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)
[LOGO]
WILD OATS MARKETS, INC.
3375 MITCHELL LANE
BOULDER, CO 80301
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 5, 1999
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
Wednesday, May 5, 1999 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 three directors to hold office until the Annual Meeting of
Stockholders in the year 2002.
2. To ratify the selection of PriceWaterhouseCoopers LLP as independent
accountants of the Company for its fiscal year ending January 1, 2000.
3. 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 8, 1999, 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
/s/ Elizabeth C. Cook
----------------------------
Elizabeth C. Cook
Secretary
Boulder, Colorado
March 11, 1999
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., 3375 MITCHELL LANE, BOULDER, COLORADO 80301.
WILD OATS MARKETS, INC.
3375 MITCHELL LANE
BOULDER, CO 80301
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 5, 1999 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, 1999, 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 8,
1999 will be entitled to notice of, and to vote at the Annual Meeting. At the
close of business on March 8, 1999 the Company had outstanding and entitled to
vote 13,113,094 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
In 1999 stockholders of record may vote by a mail-in proxy or by telephonic
means. Telephonic votes may be cast through 12:00 p.m. on May 4, 1999. 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., 3375 Mitchell Lane, Boulder, Colorado 80301, a written notice of
revocation or a duly executed proxy bearing a later date or by a telephonic vote
received at a later date. The proxy may also be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
STOCKHOLDER PROPOSALS
The Company intends to hold its 2000 Annual Meeting on or around May 1,
2000. Thus, proposals of stockholders that are intended to be presented at the
Company's 2000 Annual Meeting of Stockholders must be received by the Company
not later than November 13, 1999 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 appointed 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 1998, the size of the Board was increased from seven to nine members
and one director was appointed to fill one of the open positions. The Board of
Directors is presently composed of eight members. There are three directors in
the class whose term of office expires in 1999. 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 2002 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:
PRINCIPAL OCCUPATION/
NAME AGE POSITION HELD WITH THE COMPANY
John A. Shields.................... 55 Chairman of the Board and Chairman of
Homeland Stores, Inc.
David M. Chamberlain............... 55 Vice Chairman of the Board, Vice
Chairman of L. Kee & Co., Inc. and
Chairman of Genesco, Inc.
Elizabeth C. Cook.................. 39 Executive Vice President of the
Company
Brian K. Devine.................... 57 Chairman, President and Chief
Executive Officer of Petco Animal
Supplies, Inc.
David L. Ferguson.................. 43 General Partner of Chase Capital
Partners
Michael C. Gilliland............... 40 Chief Executive Officer of the Company
James B. McElwee................... 46 General Partner of Weston Presidio
Capital
Morris J. Siegel................... 49 Chairman of the Board of Celestial
Seasonings, Inc.
NOMINEES FOR ELECTION FOR A THREE YEAR TERM EXPIRING AT THE 2002 ANNUAL MEETING
Elizabeth C. Cook co-founded the Company, is currently Executive Vice
President, was the General Counsel from October 1987 to December 1996, 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.
2
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. and Restoration Hardware.
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.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
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
is currently Vice Chairman of L. Kee & Co., Inc., a home textiles company. 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 most recently as Chairman.
DIRECTORS CONTINUING IN OFFICE UNTIL 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.
Currently, Mr. Devine serves as Director of National Retail Federation and
serves on Georgetown University's College Board of Advisors.
Morris J. Siegel has been a Director of the Company since October 1998. Mr.
Siegel is Chairman of the Board of Celestial Seasonings, Inc. In 1970 Mr. Siegel
founded Celestial Seasonings, Inc., and was President and Chairman of the Board
until 1986. From 1986 until 1991 Mr. Siegel was involved in private investments
and not-for-profit activities. He served as Chief Executive Officer of Celestial
Seasonings from 1991 to 1997 and has served as a director since 1988 and as
Chairman of the Board since 1991. He also serves on the Board of Corporate
Express, Inc. and is a director for various non-public and not-for profit
corporations and organizations.
3
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended January 2, 1999 the Board of Directors held 7
meetings (including 3 telephonic meetings). The Board has an Audit Committee
and a Compensation Committee. The Audit Committee held 3 meetings and the
Compensation Committee held 4 meetings during the fiscal year ended January 2,
1999.
The Audit Committee consists of David L. Ferguson, John A. Shields and
Morris J. Siegel who joined the Audit Committee in February 1999. 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 January 2, 1999, all directors attended at
least 75% of the meetings of the Board and each committee of the Board on which
the directors served.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected PriceWaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year ending January 1, 2000 and
has further directed that management submit the selection of independent
accountants for ratification by the stockholders at the Annual Meeting.
PriceWaterhouseCoopers LLP has audited the Company's financial statements since
1991. Representatives of PriceWaterhouseCoopers 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 PriceWaterhouseCoopers 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
PriceWaterhouseCoopers 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 PriceWaterhouseCoopers LLP.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
4
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 8, 1999 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.
NUMBER
OF SHARES PERCENT
BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED (1) OWNED (%)(2)
- ------------------------ ------------ ---------------
Michael C. Gilliland (3)......................................... 2,054,758 15.67
Wild Oats Markets, Inc.
3375 Mitchell Lane
Boulder, CO 80301
Elizabeth C. Cook (4)............................................ 2,054,758 15.67
Wild Oats Markets, Inc.
3375 Mitchell Lane
Boulder, CO 80301
Chase Capital Partners (5)....................................... 1,867,885 14.24
380 Madison Avenue, 12th Floor
New York, NY 10017
David L. Ferguson (5)............................................ 1,890,348 14.42
James B. McElwee (6)............................................. 11,473 *
John A. Shields (7).............................................. 78,237 *
David M. Chamberlain (8)......................................... 49,918 *
Brian K. Devine (9).............................................. 9,214 *
Morris J. Siegel (10)............................................ 2,717 *
James W. Lee (11)................................................ 47,620 *
Mary Beth Lewis (12)............................................. 19,712 *
Ronald J. Feldman (13)........................................... 2,305 *
All executive officers and directors as a group (14 persons) (14) 4,174,355 31.83
_________________________
* 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 8, 1999,
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.
(2) Percentage of ownership is based on 13,113,094 shares of Common Stock
outstanding as of March 8, 1999.
5
(3) Consists of 597,349 shares held by Mr. Gilliland, 44,022 shares subject to
stock options that are exercisable within 60 days of March 8, 1999, 597,349
shares held by Elizabeth C. Cook, Mr. Gilliland's spouse, 6,210 shares held
jointly by Mr. Gilliland and Ms. Cook, 9,750 shares held by the Michael C.
Gilliland 1997 Charitable Remainder Trust, 9,750 shares held by the
Elizabeth C. Cook 1997 Charitable Remainder Trust, 25,454 shares held by
the Wild Oats Community Foundation, 10,290 shares held by the Ian Patrick
Gilliland 1993 Trust, 744,294 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 800,078
shares held by the trusts (other than the Michael C. Gilliland 1997
Charitable Remainder Trust) and Foundation.
(4) Consists of 597,349 shares held by Ms. Cook, 597,349 shares held by Michael
C. Gilliland, Ms. Cook's spouse, 44,022 shares subject to stock options
that are exercisable within 60 days of March 8, 1999 held by Mr. Gilliland,
6,210 shares held jointly by Ms. Cook and Mr. Gilliland, 9,750 shares held
by the Michael C. Gilliland 1997 Charitable Remainder Trust, 9,750 shares
held by the Elizabeth C. Cook 1997 Charitable Remainder Trust, 25,454
shares held by the Wild Oats Community Foundation, 10,290 shares held by
the Ian Patrick Gilliland 1993 Trust, 744,294 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 800,078 shares held by the trusts (other than the
Elizabeth C. Cook 1997 Charitable Remainder Trust) and Foundation.
(5) Consists of 1,867,885 shares held of record by Chase Venture Capital
Associates, L.P., a California limited partner ("CVCA"), 12,000 shares held
by Mr. Ferguson and 10,463 shares subject to stock options that are
exercisable within 60 days of March 8, 1999 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 1,010 shares and 10,463 shares subject to stock options that
are exercisable within 60 days of March 8, 1999, held by Mr. McElwee.
(7) Consists of 48,795 shares and 29,442 shares subject to stock options that
are exercisable within 60 days of March 8, 1999 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 27,690 shares subject
to stock options that are exercisable within 60 days of March 8, 1999.
(9) Consists of 9,214 shares subject to stock options that are exercisable
within 60 days of March 8, 1999 held by Mr. Devine.
(10) Consists of 2,717 shares subject to stock options that are exercisable
within 60 days of March 8, 1999 held by Mr. Siegel.
(11) Consists of 1,473 shares and 46,147 shares subject to stock options that
are exercisable within 60 days of March 8, 1999 held by Mr. Lee.
(12) Consists of 1,208 shares and 18,504 shares subject to stock options
exercisable within 60 days of March 8, 1999 held by Ms. Lewis.
(13) Consists of 505 shares and 1,800 shares subject to stock options that are
exercisable within 60 days of March 8, 1999 held by Mr. Feldman.
(14) Includes shares included pursuant to Notes 3 through 13, and includes 1,005
shares held in the aggregate by Freya R. Brier and John E. Lauderbach and
7,048 shares subject to stock options that are exercisable within 60 days
of March 8, 1999 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 January 2, 1999, were timely filed.
6
EXECUTIVE COMPENSATION
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the Executive
Officers of the Company as of March 8, 1999:
NAME AGE POSITION
---- --- --------
Michael C. Gilliland (1)...... 40 Chief Executive Officer
James W. Lee.................. 48 President and Chief Operating Officer
Elizabeth C. Cook (1)......... 39 Executive Vice President and Secretary
Mary Beth Lewis............... 41 Vice President of Finance, Treasurer and
Chief Financial Officer
Freya R. Brier................ 41 Vice President of Legal and General Counsel
Ronald J. Feldman............. 51 Vice President of Real Estate
John E. Lauderbach............ 48 Vice President of Information Technology
Peter F. Williams............. 41 Vice President of Human Resources and
Marketing
________________________
(1) Mr. Gilliland and Ms. Cook are husband and wife. See Directors Continuing
in Office Until 2000, and Proposal 1 - Election of Directors for the biographies
of Mr. Gilliland and Ms. Cook respectively.
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 with Ralphs
Grocery Company ("Ralphs") from 1988 to September 1996, most recently as Group
Vice President, Store Operations Central Division from February 1993 to
September 1996.
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 PriceWaterhouseCoopers LLP,
most recently as an audit manager.
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.
Peter F. Williams joined the Company as Vice President of Human Resources
in May 1997 and assumed responsibility as Vice President of Marketing in January
1999. Prior to joining the Company, Mr. Williams was with Boston Chicken, Inc.,
serving most recently as Senior Director of Human Resources from 1993 to April
1997.
7
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 was given in 1998 for
telephonic meetings. Commencing in 1999, directors will receive $500 for
participation in telephonic meetings, which may be paid, at the election of the
directors, in stock options. John A. Shields, Chairman of the Board, receives
$1,000 per month as additional compensation for his participation on the Board.
In October 1998 the directors agreed to accept stock options to purchase the
Company's common stock in lieu of the cash payments. Mr. Shields also agreed to
accept stock options in lieu of the $1,000 per month cash compensation for his
participation on the Board. Options are granted at the current market value on
the day of the grant, less a 15% discount and the shares vest immediately.
For their participation on the Board in fiscal 1998, the Compensation
Committee approved the following grants of non-qualified options exercisable for
shares of the Common Stock under the Plan: Mr. Shields - 2,000 shares, Mr.
Chamberlain - 2,000 shares, Mr. Ferguson - 2,000 shares, Mr. McElwee - 2,000
shares, Mr. Siegel - 10,000 shares and Mr. Devine - 2,000 shares. In 1998
certain directors received the following grants of non-qualified options
exercisable for shares of common stock for participating in Board meetings: Mr.
Shields - 1,066 shares, Mr. Chamberlain - 533 shares, Mr. Ferguson - 533 shares,
Mr. McElwee - 533 shares, Mr. Siegel - 533 shares and Mr. Devine - 533 shares.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth, for the fiscal year ended January 2, 1999,
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 $100,000 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
SECURITIES ALL OTHER
UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(1) OPTIONS (#)(2) ($)(3)
- --------------------------- ---- ---------- ------------ --------------- -------
Michael C. Gilliland 1998 250,000 125,000 -0- 4,207
Chief Executive Officer 1997 263,030 -0- 52,957 4,782
1996 151,922 -0- 39,905 3,760
James W. Lee (4) 1998 235,000 100,000 60,000 4,610
President and Chief Operating 1997 256,796 60,000 35,490 3,117
Officer 1996 51,687 25,000 45,225 1,298
Elizabeth C. Cook 1998 150,400 -0- -0- 3,760
Executive Vice President and 1997 182,521 -0- -0- 1,130
Secretary 1996 152,922 -0- -0- 3,616
Mary Beth Lewis 1998 150,000 45,000 50,000 3,750
Vice President of Finance, 1997 131,653 20,000 35,195 2,804
Treasurer and Chief Financial 1996 106,431 18,623 976
Officer
Ronald J. Feldman (5) 1998 110,000 34,000 5,000 2,750
Vice President of Real Estate 1997 24,578 -0- 6,000 -0-
__________________
8
(1) Includes bonuses paid in fiscal 1999 for fiscal 1998 performance.
(2) Adjusted for a 3-for-2 stock split in January 1998.
(3) Represents the Company's matching contribution to the Named Executive's
account under the Company's 401(k) plan.
(4) Mr. Lee joined the Company in September 1996, and so has a partial year of
reportable compensation for 1996.
(5) Mr. Feldman joined the Company in October 1997, and so has a partial year of
reportable compensation for 1997 and no reportable compensation in 1996.
OPTION GRANTS FOR 1998
The following table sets forth for the Named Executive Officers certain
information regarding options granted for the fiscal year ended January 2, 1999:
NUMBER OF PERCENT OF POTENTIAL REALIZABLE VALUE
SECURITIES TOTAL OPTIONS AT
UNDERLYING GRANTED TO ASSUMED ANNUAL RATES OF
OPTIONS EMPLOYEES EXERCISE STOCK PRICE APPRECIATION
GRANTED IN 1998 PRICE EXPIRATION FOR OPTION TERM (4)
-------------------
NAME (#)(1) (%)(2)(3) ($/SHARE) DATE 5% ($) 10% ($)
- ---- ---------- ------------- --------- --------- --------------------------
Michael C. Gilliland....... -- -- -- -- -- --
James W. Lee............... 60,000 15 25.75 2/9/09 971,642 2,462,400
Elizabeth C. Cook.......... -- -- -- -- -- --
Mary Beth Lewis............ 50,000 13 25.75 2/9/09 809,500 2,052,000
Ronald J. Feldman.......... 5,000 1 25.75 2/9/09 80,950 205,200
(1) Includes grants made in the first quarter of 1999 for fiscal 1998
performance.
(2) Based on options for 393,556 shares of Common Stock granted to employees for
fiscal 1998.
(3) Aggregate percentage based on all options granted to the named individual
for fiscal 1998.
(4) The potential realizable value is based on the term of the option at its
time of grant (10 years in the case of these options). It is calculated by
assuming that the stock price on the date of grant appreciates at the
indicated annual rate, compounded annually for the entire term of the
option, and that the option is exercised and sold on the last day of its
term for the appreciated stock price. The percentage rates of appreciation
shown are for disclosure purposes only, and may not reflect actual stock
performance.
9
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table sets forth for the Named Executive Officers the fiscal
year-end number and value of unexercised options and options exercised during
the fiscal year by the Named Executive Officers.
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
NUMBER OF SHARES JANUARY 2, 1999 JANUARY 2, 1999 ($)
ACQUIRED ON AGGREGATED VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED ($)(1) UNEXERCISABLE UNEXERCISABLE (2)
- ---- -------- --------------- ------------- -----------------
Michael C. Gilliland....... 0 0 37,625/55,237 675,647/990,258
James W. Lee............... 0 0 40,623/40,092 798,937/775,095
Elizabeth C. Cook.......... -- -- -- --
Mary Beth Lewis............ 25,696 686,983 12,687/38,048 258,398/769,445
Ronald J. Feldman.......... 0 0 1,500/4,500 16,005/48,015
(1) Based on the difference between the option exercise price and the closing
price of the Common Stock as reported on the NASDAQ Stock Market on the
date of the exercise, multiplied by the number of shares to which the
exercise relates.
(2) Based on the fair market value of the Common Stock as of January 2, 1999
as reported on the NASDAQ Stock Market, minus the exercise price,
multiplied by the number of shares underlying the option.
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. Mr. Gilliland's salary remained
unchanged in 1998.
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
10
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. The Board has agreed to amend Mr. Lee's agreement
to further provide that in the event of a change in control of the Company, to
be defined in the agreement, if Mr. Lee's employment terminates the Company will
be obligated to pay to Mr. Lee two years' 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 subsequently
agreed to extend the term of Mr. Lee's agreement through February 9, 2000.
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. The Company subsequently agreed
to extend the term of Ms. Lewis' agreement through February 9, 2000 and to allow
for a greater bonus amount. In October 1997, Ms. Lewis' base salary was
increased by the Board to $150,000 and the bonus that may be awarded was
increased to 35% of salary. Ms. Lewis' base salary for 1998 remained unchanged.
Ms. Lewis' agreement with the Company has similar non-competition,
confidentiality and termination terms to those described above for Mr. Lee.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The Compensation Committee (the "Committee") is currently comprised of
three non-employee directors: Messrs. Chamberlain, Devine, and McElwee. The
Committee is responsible for 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
1998, 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, as well as individual
performance goals. Cash bonuses of $365,697 were awarded by the Board to
executive officers for performance in 1998, and merit grants of stock options
exercisable for 130,500 shares of Common Stock were made to executive officers
for 1998 performance.
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.
11
BONUSES
In fiscal 1998, $365,697 in cash bonuses were awarded to executive officers
of the Company. The Company implemented the bonus plan in 1998 under which
staff members in the Company's corporate headquarters (which includes certain of
the executive officers who do not have bonus arrangements as set forth in
employment agreements) receive a bonus if the Company's overall projected
performance for any fiscal year is 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. The Committee views the
award of stock options as a valuable tool for long-term retention of executives
and alignment of executives with shareholder interests. 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 independent grocer and other retail companies. The
Committee awarded incentive stock options exercisable for 130,500 shares of
Common Stock to executive officers for 1998 performance. This number includes
awards of options exercisable for 60,000 and 50,000 shares of Common Stock to
the Company's President and Chief Financial Officer, respectively, as incentives
to retain such executives.
CEO COMPENSATION
Mr. Gilliland's base salary and grant of a cash bonus were determined in
accordance with the criteria described above and set forth in the Employment
Agreement between Mr. Gilliland and the Company. Mr. Gilliland's annual salary
for 1998 remained at $250,000, the level set in 1997. In reviewing such salary
level, the Committee considered appropriate formal salary surveys for the chief
executive officers of independent grocers and other retail companies, informal
surveys of management compensation contained in proxy disclosures of comparably-
sized retail companies, the Company's historical position and the recommendation
of senior management. Mr. Gilliland's salary is 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 a bonus of $125,000 as a
merit grant for meeting performance objectives related to new store openings,
gross sales performance and comparable store sales results. Mr. Gilliland has
elected to defer payment of his bonus at this time. No stock option grants were
made to Mr. Gilliland. For 1998 the Compensation Committee determined that Mr.
Gilliland met all performance objectives set by the Board.
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.
12
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. Compensation of Messrs. Chamberlain, Devine and McElwee
is determined by the entire Board of Directors with a view to attracting and
retaining talented individuals to serve as directors.
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 January 2, 1999, 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.
COMPARISON OF 26 MONTH CUMULATIVE TOTAL RETURN*
AMONG WILD OATS MARKETS, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S & P RETAIL (FOOD CHAINS) INDEX
Cumulative Total Return
-----------------------------------
10/23/96 12/96 12/97 12/98
WILD OATS MARKETS, INC. 100 74 144 189
NASDAQ STOCK MARKET (U.S.) 100 105 129 181
S & P RETAIL (FOOD CHAINS) 100 95 125 192
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 1998) have agreed that, under certain circumstances, they will
vote their shares in favor of electing the nominee of Chase to the Board of
Directors.
13
Mr. Gilliland and Ms. Cook each own part interest in Pretty Good Groceries
LLC, a Colorado limited liability company ("PGG"), which operates three grocery
stores in Boulder, Colorado. 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. In May 1998 the Company sold its
inventory and leasehold interests in the Wild Oats Vegetarian Market, a small
vegetarian market in Boulder, Colorado, to PGGII, an affiliate of PGG, for the
wholesale inventory cost of approximately $135,000.
Ms. Cook and Mr. Gilliland are trustees of Wild Oats Community Foundation,
a non-profit organization (the "Foundation"). In 1998 the Foundation opened the
Wild Oats Wellness Centers in Boulder, Colorado and Albuquerque, New Mexico in
space subleased from the Company. The Foundation pays to the Company the same
rent as paid by the Company for the space. The Company pays the Foundation, on
a monthly basis, an amount per Company employee eligible to receive the
Company's Wellness Benefit, in exchange for which the Foundation provides
certain free wellness services to the Company's employees pursuant to the
Company's Wellness Benefit program.
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
/s/ Elizabeth C. Cook
------------------------------
Elizabeth C. Cook
Secretary
March 11, 1999
14
There are two ways to vote your Proxy
-----------------------
Your telephone vote authorizes the Named COMPANY #
Proxies to vote your shares in the same manner CONTROL #
as if you marked, signed and returned your -----------------------
proxy card.
VOTE BY PHONE -- TOLL FREE -- 1-800-240-6326 -- QUICK *** EASY *** IMMEDIATE
* Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a week.
* You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which is located above.
* Follow the simple instructions the Voice provides you.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to Wild Oats Markets, Inc., c/o Shareowner
Services,SM P.O. Box 64873, St. Paul, MN 55164-9397.
IF YOU VOTE BY PHONE, PLEASE DO NOT MAIL YOUR PROXY CARD
* Please detach here *
The Board of Directors Recommends a Vote FOR Items 1 and 2.
1. Election of directors:
01 Elizabeth C. Cook [_] Vote FOR [_] Vote WITHHELD
02 David L. Ferguson all nominees from all nominees
03 James B. McElwee
(Instructions: To withhold authority to vote for any
indicated nominee, write the number(s) of the nominee(s)
in the box provided to the right.) ------------------------
------------------------
2. Proposal to Ratify the Selection of
Independent Auditors: [_] For [_] Against [_] Abstain
Approval of the appointment of
PriceWaterhouseCoopers LLP as independent
accountants to audit the financial
statements of the Company for the fiscal
year ending January 1, 2000.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box [_] Date _______________
Indicate changes below:
----------------------------------------
----------------------------------------
Signature(s) in Box
Please sign exactly as your name(s)
appear on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc., should
include title and authority. Corpora-
tions should provide full name of
corpora-tion and title of au-thorized
officer sign-ing the Proxy.
WILD OATS MARKETS, INC.
ANNUAL MEETING OF STOCKHOLDERS
Wednesday, May 5, 1999
1:00 p.m.
Boulder Public Library Auditorium
1000 Canyon Blvd.
Boulder, Colorado 80302
Wild Oats Markets, Inc.
3375 Mitchell Lane, Boulder CO 80301 proxy
- --------------------------------------------------------------------------------
This proxy is solicited by the Board of Directors for use at the Annual Meeting
on May 5, 1999.
The shares of stock you hold in your account or in a dividend reinvestment
account will be voted as you specify on this proxy.
If no choice is specified, the proxy will be voted "FOR" Items 1 and 2.
By signing the proxy, you revoke all prior proxies and appoint Michael C.
Gilliland and John A. Shields, or either one of them, with full power of
substitution, to vote your shares on the matters shown on the reverse side and
any other matters which may come before the Annual Meeting and all
adjournments.
See reverse for voting instructions.