<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
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):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
LOGO
ALBERTSON'S, INC.
250 PARKCENTER BOULEVARD
P.O. BOX 20
BOISE, IDAHO 83726
- --------------------------------------------------------------------------------
April 17, 1998
Dear Fellow Stockholder:
It is our pleasure to invite you to attend the 1998 Annual Meeting of
Stockholders. This year's Annual Meeting will be held on Friday, May 22, 1998,
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; to approve an increase in the authorized Common Stock of the Company;
and to ratify the appointment of independent auditors for the fiscal year ending
January 28, 1999. In addition, one stockholder proposal, which is 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
Gary G. Michael
Chairman of the Board
and Chief Executive Officer
<PAGE> 3
TABLE OF CONTENTS LOGO
- --------------------------------------------------------------------------------
<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) 5
- ------------------------------------------------------------------
Nominees for Election as Class III Directors 6
- ------------------------------------------------------------------
Continuing Class I Directors 7
- ------------------------------------------------------------------
Continuing Class II Directors 8
- ------------------------------------------------------------------
Certain Transactions 10
- ------------------------------------------------------------------
Committees and Meetings of the Board of Directors 10
- ------------------------------------------------------------------
Directors' Fees 12
- ------------------------------------------------------------------
Compensation of Executive Officers 13
- ------------------------------------------------------------------
Summary Compensation Table 13
- ------------------------------------------------------------------
Option Grants in Last Fiscal Year 16
- ------------------------------------------------------------------
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values 17
- ------------------------------------------------------------------
Retirement Benefits 17
- ------------------------------------------------------------------
Compensation Committee/Executive Committee Report 19
- ------------------------------------------------------------------
Compensation Committee and Executive Committee
Interlocks and Insider Participation 22
- ------------------------------------------------------------------
Performance Graph 23
- ------------------------------------------------------------------
Approval of Amendment of the Restated Certificate of
Incorporation to Increase Authorized Shares of Common
Stock (Proposal 2) 24
- ------------------------------------------------------------------
Ratification of Appointment of Independent Auditors
(Proposal 3) 26
- ------------------------------------------------------------------
Stockholder Proposal (Proposal 4) 27
- ------------------------------------------------------------------
Board of Directors' Statement in Opposition 28
- ------------------------------------------------------------------
Other Matters 28
- ------------------------------------------------------------------
Section 16(a) Beneficial Ownership Reporting Compliance 28
- ------------------------------------------------------------------
Deadline for Receipt of Stockholders' Proposals 28
- ------------------------------------------------------------------
Proposed Amendment to Article Fourth of the Restated
Certificate of Incorporation
(Exhibit A) A-1
- ------------------------------------------------------------------
</TABLE>
<PAGE> 4
FREE PARKING FOR MEETING
For three hours of free parking at the Eastman Garage, Capital Terrace Garage,
Grove Street Garage (roof-top only), Boulevard Garage (under The Grove Hotel)
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 PARKING FOR MEETING]
<PAGE> 5
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 1998, AT BOISE, IDAHO
LOGO
- --------------------------------------------------------------------------------
TO THE STOCKHOLDERS OF ALBERTSON'S, INC.:
The Annual Meeting of Stockholders of Albertson's, Inc., a Delaware corporation
(the "Company"), will be held on Friday, May 22, 1998, 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 five Class III directors to hold office for three years;
(2) To act upon a proposal to amend Article Fourth of the Company's Restated
Certificate of Incorporation to increase the Company's authorized Common
Stock from 600 million shares to 1.2 billion shares;
(3) To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending January 28, 1999;
(4) To consider and act upon, if properly presented, one proposal submitted by a
single stockholder and opposed by the Board of Directors; and
(5) 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 7, 1998, 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
[SIG]
Kaye L. O'Riordan
Vice President and Corporate Secretary
April 17, 1998
YOUR COPY OF THE COMPANY'S ANNUAL REPORT FOR THE
FISCAL YEAR ENDED JANUARY 29, 1998 IS ENCLOSED.
<PAGE> 6
PROXY STATEMENT
- --------------------------------------------------------------------------------
This Proxy Statement and the accompanying proxy card, which are being mailed to
stockholders on or about April 17, 1998, 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 22, 1998, 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 7, 1998 are entitled to vote at the meeting. As of
that date, there were 245,781,966 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
five nominees will be elected; (ii) proposal 2 must be approved by the
affirmative vote of holders of a majority of the Company's issued and
outstanding shares entitled to vote at the meeting; and (iii) proposal 3 and the
stockholder proposal, if properly 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 proposals 2 and 3 and the
stockholder proposal, 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.
2
<PAGE> 7
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
[LOGO]
- --------------------------------------------------------------------------------
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% 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 26, 1998(1)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGREGATE
NAME (AND ADDRESS SHARED SOLE SHARED AMOUNT PERCENT
FOR BENEFICIAL SOLE VOTING VOTING INVESTMENT INVESTMENT BENEFICIALLY OF
OWNERS OVER 5%) POWER POWER POWER POWER OWNED(2) CLASS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Markus Stiftung(3) 29,152,800 -- 29,152,800 -- 29,152,800 11.85%
Timmasper Weg
2353 Nortorf
Federal Republic of Germany
J.A. and Kathryn Albertson 21,422,446 -- 21,422,446 -- 21,422,446 8.71%
Foundation, Inc.(4)
501 BaybrookCourt,
P.O. Box 70002
Boise, ID 83707-0102
Kathryn Albertson 4,000(5) -- 4,000(5) -- 4,000(5) +
A. Gary Ames 11,000(5) -- 11,000(5) -- 11,000(5) +
Cecil D. Andrus 9,300(5) 800 9,300(5) 800 10,100(5) +
John B. Carley 518,942 -- 517,950(6) -- 518,942 +
Paul I. Corddry 6,000(5) 10,000 6,000(5) 10,000 16,000(5) +
John B. Fery 23,285(5) -- 23,285(5) -- 23,285(5) +
Clark A. Johnson 26,850 4,000 26,850 4,000 30,850 +
Charles D. Lein 13,925(5) 14,200 13,925(5) 14,200 28,125(5) +
Warren E. McCain 1,135,970(5) -- 1,135,970(5) -- 1,135,970(5) +
Gary G. Michael 251,203 -- 250,311(6) -- 251,203 +
Beatriz Rivera 6,000(5) -- 6,000(5) -- 6,000(5) +
J.B. Scott 4,000(5) 6,003,600 4,000(5) 6,003,600 6,007,600(5) 2.44%
Thomas L. Stevens, Jr. 2,500(5) -- 2,500(5) -- 2,500(5) +
Will M. Storey 11,000(5) -- 11,000(5) -- 11,000(5) +
Steven D. Symms 4,000(5) 3,502 4,000(5) 3,502 7,502(5) +
Richard L. King 4,636 16,472 4,139(6) 16,472 21,108 +
Carl W. Pennington 20,923(7) 162,000 20,000(6,7) 162,000 182,923(7) +
Ronald D. Walk 14,808(7) 251,876 13,885(6,7) 251,876 266,684(7) +
All directors (including 2,462,479(5,7) 6,755,114 2,451,141(5,6,7) 6,755,114 9,217,593(5,7) 3.75%
nominees) and all executive
officers as a group(31)
- ----------------------------------------------------------------------------------------------------------------
</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 beneficial ownership of
the shares within 60 days following March 26, 1998.
(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% 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% 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) The Chairman of the Board of the J.A. and Kathryn Albertson Foundation, Inc.
(the "Foundation") is J.B. Scott and Kathryn Albertson is a Vice President and a
director of the Foundation. Cecil D. Andrus is a director of the Foundation.
On May 22, 1997, Alscott Limited Partnership #1, a Texas limited partnership,
transferred 20,842,446 shares of the Common Stock of the Company (the
"Foundation Stock") to Kathryn Albertson. On May 22, 1997, Kathryn Albertson
transferred the Foundation Stock to the Foundation. On May 21, 1997, the Company
and the Foundation entered into an agreement giving the Company certain rights
of first refusal should the Foundation wish to sell the Foundation Stock (the
"Foundation Agreement").
The Foundation Agreement provides that in the event the Foundation proposes to
transfer (other than through charitable donations) any of the Foundation Stock,
the Company shall be given notice and an opportunity to purchase such Foundation
Stock for a specified period at a price that is approximately 96% of the then
market price and upon terms set forth in the notice. Should the Company decline
to exercise its option to purchase all of such Foundation Stock offered for sale
within the specified period, the Foundation may sell such Foundation Stock on
terms and at a price equivalent to or exceeding that offered to the Company
within 45 days.
The Foundation may make charitable donations of up to 5% of the Common Stock
held by the Foundation each year, provided that each donee of Foundation Stock
must agree to (i) offer to sell to the Company all of the Foundation Stock
received as a charitable donation at a price that is approximately 96% of the
then market price and (ii) sell all of such Foundation Stock on the open market
within 30 days following receipt of the charitable donation if the Company does
not accept the offer.
Except as summarized above, the Foundation Agreement does not in any respect
deprive the Foundation of the rights of ownership of the Foundation Stock,
including unrestricted voting rights and the right to receive and retain all
cash and stock dividends.
(5) Includes 2,000 shares in the case of Thomas L. Stevens, Jr.; 3,730 shares in
the case of Beatriz Rivera; 4,000 shares in the case of each of Kathryn
Albertson, Warren E. McCain, J.B. Scott and Steven D. Symms, and 6,000 shares in
the case of each remaining indicated director (57,730 shares total) not held of
record on March 26, 1998, but which could have been acquired within 60 days
thereafter under the Company's 1995 Stock Option Plan for Non-Employee
Directors.
(6) 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."
(7) Includes 96,000 shares not held of record on March 26, 1998, 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. Of these shares, 20,000
shares could have been acquired within 60 days thereafter under the Company's
1986 Nonqualified Stock Option Plan by Carl W. Pennington; and 10,000 shares
could have been acquired within 60 days thereafter under the Company's 1986
Nonqualified Stock Option Plan by Ronald D. Walk. Includes 21,609 shares as to
which certain directors and executive officers included in all directors and
executive officers as a group have sole voting and investment power but which
are held for minor children and relatives 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.
4
<PAGE> 9
LOGO
- --------------------------------------------------------------------------------
ELECTION OF DIRECTORS
(PROPOSAL 1)
- --------------------------------------------------------------------------------
The Board of Directors is divided into three classes, each serving for a
three-year term. Each class consists of five directors, and all the directors in
one class stand for election each year. This year, the five Class III directors
are to be elected for three-year terms.
The Board of Directors has nominated the following candidates to stand for
election as Class III directors, all of whom are nominated for terms expiring in
2001: Cecil D. Andrus, John B. Fery, Richard L. King, J.B. Scott and Will M.
Storey. 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 five 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, except Richard L. King who
has been nominated by the Board upon the recommendation of the Nominating
Committee for election as a Class III Director and who has not previously been
elected by the stockholders. Each of the other nominees has previously been
elected by the stockholders.
Information as to the nominees and as to each other director whose term will
continue after the 1998 Annual Meeting of Stockholders is given on pages 6-9.
Unless otherwise indicated, the nominees have been engaged in the same principal
occupation for the past five years. Directors' ages are as of March 26, 1998.
5
<PAGE> 10
NOMINEES FOR ELECTION AS CLASS III DIRECTORS
TERM EXPIRING IN 2001
- --------------------------------------------------------------------------------
CECIL D. ANDRUS
Director
since 1995
Age 66
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.,
focusing on education within Idaho. Member of the Executive and Grantor Trust
Committees.
- --------------------------------------------------------------------------------
JOHN B. FERY
Director
since 1974
Age 68
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 Hewlett-Packard Company, The Boeing
Company and U.S. Bancorp. Chairman of the Compensation Committee and member of
the Executive and Grantor Trust Committees.
- --------------------------------------------------------------------------------
RICHARD L. KING
Age 48
President and Chief Operating Officer of the Company since February 1996.
Formerly Senior Vice President and Regional Manager of the Company from November
1994; Group Vice President, Merchandising of the Company from January 1994; and
Vice President, Rocky Mountain Division of the Company from 1992.
- --------------------------------------------------------------------------------
J.B. SCOTT
Director
since 1993
Age 44
Chairman of the Board of Directors of Alscott, Inc., real estate and other
investments. Grandson of Kathryn Albertson. Mr. Scott is Chairman of the Board
and a director of the J.A. and Kathryn Albertson Foundation, Inc., focusing on
education within Idaho. Member of the Audit Committee.
- --------------------------------------------------------------------------------
6
<PAGE> 11
LOGO
- --------------------------------------------------------------------------------
WILL M. STOREY
Director
since 1992
Age 66
Served as Executive Vice President and Chief Financial Officer, American
President Companies, Inc., a provider of container transportation services,
until his retirement in 1995. Mr. Storey is a director of Eagle-Pitcher
Industries, Inc. Member of the Audit and Compensation Committees.
- --------------------------------------------------------------------------------
CONTINUING CLASS I DIRECTORS
TERM EXPIRING IN 1999
- --------------------------------------------------------------------------------
CLARK A. JOHNSON
Director
since 1989
Age 66
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. and Metromedia International Group.
Member of the Compensation, Nominating and Grantor Trust Committees.
- --------------------------------------------------------------------------------
CHARLES D. LEIN
Director
since 1975
Age 56
President and Chief Operating Officer of Stuller Settings, Inc., a jewelry
manufacturing company, and its subsidiaries, Stuller Service Centers, Inc.,
Stuller Thailand Limited, Stuller Israel Diamonds Limited and Stuller
Manufacturing, Inc., 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 57
Chairman of the Board and Chief Executive Officer of the Company. Mr. Michael is
the Chairman of the Board of Directors of the Federal Reserve Bank of San
Francisco and a director of Boise Cascade Corporation and Questar Corporation.
Chairman of the Non-Employee Directors' Deferred Compensation Committee and
member of the Executive Committee.
- --------------------------------------------------------------------------------
7
<PAGE> 12
- --------------------------------------------------------------------------------
THOMAS L. STEVENS, JR.
Director
since 1996
Age 64
Served as President, Los Angeles Trade-Technical College (LATTC) until his
retirement in 1996. Mr. Stevens was a member of the Board of Directors of the
Federal Reserve Bank of San Francisco, Los Angeles Branch until his retirement
from LATTC. He is the Chairman of the Board of the Achievement Council and the
Los Angeles Opportunities Industrialization Center, Inc. Member of the Audit and
Nominating Committees.
- --------------------------------------------------------------------------------
STEVEN D. SYMMS
Director
since 1993
Age 59
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.
- --------------------------------------------------------------------------------
CONTINUING CLASS II DIRECTORS
TERMS EXPIRING IN 2000
- --------------------------------------------------------------------------------
KATHRYN ALBERTSON
Director
since 1958
Age 89
Vice President and a director of the J.A. and Kathryn Albertson Foundation,
Inc., focusing on education within Idaho. Prior to 1997, President and a
director of Alscott, Inc., real estate and other investments. Grandmother of
J.B. Scott.
- --------------------------------------------------------------------------------
A. GARY AMES
Director
since 1988
Age 53
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 Flextech, Tektronix, Inc. and
Telewest. Chairman of the Grantor Trust Committee and member of the Compensation
and Nominating Committees.
- --------------------------------------------------------------------------------
8
<PAGE> 13
LOGO
- --------------------------------------------------------------------------------
JOHN B. CARLEY
Director
since 1979
Age 64
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 AgriBeef 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 61
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 is a director of Ameristar Casinos, Inc. Member of the Audit and
Grantor Trust Committees.
- --------------------------------------------------------------------------------
BEATRIZ RIVERA
Director
since 1995
Age 47
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.
- --------------------------------------------------------------------------------
9
<PAGE> 14
- --------------------------------------------------------------------------------
CERTAIN TRANSACTIONS
- --------------------------------------------------------------------------------
During the fiscal year ended January 29, 1998, two store leases and one office
space lease were held by Alscott Real Estate LLC, as landlord, and Albertson's,
Inc., as tenant. Alscott Real Estate LLC is managed by Alscott, Inc., an Idaho
corporation of which J.B. Scott, a director of the Company, is Chairman of the
Board and has a majority ownership interest. The terms of the two store leases
are for periods of 37 and 46 years with expiration dates occurring in 2007 and
2005. The office space lease is for a 20 year term expiring in 2017. The total
rentals and common area maintenance fees paid by the Company under the leases to
this landlord during the fiscal year ended January 29, 1998 were $928,559.
Steven D. Symms, a director of the Company, is a director of Symms Fruit Ranch,
Inc. During the fiscal year ended January 29, 1998, the Company paid Symms Fruit
Ranch $230,662 for food products purchased 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 January 29, 1998, the Company paid $1,621,619 to The Office
Environment Company for office furniture, equipment and supplies.
James Smith, brother-in-law of Richard J. Navarro, 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 January 29,
1998, the Company paid $257,476 to Tynick Services, Inc. for electronics
equipment.
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.
- --------------------------------------------------------------------------------
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
The Board of Directors held four regular meetings and three special meetings
during the last full fiscal year of the Company. All incumbent directors
attended at least 75% 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 five 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 seven members who are Charles D. Lein,
Chairman, Paul I. Corddry, Beatriz Rivera, J.B. Scott, Thomas L. Stevens, Jr.,
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 four members
10
<PAGE> 15
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- --------------------------------------------------------------------------------
who are John B. Fery, Chairman, A. Gary Ames, Clark A. Johnson and Will M.
Storey. Two 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 six members who are Warren E.
McCain, Chairman, A. Gary Ames, John B. Carley, Clark A. Johnson, Beatriz Rivera
and Thomas L. Stevens, Jr. There was one meeting 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 60 days nor more than 90 days prior to the
anniversary date of the immediately preceding annual meeting of stockholders.
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, with the exception of Cecil D. Andrus, has a financial interest in
the deferred compensation plans and trusts established by the Company for its
executives. Mr. Andrus is receiving payments of compensation deferred from his
service as a Director from 1984 to 1987 and 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 two members who
are Gary G. Michael, Chairman, and John B. Carley, neither of whom has a
financial interest in this plan. The committee held no meetings during the last
fiscal year.
11
<PAGE> 16
- --------------------------------------------------------------------------------
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 $30,000 per year plus $1,000 for each Board of Directors' and committee
meeting attended.
Non-employee directors may elect to defer payment of their directors' fees into
the Non-Employee Directors' Deferred Compensation Plan described in footnote 1
to the Summary Compensation Table on page 13.
Pursuant to the Albertson's, Inc. 1995 Stock Option Plan for Non-Employee
Directors which became effective on May 26, 1995, each non-employee director is
granted an option on the first business day after each annual stockholders'
meeting of the Company during the ten-year term of the Plan. Each such option
entitles the holder thereof to purchase 2,000 shares of the Common Stock of the
Company at the closing market price on the date of the grant and may be
exercised for ten years from the date of grant, pursuant to the terms of the
Plan.
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<PAGE> 17
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- --------------------------------------------------------------------------------
COMPENSATION OF EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The following table sets forth the compensation paid for each of the Company's
last three fiscal years to (i) the Chief Executive Officer of the Company and
(ii) the four other most-highly compensated executive officers of the Company
for the last completed fiscal year:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
-------------------------------------- ------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND FISCAL SALARY(1) BONUS(1) COMPENSATION(2) OPTIONS(3) COMPENSATION(4)
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
------------------ ------ --------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Gary G. Michael 1997 $750,000 $351,000 -- 100,000 $135,892
Chairman of the Board and Chief 1996 750,000 292,500 $50,391 0 121,310
Executive Officer and a director 1995 693,923 315,000 -- 50,000 108,631
John B. Carley(5) 1997 500,000 0 -- 0 131,542
Chairman of the Executive Committee 1996 500,423 0 -- 0 119,485
of the Board and a director 1995 610,000 256,200 -- 0 108,558
Richard L. King 1997 450,000 195,000 -- 50,000 2,275
President and Chief Operating Officer 1996 387,692 175,500 -- 50,000 1,575
1995 229,616 105,000 -- 50,000 1,100
Carl W. Pennington 1997 335,000 91,000 -- 25,000 30,696
Executive Vice President, 1996 326,692 87,100 -- 0 24,901
Corporate Merchandising 1995 287,616 91,000 -- 25,000 19,846
Ronald D. Walk 1997 335,000 91,000 -- 25,000 26,586
Executive Vice President, 1996 326,692 87,100 -- 0 21,430
Retail Operations 1995 283,462 91,000 -- 25,000 17,039
</TABLE>
- --------------------------------------------------------------------------------
(1) Certain officers, including certain of the individuals named in the above
table, were entitled to defer up to 50% of the aggregate amount of their
salaries and bonuses and non-employee directors were entitled to defer up to
100% 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% 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 of 1986, as amended (the "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 to defer any such amounts in fiscal
year 1998.
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, retirement or (under the two initial plans) disability prior to
termination of employment (collectively, "Certain Events"). In the case of such
Certain Events, deferred amounts accrue interest at a rate equal to the Moody's
Average plus 4% under the two initial plans or the Moody's Average plus 3% under
the 1990 Plan. A fourth plan, the Non-Employee Directors' Deferred Compensation
Plan was approved by the Board of Directors and by a 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% 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
13
<PAGE> 18
- --------------------------------------------------------------------------------
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 two
directors, neither of whom has a financial interest in the plan.
Pursuant to the foregoing plans, the individuals named in the table on page 13
have deferred the following amounts of salary paid or allocated to them for
services rendered during the fiscal year ended January 29,1998: Mr. Michael,
$73,558; Mr. King, $23,150; Mr. Pennington, $114,995; and Mr. Walk, $111,832.
Pursuant to the foregoing plans, the individuals named in the table on page 13
deferred the following amounts of salary paid or allocated to them for services
rendered during the fiscal year ended January 30, 1997 (which includes, for Mr.
Michael, $18,000 of bonus deferred by the Compensation Committee): Mr. Michael,
$93,000; Mr. King, $16,350; Mr. Pennington, $114,087; and Mr. Walk, $97,933.
Pursuant to the foregoing plans, the individuals named in the table on page 13
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. King, $10,900; Mr. Pennington, $99,514; and Mr. Walk, $91,504. These amounts
are included in the columns for salary or bonus in the table on page 13.
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 13 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 Code. During the fiscal
year ended January 29, 1998, the individuals named in the table on page 13
deferred the following amounts into the Savings Plan: Mr. Michael, $6,765; Mr.
King, $9,489; and Mr. Walk, $9,484. During the fiscal year ended January 30,
1997, the individuals named in the table on page 13 deferred the following
amounts into the Savings Plan: Mr. Michael, $6,620; Mr. King, $9,810; and Mr.
Walk, $9,465. During the fiscal year ended February 1, 1996, the individuals
named in the table on page 13 deferred the following amounts into the Savings
Plan: Mr. Michael, $6,184; Mr. King, $9,804; and Mr. Walk, $9,234. All amounts
deferred into the Savings Plan by these individuals are included in the column
for salary in the table on page 13.
(2) This column includes the value for income tax purposes of noncash personal
benefits, except that amounts, which, when aggregated, 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 1996 includes
$28,922 for 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 in February, 1992; (ii) the 1986 Nonqualified
Stock Option Plan ("1986 Plan"), which was adopted by the stockholders in May
1986 and expired in May 1996; and (iii) the 1995 Stock-Based Incentive Plan
("1995 Plan"), which was adopted by the stockholders in May 1995 and will expire
in May 2005. The 1982 Plan and 1986 Plan provided for and the 1995 Plan provides
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 (i) holding positions of substantial responsibility, (ii)
demonstrating special capabilities and (iii) 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
14
<PAGE> 19
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- --------------------------------------------------------------------------------
granted thereunder to accelerate in the event there is a change in control of
the Company. A description of the stock options granted to the named executives
is set forth under the heading "Option Grants in Last Fiscal Year."
(4) This column includes $22,000 in fiscal years 1997, 1996 and 1995 for each of
Gary G. Michael and John B. Carley, 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. The remaining amount consists of the
"above-market" (as such term is defined in Item 402(b)(2)(iii)(C), Instruction
3, of Regulation S-K promulgated by 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 13 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 $22,000 contribution to the deferred compensation plans described in
footnote 1 for the three-year period. No bonus is to be paid for services
rendered during the three-year period.
15
<PAGE> 20
- --------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANT DATE VALUE
UNDERLYING GRANTED TO ----------------
OPTIONS EMPLOYEES EXERCISE OR GRANT DATE
GRANTED IN FISCAL BASE PRICE EXPIRATION PRESENT VALUE(2)
NAME (#) YEAR ($/SH)(1) DATE ($)
---- ---------- ---------- ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Gary G. Michael 100,000 6.68% $45.6875 11/30/02(3) $1,126,500
Chairman of the Board and Chief Executive Officer
and a director
Richard L. King 50,000 3.34 45.6875 11/30/07(4) 802,900
President and Chief Operating Officer
Carl W. Pennington 25,000 1.67 45.6875 11/30/00(5) 173,625
Executive Vice President, Corporate Merchandising
Ronald D. Walk 25,000 1.67 45.6875 11/30/00(5) 173,625
Executive Vice President, Retail Operations
</TABLE>
- --------------------------------------------------------------------------------
(1) The closing market price on the date the option was 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 the
individual's grant. The model also assumes: (a) a risk-free rate of return
represented by the interest rate on a U.S. Treasury Bond with a maturity date
corresponding to that of the adjusted option term; (b) expected volatility using
the implied volatility for call options traded on the date of the grant; and (c)
a dividend yield determined by dividing the 1997 cash dividends declared by the
option price. The values which may ultimately be realized by the holder of the
reported option will depend on the market value of the Company's Common Stock
during the periods during which the option is exercisable, which may vary
significantly from the assumptions underlying the Black-Scholes model.
(3) Gary G. Michael was granted an option to purchase 100,000 shares of the
Common Stock of the Company at the closing market price of the Common Stock on
December 1, 1997, the date the option was granted. This option becomes
exercisable in 50% annual increments after it has been held for three years.
(4) Richard L. King was granted an option to purchase 50,000 shares of the
Common Stock of the Company at the closing market price of the Common Stock on
December 1, 1997, the date the option was granted. This option becomes
exercisable in 20% annual increments after it has been held for five years.
(5) Carl W. Pennington and Ronald D. Walk were each granted an option to
purchase 25,000 shares of the Common Stock of the Company at the closing market
price of the Common Stock on December 1, 1997, the date the option was granted.
These options become exercisable in 50% annual increments after being held for
one year.
16
<PAGE> 21
LOGO
- --------------------------------------------------------------------------------
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
YEAR-END YEAR-END
ACQUIRED ON VALUE+ --------------------------- ---------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gary G. Michael 64,000 $1,395,000 0 230,000 $ 0 $3,518,500
Chairman of the Board and Chief
Executive Officer and a director
Richard L. King 14,400 435,200 0 178,600 0 2,254,300
President and Chief Operating
Officer
Carl W. Pennington 0 0 20,000 70,000 612,500 1,048,438
Executive Vice President, Corporate
Merchandising
Ronald D. Walk 10,000 161,250 10,000 80,000 306,250 1,354,688
Executive Vice President, Retail
Operations
</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 (January 29, 1998) 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 13 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 (as defined 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.
17
<PAGE> 22
- --------------------------------------------------------------------------------
PENSION PLAN TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARS OF SERVICE
COMPENSATION ---------------------------------------------------------------
LEVEL 20 25 30 35 40 45
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10$0,000... $ 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 January 29, 1998, the years of service credited to the executive officers
listed in the Summary Compensation Table on page 13 were: Mr. Michael, 32; Mr.
Carley, 44; Mr. King, 32; Mr. Pennington, 34; and Mr. Walk, 36. 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, $772,000; Mr.
Carley, $522,000; Mr. King, $450,000; Mr. Pennington, $335,000; and Mr. Walk,
$335,000.
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 $130,000
(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 in 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 13.
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 13. The Makeup
Trust is administered by the Grantor Trust Committee of the Board of Directors
as are the Deferred Compensation Trusts.
18
<PAGE> 23
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COMPENSATION COMMITTEE/
EXECUTIVE COMMITTEE REPORT
- --------------------------------------------------------------------------------
OVERVIEW
For the fiscal year ended January 29, 1998, the Compensation Committee and the
Executive Committee in a joint meeting 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 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 and Executive Committee in a joint
meeting. The Compensation Committee approved the Albertson's, Inc. Senior
Operations Executive Officer Bonus Plan (the "Bonus Plan"), subject to
stockholder approval which was obtained at the 1997 Annual Meeting of
Stockholders. The performance goals for the senior operations executive officers
as defined in the Bonus Plan (the "Senior Operations Executive Officers") and
which included four of the five executives named in the Summary Compensation
Table were approved by the Compensation Committee as well as the performance
goals for the other officers of the Company. The Compensation Committee then
determined that the performance goals had been met which 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 in the case of the option granted to the CEO which was
recommended by the members of the Compensation Committee); and options were
granted to four 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.
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 nonqualified
"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
and Chairman of the Executive Committee, 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 to the
19
<PAGE> 24
- --------------------------------------------------------------------------------
Company-wide 401(k) plan and/or the deferred compensation plans described in
footnote 1 to the Summary Compensation Table.
At the 1997 Annual Stockholders' Meeting, the Company's stockholders approved
the Bonus Plan which is designed to meet the requirements of Section 162(m) of
the Code so that all remuneration paid by the Company for fiscal year 1997 was
deductible under Section 162(m) of the Code.
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 and
Executive 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 and Executive Committee in a joint meeting 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. One 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 23 and two of the surveys included three of those companies. The annual
salary of the Chairman of the Executive Committee was established pursuant to an
employment agreement which is described in footnote 5 to the Summary
Compensation Table. The Chairman of the Executive Committee did not receive a
bonus and was not eligible to be granted stock options.
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
The performance goals approved by the Compensation Committee (pursuant to the
stockholder approved Bonus Plan with respect to the Senior Operations Executive
Officers which included four of the five executives set forth in the Summary
Compensation Table) 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. 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
20
<PAGE> 25
LOGO
- --------------------------------------------------------------------------------
were achieved. The annual bonuses that were paid to the Senior Operations
Executive Officers were less than the maximum bonuses that could have been paid
under the terms of the Bonus Plan and the performance goals established pursuant
to the Bonus Plan. Accordingly, the annual bonus of the CEO was set at 39% of
his current annual salary, and the annual bonus of the President was set at 39%
of his current annual salary. The Chairman of the Executive Committee did not
receive an annual bonus. The annual bonus of the Executive Vice President,
Corporate Merchandising whose compensation is disclosed in the Summary
Compensation Table was set at 26% 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 26% 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
of those employees to whom it would be appropriate to grant stock options were
reasonable and granted those stock options. The Committee also granted a stock
option to the CEO. Stock options were granted during the last fiscal year to
four 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 and are described in the table "Option Grants in Last Fiscal
Year."
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 footnote 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
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 23 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 And Executive Committee." His annual 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." His annual bonus was 39% of his
current annual salary. Mr. Michael was granted a stock option during fiscal year
1997 which is described in the table "Option Grants in Last Fiscal Year."
21
<PAGE> 26
- --------------------------------------------------------------------------------
COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS
<TABLE>
<S> <C>
John B. Fery, Clark A. Johnson
Chairman Will M. Storey
A. Gary Ames
</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. 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 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.
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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<PAGE> 27
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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
Measurement Period Albertson's, (Food
(Fiscal Year Covered) Inc. S & P 500 Chains)
<S> <C> <C> <C>
1/93 100 100 100
1/94 111 113 97
1/95 126 113 105
1/96 146 157 133
1/97 153 199 156
1/98 212 252 213
</TABLE>
* $100 invested on January 31, 1993 in stock or index, including reinvestment of
dividends. Fiscal year ending January 31.
23
<PAGE> 28
- --------------------------------------------------------------------------------
AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION TO INCREASE AUTHORIZED
SHARES OF COMMON STOCK
(PROPOSAL 2)
- --------------------------------------------------------------------------------
On March 2, 1998, the Board of Directors (the "Board") unanimously adopted,
subject to approval by the stockholders at the Annual Meeting, an increase in
the number of shares of authorized Common Stock, $1.00 par value per share (the
"Common Stock"), from 600 million shares to 1.2 billion shares. This increase
would be accomplished by adopting an amendment (Proposal 2) to Article Fourth of
the Company's Restated Certificate of Incorporation (the "Certificate"). Exhibit
A to this Proxy Statement sets forth the text of the amendment, which changes
the first sentence of Article Fourth. As of April 7, 1998, 245,781,966 shares of
Common Stock were issued and outstanding. Of the remaining shares, 12,038,710
were reserved for issuance under the Company's stock option plans. Proposal 2
would increase the number of authorized, unissued and unreserved shares of
Common Stock to approximately 940 million shares. No change is proposed with
respect to the 10 million shares of Preferred Stock authorized by the
Certificate, of which 3 million shares have been designated as Series A Junior
Participating Preferred Stock in connection with the Stockholder Rights Plan
Agreement discussed below.
The Board believes that Proposal 2 is desirable, among other reasons, to provide
flexibility to declare stock splits or dividends payable in Common Stock without
further authorization by stockholders. Authorization for such additional shares
will also enable the Company to take prompt advantage of market conditions and
the availability of favorable opportunities for the acquisition of other
companies using the Company's Common Stock. Authorization at this time will
permit such action without the delay and expense incident to holding a special
meeting of stockholders should the need for the issuance of additional shares
arise. The Company has no immediate plans, arrangements, commitments or
understandings with respect to the issuance of any of the additional shares of
Common Stock which would be authorized by Proposal 2.
The issuance of additional shares of Common Stock by the Company may, depending
on the circumstances under which such shares are issued, reduce stockholders'
equity per share and reduce the percentage of ownership of Common Stock of
existing stockholders. The issuance of additional shares of Common Stock in
payment of a stock dividend or to effect a stock split, however, would not
reduce any stockholders' interest in the earnings of the Company or reduce the
percentage of ownership of the Common Stock of existing stockholders. As set
forth in the Company's Certificate, no holder of Common Stock has any preemptive
rights with respect to such Common Stock. In addition, unless required by
applicable laws or stock exchange regulations, no further authorization by vote
of stockholders will be solicited for such issuance. Under existing New York
Stock Exchange regulations, approval of a majority of the holders of Common
Stock would be required prior to the issuance of additional shares of Common
Stock or securities convertible into or exercisable for Common Stock, other than
in a public offering for cash, as a prerequisite to listing on the New York
Stock Exchange if (i) the Common Stock has or will have upon issuance voting
power equal to or in excess of 20% of the voting power outstanding before the
issuance of such stock or securities convertible into or exercisable for Common
Stock, or (ii) the number of shares of Common Stock to be issued is or will be
equal to or in excess of 20% of the number of shares of Common Stock outstanding
before the issuance of the stock.
The proposed increase in authorized shares of Common Stock could also make
attempts to acquire control of the Company more difficult. For example, issuance
of shares of Common Stock could dilute the ownership interest and voting power
of stockholders of the Company who are seeking control. Although the Board has
no pre-
24
<PAGE> 29
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- --------------------------------------------------------------------------------
sent intent to do so, shares of Common Stock could be issued in a private
placement to one or more persons or organizations sympathetic to management in
opposing a takeover bid that the Board has deemed not be in the best interest of
the Company and its stockholders, or in other circumstances that could make more
difficult, and thereby discourage, attempts to acquire control of the Company.
To the extent that it impedes any such attempts, Proposal 2 may serve to
perpetuate the tenure of management. It should be noted, however, that although
Proposal 2 would increase the number of shares of Common Stock available for
issuance, the Board currently has authority to take such actions and such
authority itself would not be increased by Proposal 2. The Company has no
knowledge that anyone is considering a takeover of the Company.
The stockholders of the Company have previously approved certain measures
designed to lessen the likelihood of a successful hostile takeover or change in
control of the Company and to encourage fair treatment of all stockholders in
the event of a takeover. These provisions include (i) the authorization of 10
million shares of Preferred Stock, 3 million of which have been previously
designated and 7 million of which may be designated on such terms as may be
fixed by the Board of Directors without further action by stockholders, (ii) a
classified Board of Directors with three classes of directors serving staggered
three-year terms, which prevents the entire Board of Directors from being
replaced at a single Annual Meeting of Stockholders, (iii) a provision stating
that Directors may be removed only for cause and only upon the affirmative vote
of the holders of 75% of the outstanding voting stock of the Company, (iv) a
provision requiring the affirmative vote of the holders of 80% of the
outstanding voting stock of the Company to approve certain business transactions
(such as mergers or sales of assets) involving an entity which beneficially owns
10% or more of the outstanding voting stock of the Company, (v) a provision
requiring the affirmative vote of the holders of 75% of the outstanding voting
stock of the Company to amend the Certificate to change the number or classes of
Directors, (vi) a provision stating that special meetings of stockholders may be
called only by the Chairman, Vice Chairman, President or a majority of the Board
of Directors and (vii) provisions requiring advance notice of stockholder
nominations of candidates for election to the Board of Directors and of other
stockholder proposals.
In addition, on December 2, 1996, the Company adopted a Stockholder Rights Plan
Agreement (the "Rights Plan"). Under the terms of the Rights Plan, all
stockholders of record on the close of business on March 21, 1997, received, for
each share owned, a preferred stock purchase right (each a "Right" and,
collectively, the "Rights") entitling the holder thereof to purchase one
one-hundredth of a share of Series A Junior Participating Preferred Stock at an
exercise price of $160 per share. The Rights are not exercisable until the
earlier of (i) the tenth business day following the public announcement that any
person has acquired, or has obtained the right to acquire, 15% or more of the
outstanding voting stock of the Company or (ii) the tenth business day following
commencement of a tender offer or exchange offer by any person for 15% or more
of the outstanding voting stock of the Company, or on such later date as the
Board of Directors may designate.
The Rights Plan provides that if any person or group becomes the beneficial
owner of more than 15% of the outstanding Common Stock of the Company, each
holder of a Right will generally be entitled to purchase at the exercise price a
number of shares of the Company's Common Stock having a market value of twice
the exercise price. The Rights Plan further provides that if, at any time after
the Rights become exercisable, the Company is acquired in a business combination
transaction by a person or group which is the holder of more than 15% of the
outstanding Common Stock of the Company prior to such transaction, and the
Company is not the surviving corporation, or more than 50% of the Company's
assets or earning power is transferred or sold, each holder of a Right will
generally be entitled to purchase shares of the acquiring Company's common stock
having a market value of twice the exercise price.
25
<PAGE> 30
- --------------------------------------------------------------------------------
Generally, at any time until ten days following the date that any group or
person becomes the holder of 15% or more of the outstanding Common Stock of the
Company, the Rights may be redeemed in whole, but not in part, at a price of
$.001 per share. The Rights Plan is designed to protect the value of the
stockholders' investment in the Company, while not preventing the consummation
of a transaction in which all stockholders receive a fair price for their stock
and which is otherwise in the best interests of the Company.
In order to secure plan benefits under each of the deferred compensation plans
adopted for management and highly compensated employees as well as under the
Makeup Plan (collectively, the "Plans"), three trusts have been established into
which the Company has contributed a combination of cash, real estate and other
property to provide for the payment of benefits under the Plans in the event of
a change in control of the Company. These trusts may have the effect of
deterring persons seeking to acquire control of the Company.
Each of the Company's stock option plans (except the option plan for the
non-employee directors) provide that the options granted pursuant to such plans
will become immediately exercisable upon the occurrence of certain events
involving a change of control of the Company, as enumerated in the plans. These
provisions may also have the effect of deterring an attempt to acquire control
of the Company.
The Board of Directors is not presently considering other measures that it
believes would have an anti-takeover effect.
The affirmative vote of holders of a majority of the Company's issued and
outstanding shares entitled to vote at the meeting is required to approve
Proposal 2.
IN VIEW OF ALL OF THE ABOVE CONSIDERATIONS, THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE FOR PROPOSAL 2.
- --------------------------------------------------------------------------------
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL 3)
- --------------------------------------------------------------------------------
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 28, 1999, and is requesting ratification by the stockholders for
such reappointment. Deloitte & Touche LLP has audited the financial statements
of the Company for each fiscal year since 1967.
In the event this proposal is defeated, the adverse vote will be considered as a
direction to the Board of Directors to select other auditors for the next fiscal
year. However, because of the difficulty and expense of making any substitution
of auditors after the beginning of a fiscal year, it is contemplated that the
appointment for the 1998 fiscal year will be permitted to stand unless the Board
of Directors finds other reasons for making a change.
Services to be performed by Deloitte & Touche LLP for the 1998 fiscal year will
include, among other things, audit of annual financial statements, limited
review 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.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 3.
26
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STOCKHOLDER PROPOSAL
(PROPOSAL 4)
- --------------------------------------------------------------------------------
Gerald R. Armstrong, the holder of 1,914 shares of the Company's Common Stock,
whose address is 910 Fifteenth Street, No. 754, Denver, Colorado 80202-2924, has
notified the Company that he intends to present the following resolution at the
Annual Meeting. 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 the shareholders of ALBERTSON'S, INC., assembled in person and by
proxy in an annual meeting, request that the Board of Directors take those steps
necessary to cause annual elections for all directors by providing that at
future elections in annual meeting, all directors be elected annually and not by
classes as is now provided and that on the expiration of the present terms their
subsequent elections shall also be on an annual basis.
STOCKHOLDER SUPPORTING STATEMENT:
For many of Albertson's most profitable years, one year terms were in place in
the election of Directors when performance warranted re-election without the
fears expressed by current management.
It is noteworthy that shareholders of Chase Manhattan received one year terms
for their directors upon merging with Chemical Bank.
Recently, Ameritech, Time-Warner, Lockheed Martin, Campbell Soups, Atlantic
Richfield, Pacific Enterprises, Westinghouse, and other corporations have
replaced three year terms with the annual election of all directors.
Occidental Petroleum Corporation stated in its 1997 proxy statement in support
of replacing three year terms with one year terms for its directors:
"the current Board of Directors . . . does recognize that under current views of
corporate governance a classified board is believed to offer less protection
against unfriendly takeover attempts than previously assumed while frustrating
stockholders in their exercise of oversight of the board. The Board of Directors
believes that the best interests of the stockholders are not currently served by
maintaining a classified board . . . ."
These actions have increased shareholder voting rights by 300% -- and, at no
cost to the shareholders.
The proponent believes the current system produces only a facade of continuity
which should be displaced; and accountability and performance be substituted as
the basis for re-election to our board of directors.
At ALBERTSON'S, this procedure will allow shareholders an opportunity to
register annually their reviews of the performance of the board collectively and
of each director, individually. Concern that annual elections of all directors
would leave ALBERTSON'S without experienced directors is unfounded.
If you agree, please vote FOR this proposal. If your proxy card is unmarked on
this issue, your shares will be automatically voted "against" this proposal.
27
<PAGE> 32
- --------------------------------------------------------------------------------
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
- --------------------------------------------------------------------------------
Your Board of Directors recommends a vote AGAINST Proposal 4 for the following
reasons:
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 from 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 vote of 77% of the
outstanding shares.
Our stockholders have consistently rejected a similar proposal for the past four
years. While a stockholder has 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 reasons relied on by the Company in
prior years remain persuasive and that the proposal should continue to be
defeated by the stockholders.
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 4.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- --------------------------------------------------------------------------------
As required by Securities and Exchange Commission rules under Section 16 of the
Securities Exchange Act of 1934, as amended, the Company notes that, due to
clerical error, the option exercise of 1,600 shares by Dennis C. Lucas, Senior
Vice President and Regional Manager, on October 6, 1997 was not reported in a
timely manner.
- --------------------------------------------------------------------------------
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 1999 Annual Meeting must be received by the
Company no later than December 18, 1998 in order that they may be included in
the Proxy Statement and proxy card for that meeting.
28
<PAGE> 33
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EXHIBIT A
PROPOSED AMENDMENT TO ARTICLE FOURTH OF THE RESTATED CERTIFICATE OF
INCORPORATION OF ALBERTSON'S, INC.
- --------------------------------------------------------------------------------
(Underscored to show changes that would be made by proposed amendment)
FOURTH: The aggregate number of shares of stock of all classes which this
Corporation has authority to issue is one billion two hundred and ten million
(1,210,000,000) of which one billion two hundred million (1,200,000,000) shares
shall be Common Stock with a par value of one dollar ($1.00) per share, and ten
million (10,000,000) shares shall be Preferred Stock with a par value of one
dollar ($1.00) per share.
A-1
<PAGE> 34
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ALBERTSON'S INC.
The undersigned hereby appoints Gary G. Michael, John B. Carley and Richard L.
King, 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. (the "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 (i)
the election of director nominees; (ii) the proposal to amend the Company's
Restated Certificate of Incorporation to increase the Company's authorized
Common Stock, and (iii) the ratification of the appointment of the independent
auditors and will vote AGAINST proposal 4 at the Annual Meeting of Stockholders
of the Company to be held on Friday, May 22, 1998, and at any and all
adjournments thereof.
(PLEASE DATE AND SIGN ON REVERSE SIDE)
ANNUAL MEETING OF STOCKHOLDERS
FRIDAY, MAY 22, 1998
10:00 A.M.
BOISE CENTRE ON THE GROVE
850 FRONT STREET
BOISE, IDAHO
<PAGE> 35
PLEASE MARK
YOUR VOTE
LIKE THIS [X]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
<TABLE>
<S> <C> <C>
WITHHOLD
AUTHORITY
FOR to vote for
all nominees nominees
1. ELECTION OF FIVE DIRECTORS TO CLASS III, [ ] [ ]
NOMINEES: Cecil D. Andrus; John B. Fury,
Richard L. King, J.B. Scott,
Will M. Storey
</TABLE>
To withhold authority for any individual nominee, check the "FOR" all nominee
box above and write that nominee's name on the line below:
- -----------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
2. APPROVAL OF PROPOSAL TO AMEND ARTICLE FOURTH FOR AGAINST ABSTAIN
OF THE COMPANY'S RESTATED CERTIFICATE OF [ ] [ ] [ ]
INCORPORATION TO INCREASE THE COMPANY'S
AUTHORIZED COMMON STOCK FROM 600 MILLION TO
1.2 BILLION SHARES
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT FOR AGAINST ABSTAIN
AUDITORS. [ ] [ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
PROPOSAL 4. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. STOCKHOLDER PROPOSAL TO RECLASSIFY THE BOARD
OF DIRECTORS
</TABLE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
AND WILL BE VOTED AS DIRECTED THEREIN. IF NO DIRECTOR IS
GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3 AND
AGAINST PROPOSAL 4.
Signature(s) Dated: , 1998
------------------------------------------ -------------
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
official. 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
