UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO.___)
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[ ] 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
A.C. MOORE ARTS & CRAFTS, INC.
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(Name of Registrant as Specified in Its Charter)
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A.C. MOORE ARTS & CRAFTS, INC.
130 A.C. MOORE DRIVE
BERLIN, NEW JERSEY 08009
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 2, 2005
To the Shareholders of A.C. Moore Arts & Crafts, Inc.:
The 2005 Annual Meeting of Shareholders (the "Meeting") of
A.C. Moore Arts & Crafts, Inc. (the "Company" or "A.C. Moore") will be held on
Thursday, June 2, 2005 at 11:00 a.m., prevailing time, at the Company's
headquarters, located at 130 A.C. Moore Drive, Berlin, New Jersey, 08009 for the
purpose of considering and acting upon the following:
1. To elect three Class C directors to hold office for a term of
three years and until each of their respective successors is
duly elected and qualified, as described in the accompanying
proxy statement;
2. To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent registered public accountants for the
fiscal year ending December 31, 2005; and
3. To transact such other business as may properly come before the
Meeting.
Only shareholders of record at the close of business on April 19, 2005,
are entitled to notice of, and to vote at, the Meeting or any adjournment or
postponement thereof.
If the Meeting is adjourned for one or more periods aggregating at least
15 days because of the absence of a quorum, those shareholders entitled to vote
who attend the reconvened Meeting, if less than a quorum as determined under
applicable law, shall nevertheless constitute a quorum for the purpose of acting
upon any matter set forth in this Notice of Meeting.
If you are a registered shareholder (that is, if your stock is
registered in your name), you may vote by telephone or electronically through
the Internet, by following the instructions included with your proxy card. The
deadline for voting by telephone or electronically through the Internet is
11:59 p.m., prevailing time, on June 1, 2005. If you vote by telephone or
electronically through the Internet, you do not need to return your proxy card.
If your shares are held in "street name" (that is, if your stock is registered
in the name of your broker, bank or other nominee), please check your proxy card
or contact your broker, bank or nominee to determine whether you will be able to
vote by telephone or electronically through the Internet.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO VOTE YOUR
SHARES PROMPTLY TO ENSURE THEY ARE REPRESENTED AT THE MEETING. YOU MAY SUBMIT
YOUR PROXY VOTE BY TELEPHONE OR ELECTRONICALLY THROUGH THE INTERNET AS DESCRIBED
IN THE FOLLOWING MATERIALS OR BY COMPLETING AND SIGNING THE ENCLOSED PROXY CARD
AND RETURNING IT IN THE SELF-ADDRESSED ENVELOPE PROVIDED. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
Janet Parker
Secretary
Berlin, New Jersey
April 26, 2005
A.C. MOORE ARTS & CRAFTS, INC.
130 A.C. MOORE DRIVE
BERLIN, NEW JERSEY 08009
(856) 768-4930
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
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The Board of Directors of A.C. Moore Arts & Crafts, Inc. (the "Company"
or "A.C. Moore") is soliciting proxies for use at the 2005 Annual Meeting of
Shareholders (the "Meeting") and any adjournments or postponements thereof. This
proxy statement and accompanying proxy card are first being mailed or given to
shareholders on or about April 26, 2005.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
WHEN IS THE MEETING AND WHERE WILL IT BE HELD?
The Meeting will be held on Thursday, June 2, 2005 at 11:00 a.m.,
prevailing time, at the Company's headquarters, located at 130 A.C. Moore Drive,
Berlin, New Jersey 08009.
WHAT IS THE PURPOSE OF THE MEETING?
At the Meeting, shareholders will consider and act upon the matters
outlined in the Notice of Annual Meeting of Shareholders, including:
o the election of three Class C directors;
o ratification of the appointment of the Company's independent
registered public accountants; and
o such other business as may properly come before the Meeting.
The nominees for director are Lawrence H. Fine, Richard Lesser and
Eli J. Segal. Messrs. Fine, Lesser and Segal are currently Class C directors of
the Company.
The Company is not currently aware of any additional matters that will
be brought before the Meeting.
WHO IS ENTITLED TO VOTE AT THE MEETING?
The Board has set April 19, 2005 as the record date for the Meeting (the
"Record Date"). If you were a shareholder of record, as shown on the stock
transfer books of the Company, at the close of business on the Record Date, you
are entitled to notice of and to vote at the Meeting or any adjournment or
postponement thereof. Each share of A.C. Moore common stock, no par value per
share (the "Common Stock") is entitled to one vote on each matter which may be
brought before the Meeting.
On the Record Date, there were 19,689,082 shares of Common Stock issued
and outstanding and, therefore, eligible to vote at the Meeting.
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HOW MANY SHARES MUST BE PRESENT TO HOLD THE MEETING?
The holders of a majority of the outstanding shares of Common Stock as
of the Record Date must be present, in person or represented by proxy, at the
Meeting in order to hold the Meeting and conduct business. This is called a
quorum. If you submit a properly executed proxy card, vote by telephone or
electronically through the Internet, then your shares will be counted as part of
the quorum. All shares of the Company's Common Stock present in person or
represented by proxy (including broker non-votes) and entitled to vote at the
Meeting, no matter how they are voted or whether they abstain from voting, will
be counted in determining the presence of a quorum. A broker non-vote occurs
when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting power
with respect to that item and has not received instructions from the beneficial
owner.
If the Meeting is adjourned because of the absence of a quorum, those
shareholders entitled to vote who attend the adjourned meeting, although
constituting less than a quorum as provided herein, shall nevertheless
constitute a quorum for the purpose of electing directors. If the Meeting is
adjourned for one or more periods aggregating at least 15 days because of the
absence of a quorum, those shareholders entitled to vote who attend the
reconvened Meeting, if less than a quorum as determined under applicable law,
shall nevertheless constitute a quorum for the purpose of acting upon any matter
set forth in the Notice of Annual Meeting.
WHAT VOTE IS REQUIRED FOR THE ELECTION OF DIRECTORS OR FOR A PROPOSAL TO BE
APPROVED?
The election of directors will be determined by a plurality vote and the
two nominees receiving the most "for" votes will be elected. Approval of any
other proposal will require the affirmative vote of a majority of the votes cast
on the proposal.
HOW DO I VOTE MY SHARES?
In order to vote your shares, you may attend the Meeting and vote in
person, or vote by proxy. If your shares are held in "street name" (that is, if
your stock is registered in the name of your broker, bank or other nominee) and
you wish to vote at the Meeting, you will need to contact your broker, bank or
other nominee regarding how to vote at the Meeting.
If you are a registered shareholder (that is, if your stock is
registered in your name) you may vote by proxy by telephone, electronically
through the Internet, or by mail by following the instructions included with
your proxy card. The deadline for registered shareholders to vote telephonically
or electronically through the Internet is 11:59 p.m., prevailing time, on
June 1, 2005.
The Company encourages you to take advantage of these ways to vote your
shares for matters to be covered at the Meeting. Set forth below is a summary of
the three voting methods which registered shareholders may utilize to submit
their votes by proxy.
Vote by Telephone - 1-866-626-4508. Use any touch-tone telephone to vote
your proxy 24 hours a day, 7 days a week. Have your proxy card in hand when you
call. You will be prompted to enter your Control Number(s) which are located on
your proxy Card and then follow the directions given.
Vote Electronically through the Internet - http://www.votestock.com. Use
the Internet to vote your proxy 24 hours a day, 7 days a week. Have your proxy
card in hand when you access the web site. You will be prompted to enter your
Control Number(s) which are located on your proxy card to create and submit an
electronic ballot.
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Vote by Mail. Mark, sign and date your proxy card and return such card
in the postage-paid envelope we have provided you.
IF YOU VOTE BY TELEPHONE OR ELECTRONICALLY THROUGH THE INTERNET, YOU DO
NOT NEED TO RETURN YOUR PROXY CARD. Please note that although there is no charge
to you for voting by telephone or electronically through the Internet, there may
be costs associated with electronic access such as usage charges for Internet
service providers and telephone companies. The Company does not cover these
costs; they are solely your responsibility. The telephone and Internet voting
procedures being made available to you are valid forms of granting proxies under
the Pennsylvania Business Corporation Law.
If you hold your shares through a broker, bank or other nominee, that
institution will send you separate instructions describing the procedure for
voting your shares.
WHAT IF I DO NOT SPECIFY HOW I WANT MY SHARES VOTED?
If you submit a signed proxy card or submit your proxy by telephone or
electronically through the Internet but do not indicate how you want your shares
voted, the persons named in the enclosed proxy will vote your shares of Common
Stock:
o "for" the election of each of the persons identified below in
"Proposal 1: Election of Directors" as nominees for election as
directors;
o "for" ratification of the appointment of PricewaterhouseCoopers
LLP ("PricewaterhouseCoopers") as the independent registered
public accountants of the Company for the year ending
December 31, 2005; and
o with respect to any other matter that properly comes before the
Meeting, the proxy holders will vote the proxies in their
discretion in accordance with their best judgment and in the
manner they believe to be in the best interest of A.C. Moore.
IF I ABSTAIN FROM VOTING OR WITHHOLD AUTHORITY TO VOTE FOR ANY PROPOSAL, WILL MY
SHARES BE COUNTED IN THE VOTE?
Under the Pennsylvania Business Corporation Law, an abstention,
withholding of authority to vote or broker non-vote will have no effect on the
vote and will not be counted in determining whether any proposal has received
the required shareholder vote.
CAN I CHANGE MY VOTE AFTER SUBMITTING MY PROXY?
Yes. You can change your vote at any time before your proxy is voted at
the Meeting. If you are a shareholder of record, you may revoke your proxy by:
o submitting a later-dated proxy by telephone, Internet or mail.
o attending the Meeting and voting in person. Your attendance
alone will not revoke your proxy. You must also vote in person
at the Meeting.
The last vote received chronologically will supercede any prior vote. The
deadline for changing your vote telephonically or electronically through the
Internet is 11:59 p.m., prevailing time, on June 1, 2005.
If you hold your shares in street name, you must contact your broker,
bank or other nominee regarding how to change your vote.
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WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
If you receive more than one proxy card, it means that you hold shares
that are registered in more than one account. To ensure that all of your shares
are voted, you will need to sign and return each proxy card you receive.
WHO PAYS FOR THE COST OF THE SOLICITATION OF PROXIES?
The Company will bear the cost of this solicitation. In addition to
solicitation by mail, officers, directors or employees of the Company may also
solicit proxies in person or by telephone or facsimile without additional
compensation. Upon request, the Company will pay the reasonable expenses
incurred by record holders of the Company's Common Stock who are brokers,
dealers, banks or voting trustees, or their nominees, for mailing proxy material
and annual shareholder reports to the beneficial owners of the shares they hold
of record.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide that the Board of
Directors shall consist of not fewer than one nor more than 15 directors, with
the exact number to be fixed by the Board of Directors. The Board of Directors
has fixed the number of directors at eight. Pursuant to the Articles of
Incorporation of the Company, the directors are divided into three classes,
which are required to be as nearly equal in number as possible. One class of
directors is to be elected annually for a term of three years. The Board of
Directors is currently comprised of one class of two directors and two classes
of three directors each.
At the Meeting shareholders will elect three Class C directors, each to
serve for a term of three years and until his respective successor is elected
and qualified. Unless directed otherwise, the persons named in the enclosed
proxy intend to vote such proxy "for" the election of the listed nominees or, in
the event of inability of a nominee to serve for any reason, for the election of
such other person as the Board of Directors may designate to fill the vacancy.
The Board of Directors has no reason to believe that any nominee will not be a
candidate or will be unable to serve.
The Board of Directors has nominated Lawrence H. Fine, Richard Lesser
and Eli J. Segal to serve as the Class C directors based upon the recommendation
of the Nominating and Corporate Governance Committee. Messrs. Fine, Lesser and
Segal currently serve as directors. The nominees have consented to being named
in the Proxy Statement and to serve if elected.
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The following table sets forth information, as of the Record Date,
concerning A.C. Moore's directors and nominees for election to the Board of
Directors:
DIRECTOR TERM
NAME AGE POSITION SINCE (1) EXPIRES
--------------------------------- --- ----------------------------------------------- -------- -------
William Kaplan................... 77 Chairman of the Board 1984 2006
John E. ("Jack") Parker.......... 63 Chief Executive Officer and Director 1984 2006
Richard J. Bauer................. 79 Director 1990 2007
Richard J. Drake................. 71 Director 1984 2007
Lawrence H. Fine (2)............. 51 President, Chief Operating Officer and Director 2002 2005
Michael J. Joyce................. 63 Director 2004 (3) 2007
Richard Lesser (2)............... 70 Director 1993 2005
Eli J. Segal (2)................. 62 Lead Director 2002 2005
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(1) Includes service as a director of A.C. Moore Incorporated, a wholly-owned
operating subsidiary of the Company.
(2) Nominee for director.
(3) On June 23, 2004, A.C. Moore's Board of Directors, by resolution, increased
the number of persons to comprise A.C. Moore's Board of Directors from
seven to eight and appointed Michael J. Joyce as a director of the Company.
The following information about A.C. Moore's directors and nominees for
director is based, in part, upon information supplied by such persons. Unless
otherwise indicated, each individual has had the same principal occupation for
more than five years.
Mr. Kaplan, the Company's co-founder, has been the Chairman of the
Company's Board of Directors since inception. Mr. Kaplan also serves as the
Chairman of the Board of Directors and an executive officer of L'egent
International, Ltd., an importer and distributor of women's handbags and leather
accessories, which he co-founded in 1992.
Mr. Parker, the Company's co-founder, has been Chief Executive Officer
and a director of the Company since inception and was the Company's President
from inception until June 2001. From 1959 to 1984, Mr. Parker worked for the
F.W. Woolworth Company, a general merchandise retailer, in various management
positions, most recently as President and Chief Executive Officer of the United
States General Merchandise Group where he was responsible for more than 1,000
stores, including the entire domestic chain of Woolworth retail stores. Mr.
Parker is the husband of Patricia A. Parker, the Company's Executive Vice
President, Merchandising, and the father of Janet Parker, the Company's
Executive Vice President, Merchandising and Marketing.
Mr. Bauer has been a director of the Company since September 1990.
Mr. Bauer is the Chairman and Chief Executive Officer of Eastern Alloys, Inc. an
independent zinc alloyer, which he founded in 1965. Mr. Bauer is the co-founder
and current Chairman of the Board of Service Aluminum Corporation, an aluminum
trading company.
Mr. Drake has been a director of the Company since its founding. He is
Chairman of Drake, Sommers, Loeb, Tarshis, Catania & Liberth P.L.L.C., a
professional limited liability company which renders legal services.
Mr. Fine has been a director of the Company since August 2002. Mr. Fine
has served as the Company's President since June 2001 and the Company's Chief
Operating Officer since February 2003. Previously Mr. Fine was Executive Vice
President - General Merchandise Manager for arts and crafts
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retailer Michaels Stores, Inc., a position he held since November 1996. From
1995 until joining Michaels in November 1996, he was Senior Vice President of
Merchandising for Party City Corp, a specialty retailer of party merchandise.
Prior to joining Party City, Mr. Fine held a variety of merchandising positions
with the Jamesway Corporation, a retail mass-merchandiser, for nearly 16 years.
Mr. Joyce has been a director of the Company since June 2004. From 1975
through May 2004, Mr. Joyce was a partner in the public accounting firm of
Deloitte & Touche, LLP and served as the New England Managing Partner from May
1995 until his retirement in May 2004. Mr. Joyce is a director of each of
Brandywine Realty Trust, a New York Stock Exchange traded real estate investment
trust, Heritage Property Investment Trust, Inc., a New York Stock Exchange
traded real estate investment trust, and Allegheny Technologies Incorporated, a
New York Stock Exchange traded specialty materials producer.
Mr. Lesser has been a director of the Company since March 1993. He was a
Senior Corporate Adviser to The TJX Companies, Inc., a New York Stock Exchange
traded retail company, from December 2001 until his retirement in February 2005.
He served as The TJX Companies' Executive Vice President from 1991 until
December 2001 and Chief Operating Officer from 1994 to 1999. Mr. Lesser also
served as the Chairman of The Marmaxx Group, a division of The TJX Companies
that operates TJ Maxx and Marshalls, from February 2001 to December 2001 and was
President of The Marmaxx Group from 1995 through 2001. Mr. Lesser held various
other executive and merchandising positions with The TJX Companies from 1981 to
1993. Mr. Lesser is a director of The TJX Companies, Reebok International, a New
York Stock Exchange traded shoe and apparel manufacturer, and Dollar Tree
Stores, Inc., a Nasdaq traded retail company.
Mr. Segal has been a director of the Company since August 2002 and was
appointed the Lead Director of the Company's Board of Directors in February
2004. Mr. Segal has served as the Chairman of the Board of SchoolSports, Inc., a
magazine and internet content provider, since 2000 and, since February 2004, has
been the principal of Segal Associates, a consulting firm specializing in
corporate governance. From September 2003 through February 2004, Mr. Segal was
the Chairman of the Wes Clark for President Campaign. From 1997 to 2000, Mr.
Segal served as the President and Chief Executive Officer of the Welfare to Work
Partnership, a nonpartisan business organization. From 1993 to 1996, Mr. Segal
served as an Assistant to the President of the United States and as Chief
Executive Officer of The Corporation For National Service, the federal
government office overseeing AmeriCorps. Mr. Segal is a director of Hasbro,
Inc., a New York Stock Exchange traded manufacturer of toys and games, and
Citizens Financial Group.
INDEPENDENCE
The Board of Directors has determined that the following directors,
constituting a majority of the members of the Board, are independent as defined
in the applicable listing standards of the Nasdaq Stock Market: William Kaplan,
Richard J. Bauer, Richard J. Drake, Michael J. Joyce, Richard Lesser and Eli J.
Segal.
COMMUNICATION WITH THE BOARD
Shareholders may communicate with the Board of Directors, including the
non-management directors, by sending a letter to an individual director or to
the Company's Board of Directors, c/o Leslie H. Gordon, A.C. Moore Arts &
Crafts, Inc., 130 A.C. Moore Drive, Berlin, New Jersey 08009. All shareholder
communications received by Mr. Gordon will be delivered to the Company's Lead
Director or to the director to which such correspondence is addressed.
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MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of A.C. Moore held five meetings during 2004. The
Audit Committee held seven meetings, the Compensation Committee held three
meetings and the Nominating and Corporate Governance Committee held two meetings
during 2004. During 2004, each of the directors attended at least 75% of all of
the meetings of the Board of Directors (held during the period for which he was
a director) and all of the meetings of all committees of the Board of Directors
on which such director served (during the period that he served).
ATTENDANCE AT ANNUAL MEETING OF SHAREHOLDERS
The Board of Directors has adopted a policy that all of the directors
should attend the annual meeting of shareholders, absent exceptional cause. All
directors, except for Mr. Joyce who was not then a director of the Company,
attended the 2004 annual meeting of shareholders.
COMMITTEES OF THE BOARD
The Board of Directors has three standing committees.
o Compensation Committee. The Compensation Committee reviews and
makes recommendations to the Board of Directors regarding the
salaries, bonuses, and other forms of compensation for executive
officers of A.C. Moore and administers various compensation and
benefit plans. The responsibilities of the Compensation
Committee are further described in the Compensation Committee
Charter adopted by the Board of Directors, a copy of which can
be found on the Company's website at
www.acmoore.com/corporate.asp.
The current members of the Compensation Committee are Messrs.
Joyce, Lesser (Chairman) and Segal. Mr. Joyce was appointed to
the Compensation Committee in June 2004. Mr. Bauer served as a
member of the Compensation Committee during 2004 and resigned
from his position as a member of the Compensation Committee in
January 2005. The Board of Directors has determined that each
member of the Compensation Committee is independent as defined
in the applicable listing standards of the Nasdaq Stock Market.
The report of the Compensation Committee begins on page 14 of
this Proxy Statement.
o Audit Committee. The Audit Committee is directly responsible for
the appointment, compensation, retention and oversight of the
work of the Company's independent registered public accountants;
reviews the independence of the Company's independent registered
public accountants; discusses with management and the Company's
independent registered public accountants the quality and
adequacy of the Company's internal financial controls; discusses
the Company's annual audited financial statements and quarterly
financial statements with management and the Company's
independent registered public accountants; and establishes
procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting,
internal accounting controls or auditing matters. The Audit
Committee also pre-approves the professional services provided
by the Company's independent registered public accountants. The
responsibilities of the Audit Committee are further described in
the Audit Committee Charter adopted by the Audit Committee and
the Board of Directors. A copy of the Audit Committee Charter
can be found on the Company's website at
www.acmoore.com/corporate.asp.
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The current members of the Audit Committee are Messrs. Bauer,
Joyce (Chairman) and Lesser. Mr. Joyce was appointed to the
Audit Committee in June 2004. Mr. Segal served as a member of
the Audit Committee during 2004 and resigned from his position
as a member of the Audit Committee in January 2005. The Board of
Directors has determined that each member of the Audit Committee
is independent as defined in applicable listing standards of the
Nasdaq Stock Market and Securities and Exchange Commission
("SEC") regulations. The Board of Directors of the Company has
determined that Mr. Joyce qualifies as an "audit committee
financial expert" as that term is defined in SEC regulations.
The report of the Audit Committee is set forth on page 10 of
this Proxy Statement.
o Nominating and Corporate Governance Committee. The Nominating
and Corporate Governance Committee makes recommendations to the
Board of Directors regarding the size of the Board of Directors
and each committee of the Board of Directors; identifies
individuals qualified to become members of the Board of
Directors consistent with the criteria approved by the
Nominating and Corporate Governance Committee; establishes
policies regarding the consideration of director candidates
recommended by shareholders; establishes procedures to be
followed by shareholders in submitting recommendations for
director candidates; considers nominees made by shareholders in
accordance with the Company's bylaws; recommends to the Board of
Directors the director nominees for each annual meeting of
shareholders; assists the Board of Directors in the event of a
vacancy by identifying individuals to fill such vacancy; makes
recommendations to the Board of Directors regarding
determinations of independence of the members of the Board of
Directors; makes annual recommendations to the Board of
Directors regarding director nominees for each board committee;
develops and recommends to the Board of Directors corporate
governance guidelines; monitors and updates the Company's
corporate governance principles and policies; reviews and makes
recommendations to the Board of Directors with respect to the
Company's code of ethics; oversees new director orientation to
the Company and leads the Board of Directors annual review of
the Board of Directors' performance. The responsibilities of the
Nominating and Corporate Governance Committee are further
described in the Nominating and Corporate Governance Committee
Charter adopted by the Board of Directors, a copy of which can
be found on the Company's website at
www.acmoore.com/corporate.asp.
The current members of the Nominating and Corporate Governance
Committee are Messrs. Bauer (Chairman), Drake and Segal. Mr.
Lesser served as a member of the Nominating and Corporate
Governance Committee during 2004 and resigned from his position
as a member of the Nominating and Corporate Governance Committee
in January 2005. The Board of Directors has determined that each
member of the Nominating and Corporate Governance Committee is
independent as defined in the applicable listing standards of
the Nasdaq Stock Market. The Nominating and Corporate Governance
Committee recommended the nomination of the directors listed on
page 4 who are standing for election at the Meeting.
DIRECTOR NOMINATION PROCESS
Director Qualifications. Nominees for director will be selected on the
basis of outstanding achievement in their careers; broad experience; education;
independence under applicable Nasdaq and SEC rules; financial expertise;
integrity; financial integrity; ability to make independent, analytical
inquiries; understanding of the business environment; and willingness to devote
adequate time to Board of Directors and committee duties. Nominees should also
have experience in the retail industry and knowledge about the issues affecting
the retail industry. Finally, the proposed nominee should be free of
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conflicts of interest that could prevent such nominee from acting in the best
interest of shareholders. Additional special criteria apply to directors being
considered to serve on a particular committee of the Board of Directors. For
example, members of the Audit Committee must meet additional standards of
independence and have the ability to read and understand the Company's financial
statements.
Director Nominee Selection Process. In the case of an incumbent director
whose term of office expires, the Nominating and Corporate Governance Committee
reviews such director's service to the Company during the past term, including,
but not limited to, the number of board and committee meetings attended, as
applicable, quality of participation and whether the candidate continues to meet
the general qualifications for a director outlined above, including the
director's independence, as well as any special qualifications required for
membership on any committees on which such director serves.
In the case of a new director candidate, the selection process for
director candidates includes the following steps:
o identification of director candidates by the Nominating and
Corporate Governance Committee based upon suggestions from
current directors and executives and recommendations received
from shareholders;
o possible engagement of a director search firm;
o interviews of candidates by the Nominating and Corporate
Governance Committee;
o reports to the Board of Directors by the Nominating and
Corporate Governance Committee on the selection process;
o recommendations by the Nominating and Corporate Governance
Committee; and
o formal nominations by the Board of Directors for inclusion in
the slate of directors at the annual meeting.
The Nominating and Corporate Governance Committee will consider
recommending properly submitted shareholder nominations for director candidates.
Director candidates recommended by shareholders are given the same consideration
by the Nominating and Corporate Governance Committee as candidates suggested by
directors and executive officers. Under the Company's bylaws, a shareholder who
desires to nominate directors for election at the Company's shareholders meeting
must comply with the procedures summarized below under "Shareholder
Nominations."
Shareholder Nominations. According to the Company's bylaws, nominations
by shareholders for directors to be elected at a meeting of shareholders which
have not previously been approved by the Board of Directors must be submitted to
the Secretary of the Corporation in writing, either by personal delivery,
nationally-recognized express mail or United States mail, postage prepaid, not
later than (i) the latest date upon which shareholder proposals must be
submitted to the Company for inclusion in the Company's proxy statement relating
to such meeting pursuant to Rule 14a-8 under the Securities Exchange Act of
1934, as amended ("Exchange Act"), or other applicable rules or regulations
under the federal securities laws or, if no such rules apply, at least 90 days
prior to the date one year from the date of the immediately preceding annual
meeting of shareholders, and (ii) with respect to an election to be held at a
special meeting of shareholders, the close of business on the tenth day
following the date on which notice of such meeting is first given to
shareholders. Each nomination is required to set forth:
o the name and address of the shareholder making the nomination
and the person or persons nominated;
9
o a representation that the shareholder is a holder of record of
capital stock of the Company entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to
vote for the person or persons nominated;
o a description of all arrangements and understandings between the
shareholder and each nominee and any other person or persons
(naming such person or persons) pursuant to which the nomination
was made by the shareholder;
o such other information regarding each nominee proposed by such
shareholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the SEC had the
nominee been nominated by the Board of Directors; and
o the consent of each nominee to serve as a director of the
Company if so elected.
All nominations which are late will be rejected by the Company. The deadline for
submitting a letter recommending a prospective director nominee for the 2006
annual meeting of shareholders is December 28, 2005.
AUDIT COMMITTEE REPORT
On March 14, 2005, the Audit Committee met with management to review and
discuss the audited financial statements. Management represented to the Audit
Committee that the Company's financial statements were prepared in accordance
with generally accepted accounting principles. The Audit Committee also
conducted discussions with the Company's independent registered public
accountants, PricewaterhouseCoopers, regarding the matters required by the
Statement on Auditing Standards No. 61. As required by Independence Standards
Board Standard No. 1, "Independence Discussion with Audit Committees," the Audit
Committee has discussed with and received the required written disclosures and
confirming letter from PricewaterhouseCoopers regarding its independence and has
discussed with PricewaterhouseCoopers its independence. Based upon the review
and discussions referred to above, the Audit Committee recommended to the Board
of Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2004.
This Audit Committee Report shall not be deemed incorporated by
reference in any document previously or subsequently filed with the SEC that
incorporates by reference all or any portion of this Proxy Statement, except to
the extent that the Company specifically requests that the Report be
specifically incorporated by reference.
THE AUDIT COMMITTEE
Michael J. Joyce (Chairman)
Richard J. Bauer
Richard Lesser
10
DIRECTOR COMPENSATION
Directors' Fees. In 2004, Mr. Kaplan received annual directors'
compensation of $100,000 for his services as Chairman of the Board and Mr. Segal
received $50,000 for his services as Lead Director. All other directors, who
were not officers, employees or consultants of the Company, received the
following in 2004: an annual directors' fee of $15,000, $1,000 for service as a
committee chair, $1,000 for each Board of Directors meeting they attended and
$500 for each committee meeting they attended.
Effective January 1, 2005, the compensation payable to all of the
Company's non-employee directors, other than William Kaplan, is as follows:
o An annual cash retainer of $30,000;
o An additional annual cash retainer of $12,500 for the chair of
the Audit Committee and $5,000 for each other member of the
Audit Committee;
o An additional annual cash retainer of $5,000 for the chair of
the Compensation Committee and $2,500 for each other member of
the Compensation Committee;
o An additional annual cash retainer of $3,500 for the chair of
the Nominating and Corporate Governance Committee and $2,500 for
each other member of the Nominating and Corporate Governance
Committee; and
o An additional annual cash retainer of $100,000 for the Company's
Lead Director, Eli J. Segal.
Mr. Kaplan will not receive any compensation in 2005 for serving as a director
of the Company.
Stock Options. Messrs. Bauer, Drake, Joyce, Lesser and Segal, each a
non-employee director of the Company, were each granted an option to acquire
10,000 shares of Common Stock in 2004 under the Company's 2002 Stock Option
Plan. In addition, other than Mr. Kaplan, in fiscal 2005 non-employee directors
will each receive an annual stock option grant pursuant to the Company's 2002
Stock Option Plan. The amount of shares subject to the option grant and the
exercise price are expected to be determined by the Compensation Committee of
the Board of Directors in August 2005.
11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the Record Date, certain
information with respect to the beneficial ownership of the Common Stock (i) by
each person who is known by A.C. Moore to be the beneficial owner of more than
5% of the Common Stock, (ii) by each director and nominee for director of A.C.
Moore, (iii) by each executive officer of A.C. Moore named in the Summary
Compensation Table and (iv) by all directors and executive officers of A.C.
Moore as a group. Except as otherwise indicated, to the knowledge of the
Company, the beneficial owners of the Common Stock listed below have sole
investment and voting power with respect to such shares.
SHARES BENEFICIALLY OWNED(1)
----------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
--------------------------------------------- --------- -------
William Kaplan (2)............................ 2,000,000(3) 10.2%
Jack Parker (2)............................... 2,684,232(4) 13.6
Patricia A. Parker............................ 45,000(5) *
Lawrence H. Fine.............................. 144,772(6) *
Leslie H. Gordon.............................. 107,000(7) *
Janet Parker.................................. 101,199(8) *
Jack Robinson................................. 0(9) *
Richard J. Bauer.............................. 77,000(10) *
Richard J. Drake.............................. 106,000(11) *
Michael J. Joyce.............................. 0 *
Richard Lesser................................ 84,000(12) *
Eli J. Segal.................................. 20,000(13) *
T. Rowe Price Associates, Inc................. 1,971,700(14) 10.0
Wellington Management Company, LLP............ 2,620,383(15) 13.3
The 2004 William Kaplan GRAT.................. 1,103,417(16) 5.6
All executive officers and
directors as a group (12 persons)........... 5,369,203(17) 26.5%
----------
* Denotes less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the SEC
and includes voting or investment power with respect to the Common Stock.
Shares of Common Stock issuable upon the exercise of securities currently
exercisable or exercisable within 60 days of the Record Date are deemed
outstanding for computing the share ownership and percentage ownership of
the person holding such securities, but are not deemed outstanding for
computing the percentage of any other person.
(2) The address of each of Messrs. Kaplan and Parker is 130 A.C. Moore Drive,
Berlin, New Jersey 08009.
(3) Includes: (i) 1,103,417 shares held of record by The 2004 William Kaplan
GRAT and (ii) 896,583 held by the William Kaplan 2005 GRAT (together with
The 2004 William Kaplan GRAT, the "GRATs"). Mr. Kaplan is the Investment
Trustee of the GRATs. Accordingly, Mr. Kaplan has the sole power to vote
and dispose of the shares owned of record by the GRATs.
(4) Does not include 45,000 shares subject to presently exercisable options
owned by Patricia A. Parker, Mr. Parker's spouse, as to which Mr. Parker
disclaims beneficial ownership.
(5) Ms. Parker's total includes 45,000 shares subject to presently exercisable
options. Does not include 2,684,232 shares owned of record by Jack Parker,
Ms. Parker's spouse, as to which Ms. Parker disclaims beneficial ownership.
(6) Includes: (i) 110,833 shares subject to presently exercisable options,
(ii) 6 shares of Common Stock allocated to Mr. Fine's account under A.C.
Moore's 401(k) Plan and (iii) 600 shares held in custody for the benefit of
Mr. Fine's child for which Mr. Fine is custodian. This information related
to the 401(k) Plan is based on a plan statement dated as of December 31,
2004.
(7) Includes 72,000 shares subject to presently exercisable options.
12
(8) Includes: (i) 92,500 shares subject to presently exercisable options and
(ii) 6,699 shares of Common Stock allocated to Ms. Parker's account under
A.C. Moore's 401(k) Plan. This information related to the 401(k) Plan is
based on a plan statement dated as of December 31, 2004.
(9) The information related to Mr. Robinson's beneficial ownership of the
Company's Common Stock is as of December 19, 2004, the date on which Mr.
Robinson resigned from the Company. Excludes 2,500 shares which were
exercisable as of December 19, 2004 but subsequently expired in March 2005
in connection with Mr. Robinson's resignation.
(10) Includes 74,000 shares subject to presently exercisable options. Does not
include 9,800 shares owned of record by Mr. Bauer's spouse, as to which Mr.
Bauer disclaims beneficial ownership.
(11) Includes 102,000 shares subject to presently exercisable options.
(12) Includes 84,000 shares subject to presently exercisable options.
(13) Includes 20,000 shares subject to presently exercisable options.
(14) Information with respect to T. Rowe Price Associates, Inc. ("Price
Associates") is derived from Price Associates' Schedule 13G/A relating to
A.C. Moore filed with the SEC. The address of Price Associates is 100 E.
Pratt Street, Baltimore, Maryland 21202. These securities are owned by
various individual and institutional investors including T. Rowe Price New
Horizons Fund, Inc. (which owns 1,000,000 shares representing 5.0% of the
shares outstanding), which Price Associates serves as investment adviser
with power to direct investments and/or sole power to vote the securities.
For purposes of the reporting requirements of the Exchange Act, Price
Associates is deemed to be a beneficial owner of such securities; however,
Price Associates expressly disclaims that it is, in fact, the beneficial
owner of such securities.
(15) Information with respect to Wellington Management Company, LLP ("WMC") is
derived from WMC's Schedule 13G/A relating to A.C. Moore filed with the
SEC. The address of WMC is 75 State Street, Boston, Massachusetts 02109.
(16) The address of The 2004 William Kaplan GRAT is c/o Jane T. Monahan, V.P.,
J.P. Morgan Trust Company of Delaware, 500 Stanton Christiana Road, Newark,
Delaware 19713. William Kaplan is the Investment Trustee of The 2004
William Kaplan GRAT. Accordingly, Mr. Kaplan has the sole power to vote and
dispose of the shares owned of record by The 2004 William Kaplan GRAT.
(17) Includes 600,333 shares subject to presently exercisable options and 6,705
shares of Common Stock allocated to the accounts of executive officers of
the Company under the Company's 401(k) Plan. Excludes shares beneficially
owned by Jack Robinson, who resigned from the Company on December 19, 2004
and therefore was not an executive officer on the Record Date.
13
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT
The Compensation Committee of A.C. Moore's Board of Directors
administers A.C. Moore's executive compensation program. In this regard, the
role of the Compensation Committee is to oversee A.C. Moore's compensation plans
and policies, annually review and recommend to the Board of Director's all
executive officers' compensation, and administer A.C. Moore's stock option plans
(including reviewing and approving stock option grants to executive officers).
The Compensation Committee's charter reflects these various responsibilities.
The Compensation Committee's membership is determined by the Board of Directors
upon the recommendation of the Nominating and Corporate Governance Committee and
is composed entirely of independent directors.
Executive Compensation Policies
The Compensation Committee's executive compensation policies are
designed to provide competitive levels of compensation, integrate pay with A.C.
Moore's annual and long-term performance goals, reward above-average corporate
performance, recognize individual initiative and achievements, and assist A.C.
Moore in attracting and retaining qualified executives.
Compensation Committee Meetings
The Compensation Committee typically meets twice during the year. At the
first committee meeting at the beginning of the year, the Compensation Committee
reviews the compensation of each executive officer and management's proposed
changes to each executive officer's compensation. In connection with such
review, Compensation Committee members are able to request additional
information from management and discuss further questions regarding the proposed
executive officer compensation. After receipt and review of all requested
information, the Compensation Committee votes on the compensation of each
executive officer. The Compensation Committee then recommends executive
officers' compensation packages to the Board of Directors, which votes on such
packages. The Compensation Committee, at the first committee meeting at the
beginning of the year, also reviews the compensation of Jack Parker, the
Company's Chief Executive Officer. Mr. Parker's compensation is reviewed and
analyzed in the context of the executive compensation components described
below. In addition, at this first meeting, the Compensation Committee usually
approves the financial goals that must be achieved by the Company during the
year in order for the executive officers to receive bonus compensation. At this
meeting, the Compensation Committee also approves discretionary bonuses to be
paid to any executive officers for services provided in the recently completed
year.
At the second committee meeting, which generally takes place in August
of each year, the Compensation Committee approves the amount, if any, of stock
option grants to be made to each executive officer pursuant to the Company's
2002 Stock Option Plan and its 1997 Employee, Director and Consultant Stock
Option Plan, each of which are described below.
Components of Executive Compensation
A.C. Moore's executive officer compensation program is comprised of base
salary, annual cash bonus compensation and long-term incentive compensation in
the form of stock options. In addition, certain of our executive officers
receive automobile allowances and other personal benefits. The aggregate amount
of such personal benefits received by each executive officer is less than
$25,000 or 10% of the total annual salary and bonus compensation received by
each respective executive officer.
14
The Company seeks to be competitive with compensation programs offered by
companies of a similar size within the retail industry. All executive officers,
except Mr. Parker who has excluded himself, are eligible to participate in the
Company's bonus and long-term incentive components of the compensation program.
A.C. Moore's executive officers are employed at will and, except Mr. Gordon who
has a severance agreement, do not have employment agreements, severance payment
arrangements or payment arrangements that would be triggered by a "change of
control" of A.C. Moore.
Base Salary and Bonus Compensation. Base salaries are based on the
results of individual performance, as well as other considerations such as the
executive officer's level of responsibility, years of service with A.C. Moore,
professional background and surveys of compensation levels of comparable retail
companies. In determining the base salary for an executive officer who is new to
A.C. Moore, the Compensation Committee reviews compensation levels for
comparable positions at comparable retail companies and the new executive
officer's skills, experience and background.
Bonus compensation is paid annually to executive officers and is
dependent upon A.C. Moore achieving certain financial goals as approved by the
Compensation Committee at the beginning of the year. In 2004, the Compensation
Committee approved certain pre-tax profit targets which needed to be achieved in
order for the executive officers to be paid bonus compensation. On April 19,
2005, the Compensation Committee approved the 2005 Bonus Plan. See "2005 Bonus
Plan" on page 19 for a description of this plan. In addition, the Compensation
Committee may also approve discretionary bonuses to executive officers based
upon his or her level of responsibility, contribution to A.C. Moore's
performance and individual performance during the year. Other than Janet Parker
who received a discretionary bonus of $10,000 for services provided in 2004, no
executive officer of the Company received bonus compensation for services
provided in 2004 because the Company did not meet the pre-tax profit targets
approved by the Compensation Committee.
Stock Options. A.C. Moore uses its 2002 Stock Option Plan and its 1997
Employee, Director and Consultant Stock Option Plan (the "Option Plans") as
long-term incentive plans for executive officers and key employees. The
objectives of the Option Plans with respect to executive officers are to align
the long-term interests of executive officers and shareholders by creating a
direct link between executive compensation and shareholder return and to enable
executives to develop and maintain a significant long-term equity interest in
A.C. Moore. The stock options component of the compensation program is also
designed to create retention incentives through extended vesting.
The Option Plans authorize the Compensation Committee to approve stock
options to officers and key employees. Individual grant amounts to executive
officers are based on internal factors, such as the size of prior grants and the
level and degree of responsibility of the position held relative to other
executive positions. In general under the Option Plans, options are granted with
an exercise price equal to the fair market value of the Common Stock on the date
of grant and are exercisable according to an extended vesting schedule approved
by the Compensation Committee at the time of grant. In 2004, 2003 and 2002, the
Board of Directors granted options to purchase an aggregate of 215,875 shares,
322,375 shares and 312,300 shares, respectively of Common Stock under the Option
Plans. These grants were approved by the Compensation Committee based upon
recommendations of management. Information concerning the option grants to
certain executive officers is set forth in the Summary Compensation Table.
Policy with Respect to Section 162(m) of the Internal Revenue Code
Generally, Section 162(m) of the Internal Revenue Code of 1986, and the
regulations promulgated thereunder (collectively, "Section 162(m)"), denies a
deduction to any publicly held corporation, such as A.C. Moore, for certain
compensation exceeding $1,000,000 paid during a calendar year to the chief
executive officer and the four other highest paid executive officers, excluding,
among
15
other things, certain performance-based compensation. Where appropriate, the
Compensation Committee has taken action to reduce the impact of this provision.
For example, the Compensation Committee intends that the Option Plans qualify
for the performance-based exclusion.
Discussion of 2004 Compensation for the Chief Executive Officer
In considering the compensation for Mr. Parker, the Chief Executive
Officer, the Compensation Committee reviewed his existing compensation
arrangements and the compensation levels of comparable retail companies. The
Compensation Committee accordingly made the determination that the annual
compensation for the Chief Executive Officer be established at $450,000 for
2004. In each of 2003 and 2002, the Compensation Committee had also established
Mr. Parker's compensation at $450,000. Mr. Parker, as a major shareholder of
A.C. Moore, elected not to participate in either the incentive compensation
program or the Option Plans. Mr. Parker also elected to reduce his compensation
to $280,000 for 2004 and $380,000 for 2003 and 2002.
As part of his overall compensation package, Mr. Parker was also
provided various life insurance policies.
THE COMPENSATION COMMITTEE
Richard Lesser (Chairman)
Michael J. Joyce
Eli J. Segal
16
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation earned during each of
the last three years by the Company's Chief Executive Officer and five other
most highly compensated executive officers of the Company (collectively, the
"Named Executive Officers") whose aggregate salaries and bonuses exceeded
$100,000 for services rendered in all capacities to the Company during 2004:
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
--------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
------------------------------- ---- --------- --------- ------------ ------------
Jack Parker.................... 2004 $ 280,000 $ -- -- $ 50,141(1)
Chief Executive Officer 2003 380,000 -- -- 46,141
2002 380,000 -- -- 48,721
Lawrence H. Fine............... 2004 $ 350,000 $ -- 50,000 $ 1,500(2)
President and 2003 350,000 -- 100,000 1,500
Chief Operating Officer 2002 338,462 64,700 100,000 1,500
Leslie H. Gordon............... 2004 $ 244,625 $ -- 15,000 $ 1,500(2)
Executive Vice President and 2003 244,625 -- 20,000 1,500
Chief Financial Officer 2002 237,500 57,250 20,000 1,500
Patricia A. Parker............. 2004 $ 215,000 $ -- -- $ 1,500(2)
Executive Vice President, 2003 215,000 -- 10,000 1,500
Merchandising 2002 215,000 32,350 10,000 16,661
Janet Parker................... 2004 $ 175,000 $ 10,000 7,500 $ 1,500(2)
Executive Vice President, 2003 175,000 -- 7,500 1,500
Merchandising and Marketing 2002 175,500 32,350 7,500 1,500
Jack Robinson.................. 2004 $ 229,170 $ -- 7,500 $ 1,500(2)
Former Executive Vice 2003 220,000 -- 7,500 1,500
President, Store Operations (3)
----------
(1) Includes (i) $48,641 of life insurance premiums paid by the Company in 2004
and (ii) $1,500 annual contribution by the Company pursuant to the
Company's 401(k) Plan.
(2) Represents annual contribution by the Company pursuant to the Company's
401(k) Plan.
(3) On December 19, 2004, Mr. Robinson resigned from the Company.
17
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning stock
options granted during 2004 to the Named Executive Officers. The exercise price
per share of each option was equal to the fair market value of the Common Stock
at the grant date as determined by the Board of Directors.
INDIVIDUAL GRANTS
-----------------------------------------------------
PERCENT OF
TOTAL POTENTIAL REALIZABLE VALUE
OPTIONS AT ASSUMED ANNUAL RATES OF
NUMBER OF GRANTED TO EXERCISE STOCK PRICE APPRECIATION
SECURITIES EMPLOYEES OR BASE FOR OPTION TERM (1)
UNDERLYING IN FISCAL PRICE EXPIRATION --------------------------
NAME OPTIONS GRANTED YEAR ($/SHARE) DATE 5% 10%
------------------------------- --------------- ---------- --------- ---------- ----------- ------------
Jack Parker.................... -- -- -- -- -- --
Lawrence H. Fine............... 50,000 23.2 $ 21.95 8/26/2014 $ 690,000 $ 1,749,000
Leslie H. Gordon............... 15,000 6.9 21.95 8/26/2014 207,000 524,700
Patricia A. Parker............. -- -- -- -- -- --
Janet Parker................... 7,500 3.5 21.95 8/26/2014 103,500 262,350
Jack Robinson.................. 7,500 3.5 21.95 8/26/2014 103,500 262,350
----------
(1) This column shows the hypothetical gain or option spreads of the options
granted based on assumed annual compound stock appreciation rates of 5% and
10% over the full term of the options. The 5% and 10% assumed rates of
appreciation are mandated by the rules of the SEC and do not represent the
Company's estimate or projection of future Common Stock prices. The gains
shown are net of the option exercise price, but do not include deductions
for taxes or other expenses associated with the exercise of the option or
the sale of the underlying shares, or reflect non-transferability, vesting
or termination provisions. The actual gains, if any, on the exercise of
stock options will depend on the future performance of the Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES
The following table sets forth certain information concerning the number
and value of unexercised options to purchase Common Stock held at the end of
2004 by the Named Executive Officers.
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR END FISCAL YEAR END (1)
ACQUIRED --------------------------- ---------------------------
NAME ON EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------------------- ----------- -------------- ----------- ------------- ----------- -------------
Jack Parker................ -- -- -- -- -- --
Lawrence H. Fine........... 47,499 $ 854,109(2) 110,834 159,000 $ 1,198,743 $ 808,997
Leslie H. Gordon........... 40,000 968,850 72,000 35,000 1,358,000 196,100
Patricia A. Parker......... -- -- 45,000 10,000 963,550 46,600
Janet Parker............... -- -- 92,500 15,000 2,074,775 86,400
Jack Robinson (3).......... 80,000 1,601,400 2,500 15,000 5,350 86,400
----------
(1) Based upon the latest reported sale price on the Nasdaq National Market on
December 31, 2004 ($28.81 per share) less the option exercise price.
(2) Of the 47,499 shares acquired on exercise, Mr. Fine retained ownership of
9,933 shares with a value realized of $227,301.
(3) Mr. Robinson resigned from the Company on December 19, 2004. In March 2005,
all of Mr. Robinson's unexercised options expired in connection with his
resignation.
18
2005 BONUS PLAN
On April 19, 2005, the Compensation Committee approved the 2005 Bonus
Plan, which is not set forth in a written agreement, for certain
management-level employees, including the Named Executive Officers. Under the
2005 Bonus Plan, if the Company achieves certain pre-tax profit targets approved
by the Compensation Committee, the Company will pay bonuses to eligible
participants at pre-determined amounts which increase as the Company's pre-tax
profit increases. The amounts paid to eligible participants vary based upon that
participant's job responsibility. The pre-tax profit targets approved by the
Compensation Committee are based on the Company's pre-tax profit before any
potential impact from the expensing of stock-based compensation as a result of
FASB Statement No. 123(R).
SEVERANCE ARRANGEMENT
The Company has agreed to pay Mr. Gordon a sum equal to one year of his
then current salary if his employment is terminated by the Company without
cause.
STOCK OPTION PLANS
The Company's stock option plans consist of the 2002 Stock Option Plan
(the "2002 Plan") and the 1997 Employee, Director and Consultant Stock Option
Plan (the "1997 Plan") (each, a "Plan" and together, the "Option Plans"). The
purpose of the Option Plans is to encourage ownership of the Company's Common
Stock by employees and directors of the Company (and by certain consultants in
the case of the 1997 Plan) in order to attract such persons, induce them to work
for the benefit of the Company and provide additional incentive for them to
promote the success of the Company. Options granted under each Plan may be
incentive stock options intended to qualify under Section 422 of the Internal
Revenue Code of 1986, as amended, or options not intended to so qualify, except
that incentive stock options may only be granted to employees. The maximum total
number of shares of the Company's Common Stock for which awards may be granted
under the 2002 Plan and 1997 Plan is 1,500,000 and 2,000,000 shares,
respectively, subject to adjustment in a manner determined by the Compensation
Committee of the Board of Directors to reflect changes in the Company's Common
Stock. Payment of the exercise price for options granted under the Option Plans
may be made in cash, shares of Common Stock or a combination of both. All
options granted pursuant to the Plans are exercisable in accordance with a
vesting schedule and prior to an expiration date, each of which are set at the
time of the issuance of the option.
As of December 31, 2004, there were options to purchase 787,253 and
643,879 shares of Common Stock outstanding under the 2002 Plan and 1997 Plan,
respectively. Shares available for future grants under the 2002 Plan and 1997
Plan amounted to 845,460 and 7,309 shares, respectively, as of December 31,
2004.
All, directors, officers and key employees (and certain consultants in
the case of the 1997 Plan) are eligible to receive options under the Option
Plans. The Options Plans are administered by the Compensation Committee or, at
the option of the Board of Directors, the Board of Directors may administer the
Option Plans. The Compensation Committee approves the optionees and determines
the nature of the option granted, the number of shares subject to each option,
the option vesting schedule and other terms and conditions of each option. The
Compensation Committee may modify or amend each Plan, provided that without the
consent of the participant, such action may not affect a participant's rights
under previously granted options. With the consent of a participant, the
Compensation Committee may amend outstanding options in a manner not
inconsistent with the applicable Plan.
19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consisted of Messrs. Bauer, Joyce, Lesser and
Segal in 2004. No person who served as a member of the Compensation Committee
during 2004 was a current or former officer or employee of the Company or
engaged in certain transactions with the Company required to be disclosed by
regulations of the SEC. Additionally, there were no compensation committee
"interlocks" during 2004, which generally means that no executive officer of the
Company served as a director or member of the compensation committee of another
entity, one of whose executive officers served as a director or member of the
Compensation Committee of the Company.
OTHER RELATED TRANSACTIONS
Richard J. Drake, a director of the Company, is a member of a law firm
which the Company retained during 2004 and which the Company intends to retain
during 2005. The Company paid fees to Mr. Drake's firm in the amount of $83,000
during 2004.
As of December 31, 2004, the Company had a receivable based on premiums
it has paid in years prior to 2003 for a split-dollar second-to-die life
insurance policy on the lives of Jack Parker and Patricia A. Parker. In February
2005, Mr. Parker reimbursed the Company for the full amount of the receivable,
$516,000.
20
STOCK PERFORMANCE GRAPH
The following graph compares the yearly changes in the total return on
the Company's Common Stock against two other measures of performance. The
comparison is on a cumulative basis for the Company's last five fiscal years.
The two other performance measures are the Nasdaq Stock Market Index and the
Nasdaq Retail Trade Index. In each case, the Company assumed an initial
investment of $100 on December 31, 1999. Dates on the following chart represent
the last trading day of the indicated calendar year. The Company paid no
dividends during such five-year period.
[CHART APPEARS HERE]
DECEMBER 31,
---------------------------------------
1999 2000 2001 2002 2003 2004
---- ---- ---- ---- ---- ----
A.C. Moore 100 141 507 437 662 990
Nasdaq Stock Market Index 100 60 48 33 49 54
The NASDAQ Retail Trade Index 100 61 85 72 100 127
21
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who beneficially own more than ten percent of
the Company's Common Stock, to file with the SEC initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Executive officers, directors and greater than ten percent
shareholders are required by regulation of the SEC to furnish the Company with
copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required during 2004, all Section 16(a) filing requirements
applicable to the Company's executive officers, directors and greater than
ten-percent beneficial owners were complied with during 2004, except that one
option grant to Janet Parker and one discretionary transaction pursuant to the
Company's 401(k) Plan by Lawrence H. Fine were not reported on timely-filed
Forms 4. Each transaction was subsequently reported on a Form 5.
SHAREHOLDER PROPOSALS
Under the Company's bylaws, shareholder proposals with respect to the
2006 annual meeting of shareholders, including nominations for directors, which
have not been previously approved by the Board of Directors must be submitted to
the Secretary of the Company not later than December 28, 2005. Any such
proposals must be in writing and sent either by personal delivery,
nationally-recognized express mail or United States mail, postage prepaid to
A.C. Moore Arts & Crafts, Inc., 130 A.C. Moore Drive, Berlin, New Jersey 08009,
Attention: Secretary of the Company. Each nomination or proposal must include
the information required by the bylaws. All late or nonconforming nominations or
proposals will be rejected.
Shareholder proposals for the 2006 annual meeting of shareholders must
be submitted to A.C. Moore by December 28, 2005 to receive consideration for
inclusion in A.C. Moore's proxy statement relating to the 2006 annual meeting of
shareholders. Any such proposal must also comply with the proxy rules under the
Exchange Act, including Rule 14a-8.
In addition, shareholders are notified that the deadline for providing
the Company timely notice of any shareholder proposal to be submitted outside of
the Rule 14a-8 process for consideration at the Company's 2006 annual meeting of
shareholders is December 28, 2005. As to all such matters which the Company does
not have notice on or prior to December 28, 2005, discretionary authority shall
be granted to the persons designated in the Company's proxy statement related to
the 2006 annual meeting of shareholders to vote on such proposal.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
A.C. Moore's independent registered public accountants for the year
ended December 31, 2004 was the firm of PricewaterhouseCoopers. The Audit
Committee of the Board of Directors has appointed PricewaterhouseCoopers,
independent registered public accountants, to serve as A.C. Moore's independent
registered public accountants for the year ending December 31, 2005.
Shareholders will be asked to ratify this appointment. Although action by the
shareholders on this matter is not required, the Audit Committee believes it is
appropriate to seek shareholder ratification of the appointment of independent
registered public accountants to provide a forum for shareholders to express
their views with regard to the Audit Committee's appointment. If the
shareholders do not ratify the appointment of PricewaterhouseCoopers, the
selection of the independent registered public accountants may be
22
reconsidered by the Audit Committee; provided, however, the Audit Committee
retains the right to continue to engage PricewaterhouseCoopers. Notwithstanding
the ratification of PricewaterhouseCoopers as the Company's independent
registered public accountants for the year ending December 31, 2005, the Audit
Committee retains the right to replace PricewaterhouseCoopers at any time
without shareholder approval. A representative of PricewaterhouseCoopers is
expected to be present at the Meeting and to be available to respond to
appropriate questions. The representative will have the opportunity to make a
statement if he or she so desires.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Aggregate fees for professional services rendered for the Company by
PricewaterhouseCoopers as of or for the years ended December 31, 2004 and 2003
were:
SERVICES RENDERED (1) 2004 2003
------------------------------------------ --------- ---------
Audit Fees................................ $ 815,650 $ 213,500
Audit Related Fees........................ 38,300 33,000
Tax Fees.................................. 42,009 20,491
All Other Fees............................ -- --
--------- ---------
Total..................................... $ 895,959 $ 266,991
========= =========
----------
(1) The aggregate fees included in Audit fees are fees billed for the fiscal
years. The aggregate fees included in each of the other categories are fees
billed in the fiscal years.
Audit fees for the years ended December 31, 2004 and 2003, respectively,
were for professional services rendered for the audits of the consolidated
financial statements of the Company, quarterly reviews, issuance of consents,
and assistance with review of documents filed with the SEC. Audit fees for the
year ended December 31, 2004 include fees related to the attestation of the
Company's internal control over financial reporting as required by the
Sarbanes-Oxley Act of 2002.
Audit related fees for the years ended December 31, 2004 and 2003 were
for assurance and related services that are reasonably related to the
performance of the audit or review of the Company's consolidated financial
statements and are not reported under "Audit Fees."
Tax fees for the years ended December 31, 2004 and 2003 were for
services relating to tax advice and tax planning other than those directly
related to the audit of the income tax accrual.
The Audit Committee has considered and determined that the services
provided by PricewaterhouseCoopers are compatible with PricewaterhouseCoopers
maintaining its independence.
The Audit Committee has adopted a policy that requires advance approval
of all audit, audit related, tax services and other services performed by the
independent registered public accountants. The policy provides for pre-approval
by the Audit Committee of specifically defined audit and non-audit services.
Unless the specific service has been previously pre-approved with respect to
that year, the Audit Committee must approve the permitted service before the
independent registered public accountants are engaged to perform it. The Audit
Committee pre-approved all of the audit and non-audit services provided to the
Company by PricewaterhouseCoopers in fiscal years 2004 and 2003.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF PROPOSAL 2.
23
OTHER MATTERS
A.C. Moore is not presently aware of any matters (other than procedural
matters) which will be brought before the Meeting which are not reflected in the
attached Notice of the Meeting. The enclosed proxy confers discretionary
authority to vote with respect to any and all of the following matters that may
come before the Meeting: (i) matters which the Company did not receive notice by
December 27, 2004 were to be presented at the Meeting; (ii) approval of the
minutes of a prior meeting of shareholders, if such approval does not amount to
ratification of the action taken at the meeting; (iii) the election of any
person to any office for which a bona fide nominee named in this Proxy Statement
is unable to serve or for good cause will not serve; (iv) any proposal omitted
from this Proxy Statement and the form of proxy pursuant to Rules 14a-8 or 14a-9
under the Securities Exchange Act of 1934; and (v) matters incident to the
conduct of the Meeting. In connection with such matters, the persons named in
the enclosed proxy will vote in accordance with their best judgment.
HOUSEHOLDING
In order to reduce printing costs and postage fees, the Company has
adopted the process called "householding" for mailing its annual report and
proxy statement to "street name holders," which refers to shareholders whose
shares are held in a stock brokerage account or by a bank or other nominee. This
means that street name holders who share the same last name and address will
receive only one copy of the Company's annual report and proxy statement, unless
the Company receives contrary instructions from a street name holder at that
address. The Company will continue to mail a proxy card to each shareholder of
record.
If you prefer to receive multiple copies of the Company's proxy
statement and annual report at the same address, you may obtain additional
copies by writing to A.C. Moore Arts & Crafts, Inc. Attention: Leslie H. Gordon,
Executive Vice President and Chief Financial Officer, 130 A.C. Moore Drive,
Berlin, New Jersey 08009 or by calling (856) 768-4930, ext. 109. Eligible
shareholders of record receiving multiple copies of the annual report and proxy
statement can request householding by contacting the Company in the same manner.
ANNUAL REPORT TO SHAREHOLDERS AND FORM 10-K
This Proxy Statement is accompanied by A.C. Moore's 2004 Annual Report
to Shareholders which includes a copy of A.C. Moore's Annual Report on Form 10-K
for the year ended December 31, 2004.
By Order of the Board of Directors
Janet Parker
Secretary
Berlin, New Jersey
April 26, 2005
24
Appendix A
Form of Proxy
A.C. MOORE ARTS & CRAFTS, INC.
BERLIN, NEW JERSEY
PROXY FOR 2005 ANNUAL MEETING OF SHAREHOLDERS, JUNE 2, 2005
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF A.C. MOORE ARTS & CRAFTS, INC.
The undersigned hereby constitutes and appoints Jack Parker and William
Kaplan, and each of them, as attorneys and proxies of the undersigned, with full
power of substitution, for and in the name, place and stead of the undersigned,
to appear at the annual meeting of shareholders of A.C. Moore Arts & Crafts,
Inc. to be held on the 2nd day of June, 2005 and at any postponement or
adjournment thereof, and to vote all of the shares of A.C. Moore Arts & Crafts,
Inc. which the undersigned is entitled to vote, with all the powers and
authority the undersigned would possess if personally present.
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED. IF NO
DIRECTIONS TO THE CONTRARY ARE INDICATED IN THE BOXES PROVIDED, THE PERSONS
NAMED HEREIN INTEND TO VOTE FOR EACH PROPOSAL LISTED ON THIS PROXY CARD.
BOTH PROXY AGENTS PRESENT AND ACTING IN PERSON OR BY THEIR SUBSTITUTES
(OR IF ONLY ONE IS PRESENT AND ACTING, THEN THAT ONE) MAY EXERCISE ALL THE
POWERS CONFERRED HEREBY. DISCRETIONARY AUTHORITY IS CONFERRED HEREBY AS TO
CERTAIN MATTERS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT.
(1) The election of 01 - Lawrence H. Fine, 02 - Richard Lesser and
03 - Eli J. Segal as Class C directors of the Company to hold office for a term
of three years and until each of their respective successors is duly elected and
qualified.
(INSTRUCTION: TO WITHHOLD
FOR all nominees WITHHOLD AUTHORITY AUTHORITY TO VOTE FOR ANY
listed above (except to vote for the INDIVIDUAL NOMINEE, WRITE THAT
as marked to the nominees listed NOMINEE'S NAME IN THE SPACE
contrary at right.) above. PROVIDED BELOW.)
[ ] [ ] ______________________________
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(Continued and to be marked, signed and dated on the reverse side)
(2) Ratification of the appointment of PricewaterhouseCoopers LLP as the
Company's independent registered public accountants for the year ending
December 31, 2005, as more fully described in the accompanying Proxy Statement.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement dated
April 26, 2005 and the Company's 2004 Annual
Report to Shareholders is hereby
acknowledged.
-------------------------------------
Signature
-------------------------------------
Signature
Dated:
-------------------------------
Please sign exactly as your name or names
appear hereon, including any official
position or representative capacity. If
shares are registered in more than one name,
all owners should sign.
PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
POSTAGE PAID ENVELOPE.
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YOUR VOTE IS IMPORTANT
VOTE TODAY IN ONE OF THREE WAYS:
1. VOTE BY TELEPHONE: After you call the phone number below, you will be asked
to enter the control number at the bottom of the page. You will need to
respond to only a few simple prompts. Your vote will be confirmed and cast
as directed.
Call toll-free in the U.S. or Canada at
1-866-626-4508 on a touch-tone telephone
OR
2. VOTE BY INTERNET:
Log-on to www.votestock.com
Enter your control number printed below
Vote your proxy by checking the appropriate boxes
Click on "Accept Vote"
OR
3. VOTE BY MAIL: If you do not wish to vote by telephone or over the Internet,
please complete, sign, date and return the above proxy card in the pre-paid
envelope provided.
YOUR CONTROL NUMBER IS:
-----------------------
You may vote by telephone or Internet 24 hours a day, 7 days a week.
Telephone and Internet voting is available through 11:59 p.m.,
Eastern Daylight Time, on June 1, 2005.
Your telephone or Internet vote authorizes the named proxies to vote in the
same manner as if you marked, signed and returned your proxy card.