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. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box:
(NATIONAL VISION INC. LOGO) NATIONAL VISION, INC. 296 GRAYSON HIGHWAY LAWRENCEVILLE, GEORGIA 30045 (770) 822-3600 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 23, 2002 To the Shareholders: The Annual Meeting of Shareholders of National Vision, Inc., a Georgia corporation, will be held at the offices of the Company located at 296 Grayson Highway, Lawrenceville, Georgia, on May 23, 2002, at 11:00 a.m. We are holding this meeting for the following purposes: 1. To elect a Board of five Directors to serve until the 2003 Annual Meeting of Shareholders. 2. To transact such other business as may properly come before the meeting or any adjournments of the meeting. The Board of Directors has set March 22, 2002 as the record date for this meeting. Accordingly, shareholders as of the close of business on that date are entitled to: - receive this notice of meeting and accompanying materials - vote at the meeting and any adjournments of the meeting. A proxy statement and a proxy solicited by the Board of Directors are enclosed, along with our annual report. Please sign, date, and return the proxy promptly in the enclosed business reply envelope. If you attend the meeting, you may, if you wish, withdraw your proxy and vote in person. By order of the Board of Directors, MITCHELL GOODMAN Secretary Lawrenceville, Georgia April 24, 2002 PLEASE COMPLETE AND RETURN THE ENCLOSED PROMPTLY SO THAT YOUR VOTE MAY BE RECORDED AT THE MEETING IF YOU DO NOT ATTEND PERSONALLY.
NATIONAL VISION, INC. PROXY STATEMENT GENERAL The Board of Directors (the "Board") of National Vision, Inc., a Georgia corporation (the "Company"), is soliciting the enclosed proxy for use at the 2002 Annual Meeting of Shareholders (the "Meeting") to be held on May 23, 2002. Only shareholders of record at the close of business on March 22, 2002, will be entitled to vote at the Meeting. On April 5, 2002, the Company had issued and outstanding 5,000,000 shares of Common Stock ("Common Stock"). The Company completed its restructuring under Chapter 11 on June 1, 2001. Pursuant to the plan of reorganization approved by the bankruptcy court, all existing equity interests in the Company were cancelled and new common stock was issued to our creditors. In addition, under the plan of reorganization, approximately 700,000 shares of common stock have been deposited in a disputed claim reserve. These shares will be distributed to creditors as and when disputed claims are resolved, and will not be voted at the Meeting. The Company's principal executive offices are located at 296 Grayson Highway, Lawrenceville, Georgia 30045. The approximate date on which this proxy statement and the accompanying proxy are being first sent to shareholders is April 24, 2002. VOTING Each of the 5,000,000 shares of Common Stock outstanding as of the record date entitles the holder to notice of, and vote on, each matter to be presented at the Meeting or any adjournments thereof. Each share is entitled to one vote. Directors are elected by a plurality of the votes cast by the shares entitled to vote. An automated system administered by the Company's transfer agent tabulates the votes. Abstentions and "broker non-votes" (that is, proxies from brokers or nominees indicating that such persons have not received instructions from the beneficial owner or other persons entitled to vote shares as to a matter with respect to which the brokers or nominees do not have discretionary power to vote) will be treated as present for purposes of determining the presence of a quorum, but will otherwise have no effect on the election of directors. For purposes of determining approval of a matter presented at the Meeting other than the election of directors, abstentions will be deemed present and entitled to vote and will, therefore, have the same legal effect as a vote "against" a matter presented at the Meeting. Broker non-votes will be deemed not entitled to vote on the subject matter as to which the non-vote is indicated and will, therefore, have no legal effect on the vote on that particular matter. REVOCABILITY OF PROXIES The proxy accompanying this proxy statement is revocable. It may be revoked by filing with the Secretary of the Company an instrument of revocation or by the presentation at the Meeting of a duly executed proxy bearing a later date. It may also be revoked by attendance at the Meeting and election to vote in person. The proxy may not be revoked after it has been exercised. SOLICITATION The Company will bear the entire cost of preparing, assembling, printing and mailing this proxy statement, the accompanying proxy and any additional material which may be furnished to shareholders by the Company. Copies of solicitation material will be furnished to brokerage houses, fiduciaries and custodians to forward to beneficial owners of stock held in their name. We will solicit proxies through the mail and through direct communication with certain shareholders or their representatives by officers, directors and employees of the Company, who will receive no additional compensation therefor.
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES COMPENSATION OF DIRECTORS Non-employee directors of the Company receive an annual retainer of $45,000 and also receive medical and dental benefits. Non-employee directors are also eligible to participate in the Restated Non-Employee Director Stock Option Plan. Under this stock option plan, the four non-employee directors (Messrs. B. Robert Floum, Myrel A. Neumann, Jeffrey A. Snow, and Peter T. Socha) were each granted an option to purchase 15,000 shares of Common Stock and are entitled to automatic grants of additional options to purchase 10,000 shares upon the date of the Meeting and each subsequent annual meeting of shareholders. All option grants are at exercise prices no less than the "fair market value" of a share of Common Stock on the date of grant. All options vest 50 percent on the second anniversary of the grant date and 25 percent on each of the third and fourth anniversaries of the grant date, or 100 percent upon the death of the director. COMMITTEES OF THE BOARD The Board has four committees: the Audit Committee; the Compensation Committee; the Nominating Committee; and the Executive Committee. The members of each of these Committees are listed below, along with the number of meetings of each Committee in 2001:
The report of the Compensation Committee begins on Page 10. NOMINATING COMMITTEE The Nominating Committee is responsible for recommending and nominating individuals for election or re-election as directors. The Nominating Committee will consider recommendations for nominees for directorships submitted by shareholders. EXECUTIVE COMMITTEE The Executive Committee is authorized to consider any matter that could be brought before a meeting of the Board, subject to applicable restrictions in the Georgia Business Corporation Code. MEETINGS OF THE BOARD During 2001, there were eight meetings of the Board. All directors attended at least 75% of all meetings of the Board and all committees of the Board of which they were members. ELECTION OF DIRECTORS (PROPOSAL 1) The directors of the Company are elected annually to serve until the next annual meeting of shareholders and until their respective successors are elected. The authorized number of directors of the Company is presently fixed at five. All the nominees, except Dr. Nelson, are currently directors. Each proxy executed and returned by a shareholder will be voted as specified by the shareholder. If no specification is made, such proxy will be voted for the election of the nominees named below to constitute the entire Board. If any nominee withdraws or for any reason is not able to serve as a director, the proxy will be voted for such other person as may be designated by the Board as a substitute nominee, but in no event will the proxy be voted for more than five nominees. The management of the Company has no reason to believe that any nominee will not serve if elected. The Company's By-Laws contain an advance notice procedure for the nomination of candidates for election to the Board. Notice of proposed shareholder nominations for election of directors must be given to the Secretary of the Company not less than 14 days nor more than 50 days prior to the meeting at which directors are to be elected, unless the notice of meeting is given less than 21 days prior to the meeting, in which case the notice of nomination must be submitted not later than the 7th day following the day on which the notice of meeting was mailed to shareholders. The notice of nomination must contain information about each proposed nominee, including age, address, principal occupation, financial standing, plans or ideas for managing the affairs of the Company, the number of shares of stock of the Company beneficially owned by such nominee and such other information as would be required to be disclosed under the Securities Exchange Act of 1934 in connection with any acquisition of shares by such nominee or with the solicitation of proxies by such nominee for his election as a director. Information must also be disclosed by and about the shareholder proposing to nominate that person. The chairman of a shareholder meeting may refuse to acknowledge the nomination of any person who does not comply with the foregoing procedure. The foregoing summary description of the By-Laws is not intended to be complete and is qualified in its entirety by reference to the text of the By-Laws. 3
INFORMATION CONCERNING DIRECTORS The following information is provided, as of April 15, 2002, regarding current directors and the nominees for election as directors:
EXECUTIVE OFFICERS The following table sets forth, as of April 15, 2002, certain information regarding the executive officers of the Company:
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The Company is not aware of any person who, on April 15, 2002, was the beneficial owner of five percent (5%) or more of outstanding shares of Common Stock, except as set forth below.
except as follows: a Form 5, relating to one transaction, was filed one day late, for each of B. Robert Floum, James W. Krause, Myrel Neumann, Jeffrey Snow, Peter T. Socha, Eduardo Egusquiza, Charles M. Johnson, Angus C. Morrison, Timothy W. Ranney, and Robert Stein. Each of Zurich Scudder Investments, Inc. and U.S. Bancorp Investments, Inc. filed a Form 3, relating to an initial acquisition of Common Stock of the Company, on an untimely basis. In making these statements, the Company has relied upon the written representations of its directors and officers and upon copies of reports furnished to the Company. COMPENSATION OF EXECUTIVE OFFICERS The following table discloses compensation received from the Company by the Company's Chief Executive Officer, and the Company's four most highly compensated officers other than the Chief Executive Officer (all such individuals, collectively, the "named executive officers"). SUMMARY COMPENSATION TABLE
OPTION GRANTS IN LAST FISCAL YEAR The following table provides information on option grants to the named executive officers by the Company in 2001. In accordance with rules of the Commission, there are shown the hypothetical gains or "option spreads" that would exist for the respective options. These gains are based on assumed rates of annual compound stock price appreciation of 5% and 10% from the date the options were granted over the full option term.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
extend such term, in which case the term of the agreement would expire three years from the date of the notice. The plan of reorganization approved in the Company's Chapter 11 case provided for the conversion of the Company's debt into equity of the reorganized company. This conversion constituted a change in control within the meaning of the change in control agreements. The Company and the named executive officers have amended the agreements to exclude the conversion of debt into equity as a change in control under the agreements. The plan of reorganization approved in the Company's Chapter 11 case also provides for severance of one year for any of the executive officers upon termination without cause. The Company has modified this severance plan to provide for payment of the severance over one year and for payment to the executive following termination of the executive because of (i) a significant, adverse change in the executive's employment responsibilities; (ii) a reduction in the executive's base salary; (iii) relocation of more than 50 miles from the Company's office; or (iv) the failure of the Company to pay current compensation. Payments under the severance plan are to be netted against any payments under the change in control agreement. REPORT OF THE COMPENSATION COMMITTEE The Company emerged from its Chapter 11 proceedings on June 1, 2001, at which time a new Board of Directors was appointed pursuant to the Company's plan of reorganization. The new Board then designated B. Robert Floum, Myrel Neumann, and Peter Socha as the new members of the Compensation Committee. The Board later added Jeffrey Snow as a member of the Committee, as is discussed further below. The goal of the Compensation Committee is to develop and implement compensation policies that reflect the circumstances of the Company and our business objectives. There are some general principles which we seek to apply: salaries should be competitive and geared to the middle of the relevant market; annual incentives should motivate attainment of specific business and operating objectives; and long term equity awards should directly align the interests of management with the interests of shareholders. We also recognize the need to apply these principles in a flexible manner and, in appropriate circumstances, to adjust the scale and mix of compensation. We faced some unusual challenges when we became members of our Committee. The Company, as recapitalized during the bankruptcy process, was still highly leveraged and needed to continue to generate strong cash flows to service its restructured debt. We also recognized the need to properly motivate management. Given those circumstances, we believed that we needed to review the entire executive compensation structure of the Company. We accordingly retained outside consultants to review the compensation structure and to report to us with suggestions and recommendations. We specifically asked them to conduct a comparable market analysis, focusing on retailers of comparable size that had emerged from Chapter 11. We also asked them to recommend ways to develop a long-term incentive plan that would be aligned with the interests of our shareholders. They reviewed and reported to us on the following areas: - salaries - incentive compensation - long-term incentives, including equity compensation 10
Their report included data from comparable companies and placed appropriate weight on the recent circumstances of the Company. Their findings and recommendations were as follows: Salaries. They found that salaries were in line with market, except for the salary of Mr. Morrison, our Chief Financial Officer, which they felt was significantly under market. They accordingly recommended an increase for Mr. Morrison. Incentive Compensation. They believed that our incentive plans were at or slightly above market. Under our current incentive plan, employees are entitled to annual incentive compensation if the Company attains defined financial goals and if our employees attain defined performance goals. Long-Term Incentives. They recommended that we reconsider our long-term incentives, to create the appropriate incentives for our management and to further align the interests of management with those of our shareholders. We accordingly took the following actions: Salaries. We maintained the salaries of all senior executives at their current levels, with the exception of the salary for Mr. Morrison, which we increased, on the recommendation of our consultants, to a level we believe to be market-based. Incentive Compensation. We maintained the existing incentive compensation plan for 2001 as this plan had already been in existence for six months in fiscal 2001. This plan had been put in place by the prior Compensation Committee and, pursuant to the plan of reorganization approved by the Bankruptcy Court, was continued in effect. We therefore believed that it was appropriate for us to maintain this incentive plan during 2001. We approved awards based on individual attainment of goals by employees. Long-Term Incentives. We restructured the long-term compensation plan by changing our annual grant levels of stock options and by adding a new component that emphasizes long-term performance. Clearly, in light of the recapitalization of the Company that occurred during our restructuring, we needed to adjust the number of stock options we award each year. We also determined that vesting of options should directly relate to the financial performance of the Company. We accordingly awarded stock options as follows: 45,000 shares to Mr. Krause, the President and Chief Executive Officer; 9,000 shares to all other executive officers; and 8,000 shares to Mr. Ranney. The options vest at the end of seven years, but vesting is accelerated if the Company attains defined financial goals. The strike price for the options was the closing trading price ($0.40) as of the date of grant. We weighted the stock option component at 60% of the value of long-term compensation. The new component, which represents the remaining 40% of the value of long-term compensation, consists of performance shares under our Restated Stock Option and Incentive Award Plan. This component of long-term compensation contemplates that executives will be awarded performance shares to the extent that the Company attains EDITDA goals over a three-year performance period. One-third of each award will be paid in stock and two-thirds in cash. The cash portion will equal the greater of $5.00 or the closing trading price of our common stock as of the last day of the performance period. To further motivate our executives, we have provided for measurement and payment of awards at the end of each fiscal year and for catch-up performance, so that a strong performance by the Company in a later year can offset a weaker performance in an earlier year. We have further provided for threshold, target, and maximum awards, depending on the financial performance of the Company. These awards are described above in the chart entitled "Long-Term Incentive Plans -- Awards in Last Fiscal Year." 11
During 2002, we will continue to evaluate the compensation structure applicable to our executives. Our goal will be to continue to align executive compensation with the interests of our shareholders. In that connection, we are mindful of the potential impact of Section 162 (m) of the Internal Revenue Code, which can limit the deductibility of certain compensation expense in excess of $1,000,000 paid to executive officers. Although our compensation levels are well below that amount, we have added Jeffrey Snow as a member of the Compensation Committee. He, along with B. Robert Floum, comprises a sub-committee that approves equity awards to our executive officers. Because he and Mr. Floum qualify as "outside directors" under the Internal Revenue Code, the options and other equity awards granted by this sub-committee should not be subject to the limitations imposed by Section 162 (m). COMPENSATION COMMITTEE B. Robert Floum (Chairman) Myrel Neumann Jeffrey A. Snow Peter T. Socha 12
PERFORMANCE GRAPH The Company emerged from Chapter 11 on June 1, 2001. Pursuant to the plan of bankruptcy, all of the Company's then-outstanding common stock was cancelled and its creditors received newly-issued shares of Common Stock. The Common Stock began trading on the American Stock Exchange on August 27, 2001. The chart below shows the total return to shareholders of the Company, assuming a $100 investment in Common Stock on August 27, 2001, compared to the total return on the American Stock Exchange Composite Index and on a custom composite index composed of all of the companies, other than the Company, trading on The American Stock Exchange that have the same SIC code as the Company's (SIC Code 5900 -- miscellaneous retail). Use of the custom composite index in the chart below does not indicate that the companies in the index are competitors of the Company. CUMULATIVE TOTAL RETURN BASED UPON AN INITIAL INVESTMENT OF $100 ON AUGUST 27, 2001 WITH DIVIDENDS REINVESTED (PERFORMANCE GRAPH)
Mr. Socha ceased employment as an executive officer of the Company in June 2001. As part of his separation from the Company, Mr. Socha received $150,000 in connection with his involvement in the Company's Chapter 11 Case, and his waiver of claims against the Company under his change in control agreement. Pursuant to the severance program approved by the bankruptcy court, he received $208,000 in severance benefits. He also received $120,000 under the Key Employment Retention Program approved by the bankruptcy court. CERTAIN TRANSACTIONS In October 1997, the Company purchased Midwest Vision, Inc., a retail optical company, all the stock of which was owned by Myrel Neumann. Dr. Neumann became a director in June 2001. In connection with the purchase of Midwest Vision, the Company entered into three ancillary contracts with Dr. Neumann: (a) a put option pursuant to which the Company agreed to repurchase 100,000 shares of Common Stock issued to Dr. Neumann; (b) an employment agreement; and (c) a lease for an optical laboratory in St. Cloud, Minnesota. In the Company's Chapter 11 proceeding in the U.S. Bankruptcy Court for the Northern District of Georgia, Dr. Neumann filed unsecured claims for $900,000 and approximately $150,000 arising out of the put option and the employment agreement, respectively. The Company has filed an objection to each of these claims. Each claim is pending and subject to resolution in the bankruptcy court. Pursuant to the plan of reorganization, holders of approved claims will be issued a combination of senior notes and common stock. Under the lease, the Company paid Dr. Neumann $80,000 in 2001. The lease expires in 2007 and can be renewed, at the option of the Company, for two terms, each for five years. In 2001, Nelson Eye Associates, P.C., which is wholly owned by Marc Nelson, a nominee for election as a director, paid the Company approximately $280,000 in occupancy fees related to the occupancy of ten retail optical locations owned by the Company. REPORT OF THE AUDIT COMMITTEE During 2001, the Committee met and held discussions with members of management and the Company's independent accountants, Arthur Andersen LLP, regarding current audit activities and the plans for and results of selected internal audits. The Company's independent accountants provided to the Committee the written disclosures and the letter required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and the Committee discussed with the independent accountants that firm's independence. The Audit Committee has determined that the provision of the non-audit services described in "Fees of Independent Accountants -- All Other Fees" below is compatible with maintaining the independence of Arthur Andersen. Management represented to the Committee that the Company's consolidated financial statements were prepared in accordance with generally accepted accounting principles. The Committee has reviewed and discussed the consolidated financial statements with management and the independent accountants. The Committee discussed with the independent accountants matters required to be discussed by Statement on Auditing Standards No. 61 as currently in effect. On the basis of these discussions and reviews, the Committee recommended that the Board include the audited consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 29, 2001 for filing with the Securities and Exchange Commission. Management has the primary responsibility for the Company's systems of internal controls and the overall financial reporting process. The independent accountants are responsible for performing an independent audit of the Company's consolidated financial statements in accordance with generally accepted accounting standards and for issuing a report thereon. The Committee's responsibility is to monitor and oversee these processes. The members of the Audit Committee are not currently certified public accountants, professional auditors or experts in the fields of accounting and auditing and rely, 14
without independent verification, on the information provided to them and on the representations made by management and the independent accountants. Arthur Andersen LLP has served as the independent auditor of the Company since 1990. Because of the uncertainty created by the Enron situation and the filing of an indictment against Arthur Andersen LLP by the Department of Justice, the Audit Committee and the Board have determined to temporarily postpone the selection of an auditor of the Company and its subsidiaries for fiscal 2002. AUDIT COMMITTEE Jeffrey A. Snow (Chairman) B. Robert Floum Peter T. Socha FEES OF INDEPENDENT ACCOUNTANTS Audit Fees. The aggregate fees billed by the Company's principal accounting firm, Arthur Andersen LLP, for professional services rendered for the audit of the Company's annual financial statements for the year ending December 29, 2001 and the review of the financial statements included in the Company's Forms 10-Q for that year were $165,000. Financial Information Systems Design and Implementation Fees. During 2001, Arthur Andersen LLP did not provide professional services with regard to financial systems design and implementation. All Other Fees. The aggregate fees billed for services rendered by Arthur Andersen LLP for 2001, other than the services described above, were $340,000. INFORMATION CONCERNING THE COMPANY'S INDEPENDENT ACCOUNTANTS The Board has not yet selected the independent public accountants who will audit the accounts of the Company and its subsidiaries for the year 2002 for the reasons described above in the Audit Committee Report. We expect that representatives of the independent accountants that we select will be present at the Meeting and will be afforded an opportunity to make a statement if they so desire. Such representatives will be available to respond to appropriate questions. SHAREHOLDER PROPOSALS FOR 2003 ANNUAL MEETING All proposals of shareholders must be submitted to the Secretary of the Company no later than December 24, 2002, in order to be considered for inclusion in the Company's 2003 proxy materials. The Company's By-Laws require notice to the Board or the President, as the case may be, in advance of any regular shareholders' meeting, of any shareholder proposals. The By-Laws further require that in connection with such proposals the shareholders provide certain information to the Board or the President, as the case may be. If a shareholder intends to present a proposal (other than a proposal which concerns the nomination and election of directors) for consideration at the 2003 Annual Meeting, the Company must receive notice of such proposal between 90 and 120 days prior to such meeting. The foregoing summary description of the By-Laws is not intended to be complete and is qualified in its entirety by reference to the text of the By-Laws. 15
OTHER MATTERS The Board is not aware of any matters to come before the Meeting other than the election of the directors. If any other matter should come before the Meeting, then the persons named in the enclosed form of proxy will have discretionary authority to vote all proxies with respect thereto in accordance with their judgment. VOTING OF PROXIES On matters coming before the Meeting as to which a choice has been specified by the shareholders on the proxies, the shares will be voted accordingly. If no choice is so specified, the shares will be voted FOR the election of management's nominees for directors. By order of the Board of Directors, MITCHELL GOODMAN Secretary Dated: April 24, 2002 16
APPENDIX AUDIT COMMITTEE OF THE BOARD OF DIRECTORS CHARTER I. SCOPE OF RESPONSIBILITIES The Committee's primary duties and responsibilities are to: - Monitor the Company's financial reporting process and internal control system. - Review and appraise the independence and performance of the Auditor and the internal auditing department. - Select, evaluate, and, when appropriate, replace the Auditor. - Monitor the compliance by the Company with legal and regulatory requirements. The Auditor is ultimately accountable to the Board and the Committee as representatives of the shareholders of the Company. The Committee will primarily fulfill its responsibilities by carrying out the activities enumerated in Section IV of this Charter. II. COMPOSITION A. INDEPENDENCE The Committee shall be comprised of three or more directors as determined by the Board. At least two of the directors shall be independent directors within the meaning of applicable law and any Listing Standards. One member of the committee may not be independent, within the meaning of applicable law and Listing Standards, if their inclusion is determined to be in the best interest of the Company. B. FINANCE KNOWLEDGE All members of the Committee shall be able to read and understand fundamental financial statements, and at least one member of the Committee shall have previous employment experience in finance and accounting or any other experience or background which results in the individual's financial sophistication. C. ELECTION OF MEMBERS The members of the Committee shall be elected by the Board and shall serve until their successors shall be duly elected and qualified. Unless a Chair is elected by the full Board, the members of the Committee may designate a Chair by majority vote of the full Committee membership. D. CONSULTANTS The Committee shall have the authority to retain legal, accounting or other consultants to advise the Committee. III. MEETINGS The Committee shall meet at least one time annually, or more frequently as circumstances dictate. The Committee shall have the authority to request that any officer or employee of the company or the Company's outside counsel or the Auditor to attend any meeting of the Committee or to meet with any members of, or consultants to, the Committee. A-1
IV. RESPONSIBILITIES AND DUTIES To fulfill its responsibilities and duties the Committee shall: A. DOCUMENTS/REPORTS REVIEW 1. Review and reassess this Charter at least annually. 2. Review any reports to management prepared by the Auditor and management's response. 3. Review with financial management and the Auditor the reports on Forms 10-Q and 10-K prior to their filing or prior to the release of earnings. B. AUDITOR 4. Recommend to the Board the selection of the Auditor, considering independence and effectiveness and approve the fees and other compensation to be paid to the Auditor. 5. Receive annually from the Auditor a formal written statement delineating all relationships between the Auditor and the Company, as required by the Listing Standards and consistent with Independence Standards Board Standard 1; and regularly review and discuss with the Auditor any relationships or services that may affect the objectivity and independence of the Auditor. 6. Take, or recommend that the Board take, appropriate action to oversee the independence of the Auditor. 7. Review the performance of the Auditor and approve any proposed discharge of the Auditor when circumstances warrant. 8. Periodically consult with the Auditor out of the presence of management about internal controls and the completeness and accuracy of the Company's financial statements. C. FINANCIAL REPORTING PROCESSES 9. In consultation with the Auditor and the internal auditors, review the integrity of the Company's financial reporting processes, both internal and external. 10. Consider the Auditor's judgments about the quality and appropriateness of the Company's accounting principles as applied in its financial reporting. 11. Consider and approve, if appropriate, changes to the Company's auditing and accounting principles and practice as suggested by the Auditor, management, or the internal auditing department. D. PROCESS IMPROVEMENT 12. Following completion of the annual audit, review with each of management, the Auditor and the internal auditing department any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information. 13. Review any significant disagreement among management and the Auditor or the internal auditing department in connection with the preparation of the financial statements. 14. Review with the Auditor, the internal auditing department and management the extent to which changes or improvements in financial or accounting practices, as approved by the Committee, have been implemented. E. ETHICAL AND LEGAL COMPLIANCE 15. Establish, review and update periodically a Code of Conduct and review management's monitoring of the Company's compliance with this Code. A-2
16. Review, with the Company's counsel, legal compliance matters including corporate securities trading policies. 17. Review, with the Company's counsel, any legal matter that could have a significant impact on the Company's financial statements. 18. Prepare the report required by the Securities and Exchange Commission to be included in the Company's annual proxy statement. 19. Perform any other activities consistent with this Charter, the Company's By-laws and governing law, as the Committee or the Board deems necessary or appropriate. V. DUTIES Nothing in this Charter shall increase or be deemed to increase the duties of the Committee and its members under applicable law or the Listing Standards. VI. DEFINITIONS The following terms have the following meanings in this Charter: - "Auditor" means the Company's independent public accountants. - "Board" means the Board of Directors of the Company. - "Committee" means the Audit Committee. - "Listing Standards" means the listing standard of any exchange or self-regulatory organization which lists or quotes the securities of the Company. A-3
(NVI LOGO) WWW.NATIONALVISION.COM
NATIONAL VISION, INC. Dear Shareholder: Please take note of the important information enclosed with this Proxy. Your vote counts, and you are strongly encouraged to exercise your right to vote your shares. Please mark the boxes on this proxy card to indicate how your shares will be voted. Then sign the card, detach it and return your proxy vote in the enclosed postage paid envelope. Thank you in advance for your prompt consideration. Sincerely, National Vision, Inc. NATIONAL VISION, INC. ANNUAL SHAREHOLDERS MEETING MAY 23, 2002 PROXY SOLICITED BY THE BOARD OF DIRECTORS The undersigned does hereby appoint JAMES W. KRAUSE and MITCHELL GOODMAN and each of them proxies of the undersigned with full power of substitution in each of them to vote at the annual meeting of shareholders of the Company to be held on May 23, 2002 at 11:00 a.m., and at any and all adjournments thereof, with respect to all shares which the undersigned would be entitled to vote, and with all powers which the undersigned would possess if personally present. This proxy revokes all prior proxies given by the undersigned. Without limiting the generality of the foregoing, said proxies are authorized to vote upon the following matters: UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE NOMINEES NAMED BELOW.
NATIONAL VISION, INC. Please sign exactly as your name or names appear(s) hereon. For more than one owner as shown, each should sign. When signing in a fiduciary capacity, please give full title. If this proxy is submitted by a corporation, it should be executed in the full corporate name by a duly authorized officer; if a partnership, please sign in partnership name by authorized person. In their discretion, the proxies are authorized to vote upon any other business that may properly come before the meeting or at any adjournment(s) thereof. Date: ------------------------------------- ------------------------------------- Shareholder sign here ------------------------------------- Co-owner sign here Please be sure to sign and date this Proxy.