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
Fred Meyer, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
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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
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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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<PAGE>
FRED MEYER, INC.
Notice of Annual Meeting of Stockholders, June 23, 1998
To the Stockholders of Fred Meyer, Inc.
The Annual Meeting of the stockholders of Fred Meyer, Inc., a Delaware
corporation, will be held on Tuesday, June 23, 1998 at 1:00 p.m., Pacific Time,
at The DoubleTree Inn, formerly Red Lion Inn (East), Jantzen Beach, 909 N.
Hayden Island Drive, Portland, Oregon for the following purposes:
1. to elect five directors for a three year term; and
2. to transact such other business as may properly come before the
meeting and at any adjournment thereof.
Only stockholders of record at the close of business on Monday, April
27, 1998 will be entitled to vote at the Annual Meeting.
You are respectfully requested to date and sign the enclosed proxy and
return it in the postage prepaid envelope enclosed for that purpose. You may
attend the meeting in person even though you have sent in your proxy, since
retention of the proxy is not necessary for admission to or identification at
the meeting.
By Order of the Board of Directors
Roger A. Cooke
Senior Vice President, General Counsel
and Secretary
Portland, Oregon
May 11, 1998
<PAGE>
PROXY STATEMENT
The mailing address of the principal executive offices of the Company
is P.O. Box 42121, Portland, Oregon 97242. The approximate date this proxy
statement and the accompanying proxy form are first being sent to stockholders
is May 15, 1998.
Upon written request to Roger A. Cooke, Senior Vice President, General
Counsel and Secretary, any person whose proxy is solicited by this proxy
statement will be provided without charge a copy of the Company's Annual Report
on Form 10-K.
SOLICITATION AND REVOCABILITY OF PROXY
The enclosed proxy is solicited on behalf of the Board of Directors of
Fred Meyer, Inc., a Delaware corporation (the "Company"), for use at the Annual
Meeting of Stockholders to be held on June 23, 1998 and at any adjournment
thereof. The Company is the successor to Fred Meyer Stores, Inc. (formerly Fred
Meyer, Inc.) and Smith's Food & Drug Centers, Inc. Information in this proxy
statement includes the combined information of the Company and Fred Meyer
Stores, Inc. The Company will bear the cost of preparing and mailing the proxy,
proxy statement and any other material solicited by use of the mails. Officers
and employees of the Company may also solicit proxies by telephone or personal
contact. Copies of solicitation materials will be furnished to fiduciaries,
custodians and brokerage houses for forwarding to beneficial owners of the stock
held in their names.
Any person giving a proxy in the form accompanying this proxy
statement has the power to revoke it at any time before its exercise. The proxy
may be revoked by filing with the Company, attention Roger A. Cooke, Senior Vice
President, General Counsel and Secretary, an instrument of revocation or a duly
executed proxy bearing a later date. The proxy may also be revoked by
affirmatively electing to vote in person while in attendance at the meeting.
However, a stockholder who attends the meeting need not revoke his proxy and
vote in person unless he wishes to do so. All valid, unrevoked proxies will be
voted at the Annual Meeting.
<PAGE>
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
The Common Stock is the only authorized voting security of the Company
currently outstanding. The record date for determining holders of Common Stock
entitled to vote at the Annual Meeting is April 27, 1998. On that date there
were 147,898,578 shares of Common Stock outstanding entitled to one vote per
share. The Common Stock does not have cumulative voting rights.
The following table shows ownership of shares of Common Stock of the
Company on March 15, 1998, except as noted, by the only person who, to the
knowledge of the Board of Directors, beneficially owned more than 5% of the
Common Stock, by certain executive officers of the Company and by all executive
officers and directors as a group:
<TABLE>
<CAPTION>
Number of Approximate
Name Shares(1) Percent(2)
- ---- ------------- -----------
<S> <C> <C>
Ronald W. Burkle 14,528,864(3) 9.3%
1000 Santa Monica Boulevard, Fifth Floor
Los Angeles, California 90067
Robert G. Miller 872,204(4) *
Mary F. Sammons 129,090(5) *
Kenneth Thrasher 178,172(4)(6) *
Sammy K. Duncan 158,926(4) *
David R. Jessick 80,000(4) *
All directors and executive officers as a group (25 individuals) 33,598,592(7) 21.1%
- -------------------
* Less than 1%
(1) Shares held directly with sole voting and sole investment power
unless otherwise indicated.
(2) Percentages based on 152,818,580 shares outstanding, which was
the total number of shares outstanding as of March 15, 1998,
including all shares to be issued in the acquisitions of Smith's
Food & Drug Centers, Inc., Quality Food Centers, Inc. and Food 4
Less Holdings, Inc.
(3) Includes 13,701,543 shares owned by affiliates of Mr. Burkle as
follows: (a) The Yucaipa Companies -- 4,856,211 (including a
warrant to purchase 3,869,366 shares); (b) Yucaipa Arizona
Partners, L.P. -- 574,522; (c) Yucaipa Smitty's Partners, L.P. --
631,400; (d) Yucaipa Smitty's Partners II, L.P. -- 287,264; (e)
Yucaipa SSV Partners, L.P. -- 2,744,595; (f) F4L Equity Partners,
L.P. -- 3,798,526; (g) FFL Partners -- 365,429; (h) Fred
Meyer/Smith's Foundation -- 28,165; (i) Yucaipa Capital Fund --
335,712; and (j) Yucaipa/F4L Partners -- 79,719. Mr. Burkle
disclaims beneficial ownership as to these shares (except to the
extent of his pecuniary interest therein). Mr. Burkle has the
sole power to vote or to direct the vote, and to dispose or
direct the disposition of shares beneficially held by him. The
Yucaipa Companies is the record holder of a currently exercisable
warrant entitling it to purchase up to 3,869,366 shares of Common
Stock. See "Certain Relationships and Related Transactions."
2
<PAGE>
(4) Includes 722,418, 102,860, 150,000 and 68,848 shares of Mr.
Miller, Mr. Thrasher, Mr. Duncan and Mr. Jessick, respectively,
subject to options that are currently exercisable or become
exercisable within 60 days of the date of this table.
(5) Includes 616 shares held by Ms. Sammons' spouse and 2,426 shares
held by her son. Beneficial ownership as to such shares is
disclaimed.
(6) Includes 30,000 shares held by Mr. Thrasher's spouse and 2,200
shares held by his sons. Beneficial ownership as to such shares
is disclaimed.
(7) Includes 6,137,138 shares subject to options that are currently
exercisable or become exercisable within 60 days of the date of
this table. Includes 24,597,796 shares for which beneficial
ownership is disclaimed.
</TABLE>
ELECTION OF DIRECTORS
The Board of Directors currently consists of sixteen members. The
Board is divided into three classes pursuant to the Company's Bylaws. One class
is elected each year for a three-year term. The term of office of Class A
directors expires at the 1998 Annual Meeting; the term of office of Class B
directors expires at the 1999 Annual Meeting; and the term of office of Class C
directors expires at the 2000 Annual Meeting (and in all cases, the terms of the
directors will continue until their respective successors have been duly
elected).
Action will be taken at the 1998 Annual Meeting to elect five Class A
directors to serve until the 2001 Annual Meeting of Stockholders. These
nominees, as well as the Class B and Class C directors who are continuing to
serve, are listed below, together with certain information about each of them.
The nominees for election at the 1998 Annual Meeting are Vivian A. Bull, Carlton
J. Jenkins, John G. King, Steven R. Rogel and Stuart M. Sloan.
<TABLE>
<CAPTION>
Number of
Name and Year Principal Occupation or Shares Held on Approximate
Elected to Board Position with Company Age March 15, 1998(1) Percent
- ---------------- --------------------- --- ----------------- -------
Class A
(Term Ending 2001)
- ------------------
<S> <C> <C> <C> <C>
Vivian A. Bull President, Linfield College 63 4,394 *
(1996)
Carlton J. Jenkins Chairman, President and Chief 42 ---- *
(1998) Executive Officer of Founders
National Bank of Los Angeles
John G. King President and Chief Executive Officer 59 ---- *
(1997) of Legacy Health System
Steven R. Rogel President and Chief Executive Officer 55 5,394 *
(1996) of Weyerhaeuser Company
Stuart M. Sloan Former Chairman of the Board of 54 3,434,975 (2) 2.2 %
(1998) Quality Food Centers, Inc.; Principal
of Sloan Capital Companies
3
<PAGE>
Number of
Name and Year Principal Occupation or Shares Held on Approximate
Elected to Board Position with Company Age March 15, 1998(1) Percent
- ---------------- --------------------- --- ----------------- -------
Class B
(Term Ending 1999)
- ------------------
James J. Curran Retired Chairman of the Board and 58 7,796 (3) *
(1996) Chief Executive Officer of First
Interstate Bank, Northwest Region
Bruce Karatz Chairman of the Board, President and 52 1,951(10) *
(1997) Chief Executive Officer of Kaufman &
Broad Home Corporation
Jeffrey P. Smith Former Chairman of the Board of 48 3,217,998 (4) 2.1 %
(1997) Smith's Food & Drug Centers, Inc.
Samuel Zell Chairman of Equity Group 56 7,569,537 (5) 4.9 %
(1998) Investments, Inc.
Bertram R. Zweig Administrative Partner, Jones, Day, 63 1,284(10) *
(1998) Reavis & Pogue
Class C
(Term Ending 2000)
- ------------------
Robert D. Beyer Group Managing Director, Trust 38 365,088 (6) *
(1998) Company of the West
Ronald W. Burkle Chairman of the Board of the 45 14,528,864 (7) 9.3%
(1997) Company; Managing General Partner
of The Yucaipa Companies
A. M. Gleason Retired Chief Executive Officer of 68 53,358 (8) *
(1992) PacifiCorp
Roger S. Meier President, AMCO, Inc. 72 44,558 (9) *
(1985)
Robert G. Miller President and Chief Executive Officer 54 872,204 (7) *
(1991) of the Company
Marc H. Rapaport Chairman and Lead Investor of LA 41 40,386 *
(1998) Soccer Partners L.P.
- -----------------------
* Less than 1%.
(1) Shares held directly with sole voting and sole investment power
unless otherwise indicated.
(2) Includes 586,910 shares which are subject to immediately
exercisable options.
(3) Includes 2,000 shares held in a family trust as to which
beneficial ownership is disclaimed.
4
<PAGE>
(4) Includes 257,262 shares held in trust for members of Mr. Smith's
immediate family, 411,002 shares held by the Dee Glen Smith
Marital Trust and 1,176,740 shares held in trust for Mr. Smith's
children. Beneficial ownership is disclaimed as to such shares.
(5) Includes 7,552,500 shares held by Zell/Chilmark Fund, L.P. By
virtue of his position with the entities that indirectly control
the general partner of Zell/Chilmark, Mr. Zell may be deemed to
beneficially own such shares. Mr. Zell disclaims such beneficial
ownership.
(6) Shares are held in various investment accounts over which Mr.
Beyer has shared voting and investment powers. Beneficial
ownership is disclaimed as to such shares.
(7) See "Voting Securities and Principal Stockholders."
(8) Includes 2,600 shares owned by Mr. Gleason's spouse as to which
beneficial ownership is disclaimed.
(9) Includes 14,000 shares owned by Mr. Meier's spouse and 5,000
shares owned by a family partnership of which Mr. Meier is
general partner. Beneficial ownership is disclaimed as to such
shares.
(10) Shares held in the Fred Meyer, Inc. Non-Employee Directors'
Deferred Compensation Plan.
</TABLE>
Robert D. Beyer has been the Group Managing Director at Trust Company
of the West, an investment management firm, since 1995. From 1991 to 1995, Mr.
Beyer was the co-Chief Executive Officer of Crescent Capital Corporation, an
investment management firm that he co-founded in 1991. Mr. Beyer is also a
member of the Board of Directors of American Restaurant Group, Inc.
Vivian A. Bull has been President of Linfield College since August
1992. Prior to that time she was in the Department of Economics at Drew
University from 1960 to 1992. Dr. Bull is a former Director of Chemical Bank in
New Jersey.
Ronald W. Burkle has been Chairman of the Board of the Company since
September 1997. He is the Managing General Partner of The Yucaipa Companies, a
private investment group specializing in the acquisition and management of
supermarket chains, which he founded in 1986. Until its merger with the Company
in March 1998, Mr. Burkle served as director and Chairman of the Board of Food 4
Less Holdings, Inc. ("Food 4 Less") and its subsidiary, Ralphs Grocery Company
("Ralphs"). From May 1996 to September 1997, Mr. Burkle was a director and the
Chief Executive Officer of Smith's Food & Drug Centers, Inc., now a subsidiary
of the Company. Mr. Burkle also serves as Chairman of the Board of Dominick's
Supermarkets, Inc. and as a director of Kaufman & Broad Home Corporation.
James J. Curran retired from First Interstate Bancorp in April 1996.
At the time of his retirement he was a member of the Executive Operating
Committee of First Interstate Bancorp and Chairman and Chief Executive Officer
of First Interstate Bank, Northwest Region. Mr. Curran is a director of Coeur
d'Alene Mines Corp.
A. M. Gleason retired from PacifiCorp, a diversified public utility,
on May 1, 1995. At the time of his retirement he was Vice Chairman of
PacifiCorp, having previously served as its President and Chief Executive
Officer. Prior to that time he served as Chairman and Chief Executive Officer of
Pacific Telecom, Inc., a former PacifiCorp subsidiary. Mr. Gleason is a director
of Tektronix, Inc. and Comdial Corporation and President of the Port of
Portland.
5
<PAGE>
Carlton J. Jenkins has served as Chairman, President and Chief
Executive Officer of Founders National Bank of Los Angeles since January 1991.
Bruce Karatz has been the Chairman of the Board of Kaufman & Broad
Home Corporation since July 1993 and its President, Chief Executive Officer and
a director since 1986. Mr. Karatz is also a director of Honeywell, Inc. and
National Golf Properties, Inc. and a Trustee of the National Park Foundation and
the RAND Corporation.
John G. King has been President and Chief Executive Officer of Legacy
Health System, a health care provider, since 1991 and has over 30 years
experience in hospital and health care administration.
Roger S. Meier has been President and Chief Executive Officer of AMCO,
Inc., a privately owned investment enterprise, for more than twenty years.
During that time Mr. Meier was Chairman of the State of Oregon Investment
Council, a member of the Board of Directors of Red Lion Inns, Ltd. and a
Director of Key Bank of Oregon. He is trustee of Acorn Fund, Acorn International
and Acorn USA. He is also an Advisory Board Member of Key Bank of Oregon and
Chairman of the Investment Committee for Legacy Health System.
Robert G. Miller became Chief Executive Officer of the Company in
August 1991. Prior to that time he was employed by Albertson's Inc., where his
most recent positions were Executive Vice President of Retail Operations from
1989 to 1991 and Senior Vice President and Regional Manager from 1985 to 1989.
Mr. Miller is a director of PacifiCorp, Pathmark Stores, Inc. and Supermarkets
General Holdings Corp.
Marc H. Rapaport has been the Chairman and Lead Investor of LA Soccer
Partners L.P., the operating group of the Los Angeles Galaxy of Major League
Soccer, since October 1994. From 1990 to 1994, Mr. Rapaport served as Executive
Vice President and Director of Corporate Finance of the Capital Division (which
he co-founded in 1990) of Jefferies & Company, Inc. Mr. Rapaport is a member of
the Board of Governors of Cedars-Sinai Hospital.
Steven R. Rogel has been President and Chief Executive Officer and a
director of Weyerhaeuser since December 1997. Prior to that time he was Chief
Executive Officer, President and a director of Willamette Industries, Inc. He
served as Chief Operating Officer of Willamette Industries, Inc. until October
1995 and, prior to that time, as an executive and group vice president for more
than five years. He serves on various boards, including the American Forest &
Paper Association, World Forestry Center, National Council for Air and Stream
Improvement and the Cascade Pacific Council Boy Scouts of America.
Stuart M. Sloan has been the owner of Sloan Capital Companies, a
private investment company, since 1984. He served as the Chairman of the Board
of Quality Food Centers, Inc. ("QFC") from October 1986 until QFC merged with
the Company in March 1998. Mr. Sloan currently serves on the Board of Directors
of TeleTech Holdings, Inc. and Anixter International, Inc.
Jeffrey P. Smith was Chairman of the Board of Smith's Food & Drug
Centers, Inc. ("Smith's") from 1988 until Smith's became a subsidiary of the
Company in September 1997. He served as Chief Executive Officer of Smith's from
1988 until May 1996 and as Chief Operating Officer and President of Smith's from
1984 to 1988.
Samuel Zell has been Chairman of the Board of Directors of Equity
Group Investments, Inc., a private investment company, since 1986. Mr. Zell is
an indirect general partner of Zell/Chilmark Fund, LP, a private investment
firm, which was the beneficial owner of approximately 17% of QFC's common stock
prior to its merger with the Company in March 1998. Mr. Zell is Chairman of the
Board of Directors of American Classic Voyages Co., Anixter International, Inc.,
Jacor Communications, Inc. and Manufactured Home Communities, Inc. He is
Chairman of the Board of Trustees of Capital Trust, Equity Office Properties
Trust
6
<PAGE>
and Equity Residential Properties Trust. He is also a director of Ramco Energy
PLC, TeleTech Holdings, Inc. and Chart House Enterprises, Inc.
Bertram R. Zweig has been a partner in the Los Angeles office of
Jones, Day, Reavis & Pogue since 1995, and prior to that, from 1962 to 1978.
Between August 1992 and June 1995, Mr. Zweig was a partner with the law firm of
Graham and James, and from January 1988 to July 1992 he was a partner with the
law firm of Stroock & Stroock & Lavan. He is a member of the Board of Directors
of E* Capital Corporation, the parent of Wedbush Morgan Securities, Inc., a
regional investment banking firm in Los Angeles. Mr. Zweig is also a member of
the Board of Directors of Aquatic Water Systems Incorporated and Nature Coast
Industries, Inc.
The Board of Directors met eleven times during the last fiscal year.
Each director attended at least 81% of the aggregate number of meetings of the
Board of Directors and any committee of which the director was a member for the
period during which such director served.
The current standing committees of the Board of Directors are as
follows:
o The Board of Directors has a Nominating Committee consisting of Roger
S. Meier (Chairman), Vivian A. Bull and Bruce Karatz. There were no
meetings of the Nominating Committee held in 1997. The Nominating
Committee seeks qualified candidates to serve on the Company's Board
of Directors and recommends them for the Board's consideration. This
Committee assesses the Board's capacity to fulfill requirements of the
Board's policy with respect to director qualifications, resources and
experience, and performance and contributions. The Committee also
reviews the Board's policy with respect to director qualifications,
Board membership requirements, and directors' compensation and advises
the Board on any recommendations for change. The Nominating Committee
will consider the names and qualifications of candidates for the Board
of Directors submitted by stockholders. Stockholders who wish to
submit names to the Committee for consideration should do so in
writing addressed to Roger A. Cooke, Secretary, Fred Meyer, Inc., P.O.
Box 42121, Portland, Oregon 97242.
o The Board of Directors has an Audit Committee consisting of A. M.
Gleason (Chairman) and James J. Curran. The Audit Committee met four
times during 1997. It reviews the planned scope and results of the
annual audit, confers with the independent auditors and reviews their
recommendations with respect to accounting, internal controls and
other matters and confers with Company finance, accounting and
internal audit personnel.
o The Board of Directors has a Compensation Committee consisting of
Ronald W. Burkle (Chairman), A. M. Gleason, Steven R. Rogel and
Jeffrey P. Smith. It met six times during 1997. The Board of Directors
has delegated the authority to administer the Company's stock
incentive plans and other compensation matters to the Compensation
Committee.
Directors' Compensation. Directors who are not employees of the
Company receive an annual fee of $40,000 and can elect to participate in the
Non-Employee Directors' Deferred Compensation Plan. Such directors also receive
a fee of $1,000 per board or committee meeting attended.
Under the Non-Employee Directors' Deferred Compensation Plan (the
"Directors' Plan"), directors who are not employees may elect to have all or
part of their annual cash retainers and meeting fees credited to a deferred
compensation account. Participants may elect to receive their deferred
compensation in the form of cash or shares of the Company's Common Stock. If a
participant elects to receive all or part of his or her deferred compensation in
the form of the Company's Common Stock, the amount of compensation credited
quarterly to his or her account shall be the number of shares of the Company's
Common Stock which can be purchased with 110% of the compensation so deferred at
the median of the high and low trading prices
7
<PAGE>
of the Company's Common Stock as quoted on the New York Stock Exchange Composite
Transactions on such date. Each participant's deferral account is increased
quarterly prior to distribution (i) to reflect interest on the amount obtained
by the cash deferral account balance at an average prime rate, and (ii) to
reflect any dividends paid on Common Stock in the participant's deferral
account. With respect to deferred amounts, a participant may specify (i) the
date of the event on which payment of such deferred compensation is to commence
(which, other than death, disability or termination may not be earlier than the
later of two years from the date of the deferral election or termination of
service as a director) and (ii) whether such payment is to be paid out in a
single lump sum or in approximately equal annual installments over a period not
to exceed 15 years. The Company will annually issue stock to the Fred Meyer
Deferred Compensation Trust to cover all outstanding stock credits under the
Directors' Plan.
The shares represented by each proxy will be voted with respect to the
election of the nominees in accordance with the instructions specified in the
proxy form. If no instructions are given, proxies will be voted for the election
of the nominees and in accordance with this proxy statement on any other
business that may properly come before the meeting. If for some unforeseen
reason any of the nominees should not be available as a candidate for director,
the number of directors constituting the Board of Directors may be reduced prior
to the meeting or the proxies may be voted for such other candidate or
candidates as may be nominated by the Board of Directors, in accordance with the
authority conferred in the proxy.
Directors are elected by a plurality of the votes cast by holders of
the shares entitled to vote at the Annual Meeting if a quorum is present.
Abstentions are counted for purposes of determining whether a quorum exists at
the Annual Meeting, but have no effect in the determination of whether a
plurality exists with respect to a given nominee.
8
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth compensation paid to the Chief
Executive Officer of the Company and the other four most highly compensated
executive officers of the Company for services in all capacities to the Company
and its subsidiaries during each of the last three fiscal years.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
----------------------------------- ------------------------------------
Awards Payouts
----------------------- ---------
Securities Long-Term
Other Restricted Underlying Incentive
Name and Annual Stock Options Plan All Other
Principal Position Year Salary(1) Bonus(1) Compensation Awards (# of Shares) Payouts Compensation (4)
- ------------------ ---- --------- -------- ------------ ----------- ------------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert G. Miller 1997 $731,923 $274,377 -- $382,742(2) 500,000 -- $79,787
President and Chief 1996 581,923 196,329 -- 49,046(3) 150,000 -- 59,593
Executive Officer 1995 597,115 86,250 -- -- -- $8,072 56,026
Mary F. Sammons 1997 301,154 103,021 -- 156,940(2) 150,000 -- 53,304
President, Fred 1996 287,308 56,422 -- 14,066(3) -- -- 41,398
Meyer Stores 1995 281,538 24,438 -- -- 50,000 7,334 39,905
Kenneth Thrasher 1997 269,231 85,852 -- 133,238(2) 150,000 -- 50,059
Executive Vice 1996 194,615 39,937 -- 9,983(3) 120,000 -- 36,127
President and Chief 1995 190,673 16,543 -- -- 20,000 6,624 35,147
Administrative
Officer
Sammy K. Duncan 1997 253,077 75,122 -- 83,496(2) 200,000 -- 50,547
Executive Vice 1996 163,846 60,026 -- 14,974(3) 60,000 -- 34,996
President - Fred 1995 125,846 15,109 -- -- -- -- 30,933
Meyer Stores
David R. Jessick(5) 1997 201,282 45,363 -- 58,110(2) 190,000 -- 46,939
Senior Vice 1996 -- -- -- -- -- -- --
President and Chief 1995 -- -- -- -- -- -- --
Financial Officer
(1) Includes compensation deferred at the election of the executive
under the Company's Profit Sharing Plan and under the Company's
Excess Deferral Plan. Under the Company's Profit Sharing Plan,
officers and other employees of the Company may elect to defer up
to the lesser of $9,500 or 15% of their compensation, subject to
limitations under the Internal Revenue Code. Under the Excess
Deferral Plan, officers and other employees of the Company may
elect to defer up to 50% of base salary and up to 100% of any
bonus award. Amounts under these plans are generally paid to
employees upon retirement.
(2) Represents restricted stock grants made to Mr. Miller, Ms.
Sammons and Messrs. Thrasher, Duncan and Jessick in the amounts
of 8,187; 3,357; 2,850; 1,786 and 1,243 shares respectively. The
amount included in the table represents the market value of the
shares at March 17, 1998, the date of the award. Vesting occurs
over three years. The total number of shares of restricted stock
held on March 17, 1998 and the market value of such shares on
that date were as follows: Mr. Miller - 9,771 shares ($456,794);
Ms. Sammons - 3,811 shares ($178,164); Mr. Thrasher - 3,172
shares ($148,291); Mr. Duncan - 2,270 shares ($106,123); and Mr.
Jessick - 1,243 shares ($58,110).
9
<PAGE>
(3) Represents restricted stock grants made to Mr. Miller, Ms.
Sammons, Mr. Thrasher and Mr. Duncan in the amounts of 2,378,
682, 484 and 726 shares, respectively. The amount included in the
table represents the market value of the shares at March 31,
1997.
(4) Amounts shown for the fiscal year 1998 consist of: (i) Company
contributions of $38,717, $15,075, $12,821, $12,931 and $7,545 to
the above-named executive officers, respectively, under the
Profit Sharing Plan and Excess Deferral Plan, (ii) $6,070,
$3,229, $2,238, $2,616 and $4,394 paid by the Company for the
above-named executive officers, respectively, as premiums under
its Long-Term Disability Plan; and (iii) $35,000 for each named
executive officer paid by the Company for life insurance under
the Supplemental Income Plan.
(5) Mr. Jessick commenced his employment with the Company in January
1997.
</TABLE>
Stock Option Grants in Last Fiscal Year
The following table provides information as to options to purchase
Common Stock granted to certain executive officers during 1997 pursuant to the
Company's 1990 Stock Incentive Plan and 1997 Stock Incentive Plan. No SARs were
granted during 1997.
<TABLE>
<CAPTION>
Potential Realizable Value at
Number of Percentage Assumed Annual Rates of
Securities Total Options Stock Price Appreciation
Underlying Granted to Exercise For Option Term(3)
Options Employees Price Expiration --------------------------------------
Name Granted(4) in Fiscal Year Per Share(4) Date 0% 5% 10%
---- ---------- -------------- ------------ ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert G. Miller 400,000(1) 8.01% $28.125 9/07 -- $7,075,200 $17,929,600
100,000(2) 2.00% 14.063 9/07 $1,406,200 3,175,000 5,888,600
Mary F. Sammons 100,000(1) 2.00% 28.125 9/07 -- 1,768,800 4,482,400
50,000(2) 1.00% 14.063 9/07 703,100 1,587,500 2,944,300
Kenneth Thrasher 100,000(1) 2.00% 28.125 9/07 -- 1,768,800 4,482,400
50,000(2) 1.00% 14.063 9/07 703,100 1,587,500 2,944,300
Sammy K. Duncan 50,000(1)(5) 1.00% 20.000 4/07 -- 628,900 1,593,750
100,000(1) 2.00% 28.125 9/07 -- 1,768,800 4,482,400
50,000(2) 1.00% 14.063 9/07 703,100 1,587,500 2,944,300
David R. Jessick 100,000(1)(5) 2.00% 16.250 1/07 -- 1,022,000 2,589,800
60,000(1) 1.20% 28.125 9/07 -- 1,061,280 2,689,440
30,000(2) 0.60% 14.063 9/07 421,860 952,500 1,766,580
(1) Options were granted for the numbers of shares indicated at an
exercise price equal to the fair market value of the Common Stock
on the date of grant. The options, which have terms of ten years,
become exercisable 20% per year on the first five anniversaries
of the original grant date. If the employment of any of the
optionees is terminated within one year after a change in control
of the Company, the options held by such optionee become
exercisable free of any limitation on the number of shares with
respect to which the option may be exercised.
(2) Options were granted for the numbers of shares indicated at an
exercise price equal to 50% of the fair market value of the
Common Stock on the date of grant. The options, which have terms
of ten years, become exercisable 20% per year on the first five
anniversaries of the original grant
10
<PAGE>
date. If the employment of any of the optionees is terminated
within one year after a change in control of the Company, the
options held by such optionee become exercisable free of any
limitation on the number of shares with respect to which the
option may be exercised.
(3) The dollar amounts under these columns are the result of
calculations of the 0%, 5% and 10% rates required by the
Securities and Exchange Commission for the maximum option term of
10 years and therefore are not intended to and may not accurately
forecast possible future appreciation, if any, of the Company's
Common Stock price.
(4) Share amounts and exercise prices have been adjusted to reflect
the 2-for-1 stock split distributed on September 30, 1997.
(5) This option became immediately exercisable on September 9, 1997
in connection with the merger with Smith's Food & Drug Centers,
Inc.
</TABLE>
Stock Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
The following table indicates (i) stock options exercised by certain
executive officers during 1997, including the value realized on the date of
exercise, (ii) the number of shares subject to exercisable (vested) and
unexercisable (unvested) stock options as of January 31, 1998, and (iii) the
value of "in-the-money" options, which represents the positive spread between
the exercise price of existing stock options and the year-end price of the
Common Stock.
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised In-the-Money
Unexercised Options Held Options Held
at January 31, 1998(1) at January 31, 1998(3)
Shares Acquired Value ----------------------------- -----------------------------
Name on Exercise(1) Realized(2) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Miller 18,388 $ 263,757 722,418 500,000 $18,314,118 $5,781,200
Mary F. Sammons 115,240 1,864,764 -- 173,070 -- 2,567,826
Kenneth Thrasher 92,964 2,126,373 102,860 175,712 2,084,123 2,616,506
Sammy K. Duncan -- -- 150,000 150,000 3,311,250 2,015,600
David R. Jessick 31,152 584,492 68,848 90,000 1,419,990 1,209,360
(1) Share amounts and exercise prices have been adjusted to reflect
the 2-for-1 stock split distributed on September 30, 1997.
(2) Aggregate market value on the exercise date of the shares covered
by the option, less the aggregate exercise price.
(3) Calculated based on the January 30, 1998 stock price of $36.875.
</TABLE>
Executive Officer Loans
During 1995, the Company made interest-free loans to executive
officers of the Company to enable the executive officers to purchase Common
Stock of the Company. The amount of each loan was a maximum
11
<PAGE>
of $100,000, and the loans are payable in a lump sum in June 1998, or upon
earlier termination of employment or sale of stock. At January 31, 1998, loans
were outstanding to Wayne W. Abbott and Sammy K. Duncan under this program.
Retirement Benefits
The Company has adopted a nonqualified Supplemental Income Plan to
provide supplemental retirement and death benefits to key employees. The plan is
administered by the Compensation Committee. Any key executive of the Company who
holds a position of Senior Vice President or higher is eligible to participate
in this plan. The Committee selects participants from those eligible employees
recommended by the Company's Chief Executive Officer. A participant is entitled
to receive full benefits under the Supplemental Income Plan upon normal
retirement by termination of employment after age 62. A participant is also
entitled to receive reduced benefits if the participant voluntarily terminates
his or her employment, is terminated without cause or dies before age 62. The
normal retirement benefit under the Supplemental Income Plan is a projected
annual amount, to be paid in equal monthly installments for 15 years, based upon
the estimated cash surrender value, less the premiums paid and other expenses of
the Company, of a Company-owned life insurance policy purchased on the life of
the executive. The actual benefit will vary from the projected benefit based on
actual dividend experience. The Company guarantees each participant a minimum
benefit equal to at least 60 percent of the projected benefit. Based on certain
assumptions, the projected annual benefits payable to Messrs. Miller, Thrasher,
Duncan and Jessick and Ms. Sammons upon retirement at normal retirement age
would be $60,427, $140,149, $77,543, $138,923 and $100,551, respectively.
Severance Agreements
The Company has agreed to pay certain benefits to Mr. Miller in
connection with his employment, including certain death, disability, retiree
medical and retirement benefits. In the event of his termination for any reason
other than cause, death or permanent disability, Mr. Miller is entitled to
payment of two years of compensation at his then-current, annual salary (payable
without interest). Assuming Mr. Miller retires at age 62, he will be entitled to
receive an additional monthly retirement benefit of $25,000 for the remainder of
his life.
In September 1997, the Company entered into Executive Severance
Agreements (the "Severance Agreements") with Messrs. Thrasher, Duncan and
Jessick and Ms. Sammons (the "Named Officers"). The Severance Agreements provide
that, if the Named Officer is terminated without "cause" or resigns for "good
reason," the Named Officer will be entitled to (i) a severance payment equal to
(A) three times the Named Officer's annual base pay if the Named Officer is
terminated before September 1998, (B) two times the Named Officer's annual base
pay if the Named Officer is terminated before September 1999, or (C) the Named
Officer's annual base pay if the Named Officer is terminated after September
1999 (except that payment would be two times the Named Officer's annual base pay
if he or she is terminated in connection with or following a "change in
control"); (ii) a prorated portion of any annual cash incentive plans for the
year in which the termination occurs; (iii) prorated accelerated vesting of
outstanding stock options held by the Named Officer under the Company's stock
option and stock incentive plans (except that all such options would accelerate
following a "change in control"); and (iv) additional benefits under the
supplemental retirement plan. If the amount of the severance payment, plus the
other amounts to which the terminated Named Officer is entitled, is subject to
the tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended, the Named Officer will also be entitled to an additional amount (the
"Additional Payment") equal to the amount of such tax incurred by the Named
Officer on a net basis after the deduction from the Additional Payment of all
federal, state and local income taxes that would be imposed on the Named Officer
by reason of the Named Officer's receipt of the Additional Payment.
12
<PAGE>
Compensation Committee Report on Executive Compensation
During 1997, the Compensation Committee of the Board of Directors (the
"Committee") was composed of four outside directors and, pursuant to authority
delegated by the Board, determined the compensation to be paid to the Chief
Executive Officer and each of the other executive officers of the Company.
The Company's objectives for executive compensation are to (i) attract
and retain key executives important to the long term success of the Company;
(ii) reward executives for performance and enhancement of stockholder value; and
(iii) align the interests of the executive officers with the success of the
Company by making a portion of the compensation based upon corporate
performance.
Section 162(m) of the Internal Revenue Code of 1986 generally
disallows a federal income tax deduction to the Company for compensation over
$1,000,000 paid to any of the Company's chief executive officer and four other
most highly compensated executive officers unless such compensation is payable
only on account of the attainment of one or more performance goals determined by
a Board committee such as the Compensation Committee and otherwise qualifies as
performance based pursuant to Section 162(m). The Compensation Committee's
policy with respect to the tax deductibility of executive compensation under
Section 162(m) of the Internal Revenue Code is to qualify such compensation for
deductibility where practicable. In this regard, the Company amended the 1990
Stock Incentive Plan three years ago to impose an individual limit on the
maximum number of stock option shares which may be granted to participants to
ensure that compensation resulting from stock option exercises by the Chief
Executive Officer and the other four most highly compensated proxy-named
executives will be tax deductible by the Company.
Executive Officer Compensation Program. The primary components of the
--------------------------------------
Company's executive officer compensation program are base salary, annual bonus
plan, and long term incentive compensation in the form of stock options and
capital bonus plan.
Base salary levels for the Company's executive officers are set
relative to companies of similar size in the retail industry and other companies
in the Pacific Northwest. In determining salaries, the Company also takes into
account individual experience, job responsibility and performance.
The Company's Bonus Plan is an annual incentive program for executive
officers, department and group managers and other selected employees of the
Company. The purpose of the Bonus Plan is to provide a direct financial
incentive in the form of an annual cash bonus to executives to achieve
predetermined departmental and Company financial goals. Target bonuses are set
for each executive officer as a percentage of base compensation. The target
bonus percentage depends upon level of responsibility within the Company. In
fiscal 1997, the financial measure of performance under the plan for the Company
was pretax income and, to a lesser extent, control of net inventory. Department
performance is determined in relation to pre-established targets for store
contribution income and control of net inventory and for departmental
operational income or expense. Generally, no bonus is paid under the Bonus Plan
if threshold levels for Company, store or department performance are not
achieved. Eighty percent of the annual bonus payable to each executive officer
at bonus plan targeted pretax income, net inventory, operational income and/or
departmental expense was paid in cash. The remaining twenty percent was withheld
pursuant to the Company's Capital Bonus Plan and paid in the form of restricted
shares of Company Common Stock. The shares were issued based on the closing
price of the Company's Common Stock on March 17, 1998 and vest in an equal
number of shares over three years (i.e., 1997's restricted shares vest on March
18, 1999, 2000 and 2001), subject to the officer being an employee at the time
of vesting. The shares also vest on the retirement, death or disability of the
officer.
The Company's stock option program is intended as a long term
incentive plan for executives, managers and selected salaried employees of the
Company. The objectives of the program are to align employee and stockholder
long term interests by creating a strong direct link between compensation and
13
<PAGE>
stockholder value. The Company's Stock Incentive Plan authorizes the Committee
to award stock options to executive officers and other employees of the Company.
Stock options are generally granted at an option price equal to the fair market
value of the Company's Common Stock on the day of grant. In connection with the
Smith's merger, however, certain executive officers of the Company received
stock options with exercise prices equal to 50% of the market value of the stock
at the time of grant. Options generally become exercisable to the extent of 25
or 20 percent of the grant on the anniversary date of the grant for the four or
five succeeding years. Stock options generally have 10-year terms and terminate
shortly after termination of employment. The amount of stock option grants for
an individual depends upon his or her level of responsibility and position in
the Company.
Compensation of the Chief Executive Officer. The compensation of the
Chief Executive Officer of the Company was determined by negotiation of an
employment agreement at the time of his employment in September 1991. The
agreement was amended in 1994 and 1997. The employment agreement provides that
Mr. Miller receive an annual salary and be eligible for an annual bonus in an
amount up to 100 percent of his annual salary based upon the achievement of
financial objectives approved by the Board of Directors. The employment
agreement also provides for disability, pension, and severance benefits, the
amount of which will depend upon the term of Mr. Miller's employment with the
Company. Pursuant to the employment agreement, the Compensation Committee of the
Board of Directors reviewed and increased the Chief Executive's base salary in
1992, 1993, 1994, 1996 and 1997. The Chief Executive's current annual base
salary is $1,000,000. The factors considered by the Committee in approving the
increases were (1) the achievement of the goals that the Board had established
for the Company's management, including goals for operating profit, performance
relative to competitors and new and remodeled store development, (2) the
contribution made by the Chief Executive in establishing the long-term strategic
and business plan of the Company, including the establishment and achievement of
organizational and management development goals, (3) enhancement of stockholder
value during the prior year, (4) levels of compensation paid to other senior
executives in the industry and (5) in 1997, the substantial increase in the size
of the Company as a result of the merger with Smith's Food & Drug Centers, Inc.
Ronald W. Burkle, Chairman
A. M. Gleason
Steven R. Rogel
Jeffrey P. Smith
14
<PAGE>
Comparison of Five Year Cumulative Total Return
The following graph provides a comparison of the five year cumulative
total stockholder return on (i) the Company's Common Stock, (ii) the S&P Retail
Stores Composite Industry Index, in each case assuming the reinvestment of any
dividends, and (iii) the S&P 500 index.
TOTAL STOCKHOLDER RETURNS
[Line Chart depicting Total Stockholder Returns]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
FRED MEYER, INC. $100.00 $113.08 $100.00 $67.31 $106.54 $226.94
S&P 500 INDEX 100.00 112.88 113.48 157.35 198.80 252.30
S&P RETAIL STORES COMPOSITE INDEX 100.00 96.38 89.25 96.23 114.87 170.34
</TABLE>
The graph assumes that $100 was invested on January 30, 1993 in
Company Common Stock, the S&P 500 Index and the S&P Retail Stores Composite
Industry Index, and that all dividends were reinvested.
15
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission (the "SEC") initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Officers, directors and greater than ten-percent stockholders
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and representations that no other reports
were required, the Company believes that during the fiscal year ended January
31, 1998 all Section 16(a) filing requirements applicable to its officers,
directors and greater than ten-percent beneficial owners were complied with.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September 1997, Fred Meyer acquired Smith's Food & Drug Centers,
Inc. (the "Smith's Merger"). Ronald W. Burkle is the founder, managing partner
and a principal owner of The Yucaipa Companies ("Yucaipa"). Yucaipa and its
affiliates acquired approximately 4,728,800 shares of Common Stock of the
Company in the Smith's Merger and a warrant to purchase 3,869,366 shares of
Common Stock of Fred Meyer at an exercise price of approximately $23.81 per
share. Messrs. Burkle and Jeffrey P. Smith were elected to the Fred Meyer Board
of Directors pursuant to the terms of the Smith's Merger Agreement and these
directors have the right to require the Company to register the Common Stock of
the Company received in the Smith's Merger under securities laws in certain
circumstances. Mr. Bruce Karatz was also elected to the Board of Directors
pursuant to the Smith's Merger Agreement. At the closing of the Smith's Merger,
the Company and Yucaipa entered into a Management Services Agreement. Under the
terms of the Management Services Agreement, Yucaipa provides management
consultation and advice to the Company for a term of five years. The Company
pays Yucaipa an annual management fee of $500,000 and has agreed to reimburse
Yucaipa for its reasonable out-of-pocket costs and expenses incurred in
connection with the performance of its obligations under the Management Services
Agreement. If during the term of the Management Services Agreement, the Board of
Directors of the Company requests Yucaipa to provide (i) consulting services in
connection with any proposed acquisition or divestiture transaction or any debt
or equity financing or (ii) any other services not otherwise covered by the
Management Services Agreement, Yucaipa will be entitled to such additional
compensation for such services as may be agreed upon by Yucaipa and the Company
(and approved by a majority of the Company's disinterested directors). In
connection with Yucaipa's services, Mr. Burkle serves as the Chairman of the
Board of Directors of the Company and has the right to do so during his initial
three year term as a director of the Company. Mr. Burkle does not receive any
compensation for serving in such capacity beyond the compensation paid to
Yucaipa under the Management Services Agreement. If the Management Services
Agreement is terminated under certain circumstances, the Company will pay or
cause to be paid to Yucaipa a termination payment equal to the greater of $2.5
million or twice the total consulting fees that would have been earned by
Yucaipa during the remaining term of the Management Services Agreement as if
such agreement had not been terminated and without regard to sums previously
paid by the Company to Yucaipa as part of its management fee. For the period
from September 1997 to the end of fiscal 1997, the Company is obligated to pay
to Yucaipa $197,222.24 in fees under the Management Services Agreement.
On March 10, 1998, the Company acquired Food 4 Less Holdings, Inc.
("Food 4 Less") in a stock-for-stock merger, as a result of which Food 4 Less
became a wholly owned subsidiary of the Company. Prior to the effective date of
the merger between the Company and Food 4 Less, Mr. Burkle was the Chairman of
the Board of Food 4 Less and Yucaipa owned approximately 27% of the fully
diluted Food 4 Less Common Stock. As a result of the Food 4 Less merger, Yucaipa
and its affiliates acquired 6,001,717 shares of the Company's Common Stock.
Robert D. Beyer and Carlton J. Jenkins were elected to the Fred Meyer Board of
Directors pursuant to the Food 4 Less merger agreement. In connection with the
Food 4 Less merger, Fred
16
<PAGE>
Meyer paid Yucaipa $20 million to terminate a management services agreement
between Yucaipa and Food 4 Less. In connection with the Food 4 Less merger, the
Company also registered for resale under the securities laws the shares received
in the merger by Yucaipa.
In March 1998, the Company acquired Quality Food Centers, Inc. ("QFC")
in a stock-for-stock merger. Samuel Zell and Stuart M. Sloan were elected as
directors of the Company pursuant to the QFC merger agreement and have the right
to require the Company to register under the securities laws the Common Stock
received by them and their affiliates in the QFC merger.
The transactions discussed herein were on terms believed by the Board
of Directors of the Company to be fair to the Company and no less favorable than
the Company could have obtained with an unrelated party.
INDEPENDENT AUDITORS
Deloitte & Touche LLP audited the Company's financial statements for
the year ended January 31, 1998. Representatives of Deloitte & Touche LLP will
be present at the Annual Meeting, will have the opportunity to make a statement
if they so desire and will be available to respond to appropriate questions. The
Board of Directors has selected Deloitte & Touche LLP as auditors for the
current fiscal year.
DISCRETIONARY AUTHORITY
While the Notice of Annual Meeting of Stockholders provides for
transaction of such other business as may properly come before the meeting, the
Board of Directors has no knowledge of any matters to be presented at the
meeting other than those referred to herein. However, the enclosed proxy gives
discretionary authority in the event that any other matters should be presented.
STOCKHOLDER PROPOSALS
Any stockholder proposals to be considered for inclusion in proxy
material for the Company's June 1999 Annual Meeting must be received at the
principal executive offices of the Company no later than January 15, 1999.
Under the Company's Bylaws, for stockholders to properly introduce
business to be transacted at the annual or any special meeting of stockholders,
a stockholder of record, on the date both of giving such notice and of
determining stockholders entitled to vote at the annual or special meeting, must
give timely notice of such proposal in a proper written form to the Company's
corporate secretary, as provided in the Company's Bylaws. To be timely, a
stockholder's notice to the secretary must be delivered to or mailed and
received at the Company's principal executive offices not more than 90 nor less
than 60 days prior to the first anniversary of the preceding year's annual
meeting of stockholders, or, in the case of a special meeting, not more than 90
or less than the later of 60 days prior to such special meeting or 10 days after
the day on which a public announcement is first made of the date of the special
meeting; provided, however, that in the event that the date of the annual
meeting is more than 30 days before or more than 60 days after the first
anniversary date of the preceding year's annual meeting, notice by the
stockholder to be timely must be so delivered not more than 90 nor less than 60
days prior to such annual meeting or the 10th day following the day on which
public announcement of the date of such meeting is first made by the Company.
The Company's Bylaws require that a stockholder's notice include: (i)
as to any other business that the stockholder proposes to bring before the
meeting, a brief description of the business, the reasons for conducting such
business and any material interest in such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (ii) as to
the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the proposal is made, (a) the name and address of such stockholder,
17
<PAGE>
as they appear on the Company's books, and of such beneficial owner and (b) the
class and number of shares of the Company which are owned beneficially and of
record by such stockholder and such beneficial owner.
The Company's Bylaws permit stockholders to nominate persons for
election to the Company's Board at any annual meeting of stockholders, or at any
special meeting if the Company's Board of Directors has determined that
directors will be elected at such meeting if they are stockholders of record as
of both the date of giving such notice and the date of determining stockholders
entitled to vote at the annual or special meeting. A stockholder must give
timely notice thereof in a proper written form to the corporate secretary, as
provided in the Company's Bylaws. To be timely, the stockholder's notice must
meet the same timeliness requirements as described above to providing advance
notice of business to be transacted at a stockholder's meeting; provided,
however, that if the number of directors to be elected to the Company's Board of
Directors is increased and there is no public announcement by the Company naming
all of the nominees for director or specifying the size of the increased Board
of Directors at least 70 days prior to the first anniversary of the preceding
year's annual meeting, a stockholder's notice shall also be considered timely,
but only with respect to nominees for any new positions created by such
increase, if it is delivered to the secretary at the principal executive offices
of the Company not later than the 10th day following the day on which such
public announcement is first made by the Company.
To be in proper written form, a stockholder's notice to the secretary
must set forth (a) as to each person whom the stockholder proposes to nominate
for election or reelection as a director, all information relating to such
person that is required to be disclosed in solicitations of proxies for election
of directors in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, and (b) as
to the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination is made, (i) the name and address of such stockholder, as
they appear on the Company's books, and of such beneficial owner and (ii) the
class and number of shares of the Company which are owned beneficially and of
record by such stockholder and such beneficial owner. Such notice must be
accompanied by a written consent of each proposed nominee to being named as a
nominee and to serving as a director if elected.
By Order of the Board of Directors
Roger A. Cooke
Senior Vice President, General Counsel
and Secretary
May 11, 1998
18
<PAGE>
Fred Meyer, inc.
Annual Meeting, June 23, 1998
Proxy/Voting Instruction Card
I appoint Robert G. Miller, Kenneth Thrasher and Roger A. Cooke,
individually and together, proxies with full power of substitution, to vote all
of my Fred Meyer, Inc. common stock at the Annual Meeting of Stockholders to be
held at the DoubleTree Inn, Jantzen Beach, 909 N. Hayden Island Drive, Portland,
Oregon, on Tuesday, June 23, 1998 at 1:00 p.m. and at any adjournment with all
powers that I would possess if personally present.
Your vote is important. Please mark this proxy as indicated on the reverse
side to vote on any item. If you wish to vote in accordance with the Board of
Directors recommendations, please sign the reverse side; no boxes need to be
checked. The proxies may vote in their discretion as to other matters that may
come before this meeting.
(Continued, and to be signed and dated on reverse side.)
FRED MEYER, INC.
P.O. BOX 11228
NEW YORK, N.Y. 10203-0228
<PAGE>
The Board of Directors Recommends a Vote FOR Item 1.
Item 1 Election of Directors
FOR all nominees [ ] WITHHOLD authority to vote [ ] *EXCEPTIONS [ ]
listed below for all nominees listed below
Nominees: Vivian A. Bull, Carlton J. Jenkins, John G. King, Steven R. Rogel and
Stuart M. Sloan
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the Exceptions box and write that nominee's name in the space provided below.)
*Exceptions ____________________________________________________________________
Item 2 Transaction of any business that properly comes before the meeting or any
adjournments thereof.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Change of Address and
or Comments Mark Here [ ]
Please sign exactly as name(s) appear(s)
hereon. If acting as an executor,
administrator, trustee, guardian, etc.,
you should so indicate in signing. If
the stockholder is a corporation, please
sign the full corporate name by duly
authorized officer. If shares are held
jointly, each stockholder named should
sign. Date and promptly return this card
in the envelope provided.
Date: ----------------------, 1998
-----------------------------------------
Signature
-----------------------------------------
Signature
Votes must be indicated (x) in Black or
Blue ink.
(Please sign, date and return this proxy in the enclosed postage prepaid
envelope.)
<PAGE>
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
May 15, 1998
NOTICE TO PARTICIPANTS
IN
THE FALLEY'S, INC.
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
THE RALPHS GROCERY COMPANY
SAVINGS PLAN PLUS--ESOP
THE RALPHS GROCERY COMPANY
TEAMSTERS EMPLOYEE STOCK OWNERSHIP PLAN
THE RALPHS GROCERY COMPANY
UFCW EMPLOYEE STOCK OWNERSHIP PLAN
Enclosed for your review is the Proxy Statement which U.S. Trust Company of
California, N.A. ("U.S. Trust") has received from Fred Meyer, Inc. and a Voting
Instruction Card. The Proxy Statement has been prepared by the Board of
Directors of Fred Meyer, Inc. in connection with the Annual Meeting of
Stockholders to be held on June 23, 1998 (the "Annual Meeting").
According to plan records, you are a participant in, and have shares of
Fred Meyer, Inc. Common Stock allocated to your account under one of the
following plans: the Falley's, Inc. Employee Stock Ownership Plan and Trust (the
"Falley's ESOP"), the Ralphs Grocery Company Savings Plan Plus--ESOP (the
"Ralphs ESOP"), the Ralphs Grocery Company Teamsters Employee Stock Ownership
Plan (the "Teamsters ESOP") or the Ralphs Grocery Company UFCW Employee Stock
Ownership Plan (the "UFCW ESOP"). The foregoing plans and trusts will be
referred to in this notice collectively as the "ESOP."
YOUR VOTING INSTRUCTIONS TO THE TRUSTEE
Your Role and Responsibilities as an ESOP Participant and a Named Fiduciary
Only the Trustee can vote the shares held by the ESOP. However, under the
terms of the ESOP, each participant may act as a "Named Fiduciary" for voting
Common Stock of Fred Meyer, Inc. allocated to the participant's account. Because
a participant may act as a "Named Fiduciary" under the ESOP, the Trustee is
required to follow proper instructions of participants that are in accordance
with the terms of the ESOP and are not contrary to the fiduciary standards of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
Fiduciaries under ERISA (including persons designated as "Named Fiduciaries")
are required to act prudently, solely in the interest of plan participants and
beneficiaries, and for the exclusive purpose of providing benefits to the plan
participants and beneficiaries.
If you choose to act as a "Named Fiduciary", you are entitled to instruct
the Trustee how to vote all shares allocated to your account. By signing, dating
and returning the instruction card, you are accepting your designation under the
ESOP in which you participate as a "Named Fiduciary" for purposes of voting your
shares of Fred Meyer, Inc. Common Stock with respect to the Annual Meeting. You
should therefore exercise your rights to vote Fred Meyer, Inc. Common Stock
prudently.
<PAGE>
Voting Instructions
The enclosed Voting Instruction Card represents your voting instructions to
the Trustee for the shares of Fred Meyer, Inc. Common Stock which have been
allocated to your account under the ESOP in which you participate. You should
mark one of the boxes on the card to indicate your voting instructions to the
Trustee, sign and date the instruction card and return it in the envelope that
is provided. If you do not provide timely voting instructions, the Trustee will
vote the shares of Fred Meyer, Inc. Common Stock allocated to your account in
its independent judgment.
Voting Deadline
Because of the time required to tabulate voting instructions from
participants before the Annual Meeting, the Trustee must establish a cut-off
date for receiving your instruction cards. U.S. Trust must have your completed
instruction card in its possession no later than 2:00 p.m. Los Angeles time, on
June 19, 1998. Only instruction cards that are properly completed, signed, dated
and delivered to U.S. Trust will be taken into account by U.S. Trust. You may
mail the card directly to U.S. Trust in the enclosed return envelope.
Confidentiality
U.S. Trust will maintain your instructions in strict confidence. U.S. Trust
will not furnish copies of your instructions, or information as to their
contents, to Fred Meyer, Inc. or any other person, except with your prior
written consent or pursuant to legal process. Accordingly, you should feel free
to exercise your voting rights in the manner you think best.
Questions
If you have any procedural questions regarding the instruction card, you
may telephone representatives of U.S. Trust at the following toll-free telephone
number --800-535-3093-- between the hours of 8:30 a.m. and 5:00 p.m., Los
Angeles time, Monday through Friday.
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
Trustee
<PAGE>
Detach at the perforation below and mail promptly
in the enclosed, postage-prepaid envelope.
PARTICIPANT VOTING INSTRUCTIONS TO TRUSTEE
The undersigned participant in the ESOP identified on this card and
referred to in the enclosed Notice hereby instructs U.S. Trust Company of
California, N.A., as Trustee, to vote all shares of Common Stock of Fred Meyer,
Inc. allocated to the account of the participant in accordance with the
instructions on the reverse side of this card.
This card must be properly completed, signed, dated and received by the
Trustee by 2:00 p.m. Los Angeles time on June 19, 1998. If your voting
instructions are not timely received, the Trustee will vote the shares of Common
Stock allocated to your account in its independent judgment. If this card is
received after 2:00 p.m. Los Angeles time on June 19, 1998, the Trustee cannot
ensure that your voting instructions will be followed. Your voting instructions
are confidential as explained in the accompanying Notice to ESOP participants.
(To be completed, signed and dated on reverse side.)
<PAGE>
Detach at the perforation below and mail promptly
in the enclosed, postage-prepaid envelope.
The Board of Directors Recommends a Vote FOR Item 1.
Item 1 - Election of Directors
FOR all nominees [ ] WITHHOLD AUTHORITY [ ] *EXCEPTIONS [ ]
for all nominees listed below
Nominees: Vivian A. Bull, Carlton J. Jenkins, John G. King, Steven R. Rogel and
Stuart M. Sloan
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions
Change of Address and or Comments Mark Here
I acknowledge receipt of the Notice to Participants and the accompanying Proxy
Statement relating to the Annual Meeting, and I hereby instruct the Trustee to
vote all shares allocated to my account as I have indicated above. If I sign,
date and return this card but do not specifically instruct the Trustee how to
vote, the Trustee will vote my shares in accordance with the Board of Directors'
recommendations.
----------------------------- -------------------------
Signature Date
PLEASE SIGN, DATE AND MAIL THIS INSTRUCTION FORM PROMPTLY IN THE ENVELOPE
PROVIDED.
