions.
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2005 |
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7
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Our Directors and Their Positions with Us/ |
|
Director |
Name |
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Age |
|
Principal Occupations / Business Experience |
|
Since |
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Heywood Wilansky
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60 |
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|
Mr. Wilansky has been
the President and
Chief Executive
Officer of Retail
Ventures since
November 2004. Before
joining Retail
Ventures, he served
as President and
Chief Executive
Officer of Filenes
Basement, a
subsidiary of Retail
Ventures, from
February 2003 to
November 2004. Mr.
Wilansky was a
professor of
marketing at the
University of
Maryland business
school from August
2002 to February
2003. From August
2000 to January 2003,
he was President and
Chief Executive
Officer of Strategic
Management Resources,
LLC. From August 1995
to July 2000, he was
President and Chief
Executive Officer of
Bon Ton Stores. Mr.
Wilansky is a
director of Retail
Ventures and
Bertuccis
Corporation.
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2005 |
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Nominees for Class III Directors for term to Expire in 2010:
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Our Directors and Their Positions with Us/ |
|
Director |
Name |
|
Age |
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Principal Occupations / Business Experience |
|
Since |
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Elaine J. Eisenman*
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59 |
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|
Dr. Eisenman currently
serves as Dean of Babson
Executive Education, the
division of Babson
College focused on
providing education,
consulting and applied
research in innovation
and leadership to
corporations and
executives. Dr. Eisenman
also is responsible for
the management of the
Babson Executive
Conference Center. Dr.
Eisenman has held senior
executive positions at
both public and private
companies such as
American Express, Enhance
Financial Services Co.,
The Childrens Place, and
private companies such as
PDI International, a
global consulting firm.
|
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2008 |
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Joanna T. Lau*
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49 |
|
|
Ms. Lau currently serves
as CEO of Lau
Technologies, an
executive consulting and
investment company
focused on providing debt
and equity financing and
consulting to mid-range
companies. Ms. Lau
founded Lau Technologies
in 1990 and has been
responsible for managing
all aspects of the
company from financing
growth to the quality of
the performance of the
products previously sold
by the company. Ms. Lau
held leadership positions
with Digital Equipment
Corporation and General
Electric before founding
Lau Technologies. Ms.
Lau is a member of the
Board of Directors of ITT
Education Services
(NYSE:ESI) since 2003 and
currently serves on the
Audit Committee. Ms. Lau
has served on the boards
of other public
companies, including TD
Banknorth and BostonFed
Bancorp, Inc.
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2008 |
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Roger S. Markfield
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65 |
|
|
Mr. Markfield is a
non-executive officer
employee of American
Eagle Outfitters
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2008 |
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|
(NYSE: AEO) and has served as a
Director of AEO since
March 1999. He served AEO
as Vice-Chairman from
November 2003 to February
2007, as President from
February 1995 to February
2006, and as Co-Chief
Executive Officer from
December 2002 to November
2003. Mr. Markfield also
served AEO and its
predecessors as Chief
Merchandising Officer
from February 1995 to
December 2002 and as
Executive Vice President
of Merchandising from May
1993 to February 1995.
Prior to joining AEO, he
served as Executive Vice
President-General
Merchandising Manager for
the Limited Stores
Division of Limited
Brands from May 1992 to
April 1993. From 1969 to
1976 and from 1979 to
1992, he was employed by
Macys Inc. in various
positions, beginning as a
Buyer in Boys Wear and
rising to President of
Corporate Buying-Mens.
From 1976 to 1979, Mr.
Markfield served as
Senior Vice President of
Merchandising and
Marketing for Gap. |
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8
Continuing Class II Directors:
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|
Our Directors and Their Positions with Us/ |
|
Director |
Name |
|
Age |
|
Principal Occupations / Business Experience |
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Since |
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Jay L. Schottenstein
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53 |
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|
Mr. Schottenstein serves
as our Chief Executive
Officer and Chairman of
the Board of Directors.
He was appointed as our
Chief Executive Officer
in March 2005. Mr.
Schottenstein became a
director of DSW in March
2005. He has been
Chairman of the Board of
Directors of Retail
Ventures, American Eagle
Outfitters, Inc. and SSC
since March 1992 and was
Chief Executive Officer
of Retail Ventures from
April 1991 to July 1997
and from July 1999 to
December 2000. Mr.
Schottenstein served as
Vice Chairman of SSC
from 1986 until March
1992 and as a director
of SSC since 1982. He
served in various
executive capacities at
SSC since 1976. Mr.
Schottenstein is also a
director of American
Eagle Outfitters, Inc.,
and Retail Ventures.
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2005 |
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Philip B. Miller*
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69 |
|
|
Mr. Miller is the
President of Philip B.
Miller Associates, a
consulting firm, and an
Operating Director of
Tri-Artisan Capital
Partners, a privately
held merchant bank, and
has held those positions
since July 2001. Mr.
Miller also serves on
the Board of Directors
of St. John Knits, a
position he has held
since December 2002. Mr.
Miller served as
Chairman and Chief
Executive Officer of
Saks Fifth Avenue, Inc.
from 1993 until January
2000 and continued as
Chairman of that company
until July 2001. From
1983 to 1990, Mr. Miller
served as Chairman and
Chief Executive Officer
of Marshall Fields, Inc.
Mr. Miller serves as a
director of Kellwood
Company.
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2005 |
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James D. Robbins*
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61 |
|
|
Mr. Robbins currently
holds a directorship in
Huntington Preferred
Capital, Inc., that he
has held since November
2001. Mr. Robbins also
serves as chairman of
the audit committee of
Huntington Preferred
Capital, Inc., which has
a class of securities
registered pursuant to
Section 12 of the
Exchange Act. From 1993
until his retirement in
June 2001, Mr. Robbins
served as Managing
Partner of the Columbus,
Ohio office of
PricewaterhouseCoopers
LLP. Mr. Robbins is a
certified public
accountant.
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2005 |
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* |
|
Independent Directors under New York Stock Exchange Rules.
|
Unless otherwise directed, the persons named in the proxy will vote the proxies FOR
the election of the above-named nominees as directors. While it is contemplated that
all nominees will stand for election, in the event any person nominated fails to stand
for election, the proxies will be voted for such other person or persons as may be
designated by the directors. Management has no reason to believe that any of the
above-mentioned persons will not stand for election or serve as a director.
Under Ohio law and our Code of Regulations, the nominees receiving the greatest number
of votes will be elected as directors. Shares as to which the authority to vote is
withheld are not counted toward the election of directors or toward the election of
the individual nominees specified on the proxy.
Your Board of Directors unanimously recommends a vote FOR each of the director
nominees named above.
9
EXECUTIVE OFFICERS
The following persons are our executive officers. Our officers are elected annually by
our Board and serve at the pleasure of the Board.
Jay L. Schottenstein, age 53, serves as our Chief Executive Officer and Chairman of
the Board of Directors. He was appointed as our Chief Executive Officer in March 2005.
Mr. Schottenstein became a director of DSW in March 2005. He has been Chairman of the
Board of Directors of Retail Ventures, American Eagle Outfitters, Inc. and SSC since
March 1992 and was Chief Executive Officer of Retail Ventures from April 1991 to July
1997 and from July 1999 to December 2000. Mr. Schottenstein served as Vice Chairman of
SSC from 1986 until March 1992 and as a director of SSC since 1982. He served in
various executive capacities at SSC since 1976. Mr. Schottenstein is also a director
of American Eagle Outfitters, Inc., which is a company with a class of securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934, or the
Exchange Act.
Deborah L. Ferrée, age 54, has served as our Vice Chairman and Chief Merchandising
Officer since January 2006. Ms. Ferrée joined us in November 1997. She served as our
President and Chief Merchandising Officer from November 2004 until January 2006. From
March 2002 until November 2004, she served as Executive Vice President and Chief
Merchandising Officer. Prior to that, she served as Senior Vice President of
Merchandising beginning in September 2000, and Vice President of Merchandising
beginning in October 1997. Prior to joining us, Ms. Ferrée worked in the retail
industry for more than 30 years in various positions, including serving as Divisional
Merchandising Manager of Shoes, Accessories and Intimate Apparel for Harris Department
Store, womens buyer for Ross Stores and Divisional Merchandise Manager of the May
Company.
Peter Z. Horvath, age 50, has served as our President since January 2006. From January
2005 until January 2006, Mr. Horvath served as our Executive Vice President and Chief
Operating Officer. He has extensive retail experience, having spent nineteen years
with the Limited Brands business. He has held numerous finance function roles within
various divisions of Limited Brands, most recently serving as Senior Vice President of
Merchandise Planning and Allocation for the entire Limited Brands enterprise from
April 2002 to August 2004. From February 1997 to April 2002, he served as Chief
Financial Officer for multiple apparel divisions of Limited Brands. From 1985 to
February 1997, Mr. Horvath held various positions with Limited Brands, including Vice
President Controller of Express, Inc. and Director of Financial Reporting for Limited
Stores.
Kevin M. Lonergan, age 59, serves as our Executive Vice President and Chief Operating
Officer. Prior to joining us in January 2006, Mr. Lonergan served as Vice President of
the West Zone for American Eagle Outfitters, beginning in January 2004, where he was
responsible for 397 stores in 30 states. Prior to that time, Mr. Lonergan served as
Executive Vice President and Chief Operating Officer of Old Navy, a division of Gap,
Inc., where he oversaw all store operations and helped build the newly formed Old Navy
division from its inception in 1993. Prior to serving in that capacity, Mr. Lonergan
held executive positions at various divisions of Gap, Inc., Target and Carson Pirie
Scott. Mr. Lonergan has over 35 years of business experience in all phases of retail,
including department stores, specialty and mass merchandising, and has been
responsible for many areas of business, including stores, operations, finance, real
estate, human resources, systems, and customer service.
Harris Mustafa, age 54, serves as our Executive Vice President, Supply Chain and
Merchandise Planning and Allocation. Prior to joining us in July 2006, Mr. Mustafa
served as Executive Vice President, Private Brand and Product Development from August
2004 to June 2006 at Saks Department Store Group. Prior to serving in that capacity,
he served as their Senior Vice President, Planning and Operations, Private Brand Group
from October 2003 to August 2004. From May 2002 to March 2003, Mr. Mustafa served as
Senior Vice President Business Planning for Williams-Sonoma, Inc. Prior to serving in
that capacity, Mr. Mustafa served in various executive positions at Payless
ShoeSource, Inc. from 1987 to 2001.
Douglas J. Probst, age 43, serves as our Executive Vice President, Chief Financial
Officer and Treasurer. Mr. Probst joined DSW in March 2005. From April 1990 to
February 2005, he held various positions with Too Inc., a company spun-off from The
Limited, Inc., including Vice President of Finance and Controller from May 2004 to
February 2005, Vice President Finance from October 2003 to May 2004 and Vice President
10
Financial Analysis and Store Control from December 1999 to October 2003. From August
1986 to March 1990, he was in the practice of public accounting with KPMG. Mr. Probst
is a certified public accountant.
Derek Ungless, age 59, serves as our Executive Vice President and Chief Marketing
Officer, a position he has held since June 2005. From April 2002 to May 2005, he was
Executive Vice President of Marketing for Express, part of Limited Brands. Mr. Ungless
was Senior Vice President and Head of Global Brand Design of the Estee Lauder brand,
part of Estee Lauder Companies Inc. from September 2000 until November 2001 and was
Executive Vice President and Creative Director of Brooks Brothers from October 1997
until September 2000. Mr. Ungless has over twelve years of experience working in the
retail industry.
11
OTHER DIRECTOR INFORMATION, COMMITTEES OF DIRECTORS AND CORPORATE GOVERNANCE INFORMATION
General
A total of four meetings of the Board of Directors were held during fiscal 2007, and
the Board took action by unanimous written consent one time during fiscal 2007. No
director attended less than 75 percent of the aggregate of (i) the total number of
meetings of the Board of Directors held during the time in which such director was a
member of the Board of Directors and (ii) the total number of meetings held by all
committees of the Board of Directors on which that director served during the period
each director served as a member of such committee.
There are no family relationships among our directors and executive officers.
Our Corporate Governance Principles provide that all incumbent directors and director
nominees are encouraged to attend our Annual Meeting of Shareholders. All seven of
our directors then in office attended our 2007 Annual Meeting of Shareholders.
Corporate Governance Principles
In June 2005, the Board of Directors adopted Corporate Governance Principles that
address Board structure, membership (including nominee qualifications), performance,
operations and management oversight. The Corporate Governance Principles were last
amended in March 2008. A current copy of our Corporate Governance Principles can be
found at our corporate and investor website at www.dswinc.com and is available
in print (without charge) to any shareholder upon request.
The Board of Directors meets in regularly scheduled executive sessions (without
management present). The Board of Directors does not have a designated director who
leads executive sessions held by the independent directors. The non-management
directors alternate as the chair of such executive sessions in alphabetical order by
last name.
Director Independence
Our director independence standards are set forth in our Corporate Governance
Principles, a copy of which can be found at our corporate and investor website at
www.dswinc.com. The Corporate Governance Principles provide that the Board of
Directors goal is that a majority of the directors should be independent directors.
A director will be designated as independent if he or she:
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has no material relationship with us or our subsidiaries; |
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satisfies the other criteria specified by New York Stock Exchange listing
standards; |
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has no business conflict with us or our subsidiaries; and |
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otherwise meets applicable independence criteria specified by law,
regulation, exchange requirement or the Board of Directors. |
During its review of director independence, the Board considered whether there were
any transactions or relationships between the Company and any director or any member
of his or her immediate family (or any entity of which a director or an immediate
family member is an executive officer, general partner or significant equity holder).
As a result of this review, the Board of Directors has affirmatively determined that
the following persons are independent under our independence standards:
Elaine Eisenman
Carolee Friedlander
Joanna T. Lau
Philip B. Miller
James D. Robbins
Allan J. Tanenbaum
12
Our Board of Directors has a Nominating and Corporate Governance Committee, a
Compensation Committee and an Audit Committee, all of which are comprised solely of
independent directors as defined under applicable Securities and Exchange Commission
rules and the listing standards of the New York Stock Exchange.
Nominating and Corporate Governance Committee
The members of our Nominating and Corporate Governance Committee are Messrs. Tanenbaum
(Chair), Miller, Robbins, and Ms. Friedlander, each of whom is independent as
discussed above. A current copy of our the Nominating and Corporate Governance
Committee charter can be found on our corporate and investor website at
www.dswinc.com and is available in print (without charge) to any shareholder
upon request.
The Nominating and Corporate Governance Committee met five times during fiscal 2007.
Its functions include assisting the Board in determining the desired qualifications of
directors, identifying potential individuals meeting those qualification criteria,
proposing to the Board a slate of nominees for election by the shareholders and
reviewing candidates nominated by shareholders. In addition, the Committee also
reviews the Corporate Governance Principles, makes recommendations to the Board with
respect to other corporate governance principles applicable to us, oversees the annual
evaluation of the Board and management, and reviews management and Board succession
plans.
The Nominating and Corporate Governance Committee meets to discuss, among other
things, identification and evaluation of potential candidates for nomination as a
director. Although there are no specific minimum qualifications that a director
candidate must possess, potential candidates are identified and evaluated according to
the qualification criteria set forth in the Boards Corporate Governance Principles,
including:
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independence; |
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judgment; |
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skill; |
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diversity; |
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strength of character; |
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age; |
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experience as an executive of, or advisor to, a publicly traded or private
organization; |
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experience and skill relative to other Board members; |
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specialized knowledge or experience; |
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service on other boards; and |
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desirability of the candidates membership on the Board or any committees
of the Board. |
The Nominating and Corporate Governance Committee will consider nominees recommended
by shareholders for the 2009 Annual Meeting of Shareholders, provided that the names
of such nominees are submitted in writing, not later than January 1, 2009, to DSW, 810
DSW Drive, Columbus, Ohio 43219, Attn: Corporate Secretary. Each such submission
must include:
As to the nominee:
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name, age, business address and residence address; |
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principal occupation or employment; |
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the class and number of DSW shares beneficially owned; and |
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any other information relating to the nominee that is required to be
disclosed in solicitations for proxies for election of directors pursuant to
Regulation 14A under the Exchange Act; and |
As to the shareholder giving the notice:
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name and record address; and |
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the class and number of our shares beneficially owned. |
Such notice shall be accompanied by a consent signed by the nominee evidencing a
willingness to serve as a director, if nominated and elected, and a commitment by the
nominee to meet personally with the Nominating and Corporate Governance Committee
members.
13
Other than the submission requirements set forth above, there are no differences in
the manner in which the Nominating and Corporate Governance Committee evaluates a
nominee for director recommended by a shareholder.
Compensation Committee
The members of our Compensation Committee are Messrs. Miller (Chair), Robbins and
Tanenbaum and Ms. Friedlander. Each member of the Compensation Committee is
independent as discussed above. None of the members of the Compensation Committee are
present or former officers of our Company, nor are they or any of their affiliates, if
any, parties to agreements with us.
A current copy of our Compensation Committee charter can be found on our corporate and
investor website at www.dswinc.com and is available in print (without charge)
to any shareholder upon request.
Our Compensation Committee met six times during fiscal 2007. The Compensation
Committees functions include evaluating the Chief Executive Officers performance
and, based upon these evaluations, setting the Chief Executive Officers annual
compensation; reviewing and approving the compensation packages of our other executive
officers; making recommendations to the Board with respect to our incentive
compensation, retirement and other benefit plans; making administrative and
compensation decisions under such plans; and recommending to the Board the
compensation for non-employee Board members. See the Compensation Discussion and
Analysis below for a more complete description of the Compensation Committees
deliberations and decisions relating to executive compensation, including the
Committees retention of a compensation consultant and the role of our executive
officers in determining executive compensation.
Audit Committee
The members of our Audit Committee are Messrs. Robbins (Chair), Miller and Tanenbaum
and Ms. Friedlander. The Board of Directors has determined that each of them is
independent and is financially literate in accordance with the applicable Securities
and Exchange Commission rules and listing standards of the New York Stock Exchange.
The Board has also determined that our Audit Committees Chairman, James D. Robbins,
qualifies as an audit committee financial expert as such term is defined by the
Securities and Exchange Commission under Item 401(h) of Regulation S-K.
A current copy of our Audit Committee charter can be found on our corporate and
investor website at www.dswinc.com and is available in print (without charge)
to any shareholder upon request.
Our Audit Committee met five times during fiscal 2007. The purpose of our Audit
Committee is to assist the Board of Directors in fulfilling its oversight
responsibilities of:
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the integrity of our financial statements; |
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compliance with legal and regulatory requirements; |
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the independent auditors qualifications and independence; and |
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performance of our internal audit function and independent auditor. |
The Audit Committee is directly responsible for the appointment, compensation,
retention, termination and oversight of the work of our independent auditor,
including resolution of disagreements between management and the independent auditor
regarding financial reporting.
No member of the Audit Committee is currently serving on the audit committees of more
than three public companies.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers and persons who are beneficial owners of more than ten percent of
our common shares (reporting persons) to file reports of ownership and changes of
ownership with the Securities and Exchange Commission and the New York Stock Exchange.
We assist our directors and executive officers in completing and filing those reports.
Based upon a
14
review of those reports furnished to us and representations of our
directors and executive officers, we believe that all filing requirements applicable to
our directors, executive officers and greater than ten percent beneficial owners were
complied with during the last completed fiscal year.
Code of Ethics and Corporate Governance Information
We have adopted a code of ethics that applies to all our officers and employees,
including our principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions, and an
additional code of ethics that applies to senior financial officers. Additionally,
the Board of Directors has adopted a Director Code of Conduct applicable to our Board
members. These codes of ethics, designated as the Code of Conduct, the Code of
Ethics for Senior Financial Officers, and the Director Code of Conduct,
respectively, by us can be found on our investor website at www.dswinc.com and
are available in print (without charge) to any shareholder upon request. We intend to
disclose any amendment to, or waiver from, any applicable provision of the Code of
Conduct, Code of Ethics for Senior Financial Officers, or Director Code of Conduct (if
such amendment or waiver relates to elements listed under Item 406(b) of Regulation
S-K and applies to our directors, principal executive officer, principal financial
officer, principal accounting officer or controller, or persons performing similar
functions) by posting such information on our corporate and investor website at
www.dswinc.com.
15
AUDIT AND OTHER SERVICE FEES
Our Audit Committee has adopted a policy under which audit and non-audit services to
be rendered by our independent registered public accountants are pre-approved. The
pre-approval policy is designed to assure that the provision of such services does not
impair the independence of our independent registered public accounting firm and is
summarized below.
|
|
|
Delegation The Audit Committee may delegate pre-approval authority to
one or more of its independent members provided that the member(s) to whom
such authority is delegated promptly reports any pre-approval decisions to
the other Audit Committee members. The Audit Committee has not delegated to
management its responsibilities to pre-approve services performed by the
independent registered public accounting firm. |
|
|
|
|
Audit Services Annual audit, review and attestation engagement terms and
fees are subject to the specific pre-approval of the Audit Committee. Any
changes in the terms, conditions or fees resulting from changes in the audit
scope requires the Audit Committees approval. |
|
|
|
|
Other Services Unless a type of service to be provided by the
independent registered public accounting firm has received general
pre-approval, it will require specific pre-approval by the Audit Committee. |
|
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|
Tax Services The Audit Committee believes that our independent
registered public accounting firm can provide tax services to us such as tax
compliance and certain tax advice without impairing its independence. In no
event, however, will the independent registered public accounting firm be
retained in connection with a transaction initially recommended by the
independent registered public accounting firm, the purpose of which may be
tax avoidance and the tax treatment of which may not be supported in the
Internal Revenue Code and related regulations or similar regulations of other
applicable jurisdictions. |
No services were provided by the independent public accountants during fiscal 2007 or
fiscal 2006 that were approved by the Audit Committee under Securities and Exchange
Commission Regulation S-X Section 2-01(c)(7)(i)(C) (which addresses certain services
considered de minimis and may be approved by the Committee after such services have
been performed).
The following table sets forth the aggregate fees for professional services rendered
by Deloitte & Touche LLP, our independent registered accountants, for each of the last
two fiscal years.
|
|
|
|
|
|
|
|
|
|
|
2007 |
|
2006 |
Audit fees (1) |
|
$ |
870,396 |
|
|
$ |
1,099,699 |
|
Audit-related fees |
|
|
|
|
|
|
|
|
Tax fees |
|
|
|
|
|
|
|
|
All other fees |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
870,396 |
|
|
$ |
1,099,699 |
|
|
|
|
(1) |
|
Includes services rendered for the audit of our annual financial
statements, review of financial statements included in our quarterly reports on Form
10-Q, and other audit services normally provided by Deloitte & Touche LLP in
connection with statutory and regulatory filings or engagements. Also includes
$425,896 and $684,095 for fiscal 2007 and fiscal 2006, respectively, representing our
allocation of audit fees under our shared service agreement with Retail Ventures. |
16
AUDIT COMMITTEE REPORT
The members of our Audit Committee are Messrs. Robbins (Chair), Miller and Tanenbaum
and Ms. Friedlander. The Board of Directors has determined that each of them is
independent and is financially literate in accordance with the applicable Securities
and Exchange Commission rules and listing standards of the New York Stock Exchange.
The Board of Directors has also determined that our Audit Committees Chairman, James
D. Robbins, qualifies as an audit committee financial expert as such term is defined
by the Securities and Exchange Commission under Item 401(h) of Regulation S-K.
Although our Board of Directors has determined that Mr. Robbins is a financial expert
as defined under Securities and Exchange Commission rules, his responsibilities are
the same as those of other Audit Committee members. The Securities and Exchange
Commission has determined that an audit committee financial expert will not be deemed
an expert for any purpose as a result of being identified as an audit committee
financial expert.
The Audit Committee operates under a written charter, which is available on our
corporate and investor website at www.dswinc.com and is available in print
(without charge) to any shareholder upon request. Under the charter, the Audit
Committees responsibilities include:
|
|
|
Review of our annual financial statements to be included in our Annual
Report on Form 10-K and recommendation to the Board of Directors whether the
audited financial statements should be included in our Annual Report on Form
10-K; |
|
|
|
|
Review of our quarterly financial statements to be included in our
Quarterly Reports on Form 10-Q; |
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|
Oversight of our relationship with our independent auditors, including: |
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|
Appointment, termination and oversight of our independent auditors; and |
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|
Pre-approval of all auditing services and
permitted non-audit services by our independent auditors; |
|
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|
Oversight of our internal controls; |
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|
Oversight of the review and response to complaints made to us regarding
accounting, internal accounting controls and auditing matters or other
compliance matters; |
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|
Oversight of our internal audit function; and |
|
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|
Review and approval of related party transactions. |
Our management is responsible for our internal controls and preparing our consolidated
financial statements. Our independent registered public accounting firm, Deloitte &
Touche LLP, is responsible for performing an independent audit of the consolidated
financial statements and issuing a report thereon. Their audit is performed in
accordance with the standards of the Public Company Accounting Oversight Board. The
Audit Committee is responsible for overseeing the conduct of these activities. In
performing its oversight function, the Audit Committee relies, without independent
verification, on the information provided to it and on representations made by our
management and our independent registered public accounting firm.
In conducting its oversight function, the Audit Committee discusses with our internal
auditors and our independent registered public accounting firm, with and without
management present, the overall scope and plans for their respective audits. The Audit
Committee also reviews our programs and key initiatives to design, implement and
maintain effective internal controls over financial reporting and disclosure controls.
The Audit Committee has sole discretion, in its areas of responsibility and at our
expense, to engage independent advisors as it deems appropriate and to approve the
fees and retention terms of such advisors.
The Audit Committee meets with the internal auditors and independent registered public
accounting firm, with and without management present, to discuss the results of their
audits, the evaluations of our internal controls and the overall quality of our
financial reporting. The Audit Committee has reviewed and discussed with management
and Deloitte & Touche LLP the audited financial statements for the fiscal year ended
February 2, 2008. The Audit Committee also reviewed and discussed with Deloitte &
Touche LLP its report on our annual financial statements.
17
The Audit Committee discussed with Deloitte & Touche LLP the matters required to be
discussed by Statement on Auditing Standards No. 61 (Communications with Audit
Committees), as adopted by the Public Company Accounting Oversight Board in Rule
3200T. In addition, the Audit Committee discussed with Deloitte & Touche LLP its
independence from management, and the Audit Committee has received from Deloitte &
Touche LLP the written disclosures required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees), as adopted by the Public
Company Accounting Oversight Board in Rule 3600T.
Based on its review of the audited consolidated financial statements and discussions
with management and Deloitte & Touche LLP referred to above, the Audit Committee
recommended to the Board the inclusion of the audited financial statements for the
fiscal year ended February 2, 2008 in our Annual Report on Form 10-K for filing with
the Securities and Exchange Commission.
Respectfully submitted,
Audit Committee
James D. Robbins, Chair
Carolee Friedlander
Philip B. Miller
Allan J. Tanenbaum
18
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis describes the material compensation
decisions and elements for DSWs executive team. As more fully described below, the
Compensation Committee of DSWs Board of Directors (the Committee) makes all
compensation decisions for DSWs executive officers, including the executive officers
named in the Summary Compensation Table below (the Named Executive Officers) as
follows:
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Jay L. Schottenstein Chairman and Chief Executive Officer; |
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|
Deborah L. Ferrée Vice Chairman and Chief Merchandising Officer; |
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|
Peter Z. Horvath President; |
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|
Douglas J. Probst Executive Vice President, Chief Financial Officer and
Treasurer; and |
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|
Kevin M. Lonergan Executive Vice President and Chief Operating Officer. |
Executive Compensation Philosophy & Objectives
The Committee believes that executive compensation packages should incorporate an
appropriate balance of fixed versus variable compensationas well as cash-based
versus stock-based compensationand reward performance that is measured against
established goals that correspond to our short-term and long-term business plan and
objectives.
DSWs executive compensation program is designed to:
|
(1) |
|
Attract and retain highly talented, experienced retail executives
who can make significant contributions to our long-term business success.
Specifically, we structure our compensation program to attract and keep
executives we believe are critical to the implementation of our business strategy
to: |
|
|
|
Anticipate the desires of our brand-, quality- and style-conscious
customers who have a passion for footwear and accessories and provide them
with a vast, exciting selection of in-season styles combined with the
convenience and value they desire; |
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Create a distinctive store experience that satisfies both the rational and
emotional shopping needs of our customers; and |
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Execute on a growth strategy to increase total net sales through DSW store
expansion while maintaining positive comparable store sales growth for DSW
stores, particularly as we intend to open at least 30 stores per year during
the next four fiscal years. |
At DSW, we believe we have assembled an experienced and talented executive team
with a proven track record of delivering growth results.
Mr. Schottenstein, our CEO, is a seasoned retail industry executive who provides
strategic leadership to DSWs senior executive team and guidance and insight
around our key growth initiatives. Ms. Ferrée, our Vice Chairman and Chief
Merchandising Officer, and Mr. Horvath, our President, provide daily leadership to
DSWs executive team. Additionally, Ms. Ferrée oversees a merchandising team that
is focused on continually delivering a broad selection of fresh and current
merchandise into our stores at price points that appeal to consumers from a broad
range of socioeconomic and demographic backgrounds. In addition to providing
daily business leadership, Mr. Horvath oversees all aspects of our business
operations. Mr. Lonergan, our Chief Operating Officer, has over 30 years of
retail industry experience and occupies a critical leadership role in creating the
distinctive store experience that is integral to our long-term business success.
Mr. Lonergan also leads our real estate and store construction functions.
Finally, Mr. Probst, our Chief Financial Officer, provides daily leadership to a
finance function that plays a critical role in ensuring the availability of the
investment capital necessary to deliver on our growth strategy. We believe that
our current senior executive team possesses a proven ability to develop and
execute merchandising, customer, real estate and infrastructure strategies. As a
result, we believe our compensation program must incentivize and reward their
efforts and also serve to keep their services with DSW, thus allowing us to
compete in attracting, developing and retaining talent to support the continued
growth of DSW.
19
|
(2) |
|
Reward executives for delivering superior performance. The
Committee regularly reviews executive compensation packages to ensure a proper
balance between fixed and variable compensation with more of the focus on, and
potential reward to the executive for, achievement of short- and long-term
performance goals. This was true for 2007 in aggregate, the Named Executive
Officer compensation opportunity consisted of approximately 34% fixed
compensation (base salary and cash perquisite allowance) and approximately 66%
variable compensation (annual cash incentive compensation and long-term equity
compensation). The Committee believed this was an appropriate balance given the
current focus and goals of the Company. |
|
|
(3) |
|
Create a strong link among the interests of shareholders, DSWs
financial performance and the total compensation of executives, and align
executive incentives with shareholder value creation. The Committee believes
targeting above-median long-term equity award levels (as discussed below) is
appropriate for DSW, a growth company, during a critical growth phase. As a
result, the Committee annually awards equity, generally in the form of stock
options and restricted stock units, to the Named Executive Officers based, in
part, on DSWs financial performance. Such grants also strongly align these
officers interests with the interests of our shareholders as each are focused on
the same result value creation. |
Setting Executive Compensation
Based on the objectives described above, the Committee has structured DSWs executive
compensation programs primarily to motivate executives to achieve the business goals
established by DSW and reward executives for meeting business goals, and perhaps more
importantly, delivering superior performance as measured against those business goals.
For 2007, the Committee engaged Hewitt Associates, a global human resources
consulting firm, to conduct a review of its total compensation program for the Named
Executive Officers as well as for other company executives. As requested by the
Committee, Hewitt provided the Committee with market data from proprietary databases
to consider when making compensation decisions for our Named Executive Officers.
While Hewitt was engaged directly by the Committee, Hewitt also provided similar input
to company management to support compensation recommendations and decisions made for
company executives who are not Named Executive Officers.
In making compensation decisions for executive officers in fiscal 2007, including the
Named Executive Officers, the Committee compared each officers compensation against
market compensation benchmarks drawn from a peer group of publicly-traded and
privately-held retail industry companies (collectively, the Comparator Group). With
input from Hewitt, the Committee ensured the Comparator Group consisted of
appropriately-sized companies against which the Committee believes DSW competes for
talent and shareholder investment. The companies included in the Comparator Group for
2007 were:
Ann Taylor Stores Corporation
Brown Shoe Company, Inc.
Eddie Bauer, Inc.
Home Decorators Collection
Lillian Vernon Corporation
Neiman Marcus
Pacific Sunwear of California, Inc.
Pier 1 Imports, Inc.
Stein Mart, Inc.
Belk, Inc.
Charming Shoppes, Inc.
Fingerhut Companies, Inc.
Home Interiors and Gifts
Linens n Things, Inc.
Norm Thompson Outfitters, Inc.
Payless ShoeSource, Inc.
Redcats USA
The Timberland Company
The Bon Ton Stores, Inc.
Dicks Sporting Goods, Inc.
Goodys Family Clothing, Inc.
L.L. Bean Incorporated
Mervyns
Oriental Trading Company, Inc.
Phillips-Van Heusen Corporation
Sports Authority, Inc.
Williams-Sonoma, Inc.
DSWs revenue is slightly below the median revenue of the Comparator Group companies.
Thus, in making comparisons between DSW pay levels and Comparator Group pay levels,
the Committee looked at both the raw tabular data for the Comparator Group companies
as well as adjusted data for the Comparator Group companies based on regression
analysis, provided by Hewitt, that accounts for differences between DSWs revenues and
median revenues of the Comparator Group companies.
The pay elements used for comparison purposes are target total cash compensation
(consisting of base salary and annual cash incentive compensation) and long-term
equity incentive compensation. Generally, the Committee targets Named Executive
Officer pay to fall between the 50th and 75th percentiles of Comparator Group data for
both total cash compensation and long-term incentive compensation. This pay objective
reflects the fact that DSW is a growth company and executives with the skills and
experience necessary to deliver contributions that will significantly impact DSWs
long-term business success and intended growth pattern
20
command a premium in the marketplace. These objectives also recognize the Committees
expectation that, over the long term, the Company will generate shareholder returns in
excess of the average of its Comparator Group. Variations to this pay objective may
occur as dictated by the experience level of the individual and market factors.
In addition, for Named Executive Officers where comparison data was available in 2007,
the Committee also evaluates the actual pay of the Named Executive Officer with pay
data drawn from proxy-disclosed pay information for the following publicly-traded
companies:
Brown Shoe Company, Inc.
Genesco, Inc.
Hot Topic, Inc.
Pacific Sunwear of California
Stein Mart, Inc.
Childrens Place Retail Stores
Finish Line, Inc.
Guitar Center, Inc.
The Mens Wearhouse, Inc.
Pier 1 Imports, Inc.
For fiscal 2007, the compensation paid to the Named Executive Officers was reviewed
pursuant to this company group (in addition to the Comparator Group above). By
looking at this proxy-disclosed information, as reviewed and summarized for the
Committee by Hewitt, the Committee was able to analyze the relation between
performance and the resulting pay delivered.
Finally, the Committee takes into consideration a review of each Named Executive
Officers compensation relative to the other Named Executive Officers, taking into
account each officers performance and impact on DSWs business results.
Role of Executive Officers in Compensation Decisions
The Committee makes all compensation decisions for DSWs Named Executive Officers
based upon input provided by certain members of company management, as discussed under
DSWs 2007 Executive Compensation Elements below, and the objective market data
provided by Hewitt. The Committee can exercise its discretion and modify any
recommendations that may be provided by company management and the independent
compensation consultant. Company management does not provide input in determining the
compensation of the Chief Executive Officer, which is determined solely by the
Compensation Committee.
DSWs 2007 Executive Compensation Elements
For the fiscal year ended February 2, 2008, the total compensation opportunity for
DSWs executives (including the Named Executive Officers) was generally comprised of
the following principal components:
|
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base salary; |
|
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|
|
performance-based annual cash incentive compensation; |
|
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|
long-term equity incentive compensation in the form of service-based stock
options and restricted stock units; and |
|
|
|
|
retirement savings contributions through the 401(k) plan. |
Base Salary
While the Committees focus is on variable compensation based on performance, a clear
objective of our executive compensation program is to pay a base salary that is
competitive with the stated Comparator Group in order to retain our Named Executive
Officers. The base salaries of all DSW executives (including the Named Executive
Officers) are determined based on job responsibilities and individual contribution,
and with reference to the considerations set forth below. Salary bands are designed
so that the salary opportunity for a given position generally falls between 80% and
140% of the base salary midpoint established for that position.
In March each year, the Committee determines the base salary of each Named Executive
Officer for the next year. During its review, the Committee primarily considers:
21
|
|
|
overall DSW financial performance during the prior year; |
|
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|
|
the individual performance of the Named Executive Officer in the prior
year; |
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|
the target total cash compensation level of the appropriate benchmark
position(s) as reflected in Comparator Group data; |
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base salary data drawn from publicly-available proxy statement information
where available; and |
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|
|
|
if relevant, compensation paid by a previous employer. |
In March 2007, the Committee decided to keep Mr. Schottensteins annual base salary
unchanged at $500,000. Mr. Schottenstein reviewed with the Committee overall DSW
performance for fiscal year 2006 and the performance of Ms. Ferrée and Mr. Horvath.
Based upon the duties and responsibilities of Ms. Ferrée and Mr. Horvath in fiscal
2006, DSWs overall performance and their individual performance against
pre-established individual objectives, and each executives pay relative to applicable
benchmark data for the Comparator Group companies, the Committee decided to increase
the base salary of Mr. Horvath by 18%. Ms. Ferrées base salary was increased by 2.5%
pursuant to the terms of her employment agreement with DSW.
Mr. Horvath reviewed with the Committee the accomplishments and contributions made by
each senior manager under his supervision and provided his proposed base salary
changes. Mr. Horvath noted that under Mr. Probsts leadership, DSWs net income grew
by 76%, and cash and short-term investments grew by 38% during fiscal year 2006.
Based upon Mr. Horvaths recommendation, and upon the Committees individual review
and analysis of compensation paid by Comparator Group companies for the comparable
position, the Committee decided to increase the base salary of Mr. Probst 7%.
Pursuant to the terms of his employment agreement with DSW, Mr. Lonergans base salary
was increased by 2.5%.
Performance-Based Annual Cash Incentive Compensation
The DSW Inc. 2005 Cash Incentive Compensation Plan (the ICP) was approved by DSWs
shareholders in 2005. The ICP gives the Committee the ability to foster and promote
the financial success of the Company and increase shareholder value by providing cash
incentives to the Named Executive Officers based on the achievement of specified
annual business objectives. The ICP is designed to promote the achievement of annual
performance goals and focuses the Named Executive Officers on short-term objectives
which ultimately will contribute to the likelihood of achieving long-term business
objectives and increase shareholder value. Under the ICP, Named Executive Officers
earn annual cash incentives only when pre-established business objectives and targets
are achieved. The Company currently has approximately 520 associates who are eligible
to receive awards under the ICP. The Named Executive Officers are generally treated
the same as all other eligible DSW associates under the ICP.
In the first quarter of each year, the Committee establishes the performance criteria
that will be used to determine incentive compensation awards for that year. Company
associates who participate in the plan have incentive levels that vary based on the
individuals position and contribution to business performance. Target award
opportunities are established as a percentage of base salary and range from 80% to
100% of base salary for the Named Executive Officers. Mr. Schottenstein is not
eligible to earn annual cash incentive compensation under the ICP. The target award
opportunities for Ms. Ferrée and Messrs. Horvath, Probst and Lonergan were 100%, 100%,
80% and 80%, respectively, and were established based on market data provided by the
independent compensation consultant and the scope of the leadership positions the
executives occupy in the DSW business.
For fiscal 2007, the Committee determined that 100% of each Named Executive Officers
annual cash incentive compensation award would be based upon DSWs net income
performance as reported in DSWs financial statements. The Committee believed net
income was the most relevant metric to our existing growth plan and aligns with the
growth objective we share with investors. Additionally, net income is publicly
disclosed in our financial statements and provides transparency to all ICP
participants.
In March 2007, the Committee established a net income target for fiscal year 2007 of
$73.6 million reflecting 12% growth over net income for the prior year. The
Committee also determined that no participant (including each Named Executive Officer)
would receive a payout unless DSW achieved at least $67.0 million in net income. All
associates who participate in the plan (including the Named Executive Officers)
received:
22
|
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|
no payment unless the Company achieved $67.0 million of net income
(approximately 91% of the target net income level established); |
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a payment of at least 50% but less than 100% of the target award
opportunity if the Company achieved or exceeded $67.0 million of net income
but did not achieve $73.6 million of net income; |
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|
a payment of at least 100% but less than 200% of the target award
opportunity if the Company achieved or exceeded $73.6 million of net income
but did not achieve $86.4 million of net income; and |
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|
|
a payment of 200% of the target award opportunity if the Company achieved
or exceeded $86.4 million of net income (approximately 117% of the target net
income level). |
In making the annual determination of the minimum, target and maximum net income
levels, the Committee may consider specific circumstances facing the company during
the prior and subsequent years. For example, in fiscal 2007, the Committee based the
target net income level on growth from fiscal 2006, but noted the effect of a
53rd week of sales in fiscal 2006. As a result, fiscal 2007 target net
income of $73.6 million was 12% higher than fiscal 2006 reported net income of $65.5
million. Generally, the Committee sets the minimum, target and maximum levels such
that the relative difficulty of achieving the target level is consistent from year to
year.
DSWs fiscal 2007 performance led to no payout of awards under the ICP.
Long-Term Equity Incentive Compensation
The DSW Inc. 2005 Equity Incentive Plan (the Equity Plan) was approved by our
shareholders in 2005. The Equity Plan generally furthers the Committees objectives
to retain its executives as well as build a link between executive compensation and
shareholder interests and objectives. All equity awards are granted in respect to
DSWs Class A Common Stock.
DSWs executive compensation philosophy generally calls for grants of both
service-based stock options and restricted stock units to executives (Vice President
and above) including the Named Executive Officers. As discussed above, in determining
the value of annual long-term equity incentive grants for DSW executives, the
Committees overall objectiveconsistent with the executive compensation
philosophyis to target the combined grant value of stock options and restricted
stock units to fall between the 50th and 75th percentile of Comparator Group long-term
incentive data. The Committee believes targeting above-median long-term incentive
levels is appropriate for a growth company that is seeking to create a compelling
value proposition during a critical growth phase. Furthermore, the Committee believes
that an above-median long-term equity incentive target is necessary to attract and
retain executives with the skills and experience necessary to deliver contributions
that will significantly impact DSWs long-term business success and intended growth
pattern.
In addition, long-term equity incentive grants to the Named Executive Officers are
based on each individuals (i) scope of job responsibilities, (ii) assessment of past
performance and (iii) assessment of potential future contribution.
Historically, the value of long-term equity incentive awards is typically delivered to
executives 70% in stock options and 30% in restricted stock units. The Committee
believes that delivery in this form provides an appropriate incentive to the
leadership team to focus on long-term shareholder value creation and, at the same
time, provides the Company with the retention value necessary in a competitive labor
market. As explained below, however, the Committee may periodically determine to vary
this mix. The value delivered in stock options is converted to a number of shares
using the same fair value methodology the Company uses in determining accounting
expense under Statement of Financial Accounting Standards (SFAS) 123R (FAS 123(R)).
The value delivered in restricted stock units is divided by the grant date share price
and adjusted based on an assumed forfeiture rate to calculate the total number of
common shares to be delivered once all vesting requirements are satisfied.
Stock Options
Stock options provide executives with financial gain derived from the potential
appreciation in the DSW share price between the awards grant date and the date the
executive elects to exercise the option. As a result,
23
DSWs long-term financial performance, as reflected in share price appreciation, ultimately determines the
value of stock options. Because financial gain from stock options is only possible
after the price of DSW common stock has increased, the Company believes grants
encourage executives to focus on behaviors and initiatives that should lead to an
increase in the DSW share price, thus benefiting both company associates and
shareholders. Generally, stock options vest annually in equal installments over the
five years following the grant date.
Restricted Stock Units (RSUs)
RSUs provide the company with retention value vis-à-vis executives because, generally,
they cliff vest 100% at the end of four years. In this way, executives are unable to
realize the value of RSUs until a significant period of time has passed since the
grant date. Additionally, since RSU value is tied directly to the market value of DSW
common stock, and not exclusively to the increase in the market value of DSW common
stock, RSUs provide retention value even when the stock price is stable or declining.
Thus, the Committee believes that RSUs are a key component of the long-term incentive
portfolio in that they help retain executives and keep them focused on long-term value
creation for shareholders. Dividend equivalents are not paid on RSUs granted to
company executives, including those granted to the Named Executive Officers.
2007 Long-Term Equity Incentive Awards for the Named Executive Officers
In March 2007, the Committee considered granting long-term equity incentive awards to
Named Executive Officers as part of the annual performance review process. The
Committee considered various alternatives based on input from management and the
independent compensation consultant which included different multiples of market
competitive long-term incentive values based on Comparator Group data. The Committee
considered alternative scenarios to effectively balance the delivery of cash and
equity to the Named Executive Officers and took into consideration the length of time
since the last annual equity grant for the Named Executive Officers. Based upon the
information provided, the Committee determined to deliver to each Named Executive
Officer a long-term incentive award with a value reasonably consistent with market
data for the Comparator Group companies at the 75th percentile. In
addition, the Committee determined to deliver the award 100% in options to provide
additional leverage in each Named Executive Officers compensation portfolio. As a
result, the Committee approved a grant of 53,900 stock options to Mr. Schottenstein,
grants of 53,400 stock options each to Ms. Ferrée and Mr. Horvath and grants to
Messrs. Lonergan and Probst of 41,300 stock options and 23,200 stock options,
respectively.
Equity Grant Practices
Under the Equity Plan, the Committee approves all equity awards and has not delegated
to management the authority to approve equity awards. The Committee may not grant
stock options at a discount to the closing price of DSW common stock on the grant
date, nor may the Committee reduce the exercise price of outstanding stock options
except in the case of a stock split or other similar event. All stock options granted
under the Equity Plan have an exercise price that is equal to the closing market price
of DSW common stock on the grant date. The grant date is the date of Compensation
Committee approval, except in the case of prospective hires who meet the criteria
outlined below.
The Committee also reviews and considers approval of off-cycle equity awards
recommended by management at regularly scheduled Committee meetings (generally
quarterly). These off-cycle equity awards reflect commitments made by DSW, subject to
Committee approval, and are for current associates (generally in the case of promotion
or retention), new hires who have already become employees of DSW or prospective hires
who have agreed to a start date with DSW that will occur within the three weeks
following the Committee meeting. The grant date for current associates and for new
hires who have already become employees of DSW is the date the Committee approves the
grant. The grant date for prospective hires is their future start date.
In March 2007, the Committee established a methodology to determine the grant date on
which annual equity awards would be granted to eligible associates. The Committee
determined that the annual equity grant date would be the seventh calendar day
following DSWs fiscal year-end earnings release. Prior to the establishment of this
methodology, the Committee made annual equity grants on pre-established dates. Since
DSW is a new public company, annual equity grants were made for the first time in
April 2006. The Committee does not backdate stock options or grant stock options
retroactively. Additionally, the Committee does not coordinate equity grants so that
they are made before announcement of favorable information or after announcement of
unfavorable information.
24
401(k) Retirement Savings Contributions
SSC sponsors a tax-qualified 401(k) plan in which all DSW associates, including the
Named Executive Officers, are eligible to participate after meeting certain age and
service requirements. The plan allows participants to contribute up to 30% of their
total eligible cash compensation (including base salary and annual cash incentives) on
a pre-tax basis up to the limits imposed by the Internal Revenue Code. The maximum
allowable per participant deferral in 2007 under the Internal Revenue Code was
$15,500. DSW provides a 100% match on the first 3% contributed by a participant and
an additional 50% match on the next 2% contributed by a participant. These matching
contributions are not available to participants until they have completed at least one
year of service with DSW. In light of the plans contribution limits for
participants, the maximum allowable per participant company matching contribution in
2007 under the Internal Revenue Code was $9,000. Participants choose to invest their
account balances from an array of investment alternatives as selected by plan
fiduciaries from time to time. A DSW stock fund is not among the investment
alternatives available to plan participants. The 401(k) plan allows for distributions
in a lump sum after termination of service. However, loansand in-service
distributions under certain circumstances such as a hardship, attainment of age 59-1/2
or a disabilityare permitted.
Tax and Financial Accounting Considerations
Section 162(m) of the Internal Revenue Code limits deductibility of certain
compensation paid to the chief executive officer and three other executive officers
(other than the chief financial officer) who are the highest paid and employed at
fiscal year-end to $1 million per year. The Committee annually considers the impact
of Section 162(m) of the Internal Revenue Code in structuring DSWs executive
compensation program. For fiscal 2007, the compensation paid to the Named Executive
Officers pursuant to the ICP and, generally, the Equity Plan was structured so as to
qualify as performance-based and thus deductible for purposes of Section 162(m), to
the extent the performance-based conditions are met. One exception to this general
statement is that, in the form DSW currently grants its RSUs (service-based vesting),
such grants do not qualify as performance-based under Section 162(m) or other
provisions of the Internal Revenue Code. Likewise, while the Committee takes the
financial accounting consequences of particular compensation decisions into account in
establishing the compensation of the Named Executive Officers, its primary
consideration is to provide appropriate compensation and incentives to the Named
Executive Officers in light of their roles and contributions, and accordingly it
reserves the discretion to award compensation regardless of its financial accounting
consequences.
Termination and Change in Control Arrangements
DSW has not entered into an employment agreement with Mr. Schottenstein, our Chief
Executive Officer. Mr. Schottenstein beneficially owns 78.4% of SSC which owns
approximately 39.5% of the outstanding shares and beneficially owns 50.2% of the
outstanding shares of Retail Ventures. Additionally, Mr. Schottenstein is the
Chairman of the Board of Retail Ventures which holds an approximately 63% ownership
stake in DSW. The remaining Named Executive Officers have employment agreements that
entitle them to receive certain benefits and payments if their employment terminates
in specified separation scenarios. All of the Named Executive Officers are entitled
to certain payments or benefits upon a change in control, including acceleration of
the vesting of outstanding equity awards pursuant to the Equity Plan, which benefit is
available to all Company associates. These arrangements are described under Potential
Payments upon Termination and Change in Control below.
25
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed the foregoing Compensation
Discussion and Analysis with management. Based on the Compensation Committees review
and discussion with management, the Compensation Committee has recommended to the
Board of Directors, and the Board of Directors has approved, that the Compensation
Discussion and Analysis be included in this proxy statement and incorporated by
reference into our Annual Report on Form 10-K for the year ended February 2, 2008.
Respectfully submitted,
Compensation Committee
Philip B. Miller, Chair
Carolee Friedlander
James D. Robbins
Allan J. Tanenbaum
26
COMPENSATION OF MANAGEMENT
The following table summarizes compensation awarded or paid to, or earned by, each of
the named executive officers during fiscal 2007 and fiscal 2006. We follow a 52/53
week fiscal year that ends on the Saturday nearest to January 31 in each year. Fiscal
year 2007 consisted of 52 weeks, and fiscal year 2006 consisted of 53 weeks.
SUMMARY COMPENSATION TABLE
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Changes in |
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Pension |
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Value and |
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Non-Qualified |
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|
|
|
|
|
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Stock |
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|
|
|
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Non-Equity |
|
Deferred |
|
All Other |
|
|
Name and |
|
Fiscal |
|
Salary |
|
Bonus |
|
Award(s) |
|
Option Award(s) |
|
Incentive Plan |
|
Compensation |
|
Compensation ($) |
|
|
Principal Position |
|
Year |
|
($) |
|
($) |
|
($)(1) |
|
($) (2) |
|
Compensation (3) |
|
Earnings |
|
(4) |
|
Total |
Jay L. Schottenstein |
|
|
2007 |
|
|
$ |
500,015 |
|
|
|
|
|
|
|
|
|
|
$ |
257,107 |
|
|
|
|
|
|
|
|
|
|
$ |
2,994 |
|
|
$ |
760,116 |
|
Chairman and Chief |
|
|
2006 |
|
|
$ |
455,666 |
|
|
|
|
|
|
|
|
|
|
$ |
40,626 |
|
|
|
|
|
|
|
|
|
|
$ |
2,998 |
|
|
$ |
499,290 |
|
Executive
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deborah L. Ferrée |
|
|
2007 |
|
|
$ |
770,481 |
|
|
|
|
|
|
$ |
133,950 |
|
|
$ |
400,008 |
|
|
|
|
|
|
|
|
|
|
$ |
55,205 |
|
|
$ |
1,359,644 |
|
Vice Chairman and |
|
|
2006 |
|
|
$ |
755,769 |
|
|
|
|
|
|
$ |
133,950 |
|
|
$ |
414,656 |
|
|
$ |
1,500,000 |
|
|
|
|
|
|
$ |
50,718 |
|
|
$ |
2,855,093 |
|
Chief
Merchandising
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter Z. Horvath |
|
|
2007 |
|
|
$ |
639,231 |
|
|
|
|
|
|
$ |
133,950 |
|
|
$ |
371,454 |
|
|
|
|
|
|
|
|
|
|
$ |
52,149 |
|
|
$ |
1,196,784 |
|
President |
|
|
2006 |
|
|
$ |
551,923 |
|
|
|
|
|
|
$ |
133,950 |
|
|
$ |
370,519 |
|
|
$ |
1,100,000 |
|
|
|
|
|
|
$ |
52,499 |
|
|
$ |
2,208,891 |
|
Douglas J. Probst |
|
|
2007 |
|
|
$ |
398,577 |
|
|
|
|
|
|
$ |
61,750 |
|
|
$ |
175,248 |
|
|
|
|
|
|
|
|
|
|
$ |
29,205 |
|
|
$ |
664,780 |
|
Executive Vice |
|
|
2006 |
|
|
$ |
377,885 |
|
|
|
|
|
|
$ |
61,750 |
|
|
$ |
186,048 |
|
|
$ |
600,000 |
|
|
|
|
|
|
$ |
32,963 |
|
|
$ |
1,258,646 |
|
President, Chief
Financial
Officer, and
Treasurer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin M. Lonergan |
|
|
2007 |
|
|
$ |
513,462 |
|
|
|
|
|
|
$ |
319,500 |
|
|
$ |
265,428 |
|
|
|
|
|
|
|
|
|
|
$ |
22,895 |
|
|
$ |
1,121,285 |
|
Executive Vice |
|
|
2006 |
|
|
$ |
509,615 |
|
|
|
|
|
|
$ |
319,500 |
|
|
$ |
254,665 |
|
|
$ |
800,000 |
|
|
|
|
|
|
$ |
107,412 |
|
|
$ |
1,991,192 |
|
President and
Chief Operating
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
(1) |
|
This column represents the dollar amount recognized for financial
statement reporting purposes with respect to fiscal 2007 and 2006 for the fair
value of RSUs granted in prior fiscal years, in accordance with SFAS 123R.
Pursuant to SEC rules, the amounts shown exclude the impact of estimated
forfeitures related to service-based vesting conditions. For RSUs, fair value is
calculated using the closing price of DSW Class A Common Stock on the date of
grant. For additional information on the valuation assumptions, refer to note 4
of DSWs financial statements in the Form 10-K for the year ended February 2,
2008, as filed with the SEC. See the Grants of Plan-Based Awards Table for
information on awards made in fiscal 2007. These amounts reflect our accounting
expense for these awards, and do not necessarily correspond to the actual value
that will be recognized by the Named Executive Officers. |
|
(2) |
|
This column represents the dollar amount recognized for financial
statement reporting purposes with respect to fiscal 2007 and 2006 for the fair
value of stock options granted in fiscal 2007 as well as prior fiscal years, in
accordance with SFAS 123R. Pursuant to SEC rules, the amounts shown exclude the
impact of estimated forfeitures related to service-based vesting conditions. For
additional information on the valuation assumptions, refer to note 4 of DSWs
financial statements in the Form 10-K for the year ended February 2, 2008, as
filed with the SEC. See the Grants of Plan-Based Awards Table for information on
options granted in fiscal 2007. These amounts reflect our accounting expense for
these awards, and do not necessarily correspond to the actual value that will be
recognized by the Named Executive Officers. |
27
|
|
|
(3) |
|
This column represents the dollar amount earned by each applicable
Named Executive Officer pursuant to our ICP for fiscal 2007 and 2006. See the
Compensation Discussion and Analysis above and the Grants of Plan-Based Awards
Table below for information on the grant of these awards. |
|
(4) |
|
The following table describes each component of the All Other
Compensation column in the Summary Compensation Table for fiscal 2007. |
|
|
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|
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|
|
|
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|
|
|
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|
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|
|
|
|
|
|
|
|
Cash Perquisite |
|
Car Allowance/Fuel |
|
401(k) Matching |
|
Life Insurance |
|
|
Name |
|
Fiscal Year |
|
Allowance |
|
Card |
|
Contributions |
|
Premium |
|
Total |
Jay L. Schottenstein |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
$ |
2,994 |
|
|
|
|
|
|
$ |
2,994 |
|
Deborah L. Ferrée |
|
|
2007 |
|
|
$ |
35,385 |
|
|
|
|
|
|
$ |
8,027 |
|
|
$ |
780 |
|
|
$ |
44,192 |
|
Peter Z. Horvath |
|
|
2007 |
|
|
$ |
35,385 |
|
|
|
|
|
|
$ |
8,069 |
|
|
$ |
780 |
|
|
$ |
44,234 |
|
Douglas J. Probst |
|
|
2007 |
|
|
|
|
|
|
$ |
19,371 |
|
|
$ |
9,212 |
|
|
$ |
622 |
|
|
$ |
32,963 |
|
Kevin M. Lonergan |
|
|
2007 |
|
|
$ |
22,115 |
|
|
|
|
|
|
|
|
|
|
$ |
780 |
|
|
$ |
22,895 |
|
28
FISCAL YEAR 2007 GRANTS OF PLAN-BASED AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards: |
|
|
|
|
|
Grant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
Exercise or |
|
Date Fair |
|
|
|
|
|
|
Estimated Possible Payouts Under |
|
Securities |
|
Base Price |
|
Value of |
|
|
|
|
|
|
Non-Equity Incentive Plan Awards (1) |
|
Underlying |
|
of Option |
|
Stock and |
|
|
|
|
|
|
Threshold |
|
Target |
|
Maximum |
|
Options |
|
Awards |
|
Option Awards |
Name |
|
Grant Date |
|
($) |
|
($) |
|
($) |
|
(#)(2) |
|
($/Sh) |
|
($) (3) |
Jay L. Schottenstein |
|
|
4/5/2007 |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
53,900 |
|
|
|
42.88 |
|
|
|
957,636 |
|
Deborah L. Ferree |
|
|
4/5/2007 |
|
|
|
404,375 |
|
|
|
808,750 |
|
|
|
1,617,500 |
|
|
|
53,400 |
|
|
|
42.88 |
|
|
|
948,752 |
|
Peter Z. Horvath |
|
|
4/5/2007 |
|
|
|
345,000 |
|
|
|
690,000 |
|
|
|
1,380,000 |
|
|
|
53,400 |
|
|
|
42.88 |
|
|
|
948,752 |
|
Douglas J. Probst |
|
|
4/5/2007 |
|
|
|
210,500 |
|
|
|
421,000 |
|
|
|
842,000 |
|
|
|
23,200 |
|
|
|
42.88 |
|
|
|
412,192 |
|
Kevin M. Lonergan |
|
|
4/5/2007 |
|
|
|
268,750 |
|
|
|
537,500 |
|
|
|
1,075,000 |
|
|
|
41,300 |
|
|
|
42.88 |
|
|
|
733,773 |
|
|
|
|
(1) |
|
These columns represent potential payouts for fiscal 2007 under our
ICP. See the Non-Equity Incentive Plan Compensation column of the Summary
Compensation Table for the actual amounts paid to each applicable Named Executive
Officer for fiscal 2007 pursuant to our ICP. See also the Compensation Discussion
and Analysis for a discussion of the performance-based criteria applicable to
these awards. |
|
(2) |
|
Options vest ratably over five years on each of the first five
anniversaries of the grant date. |
|
(3) |
|
This column represents the full grant date fair value of the stock
option awards granted to the Named Executive Officers in fiscal 2007, as computed
in accordance with SFAS 123(R). For additional information on the valuation
assumptions, refer to Note 4 of DSWs financial statements in the Form 10-K for
the year ended February 2, 2008, as filed with the SEC. |
OUTSTANDING EQUITY AWARDS FISCAL YEAR-END 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
Equity Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive |
|
|
|
|
Number of |
|
Number of |
|
Plan Awards: Number |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards: Number |
|
Equity Incentive |
|
|
Securities |
|
Securities |
|
of Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Value of |
|
of Unearned Shares, |
|
Plan Awards: Market |
|
|
Underlying |
|
Underlying |
|
Underlying |
|
|
|
|
|
|
|
|
|
Number of Shares or |
|
Shares or Units of |
|
Units, or Other |
|
or Payout Value of |
|
|
Unexercised Options |
|
Unexercised Options |
|
Unexercised |
|
Option Exercise |
|
|
|
Units of Stock That |
|
Stock That Have Not |
|
Rights That Have |
|
Unearned Shares, |
|
|
Exercisable |
|
Unexercisable |
|
Unearned Options |
|
Price |
|
Option Expiration |
|
Have Not Vested |
|
Vested |
|
Not Vested |
|
Units, or Other Rights That |
Name |
|
(#) |
|
(#) |
|
(#) |
|
($) |
|
Date |
|
(#) |
|
($)(1) |
|
(#) |
|
Have Not Vested ($) |
Jay L. Schottenstein |
|
|
8,340 |
|
|
|
33,360 |
(2) |
|
|
N/A |
|
|
|
27.80 |
|
|
|
09/07/16 |
|
|
|
|
|
|
|
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
|
53,900 |
(3) |
|
|
N/A |
|
|
|
42.88 |
|
|
|
04/05/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deborah L. Ferree |
|
|
60,000 |
|
|
|
90,000 |
(4) |
|
|
N/A |
|
|
|
19.00 |
|
|
|
06/28/15 |
|
|
|
28,200 |
(5) |
|
|
563,718 |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
|
53,400 |
(3) |
|
|
N/A |
|
|
|
42.88 |
|
|
|
04/05/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter Z. Horvath |
|
|
90,000 |
|
|
|
60,000 |
(6) |
|
|
N/A |
|
|
|
19.00 |
|
|
|
06/28/15 |
|
|
|
28,200 |
(5) |
|
|
563,718 |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
|
53,400 |
(3) |
|
|
N/A |
|
|
|
42.88 |
|
|
|
04/05/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas J. Probst |
|
|
28,000 |
|
|
|
42,000 |
(7) |
|
|
N/A |
|
|
|
19.00 |
|
|
|
06/28/15 |
|
|
|
13,000 |
(5) |
|
|
259,870 |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
|
23,200 |
(3) |
|
|
N/A |
|
|
|
42.88 |
|
|
|
04/05/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin M. Lonergan |
|
|
20,000 |
|
|
|
30,000 |
(8) |
|
|
N/A |
|
|
|
24.85 |
|
|
|
12/19/15 |
|
|
|
10,000 |
(9) |
|
|
399,800 |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
|
41,300 |
(3) |
|
|
N/A |
|
|
|
42.88 |
|
|
|
04/05/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents the closing market price of DSW Class A common stock on
last day of the fiscal year times number of shares not yet vested. |
|
(2) |
|
Remaining options vest over four years on September 7 of each year. |
|
(3) |
|
Options vest over five years on April 5 of each year. |
|
(4) |
|
Remaining options vest over three years on June 28 of each year. |
|
(5) |
|
Restricted stock units vest on June 28, 2009. |
|
(6) |
|
Remaining options vest over two years on January 3 of each year. |
|
(7) |
|
Remaining options vest over two years on March 14 of each year. |
|
(8) |
|
Remaining options vest over three years on January 30 of each year. |
|
(9) |
|
Restricted stock units vest on June 29, 2009. |
29
FISCAL YEAR 2007 OPTION EXERCISES AND STOCK VESTED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
Number of Shares |
|
Value Realized On |
|
Number of Shares |
|
Value Realized |
|
|
Acquired on Exercise |
|
Exercise |
|
Acquired on Vesting |
|
on Vesting |
|
|
(#) |
|
($) |
|
(1) |
|
(2) |
Jay L. Schottenstein |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Deborah L. Ferree |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Peter Z. Horvath |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Douglas J. Probst |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Kevin M. Lonergan |
|
|
N/A |
|
|
|
N/A |
|
|
|
10,000 |
|
|
$ |
180,000 |
|
|
|
|
(1) |
|
This column represents the number of restricted stock units that vested in fiscal
2007. |
|
(2) |
|
Value realized calculated based on multiplying number of restricted
stock units vested by the closing market price of our Class A common stock on the
trading day immediately preceding the date of vesting. |
Potential Payments Upon Termination and Change in Control
Ms. Ferrée and Messrs. Horvath, Probst and Lonergan have employment agreements with
DSW that provide for limited payments and benefits following termination of their
employment without cause or if the executive terminates employment for good
reason. Additionally, our Equity Plan provides for acceleration of the vesting of
outstanding equity awards upon a change in control for all Company associates,
including the Named Executive Officers.
Employment Agreements with Ms. Ferrée and Messrs. Horvath, Probst and Lonergan
Generally, pursuant to each Named Executive Officers employment agreement, if DSW
involuntarily terminates the officers employment without cause or if the officer
voluntarily terminates employment for good reason, each of Ms. Ferrée and Messrs.
Horvath, Probst and Lonergan are entitled to receive:
|
(i) |
|
salary continuation for at least a 12-month period based on
the executives salary as of the date of termination; |
|
|
(ii) |
|
a pro-rata share of any annual cash incentive bonus paid
for performance in the fiscal year when termination occurs; |
|
|
(iii) |
|
one year of accelerated vesting with respect to
outstanding stock options; and |
|
|
(iv) |
|
continuing health coverage for at least 12 months. |
Also, pursuant to each officers employment agreement, if employment terminates as a
result of death or disability, each of Ms. Ferrée and Messrs Horvath, Probst and
Lonergan are entitled to receive a pro-rata share of any annual cash incentive bonus
paid for performance in the fiscal year when termination occurs.
Each executives employment agreement also contains confidentiality and
non-disparagement provisions effective through the term of the agreement, a
non-competition provision effective through the longer of one year following
termination of employment or the period of any salary continuation, and a
non-solicitation provision effective through the longer of two years following
termination of employment or the period of any salary continuation.
For additional information about these employment agreements, see Employment
Agreements with Key Executives (below).
Equity Plan
Pursuant to the Equity Plan and any applicable award agreement, termination by reason
of death, disability or retirement (defined as termination after reaching age 65 and
completing at least five years of employment)
30
entitles each Named Executive Officer to receive accelerated vesting with respect to
all equity awards that are not vested as of the date of termination.
Pursuant to the Equity Plan and any applicable award agreement, termination in a
change in control entitles all associates, including each Named Executive Officer, to
receive accelerated vesting with respect to all equity awards that are not vested as
of the date of the change in control.
Potential Termination and Change of Control Payments
The estimated value of the benefits described above are presented in the table below
and are calculated as if the respective termination event occurred on February 1, 2008
and our stock price was $19.99, the closing price of our common stock on February 1,
2008, the last trading day of fiscal 2007. The amounts below assume each Named
Executive Officers salary and annual incentive award is as set forth above in the
Summary Compensation Table for fiscal 2007. The actual amounts to be paid out will
only be determinable at the time of such executives termination.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary |
|
|
|
|
|
|
|
|
Termination Without |
|
Involuntary |
|
|
|
|
|
|
Cause or Voluntary |
|
Termination Because |
|
Voluntary |
|
|
|
|
Termination for |
|
of Death or |
|
Termination Because |
|
Change in Control |
Named Executive Officer |
|
Good Reason (1) |
|
Disability (2) |
|
of Retirement (2) |
|
(2) |
Jay L. Schottenstein
Salary Continuation |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Benefits Continuation |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Accelerated Vesting of
Equity |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deborah L. Ferrée
Salary Continuation (3) |
|
$ |
808,750 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Benefits Continuation (4) |
|
$ |
4,613 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Accelerated Vesting of
Equity |
|
$ |
29,700 |
|
|
$ |
652,818 |
|
|
$ |
652,818 |
|
|
$ |
652,818 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter Z. Horvath
Salary Continuation (3) |
|
$ |
690,000 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Benefits Continuation (4) |
|
$ |
13,765 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Accelerated Vesting of
Equity |
|
$ |
29,700 |
|
|
$ |
623,118 |
|
|
$ |
623,118 |
|
|
$ |
623,118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas J. Probst
Salary Continuation (3) |
|
$ |
421,000 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Benefits Continuation (4) |
|
$ |
9,098 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Accelerated Vesting of
Equity |
|
$ |
13,860 |
|
|
$ |
301,450 |
|
|
$ |
301,450 |
|
|
$ |
301,450 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin M. Lonergan
Salary Continuation (3) |
|
$ |
537,500 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Benefits Continuation (4) |
|
$ |
5,372 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Accelerated Vesting of
Equity |
|
$ |
0 |
|
|
$ |
199,900 |
|
|
$ |
199,900 |
|
|
$ |
199,900 |
|
|
|
|
(1) |
|
The amount reported for Accelerated Vesting of Equity reflects
the intrinsic value of unvested stock options that would vest during the one year
following the Named Executive Officers date of termination. |
|
(2) |
|
The amount reported for Accelerated Vesting of Equity reflects
the intrinsic value of unvested stock options and restricted stock units that
would vest upon the Executives date of termination or upon a change in control,
as the case may be. |
31
|
|
|
(3) |
|
The amount reported reflects the continued payment of base salary
for a period of at least 12 months at the rate in effect on the Executives date
of termination. |
|
(4) |
|
The amount reported reflects the cost of maintaining health care
coverage for a period of at least 12 months at the coverage level in effect as of
the Executives date of termination. The cost of maintaining health care
coverage is calculated as the difference between the companys cost of providing
the benefits less the amount the Executive paid for such benefits as of the
Executives date of termination. |
Employment Agreements with Key Executives
Mr. Schottenstein
We have not entered into an employment agreement with Mr. Schottenstein, our Chief
Executive Officer. Mr. Schottenstein was appointed to this position on March 14,
2005.
Ms. Ferrée
We entered into an employment agreement with Ms. Ferrée, our Vice Chairman and Chief
Merchandising Officer, in November 2004. The agreement provides for an indefinite
term, subject to earlier termination pursuant to certain events (and potential payment
amounts) summarized under Potential Payments upon Termination and Change in Control
above. Under the agreement, Ms. Ferrée is to receive an annual base salary of
$700,000, which is to be increased annually by a minimum of 2.5% over the previous
years base salary. Ms. Ferrée also participates in our ICP with a target bonus
opportunity of 100% of base salary and a maximum annual bonus of 200% of base salary.
The agreement also provides for Ms. Ferrées participation in our employee pension or
welfare benefit plans at a level commensurate with her title and position and provides
an entitlement to an annual perquisite allowance from us of $40,000. Effective
December 31, 2007, we amended Ms. Ferrees employment agreement to eliminate the
annual perquisite allowance and increase her base salary by the same amount.
Mr. Horvath
We entered into an employment agreement with Mr. Horvath, our President, in January
2005. The agreement provides for an indefinite term, subject to earlier termination
pursuant to certain events (and potential payment amounts) summarized under Potential
Payments upon Termination and Change in Control above. Under the agreement, Mr.
Horvath is to receive an annual base salary of $500,000, which is to be increased
annually by a minimum of 2.5% over the previous years base salary. Mr. Horvath also
participates in our ICP with a target bonus opportunity of 100% of base salary and a
maximum annual bonus of 200% of base salary. The agreement also provides for Mr.
Horvaths participation in our employee pension or welfare benefit plans at a level
commensurate with his title and position and provides an entitlement to an annual
perquisite allowance from us of $40,000. Effective December 31, 2007, we amended Mr.
Horvaths employment agreement to eliminate the annual perquisite allowance and
increase his base salary by the same amount.
Mr. Probst
We entered into an employment agreement with Mr. Probst, our Executive Vice President,
Chief Financial Officer and Treasurer, in March 2005. The agreement provides for an
indefinite term, subject to earlier termination pursuant to certain events (and
potential payment amounts) summarized under Potential Payments upon Termination and
Change in Control above. The agreement provides for an annual salary of $350,000.
Mr. Probst also participates in our ICP with a target bonus opportunity of 80% of his
base salary and a maximum annual bonus of 160% of base salary. The agreement also
provides for Mr. Probsts participation in our employee pension or welfare benefit
plans at a level commensurate with his title and position. The agreement also
provides for an annual vehicle allowance and fuel card. Effective December 31, 2007,
we amended Mr. Probsts employment agreement to eliminate the annual vehicle allowance
and fuel card and increase his base salary by $21,000.
Mr. Lonergan
We entered into an employment agreement with Kevin M. Lonergan, our Executive Vice
President and Chief Operating Officer, in January 2006. The agreement provides for an
indefinite term, subject to earlier termination pursuant to certain events (and
potential payment amounts) summarized under Potential Payments
32
upon Termination and Change in Control above. Under the agreement, Mr. Lonergan is to receive an annual
base salary of $500,000, which is to be increased annually by a minimum of 2.5% over
the previous years base salary. We also agreed to provide Mr. Lonergan with a
comprehensive relocation package, including a gross-up on such amount for tax purposes (the amounts for each of which are set forth above in
the All Other Compensation column of the Summary Compensation Table). Mr. Lonergan
also participates in our ICP with a target bonus opportunity of 80% of base salary and
a maximum annual bonus of 160% of base salary. The agreement also provides for Mr.
Lonergans participation in our employee pension or welfare benefit plans at a level
commensurate with his title and position and provides an entitlement to an annual
perquisite allowance from us of $25,000. Effective December 31, 2007, we amended Mr.
Lonergans employment agreement to eliminate the annual perquisite allowance and
increase his base salary by the same amount.
Compensation of Directors
Our Compensation Committee reviews director compensation and makes recommendations to
our Board of Directors regarding director compensation.
Effective August 28, 2007, the Board of Directors, upon a recommendation of the
Compensation Committee, revised director compensation to provide that each director
who is not a member of management of DSW or Retail Ventures will receive:
|
|
|
An annual retainer of $110,000; and |
|
|
|
|
An additional annual retainer for committee service for each committee on
which such director serves (provided that the committee chairs do not receive
such additional retainer) as follows: |
|
|
|
Audit Committee $15,000 |
|
|
|
|
Compensation Committee $11,500 |
|
|
|
|
Nominating and Corporate Governance Committee $7,500 |
The annual retainers are paid as follows:
|
|
|
One-half in cash, payable in quarterly installments on the last day of each fiscal quarter; and |
|
|
|
|
One-half in stock units, payable on the date of each annual meeting of the
shareholders for the purpose of electing directors, determined by dividing
the amount of the retainer to be paid in stock units by the Fair Market
Value of a share of Stock on the Grant Date. |
Directors do not receive any additional compensation for attending board meetings or
board committee meetings. However, the chairmen of the Audit Committee, Nominating and
Corporate Governance Committee and Compensation Committee each receive an additional
$35,000, $20,000 and $30,000 in cash or stock units (as they may elect) per year,
respectively. We pay this compensation on a quarterly basis. All members of our Board
of Directors are reimbursed for reasonable costs and expenses incurred in attending
meetings of our Board of Directors and its committees.
Non-management directors may elect to have any of their cash portion of their
compensation paid in the form of stock units in lieu of cash.
For fiscal 2007, on August 28, 2007, each non-management director received an
additional stock grant equal to $5,000.
Stock units issued to a director are fully vested on the date of grant, but will not
be distributable to the director until the director leaves the board (for any reason).
When the director leaves the board, the stock units owed to the director will be
settled in DSW Class A Common Shares (with cash for any fractional shares), unless the
directors award agreement provides for a cash settlement. The stock units will be
settled in a lump sum transfer, and the compensated director may not defer settlement
or spread the settlement over a longer period of time.
Directors have no voting rights in respect to the stock units, but they will have the
power to vote the DSW Class A Common Shares received upon settlement of the award. In
general, directors have equivalent rights to receive dividends paid on DSW Class A
Common Shares. Each director will be credited with the same dividend that would be
issued if the stock unit was a DSW Class A Common Share. The amounts associated with
the dividend equivalent rights will not be distributed until the directors stock unit
award is settled at the
33
time that the director leaves the board. We will be entitled to a tax deduction when the award is settled, and the director will be taxed on the
then fair market value of the award.
Prior to August 28, 2007, we paid an annual retainer to our directors who are not
employees of DSW or Retail Ventures. The annual retainer consisted of $50,000 in cash
and a grant of a number of stock units with a value equal to $50,000, determined by
using the fair market value of a DSW Class A Common Share at the date of grant. We
issued the stock units for the annual retainer on the date of each annual meeting of
shareholders. The cash portion of the retainer was paid quarterly and each eligible
director could elect to receive their cash retainer and committee chairperson fees in
the form of stock units.
Prior to August 28, 2007, we also paid the chairmen of the Audit Committee, Nominating
and Corporate Governance Committee and Compensation Committee an additional $10,000,
$5,000 and $7,500 in cash or stock units (as they may elect) per year, respectively.
We paid this compensation on a quarterly basis.
FISCAL YEAR 2007 DIRECTOR COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change In |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PensionValue and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
Nonqualified |
|
|
|
|
|
|
Fees Earned or Paid |
|
|
|
|
|
|
|
|
|
Incentive Plan |
|
Deferred |
|
All Other |
|
|
|
|
in Cash |
|
Stock Awards |
|
Option Awards |
|
Compensation |
|
Compensation |
|
Compensation |
|
Total |
Name |
|
($) |
|
($) (1)(2) |
|
($) |
|
($) |
|
Earnings |
|
($) |
|
($) |
Carolee Friedlander |
|
$ |
61,000 |
|
|
$ |
54,994 |
|
|
None |
|
None |
|
None |
|
None |
|
$ |
115,994 |
|
Philip B. Miller |
|
$ |
76,825 |
|
|
$ |
54,994 |
|
|
None |
|
None |
|
None |
|
None |
|
$ |
131,819 |
|
James D. Robbins |
|
$ |
79,750 |
|
|
$ |
54,994 |
|
|
None |
|
None |
|
None |
|
None |
|
$ |
134,744 |
|
Harvey L. Sonnenberg |
|
$ |
52,500 |
|
|
$ |
54,994 |
|
|
None |
|
None |
|
None |
|
None |
|
$ |
107,494 |
|
Allan J. Tanenbaum (3) |
|
None |
|
$ |
126,651 |
|
|
None |
|
None |
|
None |
|
None |
|
$ |
126,651 |
|
|
|
|
(1) |
|
Each of our directors who are not an employee of DSW or RVI were
granted 1,325 stock units on May 30, 2007. The full grant date fair value of
these stock unit awards granted to the non-employee directors was $49,992.
Additionally, each of our directors who are not an employee of DSW or RVI were
granted 168 stock units on August 28, 2007. The full grant date fair value of
these stock unit awards granted to the non-employee directors was $5,002. These
stock units are fully vested but will not be distributable to the director until
the director leaves the Board. Because these units are fully-vested upon grant,
we recognize the full grant date fair value for financial statement reporting
purposes, as provided by SFAS 123(R). For additional information on the valuation
assumptions, refer to note 4 of DSWs financial statements included in the Form
10-K for the year ended February 2, 2008. |
|
(2) |
|
As of February 2, 2008, each director listed had the following
number of stock units outstanding: |
|
|
|
|
|
|
|
Number of Stock Units Outstanding |
Name |
|
as of February 2, 2008 |
|
|
|
|
|
Carolee Friedlander |
|
|
6,342 |
|
Philip B. Miller |
|
|
6,342 |
|
James D. Robbins |
|
|
6,342 |
|
Harvey L. Sonnenberg |
|
|
6,342 |
|
Allan J. Tanenbaum |
|
|
12,568 |
|
|
|
|
(3) |
|
Mr. Tanenbaum elected to receive payment of all fees in the form of
stock awards. |
34
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
General
Prior to the completion of our initial public offering in July 2005, we were operated
as a wholly-owned subsidiary of Retail Ventures. As of April 1, 2008, Retail
Ventures owned 27,702,667 of our Class B Common Shares, constituting all of our
issued and outstanding Class B Common Shares, or in excess of 63% of our total
outstanding shares and 93% of the combined voting power of our outstanding Common
Shares. Retail Ventures has the power acting alone to approve any action requiring a
vote of the majority of our voting shares and to elect all our directors.
As of April 1, 2008, Jay L. Schottenstein, the Chairman of Retail Ventures,
beneficially owned approximately 78.4% of the common shares of SSC. As of April 1,
2008, SSC owned approximately 39.5% of the outstanding shares and beneficially owned
approximately 50.2% of the outstanding shares of Retail Ventures (assumes issuance of
(i) 8,333,333 Retail Ventures common shares issuable upon the exercise of convertible
warrants, (ii) 1,731,460 Retail Ventures common shares issuable upon the exercise of
term loan warrants, and, (iii) 342,709 Retail Ventures common shares issuable
pursuant to the term loan warrants). For fiscal 2007, we paid approximately $14.4
million in total fees, rents and expenses to SSC.
In the ordinary course of business, we have entered into a number of agreements with
Retail Ventures, Value City Department Stores, Inc. (Value City) and SSC and their
affiliates relating to our business and our relationship with these companies, the
material terms of which are described below. We believe that each of the agreements
entered into with these entities is on terms at least as favorable to us as could be
obtained in an arms length transaction with an unaffiliated third party. In the
event that we desire to enter into any agreements with Retail Ventures or any of our
directors, officers or other affiliates in the future, in accordance with Ohio law,
any contract, action or other transaction between or affecting us and one of our
directors or officers or between or affecting us and any entity in which one or more
of our directors or officers is a director, trustee or officer or has a financial or
personal interest, will either be approved by the shareholders, a majority of the
disinterested members of our Board of Directors or a committee of our Board of
Directors that authorizes such contracts, action or other transactions or must be
fair to us as of the time our directors, a committee of our directors or our
shareholders approve the contract, action or transaction. In addition, any
transactions with directors, officers or other affiliates will be subject to
requirements of the Sarbanes-Oxley Act and other Securities and Exchange Commission
rules and regulations, as well as to our written related party transaction policy
described below.
Procedures for Review of Related Party Transactions
In June 2006, our board of directors approved a written related party transaction
policy which gives our Audit Committee the power to approve or disapprove potential
related party transactions, arrangements or relationships between us and a related
person, as described below. The related party transaction policy was amended in
March 2007 and a copy of the policy can be found at our corporate and investor
website at www.dswinc.com and is available in print (without charge) to any
shareholder upon request. The related party transaction policy provides for the
review, approval or ratification of any related party transaction that we are
required to report under this section of the proxy statement.
For purposes of this policy, a Related Person Transaction is any transaction which
is currently proposed or has been in effect at any time since the beginning of the
last fiscal year, in which the Company or any of its subsidiaries, was, or is
proposed to be, a participant, and in which any of the following persons (each, a
Related Person) has or will have a direct or indirect material interest:
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any person who is, or at any time since the beginning of the
Companys last fiscal year was, a director, director nominee or executive
officer of the Company; |
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a shareholder of the Company who owns more than five percent (5%)
of any class of the Companys voting securities; |
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a member of the immediate family of any person described in (1)
or (2) above; and |
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an entity in which any person described in (1), (2) or (3) above
has a greater than ten percent (10%) equity interest. |
In determining whether to approve a related person transaction, the Audit Committee
considers the following factors, to the extent relevant:
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Is the transaction in the normal course of the Companys business? |
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Are the terms of the transaction fair to the Company? |
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Are the terms of the transaction commercially reasonable? Are the terms
of the transaction substantially the same as the terms that the Company
would be able to obtain in an arms-length transaction with an unrelated
third party? |
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Has the Company obtained an independent appraisal or completed a
financial analysis of the transaction? If so, what are the results of such
appraisal or analysis? |
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Is the transaction in the best interests of the Company? The Companys
shareholders? |
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Would the transaction impair a directors independence in the event that
the Related Person is an independent director? |
Based on an analysis of these factors (and other additional factors that the Audit
Committee may deem relevant based on the circumstances), the Audit Committee takes
formal action to either approve or reject the related person transaction.
Relationships between DSW and Retail Ventures
Historical Relationship With Retail Ventures
Prior to the completion of our initial public offering in July 2005, we were a
wholly-owned subsidiary of Value City or Retail Ventures since 1998. As a result, in
the ordinary course of our business, we have received various services provided by
Value City and Retail Ventures, including import administration, risk management,
information technology, tax, financial services, and shared benefits administration
and payroll, as well as other corporate services. Retail Ventures also maintained
insurance for us and for our directors, officers and employees. Retail Ventures also
provided us with the services of a number of its executives and employees. Our
historical financial statements include allocations to us by Retail Ventures of its
costs related to these services. These cost allocations have been determined on a
basis that we and Retail Ventures consider to be reasonable reflections of the use of
services provided or the benefit received by us.
Retail Ventures as our Controlling Shareholder
As of April 1, 2008, Retail Ventures owns approximately 63% of the outstanding shares
of our Common Shares, and 93% of the combined voting power of our outstanding Common
Shares. For as long as Retail Ventures continues to control more than 50% of the
combined voting power of our Common Shares, Retail Ventures will be able to direct
the election of all the members of our board and exercise a controlling influence
over our business and affairs, including any determinations with respect to mergers
or other business combinations involving our company, the acquisition or disposition
of assets by our company, the incurrence of indebtedness by our company, the issuance
of any additional common shares or other equity securities, and the payment of
dividends with respect to our Common Shares. Similarly, Retail Ventures will have the
power to determine matters submitted to a vote of our shareholders without the
consent of our other shareholders, will have the power to prevent a change in control
of our company and will have the power to take other actions that might be favorable
to Retail Ventures.
Retail Ventures has advised us that its current intent is to continue to hold all the
Common Shares owned by it, except to the extent necessary to satisfy obligations
under warrants it has granted to SSC, Cerberus Partners L.P., or Cerberus, and
Millennium Partners, L.P., or Millennium,, and its obligations under the Retail
Ventures Premium Income Exchangable Securities, or PIES. In addition, Retail
Ventures is subject to contractual
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obligations with its warrantholders to retain
enough DSW Common Shares to be able to satisfy its obligations to
deliver such shares to its warrantholders if the warrantholders elect to exercise
their warrants in full for DSW Class A Common Shares. Retail Ventures is also subject
to contractual obligations with the holders of the PIES to retain enough DSW Common
Shares to be able to satisfy its obligations to deliver shares to the holders of the
PIES.
Beneficial ownership of at least 80% of the total voting power and 80% of each class
of nonvoting capital stock is required in order for Retail Ventures to effect a
tax-free spin-off of DSW or certain other tax-free transactions. Retail Ventures has
advised us that it does not currently intend or plan to undertake a spin-off of DSW
or another tax-free transaction involving DSW.
Agreements Between Us And Retail Ventures
This section describes the material provisions of agreements between us and Retail
Ventures. The description of the agreements is not complete and, with respect to each
material agreement, is qualified by reference to the terms of the agreement, each of
which is filed as an exhibit to our registration statement filed in connection with
our initial public offering or subsequent filings we have made with the Securities
and Exchange Commission. We entered into these agreements with Retail Ventures in the
context of our relationship with Retail Ventures. The prices and other terms of these
agreements may be less favorable to us than those we could have obtained in
arms-length negotiations with unaffiliated third parties for similar services or
under similar agreements.
Agreements Relating to our Separation from Retail Ventures
In connection with our initial public offering, we and Retail Ventures entered into
agreements governing various interim and ongoing relationships between us. These
agreements include:
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a master separation agreement; |
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a shared services agreement and other intercompany arrangements; |
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a tax separation agreement; |
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an exchange agreement; and |
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a footwear fixture agreement. |
Master Separation Agreement. The master separation agreement contains key provisions
relating to the separation of our business from Retail Ventures. The master
separation agreement requires us to exchange information with Retail Ventures, follow
certain accounting practices and resolve disputes with Retail Ventures in a
particular manner. We also have agreed to maintain the confidentiality of certain
information and preserve available legal privileges. The separation agreement also
contains provisions relating to the allocation of the costs of our initial public
offering, indemnification, non-solicitation of employees and employee benefit
matters.
Under the master separation agreement, we agreed to effect up to one demand
registration per calendar year of our Common Shares, whether Class A or Class B, held
by Retail Ventures, if requested by Retail Ventures. We have also granted Retail
Ventures the right to include its Common Shares of DSW in an unlimited number of
other registrations of such shares initiated by us or on behalf of our other
shareholders.
Shared Services Agreement. Many aspects of our business, which were fully managed and
controlled by us without Retail Ventures involvement, continue to operate as they
did prior to our initial public offering. We continue to manage operations for
critical functions such as merchandise buying, planning and allocation, distribution
and store operations. Under the shared services agreement, which became effective as
of January 30, 2005, we provide services to several subsidiaries of Retail Ventures
relating to planning and allocation support, and distribution services and
transportation management. Retail Ventures provides us with services relating to
import administration, risk management, tax, logistics, legal services, financial
services, shared benefits administration and payroll and maintain insurance for us
and for our directors, officers, and employees.
The current term of the shared services agreement expires at the end of fiscal 2008
and will be extended automatically for additional one-year terms unless terminated by
one of the parties. With respect to each shared service, we cannot reasonably
anticipate whether the services will be shared for a period shorter or longer than
the initial term.
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On December 5, 2006, we entered into an Amended and Restated Shared Services
Agreement with Retail Ventures, effective as of October 29, 2006 (the Amended Shared
Services Agreement). Under the terms of the Amended Shared Services Agreement,
through BTS, we provide information technology services to Retail
Ventures and its subsidiaries, including Value City and Filenes Basement. Retail
Ventures information technology associates are not employed by BTS. Additionally, we
agreed with Retail Ventures to include other non-material changes in the Amended
Shared Services Agreement.
Prior to and following the consummation of our initial public offering, DSW has had,
and will continue to have, the option to use certain administrative and marketing
services provided by third party vendors pursuant to contracts between those third
party vendors and Retail Ventures. We pay Retail Ventures for these services as
expenses for these services are incurred. These services are provided to us by virtue
of our status as Retail Ventures affiliate and are unrelated to those delineated in
the shared services agreement.
In fiscal 2007, we paid Retail Ventures approximately $9.2 million for services
rendered to us under the Shared Services Agreement. In addition, in fiscal 2007,
Retail Ventures paid us approximately $18.5 million for services we rendered on
behalf of Retail Ventures.
Tax Separation Agreement. Until the completion of our initial public offering in July
2005, we were historically included in Retail Ventures consolidated group, or the
Consolidated Group, for U.S. federal income tax purposes as well as in certain
consolidated, combined or unitary groups which include Retail Ventures and/or certain
of its subsidiaries, or a Combined Group, for state and local income tax purposes. We
entered into a tax separation agreement with Retail Ventures that became effective
upon consummation of our initial public offering. Pursuant to the tax separation
agreement, we and Retail Ventures generally make payments to each other such that,
with respect to tax returns for any taxable period in which we or any of our
subsidiaries are included in the Consolidated Group or any Combined Group, the amount
of taxes to be paid by us will be determined, subject to certain adjustments, as if
we and each of our subsidiaries included in the Consolidated Group or Combined Group
filed our own consolidated, combined or unitary tax return. Retail Ventures will
prepare pro forma tax returns for us with respect to any tax return filed with
respect to the Consolidated Group or any Combined Group in order to determine the
amount of tax separation payments under the tax separation agreement. We have the
right to review and comment on such pro forma tax returns. We are responsible for any
taxes with respect to tax returns that include only us and our subsidiaries.
Retail Ventures is exclusively responsible for preparing and filing any tax return
with respect to the Consolidated Group or any Combined Group. We generally are
responsible for preparing and filing any tax returns that include only us and our
subsidiaries. Retail Ventures has agreed to undertake to provide these services with
respect to our separate tax returns. For the tax services provided to us by Retail
Ventures, we pay Retail Ventures a monthly fee equal to 50% of all costs associated
with the maintenance and operation of Retail Ventures tax department (including all
overhead expenses). In addition, we reimburse Retail Ventures for 50% of any third
party fees and expenses generally incurred by Retail Ventures tax department and
100% of any third party fees and expenses incurred by Retail Ventures tax department
solely in connection with the performance of the tax services provided to us.
Retail Ventures is primarily responsible for controlling and contesting any audit or
other tax proceeding with respect to the Consolidated Group or any Combined Group;
provided, however, that, except in cases involving taxes relating to a spin-off, we
have the right to control decisions to resolve, settle or otherwise agree to any
deficiency, claim or adjustment with respect to any item for which we are solely
liable under the tax separation agreement. Pursuant to the tax separation agreement,
we have the right to control and contest any audit or tax proceeding that relates to
any tax returns that include only us and our subsidiaries. We and Retail Ventures
have joint control over decisions to resolve, settle or otherwise agree to any
deficiency, claim or adjustment for which we and Retail Ventures could be jointly
liable, except in cases involving taxes relating to a spin-off. Disputes arising
between the parties relating to matters covered by the tax separation agreement are
subject to resolution through specific dispute resolution provisions.
We have been included in the Consolidated Group for periods in which Retail Ventures
owned at least 80% of the total voting power and value of our outstanding stock.
Following completion of our initial public offering in July 2005, we are no longer
included in the Consolidated Group. Each member of a consolidated group for U.S.
federal income tax purposes is jointly and severally liable for the U.S. federal
income tax liability of each other member of the consolidated group. Similarly, in
some jurisdictions, each member of a consolidated, combined or unitary group for
state, local or foreign income tax purposes is jointly and severally liable for the
state, local or foreign income tax liability of each other member of the
consolidated, combined or unitary group.
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Accordingly, although the tax separation
agreement allocates tax liabilities between us and Retail Ventures, for any period in
which we were included in the Consolidated Group or a Combined Group, we could be
liable in the event that any income tax liability was incurred, but not discharged, by any
other member of the Consolidated Group or a Combined Group.
Retail Ventures has informed us that it does not currently intend or plan to
undertake a spin-off of our stock to Retail Ventures shareholders. Nevertheless, we
and Retail Ventures agreed to set forth our respective rights, responsibilities and
obligations with respect to any possible spin-off in the tax separation agreement. If
Retail Ventures were to decide to pursue a possible spin-off, we have agreed to
cooperate with Retail Ventures and to take any and all actions reasonably requested
by Retail Ventures in connection with such a transaction. We have also agreed not to
knowingly take or fail to take any actions that could reasonably be expected to
preclude Retail Ventures ability to undertake a tax-free spin-off. In addition, we
generally would be responsible for any taxes resulting from the failure of a spin-off
to qualify as a tax-free transaction to the extent such taxes are attributable to, or
result from, any action or failure to act by us or certain transactions in our stock
(including transactions over which we would have no control, such as acquisitions of
our stock and the exercise of warrants, options, exchange rights, conversion rights
or similar arrangements with respect to our stock) following or preceding a spin-off.
We would also be responsible for a percentage (based on the relative market
capitalizations of us and Retail Ventures at the time of such spin-off) of such taxes
to the extent such taxes are not otherwise attributable to us or Retail Ventures. Our
agreements in connection with such spin-off matters last indefinitely. In addition,
present and future majority-owned affiliates of DSW or Retail Ventures will be bound
by our agreements, unless Retail Ventures or we, as applicable, consent to grant a
release of an affiliate (such consent cannot be unreasonably withheld, conditioned or
delayed), which may limit our ability to sell or otherwise dispose of such
affiliates. Additionally, a minority interest participant(s) in a future joint
venture, if any, would need to evaluate the effect of the tax separation agreement on
such joint venture, and such evaluation may negatively affect their decision whether
to participate in such a joint venture. Furthermore, the tax separation agreement may
negatively affect our ability to acquire a majority interest in a joint venture.
Exchange Agreement. In connection with our initial public offering, we entered into
an exchange agreement with Retail Ventures. In the event that Retail Ventures desires
to exchange all or a portion of the Class B Common Shares held by it for Class A
Common Shares, we will issue to Retail Ventures an equal number of duly authorized,
validly issued, fully paid and nonassessable Class A Common Shares in exchange for
the Class B Common Shares of DSW held by Retail Ventures. Retail Ventures may make
one or more requests for such exchange, covering all or a part of the Class B Common
Shares that it holds.
Footwear Fixture Agreement. In connection with the completion of our initial public
offering in July 2005, we entered into an agreement with Retail Ventures related to
our patented footwear display fixtures. We agreed to sell Retail Ventures, upon its
request, the fixtures covered by the patents at the cost associated with obtaining
and delivering them. In addition, we have agreed to pay Retail Ventures a percentage
of any net profit we may receive should we ever market and sell the fixtures to third
parties.
Leases and Subleases
Office, warehouse and distribution facility. We lease our approximately 700,000
square foot corporate headquarters, warehouse and distribution facility in Columbus,
Ohio from an affiliate of SSC. In fiscal 2006, in connection with the execution of
the lease for a new corporate office described below, we exercised the first renewal
option extending the term of this lease until December 2021. Additionally, we were
granted an additional five-year renewal option for this facility. The monthly rent
is $179,533, $194,228 and $208,922, and $220,416 during the first, second, third and
fourth five-year periods of the initial term and first renewal period, respectively.
The lease has three remaining renewal options with terms of five years each. The rent
increases to $235,111, $249,805, and $265,160 in second, third and fourth renewal
terms, respectively. On account of this agreement, we incurred approximately $1.8
million in rent in fiscal 2007.
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In fiscal 2006, we entered into a lease for a new corporate headquarters immediately
adjacent to our existing home office in Columbus, Ohio. The landlord is an affiliate
of SSC. The lease expires in December 2021 and has three renewal options with terms
of five years each. The monthly rent is $123,143 with a minimum annual rent of
$1,477,710. On account of this agreement, we incurred approximately $1.3 million of
expense for fiscal 2007.
In fiscal 2007, we entered into a lease for a new fulfillment center for DSW.com
adjacent to our existing home office in Columbus, Ohio. The landlord is an affiliate
of SSC. The lease expires in September 2017 and has two renewal options with terms
of five years each. The monthly rent is $49,688 with a minimum annual rent of
$596,250. On account of this agreement, we incurred approximately $170,747
of expense for fiscal 2007.
DSW stores. As of February 2, 2008, we leased or subleased 19 DSW stores from
affiliates of SSC. We incurred approximately $17.3 million of expense related to
these leases for fiscal 2007. In addition to base rent, for each lease, we also (a)
pay percentage rent equal to approximately 2% annually of gross sales that exceed
specified breakpoints that increase as the minimum rent increases and (b) pay a
portion of expenses related to maintenance, real estate taxes and insurance. These
leases have terms expiring between November 2009 and January 2022 and generally have
at least three renewal options of 5 years each.
Corporate Services Agreement with SSC
We receive services from SSC pursuant to a Corporate Services Agreement between
Retail Ventures and SSC. The agreement set forth the costs of shared services,
including specified legal, advertising, import, real estate and administrative
services. As of February 2, 2008, the only services we receive pursuant to this
agreement pertain to real estate services. For fiscal 2007, our allocated portion of
the amount Retail Ventures paid SSC or its affiliates was $100,000 for such services.
In connection with our initial public offering, the Corporate Services Agreement was
amended and Schottenstein Management Company, or SMC, was added as a party.
We entered into a side letter agreement relating to corporate services with SSC and
SMC. Under the side letter agreement, we have agreed to pay for any services provided
by SSC or SMC to DSW through Retail Ventures in the event that Retail Ventures does
not pay for those services.
Until July 2004, we were self-insured through our participation in a self-insurance
program maintained by SSC. While we no longer participate in the program we continue
to remain liable for liabilities incurred by us under the program. Under the program,
SSC charged Retail Ventures amounts based, among other factors, on loss experience
and its actual payroll and related costs for administering the program. For fiscal
2007, our allocated portion of the amount Retail Ventures paid SSC was in an amount
immaterial to the financial statements.
DSW has had, and will continue to have, the option to use corporate aircraft provided
by a third party vendor pursuant to a contract between the third party vendor and SSC
and a Retail Ventures affiliate. We expect to pay SSC for these services as expenses
for these services are incurred. These services are made available to us by virtue of
our status as an SSC affiliate. For fiscal 2007, we paid $0.4 million related to use of
corporate aircraft provided under the arrangement.
Agreements with Filenes Basement for Leased Shoe Departments
Effective as of January 30, 2005, we updated and reaffirmed our contractual
arrangement with Filenes Basement related to combination DSW/Filenes Basement
stores. Under the agreement, we have the exclusive right to operate leased shoe
departments with 10,000 square feet or more of selling space in Filenes Basement
stores. We own the merchandise, record sales of merchandise net of returns and sales
tax, and receive a per-store license fee for use of our name on the stores. We pay a
percentage of net sales as rent. The employees that supervise the shoe departments
are employees of us who report directly to our supervisors. Filenes Basement
provides the fixtures and sales associates. As of February 2, 2008, this agreement
pertained to only three combination DSW/Filenes Basement stores. We paid a net
amount of approximately $2.9 million in total fees and expenses to Filenes Basement
for fiscal 2007.
Effective as of January 30, 2005, we updated and reaffirmed our contractual
arrangement with Filenes Basement related to the smaller leased shoe departments.
Under the new agreement we have the exclusive right to operate leased shoe
departments with less than 10,000 square feet of selling space in Filenes Basement
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stores. We own the merchandise, record sales net of returns and sales tax and provide
supervisory assistance in all covered locations. We pay a percentage of net sales as
rent. Filenes Basement provides the fixtures and sales associates. We also pay
certain taxes, insurance premiums and freight costs with respect to the merchandise.
As of February 2, 2008, we operated leased shoe departments in 36 of these Filenes
Basement stores. We paid approximately $9.3 million in total fees and expenses to
Filenes Basement for fiscal 2007.
Agreement with Filenes Basement for Atrium Space at our Union Square Store in Manhattan
Effective as of January 30, 2005, we entered into a shared expenses agreement with
Filenes Basement related to the shared atrium space connecting Filenes Basements
leased spaced at Union Square and our Union Square store leased space, and for other
expenses related to our leased space, which are located in the same building in New
York, New York. Under that agreement, we have agreed to share with Filenes Basement
expenses related to the use and maintenance of the atrium space and to share other
expenses related to the operation and maintenance of the Filenes Basement leased
space and our leased space. Our share of these expenses was immaterial for fiscal
2007.
Registration Rights Agreements
Under the master separation agreement, we have agreed to effect up to one demand
registration per calendar year of our Common Shares, whether Class A or Class B, held
by Retail Ventures, if requested by Retail Ventures. We have also granted Retail
Ventures the right to include its Common Shares of DSW in an unlimited number of
other registrations of such shares initiated by us or on behalf of our other
shareholders.
We have also entered into a registration rights agreement with Cerberus and SSC,
under which we have agreed to register in specified circumstances the Class A Common
Shares issued to them upon exercise of their warrants and each of these entities and
Millennium Partners, L.P., or Millennium, will be entitled to participate in the
registrations initiated by the other entities. Under this agreement, each of Cerberus
(together with transferees of at least 15% of its interest in registrable DSW Common
Shares) and SSC (together with transferees of at least 15% of its interest in
registrable DSW Common Shares) may request up to five demand registrations with
respect to the Class A Common Shares issued to them upon exercise of their warrants
provided that no party may request more than two demand registrations, except that
each of Cerberus and SSC may each request up to three demand registrations. The
agreement will also grant Cerberus, SSC and Millennium the right to include these
Class A Common Shares in an unlimited number of other registrations of any of our
securities initiated by us or on behalf of our other shareholders (other than a
demand registration made under the agreement).
Notes, Credit Agreements and Guarantees
Upon completion of our initial public offering in July 2005, Retail Ventures amended
or terminated the existing credit facilities and other debt obligations of Value City
and its other affiliates, including certain facilities under which DSW had rights and
obligations as a co-borrower and co-guarantor. DSW is no longer a party to any of
these agreements.
The Value City Term Loan Facility. Prior to completion of our initial public offering
in July 2005, we were party to a Financing Agreement, as amended, among Cerberus, as
agent and lender, and SSC as lender, and the other parties named as co-borrowers
therein, originally entered into in June 2002. Upon the completion of our initial
public offering, this term loan agreement was amended and restated and we were
released from our obligations as a party thereto.
In connection with the second tranche of these term loans, Retail Ventures issued to
each of Cerberus and SSC warrants to purchase 1,477,396 common shares of Retail
Ventures at a purchase price of $4.50 per share, subject to adjustment. In September
2002, Back Bay bought from each of Cerberus and SSC a $1.5 million interest in each
of the tranches of their term loans for an aggregate $6.0 million interest, and Back
Bay received from each of Cerberus and SSC a corresponding portion of the warrants to
purchase Retail Ventures common shares originally issued in connection with the
second tranche of their term loans. Effective November 23, 2005, Millennium Partners,
L.P. purchased from Back Bay Capital Funding LLC term loan warrants to purchase an
aggregate of 177,288 of Retail Ventures common shares, subject to adjustment.
In connection with the amendment of this term loan agreement, Retail Ventures amended
the outstanding warrants to provide SSC, Cerberus and Millennium the right, from time
to time, in whole or in part, to (i)
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acquire Retail Ventures common shares at the then current conversion price (subject
to the existing anti-dilution) provisions, (ii) acquire from Retail Ventures Class A
Common Shares of DSW at an exercise price of $19.00 per share (subject to
anti-dilution provisions similar to those in the existing warrants) or (iii) acquire
a combination thereof.
Assuming an exercise price per share of $19.00, SSC and Cerberus would each receive
328,915 Class A Common Shares, and Millennium would receive 41,989 Class A Common
Shares, if they exercised these warrants in full exclusively for DSW Common Shares.
The warrants expire in June 2012. Although Retail Ventures has informed us that it
does not currently intend or plan to undertake a spin-off of Common Shares to Retail
Ventures shareholders, in the event that Retail Ventures effects a spin-off of its
DSW Common Shares to its shareholders in the future, the holders of outstanding
unexercised warrants will receive the same number of DSW Common Shares that they
would have received had they exercised their warrants in full for Retail Ventures
common shares immediately prior to the record date of the spin-off, without regard to
any limitations on exercise in the warrants. Following the completion of any such
spin-off, the warrants will be exercisable solely for Retail Ventures common shares.
We have entered into an exchange agreement with Retail Ventures whereby, upon the
request of Retail Ventures, we will be required to exchange some or all of the Class
B Common Shares of DSW held by Retail Ventures for Class A Common Shares.
The Value City Senior Subordinated Convertible Loan Facility. Prior to completion of
our initial public offering in July 2005, we were a co-guarantor under the Amended
and Restated Senior Subordinated Convertible Loan Agreement, entered into by Value
City, as borrower, Cerberus, as agent and lender, SSC, as lender, and DSW and the
other parties named as guarantors, originally entered into in June 2002. Upon the
completion of our initial public offering, this convertible loan agreement was
amended and restated and we are no longer a party thereto.
In connection with the amendment and restatement of this convertible loan agreement,
Retail Ventures agreed to issue to SSC and Cerberus convertible warrants which will
be exercisable from time to time until the later of June 11, 2007 and the repayment
in full of Value Citys obligations under the amended and restated loan agreement.
Under the convertible warrants, SSC and Cerberus will have the right, from time to
time, in whole or in part, to (i) acquire Retail Ventures common shares at the
conversion price referred to in the convertible loan (subject to existing
antidilution provisions), (ii) acquire from Retail Ventures Class A Common Shares of
DSW at an exercise price of $19.00 per share (subject to antidilution provisions
similar to those in the existing warrants) or (iii) acquire a combination thereof.
Although Retail Ventures has informed us that it does not currently intend or plan to
undertake a spin-off of Common Shares to Retail Ventures shareholders, in the event
that Retail Ventures effects a spin-off of its DSW Common Shares to its shareholders
in the future, the holders of outstanding unexercised warrants will receive the same
number of DSW Common Shares that they would have received had they exercised their
warrants in full for Retail Ventures common shares immediately prior to the record
date of the spin-off, without regard to any limitation on exercise contained in the
warrants. Following the completion of any such spin-off, the warrants will be
exercisable solely for Retail Ventures common shares. During fiscal 2006, the
maturity date of the convertible warrants was extended to June 10, 2009. On June 6,
2007, Retail Ventures issued 1,333,333 of its common shares, without par value, to
Cerberus in connection with Cerberus exercise of its remaining outstanding
convertible warrants that were originally issued by Retail Ventures on July 5, 2005.
As of February 2, 2008, assuming an exercise price per share of $19.00, SSC would
receive 1,973,685 Class A Common Shares without giving effect to anti-dilution
adjustments, if any, if they exercised these warrants exclusively for DSW Common
Shares.
Union Square Store Guaranty by Retail Ventures. In January 2004, we entered into a
lease agreement with 40 East 14 Realty Associates, L.L.C., an unrelated third party,
for our Union Square store in Manhattan, New York. In connection with the lease,
Retail Ventures agreed to guarantee payment of our rent and other expenses and
charges and the performance of our other obligations.
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Provisions of Our Amended Articles of Incorporation Governing Corporate Opportunities and Related
Party Transactions
Retail Ventures remains a substantial shareholder of DSW and SSC remains a
substantial shareholder of Retail Ventures. Retail Ventures and SSC are engaged in
the same or similar activities or lines of business as we are and have interests in
the same areas of corporate opportunities. Summarized below are provisions in our
amended articles of incorporation that govern conflicts, corporate opportunities and
related party transactions.
Conflicts/ Competition. Retail Ventures and SSC have the right to engage in the same
businesses as we do, to do business with our suppliers and customers and to employ
any of our officers or employees.
Corporate Opportunities. In the event that Retail Ventures, SSC or any director or
officer of either of them who is also one of our directors or officers learns about a
potential transaction or business opportunity which we are financially able to
undertake, which is in our line of business, which is of practical advantage to us
and in which we have an interest or a reasonable expectancy, but which may also be
appropriate for Retail Ventures or SSC, our amended articles of incorporation
provide:
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If Retail Ventures or SSC learns about a corporate opportunity, it does
not have to tell us about it and it is not a breach of any fiduciary duty
for it to pursue such corporate opportunity for itself or to direct it
elsewhere. |
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If one of our directors or officers who is also a director or officer of
Retail Ventures or SSC learns about a corporate opportunity, he or she shall
not be liable to us or to our shareholders if Retail Ventures or SSC pursues
the corporate opportunity for itself, directs it elsewhere or does not
communicate information about the opportunity to us, if such director or
officer acts in a manner consistent with the following policy: |
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If the corporate opportunity is offered to
one of our officers who is also a director but not an officer of
Retail Ventures or SSC, the corporate opportunity belongs to us
unless it was expressly offered to the officer in writing solely in
his or her capacity as a director of Retail Ventures or SSC, in which
case it belongs to Retail Ventures or SSC, as the case may be. |
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If the corporate opportunity is offered to
one of our directors who is not an officer of DSW, and who is also a
director or officer of Retail Ventures or SSC, the corporate
opportunity belongs to us only if it was expressly offered to the
director in writing solely in his or her capacity as our director. |
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If the corporate opportunity is offered to
one of our officers, whether or not such person is also a director,
who is also an officer of Retail Ventures or SSC, it belongs to us
only if it is expressly offered to the officer in writing solely in
his or her capacity as our officer or director. |
Related Party Transactions. We may, from time to time, enter into contracts or
otherwise transact business with Retail Ventures, SSC, our directors, directors of
Retail Ventures or SSC or organizations in which any of such directors has a
financial interest. Such contracts and transactions are permitted if:
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the relationship or interest is disclosed or is known to the board of
directors or the committee approving the contract or transaction, and the
board of directors or committee, in good faith reasonably justified by the
facts, authorizes the contract or transaction by the affirmative vote of a
majority of the directors who are not interested in the contract or
transaction; |
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the relationship or interest is disclosed or is known to the
shareholders, and the shareholders approve the contract or transaction by
the affirmative vote of the holders of a majority of the voting power of the
corporation held by persons not interested in the contract or transaction;
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the contract or transaction is fair at the time it is authorized or
approved by the board of directors, a committee of the board of directors,
or the shareholders. |
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INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
We engaged Deloitte & Touche LLP as our independent registered public accountants to
audit our consolidated financial statements for fiscal 2007. Services provided by
Deloitte & Touche LLP for each of fiscal 2007 and fiscal 2006 and the related fees
are described under the caption Audit and Other Service Fees of this proxy
statement. Our Audit Committee is directly responsible for the appointment,
compensation, retention, termination and oversight of the work of the independent
auditors, and has the sole responsibility to retain and replace our independent
auditor. The Audit Committee has selected Deloitte & Touche LLP as our independent
auditors for fiscal 2008.
We expect that representatives of Deloitte & Touche LLP will be present at the Annual
Meeting with the opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
OTHER MATTERS
Shareholder Proposals Pursuant to Rule 14a-8
In order to be considered for inclusion in the proxy statement distributed to
shareholders prior to the Annual Meeting of Shareholders in 2009, a shareholder
proposal in compliance with Securities and Exchange Commission Rule 14a-8 must be
received by DSW no later than December 22, 2008. Written requests for inclusion
should be addressed to: Corporate Secretary, 810 DSW Drive, Columbus, Ohio 43219. It
is suggested that you mail your proposal by certified mail, return receipt requested.
Shareholder Proposals Other Than Pursuant to Rule 14a-8
After December 22, 2008, a shareholder may submit a proposal to be presented at the
Annual Meeting of Shareholders in 2009, but it will not be included in our proxy
statement or form of proxy relating to the 2009Annual Meeting. In addition, if
notice of a proposal is not received by our Corporate Secretary by March 7, 2009,
then the proposal will be deemed untimely for purposes of Rule 14a-4(c)(1)
promulgated under the Exchange Act and the individuals named in the proxies solicited
on behalf of the Board of Directors for use at the 2009 Annual Meeting will have the
right to exercise discretionary authority as to the proposal. Our Code of
Regulations also provides that nominations for director may only be made by the Board
of Directors (or an authorized Board committee) or by a shareholder of record
entitled to vote who sends notice to our Corporate Secretary not fewer than 60 nor
more than 90 days before the anniversary date of the previous years annual meeting
of shareholders. Any nomination by a shareholder must comply with the procedures
specified in our Code of Regulations. To be eligible for consideration at the 2009
Annual Meeting, any nominations for director must be received by our Corporate
Secretary between February 21, 2009 and March 23, 2009. This advance notice period
is intended to allow all shareholders an opportunity to consider any nominees
expected to be considered at the meeting.
Shareholder Communications to the Board of Directors
Shareholders and interested parties may communicate with the Board of Directors
(including the non-management directors as a group) or individual directors directly
by writing to the directors in care of our Corporate Secretary, 810 DSW Drive,
Columbus, Ohio 43219, in an envelope clearly marked shareholder communication.
Such communications will be provided promptly and, if requested, confidentially to
the respective directors.
General Information
A COPY OF THE FORM 10-K FOR THE FISCAL YEAR ENDED FEBRUARY 2, 2008 AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION WILL BE SENT TO ANY SHAREHOLDER WITHOUT CHARGE
UPON WRITTEN REQUEST ADDRESSED TO INVESTOR RELATIONS DEPARTMENT, 810 DSW DRIVE
AVENUE, COLUMBUS, OHIO 43219.
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Management knows of no other business which may be properly brought before the 2008
Annual Meeting of Shareholders. However, if any other matters shall properly come
before such meeting, it is the intention of the persons named in the enclosed form of
proxy to vote such proxy in accordance with their best judgment on such matters.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO FILL IN, SIGN AND RETURN THE
PROXY IN THE ENCLOSED STAMPED, SELF-ADDRESSED ENVELOPE.
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By Order of the Board of Directors,
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/s/ William L. Jordan
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William L. Jordan |
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Secretary |
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DSW INC.
810 DSW Drive, Columbus, Ohio 43219
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS MAY 22, 2008
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of DSW Inc. (the Company) hereby appoints Peter Z. Horvath,
Douglas J. Probst and William L. Jordan, or any one of them, as attorneys and proxies with full
power of substitution to each, to vote all shares of common stock of the Company which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of the Company to be held at
the Companys corporate offices, 810 DSW Drive, Columbus, Ohio 43219, on Thursday, May 22, 2008, at
11:00 a.m. Eastern Daylight Savings Time, and at any postponement or adjournments thereof, with all
of the powers such undersigned shareholder would have if personally present, for the following
purposes:
1. Election of the following Class I Directors:
Carolee Friedlander
Harvey L. Sonnenberg
Allan J. Tanenbaum
Heywood Wilansky
o FOR ALL NOMINEES o WITHHOLD AUTHORITY FOR ALL NOMINEES
o FOR ALL NOMINEES EXCEPT (See instructions below)
(Instruction: To withhold authority for one or more specific nominees, write such nominee(s)
name here:
.)
2. Election of the following Class III Directors:
Elaine Eisenman
Joanna T. Lau
Roger S. Markfield
o FOR ALL NOMINEES o WITHHOLD AUTHORITY FOR ALL NOMINEES
o FOR ALL NOMINEES EXCEPT (See instructions below)
(Instruction: To withhold authority for one or more specific nominees, write such nominee(s)
name here:
.)
3. To transact any other business which may properly come before the annual meeting or any
adjournment thereof.
THIS PROXY, WHEN EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSAL 1 AND 2.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders,
dated April 21, 2008, and the proxy statement of the Company furnished therewith. Any proxy
heretofore given to vote said shares is hereby revoked.
PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
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Dated: , 2008 |
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Signature |
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Signature |
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Signature(s) shall agree with the name(s) printed
on this Proxy. If shares are registered in two
names, both shareholders should sign this Proxy.
If signing as attorney, executor, administrator,
trustee or guardian, please give your full title
as such. If the shareholder is a corporation,
please sign in full corporate name by an
authorized officer. If the shareholder is a
partnership or other entity, please sign that
entitys name by authorized person. (Please note
any change of address on this Proxy.) |