SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14A-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [x]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Additional Materials Commission Only (as permitted)
[ ] Soliciting Material Pursuant to by Rule 14a-6(e)(2)
Rule 14a-11(c) or Rule 14a-12
VENATOR GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
GREENWAY PARTNERS, L.P.
GARY K. DUBERSTEIN
ANDREW P. HINES
ALFRED D. KINGSLEY
HOWARD STEIN
- --------------------------------------------------------------------------------
(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:
Not applicable
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies: Not
applicable.
------------------------------------------------------------------------
(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): Not
applicable.
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction: Not applicable.
------------------------------------------------------------------------
(5) Total Fee Paid: Not applicable.
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: Not applicable.
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.: Not applicable.
------------------------------------------------------------------------
(3) Filing Party: Not applicable.
------------------------------------------------------------------------
(4) Date Filed: Not applicable.
------------------------------------------------------------------------
July 6, 1999
GREENWAY
PARTNERS
VOTE GREEN
VOTE FOR THE GREENWAY NOMINEES ON THE GREEN PROXY CARD
ALSO, VOTE FOR PROPOSALS #3 (Name Change) AND #4 (End Poison Pill)
June 30, 1999
Dear Fellow Shareholder:
We must have a different view on Performance and Reward (let alone
corporate names) than a majority of the Directors on the current Board of
Venator Group, Inc. (formerly Woolworth Corporation). Despite what we view as
Dismal Performance by the Company, it appears to us the current Board has
Rewarded Roger N. Farah, the CEO, with a new multi-million dollar lucrative
contract that includes--among so much else--an annual grant of options to
purchase $5 million of the Company's common stock per year. We estimate that
grant of options alone to be worth over $1.7 million per year.
CONSIDER THE COMPANY'S DISMAL PERFORMANCE
Based on the Company's own calculation of cumulative five-year total
shareholder return on page 26 of its proxy statement and reproduced here on page
3 (with the dates of certain events noted by us), a $100 investment made on
January 31, 1994 in the S&P 500 Index and the S&P Retail Stores Composite Index
grew to $265.70 and $272.34, respectively, by January 31, 1999. In contrast, a
$100 investment in the Company made on January 31, 1994 sank to only $19.81 by
January 31, 1999. According to the 1998 "Shareholder Scorecard", covering 1,000
major U.S. Companies compiled by The Wall Street Journal in its issue dated
February 25, 1999, the Company's Common Stock ranked as the seventh worst
performing stock over a one-year period, and the second worst performing stock
over a five-year period, based on total return to shareholders. See page 2.
Taking a more recent measure, looking back one year from June 29, 1998 to June
29, 1999, the S&P 500 Index rose by 19% and the price of the Company's Common
Stock dropped by 43%.
Despite the Company's dismal performance and notice of our concerns as
a major shareholder, the Board of Directors entered into a new employment
agreement with Mr. Farah. A table summarizing key monetary terms of both his old
and new agreements appears on page 4. AS YOU CAN SEE, A MILLION DOLLAR BASE
SALARY IS JUST THE START! THE CONTRACTS APPROVED BY THE BOARD INCLUDE AN ANNUAL
BONUS PROGRAM, MULTI-YEAR BONUS PROGRAM, SHARE GRANTS, OPTION GRANTS, PAID
INSURANCE PREMIUMS, AND THE LIST GOES ON AND ON. Although Mr. Farah's "old"
contract did not expire until January 31, 2000, the Company entered into the
"new" contract on April 14, 1999, long before his existing one expired. What was
the rush? Why did the Board approve the new contract in view of the Company's
pitiful share price performance? Is anybody really minding the Store?
Greenway Partners, L.P. 277 Park Avenue New York, NY 10172
Tel.(212) 350-5100 Fax(212) 350-5253
#764245 v1.
THE WALL STREET JOURNAL
THURSDAY FEBRUARY 25, 1999 R1
SHAREHOLDER
SCOREBOARD
OUR FOURTH ANNUAL GUIDE
TO THE BEST- AND WORST-
PERFORMING COMPANIES THE WORST
PERFORMERS
HOW 1,000 MAJOR U.S. COMPANIES BANK
ON TOTAL RETURN TO THEIR INVESTORS
By C. FREDERIC WIEGOLD
---------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
1 YEAR 5 YEARS
- ----------------------------------------------------------------------------------------------------------------
STOCK AVERAGE STOCK AVERAGE
COMPANY NAME SYMBOL RETURN COMPANY NAME SYMBOL RETURN
- ----------------------------------------------------------------------------------------------------------------
Sunbeam Corp. SOC - 83.7% Sensormatic Electronics SRM - 27.0%
Corp.
MedPartners Inc. MDM - 76.5 Venator Group Inc. Z - 23.0
Parker Drilling Co. PKD - 73.8 Circus Circus Enterprises CIR - 21.0
Inc
Agco Corp. AG - 73.0 Sunbeam Corp. SOC - 20.6
Harnischfeger Industries Inc. HPH - 70.4 LTV Corp. LTV - 18.1
IKON Office Solutions Inc. IKN - 69.2 Cabletron Systems Corp. CS - 17.9
Venator Group Inc. Z - 68.1 Bethlehem Steel Corp. BS - 16.3
ENSCO International Inc. ESV - 67.9 IKON Office Solutions Inc. IKN - 16.2
Rowan Companies Inc. RDC -67.6 Toys "R" Us Inc. TOY - 16.2
Santa Fe International Corp. SDC - 64.2 Battle Mountain Gold Co. BMG - 16.1
Case Corp. CSE - 63.7 Newmont Mining Corp. NEM - 16.1
Global Marine Inc. GLM - 63.4 Homestake Mining Co. HM - 15.3
Weatherford International Inc. WFT - 62.6 Foster Wheeler Corp. FWC - 14.9
Union Pacific Resources Group Inc. UPR - 62.1 Cyprus Amax Minerals Co. CYM - 14.2
Thermo Electron Corp. TMO - 61.5 Harrah's Entertainment Inc. HET - 13.4
Polaroid Corp. PRD - 60.9 Harnischfeger Industries HPH - 13.3
Inc.
Baker Hughes Inc. BHI - 59.0 Louisiana-Pacific Corp. LPX - 13.0
Starwood Hotels & Res. Worldwide HOT - 58.8 Reebok International Ltd. RBK - 12.7
Security Capital Group Inc. SCZB - 58.3 Grand Casinos Inc. GND - 12.5
Sensormatic Electronics Corp. SRM - 57.8 Silicon Graphics Inc. SGI - 12.3
Noble Drilling Corp. NE - 57.8 Inland Steel Industries Inc. IAD - 12.0
Tidewater Inc. TDW - 57.4 Nine West Group Inc. NIN - 12.0
Nabors Industries Inc. NBR - 57.3 Fruit of the Loom Inc. FTL - 10.6
Thermo Instrument Systems Inc. NBR - 56.3 Citizens Utilities Co. CZN - 10.5
UCAR International Inc. UCR - 55.4 Parker Drilling Co. PKD - 10.3
Polaroid Corp. PRD - 9.6
TABLE CONTINUED ON FOLLOWING PAGE....
1
TABLE CONTINUED....
- ----------------------------------------------------------
10 YEARS
- ----------------------------------------------------------
STOCK AVERAGE
COMPANY NAME SYMBOL RETURN
- ----------------------------------------------------------
USG Corp. USG - 15.7%
Battle Mountain Gold Co. BMG - 10.9
Venator Group Inc. Z - 10.8
Safety-Kleen Corp. SK - 10.3
Bethlehem Steel Corp. BS - 9.1
Inland Steel Industries Inc. IAD - 7.5
Armco Inc. AS - 7.2
Navistar International Corp. NAV - 6.1
Polaroid Corp. PRD - 4.9
PennzEnrgy Corp. PZE - 4.2
Cyprus Amax Minerals Co. CYM - 4.2
Harnischfeger Industries Inc. HPH - 3.6
Parker Drilling Co. PKD - 3.4
Yellow Corp. YELL - 2.7
Newmont Mining Corp. NEM - 2.6
Asarco Inc. AR - 2.4
Homestake Mining Co. HM - 2.1
Starwood Hotels & Res. Worldwide HOT - 0.9
IKON Office Solutions Inc. IKN - 0.8
Meditrust Corp. MT - 0.6
U.S. Filter Corp. USF - 0.5
Boise Cascade Corp. BCC - 0.1
John H. Harland Co. JH + 0.0
Toys "R" Us Inc. TOY + 0.3
Alexander & Baldwin Inc. ALEX + 0.4
Note: Returns are average compound annual total returns, including price changes
and reinvestments from any dividends or other cash or noncash distributions, for
periods ending Dec. 31, 1998.
Sources: Rankings by L.E.K. Consulting LLC based on stock-pricing data from IDD
Information Services' Tradeline
2
Z Performance
The following performance graph compares the cumulative total
shareholder return on the Company's Common Stock against the cumulative total
return of the S&P 500 Index and the S&P Retail Stores Composite Index from
January 31, 1994 through January 30, 1999. The graph assumes an investment of
$100 in the Company's Common Stock and in each index on January 31, 1994, and
that all dividends were reinvested.
[EDGAR PRESENTATION OF DATA POINTS USED IN PRINTED PERFORMANCE GRAPH]
- ------------------------------------- ----------- ----------- ----------- ----------- ------------ ----------
Base
Period
Company/Index Name Jan 94 Jan 95 Jan 96 Jan 97 Jan 98 Jan 99
- ------------------------------------- ----------- ----------- ----------- ----------- ------------ ----------
Venator Group $100 $60.87 $43.48 $78.74 $84.06 $19.81
- ------------------------------------- ----------- ----------- ----------- ----------- ------------ ----------
S&P 500 100 97.68 132.06 163.24 203.54 265.70
- ------------------------------------- ----------- ----------- ----------- ----------- ------------ ----------
S&P Retail 100 91.13 96.72 114.05 167.35 272.34
- ------------------------------------- ----------- ----------- ----------- ----------- ------------ ----------
[EDGAR PRESENTATION OF GRAPHICS USED ACCOMPANYING PRINTED PERFORMANCE GRAPH]
[Text box: "Roger Farah named President and CEO Dec 1994" accompanied by graphic
depiction of man holding scroll with text.]
[Text box: "April 1995 - omitted cash dividend after 83 years."]
[Text box: "March 1997 - removed from Dow Jones Industrials."]
[Text box: "April 1998 - Woolworth announces new name and adopts new poison
pill" accompanied by graphic depiction of skull and crossbones.]
[Text box: "Dec 1998 - Removed from S&P 500" accompanied by graphic depiction of
ball and chain.]
- ------------------------------------- ----------- ----------- ----------- ----------- ------------ ----------
Base
Period
Company/Index Name Jan 94 Jan 95 Jan 96 Jan 97 Jan 98 Jan 99
- ------------------------------------- ----------- ----------- ----------- ----------- ------------ ----------
Venator Group $100 $60.87 $43.48 $78.74 $84.06 $19.81
- ------------------------------------- ----------- ----------- ----------- ----------- ------------ ----------
S&P 500 100 97.68 132.06 163.24 203.54 265.70
- ------------------------------------- ----------- ----------- ----------- ----------- ------------ ----------
S&P Retail 100 91.13 96.72 114.05 167.35 272.34
- ------------------------------------- ----------- ----------- ----------- ----------- ------------ ----------
The above information is derived from page 26 of the Company's Proxy Statement
dated June 15, 1999, with the dates of certain events noted by us.
#764561 v1.
The following compares certain aspects Mr. Farah's Old contract with
his New one. As the largest shareholder of the Company with over 19,000,000
shares, it appears to us the Board has taken very good care of Mr. Farah.
However, we do not believe the current Board is watching out for Shareholders.
The Greenway Nominees would NOT have approved Mr. Farah's New Contract.
- ----------------------------------------------------------- --------------------------------------------------------
MR. FARAH'S OLD CONTRACT MR. FARAH'S NEW CONTRACT
- ----------------------------------------------------------- --------------------------------------------------------
Term: December 11, 1994 to January 31, 2000. Before Term: April 15, 1999 to January 31, 2003. But, Mr.
contractual end, Mr. Farah granted more lucrative New Farah will be paid additional $1,500,000 in cash if
Contract contract not extended for additional year past January
31, 2003.
- ----------------------------------------------------------- --------------------------------------------------------
Base Salary: $1,500,000 in cash annually Base Salary: $1,000,000 in cash annually
- ----------------------------------------------------------- --------------------------------------------------------
Guaranteed Annual Option Grant: None Guaranteed Annual Option Grant: Annual Stock Option
Grant to buy $5,000,000 market value of Common Shares,
estimated present value of approx. $1,700,000 [1] .
- ----------------------------------------------------------- --------------------------------------------------------
Bonuses: Annual Bonuses of 50% of Base Salary (i.e. Bonuses: Annual Bonuses of 100% of Base Salary (i.e.,
$750,000) for "at budget" performance and eligible for $1,000,000) for "at target" performance and eligible
"Long Term" Bonus based on 1996-1998 Performance Period. for "Long Term" Bonus based on 1998-2000 Performance
Actually received Annual Bonuses of $500,000, $780,900, Period
$702,150 for 1995, 1996, 1997. Although no Annual Bonus
awarded for 1998, received a $1,671,670 "Long Term"
Bonus for 1996-1998 Performance Period.
- ----------------------------------------------------------- --------------------------------------------------------
Sign-Up "Goodies": $1,000,000 cash signing bonus, Sign-Up "Goodies": 275,000 More Restricted Common
200,000 Restricted Common Shares, Options to buy 800,000 Shares
Common Shares
- ----------------------------------------------------------- --------------------------------------------------------
If Change of Control: Continuation of salary, unpaid If Change of Control: "Golden Parachute" providing in
bonus and benefits through contract term lump sum three times Base Salary plus Annual Bonus at
target (each, now $1,000,000)
- ----------------------------------------------------------- --------------------------------------------------------
Car and driver for business purposes Same as Old Contract
- ----------------------------------------------------------- --------------------------------------------------------
Reimbursed for premiums on $3,600,000 of term life Same as Old Contract
insurance benefits
- ----------------------------------------------------------- --------------------------------------------------------
Company pays up to $15,000 annually for "personal
financial planning services"
- ----------------------------------------------------------- --------------------------------------------------------
- ------------------------
[1] This is a theoretical value, which does not actually reflect the amount Mr.
Farah may ultimately realize. Greenway used the Black-Scholes option pricing
model, incorporating assumptions disclosed by the Company in its Definitive
Proxy Materials for valuation of options granted to other Company executives.
These assumptions include a weighted-average risk-free interest rate of 4.57
percent and a stock price volatility factor of 35 percent. Greenway further
assumed that the options were issued on June 18, 1999 and are exercisable at
$9-11/16 per share, the closing price of the Common Stock on that date and that
these options are ten-year options not exercisable until the second anniversary
of their grant. This value was discounted to present value on the date of award
at the weighted-average risk-free interest rate.