SEAWAY FOOD TOWN, INC.
1020 FORD STREET - P. O. BOX 892 -
MAUMEE, OHIO 43537-0892
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
_______________________
TO THE SHAREHOLDERS OF SEAWAY FOOD TOWN, INC.:
Notice is hereby given that the ANNUAL MEETING of the shareholders of
Seaway Food Town, Inc., an Ohio corporation, will be held at the Brandywine
Country Club, Fireside Room, 6904 Salisbury Road, Maumee, Ohio, on Thursday,
the 8th of January, 1998, at 2:00 p.m., Eastern Standard Time, for the purpose
of considering and acting upon:
(1) The election of three (3) Directors to serve as members of Class I
during the ensuing three years and until their successors are elected and
qualified.
(2) A proposal to ratify the selection of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending August 29, 1998.
(3) A proposal to amend the Articles of Incorporation to increase the
number of authorized shares of common stock.
(4) The transactions of such other business as may properly come before
the meeting or any adjournment thereof.
Only shareholders of record at the close of business November 21, 1997
will be entitled to vote at the meeting or any adjournment thereof.
Accompanying this notice is a copy of the Annual Report of the Company
reflecting operations for the 1996-1997 fiscal year.
By the Order of the Board of Directors
GARY D. SIKKEMA
Secretary
Maumee, Ohio
December 12, 1997
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT IN PERSON ON JANUARY 8, 1998 ARE
REQUESTED TO SIGN, DATE AND RETURN THE ATTACHED PROXY AS PROMPTLY AS POSSIBLE.
PROXY STATEMENT
OF
SEAWAY FOOD TOWN, INC.
1020 FORD STREET, P. O. BOX 892, MAUMEE, OHIO 43537-0892
December 12, 1997
THE ACCOMPANYING PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF SEAWAY
FOOD TOWN, INC., for use at the Annual Meeting of Shareholders to be held
January 8, 1998, and at any adjournment thereof. This proxy statement and
the accompanying form of proxy are being mailed to security holders on or
about December 12, 1997. Any shareholder giving a proxy may revoke it by
giving written notice to the Secretary of the Company, or in open meeting,
at any time before it is voted. The Company will bear the cost of the
solicitation and will reimburse brokers or other persons holding Common
Stock of the Company in their names, or in the name of their nominees, for
reasonable expenses in forwarding the proxy and proxy statement to the
beneficial owners of such shares.
STOCK DIVIDEND
On April 10, 1997, the Board of Directors of the Company declared a two-
for-one stock split, whereby each shareholder of record as of April 22, 1997
would, following the split, own two shares of common stock for each share
held as of the record date. The stock dividend was issued on May 7, 1997.
All share holdings and values of Common Stock set forth in this Proxy
Statement reflect this stock dividend.
VOTING SECURITIES
At the close of business on November 21, 1997, the record date for the
determination of shareholders entitled to vote at the Annual Meeting, there
were outstanding 4,419,168 shares of Common Stock, without par value (stated
value $2 per share). The voting power of the shareholders of the Company is
vested exclusively in the holders of such Common Stock. The presence in
person or by proxy of the holders of a majority of the outstanding shares
will constitute a quorum at the Annual Meeting of Shareholders. Holders of
Common Stock of record at the close of business on November 21, 1997 will
be entitled to one vote per share on all business which is conducted at the
meeting, except that shareholders have cumulative voting rights in the
election of directors. Cumulative voting means that each shareholder is
entitled to multiply the number of shares he is entitled to vote by the
number of directors to be elected and to allocate the resulting aggregate
votes among the nominees for election in such manner as desired. In order
to exercise the right to vote cumulatively upon the election of directors,
a shareholder must give notice in writing to the President, the Treasurer
or the Secretary of the Company, which notice must be given on or before
2:00 P.M., January 6, 1998, and shall state the desire of the shareholder to
exercise cumulative voting rights in the election of directors. Announcement
thereof must be given at the meeting, as provided by Section 1701.55(C) of
the Ohio Revised Code, and thereupon all shareholders shall have the right
to vote cumulatively. The Chairman of the meeting or the Secretary will
make an announcement at the meeting of any such notice that may be received.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The total number of Directors on the Board of Directors of the Company fixed
under the Code of Regulations is twelve (12). However, the Board of
Directors is operating with nine (9) members.
The Board of Directors of the Company is divided into three (3) Classes,
each consisting of three (3) Directors. The terms of office for the
members of Class I of the Board of Directors will expire with this Annual
Meeting and until their successors are elected and qualified. The terms of
office of the nominees for Class I, if elected, will expire with the Annual
Meeting held subsequent to the close of the fiscal year ending August 27,
2000, and until their successors are elected and qualified.
It is presently intended that the shares represented by management proxies
will, unless a contrary intent is expressed, be voted for the election of
the nominees listed below, each to serve as a member of Class I for a three-
year term and to hold office until a successor is elected and qualified.
All nominees have consented to being named in this Proxy Statement and to
serve if elected. If any nominee subsequently declines or is unable to
accept such nomination to serve as a Director, an event which the management
does not now expect, the persons voting the shares represented by management
proxies will vote for such substitute nominee as may be named by the Board
of Directors.
An affirmative vote of the holders of a majority of the shares represented
at the Annual Meeting is required to elect a nominee unless cumulative voting
rights are exercised. Proxies cannot be voted for a greater number of persons
than the number of nominees named in Class I to be elected at the Annual
Meeting. The holders of management proxies will have discretionary authority
to cumulate votes.
INFORMATION CONCERNING NOMINEES AND DIRECTORS
The following table sets forth certain information as of November 21, 1997
with respect to those persons who are Directors and/or nominees for election
as Directors:
COMMON STOCK
NAME AND AGE DIRECTOR TERM BENEFICIALLY PERCENT
OF DIRECTOR PRINCIPAL OCCUPATION SINCE EXPIRES OWNED (1)(2)(3) OF CLASS
CLASS I DIRECTORS (NOMINEES FOR ELECTION)
Thomas M. O'Donnell Chairman of the Board, 1970 1998 7,200 (9) *
Age 60 McDonald & Company Invest-
ments, Inc., Investment
Bankers, Cleveland, Ohio
Richard K. Ransom President, Ransom Consulting 1989 1998 4,000 *
Age 78 Partnership; Former Chairman
of the Board and President of
Hickory Farms of Ohio, Inc.
Joel A. Levine Of Counsel, Spengler 1995 1998 0 *
Age 59 Nathanson,
Attorneys at Law (4)
CLASS II DIRECTORS (CONTINUING IN OFFICE)
Waldo E. Yeager Chief Financial Officer, 1987 1999 9,899 (6) *
Age 61 Treasurer
Richard B. Iott Chief Executive Officer 1987 1999 368,628 8.3%
Age 46 and President of the
Company
Eugene R. Wos Owner, Cross Winds One-Stop 1996 1999 0 *
Age 66 Travel, Inc., Maumee, Ohio;
former Managing Partner
Ernst & Young LLP, Certified Public
Accountants, Toledo, Ohio. (5)
CLASS III DIRECTORS (CONTINUING IN OFFICE)
Wallace D. Iott Chairman of the Board 1957 2000 856,444 19.4%
Age 82 of the Company
W. Geoffrey Lyden III Chairman of the Board 1997 2000 300 *
Age 45 and Chief Executive Officer,
The Lyden Company,
Toledo, Ohio
David J. Walrod Executive Vice President-- 1987 2000 61,198 1.4%
Age 50 Operations of the Company
* Less than 1%
The Board of Directors has appointed an Audit Committee whose members
for the fiscal year ended August 30, 1997 were Eugene R. Wos, Thomas M.
O'Donnell, Richard K. Ransom, Joel A. Levine, and W. Geoffrey Lyden.
The Committee's purpose is to recommend outside auditors and to review the
scope of audit procedures, audit reports and other matters with respect to the
Company's financial reporting. This Committee met two (2) times during the
fiscal year.
The Board of Directors appointed an Executive Compensation Committee
whose members for the fiscal year ended August 30, 1997 were Wallace D.
Iott, Richard B. Iott, Thomas M. O'Donnell, Joel A. Levine and Eugene R. Wos.
This Committee's purpose is to review compensation paid to the members of the
Board of Directors and the corporate officers of the Company and recommend
changes in their compensation. This Committee met one (1) time during the
fiscal year.
The Board of Directors appointed a Nominating Committee for the fiscal
year ended August 30, 1997 whose members were Wallace D. Iott, Richard B.
Iott, Thomas M. O'Donnell, Joel A. Levine, and Eugene R. Wos. This
Committee's purpose is to review the desirability of new members of the Board
of Directors and to seek out and recommend candidates for positions on the
Board of Directors. Shareholders who desire to have an individual
considered by the Nominating Committee for the next vacant position on the
Board of Directors should submit the recommendation in writing to the
Secretary of the Company before the September 1 preceding the next Annual
Meeting of the Shareholders and include biographical information and
qualifications for service as a director. The Nominating Committee met
one (1) time during the fiscal year.
During the fiscal year ended August 30, 1997, the Board of Directors met
a total of four (4) times. All Directors attended at least 75% of the
aggregate of the meetings of the Board of Directors and the committees on
which they served.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth, as of November 21, 1997, the names and
addresses of beneficial owners, amounts beneficially owned, and the
percentage of common stock owned beneficially by those persons (including
any "group" as the term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934) known to management to be the beneficial owner of more
than 5% of the Company's Common Stock:
NAME AND ADDRESS AMOUNT PERCENT OF
OF BENEFICIAL OWNER BENEFICIALLY CLASS
OWNED (1)(2)(3)
Wallace D. Iott 19.4%
3402 Chapel Drive 856,444 (6) (8)
Toledo, Ohio 43615
Evergreen Asset Management Group 6.1%
2500 Westchester 268,000 (11)
Purchase, New York 10577
Key Trust Co. of Ohio N.A., Trustee 11.1%
P. O. Box 10099 488,728 (12)
Toledo, Ohio 43699-0099
Richard B. Iott 368,628 (6)(7) 8.3%
5245 Keener Road
Monclova, Ohio 43542
Constance J. Braciak 7.0%
6744 Sweet Bush 311,186 (13)
Sylvania, Ohio 43560
Paul L. Pope 5.6%
4532 Sanderling Lane 248,244 (10)
Quail Ridge No. 73
Boynton Beach, Florida 33436
All executive officers and directors 29.6%
as a group (9 persons) 1,307,669 (6)
INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
The Company leases supermarkets in Temperance, Michigan and Sylvania,
Ohio and a Floral Operations Center in Toledo, Ohio, from MS Associates, a
limited partnership controlled by members of the Wallace D. Iott family.
The primary term for the Temperance supermarket lease expires in the year
2002; $128,217 in rent was paid during the fiscal year for the Temperance
location. The primary term for the Sylvania supermarket lease expires in
the year 2004; $306,821 in rent was paid during the fiscal year for the
Sylvania location. The primary term for the Toledo Floral Operations Center
lease expires in the year 1997; $17,604 in rent was paid during the fiscal
year for the Floral Operation Center. [ADDED TEXT] On September 29, 1997
the Company entered into a long-term agreement with Maumee Associates, an
Ohio General Partnership, for the construction and lease of a new store
facility in Maumee, Ohio. Director Richard K. Ransom is a 20% owner of
Maumee Associates. The primary term of the lease will expire 20 years
from the date the facility opens for business, however, the Company will
have the option of extending the lease for up to eight successive periods
of 5 years each upon the same terms and conditions as the primary term,
except for rent. Based on assumed financing and construction costs, estim-
ated monthly rent to be paid to Maumee Associates at the time the facility
opens for business will amount to $42,236.67. This figure, however, will be
adjusted for actual construction and finance costs at the time the facility
is turned over to the Company. [END OF ADDED TEXT]
The Company believes that the terms of the foregoing leases and other
transactions are at least as favorable as those that could have been obtained
from non-affiliated parties for comparable properties or goods.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The Summary Compensation Table shows certain compensation information for
the Chairman of the Board and the three other most highly compensated
executive officers for services rendered in all capacities during the fiscal
years ended August 26, 1995, August 31, 1996 and August 30, 1997. This
information includes the dollar value of base salaries and certain other
compensation. The Company does not award bonuses or Stock Appreciation Rights
("SARs"). In addition, the Company's stock option plan expired in 1993, and
there are no unexercised options outstanding.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
Other Restric- All
Ann. ted Options LTIP Other
Compen- Stock /SARs Payouts Compen-
Name and Principal Salary Bonus sation Award sation
Position Year ($) ($) ($)(A) ($) (#) ($) ($)(B)(C
Wallace D. Iott,
Chairman of the Board 1997 300,923 0 -- 0 0 0 60,150
1996 310,000 0 -- 0 0 0 60,150
1995 310,000 0 -- 0 0 0 60,150
Richard B. Iott,
Chief Executive Officer 1997 213,128 0 -- 0 0 0 13,430
and President 1996 191,062 8 -- 0 0 0 12,639
1995 185,471 0 -- 0 0 0 12,187
David J. Walrod,
Executive Vice- 1997 193,731 0 -- 0 0 0 14,719
President, 1996 181,290 0 -- 0 0 0 14,144
Operations 1995 176,000 0 -- 0 0 0 12,870
Waldo E. Yeager,
Chief Financial 1997 178,237 0 -- 0 0 0 19,699
Officer & Treasurer 1996 166,429 0 -- 0 0 0 19,154
1995 161,529 0 -- 0 0 0 19,466
(A) Perquisites and other benefits for each executive officer amount to less
than 10% of salary and bonus.
(B) Includes amounts paid by the Company on behalf of the executive for some
or all of the following: Matching 401(k) Contributions ("401(k)"), ESOP
Contributions ("ESOP"); insurance premiums on life insurance for the executive
paid by the Company and fully included on the executive's W-2 ("Premiums");
insurance premiums paid by the Company pursuant to a "split-dollar" arrange-
ment with the executive ("Insurance").
1997 1996 1995
Wallace D. Iott:
401(k) $4,500 $4,500 $4,500
ESOP $3,750 $3,750 $3,750
Premiums $51,900 $51,900 $51,900
Richard B. Iott:
401(k) $5,180 $4,389 $4,937
ESOP $3,750 $3,750 $3,750
Insurance $4,500 $4,500 $3,500
David J. Walrod
401(k) $4,969 $4,394 $4,920
ESOP $3,750 $3,750 $3,750
Insurance $6,000 $6,000 $4,200
Waldo E. Yeager
401(k) $4,949 $4,404 $4,716
ESOP $3,750 $3,750 $3,750
Insurance $11,000 $11,000 $11,000
(C) Under the terms of a split-dollar insurance arrangement between the
Company and the executive, upon surrender of the policy, the executive is
entitled to the cash surrender value in excess of premiums paid by the
Company. Currently, premiums paid by the Company exceed the cash surrender
value.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The Company does not currently sponsor any program through which options
or SARs are granted.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The Company has not awarded and does not award SARs and has no
unexercised options outstanding.
LONG-TERM INCENTIVE PLANS/AWARDS IN LAST FISCAL YEAR
The Company does not maintain any long-term incentive plans. No long-
term incentive awards were made in the last fiscal year.
COMPENSATION COMMITTEE REPORT
The Company's compensation program is designed to motivate, reward and
retain the management talent needed to achieve the Company's business
objectives and maintain its competitive position in an industry characterized
by complexity, competitiveness and change.
The compensation of the Company's top executives is reviewed and approved
annually by the Compensation Committee. The Compensation Committee makes
recommendations to the Board of Directors as to the salaries of the CEO and
the President, sets the salaries of other elected officers, and reviews
salaries of other senior executives. There are now no incentive programs in
place for Company executives.
BASE SALARY
The goal of the compensation program is to reward each employee based on
his or her performance and level of responsibility. Assessments of both
individual and corporate performance influence executives' compensation levels.
It is important to encourage a performance-based environment that motivates
individual performance by recognizing the past year's results while
simultaneously providing incentives for further improvement in the future.
This includes the ability to implement the Company's business plan as well as
reacting to unanticipated external factors that can have a significant impact
on the Company's performance. At the same time, however, executive compensa-
tion must be competitive within the supermarket industry. Inflation and
other general economic factors, competitive positioning within the industry
is the primary consideration in establishing the budget for salary
expenditures.
With respect to the determination of compensation for Wallace D. Iott,
the Company's Chairman of the Board, the following factors in addition to
those described previously were considered: Comparable Executive Compensation
within the Supermarket Industry, Mr. Iott's 39-year tenure with the Company,
his present and cumulative contributions to the Company, both personal and in
his capacity as an officer of the Company, the sales and gross profit margin
of the Company and its various subsidiaries and affiliates, and other
intangible criteria. Based on these factors, the Compensation Committee
approved a increase for Mr. Iott in 1996, however, Mr. Iott declined to
accept this increase, and in fact, requested a decrease in his compensation.
His 1997 base salary of $300,923.00 reflects this decrease, and is shown
under the caption "Salary" in the Summary Compensation Table.
SUMMARY
The Compensation Committee has the responsibility for ensuring that the
Company's compensation program continues to be in the best interest of its
shareholders while adequately compensating its executives.
The Compensation Committee believes that the compensation program is
not only appropriate but competitive within the supermarket industry.
The Compensation Committee is also reviewing new and innovative forms of
compensation and incentive programs that may further enhance the retention
and productivity of its management and, therefore, growth and profitability.
SHARE INVESTMENT PERFORMANCE
The following graph compares the yearly percentage change in the
cumulative total shareholder return, including reinvested dividends, of
Seaway Food Town, Common Stock, with three other indexes.
SEE GRAPH DESCRIPTION BELOW
CUMULATIVE TOTAL RETURN
8/92 8/93 8/94 8/95 8/96 8/97
Seaway Food Town, Inc. 100 95 84 142 169 382
Peer Group 100 101 93 89 108 135
NASDAQ Stock Market 100 132 137 185 209 291
Standard & Poor's (Retail
Food Chains) 100 125 128 154 198 207
The peer group companies are: Buttrey Food & Drug Stores (went public in
1991), Delchamps, Inc., Eagle Food Centers, Inc., Foodarama Supermarkets,
Inc., Ingles Markets, Inc., Marsh Supermarkets, Inc. and Village Supermarket,
Inc. These are moderately capitalized companies engaged in the same line of
business as the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Two members of the Compensation Committee, are Executive Officers of the
Company. Wallace D. Iott is the Chairman of the Board, and Richard B. Iott
is Chief Executive Officer and President of the Company.
COMPENSATION OF DIRECTORS
Members of the Board of Directors who have not previously served and who
are not currently serving as employees of the Company are paid an annual fee
of $12,000 for service as a Director of the Company. Non-employee Directors
are paid $1,500 for each Board meeting attended and $600 for each day
Committee meetings are attended on a day other than a day the entire Board
of Directors meets.
EXECUTIVE OFFICERS
David J. Walrod has served as an executive officer of the Company since
1979. Waldo E. Yeager has served as an executive officer of the Company
since 1974. Richard B. Iott was elected to executive officer status in 1984
and was elected to Chief Executive Officer in January, 1996. He has been
employed by the Company since 1971 in a variety of capacities. Prior to his
election to the office of President he was employed primarily in the marketing
and merchandising areas. Richard B. Iott is the son of Wallace D. Iott,
Chairman of the Board. Gary D. Sikkema is the Company Secretary and is a
partner of the law firm of Spengler Nathanson. Mr. Sikkema has been a
partner of Spengler Nathanson for the most recent five (5) year period.
No fees for services as Secretary of the Company were paid to Mr. Sikkema.
Legal fees are paid to Spengler Nathanson as compensation for his services
in connection with Board and Committee activities. The term of office for
all executive officers is one (1) year.
FOOTNOTES:
(1) Based in part on information furnished by the nominees and directors
or their agents, and in part on Company records.
(2) The inclusion of shares owned by the spouse or any of the minor
children of any of the nominees or directors as being beneficially
owned shall not be construed as an admission of beneficial ownership
by such director or nominee.
(3) No shares reported hereunder are owned of record but not owned
beneficially.
(4) Spengler Nathanson has served as general counsel to the Company since
incorporation in 1957 and will remain as such in the current fiscal
year. Fees paid to said firm by the Company for legal services
amounted to $247,871 during the Company's fiscal year ended
August 30, 1997.
(5) Mr. Wos is also a member of the Board of Directors of General Alum &
Chemical Corporation.
(6) Includes the number of shares allocated as of the record date under
the Seaway Food Town, Inc. Employee's Stock Ownership Plan.
(7) Includes 69,812 shares owned by Richard B. Iott as custodian for his
minor children and 27,450 shares owned by his wife.
(8) Includes 398,400 shares owned by Wallace D. Iott's wife.
(9) Includes 800 shares owned by Mr. O'Donnell's wife.
(10) Includes 63,572 shares owned independently by Mr. Pope's wife.
(11) Based on information in Schedule 13G filed with the Securities and
Exchange Commission on or about June 25, 1987, and any amendments
thereto and information provided by the beneficial owner.
(12) Held as Trustee for Seaway Food Town, Inc. Employee's Stock Ownership
Plan.
(13) Includes 21,570 shares owned by Constance J. Braciak as custodian for
her minor child, and 3,200 shares owned by Mrs. Braciak's husband.
RATIFICATION OF SELECTION OF AUDITORS
(PROPOSAL 2)
At the Annual Meeting, shareholders will consider and act upon the
approval of auditors for the Company's fiscal year ending August 29, 1998.
The Board of Directors, upon recommendation of its Audit Committee and subject
to such approval, has selected the independent certified public accounting
firm of Ernst & Young LLP as such auditors. Ernst & Young LLP have been
auditors for the Company for many years. Representatives of Ernst & Young
LLP are expected to be present at the annual meeting and will have an
opportunity to make a statement if they desire to do so and are expected to
be available to respond to appropriate questions.
The Board of Directors of the Corporation recommends a vote for
approval of the selection of Ernst & Young LLP. Unless otherwise specified,
shares represented by proxies will be voted for approval of Ernst & Young LLP
as auditors. Although the submission of this matter for approval by
shareholders is not required legally, the Board of Directors believes that
such submission follows sound corporate practice and is in the best interests
of shareholders. If approval of Ernst & Young LLP by an affirmative vote by
the holders of a majority of the shares presented is not received, the
selection of a firm as auditors for the Corporation will be considered by
the Audit Committee and the Board of Directors.
AMENDMENT TO ARTICLES OF INCORPORATION INCREASING
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
(PROPOSAL 3)
Shareholders will consider and act upon a recommendation of the Board of
Directors to amend the Articles of Incorporation to increase the number of
authorized shares of Common Stock of the Company from 6,000,000 (six million)
to 12,000,000 (twelve million). The 1997 two-for-one stock split and
improvements to the Company's Retirement Plan for its employees have reduced
the remaining number of authorized shares available for distribution.
The Board recommends a vote of approval on this matter in order to
ensure an adequate amount of Common Stock remains available to satisfy future
employee benefit commitments, fund possible mergers and/or acquisitions
and service anticipated and/or unanticipated capital needs of the Company.
SHAREHOLDER PROPOSALS
Shareholders may submit proposals for consideration at a meeting of the
shareholders if the shareholder desiring to do so complies with the proxy
solicitation rules of the Securities and Exchange Commission. In order for
such proposal to be included in the proxy statement for the Annual Meeting
in 1998, the proposal must be received by the Secretary no later than
September 1, 1998.
OTHER MATTERS
At the date of this proxy statement the Management knows of no other
business to be presented at the meeting. However, if any other business
should come before the meeting, the persons named in the accompanying proxy
will vote in accordance with their best judgment.
By Order of the Board of Directors
Gary D. Sikkema, Secretary
SEAWAY FOOD TOWN, INC.
December 12, 1997
Maumee, Ohio