Bed Bath & Beyond (BBBY)

Why does the Company oppose this proposal?

The proposal requests a report on products that may be affected by the concerns raised.  There are currently well in excess of 50,000 individual stock keeping units in the Bed Bath & Beyond stores alone, representing goods sold to the Company by over 2,000 separate vendors.  There are tens of thousands of additional items in Harmon, Christmas Tree Shops and buybuy BABY stores.  As noted previously, the Company is not a manufacturer and does not believe its shareholders would be well served by diverting resources from its core businesses and into chemical research.  The concerns raised in the proposal are real, however.  The Company monitors and will comply with further regulatory activity in this area, and will continue to meet the desires of its customers for alternative products and packaging as they become available.

Why does the Company oppose this proposal?

The Board of Directors does not believe this proposal would serve shareholder interests. Just as the Company’s employment decisions are based on operating needs, the principal criteria in selecting an individual for Board membership are the individual’s qualifications, experience and the ability to contribute to the enhancement of shareholder value without regard to gender, minority or other status.

The proponents of this proposal cite some support for the argument that companies with diversified boards have better performance records. The Company has reported fourteen consecutive years of record earnings and has annually recorded consistently high returns on shareholders’ equity since its initial public offering in 1992.

The shareholder proposal would require the Board of Directors to provide a report by a deadline date, commit the Company to a policy of board inclusiveness and establish a timetable for achieving it. The Board of Directors believes that this proposal is inappropriately restrictive, would unduly limit the Company in its selection of Directors, would involve cost in time and effort without any commensurate benefit and would, therefore, be detrimental to the best interests of the Company and its shareholders.

Why does the Company oppose this proposal?

        The supporters of this proposal state, "[w]e strongly believe that our company's financial performance is linked to its corporate governance policies and procedures and the level of Board and management accountability they establish." The Company agrees. Since the Company's shareholders voted in support of the current classified Board structure, gross revenues have increased an average of more than 25% per year and earnings have increased an average of more than 30% per year. Few companies have matched the Company's performance over this period. The stability and continuity fostered by the current structure of the Board has been and, in the opinion of the Board, will continue to be in the best long-term interests of all shareholders.

        The current drumbeat refrain that a classified board is per se bad governance, though popular, is not consistent with either this Company's performance or the facts on the ground. The Investor

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Responsibility Research Center reported late last year that 56% of the companies in the S&P 500 have classified boards. The New York Business Corporation Law continues to permit the creation of a classified board. Directors, regardless of the length of their terms, all have the same fiduciary responsibility to shareholders.

        It is true that in 2003 Pfizer, a company with a market capitalization nearly 20 times that of this Company, chose to discontinue its own classified board structure. In doing so, however, Pfizer made it clear that it was acting only after careful consideration of its own specific circumstances.

        The Board has reviewed the reasoning behind the adoption of a classified structure eight years ago in light of the Company's current circumstances and finds that it remains sound.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE AGAINST THIS
SHAREHOLDER PROPOSAL.

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EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

        The following table shows the aggregate compensation earned by the Company's two Co-Chairmen, its President and Chief Executive Officer, and the two other highest paid executive officers of the Company for services rendered in fiscal 2004, 2003 and 2002.

(a)

Mr. Eisenberg is employed by the Company pursuant to an employment agreement. See "Agreements with Messrs. Eisenberg and Feinstein" below.

(b)

Includes: (i) certain personal benefits provided by the Company to Mr. Eisenberg in fiscal 2004, 2003 and 2002 (such as the use of Company cars for non-business purposes, tax preparation services and other advisory services) at an aggregate cost to the Company of approximately $70,703, $60,336 and $55,089, respectively; (ii) insurance premiums in the amount of approximately $1,041, $1,413 and $1,508 in fiscal 2004, 2003 and 2002, respectively, paid by the Company in respect of certain insurance policies; and (iii) other premium payments under the Insurance Policies (as defined below) of $0 in fiscal 2004, $0 in fiscal 2003, and $197,124 in fiscal 2002. See "Agreements with Messrs. Eisenberg and Feinstein" below.

(c)

Mr. Feinstein is employed by the Company pursuant to an employment agreement. See "Agreements with Messrs. Eisenberg and Feinstein" below.

(d)

Includes: (i) certain personal benefits provided by the Company to Mr. Feinstein in fiscal 2004, 2003 and 2002 (such as the use of Company cars for non-business purposes, tax preparation services and other advisory services) at an aggregate cost to the Company of approximately $58,051, $57,776 and $61,612, respectively; (ii) insurance premiums in the amount of approximately $2,082, $2,826 and $3,016 in fiscal 2004, 2003 and 2002, respectively, paid by the Company in respect of certain insurance policies; and (iii) other premium payments under the Insurance Policies (as defined below) of $0 in fiscal 2004, $0 in fiscal 2003, and $157,270 in fiscal 2002. See "Agreements with Messrs. Eisenberg and Feinstein" below.

(e)

Messrs. Temares, Stark and Fiorilli are employed by the Company pursuant to agreements described below under "Agreements with Messrs. Temares, Stark and Fiorilli".

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STOCK OPTIONS

        The following table sets forth information as of February 26, 2005 for each of the executive officers of the Company named in the Summary Compensation Table with respect to options granted during fiscal 2004 and their potential value (at the end of the option term assuming certain levels of appreciation of the Company's common stock).