<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
ALBERTSON'S, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(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:
----------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------
<PAGE> 2
LOGO
April 19, 1996
Dear Fellow Stockholder:
It is our pleasure to invite you to attend the 1996 Annual Meeting of
Stockholders. This year's Annual Meeting will be held on May 24, 1996, at 10:00
a.m., Mountain Daylight Time, in the Eyries Room at the Boise Centre on the
Grove, 850 Front Street, Boise, Idaho.
Information about the business of the meeting and the nominees for election as
members of the Board of Directors is set forth in the Notice of Meeting and the
Proxy Statement on the following pages. This year you are asked to elect
directors. In addition, two stockholder proposals, which are opposed by your
Board of Directors, may be presented for consideration and voting.
It is important that your shares be represented at the meeting. Accordingly,
whether or not you plan to attend the meeting, we urge you to complete, date and
sign the enclosed proxy card, and return it in the envelope provided.
We look forward to personally greeting those stockholders able to attend.
Very truly yours,
ALBERTSON'S, INC.
/s/
Gary G. Michael
Chairman of the Board
and Chief Executive Officer
ALBERTSON'S, INC.
250 PARKCENTER BOULEVARD
P. O. BOX 20
BOISE, IDAHO 83726
- - --------------------------------------------------------------------------------
<PAGE> 3
LOGO
TABLE OF CONTENTS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
- - ------------------------------------------------------------------------------------------------
Notice of Annual Meeting of Stockholders 1
- - ------------------------------------------------------------------------------------------------
Proxy Statement 2
- - ------------------------------------------------------------------------------------------------
Voting Securities and Principal Holders Thereof 3
- - ------------------------------------------------------------------------------------------------
Election of Directors (Proposal 1) 6
- - ------------------------------------------------------------------------------------------------
Nominees for Election as Class I Directors 7
- - ------------------------------------------------------------------------------------------------
Continuing Class II Directors 8
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Continuing Class III Directors 9
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Certain Transactions 11
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Committees and Meetings of the Board of Directors 12
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Directors' Fees 13
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Compensation of Executive Officers 14
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Summary Compensation Table 14
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Option Grants in Last Fiscal Year 17
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Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values 18
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Retirement Benefits 18
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Compensation Committee/Executive Committee Report 19
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Compensation Committee and Executive Committee Interlocks and Insider Participation 23
- - ------------------------------------------------------------------------------------------------
Performance Graph 24
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Stockholder Proposal (Proposal 2) 25
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Board of Directors' Statement in Opposition 26
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Stockholder Proposal (Proposal 3) 26
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Board of Directors' Statement in Opposition 27
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Other Matters 28
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Filing of Forms Pursuant to Section 16 of the Securities Exchange Act of 1934 28
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Deadline for Receipt of Stockholders' Proposals 28
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</TABLE>
<PAGE> 4
FREE PARKING FOR MEETING
For three hours of free parking at the Eastman Garage, Capital Terrace Garage,
Statehouse Inn (roof-top only) and surface parking areas as indicated on the map
below, your admittance badge for the Meeting will include a validation sticker.
Handicap parking is available as indicated on the map. Parking is not available
at Boise Centre on the Grove.
[Map of Convention Center and surrounding
parking to be included in copy sent to Stockholders]
<PAGE> 5
LOGO
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 24, 1996, AT BOISE, IDAHO
- - --------------------------------------------------------------------------------
TO THE STOCKHOLDERS OF ALBERTSON'S, INC.:
The Annual Meeting of Stockholders of Albertson's, Inc., a Delaware corporation
("Company"), will be held on May 24, 1996, at 10:00 a.m., Mountain Daylight
Time, in the Eyries Room at the Boise Centre on the Grove, 850 Front Street,
Boise, Idaho, for the following purposes:
(1) To elect four Class I directors to hold office for three years;
(2) To consider and act upon, if properly presented, two proposals, each
submitted by a single stockholder and each opposed by the Board of
Directors; and
(3) To transact such other business as may properly come before the meeting or
any adjournments or postponements thereof.
All of the above matters are more fully described in the accompanying Proxy
Statement.
Stockholders of record at the close of business on April 9, 1996, will be
entitled to notice of, and to vote at, the meeting.
A complete list of the stockholders entitled to vote at the meeting will be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for the ten-day period ending immediately prior
to the date of the meeting, at 250 Parkcenter Boulevard, Boise, Idaho.
All stockholders are cordially invited to attend the meeting in person. WHETHER
OR NOT YOU PLAN TO ATTEND, PLEASE RETURN YOUR PROXY PROMPTLY. It is important
that you mark, sign, date and return the accompanying Proxy, regardless of the
size of your holdings, as promptly as possible. A postage prepaid envelope (if
mailed in the United States) is enclosed for your convenience.
Any stockholder of record attending the meeting may vote in person even if that
stockholder returned a proxy card. If you plan to attend the meeting and your
shares are held in the name of a broker or other nominee, please bring a
statement or letter from the broker or nominee confirming your ownership of
shares.
By Order of the Board of Directors
/S/ KAYE L. O'RIORDAN
---------------------------------
Kaye L. O'Riordan
Corporate Secretary
April 19, 1996
YOUR COPY OF THE COMPANY'S ANNUAL REPORT FOR THE
FISCAL YEAR ENDED FEBRUARY 1, 1996 IS ENCLOSED.
<PAGE> 6
PROXY STATEMENT
- - --------------------------------------------------------------------------------
This Proxy Statement and the accompanying proxy card, which are being mailed to
stockholders on or about April 19, 1996, are furnished in connection with the
solicitation of proxies by the Board of Directors of Albertson's, Inc., a
Delaware corporation ("Company"), for use at the Annual Meeting of Stockholders
to be held on May 24, 1996, including any adjournments or postponements thereof.
The Annual Meeting is called for the purposes stated in the accompanying Notice
of Meeting. All stockholders of record of the Company's Common Stock as of the
close of business on April 9, 1996 are entitled to vote at the meeting. As of
that date, there were 251,929,776 shares of Common Stock outstanding. On each
matter coming before the meeting, a stockholder is entitled to one vote for each
share of stock held of record as of the record date.
If the accompanying proxy card is properly signed and is not revoked by the
stockholder, the shares it represents will be voted at the meeting by the proxy
holder in accordance with the instructions of the stockholder. If no specific
instructions are designated, the shares will be voted as recommended by the
Board of Directors.
A proxy may be revoked at any time before it is voted at the meeting. Any
stockholder who attends the meeting and wishes to vote in person may revoke his
or her proxy at that time. Otherwise, revocation of a proxy must be mailed or
delivered to the Corporate Secretary of the Company at 250 Parkcenter Boulevard,
P.O. Box 20, Boise, Idaho 83726 and received prior to the meeting.
This solicitation is made on behalf of the Board of Directors and all expenses
of this solicitation will be paid by the Company. Initial solicitations will be
made by mail. However, in order to assure sufficient representation, some
directors, officers or regular employees of the Company may solicit proxies in
person or by telephone, facsimile or telegram without special compensation.
Also, to assist in the solicitation of proxies, the Company has engaged
Georgeson and Company, Inc. for a fee estimated not to exceed $25,000 plus
reimbursement of expenses. In addition, arrangements have been made with
brokerage houses and other custodians to send proxies and proxy solicitation
material to their principals, and the Company will reimburse such brokerage
houses and custodians for their expenses in doing so.
Under Delaware law and the Company's Restated Certificate of Incorporation, if a
quorum is present at the meeting (i) there will be an election of directors and,
if they receive a plurality of the votes cast in the election of directors, the
four nominees will be elected; and (ii) proposals 2 and 3, if property brought
before the meeting, must be approved by the affirmative vote of a majority of
the shares present in person or by proxy and entitled to vote on the matter.
With regard to the election of directors, abstentions and broker non-votes will
be disregarded and will have no effect on the outcome of the vote. With regard
to each of the two stockholder proposals, if properly brought before the
meeting, and other matters that may properly come before the meeting,
abstentions will be counted and will have the same effect as a vote against the
matter, and broker non-votes will be disregarded and will have no effect on the
outcome of the vote.
Upon the recommendation of its Audit Committee, the Board of Directors has
reappointed Deloitte & Touche LLP as independent auditors for the fiscal year
ending January 30, 1997. Deloitte and Touche LLP has audited the financial
statements of the Company for each fiscal year since 1967.
Services to be performed by Deloitte & Touche LLP for the 1996 fiscal year will
include, among other things, audit of annual financial statements, limited
reviews of quarterly financial information and consultations in connection with
various financial reporting, accounting and income tax matters. Representatives
of Deloitte & Touche LLP will attend the Annual Meeting and will have an
opportunity to make a statement, if they desire to do so, and to respond to
appropriate questions.
2
<PAGE> 7
LOGO
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
- - --------------------------------------------------------------------------------
The following table shows the persons (including any group deemed a "person"
under Section 13(d)(3) of the Securities Exchange Act of 1934) known to the
Company who beneficially own more than 5 percent of the Company's Common Stock.
It also shows beneficial ownership for each director, for each executive officer
named in the Summary Compensation Table and for the executive officers and
directors as a group.
SHARES BENEFICIALLY OWNED AND NATURE OF
BENEFICIAL OWNERSHIP AS OF MARCH 28, 1996(1)
- - --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
AGGREGATE
NAME (AND ADDRESS SHARED SOLE SHARED AMOUNT
FOR BENEFICIAL SOLE VOTING VOTING INVESTMENT INVESTMENT BENEFICIALLY PERCENT
OWNERS OVER 5%) POWER POWER POWER POWER OWNED(2) OF CLASS
- - -----------------------------------------------------------------------------------------------------------------------
Markus Stiftung(3) 29,152,800 -- 29,152,800 -- 29,152,800 11.57
Timmasper Weg
2353 Nortorf
Federal Republic of Germany
Alscott Limited
Partnership #1(4) -- 26,846,046 -- 26,846,046 26,846,046 10.65
380 E. Parkcenter Blvd.
Boise, ID 83706
Kathryn Albertson(4) -- 28,026,046(5) -- 28,026,046(5) 28,026,046(5) 11.12
380 E. Parkcenter Blvd.
Boise, ID 83706
A. Gary Ames 7,000(6) -- 7,000(6) -- 7,000(6) +
Cecil D. Andrus 5,300(6) 800 5,300(6) 800 6,100(6) +
John B. Carley 544,861 -- 543,900(7) -- 544,861 +
Paul I. Corddry 2,000(6) 10,000 2,000(6) 10,000 12,000(6) +
John B. Fery 20,000(6) -- 20,000(6) -- 20,000(6) +
Clark A. Johnson 13,650(6) 4,000 13,650(6) 4,000 17,650(6) +
Charles D. Lein 8,000(6) 12,200 8,000(6) 12,200 20,200(6) +
Warren E. McCain 1,234,771 -- 1,234,771 -- 1,234,771 +
Gary G. Michael 249,020 -- 248,059(7) -- 249,020 +
Beatriz Rivera 2,000(6) -- 2,0006 -- 2,000(6) +
J.B. Scott(4) -- 28,026,046(6) -- 28,026,046(5) 28,026,046(5) 11.12
380 E. Parkcenter Blvd.
Boise, ID 83706
Will M. Storey 5,000(6) -- 5,0006 -- 5,000(6) +
Steven D. Symms 2,000(6) 1,502 2,0006 1,502 3,502(6) +
Carl W. Pennington 10,894(8) 172,000 10,000(7,8) 172,000 182,894(8) +
Ronald D. Walk 893 241,876 (7) 241,876 242,769 +
All directors (including 2,378,974(6,8) 28,777,209(5) 2,368,179(6,7,8) 28,777,209(5) 31,156,183(5,6,8) 12.36
nominees) and all
executive officers as a group
(29)
</TABLE>
+ Indicates that the percentage of shares beneficially owned does not exceed one
percent of the Company's outstanding Common Stock.
(1) Beneficial ownership is determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934. Shares are considered to be "beneficially"
owned if the person has the sole or shared power to vote or direct the voting of
the securities or the sole or shared power to dispose of or direct the
disposition of the securities. A person is also considered to be the beneficial
owner of shares if that person has the right to acquire the beneficial ownership
of the shares within 60 days from March 28, 1996.
(2) Each director and executive officer disclaims beneficial ownership of any
shares owned by his or her spouse, children or grandchildren and by trusts for
such persons, whether or not the director or officer is a trustee or co-trustee
thereof.
3
<PAGE> 8
- - --------------------------------------------------------------------------------
(3) According to a Schedule 13D filed with the Securities and Exchange
Commission on or about January 18, 1990, Mr. Theo Albrecht is also a beneficial
owner of these shares. Mr. Albrecht's address is the same as that of Markus
Stiftung.
On February 15, 1980, the Company entered into an agreement with Theo Albrecht
Stiftung, the name of which was changed to Markus Stiftung on April 22, 1988,
relating to its ownership of the Company's voting securities. As amended on
April 11, 1984, September 25, 1989, and December 5, 1994, this agreement
provides that until February 14, 2000 (subject to earlier termination under
certain limited circumstances), (i) Markus Stiftung shall not acquire or permit
its affiliates to acquire any additional shares of the Company's Common Stock or
any other voting securities of the Company if such acquisition would cause it or
its affiliates to own directly or indirectly more than 14 percent of the
Company's outstanding voting securities; provided that, if the number of
outstanding voting securities is reduced for any reason, including purchases by
the Company of its voting securities, Markus Stiftung shall not be required to
dispose of any of its holdings of voting securities even if such reduction in
outstanding voting securities results in Markus Stiftung owning in excess of 14
percent of the outstanding voting securities, and (ii) the Company has a right
of first refusal with respect to the voting securities of the Company held by
Markus Stiftung if it should desire to dispose of such securities. This
agreement also restricts the manner in which the voting securities of the
Company may be sold by Markus Stiftung in the event the Company does not elect
to exercise such right of first refusal.
(4) All of the common stock of the Company previously owned by Kathryn Albertson
and J.B. Scott has been transferred to Alscott Limited Partnership #1, a Texas
limited partnership (the "Partnership"). The Managing General Partner of the
Partnership is Alscott, Inc., an Idaho corporation controlled by Kathryn
Albertson and J.B. Scott.
The Company entered into an agreement with the Partnership on February 2, 1996,
which provides for an orderly sale and purchase of the Company's Common Stock
which had been owned by Kathryn Albertson ("New Agreement"). Also on February 2,
1996, Kathryn Albertson, the Partnership and the Company entered into a
Stockholders' Agreement to coordinate the actions to be taken under the New
Agreement and the agreement entered into between the Company and Kathryn
Albertson on December 31, 1979 ("Old Agreement") which continues to apply to any
shares of the Company's Common Stock owned by her and which provides for an
orderly sale and purchase of such stock. The New Agreement and the Old Agreement
are together referred to herein as the "Agreements," and the shares of the
Company's Common Stock held by the Partnership which had been owned by Kathryn
Albertson and any shares of stock owned by Kathryn Albertson are collectively
referred to herein as the "Designated Shares."
The Agreements provide that in the event either the Partnership or Kathryn
Albertson, as applicable, proposes to sell or dispose of (other than through
gift) any of the Designated Shares, the Company shall be given notice and an
opportunity to purchase such Designated Shares for a specified period at a price
and upon terms set forth in the notice. Should the Company decline to exercise
its option to purchase all of the Designated Shares offered for sale within the
specified period, the Partnership or Kathryn Albertson, as applicable, may sell
such Designated Shares on terms and at a price equivalent to or exceeding that
offered to the Company within nine months.
The Agreements do not deprive the Partnership or Kathryn Albertson, as
applicable, of the privilege to make gifts of Designated Shares during Kathryn
Albertson's lifetime, but the donees must, within a period not to exceed one
year following the date of a gift, grant to the Company an option to purchase
all of the Designated Shares received as a gift at a price that is approximately
96 percent of the then market price. Should the Company not exercise the option
to purchase all of such Designated Shares within the specified option period,
the donee is entitled to hold these Designated Shares, deal with them and
exercise all rights of ownership thereof free from any provisions of the
Agreements.
Upon the death of Kathryn Albertson, the Company has an irrevocable and
exclusive option to purchase all of the Designated Shares at the time of death
at a price which is approximately 96 percent of the then market price. If the
Company does not exercise its option, the personal representative of the estate
is obligated to sell the Designated Shares through a secondary public offering,
the expenses of which are to be borne by the Company.
Except as summarized above, the Agreements do not in any respect deprive the
Partnership or Kathryn Albertson, as applicable, of the rights of ownership of
the Designated Shares, including unrestricted voting rights and the right to
receive and retain all cash and stock dividends.
J.B. Scott holds a revocable power of attorney that enables him to vote any
shares of the Company's Common Stock held by Kathryn Albertson.
(5) Includes 1,180,000 shares of the Company's Common Stock owned by the J. A.
and Kathryn Albertson Foundation, Inc., of which Kathryn Albertson and J.B.
Scott are directors and officers. Kathryn Albertson and J.B. Scott disclaim any
beneficial ownership of these shares.
4
<PAGE> 9
LOGO
- - --------------------------------------------------------------------------------
(6) Includes 2,000 shares (for each indicated Director and 18,000 shares total)
not held of record on March 28, 1996, but which could have been acquired within
60 days thereafter under the Company's 1995 Stock Option Plan for Non-Employee
Directors.
(7) Shares credited to the Employee Stock Ownership Plan accounts of the
individuals named and all executive officers as a group are not included in the
column headed "Sole Investment Power" since the shares cannot be sold. Such
shares are included in the column headed "Sole Voting Power" and in the column
headed "Aggregate Amount Beneficially Owned."
(8) Includes 10,000 shares not held of record on March 28, 1996, but which could
have been acquired within 60 days thereafter under the Company's 1986
Nonqualified Stock Option Plan by Carl W. Pennington, and 25,100 shares not held
of record on March 28, 1996, but which could have been acquired within 60 days
thereafter under the Company's 1982 Incentive Stock Option Plan and 1986
Nonqualified Stock Option Plan by certain executive officers included in all
executive officers as a group. Includes 14,936 shares as to which certain
executive officers included in all executive officers as a group have sole
voting and investment power but which are held for minor children and as to
which they disclaim any other beneficial interest. None of these shares could
have been acquired by or are held by any of the named individuals.
5
<PAGE> 10
- - --------------------------------------------------------------------------------
ELECTION OF DIRECTORS
(PROPOSAL 1)
- - --------------------------------------------------------------------------------
The Board of Directors is divided into three classes, each serving for a three
year term. Approximately one-third of the directors are in each class, and all
the directors in one class stand for election each year. Five directors
presently serve in each of Classes II and III and four directors presently serve
in Class I. This year four Class I directors are to be elected.
The Board of Directors has nominated the following candidates to stand for
election as Class I directors, all of whom are nominated for terms expiring in
1999: Clark A. Johnson, Charles D. Lein, Gary G. Michael and Steven D. Symms.
Except as otherwise specified in any proxy, the proxies will be voted for the
election of all these nominees.
The Board of Directors is informed that each of the four nominees has consented
to being named in this Proxy Statement as a nominee for director and to serve as
a director if elected; however, if for any reason any of the nominees shall
become unavailable for election, the proxy will be voted as directed by the
Board of Directors. It is not anticipated that any nominee will be unavailable
for election.
All of the nominees are now directors of the Company and have previously been
elected by the stockholders.
Information as to the nominees and as to each other director whose term will
continue after the 1996 Annual Meeting of Stockholders is given on pages 7-10.
Unless otherwise indicated, the nominees have been engaged in the same principal
occupation for the past five years. Directors' ages are as of March 28, 1996.
6
<PAGE> 11
LOGO
NOMINEES FOR ELECTION AS CLASS I DIRECTORS
TERM EXPIRING IN 1999
- - --------------------------------------------------------------------------------
CLARK A. JOHNSON
Director
since 1989
Age 64
Chairman of the Board and Chief Executive Officer of Pier 1 Imports, Inc., a
retailer of imported goods. Mr. Johnson is a director of Pier 1 Imports, Inc.,
Heritage Media Corporation, InterTan, Inc., Anacomp, Inc. and Metromedia
International Group. Member of the Compensation, Nominating and Grantor Trust
Committees.
- - --------------------------------------------------------------------------------
CHARLES D. LEIN
Director
since 1975
Age 54
President and Chief Operating Officer of Stuller Settings, Inc., a jewelry
manufacturing company, since January 1994. Formerly Chairman of the Board,
President and Chief Executive Officer of Black Hills Jewelry Manufacturing Co.
from 1982 to 1993. President, University of South Dakota from 1977 to 1982 and
Dean of the College of Business, Boise State University from 1973 to 1977. Mr.
Lein is a director of Stuller Settings, Inc. and First National Bank of
Lafayette. Chairman of the Audit Committee and member of the Executive
Committee.
- - --------------------------------------------------------------------------------
GARY G. MICHAEL
Director
since 1979
Age 55
Chairman of the Board and Chief Executive Officer of the Company. Mr. Michael is
a member of the Board of Directors of the Federal Reserve Bank of San Francisco
and a director of Questar Corporation. Chairman of the Non-Employee Directors'
Deferred Compensation Committee and member of the Executive Committee.
- - --------------------------------------------------------------------------------
STEVEN D. SYMMS
Director
since 1993
Age 57
President of Symms, Lehn & Associates, Inc., a consulting firm, since January
1993. Elected United States Senator from the State of Idaho in 1980 and served
until January 1993. Vice President and Secretary of Boise Air Service, Inc.
since 1983. Mr. Symms is a director of Symms, Lehn & Associates, Inc., Boise Air
Service, Inc. and Symms Fruit Ranch, Inc. Member of the Audit Committee.
- - --------------------------------------------------------------------------------
7
<PAGE> 12
- - --------------------------------------------------------------------------------
CONTINUING CLASS II DIRECTORS
TERMS EXPIRING IN 1997
- - --------------------------------------------------------------------------------
KATHRYN ALBERTSON
Director
since 1958
Age 87
President and a director of Alscott, Inc., real estate and other investments.
Prior to 1993, homemaker. Grandmother of J.B. Scott. Mrs. Albertson is a
director of the J.A. and Kathryn Albertson Foundation, Inc.
- - --------------------------------------------------------------------------------
A. GARY AMES
Director
since 1988
Age 51
President and Chief Executive Officer, U S WEST International, a
telecommunications company and a wholly-owned subsidiary of U S WEST, Inc.,
since July 1995. President and Chief Executive Officer, U S West Communications
from 1990 to 1995. Mr. Ames is a director of Tektronix, Inc. Chairman of the
Grantor Trust Committee and member of the Compensation and Nominating
Committees.
- - --------------------------------------------------------------------------------
JOHN B. CARLEY
Director
since 1979
Age 62
Chairman of the Executive Committee of the Board of Directors since February 2,
1996 and formerly President and Chief Operating Officer of the Company. Mr.
Carley is a director of Boise Cascade Office Products Corporation, Idaho Power
Company and MWI Veterinary Supply Co. Chairman of the Executive Committee and
member of the Nominating and Non-Employee Directors' Deferred Compensation
Committees.
- - --------------------------------------------------------------------------------
PAUL I. CORDDRY
Director
since 1987
Age 59
Served as Senior Vice President, Europe, of H.J. Heinz Company, a worldwide
provider of processed food products and services, until his retirement in 1992.
Mr. Corddry has been Chairman and a director of Bzircus Entertainment
Corporation since 1994 and is a director of Ameristar Casinos, Inc. Member of
the Audit and Grantor Trust Committees.
- - --------------------------------------------------------------------------------
8
<PAGE> 13
LOGO
- - --------------------------------------------------------------------------------
BEATRIZ RIVERA
Director
since 1995
Age 45
Member of the Public Utilities Commission of the State of New Mexico since 1995.
Formerly owner of Infiniti of Albuquerque, an automobile dealership from 1990 to
1995. Ms. Rivera is a director of the Tomas Rivera Center, a trustee of the
University of New Mexico Foundation and a member of the Defense Advisory
Committee on Women in the Services. Member of the Audit and Nominating
Committees.
- - --------------------------------------------------------------------------------
CONTINUING CLASS III DIRECTORS
TERMS EXPIRING IN 1998
- - --------------------------------------------------------------------------------
CECIL D. ANDRUS
Director
since 1995
Age 64
Chairman of the Andrus Center for Public Policy, a public policy forum located
at Boise State University dealing in natural resource issues, since January 1995
and of counsel to the Gallatin Group, a consulting firm, since February 1995.
Elected Governor of the State of Idaho in 1987 and served until January 1995.
Served as Secretary of the Interior in the Carter Administration from 1977
through 1980. Mr. Andrus is a director of Coeur d'Alene Mines Corp., KeyCorp.,
PCS Learning Centers and the J.A. and Kathryn Albertson Foundation, Inc. Member
of the Executive and Grantor Trust Committees.
- - --------------------------------------------------------------------------------
JOHN B. FERY
Director
since 1974
Age 66
Served as Chairman of the Board of Boise Cascade Corporation, a timber and paper
products company, until his retirement in 1995 and Chief Executive Officer from
1972 to 1994. Mr. Fery is a director of F&C Enterprises, Inc., Hewlett-Packard
Company, The Boeing Company and U.S. Bancorp. Chairman of the Compensation
Committee and member of the Executive and Grantor Trust Committees.
- - --------------------------------------------------------------------------------
9
<PAGE> 14
- - --------------------------------------------------------------------------------
WARREN E. MCCAIN
Director
since 1973
Age 70
Served as Chairman of the Executive Committee of the Board of Directors until
his retirement on February 1, 1996 and Chairman of the Board and Chief Executive
Officer of the Company from 1976 to 1991. Mr. McCain is a director of Portland
General Corporation and Pope & Talbot. Chairman of the Nominating Committee and
member of the Compensation, Executive and Non-Employee Directors' Deferred
Compensation Committees.
- - --------------------------------------------------------------------------------
J.B. SCOTT
Director
since 1993
Age 42
Vice President and a director of Alscott, Inc., real estate and other
investments. Grandson of Kathryn Albertson. Mr. Scott is President and a
director of the J.A. and Kathryn Albertson Foundation, Inc. Member of the Audit
Committee.
- - --------------------------------------------------------------------------------
WILL M. STOREY
Director
since 1992
Age 64
Served as Executive Vice President and Chief Financial Officer, American
President Companies, a provider of container transportation services until his
retirement in 1995. Mr. Storey is a director of Manville, Inc. and T.I.S.
Mortgage Investment Company. Member of the Audit and Compensation Committees.
- - --------------------------------------------------------------------------------
10
<PAGE> 15
LOGO
- - --------------------------------------------------------------------------------
CERTAIN TRANSACTIONS
- - --------------------------------------------------------------------------------
During a portion of the fiscal year ended February 1, 1996, a store lease was
held by Kathryn Albertson Enterprises, a sole proprietorship owned by Kathryn
Albertson, a director of the Company as landlord, and Albertson's, Inc., as
tenant. A similar store lease was held by Alscott, Inc., an Idaho corporation,
as landlord, and Albertson's, Inc., as tenant. Kathryn Albertson is President
and a director of Alscott, Inc., in which she has a majority ownership interest.
J.B. Scott, a director of the Company, is Vice President and a director of
Alscott, Inc., in which Mr. Scott has an indirect majority ownership interest.
In August of 1995 the two leases were transferred to Alscott Real Estate LLC, a
controlled subsidiary of Alscott Limited Partnership #1, the owner of 10.65% of
the Company's Common Stock and in which Kathryn Albertson and J.B. Scott hold
the majority interest. The terms of the two leases are for periods of 37 and 46
years with expiration dates occurring in 2007 and 2005. The total rentals paid
by the Company under the leases to these landlords during the fiscal year ended
February 1, 1996, were $328,470.
John B. Fery, a director of the Company, was Chairman of the Board of Boise
Cascade Corporation until April 1995. During the fiscal year ended February 1,
1996, the Aviation Division of Boise Cascade provided flight crews, fuel,
maintenance and various other services related to the operation of the Company's
aircraft, for which the Company paid Boise Cascade $2,492,004. In addition, the
Company paid Boise Cascade $2,369 for merchandise purchased from Boise Cascade's
Corrugated Container Division and paid Boise Cascade Office Products
Corporation, a subsidiary of Boise Cascade, and its affiliates $754,397 during
such period for merchandise purchased.
Steven D. Symms, a director of the Company, is a director of Symms Fruit Ranch,
Inc. During the fiscal year ended February 1, 1996, the Company paid Symms Fruit
Ranch $344,185 for food products purchased for resale in the Company's stores.
Ste. Chapelle Winery is a wholly-owned subsidiary of Symms Fruit Ranch, Inc.
During the fiscal year ended February 1, 1996, the Company paid $1,976,915 to
distributors for Ste. Chapelle wine purchased for resale in the Company's
stores.
John B. Carley, a director of the Company, is a director of Boise Cascade Office
Products Corporation. During the fiscal year ended February 1, 1996, the Company
paid Boise Cascade Office Products Corporation and its affiliates $754,397 for
merchandise purchased.
Donald Carley, brother of John B. Carley, a director of the Company, is a
controlling stockholder of the Vendredi Company, a food brokerage company based
in San Diego, California. During the fiscal year ended February 1, 1996, the
Company paid the Vendredi Company $1,439,634 for merchandise supplied by that
firm to the Company for resale in the Company's stores.
Richard Ogle, son-in-law of Warren E. McCain, a director of the Company, is the
owner of The Office Environment Company, an office supply company. During the
fiscal year ended February 1, 1996, the Company paid $2,442,411 to The Office
Environment Company for office furniture, equipment and supplies.
James Smith, brother-in-law of Richard J. Navaro, Group Vice President and
Controller of the Company, is the owner of Tynick Services, Inc., a retail and
wholesale electronics distributor. During the fiscal year ended February 1,
1996, the Company paid $115,064 to Tynick Services, Inc. for electronics
equipment.
Dennis C. Lucas, Senior Vice President and Regional Manager of the Company, has
a loan from the Company to assist in the purchase of a new residence due to his
relocation by the Company. The highest aggregate amount of indebtedness during
the fiscal year ended February 1, 1996, was $61,218 and the amount outstanding
as of March 28, 1996 is $61,218. There is no interest paid or charged thereon.
In the opinion of management, all of the foregoing transactions were fair and
reasonable and were entered into on terms not less favorable than could be
obtained in transactions with responsible third parties.
11
<PAGE> 16
- - --------------------------------------------------------------------------------
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
- - --------------------------------------------------------------------------------
The Board of Directors held four regular meetings and one special meeting during
the last full fiscal year of the Company. All incumbent directors attended at
least 75 percent of the total meetings of the Board of Directors and the
committees of which they were members.
The Company has an Executive Committee, which is a standing committee of the
Board of Directors, presently consisting of six members who are John B. Carley,
Chairman, Cecil D. Andrus, John B. Fery, Charles D. Lein, Warren
E. McCain and Gary G. Michael. There were three meetings of the Executive
Committee held during the last fiscal year. The Executive Committee was
established to exercise the authority of the Board of Directors between meetings
of the full Board subject to limitations under Delaware law.
The Company has an Audit Committee, which is a standing committee of the Board
of Directors, presently consisting of six members who are Charles D. Lein,
Chairman, Paul I. Corddry, Beatriz Rivera, J.B. Scott, Will M. Storey and Steven
D. Symms. Four meetings of the Audit Committee were held during the last fiscal
year. The Audit Committee's responsibilities include: (i) reviewing the plan,
scope and results of the independent audit and reporting to the full Board
whether financial information is fairly presented and whether generally accepted
accounting principles are followed; (ii) monitoring the internal accounting and
financial functions of the Company to assure quality of staff and proper
internal controls; and (iii) investigating conflicts of interest, compliance
with ethical standards and compliance with laws and regulations.
The Company has a Compensation Committee, which is a standing committee of the
Board of Directors, presently consisting of five members who are John B. Fery,
Chairman, A. Gary Ames, Clark A. Johnson, Warren E. McCain and Will M. Storey.
Five meetings of the Compensation Committee were held during the last fiscal
year. The Compensation Committee is responsible for reviewing annual salaries
and bonuses paid to the officers appointed by the Board of Directors and certain
other officers of the Company and for selecting key employees who are to receive
stock option grants and determining the terms thereof.
The Company has a Nominating Committee, which is a standing committee of the
Board of Directors, presently consisting of five members who are Warren E.
McCain, Chairman, A. Gary Ames, John B. Carley, Clark A. Johnson and Beatriz
Rivera. There were no meetings of the Nominating Committee held during the last
fiscal year. The Nominating Committee is responsible for selecting nominees to
fill Board vacancies and to replace retiring members of the Board. The
Nominating Committee reviews possible nominees for membership on the Board of
Directors, including any nominees recommended in good faith by a registered
stockholder with the consent of the proposed nominee, and makes recommendations
concerning nominees to the Board of Directors. Stockholders wishing to propose
director candidates for consideration by the Nominating Committee may do so by
writing to the Corporate Secretary of the Company, giving the candidate's name,
biographical data and qualifications. In addition, the Company's By-Laws permit
stockholders to make nominations for directors at a meeting of stockholders, but
only if, among other things, timely written notice of an intent to make such a
nomination is given to the Corporate Secretary of the Company. To be timely,
such notice, except in certain circumstances, must be received by the Company
not less than 50 days nor more than 75 days prior to the stockholders' meeting.
The Company has a Grantor Trust Committee, which is a special committee of the
Board of Directors, presently consisting of five members who are A. Gary Ames,
Chairman, Cecil D.
Andrus, Paul I. Corddry, John B. Fery and Clark A. Johnson, none of whom has a
financial interest in the deferred compensation plans and trusts established by
the Company for its executives, except Cecil D. Andrus who is receiving payments
of
12
<PAGE> 17
LOGO
- - --------------------------------------------------------------------------------
compensation deferred from his service as a Director from 1984 to 1987 and who
will abstain from any decisions made by the Grantor Trust Committee which would
affect such payments. There was one meeting of the Grantor Trust Committee held
during the last fiscal year. The
Grantor Trust Committee was established to administer the Company's deferred
compensation plans and pension benefit makeup plan for its executives and the
trusts established to protect the benefits to be received under these plans. The
plans and trusts are described more fully herein.
The Company has a Non-Employee Directors' Deferred Compensation Committee which
is a special committee created to administer the Non-Employee Directors'
Deferred Compensation Plan. The committee presently consists of three members
who are Gary G. Michael, Chairman, John B. Carley and Warren E. McCain, none of
whom has a financial interest in this plan. The committee held no meetings
during the last fiscal year.
- - --------------------------------------------------------------------------------
DIRECTORS' FEES
- - --------------------------------------------------------------------------------
Directors who are employees of the Company do not receive additional
compensation as directors. Directors who are not employees receive directors'
fees of $26,400 per year plus $1,000 for each Board of Directors' and committee
meeting attended.
Non-employee directors may elect to defer
payment of their directors' fees into the Non-Employee Directors' Deferred
Compensation Plan described in footnote 1 to the Summary Compensation Table on
page 14.
Pursuant to the Albertson's, Inc. 1995 Stock Option Plan for Non-Employee
Directors which became effective on May 26, 1995, each non-employee director is
granted an option on the first business day after each annual stockholders'
meeting of the Company during the ten-year term of the Plan to purchase 2,000
shares of the Common Stock of the Company at the closing market price on the
date of grant and which may be exercised for ten years from the date of grant
pursuant to the terms of the Plan.
13
<PAGE> 18
- - --------------------------------------------------------------------------------
COMPENSATION OF EXECUTIVE OFFICERS
- - --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL
COMPENSATION AWARDS
-------------------------------------- ------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND FISCAL SALARY(1) BONUS(1) COMPENSATION(2) OPTIONS(3) COMPENSATION(4)
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
- - ------------------------------------------ ------ --------- -------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Gary G. Michael 1995 $693,923 $315,000 $22,000 50,000 $ 86,631
Chairman of the Board and Chief 1994 655,500 327,600 80,327 0 75,191
Executive Officer and a director 1993 637,577 325,000 22,000 0 65,496
John B. Carley (5) 1995 610,000 256,000 22,000 0 86,558
President and Chief Operating 1994 585,077 292,800 22,000 0 76,499
Officer until February 1, 1996; 1993 570,385 290,000 22,000 0 67,944
Chairman of the Executive Committee
of the Board from February 2, 1996
and a director
Warren E. McCain (6) 1995 574,683 0 22,000 0 341,779
Chairman of the Executive 1994 500,000 0 22,000 0 303,867
Committee of the Board until 1993 509,616 0 22,000 0 271,827
February 1, 1996 and a director
Carl W. Pennington 1995 287,616 91,000 -- 25,000 19,846
Senior Vice President, 1994 265,462 100,000 -- 0 15,552
Corporate Merchandising until 1993 257,125 65,625 -- 0 11,965
February 1, 1996; Executive Vice
President, Corporate Merchandising
from February 2, 1996
Ronald D. Walk 1995 283,462 91,000 -- 25,000 17,039
Senior Vice President 1994 264,616 145,750 -- 0 13,092
and Regional Manager until 1993 257,125 118,125 -- 0 9,694
February 1, 1996; Executive Vice
President, Retail Operations
from February 2, 1996
</TABLE>
- - --------------------------------------------------------------------------------
(1) Certain officers, including certain of the individuals named in the above
table, were entitled to defer up to 50 percent of the aggregate amount of their
salaries and bonuses and non-employee directors were entitled to defer up to 100
percent of their directors' fees pursuant to two substantially similar deferred
compensation plans for officers and directors approved by the Board of Directors
on December 5, 1983. A third plan, the 1990 Deferred Compensation Plan ("1990
Plan") was approved by the Board of Directors on December 4, 1989, effective as
of January 1, 1990. Under the 1990 Plan, certain officers, including the
individuals named in the above table, and certain highly compensated employees
are entitled to defer up to 35 percent of their salaries, and the Compensation
Committee will defer, for "covered employees" as that term is defined in Section
162(m) of the Internal Revenue Code, that portion of the annual bonus which, in
the judgment of the Compensation Committee, would not be deductible by the
Company pursuant to the provisions of Section 162(m). The Company does not
expect that any amounts so deferred will be material in fiscal year 1996.
Salaries, bonuses and fees deferred into these plans accrue interest until
benefits are completely distributed at the monthly Corporate Bond Yield Average
with respect to average corporations as determined from the Moody's Bond Record
published by Moody's Investor's Service, Inc. ("Moody's Average"), except when
benefits are paid upon termination of employment following a change in control,
death, disability prior to termination of employment (under the two initial
plans) or retirement ("Certain Events"). In the case of such Certain Events,
deferred amounts accrue interest at a rate equal to the Moody's Average plus 4
percent under the two initial plans or the Moody's Average plus 3 percent under
the 1990 Plan. A fourth plan, the Non-Employee Directors' Deferred Compensation
Plan was approved by the Board of Directors and by a
14
<PAGE> 19
LOGO
- - --------------------------------------------------------------------------------
special committee of the Board consisting of three employee directors on
December 4, 1989. This plan permits non-employee directors to defer up to 100%
of their directors' fees. Interest is accrued until benefits are completely
distributed at the Moody's Average plus 3 percent in the case of Certain Events
and at the Moody's Average in all other cases.
The Company has purchased cost recovery life insurance to cover its obligations
under the two initial deferred compensation plans for officers and directors,
and the Company is the owner of these policies. The Company has also purchased
cost recovery life insurance to cover its obligations under the 1990 Plan and
has transferred ownership of these policies to the trustee of the grantor trust
established for the 1990 Plan (see discussion below). If assumptions as to
mortality, experience, interest rates and other factors are realized, the
Company or the trustee of the grantor trust, as applicable, will recover from
such policies an amount equal to the benefit payments under these plans and the
premium payments on the insurance policies. The plans, except for the
Non-Employee Directors' Deferred Compensation Plan, are administered by the
Grantor Trust Committee of the Board of Directors. The Non-Employee Directors'
Deferred Compensation Plan is administered by the Non-Employee Directors'
Deferred Compensation Committee, a committee of the Board consisting of three
directors, none of whom has a financial interest in the plan.
Pursuant to the foregoing plans, the individuals named in the table on page 14
have deferred the following amounts of salary paid or allocated to them for
services rendered during the fiscal year ended February 1, 1996: Mr. Michael,
$61,442; Mr. Pennington, $99,514; and Mr. Walk, $91,504. Pursuant to the
foregoing plans, the individuals named in the table on page 14 deferred the
following amounts of salary paid or allocated to them for services rendered
during the fiscal year ended February 2, 1995: Mr. Michael, $60,000; Mr.
Pennington, $88,510; and Mr. Walk, $91,789. Pursuant to the foregoing plans, the
individuals named in the table on page 14 deferred the following amounts of
salary paid or allocated to them for services rendered during the fiscal year
ended February 3, 1994: Mr. Michael, $53,769; Mr. Pennington, $85,952; and Mr.
Walk, $86,372. These amounts are included in the column for salary in the table
on page 14.
In order to secure the compensation deferred and interest accrued thereon under
the deferred compensation plans already described, except for the Non-Employee
Directors' Deferred Compensation Plan, the Company has established the Executive
Deferred Compensation Trust and the 1990 Deferred Compensation Trust ("Deferred
Compensation Trusts"), which are grantor trusts within the meaning of the
Internal Revenue Code, Section 671. The Company has or intends to contribute
cash, real estate, insurance policies or other property into the Deferred
Compensation Trusts to provide for payment of benefits under the deferred
compensation plans in the event of a change in control of the Company. The
trusts are administered by the Grantor Trust Committee of the Board of
Directors. These trusts become irrevocable upon the occurrence of certain events
described in each trust as constituting a "potential change in control," and the
Company is required to make certain contributions of cash to each trust upon the
occurrence of certain other events described in each trust as constituting a
"change in control."
The individuals named in the table on page 14 are eligible, along with all
"eligible" employees (those who complete at least 1,000 hours of service during
the twelve-month period commencing with their date of hire or with any
anniversary thereof, are age 21 or over and (with certain exceptions) are not
covered by a collective bargaining agreement), to defer a portion of their
salary into the Albertson's Tax Deferred Savings Plan ("Savings Plan") which is
a salary deferral plan pursuant to Section 401(k) of the Internal Revenue Code.
During the fiscal year ended February 1, 1996, the individuals named in the
table on page 14 deferred the following amounts into the Savings Plan: Mr.
Michael, $6,184 and Mr. Walk, $9,234. During the fiscal year ended February 2,
1995, the individuals named in the table on page 14 deferred the following
amounts into the Savings Plan: Mr. Michael, $5,950 and Mr. Walk, $9,317. During
the fiscal year ended February 3, 1994, the individuals named in the table on
page 14 deferred the following amounts into the Savings Plan: Mr. Michael,
$5,833 and Mr. Walk, $9,258. All amounts deferred into the Savings Plan by these
individuals are included in the column for salary in the table on page 14.
(2) This column includes $22,000 in fiscal years 1995, 1994 and 1993 for each of
Gary G. Michael, John B. Carley and Warren E. McCain, which is a fixed annual
amount, in addition to salary and bonus, contributed by the Company and deferred
into the deferred compensation plans described in footnote 1. This column also
includes the value for income tax purposes of noncash personal benefits; except
that amounts, when aggregated, which did not exceed the lesser of $50,000 or 10%
of compensation for any of the named executives are not included. The amount
indicated for Mr. Michael for fiscal year 1994 includes $39,400 which is the
value of personal use of corporate aircraft.
(3) The Company has granted options to its employees for the purchase of the
Company's Common Stock pursuant to three stock option plans: (i) the 1982
Incentive Stock Option Plan ("1982 Plan"), which was adopted by the stockholders
in May 1982 and which expired by its terms on February 29, 1992; (ii) the 1986
Nonqualified Stock Option Plan ("1986 Plan"), which was adopted by the
stockholders in May 1986 and will expire in May 1996; and (iii) the 1995 Stock-
15
<PAGE> 20
- - --------------------------------------------------------------------------------
Based Incentive Plan ("1995 Plan"), which was adopted by the stockholders in May
1995 and will expire in May 2005. The 1982 Plan provided and the 1986 Plan and
1995 Plan provide for the issuance of stock options from time to time to key
employees of the Company, including executive officers, designated by the
Compensation Committee of the Board as holding positions of substantial
responsibility, demonstrating special capabilities and contributing
significantly to fiscal performance. The stock option plans and related
agreements contain provisions that, in certain circumstances, may cause the date
of exercise for options granted thereunder to accelerate in the event there is a
change in control of the Company. Gary G. Michael was granted a stock option
under the 1995 Plan for 50,000 shares at the closing market price on December 4,
1995, the date the option was granted. 50 percent of the option becomes
exercisable after five years and the remaining 50 percent becomes exercisable
after six years. Carl W. Pennington was granted a stock option under the 1995
Plan for 25,000 shares at the closing market price on December 4, 1995. 50
percent of the option becomes exercisable after three years and the remaining 50
percent becomes exercisable after four years. Ronald D. Walk was granted a stock
option under the 1995 Plan for 25,000 shares at the closing market price on
December 4, 1995. 25 percent of the option becomes exercisable after four years,
with an additional 25 percent becoming exercisable each year thereafter.
(4) This column consists of the "above-market" (as such term is defined in Item
402(b)(2)(iii)(C), Instruction 3, of Regulation S-K of the Securities and
Exchange Commission) portion of the interest credited to the account of each of
the named executives under the deferred compensation plans described in footnote
1. The "above-market" portion of the interest accrued when benefits are paid
following the occurrence of "Certain Events," as that term is defined in
footnote 1, is set forth in the table on page 14 because it is the larger amount
of interest credited.
(5) Effective February 2, 1996, John B. Carley entered into an employment
contract with the Company as Chairman of the Executive Committee of the Board of
Directors for an annual salary of $500,000 for a period of three years, as well
as all perquisites provided by the Company to senior executive officers and the
annual $22,000 contribution to deferred compensation for the three-year period.
No bonus is to be paid for services rendered during the three-year period.
(6) The employment contract of Warren E. McCain with the Company expired by its
terms on February 1, 1996.
16
<PAGE> 21
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- - --------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANT DATE VALUE
UNDERLYING GRANTED TO ----------------
OPTIONS EMPLOYEES EXERCISE OR GRANT DATE
GRANTED IN FISCAL BASE PRICE EXPIRATION PRESENT VALUE(2)
NAME (#) YEAR ($/SH)(1) DATE ($)
- - -------------------------------------------------- ---------- ---------- ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Gary G. Michael 50,000 4.89% $31.875 12/3/023 $455,500
Chairman of the Board and
Chief Executive Officer and
a director
Carl W. Pennington 25,000 2.45% 31.875 12/3/004 169,250
Senior Vice President,
Corporate Merchandising until
February 1, 1996; Executive Vice
President, Corporate Merchandising
from February 2, 1996
Ronald D. Walk 25,000 2.45% 31.875 12/3/035 224,563
Senior Vice President and
Regional Manager until February 1,
1996; Executive Vice President, Retail
Operations from February 2, 1996
</TABLE>
- - --------------------------------------------------------------------------------
(1) The closing market price on the date the options were granted.
(2) In accordance with the rules of the Securities and Exchange Commission,
"Grant Date Value" has been calculated using the Black-Scholes model of option
valuation, adjusted to reflect the option term representative of each
individual's grant. The model also assumes: (a) an interest rate that represents
the interest rate on a U.S. Treasury Bond with a maturity date corresponding to
that of the adjusted option term; (b) volatility calculated using weekly stock
prices prior to the grant date for the number of weeks corresponding to that of
the adjusted option term; and (c) a dividends paid percentage rate determined by
1995 dividends paid as a percent to the average stock price as of the beginning
and end of the fiscal year. Based on this model, the calculated values of the
options on December 4, 1995 (grant date) range from $6.06 to $10.23 per share
granted.
(3) 50% of the option will become exercisable during the sixth year of the
option and 50% will become exercisable during the seventh year of the option.
(4) 50% of the option will become exercisable during the fourth year of the
option and 50% will become exercisable during the fifth year.
(5) 25% of the option will become exercisable during the fifth year and 25% will
become exercisable each year thereafter.
17
<PAGE> 22
- - --------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE+ OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
SHARES YEAR-END YEAR-END
ACQUIRED ON VALUE+ --------------------------- ---------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
- - ------------------------------------------- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gary G. Michael 32,000 $ 606,000 0 226,000 $ 0 $ 3,720,750
Chairman of the Board and Chief Executive
Officer and a director
John B. Carley 120,000 2,305,000 0 0 0 0
President and Chief Operating Officer
until February 1, 1996; Chairman of the
Executive Committee of the Board from
February 2, 1996 and a director
Carl W. Pennington 0 0 10,000 65,000 183,750 819,375
Senior Vice President, Corporate
Merchandising until February 1, 1996;
Executive Vice President, Corporate
Merchandising from February 2, 1996
Ronald D. Walk 0 0 0 75,000 0 1,003,125
Senior Vice President and Regional Manager
until February 1, 1996; Executive Vice
President, Retail Operations from February
2, 1996
</TABLE>
- - --------------------------------------------------------------------------------
+ The dollar values are calculated by determining the difference between the
closing price on the New York Stock Exchange Composite Tape for the Company's
Common Stock at exercise or at fiscal year-end (February 1, 1996) for
exercisable and unexercisable options and the exercise price of the options.
RETIREMENT BENEFITS
The Company has adopted two defined benefit pension plans that cover certain
salaried and hourly-paid employees of the Company, both of which are governed by
the Employee Retirement Income Security Act of 1974 ("ERISA"). One plan covers
eligible salaried employees of the Company and the other plan covers eligible
hourly-paid employees. "Eligible" employees are those who complete at least
1,000 hours of service during the twelve-month period commencing with their date
of hire or with any anniversary thereof, are age 21 or over and (with certain
exceptions) are not covered by a collective bargaining agreement. The amount of
benefit paid under the plans depends upon the credited years of service and the
compensation level of the participant. The compensation used in determining the
retirement benefit for the individuals named in the Summary Compensation Table
on page 14 consists of the employee's salary and deferred compensation and does
not include bonus and noncash compensation.
The following table gives the estimated annual benefit payable upon retirement
for participants in the salaried pension plan including benefits payable under
the Makeup Plan discussed below. The estimates assume normal retirement at age
62 for employees at specified compensation levels (based on average earnings for
the highest five consecutive years of service out of the last ten years) with
various years of service with the Company.
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- - --------------------------------------------------------------------------------
PENSION PLAN TABLE
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARS OF SERVICE
COMPENSATION -------------------------------------------------------------------------
LEVEL 20 25 30 35 40 45
<S> <C> <C> <C> <C> <C> <C>
- - ------------------------------------------------------------------------------------------
$100,000 $ 27,000 $ 33,750 $ 40,500 $ 47,250 $ 54,000 $ 60,750
200,000 54,000 67,500 81,000 94,500 108,000 121,500
300,000 81,000 101,250 121,500 141,750 162,000 182,250
400,000 108,000 135,000 162,000 189,000 216,000 243,000
500,000 135,000 168,750 202,500 236,250 270,000 303,750
600,000 162,000 202,500 243,000 283,500 324,000 364,500
700,000 189,000 236,250 283,500 330,750 378,000 425,250
800,000 216,000 270,000 324,000 378,000 432,000 486,000
</TABLE>
- - --------------------------------------------------------------------------------
As of February 1, 1996, the years of service credited to the executive officers
listed in the Summary Compensation Table on page 14 were: Mr. Michael, 30; Mr.
Carley, 42; Mr. McCain, 44; Mr. Pennington, 32; and Mr. Walk, 34. Also as of
such date, the covered compensation for the last fiscal year of these executive
officers under the Company's pension plans was: Mr. Michael, $714,884; Mr.
Carley, $632,000; Mr. McCain, $522,000; Mr. Pennington, $286,923; and Mr. Walk,
$282,692.
The amounts presented in the pension table are single life annuities
notwithstanding the availability of joint and survivor annuity provisions. The
pension benefit is not subject to any deduction for social security or other
offset amounts.
Retirement benefits otherwise available to key executives under the Company's
qualified defined benefit plans have been limited by the effects of the Internal
Revenue Code of 1986, as amended (the "Code"). For example, the maximum annual
benefit under a qualified pension plan under the Code is limited to $120,000
(subject to certain exceptions). The Company has complied with this limitation
to assure continuing qualification of its plans. To offset the loss of
retirement benefits associated with tax law limitations, the Company adopted a
nonqualified "makeup" benefit plan ("Makeup Plan") effective June 1, 1988.
Benefits are provided under this plan for key employees equal to those that
would otherwise be lost by such plan qualification limitations. The Makeup Plan
was amended effective 1990 to extend certain benefits to participants in the
1990 Deferred Compensation Plan. All amounts for any benefits accrued under the
Makeup Plan are included in the figures in the Summary Compensation Table on
page 14.
In order to protect the benefits payable under the Makeup Plan, the Company has
established the Executive Pension Makeup Trust ("Makeup Trust"), which is a
grantor trust that is substantially similar to the Deferred Compensation Trusts
described in footnote 1 to the Summary Compensation Table on page 14. The Makeup
Trust is administered by the Grantor Trust Committee of the Board of Directors
as are the Deferred Compensation Trusts.
COMPENSATION COMMITTEE/EXECUTIVE
COMMITTEE REPORT
OVERVIEW
For the fiscal year ended February 1, 1996, the Compensation Committee
established the annual salaries of the Chairman and Chief Executive Officer
("CEO") and the President and Chief Operating Officer ("President") and
determined that the annual salaries of the Executive Vice President, Store
Development and the Executive Vice President, Administration and General Counsel
("Executive Vice Presidents") recommended by the CEO were reasonable based upon
its analysis of the factors discussed below and approved those annual salaries.
The annual salaries of the other executive officers were determined by the CEO
and were reviewed by the Compensation Committee. The Executive Committee
reviewed and approved the annual salaries of all of the executive officers. The
Compensation Com-
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mittee determined that the bonus policy for all officers of the Company
recommended by the CEO and the Executive Committee was reasonable based upon its
analysis of the factors discussed below, approved the bonus policy and
determined the amount of the annual bonuses paid for the fiscal year. The
Compensation Committee approved all grants of stock options during the fiscal
year, as recommended by the CEO (except with regard to the option granted to the
CEO); and options were granted to three of the five executives named in the
Summary Compensation Table. All decisions of the Compensation Committee and the
Executive Committee were reported to the Board of Directors.
EXECUTIVE OFFICER COMPENSATION POLICY
The compensation policy of the Company, which is applied by the Compensation
Committee and the Executive Committee to the compensation of the CEO, President
and Executive Vice Presidents and by the CEO to the compensation of the other
executive officers, is to set compensation so as to attract and retain the
highest quality people who will contribute to the long-term performance and
long-term growth of the Company. To this end, annual compensation for executive
officers (except for the Chairman of the Executive Committee) consists of an
annual salary which is not directly dependent upon the Company's performance in
that fiscal year and an annual bonus which is paid after the end of the fiscal
year and which is computed as a percentage of annual salary. As discussed in
more detail below, the annual bonus is directly dependent upon the Company's
performance in the completed fiscal year. It is the Company's long-standing
policy that the annual bonus make up a substantial portion of executive officer
compensation. An additional bonus may be granted to an executive officer for
exceptional services to the Company as approved by the Compensation Committee.
In accordance with this overall policy, the Company provides retirement
benefits to encourage executive officers to stay with the Company. To this end,
the executive officers participate in the defined benefit pension plan that
covers eligible salaried employees of the Company as well as in the
non-qualified "makeup" benefit plan which provides benefits for key employees
equal to those that would otherwise be lost by certain plan qualification
limitations imposed by the Internal Revenue Code of 1986, as amended (the
"Code"). Both of these plans are described under the heading "Retirement
Benefits." For each of the CEO, President and Chairman of the Executive
Committee (as of the end of the fiscal year), the Company has agreed to
contribute $22,000 for the fiscal year, in lieu of salary, to the deferred
compensation plans established by the Company which are described in footnote 1
to the Summary Compensation Table. The executive officers are also eligible to
contribute amounts from their annual salary into the Company-wide 401(k) plan
and/or the deferred compensation plans described in footnote 1 to the Summary
Compensation Table.
During the last fiscal year, the remuneration paid to executive officers did not
exceed the deductibility limit under Section 162(m) of the Code. It is not
anticipated that the remuneration paid to executive officers during the next
fiscal year will exceed the deductibility limit under Section 162(m) of the Code
in a material amount unless the Company's sales and net earnings are exceedingly
high which would result in a larger amount of annual bonus paid as a percentage
of annual salary. If, however, remuneration payable to an executive officer who
is also a "covered employee" as that term is defined in Section 162(m) would
exceed the deductibility limit under Section 162(m) in fiscal year 1996, then
the Compensation Committee will defer under the 1990 Deferred Compensation Plan
(the "1990 Plan") which is described in footnote 1 to the Summary Compensation
Table, that portion of the annual bonus which, in the judgment of the
Compensation Committee, would not be deductible by the Company pursuant to the
provisions of Section 162(m). Such deferred amounts will be paid to the affected
executive officers pursuant to the terms of the 1990 Plan upon termination or
retirement in years when it is anticipated that such amounts would be deductible
by the Company. The Compensation Com-
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mittee will continue to monitor this issue in future years.
Executive Officer Compensation
Executive officer compensation (except the compensation for the Chairman of the
Executive Committee) consists of two annual components: (i) an annual salary
which is determined upon the basis of a number of factors, only one of which is
the Company's overall performance in prior fiscal years and (ii) an annual bonus
which is determined solely on the basis of the Company's performance during the
fiscal year (an additional bonus may be granted for exceptional services to the
Company as approved by the Compensation Committee); and one long-term component:
stock options, the value of which is directly dependent upon the Company's long-
term performance.
Annual Salaries -- Compensation Committee
In determining the annual salaries (including increases) for the CEO, the
President and the Executive Vice Presidents for the last fiscal year, the
Compensation Committee considered a number of factors. These factors included
the experience and responsibilities of the executive officers, the Company's
overall performance in prior fiscal years and the role of the executive officers
in achieving such performance. The consideration of overall performance was not
based on specific measures of performance. The Compensation Committee did not
give any specific weight to these factors in determining the annual salary
component of compensation. For background purposes only, and not to establish
specific target compensation levels, the Compensation Committee also reviewed
three wholesaler/retailer compensation comparison surveys prepared by third
parties. Two of the third-party comparison surveys included four of the six
companies in the Standard & Poor's Retail Store-Food Chains Index used in the
Performance Graph on page 24, and the remaining survey included one of those
companies. The annual salary of the Chairman of the Executive Committee was
established pursuant to an employment agreement which expired according to its
terms on February 1, 1996. The Chairman of the Executive Committee did not
receive a bonus and was not eligible to be granted stock options.
Annual Salaries --
Compensation Committee
and Executive Committee
In reviewing the annual salary structure for the other executive officers for
the last fiscal year, the Compensation Committee and the Executive Committee
considered the recommendations of the CEO as well as factors similar to those
set forth above. The Compensation Committee and the Executive Committee did not
give any specific weight to any of these factors in determining the annual
salary component of compensation.
Annual Bonus --
Compensation Committee
and Executive Committee
The bonus policy approved by the Compensation Committee and by the Executive
Committee set forth a scale of percentages of annual salary to be paid if
certain Company-wide sales volume increases over the prior fiscal year were
achieved by the Company and a scale of percentages of annual salary to be paid
if certain Company-wide net earnings increases over the prior fiscal year were
achieved by the Company. An additional bonus may be granted to an executive
officer for exceptional services to the Company as approved by the Compensation
Committee. In addition, the percentage of annual salary to be paid as annual
bonus increased for the more senior officers in recognition of the leadership
roles of the senior officers.
The Compensation Committee established the annual bonuses based upon the sales
volume increases and the net earnings increases that were achieved. Accordingly,
the annual bonus of the CEO was set at 42% of his current annual salary, and the
annual bonus of the President (at the end of the fiscal year) was set at 42% of
his annual salary at the end of the fiscal year. The Chairman of the Executive
Committee did not receive an annual bonus. The annual bonus of the Executive
Vice President, Corporate Merchandising whose
21
<PAGE> 26
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compensation is disclosed in the Summary Compensation Table was set at 28% of
his current annual salary. The annual bonus of the Executive Vice President,
Retail Operations whose compensation is disclosed in the Summary Compensation
Table was set at 28% of his current annual salary.
Stock Options --
Compensation Committee
Stock options are granted from time to time by the Compensation Committee to
certain employees of the Company, including executive officers. Stock options
are granted by the Compensation Committee to attract and retain the best
available personnel for positions of substantial responsibility, provide
additional incentive to employees and thus promote the success of the business
of the Company. Criteria used by the Compensation Committee in making stock
option grants include the potential for a person in the employee's position to
make a significant contribution to the Company's performance; the employee's
past performance; the employee's length of service with the Company; an
evaluation of the employee's potential for advancement; and factors bearing on
the desirability of encouraging continuance of the employee's employment with
the Company. The Committee also considers the amount and terms of previous
option grants when determining the grant of options. Based on these factors, the
Compensation Committee determined that the recommendations received from the CEO
(except with regard to the option granted to the CEO) of those employees to whom
it would be appropriate to grant stock options were reasonable and granted those
stock options. Stock options were granted during the last fiscal year to three
of the five executive officers named in the Summary Compensation Table as set
forth in that table. These options were granted based on the factors outlined
above.
Compensation of the CEO --
Compensation Committee
The compensation of Gary G. Michael, Chairman of the Board and Chief Executive
Officer, consists of the same elements as for other executive officers, which
are annual salary, annual bonus based upon the performance of the Company during
the fiscal year and stock options, as well as the $22,000 payment, in lieu of
salary, to the deferred compensation plans described in foot-note 1 to the
Summary Compensation Table. Mr. Michael also participates in the retirement
programs and in the optional deferrals of annual salary into the 401(k) plan and
the deferred compensation plans discussed herein.
Mr. Michael's annual salary was not based upon specific measures of the
Company's performance during the fiscal year. His annual salary determination
(including the increase) was based on the Compensation Committee's evaluation of
his performance during the prior fiscal year which included the financial
results reflected in the Performance Graph set forth on page 24 of this Proxy
Statement and nonfinancial factors including strategic planning for the future
of the Company, as well as the factors discussed previously under the heading
"Annual Salaries -- Compensation Committee." His bonus was based upon the
achievement of the specific Company-wide sales volume increases and net earnings
increases discussed previously under the heading "Annual Bonus -- Compensation
Committee and Executive Committee." His bonus was 42% of his current annual
salary. Mr. Michael was granted a stock option for 50,000 shares at fair market
value on December 4, 1995, with 50% of the option becoming exercisable during
the sixth year and the remaining 50% becoming exercisable during the seventh
year of the option.
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COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS
<TABLE>
<S> <C>
John B. Fery, Clark A. Johnson
Chairman Warren E. McCain
A. Gary Ames Will M. Storey
</TABLE>
EXECUTIVE COMMITTEE OF THE BOARD OF DIRECTORS
<TABLE>
<S> <C>
John B. Carley*, Charles D. Lein
Chairman Warren E. McCain***
Cecil D. Andrus** Gary G. Michael****
John B. Fery
</TABLE>
*Mr. Carley became the Chairman of the Executive Committee on February 2, 1996
and, therefore, did not participate in the decisions that are described in the
Compensation Committee/ Executive Committee Report.
**Mr. Andrus became a member of the Executive Committee on May 26, 1995 and,
therefore, did not participate in the decisions that are described in the
Compensation Committee/Executive Committee Report, except with regard to the
bonuses paid.
***Mr. McCain was the Chairman of the Executive Committee until February 1,
1996.
****Mr. Michael did not participate as a member of the Executive Committee in
any of the decisions that are described in the Compensation Committee/Executive
Committee Report.
COMPENSATION COMMITTEE AND
EXECUTIVE COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The members of the Compensation Committee are John B. Fery, Chairman, A. Gary
Ames, Clark A. Johnson, Warren E. McCain and Will M. Storey. The members of the
Executive Committee are John B. Carley, Chairman, Cecil D. Andrus, John B. Fery,
Charles D. Lein, Warren E. McCain and Gary G. Michael.
John B. Carley has been Chairman of the Executive Committee since February 2,
1996 and was formerly the President and Chief Operating Officer of the Company.
He is a director of Boise Cascade Office Products Corporation. During the fiscal
year ended February 1, 1996, the Company paid Boise Cascade Office Products
Corporation and its affiliates $754,397 for merchandise purchased.
John B. Fery, the Chairman of the Board of Boise Cascade Corporation until April
1995, has served on the Compensation Committee since 1993 and on the Executive
Committee since 1988. During the fiscal year ended February 1, 1996, the
Aviation Division of Boise Cascade provided flight crews, fuel, maintenance and
various other services related to the operation of the Company's aircraft, for
which the Company paid Boise Cascade $2,492,004. In addition, the Company paid
Boise Cascade $2,369 for merchandise purchased from Boise Cascade's Corrugated
Container Division and paid Boise Cascade Office Products Corporation, a
subsidiary of Boise Cascade, and its affiliates $754,397 for merchandise
purchased during such period.
Warren E. McCain, Chairman of the Executive Committee of the Board of Directors
until February 1, 1996 and formerly the Chairman of the Board and Chief
Executive Officer of the Company, has served on the Compensation Committee since
1992 and on the Executive Committee since 1988. Since February 2, 1996, Mr.
McCain has not been employed by the Company.
Gary G. Michael, Chairman of the Board and Chief Executive Officer, has served
on the Executive Committee since 1993. Mr. Michael did not participate as a
member of the Executive Committee in any of the decisions that are described in
the Compensation Committee/Executive Committee Report.
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PERFORMANCE GRAPH
The following graph provides a comparison of the five-year cumulative total
return* for the Standard & Poor's 500 Index, the Standard & Poor's Retail
Store-Food Chains Index and the Company.
<TABLE>
<CAPTION> S & P RETAIL STORE
ALBERTSON'S, INC. S & P 500 (FOOD CHAINS)
<S> <C> <C> <C>
1/91 100 100 100
1/92 105 123 97
1/93 130 136 124
1/94 144 153 120
1/95 164 154 130
1/96 189 213 165
</TABLE>
- - -----------
* $100 invested on January 31, 1991 in stock or index including reinvestment of
dividends. Fiscal year ending January 31.
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STOCKHOLDER PROPOSAL
(PROPOSAL 2)
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The International Brotherhood of Teamsters has advised the Company that it
intends to present the following resolution at the Annual Meeting. (The address
and number of shares owned by such stockholder will be provided upon request to
the Secretary of the Company.) In accordance with applicable proxy regulations,
the proposed resolution and supporting statement, for which the Board of
Directors and the Company accept no responsibility, are set forth below.
STOCKHOLDER RESOLUTION:
RESOLVED: That Albertson's stockholders urge the Board of Directors take the
necessary steps, in compliance with Delaware law, to declassify the Board for
the purpose of director elections. The board declassification shall be completed
in a manner that does not affect the unexpired terms of directors previously
elected.
STOCKHOLDER SUPPORTING STATEMENT:
The Albertson's board is divided into three classes of directors serving
staggered three-year terms. This means an individual director faces election
only once every three years, and shareholders only vote on roughly a third of
the board each year.
Albertson's management has argued that such a structure insures consistency and
continuity of corporate policy.
We think a better way to insure continuity is through re-election. As for
consistency, we question whether this is a virtue, especially if the results are
consistently detrimental to
shareholders.
We believe that annual elections can pave the way for improved sensitivity by
the board of important shareholder issues.
Importantly, such sensitivity should span genders. Women comprise a majority of
Albertson's employees and constitute an important share of our Company's
customers. Yet in the Board Room, there are few. Albertson's apparently
attempted to address this with the appointment of Beatriz Rivera, an auto dealer
from New Mexico.
Ms. Rivera: Welcome.
Such sensitivity should also become manifest in improved communication with
shareholders, as reflected in two developments.
First, this issue has been winning increased support among Albertson's
shareholders. The number of shareholders supporting this resolution increased
from 1994 to 1995. Second, Albertson's efforts to defeat the reform suggest
intolerance for constructive shareholder input. In 1995, Albertson's management
attempted to prevent this issue from coming to a vote based on technicalities.
(Copies of Albertson's correspondence are available by contacting the IBT Office
of Corporate Affairs at 202-624-8100.) In the 1994 and 1995 proxy statement,
management even questioned motivation. We are saddened that a board that
includes such important figures as Gov. Cecil Andrus would be reduced to such
tactics. Is Albertson's asking for shareholder capital without acknowledging
ownership prerogatives? Or is Albertson's asserting that some shareholders are
on a lower plane than others?
These factors strengthen our resolve that such reform is necessary. By adopting
annual elections, Albertson's can demonstrate its commitment to fuller
accountability to shareholders, accountability that respects the importance of
women among our company's key constituents, and accountability that honors
shareholder
prerogatives.
We urge you to vote YES for this proposal.
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<PAGE> 30
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BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
- - --------------------------------------------------------------------------------
Your Board of Directors recommends a vote AGAINST this proposal for the
following reasons:
This stockholder proposal was submitted to the Company by the International
Brotherhood of Teamsters (the "International"). The Company is regularly engaged
in negotiating labor agreements with various Teamster local unions, and
management believes this proposal reflects an attempt by the International to
gain leverage over the Company for use in labor negotiations with the Company.
For the third year in a row, the International Brotherhood of Teamsters has
submitted a stockholder proposal seeking to declassify the Board of Directors.
Your Board of Directors believes that a classified board continues to serve the
Company, you the stockholders and those with whom the Company does business by
permitting all to rely on the consistency and continuity of corporate policy. At
the same time, annual elections, in which approximately one-third of the board
is elected each year, offer stockholders a regular opportunity to renew and
reinvigorate corporate decision-making while maintaining the basic integrity of
corporate policy year-to-year for the benefit of all who rely on it.
A system of classified directors also benefits stockholders by making corporate
takeovers by proxy contest more difficult. Since only approximately one-third of
the Company's directorships are filled at any annual meeting of stockholders, it
is impossible to elect an entire new board or even a majority of the board at a
single meeting. Incumbent directors always represent a majority of the Board and
are in a position to protect the interests of all stockholders.
The stockholders of the Company adopted the present system of classified
directors at the 1980 Annual Meeting of Stockholders by a margin of 77% of the
outstanding shares.
While the Teamsters have the right to submit this proposal again this year (and
year after year, provided the proposal receives at least 10% of the vote), your
Board of Directors believes that the arguments made in prior years remain
persuasive and that the proposal should continue to be defeated by the
stockholders.
Finally, while this proposal does not address directly the issue of equal
employment opportunity, the statement in support of this proposal does. Your
Board of Directors is committed to providing equal opportunities for employment,
development and advancement for all of the Company's employees, with an emphasis
on personal and career development. The Company has in fact made steady strides
in recent years in advancing women and minorities to managerial positions.
FOR THE FOREGOING REASONS, YOUR BOARD OF DIRECTORS BELIEVES THAT THIS PROPOSAL
IS NOT IN THE BEST INTERESTS OF THE COMPANY AND UNANIMOUSLY RECOMMENDS THAT YOU
VOTE AGAINST PROPOSAL 2.
- - --------------------------------------------------------------------------------
STOCKHOLDER PROPOSAL
(PROPOSAL 3)
- - --------------------------------------------------------------------------------
The United Food & Commercial Workers Union, Local 99R ("Phoenix Union") located
at 2501 West Dunlap Avenue, Suite 240, Phoenix, Arizona 85201, the holder of 43
shares of the Company's common stock, has notified the Company that it intends
to submit the following resolution at the Annual Meeting:
RESOLVED, that shareholders recommend that Albertson's adopt a policy of
confidential shareholder voting, the sole exceptions being disclosure to
independent inspectors of election and any disclosure ordered by a court. This
proposal shall not prohibit comments on proxy cards from being disclosed to
management.
The Phoenix Union has indicated its intention to solicit proxies in support of
its proposal. The materials it is sending out consist of a proxy statement and a
survey questionnaire which stockholders are being asked to return in order to
receive a proxy card from the Phoenix Union.
26
<PAGE> 31
LOGO
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Your Board of Directors believes that the Phoenix Union is more interested in
trying to obtain information for possible use in its attempts to unionize
certain Arizona Albertson's stores than it is in obtaining votes for its
proposal.
Your Board of Directors urges you to vote AGAINST the proposal on the
accompanying WHITE proxy card.
- - --------------------------------------------------------------------------------
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
- - --------------------------------------------------------------------------------
Your Board of Directors recommends a vote AGAINST this proposal for the
following reasons:
You should know that our employees in Arizona (other than Yuma) have not
expressed a desire to be represented by the Phoenix Union, despite the union's
effort to organize them. Another
important fact is that the cost to the Phoenix Union of its proxy solicitation
exceeds the value of the 43 shares of stock that the union owns. These factors,
among others, cause your Board of Directors to believe that this proposal has
not been submitted in the interests of the stockholders but rather as part of
the union's efforts to pressure the Company to unionize its Arizona employees
who have expressed no desire to be represented by a union.
The Phoenix Union has also purchased small amounts of stock in six other
companies. These companies are unrelated to Albertson's, except that each of
them either has a member of Albertson's management on its Board of Directors or
has a member of its management on Albertson's Board. For example, the union has
targeted Questar Corporation (an integrated natural gas holding company
headquartered in Utah) where Albertson's Chief Executive Officer, Gary Michael,
is a Board member. The Phoenix Union has indicated its intention to solicit
proxies in support of proposals at those companies. We believe that this is
being done to pressure these other companies to, in turn, put pressure on
Albertson's to unionize stores, contrary to the wishes of employees.
It is the belief of your Board of Directors that stockholder support of this
proposal will encourage and prolong the Phoenix Union's efforts to use the
corporate governance process to pressure Albertson's to act in ways that are
contrary to the interests of Albertson's stockholders and employees. Your
management believes that the decision as to whether or not to unionize should be
made by our employees and not because of pressure applied through the Annual
Meeting process at Albertson's and at other companies.
Your Company's unequivocal, and continuing, position on labor relations is that
we are PRO-EMPLOYEE. We are not anti-union. This means that we respect the
wishes of our employees, and we are committed to treating them fairly, whether
they are union members or not. If the employees want to be represented by a
union, that is clearly their prerogative and will always be respected. If they
do not wish to be so represented, that decision will be respected as well. At
present, over 40% of our employees are represented by a union and the rest are
not. This choice should be, and must be, left up to the employees.
Turning to the specifics of the Phoenix Union's proposal, the Board believes
that the proposal is unnecessary. First, any stockholder who wishes to vote on a
confidential basis can do so simply by holding his or her shares in street name
through a bank, broker or other nominee. Second, the Company believes that it
has always conducted its stockholder solicitations in a fair and equitable
manner, without any coercive pressure. Thus, the Phoenix Union's argument that
confidential voting is necessary to protect stockholders from coercion has no
historical basis at Albertson's and is speculative at best. Indeed, even the
Phoenix Union specifically acknowledges that it does not suggest that
Albertson's management has ever acted in a coercive manner. Accordingly, the
Board believes that the con-
27
<PAGE> 32
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cerns expressed by the Phoenix Union do not warrant adoption of the proposed
system for confidential voting.
Moreover, the Board believes that the existing proxy solicitation process has
served the Company's stockholders fairly for many years and that the present
system is cost-effective and represents prudent management which is entirely
consistent with high business and ethical standards.
FOR THE FOREGOING REASONS, YOUR BOARD OF DIRECTORS BELIEVES THAT THIS PROPOSAL
IS NOT IN THE BEST INTERESTS OF THE COMPANY AND UNANIMOUSLY RECOMMENDS THAT YOU
VOTE AGAINST PROPOSAL 3.
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OTHER MATTERS
- - --------------------------------------------------------------------------------
The Company is not aware of any other matters to be submitted at the Annual
Meeting of Stockholders. If any other matters properly come before the meeting,
it is the intention of the proxy holders to vote the shares they represent as
the Board of Directors may recommend.
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FILING OF FORMS PURSUANT TO SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
- - --------------------------------------------------------------------------------
As required by Securities and Exchange Commission rules under Section 16 of the
Securities Exchange Act of 1934, the Company notes that a Form 4 for Steven D.
Symms included the ownership of less than 3 shares of the Company's Common Stock
held in an inadvertently created dividend investment account which was not
included in prior filings.
- - --------------------------------------------------------------------------------
DEADLINE FOR RECEIPT OF STOCKHOLDERS' PROPOSALS
- - --------------------------------------------------------------------------------
Proposals by stockholders of the Company that are intended to be presented to
the stockholders at the Company's 1997 Annual Meeting must be received by the
Company no later than December 20, 1996 in order that they may be included in
the Proxy Statement and proxy card for that meeting.
28
<PAGE> 33
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ALBERTSON'S, INC.
The undersigned hereby appoints Warren E. McCain, Gary G. Michael, John B.
Carley, and each of them, as Proxies for the undersigned, each with full power
of substitution, to represent the undersigned and to vote all shares of Common
Stock of Albertson's, Inc. ("Company") that the undersigned is entitled to vote
in the manner indicated on the reverse side hereof, and with discretionary
authority as to any other matters that may properly come before the meeting as
set forth under the heading "Other Matters" in the accompanying Proxy
Statement. If no other indication is made, the proxyholders will vote FOR the
election of the director nominees and AGAINST proposals 2 and 3 at the Annual
Meeting of Stockholders of the Company to be held on Friday, May 24, 1996, and
at any and all adjournments or postponements thereof.
(PLEASE DATE AND SIGN ON REVERSE SIDE)
- - --------------------------------------------------------------------------------
FOLD AND DETACH HERE
[ALBERTSON'S LOGO]
ANNUAL MEETING OF STOCKHOLDERS
FRIDAY, MAY 24, 1996
10:00 A.M.
BOISE CENTRE ON THE GROVE
850 FRONT STREET
BOISE, IDAHO
<PAGE> 34
PLEASE MARK YOUR VOTES LIKE THIS X
---
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED
AS DIRECTED HEREIN. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
PROPOSAL 1 AND AGAINST PROPOSALS 2 AND 3.
- - ------
COMMON
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
1. ELECTION OF FOUR DIRECTORS TO CLASS I.
NOMINEES: Clark A. Johnson, Charles D. Lein, Gary G. Michael and
Steven D. Symms.
FOR all nominees WITHHOLD AUTHORITY to vote for
all nominees
--------- ------------
To withhold authority for any individual nominee, check the "FOR" all
nominees box above and write that nominee's name on line below:
--------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 2.
2. STOCKHOLDER PROPOSAL TO DECLASSIFY THE BOARD OF DIRECTORS.
FOR AGAINST ABSTAIN
--------- ------ ------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 3.
3. STOCKHOLDER PROPOSAL TO INSTITUTE CONFIDENTIAL VOTING.
FOR AGAINST ABSTAIN
--------- ------ ------
Dated: , 1996
-------------------------
- - ----------------------------------------
Signature
- - ----------------------------------------
Signature
<PAGE> 35
THIS PROXY SHOULD BE SIGNED EXACTLY AS NAME APPEARS HEREON. Executors,
administrators, trustees, and so forth, should give full title as such. If the
signatory is a corporation, please sign full corporate name by a duly
authorized officer. If a partnership, please sign in partnership name by an
authorized party. If shares are held in multiple names, at least one must sign
as an authorized party.
- - --------------------------------------------------------------------------------
FOLD AND DETACH HERE
[ALBERTSON'S LOGO]
ANNUAL MEETING OF STOCKHOLDERS
FRIDAY, MAY 24, 1996
10:00 A.M.
BOISE CENTRE ON THE GROVE
850 FRONT STREET
BOISE, IDAHO
IF YOU PLAN TO ATTEND THE MEETING AND YOUR SHARES ARE HELD IN THE NAME OF A
BROKER OR OTHER NOMINEE, PLEASE BRING A STATEMENT OR LETTER FROM THE BROKER OR
NOMINEE CONFIRMING YOUR OWNERSHIP OF SHARES.
