Note 6 - Capital Stock and Transactions With Related Parties

12 Months Ended

May 01, 2021

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

6. CAPITAL STOCK AND TRANSACTIONS WITH RELATED PARTIES

The Board of Directors has authorized the Company to repurchase up to 3.2 million shares of common stock.  During Fiscal 2020, the Company purchased an aggregate 154,512 shares for a cost of $6.2 million. As of May 2, 2020, 1,313,144 shares were purchased under the program and 1,886,856 shares were available for repurchase.

The Company paid a special cash dividend on Common Stock of $279.9 million on January 29, 2021 ($3.00 per share), $135.2 million ($1.45 per share) on January 29, 2019, and $69.9 million ($.75 per share) on August 4, 2017 and January 27, 2017. 

The Company is a party to a management agreement with Corporate Management Advisors, Inc. (CMA), a corporation owned by our Chairman and Chief Executive Officer. This agreement was originated in 1991 for the efficient use of management of two public companies at the time. In 1994, one of those public entities, through a merger, no longer was managed in this manner.

Under the terms of the agreement, CMA provides, subject to the direction and supervision of the Board of Directors of the Company, (i) senior corporate functions (including supervision of the Company’s financial, legal, executive recruitment, internal audit and information systems departments) as well as the services of a Chief Executive Officer and Chief Financial Officer, and (ii) services in connection with acquisitions, dispositions and financings by the Company, including identifying and profiling acquisition candidates, negotiating and structuring potential transactions and arranging financing for any such transaction. CMA, through its personnel, also provides, to the extent possible, the stimulus and creativity to develop an innovative and dynamic persona for the Company, its products and corporate image. In order to fulfill its obligations under the management agreement, CMA employs numerous individuals, who, acting as a unit, provide management, administrative and creative functions for the Company.

CMA and the Company are joint owners of a corporate aircraft and pursuant to a joint ownership agreement, each party agreed to pay certain expenses associated with the use of the aircraft.  During the past three years, the joint operating costs have averaged approximately $1.0 million per year and the Company's lease payments for its ownership interest have averaged approximately $.6 million per year.  In conjunction with an inquiry by the Securities and Exchange Commission (the "SEC") for the fiscal years 2015 through 2020, the Company initiated a review to determine that the aircraft usage costs were properly classified in accordance with SEC standards.  For purposes of settling these proceedings the Company has volunteered an offer of settlement.  The offer, if approved by the SEC, will require an immaterial payment that has been accrued at May 1, 2021.    

The management agreement provides that the Company will pay CMA an annual base fee equal to one percent of the consolidated net sales of the Company, and further provides that the Compensation and Stock Option Committee and the Board of Directors may from time to time award additional incentive compensation to CMA or its personnel. The Board of Directors on numerous occasions contemplated incentive compensation to CMA, however, since the inception of this agreement, no incentive compensation has been paid. We incurred management fees to CMA of $10.7 million for Fiscal 2021, $10.0 million for Fiscal 2020, and $10.2 million for Fiscal 2019.  Amounts due CMA of $3.8 million at May 1, 2021, which includes $1.2 for costs reimbursable under the management agreement, and $2.6 million at  May 2, 2020.