SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) 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
RICHFOOD HOLDINGS, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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)(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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) 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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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
July 30, 1997
To the Shareholders of
Richfood Holdings, Inc.:
We are pleased to invite you to attend the annual meeting of
shareholders of Richfood Holdings, Inc. (the "Company") to be held at the
Company's Headquarters, 8258 Richfood Road, Mechanicsville, Virginia, on
Thursday, August 28, 1997, at 10:00 A.M. for the following purposes:
(1) to elect 12 directors of the Company to serve until the next
annual meeting of shareholders;
(2) to approve the amendment of the Richfood Holdings, Inc.
Omnibus Stock Incentive Plan;
(3) to ratify the appointment by the Board of Directors of Ernst &
Young LLP to serve as independent public accountants for the
current fiscal year; and
(4) to transact such other business as may properly come before
the meeting, or any adjournments thereof.
Only shareholders of record at the close of business on July 11, 1997,
are entitled to notice of, to vote at and to participate in the meeting.
You are requested to mark, date, sign and return the enclosed form of
proxy in the enclosed envelope whether or not you expect to attend the meeting
in person.
By order of the Board of Directors
Fredricka H. Dyson
Assistant Secretary
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
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GENERAL INFORMATION
Solicitation of the enclosed proxy is made by the Board of Directors of
the Company for use at the annual meeting of shareholders to be held at the
Company's Headquarters, 8258 Richfood Road, Mechanicsville, Virginia, on
Thursday, August 28, 1997, at 10:00 A.M. and at any adjournments of such
meeting. An annual report, including consolidated financial statements for the
fiscal year ended May 3, 1997 ("fiscal 1997"), is enclosed with this proxy
statement.
The expenses of this solicitation will be paid by the Company.
Officers, directors and employees of the Company may make solicitations of
proxies by telephone or telegraph or by personal calls. Brokerage houses,
nominees and fiduciaries have been requested to forward proxy soliciting
material to the beneficial owners of the stock held of record by them, and the
Company will reimburse them for their charges and expenses.
The Company's charter authorizes the issuance of up to 90,000,000
shares of Common Stock, without par value ("Common Stock"), and 5,000,000 shares
of Preferred Stock, without par value. Only shareholders of record at the close
of business on July 11, 1997, are entitled to notice of, to vote at and to
participate in the meeting. On the record date, 47,487,092 shares of Common
Stock were issued and outstanding. Holders of Common Stock will vote as a single
class at the annual meeting. Each outstanding share of Common Stock will entitle
the holder to one vote on all matters submitted to a vote of shareholders at the
annual meeting. All shares of Common Stock represented by properly executed and
delivered proxies will be voted at the meeting or any adjournments.
A majority of the votes entitled to be cast on matters to be considered
at the meeting constitutes a quorum. If a share is represented for any purpose
at the meeting, it is deemed to be present for quorum purposes for all other
matters as well. Abstentions and shares held of record by a broker or its
nominee ("Broker Shares") that are voted on any matter are included in
determining the number of votes present or represented at the meeting. Broker
Shares that are not voted on any matter at the meeting will not be included in
determining whether a quorum is present at such meeting. Directors are elected
by a plurality of the votes cast by holders of Common Stock at a meeting at
which a quorum is present. Votes that are withheld and Broker Shares that are
not voted in the election of directors will not be included in determining the
number of votes cast. Approval of the amendment of the Richfood Holdings, Inc.
Omnibus Stock Incentive Plan requires the affirmative vote of the holders of a
majority of the shares of Common Stock present or represented by properly
executed and delivered proxies, and entitled to vote with respect thereto, at a
meeting at which a quorum is present. Abstentions will have the same effect as a
negative vote for purposes of approving the amendment of the Omnibus Stock
Incentive Plan. Broker Shares that are not voted with respect to approval of the
amendment of the Omnibus Stock Incentive Plan will not be included in
determining the number of shares entitled to vote thereon.
This proxy statement and the enclosed form of proxy were first mailed
to shareholders on July 30, 1997.
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ELECTION OF DIRECTORS
(Proposal 1)
At the annual meeting, 12 directors are expected to be elected to hold
office until the next annual meeting of shareholders and until their respective
successors are duly elected and qualified. Unless authority to do so is
withheld, shares of Common Stock represented by properly executed proxies in the
enclosed form will be voted for the election of the persons named below. Each of
the nominees is currently a director and has served continuously since the year
he or she joined the Board. If any of the nominees should become unavailable,
the Board of Directors may designate substitute nominees for whom the proxies on
the enclosed form will be voted. In the alternative, the Board of Directors may
reduce the size of the Board to the number of remaining nominees for whom the
proxies will be voted.
Nominees for Election to the Board of Directors
Principal Occupation or Director
Name Employment During Last Five Years Continuously Since Age
---- --------------------------------- ------------------ ---
Donald D. Bennett Chairman of the Board of the Company (since 1995); 1990 61
former Chief Executive Officer (1995-1996) and
President and Chief Executive Officer (1990-1995)
of the Company.
Roger L. Gregory Managing Partner, Wilder & Gregory Law Office. 1994 44
Grace E. Harris Provost and Vice President for Academic Affairs, 1994 64
Virginia Commonwealth University.
John C. Jamison Chairman, Mallardee Associates, a corporate 1990 63
financial advisory service, and Limited Partner,
Goldman, Sachs & Co., an investment banking and
brokerage firm; former President and Chief
Executive Officer, The Mariner's Museum, an
international maritime museum (1990-1992);
Director, Hershey Foods Corporation.
G. Gilmer Minor, III Chairman of the Board (since 1994), President and 1988 56
Chief Executive Officer, Owens & Minor, Inc., a
wholesale distributor of medical and surgical
supplies; Director, Crestar Financial Corporation.
Claude B. Owen, Jr. Chairman of the Board and Chief Executive Officer, 1988 52
DIMON Incorporated (successor to Dibrell Brothers,
Incorporated), an importer and exporter of leaf
tobacco and fresh cut flowers; former Chairman of
the Board, Chief Executive Officer and President,
Dibrell Brothers, Incorporated; Director, American
National Bankshares Inc.
John F. Rotelle Chairman (since 1995) and former President of 1994 61
Rotelle, Inc.
Albert F. Sloan Former Chairman of the Board of Lance, Inc., a 1990 67
manufacturer of cookies, crackers and snack foods;
Director, Basset Furniture Industries, Inc., Cato
Corporation and PCA International, Inc.
John E. Stokely President and Chief Executive Officer of the 1995 44
Company; former President and Chief Operating
Officer (1995-1996), Executive Vice President
Finance and Administration (1993-1995) and Senior
Vice President - Finance and Chief Financial
Officer (1991-1993) of the Company.
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George H. Thomazin Chief Executive Officer, Thomazin Enterprises, Inc., 1990 57
a business investment firm; former Chief Executive
Officer, Continental Brokers Co., a food brokerage
firm (1989-1992).
James E. Ukrop Vice-Chairman and Chief Executive Officer (since 1987 60
1994), Ukrop's Super Markets, Inc., a retail grocery
chain; former President and Chief Executive Officer,
Ukrop's Super Markets, Inc.; Director, Legg
Mason, Inc. and Owens & Minor, Inc.
Edward Villanueva Financial Consultant; Director, Circuit City Stores, 1990 62
Inc.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 1
TO ELECT THE FOREGOING NOMINEES TO THE BOARD OF DIRECTORS TO SERVE UNTIL THE
NEXT ANNUAL MEETING OF SHAREHOLDERS.
-3-
Board of Directors and Committees
The Board of Directors meets regularly every quarter and following each
annual meeting of shareholders. During fiscal 1997, there were six meetings of
the Board.
The Board has standing Executive, Audit, Executive Compensation and
Nominating Committees. Members of the Executive Committee are Messrs. Bennett
(Chairman), Owen, Sloan, Stokely and Thomazin. During fiscal 1997, there was one
meeting of the Executive Committee. The Executive Committee reviews various
matters and submits proposals or recommendations to the Board of Directors. The
Executive Committee is empowered to and does act for the Board of Directors on
certain matters.
Members of the Audit Committee are Messrs. Jamison (Chairman), Gregory,
Minor and Villanueva. During fiscal 1997, there were four meetings of the Audit
Committee. The Audit Committee recommends an independent public accounting firm
to be selected by the Board of Directors for the upcoming fiscal year. The Audit
Committee reviews and approves various audit functions including the annual
audit performed by the Company's independent public accountants. Periodically,
the Company's internal auditors and independent public accountants report
directly to the Audit Committee.
Members of the Executive Compensation Committee are Messrs. Sloan
(Chairman), Thomazin and Ukrop and Dr. Harris. During fiscal 1997, there were
three meetings of the Executive Compensation Committee. The Executive
Compensation Committee recommends to the Board of Directors the compensation of
the Company's Chief Executive Officer, approves the compensation of the
Company's other executive officers and administers the Company's annual and
long-term incentive plans.
Members of the Nominating Committee are Messrs. Minor (Chairman),
Bennett and Ukrop. During fiscal 1997, there was one meeting of the Nominating
Committee. The Nominating Committee recommends to the full Board of Directors
persons to serve as directors of the Company and establishes such procedures as
it deems proper to receive and review information concerning potential
candidates for election or reelection to the Board of Directors. Shareholders
entitled to vote for the election of directors may nominate candidates for
consideration by the Nominating Committee. Notice of nominations made by
shareholders with respect to the 1998 annual meeting must be received in writing
by the Secretary of the Company no earlier than May 16, 1998, and no later than
June 10, 1998, and must set forth (i) the name, age, business address and, if
known, residence address of each nominee proposed in such notice, (ii) the
principal occupation or employment of each such nominee and (iii) the number and
class of capital shares of the Company beneficially owned by each such nominee.
The Company's employment and severance benefits agreements with Mr. Bennett and
Mr. Stokely include provisions related to their election to the Board of
Directors. See "Employment Continuity Agreements."
Persons who are employees of the Company or of its subsidiaries receive
no compensation for their services as directors of the Company. During fiscal
1997, directors who were not employees of the Company or of its subsidiaries
received an annual retainer of $15,000 and fees of $1,200 for each meeting of
the Company's Board attended, $750 for each meeting of a Board committee
attended and $500 for participation in a telephonic meeting of the Board or a
Board committee. In addition, chairmen of each Board committee who were not
employees of the Company or of its subsidiaries received an additional annual
retainer of $2,500. Pursuant to the Company's Non-Employee Directors' Stock
Option Plan, each year each director who is not an employee of the Company or of
its subsidiaries is granted an option to purchase 1,500 shares of Common Stock
for a per share exercise price equal to the fair market value of one share of
Common Stock on the date of grant.
During fiscal 1997, all directors attended at least 75% of the meetings
of the Board of Directors and the committees to which they were assigned.
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Security Ownership of Certain Beneficial Owners and Management
The following table shows, as of June 27, 1997 (except as provided
below), the direct and indirect beneficial ownership of shares of Common Stock
by (i) all directors of the Company, (ii) each executive officer named in the
Summary Compensation Table, (iii) all directors and executive officers of the
Company as a group and (iv) each person known by the Company to beneficially own
more than 5% of the outstanding shares of Common Stock.
Sole Voting
and Investment Percentage
Name Power (1) Other (2) Total Ownership (3)
---- ---------- --------- ----- -------------
Donald D. Bennett 182,710 27,375 210,085
Roger L. Gregory 1,125 0 1,125
Grace E. Harris 1,425 0 1,425
John C. Jamison 16,125 0 16,125
G. Gilmer Minor, III 4,075 0 4,075
Claude B. Owen, Jr. 31,325 0 31,325
John F. Rotelle 146,638 4,067 150,705
Albert F. Sloan 7,122 6,250 13,372
John E. Stokely 154,426 607 155,033
George H. Thomazin 9,000 0 9,000
James E. Ukrop 19,275 1,091,231 1,110,506 2.34%
Edward Villanueva 116,020 6,000 122,020
John D. Ryder 87,916 0 87,916
Alec C. Covington 16,125 0 16,125
All Directors and
Executive Officers as a Group
(22 persons) 906,631 1,142,330 2,048,961 4.32
FMR Corp.(4)
82 Devonshire Street
Boston, Massachusetts 02109 0 3,829,150 3,829,150 8.06
- ----------------------------
(1) Includes the following number of shares of Common Stock that may be
acquired within sixty days of June 27, 1997, under one or more of the Company's
stock-based incentive plans by the following directors, executive officers and
group: Mr. Bennett - 45,000; Mr. Gregory - 1,125; Mr. Jamison - 1,125; Mr. Owen
- - 1,025; Mr. Rotelle - 3,000; Mr. Sloan - 1,125; Mr. Stokely - 44,625; Mr. Ukrop
- - 1,125; Mr. Villanueva - 1,125; Mr. Ryder - 2,812; Mr. Covington - 15,000; and
all directors and executive officers as a group - 229,211.
(2) With respect to Mr. Bennett, reflects shares held by his wife and
shares held under the Company's 401(k) savings plans as of June 30, 1997. Mr.
Bennett disclaims beneficial ownership of the shares held by his wife. With
respect to Mr. Sloan, reflects shares held by his wife. Mr. Sloan disclaims
beneficial ownership of such shares. With respect to Mr. Ukrop, reflects shares
held by Ukrop's Super Markets, Inc. Mr. Ukrop disclaims beneficial ownership of
such shares. With respect to Mr. Villanueva, reflects shares held in trust for
Mr. Villanueva's children, with Mr. Villanueva as trustee. Mr. Villanueva
disclaims beneficial ownership of such shares. With respect to Messrs. Rotelle
and Stokely, and all directors and executive officers as a group, reflects
shares held under the Company's 401(k) savings plans as of June 30, 1997.
(3) Except as indicated, each person or group beneficially owns less
than 1% of the outstanding shares of Common Stock.
(4) As reported in a Form 13G dated February 14, 1997, as of December
31, 1996, Fidelity Management & Research Company ("Fidelity"), a subsidiary of
FMR Corp., beneficially owned 3,829,150 shares of the Company's Common Stock as
a result of acting as an investment adviser to several investment companies. The
ownership of one investment company, Fidelity Contrafund, amounted to 3,297,950
shares of the Company's Common Stock. Edward C. Johnson 3d and FMR Corp.,
through its control of Fidelity, each have the power to dispose of the shares
owned by the investment companies. The Boards of Trustees of the individual
investment companies have power to vote and dispose of the shares owned by such
investment companies.
-5-
EXECUTIVE COMPENSATION
Executive Compensation Committee Report on Executive Compensation
The Executive Compensation Committee of the Board of Directors (the
"Committee") is delegated the power to administer the compensation programs of
the Company applicable to its executive officers. The Committee, which is
comprised of four outside directors, recommends to the Board the compensation of
the Company's Chief Executive Officer, approves the compensation of the
Company's other executive officers and administers the Company's annual and
long-term incentive plans.
The purposes of the Company's compensation plans and the objectives of
the Committee are to:
o provide a competitive compensation program to enable the
Company to attract and retain qualified top management
personnel;
o emphasize the relationship between pay and performance by
placing variable compensation "at risk" based on the
achievement of specific and measurable goals and objectives;
o balance the Company's short-term and long-term objectives
appropriately; and
o align the financial interests of the executive officers with
those of the Company's shareholders by encouraging and
promoting executive ownership of the Company's Common Stock.
The Committee believes that compensation programs should enable
management to understand clearly what the potential rewards are and what
performance must be achieved to earn such awards. An independent consultant is
used to recommend compensation structures for the Company. To further the
objectives stated above, the compensation programs for all executive officers
include three components: (i) base salary; (ii) annual cash incentive
compensation; and (iii) long-term incentives in the form of stock options,
restricted stock, stock appreciation rights ("SARs") and/or performance shares.
The Committee's policy on the tax deductibility of compensation for the Chief
Executive Officer and other executive officers is to maximize the deductibility
thereof, to the extent possible, while preserving the Committee's flexibility to
maintain competitive compensation programs.
Base Salary. The Company seeks to maintain executive compensation at levels
competitive with other corporations in the Company's market and industry in
accordance with information, including survey data, available to the Company.
Corporations considered included the companies included in the Company's Peer
Group, as defined below, as well as other companies in the food and distribution
industries. Periodic increases in base salary are based on evaluations of each
executive's past and current performance, competitive market conditions and the
Company's performance. As discussed below, the base salary of the Chairman of
the Board, Mr. Bennett, for fiscal 1997 was established pursuant to an
employment agreement executed in April 1996. The base salary of the President
and Chief Executive Officer, Mr. Stokely, for fiscal 1997 was established
pursuant to an employment agreement executed in April 1996. The base salary of
the Company's other executive officers is determined by the Company's Chief
Executive Officer, subject to the approval of the Committee.
Annual Cash Incentive Compensation. It is the Committee's policy that a
significant portion of total compensation be "at risk" based on performance
criteria. The Committee believes that this approach relates compensation levels
to performance and is in the best interests of the shareholders. The Company's
Executive Officer Performance Plan is designed to reward certain officers and
other key employees for the Company's operating performance, as measured by
established earnings criteria, and for individual and departmental performance.
Under this Plan as in effect for fiscal 1997, an incentive compensation pool was
funded based on predetermined threshold and target levels of the Company's
adjusted pre-tax FIFO earnings. A participant shared in the incentive
compensation pool, up to a predetermined maximum percentage of annual base
salary. Awards, established as a percentage of base salary, varied by management
level. Adjustments to awards and flexibility for special awards were available
to reflect individual performance. The Committee approved the threshold and
target levels of the Company's adjusted pre-tax FIFO earnings and corresponding
percentages of annual base salary in conjunction with its review of the
Company's annual fiscal plan. All executive officers other than Mr. Bennett and
Mr. Stokely participated in this Plan for fiscal
-6-
1997. As discussed below, the formulas for determining Mr. Bennett's and Mr.
Stokely's incentive compensation for fiscal 1997 were established under the
terms of their respective employment agreements.
Long-Term Incentives. The Company's amended and restated Omnibus Stock
Incentive Plan, which was approved by the shareholders in fiscal 1997, permits
the Committee, in its discretion, to grant options to purchase shares of the
Company's Common Stock, SARs, shares of restricted stock and performance shares
to any employee of the Company or its subsidiaries who the Committee believes
has contributed significantly or can be expected to contribute significantly to
the profits or growth of the Company. The Committee determines the amount of the
grant, the term of the options, SARs, restricted stock or performance shares and
the requisite conditions for exercise and vesting. The Committee does not take
into account stock ownership of plan participants in determining the amount or
terms of grants under the Omnibus Stock Incentive Plan. The granting or award of
stock-based compensation is intended to encourage executives to take a longer
view of the impact of their individual contributions to the Company. As with
base pay and annual incentive compensation, the Committee reviews survey data to
establish competitive long-term compensation structures.
During fiscal 1997, 126 employees, including Messrs. Stokely, Bennett,
Ryder and Covington, received grants of options under the Omnibus Stock
Incentive Plan. Options granted during fiscal 1997 were granted at the fair
market value of the Common Stock on the date of grant; accordingly, the market
value of the Common Stock must increase before the employee receives any benefit
from the grant. The options granted during fiscal 1997 become exercisable in
installments over a four-year period, except that 75,000 options granted to Mr.
Stokely in connection with his election as President and Chief Executive Officer
become exercisable in installments over a five-year period. In connection with
his promotion, Mr. Stokely also was granted 37,500 shares of restricted stock.
No other shares of restricted stock, and no performance shares or SARs, were
granted during fiscal 1997.
Compensation of the Chief Executive Officer. Effective January 1, 1997, Mr.
Bennett ceased to serve as Chief Executive Officer of the Company. At that
time, Mr. Stokely was named Chief Executive Officer of the Company. Both of
their compensation arrangements are summarized below.
Mr. Stokely. Effective April 28, 1996, the Company entered into a five
year employment and severance benefits agreement with Mr. Stokely that provides
for his continued employment by the Company, in his current capacity of
President and Chief Executive Officer, through April 28, 2001. The agreement
sets Mr. Stokely's salary at $400,000 per year (subject to annual review for
possible increase in light of his performance), and provides for annual
incentive compensation, which is determined based on a formula that takes into
account the Company's pre-tax FIFO earnings. Mr. Stokely's incentive
compensation for fiscal 1997 was $500,000, approximately $270,000 of which was
awarded pursuant to his employment agreement, based on the Company's fiscal 1997
performance, and the balance of which represented a special bonus. In
determining Mr. Stokely's compensation under his employment agreement, his
special bonus for fiscal 1997 and the number of options and shares of restricted
stock granted to him under the Omnibus Stock Incentive Plan, the Committee
considered his exemplary performance and contribution to the growth and success
of the Company, including the completion during fiscal 1997 of the acquisition
of Norristown Wholesale, Inc., and his outstanding leadership in bringing about
the achievement of nonfinancial goals as well as financial results clearly
exceeding those of industry competitors. In addition, the Committee reviewed the
compensation of other chief executive officers in the wholesale and retail
grocery industry, including those employed by companies in the Peer Group used
in the performance graph set forth below. The Committee considered the Company's
financial performance during Mr. Stokely's tenure to be superior relative to the
companies in the industry. For a more detailed discussion of Mr. Stokely's
employment agreement, see "Employment Continuity Agreements."
Mr. Bennett. Effective April 28, 1996, the Company entered into an
employment and severance benefits agreement with Mr. Bennett that provides for
his continued employment by the Company, in his current role of Chairman of the
Board, through December 1998. The agreement sets Mr. Bennett's salary at
$500,000 per year. In addition, Mr. Bennett was awarded a special bonus for
fiscal 1997 of $500,000. In determining Mr. Bennett's compensation under his
employment agreement, his special bonus for fiscal 1997 and the number of
options granted to him under the Omnibus Stock Incentive Plan, the Committee
considered the financial performance of the Company during his tenure as Chief
Executive Officer, which clearly exceeded that of the Company's competitors,
including six consecutive years of record operating profit. During Mr.
Bennett's tenure as Chief Executive Officer,
-7-
the total market capitalization of the Company (determined by multiplying share
price by the number of shares outstanding) rose from approximately $55 million
during fiscal 1991 to more than $1 billion at the end of fiscal 1996. For a more
detailed discussion of Mr. Bennett's employment agreement, see "Employment
Continuity Agreements."
In conclusion, the Committee believes that the compensation policies
and practices of the Company herein described are fair and equitable and are in
keeping with the best interests of the Company and its shareholders.
Executive Compensation Committee
--------------------------------
Albert F. Sloan, Chairman
Grace E. Harris
George H. Thomazin
James E. Ukrop
-8-
Summary of Cash and Certain Other Compensation
The following table shows, for the fiscal years ended May 3, 1997,
April 27, 1996, and April 29, 1995, the cash compensation paid, as well as
certain other compensation paid or accrued, by the Company to the Company's
Chief Executive Officer and its four other most highly compensated executive
officers (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation(1) Compensation Awards
---------------------------------- --------------------------------
Securities
Name and Restricted Underlying
Principal Position Fiscal Stock Options/ All Other
at May 3, 1997 Year Salary Bonus(2) Awards(3) SARs(4) Compensation(5)
- ----------------------------------------------------------------------- -------------------------------- ---------------------
John E. Stokely 1997 $396,155 $ 500,000 $821,888 95,000 $10,634
President and Chief 1996 242,804 729,375 22,500 7,002
Executive Officer 1995 174,433 191,000 18,000 5,820
Donald D. Bennett 1997 503,846 500,000 30,000 702
Chairman 1996 417,794 1,329,375 45,000 6,671
1995 350,000 630,000 45,000 2,529
John D. Ryder(6) 1997 269,630 110,000 7,500 1,670
President & COO, 1996 255,845 33,000 11,250 1,680
Retail Division
Alec C. Covington(7) 1997 213,558 125,000 7,500 5,399
Executive Vice 1996 211,914 125,000 60,000 0
President & COO,
Wholesale
Operations
John F. Rotelle 1997 230,770 50,000 4,952
Chairman - 1996 250,000 50,000 16,108
Rotelle, Inc. 1995 160,305 100,000 4,000 481
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(1) None of the Named Executive Officers received perquisites or other
personal benefits, securities or property with an aggregate value in excess of
the lesser of $50,000 or 10% of the total of his salary and bonus shown below.
(2) With respect to Messrs. Stokely and Bennett, consists of cash bonus, in
accordance with their respective Employment and Severance Benefits Agreement,
together with the following special bonus awards: in fiscal 1997, Messrs.
Stokely and Bennett were granted special cash awards of $230,000 and $500,000,
respectively, as a result of their respective roles in completing the Company's
acquisition of Norristown Wholesale, Inc. and in recognition of the Company's
exemplary performance during fiscal 1997; in fiscal 1996, Messrs. Stokely and
Bennett were granted special cash awards of $350,000 and $562,500, respectively,
and special grants of Common Stock under the Omnibus Stock Incentive Plan with a
value of $129,375 each (based on the fair market value of the Common Stock on
the date of grant), as a result of their respective roles in completing the
Company's acquisition of Super Rite Corporation; and in fiscal 1995, Mr. Stokely
was granted a special award of Common Stock under the Omnibus Stock Incentive
Plan with a value of $31,000 (based on the fair market value of the Common Stock
on the date of grant).
(3) Reflects 37,500 shares of restricted stock granted to Mr. Stokely on
May 16, 1996, based on the fair market value of the Common Stock on the date of
grant, which vest as follows: 3,750 shares on May 16, 1997, 1998, 1999 and 2000,
and 22,500 shares on May 16, 2001. As of May 3, 1997, Mr. Stokely held 49,500
shares of restricted stock with a value of $1,008,563. Dividends are paid on
restricted stock at the same rate and times as on all other shares of Common
Stock. No other Named Executive Officer held any shares of restricted stock as
of May 3, 1997.
(4) Reflects nonqualified stock options granted under the Company's Omnibus
Stock Incentive Plan.
(5) "All Other Compensation" for fiscal 1997 consists of: (i) the Company's
25% matching contributions under the Company's Savings and Stock Ownership Plan
to the Named Executive Officers as follows: Mr. Stokely - $2,942; Mr. Bennett-
$702; Mr. Ryder - $1,670; Mr. Covington - $1,404; and Mr. Rotelle - $529; and
(ii) the amounts awarded to the following Named Executive Officers under the
Company's Vacation to Stock Conversion Plan (which amounts, net of applicable
withholdings, were distributed in the form of shares of Common Stock based on
the fair market value of the Common Stock as of the plan's determination date):
Mr. Stokely - $7,692; Mr. Bennett - $0; Mr. Ryder - $0; Mr. Covington - $3,966;
and Mr. Rotelle - $4,423.
(6) Mr. Ryder became an executive officer of the Company on October 15,
1995, as a result of the Company's acquisition of Super Rite Corporation.
(7) Mr. Covington joined the Company as an executive officer in October
1995.
-9-
Stock Options and SARs
The following table contains information concerning the grants of
options made during fiscal 1997 under the Company's Omnibus Stock Incentive Plan
to the Named Executive Officers. No SARs were granted during fiscal 1997.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants for Option Term (1)
- --------------------------------------------------------------------------------------------- --------------------------------
% of Total
Number of Options/
Securities SARs
Underlying Granted to
Options/ Employees Exercise
SARs in Fiscal or Base Expiration
Name Granted (2) Year Price (3) Date 5% (4) 10% (4)
- --------------------------------------------------------------------------------------------- ----------------------------------
John E. Stokely 75,000 22.0% $21.917 05/16/2006 $1,242,225 $2,952,225
20,000 5.9 $23.625 11/07/2006 297,100 753,100
Donald D. Bennett 30,000 8.8 $23.625 11/07/2006 445,650 1,129,650
John D. Ryder 7,500 2.2 $23.625 11/07/2006 111,413 282,413
Alec C. Covington 7,500 2.2 $23.625 11/07/2006 111,413 282,413
John F. Rotelle 0 0 - - - -
- ------------
(1) The potential realizable value is based upon assumed future prices for
the Common Stock that are derived from the specified assumed annual rates of
appreciation. Actual gains, if any, on stock option exercises and Common Stock
holdings are dependent on the actual future performance of the Common Stock.
There can be no assurance that the amounts reflected in this table will be
achieved.
(2) All option grants consisted of nonqualified stock options granted under
the Omnibus Stock Incentive Plan. These grants become exercisable in one-fourth
installments on December 15, 1997, 1998, 1999 and 2000, except that Mr.
Stokely's grant of 75,000 shares becomes exercisable in one-fifth installments
on May 16, 1997, 1998, 1999, 2000, and 2001.
(3) The exercise price was set at the fair market value of the Common Stock
on the date of the grant. The exercise price may be paid in cash or in Common
Stock valued at fair market value on the date preceding the date of exercise, or
a combination of cash and Common Stock.
(4) The 5% and 10% assumed annual rates of stock price appreciation used to
calculate potential option gains shown above are required by the rules of the
Securities and Exchange Commission. The actual gains that will be realized, if
and when the Named Executive Officers exercise the options granted in fiscal
1997, will be dependent on the future performance of the Common Stock. The
following table is provided to illustrate the relationship between the
hypothetical gain that would be realized by the Named Executive Officers upon
the exercise of such options and the hypothetical gain that would be realized by
all shareholders as a result of the assumed stock price appreciation:
Annual Rate of Stock Price
Appreciation
------------------------------------------------
5% 10%
-------------------- ---------------------
Resulting stock price based on $23.625 starting price $ 38.48 $ 61.28
Per share gain 14.86 37.66
Aggregate gain that would be realized by all shareholders 702,640,002 1,780,714,837
(based on 47,283,984 share outstanding on the November 7, 1996 grant date)
Aggregate hypothetical gain on all fiscal 1997 options granted to the Named 2,207,801 5,399,801
Executive Officers if $38.48 and $61.28 prices, respectively, are achieved
Hypothetical aggregate gains for the Named Executive Officers as a percentage 0.3% 0.3%
of all shareholders' gains
Option/SAR Exercises and Holdings
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options and SARs during fiscal
1997, and unexercised options and SARs held by them on May 3, 1997.
-10-
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
Number of Securities
Underlying Value of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Fiscal Year-End(2) Fiscal Year-End(3)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise(1) Realized Unexercisable(4) Unexercisable(4)
- ---- --------------- -------- ---------------- ----------------
John E. Stokely 33,375 $567,489 25,875/124,625 $276,425/$180,770
Donald D. Bennett 67,500 886,905 45,000/30,000 140,625/0
John D. Ryder 0 0 2,812/15,938 8,788/26,369
Alec C. Covington 0 0 15,000/52,500 48,135/144,405
John F. Rotelle 0 0 3,000/3,000 30,126/30,126
- -----------
(1) Represents only nonqualified stock options granted under the Company's
Omnibus Stock Incentive Plan.
(2) Represents only nonqualified stock options granted under the Company's
Long-Term Incentive Plan and/or Omnibus Stock Incentive Plan. Each nonqualified
stock option granted under the Company's Long-Term Incentive Plan includes a
tandem SAR.
(3) The value of unexercised in-the-money options represents the positive
spread between the May 3, 1997, closing price of Common Stock ($20.375) and the
exercise price of any unexercised options.
(4) The options represented could not be exercised by the named executive
as of May 3, 1997, and future exercisability is subject to the executive
remaining employed by the Company or its subsidiaries, subject to acceleration
for death or total disability of the executive or a "change in control" of the
Company (as defined in the applicable option agreements).
Pension Plan Table
The table below illustrates the approximate aggregate retirement benefits
payable under the Company's funded defined benefit pension plan for its salaried
employees and supplemental retirement plan for certain officers and other key
employees retiring at age 65. The amounts reflected in the table are stated in
payments in the form of a life annuity. Other actuarially equivalent forms of
benefit may be selected. The amounts reflected in the table are subject to
offset for Social Security and other benefits.
Years of Credited Service (2)
Annual --------------------------------------------------------
Compensation (1) 10 15 20 25
- ---------------- --------------------------------------------------------
$100,000 . . . . . $ 60,000 $ 65,000 $ 70,000 $ 70,000
200,000 . . . . . 120,000 130,000 140,000 140,000
300,000 . . . . . 180,000 195,000 210,000 210,000
400,000 . . . . . 240,000 260,000 280,000 280,000
500,000 . . . . . 300,000 325,000 350,000 350,000
600,000 . . . . . 360,000 390,000 420,000 420,000
- ------------
(1) Annual compensation is the average of a participant's highest five
consecutive years' compensation (base salary plus overtime and commissions)
during the last ten years and approximates, in the case of the Named Executive
Officers, the amounts reported as salary in the Summary Compensation Table.
(2) The years of credited service for the Named Executive Officers as of
May 3, 1997, were as follows: Mr. Stokely - 7; Mr. Bennett - 7; Mr. Ryder - 1;
Mr. Covington - 1; and Mr. Rotelle - 3. With respect to Mr. Bennett's benefits
under the Company's Supplemental Executive Retirement Plan, see "Employment
Continuity Agreements."
-11-
Employment Continuity Agreements
Mr. Stokely. The Company entered into an employment and severance
benefits agreement with Mr. Stokely, effective April 28, 1996, which extends his
employment with the Company in his current capacity of President and Chief
Executive Officer through April 28, 2001. The agreement also provides that the
Board of Directors will nominate Mr. Stokely for election to the Board of
Directors at each annual meeting of shareholders during the term of the
agreement, and will use its best efforts to cause Mr. Stokely to be duly elected
to the Board at each such meeting.
The agreement sets Mr. Stokely's salary at $400,000 per year (subject
to annual review for possible increase in light of his performance), and
provides for annual incentive compensation equal to the sum of (i) 50% of his
base salary if the Company achieves target pre-tax FIFO earnings, plus (ii) 1%
of the amount by which the Company's pre-tax FIFO earnings exceed target pre-tax
FIFO earnings. The agreement also provides that (i) during the term of the
agreement the Company will pay Mr. Stokely's portion of the premiums for
coverage under the Company's life, accident, medical and dental benefits plans,
and (ii) unless Mr. Stokely's employment is terminated during the term of the
agreement by the Company for cause or by Mr. Stokely (other than upon his
disability or following a "change in control" of the Company, as defined below),
the Company will provide to Mr. Stokely for a period of 5 years following the
termination of his employment (at the Company's expense) coverage under life
insurance policies consistent with those currently provided by the Company for
his benefit, and medical and dental benefits of the type generally provided from
time-to-time to the Company's executive employees. In addition, the agreement
provides for the payment of a lump-sum severance benefit equal to one year's
salary in the event Mr. Stokely is terminated during the term of the agreement
(i) by the Company other than for cause or upon his death or disability, (ii) by
the Company for any reason other than death or disability within one year
following a "change in control" of the Company or (iii) by Mr. Stokely within
one year following a "change in control" of the Company. The agreement also
provides that upon any "change in control" of the Company, Mr. Stokely shall be
entitled to receive a lump-sum payment in an amount equal to the actuarial
equivalent of the benefit he otherwise would be entitled to receive under the
Company's Supplemental Executive Retirement Plan (the "SERP") upon retirement.
In addition, if a "change in control" of the Company occurs during the term of
the agreement and Mr. Stokely becomes liable for any excise tax with respect to
any payment or benefit under this agreement or any of the Company's benefit
plans, the Company shall pay Mr. Stokely an amount equal to (i) such excise tax,
plus (ii) the federal, state and local income taxes, and federal hospitalization
tax, for which Mr. Stokely is liable on account of the payment described in
clause (i) of this sentence and the additional payments described in this clause
(ii).
Mr. Bennett. The Company entered into an employment and severance
benefits agreement with Mr. Bennett, effective April 28, 1996, to ensure his
continued service to the Company through his retirement. The agreement provides
for Mr. Bennett's employment in his current capacity of Chairman of the Board
through December 1998. The agreement further provides that, prior to its
expiration in December 1998, the Company and Mr. Bennett will enter into a
consulting agreement which will provide for his continued service to the Company
through age 65. The agreement also provides that the Board of Directors will
nominate Mr. Bennett for election to the Board at each annual meeting of
shareholders during the term of the agreement, and will use its best efforts to
cause Mr. Bennett to be duly elected to the Board at each such meeting.
The agreement sets Mr. Bennett's salary at $500,000 per year through
1998, and provides that (i) during the term of the agreement the Company will
pay Mr. Bennett's portion of the premiums for coverage under the Company's life,
accident, medical and dental benefits plans, and (ii) unless Mr. Bennett's
employment is terminated during the term of the agreement by the Company for
cause or by Mr. Bennett (other than upon his disability or following a "change
in control" of the Company), the Company will provide to Mr. Bennett following
the termination of his employment (at the Company's expense) coverage under life
insurance policies consistent with those currently provided by the Company for
his benefit through age 65, and medical and dental benefits of the type
generally provided from time-to-time to the Company's executive employees until
his death. In addition, the agreement provides for the payment of a lump-sum
severance benefit equal to one year's salary in the event Mr. Bennett is
terminated during the term of the agreement (i) by the Company other than for
cause or upon his death or disability, (ii) by the Company for any reason other
than death or disability within one year following a "change in control" of the
Company or (iii) by Mr. Bennett within one year following a "change in control"
of the Company. The agreement also provides that Mr. Bennett is entitled to a
vested benefit under the SERP based upon his having attained age 65 and having
completed 20 years of credited service, with credited monthly compensation
-12-
to be based upon the base salary contemplated in the agreement. In addition, the
agreement provides that, upon any "change in control" of the Company, Mr.
Bennett shall be entitled to receive a lump-sum payment in an amount equal to
the actuarial equivalent of the benefit he otherwise would be entitled to
receive under the SERP upon retirement. In addition, if a "change in control" of
the Company occurs during the term of the agreement and Mr. Bennett becomes
liable for any excise tax with respect to any payment or benefit under this
agreement or any of the Company's benefit plans, the Company shall pay Mr.
Bennett an amount equal to (i) such excise tax, plus (ii) the federal, state and
local income taxes, and federal hospitalization tax, for which Mr. Bennett is
liable on account of the payment described in clause (i) of this sentence and
the additional payments described in this clause (ii).
Mr. Rotelle. In connection with the Company's acquisition of Rotelle,
Inc. in August 1994, the Company entered into an employment and severance
benefits agreement with Mr. Rotelle. The agreement provides for Mr. Rotelle's
employment by Rotelle, Inc. through August 1998 at a salary of $250,000 per year
and provides for annual incentive compensation equal to a pre-determined
percentage (up to a maximum of 40%) of Mr. Rotelle's annual base salary based on
the Company's adjusted pre-tax FIFO earnings. In addition, the agreement
provides for the payment of a lump-sum severance benefit equal to one year's
salary in the event Mr. Rotelle is terminated during the term of the agreement
(i) by the Company other than for cause or upon his death of disability, (ii) by
the Company for any reason other than death or disability within one year
following a "change in control" of the Company or (iii) by Mr. Rotelle within
one year following a "change in control" of the Company if his job title or
responsibilities are materially reduced.
Definition of "Change in Control." For purposes of the foregoing
employment and severance benefits agreements, a "change in control" of the
Company means, in general, the occurrence of any of the following events: (i)
any person or group becomes the beneficial owner of securities representing more
than 50% of the aggregate voting power of all classes of the Company's
then-outstanding voting securities; or (ii) the shareholders of the Company
approve (a) a plan of merger, consolidation or share exchange between the
Company and any entity other than a subsidiary, or (b) a proposal with respect
to the sale, lease, exchange or other disposal of all, or substantially all, of
the Company's property.
Performance Graph
The following graph compares the cumulative total return for Company
Common Stock to the cumulative total returns for the Standard & Poor's 500
Composite Index and an index of peer companies (the "Peer Group") selected by
the Company for the Company's last five fiscal years. Companies in the Peer
Group are as follows: Fleming Companies Inc., Nash-Finch Company, Super Food
Services, Inc. and Supervalu Inc. The graph assumes an investment of $100 in
Company Common Stock and in each index as of May 1, 1992, and that all dividends
were reinvested.
[stock performance graph]
5 Year Comparison: Richfood Holdings, Inc.
vs. Standard & Poor's 500 vs. Peer Group
Richfood Holdings, Inc. Standard & Poor's 500 Peer Group
May-92 $100 $100 $100
Apr-93 155 110 118
Apr-94 194 116 114
Apr-95 232 136 102
Apr-96 385 177 106
May-97 363 221 109
-13-
Certain Relationships and Related Transactions
During fiscal 1997, the Company sold products and services to, and
engaged in certain other transactions with, entities affiliated with Mr. Ukrop.
See "Company Compensation Committee Interlocks and Insider Participation."
During fiscal 1995, the Company made a secured loan to Mr. Donald D.
Bennett, Chairman of the Board of the Company, in the amount of $60,000 at a
rate of interest equal to 6.0% per annum. In addition, during fiscal 1996 the
Company made secured loans to Mr. Bennett in the aggregate amount of $110,000 at
rates of interest equal to 5.90% and 5.79% per annum. The largest aggregate
amount of indebtedness outstanding under such loans during fiscal 1997,
including accrued interest, was $126,212, and the aggregate unpaid balance
thereof on June 28, 1997, was $110,000.
During fiscal 1994, the Company made a $73,938 secured loan to Mr. John
E. Stokely, President and Chief Executive Officer of the Company, at a rate of
interest equal to 3.68% per annum. In addition, in June 1994 the Company made
secured loans to Mr. Stokely in the aggregate amount of $457,127, at a rate of
interest equal to 5.56% per annum. The largest aggregate amount of indebtedness
outstanding under such loans during fiscal 1997, including accrued interest, was
$149,684, and the aggregate unpaid balance thereof on June 28, 1997, was
$131,064.
Compensation Committee Interlocks and Insider Participation
The Executive Compensation Committee of the Board is composed of
Messrs. Albert F. Sloan (Chairman), George H. Thomazin and James E. Ukrop and
Dr. Grace E. Harris.
Mr. Ukrop is Vice-Chairman and Chief Executive Officer of Ukrop's Super
Markets, Inc. ("Ukrop's"). During fiscal 1997, Ukrop's paid $211,328,508 to the
Company for products and services purchased from the Company. Until July 1,
1997, Ukrop's subleased from the Company approximately 32,000 square feet of
warehouse space in the Company's Chester, Virginia, facility. The aggregate
rental paid by Ukrop's to the Company under the sublease during fiscal 1997 was
$18,162.
The Company believes that all of the transactions with Ukrop's
described above were made on terms comparable to those that would have been
agreed to with unaffiliated third parties in similar transactions.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and persons who own
more than 10% of the Common Stock, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission and
the New York Stock Exchange. Executive officers, directors and owners of more
than 10% of the Common Stock are required by regulation to furnish the Company
with copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received and written representations from certain reporting persons who were not
required to file a Form 5 for fiscal 1997, the Company believes that all of its
executive officers, directors and owners of more than 10% of the Common Stock
complied with all Section 16(a) filing requirements applicable to them with
respect to transactions during fiscal 1997, except that during fiscal 1997 Mr.
Thomazin filed one late report on Form 5 with respect to the exercise of stock
options.
-14-
APPROVAL OF THE AMENDMENT
OF THE OMNIBUS STOCK INCENTIVE PLAN
(Proposal 2)
The Board of Directors proposes that the Company's shareholders approve
an amendment to the Richfood Holdings, Inc. Omnibus Stock Incentive Plan (the
"Plan"). The Plan was originally approved by the shareholders at the 1991 annual
meeting. The Company's shareholders approved the amendment and restatement of
the Plan at the 1996 annual meeting. The further amendment of the Plan, which
the Company's shareholders are being asked to approve at the 1997 annual meeting
(the "Amendment"), was adopted by the Executive Committee of the Board of
Directors on July 29, 1997, subject to the approval of the Company's
shareholders.
Proposed Amendment
The proposed Amendment adds a new article to the Plan, which will
permit the Executive Compensation Committee to grant non-stock based incentive
awards to employees who participate in the Plan. Such awards ("Incentive
Awards") are not stated with reference to a specified number of shares of Common
Stock. The Amendment imposes a $1.0 million limit on Incentive Awards that may
be paid to any one individual in any calendar year, and identifies objective
performance criteria (which are described below) that may be used by the
Executive Compensation Committee to establish Incentive Awards. An Incentive
Award may be subject to forfeiture or restrictions on transfer or both unless
and until certain conditions specified by the Executive Compensation Committee
are satisfied. To the extent an Incentive Award is earned, it may be settled in
cash, Common Stock or a combination thereof.
The Amendment does not make significant changes to the Plan and is
being made primarily to assure the full deductibility by the Company for tax
purposes of certain non-stock based awards earned under the Plan. It should be
noted that the maximum number of shares that may be issued under the Plan is not
being increased. Thus, the Amendment is not dilutive to the Company's
shareholders. Further, the use of Incentive Awards may enable the Executive
Compensation Committee to cap the impact on earnings of awards under the Plan.
The Board of Directors believes that amending the Plan to provide for
non-stock based Incentive Awards gives the Executive Compensation Committee an
additional tool to incent those employees who are in a position to contribute
materially to the success of the Company and its affiliates. The Board of
Directors also believes that the Plan, as amended, will benefit the Company by
(i) assisting it in recruiting and retaining officers and key employees with
ability and initiative, (ii) providing greater incentives for officers and key
employees and (iii) associating the interests of officers and key employees with
those of the Company and its shareholders through opportunities for increased
stock ownership.
The following paragraphs summarize the principal features of the Plan,
as amended. Such summary is subject, in all respects, to the terms of the Plan
and the Amendment, which are incorporated herein by reference. The Company will
provide promptly, upon request and without charge, a copy of the full text of
the Plan and the Amendment to any person to whom a copy of this proxy statement
is delivered. Requests should be directed to: Fredricka H. Dyson, Assistant
Secretary, Richfood Holdings, Inc., 8258 Richfood Road, Mechanicsville, Virginia
23116 (telephone (804) 746-6000).
Summary of the Omnibus Stock Incentive Plan, as Amended
The Executive Compensation Committee (the "Committee") administers the
Plan. Although the Committee may generally delegate its authority to an officer
of the Company, the Committee may not delegate its authority with respect to
employees who are subject to Section 16 of the Securities Exchange Act of 1934,
as amended. The Committee or its delegate select the employees who participate
in the Plan ("Participants"). The Committee or its delegate may, from time to
time, grant stock options, SARs, stock awards, performance shares, and incentive
awards to Participants. No person may participate in the Plan while he is a
member of the Committee.
Any employee of the Company or any affiliate (as defined) who, in the
Committee's or its delegate's judgment, has contributed to the profitability or
growth of the Company or one of its affiliates may be granted awards under the
Plan. All awards made under the Plan will be evidenced by written agreements
between the Company and the Participant. The Committee or its delegate may
establish guidelines supplementing the provisions
-15-
of the Plan to aid in the selection of Participants and to determine the
amounts, timing and other terms of awards. Except as discussed below with
respect to certain Incentive Awards made under the Amendment, the Company is not
able to estimate the number of individuals that the Committee or its delegate
will select to participate in the Plan or the type or size of awards that the
Committee or its delegate will approve in the future.
Options granted under the Plan may be incentive stock options ("ISOs")
or nonqualified stock options. A stock option entitles the Participant to
purchase shares of Common Stock from the Company at the option price. The option
price will be fixed by the Committee or its delegate at the time the option is
granted, but the price cannot be less than the fair market value of a share of
Common Stock on the date of the grant, in the case of an ISO, or less than 50%
of the fair market value of a share of Common Stock on the date of the grant in
the case of a nonqualified stock option. The option price may be paid in cash,
with shares of Common Stock, by reducing the number of shares otherwise issuable
under the option, a combination of cash and shares of Common Stock or, with the
consent of the Committee or its delegate, in installments. Options may be
exercised at such times and subject to such conditions as may be prescribed by
the Committee or its delegate. The maximum period in which an option may be
exercised will be fixed by the Committee or its delegate at the time the option
is granted but cannot exceed ten years. Options are nontransferable except by
will or the laws of descent and distribution.
No employee may be granted ISOs (under the Plan or any other plan of
the Company) that are first exercisable in a calendar year for Common Stock
having a fair market value (determined as of the date the option is granted)
exceeding $100,000. In addition, no Participant may be granted options in any
calendar year for more than 112,500 shares of Common Stock.
SARs generally entitle the Participant to receive the excess of the
fair market value of shares of Common Stock on the date of exercise over the
initial value of the SAR. The initial value of the SAR is the fair market value
of a share of Common Stock on the date of grant. The Plan provides that the
Committee or its delegate may prescribe that the Participant will realize
appreciation on a different basis than described in the preceding sentences. For
example, the Committee or its delegate may limit or increase the amount of
appreciation that may be realized upon the exercise of a SAR.
SARs may be granted as corresponding SARs or independent of option
grants. To exercise a corresponding SAR, the Participant must surrender
unexercised that portion of the stock option to which the corresponding SAR
relates.
SARs may be exercised at such times and subject to such conditions as
may be prescribed by the Committee or its delegate. The maximum period in which
a SAR may be exercised will be fixed by the Committee or its delegate at the
time the SAR is granted but cannot exceed ten years. SARs are nontransferable
except by will or the laws of descent and distribution.
No Participant may be granted SARs that are independent of option
grants in any calendar year for more than 37,500 shares of Common Stock or
corresponding SARs for more than 112,500 shares of Common Stock. For purposes of
this limitation (and the limitation on individual option grants), an option and
a corresponding SAR are treated as a single award.
The Plan also permits the grant of shares of Common Stock as stock
awards (a "Stock Award"). A Stock Award may be subject to forfeiture or
nontransferable or both unless and until certain conditions are satisfied. No
Participant may be granted Stock Awards (other than Stock Awards issued in
settlement of performance shares) in any calendar year for more than 37,500
shares of Common Stock.
Performance shares also may be granted to Participants. A performance
share award (a "Performance Share") is stated with reference to a specified
number of shares of Common Stock. To the extent that a Performance Share is
earned, the Participant may receive a Stock Award, a cash payment or a
combination of cash and a Stock Award based on the fair market value of the
number of shares earned under the Performance Share award. No Participant may be
granted Performance Shares with respect to more than 37,500 shares of Common
Stock in any calendar year.
The Plan will also permit the grant of Incentive Awards, as described
above under the caption "Proposed Amendment."
The exercisability of an option or SAR, the vesting or transferability
of a Stock Award and the Participant's rights under a Performance Share award
may be conditioned upon the attainment of certain performance goals. The Plan
provides that those goals or objectives may be stated with reference to the
Company's, an affiliate's or an operating unit's return on equity, earnings per
-16-
share, total earnings, earnings growth, total sales, sales growth, return on
capital, return on assets or the fair market value of the Common Stock. Similar
rules apply to Incentive Awards, but such awards may also be based on gross,
operating or net earnings before or after taxes, return on sales, return on net
assets, cash flow per share, book value per share, volume growth, cash flow (as
defined by the Committee), fair market value, share price or total shareholder
return, market share, economic value added, market value added, productivity,
level of expenses, quality, safety, customer satisfaction, or peer group
comparisons of any of the aforementioned objectives. Such goals may be set for a
one year period or for a longer period.
A maximum of 2,250,000 shares of Common Stock may be issued under the
Plan in connection with awards made after June 13, 1996. This limitation will be
adjusted, as the Committee or its delegate determines is appropriate, in the
event of a change in the number of outstanding shares of capital stock by reason
of a stock dividend, stock split, combination, reclassification,
recapitalization or other similar event. The terms of outstanding awards also
may be adjusted by the Committee or its delegate to reflect such changes.
No option or SAR may be granted, and no Stock Awards, Incentive Awards
and Performance Shares may be awarded, under the Plan after June 13, 2006. The
Board of Directors may, without further action by shareholders, terminate or
suspend the Plan in whole or in part. The Board of Directors also may further
amend the Plan, except that without shareholder approval no such amendment may
materially increase the number of shares of Common Stock that may be issued
under the Plan, materially change the class of individuals who may be selected
to participate in the Plan or materially increase the benefits that may be
provided under the Plan. Although the Board of Directors does not believe the
Amendment requires shareholder approval, the Board believes it is prudent to
obtain shareholder approval to assure the Company's future tax deductions with
respect to Incentive Awards.
The Company has been advised by counsel that for federal income tax
purposes, no taxable income is recognized by a Participant at the time an option
is granted. If the option is an ISO, no income will be recognized upon the
Participant's exercise of the option. Income is recognized by a Participant when
he disposes of shares acquired under an ISO. The exercise of a nonqualified
stock option generally is a taxable event that requires the Participant to
recognize, as ordinary income, the difference between the fair market value of
the shares of Common Stock received upon such exercise and the option price.
No taxable income is recognized by a Participant upon the grant of a
SAR. The exercise of a SAR generally is a taxable event. The Participant
generally must recognize income equal to any cash that is paid, plus the fair
market value of shares of Common Stock that are received, in settlement of a
SAR.
Income is recognized on account of a Stock Award when the shares first
become transferable or are no longer subject to a substantial risk of
forfeiture. At that time the Participant recognizes income equal to the fair
market value of the shares of Common Stock received.
No taxable income is recognized by a Participant upon an award of
Performance Shares. Income is recognized when the Performance Shares are settled
in an amount equal to any cash that is paid, plus the fair market value of any
shares of Common Stock that are received.
No taxable income is recognized by a Participant at the time an
Incentive Award is made. Income is recognized when an Incentive Award is settled
in an amount equal to any cash that is paid, plus the fair market value of any
shares of Common Stock that are received.
A Participant's employer (either the Company or an affiliate) will be
entitled to claim a federal income tax deduction on account of the exercise of a
nonqualified option or SAR or the vesting of a Stock Award, or the settlement of
Performance Shares or an Incentive Award. The amount of the deduction is equal
to the ordinary income recognized by the Participant. The employer will not be
entitled to a federal income tax deduction on account of the grant or the
exercise of an ISO. The employer may claim a federal income tax deduction on
account of certain dispositions of shares of Common Stock received upon the
exercise of an ISO.
-17-
Incentive Awards for the Three Fiscal Year Performance Cycle that Commenced
May 4, 1997
At a meeting held July 29, 1997, the Committee granted Incentive
Awards, subject to approval of the Amendment by the Company's shareholders, to
six Participants. The Incentive Awards include target awards for each individual
and performance goals based 50% on the Company's three year average return on
equity ("ROE") and 50% on the Company's three year cumulative earnings per share
("EPS"). Performance levels were established in each performance goal category
based on meeting or exceeding the goals, with no award earned if performance is
below the threshold goal for either ROE or EPS, the target award earned if
performance equals target levels for both ROE and EPS, and up to two times the
target award earned if the Company achieves certain superior levels of ROE and
EPS. In addition to the award earned based on the Company's performance, the
target awards may be adjusted based on the Company's performance relative to a
group of companies in the food and distribution industries designated by the
Committee at the time of the award.
Based on the awards and criteria established by the Committee with
respect to Incentive Awards for the three fiscal year performance cycle that
commenced on May 4, 1997, the following persons and groups would receive the
following awards at the end of the cycle, assuming that the Company's
performance with respect to each goal is superior and its weighted peer group
percentile is 80% or better: Mr. Stokely - $506,250; Mr. Covington -
$197,556; and all current executive officers as a group - $1,285,056. No other
Named Executive Officers or employees, and no non-employee directors, were
granted Incentive Awards for the three fiscal year performance cycle that
commenced May 4, 1997. The Committee intends that any Incentive Awards earned
for the three fiscal year performance cycle that commenced May 4, 1997, will be
settled 50% in cash and 50% in shares of Common Stock.
The current Incentive Awards vest at the end of the three fiscal year
performance cycle that commenced May 4, 1997. Vested but unpaid Incentive Awards
will be paid in full if a Participant's employment is terminated. Participants
who die, become disabled, retire or resign with the approval of the Committee
before an award vests will be paid a pro rata Incentive Award based on the
number of months they completed in the three fiscal year performance cycle.
Incentive Awards will vest immediately in the event of a "change in control" of
the Company, and Participants terminated thereafter will receive pro rata
awards. Unless vesting is accelerated in the Committee's sole discretion, a
Participant terminating employment due to other circumstances forfeits his
unvested Incentive Awards.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 2
TO APPROVE THE AMENDMENT OF THE RICHFOOD HOLDINGS, INC. OMNIBUS STOCK
INCENTIVE PLAN.
-18-
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
(Proposal 3)
On September 6, 1996, the Company selected Ernst & Young LLP ("Ernst &
Young") to serve as its independent public accountants for fiscal 1997 and,
accordingly, dismissed KPMG Peat Marwick LLP, its former independent public
accountants ("Peat Marwick"). The decision to engage Ernst & Young and dismiss
Peat Marwick was approved by the Audit Committee of the Board of Directors of
the Company on September 6, 1996.
Peat Marwick's reports on the Company's consolidated financial
statements for the two most recent fiscal years prior to their dismissal did not
contain an adverse opinion or disclaimer of opinion, nor were they qualified or
modified as to uncertainty, audit scope or accounting principles. During the two
most recent fiscal years prior to and through the date of their dismissal, there
was no disagreement with Peat Marwick regarding any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreement, if not resolved to the satisfaction of Peat
Marwick, would have caused Peat Marwick to make reference thereto in its
reports.
The Board of Directors has appointed Ernst & Young to serve as
independent public accountants for the Company for fiscal 1998. Shareholders are
requested to ratify this appointment. Representatives of Ernst & Young are
expected to be present at the annual meeting and will be given an opportunity to
make a statement and to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 3 TO
RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP TO SERVE AS INDEPENDENT PUBLIC
ACCOUNTANTS FOR FISCAL 1998.
-19-
PROPOSALS FOR 1998 ANNUAL MEETING
Any proposal submitted by a shareholder for inclusion in the proxy
materials for the next annual meeting of shareholders must be delivered to the
Company at its principal office not later than March 31, 1998.
In addition to any other applicable requirements, for business to be
properly brought before the 1998 annual meeting by a shareholder, even if the
proposal is not to be included in the Company's proxy statement, the Company's
bylaws provide that the shareholder must give notice in writing to the Secretary
of the Company not later than May 31, 1998. As to each such matter, the notice
must contain (i) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (ii) the name, record address of, and class and number of shares
beneficially owned by, the shareholder proposing such business and (iii) any
material interest of the shareholder in such business.
OTHER MATTERS
As of the date of this statement, management knows of no business that
will be presented for consideration at the annual meeting other than that stated
in this notice. As to other business, if any, and matters incident to the
conduct of the annual meeting that may properly come before the meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the judgment of the person or persons voting the proxies.
Shareholders, whether or not they expect to attend in person, are
requested to mark, date and sign the enclosed proxy and return it to the
Company. Please sign exactly as your name appears on the accompanying proxy.
Shareholders may revoke their proxy by delivering a written notice of revocation
to the Company at its principal office to the attention of Fredricka H. Dyson,
Assistant Secretary, at any time before the proxy is exercised.
Fredricka H. Dyson
Assistant Secretary
July 30, 1997
-20-
NOTICE
AND
PROXY STATEMENT
for the
ANNUAL MEETING
of
SHAREHOLDERS
To Be Held
August 28, 1997
[logo]
RICHFOOD HOLDINGS, INC. RICHMOND, VIRGINIA 23261
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Donald D. Bennett and John E. Stokely and
each of them proxies (and if the undersigned is a proxy, as substitute proxies)
each with the power to appoint his substitute, and hereby authorizes them to
represent and to vote, as designated below, all of the shares of Common Stock of
the Company held of record by the undersigned on July 11, 1997, at the annual
meeting of shareholders to be held at 10:00 a.m. on August 28, 1997, or any
adjournments thereof.
PROXY VOTE AUTHORIZATION FOR RICHFOOD HOLDINGS, INC.
ANNUAL MEETING AUGUST 28, 1997 CUSIP 763408101 -- RICHFOOD HOLDINGS, INC.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE FOLLOWING
PROPOSALS
1. Election of Directors
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(EXCEPT AS MARKED TO THE CONTRARY) for all nominees listed
Donald D. Bennett, Roger L. Gregory, Grace E. Harris, John C. Jamison, G. Gilmer
Minor, III, Claude B. Owen, Jr.,
John F. Rotelle, Albert F. Sloan, John E. Stokely, George H. Thomazin, James E.
Ukrop, Edward Villanueva
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NAME ON THE
LINE BELOW.
2. To approve the amendment of the Richfood Holdings, Inc. Omnibus Stock
Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the appointment by the Board of Directors of Ernst & Young LLP to
serve as independent public accountants for the current fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AND MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS
THEREOF.
Please sign exactly as your name
appears hereon. When shares are
held by joint tenants, only one of
such persons need sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If
a corporation, please sign in full
corporate name by the president or
other authorized officer. If a
partnership, please sign in
partnership name by an authorized
person. Please mark, sign, date and
return the proxy card promptly,
using the enclosed envelope.
_____________________________________
Signature
Date __, 1997
RICHFOOD HOLDINGS, INC.
SAVINGS PLANS
VOTING PROCEDURE
TO: PARTICIPANTS IN THE RICHFOOD HOLDINGS, INC.
SAVINGS AND STOCK OWNERSHIP PLAN, THE SUPER
RITE CORPORATION EMPLOYEE INVESTMENT OPPORTUNITY
PLAN, AND THE SUPER RITE FOODS, INC. INVESTMENT
OPPORTUNITY PLAN AND TRUST FOR RETAIL UNION
EMPLOYEES (collectively, the "Savings Plans")
As a participating employee in one or more of the Savings Plans, you have
the right to direct the Trustees of your Savings Plan (the "Trustees") to vote
the shares of Common Stock of Richfood Holdings, Inc. ("Common Stock")
represented by your interest in the Trust Fund under the applicable Savings Plan
at the annual meeting of shareholders of Richfood Holdings, Inc. to be held on
August 28, 1997. For your information, copies of the Notice of Annual Meeting
and Proxy Statement are forwarded herewith.
If the Trustees do not receive your instructions by August 25, 1997, (i)
they will not vote the shares of Common Stock held in your Pre-tax Contribution
and Rollover Accounts under the applicable Savings Plan at the annual meeting,
and (ii) they will vote the shares of Common Stock held in your Employer
Matching Contribution and Employer Discretionary Matching Contribution Accounts
under the applicable Savings Plan at the annual meeting in accordance with the
recommendations of management. Please indicate your instructions on the
accompanying card and return the card promptly to the Trustees in the enclosed
envelope.
TO: THE TRUSTEES OF THE RICHFOOD HOLDINGS, INC.
SAVINGS AND STOCK OWNERSHIP PLAN, THE SUPER
RITE CORPORATION EMPLOYEE INVESTMENT OPPORTUNITY
PLAN, AND THE SUPER RITE FOODS, INC. INVESTMENT
OPPORTUNITY PLAN AND TRUST FOR RETAIL UNION
EMPLOYEES (collectively, the "Savings Plans")
With respect to the shares of Common Stock of Richfood Holdings, Inc.
represented by my interest in the Trust Fund for one or more of the Savings
Plans, you are directed to sign and forward a proxy in the form being solicited
by the Board of Directors of Richfood Holdings, Inc. to instruct the persons
named therein, or their substitutes, to vote in accordance with the proxy
statement as designated below:
PROXY VOTE AUTHORIZATION FOR RICHFOOD HOLDINGS, INC.
ANNUAL MEETING AUGUST 28, 1997 CUSIP 763408101 -- RICHFOOD HOLDINGS,
INC.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE FOLLOWING
PROPOSALS
1. Election of Directors
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(EXCEPT AS MARKED TO THE CONTRARY) for all nominees listed
Donald D. Bennett, Roger L. Gregory, Grace E. Harris, John C. Jamison, G. Gilmer
Minor, III, Claude B. Owen, Jr.,
John F. Rotelle, Albert F. Sloan, John E. Stokely, George H. Thomazin, James E.
Ukrop, Edward Villanueva
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NAME ON THE
LINE BELOW.
2. To approve the amendment of the Richfood Holdings, Inc. Omnibus Stock
Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the appointment by the Board of Directors of Ernst & Young LLP to
serve as independent public accountants for the current fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IN THEIR DISCRETION, THE TRUSTEES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AND MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS
THEREOF.
Please sign and return promptly to
the Trustees in the enclosed
envelope.
_________________________________
Signature
Dated __, 1997
APPENDIX TO PROXY STATEMENT FILED
PURSUANT TO INSTRUCTION 3 TO ITEM 10(b)
OF SCHEDULE 14A
Proposed Amendment to the
Richfood Holdings, Inc.
Omnibus Stock Incentive Plan
Pursuant to Article XV of the Richfood Holdings, Inc. Omnibus Stock
Incentive Plan, as amended and restated effective June 13, 1996 (the "Plan"),
the Plan is further amended, effective July 29, 1997, subject to shareholder
approval on August 28, 1997, by adding the following new Article XVII at the end
thereof:
ARTICLE XVII
INCENTIVE AWARDS
17.01. Awards. The Committee shall designate Participants to whom Incentive
Awards shall be made. All Incentive Awards shall be determined exclusively by
the Committee under procedures established by the Committee; provided, however,
that in any calendar year no Participant may receive an Incentive Award
exceeding $1 million.
17.02. Earning an Award. The Committee, at the time an Incentive Award is made,
shall specify the terms and conditions which govern the award. Such terms and
conditions may include, by way of example and not of limitation, requirements
that the Participant complete a specified period of employment with the Company
or an Affiliate or that the Company, an Affiliate, an operating unit, or the
Participant attain stated objectives or goals as a prerequisite to payment under
an Incentive Award. Such performance objectives or goals may be based on one or
more of the Company's, an Affiliate's, or an operating unit's (i) gross,
operating net earnings before or after taxes, (ii) return on equity, (iii)
return on capital, (iv) return on sales, (v) return on assets or net assets,
(vi) earnings per share, (vii) cash flow per share, (viii) book value per share,
(ix) earning s growth, (x) sales growth, (xi) volume growth, (xii) cash flow (as
defined by the Committee), (xiii) Fair Market Value, (xiv) share price or total
shareholder return, (xv) market share, (xvi) economic value added, (xvii) market
value added, (xviii) productivity, (xix) level of expenses, (xx) quality, (xxi)
safety, (xxii) customer satisfaction, (xxiii) total sales, (xxiv) total
earnings, or (xxv) peer group comparisons of any of the aforementioned
objectives. Such goals may be set for a one year period or a longer period. If
the Committee, on the date of an award, prescribes that the Incentive Award
shall be earned only upon the attainment of performance objective stated with
respect to one or more of the foregoing criteria, such Incentive Award shall be
earned only to the extent that the Committee certifies that such objectives or
objectives have been achieved.
The Committee, at the time an Incentive Award is made, shall also specify when
amounts shall be payable under the Incentive Award and whether amounts shall be
payable in the event of the Participant's death, disability, retirement, or a
change of control.
Except with respect to those Participants who are covered employees (as
determined under Code section 162(m)(3)) and notwithstanding any other provision
of the Plan, the Committee, in its discretion may adjust the terms, conditions
or other requirements applicable to Incentive Awards and may increase or
decrease the amounts otherwise payable under an Incentive Award, to reflect
unusual or extraordinary transactions or events. The Committee may make such
adjustments with respect to one or more Participants, with respect to all
Participants as to Incentive Awards made during a particular year, or with
respect to all outstanding Incentive Awards.
17.03. Settlement. In the Committee's discretion, the amount payable when an
Incentive Award is earned may be settled in cash, by the issuance of Common
Stock, or a combination of cash and Common Stock. A fractional share shall not
be deliverable when an Incentive Award is settled, but a cash payment is made in
lieu thereof.
17.04. Shareholder Rights. No Participants shall, as a result of receiving an
Incentive Award, have any rights as a Shareholder until and then only to the
extent that the Incentive Award is earned and Common Stock is distributed. A
Participant may not sell, transfer, pledge, exchange, hypothecate, or otherwise
dispose of an Incentive Award or the rights to receive Common Stock thereunder
other than by will or the laws of descent and distribution. After and to the
extent that an Incentive Award is settled in Common Stock, a Participant will
have all the rights of a shareholder of the Company.
17.05. Administration. The Committee shall construe and administer the Plan,
including this Article XVII relating to Incentive Awards, as if the term
"Incentive Award" had been included in all Plan provisions of general
application in a manner similar to the term Performance Shares. For example,
shares of Common Stock issued pursuant to Incentive Awards shall reduce the
aggregate number of shares of Common Stock that may be issued under the Plan in
accordance with Article V. As provided in Article III, the Committee's authority
to interpret the Plan in this regard shall be absolute.