SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the registrant [ X ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
KFC NATIONAL PURCHASING COOPERATIVE, INC.
__________________________________________________________________
(Name of Registrant as Specified in Its Charter)
KFC NATIONAL PURCHASING COOPERATIVE, INC.
_________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3) or Item 22(a)(2) of
Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transactions
applies:
__________________________________________________________________
(2) Aggregate number of securities to which transaction
applies:
_________________________________________________________________
(3) Per unit price of other underlying value of transaction
computer 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:
__________________________________________________________________
KFC National Purchasing Cooperative, Inc.
____________________________________________
NOTICE OF SEVENTEENTH ANNUAL MEETING
OF STOCKHOLDERS
____________________________________________
To Be Held March 15, 1996
To the Stockholder Members:
The Seventeenth Annual Meeting (the "Annual Meeting") of the
stockholders of KFC National Purchasing Cooperative, Inc. (the
"Cooperative") will be held on Friday, March 15, 1996 at 10:00 a.m.
at the Cooperative's offices at 950 Breckenridge Lane, Louisville,
Kentucky, for the purpose of considering and acting upon:
1. Election of Directors. Election of one director by
the holders of each of the Series B, C, D, G, I, and L
Membership Common Stock; the election of one director
nominated by holders of Series J Membership Common Stock
and elected by the holders of all shares of Membership
Common Stock; and the election of the Independent
Director nominated by the Cooperative's Board of
Directors and elected by the holders of all shares of
Membership Common Stock.
2. Other Business. Such other matters and business as
may properly be brought before the meeting or any
adjournment thereof.
Information regarding the matters to be acted upon at the
Annual Meeting is contained in the Proxy Statement accompanying
this Notice. Stockholders of record at the close of business on
February 11, 1996 are entitled to notice of and to vote at the
Annual Meeting, and any adjournments thereof.
ALL STOCKHOLDER MEMBERS ARE ENTITLED TO VOTE IN THE ELECTION OF THE
INDEPENDENT DIRECTOR AND THE DIRECTOR NOMINATED BY THE HOLDERS OF
SERIES J MEMBERSHIP COMMON STOCK. IN ADDITION, HOLDERS OF SERIES
B, C, D, G, I, AND L MEMBERSHIP COMMON STOCK ARE ENTITLED TO VOTE
IN THE ELECTION OF THE DIRECTOR NOMINATED BY THE HOLDERS OF THEIR
RESPECTIVE SERIES OF MEMBERSHIP COMMON STOCK.
THE PRESENCE IN PERSON OR BY PROXY OF STOCKHOLDER MEMBERS
REPRESENTING A MAJORITY OF THE STOCKHOLDER MEMBERS ENTITLED TO VOTE
AT THE ANNUAL MEETING SHALL CONSTITUTE A QUORUM AT THE ANNUAL
MEETING. THEREFORE, YOU ARE URGED TO SIGN, DATE AND RETURN THE
ENCLOSED FORM OF PROXY.
A PROMPT RESPONSE WILL BE APPRECIATED.
By Order of the Board of Directors.
Thomas D. Henrion
President and Chief Executive Officer
Louisville, Kentucky
February 12, 1996
KFC NATIONAL PURCHASING COOPERATIVE, INC.
PROXY STATEMENT
For the Seventeenth Annual Meeting of Stockholders
To Be Held on March 15, 1996
Proxies are being solicited on behalf of the Board of
Directors of KFC National Purchasing Cooperative, Inc. (the
"Cooperative"), in connection with the Seventeenth Annual Meeting
of Stockholders (the "Annual Meeting") to be held at the
Cooperative's offices at 950 Breckenridge Lane, Louisville,
Kentucky, on Friday, March 15, 1996, at 10:00 a.m., and at any
adjournments thereof. As set forth in the accompanying Notice, the
purpose of the Annual Meeting is to consider the election of
certain directors and such other matters and business as may
properly be brought before the meeting.
All properly executed proxies delivered pursuant to this
solicitation and not revoked will be voted at the Annual Meeting in
accordance with the directions given. Except in the election of
Series B, C, D, G, I and L Directors, as discussed below, each
stockholder member has one vote per share of Membership Common
Stock on all matters coming before the meeting. With regard to the
election of directors, (a) each stockholder member is entitled to
cast one vote each to elect the Series J Director and the
Independent Director, and (b) only stockholders of each of Series
B, C, D, G, I and L Membership Common Stock are entitled to cast
one vote each to elect one member to the Board of Directors to
represent the Series. Proxies may be revoked at any time in
writing or in person at the Annual Meeting or at any adjournment
thereof. All proxies are automatically revoked one year from their
date.
The persons named in the enclosed form of proxy, who are the
members of the Executive Committee of the Board of Directors, or
their substitutes, will not vote a proxy for any nominee to
represent a Series of Membership Common Stock unless the
stockholder member appointing the proxy is eligible to vote for the
nominee and designates the stockholder's preference by checking one
of the appropriate boxes on the form of proxy.
The presence in person or by proxy of stockholders
representing a majority of the stockholder members entitled to vote
at the Annual Meeting shall constitute a quorum at the Annual
Meeting. The affirmative vote of two-thirds of the shares of
Membership Common Stock present in person or by proxy at the
meeting is required to take any action at the Annual Meeting, other
than the election of directors. Abstentions are counted for
purposes of determining the presence or absence of a quorum for the
transaction of business and in tabulations of the votes cast on
proposals presented to stockholders.
The mailing address of the principal executive offices of the
Cooperative is 950 Breckenridge Lane, Louisville, Kentucky 40207.
The approximate date on which this Proxy Statement and form of
proxy are first being sent or given to stockholders is February 12,
1996. Only those holders of Membership Common Stock of record at
the close of business on February 11, 1996, are entitled to notice
of and to vote at the Annual Meeting and any adjournment thereof.
On February 11, 1996, there were 581 holders of Membership Common
Stock.
ELECTION OF DIRECTORS
At the Annual Meeting, the Independent Director and directors
representing the Series B, C, D, G, I, J, and L Membership Common
Stockholders will be elected. The terms of the directors set forth
below will expire at the meeting. Vacancies also exist with
respect to the two director positions eligible to be filled by KFC
National Management Company ("KFC Management"), the sole holder of
Series K Membership Common Stock, but no persons have been
nominated to fill these positions at the Annual Meeting.
<TABLE>
<CAPTION>
Expired Directorships
Name Series Class Area or Holder
<S> <C> <C> <C>
Robert P. Peck B II Arkansas, Colorado, Kansas,
Missouri, New Mexico,
Oklahoma, Texas
Ronald Giles C II Connecticut, Delaware,
District of Columbia, Maine,
Maryland, Massachusetts, New
Hampshire, New Jersey, New
York, Pennsylvania, Rhode
Island, Vermont
Calvin G. White D II Alaska, Hawaii, Idaho,
Montana, Oregon, Washington,
Wyoming
Charles Buckner G II Arizona, California, Nevada,
Utah
Paul A. Houston I III Scott's Hospitality, Inc.
("Scott's")
Edward J. Henriquez, Jr. J II Foreign Territories Other Than Canada
John Marsella L I National Franchisee Advisory
Council ("NFAC")
Edward W. Rhawn N/A II Independent
</TABLE>
Nominees
Scott's, the sole holder of Series I Membership Common Stock,
is entitled to nominate and elect as a Series one member of the
Board of Directors to serve the remaining one year of a three-year
term. Scott's has nominated Paul A. Houston to continue serving as
director representing Series I Membership Common Stock. At this
Annual Meeting, NFAC, the sole holder of Series L Membership Common
Stock, is entitled to nominate and elect as a Series one member of
the Board of Directors to serve the remaining two years of a three-year
term. NFAC has nominated John Marsella to continue serving as
director representing the Series L Membership Common Stock.
Certain information with respect to Messrs. Houston and Marsella is
provided below at "Management."
Each of Series B, C, D, and G Membership Common Stock is
entitled to nominate and elect as a Series one member of the Board
of Directors. Each of the following two stockholder members has
been nominated to serve as Series B Director: Robert P. Peck and
Jacob H. DeWitt. Mr. Peck is 61 years of age and currently owns
and operates two KFC stores. He has served as a director of the
Cooperative since 1990, and currently serves as the Chairman of the
Board. Mr. DeWitt is 37 years of age, has worked with KFC stores
since 1982, and currently owns and operates one KFC store.
Each of the following two stockholder members has been
nominated to serve as Series C Director: John F. Arsenault and
James G. Cocolin. Mr. Arsenault is 46 years of age, has worked
with KFC stores since 1970, and currently owns five KFC stores.
Mr. Cocolin is 46 years of age, became a KFC franchisee in 1979,
and currently owns and operates 11 KFC stores.
Calvin G. White is the sole nominee to serve as the Series D
Director. Certain information with respect to Mr. White is
provided below at "Management."
Each of the following three stockholder members has been
nominated to serve as Series G Director: Joseph F. Cardiel, Martin
D. Lewis, and Dean M. Sorgdrager. Mr. Cardiel is 53 years of age,
became a KFC franchisee in 1980, and currently owns one KFC store.
Mr. Lewis is 74 years of age, has worked with KFC stores since
1966, and currently owns and operates 1 KFC store. Mr. Sorgdrager
is 33 years of age, has worked with KFC stores since 1976, and
currently owns and operates 1 KFC store.
Edward J. Henriquez, Jr. is the sole nominee to serve as the
Series J Director. Certain information will respect to Mr.
Henriquez is provided below at "Management."
Edward W. Rhawn is the nominee of the Board of Directors to
serve as the Independent Director. Certain information with
respect to Mr. Rhawn is provided below at "Management."
Each of the B, C, D, G, I, and L Series Directors are elected
by the affirmative vote of a plurality of the shares of the
respective Series entitled to vote for the director voting in
person or by proxy at the Annual Meeting. As of the Record Date,
there were 77 holders of Series B Membership Common Stock, 62
holders of Series C Membership Common Stock, 21 holders of Series
D Membership Common Stock, 48 holders of Series G Membership Common
Stock and one holder each of Series I and L Membership Common
Stock. Each of the Independent Director and the Series J Director
is elected by a plurality vote of all shares of Membership Common
Stock entitled to vote at the Annual Meeting; as of the Record date
there were 581 holders of all Series of Membership Common Stock.
Each of the nominees described herein has agreed to serve if
elected. The terms of the Class I Directors elected at the Annual
Meeting will expire at the Cooperative's Annual Meeting for 1998,
the terms of the Class II Directors will expire at the
Cooperative's Annual Meeting for 1999, and the terms of the Class
III Directors will expire at the Cooperative's Annual Meeting for
1997.
<TABLE>
<CAPTION>
MANAGEMENT OF THE COOPERATIVE
Directors and Executive Officers
The following table lists, in addition to other information, the directors and certain executive
officers of the Cooperative at December 31, 1995, their ages, their position with the Cooperative, their
present principal occupations, and the number and percentages of shares of Store Common Stock beneficially
owned, directly or indirectly, by each. The information provided with respect to the ages and number of
shares beneficially owned is as of December 31, 1995.
Positions Year First
and Offices Became
Currently Director or Term as Present Store Percent
held with Executive Director Series Principal Common Stock of Store
Name Age Cooperative Officer Expires Represented(*) Occupation Ownership Outstanding
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William E. 56 Director, 1988 1997 F Operator 10 **
Allen Secretary
Charles 58 Director 1993 1996 G Operator 10 **
Buckner
Darrell M. 50 Director 1995 1998 N Operator 9 **
Dunafon
Ronald 50 Director 1995 1996 C Operator 4 **
Giles
Leon W. 76 Director, 1978 1997 H Founder 266 4.7
Harman Vice Chairman of Harman
of the Board Management
Corporation
Edward J. 58 Director 1994 1996 J Operator 12 **
Henriquez, Jr.
Paul A. Houston 46 Director 1995 1996 I President of 408 7.2
Scott's Food
Services, Inc.
John Marsella 49 Director 1995 1996 L Operator 6 **
Grover G. Moss 51 Director 1994 1998 O Operator 9 **
David G. Neal 49 Director, 1991*** 1997 E Operator 89 1.6
Treasurer
Robert P. 61 Director, 1990 1996 B Operator 5 **
Peck Chairman of
the Board
Edward W. Rhawn 57 Director 1992 1996 Independent Chairman -- --
of Rhawn
Enterprises, Inc.
Jack M. Richards 67 Director 1991 1997 A Operator 3 **
James B. 57 Director 1990 1998 L Operator 2 **
Royster
Calvin G. 41 Director 1992 1996 D Operator 3 **
White
Ronald J. Young 37 Director 1993 1997 M Operator 12 **
Thomas D. 53 Director, 1980 -- -- President & -- --
Henrion President, Chief Executive
Chief Executive Officer, Cooperative
Officer
William V. 46 Vice President, 1985 -- -- Vice President, -- --
Holden Chief Financial Chief Financial
Officer Officer, Cooperative
Judith L. 47 Vice President, 1991 -- -- Vice President, -- --
Hollis General Manager Cooperative
KFC Sales
W. Thomas 49 Vice President, 1982 -- -- Vice President, -- --
Hutcherson Purchasing Cooperative
Kenneth L. Hartung 48 Vice President 1993 -- -- Vice President, -- --
Cooperative
All directors and officers as a group (27 persons)**** 848
______________________________
<FN>
* KFC Management has purchased one share of Series K Membership Common
Stock. In 1989, both directors representing KFC Management resigned as
members of the Board of Directors. KFC Management has not taken any action
to fill the vacancies and has not indicated whether it will take action in
the future to fill the vacancies. The total number of shares of Store
Common Stock listed as owned by directors and officers does not include the
2,028 shares of Store Common Stock believed by the Cooperative to be owned
by KFC Management or affiliates, representing approximately 35.8% of the
Store Common Stock outstanding.
** Less than one-half of one percent.
*** Mr. Neal has previously served on the Board of Directors of the
Cooperative as one of the two directors representing NFAC, the holder of
the Series L share of Membership Common Stock. He first began serving
on the Board of Directors as a representative of Series E in February 1991.
**** Each director and nominee for director, other than Messrs. Henrion and
Rhawn, is, or is affiliated with a member which is, the owner of one share
of Membership Common Stock. All directors and officers as a group (27
persons) own 15 shares of Membership Common Stock, 2.6 percent of the
total number of Shares of Membership Common Stock outstanding. The Store
Common Stock ownership reflects the number of shares which each director,
other than Messrs. Henrion and Rhawn, owns or which is owned by the member
with which the director is affiliated. Except as required by law, Store
Common Stock has no voting rights. Messrs. Henrion and Rhawn are neither
the owners, nor affiliates of owners, of any Membership or Store Common
Stock.
</TABLE>
The Cooperative's Bylaws provide for a Board of Directors
consisting of up to twenty voting members (with sixteen voting
members currently serving) plus the Cooperative's President, who
is a non-voting member. Up to nineteen directors will be elected
by the holders of various series of Membership Common Stock.
Each series of Membership Common Stock is generally entitled to
elect one director, except that the NFAC and KFC Management are
each entitled to elect two directors. One director (the
"Independent Director") is nominated by the Board of Directors
and elected by a plurality vote of the shares of all series of
Membership Common Stock entitled to vote. The Independent
Director must not be affiliated in any way with any owner or
operator of a KFC or Taco Bell retail outlet ("Operator"). With
the exception of the President and the Independent Director, each
director of the Cooperative must be a member of the Cooperative
or a shareholder, officer, employee or partner of the entity
which is a member of the Cooperative. Additionally, each
director (other than the President and the Independent Director)
must be a member or an officer, director, shareholder, employee
or partner of the organization which is entitled to vote for such
director. All voting members of the Board of Directors serve
three-year staggered terms. Only the Series B, C, D, G, I, J, L,
and Independent Directors will be elected at the Annual Meeting.
During the last five years, Messrs. Allen, Buckner, Dunafon,
Giles, Harman, Henriquez, Houston, Marsella, Moss, Neal, Peck,
Richards, Royster, White, and Young have been principally engaged
in business as Operators, and Mr. Rhawn has been Chairman and
owner of Rhawn Enterprises, Inc., a Louisville financial services
holding company.
Thomas D. Henrion joined the staff of the Cooperative in
March 1980 as its President and in 1993 also became Chief
Executive Officer. In 1991, Mr. Henrion was elected to serve as
a director of the National Cooperative Bank. Mr. Henrion also
serves as a director of Wholesome and Hearty Foods, Inc.
Except for Mr. Henrion, all officers of the Cooperative who
are also directors serve in such offices on a limited, part-time
basis without remuneration.
Standing Committees
The Board of Directors of the Cooperative had four regular
meetings in fiscal 1995 and no special meetings. The Board of
Directors has five standing committees, each of which, except as
noted below, met four times during fiscal 1995: Executive,
Personnel, Audit and Budget, Insurance, and Nominating.
The Executive Committee is comprised of Messrs. Allen,
Harman, Neal, Peck and Royster. The Executive Committee, between
the meetings of the Board and while the Board is not in session,
has all the powers and may exercise all the duties of the Board
of Directors in the management of the business of the Cooperative
which may lawfully be delegated to it by the Board.
The Audit and Budget Committee is comprised of Messrs.
Buckner, Giles, Henriquez, Moss, Neal and Young. The Audit and
Budget Committee meets periodically with management and
representatives of the Cooperative's independent accountants.
The independent accountants have free access to the Committee and
the Board of Directors. The Committee considers the scope,
timing and fees for the annual audit and the results of audit
examinations performed by the independent public accountants,
including certain recommendations to improve the Cooperative's
systems of accounting and internal controls, and the follow-up
reports prepared by management of the Cooperative pursuant to
such recommendations. The Committee reviews the Cooperative's
annual budget before its consideration by the Board of Directors.
The Insurance Committee is comprised of Messrs. Allen,
Dunafon, Richards and White. The Insurance Committee monitors
the KFC Franchisee Insurance Program and, in conjunction with the
Executive Committee, makes recommendations to the Board of
Directors concerning the program.
The Nominating Committee is comprised of Messrs. Allen,
Harman and Neal. The Nominating Committee makes recommendations
to the Board of Directors concerning officer positions for the
Cooperative and met once during fiscal 1995. The Board of
Directors considers the nomination of the Independent Director.
Members of the Cooperative nominate their own candidates for
director to represent their respective Series of Membership
Common Stock.
Compensation Committee Interlocks and Insider Participation
The Personnel Committee is comprised of Messrs. Harman,
Houston, Marsella, Peck, Rhawn and Royster. Pursuant to a former
provision of the Cooperative's Bylaws, Mr. Peck, as Chairman of
the Board, served as the Cooperative's Chief Executive Officer
until May 1993; he received no compensation from the Cooperative
except for the reimbursement for expenses as provided below under
"Compensation of Directors." The Personnel Committee considers
personnel policy and practices of the Cooperative and makes
recommendations to the Board of Directors concerning the
compensation of all officers. See "Report of Personnel Committee
on Executive Compensation."
Executive Compensation
The following table shows all cash compensation paid by the
Cooperative for the years ended October 31, 1995, 1994, and 1993
to the most highly compensated executive officers as to whom the
total cash and cash-equivalent remuneration exceeded $100,000
during fiscal 1995.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
Name and Principal Fiscal All Other
Position Year Salary Bonus(1) Compensation(2)
<S> <C> <C> <C> <C>
Thomas D. Henrion 1995 $181,498 $51,480 $21,046
President and Chief 1994 175,116 51,383 19,440
Executive Officer 1993 165,361 53,370 19,098
William T. Hutcherson 1995 102,034 15,815 11,631
Vice President 1994 101,538 10,713 11,834
1993 101,904 17,831 12,500
William V. Holden 1995 92,067 14,406 10,531
Vice President and 1994 85,381 10,522 10,024
Chief Financial 1993 77,082 14,048 9,659
Officer
Kenneth Hartung 1995 87,099 17,861 10,457
Vice President 1994 82,813 16,538 9,881
1993 53,125 5,040 4,535
Judith Hollis 1995 86,800 18,346 10,230
Vice President 1994 83,333 8,820 9,784
1993 78,583 16,800 10,048
________________________
<FN>
(1) The Cooperative has established bonus programs for
all officers under which, if they achieve certain
objectives, they may receive a bonus of not greater
than 40% of their base salaries. In addition, the
fiscal 1994 amount for Mr. Henrion includes a one-time
payment of $21,330 to Mr. Henrion pursuant to a letter
agreement dated May 22, 1991, providing for such
payment if Mr. Henrion remained employed by the
Cooperative through February 15, 1994.
(2) Includes employer contribution to the
Cooperative's Thrift Plan and Money Purchase Pension
Plan in fiscal 1995 as follows: Mr. Henrion $4,500 and
$11,546, respectively; Mr. Hutcherson $3,382 and
$8,249, respectively; Mr. Holden $3,078 and $7,453,
respectively; Mr. Hartung $3,109 and $7,348,
respectively; and Ms. Hollis $2,869 and $7,361,
respectively. For Mr. Henrion, the fiscal 1995 amount
includes $5,000, representing the value to Mr. Henrion
of the Cooperative's payments with respect to the
insurance policy described below. See "Report of
Personnel Committee on Executive Compensation."
</TABLE>
Compensation of Directors
No director, other than the Independent Director, receives
any remuneration from the Cooperative other than reimbursement
for long distance travel, hotel accommodations, and $400 per
board meeting for out-of-pocket expenses. The Independent
Director receives an annual fee of $10,000, plus fees of $1,000
per board meeting attended.
Report of Personnel Committee on Executive Compensation
The Personnel Committee of the Board of Directors reviews
and establishes management compensation and compensation policies
and procedures. Following review and approval by the Personnel
Committee, all issues pertaining to executive compensation are
submitted to the full Board of Directors for approval. The
Personnel Committee's policies and procedures for the year ending
October 31, 1995, are discussed below.
Chief Executive Officer Compensation
Mr. Henrion serves as Chief Executive Officer at the
pleasure of the Board. In fiscal 1995, Mr. Henrion received a
base salary of $181,498 and an incentive bonus of $51,480. The
increase in Mr. Henrion's base salary in fiscal 1995 compared to
his fiscal 1994 base salary was based on the Personnel
Committee's subjective determination, not based on specific
criteria, that Mr. Henrion continues to be a valuable employee
and has met or exceeded the Cooperative's expectations in the
preceding fiscal year. With respect to the level of Mr.
Henrion's base salary, as discussed below, a nationally
recognized management consulting firm determined during 1994 that
the Cooperative's executive officer compensation (salary plus
bonus) was generally in the low range of compensation for
executives in comparable job positions in Kentucky and throughout
the United States.
The Personnel Committee has established an incentive bonus
program (the "Incentive Bonus Program") for each of its executive
officers, including Mr. Henrion, under which, if an officer
achieves certain specified objectives, the officer may receive a
bonus of not greater than 40% of base salary. The Personnel
Committee determined the amount of Mr. Henrion's 1995 bonus based
on its assessment of his performance in the following five areas:
(i) his contribution toward obtainment of Cooperative objectives,
including (A) operating expenses as a percent of sales and (B)
income before patronage dividend and income taxes, (ii) his
overall management leadership, (iii) his success at maintaining
low costs generally for Cooperative products and services, (iv)
his generation of new business for the Cooperative, and (v) his
flexibility in dealing with issues confronted by the Cooperative
during the year. The Personnel Committee generally weighted each
of the five areas as follows: 50% weight to area (i), 15% weight
to areas (ii) and (iii), and 10% weight to areas (iv) and (v).
Based on the Cooperative's performance results in area (i) and
the Personnel Committee's subjective determination of Mr.
Henrion's performance in the other areas, the Personnel Committee
recommended, and the Board of Directors awarded, Mr. Henrion a
bonus of $51,480.
In addition, Mr. Henrion and the Cooperative have executed a
Supplemental Benefits/Consulting Agreement (the "Supplemental
Agreement"), effective January 1, 1994, whereby Mr. Henrion will
receive deferred compensation upon either his retirement or his
voluntary or involuntary termination not for cause, as defined.
The Cooperative's determination to enter into the Supplemental
Agreement was primarily based on the Board of Directors'
subjective sense of the value of Mr. Henrion's continued loyalty
and service to the Cooperative, the Cooperative's desire to
assist Mr. Henrion in providing for his retirement, as well as
the contingencies of death and disability, and to provide Mr.
Henrion with an incentive to provide advisory services to the
Cooperative in a consulting capacity upon his eventual
retirement.
Pursuant to the Supplemental Agreement, commencing upon his
departure from the Cooperative (so long as his departure is not
the result of a termination for cause) and for the duration of
the "Period" as defined below, Mr. Henrion will receive monthly
compensation equivalent at least to one-twelfth of 18% of his
annual base compensation averaged over a three-year period
("Averaged Annual Compensation"). The Period will be a number of
months equal to the number of months Mr. Henrion has worked for
the Cooperative after January 1, 1994. In addition, for one year
following the expiration of the Period, Mr. Henrion will receive,
in equal monthly installments, an amount equal to his Averaged
Annual Compensation. As of October 31, 1995, Mr. Henrion's
Averaged Annual Compensation for purposes of the Supplemental
Agreement was $175,805, with one-twelfth of 18% of this amount
equal to $2,637.
If Mr. Henrion chooses to provide consulting services
following his departure from the Cooperative, in lieu of the
monthly supplemental retirement benefits at the annual rate of
18% of his Averaged Annual Compensation, he will receive monthly
compensation equivalent to one-twelfth of 30% of his Averaged
Annual Compensation for so long as he provides such consulting
services. In any event, Mr. Henrion may not provide consulting
services for longer than the Period or seven years, if the Period
exceeds seven years. Mr. Henrion may elect to receive the
supplemental retirement income described above in a lump sum
payment of the present value of such income, in lieu of the
monthly payments.
The Supplemental Agreement also provides Mr. Henrion with an
increasing death benefit whole life split-dollar insurance policy
in an initial face amount of $147,384 (the "Policy"). The
Cooperative will pay the $10,000 annual premium on the Policy
unless and until Mr. Henrion's employment ceases for any reason.
The Cooperative has a 50% interest in the death benefits and cash
value under the Policy. Should Mr. Henrion's employment
terminate for any reason before his death, Mr. Henrion has the
option of purchasing the Cooperative's interest in the Policy for
50% of its then cash value. If Mr. Henrion does not exercise his
right to purchase the Cooperative's interest in the Policy, the
Cooperative may either purchase Mr. Henrion's interest in the
Policy for 50% of its then cash value or elect that the Policy be
surrendered, in which case the cash value will be paid one-half
to Mr. Henrion and one-half to the Cooperative.
Compensation of Executive Officers Generally
As a general matter, the Personnel Committee in making
recommendations to the Board of Directors considers increases in
the base salary compensation of each of its officers annually
between 0% and 8% depending on the Personnel Committee's
assessment of the value of the officer's position within the
Cooperative organization. It is the Personnel Committee's policy
to analyze jobs and job descriptions in addition to the
individuals filling the job positions. During 1994, the
Cooperative also commissioned a report by a nationally recognized
management consulting firm, which analyzed the Cooperative's
management structure as well as salary information regarding
executive officers of the Cooperative. Among other things, the
report concluded that Cooperative executive salaries overall were
in the low range of competitive salaries for executives in
comparable job positions in Kentucky and throughout the country.
The consulting firm considered compensation data primarily from
the wholesale trade and chain restaurant industry sectors, with
some business services and general industry data also referenced.
The Personnel Committee considered the consulting firm's report
in making the fiscal 1995 executive salary recommendations.
Individual performance-based bonuses for the Cooperative's
other key executive officers under the Incentive Bonus Program
are distributed annually at the discretion of the Board of
Directors, upon recommendation by the Personnel Committee, based
on the achievement of certain specified objectives by each
officer. The individualized criteria may include such objective
and subjective factors as the officer's success in meeting the
objectives of the Cooperative (such as operating expenses as a
percent of sales and income), the officer's management and
communication skills, or the officer's handling of accounts
receivable.
In addition to the individual performance-based bonuses
described above, executive officers participate in the
Cooperative's Thrift and Money Purchase Pension Plans (the
"Plans"), which Plans are available to all active employees of
the Cooperative. These Plans (referred to herein, where
appropriate, as the "Thrift Plan" and the "Pension Plan") are
structured to motivate the officers and employees of the
Cooperative to do an outstanding job of managing and operating
the Cooperative.
Under the Thrift Plan, money is contributed by an employee
to an employee's Plan account based on the employee's elective
contributions (which are subject to certain legal limitations).
The Cooperative may also make additional contributions under the
Thrift Plan to the employee's plan account based on a portion of
the Cooperative's profits. The Cooperative is not obligated to
make any additional contributions under the Thrift Plan and thus
voluntary additional contributions may be less in some years than
in others. If the Cooperative determines to make an additional
contribution to the Thrift Plan, the amount is divided among all
eligible employees on the basis of their annual compensation.
The Cooperative's voluntary contribution to the Thrift Plan in
fiscal 1995 was equivalent to 3.0% of each eligible employee's
annual base salary.
Under the Pension Plan, the Cooperative is obligated to make
matching contributions to the employee's account based on the
amount of elective contributions made by the employee to the
Thrift Plan. The Cooperative will match $2.00 for every $1.00
contributed by an employee to the Thrift Plan, up to the first 1%
of the employee's annual compensation; thereafter, the
Cooperative will match the elective contribution dollar-for-dollar
from the next 5% of the employee's annual compensation.
Personnel Committee Members
Leon W. Harman
Paul A. Houston
John Marsella
Robert P. Peck
Edward W. Rhawn
James B. Royster
Performance Graph
Under rules adopted by the Securities and Exchange
Commission in 1992, each corporation with securities registered
under the Securities Exchange Act of 1934 is required to provide
in its proxy statement a line graph comparing, for the previous
five years, the cumulative total return on its common stock with
the cumulative total return of a broad equity market index and an
industry index or peer group. The Cooperative cannot provide
this graph because there is no meaningful information with
respect to cumulative return on any class of the Cooperative's
capital stock. The Cooperative's stockholder members purchase
Membership Common Stock and Store Common Stock to participate in
the Cooperative's member programs, including the patronage
dividend program, and to participate in the Cooperative's
management through the election of directors. The stockholder
members do not purchase the Cooperative's capital stock with any
expectation of return on their investment through stock
appreciation or per share dividends. The Cooperative's
Membership Common Stock and Store Common Stock are issued only to
Operators. No class of the Cooperative's capital stock is listed
on an exchange or traded in any other public trading market.
Since July 1, 1983, the Cooperative from time to time has offered
shares of its Membership Common Stock at a per share price of $10
and shares of its Store Common Stock at a per share price of
$400.
Transactions With Stockholders, Directors and Officers
All present voting members of the Board of Directors and
nominees for the Board, except the Independent Director, are
Operators or represent Operators and have purchased or may
purchase equipment and supplies from the Cooperative or from
distributors who purchase from the Cooperative. All purchases by
directors and nominees or their affiliates from the Cooperative
are made on the same terms and conditions as purchases by any
other Operator. Several Operators are also in the business of
purchasing equipment and supplies for sale and distribution to
other Operators and may purchase such equipment and supplies from
the Cooperative.
Section 16 Reports
Section 16(a) of the Securities Exchange Act of 1934
requires the Cooperative's directors, executive officers and
certain persons to file initial reports of ownership and reports
of changes in ownership with the Securities and Exchange
Commission. The Cooperative believes that all such filing
requirements were complied with in fiscal 1995.
STOCKHOLDER PROPOSALS FOR THE ANNUAL MEETING
Proposals of stockholders intended to be presented at the
1997 Annual Meeting of Stockholders must be received by the
Cooperative on or before October 25, 1996 to be eligible for
inclusion in the Cooperative's proxy statement and proxy relating
to that meeting.
OTHER INFORMATION
The officers and directors of the Cooperative do not know of
any matters to be presented at the meeting and submitted to a
vote of the Stockholder Members other than those specified above.
If any other matter should come before the meeting, it is
intended that the persons named in the enclosed form of proxy,
who are members of the Executive Committee of the Board of
Directors, or their substitutes, will vote the proxy in
accordance with their discretion on such matters.
All expenses incurred in connection with the solicitation of
proxies will be borne by the Cooperative. Solicitation may be
undertaken by mail, telephone and personal contact by Directors,
officers and employees of the Cooperative without additional
compensation.
The Cooperative has appointed the firm of KPMG Peat Marwick
LLP to serve as the Cooperative's independent certified public
accountants. Representatives of KPMG Peat Marwick LLP will not be
present at the Annual Meeting.
"Taco Bell" and "KFC" are registered trademarks of Taco Bell
Corporation and KFC Corporation, respectively, and are used in
these materials for identification purposes only. The
Cooperative is an independent provider of products and is not
affiliated with Taco Bell Corporation or KFC Corporation, except
that KFC Management is a stockholder member of the Cooperative.
Louisville, Kentucky
February 12, 1996
KFC National Purchasing Cooperative, Inc.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held March 15, 1996
(Please Mark, Sign, Date and Return Immediately
I, the undersigned Stockholder Member of KFC National
Purchasing Cooperative, Inc. (the "Cooperative") do hereby
nominate, designate and appoint Robert P. Peck or William E. Allen
or Leon W. Harman or David G. Neal or James B. Royster or any one
of them with full power to act alone, my true and lawful
attorney(s), with full power of substitution, for me and in my
name, place and stead to vote all of the Membership Common Stock of
the Cooperative standing in my name on its books and which I am
entitled to vote at the annual meeting of its stockholder members
to be held at 10:00 a.m. on March 15, 1996, at the Cooperative's
offices at 950 Breckenridge Lane, Louisville, Kentucky, and at any
adjournment thereof, with all the powers the undersigned would
possess if personally present, as follows:
1. Election of Directors by All Members.
To elect the following indicated nominees as members of the
Cooperative's Board of Directors to serve as the Independent
Director and to represent the Series J Membership Common Stock,
respectively.
Series Name For Series Name For
Independent Edward W. Rhawn / / J Edward J. Henriquez / /
Note: You may vote for either or both of the nominees
listed above because each nominee has been nominated for
a separate position on the Board of Directors. All
holders of Membership Common Stock may vote in this
election.
2. Election of Series Directors by Series Members Only.
To elect the following indicated nominees as members
of the Cooperative's Board of Directors to represent
their respective Series of Membership Common Stock.
Series Name For Series Name For
B Robert P. Peck [ ] G Joseph F. Cariel [ ]
B Jacob H. DeWitt [ ] G Martin D. Lewis [ ]
C John F. Arsenault [ ] G Dean M. Sorgdrager [ ]
C James G. Cocolin [ ] I Paul A. Houston [ ]
D Calvin G. White [ ] L John Marsella [ ]
Note: Check one box only - Do not vote in Item 2 unless you hold
Series B, C, D, G, I or L Membership Common Stock.
Vote only for a nominee of your Series in Item 2. Your Series is
__________.
3. Other Business
To transact all other materials and business which may
properly come before the meeting.
Information regarding the matters to be acted upon at the
Annual Meeting is contained in the Proxy Statement accompanying
this Proxy. This Proxy will be voted as specified. If no
instruction is indicated on a properly executed and dated proxy
form, then the above-named proxies, or any of them or their
substitutes, will vote the share represented IN ACCORDANCE WITH
THEIR DISCRETION on any matters or business, other than the
election of directors, that may properly come before the meeting.
(The above-named proxies will not vote for any director nominees
named above to represent a Series unless a nominee has been
specified.) THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
IN WITNESS WHEREOF, I have signed my name on ______________, 1996.
_________________________________
(Signature of Stockholder)
_________________________________
(Printed Name)
Please sign exactly as name appears in address on this form of
proxy. When shares are held by joint tenants, both should sign.
If a corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
THE PRESENCE IN PERSON OR BY PROXY OF STOCKHOLDER MEMBERS
REPRESENTING A MAJORITY OF THE STOCKHOLDER MEMBERS ENTITLED TO VOTE
AT THE ANNUAL MEETING SHALL CONSTITUTE A QUORUM AT THE ANNUAL
MEETING. THEREFORE, YOU ARE URGED TO SIGN, DATE AND RETURN THE
PROXY CARD.
A PROMPT RESPONSE WILL BE APPRECIATED.
