SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Wild Oats Markets, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Wild Oats Markets, Inc.
1645 Broadway
Boulder, CO 80302
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 4, 1998
TO THE STOCKHOLDERS OF WILD OATS MARKETS, INC.:
Notice Is Hereby Given that the Annual Meeting of Stockholders of Wild Oats
Markets, Inc., a Delaware corporation (the "Company"), will be held on Monday,
May 4, 1998 at 1:00 p.m. local time at the Boulder Public Library Auditorium,
1000 Canyon Boulevard, Boulder, Colorado for the following purposes:
1. To elect two directors to hold office until the Annual Meeting of
Stockholders in the year 2001.
2. To amend the Wild Oats Markets, Inc. 1996 Equity Incentive Plan to increase
by 825,000 shares the number of shares of Common Stock reserved for issuance
under the Plan.
3. To ratify the selection of Price Waterhouse LLP as independent accountants of
the Company for its fiscal year ending January 2, 1999.
4. To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on March 9, 1998, as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting and at any adjournment or postponement thereof.
By Order of the Board of Directors
Elizabeth C. Cook
Secretary
Boulder, Colorado
March 20, 1998
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER
OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN
THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK
OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE
RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
INVESTORS MAY REQUEST ADDITIONAL INFORMATION REGARDING WILD OATS MARKETS, INC.,
INCLUDING A COPY OF THE FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, FREE OF CHARGE. PLEASE ADDRESS YOUR REQUEST TO: INVESTOR
RELATIONS, WILD OATS MARKETS, INC., 1645 BROADWAY, BOULDER, COLORADO 80302.
WILD OATS MARKETS, INC.
1645 BROADWAY
BOULDER, CO 80302
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors of Wild
Oats Markets, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held on May 4, 1998 at 1:00 p.m. local time
(the "Annual Meeting"), or at any adjournment or postponement thereof, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting. The
Annual Meeting will be held at the Boulder Public Library Auditorium, 1000
Canyon Boulevard, Boulder, Colorado. The Company intends to mail this proxy
statement and accompanying proxy card on or about April 1, 1998, to all
stockholders entitled to vote at the Annual Meeting.
Solicitation
The Company will bear the entire cost of solicitation of proxies including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of the $.001 par value common stock
(the "Common Stock") beneficially owned by others to forward to such beneficial
owners. The Company may reimburse persons representing beneficial owners of
Common Stock for their costs of forwarding solicitation materials to such
beneficial owners. Original solicitation of proxies by mail may be supplemented
by telephone, telegram or personal solicitation by directors, officers or other
regular employees of the Company. No additional compensation will be paid to
directors, officers or other regular employees for such services.
Voting Rights And Outstanding Shares
Only holders of record of Common Stock at the close of business on March 9,
1998 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on March 9, 1998 the Company had outstanding and entitled to
vote 12,807,889 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
Revocability Of Proxies
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, Wild Oats
Markets, Inc., 1645 Broadway, Boulder, Colorado 80302, a written notice of
revocation or a duly executed proxy bearing a later date, or it may be revoked
by attending the meeting and voting in person. Attendance at the meeting will
not, by itself, revoke a proxy.
1
Stockholder Proposals
The Company intends to hold its 1999 Annual Meeting on or around May 1,
1999. Thus, proposals of stockholders that are intended to be presented at the
Company's 1999 Annual Meeting of Stockholders must be received by the Company
not later than December 1, 1998 in order to be included in the proxy statement
and proxy relating to that Annual Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation and Bylaws
provide that the Board of Directors shall be divided into three classes, each
class consisting, as nearly as possible, of one-third of the total number of
directors, with each class having a three-year term. Vacancies on the Board may
be filled by persons elected by a majority of the remaining directors. A
director elected by the Board to fill a vacancy (including a vacancy created by
an increase in the Board of Directors) shall serve for the remainder of the full
term of the class of directors in which the vacancy occurred and until such
director's successor is elected and qualified.
During 1997, two directors resigned and the size of the Board was reduced
from nine to seven members. The Board of Directors is presently composed of
seven members. There are two directors in the class whose term of office expires
in 1998. Each of the nominees for election to this class is currently a director
of the Company. If elected at the Annual Meeting, each of the nominees would
serve until the 2001 annual meeting and until his or her successor is elected
and has qualified, or until such director's earlier death, resignation or
removal. Certain shareholders have entered into an Amended and Restated
Stockholders Agreement under which they have agreed under certain circumstances
to vote their shares for the election of the nominee of Chase Venture Capital
Associates, L.P. ("Chase") to the Board. Mr. Ferguson is the nominee of Chase.
Directors are elected by a plurality of the votes in person or represented
by proxy and entitled to vote at the meeting. Shares represented by executed
proxies will be voted, if authority to do so is not withheld, for the election
of the two nominees named below. In the event that any nominee should be
unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of such substitute nominee as management may
propose. Each person nominated for election has agreed to serve if elected, and
management has no reason to believe that any nominee will be unable to serve.
Set forth below is biographical information for each person nominated and each
person whose term of office as a director will continue after the Annual
Meeting.
The names of the current directors of the Company, including the nominees for
election, and certain information about them are set forth below:
Name Age Principal Occupation/Position Held
with the Company
John A. Shields 54 Chairman of the Board and Chairman
of Homeland Stores, Inc.
David M. Chamberlain 54 Vice Chairman of the Board,
President and CEO of L. Kee & Co.,
Inc. and Chairman of Genesco, Inc.
Brian K. Devine 55 Chairman, President and Chief
Executive Officer of Petco Animal
Supplies, Inc.
David L. Ferguson 42 General Partner of Chase Capital
Partners
James B. McElwee 45 General Partner of Weston Presidio
Capital
2
Nominees for Election for a Three Year Term Expiring at the 2001 Annual Meeting
John A. Shields has been Chairman of the Board of the Company since July
1996. Mr. Shields was a member of the Board of Directors of Alfalfa's, Inc. from
June 1995 to July 1996. He has been Chairman of the Board of Homeland Stores,
Inc. since October 1997. From January 1994 through December 1997, he was
Chairman of the Board of Delray Farms Markets, a chain of produce, meat and deli
markets. From 1983 until 1993, Mr. Shields was President and Chief Executive
Officer of First National Supermarkets. He is currently a director of DIY Home
Warehouse, Inc., Homeland Stores, Inc., Delray Farms Markets Inc. and Shore Bank
and Trust Company.
Brian K. Devine has been a Director of the Company since October 1997. Mr.
Devine is Chairman, President and Chief Executive Officer of Petco Animal
Supplies, Inc., and has been with Petco since August 1990. Prior to joining
Petco, Mr. Devine was President of Krause's Sofa Factory, a furniture retailer
and manufacturer, from 1988 to 1989. From 1970 to 1988, Mr. Devine held several
positions with Toys "R" Us, including Senior Vice President, Director of Stores.
The Board Of Directors Recommends
A Vote In Favor Of Each Named Nominee.
Directors Continuing in Office until the 1999 Annual Meeting
Elizabeth C. Cook co-founded the Company, is currently Executive Vice
President, was the General Counsel from October 1987 to July 1997, and has been
Secretary and a Director of the Company since its inception in October 1987.
Prior to that, from 1983 to 1987, Ms. Cook was tax counsel on staff with the
Atlantic Richfield Company.
David L. Ferguson has been a Director of the Company since November 1994
and has been a general partner of Chase Capital Partners (the general partner of
Chase) since 1989. Prior to joining Chase Capital Partners, he was a member of
the mergers and acquisitions groups of Prudential Securities, Inc. from 1987 to
1989 and Bankers Trust New York Corporation from 1985 to 1987. Mr. Ferguson
currently serves as a director of Guitar Center, Inc.
James B. McElwee has been a Director of the Company since July 1993. Since
November 1992, Mr. McElwee has been a general partner of Weston Presidio Capital
(the general partner of Weston Presidio Offshore Capital C.V. "Weston"). From
July 1979 until November 1992, he was Senior Vice President and a Managing
Director of the Security Pacific Venture Capital Group.
Directors Continuing in Office until the 2000 Annual Meeting
Michael C. Gilliland co-founded the Company and has been the Chief
Executive Officer and a Director of the Company since its inception in October
1987. Mr. Gilliland also served as its President and Chairman of the Board from
inception until July 1996. Prior to forming the Company in 1987, Mr. Gilliland
was involved in several entrepreneurial ventures.
David M. Chamberlain has been the Vice Chairman of the Board of the Company
since July 1996 and a Director of the Company since July 1994. Mr. Chamberlain
has been President and Chief Executive Officer of L. Kee & Co., Inc., a home
textiles company, since March 1998. Mr. Chamberlain held the positions of
President and CEO of Genesco, Inc., a shoe wholesaler/retailer company, from
October 1994 through January 1997, and is currently its Chairman of the Board.
From May 1993 to October 1994, Mr. Chamberlain was a principal of Consumer Focus
Partners, a private investment firm. Prior to that, from October 1983 until May
1994, he was with Shaklee Corp., a nutritional products company, serving as
President and Chief Executive Officer from December 1985 to May 1992 and as
Chairman thereafter. From 1969 to 1983, Mr. Chamberlain held various general
management and marketing positions with Nabisco Brands, Inc. and the Quaker Oats
Company.
3
Board Committees And Meetings
During the fiscal year ended December 27, 1997 the Board of Directors held 9
meetings (including 5 telephonic meetings). The Board has an Audit Committee, a
Compensation Committee, and a Real Estate Committee. The Audit Committee held 4
meetings and the Compensation Committee held 4 meetings during the fiscal year
ended December 27, 1997.
The Audit Committee consists of David L. Ferguson and John A. Shields. The
Audit Committee makes recommendations to the Board regarding the selection of
independent accountants, reviews the results and scope of the audit and other
services provided by the Company's independent certified public accountants and
reviews the Company's financial statement for each quarterly period.
The Compensation Committee consists of David M. Chamberlain, Brian K. Devine,
and James B. McElwee. The Compensation Committee administers the Company's
compensation program and makes recommendations to the Board concerning salaries
and incentive compensation for employees and consultants of the Company. See
"Executive Compensation Report of The Compensation Committee".
During the fiscal year ended December 27, 1997, all directors attended at least
75% of the meetings of the Board and each committee of the Board on which the
directors served held during the period for which they were a director.
Proposal 2
Amendment to the Wild Oats Markets, Inc. 1996 Equity Incentive Plan
to Increase the Number of Shares of Common Stock Reserved For Issuance
In August 1996 the Company adopted the Wild Oats Markets, Inc. 1996 Equity
Incentive Plan (the "Plan"), under which the Company may, from time to time,
issue options exercisable for shares of the Common Stock, stock bonuses and
rights to purchase restricted Common Stock. At the time of adoption of the
Plan, 1,235,147 shares (on a post-split basis adjusted for stock splits in
January 1998 and October 1996) of the Common Stock were reserved for issuance
under the Plan. As of March 9, 1998, options exercisable for 1,159,859 shares
of stock have been granted by the Company, leaving a remaining pool of 75,287
shares available for future grant, assuming all outstanding options are
exercised before their expiration or termination. The Board of Directors has
adopted an amendment to the Plan to increase the number of shares of Common
Stock reserved for issuance by 825,000 shares. Adoption of such amendment also
requires stockholder approval.
Plan Description
The Plan provides for the grant of non-qualified stock options, incentive stock
options, restricted stock and stock bonuses to employees and members of the
Board of Directors. Awards under the Plan are granted at the discretion of the
Board to reward past performance by employees and members of the Board, as an
incentive for future performance, and to recruit and retain qualified personnel.
As of March 9, 1998, a maximum of 1,159,859 shares are subject to grants of
options currently outstanding or exercised under the Plan; with the adoption of
the amendment proposed, 900,297 shares would be available for future grants.
The number of shares is subject to adjustment on account of stock splits, stock
dividends and other dilutive changes in the Common Stock. Shares of Common
Stock covered by unexercised stock options that expire, terminate or are
canceled are available for option or grant under the Plan.
The Plan is administered by the Compensation Committee of the Board of Directors
(the "Committee"). The Committee must be structured at all times so that it
satisfies the "non-employee director" requirement of Rule 16b-3 under the
Securities Exchange Act of 1934 (the "Exchange Act") and the similar requirement
of Section 162(m) of the Code. The Committee has the sole discretion to
determine the employees to whom awards may be granted under the Plan and the
manner in which such
4
awards will vest. Options are granted by the Committee to employees in such
numbers and at such times during the term of the Plan as the Committee shall
determine. If this amendment is adopted, no person shall be entitled to receive
grants exercisable for more than 266,025 shares (adjusted for stock splits) of
Common Stock in any calendar year. In granting options, the Committee will take
into account such factors as it may deem relevant in order to accomplish the
Plan's purposes, including one or more of the following: the extent to which
performance goals have been met, the duties of the respective employees and
their present and potential contributions to the Company's success.
Stock options issued under the Plan generally vest over a 5 year period and
generally expire after 10 years. Options generally terminate 30 days after the
resignation of the holder, or immediately upon a termination for cause. The
Committee determines the exercise price for each option; however, incentive
stock options must have an exercise price that is at least equal to the fair
market value of the Common Stock on the date the option is granted (determined
by the closing price of the Common Stock on the Nasdaq Stock Market), and
nonqualified stock options must have an exercise price of at least 85% of fair
market value. An option holder may exercise an option by written notice and
payment of the exercise price in (i) cash or certified funds, (ii) by the
surrender of a number of shares of Common Stock already owned by the option
holder with a fair market value equal to the exercise price, or (iii) through a
broker's transaction by directing the broker to sell all or a portion of the
Common Stock to pay the exercise price or make a loan to the option holder to
permit the option holder to pay the exercise price. Option holders who are
subject to the withholding of federal and state income tax as a result of
exercising an option may satisfy the income tax withholding obligation through
the withholding of a portion of the Common Stock to be received upon exercise of
the option. Options granted under the Plan are not transferable other than by
will or by the laws of descent and distribution.
Options granted to employees under the Plan are treated for tax purposes as
incentive stock options, and options granted to non-employee directors are
treated for tax purposes as non-qualified options. When an incentive stock
option is granted, there are no income tax consequences for the option holder or
the Company. When an incentive option is exercised, the option holder does not
recognize income and the Company does not receive a deduction. If the option
holder makes a disqualifying disposition of the Common Stock, the Company is
entitled to a deduction equal to the compensation recognized by the option
holder for the Company's taxable year that ends with or within the taxable year
in which the option holder recognized the compensation.
When a non-qualified stock option is granted, there are no income tax
consequences for the option holder or the Company. When a non-qualified stock
option is exercised, in general, the option holder recognizes compensation equal
to the excess of the fair market value of the Common Stock on the date of
exercise over the exercise price and the Company is entitled to a tax deduction
equal to this amount. If the sale of the Common Stock at a profit would subject
the option holder to liability under Section 16(b) of the Exchange Act ("Section
16(b)"), the option holder will recognize compensation income equal to the
excess of (i) the fair market value of the Common Stock on the earlier of the
date that is six months after the date of exercise or the date the option holder
can sell the Common Stock without Section 16(b) liability over (ii) the exercise
price. The option holder can make an election under Section 83(b) of the Code
to measure the compensation as of the date the non-qualified option is
exercised. The compensation recognized by an employee is subject to income tax
withholding.
The future benefits or amounts that will be received by executive officers and
employees under the Plan are not determinable. The Company granted incentive
and non-qualified options exercisable for 295,479 shares of Common Stock under
the Plan in fiscal 1997.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to adopt the amendment to the Plan.
The Board of Directors Recommends
A Vote In Favor Of Proposal 2.
5
Proposal 3
Ratification Of Selection Of Independent Accountants
The Board of Directors has selected Price Waterhouse LLP as the Company's
independent accountants for the fiscal year ending January 2, 1999 and has
further directed that management submit the selection of independent accountants
for ratification by the stockholders at the Annual Meeting. Price Waterhouse
LLP has audited the Company's financial statements since 1991. Representatives
of Price Waterhouse LLP are expected to be present at the Annual Meeting, will
have an opportunity to make a statement if they so desire and will be available
to respond to appropriate questions.
Stockholder ratification of the selection of Price Waterhouse LLP as the
Company's independent accountants is not required by the Company's By-laws or
otherwise. However, the Board is submitting the selection of Price Waterhouse
LLP to the stockholders for ratification as a matter of good corporate practice.
If the stockholders fail to ratify the selection, the Audit Committee and the
Board will reconsider whether or not to retain that firm. Even if the selection
is ratified, the Audit Committee and the Board in their discretion may direct
the appointment of different independent accountants at any time during the year
if they determine that such a change would be in the best interests of the
Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of Price Waterhouse LLP.
The Board Of Directors Recommends
A Vote In Favor Of Proposal 3.
Security Ownership Of
Certain Beneficial Owners And Management
The following table sets forth certain information regarding the ownership of
the Company's Common Stock as of March 9, 1998 by: (i) each nominee for
director; (ii) the executive officers named in the Summary Compensation Table;
(iii) each director; (iv) all executive officers and directors of the Company as
a group; and (v) all those known by the Company to be beneficial owners of more
than five percent of its Common Stock. All share amounts have been adjusted for
a 3-for-2 split of the Common Stock in January 1998.
6
Number
of Shares Percent
Beneficially Beneficially
Name of Beneficial Owner Owned (1) Owned (2)
- ------------------------ ------------ ------------
Michael C. Gilliland (3) 2,082,363 16.3
Wild Oats Markets, Inc.
1645 Broadway
Boulder, CO 80302
Elizabeth C. Cook (4) 2,082,363 16.3
Wild Oats Markets, Inc.
1645 Broadway
Boulder, CO 80302
Chase Capital Partners (5) 1,870,629 14.6
380 Madison Avenue, 12th Floor
New York, NY 10017
David L. Ferguson (5) 1,886,377 14.7
James B. McElwee (6) 183,712 1.4
John A. Shields (7) 70,212 *
David M. Chamberlain (8) 43,202 *
Brian K. Devine (9) 2,499 *
James W. Lee (10) 22,101 *
Mary Beth Lewis (11) 34,770 *
Freya R. Brier (12) 3,937 *
All executive officers and directors
as a group (14 persons) (13) 4,329,173 33.8
______________
* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock
subject to options, warrants and convertible notes currently exercisable or
convertible, or exercisable or convertible within 60 days of March 9, 1998,
are deemed outstanding for computing the percentage of the person or entity
holding such securities but are not outstanding for computing the
percentage of any other person or entity. Except as indicated by footnote,
and subject to community property laws where applicable, the persons named
in the table above have sole voting and investment power with respect to
all shares of Common Stock shown as beneficially owned by them. Share
amounts include adjustment for a 3-for-2 stock split effected by the
Company in January 1998.
(2) Percentage of ownership is based on 12,807,889 shares of Common Stock
outstanding as of March 9, 1998.
(3) Consists of 605,452 shares held by Mr. Gilliland, 25,450 shares subject to
stock options that are exercisable within 60 days of March 9, 1998, 605,452
shares held by Elizabeth C. Cook, Mr. Gilliland's spouse, 6,210 shares held
jointly by Mr. Gilliland and Ms. Cook, 18,750 shares held by the Michael C.
Gilliland 1997 Charitable Remainder Trust, 18,750 shares held by the
Elizabeth C. Cook 1997 Charitable Remainder Trust, 37,500 shares held by
the Wild Oats Community Foundation, 10,290 shares held by the Ian Patrick
Gilliland 1993 Trust, 744,219 shares held by the Gilliland/Cook Family
Investments, L.P. and 10,290 shares held by the Stella Elizabeth Gilliland
1993 Trust. Mr. Gilliland disclaims beneficial ownership to the 821,049
shares held by the trusts (other than the Michael C. Gilliland 1997
Charitable Remainder Trust) and Foundation.
7
(4) Consists of 605,452 shares held by Ms. Cook, 605,542 shares held by Michael
C. Gilliland, Ms. Cook's spouse, 25,450 shares subject to stock options
that are exercisable within 60 days of March 9, 1998 held by Mr. Gilliland,
6,210 shares held jointly by Ms. Cook and Mr. Gilliland, 18,750 shares held
by the Michael C. Gilliland 1997 Charitable Remainder Trust, 18,750 shares
held by the Elizabeth C. Cook 1997 Charitable Remainder Trust, 37,500
shares held by the Wild Oats Community Foundation, 10,290 shares held by
the Ian Patrick Gilliland 1993 Trust, 744,219 shares held by the
Gilliland/Cook Family Investments, L.P. and 10,290 shares held by the
Stella Elizabeth Gilliland 1993 Trust. Ms. Cook disclaims beneficial
ownership of the 821,049 shares held by the trusts (other than the
Elizabeth C. Cook 1997 Charitable Remainder Trust) and Foundation.
(5) Consists of 1,870,629 shares held of record by Chase Venture Capital
Associates, L.P., a California limited partner ("CVCA"), 12,000 shares held
by Mr. Ferguson and 3,748 shares subject to stock options that are
exercisable within 60 days of March 9, 1998 held by Mr. Ferguson. The
general partner of CVCA is Chase Capital Partners, a New York general
partner ("CCP"), of which Mr. Ferguson is one of several general partners.
Mr. Ferguson disclaims beneficial ownership of the shares owned by CVCA
except to the extent of his pecuniary interests therein arising from his
general partnership interest therein. Certain stockholders have entered
into a Stockholders Agreement under which they have agreed, in certain
circumstances, to vote for the nominee of Chase for election to the Board.
See "Certain Transactions." Chase disclaims beneficial ownership of the
shares voted in favor of its nominee, David Ferguson.
(6) Consists of 179,964 shares held by Weston and 3,748 shares subject to stock
options that are exercisable within 60 days of March 9, 1998, held by Mr.
McElwee. Mr. McElwee is a general partner of Weston Presidio Capital, the
general partner of Weston. Mr. McElwee disclaims beneficial ownership of
the shares held by Weston except to the extent of his pecuniary interest
therein arising from his general partnership interest therein.
(7) Consists of 48,795 shares and 21,417 shares subject to stock options that
are exercisable within 60 days of March 9, 1998 held by Mr. Shields.
(8) Consists of 20,428 shares held by Mr. Chamberlain, 900 shares held by Mr.
Chamberlain as custodian for Pamela Chamberlain, 900 shares held by Mr.
Chamberlain as custodian for Kathryn Chamberlain and 20,974 shares subject
to stock options that are exercisable within 60 days of March 9, 1998.
(9) Consists of 2,499 shares subject to stock options that are exercisable
within 60 days of March 9, 1998 held by Mr. Devine.
(10) Consists of 1,149 shares and 20,952 shares subject to stock options that
are exercisable within 60 days of March 9, 1998 held by Mr. Lee.
(11) Consists of 918 shares and 33,852 shares subject to stock options
exercisable within 60 days of March 9, 1998 held by Ms. Lewis.
(12) Consists of 638 shares and 3,299 shares subject to stock options that are
exercisable within 60 days of March 9, 1998 held by Ms. Brier.
(13) Includes shares included pursuant to Notes 3 through 12, and includes 750
shares held by John E. Lauderbach and 428 shares subject to stock options
that are exercisable within 60 days of March 9, 1998 held by certain
officers.
Compliance With Section 16(A) Of The Securities Exchange Act Of 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the Securities and Exchange Commission (the "SEC") initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Officers, directors and greater than ten
percent stockholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file. All such reports required to be
filed during the fiscal year ended December 27, 1997, were timely filed.
8
Executive Compensation
Executive Officers
The following table sets forth certain information concerning the Executive
Officers of the Company as of March 9, 1998:
Name Age Position
Michael C. Gilliland (1) 39 Chief Executive Officer
James W. Lee 47 President and Chief Operating
Officer
Elizabeth C. Cook (1) 38 Executive Vice President
and Secretary
Mary Beth Lewis 40 Vice President of Finance,
Treasurer and Chief Financial
Officer
Freya R. Brier 40 Vice President of Legal and
General Counsel
Ronald J. Feldman 50 Vice President of Real Estate
John E. Lauderbach 47 Vice President of Information
Technology
John R. Weber 51 Vice President of Marketing
and Purchasing
Peter F. Williams 40 Vice President of Human Resources
____________________
(1) Mr. Gilliland and Ms. Cook are husband and wife. See "Proposal 1 -
Election of Directors" for the biographies of Mr. Gilliland and Ms. Cook.
James W. Lee joined the Company as its Chief Operating Officer in September
1996, and was appointed as President in February 1997. Mr. Lee was Group Vice
President, Store Operations ( Central Division of Ralphs Grocery Company
("Ralphs") from February 1993 to September 1996. He was also Group Vice
President, Store Operations ( Southern Division from February 1991 to January
1993 and Vice President, Store Operations ( Northern Division from February 1988
to January 1991 with Ralphs.
Mary Beth Lewis joined the Company as Chief Financial Officer and Treasurer
in September 1992 and has been Vice President of Finance since July 1997. From
August 1986 until August 1992, Ms. Lewis worked for Price Waterhouse LLP, most
recently as an audit manager. Ms. Lewis is a Certified Public Accountant.
Freya R. Brier joined the Company as General Counsel in December 1996 and
has been Vice President of Legal since July 1997. Ms. Brier was Corporate
Counsel for Synergen, Inc. from January 1993 through January 1995, and a legal
consultant to Amgen, Inc. from February 1995 to November 1996. Prior to joining
Synergen, Ms. Brier was a partner with the Denver law firm of Holme Roberts &
Owen LLP.
Ronald J. Feldman joined the Company as Vice President of Real Estate in
October 1997. From 1994 to September 1997, Mr. Feldman was Vice President of
Real Estate Development for Quizno's Corporation. From 1991 to 1994, Mr.
Feldman was Vice President, Restaurant Services of Retail One.
John E. Lauderbach joined the Company as Vice President of Information
Technology in August 1997. From 1974 to 1997, Mr. Lauderbach was with Wolohan
Lumber Co., serving most recently as Director of Management Information Systems
from 1992 to July 1997.
9
John R. Weber joined the Company as Vice President of Marketing and
Purchasing in March 1998. From 1964 to 1998, Mr. Weber was with The Vons
Companies, Inc., serving most recently as Vice President, Procurement Support,
Category Management and ECR from 1995 to 1998 and Vice President of
Manufacturing from 1993 to 1995.
Peter F. Williams joined the Company as Vice President of Human Resources
in May 1997. From 1992 to 1997, Mr. Williams was with Boston Chicken, Inc.,
serving most recently as Senior Director of Human Resources from 1993 to April
1997.
Compensation Of Directors
Each of the Company's non-employee directors is entitled to be reimbursed for
reasonable out-of-pocket expenses incurred in connection with attendance at each
regular or special meeting of the Board of Directors, and receives $2,000 per
meeting attended by such director. No compensation is given for telephonic
meetings. John A. Shields, Chairman of the Board, receives $1,000 per month as
additional compensation for his participation on the Board. In addition, for
their participation on the Board in fiscal 1997, the Compensation Committee
approved the following grants of non-qualified options exercisable for shares of
the Common Stock under the Plan (adjusted for a 3-for-2 split in January 1998):
Mr. Shields 1,598 shares, Mr. Chamberlain 8,919 shares, Mr. Ferguson 15,000
shares, Mr. McElwee 15,000 shares and Mr. Devine 15,000 shares.
Compensation Of Executive Officers
The following table sets forth, for the fiscal year ended December 27, 1997,
certain compensation, including salary, bonuses, stock options and certain other
compensation, awarded or paid to, or earned by, the Company's Chief Executive
Officer and its four other most highly compensated executive officers whose
salary and bonus exceeded $100,000 (the "Named Executive Officers").
10
Summary Compensation Table
Long-Term
Annual Compensation Compensation
------------------- ------------
Securities Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Options (#)(1) Compensation ($)(2)
- --------------------------- ---- ---------- --------- ---------------------- -------------------
Michael C. Gilliland 1997 263,030 - 52,957 4,782
Chief Executive Officer 1996 151,922 - 39,905 3,760
1995 148,936 - - 3,772
James W. Lee (3) 1997 256,796 60,000 35,490 3,117
President and Chief 1996 51,687 25,000 45,225 1,298
Operating Officer
Elizabeth C. Cook 1997 182,521 - - 1,130
Executive Vice President 1996 152,922 - - 3,616
and Secretary 1995 144,631 - - 3,616
Mary Beth Lewis 1997 131,653 20,000 35,195 2,804
Vice President of Finance, 1996 106,431 - 18,623 976
Treasurer and Chief Financial 1995 90,174 - - -
Officer
Freya R. Brier (4) 1997 110,668 7,000 430 1,816
Vice President of Legal 1996 10,551 - 10,641 96
and General Counsel
(1) Adjusted for a 3-for-2 stock split in January 1998.
(2) Represents the Company's matching contribution to the Named Executive's
account under the Company's 401(k) plan.
(3) Mr. Lee joined the Company in September 1996, and so has no reportable
compensation for 1995 and a partial year of reportable compensation for
1996.
(4) Ms. Brier joined the Company in December 1996, and so has no reportable
compensation for 1995 and a partial year of reportable compensation for
1996.
Option Grants in 1997
The following table sets forth for the Named Executive Officers certain
information regarding options granted for the year ended December 27, 1997:
11
Percent of Potential Realizable
Total Value at
Number of Options Assumed Annual
Securities Granted to Rates of Stock price
Underlying Employees Exercise Appreciation
Options in 1997 Price Expiration For Option Term (3)
Name Granted (#) (%)(1)(2) ($/Share) Date 5% ($) 10% ($)
- ---- ----------- --------- --------- ---------- --------------------
Michael C. Gilliland 35,097 17.9 11.00 5/1/07 242,795 615,291
17,860 24.00 12/25/07 269,569 683,142
James W. Lee 29,775 12.0 11.00 5/1/07 205,979 521,990
5,715 24.00 12/25/07 86,259 218,598
Elizabeth C. Cook - - - - - -
Mary Beth Lewis 33,765 11.9 11.00 5/1/07 233,581 591,940
1,430 24.00 12/25/07 21,584 54,697
Freya R. Brier 430 * 24.00 12/25/07 6,490 16,447
___________________
(1) Based on options exercisable for 295,479 shares of Common Stock granted to
employees in fiscal 1997.
(2) Aggregate percentage based on all options granted to the named individual
in fiscal 1997.
(3) The potential realizable value is based on the term of the option at its
time of grant (10 years in the case of these options). It is calculated by
assuming that the stock price on the date of grant appreciates at the
indicated annual rate, compounded annually for the entire term of the
option, and that the option is exercised and sold on the last day of its
term for the appreciated stock price. The percentage rates of appreciation
shown are for disclosure purposes only, and may not reflect actual stock
performance.
* Less than one percent of options granted.
Aggregate Option Exercises In Last Fiscal Year And Fiscal Year End Option Values
The following table sets forth for the Named Executive Officers the fiscal year-
end number and value of unexercised options: No options were exercised during
the fiscal year by the Named Executive Officers.
Value of Unexercised
Number of Unexercised In-the-Money Options at
Options at December 27,
December 27, 1997 1997 ($)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable (1)
- ---- ------------- -----------------
Michael C. Gilliland 15,543/77,319 153,947/359,231
James W. Lee 12,449/68,266 145,395/436,198
Elizabeth C. Cook - -
Mary Beth Lewis 25,696/50,735 430,023/208,388
Freya R. Brier 2,746/8,325 34,208/102,636
____________________
(1) Based on the fair market value of the Common Stock as of December 27, 1997
as reported on the Nasdaq Stock Market, minus the exercise price,
multiplied by the number of shares underlying the option.
12
Employment Agreements
The Company entered into employment agreements with Mr. Gilliland and Ms. Cook
(each an "Executive") on July 12, 1996 (the Employment Agreements"). The
Employment Agreements provide that each Executive will be entitled to: (i)
receive a base salary of $150,000, subject to increase as determined by the
Compensation Committee; (ii) participate in a cash bonus and stock option
program, with terms and related performance criteria to be determined by the
Compensation Committee; (iii) participate in any other employee benefit programs
for which the Company's senior executives are eligible; and (iv) receive four
weeks of paid vacation per year. The Employment Agreement with Mr. Gilliland
has a two year term and the Employment Agreement with Ms. Cook has a one year
term, both subject to automatic one year renewal periods, unless terminated:
(i) by reason of the Executive's death or disability; (ii) with or without
cause, as defined in the Employment Agreements and as determined by the
Company's Board of Directors; or (iii) by the Executive's written resignation.
Upon termination of his Employment Agreement, for any reason during the initial
term, and by the Company without cause or by the Executive for a material breach
by the Company during any subsequent renewal period, Mr. Gilliland will be
entitled to receive his then effective annual base salary rate and health
insurance benefits for three years and Ms. Cook will be entitled to receive her
then effective annual base salary rate and health insurance benefits for one
year. Each Employment Agreement also contains a non-compete provision which
prohibits the Executive from rendering services to any supermarket, food store
or retailer of health and beauty aids located within ten miles of a Company
store or soliciting any of the Company's employees to leave the Company during
the term of the agreement or after the agreement is terminated, for three years
in the case of Mr. Gilliland and for two years in the case of Ms. Cook. The
Board authorized an amendment to Mr. Gilliland's agreement to increase his
salary to $250,000 effective May 2, 1997.
The Company entered into an employment agreement with Mr. Lee on October 1,
1996. Mr. Lee's employment agreement provides for (i) base salary of $225,000,
subject to increase as determined by the Company's Board of Directors; (ii) a
car to be provided by the Company, including reimbursement for related
automobile expenses; (iii) an annual bonus of up to 50% of his base salary,
based on the Company achieving certain earnings targets; (iv) the Company to pay
all expenses related to medical and dental insurance coverage; and (v) four
weeks paid vacation per year. Mr. Lee's employment agreement has a one year
term and is subject to extension by the Company for an additional year. Mr.
Lee's employment is subject to termination upon (i) his death or permanent
disability; (ii) his voluntary resignation; (iii) his discharge for cause; or
(iv) 30 days after written notice by the Company. If the Company elects to
terminate Mr. Lee's employment without cause during the term of the agreement,
it will be obligated to pay him one year's salary. Mr. Lee's employment
agreement also includes non-competition and confidentiality obligations. Mr.
Lee's agreement was amended effective May 2, 1997, to increase his salary to
$235,000, and to extend the term thereof to October 1, 1998.
The Company has an agreement with Mary Beth Lewis, the Company's Chief Financial
Officer, that provides, effective May 2, 1997, for (i) a base salary of
$135,000 and (ii) an annual bonus of up to 20% of her salary, based in part on
the Company achieving certain financial targets and in part on Ms. Lewis meeting
certain performance goals set by the Board. Ms. Lewis' agreement has a one-year
term and provides that if the Company terminates her without cause, it will be
obligated to pay her one year's salary. In October 1997, Ms. Lewis' base salary
was increased by the Board to $150,000. Ms. Lewis' agreement with the Company
has similar non-competition, confidentiality and termination terms to those
described above.
Report of the Compensation Committee
of the Board of Directors
Until 1996, the Board of Directors (the "Board") of the Company was responsible
for establishing the Company's compensation programs for all executive officers.
Beginning in 1996, the Board delegated to the Compensation Committee (the
"Committee") of the Board the authority to establish and administer the
Company's compensation programs. The Committee is currently composed of three
non-employee directors: Messrs. Chamberlain, Devine, and McElwee. The Committee
is responsible for
13
setting and administering the policies which govern executive salaries, bonuses
(if any) and stock ownership programs. The Committee annually evaluates the
performance and determines the compensation of the Chief Executive Officer (the
"CEO") and the other executive officers of the Company, based upon a mix of the
achievement of corporate goals, individual performance and comparisons with
other independent grocer and other retail companies.
The policies of the Company with respect to compensation of executive officers,
including the CEO, are to provide compensation sufficient to attract, motivate
and retain executives of outstanding ability and potential and to establish an
appropriate relationship between executive compensation and the creation of
stockholder value. To meet these goals, the Committee adopted a mix among the
compensation elements of salary, bonus and stock options, with a bias toward
stock options, to emphasize the link between executive incentives and the
creation of stockholder value as measured by the equity markets. In general for
1997, the salaries, bonuses and stock option awards of executive officers were
linked to the Company's achievement of corporate performance criteria with
respect to public company matters and Company growth. Cash bonuses of $115,000
and merit grants of stock options exercisable for 27,150 shares of Common Stock
were awarded by the Board to executive officers in 1997. In 1997, the base
salaries of the President, CEO and Chief Financial Officer were supplemented by
awards under the Plan to provide long-term incentives. Each of these components
is discussed in turn below.
Base Salary
Base salaries for all executive officers of the Company were established at or
below the mid-point of the range for companies included in the compensation
surveys considered by the Committee,. Surveys considered include industry
surveys prepared by retail trade organizations in the grocery industry, regional
compensation surveys for Colorado, where the Company's headquarters are located,
and surveys of compensation levels disclosed in comparable companies' proxy
disclosures on management compensation. In establishing such salaries, the
Committee also considers each officer's level of industry experience, individual
achievement and overall contribution to the achievement of corporate objectives.
Bonuses
In fiscal 1997, $115,000 in cash bonuses were awarded to executive officers of
the Company, and merit grants of incentive stock options under the Plan,
exercisable for an aggregate of 27,150 shares of Common Stock, were awarded. The
Company also implemented a bonus plan in 1997 pursuant to which, commencing in
1998, staff members in the Company's corporate headquarters (which may include
certain of the executive officers who do not have bonus arrangements as set
forth in employment agreements) may receive a bonus if the Company's overall
performance expectations for 1998 are met. Under the terms of this plan, a
bonus amount equal to a certain percentage of the corporate headquarters'
aggregate payroll will be set aside for distribution to staff members in
proportions based upon evaluations by their supervisors.
Equity Incentive Plan
The Plan has been established to provide all employees of the Company with an
opportunity to share, along with stockholders of the Company, in the long-term
performance of the Company. Periodic grants of stock options are generally made
to managerial-level and other eligible employees. Subsequent to the adoption of
the Company's 1996 Equity Incentive Plan, these grants have been reviewed by the
Compensation Committee on a quarterly basis. As the base salaries for executive
officers of the Company historically have been below the mid-point of the range
for comparable companies, the Company has used stock options as the primary
incentive to attract and retain its executive officers who are not significant
stockholders of the Company. In awarding stock options, the Board considers
individual performance and overall contribution to the Company and also
considers the number of unvested stock options held by the officer and the total
number of stock options available to be awarded under the Plan. The Committee
also considers the stock option practices of a self-selected group of other
14
independent grocer and other retail companies. After considering the criteria
relating to awarding stock options, the Board determined that seven executive
officers would receive additional option grants in the fiscal year ended
December 27, 1997. Incentive stock options exercisable for a total of 40,634
shares and non-qualified options exercisable for a total of 83,008 shares were
granted to executive officers in 1997. Stock options granted under the Plan
generally have a five-year vesting schedule and generally expire ten years from
the date of grant. The exercise price of options granted under the Plan was
100% of fair market value of the underlying stock on the date of grant for all
officers who were granted options during fiscal 1997.
CEO Compensation
Mr. Gilliland's base salary and grants of stock options were determined in
accordance with the criteria described above and set forth in the Employment
Agreement between Mr. Gilliland and the Company. On May 2, 1997 the base salary
of Mr. Gilliland was set at an annual rate of $250,000, retroactive to January
1, 1997, an increase from his base salary of $150,000 in 1996. In setting such
salary level, the Committee considered appropriate formal salary surveys for the
chief executive officers of independent grocers and other retail companies, as
well as informal surveys of management compensation contained in proxy
disclosures of comparably-sized retail companies. In 1997 Mr. Gilliland's
salary was set at the mid-point of the range for such companies, reflecting the
Company's size and stage of development in relation to such companies and the
Committee's desire to conserve the Company's financial resources. Mr. Gilliland
was also awarded additional stock options during 1997, in part to supplement his
base salary, and in part as a merit grant for meeting performance objectives.
The Compensation Committee determined that Mr. Gilliland met all performance
objectives set for 1997.
Section 162(m) of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code (the "Code") limits the Company to a
deduction for federal income tax purposes of no more than $1 million of
compensation paid to certain Named Executive Officers in a taxable year.
Compensation above $1 million may be deducted if it is "performance-based
compensation" within the meaning of the Code. Options granted pursuant to the
Company's Equity Incentive Plan are intended to satisfy the requirements for the
"performance-based compensation" exemption. As a result, the Board believes
that at the present time it is quite unlikely that the compensation paid to any
Named Executive Officer in a taxable year which is subject to the deduction
limit will exceed $1 million. The Board has not yet established a policy for
determining whether forms of incentive compensation, other than stock options,
awarded to its Named Executive Officers will be designed to qualify as
"performance-based compensation." The Board will continue to evaluate the
effects of the statute and to comply with Code section 162(m) in the future to
the extent consistent with the best interests of the Company.
COMPENSATION COMMITTEE
David M. Chamberlain
Brian K. Devine
James B. McElwee
Compensation Committee Interlocks and Insider Participation
Messrs. Chamberlain, Devine and McElwee currently serve as members of the
Compensation Committee. During fiscal 1997, the Compensation Committee was
comprised of Messrs. Chamberlain and McElwee and John Shields, David Ferguson
and Laird Koldyke (Mr. Koldyke resigned from the Board in 1997). Mr. McElwee is
a general partner of Weston Presidio Capital. Mr. Ferguson is a general
partner of Chase. See "Certain Transactions" for a description of certain
transactions involving these entities. Compensation of Messrs. Shields,
Chamberlain, Devine, Ferguson and McElwee is determined by the entire Board of
Directors with a view to attracting and retaining talented individuals to serve
as directors.
15
Performance Chart
The following graph sets forth the stock price performance of the Company's
common stock for the period beginning October 22, 1996, the date of the
Company's initial public offering, and ending December 27, 1997, as contrasted
with the NASDAQ Stock Market-US Index and the S&P Retail (Food Chains) Index.
The graph assumes $100 was invested at the beginning of the period and any
dividends paid during the period were reinvested.
Cumulative Total Return
--------------------------------------
10/23/96 12/96 12/97
WILD OATS MKTS INC OAT 100 74 144
MASDAQ STOCK MARKET(U.S.) INAS 100 105 129
S&P RETAIL(FOOD CHAINS) IRSF 100 95 125
Certain Transactions
In July 1996, the Company entered into a Stockholders' Agreement by and among
the Company and certain investors (the "Stockholders' Agreement"), as amended
and restated effective October 22, 1996, and a Registration Rights Agreement by
and among the Company and certain investors (the "Registration Rights
Agreement"). The Stockholders' Agreement provides, among other things, that the
holders of 5,452,630 shares of Common Stock (adjusted for a 3-for-2 split in
January 1997) have agreed that, under certain circumstances, they will vote
their shares in favor of electing the nominee of Chase to the Board of
Directors.
The Registration Rights Agreement provides that the holders of 5,470,900
outstanding shares of Common Stock (adjusted for a 3-for-2 split in January
1997) (the "Registrable Securities") have the right to require the Company to
file up to two registration statements on Form S-3 per formerly outstanding
series of preferred stock, subject to underwriter cutback. The Company is
obligated to pay the expenses associated with the registration of the
Registrable Securities pursuant to the Registration Rights Agreement. In
December 1997, pursuant to the Registration Rights Agreement, Mr. Gilliland and
Ms. Cook each sold 55,000 shares of Common Stock pursuant to a Form S-3
registration statement filed by the Company, which covered an aggregate of
1,380,188 shares of Common Stock.
16
Mr. Gilliland and Ms. Cook each own part interests in Pretty Good Groceries,
Inc., a Colorado company ("PGG"), which operates two grocery stores in Boulder,
Colorado. In December 1997, the Company sold the assets of (including inventory)
and granted a sublease interest in its Vail, Colorado store to a limited
liability company in which PGG is a 50% member. The other member is unaffiliated
with the Company. The purchase price for the assets and inventory of the Vail
store was determined by the Company's Chief Financial Officer and was equal to
the net book value of equipment and fixtures and the actual wholesale cost of
the inventory at the time of sale. The purchase price of $326,078.15 was payable
$107,678.15 in cash at closing and $218,400 was evidenced by a promissory note
from the purchaser, with interest accrued thereon at 8.5% and payable on or
before 5 years after the date thereof. The promissory note was paid in full in
January 1998. PGG purchases certain items through the Company's volume discount
programs with its distributors, for which PGG pays the Company the cost of such
items on a monthly basis. The Company does not receive any profit from the
purchase of such items by PGG.
Mr. Gilliland and Ms. Cook have employment agreements with the Company. See
"Executive Compensation ( Employment Agreements."
Other Matters
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
Elizabeth C. Cook
Secretary
March 20, 1998
17
PROXY
WILD OATS MARKETS, INC.
COMMON STOCK
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 4, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Michael C. Gilliland and John Shields, or
either one of them, with full power of substitution, as a proxy or proxies to
represent the undersigned at the Annual Meeting (the "Annual Meeting") of
stockholders of Wild Oats Markets, Inc. (the "Company") to be held on May 4,
1998 and at any adjournments or postponements thereof, and to vote thereat all
the shares of Common Stock of the Company held of record by the undersigned at
the close of business on March 9, 1998 with all the power that the undersigned
would possess if personally present, as designated on the reverse side.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL OF THE
LISTED NOMINEES AND APPROVAL OF PROPOSALS 1, 2 AND 3. IF NOT OTHERWISE
SPECIFIED, THIS PROXY WILL BE VOTED PURSUANT TO THE BOARD OF DIRECTORS'
RECOMMENDATIONS.
THIS PROXY REVOKES ALL PROXIES WITH RESPECT TO THE ANNUAL MEETING AND MAY BE
REVOKED PRIOR TO EXERCISE. RECEIPT OF THE NOTICE OF ANNUAL MEETING AND THE
PROXY STATEMENT RELATING TO THE ANNUAL MEETING IS HEREBY ACKNOWLEDGED.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
PLEASE MARK YOUR VOTES AS THIS [X]
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2 AND 3.
1. ELECTION OF DIRECTORS
FOR ALL WITHHOLD NOMINEES: JOHN A. SHIELDS AND BRIAN K. DEVINE
NOMINEES AUTHORITY
LISTED TO VOTE FOR (Instructions: To withhold authority for any
TO THE ALL individual nominee, strike a line through the
RIGHT NOMINEES nominee's name listed above.)
[_] LISTED TO
THE RIGHT
[_]
In their direction, the named proxies may vote on such other business as may
properly come before the Annual Meeting or any adjournments or postponements
thereof.
PROPOSAL NO. 2: Amendment to 1996 FOR AGAINST ABSTAIN
Equity Incentive Plan: Approval of an
amendment to increase by 825,000 shares [_] [_] [_]
the number of shares of Company common
stock reserved for issuance under the
Company's 1996 Equity Incentive Plan.
PROPOSAL NO. 3: Ratification of the FOR AGAINST ABSTAIN
selection of auditors: Approval of the
appointment of Price Waterhouse, LLP as [_] [_] [_]
independent accountants to audit the
financial statements of the Company for
the fiscal year ending January 2, 1999.
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIREC-
TORS' RECOMMENDATIONS, MERELY SIGN BELOW, NO
BOXES NEED TO BE CHECKED.
PLEASE SIGN EXACTLY AS NAME APPEARS TO THE
LEFT. WHEN SHARES ARE HELD JOINTLY, EACH
SHOULD 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 PRESIDENT OR OTHER AUTHORIZED OFFICER.
IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP
NAME BY AUTHORIZED PERSON.
SIGNATURE(S) __________________________________
DATE __________________________________________
NOTE: PLEASE SIGN AS NAME APPEARS HEREON.
JOINT OWNERS SHOULD EACH SIGN. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.