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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. )
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Sysco Corporation
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SYSCO CORPORATION
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[SYSCO LOGO]
SYSCO CORPORATION
1390 ENCLAVE PARKWAY
HOUSTON, TEXAS 77077-2099
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 6, 19985, 1999
To Thethe Stockholders of SyscoSYSCO Corporation:
NOTICE IS HEREBY GIVENWe are giving notice that the Annual Meeting of Stockholders of SyscoSYSCO
Corporation, a Delaware corporation, (the "Company"), will be held November 6,
1998,5, 1999 at 10:00 a.m.,
at the Omni Houston Hotel located at Four Riverway, Houston, Texas 77056-1999
for the following purposes:
A. To elect five directors for terms of office as shown in the
attached Proxy Statement.directors.
B. To approve the Sysco Corporation Non-Employee Directors Stock Plan
as set forth inadoption of an amendment to SYSCO's Restated
Certificate of Incorporation to increase the attached Proxy Statement.shares of common stock that
SYSCO will have the authority to issue to one billion (1,000,000,000)
shares.
C. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only Common Stockholderscommon stockholders of record on the books of the CompanySYSCO at the close of
business on September 11, 1998,10, 1999 will be entitled to vote at the annual meeting.
We hope you will be able to attend the annual meeting in person, but if you
cannot be present, it is important that you sign, date and promptly returnattend, please vote your shares by telephone, by the Internet or by
returning the enclosed proxy card promptly in order that your vote may be cast
at the annual meeting.
JOHN F. WOODHOUSEBy order of the Board of Directors
/s/ BILL M. LINDIG
BILL M. LINDIG
Chairman of the Board
Dated: September 25, 1998
Enclosure:24, 1999
A copy of the Annual Report of SyscoSYSCO Corporation for the fiscal year ended June 27, 1998,July
3, 1999, containing financial statements, is enclosed herewith.enclosed.
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SYSCO CORPORATION
1390 ENCLAVE PARKWAY
HOUSTON, TEXAS 77077-2099
19981999 ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
September 25, 1998
The following information is furnished in connection with the solicitation
of proxies for the 1998 Annual Meeting of Sysco Corporation (hereinafter called
the "Company").
A form of proxy for use24, 1999
INFORMATION ABOUT ATTENDING THE ANNUAL MEETING
Our annual meeting will be held on Friday, November 5, 1999, at 10:00 a.m.
at the Omni Houston Hotel located at Four Riverway, Houston, Texas 77056-1999.
INFORMATION ABOUT THIS PROXY STATEMENT
We sent you these proxy materials because our Board of Directors is
soliciting your proxy to vote your shares at the annual meeting. On September
24, 1999, we began mailing these proxy materials to all stockholders of record
at the close of business on September 10, 1999.
WHO CAN VOTE
If you owned shares at the close of business on September 10, 1999, you are
entitled to vote. You are entitled to one vote for each share you owned on that
date on each matter presented at the annual meeting.
On September 10, 1999, there were 329,726,343 shares of common stock
outstanding. We do not know of any person or group who owned more than 5% of our
common stock as of this date. All of our directors and executive officers (24
persons) owned 3,065,005 shares, which was approximately 1% of our outstanding
stock as of September 10, 1999. We expect that these officers and directors will
vote their shares in favor of the five nominees named below and in favor of the
amendment to our Restated Certificate of Incorporation to increase the
authorized number of shares of common stock to one billion (1,000,000,000)
shares.
HOW TO VOTE
You may vote your shares as follows:
- in person at the annual meeting;
- by telephone;
- by Internet; or
- by mail by signing, dating and mailing the enclosed proxy card.
If you vote by proxy, the individuals named on the card (your proxies) will
vote your shares in the manner you indicate.
You may specify whether your shares should be voted for all, some or none
of the nominees for director and whether your shares should be voted for or
against the adoption of an amendment to SYSCO's Restated Certificate of
Incorporation. If you sign and return the card without indicating your
instructions, your shares will be voted for:
- the election of the five nominees for directors; and
- the amendment to SYSCO's Restated Certificate of Incorporation to
increase the total number of authorized shares of common stock to one
billion shares.
If your shares are not registered in your own name and you plan to attend
the annual meeting is enclosed. Any stockholder who
executes and deliversvote your shares in person, you should contact your
broker or agent in whose name your shares are registered to obtain a broker's
proxy hascard and bring it to the rightannual meeting in order to vote.
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HOW TO REVOKE OR CHANGE YOUR VOTE
You may revoke the sameor change your proxy at any time before it is voted.exercised by:
- writing to SYSCO's Corporate Secretary in time for her to receive it
before the annual meeting;
- voting again by telephone, Internet or mail; or
- voting in person at the annual meeting.
Your last vote that we receive will be the vote that is counted.
QUORUM REQUIREMENT
A quorum is necessary to hold a valid meeting. A quorum will exist if
stockholders entitled to cast at least 35% of all the votes entitled to be cast
at the meeting are present in person or by proxy. Abstentions and broker
non-votes are counted as present for establishing a quorum. A broker non-vote
occurs when a broker votes on some matter on the proxy card but not on others
because the broker does not have the authority to do so.
VOTES NECESSARY FOR ACTION TO BE TAKEN
Five directors will be elected at the meeting by a plurality of all the
votes cast at the meeting, meaning that the five nominees for director with the
most votes will be elected. The solicitationaffirmative vote of proxies is made by and on behalfa majority of all of the
managementoutstanding shares of common stock is required to approve the Company.amendment to
SYSCO's Restated Certificate of Incorporation to increase the number of
authorized shares of common stock. Abstentions and broker non-votes will have
the effect of a "no" vote on the proposed amendment to SYSCO's Restated
Certificate of Incorporation and will have no effect on the vote on the election
of directors.
WHO WILL COUNT VOTES
We will select one or more Inspectors of Election who will determine the
number of shares of voting stock outstanding, the voting power of each, the
number of shares represented at the annual meeting, the existence of a quorum
and whether or not proxies are valid and effective.
The Inspectors of Election will determine any challenges and questions
arising in connection with the right to vote and will count all votes cast for
and against and any abstentions with respect to all proposals and will determine
the results of each vote.
COST OF PROXY SOLICITATION
We will pay the cost of solicitation of proxies will be borne by the Company. The
Companyincluding preparing,
printing and mailing this proxy statement. We will authorize banks, brokerage
houses and other custodians, nominees orand fiduciaries to forward copies of proxy
materials to the beneficial owners of
shares or to request authority for the execution of the proxies and will reimburse such banks, brokerage houses and other custodians, nominees or
fiduciariesthem for their out-of-pocket expenses incurredcosts in connection therewith.
The Company hassending the materials.
We have retained Kissel-Blake Inc. to assist in the solicitation ofhelp us solicit proxies from suchthese
nominees and certain individual stockholders, in writing or by telephone, at an
estimated fee of $7,000$8,000 plus reimbursement for reasonable
out-of-pockettheir expenses.
This Proxy Statement and formOTHER MATTERS
The Board of proxy were first mailed
to stockholders on or about September 25, 1998.
AsDirectors does not know of September 11, 1998, the record date, there were outstanding
334,679,271 shares of the Company's Common Stock, $1 par value ("Common Stock").
The holders of Common Stock vote as a single class and are entitled to one vote
per share, noncumulative. As of September 11, 1998, no person or group was known
to the Company to own more than five percent of the Company's Common Stock. All
directors and executive officers of the Company as a group (22 persons) owned
beneficially 3,940,572 shares (constituting approximately 1.18%) of the
Company's outstanding Common Stock as of September 11, 1998. It is expectedany other matter that
shares held by directors and executive officers of the Company will be
voted in
favor of each proposal. As stated in the Notice of Annual Meeting of
Stockholders attached hereto, only holders of Common Stock of recordpresented at the close of businessannual meeting other than the proposals discussed in this proxy
statement. However, if any other matter properly comes before the annual
meeting, your proxies will act on September 11, 1998 will be entitled to notice of and to
vote at the meeting or any adjournment thereof. The stock transfer book will not
be closed.such matter in their best judgment.
WE WILL FURNISH A COPY OF THIS YEAR'S ANNUAL REPORT ON FORM 10-K WITHOUT
CHARGE UPON YOUR WRITTEN REQUEST IF YOU ARE A RECORD OR BENEFICIAL OWNER OF
COMMON STOCK WHOSE PROXY WE ARE SOLICITING IN CONNECTION WITH THE 1999 ANNUAL
MEETING OF STOCKHOLDERS. PLEASE ADDRESS REQUESTS FOR A COPY OF THE ANNUAL REPORT
TO THE INVESTOR RELATIONS DEPARTMENT, SYSCO CORPORATION, 1390 ENCLAVE PARKWAY,
HOUSTON, TEXAS 77077-2099.
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YOUR VOTE IS VERY IMPORTANT. IF YOU DO NOT EXPECT TO ATTEND THE ANNUAL
MEETING IN PERSON, PLEASE VOTE YOUR SHARES BY TELEPHONE, BY THE INTERNET OR BY
PROMPTLY SIGNING, DATING AND RETURNING THE ENCLOSED PROXY CARD IN THE ENCLOSED
POSTAGE PAID ENVELOPE.
ELECTION OF DIRECTORS
Five directors are to be elected. The Company'sITEM NO. 1 ON THE PROXY CARD
We will elect five directors. Our bylaws provide for the election of
directors for staggered terms, with each director serving a three-year term. The
Board of Directors has nominated the following five directors Gordon M.
Bethune, Colin G. Campbell, Frank A. Godchaux III, Frank H. Richardson and John
F. Woodhouse, for three-year
terms of office. The proxyholders intend to vote
for the first five persons named below as directors.office:
- John W. Anderson
- Judith B. Craven
- Bill M. Lindig
- Richard G. Merrill
- Phyllis S. Sewell
The remaining ten persons named in the table set forth on page 35 will
continue in office for the terms which expire at the Annual Meeting of Stockholdersannual meeting in the yearyears
opposite their
respective names.
Management recommends that the first five nominees named below be elected
to the Board of Directors for the above-referencedthree-year terms of office. The five nominees have
consented to being named in the Proxy Statementthis proxy statement and to serve if elected. Unless
you direct otherwise directed in theon your proxy form, the proxyholders intend to vote in
favor of electing Messrs. Bethune, Campbell, Godchaux, RichardsonMr. Anderson, Dr. Craven, Mr. Lindig, Mr. Merrill and WoodhouseMrs.
Sewell as directors for three-year terms of office and until their respective
successors are elected and shall qualify.
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DIRECTOR BIOGRAPHIES
The following information has been furnished to the Company by the five members of theour Board of Directors who are nominees for election or reelection at
the 1998 Annual Meeting:
GORDON M. BETHUNE, 57, was elected by1999 annual meeting have provided the Board as a director of the
Company in September 1998. Mr. Bethune is Chairman of the Board and Chief
Executive Officer of Continental Airlines, Inc. and has served in that capacity
since 1996. Prior to joining Continental Airlines in 1994 as President and Chief
Operating Officer, he was Vice President and General Manager of the Renton
Division of the Commercial Airline Group of Boeing Corporation.
COLIN G. CAMPBELL, 62,following information:
John W. Anderson, 67, has served as a director of the Company since 1989.
Mr. Campbell is the President of Rockefeller Brothers Fund, a private
philanthropic foundation, and also serves as a director of Pitney Bowes Inc.,
HSB Group and Rockefeller Financial Services, Inc.
FRANK A. GODCHAUX III, 71, has served as a director of the Company since
1987. Mr. Godchaux is the Chairman of the Board of Directors of Riviana Foods
Inc., a food manufacturer.
FRANK H. RICHARDSON, 65, has served as a director of the Company since
1993. Mr. Richardson served as President and Chief Executive Officer of Shell
Oil Company until his retirement in 1993.
JOHN F. WOODHOUSE, 67, has served as a director and officer of the Company
since its formation in 1969. Mr. Woodhouse is Chairman of the Board of Directors
of the Company. From 1985 until November 1994, Mr. Woodhouse served as Chairman
and Chief Executive Officer of the Company. Mr. Woodhouse also serves as a
director of Shell Oil Company. Mr. Woodhouse is Chairman of the Executive
Committee of the Board of Directors of the Company.
The following information has been furnished to the Company by the ten
members of the Board of Directors of the Company whose terms of office extend
beyond the 1998 Annual Meeting:
JOHN W. ANDERSON, 66, has served as a director of the CompanySYSCO since 1981. Mr.
Anderson is retired, having formerly served as the Vice-PresidentVice President of Customer
Services of Southwestern Bell Telephone Company.
CHARLES H. COTROS, 61,Judith B. Craven, 53, has served as a director of the Company since 1985.
Mr. Cotros serves as Executive Vice President and Chief Operating Officer of the
Company and is a member of the Executive Committee of the Board of Directors of
the Company. Mr. Cotros also serves as a director of Metamore Worldwide, Inc.
JUDITH B. CRAVEN, 52, has served as a director of the CompanySYSCO since 1996. She
has served since July 1992retired in October 1998 as President of the United Way of the Texas Gulf Coast. From February 1983 to June 1992, Dr. CravenCoast,
where she had served as Dean of the School
of Allied Sciences of the University of Texas Health Science Center at Houston
and from September 1987 to June 1992 as Vice President of Multicultural Affairs
for the University of Texas Health Science Center.in that capacity since July 1992. Dr. Craven is also a
director of A.H. Belo Corporation, Compaq Corporation, Luby's Cafeterias, Inc.
and the Houston Branch, Federal Reserve Bank of Dallas.
JONATHAN GOLDEN, 61,Bill M. Lindig, 62, has served as a director of SYSCO since 1983. Mr.
Lindig has been the CompanyChairman and Chief Executive Officer of SYSCO since 1984.
Mr. Golden is a partner of Arnall Golden & Gregory, LLP, counsel to the Company,January
1999 and is a member of the Executive Committee of the Board of Directors of the
Company. Mr. Golden also serves as a director of The Profit Recovery Group
International, Inc.
BILL M. LINDIG, 61, has served as a director of the Company since 1983. Mr.
Lindig is theCommittee. From January 1995 to December
1998, he was President and Chief Executive Officer of the Company and is a
member of the Executive Committee of the Board of Directors of the Company. HeSYSCO. Mr. Lindig also
serves as a director of Burlington Northern Santa Fe Corporation.
RICHARDRichard G. MERRILL, 67,Merrill, 68, has served as a director of the CompanySYSCO since 1983.
Currently retired, he formerly served as Executive Vice President of The
Prudential Insurance Company of America. Mr. Merrill is also a director of W.R.
Berkley Corporation. Mr. Merrill is a member of the Executive Committee of the
Board of Directors of the Company.
RICHARD J. SCHNIEDERS, 50, was elected to the Board of Directors of the
Company in July 1997. Mr. Schnieders was elected Senior Vice President,
Merchandising and Multi-Unit Sales in May 1997 after previously serving as
Senior Vice President, Merchandising Services since 1992. He also serves as a
director of Aviall, Inc.
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PHYLLISCommittee.
Phyllis S. SEWELL, 67,Sewell, 68, has served as a director of the CompanySYSCO since 1991. Mrs.
Sewell, currently retired, formerly served as Senior Vice President of Federated
Department Stores, Inc. Mrs. Sewell is also a director of Pitney Bowes Inc. and
Lee Enterprises, Inc.
ARTHUR J. SWENKA, 61,The ten members of our Board of Directors whose terms of office extend
beyond the 1999 annual meeting have provided the following information:
Gordon M. Bethune, 58, was elected by the board as a director of SYSCO in
September 1998. Mr. Bethune is Chairman of the Board and Chief Executive Officer
of Continental Airlines, Inc. and has served in that capacity
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since 1996. Prior to joining Continental Airlines in 1994 as President and Chief
Operating Officer, he was Vice President and General Manager of the Renton
Division of the Commercial Airline Group of Boeing Corporation. Mr. Bethune is
also a director of Honeywell, Inc.
Colin G. Campbell, 63, has served as a director of SYSCO since 1989. Mr.
Campbell is the President of Rockefeller Brothers Fund, a private philanthropic
foundation, and also serves as a director of Pitney Bowes Inc., HSB Group and
Rockefeller Financial Services, Inc. Mr. Campbell is a member of the Executive
Committee.
Charles H. Cotros, 62, has served as a director of SYSCO since 1985. Mr.
Cotros serves as President and Chief Operating Officer of SYSCO and is a member
of the Executive Committee. Mr. Cotros also serves as a director of Metamor
Worldwide, Inc.
Frank A. Godchaux III, 72, has served as a director of SYSCO since 1987.
Mr. Godchaux is the Chairman of the Board of Directors of Riviana Foods Inc., a
food manufacturer.
Jonathan Golden, 62, has served as a director of SYSCO since 1984. Mr.
Golden is a partner of Arnall Golden & Gregory, LLP, counsel to SYSCO. He is a
member of the Executive Committee. Mr. Golden also serves as a director of The
Profit Recovery Group International, Inc.
Frank H. Richardson, 66, has served as a director of SYSCO since 1993. Mr.
Richardson served as President and Chief Executive Officer of Shell Oil Company
until his retirement in 1993.
Richard J. Schnieders, 51, has served as a director of SYSCO since 1997.
Mr. Schnieders was elected Executive Vice President, Foodservice Operations in
January 1999 after previously serving as Senior Vice President, Merchandising
Services and Multi-Unit Sales since 1997. He is a member of the Executive
Committee. Mr. Schnieders also serves as a director of Aviall, Inc.
Arthur J. Swenka, 62, has served as a director of SYSCO since 1994. Mr.
Swenka was elected Senior Vice President, Operations of the CompanySYSCO in December 1994.
Previously, Mr. Swenka had served since 1984 as President and Chief Executive
Officer of Nobel/SyscoSYSCO Food Services Company.
THOMASThomas B. WALKER, JR.Walker, Jr., 74,75, has served as a director of the CompanySYSCO since 1970.
Mr. Walker is a limited partner of The Goldman Sachs Group, L.P. and is a
director of A. H. Belo Corporation, Riviana Foods Inc. and NCH Corp. Mr. Walker is a member of the
Executive CommitteeCommittee.
John F. Woodhouse, 68, has served as a director and officer of SYSCO since
its formation in 1969. Mr. Woodhouse is Senior Chairman of the Board of
Directors of SYSCO. From 1985 until November 1994, Mr. Woodhouse served as
Chairman and Chief Executive Officer of SYSCO. He also serves as a director of
Shell Oil Company. Mr. Woodhouse is Chairman of the Company.Executive Committee.
Unless otherwise noted, the persons named above have been engaged in the
principal occupations shown for the past five years or longer.
Although management does not contemplate the possibility, in the event any
nominee is not a candidate or is unable to serve as a director at the time of
the election, the proxies will be voted for any nominee who shall beis designated by the
present Board of Directors to fill suchthe vacancy.
DIRECTOR STOCK OWNERSHIP
The information below provides the name of each nominee, the names of the
other directors, the term of office for which the nominee is
proposedstands to be elected,
and the remaining terms of office of each other director, the number of shares
of Common Stockcommon stock that each nominee and director (and all directors and executive
officers as a group) beneficially ownedowns directly or indirectly by each nominee as of the close of
business on September 11, 199810, 1999 (according to
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information received by the Company)SYSCO) and the percentage of outstanding shares of
Common Stockcommon stock such ownership represented at September 11, 1998, are detailed below. Similar information is also provided for those
directors whose terms expire in future years.10, 1999.
SHARES OF
COMMON STOCK
BENEFICIALLY
CURRENT OWNED AS OF PERCENT OF
TERM SEPTEMBER 11,10, OUTSTANDING
NAME EXPIRES 1998(1)1999(1)(2) SHARES(3)
- ---- ------- ------------- -----------
Directors Standing for Election for Three-Year Terms of
Office
John W. Anderson......................................... 1999 24,105 *
Judith B. Craven......................................... 1999 2,400 *
Bill M. Lindig........................................... 1999 855,240(4) *
Richard G. Merrill....................................... 1999 28,370 *
Phyllis S. Sewell........................................ 1999 16,000 *
Directors with Continuing Terms
Charles H. Cotros........................................ 2000 349,175 *
Jonathan Golden.......................................... 2000 54,000(5) *
Richard J. Schnieders.................................... 2000 98,456 *
Arthur J. Swenka......................................... 2000 137,666 *
Thomas B. Walker, Jr. ................................... 2000 157,775 *
Gordon M. Bethune................................ 1998 -0-Bethune........................................ 2001 2,000 *
Colin G. Campbell................................ 1998 3,333Campbell........................................ 2001 8,000 *
Frank A. Godchaux III............................ 1998 55,333(4) .02%III.................................... 2001 60,000(6) *
Frank H. Richardson.............................. 1998 13,833(5)Richardson...................................... 2001 14,500 *
John F. Woodhouse................................ 1998 1,262,814 .38%
Directors with Continuing Terms
John W. Anderson................................. 1999 22,562 .01%
Judith B. Craven................................. 1999 -0-Woodhouse........................................ 2001 1,257,318 *
Bill M. Lindig................................... 1999 894,394(6) .27%
Richard G. Merrill............................... 1999 23,667 .01%
Phyllis S. Sewell................................ 1999 11,333 *
Charles H. Cotros................................ 2000 357,034 .11%
Jonathan Golden.................................. 2000 49,333(7) .01%
Richard J. Schnieders............................ 2000 90,717 .03%
Arthur J. Swenka................................. 2000 148,409 .04%
Thomas B. Walker, Jr............................. 2000 214,533 .06%
All Executive Officers and Directors as a Group (22(24
Persons)(7)(8)(9)................................... 3,940,572 1.18%........................................... 3,065,005 1.0%
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* Less than .01%1% of outstanding shares, after rounding.
(1) Includes shares of Common Stockcommon stock owned by the wivesspouses and/or dependent
children of each of the following named individuals: Colin G. Campbell,
1,000 shares; Frank A. Godchaux III, 12,000 shares; 3
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Richard J. Schnieders,
21,50721,536 shares; and Arthur J. Swenka, 466 shares. Also includes 46,644an additional
42,459 shares owned by the wivesspouses and/or dependent children of other
current
executive officers and directors.officers.
(2) Includes options to acquire an aggregate 70,27979,829 shares of Common Stockcommon stock which
are presently exercisable or will become exercisable within 60 days after
the date of this Proxy Statementproxy statement as follows: John W. Anderson, 2,667 shares;
Colin G. Campbell, 4,000 shares; Charles H. Cotros, 16,70613,334 shares; Frank A.
Godchaux III, 4,000 shares; Jonathan Golden, 4,000 shares; Bill M. Lindig,
14,06620,000 shares; Richard J. Schnieders, 18,013G. Merrill, 4,000 shares; Frank H. Richardson, 4,000
shares; Phyllis S. Sewell, 4,000 shares; Arthur J. Swenka, 7,4282,494 shares;
Thomas B. Walker, Jr., 4,000 shares; and John F. Woodhouse, 14,06613,334 shares.
(3) Rounded to the nearest 1/10010 of one percent.
(4) Includes 20,000 shares held by Riviana Foods Inc. of which Mr. Godchaux and
his wife are affiliates.
(5) Includes 8,000 shares held by the Frank and Marilyn Richardson Family
Foundation of which Mr. Richardson and his wife are directors.
(6) Includes 92,600 shares held by trusts of which Mr. Lindig's wife is
trustee.
(7)co-trustee.
(5) Includes 40,000 shares held by a trust created under the estate of Sol I.
Golden, of which Mr. Golden is a co-trustee.
(8)(6) Includes 20,000 shares held by Riviana Foods Inc. of which Mr. Godchaux and
his wife are affiliates.
(7) Includes options to acquire 10,664254,168 shares of Common Stockcommon stock which are
presently exercisable or will become exercisable within 60 days after the
date of this Proxy Statementproxy statement held by current executive officers and
directors other than
as set forth in note (2) above.
(9)(8) As of September 11, 1998,10, 1999, Thomas E. Lankford, SeniorExecutive Vice President,
OperationsMerchandising and Multi-Unit Sales and an executive named in the Summary
Compensation Table on page 9 hereof,12, beneficially owned 294,418294,444 shares of Common Stock,common
stock, constituting .09%less than 1% of the outstanding shares of Company Common Stock.SYSCO common
stock. Mr. Lankford's ownership includes options to acquire 31,72027,320 shares of
Common Stockcommon stock which are presently exercisable or will become exercisable
within 60 days after the date of this Proxy Statement. As of September 11, 1998, George L. Holm,
Senior Vice President, Operations and an executive named in the Summary
Compensation Table on page 9 hereof, beneficially owned 103,760 shares of
Common Stock, constituting .03% of the outstanding shares of Company Common
Stock. Mr. Holm's ownership includes options to acquire 38,920 shares of
Common Stock which are presently exercisable or will become exercisable
within 60 days after the date of this Proxy Statement.proxy statement.
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DIRECTOR COMPENSATION
Directors whose principal occupation is other than employment with the
Company are compensated at the rate ofFees
We pay non-employee directors $50,000 per year plus reimbursement of
expenses for all services as a director, including committee participation or
special assignments. SuchThese directors are given the opportunity tomay defer their annual compensationretainer, which
earns interest until their retirement from the Board or until the occurrence of
certain other events. Such deferred compensation accrues interest
at a rate equal to a long-term index (the index utilized is the monthly average
for the previous calendar year of the highest of the 20-year Treasury Bond,
10-year Treasury Note and Moody's Corporate Bond Yield Indices) plus 1%. The current rate of interest in effect is 8.53%7.87% per annum.year.
Messrs. Bethune, Godchaux, Golden, Merrill and Walker and Mrs. Sewell elected to
defer their annual compensation for 1998.
The1999.
Directors Stock Plan
In May 1998, the Board of Directors adopted and our stockholders
subsequently approved the SYSCO Non-Employee Directors Stock Plan. Under this
plan, non-employee directors also receivereceive:
- a one-time retainer stock award of 2,000 shares of common stock when
first elected as a non-employee director; and
- an automatic grant of options to purchase 4,000 shares of Company Common Stock (after adjusting for the 2-for-1common stock
split by way of stock dividend distributed on March 20, 1998 to stockholders of
record as of February 27, 1998 (the "Stock Split)) each November under the
Company's Non-Employee Directors Stock Option Plan (the "1995 Plan")year if theour earnings per share of the Company for the preceding fiscalprevious year increased by
10% or more overas compared to the earnings per share of the Company for the last prior year.
In additionorder for the annual options to requiring a 10% increase in earnings per share before options are
issued to non-employee directors,vest and become exercisable, rigorous
performance goals generally must be met during the five-year period after we issue the
options are issued before such options
will vest and the grantee may exercise such option.options. If the options do not vest during the five-year period after they are
issued, suchthe options will nonetheless vest six months prior tobefore the expiration of
the ten-year life of the grant if the director is still serving on the BoardBoard.
During fiscal 1999, we granted options to purchase an aggregate of Directors. Pursuant40,000 shares
under this plan to ten non-employee directors.
Additionally, this plan permits each non-employee director receivedto elect to
receive up to one-half of his or her annual retainer in common stock in which
case we will provide a matching grant of options to purchase 4,000 shares of
Company Common Stock (as adjusted for the Stock Split) in each of 1994, 1995,
1996 and 1997 (except for Dr. Craven
4
7
who received a grant to purchase 4,000 shares in each of 1996 and 1997) and
1,333 shares50% of the 1994 grant are currently exercisable.number of shares received as
a portion of the retainer. Messrs. Anderson, Bethune, Campbell, Godchaux,
Golden, Merrill, Richardson, Walker and Mrs. Sewell made this election during
1999.
No other remunerationcompensation was paid for services as a director during the fiscal
year ended June 27, 1998.
On May 13, 1998,July 3, 1999.
BOARD MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held five meetings during fiscal 1999 and all
directors, except for Messrs. Bethune and Walker and Dr. Craven, attended 75% or
more of the aggregate of:
- the total number of meetings of the Board of Directors, adopted, subjectand
- the total number of meetings held by all committees of the Board on which
he or she served during fiscal 1999.
The Nominating Committee held three meetings during fiscal 1999. The
function of the Nominating Committee is to stockholder
approval,propose directors, Board committee
members and officers for election or reelection. The members of our Nominating
Committee are:
- Jonathan Golden (Chairman);
- Colin G. Campbell;
- Frank A. Godchaux III;
- Richard G. Merrill;
- Frank H. Richardson;
- Phyllis S. Sewell; and
- Thomas B. Walker, Jr.
The Compensation and Stock Option Committee held five meetings during
fiscal 1999. The function of the Company's Non-EmployeeCompensation Committee is to consider the
annual compensation of directors and officers for recommendation to
6
9
the Board of Directors, to oversee the administration of SYSCO's 1995 Management
Incentive Plan, the 1991 Stock Option Plan (the "Directors
Plan"). Underand the DirectorsSplit Dollar Life Insurance
Plan non-employee directors will receiveand to provide guidance in the automatic grantarea of optionsemployee benefits, including
retirement plans and group insurance. The members of our Compensation and Stock
Option Committee are:
- Richard G. Merrill (Chairman);
- John W. Anderson;
- Gordon M. Bethune;
- Colin G. Campbell;
- Judith B. Craven;
- Frank H. Richardson; and
- Phyllis S. Sewell.
The Audit Committee held four meetings during fiscal 1999. This committee
reviews and reports to purchase 4,000 shares Common Stock following the Company's 1998 Annual MeetingBoard with respect to various auditing and each succeeding Annual Meeting thereafter.accounting
matters, including recommendations of the selection of our independent public
accountants, the scope of the audit procedures, the nature of the services to be
performed, the fees to be paid to the independent public accountants, the
performance of our independent public accountants and our accounting practices.
The termsmembers of such optionsour Audit Committee are:
- Colin G. Campbell (Chairman);
- John W. Anderson;
- Gordon M. Bethune;
- Judith B. Craven;
- Frank A. Godchaux III;
- Richard G. Merrill;
- Frank H. Richardson;
- Phyllis S. Sewell; and
option grants are substantially the same as- Thomas B. Walker, Jr.
CERTAIN RELATIONSHIPS
Mr. Godchaux is Chairman of Riviana Foods Inc., a food products company
which had sales to SYSCO or its wholly owned subsidiaries of approximately
$438,000 during fiscal 1999. We believe that the terms of optionsthese transactions
were fair and option grants providedno less favorable to us than those available from other suppliers.
Mr. Golden is the sole stockholder of Jonathan Golden, P.C., a partner in
the law firm of Arnall Golden & Gregory, LLP, Atlanta, Georgia, counsel to
SYSCO. We believe that the fees paid to this firm were fair and reasonable in
view of the level and extent of services rendered.
PROPOSAL TO AMEND THE RESTATED CERTIFICATE OF INCORPORATION
ITEM NO. 2 ON THE PROXY CARD
The Board of Directors has proposed a resolution amending Article Fourth,
Section A, of our Restated Certificate of Incorporation to increase the total
number of shares of common stock which we have authority to issue from five
hundred million (500,000,000) shares to one billion (1,000,000,000) shares,
$1.00 par value.
The authorized shares of common stock were last increased by the
stockholders at the 1990 annual meeting when the number of shares was increased
from 200,000,000 shares to 500,000,000 shares. We currently have 1,500,000
authorized shares of Preferred Stock, 450,000 of which have been designated as
"Series A Junior Participating Preferred Stock." No shares of Preferred Stock
are currently outstanding. As of September 10, 1999, of the 500,000,000 shares
of common stock which we are authorized to issue, 329,726,343 were issued and
7
10
outstanding (excluding 52,861,107 shares which were held by SYSCO as treasury
stock) and an aggregate of 37,406,034 shares were reserved for issuance under
existing benefit plans and in connection with certain completed acquisitions.
The Board believes that the amendment is necessary to ensure that we will
have sufficient authorized shares available to meet our ongoing business needs
and to take advantage of future corporate opportunities. There are no present
plans to issue any of the proposed additional authorized shares of common stock.
Further stockholder authorization would not be necessary prior to any such
issuance, except for certain situations where stockholder approval may be
required under the 1995 Plan described inNew York Stock Exchange rules or Delaware law.
Under our Restated Certificate of Incorporation, holders of stock are not
entitled to preemptive rights.
The affirmative vote of a majority of the preceding paragraph. However, unlikeoutstanding shares of common
stock entitled to vote is required to adopt the 1995 Plan,proposed amendment. If this
proposal is adopted, Article Fourth, Section A, will read as follows:
"FOURTH: A. The total number of shares of stock which the Directors Plan also
calls forcorporation
shall have authority to issue is One Billion One Million Five Hundred
Thousand (1,001,500,000) shares, consisting of One Million Five Hundred
Thousand (1,500,000) shares of Preferred Stock with a one-time Retainer Stock Awardpar value of 2,000One
($1.00) Dollar each, and One Billion (1,000,000,000) shares of Common Stock
to
each current non-employee director following the Company's 1998 Annual Meeting
as well aswith a one-time Retainer Stock Awardpar value of 2,000One ($1.00) Dollar each. The corporation may issue
fractional shares of Common Stock to
each person who becomes a non-employee director of the Company after November 6,
1998. Finally, unlike the 1995 Plan, the Directors Plan would permit each
non-employee director to elect to receive up to one-half of his/her annual
retainer in Common Stock instock, which case the Company will provide a matching grant
of 50% of the number of shares resulting from the non-employee director's
election to receive a portion of his/her retainer in Common Stock. If the
Directors Plan is approved at the 1998 Annual Meeting, the Directors Plan will
supersede the 1995 Plan, options outstanding under the 1995 Plan will remain
outstanding and be governed thereby and no further options will be granted underentitled to proportionate
dividends, voting and liquidation rights."
The Board of Directors has unanimously approved the 1995 Plan. See "Proposalamendment and
recommends a vote FOR the proposed amendment to Approve the Sysco Corporation Non-Employee
Directors Stock Plan" below.our Restated Certificate of
Incorporation.
EXECUTIVE COMPENSATION
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report documents the components of the Company'sSYSCO's compensation programs for
its executive officers and describes the basis on which fiscal 19981999 compensation
determinations were made with respect to the executive officers of the Company,SYSCO,
including Mr. Lindig, the Chief Executive Officer. All fiscal 19981999 compensation
decisions with respect to base salaries, annual incentive compensation and all
option grants under the 1991 Stock Option Plan were made by the Compensation and
Stock Option Committee (the "Committee").
OVERALL EXECUTIVE COMPENSATION PHILOSOPHY
Since itSYSCO became a publicly held corporation in 1970, the Company haswe have always
directly linked the compensation of its executive officers to the performance of
the Company.SYSCO's performance.
Specifically, the CompanyCommittee has tied the level of itsSYSCO's executive compensation
to increases in the Company'sSYSCO's earnings and return on shareholders' equity. This has beenWe have
accomplished this through the following means:
- A "pay-for-performance" orientation based upon CompanySYSCO performance for
corporate officers other(other than senior vice presidents, operationsoperations) and a
combination of operating company and CompanySYSCO performance for corporate
senior vice presidents, operations and operating company senior
management;
- Competitive base salaries;
- Potentially significant annual incentive bonuses under the Company'sSYSCO's management
incentive plan;
- The issuance of performance-based stock options; and
- Customary benefits, including a supplemental executive retirement plan.
The factors and criteria upon which the determination of the fiscal 19981999
compensation of Mr. Lindig, the Chief Executive Officer, of the Company, waswere based were the
same as those discussed below with respect to all executive officers, except as
otherwise described below with respect to the Company'sSYSCO's senior vice presidents,
operations.
58
811
BASE SALARIES
The Company hasWe have established base salaries of theour executive officers of the
Company in the range of
compensation payable to executive officers of United States industrial
corporations without reference to specific CompanySYSCO performance criteria. ThisWe
reexamine this range of compensation is reexamined from time to time through a survey of
compensation practices by an independent compensation consultant across a broad
cross-section of U.S. industrial corporations (the "Survey").corporations. The Surveysurvey sample does not
necessarily include those companies in the peer group included in the
performance graphs on pages 1316 and 1417 due to the differing size, management
responsibilities and organizational structures of those corporations relative to
the Company. BaseSYSCO. We last reviewed base salaries for all of the executive officers were
last reviewed on
November 6, 1997,5, 1998, and made adjustments were made in compensation which became effective
January 1, 1998.1999. At that time, Mr. Lindig's base salary was increased
approximately 10%9.2%. It has been theour consistent practice of the
Company to maintain the Chief
Executive Officer's base salary at or below the median of the range of base
salaries payable to chief executive officers of the surveyed industrial
corporations which have chief executive officers with job content and/or
responsibilities comparable to those of the Company'sSYSCO's Chief Executive Officer.
ANNUAL INCENTIVE COMPENSATION
The CompanySYSCO provides annual incentive compensation to all executive officers
of the Company through the SyscoSYSCO Corporation 1995 Management Incentive Plan ("MIP"). The MIP is
designed to offer opportunities for compensation which are tied directly to Companyour
performance. In addition, the MIP is designed to foster significant equity
ownership in the CompanySYSCO by the executive officers and all other participants in the
MIP.
For executive officers, fiscal 19981999 incentive bonuses were calculated under
the MIP were
calculated in two parts. The first part was based on the overall performance of
the CompanySYSCO and was based upon the interplay between the percentage increase in
earnings per share and the return on shareholders' equity. The MIP utilized a
matrix based on these two factors to determine award levels, resulting in an
award of 78.4%98% of base salary to each executive officer participating in this
portion of the MIP, including Mr. Lindig, who was awarded $599,760.$818,300.
The second portion of the fiscal 19981999 incentive bonus under the MIP for
executive officers was based upon the number of SyscoSYSCO operating companies which
achieve a target return on capital. This portion of the incentive bonus is paid
only when the operating companies achieving the goals, in the aggregate, employ
at least 50% of the total capital of all of the Company'sSYSCO's operating companies, which
was the case during fiscal 1998,1999, resulting in an award of 55.5%62% of base salary to
each executive officer participating in this portion of the MIP, including Mr.
Lindig, who was awarded $424,575.$513,525.
For senior vice presidents, operations, a portion of their bonus was based
upon the two-part calculation set forth above and a portion was based upon the
aggregate financial results of those operating subsidiaries or divisions for
which they are responsible, considered as one company. This portion is based
upon the interplay between the aggregate percentage increase in pretax earnings
of their supervised operations and the aggregate return on capital of their
supervised operations.operations, adjusted in certain instances for operating companies
that are involved in SYSCO's facility expansion ("fold-out") program.
In order to encourage significant equity ownership in the CompanySYSCO by its
executive officers, the MIP provides that participants may elect to receive up
to 40% of their annual incentive bonus in the form of Sysco Common Stock,SYSCO common stock, based
on a per shareper-share price equal to the closing price on the New York Stock Exchange
of Sysco Common StockSYSCO common stock on the last day of the fiscal year for which the MIP bonus
is calculated. If such election is made, the participant is awarded one
additional share for each two shares received in accordance with the foregoing
calculation.
In addition, participants who elect to receive Common Stockcommon stock are also
entitled to receive an additional cash bonus ("Supplemental Bonus") equal to the product of (i)of:
- the value of such matching shares received by the participant (which is
equal to the closing price of such shares on the last trading day of the
fiscal year), and
(ii)- the effective tax rate applicable to the Company.SYSCO.
9
12
In fiscal 1998,1999, Mr. Lindig elected to receive 40% of his bonus in Sysco Common Stock.SYSCO
common stock. The stock portion of the bonus awarded Mr. Lindig under the MIP
consisted of 24,10225,986 shares valued at $614,601; he$799,070. He also has received a
Supplemental Bonusan additional
cash bonus of $79,898.
6
9$103,882.
Finally, MIP participants are entitled tomay defer under the Company's
Deferred Compensation Plan up to 40% of their annual incentive
bonus (without considering any election to receive a portion of the bonus in
stock). under the Executive Deferred Compensation Plan. For deferrals of up to
20% of the annual incentive bonus, the Executive Deferred Compensation Plan
provides for the CompanySYSCO to make a payment equal to 50% of the amount deferred. This
matching payment vests upon the earliest to occur of (i)of:
- the tenth anniversary of the date the matching payment is made, (ii)made;
- the participant's reaching age sixty, (iii)sixty;
- the death or permanent disability of the participant,participant; or
(iv)- a change in control of the Company.SYSCO.
In fiscal 1998,1999, Mr. Lindig deferred 20% of his MIP bonus, and therefore
received a matching payment equal to 50% of the amount deferred.
1991 STOCK OPTION PLAN
During fiscal 1998, the Company1999, SYSCO granted options to purchase shares of Company Common Stockits common
stock to 897890 key employees, including the Company's executive officers, pursuant to itsunder the 1991 Stock
Option Plan (the "Plan").Plan. All fiscal 19981999 grants to executive officers were made in September
1997.1998.
The Plan is administered by the Committee.Committee administers this plan. In general, it is the practice of the
Committee to consider issuing options under the Planthis plan only when participants in
the MIP are entitled to receive an annual incentive bonus
thereunder.bonus. In other words,
option grants generally are considered only in years when the CompanySYSCO achieves certain
earnings per share and return on shareholders' equity targets. See "Annual
Incentive Compensation" above. It is the current intention of the Committee to
continue this practice, although it is not required by the terms of the Plan.this plan.
In addition to requiring that certain performance goals must be met before
options are issued to any Planplan participant, it has been theour consistent practice
of the Company
to impose rigorous performance goals which must be met before the options will
vest and participants may exercise their options. In the case of corporate
employees, these performance goals are based upon increases in Companyour earnings per
share and return on shareholders' equity. In effect, therefore, there have been two
different sets of performance goals, one for the grant of the option and one for
the exercise of the option. The CompanyWe currently anticipatesanticipate continuing this practice.
It also has been theour practice of the Company to provide that options granted under the Planthis
plan expire ten years after the date of grant, with a five-year initial vesting
period. The Committee currently anticipates continuing the practice of providing
that options which have not vested during this five-year period will vest six
(6) months prior tobefore the end of theirthe ten-year life provided the holder remains in thean
active employmentemployee of the CompanySYSCO or one of its operating companies at that time. The
Committee has not historically considered the current number of outstanding
options held by an officer when making its grant decisions.
During fiscal 1998,1999, Mr. Lindig received one (1) grant of 19,00016,000 options at an
exercise price of $17.50$21.875 per share (as adjusted for the Stock Split).share. These options contain vesting requirements
which are identical to those discussed above.
7BENEFITS
Executives also participate in SYSCO's regular employee benefit programs,
which include a pension plan, a retirement savings plan, group medical and
dental coverage, group life insurance and other group benefit plans. In
addition, executives are provided with a Supplemental Executive Retirement Plan
which is designed, generally, to provide annual payments equal to 50% of the
participant's final average annual compensation, less all SYSCO and other
retirement plan benefits and social security payments available to the
participant upon retirement. Further details with respect to SYSCO's qualified
pension plan are provided on pages 14 and 15.
10
10
REVIEW OF POTENTIAL EFFECT OF SECTION 162(m)13
In February, the Committee approved SYSCO offering split dollar life
insurance arrangements to certain key executive officers as an alternative to
part or all of their accrued and future benefits in the Executive Deferred
Compensation Plan and the Supplemental Executive Retirement Plan. Any insurance
purchased under the arrangements by SYSCO will not have a present value cost
that is in excess of the net present value of the projected after tax cost of
the waived deferred compensation and supplemental retirement benefits. In
September 1999, the Committee designated Messrs. Lindig and Cotros as
participants under the split dollar life insurance plan. In approving these
insurance arrangements, the Committee considered that SYSCO would experience a
positive impact on its earnings with these arrangements in place, as compared to
the earnings impact of Messrs. Lindig's and Cotros's current participation in
the Executive Deferred Compensation and Supplemental Executive Retirement Plans.
INCOME DEDUCTION LIMITATIONS
Section 162(m) of the Internal Revenue Code ("Section 162(m)") generally sets a limit of $1
million on the amount of compensation (other than certain types of compensation,
including "performance-related" compensation that complies with the requirements
of Section 162(m)) that the CompanySYSCO can deduct for federal income tax purposes in any
given year with respect to the compensation of each of the executive officers
named in the Summary Compensation Table in the proxy statement with respect to such year. The Board and
the Committee have determined, after reviewing the effect of Section 162(m),
that theirour policy will be to structure the performance-based compensation
arrangements for such named executive officers, to the extent feasible and
taking into account all relevant considerations, so as to satisfy Section
162(m)'s conditions for deductibility.
COMPENSATION AND STOCK
OPTION COMMITTEE
Richard G. Merrill, Chairman
John W. Anderson
Gordon M. Bethune
Colin G. Campbell
Judith B. Craven
Frank H. Richardson
Phyllis S. Sewell
Judith B. Craven
811
1114
The following tables set forth information with respect to the Chief
Executive Officer and the other four most highly compensated executive officers
of the CompanySYSCO and its subsidiaries employed at the end of fiscal 1998 as to
whom the1999 whose total
annual salary and bonus exceeded $100,000 for the fiscal year ended June 27, 1998
exceeded $100,000:July 3,
1999:
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARD(5)
---------------------------------------------(5)
---------------------------------------------- -----------------------
(E) (F) (G)
OTHER RESTRICTED SECURITIES (I)
(B) (D)
ANNUAL STOCK UNDERLYING ALL OTHER
(A) FISCAL (C) BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($SALARY ($) (1)(2)($) (3)($) (4)($) (#) (6)($)
- --------------------------- ------ ------------------- --------- ------------ ---------- ---------- ------------
Bill M. Lindig........................ 1998 $727,500 $694,499Lindig................ 1999 $800,000 $903,002 -- $614,601 19,000 $118,580
President$799,070 16,000 $149,329
Chairman and Chief Executive 1998 727,500 694,499 -- 614,601 19,000 118,580
Officer and Director 1997 660,000 561,385 -- 496,799 20,000 97,542
Charles H. Cotros............. 1999 $622,500 $702,925 -- $622,042 16,000 $119,821
President and Chief
Operating 1998 565,000 540,166 -- 478,023 19,000 95,817
Officer and Director 1996 615,500 439,9741997 510,000 435,306 -- 389,320385,170 20,000 75,83476,548
John F. Woodhouse..................... 1998 $645,000 $612,805Woodhouse............. 1999 $612,500 $594,778 -- $542,283 19,000 $126,923$526,348 16,000 $124,265
Senior Chairman and Director 1998 645,000 612,805 -- 542,283 19,000 126,923
1997 615,000 500,385 -- 442,779 20,000 107,820
1996 615,500 429,511Richard J. Schnieders......... 1999 $350,000 $432,588 -- 380,038 20,000 94,845
Charles H. Cotros..................... 1998 $565,000 $540,166 -- $478,023 19,000$382,776 16,000 $ 95,81770,136
Executive Vice President, and Chief1998 287,500 272,372 -- 241,001 15,000 44,703
Foodservice Operations 1997 510,000 435,306240,625 223,753 -- 385,170 20,000 76,548
Operating Officer197,987 16,000 36,045
and Director
1996 472,500 338,703 -- 299,722 20,000 58,505
Thomas E. Lankford.................... 1998 $287,500 $321,702Lankford............ 1999 $325,000 $359,533 -- $235,161 15,000$318,140 13,000 $ 44,811
Senior59,074
Executive Vice President, Operations1998 287,500 321,702 -- 235,161 15,000 44,811
Merchandising and 1997 257,500 186,097 -- 164,650 16,000 31,712
1996 232,500 154,199 -- 136,418 16,000 25,750
George L. Holm(6)..................... 1998 $270,000 $300,086 -- $239,139 15,000 $ 41,163
Senior Vice President, Operations 1997 225,000 148,060 -- 131,017 16,000 22,959
1996 -- -- -- -- -- --Multi-Unit Sales
-
- ---------------
(1) Includes amounts deferred pursuant tounder the Company's Executive Deferred Compensation Plan.
(2) Does not include that portion of a participant's bonus which the participant
elected to receive in the form of restricted Commoncommon stock. See "Restricted
Stock of the Company.
See column (f).Awards" column.
(3) Does not include perquisites and other personal benefits if any,they do not, in
the aggregate, of which in the case of each named individual does not exceed the lesser of $50,000 or 10% of sucheach individual's
annual salary and bonus as reported.
(4) The amount presented is determined by multiplying the number of shares
earned by the closing price of the Company's Common Stockour common stock on the New York Stock
Exchange on June 26, 1998,July 2, 1999, the date as of which the shares were earned,
without taking into consideration the following restrictions on the shares.
The shares are not transferable by the recipient for two years following
receipt thereof and are subject to certain repurchase rights on the part of the CompanySYSCO in
the event of termination of employment other than pursuant toby normal retirement or
disability. The recipient receives dividends on the shares during the
restricted two-year period.
During fiscal 1998,1999, the number of restricted shares receivedearned by the named
individuals was as follows:
- Mr. Lindig -- 24,10225,986 shares;
- Mr. Cotros -- 20,229 shares;
- Mr. Woodhouse -- 21,26617,117 shares;
- Mr. CotrosSchnieders -- 18,74612,448 shares; and
- Mr. Lankford -- 9,222 shares; and Mr. Holm -- 9,37810,346 shares.
12
15
At the end of fiscal 1998,1999, the aggregate number and dollar amount (computed
using the closing price of the Company's Common Stockour common stock on June 26,
1998July 2, 1999 as described
above) of restricted shares heldearned by the named individuals were as
follows:
- Mr. Lindig -- 50,95650,088 shares at $1,299,378;$1,540,206;
- Mr. Cotros -- 38,975 shares at $1,198,481;
- Mr. Woodhouse -- 45,20038,383 shares at $1,152,600;$1,180,277;
- Mr. CotrosSchnieders -- 39,56621,899 shares at $1,008,933;$673,394; and
- Mr. Lankford -- 18,12219,568 shares at $462,111; and Mr. Holm --
16,460 shares at $419,730.$601,716.
(5) Column (h),The column on Long Term Incentive Plan Payouts is not included in the table
since no compensation required to be reported thereunderunder that column was paid to
the named individuals during the periods covered by the table nor does the
Companydo we have
any compensation plans whichthat provide for the payment of suchthis type of
compensation.
(6) Mr. Holm was elected as an executive officer September 30, 1996 and
therefore compensation information for fiscal year 1996 (which ended June
29, 1996) is not provided.
9
12
(6) The amounts shown include the Companya SYSCO match equal to 50% of the first 20% of the
annual incentive bonus which each individual elected to defer under the
Company'sour
Executive Deferred Compensation Plan and the amount the Companywe paid for term life
insurance coverage for each individual, as follows:
1999 1998 1997
1996
------------------------------- ------------------------------- -------------------------------------------------------------
DEFERRED TERM DEFERRED TERM DEFERRED TERM
NAME TOTAL MATCH INSURANCE TOTAL MATCH INSURANCE TOTAL MATCH INSURANCE
- - ---- -------- -------- --------- -------- -------- --------- --------------- -------- ---------
Bill M. Lindig..............Lindig............. $149,329 $133,183 $16,146 $118,580 $102,434 $16,146 $ 97,542 $82,800 $14,742
$75,834 $64,890 $10,944Charles H. Cotros.......... 119,821 103,675 16,146 95,817 79,671 16,146 76,548 64,200 12,348
John F. Woodhouse...........Woodhouse.......... 124,265 87,725 36,540 126,923 90,383 36,540 107,820 73,800 34,020
94,845 63,345 31,500
Charles H. Cotros........... 95,817 79,671 16,146 76,548 64,200 12,348 58,505 49,955 8,550Richard J. Schnieders...... 70,136 63,800 6,336 44,703 40,170 4,533 36,045 33,000 3,045
Thomas E. Lankford..........Lankford......... 59,074 53,026 6,048 44,811 39,195 5,616 31,712 27,445 4,267 25,750 22,740 3,010
George L. Holm(1)........... 41,163 39,857 1,306 22,959 21,837 1,122 -- -- --
- - ---------------
(1) See note (6) to Summary Compensation Table.
The following table provides as to the individuals named in the Summary
Compensation Table, information regarding the grants of stock
options during the last fiscal year. The Company did not grantyear to the individuals named in the Summary
Compensation Table. We have never granted any stock appreciation rights to
executive officers under the 1991 Stock Option Plan during the last fiscal year.Plan.
OPTION GRANTS IN LAST FISCAL YEAR
PERCENTAGE
NUMBER OF PERCENTAGE OF
SECURITIES TOTAL SECURITIES OPTIONS GRANT
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS GRANTED EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED(#)(#)(1) FISCAL 19981999 ($/SHARE) /SHARE) DATE VALUE($)(2)
- - ---- --------------- ------------- ------------ ----------- ---------- -----------
Bill M. Lindig................... 19,000 1.00% $17.50 9/3/2007 $119,320Lindig.................. 16,000 1.03% $21.875 09/02/2008 $128,000
Charles H. Cotros............... 16,000 1.03% $21.875 09/02/2008 $128,000
John F. Woodhouse................ 19,000 1.00% $17.50 9/3/2007 $119,320
Charles H. Cotros................ 19,000 1.00% $17.50 9/3/2007 $119,320Woodhouse............... 16,000 1.03% $21.875 09/02/2008 $128,000
Richard J. Schnieders........... 16,000 1.03% $21.875 09/02/2008 $128,000
Thomas E. Lankford............... 15,000 0.79% $17.50 9/3/2007 $ 94,200
George L. Holm................... 15,000 0.79% $17.50 9/3/2007 $ 94,200Lankford.............. 13,000 0.84% $21.875 09/02/2008 $104,000
-
- ---------------
(1) The options do not vest and become exercisable unless the Company attainswe attain certain
levels of increases in earnings per share and return on shareholders'
equity. If these increases are not attained within five years of the date of
grant, the options will not vest thereafter until six months prior tobefore the expiration of
the ten-year life of the grant, and only if the recipient is still an active
employee of the Company at that time.
(2) TheWe determined the hypothetical grant value for the options of $6.28$8.00 per
share was
determined using a modified Black-Scholes pricing model. In applying the model,
the Companywe assumed a volatility of 24%23%, a 6.4%5.4% risk-free rate of return, a dividend
yield at the date of grant of 1.71%1.65%, and a 10-year option term. The CompanyWe did not
assume any option exercises or risk of forfeiture during the 10-year term.
If used, such assumptions could have reduced the reported grant date value.
The actual value, if any, an executive may realize upon exercise of options
will depend on the excess of the stock price over the exercise price on the
date the option is exercised. Consequently, there is no assurance that the
value realized will be at or near the value estimated by the modified
Black-Scholes model.
1013
1316
The following table provides information with respect to aggregate option
exercises in the last fiscal year and fiscal year-end option values for the
executive officers named in the Summary Compensation Table.
The Company did not
grant any stock appreciation rights under the 1991 Stock Option Plan during the
last fiscal year to any officers, including executive officers, of the Company.
AGGREGATED OPTION EXERCISES
IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
(D)
NUMBER OF (E)
SECURITIES UNDERLYING VALUE OF UNEXERCISED
(B) (C)
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES VALUE JUNE 27, 1998(#)JULY 3, 1999(#)(2) JUNE 27, 1998($)(2)JULY 3, 1999(2)(3)
(A)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
Bill M. Lindig......................... 8,276 65,530 14,066 72,334 $166,853 $735,758Lindig........... 7,400 73,075 20,000 75,000 $ 360,000 $ 1,017,500
Charles H. Cotros........ 10,040 99,538 20,000 75,000 360,000 1,017,500
John F. Woodhouse...................... 5,280 38,940Woodhouse........ 14,066 72,334 166,853 735,758
Charles H. Cotros...................... 8,276 75,641 16,706 72,334 200,843 735,758170,704 13,334 75,000 240,012 1,017,500
Richard J. Schnieders.... 12,680 149,050 16,000 63,000 288,000 839,750
Thomas E. Lankford..................... -- -- 31,720 51,000 406,582 502,000
George L. Holm......................... 9,200 94,300 38,920 39,000 493,232 362,000Lankford....... 8,400 139,650 27,320 60,000 480,262 813,125
-
- ---------------
(1) Computed based on the difference between the closing price of the Common
Stockcommon
stock on the day of exercise and the exercise price.
(2) Based on option vesting status as of September 11, 1998.10, 1999.
(3) Computed based on the difference between the closing price on June 26, 1998July 2, 1999
and the exercise price.
DEFINED BENEFIT RETIREMENT PLAN
The Company hasWe have a defined benefit retirement plan which was amended and restated
effective July 2, 1989 ("Retirement Plan") and further amended effective January 1, 1998. The
Retirement Plan provides for an annual benefit payable monthly for five years
certain and life thereafter, equal to (a)to:
- the normal retirement benefit which accrued under the prior plan as of
July 2, 1989, plus
(b)- an amount equal to 1 1/2% of the participant's aggregate career
compensation earned on and after July 2, 1989.
In the event of a participant's death prior tobefore his or her normal retirement
age (age 65) or the commencement of a benefit, if earlier, and if the
participant has five or more years of credited service, a death benefit is
payable in an amount equal to the value of the pension accrued by the deceased
participant prior to his or her death or earlier termination of employment.
Under current law and regulations, the maximum annual retirement benefit
that may be payable in 19981999 under the five years certain and life thereafter
form of payment to an individual retiring at age 65 is $128,388.
Without regard to this maximum limitation, the named executive officers
have accrued the following benefits and credited benefit service as of June 27, 1998:July 3,
1999:
- Mr. Lindig -- $73,339$75,739 and 1415 years;
- Mr. Cotros -- $85,321 and 23 years;
- Mr. Woodhouse -- $177,659$180,059 and 2930 years;
- Mr. CotrosSchnieders -- $82,921$35,401 and 1416 years; and
- Mr. Lankford -- $35,589$37,989 and 17 years; and Mr.
Holm -- $25,495 and 1018 years.
11
14
The named executive officers also have anticipated future service to age 65
as follows (except for Mr. Woodhouse who is currently is 67)68):
- Mr. Lindig -- 43 years;
- Mr. Cotros -- 43 years;
14
17
- Mr. LankfordSchnieders -- 14 years; and
- Mr. HolmLankford -- 2213 years.
In addition to benefits accrued to date, each named executive officer will
accrue benefits in the future in accordance with the table below:
PENSION PLAN TABLE(1)TABLE (1)(2)
CAREER AVERAGE
YEARS OF CREDITED SERVICE
CAREER AVERAGE COMPENSATION EARNED ----------------------------------------------------
ON ---------------------------------------------------- AND AFTER JUNE 27, 1998(3)JULY 3, 1999(3) 10 15 20 25 30 35
--------------------------- ---------------------------------- ------ ------ ------ ------ ------ -------
$ 50,000.........................50,000................................. 7,500 11,250 15,000 18,750 22,500 26,250
100,000.........................100,000................................. 15,000 22,500 30,000 37,500 45,000 52,500
150,000.........................150,000................................. 22,500 33,750 45,000 56,250 67,500 78,750
200,000.........................200,000................................. 30,000 45,000 60,000 75,000 90,000 105,000
- - ---------------
(1) Assumes that the annual benefit is payable for five years certain and life
thereafter and that retirement age is 65. Pension plan benefits are not
subject to deduction by social security or any other offsets.
(2) Current law and regulations limit retirement benefits in 19981999 to $128,388 if
they are payable for five years certain and life thereafter (assuming
Retirement Plan and Social Security retirement age of 65). This limitation
applies to total retirement benefits under the Retirement Plan as determined
by adding benefits accrued with respect to periods of employment with the
CompanySYSCO
both before and after June 27, 1998.July 3, 1999. The Pension Plan Table does not reflect
this limitation.
(3) Compensation for benefit calculation purposes is limited by law to $160,000
for 19981999 and later years subject to future cost-of-living adjustments. Pay
limitations are not taken into account in the Pension Plan Table.
To the extent included in W-2 income, we use all amounts shown in the
Summary Compensation Table, other than deferred bonus, term life insurance
payments and the CompanySYSCO match under the Executive Deferred Compensation Plan are utilized to
compute career average compensation subject to the pay limitations noted in
footnote (3).
PERFORMANCE GRAPHS
PERFORMANCE GRAPHS
The following two performance graphs compare the performance of the
Company's Common StockSYSCO's
common stock to the S&P 500 Index and to a peer group for the
Company'sSYSCO's last five and
ten fiscal years, respectively. The ten-year graph is intended to provide you
with a longer-term view of SYSCO's performance. The peer group is comprised ofof:
- Fleming Companies, Inc.,;
- Nash Finch Company,Company;
- Richfood Holdings, Inc., Super Food Services,;
- Supervalu, Inc., Supervalu Stores, Inc.; and
- U.S. Foodservice,
Inc., which was created as a result of the acquisition of Rykoff-Sexton, Inc. by
JP Foodservice, Inc.Foodservice.
These distributors of grocery or foodservice products were selected since
they comprise a broad group of publicly held corporations with food distribution
operations similar in some respects to the Company'sour operations. U.S. Foodservice, Inc., through
its predecessorpredecessors JP Foodservice, Inc. and Rykoff-Sexton, Inc., is the only other
publicly held foodservice distributor to bethat was in existence throughout both the
five and ten-year periods, although, unlike the Company,SYSCO, it also manufactured certain
food products during these periods. Each other member of the peer group is in
the business of distributing grocery products to retail supermarkets. Thesupermarkets and was in
existence throughout these periods. Although we have previously included Super
Food Services, Inc. in our peer group, we have chosen to delete it due to its
acquisition by Nash Finch Company. We also did not include Performance Food
Group Company, considersa publicly-traded food service distributor, due to the lack of
available historical financial data for the ten-year graph. We consider this to
be a more representative peer group than the "S&P Foods Wholesaler"Distributors
15
18
(Food & Health)" index maintained by Standard & Poor's Corporation and
consisting of the Company, Fleming Companies,SYSCO, Supervalu, Inc., Cardinal Health, Inc. and Supervalu
Stores,McKesson HBOC,
Inc. During the past few years,, which includes two foodservice distributors have become
publicly owned companies. These are JP Foodservice, Inc. (now known as U.S.
Foodservice, Inc.) and Performance Food Group Company ("PFG"). PFG has not been
included in the peer group because of the lack of available historical financial
data.healthcare service distributors.
The returns of each member of the peer group are weighted according to each
member's stock market capitalization as of the beginning of each period
measured. The graphs assume that the value of the 12
15
investment in each ofour common
stock, the Company's Common Stock, the indexS&P 500 Index and the peer group was $100 at eachthe last trading day of
June, 26, 19931994 and June 26, 1988,1989, and that all dividends were reinvested. Performance data
for the Company is provided as of the last trading
day of each of the Company's last five and ten fiscal years, respectively.
Performance data forSYSCO, the S&P 500 Index and for each member of the peer group is provided
for the latest fiscal year andas of the last trading day closest toin June 30 of each year.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
PERFORMANCE GRAPH
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) SYSCO S&P 500 PEER GROUP1994 1995 1996 1997 1998 1999
1993 100.00 100.00 100.00
1994 95.53 101.41 91.20
1995 123.09 127.84 94.90
1996 145.10 161.08 99.83
1997 157.30 216.98 117.76
1998 225.05 282.42 129.23
1997
1998
SYSCO 100.0 128.85 151.89 164.66 235.58 278.10
S&P 500 100.0 126.07 158.85 213.97 278.50 341.88
Peer Group 100.0 104.65 104.05 125.52 134.47 143.08
13VALUE OF $100 INVESTED ON THE LAST TRADING DAY OF JUNE 1994
Total return assumes reinvestment of dividends
16
1619
COMPARISON OF TEN-YEAR CUMULATIVE TOTAL RETURN
PERFORMANCE GRAPH
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) SYSCO S&P 500 PEER GROUP1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
1988
SYSCO 100.00 145.60 175.49 205.94 214.59 205.00 264.14 311.37 337.56 482.94 570.11
S&P 500 100.00 116.49 125.10 141.88 161.22 163.48 206.11 259.69 349.81 455.31 558.34
Peer Group 100.00 1989 162.00 120.55 116.26
1990 235.87 140.43 118.45
1991 284.30 150.82 124.75
1992 333.62 171.05 113.66
1993 347.63 194.36 145.07
1994 332.09 197.10 132.31
1995 427.90 248.48 137.68
1996 504.41 313.09 144.82
1997 546.83 421.73 170.85
1998 782.36 548.92 187.4999.29 104.73 94.92 119.50 110.78 115.94 115.27 139.05 148.97 158.51
CERTAIN RELATIONSHIPS AND OTHER INFORMATION
The Company's Nominating Committee, consistingVALUE OF $100 INVESTED ON THE LAST TRADING DAY OF JUNE 1989
Total return assumes reinvestment of Jonathan Golden
(Chairman), Colin G. Campbell, Frank A. Godchaux III, Richard G. Merrill, Frank
H. Richardson, Phyllis S. Sewell and Thomas B. Walker, Jr., held five (5)
meetings during fiscal 1998. The function of the Nominating Committee is to
propose directors and officers for election or reelection. The Nominating
Committee will consider nominees recommended in writing by stockholders.
The Company's Compensation and Stock Option Committee consisted of Richard
G. Merrill (Chairman), John W. Anderson, Colin G. Campbell, Judith B. Craven,
Frank H. Richardson and Phyllis S. Sewell. The Compensation and Stock Option
Committee held four (4) meetings during fiscal 1998. The function of the
Compensation Committee is to consider for recommendation to the Board of
Directors of the Company the annual compensation of directors and officers of
the Company, to oversee the administration of the Company's 1995 Management
Incentive Plan and the 1991 Stock Option Plan, and to provide guidance in the
area of employee benefits, including retirement plans and group insurance.
The Board of Directors held six (6) meetings during fiscal 1998 and all
directors of the Company attended 75% or more of the aggregate of (1) the total
number of meetings of the Board of Directors and (2) the total number of
meetings held by all committees of the Board on which he or she served during
fiscal 1998.
Mr. Golden is the sole stockholder of Jonathan Golden, P.C., a partner in
the law firm of Arnall Golden & Gregory, LLP, Atlanta, Georgia, counsel to the
Company. The Company believes that fees paid to such firm were fair and
reasonable in view of the level and extent of services rendered.
14
17dividends
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and the
rules issued thereunder, the Company'sour executive officers and directors and any persons
holding more than ten percent (10%) of the Company's Common Stockour common stock are required to file
with the Securities and Exchange Commission and the New York Stock Exchange
reports of their initial ownership of the Company's Common Stockour common stock and any changes in ownership of
such Common Stock.common stock. Specific due dates have been established and the Company iswe are required
to disclose in itsour Annual Report on Form 10-K and Proxy Statementproxy statement any failure to
file suchthe reports by these dates. Copies of suchthese reports are required to be
furnished to the Company.us. Based solely on itsour review of the copies of suchthe reports
furnished to the Company,us, or written representations that no reports were required, the Company believeswe
believe that, during fiscal 1998,1999, all of itsour executive officers (including the
named executive officers), directors and persons owning more than 10% of its
Common Stockcommon stock complied with the Section 16(a) requirements except that Frank H. Richardson
filed one late report on Form 4 disclosing one transaction and one late report
on Form 5 with respect to a gift made in 1997, Thomas H. Lankford and Arthur J.
Swenka eachMr.
Gregory Marshall filed a late Form 3 correcting previously filed Forms 3 and James D.
Wickus filed5 reporting one late report on Form 4 disclosing one transaction and a late
Form 3 correcting a previously filed Form 3.transaction.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Anderson, Bethune, Campbell, Keller,(1) Merrill and Richardson, Dr. Craven and
Mmes.Mrs. Sewell and Craven were the only members of the Company'sour Board of Directors to serve on the Company's Compensation and
Stock Option Committee during fiscal 19981999 and were not, during fiscal 19981999 or
prior thereto,before that, officers or employees of the Company or any
subsidiary thereof. Mr. Godchaux is chairman of Riviana Foods Inc., a food
products company which had sales to the Company or its wholly-owned subsidiaries
of approximately $206,000 during fiscal 1998. The Company believes that the
terms of such transactions were fair and no less favorable to the Company than
those available from other suppliers.
PROPOSAL TO APPROVE THE
SYSCO CORPORATION
NON-EMPLOYEE DIRECTORS STOCK PLAN
On May 13, 1998, the Board of Directors adopted, subject to stockholder
approval, the Sysco Corporation Non-Employee Directors Stock Plan (the
"Directors Plan"). The purpose of the Directors Plan is to make available shares
of Common Stock for award to or purchase by non-employee directors of the
Company in order to attract and retain the services of experienced and
knowledgeable non-employee directors for the benefit of the Company and its
stockholders and to enable non-employee directors to increase their financial
stake in the Company through the ownership of the Company's Common Stock, in
addition to underscoring their common interest with stockholders in increasing
the value of the Company over the long term. If approved, the Directors Plan
will supersede the Company's existing Non-Employee Directors Stock Option Plan
(the "1995 Plan") and no further options will be granted under the 1995 Plan. A
copy of the Directors Plan is attached hereto as Appendix A.
Eligibility
All members of the Company's Board of Directors who are not employees of
the Company or any of its subsidiaries are eligible to participate in the
Directors Plan. There currently are ten non-employee directors on the Board.
Shares Reserved for the Directors Plan
The Company's Directors Plan provides for the grant of options ("Options"),
retainer stock awards ("Retainer Stock Awards"), elected shares in lieu of a
portion of annual cash retainer fees ("Elected Shares") and additional matching
shares issued with respect to Elected Shares ("Additional Shares") with
- - ---------------
(1) Donald J. Keller resigned as a director of the Company effective December 1,
1997.
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18
respect to an aggregate maximum of 400,000 shares of the Company's Common Stock.
The number of shares covered by the Directors Plan is subject to adjustment in
the event of stock dividends, stock splits, combinations of shares, mergers,
consolidations, rights offerings, reorganizations or recapitalizations, or in
the event of other changes in the corporate structure or shares of the Company.
Any such adjustment will be made if adjustments are made to awards under the
Company's incentive plans for management then in effect. Shares issued under the
Directors Plan may consist, in whole or in part, of authorized and unissued
shares, treasury shares or shares purchased on the open market.
To the extent any Option granted under the Directors Plan expires or
terminates for any reason prior to exercise, the number of shares subject to the
portion of the Option not so exercised will be available for future grants under
the Directors Plan. If the exercise price of any Option granted under the
Directors Plan is paid with shares of Common Stock, then the number of shares of
Common Stock available for issuance under the Directors Plan will be reduced
only by the net number of shares of Common Stock issued to the holder of such
Option, and not by the gross number of shares for which the Option is exercised.
Shares subject to Retainer Stock Awards that are forfeited or cancelled shall
again be available for new grants under the Directors Plan.
Administration of the Directors Plan
The Directors Plan shall be administered by the Board. The Board shall have
the authority to terminate or amend the Directors Plan, to determine the terms
and provisions of the respective Option and award agreements, to construe such
Option and award agreements and the Directors Plan, and to make all other
determinations in the judgment of the Board necessary or desirable for the
administration of the Directors Plan, including amending the vesting and
exercisability terms set forth in Exhibit A attached to the Directors Plan.
However, the Directors Plan may not be amended by the Board to revoke or alter
any provision in a manner which is unfavorable to the grantee ("Grantee") of
Options, Retainer Stock Awards, Elected Shares or Additional Shares then
outstanding without the approval of the Company's stockholders.
Automatic Grant of Stock Options and Exercise Price
Beginning with the Company's 1998 Annual Meeting, on the first business day
(the "Grant Date") following each Annual Meeting, each individual who is at the
time elected, reelected or continuing as a non-employee director automatically
will be granted an option to purchase 4,000 shares of the Company's Common Stock
(the "Annual Grant"), provided the Company achieved for the preceding fiscal
year an increase in after-tax basic earnings per share ("EPS") of 10% or more
over the EPS for the prior fiscal year, unless the Board shall waive this
requirement. However, if the General Counsel of the Company determines that the
Company is in possession of material, undisclosed information about the Company
on the Grant Date, then the Annual Grant of Options to non-employee directors
shall be suspended until the second day after public dissemination of such
information, and the exercise price, exercisability dates and Option period
shall be determined by reference to such later date. Stockholder approval of the
Directors Plan also shall constitute pre-approval of each Option granted
pursuant to the provisions of the Directors Plan, and of the subsequent exercise
of that Option in accordance with the Directors Plan.
The option price per share shall be at the last closing price of the
Company's Common Stock on the New York Stock Exchange prior to the date an award
or Option is granted.
Means of Exercise of Options
Upon exercise of the option, the option price for purchased shares shall be
payable immediately in cash or shares of Company Common Stock having an
aggregate Fair Market Value equal to the Option exercise price (for this
purpose, "Fair Market Value" shall mean the average of the quoted daily high and
low prices of Company Common Stock on the New York Stock Exchange on the last
business day prior to the date of exercise) or any combination of the foregoing.
An Option holder will have none of the rights of a stockholder with respect to
any shares covered by the Option until such individual has exercised the Option,
paid the Option price and been issued a stock certificate for the purchased
shares.
16
19
Vesting and Exercisability of Options
Each Option shall vest and become exercisable as follows:
(a) One-third of the total number of shares covered by an Option shall
vest at the conclusion of any of the five fiscal years of the Company
following the Base Year (as defined below), provided that the EPS of the
Company increased at least 20% in such fiscal year over the Company's EPS
for the prior fiscal year. If EPS of the Company should increase less than
20% in any such fiscal year over the prior fiscal year, the Option can be
vested at the conclusion of any fiscal year ending within the five-year
period following the Grant Date of the Option (the Vesting Period ) in
which EPS of the Company for the fiscal years during the Vesting Period
after the Base Year have grown at a minimum rate of 15%, compounded
annually, with one-third of the total number of shares covered by the
Option to vest for each fiscal year after the Base Year included in the
calculation of the 15% compounded minimum growth rate. The fiscal year
immediately prior to the fiscal year in which the Option is granted is the
Base Year for determining whether vesting requirements have been met.
(b) If neither of the criteria set forth in (a) is met, (i) one-third
of the Option shall vest for any fiscal year within the Vesting Period in
which (A) the Company's annual return on stockholders equity equals or
exceeds 17.5% and (B) the increase in EPS of the Company over the prior
fiscal year equals or exceeds 15%, or (ii) the Option shall fully vest, if
the Company's average annual return on stockholders' equity for the five
fiscal years ending within the Vesting Period equals or exceeds 17.5% and
the increase in EPS of the Company over such five fiscal years equals or
exceeds 10%, compounded annually.
(c) If none of the vesting requirements set out in paragraph (a) or
(b) above are met within the Vesting Period as to any portion of an Option,
such Option (or portion thereof) will nonetheless vest and become
exercisable six months prior to the expiration thereof (the Supplemental
Vesting Date ) provided that the Grantee of the Option continues to serve
on the Company's Board of Directors as a non-employee director on the
Supplemental Vesting Date. Notwithstanding the foregoing, if any Option (or
portion thereof) has not vested by the end of the Vesting Period, such
Option (or portion thereof) shall be automatically forfeited when the
Grantee ceases to serve as a non-employee director if such cessation occurs
prior to the Supplemental Vesting Date. However, any unvested portion of an
Option shall become vested and immediately exercisable upon the occurrence
of a Change of Control prior to the expiration or forfeiture of the Option.
For purposes of the Director's Plan, "Change of Control" means that a
person or persons who are acting together for the purposes of acquiring an
equity interest in the Company acquire beneficial ownership (as defined in
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended) of 20% or more of the outstanding Common Stock.
Subject to the limitations set forth in the Directors Plan, the vested
portion of an Option may be exercised at any time following the earlier to occur
of the end of the fiscal year in which it vests or the Supplemental Vesting
Date. No portion of any Option may be exercised prior to the first anniversary
of the Grant Date. Each Option granted under the Directors Plan shall expire on
the tenth anniversary of the Grant Date or such shorter period as set forth in
the Directors Plan.
Transferability of Options
Options will not be assignable or transferable other than by will or the
laws of descent and distribution, and during the Grantee's lifetime the option
may be exercised only by the Grantee or the Grantee's guardian or legal
representative.
Retainer Stock Awards
The Directors Plan also provides for the automatic grant of Retainer Stock
Awards. Immediately following the 1998 Annual Meeting, a one-time Retainer Stock
Award of 2,000 shares shall be made to each non-employee director who is serving
on the Board at that time. Thereafter, as of the date of each subsequent Annual
Meeting of Stockholders, each newly elected director who has not previously
received such an award shall be granted a one-time Retainer Stock Award of 2,000
shares. Retainer Stock Awards will vest (i) one-third on the second anniversary
of the Grant Date if the average increase in EPS of the Company over the twoour subsidiaries.
17
20
most recent fiscal years ending prior to the second anniversary of the Grant
Date is 10% or more; (ii) one-third on the fourth anniversary of the Grant Date
if the average increase in EPS of the Company over the two most recent fiscal
years ending prior to the fourth anniversary of the Grant Date is 10% or more
(and if the first third of the Retainer Stock Award did not vest under (i)
above, the first third will also vest on such fourth anniversary if the average
increase in EPS over the four most recent fiscal years ending prior to the
fourth anniversary of the Grant Date is 10% or more); and (iii) one-third on the
sixth anniversary of the Grant Date if the average increase in EPS of the
Company over the two most recent fiscal years ending prior to the sixth
anniversary of the Grant Date is 10% or more.
Notwithstanding the foregoing, 100% of any unvested portion of a Retainer
Stock Award shall vest if the average increase in EPS over the six most recent
fiscal years ending prior to the sixth anniversary of the Grant Date is 10% or
more, and any unvested portion of the Retainer Stock Award which has not
previously expired or been forfeited shall vest upon the occurrence of a Change
of Control. Any portion of the Retainer Stock Award which is not vested on the
sixth anniversary of the Grant Date thereof shall be forfeited.
Common Stock granted as a Retainer Stock Award may not be sold, assigned,
transferred or pledged prior to the date it is vested. Each director, as the
owner of shares of Common Stock granted to him or her as a Retainer Stock Award,
shall have all the rights of a Company stockholder, including but not limited
to, the right to vote such shares and the right to receive all dividends paid on
such shares; provided, however, that all such rights shall lapse immediately at
such time as any Retainer Stock Award is forfeited by such director.
Elected and Additional Shares
A non-employee director who is otherwise eligible to receive an annual cash
retainer fee for services provided as a Director may elect to forego up to 50%
of his or her annual retainer fee, in 10% increments (exclusive of any fees or
other amounts payable for attendance at meetings of the Board or for service on
any committee thereof), and receive in its stead Common Stock of the Company, in
an amount determined as set forth below. Upon making such an election, the
electing director shall have credited to his account on the date of each
quarterly payment of the annual retainer fee ("Quarterly Payment Date") that
number of shares of Common Stock determined by dividing his or her elected
amount by the Fair Market Value of one share of Company Common Stock as of such
Quarterly Payment Date ("Elected Shares"). In addition, he or she shall also
receive that number of shares of Common Stock determined by dividing 50% of the
elected amount by the Fair Market Value on such Quarterly Payment Date
("Additional Shares"). The issuance date of Common Stock credited pursuant to a
non-employee director's election to forego up to 50% of his or her annual
retainer fee shall be December 31 of the calendar year as to which the director
has elected to receive stock in lieu of cash retainer payments or the last
business day prior to December 31, if December 31 is not a business day of the
Company's transfer agent. If a director who has elected to receive common stock
in lieu of cash retainer payments ceases to be a director for any reason,
certificates for such shares shall be issued within 60 days following the date
such director ceases to serve on the Board.
All Elected Shares and Additional Shares shall be 100% vested as of the
date they are credited to the electing director. Additional Shares, however, may
not be sold or transferred for a period of two years after the date on which
they are issued and such shares shall bear a legend setting forth this
restriction (the "Restriction"). The Restriction shall remain in effect after
the date an electing director ceases to be a director; provided, however, that
(i) if an electing director ceases to be a director by reason of death,
disability or departure in good standing (determined as set forth below), the
Restriction shall lapse and be of no further force or effect on or after the
date of such death, disability or departure in good standing; and (ii) the
Restriction shall lapse and be of no further force or effect on the date of a
Change in Control.
Termination of Service
Following retirement from the Board of Directors in good standing
(determined by the Board of Directors in its sole discretion, provided that a
non-employee director who serves out his or her term but does not stand for
reelection shall be deemed to have retired from the Board in good standing), a
non-employee director's Options and Retainer Stock Awards shall remain in
effect, vest, become exercisable and expire as if he or she had remained a
non-employee director of the Company. Upon a non-employee director's death, his
or her
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21
legal representatives or heirs have one year within which to exercise those
Options which were exercisable at the time of death, but in no event may the
Options be exercised beyond the last date on which they could have been
exercised had the non-employee director not died. All other Options not
exercisable at the non-employee director's death will terminate as of the date
of death. Should an individual cease to serve as a non-employee director for any
other reason, all Options held by such person, whether or not then exercisable,
and all unvested Retainer Stock Awards shall be forfeited upon cessation of
service. With regard to Additional Shares, upon a non-employee director's death,
all Restrictions with respect to the Additional Shares shall lapse and be of no
further force or effect.
No Impairment of the Company's Rights
Nothing in the Directors Plan will be construed or interpreted so as to
affect adversely or otherwise impair the Company's right to remove any
non-employee director from service on the Board at any time in accordance with
the provisions of applicable law, and no non-employee director shall have any
claim or right to be granted or issued an Option, Retainer Stock Award, Elected
Shares or Additional Shares, except as provided in the Directors Plan.
Effective Date and Term of Plan
The Directors Plan shall be effective as of the date of approval thereof by
the Company's stockholders. No grants will be made under the Directors Plan
unless the Directors Plan is approved by the stockholders at the 1998 Annual
Meeting. The Directors Plan will terminate upon the earliest to occur of (i) ten
years from the date of stockholder approval, (ii) the date on which all shares
available for issuance under the Directors Plan have been issued, or (iii) the
date on which all outstanding grants or awards are terminated or have vested or
been forfeited. If the date of termination is determined under clause (i) above,
then any Option grants and Retainer Stock Awards outstanding on such date will
not be affected by the termination of the Directors Plan and will continue to
have force and effect in accordance with the provisions of the instruments
evidencing such grants or awards and the Plan, and Additional Shares shall
continue to be subject to the applicable provisions of the Directors Plan.
Federal Tax Consequences
Options granted under the Directors Plan are not intended to satisfy the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"). The federal income tax treatment of such options may be summarized
as follows:
The grant of an Option to a non-employee director will not result in the
recognition of any taxable income to such non-employee director. A non-employee
director will recognize ordinary income on the date of exercise of an Option in
an amount equal to the difference between (i) the fair market value of the
shares acquired pursuant to the exercise of the Option, and (ii) the exercise
price of the Option.
A non-employee director who exercises an Option by tendering shares (the
"Tendered Shares") will not recognize income as a result of the exercise of the
Option with respect to that number of shares received ("Acquired Shares") which
equals the number of Tendered Shares and will receive a carryover of the basis
and holding period of the Tendered Shares for such number of Acquired Shares.
Any Acquired Shares which exceed the number of Tendered Shares will cause the
non-employee director to recognize ordinary income (and entitle the Company to a
deduction) in an amount equal to the fair market value of such excess Acquired
Shares on the date the Option was exercised. The non-employee director's basis
for such number of excess Acquired Shares will equal the amount of ordinary
income recognized as a result of the exercise of the Option and their capital
gain holding period will begin on the date the Option is exercised.
A non-employee director who receives a Retainer Stock Award should not
recognize any taxable income upon the receipt of the Retainer Stock Award unless
such non-employee director makes a timely election pursuant to Section 83(b) of
the Code (an "83(b) Election"). However, a non-employee director who does not
make an 83(b) Election will recognize taxable compensation income at the time
his or her interest in the Retainer Stock Award is no longer subject to a
substantial risk of forfeiture under the terms of the grant. The
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tax basis of the Retainer Stock Award to the non-employee director should be
equal to the amount includable in the non-employee director's gross income as
compensation, and the non-employee director's holding period for the Retainer
Stock Award should normally commence on the day following the date on which the
value of such Shares is includable in income. Dividends paid on Retainer Stock
Awards prior to the lapse of the restrictions (if an 83(b) Election is not made)
should be included in the income of the non-employee director as taxable
compensation income when received.
If the non-employee director makes a timely 83(b) Election, the
non-employee director will recognize the fair market value of the Retainer Stock
Awards as taxable compensation income at the time of their receipt. Any gain
recognized on a subsequent sale of the Retainer Stock Awards, after a holding
period of twelve (12) months has elapsed, will be treated as a long term capital
gain.
A non-employee director who elects to receive Elected Shares and Additional
Shares will recognize ordinary compensation income in the amount of the fair
market value of such shares as of the date they are credited to his or her
account. With respect to shares received by non-employee directors pursuant to
exercise of Options, Retainer Stock Awards, Elected Shares and Additional
Shares, the Company will be entitled to a deduction for the amount included in
the income of a non-employee director for the Company's taxable year within
which the non-employee director's taxable year ends.
The above is a general summary of the federal income tax consequences under
current tax law. It does not purport to cover all of the special rules, or the
state or local income or other tax consequences inherent in the ownership and
exercise of stock options, vesting of awards and the ownership or disposition of
the underlying shares.
New Plan Benefits
The following table indicates the number of shares of Common Stock that
could be received in fiscal 1999 under the Directors Plan and the estimated
dollar value thereof:
NUMBER OF SHARES
UNDERLYING OPTIONS DOLLAR
NAME AND POSITION STOCK GRANTS VALUE
----------------- ------------------ ----------
Non-Employee Director Group (10 persons)
Stock Options (subject to performance criteria)....... 40,000 $ 251,200(1)
Retainer Stock Awards (subject to performance
criteria).......................................... 20,000 467,500(2)
Elected Shares in Lieu of Annual Retainer Fees........ 10,690(3) 249,879(2)
Additional Shares in Lieu of Annual Retainer Fees..... 5,340(3) 124,823(2)
------ ----------
Total (10 persons)............................ 76,030 $1,093,402
- - ---------------
(1) Assumes a value of $6.28 per share which is the same as the hypothetical
grant value determined for options granted in fiscal 1998 to individuals in
the Summary Compensation Table. See note (2) to the chart "Option Grants in
Last Fiscal Year" on p. 10.
(2) Assumes a fair market value of $23 3/8 per share based on the closing price
of the Company's Common Stock on the New York Stock Exchange on September
11, 1998.
(3) Under the Directors Plan, up to 50% of the annual retainer fee may be
foregone in exchange for Common Stock of the Company as described herein.
The number of shares to be granted depends upon the fees waived by each
Director. The information reported assumes each Director elected to waive
the maximum amount permitted.
If this proposal is not approved, the 1995 Plan will remain in effect.
Pursuant to the 1995 Plan, each non-employee Director receives options to
purchase 4,000 shares of Company Common Stock per year at the last closing price
of the Company's Common Stock on the New York Stock Exchange prior to the grant
date. This proposal will not affect options already granted under the 1995 Plan.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE SYSCO CORPORATION
NON-EMPLOYEE DIRECTORS STOCK PLAN
VOTING PROCEDURES AND VOTE REQUIRED
The Board of Directors of the Company will select one or more Inspectors of
Election, who shall determine the number of shares of voting stock outstanding,
the voting power of each, the number of shares of stock represented at the
Annual Meeting, the existence of a quorum (which shall consist of thirty-five
percent (35%) of the shares entitled to vote), and the validity and effect of
proxies. The Inspectors of Election shall receive votes, ballots or consents,
hear and determine any challenges and questions arising in connection with the
right to vote, tabulate all votes cast for and against (and abstentions in
respect of) each proposal and determine the result of such vote.
In accordance with the Delaware General Corporation Law, the election of
the nominees named herein as directors will require the affirmative vote of a
plurality of the votes cast by the shares of Company Common Stock entitled to
vote in the election provided that a quorum is present at the Annual Meeting.
Abstentions and broker non-votes will not be relevant to the outcome.
The proposal for approval of the Sysco Corporation Non-Employee Directors
Stock Plan will require the affirmative vote of a majority of the shares of
Common Stock present in person or by proxy and entitled to vote on the proposal.
Abstentions will have the effect of "negative" votes with respect to the
proposal, while broker non-votes will have no effect on the outcome of the
proposal. There are no rights of appraisal or similar dissenter's rights with
respect to any matter to be acted upon pursuant to this Proxy Statement.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP served as the independent public accountants providing
auditing, financial and tax services to the Company for fiscal year 19981999 and will provide such
services during the current fiscal year 1999.2000. Approval or selection of the
independent certified public accountants is not submitted to the annual meeting
of Stockholders. The Company
expectsBoard has historically selected the independent certified
public accountants with the advice of the Audit Committee, and the Board
believes it would be to the detriment of SYSCO and its stockholders for there to
be any impediment (such as selection or ratification by the stockholders) to
exercising judgment to select the independent certified public accountants or to
remove them if, in its opinion, such removal is in the best interest of SYSCO
and the stockholders.
We expect that representatives of Arthur Andersen LLP will be present at
the Annual Meetingannual meeting with the opportunity to make a statement if they desire to do
so and that they will be available to respond to appropriate questions.
The Company has an Audit Committee of the Board of Directors which is
composed of Colin G. Campbell (Chairman), Richard G. Merrill, Judith B. Craven,
Frank A. Godchaux III, Frank H. Richardson, Phyllis S. Sewell, John W. Anderson
and Thomas B. Walker, Jr. The Audit Committee held four (4) meetings during
fiscal 1998. The Audit Committee reviews and reports to the Company's Board of
Directors with respect to various auditing and accounting matters, including
recommendations as to the selection of the Company's independent public
accountants, the scope of the audit procedures, the nature of the services to be
performed for the Company, the fees to be paid to the Company's independent
public accountants, the performance of the Company's independent public
accountants and the accounting practices of the Company.
STOCKHOLDER PROPOSALS
Appropriate proposals of stockholders intendedPRESENTING BUSINESS
If you want to be presented at the
Company's 1999 Annual Meeting of Stockholders pursuant topresent a proposal under Rule 14a-8 promulgated
underof the Securities
Exchange Act of 1934 as amended (the "Exchange Act"), must
be received byat our 2000 annual meeting of Stockholders, send the
Companyproposal in time for us to receive it by May 29, 1999 for inclusion in its Proxy Statement
and form of proxy relating to that meeting.28, 2000. If the date of the next Annual
Meetingour 2000
annual meeting is subsequently advanced or delayedchanged by more than 30 calendar days from the date of
the Annual Meeting to which this Proxy Statement relates, the
Company shall, in a timely manner,year's annual meeting, we will inform its stockholdersyou of the change and the date by
which proposals of stockholderswe must be received.
In addition, all stockholder proposals submittedreceive proposals. If you want to present business at our 2000
annual meeting outside of the stockholdershareholder proposal rules promulgated pursuant toof Rule 14a-8 underof the
Exchange Act, the Secretary must receive notice of your proposal by August 8,
2000, but not before June 29, 2000 and you must be received bya stockholder of record on
the Companydate notice to stockholders is mailed and on the record date for
stockholders entitled to notice of the meeting and to vote.
NOMINATING DIRECTORS FOR ELECTION
The Nominating Committee will consider any director nominees you recommend
in writing for the 2000 annual meeting if the Secretary receives notice by
August 12, 1999, in order to be considered timely. If
such8, 2000, but not before June 29, 2000 and you are a stockholder proposals are not timely received, proxyholders will have
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discretionary voting authority with regard to any such stockholder proposals
which may come before the 1999 Annual Meeting. With regard to such stockholder
proposals, ifof record
on the date notice to stockholders is mailed and on the record date for
stockholders entitled to notice of the next annual meeting is subsequently advanced or
delayed by more than 30 calendar days fromand to vote.
In addition, your notice must provide the datefollowing for each person you are
nominating for election as a director:
- the name, age, business address and residence address of the Annual Meetingperson;
- the principal occupation or employment of the person;
- the class or series and number of shares of SYSCO capital stock which the
person owns beneficially or of record; and
- any other information relating to which this Proxy Statement relates, the Company shall,person that must be disclosed in a
timely manner,
inform stockholders of the change and the date by which proposals must be
received.
OTHER MATTERS TO COME BEFORE THE MEETING
Management does not know of anyproxy statement or other matters to come before the Annual
Meeting. However, if any other matters properly come before the Annual Meeting,
it is the intention of the persons designated as proxies to vote in accordance
with their best judgment on such matters.
UPON THE WRITTEN REQUEST OF ANY RECORD OR BENEFICIAL OWNER OF COMMON STOCK
OF THE COMPANY WHOSE PROXY WAS SOLICITED IN CONNECTION WITH THE 1998 ANNUAL
MEETING OF STOCKHOLDERS, THE COMPANY WILL FURNISH SUCH OWNER, WITHOUT CHARGE, A
COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR ITS FISCAL YEAR ENDED JUNE 27, 1998.
REQUEST FOR A COPY OF SUCH ANNUAL REPORT ON FORM 10-K SHOULD BE ADDRESSED TO THE
INVESTOR RELATIONS DEPARTMENT, SYSCO CORPORATION, 1390 ENCLAVE PARKWAY, HOUSTON,
TEXAS 77077-2099.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. STOCKHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO SIGN, DATE AND RETURN THE
PROXY IN THE ENCLOSED ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN
THE UNITED STATES.
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APPENDIX A
SYSCO CORPORATION
NON-EMPLOYEE DIRECTORS STOCK PLAN
ARTICLE 1
GENERAL
This Non-Employee Directors Stock Plan (the "Plan") is established to
attract, retain and compensate for service as members of the Board of Directors
highly qualified individuals who are not current employees of Sysco Corporation
(the "Corporation") and to enable them to increase their ownership in the
Corporation's common stock. This Plan will be beneficial to the Corporation and
its stockholders since it will allow these Directors to have a greater personal
financial stake in the Corporation through the ownership of the Corporation's
common stock, in addition to underscoring their common interest with
stockholders in increasing the value of the Corporation over the longer term.
SECTION 1.1 Eligibility. All members of the Corporation's Board of
Directors who are not current employees of the Corporation or any of its
subsidiaries ("Non-Employee Directors") are eligible to participate in this
Plan.
SECTION 1.2 Shares Available.
(a) Number of Shares Available. There are hereby reserved for issuance
under this Plan 400,000 shares of the Corporation's Common Stock, $1.00 par
value ("Common Stock"), which may be authorized but unissued shares, treasury
shares, or shares purchased on the open market.
(b) Recapitalization Adjustment. In the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation, rights offering, or any other change in the corporate structure
or shares of the Corporation, adjustments in the number and kind of shares
authorized by this Plan, in the number and kind of sharesfilings required to be issued
hereunder, in the number and kind of shares covered by outstanding stock options
("Options") under this Plan and in the option price thereof, shall be made if,
and in the same manner as, such adjustments are made to awards issued under the
Corporation's incentive plans for management of the Corporation then in effect.
ARTICLE 2
OPTION AWARDS
SECTION 2.1 Options. No Options granted pursuant to this Plan may be
"Incentive Stock Options" under Section 422 of the Internal Revenue Code of
1986, as amended.
SECTION 2.2 Annual Grant of Stock Options. If the Corporation achieves for
any fiscal year an increase in after-tax basic earnings per share ("EPS") of 10%
or more over EPS for the prior fiscal year, determined consistently with
determinations made in connection with
the measurementsolicitations of the Corporation's
performanceproxies for election of directors under incentive compensation plans for managementSection 14 of the
Corporation, or in the event such increase is not achieved, if the Board of
Directors shall waive this requirement, each individual elected, re-elected or
continuing as a Non-Employee Director shall automatically receive an Option for
4,000 shares of Common Stock on the first business day (the "Award Date") after
the Corporation's Annual Meeting of Stockholders which follows the close of such
fiscal year.
Notwithstanding the foregoing, if, on the Award Date, the General Counsel
of the Corporation determines, in his/her sole discretion, that the Corporation
is in possession of material, undisclosed information about the Corporation,
then the annual grant of Options to Non-Employee Directors shall be suspended
until the second day after public dissemination of such information, and the
price, exercisability dates and option period shall then be determined by
reference to such later date. If Common Stock is not traded on the New York
Stock Exchange ("NYSE") on any date a grant would otherwise be awarded, then
Appendix A -- p. 1
26
the grant shall be made the next day thereafter on which Common Stock is so
traded. All Option grants pursuant to this Plan shall be evidenced by a written
instrument consistent with the provisions hereof.
SECTION 2.3 Option Price. The price of the Option shall be the last
closing price of the Corporation Common Stock on the NYSE prior to the grant of
the Option.
SECTION 2.4 Option Period. An Option granted under this Plan shall become
exercisable and shall expire in accordance with the vesting and other conditions
contained on Exhibit A hereto, as the same may be amended in accordance with
Section 5.3 hereof, or in accordance with such other vesting requirements as the
Board of Directors shall substitute at or after the date of grant with respect
to any individual or group of individuals; provided, however, that no Option may
be exercised later than ten years after the date of grant thereof.
SECTION 2.5 Payment. The Option exercise price shall be paid in cash in
U.S. dollars at the time the Option is exercised or in shares of Corporation
Common Stock having an aggregate Fair Market Value equal to the Option exercise
price (determined as of the last business day prior to the date of exercise, in
accordance with Section 2.3 above) or by a combination of cash and Common Stock.
For purposes of this plan, "Fair Market Value" means, for any given business
day, the average of the quoted daily high and low prices of Corporation Common
Stock on the NYSE on such day.
SECTION 2.6 Nontransferability of Options. No Option granted under this
Plan is transferable other than by will or the laws of descent and distribution.
During the grantee's lifetime, an Option may be exercised only by the grantee or
the grantee's guardian or legal representative.
ARTICLE 3
RETAINER STOCK AWARDS
SECTION 3.1 Terms and Conditions.
(a) As of the date of the Annual Meeting of Stockholders of the Corporation
held in calendar 1998, each Director who is then a Non-Employee Director shall
be granted a Retainer Stock Award (as defined below). Thereafter, as of the date
of each subsequent Annual Meeting of Stockholders of the Corporation, each
Director who is then a Non-Employee Director (excluding any Non-Employee
Director who has previously received a Retainer Stock Award) shall be granted a
Retainer Stock Award.
(b) The Retainer Stock Award shall consist of the grant of 2,000 shares of
Common Stock, to vest as follows:
(1) One-third of the Retainer Stock Award shall vest after two years
from the date of grant if the average increase in EPS over the two most
recent fiscal years ending prior to the second anniversary of the date of
grant is 10% or more;
(2) An additional one-third of the Retainer Stock Award shall vest
after four years from the date of grant if the average increase in EPS of
the Corporation over the two most recent fiscal years ending prior to the
fourth anniversary date of the grant is 10% or more, and if the first third
of the Retainer Stock Award did not vest under paragraph (b)(1), the first
third will also vest if the average increase in EPS over the four most
recent fiscal years ending prior to the fourth anniversary of the date of
grant is 10% or more;
(3) The final one-third of the Retainer Stock Award shall vest after
six years from the date of grant if the average increase in EPS of the
Corporation over the two most recent fiscal years ending prior to the sixth
anniversary of the date of grant is 10% or more;
(4) Notwithstanding the foregoing, 100% of the Retainer Stock Award
shall vest if the average increase in EPS over the six most recent fiscal
years ending prior to the sixth anniversary of the date of grant is 10% or
more. Any portion of the Retainer Stock Award which is not vested on the
sixth anniversary of the date of grant thereof shall be forfeited.
2
Appendix A -- p. 2
27
(5) Any unvested portion of the Retainer Stock Award shall vest upon
the occurrence of a Change in Control as defined in Exhibit A.
(c) The Retainer Stock Awards granted under this Section 3.1 shall be
subject to the limitations set forth in Section 3.3.
SECTION 3.2 Fractional Shares. If the number of shares that may be vested
under a Retainer Stock Award for a Non-Employee Director would result in a
fractional share, then the number of shares otherwise available shall be reduced
to the next lowest number that would result in the allocation of no fractional
shares.
SECTION 3.3 Limitations on Stock. Common Stock granted as a Retainer Stock
Award shall be subject to the following limitations:
(a) Such Common Stock may not be sold, assigned, transferred, pledged
or otherwise encumbered prior to the date it is vested.
(b) Each certificate issued in respect of such Common Stock shall be
registered in the name of the Non-Employee Director and deposited, together
with a stock power endorsed in blank, with the Corporation.
(c) Each Retainer Stock Award shall be evidenced by a written
agreement duly executed on behalf of the Corporation and the Non-Employee
Director for whom such award is granted, dated as of the date of issuance
of the Common Stock to which it relates. Such agreement shall comply with
and be subject to the terms of the Plan.
(d) Except as otherwise provided by this Plan, each Non-Employee
Director, as owner of shares of Common Stock granted to him or her as a
Retainer Stock Award, shall have all the rights of a stockholder, including
but not limited to the right to vote such shares and the right to receive
all dividends paid on such shares; provided, however, that no dividends
shall be payable to or for the benefit of a Non-Employee Director with
respect to record dates for such dividends occurring on or after the date,
if any, on which the Non-Employee Director has forfeited the Common Stock.
ARTICLE 4
ELECTION TO RECEIVE COMMON STOCK
SECTION 4.1 Eligibility. A Non-Employee Director who is otherwise eligible
to receive cash payment for services provided as a Director may elect to receive
up to 50% of his or her annual retainer fee, in 10% increments, exclusive of any
fees or other amounts payable for attendance at the meetings of the Board or for
service on any committee thereof, in the form of Common Stock (a "Stock
Election"), subject to the following terms of this Section 4. The amount of the
fee which a Non-Employee Director elects to receive in Common Stock is referred
to herein as the "Elected Amount." The Elected Amount shall be deducted ratably
from the quarterly payments of the annual retainer fee payable to such
Non-Employer Director in that fiscal year in which the Elected Amount would have
been paid but for the Stock Election.
SECTION 4.2 Common Stock. Any Non-Employee Director who makes a stock
election pursuant to Section 4.1 (an "Electing Director") shall have an account
created on the books of the Corporation to which shares of Common Stock shall be
credited and debited as provided in this Article 4 (the "Stock Account"). Each
Electing Director shall have credited to his or her Stock Account on the date of
each quarterly payment of the annual retainer fee (the "Quarterly Payment Date")
the sum of (i) that number of shares of Common Stock determined by dividing his
or her Elected Amount by the Fair Market Value on such Quarterly Payment Date
(such shares are referred to as "Elected Shares") and (ii) that number of shares
of Common Stock determined by dividing 50% of the Elected Amount by the Fair
Market Value on such Quarterly Payment Date (such shares are referred to as
"Additional Shares").
SECTION 4.3 Vesting. All Elected Shares and Additional Shares shall be
100% vested as of the date they are credited to the Electing Director's Stock
Account. Additional Shares, however, may not be sold or
3
Appendix A -- p. 3
28
transferred for a period of two years after the date as of which they are issued
and such shares shall bear a legend setting forth this restriction (the
"Restriction"). The Restriction shall remain in effect after the date an
Electing Director ceases to be a Director; provided, however, that (i) if an
Electing Director ceases to be a Director by reason of death disability or
departure in good standing (as defined in Section 5.1), the Restriction shall
lapse and be of no further force or effect on or after the date of such death or
disability; and (ii) the Restriction shall lapse and be of no further force or
effect on the date of a Change in Control.
SECTION 4.4 Date of Issuance. The date of issuance of Common Stock issued
pursuant to this Article 4 (the "Issue Date") shall be December 31 for any year
as to which a Non-Employee Director has made a stock election as described in
Section 4.1 hereof, or if December 31 is not a business day for the
Corporation's transfer agent, on the last business day of the Corporation's
transfer agent prior to December 31. As of the Issue Date, a certificate for the
total number of vested shares in his or her account on the Issue Date shall be
issued to such Electing Director subject to the other terms and conditions of
this Plan and at that time, the balance in each Electing Director's Stock
Account shall be debited by the number of shares issued. Notwithstanding the
foregoing, if a Non-Employee Director ceases to be a director for any reason
when there are shares accrued to such director's Stock Account, certificates for
such shares shall be issued within 60 days of the date such Non-Employee
Director ceases to be a director and the date such shares are issued shall be
the Issue Date of such shares.
SECTION 4.5 Method of Election. A Non-Employee Director who wishes to make
a Stock Election must deliver to the Secretary of the Corporation a written
irrevocable election specifying the Elected Amount by January 31 of the calendar
year to which the Stock Election relates (or at such other time required under
rules established by the Board).
ARTICLE 5
MISCELLANEOUS
SECTION 5.1 Cessation of Service. Upon cessation of service as a
Non-Employee Director (for reasons other than death), all Options, whether or
not exercisable at the date of cessation of service, and all unvested Retainer
Stock Awards shall be forfeited by the grantee; provided, however, that, subject
to Paragraph 3 of Exhibit A, if a grantee leaves the Board of Directors in "good
standing" (for reasons other than death), such grantee's Options and Retainer
Stock Awards shall remain in effect, vest, become exercisable and expire as if
the grantee had remained a Non-Employee Director of the Corporation. Whether or
not a Non-Employee Director has left the Board in "good standing" shall be
determined by the Corporation's Board of Directors, in its sole discretion;
provided, however, that any Non-Employee Director who serves out his/her term
but does not stand for re-election at the end thereof shall be deemed to have
left the Board of Directors in "good standing." Status of Elected Shares and
Additional Shares shall be governed by Section 4.3.
SECTION 5.2 Death. Upon the death of a Non-Employee Director, only those
Options which were exercisable on the date of death shall be exercisable by
his/her legal representatives or heirs. Such Options must be exercised within
one year from date of death or they shall be automatically forfeited (but in no
event may the Options be exercised beyond the last date on which they could have
been exercised if the Non-Employee Director had not died). In addition, in the
event of the death of a Non-Employee Director, all of his/her unvested Retainer
Stock Awards shall be automatically forfeited, but all restrictions with respect
to Additional Shares shall lapse.
SECTION 5.3 Administration and Amendment of the Plan. This Plan shall be
administered by the Board of Directors of the Corporation. This Plan may be
terminated or amended by the Board of Directors as it deems advisable. No
amendment may revoke or alter in a manner unfavorable to the grantees any
Options, Retainer Stock Awards or Elected Shares then outstanding. No Option,
Retainer Stock Award, Elected Shares or Additional Shares may be issued under
this Plan after that date which is ten years from the date of stockholder
approval of this Plan, but Options granted prior to that date shall continue to
become exercisable and may be exercised according to their terms, Retainer Stock
Awards granted prior to that date shall
4
Appendix A -- p. 4
29
continue to vest in accordance with their terms and Additional Shares shall
continue to be subject to the provisions hereof.
SECTION 5.4 No Other Rights. Except as provided in this Plan, no
Non-Employee Director shall have any claim or right to be granted or issued an
Option, Retainer Stock Award, Elected Shares or Additional Shares under this
Plan. Neither this Plan nor any actions hereunder shall be construed as giving
any Director any right to be retained in the service of the Corporation.
SECTION 5.5 Prior Plan. This Plan supersedes the Corporation's existing
Non-Employee Directors Stock Option Plan (the "Directors Option Plan"). No
further options will be granted under the Directors Option Plan following
approval of this Plan by the Corporation's Stockholders.
SECTION 5.6 Effective Date. This Plan shall be effective on that date that
it is approved by the Stockholders of the Corporation.
5
Appendix A -- p. 5
30
EXHIBIT A TO SYSCO CORPORATION
NON-EMPLOYEE DIRECTORS STOCK PLAN
In addition to the conditions set out in the Plan, the exercise of an
Option is contingent upon satisfying the below requirements:
1. The fiscal year immediately prior to the fiscal year in which the
Option is granted is the "Base Year" for determining if vesting
requirements have been met. One-third of the total number of shares covered
by an Option shall vest at the conclusion of any of the five fiscal years
of the Corporation following the Base Year, provided that the after tax
basic earnings per share of the Corporation ("EPS") increased at least 20%
in such fiscal year over the Corporation's EPS for the prior fiscal year.
If EPS of the Corporation should increase less than 20% in any one fiscal
year over the prior fiscal year, the Option can be vested at the conclusion
of any fiscal year ending within the five-year period following the date of
grant of the Option (the "Vesting Period") in which EPS of the Corporation
for the fiscal years after the Base Year have grown at a minimum rate of
15%, compounded annually, with one-third of the total number of shares
covered by the Option to vest for each fiscal year after the Base Year
included in the calculation of the 15% compounded minimum growth rate.
2. If neither of the vesting requirements set out in the paragraph
immediately above is met, an Option may still vest, in part or in whole,
subject to the following criteria:
(a) For any fiscal year within the Vesting Period in which the
Corporation's annual return on shareholders' equity (computed in a
manner consistent with the computation of the Corporation's annual
return on shareholders' equity under the Corporation's incentive
compensation plans for management of the Corporation) equals or exceeds
17.5% and the increase in EPS of the Corporation over the prior fiscal
year equals or exceeds 15%, one-third of the Option will vest.
(b) If the Corporation's average annual return on shareholders'
equity (computed in a manner consistent with the computation of the
Corporation's annual return on shareholders' equity under the
Corporation's incentive compensation plans for management of the
Corporation) for the five fiscal years ending within the Vesting Period
equals or exceeds 17.5% and the increase in EPS of the Corporation over
such five fiscal years equals or exceeds 10%, compounded annually, the
Option will fully vest.
3. If none of the vesting requirements set out above are met within
the Vesting Period as to any portion of an Option, such Option (or portion
thereof) will nonetheless vest and become exercisable six months prior to
the expiration thereof (the "Supplemental Vesting Date") provided that the
grantee of the Option (the "Grantee") continues to serve on the
Corporation's Board of Directors as a Non-Employee Director on the
Supplemental Vesting Date.
Notwithstanding anything in Section 5.1 of the Plan to the contrary,
if any Option (or portion thereof) has not vested by the end of the Vesting
Period, said Option (or portion thereof) shall be automatically forfeited
when the Grantee ceases to serve as a Non-Employee Director (for reasons
other than death) if such cessation occurs prior to the Supplemental
Vesting Date.
4. Subject to the limitations set forth in the Plan, the vested
portion of an Option may be exercised at any time following the conclusion
of the fiscal year in which it vests, provided that at the time of exercise
all of the conditions set forth in the Plan have been met. No portion of
any Option may be exercised prior to one calendar year following the date
of grant thereof.
5. Notwithstanding anything to the contrary contained in the Plan, all
unvested options shall become vested and immediately exercisable upon the
occurrence of a Change in Control. For purposes of this Plan, "Change in
Control" means that a person or persons who are acting together for the
purpose of acquiring an equity interest in the Corporation acquire
beneficial ownership (as defined in Rule 13d-3 promulgated under
the Securities Exchange Act of 1934 (as amended)and its rules and regulations.
In addition, your notice must provide the following information relating to
yourself:
- your name and record address;
- the class or series and number of 20%shares of capital stock of SYSCO that
you own beneficially or moreof record;
- a description of all arrangements or understandings between you and each
proposed nominee and any other person or persons, including their names,
pursuant to which the nomination(s) are to be made;
- a representation that you intend to appear in person or by proxy at the
meeting to nominate the persons named in your notice; and
18
21
- any other information about yourself that must be disclosed in a proxy
statement or other filings required to be made in connection with
solicitations of proxies for election of directors under Section 14 of
the outstanding Common Stock.
Appendix A -- p. 6Securities Exchange Act of 1934 and its rules and regulations.
The notice must include a written consent by each proposed nominee to being
named as a nominee and to serve as a director if elected. No person will be
eligible for election as a director of SYSCO unless nominated in accordance with
the procedures set forth above.
CHANGE IN ANNUAL MEETING DATE
If the date of next year's annual meeting is advanced by more than 30 days
prior to or delayed by more than 60 days after the date of this year's annual
meeting, we will inform you of the change and we must receive your director
nominee notices by the latest of 90 days before the annual meeting, 10 days
after we mail the notice of the changed date of the annual meeting or 10 days
after we publicly disclose the changed date of the annual meeting.
19
31
SYSCO-PS-98
32
DETACH HERE22
ANNEX
PROXY
SYSCO CORPORATION
Proxy For The Annual Meeting Of Stockholders November 5, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF
SYSCO CORPORATION
FOR THE ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 6, 1998, 10:00 A.M.
The undersigned hereby constitutes and appoints John F. WoodhouseBill M. Lindig and
Arthur J.
Swenka,Charles H. Cotros, and each of them jointly and severally, proxies, with full
power of substitution to vote all shares of Common Stockcommon stock which the undersigned
is entitled to vote at the Annual Meetingannual meeting of Stockholders of SyscoSYSCO Corporation (the
"Company")
to be held on November 6, 19985, 1999 at 10:00 a.m., at the Omni Houston Hotel, Four
Riverway, Houston, Texas 77056-1999, or any adjournment thereof.
The undersigned acknowledges the receipt of Notice of the aforesaid Annual
Meetingannual
meeting and Proxy Statement,proxy statement, each dated September 25, 1998,24, 1999, grants authority to
any of said proxies, or their substitutes, to act in the absence of others, with
all the powers which the undersigned would possess if personally present at such
meeting, and hereby ratifies and confirms all that said proxies, or their
substitutes, may lawfully do in the undersigned's name, place and stead. The
undersigned instructs said proxies, or any of them, to vote as set forth on the
reverse side.
- - ---------------- ----------------
SEE REVERSE CONTINUEDSIDE (CONTINUED AND TO BE SIGNED ON REVERSE SIDESIDE) SEE REVERSE SIDE
SIDE 23
SYSCO CORPORATION
1390 ENCLAVE PARKWAY
HOUSTON, TX 77077
Vote by Telephone Vote by Internet
It's fast, convenient, and immediate! It's fast, convenient,
Call Toll-Free on a Touch-Tone Phone and your vote is
1-877-PRX-VOTE (1-877-779-8683). immediately confirmed and
posted.
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy Statement 1. Read the accompanying Proxy Statement
and Proxy Card. and Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE(1-877-779-8683). For stockholders http://www.eproxyvote.com/syy
residing outside the United States call collect on
a touch-tone phone 1-201-536-8073.
3. Enter your 14-digit Voter Control Number 3. Enter your 14-digit Voter Control Number
located on your Proxy Card above your name. located on your Proxy Card above your name.
4. Follow the recorded instructions. 4. Follow the instructions provided.
Your vote is important! Your vote is important!
Call 1-877-PRX-VOTE anytime!. Go to http://www.eproxyvote.com/syy
anytime!
Do not return your Proxy Card if you are voting by
Telephone or Internet. Proxies voted by Telephone or Internet must
be received by 5:00 P.M. EST - - ---------------- ----------------
33
DETACH HERE
- - --- PLEASE MARK
X VOTES AS IN
- - --- THIS EXAMPLE
1. ElectionNovember 4, 1999
Please Mark
[X] Votes As In
This Example
The Board of Directors.
NOMINEES: Gordon M. Bethune, Colin G. Campbell,
Frank A. Godchaux III, Frank H. RichardsonDirectors recommends a vote "FOR" the following Proposals:
FOR AGAINST ABSTAIN
1. To elect five directors of SYSCO 2. Approval of SYSCO's proposal to [ ] [ ] [ ]
NOMINEES: (01) John W. Anderson, increase the number of authorized
(02) Judith B. Craven, (03) Bill M. Lindig, shares to one billion (1,000,000,000) shares.
(04) Richard G. Merrill and
(05) Phyllis S. Sewell
FOR [ ] WITHHELD [ ]
ALL FROM ALL
NOMINEES NOMINEES
[ ]------------------------------------
For all nominees except as noted above.
All proxies signed and John F. Woodhouse
FOR [ ] [ ] WITHHELD
[ ] -----------------------------
FOR all nominees exceptreturned will be voted or not voted in accordance with
your instructions, but those whose name(s) are written
above.
FOR AGAINST ABSTAIN
2. Approvalwith no choice will be voted "FOR" each of the
Sysco Corporation
Non-Employee Directors Stock Plan. [ ] [ ] [ ]
3. On allnominees for director named, "FOR" the proposal to increase the number of
authorized shares and in the discretion of the proxy holder on any other matters whichmatter
that may properly come before the meeting orand any adjournment thereof.
ALL PROXIES SIGNED AND RETURNED WILL BE VOTED OR NOT VOTED IN ACCORDANCE WITH
YOUR INSTRUCTIONS, BUT THOSE WITH NO CHOICE WILL BE VOTED "FOR" EACH OF THE
NOMINEES FOR DIRECTOR NAMED HEREON AND "FOR" APPROVAL OF THE SYSCO CORPORATION
NON-EMPLOYEE DIRECTORS STOCK PLAN.or postponement of
the annual meeting.
MARK HERE FOR ADDRESS [ ]
CHANGE AND NOTE AT LEFT
[ ]
(Signature should conform to name and title stenciled hereon. Where there is
more than one owner, each should sign. Executors, administrators, trustees,
guardians and attorneys should add their title upon signing.)
Please sign, below, date and return promptly. No postage required if this proxy is
returned in the enclosed envelope and mailed in the United States.
Please sign as name appears on this card. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title. If signer is a corporation, please sign with the full corporation
name by authorized officer or officers.
Signature:___________________________ Date:
--------------------------------- ----------------------_______________________________
Signature:___________________________ Date:
--------------------------------- ----------------------
_______________________________
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