Section 240.14a-101 Schedule 14A.
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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240.14a-12
REX STORES CORPORATION
..................................................................
(Name of Registrant as Specified In Its Charter)
..................................................................
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[REX LOGO]
REX STORES CORPORATION
2875 NEEDMORE ROAD
DAYTON, OHIO 45414
-------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 27, 2004
The Annual Meeting of Shareholders of REX Stores Corporation will be held at
the Dayton Racquet Club, Kettering Tower, Dayton, Ohio on Thursday, May 27,
2004, at 2:00 p.m., for the following purposes:
1. Election of seven members to the Board of Directors to serve until
the next Annual Meeting of Shareholders and until their respective
successors are elected and qualified.
2. Transaction of such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only shareholders of record at the close of business on April 22, 2004 will
be entitled to notice of and to vote at the Annual Meeting.
All shareholders are cordially invited to attend the Annual Meeting in
person.
By Order of the Board of Directors
EDWARD M. KRESS
EDWARD M. KRESS
Secretary
Dayton, Ohio
April 29, 2004
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, DATE,
SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE
PROVIDED.
REX STORES CORPORATION
2875 NEEDMORE ROAD
DAYTON, OHIO 45414
--------------------------
PROXY STATEMENT
--------------------------
MAILING DATE
APRIL 29, 2004
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of REX Stores Corporation, a Delaware
corporation (the 'Company'), for use for the purposes set forth herein at its
Annual Meeting of Shareholders to be held on May 27, 2004 and any adjournments
thereof. All properly executed proxies will be voted as directed by the
shareholder on the proxy card. If no direction is given, proxies will be voted
in accordance with the Board of Directors' recommendations and, in the
discretion of the proxy holders, in the transaction of such other business as
may properly come before the Annual Meeting and any adjournments thereof. Any
proxy may be revoked by a shareholder by delivering written notice of revocation
to the Company or in person at the Annual Meeting at any time prior to the
voting thereof.
The Company has one class of stock outstanding, namely Common Stock, $.01
par value, of which there were 11,355,253 shares outstanding as of April 22,
2004. Only holders of Common Stock whose names appeared of record on the books
of the Company at the close of business on April 22, 2004 are entitled to notice
of and to vote at the Annual Meeting. Each shareholder is entitled to one vote
per share.
A majority of the outstanding shares of Common Stock will constitute a
quorum at the Annual Meeting. Abstentions and broker non-votes are counted for
purposes of determining the presence or absence of a quorum. Directors are
elected by a plurality of the votes cast by the holders of Common Stock at a
meeting at which a quorum is present. Abstentions and broker non-votes will not
be counted toward a nominee's achievement of a plurality and thus will have no
effect. A broker non-vote occurs when a broker submits a proxy with respect to
shares held in a fiduciary capacity (or 'street name') that indicates the broker
does not have discretionary authority to vote the shares on a particular matter.
Brokers normally have discretion to vote shares held in street name on 'routine'
matters, such as election of directors, but not on non-routine matters such as
approval of stock plans.
FISCAL YEAR
All references in this Proxy Statement to a particular fiscal year are to
the Company's fiscal year ended January 31. For example, 'fiscal 2003' means the
period February 1, 2003 to January 31, 2004.
ELECTION OF DIRECTORS
Seven directors are to be elected at the Annual Meeting to hold office until
the next Annual Meeting of Shareholders and until their successors are elected
and qualified. Unless otherwise directed, it is the intention of the persons
named in the accompanying proxy to vote each proxy for the election of the
nominees listed below. All nominees, with the exception of Mr. Harris, are
presently directors of the Company.
If at the time of the Annual Meeting any nominee is unable or declines to
serve, the proxy holders will vote for the election of such substitute nominee
as the Board of Directors may recommend. The Company and the Board of Directors
have no reason to believe that any substitute nominee will be required.
Set forth below is certain information with respect to the nominees for
director.
STUART A. ROSE, 49, has been the Chairman of the Board and Chief Executive
Officer of the Company since its incorporation in 1984 as a holding company to
succeed to the ownership of Rex Radio and Television, Inc., Kelly & Cohen
Appliances, Inc. and Stereo Town, Inc. Upon the retirement of Mr. Tomchin in
2004, Mr. Rose was also elected President. Prior to 1984, Mr. Rose was Chairman
of the Board and Chief Executive Officer of Rex Radio and Television, Inc.,
which he founded in 1980 to acquire the stock of a corporation which operated
four retail stores.
LAWRENCE TOMCHIN, 76, retired as the President and Chief Operating Officer
of the Company effective January 31, 2004, a position he held since 1990.
Mr. Tomchin remains a part-time employee of, and consultant to, the Company.
From 1984 to 1990, he was the Executive Vice President and Chief Operating
Officer of the Company. Mr. Tomchin has been a director since 1984. Mr. Tomchin
was Vice President and General Manager of the corporation which was acquired by
Rex Radio and Television, Inc. in 1980 and served as Executive Vice President of
Rex Radio and Television, Inc. after the acquisition.
ROBERT DAVIDOFF, 77, has been a director since 1984. Mr. Davidoff has been
employed by Carl Marks & Co., Inc., an investment banking firm, since 1950 and
currently is Vice President in charge of corporate finance. Mr. Davidoff is also
a director of Hubco Exploration, Inc., Marisa Christina, Inc., Aquis
Communications Group, Inc. and Access Integrated Technologies, Inc.
EDWARD M. KRESS, 54, has been the Secretary of the Company since 1984 and a
director since 1985. Mr. Kress has been a partner of the law firm of Chernesky,
Heyman & Kress P.L.L., counsel for the Company, since 1988. Mr. Kress has
practiced law in Dayton, Ohio since 1974.
LEE FISHER, 52, has been a director since 1996. Mr. Fisher is the President
and Chief Executive Officer of the Center for Families and Children, a private
nonprofit human services organization. Mr. Fisher was a partner of the law firm
of Hahn Loeser & Parks LLP from 1995 to 1999. Mr. Fisher served as Ohio Attorney
General from 1991 to 1995, State Senator, Ohio General Assembly, from 1983 to
1991, and State Representative, Ohio General Assembly, from 1981 to 1983. Mr.
Fisher practiced law with Hahn Loeser & Parks from 1978 to 1991.
CHARLES A. ELCAN, 40, has been a director since 2003. Mr. Elcan became
Executive Vice President -- Medical Office Operations of Health Care Property
Investors, Inc. (HCP), a real estate investment trust specializing in health
care related real estate, in October 2003. Prior to that date, he served as the
Chief Executive Officer and President of MedCap Properties, LLC, a real estate
company located in Nashville, Tennessee that owns, operates and develops real
estate in the healthcare field, which HCP acquired in October 2003. From 1992 to
1997, Mr. Elcan was a founder and investor in
2
Behavioral Healthcare Corporation (now Ardent Health Services LLC), a healthcare
company that owns and operates psychiatric and acute care hospitals.
DAVID S. HARRIS, 44, is the President of Grant Capital, Inc., a private
investment company. From 2001 to 2002, Mr. Harris served as a Managing Director
in the investment banking division of ABN Amro Securities LLC (ABN), from 1997
to 2001 he served as a Managing Director and Sector Head of the Retail, Consumer
and Leisure Group of ING Barings LLC (ING), and from 1986 to 1997 he served in
various capacities as a member of the investment banking group of Furman Selz
LLC. Furman Selz was acquired by ING in 1997 and the investment banking
operations of ING were acquired by ABN in 2001. Mr. Harris is also a nominee for
director of Steiner Leisure Limited.
BOARD OF DIRECTORS
Following the Annual Meeting, the Board of Directors will consist of seven
directors. The Board has determined that four of the seven directors, Robert
Davidoff, Lee Fisher, Charles A. Elcan and David S. Harris, are independent
within the meaning of Section 303A.02 of the New York Stock Exchange ('NYSE')
Listed Company Manual.
To be considered independent, the Board must determine that the director has
no material relationship with the Company, either directly or as a partner,
shareholder or officer of an organization that has a relationship with the
Company, including commercial, industrial, banking, consulting, legal,
accounting, charitable and family relationships, among others. The Board has
established the following guidelines, consistent with Section 303A.02 of the
NYSE listing standards, to assist it in determining independence of directors.
A director who is an employee, or whose immediate family member is an
executive officer, of the Company is not independent until three years
after the end of such employment relationship.
A director who receives, or whose immediate family member receives, more
than $100,000 per year in direct compensation from the Company, other than
director and committee fees and pension or other forms of deferred
compensation for prior service (provided such compensation is not
contingent in any way on continued service), is not independent until three
years after he or she ceases to receive more than $100,000 per year in such
compensation. (Compensation received by an immediate family member for
service as a non-executive employee need not be considered in determining
independence under this test.)
A director who is affiliated with or employed by, or whose immediate family
member is affiliated with or employed in a professional capacity by, a
present or former internal or external auditor of the Company is not
'independent' until three years after the end of the affiliation or the
employment or auditing relationship.
A director who is employed, or whose immediate family member is employed,
as an executive officer of another company where any of the Company's
present executives serve on that company's compensation committee is not
'independent' until three years after the end of such service or the
employment relationship.
A director who is an executive officer or an employee, or whose immediate
family member is an executive officer, of a company that makes payments to,
or receives payments from, the Company for property or services in an
amount which, in any single fiscal year, exceeds the greater of $1 million,
or 2% of such other company's consolidated gross revenues, is not
'independent' until three years after falling below such threshold.
3
Mr. Elcan's brother provides real estate brokerage services to the Company
and has acted as a finder in connection with the Company's investments in
synthetic fuel limited partnerships and facilities. The Board has determined
that this is not a material relationship affecting Mr. Elcan's independence.
The Board of Directors held one meeting and took action by unanimous written
consent one time during the fiscal year ended January 31, 2004. Each incumbent
director attended all meetings of the Board of Directors and Board Committees on
which he served.
Directors are invited and encouraged to attend the Company's annual meeting
of shareholders. All directors attended the 2003 Annual Meeting.
BOARD COMMITTEES
The Board of Directors has four standing committees: the Audit Committee,
the Compensation Committee, the Nominating/Corporate Governance Committee and
the Executive Committee.
Audit Committee. The Audit Committee assists Board oversight of the
integrity of the financial statements of the Company, the Company's compliance
with legal and regulatory requirements, the independent accountants'
qualifications and independence, and the performance of the Company's internal
audit function and independent accountants. The Audit Committee is directly
responsible for the appointment, retention and oversight of the work of the
Company's independent accountants. The Audit Committee acts pursuant to a
written charter. The members of the Audit Committee are Messrs. Davidoff, Fisher
and Elcan. All members of the Audit Committee are independent within the meaning
of applicable NYSE listing standards and rules of the Securities and Exchange
Commission ('SEC'). The Board has determined that Mr. Davidoff is an audit
committee financial expert as defined by applicable SEC rules. The Board has
also determined that Mr. Harris, who is expected to be appointed to the Audit
Committee, will also qualify as an audit committee financial expert. The Audit
Committee met four times during fiscal 2003.
Compensation Committee. The Compensation Committee has direct responsibility
to review and approve CEO compensation, makes recommendations to the Board with
respect to non-CEO compensation and compensation plans, and administers the
Company's stock option plans. The Compensation Committee acts pursuant to a
written charter. The members of the Compensation Committee are Messrs. Davidoff,
Fisher and Elcan. All members of the Compensation Committee are independent
within the meaning of applicable NYSE listing standards. The Compensation
Committee met one time and took action by unanimous written consent two times
during fiscal 2003.
Nominating/Corporate Governance Committee. The Nominating/Corporate
Governance Committee identifies individuals qualified to become Board members
consistent with criteria approved by the Board, recommends for the Board's
selection a slate of director nominees for election to the Board at the annual
meeting of shareholders, develops and recommends to the Board the Corporate
Governance Guidelines applicable to the Company, and oversees the evaluation of
the Board and management. The Nominating/Corporate Governance Committee acts
pursuant to a written charter. The members of the Nominating/Corporate
Governance Committee are Messrs. Davidoff, Fisher and Elcan. All members of the
Nominating/Corporate Governance Committee are independent within the meaning of
applicable NYSE listing standards. The Nominating/Corporate Governance Committee
was established in March 2004.
The Board seeks director candidates who possess the background, skills and
expertise to make a significant contribution to the Board, the Company and
shareholders. In identifying and evaluating director candidates, the
Nominating/Corporate Governance Committee may consider a number of
4
attributes, including experience, skills, judgment, accountability and
integrity, financial literacy, time, industry knowledge, networking/contacts,
leadership, independence from management and other factors it deems relevant.
The Nominating/Corporate Governance Committee reviews the desired experience,
mix of skills and other qualities to assure appropriate Board composition,
taking into account the current directors and specific needs of the Company and
the Board. The Nominating/Corporate Governance Committee may solicit advice from
the CEO and other members of the Board.
The Nominating/Corporate Governance Committee will consider director
candidates recommended by the Company's shareholders. Shareholders must submit
the name of a proposed shareholder candidate to the Nominating/Corporate
Governance Committee at the Company's corporate offices by the date specified
under 'Shareholder Proposals.'
Executive Committee. The Executive Committee is empowered to exercise all of
the powers and authority of the Board of Directors between meetings of the
Board, other than the power to fill vacancies on the Board or on any Board
committee and the power to declare dividends. The members of the Executive
Committee are Messrs. Rose and Tomchin. The Executive Committee met informally
throughout the year and took formal action by unanimous written consent six
times during fiscal 2003.
CODE OF ETHICS, CORPORATE GOVERNANCE GUIDELINES AND COMMITTEE CHARTERS
The Company has adopted a Code of Business Conduct and Ethics applicable to
its employees, officers and directors. A copy of the Code of Business Conduct
and Ethics has been filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended January 31, 2004 and is posted on the Company's website
www.rextv.com.
The Company has adopted a set of Corporate Governance Guidelines addressing
director qualification standards, director responsibilities, director access to
management and independent advisors, director compensation and other matters. A
copy of the Corporate Governance Guidelines is posted on the Company's website
www.rextv.com.
The charters of the Audit Committee, Compensation Committee and
Nominating/Corporate Governance Committee are posted on the Company's website
www.rextv.com.
Copies of the Code of Business Conduct and Ethics, Corporate Governance
Guidelines and the charters of Audit Committee, Compensation Committee and
Nominating/Corporate Governance Committee are available in print to shareholders
by contacting Douglas L. Bruggeman, Vice President -- Finance, REX Stores
Corporation at (937) 276-3931.
PROCEDURES FOR CONTACTING DIRECTORS
Shareholders may communicate with the Board, the non-management directors as
a group, or a specific director by writing to REX Stores Corporation, 2875
Needmore Road, Dayton, Ohio 45414, Attention: Board of Directors, Non-Management
Directors or [Name of Specific Director]. All communications will be forwarded
as soon as practicable to the specific director, or if addressed to the
Non-Management Directors to the Chairman of the Audit Committee, or, if
addressed to the Board, to the Chairman of the Board or other director
designated by the Board to receive such communications.
DIRECTOR COMPENSATION
Directors who are not officers or employees of the Company may receive a fee
of up to $1,000 plus reasonable expenses for each meeting of the Board attended.
5
Nonemployee directors are eligible to receive grants of stock options under
the Company's 1995 and 1999 Omnibus Stock Incentive Plans. Under the Plans, on
the date of each annual meeting of the Company's shareholders, each nonemployee
director is awarded a nonqualified stock option to purchase a number of shares
of Common Stock such that the exercise price of the option multiplied by the
number of shares subject to the option is as near as possible to $100,000, but
in no event more than 10,000 shares. The exercise price of each nonqualified
option is the fair market value of the Common Stock on the date of grant. The
options are exercisable in five equal annual installments commencing on the
first anniversary of the date of grant and expire ten years from the date of
grant. For fiscal 2003, each nonemployee director was granted an option to
purchase 8,305 shares at an exercise price of $12.04 per share.
AUDIT COMMITTEE REPORT
The Audit Committee assists Board oversight of the integrity of the
financial statements of the Company. The Audit Committee is comprised of
nonemployee directors who meet the independence and financial experience
requirements of applicable NYSE listing standards and SEC rules. The Audit
Committee operates under a written charter, a copy of which is attached to this
Proxy Statement as Appendix A.
Management has the primary responsibility for the financial statements and
the reporting process, including the Company's systems of internal controls. In
fulfilling its oversight responsibilities, the Committee reviewed the audited
financial statements in the Annual Report on Form 10-K with management,
including a discussion of the quality and the acceptability of the Company's
financial reporting and controls.
The Committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their judgments as to
the quality and the acceptability of the Company's financial reporting and such
other matters as are required to be discussed with the Committee under generally
accepted auditing standards. In addition, the Committee has discussed with the
independent auditors the auditors' independence from management and the Company,
including the matters in the auditors' written disclosures required by the
Independence Standards Board.
The Committee also discussed with the Company's independent auditors the
overall scope and plans for their respective audits. The Committee meets
periodically with the independent auditors, with and without management present,
to discuss the results of their examinations, their evaluations of the Company's
internal controls, and the overall quality of the Company's financial reporting.
In reliance on the reviews and discussions referred to above, the 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 fiscal year ended
January 31, 2004 for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
ROBERT DAVIDOFF
LEE FISHER
CHARLES A. ELCAN
6
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation awarded to, earned by or
paid to the Chief Executive Officer, and to each of the other executive officers
of the Company whose total annual salary and bonus exceeded $100,000, for
services rendered in all capacities to the Company and its subsidiaries for each
of the last three fiscal years.
All information concerning stock options in the following tables reflects
3-for-2 stock splits in August 2001 and February 2002.
LONG-TERM
COMPENSATION
------------
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
NAME AND ---------------------- UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) COMPENSATION ($)(1)
------------------ ---- ---------- --------- ----------- -------------------
Stuart A. Rose ..................... 2003 154,500 984,225 -- --
Chairman of the Board and Chief 2002 154,500 882,800 -- --
Executive Officer 2001 154,500 792,000 1,125,000 --
Lawrence Tomchin ................... 2003 154,500 460,125 -- --
President and Chief Operating 2002 154,500 412,700 -- --
Officer 2001 154,500 370,000 337,500 --
Douglas L. Bruggeman ............... 2003 148,800 51,500 35,000 200
Vice President -- Finance, Chief 2002 137,500 46,200 35,000 200
Financial Officer and Treasurer 2001 129,737 41,300 56,250 200
---------
(1) Amounts in this column represent employer matching contributions on behalf
of the named executive under the Company's Profit Sharing Plan.
EMPLOYMENT AGREEMENTS
Stuart A. Rose has an employment agreement with Rex Radio and Television,
Inc. that provides for an annual salary of $154,500, a cash bonus at the
discretion of the Board of Directors, participation in all employee benefit
plans and reimbursement for business expenses. The agreement is for a term of
three years commencing January 1, 2003 and is automatically renewed for
additional one-year terms until Mr. Rose's resignation, death, total disability
or termination of employment for cause, unless earlier terminated by either
party upon 180 days written notice. Lawrence Tomchin had a similar employment
agreement during fiscal 2003 that was replaced with the agreement described
below upon his retirement as President and Chief Operating Officer effective
January 31, 2004.
Mr. Tomchin has an employment agreement with Rex Radio and Television, Inc.
that provides for an annual salary of $77,250, a cash bonus at the discretion of
the Board of Directors, participation in all employee benefit plans and
reimbursement for business expenses. The agreement is for a term of one year
commencing February 1, 2004 and is automatically renewed for additional one-year
terms until Mr. Tomchin's resignation, death, total disability or termination of
employment for cause, or unless earlier terminated by either party upon 90 days
written notice.
7
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning individual grants of
stock options made to the named executive officers during the fiscal year ended
January 31, 2004.
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
------------------------------------------------------- ---------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- ----------- ----------- ------ ---- ------ -------
Stuart A. Rose................. -- -- -- -- -- --
Lawrence Tomchin............... -- -- -- -- -- --
Douglas L. Bruggeman........... 35,000(1) 10.6 13.01 9/30/13 286,367 725,711
---------
(1) Nonqualified options granted pursuant to the Company's 1999 Omnibus Stock
Incentive Plan. These options become exercisable in five cumulative
installments of 20% on each anniversary of the date of grant. The date of
grant was September 30, 2003.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning each exercise of stock
options during fiscal 2003 by each of the named executive officers and the
fiscal year-end value of unexercised options.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
ACQUIRED YEAR-END (#) FISCAL YEAR-END ($)(1)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------ ----------- ------------- ----------- -------------
Stuart A. Rose................ 349,125 2,752,974 2,084,000 767,250 15,510,480 3,784,095
Lawrence Tomchin.............. 79,675 585,288 836,325 239,625 6,151,289 1,177,628
Douglas L. Bruggeman.......... 12,965 143,174 179,750 110,250 1,269,955 227,295
---------
(1) Unexercised options were in-the-money if the fair market value of the
underlying shares exceeded the exercise price of the option at January 31,
2004.
8
EQUITY COMPENSATION PLAN INFORMATION
NUMBER OF SECURITIES
REMAINING AVAILABLE
FOR FUTURE ISSUANCE
NUMBER OF SECURITIES UNDER EQUITY
TO BE ISSUED UPON WEIGHTED-AVERAGE COMPENSATION PLANS
EXERCISE OF EXERCISE PRICE OF (EXCLUDING SECURITIES
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, REFLECTED IN
WARRANTS AND RIGHTS WARRANTS AND RIGHTS COLUMN(A))
PLAN CATEGORY (A) (B) (C)
------------- --------------------- -------------------- ---------------------
Equity compensation plans approved by
security holders(1)................. 1,545,171 $5.48 108,011
Equity compensation plans not approved
by security holders(2).............. 4,845,898 $7.80 2,304,153
--------- ----- ---------
Total............................. 6,391,069 $7.24 2,412,164
--------- ----- ---------
--------- ----- ---------
---------
(1) Includes the Company's 1995 Omnibus Stock Incentive Plan.
(2) Includes the Company's 1999 Omnibus Stock Incentive Plan, the 1998
Nonqualified Executive Stock Options and the 2001 Nonqualified Executive
Stock Options.
Under the 1999 Omnibus Plan, the Company may grant to officers and key
employees awards in the form of nonqualified stock options, stock
appreciation rights, restricted stock, other stock-based awards and cash
incentive awards. The 1999 Omnibus Plan also provides for yearly grants of
nonqualified stock options to directors who are not employees of the
Company. The exercise price of each option must be at least 100% of the fair
market value of the Common Stock on the date of grant. A maximum of
4,500,000 shares are authorized for issuance under the 1999 Omnibus Plan, of
which 2,304,153 shares remain available for issuance.
The 1998 Nonqualified Executive Stock Options and the 2001 Nonqualified
Executive Stock Options are individual compensation arrangements. On
October 14, 1998, nonqualified stock options for 1,462,500 shares were
granted to Messrs. Rose and Tomchin at an exercise price of $4.42 per share,
which represented the market price on the date of grant, in connection with
their entering into three year employment agreements. These options are
fully exercisable and outstanding. On April 17, 2001, nonqualified stock
options for 1,462,500 shares were granted to Messrs. Rose and Tomchin at an
exercise price of $8.01 per share, which represented the market price on the
date of grant, in connection with their entering into new three year
employment agreements. These options become exercisable in one-third
increments on December 31, 2003, 2004 and 2005.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee reviews and approves Chief Executive Officer
(CEO) compensation, makes recommendations to the Board with respect to non-CEO
compensation and compensatory plans, and administers the Company's 1995 and 1999
Omnibus Stock Incentive Plans.
EXECUTIVE COMPENSATION POLICIES
The goal of the Company's executive compensation policy is to ensure that an
appropriate relationship exists between executive pay and the creation of
shareholder value, while at the same time motivating and retaining key
employees. To achieve this goal, the Company's executive compensation policies
integrate base salary with annual bonuses based upon corporate and individual
performance, supplemented with long-term equity-based incentive awards.
9
Base salary is intended to be set at a level below the base salaries paid to
executives of similarly-sized companies within the industry and the peer group.
Salaries for executive officers are reviewed by the Committee on an annual
basis, subject to the terms of any existing employment agreements.
Annual bonuses are intended to comprise a substantial portion of each senior
executive officer's annual cash compensation and are based upon corporate
financial performance. For fiscal 2003, to reflect tax savings realized from the
Company's investments generating income tax credits, the Committee established
the amount of the Company's after-tax earnings as a percentage of net sales (the
'After-Tax Earnings Percentage') as the performance measure for determining
senior executives' bonuses. In calculating after-tax earnings for this purpose,
the Company's effective federal income tax rate cannot go below 0%. Annual
bonuses for the executive officers other than senior executives are established
by the Chief Executive Officer based on his assessment of the individual's
performance.
Long-term incentive awards are made in the form of annual grants of
incentive stock options and nonqualified stock options pursuant to the Omnibus
Plans. Stock appreciation rights, restricted stock and other stock-based awards
may also be granted under the Plans. The Committee feels that stock options and
other stock-based awards are an effective long-term incentive for executive
officers to create value for shareholders, since their value bears a direct
relationship to the Company's stock price. Stock options are granted at the fair
market value of the underlying shares at the date of grant (unless otherwise
required by applicable law), and generally vest in installments over multiple
years. During fiscal 2003, nonqualified stock options were granted under the
1999 Omnibus Plan to 74 employees, including one executive officer, based
primarily on the individual's contribution to the Company's growth and
profitability.
CEO COMPENSATION
Stuart A. Rose, the Chairman and Chief Executive Officer of the Company,
received a base salary of $154,500 in fiscal 2003 pursuant to the terms of his
employment agreement.
Mr. Rose earned a cash bonus of $984,225 for fiscal 2003, compared to his
fiscal 2002 cash bonus of $882,800. This increase was based on the fiscal 2003
After-Tax Earnings Percentage of 5.965% (compared to the fiscal 2002 After-Tax
Earnings Percentage of 5.35%). In determining Mr. Rose's cash bonus, the
Committee utilized a measure of a $165,000 cash bonus for each After-Tax
Earnings Percentage point.
INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code generally disallows a federal
income tax deduction to a public company for compensation paid in excess of
$1 million in any taxable year to the corporation's chief executive officer or
any of its other named executive officers in the proxy statement. Depending upon
the number of options exercised by an executive officer in a particular year and
the value of the underlying shares at that time, exercise of the 1998 or 2001
nonqualified executive stock options or the nonqualified options granted under
the 1999 Omnibus Plan could result in the individual's annual compensation
exceeding the $1 million deduction limitation. For fiscal 2003, a portion of Mr.
Rose's compensation from salary and bonus exceeded the $1 million deduction
limitation.
COMPENSATION COMMITTEE
ROBERT DAVIDOFF
LEE FISHER
CHARLES A. ELCAN
10
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Company's Common Stock against
the cumulative total return of the S&P 500 Stock Index and a peer index
comprised of three selected publicly traded consumer electronics retailers (*)
for the period commencing January 31, 1999 and ended January 31, 2004. The graph
assumes an investment of $100 in the Company's Common Stock and each index on
January 31, 1999 and reinvestment of all dividends.
[PERFORMANCE GRAPH]
REX STORES CORPORATION
Comparison of Five Year Cumulative Total Return
(REX Stores Corporation, S&P 500 and Peer Group)
REX Stores S&P Peer
Corporation 500 Group
------------- ---- ---------
1/31/99 100 100 100
1/31/00 122 110 189
1/31/01 159 109 192
1/31/02 352 92 228
1/31/03 182 71 49
1/31/04 232 95 58
---------
* The peer group is comprised of Tweeter Home Entertainment Group, Inc.,
Ultimate Electronics, Inc. and Conn's, Inc. The peer group used in prior
years included Good Guys, Inc. Good Guys, Inc. was acquired by CompUSA Inc.
in December 2003 and has been replaced with Conn's, Inc. which went public in
November 2003. Peer group return reflects Conn's, Inc. return from that date
forward.
11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of April 22, 2004 (the record date for
the Annual Meeting), certain information with respect to the beneficial
ownership of the Company's Common Stock by each director and nominee for
director of the Company, each executive officer of the Company, all directors
and executive officers of the Company as a group and those persons or groups
known by the Company to own more than 5% of the Company's Common Stock.
For purposes of this table, a person is considered to 'beneficially own' any
shares if such person, directly or indirectly, through any contract,
arrangement, understanding, relationship, or otherwise, has (or has the right to
acquire within 60 days after April 22, 2004) sole or shared power (i) to vote or
to direct the voting of such shares or (ii) to dispose or to direct the
disposition of such shares. Unless otherwise indicated, voting power and
investment power are exercised solely by the named person or shared with members
of his household.
COMMON STOCK
BENEFICIALLY OWNED
----------------------
NAME AND ADDRESS NUMBER PERCENT(1)
---------------- ------ ----------
Stuart A. Rose(2) 3,264,249 24.6%
2875 Needmore Road
Dayton, Ohio 45414
Lawrence Tomchin(3) ........................................ 762,955 6.3%
2875 Needmore Road
Dayton, Ohio 45414
Robert Davidoff(4) ......................................... 279,936 2.4%
135 East 57th Street, 27th Floor
New York, New York 10022
Edward M. Kress(5) ......................................... 168,225 1.5%
1100 Courthouse Plaza S.W.
Dayton, Ohio 45402
Lee Fisher(6) .............................................. 44,425 *
Western Reserve Building
1468 West 9th Street
Cleveland, Ohio 44113
Charles A. Elcan(7) ........................................ 1,661 *
508 Belle Meade Blvd.
Nashville, Tennessee 37205
David S. Harris ............................................ -- *
237 Park Avenue, Suite 900
New York, New York 10017
Douglas L. Bruggeman(8) .................................... 205,750 1.8%
2875 Needmore Road
Dayton, Ohio 45414
All directors and executive officers as a group
(7 persons)(9)............................................ 4,725,540 32.7%
FMR Corp.(10) ............................................. 1,400,000 12.3%
82 Devonshire Street
Boston, Massachusetts 02109
(table continued on next page)
12
(table continued from previous page)
COMMON STOCK
BENEFICIALLY OWNED
----------------------
NAME AND ADDRESS NUMBER PERCENT(1)
---------------- ------ ----------
Vanguard Horizon Funds -- Vanguard Capital
Opportunity Fund(11)...................................... 875,000 7.7%
Post Office Box 2600
Valley Forge, Pennsylvania 19482
Dimensional Fund Advisors Inc.(12) ......................... 835,942 7.4%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Royce & Associates, LLC(13)................................. 816,500 7.2%
1414 Avenue of the Americas
New York, New York 10019
Investment Counselors of Maryland, LLC(14).................. 612,900 5.4%
803 Cathedral Street
Baltimore, Maryland 21201-5297
---------
* One percent or less.
(1) Percentages are calculated on the basis of the number of shares outstanding
on April 22, 2004 plus the number of shares issuable upon the exercise of
options held by the person or group which are exercisable within 60 days
after April 22, 2004.
(2) Includes (i) 462,209 shares held by the Stuart Rose Family Foundation, an
Ohio nonprofit corporation of which Mr. Rose is the sole member, chief
executive officer and one of three members of the board of trustees, the
other two being members of his immediate family and (ii) 1,901,600 shares
issuable upon the exercise of options.
(3) Includes 4,200 shares held by Mr. Tomchin's wife and 758,664 shares
issuable upon the exercise of options.
(4) Includes 97,164 shares issuable upon the exercise of options.
(5) Includes 20,160 shares held by Mr. Kress as co-trustee of two trusts with
respect to which Mr. Kress has shared voting and investment power, 4,775
shares held by Mr. Kress as trustee of two trusts for the benefit of his
children and 97,164 shares issuable upon the exercise of options.
(6) Includes 44,425 shares issuable upon the exercise of options.
(7) Includes 1,661 shares issuable upon the exercise of options.
(8) Includes 202,000 shares issuable upon the exercise of options.
(9) Includes 3,101,017 shares issuable upon the exercise of options.
(10) Based on a Schedule 13G filing dated February 14, 2003. Fidelity Management
& Research Company, a wholly-owned subsidiary of FMR Corp. and a registered
investment adviser, is the beneficial owner of 1,400,000 shares of Common
Stock of the Company as a result of acting as investment adviser to various
registered investment companies. One investment company, Fidelity Low
Priced Stock Fund, owns 1,400,000 shares. Edward C. Johnson 3d (Chairman of
FMR Corp.),
(footnotes continued on next page)
13
(footnotes continued from previous page)
FMR Corp., through its control of Fidelity Management & Research Company,
and the funds each has sole power to dispose of the 1,400,000 shares owned
by the funds, while the sole power to vote or direct the voting of the
shares owned directly by the Fidelity funds resides with the funds' boards
of trustees.
(11) Based on a Schedule 13G filed February 3, 2004. Vanguard Capital
Opportunity Fund, a registered investment company, has sole power to vote
or direct the voting of 875,000 shares. PRIMECAP Management Company, a
registered investment adviser, filed a Schedule 13G dated December 31, 2003
showing it has sole power to dispose of 875,000 shares. The Company
believes these are the same 875,000 shares reported as beneficially owned
by the Fund.
(12) Based on a Schedule 13G filing dated February 6, 2004. Dimensional Fund
Advisors Inc., a registered investment adviser, furnishes investment advice
to four registered investment companies and serves as investment manager to
certain other commingled group trusts and separate accounts. In its role as
investment adviser or manager, Dimensional Fund Advisors Inc. has sole
power to vote and dispose of 835,942 shares owned by these funds.
Dimensional Fund Advisors Inc. disclaims beneficial ownership of all such
shares.
(13) Based on a Schedule 13G filing dated February 6, 2004. Royce & Associates,
LLC, a registered investment adviser, has sole power to vote or direct the
voting and sole power to dispose or direct the disposition of 816,500
shares.
(14) Based on a Schedule 13G filing dated February 5, 2004. All shares of Common
Stock are owned by various investment advisory clients of Investment
Counselors of Maryland, Inc., which is deemed to be a beneficial owner of
those shares due to its discretionary power to make investment decisions
over such shares for its clients and its ability to vote such shares.
Investment Counselors of Maryland, Inc. has sole power to vote 458,900
shares, shared power to vote 154,000 shares and sole power to dispose of
612,900 shares.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers to file reports of ownership and changes of
ownership of the Company's Common Stock with the Securities and Exchange
Commission. The Company believes that during fiscal 2003 all filing requirements
applicable to its directors and executive officers were met.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Rex Radio and Television, Inc. leases 10,000 square feet for a store in a
strip shopping center in Beavercreek, Ohio, from Stuart Rose/Beavercreek, Inc.
under a lease dated December 12, 1994. The shareholders of Stuart
Rose/Beavercreek, Inc. are Stuart A. Rose and Lawrence Tomchin. Base rent is
$82,500 per year.
During fiscal 2003, the Company paid the law firm of Chernesky, Heyman &
Kress P.L.L., of which Edward M. Kress is a partner, a total of $422,167 for
legal services.
14
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP served as the Company's independent public accountants
for the fiscal year ended January 31, 2004, and has served in that capacity
since 2002. It is anticipated that representatives of Deloitte & Touche LLP will
be present at the Annual Meeting to respond to appropriate questions from
shareholders and to make a statement if they desire to do so.
The Board of Directors of the Company annually appoints the independent
public accountants for the Company after receiving the recommendations of its
Audit Committee. No recommendation of the Audit Committee has been made
concerning the appointment of independent public accountants for the fiscal year
ending January 31, 2005.
AUDIT AND NON-AUDIT FEES
The following table sets forth the aggregate fees billed to the Company for
the fiscal years ended January 31, 2004 and 2003 by Deloitte & Touche LLP:
FISCAL FISCAL
2003 2002
---- ----
Audit Fees(1)............................................... $175,950 $131,200
Audit-Related Fees(2)....................................... 20,500 8,700
Tax Fees(3)................................................. 76,975 40,050
All Other Fees(4)........................................... 0 0
-------- --------
Total................................................... $273,425 $179,950
-------- --------
-------- --------
---------
(1) Audit Fees consist of fees billed for professional services rendered for the
audit of the Company's annual financial statements and review of the interim
financial statements included in the Company's quarterly reports and
services that are normally provided by Deloitte & Touche LLP in connection
with statutory and regulatory filings or engagements.
(2) Audit-Related Fees consist of fees billed for assurance and related services
that are reasonably related to the performance of the audit or review of the
Company's financial statements and are not reported under 'Audit Fees.' This
category included fees related to the audit of the financial statements of
the Companys' employee benefit plan and, in fiscal 2003, Sarbanes-Oxley
readiness procedures.
(3) Tax Fees consist of fees billed for professional services rendered for tax
compliance, tax advice and tax planning.
(4) All Other Fees consist of fees for products and services other than services
reported above.
POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES
The Audit Committee's policy is to pre-approve all audit and non-audit
services provided by the independent public accountants. The Audit Committee
will generally pre-approve a list of specific services and categories of
services, including audit, audit-related, tax and other services, for the
upcoming or current fiscal year, subject to a specified dollar limit. Any
material service not included in the approved list of services, and all services
in excess of the pre-approved dollar limit, must be
15
separately pre-approved by the Audit Committee. The independent public
accountants and management are required to periodically report to the Audit
Committee all services performed and fees charged to date by the independent
public accountants pursuant to the pre-approval policy. None of the fees billed
by the independent public accountants for Audit-Related, Tax and Other Services
described above were approved by the Audit Committee after the services were
rendered pursuant to the de minimus exception under SEC rules.
CHANGE OF INDEPENDENT PUBLIC ACCOUNTANTS IN 2002
On June 13, 2002, the Company's Board of Directors voted to approve the
engagement of Deloitte & Touche LLP as the Company's independent auditor for the
year ending January 31, 2003, subject to customary client acceptance procedures,
and to dismiss the firm of Arthur Andersen LLP. The decision to change
accountants was recommended and approved by the Audit Committee of the Board of
Directors.
The reports of Arthur Andersen LLP on the Company's financial statements for
the years ended January 31, 2002 and 2001 did not contain an adverse opinion or
a disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles.
In connection with the audits of the Company's financial statements for the
years ended January 31, 2002 and 2001, and through June 13, 2002, there were no
disagreements with Arthur Andersen LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which, if not resolved to the satisfaction of Arthur Andersen LLP, would have
caused Arthur Andersen LLP to make reference thereto in its report on the
Company's financial statements for such years.
No event of the type described in Item 304(a)(1)(v) of Regulation S-K
occurred during the period described above.
Prior to the Board's determination to engage Deloitte & Touche LLP as the
Company's independent auditors for the year ending January 31, 2003, Deloitte &
Touche LLP was not consulted on accounting treatment and disclose requirements.
OTHER BUSINESS
SOLICITATION OF PROXIES
The Company will bear the entire expense of this proxy solicitation.
Arrangements will be made with brokers and other custodians, nominees and
fiduciaries to send proxy solicitation materials to their principals and the
Company will, upon request, reimburse them for their reasonable expenses in so
doing. Officers and other regular employees of the Company may solicit proxies
by mail, in person or by telephone.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
Annual Meeting other than those mentioned above. However, if other matters
should properly come before the Annual Meeting or any adjournments thereof, the
proxy holders will vote the proxies thereon in their discretion.
16
SHAREHOLDER PROPOSALS
Proposals by shareholders intended to be presented at the Company's 2005
Annual Meeting of Shareholders must, in accordance with applicable regulations
of the Securities and Exchange Commission, be received by the Secretary of the
Company at 2875 Needmore Road, Dayton, Ohio 45414 on or before December 30, 2004
in order to be considered for inclusion in the Company's proxy materials for
that meeting. Shareholder proposals intended to be submitted at the 2005 Annual
Meeting outside the processes of Rule 14a-8 will be considered untimely under
Rule 14a-4(c)(1) if not received by the Company at its corporate offices on or
before March 15, 2005. If the Company does not receive timely notice of such
proposal, the proxy holders will vote on the proposal, if presented at the
meeting, in their discretion.
Shareholder recommendations for director candidates must be received by the
Nominating/Corporate Governance Committee at the Company's corporate offices on
or before December 30, 2004 to be considered for nomination in connection with
the 2005 Annual Meeting. Names submitted after this deadline will not be
considered.
By Order of the Board of Directors
EDWARD M. KRESS
EDWARD M. KRESS
Secretary
April 29, 2004
Dayton, Ohio
17
APPENDIX A
REX STORES CORPORATION
AUDIT COMMITTEE CHARTER
I. PURPOSE
The Audit Committee of the Board of Directors shall assist Board oversight
of (i) the integrity of the financial statements of the Company, (ii) the
Company's compliance with legal and regulatory requirements, (iii) the
independent accountants' qualifications and independence and (iv) the
performance of the Company's internal audit function and independent
accountants. The Audit Committee shall be directly responsible for the
appointment, compensation, retention and oversight of the work of the Company's
independent accountants. The Audit Committee shall prepare an audit committee
report as required by the Securities and Exchange Commission to be included in
the Company's annual proxy statement.
II. COMMITTEE MEMBERSHIP
The Audit Committee shall be comprised of at least three directors of the
Company. Each member of the Audit Committee shall satisfy the independence,
experience and financial expertise requirements of applicable law and the
listing standards of the New York Stock Exchange (NYSE). In addition, at least
one member of the Audit Committee shall have accounting or related financial
management expertise or shall be an audit committee financial expert as defined
by applicable law and NYSE listing standards. Director's fees are the only
compensation that an Audit Committee member may receive from the Company.
The Board of Directors shall appoint the members of the Audit Committee. The
members of the Audit Committee shall serve until their successors are appointed
and qualify, and shall designate the Chairman of the Audit Committee.
III. MEETINGS
The Audit Committee shall meet regularly as necessary to discharge its
responsibilities and duties or as circumstances require. The Audit Committee
shall meet periodically with management, the independent accountants and those
responsible for the internal audit function in separate executive sessions in
furtherance of its purpose.
IV. AUTHORITY AND RESPONSIBILITIES
A. AUTHORITY
The Audit Committee shall have sole authority and be directly responsible
for the appointment, compensation, retention and oversight of the work of the
independent accountants employed by the Company (including resolution of
disagreements between management and the accountants regarding financial
reporting) for the purpose of preparing or issuing an audit report or performing
other audit, review or attest services, and such independent accountants shall
report directly to the Audit Committee. The Audit Committee shall pre-approve
all audit, review and attest engagements and all permissible non-audit services,
unless the engagement is entered into pursuant to pre-approval policies and
procedures established by the Audit Committee that are detailed as to the
particular service and
A-1
the Audit Committee is informed of each service, or as otherwise permitted by
applicable law with respect to de minimus non-audit services. The Audit
Committee may consult with management, but shall not delegate these
responsibilities to management.
The Audit Committee shall have the authority to engage independent counsel
and other advisers as it determines necessary to carry out its duties, and to
conduct or authorize investigations into any matters within the scope of its
responsibilities.
The Company shall provide appropriate funding, as determined by the Audit
Committee in its capacity as a committee of the Board of Directors, for payment
of (i) compensation to the independent accountants engaged to render or issue an
audit report or performing other audit, review or attest services for the
Company, (ii) compensation to any advisers employed by the Audit Committee and
(iii) ordinary administrative expenses of the Audit Committee that are necessary
or appropriate in carrying out its duties.
B. RESPONSIBILITIES AND DUTIES
In carrying out its responsibilities and duties, the Audit Committee shall:
Review and discuss with management and the independent accountants the
Company's annual audited financial statements, including disclosures made
in Management's Discussion and Analysis of Financial Condition and Results
of Operations (MD&A), and the matters required to be discussed pursuant to
Statement on Auditing Standards (SAS) No. 61, and recommend to the Board
whether the audited financial statements should be included in the
Company's Form 10-K.
Review and discuss with management and the independent accountants the
Company's quarterly financial statements, including disclosures made under
MD&A or similar disclosures, and the matters required to be discussed
pursuant to SAS No. 61, prior to the filing of the Company's Form 10-Q,
including the results of the independent accountants' reviews of the
quarterly financial statements to the extent applicable.
Review and discuss with management and the independent accountants, as
applicable:
all significant accounting principles and practices, including critical
accounting policies and estimates, used by the Company in the
preparation of its financial statements, and any significant changes in
the Company's selection or application of significant or critical
accounting principles, practices, policies, or estimates;
all alternative treatments within generally accepted accounting
principles for policies and practices related to material items
discussed with management, including the ramifications of the use of
alternative disclosures and treatments and the treatment preferred by
the independent accountants;
material written communications between the independent accountants and
management, such as any management letter or schedule of unadjusted
differences;
the adequacy and effectiveness of the Company's internal controls, any
material weaknesses identified by management or the independent
accountants, and any corrective actions with regard to significant
deficiencies and material weaknesses;
any problems, difficulties or differences encountered in the course of
the audit work, including any disagreements with management or
restrictions on the scope of the independent accountants' activities or
on access to requested information;
A-2
the effect of regulatory and accounting initiatives, as well as
off-balance sheet structures, on the financial statements; and
the Company's earnings press releases as well as financial information
and earnings guidance provided to analysts and rating agencies
(generally by type of information to be disclosed and not necessarily
in advance of release).
Discuss with management the Company's major financial risk exposures and
the steps management has taken to monitor and control such exposures.
Obtain and review a report from the independent accountants at least
annually regarding (i) the independent accountants' internal
quality-control procedures, (ii) any material issues raised by the most
recent internal quality-control review, or peer review, of the firm, or by
any inquiry or investigation by governmental or professional authorities
within the preceding five years respecting one or more independent audits
carried out by the firm and (iii) any steps taken to deal with any such
issues.
Evaluate the qualifications, performance and independence of the
independent accountants, including all relationships between the
independent accountants and the Company, and obtain from the independent
accountants the written disclosures as required by Independence Standards
Board Standard No. 1.
Ensure that the lead partner and the concurring partner of the independent
accountants responsible for the audit are rotated at least every five years
as required by applicable law, rules and regulations.
Recommend to the Board of Directors policies for the Company's hiring of
employees or former employees of the independent accountants who were
engaged on the Company's account.
Discuss with the independent accountants the Company's internal audit
function.
Establish procedures for (i) the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal
accounting controls or auditing matters and (ii) the confidential,
anonymous submission by employees of the Company of concerns regarding
questionable accounting or auditing matters.
Make regular reports to the Board of Directors.
Review and reassess the adequacy of this charter annually.
Annually review the Audit Committee's own performance.
V. LIMITATIONS OF AUDIT COMMITTEE'S ROLES
While the Audit Committee has the responsibility and authority set forth in
this charter, it is not the duty of the Audit Committee to prepare financial
statements, plan or conduct audits or to determine that the Company's financial
statements and disclosures are complete and accurate and are in accordance with
generally accepted accounting principles and applicable rules and regulations.
These are the responsibilities of management and the independent accountants.
Adopted: March 30, 2004
A-3
ANNUAL MEETING OF SHAREHOLDERS OF
REX STORES CORPORATION
May 27, 2004
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
____ Please detach along perforated line and mail in the envelope provided. ____
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
--------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS
NOMINEES:
[ ] FOR ALL NOMINEES O Stuart A. Rose
O Lawrence Tomchin
[ ] WITHHOLD AUTHORITY O Robert Davidoff
FOR ALL NOMINEES O Edward M. Kress
O Lee Fisher
[ ] FOR ALL EXCEPT O Charles A. Elcan
(See instructions below) O David S. Harris
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: O
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
2. IN THEIR DISCRETION the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
This proxy is solicited on behalf of the Board of Directors and will be voted as
directed herein. If no direction is given, this proxy shall be voted FOR
Proposal 1.
--------------- ------- ------------- -----------
Signature of Shareholder Date: Signature of Shareholder Date:
--------------- ------- ------------- -----------
Note: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please
give full title as such. If the signer is a corporation, please
sign full corporate name by duly authorized officer, giving full
title as such. If signer is a partnership, please sign in
partnership name by authorized person.
PROXY
REX STORES CORPORATION
Proxy for Annual Meeting of Shareholders
May 27, 2004
The undersigned hereby appoints Stuart A. Rose and Lawrence Tomchin and
each of them proxies for the undersigned, with full power of substitution, to
vote all the shares of Common Stock of REX STORES CORPORATION, a Delaware
corporation (the "Company"), which the undersigned is entitled to vote at the
Annual Meeting of Shareholders of the Company to be held on Thursday, May 27,
2004, at 2:00 p.m. and any adjournments thereof.
(Continued, and to be signed, on the other side)
14475