SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Linens 'N Things, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No Fee Required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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 transaction:
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5. Total fee paid:
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration number, or
the Form or Schedule and the date of its filing.
1. Amount previously paid:
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2. Form, Schedule or Registration Statement No.:
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LINENS 'N THINGS, INC.
6 BRIGHTON ROAD
CLIFTON, NEW JERSEY 07015
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 2, 2001
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To Linens 'n Things, Inc. Shareholders:
The Annual Meeting of Shareholders of Linens 'n Things, Inc.,
a Delaware corporation (the "Company"), will be held at the Company's
headquarters at 6 Brighton Road, Clifton, New Jersey, on Wednesday, May 2, 2001,
at 11:00 a.m., for the following purposes:
1. To elect one director for a three year term.
2. To act upon such other business as may properly come
before the Annual Meeting or any postponement or
adjournment.
Shareholders of record at the close of business on March 8,
2001 are entitled to notice of and to vote at the Annual Meeting or at any
postponement or adjournment.
By order of the Board of Directors,
BRIAN D. SILVA
Senior Vice President,
Human Resources and
Corporate Secretary
March 30, 2001
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YOUR VOTE IS IMPORTANT. TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING,
PLEASE COMPLETE THE ENCLOSED PROXY AND RETURN IT PROMPTLY, WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING.
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LINENS 'N THINGS, INC.
6 BRIGHTON ROAD
CLIFTON, NEW JERSEY 07015
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 2, 2001
PROXY STATEMENT
This Proxy Statement is being furnished to the shareholders of
Linens 'n Things, Inc., a Delaware corporation (the "Company"), in connection
with the solicitation of proxies by the Board of Directors of the Company for
use at the Annual Meeting of Shareholders of the Company to be held on
Wednesday, May 2, 2001, at 11:00 a.m., at 6 Brighton Road, Clifton, New Jersey
and at any postponement or adjournment (the "Annual Meeting"). At the Annual
Meeting, shareholders of the Company are being asked to consider and vote on the
election of one director for a three year term.
This Proxy Statement, Notice of Meeting and accompanying proxy
are first being mailed to shareholders on or about March 30, 2001.
GENERAL
The holders of record of shares of the Company's Common Stock
at the close of business on March 8, 2001 are entitled to vote such shares at
the Annual Meeting. On March 8, 2001, there were outstanding 40,474,194 shares
of Common Stock.
The presence in person or by proxy of the holders of a
majority of the shares outstanding on the record date is necessary to constitute
a quorum for the transaction of business at the Annual Meeting. Each shareholder
is entitled to one vote, in person or by proxy, for each share of Common Stock
held as of the record date on each matter to be voted on. Abstentions and broker
non-votes are included in determining whether a quorum is present. Broker
non-votes occur when a broker returns a proxy but does not have authority to
vote on a particular proposal.
Shares of Common Stock represented by a properly executed
proxy received in time for the Annual Meeting will be voted as specified in the
proxy, unless the proxy has previously been revoked. Unless contrary
instructions are given in the proxy, it will be voted for the persons designated
in the proxy as the Board of Directors' nominees for director and, with respect
to any other matter properly submitted to shareholders at the Annual Meeting, as
recommended by the Board of Directors or, if no recommendation is given, in its
discretion.
Shareholders may vote by completing and mailing the proxy
card. A proxy may be revoked prior to the exercise of the proxy either by
submitting written revocation of that proxy to the Corporate Secretary or by
submitting a new proxy bearing a later date via proxy card. A proxy may also be
revoked by voting in person at the Annual Meeting. Attendance at the Annual
Meeting will not in itself constitute revocation of a proxy.
2
This proxy solicitation is being made on behalf of the Company
and the expense of preparing, printing and mailing this Proxy Statement and
proxy is being paid by the Company. In addition to use of the mails, proxies may
be solicited personally or by telephone, facsimile or electronic mail by regular
employees or directors of the Company without additional compensation. The
Company will reimburse banks, brokers and other custodians, nominees and
fiduciaries for their costs in sending proxy materials to the beneficial owners
of Common Stock.
MULTIPLE COPIES OF ANNUAL REPORT AND PROXY STATEMENT
When more than one holder of Common Stock share the same address, the
Company may deliver only one annual report and one proxy statement to that
address unless the Company has received contrary instructions from one or more
of those shareholders. Similarly, brokers and other intermediaries holding
shares of Common Stock in "street name" for more than one beneficial owner with
the same address may deliver only one annual report and one proxy statement to
that address if they have received consent from the beneficial owners of the
stock.
The Company will deliver promptly upon written or oral request a
separate copy of the annual report and proxy statement to any shareholder,
including a beneficial owner of stock held in "street name," at a shared address
to which a single copy of either of those documents was delivered. To receive
additional copies of the annual report and proxy statement, you may call, write
or e-mail the Investor Relations Department, Linens 'n Things, Inc., 6 Brighton
Road, Clifton, New Jersey 07015, telephone number (973) 815-2929, e-mail
investor@lnt.com.
You may also contact the Investor Relations Department at the address
or telephone number above if you are a shareholder of record of the Company and
you wish to receive a separate annual report and proxy statement in the future,
or if you are currently receiving multiple copies of the annual report and proxy
statement and want to request delivery of a single copy in the future. If your
shares are held in "street name" and you want to increase or decrease the number
of copies of the annual report and proxy statement delivered to your household
in the future, you should contact the broker or other intermediary who holds the
shares on your behalf.
3
ITEM 1
ELECTION OF DIRECTOR
(PROPOSAL 1 ON THE PROXY CARD)
GENERAL. The Board of Directors currently consists of five
members and is divided into three classes approximately equal in size. Directors
are generally elected for three year terms on a staggered term basis, so that
each year the term of office of one class will expire and the terms of office of
the other classes will extend for additional periods of one and two years
respectively. This year's nominee has been nominated to serve for a three year
term expiring in 2004. The Company has inquired of the nominee and determined
that he will serve if elected. If for any reason the nominee is not available
for election, which is not expected, the proxy committee may vote for such
substitute nominee as may be recommended by the Board of Directors.
Directors are elected by the affirmative vote of a plurality
of the votes cast at the Annual Meeting and entitled to vote. Abstentions are
not counted as votes cast and have no effect on the outcome.
The nominee is a current director of the Company. Set forth
below is a description of the background of the nominee. Also set forth below is
a description of the background of the existing directors whose terms of office
extend beyond the Annual Meeting. The Board of Directors recommends that
shareholders vote "FOR" the Company's nominee for director.
NOMINEE FOR ELECTION AT THE ANNUAL MEETING
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STANLEY P. GOLDSTEIN
AGE: 66
DIRECTOR SINCE: 1996
PRINCIPAL OCCUPATION AND
RECENT BUSINESS EXPERIENCE: Mr. Goldstein was Chairman of the Board
of CVS Corporation, formerly Melville
Corporation, until he retired in April
1999, and prior to May 1998 was Chairman
and CEO of CVS Corporation. Mr.
Goldstein co-founded Consumer Value
Stores, a retail drug chain, in 1963.
OTHER DIRECTORSHIPS: CVS Corporation and Footstar, Inc. Mr.
Goldstein is also on the Board of
Overseers of The Wharton School of the
University of Pennsylvania.
EXPIRATION OF TERM AS DIRECTOR: 2004
4
DIRECTORS WHOSE TERMS DO NOT EXPIRE THIS YEAR
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NORMAN AXELROD
AGE: 48
DIRECTOR SINCE: 1996
PRINCIPAL OCCUPATION AND
RECENT BUSINESS EXPERIENCE: Chairman and CEO of the Company. Between
1976 and 1988 Mr. Axelrod held various
management positions at Bloomingdale's,
ending with Senior Vice President,
General Merchandise Manager.
OTHER DIRECTORSHIPS: Jaclyn, Inc.
EXPIRATION OF TERM AS DIRECTOR: 2002
================================================================================
PHILIP E. BEEKMAN
AGE: 69
DIRECTOR SINCE: 1997
PRINCIPAL OCCUPATION AND
RECENT BUSINESS EXPERIENCE: President of Owl Hollow Enterprises,
Inc., a consulting and investment
company. From 1986 to 1994, Mr. Beekman
was Chairman of the Board and CEO of
Hook SupeRx, Inc., a retail drug store
chain. Prior to that he was President
and Chief Operating Officer of Seagram
Company Limited.
OTHER DIRECTORSHIPS: General Chemical Group, Inc., Kendle
International Inc., Kendle Co.,
Panavision, Inc. and Sunbeam
Corporation.
EXPIRATION OF TERM AS DIRECTOR: 2003
================================================================================
5
HAROLD F. COMPTON
AGE: 53
DIRECTOR SINCE: 1998
PRINCIPAL OCCUPATION AND
RECENT BUSINESS EXPERIENCE: President and Chief Executive Officer of
CompUSA Inc. Mr. Compton joined CompUSA
in 1994 as Executive Vice President-
Operations, becoming Chief Operating
Officer in 1995 and President of CompUSA
Stores in 1996.
OTHER DIRECTORSHIPS: Stage Stores, Inc.
EXPIRATION OF TERM AS DIRECTOR: 2003
================================================================================
MORTON E. HANDEL
AGE: 66
DIRECTOR SINCE: 2000
PRINCIPAL OCCUPATION AND
RECENT BUSINESS EXPERIENCE: Chairman of the Board of Marvel
Enterprises Inc. Also, President, CEO
and a director of Ranger Industries,
Inc., formerly Coleco Industries, Inc.,
from 1997 to 2001, and is currently
President of S&H Consulting, LTD.
Between 1974 and 1990 Mr. Handel held
various executive management positions
at Coleco Industries, Inc., including
Chairman and CEO.
OTHER DIRECTORSHIPS: Concurrent Computer Corp.
EXPIRATION OF TERM AS DIRECTOR: 2002
================================================================================
6
DIRECTOR COMPENSATION
Directors who are not employees of the Company are paid an
annual retainer of $10,000 which may be taken either in cash or Common Stock of
the Company. Upon his or her initial election or appointment to the Board, each
non-employee director receives an option to purchase 6,000 shares of Common
Stock and 400 stock units. Each stock unit represents the right to receive one
share of Common Stock at the end of a specified period. One-half of a stock unit
is paid six months and a day after the grant date and the other half
approximately six months thereafter, provided the non-employee director has not
ceased to serve as a director for any reason other than death, disability, or
retirement at or after age 65. In addition, each non-employee director receives
400 stock units and an option to purchase 2,000 shares of Common Stock on the
date of each annual meeting. Each director attended 100% of the meetings of the
Board of Directors and of the committees of which he is a member.
COMMITTEES OF THE BOARD OF DIRECTORS
AUDIT COMMITTEE
MEMBERS: Philip E. Beekman (Chairman)
Harold F. Compton
Morton E. Handel
NUMBER OF MEETINGS IN 2000: 3
FUNCTIONS: o Serves as a communication point
among non-Audit Committee directors,
internal auditors, the independent
auditors and Company management as their
respective duties relate to financial
accounting, reporting and internal
controls.
o Assists the Board of Directors in
fulfilling its responsibility with
respect to accounting policies, internal
controls, financial and operating
controls, standards of corporate conduct
and performance, reporting practices of
the Company and sufficiency of auditing.
COMPENSATION COMMITTEE
MEMBERS: Stanley P. Goldstein (Chairman)
Harold F. Compton
NUMBER OF MEETINGS IN 2000: 3
FUNCTIONS: o Determines and administers compensation
for the senior officers of the Company
and other key members of the Company's
management, including salary and
incentive based plans.
NOMINATING COMMITTEE
MEMBERS: Harold F. Compton (Chairman)
Morton E. Handel
FUNCTIONS: o Considers and determines suitable
nominees to the Board of Directors.
Established in fiscal 2001.
7
EXECUTIVE COMPENSATION
The following table sets forth information on compensation for
the Company's Chairman and Chief Executive Officer and for the four other most
highly compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
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Annual Compensation Awards Payouts
------------------------- --------------------------- ----------- -------------
Number of
Restricted Securities All Other
Name and Principal Fiscal Stock Underlying LTIP Compensation
Position Year Salary ($) Bonus ($) Award(s) ($) Options Payouts ($) ($) (2)
------------------------------------------------------------------ --------------------------- ----------- -------------
Norman Axelrod, Chairman 2000 716,154 360,150 1,740,129(1) 300,000 740,634(1) 379,980
and Chief Executive 1999 638,076 665,665 1,254,026 300,000 0 505,468
Officer 1998 548,846 707,945 548,373 378,774 0 9,600
Steven B. Silverstein, 2000 366,346 131,250 323,877(1) 75,000 323,877(1) 10,500
President* 1999 350,000 250,250 565,733 75,000 0 9,600
1998 304,808 234,192 211,436 109,376 0 9,600
Hugh J. Scullin, 2000 222,308 63,000 161,939(1) 20,000 161,939(1) 10,500
Senior Vice President, 1999 215,000 122,980 289,603 20,000 0 9,600
Store Operations 1998 215,000 153,940 149,053 27,509 0 9,600
Brian D. Silva, Senior Vice 2000 237,962 67,760 174,157(1) 25,000 174,157(1) 10,500
President, Human Resources, 1999 222,962 129,844 305,743 25,000 0 9,600
and Corporate Secretary 1998 208,769 151,792 146,976 28,345 0 9,600
William T. Giles, Senior 2000 259,231 75,600 194,343(1) 40,000 194,343(1) 10,500
Vice President and Chief 1999 221,923 124,982 309,810 30,000 0 9,600
Financial Officer 1998 200,000 121,720 110,927 28,345 0 9,600
* Mr. Silverstein was promoted from Executive Vice President, Chief
Merchandising Officer to President in March 2001.
(1) Awards under the Company's long term incentive plan ("LTIP") were made
for fiscal 2000 based on each executive officer having exceeded certain
preestablished performance objectives based on earnings and net return
on assets over a 3 year period. The LTIP awards for fiscal 2000 were
made 50% in restricted stock and 50% in deferred cash awards. The
deferred cash awards are to be invested in Common Stock by the plan
trustee under the Company's deferred compensation plan. The LTIP awards
for fiscal 2000 vest two years from the award date. The restricted
stock awards under the LTIP for fiscal 2000 for each of the named
executives are: Mr. Axelrod, 26,490 shares; Mr. Silverstein, 11,584
shares; Mr. Scullin, 5,792 shares; Mr. Silva, 6,229 shares; and Mr.
Giles, 6,951 shares. Mr. Axelrod was also awarded 46,640 shares of
deferred stock on the effective date of his Employment Agreement which
vest in 25% increments over three years, beginning with the date of
grant. The number and value of all restricted stock holdings at the end
of fiscal 2000 are: Mr. Axelrod, 108,090 shares, $2,986,527; Mr.
Silverstein, 31,439 shares, $868,660; Mr. Scullin, 17,292 shares,
$477,778; Mr. Silva, 18,030 shares, $498,169; and Mr. Giles, 17,665
shares, $488,084. Holders of restricted stock are entitled to receive
dividends, if any, on restricted stock.
(2) For fiscal year 2000 represents amounts contributed under the Company's
401(k) profit sharing plan. In addition, for Mr. Axelrod, the fiscal
2000 amount includes the present value cost of $344,024 of the
Company's portion of fiscal 2000 premiums for split-dollar insurance
above the term coverage level, $12,494 of imputed income associated
with the term portion of the split-dollar arrangement and $12,962 of
related tax reimbursement obligations.
8
OPTION GRANTS IN LAST FISCAL YEAR. The table below sets forth
certain information concerning stock options granted during fiscal 2000 by the
Company to the named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
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NUMBER OF PERCENT OF GRANT DATE
SECURITIES TOTAL OPTIONS PRESENT VALUE
UNDERLYING GRANTED TO EXERCISE OR ($)(2)
OPTIONS GRANTED EMPLOYEES IN FISCAL BASE PRICE EXPIRATION
NAME (#)(1) YEAR ($/SHARE) DATE
-------------------------------------------------------------------------------------------------------------------------
Norman Axelrod 300,000 27.3% 21.44 10/12/10 3,699,450
Steven B. Silverstein 75,000 6.8% 21.44 10/12/10 924,863
Hugh J. Scullin 20,000 1.8% 21.44 10/12/10 246,630
Brian D. Silva 25,000 2.3% 21.44 10/12/10 308,288
William T. Giles 40,000 3.6% 21.44 10/12/10 493,260
(1) Options were granted at fair market value and vest and become
exercisable in 25% annual increments.
(2) The hypothetical present values on grant date are calculated under the
modified Black-Scholes Model, which is a mathematical formula used to
value options traded on stock exchanges. This formula considers a
number of factors in hypothesizing an option's present value. Factors
used to value options granted include the stock's expected volatility
rate (55%), risk free rate of return (5.12%), dividend yield (0%),
projected time of exercise (6 years) and projected risk of forfeiture
and non-marketability for the vesting period (6.29% per annum).
9
OPTION EXERCISES AND YEAR-END OPTION HOLDINGS. The following
table shows information regarding option exercises during fiscal 2000 as well as
fiscal 2000 year-end option holdings for each of the named executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
VALUE OF
NUMBER OF UNEXERCISED
SHARES SECURITIES IN-THE-MONEY
ACQUIRED UNDERLYING UNEXERCISED OPTIONS
ON VALUE OPTIONS AT FY-END AT FY-END ($)
EXERCISE REALIZED (#) EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
-------------------------------- ---------------- -------------- ---------------------------- ---------------------------
Norman Axelrod 275,000 6,163,598 340,984/1,025,000 5,342,048/2,621,438
Steven B. Silverstein 82,500 1,653,021 61,876/265,000 913,108/617,138
Hugh J. Scullin 0 0 80,509/72,500 1,336,610/200,244
Brian D. Silva 10,000 199,375 67,345/84,000 1,016,009/246,483
William T. Giles 0 0 60,845/102,500 930,383/324,044
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL AGREEMENTS; OTHER EXECUTIVE
AGREEMENTS.
The Company has employment agreements with each of the named
executive officers (the "Employment Agreements"). The following briefly
summarizes the principal terms of the Employment Agreements, all of which became
effective in fiscal 2000.
The period of employment under the Employment Agreements
extends initially for approximately four years subject to automatic one-year
extensions at the end of the initial term unless the executive fails to seek
renewal or the Company gives notice of non-renewal. A Company notice of
non-renewal prior to the executive reaching age 60 would constitute a
constructive termination of the executive without cause. During Mr. Axelrod's
employment term he may relinquish any or all of his executive officer positions
and if he relinquishes all such executive officer positions he has agreed to
remain in the Company's employ in an appropriate capacity at reduced
compensation until age 60. The Employment Agreements generally provide for
payment of an annual base salary that will be reviewed at the discretion of the
Compensation Committee, but may not be decreased from the amount in effect for
the previous year. The Employment Agreements also include provisions concerning
annual incentive compensation with minimum target annual incentive awards (not
less than 70% of base salary for Mr. Axelrod, 50% for Mr. Silverstein and 40%
for the other executives) and long-term incentive compensation with a minimum
target award opportunity (not less than 35% of base salary for Mr. Axelrod, 30%
for Mr. Silverstein and 25% for the other executives).
10
The Employment Agreements generally provide for (i) in the
event the executive's employment is terminated other than for cause or by
voluntary termination, continued payment of salary and annual incentive
compensation at target levels for 30 months for Mr. Axelrod, 24 months for Mr.
Silverstein and 18 months for the other executives, continuation of certain
benefits (or service credit or a lump sum cash amount equivalent to) 30 months
for Mr. Axelrod, 24 months for Mr. Silverstein and 24 months for the other
executives; (ii) certain restrictive covenants including non-competition,
non-disclosure, non-solicitation of employees and availability for litigation
support; (iii) participation in certain benefit plans and programs (including
retirement benefits, disability and life insurance, medical benefits and, in the
case of Mr. Axelrod, a supplemental executive retirement benefit and split
dollar life insurance benefit); and (iv) deferred compensation arrangements.
In the event of a "change in control," the Employment
Agreements generally provide lump sum severance benefits equal to 2 times (2.99
for Mr. Axelrod and 2.5 times for Mr. Silverstein) annual base salary and target
bonus, continued participation in certain benefit plans for (or service credit
or a cash benefit thereunder equivalent to) 36 months for Mr. Axelrod, 30 months
for Mr. Silverstein and 24 months for the other executives (and, in the case of
health benefits for Mr. Axelrod, until age 60 at Company cost), vesting of
outstanding options, restricted or deferred stock awards and long-term incentive
awards and the right in certain cases to exercise vested options for the
remainder of the term of the options. In addition, in the case of voluntary
termination, the Company may elect to pay the executive over a 12-month period
an amount equal to the executive's annual base salary and target annual bonus in
exchange for the executive's agreement not to compete with the Company for a
period of one year. Upon a termination for cause, the executives have agreed not
to compete with the Company for a period of one year.
A "change in control" is defined to include a variety of
events, including significant changes in the stock ownership of the Company or a
significant subsidiary, certain changes in the Company's Board of Directors,
certain mergers and consolidations of the Company or a significant subsidiary,
and the sale or disposition of all or substantially all the consolidated assets
of the Company. "Cause" is defined generally as a breach of the restrictive
covenants contained in the Employment Agreements, certain felony convictions, or
willful acts or gross negligence that are materially damaging to the Company.
If payments under the Employment Agreements following a change
in control are subject to the golden parachute excise tax, the Company will make
an additional gross-up payment sufficient to ensure that the net after-tax
amount retained by the executive (taking into account all taxes, including those
on the gross-up payment) is the same as it would have been had such excise tax
not applied. The Employment Agreements obligate the Company to indemnify the
executives to the fullest extent permitted by law, including the advancement of
expenses, and, in the case of Mr. Axelrod and Mr. Silverstein, generally
provides that the Company will reimburse Mr. Axelrod and Mr. Silverstein for
expenses incurred in seeking enforcement of his Employment Agreement, unless the
assertion of such rights is in bad faith or frivolous.
11
The Company also has a supplemental executive retirement
benefit for Mr. Axelrod, which will provide annual retirement benefits,
commencing at or after age 55, to Mr. Axelrod following his retirement from
active service. The net annual benefit under the plan is determined based on
three primary components: (i) 1.6% of final average compensation, times (ii)
years of service, reduced by (iii) a "reduction amount" ranging from $38,000
(assuming retirement were to occur at age 47) to $530,000 (assuming retirement
were to occur at or following age 55). In no event will the annual benefit
amount exceed 50% of final average compensation. "Final average compensation"
means the average of the participant's base salary and bonus compensation
(excluding equity compensation) for the three years (which need not be
consecutive) with the Company or its affiliates that yield the highest average
compensation. Mr. Axelrod currently has 13 years of credited service. Assuming a
twenty percent increase in final average compensation from the highest annual
covered compensation in the Summary Compensation Table above and assuming
retirement from service at age 60, the estimated annual retirement benefit
payable by the Company under the plan would be approximately $90,800. There is
no offset for social security benefits. In addition, in the case of Mr.
Silverstein, in the event his employment is terminated "without cause" he will
be entitled to sufficient additional service credit in order to qualify for the
required ten years of service credit under the SERP.
The Company also has a collateral assignment split dollar
insurance arrangement with Mr. Axelrod. See footnote (2) to Summary Compensation
Table above. The Company pays an annual premium under the policy until the
earlier of age 55 or Mr. Axelrod's retirement. The arrangement is designed so
that the Company ultimately receives back from the policy value (the "Company
Amount") the sum of all annual premium payments made by the Company, plus an
interest factor of 3.4% annually. Mr. Axelrod's interest in the cash value and
death benefit value under the policy is equal to the total policy value minus
the Company Amount as calculated above.
REPORT ON COMPENSATION OF EXECUTIVE OFFICERS
Compensation decisions for the Company's Chief Executive
Officer and the other named executive officers for fiscal 2000 were reviewed and
determined by the Compensation Committee.
The overall objectives of the Company's executive compensation
program are to attract and retain the highest quality executives to manage and
lead the Company, and to provide annual and long-term incentives to management,
based on both Company performance and individual performance, in order to build
and sustain value for shareholders.
The Company's executive compensation program for fiscal 2000
was reviewed and approved by the Compensation Committee. A national compensation
consultant is regularly retained by the Compensation Committee to assist in
reviewing competitive compensation programs for the Company in connection with
the Company's senior officers, including the Chief Executive Officer and each of
the other named executive officers as well as other members of the management
group. This review includes compensation levels reported for senior executives
of a survey group of retailers. The survey group is not the same group of
companies included in the Peer Group index set forth in the Company's
Performance Graph below because, in the view of the Compensation Committee and
its compensation consultant, such survey group is not necessarily the most
representative group for purposes of determining competitive compensation
12
pay practices for the senior executives. The Compensation Committee reviews the
competitiveness of the Company's executive compensation practices on an annual
basis.
ANNUAL BASE SALARY. Annual base salaries for the Chief
Executive Officer and the other named executives were initially established at
approximately the mean of the range of salaries considered in the survey group,
with increases through fiscal 2000 made by the Compensation Committee based on
its view of appropriate, competitive annual base salary levels for such
executives. Actual total remuneration levels may range below or above target in
any one year and over a period of years, based on performance against annual and
long-term goals and return to shareholders. Under employment agreements with
each of the named executive officers base salary may not be decreased from the
amount in effect for the previous year.
INCENTIVE AWARDS. The Company's incentive program provides for
cash bonuses based on performance relative to predetermined objectives
established for the year. For fiscal 2000, the target award rate was 70% for the
Chief Executive Officer, 50% for Mr. Silverstein, and 40% for each of the other
named executive officers. Larger awards may be made if performance exceeds
predetermined objectives. Smaller or no awards may be made if performance falls
below such objectives. Eligible members of management, including the Chief
Executive Officer and the other executive officers, can defer receipt of a
portion of their incentive award. For fiscal 2000, incentive bonuses payable to
the Chief Executive Officer and the other named executives were based on
specific earnings objectives established by the Compensation Committee in early
2000. Actual fiscal 2000 incentive awards were determined to be 70% of the
target levels for each of the executive officers (see Summary Compensation Table
above).
STOCK BASED COMPENSATION. The Board of Directors and the
Compensation Committee are of the view that stock ownership or its equivalent by
management aligns the interest of management with the Company's shareholders.
Stock options are granted at fair market value and are intended to align
executive compensation opportunities with shareholder returns. Stock options
granted during fiscal 2000 were part of the Compensation Committee's customary
annual review and these option grants were made at levels which the Compensation
Committee determined to be appropriate long-term equity-based incentives to such
executives. In determining the specific levels of individual option grants for
fiscal 2000, including the Chief Executive Officer and each of the other
executive officers, the Compensation Committee considered and weighed a number
of factors, including annual stock option grant levels of the peer group of
retail companies, past levels of annual option grants to Company executives, the
executive's position, salary and performance levels, and projected stock option
grant values. These stock options vest in 25% increments over four years from
date of grant. Stock options are intended to provide long term compensation
incentive, and future grants of options or other awards will be periodically
reviewed and determined by the Compensation Committee. In connection with his
execution of a new employment agreement with the Company during fiscal 2000, Mr.
Axelrod was awarded 46,640 shares of deferred stock in consideration of his
exemplary performance on behalf of the Company.
Awards under the Company's long term incentive plan ("LTIP") were made
for fiscal 2000 by the Compensation Committee to the named executive officers
based on such executives having exceeded certain preestablished performance
objectives based on earnings and net return on assets for the 3 year period
ending June 30, 2000, with Mr. Axelrod receiving an award equivalent to
approximately 200% of base salary, Mr. Silverstein receiving an award equivalent
to
13
approximately 170% of base salary and Messrs. Scullin, Silva and Giles receiving
awards equivalent to approximately 140% of base salary. The LTIP awards for
fiscal 2000 were made 50% in restricted stock and 50% in deferred cash awards
(which cash awards are required to be invested in Company stock by the plan
trustee under the Company's deferred compensation plan).
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). Section
162(m) of the Internal Revenue Code generally allows a deduction to publicly
traded companies for certain qualifying performance-based compensation. Section
162(m) disallows a deduction to the extent of excess non-performance based
compensation over $1 million paid to the Chief Executive Officer or to any of
the four other most highly compensated executive officers. The Company believes
that Section 162(m) deduction limits for fiscal 2001 will not be applicable or,
if applicable, would not be material in terms of net financial effect and
therefore the Company does not intend to seek to restructure any fiscal 2001
compensation arrangements. The Company and the Compensation Committee will
continue to monitor this matter.
Compensation Committee
Stanley P. Goldstein, Chairman
Harold F. Compton
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors is comprised entirely of
independent outside directors. Its primary function is to oversee the Company's
system of internal controls, financial reporting practices and audit function to
ensure their quality, integrity and objectivity. The Board of Directors has
adopted and approved a written charter for the Audit Committee attached as
Exhibit A.
For fiscal 2000, the Audit Committee reviewed the overall audit scope,
plans and results of the audit engagement. The Committee also met separately
without management present with both the internal auditor and the independent
auditors to discuss the year's audit. In addition, the Committee reviewed and
discussed the Company's annual financial statements with management before
issuance.
The Audit Committee has discussed with the independent auditors the
matters required to be discussed by SAS 61, COMMUNICATION WITH AUDIT COMMITTEES,
of the Auditing Standards Board of the American Institute of Certified Public
Accountants, to the extent applicable. The Audit Committee has also received and
reviewed the written disclosures and confirmation from the independent auditors
required by Independence Standards Board Standard No. 1, INDEPENDENCE
DISCUSSIONS WITH AUDIT COMMITTEE, of the Independence Standards Board, and has
discussed with the auditors the auditors' independence.
Based on the foregoing review and discussions, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year 2000.
Audit Committee
Philip E. Beekman, Chairman
Harold F. Compton
Morton E. Handel
15
PERFORMANCE GRAPH
The following graph compares the percentage change in the
cumulative total shareholders' return on the Company's Common Stock on a
quarterly basis from November 26, 1996 through December 30, 2000, with the
cumulative total return on the Standard & Poor's Specialty Retail Index, the
Peer Group Index and the Standard & Poor's 500 Index for the same period. In
accordance with the SEC rules, the returns are indexed to a value of $100 at
November 26, 1996 and it is assumed that all dividends were reinvested.
The Peer Group Index is comprised of the following companies
in the retail industry: Bed Bath & Beyond Inc.; The Bombay Company, Inc.;
Borders Group, Inc.; Jo-Ann Stores, Inc.; Haverty Furniture Companies, Inc.;
Lechters, Inc.; Michaels Stores, Inc.; Petsmart, Inc.; Pier 1 Imports, Inc.;
Sharper Image Corporation; The Sports Authority, Inc.; Strouds, Inc.; and
Williams-Sonoma, Inc. The returns of each issuer in the Peer Group Index have
been weighted according to the issuer's stock market capitalization at the
beginning of each period for which a return is indicated.
COMPARISON OF YEAR END CUMULATIVE TOTAL RETURN AMONG LINENS'N THINGS, INC.,
STANDARD & POOR'S SPECIALTY RETAIL INDEX, PEER GROUP INDEX
AND STANDARD & POOR'S 500 INDEX*
11/26/96 12/31/96 12/31/97 12/31/98 12/31/99 12/29/00
-------- -------- -------- -------- -------- --------
Linens 'n Things $100 $127 $281 $511 $382 $356
S&P Specialty Retail 100 92 92 79 56 47
Peer Group 100 96 114 135 123 117
S&P 500 100 105 141 181 219 199
--------------------------------------------------------------------------------
* $100 invested on 11/26/96 in stock or on 10/31/96 in Index - including
reinvestment of dividends. Fiscal year ending December 30.
--------------------------------------------------------------------------------
16
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
The Compensation Committee is comprised of Messrs. Goldstein and Compton. Mr.
Goldstein was Chairman of the Board and an executive officer of CVS. Immediately
following the Company's 1996 IPO CVS owned approximately 32.5% of the Company's
Common Stock. During 1997 CVS sold substantially all of its remaining equity
interest in the Company's Common Stock in an underwritten secondary offering by
the Company.
17
BENEFICIAL OWNERSHIP OF COMMON STOCK
CERTAIN BENEFICIAL OWNERS. The following table sets forth
certain information as to beneficial ownership of each person known to the
Company to own beneficially more than 5% of the outstanding Common Stock of the
Company as of February 1, 2001.
Beneficial Owner Number of Shares Percent of Class
---------------- ---------------- ----------------
PRIMECAP Management Company (1) ..............3,341,200 8.3%
Marsh & McLennan Companies, Inc. (2) .........2,512,753 6.3%
AIM Management Group Inc. (3) ............... 2,924,990 7.3%
Salomon Smith Barney Inc. (4) ................2,918,542 7.3%
The TCW Group, Inc.(5) .......................2,276,379 5.7%
Delaware Management Holdings
Company, Inc.(6) .............................2,174,231 5.43%
American Express Company (7) .................2,101,256 5.2%
Vanguard Horizon Funds - Vanguard ............2,100,000 5.25%
Capital Opportunity Fund (8)
-------------------------------
(1) Pursuant to a Schedule 13G dated September 30, 2000 filed by PRIMECAP
Management Company, PRIMECAP Management Company has shared voting and
dispositive power with respect to no shares; sole voting power with respect to
1,335,700 shares; and sole dispositive power with respect to 3,341,200 shares.
(2) Pursuant to an amended Schedule 13G dated October 9, 2000 filed by Marsh &
McLennan Companies, Inc., Putnam Investments, Inc., Putnam Investment
Management, Inc. and The Putnam Advisory Company, Inc., Putnam Investments, Inc.
has sole voting power and sole dispositive power with respect to no shares,
shared voting power with respect to 173,800 shares and shared dispositive power
with respect to 2,512,753 shares; Putnam Investment Management, Inc. has sole
voting power, shared voting power and sole dispositive power with respect to no
shares and shared dispositive power with respect to 1,808,800 shares; and The
Putnam Advisory Company, Inc. has sole voting power and sole dispositive power
with respect to no shares, shared voting power with respect to 173,800 shares
and shared dispositive power with respect to 703,953 shares. The address for
Marsh & McLennan Companies, Inc. is 1166 Avenue of the Americas, New York, New
York 10036, and the address for Putnam Investments, Inc., Putnam Investment
Management, Inc. and The Putnam Advisory Company, Inc. is One Post Office
Square, Boston, Massachusetts 02109.
18
(3) Pursuant to a Schedule 13G dated February 9, 2001 filed by AIM Management
Group Inc. on behalf of itself and its wholly-owned subsidiaries, AIM Advisors,
Inc. and AIM Capital Management, Inc. (collectively "AIM"), AIM has shared
voting power and shared dispositive power with respect to 2,924,990 shares. The
address for AIM is 11 Greenway Plaza, Suite 100, Houston, Texas 77046.
(4) Pursuant to a Schedule 13G dated February 13, 2001 filed by Salomon Smith
Barney Inc., Salomon Brothers Holding Company Inc., Salomon Smith Barney
Holdings Inc. and Citigroup Inc., Salomon Smith Barney Inc. has sole voting and
sole dispositive power with respect to no shares and shared voting and shared
dispositive power with respect to 2,354,280 shares; Salomon Brothers Holding
Company Inc. has sole voting and sole dispositive power with respect to no
shares and shared voting and shared dispositive power with respect to 2,361,180
shares; Salomon Smith Barney Holdings Inc. has sole voting and sole dispositive
power with respect to no shares and shared voting and shared dispositive power
with respect to 2,849,574 shares; and Citigroup Inc. has sole voting and sole
dispositive power with respect to no shares and shared voting and shared
dispositive power with respect to 2,918,542 shares. The address for Salomon
Smith Barney Inc., Salomon Brothers Holding Company Inc., Salomon Smith Barney
Holdings Inc. is 388 Greenwich Street, New York, New York 10013. The address
for Citigroup is 399 Park Avenue, New York, New York 10043.
(5) Pursuant to a Schedule 13G dated February 12, 2001 filed by The TCW Group,
Inc. and Robert Day (collectively "TCW"), TCW has shared voting power and shared
dispositive power with respect to 2,276,379 shares. The address for TCW Group,
Inc. and Robert Day is 865 South Figueroa Street, Los Angeles, California 90017.
(6) Pursuant to a 13G dated February 7, 2001 filed by Delaware Management
Holdings on behalf of itself and its subsidiary Delaware Management Business
Trust (collectively "Delaware Management") , Delaware Management Holdings has
sole voting power with respect to 2,160,735 shares, shared voting power with
respect to no shares, sole dispositive power with respect to 2,164,531 shares
and shared dispositive power with respect to 9,700 shares. Delaware Management
Business Trust has sole voting power with respect to 2,050,900 shares, shared
voting power with respect to no shares, sole dispositive power with respect to
2,041,200 shares and shared dispositive power with respect to 9,700 shares. The
address for Delaware Management is 2005 Market Street, Philadelphia,
Pennsylvania 19103.
(7) Pursuant to a Schedule 13G dated February 9, 2000 filed by American Express
Company and American Express Financial Corporation (collectively, "American
Express"), American Express has shared voting power and shared dispositive power
with respect to 2,101,256 shares. The address for American Express Company is
American Express Tower, 200 Vesey Street, New York, New York 10285; and for
American Express Financial Corporation is IDS Tower 10, Minneapolis, Minnesota
55440.
(8) Pursuant to a Schedule 13G dated February 13, 2001 filed by Vanguard Horizon
Funds - Vanguard Capital Opportunity Fund ("Vanguard"), Vanguard has sole voting
power with respect to 2,100,000 shares; shared voting power and sole dispositive
power with respect to no shares; and shared dispositive power with respect to
2,100,000 shares. The address for Vanguard is Vanguard Financial Center, P.O.
Box 2600, Valley Forge, PA 19482.
19
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS. The
following table sets forth certain information as to beneficial ownership of the
outstanding Common Stock of the Company as of February 1, 2001, by each director
and nominee of the Company, each of the named executive officers listed in the
Summary Compensation Table, and all executive officers and directors of the
Company as a group. Except as otherwise indicated, each person listed below has
sole voting and investment power with respect to such shares. No director or
executive officer beneficially owns more than one percent of the total
outstanding Common Stock other than Mr. Axelrod who would be deemed beneficially
to own 1.03% and all directors and executive officers as a group would be deemed
beneficially to own 1.99% of the outstanding Common Stock.
No. of Shares of No. of Shares of
Name of Beneficial Common Name of Beneficial Common
Owner Stock(1) Owner Stock(1)
------------------------------------ --------------------- --------------------------------- ------------------- --
N. Axelrod.......................... 414,701(2) S. Silverstein...................... 84,224(3)
P. Beekman.......................... 24,968 H. Scullin.......................... 101,085(4)
S. Goldstein........................ 31,968 B. Silva............................ 74,783
H. Compton.......................... 10,472 W. Giles............................ 68,750
M. Handel........................... 572
All executive officers and
directors as a group.............. 811,523
(1) Includes shares subject to stock options that were exercisable as of
February 1, 2001 or will become exercisable within 60 days thereafter,
as follows: Mr. Axelrod, 340,984; Mr. Beekman, 17,050; Mr. Goldstein,
17,050; Mr. Compton, 8,000; Mr. Silverstein, 61,876; Mr. Scullin,
80,509; Mr. Silva, 67,345; Mr. Giles, 60,845; and all directors and
executive officers as a group, 653,659.
(2) Includes 400 shares held by Mr. Axelrod's minor children, as to which
shares Mr. Axelrod disclaims beneficial ownership.
(3) Includes 800 shares held by Mr. Silverstein's minor children, as to
which shares Mr. Silverstein disclaims beneficial ownership.
(4) Includes 1,000 shares held by Mr. Scullin's minor child and 1,000
shares held by Mr. Scullin's spouse, as to which shares Mr. Scullin
disclaims beneficial ownership.
20
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's executive officers and directors to file reports regarding
beneficial ownership of the Company's Common Stock with the Commission, and to
furnish the Company with copies of all such filings. Based on a review of these
filings, the Company believes all such filings were timely made except for an
amended Form 5 for Mr. Axelrod to reflect an exempt grant.
21
INDEPENDENT AUDITORS
The Board of Directors has selected KPMG LLP as the Company's
independent auditors to make an examination of the accounts of the Company for
the fiscal year 2001. KPMG LLP has served as the independent auditors of the
Company since the Company's 1996 IPO. Representatives of KPMG LLP are expected
to be present at the Annual Meeting and will be available to respond to
appropriate questions and to make such statements as they may desire.
The fees billed for services rendered for the Company by KPMG LLP for
fiscal 2000 were as follows:
Audit Fees $195,500
Financial Information Systems Design and
Implementation Fees --
All Other Fees $47,600
The Audit Committee has considered whether the provision of the
services covered under the captions "Financial Information Systems Design and
Implementation Fees" and "All Other Fees" above is compatible with maintaining
the auditor's independence.
22
SHAREHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING
Any proposal of a shareholder intended to be presented at the
Company's 2002 Annual Meeting of Shareholders must be received by the Secretary
of the Company, for inclusion in the Company's Proxy Statement, Notice of
Meeting and Proxy relating to the 2002 Annual Meeting, not later than November
30, 2001.
The Company's Bylaws establish an advance written notice
procedure for shareholders seeking to nominate candidates for election as
directors at any Annual Meeting of Shareholders, or to bring business before an
Annual Meeting of Shareholders of the Company. The Bylaws provide that only
persons who are nominated by or at the direction of the Board, or by a
shareholder who has given timely written notice to the Secretary of the Company
prior to the meeting at which directors are to be elected, will be eligible for
election as directors of the Company. The Bylaws also provide that at any
meeting of shareholders only such business may be conducted as has been brought
before the meeting by or at the direction of the Board or, in the case of an
Annual Meeting of Shareholders, by a shareholder who has given timely written
notice to the Secretary of the Company of such shareholder's intention to bring
such business before such meeting. Under the Bylaws, for any such shareholder
notice to be timely, such notice must be received by the Company in writing not
less than 60 days nor more than 90 days prior to the meeting, or in the event
that less than 70 days' notice or prior public disclosure of the date of the
Annual Meeting is given or made to shareholders, to be timely, notice by the
shareholder must be received not later than the close of business on the 10th
day following the day on which such notice of the date of the meeting or such
public disclosure was made. Under the Bylaws, a shareholder's notice must also
contain certain information specified in the Bylaws.
ANNUAL REPORT
A copy of the Company's Annual Report to Shareholders has been
mailed to all shareholders of record. Shareholders, upon written request to the
Investor Relations Department, Linens 'n Things, Inc., 6 Brighton Road, Clifton,
New Jersey 07015, may receive, without charge, a copy of the Company's Annual
Report on Form 10-K, including the financial statements, financial statement
schedules and list of exhibits, required to be filed with the Commission for the
2000 fiscal year.
OTHER MATTERS
As of the date of this Proxy Statement, the Company knows of
no business that will be presented for consideration at the Annual Meeting other
than the matters referred to above. Proxies in the enclosed form will be voted
in respect of any other business that is properly brought before the Annual
Meeting as recommended by the Board of Directors or, if no such recommendation
is given, in the discretion of the proxy holders.
23
EXHIBIT A
---------
BOARD OF DIRECTORS MEETING
MAY 31, 2000
LINENS 'N THINGS, INC.
AUDIT COMMITTEE
CHARTER
ORGANIZATION
------------
o The Audit Committee shall be composed of a minimum of three members as may
be required by the New York Stock Exchange ("NYSE"), each of whom is to
satisfy the "independence" standards of the NYSE within the time periods
established by the NYSE.
o Each member of the Audit Committee shall be or shall become financially
literate and at least one member must have accounting or related financial
management expertise, all as determined by the Board of Directors in
accordance with the rules of the NYSE.
o The Board of Directors will designate the Chairman of the Audit Committee.
o The Audit Committee shall hold regular meetings, as it deems appropriate.
o Unless otherwise determined by the Audit Committee or its Chairman, at each
regular meeting, the Audit Committee shall meet with the Chief Financial
Officer of the Company and the independent accountants, who will be asked
to discuss as a group, and then separately, current matters relevant to the
responsibilities and authority of the Audit Committee.
o The Audit Committee shall keep minutes of all meetings.
o The Audit Committee shall report to the Board of Directors on a schedule
which the Board of Directors deems appropriate or as circumstances warrant.
OBJECTIVES AND RESPONSIBILITIES
-------------------------------
The Audit Committee's responsibilities shall be to oversee and review the
Company's financial reporting and accounting practices and to consult with the
Company's independent accountants, internal auditors, and management with
respect thereto. In furtherance of the foregoing, the Audit Committee shall:
(a) Review and reassess the adequacy of this Charter at least annually and
will submit the Charter to the Board of Directors for approval and have
the document published at least every three years in accordance with
the Securities and Exchange Commission ("SEC") regulations;
(b) Prior to publication, review the Company's annual audited financial
statements and discuss such audited financial statements with Company
executive management;
(c) Determine, based on such review and discussion with management and
based on its discussions with the independent accountants, whether to
recommend to the Board of
24
Directors that the audited financial statements be included in the
Company's Annual Report on Form 10-K;
(d) Review any changes to the audit plan or disputes with management;
(e) Review the scope of the current annual audit, including the fees
therefor, and the results of the prior year's audit;
(f) Discuss certain matters required to be communicated to the Audit
Committee in accordance with Statement of Accounting Standards ("SAS")
No. 61;
(g) Prepare a report annually to shareholders as required by the SEC to be
included in the annual proxy statement;
(h) Review the Company's accounting and financial reporting principles and
practices;
(i) Review the adequacy and effectiveness of the Company's system of
internal accounting controls, and consult with the independent
accountants concerning their evaluations of weaknesses in such controls
and recommendations for improvements thereto;
(j) Review the scope of any other auditing services to be performed by the
independent accountants;
(k) Recommend to the Board of Directors the retention and replacement of
the independent accountants;
(l) Be responsible for obtaining a statement of independence from the
independent accountants, and for reviewing the
independence and objectivity of the independent accountants;
(m) Inquire of management, the internal auditors, and the independent
accountants concerning any significant financial
risks or exposures;
(n) Review periodically the adequacy of the Company's accounting and
financial personnel resources;
(o) Have the power to conduct or authorize investigations into any matters
within the Audit Committee's scope of responsibilities; and
(p) Review and consider any other matters relative to the audit of the
Company's accounts and the preparation of its financial statements and
reports that the Audit Committee, in its discretion, deems appropriate.
The Audit Committee may rely on the findings and opinions of the independent
accountants and management with respect to the above and any other matters
relating to the preparation, completeness, and accuracy of the financial
statements.
The independent accountants and the Chief Financial Officer of the Company shall
have free access to the Audit Committee without obtaining authorization from
Company management.
25
CERTAIN RESPONSIBILITIES
------------------------
The independent accountants are ultimately accountable to the Board of Directors
and the Audit Committee; the Audit Committee and the Board of Directors have the
ultimate authority and responsibility to select, evaluate and, where
appropriate, replace the independent accountants (and to nominate the
independent accountants to be proposed for shareholder approval or ratification
at any Annual Meeting of the Company).
The Audit Committee is responsible for ensuring that the independent accountants
submit on a periodic basis to the Audit Committee a written statement
delineating all relationships between such independent accountants and the
Company, and the Audit Committee is responsible for actively engaging in a
dialogue with the independent accountants with respect to any disclosed
relationships or services that impact the objectivity and independence of the
independent accountants and for recommending that the Board of Directors take
appropriate action in response to such reports in order to satisfy itself of the
independence of the independent accountants.
26
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PROXY
LINENS 'N THINGS, INC.
May 2, 2001
This Proxy is Solicited on Behalf
of the Board of Directors of Linens 'n Things, Inc.
The undersigned hereby appoints Brian D. Silva, William T. Giles and Denise
Tolles, and each of them, with power of substitution, proxies for the
undersigned and authorizes each of them to represent and vote, as designated,
all of the shares of stock of Linens 'n Things, Inc. (the "Company")
which the undersigned may be entitled to vote at the Annual Meeting of
Shareholders of the Company to be held at the Company's headquarters at 6
Brighton Road, Clifton, New Jersey on May 2, 2001 and at any adjournment or
postponement of such meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO CONTRARY DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" PROPOSAL 1. PLEASE VOTE PROMPTLY.
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
ZLTH2B DETACH HERE
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[X] Please mark
votes as in
this example.
1. ELECTION OF ONE DIRECTOR.
To elect (01) Stanley P. Goldstein as director for a three-year term:
FOR WITHHELD
[_] [_]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
Please sign exactly as your name or names appear hereon. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title as such. If a corporation, please print the full corporate name and sign
by president or other authorized officer. If a partnership, please print the
full partnership name and sign by authorized person.
Signature: Date: Signature: Date:
-------------- ---------- --------------- ----------