DEF 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
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(Amendment No. )
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o Soliciting
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(Name of Registrant as Specified In Its Charter)
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Check box if any part of the fee is offset as provided by
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previous filing by registration statement number, or the Form or
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TABLE OF CONTENTS
122 Fifth Avenue
New York, New York 10011
April 27, 2005
Dear Stockholder:
You are cordially invited to attend the 2005 Annual Meeting of
Stockholders of Barnes & Noble, Inc. The meeting will
be held at 9:00 a.m., Eastern Time, on Wednesday,
June 1, 2005 at Barnes & Noble Booksellers, Union
Square Store, 33 East 17th Street, New York, New York.
Information about the meeting and the various matters on which
the stockholders will act is included in the Notice of Annual
Meeting of Stockholders and Proxy Statement which follow. Also
included is a Proxy Card and postage paid return envelope.
Whether or not you plan to attend the meeting, we hope you will
have your shares represented at the meeting by completing,
signing and returning your Proxy Card in the enclosed postage
paid return envelope promptly.
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Sincerely, |
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Michael N. Rosen
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Secretary |
122 Fifth Avenue
New York, New York 10011
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 1, 2005
The Annual Meeting of Stockholders of Barnes & Noble,
Inc. (the Company) will be held at Barnes &
Noble Booksellers, Union Square Store, 33 East 17th Street, New
York, New York, at 9:00 a.m., Eastern Time, on Wednesday,
June 1, 2005 for the following purposes:
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1. |
To elect three Directors to serve until the 2008 annual meeting
of stockholders and until their respective successors are duly
elected and qualified; |
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2. |
To ratify the appointment of BDO Seidman, LLP as independent
certified public accountants for the Companys fiscal year
ending January 28, 2006; and |
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3. |
To transact such other business as may be properly brought
before the meeting and any adjournment or postponement thereof. |
Only holders of record of Common Stock as of the close of
business on April 8, 2005 are entitled to notice of and to
vote at the meeting and at any adjournment or postponement
thereof.
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Secretary |
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New York, New York |
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April 27, 2005 |
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY
CARD.
BARNES & NOBLE, INC.
122 Fifth Avenue
New York, New York 10011
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 1, 2005
INTRODUCTION
This Proxy Statement and enclosed Proxy Card are being furnished
commencing on or about April 27, 2005 in connection with
the solicitation by the Board of Directors of Barnes &
Noble, Inc., a Delaware corporation (the Company),
of proxies for use at the Annual Meeting of Stockholders to be
held on June 1, 2005 (the Meeting) for the
purposes set forth in the accompanying Notice of Annual Meeting
of Stockholders. Any proxy given pursuant to such solicitation
and received in time for the Meeting will be voted as specified
in such proxy. If no instructions are given, proxies will be
voted FOR the election of the nominees listed
below under the caption Election of Directors
Information Concerning the Directors and Nominees
Nominees for Election as Director, FOR the
ratification of the appointment of BDO Seidman, LLP as
independent certified public accountants for the Companys
fiscal year ending January 28, 2006 (collectively, the
Proposals), and in the discretion of the proxies
named on the Proxy Card with respect to any other matters
properly brought before the Meeting and any adjournments
thereof. Any proxy may be revoked by written notice received by
the Secretary of the Company at any time prior to the voting
thereof by submitting a subsequent proxy or by attending the
Meeting and voting in person.
Only holders of record of the Companys voting securities
as of the close of business on April 8, 2005 are entitled
to notice of and to vote at the Meeting. As of the record date,
70,124,725 shares of Common Stock, par value $.001 per
share (Common Stock), were outstanding. Each share
of Common Stock entitles the record holder thereof to one vote
on each of the Proposals and on all other matters properly
brought before the Meeting. The presence of a majority of the
combined outstanding shares of the Common Stock represented in
person or by proxy at the Meeting will constitute a quorum.
The three nominees for Director receiving the highest vote
totals will be elected as Directors of the Company to serve
until the 2008 annual meeting of stockholders. The proposal to
ratify the appointment of the Companys independent
certified public accountants will require the affirmative vote
of a majority of the votes cast on these matters in person or by
proxy at the Meeting.
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Abstentions and Broker Non-Votes |
With respect to the proposal to elect the three nominees for
Director and the proposal to ratify the appointment of the
Companys independent certified public accountants,
abstentions and broker non-votes will not be
included in vote totals and will have no effect on the outcome
of these proposals. A broker non-vote occurs when a
nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have
discretionary voting power on that matter and has not received
instructions from the beneficial owner.
Abstentions and broker non-votes are included in
determining whether a quorum is present.
It should be noted that all of the Directors and executive
officers of the Company, together with principal stockholders of
the Company with which they are affiliated, own or control the
voting power of approximately 19.6% of the Common Stock
outstanding as of April 8, 2005, and have advised the
Company that they intend to vote FOR all of the
Proposals.
A Proxy Card is enclosed for your use. YOU ARE SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS TO COMPLETE, SIGN, DATE AND
RETURN THE PROXY CARD IN THE ACCOMPANYING ENVELOPE, which is
postage paid if mailed in the United States.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY
STATEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED. THE DELIVERY OF THIS
PROXY STATEMENT SHALL, UNDER NO CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE OF THIS PROXY STATEMENT.
PROPOSAL 1
ELECTION OF DIRECTORS
Information Concerning the Directors and Nominees
The Board of Directors currently consists of nine Directors. The
Directors currently are divided into three classes, consisting
of three members whose terms expire at the Meeting, three
members whose terms expire at the 2006 annual meeting of
stockholders and three members whose terms expire at the 2007
annual meeting of stockholders.
Background information with respect to the Board of Directors
and nominees for election as Directors, all of whom are
incumbent Directors, appears below. See Security Ownership
of Certain Beneficial Owners and Management for
information regarding such persons holdings of equity
securities of the Company.
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Director | |
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Name |
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Age | |
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Since | |
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Position |
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Leonard Riggio
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64 |
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1986 |
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Founder and Chairman of the Board |
Stephen Riggio
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50 |
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1997 |
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Vice Chairman and Chief Executive Officer |
Matthew A. Berdon(2)(3)
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85 |
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1992 |
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Director |
Michael J. Del Giudice(3)
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62 |
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1999 |
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Director |
William Dillard II(1)
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60 |
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1993 |
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Director |
Irene R. Miller
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52 |
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1995 |
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Director |
Margaret T. Monaco(2)
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57 |
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1995 |
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Director |
Michael N. Rosen
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64 |
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1986 |
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Secretary and Director |
William Sheluck, Jr.(1)(2)(3)
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64 |
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1993 |
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Director |
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(1) |
Member of Nominating Committee |
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Member of Compensation Committee |
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Member of Audit Committee |
At the Meeting, three Directors will be elected, each to hold
office for a term of three years and until his or her successor
is elected and qualified. Stephen Riggio, Matthew A. Berdon and
Margaret T. Monaco are nominees for election as Directors at the
Meeting, each to hold office for a term of three years until the
annual meeting of stockholders to be held in 2008. The terms of
William Dillard II, Irene R. Miller and Michael N. Rosen
expire in 2006, and the terms of Leonard Riggio, Michael J. Del
Giudice and William Sheluck, Jr. expire in 2007. Each of
the nominees has consented to serve, if elected. However, if any
nominee is unable to stand for election, proxies may be voted
for a substitute designated by the Board of Directors.
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Nominees for Election as Director |
The following individuals are nominees for Director at the
Meeting:
Stephen Riggio has been a Director of the Company since
September 1993, was appointed Vice Chairman of the Company in
December 1997, and was named Chief Executive Officer of the
Company in February 2002. Mr. Riggio was Chief Operating
Officer of the Company from February 1995 until December
2
1997. Since January 2000, he has been Vice Chairman of
Barnes & Noble.com. Mr. Riggio is Leonard
Riggios brother.
Matthew A. Berdon has been a Director of the Company
since June 1992. Since January 2003, Mr. Berdon has been
the Senior Partner of the financial consulting firm F.
B. & Co., LLP. From January 1998 through December 2002,
Mr. Berdon was the Chairman of the New York Division of the
accounting firm of Urbach, Kahn & Werlin. Prior to
that, he was a partner in the certified public accounting firm
of Ferro Berdon & Company.
Margaret T. Monaco has been a Director of the Company
since May 1995. Ms. Monaco resumed her position as
Principal of Probus Advisors, a financial and management
consulting firm, in October 2003. Ms. Monaco was the Chief
Operating Officer of Merrill Lynch Ventures, LLC and KECALP,
Inc., wholly owned subsidiaries of Merrill Lynch & Co.,
Inc., from November 1999 to October 2003. She had been the Chief
Administrative Officer from April 1998 to November 1999.
Ms. Monaco had been the Principal of Probus Advisors from
July 1993 to April 1998. Ms. Monaco is also a director of
Stage Stores, Inc.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THE ELECTION OF EACH NOMINEE FOR DIRECTOR NAMED
ABOVE. PROXIES SOLICITED BY THIS PROXY STATEMENT WILL BE VOTED
FOR EACH NOMINEE NAMED ABOVE UNLESS A VOTE AGAINST A
NOMINEE OR AN ABSTENTION IS SPECIFICALLY INDICATED.
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Other Directors whose Terms of Office Continue after the
Meeting |
Leonard Riggio is the founder of the Company and has been
Chairman of the Board and a principal stockholder of the Company
since its inception in 1986 and was Chief Executive Officer of
the Company from its inception through February 2002. Since
1965, Mr. Riggio has been Chairman of the Board, Chief
Executive Officer and the principal stockholder of
Barnes & Noble College Booksellers, Inc. (B&N
College), one of the nations largest operators of
college bookstores. Since 1985, Mr. Riggio has been
Chairman of the Board and a principal beneficial owner of MBS
Textbook Exchange, Inc. (MBS one of the
nations largest wholesalers of college textbooks).
Mr. Riggio is also a director of GameStop Corp.
(GameStop), a national video game retailer.
Mr. Riggio is Stephen Riggios brother.
Michael J. Del Giudice has been a Director of the Company
since 1999. Mr. Del Giudice is a co-founder and Senior
Managing Director at Millennium Credit Markets LLC, an
investment banking firm. He is Chairman of Rockland Capital
Energy Investments LLC, Lead Director of the Board of Directors
of Con Edison Inc. of New York, a member of the Board of Fusion
Telecommunications Intl., and a Trustee of the Board of
Directors of the New York Racing Association. He is Chairman of
the Governors Committee on Scholastic Achievement, an
educational non-profit group. Mr. Del Giudice was Chairman
of the Board of Orange & Rockland Utilities Corp. from
1997 to 1999.
William Dillard, II has been a Director of the
Company since November 1993. Mr. Dillard has been the Chief
Executive Officer of Dillards, Inc.
(Dillards) since May 1998 and he has been a
director of Dillards since 1968. He was appointed Chairman
of Dillards in May 2002. Mr. Dillard is also a member
of JPMorganChase & Co. National Advisory Board,
JPMorganChase & Co. Dallas Region Advisory Board and a
director of Acxiom Corp.
Irene R. Miller has been a Director of the Company since
May 1995. Ms. Miller has been the Chief Executive Officer
of Akim, Inc., an investment management and consulting firm
since July 1997, and until June 1997 she was Vice Chairman and
Chief Financial Officer of the Company. Ms. Miller is also
a director of Coach, Inc., Inditex, S.A. and The Body Shop
International Plc.
Michael N. Rosen has been Secretary and a Director of the
Company since its inception in 1986 and a partner at Bryan Cave
LLP since their July 2002 combination with Robinson Silverman
Pearce Aronsohn & Berman LLP (Robinson
Silverman), counsel to the Company. Prior to that,
Mr. Rosen was Chairman of Robinson Silverman for more than
the past five years. Mr. Rosen is also a director of
GameStop, B&N College and MBS.
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William Sheluck, Jr. has been a Director of the
Company since November 1993. Mr. Sheluck formerly was the
President, Chief Executive Officer and a director of Nationar, a
New York State-chartered commercial bank providing services to
financial institutions and corporations, from 1983 until his
retirement in April 1993. Mr. Sheluck is a Chartered
Financial Analyst.
Meetings and Committees of the Board
The Board of Directors met six times during the fiscal year
ended January 29, 2005 (fiscal 2004). All
Directors attended at least 75% of all of the meetings of the
Board of Directors and the committees thereof on which they
served during fiscal 2004. Based on information supplied to it
by the Directors, the Board of Directors has affirmatively
determined that each of Matthew A. Berdon, Michael J. Del
Giudice, William Dillard, II, Irene R. Miller,
Margaret T. Monaco and William Sheluck, Jr. are
independent under the listing standards of the New
York Stock Exchange, and have made such determination based on
the fact that none of such persons have had, or currently have,
any relationship with the Company or its affiliates or any
executive officer of the Company or his or her affiliates, that
would currently impair their independence, including, without
limitation, any commercial, industrial, banking, consulting,
legal, accounting, charitable or familial relationship.
See our website at www.barnesandnobleinc.com for a description
of the Companys strategic planning process and the Board
of Directors involvement in that process.
The Board of Directors has three standing committees: the Audit
Committee, the Compensation Committee and the
Nominating & Corporate Governance Committee.
Audit Committee. The Audit Committee has the principal
function of, among other things, reviewing the adequacy of the
Companys internal system of accounting controls, the
appointment, compensation, retention and oversight of the
independent certified public accountants, conferring with the
independent certified public accountants concerning the scope of
their examination of the books and records of the Company,
reviewing and approving related party transactions and
considering other appropriate matters regarding the financial
affairs of the Company. In addition, the Audit Committee has
established procedures for the receipt, retention and treatment
of confidential and anonymous complaints regarding the
Companys accounting, internal accounting controls and
auditing matters. The Board of Directors has adopted a written
charter setting out the functions of the Audit Committee, a copy
of which is available on the Companys website at
www.barnesandnobleinc.com and is available in print to any
stockholder who requests it, in writing to the Companys
Secretary, Barnes & Noble, Inc.,
122 Fifth Avenue, New York, New York 10011. The
current members of the Audit Committee are Messrs. Sheluck
(Chairman), Berdon and Del Giudice. In addition to meeting the
independence standards of the New York Stock Exchange, each
member of the Audit Committee is financially literate and meets
the independence standards established by the Securities and
Exchange Commission (the SEC). The Board of
Directors has also determined that each member of the Audit
Committee has the requisite attributes of an audit
committee financial expert as defined by regulations
promulgated by the SEC and that such attributes were acquired
through relevant education and/or experience. The Audit
Committee met 14 times during fiscal 2004.
Compensation Committee. The principal function of the
Compensation Committee is to, among other things, review and
approve the compensation and employment arrangements for the
Companys executive officers. The Compensation Committee is
also responsible for administering the Companys 1991, 1996
and 2004 Incentive Plans, as amended, as well as the Performance
Plan. The current members of the Compensation Committee are
Mr. Berdon (Chairman), Ms. Monaco and
Mr. Sheluck, all of whom meet the independence standards of
the New York Stock Exchange. The Board of Directors has adopted
a written charter setting out the functions of the Compensation
Committee, which is available on the Companys website at
www.barnesandnobleinc.com and is available in print to any
stockholder who requests it, in writing to the Companys
Secretary, Barnes & Noble, Inc., 122 Fifth Avenue, New
York, New York 10011. The Compensation Committee met 11 times
during fiscal 2004.
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Nominating & Corporate Governance Committee. The
function of the Nominating & Corporate Governance
Committee is to, among other things, seek qualified individuals
to serve as Directors of the Company. The current members of the
Nominating & Corporate Governance Committee are
Messrs. Dillard and Sheluck, both of whom meet the
independence standards of the New York Stock Exchange. The Board
of Directors has adopted a written charter setting out the
functions of the Nominating & Corporate Governance
Committee, which is available on the Companys website at
www.barnesandnobleinc.com and is available in print to any
stockholder who requests it, in writing to the Companys
Secretary, Barnes & Noble, Inc.,
122 Fifth Avenue, New York, New York 10011. The
Nominating & Corporate Governance Committee met once
during fiscal 2004.
The Company does not set specific criteria for Directors except
to the extent required to meet applicable legal, regulatory and
stock exchange requirements, including, but not limited to, the
independence requirements of the New York Stock Exchange and the
SEC, as applicable. Nominees for Director will be selected on
the basis of outstanding achievement in their personal careers;
board experience; wisdom; integrity; ability to make
independent, analytical inquiries; understanding of the business
environment; and willingness to devote adequate time to Board
duties. While the selection of qualified Directors is a complex
and subjective process that requires consideration of many
intangible factors, the Nominating & Corporate
Governance Committee believes that each Director should have a
basic understanding of (i) the principal operational and
financial objectives and plans and strategies of the Company,
(ii) the results of operations and financial condition of
the Company and of any significant subsidiaries or business
segments, and (iii) the relative standing of the Company
and its business segments in relation to its competitors.
Although the process for identifying and evaluating candidates
to fill vacancies and/or expand the Board will inevitably
require a practical approach in light of the particular
circumstances at such time, the Board of Directors has adopted
the following process to guide the Board of Directors in this
respect. The Nominating & Corporate Governance
Committee is willing to consider candidates submitted by a
variety of sources (including incumbent Directors, stockholders
(as described below), Company management and third party search
firms) when reviewing candidates to fill vacancies and/or expand
the Board. If a vacancy arises or the Board decides to expand
its membership, the Nominating & Corporate Governance
Committee asks each Director to submit a list of potential
candidates for consideration. The Nominating &
Corporate Governance Committee then evaluates each potential
candidates educational background, employment history,
outside commitments and other relevant factors to determine
whether he/she is potentially qualified to serve on the Board.
At that time, the Nominating & Corporate Governance
Committee also will consider potential nominees submitted by
stockholders in accordance with the procedures described below,
or by the Companys management, and if the
Nominating & Corporate Governance Committee deems it
necessary, retain an independent third party search firm to
provide potential candidates. The Nominating &
Corporate Governance Committee seeks to identify and recruit the
best available candidates, and it intends to evaluate qualified
stockholder nominees on the same basis as those submitted by
Board members, Company management, third party search firms or
other sources.
After completing this process, the Nominating &
Corporate Governance Committee will determine whether one or
more candidates are sufficiently qualified to warrant further
investigation. If the process yields one or more desirable
candidates, the Nominating & Corporate Governance
Committee will rank them by order of preference, depending on
their respective qualifications and the Companys needs.
The Nominating & Corporate Governance Committee Chair
will then contact the preferred candidate(s) to evaluate their
potential interest and to set up interviews with the full
Nominating & Corporate Governance Committee. All such
interviews are held in person, and include only the candidate
and the Nominating & Corporate Governance Committee
members. Based upon interview results and appropriate background
checks, the Nominating & Corporate Governance Committee
then decides whether it will recommend the candidates
nomination to the full Board.
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When nominating a sitting Director for re-election at an annual
meeting, the Nominating & Corporate Governance
Committee will consider the Directors performance on the
Board and the Directors qualifications in respect of the
criteria referred to above.
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Consideration of Stockholder Nominated Directors |
The Nominating & Corporate Governance Committee also
will consider potential nominees submitted by stockholders if a
vacancy arises or if the Board decides to expand its membership,
and at such other times as the Nominating & Corporate
Governance Committee deems necessary or appropriate. Any
stockholder wishing to submit a candidate for consideration
should send the following information to the Companys
Secretary, Barnes & Noble, Inc., 122 Fifth Avenue, New
York, New York 10011: (i) stockholders name, number
of shares owned, length of period held, and proof of ownership;
(ii) name, age and address of candidate; (iii) a
detailed resume describing, among other things, the
candidates educational background, occupation, employment
history for at least the previous five years, and material
outside commitments (e.g., memberships on other boards
and committees, charitable foundations, etc.); (iv) a
supporting statement which describes the candidates
reasons for seeking election to the Board; (v) a
description of any arrangements or understandings between the
candidate and the Company; and (vi) a signed statement from
the candidate, confirming his/her willingness to serve on the
Board. In accordance with the Companys Bylaws, in order
for the Company to consider a candidate submitted by a
stockholder, the Company must receive the foregoing information
not less than 30 days, nor more than 60 days, prior to
a meeting of the Companys stockholders for the election of
Directors; provided, that if less than 40 days notice
of such meeting is given to stockholders, the Company must
receive the foregoing information no later than the 10th day
following the day on which notice of the date of such meeting
was mailed or publicly disclosed. The Companys Secretary
will promptly forward such materials to the
Nominating & Corporate Governance Committee. The
Companys Secretary also will maintain copies of such
materials for future reference by the Nominating &
Corporate Governance Committee when filling Board positions.
Corporate Governance
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Corporate Governance Guidelines and Code of Business
Conduct and Ethics |
The Board of Directors has adopted Corporate Governance
Guidelines. The Board of Directors has also adopted a Code of
Business Conduct and Ethics. The Corporate Governance Guidelines
and the Code of Business Conduct and Ethics is available on the
Companys website at www.barnesandnobleinc.com. A copy of
the Corporate Governance Guidelines and a copy of the Code of
Business Conduct and Ethics are available in print to any
stockholder who requests it, in writing to the Companys
Secretary, Barnes & Noble, Inc.,
122 Fifth Avenue, New York, New York 10011.
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Code of Ethics for Senior Financial Officers |
The Board of Directors has adopted a Code of Ethics applicable
to the Companys Chairman of the Board, Chief Executive
Officer, Chief Financial Officer, and Controller, which is
available on the Companys website at
www.barnesandnobleinc.com. A copy of the Code of Ethics for
Senior Financial Officers is available in print to any
stockholder who requests it, in writing to the Companys
Secretary, Barnes & Noble, Inc., 122 Fifth
Avenue, New York, New York 10011.
In accordance with the Corporate Governance Guidelines,
non-management Directors of the Company will hold regularly
scheduled executive sessions without management present. At
least once annually, the independent, non-management Directors
will meet. The Board of Directors has selected the Chair of the
Audit Committee as the presiding Director at the executive
sessions of the non-management Directors.
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Communications Between Stockholders and the Board |
Stockholders and other interested persons seeking to communicate
with the Board should submit any communications in writing to
the Companys Secretary, Barnes & Noble, Inc., 122
Fifth Avenue, New York, New York 10011. Any such communication
must state the number of shares beneficially owned by the
stockholder making the communication. The Companys
Secretary will forward such communication to the full Board or
to any individual Director or Directors (including the presiding
Director of the executive sessions of the non-management
Directors or the non-management Directors as a group) to whom
the communication is directed.
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Attendance at Annual Meetings |
All Board members are expected to attend in person the
Companys annual meetings of stockholders and be available
to address questions or concerns raised by stockholders. All
Directors attended the 2004 Annual Meeting of stockholders.
Compensation of Directors
Non-employee Directors received a fee of $40,000, Audit
Committee members received an additional $20,000 in annual
compensation, and the annual compensation paid to the Chairmen
of the Audit Committee and the Compensation Committee was
$70,000 with no additional fees for attendance at Board or
committee meetings during fiscal 2004. All Directors of the
Company are reimbursed for travel, lodging and related expenses
incurred in attending Board meetings.
On April 1, 2005, the non-employee Directors received a
grant of options to purchase 20,000 shares of the Companys
common stock with an exercise price of $34.19 per share, vesting
in equal annual installments over four years, and a grant of 585
restricted shares of Company common stock vesting in one year.
Executive Officers
The Companys executive officers, as well as additional
information with respect to such persons, is set forth in the
table below:
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Position |
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Leonard Riggio
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64 |
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Founder and Chairman of the Board
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Stephen Riggio
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50 |
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Vice Chairman and Chief Executive Officer
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Mitchell S. Klipper
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47 |
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Chief Operating Officer
|
Marie J. Toulantis
|
|
|
51 |
|
|
Chief Executive Officer of Barnes & Noble.com
|
J. Alan Kahn
|
|
|
58 |
|
|
President of the Barnes & Noble Publishing Group
|
Joseph J. Lombardi
|
|
|
43 |
|
|
Chief Financial Officer
|
William F. Duffy
|
|
|
49 |
|
|
Executive Vice President of Distribution and Logistics
|
Mary Ellen Keating
|
|
|
48 |
|
|
Senior Vice President of Corporate Communications and Public
Affairs
|
David S. Deason
|
|
|
46 |
|
|
Vice President of Barnes & Noble Development
|
Christopher Grady-Troia
|
|
|
53 |
|
|
Vice President and Chief Information Officer
|
Mark Bottini
|
|
|
44 |
|
|
Vice President and Director of Stores
|
Michelle Smith
|
|
|
52 |
|
|
Vice President of Human Resources
|
Michael N. Rosen
|
|
|
64 |
|
|
Secretary
|
Information with respect to executive officers of the Company
who also are Directors is set forth in Information
Concerning the Directors and Nominees above.
Mitchell S. Klipper has been the Chief Operating Officer
of the Company since February 2002. Prior to that, he was the
President of Barnes & Noble Development, the group
responsible for selecting, designing and
7
constructing new store locations, and an Executive Vice
President of the Company from December 1995 to February 2002.
Mr. Klipper is a Certified Public Accountant.
Marie J. Toulantis has been Chief Executive Officer of
Barnes & Noble.com since February 2002.
Ms. Toulantis was President and Chief Operating Officer of
Barnes & Noble.com from May 2001 through February 2002.
Prior to that, Ms. Toulantis was Chief Financial Officer of
Barnes & Noble.com from May 1999 through May 2001. From
March 1999 through May 1999, Ms. Toulantis was Chief
Financial Officer of Barnes & Noble, Inc., and from
July 1997 through May 1999 Ms. Toulantis was Executive Vice
President, Finance of Barnes & Noble, Inc.
Ms. Toulantis is a member of the board of directors of
Hershey Foods Corporation.
J. Alan Kahn has been the President of the
Barnes & Noble Publishing Group since February 2002.
Mr. Kahn was the Chief Operating Officer of the Company
from December 1997 to February 2002. Prior to that,
Mr. Kahn was Chief Executive Officer of B&N College.
Joseph J. Lombardi has been Chief Financial Officer of
the Company since May 2003. Previously, he was Vice President
and Controller of the Company from May 2002 to May 2003. Prior
to joining the Company, Mr. Lombardi was Chief Financial
Officer at The Museum Company Inc. from August 1999 to May 2002.
From August 1995 through July 1999, he was the Vice President
and Controller of Toys R Us, Inc.
Prior to that, he was a Partner at Ernst & Young LLP.
Mr. Lombardi is a Certified Public Accountant.
William F. Duffy has been the Executive Vice President of
Distribution and Logistics for the Company since February 2002.
Prior to that, he was Vice President, Operations, Fulfillment
and Customer Service of Barnes & Noble.com from January
1999 to February 2002. Mr. Duffy was Vice President of
Operations of Barnes & Noble.com since its inception in
February 1997. He was also Chief Financial Officer of
Barnes & Noble.com from its inception to January 1999
and a director of Barnes & Noble.com from its inception
to October 1998.
Mary Ellen Keating joined the Company as Senior Vice
President, Corporate Communications and Public Affairs in
January 1998. Prior to that, she was an executive with Hill and
Knowlton, Inc., a worldwide public relations firm, from 1991 to
1998, where she served as Executive Vice President and General
Manager of Hill and Knowltons flagship New York Office.
David S. Deason joined the Company in January 1990 as a
Director of Real Estate and became Vice President of
Barnes & Noble Development in January 1997.
Mr. Deason serves as a board member of Creative Learning 4
Kids, a nonprofit educational charity which provides tutorial
services and mentoring for children.
Christopher Grady-Troia has been the Chief Information
Officer of the Company since October 2004. Prior to that, he was
Vice President of Information Technology. Mr. Troia began
his career with Barnes & Noble as a Systems Manager in
1993. Previously, he was Assistant Director of Information
Technology at Ann Taylor Stores Corporation and a Director of
Application Development at Lord & Taylor.
Mark Bottini has been the Vice President and Director of
Stores of Barnes & Noble since October 2003.
Previously, he was a Regional Director of Barnes &
Noble in New York since October 2000. Mr. Bottini served as
a Regional Director of Barnes & Noble in Chicago from
April 1999 to October 2000 and a District Manager of
Barnes & Noble in New York from September 1995 to April
1999. Mr. Bottini began his career with Barnes &
Noble, Inc. as a District Manager for B. Dalton Bookseller from
October 1991 to September 1995.
Michelle Smith became Vice President of Human Resources
for the Company in November 1996. Ms. Smith joined the
Company in September 1993 as Director of Human Resources.
Ms. Smith is a member of the Society for Human Resource
Management and serves on the Health and Employee Benefits
Committee and Employment Law Committee of the National Retail
Federation.
The Companys officers are elected annually by the Board of
Directors and hold office at the discretion of the Board of
Directors.
8
Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth information regarding the
beneficial ownership of shares of Common Stock, as of
April 8, 2005, by each person known by the Company to own
beneficially more than five percent of the Companys
outstanding Common Stock, by each Director and nominee for
Director, by each executive officer named in the Summary
Compensation Table contained in Executive
Compensation, and by all Directors and executive officers
of the Company as a group. Except as otherwise noted, each
person named in the table has sole voting and investment power
with respect to all shares of Common Stock shown as beneficially
owned by him, her or it.
|
|
|
|
|
|
|
|
|
|
|
|
Shares | |
|
|
|
|
Beneficially | |
|
Percent of Shares | |
Name and Address of Beneficial Owner |
|
Owned(1) | |
|
Beneficially Owned(1) | |
|
|
| |
|
| |
Leonard Riggio
|
|
|
14,800,418 |
(2) |
|
|
20.8 |
% |
|
c/o Barnes & Noble, Inc. |
|
|
|
|
|
|
|
|
|
122 Fifth Avenue |
|
|
|
|
|
|
|
|
|
New York, New York 10011 |
|
|
|
|
|
|
|
|
Barclays Global Fund Advisors
|
|
|
|
|
|
|
|
|
|
45 Fremont Street |
|
|
|
|
|
|
|
|
|
San Francisco, CA 94105 |
|
|
7,785,679 |
(3) |
|
|
11.1 |
% |
LSV Asset Management
|
|
|
|
|
|
|
|
|
|
1 N. Wacker Drive |
|
|
|
|
|
|
|
|
|
Chicago, IL 60606 |
|
|
3,715,957 |
(4) |
|
|
5.3 |
% |
Stephen Riggio
|
|
|
2,809,758 |
(5) |
|
|
3.9 |
% |
Mitchell S. Klipper
|
|
|
1,054,479 |
(6) |
|
|
1.5 |
% |
J. Alan Kahn
|
|
|
866,427 |
(7) |
|
|
1.2 |
% |
Marie J. Toulantis
|
|
|
755,666 |
(8) |
|
|
1.1 |
% |
Irene R. Miller
|
|
|
175,582 |
(9) |
|
|
* |
|
Matthew A. Berdon
|
|
|
174,963 |
(10) |
|
|
* |
|
William Dillard II
|
|
|
127,963 |
(11) |
|
|
* |
|
Michael N. Rosen
|
|
|
83,350 |
(12) |
|
|
* |
|
William Sheluck, Jr.
|
|
|
112,296 |
(13) |
|
|
* |
|
Margaret T. Monaco
|
|
|
63,197 |
(14) |
|
|
* |
|
Michael J. Del Giudice
|
|
|
35,967 |
(15) |
|
|
* |
|
All directors and executive officers as a group (19 persons)
|
|
|
20,680,603 |
(16) |
|
|
27.0 |
% |
|
|
(1) |
Shares of Common Stock that an individual or group has a right
to acquire within 60 days after April 8, 2005 pursuant
to the exercise of options, warrants or other rights are deemed
to be outstanding for the purpose of computing the percentage
ownership of such individual or group, but are not deemed to be
outstanding for computing the percentage ownership of any other
person or group shown in the table. |
|
(2) |
Includes (i) 2,652,334 shares owned by B&N College
(Mr. Riggio owns all of the voting securities of B&N
College), (ii) 1,541,500 shares owned by The Riggio
Foundation, a charitable trust established by Mr. Riggio,
with himself and his wife as trustees,
(iii) 990,740 shares issuable upon the exercise of
stock options, 964,202 of which are held for the benefit of
Stephen Riggio by agreement dated July 24, 2002, as
amended, (iv) 13,535 restricted shares, and
(v) 712,473 shares held in a rabbi trust established
by the Company for the benefit of Mr. Riggio pursuant to a
deferred compensation arrangement. Under the arrangement,
Mr. Riggio is entitled to 712,473 shares of Common
Stock within 30 days following the earliest of:
(i) his death; (ii) a sale of all or substantially all
of the assets of the Company; or (iii) a sale of a
controlling interest in the Company (defined as 40%
or more of the Companys outstanding common stock). The
shares of Common Stock owned by Mr. Riggio are, and in the
future may be, pledged as collateral for certain loans,
including loans which were used to purchase Common Stock. The |
9
|
|
|
failure of Mr. Riggio to repay such loans, together with
any sale by the pledgees of the pledged Common Stock, could
result in a change of control of the Company. |
|
(3) |
Barclays Global Fund Advisors (Barclays) has
sole voting power with respect to 6,915,681 of its shares, and
dispositive power with respect to 7,785,679 of its shares. This
information is based upon a Schedule 13G publicly filed by
Barclays in February 2005. |
|
(4) |
LSV Asset Management (LSV) has sole voting power
with respect to 2,627,757 of its shares, and dispositive power
with respect to 3,645,357 of its shares. This information is
based upon a Schedule 13G publicly filed by LSV in February
2005. |
|
(5) |
Of these shares, 2,772,347 shares are issuable upon the
exercise of stock options, including 964,202 of which are held
by Leonard Riggio for the benefit of Stephen Riggio by agreement
dated July 24, 2002, as amended, and 20,300 are restricted
shares. |
|
(6) |
Of these shares, 1,032,419 shares are issuable upon the
exercise of stock options and 22,060 are restricted shares. |
|
(7) |
Of these shares, 863,447 shares are issuable upon the
exercise of stock options and 1,980 are restricted shares. |
|
(8) |
Of these shares, 739,426 shares are issuable upon the
exercise of stock options and 16,240 are restricted shares. |
|
(9) |
Of these shares, 154,997 shares are issuable upon the
exercise of stock options and 585 are restricted shares. |
|
|
(10) |
Of these shares, 127,378 are issuable upon the exercise of stock
options and 585 are restricted shares. One thousand shares are
owned by Mr. Berdons wife. Mr. Berdon disclaims
any beneficial ownership of those shares. |
|
(11) |
Of these shares, 127,378 shares are issuable upon the
exercise of stock options and 585 are restricted shares. |
|
(12) |
Of these shares, 70,765 shares are issuable upon the
exercise of stock options and 585 are restricted shares. Of the
other 12,000 shares, 10,000 are owned by
Mr. Rosens wife and 2,000 are owned by
Mr. Rosens daughter. Mr. Rosen disclaims any
beneficial ownership of these shares. |
|
(13) |
Of these shares, 99,071 are issuable upon the exercise of stock
options and 585 are restricted shares. Of the other
12,640 shares, Mr. Sheluck shares voting and
dispositive power with respect to 8,000 of these shares with his
wife, and the remaining 4,640 shares are owned by children
of Mr. Sheluck. |
|
(14) |
Of these shares, 56,612 are issuable upon the exercise of stock
options and 585 are restricted shares. |
|
(15) |
Of these shares, 35,382 are issuable upon the exercise of stock
options and 585 are restricted shares. |
|
(16) |
Includes 6,605,614 shares issuable upon the exercise of
stock options and 138,095 are restricted shares. |
Compensation Committee Interlocks and Insider
Participation
The current members of the Compensation Committee of the Board
of Directors are Mr. Berdon (Chairman), Mr. Sheluck
and Ms. Monaco, none of whom is an officer or employee or
former officer or employee of the Company, or an officer or
employee of any company for which any officer of the Company
serves as a member of their compensation committee or board of
directors. See Meetings and Committees of the
Board Compensation Committee.
Executive Compensation
The following table summarizes the compensation paid or accrued
by the Company for services rendered during the years indicated
to the Companys Chief Executive Officer and the
Companys four other most highly compensated executive
officers. The Company did not grant any free-standing stock
appreciation rights or make any long-term incentive plan payouts
during the years indicated.
10
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term | |
|
|
|
|
|
|
|
|
|
|
Compensation Awards | |
|
|
|
|
Fiscal Year | |
|
|
|
| |
|
|
|
|
Ended on | |
|
Annual Compensation | |
|
|
|
Securities | |
|
|
|
|
or About | |
|
| |
|
Restricted | |
|
Underlying | |
|
All Other | |
Name and Principal Position |
|
January 31 | |
|
Salary | |
|
Bonus | |
|
Stock Awards | |
|
Options/SARs | |
|
Compensation | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Leonard Riggio
|
|
|
2005 |
|
|
$ |
500,000 |
|
|
$ |
300,000 |
|
|
|
11,735 |
|
|
|
|
|
|
$ |
3,671 |
(1) |
|
Founder and |
|
|
2004 |
|
|
|
500,000 |
|
|
|
150,000 |
|
|
|
|
|
|
|
|
|
|
|
3,671 |
(1) |
|
Chairman of the Board |
|
|
2003 |
|
|
|
500,000 |
|
|
|
150,000 |
|
|
|
|
|
|
|
|
|
|
|
3,671 |
(1) |
Stephen Riggio
|
|
|
2005 |
|
|
|
730,769 |
|
|
|
390,000 |
|
|
|
17,600 |
|
|
|
1,415,343 |
|
|
|
3,675,198 |
(2) |
|
Vice Chairman and |
|
|
2004 |
|
|
|
650,000 |
|
|
|
195,000 |
|
|
|
|
|
|
|
|
|
|
|
10,536 |
(3) |
|
Chief Executive Officer |
|
|
2003 |
|
|
|
627,885 |
|
|
|
162,500 |
|
|
|
|
|
|
|
|
|
|
|
10,198 |
(4) |
Mitchell S. Klipper
|
|
|
2005 |
|
|
|
722,654 |
|
|
|
360,000 |
|
|
|
19,360 |
|
|
|
6,899 |
|
|
|
15,024 |
(5) |
|
Chief Operating Officer |
|
|
2004 |
|
|
|
600,000 |
|
|
|
180,000 |
|
|
|
|
|
|
|
577,500 |
|
|
|
13,805 |
(6) |
|
|
|
|
2003 |
|
|
|
598,077 |
|
|
|
150,000 |
|
|
|
|
|
|
|
700,000 |
|
|
|
13,313 |
(7) |
Marie J. Toulantis
|
|
|
2005 |
|
|
|
600,000 |
|
|
|
273,000 |
|
|
|
14,080 |
|
|
|
707,671 |
|
|
|
4,620,834 |
(8) |
|
Chief Executive Officer of |
|
|
2004 |
|
|
|
600,000 |
|
|
|
325,000 |
|
|
|
|
|
|
|
|
|
|
|
8,319 |
(9) |
|
Barnes & Noble.com |
|
|
2003 |
|
|
|
504,038 |
|
|
|
113,750 |
|
|
|
|
|
|
|
|
|
|
|
9,026 |
(10) |
J. Alan Kahn
|
|
|
2005 |
|
|
|
540,385 |
|
|
|
300,000 |
|
|
|
|
|
|
|
5,059 |
|
|
|
13,439 |
(11) |
|
President of Barnes & Noble |
|
|
2004 |
|
|
|
500,000 |
|
|
|
150,000 |
|
|
|
|
|
|
|
6,250 |
|
|
|
11,716 |
(12) |
|
Publishing Group |
|
|
2003 |
|
|
|
503,846 |
|
|
|
180,000 |
|
|
|
|
|
|
|
9,350 |
|
|
|
10,608 |
(13) |
|
|
(1) |
Represents (a) $234 paid by the Company as a premium on a
term life insurance policy for the benefit of Mr. Riggio
and (b) $3,437 paid by the Company as a premium on a
long-term disability insurance policy for the benefit of
Mr. Riggio. |
|
(2) |
Represents (a) $11,862 paid by the Company as a
contribution to Mr. Stephen Riggios account under the
Companys 401(k) Savings Plan (401(k) Plan) and
(b) $936 paid by the Company as a premium on a term life
insurance policy for the benefit of Mr. Stephen Riggio and
(c) $3,662,400 paid by the Company in the merger of
barnesandnoble.com inc. with a wholly owned subsidiary of the
Company. |
|
(3) |
Represents (a) $9,600 paid by the Company as a contribution
to Mr. Stephen Riggios account under the
Companys 401(k) Plan and (b) $936 paid by the Company
as a premium on a term life insurance policy for the benefit of
Mr. Stephen Riggio. |
|
(4) |
Represents (a) $9,262 paid by the Company as a contribution
to Mr. Stephen Riggios account under the
Companys 401(k) Plan and (b) $936 paid by the Company
as a premium on a term life insurance policy for the benefit of
Mr. Stephen Riggio. |
|
(5) |
Represents (a) $10,862 paid by the Company as a
contribution to Mr. Klippers account under the
Companys 401(k) Plan, (b) $936 paid by the Company as
a premium on a term life insurance policy for the benefit of
Mr. Klipper and (c) $3,226 paid by the Company as a
premium on a long-term disability insurance policy for the
benefit of Mr. Klipper. |
|
(6) |
Represents (a) $9,600 paid by the Company as a contribution
to Mr. Klippers account under the Companys
401(k) Plan, (b) $936 paid by the Company as a premium on a
term life insurance policy for the benefit of Mr. Klipper
and (c) $3,269 paid by the Company as a premium on a
long-term disability insurance policy for the benefit of
Mr. Klipper. |
|
(7) |
Represents (a) $9,108 paid by the Company as a contribution
to Mr. Klippers account under the Companys
401(k) Plan, (b) $936 paid by the Company as a premium on a
term life insurance policy for the benefit of Mr. Klipper
and (c) $3,269 paid by the Company as a premium on a
long-term disability insurance policy for the benefit of
Mr. Klipper. |
|
(8) |
Represents (a) $8,200 paid by the Company as a contribution
to Ms. Toulantis account under the Companys
401(k) Plan, (b) $234 paid by the Company as a premium on a
term life insurance policy for the benefit of Ms. Toulantis
and (c) $4,612,400 paid by the Company in the merger of
barnesandnoble.com inc. with a wholly owned subsidiary of the
Company. |
11
|
|
(9) |
Represents (a) $8,031 paid by the Company as a contribution
to Ms. Toulantis account under the Companys
401(k) Plan, (b) $288 paid by the Company as a premium on a
term life insurance policy for the benefit of Ms. Toulantis. |
|
|
(10) |
Represents (a) $8,738 paid by the Company as a contribution
to Ms. Toulantis account under the Companys
401(k) Plan, (b) $288 paid by the Company as a premium on a
term life insurance policy for the benefit of Ms. Toulantis. |
|
(11) |
Represents (a) $11,323 paid by the Company as a
contribution to Mr. Kahns account under the
Companys 401(k) Plan, (b) $936 paid by the Company as
a premium on a term life insurance policy for the benefit of
Mr. Kahn and (c) $1,180 paid by the Company as a
premium on a long-term disability insurance policy for the
benefit of Mr. Kahn. |
|
(12) |
Represents (a) $9,600 paid by the Company as a contribution
to Mr. Kahns account under the Companys 401(k)
Plan, (b) $936 paid by the Company as a premium on a term
life insurance policy for the benefit of Mr. Kahn and
(c) $1,180 paid by the Company as a premium on a long-term
disability insurance policy for the benefit of Mr. Kahn. |
|
(13) |
Represents (a) $8,492 paid by the Company as a contribution
to Mr. Kahns account under the Companys 401(k)
Plan, (b) $936 paid by the Company as a premium on a term
life insurance policy for the benefit of Mr. Kahn and
(c) $1,180 paid by the Company as a premium on a long-term
disability insurance policy for the benefit of Mr. Kahn. |
The following table sets forth certain information concerning
options granted by the Company during the 52 weeks ended
January 29, 2005 to the executive officers named in the
Summary Compensation Table above. The Company did not grant any
free-standing stock appreciation rights during the 52 weeks
ended January 29, 2005.
Option/ SAR Grants In Last Fiscal Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Grants | |
|
|
|
|
| |
|
|
|
|
|
|
Percentage of | |
|
|
|
|
|
|
Number of | |
|
Total | |
|
|
|
|
|
|
Securities | |
|
Options/SARs | |
|
|
|
Present Value of | |
|
|
Underlying | |
|
Granted to | |
|
|
|
Grant at Date of | |
|
|
Options/SARs | |
|
Employees in | |
|
Exercise Price | |
|
Expiration | |
|
Grant Using the | |
Name |
|
Granted(1) | |
|
Fiscal 2004(1) | |
|
Per Share(1) | |
|
Date | |
|
Black-Scholes Model(2) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
Leonard Riggio
|
|
|
|
|
|
|
|
% |
|
$ |
|
|
|
|
|
|
|
$ |
|
|
Stephen Riggio
|
|
|
1,415,343 |
|
|
|
32.80 |
|
|
|
21.67 |
|
|
|
6/2/14 |
|
|
|
11,670,001 |
|
Mitchell S. Klipper
|
|
|
6,899 |
|
|
|
0.16 |
|
|
|
22.98 |
|
|
|
6/13/14 |
|
|
|
61,125 |
|
Marie J. Toulantis
|
|
|
707,671 |
|
|
|
16.40 |
|
|
|
21.67 |
|
|
|
6/2/14 |
|
|
|
8,258,521 |
|
J. Alan Kahn
|
|
|
5,059 |
|
|
|
0.12 |
|
|
|
22.98 |
|
|
|
6/13/14 |
|
|
|
44,823 |
|
|
|
(1) |
On November 12, 2004, the Company distributed to its
stockholders 0.424876232 of a share of GameStop Class B
common stock as a tax-free distribution on each outstanding
share of Barnes & Noble common stock. The stock option
exercise prices and options granted presented above for periods
before November 12, 2004 are restated to reflect the
distribution of the Companys ownership in GameStop to its
stockholders. The market prices were restated by dividing by
1.415342890, the same adjustment made by Barnes & Noble
to outstanding Barnes & Noble stock options to maintain
the same aggregate intrinsic value of the stock options as
before the spin-off. |
|
(2) |
Calculated using the Black-Scholes option-pricing model with the
following assumptions: volatility of 31.0%, risk-free interest
rate of 3.87% and an expected life of six years. The
Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no
vesting restrictions and are fully transferable. In addition,
option valuation models require the input of highly subjective
assumptions including the expected stock price volatility.
Because the Companys stock options have characteristics
significantly different from those of traded options, and
because changes in the subjective input assumptions can
materially affect the fair value estimate, in managements
opinion, |
12
|
|
|
the Black-Scholes model does not necessarily provide a reliable
measure of the fair value of the Companys stock options. |
The following table sets forth information concerning option
exercises and the value of unexercised options as of
January 29, 2005 for the executive officers named in the
Summary Compensation Table above.
Aggregated Option/ SAR Exercises In Last Fiscal Year and
Fiscal Year End Option/ SAR Values
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Unexercised | |
|
Value of Unexercised | |
|
|
|
|
|
|
Options/SARs | |
|
In-the-Money Options/SARs | |
|
|
Shares | |
|
|
|
at January 29, 2005 | |
|
at January 29, 2005(1) | |
|
|
Acquired on | |
|
Value | |
|
| |
|
| |
Name |
|
Exercise | |
|
Realized | |
|
Exercisable | |
|
Unexercisable | |
|
Exercisable | |
|
Unexercisable | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Leonard Riggio
|
|
|
|
|
|
$ |
|
|
|
|
743,055 |
(2) |
|
|
247,685 |
(3) |
|
$ |
11,138,543 |
(2) |
|
$ |
3,712,848 |
(3) |
Stephen Riggio
|
|
|
17,111 |
|
|
|
371,083 |
|
|
|
2,551,200 |
(2) |
|
|
221,147 |
(3) |
|
|
34,992,267 |
(2) |
|
|
4,085,359 |
(3) |
Mitchell S. Klipper
|
|
|
23,406 |
|
|
|
363,853 |
|
|
|
950,129 |
|
|
|
1,026,685 |
|
|
|
14,819,596 |
|
|
|
15,646,856 |
|
Marie J. Toulantis
|
|
|
|
|
|
|
|
|
|
|
739,426 |
|
|
|
|
|
|
|
7,390,483 |
|
|
|
|
|
J. Alan Kahn
|
|
|
|
|
|
|
|
|
|
|
823,198 |
|
|
|
56,346 |
|
|
|
12,611,430 |
|
|
|
872,097 |
|
|
|
(1) |
Based on the $31.70 per share closing price of the Common
Stock on January 28, 2005, the last trading date of fiscal
2004. |
|
(2) |
The options for 743,055 shares held by Leonard Riggio are
for the benefit of Stephen Riggio by agreement dated
July 24, 2002, as amended. These options and related value
are reflected in the amounts listed for both Leonard Riggio and
Stephen Riggio. |
|
(3) |
Of the options for 247,685 shares held by Leonard Riggio,
options for 221,147 shares are for the benefit of Stephen
Riggio by agreement dated July 24, 2002, as amended. These
options and related value are reflected in the amounts listed
for both Leonard Riggio and Stephen Riggio. |
Equity Compensation Plan Information
The following table sets forth equity compensation plan
information as of January 29, 2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of | |
|
|
|
|
|
|
Securities | |
|
|
Number of | |
|
Weighted- | |
|
Remaining Available | |
|
|
Securities to be | |
|
average Exercise | |
|
for Future Issuance | |
|
|
Issued Upon | |
|
Price of | |
|
Under Equity | |
|
|
Exercise of | |
|
Outstanding | |
|
Compensation Plans | |
|
|
Outstanding | |
|
Options, | |
|
(excluding | |
|
|
Options, Warrants | |
|
Warrants and | |
|
securities in column | |
Plan Category |
|
and Rights | |
|
Rights | |
|
(a)) | |
|
|
| |
|
| |
|
| |
|
|
(a) | |
|
(b) | |
|
(c) | |
Equity compensation plans approved by security holders
|
|
|
13,860,000 |
|
|
$ |
17.16 |
|
|
|
5,753,551 |
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
13,860,000 |
|
|
$ |
17.16 |
|
|
|
5,753,551 |
|
|
|
|
|
|
|
|
|
|
|
Employees Retirement Plan
As of December 31, 1999, substantially all employees of the
Company were covered under the Companys Employees
Retirement Plan (the Retirement Plan). The
Retirement Plan is a defined benefit pension plan. As of
January 1, 2000, the Retirement Plan was amended so that
employees no longer earn benefits for subsequent service.
Subsequent service continues to be the basis for vesting of
benefits not yet vested at December 31, 1999 and the
Retirement Plan will continue to hold assets and pay benefits.
The amendment was treated as a curtailment in fiscal 1999.
13
A participants annual benefit is determined for an
employee, including an officer, generally as (i) 0.7% of
the participants average annual pay as determined in
accordance with the Retirement Plan up to Social
Security-covered compensation, multiplied by the
participants years of credited service, plus
(ii) 1.3% of the participants average annual pay as
determined in accordance with the Retirement Plan in excess of
Social Security-covered compensation, multiplied by the
participants years of credited service. A
participants maximum benefit is limited pursuant to
Section 415 of the Internal Revenue Code of 1986, as
amended (the Code), to $130,000 for 1999, indexed
annually. Compensation recognized is limited to $160,000 based
upon the Retirement Plan.
Credited years of service under the Retirement Plan as of
January 29, 2005 for the individuals named in the Summary
Compensation Table above are: Stephen Riggio
12 years; Mitchell S. Klipper 11 years;
Marie J. Toulantis 4 years, and J. Alan
Kahn 2 years. Leonard Riggio is not a
participant.
The following table illustrates the maximum annual amounts
payable at age 65 under the Retirement Plan, based on
various levels of highest average annual salary and years of
credited service:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years of Credited Service | |
|
|
| |
Assumed Highest Average Salary |
|
15 | |
|
20 | |
|
25 | |
|
30 | |
|
35 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
$125,000
|
|
|
21,135 |
|
|
|
28,180 |
|
|
|
35,225 |
|
|
|
42,270 |
|
|
|
49,315 |
|
$150,000
|
|
|
26,010 |
|
|
|
34,680 |
|
|
|
43,350 |
|
|
|
52,020 |
|
|
|
60,690 |
|
$160,000 and above(1)
|
|
|
27,960 |
|
|
|
37,280 |
|
|
|
46,600 |
|
|
|
55,920 |
|
|
|
65,240 |
|
|
|
(1) |
The benefits shown corresponding to this compensation reflect
the compensation limit under Section 401(a)(17) of the
Code. A participants compensation in excess of $150,000
(as adjusted to reflect cost-of-living increases) is disregarded
for purposes of determining highest average earnings in plan
years beginning in 1994 through 1996. A participants
compensation in excess of $160,000 (as adjusted to reflect
cost-of-living increases) is disregarded for purposes of
determining highest average earnings in plan years beginning in
1997 through 1999. Benefits accrued as of the last day of the
plan year beginning in 1993 on the basis of compensation in
excess of $150,000 are preserved. |
Deferred Compensation Plan
The Barnes & Noble, Inc. Deferred Compensation Plan
(the Deferred Comp Plan) permits Company employees
making an annual salary in excess of $130,000 to elect to defer
receipt of up to 50% of their annual salary and up to 100% of
their annual bonus. Participants may elect to have deferred
amounts paid after one of the following events:
(i) retirement; (ii) termination of employment; or
(iii) the beginning of a designated year not later than the
year in which the participant would attain the age of
701/2.
Amounts paid to a participant under the Deferred Comp Plan are
paid in a lump sum, except in the case of retirement, where a
participant may elect to have payments made in equal annual
installments for a period of up to 15 years. Amounts in the
Deferred Comp Plan may be withdrawn by a participant at any time
subject to a 10% penalty, which may be waived by the
Compensation Committee in the case of financial hardship.
Employment Agreements
Stephen Riggio has an employment agreement for his services as
Chief Executive Officer expiring in 2006. The agreement provides
for an annual salary of $650,000, or such higher amount as the
Compensation Committee of the Board of Directors may determine,
and an annual bonus determined in accordance with the
Barnes & Noble, Inc. Supplemental Compensation Plan.
The agreement also provides for life and long-term disability
insurance, a car allowance and a two-year post-employment,
non-competition agreement. The agreement also provides for lump
sum severance payments equal to two years salary, bonus
and benefits in the event his employment terminates
involuntarily without Cause (as defined in the agreement), and
equal to three years salary, bonus and benefits in the
event his employment terminates involuntarily (or voluntarily
for Good Cause, as defined in the agreement) within two years
following a change in control of the Company. The agreement
renews annually upon expiration, unless terminated by either
party on 12 months prior notice.
14
Mitchell S. Klipper has an employment agreement for his services
as Chief Operating Officer expiring in 2006. The agreement
provides for an annual salary of $600,000, or such higher amount
as the Compensation Committee of the Board of Directors may
determine, and an annual bonus determined in accordance with the
Barnes & Noble, Inc. Supplemental Compensation Plan.
The agreement also provides for life and long-term disability
insurance, a car allowance and a two-year post-employment,
non-competition agreement. The agreement also provided for
grants of options to purchase 800,000 shares of Common
Stock (but not exceeding 700,000 in any calendar year) at
exercise prices not exceeding the fair market value of the
Common Stock on the date of the employment agreement. The
agreement also provides for lump sum severance payments equal to
two years salary, bonus and benefits in the event his
employment terminates involuntarily without Cause (as defined in
the agreement), and equal to three years salary, bonus and
benefits in the event his employment terminates involuntarily
(or voluntarily for Good Cause, as defined in the agreement)
within two years following a change in control of the Company.
The agreement renews annually upon expiration, unless terminated
by either party on 12 months prior notice.
Marie J. Toulantis has an employment agreement for her services
as the Chief Executive Officer of Barnes & Noble.com
expiring in 2008. The agreement provides for an annual salary of
$600,000, or such higher amount as the Compensation Committee of
the Board of Directors may determine, and an annual bonus based
upon the achievement of a certain pre-set target established
prior to each fiscal year by the Compensation Committee of the
Board of Directors. Ms. Toulantis is also entitled to a
cash retention bonus of $1,000,000 on each of the first and
second anniversaries of the merger of barnesandnoble.com inc.
with a wholly owned subsidiary of the Company, subject to her
continued employment on such anniversary dates.
Ms. Toulantis is also entitled to the retention bonus if,
prior to the first or second anniversary date, her employment is
terminated for any reason other than for Cause (as defined in
the agreement) or she voluntarily terminates her employment for
Good Cause (as defined in the agreement). The agreement provides
for lump sum severance in the event Ms. Toulantis
employment is terminated involuntarily (other than for Cause or
her death or disability), equal to the product of: (a) the
greater of (x) two or (y) the number of years
remaining under the term of the agreement (including fractions)
and (b) the sum of her annual salary, bonus and benefits.
Ms. Toulantis is also entitled to three years salary,
bonus and benefits in the event her employment terminates
involuntarily (or voluntarily for Good Cause) within two years
following a change in control in Barnes & Noble.com or
the Company. The agreement provides for grants of options to
purchase 50,000 shares of Common Stock at exercise
prices not exceeding the fair market value of the Common Stock
on the date of grant. The agreement also provides for long-term
disability insurance, a car allowance and a two-year
post-employment, non-competition agreement. The agreement renews
annually upon expiration, unless terminated by either party on
six months prior notice.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
The Companys executive officer compensation program is
administered by the Compensation Committee of the Board of
Directors (the Committee), consisting of the three
non-employee directors listed below. The Committee is
responsible to the Companys Board of Directors and to
stockholders for approving compensation awarded to the named
executive officers also listed below. The program is based upon
the following guiding principles:
|
|
|
1. The pay and benefits provided by the Company to its
executive officers should be competitive and allow the Company
to attract and retain individuals whose skills are critical to
the long-term success of the Company. |
|
|
2. The compensation offered by the Company should reward
and motivate individual and team performance in attaining
business objectives and maximizing stockholder value. |
|
|
3. The Committee designs compensation awards based upon the
fundamental principle of aligning the long-term interests of the
Companys employees with those of the Companys
stockholders. |
The Committee reviews the Companys executive compensation
program each year. This review includes a comparison of the
Companys executive compensation, corporate performance,
stock appreciation and total
15
return to the stockholders with that of other companies,
including other retailers. In 2004, the Board of Directors and
stockholders approved the Barnes & Noble 2004 Executive
Performance Plan (the Performance Plan). In 2004,
the Committee also selected and engaged Frederic W.
Cook & Co., Inc. (the Independent
Consultants) to provide independent insights on executive
compensation matters, both generally and within the retail
industry.
The key elements of the Companys executive compensation
package consist of base salary, annual bonus, stock options and
restricted stock. The Companys policies with respect to
each of these elements are discussed below. In addition, while
the elements of compensation described below are considered
separately, the Committee also considers and reviews the full
compensation package afforded by the Company to its executive
officers, including pension, insurance and other benefits. The
Committee makes its determinations after receiving and
considering the recommendations of the Companys chief
executive officer and, from time to time, the Committee seeks
the advice of outside consultants.
Base Salaries. An executive officers base salary is
determined by evaluating the responsibilities of the position
held, the individuals experience and the competitive
marketplace for executive talent. The base salary is intended to
be competitive with base salaries paid to executive officers
with comparable qualifications, experience and responsibilities
at other companies.
Annual Bonuses. The Committee is responsible for the
administration of the Performance Plan. In addition to a base
salary, each executive officer is eligible for an annual bonus.
Bonuses for senior executive officers of the Company are based
upon annual net earnings of the Company and are determined
pursuant to the Performance Plan. The purpose of the Performance
Plan is to permit the Company, through awards of annual
incentive compensation that satisfy the requirements for
performance-based compensation under Section 162(m) of the
Code, to attract and retain management who, because of the
extent of their responsibilities, can and do make significant
contributions to the success of the Company by their ability,
industry, loyalty and exceptional service.
The Performance Plan provides that not later than 90 days
after the commencement of each fiscal year of the Company, the
Compensation Committee shall designate, in writing, one or more
performance periods for such fiscal year, provided that any
performance period of less than one year shall be designated no
later than the date on which 25% of such performance period has
lapsed, and shall also do the following:
|
|
|
|
|
determine the participants for the performance period, which
will be, except as otherwise determined by the Committee, each
named executive officer in the Companys annual proxy
statement following the conclusion of the applicable performance
period; |
|
|
|
affirm the Incentive Pool (as defined in the Performance Plan)
for the applicable performance period, which will equal 5% of
the Companys operating income, without regard to certain
extraordinary items and changes in accounting standards required
by generally accepted accounting principles; and |
|
|
|
assign to each participant under the Performance Plan such
participants percentage of the Incentive Pool, which may
not exceed 40% of the Incentive Pool for any performance period. |
The aggregate amount of all awards under the Performance Plan
for any performance period will not exceed 100% of the Incentive
Pool for such performance period. Awards will be paid in cash
or, in the Committees sole discretion, in stock obtained
from any equity compensation plan of the Company (including the
2004 Incentive Plan), or any combination thereof.
In accordance with the Performance Plan, the Committee
(i) determined that the participants for the performance
period would be the named executive officers in the
Companys annual proxy statement following the conclusion
of the performance period, (ii) affirmed the performance
goal as the Incentive Pool, and (iii) allocated to each
participant 20% of the Incentive Pool. Leonard Riggio, Stephen
Riggio, Mitchell S. Klipper, J. Alan Kahn and Marie J.
Toulantis are the senior executive officers of the Company
currently participating in the Performance Plan.
Stock Options and Restricted Stock Awards. The general
purpose of long-term awards, currently in the form of stock
options or restricted stock awards, is to align the interests of
the executive officers with the
16
interests of the Companys stockholders. Additionally,
long-term awards offer executive officers an incentive for the
achievement of superior performance over time and foster the
retention of key management personnel. In determining annual
stock option grants and restricted stock awards, the Committee
has based its decision on the individuals performance and
potential to improve stockholder value. The issuance of options
at 100 percent of the fair market value also assures that
executives will receive a benefit only when the stock price
increases. Under the Performance Plan, the Committee may
determine to make all or any portion of the annual incentive
award in the form of stock options or restricted stock awards
granted under the Incentive Plan.
Compensation of Chief Executive Officer. Mr. Stephen
Riggios annual compensation is determined pursuant to the
principles outlined above in the same manner as they were
applied to the other named executive officers of the Company.
Mr. Riggios annual salary for the fiscal year ended
January 29, 2005 was $730,769 with a bonus of $390,000
compared to an annual salary for the fiscal year ended
January 31, 2004 of $650,000 with a bonus of $195,000.
Mr. Riggios bonus for the year ended January 29,
2005 was determined in accordance with the Performance Plan.
Specific consideration is given to Mr. Riggios
responsibilities and experience in the industry and the
compensation package awarded to chief executive officers of
other comparable companies.
Impact of Section 162(m) of the Code. The Committee
has considered the potential impact of Section 162(m) of
the Code, adopted under the Revenue Reconciliation Act of 1993.
This section disallows a tax deduction for any publicly held
corporation, for individual compensation exceeding $1,000,000 in
any taxable year paid to its chief executive officer or any of
its four other highest paid officers unless (i) the
compensation is payable solely on account of the attainment of
performance goals, (ii) the performance goals are
determined by a committee of two or more outside directors,
(iii) the material terms under which compensation is to be
paid are disclosed to and approved by stockholders and
(iv) the committee certifies that the performance goals
were met. The Companys Performance Plan was approved by
the Companys stockholders so that compensation
attributable to stock options and certain other awards granted
under that Performance Plan may be excluded from the
$1.0 million cap. As a result, compensation paid in fiscal
2004, subject to the Section 162(m) cap, is not expected to
exceed $1.0 million for any named executive officer. The
Committee believes that the Company will not be subject to any
Section 162(m) limitations on deductibility of compensation
paid to the Companys named executive officers for fiscal
2004.
The Committee continues to consider other steps which might be
in the Companys best interest to comply with
Section 162(m), while reserving the right to award future
compensation which would not comply with the Section 162(m)
requirements for non-deductibility if the Compensation Committee
concluded that this was in the Companys best interests.
|
|
|
Compensation Committee |
|
|
Matthew A. Berdon, Chairman |
|
Margaret T. Monaco |
|
William Sheluck, Jr. |
17
PERFORMANCE GRAPH
The following table compares the cumulative total stockholder
return on the Common Stock for the period commencing
January 28, 2000 through January 28, 2005 (the last
trading date of fiscal 2004) with the cumulative total return on
the Standard & Poors 500 Stock Index (the
S&P 500) and the Dow Jones Retailers, Other
Specialty Industry Group Index (the Dow Jones Specialty
Retailers Index) over the same period. Total return values
were calculated based on cumulative total return assuming
(i) the investment of $100 in the Common Stock, the S&P
500 and the Dow Jones Specialty Retailers Index on
January 28, 2000 and (ii) reinvestment of dividends.
18
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company believes that the transactions and agreements
discussed below (including renewals of any existing agreements)
between the Company and its affiliates are at least as favorable
to the Company as could be obtained from unaffiliated parties.
The Board of Directors and the Audit Committee are designated to
approve in advance any new proposed transaction or agreement
with affiliates and will utilize procedures in evaluating the
terms and provisions of such proposed transaction or agreement
as are appropriate in light of the fiduciary duties of directors
under Delaware law.
The Company leases space for its executive offices in properties
in which Leonard Riggio has a minority interest. The space was
rented at an aggregate annual rent including real estate taxes
of approximately $4,475,000, $4,275,000 and $4,043,000 in fiscal
years 2004, 2003 and 2002, respectively. Rent per square foot is
approximately $29.00, which is below market.
The Company leases a 75,000-square-foot office/warehouse from a
partnership in which Leonard Riggio has a 50 percent
interest, pursuant to a lease expiring in 2023. Pursuant to such
lease, the Company paid $304,000, $638,000 and $752,000 in
fiscal years 2004, 2003 and 2002, respectively.
The Company leases retail space in a building in which B&N
College, a company owned by Leonard Riggio, subleases space from
the Company. Occupancy costs allocated by the Company to B&N
College for this space totaled $810,000, $823,000
and $771,000 for fiscal years 2004, 2003 and 2002, respectively.
The amount paid by B&N College to the Company approximates
the cost per square foot paid by the Company to its unaffiliated
third-party landlord.
The Company subleases to Barnes & Noble.com
approximately one-third of a 300,000-square-foot warehouse
facility located in New Jersey. The Company has received from
Barnes & Noble.com $558,000 and $498,000 for such
subleased space during fiscal 2003 and 2002, respectively. The
amount paid by Barnes & Noble.com to the Company
approximates the cost per square foot paid by the Company as a
tenant pursuant to the lease of the space from an unaffiliated
third party.
The Company had an agreement (the Supply Agreement)
with Barnes & Noble.com whereby the Company charged
Barnes & Noble.com the costs associated with such
purchases plus incremental overhead incurred by the Company in
connection with providing such inventory. The Supply Agreement
was subject to certain termination provisions. Barnes &
Noble.com purchased $113,758,000 and $108,269,000 of merchandise
from the Company during fiscal 2003 and 2002, respectively. The
Company charged Barnes & Noble.com incremental fees of
$3,303,000 and $2,391,000 during fiscal 2003 and 2002.
The Company entered into agreements whereby Barnes &
Noble.com received various services from the Company, including,
among others, services for payroll processing, benefits
administration, insurance (property, casualty, medical, dental,
life, etc.), tax, traffic, fulfillment and telecommunications.
In accordance with the terms of such agreements, the Company
received fees in an amount equal to the direct costs plus
incremental expenses associated with providing such services.
The Company received $2,025,000 and $3,453,000 for such services
during fiscal 2003 and 2002, respectively.
In 2002, the Company through its wholly owned subsidiary,
Marketing Services (Minnesota) Corp., entered into an agreement
with Barnes & Noble.com for marketing services, which
includes the issuance of gift cards. Under this agreement, the
Company paid Barnes & Noble.com $18,153,000 and
$5,273,000 during fiscal 2003 and 2002, respectively, which
represents reimbursement for gift cards purchased in a
Barnes & Noble store and redeemed on the
Barnes & Noble.com Web site.
Barnes & Noble.com, through its fulfillment centers,
ships various customer orders for the Company to its retail
stores as well as to the Companys customers homes.
Barnes & Noble.com charged the Company the costs
associated with such shipments plus any incremental overhead
incurred by Barnes & Noble.com to process these orders.
The Company paid Barnes & Noble.com $2,662,000 and
$1,746,000 for shipping and handling during fiscal 2003 and
2002, respectively. The Company and Barnes & Noble.com
had an agreement whereby the Company paid a commission on all
items ordered by customers at the Companys stores and
19
shipped directly to customers homes by Barnes &
Noble.com. Commissions paid for these sales were $1,505,000 and
$1,547,000 during fiscal 2003 and 2002, respectively.
Barnes & Noble.com purchases new and used textbooks directly
from MBS. Total purchases were $18,148,000, $13,829,000 and
$17,223,000 for fiscal years 2004, 2003 and 2002, respectively.
In addition, Barnes & Noble.com maintains a link on its Web
site which is hosted by MBS and through which Barnes &
Noble.com customers are able to sell used books directly to MBS.
Barnes & Noble.com is paid a commission based on the price
paid by MBS to the consumer. Total commissions were $62,000,
$75,000 and $58,000 for fiscal years 2004, 2003 and 2002,
respectively.
Barnes & Noble.com licenses the Barnes &
Noble name under a royalty-free license agreement, dated
October 31, 1998, as amended, between Barnes &
Noble.com and B&N College (the License
Agreement). Pursuant to the License Agreement, Barnes
& Noble.com has been granted an exclusive license to use the
Barnes & Noble name and trademark for the
purpose of selling books over the Internet (excluding sales of
college textbooks). Under a separate agreement dated as of
January 2001, between Barnes & Noble.com and Textbooks.com,
Inc. (Textbooks.com), a corporation owned by Leonard
Riggio, Barnes & Noble.com was granted the right to sell
college textbooks over the Internet using the Barnes &
Noble name. Pursuant to this agreement, Barnes &
Noble.com pays Textbooks.com a royalty on revenues (net of
product returns, applicable sales tax and excluding shipping and
handling) realized by Barnes & Noble.com from the sale of
books designated as textbooks. The term of the agreement is for
five years and renews annually for additional one-year periods
unless terminated 12 months prior to the end of any given
term. Royalty expense was $4,551,000, $3,984,000 and $3,485,000
for fiscal years 2004, 2003 and 2002, respectively, under the
terms of this agreement.
The Company paid B&N College certain operating costs B&N
College incurred on the Companys behalf. These charges are
included in the accompanying consolidated statements of
operations and approximated $219,000, $237,000 and $219,000 for
fiscal 2004, 2003 and 2002, respectively. B&N College
purchased inventory, at cost plus an incremental fee, of
$46,468,000, $43,403,000 and $44,944,000 from the Company during
fiscal 2004, 2003 and 2002, respectively. The Company charged
B&N College $2,439,000, $2,198,000 and $2,064,000 for fiscal
years 2004, 2003 and 2002, respectively, for capital
expenditures, business insurance and other operating costs
incurred on its behalf.
The Company uses a jet aircraft owned by B&N College and
pays for the costs and expenses of operating the aircraft based
upon the Companys usage. Such costs which include fuel,
insurance and other costs approximated $2,361,000, $2,373,000
and $1,872,000 during fiscal 2004, 2003 and 2002, respectively,
and are included in the accompanying consolidated statements of
operations.
GameStop, a company in which Leonard Riggio is a member of the
Board of Directors and a minority shareholder, operates
departments within some of the Companys bookstores.
GameStop pays a license fee to the Company in an amount equal to
7 percent of the gross sales of such departments. The
Company charged GameStop a license fee of $859,000, $974,000 and
$1,103,000 during fiscal 2004, 2003 and 2002.
GameStop participates in the Companys workers
compensation, property and general liability insurance programs.
The costs incurred by the Company under these programs are
allocated to GameStop based upon GameStops total payroll
expense, property and equipment, and insurance claim history.
The Company charged GameStop for these services $2,548,000,
$2,363,000 and $1,726,000 during fiscal 2004, 2003 and 2002,
respectively. GameStops participation in the
Companys insurance programs will expire in fiscal 2005.
In fiscal 2003, GameStop purchased an airplane from B&N
College. The purchase price was $9,500,000 and was negotiated
through an independent third party following an independent
appraisal.
The Company is provided with national freight distribution,
including trucking services by the Argix Direct Inc. (Argix)
(formerly the LTA Group, Inc.), a company in which a brother of
Leonard and Stephen Riggio owns a 20 percent interest. The
Company paid Argix $20,274,000, $19,430,000 and $18,509,000 for
such services during fiscal years 2004, 2003 and 2002,
respectively. The Company believes the cost of freight delivered
to the stores is comparable to the prices charged by publishers
and other third-party freight distributors. Argix subleased
warehouse space from the Company in Jamesburg, New Jersey. The
Company
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charged Argix $1,828,000, $1,822,000 and $1,831,000 for such
subleased space and other operating costs incurred on its behalf
during fiscal 2004, 2003 and 2002, respectively.
Since 1993, the Company has used AEC One Stop Group, Inc.
(AEC) as its primary music and DVD/video supplier and to
provide a music and video database. AEC is one of the largest
wholesale distributors of music and DVD/videos in the United
States. In 1999, AECs parent corporation was acquired by
an investor group in which Leonard Riggio was a minority
investor. The Company paid AEC $309,702,000, $298,727,000 and
$286,945,000 for merchandise purchased during fiscal 2004, 2003
and 2002, respectively. In addition, the Company paid AEC
$6,206,000, $4,211,000 and $8,139,000 for database equipment and
services during fiscal 2004, 2003 and 2002, respectively. The
Company believes the cost charged by AEC are comparable to other
suppliers. Amounts payable to AEC for merchandise purchased were
$30,837,000 and $28,836,000 as of January 29, 2005 and
January 31, 2004, respectively.
Michael N. Rosen, the Secretary and a Director of the Company,
is a partner at Bryan Cave LLP, which law firm represents the
Company.
Independent Accountants
The firm of BDO Seidman, LLP (BDO Seidman) has been
selected as independent accountants for the Company.
The independent accountants examine annual financial statements
and provide other non-audit and tax-related services for the
Company. The Company and the Audit Committee have considered
whether other non-audit services provided by BDO Seidman are
compatible with maintaining the independence of BDO Seidman in
its audit of the Company and are not considered prohibited
services under the Sarbanes-Oxley Act of 2002.
Audit Fees. For fiscal 2004, the Company and its
subsidiaries paid BDO Seidman $1,367,172 for professional
services rendered for the Companys audit of the annual
financial statements and managements assessment of
internal controls and for reviews of the Companys
financial statements included in the Companys quarterly
reports on Form 10-Q filed with the SEC. Of the $1,367,172,
GameStop paid $191,013 through November 12, 2004 (the date
of the distribution of the Companys ownership in GameStop
to the Companys stockholders), for audit fees related to
their financial statements. For fiscal 2003, the Company and its
subsidiaries paid BDO Seidman $992,543 for professional services
rendered for the Companys audit of the annual financial
statements and for reviews of the Companys financial
statements included in the Companys quarterly reports on
Form 10-Q filed with the SEC. Of the $992,543, GameStop and
Barnes & Noble.com paid $258,253 and $312,420 (of which
$48,030 was incurred prior to the Company obtaining control of
Barnes & Noble.com on September 15, 2003),
respectively for audit fees related to their financial
statements.
Audit-Related Fees. In fiscal 2004, the Company paid
$315,147 for consultation concerning financial accounting and
reporting standards of which GameStop paid $7,287 through
November 12, 2004 (the date of the distribution of the
Companys ownership in GameStop to the Companys
stockholders). The Company paid $36,000 for employee benefit
plan audits. In fiscal 2003, the Company paid $247,242 for due
diligence relating to Barnes & Noble.com and Sterling
Publishing, Co., Inc. The Company paid $155,425 for consultation
concerning financial accounting and reporting standards of which
GameStop paid $2,450. The Company paid $39,000 ($11,000 of which
was paid by GameStop and $16,000 of which was paid by
Barnes & Noble.com prior to the Company obtaining
control of Barnes & Noble.com) for employee benefit
plan audits.
Tax Fees. In fiscal 2004, the Company paid BDO Seidman
$467,498 of which $325,000 was paid by GameStop through
November 12, 2004 (the date of the distribution of the
Companys ownership in GameStop to the Companys
stockholders). Tax fees included professional services rendered
for tax compliance, tax advice and tax planning. In fiscal 2003,
the Company paid BDO Seidman $362,120 of which $80,190 was paid
by GameStop. Tax fees included professional services rendered
for tax compliance, tax advice and tax planning.
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All Other Fees. The Company did not pay BDO Seidman for
any other fees in fiscal 2004. The Company paid BDO Seidman
$15,500 for other fees in fiscal 2003, all of which was paid by
Barnes & Noble.com prior to the Company obtaining
control of Barnes & Noble.com.
Pre-approval Policies and Procedures. The Audit Committee
Charter adopted by the Board of Directors of the Company
requires that, among other things, the Audit Committee
pre-approve the rendering by the Companys independent
auditor of all audit and permissible non-audit services. The
Audit Committee has approved the services provided by BDO
Seidman referred to above. The Audit Committee has also
authorized the Companys management in advance to engage
the Companys independent auditor from time to time in the
future to perform certain services in areas pre-approved by the
Audit Committee that at any one time will not involve more than
$25,000 per project and more than $50,000 in the aggregate.
AUDIT COMMITTEE REPORT
The Audit Committee reviews the Companys financial
reporting process on behalf of the Board of Directors.
Management has the primary responsibility for the financial
statements and reporting process. The Companys independent
auditors are responsible for expressing an opinion on the
conformity of the Companys audited financial statements to
generally accepted accounting principles.
In this context, the Audit Committee has reviewed and discussed
with management and the independent auditors the Companys
audited financial statements. The Audit Committee has discussed
with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61
(communication with audit committees). In addition, the Audit
Committee has received from the independent auditors the written
disclosures and letter required by Independence Standards Board
Standard No. 1 (independence discussions with audit
committees) and discussed with them their independence from the
Company and its management.
In reliance on the reviews and discussions referred to above,
the Audit Committee recommended to the Board of Directors, and
the Board has approved, that the Companys audited
financial statements and managements report on internal
controls be included in the Companys Annual Report on
Form 10-K for the fiscal year ended January 29, 2005
for filing with the SEC.
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Audit Committee |
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William Sheluck, Jr., Chairman |
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Matthew A. Berdon |
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Michael J. Del Giudice |
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PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
The Audit Committee has appointed the firm of BDO Seidman, which
firm was engaged as independent certified public accountants for
the fiscal year ended January 29, 2005, to audit the
financial statements of the Company for the fiscal year ending
January 28, 2006. A proposal to ratify this appointment is
being presented to the stockholders at the Meeting. A
representative of BDO Seidman will be present at the Meeting and
will have the opportunity to make a statement and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS CONSIDERS BDO SEIDMAN TO BE WELL
QUALIFIED AND RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
RATIFICATION. PROXIES SOLICITED BY THIS PROXY STATEMENT WILL BE
VOTED FOR THE PROPOSAL UNLESS A VOTE AGAINST THE
PROPOSAL OR ABSTENTION IS SPECIFICALLY INDICATED.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the
Companys executive officers and Directors, and persons who
own more than 10 percent of a registered class of the
Companys equity securities, to file initial statements of
beneficial ownership (Form 3) and statements of changes in
beneficial ownership (Forms 4 and 5) of Common Stock
of the Company with the SEC. Executive officers, Directors and
greater than 10-percent stockholders are required to furnish the
Company with copies of all such forms they file.
To the Companys knowledge, based solely on its review of
the copies of such forms received by it, or written
representations from certain reporting persons that no
additional forms were required, all filing requirements
applicable to its executive officers, Directors and greater than
10-percent stockholders were complied with, except for a late
Form 4 filed by Leonard Riggio with respect to one
transaction and Christopher Grady-Troia has not filed a
Form 3.
OTHER MATTERS
The Company does not intend to present any other business for
action at the Meeting and does not know of any other business
intended to be presented by others. If any matters other than
the matters described in the Notice of Annual Meeting of
Stockholders and this Proxy Statement should be presented for
stockholder action at the Meeting, it is the intention of the
persons designated in the proxy to vote thereon according to
their best judgment.
Proxy Solicitation. Solicitation may be made personally,
by telephone, by telegraph or by mail by officers and employees
of the Company who will not be additionally compensated
therefor. The Company will request persons such as brokers,
nominees and fiduciaries holding stock in their names for
others, or holding stock for others who have the right to give
voting instructions, to forward proxy materials to their
principals and request authority for the execution of the proxy.
The Company will reimburse such persons for their expenses in so
doing. The Company is bearing all costs of this solicitation.
Financial and Other Information. The Companys
Annual Report for the fiscal year ended January 29, 2005,
including financial statements, is being sent to stockholders
together with this Proxy Statement.
Stockholder Proposals. Proposals of stockholders intended
to be included in the proxy materials for the Annual Meeting of
Stockholders to be held in 2006 must be received by the
Secretary, Barnes & Noble, Inc., 122 Fifth Avenue, New
York, New York 10011, no later than December 28, 2005.
In addition, the Companys Bylaws provide that, in order
for a stockholder to propose business for consideration at such
meeting, such stockholder must give written notice to the
Secretary of the Company not less than 30 days nor more
than 60 days prior to the meeting; provided, however, that
in the event that less than 40 days notice or prior public
disclosure of the date of the meeting is given to stockholders,
notice by the stockholder must be given not later than the close
of business on the tenth day following the day on which
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such notice of the date of the meeting was mailed or such public
disclosure was made. Such notice must contain the proposing
stockholders record name and address, and the class and
number of shares of the Company which are beneficially owned by
such stockholder. Such notice must also contain: (i) a
brief description of the business desired to be brought before
the annual meeting and the reasons for conducting such business
at the annual meeting, and (ii) any material interest of
the proposing stockholder in such business.
STOCKHOLDERS ARE URGED TO FORWARD THEIR PROXIES WITHOUT
DELAY. A PROMPT RESPONSE WILL BE GREATLY APPRECIATED.
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By Order of the Board of Directors |
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Leonard Riggio
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Chairman |
April 27, 2005
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BARNES & NOBLE, INC.
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YOUR VOTE IS IMPORTANT
VOTE BY INTERNET / TELEPHONE
24 HOURS A DAY, 7 DAYS A WEEK
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INTERNET
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TELEPHONE
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MAIL |
https://www.proxyvotenow.com/bks
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1-866-855-9693 |
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Go to the website address listed
above.
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OR
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Use any touch-tone telephone.
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OR
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Mark, sign and date your proxy card. |
Have your proxy card ready.
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Have your proxy card ready.
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Detach your proxy card. |
Follow the simple instructions that
appear on your computer screen.
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Follow the simple recorded
instructions.
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Return your proxy card in the
postage-paid envelope provided. |
1-866-855-9693
CALL TOLL-FREE TO VOTE
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6 DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET 6
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Please Mark, Sign, Date and
Return this Proxy Card Promptly
Using the Enclosed Envelope.
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x
Votes MUST be indicated
(x) in Black or Blue ink. |
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FOR all nominees
listed below
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WITHHOLD AUTHORITY to vote
for all nominees listed below
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*EXCEPTIONS
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Nominee: 01 Stephen Riggio, 02 Matthew A. Berdon and 03 Margaret T. Monaco
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the
Exceptions box and write that nominees name in the space provided below.)
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2. RATIFICATION OF THE APPOINTMENT OF BDO
SEIDMAN, LLP, as the independent certified public
accountants of the Company for the fiscal year ending
January 28, 2006. |
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To change your address, please mark this box.
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To include any comments, please mark this box.
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Please sign exactly as name appears to the left. When shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
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Date
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Share Owner sign here
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Co-Owner sign here |
BARNES & NOBLE, INC.
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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The undersigned hereby appoints Leonard Riggio and Stephen Riggio, and each of them, as his true
and lawful Agents and Proxies, with full power of substitution in each, and hereby authorizes them
to represent and to vote, as designated on the reverse side hereof, all the shares of common stock
of Barnes & Noble, Inc. held of record by the undersigned on April 8, 2005, at the Annual Meeting
of Stockholders to be held on June 1, 2005, and any adjournments or postponements thereof, with the
same effect as if the undersigned were present and voting such shares, on all matters as further
described in the accompanying Proxy Statement.
The undersigned acknowledges receipt of the Notice of Annual Meeting of Stockholders and the
accompanying Proxy Statement.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE. IF
THIS PROXY IS EXECUTED BUT NO SPECIFICATION IS MADE, THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED FOR EACH OF THE BOARD OF DIRECTORS NOMINEES AND FOR PROPOSAL 2. THE PROXIES, IN THEIR
DISCRETION, ARE AUTHORIZED TO VOTE UPON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL
MEETING.
By executing this proxy, the undersigned hereby revokes all prior proxies.
(Continued, and to be signed and dated on the reverse side.)
BARNES & NOBLE, INC.
P.O. BOX 11280
NEW YORK, N.Y. 10203-0280