SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
FLEMING COMPANIES, INC.
(Name of Registrant as Specified in its Charter)
FLEMING COMPANIES, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction
applies: N/A
2) Aggregate number of securities to which transaction
applies: N/A
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11[1]:
N/A
4) Proposed maximum aggregate value of transaction:
N/A
[1] Set forth the amount on which the filing fee is
calculated and state how it was determined.
[ ] 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:
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N/A
4) Date Filed:
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<PAGE>
FLEMING COMPANIES, INC.
6301 Waterford Boulevard
P.O. Box 26647
Oklahoma City, OK 73126-0647
NOTICE OF ANNUAL MEETING
Dear Shareholder:
You are cordially invited to attend the annual meeting of
shareholders of Fleming Companies, Inc. on Wednesday, May 3, 1995,
at 10:00 a.m. at the National Cowboy Hall of Fame, 1700 N.E. 63rd
Street, Oklahoma City. The meeting is being held for the following
purposes:
1. To elect one director for a term expiring in 1997
and three directors for terms expiring in 1998.
2. To consider and act upon a proposal to approve the
Economic Value Added Incentive Bonus Plan for
Fleming Companies, Inc. and Its Subsidiaries, a
copy of which is attached to the accompanying Proxy
Statement as Exhibit "A".
3. To ratify the appointment of Deloitte & Touche LLP
as independent auditors for 1995.
4. To transact other business as may properly come
before the meeting or any adjournment.
The accompanying proxy statement contains complete
details on the proposals and other matters. Shareholders of record
as of March 6, 1995, are entitled to notice of, and to vote at, the
meeting. The company's annual report, including financial
statements for the year ended December 31, 1994, is also enclosed.
We hope you can be with us for this year's meeting. Your
participation in the affairs of the company is important,
regardless of the number of shares you hold. To ensure your
representation at the meeting whether or not you are able to be
present, please complete and return the enclosed proxy card as soon
as possible.
By Order of the Board of Directors
David R. Almond
Senior Vice President
General Counsel and Secretary
Oklahoma City, March 17, 1995
<PAGE>
PROXY STATEMENT
This proxy statement, which is being mailed to
shareholders on or about March 17, 1995, is furnished in connection
with the solicitation of proxies by the board of directors for use
at the annual meeting of shareholders on May 3, 1995, including any
adjournments.
The annual meeting is called for the purposes stated in
the accompanying notice. All holders of the company's $2.50 par
value common stock as of March 6, 1995, are entitled to vote. As
of that date, 37,429,250 shares were outstanding. On each matter
coming before the meeting, a shareholder is entitled to one vote
for each share of stock held as of the record date.
If a proxy is properly signed and is not revoked by the
shareholder, the shares it represents will be voted according to
the instructions of the shareholder. If no specific instructions
are given, the shares will be voted as recommended by the board of
directors.
A shareholder may revoke his or her proxy any time before
it is voted at the meeting. Any shareholder who attends the meeting
and wishes to vote in person may revoke his or her proxy then.
Otherwise, a shareholder must advise the senior vice president -
general counsel and secretary in writing of revocation of his or
her proxy.
The company will bear the cost of solicitation of
proxies. Solicitations will be made primarily by mail, but certain
officers or associates of the company may solicit proxies by
telephone without additional compensation.
Election of Directors
The company's certificate of incorporation provides that
members of the board of directors will be divided into three
classes with staggered three-year terms. The certificate requires
that at each annual meeting, successors to directors whose terms
expire at that meeting will be elected for three-year terms. At
its August 1994 meeting, the board of directors decreased the
number of directors from 11 to 10 and at its March 1995 meeting, it
reapportioned the board into three classes of three, four and three
directors with terms expiring in 1995, 1996 and 1997.
The board of directors has nominated three persons for
election as directors to serve for three-year terms expiring in
1998 and has nominated one person for a two-year term expiring in
1997 or until their successors are elected and qualified. All
nominees are currently serving as directors and have consented to
serve for the new terms. The board of directors unanimously
recommends a vote FOR the election of each nominee.
The persons named on the accompanying proxy card intend
to vote in favor of the four nominees listed below. Should any one
or more of these nominees become unavailable for election, the
proxy will be voted for substitute nominees.
The election of directors requires a plurality of the
votes cast at the meeting. If all nominees are elected, the board
will be comprised of 10 members, of which nine are nonmanagement
directors and one is an officer of the company.
The office of the corporate secretary tabulates all votes
received before the date of the annual meeting. The company
appoints two inspectors of election to receive the tabulation,
tabulate all other votes and certify the results of all matters
voted upon. Neither the corporate law of the State of Oklahoma,
the state in which the company is incorporated, nor the company's
certificate of incorporation or bylaws has any specific provisions
regarding the treatment of abstentions and broker non-votes. It is
the company's policy to count abstentions and broker non-votes for
purposes of determining the presence of a quorum at the meeting.
The company's bylaws provide that the ratification of the
appointment of auditors requires approval by the holders of a
majority of the stock having voting power present at the meeting.
Therefore, an abstention or broker non-vote will have no effect on
the outcome of the election of directors and will have the same
effect as a vote against the ratification of the appointment of the
auditors.
Nominee for Director Term Expiring in 1997
Nominee (age), year first became a director
GUY A. OSBORN (59), 1992
Chairman and chief executive officer of Universal Foods
Corp. He joined that company in 1971, became president in 1984 and
chairman in 1990. He serves on the boards of Firstar Corp. (a bank
holding company), Firstar Bank of Milwaukee, Wisconsin Gas Co.,
WICOR, Inc. (a utility holding company), Milwaukee Metropolitan
Association of Commerce, Boys and Girls Club of Greater Milwaukee,
Greater Milwaukee Committee and Alverno College and is a trustee of
Northwestern Mutual Life Insurance Company.
Member of the compensation and organization committee and
the nominating committee.
Nominees for Director Terms Expiring in 1998
ROBERT E. STAUTH (50), 1993
Chairman, president and chief executive officer. Mr.
Stauth has been associated with Fleming for a total of 21 years.
He first joined the company in 1966, and after leaving for a brief
time to serve in senior management positions at two retail chains,
he rejoined the company in 1977. In 1987, Mr. Stauth was elected
vice president, serving at the Phoenix division. In 1991, he was
promoted to senior vice president - Western Region, and in 1992 was
named executive vice president - division operations. In April
1993, Mr. Stauth was named president and chief operating officer.
He was elected to the board the following June. In October of the
same year, Mr. Stauth became the chief executive officer and
assumed the role of chairman at the 1994 shareholders' meeting. He
serves as a member of the board of directors of IGA, Inc., the
National American Wholesale Grocers Association (NAWGA), for which
he serves on the government relations and nominating committees,
the Oklahoma State Chamber of Commerce, and the Oklahoma Business
Roundtable. He also serves on the executive steering committee on
ECR and the industry relations committee for the Food Marketing
Institute (FMI). Additionally, he serves on the Advisory Boards of
the University of Oklahoma's College of Business Administration and
Kansas State University.
ARCHIE R. DYKES (64), 1981
Chairman and chief executive officer of Capital City
Holdings, Inc. (a venture capital organization). He is a director
of Whitman Corp., Bradford Capital Partners, the Employment
Corporation and Pet Inc. A former chancellor of the University of
Kansas and of the University of Tennessee, Mr. Dykes also serves as
a trustee of the Kansas University Endowment Association and of the
William Allen White Foundation.
Chairman of the audit and finance committee and member of
the nominating committee.
JOHN A. McMILLAN (63), 1992
Co-chairman of the board of Nordstrom, Inc. (specialty
store chain). Mr. McMillan has been associated with Nordstrom for
over 35 years, and has served as a member of the office of chief
executive officer since 1971. He was named co-chairman of the
board in 1991. He is a member of the board of directors of the
Fred Hutchinson Cancer Center and of the board of trustees of
Seattle University. He also serves on the board of the Seattle
YMCA.
Member of the compensation and organization committee and
the nominating committee.
Directors Whose Terms Expire in 1996
JAMES G. HARLOW, JR. (60), 1977
Chairman, president and chief executive officer of
Oklahoma Gas & Electric Co. Mr. Harlow has been associated with
this electric utility company since 1961 and has served as chairman
since 1982. Mr. Harlow is a director of Massachusetts Mutual Life
Insurance Co. and AEGIS Insurance Services, Inc. He was chairman
of Edison Electric Institute in 1991. He is chairman of the board
of trustees of the University of Oklahoma Foundation and is a
trustee of Oklahoma City University.
Chairman of the compensation and organization committee
and member of the nominating committee.
EDWARD C. JOULLIAN III (65), 1984
Chairman and chief executive officer of Mustang Fuel
Corp. (energy development and services) since 1976. Mr. Joullian
is a director of The LTV Corp. and American Fidelity Co. He is
also chairman of the World Scout Foundation, vice president of
Joullian Vineyards, Ltd. and trustee of the Colonial Williamsburg
Foundation.
Member of the audit and finance committee and the
nominating committee.
HOWARD H. LEACH (64), 1974
President of Leach McMicking & Co. (private investment
banking firm) and Leach Capital Corporation, chairman of Hunter Fan
Company (manufacturer of ceiling fans) and two California agri-
business corporations. He is chairman of the Board of Regents of
the University of California and chairman of Foley Timber Company,
Inc., a timber management company. He is also a director of Frye
Copysystems, Inc.
Chairman of the nominating committee and member of the
compensation and organization committee.
DEAN WERRIES (65), 1979
Mr. Werries has been associated with Fleming for 39
years. He was named president and chief operating officer in 1981,
chief executive officer in 1988 and chairman of the board in 1989.
Mr. Werries relinquished the position of president to John E. Moll
in 1989 but reassumed this position upon Mr. Moll's retirement in
1992. Mr. Werries retired as president and chief executive officer
in 1993 and retired as chairman in 1994. Mr. Werries is past
chairman and a director of the Food Marketing Institute. He is a
director of Sonic Industries, Inc. and Carr-Gottstein Foods Co. He
is a trustee of the Food Industry Crusade Against Hunger, the
Oklahoma School of Science and Mathematics and a member of the
board of governors of Oklahoma Christian University of Science and
Arts. In February 1995, Mr. Werries was appointed Secretary of
Commerce for the State of Oklahoma by Governor Frank Keating.
Member of the audit and finance committee and the
nominating committee.
Directors Whose Terms Expire in 1997
CAROL B. HALLETT (57), 1993
Senior government relations advisor with Collier,
Shannon, Rill & Scott, Washington, D.C. Prior to joining Collier,
Shannon, Rill & Scott in February 1993, Mrs. Hallett served as the
Commissioner of the United States Customs Service from November
1989 through January 1993. From September 1986 to May 1989, she
served as the U.S. Ambassador to The Commonwealth of the Bahamas.
From July 1983 to August 1986, Mrs. Hallett served as the national
vice chairman and field director of Citizens for America. Mrs.
Hallett also served three terms in the California legislature and
as minority leader in the State Assembly. Mrs. Hallett is a
director of Litton Industries, Inc., Radix Group International, and
the American Association of Exporters and Importers (AAEI). She is
a trustee for the Junior Statesmen of America and the United States
Naval Institute. Mrs. Hallett also serves on the President's
Cabinet of California Polytechnic State University.
Member of the audit and finance committee and nominating
committee.
LAWRENCE M. JONES (63), 1972
Retired chairman of the board of directors and chief
executive officer, The Coleman Co., Inc. (manufacturer of outdoor
recreational products and associated equipment). Prior to
rejoining Coleman in 1989, Mr. Jones served for 18 months as
Fleming's vice chairman and chief financial officer. Before that,
he was president of Coleman from 1976 to 1985, and chairman of the
executive committee from 1985 to 1987. Mr. Jones continues to
serve on the board of The Coleman Co., Inc. and is a director of
Fourth Financial Corp. and Union Pacific Corp.
Member of the audit and finance committee and the
nominating committee.
The Board of Directors
Meetings of Directors. During the past year, the board
of directors had five regular and three special meetings, which
included two telephone meetings. Each director attended 75% or
more of the meetings of the board and of committees of which he or
she was a member except for Mr. Osborn who attended five of the
eight board meetings and was unable to attend the May and August
meetings of the compensation and organization committee.
Compensation of Directors. The company pays an annual
retainer of $20,000 to nonmanagement directors, plus a fee of
$1,000 for each board and committee meeting attended and an
additional $250 for each committee meeting chaired. Such amounts
together with the value of the stock equivalent units described
below yield actual annual compensation of approximately $40,000 for
each director. Directors are not compensated for participation in
telephone meetings of the board of directors or of its committees.
In 1992, the company established the Directors' Stock Equivalent
Plan under which nonmanagement members of the board may be awarded
stock equivalent units within certain limits set forth in the plan.
These units represent the right to receive cash equal to the value
of shares of common stock when the director ceases to serve,
according to the terms of the grant. Upon payment of the stock
equivalent units, the company will also pay cash to the participant
in an amount equal to dividends or distributions which he or she
would have received if the stock equivalent units had been awarded
as shares of common stock rather than stock equivalent units. In
February 1994, each nonmanagement director was awarded 536 stock
equivalent units having a value at that time of $25.13 per unit;
however, the board determined not to make any such awards for 1995.
Upon his retirement as chairman in 1994, Dean Werries
entered into a three year consulting agreement with the company for
$200,000 per year plus reimbursement of reasonable business, travel
and other expenses in consideration of his agreeing to provide
advisory and consulting services to the company. In addition, Mr.
Werries also receives retirement benefits pursuant to the company's
defined benefit plan (the "Pension Plan") and Supplemental
Retirement Plan (the "SRP"). See "Pension Plan."
Committees of the Board
The board of directors has three standing committees.
The principal responsibilities of each are as follows.
Audit and Finance Committee. The committee focuses
primarily on ethical and regulatory matters and on the
effectiveness of the company's accounting policies and practices,
financial reporting and internal controls, and the internal audit
function. The committee oversees company policies and programs
with respect to ethical standards and regulatory compliance. It
annually reviews the selection of independent auditors and, after
consultation with management, recommends the appointment of
independent auditors for board approval and shareholder
ratification. It reviews and discusses the scope of the annual
audit with management and the independent auditors and may request
additional review and audit procedures. The committee reviews and
discusses the annual report of the auditors and the auditors'
observations and suggestions regarding accounting and control
policies, procedures and organization, and their adequacy. The
committee makes recommendations, as appropriate, to management
based on the auditors' suggestions. The committee reports its
findings to the board at least annually. The committee met twice
during 1994.
Compensation and Organization Committee. The committee
oversees the company's compensation and benefit policies and
programs. The committee reviews the objectives, structure, cost
and administration of major compensation and benefit policies and
programs. It annually reviews officers' salaries, stock options,
and other management incentives, and administers the company's
stock option and management incentive plans. The stated policy of
the committee is to motivate the company's executive officers and
other associates to enhance the company's financial performance by
focusing on specific business objectives. It also makes
recommendations regarding the selection of the chief executive
officer. The committee met three times during 1994.
Nominating Committee. The committee develops and
recommends to the board guidelines and criteria for selecting
persons to serve as directors. It recommends nominees for election
at the annual meeting and candidates to fill board vacancies. The
committee considers and makes recommendations regarding the
composition of the board. The committee met once during 1994.
The committee will consider nominees recommended by
shareholders if such nomination is made pursuant to timely notice
in writing in strict accordance with the company's bylaws. A
shareholder desiring to make a nomination should contact the senior
vice president - general counsel and secretary to obtain a copy of
the bylaws.
Security Ownership of Management
The total number of shares of common stock beneficially
owned as of January 16, 1995 by each of the present directors,
nominees, the chief executive officer and each of the other five
most highly compensated executive officers, and all of the
directors and executive officers as a group, are as follows:
<TABLE>
<CAPTION>
Amount and Nature
Name of Beneficial Owner Beneficially Owned<F1>
<S> <C>
Robert E. Stauth . . . . . . . . . . . . 57,929 <F2>
Archie R. Dykes. . . . . . . . . . . . . 4,001 <F3>
Carol B. Hallett . . . . . . . . . . . . 395
James G. Harlow, Jr. . . . . . . . . . . 1,883 <F4>
Lawrence M. Jones. . . . . . . . . . . . 4,693
Edward C. Joullian III . . . . . . . . . 3,000 <F5>
Howard H. Leach. . . . . . . . . . . . . 12,200
John A. McMillan . . . . . . . . . . . . 3,000
Guy A. Osborn. . . . . . . . . . . . . . 1,000
Dean Werries . . . . . . . . . . . . . . 62,030 <F6>
Gerald G. Austin . . . . . . . . . . . . 57,244 <F7>
E. Stephen Davis . . . . . . . . . . . . 52,561 <F8>
Thomas L. Zaricki . . . . . . . . . . . 7,250 <F9>
Glenn E. Mealman . . . . . . . . . . . . 38,270 <F10>
James E. Stuard . . . . . . . . . . . . 46,103 <F11>
All directors and executive officers
as a group (25). . . . . . . . . . . . 477,938 <F12>
<FN>
<F1> Unless otherwise indicated, all shares are owned directly
by the named person and he or she has sole voting and
investment power with respect to such shares. The shares
represent less than 1% for each person listed, and
approximately 1.28% for all directors and executive
officers as a group, of the total shares outstanding.
<F2> Consists of 7,229 shares owned directly by Mr. Stauth for
which he has sole voting and investment power, 26,700
shares under options presently exercisable and 24,000
shares awarded under the 1990 Stock Incentive Plan,
subject to forfeiture, for which he has sole voting
power.
<F3> Consists of 3,416 shares owned directly by Mr. Dykes for
which he has sole voting and investment power, and 585
shares owned jointly by Mr. Dykes and his wife with whom
he shares voting and investment power.
<F4> Consists of 1,539 shares owned directly by Mr. Harlow for
which he has sole voting and investment power, and 344
shares owned jointly with his wife with whom he shares
voting and investment power.
<F5> Owned by a limited partnership in which Mr. Joullian is
a general partner and for which he shares voting and
investment power with the remaining general partners.
<F6> Consists of 42,658 shares owned directly by Mr. Werries,
and 19,372 shares owned by a partnership in which Mr.
Werries is the general partner, for all of which he has
sole voting and investment power.
<F7> Consists of 12,250 shares owned directly by Mr. Austin
for which he has sole voting and investment power, 29,500
shares under options presently exercisable, 6,894 shares
owned jointly by Mr. Austin and his wife with whom he
shares voting and investment power, 600 shares owned by
his wife and 8,000 shares awarded under the 1990 Stock
Incentive Plan, subject to forfeiture, for which he has
sole voting power.
<F8> Consists of 7,061 shares owned directly by Mr. Davis for
which he has sole voting and investment power, 29,500
shares under the options presently exercisable, 8,000
shares owned jointly by Mr. Davis and his wife with whom
he shares voting and investment power and 8,000 shares
awarded under the 1990 Stock Incentive Plan, subject to
forfeiture, for which he has sole voting power.
<F9> Consists of 1,000 shares owned directly by Mr. Zaricki
for which he has sole voting and investment power, 2,250
shares under options presently exercisable and 4,000
shares awarded under the 1990 Stock Incentive Plan,
subject to forfeiture, for which he has sole voting
power.
<F10> Consists of 5,068 shares owned directly by Mr. Mealman
for which he has sole voting and investment power, 24,200
shares under options presently exercisable, 4,202 shares
owned jointly by Mr. Mealman and his wife with whom he
shares voting and investment power and 4,800 shares
awarded under the 1990 Stock Incentive Plan, subject to
forfeiture, for which he has sole voting power.
<F11> Consists of 6,203 shares owned directly by Mr. Stuard for
which he has sole voting and investment power, 28,100
shares under options presently exercisable, 7,000 shares
owned jointly by Mr. Stuard and his wife with whom he
shares voting and investment power and 4,800 shares
awarded under the 1990 Stock Incentive Plan, subject to
forfeiture, for which he has sole voting power.
<F12> Includes 115,865 shares for which directors and executive
officers have sole voting and investment power, 61,773
shares for which they share voting and investment power
with others, 198,700 shares under options presently
exercisable, and 101,600 shares awarded under the 1990
Stock Incentive Plan, subject to forfeiture, for which
they have sole voting power.
</FN>
</TABLE>
Security Ownership of Certain Beneficial Owners
The following table sets forth the name and address of
each known shareholder of the company who beneficially owns more
than 5% of the company's common stock, the number of shares
beneficially owned by each, and the percentage of outstanding stock
so owned according to information made available to the company as
of February 15, 1995.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percent
Name and Address Ownership of Class
<S> <C> <C>
FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109 . . . 4,101,534 <F1> 10.96%
Sanford C. Bernstein & Co., Inc.
767 Fifth Avenue
New York, New York 10153 . . . . . 3,414,676 <F2> 9.12%
INVESCO PLC
11 Devonshire Square
London EC2M 4YR
England . . . . . . . . . . . . . 2,394,150 <F3> 6.40%
<FN>
<F1> FMR Corp. has the sole power to vote 174,524 shares and
the sole power to dispose of all shares
<F2> Sanford C. Bernstein & Co., Inc. has sole power to vote
1,864,241 shares and to dispose of all shares.
<F3> INVESCO MIM PLC shares the power to vote and dispose of
all shares.
</FN>
</TABLE>
Summary Compensation Table
The following summary compensation table sets forth
the compensation information for the chief executive officer and
the four other most highly compensated executive officers and James
E. Stuard, the former executive vice president - division
operations of the company, who retired effective December 1, 1994
and who would have been one of the four most highly compensated
executive officers but for the fact that he was not an executive
officer of the company as of December 31, 1994, for services
rendered in all capacities during the fiscal years ended December
31, 1994, December 25, 1993 and December 26, 1992.
<TABLE>
Long Term
Compensation
Annual Compensation Awards
Restricted
Other Annual Stock All Other
Compensation Award(s) Options Compensation
Name and Principal Position Year Salary($) Bonus($) ($)<F1> ($)<F2> (#) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Robert E. Stauth 1994 501,328 311,531 288 598,500 90,000 ---
Chairman, President and Chief 1993 324,186 --- 174 --- --- ---
Executive Officer 1992 211,320 73,343 174 --- --- ---
Gerald G. Austin 1994 315,583 154,282 570 199,500 30,000 ---
Executive Vice President 1993 257,432 --- 570 --- --- ---
Operations 1992 240,938 35,041 288 --- --- ---
E. Stephen Davis 1994 242,135 118,013 288 199,500 30,000 ---
Executive Vice President 1993 212,751 --- 288 --- --- ---
Scrivner Group 1992 205,775 23,150 288 --- --- ---
Thomas L. Zaricki 1994 223,192 89,565 39,350 99,750 15,000 ---
Senior Vice President 1993 29,508 --- 19,278 --- --- ---
Retail Operations 1992 --- --- --- --- --- ---
Glenn E. Mealman 1994 235,465 87,597 1,002 119,700 18,000 ---
Executive Vice President 1993 226,745 54,489 570 --- --- ---
National Accounts 1992 222,535 31,101 570 --- --- ---
James E. Stuard 1994 277,741 120,089 1,002 119,700 18,000 50,000<F3>
Former Executive 1993 242,368 38,421 570 --- --- 50,000<F3>
Vice President 1992 237,799 68,023 570 --- --- ---
Division Operations
<FN>
<F1> The company provides term life insurance to all
associates generally, and there is no imputed income to
the associate with respect to the first $50,000 of
coverage except for highly compensated associates.
Accordingly, the company is required to impute income to
the named individuals with respect to the first $50,000
of coverage and reimburses them for its tax effect. The
amounts shown in this column reflect such tax
reimbursement amounts. The amounts opposite Mr.
Zaricki's name reflect the advancement of certain
relocation expenses.
<F2> The restricted stock awards reported in this column were
made pursuant to the company's 1990 Stock Incentive Plan.
The listed awards were made on February 16, 1994 and the
market price per share on the date of grant was $24.9375.
These restricted shares vest in twenty percent (20%)
increments over a ten-year period (the "Performance
Cycle") in the event the price of the company's common
stock reaches certain specified target prices. Unearned
restricted stock will be forfeited at the end of the
Performance Cycle. If and to the extent paid on the
company's common stock generally, dividends declared and
paid by the company on the shares of restricted stock are
accrued and not paid until the vesting requirements are
met. As of the last day of fiscal 1994, there were held
in escrow for Mr. Stauth 24,000 restricted shares with a
value of $558,000, Mr. Austin 8,000 restricted shares
with a value of $186,000, Mr. Davis 8,000 restricted
shares with a value of $186,000, Mr. Zaricki 4,000
restricted shares with a value of $93,000, Mr. Mealman
4,800 restricted shares with a value of $111,600 and Mr.
Stuard 4,800 restricted shares with a value of $111,600.
<F3> The $50,000 paid in each of 1993 and 1994 represent
payments under a consulting agreement. See "Termination
of Employment and Change of Control Arrangements - Other
Arrangements."
</FN>
</TABLE>
Report of the Compensation Committee
Executive Officers
The policy of the compensation and organization committee
(the "Committee"), implemented through the compensation programs
described below, is to motivate executive officers and other
associates to enhance the company's financial performance by
focusing attention on specific business objectives emphasizing
teamwork among associates and to reward such executive officers and
other associates based on corporate and individual performance.
Compensation for the company's executive officers is
generally comprised of base salary, bonus and awards of stock
options or restricted stock. Decisions with respect to
compensation, except for that of the chief executive officer (the
"CEO"), are made by the Committee, composed of four nonmanagement
directors, upon the recommendation of the CEO. The Committee
separately determines the CEO's compensation. The Committee's
decisions are submitted to the full board of directors for its
information and review only. Earnings of the company and the
market value of its stock are considered subjectively by the
members of the Committee in setting the CEO's and other executive
officers' base salaries. Also, some bonus awards are based in part
on earnings performance. The CEO who is also a director
participates in the board's review of the Committee's decisions
regarding his compensation. Decisions about awards under certain
of the company's stock-based compensation plans are made solely by
the Committee in order for awards to comply with Securities and
Exchange Commission Rule 16b-3.
Salary. In determining salary for fiscal 1994, the
Committee relied on the company's salary administration program,
the objectives of which are to attract, retain and motivate
productive executive officers and other management associates. For
each job classification, the program requires a written job
description, an evaluation of the job with assigned points based on
the nature of the job, its functions and the level of the position,
and an assigned salary range based on the total point value.
Annual salaries are adjusted based on individual performance. In
addition, each member of the Committee reviews the earnings of the
company and the market value of the company's common stock for the
previous fiscal year-end, and, based on these factors, the
Committee makes a subjective determination of the nature and extent
of salary adjustments. The Committee generally sets salaries in
the high end of the assigned salary range. In order to measure
competitiveness, the Committee also considers salary surveys
comparing company jobs with similar jobs held by employees of
companies included in the company's peer group. See "Company
Performance." The company believes its executive salaries are
generally higher than executive salaries of companies in its peer
group with the exception of SUPERVALU, Inc.
Bonuses. Bonus awards are determined, within the
Committee's discretion, with reference to company and individual
performance measured against criteria established under the Fleming
Companies, Inc. Incentive Compensation Program ("FICP"). The
Committee establishes the company criteria annually in February or
March, which criteria may be adjusted based on internal and
external business factors. Pursuant to the FICP, the Committee
assigns a weight to each criterion, which, in conjunction with
targets for each criterion, guides the Committee's determination of
performance units earned by each executive officer. When the
executive officer's performance units equal a predetermined number,
he becomes eligible to receive a bonus. Bonuses under the FICP for
1994 for executive officers were based fifty percent on the
attainment by the company of targeted goals based on sales (20%)
and earnings (30%) of the company's core business operations (the
"Corporate Objectives"). The remaining fifty percent was tied to
the attainment of specified key business objectives (40%) and
specified personal objectives (10%) (collectively, the "Other
Objectives"). The Other Objectives are unique to each of the
executive officers and are designed to reflect specifically
expected achievements related to the company generally or the
division or by the corporate sub unit for which such executive
officer has primary responsibility as well as certain specified
personal goals.
Although the company failed to meet the earnings goal, it
exceeded the top target goal for the sales portion of the Corporate
Objectives such that each executive officer received the maximum
number of performance units associated with such objective. When
combined with the performance units earned in connection with their
achievement of the Other Objectives, each executive officer was
eligible for a bonus for 1994. However, since the achievement of
the sales portion of the Corporate Objectives was due in part to a
large acquisition by the company which was completed in August
1994, the Committee utilized its discretion under the FICP and
reduced bonus awards to executive officers by twenty-eight and one-
half percent (28.5%).
Bonuses for the executive officers and other corporate
officers of the company (currently totalling 25 in number) for 1995
and future years will be determined under the Economic Value Added
Incentive Bonus Plan if approved by the shareholders at this annual
meeting. Bonuses for all other eligible associates for 1995 will
be determined under the FICP. See "Economic Value Added Incentive
Bonus Plan."
Restricted Stock and Stock Options. As described in
footnote two to the Summary Compensation Table above, pursuant to
the 1990 Stock Incentive Plan, the Committee can award restricted
stock to executive officers and other key management associates
which vests upon the attainment of targeted profit and/or other
performance criteria. The Committee believes that restricted stock
awards build stock ownership and provide a long-term focus since
the stock is restricted from being sold, transferred, or assigned
until vested, and is forfeitable. Awards granted in 1990 and 1991
representing 56,467 shares of restricted stock, of which 5,860
shares were held by Mr. Stauth, 6,255 shares by Mr. Austin, 5,177
shares by Mr. Davis, 5,608 shares by Mr. Mealman, and 6,183 by Mr.
Stuard, were forfeited as of December 31, 1994, the end of the
performance cycle, because the targeted profit and performance
criteria were not attained as to those shares. In February 1994,
the Committee awarded a total of 101,600 shares of restricted stock
to its executive officers, the vesting of which is tied to targeted
increases in the price of the company's common stock. The named
executive officers each were awarded shares of restricted stock.
See "Summary Compensation Table." The Committee's decisions as to
the number of shares awarded to each executive officer were based
on the nature of the executive's position and the level of
responsibility associated with such position.
Pursuant to the company's 1990 Stock Option Plan, at
March 1, 1995 there were 94,050 options available for grant to
executive officers and other key management associates. In
February 1994, the Committee granted a total of 384,000 options to
its executive officers of which 256,000 were performance options,
the exercisability of which is tied to targeted increases in the
price of the company's common stock. The named executive officers
each received stock options and performance related stock options.
See "Stock Option Information - Option Grants." The Committee's
decision as to the number of options granted to each executive
officer was based on the nature of the executive's position and the
level of responsibility associated with such position.
Chief Executive Officer
The salary for the CEO was determined by the Committee in
accordance with the policies set forth above for all executive
officers. In order to reflect his leadership, responsibilities and
vision with respect to the company, the CEO received a 17 percent
merit increase in February 1994. In August 1994, he received an
additional seven percent salary increase based on the closing of an
acquisition which increased the size of the company by one-third.
The bonus for the CEO was based on the attainment by the
company of the sales portion of the Corporate Objectives and the
attainment by the CEO of the Other Objectives with the same
weighing as set forth above for all executive officers. In the
case of the CEO, his Other Objectives were comprised of (i) 15 key
business objectives relating to, among other things, the
reengineering of the company, the development of the Economic Value
Added Incentive Bonus Plan (see "Economic Value Added Incentive
Bonus Plan"), implementation of a new flexible marketing plan and
the development of a strategy for long-term growth of shareholder
value and (ii) five personal objectives relating to, among other
things, communications with associates and communications with
shareholders and others. The bonus award for the CEO was
determined by the Committee in accordance with the FICP and the
achievement by the company of the top target goal for the sales
portion of the Corporate Objectives and attainment by the CEO of 18
out of 20 of his Other Objectives. However, as with the other
executive officers, the CEO's bonus was reduced by twenty-eight and
one-half percent (28.5%) in view of the fact that the achievement
of the sales portion of the Corporate Objectives was due in part to
the closing of a large acquisition.
The CEO was also awarded 24,000 shares of restricted
stock, valued at the date of grant at $598,500 and a total of
90,000 stock options, 60,000 of which are performance related
options. The number of shares of restricted stock awarded and the
number and type of stock options granted to the CEO were based on
his position and level of responsibilities.
Deductibility of Executive Compensation
Although no executive officer's salary for fiscal 1994
exceeded the limitations on deductibility under Section 162(m) of
the Internal Revenue Code, as amended ("Section 162(m)"), the Board
of directors has adopted the following policy regarding Section
162(m):
Section 162(m) limits the deductibility of
certain compensation paid by the company to
certain of its executive officers. For fiscal
1994, Section 162(m) did not apply to any
compensation paid to an executive officer by
the company. However, it is possible that
future circumstances may warrant compensation
payments which will not qualify as a tax
deductible expense. It shall be the policy of
the Committee to compensate executive officers
based on performance, and the Committee
recognizes that flexibility with respect to
the payment of compensation must be insured in
order to maintain this policy. Accordingly,
although the Committee will to the extent
possible attempt to qualify all compensation
payments for deductibility under Section
162(m), circumstances may arise which require
it to authorize compensation which is not
deductible under Section 162(m).
James G. Harlow, Jr., Chairman John A. McMillan
Howard H. Leach Guy A. Osborn
COMPANY PERFORMANCE
The following graph shows a five-year comparison of
cumulative total returns for the company, the S&P 500 composite
index and an index of peer companies selected by the company with
the investment weighted based on market capitalization at the
beginning of each year.
<TABLE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG FLEMING, S&P 500 INDEX, & PEER INDEX
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Fleming Companies, Inc. 100 121 121 116 94 93
S&P 500 100 97 126 136 150 152
Peer Index 100 93 103 112 123 99
</TABLE>
The total cumulative return on investment (change in the
year-end stock price plus reinvested dividends) for each year for
the company, the peer group and the S&P 500 composite is based on
the stock price or composite index at the end of calendar 1989.
Companies in the peer group are as follows: Fleming
Companies, Inc., SUPERVALU, Inc., Nash Finch Co., Super Food
Services, Inc., Richfood Holdings, Inc., and Super Rite Corp. Due
to unavailable data, performance for Super Rite Corp. in the peer
index has been excluded for the years 1989 through 1991.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Company's Compensation and Organization Committee
consists of James G. Harlow, Jr., chairman, Howard H. Leach, John
A. McMillan and Guy A. Osborn.
Stock Option Information
Option Grants
The following table sets forth information concerning the
grant of stock options to the named executive officers during the
fiscal year ended December 31, 1994.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
% of
Total Options
Granted to
Number Employees
of Securities in Exercise Grant Date
Underlying Options Fiscal or Base Present
Name Granted(#)<F1><F2> Year Price($/Sh) Expiration Date Value $<F3>
<S> <C> <C> <C> <C> <C>
Robert E. Stauth 30,000 5.6 24.9375 2-15-04 141,720
60,000 6.1 24.9375 2-15-04 283,440
Gerald G. Austin 10,000 1.9 24.9375 2-15-04 47,240
20,000 2.0 24.9375 2-15-04 94,480
E. Stephen Davis 10,000 1.9 24.9375 2-15-04 47,240
20,000 2.0 24.9375 2-15-04 94,480
Thomas L. Zaricki 5,000 0.9 24.9375 2-15-04 23,620
10,000 1.0 24.9375 2-15-04 47,240
Glenn E. Mealman 6,000 1.1 24.9375 2-15-04 28,344
12,000 1.2 24.9375 2-15-04 56,688
James E. Stuard 6,000 1.1 24.9375 2-15-04 28,344
12,000 1.2 24.9375 2-15-04 56,688
<FN>
<F1> The listed options are a combination of (i) stock options
which are exercisable in four twenty-five percent (25%)
increments on the first through fourth anniversaries of
the date of grant ("Stock Options") and (ii) stock
options which are exercisable in ten percent (10%)
increments only if the price of the company's common
stock reaches certain specified target prices
("Performance Stock Options). The Stock Option
information appears on the first line opposite the
executive's name and the Performance Stock Option
information appears on the second line opposite the
executive's name.
<F2> The vesting of all listed options accelerates in the case
of a change of control of the company. See "Termination
of Employment and Change in Control Arrangements - Other
Arrangements."
<F3> Based on Black-Scholes option pricing model adapted for
use in valuing executive stock options. The estimated
values under the model are based on assumptions as to
variables such as risk free interest rate, stock price
volatility and future dividend yield as follows: the
options are assumed to be exercised at the end of the ten
year term; yield volatility of 19.00; annual dividend
yield of 5.1% and a risk free rate of return of 7.9%.
</TABLE>
Option Exercises
The following table sets forth information concerning
each exercise of stock options by the named executive officers
during the fiscal year ended December 31, 1994 with information
regarding the value as of the fiscal year-end of any unexercised
options.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Options at Options at
FY-End (#) FY-End ($)<F1>
Shares
Acquired Exercisable/ Exercisable/
Name On Exercise(#) Value Realized($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Robert E. Stauth - - 26,700/76,500 -
Gerald G. Austin - - 29,500/25,500 -
E. Stephen Davis - - 29,500/25,500 -
Thomas L. Zaricki - - 2,250/12,750 -
Glenn E. Mealman - - 24,200/15,300 -
James E. Stuard - - 28,100/15,300 -
<FN>
<F1> The values shown in this column are based on a market
price of the company's common stock at 1994 fiscal year-
end of $23.25 per share. None of the options held at the
end of the fiscal year was in-the-money.
</FN>
</TABLE>
Pension Plan
The following table illustrates estimated annual benefits
payable under the company's Pension Plan to the named executive
officers upon retirement, assuming retirement at age 65, including
amounts attributable to the company's SRP which provides benefits
that would otherwise be denied participants due to certain
limitations on qualified benefit plans in the Internal Revenue Code
of 1986, as amended (the "Code"):
<TABLE>
<CAPTION>
Pension Plan Table
Years of Service
Remuneration 10 15 20 25 30 35 40
<S> <C> <C> <C> <C> <C> <C> <C>
$250,000 $125,000 $137,500 $150,000 $162,500 $175,000 $187,500 $200,000
300,000 150,000 165,000 180,000 195,000 210,000 225,000 240,000
350,000 175,000 192,500 210,000 227,500 245,000 262,500 280,000
400,000 200,000 220,000 240,000 260,000 280,000 300,000 320,000
450,000 225,000 247,500 270,000 292,500 315,000 337,500 360,000
500,000 250,000 275,000 300,000 325,000 350,000 375,000 400,000
550,000 275,000 302,500 330,000 357,500 385,000 412,500 440,000
600,000 300,000 330,000 360,000 390,000 420,000 450,000 480,000
650,000 325,000 357,500 390,000 422,500 455,000 487,500 520,000
700,000 350,000 385,000 420,000 455,000 490,000 525,000 560,000
750,000 375,000 412,500 450,000 487,500 525,000 562,500 600,000
800,000 400,000 440,000 480,000 520,000 560,000 600,000 640,000
850,000 425,000 467,500 510,000 552,500 595,000 637,500 680,000
</TABLE>
The estimated number of years of credited service for
each of the named executive officers is as follows: Mr. Stauth,
18; Mr. Austin, 35; Mr. Davis, 34; Mr. Zaricki, 1; Mr. Mealman,
37, and Mr. Stuard, 30.
Benefit amounts payable under the Pension Plan are (i)
payable on a straight life basis computed as a percentage of final
average compensation (consisting of salaries, wages, commissions
and bonuses) for the five calendar plan years during the last ten
years of the associate's career for which such average is the
highest, (ii) subject to offset for Social Security and (iii)
limited by the Employee Retirement Income Security Act of 1974, as
amended, and by the Code. There is also an additional dollar
limitation on benefits which an associate may earn under all of the
company's qualified pension plans.
The SRP is a defined benefit supplementary plan which
provides retirement benefits for each of the named executive
officers with the exception of Mr. Zaricki and Mr. Stuard who are
not participants in the plan. Benefit amounts payable under the
SRP are intended to provide a minimum base retirement benefit and
are therefore offset by amounts payable from other retirement
plans, including the Pension Plan and Social Security payments.
The SRP benefit is based upon a percentage of the participant's
total highest annual compensation paid during the last three years
of employment. The percentage ranges from 50% to 80%. Retirement
payments commence upon retirement after age 65 (or with the consent
of the company, after age 55) or upon termination of an eligible
associate within three years after a change of control of the
company. See "Termination of Employment and Change in Control
Arrangements - SRP and Trust Agreement."
Termination of Employment and Change in Control Arrangements
Employment Agreements. On March 2, 1995, the company
entered into employment agreements with all of the named executives
with the exception of Mr. Stuard (See "-Other Arrangements"). The
provisions of the employment agreements are effective upon a
"change of control" of the company (as defined in the agreements)
and for a period of three years thereafter. Upon a change of
control, the executive is to receive an annual base salary equal to
the greater of (i) his base salary at the time of the change of
control and (ii) the highest average annual base salary paid to the
executive during any of the three out of the five fiscal years
immediately preceding the change of control which yield the highest
annual base salary. In addition, the executive will receive an
annual bonus equal to the highest annual bonus paid to the
executive during any of the five fiscal years immediately preceding
the change of control. The executive will also be entitled to all
of the benefits and to participate in all of the plans in effect
immediately preceding the change of control that are available to
other key management associates.
Pursuant to the terms of the employment agreements, in
the event following a change of control, or in anticipation of a
change of control, the executive is terminated for other than
"cause" (as such term is defined in the agreement), death or
disability or he terminates his employment for "good reason" (as
such term is defined in the agreement), then the executive is to
receive a lump sum cash payment comprised of the following amounts:
(i) his base salary through the date of termination at the annual
rate in effect on the date of termination or, if higher, at the
highest annual rate in effect at any time during the 36 month
period preceding the change of control date through the date of
termination (the "Highest Base Salary"); (ii) the prorated portion
of his prior year's annual bonus (the "Recent Bonus"); (iii) the
product obtained by multiplying 2.99 times the sum of the Highest
Base Salary and the Recent Bonus; and (iv) any amounts previously
deferred by the executive (plus any accrued interest thereon) and
any accrued vacation pay. In addition, for the remainder of the
employment period or such longer period as any plan or policy may
provide, the executive shall also be entitled to participate in all
plans and continue all benefits at least equal to those he would
have received had he not been terminated. Any such payments to be
received by the executive shall be "grossed up" to cover any excise
tax, interest or penalties imposed under the Internal Revenue Code
of 1986, as amended (the "Code"). The employment agreements also
provide for indemnification from the company to the executive and
for officers' and directors' insurance coverage for the executive
for a period of five years following the termination date. For a
period of 30 days following the first year after a change of
control, the executive can terminate his employment for any reason
and receive all the benefits of the agreement as if he had
terminated for good reason. Under the employment agreements,
assuming a change of control on December 31, 1994, and termination
of employment of the named executive for other than cause, death or
disability or by the executive for good reason, the company would
be required to pay the following amounts: Mr. Stauth, $3,013,913;
Mr. Austin, $1,674,603; Mr. Davis, $1,355,646; Mr. Zaricki,
$1,115,220; and Mr. Mealman, $1,145,234. Prior to entering into
the employment agreements, the foregoing officers, except for Mr.
Zaricki, had been parties to severance agreements with the company.
The employment agreements replaced the severance agreements.
SRP and Trust Agreement. The SRP provides for retirement
benefits to be paid to each of the named executive officers upon
retirement or in the event his employment is terminated for other
than "cause" (as such term is defined in the SRP), death or
disability or he terminates his employment for "good reason" (as
such term is defined in the SRP) within three years after a change
in control of the company or in anticipation of a change of control
of the company. Assuming a change of control on December 31, 1994
and the termination of employment of the following persons within
three years after that, the company would be required under the SRP
to pay the following amounts annually for life to the following
named executives: Mr. Stauth, $213,163, Mr. Austin, $106,340, Mr.
Davis, $113,148, and Mr. Mealman, $88,829. Mr. Zaricki does not
currently participate in the SRP. Due to his retirement in
December 1994, this provision is no longer applicable to Mr.
Stuard.
The company has entered into a Supplemental Income Trust
(the "Trust"). The board of directors has empowered the Committee
in its sole discretion to fund the Trust as it deems appropriate
from time to time in order to satisfy the company's obligations to
associates with respect to the SRP and the employment agreements,
as well as severance agreements and employment agreements available
to certain associates who are not named executive officers,
including obligations arising following a change in control of the
company. The Trust assets relating to company contributions are
always subject to the claims of general creditors of the company.
No associate with any right to or interest in any benefit or future
payments under the Trust will have any right to or security
interest in any specific asset of the Trust or any right to assign
any benefits or rights which he or she may expect to receive from
the Trust.
Other Arrangements. Pursuant to the provisions of the
company's 1990 Stock Incentive Plan, in the event of a "change of
control" of the company, the Committee, in its sole discretion, may
accelerate the vesting and payment of any award or may determine
that a payment instead of an award may be made. Under Phase III of
this plan, adopted in February 1994, which covers the named
executive officers, a participant is entitled to receive a cash
payment equal to his annual base salary if the event occurs in the
first year of the performance cycle, two-thirds of his annual base
salary if the event occurs in the second year of the performance
cycle and one-third of his annual base salary if the event occurs
in the third year of the performance cycle. In addition, the
participant shall receive a "gross up" payment to cover any
applicable excise tax, interest or penalties imposed under the
Code. Pursuant to the provisions of the company's 1990 Stock
Option Plan, in the event of a "change of control" of the company,
all options outstanding under the plan, with and without SARs, will
become automatically fully vested and immediately exercisable with
such acceleration to occur without requirement of any further act
by the company or any plan participant. All of the named executive
officers participate in the above-described plans.
Mr. Stuard has entered into an agreement with the company
pursuant to which he will act as a consultant following his
retirement. Under the agreement, in recognition of his valuable
service to the company, he received a $50,000 payment in 1993 and
an additional payment of $50,000 in December 1994. At his
retirement in December, 1994, he commenced receipt of his
retirement benefits under the Pension Plan and the SRP. He also
received health insurance for which the company pays premiums until
he reaches age 65.
William A. Lawson, senior vice president - corporate
development/international operations, became an executive officer
of the company in August 1994. From January through July of 1994,
a Phoenix-based law firm with whom he was a member received a total
of $102,224 from the company for legal services rendered to the
company.
Economic Value Added Incentive Bonus Plan
General
On March 2, 1995, the board of directors, subject to
shareholder approval, adopted the Economic Value Added Incentive
Bonus Plan for Fleming Companies, Inc. and Its Subsidiaries (the
"EVA Incentive Plan") which will provide a system for determining
incentive compensation to be paid to key associates who are
selected to be participants and who contribute to the long term
growth and profitability of the company. In the event the EVA
Incentive Plan is approved by the shareholders, it will replace the
FICP for the 25 executive officers and other corporate officers of
the company with respect to their bonus determinations for 1995 and
future years. The Company intends to expand the number of
participants in EVA for 1996 and future years to approximately 1225
additional associates of which approximately 215 (including the 25
officer associates) will participate in the bonus bank feature.
The remaining approximately 1035 participants will receive 100% of
any Final Declared Bonus on an annual basis. To the extent the EVA
Incentive Plan is expanded in the future to cover all current FICP
participants, the FICP will be terminated. The EVA Incentive Plan
will be administered by the Committee. See "Committees of the
Board". Although shareholder approval is not required to implement
the plan, the board of directors has requested such approval in
order to ensure deductibility under the Code for income tax
purposes of amounts paid to executive officer associates. See
"Report of the Compensation Committee." In the event of a negative
vote on the EVA Incentive Plan, it will be terminated. A
description of the EVA Incentive Plan appears below. A copy of the
EVA Incentive Plan is attached to this proxy statement as Exhibit
"A" and the description contained herein is qualified in its
entirety by reference to the complete text of the EVA Incentive
Plan. Capitalized terms not defined in the summary below shall
have the meaning ascribed to them in the EVA Incentive Plan.
Description of the EVA Incentive Plan
The EVA Incentive Plan is designed to better align
eligible associates' compensation with shareholder interests, and
to promote the maximization of shareholder value over the long term
while rewarding associates for creating shareholder value and not
rewarding associates for allowing value to erode.
The plan is structured around an economic value added
("EVA") concept, a financial measurement system or tool, expressed
as a formula. EVA is the net operating profit of the company or
unit of the company after taxes ("NOPAT"), less a charge for the
capital employed by the company or unit in order to produce such
profit. NOPAT is net income as determined under generally accepted
accounting principles with some adjustments. The capital charge is
determined by measuring all capital employed to produce the NOPAT
and multiplying such capital employed by a weighted average cost of
capital rate or required return.
The EVA Incentive Plan is composed of the following
components: (i) the Target Bonus, to be established by the
Committee for each participant at the beginning of each Plan
Period; (ii) an Actual EVA which is the economic value added
performance for a given year of the company or an Operating Unit to
which the participant is assigned and is based on actual
performance, (iii) a Target EVA, which is automatically set each
year based on the average of the prior year's Actual EVA and the
prior year's Target EVA plus a fixed dollar amount known as the
Expected Improvement; and (iv) a Performance Multiple Factor which
is also expressed as a fixed dollar amount and is used to determine
the extent to which a difference between the Actual EVA and the
Target EVA impacts the actual bonus awarded the participants. The
Performance Multiple Factor is fixed each year and is determined by
a market study designed to equate to the degree of difficulty in
the participant's exceeding the Target Bonus. The plan also
utilizes a Bonus Multiple, which is made up of the sum of the
Performance Multiple (the difference between the Actual EVA and the
Target EVA divided by the Performance Multiple Factor) and the
Target Multiple (fixed at 1). The Initial Declared Bonus is
calculated by multiplying the Target Bonus by the Bonus Multiple.
In the case of some participants, such amount is divided into two
parts: the Direct Portion and the Individual Portion. The
Individual Portion is multiplied by an Individual Performance
Factor ("IPF") ranging from 0-150% which is fixed annually by the
Committee for each participant. The IPF for each participant
depends on the achievement by that participant of his stated
personal key business objectives.
The Final Declared Bonus is deposited into a
participant's Bonus Bank which is then added to the Beginning Bonus
Bank Balance to calculate the Available Bonus Bank Balance. Bonus
payments are then made to the participant from the Available Bonus
Bank Balance. During years one through four a participant is
included in the EVA Incentive Plan, the payout schedule will be:
67%, 50%, 40% and 33%, respectively, and will remain 33% after year
four. Upon retirement, death or termination without cause the
Bonus Bank Balance will be paid to the participant or his estate,
as applicable.
The following is an example calculation of a bonus for a
hypothetical associate assuming an Actual EVA of $200,000,000, a
Target EVA of $160,000,000, a Performance Multiple Factor of
$80,000,000 and a Target Bonus of $10,000. Seventy percent (70%)
of the bonus is based upon total company results (the Direct
Portion) and thirty percent (30%) upon achievement of individual
key business objectives (the Individual Portion) which is affected
by an Individual Performance Factor of 110%:
EVA Calculation
Actual EVA ($200,000,000) - Target EVA ($160,000,000) = $40,000,000
divided by Performance Multiple Factor ($80,000,000) = .50 (the
Performance Multiple).
The Performance Multiple (.50) + the Target Multiple (1.00) = the
Bonus Multiple (1.50).
The Target Bonus ($10,000) X the Bonus Multiple (1.50) = $15,000
(the Initial Declared Bonus).
<TABLE>
<CAPTION>
Bonus Calculation
Direct Individual Total
<S> <C> <C> <C>
Portion 70% 30% 100%
Initial Declared Bonus $10,500 $4,500 $15,000
Individual Performance
Factor (IPF) 110%
Final Declared Bonus $10,500 $4,950 $15,450
</TABLE>
<TABLE>
<CAPTION>
Bonus Bank Calculation
Amount
<S> <C>
Beginning Bonus Bank Balance $0
+Final Declared Bonus = $15,450 (Available
Bonus Bank Balance)
Available Bonus Bank Balance x
Payout Percentage (67%) = $10,352 (Bonus Bank
Payout)
Available Bonus Bank Balance ($15,450) - Bonus Bank Payout
($10,352) = Ending Bonus Bank Balance ($5,098)
</TABLE>
The Committee
The EVA Incentive Plan will be administered by the
Committee composed of not less than three members of the board of
directors. No member of the Committee will be an associate of the
company or eligible to receive bonuses under the plan. The
Committee is authorized and has complete discretion to formulate
policies and to establish rules and regulations for the
administration of the EVA Incentive Plan and to set or establish
the Target Bonus, the Target EVA, the Expected Improvement, the
Target Multiple and the Individual Performance Factor for each
participant. Final Declared Bonus payments under the EVA Incentive
Plan will only be made with the approval of the Committee whose
decision is to be made on or before March 15 of the year subsequent
to each Plan Period. The Committee can reduce or eliminate the
payment of any bonus under the EVA Incentive Plan. The Committee
cannot increase the amount of any Final Declared Bonus.
Participants
Other than the current 25 participants, it is impossible
at this time to determine who among the eligible associates may be
selected to be participants in the EVA Incentive Plan. It is
expected, however, that these determinations will be made on the
basis of the associate's responsibilities and present and potential
contribution to the success of the company and its subsidiaries as
indicated by the Committee's evaluation of such associate's
position. Among those who may qualify as recipients of bonuses
under the EVA Incentive Plan will be directors who are officers of
the company, officers and other key associates of the company and
its subsidiaries who occupy executive, administrative, professional
and technical positions. The only current nominee for election as
a director who will be eligible to participate in the EVA Incentive
Plan is Robert E. Stauth. The EVA Incentive Plan will only cover
executive officers and other corporate officers (25 participants)
for 1995. The company intends to expand the EVA Incentive Plan to
cover approximately 1225 additional associates in 1996 and future
years, however, only approximately 215 (including the current 25
participants) will participate in the bonus bank feature of the
plan and the remaining approximately 1035 participants will be paid
100% of any Final Declared Bonus on an annual basis.
If a participant transfers to another Operating Unit, the
Bonus Bank of such associate will follow the transferring
participant. The associate's bonus for the first year after
transfer will be determined by calculations using EVA results from
both Operating Units.
New Plan Benefits
The following table sets forth the bonus amounts to be
received by named executive officers, other than Mr. Stuard, and
the other specified groups for the fiscal year ended December 30,
1995, assuming the EVA Incentive Plan is approved by the
shareholders. Since Actual EVA is not yet determinable for fiscal
1995, all amounts have been calculated assuming (i) Target EVA
(adopted by the Committee on March 1, 1995 for the 25 executive and
other corporate officers to be covered in 1995) equals Actual EVA
and (ii) where applicable, that the individual performance factor
is 100%:
<TABLE>
<CAPTION>
NEW PLAN BENEFITS
EVA Incentive Plan
Name and Position Dollar Value ($) <F1>
<S> <C>
Robert E. Stauth 393,819
Chairman, President and
Chief Executive Officer
Gerald G. Austin 164,619
Executive Vice President
Operations
E. Stephen Davis 140,700
Executive Vice President
Scrivner Group
Thomas L. Zaricki 117,133
Senior Vice President
Retail Operations
Glenn E. Mealman 89,016
Executive Vice President
National Accounts
Executive Group(14) 1,568,314
Non-Executive Director -0-(2)
Group
Non-Executive Officer 424,938
Employee Group(11)
<FN>
<F1> Amounts shown reflect 67% of the Final Declared Bonus
since the remainder is credited to the participant's
Bonus Bank.
<F2> Non-executive directors are not eligible to participate
in the EVA Incentive Plan.
</FN>
</TABLE>
Business Criteria
The amount of bonus to be paid to participants under the
EVA Incentive Plan will be dependent upon the increase in the NOPAT
realized by the company and/or by the Operating Unit for which the
associate performs services and upon the participant's individual
performance in the attainment of the NOPAT and of certain key
business objectives.
Change of Control
In the event there has been a "Change of Control" of the
company (as such term is defined in the EVA Incentive Plan), the
Committee, in its sole discretion, may (i) accelerate the vesting
and payment of all Bonus Bank Balances and the pro-rata amount of
the bonus for the year in which the Change of Control occurs,
provided, however, no negative amounts will be applied to determine
the final amount of the Bonus Bank payments or (ii) determine that
a payment in lieu of such amounts shall be made.
Effective Date
The effective date of the EVA Incentive Plan is January
1, 1995, upon approval of the shareholders at this annual meeting.
Amendments
The EVA Incentive Plan may be amended, suspended or
terminated at any time at the sole discretion of the board of
directors of the company. The Committee may revise the various
rates and percentages as provided in the plan from time to time
with respect to any future year.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
PROPOSAL TO APPROVE THE ADOPTION OF THE ECONOMIC VALUE ADDED
INCENTIVE BONUS PLAN FOR FLEMING COMPANIES, INC. AND ITS
SUBSIDIARIES. PROXIES SOLICITED BY THE BOARD OF DIRECTORS OF THE
COMPANY WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY IN THEIR
PROXIES A CONTRARY CHOICE.
Compliance with Section 16(a) of the
Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934
requires the company's directors and executive officers, and
persons who own more than ten percent of common stock, to file with
the Securities and Exchange Commission and the New York Stock
Exchange initial reports of beneficial ownership and reports of
changes in beneficial ownership of common stock of the company.
Such persons are also required by applicable regulations to furnish
the company with copies of all Section 16(a) forms they file. To
the company's knowledge, based solely on a review of the copies of
such reports furnished to the company and written representations
that no other reports were required to be filed, during 1994 all
Section 16(a) filing requirements were complied with except for one
late filing by Mark Batenic, Senior Vice President of the company.
Ratification of Appointment of Independent Auditors
Upon the recommendation of the audit and finance
committee, the board of directors has reappointed Deloitte & Touche
LLP as independent auditors for 1995 and is requesting ratification
by the shareholders. Deloitte & Touche LLP has audited the
consolidated financial statements since 1967.
Services performed by Deloitte & Touche LLP for the 1994
fiscal year included, among others, the audit of annual financial
statements and consultations concerning various tax and accounting
matters. Representatives of Deloitte & Touche LLP will attend the
meeting, have the opportunity to make a statement if they so
desire, and be available to answer questions.
Ratification of the appointment of independent auditors
requires the affirmative vote by the holders of a majority of the
stock having voting power present at the meeting. The board of
directors unanimously recommends a vote FOR the ratification of the
appointment of Deloitte & Touche LLP.
Shareholder Proposals
Any proposals of shareholders intended to be presented at
the 1996 annual meeting must be received not later than November
24, 1995, to be considered for inclusion in the proxy statement and
form of proxy relating to the meeting. No shareholder proposals
were received for inclusion in this proxy statement.
Other Business
The board of directors knows of no business which will be
presented for action at the meeting other than that described in
the notice of annual meeting. If other matters come before the
meeting, the proxies will be voted according to the judgment of the
persons named on the proxy card.
It is important that the proxies be returned promptly.
Therefore, shareholders who do not expect to attend the annual
meeting in person are requested to complete and return the proxy
card as soon as possible.
By Order of the Board of Directors
David R. Almond
Senior Vice President
General Counsel and Secretary
<PAGE>
EXHIBIT A
ECONOMIC VALUE ADDED
INCENTIVE BONUS PLAN FOR FLEMING COMPANIES, INC.
AND ITS SUBSIDIARIES
Fleming Companies, Inc., an Oklahoma corporation, hereby
adopts the Economic Value Added Incentive Bonus Plan for Fleming
Companies, Inc. and Its Subsidiaries upon the following terms and
conditions:
ARTICLE I
Name and Purpose of Plan
1.01 Name of the Plan. This Plan shall be known as the
Economic Value Added Incentive Bonus Plan For Fleming
Companies, Inc. and Its Subsidiaries.
1.02 Purpose of the Plan. The purpose of the Plan is to align
the interest of Associates in the Plan with shareholder's
interests, to motivate outstanding performance and to
reward Associates for significant value creation. The
plan will provide a system of incentive compensation
which will promote the maximization of shareholder value
over the long term. In order to better align eligible
Associate incentives with shareholder interests,
incentive compensation will reward the creation of value
as defined in the Plan. The Plan will tie incentive
compensation to Economic Value Added ("EVA") and,
thereby, reward eligible Associates for creating value
but will not reward eligible Associates for allowing
value to erode. EVA will be used as the performance
measure of value creation. EVA reflects the benefits and
costs of capital employment. Associates create value
when they employ capital in an endeavor that generates a
return that exceeds the cost of the capital employed.
Associates erode value when they employ capital in an
endeavor that generates a return that is less than the
cost of capital employed. By imputing the cost of
capital to the operating profits generated by a business
unit, EVA measures the total value created (or eroded) by
Associates.
ARTICLE II
Definitions
Unless the context provides a different meaning, the
following terms shall have the following meanings.
2.01 "Actual Eva" means Economic Value Added performance for
a given fiscal year of the Company and Plan Period based
on actual performance.
2.02 "Allocated Target Bonus" means for certain Participants
that portion or percentage of the Target Bonus allocated
between the Company and/or the Operating Unit(s).
2.03 "Available Bonus Bank Balance" means the sum of an amount
equal to the Beginning Bonus Bank Balance and the Final
Declared Bonus.
2.04 "Associate" shall mean any person employed by the Company
on the basis of an employer-employee relationship who
receives remuneration for personal services rendered to
the Company.
2.05 "Beginning Bonus Bank Balance" means the amount of money
in a Participant's Bonus Bank account on the first day of
each Plan Period, as determined under Section 3.09.
2.06 "Board" or "Board of Directors" means the duly elected
and acting board of directors of Fleming Companies, Inc.,
an Oklahoma corporation.
2.07 "Bonus Bank" means a Participant's bonus account into
which a portion of each year's bonus may be deposited for
future payout.
2.08 "Bonus Bank Payout" means the amount that on an annual
basis is paid to the Participant.
2.09 "Bonus Multiple" is the sum of the Performance Multiple
plus the Target Multiple and represents the level of EVA
performance for any given bonus calculation. The Bonus
Multiple is multiplied by the Participant's Target Bonus
to determine the Initial or Final Declared Bonus, as the
case may be.
2.10 "Capital" means the net investment employed in the
operations of the Company or an Operating Unit of the
Company and is defined as (i) indebtedness, lease
obligations and stockholders' equity or (ii) assets less
non-interest-bearing liabilities.
2.11 "Capital Charge" means net capital employed by the
Company or an Operating Unit times weighted average Cost
of Capital rate for the Company or such Operating Unit.
2.12 "Cause" or termination for "Cause" of a Participant's
employment by the Company shall mean termination for one
of the following reasons: (i) the conviction of the
Participant of a felony by a federal or state court of
competent jurisdiction; (ii) an act or acts of dishonesty
taken by the Participant and intended to result in
personal enrichment of the Participant at the expense of
the Company; (iii) the Participant's "willful" failure to
follow a direct lawful written order from his/her
supervisor, within the reasonable scope of the
Participant's duties, which failure is not cured within
30 days; or (iv) the Participant's failure to perform
his/her specified duties and responsibilities for a
period of 45 days as determined by his/her supervisor
after a warning in writing.
2.13 "Committee" means the compensation and organization
committee designated by the Board of Directors which
committee shall administer the Plan and make all
decisions for the Board or Directors and the Company
related to the Plan.
2.14 "Company" means Fleming Companies, Inc., an Oklahoma
corporation or its successor, and such term shall include
any Subsidiary.
2.15 "Cost of Capital" for either the Company or an Operating
Unit means the weighted average of the cost to the
Company or the Operating Unit, as the case may be, for
borrowed money or lease obligations (including the amount
of capitalized operating leases) plus the equivalent cost
of the use of the amount of equity supplied by the
shareholders, such cost being for the business risk
adjusted for the tax benefits of debt financing.
2.16 "Direct Portion" means that portion of certain of the
Participant's Initial Declared Bonus fixed by the
Committee attributable to the attainment of EVA by the
Company and, if applicable, the Participant's Operating
Unit and together with the Individual Portion constitutes
the Final Declared Bonus.
2.17 "Disability" means any Participant who shall be mentally
or physically disabled from properly or fully performing
his/her duties and responsibilities of employment with
the Company for a period of 120 consecutive days, or 180
days, even though not consecutive, within any 360-day
period, all as determined by the Committee in good faith
and supported by medical evidence.
2.18 "Economic Value Added" or "EVA" means the excess NOPAT
that remains after subtracting the Capital Charge,
expressed as follows: EVA = NOPAT - Capital Charge.
2.19 "Ending Bonus Bank Balance" means the amount of money in
a Participant's Bonus Bank account as of the last day of
each Plan Period, after application of Section 3.09.
2.20 "Executive Officer Group" means a select group of key
management Associates who are highly compensated and who
are members of the Board and also officers of the
Company, executive officers, other officers and other
Associates who occupy executive or administrative
positions within the Company.
2.21 "Expected Improvement" determined for the Company and
each Operating Unit means a dollar amount based on the
expected performance of the Company over several years
and is tied to the share price of the Company's stock.
It does not vary from year to year unless there is a
significant change in the Capital employed.
2.22 "Final Declared Bonus" means the amount of the finally
determined Participant's bonus for a Plan Period
calculated by multiplying the Participant's Target Bonus
by the Bonus Multiple unless the bonus results from the
application of the Individual Performance Factor. If the
Individual Performance Factor is applicable, then the
Final Declared Bonus means the sum of the Direct Portion
and the Individual Portion of the Initial Declared Bonus
after application of the Individual Performance Factor.
The Final Declared Bonus can be positive or negative.
2.23 "Individual Performance Factor" means the component
(ranging from 0-150%) by which the Individual Portion of
the Participant's Initial Declared Bonus is multiplied to
determine the Individual Portion of the Participant's
Final Declared Bonus and is based upon the achievement of
stated key business objectives.
2.24 "Individual Portion" means that portion of certain of the
Participant's Initial Declared Bonus fixed by the
Committee to which is applied the Individual Performance
Factor in order to reflect the achievement (or failure to
achieve) of stated key business objectives and together
with the Direct Portion constitutes the Final Declared
Bonus.
2.25 "Initial Declared Bonus" means the amount of the
initially determined Participant's bonus for a Plan
Period calculated by multiplying the Participant's Target
Bonus or, in respect to Participants whose bonuses are
divided between the Company and Operating Unit(s), their
Allocated Target Bonus by the Bonus Multiple. It is
determined before the allocation of the bonus between the
Direct Portion and the Individual Portion. The Initial
Declared Bonus may be positive or negative.
2.26 "Net Operating Profit After Tax" or "NOPAT" means the
after tax operating earnings of the Company for the Plan
Period in question adjusted for non-operating activities.
2.27 "Non-Executive Officers Group" means a group of key
Associates who occupy administrative, professional and
technical positions with the Company.
2.28 "Operating Unit" means a business segment or unit of the
Company identified by the Committee for the purpose of
calculating EVA and EVA based bonus awards for certain
Participants.
2.29 "Participant" means any Associate of the Company
designated by the Committee as a Participant in the Plan
with respect to any Plan Period, more particularly
defined in Section 3.01 below.
2.30 "Payout Percentage (%)" has the meaning set forth in
Section 3.09.
2.31 "Performance Multiple" is the factor used to determine
the Bonus Multiple and is calculated by subtracting the
Target EVA from the Actual EVA and dividing the result by
the Performance Multiple Factor to obtain the Performance
Multiple.
2.32 "Performance Multiple Factor" means the component which
determines the degree to which a difference between
Actual EVA and Target EVA impacts the Initial Declared
Bonus. It is expressed as a fixed dollar amount and
reflects the historical volatility of the Company's
business.
2.33 "Performance Weighting" means the percentage of an
Associate's bonus which is based on Operating Unit(s) or
total Company performance.
2.34 "Plan" means the Economic Value Added Incentive Bonus
Plan for Fleming Companies, Inc. and Its Subsidiaries.
2.35 "Plan Period" means any annual period corresponding to
the Company's fiscal year with respect to which EVA is
calculated for the Company and/or the Operating Unit(s)
for purposes of calculating bonus awards to any
Participant under the Plan.
2.36 "Subsidiary" shall mean any corporation which is
consolidated with the Company under generally accepted
accounting principles.
2.37 "Target Bonus" means the potential bonus set annually by
the Committee for each Participant. The Initial Declared
Bonus equals the Target Bonus when Target EVA is
achieved.
2.38 "Target EVA" means the average of the prior year's Actual
EVA and the prior year's Target EVA, plus the Expected
Improvement.
2.39 "Target Multiple" means a factor used to determine the
Bonus Multiple which is always 1.0.
ARTICLE III
The Plan
3.01 Plan Participation. The Plan shall apply to Participants
selected by the Committee from two groups of Associates
(i) the Executive Officer Group and (ii) the Non-
Executive Officer Group. Only the Executive Officer
Group shall be eligible to participate in the Bonus Bank
portion (Section 3.09) of the Plan.
3.02 Target Bonus. Target Bonuses for each Participant will
be determined annually by the Committee prior to March
15th for the current Plan Period.
3.03 Target EVA. The Target EVA for Plan Period 1 of the Plan
for each Participant and each year thereafter will be
equal to the average of the prior year's Actual EVA and
prior years Target EVA plus the Expected Improvement.
3.04 Expected Improvement. The Expected Improvement is a
factor that is used to assure that a minimum level of
improvement is achieved in order to earn bonus awards.
The Expected Improvement is fixed by the Committee each
Plan Period for the total Company and each Operating Unit
and is added to the average of the prior year's Actual
EVA and prior year's Target EVA to calculate the current
year's Target EVA. Expected Improvement for each
Operating Unit is determined based on the Operating
Unit's historical and prospective EVA performance as well
as capital employed. The dollar amount does not change
from year to year unless there is a significant change in
the Capital employed.
3.05 Performance Multiple Factor. The Performance Multiple
Factor is the EVA component which determines the degree
to which a difference between Actual EVA and Target EVA
impacts the Final Declared Bonus increment required to
enhance the bonus award or result in a zero bonus award.
The Performance Multiple Factor is a dollar amount fixed
by the Committee each Plan Period for the total Company
and each Operating Unit to reflect the historical
volatility of the business.
3.06 Bonus Multiple Calculation. The Target Bonus (or
Allocated Target Bonus for those Participants whose
bonuses are calculated based upon Operating Unit
operations, as well as the total Company) is multiplied
by the Bonus Multiple to calculate the Initial Declared
Bonus.
3.07 Performance Weighting. For each Plan Period the
Committee will determine for each Participant, if
applicable, the Performance Weighting percentages for the
Company and the applicable Operating Unit.
3.08 Direct Portion and Individual Portion. Where applicable,
bonuses will be based on both a Direct Portion and an
Individual Portion each expressed as percentages of the
Initial Declared Bonus. The Direct Portion is the amount
of the Initial Declared Bonus that becomes a portion of
the Final Declared Bonus based on actual EVA performance.
The Individual Portion will be calculated as the non-
direct portion of the Initial Declared Bonus (Initial
Declared Bonus - Direct Portion). In order to determine
the Individual Portion of the Final Declared Bonus, the
Individual Portion of the Initial Declared Bonus is
multiplied by the Participant's Individual Performance
Factor. The Individual Performance Factor range is 0-
150%. The sum of Direct Portion of the Final Declared
Bonus and Individual Portion of the Final Declared Bonus
is the Final Declared Bonus. The Committee will
determine annually for each Participant, if applicable,
the Direct Portion Percentage and the Individual Portion
Percentage of the Initial Declared Bonus.
3.09 Bonus Bank. The Bonus Bank exists to encourage
Participants in the Executive Officer Group to focus on
long-term Company and/or Operating Unit(s) performance by
placing a component or portion of each year's Final
Declared Bonus at risk. Each Executive Officer Group
Participant, upon becoming a Participant in the Plan,
will begin with a zero balance in his/her Bonus Bank.
The Bonus Bank will operate as follows:
-- The Final Declared Bonuses plus an amount equal
to the Beginning Bonus Bank Balance will equal the
Available Bonus Bank Balance.
-- Bonus Bank Payout will be determined by
multiplying the Available Bonus Bank Balance for
each Executive Officer Group Participant by the
Payout Percentage (%) for the indicated Plan
Period.
Plan Payout
Period Percentage(%)
Plan Period 1 67
Plan Period 2 50
Plan Period 3 40
Plan Period 4 & 33
-- The Bonus Bank Payout shall first be paid out
of any positive Final Declared Bonus earned for the
applicable Plan Period.
-- To the extent, if any, that a positive Final
Declared Bonus exceeds the Bonus Bank Payout, such
excess shall be credited to the Beginning Bonus
Bank Balance.
-- In the event that the Bonus Bank Payout exceeds
the Final Declared Bonus, the amount by which the
Bonus Bank Payout exceeds the greater of (i) the
Final Declared Bonus or (ii) zero shall be paid
from and reduce the Beginning Bonus Bank Balance.
-- The Beginning Bonus Bank Balance shall be
reduced by the amount of any negative Final
Declared Bonus.
-- The Beginning Bonus Bank Balance after
adjustment under the preceding three paragraphs
will equal the Ending Bonus Bank Balance. The
Ending Bonus Bank Balance will become the Beginning
Bonus Bank Balance for the following year's EVA
bonus calculation.
3.10 Working Plan Example - Executive Officer Group. The
following represents an example of the mechanics of the
Plan. The assumptions for the example are as follows:
An Executive Officer Group Participant has his/her bonus based
Twenty-Five Percent (25%) on total Company results and Seventy-Five
Percent (75%) on Operating Unit results. The Individual Portion is
determined to be Thirty Percent (30%) of the Initial Declared Bonus
with an Individual Performance Factor of One Hundred Ten Percent
(110%). The Target Bonus is $10,000. (This example is
illustrative only as the Performance Multiple Factor, the
Performance Weighting ratios, the Direct and Individual Portions of
the Initial Declared Bonus and the Individual Performance Factor
will not be the same for each Participant and will not be factors
in determining bonuses for some Participants.)
<TABLE>
<CAPTION>
THE EVA BONUS CALCULATION
The Operating
Company Unit
<S> <C> <C> <C>
Actual EVA $200,000,000 $2,100,000
- - Target EVA $160,000,000 $2,000,000
= Actual EVA - Target EVA $ 40,000,000 $ 100,000
divided by Performance Multiple
Factor $ 80,000,000 $ 500,000
= Performance Multiple 0.50x 0.20x
= Target Multiple 1.00x 1.00x
= Bonus Multiple 1.50x 1.20x
The Operating
Company Unit Total
Performance Weighting 25% 75% 100%
Allocated Target Bonus $ 2,500 $ 7,500 $10,000
x Bonus Multiple 1.50x 1.20x
= Initial Declared Bonus $ 3,750 $ 9,000 $12,750
Direct Individual Total
Portion 70% 30% 100%
Initial Declared Bonus $8,925 $3,825 $12,750
Individual Performance Factor N/A 110%
Final Declared Bonus $8,925 $4,208 $13,133
Bonus Bank*
Beginning Bonus Bank Balance $0
+ Final Declared Bonus $13,133
= Available Bonus Bank Balance $13,133
x Payout Percentage 67% (first year)
= Bonus Bank Payout $ 8,799
Ending Bonus Bank Balance $ 4,334
* Applicable only to the Executive Officer Group.
</TABLE>
3.11 Non-Executive Officer Group Participants. The Plan as
described in this Article III, with the exception of
Section 3.09, shall be applicable to Participants in the
Non-Executive Group. The Bonus Bank as provided in
Section 3.09 shall not be applicable to the Non-Executive
Officer Group.
ARTICLE IV
Plan Administration
4.01 New Associates/Promotions. New Associates who qualify
for the Plan and Associates promoted into the Plan will
participate on a pro rata basis in the year of entry.
The Bonus Bank Payout schedule for these Associates will
be as established as set forth in Section 3.09 of this
Plan.
4.02 Transfers. For the year of the transfer of a Participant
from one Operating Unit to another Operating Unit, the
amount of the Target Bonus shall be divided between
Operating Units pro rata as to the Company's accounting
periods. All other components applicable to the
computation of the transferring Participant's Final
Declared Bonus for the year of transfer shall be applied
to the portion of the Target Bonus allocated to each
Operating Unit.
4.03 Voluntary Resignations. Voluntary resignations or
terminations will result in the forfeiture of the balance
in the Participant's Bonus Bank. The Bonus Bank Payout
for the immediately preceding year shall also be
forfeited unless the Bonus Bank Payouts for such year for
all Plan Participants, including such terminating
Participant, have been approved for payment by the
Committee.
4.04 Retirement. A Participant who retires from the Company
under normal rules and procedures established by the
Company and has a positive Bank Balance shall receive
full payment of his/her Bonus Bank including the pro rata
portion of any positive Final Declared Bonus and Bonus
Bank Payout attributable to such Participant under the
Plan computed on a pro rata basis for the year in which
he/she retires subject to the provisions of Section 6.04
of this Plan; provided, however, that in determining the
amount of the Final Declared Bonus for the year of
retirement, no negative amounts will be applied to
determine the final amount of the Bonus Bank to be paid
to such retiring Participant. Such payment may be made
over one or two years.
4.05 Termination With Cause. Termination with Cause will
result in the forfeiture of the Participant's Bonus Bank.
The Bonus Bank Payout for the immediately preceding year
shall also be forfeited unless the Bonus Bank Payouts for
such year for all Plan Participants, including such
terminating Participant, have been approved for payment
by the Committee.
4.06 Termination Without Cause. A Participant who is
terminated without Cause and who has a positive Bank
Balance in his/her Bonus Bank shall receive full payment
of his/her Bonus Bank at the regular time for making
bonus payments with respect to the year of such
termination, including the pro rata portion of any
positive Final Declared Bonus and Bonus Bank Payout
attributable to such Participant under the Plan computed
on a pro rata basis for the year in which termination
occurs, subject to the provisions of Section 6.04 of this
Plan; provided, however, that in determining the amount
of the Final Declared Bonus for the year of termination,
no negative amounts will be applied to determine the
final amount of the Bonus Bank to be paid to such
terminating Participant.
4.07 Death/Disability. A Participant who dies or suffers
Disability while in employment with the Company shall
receive full payment of his/her Bank Balance and pro-rata
bonus for the year in which he/she dies or becomes
disabled, including the pro rata portion of any positive
Final Declared Bonus and Bonus Bank Payout attributable
to such Participant under the Plan; provided, however, no
negative amounts will be applied to determine the final
amount of the Bonus Bank to be paid to such disabled
Participant or the estate of such deceased Participant.
Such payment will be made at the regular time for making
bonus payments in respect to the year of such death or
Disability.
ARTICLE V
General Provisions
5.01 Withholding of Taxes. The Company shall have the right
to withhold the amount of taxes, which in the
determination of the Company, are required to be withheld
under law with respect to any amount due or paid under
the Plan.
5.02 Expenses. All expenses and costs in connection with the
adoption and administration of the Plan shall be borne by
the Company.
5.03 No Prior Right or Offer. Except and until expressly
granted pursuant to the Plan, nothing in the Plan shall
be deemed to give any Associate any contractual or other
right to participate in the benefits of the Plan. No
award to any such Participant in any Plan Period shall be
deemed to create a right to receive any award or to
participate in the benefits of the Plan in any subsequent
Plan Period.
5.04 Claims for Benefits. In the event a Participant (a
"claimant") desires to make a claim with respect to any
of the benefits provided hereunder, the claimant shall
submit evidence satisfactory to the Committee of facts
establishing his entitlement to a payment under the Plan.
Any claim with respect to any of the benefits provided
under the Plan shall be made in writing within ninety
(90) days of the event which the claimant asserts
entitles him to benefits. Failure by the claimant to
submit his claim within such ninety (90) day period shall
bar the claimant from any claim for benefits under the
Plan.
5.05 Appeal of Decisions. In the event that a claim which is
made by a claimant is wholly or partially denied, the
claimant will receive from the Committee a written
explanation of the reason for denial and the claimant or
his duly authorized representative may appeal the denial
of the claim to the Committee at any time within ninety
(90) days after the receipt by the claimant of written
notice from the Committee of the denial of the claim. In
connection therewith, the claimant or his duly authorized
representative may request a review of the denied claim;
may review pertinent documents; and may submit issues and
comments in writing. Upon receipt of an appeal, the
Committee shall make a decision with respect to the
appeal and, not later than sixty (60) days after receipt
of a request for review, shall furnish the claimant with
a decision in writing, including the specific reasons for
the decision written in a manner calculated to be
understood by the claimant, as well as specific reference
to the pertinent provisions of the Plan upon which the
decision is based. In reaching its decision, the
Committee shall have complete discretionary authority to
determine all questions arising in the interpretation and
administration of the Plan, and to construe the terms of
the Plan, including any doubtful or disputed terms and
the eligibility of a Participant for benefits.
5.06 Action Taken in Good Faith; Indemnification. The
Committee may employ attorneys, consultants, accountants
or other persons and the Committee, the Company's
directors and officers shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All
actions taken and all interpretations and determinations
made by the Committee in good faith shall be final and
binding upon all Associates who have received, or may be
entitled to receive awards, the Company and all other
interested parties. No member of the Committee, nor any
officer, director, Associate or representative of the
Company, or any of its affiliates acting on behalf of or
in conjunction with the Committee, shall be personally
liable for any action, determination, or interpretation,
whether of commission or omission, taken or made with
respect to the Plan, except in circumstances involving
actual bad faith or willful misconduct. In addition to
such other rights of indemnification as they may have as
members of the Board of Directors, as members of the
Committee or as officers or Associates of the Company,
all members of the Committee and any officer, Associate
or representative of the Company acting on their behalf
shall be fully indemnified and protected by the Company
with respect to any such action, determination or
interpretation against the reasonable expenses, including
attorneys' fees actually and necessarily incurred, in
connection with the defense of any civil or criminal
action, suit or proceeding, or in connection with any
appeal therein, to which they or any of them may be a
party by reason of any action taken or failure to act
under or in connection with the Plan or an award granted
thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved
by independent legal counsel selected by Company) or paid
by them in satisfaction of a judgment in any action, suit
or proceeding, except in relation to matters as to which
it shall be adjudged in such action, suit or proceeding
that the actions or omissions of the persons seeking
indemnification under this Section 5.06 constituted bad
faith or willful misconduct and provided that such person
claiming indemnification shall in writing offer the
Company the opportunity, at its own expense, to handle
and defend the same. Expenses (including attorneys'
fees) incurred in defending a civil or criminal action,
suit or proceeding shall be paid by the Company in
advance of the final disposition of such action, suit or
proceeding if such person claiming indemnification is
entitled to be indemnified as provided in this Section.
5.07 Rights Personal to Associate. Any rights provided to an
Associate under the Plan shall be personal to such
Associate, shall not be transferable (except by will or
pursuant to the laws of descent or distribution), and
shall be exercisable, during his (her) lifetime, only by
such Associate.
5.08 Distributions upon Termination of Plan. Upon termination
of the Plan by the Board of Directors, which the Board of
Directors has reserved the right to do at any time, all
of the Participants shall have the right to receive the
benefits of a Participant who has been terminated without
Cause as provided in Section 4.06 of this Plan.
5.09 Suspension of the Plan. In the event of a suspension of
the Plan by the Board of Directors, which the Board of
Directors has reserved the right to do at any time, no
awards under the Plan for the Plan Period during which
such suspension occurs shall affect the calculation of
awards for any subsequent period in which the Plan is
continued.
ARTICLE VI
Limitations
6.01 No Continued Employment. Neither the establishment of
the Plan nor the grant of an award under the Plan shall
be deemed to constitute an express or implied contract of
employment of any Participant for any period of time or
in any way abridge the rights of the Company to determine
the terms and conditions of employment or to terminate
the employment of any Associate with or without Cause at
any time.
6.02 No Vested Rights. Except as expressly provided herein,
no Associate or other person shall have any claim of
right (legal, equitable, or otherwise) to any award,
allocation, or distribution or any right, title, or
vested interest in any amounts in his/her Bonus Bank and
no officer or employee of the Company or any other person
shall have any authority to make representations or
agreements to the contrary. No interest conferred herein
to a Participant shall be assignable or subject to claim
by a Participant's creditors.
6.03 Not Part of Other Benefits. The benefits provided in
this Plan shall not be deemed a part of any other benefit
provided by the Company to its Associates. The Company
assumes and shall have no obligation to Participants
except as expressly provided in the Plan. This is a
complete statement of the terms and conditions of the
Plan.
6.04 Approval By The Committee. On or before March 15th of
the year subsequent to each Plan Period, the Committee
shall review the Final Declared Bonuses of each
Participant for the preceding Plan Period and approve or
reject such bonuses. In addition, the Committee has the
right to reduce or eliminate the amount of the Final
Declared Bonus of any Participant during any Plan Period
in the event the Committee determines in its sole
discretion such amount to be excessive or is not
warranted. The Committee can not, however, increase
Final Declared Bonuses for any of the Participants.
6.05 Other Plans. Nothing contained herein shall limit the
Company's power to grant bonuses to Associates of the
Company, whether or not they are Participants in this
Plan.
ARTICLE VII
Acceleration on Change of Control
7.01 Change of Control. In the event that there has been a
Change of Control (as defined hereafter), the Committee,
in its sole discretion, may (i) accelerate the vesting
and payment of all Bonus Banks and the pro-rata amount of
the bonus for the year in which the Change of Control
occurs, provided, however, no negative amounts will be
applied to determine the final amount of the Bonus Banks
to be paid to such Participants or (ii) determine that a
payment in lieu of such amounts shall be made. Anything
in this Plan to the contrary notwithstanding, if a
Participant's employment with the Company is terminated
prior to the date on which a Change of Control occurs,
and it is reasonably demonstrated that such termination
(i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change of Control
or (ii) otherwise arose in connection with or
anticipation of a Change of Control, then for all
purposes of this Plan as to such terminated Participant,
a Change of Control shall mean the date immediately prior
to the date of such termination. For the purpose of this
Plan, a "Change of Control" shall mean:
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or
more (the "Triggering Percentage") of either (i)
the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or
(ii) the combined voting power of the then
outstanding voting securities of the Company
entitled to vote generally in the election of
directors (the "Outstanding Company Voting
Securities"); provided, however, in the event the
"Incumbent Board" (as such term is hereinafter
defined) pursuant to Section 7 of the Rights
Agreement between the Company and the Liberty
National Bank and Trust Company of Oklahoma City
dated as of July 7, 1986 together with any
additional amendments thereto (collectively the
"Rights Agreement") lowers the threshold amounts
set forth in Section 1(a) or 3(a) of the Rights
Agreement, the Triggering Percentage shall be
automatically reduced to equal the threshold set
pursuant to Section 7 of the Rights Agreement; and
provided, further, however, that the following
acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company; (iii)
any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the
Company or any corporation controlled by the
Company, (iv) any acquisition previously approved
by the Incumbent Board, (v) any acquisition
approved by the Incumbent Board within five (5)
business days after the Company has notice of such
acquisition, or (vi) any acquisition by any
corporation pursuant to a transaction which
complies with clauses (x), (y), and (z) of
subsection (c) of this Section 2; or
(b) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority of
the Board; provided, however, that any individual
becoming a director subsequent to the date hereof
whose election, appointment or nomination for
election by the Company's shareholders, was
approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall
be considered as though such individual were a
member of the Incumbent Board, but excluding, for
purposes of this definition, any such individual
whose initial assumption of office occurs as a
result of an actual or threatened election contest
with respect to the election or removal of
directors or other actual or threatened
solicitation of proxies or consents by or on behalf
of a Person other than the Board; or
(c) Approval by the shareholders of the Company of
a reorganization, share exchange, merger or
consolidation (a "Business Combination"), in each
case, unless, following such Business Combination,
(i) all or substantially all of the individuals and
entities who were the beneficial owners,
respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination
beneficially own, directly or indirectly, more than
70% of, respectively, the then outstanding shares
of common stock and the combined voting power of
the then outstanding voting securities entitled to
vote generally in the election of directors, as the
case may be, of the corporation resulting from such
Business Combination (including, without
limitation, a corporation which as a result of such
transaction owns the Company through one or more
subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such
Business Combination of the Outstanding Company
Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person
(excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting
from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common
stock of the corporation resulting from such
Business Combination or the combined voting power
of the then outstanding voting securities of such
corporation except to the extent that such
ownership existed prior to the Business
Combination, and (iii) at least a majority of the
members of the board of directors of the
corporation resulting from such Business
Combination were members of the Incumbent Board at
the time of the execution of the initial agreement,
or of the action of the Board, providing for such
Business Combination or were elected, appointed or
nominated by the Board; or
(d) Approval by the shareholders of the Company of
(i) a complete liquidation or dissolution of the
Company or, (ii) the sale or other disposition of
all or substantially all of the assets of the
Company, other than to a corporation, with respect
to which following such sale or other disposition,
(A) more than 70% of, respectively, the then
outstanding shares of common stock of such
corporation and the combined voting power of the
then outstanding voting securities of such
corporation entitled to vote generally in the
election of directors is then beneficially owned,
directly or indirectly, by all or substantially all
of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other
disposition in substantially the same proportion as
their ownership, immediately prior to such sale or
other disposition, of the Outstanding Company
Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) less than 20%
of, respectively, the then outstanding shares of
common stock of such corporation and the combined
voting power of the then outstanding voting
securities of such corporation entitled to vote
generally in the election of directors is then
beneficially owned, directly or indirectly, by any
Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation),
except to the extent that such Person owned 20% or
more of the Outstanding Company Common Stock or
Outstanding Company Voting Securities prior to the
sale or disposition, and (C) at least a majority of
the members of the board of directors of such
corporation were members of the Incumbent Board at
the time of the execution of the initial agreement,
or of the action of the Board, providing for such
sale or other disposition of assets of the Company
or were elected, appointed or nominated by the
Board.
7.02 Certain Additional Payments by the Company.
(a) Anything in this Plan to the contrary
notwithstanding, in the event it shall be
determined that any payment or distribution by the
Company to or for the benefit of the Participant
(whether paid or payable or distributed or
distributable pursuant to the terms of this
Agreement or otherwise, but determined without
regard to any additional payments required under
this Section 7) (a "Payment") would be subject to
the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the
"Code") or any interest or penalties are incurred
by the Participant with respect to such excise tax
(such excise tax, together with any such interest
and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then, the
Committee may, in its sole discretion, authorize an
additional payment (a "Gross-Up Payment") to the
Participant in an amount such that after payment by
the Participant of all taxes (including any
interest or penalties imposed with respect to such
taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Participant retains an amount
of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. In the event the
Committee determines that Gross-Up Payments shall
be made to the Participants, the procedures set
forth in Section 7.02(b) through 7.02(d) shall
apply.
(b) Subject to the provisions of Subsection
7.02(c) below, all determinations required to be
made under this Section 7.02, including whether and
when a Gross-Up Payment is required and the amount
of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall
be made by Deloitte & Touche, Oklahoma City,
Oklahoma or such other certified public accounting
firm as may be designated by the Participant (the
"Accounting Firm") which shall provide detailed
supporting calculations both to the Company and the
Participant within 15 business days of the receipt
of notice from the Participant that there has been
a Payment which would be subject to the Excise Tax,
or such earlier time as is requested by the
Company. In the event that the Accounting Firm is
serving as accountant or auditor for the
individual, entity or group effecting the Change of
Control, the Participant shall appoint another
nationally recognized accounting firm to make the
determinations required hereunder (which accounting
firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the
Company. Any Gross-Up Payment, as determined
pursuant to this Section 7.02, shall be paid by the
Company to the Participant within five days of the
receipt of the Accounting Firm's determination. If
the Accounting Firm determines that no Excise Tax
is payable by the Participant, it shall furnish the
Participant with a written opinion that failure to
report the Excise Tax on the Participant's
applicable federal income tax return would not
result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm
shall be binding upon the Company and the
Participant. As a result of the uncertainty in the
application of Section 4999 of the Code at the time
of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments
which will not have been made by the Company should
have been made ("Underpayment"), consistent with
the calculations required to be made hereunder. In
the event that the Company exhausts its remedies
pursuant to Subsection 7.02(c) and the Participant
thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and
any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Participant.
(c) The Participant shall notify the Company in
writing of any claim by the Internal Revenue
Service that, if successful, would require the
payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as
practicable but no later than ten business days
after the Participant is informed in writing of
such claim and shall apprise the Company of the
nature of such claim and the date on which such
claim is requested to be paid. The Participant
shall not pay such claim prior to the expiration of
the 30-day period following the date on which he
gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes
with respect to such claim is due). If the Company
notifies the Participant in writing prior to the
expiration of such period that it desires to
contest such claim, the Participant shall:
(i) give the Company any information
reasonably requested by the Company relating to
such claim,
(ii) take such action in connection with
contesting such claim as the Company shall
reasonably request in writing from time to time,
including, without limitation, accepting legal
representation with respect to such claim by an
attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith
in order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and
pay directly all costs and expenses (including
additional interest and penalties) incurred in
connection with such contest and shall indemnify
and hold the Participant harmless, on an after-tax
basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto)
imposed as a result of such representation and
payment of costs and expenses. Without limitation
on the foregoing provisions of this Subsection
7.02(c), the Company shall control all proceedings
taken in connection with such contest and, at its
sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of
such claim and may, at its sole option, either
direct the Participant to pay the tax claimed and
sue for a refund or contest the claim in any
permissible manner, and the Participant agrees to
prosecute such contest to a determination before
any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts,
as the Company shall determine; provided, however,
that if the Company directs the Participant to pay
such claim and sue for a refund, the Company shall
advance the amount of such payment to the
Participant, on an interest-free basis and shall
indemnify and hold the Participant harmless, on an
after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect
thereto) imposed with respect to such advance or
with respect to any imputed income with respect to
such advance; and further provided that any
extension of the statute of limitations relating to
payment of taxes for the taxable year of the
Participant with respect to which such contested
amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be
payable hereunder and the Participant shall be
entitled to settle or contest, as the case may be,
any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Participant of an
amount advanced by the Company pursuant to
Subsection 7.02(c), the Participant becomes
entitled to receive any refund with respect to such
claim, the Participant shall (subject to the
Company's complying with the requirements of
Subsection 7.02(c)) promptly pay to the Company the
amount of such refund (together with any interest
paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Participant
of an amount advanced by the Company pursuant to
Subsection 7.02(c), a determination is made that
the Participant shall not be entitled to any refund
with respect to such claim and the Company does not
notify the Participant in writing of its intent to
contest such denial of refund prior to the
expiration of 30 days after such determination,
then such advance shall be forgiven and shall not
be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid.
ARTICLE VIII
Miscellaneous Provisions
8.01 Authority. Except as otherwise expressly provided
herein, full power and authority to interpret and
administer this Plan shall be vested in the Committee.
The Committee may from time to time make such decisions
and adopt such rules and regulations for implementing the
Plan as it deems appropriate for any Participant under
the Plan. Any decision taken by the Committee arising
out of or in connection with the construction,
administration, interpretation and effect of the Plan
shall be final, conclusive and binding upon all
Participants and any person claiming under or through
them except only with respect to appeals of decisions
with respect to claims as provided in Section 5.05 of the
Plan.
8.02 Notice. Any notice to be given pursuant to the
provisions of the Plan shall be in writing and directed
to the appropriate recipient thereof at his/her business
address or office location.
8.03 Effective Date. This Plan shall be effective as of
January 1, 1995.
8.04 Amendments. This Plan may be amended, suspended or
terminated at any time at the sole discretion of the
Board of Directors of the Company. The Committee may
revise the various rates and percentages as provided in
the Plan from time to time with respect to any future
Plan Period. Notwithstanding the foregoing, after
approval by the Committee pursuant to Section 6.04 of
this Plan, no change in the Plan shall be effective to
eliminate or diminish the distribution of any award that
has been allocated to the Bonus Bank of a Participant
prior to the date of such amendment, suspension or
termination contrary to the terms of the Plan in effect
as of the date on which such award was made. Notice of
any amendment, suspension or termination of the Plan
shall be given promptly to each Participant.
8.05 Restrictions on Alienation. No right or benefit under
this Plan shall be subject to anticipation, alienation,
sale, assignment, pledge, encumbrance, or charge, and any
attempt to anticipate, alienate, sell, assign, pledge,
encumber, or charge the same shall be void. No right or
benefit hereunder shall in any manner be liable for or
subject to the debts, contracts, liabilities, or torts of
the person entitled to such benefit. If any Participant
under this Plan should become bankrupt or attempt to
anticipate, alienate, sell, assign, pledge, encumber, or
charge any right to a benefit under this Plan, then such
right or benefit shall, in the discretion of the
Committee cease, and in such event, the Committee may
hold or apply the same or any part thereof for the
benefit of such Participant, his or her spouse, children,
or other dependents, or any of them, in such manner and
in such portion as the Committee, in its sole and
absolute discretion, may deem proper.
8.06 No Trust. No action under this Plan by the Company, its
Board of Directors or the Committee shall be construed as
creating a trust, escrow or other secured or segregated
fund in favor of the Participant or any other persons
otherwise entitled to benefits hereunder. The status of
the Participant with respect to any liabilities assumed
by the Company hereunder shall be solely that of an
unsecured creditor of the Company who employs such
Participant. Any asset acquired or held by the Company
in connection with liabilities assumed by it hereunder,
shall not be deemed to be held under any trust, escrow or
other secured or segregated fund for the benefit of the
Participant or to be security for the performance of the
obligations of the Company or any Subsidiary, but shall
be, and remain a general, unpledged, unrestricted asset
of the Company at all times subject to the claims of
general creditors of the Company.
8.07 Withholding and Other Employment Taxes. The Company
shall comply with all federal and state laws and
regulations respecting the withholding, deposit and
payment of any income or other taxes relating to any
payments made under this Plan.
8.08 Applicable Law. This Plan shall be construed in
accordance with the provisions of the laws of the State
of Oklahoma.
8.09 Articles and Section Titles and Headings. The titles and
headings at the beginning of each Article and Section
shall not be considered in construing the meaning of any
provisions in this Plan.
<PAGE>
EXHIBIT B
P R O X Y
FLEMING COMPANIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
Robert E. Stauth, Harry L. Winn, Jr. or David R. Almond is hereby
constituted the proxy of the undersigned with full power of
substitution to represent and vote all shares of stock of the
undersigned at the annual meeting of shareholders of Fleming
Companies, Inc., or any adjournment thereof, to be held May 3,
1995, at 10:00 a.m.
I. Election of Directors
Withhold authority to
For all nominees vote for all nominees
[ ] listed below [ ] listed below
Robert E. Stauth, Archie R. Dykes and John A. McMillan (for
three-year terms), and Guy A. Osborn (for two-year term)
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write the nominee's name in the space provided below.)
II. Approval of the Economic Value Added Incentive Bonus Plan for
Fleming Companies, Inc. and Its Subsidiaries
[ ] For [ ] Against [ ] Abstain
III. Ratification of Deloitte & Touche LLP as independent auditors
for 1995.
[ ] For [ ] Against [ ] Abstain
IV. In their discretion, on such other business as may properly
come before the meeting or any adjournment thereof.
The shares represented by this proxy will be voted as
specified, or if no direction is indicated, they will be voted
FOR the election of the directors nominated by the board and
FOR Items II and III. The board of directors recommends a
vote FOR each of these items.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD USING THE ENCLOSED
ENVELOPE.
<PAGE>
[LOGO] SEE REVERSE SIDE FOR MATTERS TO BE VOTED ON
I RESERVE THE RIGHT TO REVOKE THIS PROXY AT ANY TIME BEFORE
THE EXERCISE THEREOF.
___________________________________
Signature
______________________, 1995
__________________________________
Please sign exactly as name
appears below, indicating
official position or
representative capacity.
FOR JOINT ACCOUNTS EACH OWNER SHOULD SIGN
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
