SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SUPERVALU, 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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Notes:
[SUPERVALU LOGO]
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Notice of Annual Meeting of Stockholders
to be Held Wednesday, June 27, 2001
The Annual Meeting of Stockholders of SUPERVALU INC. will be held on
Wednesday, June 27, 2001, at 10:30 a.m., local time, at The Minneapolis
Convention Center, 1301 Second Avenue South, Minneapolis, Minnesota 55403 for
the following purposes:
1) to elect four directors;
2) to vote on an amendment to the SUPERVALU/Richfood Stock Incentive Plan;
3) to ratify the appointment of KPMG LLP as independent auditors; and
4) to transact such other business as may properly come before the meeting.
Record Date
The Board of Directors has fixed the close of business on May 1, 2001, as
the record date for the purpose of determining stockholders who are entitled
to notice of, and to vote at the meeting. Holders of Common Stock and
Preferred Stock 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 or
follow the instructions on your proxy card to vote and to confirm your
attendance by telephone or via the Internet. Please note that this year's
meeting will be held at the Minneapolis Convention Center. Parking is
available for stockholders in the Plaza municipal parking ramp located across
the street from The Minneapolis Convention Center and the Orchestra Hall ramp.
A map showing the location of The Minneapolis Convention Center and designated
parking areas is included on your proxy card. If you need special assistance
because of a disability, please contact me at P.O. Box 990, Minneapolis,
Minnesota 55440.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ John P. Breedlove
John P. Breedlove
Corporate Secretary
May 14, 2001
PROXY STATEMENT--VOTING PROCEDURES
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YOUR VOTE IS VERY IMPORTANT
. Voting by Mail. Whether or not you expect to attend the meeting, please
sign, date, and mail your proxy card promptly in the enclosed postage paid
envelope.
. Voting by Telephone and the Internet. If you wish to vote by telephone or
by the Internet, please follow the instructions on the enclosed proxy
card. If you vote by telephone or the Internet you do not need to return
the proxy card.
. Beneficial Stockholders. If your shares are held in the name of a bank,
broker or other holder of record, follow the voting instructions you
receive from the holder of record to vote your shares. Telephone and
Internet voting are also available to stockholders owning stock through
most major banks and brokers.
It is important that all stockholders vote. If you sign, date and mail your
proxy card without indicating how you want to vote, your shares will be voted
as recommended by the Board of Directors.
Vote Required and Method of Counting Votes
. Number of Shares Outstanding. SUPERVALU has two classes of capital stock
outstanding, Common and Preferred. The holders of each class are entitled
to one vote for each share held, voting together as one class. 132,817,546
shares of Common Stock and 1,341 shares of Preferred Stock are eligible to
vote at the meeting.
. Vote Required. The following is an explanation of the vote required for
each of the items to be voted on.
Election of Directors (Item 1)
The four nominees receiving the highest number of votes will be elected.
Stockholders who do not wish their shares to be voted for a particular nominee
may so indicate in the space provided on the proxy card.
All Other Items (Items 2 and 3)
The affirmative vote of a majority of shares present in person or by proxy is
required for approval of Items 2 and 3. Shares represented by a proxy marked
"abstain" on any matter 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 voted in favor of the item. Therefore, any proxy marked
"abstain" will have the effect of a vote against the item. Shares represented
by a proxy as to which there is a "broker non-vote" (i.e. where a broker does
not have discretionary authority to vote the shares) will be considered
present at the meeting for purposes of determining a quorum, but will have no
effect on the vote.
Revoking Your Proxy
You may revoke your proxy at any time before your shares are voted by sending
a written statement to the Secretary, or by submitting another proxy with a
later date. You may also revoke your proxy by appearing and voting at the
meeting.
Voting By Participants in SUPERVALU Benefit Plans
If you own SUPERVALU shares as a participant in one or more of SUPERVALU's
employee benefit plans, you will receive a single proxy card that covers both
the shares credited to your plan account(s) and shares you own that are
registered in the same name. If any of your plan accounts are not in the same
name as your shares of record, you will receive separate proxy cards for your
record and plan holdings. Proxies submitted by plan participants will serve as
voting instructions to the trustee(s) for the plans whether provided by mail,
telephone or the Internet.
Other Business
The Board knows of no other matters to be presented for stockholder action at
the meeting. If other matters are properly brought before the meeting, the
persons named in the accompanying proxy card intend to vote the shares
represented in accordance with their best judgment. This Proxy Statement will
be first mailed to stockholders on or about May 18, 2001.
1
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
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The Board of Directors held six regular meetings and one special meeting
during the last fiscal year. Each director attended more than 75% of the
meetings of the Board and its committees on which the director served, except
for Carole F. St. Mark who attended 55%. The Executive Committee of the Board
does not have scheduled meetings and did not meet during the year. The Board
maintains four other committees: Audit, Finance, Executive Personnel and
Compensation, and Director Affairs. Membership on the Audit, Director Affairs,
and Executive Personnel and Compensation Committees is limited to non-employee
directors.
Audit Committee
The following directors serve on the Audit Committee: Garnett L. Keith, Jr.
(Chairman), Susan E. Engel, Charles M. Lillis, Harriet Perlmutter and Steven
S. Rogers. The Audit Committee met two times during the last fiscal year and
participated in teleconferences with the Company's outside auditors prior to
earnings releases.
The primary responsibilities of the Audit Committee are to assist the Board of
Directors:
. In its oversight of the Company's accounting and financial reporting
principles and policies, and internal audit controls and procedures;
. In its oversight of the Company's financial statements and the independent
audit thereof;
. In selecting (or nominating the outside auditors to be proposed for
shareholder approval in any proxy statement), evaluating and, where deemed
appropriate, replacing the outside auditors; and
. In evaluating the independence of the outside auditors.
Finance Committee
The following directors serve on the Finance Committee: Charles M. Lillis
(Chairman), Susan E. Engel, Garnett L. Keith, Jr., Harriet Perlmutter, Steven
S. Rogers, Carole F. St. Mark, Jeffrey Noddle and Michael W. Wright. The
Finance Committee met one time during the last fiscal year.
The primary responsibilities of the Finance Committee are to review the
financial structure, policies and future financial plans of the Company, and
to make recommendations concerning them to the Board. In carrying out these
responsibilities, the Finance Committee periodically reviews:
. The annual operating and capital budgets of the Company as proposed by
management, and performance by the Company as compared to the approved
budgets;
. Dividend policy and rates;
. Investment performance of the Company's employee benefit plans;
. Company financing arrangements;
. The Company's capital structure, including key financial ratios such as
debt to equity ratios and coverage of fixed charges; and
. Proposals for changes in the capitalization of the Company, including
purchases of treasury stock.
Director Affairs Committee
The following directors serve on the Director Affairs Committee: William A.
Hodder (Chairman), Lawrence A. Del Santo, Edwin C. Gage and Richard L.
Knowlton. The Director Affairs Committee met two times during the last fiscal
year.
The mission of the Director Affairs Committee is to recommend a framework to
assist the Board in fulfilling its corporate governance responsibilities. In
carrying out its mission, the Director Affairs Committee establishes and
regularly reviews the Board of Directors' policies and procedures which
provide:
. Criteria for the size and composition of the Board;
. Procedures for the conduct of Board meetings including executive sessions
of the Board;
. Policies on director retirement and resignation;
. Criteria regarding personal qualifications needed for Board membership; and
2
. Appropriate compensation for directors.
In addition, the Director Affairs Committee has responsibility to:
. Consider and recommend nominations for Board membership and the composition
of Board Committees;
. Evaluate Board practices at SUPERVALU and other well-managed companies and
recommend appropriate changes to the Board (see "SUPERVALU Board Practices"
below); and
. Consider governance issues raised by stockholders and recommend appropriate
responses to the Board.
Executive Personnel and Compensation Committee
The following directors serve on the Executive Personnel and Compensation
Committee: Edwin C. Gage (Chairman), Lawrence A. Del Santo, William A. Hodder,
Richard L. Knowlton and Carole F. St. Mark. This Committee met three times
during the last fiscal year. When necessary for purposes of Section 162(m) of
the Internal Revenue Code, the Committee acts by subcommittee comprised solely
of the members of the Committee who are "outside directors" as defined
pursuant to Section 162(m). This subcommittee met three times during the last
fiscal year and took action twice by written consent, and was comprised of all
of the members of the Committee except for Mr. Gage. See "Compensation
Committee Interlocks and Insider Participation."
The primary functions of the Executive Personnel and Compensation Committee
are to:
. Determine the process to evaluate the performance of the Chief Executive
Officer;
. Review and recommend to the Board the compensation of the Chief Executive
Officer;
. Review and recommend to the Board major changes in executive compensation
programs, executive stock options and retirement plans for officers;
. Consider and make recommendations to the Board concerning the annual
election of corporate officers and the Company's succession plan;
. Approve annual salaries and bonuses of corporate officers and other
executives at specified levels;
. Review and approve participants and performance targets under annual and
long-term incentive compensation plans; and
. Approve stock option grants and awards under the Company's stock option
plans, bonus and other incentive plans.
SUPERVALU BOARD PRACTICES
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In order to help our stockholders better understand SUPERVALU's Board
practices, we are including the following description of current practices.
The Director Affairs Committee periodically reviews these practices.
Evaluation of Board Performance
In order to continue to evaluate and improve the effectiveness of the Board,
the Director Affairs Committee evaluates the Board's performance as a whole
once every two years. The evaluation process includes a survey of the
individual views of all directors, a summary of which is then shared with the
Board.
Size of the Board
Although the size of the Board may vary from time to time, the Board believes
the size should preferably be not less than ten or more than fourteen members.
The Board believes that the size of the Board should accommodate the
objectives of effective discussion and decision-making and adequate staffing
of Board committees. The Board also believes that the Board should be made up
of a substantial majority of independent, non-employee directors. It is the
Board's policy that no more than three members of the Board will be employees
of SUPERVALU. These management members will include the Chief Executive
Officer and up to two additional persons whose duties and responsibilities
identify them as top management individuals in the Company. The Board
currently has twelve members, one of whom is the Company's Chief Executive
Officer, and one of whom is the Company's President and Chief Operating
Officer.
3
Director Retirement
It is Board policy that non-employee directors retire at the Annual Meeting
following the date they attain the age of seventy-two, and that non-employee
directors elected after February 27, 1994 will serve a maximum term of fifteen
years. Directors who change the occupation they held when initially elected to
the Board are expected to offer to resign from the Board. At that time, the
Director Affairs Committee will review the continuation of Board membership
under these new circumstances and make a recommendation to the full Board.
The Board also has adopted a policy that requires employee directors, other
than the CEO, to retire from the Board at the time of a change in their status
as an officer of SUPERVALU. A former CEO may continue to serve on the Board
until the third anniversary after his or her separation from the Company. If a
former CEO, however, leaves the Company to accept another position, the CEO
will retire as a director effective simultaneously with his or her separation
from the Company.
Selection of Directors
All directors are encouraged to submit the name of any candidate deemed
qualified to serve on the Board, together with all available information on
the candidate, to the Chairperson of the Director Affairs Committee. The
Director Affairs Committee considers potential Board candidates and makes its
recommendation to the full Board.
Board Meetings
The Board meets at least six times per year. Board meetings normally do not
exceed one day in length. The Board meets in Executive Session at the
beginning of each regularly scheduled Board meeting, with the CEO or other
inside directors in attendance. The Board also schedules a longer multi-day
off-site strategic planning meeting every other year.
Executive Sessions of Outside Directors
Outside directors generally meet together as a group, without the CEO or other
inside directors in attendance, during three scheduled Executive Sessions of a
Board meeting each year. The Chairperson of the Director Affairs Committee
will preside during any session of the Board at which only outside directors
are present; provided, however, that the Chairperson of the Executive
Personnel and Compensation Committee will preside during any non-employee
director session held for the purpose of conducting the CEO's performance
review.
Stock Ownership Guidelines
Non-employee directors are encouraged to acquire and own Company stock with a
fair market value of five times their annual retainer, within five years after
the director is first elected.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
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The following table sets forth information with respect to the only persons or
groups known to the Company as of April 16, 2001, to be the beneficial owner
of more than 5% of its Common Stock.
Name and Address of Amount and Nature of Percent of
Beneficial Holder Beneficial Ownership Class
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Alliance Capital Management L.P. 11,419,421 8.60%
1345 Avenue of the Americas
New York, New York 10105 (1)
Morgan Stanley Dean Witter Advisors 6,935,413 5.24%
1585 Broadway, 38th Floor
New York, New York 10036 (2)
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(1) Based on a Schedule 13G report dated February 12, 2001, filed by AXA
Financial, Inc. on behalf of Alliance Capital Management L.P., AXA, AXA
Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, AXA Conseil Vie
Assurance Mutuelle and AXA Courtage Assurance Mutuelle. Alliance Capital
Management L.P., a subsidiary of AXA Financial, Inc., beneficially owns
11,419,421 shares of the Company's Common Stock, with sole voting power as
to 5,803,168 of such shares, shared voting power as to 1,023,900 of such
shares and sole dispositive power as to 11,419,421 of such shares. The
other companies identified in the filing as beneficial owners of the
Company's Common Stock, AXA Rosenberg
4
Investment Management LLC, a subsidiary of AXA, and The Equitable Life
Assurance Society of the United States, a subsidiary of AXA Financial,
Inc., own 25,200 and 1,100 shares, respectively.
(2) Based on a Schedule 13G report dated February 14, 2001, filed by Morgan
Stanley Dean Witter & Co. on behalf of itself and its wholly owned
subsidiary Morgan Stanley Dean Witter Advisors Inc. Morgan Stanley Dean
Witter Advisors Inc. beneficially owns owns 6,935,413 shares of the
Company's Common Stock with shared voting power as to 6,921,338 shares and
shared dispositive power as to 6,935,413 shares. An additional 363,276
shares of the Company's Common Stock are owned by entities affiliated with
Morgan Stanley Dean Witter & Co.
SECURITY OWNERSHIP OF MANAGEMENT
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The following table sets forth information, as of April 16, 2001, concerning
beneficial ownership of SUPERVALU Common Stock by each director, 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.
Amount and Nature of Percent
Name of Beneficial Options Exercisable of
Beneficial Owner Ownership (1) Within 60 Days (2) Class (2)
---------------- -------------------- ------------------- ----------
Lawrence A. Del Santo 8,200 20,000 *
Susan Engel 5,142 10,000 *
Edwin C. Gage 44,382 23,466 *
William A. Hodder 22,776 26,885 *
Garnett L. Keith, Jr. 21,153 29,059 *
Richard L. Knowlton 16,845 24,589 *
Charles M. Lillis 17,367 26,000 *
Harriet Perlmutter 20,704 32,000 *
Steven S. Rogers 5,427 11,000 *
Carole F. St. Mark 7,848 29,600 *
Michael W. Wright (3) 452,703 733,584 *
Jeffrey Noddle 125,347 497,740 *
David L. Boehnen 121,417 248,017 *
Alec C. Covington 20,265 109,852 *
Pamela K. Knous 55,206 182,000 *
All directors and
executive officers as a
group (27 persons) 1,346,980 2,834,152 3.2%
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* Less than 1%.
(1) All persons listed have sole voting and investment power with respect to
all of the shares listed except: (i) the following who have shared voting
and investment power as follows: Mr. Gage, 8,000 shares; Ms. Perlmutter,
3,000 shares; and Mr. Wright. 43,552 shares; and (ii) the following non-
employee directors who have sole voting power, but no investment power,
over shares held in the Non-Employee Directors Deferred Stock Plan Trust
as follows: Lawrence A. Del Santo, 8,200 shares; Susan E. Engel, 5,142
shares; Edwin C. Gage, 4,448 shares; William A. Hodder, 17,261 shares;
Garnett L. Keith, Jr., 14,212 shares; Richard L. Knowlton, 13,434 shares;
Charles M. Lillis, 15,367 shares; Harriet Perlmutter, 7,304 shares; Steven
S. Rogers, 2,427 shares; and Carole F. St. Mark, 4,448 shares.
(2) Options exercisable within 60 days are deemed beneficially owned and are
included in the percent of class owned.
(3) Includes 8,000 shares held in a retirement trust for Mr. Wright.
5
ELECTION OF DIRECTORS (ITEM 1)
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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. If a vacancy occurs 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 elect a director to
fill the balance of the unexpired term or the term established by the Board.
Charles M. Lillis, Jeffrey Noddle, Steven S. Rogers and Michael W. Wright are
nominated for three-year terms expiring in 2004. There are currently twelve
members of the Board.
The Board of Directors is informed that each of the four 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 another person as the holders
of the proxies decide.
The following sets forth information, as of April 16, 2001, concerning the
four nominees for election as directors of the Company and as to the eight
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 2004
CHARLES M. LILLIS, age 59
. General Partner, LoneTree Capital Management (a private equity company)
since 2000
. Chairman, President, and Chief Executive Officer of MediaOne Group, Inc. (a
broadband communications company) from 1998 to 2000
. Executive Vice President of US WEST, Inc. (a diversified multimedia
communication company) from 1987 to 1998 and a director of US WEST, Inc.
from 1997 to 1998
. President and Chief Executive Officer of US WEST Media Group, a division of
US WEST, Inc. from April 1995 to 1998
. Elected a Director of SUPERVALU in 1995
JEFFREY NODDLE, age 54
. President and Chief Operating Officer of the Company since 2000
. Executive Vice President, and President and Chief Operating Officer-
Wholesale Food Companies from 1995 to 2000
. Elected a Director of SUPERVALU in 2000
. Also a Director of Donaldson Company, Inc. and General Cable Corporation
STEVEN S. ROGERS, age 43
. Clinical Professor of Finance and Management at J.L. Kellogg Graduate
School of Management at Northwestern University since 1995
. Owner of Fenchel Lampshade Company (a private manufacturing company) from
1988 to 1995
. Elected a Director of SUPERVALU in 1998
. Also a Director of DQE, Inc.
MICHAEL W. WRIGHT, age 62
. Chairman of the Board and Chief Executive Officer of the Company since 2000
. Chairman of the Board, President and Chief Executive Officer of the Company
from 1982 to 2000
. Elected a Director of SUPERVALU in 1977
. Also a Director of Honeywell International Inc. and Wells Fargo & Company
6
DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL MEETING IN 2002
EDWIN C. GAGE, age 60
. Chairman and Chief Executive Officer of GAGE Marketing Group, L.L.C. (an
integrated marketing services company) since 1991
. Elected a Director of SUPERVALU in 1986
. Also a Director of AHL Services, Inc.
GARNETT L. KEITH, JR., age 65
. Chairman and Chief Executive Officer of SeaBridge Investment Advisors, LLC
(a registered investment advisor) since 1996
. Vice Chairman of The Prudential Insurance Company of America from 1984 to
1996
. Elected a Director of SUPERVALU in 1984
. Also a Director of Pan-Holding Societe Anonyme
RICHARD L. KNOWLTON, age 68
. Chairman of the Hormel Foundation (a charitable foundation controlling
45.2% of Hormel Foods Corporation) since 1995
. Chairman of Hormel Foods Corporation (a food manufacturing company) from
1993 to 1995
. Elected a Director of SUPERVALU in 1994
. Also a Director of ING America Insurance Holdings, Inc.
CAROLE F. ST. MARK, age 58
. President and Chief Executive Officer of Growth Management, LLC (a business
development and strategic management company) since 1997
. President and Chief Executive Officer of Pitney Bowes Business Services, a
unit of Pitney Bowes, Inc. from 1994 to 1997
. Elected a Director of SUPERVALU in 1989
. Also a Director of Gerber Scientific, Inc., Polaroid Corporation and Royal
& SunAlliance Insurance Group plc.
DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL MEETING IN 2003
LAWRENCE A. DEL SANTO, age 67
. Chief Executive Officer of The Vons Companies (a retail grocery company)
from 1994 to 1997
. Elected a Director of SUPERVALU in 1997
. Also a Director of Hussman Corporation and PETsMART, Inc.
SUSAN E. ENGEL, age 54
. Chairwoman of the Board, and Chief Executive Officer of Department 56, Inc.
(a designer, importer and distributor of fine quality collectibles and
other giftware products) and of D 56, Inc. (Department 56, Inc.'s principal
operating subsidiary), since September 1997 and November 1996,
respectively.
. President and Chief Operating Officer of Department 56, Inc. and of D 56,
Inc. from September 1994 to November 1996.
. Elected a Director of SUPERVALU in 1999
. Also a Director of Wells Fargo & Company, and K2, Inc.
WILLIAM A. HODDER, age 69
. Chief Executive Officer of Donaldson Company, Inc. (a manufacturer of
filtration devices) from 1982 to 1996
. Elected a Director of SUPERVALU in 1990
. Also a Director of NRG Energy, Inc.
HARRIET PERLMUTTER, age 69
. Trustee of the Papermill Playhouse (The State Theatre of New Jersey)
. Elected a Director of SUPERVALU in 1978
7
COMPENSATION OF DIRECTORS
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Non-employee directors receive the following compensation for their Board
service:
. Cash retainer of $22,000 per year;
. Deferred retainer of $20,000 per year payable in SUPERVALU Common Stock
under the Non-Employee Directors Deferred Stock Plan;
. $1,800 for each Board meeting attended;
. $1,000 for each Committee meeting attended; and
. At the time of the Annual Meeting each director will receive an option to
purchase 6,000 shares, and newly appointed directors will receive an option
to purchase 6,000 shares when such directors join the Board. Options
granted to directors are at current fair market value and are fully
exercisable upon grant.
Committee Chairpersons receive an additional annual retainer in the following
amounts:
. Finance and Director Affairs Committees: $2,500; and
. Audit, Executive Personnel and Compensation Committees: $4,000.
Effective June 27, 1996, the Company's retirement/deferral program for
directors was discontinued and benefits previously earned by directors were
frozen. A director first elected to SUPERVALU's Board prior to June 27, 1996
will receive at termination an annual payment of $20,000 per year for the
number of years of the director's service on the Board prior to June 27, 1996,
but not more than ten years. Directors first elected to the Board after June
27, 1996 do not participate in the retirement/deferral program.
Directors may elect to defer payment of their directors' fees under one or
more of the following arrangements:
. Directors Deferred Compensation Plan and Executive Deferred Compensation
Plans. Fees and quarterly interest are credited to an account for the
director, until payment is made from the plan following retirement from the
Board.
. Non-Employee Directors Deferred Stock Plan. Fees are credited to a deferred
stock account for each director. To encourage increased stock ownership, a
director who chooses to defer payment of cash fees into this plan will
receive deferred stock equal to 110% of the fees otherwise payable. The
Company contributes the deferred cash fees to an irrevocable trust and the
trust purchases shares of SUPERVALU Common Stock. The trust assets remain
subject to the claims of the Company's creditors. Each director is entitled
to direct the trustee to vote all shares allocated to the director's
account in the trust. The Common Stock will be distributed to each director
following the director's retirement from the Board.
8
COMPENSATION OF EXECUTIVE OFFICERS
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The following table shows compensation for each of the last three fiscal years
of the Chief Executive Officer and the other four most highly compensated
persons serving as executive officers at the end of the fiscal year.
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation Awards
-------------------------------- -----------------------
Other Restricted Securities
Annual Stock Underlying All Other
Name and Salary Bonus Compensation Awards Options/SARs Compensation
Principal Position Year ($) ($) ($) ($)(1) (#)(2) ($)(3)
------------------ ---- -------- ---------- ------------ ---------- ------------ ------------
Michael W. Wright 2001 $990,000 $ 712,330 $ 0 $1,118,161 0 $162,549
Chairman and Chief 2000 931,505 1,583,559 0 801,279 0 116,943
Executive Officer 1999 873,582 682,442 0 1,179,068 1,806,697 70,277
Jeffrey Noddle 2001 $594,230 $ 306,449 $ 0 $ 81,114 248,622 $ 14,990
President & Chief 2000 489,955 489,955 0 320,334 60,000 8,578
Operating Officer 1999 473,118 261,256 0 471,366 40,000 18,380
David L. Boehnen 2001 $377,000 $ 159,565 $ 0 $ 606,678 100,000 $18 ,928
Executive Vice 2000 361,971 361,971 0 217,961 50,000 14,244
President 1999 345,727 194,368 0 320,726 115,441 6,800
Alec C. Covington 2001 $362,347 $ 157,169 $ 0 $ 0 90,000 $ 1,483
Executive Vice 2000 -- -- -- -- -- --
President; President & 1999 -- -- -- -- -- --
COO, Distribution
Food Companies (4)
Pamela K. Knous 2001 $370,000 $ 156,603 $ 0 $ 604 ,427 100,000 $ 1,958
Executive Vice 2000 350,000 350,000 0 173,876 50,000 2,305
President, Chief 1999 330,000 185,526 0 255,855 40,000 0
Financial Officer
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(1) The amounts reflected represent the value of: (i) the shares of restricted
stock earned under the Company's Long-Term Incentive Plan based on the
achievement of designated levels of corporate return on invested capital
and sales for fiscal 1999, 2000 and 2001, respectively, (ii) restricted
stock units granted for retention purposes, and (iii) a special grant to
Mr. Wright. The shares earned in fiscal 2000 and 1999 for prior awards
vested and the restrictions were removed on March 2, 2001 and February 28,
2000, respectively, for each of the named executive officers. The shares
earned in fiscal 2001 will vest and the restrictions will be removed on
March 2, 2002, if such named executive officers remain in the employ of
the Company at the time of vesting. The number of shares earned in fiscal
1999 under the Long-Term Incentive Plan are as follows: 48,747 shares for
Mr. Wright; 13,260 shares for Mr. Boehnen; 10,578 shares for Ms. Knous;
and 19,488 shares for Mr. Noddle. The number of shares earned in fiscal
2000 under the Long-Term Incentive Plan are as follows: 48,747 shares for
Mr. Wright; 13,260 shares for Mr. Boehnen; 10,578 shares for Ms. Knous;
and 19,488 shares for Mr. Noddle. The number of shares earned in 2001
under the Long-Term Incentive Plan are as follows: 14,617 shares for
Mr. Wright; 5,767 shares for Mr. Noddle; 4,206 shares for Mr. Boehnen; and
4,046 shares for Ms. Knous. In addition, in fiscal 2001, Mr. Boehnen and
Ms. Knous each received a special award of 30,000 restricted stock units
under the Company's 1993 Stock Plan as an incentive to remain with the
Company, and Mr. Wright received a special award of 50,000 shares of
restricted stock. See "Report of Executive Personnel and Compensation
Committee." For purposes of this table, the restricted stock and the
restricted stock units are valued based on the closing price of the
Company's Common Stock on the date earned or granted. Dividends are paid
on the shares of restricted stock. Dividends are not paid on restricted
stock units. As of February 24, 2001, the number and fair market value of
all shares of restricted stock and restricted stock units held or earned
by the above named executive officers were as follows: Mr. Wright:
113,364, $1,598,591; Mr. Noddle: 85,253, $1,199,510; Mr. Boehnen: 47,466,
$667,847; Mr. Covington: 20,000, $281,400; and Ms. Knous: 44,624,
$627,860.
(2) The total number of option awards in fiscal 2001, 2000 and 1999 includes
restoration options (as more fully described below) received by the
following named executive officers in the amounts stated: Mr. Wright,
206,697 shares in fiscal 1999, Mr. Noddle, 48,622 shares in fiscal 2001,
and Mr. Boehnen, 65,441 shares in fiscal 1999. In fiscal 1999, Mr. Wright
received a premium price option award to purchase 1,400,000 shares of
SUPERVALU Common Stock. Except for Mr. Wright's premium price option award
that includes 700,000 tandem limited stock appreciation rights exercisable
for cash in lieu of the options only upon a Change of Control, no limited
stock appreciation rights were granted in tandem with the grants made in
fiscal 1999, 2000 or 2001.
(3) For fiscal 2001, the amount of All Other Compensation reflects
contributions during the fiscal year by the Company under the Qualified
Pre-Tax Savings and Profit Sharing (401(k)) Plan ("401(k) Plan") and to an
unfunded non-qualified deferred
9
compensation plan because of limitations on the annual compensation that
can be taken into account under the 401(k) Plan as follows: $5,700 and
$50,888 for Mr. Wright; $5,058 and $9,932 for Mr. Noddle; $5,056 and
$13,872 for Mr. Boehnen; $1,483 and $0 for Mr. Covington; and $1,958 and $0
for Ms. Knous. In addition, for fiscal 2001, the amount shown under All
Other Compensation for Mr. Wright includes $105,961, representing the value
of a split dollar life insurance arrangement. See footnote 2 to Pension
Plans on page 12.
(4) Mr. Covington became an executive officer of the Company effective
November 6, 2000. Effective April 28, 2001, Mr. Covington resigned as an
employee of the Company.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
- -------------------------------------------------------------------------------
The following table provides information on grants of stock options and stock
appreciation rights for fiscal 2001 to the named executive officers.
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation Prior Columns
Individual Grants for Option Term (1) Annualized (1)(2)
----------------------------------------------- --------------------- -----------------
Percent of
Number of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees Or Base
Granted In Fiscal Price Expiration
Name (#)(3) Year ($/Share) Date 5%($) 10%($) 5%($) 10%($)
---- ------------ ------------ --------- ---------- ---------- ---------- -------- --------
Michael W. Wright 0 -- -- -- -- -- -- --
Jeffrey Noddle 150,000 3.7% $14.50 03/14/2010 $1,367,846 $3,466,390 $136,785 $346,639
48,622(4) 1.2% 22.50 06/26/2000 -- -- -- --
50,000 1.2% 19.00 06/29/2010 597,450 1,514,055 59,745 151,406
David L. Boehnen 100,000 2.5% $14.50 03/14/2010 $ 911,897 $2,310,927 $ 91,190 $231,093
Alec C. Covington 40,000 1.0% $14.50 03/14/2010 $ 364,759 $ 924,371 $ 36,476 $ 92,437
50,000 1.2% 14.44 10/05/2010 453,983 1,150,483 45,398 115,048
Pamela K. Knous 100,000 2.5% 14.50 03/14/2010 $ 911,897 $2,310,927 $ 91,190 $231,093
Total potential realizable value for the named officers who received stock
option grants is $4,607,832 and $11,677,153 at the 5% and 10% stock price
growth assumptions respectively. Assuming 5% and 10% stock price growth over a
period of 10 years commencing April 1, 2000, the increase in total stockholder
value from stock price appreciation alone for all shares outstanding on that
date would be $1,350,486,451 and $3,422,397,819.
- --------
(1) These amounts are the result of calculations at the 5% and 10% rates set
by the Securities and Exchange Commission and therefore are not intended
to forecast possible future appreciation, if any, in the Company's stock
price.
(2) Computed by dividing potential realizable value at the assumed annual
rates of stock price appreciation by the term of the option. Original
options are granted with a ten-year term. Restoration options (described
below) have a term equal to the remaining term of the original option.
(3) The option has been granted with a ten-year term. 20% of the option is
exercisable upon grant and an additional 20% becomes exercisable on each
of the next four anniversary dates of grant, except that the option
becomes 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 delivery of already-owned
shares or offset of the underlying shares. A "restoration" option (also
referred to as a "reload" option) is granted when the option is exercised
and payment of the exercise price is made by delivery of SUPERVALU Common
Stock. Each restoration option is granted for the number of shares of
Common Stock tendered as payment for the exercise price and withheld for
tax purposes, upon exercise of the original option. The exercise price of
each restoration option is the fair market value of SUPERVALU 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 original
option. All options reported in the table are entitled to restoration
options.
(4) Grant of a restoration option with a limited stock appreciation right
exercisable for cash in lieu of the option only upon a Change of Control.
Such restoration option expired on June 26, 2000.
10
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 2001 by
the named executive officers, and the value of such officers' unexercised
options/SARs at the end of the fiscal year.
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at Fiscal In-the-Money Options/SARs
Shares Year-End (#) at Fiscal Year-End ($)
Acquired on Value ------------------------- -------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
Michael W. Wright 121,249 $ 94,270 693,584 1,512,000(1) $ 0 $ 0
Jeffrey Noddle 60,000 $502,500 439,740 250,000 $39,169 $ 0
David L. Boehnen 0 $ 0 202,017 140,000 $ 4,060 $ 0
Alec C. Covington 0 $ 0 101,852 126,718 $ 0 $ 0
Pamela K. Knous 0 $ 0 144,000 146,000 $ 0 $ 0
- --------
(1) Includes a premium price stock option award to purchase 1,400,000 shares
of SUPERVALU Common Stock, granted in December, 1998.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
- -------------------------------------------------------------------------------
The following table provides information on awards made to the named executive
officers during the fiscal year.
Number of Shares, Units Performance or Other Period
Name or Other Rights (#)(1) Until Maturation or Payout (1)
---- ----------------------- ------------------------------
Michael W. Wright........ 0 --
Jeffrey Noddle........... 17,445 Fiscal years 2001-2003
David L. Boehnen......... 10,738 Fiscal years 2001-2003
Alec C. Covington........ 7,801 Fiscal years 2001-2003
Pamela K. Knous.......... 10,538 Fiscal years 2001-2003
- --------
(1) Awards are of stock units under the Company's Long-Term Incentive Plan,
each of which represents the right to receive one share of restricted
stock upon achievement of specified performance objectives. Stock units
will be converted to restricted stock based on the Company's total return
on invested capital ("ROIC") relative to the specified performance
objectives for the fiscal 2001--fiscal 2003 performance period. No stock
units will be converted to restricted stock if the pre-established minimum
ROIC performance objective is not achieved. If the minimum, target or
maximum ROIC performance objective is achieved, then 50%, 100% or 150%,
respectively, of the awarded stock units will be converted to restricted
stock. If the Company's actual ROIC performance falls between the minimum
and target or the target and maximum objectives, the percent of stock
units converting to restricted stock will be extrapolated accordingly.
Shares earned for ROIC performance as described above may be increased if
Company sales exceed 2% of a pre-established sales target, but only if the
ROIC performance is at or above target. At sales growth of 3% over the
sales target, the stock units to be converted to restricted stock will be
increased by 10%, progressing linearly to a 50% increase in such
restricted stock for Company sales of 7% or more over the sales target.
Shares of restricted stock issued upon conversion of stock units would
vest at the end of fiscal 2004, provided that the named officer continues
in the employ of the Company at the time of vesting. No dividends are paid
on stock units. Dividends are paid on all shares of restricted stock that
are issued.
11
PENSION PLANS
- -------------------------------------------------------------------------------
The following table shows estimated maximum annual benefits that would be paid
to an employee upon retirement at age 65 under the combination of the
SuperValu Retirement Plan, the Non-Qualified Supplemental Executive Retirement
Plan (or, if applicable, the Excess Benefit Plan) maintained for certain
highly compensated employees, and the "Retirement Benefit Plan Account" of the
Company's deferred compensation plans. The table does not reflect the $140,000
per year limitation on annual benefits payable from the plans imposed by
Section 415 of the Internal Revenue Code, nor the $170,000 per year limitation
on compensation included in final annual average pay imposed by Section
401(a)(17) of the Internal Revenue 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, at least the benefits they would have been entitled to receive if
such Sections did not impose maximum limitations.
Years of Service (1)(2)
Final Annual -------------------------------------
Average Pay (including Salary and Bonus) 15 20 25 30
- ---------------------------------------- -------- -------- -------- ----------
$ 300,000............................... $ 63,900 $ 85,200 $106,500 $ 127,800
500,000............................... 111,900 149,200 186,500 223,800
800,000............................... 183,900 245,200 306,500 367,800
1,100,000............................... 255,900 341,200 426,500 511,800
1,400,000............................... 327,900 437,200 546,500 655,800
1,700,000............................... 339,900 533,200 666,500 799,800
2,000,000............................... 471,900 629,200 786,500 943,800
2,400,000............................... 567,900 757,200 946,500 1,135,800
- --------
(1) The above estimates of annual benefits payable on normal retirement are
computed using the straight-life annuity method and are based on certain
assumptions, including (a) that the employee remains until the normal
retirement age of 65 (although retirement is permitted at age 62 without
benefit reduction because of age); and (b) that the present retirement
plans remain in force until the retirement date. Benefits under plans are
not reduced by the participant's Social Security benefit.
(2) If Mr. Wright retires as CEO of the Company after he reaches age 62,
instead of the benefits shown in the above table, he will be entitled to
receive annual payments calculated as 60% of this average (five highest
years) salary plus bonus, offset by the sum of (i) the value of any
matching contributions to the Company's Pre-Tax Savings and Profit
Sharing (401(k)) Plan made through the date of retirement, (ii) any
Company additions to non-qualified deferred compensation accounts made
through the date of retirement, (iii) one half of primary social
security, and (iv) the projected annual value of the split dollar
insurance policy entered into between the Company and Mr. Wright
effective in fiscal 1999, which has a more favorable long term expense
impact on the Company than payments from the Supplemental Executive
Retirement Plan. If Mr. Wright were to retire at age 63, based on current
compensation and payment levels from other plans, Mr. Wright would
receive payments of $558,664 per year. Lump sum and installment payout
options are also available.
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 24, 2001, were as follows: Mr. Wright: $1,872,491, 24 years;
Mr. Noddle: $800,384, 24.8 years, Mr. Boehnen: $530,009, 9.8 years; and Ms.
Knous: $570,970, 3.4 years. Mr. Covington commenced participation in the
SuperValu Retirement Plan on November 1, 2000. Prior to that time he was
covered by the Richfood Pension Plan under which he has an accrued benefit of
$10,096 a year, and the Wetterau Inc. Pension Plan which was merged into the
SuperValu Retirement Plan; his final average pay and years of service under
the SuperValu plan are: $360,235 and 14 years.
12
CHANGE IN CONTROL AGREEMENTS
- -------------------------------------------------------------------------------
The Company has entered into Severance Agreements with officers and certain
other employees of the Company, including those identified in the Summary
Compensation Table above, with the exception of Mr. Covington.
In general, these agreements entitle the executive to a lump-sum cash payment
if the executive's employment is terminated (other than for Cause or
disability) within two years after a Change of Control (as defined). The lump-
sum cash payment is equal to a multiple of one, two or three times the
executive's annual base salary, annual bonus and the value of the executive's
annual perquisites. The multiple is three for Mr. Wright, Mr. Noddle, Mr.
Boehnen, and Ms. Knous; and one or two for all other recipients. Each
executive would also receive a lump-sum retirement benefit equal to the
present value of the additional qualified pension plan benefits the executive
would have accrued under the plan absent the early termination. Generally, the
executive would also be entitled to continued family medical coverage, dental
and life insurance coverage until the earlier of 24 months after termination
or the commencement of comparable coverage with a subsequent employer. Mr.
Wright's Severance Agreement also provides for payment to be made if his
employment is terminated for any reason during the seventh month following a
Change of Control. Each Severance Agreement includes a covenant not to compete
with the Company. Due to the possible imposition of excise taxes on the
payments, the severance benefits payable to an executive would be increased by
the amount equal to the excise tax imposed on the executive's severance
payments.
Several of the Company's compensation and benefit plans contain provisions for
enhanced benefits on a Change of Control. They include stock options,
performance shares, restricted stock and restricted stock unit awards.
Executive officers also hold limited stock appreciation rights that become
exercisable upon a Change of Control, allowing the executive to receive cash
for the bargain element in the related stock option. The Company's Executive
Deferred Compensation Plans may be increased by 130% to compensate the
executive for any excise tax liability incurred following a Change of Control.
The Company's retirement plans provide for full vesting if employment
terminates under specified circumstances following a Change of Control, and
preserve any excess plan assets for the benefit of plan participants for five
years following a Change of Control.
The Company may set aside funds in an irrevocable grantor trust to satisfy its
obligations arising from certain of its benefit plans. Funds will be set aside
in the trust automatically upon a Change of Control. The trust assets would
remain subject to the claims of the Company's creditors.
13
REPORT OF EXECUTIVE PERSONNEL AND COMPENSATION COMMITTEE
- -------------------------------------------------------------------------------
Compensation Principles
The Executive Personnel and Compensation Committee of the Board of Directors,
composed entirely of non-employee directors, has adopted a comprehensive
Executive Compensation Program based on the following principles:
. The program will enable SUPERVALU to attract, retain and motivate the key
executives necessary for current and long-term success;
. Compensation plans are designed to support SUPERVALU's long range business
strategy;
. Executive compensation is linked to corporate performance and attainment of
designated strategic objectives;
. A significant portion of executive gain is tied to the enhancement of
stockholder value; and
. The Committee exercises independent judgment and approval authority with
respect to the Executive Compensation Program and the awards made under the
program.
Compensation Methodology
The structure of the Executive Compensation Program is based on a market
comparison of compensation for equivalent positions in industries from which
SUPERVALU 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 eight companies comprising the peer
group for the 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 9 years. These market comparisons are the basis for designing the
Company's current compensation structure that 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 market comparisons were performed
in each year to ensure that the dollar values of the various plan components
as well as total compensation were comparable to that of the Compensation Peer
Group. In addition to a review of compensation plan design and compensation
levels, 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 SUPERVALU's 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 SUPERVALU's stock price.
A summary follows which explains the major components of the Executive
Compensation Program, including factors and criteria upon which compensation
was awarded to the Chief Executive Officer for fiscal 2001.
Annual Compensation
Base Salaries. The base salary levels for executive officers are determined
based on three objectives:
. Internal equity based on job responsibility;
. Individual performance and experience; and
. Competitive salary levels with industries from which the Company draws
executive talent.
The Company's salary structure is based on the median salary levels of
companies in similar industries and similar in size to SUPERVALU. Actual
salaries may be set above or below this median depending on individual job
performance and experience.
14
The Committee annually reviews and approves all salary increases for executive
officers other than the CEO. Increases for executives below the CEO level are
proposed by the CEO based on performance evaluations, which include both
progress on achievement of financial results and a qualitative assessment of
performance.
The Chairman of the Committee conducts an annual 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 made on a biannual or annual basis depending on
competitive conditions and practices. In fiscal 2001, Mr. Wright's base salary
was increased from $931,505 to $990,000.
Annual Bonuses. All of the Company's executive officers are eligible to
receive an annual cash bonus. The annual bonus plan is designed to motivate
executives to meet or exceed corporate financial goals that support the
Company's business plans. Specifically, the annual bonus plan for executive
officers is designed to stimulate and reward growth in Company earnings. The
Committee assigns target bonus levels to each executive, which are competitive
with the Compensation Peer Group. Among executive officers, these range from
25% of annual base salary to 85% of annual base salary for the CEO. The bonus
award potential for corporate officers is tied solely to corporate net profit
performance. Bonus payments increase as net profit growth meets and exceeds
the annual growth rate targeted by the Board. The maximum bonus is limited to
twice the target bonus level. Bonuses for the CEO and four other executive
officers are paid from a special plan structured so that the payment will be
tax deductible as "performance based compensation" under Internal Revenue Code
Section 162(m).
Long-Term Incentive Compensation
The Company has implemented 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 long-term incentive potential is
intended to be competitive with programs offered by the Compensation Peer
Group.
Long-Term Incentive Plan. The Committee selects Plan participants, approves
awards and interprets and administers the Long-Term Incentive Plan. In fiscal
2001, the Committee made awards of "performance shares" to executive officers
and profit center presidents. The awards covered the performance period of
fiscal 2001 through fiscal 2003, and were set at levels that are expected to
be competitive with long-term compensation offered by the Compensation Peer
Group. The Committee determined minimum, target and maximum payout amounts for
each participant and awards will be earned for participants based on corporate
return on invested capital (ROIC) performance relative to pre-set objectives.
If these objectives are met or exceeded, and overall corporate sales exceed
the Company's sales plan by more than 2%, performance shares earned by ROIC
performance may be increased. The awards provide that, if earned, performance
shares would be converted to restricted stock that would vest after one year
of further employment. Executives who receive restricted stock are motivated
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 for the fiscal 1999 through fiscal 2001 performance period based
on corporate ROIC and sales performance for corporate officers, and corporate
ROIC/sales and profit center ROIC/sales performance for key profit center
executives. Application of the criteria set forth in the awards for the fiscal
1999 through fiscal 2001 performance period resulted in corporate officers
earning an aggregate of 47,450 shares of restricted stock and key profit
center executives earning an aggregate of 9,678 shares of restricted stock.
Mr. Wright received a payout of 14,617 shares of restricted stock.
Stock Option Plans. The Committee believes that executive gain tied to stock
price
15
appreciation is the most effective way of aligning executive and stockholder
interests. Two key programs together, cause executives to view themselves as
owners of a meaningful equity stake in the business over the long term. They
are:
. The executive stock option program; and
. Stock ownership targets for executive officers.
Annual Option Grants. The Committee makes grants of stock options to key
employees under established grant guidelines intended to be competitive with
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. Corporate, profit center 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 profit center presidents. Based on the stock grant guidelines and
the subjective factors described above, grant recommendations are developed by
management, reviewed by the Chief Executive Officer and presented to the
Committee for final approval.
In fiscal 2001 the Committee granted options to key employees, including all
officers (with the exception of the CEO). Both Mr. Noddle and Mr. Covington
received additional grants of 50,000 shares each in fiscal 2001 due to their
promotions to President and Chief Operating Officer, and Executive Vice
President, respectively.
Stock options are granted with an exercise price equal to the market price of
the Company's stock on the date of grant. In order to encourage option
exercise and share ownership, SUPERVALU also permits executives to exercise
options using shares of SUPERVALU stock to pay the exercise price. Upon such
exercise, SUPERVALU grants the executive a restoration stock option (commonly
referred to as a reload option) for that number of shares surrendered. Reload
options are exercisable at the then current market price and extend for the
remainder of the original option's term.
In December 1998, the Board awarded Mr. Wright a special premium price stock
option grant for 1,400,000 shares, with an exercise price equal to $40. The
vesting of the option award is contingent on the Company achieving either one
of two performance hurdles: (a) either the market price of SUPERVALU Common
Stock exceeds the option exercise price for 10 consecutive trading days prior
to February 28, 2003 or (b) the net income growth of the Company during fiscal
2000--2003 must exceed 12.5% compounded annually, over the base year of fiscal
1999, subject to a minimum ROIC threshold. As a result of this special grant
in 1998 no stock options were granted to Mr. Wright during fiscal 2000 or
fiscal 2001.
Stock Ownership Guidelines
Stock ownership guidelines for executive officers have been established so
that they face the same downside risk and upside potential as stockholders
experience. Executives are expected to show significant progress toward
reaching these ownership goals. The goal for the CEO is six times annual base
salary, excluding vested and unexercised stock options. Mr. Wright's current
stock ownership, excluding vested and unexercised stock options, exceeds six
times his annual base salary.
Restricted Stock and Stock Unit Awards
The Company has utilized restricted stock or restricted stock units on a
selective basis for competitive or retention reasons. Based on the competitive
comparison methodology previously described, the Committee approved a grant of
50,000 shares of restricted stock to Mr. Wright in fiscal 2001. These shares
will vest upon the earlier of retirement or June 28, 2003 and contain a non-
compete provision that is effective for one year after vesting occurs.
The Committee also approved special awards of 30,000 restricted stock units
each to Mr. Boehnen and Ms. Knous. The objective of these special grants was
to incent these two key executive officers to remain with the Company. These
stock units partially vest between the fourth and seventh year after grant.
Mr. Boehnen's grant completely vests in 2006 and Ms. Knous' grant completely
vests in 2007.
16
Vested restricted stock units will be paid out in SUPERVALU Common Stock upon
attainment of the latter of a designated age (age 62 for Mr. Boehnen and age
57 for Ms. Knous) or one year after retirement, provided the non-compete
provisions of the agreement have been adhered to between the vesting and
payout dates.
Policy Regarding Applicable Tax Code Provision
Section 162(m) of the Internal Revenue Code imposes limits on tax deductions
for executive compensation in excess of $1 million paid to any of the top five
executive officers named in the Summary Compensation Table unless certain
conditions are met. The Committee makes every reasonable effort to preserve
this tax deduction consistent with the principles of the Executive
Compensation Program.
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 SUPERVALU's compensation plans implement its
key compensation principles. Independent compensation consultants have assisted
the Committee in designing these plans, assessing the effectiveness of the
overall program and keeping overall compensation competitive with that of
relevant peer companies. Total compensation is intended to be above industry
averages when performance is superior, and below competitive levels when
performance is below expected levels or SUPERVALU 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
Lawrence A. Del Santo
William A. Hodder
Richard L. Knowlton
Carole F. St. Mark
17
REPORT OF AUDIT COMMITTEE
- -------------------------------------------------------------------------------
The Audit Committee of the Company's Board of Directors is composed of the
following non-employee directors: Garnett L. Keith (Chairman), Susan E. Engel,
Charles M. Lillis, Harriet Perlmutter and Steven S. Rogers. All of the members
of the Audit Committee are independent for purposes of the New York Stock
Exchange listing requirements. The Audit Committee operates under a written
charter adopted by the Board of Directors, a copy of which is attached to this
Proxy Statement as Exhibit A. The Audit Committee recommends to the Board of
Directors, subject to shareholder ratification, the selection of the Company's
independent accountants.
Management is responsible for the Company's internal controls and the
financial reporting process. The Company's independent accountants are
responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with auditing standards generally accepted
in the United States of America and issuing a report on the Company's
consolidated financial statements. The Audit Committee's responsibility is to
monitor and oversee these processes.
In this context, the Audit Committee met and held discussions with management
and KPMG LLP ("KPMG"), the Company's independent accountants. Management
represented to the Audit Committee that the Company's consolidated financial
statements were prepared in accordance with accounting principles generally
accepted in the United States of America, and the Audit Committee reviewed and
discussed the consolidated financial statements with management and KPMG. The
Audit Committee discussed with KPMG matters required to be discussed by
Statement on Auditing Standards No. 61 (Communications with Audit Committees).
KPMG also provided to the Audit Committee the written disclosure required by
Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees), and the Audit Committee discussed with KPMG the accounting
firm's independence.
Based upon the Audit Committee's discussion with management and KPMG, and the
Audit Committee's review of the representation of management and the report of
KPMG to the Audit Committee, the Audit Committee recommended to the Board of
Directors that the audited consolidated financial statements be included in
the Company's Annual Report on Form 10-K for the fiscal year ended
February 24, 2001 ("fiscal year 2001") filed with the Securities and Exchange
Commission.
During fiscal year 2001, KPMG provided various audit, audit-related and non-
audit services to the Company as follows:
Audit Fees: The aggregate fees billed for professional services rendered for
the audit of the Company's consolidated financial statements for fiscal year
2001 and for reviews of the consolidated financial statements included in the
Company's quarterly reports on Forms 10-Q for fiscal year 2001 were $783,500.
Financial Information Systems Design and Implementation Fees: For fiscal year
2001, KPMG did not render any services relating to the design and
implementation of financial information systems.
All Other Fees: The aggregate fees billed for all other services rendered,
exclusive of the fees disclosed above relating to financial statement audit
services, were $2,134,350, primarily for taxes.
The Committee also considered whether non-audit services provided by the
independent accountants during fiscal year 2001 were compatible with
maintaining the independent accountants' independence.
Respectfully submitted,
Garnett L. Keith, Chairman
Susan E. Engel
Charles M. Lillis
Harriet Perlmutter
Steven S. Rogers
18
PERFORMANCE GRAPH
- -------------------------------------------------------------------------------
The following graph compares the cumulative total stockholder return on
SUPERVALU'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 retail food and food
distribution industries. The graph assumes the investment of $100 in each
company on February 24, 1996 and the reinvestment of all dividends on a
quarterly basis, with results calculated to the last business day in February
each year. The returns of the companies were weighted based on their
respective capitalization and on the relative percentage of SUPERVALU's
operating profit realized from retail food and food distribution operations
for each year. The stock price performance shown on the graph below is not a
projection of future price performance.
Comparison of Five-Year Cumulative Total Return
SUPERVALU INC., S&P 500 Stock Index and Composite Peer Group
The composite peer group is comprised of the following retail food and food
distribution companies: Albertson's, Inc., Delhaize America, Inc., Fleming
Companies, Inc., Great Atlantic & Pacific Tea Company, The Kroger Company,
Nash Finch Company, Safeway Inc. and Winn-Dixie Stores, Inc.
[PERFORMANCE GRAPH APPEARS HERE]
Feb-96 Feb-97 Feb-98 Feb-99 Feb-00 Feb-01
------- ------- ------- ------- ------- -------
SUPERVALU....................... $100.00 $ 99.36 $156.68 $164.39 $119.60 $105.53
S&P 500......................... 100.00 126.09 170.14 203.75 227.66 215.24
Peer Group...................... 100.00 110.55 150.33 180.57 116.89 182.24
19
PROPOSAL TO AMEND THE SUPERVALU/RICHFOOD STOCK INCENTIVE PLAN (ITEM 2)
- -------------------------------------------------------------------------------
BACKGROUND. When the Company acquired the outstanding Common Stock of Richfood
Holdings, Inc. pursuant to a merger agreement in August 1999, the Company
assumed the Richfood Holdings, Inc. Omnibus Stock Incentive Plan (the
"Richfood Plan") previously approved by Richfood's stockholders. The shares of
Richfood Holdings, Inc. Common Stock that were available for issuance under
the Richfood Plan or reserved to satisfy awards previously granted were
converted to shares of SUPERVALU's Common Stock based on the exchange ratio
set forth in the merger agreement. The Richfood Plan was amended in October
1999 to change the name to the SUPERVALU/Richfood Stock Incentive Plan (the
"Plan") and to conform certain administrative provisions to those contained in
other stock based plans maintained by SUPERVALU.
PROPOSED AMENDMENTS. The Board of Directors recommends that the stockholders
approve amendments to the Plan that will:
(i) limit annual grants to any employee of stock options, stock appreciation
rights and other awards, with a value based solely on an increase in the
value of the Company's Common Stock after the grant date, to a maximum
of 500,000 shares, taking into account all SUPERVALU stock plans in
which the employee participates, which limitation will qualify such
options, stock appreciation rights and awards as "performance based"
compensation for purposes of Internal Revenue Code Section 162(m),
(ii) provide that options may not be granted with an exercise price of less
than 100% of the fair market value of the Company's Common Stock on the
date of grant, and
(iii) allow for restoration options, commonly referred to as "reload
options", to be granted under the Plan.
SUMMARY OF THE PLAN. A copy of the Plan is attached as Exhibit B to this Proxy
Statement. The language added or altered by the proposed amendments is
underlined. This discussion is only a summary. You should refer to the Plan
for more complete information.
Purpose. The purpose of the Plan is to assist the Company and its Affiliates
in recruiting and retaining employees with ability and initiative by enabling
employees to participate in its future success and to associate their
interests with those of the Company and its Affiliates.
Administration. The Plan is administered by the Executive Personnel and
Compensation Committee. The Committee has the authority to select the
individuals to whom awards are granted, to determine the types of awards and
the number of shares of Common Stock covered by awards, and to set the terms
and conditions of awards. The Committee also has the authority to establish
rules for the administration of the Plan, and its determinations and
interpretations are binding. The Committee may delegate its authority to one
or more officers.
Eligible Participants. Any employee of the Company and its Affiliates who is
selected by the Committee is eligible to receive awards under the Plan. As of
April 16, 2001, there were approximately 1,200 persons who were eligible as a
class to receive awards under the Plan.
The following table sets forth the number of shares of SUPERVALU Common Stock
covered by options or other awards granted under the Plan during the 2001
fiscal year to employees of the Company. Non-Employee Directors are not
eligible to receive awards under the Plan.
No. of Shares
No. of Shares Underlying
Underlying Restricted
Name and Principal Position Options Stock Units
--------------------------- ------------- -------------
Michael W. Wright 0 0
Jeffrey Noddle 0 0
David L. Boehnen 0 0
Alec C. Covington 0 0
Pamela K. Knous 0 0
All current Executive Officers as a Group 0 7,500
All current Non-Employee Directors as a Group 0 0
All Employees as a Group (excluding 953,711 0
Executive Officers)
20
The number and type of awards that will be granted in the future under the
Plan to employees are not determinable, as the Committee will make such
determinations in its discretion.
Types Of Awards. The Plan permits the grant of a variety of different types of
awards:
. Stock options, including incentive stock options ("ISOs") meeting the
requirements of Section 422 of the Internal Revenue Code, and stock options
that are not ISOs ("Nonqualified Stock Options"),
. Stock appreciation rights ("SARs"),
. Stock awards (including restricted stock),
. Performance shares valued in whole or in part by reference to or based on
SUPERVALU's Common Stock, and
. Incentive awards payable in cash or stock, or a combination of cash and
stock, upon attainment of specified objectives or goals.
The proposed amendment would allow the Company to grant restoration options,
commonly referred to as "reload options", under the Plan.
The following types of awards have been made under the Plan:
. Stock options; and
. Restricted stock.
Awards may be granted for any amount of cash consideration or for no cash
consideration so long as legal requirements are met. The provisions of Section
422(b) of the Internal Revenue Code require that the exercise price for an ISO
be no less than the fair market value of the Company's Common Stock on the
date of grant. The Plan, as assumed by the Company, provided that the exercise
price per share under any Nonqualified Stock Option may not be less than 50%
of the fair market value of the Company's Common Stock on the date of grant.
It has been the Company's practice, when granting options under the Plan, to
establish the exercise price for all options at not less than 100% of the fair
market value of the Company's Common Stock on the date of grant. The proposed
amendment would require the Company to grant Nonqualified Stock Options with
an exercise price per share of not less than 100% of the fair market value of
the Company's Common Stock on the date of grant.
Stock Options. Options may be exercised by payment of the exercise price,
either in cash or, at the discretion of the Committee, by using shares of
Common Stock or other consideration having a fair market value equal to the
exercise price. The proposed amendment provides that the Committee may grant
restoration options with terms and conditions established by the Committee.
Restoration options are granted when a participant pays the exercise price of
the option by using previously owned shares of Common Stock. The new option
would be for a number of shares equal to the number of shares surrendered in
payment of the option exercise price plus the number of shares, if any,
surrendered or withheld in payment of tax obligations of the participant in
connection with the exercise of the option.
Stock Appreciation Rights. The holder of a SAR is entitled to receive the
excess of the fair market value of a specified number of shares over the grant
price of the SAR.
Restricted Stock. Shares of restricted stock and restricted stock units may be
awarded subject to such restrictions and other terms and conditions as the
Committee may impose. Restricted stock may not be transferred by the holder
until the restrictions established by the Committee lapse. Holders of
restricted stock units would have the right to receive shares of Common Stock
at some future date.
Other Stock Awards. Performance shares and incentive awards provide the right
to receive awards upon the achievement of the goals established by the
Committee. Performance shares and incentive awards granted under the Plan may
be denominated or payable in cash, restricted or unrestricted shares of Common
Stock, or other securities or property.
Maximum Number Of Shares. Up to 2,076,684 shares of the Company's Common Stock
may be issued for awards under the Plan (subject to certain adjustments). If
any shares to which an award relates are forfeited, or if an award is
otherwise terminated, then the number of shares with respect to such award, to
the extent of any such forfeiture or termination, will again be available for
grant under the Plan. As of April 16, 2001, 31,767 shares had been
21
issued, 953,711 shares were subject to outstanding options, and 1,091,206
shares were available for future grants under the Plan. As of April 16, 2001,
approximately 256 optionees held options under the Plan.
The closing price of SUPERVALU Common Stock on April 16, 2001, as reported on
the New York Stock Exchange, was $12.90.
Adjustments. The Committee may make adjustments to awards under the Plan in
order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available if any corporate transaction or event affects
the shares of Common Stock so that an adjustment is appropriate.
Term. The Plan terminates on March 6, 2006, and no awards may be made after
that date.
Amendments. The Board of Directors may amend or terminate the Plan at any
time, provided that stockholder approval must be obtained if the amendment
materially increases the aggregate number of shares of Common Stock that may
be issued under the Plan, materially changes the class of individuals eligible
to participate in the Plan or materially increases the benefits that may be
provided under the Plan.
FEDERAL INCOME TAX CONSEQUENCES. The following is a summary of the principal
federal income tax consequences generally applicable to options and SARs under
the Plan.
The grant of an option or SAR is not expected to result in any taxable income
for the recipient. The holder of an ISO generally will have no taxable income
upon exercising the ISO (except that a liability may arise for alternative
minimum tax), and the Company will not be entitled to a tax deduction when an
ISO is exercised. When a participant exercises a Nonqualified Stock Option,
the optionee must recognize ordinary income equal to the difference between
the fair market value of the shares acquired and the exercise price, and the
Company will be entitled to a tax deduction for the same amount. Upon
exercising a SAR, the amount of any cash received and the fair market value on
the exercise date of any Common Stock received are taxable to the recipient as
ordinary income and deductible by the Company. With respect to an award that
is payable in shares of Common Stock that are restricted as to transferability
and subject to substantial risk of forfeiture, unless a special election is
made pursuant to the Code, the holder of the award must recognize ordinary
income equal to the excess of (i) the fair market value of the shares of
Common Stock received (determined as of the first time the shares become
transferable or not subject to substantial risk of forfeiture, whichever
occurs earlier) over (ii) the amount (if any) paid for such shares of Common
Stock by the holder, and the Company will be entitled at that time to a tax
deduction for the same amount.
The tax consequences to a participant upon a disposition of shares acquired
through the exercise of an option or SAR will depend on how long the shares
have been held and whether such shares were acquired by exercising an ISO or
by exercising a Nonqualified Stock Option or SAR. If shares acquired on the
exercise of an ISO are held for at least one year after exercise and two years
from the date the ISO was granted, the optionee will recognize long-term
capital gain or loss in an amount equal to the difference between the option
price for the shares and the sale price. Generally, there will be no tax
consequence to the Company in connection with the disposition of shares
acquired under an option, except that the Company may be entitled to a tax
deduction in the case of a disposition of ISO shares before the applicable ISO
holding periods have been satisfied.
The Board of Directors recommends a vote "FOR" the proposal to amend the
SUPERVALU/Richfood Stock Incentive Plan.
22
PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS (ITEM 3)
- -------------------------------------------------------------------------------
The Company is seeking the ratification by the stockholders of its appointment
of KPMG LLP to audit the books and accounts of the Company and its
subsidiaries for the fiscal year ending February 23, 2002. A representative of
KPMG LLP will be present at the Annual Meeting with the opportunity to make a
statement and to respond to questions.
The Board of Directors recommends a vote "FOR" the proposal to ratify the
appointment of KPMG LLP as independent auditors.
OTHER INFORMATION
- -------------------------------------------------------------------------------
SUPERVALU Mailing Address
The Company's mailing address is: P.O. Box 990, Minneapolis, MN 55440.
Stockholders Proposals for 2002 Annual Meeting
All proposals of stockholders that are requested to be included in the
Company's Proxy Statement for the 2002 Annual Meeting must be received by the
Corporate Secretary on or before January 18, 2002, to be included.
Any other stockholder proposals to be presented at the 2002 Annual Meeting
must be given in writing to the Corporate Secretary and received at the
principal executive offices of the Company no later than the close of business
on February 27, 2002 nor earlier than January 28, 2002. The proposal must
contain specific information required by the Company's Restated Bylaws, a copy
of which may be obtained by writing to the Corporate Secretary.
Director Nominations
In accordance with procedures set forth in the Company's Bylaws, stockholders
may propose nominees for election to the Board of Directors by timely written
notice to the Corporate Secretary, generally no less than sixty days and no
more than ninety days prior to the first anniversary date of the last Annual
Meeting.
Expenses of Solicitation
This solicitation of proxies is being made by the Company and it pays the cost
of soliciting proxies. The Company arranges with brokerage houses, custodians,
nominees and other fiduciaries to send proxy materials to their principals,
and the Company reimburses them for their expenses. In addition to
solicitation by mail, proxies may be solicited by the Company's employees, by
telephone or personally. No additional compensation would be paid for such
employee solicitation. The Company has also retained Innisfree M&A
Incorporated to assist in the solicitation of proxies for an estimated fee of
$9,000 plus out-of-pocket expenses.
Compensation Committee Interlocks and Insider Participation
As indicated above, Edwin C. Gage (Chairman), Lawrence A. Del Santo, William
A. Hodder, Richard L. Knowlton and Carole F. St. Mark served as members of the
Executive Personnel and Compensation Committee during fiscal 2001. The members
of the Committee do not participate in any interlocking directorships.
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
$224,000, increasing to $232,000 in 2003, which the Company believes to be a
fair market rental. The leased premises are subleased to an independent retail
supermarket operator.
Section 16(a) Beneficial Ownership Reporting Compliance
The rules of the Securities and Exchange Commission require the Company's
directors,
23
executive officers, and holders of more than 10% of the Company's Common Stock
to file reports of stock ownership and changes in ownership. To the best of
the Company's knowledge, there were no late or inaccurate filings in fiscal
2001. In making this statement, the Company has relied upon written
representations of its directors and executive officers.
Householding
Only one copy of the Company's Annual Report and Proxy Statement has been sent
to multiple stockholders of the Company who share the same address and last
name, unless the Company has received contrary instructions from one or more
of those stockholders. This procedure is referred to as "householding." In
addition, the Company has been notified that certain intermediaries, i.e.
brokers or banks, will household proxy materials. The Company will deliver
promptly, upon oral or written request, a separate copy of the Annual Report
and Proxy Statement to any stockholder at the same address. If you wish to
receive a separate copy of the Annual Report and Proxy Statement, you may
write to SUPERVALU INC., P.O. Box 990, Minneapolis, MN 55440, Attention:
Corporate Secretary or call (952) 828-4154. You can contact your broker or
bank to make a similar request. Stockholders sharing an address who now
receive multiple copies of the Company's Annual Report and Proxy Statement may
request delivery of a single copy by writing or calling the Company at the
above address or by contacting their broker or bank, provided they have
determined to household proxy materials.
Electronic Access of Annual Report and Proxy Statement
The Company's Notice of Annual Meeting and Proxy Statement and Annual Report
are available on the Company's Internet site at http://www.supervalu.com.
Instead of receiving paper copies of the Annual Report and Proxy Statement in
the mail, you can elect to access these documents on the Internet. Opting to
receive your proxy materials on-line saves the Company the cost of producing
and mailing bulky documents to your home or business.
Stockholders of Record: To consent to electronic access to these documents in
the future, you can go directly to http://www.econsent.com/svu and follow the
prompts. If you vote by Internet, simply follow the prompts that will link you
to http://www.econsent.com. If you vote by telephone or mail, you can enroll
for access only through http://www.econsent.com.
Beneficial Stockholders: Check the information provided to you in the proxy
materials mailed to you by your bank or broker.
24
Exhibit A
SUPERVALU INC.
AUDIT COMMITTEE CHARTER
I. Composition of the Audit Committee: The Audit Committee shall be comprised
of at least three directors, each of whom shall have no relationship to
the Company that may interfere with the exercise of their independence
from management and the Company and shall otherwise satisfy the applicable
membership requirements under the rules of New York Stock Exchange, Inc.,
as such requirements are interpreted by the Board of Directors in its
business judgment.
The Audit Committee members and the Chair of the Audit Committee shall be
appointed by the Board of Directors on recommendation of the Director
Affairs Committee. If an Audit Committee Chair is not designated or present
for a specific meeting, the members of the Audit Committee may designate a
chair by majority vote.
II. Purposes of the Audit Committee: The purposes of the Audit Committee are
to assist the Board of Directors:
1. in its oversight of the Company's accounting and financial reporting
principles and policies and internal audit controls and procedures;
2. in its oversight of the Company's financial statements and the
independent audit thereof;
3. in selecting (or nominating the outside auditors to be proposed for
shareholder approval in any proxy statement), evaluating and, where
deemed appropriate, replacing the outside auditors; and
4. in evaluating the independence of the outside auditors.
The function of the Audit Committee is oversight. The management of the
Company is responsible for the preparation, presentation and integrity of
the Company's financial statements. Management and the internal auditing
function are responsible for maintaining appropriate accounting and
financial reporting principles and policies and internal controls and
procedures designed to assure compliance with accounting standards and
applicable laws and regulations. The outside auditors are responsible for
planning and carrying out a proper audit of the Company's annual financial
statements, reviews of the Company's quarterly financial statements prior
to the filing of each quarterly report on Form 10-Q, and other procedures.
In fulfilling their responsibilities hereunder, it is recognized that
members of the Audit Committee are not full-time employees of the Company
and are not, and do not represent themselves to be, accountants or auditors
by profession or experts in the fields of accounting or auditing. As such,
it is not the duty or responsibility of the Audit Committee or its members
to conduct "field work" or other types of auditing or accounting reviews or
procedures or to set auditor independence standards, and each member of the
Audit Committee shall be entitled to rely on (i) the integrity of those
persons and organizations within and outside the Company from which it
receives information, (ii) the accuracy of the financial and other
information provided to the Audit Committee by such persons or
organizations absent actual knowledge to the contrary (which shall be
promptly reported to the Board of Directors) and (iii) representations made
by management as to any information technology, internal audit and other
non-audit services provided by the auditors to the Company.
The outside auditors for the Company are ultimately accountable to the
Board of Directors (as assisted by the Audit Committee). The Board of
Directors, with the assistance of the Audit Committee, has the ultimate
authority and responsibility to select, evaluate and, where appropriate,
replace the outside auditors (or to nominate the outside auditors to be
proposed for shareholder approval in the proxy statement).
A-1
The outside auditors shall submit to the Company annually a formal written
statement delineating all relationships between the outside auditors and
the Company ("Statement as to Independence"), addressing each non-audit
service provided to the Company and the matters set forth in Independence
Standards Board No. 1.
The outside auditors shall submit to the Company annually a formal written
statement of the fees billed for each of the following categories of
services rendered by the outside auditors: (i) the audit of the Company's
annual financial statements for the most recent fiscal year and the reviews
of the financial statements included in the Company's Quarterly Reports on
Form 10-Q for that fiscal year; (ii) information technology consulting
services for the most recent fiscal year, in the aggregate and by each
service (and separately identifying fees for such services relating to
financial information systems design and implementation); and (iii) all
other services rendered by the outside auditors for the most recent fiscal
year, in the aggregate and by each service.
III. Meetings of the Audit Committee: The Audit Committee shall meet two
times annually, or more frequently if circumstances dictate, to discuss
with management the annual audited financial statements. The Audit
Committee should meet separately at least annually with the senior
internal auditing executive and the outside auditors to discuss any
matters that the Audit Committee or any of these persons or firms
believe should be discussed privately. In addition, the Audit Committee
or at least its Chair should communicate with management and the
independent auditors quarterly to review the Company's financial
statements and any significant findings based upon the auditors' review
procedures.
The Audit Committee may request any officer or employee of the Company or
the Company's outside counsel or outside auditors to attend a meeting of
the Audit Committee or to meet with any members of, or consultants to, the
Audit Committee. Members of the Audit Committee may participate in a
meeting of the Audit Committee by means of conference call or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.
IV. Duties and Powers of the Audit Committee: To carry out its purposes, the
Audit Committee shall have the following duties and powers:
1. with respect to the outside auditor,
(i) to provide advice to the Board of Directors in selecting,
evaluating or replacing outside auditors;
(ii) to review the fees and other significant compensation charged by
the outside auditors for audit and non-audit services;
(iii) to ensure that the outside auditors prepare and deliver annually
a Statement as to Independence (it being understood that the
outside auditors are responsible for the accuracy and
completeness of this Statement), to discuss with the outside
auditors any relationships or services disclosed in this
Statement that may impact the objectivity and independence of
the Company's outside auditors and to recommend that the Board
of Directors take appropriate action in response to this
Statement to satisfy itself of the outside auditors'
independence;
(iv) if applicable, to consider whether the outside auditors'
provision of (a) information technology consulting services
relating to financial information systems design and
implementation and (b) other non-audit services to the Company is
compatible with maintaining the independence of the outside
auditors; and
A-2
(v) to instruct outside auditors that the outside auditors are
ultimately accountable to the Board of Directors and Audit
Committee;
2. with respect to the internal auditing function,
(i) to review the appointment and replacement of the senior internal
auditing executive;
(ii) to review the budget, plan, activities, and organizational
structure of the internal audit function; and
(iii) to advise the senior internal auditing executive that he or she
is expected to provide to the Audit Committee summaries of and,
as appropriate, the significant reports to management prepared
by the internal auditing function; and
3. with respect to financial reporting principles and policies and
internal audit controls and procedures,
(i) to advise management, the internal auditing function and the
outside auditors that they are expected to provide to the Audit
Committee a timely analysis of significant financial reporting
issues and practices;
(ii) to consider any reports or communications (and management's
and/or the internal audit function responses thereto) submitted
to the Audit Committee by the outside auditors required by or
referred to in SAS 61, as that may be modified or supplemented;
(iii) to meet with management, the senior internal auditing executive
and/or the outside auditors:
. to discuss the scope, staffing, locations, and reliance upon
management and internal audit for the annual audit;
. to discuss the audited financial statements;
. to discuss all reports concerning any significant fraud or
regulatory non-compliance that occurs at the Company, and
management's responses thereto;
. to discuss any significant matters arising from any audit or
report or communication referred to in items 2(iii) or 3(ii)
above, whether raised by management, the internal auditing
function or the outside auditors, relating to the Company's
financial statements;
. to review the form of opinion the outside auditors propose to
render to the Board of Directors and stockholders;
. to discuss significant changes to the Company's auditing and
accounting principles, policies, controls, procedures and
practices proposed or contemplated by the outside auditors, the
internal auditing function or management; and
. to inquire about significant risks and exposures, if any, and the
steps taken to monitor and minimize such risks;
(iv) to obtain from the outside auditors assurance that the audit was
conducted in a manner consistent with Section 10A of the
Securities Exchange Act of 1934, as amended, which sets forth
certain procedures to be followed in any audit of financial
statements required under the Securities Exchange Act of 1934;
and
(v) to discuss with the Company's Chief Legal Officer any significant
legal matters that may have a material effect on the financial
statements, the Company's compliance policies, including material
notices to or inquiries received from governmental agencies; and
A-3
4. with respect to reporting, recommendations, and other matters,
(i) to prepare any report or other disclosures, including any
recommendation of the Audit Committee, required by the rules of
the Securities and Exchange Commission to be included in the
Company's annual proxy statement;
(ii) to review this Charter at least annually and recommend any
changes to the full Board of Directors;
(iii) to establish, review and approve, and when appropriate report to
the full Board of Directors as to compliance with the Company's
code of conduct;
(iv) to review and approve, and when appropriate report to the full
Board of Directors, the Chief Executive Officer's expense and
travel reports; and
(v) to report its activities to the full Board of Directors on a
regular basis and to make such recommendations with respect to the
above and other matters as the Audit Committee may deem necessary
or appropriate.
V. Resources and Authority of the Audit Committee: The Audit Committee shall
have the resources and authority appropriate to discharge its
responsibilities, including the authority to engage outside auditors for
special audits, reviews and other procedures and to retain special counsel
and other experts or consultants.
Adopted: April 10, 2001
A-4
Exhibit B
SUPERVALU/Richfood Stock Incentive Plan
(formerly the Richfood Holdings, Inc. Omnibus Stock Incentive Plan
(as assumed by SUPERVALU INC.))
Amended and Restated
Effective June 27, 2001
INTRODUCTION
The Richfood Holdings, Inc. Omnibus Stock Incentive Plan (the "Plan") was
adopted by the Board of Directors of Richfood Holdings, Inc. on March 7, 1991
and was approved by shareholders at the 1991 annual meeting. The Plan
authorized the grant of Options, SARs and Stock Awards.
The Plan was amended and restated effective November 4, 1993. The amendments
adopted at that time (1) clarified the definition of Common Stock, (2) revised
the manner in which the option price and withholding tax obligations may be
settled, and (3) clarified that immediately vested and transferable Stock
Awards may be granted under the Plan.
The Plan was further amended and restated effective June 13, 1996, subject
to the approval of shareholders. The amendments (1) increased the number of
shares that may be issued under the Plan, (2) included provisions that will
permit the award of "performance based compensation" under Section 162(m) of
the Internal Revenue Code of 1986, as amended, and (3) clarified the
provisions regarding the grant of Performance Shares under the Plan.
The Plan was further amended, effective July 29, 1997, subject to the
approval of shareholders at the 1997 annual meeting. The Plan was further
amended and restated on October 13, 1999 in connection with the Company's
acquisition of Richfood Holdings, Inc. on August 31, 1999. The amendments (1)
reflected the Company's assumption of the Plan and (2) eliminated the cashless
exercise option whereby shares were withheld or the shares otherwise issuable
were reduced. The terms of the Plan stated herein will govern awards granted
on and after October 13, 1999.
ARTICLE I
DEFINITIONS
1.01 Affiliate means any "subsidiary" or "parent" corporation (within the
meaning of Section 424 of the Code) of the Company.
1.02 Agreement means a written agreement (including any consent, amendment
or supplement thereto) between the Company and a Participant specifying the
terms and conditions of an award of Performance Shares, or an Option, SAR or
Stock Award granted to such Participant.
1.03 Board means the Board of Directors of the Company.
1.04 Committee means the Executive Personnel and Compensation Committee of
the Board.
1.05 Common Stock means the Common Stock, $1.00 par value of the Company.
1.06 Company means SUPERVALU INC.
1.07 Corresponding SAR means an SAR that is granted in relation to a
particular Option and that can be exercised only upon the surrender to the
Company, unexercised, of that portion of the Option to which the SAR relates.
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1.08 Fair Market Value means, on any given date, the average of the opening
and closing sale prices of a share of Common Stock as reported on the New York
Stock Exchange on such date or, if such exchange is not open for trading on
such date, on the day closest to such date when such exchange is open for
trading. Notwithstanding the foregoing, with respect solely to grants made
under the Plan prior to August 31, 1999, "Fair Market Value" shall be
determined using the last sale price of a share of Common Stock rather than
the average of the opening and closing sale prices.
1.09 Initial Value means, with respect to an SAR, the Fair Market Value of
one share of Common Stock on the date of grant, as set forth in the Agreement.
1.10 Option means a stock option that entitles the holder to purchase from
the Company a stated number of shares of Common Stock at the price set forth
in the holder's Agreement.
1.11 Participant means an employee of the Company or an Affiliate, including
an employee who is a member of the Board, who satisfies the requirements of
Article IV and is selected by the Committee to receive an award of Performance
Shares, an Option, a SAR or a Stock Award or a combination thereof.
1.12 Performance Shares means an award which, in accordance with and subject
to an Agreement, will entitle the Participant to receive a Stock Award, a
payment of cash or a combination thereof.
1.13 Plan means the SUPERVALU/Richfood Stock Incentive Plan (formerly the
Richfood Holdings, Inc. Omnibus Stock Incentive Plan (as assumed by SUPERVALU
INC.)).
1.14 Restoration Option shall mean any Option granted under Article VI.
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1.15 Restricted Stock means shares of Common Stock that are nontransferable
or subject to a substantial risk of forfeiture or both and that the Committee
may grant to a Participant pursuant to a Stock Award. Shares of Common Stock
shall cease to be Restricted Stock when, in accordance with the terms of the
applicable Agreement, they become transferable and free of a substantial risk
of forfeiture.
1.16 SAR means a stock appreciation right that entitles the holder to
receive, with respect to each share of Common Stock encompassed by the
exercise of such SAR, the amount determined by the Committee and specified in
the holder's Agreement. In the absence of such a determination, the holder
shall be entitled to receive, with respect to each share of Common Stock
encompassed by the exercise of such SAR, the excess of the Fair Market Value
on the date of exercise over the Initial Value. References to "SARs" include
both Corresponding SARs and SARs granted independently of Options, unless the
context requires otherwise.
1.17 Stock Award means Common Stock awarded to a Participant under Article X
(including an award of Restricted Stock) or in full or partial settlement of
an award of Performance Shares.
ARTICLE II
PURPOSES
The Plan is intended to assist the Company and its Affiliates in recruiting
and retaining employees with ability and initiative by enabling employees to
participate in its future success and to associate their interests with those
of the Company and its Affiliates. The Plan authorizes the award of
Performance Shares and the grant of Stock Awards, SARs, Options qualifying
under Section 422 of the Code ("incentive stock options") and Options not so
qualifying. No Option that is intended to be an incentive stock option shall
be invalid for failure to qualify as an incentive stock option. The proceeds
received by the Company from the sale of Common Stock pursuant to the Plan
shall be used for general corporate purposes.
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ARTICLE III
ADMINISTRATION
Except as provided in this Article III, the Plan shall be administered by
the Committee. The Committee shall have authority to award Performance Shares
and to grant Options, SARs and Stock Awards upon such terms (not inconsistent
with the provisions of the Plan) as the Committee may consider appropriate.
Such terms may include conditions (in addition to those contained in the Plan)
on the exercisability of all or any part of an Option or SAR or on the
transferability or forfeitability of Performance Shares or a Stock Award.
Notwithstanding any such conditions, the Committee may, in its discretion,
accelerate the time at which any Option or SAR may be exercised, the time at
which an award of Performance Shares may be earned or the time at which
Restricted Stock may become transferable or nonforfeitable. In addition, the
Committee shall have complete authority to interpret all provisions of the
Plan; to prescribe the form of Agreements; to adopt, amend and rescind rules
and regulations pertaining to the administration of the Plan; and to make all
other determinations necessary or advisable for the administration of the
Plan. The express grant in the Plan of any specific power to the Committee
shall not be construed as limiting any power or authority of the Committee.
Any decision made, or action taken, by the Committee or in connection with the
administration of the Plan shall be final and conclusive. No member of the
Committee shall be liable for any act done in good faith with respect to the
Plan or any Agreement, Option, SAR, Stock Award or an award of Performance
Shares. All expenses of administering the Plan shall be borne by the Company.
The Committee, in its discretion, may delegate to one or more officers of
the Company or its Affiliates all or part of the Committee's authority and
duties with respect to grants and awards to individuals who are not subject to
the reporting and other provisions of Section 16 of the Securities Exchange
Act of 1934, as in effect from time to time. In the event of such delegation,
and as to matters encompassed by the delegation, references in the Plan to the
Committee shall be interpreted as a reference to the Committee's delegate or
delegates. The Committee may revoke or amend the terms of a delegation at any
time but such action shall not invalidate any prior actions of the Committee's
delegate or delegates that were consistent with the terms of the Plan.
ARTICLE IV
ELIGIBILITY
4.01 General. Any employee of the Company or an Affiliate (including a
corporation that becomes an Affiliate after the adoption of the Plan) is
eligible to participate in the Plan if the Committee, in its sole discretion,
determines that such person has contributed significantly or can be expected
to contribute significantly to the profits or growth of the Company or an
Affiliate. Directors of the Company or an Affiliate who are employees of the
Company or an Affiliate may be selected to participate in the Plan. A person
who is a member of the Committee may not be awarded Performance Shares or
granted Options, SARs or Stock Awards under the Plan.
4.02 Grants. The Committee will designate individuals to whom Performance
Shares are to be awarded and to whom Options, SARs and Stock Awards are to be
granted and will specify the number of shares of Common Stock subject to each
award or grant. An Option may be granted with or without a related SAR. An SAR
may be granted with or without a related Option. Each award of Performance
Shares and all Options, SARs and Stock Awards granted under the Plan shall be
evidenced by Agreements which shall be subject to applicable provisions of the
Plan and to such other provisions as the Committee may adopt. No Participant
may be granted incentive stock options or related SARs (under all incentive
stock option plans of the Company and its Affiliates) that are first
exercisable in any calendar year for stock having an aggregate Fair Market
Value (determined as of the date of grant) exceeding $100,000. The preceding
annual limitation shall not apply with respect to Options that are not
incentive stock options.
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ARTICLE V
STOCK SUBJECT TO PLAN
Upon the award of shares of Common Stock pursuant to a Stock Award, the
Company may issue authorized Common Stock. Upon the exercise of any Option or
SAR, the Company may deliver to the Participant (or the Participant's broker
if the Participant so directs) authorized Common Stock. The maximum aggregate
number of shares of Common Stock that may be issued under the Plan with
respect to Stock Awards, Options, SARs and Performance Shares granted on or
after October 13, 1999, is 2,076,684 shares, subject to adjustment as provided
in Article XII. If an Option or SAR is terminated, in whole or in part, for
any reason other than its exercise, the number of shares of Common Stock
allocated to the Option or SAR or portion thereof may be reallocated to other
Options, SARs, Stock Awards and awards of Performance Shares to be granted
under the Plan. If an award of Performance Shares is forfeited, in whole or in
part, without the issuance of a Stock Award, the number of shares of Common
Stock allocated to the award of Performance Shares or a portion thereof may be
reallocated to other Options, SARs, Stock Awards and Performance Shares to be
granted under the Plan.
ARTICLE VI
AWARDS
In accordance with the provisions of Article IV, the Committee will
designate each individual to whom an Option or SAR is to be granted and will
specify the number of shares of Common Stock covered by such grants.
Notwithstanding the preceding sentence, no Participant, who is an employee of
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the Company at the time of grant, may be granted any Option, SAR or other
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Stock Award, the value of which are based solely on an increase in the value
- ----------------------------------------------------------------------------
of the Shares after the date of grant, for more than 500,000 Shares (subject
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to adjustment as provided for in Article XII relating to stock splits, etc.),
- -----------------------------------------------------------------------------
in the aggregate, taking into account all such awards granted by the Company
- ----------------------------------------------------------------------------
pursuant to any of its stock compensation plans, in any calendar year period
- ----------------------------------------------------------------------------
beginning with the period commencing January 1, 2001 and ending December 31,
- ----------------------------------------------------------------------------
2001. The foregoing annual limitation specifically includes the grant of any
- ----------------------------------------------------------------------------
awards representing "qualified performance-based compensation" within the
- -------------------------------------------------------------------------
meaning of Section 162(m) of the Code. For purposes of this Article VI, an
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Option and Corresponding SAR shall be treated as a single grant.
- ----------------------------------------------------------------
The Committee may grant Restoration Options, commonly referred to as
- ----------------------------------------------------------------------
"reloads", separately or together with another Option, pursuant to which,
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subject to the terms and conditions established by the Committee and any
- ------------------------------------------------------------------------
applicable requirements of Rule 16b-3 or any other applicable law, the
- ----------------------------------------------------------------------
Participant would be granted a new Option when the payment of the exercise
- --------------------------------------------------------------------------
price of the option to which such Restoration Option relates is made by the
- ---------------------------------------------------------------------------
delivery or withholding of Shares pursuant to the relevant provisions of the
- ----------------------------------------------------------------------------
plan or agreement relating to such option, which new Option would be an Option
- ------------------------------------------------------------------------------
to purchase the number of Shares not exceeding the sum of (A) the number of
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Shares so provided as consideration upon the exercise of the previously
- -----------------------------------------------------------------------
granted option to which such Restoration Option relates, (B) the number of
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Shares, if any, tendered or withheld as payment of the amount to be withheld
- ----------------------------------------------------------------------------
under applicable tax laws in connection with the exercise of the option to
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which such Restoration Option relates, and (C) the number of previously owned
- -----------------------------------------------------------------------------
Shares, if any, tendered as payment for additional tax obligations of the
- -------------------------------------------------------------------------
Participant in connection with the exercise of the option to which such
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Restoration Option relates pursuant to the relevant provisions of the plan or
- -----------------------------------------------------------------------------
agreement relating to such option. Restoration Options may be granted with
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respect to Options previously granted under the Plan or any other stock option
- ------------------------------------------------------------------------------
plan of the Company, and may be granted in connection with any Option granted
- -----------------------------------------------------------------------------
under the Plan or any other stock option plan of the Company at the time of
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such grant.
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B-4
ARTICLE VII
OPTION EXERCISE PRICE
The purchase price per share of Common Stock purchasable under an Option
- --------------------------------------------------------------------------
shall be determined by the Committee; provided, however, that such purchase
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price shall not be less than one hundred percent (100%) of the Fair Market
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Value of a share of Common Stock on the date of grant of such Option.
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ARTICLE VIII
EXERCISE OF OPTIONS AND SARS
8.01 Maximum Option or SAR Period. The maximum period in which an Option or
SAR may be exercised shall be determined by the Committee on the date of
grant, except that no Option or SAR shall be exercisable after the expiration
of ten years from the date the Option or SAR was granted. The terms of any
Option or SAR may provide that it is exercisable for a period less than such
maximum period.
8.02 Nontransferability. Any Option or SAR granted under the Plan shall be
nontransferable except by will or by the laws of descent and distribution. In
the event of any such transfer, the Option and any Corresponding SAR that
relates to such Option must be transferred to the same person(s). During the
lifetime of the Participant to whom the Option or SAR is granted, the Option
or SAR may be exercised only by the Participant. No right or interest of a
Participant in any Option or SAR shall be liable for, or subject to, any lien,
obligation or liability of such Participant.
8.03 Employee Status. For purposes of determining the applicability of
Section 422 of the Code (relating to incentive stock options), or in the event
that the terms of any Option or SAR provide that it may be exercised only
during employment or within a specified period of time after termination of
employment, the Committee may decide to what extent leaves of absence for
governmental or military service, illness, temporary disability or other
reasons shall not be deemed interruptions of continuous employment.
8.04 Performance Objectives. The Committee may prescribe that an Option or
SAR is exercisable only to the extent that certain performance objectives are
attained. Such performance objectives may be based on the Company's, an
Affiliate's or an operating unit's return on equity, earnings per share, total
earnings, earnings growth, total sales, sales growth, return on capital or
return on assets or based on Fair Market Value. If the Committee, on the date
of the award, prescribes that an Option or SAR shall become exercisable only
upon the attainment of performance objectives stated with respect to one or
more of the foregoing criteria, the Option or SAR shall become exercisable
only to the extent the Committee certifies that such objectives have been
achieved.
ARTICLE IX
METHOD OF EXERCISE
9.01 Exercise. Subject to the provisions of Articles VII and VIII, an Option
or SAR may be exercised in whole at any time or in part from time to time at
such times and in compliance with such requirements as the Committee shall
determine; provided, however, that a Corresponding SAR that is related to an
incentive stock option may be exercised only to the extent that the related
Option is exercisable and when the Fair Market Value exceeds the option price
of the related Option. An Option or SAR granted under the Plan may be
exercised with respect to any number of whole shares less than the full number
of shares for which the Option or SAR could be exercised. A partial exercise
of an Option or SAR shall not affect the right to exercise the Option or SAR
from time to time in
B-5
accordance with the Plan and the applicable Agreement with respect to
remaining shares subject to the Option or related to the SAR. The exercise of
either an Option or Corresponding SAR shall result in the termination of the
other to the extent of the number of shares with respect to which the Option
or Corresponding SAR is exercised.
9.02 Payment. Unless otherwise provided by the Agreement, payment of the
Option price shall be made in cash or a cash equivalent acceptable to the
Committee. Payment of all or part of the Option price also may be made by
surrendering shares of Common Stock to the Company. If Common Stock is used to
pay all or part of the Option price, the sum of the cash and cash equivalent
and the Fair Market Value (determined as of the day preceding the date of
exercise) of the shares surrendered must not be less than the Option price of
the shares for which the Option is being exercised.
9.03 Installment Payment. If the Agreement so provides, and if the
Participant is employed by the Company or an Affiliate on the date the Option
is exercised, payment of all or part of the Option price may be made in
installments. In that event, the Participant shall pay not less than ten
percent (10%) of the Option price of the shares acquired upon the exercise of
an Option. If the Agreement so provides, payment of such portion of the Option
price may be made in cash, a cash equivalent or by surrendering shares of
Common Stock to the Company. If Common Stock is used to pay part of the Option
price, the amount deemed to be paid with Common Stock shall be the Fair Market
Value (determined as of the day preceding the date of exercise) of the shares
surrendered.
In the event that payment of all or part of the Option price is made in
installments, the Company shall lend the Participant an amount equal to not
more than ninety percent (90%) of the Option price of the shares acquired by
the exercise of the Option. This amount shall be evidenced by the
Participant's promissory note and shall be payable in not more than five equal
annual installments, unless the amount of the loan exceeds the maximum loan
value for the shares purchased, which value shall be established from time to
time by regulations of the Board of Governors of the Federal Reserve System.
In that event, the note shall be payable in equal quarterly installments over
a period of time not to exceed five years. The Committee, however, may vary
such terms and make such other provisions concerning the unpaid balance of
such purchase price in the case of hardship, subsequent termination of
employment, absence on military or government service or subsequent death of
the Participant as in its discretion are necessary or advisable in order to
protect the Company, promote the purposes of the Plan and comply with
regulations of the Board of Governors of the Federal Reserve System relating
to securities credit transactions.
The Participant shall pay interest on the unpaid balance at the minimum rate
necessary to avoid imputed interest or original issue discount under the Code.
All shares purchased with cash borrowed from the Company shall be pledged to
the Company as security for the repayment thereof. In the discretion of the
Committee, shares of stock may be released from such pledge proportionately as
payments on the note (together with interest) are made, provided the release
of such shares complies with the regulations of the Federal Reserve System
relating to securities credit transactions then applicable. While shares are
so pledged, and so long as there has been no default in the installment
payments, such shares shall remain registered in the name of the Participant,
and the Participant shall have the right to vote such shares and to receive
all dividends thereon.
9.04 Determination of Payment of Cash and/or Common Stock Upon Exercise of
SAR. At the Committee's discretion, the amount payable as a result of the
exercise of a SAR may be settled in cash, Common Stock, or a combination of
cash and Common Stock. No fractional shares shall be deliverable upon the
exercise of a SAR but a cash payment will be made in lieu thereof.
9.05 Shareholder Rights. No Participant shall have any rights as a
stockholder with respect to shares subject to an Option or SAR until the date
of exercise of such Option or SAR.
B-6
ARTICLE X
STOCK AWARDS
10.01 Awards. In accordance with the provisions of Article IV, the Committee
will designate each individual to whom a Stock Award is to be made and will
specify the number of shares of Common Stock covered by such award; provided,
however, that no Participant may receive Stock Awards in any calendar year for
more than 37,500 shares of Common Stock. The preceding sentence shall not
limit the issuance of Stock Awards in settlement of Performance Share awards.
10.02 Vesting. The Committee, on the date of the award, may, but shall not
be required to, prescribe that a Participant's rights in the Stock Award shall
be forfeitable or otherwise restricted for a period of time set forth in the
Agreement. By way of example and not of limitation, the restrictions may
postpone transferability of the shares until the attainment of performance
objectives prescribed by the Committee or may provide that the shares will be
forfeited if the Participant separates from the service of the Company and its
Affiliates before the expiration of a stated term.
10.03 Performance Objectives. In accordance with Section 10.02, the
Committee may prescribe that Stock Awards will become vested or transferable
or both based on objectives stated with respect to the Company's, an
Affiliate's or an operating unit's return on equity, earnings per share, total
earnings, earnings growth, total sales, sales growth, return on capital or
return on assets or based on Fair Market Value. If the Committee, on the date
of the award, prescribes that a Stock Award shall become nonforfeitable and
transferable only upon the attainment of performance objectives stated with
respect to one or more of the foregoing criteria, the shares subject to such
Stock Award shall become nonforfeitable and transferable only to the extent
the Committee certifies that such objectives have been achieved.
10.04. Shareholder Rights. In accordance with the terms of the Agreement, a
Participant will have all rights of a shareholder with respect to the Common
Stock covered by a Stock Award, including the right to receive dividends and
vote the shares; provided, however, that (a) a Participant may not sell,
transfer, pledge, exchange, hypothecate or otherwise dispose of Restricted
Stock, (b) the Company shall retain custody of the certificates evidencing
shares of Restricted Stock, and (c) the Participant shall deliver to the
Company a stock power, endorsed in blank, with respect to each award of
Restricted Stock. The limitations set forth in the preceding sentence shall
not apply after the Restricted Stock is, in accordance with the terms of the
applicable Agreement, transferable and no longer forfeitable.
ARTICLE XI
AWARD OF PERFORMANCE SHARES
11.01. Award. In accordance with the provisions of Article IV, the Committee
will designate individuals to whom an award of Performance Shares is to be
granted and will specify the number of shares of Common Stock covered by such
award; provided, however, that no Participant may receive Performance share
awards in any calendar year for more than 37,500 shares of Common Stock.
11.02. Earning the Award. The Committee, on the date of the grant of an
award, may prescribe that the Performance shares, or a portion thereof, will
be earned according to the terms of the applicable Agreement. By way of
example and not of limitation, the Agreement may specify that Performance
Shares shall be earned only upon the Participant's completion of a specified
period of employment with the Company or an Affiliate or upon the attainment
of stated performance objectives or goals. Such performance objectives or
goals may be based on the Company's, an Affiliate's or an operating unit's
return on equity, earnings per share, total earnings, earnings growth, total
sales, sales growth, return on capital, return on assets, or Fair Market
Value. If the Committee, on the date of the
B-7
award, prescribes that Performance Shares shall be earned only upon the
attainment of performance objectives stated with respect to one or more of the
foregoing criteria, such Performance Shares shall be earned only to the extent
the Committee certifies that such objectives have been achieved.
11.03. Settlement. In the Committee's discretion, the amount payable when an
award of Performance Shares is earned may be settled in cash, by the grant of
a Stock Award or a combination of cash and a Stock Award. A fractional share
shall not be deliverable when a Performance Share is settled, but a cash
payment will be made in lieu thereof.
11.04. Shareholder Rights. No Participant shall, as a result of receiving an
award of Performance Shares, have any rights as a shareholder until and to the
extent that the award of Performance Shares is earned and a Stock Award is
made. A Participant may not sell, transfer, pledge, exchange, hypothecate or
otherwise dispose of an award of Performance Shares or the right to receive
Common Stock thereunder other than by will or the laws of descent and
distribution. After and to the extent that an award of Performance Shares is
settled with a Stock Award, a Participant will have all the rights of a
shareholder as described in Plan section 11.03.
ARTICLE XII
ADJUSTMENT UPON CHANGE IN COMMON STOCK
The maximum number of shares that may be issued pursuant to Options, SARs
and Stock Awards under this Plan and the individual limits on the award of
Options, SARs, Stock Awards and Performance Shares in a calendar year shall be
proportionately adjusted, and the terms of outstanding awards of Performance
Shares, Options, SARs and Stock Awards shall be adjusted, as the Committee
shall determine to be equitably required in the event that the Company (1)
effects one or more stock dividends, stock split-ups, subdivisions or
consolidations of shares or (2) engages in a transaction to which Section 424
of the Code applies. Any determination made under this Article XI by the
Committee shall be final and conclusive.
The issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or for
labor or services, either upon direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or obligations of
the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
maximum number of shares that may be issued pursuant to Options, SARs and
Stock Awards under this Plan, the individual limits on the award of Options,
SARs, Stock Awards and Performance Shares in a calendar year or outstanding
awards of Performance Shares, Options, SARs or Stock Awards.
The Committee may award Performance Shares or grant Options, SARs and Stock
Awards in substitution for performance shares, stock awards, stock options,
stock appreciation rights or similar awards held by an individual who becomes
an employee of the Company or an Affiliate in connection with a transaction
described in the first paragraph of this Article XII. Notwithstanding any
provision of the Plan (other than the limitation of Article V), the terms of
such substituted award of Performance Shares, or grant of an Option, SAR or
Stock Award, shall be as the Committee, in its discretion, determines is
appropriate.
ARTICLE XIII
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No Option or SAR shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, and no payment
shall be made under this Plan except in
B-8
compliance with all applicable federal and state laws and regulations
(including, without limitation, withholding tax requirements), any listing
agreement to which the Company is a party, and the rules of all domestic stock
exchanges on which the Company's shares may be listed. The Company shall have
the right to rely on an opinion of its counsel as to such compliance. Any
share certificate issued to evidence Common Stock for which a Stock Award is
granted or for which an Option or SAR is exercised may bear such legends and
statements as the Committee may deem advisable to assure compliance with
federal and state laws and regulations. No Option or SAR shall be exercisable,
no Stock Award shall be granted, no Common Stock shall be issued, no
certificate for shares shall be delivered and no payment shall be made under
this Plan until the Company has obtained such consent or approval as the
Committee may deem advisable from regulatory bodies having jurisdiction over
such matters.
ARTICLE XIV
GENERAL PROVISIONS
14.01. Effect on Employment. Neither the adoption of this Plan, its
operation nor any documents describing or referring to this Plan (or any part
thereof) shall confer upon any individual any right to continue in the employ
or service of the Company or an Affiliate or in any way affect any right and
power of the Company or an Affiliate to terminate the employment or service of
any individual at any time with or without assigning a reason therefor.
14.02. Unfunded Plan. The Plan, insofar as it provides for awards or grants,
shall be unfunded, and the Company shall not be required to segregate any
assets that may at any time be represented by awards or grants under this
Plan. Any liability of the Company to any person with respect to any award or
grant under this Plan shall be based solely upon any contractual obligations
that may be created pursuant to this Plan. No such obligation of the Company
shall be deemed to be secured by any pledge of, or other encumbrance on, any
property of the Company.
14.03. Disposition of Stock. A Participant shall notify the Committee of any
sale or other disposition of Common Stock acquired pursuant to an Option that
was an incentive stock option if such sale or disposition occurs (a) within
two (2) years of the grant of an Option or (b) within one (1) year of the
issuance of the Common Stock to the Participant. Such notice shall be in
writing and directed to the Secretary of the Company.
14.04. Withholding Taxes. Each Participant shall be responsible for
satisfying any income and employment tax withholding obligations attributable
to participation in the Plan. Unless otherwise provided by the Agreement, any
such withholding tax obligations may be satisfied in cash (including from any
cash payable in settlement of an award of Performance Shares or an SAR) or a
cash equivalent acceptable to the Committee. Any withholding tax obligations
may also be satisfied by surrendering shares of Common Stock to the Company,
by withholding or reducing the number of shares of Common Stock otherwise
issuable to the Participant upon the exercise of an Option or SAR, the
settlement of an award of Performance Shares or the grant or vesting of a
Stock Award, or by any other method as may be approved by the Committee. If
shares of Common Stock are used to pay all or part of such withholding tax
obligation, the Fair Market Value of the shares surrendered, withheld or
reduced shall be determined as of the day preceding the date the Option or SAR
is exercised, the Restricted stock vests or the Performance Shares are earned,
as applicable.
14.05. Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
B-9
ARTICLE XV
AMENDMENT
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until shareholder approval is
obtained if (1) the amendment materially increases the aggregate number of
shares of Common Stock that may be issued under the Plan, (2) the amendment
materially changes the class of individuals eligible to become Participants or
(3) the amendment materially increases the benefits that may be provided under
the Plan. No amendment shall, without a Participant's consent, adversely
affect any rights of such Participant under any outstanding award of
Performance Shares or any Option, SAR or Stock Award outstanding at the time
such amendment is made.
ARTICLE XVI
DURATION OF PLAN
No Performance Shares may be awarded and no Option, SAR or Stock Award may
be granted under this Plan after March 6, 2006. Awards of Performance Shares
and Options, SARs and Stock Awards granted on or before that date shall remain
valid in accordance with their terms.
ARTICLE XVII
INCENTIVE AWARDS
17.01. Awards. The Committee shall designate Participants to whom Incentive
Awards shall be made. All Incentive Awards shall be determined exclusively by
the Committee under procedures established by the committee; provided,
however, that in any calendar year, no Participant may receive an Incentive
Award exceeding $1 million.
17.02. Earning an Award. The Committee, at the time an Incentive Award is
made, shall specify the terms and conditions that govern the award. Such terms
and conditions may include, by way of example and not of limitation,
requirements that the Participant complete a specified period of employment
with the Company or an Affiliate or that the Company, an Affiliate, an
operating unit or the Participant attain stated objectives or goals as a
prerequisite to payment under an Incentive Award. Such performance objectives
or goals may be based on one or more of the Company's, an Affiliate's or an
operating unit's gross, operating net earnings before or after taxes, return
on equity, return on capital, return on sales, return on assets or net assets,
earnings per share, cash flow per share, book value per share, earnings
growth, sales growth, volume growth, cash flow (as defined by the Committee),
Fair Market Value, share price or total shareholder return, market share,
economic value added, market value added, productivity, legal of expenses,
qualify, safety, customer satisfaction, total sales, total earnings or peer
group comparisons of any of the aforementioned objectives. Such goals may be
set for a one-year period or a longer period. If the Committee, on the date of
an award, prescribes that the Incentive Award shall be earned only upon the
attainment of performance objectives stated with respect to one or more of the
foregoing criteria, such Incentive Award shall be earned only to the extent
that the Committee certifies that such objectives or objectives have been
achieved. The Committee, at the time an Incentive Award is made, shall also
specify when amounts shall be payable under the Incentive Award and whether
amounts shall be payable in the event of the Participant's death, disability,
retirement or a change of control.
Except with respect to those Participants who are covered employees (as
determined under Code Section 162(m)(3)) and notwithstanding any other
provision of the Plan, the Committee, in its discretion may adjust the terms,
conditions or other requirements applicable to Incentive Awards and may
increase or decrease the amounts otherwise payable under an Incentive Award,
to reflect unusual or
B-10
extraordinary transactions or events. The Committee may make such adjustments
with respect to one or more Participants, with respect to all Participants as
to Incentive Awards made during a particular year or with respect to all
outstanding Incentive Awards.
17.03 Settlement. In the Committee's discretion, the amount payable when an
Incentive Award is earned may be settled in cash, by the issuance of Common
Stock or a combination of cash and Common Stock. A fractional share shall not
be deliverable when an Incentive Award is settled, but a cash payment shall be
made in lieu thereof.
17.04. Shareholder Rights. No Participants shall, as a result of receiving
an Incentive Award, have any rights as a shareholder of the Company until and
then only to the extent that the Incentive Award is earned and Common Stock is
distributed. A Participant may not sell, transfer, pledge, exchange,
hypothecate or otherwise dispose of an Incentive Award or the rights to
receive Common Stock thereunder other than by will or the laws of descent and
distribution. After and to the extent that an Incentive Award is settled in
Common Stock, a Participant will have all the rights of a shareholder of the
Company.
17.05. Administration. The Committee shall construe and administer the Plan,
including this Article XVII relating to Incentive Awards, as if the term
"Incentive Award" had been included in all Plan provisions of general
application in a manner similar to the term Performance Shares. For example,
shares of Common Stock issued pursuant to Incentive Awards shall reduce the
aggregate number of shares of Common Stock that may be issued under the Plan
in accordance with Article V. As provided in Article III, the Committee's
authority to interpret the Plan in this regard shall be absolute.
B-11
[SUPERVALU LOGO]
[RECYCLE LOGO]
Printed with soy
based inks on
recycled
paper containing at least 10% fibers from
paper recycled by
consumers.
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SUPERVALU INC.
JUNE 27, 2001 ANNUAL MEETING OF STOCKHOLDERS
This Proxy is solicited on behalf of the Board of Directors of the Company.
The stockholder(s) named on this card hereby appoint Michael W. Wright
and John P. Breedlove, and each of them, as their proxy, with power of
substitution to vote their shares of SUPERVALU common stock at the Annual
Meeting as directed below. The proxies may also vote, in their discretion, upon
all other matters that may properly come before the Meeting, or any adjournment
or adjournments thereof. The shares will be voted as if the stockholder(s) were
personally present at the meeting. All former proxies are revoked. If not
otherwise specified, shares will be voted as recommended by the Directors.
Please mark this Proxy as indicated on the reverse side to vote on any item.
(Continued and to be signed on other side.)
\/ Please detach here \/
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The Board of Directors Recommends a Vote FOR Items 1, 2, and 3
1. ELECTION OF DIRECTORS: 01 Charles M. Lillis 02 Jeffrey Noddle [_] Vote FOR [_] Vote WITHHELD
03 Steven S. Rogers 04 Michael W. Wright all nominees from all nominees
(Instructions: To withhold authority to vote for any indicated nominee, ________________________________________
write the number(s) of the nominee(s) in the box provided to the right.) ________________________________________
2. AMENDMENT TO SUPERVALU/RICHFOOD STOCK INCENTIVE PLAN [_] For [_] Against [_] Abstain
3. APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS [_] For [_] Against [_] Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box [_] Indicate changes below: Date_________________________
----------------------------------------
----------------------------------------
Signature(s) in Box
NOTE: Please date and sign exactly as
name appears, indicating, if appropriate,
official position or capacity. If co-
owners, both should sign.
SUPERVALU INC.
June 27, 2001 Annual Meeting of Stockholders
The Minneapolis Convention Center
1301 Second Avenue South
Minneapolis, Minnesota 55403
The Annual Meeting will begin at 10:30 a.m., local time,
at The Minneapolis Convention Center.
Refreshments will be available before and after the Annual Meeting.
[MINNEAPOLIS MAP APPEARS HERE]
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SUPERVALU INC.
JUNE 27, 2001 ANNUAL MEETING OF STOCKHOLDERS
This Proxy is solicited on behalf of the Board of Directors of the Company.
As the stockholder(s) named on this card, you hereby appoint Michael W.
Wright and John P. Breedlove, and each of them, as your proxy, with power of
substitution, to vote your shares of SUPERVALU common stock at the Annual
Meeting as directed below. These proxies may also vote, in their discretion,
upon all other matters that may properly come before the Annual Meeting, or any
adjournment or adjournments thereof. Your shares will be voted as if you were
personally present at the Annual Meeting. All former proxies are revoked. If not
otherwise specified, your shares will be voted as recommended by the Directors.
o Voting Instructions. You may vote by mail, telephone or Internet. Please
follow the instructions on the reverse side of this card.
o SUPERVALU Employees. If you are a current or former employee of SUPERVALU
and own shares of SUPERVALU common stock through a SUPERVALU employee
benefit plan, your share ownership as of May 1, 2001 is shown on this card.
Your vote will provide voting instructions to the trustees of the plans. If
no instructions are given, the trustees will vote your shares pursuant to
the terms of the plans.
o Householding. If you share the same address and last name as other
SUPERVALU stockholders, only one copy of SUPERVALU's Annual Report and
Proxy Statement has been mailed to your address. Proxy cards for each
SUPERVALU stockholder residing at your address have been mailed under
separate cover.
Please mark this Proxy as indicated on the reverse side to vote on any item.
(Continued and to be signed on other side.)
------------------------
There are three ways to vote your proxy COMPANY #
CONTROL #
Please follow the instructions below. ------------------------
We encourage you to take advantage of these convenient ways to vote your shares
of SUPERVALU common stock for matters to be considered at SUPERVALU's 2001
Annual Meeting of Stockholders. Your telephone or Internet vote authorizes the
named proxies to vote your shares in the same manner as if you marked, dated,
signed and returned your proxy card.
1) VOTE BY PHONE ---- TOLL FREE ---- 1-800-240-6326 ---- QUICK *** EASY ***
IMMEDIATE
o Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days
a week.
o You will be prompted to enter the 3-digit Company Number and 7-digit
Control Number located above.
o Follow the simple instructions the Voice provides you.
o Please DO NOT hang up until you have been prompted and replied
regarding your attendance at the Annual Meeting.
2) VOTE BY INTERNET ---- http://www.eproxy.com/svu/ ---- QUICK *** EASY
*** IMMEDIATE
o Use the Internet to vote your proxy 24 hours a day, 7 days a week.
o You will be prompted to enter the 3-digit Company Number and 7-digit
Control Number located above to obtain your records and create an
electronic ballot.
o If you choose to vote by internet, please indicate that you will
attend when prompted.
Please note that in addition to voting, if you are a registered
stockholder, you may consent to receiving future copies of the Annual
Report and Proxy Statement via the Internet by going to the website
http://www.econsent.com/svu/ and following the prompts.
3) VOTE BY MAIL
o Mark, sign and date your proxy card, and return it in the postage-paid
envelope provided or mail it to SUPERVALU INC., c/o Shareowner
Services, P.O. Box 64873, St. Paul, MN 55164-9397.
NOTE: The deadline for electronic voting by telephone or Internet is
11:59 p.m. (CDT), Monday, June 25, 2001.
IF YOU VOTE BY TELEPHONE OR INTERNET, DO NOT MAIL BACK YOUR PROXY CARD.
THANK YOU FOR VOTING
\/ \/
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Please detach here
The Board of Directors Recommends a Vote FOR Items 1, 2 and 3
ITEM 1. ELECTION OF DIRECTORS: 01 Charles M. Lillis 02 Jeffrey Noddle [_] Vote FOR [_] Vote WITHHELD
03 Steven S. Rogers 04 Michael W. Wright all nominees from all nominees
(Instructions: To withhold authority to vote for any indicated nominee, __________________________________________
write the number(s) of the nominee(s) in the box provided to the right.) __________________________________________
ITEM 2. AMENDMENT TO SUPERVALU/RICHFOOD STOCK INCENTIVE PLAN [_] For [_] Against [_] Abstain
ITEM 3. APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS [_] For [_] Against [_] Abstain
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR EACH
PROPOSAL. IF YOU VOTE BY TELEPHONE OR INTERNET AS INSTRUCTED ABOVE, THERE IS NO NEED TO MAIL BACK YOUR PROXY CARD.
Address Change? Mark Box [_] Indicate changes below: Date____________________________
I plan to attend the meeting [_] __________________________________________
__________________________________________
Signature(s) in Box
Please sign exactly as your name(s) appear
on the Proxy. If held in joint tenancy, all
persons must sign. Trustees, administrators,
etc., should include title and authority.
Corporations should provide full name of
corporation and title of authorized officer
signing the Proxy.
[SUPERVALU LOGO]
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Notice of Annual Meeting of Stockholders
to be Held Wednesday, June 27, 2001
The Annual Meeting of Stockholders of SUPERVALU INC. will be held on
Wednesday, June 27, 2001, at 10:30 a.m., local time, at The Minneapolis
Convention Center, 1301 Second Avenue South, Minneapolis, Minnesota 55403 for
the following purposes:
1) to elect four directors;
2) to vote on an amendment to SUPERVALU/Richfood Stock Incentive Plan;
3) to ratify the appointment of KPMG LLP as independent auditors; and
4) to transact such other business as may properly come before the meeting.
Record Date
The Board of Directors has fixed the close of business on May 1, 2001, as
the record date for the purpose of determining stockholders who are entitled
to notice of, and to vote at the meeting. Holders of Common Stock and
Preferred Stock 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 or
follow the instructions on your proxy card to vote and to confirm your
attendance by telephone or via the Internet. Please note that this year's
meeting will be held at the Minneapolis Convention Center. Parking is
available for stockholders in the Plaza municipal parking ramp located across
the street from The Minneapolis Convention Center and the Orchestra Hall ramp.
A map showing the location of The Minneapolis Convention Center and designated
parking areas is included on your proxy card. If you need special assistance
because of a disability, please contact me at P.O. Box 990, Minneapolis,
Minnesota 55440.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ John P. Breedlove
John P. Breedlove
Corporate Secretary
May 14, 2001
PLEASE SEE THE REVERSE SIDE OF THIS NOTICE FOR IMPORTANT INFORMATION REGARDING
THE DELIVERY OF SUPERVALU INC.'S 2001 ANNUAL REPORT AND PROXY STATEMENT TO
CERTAIN STOCKHOLDERS ELECTRONICALLY AND TO HOUSEHOLDED ACCOUNTS, AND FOR
VOTING INSTRUCTIONS.
DEAR SUPERVALU STOCKHOLDER:
Enclosed is a proxy card with voting instructions for the 2001 Annual
Meeting of Stockholders. If you are a registered stockholder who has consented
to electronic delivery of the Company's proxy materials or an employee owning
shares through one of the Company's benefit plans, please follow the
instructions set forth below to access the Annual Report and Proxy Statement
electronically. You may print or download a copy of these materials to save if
desired. If you are a stockholder sharing the same address and last name as
other stockholders, please see the information below under the caption
"Householding."
Electronic Access to Annual Report and Proxy Statement:
Registered stockholders: Thank you for consenting to access the Annual
Report and Proxy Statement over the Internet instead of receiving papers
copies in the mail. Beginning today you may access the Annual Report and
Proxy Statement on the SUPERVALU website at http://www.supervalu.com under
"Financial Information."
Employee stockholders with Lotus Notes: If you own SUPERVALU Common Stock
through an employee benefit plan and have access to Lotus Notes, beginning
today you may access the Annual Report and Proxy Statement on the SUPERVALU
Bulletin Board under "Company Information". Please open the e-mail sent to
all Lotus Notes Users and click on the link to the Bulletin Board. Follow
the instructions on the Bulletin Board to open the Annual Report or Proxy
Statement. If you have Internet access you may also access the Annual
Report and Proxy Statement on the SUPERVALU website at
http://www.supervalu.com under "Financial Information."
Householding:
If you share the same address and last name as other stockholders of the
Company, only one copy of the Annual Report and Proxy Statement has been
mailed to your address. Proxy cards for each SUPERVALU stockholder residing at
your address have been mailed under separate cover unless one or more of such
stockholders have objected to Householding. Enclosed is a proxy card and
voting instructions. Please contact the Corporate Secretary's Office at the
address below if you have not received all of the proxy cards for your
household by June 1, 2001.
Voting Instructions:
Please review the Annual Report and Proxy Statement carefully before voting
on the matters set forth in the Notice of Annual Meeting. You may vote by
mail, telephone or Internet. Please follow the instructions on the proxy card.
Stockholders are responsible for usage charges from Internet service providers
and telephone companies.
Paper Copies:
You may request paper copies of the Annual Report or Proxy Statement by
contacting us as follows:
SUPERVALU INC.
P.O. Box 990
Minneapolis, Minnesota 55440
Attention: Office of the Corporate Secretary
Telephone: (952) 828-4963
E-mail: Barbara.Buisman@supervalu.com
Please include your full name and address with any correspondence.
YOUR VOTE IS IMPORTANT! PLEASE TAKE A MOMENT TO REVIEW
THE PROXY MATERIALS AND VOTE YOUR SHARES AS SOON AS POSSIBLE