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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
EAGLE FOOD CENTERS, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 11, 1997
Dear Shareholder:
You are hereby invited to attend the 1997 Annual Meeting of Shareholders
of Eagle Food Centers, Inc. which will be held on Wednesday, June 11, 1997, at
10:00 a.m., Central Daylight Time, at the Milan Community Center, Rt. 67 & 92nd
Avenue, Milan, Illinois. The matters to be considered and voted upon at the
Annual Meeting of Shareholders are:
1. The election of eleven persons to serve as directors of the Company
until the 1998 Annual Meeting of Shareholders or until their successors
shall have been elected and shall have qualified.
2. A proposal to ratify the appointment of Deloitte & Touche LLP as
independent public accountants for the current fiscal year.
3. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on May 2, 1997, as
the record date for determining the shareholders entitled to notice of and to
vote at the meeting or any adjournment or postponements thereof.
All shareholders of record at the close of business on May 2, 1997, are
invited to attend the meeting in person. However, to ensure your shares will
be voted in the event you are not able to attend, please fill in, sign, and
date the enclosed proxy, and return it in the enclosed envelope as soon as
possible. The attached Proxy Statement contains more detailed information with
respect to the business to be transacted at the meeting.
Herbert T. Dotterer
Secretary
May 13, 1997
Milan, Illinois
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May 13, 1997
EAGLE FOOD CENTERS, INC.
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of Eagle Food Centers, Inc.
(the "Company"), to be voted at the Annual Meeting of Shareholders to be held
on June 11, 1997, at 10:00 a.m., Central Daylight Time at the Milan Community
Center, Rt. 67 & 92nd Avenue, Milan, Illinois, and at any adjournments or
postponements thereof. Proxies are solicited to give all shareholders of
record at the close of business on May 2, 1997, an opportunity to vote upon the
items listed on the accompanying proxy card. This Proxy Statement, the Notice
of Annual Meeting, and the proxy card are intended to be mailed to shareholders
commencing on May 13, 1997.
Only holders of record of the Company's Common Stock, $.01 par value per
share, at the close of business on May 2, 1997, are entitled to notice of and
to vote at the annual meeting. As of May 2, 1997, the Company had outstanding
10,883,881 shares of Common Stock each of which is entitled to one vote on each
proposal presented. A majority of the outstanding shares of Common Stock
present in person or represented by proxy will constitute a quorum for the
transaction of business at the meeting. In the election of directors, a
plurality of votes cast in person or by proxy shall elect. Shareholders are
not entitled to cumulative voting in the election of directors. Each other
proposal requires a majority of the votes cast on the proposal to approve.
Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business. Abstentions
are counted in tabulations of the votes cast on proposals presented to the
shareholders, whereas broker non-votes are not counted for purposes of
determining whether a proposal has been approved.
All proxies delivered pursuant to this solicitation may be revoked at any
time at the option of the shareholder by giving written notice to the Secretary
of the Company, by submitting a later dated proxy, or by voting in person at
the meeting.
Upon timely receipt of each properly signed proxy card, the shares
represented thereby will be voted in accordance with the directions indicated
on the proxy card. If no instructions are indicated, the shares will be voted
for the election of the nominated directors and for the ratification of the
selection of auditors.
The cost of soliciting proxies will be borne by the Company. Officers,
directors, and regular employees of the Company may solicit proxies personally,
by mail, or by telephone and telegraph for which they will not receive
additional compensation.
The Eagle Food Centers, Inc. 1996 Annual Report and financial statements
for the fiscal year ended February 1, 1997, with comparative figures for prior
periods, accompany this Proxy Statement. The Annual Report and the financial
statements included therein are incorporated in this Proxy Statement by
reference.
THE MAILING ADDRESS OF THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY IS
RT. 67 AND KNOXVILLE ROAD, MILAN, ILLINOIS, 61264.
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PROPOSALS TO SHAREHOLDERS
ELECTION OF DIRECTORS
PROPOSAL 1
The Board of Directors currently consists of ten members, all of whom have
been nominated to be elected at the 1997 Annual Meeting of Shareholders to
serve until the 1998 Annual Meeting of Shareholders or until their successors
have been elected and qualified. In addition, the Board of Directors has
nominated Paul D. Barnett to be elected to the Board of Directors to serve
until the 1998 Annual Meeting of Shareholders or until his successor has been
elected and qualified. Mr. Barnett is a Principal of Odyssey Partners L.P..
The table below sets forth certain information regarding the nominees. It is
intended that the accompanying proxy, in the absence of instructions to the
contrary, will be voted for the election of the following eleven persons unless
the authority to vote is withheld. If any nominee is unwilling or unable to
serve, favorable and uninstructed proxies will be voted for a substitute
nominee designated by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE ELEVEN NOMINEES
LISTED BELOW.
NAME AGE POSITION(S) HELD
- ---- --- ----------------
Martin J. Rabinowitz 65 Chairman of the Board and Director
Robert J. Kelly 52 Chief Executive Officer, President and Director
Herbert T. Dotterer 52 Senior Vice President--Finance and Administration,
Chief Financial Officer, Secretary and Director
Paul D. Barnett 36 Director
Peter B. Foreman 61 Director
Steven M. Friedman 42 Director
Michael J. Knilans 70 Director
Alain M. Oberrotman 46 Director
Marc C. Particelli 52 Director
Pasquale V. Petitti 67 Director
William J. Snyder 54 Director
The business experience of each of the directors and executive officers during
the past five years is as follows:
Mr. Rabinowitz served as Chairman of the Board from November 1987 to June
1990 and resumed the position as of May 1992. Mr. Rabinowitz has been a
Limited Partner of Odyssey Partners, L.P. since January 1993 and was a General
Partner of Odyssey Partners from February 1984 through December 1992. Prior to
joining Odyssey Partners, Mr. Rabinowitz was a senior tax partner with the law
firm of Weil, Gotshal & Manges. Mr. Rabinowitz also serves as Chairman of the
Board of Thackeray Corporation.
Mr. Kelly joined the Company as President and Chief Executive Officer in
May 1995 and became a director in June 1995. Prior to May 1995, Mr. Kelly was
Executive Vice President, Retailing for The Vons Companies, Inc. and was
employed by that Company since 1963. Mr. Kelly has 34 years of experience in
the supermarket industry.
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Mr. Dotterer was named Secretary and a director of the Company in February
1992. He previously served as Controller of the Company from August 1988 until
June 1991 when he became Vice President-Finance, Chief Financial Officer. He
became Senior Vice President-- Finance and Administration, Chief Financial
Officer in January 1994. Prior to August 1988, Mr. Dotterer held various
positions with The Kroger Co. and Jewel Companies, Inc. Mr. Dotterer has 35
years of experience in the supermarket industry.
Mr. Barnett is a Principal of Odyssey Partners, L.P. Prior to joining
Odyssey Partners in July 1993, he was a Managing Director of Mancuso &
Company, a private merchant banking firm from 1992 until July 1993. Mr.
Barnett began his employment with Mancuso & Company as a Vice President in
February 1990.
Mr. Foreman is President of Sirius Corporation, a private investment
management firm. Prior to 1993, Mr. Foreman was a Principal at Harris
Associate L.P. since 1976. Mr. Foreman also serves as a director of Glacier
Water Services, Inc.; a director of PCA International, Inc.; and a director of
National Picture and Frame Company. Mr. Foreman has been a director of the
Company since June 1989.
Mr. Friedman is a General Partner of Eos Partners, L.P., a private
investment firm, a position he has held since January 1994. Mr. Friedman has
served as a director of the Company since November 1987 and was a General
Partner of Odyssey Partners from April 1, 1988 until December 1993. Mr.
Friedman also serves as a director of Forstmann & Company, Inc., The Caldor
Corporation and JPS Textile Group & Subsidiaries; and he serves as a director
and Chairman of Rickel Home Centers, Inc.
Mr. Knilans served as the President of Big Bear, Inc., a supermarket chain
in Ohio, from June 1983 to June 1989 when he retired. Mr. Knilans has been a
director of the Company since June 1989. Mr. Knilans also serves as a director
of the Cardinal Fund, Columbus, Ohio and director and member of the Audit and
Compensation Committees of the Golub Corporation.
Mr. Oberrotman is a Principal of Odyssey Partners, L.P. Prior to joining
Odyssey Partners in July 1992, he was a Principal of Hambro International
Equity Partners, a venture capital firm, from September 1990 to October 1992.
Mr. Oberrotman became a director of the Company in June 1996. Mr. Oberrotman
also serves as a director of JPS Textile Group, Inc.
Mr. Particelli is a Principal and Director of Operations of Odyssey
Partners, L.P. Prior to joining Odyssey Partners in October 1994, he was the
worldwide Consumer Products Practice Leader as well as a Senior Partner of
Booz, Allen & Hamilton, a large management consulting firm beginning in 1973.
Mr. Particelli became a director of the Company in June 1996. Mr. Particelli
also serves as a director of JPS Textile Group, Inc. and Monarch Marking
Systems.
Mr. Petitti served as a director from June 1989 until April 1993 and
President and Chief Executive Officer from September 1989 through April 1992
when he retired as an officer of the Company. Mr. Petitti resumed the
positions of Director, President and Chief Executive Officer in April 1994 and
was replaced as President and Chief Executive Officer on May 22, 1995.
Previously, Mr. Petitti had been with the Company or its predecessor since
1957.
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Mr. Snyder is a senior shareholder in the law firm of Snyder & Schwarz,
P.C., Rock Island, Illinois where he has been employed since March 1983. Mr.
Snyder and the firm have performed legal services in the past for the Company
and the Company expects such services to continue in the future. Mr. Snyder
has been a director of the Company since June 1989.
The Company's directors are elected annually to serve until the next
annual meeting of shareholders and until their successors have been elected and
qualified. None of the directors or executive officers listed herein is
related to any other director or executive officer.
COMPENSATION OF DIRECTORS
The Company's non-employee directors receive an annual retainer of $15,000
and fees of $750 for each board meeting and $500 for each committee meeting
attended plus reimbursement of travel expenses. Mr. Snyder does not receive
director's fees, but does receive legal fees for his services as a board and
committee member.
CERTAIN TRANSACTIONS
Snyder & Schwarz, P.C., the law firm of which Mr. Snyder, a director of
the Company is a member, serves as counsel to the Company. The Company paid
that law firm $240,109, $393,857, and $353,613 for services rendered in fiscal
1996, fiscal 1995, and fiscal 1994, respectively. These amounts include
remuneration for Mr. Snyder's services as a director of the Company.
The Board has determined that the fees paid for services rendered from
Snyder & Schwarz, P. C. were fair and competitive.
BOARD OF DIRECTORS AND COMMITTEES MEETINGS
The Board of Directors is responsible for establishing broad corporate
policies and for overseeing the overall performance of the Company. The
directors are kept informed of the Company's business through discussions with
the Chairman, President and Chief Executive Officer, and other directors and
officers, by reviewing reports and analyses, and by participating in board and
committee meetings.
The Board of Directors held four meetings during fiscal 1996. In
addition, from time to time, members of the Board of Directors and committees
act by unanimous written consent pursuant to Delaware law. All directors
attended at least 75% of all board and committee meetings held during the
periods for which they were directors.
The Board of Directors has an Audit Committee and a Compensation
Committee. The Board has no nominating committee. The Board of Directors acts
as a committee of the whole with respect to functions that would be performed
by a nominating committee.
The Audit Committee is composed of Mr. Knilans, Mr. Foreman, Mr. Snyder
and Mr. Oberrotman, all of whom are non-employee directors. The Committee met
twice during fiscal
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1996. The Committee recommends the engagement of an independent auditor and
reviews the scope and results of the Company's audits, the Company's internal
accounting controls, and the professional services rendered by the Company's
independent auditors.
The Compensation Committee is composed of Mr. Rabinowitz, Mr. Friedman and
Mr. Foreman, all of whom are non-employee directors. The Committee met twice
during fiscal 1996. The Committee reviews and approves all salary arrangements
and other remuneration for officers of the Company.
LIMITATION OF LIABILITY OF DIRECTORS
As permitted by the Delaware General Corporation Law, the Company's
Certificate of Incorporation provides that a director of the Company will not
be personally liable to the Company or its shareholders for monetary damages
for breach of the fiduciary duty of care as a director, including breaches
which constitute gross negligence. By its terms and in accordance with the
Delaware General Corporation Law, however, this provision does not eliminate or
limit the liability of a director of the Company (i) for breach of the
director's duty of loyalty to the Company or its shareholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law (relating to unlawful payments of dividends or unlawful stock
repurchases or redemptions), or (iv) for any transaction from which the
director derived an improper personal benefit.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The Summary Compensation Table below shows compensation information for
the Chief Executive Officer of the Company and the three other most highly
compensated executive officers who were serving at the end of the last fiscal
year whose total annual salary and bonus exceeded $100,000 for the fiscal
years indicated.
SUMMARY COMPENSATION TABLE
==========================================================================================================================
ANNUAL COMPENSATION LONG-TERM COMPENSATION
===================================================================
FISCAL SALARY BONUS OTHER ANNUAL SECURITIES LTIP ALL OTHER
YEAR COMPENSATION UNDERLYING PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION OPTIONS (#)
- --------------------------------------------------------------------------------------------------------------------------
Robert J. Kelly 1996 $350,000 $350,000 (1) 0 $0 $31,583(2)
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Chief Executive Officer 1995 249,038 300,000(3) (1) 600,000 0 2,500(6)
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and President
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Herbert T. Dotterer, 1996 123,425 123,425 (1) 0 0 5,509(2)
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Chief Financial Officer 1995 117,212 17,250 (1) 25,000 0 3,926(6)
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and Senior Vice President- 1994 115,000 0 (1) 3,000 0 3,926(6)
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Finance and Administration
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David S. Norton 1996 130,925 130,925 32,646(1)(4) 0 0 10,083(2)
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Senior Vice President- 1995 72,116 20,817(5) (1) 75,000 0 2,125(6)
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Retail
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Randy P. Smith(7) 1996 87,300 87,300 (1) 0 0 3,043(2)
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Vice President- 1995 78,481 11,515 (1) 25,000 0 2,500(6)
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Human Resources
==========================================================================================================================
Notes:
(1) Received other annual compensation consisting of perquisites and personal
benefits valued at less than the lesser of ten percent of total annual
salary and bonus or $50,000.
(2) Amount represents the full dollar value of premiums paid by the Company
on compensatory split-dollar executive life insurance policies and a
401(K) matching contribution paid by the Company for each executive,
respectively.
(3) Mr. Kelly received a signing bonus of $150,000 pursuant to the terms of
his employment agreement.
(4) Amount represents moving expenses of $32,148 as well as the taxable
amount of
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insurance premiums paid by the company on behalf of Mr. Norton.
(5) Mr. Norton received a signing bonus of $10,000 pursuant to the terms of
his employment contract in addition to the bonus received in fiscal year
1995.
(6) Amounts represent the full dollar value of premiums paid by the Company
on compensatory split-dollar executive life insurance policies for each
executive, respectively.
(7) Mr. Smith resigned from the Company effective May 2, 1997.
OPTIONS/SAR GRANTS IN FISCAL YEAR 1996
There were no options or SARs granted to the named executive officers in
fiscal year 1996.
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR END OPTION/SAR VALUES
The following table shows information regarding the values of certain
unexercised options owned by the named executive officers at the end of the
last completed fiscal year. No options or stock appreciation rights were
exercised during the fiscal year. No stock appreciation rights were granted
during fiscal 1996 or were outstanding at the end of fiscal 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES TABLE
=====================================================================================================
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED MONEY OPTIONS
OPTIONS AT FEBRUARY 1, 1997 AT FEBRUARY 1, 1997(1)
- -----------------------------------------------------------------------------------------------------
SHARES
ACQUIRED
ON VALUE
NAME EXERCISE REALIZED EXERCISABLE NONEXERCISABLE EXERCISABLE NONEXERCISABLE
- -----------------------------------------------------------------------------------------------------
Robert J. Kelly 0 0 200,000 400,000 300,000 100,000
- -----------------------------------------------------------------------------------------------------
Herbert T. Dotterer 0 0 9,250 18,750 17,500 46,875
- -----------------------------------------------------------------------------------------------------
David S. Norton 0 0 25,000 50,000 37,500 12,500
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Randy P. Smith 0 0 11,250 18,750 17,500 46,875
=====================================================================================================
Note:
(1) Market value of underlying securities at February 1, 1997 ($4.00) minus the
base price.
LONG TERM INCENTIVE PLAN AWARDS TABLE
The Company did not make any Long Term Incentive Plan awards in fiscal 1996.
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COMPENSATION COMMITTEE REPORT
The Compensation Committee for fiscal 1996 was composed of three
non-employee members from the Board of Directors. The members were Mr.
Rabinowitz, Mr. Friedman and Mr. Foreman. Mr. Kelly attended meetings as a
non-voting member. The Committee establishes objectives for the executive
compensation program and reviews and approves all salary and other remuneration
for the executive officers of the Company. The objectives of the executive
compensation program are to:
1. Promote the attainment of Company goals by placing a greater portion
of compensation subject to performance goals.
2. Attract and retain qualified talent.
3. Enhance shareholder value by providing opportunities for equity
ownership through performance-based programs.
The executive officer compensation program is comprised of salary, cash
incentive compensation and other benefits, including pension and medical
benefits which are available to other employees in the Company.
BASE SALARY
There is no formal Compensation Committee policy regarding the
determination of salaries; however, consideration is given to several factors
including individual work experience, performance, and comparable salaries
within the retail food industry. Based upon a 1992 study conducted by Hewitt
Associates of fifteen similar retail food chains, the Company's salary
structure for executive officers was approximately one-third below the industry
median. The Hewitt study has been adjusted for inflation for current use.
Salary adjustments for fiscal years 1994 and 1995 reflect promotions and
changes in responsibility and did not include any annual adjustments.
The compensation peer group used in the Hewitt Study is not the same as
the S & P Retail Food peer group index used in the Comparison of Five Year
Cumulative Total Return graph included in this Proxy Statement. The group with
which the Company competes for executive talent does not necessarily include
all of companies which should be used to compare shareholder returns.
ANNUAL INCENTIVE BONUSES
The Company used the Hewitt study and other industry comparative data to
determine annual bonus potentials. Annual bonus potentials depend upon job
levels and are set at a stated percent of the base compensation. The
corporate team plan paid out the maximum potential based on the financial
results and improvements for 1996. The entire annual incentive bonus paid for
1995 was on a discretionary basis except for bonuses paid pursuant to
contractual guarantees. No bonus payments were awarded to the named executive
officers for 1994 due to the Company's results.
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LONG-TERM INCENTIVE
The Committee intends to utilize stock options as the vehicle to provide a
long-term focus for fiscal 1995 and later fiscal years. Stock options were
issued at the beginning of fiscal year 1997.
CHIEF EXECUTIVE OFFICER COMPENSATION
As of May 10, 1995, the Company retained Robert J. Kelly as its President
and Chief Executive Officer. Mr. Kelly is one of the nominees for the Board of
Directors. The Company and Mr. Kelly have entered into an Employment Agreement
which has a term of three years ending on May 22, 1998. The Employment
Agreement provides for a base salary at the rate of $350,000 per year. In
addition, the Company paid a signing bonus of $150,000 at the commencement of
his employment. Also, Mr. Kelly is eligible to receive bonus compensation in
an amount determined by the Board of Directors based upon mutually acceptable
performance targets and up to 100% of the base salary. The bonus compensation
in the first year of Mr. Kelly's employment was $150,000. The bonus
compensation in the second year was $350,000. Mr. Kelly purchased 125,000
shares of common stock of the Company at the time of the execution of the
Employment Agreement by delivering to the Company a promissory note with the
purchase price of the shares based upon the closing sale price of the Company's
common stock on the business day immediately preceding the date of the
Employment Agreement. The Company has also granted Mr. Kelly the option to
purchase up to 600,000 shares of the Company's common stock. Under the terms
of this option, up to 200,000 shares may be purchased by Mr. Kelly on or after
the first anniversary date of his employment at a price equal to $2.50 per
share, up to an additional 200,000 shares may be purchased on or after the
second anniversary of his employment at a price equal to $3.50 per share, and
the balance of the shares may be purchased on or after the third anniversary
of Mr. Kelly's employment at a price equal to $4.50 per share. This option
becomes immediately exercisable in the event of the termination of Mr. Kelly's
employment by reason of his death or permanent disability, by the Company for
any reason other than cause (as defined in the Employment Agreement), or by Mr.
Kelly for good reason (as defined in the Employment Agreement). The option
also becomes immediately exercisable in the event of a change of control of the
Company. The Employment Agreement provides that Mr. Kelly is entitled to
four weeks of vacation per year.
Compensation Committee:
Martin J. Rabinowitz
Steven M. Friedman
Peter B. Foreman
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER INFORMATION
The Compensation Committee is comprised exclusively of directors who are
not and have never been Company employees. No Company executive officer serves
on the Compensation Committee or as a director of another company for which any
member of the Compensation Committee serves as a director or executive officer.
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SUMMARY OF COMPENSATION PLANS
RETIREMENT PLAN
The Company maintains a tax-qualified defined benefit pension plan
covering both salaried and non-union hourly employees. The benefit formula
under such plan is the sum of 1% of annual compensation for each year up to the
Social Security Wage Base for that year and 1.33% of annual compensation over
the Social Security Wage Base with a minimum benefit of $360 per year
multiplied by years of credited service. There is full vesting of benefits
after five years of service. All contributions are made by the Company.
Effective October 1, 1990, the pension plans were amended to provide for
voluntary early retirement at age 55. Assuming continued employment with the
Company until retirement at age 65, the estimated annual benefits payable
beginning at age 65 to the named executive officers are as follows: Mr.
Kelly--$28,435; Mr. Dotterer--$36,684; Mr. Norton--$31,250 and Mr.
Smith--$30,580.
STOCK INCENTIVE PLAN
The Company has a Stock Incentive Plan which was ratified by the
shareholders at the 1995 Annual Shareholders Meeting. The Plan provides the
Compensation Committee with the discretion to make grants until June 20, 2005
to all salaried employees of the Company who are not in a bargaining unit, in
the form of Nonqualified Stock Options, Incentive Stock Options, Stock
Appreciation Rights, Limited Stock Appreciation Rights, and Restricted Stock.
Grants of Stock Appreciation Rights, Limited Stock Appreciation Rights, and
Restricted Stock are intended to be confined to key employees in special
situations. The Plan originally authorized two million shares of common stock.
There are 994,700 shares available as of February 1, 1997 for future grants.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Robert J. Kelly, who was named as President and Chief Executive Officer on
May 22, 1995 has an employment contract which is described above.
The Company also has an Employment Agreement with David S. Norton, the
Company's Senior Vice President - Retail. This Agreement provides that Mr.
Norton will have a base salary of $125,000 per year (subsequent to employment,
the base salary was increased to $130,925) and will be entitled to participate
in the Eagle Bonus Plan at the Senior Vice President targeted norm of 50% of
base salary. Payout is contingent on Company performance with final
determination solely vested with the Board of Directors. Mr. Norton's bonus in
1996 was $130,925 (100% on his base salary). Mr. Norton received a one-time
bonus of $10,000 upon his employment with the Company. In addition, under the
terms of his Employment Agreement, he is entitled to receive options to
purchase Company common stock in the amount of 25,000 shares at a purchase
price of $2.50 per share on the one-year anniversary of his employment, 25,000
shares at a purchase price of $3.50 per share on the two-year anniversary
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of his employment, and 25,000 shares at $4.50 per share on the three-year
anniversary of his employment. The options must be exercised within ten years
of award or within 30 days following termination of employment. The options
immediately vest upon a change of ownership, defined as a sale of more than 50%
of Company common stock to any entity other than the public. The Employment
Agreement entitles Mr. Norton to four weeks of vacation and standard Company
employment benefits. In addition, the Agreement provides that if Mr. Norton is
terminated, he will receive 18 months of compensation based upon his base
salary at the time of separation plus health benefits during the 18 month
period.
In order to protect all of the participant's rights in the event of a
Change in Control (as defined below) of the Company, the 1995 Stock Incentive
Plan provides for the immediate vesting of all outstanding awards upon the
occurrence of such an event. For purposes of such Plan, a Change in Control of
the Company is deemed to occur if: (i) any person or entity (with the exception
of Odyssey Partners) acquires 50% or more of the voting securities of the
Company; (ii) the shareholders approve a plan of complete liquidation, an
agreement for sale or disposition of substantially all of the Company's assets,
or a materially dilutive merger or consolidation of the Company; or (iii) the
Board of Directors agrees by a two-thirds vote that a Change in Control has
occurred or is about to occur and within six months actually does occur.
However, for purposes of such Plan, no Change in Control would be deemed to
occur with respect to any Plan participant who is a material equity participant
of the purchasing group that consummates a Change in Control.
PERFORMANCE GRAPH
Shown below is a line graph comparing a five-year cumulative total
shareholder return for the Company, the S & P Retail Stores (Food), and the
Russell 2000.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
EAGLE FOOD CENTERS, S&P 500 RETAIL FOOD STORES, AND RUSSELL 2000
[Camera Ready Performance Graph]
- --------------------------------------------------------------
S&P 500 RETAIL
DATE EAGLE FOODS FOOD STORES RUSSELL 2000
- --------------------------------------------------------------
January 1992 $100.00 $100.00 $100.00
January 1993 $101.75 $127.58 $113.23
January 1994 $ 91.23 $123.01 $134.31
January 1995 $ 22.81 $133.96 $126.24
January 1996 $ 29.82 $169.37 $164.05
January 1997 $ 56.14 $198.55 $195.14
- --------------------------------------------------------------
*Total return assumes reinvestment of dividends on a quarterly basis.
Note: Companies comprising the S & P Retail Stores (Food) Index include:
Albertson's, Inc.; American Stores Co.; Giant Food Inc.; Great Atlantic &
Pacific Tea Co.; Kroger Co.; and Winn-Dixie Stores Inc.
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SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS
AND MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of shares of Common Stock by (a) each person or group that is known
to the Company to be the beneficial owner of more than 5% of the outstanding
shares, (b) each director and named executive officer of the Company, and (c)
all directors and executive officers of the Company as a group.
AMOUNT
AND NATURE PERCENT
NAMES OF BENEFICIAL OWNERS OF BENEFICIAL OF
- -------------------------- OWNERSHIP(1) CLASS(2)
------------- --------
Odyssey Partners, L.P.(3)(4) 5,754,835 52.96
Dimensional Fund Advisors Inc.(5) 557,900 5.13
Martin J. Rabinowitz(3) 0
Steven M. Friedman(3) 267,345 2.46
Alain M. Oberrotman(3) 75,000 *
Marc C. Particelli(3) 75,000 *
Pasquale V. Petitti 250,000 2.30
Robert J. Kelly(6) 525,000 4.66
Herbert T. Dotterer(7) 26,476 *
Paul D. Barnett 0
Peter B. Foreman 151,022 1.39
Michael J. Knilans 500 *
David S. Norton 25,000 *
William J. Snyder(8) 1,000 *
Randy P. Smith(9) 11,250 *
Directors, Nominee and Executive Officers 6,745,083 59.63
as a group (13) persons including certain of
the persons listed above.
1) Unless otherwise noted, each person has sole investment and voting power
with respect to the shares indicated.
2) 10,866,639 shares of Common Stock were outstanding on February 1, 1997.
3) Odyssey Partners, a private investment firm has beneficial ownership of
5,754,835 shares which may be deemed to be beneficially owned by each of
Messrs. Stephen Berger, Leon Levy, Jack Nash, Joshua Nash and Brian
Wruble. The business address of Messrs. Berger, Levy, Nash, and Wruble is
c/o Odyssey Partners L.P., 31 West 52nd Street, New York, NY 10019. This
includes 267,345 shares in which Steven M. Friedman, a former general
partner of Odyssey Partners, L.P., and 29,670 shares in which Salem D.
Shuchman, a former associate of Odyssey Partners, L.P., have an economic
interest. Mr. Rabinowitz has a beneficial interest in the shares owned by
Odyssey Partners, L.P. Mr. Oberrotman and Mr. Particelli each own an
option to purchase 75,000 shares owned by Odyssey Partners, L.P. Odyssey
Partners retains sole voting and dispositive power over Mr. Friedman's,
Mr. Shuchman's, Mr. Oberrotman's and Mr. Particelli's shares.
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4) The business office address of Odyssey Partners L.P. is 31 West 52nd
Street, New York, NY 10019.
5) Dimensional Fund Advisors Inc. (Dimensional), a registered investment
adviser, is deemed to have beneficial ownership of 557,900 shares of Eagle
Food Centers, Inc. stock as of December 31, 1996, all of which shares are
held in portfolios of DFA Investment Dimensions Group Inc., a registered
open-end investment company, or in series of the DFA Investment Company, a
Delaware business trust, or the DFA Group Trust and DFA Participation
Group Trust, investment vehicles for qualified employee benefit plans, all
of which Dimensional Fund Advisors Inc. serves as investment manager.
Dimensional disclaims beneficial ownership of all such shares. The
business office address of Dimensional Fund Advisors Inc. is 1299 Ocean
Avenue, 11th Floor, Santa Monica, CA 90401.
6) Mr. Kelly purchased 125,000 shares of common stock of the Company at the
time of the execution of the Employment Agreement. The beneficial
ownership includes 400,000 shares which are exercisable under a stock
option awarded in fiscal 1995.
7) Includes 3,000 shares which are exercisable under a stock option awarded
in fiscal 1994 and 6,250 shares which are exercisable under a stock option
awarded in fiscal 1995.
8) The profit sharing plan of Snyder & Schwarz, P.C., the law firm of which
Mr. Snyder is a member, owns 1,000 shares of Common Stock.
9) Represents 5,000 shares which are exercisable under a stock option
awarded in fiscal 1994 and 6,250 shares which are exercisable under a
stock option awarded in fiscal 1995.
* Owns less than 1% of the total outstanding Common Stock of the Company.
OWNERSHIP OF PRINCIPAL SHAREHOLDERS
Odyssey Partners currently holds the right to vote 52.96% of the issued
and outstanding shares of Common Stock of the Company. As long as Odyssey
Partners owns a majority of the outstanding voting stock of the Company,
Odyssey Partners will be able, acting alone, to elect the entire Board of
Directors of the Company and to approve any action requiring shareholder
approval.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the two fiscal years ended February 1, 1997, all
Section 16(a) filing requirements applicable to its
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officers, directors, and greater than ten-percent beneficial owners were
complied with; except that one report of ownership by Mr. Herbert T. Dotterer
in fiscal year 1995 disclosing one transaction was inadvertently filed late.
RATIFICATION OF THE
SELECTION OF AN INDEPENDENT AUDITOR
PROPOSAL 2
Deloitte & Touche LLP, 101 W. Second Street, Davenport, Iowa, independent
certified public accountants, have performed an audit of the financial
statements of the Company for the fiscal year ended February 1, 1997. Services
provided by Deloitte & Touche LLP included work related to the requirements of
the annual financial statements, reviews of unaudited quarterly financial
information and preparation of state and federal income tax returns.
The Board of Directors, upon recommendation of its Audit Committee, has
appointed Deloitte and Touche LLP to audit the financial statements of the
Company for the fiscal year ending January 31, 1998 and is seeking ratification
of this appointment by the Shareholders. It is intended that the shares
represented by the proxy will be voted (unless the proxy indicates to the
contrary) for ratification of the appointment.
A representative of Deloitte & Touche LLP will be attending the meeting
and provided the opportunity to make a statement, if desired, and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
SELECTION OF AN INDEPENDENT AUDITOR.
1998 SHAREHOLDER PROPOSALS
Any shareholder who desires to present a proposal qualified for inclusion
in the Company's proxy materials for the 1998 Annual Shareholders Meeting must
forward the proposal in writing to the Secretary of the Company at the address
shown on the first page of this proxy statement in time to arrive at the
Company no later than January 12, 1998.
ADDITIONAL INFORMATION
Included with this Proxy Statement is the Company's Annual Report
indicating the general scope and nature of such business together with a
summary of the activities and financial results of the Company for fiscal 1996.
SHAREHOLDERS MAY UPON WRITTEN REQUEST AND WITHOUT CHARGE, OBTAIN A COPY OF THE
COMPANY'S SECURITIES AND EXCHANGE COMMISSION ANNUAL REPORT ON FORM 10-K.
EXHIBITS TO THE FORM 10-K ARE ALSO AVAILABLE. THE COMPANY WILL REQUIRE PAYMENT
OF A FEE COVERING ITS REASONABLE EXPENSES IN FURNISHING SUCH EXHIBITS. ADDRESS
ANY REQUEST TO MR. HERBERT T. DOTTERER, EAGLE FOOD CENTERS, INC., RT. 67 AND
KNOXVILLE RD., MILAN, ILLINOIS, 61264.
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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 intent of the persons
named in the enclosed proxy to vote such proxy in accordance with their
discretion.
BY ORDER OF THE BOARD OF DIRECTORS
Herbert T. Dotterer, Secretary
Dated May 13, 1997
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EAGLE FOOD CENTERS, INC. PROXY/VOTING INSTRUCTION CARD
MILAN, ILLINOIS
- ----------------------------------------------------------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING ON JUNE 11, 1997
The undersigned hereby appoints Robert J. Kelly and Herbert T. Dotterer as true and lawful proxies each with the power to appoint
substitutes, and to vote the shares of common stock of the Company held of record by the undersigned on May 2, 1997, at the Annual
Shareholders Meeting of Eagle Food Centers, Inc. to be held on June 11, 1997 at 10:00 a.m., Central Daylight Time, at the Milan
Community Center, Rt. 67 & 92nd Avenue, Milan, Illinois, and at any adjournments thereof, on all the matters coming before said
meeting including any matters which the Board of Directors is not aware of on May 13, 1997.
IF NO DIRECTION AS TO THE MANNER OF VOTING THE PROXY IS MADE, THE PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR PROPOSAL
2 AS INDICATED ON THE REVERSE SIDE HEREOF.
Election of Directors:
Nominees: Martin J. Rabinowitz, Robert J. Kelly, Pasquale V. Petitti, Herbert T. Dotterer, Paul D. Barnett, Steven M. Freidman,
Peter B. Foreman, Michael J. Knilans, Alain M. Oberrotman, Marc C. Particelli, William J. Snyder
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES ON THE REVERSE SIDE. HOWEVER, YOU NEED NOT MARK ANY
BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXY COMMITTEE CANNOT VOTE YOUR SHARES
UNLESS YOU SIGN, DATE AND RETURN THIS CARD.
SEE REVERSE
SIDE
- -----------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
[EAGLE COUNTRY MARKET LOGO]
/ X/ Please mark your 6400
vote as in this
example
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS SET FORTH BELOW. IF NO SELECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE BOARD OF DIRECTORS AND FOR PROPOSAL 2.
- -----------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2.
- -----------------------------------------------------------------------------------------------------------------------------------
FOR WITHHELD as to ALL Nominees FOR AGAINST ABSTAIN
1. Election of / / / / 2. Ratification of the selection / / / / / /
Directors. of Deloitte & Touche LLP as
(See opposite Independent Auditors.
side).
For, except authority to vote for the following nominee(s), is withheld:
------------------------------------------------------------------------
SIGNATURE(S)____________________________________________________________DATE______________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, administrator, trustee
or guardian, please give full title as such. If the signer is a Corporation please sign full Corporate name by duly authorized
officer. If a partnership, please sign in partnership by authorized person.
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FOLD AND DETACH HERE