<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Bruno's, 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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[BRUNO'S LOGO]
800 Lakeshore Parkway, Birmingham, Alabama 35211
June 10, 1997
Dear Fellow Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Bruno's, Inc. (the "Company"). This meeting will be held in the White & Gold
Suite at the Plaza Hotel, Fifth Avenue at Central Park South, in New York, New
York 10019, on Thursday, July 10, 1997, at 11:00 A.M., New York time.
This booklet contains the formal notice of the meeting and a proxy
statement. The proxy statement describes the business to be transacted at the
meeting and provides other information concerning the Company for your
consideration when you vote your shares. In addition, we have enclosed for your
information a copy of the Company's Annual Report on Form 10-K for the fiscal
year ended February 1, 1997 as filed by the Company with the Securities and
Exchange Commission on April 28, 1997.
To assist us in planning for the meeting, please mark the appropriate box
on your proxy card if you plan to attend the meeting.
Yours very truly,
/s/ William J. Bolton
WILLIAM J. BOLTON
Chairman of the Board and
Chief Executive Officer
<PAGE> 3
[BRUNO'S LOGO]
800 Lakeshore Parkway, Birmingham, Alabama 35211
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 10, 1997
---------------------
To the Stockholders of
BRUNO'S, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Bruno's,
Inc. (the "Company") will be held in the White & Gold Suite at the Plaza Hotel,
Fifth Avenue at Central Park South, New York, New York 10019, at 11:00 A.M. on
Thursday, July 10, 1997, for the following purposes:
1. To elect seven directors to serve until the next Annual Meeting of
Stockholders or until their successors are elected and qualified; and
2. To transact such other business as may properly be brought before
the meeting.
The Board of Directors has fixed the close of business on June 2, 1997 as
the time for determining stockholders of record entitled to notice of, and to
vote at, the Annual Meeting of Stockholders. Each share of the Company's Common
Stock will entitle the holder thereof to one vote on all matters which may
properly come before the Annual Meeting of Stockholders.
By Order of the Board of Directors,
/s/ Walter M. Grant
WALTER M. GRANT
Secretary
Birmingham, Alabama
June 10, 1997
<PAGE> 4
BRUNO'S, INC.
800 LAKESHORE PARKWAY
BIRMINGHAM, ALABAMA 35211
---------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON JULY 10, 1997
---------------------------
This proxy statement and the accompanying proxy card have been prepared on
behalf of the Board of Directors of Bruno's, Inc. (the "Company") in connection
with the solicitation of proxies to be used at the Annual Meeting of
Stockholders of the Company to be held at the Plaza Hotel in New York, New York,
at 11:00 A.M. on Thursday, July 10, 1997, and any adjournments or postponements
thereof (the "Annual Meeting"). Any stockholder giving a proxy has the power to
revoke it at any time before it is voted by giving written notice to the
Secretary of the Company, by submitting a proxy bearing a later date, or by
voting in person at the Annual Meeting. Each valid and timely proxy that is not
revoked will be voted at the Annual Meeting in accordance with the instructions
thereon or, if no instructions are specified thereon, then the proxy will be
voted as recommended by the Board of Directors. The affirmative vote of a
majority of the votes cast by the shares entitled to vote is required for the
election of directors and the approval of any stockholder proposals that may be
offered at the Annual Meeting. Abstentions and broker non-votes will not be
included in vote totals and will have no effect on the outcome of any vote.
The cost of soliciting proxies will be borne by the Company. In addition to
the use of the mails, directors, officers and employees of the Company may
solicit proxies by telephone, telegraph or personal interview, but will not be
compensated for such solicitation. Brokerage houses and other custodians,
nominees and fiduciaries will be requested to forward soliciting material to
their principals, and the Company will, upon request, reimburse them for the
reasonable expense of doing so.
Only holders of record of the Company's common stock, par value $.01 per
share (the "Common Stock"), at the close of business on June 2, 1997, will be
entitled to vote at the Annual Meeting. As of June 2, 1997, the Company had
outstanding 25,337,982 shares of Common Stock. Each share of Common Stock is
entitled to one vote on each matter to be voted on at the Annual Meeting. Shares
representing a majority of the votes entitled to be cast must be represented in
person or by proxy at the Annual Meeting in order for a quorum to be present.
As of June 2, 1997, Crimson Associates, L.P. and KKR Partners II, L.P. (the
"Partnerships") owned approximately 82.2% of the outstanding shares of Common
Stock. The Partnerships have advised the Company that they intend to vote all of
their shares of Common Stock in favor of the election of the seven nominees for
the Board of Directors of the Company named in this proxy statement. Such action
by the Partnerships is sufficient to elect such nominees without any action on
the part of any other holder of the Common Stock. The Partnerships were
organized by Kohlberg Kravis Roberts & Co. L.P. ("KKR"). Five of the seven
nominees for the Board of Directors are affiliated with KKR and with the general
partner of each of the Partnerships. SEE "OWNERSHIP OF COMPANY STOCK BY CERTAIN
HOLDERS."
The complete mailing address of the principal executive offices of the
Company is 800 Lakeshore Parkway, Birmingham, Alabama 35211. The approximate
date on which this proxy statement is first being sent to stockholders is June
10, 1997.
ELECTION OF DIRECTORS
At the Annual Meeting, the stockholders of the Company will be asked to
elect seven members of the Board of Directors of the Company to serve until the
next Annual Meeting of Stockholders or until their successors are elected and
qualified. Each nominee is now a member of the Board of Directors of the
Company. If any nominee becomes unavailable for election for any reason, the
holders of the proxies may exercise discretion to vote for
1
<PAGE> 5
substitutes proposed by the Board of Directors. The Board of Directors has no
reason to believe that the nominees named in this proxy statement will be unable
to serve if elected or will decline to serve.
The election of each nominee to the Board of Directors requires a majority
of the votes cast at the Annual Meeting. If a stockholder wishes to withhold
authority to vote for any nominee, such stockholder can do so by following the
directions set forth on the enclosed proxy or on the ballot to be distributed at
the Annual Meeting. The persons named in the enclosed proxy will vote the shares
of Common Stock covered by such proxy for the election of the nominees set forth
below unless instructed to the contrary.
NOMINEES FOR BOARD OF DIRECTORS
The following is a brief description of the business experience for at
least the past five years of each of the nominees for election to the Board of
Directors of the Company:
William J. Bolton, age 50, has been Chairman of the Board of Directors and
Chief Executive Officer of the Company since August 1995. He served as President
of Jewel Food Stores from 1991 to April 1995 and Chief Operating
Officer -- Markets of American Stores Company from April 1995 to August 1995.
Henry R. Kravis, age 53, has served as a director of the Company since
August 1995. He is a Founding Partner of KKR and a managing member of the
Executive Committee of the limited liability company which serves as the general
partner of KKR. Mr. Kravis serves as a member of the Board of Directors of
AutoZone, Inc., Borden, Inc., Evenflo & Spalding Holdings Corporation, Flagstar
Companies, Inc., Flagstar Corporation, The Gillette Company, IDEX Corporation,
K-III Communications Corp., KinderCare Learning Centers, Inc., KSL Recreation
Group, Inc., Merit Behavioral Care Corporation, Newsquest Capital plc,
Owens-Illinois, Inc., Owens-Illinois Group, Inc., Safeway Inc., Sotheby's
Holdings Inc., Union Texas Petroleum Holdings, Inc., and World Color Press, Inc.
George R. Roberts, age 53, has been a director of the Company since August
1995. He is a Founding Partner of KKR and a managing member of the Executive
Committee of the limited liability company which serves as the general partner
of KKR. Mr. Roberts serves as a member of the Board of Directors of AutoZone,
Inc., Borden, Inc., Evenflo & Spalding Holdings Corporation, Flagstar Companies,
Inc., Flagstar Corporation, IDEX Corporation, K-III Communications Corp.,
KinderCare Learning Centers, Inc., Merit Behavioral Care Corporation, Newsquest
Capital plc, Owens-Illinois, Inc., Owens-Illinois Group, Inc., Red Lion
Properties, Inc., Safeway Inc., Union Texas Petroleum Holdings, Inc., Walter
Industries, Inc., and World Color Press, Inc.
Paul E. Raether, age 50, has been a director of the Company since August
1995. He is a member of the limited liability company which serves as the
general partner of KKR. Mr. Raether serves as a member of the Board of Directors
of Flagstar Companies, Inc., Flagstar Corporation, IDEX Corporation, and KSL
Recreation Group, Inc.
James H. Greene, Jr., age 46, has been a director of the Company since
August 1995. He is a member of the limited liability company which serves as the
general partner of KKR. Mr. Greene serves as a member of the Board of Directors
of Owens-Illinois, Inc., Owens-Illinois Group, Inc., Safeway Inc., and Union
Texas Petroleum Holdings, Inc.
Ronald G. Bruno, age 45, has been a director of the Company since 1983. He
served as Chairman of the Board of the Company from December 1991 to August
1995, Chief Executive Officer of the Company from October 1990 to August 1995
and President of the Company from 1986 to 1994. Mr. Bruno is a member of the
Board of Directors of SouthTrust Bank, N.A., Books-A-Million, Inc., and Russell
Corp.
Nils P. Brous, age 32, has been a director of the Company since August
1995. He has served as an Executive with KKR since November 1992. Prior to
November 1992, Mr. Brous was an Associate with Goldman, Sachs & Co. He is a
member of the Board of Directors of Canadian General Insurance Group Limited and
KinderCare Learning Centers, Inc.
Mr. Bruno has agreed to serve as a member of the Board of Directors of the
Company until August 18, 1998 (subject to the customary right of a director to
resign) pursuant to a Stockholders Agreement executed in
2
<PAGE> 6
connection with the acquisition of 20,833,333 shares of the Company's Common
Stock by affiliates of KKR on August 18, 1995. SEE "OWNERSHIP OF COMPANY STOCK
BY CERTAIN HOLDERS."
Messrs. Kravis and Roberts are first cousins.
ADDITIONAL INFORMATION
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
The business of the Company is managed by or under the direction of the
Board of Directors. During the fiscal year ended February 1, 1997, the Board of
Directors held six meetings. Each director, except for Messrs. Kravis and
Roberts, attended at least 75% or more of the total number of meetings of the
Board of Directors and meetings of all committees of the Board of Directors on
which he served.
The Board of Directors has established the following standing committees of
the Board of Directors: an Executive Committee, a Compensation Committee, and an
Audit Committee.
The Executive Committee has the authority to exercise the full power and
authority of the Board of Directors to the fullest extent permissible under
applicable law, subject at all times to the supervision and control of the full
Board of Directors. The present members of the Executive Committee are Messrs.
Bolton, Raether, Greene, and Brous. The Executive Committee held six meetings
during the Company's fiscal year ended February 1, 1997.
The Compensation Committee is responsible for establishing and
administering the policies which govern the compensation of the Company's
executive officers and key employees. The Compensation Committee presently
consists of Messrs. Raether, Greene, and Brous. The Compensation Committee did
not hold any formal meetings during Company's fiscal year ended February 1, 1997
but took action during meetings of the full Board of Directors.
The functions of the Audit Committee are to (i) select and engage
independent auditors to audit the books, records and accounts of the Company,
(ii) approve the scope of the audit and non-audit services provided by such
auditors, (iii) establish policies in connection with the Company's internal
audit programs, and (iv) perform such other duties as the Board of Directors may
from time to time prescribe. Messrs. Bruno and Brous are the current members of
the Audit Committee. The Audit Committee met one time during the Company's
fiscal year ended February 1, 1997.
COMPENSATION OF DIRECTORS
Members of the Board of Directors who are not employees of the Company
receive an annual retainer from the Company in the amount of $30,000. Directors
do not receive separate fees for attending meetings of the Board of Directors or
for serving on committees of the Board of Directors. Mr. Bolton, who is an
employee of the Company, does not receive any additional compensation for
serving on the Board of Directors.
On April 30, 1997, the Board of Directors adopted the Bruno's, Inc.
Directors' Deferred Compensation Plan (the "Deferred Compensation Plan"). The
Deferred Compensation Plan permits non-employee directors to defer all or any
part of the fees that they receive for serving on the Board of Directors.
Amounts deferred will be credited, at the election of the director, to an
unfunded cash account (the "Cash Account") or to an account under which the
director will receive compensation in the form of shares of the Company's Common
Stock (the "Stock Account"). Amounts credited to the Cash Account will accrue
interest based on the Company's average borrowing rate from time to time.
Amounts credited to the Stock Account will be converted into the number of
shares of the Company's Common Stock which the amounts would have purchased
based on the fair market value of a share of the Company's Common Stock on the
date the amounts otherwise would have been paid. When an individual ceases to be
a director of the Company, all amounts credited under the Deferred Compensation
Plan are paid in one lump sum or in installments based on the election made by
the director. Amounts credited to a director's Stock Account will be paid, in
the Company's sole discretion, in the form of shares of the Company's Common
Stock or in cash, with the amount of cash to be determined by multiplying the
number of shares in the Stock Account by the then fair market value of a share
of the Company's Common Stock.
3
<PAGE> 7
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
On August 18, 1995, Crimson Acquisition Corp. was merged into and with the
Company (the "Merger"). Since the date of the Merger, the Partnerships have
owned 20,833,333 shares of the Company's Common Stock. The shares owned by the
Partnerships represent approximately 82.2% of the outstanding shares of Common
Stock as of May 15, 1997. The Partnerships also own warrants under which they
have the right to purchase an additional 10,000,000 shares of Common Stock at an
exercise price of $12.00 per share, subject to adjustment (the "Warrants"). The
general partner of the Partnerships is KKR Associates, a New York limited
partnership. KKR Associates has sole voting and investment power with respect to
the shares of Common Stock held by the Partnerships. Messrs. Kravis, Roberts,
Raether, and Greene (all of whom are members of the Board of Directors of the
Company) are general partners of KKR Associates. Messrs. Kravis and Roberts are
also members of the Executive Committee of KKR Associates. The other general
partners of KKR Associates are Robert I. MacDonnell, Michael W. Michelson,
Michael T. Tokarz, Perry Golkin, Clifton S. Robbins, Scott M. Stuart and Edward
A. Gilhuly. Mr. Brous, who is a member of the Board of Directors of the Company,
is a limited partner of KKR Associates.
The Partnerships have the right, under certain circumstances and subject to
certain conditions, to require the Company to register under the Securities Act
of 1933, as amended, the shares of Common Stock and the Warrants held by them.
The Partnerships have both demand and "piggyback" registration rights. Under the
agreements providing for registration rights, the Company will pay all expenses
in connection with any such registration. The Partnerships have informed the
Company that they have no present intention of exercising their registration
rights.
KKR, which is an affiliate of KKR Associates, may receive investment
banking fees for services rendered to the Company in connection with certain
transactions. During the fiscal year ended February 1, 1997, KKR received a fee
of $800,000 from the Company for assisting the Company in the acquisition of
Seessel Holdings, Inc. In addition, KKR renders management, consulting and
financial services to the Company for an annual fee of $1,000,000 plus expenses.
Messrs. Kravis, Roberts, Raether, and Greene are members of the limited
liability company which serves as the general partner of KKR, and Mr. Brous is
an executive of KKR.
OWNERSHIP OF COMPANY STOCK BY CERTAIN HOLDERS
The following table sets forth, as of the close of business on May 15,
1997, information as to those stockholders (other than executive officers and
directors of the Company) known to the Company to be the beneficial owners of
more than 5% of the outstanding shares of the Company's Common Stock:
<TABLE>
<CAPTION>
COMMON STOCK PERCENTAGE OF
BENEFICIALLY OWNED COMMON STOCK
NAME AND ADDRESS ON MAY 15, 1997 OUTSTANDING
- - ---------------- ------------------ -------------
<S> <C> <C>
KKR Associates, L.P. (1)................................ 30,833,333(2) 87.3%(3)
9 West 57th Street
New York, NY 10019
</TABLE>
- - ---------------
(1) The shares of Common Stock shown as owned by KKR Associates are owned of
record by the Partnerships. KKR Associates is the sole general partner of
the Partnerships and possesses the sole voting and investment power of the
Partnerships. Messrs. Kravis, Roberts, Raether and Greene (all of whom are
members of the Board of Directors of the Company) are general partners of
KKR Associates. Messrs. Kravis and Roberts are also the members of the
Executive Committee of KKR Associates. The other general partners of KKR
Associates are Robert I. MacDonnell, Michael W. Michelson, Michael T.
Tokarz, Perry Golkin, Clifton S. Robbins, Scott M. Stuart and Edward A.
Gilhuly. Mr. Brous, who is a member of the Board of Directors of the
Company, is a limited partner of KKR Associates.
(2) This amount includes 10,000,000 shares of Common Stock subject to purchase
within the next 60 days pursuant to exercise of the Warrants.
(3) For purposes of computing the percentage of outstanding shares held by KKR
Associates, the shares which KKR Associates has the right to acquire upon
exercise of the Warrant are deemed to be outstanding, but the shares that
the executive officers and directors of the Company have the right to
acquire within the next 60 days pursuant to the exercise of stock options
are not deemed to be outstanding.
4
<PAGE> 8
OWNERSHIP OF COMPANY STOCK BY DIRECTORS AND OFFICERS
The members of the Company's Board of Directors and all directors and
executive officers of the Company as a group have beneficial ownership of the
number of shares of the Company's Common Stock indicated in the following table
and its footnotes. Unless otherwise indicated in the footnotes, each such
individual has sole voting and investment power with respect to the shares set
forth in the table.
<TABLE>
<CAPTION>
COMMON STOCK PERCENTAGE OF
BENEFICIALLY OWNED ON COMMON STOCK
NAME MAY 15, 1997 OUTSTANDING (1)
- - ---- --------------------- ---------------
<S> <C> <C>
William J. Bolton.......................................... 133,333(2) *
Henry R. Kravis............................................ 30,833,333(3) 87.3%
George R. Roberts.......................................... 30,833,333(3) 87.3
Paul E. Raether............................................ 30,833,333(3) 87.3
James H. Greene, Jr........................................ 30,833,333(3) 87.3
Ronald G. Bruno............................................ 73,924(4) *
Nils P. Brous.............................................. -0- *
David B. Clark............................................. 33,333(2) *
James J. Hagan............................................. 31,666(2) *
Walter M. Grant............................................ 30,625(2) *
Laura Hayden............................................... 20,312(2) *
John Butler................................................ 20,833(5) *
All Executive Officers and Directors as a group (12
persons)................................................. 31,177,359(6) 88.0
</TABLE>
- - ---------------
* Holdings do not exceed 1% of the total outstanding shares of Common Stock.
(1) For the purposes of this table, a person or group of persons is deemed to
have "beneficial ownership" of any shares which such person has the right to
acquire within the next 60 days. For purposes of computing the percentage of
outstanding shares held by each person or group of persons within the next
60 days, any shares which such person or group of persons has the right to
acquire within the next 60 days are deemed to be outstanding but are not
deemed to be outstanding for the purpose of computing the percentage
ownership of any other person.
(2) These amounts include shares subject to purchase within the next 60 days
pursuant to the exercise of stock options as follows: Mr. Bolton, 50,000
shares; Mr. Clark, 12,500 shares; Mr. Hagan, 6,666 shares; Mr. Grant, 5,625
shares; and Ms. Hayden, 4,687 shares.
(3) This amount includes 20,833,333 shares owned of record by the Partnerships.
Messrs. Kravis, Roberts, Raether and Greene are general partners of KKR
Associates, which is the sole general partner of each of the Partnerships.
Under regulations adopted by the Securities and Exchange Commission, Messrs.
Kravis, Roberts, Raether and Greene, along with the other general partners
of KKR Associates, may be deemed to share beneficial ownership of the shares
beneficially owned by KKR Associates, but they disclaim any such beneficial
ownership. This amount also includes 10,000,000 shares of Common Stock
subject to purchase within the next 60 days pursuant to exercise of the
Warrants.
(4) This amount includes 37,227 shares owned directly by Mr. Bruno, 283 shares
owned by Mr. Bruno jointly with his wife, 176 shares owned by Mr. Bruno's
wife, 1,325 shares held by Mr. Bruno as a Trustee for his minor son, 18,139
shares held by Mr. Bruno as co-trustee for various family members, and
16,774 shares held by Mr. Bruno as executor for an estate.
(5) Mr. Butler was elected to the position of Senior Vice
President -- Operations of the Company on March 20, 1997. On April 21, 1997,
Mr. Butler purchased 20,833 shares of Common Stock from the Company at a
price of $12.00 per share.
(6) The number of shares shown for directors and executive officers as a group
includes an aggregate of 10,079,478 shares which are subject to purchase by
members of the group within the next 60 days pursuant to the exercise of
stock options and pursuant to the exercise of the Warrants.
5
<PAGE> 9
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
In December 1995, the Company changed its fiscal year from a 52-week or
53-week period ending on the Saturday closest to June 30 to a 52-week or 53-week
period ending on the Saturday closest to January 31. In order to implement this
change, the Company had a 30-week fiscal year beginning on July 2, 1995 and
ending on January 27, 1996 (the "Transition Period").
The following table sets forth the compensation paid or accrued during the
Transition Period and during the fiscal year ended February 1, 1997 (which is
referred to in the table as "Fiscal 1996") for the Chairman of the Board and
Chief Executive Officer of the Company and for the other individuals who were
serving as executive officers of the Company as of February 1, 1997 (the
"Executive Officers"). None of the Executive Officers was employed by the
Company prior to the Transition Period.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------------------- -----------------
OTHER SECURITIES
NAME AND PRINCIPAL ANNUAL UNDERLYING
POSITION YEAR SALARY ($)(1) BONUS ($)(2) COMPENSATION ($)(3) STOCK OPTIONS (#)
- - ---------------------------- ----------- ------------- ------------ ------------------- -----------------
<S> <C> <C> <C> <C> <C>
William J. Bolton........... Fiscal 1996 $407,689 $148,330 $ 27,197 250,000
Chairman of the Board and Transition 176,606 392,300 -0- -0-
Chief Executive Officer Period
James J. Hagan(5)........... Fiscal 1996 206,251 58,833 79,511 66,667
Executive Vice President
and Chief Financial
Officer
David B. Clark(6)........... Fiscal 1996 246,639 76,067 -0- 62,500
Executive Vice Transition 47,518 55,965 -0- -0-
President -- Merchandising Period
Walter M. Grant............. Fiscal 1996 152,311 43,447 119,882 56,250
Senior Vice President,
General Counsel and
Secretary
Laura Hayden................ Fiscal 1996 109,613 31,269 59,400 46,875
Senior Vice President --
Human Resources
Michael Heintzman(7)........ Fiscal 1996 203,851 57,051 40,800 62,500
Former Senior Vice Transition 53,690 53,850 -0- -0-
President -- Merchandising Period
Lisa R. Kranc(8)............ Fiscal 1996 178,372 49,920 16,199 46,875
Former Senior Vice Transition 16,828 6,729 -0- -0-
President -- Marketing Period
<CAPTION>
NAME AND PRINCIPAL ALL OTHER
POSITION COMPENSATION ($)(4)
- - ---------------------------- -------------------
<S> <C>
William J. Bolton........... $123,816
Chairman of the Board and -0-
Chief Executive Officer
James J. Hagan(5)........... 36,929
Executive Vice President
and Chief Financial
Officer
David B. Clark(6)........... 64,196
Executive Vice -0-
President -- Merchandising
Walter M. Grant............. 56,435
Senior Vice President,
General Counsel and
Secretary
Laura Hayden................ 56,443
Senior Vice President --
Human Resources
Michael Heintzman(7)........ 77,118
Former Senior Vice -0-
President -- Merchandising
Lisa R. Kranc(8)............ 90,071
Former Senior Vice -0-
President -- Marketing
</TABLE>
- - ---------------
(1) The amounts in this column reflect compensation for services provided during
a portion of the Transition Period for Mr. Bolton, Mr. Clark, Mr. Heintzman
and Ms. Kranc and compensation for services provided during a portion of
Fiscal 1996 for Mr. Hagan, Mr. Grant, and Ms. Hayden. The Executive Officers
began employment with the Company on the following dates: August 21, 1995
for Mr. Bolton, October 22, 1995 for Mr. Heintzman, November 13, 1995 for
Mr. Clark, January 8, 1996 for Ms. Kranc, May 6, 1996 for Mr. Hagan, June
17, 1996 for Mr. Grant, and July 8, 1996 for Ms. Hayden.
(2) The amounts listed in this column include signing bonuses paid by the
Company during the Transition Period to each of Mr. Bolton, Mr. Clark and
Mr. Heintzman. SEE "EMPLOYMENT CONTRACTS WITH EXECUTIVE OFFICERS."
(3) The amounts in this column include (i) the dollar value of the difference
between the price paid by Mr. Hagan, Mr. Grant and Ms. Hayden for shares of
the Company's Common Stock purchased from the
6
<PAGE> 10
Company during Fiscal 1996 and the fair market value of such shares on the
date of purchase, (ii) amounts paid by the Company to reimburse Mr. Hagan,
Mr. Grant and Ms. Hayden for taxes on the difference between the price paid
by them for shares of the Company's Common Stock and the fair market value
of such shares on the date of purchase, and (iii) amounts paid by the
Company to reimburse the Executive Officers for taxes on the relocation
expenses or allowances reported in the column entitled "All Other
Compensation." The amounts in this column do not include the value of other
perquisites and personal benefits provided by the Company to the Executive
Officers. The value of the perquisites and benefits provided to each
Executive Officer during Fiscal 1996 and during the Transition Period did
not exceed the lesser of $50,000 or 10% of such Executive Officer's salary
plus annual bonus.
(4) The amounts in this column include (i) relocation expenses or allowances
paid by the Company in Fiscal 1996 on behalf of each Executive Officer and
(ii) the dollar value of insurance premiums paid by the Company for term
life insurance policies providing death benefits to the beneficiaries of the
Executive Officers.
(5) Mr. Hagan was elected to the position of Executive Vice President and Chief
Financial Officer of the Company on January 29, 1997. Prior to January 29,
1997, Mr. Hagan served as Senior Vice President and Chief Financial Officer
of the Company.
(6) Mr. Clark was elected to the position of Executive Vice
President -- Merchandising of the Company on January 29, 1997. Prior to
January 29, 1997, Mr. Clark served as the Company's Senior Vice President --
Operations.
(7) Mr. Heintzman resigned from his position as the Company's Senior Vice
President -- Merchandising effective as of February 1, 1997. The Company is
currently paying severance benefits to Mr. Heintzman. SEE "EMPLOYMENT
AGREEMENTS WITH EXECUTIVE OFFICERS."
(8) Ms. Kranc resigned from her position as the Company's Senior Vice
President -- Marketing effective as of March 31, 1997. The Company is
currently paying severance benefits to Ms. Kranc. SEE "EMPLOYMENT AGREEMENTS
WITH EXECUTIVE OFFICERS."
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
During the fiscal year ended February 1, 1997, the Company granted stock
options to the Executive Officers under the 1996 Stock Purchase and Option Plan
for Key Employees of Bruno's, Inc. and Subsidiaries (the "Option Plan"). No
stock appreciation rights were granted to the Executive Officers during the last
fiscal year. Each Executive Officer was required to purchase shares of the
Company's Common Stock from the Company in order to be eligible to receive stock
options under the Option Plan. SEE "EMPLOYMENT AGREEMENTS WITH EXECUTIVE
OFFICERS" AND "CERTAIN RELATIONSHIPS BETWEEN THE COMPANY AND OFFICERS AND
DIRECTORS."
7
<PAGE> 11
The following table contains information regarding the stock options
granted by the Company to the Executive Officers during the last fiscal year:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
--------------------------------------------------- -----------------------------------
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO EXERCISE
UNDERLYING EMPLOYEES OR BASE
OPTIONS IN FISCAL PRICE EXPIRATION
NAME GRANTED (#)(1) YEAR ($/SH) DATE 0% ($)(2) 5% ($)(2) 10% ($)(2)
- - ---- -------------- ---------- -------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
William J. Bolton.................. 250,000 28.7% $12.00 2/15/06 -0- $1,072,237 $3,484,356
James J. Hagan..................... 66,667 7.6 12.00 9/30/06 $116,667 693,157 1,577,605
David B. Clark..................... 62,500 7.2 12.00 3/13/06 -0- 255,333 850,825
Walter M. Grant.................... 56,250 6.4 12.00 9/30/06 98,438 584,848 1,331,098
Laura Hayden....................... 46,875 5.4 12.00 9/30/06 82,031 487,373 1,109,248
Michael F. Heintzman(3)............ 62,500 7.2 12.00 2/15/06 -0- 268,059 871,089
Lisa R. Kranc(4)................... 46,875 5.4 12.00 2/15/06 -0- 201,044 653,317
</TABLE>
- - ---------------
(1) All of the stock options granted to the Executive Officers are non-qualified
options and have a term of ten years from the date of grant. One-half of the
options granted to each Executive Officer become exercisable based on the
Executive Officer's length of service with the Company (the "Time Options"),
and the remaining one-half of the options become exercisable based on the
Company's financial performance (the "Performance Options"). The Time
Options granted to each Executive Officer become exercisable in equal
installments of 20% per year over a five-year period. The Performance
Options become exercisable with respect to 20% of the underlying shares on
each August 18 following the completion of a fiscal year of the Company in
which the Company meets the annual and cumulative performance targets
specified by the Board of Directors of the Company. If the performance
targets specified by the Board of Directors are not met for a given year but
the Company meets both its annual and cumulative performance targets in a
subsequent year, then the Performance Options will become exercisable with
respect to all of the shares that would have been exercisable if the
performance targets had been met as scheduled. All Performance Options will
become exercisable after seven years from the date of grant, regardless of
whether the Company's performance targets have been met.
(2) The dollar gains shown in these columns result from calculations using
assumed annual growth rates of 0%, 5%, and 10% in the value of the Company's
Common Stock measured from the market value at the date of grant through the
expiration date of the ten-year life of the stock options granted to the
Executive Officers. These assumed rates of growth were selected by the
Securities and Exchange Commission for illustration purposes only and are
not intended to forecast future stock prices, which will depend upon market
conditions and the Company's future performance and prospects. The dollar
gains shown in these columns reflect a future value based upon growth at the
prescribed rates. The column labeled 0% shows the value at the date of grant
of stock options whose exercise price was below the market price of the
Company's Common Stock at the date of grant.
(3) The options granted to Mr. Heintzman were cancelled and terminated in
connection with his resignation as Senior Vice President -- Merchandising of
the Company effective as of February 1, 1997. The Company made a payment to
Mr. Heintzman in the amount of $3,000 in connection with the termination of
his stock options.
(4) The options granted to Ms. Kranc were cancelled and terminated in connection
with her resignation as Senior Vice President -- Marketing of the Company
effective as of March 31, 1997. The Company made a payment to Ms. Kranc in
the amount of $2,250 in connection with the termination of her stock
options.
8
<PAGE> 12
OPTION EXERCISES AND HOLDINGS
No options were exercised by the Executive Officers during the last fiscal
year. The following table contains information with respect to the unexercised
options to purchase shares of the Company's Common Stock held by the Executive
Officers as of February 1, 1997:
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
VALUE REALIZED ($) UNEXERCISED OPTIONS OPTIONS AT FISCAL
SHARES (MARKET PRICE AT AT FISCAL YEAR END(#) YEAR END($)(1)
ACQUIRED EXERCISE LESS --------------------------- ---------------------------
NAME ON EXERCISE(#) EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---- --------------- ------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William J. Bolton............. -0- -0- 25,000 225,000 $100,000 $900,000
James J. Hagan................ -0- -0- -0- 66,667 -0- 266,668
David B. Clark................ -0- -0- 6,250 56,250 25,000 225,000
Walter M. Grant............... -0- -0- -0- 56,250 -0- 225,000
Laura Hayden.................. -0- -0- -0- 46,875 -0- 187,500
Michael F. Heintzman(2)....... -0- -0- 6,250 56,250 25,000 225,000
Lisa R. Kranc(3).............. -0- -0- 4,687 42,188 18,748 168,752
</TABLE>
- - ---------------
(1) The numbers in these columns represent the difference between the fair
market value of the shares of the Company's Common Stock on February 1, 1997
and the exercise price for the unexercised options. The fair market value of
the Company's Common Stock on February 1, 1997 was $16.00 per share based on
trading in the over-the-counter market. See Item 5 entitled "Market for
Registrant's Common Equity and Related Stockholder Matters" in the Company's
Annual Report on Form 10-K for the fiscal year ended February 1, 1997, which
accompanies this proxy statement. An option is "in-the-money" if the fair
market value of the Company's Common Stock exceeds the exercise price.
(2) The options granted to Mr. Heintzman were cancelled and terminated in
connection with his resignation as Senior Vice President -- Merchandising of
the Company effective as of February 1, 1997. The Company made a payment to
Mr. Heintzman in the amount of $3,000 in connection with the termination of
his stock options.
(3) The options granted to Ms. Kranc were cancelled and terminated in connection
with her resignation as Senior Vice President -- Marketing of the Company
effective as of March 31, 1997. The Company made a payment to Ms. Kranc in
the amount of $2,250 in connection with the termination of her stock
options.
RETIREMENT SAVINGS PLAN
The Company maintains a profit sharing and retirement savings plan pursuant
to Section 401(k) of the Internal Revenue Code of 1986, as amended. To be
eligible to participate in the plan, an employee must be at least 21 years old,
must have at least one year of service with the Company, and must not be
eligible to participate in a union-sponsored or co-sponsored qualified
retirement plan.
Subject to certain limitations, participants in the plan are permitted to
make voluntary contributions to their accounts in the plan through payroll
deductions. The Company makes matching contributions with respect to the
voluntary contributions made by plan participants. Prior to April 1, 1997, the
Company made matching contributions on a dollar-for-dollar basis with respect to
a participant's contributions on the first two percent of his or her
compensation. The plan was amended effective April 1, 1997 to provide that the
Company will make matching contributions in the future in an amount equal to 50%
of a participant's contributions on the first five percent of his or her
compensation.
The plan permits the Company to make discretionary profit sharing
contributions to the accounts of eligible participants in an amount determined
annually by the Board of Directors of the Company. The Company did not make
discretionary contributions to the plan during the fiscal years ended July 2,
1994 and July 1, 1995, during the Transition Period, or during the fiscal year
ended February 1, 1997.
9
<PAGE> 13
All voluntary contributions made by plan participants and all matching
contributions made by the Company are fully vested at all times. Any
discretionary contributions made by the Company are vested after a plan
participant has completed five years of service with the Company or upon the
participant's death, disability or normal retirement. A participant is entitled
to receive a distribution of his vested account in the plan 90 days after the
participant's termination of employment with the Company, including a
termination of employment as a result of retirement, disability or death.
Payments are made in the form of a lump sum or in installments paid over a
period of 15 years.
THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE AND THE PERFORMANCE
GRAPH THAT APPEARS IMMEDIATELY AFTER SUCH REPORT SHALL NOT BE DEEMED TO BE
SOLICITING MATERIAL OR TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934 OR
INCORPORATED BY REFERENCE IN ANY DOCUMENT SO FILED.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for developing and making recommendations to the Board of Directors
with respect to the Company's executive compensation policies. The following
report of the Committee discusses the Company's executive compensation
objectives and policies applicable to the Executive Officers.
With respect to executive compensation for the Executive Officers, the
Committee's primary objectives are to (i) attract and retain highly qualified
individuals to serve as Executive Officers, (ii) align the interests of the
Executive Officers with those of the Company's stockholders, and (iii) reward
the Executive Officers appropriately for their performance. The Committee
believes that stock ownership by management and stock-based performance
compensation arrangements are beneficial to the enhancement of stockholder value
on the basis that members of management who are substantial stockholders in the
Company are motivated to act on behalf of all stockholders to optimize the
Company's performance. The executive compensation program is designed to provide
an overall level of executive compensation that is competitive with companies of
comparable size with similar market and operating characteristics.
The Company's executive compensation program for the Executive Officers
consists of a base salary, a bonus plan and stock options. Benefits are also
offered to the Executive Officers that are not based on performance, such as
benefits in the event of illness, disability, death or retirement. These
benefits are provided to the vast majority of employees of the Company.
Base Salary. Base salary levels for the Executive Officers, including the
Chief Executive Officer, are set so that the overall cash compensation package
for the Executive Officers, including bonus opportunity, compares favorably to
companies with which the Company competes for executive talent. In determining
base salaries, the Committee also takes into account a number of factors,
including individual experience and performance, each Executive Officer's level
of responsibility, the cost of living, and the historical salary levels for each
Executive Officer. The measures of individual performance considered include a
number of quantitative and qualitative factors such as the Company's historical
and recent financial performance, the Executive Officer's success in achieving
various nonfinancial goals within his or her area of responsibility, and other
contributions made by the Executive Officer to the Company's success. The
Committee has not found it practicable to, and has not attempted to, assign
relative weights to the specific factors considered in determining base salary
levels because the specific factors used may vary among the Executive Officers.
As is typical for most companies, payment of an Executive Officer's base salary
is not conditioned upon the achievement of any specific, pre-determined
performance targets.
Bonus Plan. In addition to his or her base salary, each Executive Officer,
including the Chief Executive Officer, may earn an annual bonus with a target
amount equal to a percentage of his or her base salary. For the fiscal year
ended February 1, 1997, the target bonus for the Chief Executive Officer was
equal to 65% of his base salary, and the target bonus for each other Executive
Officer was equal to 50% of his or her base salary. The maximum bonus for each
Executive Officer, including the Chief Executive Officer, was 100% of base
salary. The financial measure of performance under the Company's bonus plan for
the fiscal year ended February 1, 1997
10
<PAGE> 14
was the Company's earnings before interest, taxes, depreciation and amortization
("EBITDA"). The bonus plan provided for the payment of bonuses at the target
amount for each Executive Officer if the Company achieved the EBITDA performance
specified by the Board of Directors. The bonus plan provided for the payment of
bonuses either above or below the target amount if the Company's EBITDA
performance exceeded or fell below the amount specified by the Board of
Directors. The actual bonuses paid for the last fiscal year were equal to 57% of
the target bonus for each of the Executive Officers, including the Chief
Executive Officer.
Stock Options. The Committee believes that the Option Plan aligns the
interests of the Executive Officers with those of stockholders because stock
options allow the Executive Officers to benefit from increases in the value of
the Company's Common Stock. The Committee determines the number of option shares
granted to each Executive Officer based on the Executive Officer's position and
responsibilities and based on the number of shares of Common Stock purchased by
the Executive Officer. Each Executive Officer was required to purchase shares of
the Company's Common Stock from the Company in order to be eligible to receive
stock options under the Option Plan. SEE "STOCK OPTIONS AND STOCK APPRECIATION
RIGHTS."
Chief Executive Officer Compensation. The compensation of William J.
Bolton, the Company's Chief Executive Officer, for the Company's last fiscal
year was based on the same factors discussed above for all of the other
Executive Officers. As noted above, the target bonus for Mr. Bolton for the last
fiscal year was equal to 65% of his base salary. The bonuses paid to Mr. Bolton
and the other Executive Officers represented the same percentage (57%) of their
respective target bonuses.
Summary. The Company's executive compensation program is designed to
reward the following elements of performance:
- Individual performance is rewarded through continued employment with the
Company and through levels of, and increases to, base salary.
- Achievement of financial performance goals specified by the Board of
Directors is rewarded through the bonus plan.
- Stock price performance is rewarded through increases in the value of
previously granted stock options.
The Committee believes that the Company's executive compensation program
has been effective in (i) enabling the Company to attract and retain highly
qualified individuals to serve as Executive Officers of the Company, (ii)
rewarding individuals appropriately for their performance, and (iii) aligning
the interests of the Executives Officers with those of the Company's
stockholders. Although the Committee is pleased with the present compensation
program, it reserves the right to make changes to the program to the extent
necessary to continue to meet its stated goals in future years.
Submitted by the Compensation
Committee of the Company's Board of
Directors
James H. Greene, Jr.
Paul E. Raether
Nils Brous
11
<PAGE> 15
STOCK PERFORMANCE GRAPH
The following graph provides a comparison of the cumulative total
stockholder returns on (i) the Company's Common Stock, (ii) the Standard &
Poor's 500 Index, and (iii) a peer group of companies in the retail supermarket
industry. The comparison covers the period from the last trading day prior to
the end of the Company's fiscal year ended June 29, 1991 to the last trading day
prior to the end of the Company's fiscal year ended February 1, 1997. The
comparison assumes an initial investment of $100 at the beginning of such
period.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Bruno's S&P 500 Peer Group (1)
<S> <C> <C> <C>
June 29, 1991 100 100 100
June 27, 1992 71.09 113.41 91.10
July 3, 1993 50.31 128.87 105.07
July 2, 1994 39.95 130.68 106.81
July 1, 1995 65.78 164.75 121.56
January 27, 1996 58.71 194.97 137.67
February 1, 1997 90.54 246.33 180.12
</TABLE>
<TABLE>
<CAPTION>
JUNE 29, JUNE 27, JULY 3, JULY 2, JULY 1, JANUARY 27, FEBRUARY 1,
1991 1992 1993 1994 1995 1996 1997
-------- -------- ------- ------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Bruno's...................... $100 $ 71.09 $ 50.31 $ 39.95 $ 65.78 $ 58.71 $ 90.54
S&P 500...................... 100 113.41 128.87 130.68 164.75 194.97 246.33
Peer Group(1)................ 100 91.10 105.07 106.81 121.56 137.67 180.12
</TABLE>
- - ---------------
(1) The selected peer group consists of the following companies: Albertson's,
Inc., American Stores Co., Buttrey Food and Drug Co., Delchamps, Inc., Eagle
Food Centers, Food Lion, Inc., Giant Food, Inc., Great Atlantic and Pacific
Tea Co., Hannaford Brothers Company, Ingles Markets, Kroger Co., Marsh
Supermarkets, Ruddick Corp., Safeway Inc., Seaway Food Town, Smith's Food &
Drug Centers, Inc., Southland Corp., Supervalu, Inc., Village Supermarkets,
Inc., Vons Companies, Weis Markets, Inc. and Winn Dixie Stores, Inc.
12
<PAGE> 16
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
The Company has entered into Employment Agreements with each of the
Executive Officers. The Company also has entered into an Employment Agreement
with John Butler, who did not serve as an Executive Officer until his election
to the position of Senior Vice President -- Operations of the Company on March
20, 1997. For purposes of this discussion, all references to Executive Officers
shall be deemed to include Mr. Butler.
The Employment Agreements provide that each Executive Officer is entitled
to receive a base salary, which may be increased in the reasonable discretion of
the Company, and an annual bonus with a target amount equal to or not less than
50% of the Executive Officer's base salary and a maximum amount equal to 100% of
the Executive Officer's base salary. The initial base salaries specified in the
Employment Agreements are $400,000 for Mr. Bolton, $275,000 for Mr. Hagan,
$225,000 for Mr. Clark, $240,000 for Mr. Grant, $190,000 for Ms. Hayden,
$200,000 for Mr. Heintzman, $175,000 for Ms. Kranc, and $210,000 for Mr. Butler.
Mr. Clark's base salary was increased to $266,669 in connection with his
election to the position of Executive Vice President -- Merchandising of the
Company on January 29, 1997.
The Employment Agreements provide that each of the Executive Officers would
be given the opportunity to purchase a specified number of shares of the
Company's Common Stock at a price of $12.00 per share and would be granted
options to purchase additional shares of the Company's Common Stock at an
exercise price of $12.00 per share. Pursuant to the Employment Agreements, the
Company sold shares of the Company's Common Stock to the Executive Officers as
follows: 83,333 shares to Mr. Bolton, 25,000 shares to each of Mr. Hagan and Mr.
Grant, 20,833 shares to each of Mr. Clark, Mr. Heintzman, and Mr. Butler, and
15,625 shares to each of Ms. Hayden and Ms. Kranc. The Company also granted to
the Executive Officers the stock options described above in the table entitled
"OPTION GRANTS IN LAST FISCAL YEAR."
The Employment Agreements also provided for the Company to pay relocation
expenses or allowances for the Executive Officers and to pay signing bonuses to
certain of the Executive Officers. The relocation payments and signing bonuses
are reported above in the table entitled "SUMMARY COMPENSATION TABLE."
The term of the Employment Agreement for Mr. Bolton will continue until the
earlier of August 31, 1998 or the termination of Mr. Bolton's employment
pursuant to his Employment Agreement. The Company has the right to terminate Mr.
Bolton's employment at any time and for any reason. If Mr. Bolton's employment
is terminated by the Company without cause or by Mr. Bolton for "good reason,"
then Mr. Bolton will be entitled to receive a termination amount payable in 18
monthly installments equal to the greater of (i) an amount equal to Mr. Bolton's
base salary for 18 months at its then current monthly rate plus 1.5 times the
amount of Mr. Bolton's target bonus for the year in which the termination occurs
or (ii) the amount of the base salary plus target bonus that Mr. Bolton would
have received for the remaining term of his Employment Agreement. Mr. Bolton
also will be entitled to receive payment for accrued but unused vacation days
and to continued coverage for 18 months under any employee medical, disability
and life insurance plans in accordance with the terms of such plans. Mr. Bolton
may terminate his employment for "good reason" in the event of (i) a material
breach by the Company of any provision of his Employment Agreement, including a
material reduction by the Company in Mr. Bolton's duties, authority, support or
responsibilities, (ii) a decision by the Company requiring Mr. Bolton to perform
his duties and responsibilities for the Company at a location other than
Birmingham, Alabama, or (iii) a reduction by the Company in Mr. Bolton's base
salary, other than a reduction that is part of a general salary reduction
program affecting at least 90% of the officers of the Company and not exceeding
20% of Mr. Bolton's base salary.
The term of the Employment Agreement for each Executive Officer (other than
Mr. Bolton) is three years, except that the Employment Agreement for Mr. Hagan
will continue until his employment is terminated either voluntarily or
involuntarily. The Company has the right to terminate each Executive Officer's
employment at any time and for any reason. If an Executive Officer's employment
is terminated by the Company without cause or if the Executive Officer's
employment is terminated by the Executive for "good reason," then the Executive
Officer (other than Mr. Bolton) is entitled to receive a severance payment equal
to his or her base salary for one year. An Executive Officer (other than Mr.
Bolton) may terminate his or her employment for "good reason" in the event of
(i) a material breach by the Company of any provision of the Employment
Agreement, including a demotion by the Company in the Executive Officer's
position or the assignment to the Executive Officer of duties or
13
<PAGE> 17
responsibilities which are materially inconsistent with the duties or
responsibilities contemplated by the Employment Agreement or (ii) a reduction by
the Company in the Executive Officer's base salary, other than a reduction that
is part of a general salary reduction program affecting senior executives of the
Company and that is not, on average, greater than the salary reduction (as a
percentage of base salary) of other senior executives of the Company.
Mr. Heintzman resigned from his position as Senior Vice
President -- Merchandising of the Company effective as of February 1, 1997. The
Company has agreed that Mr. Heintzman will remain on the Company's payroll and
will continue to receive the same base salary and benefits that he was receiving
prior to February 1, 1997 until the first to occur of (i) February 1, 1998 or
(ii) his re-employment with another Company. After the date of his re-employment
with another Company, Mr. Heintzman will no longer be entitled to receive any
benefits from the Company but he will continue to receive the severance payments
to which he is entitled under his Employment Agreement through February 1, 1998.
In connection with Mr. Heintzman's resignation, the Company repurchased 20,833
shares of the Company's Common Stock from Mr. Heintzman at a price of $12.24 per
share and made a payment to Mr. Heintzman of $3,000 in connection with the
cancellation and termination of the stock options previously granted to him.
Ms. Kranc resigned from her position as Senior Vice President -- Marketing
of the Company effective as of March 31, 1997. The Company has agreed that Ms.
Kranc will remain on the Company's payroll and will continue to receive the same
base salary and benefits that she was receiving prior to March 31, 1997 until
the first to occur of (i) March 31, 1998 or (ii) her re-employment with another
Company. After the date of her re-employment with another Company, Ms. Kranc
will no longer be entitled to receive any benefits from the Company but she will
continue to receive the severance payments to which she is entitled under her
Employment Agreement through March 31, 1998. In connection with Ms. Kranc's
resignation, the Company repurchased 15,625 shares of the Company's Common Stock
from Ms. Kranc at a price of $12.24 per share and made a payment to Ms. Kranc of
$2,250 in connection with the cancellation and termination of the stock options
previously granted to her.
CERTAIN RELATIONSHIPS BETWEEN THE COMPANY AND OFFICERS AND DIRECTORS
During the fiscal year ended February 1, 1997, the Company sold shares of
its Common Stock to the Executive Officers pursuant to the Employment Agreements
with the Executive Officers. In addition, on April 21, 1997, the Company sold
shares of its Common Stock to John Butler, who was elected to the position of
Senior Vice President -- Operations of the Company on March 20, 1997. SEE
"EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS." The Company sold 83,333 shares
to Mr. Bolton, 25,000 shares to each of Mr. Hagan and Mr. Grant, 20,833 shares
to each of Mr. Clark, Mr. Heintzman, and Mr. Butler, and 15,625 shares to each
of Ms. Hayden and Ms. Kranc. Each Executive Officer paid a price of $12.00 per
share for the shares purchased by such Executive Officer. In connection with the
purchase of such shares, each Executive Officer entered into a Management
Stockholder's Agreement with the Company (the "Stockholder's Agreements"). The
Stockholder's Agreements impose restrictions on the transfer of the shares of
Common Stock purchased by the Executive Officers. With certain exceptions, the
shares purchased by the Executive Officers cannot be transferred prior to the
fifth anniversary of the purchase date of such shares. In addition, the Company
has the option to repurchase the shares held by any Executive Officer whose
employment with the Company is terminated. The Company has repurchased the
shares of its Common Stock sold to Mr. Heintzman and Ms. Kranc. SEE "EMPLOYMENT
AGREEMENTS WITH EXECUTIVE OFFICERS."
Five of the members of the Board of Directors of the Company are associated
with KKR. Certain relationships and transactions between the Company and KKR and
its affiliates are described above. SEE "COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION."
14
<PAGE> 18
INDEBTEDNESS OF MANAGEMENT
The Company made loans to certain of the Executive Officers in connection
with their purchase of shares of the Company's Common Stock. Each loan bears
interest at the applicable federal rate as determined under the Internal Revenue
Code of 1986, as amended, at the time the loan was made. The outstanding
principal amounts under these loans as of May 15, 1997 are shown below:
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND TITLE INDEBTEDNESS APPLICABLE
OF EXECUTIVE OFFICER TO COMPANY INTEREST RATE
-------------------- ------------ -------------
<S> <C> <C>
William J. Bolton........................................... $443,253 5.65%
Chairman of the Board and Chief Executive Officer
David B. Clark.............................................. 125,000 5.65
Executive Vice President -- Merchandising
Laura Hayden................................................ 93,750 6.53
Senior Vice President -- Human Resources
John Butler (1)............................................. 125,000 6.39
Senior Vice President -- Operations
</TABLE>
- - ---------------
(1) Mr. Butler was elected to the position of Senior Vice
President -- Operations of the Company on March 20, 1997.
Each loan is secured by the shares of the Company's Common Stock held by
the Executive Officer to whom the loan was made. Interest is due on June 30 and
December 31 of each year. The principal amount of the loan made to each
Executive Officer is due upon the earliest to occur of (i) one year following
the termination of the Executive Officer's employment with the Company without
cause or for "good reason," (ii) immediately upon the termination of the
Executive Officer's employment with the Company for cause or without "good
reason," (iii) the disposition by the Executive Officer of all or any part of
the shares of the Company's Common Stock purchased by the Executive Officer from
the Company with the proceeds of the loan, or (iv) seven years from the date on
which the loan was made.
OTHER MATTERS
The Board of Directors does not know of any other matters to be presented
for action at the Annual Meeting. If any other business properly comes before
the Annual Meeting, the persons named in the accompanying form of proxy intend
to vote thereon in accordance with their best judgment.
INDEPENDENT AUDITORS
The Board of Directors has appointed Deloitte & Touche LLP to audit the
accounts of the Company and its subsidiaries for the fiscal year ending January
31, 1998. A representative of Deloitte & Touche LLP will be present at the
Annual Meeting and will have the opportunity to make a statement if he or she so
desires and will be available to respond to appropriate questions from the
Company's stockholders.
STOCKHOLDER PROPOSALS
Stockholders of the Company who intend to submit proposals at the Company's
1998 Annual Meeting of Shareholders must submit such proposals to the Company no
later than March 12, 1998 in order to be considered for inclusion in the proxy
statement and form of proxy to be distributed by the Board of Directors in
connection with that meeting. Stockholder proposals should be submitted to the
Secretary of the Company at the principal executive offices of the Company at
800 Lakeshore Parkway, Birmingham, Alabama 35211. The Company reserves the right
to decline to include in the Company's proxy materials any stockholder proposals
which do not comply with the rules of the Securities and Exchange Commission for
inclusion therein.
15
<PAGE> 19
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
10% of a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of the Company's Common Stock and other equity securities
of the Company. Officers, directors and greater than 10% stockholders are
required by the regulations of the Securities and Exchange Commission to furnish
the Company with copies of all reports that they file under Section 16(a). To
the Company's knowledge, based solely on a review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, all Section 16(a) filing requirements applicable to the Company's
officers, directors and greater than 10% beneficial owners were complied with by
such persons during the fiscal year ended February 1, 1997, except that Mr.
Bruno failed to file timely Form 4 Reports with respect to certain changes in
his beneficial ownership of the Company's Common Stock during such fiscal year.
By Order of the Board of Directors
/s/ Walter M. Grant
WALTER M. GRANT
Secretary
THE COMPANY HAS SENT A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE
FISCAL YEAR ENDED FEBRUARY 1, 1997, AS FILED BY THE COMPANY WITH THE SECURITIES
AND EXCHANGE COMMISSION ON APRIL 28, 1997, INCLUDING THE FINANCIAL STATEMENTS
CONTAINED THEREIN, TO EACH OF ITS STOCKHOLDERS OF RECORD AS OF JUNE 2, 1997 AND
TO EACH BENEFICIAL STOCKHOLDER ON THAT DATE. IF YOU HAVE NOT RECEIVED YOUR COPY,
THE COMPANY WILL PROVIDE A COPY WITHOUT CHARGE (A REASONABLE FEE WILL BE CHARGED
FOR EXHIBITS) UPON RECEIPT OF A WRITTEN REQUEST THEREFOR MAILED TO THE COMPANY'S
OFFICES, ATTENTION: SECRETARY.
16
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[BRUNO'S LOGO]
<PAGE> 21
APPENDIX A
PROXY
BRUNO'S, INC.
BIRMINGHAM, ALABAMA
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON THE 10TH DAY OF JULY, 1997.
The undersigned hereby revokes all previous proxies, acknowledges receipt of
the notice and proxy statement for the Annual Meeting of Stockholders of
Bruno's, Inc. (the "Company") to be held on July 10, 1997, and appoints William
J. Bolton, Walter M. Grant and James J. Hagan, and each of them, each with the
power to apppoint his substitute, attorneys with the powers the undersigned
would possess if personally present to vote all of the shares of Common Stock
of the Company held of record by the undersigned on June 2, 1997, at the Annual
Meeting of the Stockholders of the Company to be held at the Plaza Hotel, Fifth
Avenue at Central Park South, New York, New York 10019, on the 10th day of
July 1997, at 11:00 o'clock A.M., New York time, and at any adjournements
thereof, upon the matter set forth on the reverse side and described in the
notice and proxy statement for such meeting and in their discretion upon such
matters which may come before the meeting.
If your address has changed, please note new address:
Address:
--------------------------------------------
Zip Code:
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<TABLE>
<S> <C>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE BY THE UNDERSIGNED HEREIN.
IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES NAMED BELOW.
Please mark
your votes as
indicated in /x/
this example.
(1) ELECTION OF DIRECTORS FOR all WITHHOLD
nominees listed below AUTHORITY
(INSTRUCTION -- TO WITHHOLD (except as marked to vote for all
AUTHORITY TO VOTE FOR ANY to the contrary) nominees listed below
INDIVIDUAL NOMINEE, STRIKE A LINE / / / /
THROUGH THE NOMINEE'S NAME IN
THE LIST BELOW.)
Nominees: William J. Bolton James M. Greene, Jr.
Henry R. Kravis Nils P. Brous
George R. Roberts Ronald G. Bruno
Paul E. Raether
(2) In their discretion, upon such other matters as may properly come before the \
meeting.
To help our preparations for the meeting, please
check here if you plan to attend. / /
Please mark, date and return this proxy in the enclosed envelope as soon as possible,
even though you plan to attend this meeting.
Signature(s)_______________________________________ Date: ______________________
SIGN HERE EXACTLY AS NAME(S) APPEAR(S) HEREON. When shares are held by joint tenants, both should sign. When signing as an
attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or by an authorized officer. If a partnership, please sign in partnership name by an authorized person.
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