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OMB APPROVAL |
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OMB Number:
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3235-0059 |
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Expires:
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January 31, 2008 |
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Estimated average burden hours per
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14 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the Registrant
o |
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Check the appropriate box: |
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o Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
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þ Definitive Proxy Statement |
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o Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
The Finish Line, Inc.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
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þ No fee required. |
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o
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11. |
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1) Title of each class of securities to which transaction applies: |
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2) Aggregate number 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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4) Proposed maximum aggregate value of transaction: |
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o Fee paid previously with preliminary materials. |
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o Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing. |
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1) Amount Previously Paid: |
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2) Form, Schedule or Registration Statement No.: |
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SEC 1913 (02-02) |
Persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays a currently valid
OMB control number. |
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![(FINISH LINE LOGO)](c05954dc0595400.gif) |
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June 19, 2006 |
Dear Shareholder:
You are cordially invited to attend the 2006 Annual Meeting of Shareholders of The Finish
Line, Inc., on Thursday, July 20, 2006, at 9:00 a.m., to be held at The Finish Line, Inc. Corporate
Office, 3308 N. Mitthoeffer Road, Indianapolis, Indiana 46235. Members of your Board of Directors
and management look forward to greeting those shareholders 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.
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Respectfully,
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![-s- Alan H. Cohen](c05954dc0595401.gif) |
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Alan H. Cohen, |
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Chairman of the Board |
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and Chief Executive Officer |
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TABLE OF CONTENTS
THE FINISH LINE, INC.
3308 N. Mitthoeffer Road
Indianapolis, Indiana 46235
Notice of Annual Meeting of Shareholders
to be held July 20, 2006
TO THE SHAREHOLDERS OF THE FINISH LINE, INC.:
Notice is hereby given that the 2006 Annual Meeting of Shareholders of The Finish Line, Inc.
(the Company) to be held at The Finish Line, Inc. Corporate Office, 3308 N. Mitthoeffer Road,
Indianapolis, Indiana 46235 on Thursday, July 20, 2006, at 9:00 a.m., will be conducted for the
following purposes:
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To elect three Class II directors to serve on the Companys Board of Directors
until the 2009 Annual Meeting of Shareholders; |
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(2) |
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To ratify the selection of Ernst & Young LLP as the Companys independent
registered public accounting firm for the Companys fiscal year ending March 3, 2007;
and |
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(3) |
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To transact such other business as may properly come before the meeting or any
adjournments or postponements thereof. |
Only shareholders of record at the close of business on May 26, 2006, will be entitled to
notice of and to vote at the Annual Meeting and any adjournments or postponements thereof.
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By Order of the Board of Directors,
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![-s- Gary D. Cohen](c05954dc0595402.gif) |
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Gary D. Cohen, |
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Executive Vice President, |
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General Counsel and Secretary |
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Indianapolis, Indiana
June 19, 2006
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.
The Finish Line, Inc.
3308 N. Mitthoeffer Road
Indianapolis, Indiana 46235
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
JULY 20, 2006
GENERAL INFORMATION
This Proxy Statement and the accompanying Notice of Annual Meeting and Proxy Card are being mailed
on or about June 19, 2006, in connection with the solicitation of proxies by the Board of Directors
(the Board) of The Finish Line, Inc. (Finish Line or the Company) for use at the 2006 Annual
Meeting of Shareholders of the Company (the Annual Meeting) to be held at The Finish Line, Inc.
Corporate Office, 3308 N. Mitthoeffer Road, Indianapolis, Indiana 46235, on Thursday, July 20,
2006, at 9:00 a.m., and any adjournment or postponement thereof. At the Annual Meeting, the
Companys shareholders will be asked to: (i) elect three Class II directors to serve on the Board
until the 2009 Annual Meeting of Shareholders, (ii) ratify the selection of Ernst & Young LLP as
the Companys independent registered public accounting firm for the Companys fiscal year ending
March 3, 2007, and (iii) vote on such other matters as may properly come before the Annual Meeting
or any adjournments or postponements thereof. This Proxy Statement and related proxy materials are
being first mailed to shareholders on or about June 19, 2006.
Throughout this Proxy Statement, fiscal 2006, fiscal 2005 and fiscal 2004 represent the fiscal
years ended February 25, 2006, February 26, 2005, and February 28, 2004, 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 Companys shareholders. 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 Shares.
Voting at the Meeting
Shareholders of record of the Companys Class A Common Shares and Class B Common Shares at the
close of business on May 26, 2006, are entitled to notice of and to vote at the Annual Meeting and
any adjournment or postponement thereof. On that date, 43,029,261 Class A Common Shares and
5,141,336 Class B Common Shares were outstanding and entitled to vote. Each outstanding Class A
Common Share entitles the holder thereof to one vote and each outstanding Class B Common Share
entitles the holder thereof to ten votes.
In the election of directors, the three 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 affirmative vote of a majority of the votes cast is
required to ratify the selection of Ernst & Young LLP as the Companys independent registered
public accounting firm for the Companys fiscal year ending March 3, 2007.
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 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.
Shareholders do not have the right to cumulate their votes in the election of directors.
Revocability of Proxy
A proxy may be revoked by a shareholder 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
1
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 shareholder 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 shareholders or, if no instructions are indicated, will be voted
FOR the election of the three Class II director nominees indicated herein to serve on the Board
until the 2009 Annual Meeting of Shareholders, FOR the ratification of the selection of Ernst &
Young LLP as the Companys independent registered public accounting firm for the Companys fiscal
year ending March 3, 2007, and, as to any other matter that may be properly brought before the
Annual Meeting, in accordance with the judgment of the proxy.
ELECTION OF CLASS II DIRECTORS
(Item 1 on your Proxy)
The Companys Bylaws provide for dividing the Board into three classes, as nearly equal in number
as possible, with the term of office of one class expiring each year, and with each director to
hold office until his or her successor is duly elected and qualified, except in the event of his or
her death, resignation or removal. The term of the Class I directors, consisting of Alan H. Cohen
and Jeffrey H. Smulyan, will expire at the 2008 Annual Meeting, the term of the Class II directors,
consisting of Larry J. Sablosky, Bill Kirkendall and William P. Carmichael, will expire at the 2006
Annual Meeting, and the term of the Class III directors, consisting of David I. Klapper, Stephen
Goldsmith and Catherine A. Langham, will expire at the 2007 Annual Meeting.
The persons named in the accompanying Proxy Card as proxies for this meeting will vote in favor of
the following three nominees as Class II directors of the Company unless otherwise indicated by the
shareholder on the Proxy Card. Class II directors elected at the 2006 Annual Meeting will serve for
a three-year term expiring at the 2009 Annual Meeting of Shareholders, and until their successors
are duly elected and qualified, except in the event of his or her 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 Class II directors of the Company are Larry J. Sablosky, Bill
Kirkendall and William P. Carmichael. Each of such persons currently serves as a director of the
Company. The nominees for election as Class II directors of the Company were selected by the Board
upon the recommendation of the independent directors of the Board, meeting in executive session.
See Management Executive Officers and Directors for additional information concerning the
nominees, and Board of Directors, Committees and Meetings Nomination Process for additional
information regarding the Boards criteria for selecting director nominees.
Recommendation of the Board of Directors
The Board unanimously recommends that shareholders vote FOR the Class II director nominees set
forth above. Proxies solicited by the Board will be so voted unless shareholders specify otherwise
on their Proxy Cards (Item 1 on your Proxy).
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 26, 2006, information relating to the beneficial
ownership of the Companys common shares by each person known to the Company to be the beneficial
owner of more than five percent of the outstanding Class A Common Shares or Class B Common Shares,
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.
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Class A |
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Class B |
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Number of |
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% of |
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Number of |
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% of |
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Total |
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Shares(1)(2) |
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Class(3) |
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Shares(1) |
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Class(3) |
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Shares |
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Alan H. Cohen |
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41,000 |
(8) |
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(10 |
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2,168,794 |
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42.2 |
% |
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2,209,794 |
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David I. Klapper |
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1,824,300 |
(5) |
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35.5 |
% |
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1,824,300 |
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Larry J. Sablosky |
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41,500 |
(4)(8) |
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(10 |
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1,148,242 |
(6) |
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22.3 |
% |
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1,189,742 |
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Glenn S. Lyon |
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136,000 |
(8) |
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(10 |
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136,000 |
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Steven J. Schneider |
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101,920 |
(8) |
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(10 |
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101,920 |
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Gary D. Cohen |
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88,351 |
(8) |
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(10 |
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88,351 |
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George S. Sanders |
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141,500 |
(8) |
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(10 |
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141,500 |
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Donald E. Courtney |
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98,054 |
(7)(8) |
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(10 |
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98,054 |
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Michael L. Marchetti |
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99,800 |
(8) |
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(10 |
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99,800 |
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Kevin S. Wampler |
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95,936 |
(8) |
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(10 |
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95,936 |
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Kevin G. Flynn |
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70,200 |
(8) |
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(10 |
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70,200 |
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Robert A. Edwards |
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73,652 |
(8) |
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(10 |
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73,652 |
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James B. Davis |
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35,200 |
(8) |
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(10 |
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35,200 |
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Roger C. Underwood |
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46,000 |
(8) |
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(10 |
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46,000 |
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Timothy R. Geis |
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25,200 |
(8) |
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(10 |
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25,200 |
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Michael J. Smith |
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38,086 |
(8) |
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(10 |
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38,086 |
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Jeffrey H. Smulyan |
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58,000 |
(8) |
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(10 |
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58,000 |
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Stephen Goldsmith |
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24,000 |
(8) |
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(10 |
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24,000 |
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Bill Kirkendall |
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19,000 |
(8) |
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(10 |
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19,000 |
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William P. Carmichael |
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34,000 |
(8) |
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(10 |
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34,000 |
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Catherine A. Langham |
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T. Rowe Price
100 E. Pratt St.
Baltimore, MD |
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2,755,840 |
(9) |
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6.3 |
% |
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2,755,840 |
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All directors and executive officers
as a group (21 persons) |
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1,042,899 |
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2.4 |
% |
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5,141,336 |
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100.0 |
% |
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6,184,235 |
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(1) |
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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. |
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(2) |
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If Class B Common Shares are owned by the named person or group, excludes Class B Common
Shares convertible into a corresponding number of Class A Common Shares. |
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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, as amended (the Exchange Act). |
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(4) |
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Reflects shares gifted to a private family foundation, which is controlled by the named
person. |
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Includes 97,100 shares held by a family partnership of which Mr. Klapper serves as general
partner. |
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Includes 150,000 Class B Common Shares held by a family partnership of which Mr. Sablosky
serves as general partner, and 14,420 Class B Common Shares held by Mr. Sabloskys spouse. |
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Includes 9,200 Class A Common Shares held by Mr. Courtneys spouse. |
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(8) |
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Includes restricted Class A Common Shares and also includes the following shares issuable
upon exercise of options which are exercisable within 60 days of May 26, 2006: |
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Alan H. Cohen |
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4,000 |
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Glenn S. Lyon |
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107,000 |
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Steven J. Schneider |
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69,000 |
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Gary D. Cohen |
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56,000 |
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George S. Sanders |
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129,500 |
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Donald E. Courtney |
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69,000 |
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Michael L. Marchetti |
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83,000 |
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Kevin S. Wampler |
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82,900 |
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Kevin G. Flynn |
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61,800 |
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Robert A. Edwards |
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66,400 |
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James B. Davis |
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29,200 |
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Roger C. Underwood |
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40,000 |
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Timothy R. Geis |
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19,200 |
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Michael J. Smith |
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25,800 |
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Jeffrey H. Smulyan |
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32,000 |
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Stephen Goldsmith |
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24,000 |
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Bill Kirkendall |
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19,000 |
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William P. Carmichael |
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30,000 |
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(9) |
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This information is based solely on Schedule 13G/As filed with the Securities and Exchange
Commission, copies of which were provided to the Company. The respective dates of the
Schedule 13G/As are as follows: |
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(10) |
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Less than 1% of the Class A Common Shares outstanding. |
4
MANAGEMENT
Executive Officers and Directors
The executive officers, directors and nominees for director of the Company are as follows:
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Executive |
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Officer or |
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Director |
Name |
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Age |
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Position |
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Since |
Alan H. Cohen
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59 |
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Chairman of the Board, CEO, Class I Director
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1976 |
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Glenn S. Lyon
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56 |
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President, Chief Merchandise Officer
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2001 |
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David I. Klapper
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57 |
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Senior Executive Vice President, Class III Director
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1976 |
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Larry J. Sablosky
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57 |
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Senior Executive Vice President, Class II Director
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1982 |
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Steven J. Schneider
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50 |
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Senior Executive Vice President, COO
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1989 |
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Gary D. Cohen
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54 |
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Executive Vice President, General Counsel, Secretary
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1997 |
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George S. Sanders
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48 |
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Executive Vice President, Real Estate and Store Development
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1994 |
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Donald E. Courtney
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51 |
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Executive Vice PresidentIS, Distribution, CIO, Assistant Secretary
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1989 |
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Michael L. Marchetti
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55 |
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Executive Vice President, Store Operations
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1995 |
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Kevin S. Wampler
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43 |
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Executive Vice President, CFO and Assistant Secretary
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1997 |
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Kevin G. Flynn
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42 |
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Senior Vice President, Marketing
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1997 |
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Robert A. Edwards
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44 |
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Senior Vice President, Distribution
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1997 |
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James B. Davis
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43 |
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Senior Vice President, Real Estate
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1997 |
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Roger C. Underwood
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36 |
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Senior Vice President, Information Systems
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2001 |
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Timothy R. Geis
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46 |
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Senior Vice President, General Merchandise Manager
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2003 |
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Michael J. Smith
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48 |
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Senior Vice President, Loss Prevention
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2003 |
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Jeffrey H. Smulyan
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59 |
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Class I Director
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1992 |
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Stephen Goldsmith
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59 |
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Class III Director
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1999 |
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Bill Kirkendall
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52 |
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Class II Director
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2001 |
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William P. Carmichael
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62 |
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Class II Director
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2003 |
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Catherine A. Langham
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48 |
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Class III Director
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2006 |
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Mr. Alan H. Cohen, a co-founder of the Company, served as Chairman of the Board, President and
Chief Executive Officer of the Company from May 1982 until October 2003. In October 2003, Mr. Cohen
stepped down from the Presidency and is now the Chairman of the Board and CEO. 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. Glenn S. Lyon has served as President and Chief Merchandise Officer of the Company since
October 2003, and as Executive Vice President and Chief Merchandise Officer from September 2001 to
October 2003. 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 Macys N.Y., where he spent ten years in various merchandising positions.
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.
5
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 Senior Executive Vice President and Chief Operating Officer
of the Company since October 2003, and as Executive Vice President, Chief Operating Officer, Chief
Financial Officer and Assistant Secretary from April 2001 to October 2003. Mr. Schneider also
served as Executive Vice PresidentFinance, Chief Financial Officer and Assistant Secretary of the
Company from April 2000 to April 2001, as Senior Vice PresidentFinance, Chief Financial Officer
and Assistant Secretary of the Company from March 1997 to April 2000, and as Vice PresidentFinance
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 womens
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 25 years.
Mr. Gary D. Cohen has served as Executive Vice PresidentGeneral Counsel and Secretary of the
Company since April 2000. Mr. Cohen also served as Senior Vice PresidentGeneral Counsel and
Secretary of the Company from July 1997 to April 2000. From April 1990 to July 1997, Mr. Cohen was
a Senior Partner in the law firm of Cohen and Morelock. During the 15 years prior to his joining
the Company, Mr. Cohen represented the Company regarding real estate matters. From 1978 to 1990,
Mr. Cohen held 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. George S. Sanders has served as Executive Vice PresidentReal Estate and Store Development of
the Company since April 2000. Mr. Sanders also served as Senior Vice PresidentReal Estate and
Store Development of the Company from March 1997 to April 2000, and as Vice PresidentReal Estate
and Store Construction from April 1994 to March 1997. 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 Senior Leasing Representative.
Mr. Donald E. Courtney has served as Executive Vice President, IS, Distribution, Chief Information
Officer and Assistant Secretary of the Company since October 2003, and as Executive Vice
PresidentChief Information OfficerDistribution from April 2000 to October 2003. Mr. Courtney also
served as Senior Vice PresidentMIS and Distribution of the Company from March 1997 to April 2000
and as Vice PresidentMIS and Distribution of the Company from August 1989 to March 1997. 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 PresidentMIS and Distribution. Mr. Courtney has been involved in the retail industry for over
25 years.
Mr. Michael L. Marchetti has served as Executive Vice PresidentStore Operations of the Company
since April 2000. Mr. Marchetti also served as Senior Vice PresidentStore Operations of the
Company from March 1997 to April 2000 and as Vice PresidentStore Operations from September 1995 to
March 1997. 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 30 years.
Mr. Kevin S. Wampler has served as Executive Vice President, Chief Financial Officer and Assistant
Secretary of the Company since October 2003, and as Senior Vice President, Chief Accounting Officer
and Assistant Secretary from April 2001 to October 2003. Mr. Wampler also served as Senior Vice
PresidentCorporate Controller and Assistant Secretary of the Company from April 2000 to April 2001
and as Vice PresidentCorporate Controller and Assistant Secretary of the Company from March 1997
to April 2000. Mr. Wampler, who is a Certified Public Accountant, was also employed by the Company
from June 1993 to March 1997 as Corporate Controller. Mr. Wampler held the position of Audit
Manager at a national accounting firm from July 1986 to May 1993.
Mr. Kevin G. Flynn has served as Senior Vice PresidentMarketing of the Company since April 2000.
Mr. Flynn also served as Vice PresidentMarketing 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 by Caldwell Van Riper, a regional advertising agency and by Leo Burnett Advertising
in Chicago prior to July 1992.
6
Mr. Robert A. Edwards has served as Senior Vice PresidentDistribution of the Company since April
2000. Mr. Edwards also served as Vice PresidentDistribution of the Company from March 1997 to
April 2000. Mr. Edwards has been employed by the Company since June 1982 and prior to his election
as an officer, held the position of Director of Distribution.
Mr. James B. Davis has served as Senior Vice PresidentReal Estate of the Company since April 2000.
Mr. Davis also served as Vice PresidentReal 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
PresidentLeasing for JMB Urban (a real estate developer and manager) from January 1993 to October
1996.
Mr. Roger C. Underwood has served as Senior Vice PresidentInformation Systems of the Company since
April 2001. Mr. Underwood also served as Vice PresidentInformation 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.
Mr. Timothy R. Geis has served as Senior Vice President, General Merchandise Manager of the Company
since October 2003, and as Senior Vice PresidentFootwear from April 2003 to October 2003. From
April 2001 until April 2003, Mr. Geis held the position of Vice PresidentFootwear. 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.
Mr. Michael J. Smith has served as Senior Vice PresidentLoss Prevention of the Company since April
2003. From March 2000 to April 2003, Mr. Smith held the position of Vice PresidentLoss Prevention.
Mr. Smith joined the Company 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 through 1998.
Mr. 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 24 radio stations, three network-affiliated television
stations, and award-winning regional and specialty magazines around the country. Mr. Smulyan, a
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 the University of Southern
California. In 2000, Mr. Smulyan was honored with the American Women in Radio and Televisions
Silver Satellite Award, the National Association of Broadcasters National Radio Award, and as
Radio Inks Radio Executive of the Year. In 2004, Mr. Smulyan was inducted into the Broadcast and
Cable Hall of Fame. Under his leadership, Emmis was named one of Fortunes 100 Best Companies to
Work For in 2005. He is the former owner of the Seattle Mariners baseball team.
Mr. Stephen Goldsmith has served as a director of the Company since July 1999. Mr. Goldsmith is a
Partner of Knowledge Universe, which invests in internet-oriented education companies, day care and
childhood learning companies, and B2B companies, principally in business and human resources
consulting and online training. He is also Chairman of the Corporation for National and Community
Service and the Daniel Paul Professor of Government and Director of the Innovations in American
Government Program at Harvard Universitys Kennedy School of Government. From 2001 to 2005, he
served as Senior Vice President of ACS State and Local Solutions. Mr. Goldsmith was a director of
Net2Phone, Inc., an Internet communications company, from 2003 to 2005 and The Steak n Shake
Company, a national restaurant chain, from 1999 to 2005. He is also a former trustee of Windrose
Medical Properties Trust. Mr. Goldsmith served as Mayor of the City of Indianapolis from January
1992 to December 1999, and then as chief domestic policy advisor to the Bush 2000 Presidential
Campaign.
Mr. Bill Kirkendall has served as a director of the Company since July 2001. Mr. Kirkendall is a
Partner in D.A. Weibring Golf Resources Group, a golf design management and consulting firm. 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
7
1991 to 1998. Mr. Kirkendall was Vice President of Golden Brothers Inc., a long haul trucking
company from 1976 to 1982.
Mr. William P. Carmichael has served as a director of the Company since July 2003. From 1999 to
2001 Mr. Carmichael was Senior Managing Director of 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 product companies, including Senior Vice President of Sara Lee
Corporation from 1991 to 1993, Senior Vice President of Beatrice Foods from 1984 to 1990, Chief
Financial Officer from 1987 to 1990, and Vice President of Esmark, Inc., from 1973 to 1984. Mr.
Carmichael has been a director of Spectrum Brands (formerly Rayovac Corporation) since August 2002,
Cobra Electronics Corporation since 1994, and Simmons Company since May 2004. He also serves as
Chairman of the Board of Trustees of the Columbia Funds Series Trust, Columbia Funds Master
Investment Trust, and Nations Separate Account Trust. He was previously a director of Opta Food
Ingredients, Inc., Nations Government Income Term Trust 2004, Nations Government Income Term Trust
2003, Nations Balanced Target Maturity Fund and Hatteras Income Securities Fund.
Ms. Catherine A. Langham was elected as a director of the Company by the Board of Directors on
April 20, 2006. Ms. Langham has over twenty years of experience in the logistics industry. She is
the co-founder and President of Future Enterprises, Inc. dba Langham, a global freight management
company specializing in expedited transportation, warehousing and distribution. She has been a
member of the Board of Directors of Marsh Supermarkets, Inc. since 1998, and currently serves on
Marshs audit and executive committees.
Officers are appointed by and serve at the discretion of the Board. Unless otherwise stated, there
are no family relationships among any directors or executive officers of the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Companys officers and directors and persons who
beneficially own more than 10 percent of the Companys Class A Common Shares to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the SEC. Officers, directors and 10
percent shareholders are required by the SEC to furnish the Company with copies of all Forms 3, 4
and 5 that they file.
Based solely on the Companys 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 officers, directors and greater than
10 percent shareholders have complied with all of the filing requirements applicable to them with
respect to transactions during the fiscal year ended February 26, 2005.
BOARD OF DIRECTORS, COMMITTEES AND MEETINGS
Independence of Directors
The Board has determined that the majority of its members are independent directors under the
criteria for independence set forth in the listing standards of the Nasdaq Stock Market (Nasdaq).
The independent directors of the Board include Jeffrey H. Smulyan, Stephen Goldsmith, Bill
Kirkendall, William P. Carmichael and Catherine A. Langham. Ms. Langham was elected a director by
the Board on April 20, 2006.
In addition, all members of the Audit Committee and the Compensation and Stock Option Committee of
the Board are independent directors. In accordance with the Nasdaq listing standards, all the
members of the Audit Committee must not accept, directly or indirectly, any compensation from the
Company other than directors fees and must not be affiliated persons of the Company (other than by
virtue of their directorship).
Meetings and Committees of the Board of Directors
The Board held four meetings in fiscal 2006 and all directors attended at least 75% of the meetings
of the Board and the committees of the Board of which they were members. Members of the Board are
expected to attend the Annual Meeting of Shareholders. All of the Board members attended the 2005
Annual Meeting, other than Mr. Kirkendall, who was out of the country at the time.
The Board of Directors has three (3) committees. The Audit Committee is comprised of Ms. Langham
and Messrs. Goldsmith, Kirkendall and Carmichael, Chair. Ms. Langham has served on the Audit
Committee since her election to the Board on April 20, 2006. The Compensation and Stock Option
Committee is comprised of Messrs. Kirkendall and Smulyan. The Finance Committee is comprised of
Messrs. Klapper and Carmichael. The Company
8
does not have a nominating committee nor any committee performing such functions. The Board has
determined that, because a majority of its members are independent directors, it is appropriate for
the independent directors to fulfill the role of a nominating committee. Nominees are recommended
to the Board of Directors by at least a majority of independent directors, meeting in executive
session.
Audit Committee. The Audit Committee met eight times during fiscal 2006. The Audit Committee is
composed solely of independent directors (as defined in the Nasdaq listing standards and Securities
and Exchange Commission (SEC) rules). The Audit Committee is governed by a written charter
approved by the Board, a copy of which was included as an appendix to the proxy statement sent to
the Companys shareholders in connection with the 2004 Annual Meeting of Shareholders. Under its
charter, the Audit Committee, among other things, appoints the Companys independent registered
public accounting firm each year and approves the compensation and terms of engagement of the
Companys independent registered public accounting firm, approves services proposed to be provided
by the independent registered public accounting firm, as well as all services provided by other
professional financial services providers, and monitors and oversees the quality and integrity of
the Companys accounting process and systems of internal controls. Each member of the Audit
Committee meets the Nasdaq financial knowledge requirements, and the Board has determined that Mr.
Carmichael qualifies as an audit committee financial expert as defined by SEC rules and meets
Nasdaq professional experience requirements as well. The Audit Committee, among its other duties
and responsibilities, reviews and monitors all related party transactions as defined in the
applicable Nasdaq listing standards. During fiscal 2006, there were no related party transactions
between the Company and its executive officers and directors.
Compensation and Stock Option Committee. The Compensation and Stock Option Committee met four
times during fiscal 2006. The Compensation and Stock Option Committee is composed solely of
independent directors (as defined in the Nasdaq listing standards). The Compensation and Stock
Option Committee focuses on executive compensation, the administration of the Companys stock
incentive plans and making decisions on the granting of discretionary bonuses.
Meetings of the Independent Directors. The Companys independent directors meet regularly in
executive sessions outside the presence of management. An executive session is generally held in
conjunction with each regularly scheduled meeting of the Board. The Company has not formally
appointed a single director to preside at executive sessions of the independent directors. Rather,
the responsibility to preside at each such meeting of independent directors is rotated among the
independent directors, depending on the subject matter to be discussed at such meeting.
Nomination Process
In determining whether to nominate a candidate for a position on the Companys Board of Directors,
the Board considers various criteria, such as the recommendations of the independent directors, the
candidates relevant business skills and experience, commitment to enhancing shareholder value, and
professional ethics and values, bearing in mind the requirements of the Board at that point in
time. The Board believes it is appropriate that a majority of its members be independent directors
and that at least one member, who also serves on the Audit Committee, be an audit committee
financial expert as defined by SEC rules. Candidates are identified through a variety of sources,
including other members of the Board, senior Company executives, individuals personally known by
the members of the Board, and research. The Company will consider shareholder recommendations of
candidates when the recommendations are properly submitted. To be considered at the Annual Meeting
of Shareholders, any such shareholder recommendation must be submitted as set forth under the
section of this Proxy Statement entitled Proposals of Shareholders, and must comply with the
notice, information and consent provisions set forth in the Companys Bylaws. Shareholder nominees
will be evaluated under the criteria set forth above. To recommend a prospective nominee for the
Boards consideration, submit a candidates name and qualifications to The Finish Line, Inc. Board
of Directors (or the applicable Board member) at the Companys principal offices (3308 N.
Mitthoeffer Road, Indianapolis, Indiana 46235) in care of the Secretary.
Communications with the Board of Directors
Shareholders may communicate with the Board of Directors, its committees, the independent directors
as a group, or one or more members of the Board or its committees, by sending a letter to The
Finish Line, Inc., Board of Directors (or the applicable member of the Board of Directors), at the
Companys principal offices (3308 N. Mitthoeffer Road, Indianapolis, Indiana 46235) in care of the
Secretary. If the Secretary deems appropriate, the Secretary will forward such correspondence to
the Chairman of the Board or to the applicable Board member.
9
EXECUTIVE COMPENSATION
The following Summary Compensation Table shows compensation paid by the Company for services
rendered during fiscal years 2006, 2005 and 2004 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 executive officers) whose salary and bonus exceeded $100,000 in fiscal 2006.
SUMMARY COMPENSATION TABLE
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Long Term Compensation |
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Awards |
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Payouts |
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Restricted |
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Securities |
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Annual Compensation |
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Stock |
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Underlying |
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LTIP |
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All other |
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Salary |
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Bonus |
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Award(s) |
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Options/SARs |
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Payouts |
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Compensation |
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Name and Principal Position |
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Year |
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($) |
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($)(1) |
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($)(2) |
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(#) |
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($) |
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($)(3) |
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Alan H. Cohen |
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2006 |
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520,000 |
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83,234 |
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173,040 |
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40,000 |
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14,116 |
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Chairman of the Board |
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2005 |
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500,000 |
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545,000 |
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16,914 |
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and CEO |
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2004 |
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416,000 |
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509,184 |
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17,227 |
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Glenn S. Lyon |
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2006 |
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400,000 |
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51,221 |
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129,780 |
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30,000 |
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14,116 |
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President and |
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2005 |
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375,000 |
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327,000 |
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50,000 |
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16,914 |
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Chief Merchandise Officer |
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2004 |
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287,577 |
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273,773 |
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40,000 |
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17,227 |
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Steven J. Schneider |
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2006 |
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350,000 |
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39,216 |
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86,520 |
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25,000 |
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14,116 |
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Sr. Exec. Vice President |
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2005 |
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325,000 |
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247,975 |
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40,000 |
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16,914 |
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and COO |
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2004 |
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284,115 |
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270,478 |
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17,227 |
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Gary D. Cohen |
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2006 |
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284,000 |
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27,275 |
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72,100 |
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20,000 |
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14,116 |
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Exec. Vice President, |
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2005 |
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273,000 |
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178,542 |
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35,000 |
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16,914 |
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General Counsel &
Secretary |
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2004 |
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261,000 |
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212,976 |
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17,227 |
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George S. Sanders |
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2006 |
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271,000 |
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26,027 |
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72,100 |
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20,000 |
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14,116 |
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Exec. Vice President, |
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2005 |
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260,000 |
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170,040 |
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35,000 |
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16,914 |
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Real Estate and
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2004 |
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248,300 |
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202,613 |
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17,227 |
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Store Development |
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(1) |
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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. |
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(2) |
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The amounts reported in this column of the Summary Compensation Table above represents the
value of the restricted Class A Common Shares on the grant date, using the closing market
price. The value of the restricted Class A Common Shares as of the end of the last fiscal
year was $205,800, $154,350, $102,900, $85,750 and $85,750 for A. Cohen, G. Lyon, S.
Schneider, G. Cohen and G. Sanders, respectively. Such value is calculated by multiplying the
closing market price for the Companys Class A Common Shares on the last trading day of the
Companys fiscal year, by the number of restricted shares held by A. Cohen, G. Lyon, S.
Schneider, G. Cohen and G. Sanders on that date. The number of the restricted Class A Common
Shares held by A. Cohen, G. Lyon, S. Schneider, G. Cohen and G. Sanders as of the end of the
last fiscal year was 12,000, 9,000, 6,000, 5,000 and 5,000, respectively. Restrictions lapse
fully on March 1, 2008. Dividends are paid on all restricted shares at the same rate as the
dividends received by all shareholders. |
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(3) |
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The stated amounts are Company contributions to The Finish Line, Inc. 401k and Profit Sharing
Plan. |
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, an additional $3,500 per meeting
for attending regular meetings of the Board of Directors and an additional $1,000 per meeting for
attending special meetings. Directors who are not employees of the Company are also reimbursed for
expenses incurred in attending regular, special and committee meetings. In addition, non-employee
directors receive a $1,000 fee for each Audit Committee or
10
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 6,000 Class A Common Shares
upon their first election to the Board and an additional 8,000 options for each year they serve on
the Board.
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information with respect to options to purchase the Companys Class A
Common Shares granted during fiscal 2006 to the named executive officers.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Grants |
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Realizable |
|
|
|
Securities |
|
|
% of Total |
|
|
|
|
|
|
|
|
|
|
Value at Assumed |
|
|
|
Underlying |
|
|
Options |
|
|
|
|
|
|
|
|
|
|
Annual Rates of Stock |
|
|
|
Options |
|
|
Granted to |
|
|
Exercise |
|
|
|
|
|
|
Price Appreciation for |
|
|
|
Granted |
|
|
Employees |
|
|
Price |
|
|
Expiration |
|
|
Option Term (3) |
|
Name |
|
(#)(1)(2) |
|
|
in Fiscal Year |
|
|
(S/Sh) |
|
|
Date |
|
|
5% |
|
|
10% |
|
Alan H. Cohen |
|
|
40,000 |
|
|
|
9.7 |
% |
|
$ |
14.29 |
|
|
|
8/31/2015 |
|
|
$ |
359,476 |
|
|
$ |
910,983 |
|
Glenn S. Lyon |
|
|
30,000 |
|
|
|
7.3 |
% |
|
$ |
14.29 |
|
|
|
8/31/2015 |
|
|
$ |
269,607 |
|
|
$ |
683,237 |
|
Steven J. Schneider |
|
|
25,000 |
|
|
|
6.0 |
% |
|
$ |
14.29 |
|
|
|
8/31/2015 |
|
|
$ |
224,673 |
|
|
$ |
569,364 |
|
Gary D. Cohen |
|
|
20,000 |
|
|
|
4.8 |
% |
|
$ |
14.29 |
|
|
|
8/31/2015 |
|
|
$ |
179,738 |
|
|
$ |
455,492 |
|
George S. Sanders |
|
|
20,000 |
|
|
|
4.8 |
% |
|
$ |
14.29 |
|
|
|
8/31/2015 |
|
|
$ |
179,738 |
|
|
$ |
455,492 |
|
|
|
|
(1) |
|
Vest 10% on March 1, 2006, an additional 20% on March 1, 2007, an additional 30% on March 1,
2008 and the remaining 40% on March 1, 2009. The exercise price of these options was equal to
the fair market value of the Companys Class A Common Shares 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 share 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 SEC and does not
reflect the Companys estimate of future share price growth. |
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
Shown below is information with respect to the exercise in fiscal 2006 of options to purchase the
Companys Class A Common Shares by the five named executive officers and the unexercised options to
purchase the Companys Class A Common Shares under the Companys 1992 Employee Stock Incentive Plan
and 2002 Stock Incentive Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities |
|
|
Value of Unexercised In |
|
|
|
Shares |
|
|
|
|
|
|
Underlying Unexercised |
|
|
the Money Options/ SARs |
|
|
|
Acquired on |
|
|
Value |
|
|
Options/SARs at FY End (#) |
|
|
at FY End ($)(1) |
|
Name |
|
Exercise (#) |
|
|
Realized ($) |
|
|
Exercisable/Unexercisable |
|
|
Exercisable/Unexercisable |
|
Alan H. Cohen |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
|
|
|
|
|
|
114,400 |
|
Glenn S. Lyon |
|
|
|
|
|
|
|
|
|
|
94,000 |
|
|
|
129,000 |
|
|
|
1,111,700 |
|
|
|
912,800 |
|
Steven J. Schneider |
|
|
28,500 |
|
|
|
405,210 |
|
|
|
58,500 |
|
|
|
75,000 |
|
|
|
712,560 |
|
|
|
232,500 |
|
Gary D. Cohen |
|
|
32,750 |
|
|
|
485,653 |
|
|
|
53,000 |
|
|
|
65,500 |
|
|
|
609,345 |
|
|
|
218,200 |
|
George S. Sanders |
|
|
10,500 |
|
|
|
189,053 |
|
|
|
120,500 |
|
|
|
65,500 |
|
|
|
1,275,508 |
|
|
|
218,200 |
|
|
|
|
(1) |
|
Represents the difference between the closing price of the Companys Class A Common Shares on
Nasdaqâ on February 24, 2006 ($17.15) and the exercise price of the options. |
11
COMPENSATION AND STOCK OPTION COMMITTEE REPORT
Scope of Committees Work
The Compensation and Stock Option Committee of the Board of Directors (for purposes of this
section, the Committee) administers the Companys 1992 Employee Stock Incentive Plan, as amended
and the Companys 2002 Stock Incentive Plan, as amended; reviews the Companys 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. The Committee is composed
of two independent directors (as defined in the Nasdaq listing standards).
Summary of Compensation Policies for CEO and Executive Officers
The Companys philosophy is to maintain compensation programs that attract, retain and motivate
senior management with economic incentives, which are directly linked to financial performance and
increased shareholder value. The key elements of the Companys executive compensation program for
fiscal 2006 consisted of a base salary, potential for an annual bonus directly linked to overall
Company performance, potential for a longer term bonus directly linked to the Companys ability to
improve operating earnings over a three-year period (for certain executive officers), 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 shareholder economic interests.
CEO Compensation
The Committee believes that the Chief Executive Officers 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 Companys Chief Executive Officer. For the last three fiscal years, Mr. Alan H. Cohen,
the Companys Chief Executive Officer, was compensated with a base salary at an annualized rate of
$520,000, $500,000 and $416,000, respectively. See Executive Compensation Summary Compensation
Table. In March 2005, the Committee established a performance bonus program for Mr. Cohen (as well
as for the Companys other senior executive officers) which, for the fiscal year ended February 25,
2006, was based on four factors:
1. Increase in fiscal 2006 operating income before taxes as compared to fiscal 2005 operating
income before taxes;
2. Same store sales increases;
3. Total sales increases; and
4. Aged inventory reduction.
The Committee believes this arrangement provided the Chief Executive Officer with significant
incentives and aligned what amounted to a bonus ($83,234 for fiscal 2006) equal to 16% (for fiscal
2006) of his annual base salary directly to the Companys economic performance. A long-term
incentive bonus plan was approved in March 2005 that would allow Mr. Cohen (as well as certain of
the Companys other executive officers) to earn a bonus of up to $225,000 (lesser amounts in the
case of such other executive officers) if the Companys operating earnings over the three fiscal
years ending March 1, 2008, meet or exceed a specified cumulative amount.
In fiscal 2006, the Committee also granted Mr. Alan H. Cohen 12,000 restricted Class A Common
Shares, as well as an option to purchase 40,000 Class A Common Shares.
Executive Officers Compensation
The Committee has adopted similar policies with respect to overall compensation of the Companys
other senior executive officers.
The Companys President, Mr. Glenn S. Lyon, was compensated at a base salary of $400,000 for fiscal
2006. The Companys Senior Executive Vice President and COO, Mr. Steven J. Schneider, was
compensated at an annual base salary of $350,000. The Companys Executive Vice President, General
Counsel and Secretary, Mr. Gary D. Cohen was compensated at a base salary equal to $284,000 during
fiscal 2006. The Companys Executive Vice President, Real Estate & Store Development, Mr. George S.
Sanders was compensated at an annual base salary of $271,000 during fiscal 2006. In addition,
Messrs. Lyon, Schneider, Cohen, and Sanders participated in a bonus plan similar to
12
the plan described above under CEO Compensation under which each received a bonus equal to a
percentage (approximately 13% for Mr. Lyon, approximately 12% for Mr. Schneider, and approximately
10% for Messrs. Cohen and Sanders) of annual base salary. Under the long-term incentive bonus plan
initiated in fiscal 2006 described above under CEO Compensation, Messrs. Lyon, Schneider, Cohen
and Sanders are eligible to earn a bonus of up to $150,000, $125,000, $75,000 and $75,000,
respectively, if the Companys operating earnings over a three-year period meet or exceed a
specified cumulative amount.
Messrs. Lyon, Schneider, Cohen and Sanders were also granted options to purchase 30,000, 25,000,
20,000 and 20,000 Class A Common Shares, respectively. In addition, these same executive officers
were granted restricted Class A Common Shares in the amounts of 9,000, 6,000, 5,000 and 5,000,
respectively.
The Companys Chief Executive Officer and the other named executive officers were also eligible to
participate in the Companys 401k and Profit Sharing Plan currently up to a maximum annual
contribution of $42,000 per person for the Companys most recent plan year ended December 31, 2005.
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 independent directors. In addition, the material terms of the
plan must be disclosed to and approved by the Companys shareholders, 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 executives 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 Committees 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 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 Companys shareholders.
Compensation and Stock Option Committee
Bill Kirkendall
Jeffrey Smulyan
Indianapolis, Indiana
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, as
amended (the Securities Act) or the Exchange Act, except to the extent that the Company
specifically incorporates the same by reference.
Compensation Committee Interlocks and Insider Participation
Messrs. Kirkendall and Smulyan comprised the Compensation and Stock Option Committee during fiscal
2006.
13
STOCK PRICE PERFORMANCE GRAPH
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, or under the Exchange Act, except to the extent the Company specifically
incorporates this information by reference, and shall not otherwise be deemed filed under such
Acts.
COMPARISON
OF 5 YEAR CUMULATIVE TOTAL
RETURN(1)
AMONG THE FINISH LINE, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND A PEER GROUP(2)
(1) $100 invested on 3/3/01 in stock or on 2/28/01 in index including reinvestment of dividends.
(2) 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 managements opinion,
most closely represents the peer group of the Company.
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
or the Exchange Act, except to the extent the Company specifically incorporates this Report by
reference therein.
During October 2003, the Audit Committee of the Board developed an updated charter for the
Committee, which was approved by the full Board on October 23, 2003. The Audit Committee oversees
the Companys financial reporting process on behalf of the Board. 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 on Form 10-K for the year ended
February 25, 2006 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.
14
The Audit Committee is composed solely of independent directors (as defined in the criteria for
independence set forth in the Nasdaq listing standards and SEC rules). Each member meets Nasdaq
financial knowledge requirements, and the Board of Directors has determined that Mr. Carmichael
qualifies as an audit committee financial expert as defined by SEC rules and meets Nasdaq
professional experience requirements as well.
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 Companys 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 (and the Board has approved) that the audited financial statements be included in the
Annual Report on Form 10-K for the year ended February 25, 2006, for filing with the SEC.
William P. Carmichael, Chair
Bill Kirkendall
Stephen Goldsmith
Indianapolis, Indiana
At the time that the foregoing report was rendered, Catherine A. Langham was not a member of the
Audit Committee.
Relationship with Independent Public Accountants
The accounting firm of Ernst & Young LLP, which has served as the Companys principal independent
registered public accounting firm continuously since 1988, was selected by the Audit Committee to
continue in that capacity for fiscal year 2007, ending March 3, 2007. During fiscal 2006, the
Company also engaged Ernst & Young LLP to render certain other professional services involving
financial due diligence, assistance on tax planning matters, audit of the retirement plan and
general consultations.
The appointment of auditors is approved annually by the Audit Committee. In making its
determination, the Audit Committee reviewed both the audit scope and estimated audit fees for the
coming year. The Audit Committee has selected Ernst & Young LLP for the current fiscal year. Each
professional service performed by Ernst & Young LLP during fiscal 2006 was reviewed, and the
possible effect of such service on the independence of the firm was considered, by the Audit
Committee. Additionally, the Audit Committee requires the rotation of its outside auditors audit
partners as required by the Sarbanes-Oxley Act and the related rules of the SEC.
Independent Auditor Fee Information
Fees for professional services provided by the Companys independent registered public accounting
firm Ernst & Young LLP, in each of the last two fiscal years, in each of the following categories
are:
|
|
|
|
|
|
|
|
|
|
|
2006 |
|
|
2005 |
|
Audit Fees |
|
$ |
467,504 |
|
|
$ |
530,777 |
|
Audit-Related Fees |
|
$ |
18,600 |
|
|
$ |
174,115 |
|
Tax Fees |
|
$ |
110,143 |
|
|
$ |
79,131 |
|
All Other Fees |
|
|
-0- |
|
|
|
-0- |
|
|
|
|
|
|
|
|
|
|
$ |
596,247 |
|
|
$ |
784,023 |
|
Fees for audit services include fees associated with the annual financial statement and internal
controls audit, the reviews of the Companys quarterly reports on Form 10-Q, and assistance with
review of documents filed with the SEC. Audit-related fees principally include accounting
consultations and the audit of the Companys retirement plan. Tax fees include tax compliance, tax
advice and tax planning.
There were no other services performed during fiscal years 2006 and 2005.
15
Pre-Approval Policies and Procedures
The Audit Committee has adopted a policy that requires pre-approval of all audit, audit-related,
tax services and other services performed by the independent auditor during the fiscal year. The
Audit Committee pre-approves specifically defined services within the categories outlined above,
subject to the budget for each category. Unless a specific service has been previously pre-approved
for that year, the Audit Committee must approve the service before the independent auditor may
perform such service. The Audit Committee has delegated to the Chair of the Audit Committee the
authority to pre-approve permitted services between Audit Committee meetings, subject to specified
budgetary limitations, so long as the Chair reports any such decisions to the Audit Committee at
its next scheduled meeting.
RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
(Item 2
on your Proxy)
The Audit Committee has selected Ernst & Young LLP as the Companys independent registered public
accounting firm for the fiscal year ending March 3, 2007. The Board urges you to vote for
ratification of that appointment. A representative of Ernst & Young LLP plans to be present at the
Annual Meeting 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 shareholders.
Recommendation of the Board of Directors
The Board of Directors unanimously recommends that shareholders vote FOR ratification of the
selection of Ernst & Young LLP as the Companys independent registered public accounting firm.
Proxies solicited by the Board of Directors will be so voted unless shareholders specify otherwise
on their Proxy Cards (Item 2 on your Proxy).
16
PROPOSALS OF SHAREHOLDERS
If a shareholder wishes to submit a proposal for consideration at the 2007 Annual Meeting and wants
that proposal to appear in the Companys 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 than February 19, 2007.
If a shareholder wishes to submit a proposal for consideration at the 2007 Annual Meeting without
including that proposal in the Companys proxy statement and form of proxy, or if a shareholder
wishes to recommend a candidate for election to the Board, the Companys Bylaws require the
shareholder to provide the Company with written notice of such proposal or recommendation no less
than 90 days nor more than 120 days in advance of the first anniversary of the 2006 Annual Meeting
(in the event that the date of the 2007 Annual Meeting is advanced by more than 30 days or delayed
by more than 60 days from such anniversary date, the shareholder must provide the Company with
written notice of such proposal or recommendation no less than 90 days nor more than 120 days in
advance of the meeting or, if later, the seventh day following the first public announcement of the
date of the 2006 Annual Meeting). Such notice should be sent to the Company in care of the
Secretary at its principal offices.
MISCELLANEOUS
The Company has adopted a Code of Ethics applicable to its directors and officers (including its
chief executive officer, chief financial officer, corporate controller and other finance officers).
The Companys Code of Ethics is available on the Companys website at www.finishline.com. The
Company intends to disclose waivers under this Code of Ethics, or amendments thereto, on the
Companys website at www.finishline.com or in a report on Form 8-K as required.
The Companys Annual Report to Shareholders for the fiscal year ended February 25, 2006, 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 2006 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,
|
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|
|
![-s- Gary D. Cohen](c05954dc0595402.gif) |
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|
|
|
|
Gary D. Cohen |
|
|
|
|
Executive Vice President, |
|
|
|
|
General Counsel and Secretary |
|
|
|
|
Indianapolis, Indiana |
|
|
|
|
June 19, 2006 |
|
|
17
ANNUAL MEETING OF SHAREHOLDERS OF
THE FINISH LINE, INC.
July 20, 2006
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible
â Please detach along perforated line
and mail in the envelope provided â
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
|
|
|
|
|
|
|
1.
|
|
The election of 3 Class II directors to serve until the 2009 Annual Meeting of Shareholders: |
|
|
|
|
NOMINEES: |
o
|
|
FOR ALL NOMINEES
|
|
m
m
|
|
Larry J. Sablosky
Bill KirKendall |
o
|
|
WITHHOLD AUTHORITY
FOR ALL NOMINEES
|
|
m |
|
William P. Carmichael |
o
|
|
FOR ALL EXCEPT
(See instructions below)
|
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|
|
|
|
|
|
|
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN |
2.
|
|
Ratification of the selection of Ernst & Young LLP as the Companys independent auditors for the Companys fiscal year ending March 3, 2007: |
|
o
|
|
o
|
|
o |
|
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|
3. |
|
To transact such other business as may properly come before the meeting or any adjournments or postponements thereof and as to which the undersigned hereby confers discretionary authority. |
|
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|
THIS
PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2, AND ACCORDING TO THE JUDGMENT OF THE PROXIES WITH RESPECT TO PROPOSAL 3. |
|
|
|
INSTRUCTION:
|
|
To withhold authority to vote for any
individual nominee(s), mark FOR ALL EXCEPT and fill in
the circle next to each nominee you wish to withhold, as
shown here: l |
|
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|
To change the address on your account, please
check the box at right and indicate your new address
in the address space above. Please note that
changes to the registered name(s) on the account may
not be submitted via this method.
|
|
o |
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Signature of Shareholder
|
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Date:
|
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|
Signature of Shareholder
|
|
|
|
Date:
|
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|
Note:
|
|
Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. |
THE FINISH LINE, INC.
CLASS A COMMON SHARES
Proxy for Annual Meeting of Shareholders, July 20, 2006
This Proxy is solicited on behalf of the board of directors for the
Annual Meeting of Shareholders to be held on July 20, 2006 at 9:00 a.m.
at the Companys Corporate Office located at
3308 N. Mitthoeffer Road, Indianapolis, IN 46235
The
undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and the accompanying Proxy Statement for the 2006 Annual Meeting and,
revoking all prior Proxies, appoints Alan H. Cohen and Steven J. Schneider, and each of them,
with full power of substitution in each, the Proxies of the undersigned to represent the undersigned and
vote all Class A Shares of the undersigned in The Finish Line, Inc. at the Annual Meeting of
Shareholders to be held on July 20, 2006, and any adjournments or postponements thereof upon
the following matters and in the manner designated on the reverse side of this proxy card.
(Continued and to be signed on the reverse side)