SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
The Finish Line, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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[LOGO] FINISH LINE
June 17, 2003
Dear Stockholder:
You are cordially invited to attend the 2003 Annual Meeting of Stockholders
of The Finish Line, Inc. on Thursday, July 17, 2003 at 9:00 a.m., to be held at
Finish Line Corporate Office, 3308 N. Mitthoeffer Rd, Indianapolis, IN 46235.
Members of your Board of Directors and management look forward to greeting those
stockholders who are able to attend.
The accompanying Notice and Proxy Statement describe the matters to be
acted upon at the meeting.
It is important that your shares be represented and voted at the meeting.
Whether or not you plan to attend, please sign, date and mail the enclosed proxy
card at your earliest convenience. If you attend the meeting, you may withdraw
your proxy and vote in person.
Your interest and participation in the affairs of the Company are greatly
appreciated.
Respectfully,
/s/ Alan H. Cohen
Alan H. Cohen,
Chairman of the Board
and Chief Executive Officer
THE FINISH LINE, INC.
3308 N. MITTHOEFFER ROAD
INDIANAPOLIS, INDIANA 46235
-------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 17, 2003
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TO THE STOCKHOLDERS OF THE FINISH LINE, INC.:
Notice is hereby given that the 2003 Annual Meeting of Stockholders of The
Finish Line, Inc. to be held at Finish Line Corporate Office, 3308 N.
Mitthoeffer Rd, Indianapolis, IN 46235 on Thursday, July 17, 2003 at 9:00 a.m.,
will be conducted for the following purposes:
1. To elect seven directors; and
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only stockholders of record at the close of business on May 23, 2003, will
be entitled to notice of and to vote at the Annual Meeting and any adjournments
or postponements thereof.
By Order of the Board of Directors,
/s/ Gary D. Cohen
Gary D. Cohen,
Executive Vice President
General Counsel and Secretary
Indianapolis, Indiana
June 17, 2003
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YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE ASKED TO COMPLETE, SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY CARD IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
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THE FINISH LINE, INC.
3308 N. MITTHOEFFER ROAD
INDIANAPOLIS, INDIANA 46235
--------------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
JULY 17, 2003
--------------------------------
GENERAL INFORMATION
This Proxy Statement and the accompanying Notice of Annual Meeting and Proxy
Card are being mailed on or about June 17, 2003 in connection with the
solicitation of proxies by the Board of Directors of The Finish Line, Inc.
("Finish Line" or the "Company") for use at the 2003 Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held at Finish Line
Corporate Office, 3308 N. Mitthoeffer Rd., Indianapolis, IN 46235, on Thursday,
July 17, 2003, at 9:00 a.m., and any adjournment or postponement thereof. At the
Annual Meeting, the Company's stockholders will be asked to elect seven
directors, and to vote on such other matters as may properly come before the
Annual Meeting.
Throughout this Proxy Statement, fiscal 2003, fiscal 2002 and fiscal 2001
represent the fiscal years ended March 1, 2003, March 2, 2002, and March 3, 2001
respectively.
PERSONS MAKING THE SOLICITATION
The Company is making this solicitation and will bear the expenses of preparing,
printing and mailing proxy materials to the Company's stockholders. In addition,
proxies may be solicited personally or by telephone or fax by officers or
employees of the Company, none of whom will receive additional compensation
therefrom. The Company will also reimburse brokerage houses and other nominees
for their reasonable expenses in forwarding proxy materials to beneficial owners
of the Class A Common Stock.
VOTING AT THE MEETING
Stockholders of record of the Company's Class A Common Stock, par value $.01 per
share ("Class A Common Stock"), and Class B Common Stock, par value $.01 per
share ("Class B Common Stock") at the close of business on May 23, 2003, are
entitled to notice of and to vote at the Annual Meeting and any adjournment or
postponement thereof. On that date, 19,237,585 shares of Class A Common Stock
and 3,897,810 shares of Class B Common Stock were outstanding and entitled to
vote. Each outstanding share of Class A Common Stock entitles the holder thereof
to one vote and each outstanding share of Class B Common Stock entitles the
holder to ten votes.
In the election of directors, the seven nominees receiving the highest number of
affirmative votes of the shares present or represented and entitled to be voted
for them shall be elected. Votes withheld from any director are counted for
purposes of determining the presence or absence of a quorum for the transaction
of business.
The Company believes that abstentions should be counted for purposes of
determining whether a quorum is present at the Annual Meeting for the
transaction of business. In the absence of controlling precedent to the
contrary, the Company intends to treat abstentions with respect to the election
of directors in this manner. The Company intends to count broker non-votes as
present or represented for purposes of determining the presence or absence of a
quorum for the transaction of business.
Stockholders do not have the right to cumulate their votes in the election of
directors.
1
REVOCABILITY OF PROXY
A proxy may be revoked by a stockholder prior to the voting at the Annual
Meeting by written notice to the Secretary of the Company, by submission of
another proxy bearing a later date or by voting in person at the Annual Meeting.
Such notice or later proxy will not affect a vote on any matter taken prior to
the receipt thereof by the Company. The mere presence at the Annual Meeting of a
stockholder who has appointed a proxy will not revoke the prior appointment. If
not revoked, the proxy will be voted at the Annual Meeting in accordance with
the instructions indicated on the Proxy Card by the stockholders or, if no
instructions are indicated, will be voted FOR the slate of directors described
herein, and as to any other matter that may be properly brought before the
Annual Meeting, in accordance with the judgment of the proxy.
2
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 23, 2003 information relating to the
beneficial ownership of the Company's common stock by each person known to the
Company to be the beneficial owner of more than five percent of the outstanding
shares of Class A Common Stock or Class B Common Stock, by each director or
nominee for director, by each of the executive officers named below, and by all
directors and executive officers as a group.
BENEFICIAL OWNERSHIP AS OF MAY 23, 2003
-------------------------------------------------------------------------
CLASS A CLASS B
--------------------------- ---------------------------
NUMBER OF % OF NUMBER OF %OF TOTAL
NAME SHARES(1)(2) CLASS (3) SHARES(1) CLASS(3) SHARES
---- ------------- ---------- ------------ ----------- ----------
Alan H. Cohen .................. 428,334 (4) 2.2% 1,606,063(7) 41.2% 2,034,397
David I. Klapper .................. 534,957 (5) 2.7% 1,428,600(8) 36.7% 1,963,557
Larry J. Sablosky .................. 174,866 (6) (12) 863,147(9) 22.1% 1,038,013
Steven J. Schneider .................. 59,660(10) (12) -- -- 59,660
Gary D. Cohen .................. 55,025(10) (12) -- -- 55,025
Glenn S. Lyon .................. 3,750(10) (12) -- -- 3,750
George S. Sanders .................. 67,150(10) (12) -- -- 67,150
Donald E. Courtney .................. 56,650(10) (12) -- -- 56,650
Michael L. Marchetti.................. 46,550(10) (12) -- -- 46,550
Kevin S. Wampler .................. 40,200(10) (12) -- -- 40,200
Kevin G. Flynn .................. 25,600(10) (12) -- -- 25,600
Robert A. Edwards .................. 42,900(10) (12) -- -- 42,900
James B. Davis .................. 28,750(10) (12) -- -- 28,750
Joseph L. Gravitt .................. 33,500(10) (12) -- -- 33,500
Roger C. Underwood.................. 11,200(10) (12) -- -- 11,200
Timothy R. Geis .................. 7,600(10) (12) -- -- 7,600
Michael J. Smith .................. 6,100(10) (12) -- -- 6,100
Jonathan K. Layne .................. 24,000(10) (12) -- -- 24,000
Jeffrey H. Smulyan .................. 68,000(10) (12) -- -- 68,000
Stephen Goldsmith .................. 19,000(10) (12) -- -- 19,000
Bill Kirkendall .................. 7,000(10) (12) -- -- 7,000
William P. Carmichael.................. -- -- -- -- --
FMR Corp. 2,288,200(11) 11.6% -- -- 2,288,200
82 Devonshire Street
Boston, MA 02109
Advisory Research, Inc. 1,668,627(11) 8.4% -- -- 1,668,627
180 N. Stetson St., Ste. 5780
Chicago, IL 60601
Dimensional Fund Advisors 1,526,850(11) 7.7% -- -- 1,526,850
1299 Ocean Ave., 11th Floor
Santa Monica, CA 90401
Wasach Advisors, Inc. 1,330,257(11) 6.7% -- -- 1,330,257
150 Social Hall Avenue
Salt Lake City, UT 84111
Barclays Global Investors, NA 1,065,990(11) 5.4% -- -- 1,065,990
45 Fremont Street
San Francisco, CA 94105
All directors and executive officers as 1,740,792 8.8% 3,897,810 100.0% 5,638,602
a group (22 persons)
--------------
(1) Each executive officer and director has sole voting and investment power
with respect to the shares listed, unless otherwise indicated, and the
address for the executive officers and directors is: 3308 N. Mitthoeffer
Road, Indianapolis, Indiana 46235.
(2) If shares of Class B Common Stock are owned by the named person or group,
excludes shares of Class B Common Stock convertible into a corresponding
number of Class A Common Stock.
3
(3) The shares owned by each person, or by the group, and the shares included
in the total number of shares outstanding have been adjusted, and the
percentage owned (where such percentage exceeds 1%) has been computed, in
accordance with Rule 13d-3(d)(1) under the Securities Exchange Act of 1934.
(4) Includes 53,850 shares gifted to a private family foundation, which is
controlled by the named person, and includes 224,484 shares held as trustee
of a trust for the benefit of his children.
(5) Includes 83,550 shares gifted to a private family foundation, which is
controlled by the named person, and includes 351,407 shares held as trustee
of a trust for the benefit of his children.
(6) Includes 50,050 shares gifted to a private family foundation, which is
controlled by the named person. Also includes 120,000 shares held by a
family partnership of which Mr. Sablosky serves as general partner.
(7) Includes 273,343 shares held as trustee of a trust for the benefit of his
children.
(8) Includes 48,550 shares held by a family partnership of which Mr. Klapper
serves as general partner and includes 234,493 shares held as trustee of a
trust for the benefit of his children.
(9) Includes 227,526 shares of Class B Common Stock held by a family
partnership of which Mr. Sablosky serves as general partner, and 7,210
shares of Class B Common Stock held by Mr. Sablosky's spouse. Also includes
251,809 shares held as trustee of a trust for the benefit of his children.
(10) Includes the following shares issuable upon exercise of options which are
exercisable within 60 days of
May 23, 2003:
Steven J. Schneider................................................54,550
Glenn S. Lyon.......................................................3,750
Gary D. Cohen......................................................48,525
George S. Sanders..................................................67,150
Donald E. Courtney.................................................54,550
Michael L. Marchetti...............................................44,550
Kevin S. Wampler...................................................40,200
Kevin G. Flynn.....................................................25,400
Robert A. Edwards..................................................41,700
James B. Davis.....................................................28,750
Joseph L. Gravitt..................................................31,300
Roger C. Underwood.................................................11,200
Timothy Geis........................................................7,600
Michael J. Smith....................................................6,100
Jonathan K. Layne..................................................24,000
Jeffrey H. Smulyan.................................................42,000
Stephen Goldsmith..................................................19,000
Bill Kirkendall.....................................................7,000
(11) This information is based solely on Schedule 13G's filed with the
Securities Exchange Commission, copies of which were provided to the
Company. The respective dates of the Schedule 13G's are as follows:
FMR Corp.........................................................02/13/03
Advisory Research, Inc...........................................02/14/03
Dimensional Fund Advisors........................................02/12/03
Wasach Advisors, Inc.............................................02/14/03
Barclays Global Investors, NA....................................02/12/03
(12) Less than 1% of the shares of Class A Common Stock outstanding.
4
ELECTION OF DIRECTORS
(ITEM 1 ON YOUR PROXY)
A board of seven directors is to be elected at the 2003 Annual Meeting. The
persons named in the Proxy Card as proxies for this meeting will vote in favor
of each of the following nominees as directors of the Company unless otherwise
indicated by the stockholder on the Proxy Card. Directors elected at the 2003
Annual Meeting will hold office until the next annual meeting of stockholders of
the Company, and until their successors are duly elected and qualified, except
in the event of their death, resignation, or removal. Management has no reason
to believe that any of the nominees will be unable or unwilling to serve if
elected. If any nominee should become unavailable prior to the election, the
accompanying Proxy Card will be voted for the election in his or her stead of
such other person as the Board of Directors may recommend.
NOMINEES
The nominees for election as directors of the Company are Alan H. Cohen, David
I. Klapper, Larry J. Sablosky, Jeffrey H. Smulyan, Stephen Goldsmith, Bill
Kirkendall and William P. Carmichael. Each of such persons, except William P.
Carmichael, currently serves as a director of the Company. See
"Management--Executive Officers and Directors" for additional information
concerning the nominees.
BOARD OF DIRECTORS' RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
SLATE OF NOMINEES SET FORTH ABOVE. PROXIES SOLICITED BY THE BOARD OF DIRECTORS
WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE ON THEIR PROXY CARDS.
5
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers, directors and nominees for director of the Company are
as follows:
EXECUTIVE
OFFICER OR
DIRECTOR
NAME AGE POSITION SINCE
---- --- -------- ----------
Alan H. Cohen..............................56 Chairman of the Board, President and CEO 1976
David I. Klapper...........................54 Senior Executive Vice President, Director 1976
Larry J. Sablosky..........................54 Senior Executive Vice President, Director 1982
Steven J. Schneider........................47 Executive Vice President-COO, CFO and Asst. Secretary 1989
Gary D. Cohen..............................51 Executive Vice President-General Counsel, Secretary 1997
Glenn S. Lyon..............................53 Executive Vice President - Chief Merchandise Officer 2001
George S. Sanders..........................45 Executive Vice President-Real Estate and Store Development 1994
Donald E. Courtney.........................49 Executive Vice President-CIO and Distribution 1989
Michael L. Marchetti.......................52 Executive Vice President-Store Operations 1995
Kevin S. Wampler...........................40 Senior Vice President-CAO and Asst. Secretary 1997
Kevin G. Flynn.............................39 Senior Vice President-Marketing 1997
Robert A. Edwards..........................41 Senior Vice President-Distribution 1997
James B. Davis.............................40 Senior Vice President-Real Estate 1997
Joseph L. Gravitt..........................43 Senior Vice President-Store Operations 1998
Roger C. Underwood.........................33 Senior Vice President-Information Systems 2001
Timothy R. Geis............................42 Senior Vice President-Footwear 2003
Michael J. Smith...........................45 Senior Vice President-Loss Prevention 2003
Jeffrey H. Smulyan.........................55 Director 1992
Stephen Goldsmith..........................55 Director 1999
Bill Kirkendall............................49 Director 2001
William P. Carmichael......................59 Nominee for Director ----
MR. ALAN H. COHEN, a co-founder of the Company, has served as Chairman of the
Board, President and Chief Executive Officer of the Company since May 1982.
Since 1976, Mr. Cohen has been involved in the athletic retail business as
principal co-founder of Athletic Enterprises, Inc. (one of the predecessor
companies of the Company). Mr. Cohen is an attorney, and practiced law from 1973
through 1981. Mr. Cohen is the brother of Gary D. Cohen.
MR. DAVID I. KLAPPER, a co-founder of the Company, has served as a director of
the Company since May 1982. Mr. Klapper has also served as Senior Executive Vice
President of the Company since April 2000. Prior to his current position, Mr.
Klapper served as Executive Vice President from May 1982 to April 2000. Since
1976, Mr. Klapper has been involved in the athletic retail business as principal
co-founder of Athletic Enterprises, Inc. (one of the predecessor companies of
the Company).
MR. LARRY J. SABLOSKY, a co-founder of the Company, has served as a director of
the Company since May 1982. Mr. Sablosky has also served as Senior Executive
Vice President of the Company since April 2000. Prior to his current position,
Mr. Sablosky served as Executive Vice President from May 1982 to April 2000.
Prior to 1982, Mr. Sablosky was employed in a family retail business for over 10
years. Mr. Sablosky has been involved in the retail industry for over 30 years.
MR. STEVEN J. SCHNEIDER has served as Executive Vice President, Chief Operating
Officer, Chief Financial Officer and Assistant Secretary since April 2001. Mr.
Schneider also served as Executive Vice President-Finance, Chief Financial
Officer and Assistant Secretary of the Company from April 2000 to April 2001.
Mr. Schneider also served as Senior Vice President-Finance, Chief Financial
Officer and Assistant Secretary of the Company from March 1997 to April 2000 and
as Vice President-Finance and Chief Financial Officer of the Company from April
1989 to March 1997. From August 1984 to March 1989, Mr. Schneider was employed
as Assistant Controller for Paul Harris Stores, Inc. a women's apparel retailer.
Mr. Schneider, a Certified Public Accountant, was employed by a national
accounting firm for two years and has been engaged in various financial
positions in the retail industry for over 24 years.
6
MR. GARY D. COHEN has served as Executive Vice President-General Counsel and
Secretary since April 2000. Mr. Cohen also served as Senior Vice
President-General Counsel and Secretary of the Company from his employment in
July 1997 to April 2000. Mr. Cohen also has served as Secretary for the Company
since July 1998. From April 1990 to July 1997, Mr. Cohen was a Senior Partner in
the law firm of Cohen and Morelock. During the 15 years preceding his joining
the Company, Mr. Cohen represented the Company regarding real estate matters.
From 1978 to 1990 Mr. Cohen held associate partnership positions with various
law firms. At the present time, Mr. Cohen retains an "Of Counsel" position with
Brand Davis Elsea & Morelock. Mr. Cohen is the brother of Alan H. Cohen.
MR. GLENN S. LYON has served as Executive Vice President and Chief Merchandise
Officer since September 2001. Prior to joining the Company he served as
President/CEO of Paul Harris Stores, Inc. from March 2000 to February 2001. From
October 1995 to February 2000 he held positions as President and General
Merchandising Manager of Modern Woman Stores, a Division of the American Retail
Group. Mr. Lyon also spent eight years with TJX Company as Senior Vice President
and Executive Vice President of Merchandising and Marketing. Mr. Lyon started
his career in February 1973 at Macy's N.Y. where he spent ten years in various
merchandising positions.
MR. GEORGE S. SANDERS has served as Executive Vice President-Real Estate and
Store Development since April 2000. Mr. Sanders also served as Senior Vice
President-Real Estate and Store Development of the Company from March 1997 to
April 2000 and as Vice President-Real Estate and Store Construction since April
1994. From February 1993 to April 1994, Mr. Sanders served as Director of Real
Estate of the Company. From 1983 to February 1993, Mr. Sanders was employed by
Melvin Simon and Associates, a real estate developer and manager. At the time
Mr. Sanders left Melvin Simon and Associates, he held the position of Sr.
Leasing Representative.
MR. DONALD E. COURTNEY has served as Executive Vice President-Chief Information
Officer-Distribution since April 2000. Mr. Courtney also served as Senior Vice
President-MIS and Distribution of the Company from March 1997 to April 2000 and
as Vice President-MIS and Distribution of the Company since August 1989. From
August 1988 to August 1989, Mr. Courtney served as Director of MIS and
Distribution for the Company. From August 1976 to August 1988, Guarantee Auto
Stores, Inc., an automotive retailer, employed Mr. Courtney. At the time Mr.
Courtney left Guarantee Auto Stores, he held the position of Vice President-MIS
and Distribution. Mr. Courtney has been involved in the retail industry for over
25 years.
MR. MICHAEL L. MARCHETTI has served as Executive Vice President-Store Operations
since April 2000. Mr. Marchetti also served as Senior Vice President-Store
Operations of the Company from March 1997 to April 2000 and as Vice
President-Store Operations since September 1995. From May 1990 to September
1995, Mr. Marchetti was employed as Regional Vice President of Champs Sports, a
division of Footlocker, Inc. Mr. Marchetti has been involved in the retail
industry for over 29 years.
MR. KEVIN S. WAMPLER has served as Senior Vice President, Chief Accounting
Officer and Assistant Secretary since April 2001. Mr. Wampler also served as
Senior Vice President-Corporate Controller and Assistant Secretary of the
Company from April 2000 to April 2001. Mr. Wampler also served as Vice
President-Corporate Controller and Assistant Secretary of the Company from March
1997 to April 2000. Mr. Wampler is a CPA and has been employed by the Company
since June 1993 as Corporate Controller. Mr. Wampler was previously employed by
a national accounting firm from July 1986 to May 1993. At the time Mr. Wampler
left the national accounting firm, he held the position of Audit Manager.
MR. KEVIN G. FLYNN has served as Senior Vice President-Marketing since April
2000. Mr. Flynn also served as Vice President-Marketing of the Company from
March 1997 to April 2000. Mr. Flynn has been employed by the Company since
November 1994 and prior to election as an officer, held the position of
Marketing Director. Mr. Flynn was previously employed from July 1992 to November
1994 as Associate Media Director for Caldwell Van Riper, a regional advertising
agency.
MR. ROBERT A. EDWARDS has served as Senior Vice President-Distribution since
April 2000. Mr. Edwards also served as Vice President-Distribution of the
Company from March 1997 to April 2000. Mr. Edwards has been employed by the
Company since June 1983 and prior to his election as an officer, held the
position of Director of Distribution.
7
MR. JAMES B. DAVIS has served as Senior Vice President-Real Estate since April
2000. Mr. Davis also served as Vice President-Real Estate of the Company from
October 1997 to April 2000. Mr. Davis has been employed by the Company since
October 1996 and prior to his election as an officer, held the position of
Director of Leasing. Mr. Davis was previously employed as Vice President-Leasing
for JMB Urban (a real estate developer and manager) from January 1993 to October
1996.
JOSEPH L. GRAVITT has served as Senior Vice President-Store Operations since
April 2000. Mr. Gravitt also served as Vice President-Store Personnel of the
Company from July 1998 to April 2000. Mr. Gravitt has been employed by the
Company since December 1982. Prior to his election as an officer, Mr. Gravitt
held the position of Director of Store Operations for the Company.
ROGER C. UNDERWOOD has served as Senior Vice President-Information Systems since
April 2001. Mr. Underwood also served as Vice President-Information Systems of
the Company from May 2000 to April 2001. Mr. Underwood has been employed by the
Company since January 1992. Prior to his election as an officer, Mr. Underwood
held the position of Director of Information Systems for the Company.
TIMOTHY R. GEIS has served as Senior Vice President-Footwear since April 2003.
From April 2001 until April 2003, Mr. Geis held the position of Vice
President-Footwear. From November 1996 to April 2001, Mr. Geis held the position
of Divisional Merchandise Manager of Footwear. Mr. Geis joined Finish Line in
October 1995 as a footwear buyer. Prior to Finish Line, Mr. Geis was employed as
a footwear buyer for Champs Sports, a division of Footlocker, Inc.
MICHAEL J. SMITH has served as Senior Vice President-Loss Prevention since April
2003. From March 2000 to April 2003, Mr. Smith held the position of Vice
President-Loss Prevention. Mr. Smith joined Finish Line in October, 1998 as
Director of Loss Prevention. Prior to joining the Company, Mr. Smith was
employed by Merchantile South Department Stores in Mobile, Alabama from 1992
thru 1998.
JEFFREY H. SMULYAN has served as a director of the Company since June 1992. Mr.
Smulyan is CEO, Chairman of the Board, and President of Indianapolis-based Emmis
Communications Corporation, which he founded in 1981. Emmis owns and operates 23
radio stations, 15 network-affiliated television stations, and award-winning
regional and specialty magazines around the country. Mr. Smulyan, a former
director of the National Association of Broadcasters and former Chairman of the
Board of Directors of the Radio Advertising Bureau, sits on the Board of
Trustees of Ball State University and the University of Southern California. In
2000, Mr. Smulyan was honored with the American Women in Radio and Television's
Silver Satellite Award, the National Association of Broadcasters' National Radio
Award, and as Radio Ink's "Radio Executive of the Year." He is the former owner
of the Seattle Mariners baseball team.
STEPHEN GOLDSMITH has served as a director of the Company since July 1999. Mr.
Goldsmith currently serves as Special Advisor to President Bush on faith-based
and not-for-profit initiatives and served as chief domestic policy advisor to
the Bush campaign. Mr. Goldsmith is Chairman, Corporation for National and
Community Service and Senior Vice President, ACS State and Local Solutions
Professor of Practice in Public Management and Faculty Chair for the Institute
for Government Innovation at Harvard University's Kennedy School of Government.
Mr. Goldsmith is a director of Net2Phone, Inc. an Internet communications
company, and Steak 'N Shake Inc., a national restaurant chain. Mr. Goldsmith
served as Mayor of the City of Indianapolis from January 1992 until December
1999.
BILL KIRKENDALL has served as a director of the Company since July 2001. Mr.
Kirkendall is currently employed as an independent consultant since November
2002. Mr. Kirkendall was President and Chief Executive Officer of Orlimar Golf
Company, a manufacturer and distributor of golf equipment, from October 1999 to
November 2002. Mr. Kirkendall was President and CEO of Tretorn of N.A., Inc., a
distributor and licensee of athletic footwear, from 1998 to 1999. Mr. Kirkendall
was a driving force with Etonic Inc., a distributor, manufacturer, and licensee
of athletic footwear and apparel from 1982 to 1998, holding the following
positions: Sales Representative from 1982 to 1985, National Sales Manager from
1985 to 1986, Vice President from 1986 to 1988, Senior Vice President from 1988
to 1989, Executive Vice President from 1989 to 1991, and President from 1991 to
1998. Mr. Kirkendall was Vice President of Golden Brothers Inc., a long haul
trucking company from 1976 to 1982.
8
WILLIAM P. CARMICHAEL was nominated to be a director of the Company at the April
24, 2003 Board Meeting. Mr. Carmichael is a consultant for The Succession Fund
which he co-founded in 1998. Prior to The Succession Fund, Mr. Carmichael served
for twenty-six years in various financial positions with global consumer
products companies, including Senior Vice President for Sara Lee Corporation
from 1991 to 1993, Senior Vice President and CFO for Beatrice Foods Company from
1987 to 1990, and Vice President of Esmark, Inc. from 1973 to 1984.
JONATHAN K. LAYNE has served as a director of the Company since June 1992. Mr.
Layne has been a partner of the law firm of Gibson, Dunn & Crutcher LLP since
1987, where he specializes in corporate and securities law matters. Mr. Layne
was an associate with Gibson, Dunn & Crutcher LLP from 1979 to 1986. Mr. Layne
has decided not to run for reelection as a director.
Each director holds office until the next annual meeting of stockholders or
until his successor has been elected and qualified. Officers are appointed by
and serve at the discretion of the Board of Directors. Unless otherwise stated,
there are no family relationships among any directors or executive officers of
the Company.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings in fiscal 2003 and all directors
attended at least 75 percent of the meetings of the Board and Board Committees
of which they were members.
The Board of Directors has three (3) committees. The Audit Committee is
comprised of Messrs. Goldsmith, Smulyan and Kirkendall, Chair. The Compensation
and Stock Option Committee is comprised of Messrs. Kirkendall and Layne. The
Finance Committee is comprised of Messrs. Klapper and Layne. The Company does
not have a nominating committee nor any committee performing such functions.
The Audit Committee met seven times during fiscal 2003. The Audit Committee is
composed solely of independent directors (as defined in the National Association
of Securities Dealers listing standards). Information regarding the functions
performed by the Committee and its membership is set forth in the "Report of the
Audit Committee," included in this annual proxy statement. The Audit Committee
is governed by a written charter approved by the Board of Directors.
The Compensation and Stock Option Committee met two times during fiscal 2003.
The Compensation and Stock Option Committee focuses on executive compensation,
the administration of the Company's stock option and stock purchase plans and
making decisions on the granting of discretionary bonuses.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors and persons who own more than 10% of the
Company's Class A Common Stock to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission.
Executive officers, directors and 10% stockholders are required by the
Securities and Exchange Commission to furnish the Company with copies of all
Forms 3, 4 and 5 that they file.
Based solely on the Company's review of the copies of such forms it has received
and representations from certain reporting persons that they were not required
to file a Form 5 for specified fiscal years, the Company believes that all of
its executive officers, directors and greater than 10% stockholders have
complied with all of the filing requirements applicable to them with respect to
transactions during the fiscal year ended March 1, 2003.
9
EXECUTIVE COMPENSATION
The following Summary Compensation Table shows compensation paid by the Company
for services rendered during fiscal years 2003, 2002 and 2001 for the person who
was Chief Executive Officer at the end of the last fiscal year and the four most
highly compensated executive officers of the Company ("Named Officers") whose
salary and bonus exceeded $100,000 in fiscal 2003.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
--------------------------------------
AWARDS PAYOUTS
-------- ---------
ANNUAL COMPENSATION RESTRICTED SECURITIES
------------------- STOCK UNDERLYING LTIP ALL OTHER
SALARY BONUS AWARD (S) OPTIONS/SAR'S PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) $ (#) ($) ($)(2)
-------------------------------- ------ -------- ---------- ------------- -------------- ---------- --------------
Alan H. Cohen 2003 400,000 338,832 -- -- -- 16,153
Chairman of the Board, 2002 305,030 240,364 -- -- -- 19,238
President and CEO 2001 295,000 187,620 -- -- -- 14,783
Steven J. Schneider 2003 270,000 177,887 -- 17,500 -- 16,153
Exec. Vice President, 2002 259,000 127,558 -- 41,500 -- 16,890
COO, CFO & Asst. Secretary 2001 242,000 96,195 -- -- -- 14,783
Glenn S. Lyon (3) 2003 265,000 149,651 -- 17,500 -- 4,439
Exec. Vice President, 2002 125,000 79,563(4) -- 46,500 -- --
Chief Merchandise Officer 2001 -- -- -- -- -- --
Gary D. Cohen 2003 250,559 141,496 -- 17,500 -- 16,153
Exec. Vice President, 2002 240,922 118,654 -- 41,500 -- 16,842
General Counsel & Secretary 2001 233,000 92,618 -- -- -- 14,783
George S. Sanders 2003 238,730 134,816 -- 17,500 -- 16,153
Exec. Vice President, 2002 229,548 113,052 -- 41,500 -- 16,806
Real Estate and 2001 222,000 88,245 -- -- -- 14,783
Store Development
(1) Cash bonuses for services rendered in each fiscal year have been listed in
the year earned; however the amounts listed were actually paid in the
subsequent fiscal year.
(2) The stated amounts are Company contributions to The Finish Line, Inc. 401k
and Profit Sharing Plan.
(3) Mr. Lyon joined the Company in September 2001.
(4) Included an $18,000 signing bonus.
DIRECTOR COMPENSATION
Directors who are employees of the Company are not compensated for serving as
directors. Directors who are not employees of the Company are paid $3,500 per
annum and an additional $3,500 per meeting for attending regular meetings of the
Board of Directors and are reimbursed for expenses incurred in attending
regular, special and committee meetings. In addition, non-employee directors
receive a $500 fee for each Audit Committee or Compensation and Stock Option
Committee meeting they attend in person or telephonically. Directors who are not
employees of the Company also receive options to purchase 3,000 shares of Class
A Common Stock upon their first election to the Board and an additional 4,000
options for each year they serve on the Board.
10
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information with respect to options to purchase the
Company's Class A Common Stock granted during fiscal 2003 to the Named Officers.
INDIVIDUAL GRANTS
--------------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES % OF TOTAL ANNUAL RATES
UNDERLYING OPTIONS OF STOCK PRICE
OPTIONS GRANTED EXERCISE APPRECIATION FOR
GRANTED TO EMPLOYEES PRICE EXPIRATION OPTION TERM (3)
NAME #(1)(2) IN FISCAL YEAR ($/SH) DATE 5% 10%
------------------------- ------------ -------------- ------------ ------------- ----------------------------
Alan H. Cohen. . . . . . -- -- -- -- -- --
Steven J. Schneider. . . 17,500 3.6% $11.30 02/03/2013 $124,364 $315,163
Glenn S. Lyon. . . . . . 17,500 3.6% $11.30 02/03/2013 $124,364 $315,163
Gary D. Cohen. . . . . . 17,500 3.6% $11.30 02/03/2013 $124,364 $315,163
George S. Sanders. . . . 17,500 3.6% $11.30 02/03/2013 $124,364 $315,163
(1) Vest 10% after one year, an additional 20% after two years, an additional
30% after three years and the remaining 40% vest after four years following
the date of grant. The exercise price of these options is equal to the fair
market value of the Company's Class A Common Stock on the date of grant.
(2) Options were granted for a term of 10 years, subject to earlier termination
in certain events related to termination of employment.
(3) Potential realizable value is based on the assumption that the common stock
price appreciates at the annual rate shown (compounded annually) from the
grant date until the end of the ten-year option term. This value is
calculated based on requirements of the Securities and Exchange Commission
and does not reflect the Company's estimate of future stock price growth.
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
Shown below is information with respect to the exercise in 2003 of options to
purchase the Company's Class A Common Stock by the five Named Officers and the
unexercised options to purchase the Company's Class A Common Stock under the
Incentive Plan (as defined herein).
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/ SARS OPTIONS/ SARS
ACQUIRED AT FY-END (#) AT FY-END ($)(1)
ON VALUE ------------------ ------------------
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---------------------------- -------------- ----------- ------------------ ------------------
Alan H. Cohen ...... -- -- -- -- -- --
Steven J. Schneider...... -- -- 61,050 62,950 279,289 243,327
Glenn S. Lyon ...... -- -- 3,750 60,250 9,030 203,650
Gary D. Cohen ...... -- -- 45,025 62,950 75,633 243,327
George S. Sanders ...... -- -- 63,65 62,950 306,806 243,327
(1) Represents the difference between the closing price of the Company's Class
A Common Stock on Nasdaq(R)on March 1, 2003 ($12.42) and the exercise price
of the options.
11
COMPENSATION AND STOCK OPTION COMMITTEE REPORT
SCOPE OF COMMITTEE'S WORK
The Compensation and Stock Option Committee of the Board of Directors (the
"Committee") administers the Company's 1992 Employee Stock Incentive Plan, as
amended and administers the Company's 2002 Stock Incentive Plan, reviews the
Company's compensation plans, programs and policies for executive officers,
monitors the performance and compensation of executive officers and other key
employees and makes appropriate recommendations and reports to the full Board of
Directors concerning matters of executive compensation.
SUMMARY OF COMPENSATION POLICIES FOR CEO AND EXECUTIVE OFFICERS
The Company's philosophy is to maintain compensation programs which attract,
retain and motivate senior management with economic incentives which are
directly linked to financial performance and increased stockholder value. The
key elements of the Company's executive compensation program consist of a base
salary, potential for an annual bonus directly linked to overall Company
performance and the grant of stock options and other stock incentive awards
intended to encourage achievement of superior results over time and to directly
align executive officer and stockholder economic interests.
CEO COMPENSATION
The Committee believes the Chief Executive Officer's compensation should be
heavily influenced by Company performance. The Committee also considers the
level of compensation paid to the chief executive officers of comparable
companies as part of its calculation of the compensation to be paid to the
Company's Chief Executive Officer. For the last three fiscal years, Mr. Alan H.
Cohen, the Company's Chief Executive Officer, was compensated at an annualized
rate of $400,000, $305,030, and $295,000 respectively. See "Executive
Compensation-Summary Compensation Table". In April 2002, the Committee
established a performance bonus program for Mr. Cohen (as well as for the
Company's other senior executive officers), which, for the fiscal year ended
March 1, 2003, was based on four factors:
1. Increase in 2003 operating income before taxes (excluding repositioning
charge/reversals) as compared to 2002 operating income before taxes
(excluding repositioning charge/reversals)
2. Same store sales increases
3. Total sales increases
4. Aged inventory reduction
A bonus of between 0% and 90% of base compensation, up to a maximum of $360,000,
was payable to Mr. Cohen under the program. The Committee believes this
arrangement provided the Chief Executive Officer with significant incentives and
aligned what amounted to a bonus ($338,832 for fiscal 2003) equal to a
significant percentage (84.7% for fiscal 2003) of his annual base salary
directly to the Company's economic performance.
While the Committee believes that the use of stock options which vest over a
period of time is an effective device to link individual compensation with
increased stockholder values, because of Mr. Cohen's substantial equity position
in the Company (an aggregate of 2,034,397 shares of Class A and Class B Common
Stock as of May 23, 2003), Mr. Cohen requested that he not be eligible at the
current time for the grant of stock options or other incentive awards under the
Company's Incentive Plan. Mr. Cohen, Mr. David I. Klapper and Mr. Larry J.
Sablosky (collectively "founders") are principal stockholders of the Company and
each has currently elected not to receive grants of stock options or stock
grants. Consequently, no options or incentive awards were granted to the
founders during fiscal 2003.
12
EXECUTIVE OFFICERS COMPENSATION
The Committee has adopted similar policies with respect to overall compensation
of the Company's other senior executive officers.
The Company's Executive Vice President - COO, CFO and Assistant Secretary, Mr.
Schneider, was compensated at an annual base salary of $270,000 during fiscal
2003. The Company's Executive Vice President-General Merchandise Manager, Glenn
Lyon was compensated at a base salary of $265,000 during fiscal 2003. The
Company's Executive Vice President-General Counsel and Secretary, Mr. Gary Cohen
was compensated at a base salary equal to $250,559 during fiscal 2003. The
Company's Executive Vice President-Real Estate & Store Development, Mr. Sanders
was compensated at an annual base salary of $238,730 during fiscal 2003. In
addition, Messrs. Schneider, Lyon, Cohen, and Sanders participated in a bonus
plan similar to the plan described above under "CEO Compensation", subject to a
maximum bonus of 60% (70% for Mr. Schneider) of annual base salary.
The Company's Chief Executive Officer and the other Named Officers were also
eligible to participate in the Company's Profit Sharing Plan currently up to a
maximum annual contribution of $30,000 per person for the Company's most recent
plan year ended December 31, 2002. See "Executive Compensation - Summary
Compensation Table".
Under current law, income tax deductions for compensation paid by
publicly-traded companies may be limited to the extent total compensation
(including base salary, annual bonus, restricted stock awards, stock options
exercises, and non-qualified benefits) for certain executive officers exceeds $1
million in any one year. Under the law, the deduction limit does not apply to
payments that qualify as "performance based." To qualify as "performance based",
compensation payments must be made from a plan that is administered by a
compensation committee of the Board of Directors, which is comprised solely of
two or more outside directors. In addition, the material terms of the plan must
be disclosed to and approved by stockholders, and the Committee must certify
that the performance goals were achieved before payments can be awarded.
To the extent readily determinable, and as one of the factors in its
consideration of compensation matters, the Committee also considers the
anticipated tax treatment to the Company and to the executives of various
payments and benefits. However, since some types of compensation payments and
their deductibility depend upon the timing of an executive's exercise of stock
options rights (e.g., the spread on exercise of non-qualified options), and
because interpretations and changes in the tax laws and other factors beyond the
Committee's control may also affect the deductibility of compensation, the
Committee will not necessarily limit executive compensation to that which is
deductible under applicable provisions of the Internal Revenue Code. The
Committee will consider various alternatives to preserving the deductibility of
compensation payments and benefits to the extent reasonably practicable and to
the extent consistent with its other compensation objectives.
SUMMARY
The Committee believes that the current compensation arrangements provide the
Chief Executive Officer and the other executive officers with incentives to
perform at superior levels and in a manner, which is directly aligned with the
economic interests of the Company's stockholders.
COMPENSATION AND STOCK
OPTION COMMITTEE
Bill Kirkendall
Jonathan K. Layne
Indianapolis, Indiana
May 23, 2003
The above report of the Compensation and Stock Option Committee will not be
deemed to be incorporated by reference into any filing by the Company under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent that the Company specifically incorporates the same by reference.
13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Kirkendall and Layne comprise the Compensation and Stock Option
Committee.
Mr. Layne is a partner of the law firm of Gibson, Dunn & Crutcher LLP, which has
provided legal services to the Company. The Company expects that such law firm
will continue to render legal services to the Company in the future. As noted on
page 9, Mr. Layne has decided not to run for reelection as a director.
14
STOCK PRICE PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THE FINISH LINE, INC.
S&P 500 INDEX AND PEER GROUP INDEX (1)
The Stock Price Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
[PERFORMANCE GRAPH]
-------------------------------------------------------------------------------------------------
2/98 3/98 4/98 5/98 6/98 7/98 8/98 9/98 10/98 11/98 12/98
THE FINISH LINE, INC. 100.00 145.04 151.15 145.04 171.76 132.06 52.67 56.87 64.89 55.73 48.85
NASDAQ STOCK MARKET (U.S.) 100.00 103.70 105.45 99.59 106.55 105.30 84.42 96.13 100.36 110.56 124.92
PEER GROUP 100.00 110.44 108.09 104.26 108.61 107.79 83.22 81.24 89.19 100.09 111.10
-------------------------------------------------------------------------------------------------
1/99 2/99 3/99 4/99 5/99 6/99 7/99 8/99 9/99 10/99 11/99
THE FINISH LINE, INC. 56.11 73.66 78.63 91.98 75.19 68.70 64.12 54.58 53.44 42.18 40.46
NASDAQ STOCK MARKET (U.S.) 143.05 130.24 140.07 144.52 140.46 153.08 150.31 156.65 156.84 169.40 189.93
PEER GROUP 104.41 102.04 114.01 111.68 109.17 112.69 101.77 81.38 84.05 84.75 93.43
--------------------------------------------------------------------------------------------------
12/99 1/00 2/00 3/00 4/00 5/00 6/00 7/00 8/00 9/00 10/00
THE FINISH LINE, INC. 33.21 35.11 36.64 59.54 64.51 42.75 50.00 49.24 48.48 44.66 46.56
NASDAQ STOCK MARKET (U.S.) 231.69 223.16 265.70 260.27 218.92 192.53 226.34 214.54 239.92 208.76 191.60
PEER GROUP 88.10 83.44 87.68 88.33 81.54 69.33 71.08 68.72 74.70 71.39 72.22
--------------------------------------------------------------------------------------------------
11/00 12/00 1/01 2/01 3/01 4/01 5/01 6/01 7/01 8/01 9/01
THE FINISH LINE, INC. 49.62 36.07 41.98 42.37 39.69 48.55 61.62 76.27 65.59 59.54 66.26
NASDAQ STOCK MARKET (U.S.) 147.62 139.79 156.71 121.32 104.32 119.88 119.71 122.94 115.13 102.60 85.31
PEER GROUP 64.92 62.78 82.98 75.27 72.63 80.09 80.99 85.95 84.94 85.42 71.57
--------------------------------------------------------------------------------------------------
10/01 11/01 12/01 1/02 2/02 3/02 4/02 5/02 6/02 7/02 8/02
THE FINISH LINE, INC. 61.98 78.66 93.37 90.99 98.99 112.67 123.79 94.96 109.44 80.31 54.35
NASDAQ STOCK MARKET (U.S.) 96.26 109.97 110.89 110.05 98.60 105.07 96.34 92.09 83.75 76.10 75.30
PEER GROUP 76.55 88.51 94.40 96.41 96.41 102.31 104.26 105.68 97.94 79.02 77.44
--------------------------------------------------------------
9/02 10/02 11/02 12/02 1/03 2/03 3/03
THE FINISH LINE, INC. 55.08 54.90 64.98 64.43 71.57 75.85 75.85
NASDAQ STOCK MARKET (U.S.) 67.20 76.38 84.90 76.66 75.84 76.90 76.90
PEER GROUP 70.70 77.77 89.91 77.75 74.15 70.22 70.22
ASSUMES $100 INVESTED ON MARCH 1, 1998
AND ASSUMES DIVIDENDS REINVESTED THROUGH
FISCAL YEAR ENDING MARCH 1, 2003
----------
1) Peer group is: Standard Industrial Classification Codes 5940 through 5949
(actively trading issues during relevant period). SIC codes beginning with
594 represent miscellaneous Shopping Goods Stores, which, in management's
opinion, most closely represents the peer group of the Company.
15
AUDIT COMMITTEE REPORT
THE FOLLOWING REPORT OF THE AUDIT COMMITTEE DOES NOT CONSTITUTE SOLICITING
MATERIAL AND SHOULD NOT BE DEEMED FILED OR INCORPORATED BY REFERENCE INTO ANY
OTHER COMPANY FILING UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE
ACT OF 1934, EXCEPT TO THE EXTENT THE COMPANY SPECIFICALLY INCORPORATES THIS
REPORT BY REFERENCE THEREIN.
During April 2000, the Audit Committee of the Board of Directors developed an
updated charter for the Committee, which was approved by the full Board on April
27, 2000. The Board of Directors is currently in the process of updating and
revising the Audit Committee Charter and it is anticipated that an amended Audit
Committee Charter will be adopted by the Board in the near future.
The Audit Committee oversees the Company's financial reporting process on behalf
of the Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process including the systems of internal
controls. In fulfilling its oversight responsibilities, the Audit Committee
reviewed and discussed the audited financial statements in the Annual Report
with management including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments, and the clarity of disclosures in the financial statements.
The Audit Committee discussed with the independent auditors, who are responsible
for expressing an opinion on the conformity of the audited financial statements
with generally accepted accounting principals, the matters to be discussed by
Statement of Accounting Standards No. 61, "Communication with Audit Committees,"
as amended, which indexes, among other items, matters relating to the conduct of
an audit of the Company's financial statements.
The Audit Committee received the written disclosures and the letter from the
independent auditors required by Independence Standards Board Standard No. 1 and
has discussed with the independent auditors their independence from the Company.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended March 1, 2003 for filing with the Securities and
Exchange Commission.
Bill Kirkendall, Chair
Jeffrey H. Smulyan
Stephen Goldsmith
Indianapolis, Indiana
May 23, 2003
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Ernst & Young LLP, which has served as the Company's
principal independent accountants continuously since 1988, was selected by the
Board to continue in that capacity for fiscal 2004. During fiscal 2003, the
Company also engaged Ernst & Young LLP to render certain other professional
services involving assistance on tax planning matters, audit of pension plan and
general consultations.
The appointment of auditors is approved annually by the Board of Directors,
which is based in part on the recommendation of the Audit Committee. In making
its recommendation, the Audit Committee reviewed both the audit scope and
estimated audit fees for the coming year. The Audit Committee and the Board of
Directors have selected Ernst & Young LLP for the current fiscal year.
Stockholder approval is not sought in connection with this selection. Each
professional service performed by Ernst & Young LLP during fiscal 2003 was
reviewed, and the possible effect of such service on the independence of the
firm was considered, by the Audit Committee. A representative of Ernst & Young
LLP plans to be present at the Annual Meeting of Stockholders and will be given
an opportunity to make a statement if he or she desires to do so and will be
available to respond to appropriate questions from stockholders.
16
INDEPENDENT AUDITOR FEE INFORMATION
Fees for professional services provided by our independent auditors Ernst &
Young LLP, in each of the last two fiscal years, in each of the following
categories are:
2003 2002
----------- -----------
Audit Fees $156,950 $142,675
Audit-Related Fees 20,375 19,050
Tax Fees 120,163 24,710
All Other Fees 0 0
----------- -----------
$297,488 $186,435
Fees for audit services include fees associated with the annual audit, the
reviews of the Company's quarterly reports on Form 10-Q, and assistance with
review of documents filed with the Securities and Exchange Commission.
Audit-related fees principally include accounting consultations and the audit of
our benefit plan. Tax fees include tax compliance, tax advice and tax planning.
There were no other services performed during fiscal year 2003 and 2002.
PROPOSALS OF STOCKHOLDERS
If a stockholder wishes to submit a proposal for consideration at the 2004
Annual Stockholders Meeting and wants that proposal to appear in the Company's
proxy statement and form of proxy for that meeting, the proposal must be
submitted to the Company at its principal offices (3308 N. Mitthoeffer Road,
Indianapolis, Indiana 46235) in care of the Secretary no later then February 18,
2004.
If a stockholder wishes to submit a proposal for consideration at the 2004
Annual Stockholders Meeting without including that proposal in the Company's
proxy statement and form of proxy, the Company's Bylaws require the stockholder
to provide the Company with written notice of such proposal no less then 90 days
in advance of such meeting or, if later, the seventh day following the first
public announcement of the date of such meeting. Such notice should be sent to
the Company in care of the Secretary at its principal offices.
MISCELLANEOUS
The Company's Annual Report to Stockholders for the fiscal year ended March 1,
2003, including the financial statements and related notes thereto, together
with the report of the independent auditors and other information with respect
to the Company, accompanies this Proxy Statement.
The Company is not aware of any other business to be presented at the 2003
Annual Meeting. If matters other than those described should properly arise at
the meeting, the proxies will vote on such matters in accordance with their best
judgment.
By Order of the Board Of Directors
/s/ Gary D. Cohen
Gary D. Cohen,
Executive Vice President,
General Counsel and Secretary
Indianapolis, Indiana
June 17, 2003
17
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