PROPOSAL 1

ELECTION OF DIRECTORS

      The Company’s Certificate of Incorporation provides that the Directors are to be divided into three classes with respect to the time for which they hold office. Each class consists of one Director elected by the holders of Class B Common Stock (each a “Class B Director”), one Director elected by the holders of Class C Common Stock (each a “Class C Director”) and one Director elected by all stockholders of the Company voting together as a single class (each a “Class A Director”). At each annual meeting of stockholders of the Company, successors of the class whose term of office expires in that year are to be elected for a three-year term and until their successors have been duly elected and qualified.

      At the Meeting, three Directors (one Class A Director, one Class B Director and one Class C Director) will be elected, each to hold office for a term of three years and until his successor is elected and qualified. Mr. Jan Michiel Hessels, Mr. Leonard Riggio and Mr. Joel Klein are nominees for election as Class A Director, Class B Director and Class C Director, respectively, at the Meeting, each to hold office for a term of

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NOMINEES FOR ELECTION AS DIRECTOR

      Class A Director

      Mr. Jan Michiel Hessels, a Class A Director, has been a director of the Company since August 1999. Mr. Hessels was the Chief Executive Officer of Royal Vendex KBB N.V. (“Vendex”) from 1990 until June 2000. Vendex is a multi-billion dollar Netherlands-based corporation with international retailing operations. Mr. Hessels is also a director of Schiphol Airport, Royal Vopak N.V., Royal Philips Electronics N.V., Euronext N.V., Fortis N.V. and Heineken N.V.

      Class B Director

      Mr. Leonard Riggio, a Class B Director, has been Chairman of the Board of the Company and B&N.com since inception. Mr. Riggio has been Chairman of the Board and a principal stockholder of Barnes & Noble since its inception in 1986, and was Chief Executive Officer of Barnes & Noble from inception through February 2002. Since 1965, Mr. Riggio has been Chairman of the Board, Chief Executive Officer and the principal stockholder of Barnes & Noble College Bookstores, Inc. (“B&N College”), one of the nation’s largest operators of college bookstores. Since 1985, Mr. Riggio has been the Chairman of the Board and a principal beneficial owner of MBS Textbook Exchange, Inc. (“MBS”), one of the nation’s largest wholesalers of college textbooks. Mr. Riggio is also a director of GameStop Corp. (“GameStop”), a majority-owned subsidiary of Barnes & Noble. Mr. Leonard Riggio is the brother of Mr. Stephen Riggio.

      Class C Director

      Mr. Joel Klein, a Class C Director, has been a director of the Company since January 2002. Mr. Klein is Chairman and Chief Executive Officer of Bertelsmann Inc. and Chief U.S. Liaison Officer to Bertelsmann, and is a member of the Corporate Executive Council of Bertelsmann. Mr. Klein served as Assistant Attorney General in charge of the Antitrust Division of the United States Department of Justice from July 1997 to September 2000; and was appointed Acting Assistant Attorney General by President Clinton and confirmed by the United States Senate in July 1997. Before joining the Justice Department in 1995 as Principal Deputy to the Assistant Attorney General, Mr. Klein served as Deputy White House Counsel to President Clinton.

      THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF EACH NOMINEE FOR DIRECTOR NAMED ABOVE. PROXIES SOLICITED HEREBY WILL BE VOTED FOR EACH NOMINEE NAMED ABOVE UNLESS A VOTE AGAINST A NOMINEE OR AN ABSTENTION IS SPECIFICALLY INDICATED.

Class Whose Term Expires in 2003

      Mr. William F. Reilly, a Class A Director, has been a director of the Company since August 1999. Mr. Reilly founded Aurelian Communications (“Aurelian”), a special interest publisher, in February 2002. Mr. Reilly is Chief Executive Officer of Aurelian. Mr. Reilly served as Chairman and Chief Executive Officer of Primedia Inc., a specialty media company, from February 1990 to 1999. Mr. Reilly is a member of the Board of Directors of FMC Corporation. Mr. Reilly serves on the Board of Trustees of the University of Notre Dame.

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      Mr. Michael N. Rosen, a Class B Director, has been Secretary and a director of the Company and B&N.com since inception. Mr. Rosen has been the Chairman of Robinson Silverman Pearce Aronsohn & Berman LLP (“Robinson Silverman”), counsel to the Company and B&N.com, for more than the past five years. Mr. Rosen is also a director of Barnes & Noble, B&N College, MBS and GameStop.

      Mr. Markus Wilhelm, a Class C Director, has been a director of the Company since inception and B&N.com since November 1, 1998. Since March 2000, Mr. Wilhelm has been Chief Executive Officer of BOOKSPAN, a partnership between Doubleday Direct, Inc. (“Doubleday Direct”) and Book-of-the-Month Club Holdings LLC. In March 1998, Mr. Wilhelm was elected Chairman of the Board of Doubleday Interactive, Inc., a U.S. Internet service provider. In 1998, as director of BOL.US Online, Inc. and BOL.Global, Inc., Mr. Wilhelm developed and launched bol.com AG, the Internet division of Bertelsmann. Mr. Wilhelm has been the President of Doubleday Direct, a wholly owned subsidiary of Bertelsmann, since May 1993, and its Chief Executive Officer and Chief Compliance Officer since July 1994.

Class Whose Term Expires in 2004

      Ms. Patricia Higgins, a Class A Director, has been a director of the Company since July 2000. Ms. Higgins has been President and Chief Executive Officer of Switch and Data Facilities Inc., an international operator of convergent computer network centers, since November 2000. Ms. Higgins was Vice President and Chief Information Officer of Alcoa Inc. from January 1997 to April 1999. Prior to that, Ms. Higgins held a position at Unisys Corporation as President, Communications Worldwide Business Unit from January 1995 to January 1997. Ms. Higgins has been a member of the Board of Directors of The Williams Companies since 1995 and Fleet Bank N.A. since 1991.

      Mr. Stephen Riggio, a Class B Director, has been a director of the Company and B&N.com since inception and Vice Chairman since January 2000. From January 2000 to February 2002, Mr. Riggio was also Acting Chief Executive Officer of the Company and B&N.com, a position he previously held at B&N.com from inception to December 1998. From February 2002 to the present Mr. Riggio has been Chief Executive Officer of Barnes & Noble. Mr. Riggio has been Vice Chairman of Barnes & Noble since December 1997 and a director of Barnes & Noble since April 1997. From February 1995 to December 1997, Mr. Riggio was Chief Operating Officer of Barnes & Noble. Mr. Riggio is also a director of iUniverse, The National Book Foundation, The National Down’s Syndrome Society and The Association for the Help of Retarded Children. Mr. Stephen Riggio is the brother of Mr. Leonard Riggio.

      Dr. Klaus Eierhoff, a Class C Director, has been a director of the Company since inception and B&N.com since November 1998. Dr. Eierhoff has been President and Chief Executive Officer of DirectGroup Bertelsmann and a member of the Executive Board of Bertelsmann since January 1998. From 1990 to 1997, Dr. Eierhoff served as a member of the Executive Board of Karstadt AG. Dr. Eierhoff is Chairman of the supervisory board of ECI, Vianen. Dr. Eierhoff is also a member of the supervisory board of DealTime Inc. and of BOOKSPAN.

Board of Directors Meetings and Committees

      During 2001, the Board of Directors met four times. All Directors attended at least 75% of the meetings of the Board of Directors and the committees of which they are members, except Jan Michiel Hessels who attended two of four meetings.

      The Board of Directors has five standing committees: the Special Committee, the Executive Committee, the Audit Committee, the Compensation Committee and the Nominating Committee.

      Special Committee. The Special Committee consists of two members, one of whom is selected by the Class B Directors and one of whom is selected by the Class C Directors. The current members of the Special Committee are Mr. Leonard Riggio and Dr. Klaus Eierhoff. The purpose of the Special Committee is to evaluate certain major corporate actions, such as mergers, acquisitions, capital expenditures or borrowings in excess of $20 million (each a “Major Action”). Each Major Action requires the approval of the Special Committee prior to being submitted for the approval of the Board of Directors.

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      Executive Committee. The Executive Committee consists of four members of the Board of Directors. The current members of the Executive Committee are Mr. Leonard Riggio, Mr. Stephen Riggio, Dr. Klaus Eierhoff and Mr. Joel Klein. The Executive Committee exercises all of the power and authority of the Board of Directors to the extent permitted by law, provided that Major Actions will require the approval of the Special Committee and the full Board of Directors.

      Audit Committee. The current members of the Audit Committee are Mr. William F. Reilly (Chairman), Mr. Jan Michiel Hessels and Ms. Patricia Higgins, none of whom is, or ever has been, an officer or employee of the Company and all of whom are considered “independent” for purposes of the National Association of Securities Dealers’ listing standards. The Audit Committee reviews, acts on and reports to the Board of Directors with respect to various auditing and accounting matters, including the selection of the Company’s auditors, the scope of the annual audits, fees to be paid to the auditors, the performance of the Company’s independent auditors and the accounting practices of the Company. The Board has adopted a written audit committee charter setting out the audit-related functions of the Audit Committee. The Audit Committee met three times during 2001.

      Compensation Committee. The Compensation Committee consists of William F. Reilly and Jan Michiel Hessels, none of whom is, or ever has been, an officer or employee of the Company. The Compensation Committee determines the salaries and incentive compensation of the officers of the Company and provides recommendations for the salaries and incentive compensation of the other employees and the consultants of the Company and authorizes grants under the Company’s 1999 Incentive Plan. The Compensation Committee met three times during 2001.

      Nominating Committee. The current members of the Nominating Committee are Mr. Leonard Riggio and Dr. Klaus Eierhoff. The role of the Nominating Committee is to conduct searches for potential directors and to recommend candidates to the full Board of Directors for its consideration. The Nominating Committee met once during 2001.