<PAGE>
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to (Section) 240.14a-11(c) or (Section)
240.14a-12
THE GRAND UNION COMPANY
-----------------------
(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>
The Grand Union Company
201 Willowbrook Boulevard
Wayne, New Jersey 07470-0966
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
August 19, 1999
TO THE STOCKHOLDERS OF THE GRAND UNION COMPANY:
The Annual Meeting of Stockholders of The Grand Union Company (the
"Company") will be held at the Sheraton Crossroads Hotel, One International
Boulevard, Mahwah, New Jersey 07495, beginning at 10:00 a.m. on Thursday,
August 19, 1999, for the following purposes, as more fully described in the
accompanying Proxy Statement:
(1) To elect the following eleven (11) nominees to serve as
directors: J. Wayne Harris, Jack W. Partridge, Jr., Gary M. Philbin,
Martin Bernstein, Thomas R. Cochill, Joseph Colonnetta, Jacob W.
Doft, David M. Green, Joseph V. Lash, Anthony Petrillo and Scott
Tepper.
(2) To ratify the appointment of PricewaterhouseCoopers LLP as
independent accountants of the Company for the fiscal year ending
April 1, 2000.
(3) To transact such other business as may properly come before
the meeting or any adjournment or postponement thereof.
Only stockholders of record at the close of business on July 2, 1999,
will be entitled to notice of and to vote at the meeting or any adjournment or
postponement thereof. A list of such stockholders will be available for
examination by any stockholder for purposes germane to the meeting, during
ordinary business hours, for ten (10) days prior to the meeting at the
Company's offices, 201 Willowbrook Boulevard, Wayne, New Jersey, and at the
place of the meeting for the ten (10) days prior to the meeting. The meeting
will be open to all stockholders of record and proxyholders, and to others by
invitation only. Beneficial owners of shares held by a broker or nominee must
bring with them or have delivered to the Company an appropriate proxy from
their broker to vote such shares.
By Order of the Board of Directors
Donald C. Vaillancourt
Corporate Vice President and Secretary
July 9, 1999
PLEASE USE THE ENCLOSED STAMPED ENVELOPE TO RETURN YOUR PROXY.
RETURNING YOUR PROXY WILL NOT PREVENT YOU FROM VOTING IN PERSON AT THE ANNUAL
MEETING.
<PAGE>
THE GRAND UNION COMPANY
201 Willowbrook Boulevard
Wayne, New Jersey 07470
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
The Grand Union Company, a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders (the "Annual Meeting") to be held at the
Sheraton Crossroads Hotel, One International Place, Mahwah, New Jersey,
beginning at 10:00 a.m. on August 19, 1999, and at any adjournment or
postponement thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Stockholders.
These proxy solicitation materials, and the Annual Report to
Stockholders for the fiscal year ended April 3, 1999 ("Fiscal 1999"), including
financial statements, are being first mailed on or about July 9, 1999, to all
stockholders entitled to vote at the Annual Meeting.
Record Date and Shares Outstanding
Stockholders of record at the close of business on the record date,
July 2, 1999, are entitled to notice of and to vote at the Annual Meeting. The
Company has one class of voting equity securities outstanding: Common Stock,
$.01 par value ("Common Stock"). At the close of business on the record date,
30,000,000 shares of Common Stock were issued and outstanding.
Voting and Revocability of Proxies
Any proxy given in the form accompanying this proxy statement may be
revoked or superseded by the person giving it prior to exercise. A proxy may be
revoked by delivering to the Secretary of the Company a later dated proxy or a
written notice of revocation, or by attending the Annual Meeting and voting in
person. A proxy, when executed and not so revoked, will be voted in accordance
with the instructions given in the proxy. If a choice is not specified in the
proxy, the proxy will be voted "FOR" the nominees for election of directors
named in this Proxy Statement, "FOR" the ratification of the appointment of
PricewaterhouseCoopers LLP as the Company's accountants for the current fiscal
year, and according to the discretion of the proxyholders on any other matters
that properly come before the meeting.
Any stockholder present at the meeting may withdraw his or her proxy
and vote in person on each matter brought before the meeting. Stockholders
attending the meeting whose shares are held in the name of a broker or other
nominee must bring with them or cause to be delivered to the Company a proxy
from that broker or nominee in order to vote those shares.
Each holder of shares of Common Stock outstanding at the record date
will be entitled to one vote for each share of Common Stock held. Members of
the Board of Directors shall be elected by a plurality of the votes cast. The
affirmative vote of a majority of the shares of Common Stock present at the
meeting in person or by proxy shall be necessary to ratify the appointment of
the Company's independent accountants. With respect to any other matter that
may properly come before the Annual Meeting, each holder of shares of Common
Stock will generally have the rights described above.
The presence in person or by proxy of holders of a majority of the
outstanding shares of Common Stock is necessary to establish a quorum at the
Annual Meeting. Abstentions are counted for purposes of determining the
presence or absence of a quorum, but since they are not affirmative votes for
the particular matter, they have the same effect as a vote against the matter.
Broker non-votes are not considered present at the meeting for the particular
matter as to which the vote is withheld. Consequently, broker non-votes are not
counted in respect of such matter, but they do have the practical effect of
reducing the number of affirmative votes required to achieve a majority for
such matter.
<PAGE>
Solicitation of Proxies
The Company will bear the entire cost of solicitation of proxies,
including costs incurred in connection with the preparation, assembly, printing
and mailing of this Proxy Statement, the proxy and any additional information
furnished to the Company's stockholders in relation to the Annual Meeting. The
Company has retained The Altman Group - New York, NY to assist in the
solicitation of proxies for a fee of $3,500, plus reimbursement of
out-of-pocket expenses. In addition, the Company may reimburse brokerage firms
and other persons representing beneficial owners of shares for their expenses
in forwarding solicitation materials to such beneficial owners. Proxies also
may be solicited by certain of the Company's directors, officers and regular
employees, without additional compensation, personally or by telephone,
facsimile, telegram or any other means of communication.
2
<PAGE>
Security Ownership By Certain Beneficial Owners and Management
Set forth below is certain information as of June 25, 1999 (except as
otherwise indicated), regarding the beneficial ownership of the Company's
Common Stock by (i) any person known by the Company to beneficially own more
than 5% of the Common Stock; (ii) each director and nominee for director; (iii)
each of the Named Executive Officers (as defined below) identified in the
Summary Compensation Table; and (iv) all directors and executive officers as a
group. Included in the table are shares that the holder has the right to
acquire within 60 days from the date above. Except as indicated otherwise, the
Company believes, based on information furnished by such owners, that the
beneficial owners of the Company's Common Stock listed below have sole
investment and voting power with respect to such shares, subject to applicable
community property laws. Unless otherwise indicated, the address for all
natural persons listed in the table below is c/o The Grand Union Company, 201
Willowbrook Boulevard, Wayne, New Jersey 07470.
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Name of Beneficial Owner Ownership(1) of Class(1)
- ------------------------ ----------- ----------
<S> <C> <C> <C>
Five Percent (5%) Holders `
Morgens, Waterfall, Vintialis & Co., Inc................. 2,924,375 (2) 9.75%
10 East 50th Street
NY, NY 10022
Appaloosa Management L.P................................. 2,751,500 (3) 9.17%
26 Main Street
Chatham, NJ 07928
UBS AG, London Branch.................................... 2,434,564 (4) 8.12%
C/O Swiss Bank Corp
299 Park Ave
NY, NY 10171
Richard L. Chilton, Jr................................... 2,300,400 (5) 7.67%
Chilton Investment Co., Inc
320 Park Avenue, 22nd Floor
NY, NY 10022
Paul Tudor Jones II...................................... 1,602,547 (6) 5.34%
C/O Tudor Investment Corporation
600 Steamboat Road
Greenwich, CT 06830
Directors and Executive Officers
J. Wayne Harris.......................................... 65,225 (7) *
Jack W. Partridge, Jr.................................... 35,020 (7) *
Gary M. Philbin.......................................... 25,914 (7) *
Jeffrey P. Freimark...................................... 12,795 (7) *
Manouchehr Moslemi....................................... 0 *
Martin Bernstein......................................... 5,334 (8) *
Thomas R. Cochill........................................ 3,334 (8) *
Joseph Colonnetta........................................ 3,334 (8) *
Jacob W. Doft............................................ 4,334 (8) *
David M. Green........................................... 3,334 (8) *
Joseph V. Lash........................................... 3,334 (8) *
Anthony Petrillo......................................... 3,334 (8) *
Scott Tepper............................................. 3,334 (8) *
All Directors & Executive Officers as a group (20 persons) 169,669 (9) *
</TABLE>
- -----------
* Less than 1%.
3
<PAGE>
(1) Beneficial ownership is determined pursuant to Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
applied by Item 403 of Regulation S-K. Pursuant to these rules, percentage
ownership is calculated by including in the numerator and the denominator
for a beneficial owner shares which such owner has the right to acquire
within 60 days.
(2) Based on information contained in a Schedule 13G dated March 31, 1999,
filed by Morgens, Waterfall, Vintialis & Co., Inc. ("MWVCI") and the June
9, 1999 response of MWVCI to Grand Union's questionnaire to 5% holders of
the Company's Common Stock. The Shares of the Company's Common Stock are
beneficially owned by MWVCI.
(3) Based on information contained in the June 10, 1999, response of David A.
Tepper ("Mr. D. Tepper") on behalf of Appaloosa Management L.P. ("AMLP")
to Grand Union's questionnaire to 5% holders of the Company's Common
Stock. AMLP is the general partner of Appaloosa Investment Limited
Partnership I ("AILP"), the investment advisor to Palomino Fund, Ltd.
("PFL"), and the managing member of Tersk, LLC ("TLLC"), which are the
holders of record of 1,219,995, 1,376,156, and 155,349 shares,
respectively. Mr. D. Tepper is the sole stockholder and president of
Appaloosa Partners, Inc. ("API"). API is the general partner of AMLP and
Mr. D. Tepper owns a majority of the limited partnership interests of AMLP.
(4) Based on information contained in the June 7, 1999, response of UBS AG,
London Branch to Grand Union's questionnaire to 5% holders of the
Company's Common Stock. The shares of the Company's Common Stock are
beneficially owned by UBS AG, London Branch.
(5) Based on information contained in a Schedule 13G dated February 16, 1999,
filed by Richard L. Chilton, Jr. The shares of the Company's Common Stock
are beneficially owned by Mr. Chilton.
(6) Based on information contained in a Schedule 13G dated April 9, 1999,
jointly filed by Tudor Investment Corporation ("TIC"), Paul Tudor Jones II
("Mr. Jones"), Tudor BVI Futures, Ltd. ("Tudor BVI"), Tudor Proprietary
Trading, L.L.C. ("TPT"), The Raptor Global Fund, Ltd. ("Raptor, Ltd."),
The Raptor Global Fund L.P. ("Raptor L.P.") and The Upper Mill Capital
Appreciation Fund Ltd. ("Upper Mill"). The shares of the Company's Common
Stock are beneficially owned by Tudor BVI (401,420 shares), TPT (100,008
shares), Raptor Ltd. (795,354 shares), Raptor L.P. (211,699 shares) and
Upper Mill (94,066 shares). Each of TIC and Mr. Jones disclaims beneficial
ownership of such shares.
(7) Represents shares subject to acquisition pursuant to the Series 1 Warrant
Agreement and to options exercisable under the 1995 Equity Incentive Plan,
as amended May 14, 1998 ("EIP"), and for Mr. Harris, 4,000 shares that he
owns directly, for Mr. Partridge, 10,000 shares that he owns directly, for
Mr. Philbin, 1,000 shares that he owns directly and for Mr. Freimark, 300
shares that he owns directly and 250 that are owned directly by his minor
son.
(8) Represents shares subject to acquisition pursuant to options exercisable
under the 1995 Non-Employee Directors' Stock Option Plan, as amended May
14, 1998 ("NEDSOP"), and, for Mr. Bernstein, 2,000 shares that he owns
directly, and for Mr. Doft, 1,000 shares that he owns directly.
(9) Includes 122,450 shares subject to acquisition pursuant to options
exercisable under the EIP and 26,672 shares subject to acquisition
pursuant to options exercisable under the NEDSOP.
4
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
Director Nominees and Executive Officers
The names, ages and present principal occupations of the directors and
executive officers of Grand Union as of July 2, 1999, are set forth below.
Name Age Position
- ---- --- --------
J. Wayne Harris............... 60 Director, Chairman and Chief Executive
Officer
Jack W. Partridge, Jr......... 54 Director, Vice Chairman and Chief
Administrative Officer
Gary M. Philbin............... 42 Director, President and Chief
Merchandising Officer
Jeffrey P. Freimark........... 44 Executive Vice President and Chief
Financial Officer
Raymond H. Ayers.............. 54 Corporate Vice President, Real Estate
L. Andrew DePaolis............ 56 Corporate Vice President, Advertising and
Marketing
Gary B. Duncan................ 47 Corporate Vice President, Human Resources
Jasper S. Meadows............. 48 Corporate Vice President, Specialty Store
Formats
Manouchehr Moslemi............ 54 Corporate Vice President and Chief
Information Officer
Francis E. Nicastro........... 57 Corporate Vice President and Treasurer
Glenn J. Smith................ 35 Corporate Vice President, General Counsel
and Assistant Secretary
Donald C. Vaillancourt........ 55 Corporate Vice President, Public Affairs
Counsel and Secretary
Martin Bernstein.............. 62 Director
Thomas R. Cochill............. 59 Director
Joseph Colonnetta............. 38 Director
Jacob W. Doft................. 29 Director
David M. Green................ 44 Director
Joseph V. Lash................ 36 Director
Anthony Petrillo.............. 57 Director
Scott Tepper.................. 39 Director
Mr. Harris has been a director, Chairman and Chief Executive Officer
of the Company since August 1, 1997. From September, 1992 until joining the
Company, Mr. Harris served as: Senior Vice President, North East Operations,
The Great Atlantic and Pacific Tea Company ("A&P"), a leading supermarket
chain; Executive Vice President and Chief Operating Officer for A&P's US
Operations; and, most recently, Chairman and Chief Executive Officer of A&P
Canada, Ltd. Between 1986 and 1992, Mr. Harris was President of the
Cincinnati/Dayton Division of The Kroger Company ("Kroger"), the largest food
retailer in the United States.
Mr. Partridge has been a director of Grand Union since January 15,
1998 and was elected Vice Chairman and Chief Administrative Officer effective
January 5, 1998. Mr. Partridge joined Grand Union after a 23-year career with
Kroger, where he served, most recently, as Group Vice President and a member of
the company's Senior Management Committee.
Mr. Philbin has been a director of the Company since October 30, 1997,
and was elected President and Chief Merchandising Officer of the Company on
October 3, 1997. From June, 1996 until joining the Company, Mr. Philbin was
Executive Vice President in charge of Merchandising and Operations for the Cub
Food Store Division of SuperValu, Inc. Before joining Cub Foods, Mr. Philbin
was Vice President of Merchandising with the Waldbaum's Division of A&P from
July, 1993. Prior to his employment with Waldbaum's, Mr. Philbin served in
merchandising and operations capacities with Kroger commencing in January 1990.
Mr. Freimark has been the Company's Executive Vice President and Chief
Financial Officer since March 3, 1997. From March 3, 1997, to January 5, 1998,
Mr. Freimark also served as the Company's Chief Administrative Officer. Prior
to joining the Company, Mr. Freimark served as Executive Vice President and
Chief Financial Officer of Pueblo Xtra International, Inc., a leading
supermarket chain in the Commonwealth of Puerto Rico and the Territory of the
U.S.
5
<PAGE>
Virgin Islands, from 1992 and as Senior Vice President, Finance, Administration
and Treasurer beginning in 1986. Prior to that, he was Vice President-Finance
and Corporate Secretary of Kings Super Markets, Inc., a New Jersey supermarket
chain.
Mr. Ayers has been the Corporate Vice President in charge of Real
Estate since 1988. Prior to his present position, Mr. Ayers served in several
capacities in the Real Estate Department, starting in 1968.
Mr. DePaolis has been the Corporate Vice President in charge of
Advertising and Marketing since 1996. Mr. DePaolis served as Corporate Vice
President of Advertising and Sales Promotion from 1990 until 1996 when he was
appointed to his present position. Mr. DePaolis joined the Company in 1968,
spending most of his time in the Advertising Department.
Mr. Duncan has been the Corporate Vice President in charge of Human
Resources since January 11, 1999. From 1997 until joining the Company, Mr.
Duncan served as Vice President of Human Resources for the Genuardi's Family
Markets, a supermarket chain. Prior to that he was employed by The Vons
Companies Division of Safeway Stores, a supermarket chain, from 1969 where he
held a variety of positions, most recently as Director of Compensation
Management and Training since 1994.
Mr. Moslemi has been the Corporate Vice President and Chief
Information Officer of the Company since July 6, 1998. Prior to joining the
Company, Mr. Moslemi served as Corporate Vice President of Information
Technology for the Cub Food Store Division of SuperValu, Inc. from 1995. Prior
to that he was Vice President of Information Technology with American Stores, a
supermarket chain, from 1993.
Mr. Meadows has been Corporate Vice President in charge of Specialty
Store Formats since August, 1998. Prior to that, Mr. Meadows served as
Corporate Vice President of Grocery and General Merchandise from May 1997.
Preceding that, Mr. Meadows served in various positions in the Company's
Grocery and General Merchandise Department. He joined the Company in 1972.
Mr. Nicastro has been Corporate Vice President and Treasurer of the
Company since September 1989. Prior to that, he spent 20 years with the Singer
Company, a manufacturing company, the last three of which were as Treasurer.
Mr. Smith has been Corporate Vice President, General Counsel and
Assistant Secretary since February 1998. Mr. Smith commenced his employment
with Grand Union in August 1995 as Director of Labor Relations and Employment
Practices. He was appointed Vice President, Labor and Employment Counsel in
May 1997 and to Vice President, General Counsel and Assistant Secretary in
August 1997. Prior to joining Grand Union, Mr. Smith was an Associate with the
law firm of Grotta, Glassman and Hoffman, P.A., in Roseland, New Jersey from
September 1991 to August 1995.
Mr. Vaillancourt has been Corporate Vice President, Public Affairs
Counsel and Secretary since June, 1997. Prior to that he served in a number of
capacities with the Company. Effective January 1985, Mr. Vaillancourt became
Corporate Vice President, Corporate Communications and Consumer Affairs.
Effective January 1980, he was appointed Vice President, Corporate
Communications and Consumer Affairs. Effective October 1976, he became
Director, Corporate Communications and Consumer Affairs. In December 1971, he
was appointed Assistant to the Director of Public Relations.
Mr. Bernstein has been a director since August 17, 1998. Mr. Bernstein
has been President of MFP Investors, L.L.C., an investment company, since
November, 1998 and has been a private investor since 1988. Mr. Bernstein is
also a director of Astro Communications, a specialty lighting company, and MBO
Properties, a real estate mortgage company.
Mr. Cochill has been a director since August 17, 1998. Mr. Cochill has
been a Managing Partner of Ingenium, L.L.C., a crisis management consulting
company, since January, 1998. From March, 1992 to December, 1998, Mr. Cochill
was the President, Chief Executive Officer and Chairman of the Board of
Webcraft Technologies Inc., a printer of personalized direct mail formats,
leader in fragrance sampling devices, specialized government forms and complex
commercial print formats. Mr. Cochill is also a director of Harvard Industries,
Inc., an automotive and industrial
6
<PAGE>
company, Quantegy, Inc., a leading manufacturer of professional recording
media, and U.S. Leather, Inc., a producer of leather.
Mr. Colonnetta has been a director since August 17, 1998. Mr.
Colonnetta has been a Principal of Hicks Muse Management, a private equity
company, beginning in 1999 and was the Managing Principal at a Hicks Muse
Management affiliate since 1995. From 1994 to 1995, Mr. Colonnetta was an
Operating Partner and Chief Executive Officer of two Contrarian Capital and
Goldman Sachs investments, Triangle FoodService and StarMark Foods. From 1989
to 1994, Mr. Colonnetta was the Chief Financial Officer of TRC, a $1 billion
holding company founded by the Bass Family Group, specializing in repositioning
and growing food-related companies. Mr. Colonnetta is also a director of CCI
Triad, a computer software service provider company, and Home Interiors, a
direct marketer of consumer products.
Mr. Doft has been a director since August 17, 1998. Mr. Doft has
served as a Managing Director of Highline Capital Management, L.L.C., a New
York-based investment management firm, since 1995. From 1994 through 1995, Mr.
Doft served as a consultant to The Blackstone Group's asset management
subsidiary, Blackstone Alternative Asset Management. From 1991 to 1993, Mr.
Doft worked as a Financial Analyst at Gleacher & Co., Inc., a New York Mergers
& Acquisitions ("M&A") advisory and Merchant Banking boutique. Mr. Doft is also
a director of Edison Brothers Stores, Inc., a retailer.
Mr. Green has been a director since August 17, 1998. Mr. Green was the
Chairman, Chief Executive Officer and President of Southwest Supermarkets from
January 1997 to February 1998. Mr. Green was with Smitty's Super Valu, Inc., a
supermarket chain, from 1991 to 1996, serving as its President from 1992 to
1996, its Chief Executive Officer from 1995 to 1996, and its Senior Vice
President of Marketing, Merchandising and Procurement from 1991 to 1992.
Mr. Lash has been a director since August 17, 1998. Mr. Lash has been
a Managing Director in the global M&A group of Chase Securities, Inc., a
securities unit of Chase Manhattan Bank, since June 1998. From January 1996 to
June 1998, Mr. Lash was the President of Lash & Co. Incorporated, an M&A
advisory firm. From December 1994 to December 1995, Mr. Lash was a Managing
Director and Co-Head of the M&A Department at PaineWebber Incorporated. From
1985 to 1994, Mr. Lash served as a financial analyst and ultimately a Managing
Director and Co-Head of the M&A Department at Kidder, Peabody & Co.,
Incorporated.
Mr. Petrillo has been a director since August 17, 1998. Mr. Petrillo
has been associated with Leonard Green & Co., LLP, ("Leonard Green"), a private
investment company, commencing in 1994. Since 1995, Mr. Petrillo has been an
Operating Partner of Leonard Green. In 1993, Mr. Petrillo was in retirement.
Mr. Petrillo is also a director of Center Holdings, a holding company for Home
Quarters, Builders Square and Hechingers.
Mr. Tepper has been a director since August 17, 1998. Mr. Tepper is
the founder and lead integration consultant for KST Consulting, a healthcare
and healthcare technology consulting firm, since July, 1994. Prior to that, Mr.
Tepper served as the Senior Vice President for Medisolution Ltd., a healthcare
company in Canada from August 1994 to June 1998. From 1992 to 1994, Mr. Tepper
was a Senior Director for Foxmeyer Health, a pharmaceutical distribution and
product logistics firm.
Executive officers of the Company are appointed and serve at the
discretion of the Board of Directors. Each director of the Company is elected
for a period of one year and will serve until his or her successor is duly
elected and qualified.
7
<PAGE>
In addition, the following individuals served as directors or
executive officers of the Company during Fiscal 1999:
<TABLE>
<CAPTION>
Name Positions Served through
- ---- --------- --------------
<S> <C> <C>
Roger E. Stangeland...... Director, Chairman Emeritus April 22, 1998
Chairman of the Board and Chief Executive Officer October 1, 1997
James J. Costello........ Director April 22, 1998
Geoffrey T. Moore........ Director April 22, 1998
Clifford A. Miller....... Director April 22, 1998
J. Richard Stonesifer.... Director April 22, 1998
Jordan H. Krimstein...... Director August 17, 1998
Mark H. Manski........... Director August 17, 1998
Martha A. Pritchard...... Director August 17, 1998
</TABLE>
Nominees
Eleven (11) directors have been nominated for election at the Annual
Meeting. Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the eleven (11) nominees named below, all of whom are
currently directors of the Company. If any such nominee is unable or declines
to serve as a director at the time of the Annual Meeting, the proxies will be
voted for any nominee who the proxy holders in their discretion may designate
to fill the vacancy. The Company is not aware of any nominee who will be unable
or will decline to serve as a director. The term of office for each person
elected as a director will continue until the next Annual Meeting of
Stockholders and until his successor has been elected and qualified.
The election of directors shall be by the affirmative vote of a
plurality of the votes cast at the Annual Meeting. The eleven persons receiving
the greatest number of votes will be elected as directors. There is no
cumulative voting. The Board of Directors recommends a vote "FOR" the election
of all the following nominees for election as director: J. Wayne Harris, Jack
W. Partridge, Jr., Gary M. Philbin, Martin Bernstein, Thomas R. Cochill, Joseph
Colonnetta, Jacob W. Doft, David M. Green, Joseph V. Lash, Anthony Petrillo and
Scott Tepper.
Board Meetings and Committees
From August 17, 1998 through the present, the Board has been composed
of Messrs. Harris, Partridge, Philbin, Bernstein, Colonnetta, Cochill, Doft,
Green, Lash, Petrillo, and Tepper. From April 22, 1998 until August 17, 1998,
the Board was composed of Messrs. Harris, Partridge, Philbin, Krimstein and
Manski, and Ms. Pritchard. From March 29, 1998 until April 22, 1999, the Board
was composed of Messrs. Harris, Partridge, Philbin, Krimstein, Manski,
Costello, Moore, Miller, Stangeland and Stonesifer, and Ms. Pritchard. Since
the end of the fiscal year ended March 28, 1998, Messrs. Stangeland, Costello,
Moore, Miller and Stonesifer have each resigned from the Board, effective April
22, 1998, and Messrs. Krimstein and Manski and Ms. Pritchard have each resigned
from the Board, effective August 17, 1998. Each Director serves until the next
annual meeting of stockholders and until his or her successor is duly elected
and qualified or until his/her earlier death, resignation or removal.
The Board of Directors of the Company held twelve (12) meetings during
the fiscal year ended April 3, 1999. During the fiscal year ended April 3,
1999, each incumbent director attended at least 75% of the aggregate of the
number of meetings of the Board and the number of meetings held by all
committees of the Board on which he or she served.
The Board of Directors has an Audit Committee, a Compensation
Committee, a Finance Committee and, effective June 24, 1999, a Corporate
Governance Committee.
8
<PAGE>
The Audit Committee reviews the results and scope of audits and other
services provided by the Company's independent auditors and considers other
matters related to the financial condition of the Company. During the fiscal
year ended April 3, 1999, the Audit Committee held a total of four (4)
meetings. At the close of the fiscal year ended April 3, 1999, the Audit
Committee consisted of Mr. Bernstein (Chair), Mr. Doft and Mr. Lash. The
Company anticipates that, if elected, those three directors will continue to
serve on the Audit Committee.
The Compensation Committee, among other things, sets the compensation
for the Chairman of the Board and Chief Executive Officer, Vice Chairman and
Chief Administrative Officer, President and Chief Merchandising Officer, and
Executive Vice President and Chief Financial Officer (together the "Senior
Managers"), makes recommendations concerning salaries and incentive
compensation for executive officers and key personnel, administers the EIP and
the Executive Annual Incentive Bonus Plan ("EAIBP"). Members of the
Compensation Committee are eligible to receive formula-based awards made under
the terms of the 1995 Non-Employee Directors' Stock Option Plan. During the
fiscal year ended April 3, 1999, the Compensation Committee held a total of
four (4) meetings. At the close of the fiscal year ended April 3, 1999, the
Compensation Committee consisted of Mr. Cochill (chair), Mr. Green and Mr.
Tepper. The Company anticipates that, if elected, those three directors will
continue to serve on the Compensation Committee.
The Finance Committee, in addition to other functions, provides
oversight and approval for projects under the Company's capital
investment program. During Fiscal 1999, the Finance Committee held a
total of three meetings. At the close of Fiscal 1999, the Finance
Committee consisted of Mr. Colonnetta (Chair), Mr. Petrillo and Mr.
Philbin. The Company anticipates that, if elected, those three directors
will continue to serve on the Finance Committee.
In addition to other functions, the Corporate Governance Committee
will identify and screen candidates for membership on the Company's Board of
Directors, consult with the Chairman regarding the Board's various committees,
and coordinate meetings of the non-employee directors. The Corporate Governance
Committee consists of Mr. Green (chair), Mr. Lash, Mr. Tepper and Mr.
Partridge. The Company anticipates that, if elected, those four directors will
continue to serve on the Corporate Governance Committee.
9
<PAGE>
Executive Compensation
The following table sets forth compensation ("Summary Compensation Table")
paid or accrued by the Company during the three fiscal years ended April 3,
1999 ("Fiscal 1999"), March 28, 1998 ("Fiscal 1998") and March 29, 1997
("Fiscal 1997") to the Company's Chief Executive Officer and the next four most
highly compensated executive officers (collectively the "Named Executive
Officers") for services rendered to the Company and its subsidiaries in all
capacities during such three fiscal year period:
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
------------------------------------------- ----------
Securities All Other
Other Annual Underlying Compensation
Name and Principal Position Year Salary($) Bonus ($)(1) Compensation Options/SARs(#) ($)(2)
- --------------------------- ---- --------- ------------ ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
J. Wayne Harris............ 1999 611,539 750,000 328,634 (3) 1,069,346 16,619
Chairman and Chief 1998 394,402 415,384 -- (4) 1,250,000 118,693
Executive Officer 1997 -- -- -- -- --
Jack W. Partridge, Jr. .... 1999 356,731 437,500 155,945 (5) 427,738 39,035
Vice Chairman and 1998 80,769 75,000 -- (4) 450,000 30,145
Chief Administrative 1997 -- -- -- -- --
Officer
Gary M. Philbin............ 1999 356,731 437,500 67,212 (6) 427,737 63,617
President and Chief 1998 168,347 168,269 -- (4) 450,000 27,685
Merchandising Officer 1997 -- -- -- -- --
Jeffrey P. Freimark........ 1999 331,250 325,000 8,032 (7) 213,870 24,748
Executive Vice 1998 330,436 222,000 -- (4) 95,000 643,205
President and Chief 1997 25,673 150,000 -- -- 18,272
Financial Officer
Manouchehr Moslemi.......... 1999 153,846 144,340 54,729 (8) 15,000 5,246
Corporate Vice President 1998 -- -- -- -- --
and Chief Information 1997 -- -- -- -- --
Officer
</TABLE>
(1) Included in the "Bonus" column for Fiscal 1999 are amounts paid during the
fiscal year ending April 1, 2000 for performance in Fiscal 1999. For
Fiscal 1998 the amounts in the "Bonus" column represent payments made
during Fiscal 1999 for performance and discretionary amounts in Fiscal
1998.
(2) "All Other Compensation" includes the following: (i) contributions to the
Company's Savings Plan under Section 401(k) made by the Company in Fiscal
1999 for each of the Named Executive Officers as follows: Mr. Partridge -
$538; Mr. Philbin - $538; Mr. Freimark - $1,250, and Mr. Moslemi - $308;
the amounts for 401(k) contributions in Fiscal 1998 were as follows: Mr.
Freimark - $625; and (ii) premium payments for life insurance made by the
Company in Fiscal 1999 for each of the Named Executive Officers were as
follows: Mr. Harris - $16,619; Mr. Partridge - $18,772; Mr. Philbin -
$7,673; Mr. Freimark - $9,567; and Mr. Moslemi - $4,939. The amounts for
premiums in Fiscal 1998 were as follows: Mr. Harris - $10,887; Mr. Philbin
- $2,818; and Mr. Freimark - $3,708. The Fiscal 1999 amounts for Messrs.
Partridge, Philbin, Freimark and Moslemi include payments for
relocation/moving costs incurred when joining the Company, in the following
amounts: Mr. Partridge - $19,724; Mr. Philbin - $33,020; Mr. Freimark -
$13,931; and Mr. Moslemi - $11,106. The Fiscal 1998 amounts for Messrs.
Harris, Partridge, Philbin, and Freimark include payments for
relocation/moving costs incurred when joining the Company, in the following
amounts: Mr. Harris - $107,806; Mr. Partridge - $30,145; Mr. Philbin -
$24,867; and Mr. Freimark - $638,872. The Fiscal 1997 amounts for Mr.
Freimark include payments of $18,272
10
<PAGE>
for relocation/moving costs incurred when joining the Company. The Fiscal
1999 amounts for Mr. Philbin include interest imputed on a loan to Mr.
Philbin in the amount of $22,386, including a tax gross-up for his
benefit.
(3) For Mr. Harris this includes: 1) $152,955 in amounts reimbursed for the
tax effects of certain payments or benefits, and; 2) the following personal
benefits or perquisites that exceed 25% of all personal benefits or
perquisites made available to Mr. Harris: $135,061 in local residence costs
as provided in the Company's employment agreement with Mr. Harris.
(4) No "Other Annual Compensation" was reported since the aggregate amount of
perquisites and other personal benefits in respect of Fiscal 1998, is less
than the lower of $50,000 or 10% of the total annual salary and bonus
reported for the Named Executive Officers and no other compensation of the
type required to be described in the "Other Annual Compensation" column
was paid in Fiscal 1998.
(5) For Mr. Partridge this includes: 1) $74,395 in amounts reimbursed for the
tax effects of certain payments or benefits, and; 2) the following personal
benefits or perquisites that exceed 25% of all personal benefits or
perquisites made available to Mr. Partridge: (a) $39,846 in local residence
costs and (b) $28,590 in covered travel expenses to Mr. Partridge's
permanent residence, both as provided in the Company's employment agreement
with Mr. Partridge.
(6) For Mr. Philbin this includes: 1) $67,212 in amounts reimbursed for the tax
effects of certain payments or benefits, and (2) no amount representing
personal benefits or perquisites, given that the total of all personal
benefits and perquisites made available to Mr. Philbin do not total the
lower of $50,000 or 10% of the total annual salary and bonus reported for
Mr. Philbin in Fiscal 1999.
(7) For Mr. Freimark this includes: 1) $8,032 in amounts reimbursed for the
tax effects of certain payments or benefits,and (2) no amount representing
personal benefits or perquisites given that the total of all personal
benefits and perquisites made available to Mr. Freimark do not total the
lower of $50,000 or 10% of the total annual salary and bonus reported for
Mr. Freimark in Fiscal 1999.
(8) For Mr. Moslemi this includes: 1) $15,544 in amounts reimbursed for the
tax effects of certain payments or benefits, and (2) the following personal
benefits or perquisites that exceed 25% of all personal benefits or
perquisites made available to Mr. Moslemi: $29,918 in local residence costs
as provided in the Company's employment arrangements with Mr. Moslemi.
11
<PAGE>
Option/SAR Grants In Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
------------------------------------------------------------------ Value at Assumed
Number of Annual Rates of Stock
Securities Percent of Total Price Appreciation for
Underlying Options Granted Exercise Price Option Term (3)
Options to Employees in ($/Share) Expiration ------------------------
Name Granted(#) (1) Fiscal Year (2) Date 5%($) 10%($)
------------- ----------- ------------- ------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
J. Harris.................. 1,069,346 (4) 44.4% $10.65-$12.32 8/17/02 $73,673 $1,595,274
J. Partridge............... 427,738 (4) 17.8% $10.65-$12.32 8/17/02 $29,469 $638,109
G. Philbin................. 427,738 (4) 17.8% $10.65-$12.32 8/17/02 $29,469 $638,109
J. Freimark................ 213,870 (4) 8.9% $10.65-$12.32 8/17/02 $14,735 $319,057
M. Moslemi................. 15,000 0.6% $8.50 9/10/08 $80,250 $203,250
</TABLE>
(1) Unless otherwise noted, options vest 25% annually for the first four
anniversaries of the award.
(2) Unless otherwise noted, all options were granted at the fair market value
on the date of grant, based on the closing price of the Common Stock as
reported on the Nasdaq National Market on the date of grant.
(3) The dollar amounts under these columns are the result of calculations at
the 5% and 10% rates required by applicable regulations of the SEC and,
therefore, are not intended to forecast possible future appreciation, if
any, of the Common Stock price. Additionally, since there was no active
trading market in the Company's Common Stock as of August 17, 1998, the
fair market value utilized above as the base value of the options for
Messrs. Harris, Partridge, Philbin and Freimark was the closing price
($8.875) of the Company's Common Stock on its first day of trading on the
Nasdaq National Market on October 1, 1998.
(4) In connection with the 1998 Reorganization under Chapter 11 of the
Bankruptcy Code, on August 17, 1998, all previously issued stock options
were cancelled and the Senior Managers (Messrs. Harris, Partridge, Philbin
and Freimark), were granted options under the EIP to purchase an aggregate
of 2,138,693 shares of Grand Union's common stock. All of the Senior
Managers' options expire on August 17, 2002, unless earlier terminated.
The options were granted to the Senior Managers in five tranches and are
exercisable as follows: (i) 306,122 options at an exercise price of $12.32
per share; (ii) 466,176 options exercisable when fiscal year end EBITDA
(earnings before interest, taxes, depreciation, amortization, unusual and
extraordinary items and non-cash pension and LIFO charges) is at least $125
million at an exercise price of $12.32 per share; (iii) 313,923 options
exercisable when fiscal year end EBITDA is at least $135 million at an
exercise price of $12.32 per share; (iv) 317,094 options exercisable when
fiscal year end EBITDA is at least $145 million at an exercise price of
$10.65 per share; and (v) 735,377 options exercisable when fiscal year end
EBITDA is at least $155 million at an exercise price of $10.65 per share.
With respect to each tranche of options granted, Messrs. Harris, Partridge,
Philbin and Freimark were granted 50%, 20%, 20% and 10%, respectively. The
Compensation Committee is required to certify in writing or in approved
minutes of the Committee that the foregoing performance standards have been
satisfied prior to the exercise of any option requiring EBITDA performance.
The options granted to Senior Managers vest ratably across each tranche as
follows: (a) one-fifth on August 17, 1998; (b) one-fifth on each of August
17, 1999, August 17, 2000, and August 17, 2001; and (c) one-fifth on May
19, 2002. The vested options and shares received upon exercise of options
("Option Shares") will become transferable in tranches of 20%, 20%, 30% and
30% (expressed as a percentage of vested and unvested options) on each of
the first four anniversaries, respectively, of the date of grant. Except as
described in the preceding sentence and except for transfers in connection
with estate planning, the options and Option Shares will not be
transferable during the term of a Senior Manager's employment.
12
<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised Unexercised In-the-Money
Options/SARs at FY-End(#) Options/SARs at FY-End ($)
---------------------------- ----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
J. Harris............ 30,613 1,038,733 0 0
J. Partridge......... 12,245 415,493 0 0
G. Philbin........... 12,245 415,493 0 0
J. Freimark.......... 6,122 207,748 0 0
M. Moslemi........... 0 10,000 0 0
</TABLE>
Pension Plan Table
The table below shows, on a combined basis for The Grand Union Company
Employees' Retirement Plan (the "Retirement Plan") and The Grand Union Company
Supplemental Retirement Program for Key Executives, Fourth Amendment and
Restatement as of November 20, 1997 (the "SERP"), the estimated annual benefit
payable upon retirement to specified compensation and years of service
classifications of 5, 10 and 15 or more years of service as defined by the
SERP. The credited years of service under the SERP for Messrs. Harris,
Partridge, Philbin and Freimark, are 1 year, 1 year, 1 year, and 2 years,
respectively. Mr. Moslemi is not eligible for any SERP benefits. The current
base compensation set forth in the "salary" column of the Summary Compensation
Table does not differ substantially from covered compensation under these
Plans. The retirement benefits shown are based upon retirement at age 62 and
the payment of a single-life annuity to the employee.
Base Compensation Years of Service
- ----------------- ---------------------------------------
5 10 15 or more
-------- -------- --------
[S] [C] [C] [C]
$100,000................. $ 21,667 $ 43,333 $ 65,000
150,000................. 32,500 65,000 97,500
200,000................. 43,333 86,667 130,000
250,000................. 54,167 108,333 162,500
300,000................. 65,000 130,000 195,000
350,000................. 75,833 151,667 227,500
400,000................. 86,667 173,333 260,000
450,000................. 97,500 195,000 292,500
500,000................. 108,333 216,667 325,000
550,000................. 119,167 238,333 357,500
600,000................. 130,000 260,000 390,000
650,000................. 140,833 281,667 422,500
The total benefits actually payable to an individual executive are
reduced, in some cases substantially, through offsets for primary Social
Security benefits and the actuarial equivalent of the value of securities
received by those executives who received distributions in 1994 and 1995.
The Grand Union Company Employees' Retirement Plan
The Retirement Plan is a tax-qualified, noncontributory retirement
plan, providing retirement benefits for the Company's eligible salaried and
hourly non-union employees, union employees not covered by other pension plans,
and all of the Company's officers. Under the Retirement Plan, a Participant's
benefit is generally 1.5% of the average of his or her five consecutive years
of highest annual compensation multiplied by years of service not in excess of
35 minus primary Social Security benefits. Benefits under the plan are paid
under several alternatives, including monthly or lump sum payments at the
employee's election. Benefits are normally payable at age 65; however, the plan
provides for early
13
<PAGE>
retirement with reduced benefits commencing at age 55. The Internal Revenue
Code of 1986, as amended (the "Code"), places certain limits on pension
benefits, which may be paid under qualified plans.
The estimated Retirement Benefits shown below are expressed in the
form of an annuity commencing at age 65. Note that the actual Retirement
Benefit that each Participant eventually receives from the Retirement Plan may
be lower upon application of the statutory benefit limitations under Section
415 of the Code. In addition, each participant may elect to receive his
Retirement Benefit as early as age 55 (provided the participant has ten years
of service) in an actuarially reduced amount, or under one of the optional
forms of payment. None of the Named Executive Officers had any accrued benefit
under the Qualified Retirement Plan as of April 3, 1999.
Supplemental Retirement Plan For Key Executives
The SERP is a non-qualified pension plan pursuant to which certain key
employees of the Company and its affiliates ("Participants") earn a
supplemental pension in addition to the pension benefit to which they are
entitled under the Retirement Plan. The pension benefit formula under the SERP
is expressed as an annual pension, payable monthly (i) if the Participant is
not married on his retirement date, for the Participant's life, or (ii) if the
Participant is married on his retirement date, the same amount as described in
clause (i) for the duration of the Participant's life and thereafter 50% of
such amount for the duration of the life of the Participant's surviving spouse.
The amount of the annual pension payable upon retirement at age 62 or later is
determined as the "target benefit" minus the "plan offsets." The "target
benefit" is an annual pension equal to the product of 4-1/3% of the
Participant's final year's base salary rate in effect immediately prior to his
separation or as may be adjusted by the committee administering the SERP in its
sole discretion, multiplied by the Participant's number of years of actual or
deemed credited service (in most cases, up to 15 years) under the SERP. "Plan
offsets" for Participants retiring at age 62 or later are equal to the sum of
the Participant's (i) primary Social Security benefits payable at the later of
age 62 or the Participant's actual retirement age, (ii) benefits under the
Retirement Plan payable at the later of age 62 or the Participant's actual
retirement age in the form of a single life annuity, and (iii) benefits, if
any, payable from the qualified retirement plan(s) of the Participant's
previous employer(s). Participants may also retire early (i) at or after
attaining age 50 but prior to attaining age 55, with the consent of the Company
(the consent requirement is waived for a Participant who becomes disabled or is
involuntarily terminated other than for cause), or (ii) at or after age 55,
without any requirement for consent by the Company. For Participants who retire
early, the "target benefit" is reduced by 5% per year for each year the
Participant is under age 62. SERP benefits are payable in an actuarially
determined single sum no later than 30 days following the Participant's date of
retirement or other termination of employment. In general, no SERP benefits
will be paid to a Participant whose employment with the Company terminates
prior to the Participant's attaining age 50.
Pursuant to their employment agreements, as detailed below, Messrs.
Harris, Partridge, Philbin & Freimark were granted additional credited service
under the terms of the SERP. In no event, however, will any executive receive a
SERP benefit that is based on more than 15 years of service (i.e., 65% of final
pay rate). The following exhibit illustrates the credited service as defined in
the SERP and the additional service grants for each active executive who is a
Participant in the SERP.
Years of Credited Service
-------------------------------------------------------
Additional Recognized
Under Terms of
Employment Agreement*
---------------------------------
Nondiscretionary Good Reason Separation
Name As of 4/3/99 Pre 8/17/2002 Post 8/17/2002
---- ------------ ------------- --------------
J. Freimark 2 4 4
J. Harris 1 7 total of 15
J. Partridge 1 7 7
G. Philbin 1 6 6
Under the terms of the employment agreements with Messrs. Harris,
Partridge, Philbin and Freimark, additional service is recognized for the
purpose of determining the target benefit under the following set of
circumstances: (1) separation from the Company for Good Reason prior to August
17, 2002, or (2) retirement on or after August 17, 2002. If
14
<PAGE>
the Participant terminates his employment with the Company other than for Good
Reason prior to August 17, 2002, the additional amounts are not recognized.
Compensation of Directors
Each non-employee director receives an annual fee of $25,000 for
serving on the Board, and meeting fees of $1,500 for each Board meeting
attended in person, $750 for each committee meeting attended in person and each
telephonic Board meeting attended, and $375 for each telephonic committee
meeting attended. In addition, the Chair of each of the committees receives
$500 for each committee meeting they attend in person as Chair and $250 for
each telephonic committee meeting they attend as Chair. Directors receive
reimbursement of reasonable expenses incidental to attendance at meetings of
the Board of Directors or its committees.
Each non-employee director also receives an automatic initial grant of
options to purchase 5,000 shares of common stock, and additional grants to
purchase 1,500 shares with each re-election by stockholders. All options have a
term of ten years and generally become exercisable (i) six months after the
grant date as to one-third of the shares, (ii) on the earlier of the first
anniversary of the grant date or the annual meeting of stockholders closest
thereto as to the second third of the shares and as to one share of any
remainder, and (iii) on the earlier of the second anniversary of the grant date
or the annual meeting of stockholders closest thereto as to the last third of
the shares and the second share of any two-share remainder.
Employment Contracts, Termination of Employment
and Change-in-Control Arrangements
Harris Employment Agreement
J. Wayne Harris is currently the Chairman of the Board of Directors
and is employed as Grand Union's Chief Executive Officer. On August 13, 1998
and effective August 17, 1998, Grand Union and Mr. Harris executed an amendment
to his employment agreement (the "Harris Amendment"), which amended and
restated Mr. Harris' original employment agreement dated August 1, 1997. Under
the terms of the Harris Amendment, Mr. Harris will be employed by Grand Union
for a four-year term of employment commencing August 17, 1998 and will receive
(a) an annual salary of $600,000; (b) annual bonus compensation determined in
accordance with the EAIBP up to a maximum bonus equal to 125% of his base
salary paid for such period, subject to the achievement by Grand Union of
specified performance targets determined by the Compensation Committee; and (c)
so long as Mr. Harris does not maintain a permanent residence within 100 miles
of Grand Union's principal office, payment or reimbursement of the costs of
maintaining a local residence near Grand Union's principal executive offices
(subject to income tax gross-up procedures) and travel expenses between Grand
Union's principal executive offices and the permanent residence maintained by
Mr. Harris.
Pursuant to the Harris Amendment, for purposes of the SERP, Mr. Harris
will be credited with 7 additional years of service, plus one year for each
year of service with Grand Union, and will be credited with a total of 15 years
of service (inclusive of the aforementioned years of service) if Mr. Harris
completes his term of employment. Mr. Harris will also be entitled to other
employee benefits which Grand Union believes to be customary for executives in
Mr. Harris' position. The Harris Amendment provides for rights of termination,
payments and other benefits on termination under certain circumstances,
confidentiality, and non-competition, in each case which Grand Union believes
to be customary for agreements with executives in Mr. Harris' position.
Partridge Employment Agreement
Jack W. Partridge, Jr. is currently Vice Chairman of the Board of
Directors and is employed as Grand Union's Chief Administrative Officer. On
August 13, 1998 and effective August 17, 1998, Grand Union and Mr. Partridge
executed an amendment to his original employment agreement (the "Partridge
Amendment"), which amended and restated Mr. Partridge's original employment
agreement dated January 5, 1998. Under the terms of the Partridge Amendment,
Mr. Partridge will be employed by Grand Union for a four-year term of
employment beginning on August 17, 1998, and will receive: (a) an annual salary
of $350,000; (b) annual bonus compensation determined in accordance with the
EAIBP up to a maximum bonus equal to 125% of his base salary paid for such
period, subject to the achievement by Grand Union of specified performance
targets determined by the Compensation Committee; and (c) so long as Mr.
Partridge does not maintain a permanent residence
15
<PAGE>
within 100 miles of Grand Union's principal office, payment or reimbursement of
the cost of maintaining a local residence near Grand Union's principal
executive office (subject to income tax gross-up procedures) and travel
expenses for Mr. Partridge between Grand Union's principal executive offices
and such permanent residence.
Pursuant to the Partridge Amendment, for purposes of the SERP, Mr.
Partridge will be credited with 7 additional years of service, plus one year
for each year of service with Grand Union. The Partridge Amendment also
contains provisions concerning other employee benefits, rights of termination,
payments and other benefits on termination under certain circumstances,
confidentiality, and non-competition, in each case which Grand Union believes
to be customary for agreements with executives in Mr. Partridge's position.
Philbin Employment Agreement
Gary M. Philbin is currently a member of the Board of Directors and is
employed as Grand Union's President and Chief Merchandising Officer. On August
13, 1998 and effective August 17, 1998, Grand Union and Mr. Philbin executed an
amendment to his employment agreement (the "Philbin Amendment"), which amended
and restated Mr. Philbin's original employment agreement dated October 3, 1997.
Under the terms of the Philbin Amendment, Mr. Philbin will be employed by Grand
Union for a four-year term of employment beginning on August 17, 1998 and will
receive: (a) an annual salary of $350,000; (b) annual bonus compensation
determined in accordance with the EAIBP up to a maximum bonus equal to 125% of
his base salary paid for such period, subject to the achievement by Grand Union
of specified performance targets determined by the Compensation Committee; and
(c) payment or reimbursement of the costs of travel by Mr. Philbin and his
immediate family between the New York/New Jersey metropolitan area and the
Midwestern United States throughout the term of employment.
Pursuant to the Philbin Amendment, for purposes of the SERP, Mr.
Philbin will be credited with 6 additional years of service, plus one year for
each year of service with Grand Union. The Philbin Amendment also contains
provisions concerning other employee benefits, rights of termination, payments
and other benefits on termination under certain circumstances, confidentiality,
and non-competition, in each case which Grand Union believes to be customary
for agreements with executives in Mr. Philbin's position. In connection with
Mr. Philbin's original employment agreement, the Company loaned him $225,000,
all of which remains outstanding. Such loan bears no interest and is repayable
on August 17, 2002.
Freimark Employment Agreement
Jeffrey P. Freimark is currently Grand Union's Executive Vice
President and Chief Financial Officer. On August 13, 1998 and effective August
17, 1998, Grand Union and Mr. Freimark executed an employment agreement (the
"Freimark Employment Agreement"). Under the terms of the Freimark Employment
Agreement, Mr. Freimark will be employed by Grand Union for a four-year term of
employment beginning August 17, 1998, and will receive: (a) an annual salary of
$325,000; and (b) annual bonus compensation determined in accordance with the
EAIBP, up to a maximum bonus of 100% of his base salary paid for such period,
subject to the achievement by Grand Union of specified performance targets
determined by the Compensation Committee.
Pursuant to the Freimark Employment Agreement, for purposes of the
SERP, Mr. Freimark will be credited with 4 additional years of service, plus
one year for each year of service with Grand Union. The Freimark Employment
Agreement also contains provisions concerning other employee benefits, rights
of termination, payments and other benefits on termination under certain
circumstances, confidentiality, and non-competition, in each case which Grand
Union believes to be customary for agreements with executives in Mr. Freimark's
position.
Employment Arrangements with Mr. Moslemi
Effective August 6, 1998, the Company hired Manouchehr Moslemi to
serve as the Company's Corporate Vice President, and Chief Information Officer.
Pursuant to the terms of an offer letter dated June 17, 1998, the Company
agreed to pay Mr. Moslemi an initial annual base salary in the amount of
$200,000, and a signing bonus in the amount of $50,000. In addition, Mr.
Moslemi will participate in the Company's Bonus Plan, with a target bonus of
$100,000 and a maximum bonus of 125% of the target bonus, based on achievement
by the Company of certain financial and/or sales performance targets; provided,
however, that for the fiscal year ending March 28, 1998, the Company guaranteed
16
<PAGE>
Mr. Moslemi a minimum bonus payment of $100,000 pro-rated for his actual period
of employment during the fiscal year. Mr. Moslemi has also been granted an
option to purchase 15,000 shares of the Company's Common Stock, vesting in
equal increments over a four year period, all exercisable at a price of $8.50.
Mr. Moslemi is not eligible for benefits under the Grand Union Severance Plan
for Exempt Associates. Instead, if his employment is terminated for any reason
other than his death, voluntary resignation or because of his misconduct, Mr.
Moslemi will be eligible to receive 18 months of his then present annual salary
as a severance payment. If Mr. Moslemi chooses not to relocate his principal
residence to an area within normal commuting distance of the Company's
Headquarters during the first two years of his employment with Grand Union, Mr.
Moslemi will be reimbursed for: (a) reasonable living expenses for a local
residence near the Company's Headquarters and (b) reasonable air travel between
the local residence and his principal residence in Minnesota. If Mr. Moslemi
does relocate his principal residence to an area within normal commuting
distance of the Company's Headquarters, he will be eligible for coverage under
The Grand Union Company Moving Policy. Mr. Moslemi is also eligible for other
standard benefits provided to the Company's Corporate Vice Presidents.
Indemnification Agreements
The Company has entered into indemnification agreements with each of
its directors and executive officers pursuant to which the Company has agreed
to indemnify such persons to the fullest extent permitted by law against
expenses, judgments, fines, penalties or amounts paid in settlement actually
and reasonably incurred by such person in connection with legal proceedings in
which the person was involved by reason of being a director or officer of the
Company. Under current law, such indemnification generally is available if such
person acted in good faith and in a manner he or she reasonably believed to be
in the best interests of the Company and, with respect to criminal proceedings,
had no reasonable cause to believe his or her conduct was unlawful. Under
current law, such person is not indemnified in respect of matters as to which
he or she has been adjudged liable to the Company unless a court determines
that, under the circumstances, he or she is reasonably entitled to such
indemnification. Comparable indemnification rights are also provided pursuant
to the Company's Certificate of Incorporation.
Severance Plans
On and effective April 14, 1998, the Board of Directors adopted (i)
The Grand Union Company Discretionary Severance Plan for Non-Union Associates
(the "Discretionary Severance Plan") and (ii) The Grand Union Company Severance
Plan for Exempt Personnel (the "Exempt Severance Plan"). The Discretionary
Severance Plan and the Exempt Severance Plan supercede any prior severance plan
or policy which may have existed prior to April 14, 1998. Generally, the
Discretionary Severance Plan applies to all non-union, non-salaried, hourly
associates working in the Company's stores and non-union hourly personnel who
work in the Company's offices. Under the Discretionary Severance Plan, eligible
terminated associates of the Company are generally eligible to receive the
equivalent of one week's regular pay for each two years of service to a maximum
of 26 weeks of total severance benefits. However, the Plan Administrator
retains the absolute right and discretion to determine whether an employee will
be offered severance benefits and the terms and amount of the severance
benefits to be paid, if any. Subject to all of the terms and conditions of the
Exempt Severance Plan, all salaried personnel at the Company's headquarters and
salaried store personnel who are actively employed and working may be eligible
to receive a severance benefit under the Exempt Severance Plan. Severance
benefits under the Exempt Severance Plan will generally be payable to eligible
employees terminated due to a job elimination, a reduction in force for
economic reasons, a decision to outsource work performed by Company employees
to a third party service provider, or another Company initiated event (other
than the sale of a major business unit of the Company). Under the Exempt
Severance Plan, eligible employees will receive a lump sum severance benefit of
one week's pay. Additionally, the Exempt Severance Plan provides for a lump-sum
severance payment equal to (i) in the case of salaried employees holding the
office of Senior Vice President or above, 18 months' base salary less the one
week base severance benefit; (ii) in the case of salaried employees holding the
office of Corporate Vice President, 12 months' base salary less the one week
base severance benefit; (iii) in the case of salaried employees holding the
office of appointed vice president or director, 6 months' base salary less the
one week base severance benefit; and (iv) in the case of all other salaried
employees, one week's base salary for each year of service to the Company up to
a maximum of 26 weeks less the one week base severance benefit. Any employee of
the Company who has a separate written agreement with the Company, which
provides for payment of severance benefits, will receive no severance benefit
under either the Discretionary Severance Plan or the Exempt Severance Plan.
Each of the Senior Managers employment agreements and the employment
arrangements with Mr. Moslemi provide for termination payments that render them
ineligible for severance benefits under the Discretionary Severance Plan and/or
Exempt Severance Plan.
17
<PAGE>
Change-in-Control Provisions
Under the EIP and NEDSOP, certain provisions become effective upon a
change in control of the Company. Under both plans, unless otherwise specified
in a particular award, on the twentieth (20th) trading day prior to the
effective date of the change in control, all stock options not otherwise
vested, become fully vested, and any restrictions or other conditions
applicable to restricted stock or other incentives awarded under the EIP lapse
or are deemed satisfied and such awards become fully vested and/or immediately
payable. In addition, the value of any canceled award is paid out in cash
unless the award holder receives either (i) the right to acquire the same
basket of cash and securities available to holders of Common Stock, or (ii) if
pooling of interests is a condition of the transaction, an equivalent right in
a successor security which would enable the transaction to qualify for pooling
of interests. Under both plans, a change in control is defined to include: (1)
any person, entity or Group (persons or entities acting together) is or becomes
the beneficial owner of more than 50% of the Voting Stock of the Company (as
defined below); (2) a consolidation, merger or sale of substantially all of the
assets of the Company, with the effect that any person, entity or Group becomes
the beneficial owner of more than 50% of the Voting Stock of the Company or the
Company is not the surviving entity; (3) during any consecutive two-year period
commencing July 1, 1996, individuals who constituted the Board of Directors at
the beginning of such period, together with any new directors whose election by
the Board of Directors or nomination for election by stockholders was approved
by 66-2/3% of the directors who were in office at the beginning of the period
or whose election or nomination was so approved, cease to constitute a majority
of the Board of Directors then in office; or (4) any order, judgment or decree
of dissolution or split-up of the Company, and such order remains undischarged
or unstayed for a period in excess of 60 days. For purposes of determining
whether a change in control has occurred, "more than 50% of the Voting Stock"
means more than 50% of one or more classes of stock pursuant to which the
holders have the general power to vote for the election of members of the Board
of Directors, and the aggregate of such classes for which the person, entity or
Group holds more than 50% has the power to elect more than 50% of the members
of the Board of Directors.
Each Senior Manager's employment agreement provides that if Grand
Union terminates a Senior Manager without "Cause," or if such Senior Manager
resigns for "Good Reason" (each as defined in their employment agreements),
within twelve months following a "Change of Control" (as defined below), such
Senior Manager shall be entitled to severance pay equal to the sum of (i) the
product of (x) 2.99 times (y) 120% of such Senior Manager's base salary then in
effect, plus (ii) such Senior Manager's accrued and unpaid bonus based on the
ratable portion of EBITDA through the date of termination pursuant to such
Senior Manager's existing employment agreement and the continuation of certain
other benefits as set forth in the agreements. "Change of Control" shall mean,
the acquisition by any person or entity, directly or indirectly, of more than
50% of the common stock. The employment agreements for the Senior Managers and
the EIP provide for certain termination obligations for certain events not
covered under this change of control provision.
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Stock Price Performance Graph
The following graph shows a comparison of cumulative total returns for
the Company, the Standard & Poor's 500 ("S&P 500"), and the Standard & Poor's
Retail (Food Chains) Index, for the period that commenced on September 9, 1998,
and ended on April 3, 1999, with data points for September 9, 1998 (the first
day of Over-The-Counter trading following emergence from Chapter 11
proceedings), December 31, 1998, and April 3, 1999. The graph assumes: 1) $100
invested at the close of trading on September 9, 1998, and 2) that all
dividends have been reinvested. Market price is not meaningful for the period
prior to August 17, 1998, due to the significant change in the capital
structure of the Company.
Comparison of Cumulative Total Return
(The Grand Union Company, S&P 500 Index, S&P Retail (Food Chains) Index)
(Performance Results Through April 3, 1999)
[LINE GRAPH OMITTED]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
September 9, 1998 December 31, 1998 April 3, 1999
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The Grand Union Company ("GUCO") 100.00 137.06 125.18
- --------------------------------------------------------------------------------------------------
S&P 500 100.00 122.74 129.59
- --------------------------------------------------------------------------------------------------
S&P Retail (Food Chains) 100.00 121.17 108.03
- --------------------------------------------------------------------------------------------------
</TABLE>
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended (the
"Securities Act"), or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), that might incorporate future filings, including this Proxy
Statement, in whole or in part, the following report and the above Performance
Graph shall not be incorporated by reference into any such filings, nor shall
they be deemed to be soliciting material or deemed filed with the Securities
and Exchange Commission under the Securities Act, or under the Exchange Act.
19
<PAGE>
Report of the Compensation Committee
At the conclusion of the fiscal year ended April 3, 1999, and since
September 20, 1998, the Compensation Committee was composed of Thomas Cochill
(Chair), David Green and Scott Tepper, three non-employee directors of the
Company and "outside directors" within the meaning of Section 162(m) of the
Code. From the beginning of the fiscal year through April 22, 1998, the
Compensation Committee was composed of Clifford Miller (Chair), J. Richard
Stonesifer and Martha Pritchard, also "outside directors." From April 22, 1998,
through August 17, 1998, the Compensation Committee was composed of Mark Manski
(Chair), Jordan Krimstein and Ms. Pritchard, also "outside directors." The
Compensation Committee's primary duties include (i) reviewing the compensation
levels of the Company's officers, including the Senior Managers and certain
other members of executive management, (ii) administering the Company's
incentive bonus plans, (iii) administering the EIP and the EAIBP and (iv)
related matters.
Compensation Philosophy and Policies
Historically, the compensation philosophy of the Company has been to
provide a balanced mix of base compensation, annual incentives, and retirement
income, to attract and retain top-quality people who will contribute to the
long-term performance and long-term growth of the Company. Annual and long-term
incentives have been designed to link compensation to corporate and individual
performance, and to align employee interests with stockholder interests.
Special incentives and awards have been provided as circumstances warrant.
Given the business decline experienced by the Company in the fiscal
year ended March, 1997 and the departure of the Company's five highest ranking
executives in and around that same time period, the primary objective of the
Compensation Committee and the Board was to attract a new executive officer
team. Mr. Freimark was employed in March, 1997, and Mr. Harris was hired in
August, 1997. In October, 1997, Mr. Philbin joined the Company and lastly Mr.
Partridge joined the Company in January, 1998. As part of the Company's 1998
Reorganization under Chapter 11 of the Bankruptcy Code (the "1998
Reorganization") and as approved by the Compensation Committee sitting from
April 22, 1998 to August 17, 1998, new employment agreements were negotiated
and entered into with each of the Senior Managers, with the intent being to
stabilize and secure the executive management of the Company.
On September 20, 1998, following the consummation of the 1998
Reorganization and the appointment of a new Board of Directors on August 17,
1998, the current Compensation Committee was appointed. Since being appointed,
the Compensation Committee has, among other things, reviewed and familiarized
itself with the Company's existing benefit plans, bonus plans, historical
compensation methodology and the Company's employment agreements with the
Senior Managers.
Annual Salary
Historically, the annual salaries of the executive officers of the
Company have been determined by reference to the mid-range of a varying mix of
other supermarket retailers with comparable revenues and/or geographic
coverage. The annual salaries of the Senior Managers are as set forth in their
respective employment agreements through August 2002. For each of Messrs.
Harris, Partridge, Philbin and Freimark, annual base salaries were set in
connection with their initial retention by the Company and were restated in the
amended employment agreements that were entered into as part of the 1998
Reoganization. With regard to the salaries of the Senior Managers, other
executives, and managerial associates of the Company, it is the Compensation
Committee's continuing objective to maintain the competitive level of such
salaries.
Annual Performance Incentives
Annual bonus levels and performance targets are established annually
and are based upon corporate performance during the fiscal year. Potential
bonuses for the fiscal year ending April 3, 1999, were established by the
Compensation Committee in place from April 22, 1998 to August 17, 1998 and were
based on the Company achieving specified levels of EBITDA (Earnings Before
Interest, Taxes, Depreciation and Amortization) during the fiscal year. The
incentive targets for the Senior Managers are established pursuant to the
EAIBP. All other managerial associates, including store general managers and
assistant managers, are eligible for annual bonus payments, also based upon the
achievement of certain corporate or, in the case of store personnel, store
financial objectives.
20
<PAGE>
For the fiscal year ended April 3, 1999, the Senior Managers and all
eligible participants, with the exception of certain store personnel, received
bonus payments based upon 125% performance target achievement. The following
annual incentive bonuses, pursuant to the EAIBP, were earned by and paid to the
Senior Managers for the fiscal year ended April 3, 1999: Mr. Harris - $750,000;
Mr. Partridge - $437,500; Mr. Philbin - $437,500 and Mr. Freimark - $325,000.
Long-Term Incentives
The Company maintains two equity incentive plans, one for non-employee
directors (the "NEDSOP") and the other for employees (the "EIP"). Grants under
these plans provide an immediate and direct link to stockholder interests. The
Company and its stockholders benefit from the increased morale and productivity
that the Company believes are associated with these grants, as well as the
ability to retain key employees through the vesting provisions contained in the
plans. Option grants to the Senior Managers, representing 2,138,692 shares,
were issued by the Compensation Committee sitting from April 22, 1998 to August
17, 1998, as part of the Senior Managers' employment agreements effective on
August 17, 1998. During Fiscal 1999, additional option grants to other
executive officers and managerial associates representing 269,500 shares were
issued based upon the recipient's level of responsibility. To date, executive
officers and other employees of the Company have been granted an aggregate of
approximately 2,414,192 stock options, net of canceled options, since the
adoption of the Employee Plan in 1995.
Other Compensation
Executive officers, along with all other eligible employees,
participate in the Company's Retirement Plan, Savings Plan, and other health
and life insurance benefits. Senior executives, including those individuals who
hold the positions of Senior Vice President and above, participate in the SERP,
which generally provides a lump sum retirement benefit of up to 65% of the
final year's salary, reduced by amounts payable through Social Security, under
the Retirement Plan and under a predecessor plan to the SERP.
Tax Policy
Section 162(m) of the Code ("Section 162(m)") generally limits
deductions for certain executive compensation paid to a "covered employee" (as
defined in Section 162(m) during a taxable year) in excess of $1 million per
executive per taxable year. Certain types of compensation are exempt from such
limits on deductibility if they satisfy the requirements for the
performance-based compensation exemption to Section 162(m).
Compensation paid to executive officers during the last fiscal year
did not exceed the deductibility threshold. The Compensation Committee believes
it is more likely than not that the Company will be able to fully deduct all
compensation paid in the foreseeable future.
The Company has endeavored to structure its long-term and other
incentives to achieve maximum deductibility under Section 162(m) with minimal
sacrifices in flexibility and corporate objectives. To that end, options
granted under the EIP should qualify for the performance-based compensation
exemption to Section 162(m). However, because long-term incentives allow an
individual to concentrate significant compensation in a single year, and
because corporate objectives may not always be consistent with the requirements
for full deductibility, it is conceivable that circumstances might arise under
which some payments will not be deductible under Section 162(m).
21
<PAGE>
Conclusion
The Compensation Committee believes that long-term stockholder value
is enhanced by corporate and individual performance achievements. Through the
plans described above during the past fiscal year, a significant portion of the
Company's executive compensation was based on overall corporate financial
performance. The Committee believes equity compensation, in the form of stock
options, is beneficial to the long-term success of the Company. The Company
remains committed to this policy, recognizing the competitive market for
talented executives may result in highly variable compensation for a particular
time period.
Thomas R. Cochill, Chair
David M. Green
Scott Tepper
Compensation Committee Interlocks And Insider Participation
The Board of Directors maintains a Compensation Committee consisting
of three directors. The Compensation Committee currently consists of Mr.
Cochill, Mr. Green and Mr. Tepper, with Mr. Cochill acting as Chair. From April
22, 1998 to August 17, 1998, the Compensation Committee consisted of Ms.
Pritchard and Messrs. Manski and Krimstein, with Mr. Manski serving as Chair.
From October 30, 1997 to April 22, 1998, the Compensation Committee consisted of
Ms. Pritchard, Mr. Miller and Mr. Stonesifer, with Mr. Miller serving as Chair.
No member of the Board participates in decisions regarding his own
compensation as an executive officer of the Company. However, Compensation
Committee members are eligible for certain automatic, annual option grants
under the NEDSOP.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and persons who beneficially 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 Common Stock and other equity securities of the Company on Forms
3, 4, and 5. Officers, directors and greater than 10% beneficial stockholders
are required by rules promulgated by the Securities and Exchange Commission to
furnish the Company with copies of all Section 16(a) reports they file. Based
solely on its review of the copies of reporting forms furnished to the Company,
or written representations of reporting persons, the Company believes that all
filing requirements under Section 16(a) of the Exchange Act applicable to its
directors, officers and any persons holding 10% or more of the Company's Common
Stock with respect to the Company's fiscal year ended April 3, 1999, were
satisfied, with the exception of late Form 3 filings for Messrs. Bernstein,
Cochill, Colonnetta, Doft, Green, Lash, Petrillo and Tepper.
22
<PAGE>
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP,
independent accountants, to audit the financial statements of the Company for
the fiscal year ending April 1, 2000. THE BOARD OF DIRECTORS recommends that
stockholders vote "FOR" ratification of such appointment. The affirmative vote
of a majority of the shares of Common Stock present at the meeting in person or
by proxy shall be necessary to ratify the appointment of the Company's
independent accountants. In the event of a negative vote on such ratification,
the Board of Directors will reconsider its selection.
Representatives of PricewaterhouseCoopers LLP are expected to be
present at the Annual Meeting with the opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions.
OTHER MATTERS TO COME BEFORE THE ANNUAL MEETING
The Company knows of no other matters to come before the Annual
Meeting. If any other matter not mentioned in this Proxy Statement properly
comes before the Annual Meeting, it is the intention of the proxy holders named
in the enclosed Proxy to vote the shares they represent as the Board of
Directors may recommend.
STOCKHOLDER NOMINATIONS FOR ELECTION OF DIRECTORS
Nominations of persons for election to the Board of Directors at an
annual meeting or by the written consent of the stockholders may be made by any
stockholder of the Company entitled to vote for the election of directors at
the meeting who complies with certain notice procedures. A stockholder's
nomination of a person for election to the Board of Directors must be delivered
to or mailed and received at the principal executive offices of the Company,
addressed to the attention of the Secretary of the Company, not less than sixty
days prior to the meeting or the date the stockholders are first solicited for
their consents as the case may be; provided, however, that, in the case of an
annual meeting and in the event that less than fifty days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received not later than the
earlier of (a) the close of business on the fifteenth day following the day on
which such notice of the date of the meeting was mailed or such public
disclosure was made, whichever first occurs, or (b) two days prior to the date
of the meeting. Such stockholder's notice to the Secretary shall set forth (a)
as to each person whom the stockholder proposes to nominate for election or
reelection as a director, (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class and number of shares of capital stock of the Company
which are beneficially owned by the person, (iv) a statement as to the person's
citizenship, and (v) any other information relating to the person that is
required to be disclosed in solicitations for proxies for election of directors
pursuant to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder, and (b) as to the stockholder giving the notice, (i)
the name and record address of the stockholder and (ii) the class, series and
number of shares of capital stock of the Company which are beneficially owned
by the stockholder. The Company may require any proposed nominee to furnish
such other information as may reasonably be required by the Company to
determine the eligibility of such proposed nominee to serve as a director of
the Company. In connection with any annual meeting, the Chairman of the Board
of Directors shall, if the facts warrant, determine and declare to the meeting
that a nomination not made in accordance with the foregoing procedure, or
otherwise properly made by the Board of Directors, was defective and shall be
disregarded.
STOCKHOLDER PROPOSALS TO BE PRESENTED AT THE 2000 ANNUAL MEETING
Federal proxy rules specify what constitutes timely submission for a
stockholder proposal to be included in a subsequent proxy statement. Proposals
of stockholders that are intended to be presented by such stockholders at the
Company's 2000 Annual Meeting of Stockholders generally must be received by the
Company at its principal executive offices no later than March 11, 2000, in
order to be considered for inclusion in the Company's proxy statement relating
to that meeting. In addition, to be properly brought before the meeting under
the Company's Bylaws, a stockholder's notice must be received at the principal
executive offices of the Company, addressed to the attention of the Secretary
of the Company, within the time specified in the federal proxy rules for timely
submission of a stockholder proposal or, if not
23
<PAGE>
within such time, then not less than sixty days nor more than ninety days prior
to the meeting; provided, however, that in the event that less than fifty days'
notice or prior public disclosure of the date of the meeting is given or made
to stockholders, notice by the stockholder to be timely must be so received by
the earlier of (a) the close of business on the fifteenth day following the day
on which such notice of the date of the annual meeting was mailed or such
public disclosure was made, whichever first occurs, and (b) two days prior to
the date of the meeting. A stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the annual
meeting (i) a brief description of the business desired to be brought before
the annual meeting, (ii) the name and record address of the stockholder
proposing such business, (iii) the class and number of shares of the Company
which are beneficially owned by the stockholder, and (iv) any material interest
of the stockholder in such business.
The Chairman of the Board of Directors shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of the Company's Bylaws,
and if he should so determine, he is required to so declare to the meeting and
any such business not properly brought before the meeting shall not be
transacted.
The 1999 Annual Report to Stockholders of the Company including its
Annual Report on Form 10-K for the fiscal year ended April 3, 1999 is attached
to this Proxy Statement. The Annual Report is not to be regarded as proxy
soliciting material or as a communication by means of which any solicitation is
to be made.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED APRIL 3, 1999, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES, BUT WITHOUT
EXHIBITS, WILL BE PROVIDED TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST
TO THE SECRETARY, THE GRAND UNION COMPANY, 201 WILLOWBROOK BOULEVARD, WAYNE,
NEW JERSEY 07470
24
