UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
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
(Amendment
No. 1)
Filed by
the Registrant ¨
Filed by
a Party other than the Registrant x
Check the
appropriate box:
x Preliminary
Proxy Statement
¨ Confidential,
for Use of the Commission Only (as permitted by Rule14a-6(e)(2))
¨ Definitive
Proxy Statement
¨ Definitive
Additional Materials
¨ Soliciting
Material Under Rule 14a-12
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CHARMING
SHOPPES, INC.
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(Name
of Registrant as Specified in Its Charter)
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CRESCENDO
PARTNERS II, L.P., SERIES Q
CRESCENDO
INVESTMENTS II, LLC
CRESCENDO
PARTNERS III, L.P.
CRESCENDO
INVESTMENTS III, LLC
ERIC
S. ROSENFELD
MYCA
PARTNERS INC.
MYCA
MASTER FUND, LTD.
ROBERT
FRANKFURT
ARNAUD
AJDLER
MICHAEL
APPEL
CHARMING
SHOPPES FULL VALUE COMMITTEE
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(Name
of Persons(s) Filing Proxy Statement, if Other Than the
Registrant)
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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.
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(1) Title
of each class of securities to which transaction applies:
(2) Aggregate
number of securities to which transaction applies:
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(3)
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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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maximum aggregate value of transaction:
(5) Total
fee paid:
¨ Fee
paid previously with preliminary materials:
¨ Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount
previously paid:
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Schedule or Registration Statement No.:
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Filed:
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PRELIMINARY
COPY SUBJECT TO COMPLETION DATED MARCH 20, 2008
THE
CHARMING SHOPPES FULL VALUE COMMITTEE
_______,
2008
Fellow
Shareholders:
The
members of The Charming Shoppes Full Value Committee (the “Committee”) are
significant shareholders of Charming Shoppes, Inc., a Pennsylvania corporation
(“Charming Shoppes” or the “Company”). The Committee does not believe that the
current Board of Directors of the Company is acting in your best
interests. In particular, we are concerned with (i) the
Company’s capital allocation decisions, (ii) the Company’s operating
performance, (iii) the lack of focus on the Company’s core brands, (iv) the
compensation awarded to the Company’s senior management and (v) the Company’s
corporate governance practices. In our opinion, these factors have
contributed to a market valuation that does not reflect the intrinsic value of
the Company. The Committee is therefore seeking your support at the
upcoming annual meeting to elect its slate of three highly qualified director
nominees.
If
elected, our nominees will represent a minority of the
Board. Accordingly, the nominees will not be able to adopt any
measures without the support of at least some members of the current
Board. Nevertheless, we believe that the election of our nominees
will provide a strong signal to the current Board that the Company’s
shareholders demand a change in the direction of the Company and support the
Committee’s plans for increasing shareholder value.
The
Committee urges you to consider carefully the information contained in the
attached Proxy Statement and then support its efforts by signing, dating and
returning the enclosed WHITE proxy card today. The attached Proxy
Statement and the enclosed WHITE proxy card are first being furnished to the
shareholders on or about _____, 2008.
If you
have already voted for the incumbent management slate using the gold proxy
card, you have every right to change your vote by signing, dating and returning
a later dated proxy.
If
you have any questions or require any assistance with your vote, please contact
D.F. King & Co., Inc., which is assisting us, at their address and toll-free
numbers listed on the following page.
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Thank
you for your support,
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THE
CHARMING SHOPPES FULL VALUE
COMMITTEE
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3
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If
you have any questions, require assistance in voting your WHITE proxy
card,
or
need additional copies of the Committee’s proxy materials, please
contact:
D.F.
KING & CO., INC.
48
Wall Street 22nd Floor
New
York, NY 10005
CALL
TOLL FREE: (800) 735-3107
OR
BANKS
AND BROKERS CALL COLLECT: (212) 269-5550
OR
EMAIL:
info@dfking.com
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4
PRELIMINARY
COPY SUBJECT TO COMPLETION DATED MARCH 20, 2008
2008
ANNUAL MEETING OF THE SHAREHOLDERS
OF
CHARMING
SHOPPES, INC.
_____________________
PROXY
STATEMENT
OF
THE
CHARMING SHOPPES FULL VALUE COMMITTEE
_____________________
Members
of The Charming Shoppes Full Value Committee (the “Committee”) are significant
shareholders of Charming Shoppes, Inc. (“Charming Shoppes” or the
“Company”). The Committee does not believe that the current Board of
Directors of Charming Shoppes (the “Charming Shoppes Board”) is acting in the
best interests of its shareholders. The Committee is therefore
seeking your support at the annual meeting of shareholders scheduled to be held
at [__________________, __________, _________ ________,] on May 8, 2008, at
10:00 A.M. (eastern time), including any adjournments or postponements thereof
and any meeting which may be called in lieu thereof (the “Annual Meeting”) for
the following:
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1.
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To
elect the Committee’s slate of director nominees, Arnaud Ajdler, Michael
Appel and Robert Frankfurt (the “Nominees”), to serve as Class C directors
of the Company for a three-year term that expires at the 2011 annual
meeting of the Company’s
shareholders;
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2.
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To
vote against the Company’s proposal to re-approve the material terms of
the performance goals under the Company’s 2003 Incentive Compensation
Plan;
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3.
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To
ratify the appointment of Ernst & Young LLP as the Company’s
independent auditors to serve for the 2009 fiscal year;
and
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4.
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To
transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
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As of
________ __, 2008, the approximate date on which this Proxy Statement is being
mailed to shareholders, the members of the Committee were collectively the
beneficial owners of an aggregate of [9,280,805] shares of common stock of the
Company, $0.10 par value per share (the “Shares”), which currently represent
approximately [8.0%] of the issued and outstanding Shares. The
Committee is composed of Crescendo Partners II, L.P., Series Q, a Delaware
limited partnership (“Crescendo Partners II”), Crescendo Investments II, LLC, a
Delaware limited liability company (“Crescendo Investments II”), Crescendo
Partners III, L.P., a Delaware limited partnership (“Crescendo Partners III”),
Crescendo Investments III, LLC,
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a
Delaware limited liability company (“Crescendo Investments III”), Myca Master
Fund, Ltd., a Cayman Islands company (“Myca Master Fund”), Myca Partners Inc., a
Delaware corporation (“Myca Partners”), Eric Rosenfeld, Arnaud Ajdler, Michael
Appel and Robert Frankfurt. Each of these individuals and entities
are deemed participants in this proxy solicitation. See “Additional
Information Concerning the Participants.” This Proxy Statement and
the WHITE proxy card are
first being furnished to Charming Shoppes’ shareholders on or about ___________
__, 2008.
Charming Shoppes has set the record
date for determining shareholders entitled to notice of and to vote at the
Annual Meeting as March 28, 2008 (the “Record Date”). As of the
Record Date, the members of the Committee were collectively the beneficial
owners of an aggregate of [9,280,805] Shares, all of which Shares are entitled
to be voted at the Annual Meeting. The mailing address of the
principal executive offices of the Company is 450 Winks Lane, Bensalem,
Pennsylvania, 19020. Shareholders of record at the close of business
on the Record Date will be entitled to vote at the Annual
Meeting. According to the Company, as of the Record Date, there were
[_____________]
Shares outstanding and
entitled to vote at the Annual Meeting. The participants in this
solicitation intend to vote all of their Shares FOR the election of the Nominees,
AGAINST
the Company’s proposal to
re-approve the material
terms of the performance goals under the Company’s 2003 Incentive
Compensation Plan and FOR the ratification of the appointment of
Ernst & Young LLP as
the Company’s independent auditors to serve for the 2009 fiscal year, as described
in more detail herein.
THE
COMMITTEE’S NOMINEES ARE COMMITTED TO ACTING IN THE BEST INTEREST OF THE
COMPANY’S SHAREHOLDERS. WE BELIEVE THAT YOUR VOICE IN THE FUTURE OF
CHARMING SHOPPES CAN BEST BE EXPRESSED THROUGH THE ELECTION OF THE NOMINEES.
ACCORDINGLY, WE URGE YOU TO VOTE YOUR WHITE PROXY CARD FOR ARNAUD
AJDLER, MICHAEL APPEL AND ROBERT FRANKFURT.
THIS
SOLICITATION IS BEING MADE BY THE COMMITTEE AND NOT ON BEHALF OF THE BOARD OF
DIRECTORS OR MANAGEMENT OF CHARMING SHOPPES. THE COMMITTEE IS NOT
AWARE OF ANY OTHER MATTERS TO BE BROUGHT BEFORE THE ANNUAL
MEETING. SHOULD OTHER MATTERS, OF WHICH THE COMMITTEE IS NOT AWARE A
REASONABLE TIME BEFORE THIS SOLICITATION, BE BROUGHT BEFORE THE ANNUAL MEETING,
THE PERSONS NAMED AS PROXIES IN THE ENCLOSED WHITE PROXY CARD WILL VOTE ON
SUCH MATTERS IN THEIR DISCRETION.
IF YOU
HAVE ALREADY SENT A GOLD PROXY CARD FURNISHED BY THE COMPANY TO CHARMING
SHOPPES, YOU MAY REVOKE THAT PROXY AND VOTE AGAINST THE ELECTION OF CHARMING
SHOPPES’ NOMINEES BY SIGNING, DATING AND RETURNING THE ENCLOSED WHITE PROXY
CARD. THE LATEST DATED PROXY IS THE ONLY ONE THAT
COUNTS. ANY PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE ANNUAL
MEETING BY DELIVERING A WRITTEN NOTICE OF REVOCATION OR A LATER DATED PROXY FOR
THE ANNUAL MEETING TO OUR PROXY SOLICITOR, D.F. KING & CO., INC. (“D.F.
KING”) OR BY VOTING IN PERSON AT THE ANNUAL MEETING. SEE “RECORD DATE AND
VOTING” ON PAGE 22.
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IMPORTANT
Your vote is important, no matter how
many or few Shares you own. The Committee urges you to sign, date,
and return the enclosed WHITE proxy card today to vote FOR the election
of the Committee’s Nominees.
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If
your Shares are registered in your own name, please sign and date the
enclosed WHITE
proxy card and return it to the Committee, c/o D.F. King & Co., Inc.,
in the enclosed envelope today.
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If
your Shares are held in a brokerage account or bank, you are considered
the beneficial owner of the Shares, and these proxy materials, together
with a WHITE
voting form, are being forwarded to you by your broker or
bank. As a beneficial owner, you must instruct your broker,
trustee or other representative how to vote. Your broker cannot
vote your Shares on your behalf without your
instructions.
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Depending
upon your broker or custodian, you may be able to vote either by toll-free
telephone or by the Internet. Please refer to the enclosed
voting form for instructions on how to vote telephonically or
electronically. You may also vote by signing, dating and
returning the enclosed voting form.
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Since
only your latest dated proxy card will count, we urge you not to return any
proxy card you receive from the Company. Even if you return the
management proxy card marked “withhold” as a protest against the incumbent
directors, it will revoke any proxy card you may have previously sent to the
Committee. Remember, you can vote for our nominees only on our WHITE proxy
card. So please make certain that the latest dated proxy card you
return is the WHITE
proxy card.
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If
you have any questions, require assistance in voting your WHITE proxy
card,
or
need additional copies of the Committee’s proxy materials, please
contact:
D.F.
KING & CO., INC.
48
Wall Street 22nd Floor
New
York, NY 10005
CALL
TOLL FREE: (800) 735-3107
OR
BANKS
AND BROKERS CALL COLLECT: (212) 269-5550
OR
EMAIL:
info@dfking.com
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REASONS
FOR OUR SOLICITATION
We are
significant shareholders of the Company. The Committee owns in the
aggregate a total of [9,280,805] Shares, representing approximately [8.0]% of
the issued and outstanding common stock of the Company, which Shares were
purchased in the open market, except as otherwise noted on Schedule
I. As significant shareholders of Charming Shoppes, we have one
simple goal – to maximize the
value of the Shares for all shareholders.
Our Nominees will attempt to work
with other members of the Board to pursue options that we believe are in the
best interests of all shareholders and which have the ability to maximize
shareholder value. In putting forth the Nominees for election at the
Annual Meeting, the Committee is not attempting to take control of the
Company. If our Nominees are elected to the Charming Shoppes Board,
they will comprise a minority of the Board.
We do not believe that the current
Charming Shoppes Board has served the best interests of the Company’s
shareholders, and we question the ability of the current Charming Shoppes Board
to improve the Company’s operating performance and enhance shareholder
value. Without change to the current Charming Shoppes Board, we also
fear that the Company’s intrinsic value may continue to erode under the
continued stewardship of current senior management.
Specifically,
our concerns include the following:
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Charming Shoppes’ stock
performance;
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Charming Shoppes’ capital
allocation decisions;
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Charming Shoppes’ operational
performance;
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The lack of focus on Charming
Shoppes’ core assets;
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The compensation awarded to
Charming Shoppes’ senior management;
and
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The management turnover at
Charming Shoppes' division level.
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We
Do Not Believe the Current Market Valuation Accurately Reflects Charming
Shoppes’ Intrinsic Value
The
Committee believes that the Company’s public market valuation does not
accurately reflect the intrinsic value of the Company. We do not
believe that the Charming Shoppes Board has taken the steps to close this value
gap. The Committee believes the Board should (1) focus on operational
excellence and merchandising improvements, (2) simplify the business through
asset sales and (3) reduce high corporate overhead, which collectively we
believe should improve operating performance and unlock the Company’s intrinsic
value.
On August
23, 1995, when Dorrit J. Bern, the Company’s Chairman, President and Chief
Executive Officer, joined Charming Shoppes, the share price of Charming Shoppes
closed at $4.63. On January 14, 2008, the day the Committee disclosed
its nomination of the Nominees, it closed at $4.35. During this same
time period, the S&P Retail Index rose 234%.
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We
Are Concerned with the Company’s Stock Performance
Charming
Shoppes’ stock performance has fared poorly over the past 12
years. Charming Shoppes’ stock performance fares even worse on a
relative basis than on an absolute one, as measured by the S&P 500 Retail
Index. The following chart highlights Charming Shoppes’ share price
underperformance.
We
Question the Company’s Capital Allocation Decisions
The
Committee believes that the decline in Charming Shoppes’ share price is
attributable, in part, to the Company’s capital allocation
decisions.
Over
the last eleven quarters since the fiscal year ended January 29, 2005, the
Charming Shoppes Board has approved $346 million of capital expenditures and the
$262 million acquisition of Crosstown Traders in June 2005 for a total of $608
million. As of the close of business on March 19, 2008, Charming
Shoppes’ market capitalization was approximately $542.6 million. The
return on this incremental capital is, in our opinion, not
acceptable.
Additionally,
the direct-to-consumer division has experienced a steady deterioration in
revenues and profits since the Company’s acquisition of Crosstown
Traders. We believe the Company should have instead focused on
improving its retail and Internet presence at its core brands.
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If
elected, our Nominees would seek to work with the other members of the Charming
Shoppes Board to allocate the Company’s capital in a more effective
manner.
We
Are Concerned with Charming Shoppes’ Operating Performance
We have
concerns with the Company’s operating performance, particularly over the past
fiscal year. For the thirty-nine weeks ended November 3, 2007, the
Company’s net income was approximately $41 million, compared to approximately
$84 million for the same period ended October 28, 2006. The Company’s
diluted net income per share for the thirty-nine weeks ended November 3, 2007
was $0.32, compared to $0.63 for the same period in fiscal year
2006. We are not convinced that the current Charming Shoppes
Board has addressed the Company’s operating performance issues.
We
Question Whether Senior Management and the Charming Shoppes Board Has Properly
Focused On the Company’s Core Brands
We are
concerned that senior management and the Charming Shoppes Board may have put too
much of an emphasis on new growth initiatives instead of optimizing its core
brands and assets. We are also concerned with the Company’s current
marketing strategy. The Committee believes that a more focused
marketing and merchandising strategy are needed. In order to maximize
shareholder value, we believe it is imperative, and our Nominees are committed
to, refocusing the Company’s business strategy on its core brands and
competencies.
We
Have Concerns with the Compensation of Charming Shoppes’ Senior
Management
Compensation
of the top five listed senior executives has totaled approximately $54.5 million
over the last four fiscal years. Despite the Company’s operating
performance, Ms. Bern was recently rewarded with a new three-year employment
agreement which includes a 24% increase in base salary.
We believe that management should be
compensated based upon achieving successful operational performance as well as
increasing shareholder value. We question whether there is such a
correlation relating to the compensation of the Company’s senior
management.
We
Have Concerns with the Management Turnover at Charming Shoppes’ Division
Level
We note that over the last five
years there have been twelve different presidents at the Company’s senior
divisional level. During this same time period, there
have been few, if any, changes at the senior management level. We are
concerned by this high level of turnover experienced at the Company’s operating
divisions.
We
are Concerned with the Company’s Corporate Governance Policies
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Separation
of the role of Chairman of the Board and Chief Executive
Officer:
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Consolidation
of power in combining the Chairman and Chief Executive offices represents
a choice by the Company to meet only the minimum requirements of effective
governance.
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Supermajority
Voting Provisions:
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A
supermajority vote is required for shareholders to amend certain
provisions of the Company’s Articles of Incorporation, including
rescinding the classified Charming Shoppes Board.
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Staggered
Board:
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Charming
Shoppes maintains a “staggered” or classified board.
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Directors:
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Directors
may only be removed by the vote of 80% of the shares entitled to
vote.
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Anti-takeover
Provisions:
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·
Charming Shoppes maintains a shareholder rights plan or “poison
pill.”
·
Charming Shoppes has the ability to issue “blank check” preferred
stock.
· Shareholders
do not have an express right to call a special meeting under the Company’s
Bylaws.
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Governance
provisions such as these are contrary to the guidelines for corporate governance
best practices issued by leading advocates of shareholder democracy, such as
Institutional Shareholder Services (ISS) and Glass, Lewis & Co.
THE
CHARMING SHOPPES FULL VALUE COMMITTEE IS COMMITTED TO MAXIMIZING VALUE FOR ALL
SHAREHOLDERS
Members of the Committee are
shareholders of the Company, owning collectively 8% of the outstanding common
stock. As such, our interests are aligned with yours. Our
goal is to maximize the value of Charming Shoppes’ common stock for the benefit
of all
shareholders
Our
Nominees are committed to this course of action for the Company and will, if
elected, support a thorough and comprehensive strategic review of the Company’s
business. The Committee does not have any specific plans regarding
the sale of any of the Company’s assets. Our Nominees will, if
elected, constitute a minority of the Board, at least until the next Annual
Meeting or some other change in composition of the
Board. Accordingly, the Nominees, if elected, will not be able to
adopt any measures without the support of at least some members of the current
Charming Shoppes Board. The Nominees therefore should be expected to articulate
and raise their deep concerns about Charming Shoppes’ business activities and
strategies and work to try to maximize shareholder value with the rest of the
Charming Shoppes Board members.
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Litigation
by the Company Against the Committee Members:
On March
7, 2008, Charming Shoppes filed an action in the United States District Court
for the Eastern District of Pennsylvania against Crescendo Partners II,
Crescendo Investments II, Crescendo Partners III, Crescendo Investments III
(collectively, the “Crescendo Defendants”), Myca Partners, Myca Master Fund
(collectively, the “Myca Defendants”), Arnaud Ajdler, Eric Rosenfeld, and Robert
Frankfurt (collectively, together with the Crescendo Defendants and the Myca
Defendants, the “Defendants”), asserting a claim under Section 13(d) of the
Securities Exchange Act of 1934. The Complaint alleges that the
Initial 13D filed by the Crescendo Defendants and Mr. Rosenfeld on January 8,
2008 was false and misleading in the following ways: (i) the Initial 13D stated
that the Crescendo Defendants had no specific plans to seek representation on
the Charming Shoppes Board, but that they may in the future take such actions as
they deem appropriate, where the Crescendo Defendants had allegedly by then
decided to pursue specific goals such as altering the composition of the
Charming Shoppes Board and seeking to promote an extraordinary corporate
transaction or the repurchase of their Shares at a premium by Charming
Shoppes; (ii) the Initial 13D failed to disclose that the Crescendo
Defendants had formed a group with the Myca Defendants, when they allegedly had
reached an agreement to work together to influence the direction of Charming
Shoppes; (iii) the Initial 13D did not disclose that the Myca
Defendants had solicited Ramius Capital and RCG Starboard Advisors to obtain
their assistance in connection with their plans to act towards Charming Shoppes;
and (iv) the Initial 13D did not disclose the Myca Defendants’ and
Crescendo Defendants’ histories of proxy solicitations in connection with other
investments, including an alleged history of forcing companies into sales,
transaction, and other events favorable to the Defendants.
The
Complaint also alleges that Amendment No. 1 to the Schedule 13D, filed by
Defendants on January 15, 2008, was false and misleading, because: (i) Amendment
No. 1 does not disclose that the Defendants’ “sole” purpose is to coerce
Charming Shoppes into selling assets, borrowing money or expending resources to
purchase Defendants’ stock through a greenmail transaction or otherwise; (ii)
Amendment No. 1 does not disclose other parties who were allegedly approached by
the Myca Defendants about the possibility of forming a group in connection with
Charming Shoppes, and does not disclose alleged other members of the Committee;
and (iii) Amendment No. 1 did not disclose the Myca Defendants’ and Crescendo
Defendants’ histories of proxy solicitations in connection with other
investments, including an alleged history of forcing companies into sales,
transaction, and other events favorable to the Defendants.
The
Complaint seeks an order: (A) preliminarily and permanently enjoining Defendants
from making any further false and misleading public statements or public filings
regarding Charming Shoppes, and from attempting to take any further steps in
furtherance of their allegedly unlawful conduct; (B) declaring that the
defendants have violated Section 13(d) of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder; (C) preliminarily and permanently
enjoining Defendants and all persons acting on their behalf from violating
Section 13(d) of the Exchange Act and engaging in any further activities with
respect to the shares until they have made corrective disclosures; (D) ordering
the Defendants to make immediate corrective disclosures; (E) ordering Defendants
to divest themselves of all shares of Charming Shoppes that they acquired in
violation of the federal securities laws; and (F) awarding Charming Shoppes
reasonably attorneys’ fees, costs and disbursements of the
action. Charming Shoppes also seeks expedited discovery with respect
to the action. The Defendants believe the claims are without merit
and intend to defend the action vigorously.
Other
than as set forth herein, there is, and has been, no legal or other proceeding
involving the Committee or any Nominee that is required to be disclosed under
the federal proxy rules.
12
PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
The
Charming Shoppes Board is currently composed of eight directors divided into
three classes serving staggered three-year terms. One class of directors is
elected by the shareholders annually. At the 2008 Annual Meeting
three directors will be elected. The Committee is seeking your
support at the Annual Meeting to elect the Nominees in opposition to Charming
Shoppes’ director nominees to serve until the 2011 annual meeting of
shareholders and until their successors are duly elected and
qualified.
THE
NOMINEES
The Committee has nominated three
highly qualified nominees who we believe possess the expertise necessary to work
to restore and enhance shareholder value. The Nominees are independent of the
Company in accordance with Securities and Exchange Commission and NASDAQ
Marketplace rules on board independence and are committed to exploring all
alternatives to increase shareholder value. If elected, the Nominees are
committed to acting in the best interest of Charming Shoppes’ shareholders and
will pursue their efforts diligently and promptly.
Set forth
below are the name, age, business address, present principal occupation,
employment history and directorships of publicly-held companies of each of the
Nominees for at least the past five years. This information has been furnished
to the Committee by the respective Nominees. Each of the Nominees has consented
to serve as a director of the Company and be named in this Proxy Statement as a
nominee. Each of the Nominees is a citizen of the United States of America,
except for Mr. Ajdler who is a citizen of Belgium. None of the
entities referenced below is a parent or subsidiary of the Company.
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Name
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Age
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Present
Principal Occupation
and Five Year
Employment History
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Arnaud
Ajdler
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Arnaud
Ajdler has been a Managing Director of Crescendo Partners since December
2005. Since March 2008, Mr. Ajdler has served as a director and
on the Compensation and Human Resources Committee of O’Charley’s Inc., a
multi-concept restaurant company that operates or franchises a total of
364 restaurants under three brands. Since March 2008, Mr.
Ajdler has served as a director and on the Compensation Committee of
Mothers Work, Inc., a designer and retailer of maternity
apparel. Since its inception in June 2006, Mr. Ajdler has
served as a member of the Board of Directors and the Secretary of Rhapsody
Acquisition Corp., an OTC Bulletin Board-listed blank check company formed
to effect a business combination with an operating
business. From June 2004 until June 2006 Mr. Ajdler also served
as the Chief Financial Officer, a director and the Secretary of Arpeggio
Acquisition Corporation. Arpeggio completed its business combination with
Hill International, Inc. in June 2006 and since such time Mr. Ajdler has
served as a Director of the surviving company, a NYSE listed
company. From August 2006 until the company was acquired in
October 2007, Mr. Ajdler served as a director of The Topps Company, Inc.,
a NASDAQ listed company. Mr. Ajdler is also an adjunct
professor at Columbia University Business School where he teaches a course
in value investing. Mr. Ajdler received a B.S. in engineering
from the Free University of Brussels, Belgium, an S.M. in Aeronautics from
the Massachusetts Institute of Technology and an M.B.A. from the Harvard
Business School.
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Michael
Appel
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Michael
Appel has significant retail executive experience. He currently
serves as Managing Director of Quest Turnaround Advisors (“Quest”), a firm
that provides turnaround and crisis management services to boards of
directors, management, creditors and shareholders of companies
experiencing financial and operational difficulties. Mr. Appel
has served as an interim Chief Executive Officer, interim Chief Operating
Officer and turnaround advisor for several well-known retailers and
specialty consumer products companies. The companies for which
Mr. Appel has served as Chief Executive Officer include Caswell-Massey Co.
Ltd, Ciro, Inc., Laura Ashley, N.A. and MacKenzie-Childs. Mr.
Appel served as financial advisor to the Creditors Committee in the
bankruptcy proceeding of Kasper ASL, a leading manufacturer of women’s
apparel under the Kasper and Ann Klein brands that filed for Chapter 11 in
February 2002. Mr. Appel assisted in developing and
implementing a successful turnaround plan for Kasper ASL and was awarded
the 2004 Turnaround of the Year Award by the Turnaround Management
Association for his work with Kasper ASL. Mr. Appel served as
Chief Restructuring Officer of HCI Direct, the leading U.S. direct
marketer of women’s hosiery, Mr. Appel worked with HCI’s management and
board in implementing a successful pre-package Chapter 11 filing. Upon
departure of the company’s Chief Executive Officer, Mr. Appel was
appointed interim Chief Executive Officer, where he managed the business,
launched a successful new product line and recruited a new Chief Executive
Officer. Mr. Appel began his career in 1973 at Bloomingdale’s
where he spent ten years in merchandising. Mr. Appel graduated
Phi Beta Kappa from Brandeis University and received an M.B.A., with
Distinction, from the Harvard Business School.
|
|
Robert
Frankfurt
|
42
|
Robert
Frankfurt has served as President of Myca Partners, an investment advisory
services firm, since September 2006. From January 2005 to October 2005,
Mr. Frankfurt served as a Vice President of Sandell Asset Management
Corp., a privately owned hedge fund. From April 2001 to September 2002,
Mr. Frankfurt served as President of Myer Capital, an investment advisory
services firm. From 1995 to 2000, Mr. Frankfurt was a Partner
at Steel Partners. His responsibilities at Steel Partners
were extensive and varied, ranging from sourcing public and private
investment opportunities to hands-on turnaround management of portfolio
companies. During his tenure at Steel Partners, Mr. Frankfurt
served on the Board of Directors of Puroflow, Inc. Mr.
Frankfurt graduated from the Wharton School of Business at the University
of Pennsylvania with a B.S. in Economics and received an M.B.A. from the
Anderson Graduate School of Management at
UCLA.
|
Our Nominees will, if elected,
constitute a minority of the Board, at least until the next Annual Meeting or
some other change in composition of the Board. Accordingly, the
Nominees will not be able to adopt any measures without the support of at least
some members of the current Board. The Nominees therefore should be expected to
articulate and raise their concerns about Charming Shoppes’ business activities
and strategy to maximize shareholder value with the rest of the Board
members.
The
Nominees understand that, if elected as directors of Charming Shoppes, each of
them will have an obligation under Pennsylvania law to discharge his duties as a
director in good faith, consistent with his fiduciary duties to Charming Shoppes
and its shareholders.
There can be no assurance that the
actions the Nominees intend to take as described above will be implemented if
they are elected or that the election of the Nominees will improve the Company’s
business or otherwise enhance shareholder value. Your vote to elect the Nominees
does not constitute a vote in favor of the Committee’s value-enhancing plans for
Charming Shoppes. Your vote to elect the Nominees will have the legal
effect of replacing three incumbent directors of Charming Shoppes with the
Nominees. There can be no assurance that shareholder value will be
maximized as a result of this solicitation or the election of the
Nominees.
14
The Committee does not expect that the
Nominees will be unable to stand for election, but, in the event that such
persons are unable to serve or for good cause will not serve, the Shares
represented by the enclosed WHITE proxy card will be voted for substitute
nominees. In addition, the Committee reserves the right to nominate
substitute persons if Charming Shoppes makes or announces any changes to the
Bylaws or its Restated Articles of Incorporation or takes or announces any other
action that has, or if consummated would have, the effect of disqualifying the
Nominees. In any such case, Shares represented by the enclosed WHITE
proxy card will be voted for such substitute nominees. The Committee
reserves the right to nominate additional persons if Charming Shoppes increases
the size of the Charming Shoppes Board above its existing size or increases the
number of directors whose terms expire at the Annual
Meeting. Additional nominations made pursuant to the preceding
sentence are without prejudice to the position of the Committee that any attempt
to increase the size of the current Charming Shoppes Board or to reconstitute or
reconfigure the classes on which the current directors serve constitutes an
unlawful manipulation of Charming Shoppes’ corporate machinery.
YOU
ARE URGED TO VOTE
“FOR”
THE ELECTION OF OUR NOMINEES ON THE ENCLOSED WHITE PROXY CARD
15
PROPOSAL
NO. 2
COMPANY
PROPOSAL TO RE-APPROVE THE MATERIAL TERMS OF THE PERFORMANCE GOALS UNDER THE
COMPANY’S 2003 INCENTIVE COMPENSATION PLAN
As discussed in further detail in the
Company’s proxy statement, the Company is asking shareholders to re-approve the
material terms of the performance goals of the Company’s 2003 Incentive
Compensation Plan (the “2003 Plan”). In the Company’s proxy
statement, the Company states that it is required to seek shareholder approval
at five-year intervals to preserve the federal income tax deduction under
section 162(m) of the Internal Revenue Code.
As discussed in more detail above, the
Committee believes that Charming Shoppes has rewarded senior management with
excessive compensation packages that we believe are not directly tied to the
Company’s performance.
While shareholders have suffered as a
result of the Company’s stock performance, the top five listed senior executives
have been awarded approximately $54.5 million in total compensation over the
past four fiscal years.
YOU
ARE URGED TO VOTE “AGAINST” THE PROPOSAL TO RE-APPROVE THE MATERIAL TERMS OF THE
PERFORMANCE GOALS UNDER THE COMPANY’S 2003 INCENTIVE COMPENSATION
PLAN.
16
PROPOSAL
NO. 3
COMPANY
PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
As discussed in further detail in the
Company’s proxy statement, the Company’s audit committee engaged Ernst &
Young LLP as the Company’s independent auditors for the fiscal year
2009. The Company is asking shareholders to ratify the appointment of
Ernst & Young LLP as independent auditors for the Company’s fiscal year
2009.
WE
DO NOT OBJECT TO THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS
THE COMPANY’S INDEPENDENT AUDITORS TO SERVE FOR THE 2009 FISCAL
YEAR.
RECORD
DATE AND VOTING
According
to the Company’s proxy statement, as of March 28, 2008, the Company had
outstanding [___________] Shares entitled to be voted at the Annual
Meeting. Each Share is entitled to one vote on each matter submitted to a vote
of shareholders. Only shareholders of record at the close of business on March
28, 2008 will be entitled to vote at the Annual Meeting. Based on publicly
available information, the Committee believes that the only outstanding class of
securities of Charming Shoppes entitled to vote at the Annual Meeting is the
Shares. Shares represented by properly executed WHITE proxy cards will be voted
at the Annual Meeting as marked and, in the absence of specific instructions,
will be voted FOR the election of the Nominees to the Charming Shoppes Board and
in the discretion of the persons named as proxies on all other matters as may
properly come before the Annual Meeting. You are being asked to elect the
Nominees. The enclosed WHITE proxy card may only be voted for the Nominees and
does not confer voting power with respect to the Company’s nominees.
Accordingly, you will not have the opportunity to vote for any of Charming
Shoppes’ nominees. You can only vote for Charming Shoppes’ nominees by executing
a proxy card provided by the Company. Shareholders should refer to the Company’s
proxy statement for the names, backgrounds, qualifications and other information
concerning the Company’s nominees. The participants in this solicitation intend
to vote all of their Shares in favor of the Committee’s Nominees.
If your
shares are held in a stock brokerage account or by a bank or other nominee, you
are considered the beneficial owner of shares held in “street name.” These proxy
materials are being forwarded to you by your broker who is considered, with
respect to those shares, the shareholder of record. As the beneficial
owner, you have the right to direct your broker to vote your shares, and your
broker or nominee has enclosed a voting instruction card for you to use. If your
shares are held by a broker or nominee, please return your voting card as early
as possible to ensure that your shares will be voted in accordance with your
instructions. You are also invited to attend the Annual Meeting; however, since
you are not the shareholder of record, you may not vote these shares in person
at the meeting.
17
QUORUM
Under
Pennsylvania law and the Bylaws, the presence of a quorum is required to
transact business at the Annual Meeting. For each of Proposals 1, 2
and 3 to be considered at the Annual Meeting, the presence, in person or by
proxy, of a majority of the votes that shareholders are entitled to cast on the
proposal is necessary to constitute a quorum for action on that matter.
Abstentions, votes withheld from any nominee and broker non-votes (which occur
when shares held by brokers or nominees for beneficial owners are voted on some
matters but not on others) will be counted as present for purposes of
determining the presence or absence of a quorum with regard to any proposal at
the annual meeting. The shareholders present at a duly organized
meeting can continue to do business until adjournment notwithstanding the
withdrawal of enough shareholders to leave less than a
quorum.
VOTES
REQUIRED FOR APPROVAL OF EACH ITEM
Vote Required for
the Election of Directors. With regard to the election of
three Class C directors, each director must be elected by a plurality of the
votes cast at this annual meeting by the holders of shares entitled to vote. The
three nominees for election as directors who receive the greatest number of
votes will be elected directors. Shareholders may vote “for” all of
the director nominees, “withhold” authority to vote for all of the nominees or
“withhold” authority to vote for any individual nominee but vote for all other
nominees. Shares that are withheld from voting as to any nominee and broker
non-votes will not affect the outcome. Shareholders of record may
appoint proxies to vote their shares by signing, dating and mailing the WHITE
proxy card in the envelope provided.
Vote
Required to Re-Approve the Performance
Goals under the Company’s 2003 Incentive Compensation
Plan. The
Company’s proposal that shareholders re-approve the material terms of the
performance goals under the Company’s 2003 Incentive Compensation Plan, to
preserve the deductibility of compensation payments in accordance with
Section 162(m) of the Internal Revenue Code, requires the affirmative vote
of a majority of the votes cast on the matter.
Vote Required to
Approve the Ratification of the Appointment of Ernst & Young LLP as the
Company’s Independent Auditors to Serve for the 2009 Fiscal Year.
Ratification of the appointment of Ernst & Young LLP as the Company’s
independent auditors to serve for the 2009 fiscal year requires the affirmative
vote of a majority of the votes cast on the matter.
Shares
represented by properly executed, but unmarked, WHITE proxy cards will be voted
at the Annual Meeting as marked and will be voted FOR the election of the
Nominees to the Charming Shoppes Board, FOR the ratification of the appointment
of Ernst & Young LLP as the Company’s independent auditors to serve for the
2009 fiscal year, AGAINST the Company’s proposal to re-approve the material
terms of the performance goals under the Company’s 2003 Incentive Compensation
Plan, and in the discretion of the persons named as proxies on all other matters
as may properly come before the Annual Meeting.
18
With
respect to the ratification of the appointment of Ernst & Young LLP as the
Company’s independent auditors to serve for the 2009 fiscal year, the
re-approval of the material terms of the performance goals under the Company’s
2003 Incentive Compensation Plan and any matters other than the election of
directors to be voted on at the Annual Meeting, abstentions and broker non-votes
will not be taken into account and will have no effect on the outcome.
Shareholders of record may appoint proxies to vote their shares by signing,
dating and mailing the WHITE proxy card in the envelope provided.
You are
being asked to elect the Nominees. The enclosed WHITE proxy card may only be
voted for the Nominees and does not confer voting power with respect to the
Company’s nominees. Accordingly, you will not have the opportunity to
vote for any of Charming Shoppes’ nominees. You can only vote for
Charming Shoppes’ nominees by executing a proxy card provided by Charming
Shoppes. Shareholders should refer to the Company’s proxy statement
for the names, backgrounds, qualifications and other information concerning the
Company’s nominees. The participants in this solicitation intend to
vote all of their Shares in favor of the Nominees, against the re-approval of
the material terms of the performance goals under the Company’s 2003 Incentive
Compensation Plan and to ratify the appointment of Ernst & Young LLP as the
Company’s independent auditors to serve for the 2009 fiscal year.
REVOCATION
OF PROXIES
Shareholders
of Charming Shoppes may revoke their proxies at any time prior to exercise by
attending the Annual Meeting and voting in person (although attendance at the
Annual Meeting will not in and of itself constitute revocation of a proxy) or by
delivering a written notice of revocation. The delivery of a
subsequently dated proxy which is properly completed will constitute a
revocation of any earlier proxy. The revocation may be delivered either to the
Committee in care of D.F. King & Co., Inc. at the address set forth on the
back cover of this Proxy Statement or to Charming Shoppes at 450 Winks Lane,
Bensalem, Pennsylvania, 19020 or any other address provided by Charming
Shoppes. Although a revocation is effective if delivered to Charming
Shoppes, the Committee requests that either the original or photostatic copies
of all revocations be mailed to the Committee in care of D.F. King & Co.,
Inc. at the address set forth on the back cover of this Proxy Statement so that
the Committee will be aware of all revocations and can more accurately determine
if and when proxies have been received from the holders of record on the Record
Date of a majority of the outstanding Shares. Additionally, D.F. King
& Co., Inc. may use this information to contact shareholders who have
revoked their proxies in order to solicit later dated proxies for the election
of the Nominees.
IF YOU
WISH TO VOTE FOR THE ELECTION OF THE COMMITTEE’S NOMINEES TO THE BOARD, FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY’S
INDEPENDENT AUDITORS TO SERVE FOR THE 2009 FISCAL YEAR AND AGAINST THE COMPANY’S
PROPOSAL TO RE-APPROVE THE MATERIAL TERMS OF THE PERFORMANCE GOALS UNDER THE
COMPANY’S 2003 INCENTIVE COMPENSATION PLAN, PLEASE SIGN, DATE AND RETURN
PROMPTLY THE ENCLOSED WHITE PROXY CARD IN THE POSTAGE-PAID ENVELOPE
PROVIDED.
19
METHOD
OF COUNTING VOTES
The
holders of not less than a majority of the votes that shareholders are entitled
to cast at the Annual Meeting must be represented in person or by proxy in order
to constitute a quorum for the transaction of business. Withheld
votes, abstentions and broker non-votes will be included for purposes of
determining whether a quorum exists. Broker non-votes occur when
brokers do not receive voting instructions from their customers on non-routine
matters and consequently have no discretion to vote on those
matters. If your Charming Shoppes Shares are held in the name of a
brokerage firm, bank nominee or other institution, you should contact the person
responsible for your account and give instructions for a proxy card to be issued
so that your Shares will be represented at the Annual Meeting.
After a
quorum is determined to exist at the Annual Meeting, withheld votes, abstentions
and broker non-votes will have no effect on the outcome of the election of
directors or the approval of the other matters that may come before the Annual
Meeting.
Rule 452
of the New York Stock Exchange permits a broker member to vote on certain
routine, uncontested matters without specific instructions from the beneficial
owners so long as the broker has transmitted proxy material to the beneficial
owner at least 15 days prior to the annual meeting of
shareholders. It is our view to the extent that we distribute
material to the brokers for forwarding on to beneficial owners, the election of
directors becomes a contested item and therefore the brokers will not issue a
“routine” vote on behalf of the beneficial owners that have not instructed the
brokers as to how they wish to vote on the election of directors. If
a beneficial owner wishes to vote, they must provide the broker with specific
instruction to vote.
ADDITIONAL
INFORMATION
The
principal executive offices of Charming Shoppes, Inc. are located at 450 Winks
Lane, Bensalem, Pennsylvania, 19020. Except as otherwise noted
herein, the information concerning Charming Shoppes has been taken from or is
based upon documents and records on file with the Securities and Exchange
Commission and other publicly available information.
PROXY
SOLICITATION; EXPENSES
Executed
proxies may be solicited in person, by mail, advertisement, telephone,
telecopier, telegraph or email. Solicitation may be made by the
Committee, including the Nominees, employees of Crescendo Partners, Myca
Partners and their affiliates, none of whom will receive additional compensation
for such solicitation. Proxies will be solicited from individuals,
brokers, banks, bank nominees and other institutional holders. We
have requested banks, brokerage houses and other custodians, nominees and
fiduciaries to forward all solicitation materials to the beneficial owners of
the Shares they hold of record. We will reimburse these record
holders for their reasonable out-of-pocket expenses.
In
addition, the Committee has retained D.F. King to solicit proxies on its behalf
in connection with the 2008 Annual Meeting. D.F. King will employ
approximately [__] people in its efforts. We have agreed to reimburse
D.F. King for its reasonable expenses and to pay to D.F. King a fee of up to
$[____].
20
The
entire expense of our proxy solicitation is being borne by Crescendo Partners II
and Myca Partners. On January 11, 2008, the members of the Committee
entered into a Joint Filing and Solicitation Agreement relating to the sharing
of expenses and certain other activities in connection with the proxy
solicitation (the “Joint Filing & Solicitation
Agreement”). Specifically, the parties to the Joint Filing &
Solicitation Agreement agreed to the joint filing on behalf of each of them of
statements on Schedule 13D with respect to the Shares of the
Company to the extent required under applicable securities
laws. Pursuant to the Joint Filing & Solicitation Agreement,
Crescendo Partners II and Myca Partners have agreed to pay directly all expenses
incurred in connection with the proxy solicitation on a pro rata basis between
Crescendo Partners II and Myca Partners based on the number of Shares in the
aggregate held by each of Crescendo Partners II and Myca Partners as of January
11, 2008.
In the
event that our Nominees are elected to the Charming Shoppes Board, we will seek
reimbursement of such expenses from Charming Shoppes and will not submit such
reimbursement to a vote of shareholders. In addition to the
engagement of D.F. King described above, costs related to the solicitation of
proxies include expenditures for printing, postage, legal and related expenses
are expected to be approximately $[____], of which no amounts have been paid to
date.
21
ADDITIONAL
INFORMATION CONCERNING THE PARTICIPANTS
The
participants in the proxy solicitation are Crescendo Partners II, Crescendo
Investments II, Crescendo Partners III, Crescendo Investments III, Myca Master
Fund, Myca Partners, Eric Rosenfeld, Arnaud Ajdler, Michael Appel and Robert
Frankfurt. The principal business of Crescendo Partners II is
investing in securities. The principal business of Crescendo Investments II is
acting as the general partner of Crescendo Partners II. The principal
business of Crescendo Partners III is investing in securities. The
principal business of Crescendo Investments III is acting as the general partner
of Crescendo Partners III. The principal occupation of Mr. Rosenfeld
is serving as the managing member of Crescendo Investments II, Crescendo
Investments III and as the managing member of the general partner of Crescendo
Partners, L.P., whose principal business is investing in
securities. The principal business of Myca Master Fund is investment
advisory services. The principal business of Myca Partners is investment
advisory services and serving as the investment manager of Myca Master Fund. The
principal occupation of Mr. Frankfurt is serving as president of Myca
Partners. The principal occupation of Mr. Ajdler is serving as
managing director of Crescendo Partners. The principal occupation of Mr. Appel
is serving as Managing Director of Quest Turnaround Advisors.
The
principal business address of Crescendo Partners II, Crescendo Investments II,
Crescendo Partners III, Crescendo Investments III, Mr. Rosenfeld and Mr. Ajdler
is 825 Third Avenue, 40th Floor, New York, New York 10022. The
principal business address of Myca Master Fund, Myca Partners and Mr. Frankfurt
is 135 West 20th Street, 5th Floor, New York, New York 10011. The
principal business address of Mr. Appel is c/o Quest Turnaround Advisors, 287
Bowman Avenue, Purchase, New York 10577.
Crescendo
Partners II beneficially owns 7,354,125 Shares of common stock of the Company.
As the general partner of Crescendo Partners, Crescendo Investments II is deemed
to beneficially own the 7,354,125 Shares of the Company beneficially owned by
Crescendo Partners II. Crescendo Partners III beneficially owns
378,275 Shares of common stock of the Company. As the general partner
of Crescendo Partners III, Crescendo Investments III is deemed to beneficially
own the 378,275 Shares of the Company beneficially owned by Crescendo Partners
III. Eric Rosenfeld, as the managing member of Crescendo Investments
II, which in turn is the general partner of Crescendo Partners II, is deemed to
beneficially own the 7,354,125 Shares of the Company owned by Crescendo Partners
II. Additionally, Eric Rosenfeld, as the managing member of Crescendo
Investments III, the general partner of Crescendo Partners III, is deemed to
beneficially own the 378,275 Shares of the Company owned by Crescendo Partners
III. Myca Master Fund beneficially owns 1,523,405 Shares of common
stock of the Company. As the investment manager of Myca Master Fund,
Myca Partners is deemed to beneficially own the 1,523,405 Shares of the Company
beneficially owned by Myca Master Fund. Robert Frankfurt, as the
President of Myca Partners, the investment manager of Myca Master Fund, is
deemed to beneficially own the 1,523,405 Shares of the Company beneficially
owned by Myca Master Fund. Additionally, Robert Frankfurt, as a
member of a “group” for the purposes of Rule 13d-5(b)(1) of the Securities
Exchange Act of 1934, as amended, is deemed to beneficially own the 7,354,125
Shares owned by Crescendo Partners II and the 378,275 Shares owned by Crescendo
Partners III. Mr. Frankfurt disclaims beneficial ownership of the
Shares owned by Crescendo Partners II and Crescendo Partners
III. Arnaud Ajdler owns 15,000 Shares of common stock of the
Company. As a member of a “group” for the purposes of Rule
13d-5(b)(1) of the Securities Exchange Act of 1934, as amended, Mr. Ajdler is
deemed to beneficially own the 7,354,125 Shares owned by Crescendo Partners II,
the 378,275 Shares owned by Crescendo Partners III and the 1,523,405 Shares
owned by Myca Master Fund. Mr. Ajdler disclaims beneficial ownership
of the Shares owned by Crescendo Partners II, Crescendo Partners III and Myca
Master Fund. Michael Appel owns 10,000 Shares of common stock of the
Company. As a member of a “group” for the purposes of Rule
13d-5(b)(1) of the Securities Exchange Act of 1934, as amended, Mr. Appel is
deemed to beneficially own the 7,354,125 Shares owned by Crescendo Partners II,
the 378,275 Shares owned by Crescendo Partners III and the 1,523,405 Shares
owned by Myca Master Fund. Mr. Appel disclaims beneficial ownership
of the Shares owned by Crescendo Partners II, Crescendo Partners III and Myca
Master Fund.
22
For information regarding purchases and
sales of securities of Charming Shoppes during the past two years by the members
of the Committee, see Schedule I.
On
January 11, 2008, the members of the Committee entered into a Joint Filing and
Solicitation Agreement in which each member of the Committee agreed to the joint
filing on behalf of each of them of Statements on Schedule 13D and agreed to
form the a group for the purpose of soliciting proxies or written consents for
the election of the Nominees to the Board at the Annual Meeting and for the
purpose of taking all other actions incidental to the foregoing. The Committee
intends to seek reimbursement from Charming Shoppes of all expenses it incurs in
connection with the Solicitation. The Committee does not intend to
submit the question of such reimbursement to a vote of security holders of the
Company.
On
January 11, 2008, Myca Partners entered into a fee arrangement with RCG
Starboard Advisors, LLC (“Starboard”) relating to certain fees payable to Myca
Partners by Starboard for previously identifying the Company as a potential
investment opportunity (the “Fee Arrangement”). Pursuant to the terms
of the Fee Arrangement, Starboard agreed to pay Myca Partners an upfront fee and
a fee based on the net profits on the investment by certain of Starboard’s
affiliates in the Company. The Fee Arrangement confirms that Myca
Partners and Starboard will make their own independent investment, voting and
disposition decisions with respect to the
Company.
Except as
disclosed herein, no Nominee is involved in any material pending legal
proceedings with respect to the Company. The Nominees will not receive any
compensation from any other member of the Committee for their services as
directors of the Company. Except for what is set
forth herein, there is no other arrangement or understanding between any Nominee
and any other person pursuant to which he was or is to be selected as a Nominee
or director. None of the Nominees currently holds any position or office with
the Company or has ever served previously as a director of the
Company.
The
Committee reserves the right to retain one or more financial advisors and proxy
solicitors, who may be considered participants in a solicitation under
Regulation 14A of the Exchange Act.
Except as set forth in this Proxy
Statement (including the Schedules hereto), (i) during the past 10 years, no
participant in this solicitation has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors); (ii) no participant in
this solicitation directly or indirectly beneficially owns any securities of
Charming Shoppes; (iii) no participant in this solicitation owns any securities
of Charming Shoppes which are owned of record but not beneficially; (iv) no
participant in this solicitation has purchased or sold any securities of
Charming Shoppes during the past two years; (v) no part of the purchase price or
market value of the securities of Charming Shoppes owned by any participant in
this solicitation is represented by funds borrowed or otherwise obtained for the
purpose of acquiring or holding such securities; (vi) no participant in this
solicitation is, or within the past year was, a party to any contract,
arrangements or understandings with any person with respect to any securities of
Charming Shoppes, including, but not limited to, joint ventures, loan
23
or option
arrangements, puts or calls, guarantees against loss or guarantees of profit,
division of losses or profits, or the giving or withholding of proxies; (vii) no
associate of any participant in this solicitation owns beneficially, directly or
indirectly, any securities of Charming Shoppes; (viii) no participant in this
solicitation owns beneficially, directly or indirectly, any securities of any
parent or subsidiary of Charming Shoppes; (ix) no participant in this
solicitation or any of his/its associates was a party to any transaction, or
series of similar transactions, since the beginning of Charming Shoppes’ last
fiscal year, or is a party to any currently proposed transaction, or series of
similar transactions, to which Charming Shoppes or any of its subsidiaries was
or is to be a party, in which the amount involved exceeds $120,000; (x) no
participant in this solicitation or any of his/its associates has any
arrangement or understanding with any person with respect to any future
employment by Charming Shoppes or its affiliates, or with respect to any future
transactions to which Charming Shoppes or any of its affiliates will or may be a
party; and (xi) no person, including the participants in this solicitation, who
is a party to an arrangement or understanding pursuant to which the Nominees are
proposed to be elected has a substantial interest, direct or indirect, by
security holdings or otherwise in any matter to be acted on at the Annual
Meeting.
24
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL
OWNERS, DIRECTORS AND MANAGEMENT
The
following table is reprinted from Charming Shoppes’ preliminary proxy statement
filed with the
Securities
and Exchange Commission on March 13, 2008
The
following table shows the beneficial ownership of our Common Stock of (1) each
person or group we know to be a beneficial owner of more than five percent of
our outstanding Common Stock, (2) each Director, (3) each named executive
officer for fiscal 2008, and (4) all of our Directors and executive officers as
a group. The number of shares beneficially owned is as of March 4,
2008, unless otherwise indicated, and all percentages are calculated based on
the shares outstanding as of March 4, 2008. Unless otherwise
indicated in the footnotes, each named person had sole voting and investment
power over the shares shown as beneficially owned by that person, and the
address for each named person is c/o Charming Shoppes, Inc., 450 Winks Lane,
Bensalem, Pennsylvania 19020.
|
Name
of Beneficial Owner
|
Shares
of
Common
Stock
Beneficially
Owned
|
Percentage
of
Common
Stock
Beneficially
Owned
|
||
|
William
O. Albertini
|
122,572(1)
|
*
|
||
|
Joseph
M. Baron
|
184,118(2)
|
*
|
||
|
Dorrit
J. Bern
|
1,283,493(2)
|
1.1%
|
||
|
James
G. Bloise
|
85,834(2)
|
*
|
||
|
Yvonne
M. Curl
|
60,155(1)
|
*
|
||
|
Pamela
Davies
|
88,469(1)
|
*
|
||
|
Charles
T. Hopkins
|
141,572(1)
|
*
|
||
|
Katherine
M. Hudson
|
113,765(1)
|
*
|
||
|
Alan
Rosskamm
|
148,806(1)
|
*
|
||
|
Eric
M. Specter
|
403,675(2)
|
*
|
||
|
Colin
D. Stern
|
123,690(2)
|
*
|
||
|
M.
Jeannine Strandjord
|
36,038(1)
|
*
|
||
|
Barclays
Global Investors, N.A.
|
5,524,044(3)
|
4.83%
|
||
|
Clearbridge
Advisors, LLC
|
14,556,313(4)
|
12.71%
|
||
|
Crescendo
Partners II, L.P., Series Q
|
9,276,805(5)
|
8.10%
|
||
|
Dimensional
Fund Advisors LP
|
5,935,084(6)
|
5.18%
|
||
|
First
Pacific Advisors, LLC
|
17,312,300(7)
|
15.12%
|
||
|
Royce &
Associates, LLC
|
10,367,215(8)
|
9.06%
|
||
|
Snyder
Capital Management, L.P.
|
6,950,008(9)
|
6.07%
|
||
|
The
Clark Estates, Inc.
|
6,452,000(10)
|
5.64%
|
||
|
Wellington
Management Company, LLP
|
6,704,799(11)
|
5.86%
|
||
|
All
Directors and Executive Officers as a group (17 persons)
|
3,250,364(12)
|
2.8%
|
||
_________________
|
*
|
Does
not exceed one percent of the outstanding class of Common
Stock.
|
|
(1)
|
With
respect to non-employee Directors:
|
|
|
(i)
|
Includes
shares as to which the Director holds options exercisable within 60 days
in the following amounts: Mr. Albertini, 21,500 shares; Ms. Curl, 22,925
shares; Dr. Davies, 54,500 shares; Mr. Hopkins, 94,500 shares; Ms. Hudson,
34,500 shares; Mr. Rosskamm, 94,500 shares and Ms. Strandjord, 8,733
shares.
|
25
|
|
(ii)
|
Includes
deferred shares which are non-forfeitable or become non-forfeitable within
60 days in the following amounts: Mr. Albertini, 18,000 shares; Ms. Curl,
7,500 shares; Dr. Davies, 21,000 shares; Ms. Hudson, 24,893 shares and Mr.
Rosskamm, 21,000 shares.
|
|
|
(iii)
|
Includes
8,572 restricted stock units held by each non-employee Director which are
non-forfeitable or become non-forfeitable within 60
days.
|
|
|
(iv)
|
Includes
shares of restricted stock as to which the Director has voting power but
which are subject to risk of forfeiture and restrictions on
transferability, in the following amounts: Ms. Strandjord, 6,667
shares.
|
|
(2)
|
With
respect to Executive Officers:
|
|
|
(i)
|
Includes
215,000 shares as to which Mr. Specter holds options exercisable within 60
days.
|
|
|
(ii)
|
Includes
restricted stock units and deferred shares subject to risk of forfeiture
and/or restrictions on transfer and no present voting rights in the
following amounts: Mr. Baron, 67,391 shares; Ms. Bern, 192,434 shares; Mr.
Bloise, 47,571 shares; Mr. Specter, 64,413 shares; and Mr. Stern, 39,283
shares; and
|
|
|
(iii)
|
Includes
shares of restricted stock as to which the Executive Officer has voting
power but which are subject to risk of forfeiture and/or restrictions on
transfer in the following amounts: Mr. Baron, 63,620 shares; Ms. Bern, 0
shares; Mr. Bloise, 25,988 shares; Mr. Specter, 58,250 shares; and Mr.
Stern, 48,546 shares.
|
|
(3)
|
The
source of this information is a Schedule 13G filed January 22, 2008 by
Barclay Global Investors, NA. (“Barclays”) reporting beneficial
ownership at December 31, 2007. The Schedule 13G reported that
Barclays, together with Barclays Global Fund Advisors and Barclays Global
Investors, LTD, had sole voting power over 5,041,460 shares of Common
Stock and sole dispositive power over 5,524,044 shares of Common
Stock. The address of Barclays is 45 Fremont Street, San
Francisco, CA 94105.
|
|
(4)
|
The
source of this information is a Schedule 13G/A filed February 14, 2008 by
Clearbridge Advisors, LLC (“Clearbridge”) reporting beneficial ownership
at December 31, 2007. The Schedule 13G/A reported that
Clearbridge, together with Clearbridge Asset Management, Inc. and Smith
Barney Fund Management LLC, beneficially owned 14,556,313 shares of Common
Stock. Their address is 399 Park Avenue, New York, NY
10022.
|
|
(5)
|
The
source of this information is a Schedule 13D/A filed January 15, 2008 by
Crescendo Partners II, L.P., Series Q (“Crescendo”) reporting beneficial
ownership at January 11, 2008. The Schedule 13D/A reported that
Crescendo beneficially owned 9,276,805 shares of Common
Stock. The address of Crescendo is 825 Third Avenue, 40th
Floor, New York, NY 10022.
|
The
Schedule 13D/A was also filed on behalf of Crescendo Investments II, LLC,
Crescendo Partners III, L.P., Crescendo Investments III, LLC, Eric Rosenfeld,
Myca Partners, Inc., Myca Master Fund, LTD., Arnaud Ajdler, Michael Appel,
Robert Frankfurt and The Charming Shoppes Full Value Committee. The
Schedule 13D/A also reported that Crescendo Investments II, LLC has beneficial
ownership with respect to 7,354,125 of these shares and Eric Rosenfeld has
beneficial ownership with respect to 7,732,400 of these shares. The
Charming Shoppes Full Value Committee has beneficial ownership over the shares
held by Crescendo, Crescendo Investments II, LLC and Eric Rosenfeld plus an
additional 1,523,405 shares beneficially owned by Myca Partners, Inc., Myca
Master Fund, LTD and Robert Frankfurt.
26
|
(6)
|
The
source of this information is a Schedule 13G/A, filed February 6, 2008 by
Dimensional Fund Advisors LP (“Dimensional”) reporting beneficial
ownership at December 31, 2007. The Schedule 13G/A reported
that Dimensional had sole voting power and sole dispositive power over
5,935,084 shares of Common Stock. Dimensional is a registered
investment advisor and the reported shares are owned by certain investment
companies, trusts and accounts for which Dimensional acts as investment
advisor or investment manager. The address of Dimensional is
1299 Ocean Avenue, Santa Monica, CA
90401.
|
|
(7)
|
The
source of this information is a Schedule 13G filed February 12, 2008 by
First Pacific Advisors, LLC (“FPA”) reporting beneficial ownership at
December 31, 2007. The Schedule 13G reported that FPA had
shared voting power over 5,709,300 shares of Common Stock and shared
dispositive power over 17,312,300 shares of Common Stock. The
Schedule 13G also reported that Robert L. Rodriguez and J. Richard Atwood,
each a Managing Member of FPA, had beneficial ownership (with the same
voting and dispositive power as FPA) with respect to these shares, and
that Mr. Rodriquez had sole voting and sole dispositive power over an
additional 143,200 shares. The address of FPA is 11400 W.
Olympic Blvd., Suite 1200, Los Angeles, CA
90064.
|
|
(8)
|
The
source of this information is a Schedule 13G/A filed January 28, 2008 by
Royce & Associates, LLC (“Royce”) reporting beneficial ownership at
December 31, 2007. The Schedule 13G/A reported that Royce had
sole voting and sole dispositive power over 10,367,215 shares of Common
Stock. Their address is 1414 Avenue of the Americas, New York,
NY 10019.
|
|
(9)
|
The
source of this information is a Schedule 13G/A filed February 14, 2008 by
Snyder Capital Management, L.P. (“SCMLP”) and its general partner, Snyder
Capital Management, Inc. (“SCMI”) reporting beneficial ownership at
December 31, 2007. The Schedule 13G/A reported that SCMLP and
SCMI had shared voting power over 6,365,508 shares and shared dispositive
power over 6,950,008 shares of Common Stock. Their address is
One Market Plaza, Steuart Tower, Suite 1200, San Francisco, CA
94105.
|
|
(10)
|
The
source of this information is a Schedule 13G filed January 11, 2008 by The
Clark Estates, Inc. (“Clark”) reporting beneficial ownership at January 7,
2008. The Schedule 13G reported that Clark had sole voting
power and sole dispositive power over 6,452,000 shares of Common
Stock. Clark is a registered investment advisor and the
reported shares are owned by certain investment companies, trusts and
accounts for which Clark acts as investment advisor or investment
manager. The address of The Clark Estates, Inc. is One
Rockefeller Plaza, 31st Floor, New York, NY
10020.
|
|
(11)
|
The
source of this information is a Schedule 13G filed February 14, 2008 by
Wellington Management Company, LLP (“Wellington”) reporting beneficial
ownership at December 31, 2007. The Schedule 13G reported that
Wellington had shared voting power over 3,643,000 shares and shared
dispositive power over 6,704,799 shares of Common Stock. Their
address is 75 State Road, Boston, MA
02109.
|
|
(12)
|
Includes
636,158 shares as to which Directors and executive officers hold options
exercisable within 60 days, 983,522 deferred shares, 612,764 restricted
stock units and 329,329 shares of restricted stock as to which the
Director or Executive Officer has voting power but which are subject to
risk of forfeiture and restrictions on
transferability.
|
27
Incorporation
by Reference
The Committee has omitted from this
Proxy Statement certain disclosure required by applicable law that is expected
to be included in the Company’s proxy statement relating to the Annual
Meeting. This disclosure is expected to include, among other things,
current biographical information on Charming Shoppes’ current directors,
information concerning executive compensation, and other important
information. Although we do not have any knowledge indicating
that any statement made by the Committee herein is untrue, we do not take any
responsibility for the accuracy or completeness of statements taken from public
documents and records that were not prepared by or on our behalf, or for any
failure by Charming Shoppes to disclose events that may affect the significance
or accuracy of such information. See Schedule II for information
regarding persons who beneficially own more than 5% of the Shares and the
ownership of the Shares by the directors and management of Charming
Shoppes.
The
information concerning Charming Shoppes contained in this Proxy Statement and
the Schedules attached hereto has been taken from, or is based upon, publicly
available information.
WE URGE YOU TO SIGN, DATE AND RETURN
THE WHITE PROXY CARD IN FAVOR OF THE ELECTION OF OUR NOMINEES DESCRIBED IN
THIS PROXY STATEMENT.
Dated: [_________],
2008
Sincerely,
Your Fellow
Shareholders:
THE CHARMING SHOPPES FULL VALUE
COMMITTEE
28
SCHEDULE
I
TRANSACTIONS
IN SECURITIES OF CHARMING SHOPPES
DURING
THE PAST TWO YEARS
Except
as otherwise specified, all purchases and sales were made in the open
market.
|
Shares
of Common Stock
Purchased /
(Sold)
|
Price
Per
Share($)
|
Date
of
Purchase /
(Sale)
|
CRESCENDO PARTNERS II, L.P.,
SERIES Q
|
187,400
|
5.0923
|
12/17/07
|
|||
|
391,200
|
4.9834
|
12/18/07
|
|||
|
826,925
|
4.9900
|
12/19/07
|
|||
|
342,400
|
5.0788
|
12/20/07
|
|||
|
1,613,500
|
5.3569
|
12/21/07
|
|||
|
213,000
|
5.3220
|
12/24/07
|
|||
|
600,000
|
5.2925
|
12/26/07
|
|||
|
854,900
|
5.3704
|
12/27/07
|
|||
|
424,750
|
5.3633
|
12/28/07
|
|||
|
349,850
|
5.3783
|
12/31/07
|
|||
|
590,400
|
5.3938
|
01/02/08
|
|||
|
440,000
|
5.4011
|
01/03/08
|
|||
|
369,600
|
5.0199
|
01/04/08
|
|||
|
35,200
|
4.6964
|
01/08/08
|
|||
|
50,000
|
4.2000
|
01/09/08
|
|||
|
65,000
|
4.5327
|
01/10/08
|
CRESCENDO INVESTMENTS II,
LLC
None
CRESCENDO PARTNERS III,
L.P.
|
12,600
|
5.0923
|
12/17/07
|
|||
|
26,300
|
4.9834
|
12/18/07
|
|||
|
29,575
|
4.9900
|
12/19/07
|
|||
|
23,000
|
5.0788
|
12/20/07
|
|||
|
108,500
|
5.3569
|
12/21/07
|
|||
|
14,300
|
5.3220
|
12/24/07
|
|||
|
10,400
|
5.2925
|
12/26/07
|
|||
|
14,800
|
5.3704
|
12/27/07
|
|||
|
7,350
|
5.3633
|
12/28/07
|
|||
|
6,050
|
5.3783
|
12/31/07
|
|||
|
10,200
|
5.3938
|
01/02/08
|
|||
|
60,000
|
5.4011
|
01/03/08
|
|||
|
50,400
|
5.0199
|
01/04/08
|
|||
|
4,800
|
4.6964
|
01/08/08
|
CRESCENDO INVESTMENTS III,
LLC
None
ERIC S.
ROSENFELD
None
MYCA PARTNERS
INC.
None
MYCA MASTER FUND,
LTD.
|
80,000
|
11.4700
|
03/21/07
|
|||
|
120,000
|
12.5600
|
04/24/07
|
|||
|
(27,500)
|
12.1100
|
05/11/07
|
|||
|
(22,500)
|
12.6700
|
05/22/07
|
|||
|
14,000
|
12.1500
|
05/29/07
|
|||
|
36,000
|
11.8600
|
06/06/07
|
|||
|
16,500
|
11.7900
|
06/07/07
|
|||
|
8,500
|
11.7700
|
06/08/07
|
|||
|
30,000
|
11.7600
|
06/12/07
|
|||
|
5,500
|
11.7000
|
06/13/07
|
|||
|
5,000
|
11.7300
|
06/18/07
|
|||
|
24,500
|
11.7900
|
06/20/07
|
|||
|
26,000
|
11.6800
|
06/21/07
|
|||
|
16,000
|
11.6000
|
06/22/07
|
|||
|
20,745
|
11.5200
|
06/25/07
|
|||
|
40,255
|
10.8300
|
06/26/07
|
|||
|
7,000
|
10.8600
|
06/29/07
|
|||
|
25,000
|
10.8500
|
07/09/07
|
|||
|
20,000
|
10.7500
|
07/10/07
|
|||
|
27,000
|
10.8200
|
07/13/07
|
|||
|
13,500
|
10.8700
|
07/16/07
|
|||
|
17,500
|
10.8600
|
07/17/07
|
|||
|
105,000
|
10.7900
|
07/18/07
|
|||
|
17,000
|
10.8500
|
07/20/07
|
|||
|
25,000
|
10.7800
|
07/23/07
|
|||
|
58,000
|
10.5400
|
07/24/07
|
|||
|
8,701
|
10.2600
|
07/26/07
|
|||
|
146,799
|
8.2200
|
08/08/07
|
|||
|
(193,500)
|
9.0900
|
08/10/07
|
|||
|
(39,600)
|
9.4700
|
08/13/07
|
|||
|
(10,400)
|
9.0100
|
08/14/07
|
|||
|
(5,600)
|
9.0200
|
08/15/07
|
|||
|
(4,400)
|
8.9800
|
08/16/07
|
|||
|
(65,307)
|
9.0900
|
08/17/07
|
|||
|
(2,693)
|
9.1700
|
08/21/07
|
|||
|
12,000
|
8.6900
|
09/06/07
|
|||
|
46,000
|
8.4700
|
09/13/07
|
|||
|
15,000
|
8.4600
|
10/04/07
|
|||
|
15,000
|
8.4000
|
10/08/07
|
|||
|
4,000
|
8.2400
|
10/09/07
|
|||
|
65,000
|
8.1800
|
10/10/07
|
|||
|
(1,000)
|
7.5300
|
10/19/07
|
|
425*
|
9.5100
|
10/25/07
|
|||
|
2*
|
9.5100
|
11/08/07
|
|||
|
559*
|
9.5100
|
11/16/07
|
|||
|
560*
|
9.5100
|
12/06/07
|
|||
|
40,000
|
5.0100
|
12/18/07
|
|||
|
30,000
|
4.9900
|
12/19/07
|
|||
|
18,000
|
5.0700
|
12/20/07
|
|||
|
15,000
|
5.3400
|
12/21/07
|
|||
|
25,000
|
5.3300
|
12/24/07
|
|||
|
15,500
|
5.2500
|
12/26/07
|
|||
|
18,500
|
5.3600
|
12/27/07
|
|||
|
7,796
|
5.3500
|
12/28/07
|
|||
|
22,204
|
5.4000
|
12/31/07
|
|||
|
140,000
|
4.6100
|
01/07/08
|
|||
|
93,405
|
4.4500
|
01/08/08
|
|||
|
363*
|
9.5100
|
01/10/08
|
|||
|
2,091*
|
9.5100
|
01/18/08
|
* Exercised
Put Option ($10.00 Strike Price). Each option represents 100 shares
of the underlying common stock.
ROBERT
FRANKFURT
None
ARNAUD
AJDLER
|
15,000
|
4.2329
|
01/11/08
|
MICHAEL
APPEL
|
6,000**
|
4.1879
|
01/11/08
|
|||
|
4,000
|
5.1400
|
01/23/08
|
** The
6,000 shares were purchased through Mr. Appel’s Michael Appel Rollover IRA
account.
|
IMPORTANT
Tell the Board of Directors what
you think! Your vote is extremely important. No matter how many Shares of
the Company’s common stock you own, please give The Charming Shoppes Full
Value Committee your proxy with respect to the Company’s common stock at
the 2008 Annual Meeting to vote: (1) “FOR” the election of the Nominees as
the three Class C directors on the Company’s Board of Directors, (2)
“AGAINST” the Company’s proposal to re-approve the material terms of the
performance goals under the Company’s 2003 Incentive Compensation Plan,
and (3) “FOR” the Company’s proposal to ratify the appointment of Ernst
& Young LLP as the Company’s independent auditors to serve for the
2009 fiscal year.
If any of your Shares are held in
the name of a brokerage firm, bank, bank nominee or other institution,
only it can vote such Shares. Accordingly, please vote your Shares
according to the voting instructions provided by your nominee or contact
the person responsible for your account and instruct that person to
execute the WHITE proxy card representing your Shares. The Charming
Shoppes Full Value Committee urges you to confirm in writing your
instructions to The Charming Shoppes Full Value Committee in care of the
address provided below so that it will be aware of all instructions given
and can attempt to ensure that such instructions are
followed.
If you would like additional
copies of this document, would like to ask any additional questions, or
need assistance voting your WHITE proxy card, please contact our proxy
solicitor:
D.F.
KING & CO., INC.
48
Wall Street 22nd Floor
New
York, NY 10005
CALL
TOLL FREE: (800) 735-3107
OR
BANKS
AND BROKERS CALL COLLECT: (212) 269-5550
OR
EMAIL:
info@dfking.com
|
PRELIMINARY
COPY SUBJECT TO COMPLETION
DATED
MARCH 20, 2008
WHITE
PROXY
CHARMING
SHOPPES, INC.
2008
ANNUAL MEETING OF SHAREHOLDERS
THIS
PROXY IS SOLICITED ON BEHALF OF THE CHARMING SHOPPES
FULL
VALUE COMMITTEE (THE “COMMITTEE”)
THE
BOARD OF DIRECTORS OF CHARMING SHOPPES, INC.
IS
NOT SOLICITING THIS PROXY
P R O X Y
The
undersigned appoints [________] and [________], and each of them, attorneys and
agents with full power of substitution to vote all shares of common stock of
Charming Shoppes, Inc. (“Charming Shoppes” or the “Company”) which the
undersigned would be entitled to vote if personally present at the 2008 Annual
Meeting of Shareholders of the Company scheduled to be held at
[__________________, __________, _________ ________,] on May 8, 2008, at 10:00
A.M. (eastern time), and including at any adjournments or postponements thereof
and at any meeting called in lieu thereof (the “Annual Meeting”).
The
solicitation is being made on behalf of Crescendo Partners II, L.P., Series Q,
Crescendo Investments II, LLC, Crescendo Partners III, L.P., Crescendo
Investments III, LLC, Eric S. Rosenfeld, Myca Partners Inc., Myca Master Fund,
Ltd., Arnaud Ajdler, Michael Appel, Robert Frankfurt and The Charming Shoppes
Full Value Committee
The
undersigned hereby revokes any other proxy or proxies heretofore given to vote
or act with respect to the shares of common stock of the Company held by the
undersigned, and hereby ratifies and confirms all action the herein named
attorneys and proxies, their substitutes, or any of them may lawfully take by
virtue hereof. If properly executed, this Proxy will be voted as
directed on the reverse and in the discretion of the herein named attorneys and
proxies or their substitutes with respect to any other matters as may properly
come before the Annual Meeting that are unknown to the Committee a reasonable
time before this solicitation.
IF
NO DIRECTION IS INDICATED WITH RESPECT TO THE PROPOSAL ON THE REVERSE, THIS
PROXY WILL BE VOTED “FOR” PROPOSALS 1 AND 3 AND “AGAINST” PROPOSAL
2.
This
Proxy will be valid until the sooner of one year from the date indicated on the
reverse side and the completion of the Annual Meeting.
IMPORTANT: PLEASE
SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY!
CONTINUED
AND TO BE SIGNED ON REVERSE SIDE
[X] Please mark vote as in this
example
THE
COMMITTEE RECOMMENDS A VOTE “FOR” THE NOMINEES LISTED IN
PROPOSAL
NO. 1, “AGAINST” PROPOSAL NO. 2 AND “FOR” PROPOSAL NO. 3
Proposal
1 – Proposal to Elect Arnaud Ajdler, Michael Appel and Robert Frankfurt to serve
as Class C directors of the Company for a three-year term that expires at the
2011 annual meeting of the Company’s shareholders.
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FOR
ALL NOMINEES
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WITHHOLD
AUTHORITY TO VOTE FOR ALL NOMINEES
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FOR
ALL EXCEPT NOMINEE(S) WRITTEN BELOW
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Nominees:
Arnaud
Ajdler
Michael
Appel
Robert
Frankfurt
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[ ]
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[ ]
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[ ]
________________
________________
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Proposal
2 – The Company’s Proposal to re-approve the material terms of the performance
goals under the Company’s 2003 Incentive Compensation Plan
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[
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]
FOR
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[
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]
AGAINST
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[
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]
ABSTAIN
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Proposal 3 – Proposal to ratify the
appointment of Ernst & Young LLP as the Company’s independent auditors to
serve for the 2009 fiscal year.
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[
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]
FOR
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[
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]
AGAINST
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[
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]
ABSTAIN
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Dated: ______________________________
____________________________________
(Signature)
____________________________________
(Signature,
if held jointly)
____________________________________
(Title)
WHEN
SHARES ARE HELD JOINTLY, JOINT OWNERS SHOULD EACH SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC., SHOULD INDICATE THE CAPACITY IN WHICH
SIGNING. PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS
PROXY.