SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SUPERVALU INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
SUPERVALU INC.
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
(4) Proposed maximum aggregate value of transaction:
- - - ----------
* Set forth the amount on which the filing fee is calculated and state how
it was determined.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
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[SUPERVALU LOGO]
SUPERVALU INC.
NOTICE OF 1994 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 29, 1994
TO THE STOCKHOLDERS OF SUPERVALU INC.:
Notice is hereby given that the Annual Meeting of Stockholders of SUPERVALU
INC. (the "Company") will be held on Wednesday, June 29, 1994, at 10:30 a.m.,
local time, at The Minneapolis Convention Center, 1301 Second Avenue South,
Minneapolis, Minnesota 55403 for the following purposes:
. to elect five directors of the Company;
. to vote on approval of the Annual Cash Bonus Plan for Designated
Corporate Officers;
. to vote on ratification of the appointment of Deloitte & Touche to audit
the books and accounts of the Company for the fiscal year ending February
25, 1995;
. to consider two stockholder proposals; and
. to transact such other business as may properly come before the meeting.
Common and Preferred Stockholders of record at the close of business on May
5, 1994, are entitled to one vote for each share held of record at that time.
IMPORTANT: We hope you will be able to attend the meeting in person and you
are cordially invited to attend. If you expect to attend the meeting, please
check the appropriate box on the proxy card when you return your proxy. NOTE
THAT THIS YEAR'S ANNUAL MEETING IS AT THE MINNEAPOLIS CONVENTION CENTER.
Parking is available in the Plaza municipal parking ramp across the street from
The Minneapolis Convention Center; the parking ramp has entrances on 12th
Street South (between Marquette Avenue and Second Avenue South), and on Second
Avenue South (between 12th Street South and Grant Street). If you need special
assistance because of a disability, please contact the Corporate Secretary at
P.O. Box 990, Minneapolis, MN 55440.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND RETURN YOUR
PROXY PROMPTLY. It is important that all stockholders, however small their
holdings, execute, date and return the proxy, utilizing the enclosed envelope
to which no postage need be affixed if mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
TERESA H. JOHNSON
Secretary
May 23, 1994
SUPERVALU INC.
P.O. BOX 990
MINNEAPOLIS, MINNESOTA 55440
PROXY STATEMENT
This Proxy Statement is furnished for solicitation by the Board of Directors
of SUPERVALU INC. (hereinafter referred to as the "Company") of proxies in the
enclosed form from holders of Common and Preferred Stock to be voted at the
Annual Meeting of Stockholders to be held on June 29, 1994, at 10:30 a.m.,
local time, at The Minneapolis Convention Center, 1301 Second Avenue South,
Minneapolis, Minnesota 55403 and at any adjournment of the meeting. This Proxy
Statement and accompanying form of proxy will be first mailed or given to
stockholders on or about May 18, 1994.
The cost of soliciting proxies will be borne by the Company. Arrangements
will be made with brokerage houses, custodians, nominees and other fiduciaries
to send proxy material to their principals, and the Company will reimburse them
for their expenses. In addition to solicitation by mail, certain officers and
directors of the Company, who will receive no compensation for their services
other than their regular salaries, may solicit proxies by telephone, telegraph
and personally. The Company has also retained D. F. King & Co., Inc. to assist
in the solicitation of proxies for an estimated fee of $5,000 plus out-of-
pocket expenses.
The Company has two classes of capital stock outstanding: Common Stock, par
value $1, and Preferred Stock, no par value. The holders of Common Stock and
Preferred Stock of record at the close of business on May 5, 1994, are entitled
to vote at the meeting. Holders of Common Stock and Preferred Stock are
entitled to one vote for each share held of record, voting together as one
class, on each proposal being voted upon. 71,456,891 shares of Common Stock and
5,908 shares of Preferred Stock are eligible to vote at the meeting.
Shares of Common Stock and Preferred Stock represented by proxies in the form
solicited will be voted in the manner directed by the holder of such shares,
and, if no direction is made, such shares will be voted for the election of the
nominees for director named in this Proxy Statement, and for the proposals to
approve the Annual Cash Bonus Plan for Designated Corporate Officers and to
appoint Deloitte & Touche as the auditors for the 1995 fiscal year; such shares
will be voted against the stockholder proposals in items 4 and 5. If an
executed proxy card is returned and the stockholder has voted "abstain" on any
matter (or "withhold authority" as to the election of any director), the shares
represented by such proxy will be considered present at the meeting for
purposes of determining a quorum and for purposes of calculating the vote, but
will not be considered to have been voted in favor of such matter. If an
executed proxy is returned by a broker holding shares in street name which
indicates that the broker does not have discretionary authority as to certain
shares to vote on one or more matters, such shares will be considered present
at the meeting for purposes of determining a quorum, but will not be considered
to be represented at the meeting for purposes of calculating the vote with
respect to such matter. A stockholder may revoke his or her proxy at any time
before it is voted by written notice to the Secretary, or by filing with the
Secretary another proxy bearing a later date, or by appearing and voting at the
meeting. The affirmative vote of a majority of the shares of Common Stock and
Preferred Stock entitled to vote, present in person or by proxy at the 1994
Annual Meeting of Stockholders and voting together as one class, will be
necessary for the election of directors and the approval of each other matter
submitted to the stockholders for approval at the Annual Meeting.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS
The following table sets forth information with respect to the only persons
or groups known to the Company as of April 1, 1994, to be the beneficial owner
of more than 5% of its Common Stock.
AMOUNT AND
NAME AND ADDRESS OF NATURE OF PERCENT
BENEFICIAL HOLDER BENEFICIAL OWNERSHIP OF CLASS
------------------- -------------------- --------
INVESCO MIM PLC
11 Devonshire Square 8,095,950(1) 11.24%
London, EC2M 4YR
England
- - - --------
(1) Based on information in a Schedule 13G Report dated February 10, 1994,
delivered to the Company and indicating that INVESCO MIM PLC and certain of
its subsidiaries are the beneficial owners of 8,095,950 shares of Common
Stock and possess shared voting and dispositive power with respect to such
shares.
2
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information, as of April 1, 1994, concerning
beneficial ownership of the Company's Common Stock by each director and
nominee, by each of the executive officers named in the Summary Compensation
Table on page 9, and by all directors and executive officers as a group. The
definition of beneficial ownership for proxy statement purposes includes shares
over which a person has sole or shared voting power, and shares over which a
person has sole or shared dispositive power, whether or not a person has any
economic interest in the shares. Options exercisable within 60 days after April
1, 1994, are set forth in note (1) following the table.
NAME OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1)(2) OF CLASS
---------------- -------------------------- --------
Herman Cain 1,000 *
Stephen I. D'Agostino 800 *
Edwin C. Gage 12,500 *
Sumner H. Goldman 24,973 *
Vernon H. Heath 2,000 *
William A. Hodder 1,400 *
Garnett L. Keith, Jr. 2,000 *
Richard L. Knowlton 1,000(3) *
Richard D. McCormick 1,638 *
Harriet Perlmutter 6,700 *
Carole F. St. Mark 1,700 *
Ted Wetterau 0 *
Winston R. Wallin 1,000 *
Michael W. Wright 187,786 *
Laurence L. Anderson 47,405 *
Phillip A. Dabill 43,591 *
Jeffrey C. Girard 10,628 *
Jeffrey Noddle 27,105 *
All directors and executive officers as a
group (33 persons) 541,298 *
- - - --------
*Less than 1%.
(1) In addition, not included are (a) 209,522 shares for Mr. Wright, 71,776
shares for Mr. Anderson, 62,657 shares for Mr. Dabill, 49,900 shares for
Mr. Girard, 66,492 shares for Mr. Noddle, 1,200 shares for each of Mr.
Cain, Mr. D'Agostino, Mr. Gage, Mr. Goldman, Mr. Heath, Mr. Keith, Mr.
McCormick, Ms. Perlmutter and Mr. Wallin and 838,019 shares for all
directors and executive officers as a group, which shares such persons and
group have the right to acquire under stock options exercisable within 60
days of April 1, 1994; (b) 19,600 shares held by or for children of Mr.
Wright, as to which shares he disclaims beneficial ownership; and (c) 8,000
shares held in a retirement trust for Mr. Wright. Including all such shares
in the number of shares beneficially owned, all directors and executive
officers as a group (33 persons) beneficially owned 1.96% of the
outstanding Common Stock of the Company as of April 1, 1994.
(2) The persons listed have sole voting and investment power with respect to
the shares listed except the following persons have shared voting and
investment power: Ms. Perlmutter--2,700 shares; Mr. McCormick--717 shares;
Mr. Wright--21,776 shares; Mr. Gage--4,000 shares; and Mr. Anderson--16,355
shares.
(3) Reflects ownership of Mr. Knowlton as of April 21, 1994.
3
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
holders of more than 10% of the Company's Common Stock to file with the
Securities and Exchange Commission (the "Commission") initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. The Company believes that during the fiscal year
ended February 26, 1994, its directors, executive officers, and holders of more
than 10% of the Company's Common Stock complied with all Section 16(a) filing
requirements. However, the Form 5 of George Lopuch, an executive officer of the
Company, was filed two days late. In making these statements, the Company has
relied upon the written representations of its directors and executive
officers.
ELECTION OF DIRECTORS
(ITEM 1)
Pursuant to the Bylaws of the Company, the Board is divided into three
classes with the number of directors to be divided as equally as possible among
the three classes. Directors are elected for staggered terms of three years.
The Bylaws of the Company also provide that in the event of any vacancy on the
Board of Directors occurring during the year, the vacant directorship may be
filled by the vote of the remaining directors until the next Annual Meeting, at
which time the stockholders shall elect a director to fill the balance of the
unexpired term or the term established by the Board pursuant to the Bylaws.
Vernon H. Heath, William A. Hodder, Harriet Perlmutter and Winston R. Wallin
are nominated for three-year terms expiring in 1997, and Richard L. Knowlton is
nominated for a two-year term expiring in 1996. Sumner H. Goldman has announced
his intention to retire and therefore will not be standing for reelection.
There are currently 12 members of the Board of Directors. The Board of
Directors decreased its size from 13 to 12 members, effective February 9, 1994
upon the retirement of Ted C. Wetterau.
The Board of Directors is informed that each of the five nominees is willing
to serve as a director; however, if any nominee is unable to serve or for good
cause will not serve, the proxy may be voted for such other person as the
proxies shall, in their discretion, determine.
The following sets forth information, as of April 1, 1994, concerning the
five nominees for election as directors of the Company and as to the seven
directors of the Company whose terms of office will continue after the Annual
Meeting.
NOMINEES FOR ELECTION AS DIRECTORS FOR
TERMS EXPIRING AT THE ANNUAL MEETING IN 1997
VERNON H. HEATH, age 65; Retired. Mr. Heath was Chairman of the Board of
Rosemount Inc. (a company engaged in the manufacture of measurement and control
instrumentation) from 1991 to February, 1994. From 1968 to 1991, he was
Chairman and Chief Executive Officer of that company. Mr. Heath was elected a
director of the Company in 1982. He is also a director of Medtronic, Inc. and
The Tennant Company.
WILLIAM A. HODDER, age 62; Chairman, President, Chief Executive Officer and a
Director of Donaldson Company, Inc. (a manufacturer of filtration and noise
abatement equipment) since 1984. Mr. Hodder was elected a director of the
Company in 1990. He is also a director of Norwest Corporation, The Tennant
Company and The NWNL Companies, Inc.
4
HARRIET PERLMUTTER, age 62; Trustee of the Papermill Playhouse (The State
Theatre of New Jersey). Ms. Perlmutter was elected a director of the Company in
1978.
WINSTON R. WALLIN, age 68; Chairman of the Board and a director of Medtronic,
Inc. (a manufacturer of therapeutic medical devices) since 1991. From 1986 to
his retirement in 1991, Mr. Wallin was President and Chief Executive Officer of
that company. Mr. Wallin was elected a director of the Company in 1991. He is
also a director of Bemis Company.
NOMINEE FOR ELECTION AS DIRECTOR FOR A
TERM EXPIRING AT THE ANNUAL MEETING IN 1996
RICHARD L. KNOWLTON, age 61; Chairman of the Board of Hormel Foods
Corporation (a food manufacturing company) since 1984. From 1984 to 1992 Mr.
Knowlton was also President and Chief Executive Officer of that Company. He is
also a director of Northwestern National Life Insurance Co., First Bank System
and a member of the Board of Trustees, Mayo Foundation.
DIRECTORS WHOSE TERMS EXPIRE
AT THE ANNUAL MEETING IN 1996
EDWIN C. GAGE, age 53; Chairman and Chief Executive Officer of GAGE Marketing
Group, LLC (an integrated marketing services company) since 1991. He was
President and Chief Executive Officer of Carlson Companies, Inc. (a diversified
services company principally engaged in hotel, restaurant, travel services and
incentives businesses) from 1989 to 1991, and from 1984 to 1989 he was
President and Chief Operating Officer of that company. Mr. Gage was elected a
director of the Company in 1986. He is also a director of Fingerhut Companies,
Inc.
GARNETT L. KEITH, JR., age 58; Vice Chairman of The Prudential Insurance
Company of America since 1984. Mr. Keith was elected a director of the Company
in 1984.
CAROLE F. ST. MARK, age 51; President of Pitney Bowes Logistics Systems and
Business Services, a division of Pitney Bowes, Inc. (a company engaged in the
production and supply of business and business-related products) since 1990.
From 1988 to 1990, she was President of the Business Supplies and Services
Division, and from 1985 to 1988 was Vice President, Corporate Planning &
Development of Pitney Bowes, Inc. Ms. St. Mark was elected a director of the
Company in 1989.
DIRECTORS WHOSE TERMS EXPIRE
AT THE ANNUAL MEETING IN 1995
HERMAN CAIN, age 48; President and Chief Executive Officer of Godfather's
Pizza, Inc. (a company engaged in the operation and franchising of pizza
restaurants) since 1986. Mr. Cain was elected a director of the Company in
1991. He is also a director of Whirlpool Corporation, Federal Reserve Bank of
Kansas City and Utilicorp United, Inc.
5
STEPHEN I. D'AGOSTINO, age 60; Chairman of D'Agostino Investments (an
investment management company) since 1992. From 1988 to 1992, he was Chairman
of Lord Capital Corporation (an investment management company). Mr. D'Agostino
was elected a director of the Company in 1983. He is also a director of
Catalina Marketing Corp.(1)
RICHARD D. MCCORMICK, age 53; Chairman, President and Chief Executive Officer
of U S WEST, Inc. (a diversified telecommunications holding company) since May
1, 1992. He was President and Chief Executive Officer of that company from 1990
to May 1, 1992, and President and Chief Operating Officer of that company from
1986 to 1990. Mr. McCormick was elected a director of the Company in 1983. He
is also a director of U S WEST, Inc. and Norwest Corporation.
MICHAEL W. WRIGHT, age 55; Chairman of the Board, President, and Chief
Executive Officer of the Company since 1982. Mr. Wright was elected a director
of the Company in 1977. He is also a director of Cargill, Inc., Honeywell Inc.,
The Musicland Group, Inc., ShopKo Stores, Inc. and Norwest Corporation.
- - - --------
(1) In addition, Mr. D'Agostino was Chairman of the Board and Chief Executive
Officer of Pantera's Corporation, Dallas, Texas, from July 30, 1989 to
September 18, 1989; on September 1, 1989, Pantera's Corporation filed a
Chapter 11 proceeding under the Federal bankruptcy laws in the United
States Bankruptcy Court for the Northern District of Texas.
6
MEETINGS AND COMMITTEES
OF THE BOARD OF DIRECTORS
The Board of Directors held six meetings during the last full fiscal year of
the Company. Each incumbent director attended 75 percent or more of the total
number of meetings of the Board and any Committees on which such director
served.
The Company has an Audit Committee consisting of five directors who are not
employees of the Company: Mr. Keith (Chairperson), Mr. D'Agostino, Mr. Goldman,
Mr. Heath and Ms. Perlmutter. Two meetings of the Committee were held during
the last fiscal year. The Audit Committee recommends to the full Board of
Directors the selection of independent auditors, reviews the activities and
reports of the independent auditors, monitors the internal audit controls of
the Company, and has such other duties as may be provided by the Board of
Directors.
The Company has an Executive Personnel and Compensation Committee consisting
of six directors who are not employees of the Company: Mr. Gage (Chairperson),
Mr. Cain, Mr. Hodder, Mr. McCormick, Ms. St. Mark and Mr. Wallin. Five meetings
of the Committee were held during the last fiscal year. The Committee is
responsible for reviewing, approving and reporting to the Board of Directors on
(i) compensation of corporate officers, (ii) adopting and changing major
Company compensation programs, and (iii) election recommendations for corporate
officers and succession planning. The Committee also grants stock options,
stock appreciation rights, and awards under the Company's Management Incentive
Bonus Plan, Long-Term Incentive Plan and 1993 Stock Plan. If approved by the
stockholders, the Committee will also be authorized to implement awards under
the Annual Cash Bonus Plan for Designated Corporate Officers.
The Company has a Director Affairs Committee consisting of six members of the
Board of Directors: Mr. Hodder (Chairperson), Mr. Heath, Ms. Perlmutter, Ms.
St. Mark, Mr. Wallin and Mr. Wright. The Committee is responsible for
recommending to the Board of Directors (i) nominees for election to the Board
of Directors of the Company, and (ii) policies and procedures for the Board of
Directors. The Committee met three times during the last fiscal year. The
Committee considers candidates for Board membership suggested by directors,
officers, or stockholders of the Company and makes an evaluation of each
candidate. Stockholders may suggest candidates for consideration by the
Committee by submitting the candidate's name to the Secretary of the Company.
Any stockholder wishing to nominate a candidate to be considered by the
Committee must furnish a certificate of nomination signed by the stockholder
setting forth the name, address and qualifications of the nominee and the
nominee's written consent to be named in the proxy statement and to serve as a
director if nominated and elected. To be considered by the Committee, any
certificate of nomination for nominees to be elected at the 1995 Annual Meeting
of Stockholders must be received by the Company on or before January 18, 1995.
The Committee will evaluate each candidate and make its recommendation to the
full Board of Directors.
Stockholders may nominate persons for election to the Board of Directors, at
an annual meeting of stockholders, by timely notice in proper written form to
the Secretary of the Company. The Company's Bylaws provide that to be timely, a
stockholder's notice shall be delivered to the Secretary at the principal
executive offices of the Company not less than 60 days nor more than 90 days
prior to the first anniversary of the preceding year's annual meeting;
provided, however, that in the event that the date of the annual meeting is
advanced by more than 30 days or delayed by more than 60 days from such
anniversary date, notice by the stockholder to be timely must be so delivered
not earlier than the 90th day prior to such annual meeting and not later than
the close of business on the later of the 60th day prior to such annual meeting
or the 10th day following the day on which public announcement of the date of
such meeting is first made. To be in proper form, the stockholder's notice
shall set forth in writing (a) as to each person whom the stockholder proposes
to nominate for election or reelection as a director, all information relating
to such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under
7
the Exchange Act, including, without limitation, such person's written consent
to be named in the proxy statement as a nominee and to serving as a director if
elected; and (b) as to the stockholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination is made (i) the name and address
of such stockholder, as they appear on the Company's books, and of such
beneficial owner, and (ii) the class and number of shares of the Company that
are owned beneficially and of record by such stockholder and such beneficial
owner. However, in the event that the number of directors to be elected to the
Board of Directors of the Company is increased and there is no public
announcement naming all of the nominees for director or specifying the size of
the increased Board of Directors made by the Company at least 70 days prior to
the first anniversary of the preceding year's annual meeting, a stockholder's
notice shall also be considered timely, but only with respect to nominees for
any new positions created by such increase, if it shall be delivered to the
Secretary at the principal executive offices of the Company not later than the
close of business on the 10th day following the day on which such public
announcement is first made by the Company. "Public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Company with the Commission pursuant to Sections 13, 14, or 15(d)
of the Exchange Act.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company or one of its subsidiaries do not
receive additional remuneration as directors. Directors who are not employees
receive directors' retainer fees as follows: For the fiscal year ended February
26, 1994, a retainer of $18,000 per year plus $1,300 for each Board meeting
attended and $700 for each Committee meeting attended. Committee chairpersons
received an additional $300 for each Committee meeting attended. Effective for
the fiscal year ending February 25, 1995, and thereafter, the outside
directors' annual retainer has been increased to $20,000, and an additional
annual retainer was instituted for certain Committee Chairpersons in the
following amounts: Audit Committee--$2,000; Executive Personnel and
Compensation Committee--$3,000; and Finance and Director Affairs Committees--
$1,000. Other fees paid to non-employee directors remain unchanged.
Non-employee directors may elect to defer payment of their directors' fees
under a Deferred Compensation Plan, until they no longer serve as a director;
the accrued amounts in each account are credited quarterly with eleven percent
per annum simple interest until payment is made from the plan. In addition,
directors may elect to defer payment of their directors' fees under the
Company's Executive Deferred Compensation Plans; depending on the date the
election to defer was made, amounts deferred under such plans accrue interest
at either four percent over the average rate for the twelve months preceding
the beginning of each plan year of Moody's Corporate Bond Yield Average-Monthly
Average Corporates as published by Moody's Investors Service, Inc., or 120% of
the ten year rolling average of ten year U. S. Treasury Notes.
Under the Company's 1983 Employee Stock Option Plan, each non-employee
director serving on the Board of Directors on June 30, 1992 was granted an
option on that date to purchase 3,000 shares of Common Stock and each non-
employee director first elected or appointed to the Board of Directors after
June 30, 1992 and during the term of the plan will be granted, as of the date
of such election or appointment, an option to purchase 3,000 shares of Common
Stock. After this initial grant to each non-employee director, each such
director will be granted during the term of the plan, as of each even-numbered
anniversary of the date of such initial grant to such director, if such
director's term of office continues after such anniversary date, an option to
purchase 3,000 shares of Common Stock. Accordingly, each non-employee director
elected at or continuing to serve after the 1994 Annual Meeting will receive an
additional option to purchase 3,000 shares of Company Common Stock. All options
granted or to be granted to non-employee directors have an exercise price equal
to the fair market value of the shares on the date of grant, and become
exercisable in installments over a period of three years from the date of
grant.
8
The Directors' Retirement Program as amended in February of 1994, provides
that non-employee directors, who have served at least four years, will receive
an annual retirement fee equal to the annual Board retainer fee in effect on
the retirement date. This fee will be payable for the number of years of a
director's Board service, not to exceed ten years. Payments will commence when
the director leaves the Board or reaches age 55, whichever is later. The
Program also provides that non-employee directors who leave the Board for any
reason following a Change of Control will receive an annual fee equal to the
annual retainer fee for active directors on the date of leaving; the annual fee
is payable for the lesser of the number of years of Board service as a non-
employee director or ten years, but not less than four years. A former director
participating in the Retirement Program must be available to management for
consultation services and not engage in any activity directly competitive to
the Company's business.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning compensation for
services in all capacities to the Company and its subsidiaries for each of the
last three fiscal years of the Company's Chief Executive Officer, Ted C.
Wetterau, who retired during the fiscal year, and the other four most highly
compensated executive officers in fiscal 1994.
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------- ---------------------
OTHER
NAME ANNUAL SECURITIES
AND COMPEN- RESTRICTED UNDERLYING ALL OTHER
PRINCIPAL SATION STOCK OPTIONS/ COMPEN-
POSITION YEAR SALARY BONUS (1) AWARDS (2) SARS (3) SATION (4)
--------- ---- -------- -------- ------- ---------- ---------- -----------
MICHAEL W. 1994 $675,000 $801,900 $ 9,433 0 42,792 $ 5,846
WRIGHT 1993 675,000 810,000 11,102 $1,088,438 29,558 3,492
Chairman 1992 642,000 368,703 -- 0 0 --
and Chief
Executive
Officer
TED C. 1994 562,500 447,548 4,143 0 0 237,500(6)
WETTERAU 1993 225,000 369,794 13,624 0 0
Vice
Chairman
(5)
13,300,385(6)
LAURENCE 1994 365,000 352,737 13,593 0 20,629 5,846
L. ANDER- 1993 299,877 258,222 6,614 342,656 59,550 3,492
SON 1992 267,650 103,607 -- 0 11,500 --
Executive
Vice
President
PHILLIP A. 1994 325,000 305,825 8,097 0 15,000 5,846
DABILL 1993 287,154 238,848 5,722 342,656 29,196 3,492
Executive 1992 267,650 108,960 -- 0 8,625 --
Vice
President
JEFFREY C. 1994 325,000 309,075 8,775 0 17,250 5,846
GIRARD 1993 287,154 238,848 4,583 338,625 17,250 3,492
Executive 1992 265,000 107,882 -- 0 11,500 --
Vice
President
and Chief
Financial
Officer
JEFFREY 1994 310,000 294,810 8,705 0 15,000 5,846
NODDLE 1993 275,462 228,687 5,152 330,563 27,217 3,492
Executive 1992 259,904 105,806 -- 0 25,875 --
Vice
President
- - - --------
(1) Information for years prior to fiscal 1993 is not required to be disclosed.
(2) The amounts reflected for fiscal 1993 represent the value of shares of
restricted stock earned under the Long-Term Incentive Plan based on the
achievement of a designated level of return on equity for the two year
period ended February 27, 1993. The number of shares earned for fiscal
9
years 1992 and 1993 was: 33,750 shares for Mr. Wright; 10,625 shares for Mr.
Anderson; 10,625 shares for Mr. Dabill; 10,500 shares for Mr. Girard and
10,250 shares for Mr. Noddle. One-half of such shares vested on February 28,
1994 and the remaining shares will vest on February 28, 1995, subject to
continued employment with the Company. Dividends are paid on all shares of
restricted stock. For purposes of the table, such shares are valued based on
the closing price of the Company's Common Stock on February 26, 1993. On
February 25, 1994, such shares of restricted stock (which were the only
shares of restricted stock owned by such individuals on that date) had a
market value of $1,238,203 for Mr. Wright; $389,805 for Mr. Anderson;
$389,805 for Mr. Dabill; $385,219 for Mr. Girard; and $376,047 for Mr.
Noddle.
(3) For fiscal 1993, all options granted to Mr. Wright, 23,050 options granted
to Mr. Anderson, 14,821 options granted to Mr. Dabill and 12,717 options
granted to Mr. Noddle were restoration options (also referred to as
"reload" options). A limited stock appreciation right has been granted in
tandem with each option reported in the table. Each such right is
exercisable for cash in lieu of such option only upon a Change of Control.
(4) Information for years prior to fiscal 1993 is not required to be disclosed.
Amounts of All Other Compensation for fiscal 1994 are the amounts
contributed during the fiscal year by the Company under the Pre-Tax Savings
and Profit Sharing (401k) Plan, as follows: $5,846 for each of Mr. Wright,
Mr. Anderson, Mr. Dabill, Mr. Girard, and Mr. Noddle.
(5) Mr. Wetterau was an executive officer of the Company from October 29, 1992,
through December 31, 1993, and information in the table only reflects
compensation paid or accrued to Mr. Wetterau by the Company during that
period. As described in footnote (6) and under the caption "Severance
Agreements, Change-in-Control Arrangements and Employment Agreement,"
amounts reported in the table for Mr. Wetterau were paid pursuant to an
agreement entered into with Mr. Wetterau in connection with the acquisition
by the Company of Wetterau Incorporated on October 29, 1992.
(6) Amounts of All Other Compensation for Mr. Wetterau for fiscal 1994
consisted of $112,500 of severance compensation and $125,000 of split
dollar life insurance premiums on policies covering Mr. Wetterau. Amounts
for fiscal 1993 include: (i) a $13,282,890 lump-sum distribution from the
Wetterau Incorporated Supplemental Pension Plan trust fund, which was
funded prior to the Company's acquisition of Wetterau Incorporated; such
distribution was made in connection with the termination of such plan, by
mutual agreement, following the acquisition in order to achieve a benefit
to both the Company and the participants; and (ii) $17,495 in split dollar
life insurance premiums paid by the Company after the acquisition. All such
amounts were paid pursuant to an agreement entered into with Mr. Wetterau
in connection with the Company's acquisition of Wetterau Incorporated on
October 29, 1992. See "Severance Agreements, Change-in-Control Arrangements
and Employment Agreement."
10
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information on grants of stock options and stock
appreciation rights for fiscal 1994 to the named executive officers.
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION PRIOR COLUMNS
INDIVIDUAL GRANTS TERM(2) ANNUALIZED(2)(3)
--------------------------------------------- ----------------------- ----------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SARS EMPLOYEES IN OR BASE EXPIRATION
NAME GRANTED(1) FISCAL YEAR PRICE DATE 0% 5% 10% 5% 10%
---- ------------ ------------ -------- ---------- --- -------- ---------- ------- --------
Michael W. Wright....... 42,792 6.2% $33.56 6-28-03 0 $903,155 $2,288,723 $90,316 $228,872
Ted C. Wetterau......... 0 -- -- -- -- --
Laurence L. Anderson.... 20,629 3.0% 31.63 4-13-03 0 410,351 1,039,909 41,035 103,991
Phillip A. Dabill....... 15,000 2.2% 31.63 4-13-03 0 298,379 756,151 29,838 75,615
Jeffrey C. Girard....... 17,250 2.5% 31.63 4-13-03 0 343,136 869,574 34,314 86,957
Jeffrey Noddle.......... 15,000 2.2% 31.63 4-13-03 0 298,379 756,151 29,838 75,615
Total potential realizable value for the five officers who received stock
option grants is $2,253,400 and $5,710,508, respectively, under the 5% and 10%
stock price growth assumptions. The term of all grants shown in the table is 10
years. Assuming 5% and 10% stock price growth over a period of 10 years
commencing April 13, 1993, the increase in total stockholder value from stock
price appreciation alone for all shares outstanding on that date would be
$1,425,218,000 and $3,612,129,100, respectively.
- - - -------
(1) All options become exercisable 20% in each of the first four years after
the date of grant and are fully exercisable on and after the fourth
anniversary of the date of grant, except that all options become fully
exercisable upon a Change of Control. The exercise price may be paid by
delivery of already-owned shares, and tax withholding obligations related
to exercise may be paid by offset of the underlying shares. A "restoration"
option (also referred to as a "reload" option) may be granted when the
payment of the exercise price of another option (the "Base Option") is made
by delivery of the Company's Common Stock; each restoration option is for
the number of shares of Common Stock tendered as payment for the exercise
price, and withheld for tax purposes, upon exercise of the Base Option. The
exercise price of each restoration option is the fair market value of the
Company's Common Stock on the date of grant. Each restoration option is
exercisable in full on the date of grant, and will expire on the same date
as the Base Option. All options reported in the table are entitled to
restoration options. A limited stock appreciation right has been granted in
tandem with each option reported in the table, and is exercisable for cash
in lieu of such option only upon a Change of Control.
(2) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent on the future
performance of the Company and overall market conditions. There can be no
assurance that the amounts reflected in this table will be achieved.
(3) Computed by dividing potential realizable value at the assumed annual rates
of stock price appreciation by the term of the option.
11
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table provides information on option exercises in fiscal 1994
by the named executive officers and the value of such officers' unexercised
options/SARs at fiscal year end (February 26, 1994).
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
SHARES OPTIONS/SARS AT FISCAL THE-MONEY OPTIONS/SARS AT
ACQUIRED YEAR-END FISCAL YEAR-END
ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ----------- ----------- ------------- ----------- -------------
Michael W. Wright....... 3,072 $3,648 186,522 57,234 $2,034,956 $395,889
Ted C. Wetterau......... 0 -- -- -- -- --
Laurence L. Anderson.... 0 -- 60,750 45,304 391,942 337,647
Phillip A. Dabill....... 0 -- 52,757 26,375 450,106 205,669
Jeffrey C. Girard....... 0 -- 40,700 36,050 398,416 290,267
Jeffrey Noddle.......... 0 -- 56,592 31,550 499,876 255,451
- - - --------
(1) The value received is in the form of stock ownership as none of such shares
acquired upon exercise by the named executive officer have been sold.
PENSION PLANS
The following table sets forth various estimated maximum annual benefits
which would become payable upon retirement at age 65 under the combination of
the Company's tax-qualified defined benefit retirement plan, the Non-qualified
Supplemental Executive Retirement Plan (or, if applicable, the Excess Benefits
Plan) maintained for certain highly compensated employees, and the "Retirement
Benefit Plan Account" of the Company's deferred compensation plans, to
participants in the final average pay and years of credited service categories
indicated. The table does not reflect the $118,800 per year limitation on
annual benefits payable from the plans imposed by Section 415 of the Code, nor
the $150,000 per year limitation on compensation included in final annual
average pay imposed by Section 401(a)(17) of the Code; the Company's Non-
qualified Supplemental Executive Retirement Plan and Excess Benefits Plan allow
payment of additional benefits so that retiring employees may receive, in the
aggregate, the benefits they would have been entitled to receive had such Code
Sections not imposed maximum limitations.
YEARS OF SERVICE(1)
FINAL ANNUAL ---------------------------------------------------------------
AVERAGE PAY(2) 15 20 25 30
-------------- -------- -------- -------- --------
$ 250,000 $ 55,875 $ 74,500 $ 93,125 $111,750
450,000 103,875 138,500 173,125 207,750
650,000 151,875 202,500 253,125 303,750
850,000 199,875 266,500 333,125 399,750
1,350,000 319,875 423,500 526,125 625,750
1,800,000 427,875 567,500 705,125 841,750
- - - --------
(1) The above calculations of annual benefits estimated to be payable upon
normal retirement are computed using the straight-life annuity method and
are necessarily based upon certain assumptions, including (a) that the
employee remains in the employ of the Company or a subsidiary until the
normal retirement age of 65 (although retirement is permitted at age 62
without benefit reduction because of age); and (b) that the Company's
present retirement plans remain in force until the retirement date.
Benefits under such plans are not reduced by the participant's Social
Security benefit.
(2) Includes salary and bonus.
12
As to each of the individuals named in the Summary Compensation Table above,
their final annual average pay and credited years of service under the plans as
of February 26, 1994 were as follows: Mr. Wright--$1,153,808, 17 years; Mr.
Anderson--$464,464, 19.3 years; Mr. Dabill--$441,733, 31.6 years; Mr. Girard--
$522,986, 3.5 years and Mr. Noddle--$421,818, 17.8 years. Mr. Wetterau is not a
participant in such plans but instead is covered by the Wetterau Incorporated
Pension Plan. Mr. Wetterau retired effective December 31, 1993 and is receiving
an annual benefit of $105,384 under the Wetterau Incorporated Pension Plan.
SEVERANCE AGREEMENTS,
CHANGE-IN-CONTROL ARRANGEMENTS
AND EMPLOYMENT AGREEMENT
The Company has entered into change of control severance agreements (the
"Severance Agreements") with officers of the Company, including those
identified in the Summary Compensation Table above. The Severance Agreements
provide that, if, within two years after a Change of Control (as defined
therein), the Company terminates the individual's employment other than for
Cause (as defined therein) or disability, or the individual terminates his or
her employment for Good Reason (as defined therein), then the individual will
be entitled to a lump-sum cash payment equal to (1) a multiple of one, two or
three times the individual's annual base salary, plus (2) a multiple of one,
two or three times his or her average annual bonus for the three fiscal years
immediately preceding the date of termination. Such multiple is three for Mr.
Wright; two for Mr. Anderson, Mr. Dabill, Mr. Girard and Mr. Noddle; and one or
two for all other officers of the Company. Each individual would also receive
his or her salary through the date of termination, all other amounts owed to
the individual at the date of termination under the Company's benefit plans,
and a lump-sum retirement benefit equal to the difference between (a) the
actuarial equivalent of the benefit the individual would receive under the
Company's retirement plans if he or she remained employed by the Company at the
compensation level provided by the Severance Agreement for a one, two or three
year period following the date of termination, and (b) the actuarial equivalent
of the benefit to which the individual is otherwise then entitled under the
Company's retirement plans. In addition, under such circumstances, the
individual will be entitled to continued medical coverage, including family
coverage, for a one, two or three year period after the date of termination.
Mr. Wright's Severance Agreement provides that any termination by him during
the 30-day period immediately after the six-month anniversary of the Change of
Control will be considered to be for Good Reason. The Severance Agreements
contain provisions designed to deal with the golden parachute tax rules. These
provisions would decrease the severance benefits owed to the individual, but
only if the result is to give the individual a larger after-tax benefit than if
the payments are not reduced. The individual is permitted to elect that
payments be reduced.
Certain of the Company's benefit plans and related agreements contain
provisions intended to preserve the economic benefits conferred thereby in the
event of a Change of Control (as defined in such plans or agreements).
Outstanding stock options, as well as performance shares and restricted stock
awards outstanding under the Company's Long-Term Incentive Plan, become fully
vested upon a Change of Control. Outstanding stock appreciation rights also
become exercisable upon a Change of Control, allowing the holder to receive
cash instead of exercising the related stock option. Amounts payable under the
Executive Deferred Compensation Plans are to be maintained following a Change
of Control and may be increased by 130% to deal with the golden parachute tax
rules. The Company's retirement plans provide for full vesting if employment
terminates under specified circumstances following a Change of Control, and
preserves any excess plan assets for five years following a Change of Control
for the benefit of plan participants at the time of a Change of Control.
The Company has established an irrevocable grantor trust under which the
Company may set aside funds in the future at the Board of Directors' discretion
(except that if a Change of Control, as defined therein, occurs with respect to
the Company, such setting aside of funds shall occur automatically) to
13
satisfy the Company's obligations under certain of its retirement, deferred
compensation and other benefit plans. The participants in those plans do not
have any preferred claim on the trust assets, which remain subject to the
claims of the Company's creditors. If any funds set aside in the trust are
insufficient to pay amounts due to beneficiaries of the trust, then the Company
will be liable for those amounts.
In connection with the acquisition of Wetterau Incorporated ("WI"), the
Company entered into an employment agreement dated July 24, 1992 with Mr.
Wetterau, who was at that time Chairman of the Board and Chief Executive
Officer of WI. In accordance with the terms of the agreement, Mr. Wetterau
became Vice Chairman and a director of the Company following the acquisition
until his retirement on December 31, 1993 at an annual base salary rate of
$675,000 per annum. Following termination of his employment, Mr. Wetterau
became entitled to receive a severance payment equal to one year's base salary
payable in equal monthly installments. Pursuant to the employment agreement,
Mr. Wetterau had an opportunity to earn a bonus norm for the year ended
February 27, 1993 and a pro rated bonus norm for the period ended December 31,
1993 of 60% of his base salary, subject to increase or decrease, depending on
performance. The agreement also required the vesting, at the effective time of
the acquisition, of unvested stock options covering a total of 120,000 shares
of WI Common Stock held by Mr. Wetterau and for the payment by WI to him of
$18.00 per share (representing the difference between the per share purchase
price paid by the Company for shares of WI Common Stock in the acquisition and
the per share exercise price of such options) on all stock options held by Mr.
Wetterau, covering a total of 150,000 shares of WI Common Stock.
Pursuant to the employment agreement, the Company also agreed to cause WI to
discharge its existing obligations to Mr. Wetterau under the WI Supplemental
Pension Plan in accordance with the terms of such plan and to provide Mr.
Wetterau, through qualified pension plans and otherwise, with at least the same
or comparable pension benefits as those to which he was entitled under the WI
pension plans in effect immediately prior to the acquisition (without giving
effect to any subsequent amendments). The employment agreement also contains
provisions for retiree health care benefits for Mr. Wetterau and his wife
comparable to those provided by WI before the acquisition (without giving
effect to any subsequent amendments), continuance through June 30, 2002 of
split dollar life insurance premiums (not to exceed $125,000 per year) for
policies providing death benefits of approximately $4.5 million, and payment of
$10,000 annually through 1997 to reimburse Mr. Wetterau for country club dues.
Upon termination of the agreement for split dollar life insurance coverage,
upon Mr. Wetterau's death or otherwise, WI will be entitled to recover the
total amount of premiums theretofore paid for such insurance coverage. The
employment agreement also prohibits Mr. Wetterau, during the term of his
employment and for a period of two years following the termination of his
employment, from (1) engaging in the wholesale food distribution business in
competition with WI or engaging in the retail grocery business in the St. Louis
metropolitan area unless the Company is the principal wholesale supplier to
that business and (2) soliciting, enticing or inducing (or attempting to do so)
any employee of WI or the Company, or any of their affiliates, to leave his or
her employment.
TRANSACTIONS WITH AFFILIATES
Mr. Gage and certain family members, as trustees for revocable trusts, are
general partners, among others, of Carlson Real Estate Company, a limited
partnership which leases a retail supermarket in Shakopee, Minnesota, to the
Company for a term ending in 2008, with options to renew. The annual rental is
$199,000, increasing to $224,000 in 1998 and $232,000 in 2003, which the
Company believes to be a fair market rental. The leased premises are subleased
by the Company to an independent retail supermarket operator.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Exchange
Act that might incorporate future filings, including this Proxy Statement, in
whole or in part, the following report and the Performance Graph on page 19
shall not be incorporated by reference into any such filings.
14
REPORT OF EXECUTIVE PERSONNEL
AND COMPENSATION COMMITTEE
The Executive Personnel and Compensation Committee of the Board of Directors
(the "Committee"), composed entirely of independent non-employee directors, has
implemented a comprehensive Executive Compensation Program within the Company.
The Committee has structured this program to serve the interests of
stockholders by providing compensation to executive officers in direct
proportion to their responsibilities and efforts as these impact the objectives
of the Company. The program consists of both cash and stock elements, with the
majority of executive officers' total compensation value in the form of
variable compensation tied to Company performance and stock price performance.
The Company's Executive Compensation Program is based on the following
principles:
1. The program will enable the Company to attract, retain and motivate the
key executives necessary for the Company's current and long-term
success.
2. Compensation plans are designed to support the Company's long range
business strategy.
3. Executive compensation is linked to corporate performance and attainment
of designated strategic objectives.
4. A significant portion of executive gain is tied to the enhancement of
stockholder value.
5. The Committee exercises independent judgment and approval authority with
respect to the Executive Compensation Program and the awards thereunder.
The structure of the Company's Executive Compensation Program is based on a
market comparison of compensation for equivalent positions in industries from
which the Company draws executive talent as well as a position evaluation
designed to achieve internal equity based on job responsibility. The Company's
primary market comparison for compensation is the 12 companies comprising the
composite peer group for the comparative performance graph on page 19, plus
three additional non-grocery distribution companies, all adjusted for size
based primarily on market capitalization (collectively the "Compensation Peer
Group"). The Company engaged outside consulting firms to perform this market
comparison in each of the past three years. The market comparison performed in
1991 was the basis for designing the Company's current compensation structure,
which has a mix of fixed to variable compensation and short-term to long-term
incentive potential approximating the mix within the Compensation Peer Group.
The 1992 and 1993 market comparisons were performed to ensure that the target
dollar values of the various plan components as well as targeted total
compensation approximated those within the Compensation Peer Group. In addition
to a review of compensation plan design and compensation levels relative to the
Compensation Peer Group, the Committee also reviews the Company's performance
on a number of key financial measures relative to the Compensation Peer Group
plus selected other industry companies.
The variable compensation components of the program are designed so that
executives' total compensation will be above that of the Compensation Peer
Group when Company performance is superior, and below that of the Compensation
Peer Group when performance is below industry norms. This fluctuation in
compensation value is increased by the substantial use of stock in the program
(as described in more detail in the remainder of this report), so that total
compensation will significantly increase or decrease in direct relation to
increases or decreases in the price of the Company's stock.
The application of the above stated principles is described in the following
sections which summarize the major components of the Company's Executive
Compensation Program, including factors and criteria upon which compensation
was awarded to the Company's Chief Executive Officer for fiscal 1994.
15
BASE SALARIES
The base salary levels for executive officers are determined from a position
evaluation process designed to achieve internal equity based on job
responsibility, and by reference to base salary levels in industries from which
the Company draws executive talent as analyzed by an outside compensation
consulting firm. The Company's salary structure is based on the median salary
levels of companies in these industries which are similar in size to the
Company. Actual salaries may be set above or below this median depending on
individual job performance and experience.
The Committee annually reviews and approves all salary increases for
executive officers other than the CEO. Increases for these executives are
proposed to the Committee by the CEO based on financial results and a
qualitative assessment of performance. After discussion, the Committee makes a
final determination of any salary increases.
The Chairman of the Committee conducts an annual formal performance
evaluation of the CEO based on written input from all Board members. The
following factors are considered in this performance evaluation: financial
results, strategic planning, leadership, customer service, succession planning,
human resource management/EEO, communications, external relations and Board
interface. Salary adjustments for the CEO are currently made every other year.
There was no change to the CEO's base salary for fiscal 1994 since an increase
had occurred for fiscal 1993.
ANNUAL INCENTIVE
All of the Company's executive officers are eligible to receive an annual
cash bonus designed to motivate these executives to meet or exceed individual
and financial goals which support the Company's business plans as these are
translated into annual performance measures. Specifically, the annual bonus
plan for executive officers is designed to stimulate and reward growth in
Company earnings. The Committee assigns eligible executives target bonus levels
which approximate the bonus opportunity for comparable positions within the
Compensation Peer Group. Among executive officers, these range from 20% of
annual base salary to 60% of annual base salary for the CEO. These target bonus
levels have been in effect for several years, and normally change only when an
individual enters a new position. Ninety percent of this award potential (100%
in the case of the CEO) is tied to the Company's net profit performance. The
remaining ten percent for executives other than the CEO is based on a
subjective evaluation of performance relative to personal objectives. Bonus
payments increase, and can go above target levels, as net profit growth meets
and exceeds the annual rate of profit growth targeted by the Board in advance
of the fiscal year. In no event can the amount paid as annual incentive bonus
exceed two times the target bonus level of the position.
For fiscal 1994, profit performance substantially exceeded profit growth
targets resulting in the payment of bonuses as disclosed in the Summary
Compensation Table.
LONG-TERM INCENTIVE COMPENSATION
The Company has implemented, with stockholder approval, a Long Term Incentive
Plan and Stock Option Plans. Together, these plans tie a significant portion of
the executives' total compensation to long term results. The Executive
Compensation Program is structured so that the overall value of the long term
incentive potential approximates that of the Compensation Peer Group. The
Committee has structured these long term plans so that there is approximately
equal value between the awards under the Long Term Incentive Plan and the
grants under the Stock Option Plans.
Long Term Incentive Plan. The Plan empowers the Committee to select Plan
participants, approve awards under the Plan, and in general, interpret and
administer the Plan. Awards under the Plan have covered the three year period
fiscal 1992-fiscal 1994. For fiscal 1994, the Committee granted executive
officers and division presidents performance shares with a value equal to a
fixed percent of the
16
participant's base salary plus target annual bonus. These percentages are set
at a level which is expected to produce a value, when combined with the value
of stock options, approximately equal to the long term compensation potential
of the Compensation Peer Group. For executive officers, such performance shares
are earned if stated performance objectives are achieved for return on
stockholder's equity ("ROE"). Thus, award value is dependent on both corporate
ROE performance (which determines the number of shares earned) and stock price
(which determines the value of the shares earned). If an award is earned,
performance shares are converted to restricted stock with a two year
requirement of further employment, so that termination before the restrictions
lapse, or a decrease in the stock price, will result in forfeiture of the award
or diminishment in its value. This provides a continuing incentive for
executives to remain with the Company and focus on stockholder value after the
award has actually been earned. The Committee determined minimum, target and
maximum payout amounts for each participant based on corporate ROE performance
for officers, and corporate ROE and division return on capital employed
("ROCE") performance for division presidents. Application of the criteria set
forth in the awards under the Plan for fiscal 1994 resulted in Division
Presidents earning an aggregate of 10,395 shares of restricted stock based on
division performance criteria. No restricted shares were earned by corporate
officers for fiscal 1994; corporate officers earned awards for fiscal 1992-1993
which, for the five most highly compensated executive officers, are shown in
the Summary Compensation Table.
The Committee changed the emphasis of the awards under this Plan for the
fiscal 1995-1997 period so that more of the award potential will be tied to
total stockholder return as described below. For corporate officers, half of
any award will depend on performance relative to a return on invested capital
objective, with the other half of the award potential dependent on the
Company's total stockholder return performance relative to the group of
companies comprising the performance graph peer group on page 19. This change
will align even more of the executives' compensation with stockholder return,
specifically as this stockholder return relates to the peer group disclosed in
the proxy statement.
Stock Option Plans. The Committee believes that executive gain tied to stock
price appreciation is the most effective way of aligning executive and
stockholder interests. The Company historically has utilized stock options to
accomplish this objective, but in 1992 also established stock ownership targets
for executive officers. These two programs together cause executives to view
themselves as owners with a meaningful equity stake in the business over the
long term.
Under the Company's stock option plans, the Committee grants stock options to
key employees. The Committee has established grant guidelines intended to
produce a value which, when combined with the value of Long Term Incentive Plan
awards, approximately equals the long term compensation potential of the
Compensation Peer Group. The Committee also considers subjective factors in
determining grant size; grants are not automatically tied to a formula or the
optionee's position in the Company. Poor corporate, division or individual
performance will impact the size of an optionee's grant. In addition, current
ownership of stock is a consideration in the size of option grants for officers
and division presidents. That is, minimal ownership can result in future grants
being reduced in size. Based on the stock grant guidelines and the subjective
factors described above, grant recommendations are developed, reviewed by the
CEO and presented to the Committee for final approval.
The Committee awarded Mr. Wright a grant of stock options in fiscal 1994
which was based on the criteria described above and the performance review
process described in the section on base salary.
Stock options are designed to align executive gain with stockholder gain, and
for that reason options are granted with an exercise price equal to the market
price of the Company's stock on the date of grant. To maintain executives'
carried interest in Company stock, the Company implemented in 1992, following
stockholder approval, a restoration stock option program (commonly referred to
as a reload option program) which provides that stock surrendered to exercise
an option would be replaced with a new option grant exercisable at the then
current market price for the remainder of the option term.
17
STOCK OWNERSHIP GUIDELINES
Stock ownership guidelines for executive officers were established in 1992 so
that these executives would face the same downside risk, in addition to upside
potential, as stockholders experience. Executives are expected to show
significant progress toward reaching these ownership goals. The goal for the
Chief Executive Officer is six times annual base salary excluding vested and
unexercised stock options. Mr. Wright currently exceeds the ownership goal for
the CEO.
POLICY REGARDING TAX DEDUCTION FOR COMPENSATION UNDER INTERNAL REVENUE CODE
SECTION 162(M)
The Company's policy is to preserve the tax deduction for compensation paid
to its executive officers to the maximum extent possible by structuring its
performance based compensation plans to comply with the requirements of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). In
accordance with this policy, the Company is seeking approval from its
stockholders for adoption of a plan which is intended to meet the requirements
of Code Section 162(m) such that compensation paid under the Plan to the
Company's Chief Executive Officer and the four other most highly compensated
executive officers will continue to be deductible by the Company for federal
income tax purposes. (See proposal for approval of Annual Cash Bonus Plan for
Designated Corporate Officers on page 20).
CONCLUSION
The Committee believes that the caliber and motivation of executive
management is fundamentally important to the Company's performance. The
Committee plays a very active role in ensuring that the compensation principles
stated previously are being met by the Company's compensation plans.
Independent compensation consultants have assisted the Committee in designing
these plans, assessing the effectiveness of the overall program, and comparing
the value of these programs and the Company's performance to relevant peer
companies. Program value is reviewed by individual component and in the
aggregate, with special attention given to the mix of fixed and variable
compensation, and short-term and long-term award potential. At the top
executive levels of the Company, 55-65 percent of total compensation is
variable in nature (that is, dependent on performance results) with the
majority of such variable compensation tied to long term performance. Both
stock price appreciation and financial factors related to this appreciation,
such as earnings growth (in the annual bonus plan) and return on equity or
invested capital (in the Long Term Incentive Plan) determine the variable
compensation. This is intended to result in total compensation being above
industry averages when performance is superior, and being below competitive
levels when performance is below expected levels or the Company stock fails to
appreciate. The Committee believes that the Executive Compensation Program has
been a substantial contributor toward motivating executives to focus on the
creation of stockholder value.
Respectfully submitted,
Edwin C. Gage, Chairman
Herman Cain
William A. Hodder
Richard D. McCormick
Carole F. St. Mark
Winston R. Wallin
18
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Company's Common Stock for the last five fiscal years with that of the S&P 500
Stock Index and a group of peer companies in the wholesale and retail grocery
industries (assuming the investment of $100 in each vehicle on February 28,
1989 and the reinvestment of all dividends on a quarterly basis). The stock
price performance shown on the graph below is not necessarily indicative of
future price performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
SUPERVALU INC., S&P 500 STOCK INDEX AND COMPOSITE PEER GROUP(1)
(STOCK PERFORMANCE GRAPH APPEARS HERE)
1989 1990 1991 1992 1993 1994
---- ------ ------ ------ ------ ------
SUPERVALU 100 113.09 109.14 113.72 145.50 171.03
S&P 500 100 118.70 136.00 157.71 174.42 188.83
Peer Group 100 96.46 115.50 112.85 119.42 115.26
- - - --------
(1) The composite peer group is comprised of the following food wholesalers and
food retailers: Albertson's, Inc., American Stores Company, Fleming
Companies, Inc., Food Lion, Inc., Great Atlantic & Pacific Tea, The Kroger
Company, Nash Finch Company, Richfood Holdings Inc., Safeway Inc., Super
Food Services, Inc., Super Rite Foods and The Vons Companies, Inc. The
returns of the peer group companies were weighted based on their respective
market capitalization and on the relative percentage of the Company's
operating profit realized from wholesale and retail food operations for
each year. The performance graph indicates results calculated to the last
business day in February each year.
19
PROPOSAL TO APPROVE THE ANNUAL CASH BONUS PLAN
FOR DESIGNATED CORPORATE OFFICERS
(ITEM 2)
The Company seeks stockholder approval of the Annual Cash Bonus Plan for
Designated Corporate Officers (the "Plan"). The Plan will be administered by
the Executive Personnel and Compensation Committee of the Board of Directors
(the "Committee"). The Plan is intended to qualify compensation paid thereunder
as "qualified performance based compensation" within the meaning of Section
162(m) of the Internal Revenue Code (the "Code"). Stockholder approval of the
Plan is necessary for the Company to claim federal income tax deductions for
any payments under the Plan to a "covered employee" (as defined under the Code)
having compensation in excess of $1,000,000 for any fiscal year.
The Plan provides that eligible participants may share in an annual cash
bonus pool. Eligibility under this Plan will be limited to the Chief Executive
Officer plus any four other key employees designated by the Committee. This
bonus pool is the mechanism for funding the Company's annual cash bonuses for
the covered executives. The Chief Executive Officer may receive no more than
28% of the bonus pool, and the other four participants no more than 18% of the
bonus pool.
Before any payments can be made under the Plan, the Company must achieve at
least an 8% return on invested capital ("ROIC") for the fiscal year for which
bonuses are being paid. ROIC is defined as earnings before income taxes and
interest expense relative to the Company's interest bearing short term
borrowings, interest bearing long-term debt, stockholders equity and the
present value of capital and operating leases, all as computed in accordance
with generally accepted accounting principles. If this ROIC threshold is met,
the Plan's cash bonus pool will be funded with an amount equal to 2.8% of the
Company's pre-tax profit for the fiscal year. Pre-tax profit is defined as the
Company's earnings before income taxes, extraordinary items, discontinued
operations, and restructuring charges, as computed in accordance with generally
accepted accounting principles. This bonus pool will be the maximum amount
available to the Committee in determining participant cash bonuses.
The Committee will have the authority to reduce the share of any or all
participants below the maximum amount available. In the event that the
Committee elects to reduce the bonuses payable under the Plan to an amount less
than 2.8% of Company pre-tax profit for any fiscal year, the amount by which
the bonuses are reduced will be added to the bonus pool that is available for
any subsequent year or years to the extent permitted under the Code.
In determining whether the share of any participant in the bonus pool will be
reduced, the Committee will consider those financial and individual performance
factors that it determines to be appropriate. While the nature of these factors
and the size of the bonus pool in the future cannot be predicted, the Committee
has determined that if the Plan had been in effect for fiscal year 1994, the
Committee would have named Messrs. Anderson, Dabill, Girard and Noddle as
participants in addition to the Chief Executive Officer and would have awarded
to the individual participants under the Plan those bonus amounts set forth
opposite their names in the Summary Compensation Table on page 9. Therefore the
total bonuses paid under the Plan to all participating executive officers as a
group would have been $2,064,347 if the Plan had been in effect in fiscal 1994.
The Committee may amend prospectively or terminate the Plan at any time.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
APPROVE THE ANNUAL CASH BONUS PLAN FOR DESIGNATED CORPORATE OFFICERS.
20
PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM 3)
The Board of Directors, upon recommendation of its Audit Committee, has
appointed Deloitte & Touche to audit the books and accounts of the Company and
its subsidiaries for the fiscal year ending February 25, 1995 and is seeking
the ratification of this appointment by the stockholders.
A partner of Deloitte & Touche is expected to be present at the Annual
Meeting with the opportunity to make a statement if he or she desires to do so,
and is expected to be available to respond to appropriate questions.
STOCKHOLDER PROPOSAL
(ITEM NO. 4)
A stockholder (name and address and Common Stock holdings of proponent will
be supplied upon oral or written request to the Secretary of the Corporation)
has submitted the following proposal for action at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL.
Stockholder Proposal
"Resolved: That the stockholders of SUPERVALU INC., assembled in annual
meeting in person and by proxy, hereby request the Board of Directors to take
the steps necessary to eliminate Dividend Equivalent Rights from the 1993 Stock
Plan."
Supporting Statement of the Stockholder
Dividend Equivalent Rights has several provisions which provide option
holders with advantages unavailable to public stockholders. Particularly
disturbing is a provision that allows holders to collect dividends on stock
they do not own. Unlike stock appreciation rights (SAR's) the Dividend
Equivalent Rights (DER's) allows management to assume no financial risk
incentive and gain dividends in a manner unavailable to public stockholders. In
other words, no matter how the stock performs and without taking any financial
risk, managers would have a right to dividends regardless of whether the
dividends stay the same or are increased. This is not in the best interest of
the stockholders.
Many successful corporations have Stock Plans which do not include this
feature and furthermore some corporations such as Hormel Foods have responded
to stockholders and eliminated this feature from their Stock Plans.
If you agree, please mark your proxy for this resolution, otherwise it is
automatically cast against it, unless you have marked to abstain.
----------------
Company's Statement in Opposition to Proposal
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL
FOR THE FOLLOWING REASONS:
This stockholder is objecting to a single feature of the 1993 Stock Plan
which was approved last year by the stockholders. That feature, which permits
the Executive Personnel and Compensation Committee to grant dividend equivalent
rights to participants, must be viewed in the context of the entire Plan and
the Committee's rationale in adopting it. In light of the constantly evolving
nature of executive
21
compensation, the Committee could not predict what compensation vehicles might
be the key to future compensation planning. Therefore, the Committee included a
variety of different possible compensation awards which could be used under the
Plan such as stock options, performance shares, performance units, restricted
stock, stock appreciation rights and dividend equivalent rights. To date, the
Committee has not granted any dividend equivalent rights nor has it used some
of the other types of compensation awards available to it under the Plan. It
is, however, possible that these other compensation vehicles may be appropriate
in the future to enable the Company to retain and motivate key managers and
executives. The Company believes it is in the interests of its stockholders to
preserve the Committee's flexibility to use all the types of awards at its
disposal in structuring compensation programs for the Company's executives.
For these reasons, the Company believes that the dividend equivalents rights
as a feature in the 1993 Stock Plan should be retained.
FOR THE FOREGOING REASONS, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE "AGAINST" THIS PROPOSAL.
STOCKHOLDER PROPOSAL
(ITEM NO. 5)
A stockholder (name and address and Common Stock holdings of proponent will
be supplied upon oral or written request to the Secretary of the Corporation)
has submitted the following proposal for action at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL.
Stockholder Proposal
RESOLVED: That the stockholders of SUPERVALU, INC. (the "Company" or
"SUPERVALU") request the Board of Directors to redeem the preferred share
purchase rights issued in 1989 unless such issuance is approved by the
affirmative vote of a majority of the outstanding shares at a meeting of the
stockholders to be held as soon as may be practicable.
Supporting Statement of the Stockholder
On April 12, 1989 the Board of Directors of SUPERVALU declared, without
stockholder approval, a dividend of preferred share purchase rights ("rights").
We strongly believe that such rights are a type of anti-takeover device,
commonly known as a poison pill, which injures stockholders by reducing
management accountability and adversely affecting stockholder value.
The stockholders of the Company believe the terms of the rights are designed
to discourage or thwart an unwanted takeover of the Company. While management
and the Board of Directors should have appropriate tools to ensure that all
stockholders benefit from any proposal to acquire the Company, the stockholders
do not believe that the future possibility of a takeover justifies unilateral
implementation of such a poison pill.
Rather, we believe that it is the stockholders who should have the right to
vote on the necessity of such a powerful tool which could be used to entrench
existing management. Rights plans like the Company's have become increasingly
unpopular in recent years.
22
The negative effects of poison pill rights plans on the trading value of
companies' stock have been the subject of extensive research. A 1986 study
(covering 245 companies adopting poison pills between 1983 and July 1986) by
the Office of the Chief Economist of the U.S. Securities and Exchange
Commission on the effect of poison pills on the wealth of target stockholders
states that "empirical tests, taken together, show that poison pills are
harmful to target stockholders, on net." Another, more recent study by
Professor Michael Ryngaert published in 1988 (covering 380 companies adopting
poison pills in the period 1982-1986) singled out rights plans such as the one
authorized by the Company for their negative effect on stockholder value.
We believe the Company's performance is unsatisfactory. Out of 1,000
companies studied by the United Shareholders of America in 1993 (evaluating
companies on the basis of long and short-term returns to stockholders,
stockholder rights policies and linkage of executive compensation to stock
performance), SUPERVALU was rated very low at number 818.
We believe that in light of what can at best be described as the debatable
economic benefit of the Company's rights plan and the undeniably undemocratic
way in which such rights plan was adopted by the Company, the preferred share
purchase rights should either be redeemed or voted on by the stockholders.
WE URGE YOU TO VOTE FOR THIS RESOLUTION
----------------
Company's Statement in Opposition to Proposal
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL
FOR THE FOLLOWING REASONS:
The Preferred Share Purchase Rights Plan (the "Rights Plan") was adopted by
the Board of Directors in 1989 to protect the Company's stockholders against
certain abusive takeover practices prevalent in the marketplace and to ensure
that all stockholders are treated fairly and equally. The overriding objective
of the Board of Directors in adopting the Rights Plan was, and continues to be,
the preservation and maximization of the Company's value for all stockholders.
The Board believes that the Rights Plan is a sound and reasonable means of
protecting against unfair and abusive takeover practices and is both
appropriately within its discretion and an appropriate exercise of its
fiduciary obligations to the stockholders. The Board also believes that many
stockholders have come to recognize the effectiveness of these plans in
protecting and enhancing value for all stockholders.
The Rights Plan does not preclude a prospective bidder from making an offer
for the Company. Moreover, the Rights Plan is not intended to prevent a
takeover of the Company nor would it do so. The Rights Plan is intended to give
the Board sufficient time, if confronted with an offer to acquire the Company,
to evaluate the offer and any possible alternatives and to take those steps
that the Board believes would be necessary to maximize the value that can be
achieved for all stockholders.
23
The Board strongly disagrees with the view that rights plans deter legitimate
acquisition proposals from being made or depress the price of the stock of
corporations adopting them. Since 1986, at least 52 companies which had rights
plans have been acquired or were parties to agreements to be acquired,
including 37 companies which were acquired after receiving an unsolicited bid.
Furthermore, in 31 of the 37 acquisitions of companies with rights plans that
were initiated by unsolicited bids, the prices ultimately received by
stockholders exceeded the initial bids--and did so by an average premium to the
initial bid of more than 20%.(1)
Studies by Georgeson & Co., a leading investor communications firm, have
concluded that "[rights plans] do not prevent takeovers nor do they diminish
the value of a company's stock." These studies also indicated that "companies
with [rights plans] receive premiums 69% higher in takeover contests than
companies without [rights plans]."
The proponent has cited a report by United Shareholders of America ("USA"),
as support for its premise that the Company's performance is unsatisfactory. As
illustrated on page 19 of this Proxy Statement, the Company outperformed a peer
group of 12 companies in the food industry in four of the last five years, with
a total return of 71% over the five-year period. In the corporate governance
area, the USA study assigns ratings based on rigidly applied mechanical tests
which do not, in the view of the Board, adequately account for all the
significant facts and circumstances relating to the Company's corporate
governance. For these reasons, the Board of Directors believes that the USA
study does not accurately portray the Company's financial performance or its
attention to corporate governance.
FOR THE FOREGOING REASONS, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE "AGAINST" THIS PROPOSAL.
- - - --------
(1) Based on data obtained from Securities Data Corporation and other industry
sources.
PROPOSALS OF STOCKHOLDERS FOR 1995 ANNUAL MEETING
All proposals of stockholders intended to be presented at the Company's 1995
Annual Stockholder Meeting pursuant to the Securities Exchange Act of 1934 must
be received by the Company at its executive offices on or before January 18,
1995, to be included in the proxy statement for that meeting.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters which may
come before the meeting. However, if any matters other than those referred to
above should properly come before the meeting, it is the intention of the
persons named in the enclosed proxy to vote such proxy in accordance with their
discretion.
BY ORDER OF THE BOARD OF DIRECTORS
TERESA H. JOHNSON
Secretary
Dated: May 23, 1994
24
[SUPERVALU LOGO]
[RECYCLING LOGO]
Printed with soy
based inks on
recycled
paper containing at least 10% fibers from
paper recycled by
consumers.
PROXY
SUPERVALU INC. . 11840 VALLEY VIEW ROAD . EDEN PRAIRIE, MINNESOTA 55344
1994 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
The undersigned hereby appoints Michael W. Wright and Teresa H. Johnson, and
each of them, the undersigned's agent and proxy, with power of substitution to
vote as the undersigned's proxy in accordance with the specifications appearing
below, and, in their discretion, upon all other matters that may properly come
before the Annual Meeting of Stockholders of SUPERVALU INC., a Delaware
corporation, to be held on Wednesday, June 29, 1994 at 10:30 a.m., local time,
or any adjournment or adjournments thereof, according to the number of votes
that the undersigned would be entitled to vote if the undersigned were
personally present at said meeting, and hereby revoking all former proxies. The
undersigned hereby acknowledges receipt of the Proxy Statement for the meeting.
The Board of Directors recommends a vote FOR the nominees for election as
directors, and FOR the proposals in items 2 and 3.
1. ELECTION OF DIRECTORS.
Nominees: Vernon H. Heath, William A. Hodder, Harriet Perlmutter,
Winston R. Wallin and Richard L. Knowlton.
[_] VOTE FOR all nominees listed, EXCEPT THOSE WHOSE NAME(S) IS (ARE)
STRICKEN OUT.
[_] VOTE WITHHELD from all nominees.
2. PROPOSAL TO APPROVE THE ANNUAL CASH BONUS PLAN FOR DESIGNATED CORPORATE
OFFICERS.
For [_] Against [_] Abstain [_]
3. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE as the independent
auditors of the Company.
For [_] Against [_] Abstain [_]
(over)
- - - -------------------------------------------------------------------------------
The Board of Directors recommends a vote AGAINST the stockholder proposals in
items 4 and 5.
4. STOCKHOLDER PROPOSAL RELATING TO THE COMPANY'S 1993 STOCK PLAN.
For [_] Against [_] Abstain [_]
5. STOCKHOLDER PROPOSAL RELATING TO THE COMPANY'S PREFERRED SHARE PURCHASE
RIGHTS.
For [_] Against [_] Abstain [_]
THIS PROXY WILL BE VOTED AS DIRECTED. IF
NO CHOICE IS SPECIFIED, PROXIES WILL BE DATED: ______________________, 1994
VOTED FOR THE NOMINEES FOR ELECTION FOR (Month) (Day)
DIRECTOR AND FOR THE PROPOSALS IN ITEMS 2 -----------------------------------
AND 3 AND AGAINST THE STOCKHOLDER Signature of Stockholder
PROPOSALS IN ITEMS 4 AND 5. -----------------------------------
(If there are co-owners both must
sign)
The signature(s) should be exactly
as the name(s) appear printed to
the left. If a corporation, please
sign the corporation name in full
by a duly authorized officer and
indicate the office of the signer.
When signing as executor,
administrator, fiduciary,
attorney, trustee or guardian, or
as custodian for a minor, please
give full title as such. When
signing pursuant to a power of
attorney, please attach photocopy.
If a partnership, sign in the
partnership name by authorized
person.
[_]PLEASE CHECK BOX IF YOU ARE
ATTENDING THE ANNUAL MEETING IN
PERSON. NUMBER OF STOCKHOLDERS
PLEASE MARK, SIGN, DATE AND RETURN THE ATTENDING: _____________________
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
PROXY
SUPERVALU INC. EMPLOYEE STOCK OWNERSHIP PLAN
CONFIDENTIAL VOTING INSTRUCTIONS TO NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, TRUSTEE
SUPERVALU INC. . 11840 VALLEY VIEW ROAD . EDEN PRAIRIE, MINNESOTA 55344
1994 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY. I
hereby direct that the voting rights pertaining to the stock of SUPERVALU INC.
held by the SUPERVALU INC. Employee Stock Ownership Plan Trust and allocable to
my accounts under the above Plan shall be exercised at the 1994 Annual Meeting
of Stockholders to be held on Wednesday, June 29, 1994 at 10:30 a.m., local
time, or any adjournment or adjournments thereof, in accordance with the
specifications appearing below, and in the Trustee's discretion, upon all other
matters that may properly come before said Meeting of Stockholders. The
undersigned hereby acknowledges receipt of the Proxy Statement for the meeting.
The Board of Directors recommends a vote FOR the nominees for election as
directors, and FOR the proposals in items 2 and 3.
1. ELECTION OF DIRECTORS.
Nominees: Vernon H. Heath, William A. Hodder, Harriet Perlmutter, Winston
R. Wallin and Richard L. Knowlton.
[_] VOTE FOR all nominees listed, EXCEPT THOSE WHOSE NAME(S) IS (ARE)
STRICKEN OUT.
[_] VOTE WITHHELD from all nominees.
2. PROPOSAL TO APPROVE THE ANNUAL CASH BONUS PLAN FOR DESIGNATED CORPORATE
OFFICERS.
For [_] Against [_] Abstain [_]
3. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE as the independent
auditors of the Company.
For [_] Against [_] Abstain [_]
(over)
- - - -------------------------------------------------------------------------------
The Board of Directors recommends a vote AGAINST the stockholder proposals in
items 4 and 5.
4. STOCKHOLDER PROPOSAL RELATING TO THE COMPANY'S 1993 STOCK PLAN.
For [_] Against [_] Abstain [_]
5. STOCKHOLDER PROPOSAL RELATING TO THE COMPANY'S PREFERRED SHARE PURCHASE
RIGHTS.
For [_] Against [_] Abstain [_]
This instruction card must be returned to Norwest Bank Minnesota, National
Association, Trustee, The Trustee will tabulate the instructions from all
Participants, will determine the ratio of votes for and against each proposal,
and will then vote all shares held in the Trust according to the ratios so
determined.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO CHOICE IS SPECIFIED, PROXIES WILL
BE VOTED FOR THE NOMINEES FOR ELECTION FOR DIRECTOR AND FOR THE PROPOSALS IN
ITEMS 2 AND 3 AND AGAINST THE STOCKHOLDER PROPOSALS IN ITEMS 4 AND 5.
DATED: ______________________, 1994
(Month) (Day)
-----------------------------------
Signature of Stockholder
-----------------------------------
(If there are co-owners both must
sign)
PLEASE MARK, SIGN, DATE AND RETURN THE The signature(s) should be exactly
PROXY CARD PROMPTLY USING THE ENCLOSED as the name(s) appear printed to
ENVELOPE the left.
SUPERVALU INC.
ANNUAL CASH BONUS PLAN
FOR DESIGNATED CORPORATE OFFICERS
1. DEFINITIONS. When the following terms are used herein with initial capital
letters, they shall have the following meanings:
1.1. BONUS POOL AMOUNT - An amount from which bonuses as provided herein
may be paid equal to two and eight-tenths percent (2.8%) of the Company's
earnings before income taxes for the Performance Period for which bonuses
are being paid, as computed in accordance with generally accepted
accounting principles as in effect from time to time and as applied by the
Company in the preparation of its financial statements. For purposes of
the foregoing computation, changes in generally accepted accounting
principles which occur during a Performance Period shall not be taken into
account, and extraordinary items, discontinued operations and restructuring
costs, as computed in accordance with generally accepted accounting
principles as in effect from time to time and as applied and reported by
the Company in the preparation of its financial statements, shall also not
be taken into account.
1.2. COMMITTEE - A committee of the Board of Directors comprised solely of
two or more members appointed from time to time by the Board of Directors.
To the extent required by Section 162(m) of the Code, at all times
following the 1995 annual meeting of stockholders of the Company, all
members of the Committee shall be "outside directors" within the meaning of
Section 162(m) of the Code.
1.3. CODE - The Internal Revenue Code of 1986, as it may be amended from
time to time, and any proposed, temporary or final Treasury Regulations
promulgated thereunder.
1.4. COMPANY - SUPERVALU INC., a Delaware corporation, and any of its
subsidiaries or affiliates whether now or hereafter established.
1.5. PARTICIPANT - The Chief Executive Officer and four other key
employees of the Company or any of its subsidiaries or affiliates who are
designated by the Committee pursuant to Section 2.2 hereof as Participants
in this Plan.
1.6. PERFORMANCE PERIOD - The period which coincides with the Company's
fiscal year.
1.7. COMPANY PERFORMANCE FACTOR - The Company's "return on invested
capital" must be at least eight percent (8%) for the Performance Period for
which bonuses are being paid. For purposes of the foregoing computation,
"return on invested capital" means a fraction with a numerator equal to
earnings before income taxes for that Performance Period as computed in
accordance with Section 1.1 above but before interest expense, and with a
denominator equal to the sum of the Company's interest-bearing short-term
borrowings, interest-bearing long-term debt, stockholders equity and the
present value of capital and operating leases, all as computed in
accordance with generally accepted accounting principles as in effect from
time to time and as applied and reported by the Company in the preparation
of its financial statements. Such denominator shall be computed as of the
last day of the Company's fiscal year which ends immediately before the
beginning of a Performance Period and as of the last day of the fiscal year
which coincides with the Performance Period, and the sum of the foregoing
amounts shall then be divided by two in order to determine such
denominator.
2. ADMINISTRATION.
2.1. COMMITTEE. The Plan shall be administered by the Committee.
2.2. DETERMINATIONS MADE PRIOR TO EACH PERFORMANCE PERIOD. Prior to each
Performance Period, or solely in the case of the Performance Period which begins
February 27, 1994, prior to April 1, 1994, the Committee shall designate
Participants for that Performance Period.
2.3. CERTIFICATION. Following the close of each Performance Period and
prior to payment of any bonus under the Plan, the Committee must certify in
writing that the Company Performance Factor has been attained and as to the
computation of the Bonus Pool Amount.
2.4. SHAREHOLDER APPROVAL. The material terms of this Plan shall be
disclosed to and approved by the stockholders of the Company in accordance with
Section 162(m) of the Code. No bonus shall be paid under this Plan unless such
stockholder approval has been obtained.
3. BONUS PAYMENT.
3.1. FORMULA. Subject to Section 3.2(b) hereof, the Chief Executive
Officer of the Company shall receive a cash bonus for each Performance Period in
an amount equal to twenty-eight percent (28%) of the Bonus Pool Amount for that
Performance Period, and each of the four other Participants in this Plan for a
Performance Period shall receive a cash bonus payment for each Performance
Period in an amount equal to eighteen percent (18%) of the Bonus Pool Amount for
that Performance Period.
-2-
3.2. LIMITATIONS.
(a) NO PAYMENT IF PERFORMANCE FACTOR NOT ACHIEVED. In no event shall
any Participant receive a bonus payment hereunder if the Company
Performance Factor is not achieved during the Performance Period.
(b) COMMITTEE MAY REDUCE BONUS PAYMENT. The Committee retains sole
discretion to reduce the amount of any bonus otherwise payable
under this Plan. If and to the extent permitted by Section
162(m) of the Code, the Bonus Pool Amount in a subsequent
Performance Period shall be increased by any portion of the Bonus
Pool Amount of a prior Performance Period which has not been paid
or credited to or for the benefit of Participants hereunder.
4. BENEFIT PAYMENTS.
4.1. TIME AND FORM OF PAYMENTS. Subject to any deferred compensation
election pursuant to any such plans of the Company applicable hereto, benefits
shall be paid to the Participant in a single lump sum cash payment as soon as
administratively feasible after the Committee has certified that the Company
Performance Factor has been attained.
4.2. NONTRANSFERABILITY. Participants and beneficiaries shall not have the
right to assign, encumber or otherwise anticipate the payments to be made under
this Plan, and the benefits provided hereunder shall not be subject to seizure
for payment of any debts or judgments against any Participant or any
beneficiary.
4.3. TAX WITHHOLDING. In order to comply with all applicable federal or
state income tax laws or regulations, the Company may take such action as it
deems appropriate to ensure that all applicable federal or state payroll,
withholding, income or other taxes, which are the sole and absolute
responsibility of a Participant, are withheld or collected from such
Participant.
5. AMENDMENT AND TERMINATION. The Committee may amend this Plan prospectively
at any time and for any reason deemed sufficient by it without notice to any
person affected by this Plan and may likewise terminate or curtail the benefits
of this Plan both with regard to persons expecting to receive benefits hereunder
in the future and persons already receiving benefits at the time of such action.
-3-
6. MISCELLANEOUS.
6.1. EFFECTIVE DATE. February 27, 1994.
6.2. TERM OF THE PLAN. The Plan shall continue until discontinued or
terminated by the Committee.
6.3. HEADINGS. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not
be deemed in any way material or relevant to the construction or interpretation
of the Plan or any provision thereof.
6.4. APPLICABILITY TO SUCCESSORS. This Plan shall be binding upon and
inure to the benefit of the Company and each Participant, the successors and
assigns of the Company, and the beneficiaries, personal representatives and
heirs of each Participant. If the Company becomes a party to any merger,
consolidation or reorganization, this Plan shall remain in full force and effect
as an obligation of the Company or its successors in interest.
6.5. EMPLOYMENT RIGHTS AND OTHER BENEFIT PROGRAMS. The provisions of this
Plan shall not give any Participant any right to be retained in the employment
of the Company. In the absence of any specific agreement to the contrary, this
Plan shall not affect any right of the Company, or of any affiliate of the
Company, to terminate, with or without cause, the participant's employment at
any time. This Plan is in addition to, and not in lieu of, any other employee
benefit plan or program in which any Participant may be or become eligible to
participate by reason of employment with the Company. Receipt of benefits
hereunder shall have such effect on contributions to and benefits under such
other plans or programs as the provisions of each such other plan or program may
specify.
6.6. NO TRUST OR FUND CREATED. This Plan shall not create or be construed
to create a trust or separate fund of any kind or a fiduciary relationship
between the Company or any affiliate and a Participant or any other person. To
the extent that any person acquires a right to receive payments from the Company
or any affiliate pursuant to this Plan, such right shall be no greater than the
right of any unsecured general creditor of the Company or of any affiliate.
6.7. GOVERNING LAW. The validity, construction and effect of the Plan or
any bonus payable under the Plan shall be determined in accordance with the
internal laws, and not the laws of conflicts, of the State of Minnesota.
6.8. SEVERABILITY. If any provision of the Plan is or becomes or is deemed
to be invalid, illegal or unenforceable in any jurisdiction such provision shall
be
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construed or deemed amended to conform to applicable laws, or if it cannot be so
construed or deemed amended without, in the determination of the Committee,
materially altering the purpose or intent of the Plan, such provision shall be
stricken as to such jurisdiction, and the remainder of the Plan shall remain in
full force and effect.
6.9. QUALIFIED PERFORMANCE-BASED COMPENSATION. All of the terms and
conditions of the Plan shall be interpreted in such a fashion as to qualify all
compensation paid hereunder as "qualified performance-based compensation" within
the meaning of Section 162(m) of the Code.
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