1
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
ALBERTSON'S, INC.
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(Name of Registrant as Specified in its Charter)
KAYE L. O'RIORDAN
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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ALBERTSON'S, INC.
250 PARKCENTER BOULEVARD
P. O. BOX 20 [ALBERTSON'S LOGO]
BOISE, IDAHO 83726
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April 22, 1994
DEAR FELLOW STOCKHOLDER:
It is our pleasure to invite you to attend the 1994 Annual Meeting of
Stockholders. This year's Annual Meeting will be held on May 27, 1994, at 10:00
a.m., Mountain Daylight Time, in the Eyries Room at the Boise Centre on the
Grove, 850 Front Street, Boise, Idaho.
Information about the business of the meeting and the nominees for election as
members of the Board of Directors is set forth in the Notice of Meeting and the
Proxy Statement on the following pages. This year you are asked to elect
directors and to ratify the appointment of independent auditors for the fiscal
year ending February 2, 1995. In addition, two stockholder proposals may be
presented for consideration and voting.
It is important that your shares be represented at the meeting. Accordingly,
whether or not you plan to attend the meeting, we urge you to complete, date and
sign the enclosed proxy card, and return it in the envelope provided.
We look forward to personally greeting those stockholders able to attend.
Very truly yours,
ALBERTSON'S, INC.
(FACSIMILE SIGNATURE)
Gary G. Michael
Chairman of the Board
and Chief Executive Officer
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TABLE OF CONTENTS [ALBERTSON'S LOGO]
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PAGE
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Notice of Annual Meeting of Stockholders 1
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Proxy Statement 2
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Voting Securities and Principal Holders Thereof 3
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Election of Directors (Proposal 1) 5
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Nominees for Election as Class II Directors 6
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Continuing Class III Directors 7
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Continuing Class I Directors 8
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Certain Transactions 9
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Committees and Meetings of the Board of Directors 10
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Directors' Fees 11
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Compensation of Executive Officers 12
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Summary Compensation Table 12
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Stock Option and Year-End Value Table 14
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Retirement Benefits 14
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Compensation Committee/Executive Committee Report 16
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Compensation Committee and Executive Committee Interlocks and Insider Participation 19
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Performance Graph 20
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Ratification of Appointment of Independent Auditors (Proposal 2) 21
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Stockholder Proposal (Proposal 3) 21
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Stockholder Proposal (Proposal 4) 23
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Other Matters 25
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Filing of Forms Pursuant to Section 16 of the Securities Exchange Act of 1934 25
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Deadline for Receipt of Stockholders' Proposals 25
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FREE PARKING FOR MEETING
For three hours of free parking at the Eastman Garage, Capital Terrace Garage,
Statehouse Inn (roof-top only) and surface parking areas as indicated on the map
below, your admittance badge for the Meeting will include a validation sticker.
Handicap parking is available as indicated on the map. Parking is not available
in Boise Centre on the Grove.
[MAP]
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 27, 1994, AT BOISE, IDAHO [ALBERTSON'S LOGO]
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TO THE STOCKHOLDERS OF ALBERTSON'S, INC.:
The Annual Meeting of Stockholders of Albertson's, Inc., a Delaware corporation
("Company"), will be held on May 27, 1994, at 10:00 a.m., Mountain Daylight
Time, in the Eyries Room at the Boise Centre on the Grove, 850 Front Street,
Boise, Idaho, for the following purposes:
(1) To elect four Class II directors to hold office for three years;
(2) To ratify the appointment of Deloitte & Touche as the Company's independent
auditors for the fiscal year ending February 2, 1995;
(3) To consider and vote on two stockholder proposals; and
(4) To transact such other business as may properly come before the meeting.
All of the above matters are more fully described in the accompanying Proxy
Statement.
Stockholders of record at the close of business on April 12, 1994, will be
entitled to notice of, and to vote at, the meeting.
All stockholders are cordially invited to attend the meeting in person. WHETHER
OR NOT YOU PLAN TO ATTEND, PLEASE RETURN YOUR PROXY PROMPTLY. It is important
that you mark, sign, date and return the accompanying Proxy, regardless of the
size of your holdings, as promptly as possible. A postage prepaid envelope (if
mailed in the United States) is enclosed for your convenience. Any stockholder
attending the meeting may vote in person even if that stockholder returned a
proxy card.
By Order of the Board of Directors
(FACSIMILE SIGNATURE)
Kaye L. O'Riordan
Corporate Secretary
April 22, 1994
YOUR COPY OF THE COMPANY'S ANNUAL REPORT FOR THE
FISCAL YEAR ENDED FEBRUARY 3, 1994 IS ENCLOSED.
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PROXY STATEMENT
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This Proxy Statement and the accompanying proxy card, which are being mailed to
stockholders on or about April 22, 1994, are furnished in connection with the
solicitation of proxies by the Board of Directors of Albertson's, Inc., a
Delaware corporation ("Company"), for use at the Annual Meeting of Stockholders
to be held on May 27, 1994, including any adjournments thereof.
The Annual Meeting is called for the purposes stated in the accompanying Notice
of Meeting. All stockholders of the Company's Common Stock as of the close of
business on April 12, 1994 are entitled to vote at the meeting. As of that date,
there were 253,545,783 shares of Common Stock outstanding. On each matter coming
before the meeting, a stockholder is entitled to one vote for each share of
stock held as of the record date.
If the accompanying proxy card is properly signed and is not revoked by the
stockholder, the shares it represents will be voted at the meeting by the proxy
holder in accordance with the instructions of the stockholder. If no specific
instructions are designated, the shares will be voted as recommended by the
Board of Directors.
A proxy may be revoked at any time before it is voted at the meeting. Any
stockholder who attends the meeting and wishes to vote in person may revoke his
or her proxy at that time. Otherwise, revocation of a proxy must be mailed to
the Corporate Secretary of the Company at P. O. Box 20, Boise, Idaho 83726 and
received prior to the meeting.
This solicitation is made on behalf of the Board of Directors and all expenses
of this solicitation will be paid by the Company. Initial solicitations will be
made by mail. However, to the extent necessary to assure sufficient
representation, some directors, officers or regular employees of the Company may
solicit proxies in person or by telephone, facsimile or telegram without special
compensation. To assist in solicitation of proxies, the Company has engaged
Georgeson and Company, Inc. for a fee estimated not to exceed $25,000 plus
reimbursement of expenses. In addition, arrangements have been made with
brokerage houses and other custodians to send proxies and proxy solicitation
material to their principals, and the Company will reimburse such brokerage
houses and custodians for their expenses in doing so.
Under Delaware law and the Company's Restated Certificate of Incorporation, if a
quorum is present at the meeting (i) the four nominees for election as directors
will be elected by a plurality of the votes cast in the election of directors;
(ii) proposals 2 and 3 must be approved by the affirmative vote of a majority of
the shares present in person or by proxy and entitled to vote on the matter; and
(iii) proposal 4 must be approved by the affirmative vote of a majority of the
shares entitled to vote thereon. In the election of directors, abstentions and
broker non-votes will have no effect. In the vote on any of the other matters,
abstentions and broker non-votes will be counted and will have the same effect
as a vote against any such matter.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF [ALBERTSON'S LOGO]
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The following table shows the persons (including any group deemed a "person"
under Section 13(d)(3) of the Securities Exchange Act of 1934) known to the
Company who beneficially own more than 5 percent of the Company's Common Stock.
It also shows beneficial ownership for each director, for each executive officer
named in the Summary Compensation Table and for the executive officers and
directors as a group.
SHARES BENEFICIALLY OWNED AND NATURE OF
BENEFICIAL OWNERSHIP AS OF MARCH 31, 1994 1
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AGGREGATE
SHARED SOLE SHARED AMOUNT
NAME AND ADDRESS SOLE VOTING VOTING INVESTMENT INVESTMENT BENEFICIALLY PERCENT OF
OF BENEFICIAL OWNER POWER POWER POWER POWER OWNED2 CLASS3
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Markus Stiftung4
Timmasper Weg
2353 Nortorf
Federal Republic of
Germany 29,152,800 -- 29,152,800 -- 29,152,800 11.50
Kathryn Albertson5
380 E. Parkcenter Blvd.
Boise, ID 83706 20,876,320 1,180,000 6 20,876,320 1,180,000 6 22,056,320 6 8.70
A. Gary Ames 3,200 1,800 3,200 1,800 5,000 +
John B. Carley 581,324 -- 580,400 7 -- 581,324 +
Paul I. Corddry -- 10,000 -- 10,000 10,000 +
John B. Fery 18,000 -- 18,000 -- 18,000 +
Clark A. Johnson 10,000 4,000 10,000 4,000 14,000 +
Charles D. Lein 200 14,600 200 14,600 15,000 +
Warren E. McCain 1,282,376 -- 1,281,452 7 -- 1,282,376 +
Gary G. Michael 242,924 -- 242,000 7 -- 242,924 +
J. B. Scott5 6,000,000 1,180,000 6 6,000,000 1,180,000 6 7,426,640 6 2.93
Will M. Storey 1,000 -- 1,000 -- 1,000 +
Steven D. Symms -- 1,000 -- 1,000 1,000 +
Allen R. Rowland 89,835 8 -- 89,696 7,8 -- 89,835 8 +
Ronald D. Walk 859 243,230 -- 7 243,230 244,089 +
All directors (including
nominees) and all
executive officers as a
group (26) 29,394,702 8 1,899,452 6 29,384,915 7,8 1,899,452 6 31,541,772 6,8 12.44
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+ Indicates that the percentage of shares beneficially owned does not exceed one
percent of the Company's outstanding Common Stock.
1 Beneficial ownership is determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934. Shares are considered to be "beneficially"
owned if the person has the sole or shared power to vote or direct the voting of
the securities or the sole or shared power to dispose of or direct the
disposition of the securities. A person is also considered to be the beneficial
owner of shares if that person has the right to acquire the beneficial ownership
of the shares within 60 days from March 31, 1994.
2 Each director and executive officer disclaims beneficial ownership of any
shares owned by his or her spouse, children or grandchildren and by trusts for
such persons, whether or not the director or officer is a trustee or co-trustee
thereof. These shares (totaling 260,042 for all directors and executive officers
as a group) are included in the column headed "Aggregate Amount Beneficially
Owned." Of these shares, 12,424 shares held as trustee or custodian are also
included in the columns headed "Sole Voting Power" and "Sole Investment Power."
1,180,000 shares discussed in footnote 6 are also included in the columns headed
"Shared Voting Power" and "Shared Investment Power."
3 The percentages shown include both the shares actually owned and those shares
that the person or group has the right to acquire within 60 days from March 31,
1994.
3
8
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4 According to a Schedule 13D filed with the Securities and Exchange Commission
on or about January 18, 1990, Mr. Theo Albrecht is also a beneficial owner of
these shares. Mr. Albrecht's address is the same as that of Markus Stiftung.
On February 15, 1980, the Company entered into an agreement with Theo Albrecht
Stiftung, the name of which was changed to Markus Stiftung on April 22, 1988,
relating to its ownership of the Company's voting securities. As amended on
April 11, 1984 and on September 25, 1989, this agreement provides that until
February 14, 1995 (subject to earlier termination under certain limited
circumstances), (i) Markus Stiftung shall not acquire or permit its affiliates
to acquire any additional shares of the Company's Common Stock or any other
voting securities of the Company if such acquisition would cause it or its
affiliates to own directly or indirectly more than 12 percent of the Company's
outstanding voting securities; provided that, if the number of outstanding
voting securities is reduced for any reason, including purchases by the Company
of its voting securities, Markus Stiftung shall not be required to dispose of
any of its holdings of voting securities even if such reduction in outstanding
voting securities results in Markus Stiftung owning in excess of 12 percent of
the outstanding voting securities, and (ii) the Company has a right of first
refusal with respect to the voting securities of the Company held by Markus
Stiftung if it should desire to dispose of such securities. This agreement also
restricts the manner in which the voting securities of the Company may be sold
by Markus Stiftung in the event the Company does not elect to exercise such
right of first refusal.
5 On December 31, 1979 the Company entered into an agreement with Kathryn
Albertson, providing for an orderly sale and purchase of the Company's Common
Stock held by Kathryn Albertson. The agreement with Kathryn Albertson provides
that in the event she proposes to sell or dispose of (other than through gift)
any of the Company's stock owned by her, she shall give the Company notice and
an opportunity to purchase such stock for a specified period at a price and upon
terms set forth in the notice. Should the Company decline to exercise its option
to purchase all of the stock offered for sale within the specified period,
Kathryn Albertson may sell her stock on terms and at a price equivalent to or
exceeding that offered to the Company within nine months.
The agreement does not deprive Kathryn Albertson of the privilege to make gifts
of stock during her lifetime, but her donees must, within a period not to exceed
one year following the date of a gift, grant to the Company an option to
purchase all of the stock received as a gift from her at a price that is
approximately 96 percent of the then market price. Should the Company not
exercise the option to purchase all of such stock within the specified option
period, the donee is entitled to hold that stock, deal with it and exercise all
rights of ownership thereof free from any provisions of the agreement.
Upon the death of Kathryn Albertson, the Company has an irrevocable and
exclusive option to purchase all of her stock at the time of death at a price
which is approximately 96 percent of the then market price. If the Company does
not exercise its option, the personal representative of the estate is obligated
to sell such stock through a secondary public offering, the expenses of which
are to be borne by the Company.
Except as summarized above, the agreement does not in any respect deprive
Kathryn Albertson of the rights of ownership of the stock owned by her,
including unrestricted voting rights and the right to receive and retain all
cash and stock dividends.
J. B. Scott holds a revocable power of attorney that enables him to vote any
shares held by Kathryn Albertson.
6 Includes 1,180,000 shares owned by the J. A. and Kathryn Albertson Foundation,
Inc., of which Kathryn Albertson and J. B. Scott are directors and officers.
Kathryn Albertson and J. B. Scott disclaim any beneficial ownership of these
shares.
7 Shares credited to the Employee Stock Ownership Plan accounts of the
individuals named and all executive officers as a group are not included in the
column headed "Sole Investment Power" since the shares cannot be sold. Such
shares are included in the column headed "Sole Voting Power" and in the column
headed "Aggregate Amount Beneficially Owned."
8 Includes 49,700 shares not held of record on March 31, 1994, but which could
have been acquired within 60 days thereafter under the Company's 1975 Stock
Option Plan or 1986 Nonqualified Stock Option Plan by all executive officers as
a group. Of these shares, 16,000 shares could have been acquired within 60 days
thereafter under the Company's 1986 Non-qualified Stock Option Plan by Allen R.
Rowland.
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(ALBERTSON'S LOGO)
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ELECTION OF DIRECTORS
(PROPOSAL 1)
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The Board of Directors is divided into three classes, each serving for a three
year term, with one-third of the directors in each class, and all the directors
in one class standing for election each year. Four directors presently serve in
each of the classes. This year four Class II directors are to be elected.
The Board of Directors has nominated the following candidates to stand for
election as Class II directors, all of whom are nominated for terms expiring in
1997: Kathryn Albertson, A. Gary Ames, John B. Carley and Paul I. Corddry.
Except as otherwise specified in any proxy, the proxies will be voted for the
election of all these nominees.
The Board of Directors is informed that each of the four nominees is willing to
serve as a director; however, if for any reason any of the nominees shall become
unavailable for election, the proxy will be voted as directed by the Board of
Directors. It is not anticipated that any nominee will be unavailable for
election.
All of the nominees are now directors of the Company and each of them has been
previously elected by the stockholders.
Information as to the nominees and as to each other director whose term will
continue after the 1994 Annual Meeting of Stockholders is given on pages 6-8.
Unless otherwise indicated, the nominees have been engaged in the same principal
occupation for the past five years. Directors' ages are as of March 31, 1994.
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NOMINEES FOR ELECTION AS CLASS II DIRECTORS
TERMS EXPIRING IN 1997
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KATHRYN ALBERTSON
Director
since 1958
Age 85
Owner of Kathryn Albertson Enterprises, real estate and other investments.
Prior to 1993, homemaker. Director of Alscott, Inc.
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A. GARY AMES
Director
since 1988
Age 49
President and Chief Executive Officer, U S WEST Communications, a
telecommunications company and a wholly-owned subsidiary of U S WEST, Inc. since
1990; President, Operations, U S WEST Communications, in 1989; President, Public
Policy, U S WEST Communications from 1988 to 1989; President and Chief Executive
Officer of Mountain Bell, a wholly-owned subsidiary of U S WEST, Inc. from 1987
to 1989. Executive Vice President and Chief Operating Officer of Mountain Bell
from 1986 to 1987. Mr. Ames is a director of U S WEST Communications, Donaldson
Co. and First Interstate Bank of Denver, a wholly-owned subsidiary of First
Interstate Bancorp. Chairman of the Grantor Trust Committee and member of the
Compensation and Nominating Committees.
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JOHN B. CARLEY
Director
since 1979
Age 60
President and Chief Operating Officer of the Company. Mr. Carley is a director
of Idaho Power Company. Member of the Nominating and Non-Employee Directors'
Deferred Compensation Committees.
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PAUL I. CORDDRY
Director
since 1987
Age 57
Retired. Formerly Senior Vice President, Europe, of H. J. Heinz Company, a
worldwide provider of processed food products and services from 1988 to 1992.
Senior Vice President of H. J. Heinz Company from 1986 to 1988. President of
Ore-Ida Foods, a wholly-owned subsidiary of H. J. Heinz Company, from 1977 to
1986. Member of the Audit and Grantor Trust Committees.
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CONTINUING CLASS III DIRECTORS (ALBERTSON'S LOGO)
TERMS EXPIRING IN 1995
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JOHN B. FERY
Director
since 1974
Age 64
Chairman of the Board and Chief Executive Officer of Boise Cascade Corporation,
a timber and paper products company. Mr. Fery is a director of Boise Cascade
Corporation, West One Bancorp, Hewlett-Packard Company and The Boeing Company.
Chairman of the Compensation Committee and member of the Executive and Grantor
Trust Committees.
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WARREN E. MCCAIN
Director
since 1973
Age 68
Chairman of the Executive Committee of the Board of Directors. Chairman of the
Board and Chief Executive Officer of the Company from 1976 to 1991. Mr. McCain
is a director of West One Bancorp, Portland General Corporation and Pope &
Talbot. Chairman of the Executive and Nominating Committees and member of the
Compensation and Non-Employee Directors' Deferred Compensation Committees.
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J. B. SCOTT
Director
since 1993
Age 40
Real estate and other investments. Grandson of Kathryn Albertson. Mr. Scott is a
director of Alscott, Inc. Member of the Audit Committee.
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WILL M. STOREY
Director
since 1992
Age 62
Executive Vice President and Chief Financial Officer, American President
Companies (APC), a provider of container transportation services. Vice Chairman
of Manville, Inc. from 1989 to 1990. Vice Chairman of Federated Department
Stores, Inc. from 1982 to 1988, and Executive Vice President of Boise Cascade
Corporation during a 19-year career with that company. Mr. Storey is a director
of APC, Manville, Inc., Riverwood International Corp. and T.I.S. Mortgage
Investment Company. Member of the Audit and Compensation Committees.
7
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CONTINUING CLASS I DIRECTORS
TERMS EXPIRING IN 1996
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CLARK A. JOHNSON
Director
since 1989
Age 62
Chairman of the Board and Chief Executive Officer of Pier 1 Imports, a retailer
of imported goods. President and Chief Executive Officer of Pier 1 Imports from
May 1985 to August 1988. Mr. Johnson is a director of Pier 1 Imports, Fuqua
Industries, Heritage Media Corporation, InterTan, Inc. and Anacomp, Inc. Member
of the Compensation, Nominating and Grantor Trust Committees.
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CHARLES D. LEIN
Director
since 1975
Age 52
President and Chief Operating Officer of Stuller Settings, Inc., a jewelry
manufacturing company since January 1994. Formerly Chairman of the Board,
President and Chief Executive Officer of Black Hills Jewelry Manufacturing Co.
from 1982 to 1993. President of The University of South Dakota from 1977 to 1982
and Dean of the College of Business, Boise State University, from 1973 to 1977.
Mr. Lein is a director of Stuller Settings, Inc. Chairman of the Audit Committee
and member of the Executive Committee.
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GARY G. MICHAEL
Director
since 1979
Age 53
Chairman of the Board and Chief Executive Officer of the Company. Vice Chairman
of the Board and Chief Financial and Corporate Development Officer of the
Company from 1984 to 1991. Mr. Michael is a member of the Board of Directors of
the Federal Reserve Bank of San Francisco and a Director of Questar Corporation.
Chairman of the Non-Employee Directors' Deferred Compensation Committee and
member of the Executive Committee.
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STEVEN D. SYMMS
Director
since 1993
Age 55
President of Symms, Lehn & Associates, Inc., a consulting firm, since January
1993. Elected United States Senator from the State of Idaho in 1980 and served
until January 1993. Vice President and Secretary of Boise Air Service, Inc.
since 1983. Mr. Symms is a director of Symms, Lehn & Associates, Inc., Boise Air
Service, Inc. and Symms Fruit Ranch, Inc. Member of the Audit Committee.
8
13
(ALBERTSON'S LOGO)
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CERTAIN TRANSACTIONS
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During the fiscal year ended February 3, 1994, a store lease was held by Kathryn
Albertson, a director of the Company and beneficial owner of 8.70 percent of the
Company's Common Stock, as landlord, and Albertson's, Inc., as tenant. A similar
store lease was held by Alscott, Inc., an Idaho corporation, as landlord, and
Albertson's, Inc., as tenant. Kathryn Albertson is President and a director of
Alscott, Inc., in which she has a 89.53 percent ownership interest. J. B. Scott,
a director of the Company, is Vice President and a director of Alscott, Inc., in
which Mr. Scott has a 10.47 percent ownership interest. The terms of the two
leases are for periods of 37 and 46 years with expiration dates occurring in
2007 and 2005. The total rentals paid by the Company under the leases to these
landlords during the fiscal year ended February 3, 1994, were $328,470.
John B. Fery, a director of the Company, is Chairman of the Board and Chief
Executive Officer of Boise Cascade Corporation. During the fiscal year ended
February 3, 1994, the Aviation Division of Boise Cascade provided fuel,
maintenance and various other services related to the operation of the Company's
aircraft, for which the Company paid Boise Cascade $2,765,687. In addition, the
Company paid Boise Cascade $148,405 for merchandise purchased from Boise
Cascade's Corrugated Container Division and Office Products Division during such
period.
Steven D. Symms, a director of the Company, is a director and officer of Symms
Fruit Ranch, Inc. During the fiscal year ended February 3, 1994, the Company
paid Symms Fruit Ranch $674,810 for food products purchased for resale in the
Company's stores. St. Chapelle Winery is a wholly-owned subsidiary of Symms
Fruit Ranch, Inc. During the fiscal year ended February 3, 1994, the Company
paid $1,972,419 to distributors for St. Chapelle wine purchased for resale in
the Company's stores.
Donald Carley, brother of John B. Carley, a director of the Company, is a
controlling stockholder of the Vendredi Company, a food brokerage company based
in San Diego, California. During the fiscal year ended February 3, 1994, the
Company paid the Vendredi Company $1,132,509 for merchandise supplied by that
firm to the Company for resale in the Company's stores.
Richard Ogle, son-in-law of Warren E. McCain, a director of the Company, is the
owner of The Office Environment Company, an office supply company. During the
fiscal year ended February 3, 1994, the Company paid $2,378,674 to The Office
Environment Company for office equipment and supplies.
Tim Reuling and his wife, the brother and sister-in-law of Michael F. Reuling,
Executive Vice President, Store Development of the Company, were the owners of
Trump Sales, a company selling general merchandise. During the fiscal year ended
February 3, 1994, the Company paid $142,712 for miscellaneous general
merchandise supplied by that firm to the Company for resale in the Company's
stores.
In the opinion of management, all of the foregoing transactions were fair and
reasonable and were entered into on terms not less favorable than could be
obtained in transactions with responsible third parties.
9
14
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COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
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The Board of Directors held four regular meetings and two special meetings
during the last full fiscal year of the Company. All incumbent directors
attended at least 75 percent of the total meetings of the Board of Directors and
the committees of which they were members, except Kathryn Albertson.
The Company has an Executive Committee, which is a standing committee of the
Board of Directors, presently consisting of four members who are Warren E.
McCain, Chairman, John B. Fery, Charles D. Lein and Gary G. Michael. There were
three meetings of the Executive Committee held during the last fiscal year. The
Executive Committee was established to exercise the authority of the Board of
Directors between meetings of the full Board subject to limitations under
Delaware law.
The Company has an Audit Committee, which is a standing committee of the Board
of Directors, presently consisting of five members who are Charles D. Lein,
Chairman, Paul I. Corddry, J. B. Scott, Will M. Storey and Steven D. Symms.
Three meetings of the Audit Committee were held during the last fiscal year. The
Audit Committee's responsibilities include: (i) reviewing the plan, scope and
results of the independent audit and reporting to the full Board whether
financial information is fairly presented and whether generally accepted
accounting principles are followed; (ii) monitoring the internal accounting and
financial functions of the Company to assure quality of staff and proper
internal controls; and (iii) investigating conflicts of interest, ethics and
compliance with laws and regulations.
The Company has a Compensation Committee, which is a standing committee of the
Board of Directors, presently consisting of five members who are John B. Fery,
Chairman, A. Gary Ames, Clark A. Johnson, Warren E. McCain and Will M. Storey.
Two meetings of the Compensation Committee were held during the last fiscal
year. The Compensation Committee is responsible for reviewing annual salaries
and bonuses paid to the elected officers of the Company and for selecting key
employees who are to receive stock option grants and determining the terms
thereof.
The Company has a Nominating Committee, which is a standing committee of the
Board of Directors, presently consisting of four members who are Warren E.
McCain, Chairman, A. Gary Ames, John B. Carley and Clark A. Johnson. There were
no meetings of the Nominating Committee held during the last fiscal year. The
Nominating Committee is responsible for selecting nominees to fill Board
vacancies and to replace retiring members of the Board and for selecting
nominees for membership on Board committees. The Nominating Committee reviews
possible nominees for membership on the Board of Directors, including any
nominees recommended in good faith by a registered stockholder with the consent
of the proposed nominee and makes recommendations concerning nominees to the
Board of Directors. Stockholders wishing to propose director candidates for
consideration by the Nominating Committee may do so by writing to the Corporate
Secretary of the Company, giving the candidate's name, biographical data and
qualifications. In addition, the Company's By-Laws permit stockholders to make
nominations for directors at a meeting of stockholders, but only if, among other
things, timely written notice of an intent to make such a nomination is given to
the Corporate Secretary of the Company. To be timely, such notice, except in
certain circumstances, must be received by the Company not less than 50 days nor
more than 75 days prior to the stockholders' meeting.
The Company has a Grantor Trust Committee, which is a special committee of the
Board of Directors, presently consisting of four members who are A. Gary Ames,
Chairman, Paul I. Corddry, John B. Fery and Clark A. Johnson, none of whom has a
financial interest in the deferred compensation plans and trusts established by
the Company for its executives. No meetings of the Grantor Trust Committee were
held during the last fiscal year. The Grantor Trust Committee was
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established to administer the Company's deferred compensation plans and pension
benefit makeup plan for its executives and the trusts established to protect the
benefits to be received under the deferred compensation plans and pension
benefit makeup plan. These plans and trusts are described more fully herein.
The Company has a Non-Employee Directors' Deferred Compensation Committee which
is a special committee created to administer and amend the Non-Employee
Directors' Deferred Compensation Plan. The committee presently consists of three
members who are Gary G. Michael, Chairman, John B. Carley and Warren E. McCain,
none of whom has a financial interest in this plan. The committee held no
meetings during the last fiscal year.
During the last fiscal year, the Special Option Committee was formed for the
purpose of deciding upon the timing for the exercise of the option to purchase
shares of the Company's Common Stock from the Estate of J. A. Albertson and the
terms of the financing of such a purchase. The Committee consisted of three
members, John B. Fery, Warren E. McCain and Gary G. Michael.
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DIRECTORS' FEES
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Directors who are employees of the Company do not receive additional
compensation as directors. Directors who are not employees receive directors'
fees of $26,400 per year plus $1,000 for each Board of Directors' and committee
meeting attended.
Certain non-employee directors may elect to defer payment of their directors'
fees into one of the deferred compensation plans for directors described in
footnote 1 to the Summary Compensation Table on page 12.
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COMPENSATION OF EXECUTIVE OFFICERS
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SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
ANNUAL AWARDS
COMPENSATION ------------
-------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND FISCAL SALARY1 BONUS1 COMPENSATION2 OPTIONS3 COMPENSATION4
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
------------------ ------ --------- -------- --------------- ------------ ------------
Gary G. Michael 1993 $637,577 $325,000 $22,000 0 $ 65,496
Chairman of the Board and Chief 1992 586,769 341,000 22,000 0 56,673
Executive Officer and a director 1991 530,154 174,000 22,000 80,000 *
John B. Carley 1993 570,385 290,000 22,000 0 67,944
President and Chief Operating 1992 534,231 305,250 22,000 0 59,100
Officer and a director 1991 505,077 159,000 22,000 80,000 *
Warren E. McCain5 1993 509,616 0 22,000 0 271,827
Chairman of the Executive 1992 500,000 0 22,000 0 240,912
Committee of the Board 1991 500,577 0 22,000 0 *
and a director
Ronald D. Walk 1993 257,125 118,125 -- 0 9,694
Senior Vice President 1992 239,846 112,500 -- 0 6,989
and Regional Manager 1991 199,962 48,000 -- 50,000 *
Allen R. Rowland 1993 257,125 105,000 -- 0 4,592
Senior Vice President 1992 239,846 87,500 -- 0 3,809
and Regional Manager 1991 199,923 48,000 -- 50,000 *
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1 Certain officers, including certain of the individuals named in the above
table, were entitled to defer up to 50 percent of the aggregate amount of their
salaries and bonuses and non-employee directors were entitled to defer up to 100
percent of their directors' fees pursuant to two substantially similar deferred
compensation plans for officers and directors approved by the Board of Directors
on December 5, 1983. A third plan, the 1990 Deferred Compensation Plan (1990
Plan) was approved by the Board of Directors on December 4, 1989, effective as
of January 1, 1990. Under the 1990 Plan, certain officers, including the
individuals named in the above table, and certain highly compensated employees
are entitled to defer up to 35 percent of their salaries, and the Compensation
Committee will defer, for "covered employees" as that term is defined in Section
162(m) of the Internal Revenue Code, that portion of the annual bonus which, in
the judgment of the Compensation Committee, would not be deductible by the
Company pursuant to the provisions of Section 162(m). The Company does not
expect that any amounts so deferred will be material in fiscal year 1994.
Officers with contracts under the two initial plans are permitted to make
deferrals under those plans and under the 1990 Plan.
Salaries, bonuses and fees deferred into these plans accrue interest until
benefits are completely distributed at the monthly Corporate Bond Yield Average
with respect to average corporations as determined from the Moody's Bond Record
published by Moody's Investor's Service, Inc. (Moody's Average), except when
benefits are paid upon termination of employment following a change in control,
death, disability prior to termination of employment (under the two initial
plans) or retirement ("Certain Events"). In the case of such Certain Events,
deferred amounts accrue interest at a rate equal to the Moody's Average plus 4
percent under the two initial plans or the Moody's Average plus 3 percent under
the 1990 Plan. A fourth plan, the Non-Employee Directors' Deferred Compensation
Plan was approved by the Board of Directors and by a special committee of the
Board consisting of three employee directors on December 4, 1989. This plan
permits non-employee directors to defer up to 100% of their directors' fees.
Interest is accrued until benefits are completely distributed at the Moody's
Average plus 3 percent in the case of Certain Events and at the Moody's Average
in all other cases.
The Company has purchased cost recovery life insurance to cover its obligations
under the two initial deferred compensation plans for officers and directors,
and the Company is the owner of these policies. The Company has also purchased
cost recovery life insurance to cover the obligations under the 1990 Plan and is
transferring ownership of these policies to the trustee of the grantor trust
established for the 1990 Plan (see discussion on page 13). The Company is
purchasing additional cost recovery life insurance to
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cover the obligations under the 1990 Plan and intends to transfer these policies
to the trustee of the grantor trust. If assumptions as to mortality, experience,
interest rates and other factors are realized, the Company or the trustee of the
grantor trust, as applicable, will recover from such policies an amount equal to
the benefit payments under these plans and the premium payments on the insurance
policies. The plans, except for the Non-Employee Directors' Deferred
Compensation Plan, are administered by the Grantor Trust Committee of the Board
of Directors. The Non-Employee Directors' Deferred Compensation Plan is
administered by the Non-Employee Directors' Deferred Compensation Committee, a
committee of the Board consisting of three employee directors.
Pursuant to the foregoing plans, the individuals named in the preceding table
have deferred the following amounts of salary paid or allocated to them for
services rendered during the fiscal year ended February 3, 1994: Mr. Michael,
$53,769; Mr. Walk, $86,372; and Mr. Rowland, $20,866. Pursuant to the foregoing
plans, the individuals named in the preceding table deferred the following
amounts of salary and/or bonus paid or allocated to them for services rendered
during the fiscal year ended January 28, 1993: Mr. Michael, $37,231; Mr. Carley,
$25,000; Mr. Walk, $71,077; and Mr. Rowland, $20,000. Pursuant to the foregoing
plans, the individuals named in the preceding table deferred the following
amounts of salary and/or bonus paid or allocated to them for services rendered
during the fiscal year ended January 30, 1992: Mr. Michael, $29,269; Mr. Carley,
$25,000; Mr. Walk, $65,491; and Mr. Rowland, $19,616. These amounts are included
in the columns for salary and/or bonus in the preceding table.
In order to secure the compensation deferred and interest accrued thereon under
the deferred compensation plans already described, except for the Non-Employee
Directors' Deferred Compensation Plan, the Company has established the Executive
Deferred Compensation Trust and the 1990 Deferred Compensation Trust ("Deferred
Compensation Trusts"), which are grantor trusts within the meaning of the
Internal Revenue Code, Section 671. The Company has or intends to contribute
cash, real estate, insurance policies or other property into the Deferred
Compensation Trusts to provide for payment of benefits under the deferred
compensation plans in the event of a change in control of the Company. The
trusts are administered by the Grantor Trust Committee of the Board of
Directors. These trusts become irrevocable upon the occurrence of certain events
described in each trust as constituting a "potential change in control," and the
Company is required to make certain contributions of cash to each trust upon the
occurrence of certain other events described in each trust as constituting a
"change in control."
The individuals named in the table on page 12 are eligible, along with all
"eligible" employees (those who complete at least 1,000 hours of service during
the twelve-month period commencing with their date of hire or with any
anniversary thereof, are age 21 or over and (with certain exceptions) are not
covered by a collective bargaining agreement), to defer a portion of their
salary into the Albertson's Tax Deferred Savings Plan ("Savings Plan") which is
a salary deferral plan pursuant to Section 401(k) of the Internal Revenue Code.
During the fiscal year ended February 3, 1994, the individuals named in the
table on page 12 deferred the following amounts into the Savings Plan: Mr.
Michael, $5,833; Mr. Walk, $9,258; and Mr. Rowland, $9,290. During the fiscal
year ended January 28, 1993, the individuals named in the preceding table
deferred the following amounts into the Savings Plan: Mr. Michael, $5,489; Mr.
Walk, $9,448; and Mr. Rowland, $9,574. During the fiscal year ended January 30,
1992, the individuals named in the preceding table deferred the following
amounts into the Savings Plan: Mr. Michael, $835; Mr. Walk, $8,475; and Mr.
Rowland, $8,475. All amounts deferred into the Savings Plan by these individuals
are included in the column for salary in the preceding table.
2 This column includes $22,000 in fiscal years 1993, 1992 and 1991 for each of
Gary G. Michael, John B. Carley and Warren E. McCain, which is a fixed annual
amount, in addition to salary and bonus contributed by the Company and deferred
into the deferred compensation plans described in footnote 1. This column also
includes the value of noncash personal benefits, deemed additional compensation
for income tax purposes. Amounts which did not exceed the lesser of $50,000 or
10% of compensation for any of the named executives are not included.
3 The Company has granted options to its employees for the purchase of the
Company's Common Stock pursuant to three stock option plans: (i) the 1975
Employees' Stock Option Plan ("1975 Plan"), which was adopted by the
stockholders in May 1975 and which expired by its terms on April 6, 1985; (ii)
the 1982 Incentive Stock Option Plan ("1982 Plan"), which was adopted by the
stockholders in May 1982 and which expired by its terms on February 29, 1992;
and (iii) the 1986 Nonqualified Stock Option Plan ("1986 Plan"), which was
adopted by the stockholders in May 1986 and will expire in 1996. The 1975 Plan
and the 1982 Plan provided and the 1986 Plan provides for the issuance of stock
options from time to time to key employees of the Company, including executive
officers, designated by the Compensation Committee of the Board as holding
positions of substantial responsibility, demonstrating special capabilities and
contributing significantly to fiscal performance. All three stock option plans
and related agreements contain provisions that, in certain circumstances, may
cause the date of exercise for options granted thereunder to accelerate in the
event there is a change in control of
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the Company. No stock options were granted to the individuals named in the
preceding table during the fiscal year ended February 3, 1994.
4 This column consists of the "above-market" (as such term is defined in Item
402(b)(2)(iii)(C), Instruction 3, of Regulation S-K of the Securities and
Exchange Commission) portion of the interest credited to the account of each of
the named executives under the deferred compensation plans described in footnote
1. The "above-market" portion of the interest when benefits are paid following
the occurrence of "Certain Events," as that term is defined in footnote 1, is
set forth in the preceding table since it is the larger amount of interest
credited.
5 Effective February 1, 1991, Warren E. McCain entered into an employment
contract with the Company as Chairman of the Executive Committee of the Board of
Directors for an annual salary of $500,000 for a period of five years, as well
as all perquisites provided by the Company to senior executive officers and the
annual $22,000 contribution to deferred compensation for the five year period.
No bonus is to be paid for services rendered during the five year period.
* Under the transition rules of the Securities and Exchange Commission, no
disclosure is required for fiscal year 1991.
- --------------------------------------------------------------------------------
STOCK OPTION AND YEAR-END VALUE TABLE
AGGREGATED STOCK OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END STOCK OPTION VALUES
- --------------------------------------------------------------------------------
NUMBER OF SECURITIES VALUE+ OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL YEAR-END OPTIONS AT FISCAL YEAR-END
--------------------------- ---------------------------
SHARES ACQUIRED VALUE+
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) ($)
---- --------------- -------- --------------------------- ---------------------------
Gary G. Michael 0 $ 0 0 240,000 $ 0 $2,780,000
Chairman of the Board and
Chief Executive Officer and
a director
John B. Carley 0 0 0 240,000 0 2,780,000
President and Chief
Operating Officer and a
director
Warren E. McCain 0 0 130,000 0 1,649,375 0
Chairman of the Executive
Committee of the Board and a
director
Ronald D. Walk 32,000 816,000 0 50,000 0 468,750
Senior Vice President and
Regional Manager
Allen R. Rowland 0 0 16,000 82,000 372,749 1,214,248
Senior Vice President and
Regional Manager
+ The dollar values are calculated by determining the difference between the
closing price on the composite tape for the Company's Common Stock at exercise
or at fiscal year-end (February 3, 1994) for exercisable and unexercisable
options and the exercise price of the options.
RETIREMENT BENEFITS
The Company has adopted two defined benefit pension plans that cover certain
salaried and hourly-paid employees of the Company, both of which are governed by
the Employee Retirement Income Security Act of 1974 ("ERISA"). One plan covers
eligible salaried employees of the Company and the other plan covers eligible
hourly-paid employees. "Eligible" employees are those who complete at least
1,000 hours of ser-
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vice during the twelve-month period commencing with their date of hire or with
any anniversary thereof, are age 21 or over and (with certain exceptions) are
not covered by a collective bargaining agreement. The amount of benefit paid
under the plans depends upon the credited years of service and the compensation
level of the participant. The compensation used in determining the retirement
benefit for the individuals named in the Summary Compensation Table on page 12
consists of the employee's salary and deferred compensation and does not include
bonus and noncash compensation.
The following table gives the estimated annual benefit payable upon retirement
for participants in the salaried pension plan including benefits payable under
the Makeup Plan discussed below. The estimates assume normal retirement at age
62 for employees at specified compensation levels (based on average earnings for
the highest five consecutive years of service out of the last ten years) with
various years of service with the Company. The amounts presented in the pension
table are single life annuities notwithstanding the availability of joint and
survivor annuity provisions. The pension benefit is not subject to any deduction
for social security or other offset amounts.
PENSION PLAN TABLE
- ------------------------------------------------------------------------------------------
COMPENSATION YEARS OF SERVICE
LEVEL 15 20 25 30 35 40
- ------------------------------------------------------------------------------------------
$100,000 $ 20,250 $ 27,000 $ 33,750 $ 40,500 $ 47,250 $ 54,000
200,000 40,500 54,000 67,500 81,000 94,500 108,000
300,000 60,750 81,000 101,250 121,500 141,750 162,000
400,000 81,000 108,000 135,000 162,000 189,000 216,000
500,000 101,250 135,000 168,750 202,500 236,250 270,000
600,000 121,500 162,000 202,500 243,000 283,500 324,000
700,000 141,750 189,000 236,250 283,500 330,750 378,000
800,000 162,000 216,000 270,000 324,000 378,000 432,000
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As of February 3, 1994, the years of service credited to the executive officers
listed in the Summary Compensation Table on page 12 were: Mr. Michael, 28; Mr.
Carley, 40; Mr. McCain, 42; Mr. Walk, 32; and Mr. Rowland, 23. Also as of such
date, the covered compensation for the last fiscal year of these executive
officers under the Company's pension plans was: Mr. Michael, $659,115; Mr.
Carley, $592,000; Mr. McCain, $531,616; Mr. Walk, $256,779; and Mr. Rowland,
$256,779.
Retirement benefits otherwise available to key executives under the Company's
qualified defined benefit plans have been limited by the effects of the Internal
Revenue Code of 1986, as recently amended (the "Code"). For example, the maximum
annual benefit under a qualified pension plan under the Code is limited to
$118,800 (subject to certain exceptions). The Company has complied with this
limitation to assure continuing qualification of its plans. To offset the loss
of retirement benefits associated with tax law limitations, the Company adopted
a nonqualified "makeup" benefit plan ("Makeup Plan") effective June 1, 1988.
Benefits are provided under this plan for key employees equal to those that
would otherwise be lost by such plan qualification limitations. The Makeup Plan
was amended effective January 1, 1990 to extend certain benefits to participants
in the 1990 Deferred Compensation Plan. All amounts for any benefits accrued
under the Makeup Plan are included in the figures in the table above.
In order to protect the benefits payable under the Makeup Plan, the Company has
established the Executive Pension Makeup Trust ("Makeup Trust"), which is a
grantor trust that is substantially similar to the Deferred Compensation
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20
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Trusts described in footnote 1 to the Summary Compensation Table on page 12. The
Makeup Trust is administered by the Grantor Trust Committee of the Board of
Directors as are the Deferred Compensation Trusts.
COMPENSATION COMMITTEE/EXECUTIVE COMMITTEE REPORT
OVERVIEW
For the fiscal year ended February 3, 1994, the Compensation Committee
established the annual salaries of the Chairman and Chief Executive Officer
("CEO") and the President and Chief Operating Officer ("President") and
determined that the annual salaries of the Executive Vice President, Store
Development and the Executive Vice President, Administration and General Counsel
("Executive Vice Presidents") recommended by the CEO were reasonable based upon
its analysis of the factors discussed below and approved those annual salaries.
The annual salaries of the other executive officers were determined by the CEO
with the assistance of the Executive Committee. The Compensation Committee
determined that the bonus policy for all officers of the Company recommended by
the CEO and the Executive Committee was reasonable based upon its analysis of
the factors discussed below, approved the bonus policy and determined the amount
of the annual bonuses paid for the fiscal year. The Compensation Committee
approved all grants of stock options during the fiscal year, as recommended by
the CEO; however, no options were granted to the five executives named in the
Summary Compensation Table. All decisions of the Compensation Committee and the
Executive Committee were reported to the Board of Directors.
EXECUTIVE OFFICER COMPENSATION POLICY
The compensation policy of the Compensation Committee and of the Executive
Committee applicable to executive officers is to set compensation so as to
attract and retain the highest quality people who will contribute to the
long-term performance and long-term growth of the Company. To this end, annual
compensation for executive officers (except for the Chairman of the Executive
Committee) consists of an annual salary which is not directly dependent upon the
Company's performance in that fiscal year and an annual bonus which is paid
after the end of the fiscal year and which is computed as a percentage of annual
salary. As discussed in more detail below, the annual bonus is directly
dependent upon the Company's performance in the completed fiscal year. It is the
Company's long-standing policy that the annual bonus make up a substantial
portion of executive officer compensation.
In accordance with this overall policy, the Company provides retirement benefits
to encourage executive officers to stay with the Company. To this end, the
executive officers participate in the defined benefit pension plan that covers
eligible salaried employees of the Company as well as in the non-qualified
"makeup" benefit plan which provides benefits for key employees equal to those
that would otherwise be lost by certain plan qualification limitations imposed
by the Internal Revenue Code of 1986, as amended (the "Code"). Both of these
plans are described under the heading "Retirement Benefits." For each of the
CEO, President and Chairman of the Executive Committee, the Company has agreed
to contribute $22,000 for the fiscal year, in lieu of salary, to the deferred
compensation plans established by the Company which are described in footnote 1
to the Summary Compensation Table. The executive officers are also eligible to
contribute amounts from their annual salary into the Company-wide 401(k) plan
and/or the deferred compensation plans described in footnote 1 to the Summary
Compensation Table.
It is not anticipated that the remuneration paid to executive officers during
the next fiscal year will exceed the deductibility limit under Section 162(m) of
the Code in a material amount unless the Company's sales and earnings are
exceedingly high which would result in a larger amount of annual bonus paid as a
percentage of annual salary. If, however, remuneration payable to an executive
officer who is also a "covered employee" as that term is defined in Section
162(m) would exceed the deductibility limit under Section 162(m) in fiscal year
1994, then the Compensation Committee will defer under the 1990 Deferred
Compensation Plan which is described in footnote 1 to the Summary Compensa-
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tion Table (the "1990 Plan") that portion of the annual bonus which, in the
judgment of the Compensation Committee, would not be deductible by the Company
pursuant to the provisions of Section 162(m). Such deferred amounts will be paid
to the affected executive officers pursuant to the terms of the 1990 Plan upon
termination or retirement in years when it is anticipated that such amounts
would be deductible by the Company. The Compensation Committee will continue to
monitor this issue in future years.
EXECUTIVE OFFICER COMPENSATION
Executive officer compensation (except the compensation for the Chairman of the
Executive Committee) consists of two annual components: (i) an annual salary
which is determined upon the basis of a number of factors, only one of which is
the Company's overall performance in prior fiscal years and (ii) an annual bonus
which is determined solely on the basis of the Company's performance during the
fiscal year; and one long-term component: stock options, the value of which is
directly dependent upon the Company's long-term performance.
Annual Salaries -- Compensation Committee
In determining the annual salaries (including increases) for the CEO, the
President and the Executive Vice Presidents for the last fiscal year, the
Compensation Committee considered a number of factors. These factors included
the experience and responsibilities of the executive officers, the Company's
overall performance in prior fiscal years and the role of the executive officers
in achieving such performance. The consideration of overall performance was not
based on specific measures of performance. The Compensation Committee did not,
however, give any specific weight to these factors in determining the annual
salary component of compensation. For background purposes only, and not to
establish specific target compensation levels, the Compensation Committee also
reviewed a study of senior executive compensation in the retail grocery and
distribution industry prepared by an outside consultant, as well as a
wholesaler/ retailer comparison survey prepared by a third party. One of the
third-party comparison surveys included three of the seven companies in the
Standard & Poor's Retail Store-Food Chains Index used in the Performance Graph
and the other survey included five of the seven companies. The annual salary of
the Chairman of the Executive Committee was established pursuant to an
employment agreement which is discussed in footnote 5 to the Summary
Compensation Table. The Chairman of the Executive Committee does not receive a
bonus and is not eligible to be granted stock options.
Annual Salaries -- Executive Committee
In determining the annual salary structure for the other executive officers for
the last fiscal year, the Executive Committee considered the recommendations of
the CEO as well as factors similar to those set forth above. The Executive
Committee did not give any specific weight to any of these factors in
determining the annual salary component of compensation.
Annual Bonus -- Compensation Committee and Executive Committee
The bonus policy approved by the Compensation Committee and by the Executive
Committee set forth a scale of percentages of annual salary to be paid if
certain Company-wide sales volume increases over the prior fiscal year and
Company-wide earnings per share increases over the prior fiscal year were
achieved by the Company. For the Senior Vice Presidents and Regional Managers, a
significant portion (approximately 40%) of their annual bonus determination was
based on performance goals for each of their regions of responsibility
consisting of a sales volume goal and an earnings goal which, in each case,
required improved performance compared to the prior fiscal year. The remainder
of their annual bonus determination was based on achievement of the Company-wide
sales volume increases and Company-wide earnings per share increases. In
addition, the percentage of annual salary to be paid as annual bonus increased
for the more senior officers in recognition of the leadership roles of the
senior officers.
The Compensation Committee established the annual bonuses after considering the
sales vol-
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ume increases and the earnings per share increases that were achieved, and, for
the Senior Vice Presidents and Regional Managers, the regional sales volume
increases and earnings increases that were achieved. Accordingly, the annual
bonuses of the CEO and President were set at 50% of their current annual salary.
The Chairman of the Executive Committee does not receive an annual bonus as set
forth in the employment agreement discussed in footnote 5 to the Summary
Compensation Table. The annual bonuses of the Senior Vice Presidents and
Regional Managers whose compensation is disclosed in the Summary Compensation
Table were set at 40-45% of such executives' current annual salary.
Stock Options -- Compensation Committee
Stock options are granted from time to time by the Compensation Committee to
certain employees of the Company, including executive officers. Stock options
are granted by the Compensation Committee to attract and retain the best
available personnel for positions of substantial responsibility, provide
additional incentive to employees and thus promote the success of the business
of the Company. Criteria used by the Compensation Committee in making stock
option grants include the potential for a person in the employee's position to
make a significant contribution to the Company's performance; the employee's
past performance; the employee's length of service with the Company; an
evaluation of the employee's potential for advancement; and factors bearing on
the desirability of encouraging continuance of the employee's employment with
the Company. The Committee also considers the amount and terms of previous
option grants when determining the grant of options. Based on these factors, the
Compensation Committee determined that the recommendations received from the CEO
of those employees to whom it would be appropriate to grant stock options were
reasonable and granted those stock options. No stock options were granted during
the last fiscal year to the five executive officers named in the Summary
Compensation Table. The primary factor involved in this determination was that
each of these executives has previously been granted options as set forth in the
table on page 14.
Compensation of the CEO -- Compensation Committee
The compensation of Gary G. Michael, Chairman of the Board and Chief Executive
Officer, consists of the same elements as for other executive officers, which
are annual salary, annual bonus based upon the performance of the Company during
the fiscal year, retirement programs, optional deferrals of annual salary into
the 401(k) plan or the deferred compensation plans discussed herein and stock
options.
Mr. Michael's annual salary was not based upon specific measures of the
Company's performance during the fiscal year. His annual salary determination
(including the increase) was based on the Compensation Committee's evaluation of
his performance during the prior fiscal year which included the financial
results reflected in the Performance Graph set forth on page 20 of this Proxy
Statement and nonfinancial factors including strategic planning for the future
of the Company, as well as the factors discussed above under the heading "Annual
Salaries -- Compensation Committee." His bonus was based upon the achievement of
the specific Company-wide sales volume increases and earnings per share
increases discussed above under the heading "Annual Bonus -- Compensation
Committee and Executive Committee." His bonus was 50% of his current annual
salary. Mr. Michael was not granted a stock option during the fiscal year.
COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS
John B. Fery, Clark A. Johnson*
Chairman* Warren E. McCain
A. Gary Ames Will M. Storey
EXECUTIVE COMMITTEE OF THE BOARD OF DIRECTORS
Warren E. McCain, Charles D. Lein**
Chairman Gary G. Michael**
John B. Fery
*John B. Fery and Clark A. Johnson were each appointed to the Compensation
Committee on May 28, 1993 and, therefore, did not participate in
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the decisions described in this Compensation Committee/Executive Committee
Report except for the decision as to the annual bonuses to be paid pursuant to
the bonus policy and the grant of stock options.
**Charles D. Lein and Gary G. Michael were each appointed to the Executive
Committee on May 28, 1993 and, therefore, did not participate in the decisions
described in this Compensation Committee/Executive Committee Report.
COMPENSATION COMMITTEE AND
EXECUTIVE COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
The members of the Compensation Committee are John B. Fery, Chairman, A. Gary
Ames, Clark A. Johnson, Warren E. McCain and Will M. Storey. The members of the
Executive Committee are Warren E. McCain, Chairman, John B. Fery, Charles D.
Lein and Gary G. Michael.
John B. Fery has served on the Compensation Committee since May 28, 1993 and on
the Executive Committee since 1988. During the fiscal year ended February 3,
1994, the Aviation Division of Boise Cascade provided fuel, maintenance and
various other services related to the operation of the Company's aircraft, for
which the Company paid Boise Cascade $2,765,687. In addition, the Company paid
Boise Cascade $148,405 for merchandise purchased from Boise Cascade's Corrugated
Container Division and Office Products Division during such period.
Warren E. McCain, Chairman of the Executive Committee of the Board of Directors
and formerly the Chairman of the Board and Chief Executive Officer of the
Company, has served on the Compensation Committee since May 22, 1992 and on the
Executive Committee since 1988. Since February 1991, Mr. McCain has been paid a
fixed salary of $500,000 a year as established in the employment agreement
described in footnote 5 to the Summary Compensation Table and has not been
eligible to receive a bonus or a stock option.
Gary G. Michael, Chairman of the Board and Chief Executive Officer, has served
on the Executive Committee since May 28, 1993.
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PERFORMANCE GRAPH
The following graph provides a comparison of the five-year cumulative total
return* for the Standard & Poor's 500 Index, the Standard & Poor's Retail
Store-Food Chains Index and the Company.
Measurement Period S & P Retail Store-
(Fiscal Year Covered) Albertson's Inc. S & P 500 Food Chains Index
January
1989 100 100 100
1990 126 114 117
1991 190 124 146
1992 198 152 142
1993 246 168 181
1994 274 190 175
* $100 invested on January 31, 1989 in stock or index including reinvestment of
dividends. Fiscal year ending January 31.
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RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL 2) [ALBERTSON'S LOGO]
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Upon the recommendation of its Audit Committee, the Board of Directors has
reappointed Deloitte & Touche as independent auditors for the fiscal year ending
February 2, 1995, and is requesting ratification by the stockholders for such
reappointment. Deloitte & Touche has audited the financial statements of the
Company for each fiscal year since 1967.
In the event this proposal is defeated, the adverse vote will be considered as a
direction to the Board of Directors to select other auditors for the next fiscal
year. However, because of the difficulty and expense of making any substitution
of auditors after the beginning of a fiscal year, it is contemplated that the
appointment for the 1994 fiscal year will be permitted to stand unless the Board
of Directors finds other reasons for making a change.
Services to be performed by Deloitte & Touche for the 1994 fiscal year will
include, among other things, audit of annual financial statements, limited
reviews of quarterly financial information and consultations in connection with
various financial reporting, accounting and income tax matters. Representatives
of Deloitte & Touche will attend the Annual Meeting and will have an opportunity
to make a statement, if they desire to do so, and to respond to appropriate
questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 2.
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STOCKHOLDER PROPOSAL
(PROPOSAL 3)
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A stockholder has advised the Company that he intends to present the following
resolution at the Annual Meeting. (The name, address and number of shares owned
by such stockholder will be provided upon request to the Secretary of the
Company.) In accordance with applicable proxy regulations, the proposed
resolution and supporting statement, for which the Board of Directors and the
Company accept no responsibility, are set forth below.
STOCKHOLDER RESOLUTION
BE IT RESOLVED: That Albertson's stockholders urge that the Board of Directors
take the necessary steps, in compliance with Delaware law, to declassify the
Board of Directors for the purpose of director elections. The Board
declassification shall be completed in a manner that does not affect the
unexpired terms of directors previously elected.
SUPPORTING STATEMENT
The Board of Directors of Albertson's is divided into three classes of directors
serving staggered three-year terms. This means that if shareholders wanted to
replace the board, it would take three years and three separate votes.
The general purpose of this structure is to provide continuity as well as to
prevent takeovers.
As an anti-takeover device, a staggered board is unneeded. Albertson's is a
Delaware company and enjoys nearly iron-clad protection from hostile bidders
through a number of state laws and court rulings.
Providing continuity is a nice way of saying that it reduces the number of
directors that could be defeated in an election. The ability to elect directors
is the single most important power of the shareholder vote. Shareholders should
be able to review all board candidates at every annual meeting.
For example, staggered boards retard shareholders from replacing current
directors with those concerned with Albertson's failure to integrate its Board
and executive management teams with women or minorities. Here are some concerns
at Albertson's:
* On Tuesday, November 23, 1993, Albertson's announced it settled a class action
lawsuit alleg-
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ing gender and race discrimination for $29.5 million.
* In 1991, the EEOC charged Albertson's with sex discrimination. The corporation
agreed to pay $725,000 and revise its employment procedures.
* In 1986, the EEOC cited Albertson's for engaging in employment practices which
kept women in low-level jobs. At that time, women represented less than 2% of
Albertson's store directors, but did and still do represent over 75% of our
customers.
Discrimination charges against Albertson's are not limited to employees.
Lawsuits filed by female customers of Albertson's stores in Clearwater and
Pinellas, Florida, and Clarkston, Washington, and Lewiston, Idaho, have accused
Albertson's of subjecting them to racial slurs, threats and civil rights
violations.
The costs of these lawsuits go beyond the litigation expenses and potential
damages that could run into the hundreds of millions. If the company is in fact
discriminating against female and minority employees, then as shareholders, we
will suffer due to declining productivity. Similarly, if female and minority
customers feel uncomfortable in Albertson's stores, we will lose valuable
business.
The Board of Directors, no matter how well intentioned, may have difficulty
identifying and rooting out sources of discrimination because the Board of
Directors consists almost entirely of white males. There are no people of color
on the Board or in the executive suites.
The Board of Directors has had seven years since the first EEOC charge to
address these problems. While other major corporations have begun to diversify
the top ranks of management, the Albertson's Board has been unwilling or unable
to locate qualified female and minority candidates.
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BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
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Your Board of Directors recommends a vote AGAINST this proposal for the
following reasons:
Your Board of Directors believes that a classified board continues to serve the
Company, you the stockholders and those with whom the Company does business by
permitting all to rely on the consistency and continuity of corporate policy. At
the same time, annual elections, in which a third of the board is elected each
year, offer stockholders a regular opportunity to renew and reinvigorate
corporate decision-making while maintaining the basic integrity of corporate
policy year-to-year for the benefit of all who rely on it.
A system of classified directors also benefits stockholders by making corporate
takeovers by proxy contest more difficult. Since only one-third of the Company's
directorships are filled at any annual meeting of stockholders, it is impossible
to elect an entire new board or even a majority of the board at a single
meeting. (Contrary to the supporting statement offered for this proposal,
control of the board can be changed at two annual meetings held one year apart,
and the entire board can be replaced in the course of three annual meetings held
just two years apart.) Incumbent directors always represent a majority of the
board and are in a position to protect the interests of all stockholders.
The stockholders of the Company adopted the present system of classified
directors at the 1980 Annual Meeting of Stockholders by a margin of 77% of the
outstanding shares in favor, 7% of the outstanding shares against and 3% of the
outstanding shares abstaining. More than half of all Fortune 500 companies
currently have a system of classified directors. Statistics compiled by the
Investor Responsibility Research Center, Inc. show that stockholders of public
companies have strongly supported the use of classified boards.
This stockholder proposal, like the stockholder proposal that follows, was
submitted to the Company by a member of the International Brotherhood of
Teamsters (the "International"), which is conducting a campaign this year
against the
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27
(ALBERTSON'S LOGO)
- --------------------------------------------------------------------------------
Company and several other corporations. The Company is regularly engaged in
negotiating labor agreements with various Teamster local unions, and management
believes this proposal reflects an attempt by the International to gain leverage
over the Company for use in labor negotiations with the Company.
Your Board of Directors is committed to providing equal opportunities for
employment, development and advancement for all of the Company's employees, with
an emphasis on personal and career development. The Company has in fact made
steady strides in recent years in advancing women and minorities to managerial
positions. Although this stockholder proposal does not address these issues, the
statement in support of this proposal does. The proposal itself addresses the
mechanics of electing directors, which your Board of Directors has addressed in
this statement.
FOR THE FOREGOING REASONS, YOUR BOARD OF DIRECTORS BELIEVES THAT THIS PROPOSAL
IS NOT IN THE BEST INTERESTS OF THE COMPANY AND UNANIMOUSLY RECOMMENDS THAT YOU
VOTE AGAINST THIS PROPOSAL.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSAL
(PROPOSAL 4)
- --------------------------------------------------------------------------------
A stockholder has advised the Company that he intends to present the following
resolution at the Annual Meeting. (The name, address and number of shares owned
by such stockholder will be provided upon request to the Secretary of the
Company.) In accordance with applicable proxy regulations, the proposed
resolution and supporting statement, for which the Board of Directors and the
Company accept no responsibility, are set forth below.
STOCKHOLDER RESOLUTION
WHEREAS, the shareholders of the Company desire to vote by secret ballot,
THEREFORE, BE IT RESOLVED that Article II, Section 10 of the Albertson's, Inc.
By-Laws be amended by adding the following paragraph:
Except as otherwise provided by law, only persons in whose names shares
entitled to vote stand on the stock records of the Corporation on the
record date for determining the stockholders entitled to vote at every
meeting of the stockholders shall be entitled to vote at such meeting.
Shares standing in the names of two or more persons shall be voted or
represented in accordance with the determination of the majority of such
persons, or, if only one of such persons is present in person or
represented by proxy, such person shall have the right to vote such shares
and such shares shall be deemed to be represented for the purpose of
determining a quorum. Every person entitled to vote or execute consents
shall have the right to do so either in person or by an agent or agents
authorized by a written proxy executed by such person or his duly
authorized agent, which proxy shall be filed with the Secretary of the
Corporation at or before the meeting at which it is to be used. A
shareholder vote, whether in person or by proxy, shall be conducted by a
secret ballot vote. Said proxy so appointed need not be a stockholder.
SUPPORTING STATEMENT
Secret ballot voting is a basic part of true democracy. Federal and State laws
require secret ballot elections for public offices and labor union offices.
Shareholders deserve the same right.
Many shareholders are also customers or employees of Albertson's, Inc. Many
shareholders do business with various firms connected to incumbent directors.
While I am unaware of any threats of retaliation, fears of retaliation should
not even be in the back of a shareholder's mind when he or she decides how to
vote.
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The confidentiality policies at Sears, Baxter International, Weyerhaeuser,
General Signal, Unisys and W.R. Grace all now provide confidentiality during
proxy contests. Most of these used to have a policy like Albertson's, but
modified it after shareholders objected. At Avon, Lockheed, and USX,
shareholders in 1990 enacted confidential voting over management opposition. At
National Intergroup, management tried to get shareholders to accept limited
confidentiality, but 69.9 percent of shares voted instead in favor of full
confidentiality. Confidential voting at various companies has been backed by
TIAA-CREF (the nation's largest pension fund), California and New York City
pension funds, United Shareholders Association and others. A Business Week
editorial in 1992 also endorsed confidential voting.
Many shareholders think confidentiality can be assured by holding stock in a
street or nominee name. This is not the case; some brokers or nominees reveal
their customers' votes. Moreover, a shareholder who owns stock in a street or
nominee name is giving up important legal rights given only to shareholders of
record, such as access to corporate records.
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BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
- --------------------------------------------------------------------------------
Your Board of Directors recommends a vote AGAINST this proposal for the
following reasons:
Your Board of Directors believes that a secret ballot requirement is unnecessary
in view of existing safeguards under the Company's present By-Laws. Stockholders
already have the option of voting anonymously by holding their shares in the
name of a banker, broker or other nominee. For any stockholder interested in
anonymity, this is a more direct and less costly method of providing
confidentiality than mandating a system of secret ballots for all stockholders.
Moreover, the Board believes that the existing proxy solicitation process has
served the Company's stockholders fairly for many years and that the present
process is cost-effective and represents prudent management which is entirely
consistent with high business and ethical standards.
Further, each year many stockholders rely on the Company's proxy card to voice
their individual concerns to the Company in a simple, convenient and cost-free
manner. Your Board of Directors is, of course, opposed to any measure that would
discourage stockholder communication with the Company. Therefore, and especially
in view of the existing options available to stockholders who desire anonymity,
the Board of Directors believes that secret ballot voting would unnecessarily
deny stockholders an efficient and effective means of communicating with the
Company without offering the Company and all stockholders offsetting benefits in
return.
In addition, the proposal is drafted in a flawed and unworkable manner. Since
what is being proposed is an amendment to the Company's By-Laws, the procedure
to be used for secret ballot voting should be specified in the amendment. The
proposal is so vague as to be extremely difficult, if not impossible, to
implement. This is certainly not the proper way to amend the Company's governing
documents.
Like the stockholder proposal above, this stockholder proposal was submitted to
the Company by a member of the International Brotherhood of Teamsters (the
"International"), which is conducting a campaign this year against the Company
and several other corporations. The Company is regularly engaged in negotiating
labor agreements with various Teamster local unions, and management believes
this proposal reflects an attempt by the International to gain leverage over the
Company for use in labor negotiations with the Company.
FOR THE FOREGOING REASONS, YOUR BOARD OF DIRECTORS BELIEVES THAT THIS PROPOSAL
IS NOT IN THE BEST INTERESTS OF THE COMPANY AND UNANIMOUSLY RECOMMENDS THAT YOU
VOTE AGAINST THIS PROPOSAL.
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(ALBERTSON'S LOGO)
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OTHER MATTERS
- --------------------------------------------------------------------------------
The Company is not aware of any other matters to be submitted at the Annual
Meeting of Stockholders. If a stockholder proposal relating to an independent
nominating committee that was excluded from this Proxy Statement in accordance
with the applicable provisions of Rule 14a-8 of the Securities Exchange Act of
1934 is properly brought before the meeting, the Board of Directors will
recommend that the proxy holders use their discretionary authority to vote the
shares they represent against such proposal. If any other matters properly come
before the meeting, it is the intention of the proxy holders to vote the shares
they represent as the Board of Directors may recommend.
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FILING OF FORMS PURSUANT TO SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
- --------------------------------------------------------------------------------
As required by Securities and Exchange Commission rules under Section 16 of the
Securities Exchange Act of 1934, the Company notes that due to clerical error,
the Form 3 for J. B. Scott, Director, and one Form 4 covering one transaction
for Thomas A. Brother, Senior Vice President, Distribution, were filed late.
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DEADLINE FOR RECEIPT OF STOCKHOLDERS' PROPOSALS
- --------------------------------------------------------------------------------
Proposals by stockholders of the Company that are intended to be presented to
the stockholders at the Company's 1995 Annual Meeting must be received by the
Company no later than December 9, 1994 in order that they may be included in the
Proxy Statement and proxy card for that meeting.
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30
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ALBERTSON'S, INC.
The undersigned hereby appoints Warren E. McCain, Gary G. Michael, John B.
Carley, and each of them, as Proxies for the undersigned, each with full power
of substitution, to represent the undersigned and to vote all shares of Common
Stock of Albertson's, Inc. ("Company") that the undersigned is entitled to vote
in the manner indicated on the reverse side hereof, and with discretionary
authority as to any other matters that may properly come before the meeting as
set forth under the heading "Other Matters" in the accompanying proxy
statement. If no other indication is made, the proxyholders will vote FOR the
election of the director nominees, FOR proposal 2 and AGAINST proposals 3 and 4
at the Annual Meeting of Stockholders of the Company to be held on Friday, May
27, 1994, and at any and all adjournments thereof.
(PLEASE DATE AND SIGN ON REVERSE SIDE)
-------------------------------------------------------------------------
FOLD AND DETACH HERE
[ALBERTSON'S LOGO]
ANNUAL MEETING OF STOCKHOLDERS
FRIDAY, MAY 27, 1994
10:00 A.M.
BOISE CENTRE ON THE GROVE
850 FRONT STREET
BOISE, IDAHO
31
PLEASE MARK YOUR VOTES LIKE THIS X
-----
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED
AS DIRECTED HEREIN. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2 AND AGAINST PROPOSALS 3 AND 4.
- -------------
COMMON
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
1. ELECTION OF FOUR DIRECTORS TO CLASS II.
NOMINEES: Kathryn Albertson, A. Gary Ames, John B. Carley, Paul I.
Corddry.
FOR all nominees WITHHOLD AUTHORITY to vote for all nominees
________ ________
To withhold authority for any individual nominee, check the "FOR" all
nominees box above and write that nominee's name on line below:
______________________________________________
2. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE AS THE COMPANY'S
INDEPENDENT AUDITORS.
FOR _____ AGAINST _____ ABSTAIN _____
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 3 AND 4.
3. STOCKHOLDER PROPOSAL TO DECLASSIFY THE BOARD OF DIRECTORS.
FOR _____ AGAINST _____ ABSTAIN _____
4. STOCKHOLDER PROPOSAL TO AMEND BY-LAWS TO IMPLEMENT SECRET BALLOT VOTING.
FOR _____ AGAINST _____ ABSTAIN _____
Dated:_______________________, 1994
__________________________________________
Signature
__________________________________________
Signature
THIS PROXY SHOULD BE SIGNED EXACTLY AS NAME APPEARS HEREON. Executors,
administrators, trustees, and so forth, should give full title as such. If the
signatory is a corporation, please sign full corporate name by duly authorized
officer. If a partnership, please sign in partnership name by authorized
party. If shares are held in multiple names, at least one must sign as
authorized party.
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FOLD AND DETACH HERE
[ALBERTSON'S LOGO]
ANNUAL MEETING OF STOCKHOLDERS
FRIDAY, MAY 27, 1994
10:00 A.M.
BOISE CENTRE ON THE GROVE
850 FRONT STREET
BOISE, IDAHO
32
APPENDIX A
DESCRIPTION OF GRAPHIC AND IMAGE MATERIAL
1. Location: Page immediately following Table of Contents
Item: Map
Description: Map showing parking options near site of Annual Meeting