SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by a Party other than the Registrant [_]
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[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
UNIFIED WESTERN GROCERS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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[_] 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:
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4) Date Filed:
UNIFIED WESTERN GROCERS, INC.
5200 Sheila Street, Commerce, California 90040
----------------
Notice of Annual Meeting of Shareholders
February 15, 2000
----------------
The Annual Meeting of Shareholders of Unified Western Grocers, Inc., a
California corporation, will be held at the Doubletree Hotel, Lloyd Center,
1000 NE Multnomah Avenue, Portland, Oregon, on February 15, 2000 at 11:00
a.m., for the following purposes:
1. To elect the twenty-four members of the Board of Directors for the
ensuing year, nineteen by the holders of Class A Shares and five by the
holders of Class B Shares.
2. To transact such other business as may properly come before the
meeting.
The names of the nominees intended to be presented by the Board of Directors
for election as Directors for the ensuing year are set forth in the
accompanying proxy statement.
Only shareholders of record at the close of business on December 17, 1999
will be entitled to vote at the meeting.
All shareholders are cordially invited to attend the meeting in person.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, IT IS REQUESTED THAT
YOU COMPLETE, DATE AND SIGN THE ENCLOSED PROXY RELATING TO THE ANNUAL MEETING
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. YOU MAY REVOKE YOUR PROXY IF
YOU ATTEND THE MEETING AND WISH TO VOTE YOUR SHARES IN PERSON.
By Order of the Board of Directors
Robert M. Ling, Jr.,
Executive Vice President, General
Counsel and Corporate Secretary
December 27, 1999
UNIFIED WESTERN GROCERS, INC.
5200 Sheila Street, Commerce, California 90040
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PROXY STATEMENT
----------------
INTRODUCTION
This proxy statement is furnished in connection with the solicitation by the
Board of Directors of Unified Western Grocers, Inc. (the "Company") of proxies
for use at the Annual Meeting of Shareholders to be held February 15, 2000, or
at any adjournment thereof.
A shareholder giving a proxy may revoke it at any time before it is
exercised by filing with the Secretary of the Company a written revocation or
a fully executed proxy bearing a later date. A proxy may also be revoked if
the shareholder who has executed it is present at the meeting and elects to
vote in person.
Only the holders of record of Class A Shares and Class B Shares at the close
of business on December 17, 1999 are entitled to vote at the Annual Meeting.
On that date, the Company had outstanding 67,800 Class A Shares and 393,771
Class B Shares.
These proxy materials will be first mailed to shareholders on or about
January 5, 2000. The cost of soliciting the proxies, consisting of the
preparation, printing, handling and mailing of the proxies and its related
material, will be paid by the Company. Proxies may be solicited by officers
and regular employees of the Company by telephone or in person. These persons
will receive no additional compensation for their services.
SOLICITATION REGARDING ELECTION OF DIRECTORS
Election of Directors
At the Annual Meeting twenty-four directors (constituting the entire board)
are to be elected to serve until the next Annual Meeting and until their
successors are elected and qualified. Nineteen directors are to be elected by
the holders of the Company's Class A Shares and five directors are to be
elected by the holders of the Company's Class B Shares.
The following table sets forth certain information concerning the nominees
for election to the Board of Directors. All of the nominees are currently
serving as directors of the Company. All nominees have consented to being
named herein as nominees and to serve as directors if elected.
Age as Year
of First Principal Occupation
Name 12/31/99 Elected During Last 5 Years
---- -------- ------- --------------------
NOMINEES FOR ELECTION
BY CLASS A SHARES
President, Andronico's
Bill Andronico................... 42 1999 Markets
President, Howard's On
Gaylon G. Baese.................. 62 1999 Scholls, Inc.
Co-owner, Mollie Stone's
David M. Bennett................. 46 1999 Markets
John Berberian................... 48 1991 President, Berberian
Enterprises, Inc.,
operating Jons Markets
Edmund Kevin Davis............... 46 1998 President, Chairman and
Chief Executive Officer,
Bristol Farms Markets
President, Bales For Food,
Kenneth W. Findley............... 60 1999 Bales Unico
President, Pokerville
James F. Glassel................. 59 1999 Select Market
President, Goodwin & Sons,
David M. Goodwin................. 49 1999 Inc.
President, Mar-Val Food
Mark Kidd........................ 49 1992 Stores, Inc.
Jay McCormack.................... 49 1993 Owner-Operator, Alamo
Market; Co-owner, Glen
Avon Apple Market
Mary J. McDonald................. 65 1999 Secretary/Treasurer, Sweet
Home Thriftway/M&S Grocers
Morrie Notrica................... 70 1988 President and Chief
Operating Officer, Joe
Notrica, Inc.
Peter J. O'Neal.................. 55 1999 President, Estacada Foods,
Inc.; White
Salmon Foods, Inc.
Michael A. Provenzano, Jr. ...... 57 1986 President, Pro & Son's,
Inc., President, Provo,
Inc. and President, Pro
and Family, Inc.
Edward J. Quijada................ 52 1998 Executive Vice President,
Tresierras Bros. Corp.,
operating Tresierras
Markets
Gordon E. Smith.................. 54 1999 President, Marlea Foods,
Inc.,
operating Vernonia Sentry
Market
President, Stump's Market,
James R. Stump................... 61 1982 Inc.
Preisdent, Evergreen
Kenneth Ray Tucker............... 52 1999 Markets, Inc.
President, Pioneer Super
Floyd F. West.................... 59 1999 Save, Inc.
NOMINEES FOR ELECTION
BY CLASS B SHARES
President, Super A Foods,
Louis A. Amen.................... 70 1974 Inc.
Darioush Khaledi................. 53 1993 Chairman of the Board and
Chief Executive Officer,
K.V. Mart Co., operating
Top Valu Markets and Valu
Plus Food Warehouse
Mimi R. Song..................... 42 1998 President and Chief
Executive Officer, Super
Center Concepts, Inc.
President, Gelson's
Robert E. Stiles................. 60 1999 Markets
President, Wright's
Richard L. Wright................ 62 1999 Foodliner
2
Voting Rights
Each class of shares is entitled to one vote for each share on those matters
with respect to which the class is entitled to vote. However, if any
shareholder gives notice of its intention to cumulate its votes in the
election of directors, then all shareholders may cumulate their votes in the
election of directors. To be effective, such notice (which need not be
written) must be given by the shareholder at the Annual Meeting before any
votes have been cast in such election. Under cumulative voting, each holder of
Class A Shares may give one nominee a number of votes equal to the number of
Class A Shares for which the holder is entitled to vote multiplied by the
number of directors to be elected by the holders of Class A Shares (nineteen
at this meeting) or the holder may distribute such votes among any or all of
the nominees as the holder sees fit. Similarly, the Class B Shares entitled to
be voted may be voted cumulatively by the holders of such shares for the five
directors to be elected by the holders of Class B Shares.
In the election of directors, the nominees receiving the highest number of
affirmative votes of the class of shares entitled to be voted for them, up to
the number of directors to be elected by such class, will be elected. Under
the California Corporations Code, votes against a nominee and votes withheld
have no legal effect.
The proxy holders named on the enclosed form of proxy relating to the Annual
Meeting will vote the proxies received by them for the election of the above
nominees unless such authority is withheld as provided in the proxy. In the
unanticipated event that any nominee should become unavailable for election as
a director, the proxies will be voted for any substitute nominee named by the
present Board of Directors. In their discretion, the proxy holders may
cumulate the votes represented by the proxies received. If additional persons
are nominated for election as directors by persons other than the Board of
Directors, the proxy holders intend to vote all proxies received by them in
such manner as will assure the election of as many of the above nominees as
possible, with the specific nominees to be voted for to be determined by the
proxy holders.
The Board of Directors recommends a vote "FOR" the election of each of the
nominees listed above.
PRINCIPAL STOCKHOLDERS
As of December 17, 1999, no person is known by the Company to own
beneficially more than five percent (5%) of the outstanding Class A Shares or
Class B Shares of the Company.
3
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
Class A Shares and Class B Shares, as of December 17, 1999 by each director,
or their affiliated companies, and by all directors, and their affiliated
companies, as a group. No officer of the Company who is not a director owns
shares of any class of the Company's stock.
Shares Owned
-------------------------------------
Class A Shares Class B Shares
------------------ ------------------
Name and
Affiliated No. % of Total No. % of Total
Company Shares Outstanding Shares Outstanding
---------- ------ ----------- ------ -----------
Louis A. Amen........................... 100 0.15% 9,961 2.53%
Super A Foods, Inc. (1)
Bill Andronico.......................... 100 0.15% 4,536 1.15%
Andronico's Markets
Gaylon G. Baese ........................ 100 0.15% 861 0.22%
Howard's On Scholls
David M. Bennett ....................... 100 0.15% 1,264 0.32%
Mollie Stone's Markets
John Berberian.......................... 100 0.15% 7,615 1.93%
Berberian Enterprises, Inc.
Edmund Kevin Davis...................... 100 0.15% 485 0.12%
Bristol Farms Markets
Kenneth W. Findley...................... 100 0.15% 2,521 0.64%
Bales For Food, Bales Unico
James F. Glassel ....................... 100 0.15% 163 0.04%
Pokerville Select Market
David M. Goodwin........................ 100 0.15% 1,311 0.33%
Goodwin & Sons, Inc.
Darioush Khaledi........................ 100 0.15% 16,691 4.24%
K.V. Mart Co.(1)
Mark Kidd............................... 100 0.15% 1,950 0.50%
Mar-Val Food Stores, Inc.
Jay McCormack........................... 300 0.44% 1.741 0.44%
Alamo Market(2)
Mary J. McDonald........................ 100 0.15% 860 0.22%
Sweet Home Thriftway, M&S Grocers
Morrie Notrica ......................... 100 0.15% 9,520 2.42%
Joe Notrica, Inc.
Peter J. O'Neal......................... 100 0.15% 55 0.00%
Estacada Foods, Inc. and White Salmon
Foods, Inc.
Michael A. Provenzano, Jr. ............. 100 0.15% 1,730 0.44%
Pro & Son's, Inc.
Edward J. Quijada ...................... 100 0.15% 2,409 0.61%
Tresierras Bros. Corp.
Gordon E. Smith ........................ 100 0.15% 812 0.21%
Marlea Foods, Inc., operating Vernonia
Sentry Market
Mimi R. Song ........................... 100 0.15% 18,277 4.64%
Super Center Concepts, Inc.(1)
Robert E. Stiles ....................... 100 0.15% 8,147 2.07%
Gelson's Markets (1) (3)
James R. Stump ......................... 100 0.15% 2,131 0.54%
Stump's Market, Inc.
Kenneth Ray Tucker ..................... 100 0.15% 19 0.00%
Evergreen Markets, Inc.
Floyd F. West........................... 100 0.15% 646 0.16%
Pioneer Super Save, Inc.
Richard L. Wright....................... 100 0.15% 5,929 1.51%
Wright's Foodliner (1)
----- ---- ------ -----
2,600 3.83% 99,634 25.30%
===== ==== ====== =====
4
- --------
(1) Elected by holders of Class B Shares.
(2) Mr. McCormack is affiliated with Glen Avon Food, Inc. which owns 100 Class
A Shares and 402 Class B Shares (0.10% of the outstanding Class B Shares)
and Yucaipa Trading Co., Inc. which owns 100 Class A Shares and 607 Class
B Shares (0.15% of the outstanding Class B Shares).
(3) These shares are owned by Arden-Mayfair, Inc., the parent company of
Gelson's Markets.
5
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of twelve meetings during
the fiscal year ended August 28, 1999. Each incumbent director who was in
office during such year attended more than 75% of the aggregate of the total
number of meetings of the board and the total number of meetings held by those
committees of the board on which the director served.
The Company has an Audit Committee which presently consists of director
Richard L. Wright, Committee Chairman, and directors David M. Goodwin, Jay
McCormack, Mary J. McDonald and Floyd F. West. Louis A. Amen, Chairman of the
Board of Directors, is an ex-officio member of the Audit Committee. The Audit
Committee, which met two times during the Company's last fiscal year, is
primarily responsible for approving and reviewing the services performed by
the Company's independent auditors, reviewing the annual audit, and reviewing
the Company's accounting practices and system of internal accounting controls.
The Company has an Executive Compensation Committee which presently consists
of director Mark Kidd, Committee Chairman, and directors John Berberian, Jay
McCormack, Morrie Notrica, Gordon E. Smith and Mimi R. Song. Louis A. Amen,
Chairman of the Board of Directors, is an ex-officio member of the Executive
Compensation Committee. The Executive Compensation Committee, which met four
times during the Company's last fiscal year, is responsible for reviewing
salaries and other compensation arrangements of all officers and for making
recommendations to the Board of Directors concerning such matters.
The Company has a Nominating Committee which presently consists of director
James R. Stump, Committee Chairman, and directors David M. Bennett, Edmund
Kevin Davis, Morrie Notrica, Peter J. O'Neal and Kenneth Ray Tucker. Louis A.
Amen, Chairman of the Board of Directors, and Alfred A. Plamann, President and
Chief Executive Officer, are ex-officio members of the Nominating Committee.
The Nominating Committee, which met four times during the Company's last
fiscal year, is responsible for selecting nominees to be submitted by the
Board of Directors to the shareholders for election to the Board of Directors.
6
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation Committee Interlocks and Insider Participation
As noted under the caption "Board Meetings and Committees", the Company's
Executive Compensation Committee presently consists of Mark Kidd, Committee
Chairman, and directors John Berberian, Jay McCormack, Morrie Notrica,
Gordon E. Smith and Mimi R. Song, as well as ex-officio member and Chairman of
the Board, Louis A. Amen. For the fiscal year 1999, the Executive Compensation
Committee consisted of Darioush Khaledi, Chairman, Louis A. Amen, Mark Kidd,
Michael A. Provenzano, Jr. and James Stump.
As Chairman of the Board, Mr. Amen is an officer under the Bylaws of the
Company, although he is not an employee and does not receive any compensation
or expense reimbursement beyond that to which other directors are entitled.
In the course of its business, the Company has made loans and loan
guarantees, and has entered into lease guarantees and subleases, involving its
members patrons, herein referred to as "members" or "patrons." Refer to
"Transactions With Management and Other Persons" on page 13 for a description
of transactions the Company has entered into with certain patrons with which
members of the Executive Compensation Committee are affiliated.
Report of Executive Compensation Committee on Executive Compensation
The principal components of the Company's executive compensation program
consist of an annual salary, an annual cash bonus the payment of which is
dependent upon the Company's performance during the preceding fiscal year, and
certain pension, retirement and life insurance benefits.
Salary
The Compensation Committee is responsible for the review of salary
recommendations made by the Chief Executive Officer (CEO) for each officer.
Such review is conducted in closed session and, with the exception of the CEO,
without management personnel being present. This process is subjective and
centers on the Compensation Committee's consideration of the CEO's evaluation
of individual officers based on various subjective criteria. The criteria
includes the CEO's perception of officer performance against individual
officer responsibilities and goals, the relative value and importance of
individual officer contributions toward organizational success, relative
levels of officer responsibilities, changes in the scope of officer
responsibilities, and officer accomplishments and contributions during the
preceding fiscal year.
The Compensation Committee sets the CEO's salary based on its assessment of
the CEO's performance in light of the policies and considerations discussed
directly above. In early fiscal year 1999, the Compensation Committee accepted
the recommendation of the CEO that there be no increase in officer salaries,
including that of the CEO, for fiscal year 1999. In connection with the merger
with United Grocers, Inc., the increase in size of the combined entity and the
increased responsibilities associated with the merger, the Compensation
Committee, following a review of information provided by Compensation
Resources Group, Inc., the Company's independent compensation advisors,
recommended that the CEO's salary be increased, effective upon completion of
the merger with United Grocers, Inc. Details with respect to the CEO's amended
employment contract are set forth in "Executive Employment, Termination and
Severance Agreements."
Annual Bonuses
In recognition of the relationship between Company performance and
enhancement of shareholder value, Company officers may be awarded annual cash
bonuses. For Company officers other than the CEO, bonuses for fiscal year 1999
are awarded pursuant to an annual executive incentive plan. The plan uses a
performance matrix to determine an earned incentive, expressed as a percent of
base salary. The performance measures are pre-patronage dividend income and
revenue growth. The earned incentive determined by these performance measures,
as may be adjusted at the discretion of the CEO, is awarded as a bonus. The
CEO may raise or lower
7
the bonus, up to a maximum of 25% percent of the earned incentive, based on
individual contributions to the overall performance of the Company.
The CEO's bonus is determined by the Committee's score of Company
performance and CEO performance against specified criteria and performance
targets. The criteria and performance targets are established by the Board of
Directors at the beginning of the fiscal year. Company performance is
determined by the weighted average of certain objective criteria (pre-
patronage dividend income, capital adequacy and asset utilization), and scored
against specified performance targets. CEO performance is scored based on the
weighted average of certain subjective criteria (CEO leadership with the
Board, CEO leadership with senior management, CEO impact on industry and
community and performance of senior management as a team). The scores for
Company performance and CEO performance comprise 60% and 40%, respectively, of
the overall CEO score. In fiscal 1999, the CEO was eligible for a target
annual bonus of 40% of base salary. Based on achieving target performance in
fiscal 1999, the full target bonus was awarded.
Bonuses awarded to named executives are disclosed in the Summary
Compensation Table.
Benefits
Consistent with the objective of attracting and retaining qualified
executives, the compensation program includes the provision of pension
benefits to Company employees, including officers, under the Company's defined
benefit pension plan, which is described in connection with the Pension Plan
Table. In addition, Company employees, including officers, may defer income
from their earnings through voluntary contributions to the Company's
Employees' Sheltered Savings Plan adopted pursuant to Section 401(k) of the
Internal Revenue Code and the Company's Employee's Excess Benefit Plan which
is a nonqualified plan. In the case of those officers who elect to defer
income under these plans, the Company makes additional contributions for their
benefit. The amount of these additional contributions made during fiscal year
1999 for the benefit of the CEO and other named executive officers is set
forth in the footnotes to the Summary Compensation Table. The Company also
provides additional retirement benefits to its officers pursuant to an
Executive Salary Protection Plan II, which is described in connection with the
Pension Plan Table.
Executive Compensation Committee Members
Darioush Khaledi, Chairman
Louis A. Amen
Mark Kidd
Michael A. Provenzano, Jr.
James Stump
8
Executive Officer Compensation
The following table sets forth information respecting the compensation paid
during the Company's last three fiscal years to the President and Chief
Executive Officer and to certain other executive officers of the Company.
Summary Compensation Table
Annual Compensation
-------------------------
Fiscal All other
Name and principal position Year Salary($) Bonus($) compensation($)
- --------------------------- ------ --------- -------- ---------------
Alfred A. Plamann 1999 415,000 166,000 34,343(1)
President & Chief Executive Officer 1998 408,267 125,000 34,319
1997 383,750 168,000 31,919
Corwin J. Karaffa 1999 173,000 34,600 13,670(5)
Vice President Distribution 1998 170,250 20,760 13,212
1997 159,750 32,400 11,083
Robert M. Ling, Jr. 1999 204,000 71,000 16,098(3)
Executive Vice President, General
Counsel and Secretary 1998 199,750 39,100 15,467
1997 184,000 37,400 5,466
Richard J. Martin 1999 250,000 75,000 5,949(4)
Executive Vice President, Finance & 1998 76,923 37,500 0
Administration and Chief Financial
Officer
Charles J. Pilliter 1999 210,000 52,500 17,045(2)
Executive Vice President--Sales and
Marketing 1998 207,000 31,500 16,797
1997 195,000 49,500 15,733
- --------
(1) Consists of a $11,894 Company contribution to the Company's Employees'
Sheltered Savings Plan, a $18,502 Company contribution to the Company's
Employees' Excess Benefit Plan and Supplemental Deferred Compensation
Plan, and $3,947 representing the economic benefit associated with the
Company paid premium on the Executive Life Plan.
(2) Consists of a $8,045 Company contribution to the Company's Employees'
Sheltered Savings Plan, $7,916 Company contribution to the Company's
Employees' Excess Benefit Plan and Supplemental Deferred Compensation
Plan, and $1,075 representing the economic benefit associated with the
Company paid premium on the Executive Life Plan.
(3) Consists of a $11,148 Company contribution to the Company's Employees'
Sheltered Savings Plan, a $4,394 Company contribution to the Company's
Employees' Excess Benefit Plan and Supplemental Deferred Compensation
Plan, and $556 representing the economic benefit associated with the
Company paid premium on the Executive Life Plan.
(4) Consists of a $4,846 Company contribution to the Company's Employees'
Sheltered Savings Plan, a $269 Company contribution to the Company's
Employees' Excess Benefit Plan and Supplemental Deferred Compensation
Plan, and $834 representing the economic benefit associated with the
Company paid premium on the Executive Life Plan.
(5) Consists of a $9,727 Company contribution to the Company's Employees'
Sheltered Savings Plan, a $3,354 Company contribution to the Company's
Employees' Excess Benefit Plan and Supplemental Deferred Compensation
Plan, and $589 representing the economic benefit associated with the
Company paid premium on the Executive Life Plan. Mr. Karaffa's employment
terminated subsequent to year end.
The Company has a defined benefit pension plan which covers its non-union
and executive employees. Benefits under this plan are based on formulas using
compensation and employee service periods and are subject to the appropriate
IRS tables and limitations. The Company's Executive Salary Protection Plan II,
as amended, ("ESPP II"), provides additional post-termination retirement
income based upon the participant's salary and years of service. The funding
for this benefit is facilitated through the purchase of life insurance
policies, the premiums for which are paid by the Company.
9
ESPP II is targeted to provide eligible executives with a retirement benefit
at age 62, including the defined benefit, of up to 65% of a participant's
final salary, based on formulas which include years of service and salary.
Executives become eligible for ESPP II after three years of service as an
executive officer of the Company. Upon eligibility, executives receive credit
for years of service with the Company at a rate of 5% per year up to a maximum
of 13 years. Payments under ESPP II are discounted for executives who retire
prior to age 62. At August 28, 1999, credited years of service for named
officers are: Mr. Plamann, 10 years; Mr. Karaffa, 4 years; Mr. Ling, 3 years;
Mr. Martin, 1 year; and Mr. Pilliter, 23 years. Executive officers first
elected after December, 1998, will receive credit only for years of service as
an executive officer.
The following table illustrates the estimated annual benefits under the
combined defined benefit plan and ESPP II plan. The amounts shown represent
annual compensation for qualifying executives with selected years of service
as if such executives had retired on August 28, 1999 at age 62.
PENSION PLAN TABLE
Years of Service
-----------------------------------------------------
Remuneration 5 Years 10 Years 15 Years 20 Years 25 Years 33 Years
------------ -------- -------- -------- -------- -------- --------
$100,000.................. $ 25,978 $ 51,955 $ 67,933 $ 68,910 $ 69,888 $ 71,452
130,000.................. 33,819 67,594 88,391 89,688 90,985 93,060
160,000.................. 41,740 83,481 109,221 110,963 112,703 115,488
190,000.................. 49,240 98,481 128,721 130,463 132,203 134,988
220,000.................. 56,740 113,481 148,221 149,963 151,703 154,488
250,000.................. 64,240 128,481 167,721 169,463 171,203 173,988
300,000.................. 76,740 153,481 200,221 201,963 203,703 206,488
350,000.................. 89,240 178,481 232,721 234,463 236,203 238,988
400,000.................. 101,740 203,481 265,221 266,963 268,703 271,488
450,000.................. 114,240 228,481 297,721 299,463 301,203 303,988
Executive Employment, Termination and Severance Agreements
In connection with the completion of the merger with United Grocers, Inc.,
the Company amended its existing employment agreement with Alfred A. Plamann,
the Company's President and Chief Executive Officer. The initial term of Mr.
Plamann's amended contract is three years, commencing on September 29, 1999,
the effective date of the merger with United Grocers, Inc. The initial term
will be extended automatically for successive one year terms on each
anniversary of the amended contract unless either party gives notice of an
intention to terminate at least eleven months prior to such anniversary date.
Under the amended contract, Mr. Plamann serves as the Company's President and
Chief Executive Officer and receives a base salary, currently $500,000,
subject to annual review and upward adjustment at the discretion of the Board
of Directors. Mr. Plamann is also eligible for annual bonuses, up to a maximum
of 60% of base salary, based on performance criteria established by the Board
of Directors at the beginning of each fiscal year. Additionally, Mr. Plamann
will receive employee benefits such as life insurance and Company pension and
retirement contributions. The amended contract is terminable at any time by
the Company, with or without cause, and will also terminate upon Mr. Plamann's
resignation, death or disability. Except where termination is for cause or is
due to Mr. Plamann's resignation (other than a resignation following
designated actions of the Company or its successor which trigger a right by
Mr. Plamann to resign and receive severance benefits), death or disability,
the amended contract provides that Mr. Plamann will be entitled to receive his
highest base salary during the previous three years, plus an annual bonus
equal to the average of the most recent three annual bonus payments,
throughout the balance of the term of the agreement. Mr. Plamann would also
continue to receive employee benefits such as life insurance and Company
pension and retirement contributions throughout the balance of the term of the
agreement.
10
In connection with the completion of the merger with United Grocers, Inc.,
the Company entered into an employment agreement with Terrence W. Olsen, the
Company's Executive Vice President--Chief Operating Officer. The initial term
of Mr. Olsen's contract is three years, commencing on September 29, 1999, the
effective date of the merger with United Grocers, Inc. The initial term will
be extended automatically for successive one year terms on each anniversary of
the contract unless either party gives notice of an intention to terminate at
least eleven months prior to such anniversary date. Under the contract, Mr.
Olsen serves as the Company's Executive Vice President--Chief Operating
Officer and receives a base salary, currently $300,000, subject to annual
review and upward adjustment at the discretion of the Board of Directors. Mr.
Olsen is also eligible to participate in the Company's Senior Management
Incentive Compensation Plan and Executive Salary Protection Plan.
Additionally, Mr. Olsen will receive employee benefits such as life insurance
and pension and retirement contributions. The contract is terminable at any
time by the Company, with or without cause, and will also terminate upon Mr.
Olsen's resignation, death or disability. Except where termination is for
cause or is due to Mr. Olsen's resignation (other than a resignation following
designated actions of the Company or its successor which trigger a right by
the executive to resign and receive severance benefits), death or disability,
the contract provides that Mr. Olsen will be entitled to receive his highest
base salary during the previous three years, plus an annual bonus equal to the
average of the most recent three annual bonus payments, throughout the balance
of the term of the agreement. Mr. Olsen would also continue to receive
employee benefits such as life insurance and pension and retirement
contributions throughout the balance of the term of agreement.
The Company has executed severance agreements with Senior Vice Presidents
Robert M. Ling, Jr., Richard J. Martin and Charles J. Pilliter. The agreements
extend until June 9, 2001, June 9, 2001 and April 3, 2000, respectively, and
contain provisions for annual extensions subject to certain parameters. Among
other provisions, the agreements provide for the payment of an amount equal to
the executive's highest annual base salary during the three year period
immediately prior to the date of termination plus an amount equal to the
average annual incentive bonus paid during the three years prior to the date
of termination if executive's employment is terminated by the Company other
than for cause, disability, death or retirement or by the executive for good
reason.
Director Compensation
Each director receives a fee of $500 for each regular board meeting
attended, $200 for each committee meeting attended and $200 for attendance at
each board meeting of a subsidiary of the Company on which the director
serves. In addition, directors are reimbursed for Company related expenses.
Effective as of the first meeting following the Annual Meeting, and
continuing thereafter, each director shall receive an annual payment of $7,500
as compensation for service a director of the Company and a member of any
Board committees and subsidiaries, if applicable. In recognition of the
additional duties and responsibilities attendant with such positions, the
Chairman of the Board shall receive annual compensation of $12,500, and each
Vice Chairman shall receive annual compensation of $10,000.
11
Cumulative Total Shareholder Return
The following graph sets forth the five year cumulative total shareholder
return on the Company's shares as compared to the cumulative total return for
the same period of the S&P 500 Index and Peer Issuers consisting of Spartan
Stores, Inc. and Roundy's, Inc. Like the Company, Spartan Stores and Roundy's
are retailer-owned wholesale grocery distributors. While Spartan Stores pays a
dividend on its stock, the Company and Roundy's do not. The shares of the
Company and the Peer Issuers are not traded on any exchange and there is no
established public market for such shares. The price of the Company's shares
during each of its fiscal years is the book value of such shares as of the end
of the prior fiscal year.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG CERTIFIED GROCERS S&P 500 INDEX AND PEER GROUP
PERFORMANCE GRAPH APPEARS HERE
Measurement Period CERTIFIED S&P
(Fiscal Year Covered) GROCERS 500 INDEX Peer Group
- ------------------- ---------- --------- ----------
Measurement Pt- 9/3/94 $100 $100 $100
FYE 1995 $101.7 $118.2 $108.5
FYE 1996 $103.0 $137.1 $101.7
FYE 1997 $107.5 $189.2 $106.5
FYE 1998 $112.5 $201.3 $116.1
FYE 1999 $115.5 $277.7 $124.5
* Total return assumes reinvestment of dividends
** Fiscal years ended September 2, 1995, August 31, 1996, August 30, 1997,
August 29, 1998 and August 28, 1999
12
TRANSACTIONS WITH MANAGEMENT AND OTHER PERSONS
All directors of the Company (or the firms with which such directors are
affiliated) purchase grocery products and related products and services from
the Company or its subsidiaries in the ordinary course of business.
As described below, the Company has made loans and loan guarantees to,
entered into lease guarantees and subleases with, entered into supply
agreements with and made direct investments in patrons with which certain
directors of the Company are affiliated.
Directors
Loans and Loan Guarantees:
Grocers Capital Company ("GCC") had the following loans outstanding at
November 30, 1999 to members affiliated with directors of the Company as
follows:
Aggregate Loan
Balance at Maturity
Director November 30, 1999 Date
-------- ----------------- ---------
(dollars in thousands)
Darioush Khaledi................................. $3,208 2004
Bill Andronico................................... 2,618 2000-2004
David M. Bennett................................. 2,000 2003
Michael A. Provenzano, Jr. ...................... 595 2006
At November 30, 1999, the principal balances of loans to members affiliated
with directors of the Company that were sold by GCC or United Resources, Inc.
to National Consumer Cooperative Bank with recourse were as follows:
Aggregate Loan
Balances at Maturity
Director November 30, 1999 Dates
-------- ----------------- ---------
(dollars in thousands)
Peter J. O'Neal.................................. $1,978 2004
Michael A. Provenzano, Jr. ...................... 1,164 2000-2005
Gaylon Baese..................................... 610 2003
Mark Kidd........................................ 149 2003
David M. Bennett................................. 137 2001
James R. Stump................................... 113 1999-2001
John Berberian................................... 14 1999-2000
Jay McCormack.................................... 8 1999-2000
The Company provides loan guarantees to its members. GCC has guaranteed 10%
of the principal amount of certain third party loans to K.V. Mart Co. (KV) of
which director Darioush Khaledi is an affiliate. At November 30, 1999, the
principal amount of this guarantee was $555,000.
13
Lease Guarantees and Subleases:
The Company has executed lease guarantees and subleases to its member-
patrons. The Company has executed lease guarantees or subleases to members
affiliated with directors or the Company at November 30, 1999 as follows:
Total
No. of Current Expiration
Director Stores Annual Rent Date(s)
-------- ------ ----------- ----------
(dollars in thousands)
Darioush Khaledi............................... 5 $1,416 2004-2011
Bill Andronico................................. 1 861 2014
Richard L. Wright.............................. 3 680 2001-2007
Michael Provenzano, Jr. ....................... 2 351 2016-2017
John Berberian................................. 2 310 2001-2007
Gaylon G. Baese................................ 1 278 2005
James R. Stump................................. 2 208 2001-2003
Mimi R. Song .................................. 1 187 2004
Mark Kidd...................................... 1 121 2008
The Company has committed to guarantee the store lease of a store currently
under development affiliated with a director of Unified as follows:
Total
Estimated Current
Director Term Annual Rent
-------- --------- -----------
Edmund K. Davis........................................ 10 Years $1,560
Other Leases:
The Company leases its produce warehouse to Joe Notrica, Inc., with which
director Morrie Notrica is affiliated. The lease is for a term of five years
expiring in November 2003. Monthly rent during the term is $24,000.
Supply Agreements and Other:
During the course of its business, the Company enters into supply agreements
with members of the Company. These agreements typically require the member to
purchase certain agreed amounts of its merchandise requirements from the
Company and obligate the Company to supply such merchandise under agreed terms
and conditions relating to such matters as pricing, delivery, discounts and
allowances. Members affiliated with directors Andronico, Bennett, Davis,
Khaledi, Kidd, McCormack, Provenzano, Jr., and Song have entered into supply
agreements with the Company. These supply agreements vary in terms and length,
and expire at various dates through 2004, but are subject to earlier
termination in certain events.
In August 1999, the Company purchased for $275,000 certain assets related to
a store in Santee, California from an entity in which James R. Stump has an
interest.
Direct Investment:
The Company owns 49% of the stock of RAF, LLC. Wright's Foodliner, Inc.,
which is controlled by director Richard L. Wright, owns 51% of the stock of
RAF, LLC. During fiscal 1999, RAF, LLC purchased groceries and other products
in the ordinary course of business from the Company on the same terms and
conditions as the Company's other members.
Executive Officers
On October 1, 1999, to facilitate Mr. Charles J. Pilliters's relocation to
Southern California, the Company loaned to Mr. Pilliter, pursuant to a four
year Note Secured by a Deed of Trust, $100,000 with interest at a rate of 7%
per annum, interest only payable in arrears on January 15, 2000, January 15,
2001, January 15, 2002, January 1, 2003, and on maturity.
14
SHAREHOLDER PROPOSALS FOR NEXT YEAR'S ANNUAL MEETING
Under the present rules of the Securities and Exchange Commission (the
"Commission"), and in view of the presently anticipated date of the Company's
Proxy Statement for this year's Annual Meeting of Shareholders, the deadline
for shareholders to submit proposals to be considered for inclusion in the
Company's Proxy Statement for next year's Annual Meeting of Shareholders is
expected to be October 20, 2000. Such proposals may be included in next year's
Proxy Statement if they comply with certain rules and regulations promulgated
by the Commission. Such proposals should be submitted to the Corporate
Secretary of the Company at the address of the Company's principal executive
office shown on the first page of this Statement.
BY ORDER OF THE BOARD OF DIRECTORS
Robert M. Ling, Jr., Executive Vice
President, General Counsel and
Corporate Secretary
Dated: December 27, 1999
A copy of the Company's Annual Report on Form 10-K for the fiscal year ended
August 28, 1999, as filed with the Securities and Exchange Commission,
excluding exhibits, may be obtained without charge by writing to the Corporate
Secretary of the Company at the address of the Company's principal executive
office shown on the first page of this Statement.
15
PROXY
SOLICITED BY THE BOARD OF DIRECTORS OF
UNIFIED WESTERN GROCERS, INC.
FOR ANNUAL MEETING OF SHAREHOLDERS ON FEBRUARY 15, 2000
The undersigned, revoking any previous proxies respecting the subject matter
hereof, hereby appoints LOUIS A. AMEN, ALFRED A. PLAMANN and ROBERT M. LING,
JR. attorneys and proxies (each with power to act alone and with power of
substitution) to vote all of the Class A Shares which the undersigned is
entitled to vote and all of the Class B Shares which the undersigned is
entitled to vote, with all powers which the undersigned would possess if
personally present, at the Annual Meeting of Shareholders of Unified Western
Grocers, Inc. (the "Company"), to be held on February 15, 2000, notice of
which meeting and the proxy statement accompanying the same having been
received by the undersigned, or at any adjournment thereof, as follows:
1. ELECTION OF DIRECTORS.
Election of Nineteen Directors by Class A Shares.
Nominees: Bill Andronico, Gaylon G. Baese, David M. Bennett, John
Berberian, Edmund Kevin Davis, Kenneth W. Findley, James F. Glassel,
David M. Goodwin, Mark Kidd, Jay McCormack, Mary J. McDonald, Morrie
Notrica, Peter J. O'Neal, Michael A. Provenzano, Jr., Edward J. Quijada,
Gordon E. Smith, James R. Stump, Kenneth Ray Tucker and Floyd F. West.
[_] FOR all nominees listed above, except any whose names are crossed out
in the above list (the Board of Directors favors an instruction to
vote for all nominees).
[_] WITHHOLD AUTHORITY to vote for all nominees listed above.
Election of Five Directors by Class B Shares.
Nominees: Louis A. Amen, Darioush Khaledi, Mimi R. Song, Robert E. Stiles
and Richard L. Wright.
[_] FOR all nominees listed above, except any whose names are crossed out
in the above list (the Board of Directors favors an instruction to
vote for all nominees).
[_] WITHHOLD AUTHORITY to vote for all nominees listed above.
2. In their discretion, on such other matters as may properly come before
the meeting or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED, BUT IF NO
DIRECTION IS INDICATED IT WILL BE VOTED "FOR" ITEM 1, AND ACCORDING TO THE
DISCRETION OF THE PROXY HOLDERS ON ANY OTHER PROPERLY PRESENTED MATTERS.
DATED: _____________, 2000
___________________________________________ _____________________________________________
Signature Title
___________________________________________ _____________________________________________
Signature Title
___________________________________________ _____________________________________________
Signature Title
PLEASE READ: Execution should be exactly in the name in which the shares
are held; if by a fiduciary, the fiduciary's full title should be shown;
if by a corporation, execution should be in the corporate name by its
chairman of the board, president or a vice president, or by other
officers authorized by resolution of its board of directors or its
bylaws; if by a partnership, execution should be in the partnership name
by an authorized person.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS
PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.