<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Fleming Companies, Inc
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
<TABLE>
<S> <C>
A GREAT PLACE TO WORK
A GREAT PLACE TO TRADE
[FLEMING COMPANIES, INC. LOGO] A GREAT PLACE TO INVEST
</TABLE>
<TABLE>
<S> <C>
FLEMING COMPANIES, INC. NOTICE OF 2000 ANNUAL MEETING
6301 Waterford Boulevard AND PROXY STATEMENT
P. O. Box 26647
Oklahoma City, Oklahoma 73126-0647
</TABLE>
Dear Fellow Shareholders:
Please come to our annual meeting on May 10, 2000. We are holding this
year's meeting at 10:00 a.m. Mountain Daylight Time at the Salt Lake City
Marriott, 75 South West Temple, Salt Lake City, Utah. You will hear about our
performance for fiscal 1999 and have the opportunity to ask questions. Enclosed
with this proxy statement are your proxy card and our 1999 annual report. We
first mailed these materials to shareholders on March 27, 2000.
You will notice that we have used "plain English" in our proxy statement
this year. I hope you like the new format and find the proxy materials easier to
read.
We are also introducing telephone voting and internet voting this year in
addition to the usual method of voting by mail. We hope you find these new
voting methods useful, and we would appreciate your vote as soon as practicable.
I look forward to seeing you at our annual meeting.
Sincerely,
Mark S. Hansen
Chairman and Chief Executive Officer
March 27, 2000
<PAGE> 3
FLEMING COMPANIES, INC.
6301 WATERFORD BOULEVARD
P.O. BOX 26647
OKLAHOMA CITY, OK 73126-0647
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
- --------------------------------------------------------------------------------
TIME.................................. 10:00 a.m. on Wednesday, May 10, 2000
PLACE................................. The Salt Lake City Marriott
75 South West Temple
Salt Lake City, Utah
ITEMS OF BUSINESS..................... (1) To re-elect three members of the
board of directors for one year
terms.
(2) To ratify the selection of Deloitte
& Touche LLP as our independent
auditors for the 2000 fiscal year.
(3) To approve our 2000 Stock Incentive
Plan.
(4) To transact such other business as
may properly come before the meeting
and any adjournment or postponement.
RECORD DATE........................... You can vote if you are a shareholder of
record on March 13, 2000.
LIST OF SHAREHOLDERS.................. A list of shareholders entitled to vote
at the meeting will be made available
for examination by any shareholder, for
any purpose germane to the meeting,
during ordinary business hours, for a
period of ten days prior to the meeting
at Suitter Axland, 175 South West
Temple, Suite 700, Salt Lake City, Utah.
PROXY VOTING.......................... It is important that your shares be
represented and voted at the meeting.
Please vote in one of these ways:
PLEASE NOTE THAT ALL VOTES CAST VIA
TELEPHONE
OR THE INTERNET MUST BE CAST BEFORE
12:00 A.M. EASTERN DAYLIGHT SAVINGS
TIME
ON WEDNESDAY, MAY 10, 2000. (1) MARK, SIGN, DATE AND PROMPTLY
RETURN the enclosed proxy card in
the postage-paid envelope, or
(2) CALL 1-877-PRX-VOTE (1-877-779-8683)
from the U.S. and Canada, OR
(3) LOG ON to the following web address:
http://www.eproxyvote.com/FLM
Any proxy may be revoked at any time
prior to its exercise at the meeting.
MARCH 27, 2000 Lenore T. Graham
Senior Vice President,
General Counsel and Secretary
<PAGE> 4
QUESTIONS AND ANSWERS
Q: WHAT AM I VOTING ON?
A: You are voting on three things:
- re-election of three directors (Carol B. Hallett, Guy A. Osborn and
David A. Rismiller),
- ratification of Fleming's independent accountants, and
- approval of our 2000 Stock Incentive Plan. (A copy of the plan is
attached as Exhibit A.)
Q: WHO IS ENTITLED TO VOTE?
A: Shareholders as of the close of business on
March 13, 2000 (the record date). Each share of common stock is
entitled to one vote.
Q: HOW DO I VOTE?
A: In addition to attending the meeting and
casting your vote in person, you may either:
- Mark your selection on the enclosed proxy card, date and sign the
card, and return the card in the enclosed envelope; or
- Dial 1-877-PRX-VOTE (1-877-779-8683) from the U.S. and Canada, enter
your control number (found on your proxy card) and follow the voice
prompts; or
- Go to the following website: http://www.eproxyvote.com/FLM enter your
control number and follow the simple instructions on the screen.
Q: IF I VOTE BY TELEPHONE OR INTERNET,
DO I NEED TO RETURN MY PROXY CARD?
A: No.
Q: WHAT IS THE DIFFERENCE BETWEEN
VOTING VIA TELEPHONE OR THE INTERNET OR RETURNING A PROXY CARD AND
VOTING IN PERSON?
A: Voting by proxy, regardless of whether it is via
telephone or the internet or by returning your proxy card by mail,
appoints Mark S. Hansen, our chairman and chief executive officer, Neal
J. Rider, our chief financial officer and Lenore T. Graham, our senior
vice president, general counsel and secretary, as your proxies. They
will be required to vote on the three proposals exactly as you voted.
However, if any other matter requiring a shareholder vote is properly
raised at the meeting, then Messrs. Hansen and Rider and Mrs. Graham
are authorized to use their discretion to vote on the issues on your
behalf.
Q: HOW DOES DISCRETIONARY
AUTHORITY APPLY?
A: If you sign your proxy card, but do not make
any selections, you give authority to Mark S. Hansen, Neal J. Rider or
Lenore T. Graham to vote on the proposals and any other matter that may
arise at the annual meeting.
Q: IF I VOTE VIA TELEPHONE OR THE
INTERNET OR BY MAILING MY PROXY CARD, MAY I STILL ATTEND THE MEETING?
A: Yes.
Q: WHAT IF I WANT TO CHANGE MY
VOTE?
A: You can revoke your vote at any time before
the meeting.
Q: IS MY VOTE CONFIDENTIAL?
A: Yes, only First Chicago Trust Company, the
inspector of election, Morrow & Co., our proxy solicitor, and certain
employees of Fleming will have access to your voting information. All
comments will remain confidential, unless you ask that your name be
disclosed.
Q: WHO WILL COUNT THE VOTES?
A: First Chicago Trust Company will tabulate
the votes and act as inspector of election.
2
<PAGE> 5
Q: WHAT DOES IT MEAN IF I GET MORE
THAN ONE PROXY CARD?
A: Your shares are probably registered differently
or are in more than one account. Vote all proxy cards to ensure that
all your shares are voted. Contact our transfer agent, (800-317-4445),
to have your accounts registered in the same name and address.
Q: WHAT CONSTITUTES A QUORUM?
A: As of March 13, 2000, 39,223,836 shares of
Fleming common stock were issued and outstanding and entitled to vote
at the annual meeting. A majority of the shares entitled to vote,
present in person or represented by proxy, constitutes a quorum. If you
vote by telephone or the internet or by returning your proxy card, you
will be considered part of the quorum. The inspector of election will
treat shares represented by a properly executed proxy as present at the
meeting. Abstentions and broker non-votes are counted for purposes of
determining a quorum. A broker non-vote occurs when a nominee holding
shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power with
respect to that item and has not received instructions from the
beneficial owner.
Q: WHEN ARE THE SHAREHOLDER
PROPOSALS DUE FOR THE YEAR 2001 ANNUAL MEETING?
A: To be included in next year's proxy statement,
shareholder proposals must be received in writing by November 27, 2000
by our corporate secretary. We will include a proposal in next year's
proxy statement if it complies with the rules of the Securities and
Exchange Commission and we are required to include it in our proxy
statement pursuant to the rules of the Securities and Exchange
Commission. In accordance with our bylaws, if a shareholder wishes to
present a proposal for consideration at the 2001 annual meeting, but
not have it included in our proxy statement, he or she must send
written notice of the proposal to our corporate secretary. To be
timely, the notice must be delivered to, or mailed and received at, our
principal executive offices during the period beginning February 10,
2001 and ending March 12, 2001.
Q: HOW DOES A SHAREHOLDER
NOMINATE A DIRECTOR OF FLEMING?
A: Submit a written recommendation
(accompanied by the written consent of the nominee to serve as a
director if elected and principal occupations or employment over the
past five years) to our corporate secretary. To be timely, the notice
must be delivered to, or mailed and received at, our principal
executive offices during the period beginning February 10, 2001 and
ending March 12, 2001. You can contact our corporate secretary at
Fleming Companies, Inc., 6301 Waterford Boulevard, P.O. Box 26647,
Oklahoma City, Oklahoma 73126-0647.
Q: WHO PAYS THE SOLICITATION
EXPENSES?
A: The accompanying proxy is being solicited on
behalf of the Fleming board of directors, and Fleming pays the cost of
solicitation. We generally solicit proxies by mail, but certain
officers or associates of Fleming may solicit proxies by telephone or
in person without additional compensation. We hired Morrow & Co. to
assist in the distribution of proxy materials and solicitation of votes
for $7,500 plus out-of-pocket expenses. Upon request, we will reimburse
stockbrokers and other custodians, nominees, and fiduciaries for their
reasonable out-of-pocket expenses for forwarding proxy material to the
beneficial owners of shares of our common stock.
Q: WHERE CAN I FIND THE VOTING
RESULTS OF THE MEETING?
A: We will announce voting results at the
meeting, and we will publish final results in our quarterly report on
Form 10-Q for the second quarter of 2000. We will file that report with
the Securities and Exchange Commission. You can get a copy by
contacting either our communications department (405 840-7200) or the
Securities and Exchange Commission at 800/SEC-0330 or www.sec.gov.
3
<PAGE> 6
PROPOSALS
1. RE-ELECTION OF DIRECTORS
Since 1983, our board of directors has been divided into three classes with each
class serving a three year term. At last year's annual meeting, our shareholders
voted to amend our Certificate of Incorporation to phase out classification of
the board of directors. Beginning with this annual meeting, the directors named
below, who are members of the class of directors with terms expiring this year,
are nominated for re-election to serve one year terms. As existing directors
complete their current terms, if nominated, they will stand for re-election for
one year terms. Beginning with the annual meeting in 2002, the classification of
the board will terminate and all nominees will be subject to annual election.
Nominees for re-election this year are:
- - Carol B. Hallett (director since 1993)
- - Guy A. Osborn (director since 1992)
- - David A. Rismiller (director since 1997)
Each has consented to serve a one year term. (See page 6 for biographical
information.)
If any nominee is unable to stand for re-election, the board may provide for a
lesser number of directors or designate a substitute. In the latter event,
shares represented by proxies may be voted for a substitute nominee.
The three nominees receiving the highest number of "yes" votes will be elected
as directors. This number is called a plurality. Abstentions and broker
non-votes are not counted for purposes of the election of directors. OUR BOARD
OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES.
2. RATIFICATION OF DELOITTE &
TOUCHE LLP AS INDEPENDENT AUDITORS FOR 2000
Our board of directors, upon recommendation of the audit and compliance
committee, has selected Deloitte & Touche LLP to serve as our independent
auditors for the 2000 fiscal year and is soliciting your ratification of that
selection. Representatives of Deloitte & Touche LLP will attend the annual
meeting, have the opportunity make a statement if they so desire, and be
available to answer appropriate questions.
The affirmative vote of the majority of shares present in person or by proxy and
entitled to vote at the annual meeting is required to ratify Deloitte & Touche
LLP as independent auditors for 2000. For purposes of approving this proposal,
abstentions are counted as a vote against the proposal and broker non-votes are
not counted. OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
DELOITTE & TOUCHE LLP AS INDEPENDENT ACCOUNTANTS FOR 2000.
3. APPROVAL OF THE FLEMING
COMPANIES, INC. 2000 STOCK INCENTIVE PLAN.
Subject to shareholder approval, our board of directors has adopted the Fleming
Companies, Inc. 2000 Stock Incentive Plan. The plan authorizes the compensation
and organization committee to award or grant up to 1,900,000 shares of Fleming
common stock to key associates. A description of the plan begins on page 24. A
copy of the plan is attached as Exhibit A.
The affirmative vote of the majority of the shares present in person or by proxy
and entitled to vote at the annual meeting is required to approve the 2000 Stock
Incentive Plan. For purposes of approving the Plan, abstentions are counted as a
vote against the proposal and broker non-votes are not counted. OUR BOARD OF
DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE 2000 STOCK INCENTIVE PLAN.
4
<PAGE> 7
BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RE-ELECTION OF EACH
NOMINEE.
The persons named on your proxy card intend to vote in favor of the three
nominees listed below. Should any of these nominees become unavailable for
election, the proxy will be voted for a substitute nominee. If the nominees are
elected, our board will be comprised of nine members, of which seven are
non-management directors, one is an officer of Fleming and one is responsible
for the operations of one of Fleming's significant retail chains.
NOMINEES FOR RE-ELECTION AS DIRECTORS
NAME (AGE), YEAR FIRST BECAME A DIRECTOR
CAROL B. HALLETT (62), 1993
President and chief executive officer of the Air Transport
Association of America, Washington, D.C. (the nation's oldest and
largest airline trade organization). Prior to joining the Air
Transport Association in April 1995, Mrs. Hallett served as senior
government relations advisor with Collier, Shannon, Rill & Scott
from February 1993 to March 1995. From November 1989 through
January 1993, Mrs. Hallett served as the Commissioner of the
United States Customs Service. 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. and Mutual of Omaha Insurance
Company. She is a trustee for the Junior Statesmen of America.
Mrs. Hallett also serves on the President's Cabinet of California
Polytechnic State University.
GUY A. OSBORN (64), 1992
Retired as chairman of Universal Foods Corp. in April 1997. He
joined that company in 1971, became president in 1984 and chairman
in 1990. He serves on the boards of Wisconsin Gas Co., WICOR,
Inc., Boys and Girls Club of Greater Milwaukee and Alverno College
and is a trustee of Northwestern Mutual Life Insurance Company.
DAVID A. RISMILLER (62), 1997
Chairman, president, and chief executive officer of America First
Financial Institutions Management, L.L.C. (managing general
partner of an investment partnership), since 1997. He served as
chairman and chief executive officer of FirsTier Financial Inc.
from 1989 until the company's merger with FirstBank in 1996. From
1988 to 1989, he served as president of FirsTier Financial Inc.
and from 1984 to 1988, he served as chairman and chief executive
officer of Commerce Bank of Kansas City, N.A. From 1992 to 1995,
Mr. Rismiller served as the Federal Reserve tenth district
representative to the Federal Advisory Council and from 1979 to
1997 he served as a member of the Bankers Roundtable. He serves as
an executive committee member and director of the Omaha Chamber of
Commerce; director and executive committee member of Woodmen
Accident & Life Insurance Co.; director and executive committee
member, treasurer and finance committee chairman of Joslyn Art
Museum; director, Duncan Aviation, Inc.; director of Omaha
Zoological Society; dean's council member, Ohio State University
Fisher College of Business; trustee of Midwest Research Institute;
and member of U.S.A.F. Strategic Command Consultation Committee.
5
<PAGE> 8
DIRECTORS WHOSE TERMS EXPIRE IN 2001
NAME (AGE), YEAR FIRST BECAME A DIRECTOR
HERBERT M. BAUM (63), 1998
President and chief operating officer of Hasbro, Inc. (a toy
manufacturing company). Prior to joining Hasbro, Inc. in January,
1999, Mr. Baum served as chairman and chief executive officer of
Quaker State Corporation from 1993 to 1998. From 1978 to 1993, Mr.
Baum served in a variety of positions for Campbell Soup Company
where his last position held was president Campbell North and
South America. Mr. Baum is a director of the American Marketing
Association, The Dial Corporation, Hasbro, Inc., Midas, Inc.,
Meredith Corporation, and Whitman Corporation.
ARCHIE R. DYKES (69), 1981
Chairman and chief executive officer of Capital City Holdings,
Inc. (a venture capital organization). He is a director of Whitman
Corporation, Hussman International Corporation, Midas, Inc. and
the Employment Corporation. 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.
MARK S. HANSEN (45), 1998
Chairman and chief executive officer. Mr. Hansen served as
president and chief executive officer of SAM'S Club, a division of
Wal-Mart Stores, Inc., from 1997 through 1998. Prior to joining
Wal-Mart, Mr. Hansen served in multiple capacities from 1989 to
1997 including as president and chief executive officer of
PETsMART, Inc. a retailer of pet food, pet supplies and related
products. Prior to 1989, Mr. Hansen served in various management
capacities in the supermarket industry. He serves as an executive
advisory board member of Swander Pace Capital and is a director of
Applebee's Restaurants.
6
<PAGE> 9
DIRECTORS WHOSE TERMS EXPIRE IN 2002
NAME (AGE), YEAR FIRST BECAME A DIRECTOR
JACK W. BAKER (62), 1996
Chief executive of Baker's Supermarkets, a family owned
independent retail chain acquired by the company in 1992. Mr.
Baker has been associated with Baker's for his entire business
career. He is president, chief executive officer and an owner of
PDM, Inc., an Omaha, Nebraska based real estate development firm.
He served as chairman of the Greater Omaha Chamber of Commerce in
1993, vice chairman of the Food Marketing Institute from 1993 to
1995 and, with his wife, co-chaired the 1998 United Way of The
Midlands/Chad Campaign.
EDWARD C. JOULLIAN III (70), 1984
Chairman of Mustang Fuel Corp. (energy development and services)
since 1964. He also served as chief executive officer of that
company until his retirement in 1998. Mr. Joullian also served
Fleming as interim chairman of the board of directors from July
18, 1998 until November 30, 1998. He is a director of The LTV
Corp. and a trustee of the Colonial Williamsburg Foundation.
ALICE M. PETERSON (47), 1998
Since February, 2000, Ms. Peterson has been engaged in various
e-commerce start-up ventures. From June 1998 to February 2000, Ms.
Peterson served as vice president and general manager of Sears
Online, the unit of Sears, Roebuck and Co. where all business-to-
consumer Internet activities are conducted, including interactive
marketing. Ms. Peterson was vice president and treasurer of Sears,
Roebuck and Co. from 1993 to 1998. She joined that company in 1989
as corporate director of finance, became managing director --
corporate finance in 1992, and vice president -- treasurer in
1993. Prior to joining Sears, Ms. Peterson served as assistant
treasurer of Kraft, Inc. from 1988 to 1989. From 1984 to 1988, Ms.
Peterson served in a variety of financial positions for PepsiCo,
Inc., where her last position held was director of capital
markets. Ms. Peterson serves on the Ravinia Festival Board of
Trustees.
7
<PAGE> 10
BOARD AND COMMITTEE MEETINGS
Our board of directors met ten times in 1999.
<TABLE>
- ----------------------------------------------------------------------------------------------
NUMBER OF
MEETINGS IN
COMMITTEE AND MEMBERS FUNCTIONS OF COMMITTEE 1999
<S> <C> <C>
- ----------------------------------------------------------------------------------------------
AUDIT AND COMPLIANCE - Considers selection of independent
Herbert M. Baum auditors and recommends appointment
Carol B. Hallet* - Reviews scope of annual audit and
Edward C. Joullian III auditors' annual report and discusses
David A. Rismiller reviews of interim financial
information
- Oversees internal audit programs and 3
policies, as well as programs related
to ethical standards and compliance
- Addresses independent auditors'
relationships with, and non-audit
services provided to, Fleming
- ----------------------------------------------------------------------------------------------
COMPENSATION AND ORGANIZATION - Oversees all compensation and
Herbert M. Baum benefits policies and programs
Archie R. Dykes - Reviews objectives, structure, cost
Guy A. Osborn* and administration of major
Alice M. Peterson compensation and benefits policies 8
and programs
- Administers stock option and
incentive plans
- ----------------------------------------------------------------------------------------------
CORPORATE GOVERNANCE - Considers matters relating to
Jack W. Baker corporate governance
Archie R. Dykes* - Establishes standards, subject to
Carol B. Hallett annual review, for governing operation
David A. Rismiller of Fleming by the board through 4
management
- Annually assesses board and committee
effectiveness
- See Exhibit B to this proxy statement
- ----------------------------------------------------------------------------------------------
NOMINATING - Develops and recommends guidelines
Jack W. Baker and criteria for selecting directors
Edward C. Joullian III* - Recommends nominees
Guy A. Osborn - Considers shareholder recommendations
Alice M. Peterson and makes recommendations on board 1
composition
- See Exhibits C-1 and C-2 to this
proxy statement
- ----------------------------------------------------------------------------------------------
</TABLE>
* Chairperson
8
<PAGE> 11
DIRECTORS COMPENSATION
Directors who are also associates of Fleming do not receive compensation
for serving on the board of directors or its committees other than their normal
salaries. Directors who are not associates of Fleming received the following in
1999:
STOCK BASED COMPENSATION
<TABLE>
<S> <C>
- - 750 stock equivalent units O - These units represent the right to
- - 1,750 shares of restricted stock O receive cash equal to the value of
CASH COMPENSATION Fleming common stock when the director
- - $1,000 for each board or committee meeting attended* ceases to be a member of the board.
- - $500 for chairing a committee - No voting rights.
- - reimbursement of travel expenses for attending meetings - Dividends are accrued as if units were
- --------------- shares of Fleming common stock and paid
* No fees are paid for telephone board meetings unless they when director ceases to be a member of
are longer than thirty minutes and are meetings for which the board.
an agenda has been set. - Stock equivalent units will not be paid
STOCK OWNERSHIP REQUIREMENTS in 2000, but the number of shares of
In March 1999, the board adopted stock ownership restricted stock will be increased to
requirements for directors. Directors who are not also 3,500 shares.
associates of Fleming must meet the following stock
ownership requirements:
</TABLE>
<TABLE>
<S> <C>
- - 1,000 shares of Fleming common stock within one
year of first being elected.
- - 12,000 shares of Fleming common stock within four - Prior to vesting, shares have voting and dividend rights.
years of first being elected. - Shares will vest five years from July 1, 1999 if adjusted
- - Members of the board on March 1, 1999 have until net earnings from operations for the 13 four-week
March 1, 2003 to satisfy the four year requirement accounting periods preceding the date of determination
since the policy was not in effect when they were exceed adjusted net earnings from operations for fiscal
first elected. 1998 by at least 10%.
The board also adopted stock ownership requirements - Shares are held in escrow by Fleming's corporate
for corporate officers which are described on page secretary, pending vesting.
16. - Unvested shares will be forfeited.
- If on a date prior to the end of the five year vesting
period, a director ceases to be a member of the board,
under certain conditions, vesting can be accelerated.
</TABLE>
9
<PAGE> 12
BENEFICIAL OWNERSHIP
This table indicates how much Fleming common stock and stock equivalent
units were beneficially owned as of March 3, 2000, by the directors, nominees
and each of the named executive officers listed in the Summary Compensation
Table who retained his position as of March 3, 2000 and by beneficial owners of
more than 5% as of the dates indicated in the footnotes. Beneficial ownership of
directors and executive officers as a group (22 persons) represents 3.41% of the
total outstanding shares. No director or executive officer owns in excess of 1%
of the outstanding shares except for Mr. Baker who owns 1.25% of the outstanding
shares.
<TABLE>
- -------------------------------------------------------------------------------------------------------
SHARES OF COMMON STOCK
NAME BENEFICIALLY OWNED(1) STOCK EQUIVALENT UNITS(2)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mark S. Hansen(3)(4)(5)(6) 272,000 --
- -------------------------------------------------------------------------------------------------------
Jack W. Baker(3)(4)(5) 491,604 --
- -------------------------------------------------------------------------------------------------------
Herbert M. Baum 2,750 750
- -------------------------------------------------------------------------------------------------------
Archie R. Dykes 6,943 5,314
- -------------------------------------------------------------------------------------------------------
Carol B. Hallett 4,895 4,456
- -------------------------------------------------------------------------------------------------------
Edward C. Joullian 12,105 14,337
- -------------------------------------------------------------------------------------------------------
Guy A Osborn 19,950 5,314
- -------------------------------------------------------------------------------------------------------
Alice M. Peterson 5,750 2,250
- -------------------------------------------------------------------------------------------------------
David A. Rismiller 4,850 2,250
- -------------------------------------------------------------------------------------------------------
E. Stephen Davis(3)(4)(5)(6) 137,731 --
- -------------------------------------------------------------------------------------------------------
William H. Marquard(3)(4)(5) 42,500 --
- -------------------------------------------------------------------------------------------------------
David R. Almond(3)(4)(5)(6) 54,581 --
- -------------------------------------------------------------------------------------------------------
Scott M. Northcutt(3)(4)(5) 50,000 --
- -------------------------------------------------------------------------------------------------------
All directors and executive officers as a
group(4)(5)(6) 1,336,060 34,671
- -------------------------------------------------------------------------------------------------------
Southeastern Asset Management, Inc.(7) 6,444,000 --
6410 Poplar Avenue, Suite 900
Memphis, Tennessee 38119
- -------------------------------------------------------------------------------------------------------
FMR Corp.(8) 4,730,102 --
82 Devonshire Street
Boston, Massachusetts 02109
- -------------------------------------------------------------------------------------------------------
Dimensional Fund Advisors, Inc.(9) 2,048,897 --
1299 Ocean Avenue
11th Floor
Santa Monica, California 90401
- -------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) This column includes Fleming common stock held by directors and officers or
by certain members of their families (for which the directors and executive
officers have sole or shared voting or investment power), Fleming common
stock which the officers have the right to acquire within 60 days of March
3, 2000 under Fleming's stock option and stock incentive plans and shares of
Fleming restricted common stock, subject to forfeiture, awarded under
Fleming's stock incentive plans.
(2) These stock equivalent units are payable in cash only when a director ceases
to be a member of the board.
10
<PAGE> 13
(3) The amounts shown include shares which the following persons have the right
to acquire within 60 days of March 3, 2000 under the company's stock option
and stock incentive plans:
<TABLE>
<S> <C>
Hansen 200,000 shares
Davis 53,500 shares
Almond 44,250 shares
Northcutt 25,000 shares
Baker 6,600 shares
</TABLE>
All directors and officers as a group (including those named above):
414,100
(4) The individuals and group named in the table have shared voting and
investment power with respect to the following shares of common stock:
<TABLE>
<S> <C>
Almond 6,331 shares
Baker 67,086 shares
Dykes 639 shares
Davis 9,000 shares
Northcutt 10,000 shares
</TABLE>
All directors and officers as a group (including those named above): 123,285
shares
(5) The individuals and group named in the table have sole voting power with
respect to the following shares of restricted stock:
<TABLE>
<S> <C>
Hansen 16,000 shares
Baker 2,400 shares
Baum 1,750 shares
Dykes 1,750 shares
Hallett 1,750 shares
Joullian 1,750 shares
Osborn 1,750 shares
Peterson 1,750 shares
Rismiller 1,750 shares
Davis 68,000 shares
Marquard 40,000 shares
Almond 4,000 shares
Northcutt 4,000 shares
</TABLE>
All directors and officers as a group (including those named above): 223,450
shares
(6) The following shares have been excluded from the share totals for
individuals and group named in the table as they do not have voting or
investment power with respect to such shares:
<TABLE>
<S> <C>
Hansen 300,000 shares of restricted stock
Davis 100,000 shares of restricted stock
Almond 33,334 shares of restricted stock
</TABLE>
All directors and officers as a group (including those named above):
483,334 shares of restricted stock
(7) In a Schedule 13G dated February 4, 2000, Southeastern Asset Management,
Inc. disclosed that it held 16.60% of the shares of Fleming common stock and
shared voting and investment power with respect to all shares with Longleaf
Partners Small-Cap Fund.
(8) In a Schedule 13G dated February 14, 2000, FMR Corp. disclosed that it held
12.18% of the shares of Fleming common stock, had sole power to vote 49,000
shares and the sole power to dispose of all shares.
(9) In a Schedule 13G dated February 4, 2000, Dimensional Fund Advisors, Inc.
disclosed it held 5.28% of the shares of Fleming common stock and had sole
power to vote and dispose of all shares.
11
<PAGE> 14
SUMMARY COMPENSATION TABLE
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
- ---------------------------------------------------------------------------------------------------------------
RESTRICTED
OTHER ANNUAL STOCK SECURITIES ALL OTHER
NAME AND PRINCIPAL BONUS($) COMPENSATION AWARDS UNDERLYING COMPENSATION
POSITION YEAR SALARY($) (1) ($)(2) ($)(3) OPTIONS(#) ($)(4)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Mark S. Hansen 1999 750,000 980,813 -- -- -- 90,818
Chairman and Chief 1998 57,692 -- -- 322,000 800,000 306,478
Executive Officer 1997 -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
E. Stephen Davis 1999 330,858 342,104 570 690,000 25,000 --
Executive Vice
President- 1998 324,643 -- 570 -- 25,000 --
President of Wholesale 1997 310,153 357,571 570 843,750 -- 1,000,333
- ---------------------------------------------------------------------------------------------------------------
William H. Marquard (5) 1999 229,231 261,550 -- 418,750 200,000 415,562
Executive Vice
President- 1998 -- -- -- -- -- --
Chief Knowledge Officer 1997 -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
David R. Almond (6) 1999 253,809 265,046 570 -- 100,000 --
Senior Vice President- 1998 223,188 -- 570 -- --
Administration 1997 205,669 134,390 570 337,500 5,000 531,767
- ---------------------------------------------------------------------------------------------------------------
William J. Dowd (7) 1999 247,500 266,603 570 -- 25,000 400,664
Former President and 1998 491,923 -- 570 -- -- --
Chief Operating Officer 1997 474,218 451,654 570 -- 20,000 --
- ---------------------------------------------------------------------------------------------------------------
Scott M. Northcutt 1999 225,212 285,046 570 73,000 100,000 238,652
Executive Vice
President- 1998 -- -- -- -- -- --
Human Resources 1997 -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) Bonus amounts shown for 1997 were awarded pursuant to the terms of the
company's Economic Value Added Incentive Bonus Plan (the "EVA(R) Plan").
Amounts shown in 1997 represent 100% of the bonuses awarded although, under
the EVA Plan, 67% of the bonus awarded for fiscal 1997 was actually paid to
the named executive officer and 33% was credited to his bonus bank. The
board of directors terminated the EVA Plan effective February 15, 1999 and
thereafter Messrs. Davis, Almond and Dowd received payments of the remaining
33% of their 1997 bonuses which had been credited to their bonus banks.
(2) The company provides term life insurance to all associates. 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.
EVA(R) is a registered trademark of Stern Stewart & Co.
12
<PAGE> 15
(3) The following officers received restricted stock awards in connection with
their employment with Fleming which vest as follows based on their
continuous employment through the applicable vesting dates:
<TABLE>
<S> <C> <C>
Hansen 32,000 shares on 16,000 shares vested
November 30, 1998 on November 30, 1999
and 16,000 shares will
vest on November 30,
2000
Marquard 20,000 shares on June 10,000 shares will
1, 1999 vest on June 1, 2000
and 10,000 shares will
vest on June 1, 2001
Northcutt 8,000 shares on 4,000 shares vested on
January 26, 1999 January 26, 2000 and
4,000 shares will vest
on January 26, 2001
</TABLE>
Messrs. Davis and Almond were awarded 100,000 shares and 20,000 shares
respectively of restricted stock on November 1, 1997 in connection with
termination of the company's Supplemental Retirement Income Plan (the
"SRP"). With respect to the award to Mr. Davis, 66,667 shares have vested
and 33,333 will vest if Mr. Davis remains continuously employed through
July 20, 2001 and meets certain targets in connection with Fleming's Low
Cost Pursuit Program. With respect to the award to Mr. Almond, 13,334
shares have vested and 6,666 shares will vest if Mr. Almond remains
continuously employed through March 2, 2001. No vested shares are
distributable to Messrs. Davis or Almond until termination of their
employment. Mr. Davis received an additional award of 60,000 shares of
restricted stock on July 20, 1999 which will vest on July 20, 2001 if Mr.
Davis remains continuously employed through that date and meets certain
targets in connection with Fleming's Low Cost Pursuit Program. Mr. Marquard
received an additional award of 20,000 shares of restricted stock on
December 21, 1999 which will vest 50% per year on December 21, 2000 and
December 21, 2001 based on his continuous employment through the vesting
dates.
All shares of restricted stock will vest upon the occurrence of a change of
control and upon termination of the executive's employment due to death or
disability, without cause or by the executive for good reason. As of
December 25, 1999, there were held in escrow the following shares of
restricted stock for each officer with the following values (based on the
market price per share of $10.3125 on December 23, 1999):
<TABLE>
<S> <C> <C>
Hansen 16,000 shares $ 165,000
Davis 168,000 shares $1,732,500
Marquard 40,000 shares $ 412,500
Almond 24,000 shares $ 247,500
Northcutt 8,000 shares $ 82,500
</TABLE>
(4) Included in this column are the following amounts:
Mr. Hansen: In 1999: $52,145 attributable to personal use of
the company plane (includes reimbursement for his
tax liability associated with such amount) and
$38,673 for relocation expenses. For 1998: $299,105
reimbursement for his tax liability associated with
restricted stock award and $7,373 attributable to
personal use of company plane.
Mr. Davis: For 1997: $1,000,333 represents the value of Mr.
Davis' account established in connection with the
termination of the SRP and adoption of the
Executive Past Service Benefit Plan (the "Past
Service Plan"). The amount was determined by
calculating the present value of the amount which
would have been payable under the SRP, assuming Mr.
Davis had retired November 1, 1997 and was fully
vested. Payment
13
<PAGE> 16
will be made to Mr. Davis under the Past Service
Plan upon termination of employment.
Mr. Marquard: For 1999: $387,314 reimbursement for his tax
liability associated with restricted stock awards
and $28,248 for temporary living expenses.
Mr. Almond: For 1997: $531,767 represents the value of his
account under the Past Service Plan. Payment will
be made to Mr. Almond under the Past Service Plan
upon the termination of his employment.
Mr. Dowd For 1999: $266,232 as a severance payment in
connection with his termination of employment,
$28,557 for his accrued vacation, $31,625 for the
value of his company car, $69,045 reimbursement for
outplacement services and $9,212 COBRA premium
reimbursement.
Mr. Northcutt: For 1999: $70,654 reimbursement for his tax
liability associated with his restricted stock
award, $1,350 reimbursement for COBRA expense from
his prior employer, $87,712 for relocation expense
and $78, 936 for home sale expense.
(5) Compensation for Mr. Marquard is not reflective of an entire year since he
became an associate of Fleming on June 1, 1999.
(6) During 1999, Mr. Almond served the Company as Senior Vice
President -- General Counsel and Corporate Secretary.
(7) Mr. Dowd resigned as president and chief operating officer effective May 20,
1999. For information regarding his severance arrangement, See "Employment
Contracts, Termination of Employment and Change in Control
Arrangements -- Dowd Severance Arrangement."
14
<PAGE> 17
REPORT OF THE COMPENSATION AND ORGANIZATION COMMITTEE
COMPENSATION PHILOSOPHY
The company's compensation philosophy is based primarily on "pay for
performance." The objectives of the Fleming executive compensation programs are
to motivate executive officers to enhance financial performance by focusing
attention on specific business objectives emphasizing company profitability and
teamwork, and to reward executive officers based on company and individual
performance.
There are three parts to Fleming's executive compensation program:
- Base salary
- Annual bonuses; and
- Stock based compensation (stock options and restricted stock)
The compensation and organization committee, comprised of non-management
directors, administers the executive compensation programs, policies and
practices. The committee decides compensation for all executive officers, except
the chief executive officer, upon recommendation of the CEO. The committee's
decisions are submitted to the full board of directors for its information and
review only. The CEO, who is also a director, does not participate in the
board's review of the committee's decisions regarding his compensation.
BASE SALARIES
Base salaries for the named executive officers for 1999 except for Messrs.
Davis, Almond and Dowd were determined based on negotiations of their employment
agreements. Decisions as to these were based on the committee's view that the
company needed to attract top notch candidates to these positions, the value of
these executives in the market place and the general competition for executives
of this caliber. Decisions as to base salary for 1999 for Messrs. Davis, Almond
and Dowd and other executive officers were determined by the committee in
reliance on the company's salary administration program, the objectives of which
are to attract, retain and motivate productive executive officers. 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 function 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, 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 establishes target
salaries in the middle of the assigned salary ranges. 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." In comparison with our peer group, which
is listed on page 18, the company believes that its executive salaries are
generally higher than executive salaries of Nash Finch Company and are generally
less than executive salaries of SUPERVALU, Inc. The committee froze base
salaries of all executive officers for fiscal 1999.
BONUSES
Bonuses are paid to executives under the corporate officer incentive plan.
The plan has the following primary goals:
- Attain substantial improvement in sales
- Substantially improve earnings
- Provide a concrete and understandable linkage between performance, reward
and share value creation for shareholders; and
- Encourage teamwork
Bonus awards are based on pre-determined performance targets in relation to
adjusted earnings per share, sales and adjusted earnings. In order to be
entitled to a bonus, the adjusted earnings per share target must be met or
exceeded. Then, the bonus will be weighted based on sales and adjusted earnings.
For fiscal 1999, the committee determined that 60% of the bonus would be based
on sales and 40% would be based on adjusted
15
<PAGE> 18
earnings. The bonus for fiscal 1999 was determined by the committee at its
meeting in February 2000. Target percentages for all executive officers were set
based on position and responsibilities, comparative market place data and
internal equity. Since the adjusted earnings per share target for 1999 was met,
all executive officers received a bonus for 1999. These bonuses were paid in
March 2000.
STOCK BASED COMPENSATION
The committee can award restricted stock and stock options to executives
and other key associates under the company's stock option and stock incentive
plans. The committee believes stock based compensation is important in aligning
the interests of executives and shareholders. The committee believes restricted
stock awards build stock ownership and provide a long-term focus since the stock
is restricted from being sold, transferred or assigned and is forfeitable until
vested. The committee believes stock options help to retain and motivate key
associates. All executive officers, except Mr. Hansen, received stock option
grants during fiscal 1999. The basis of the grants was not only to provide
incentive to these executives to drive company performance, but also to help
retain these executives in an increasingly competitive market for top talent.
CHIEF EXECUTIVE OFFICER
Mark S. Hansen became CEO of the company on November 30, 1998. His salary
for 1999 and his number of stock options and shares of restricted stock were
determined by the committee as a result of negotiations of an employment
agreement with Mr. Hansen and consideration of the following factors:
competitive levels of compensation, his experience in managing operations of a
size and complexity similar to the company, his general knowledge of the
distribution and retail food industry, his track record in making changes and
the committee's belief that Mr. Hansen has the qualifications necessary to
responsibly manage the company. His bonus for 1999 was determined in accordance
with the Corporate Officer Incentive Plan which provides for a bonus if certain
pre-determined levels of adjusted earnings per share, sales and adjusted
earnings are met. The amount of his bonus was based on a percentage of his
salary set forth in his employment agreement. This percentage was determined by
the committee as part of his overall compensation package set forth in his
employment agreement and based on the factors set forth above. Mr. Hansen did
not receive any stock based compensation in fiscal 1999.
MANAGEMENT STOCK OWNERSHIP GUIDELINES
Fleming is committed to strengthening the alignment of its executives'
financial interests with those of its shareholders. Corporate officers are
required to own the following levels of stock:
<TABLE>
- ---------------------------------------------------------------
POSITION STOCK OWNERSHIP LEVEL
- ---------------------------------------------------------------
<S> <C>
Chairman and CEO 3 times base salary
- ---------------------------------------------------------------
Executive Vice Presidents 2 times base salary
- ---------------------------------------------------------------
Senior Vice Presidents 1.5 times base salary
- ---------------------------------------------------------------
Vice Presidents 1 times base salary
- ---------------------------------------------------------------
</TABLE>
Officers must meet the required stock ownership levels by March 2004 or
five years from their election as an officer, whichever is later. Neither
unvested restricted stock nor stock options, whether vested or unvested, are
counted for purposes of determining stock ownership. Fleming has a loan program
which provides interest free, full recourse loans to officers in order to assist
them in meeting their stock ownership levels. None of the named executive
officers participated in the loan program during 1999. At March 10, 2000,
officers subject to the stock ownership requirements owned a total of 224,638
shares of Fleming Stock.
16
<PAGE> 19
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Although no executive officer's total compensation for fiscal 1999 exceeded
the limitations on deductibility under Section 162(m) of the Internal Revenue
Code of 1986, as amended ("the Code"), the committee has adopted and the board
of directors has ratified 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. 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).
<TABLE>
<S> <C>
Guy A. Osborn, Chairman Archie R. Dykes
Herbert M. Baum Alice M. Peterson
</TABLE>
17
<PAGE> 20
PERFORMANCE GRAPH
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.
[TOTAL SHAREHOLDER RETURNS PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fleming Companies, Inc. 100 93 79 62 48 48
S&P 500 100 138 169 226 290 346
Peer Group 100 125 125 157 172 120
</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 1994.
Companies in the peer group are as follows: Fleming Companies, Inc.,
SUPERVALU, Inc., Nash Finch Company, Super Food Services, Inc., Richfood
Holdings, Inc., and Super Rite Corp. Richfood Holdings, Inc. was acquired by
SUPERVALU, Inc. in 1999, Super Food Services, Inc. was acquired by Nash Finch
Company in 1996 and Super Rite Corp. was acquired by Richfood Holdings, Inc. in
1995.
18
<PAGE> 21
STOCK OPTION INFORMATION
OPTION GRANTS
This table sets forth information concerning the grant of stock options to
the named executive officers during the fiscal year ended December 25, 1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
- ----------------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR
OPTIONS EMPLOYEES BASE GRANT DATE
GRANTED IN PRICE EXPIRATION PRESENT
NAME (#)(1,)(2) FISCAL YEAR ($/SH) DATE VALUE $(3)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mark S. Hansen -- -- -- -- --
- ----------------------------------------------------------------------------------------------
E. Stephen Davis 25,000 1.22 7.5313 03/01/09 82,609.77
- ----------------------------------------------------------------------------------------------
William H. Marquard 200,000 9.72 10.1875 05/31/09 941,116.36
- ----------------------------------------------------------------------------------------------
David R. Almond 100,000 4.86 7.5313 03/01/09 330,439.06
- ----------------------------------------------------------------------------------------------
William J. Dowd 25,000 1.22 7.5313 03/01/09 82,609.77
- ----------------------------------------------------------------------------------------------
Scott M. Northcutt 100,000 4.86 9.0000 01/26/09 389,626.96
- ----------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) The listed options are exercisable in four twenty-five percent (25%)
increments on the first through fourth anniversaries of the date of grant.
(2) The vesting of all options accelerates in the case of a change of control of
the company. In the case of Messrs. Hansen and Marquard, if their employment
is terminated within one year following a change of control of the company,
they will each have three years from such termination date to exercise their
stock options. All executives have three years following retirement to
exercise any options which have vested as of their retirement date.
(3) 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 a ten year term; yield volatility of 34.89%;
annual dividend yield ranging from .79% to 1.06% and a risk free rate of
return ranging from 5.00% to 6.06%.
19
<PAGE> 22
OPTION EXERCISES
This table sets forth information regarding the value as of the fiscal year
ended December 25, 1999 of any unexercised options held by the named executive
officers who retained their positions with the company as of such date. No stock
options were exercised by any of the named executive officers during the fiscal
year ended December 25, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
- ---------------------------------------------------------------------------------------------
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END(#) FY-END($)(1)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mark S. Hansen -- -- 200,000/600,000 2,062,500/6,187,500
- ---------------------------------------------------------------------------------------------
E. Stephen Davis -- -- 53,500/40,500 551,719/417,656
- ---------------------------------------------------------------------------------------------
William H. Marquard -- -- 0/200,000 0/2,062,500
- ---------------------------------------------------------------------------------------------
David R. Almond -- -- 44,250/78,750 456,328/812,109
- ---------------------------------------------------------------------------------------------
Scott M. Northcutt -- -- 25,000/75,000 257,813/773,438
- ---------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) The market price of the company's common stock at 1999 fiscal year-end was
$10.3125 per share.
PENSION PLAN
This table shows the estimated annual retirement benefits payable on a
straight-life annuity basis to covered participants, including the named
executive officers, assuming retirement at age 65 under Fleming's qualified
Pension Plan as well as non-qualified supplemental benefits under the Executive
Deferred Compensation Plan, based on final average earnings formulas and years
of service.
<TABLE>
<CAPTION>
ANNUAL FINAL YEARS OF SERVICE
COMPENSATION(1) 10 15 20 25 30 35 40
<S> <C> <C> <C> <C> <C> <C> <C>
$250,000 $ 41,675 $ 62,500 $ 83,350 $104,188 $125,000 $137,500 $ 150,000
300,000 50,010 75,000 100,020 125,025 150,000 165,000 180,000
350,000 58,345 87,500 116,690 145,863 175,000 192,500 210,000
400,000 66,680 100,000 133,360 166,700 200,000 220,000 240,000
450,000 75,015 112,500 150,030 187,538 225,000 247,500 270,000
500,000 83,350 125,000 166,700 208,375 250,000 275,000 300,000
550,000 91,685 137,500 183,370 229,213 275,000 302,500 330,000
600,000 100,020 150,000 200,040 250,050 300,000 330,000 360,000
650,000 108,355 162,500 216,710 270,888 325,000 357,500 390,000
700,000 116,690 175,000 233,380 291,725 350,000 385,000 420,000
750,000 125,025 187,500 250,050 312,563 375,000 412,500 450,000
800,000 133,360 200,000 266,720 333,400 400,000 440,000 480,000
850,000 141,695 212,500 283,390 354,238 425,000 467,500 510,000
900,000 150,030 225,000 300,060 375,076 450,000 495,000 540,000
</TABLE>
- ---------------
(1) Under the Executive Deferred Compensation Plan, Annual Final Compensation is
average total compensation earned for the three consecutive calendar years
of employment prior to retirement.
As of December 25, 1999, Messrs. Hansen, Davis, Northcutt and Almond each
had 1, 39, 1 and 10 years, respectively, of credited service under the
Pension Plan. Mr. Marquard will not be eligible to participate
20
<PAGE> 23
in the Pension Plan until one year from the date he joined the company;
however, all named executive officers except for Mr. Dowd participated in
the Executive Deferred Compensation Plan during 1999. Since Mr. Dowd
terminated his employment with the company in 1999, he will not be eligible
to receive any payments for early retirement under the Pension Plan, but
will qualify for benefits when he reaches age 65. He will have an estimated
5 years of credited service. Amounts shown in the table are subject to
offset for Social Security. Benefits under the Executive Deferred
Compensation Plan are subject to offset for amounts payable under the
Pension Plan. As of December 25, 1999, Annual Final Compensation was
$739,871 for Mr. Hansen, $400,473 for Mr. Davis, $395,604 for Mr. Marquard,
$264,633 for Mr. Almond, and $242,308 for Mr. Northcutt.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
EMPLOYMENT AGREEMENTS
Our named executive officers, except for Messrs. Davis and Almond, have
five year employment agreements. Below is a summary of the basic terms of the
agreements followed by a summary of the specific terms for each named executive
officer as of their date of employment. Base salaries and bonus targets are
reviewed annually by the corporation and organization committee and could
increase over the five year term of the employment agreement.
If Fleming terminates employment without cause or the executive resigns for
good reason, the executive receives:
- Base salary and accrued vacation through termination date
- Base salary for the next 24 months
- Continued coverage under all medical and life insurance programs for the
next 24 months
If Fleming terminates employment with cause or executive resigns without
good reason, the executive receives:
- Base salary and accrued vacation through the termination date
If Fleming terminates employment due to disability, the executive receives
- Base salary through date of termination
- Disability benefits under the company's disability program
- Accrued vacation through termination date
Upon death of the executive, his beneficiary receives his base salary
through date of death.
The executive has also agreed not to compete with Fleming for two years
following termination of employment, but not if he has been terminated without
cause or he resigns for good reason. In addition, Messrs. Hansen and Northcutt
participated in the company's relocation program for senior executives, which
provided for reimbursement of various relocation expenses and the purchase of
their homes by the company at the greater of their documented invested cost or
the value determined by an appraiser selected by the company.
HANSEN AGREEMENT
- Agreement term is from November 30 1998 to November 29, 2003
- Annual base salary of $750,000, subject to increase but not decrease
- Bonus target of 75% of base salary with a maximum annual of 150% of base
salary
- 32,000 shares of restricted stock (vests at 50% per year) plus $299,105
to reimburse him for his tax liability associated with the award
- 800,000 nonqualified stock options which vest at 25% per year on the
first four anniversary dates of the award
21
<PAGE> 24
MARQUARD AGREEMENT
- Agreement term is from June 1, 1999 to May 31, 2004
- Annual base salary of $400,000, subject to increase but not decrease
- Bonus target of 65% of base salary with a maximum annual of 130% of base
salary
- 20,000 shares (vests at 50% per year) of restricted stock plus $196,547
to reimburse him for his tax liability associated with the award
- 200,000 nonqualified stock options which vest at 25% per year on the
first four anniversary dates of the award
NORTHCUTT AGREEMENT
- Agreement term is from January 26, 1999 to January 25, 2004
- Annual base salary of $245,000, subject to increase but not decrease
- Bonus target of 55% of base salary with a maximum annual of 110% of base
salary
- 8,000 shares of restricted stock (vests at 50% per year) plus $70,654 to
reimburse him for his tax liability associated with the award
- 100,000 nonqualified stock options which vest at 25% per year on the
first four anniversary dates of the award
CHANGE OF CONTROL EMPLOYMENT AGREEMENTS
Since 1995, we have entered into change of control employment agreements
with senior executives. The purpose of these agreements is to assure objective
judgment and to keep the loyalties of key executives if Fleming is ever faced
with a potential change of control by providing for a continuation of salary,
bonus, health and other benefits for a maximum period of three years. In
addition, if the executive is terminated during the three years following the
change of control or in anticipation of the change of control for other than
cause, death, disability, or he terminates for good reason, then the executive
receives a lump sum payment comprised of:
- 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 paid or payable during the three out of the five years preceding the
change of control date which yield the highest base salary (the "Highest
Base Salary");
- The pro-rated portion of his annual bonus or, if higher, an amount equal
to the middle target level bonus payable, regardless of whether specified
targets are met, under the company's incentive compensation plan
applicable to the executive for his position on the date his employment
is terminated (the "Highest Bonus");
- The product obtained by multiplying 2.99 times the sum of the Highest
Base Salary and the Highest Bonus; and
- Any amounts previously deferred by the executive (plus any accrued
interest thereon) and any accrued vacation pay.
In addition, there are provisions for the "gross up" of certain payments to
cover certain taxes on these termination payments and for extension of
indemnification and insurance coverage for 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 change of control employment agreements, assuming a change of control on
December 25, 1999, 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 (plus any applicable
"gross up" amounts): Mr. Hansen, $5,175,130; Mr. Davis, $2,000,630; Mr. Marquard
$1,978,034; Mr. Almond, $1,435,337; and Mr. Northcutt, $1,584,837. The change of
control employment agreement for Mr. Dowd terminated upon termination of his
employment with the company.
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OTHER CHANGE OF CONTROL ARRANGEMENTS
SUPPLEMENTAL TRUSTS. The company has two trust agreements to provide for
the payment of its obligations under the Change of Control Employment
Agreements, severance and employment agreements available to certain associates
who are not named executive officers, to former associates receiving benefits
under the company's former supplemental retirement income plan and to
participants in the Past Service Plan and the Executive Deferred Compensation
Plan. These trusts include provisions which require full funding in the event of
a change of control.
PAST SERVICE PLAN. The company adopted the Past Service Plan in connection
with the termination of its supplemental retirement income plan. Benefits
payable under the plan are based on the benefit payable under the terminated
plan assuming the executive retired as of November 1, 1997 and was fully vested.
Messrs. Davis and Almond are the only two named executive officers participating
in this plan. Upon a change of control, all participants will be fully vested in
this plan. Assuming (i) a change of control on December 25, 1999 and termination
of their employment, and (ii) each of them elected a life only payment method,
the company would be required to pay Mr. Davis and Mr. Almond $101,132 and
$54,987, respectively, annually for life.
EXECUTIVE DEFERRED COMPENSATION PLAN. Under the company's Executive
Deferred Compensation Plan, which supplements retirement benefits under the
Pension Plan, each participant will be fully vested in his benefit upon a change
of control, benefits will be paid immediately following termination of
employment and no reduction will be made for any early retirement adjustment
factors. Assuming (i) a change of control of the company on December 25, 1999
and termination of employment of the following persons and (ii) each of them
elected a life only payment method, the company would be required under the
Executive Deferred Compensation Plan to pay the following amounts to the
following persons annually for life: Mr. Hansen, $11,600; Mr. Davis, $104,417;
Mr. Marquard, $3,928; Mr. Almond, $16,390; and Mr. Northcutt, $1,372.
OTHER ARRANGEMENTS. Provisions of the company's stock option and stock
incentive plans permit the committee administering the plan to accelerate
vesting upon a change of control. The vesting of all stock options held by the
named executive officers will accelerate upon a change of control. All shares of
restricted stock awarded to directors and the named executive officers will
become fully vested and nonforfeitable in the event of a change of control.
DOWD SEVERANCE ARRANGEMENT
Mr. Dowd resigned as president and chief operating officer effective May
20, 1999 and entered into a severance agreement with the company. Pursuant to
the agreement, Mr. Dowd is entitled to receive $990,000 (two year's base salary)
payable over a two year period, $266,603 (the pro rated portion of his bonus
earned for 1999), his company car valued at $31,625, $28,557 for his accrued
vacation, $69,045 as reimbursement for outplacement services and COBRA premium
replacement which is equal to 18 times the monthly COBRA premium for his then
current level of coverage under the company's medical plan. Mr. Dowd is also
entitled to receive reimbursement for certain relocation costs. Mr. Dowd
released the company from any claims associated with his employment.
TRANSACTIONS WITH MANAGEMENT
The company leases eleven Baker's supermarket sites and a storage facility
in Omaha, Nebraska from five separate affiliates (the "Baker Affiliates") of
Jack W. Baker, a director of the company, and paid the Baker Affiliates in
fiscal 1999 approximately $2,460,000 for rent and administrative fees under the
leases. The company also has an ongoing contract with a limited liability
company owned 75% by his son-in-law in which Mr. Baker is also investor (the
"LLC"). The company paid $104,000 to the LLC during 1999 for software support to
certain of its retail stores. The company also received $4,000 in royalty fees
during 1999 from the LLC in connection with the sale and licensing of certain
software previously sold by the company to the LLC. In his capacity as an
associate of the company, Mr. Baker is also a party to a change of control
employment agreement with the company.
23
<PAGE> 26
Prior to joining Fleming in June 1999, Mr. Marquard was a partner with
Ernst & Young LLP and had a general partnership interest of less than 0.5%.
During 1999, Ernst & Young LLP provided consulting services to the company and
received a total of $6.9 million in fees plus warrants to purchase 100,000
shares of company stock at a purchase price of $9.50 per share.
2000 STOCK INCENTIVE PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 2000 STOCK
INCENTIVE PLAN.
Subject to shareholder approval, our board of directors has adopted the
Fleming Companies, Inc. 2000 Stock Incentive Plan. The 2000 plan authorizes
Fleming's compensation committee to grant non-qualified and incentive stock
options and award shares restricted stock to key associates. A total of
1,900,000 shares of common stock have been reserved to be issued under the 2000
plan.
BACKGROUND
In 1999, Fleming's shareholders approved the 1999 stock incentive plan
which reserved 2,500,000 shares of Fleming common stock to be issued to key
associates. During 1999, Fleming granted a large number of options in order to
attract top industry talent. In accordance with its compensation philosophy of
linking pay with performance, Fleming also granted options to its senior
executives in 1999 instead of raising their base pay. Additionally, since the
1999 plan was approved, Fleming has expanded the group of potential optionees to
include over 200 associates. In order to reward and retain our top management,
additional options were granted in February 2000. Our board of directors
recommends approval of the 2000 stock incentive plan as it believes that the
2000 plan will provide the additional shares of Fleming stock necessary to
attract new associates and to retain and provide incentives for current
associates.
PURPOSE AND FEATURES OF THE PLAN
The purpose of the 2000 plan is to emphasize the company's pay for
performance philosophy and create incentives designed to motivate Fleming
associates to significantly contribute toward the growth and profitability of
the company. The shares available to be issued under the 2000 plan will enable
Fleming to attract and retain experienced associates who, by their positions,
abilities and diligence, are able to make important contributions to Fleming's
success.
ADMINISTRATION
Fleming's 2000 stock incentive plan consists of two separate stock plans
that are almost identical.
- Non-executive officer plan: This aspect of the plan is limited to
participants who are not subject to Section 16 of the Securities Exchange
Act of 1934 because they are not executive officers of Fleming.
- Executive officer plan: This aspect of the plan is limited to
participants who are executive officers of Fleming and who, therefore,
are subject to the reporting requirements of Section 16 of the Securities
Exchange Act of 1934.
Except for administration and the category of participants eligible to
receive awards, the terms of the non-executive officer plan and the executive
officer plan are identical.
The executive officer plan is administered exclusively by the compensation
and organization committee. The non-executive officer plan is administered by
two committees: the regular award committee and the compensation and
organization committee. Our chief executive officer is the sole member of
regular award committee. Although the regular award committee is authorized to
administer the non-executive officer plan, it can only make awards within
guidelines set by the compensation and organization committee.
When we refer to the non-executive officer plan in this discussion, we mean
the regular award committee and the compensation and organization committee;
when we refer to the executive officer plan, "the committee" means the
compensation and organization committee. In the case of either plan, the
committee is
24
<PAGE> 27
authorized and has complete discretion to formulate policies and to establish
rules and regulations in connection with the plan.
ELIGIBILITY FOR PARTICIPATION
All of Fleming's key associates, and all of the key associates of Fleming's
subsidiaries and affiliated entities, are eligible to participate in the 2000
plan. Subject to the provisions of the plan, the committee has exclusive power
in selecting participants from among the eligible associates.
TYPES OF AWARDS
The 2000 plan provides that any or all of the following types of awards may
be granted:
- Stock options: Including non-qualified stock options and stock options
intended to qualify as "incentive stock options" under Section 422 of the
Internal Revenue Code; and
- Restricted stock.
STOCK OPTIONS. The committee may grant awards under the 2000 plan in the
form of options to purchase shares of Fleming common stock. The committee will
have the authority to determine:
- the terms and conditions of each option;
- the number of shares subject to the option; and
- the manner and time of the option's exercise.
Subject to certain adjustment provisions, the committee cannot grant
options for more than 300,000 shares of common stock to any participant in any
fiscal year.
Exercise Price. The exercise price of an option may not be less than the
fair market value of the common stock on the date of grant. The fair market
value of shares of common stock subject to options is determined by averaging
the high and low sales prices as reported on the New York Stock Exchange. As of
March 13, 2000, the average of the high and low sales price of Fleming's common
stock as reported on the exchange was $15.2188.
A participant may pay the exercise price of an option in cash, in shares of
Fleming common stock or a combination of both; provided that, if the exercise
price (including required withholding taxes) is paid using shares of Fleming
common stock, the committee does not want this act to result in an adverse
accounting charge to the company. Accordingly, at the present time, the
committee has determined for administrative purposes that a participant using
Fleming shares to pay the exercise price of options granted under the 2000 plan
must have held those shares for at least six months. Stock options may also be
exercised through a broker-dealer acting on a participant's behalf. The exercise
price is paid upon settlement by the broker from the proceeds of the sale of the
common stock subject to the stock option.
When and how to exercise options. Stock options are exercisable in
accordance with the schedule set forth in each award agreement. Generally, stock
options vest at the rate of 25% each year over the four years following the date
of grant.
A participant can exercise all or any portion of a stock option which is
exercisable by giving written notice to Fleming's secretary at least two
business days before the exercise date. When stock options are exercised, a
participant must pay the exercise price to Fleming. In addition, the participant
is responsible for paying any applicable income and employment taxes.
RESTRICTED STOCK AWARDS. Shares of restricted stock awarded under the plan
will be subject to the terms, conditions, restrictions and/or limitations, if
any, that the committee deems appropriate, including restrictions on employment,
transferability and continued employment. All restricted stock awards must vest
over a minimum restriction period of at least three years from the date of grant
if vesting is based on time. If vesting is based on performance, the restricted
stock award must have a minimum restriction period of at least one year. Subject
to certain adjustment provisions, no more than 200,000 shares of common stock
can be awarded
25
<PAGE> 28
under the plan as restricted stock awards. The committee can accelerate the
vesting of restricted stock awards upon the occurrence of a change of control
event and upon termination of employment due to death, disability, without cause
or by the participant for good reason.
TERMINATION OF EMPLOYMENT
The committee will determine the treatment of a participant's stock option
in the event of death, disability, retirement or termination of employment for
an approved reason. Award agreements covering options granted under the plan
currently provide for the following upon termination of employment:
RETIREMENT. If a participant retires in accordance with Fleming's regular
retirement policies, the participant will have a period of three years from
retirement date to exercise options which are vested on the retirement date. All
unvested options will terminate.
DEATH. If a participant's employment terminates due to death, the
participant's personal representative will have twelve months from the date of
death to exercise options which are vested on the date of death. All unvested
options will terminate.
OTHER TERMINATIONS. If a participant's employment is terminated for any
other reason, the participant will have three months from the date of
termination to exercise the stock options which are vested on the date of
termination. All unvested options will terminate.
Upon granting any award, the committee will, by way of an award agreement,
establish any other terms, conditions, restrictions and/or limitations governing
the awards granted.
AMENDING THE STOCK PLAN
Acting through the board, Fleming may amend the 2000 stock incentive plan
at any time. The board of directors, however, may not without shareholder
approval adopt any amendment that would increase the maximum number of shares
that may be issued under the plan (except for certain antidilution adjustments
described below), materially modify the plan's eligibility requirements or
materially increase the benefits provided to participants under the plan.
CHANGE OF CONTROL EVENT
If a change of control event occurs, the committee can, within its
discretion, accelerate the vesting of any unvested portion of any outstanding
awards under the stock plan.
NEW PLAN BENEFITS
To date, no awards have been made under the 2000 plan.
AUTOMATIC ADJUSTMENT FEATURES
The 2000 plan provides for the automatic adjustment of:
- the number and kind of shares available under it, and
- the number and kind of shares subject to outstanding awards in the event
the common stock is changed into or exchanged for a different number or
kind of shares of stock or other securities of Fleming or another
corporation, or if the number of shares of common stock is increased
through a stock dividend.
The plan also provides that the committee may adjust the number of shares
available under the plan and the number of shares subject to any outstanding
awards if, in the committee's opinion, any other change in the number or kind of
shares of common stock equitably requires such an adjustment.
FEDERAL TAX TREATMENT
INCENTIVE STOCK OPTION GRANT. A participant who is granted an incentive
stock option does not realize any taxable income at the time of the grant or at
the time of exercise. Similarly, the company is not entitled to
26
<PAGE> 29
any deduction at the time of grant or at the time of exercise (except for
alternative minimum tax). If the participant makes no disposition of the shares
acquired pursuant to an incentive stock option before the later of two years
from the date of grant of such option or one year of the transfer of such shares
to the participant, any gain or loss realized on a subsequent disposition of the
shares will be treated as a long-term capital gain or loss. Under such
circumstances, the company will not be entitled to any deduction for federal
income tax purposes.
NON-QUALIFIED STOCK OPTION GRANT/EXERCISE. A participant who is granted a
non-qualified stock option does not have taxable income at the time of grant.
Taxable income occurs at the time of exercise in an amount equal to the
difference between the exercise price of the shares and the market value of the
shares on the date of exercise. Fleming is entitled to a corresponding deduction
for the same amount.
RESTRICTED STOCK AWARD. A participant who has been granted an award in the
form of restricted stock will not realize taxable income at the time of the
grant, and the company will not be entitled to a deduction at the time of the
grant, assuming that the restrictions constitute a substantial risk of
forfeiture for federal income tax purposes. When such restrictions lapse, the
participant will receive taxable income (and have tax basis in the shares) in an
amount equal to the excess of the fair market value of the shares at such time
over the amount, if any, paid for such shares. The company will be entitled to a
corresponding deduction.
OTHER BUSINESS
The board of directors knows of no other business which will be presented
for action at the meeting other than as described in the notice of annual
meeting. If other matters come before the meeting, the proxies will be voted in
accordance with the judgment of the persons named on the proxy card.
By Order of the Board of Directors
Lenore T. Graham
Senior Vice President,
General Counsel and Secretary
27
<PAGE> 30
EXHIBIT A
FLEMING COMPANIES, INC.
2000 STOCK INCENTIVE PLAN
<PAGE> 31
FLEMING COMPANIES, INC.
2000 STOCK INCENTIVE PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I PURPOSE....................................................................... A-1
Section 1.1 Purpose..................................................... A-1
Section 1.2 Establishment............................................... A-1
Section 1.3 Shares Subject to the Plan.................................. A-1
ARTICLE II DEFINITIONS.................................................................. A-1
Section 2.1 "Affiliated Entity"......................................... A-1
Section 2.2 "Award"..................................................... A-1
Section 2.3 "Award Agreement"........................................... A-1
Section 2.4 "Board"..................................................... A-1
Section 2.5 "Change of Control Event" .................................. A-1
Section 2.6 "Code"...................................................... A-3
Section 2.7 "Committee"................................................. A-3
Section 2.8 "Common Stock".............................................. A-3
Section 2.9 "Company"................................................... A-3
Section 2.10 "Compensation Committee".................................... A-3
Section 2.11 "Date of Grant"............................................. A-3
Section 2.12 "Eligible Associate"........................................ A-3
Section 2.13 "Exchange Act".............................................. A-3
Section 2.14 "Executive Officer Participants"............................ A-3
Section 2.15 "Fair Market Value"......................................... A-3
Section 2.16 "Incentive Stock Option".................................... A-3
Section 2.17 "Non-Executive Officer Participants"........................ A-3
Section 2.18 "Nonqualified Stock Option"................................. A-3
Section 2.19 "Option".................................................... A-3
Section 2.20 "Participant"............................................... A-3
Section 2.21 "Plan"...................................................... A-3
Section 2.22 "Regular Award Committee"................................... A-3
Section 2.23 "Restricted Stock Award".................................... A-4
Section 2.24 "Secretary"................................................. A-4
Section 2.25 "Subsidiary"................................................ A-4
ARTICLE III ADMINISTRATION.............................................................. A-4
Section 3.1 Administration of the Plan; the Committee................... A-4
Section 3.2 Committee to Make Rules and Interpret Plan.................. A-4
ARTICLE IV GRANT OF AWARDS; SHARES SUBJECT TO THE PLAN.................................. A-5
Section 4.1 Committee to Grant Awards to Eligible Associates............ A-5
ARTICLE V ELIGIBILITY................................................................... A-5
ARTICLE VI STOCK OPTIONS................................................................ A-6
Section 6.1 Grant of Options............................................ A-6
Section 6.2 Conditions of Options....................................... A-6
ARTICLE VII RESTRICTED STOCK AWARDS..................................................... A-7
Section 7.1 Grant of Restricted Stock Awards............................ A-7
Section 7.2 Conditions of Restricted Stock Awards....................... A-7
ARTICLE VIII STOCK ADJUSTMENTS.......................................................... A-8
</TABLE>
(i)
<PAGE> 32
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE IX GENERAL...................................................................... A-8
Section 9.1 Amendment or Termination of Plan............................ A-8
Section 9.2 Termination of Employment; Termination of Service........... A-8
Section 9.3 Limited Transferability -- Options.......................... A-9
Section 9.4 Withholding Taxes........................................... A-9
Section 9.5 Dividends and Dividend Equivalents -- Awards................ A-9
Section 9.6 Change of Control........................................... A-10
Section 9.7 Amendments to Awards........................................ A-10
Section 9.8 Regulatory Approval and Listings............................ A-10
Section 9.9 Right to Continued Employment............................... A-10
Section 9.10 Reliance on Reports......................................... A-10
Section 9.11 Construction................................................ A-10
Section 9.12 Governing Law............................................... A-10
</TABLE>
(ii)
<PAGE> 33
ARTICLE I
PURPOSE
Section 1.1 Purpose. This 2000 Stock Incentive Plan (the "Plan") is
established by Fleming Companies, Inc. (the "Company") to emphasize the
Company's pay for performance philosophy by creating incentives which are
designed to motivate Participants to put forth maximum effort toward the success
and growth of the Company and to enable the Company to attract and retain
experienced individuals who by their position, ability and diligence are able to
make important contributions to the Company's success. Toward these objectives,
the Plan provides for the granting of Options and Restricted Stock Awards to
Eligible Associates subject to the conditions set forth in the Plan.
Section 1.2 Establishment. The Plan is effective as of February 29, 2000
and for a period of ten years thereafter. The Plan shall continue in effect
until all matters relating to the payment of Awards and administration of the
Plan have been settled.
The Plan shall be approved by the holders of a majority of the outstanding
shares of Common Stock, present, or represented, and entitled to vote at a
meeting called for such purpose, which approval must occur within the period
ending twelve months after the date the Plan is adopted by the Board. Pending
such approval by the shareholders, Awards under the Plan may be granted to
Eligible Associates, but no such Awards may be exercised prior to receipt of
shareholder approval. In the event shareholder approval is not obtained within
such twelve-month period, all such Awards shall be void.
Section 1.3 Shares Subject to the Plan. Subject to the limitations set
forth in the Plan, Awards may be made under this Plan for a total of One Million
Nine Hundred Thousand (1,900,000) shares of Common Stock.
ARTICLE II
DEFINITIONS
Section 2.1 "Affiliated Entity" means any partnership or limited liability
company in which a majority of the partnership or other similar interest thereof
is owned or controlled, directly or indirectly, by the Company or one or more of
its Subsidiaries or Affiliated Entities or a combination thereof. For purposes
hereof, the Company, a Subsidiary or an Affiliated Entity shall be deemed to
have a majority ownership interest in a partnership or limited liability company
if the Company, such Subsidiary or Affiliated Entity shall be allocated a
majority of partnership or limited liability company gains or losses or shall be
or control a managing director or a general partner of such partnership or
limited liability company.
Section 2.2 "Award" means, individually or collectively, any Option or
Restricted Stock Award granted under the Plan to an Eligible Associate by the
Committee pursuant to such terms, conditions, restrictions, and/or limitations,
if any, as the Committee may establish by the Award Agreement or otherwise.
Section 2.3 "Award Agreement" means any written instrument that
establishes the terms, conditions, restrictions, and/or limitations applicable
to an Award in addition to those established by this Plan and by the Committee's
exercise of its administrative powers.
Section 2.4 "Board" means the Board of Directors of the Company.
Section 2.5 "Change of Control Event" means each of the following:
(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 authority granted in any rights agreement to which the
A-1
<PAGE> 34
Company is a party (the "Rights Agreement") lowers the acquisition
threshold percentages set forth in such Rights Agreement, the Triggering
Percentage shall be automatically reduced to equal the threshold
percentages set pursuant to authority granted to the board in 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, or (iv) any
acquisition by any corporation pursuant to a transaction which complies
with clauses (x), (y), and (z) of subsection (c) of this Section 2.5; 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 or acquisition of assets of another
corporation (a "Business Combination"), in each case, unless, following
such Business Combination, (x) 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 will beneficially own,
directly or indirectly, more than 50% 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 will own 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, (y) no Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation resulting from such
Business Combination) will beneficially own, 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 (z) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination will
have been 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
(d) Approval by the shareholders of the Company of (x) a complete
liquidation or dissolution of the Company or, (y) 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 50% 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 will be 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 will be
beneficially owned, directly or indirectly, by any Person (excluding any
employee benefit plan (or related trust) of the Company or such
A-2
<PAGE> 35
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 will have been
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.
Section 2.6 "Code" means the Internal Revenue Code of 1986, as amended.
References in the Plan to any section of the Code shall be deemed to include any
amendments or successor provisions to such section and any regulations under
such section.
Section 2.7 "Committee" shall have the meaning set forth in Section 3.1.
Section 2.8 "Common Stock" means the common stock, par value $2.50 per
share, of the Company, and after substitution, such other stock as shall be
substituted therefor as provided in Article VIII.
Section 2.9 "Company" means Fleming Companies, Inc., an Oklahoma
corporation.
Section 2.10 "Compensation Committee" means the Compensation and
Organization Committee of the Board.
Section 2.11 "Date of Grant" means the date on which the granting of an
Award to an Eligible Associate is authorized by the Committee or such later date
as may be specified by the Committee in such authorization.
Section 2.12 "Eligible Associate" means any key associate of the Company,
a Subsidiary, or an Affiliated Entity.
Section 2.13 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
Section 2.14 "Executive Officer Participants" means Participants who are
subject to the provisions of Section 16 of the Exchange Act.
Section 2.15 "Fair Market Value" means (A) during such time as the Common
Stock is listed upon the New York Stock Exchange or other exchanges or the
NASDAQ/ National Market System, the average of the highest and lowest sales
prices of the Common Stock as reported by such stock exchange or exchanges or
the NASDAQ/National Market System on the day for which such value is to be
determined, or if no sale of the Common Stock shall have been made on any such
stock exchange or the NASDAQ/National Market System that day, on the next
preceding day on which there was a sale of such Common Stock or (B) during any
such time as the Common Stock is not listed upon an established stock exchange
or the NASDAQ/ National Market System, the mean between dealer "bid" and "ask"
prices of the Common Stock in the over-the-counter market on the day for which
such value is to be determined, as reported by the National Association of
Securities Dealers, Inc.
Section 2.16 "Incentive Stock Option" means an Option within the meaning
of Section 422 of the Code.
Section 2.17 "Non-Executive Officer Participants" means Participants who
are not subject to the provisions of Section 16 of the Exchange Act.
Section 2.18 "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.
Section 2.19 "Option" means an Award granted under Article VI of the Plan
and includes both Nonqualified Stock Options and Incentive Stock Options to
purchase shares of Common Stock.
Section 2.20 "Participant" means an Eligible Associate of the Company, a
Subsidiary, or an Affiliated Entity to whom an Award has been granted by the
Committee under the Plan.
Section 2.21 "Plan" means Fleming Companies, Inc. 2000 Stock Incentive
Plan.
Section 2.22 "Regular Award Committee" means a committee comprised of the
individual who is the Company's chief executive officer and such additional
members, if any, as shall be appointed by the Board.
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Section 2.23 "Restricted Stock Award" means an Award granted to an
Eligible Associate under Article VII of the Plan.
Section 2.24 "Secretary" means the corporate secretary of the Company duly
elected by the Board.
Section 2.25 "Subsidiary" shall have the same meaning set forth in Section
424 of the Code.
ARTICLE III
ADMINISTRATION
Section 3.1 Administration of the Plan; the Committee. For purposes of
administration, the Plan shall be deemed to consist of two separate stock
incentive plans, a "Non-Executive Officer Participant Plan" which is limited to
Non-Executive Officer Participants and an "Executive Officer Participant Plan"
which is limited to Executive Officer Participants. Except for administration
and the category of Eligible Associates eligible to receive Awards, the terms of
the Non-Executive Officer Participant Plan and the Executive Officer Participant
Plan are identical.
The Non-Executive Officer Participant Plan shall be administered by both
the Regular Award Committee and the Compensation Committee. The Regular Award
Committee may only act within guidelines established by the Compensation
Committee. The Executive Officer Participant Plan shall be administered by the
Compensation Committee. With respect to the Non-Executive Officer Participant
Plan and to decisions relating to Non-Executive Officer Participants, including
the grant of Awards, the term "Committee" shall mean both the Regular Award
Committee and the Compensation Committee; and with respect to the Executive
Officer Participant Plan and to decisions relating to the Executive Officer
Participants, including the granting of Awards, the term "Committee" shall mean
only the Compensation Committee.
Unless otherwise provided in the by-laws of the Company or the resolutions
adopted from time to time by the Board establishing the Committee, the Board may
from time to time remove members from, or add members to, the Committee.
Vacancies on the Committee, however caused, shall be filled by the Board. The
Committee shall hold meetings at such times and places as it may determine. A
majority of the members of the Committee shall constitute a quorum, and the acts
of a majority of the members present at any meeting at which a quorum is present
or acts reduced to or approved in writing by a majority of the members of the
Committee shall be the valid acts of the Committee.
Subject to the provisions of the Plan, the Committee shall have exclusive
power to:
(a) Select the Eligible Associates to participate in the Plan.
(b) Determine the time or times when Awards will be made.
(c) Determine the form of an Award, whether an Option or a Restricted
Stock Award, the number of shares of Common Stock subject to the Award, all
the terms, conditions (including performance requirements), restrictions
and/or limitations, if any, of an Award, including the time and conditions
of exercise or vesting, and the terms of any Award Agreement, which may
include the waiver or amendment of prior terms and conditions or
acceleration or early vesting or payment of an Award under certain
circumstances determined by the Committee.
(d) Determine whether Awards will be granted singly or in combination.
(e) Accelerate the vesting, exercise or payment of an Award or the
performance period of an Award.
(f) Take any and all other action it deems necessary or advisable for
the proper operation or administration of the Plan.
Section 3.2 Committee to Make Rules and Interpret Plan. The Committee in
its sole discretion shall have the authority, subject to the provisions of the
Plan, to establish, adopt, or revise such rules and regulations and to make all
such determinations relating to the Plan as it may deem necessary or advisable
for
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the administration of the Plan. The Committee's interpretation of the Plan or
any Awards and all decisions and determinations by the Committee with respect to
the Plan shall be final, binding, and conclusive on all parties.
ARTICLE IV
GRANT OF AWARDS; SHARES SUBJECT TO THE PLAN
Section 4.1 Committee to Grant Awards to Eligible Associates. The
Committee may, from time to time, grant Awards to one or more Eligible
Associates, provided, however, that:
(a) Subject to Article VIII, the aggregate number of shares of Common
Stock made subject to the Award of Options to any Eligible Associate in any
calendar year may not exceed 300,000.
(b) Subject to Article VIII, in no event shall more than 200,000
shares of Common Stock subject to the Plan be awarded to Eligible
Associates as Restricted Stock Awards (the "Restricted Stock Award Limit").
(c) Any shares of Common Stock related to Awards which terminate by
expiration, forfeiture, cancellation or otherwise or are exchanged in the
Committee's discretion for Awards not involving Common Stock, shall be
available again for grant under the Plan and shall not be counted against
the Restricted Stock Award Limit.
(d) Common Stock delivered by the Company in payment of any Award
under the Plan may be authorized and unissued Common Stock or Common Stock
held in the treasury of the Company.
(e) The Committee shall, in its sole discretion, determine the manner
in which fractional shares arising under this Plan shall be treated.
(f) The Compensation Committee shall from time to time establish
guidelines for the Regular Award Committee regarding the grant of Awards to
Eligible Associates.
(g) Separate certificates representing Common Stock to be delivered to
an Eligible Associate Participant upon the exercise of any Option will be
issued to such Participant.
(h) Awards granted which vest based upon the Participant's continued
employment shall be limited in such a way that (i) no portion of the Award
will vest until one year after the Date of Grant, (ii) no more than
one-third of the shares subject to the Award is eligible to vest until one
year after Date of Grant; (iii) no more than two-thirds of the shares
subject to the Award is eligible to vest until at least two years after
Date of Grant and (iv) the entire Award cannot vest until at least three
years after Date of Grant.
(i) Awards granted which vest based upon performance standards shall
require the holder to remain in the employment of the Company, a
Subsidiary, or an Affiliated Entity for at least one year from Date of
Grant.
(j) The Committee shall be prohibited from canceling, reissuing or
modifying Awards if such action will have the effect of repricing the
Participant's Award.
ARTICLE V
ELIGIBILITY
Subject to the provisions of the Plan, the Committee shall, from time to
time, select from the Eligible Associates those to whom Awards shall be granted
and shall determine the type or types of Awards to be made and shall establish
in the related Award Agreements the terms, conditions, restrictions and/or
limitations, if any, applicable to the Awards in addition to those set forth in
the Plan and the administrative rules and regulations issued by the Committee.
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ARTICLE VI
STOCK OPTIONS
Section 6.1 Grant of Options. The Committee may, from time to time,
subject to the provisions of the Plan and such other terms and conditions as it
may determine, grant Options to Eligible Associates. These Options may be
Incentive Stock Options or Nonqualified Stock Options, or a combination of both.
Each grant of an Option shall be evidenced by an Award Agreement executed by the
Company and the Eligible Associate, and shall contain such terms and conditions
and be in such form as the Committee may from time to time approve, subject to
the requirements of Section 6.2.
Section 6.2 Conditions of Options. Each Option so granted shall be subject
to the following conditions:
(a) Exercise Price. As limited by Section 6.2(e) below, each Option
shall state the exercise price which shall be set by the Committee at the
Date of Grant; provided, however, no Option shall be granted at an exercise
price which is less than the Fair Market Value of the Common Stock on the
Date of Grant.
(b) Form of Payment. The exercise price of an Option may be paid (i)
in cash or by check, bank draft or money order payable to the order of the
Company; (ii) by delivering shares of Common Stock having a Fair Market
Value on the date of payment equal to the amount of the exercise price, but
only to the extent such exercise of an Option would not result in an
accounting compensation charge with respect to the shares used to pay the
exercise price unless otherwise determined by the Committee; or (iii) a
combination of the foregoing. In addition to the foregoing, any Option
granted under the Plan may be exercised by a broker-dealer acting on behalf
of a Participant if (A) the broker-dealer has received from the Participant
or the Company a notice evidencing the exercise of such Option and
instructions signed by the Participant requesting the Company to deliver
the shares of Common Stock subject to such Option to the broker-dealer on
behalf of the Participant and specifying the account into which such shares
should be deposited, (B) adequate provision has been made with respect to
the payment of any withholding taxes due upon such exercise or, in the case
of an Incentive Stock Option, upon the disposition of such shares and (C)
the broker-dealer and the Participant have otherwise complied with Section
220.3(e)(4) of Regulation T, 12 CFR, Part 220 and any successor rules and
regulations applicable to such exercise.
(c) Exercise of Options. Options granted under the Plan shall be
exercisable, in whole or in such installments and at such times, and shall
expire at such time, as shall be provided by the Committee in the Award
Agreement. Exercise of an Option shall be by written notice to the
Secretary at least two business days in advance of such exercise stating
the election to exercise in the form and manner determined by the
Committee. Every share of Common Stock acquired through the exercise of an
Option shall be deemed to be fully paid at the time of exercise and payment
of the exercise price.
(d) Other Terms and Conditions. Among other conditions that may be
imposed by the Committee, if deemed appropriate, are those relating to (i)
the period or periods and the conditions of exercisability of any Option;
(ii) the minimum periods during which Participants must be employed by the
Company, its Subsidiaries, or an Affiliated Entity, or must hold Options
before they may be exercised; (iii) the minimum periods during which shares
acquired upon exercise must be held before sale or transfer shall be
permitted; (iv) conditions under which such Options or shares may be
subject to forfeiture; (v) the frequency of exercise or the minimum or
maximum number of shares that may be acquired at any one time; (vi) the
achievement by the Company of specified performance criteria; and (vii)
non-compete and protection of business matters.
(e) Special Restrictions Relating to Incentive Stock Options. Options
issued in the form of Incentive Stock Options shall only be granted to
Eligible Associates of the Company or a Subsidiary, and not to Eligible
Associates of an Affiliated Entity. Furthermore, Incentive Stock Options
shall, in addition to being subject to all applicable terms, conditions,
restrictions and/or limitations established by the Committee, comply with
the requirements of Section 422 of the Code, including, without limitation,
the requirement that the exercise price of an Incentive Stock Option not be
less than 100% of the Fair Market Value of the Common Stock on the Date of
Grant, the requirement that each Incentive Stock
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Option, unless sooner exercised, terminated or cancelled, expire no later
than 10 years from its Date of Grant, and the requirement that the
aggregate Fair Market Value (determined on the Date of Grant) of the Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by a Participant during any calendar year (under this Plan or
any other plan of the Company or any Subsidiary) not exceed $100,000.
(f) Application of Funds. The proceeds received by the Company from
the sale of Common Stock pursuant to Options will be used for general
corporate purposes.
(g) Shareholder Rights. No Participant shall have a right as a
shareholder with respect to any share of Common Stock subject to an Option
prior to purchase of such shares of Common Stock by exercise of the Option.
ARTICLE VII
RESTRICTED STOCK AWARDS
Section 7.1 Grant of Restricted Stock Awards. The Committee may, from time
to time, subject to the provisions of the Plan and such other terms and
conditions as it may determine, grant a Restricted Stock Award to any Eligible
Associate. Restricted Stock Awards shall be awarded in such number and at such
times during the term of the Plan as the Committee shall determine. Each
Restricted Stock Award may be evidenced in such manner as the Committee deems
appropriate, including, without limitation, a book-entry registration or
issuance of a stock certificate or certificates, and by an Award Agreement
setting forth the terms of such Restricted Stock Award.
Section 7.2 Conditions of Restricted Stock Awards. The grant of a
Restricted Stock Award shall be subject to the following:
(a) Restriction Period. In addition to any vesting conditions
determined by the Committee, including, but not by way of limitation, the
achievement by the Company of specified performance criteria, vesting of
each Restricted Stock Award shall require the holder to remain in the
employment of the Company, a Subsidiary, or an Affiliated Entity for a
prescribed period (a "Restriction Period"). Subject to Sections 4.1(h) and
(i) the Committee shall determine the Restriction Period or Periods which
shall apply to the shares of Common Stock covered by each Restricted Stock
Award or portion thereof. At the end of the Restriction Period, assuming
the fulfillment of any other specified vesting conditions, the restrictions
imposed by the Committee shall lapse with respect to the shares of Common
Stock covered by the Restricted Stock Award or portion thereof. In addition
to acceleration of vesting upon the occurrence of a Change of Control Event
as provided in Section 9.6, the Committee may, in its sole discretion,
modify or accelerate the vesting of a Restricted Stock Award (i) in the
case of the death or disability of the Participant, (ii) in the case the
Participant's employment is terminated by the Company without "cause" as
such term shall be defined by the Committee in the Award Agreement, or
(iii) in the case the Participant terminates his employment for "good
reason" as such term shall be defined by the Committee in the Award
Agreement. In addition, with respect to Restricted Stock Awards
representing an aggregate of 20,000 shares under the Plan (10% of the
Restricted Stock Award Limit), the Committee may in its sole discretion
modify or accelerate the vesting of such Restricted Stock Awards under such
circumstances as it deems appropriate.
(b) Restrictions. The holder of a Restricted Stock Award may not sell,
transfer, pledge, exchange, hypothecate, or otherwise dispose of the shares
of Common Stock represented by the Restricted Stock Award during the
applicable Restriction Period. The Committee shall impose such other
restrictions and conditions on any shares of Common Stock covered by a
Restricted Stock Award as it may deem advisable including, without
limitation, restrictions under applicable Federal or state securities laws,
and may legend the certificates representing Restricted Stock to give
appropriate notice of such restrictions.
(c) Rights as Shareholders. During any Restriction Period, the
Committee may, in its discretion, grant to the holder of a Restricted Stock
Award all or any of the rights of a shareholder with respect to the shares,
including, but not by way of limitation, the right to vote such shares and
to receive dividends.
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If any dividends or other distributions are paid in shares of Common Stock,
all such shares shall be subject to the same restrictions on
transferability as the shares of Restricted Stock with respect to which
they were paid.
ARTICLE VIII
STOCK ADJUSTMENTS
In the event that the shares of Common Stock, as presently constituted,
shall be changed into or exchanged for a different number or kind of shares of
stock or other securities of the Company or of another corporation (whether by
reason of merger, consolidation, recapitalization, reclassification, stock
split, combination of shares or otherwise), or if the number of such shares of
Common Stock shall be increased through the payment of a stock dividend, or a
dividend on the shares of Common Stock or rights or warrants to purchase
securities of the Company shall be issued to holders of all outstanding Common
Stock, then there shall be substituted for or added to each share available
under and subject to the Plan, and each share theretofore appropriated under the
Plan, the number and kind of shares of stock or other securities into which each
outstanding share of Common Stock shall be so changed or for which each such
share shall be exchanged or to which each such share shall be entitled, as the
case may be, on a fair and equivalent basis in accordance with the applicable
provisions of Section 424 of the Code; provided, however, with respect to
Options, in no such event will such adjustment result in a modification of any
Option as defined in Section 424(h) of the Code. In the event there shall be any
other change in the number or kind of the outstanding shares of Common Stock, or
any stock or other securities into which the Common Stock shall have been
changed or for which it shall have been exchanged, then if the Committee shall,
in its sole discretion, determine that such change equitably requires an
adjustment in the shares available under and subject to the Plan, or in any
Award, theretofore granted, such adjustments shall be made in accordance with
such determination, except that no adjustment of the number of shares of Common
Stock available under the Plan or to which any Award relates that would
otherwise be required shall be made unless and until such adjustment either by
itself or with other adjustments not previously made would require an increase
or decrease of at least 1% in the number of shares of Common Stock available
under the Plan or to which any Award relates immediately prior to the making of
such adjustment (the "Minimum Adjustment"). Any adjustment representing a change
of less than such minimum amount shall be carried forward and made as soon as
such adjustment together with other adjustments required by this Article VIII
and not previously made would result in a Minimum Adjustment. Notwithstanding
the foregoing, any adjustment required by this Article VIII which otherwise
would not result in a Minimum Adjustment shall be made with respect to shares of
Common Stock relating to any Award immediately prior to exercise, payment or
settlement of such Award.
No fractional shares of Common Stock or units of other securities shall be
issued pursuant to any such adjustment, and any fractions resulting from any
such adjustment shall be eliminated in each case by rounding downward to the
nearest whole share.
ARTICLE IX
GENERAL
Section 9.1 Amendment or Termination of Plan. The Board may alter, suspend
or terminate the Plan at any time. In addition, the Board may, from time to
time, amend the Plan in any manner, but may not without shareholder approval
adopt any amendment which would (i) increase the aggregate number of shares of
Common Stock available under the Plan (except by operation of Article VIII),
(ii) materially modify the requirements as to eligibility of Eligible Associates
for participation in the Plan, or (iii) materially increase the benefits to
Participants provided by the Plan.
Section 9.2 Termination of Employment; Termination of Service. If an
Eligible Associate's employment with the Company, a Subsidiary, or an Affiliated
Entity terminates for a reason other than death, disability, retirement, or any
approved reason, all unexercised, unearned, and/or unpaid Awards, including, but
not by way of limitation, Awards earned, but not yet paid, all unpaid dividends
and dividend equivalents, and all interest, if any, accrued on the foregoing
shall be cancelled or forfeited, as the case may be, unless the
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Eligible Associate's Award Agreement provides otherwise. The Committee shall (i)
determine what events constitute disability, retirement, or termination for an
approved reason for purposes of the Plan, and (ii) determine the treatment of a
Participant under the Plan in the event of his death, disability, retirement, or
termination for an approved reason. The Committee shall also determine the
method, if any, for accelerating the vesting or exercisability of any Options,
or providing for the exercise of any unexercised Options in the event of an
Eligible Associate's death, disability, retirement, or termination for an
approved reason. In the event an Eligible Associate's employment is terminated
due to retirement in accordance with the Company's regular retirement policies,
unless the Eligible Associate's Award Agreement provides otherwise, the Eligible
Associate shall have a period of three years following his date of retirement to
exercise any Nonqualified Stock Options which are otherwise exercisable on his
date of retirement.
Section 9.3 Limited Transferability -- Options. The Committee may, in its
discretion, authorize all or a portion of the Nonqualified Stock Options to be
granted under this Plan to be on terms which permit transfer by the Participant
to (i) the ex-spouse of the Participant pursuant to the terms of a domestic
relations order, (ii) the spouse, children or grandchildren of the Participant
("Immediate Family Members"), (iii) a trust or trusts for the exclusive benefit
of such immediate Family Members, or (iv) a partnership in which such Immediate
Family Members are the only partners. In addition (x) there may be no
consideration for any such transfer, (y) the Award Agreement pursuant to which
such Nonqualified Stock Options are granted must be approved by the Committee,
and must expressly provide for transferability in a manner consistent with this
paragraph, and (z) subsequent transfers of transferred Nonqualified Stock
Options shall be prohibited except as set forth below in this Section 9.3.
Following transfer, any such Nonqualified Stock Options shall continue to be
subject to the same terms and conditions as were applicable immediately prior to
transfer, provided that for purposes of Section 9.2 hereof the term
"Participant" shall be deemed to refer to the transferee. The events of
termination of employment of Section 9.2 hereof shall continue to be applied
with respect to the original Participant, following which the Nonqualified Stock
Options shall be exercisable by the transferee only to the extent, and for the
periods specified in Section 9.2 hereof. No transfer pursuant to this Section
9.3 shall be effective to bind the Company unless the Company shall have been
furnished with written notice of such transfer together with such other
documents regarding the transfer as the Committee shall request. In addition,
subject to the foregoing provisions of this Section 9.3, Awards shall be
transferable only by will or the laws of descent and distribution; however, no
such transfer of an Award by the Participant shall be effective to bind the
Company unless the Company shall have been furnished with written notice of such
transfer and an authenticated copy of the will and/or such other evidence as the
Committee may deem necessary to establish the validity of the transfer and the
acceptance by the transferee of the terms and conditions of such Award.
Section 9.4 Withholding Taxes. Unless otherwise paid by the Participant,
the Company shall be entitled to deduct from any payment under the Plan,
regardless of the form of such payment, the amount of all applicable income and
employment taxes required by law to be withheld with respect to such payment or
may require the Participant to pay to it such tax prior to and as a condition of
the making of such payment. In accordance with any applicable administrative
guidelines it establishes, the Committee may allow a Participant to pay the
amount of taxes required by law to be withheld from an Award by (i) directing
the Company to withhold from any payment of the Award a number of shares of
Common Stock having a Fair Market Value on the date of payment equal to the
amount of the required withholding taxes or (ii) delivering to the Company
previously owned shares of Common Stock having a Fair Market Value on the date
of payment equal to the amount of the required withholding taxes; provided, the
foregoing notwithstanding, any payment made by the Participant pursuant to
either of the foregoing clauses (i) or (ii) shall not be permitted if it would
result in an accounting charge with respect to such shares used to pay such
taxes unless otherwise approved by the Committee.
Section 9.5 Dividends and Dividend Equivalents -- Awards. The Committee
may choose, at the time of the grant of any Award or any time thereafter up to
the time of payment of such Award, to include as part of such Award an
entitlement to receive dividends or dividend equivalents subject to such terms,
conditions, restrictions, and/or limitations, if any, as the Committee may
establish. Dividends and dividend equivalents granted hereunder shall be paid in
such form and manner (i.e., lump sum or installments), and at such time as
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the Committee shall determine. All dividends or dividend equivalents which are
not paid currently may, at the Committee's discretion, accrue interest.
Section 9.6 Change of Control. Awards granted under the Plan to any
Eligible Associate may, in the discretion of the Committee, provide that such
Awards shall be immediately vested, fully earned and exercisable upon the
occurrence of a Change of Control Event.
Section 9.7 Amendments to Awards. The Committee may at any time
unilaterally amend the terms of any Award Agreement, whether or not presently
exercisable or vested, to the extent it deems appropriate; provided, however,
that any such amendment which is adverse to the Participant shall require the
Participant's consent.
Section 9.8 Regulatory Approval and Listings. The Company shall use its
best efforts to file with the Securities and Exchange Commission as soon as
practicable following approval by the shareholders of the Company of the Plan as
provided in Section 1.2 of the Plan, and keep continuously effectively, a
Registration Statement on Form S-8 with respect to shares of Common Stock
subject to Awards hereunder. Notwithstanding anything contained in this Plan to
the contrary, the Company shall have no obligation to issue shares of Common
Stock under this Plan prior to:
(a) the obtaining of any approval from, or satisfaction of any waiting
period or other condition imposed by, any governmental agency which the
Committee shall, in its sole discretion, determine to be necessary or
advisable;
(b) the admission of such shares to listing on the stock exchange on
which the Common Stock may be listed; and
(c) the completion of any registration or other qualification of such
shares under any state or Federal law or ruling of any governmental body
which the Committee shall, in its sole discretion, determine to be
necessary or advisable.
Section 9.9 Right to Continued Employment. Participation in the Plan shall
not give any Eligible Associate any right to remain in the employ of the
Company, any Subsidiary, or any Affiliated Entity. The Company or, in the case
of employment with a Subsidiary or an Affiliated Entity, the Subsidiary or
Affiliated Entity reserves the right to terminate any Eligible Associate at any
time. Further, the adoption of this Plan shall not be deemed to give any
Eligible Associate or any other individual any right to be selected as a
Participant or to be granted an Award.
Section 9.10 Reliance on Reports. Each member of the Committee and each
member of the Board shall be fully justified in relying or acting in good faith
upon any report made by the independent public accountants of the Company and
its Subsidiaries and upon any other information furnished in connection with the
Plan by any person or persons other than himself or herself. In no event shall
any person who is or shall have been a member of the Committee or of the Board
be liable for any determination made or other action taken or any omission to
act in reliance upon any such report or information or for any action taken,
including the furnishing of information, or failure to act, if in good faith.
Section 9.11 Construction. Masculine pronouns and other words of masculine
gender shall refer to both men and women. The titles and headings of the
sections in the Plan are for the convenience of reference only, and in the event
of any conflict, the text of the Plan, rather than such titles or headings,
shall control.
Section 9.12 Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Texas except as superseded by
applicable Federal law.
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EXHIBIT B
FLEMING COMPANIES, INC.
FEBRUARY 2000
CORPORATE GOVERNANCE
THE PHILOSOPHY.
The Company will operate pursuant to the highest possible ethical standards
with integrity, propriety, and fairness, and in full compliance with the law.
Each director and management associate is expected to conduct himself or herself
at all times in accordance with these tenets. Every action by each director and
management associate will be taken with full consideration for the interests and
well-being, first, of all Company stockholders and, second, of all other Company
stakeholders. Equal opportunity without qualification is the Company's policy in
employment practices, in its daily management, and in its procurement and sale
of goods and services. Discrimination will not be permitted based on race,
color, religion, sex, age, disability status, national origin, citizenship, or
Vietnam veteran status.
THE STANDARDS.
The Governance Committee of the Board has adopted and will administer the
following Corporate Governance Standards for the guidance of the Company:
1. The Board will operate in accordance with a statement of Requirements of
Management and Directors attached hereto as Attachment I.
2. The Chairman of the Compensation and Organization Committee (the
"Compensation Committee") shall conduct a performance appraisal review
with the CEO at least annually. In connection with the annual review the
Chairman shall seek consultation with, and request information from, the
other members of the Compensation Committee and other independent
directors.
3. The Board will annually review and approve a three-year strategic plan
and a one-year operating plan for the Company.
4. Beginning with the annual meeting of stockholders in 2002, all directors
will stand for election annually.
5. The Board believes that as a general rule, former Company associates
should not serve on the Board; provided, however, this standard shall
not apply to former Company associates five years after he/she has no
longer been an associate.
6. The Audit and Compliance Committee ("Audit Committee") and the
Compensation Committee shall consist entirely of independent directors.
7. The Board will appoint all committee members of the designated standing
committees of the Board upon the recommendation of the Governance
Committee. The intent will be to rotate various members of the Board
through various committees so that each independent member of the Board
has an opportunity to become more experienced about the internal
operations and affairs of the Company. Effective with the annual meeting
in 2000, the Board will have the following standing committees: Audit
and Compliance, Compensation and Organization, Finance,
Governance/Nominating and an Executive Committee.
8. The Governance Committee will annually assess Board and committee
effectiveness through the use of the "Board Evaluation" questionnaire
attached hereto as Attachment II. Each independent member of the Board
will be required to complete the questionnaire annually. The
questionnaires shall become a part of the permanent records of the
Company and maintained by the Company's corporate secretary.
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9. Whenever feasible, directors will receive materials well in advance of
meetings for items to be acted upon. In addition, independent directors
shall meet outside of the presence of non-independent directors from
time to time as deemed appropriate.
10. Interlocking directorships will not be allowed; provided, however, that
this shall not preclude members of the Fleming Board of Directors from
serving together on boards of other public companies. (An interlocking
directorship would occur if a Fleming director or officer served on the
board of company X and a director or an officer of company X served on
the Fleming Board, or if a major supplier or customer served on
Fleming's Board.) Joint ventures will be permitted between the Company
and independent Board members subject to approval by the Board and
Securities and Exchange Commission disclosure rules.
11. Directors are required to own at least 1,000 shares of Fleming common
stock within one year of election (by the Board or the stockholders)
and 12,000 shares within four years of such election, directors
currently serving as of March 1, 1999 have until March 1, 2003 to meet
this requirement. A substantial portion of each independent director's
annual compensation shall be paid in Fleming common stock or its
equivalent.
12. Each director will retire upon the earlier of 30 days after reaching
age 70 or upon his/her 15th anniversary as a director; provided,
however, the 15 year limitation shall not apply to directors holding
office at the time these standards were first adopted by the Board in
1997.
13. Succession planning and management development will be reported
annually to the independent directors by the CEO.
14. All corporate officers are required to own Fleming common stock, with a
value equal to a specified multiple of their base salary with the
ownership requirements to be met over a five year period. The
Compensation Committee will be responsible for setting the multiples on
which the ownership requirements will be based.
15. Generally, management's incentive compensation will be linked directly
and objectively to measured financial goals set in advance by the
Compensation Committee; however, the Board recognizes that flexibility
is important in determining compensation and that all management
compensation may not be so linked.
16. Stock options will not be repriced (the exercise price for options will
not be lowered even if the current market price of the stock is below
the exercise price) and all stock option plans will be subject to
stockholder approval.
17. All stockholders have equal voting rights except as may be provided by
law, the Restated Certificate of Incorporation or, if applicable, under
a share rights plan adopted by the Company.
18. These Corporate Governance standards have been developed and approved
by the Board and will be reviewed by the Board and published at least
annually and revised where appropriate.
B-2
<PAGE> 45
ATTACHMENT I
REQUIREMENTS OF MANAGEMENT AND DIRECTORS
The Governance Committee shall direct the operation of the Company through
management in accordance with the following Requirements of Management and
Directors in order to enhance Board effectiveness:
<TABLE>
BOARD REQUIREMENTS FLEMING REQUIREMENTS
OF MANAGEMENT OF DIRECTORS
- ----------------------------------------- -----------------------------------------
<S> <C>
- - Strong principled and ethical - Represent and act in the best interests
leadership. of the stockholders.
- - Develop strategies to deliver strong - Critique and approve strategic and
market franchises and build stockholder operating plans.
wealth over the long term.
- - Recommend appropriate strategic and - Select, motivate, evaluate, and
operating plans. compensate the CEO and all senior
officers.
- - Maintain effective control of - Good understanding of strategies and
operations. the business.
- - Measure performance against peers. - Review succession planning and
management development. (For
independent directors only.)
- - Assure sound succession planning and - Advise and consult on key
management development. organizational changes.
- - Sound organizational structure. - Careful study of Board materials and
issues.
- - Inform the Board regularly regarding - Active, objective and constructive
the status of key initiatives. participation at meetings of Board and
Committees.
- - No surprises. - Assistance in representing Fleming to
the outside world.
- - Board meetings which are well-planned, - Counsel on corporate issues.
allow meaningful participating, and
provide for timely resolution of
issues.
- - Advance Board materials which contain - Good understanding of general economic
the right amount of information and are trends and corporate governance.
received sufficiently in advance of
meetings.
</TABLE>
B-3
<PAGE> 46
ATTACHMENT II
BOARD EVALUATION QUESTIONNAIRE
This questionnaire shall be provided to each independent director on or
about January 1 of each year and such directors shall complete the questionnaire
by entering a number grade from 1 to 5 (where 1 is considered "poor" and 5 is
considered "excellent") and written comments, where appropriate, as to each of
the following 14 standards.
<TABLE>
QUESTION POINTS
------------------------------------------------------------ -----
<S> <C> <C>
1. The Board knows and understands the Company's vision,
strategic precepts, strategic plan and operating plan.
-----
2. The Board reflects its understanding of the Company's
vision, strategic precepts, strategic plan, and operating
plan in its discussions and actions on key issues throughout
the year.
-----
3. Board meetings are conducted in a manner which ensures open
communication, meaningful participation, and timely
resolution of issues.
-----
4. Board materials contain the right amount of information, and
Board members receive their materials sufficiently in
advance of meetings.
-----
5. Board members are diligent in preparing for meetings.
-----
6. The Board reviews and adopts an annual operating budget and
regularly monitors performance against it throughout the
year.
-----
7. The Board monitors the Company's income statement, balance
sheet, and cash flow.
-----
8. The Board reviews and adopts an annual capital budget and
receives regular written or oral reports of performance
against it throughout the year.
-----
9. In tracking Company performance, the Board regularly
considers the performance of peer companies.
-----
10. The Board reviews on at least an annual basis the
performance of the CEO through the Compensation Committee.
-----
11. On an annual basis, the Board and/or the Compensation
Committee will review the performance and ethics of the
senior officers.
-----
12. The correlation between executive pay and Company
performance will be reviewed on an annual basis by the Board
and/or the Compensation Committee.
-----
13. On an annual basis, the independent directors shall review
the succession plans for the CEO and key senior management.
-----
14. Each individual director standing for re-election will
receive a performance review prior to his/her nomination
from those members of the Governance Committee who are not
standing for re-election. This assures that each director
receives feedback from his fellow directors on his/her
performance as a director.
-----
</TABLE>
The Governance Committee will analyze the numerical ratings and comments in
detail and develop recommendations to enhance Board effectiveness. The Chairman
of the Governance Committee shall present the assessments and recommendations to
the full Board annually at its meeting immediately prior to the mailing of the
proxy materials. The Governance Committee will oversee the process of
implementing recommendations.
B-4
<PAGE> 47
EXHIBIT C-1
GUIDELINES FOR BOARD COMPOSITION
Size: Between 3 and 20 members (as set by Restated
Certificate of Incorporation). Board chooses within
those parameters.
Election: Beginning with the annual meeting of stockholders
in 2002, all directors will be elected annually.
Mix: Maximum of 3 inside directors; must always be a
majority of independent directors.
Independent Director: Must offer to stand down at end of term following
change in occupation or profession that would
diminish director's ability to contribute as a
board member.
Inside Director:
(Non-CEO) Must offer to resign from board upon the earlier of
either reaching age 65 or retirement, resignation,
Inside Director: other termination from company, or
downward revision of (Non-CEO) status in company.
Disability: Must stand down if suffering from disability or ill
health sufficiently serious to prevent active
participation in board affairs over a sustained
period.
Retirement from Board: A director must retire from the board during the
month following his or her 70th birthday.
Attendance: If cumulative attendance at board and committee
meetings over two successive years falls below 60%,
director must offer to stand down.
C-1
<PAGE> 48
EXHIBIT C-2
GUIDELINES FOR BOARD CANDIDATES
1. A director should have the ability to apply good independent judgment to
a business situation and should be able to represent broadly the
interests of all the company's shareholders and constituencies. Board
members should be recommended primarily on the basis of their
qualification to meet these fundamental criteria.
2. A director must be free of any conflicts of interest which would
interfere with his or her loyalty to the company and its shareholders.
Those who have positions with or significant interests in competitors of
the company may not be considered. To avoid even the appearance of a
conflict of interest, members of legal firms which provide legal counsel
to the company and representatives of investment banking houses,
commercial banks or management consulting firms which have or are
anticipated to have business relations with the company should not be
considered.
3. In addition, the following criteria should be considered in recommending
candidates for board membership, although these should not be applied
rigidly:
a. Maturity and Experience
A director should be mature and have practical or academic
experience in business, economics, government or the sciences.
Ideally, a director would have 15 or more years of experience
including management responsibilities.
b. Geography
Since the company's operations are primarily mainland United States
in scope, it is desirable to have a balanced geographic
representation with major geographic areas of the company's
business being reflected on the board to the extent practicable.
c. Past Experience in Order of Preference
(1) Chief executive officer, chief operating officer or senior
executive officer of a public or substantial private company,
preferably of an industrial, distribution or retailing company,
with sales in excess of $500,000,000.
(2) An educator from fields of business, economics or the sciences
with management experience.
d. Women, Minorities and Special Interests
Since a director represents broadly the interests of all the
company's shareholders and constituencies, he or she should be
chosen for his or her individual abilities and not be recommended
based upon gender, minority group status or as a representative of
any special interest group. However, it is desirable to have a
cross section of backgrounds, and candidates otherwise qualified
may be recommended with due consideration given to their gender,
minority status or special interests.
C-2
<PAGE> 49
FLEMING COMPANIES, INC.
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 10, 2000 AT 10:00 A.M. AT
R THE SALT LAKE CITY MARRIOTT, 75 SOUTH WEST TEMPLE, SALT LAKE CITY, UTAH.
O Mark S. Hansen, Neal J. Rider, or Lenore T. Gramham is hereby constituted
the proxy of the undersigned with full power of substitution to represent
X and to vote as specified all shares of common stock which the
Shareholder(s) named on the reverse side is entitled to vote at the above
Y Annual Meeting or at any adjournment thereof, and their discretion to vote
upon all matters as may properly be brought before the Meeting.
First Chicago Trust Company, a division of EquiServe, as Custodian under
the Dividend Reinvestment and Stock Purchase Plan, is hereby authorized to
execute a proxy with identical instructions for any shares of common stock
held for the benefit of the Shareholder(s) named on the reverse side.
Nominees for election to the Board of Directors for a one-year term
expiring in 2001 are:
01. Carol B. Hallett, 02. Guy A. Osborn and 03. David A. Rismiller.
Please sign and date on the reverse side and mail promptly in the enclosed
postage-paid envelope or otherwise to vote by telephone or Internet,
please see the reverse of this card.
--------------------------------------------------------------------------
Comments:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
FLEMING COMPANIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 2000
10:00 A.M.
SALT LAKE CITY, UTAH
YOUR VOTE IS IMPORTANT
THANK YOU FOR VOTING.
A GREAT PLACE TO WORK
A GREAT PLACE TO TRADE
A GREAT PLACE TO INVEST
<PAGE> 50
<TABLE>
<S> <C> <C>
Please mark your
[X] votes as in this example.
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" Proposals 2 and 3. The board of directors recommends a vote "FOR"
Proposals 2 and 3.
- ------------------------------------------------------------------------------------------------------------------------------------
The Board of Directors Recommends a vote FOR Proposals 2 and 3. SPECIAL ACTION
1. Election of FOR WITHHELD 2. Ratification of Deloitte & FOR AGAINST ABSTAIN
Directors. Touche LLP as Independent
(See Reverse) [ ] [ ] Auditors for 2000. [ ] [ ] [ ] I have included comments
or change of address. [ ]
For, except vote from
the following nominee(s): 3. Approval of the 2000 I do not wish to receive
Stock Incentive Plan. [ ] [ ] [ ] future annual reports for
- ------------------------------------- this account at this address. [ ]
I agree to accept future proxy
statements and annual reports
electronically. [ ]
I plan to attend the annual
meeting. [ ]
THE PROXY WILL VOTE IN HIS/HER DISCRETION,
ON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF.
I RESERVE THE RIGHT TO REVOKE THIS PROXY
AT ANY TIME BEFORE THE EXERCISE THEREOF.
NOTE: Please sign exactly as name appears
hereon. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such.
------------------------------------------
------------------------------------------
SIGNATURE(S) DATE
- ------------------------------------------------------------------------------------------------------------------------------------
o FOLD AND DETACH HERE ONLY IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL. o
</TABLE>
FLEMING COMPANIES, INC.
Dear Shareholder:
Fleming encourages you to take advantage of new and convenient ways by which you
can vote your shares. You can vote your shares electronically through the
Internet or the telephone. This eliminates the need to return the proxy card.
To vote your shares electronically you must use the control number printed in
the box above, just below the perforation. The series of numbers that appear in
the box above is your personal code to access the system.
1. To vote over the Internet:
o Log on to the Internet and go to the web site
http://www.eproxyvote.com/flm.
2. To vote over the telephone:
o On a touch-tone telephone call 1-877-PRX-VOTE (1-877-779-8683) 24 hours
a day, 7 days a week from the U.S. and Canada to vote your proxy.
Your electronic vote authorizes the named proxies in the same manner as if you
marked, signed, dated and returned the proxy card.
If you choose to vote your shares electronically, do not mail back your proxy
card.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
