SCHEDULE 14A
(Rule 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as
[X] Definitive Proxy Statement permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12
LOWE'S COMPANIES, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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LOWE'S COMPANIES, INC.
--------------------------------------------
Notice of
Annual Meeting
and
Proxy Statement
--------------------------------------------
2004
LOWE'S
[LOGO OMITTED]
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Corporate Offices 1000 Lowe's Boulevard
Mooresville, North Carolina 28117
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LOWE'S
COMPANIES,
INC.
April 16, 2004
TO LOWE'S SHAREHOLDERS:
It is my pleasure to invite you to the 2004 Annual Meeting to be held at
The Park Hotel located at 2200 Rexford Road, Charlotte, North Carolina, on
Friday, May 28, 2004 at 10:00 a.m. Directions to The Park Hotel are printed on
the back of the Proxy Statement.
We intend to broadcast the meeting live on the Internet. To participate,
visit Lowe's website (www.Lowes.com/investor). A link to the webcast will be
posted a few days before the May 28th meeting. An archived replay will also be
available beginning approximately three hours after the conclusion of the
meeting and running until June 4, 2004.
The formal Notice of Annual Meeting and Proxy Statement are enclosed with
this letter. The Proxy Statement tells you about the agenda and the procedures
for the meeting. It also describes how the Company's Board of Directors operates
and gives certain information about the Company. There are two items of
business, as described in detail in the Proxy Statement; so your vote by proxy
or in person at the meeting is important. I look forward to reporting on Fiscal
Year 2003, as well as commenting on the results of our first Fiscal Quarter of
2004.
Yours cordially,
/s/ ROBERT L. TILLMAN
---------------------------
Robert L. Tillman
Chairman of the Board
and Chief Executive Officer
------------------------------
Notice of
Annual Meeting of Shareholders
of Lowe's Companies, Inc.
------------------------------
Date: May 28, 2004
Time: 10:00 a.m.
Place: The Park Hotel
2200 Rexford Road
Charlotte, North Carolina
Purpose: o To elect one Class I director to a term of one year, three Class
II directors to a term of two years and four Class III directors
to a term of three years.
o To ratify the appointment of Deloitte & Touche LLP as the
independent auditors of the Company for the 2004 Fiscal Year.
o To transact such other business as may be properly brought
before the Annual Meeting.
/s/ ROSS W. MCCANLESS
--------------------------------------
Ross W. McCanless
Senior Vice President, General Counsel
& Secretary
Mooresville, North Carolina
April 16, 2004
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YOUR VOTE IS IMPORTANT. TO VOTE YOUR SHARES YOU MAY: VOTE AT THE INTERNET SITE
ADDRESS LISTED ON YOUR PROXY CARD; CALL THE TOLL-FREE NUMBER SET FORTH ON YOUR
PROXY CARD; OR SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY TO ENSURE
ITS ARRIVAL IN TIME FOR THE MEETING.
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Table of Contents
Page
----
GENERAL INFORMATION ................................................... 1
PROPOSAL ONE: ELECTION OF DIRECTORS ................................... 2
INFORMATION CONCERNING THE NOMINEES ................................... 3
INFORMATION CONCERNING CONTINUING DIRECTORS ........................... 4
INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD .. 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ........ 10
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE ............... 11
COMPENSATION OF EXECUTIVE OFFICERS .................................... 11
TOTAL RETURN TO SHAREHOLDERS .......................................... 13
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE IN CONTROL ARRANGEMENTS ...................................... 13
REPORT OF THE COMPENSATION AND ORGANIZATION COMMITTEE ................. 14
AUDIT MATTERS ......................................................... 18
PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS ..... 19
ADDITIONAL INFORMATION ................................................ 19
SHAREHOLDER PROPOSALS FOR THE 2005 ANNUAL MEETING ..................... 20
ANNUAL REPORT ......................................................... 20
APPENDIX A: AUDIT COMMITTEE CHARTER ................................... A-1
Lowe's Companies, Inc.
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Proxy Statement
for
Annual Meeting of Shareholders
May 28, 2004
------------------------------
GENERAL INFORMATION
This Proxy Statement is being furnished in connection with the solicitation
by the Board of Directors of Lowe's Companies, Inc. (the "Company") of proxies
to be voted at the Annual Meeting of Shareholders to be held at The Park Hotel,
2200 Rexford Road, Charlotte, North Carolina on Friday, May 28, 2004 at 10:00
a.m. It is anticipated that this Proxy Statement and the enclosed form of proxy
will first be sent to shareholders on or about April 16, 2004.
Outstanding Shares
On April 1, 2004 there were 786,182,289 shares of Common Stock of the
Company outstanding and entitled to vote. Shareholders are entitled to one vote
for each share held on all matters to come before the meeting.
Who May Vote
Only shareholders of record at the close of business on April 1, 2004 are
entitled to notice of and to vote at the meeting or any adjournment thereof.
How To Vote
You may vote by proxy or in person at the meeting. To vote by proxy, you
may: vote at the Internet site address listed on your proxy card; call the
toll-free number set forth on the proxy card; or mail your signed proxy card to
our tabulator in the envelope provided. Even if you plan to attend the meeting,
we recommend that you vote prior to the meeting. You can always change your vote
by proxy as described below.
How Proxies Work
The Company's Board of Directors is asking for your proxy. By giving us
your proxy, you authorize the proxyholders (members of Lowe's management) to
vote your shares at the meeting in the manner you direct. If you do not specify
how you wish them to vote your shares, they will vote your shares "FOR ALL"
director nominees and "FOR" ratification of appointment of Deloitte & Touche LLP
("Deloitte") as the Company's independent auditors. Proxyholders will also vote
shares according to their discretion on any other matter properly brought before
the meeting.
You may receive more than one proxy card depending on how you hold your
shares. Generally, you need to vote on the Internet, call the toll-free number
or sign and return all of your proxy cards to vote all of your shares. For
example, if you hold shares through someone else, such as a stockbroker, you may
get proxy material from that person. Shares registered in your name are covered
by a separate proxy card.
If for any reason any of the nominees for election as directors becomes
unavailable for election, discretionary authority may be exercised by the
proxyholders to vote for substitutes proposed by the Board of Directors.
Abstentions and shares held of record by a broker or its nominee ("broker
shares") that are voted on any matter are included in determining the number of
votes present or represented at the meeting. Broker shares that are not voted on
any matter at the meeting are not included in determining whether a quorum is
present. The vote required to approve each of the matters to be considered at
the meeting is disclosed under the caption for such matters. Votes that are
withheld and broker shares that are not voted (commonly referred to as "broker
non-votes") are not included in determining the number of votes cast in the
election of directors or on other matters.
Quorum
In order to carry out the business of the meeting, we must have a quorum.
This means that at least a majority of the outstanding shares eligible to vote
must be represented at the meeting, either by proxy or in person. Shares owned
by the Company are not voted and do not count for this purpose.
Revoking Your Proxy
The shares represented by a proxy will be voted as directed unless the
proxy is revoked. Any proxy may be revoked before it is exercised by filing with
the Secretary of the Company an instrument revoking the proxy or a proxy bearing
a later date. A proxy is revoked if the person who executed the proxy is present
at the meeting and elects to vote in person.
Votes Needed
Director nominees receiving the largest number of votes cast are elected.
As a result, any shares not voted (whether by abstention, broker non-vote or
otherwise) have no impact on the election of directors, except to the extent
that the failure to vote for a particular nominee may result in another nominee
receiving a larger number of votes. Approval of any other matter properly
brought before the meeting requires the favorable vote of a majority of the
votes cast.
Attending In Person
Only shareholders, their designated proxies and guests of the Company may
attend the meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
The number of directors is currently fixed at twelve and there is one
vacancy. The Articles of Incorporation of the Company divide the Board into
three classes, designated Class I, Class II and Class III, with one class
standing for election each year for a three-year term. The only nominee standing
for election as a Class I director is Robert L. Tillman, Chairman and Chief
Executive Officer of the Company, who has announced his intention to retire on
January 28, 2005. The three nominees standing for election as Class II directors
are: Marshall O. Larsen, Stephen F. Page and O. Temple Sloan, Jr. The four
nominees standing for election as Class III directors at the Annual Meeting are:
Leonard L. Berry, Paul Fulton, Dawn E. Hudson and Robert A. Niblock. If elected,
each Class I, Class II and Class III nominee will serve until his or her term
expires in 2005, 2006 or 2007 or until a successor is elected and qualified.
All of the nominees are currently serving as directors, with the exception
of Marshall O. Larsen, who is nominated to fill the vacancy on the Board. The
election of each nominee requires the affirmative vote of the holders of the
plurality of the shares of Common Stock cast in the election of directors.
Unless authority to vote in the election of directors is withheld, it is the
intention of the persons named as proxies to vote "FOR ALL" of the eight
nominees. If at the time of the meeting any of these nominees is unavailable for
election as a director for any reason, which is not expected to occur, the
persons named as proxies will vote for such substitute nominee or nominees, if
any, as shall be designated by the Board of Directors.
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INFORMATION CONCERNING THE NOMINEES
Nominee For Election As Class I Director -- Term to Expire in 2005
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ROBERT L. TILLMAN Director Since: 1994
Age: 60
Chairman of the Board since January 1998, Chief Executive Officer of Lowe's
Companies, Inc. since 1996. Chairman of Executive Committee.
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Nominees For Election As Class II Directors -- Term To Expire In 2006
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MARSHALL O. LARSEN
Age: 55
Chairman of Goodrich Corporation, a supplier of systems and services to the
aerospace and defense industry, since October 2003. President and Chief
Executive Officer of Goodrich Corporation since February 2002 and April 2003,
respectively. Executive Vice President of Goodrich Corporation and President and
Chief Operating Officer of Goodrich Aerospace Corporation, a subsidiary of
Goodrich Corporation, 1995-2002.
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STEPHEN F. PAGE Director Since: 2003
Age: 64
Member of the Audit Committee and Governance Committee. Vice Chairman and Chief
Financial Officer of United Technologies Corporation since 2002, manufacturer of
high-technology products and services to the building systems and aerospace
industries. President and Chief Executive Officer of Otis Elevator Company, a
subsidiary of United Technologies Corporation, from 1997 to 2002. Other
directorships: Liberty Mutual Holding Company, Inc.
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O. TEMPLE SLOAN, JR. Director Since: 2004
Age: 65
Member of the Audit Committee and Governance Committee. Chairman and Chief
Executive Officer of General Parts, Inc., a distributor of automotive
replacement parts, since 1961. Other directorships: Bank of America Corporation;
and Highwoods Properties, Inc., where he serves as Non-Executive Chairman of the
Board.
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Nominees For Election As Class III Directors -- Term To Expire In 2007
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LEONARD L. BERRY Director Since: 1998
Age: 61
Member of Compensation and Organization Committee and Governance Committee.
Distinguished Professor of Marketing and M.B. Zale Chair in Retailing and
Marketing Leadership, Texas A&M University, since 1982. Other directorships:
Darden Restaurants, Inc.; and Genesco Inc.
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PAUL FULTON Director Since: 1996
Age: 69
Chairman of Compensation and Organization Committee, member of Executive
Committee and Governance Committee. Chairman of the Board of Bassett Furniture
Industries, Inc., a furniture manufacturer, since 2000 and director since 1994,
Chief Executive Officer of Bassett Furniture from 1997 until 2000. Dean,
Kenan-Flagler Business School, University of North Carolina, Chapel Hill, NC,
1994-1997. Other directorships: Bank of America Corporation; Sonoco Products
Company; and Carter's, Inc.
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3
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DAWN E. HUDSON Director Since: 2001
Age: 46
Member of Compensation and Organization Committee and Governance Committee.
President of Pepsi Cola Company North America, soft drink maker and distributor,
since June 2002. Senior Vice President, Strategy and Marketing for Pepsi Cola
Company North America, 1997-2002.
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ROBERT A. NIBLOCK Director Since: 2004
Age: 41
President of Lowe's Companies, Inc. since March 2003. Executive Vice President
2001-2003, Chief Financial Officer 2000-2003 and Senior Vice President - Finance
of the Company, 1999-2000 and Vice President and Treasurer of the Company,
1997-1998. Mr. Niblock was elected a director by the Board of Directors on April
2, 2004, and was also named Chairman and Chief Executive Officer of the Company,
to be effective upon the retirement of Robert L. Tillman on January 28, 2005.
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INFORMATION CONCERNING CONTINUING DIRECTORS
Class I Directors -- Term to expire in 2005
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ROBERT A. INGRAM Director Since: 2001
Age: 61
Member of Audit Committee and Governance Committee. Vice Chairman
Pharmaceuticals, GlaxoSmithKline, a pharmaceutical research and development
company, since January 2003; Chief Operating Officer and President,
Pharmaceutical Operations of GlaxoSmithKline, an international pharmaceutical
corporation, January 2001-2002, having previously served as Chief Executive of
Glaxo Wellcome plc, 1997-2000, Chairman of Glaxo Wellcome Inc. (Glaxo Wellcome
plc's United States subsidiary), 1999-2000; Chairman, President and Chief
Executive Officer of Glaxo Wellcome Inc., 1997-1999, and President and Chief
Executive Officer of Glaxo Wellcome Inc. prior thereto. Other directorships:
Edwards Lifesciences Corporation; Misys plc (Non-Executive Director); Molson,
Inc.; Nortel Networks Corporation; OSI Pharmaceuticals, Inc. (Chairman); Valeant
Pharmaceuticals International; and Wachovia Corporation.
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RICHARD K. LOCHRIDGE Director Since: 1998
Age: 60
Chairman of Audit Committee, member of Executive Committee and Governance
Committee. President, Lochridge & Company, Inc., a general management consulting
firm, since 1986. Other directorships: Dover Corporation; John H. Harland
Company; and PetsMart, Inc.
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CLAUDINE B. MALONE Director Since: 1995
Age: 67
Member of Audit Committee and Governance Committee. President and Chief
Executive Officer, Financial & Management Consulting, Inc., a consulting firm,
since 1984; Former Chairman, Federal Reserve Bank, Richmond, VA, 1996-1999
(Member since 1994). Other directorships: Aviva Life Insurance Co.; Hasbro,
Inc.; LaFarge Corporation; Novell, Inc.; and Science Applications International
Corporation.
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4
Class II Director -- Term to Expire in 2006
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PETER C. BROWNING Director Since: 1998
Age: 62
Chairman of Governance Committee, member of Compensation and Organization
Committee and Executive Committee. Dean of the McColl Graduate School of
Business at Queens University of Charlotte since March 2002. Non-Executive
Chairman of the Board, Nucor Corporation, a steel manufacturer, since 2000.
President and CEO of Sonoco Products Company, a manufacturer of industrial and
consumer packaging products, April 1998 through July 2000. Other directorships:
Acuity Brands Inc.; EnPro Industries, Inc.; The Phoenix Companies, Inc.; and
Wachovia Corporation.
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INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
Corporate Governance Guidelines
The Board of Directors has adopted Corporate Governance Guidelines setting
forth guidelines and standards with respect to the role and composition of the
Board, the functioning of the Board and its Committees, the compensation of
directors, succession planning and management development, the Board's and its
Committee's access to independent advisers and other matters. The Governance
Committee of the Board of Directors periodically reviews and assesses the
Company's Corporate Governance Guidelines, which are posted on the Company's
website at www.Lowes.com. The information on our website is not a part of this
proxy statement. You may also obtain a written copy of the Corporate Governance
Guidelines by contacting Ross W. McCanless, Senior Vice President, General
Counsel and Secretary, at Lowe's Companies, Inc., 1000 Lowe's Boulevard,
Mooresville, North Carolina 28117.
Director Independence
The Corporate Governance Guidelines provide that in accordance with Lowe's
long-standing policy, a substantial majority of the members of Lowe's Board of
Directors must qualify as independent directors. The Company's Board of
Directors has determined that each continuing director and nominee for election
as a director, other than Robert L. Tillman and Robert A. Niblock, has no
material relationship with the Company (other than as a director) and is
therefore, "independent" within the meaning of the current listing standards of
the New York Stock Exchange. In its annual review of director independence, the
Board considers all commercial, banking, consulting, legal, accounting,
charitable or other business relationships any director may have with the
Company. The Board of Directors considers a "material relationship" to be one
that impairs or inhibits, or has the potential to impair or inhibit, a
director's exercise of critical and disinterested judgment on behalf of the
Company and its shareholders. When assessing the "materiality" of a director's
relationship with the Company, the Board of Directors considers all relevant
facts and circumstances not only from the standpoint of the director in his or
her individual capacity, but also from the standpoint of the persons to whom the
director is related and organizations with which the director is affiliated.
Compensation of Directors -- Standard Arrangements
Directors who are not employed by the Company are paid an annual retainer
of $75,000, plus $15,000 annually for serving as a committee chairman. Directors
who are employed by the Company receive no additional compensation for serving
as directors.
Compensation of Directors -- Other Arrangements
In 1999, shareholders approved the Lowe's Companies, Inc. Directors' Stock
Option Plan. This Plan provides for each non-employee director to be awarded an
option to purchase 4,000 shares of Company Common Stock at the first directors'
meeting following the Annual Meeting each year (the "Award Date"). The Company
reserved 500,000 shares of Common Stock for options to be granted under this
plan, of which 69,341
5
option shares are currently exercisable. Each option becomes exercisable with
respect to 1,333 of the shares of Common Stock on May 15 of each of the first
and second calendar years following the Award Date and 1,334 shares on May 15 of
the third calendar year following the Award Date. Each option has a seven-year
term. The exercise price of options granted under the Directors' Stock Option
Plan is equal to the closing price of a share of Common Stock as reported on the
New York Stock Exchange on the Award Date. Options for 4,000 shares each were
granted on May 30, 2003 to the following directors: Robert A. Ingram, Richard K.
Lochridge, Claudine B. Malone, Peter C. Browning, Leonard L. Berry, Paul Fulton
and Dawn E. Hudson. Mr. Tillman and Mr. Niblock are not eligible to participate
in this plan.
In 1994, the Board adopted the Lowe's Companies, Inc. Directors' Deferred
Compensation Plan. This Plan allows each non-employee director to defer receipt
of all, but not less than all, of the annual retainer otherwise payable to the
director. Deferrals are credited to a bookkeeping account and account values are
adjusted based on the investment measure selected by the director. One
investment measure adjusts the account based on the Wachovia Bank, N.A. prime
rate plus 1%. The other investment measure assumes that the deferrals are
invested in the Company's Common Stock. A director may allocate deferrals
between the two investment measures in 25% multiples. Account balances are paid
in cash following the termination of a director's service.
Board Meetings and Committees of the Board
Attendance at Board and Committee Meetings. During Fiscal Year 2003, the
Board of Directors held five meetings. All incumbent directors attended at least
75% of the aggregate of all meetings of the Board and the committees on which
they served, with the exception of Ms. Hudson and Mr. Ingram, who attended 73%
and 72% of the meetings of the Board and the committees on which they served,
respectively.
Executive Sessions of the Non-management Directors. The non-management
directors, all of whom are independent directors, meet in regularly scheduled
executive sessions. Mr. Browning, Chairman of the Governance Committee, presides
over these executive sessions and in his absence, the non-management directors
may select another non-management director present to preside.
Attendance at Annual Meetings of Shareholders. Directors are expected to
attend the Annual Meeting of Shareholders. All of the incumbent directors
attended last year's Annual Meeting.
Committees of the Board of Directors and their Charters. The Board has four
standing committees: the Audit Committee, the Compensation and Organization
Committee, the Executive Committee and the Governance Committee. Each of these
committees acts pursuant to a written charter adopted by the Board of Directors.
A copy of each committee charter is available on our website at www.Lowes.com.
How to Communicate with the Board of Directors and Independent Directors.
Shareholders wishing to communicate with the Company's Board of Directors may do
so by sending a written communication addressed simply to the Board of Directors
or to any member of our Board of Directors individually in care of Lowe's
Companies, Inc., 1000 Lowe's Boulevard, Mooresville, North Carolina 28117.
Shareholders wishing to communicate with the independent directors as a group,
may do so by sending a written communication addressed to the presiding
director, Peter C. Browning, as Chairman of the Governance Committee, in care of
Lowe's Companies, Inc., 1000 Lowe's Boulevard, Mooresville, North Carolina
28117. Any communication addressed to any director that is received at Lowe's
principal executive offices will be delivered or forwarded to the individual
director as soon as practicable. Lowe's will forward all communications received
from its shareholders that are addressed simply to the Board of Directors to the
chairman of the committee of the Board of Directors whose purpose and function
is most closely related the subject matter of the communication.
6
Audit Committee
Number of Members: Five
Members: Richard K. Lochridge (Chairman), Robert A. Ingram,
Claudine B. Malone, Stephen F. Page and O. Temple Sloan,
Jr.
Number of Meetings
in Fiscal Year 2003: Eight
Purpose and
Functions: The primary purpose of the Audit Committee is to assist
the Board of Directors in monitoring (A) the integrity
of the financial statements, (B) compliance by the
Company with its established internal controls and legal
and regulatory requirements, (C) the performance of the
Company's internal audit function and independent
auditors and (D) the independent auditors'
qualifications and independence. The Audit Committee is
directly responsible for the appointment, compensation
and oversight of the work of the Company's independent
auditors. In addition, the Audit Committee is
responsible for pre-approving all engagements related to
audit, review and attest reports required under the
securities laws and all other engagements permissible
under the Securities Exchange Act of 1934, as amended,
for services to be performed for the Company by its
independent auditors, including the applicable fees and
terms. The Audit Committee is also responsible for
reviewing and approving the appointment, annual
performance appraisal, replacement, reassignment or
discharge of the Vice President of Internal Audit. The
Committee reviews the general scope of the Company's
annual audit and the fees charged by the independent
auditors for audit services, audit related services, tax
services and all other services; reviews with the
Company's Vice President of Internal Audit the work of
the Internal Audit Department; reviews financial
statements and the accounting principles being applied;
and reviews audit results and other matters relating to
internal control and compliance with the Company's code
of ethics. The Audit Committee has established
procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting,
internal accounting controls or auditing matters, and
the confidential, anonymous submission by employees of
concerns regarding accounting or auditing matters. Each
member of the Audit Committee is financially literate
and qualified to review and assess financial statements.
The Board of Directors has determined that Richard K.
Lochridge, Robert A. Ingram, Claudine B. Malone, Stephen
F. Page and O. Temple Sloan, Jr. each qualifies as an
"audit committee financial expert," as such term is
defined by the Securities and Exchange Commission. Each
member of the Audit Committee is also "independent," as
that term is defined under Rule 10A-3(b)(1)(ii) of the
Securities Exchange Act of 1934, as amended. The Board
of Directors adopted an amended and restated Audit
Committee Charter on January 30, 2004, a copy of which
is attached to this proxy statement as Appendix A and is
also available on the Company's website at
www.Lowes.com. The members of the Audit Committee
conduct an annual performance evaluation of the
Committee's performance with the assistance of the
Governance Committee of the Board.
Compensation and Organization Committee
Number of Members: Four
Members: Paul Fulton (Chairman), Leonard L. Berry, Peter C.
Browning and Dawn E. Hudson
Number of Meetings
In Fiscal Year 2003: Six
Purpose and
Functions: The primary purpose of this Committee is to discharge
the responsibilities of the Board of Directors relating
to compensation, organization and succession planning
for the Company's executives. This Committee reviews and
approves on an annual basis the
7
corporate goals and objectives relevant to compensation
for the Chief Executive Officer of the Company,
evaluates the Chief Executive Officer's performance in
light of these established goals and objectives and,
based upon this evaluation, sets the Chief Executive
Officer's annual compensation. The Committee also
reviews and recommends the compensation of all other
executive officers of the Company; reviews and approves
all annual management incentive plans and all awards
under multi-year incentive plans, including equity-based
incentive arrangements authorized under the Company's
equity incentive compensation plans. In addition the
Committee is charged with assuring that a succession
plan is maintained for the Chief Executive Officer. The
Committee conducts an annual performance evaluation of
the Committee's performance with the assistance of the
Governance Committee of the Board. Each member of the
Compensation and Organization Committee is "independent"
within the meaning of the current listing standards of
the New York Stock Exchange.
Executive Committee
Number of Members: Four
Members: Robert L. Tillman (Chairman), Peter C. Browning, Paul
Fulton, and Richard K. Lochridge
Number of Meetings
In Fiscal Year 2003: Two
Purpose and
Functions: The Executive Committee functions in the intervals
between meetings of the Board of Directors, should an
interim action be called for between such meetings, to
approve matters which require formal action by or on
behalf of the Board. The Committee is generally
authorized to have and to exercise all of the powers of
the Board, except the powers reserved for the Board of
Directors by the North Carolina Business Corporation
Act.
Governance Committee
Number of Members: Nine
Members: Peter C. Browning (Chairman), Leonard L. Berry, Paul
Fulton, Dawn E. Hudson, Robert A. Ingram, Richard K.
Lochridge, Claudine B. Malone, Stephen F. Page and O.
Temple Sloan, Jr.
Number of Meetings
In Fiscal Year 2003: Four
Purpose and
Functions: The purpose of this Committee, which functions both as a
governance and as a nominating committee, is to (A)
identify and recommend individuals to the Board for
nomination as members of the Board and its committees
consistent with the criteria approved by the Board, (B)
develop and recommend to the Board the Corporate
Governance Guidelines applicable to the Company and (C)
oversee the evaluation of the Board, its committees and
management of the Company. This Committee's nominating
responsibilities include developing criteria for
evaluation of potential candidates for the Board and its
committees; screening and reviewing candidates for
election to the Board; recommending to the Board the
nominees for directors to be appointed to fill vacancies
or to be elected at the next annual meeting of
shareholders; assisting the Board in determining and
monitoring whether or not each director and prospective
director is "independent" within the meaning of any
rules and laws applicable to the Company; recommending
to the Board for its approval the membership and
chairperson of each committee of the Board; and
assisting the Board in an annual performance evaluation
of the Board and each of its committees.
8
The Committee will consider nominees recommended by
shareholders and its process for doing so is no
different than its process for screening and evaluating
candidates suggested by other directors, management of
the Company or third parties. Any such recommendation
should be submitted in writing to the Secretary of the
Company not less than 15 days prior to the meeting of
shareholders at which directors are to be elected. If
mailed, such notice shall be sent by certified mail,
return receipt requested, and shall be deemed to have
been given when received by the Secretary. A
shareholder's nomination for director shall set forth
(A) the name and business address of the shareholder's
nominee, (B) the fact that the nominee has consented to
his name being placed in nomination, (C) the name and
address, as they appear on the Company's books, of the
shareholder making the nomination, (D) the class and
number of shares of the Company's Common Stock
beneficially owned by the shareholder, and (E) any
material interest of the shareholder in the proposed
nomination. The recommendation should include
information that will enable the Committee to evaluate
the qualifications of the proposed nominee.
The Governance Committee considers a variety of factors
when determining whether to recommend a nominee for
election to the Board of Directors, including those set
forth in the Company's Corporate Governance Guidelines.
In general, candidates nominated for election or
re-election to the Board of Directors should possess the
following qualifications:
o high personal and professional ethics, integrity,
practical wisdom and mature judgment;
o broad training and experience in policy-making
decisions in business, government, education or
technology;
o expertise that is useful to the Company and
complementary to the background and experience of
other directors;
o willingness to devote the amount of time necessary
to carry out the duties and responsibilities of
Board membership;
o commitment to serve on the Board over a period of
several years in order to develop knowledge about
the Company's principal operations; and
o willingness to represent the best interests of all
shareholders and objectively appraise management
performance.
In addition, the Committee believes that at least one
member of the Board of Directors must satisfy the
requirements for an audit committee financial expert, as
that term is defined in the regulations of the
Securities and Exchange Commission.
In 2003 the Committee engaged an executive search firm
to assist the Committee on an ongoing basis in
fulfilling its responsibility to identify and evaluate
candidates for nomination and re-nomination by the
Committee for election to the Board of Directors.
Members of the Governance Committee, in consultation
with representatives of the executive search firm,
identified Marshall O. Larsen, the only nominee for
election as a director proposed to be elected for the
first time at this year's Annual Meeting.
Each member of the Governance Committee is "independent"
within the meaning of the current listing standards of
the New York Stock Exchange. The Committee annually
reviews and evaluates its own performance.
9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the beneficial ownership as of April 1, 2004,
except as noted, of the Company's Common Stock of each director of the Company,
each nominee for election as a director of the Company, the executive officers
named in the Summary Compensation Table, each shareholder known to the Company
to be the beneficial owner of more than 5% of the Company's Common Stock, and
incumbent directors, director nominees and executive officers as a group:
Name or Number Number of Percent
of Persons in Group Shares (1)(2) of Class
------------------- ------------- --------
Leonard L. Berry ...................................... 13,234 *
Gregory M. Bridgeford ................................. 358,664 *
Peter C. Browning ..................................... 23,747 *
Paul Fulton ........................................... 44,807 *
Dawn E. Hudson ........................................ 8,401 *
Robert A. Ingram ...................................... 8,001 *
Marshall O. Larsen .................................... 0 *
Richard K. Lochridge .................................. 24,013 *
Claudine B. Malone .................................... 24,001 *
Robert A. Niblock ..................................... 302,651 *
Stephen F. Page ....................................... 2,000 *
Dale C. Pond .......................................... 280,299 *
O. Temple Sloan, Jr ................................... 11,000 *
Larry D. Stone ........................................ 604,423 *
Robert L. Tillman ..................................... 1,767,645 *
Incumbent Directors, Director Nominees
and Executive Officers as a Group (34 in total) ....... 5,828,761 *
State Street Bank and Trust Company, Trustee
225 Franklin Street
Boston, MA 02110 ...................................... 64,800,620(3) 8.2%
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071 ................................. 82,599,000(4) 10.5%
AXA Financial, Inc. (and related persons)
1290 Avenue of the Americas
New York, NY 10104 .................................... 39,598,642(5) 5.0%
------------------
* Less than 1%
(1) Includes shares that may be acquired within 60 days under the Company's
Stock Option Plans as follows: Mr. Berry 5,334 shares; Mr. Bridgeford
186,107 shares; Mr. Browning 16,001 shares; Mr. Fulton 16,001 shares; Ms.
Hudson 8,001 shares; Mr. Ingram 8,001 shares; Mr. Lochridge 16,001 shares;
Ms. Malone 16,001 shares; Mr. Niblock 247,694 shares; Mr. Pond 186,000
shares; Mr. Stone 405,179 shares; Mr. Tillman 1,283,667 shares; all
executive officers and directors as a group 3,628,466 shares.
(2) Does not include phantom shares credited to the accounts of executive
officers and directors under the Company's Deferral Program as of the end
of Fiscal Year 2003 as follows: Mr. Bridgeford 58,619 shares; Mr. Browning
4,432 shares; Mr. Fulton 4,500 shares; Mr. Ingram 4,656 shares; Mr. Tillman
200,657 shares; participating executive officers and directors as a group
291,998 shares.
(3) Shares held at December 31, 2003, according to Schedule 13G filed on
February 5, 2004 with the Securities and Exchange Commission, which total
includes 44,182,367 shares held in trust for the benefit of the Company's
401(k) Plan participants. Shares allocated to participant's 401(k) accounts
are voted by the participants by giving voting instructions to State Street
Bank. A fiduciary committee directs the Trustee in the manner in which
shares not voted by participants are to be voted. This committee has six
members, including Mr. Niblock and Mr. Stone.
(4) Shares held at December 31, 2003, according to Schedule 13G filed on
February 13, 2004 with the Securities and Exchange Commission.
10
(5) Shares held at December 31, 2003, according to Schedule 13G filed by AXA
Financial, Inc. (and related persons) with the Securities and Exchange
Commission on February 10, 2004 indicates that AXA Financial, Inc. has sole
voting power as to 17,739,680 of the shares shown, shared voting power as
to 6,713,184 of the shares shown, sole dispositive power as to 37,303,538
of the shares shown and shared dispositive power as to 52,699 of the shares
shown. That filing further indicates that Alliance Capital Management L.P.,
as investment advisor to various discretionary investment advisory accounts
and a subsidiary of AXA Financial, Inc., is the beneficial owner of
36,799,425 shares and The Equitable Life Assurance Society of the United
States, a subsidiary of AXA Financial, Inc., is the beneficial owner of
556,812 shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company pursuant to Rule 16a-3(e) of the Securities Exchange
Act of 1934 during Fiscal Year 2003 and Form 5 and amendments thereto furnished
to the Company with respect to Fiscal Year 2003, and written representations
from certain reporting persons, the Company believes that all filing
requirements under Section 16(a) applicable to its officers, directors and
greater than 10% beneficial owners have been complied with, except that Charles
W. Canter, Jr., Senior Vice President -- Store Operations -- North Central
Division, was inadvertently late in filing one Report on Form 4 relating to a
sale of the Company's Common Stock.
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received by the Company's Chief
Executive Officer and the four other most highly paid executive officers (the
"named executive officers") for the three fiscal years ended January 30, 2004,
January 31, 2003 and February 1, 2002:
Summary Compensation Table
Long-term Compensation
Annual Compensation Awards
------------------------------------ ---------------------
Other Restricted Securities
Fiscal Annual Stock Underlying All Other
Year Salary Bonus Compensation Awards Options Compensation
Name & Principal Position Ended ($) ($) ($) ($) (1) (#) (2) $ (3)
------------------------- -------- ---------- ---------- ---------- ---------- -------- --------
Robert L. Tillman .......... 01/30/04 $1,000,000 $3,000,000 $52,415(4) $5,895,000 $287,000 $360,000
Chairman of the Board and 01/31/03 1,000,000 3,000,000 -- 0 216,000 395,817
Chief Executive Officer 02/01/02 935,000 1,916,049 -- 0 499,000 458,449
Robert A. Niblock (5) ...... 01/30/04 651,000 1,625,000 -- 3,930,000 149,000 204,231
President
Larry D. Stone ............. 01/30/04 702,000 1,404,000 -- 3,930,000 161,000 189,447
Senior Executive Vice 01/31/03 675,000 1,350,000 -- 0 102,000 199,095
President, Operations 02/01/02 600,000 982,950 -- 0 223,000 248,591
Dale C. Pond ............... 01/30/04 550,000 1,100,000 -- 3,930,000 126,000 148,389
Senior Executive 01/31/03 518,000 1,036,000 -- 0 78,000 153,464
Vice President, 02/01/02 450,000 737,213 -- 0 177,000 184,737
Merchandising/Marketing
Gregory M. Bridgeford (5) .. 01/30/04 355,000 532,500 -- 1,965,000 41,000 79,823
Executive Vice President,
Business Development
-----------------
(1) Amounts shown represent the value of deferred stock units granted March 1,
2003 (based on the closing price of $39.30 per share on the grant date).
Each deferred stock unit grant, with the exception of Mr. Niblock's, will
vest 40% on the third anniversary of the grant and the remaining 60% on the
fifth anniversary of the grant. Mr. Niblock's grant will be fully vested on
the fifth anniversary of the grant. Dividend equivalents are payable on
deferred stock units and are reinvested in additional deferred stock units
from and after the date the units become vested. As of January 30, 2004,
the named executive officers held the following number of deferred stock
units with the following values (based on the closing price of $53.55 per
share on January 30, 2004): Mr. Tillman -- 150,000 units valued at
$8,032,500; Mr. Niblock -- 100,000 units valued at $5,355,000; Mr. Stone --
100,000 units valued at $5,355,000; Mr. Pond -- 100,000 units valued at
$5,355,000; and Mr. Bridgeford -- 50,000 units valued at $2,677,500.
11
(2) Stock option grants for the fiscal year ended February 1, 2002 have been
adjusted to reflect the 2-for-1 stock split effective June 29, 2001.
(3) Amounts shown for the fiscal year ended January 30, 2004 consist of: (a)
matching contributions by the Company under the 401(k) Plan ($14,000 for
each of the named executive officers); and (b) matching contributions by
the Company under the Company's Benefit Restoration Plan (Mr. Tillman --
$346,000; Mr. Niblock -- $190,231; Mr. Stone -- $175,447; Mr. Pond --
$134,389; and Mr. Bridgeford -- $65,823).
(4) Amount shown includes the value of personal use of corporate aircraft
($31,068) and reimbursement of relocation expenses ($21,347).
(5) Messrs. Niblock and Bridgeford were not included among the four most highly
compensated executive officers of the Company during either of the two
fiscal years ended January 31, 2003 or February 1, 2002. Mr. Bridgeford was
promoted from Senior Vice President to Executive Vice President effective
January 30, 2004.
Option Grants in Fiscal Year
The following table provides information with respect to stock options
granted to the named executive officers during Fiscal Year 2003:
Individual Grants (1)
--------------------------------------------------- Potential Realizable Value
Number of % of Total at Assumed Annual
Securities Options Rates of Stock Price
Underlying Granted to Exercise Appreciation for Option Term
Options Employees in Price Expiration ----------------------------
Name Granted (#) Fiscal Year $/Share Date 5% ($) 10% ($)
---- ----------- ------------ ------- ---------- ---------- -----------
Robert L. Tillman ........... 287,000 6.65% $39.30 03/01/10 $4,591,726 $10,700,675
Robert A. Niblock ........... 149,000 3.45 39.30 03/01/10 2,383,858 5,555,403
Larry D. Stone .............. 161,000 3.73 39.30 03/01/10 2,575,847 6,002,818
Dale C. Pond ................ 126,000 2.92 39.30 03/01/10 2,015,880 4,697,857
Gregory M. Bridgeford ....... 41,000 0.95 39.30 03/01/10 655,961 1,528,668
------------------
(1) All options for the named executive officers: (i) were granted on March
1, 2003 under the 1994 Incentive Plan; (ii) have an exercise price equal
to the fair market value on the date of grant; (iii) vest in three equal
annual installments on each of the first three anniversaries of the grant
date including such anniversaries occurring after the executive's
termination of employment; and (iv) continue to be exercisable until
their expiration dates following termination of employment for any reason
other than a termination by the Company for cause.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
The following table provides information concerning Fiscal Year 2003 and
the options exercised during unexercised options held by each of the named
executive officers at January 30, 2004:
Value of Unexercised
Number of Securities In-the-Money
Underlying Unexercised Options on January 30, 2004
Options on January 30, 2004(#) ($) (2)
Acquired on Value ----------------------------- ----------------------------
Name Exercise (#) Realized ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ --------------- ----------- ------------- ----------- -------------
Robert L. Tillman ......... 0 0 1,008,000 714,000 $28,330,040 $9,653,000
Robert A. Niblock ......... 0 0 153,574 303,786 3,987,179 3,772,847
Larry D. Stone ............ 99,800 3,060,537 271,512 360,000 7,084,721 4,809,650
Dale C. Pond .............. 139,096 4,031,512 87,334 293,666 1,846,004 3,758,566
Gregory M. Bridgeford ..... 0 0 149,130 132,320 4,251,521 1,606,890
---------------
(1) Value realized equals the aggregate amount of the excess of the fair market
value on the dates of exercise over the relevant exercise prices.
(2) Value of unexercised in-the-money options is calculated as the aggregate
difference between the fair market value of $53.55 per share on January 30,
2004 over the relevant exercise prices.
12
TOTAL RETURN TO SHAREHOLDERS
The following graph compares the total returns (assuming reinvestment of
dividends) of the Company's Common Stock, the S&P 500 Index and the S&P Retail
Index. The graph assumes $100 invested on January 29, 1999 in the Company's
Common Stock and each of the indices.
[GRAPHIC OMITTED]
Source: Bloomberg Financial Services
01/29/1999 01/28/2000 02/02/2001 02/01/2002 01/31/2003 01/30/2004
---------- ---------- ---------- ---------- ---------- ----------
LOWE'S ................ $100.00 $ 76.59 $ 92.82 $157.92 $118.36 $185.84
S&P 500 ............... $100.00 $107.63 $108.03 $ 91.05 $ 70.59 $ 94.99
S&P RETAIL INDEX ...... $100.00 $109.61 $110.43 $119.77 $ 86.17 $128.80
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE IN CONTROL ARRANGEMENTS
The Company has entered into Management Continuity Agreements with each of
Messrs. Tillman, Niblock, Stone, Pond and Bridgeford as well as 19 other
executive officers. Other than the termination compensation amounts, the
agreements are identical. Each was unanimously approved by the non-management
members of the Board of Directors.
The agreements provide for certain benefits if the Company experiences a
change-in-control followed by termination of the executive's employment without
cause by the Company's successor, by the executive during the thirty day period
following the first anniversary of the change-in-control or by the employee for
certain reasons, including a downgrading of the executive's position. "Cause"
means continued and willful failure to perform duties or conduct demonstrably
and materially injurious to the Company or its affiliates.
All agreements provide for three-year terms. On the first anniversary, and
every anniversary thereafter, the term is extended automatically for an
additional year unless the Company does not extend the term. All agreements
automatically expire on the second anniversary of a change-in-control
notwithstanding the length of the terms remaining on the date of the
change-in-control.
13
If benefits are paid under an agreement, the executive will receive (i) a
lump-sum severance payment equal to the present value of three times annual base
salary, incentive bonus and welfare insurance costs for Messrs. Tillman,
Niblock, Stone and Pond and, effective as of January 30, 2004 for Mr.
Bridgeford, 2.99 times annual base salary, incentive bonus and welfare insurance
costs and two times annual base salary, incentive bonus and welfare insurance
costs for all other participating executive officers, including Mr. Bridgeford
prior to January 30, 2004 and (ii) any other unpaid salary and benefits to which
the executive is otherwise entitled. In addition, the executive will be
compensated for any excise tax liability he may incur as a result of excess
parachute payments and for income taxes attributable to excise tax
reimbursements.
All legal fees and expenses incurred by the executives in enforcing these
agreements will be paid by the Company.
REPORT OF THE COMPENSATION AND ORGANIZATION COMMITTEE
This report by the Compensation and Organization Committee is required by
rules of the Securities and Exchange Commission. It is not to be deemed
incorporated by reference by any general statement which incorporates by
reference this Proxy Statement into any filing under the Securities Act of 1933
or the Securities Exchange Act of 1934, and it is not to be otherwise deemed
filed under either such Act.
The Compensation and Organization Committee (the "Committee") of the Board
of Directors comprises four Independent Directors and is responsible for
administering the Company's Executive Compensation Program for all executives at
a compensation level set by the Committee. In carrying out its responsibilities,
the Committee:
o Articulates the Company's executive compensation philosophies and
policies to executive management, participates in compensation program
development, and has authority for approval of awards under the
Company's plans and programs;
o Monitors and approves on-going base salary and incentive compensation
programs for executive management, including participation,
performance goals and criteria, interpretation of provisions and
determination of award payouts;
o Reviews and approves base salary recommendations for executive
officers of the Company; and
o Initiates all compensation actions for the Chairman of the Board and
Chief Executive Officer, subject to final Board approval.
The Committee has retained a national consulting firm (which reports to the
Committee) to be a source of on-going advice to both the Committee and
management.
Executive Compensation Principles
The Company's Executive Compensation Program has been designed to establish
a strong link between the creation of shareholder value and the compensation
earned by its executive officers. It is the intention of the Committee that, to
the extent practical, all compensation paid under the Executive Compensation
Program of the Company (other than incentive stock options) will be tax
deductible to the Company in the year paid to the executive. The fundamental
objectives of the Program are to:
o Align executive compensation with the Company's mission, values and
business strategies;
o Attract, motivate, retain and reward the executives whose leadership
and performance are critical to the Company's success in enhancing
shareholder value; and
o Provide compensation which is commensurate with the Company's
performance and the contributions made by executives toward this
performance.
The Program is intended to provide compensation which is competitive with
comparable companies in the retailing industry (with particular emphasis on
specialty hard goods retailers and major U.S. retailers) when the Company is
meeting its targeted financial goals. At the same time, the Program seeks to
provide above average compensation when the Company's targeted goals are
exceeded, and below average compensation when targeted performance goals are not
achieved.
14
The Program provides for larger portions of total compensation to vary on
the basis of Company performance for higher levels of executives (i.e., the most
senior executive officers have more of their total compensation at risk on the
basis of Company performance than do lower levels of executives). All executive
officers participate in the same direct compensation programs as the other
executives of the Company, with the only differences being the degree of
compensation risk and the overall magnitude of the potential awards.
The Committee strongly believes that executive officers should own
significant amounts of the Company's Common Stock to align their interests with
those of the Company's shareholders, and the Company's 401(k) Plan, Employee
Stock Purchase Plan and Incentive Plans enable executives to acquire such Common
Stock. The Committee also has adopted a stock ownership and retention policy for
all Executive Vice Presidents and more senior officers of the Company. The
ownership targets under the policy are ten times base salary for the Chairman
and CEO and five times base salary for all other executives who are subject to
the policy. Executives who are subject to the policy must retain 100% of the net
shares received from the exercise of any stock options granted under the
Incentive Plans until the targeted ownership level is reached. After the target
ownership level is reached, executives must retain the net shares from the
exercise of any options granted under the Incentive Plans after September 13,
2002 for at least one year from the date of exercise.
Elements in the Executive Compensation Program
The Company's Executive Compensation Program comprises the following
elements:
Base Salary
Salaries for executive officers are established on the basis of the
qualifications and experience of the executive, the nature of the job
responsibilities and salaries for competitive positions in the retailing
industry.
Executive officers' base salaries are reviewed annually and are approved by
the Committee. Salaries of executive officers are compared with those of
comparable executive positions in the retailing industry throughout the United
States. The Committee uses the median level of base salary as a guideline, in
conjunction with the executive's performance and qualifications, for
establishing salary levels. Any action by the Committee with respect to the base
salary level for the Chairman of the Board and Chief Executive Officer is
subject to final Board approval.
1994, 1997 and 2001 Incentive Plans
The 1994, 1997 and 2001 Incentive Plans, which were approved by
shareholders in 1994, 1997 and 2001, respectively, are intended to attract,
motivate, retain and reward the executives whose leadership and performance are
critical to the Company's success in enhancing shareholder value. The Incentive
Plans help to place further emphasis on executive ownership of the Company's
Common Stock. The Incentive Plans are designed to assure the deductibility of
executive compensation for federal and state income tax purposes.
Short-Term Incentives. The Management Bonus Program is administered
pursuant to the Incentive Plans. The Management Bonus Program provides bonus
opportunities that can be earned upon the achievement by the Company of
predetermined annual earnings growth objectives. No bonuses are paid if
performance is below the threshold level of corporate profitability. If the
financial goals are fully met, 100% of the stated bonus opportunity is earned. A
bonus equal to 300% of the February 1, 2003 base salary was paid to the Chairman
and Chief Executive Officer, a bonus equal to 250% of the February 1, 2003 base
salary was paid to the President, bonuses equal to 200% of the February 1, 2003
base salary were paid to the two Senior Executive Vice Presidents, and a bonus
equal to 150% of the February 1, 2003 base salary was paid to the fifth highest
paid executive because the Company's financial results for the 2003 Fiscal Year
exceeded the maximum predetermined annual earnings growth objectives.
Long-Term Incentives. The Incentive Plans authorize the grant of stock
options. The option price cannot be less than the market price of the Company's
Common Stock on the date on which the option is granted. Consequently, stock
options granted under the Incentive Plans measure performance and provide
compensation solely on the basis of the appreciation in the price of the
Company's Common Stock. During Fiscal Year 2003, the Committee approved a
broad-based stock option grant to executive and senior management, middle
managers and professionals, and retail store managers.
15
Stock appreciation rights also may be granted under the Incentive Plans.
These rights entitle the recipient to receive a payment based solely on the
appreciation in the Company's Common Stock following the date of the award.
Stock appreciation rights thus measure performance and provide compensation only
if the price of the Company's Common Stock appreciates. No stock appreciation
rights grants were made during Fiscal Year 2003, nor are any previous grants
outstanding.
Under the 2001 Incentive Plan, the Committee approved the grant of deferred
stock units for a total of 550,000 shares to senior executives on March 1, 2003.
Mr. Tillman was granted 150,000 units. Messrs. Niblock, Pond and Stone were
granted 100,000 units each, and Mr. Bridgeford and one other Senior Vice
President were granted 50,000 units each. Each of the grants, with the exception
of Mr. Niblock's, will vest 40% on the third anniversary of the grant and the
remaining 60% on the fifth anniversary of the grant. Mr. Niblock's grant will be
fully vested on the fifth anniversary of the grant.
The Incentive Plans also authorize awards of Company Common Stock. No
Performance Accelerated Restricted Stock (PARS) or Performance Stock Awards were
issued during Fiscal Year 2003, nor are any previous grants outstanding.
The Incentive Plans include a Deferral Program. The Deferral Program,
available to executives at or above the Vice-President level, permits deferral
of receipt of certain stock incentives (vested performance stock awards and
performance accelerated restricted stock and gain on non-qualified stock
options), but not salary or bonus. The single exception to this provision is
that the Deferral Program will accept the mandatory deferral of cash
compensation to the extent that it would not be a tax-deductible item for the
Company under Internal Revenue Code Section 162(m).
The Deferral Program requires that the executive make a deferral election
in the year prior to the year in which a stock option is exercised or the year a
restricted stock grant vests. Deferred shares are cancelled upon the
participant's election and tracked as phantom shares. During the deferral
period, the participant's account is credited with amounts equal to the
dividends paid on actual shares. Shares are reissued when distributed to the
executive. Unless a participant elects otherwise, deferred benefits are
generally payable beginning on the March 15 following the earlier of the
executive's retirement or other termination of employment or his or her 65th
birthday.
The Deferral Program is unfunded. A deferred benefit under the Program is
at all times a mere contractual obligation of the Company. A participant and his
beneficiaries have no right, title, or interest in the benefits deferred under
the Program or any claim against them.
Benefit Restoration Plan
The Company's Benefit Restoration Plan is intended to provide qualifying
executives with benefits equivalent to those received by all other employees
under the Company's basic qualified employee retirement plans. Qualifying
executives are those whose annual additions and other benefits, as normally
provided to all participants under those qualified plans, would be curtailed by
the effect of Internal Revenue Code restrictions.
Cash Deferral Plan
The Cash Deferral Plan, adopted by the Company on December 5, 2003 is
intended to permit qualifying executives to voluntarily defer a portion of their
base salary, management bonus and certain other bonuses on a tax-deferred basis,
and to have such deferred amounts credited with earnings, generally using the
same investment choices as are available from time to time under the Benefit
Restoration Plan. Qualifying executives are those in director level and above
positions.
The Deferral Program is unfunded. A deferred benefit under the Program is
at all times a mere contractual obligation of the Company. A participant and his
beneficiaries have no right, title, or interest in the benefits deferred under
the Program or any claim against them.
16
Other Compensation
The Company's executive officers participate in the various qualified and
non-qualified employee benefit plans sponsored by the Company. The Company makes
only nominal use of perquisites in compensating its executive officers.
The CEO's Compensation in the Fiscal Year Ended January 30, 2004
The Committee made no change to Mr. Tillman's annual base salary of
$1,000,000 effective January 31, 2004, the start of the next fiscal year. The
Committee authorized payment to Mr. Tillman of an annual bonus of $3,000,000
under the 2003 Management Bonus Program. The Committee determined Mr. Tillman's
bonus solely on the basis of the Company's earnings performance versus the goals
for such performance which the Committee established at the beginning of the
performance period.
Mr. Tillman was granted options for 287,000 shares of Company Stock on
March 1, 2003 with an exercise price of $39.30 per share, the fair market value
of the Stock on the date of the grant; 2,544 shares of the grant are incentive
stock options and the remaining 284,456 shares are non-qualified stock options.
The options become exercisable in thirds after one, two and three years from the
date of the grant. The options expire after seven years. Mr. Tillman also
received a grant on March 1, 2003 of 150,000 deferred stock units. The grant
will vest 40% on the third anniversary of the grant and the remaining 60% on the
fifth anniversary of the grant.
Mr. Tillman received a Benefit Restoration Plan matching contribution of
$346,000 for the fiscal year ended January 30, 2004.
The Committee believes that the payments and stock incentives described
herein were necessary to maintain the competitiveness of Mr. Tillman's
compensation package in comparison to those of other chief executive officers of
similarly situated companies.
* * *
The Committee believes that the Company's Executive Compensation Program
has been strongly linked to the Company's performance and the enhancement of
shareholder value. The Committee intends to continually evaluate the Company's
compensation philosophies and plans to ensure that they are appropriately
configured to align the interests of executives and shareholders and to ensure
that the Company can attract, motivate and retain talented management personnel.
Paul Fulton, Chairman
Leonard L. Berry
Peter C. Browning
Dawn E. Hudson
17
AUDIT MATTERS
Report of the Audit Committee
This report by the Audit Committee is required by the rules of the
Securities and Exchange Commission. It is not to be deemed incorporated by
reference by any general statement which incorporates by reference this Proxy
Statement into any filing under Securities Act of 1933 or the Securities
Exchange Act of 1934, and it is not to be otherwise deemed filed under either
such Act.
The Audit Committee has five members, all of whom are independent directors
as defined by Section 303A.02 of the New York Stock Exchange Listed Company
Manual and Rule 10A-3(b)(1)(ii) of the Securities Exchange Act of 1934, as
amended. Each member of the Audit Committee is financially literate and
qualified to review and assess financial statements. The Board of Directors has
determined that Richard K. Lochridge, Robert A. Ingram, Claudine B. Malone,
Stephen F. Page and O. Temple Sloan, Jr. each qualifies as an "audit committee
financial expert," as such term is defined by the Securities and Exchange
Commission.
The Committee reviews the general scope of the Company's annual audit and
the fees charged by the Company's independent auditors, determines duties and
responsibilities of the internal auditors, reviews financial statements and
accounting principles being applied, and reviews audit results and other matters
relating to internal control and compliance with the Company's code of ethics.
In carrying out its responsibilities, the Committee has:
o reviewed and discussed the audited financial statements with
management,
o met periodically with the Company's Vice President of Internal Audit
and the independent auditors, with and without management present, to
discuss the results of their examinations, the evaluations of the
Company's internal controls, and the overall quality of the Company's
financial reporting,
o discussed with the independent auditors the matters required to be
communicated to audit committees by Statement on Auditing Standards
No. 61, as amended, and
o received and discussed with the independent auditors their written
report on their independence from the Company and its management,
which is made under Rule 3600T of the Public Company Accounting
Oversight Board, which adopts on an interim basis Independence
Standards Board Standard No. 1, and has discussed with the independent
auditors whether the provision of non-audit services provided by them
to the Company during 2003 was compatible with that firm's
independence.
Based on the review and discussions noted above and the report of the
independent auditors to the Audit Committee, the Audit Committee has recommended
to the Board of Directors that the Company's audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
January 30, 2004.
Richard K. Lochridge (Chairman)
Robert A. Ingram
Claudine B. Malone
Stephen F. Page
O. Temple Sloan, Jr.
18
Fees Paid to the Independent Auditors
The aggregate fees billed to the Company for the last two fiscal years by
the Company's independent auditors, Deloitte, were:
2003 2002
-------- --------
Audit Fees (1) ................................... $708,468 $600,000
Audit-Related Fees (2) ........................... 284,539 155,306
Tax Fees (3) ..................................... 162,347 537,387
All Other Fees ................................... 0 0
---------------
(1) Audit fees consist of fees billed for professional services for the audit
of the Company's consolidated financial statements included in Form 10-K,
review of financial statements included in Form 10-Qs and services provided
by the independent auditors in connection with the Company's statutory
filings for the last two fiscal years.
(2) Audit-related fees are fees billed by the independent auditors for
assurance and related services that are reasonably related to the
performance of the audit or review of the Company's financial statements,
and included audits of the Company's employee benefit plans, consultations
in connection with Section 404 of the Sarbanes-Oxley Act of 2002 and other
consultations concerning financial accounting and reporting standards.
(3) Tax fees consist of fees billed for professional services rendered for tax
compliance, tax advice, and tax planning. Also included in this category is
assistance with the Company's license renewal for its offices in China,
software licensing and tax return review.
The Audit Committee has considered whether the provision of this level of
audit-related, tax and all other services is compatible with maintaining the
independence of Deloitte. The Audit Committee, or the Chairman of the Audit
Committee pursuant to a delegation of authority from the Committee set forth in
the Committee's charter, approves the engagement of Deloitte to perform all such
services before Deloitte is engaged to render them.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee has appointed Deloitte to serve as independent auditors
for the fiscal year 2004. Deloitte has served as the Company's independent
auditors since 1982 and is considered by management to be well qualified.
Shareholder ratification of the Audit Committee's selection of Deloitte as
our independent auditors is not required by the Company's Bylaws or otherwise;
however, the Board of Directors is submitting the selection of Deloitte to the
shareholders for ratification. If the shareholders fail to ratify the Audit
Committee's selection, the Audit Committee will reconsider whether to retain
Deloitte as the Company's independent auditors. In addition, even if the
stockholders ratify the selection of Deloitte, the Audit Committee may in its
discretion appoint a different independent accounting firm at any time during
the year if the audit committee determines that a change is in the best
interests of the Company.
Representatives of Deloitte are expected to be present at the Annual
Meeting, where they will have the opportunity to make a statement, if they
desire to do so, and be available to respond to appropriate questions.
Our Board of Directors recommends a vote "FOR" the ratification of the
appointment of Deloitte as independent auditors. Proxies received by the Board
of Directors will be so voted unless shareholders specify in their proxies a
contrary choice.
ADDITIONAL INFORMATION
Solicitation of Proxies
The cost of solicitations of proxies will be borne by the Company. In
addition to the use of the mail, proxies may be solicited personally, by
telephone, by telegraph or by certain employees of the Company. The Company may
reimburse brokers or other persons holding stock in their names or in the names
of nominees for their expense in sending proxy materials to principals and
obtaining their proxies. The Company has engaged the proxy soliciting firm of
Georgeson Shareholder Communications Inc. to distribute proxy materials and
solicit proxies for the Annual Meeting at an anticipated cost of $8,000 (plus
handling fees).
19
Voting of Proxies
Where a choice is specified with respect to any matter to come before the
meeting, the shares represented by the proxy will be voted in accordance with
such specifications.
Where a choice is not so specified, the shares represented by the proxy
will be voted "FOR ALL" nominees named in Proposal One and "FOR" Proposal Two as
set forth in the Notice of Annual Meeting and Proxy Card.
Management is not aware that any matters other than those specified herein
will be presented for action at the meeting, but if any other matters do
properly come before the meeting, the persons named as Proxies will vote upon
such matters in accordance with their best judgment.
In the election of directors, a specification to withhold authority to vote
for the slate of nominees named on the proxy card will not constitute an
authorization to vote for any other nominee.
Delivery of Proxy Statements
As permitted by the Securities Exchange Act of 1934, as amended, only one
copy of this proxy statement is being delivered to shareholders residing at the
same address, unless such share owners have notified the Company of their desire
to receive multiple copies of the proxy statement.
The Company will promptly deliver, upon oral or written request, a separate
copy of the proxy statement to any shareholder residing at an address to which
only one copy was mailed. Requests for additional copies and/or to request
multiple copies of the proxy statement in the future should be directed to our
Investor Relations Department, 1000 Lowe's Boulevard, Mooresville, North
Carolina 28117, (704) 758-1000.
Shareholders residing at the same address and currently receiving multiple
copies of the proxy statement may contact our Investor Relations Department,
1000 Lowe's Boulevard, Mooresville, North Carolina 28117, (704) 758-1000 to
request that only a single copy of the proxy statement be mailed in the future.
SHAREHOLDER PROPOSALS FOR THE 2005 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 2005 Annual
Meeting must be received by the Board of Directors for consideration for
inclusion in the Proxy Statement and form of proxy relating to that meeting on
or before December 18, 2004. In addition, if the Company receives notice of a
shareholder proposal after March 2, 2005, the persons named as Proxies in the
Proxy Statement for the 2005 Annual Meeting will have discretionary voting
authority to vote on such proposal at the 2005 Annual Meeting. Proposals should
be addressed to the attention of Ross W. McCanless, Senior Vice President,
General Counsel and Secretary, at the Company's principal executive offices,
1000 Lowe's Boulevard, Mooresville, North Carolina 28117.
ANNUAL REPORT
The Annual Report to shareholders accompanies this Proxy Statement. The
Company's report to the Securities and Exchange Commission on Form 10-K for the
Fiscal Year ended January 30, 2004 is available upon written request addressed
to Lowe's Companies, Inc., Investor Relations Department, 1000 Lowe's Boulevard,
Mooresville, North Carolina 28117.
By order of the Board of Directors,
/s/ ROSS W. MCCANLESS
---------------------------
Ross W. McCanless
Senior Vice President,
General Counsel & Secretary
Mooresville, North Carolina
April 16, 2004
20
APPENDIX A
AUDIT COMMITTEE CHARTER
Purpose
The Audit Committee (the "Committee") is established by the Board of
Directors (the "Board") of Lowe's Companies, Inc. (the "Company") as an
independent and objective committee of the Board. Its primary purposes are:
o to assist the Board in monitoring (a) the integrity of the Company's
financial statements, (b) the Company's legal and regulatory
compliance, (c) the Company's independent auditor's qualifications and
independence, (d) the performance of the Company's internal audit
function and independent auditors, and (e) compliance by the Company
with its established internal controls; and
o to prepare the Audit Committee report that is required by the rules of
the Securities and Exchange Commission (the "SEC") to be included in
the Company's annual proxy statement.
Composition and Procedure
The Committee shall consist of at least three (3) directors. The members of
the Committee shall qualify as "independent" under the requirements of the New
York Stock Exchange (the "NYSE"), Section 10A(m)(3) of the Securities Exchange
Act of 1934 (the "Exchange Act") and the rules and regulations of the SEC. The
members of the Committee shall meet the financial literacy requirements of the
NYSE, as such qualification is interpreted by the Board in its business
judgment. At least one member of the Committee shall qualify as a "financial
expert" (as defined by SEC rules) and have accounting or related financial
management expertise, as the Board interprets such qualification in its business
judgment, and in accordance with the NYSE requirements and SEC rules.
The members of the Committee shall be nominated by the Governance Committee
of the Board and appointed by the Board in accordance with the Bylaws of the
Company. The members of the Committee shall serve at the pleasure of the Board
for such term or terms as the Board may determine. The Board shall designate the
Chairperson of the Committee. Except as expressly provided in this Charter, the
Bylaws of the Company or the Corporate Governance Guidelines of the Company, the
Committee shall fix its own rules of procedure.
The Committee shall have full and unrestricted access to all personnel,
records, operations, properties and other informational sources of the Company
as required to properly discharge its responsibilities. Further, the Committee
is authorized to investigate any activity of the Company and all employees are
directed to cooperate as requested by members of the Committee. The Committee is
also authorized to retain and pay outside counsel and other advisors as it deems
necessary to assist the Committee in fulfilling its responsibilities.
The Company shall provide for appropriate funding, as determined by the
Committee, for payment of compensation to the Company's independent auditor, to
any advisors employed by the Committee and ordinary administrative expenses of
the Committee that are necessary or appropriate in carrying out its
responsibilities.
The Committee shall meet at such times as it deems necessary, but not less
frequently than quarterly, and shall meet periodically, with management, the
senior internal auditing executive and the independent auditor in separate
executive sessions.
The Committee shall make regular reports to the Board and, to the extent it
deems necessary or appropriate, review with the Board any issues that arise with
respect to the quality or integrity of the Company's financial statements, the
Company's compliance with legal or regulatory requirements, the compliance by
the Company with its established internal controls, the performance and
independence of the Company's independent auditor or the performance of the
Company's internal audit function.
A-1
Committee Authority And Responsibilities
The Committee shall have the following authority and responsibilities:
o To be directly and solely responsible for the appointment,
compensation, retention and oversight of the work of the Company's
independent auditor (including resolution of disagreements between
management and the independent auditor regarding financial reporting)
for the purpose of preparing or issuing an audit report or performing
other audit, review or attest services for the Company, and such
independent auditor must report directly to the Committee.
o To review and reassess the adequacy of this Charter annually and
submit changes to the Board for approval.
o To review and discuss with management and the independent auditor the
Company's annual audited financial statements and quarterly financial
statements, including significant issues regarding accounting
principles, estimates, judgments and practices, and disclosures made
under "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in quarterly and annual reports, and recommend
to the Board whether the audited financial statements should be
included in the Company's Form 10-K.
o To discuss with the independent auditor the matters required to be
discussed by Statement of Auditing Standards No. 61 relating to the
conduct of the audit.
o To review and discuss with management and the independent auditor at
least annually the effect of significant regulatory, legislative and
accounting initiatives that may impact the financial reporting
environment for the Company.
o To discuss with management, the independent auditor and the Company's
internal audit department their qualitative judgments about the
acceptability and appropriateness of accounting principles and
financial disclosure practices used or proposed to be adopted by the
Company, particularly the degree of aggressiveness or conservatism of
its accounting principles and underlying estimates.
o To review and discuss the Company's major financial risk exposures and
the steps management has taken to identify, assess, monitor, control,
remediate and report such exposures.
o To review analyses prepared by management and/or the independent
auditor of significant financial reporting issues and judgments made
in connection with the preparation of the Company's financial
statements, including analyses of the effects of alternative GAAP
methods on the financial statements.
o To review significant issues regarding the Company's auditing and
accounting principles and practices and financial statement
presentations and any major changes as suggested by the independent
auditor, internal auditors or management.
o To consider whether the provision of permitted non-audit services is
compatible with maintaining the independent auditor's independence.
o To review the scope and general extent of the independent auditor's
audit examination prior to the annual audit, taking into account the
Vice President of Internal Audit's evaluation for the performance of
the independent auditors, including the degree of audit coordination
and overall audit coverage.
o To review and approve the appointment, annual performance appraisal or
discharge of the Vice President of Internal Audit.
o To meet on an annual basis with the Vice President of Internal Audit
to:
o Review the Internal Audit department's scope, staffing,
training/development, budget and audit schedule, including the
risk assessment upon which the audit schedule was developed, as
well as plans for reviews of the Company's information systems,
procedures and controls;
o Review and approve the initial audit plan and any significant
subsequent changes to the plan, the results of internal audit
activities, including the independence, objectivity and
qualifications of the internal audit staff, and periodically
review and approve the Internal Audit Department charter;
A-2
o Review management's monitoring of compliance with the Company's
Code of Ethics, including disclosures of insider and affiliated
party transactions.
o To regularly review with the independent auditor any problems or
difficulties the auditor may have encountered in the course of the
audit work and management's response, including:
o The responsibilities, budget and staffing of the Company's
internal audit function;
o Any restrictions on the scope of activities or access to required
information, and any significant disagreements with management;
o Any accounting adjustments that were noted or proposed by the
auditor but were not made by the Company;
o Any communications between the audit team and the independent
auditor's national office concerning material auditing or
accounting issues; and
o Any "management" or "internal control" letter issued, or proposed
to be issued, by the independent auditor to the Company.
o To discuss with management, the independent auditor and the Company's
internal audit department significant issues as to the adequacy of the
Company's internal controls and any special audit steps adopted in
light of material control deficiencies.
o To prepare the report required by the rules of the SEC to be included
in the Company's annual proxy statement.
o To review with the Company's General Counsel legal matters that may
have a material impact on the Company's financial statements,
accounting policies, compliance with applicable laws and regulations
or the Company's compliance policies and any material reports or
inquiries received from regulators or governmental agencies.
o To pre-approve all engagements related to audit, review and attest
reports required under the securities laws and all other engagements
permissible under the Exchange Act, subject to such exception with
respect to such other engagements as may be provided under the
Exchange Act, for services to be performed for the Company by its
independent auditor, including, in both cases, the fees and terms
thereof.
o To set clear policies for hiring current or former partners,
principles, shareholders and employees of the independent auditor in
accordance with applicable law.
o To review a report from the independent auditor annually prior to the
filing of the Form 10-K on:
o Critical accounting policies and practices to be used;
o Alternative treatments of financial information within generally
accepted accounting principles ("GAAP") that have been discussed
with management, including ramifications of the use of such
alternative disclosures and treatments, and the treatment
preferred by the independent auditor; and
o Other material written communications between the independent
auditor and management, such as any management letter or schedule
of unadjusted differences.
o To establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal
accounting controls or auditing matters, and the confidential,
anonymous submission by employees of concerns regarding questionable
accounting or auditing matters.
o To review and discuss earnings press releases, including the use of
"pro forma" or "adjusted" non-GAAP financial information, and
financial information, as well as the Company's policies and
procedures with respect to earnings guidance provided to analysts and
rating agencies, which may consist of a discussion of the types of
information to be disclosed and the type of presentation to be made
and need not be done in advance.
A-3
o At least annually, to obtain and review a report from the independent
auditor describing:
o The firm's internal quality-control procedures;
o Any material issues raised by the most recent internal
quality-control review, or by any inquiry, review or
investigation by governmental or professional authorities, within
the preceding five years, respecting one or more independent
audits carried out by the independent auditor, and any steps
taken to deal with any such issues; and
o Relationships between the independent auditor and the Company in
order to assess the auditor's independence.
o To conduct an annual evaluation of the qualification, performance and
independence of the independent auditor, including a review and
evaluation of the performance of the lead audit partner.
o To ensure the regular rotation of the lead audit partner in accordance
with applicable law and to consider whether there should be regular
rotation of the independent audit firm.
o To conduct an annual evaluation of the Committee's performance with
the assistance of the Governance Committee of the Board.
Delegation
The Committee may delegate to the Chairperson of the Committee, the
authority to grant pre-approvals of engagements related to the audit of the
Company and all other engagements permissible under the Exchange Act, with the
exception of the annual audit to be performed by the independent accountant,
provided that decisions of the Chairperson to grant pre-approvals shall be
presented to the full Committee at its next scheduled meeting and subject to the
disclosure provisions of the Exchange Act. The Committee may, in its discretion,
delegate all or a portion of its authority and responsibilities to a
subcommittee of the Committee when appropriate.
Limitation of Committee's Role
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statements and disclosures are complete
and accurate and are in accordance with GAAP and applicable rules and
regulations. This is the responsibility of management and the independent
auditor.
A-4
--------------------------------------------------------------------------------
Directions to The Park Hotel
From Charlotte Douglas International Airport:
Take airport freeway to Billy Graham Parkway South. Follow Billy Graham until
the road name changes to Woodlawn Road. Cross 3 intersections (Old Pineville
Road, South Boulevard and Park Road). Woodlawn becomes Runnymede at the
intersection of Selwyn Avenue. Continue straight on Runnymede. At the second
light turn right onto Colony Road. Turn right onto Roxborough Road. Turn right
onto Rexford, and The Park Hotel is on the left.
From I-85 North:
Take Billy Graham Parkway Exit #33. Follow Billy Graham until the road
name changes to Woodlawn Road. Cross 3 intersections (Old Pineville Road,
South Boulevard and Park Road). Woodlawn becomes Runnymede at the
intersection of Selwyn Avenue. Continue straight on Runnymede. At the second
light turn right onto Colony Road. Turn right onto Roxborough Road. Turn right
onto Rexford, and The Park Hotel is on the left.
From I-85 South:
Take Billy Graham Parkway Exit #33. Follow Billy Graham until the road
name changes to Woodlawn Road. Cross 3 intersections (Old Pineville Road,
South Boulevard and Park Road). Woodlawn becomes Runnymede at the
intersection of Selwyn Avenue. Continue straight on Runnymede. At the second
light turn right onto Colony Road. Turn right onto Roxborough Road. Turn right
onto Rexford, and The Park Hotel is on the left.
From I-77 South:
Take Exit #5, Tyvola Road and turn left at the end of the ramp. Continue on
Tyvola Road. At the intersection of Park Road and Tyvola Road, cross Park Road,
Tyvola becomes Fairview Road. Continue on Fairview. At Barclay Downs (Wachovia
is on the left) turn left. Turn right at the light (second intersection) onto
Morrison Boulevard. Turn left onto Coca-Cola Boulevard (first left). Turn right
onto Rexford Road, and The Park Hotel is on the right.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
--------------------------------------------------------------------------------
COMMON STOCK PROXY COMMON STOCK
LOWE'S COMPANIES, INC.
2004 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Ross W. McCanless and Robert F. Hull, Jr. as
Proxies, each with the full power to appoint his substitute, and hereby
authorizes them to represent and vote, as designated on the reverse side, all
the shares of Common Stock of Lowe's Companies, Inc. held of record by the
undersigned on April 1, 2004, at the Annual Meeting of Shareholders to be held
on May 28, 2004, at The Park Hotel, 2200 Rexford Road, Charlotte, North Carolina
or any adjournment thereof. The Board of Directors recommends a vote "FOR ALL"
nominees named in Proposal 1 and "FOR" Proposal 2.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted "FOR ALL" nominees named in Proposal 1 and "FOR" Proposal 2. In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the meeting.
PLEASE MARK, SIGN AND DATE ON THE REVERSE SIDE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE, OR FOLLOW THE INSTRUCTIONS TO VOTE BY
TELEPHONE OR INTERNET.
CONTINUE ON THE REVERSE SIDE
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RECEIVE FUTURE PROXY MATERIALS ELECTRONICALLY. Receiving shareholder material
electronically reduces mailing and printing costs and is better for the
environment. Would you like to receive future proxy materials electronically? If
so go to http://www.econsent.com/low and follow the instructions provided.
Shareholders who elect this option will be notified each year by e-mail how to
access the proxy materials and how to vote their shares on the Internet.
You may access Lowe's Companies, Inc.'s 2003 Annual Report at
www.Lowes.com/annualreport and Proxy Statement at www.Lowes.com/proxy.
PROXY AND VOTING INSTRUCTIONS
Lowe's Companies, Inc. encourages all shareholders to vote. We provide three
convenient methods for voting listed below:
Your vote is important. Please vote immediately.
---------------------------------- -----------------------------------
| Vote-by-Internet [GRAPHIC | | Vote-by-Telephone [GRAPHIC |
| OMITTED] | OR | OMITTED] |
|--------------------------------- -----------------------------------
| Log on to the Internet and go | | Call toll-free |
| to http://www.eproxyvote.com/low | | 1-877-PRX-VOTE (1-877-779-8683) |
---------------------------------- -----------------------------------
If you vote over the Internet or by telephone, please do not mail your card.
-------------- Complete, sign, date and return the Proxy Card
| Vote by Mail | attached below in the enclosed envelope.
--------------
FOLD AND DETACH HERE
--------------------------------------------------------------------------------
XXXX
[X] Please mark
votes as in
this example.
------------------------------------------ ------------------------------------------
| The Board of Directors recommends a vote | | The Board of Directors recommends a vote |
| "FOR ALL" nominees named in Proposal 1. | | "FOR" Proposal 2. |
------------------------------------------ ------------------------------------------
1. Election of Directors.
Nominees: (01) Leonard L. Berry, (02) Paul
Fulton, (03) Dawn E. Hudson, (04) Marshall FOR AGAINST ABSTAIN
O. Larsen, (05) Robert A. Niblock, 2. Ratification of Appointment of Deloitte & [ ] [ ] [ ]
(06) Stephen F. Page, (07) O. Temple Sloan, Touche LLP as the Company's Independent
Jr., (08) Robert L. Tillman. Auditors for the 2004 Fiscal Year.
FOR ALL [ ] [ ] WITHHELD In their discretion, the Proxies are authorized to vote upon
NOMINEES FROM ALL such other business as may properly come before the meeting.
NOMINEES
[ ] ----------------------------------------
For all nominees except as written above MARK HERE FOR MARK HERE IF YOU
ADDRESS CHANGE AND [ ] PLAN TO ATTEND THE [ ]
NOTE AT LEFT MEETING
Please sign exactly as your name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as
such, and where more than one name appears, each should sign.
If a corporation, this signature should be that of an authorized
officer who should state his or her title.
Signature Date: Signature Date:
------------------------ ------------- ------------------------ -------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
--------------------------------------------------------------------------------
401(k) STOCK PROXY 401(k) STOCK
LOWE'S COMPANIES, INC.
2004 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TO: STATE STREET BANK AND TRUST COMPANY, TRUSTEE OF THE LOWE'S 401(k) PLAN
("401(k)")
As a participant in the 401(k), I direct State Street Bank and Trust Company,
Trustee of the 401(k), to vote the shares of Lowe's Companies, Inc. Common Stock
allocated to my 401(k) account at the Annual Meeting of Shareholders to be held
on May 28, 2004, at The Park Hotel, 2200 Rexford Road, Charlotte, North
Carolina, and at any adjournment thereof, in accordance with the direction on
the reverse side. Any allocated shares for which no instructions are timely
received will be voted by the Trustee in the manner directed by a 401(k)
fiduciary committee. The Board of Directors recommends a vote "FOR ALL" nominees
named in Proposal 1 and "FOR" Proposal 2.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted "FOR ALL" nominees named in Proposal 1 and "FOR" Proposal 2. In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the meeting.
PLEASE MARK, SIGN AND DATE ON THE REVERSE SIDE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE, OR FOLLOW THE INSTRUCTIONS TO VOTE BY
TELEPHONE OR INTERNET.
CONTINUE ON THE REVERSE SIDE
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RECEIVE FUTURE PROXY MATERIALS ELECTRONICALLY. Receiving shareholder material
electronically reduces mailing and printing costs and is better for the
environment. Would you like to receive future proxy materials electronically? If
so go to http://www.econsent.com/low and follow the instructions provided.
Shareholders who elect this option will be notified each year by e-mail how to
access the proxy materials and how to vote their shares on the Internet.
You may access Lowe's Companies, Inc.'s 2003 Annual Report at
www.Lowes.com/annualreport and Proxy Statement at www.Lowes.com/proxy.
PROXY AND VOTING INSTRUCTIONS
Lowe's Companies, Inc. encourages all shareholders to vote. We provide three
convenient methods for voting listed below:
Your vote is important. Please vote immediately.
---------------------------------- -----------------------------------
| Vote-by-Internet [GRAPHIC | | Vote-by-Telephone [GRAPHIC |
| OMITTED] | OR | OMITTED] |
|--------------------------------- -----------------------------------
| Log on to the Internet and go | | Call toll-free |
| to http://www.eproxyvote.com/low | | 1-877-PRX-VOTE (1-877-779-8683) |
---------------------------------- -----------------------------------
If you vote over the Internet or by telephone, please do not mail your card.
-------------- Complete, sign, date and return the Proxy Card
| Vote by Mail | attached below in the enclosed envelope.
--------------
FOLD AND DETACH HERE
--------------------------------------------------------------------------------
XXXX
[X] Please mark
votes as in
this example.
------------------------------------------ ------------------------------------------
| The Board of Directors recommends a vote | | The Board of Directors recommends a vote |
| "FOR ALL" nominees named in Proposal 1. | | "FOR" Proposal 2. |
------------------------------------------ ------------------------------------------
1. Election of Directors.
Nominees: (01) Leonard L. Berry, (02) Paul
Fulton, (03) Dawn E. Hudson, (04) Marshall FOR AGAINST ABSTAIN
O. Larsen, (05) Robert A. Niblock, 2. Ratification of Appointment of Deloitte & [ ] [ ] [ ]
(06) Stephen F. Page, (07) O. Temple Sloan, Touche LLP as the Company's Independent
Jr., (08) Robert L. Tillman. Auditors for the 2004 Fiscal Year.
FOR ALL [ ] [ ] WITHHELD In their discretion, the Proxies are authorized to vote upon
NOMINEES FROM ALL such other business as may properly come before the meeting.
NOMINEES
[ ] ----------------------------------------
For all nominees except as written above
Please sign exactly as your name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as
such, and where more than one name appears, each should sign.
If a corporation, this signature should be that of an authorized
officer who should state his or her title.
Signature Date: Signature Date:
------------------------ ------------- ------------------------ -------------
--------------------------------------------------------------------------------