<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
The Great Atlantic & Pacific Tea Company, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
R.R. Donnelley
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[x] Fee paid.
[_] 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
TWO PARAGON DRIVE
MONTVALE, NEW JERSEY 07645
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held July 15, 1997
----------------
To the Stockholders of
The Great Atlantic & Pacific Tea Company, Inc.
Notice is Hereby Given that the Annual Meeting of Stockholders of The Great
Atlantic & Pacific Tea Company, Inc. (the "Company") will be held at the
Sheraton Crossroads Hotel, One International Boulevard, Mahwah, New Jersey
07495-0001 on Tuesday, July 15, 1997 at 10:00 A.M. (E.D.T.) for the following
purposes:
1. To elect a Board of eleven directors to serve until the next annual
meeting of stockholders and until the election and qualification of their
successors;
2. To elect independent auditors of the Company for the fiscal year ending
February 28, 1998; and
3. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed May 20, 1997 as the record date for the
determination of stockholders entitled to notice of and to vote at the
meeting. Accordingly, only stockholders of record at the close of business on
that date are entitled to vote at the meeting or at any adjournment thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE AND SIGN THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY TO THE COMPANY IN THE STAMPED RETURN
ENVELOPE ENCLOSED FOR YOUR USE.
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended February 22, 1997 accompanies this proxy statement.
By order of the Board of Directors
Peter R. Brooker
Vice President and Secretary
Dated: May 22, 1997
You are cordially invited to attend the meeting. Whether or not
you plan to do so, please sign, date and vote or otherwise
indicate your choices with respect to the matters to be voted upon
on the accompanying proxy card and mail it at once in the enclosed
envelope, which requires no postage if mailed in the United
States.
<PAGE>
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
TWO PARAGON DRIVE
MONTVALE, NEW JERSEY 07645
----------------
PROXY STATEMENT
----------------
SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of The Great
Atlantic & Pacific Tea Company, Inc. (the "Company") for use at the Annual
Meeting of Stockholders to be held on July 15, 1997. The Company will bear the
cost of such solicitation. It is expected that the solicitation of proxies
will be primarily by mail. Proxies may be solicited personally by regular
employees of the Company, by telephone, or other means of communication at
nominal cost. The Company will reimburse banks, brokers and trustees, or their
nominees, for reasonable expenses incurred by them in forwarding proxy
material to beneficial owners of stock in accordance with The New York Stock
Exchange schedule of charges. Any stockholder giving a proxy has the power to
revoke it at any time prior to its exercise by giving notice in writing to the
Secretary, or by casting a ballot at the meeting in person or by proxy. This
proxy statement is first being mailed to stockholders on or about May 22,
1997.
VOTING AT MEETING
Only stockholders of record at the close of business on May 20, 1997, will
be entitled to vote at the annual meeting. As of May 20, 1997, there were
outstanding 38,248,966 shares of Common Stock (par value $1 per share) of the
Company, each of which is entitled to one vote. Proxies marked as abstaining
(including proxies containing broker non-votes) on any matter to be acted upon
by stockholders will be treated as present at the meeting for purposes of
determining a quorum but will not be counted as votes cast on such matters.
CERTAIN BENEFICIAL OWNERS
As of May 1, 1997, the Company is informed that Tengelmann
Warenhandelsgesellschaft (a partnership organized under the laws of the
Federal Republic of Germany, hereinafter "Tengelmann"), which is a general
retailer in Germany, controlled by Mr. Erivan Haub, owned beneficially and of
record 20,750,000 shares of the Company's Common Stock (approximately 54.25%
of the outstanding shares). Mr. Haub additionally controls, among others, PLUS
Warenhandelsgesellschaft mbH & Co. oHG and Kaiser's Kaffee-Geschaft AG, also
general retailers in Germany, and Tenga Capital Corporation.
The address of Tengelmann and Mr. Haub is c/o Tengelmann
Warenhandelsgesellschaft, Wissollstrasse 5-43, 45478 Mulheim/Ruhr, Germany.
Except as set forth above, at May 1, 1997 no person beneficially owned, to
the knowledge of the Company, more than 5% of the outstanding shares of the
Company's Common Stock.
<PAGE>
ELECTION OF DIRECTORS
Eleven directors are to be elected to hold office until the next annual
meeting and until their successors are elected and shall qualify. The persons
named as proxies in the accompanying proxy intend to vote, unless otherwise
instructed, for the election to the Board of Directors of the persons named
below, each of whom has consented to nomination and to serve when elected.
Each nominee is a member of the present Board of Directors. The affirmative
vote of a majority of the votes cast at the Annual Meeting is required for the
election of each director.
NOMINEES
JOHN D. BARLINE, ESQ.
Mr. Barline, age 50, was elected a director on July 9, 1996. He is a member
of the Retirement Benefits Commitee.
Mr. Barline, an attorney in private practice since 1973, is currently
associated with the law firm Williams, Kastner & Gibbs LLP in Tacoma,
Washington. His areas of practice include corporate tax law, mergers and
acquisitions, general business law, estate planning and real estate. He
provides personal legal services to the Haub family, including Helga and
Erivan Haub and Christian Haub. He is a member of the Pierce County,
Washington State and the American Bar Associations and special district
counsel to the Washington State Bar Association.
Mr. Barline is a member of the Board of Directors and corporate secretary of
Sun Mountain Resorts, Inc. He is also on the Board of Directors of Sun
Mountain Lodge, Inc. and Wissoll Trading Company, Inc. These are small closely
held corporations owned primarily by the Haub family. He is Chairman of the
Board of the Franciscan Foundation and on the Board of the Tacoma Art Museum.
ROSEMARIE BAUMEISTER
EXECUTIVE VICE PRESIDENT AND HEAD OF THE PUBLIC RELATIONS DEPARTMENT OF
TENGELMANN
Mrs. Baumeister, age 63, has been a member of the Company's Board of
Directors since 1979. She is a member of the Compensation Policy Committee.
Prior to assuming her present position, she has served in various executive
capacities with Tengelmann.
Mrs. Baumeister is a member of the management executive committee of
Tengelmann, a member of the Supervisory Board of Kaiser's Kaffee-Geschaft AG,
an affiliate of Tengelmann, and a member of the Advisory Board of Deutsche
Bank.
FRED CORRADO
VICE CHAIRMAN OF THE BOARD AND CHIEF FINANCIAL OFFICER
Mr. Corrado, age 57, has been a director since 1990. He is Vice Chairman of
the Executive Committee and a member of the Finance and Retirement Benefits
Committees.
During the past five years, Mr. Corrado also served as Treasurer and
Executive Vice President of the Company. In addition, Mr. Corrado is a
Director of Batteries Batteries, Inc.
CHRISTOPHER F. EDLEY
PRESIDENT EMERITUS AND FORMER PRESIDENT AND CHIEF EXECUTIVE OFFICER OF THE
UNITED NEGRO COLLEGE FUND, INC.
Mr. Edley, age 69, has been a member of the Company's Board of Directors
since 1981. He is Chairman of the Compensation Policy Committee and a member
of the Audit Review, Executive, and Retirement Benefits Committees.
2
<PAGE>
Mr. Edley served as President and Chief Executive Officer, United Negro
College Fund, Inc. from 1973 until his retirement in 1991. He is also a
director of The Allstate Corporation, AMR Corporation and The Student Loan
Corporation.
CHRISTIAN WILHELM ERICH HAUB
PRESIDENT AND CO-CHIEF EXECUTIVE OFFICER OF THE COMPANY
Mr. Haub, age 32, was elected a director on December 3, 1991, President of
the Company on December 7, 1993 and Co-Chief Executive Officer on April 2,
1997. He is an ex officio member of the Executive, Finance and Retirement
Benefits Committees.
During the past 5 years and prior to assuming his present position Mr. Haub
served as Corporate Vice President and Assistant to the Executive Vice
President, Development and Strategic Planning. Before joining the Company he
was a partner in the investment banking firm, Global Reach, which he had
joined in early 1991, from the investment banking firm of Dillon Read & Co.,
Inc. in New York City.
Mr. Haub is a partner and a member of the management executive committee of
Tengelmann and a son of Erivan and Helga Haub.
HELGA HAUB
Mrs. Haub, age 62, has been a member of the Company's Board of Directors
since 1979. She is a member of the Executive and the Finance Committees.
Mrs. Haub is a member of the Supervisory Board of Kaiser's Kaffee-Geschaft
AG, an affiliate of Tengelmann, a consultant to Tengelmann and has an interest
in Tenga Capital Corporation. She also is a director of The George C. Marshall
Home Preservation Fund, Inc., a member of the Board of Governors of World USO
and president of the Board of Trustees of the Elizabeth Haub Foundation for
Environmental Policy and Law. Mrs. Haub is the wife of Mr. Erivan Haub and
mother of Mr. Christian Haub.
BARBARA BARNES HAUPTFUHRER
Mrs. Hauptfuhrer, age 68, has been a member of the Company's Board of
Directors since 1975. She is Chairman of the Retirement Benefits Committee and
a member of the Audit Review, Executive and Finance Committees.
Mrs. Hauptfuhrer is a director of The Vanguard Group of Investment Companies
and each of its mutual funds. She is also a director of Knight-Ridder, Inc.,
The Massachusetts Mutual Life Insurance Company, IKON Office Solutions, Inc.
and the Raytheon Company. She is a Trustee Emeritus of Wellesley College, and
also a director of the Ladies Professional Golf Association.
WILLIAM A. LIFFERS
Mr. Liffers, age 68, was elected a director on July 9, 1996. He is Chairman
of the Audit Review Commitee and a member of the Executive Committee.
Mr. Liffers served as Vice Chairman of American Cyanamid Company
(principally engaged in the manufacture and sale of medical, agricultural,
chemical and consumer products) from 1978 until his retirement in 1993. He was
a member of its Board of Directors from 1977 until he retired. He also served
in other executive capacities with the company in the United States and
abroad.
Mr. Liffers is a Senior Advisor to the United Nations Development Programme,
assisting the Peoples Republic of China in its efforts to reform its state
owned enterprises. He is also a member of the Board of Overseers of the New
Jersey Institute of Technology and a member of the Board of Trustees of the
Washington, D.C. based National Policy Association.
3
<PAGE>
FRITZ TEELEN
CHIEF OPERATING OFFICER OF TENGELMANN IN EUROPE
Mr. Teelen, age 61, has been a member of the Company's Board of Directors
since 1979. He is a member of the Finance Committee.
Prior to assuming his present position, Mr. Teelen served in various
executive capacities with the Company and with Tengelmann, including serving
as President of PLUS Warenhandelsgesellschaft mbH & Co. oHG. He is also a
member of the Supervisory Board of Kaiser's Kaffee-Geschaft AG, an affiliate
of Tengelmann.
ROBERT L. "SAM" WETZEL
PRESIDENT AND CHIEF EXECUTIVE OFFICER OF WETZEL INTERNATIONAL, INC.
Mr. Wetzel, age 66, was elected a director effective May 21, 1991. He is
Chairman of the Finance Committee and a member of the Audit Review,
Compensation Policy and Retirement Benefits Committees.
Mr. Wetzel has been President and Chief Executive Officer of Wetzel
International, Inc., a management consulting firm specializing in
international marketing and joint ventures in the aerospace, defense and
commercial industries based in Columbus, Georgia, since his retirement as a
Lieutenant General in June 1986 from his position as Commanding General V
(U.S.) Corps, Frankfurt, Germany. He is also an advisory director of Columbus
Bank & Trust Company, Columbus, Georgia, a subsidiary of Synovus Financial
Corporation.
JAMES WOOD
CHAIRMAN OF THE BOARD AND CO-CHIEF EXECUTIVE OFFICER OF THE COMPANY
Mr. Wood, age 67, was elected Chairman of the Board of Directors and Chief
Executive Officer in 1980 and Co-Chief Executive Officer earlier this year. He
is Chairman of the Executive Committee and is an ex officio member of the
Finance and Retirement Benefits Committees. During the past five years he also
served as President of the Company.
Mr. Wood is a director of ASARCO Inc., and Schering-Plough Corporation. He
is also on the board of the Food Marketing Institute and a member of the Board
of Governors of World USO.
4
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth the number of shares of Common Stock of the
Company beneficially owned as of May 1, 1997, by each director and nominee,
each named executive officer and by all directors and executive officers as a
group:
<TABLE>
<CAPTION>
SHARES STOCK
BENEFICIALLY OPTION % OF
OWNED SHARES(1) TOTAL CLASS
------------ --------- --------- -----
<S> <C> <C> <C> <C>
John D. Barline, Esq. (2)............... 2,000 2,000 4,000 *
Rosemarie Baumeister (2)................ 2,800 2,600 5,400 *
Fred Corrado............................ 200 25,000 25,200 *
Christopher F. Edley.................... 1,100 2,600 3,700 *
George Graham........................... 5,000 15,000 20,000 *
J. Wayne Harris......................... 1,000 27,500 28,500 *
Christian Haub (2)...................... 200 140,000 140,200 *
Helga Haub (2).......................... 2,800 2,600 5,400 *
Barbara B. Hauptfuhrer (3).............. 1,300 2,600 3,900 *
William A. Liffers...................... 1,000 2,000 3,000 *
Peter J. O'Gorman....................... 3,850 15,000 18,850 *
Fritz Teelen (2)........................ 3,300 2,600 5,900 *
Robert L. "Sam" Wetzel.................. 500 2,600 3,100 *
James Wood.............................. 11,321 700,000 711,321 1.9
All directors and executive officers as
a group
(18 persons)(4)........................ 39,371 1,047,100 1,086,471 2.8
</TABLE>
- --------
* Less than 1%
(1) The amounts shown include all options granted under Company plans
regardless of whether exercisable within 60 days.
(2) The association of Mmes. Baumeister and Haub, and Messrs. Barline, Haub
and Teelen with Tengelmann and Mr. Erivan Haub is set forth herein under
"Nominees". Mr. Christian Haub disclaims investment and voting power over
the shares owned by Tengelmann and they are excluded herein. Mrs. Haub
disclaims any investment or voting power over the shares owned by Mr.
Erivan Haub and the organizations which he controls and same are not
included herein.
(3) Mrs. Hauptfuhrer disclaims beneficial ownership over any shares held by
any funds or trusts of the companies of which she also serves as a
director and any such shares are not included herein.
(4) On a timely Form 5, two executive officers reported December 1996
exercises of SAR's, discussed infra, that under a rule change should have
been reported earlier on Form 4.
BOARD MEETINGS, COMMITTEES AND COMPENSATION
During the last fiscal year, the Board of Directors held 6 meetings and
committees thereof held 11 meetings. The Audit Review Committee held 3
meetings, and the Compensation Policy Committee held 3 meetings. Such
Committees are composed of non-employee directors. The Audit Review Committee
reviews annual financial statements prior to submission to the Board and
reports thereon; at its discretion, examines and considers matters relating to
the internal and external audit of the Company's accounts and financial
affairs; recommends the employment of outside accountants and their
compensation; and, as appropriate, meets with Company personnel in performance
of its functions. The Compensation Policy Committee approves salaries and
salary increases and benefits where the base annual compensation is at least
$150,000, approves and interprets incentive plans, and serves as the committee
to administer the employee stock option plan. There is no standing Nominating
Committee. All directors attended more than 75% of the aggregate of (i) the
total number of meetings of the
5
<PAGE>
Board of Directors held while they were members, and (ii) the total number of
meetings held by all Committees of the Board on which they served as members.
Overall attendance was 96%.
Directors who are neither officers nor employees of the Company are each
paid fees consisting of an annual retainer of $26,000 plus an attendance fee
of $1,000 for each Board meeting attended, and $1,000 for each committee
meeting attended if substantial time or effort is involved, plus expenses of
attendance. If two compensable meetings are held on the same day, the fee for
the second meeting is limited to $500. The Chairman of each Committee, except
the Executive Committee, is paid an additional $10,000 per year. Under the
directors stock option plan, non-employee directors are entitled to an initial
stock option grant of 2,000 shares with 200 shares granted after each Annual
Meeting thereafter. These shares vest in one-third increments on succeeding
Annual Meeting dates.
The Company revised the compensation program for its non-employee directors
effective May 1, 1996. It suspended the retirement plan pursuant to which
directors, after serving 5 years and attaining age 70, were entitled upon
retirement from the Board to an annual benefit equal to the highest annual
retainer paid during their tenure (currently $26,000) for a period equal to
their years of service up to 15 years. The directors had a one time election
to transfer the present value of their accrued benefits to the new plan. Under
the new deferred compensation plan, the Company will contribute to book
accounts of all new directors and all directors with less than fifteen years
of service an amount equal to 75% of the current retainer. Up to all and at
least 50% of these deferred payments will be credited to a Company Common
Stock equivalent account. The balance, at the director's election in
increments of 25% will be credited to a 10-year U. S. Treasury bond equivalent
account. The directors will be fully vested in their accounts. Accruals will
be made to these accounts through the fifteenth anniversary of Board service.
Upon termination from service as a director, the value of the Company Common
Stock equivalent account will be determined using the final average market
value of the Company's shares for the prior 180 calendar days, inclusive of
appreciation for the effect of dividends. The value of the bond equivalent
account will be the sum of the credits and interest to the date of
termination. Benefits will then be paid to the retired director equally over
the subsequent 180 months or the length of service, whichever is shorter.
However, in the event of death, benefits will continue to be paid to the
director's beneficiary for a maximum of ten years, which includes any period
of payment before death.
Directors who are also officers or employees of the Company receive no extra
compensation or benefits for such service.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Tenga Capital Corporation, which is owned by Erivan and Helga Haub, owns
property in Windsor, Ontario, Canada on which an indirect subsidiary of the
Company, A&P Properties Limited, has leased a store since 1983. The initial
term expires October 31, 2003, with four 5-year renewal options. The base
annual rental is CN$467,603, with percentage rents subject to specified caps.
The Company is a party to agreements granting Tengelmann and its affiliates
the exclusive right to use the "A&P" trademark in Germany and other European
countries pursuant to which the Company received $100,000 which is the maximum
annual royalty fee under such agreements. The Company also is a party to
agreements under which it purchased from Wilh. Schmitz-Scholl ("Wissoll"),
which is an affiliate of Tengelmann, approximately $1.3 million worth of the
Black Forest line and Master Choice candy.
The Company owns a jet aircraft which Tengelmann leases under a full cost
reimbursement lease that also allows the Company to charter the aircraft for
its use at a below market charter rate. During fiscal 1996 Tengelmann was
obligated to reimburse the Company an average monthly cost of $213,400.
Under an agreement between the Company and Tengelmann, Peter J. O'Gorman
again spent a portion of his work time with Tengelmann during fiscal year 1996
and the Company was reimbursed $187,250 representing a pro rata portion of Mr.
O'Gorman's salary and benefits.
6
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth the compensation paid by the Company and its
subsidiaries for services rendered in all capacities during each of the last
three fiscal years to or for the account of Mr. Wood and the other five most
highly compensated executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------- ---------------------
PRINCIPAL POSITION OTHER ANNUAL SECURITIES UNDERLYING ALL OTHER
DURING SALARY BONUS COMPENSATION OPTIONS/SAR'S COMPENSATION(2)
FISCAL YEAR YEAR ($) ($) ($)(1) (#) ($)
------------------ ---- --------- --------- ------------ --------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
James Wood 1996 1,160,500 1,005,910 142,656
Chairman, 1995 1,160,500 810,920 142,656
Chief Executive Officer 1994 1,160,500 22,865 134,606
Fred Corrado 1996 478,100 75,000 39,672
Vice Chairman, 1995 461,423 75,000 25,000 38,230
Chief Financial Officer 1994 451,000 37,500 37,110
George Graham 1996 363,462 62,500 13,267
Executive Vice
President, 1995 345,000 93,750 15,000 12,534
Chief Merchandising 1994 343,462 41,250 12,108
Officer
J. Wayne Harris 1996 350,000 221,265 12,338
Executive Vice 1995 70,186 15,000 10,500
President, 331,538
Chairman and Chief 1994 300,000 50,000 9,882
Executive Officer,
The Great Atlantic &
Pacific Co. of Canada,
Limited
Christian Haub 1996 347,308 84,608 6,738
President & Chief 1995 313,846 37,500 25,000 6,529
Operating Officer(3) 1994 300,000 18,270 6,099
Peter J. O'Gorman 1996 363,462 62,500 17,260
Executive Vice 1995 345,000 62,500 15,000 15,570
President,
International Store and 1994 343,462 31,250 14,382
Product Development
</TABLE>
- --------
(1) Represents income in 1994 of $12,835 on the Trust and reimbursement in
1994 of $10,030 for the prior year's taxes thereon as described under the
heading "Employment and Termination Agreements" infra.
(2) Consists of, respectively, Company contributions to the Retirement/Savings
Plan and the cost for insurance, for 1996: Mr. Wood, ($6,000 and
$106,656); Mr. Corrado, ($10,750 and $23,922); Mr. Graham, ($10,750 and
$2,517); Mr. Harris, ($6,000 and $6,338); Mr. Haub ($6,000 and $738); and
Mr. O'Gorman, ($10,750 and $6,510). Additionally, a tax preparation and
planning fee is included of $30,000 and $5,000 respectively for Messrs.
Wood and Corrado.
(3) Mr. Haub was elected Co-Chief Executive Officer together with Mr. Wood on
April 2, 1997.
EMPLOYMENT AND TERMINATION AGREEMENTS
Mr. Wood's employment contract which expires April 30, 1998, provides for a
minimum base annual salary of $875,000, regular Company benefits applicable to
his position, life insurance equal in face value to three times
7
<PAGE>
his base annual salary and the grant of various options under the Company's
Stock Option Plans. He is also entitled to receive an annual bonus equal to 1%
of the Company's pre-tax profit reduced by any bonuses awarded for that year
under the Company's management incentive plan. Bonus payments are included in
the Summary Compensation Table. He is also entitled to a pension benefit which
includes a surviving spouse's benefit. Upon a change in his duties or
involuntary termination by the Company other than for disability or cause, Mr.
Wood or his beneficiary is entitled to receive his then base salary for the
longer of the remaining contract term, or 3 years, and to receive his pension.
Termination for disability would result in payment of his then salary for a
period of two years. Upon his voluntary termination or termination for cause,
no further remuneration payments would be due him except pension benefits. His
pension is fully vested, and funded through a Trust Agreement dated December
29, 1988. Benefits became payable thereunder upon his attaining age 65. All
amounts contributed to the Trust were treated as compensation to him in the
year contributed. The Trust is irrevocable for the duration of the pension
obligations with any residual monies reverting to the Company. The Company is
responsible for the trustee's commissions, fees, charges and expenses, and
additional contributions to fund the Trust's obligations, and indemnifies the
trustee. By a separate Phantom Stock Agreement dated December 1, 1988 between
Tengelmann and Mr. Wood, as amended February 3, 1994, Tengelmann grants to him
1,794,593 phantom stock units ("Units"), each equivalent to one share of
Common Stock of the Company. These Units are fully vested. Tengelmann will pay
Mr. Wood an amount equal to the number of Units Mr. Wood holds times the
difference between $44.758 and the higher value of the Company's Common Stock,
on April 30, 2000, or his earlier election. All payments under the Phantom
Stock Agreement are payable by Tengelmann, without expense to the Company.
Mr. Corrado's employment contract, which expires May 20, 2002 unless sooner
terminated upon three years' advance written notice, generally provides a
minimum base annual salary of $451,000, regular Company benefits applicable to
his position and incentive compensation with a $125,000 initial annual base at
100%. Mr. Corrado's contract further provides immediate vesting of his age 65
benefit at age 62 under SERP, discussed infra, and life insurance equal in
face value to three times his base annual salary. By Board resolution, in lieu
of participating in the management incentive plan Mr. Harris is entitled to
receive a special bonus equal to 1/2 of 1% of the Canadian Company's Group
Contribution as reported internally. Upon attainment of age 62 while employed
by the Company Mr. Harris shall be vested immediately in his age 65 benefit,
under SERP, without any early retirement reduction. Mr. O'Gorman, who is
vested in his pension under SERP, was granted entitlement to an unreduced
benefit at age 62.
STOCK OPTION/SAR GRANTS AND EXERCISES
No stock options or stock appreciation rights ("SARs") were granted during
the last fiscal year to the named executive officers. The following table sets
forth information with respect to stock options/SARs exercised or held by the
named executive officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS
SHARES FY-END AT FY-END(1)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
(#) ($) (#) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
James Wood.............. None 0 700,000 0 1,125,000 0
Fred Corrado............ None 0 53,750 28,750 194,688 106,563
George Graham........... 13,125 114,375 27,500 16,875 30,469 62,344
J. Wayne Harris......... None 0 23,125 14,375 143,594 48,281
Christian Haub.......... None 0 43,750 26,250 188,594 90,781
Peter J. O'Gorman....... None 0 41,250 18,750 146,250 73,750
</TABLE>
- --------
(1) Based on the closing price of the Common Stock on February 21, 1997,
$30.375.
8
<PAGE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------
REMUNERATION 15 20 25 30 35
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$300,000........................ $112,500 $135,000 $135,000 $135,000 $135,000
350,000........................ 131,250 157,500 157,500 157,500 157,500
400,000........................ 150,000 180,000 180,000 180,000 180,000
450,000........................ 168,750 202,500 202,500 202,500 202,500
500,000........................ 187,500 225,000 225,000 225,000 225,000
</TABLE>
The table above indicates the amount of annual benefit payable to a person
at age 65 in the specified final average remuneration and years-of-service
classifications under the Supplemental Executive Retirement Plan ("SERP")
except that such benefits do not reflect the requisite reduction for any
applicable Social Security, or other Company retirement benefits. SERP is an
unfunded defined benefit final average pay plan that covers the named
executives, excluding Messrs. Wood and Haub. Mr. Wood's entitlement to a
pension benefit is provided in his Employment Agreement which is described
supra under the heading "Employment and Termination Agreements". Mr. Graham
participated in the Company's former defined benefit plan and has an annuity
therefrom which is an offset to his benefit entitlements under SERP.
The compensation covered by SERP is base salary, i.e., essentially the
"Salary" reflected in the Summary Compensation Table computed as an average of
such base salary over the highest compensated five years of employment during
the last 10 years. The benefit is computed at the rate of 3% for each year up
to 10 years of service, plus 1 1/2% of such compensation for up to 10
additional years of service with a maximum benefit equal to 45% of such
average base salary. Estimated or actual credited years of service at
retirement for each participating named executive officers are: Mr. Corrado,
18 years; Mr. Graham, 20 years; Mr. Harris, 11 years; and Mr. O'Gorman, 20
years.
9
<PAGE>
PERFORMANCE GRAPHS
The following performance graph compares the five-year cumulative total
shareholder return (assuming reinvestment of dividends) on the Company's
Common Stock to the Standard & Poor's 500 Index and a peer group of companies
in the retail grocery industry comprised of the following six companies:
American Stores Company, Bruno's, Inc., Giant Food, Inc., Safeway, Inc., The
Great Atlantic & Pacific Tea Company, Inc., and The Kroger Co. The performance
graph assumes $100 is invested in the Company's Common Stock, the Standard &
Poor's 500 Index and a composite index for the peer companies on February 21,
1992, and that dividends paid during the period were reinvested to purchase
additional shares. The peer group consists of significant unionized food
retailers operating in the eastern/southeastern United States or, in the case
of Safeway Inc., a significant unionized food retailer with substantial
operations in Canada.
[PERFORMANCE GRAPH]
INDEX NUMBERS
------------------------------
S&P 500 A&P PEER GROUP
------- ----- ----------
1992 100 100 100
1993 109 78 86
1994 121 88 107
1995 129 65 110
1996 178 77 148
1997 219 104 205
REPORT OF THE COMPENSATION POLICY COMMITTEE
The Company's Compensation Policy Committee approves the compensation of all
executive officers and other key employees and acts as the Company's Stock
Option Plan Committee.
PRINCIPLES AND PROGRAM
The Company's executive compensation program includes the following policy
objectives:
. Compensation must be sufficient to attract and retain talented
executives.
. Incentives are included in the executive compensation package based upon
criteria which also enhance shareholder value.
. Improvements in compensation should bear a relationship to the Company's
improvement in performance.
10
<PAGE>
To meet these objectives the program has salary, incentive and equity
elements. The Committee considers each of these elements, setting salary and
bonus levels that reflect the above-described objectives and awarding stock
appreciation rights or stock options to provide an equity-based compensation
element.
SALARIES
The Compensation Policy Committee employs several criteria in fixing the
salaries of the executive officers (including the five most highly compensated
officers). These criteria include the responsibility of the position, the
officer's performance, the Company's financial performance and the business
and economic climate in which the Company operates. Executive officers with
responsibility for a business unit are also evaluated on the basis of the
unit's performance. Additional criteria such as success in achieving desired
business goals are utilized in determining the appropriate salary for an
officer. For the named executive officers, salary increases during the 1996
fiscal year were granted as follows: Christian Haub 13.6%, George Graham 5.8%
and Peter O'Gorman 5.8%. Neither Messrs. Graham nor O'Gorman had received a
salary increase for two years.
ANNUAL INCENTIVE PLAN
The Company has an annual U.S. management incentive plan which, for
executive officers, provides for target bonus awards ranging up to 40% of base
salary contingent upon the attainment of goals comprised of profits and
management objectives. The determination of the maximum bonus payable to an
individual under the Plan is based upon the following factors: percentage of
base salary previously awarded to the individual, ability of the individual to
make a direct contribution to the financial performance of the Company and the
responsibility of the position held by the individual. If established goals
are exceeded, a bonus is computed on the excess, but is deferred and not
payable unless (a) a subsequent bonus is less than 100% of bonus target,
whereupon the deferred bonus is payable to the extent of the deficiency, or
(b) a participant retires or suffers permanent disability.
Seventy-five percent of the executive's bonus is predicated on the
attainment of the profit goals. The profit goals for the 1996 fiscal year were
established by the Compensation Policy Committee taking into account the
performance of the Company relative to the performance of comparable companies
and relative to the competitive and economic environment in which the Company
operates. Twenty-five percent of such bonus is attributable to the achievement
of the management objectives. In consideration of the significant turnaround
in performance that continued in the 1996 fiscal year, on the Compensation
Policy Committee's recommendation, the Board confirmed that the management
objectives were achieved for purposes of the management incentive plan. On the
Compensation Policy Committee's further recommendation in consideration of the
Board's prior deferral of salary increases for employees (earning or expected
to earn) a salary of $150,000 or more, the Board further approved a corporate
level bonus based on the Company's profit performance which provided overall a
total management incentive bonus for the fiscal year equal to 50% of the
executive's target bonus. In addition, on the Compensation Policy Committee's
recommendation, the Board granted Mr. Harris a special bonus as detailed
infra.
EQUITY BASED COMPENSATION
The Company's 1994 Stock Option Plan as amended, which was adopted with
shareholder approval, authorizes grants through March 17, 2004 of up to
1,500,000 shares for stock options and tandem or independent SARs; however,
none were awarded in the 1996 fiscal year to the named executive officers.
DISCUSSION OF FISCAL 1996 COMPENSATION FOR THE CHAIRMAN AND CHIEF EXECUTIVE
OFFICER
The Compensation Policy Committee recommends the compensation level of the
Chairman and Chief Executive Officer, taking into account all of the factors
described in this report. The compensation of Mr. Wood for the last fiscal
year was determined predominantly by the terms of his 1988 Employment
Agreement under which Mr. Wood was to receive base compensation of at least
$875,000, and an annual salary review. Accordingly, Mr. Wood's 1996 annual
salary rate of $1,160,500 reflects salary increases granted through 1993 when
he received his last increase. Under the terms of his Employment Agreement,
Mr. Wood received a management incentive bonus equal to 1% of pretax profit of
the Company.
11
<PAGE>
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code, enacted in 1993, subject to
certain exceptions, disallows a tax deduction to public companies for
compensation over $1,000,000 paid to the Chief Executive Officer and the four
other most highly compensated officers at fiscal year end. The exceptions to
the $1,000,000 deduction limit include compensation paid under preexisting
employment agreements and performance based compensation meeting certain
requirements. By reason of this limitation, it is anticipated that a portion
of Mr. James Wood's compensation will not be deductible in respect of the 1997
fiscal year. For 1996 Mr. James Wood was sole Chief Executive Officer of the
Company. Effective April 2, 1997 Christian Haub was elected Co-Chief Executive
Officer, thereafter serving in such capacity with James Wood. However, the
salary and bonuses of each of the other named executive officers for the 1997
fiscal year including the compensation of Christian Haub, are expected to be
less than $1,000,000 and the compensation payable to such officers therefore
should be fully deductible. Moreover, the Company's 1994 Stock Option Plan has
been tailored to comply with the provisions of Section 162(m) so that amounts
received upon the exercise of options and SARs thereunder should be exempt
from Section 162(m) limitations.
COMPENSATION POLICY COMMITTEE
Christopher F. Edley, Chairman
Rosemarie Baumeister
Robert L. "Sam" Wetzel
ELECTION OF AUDITORS
In keeping with the Company's historic custom and practice, independent
auditors are to be elected at the meeting. Pursuant to the recommendation of
the Audit Review Committee and Board of Directors, the persons named in the
accompanying proxy intend to vote, unless otherwise instructed, for Deloitte &
Touche LLP, who have audited the accounts of the Company for the past forty-
one fiscal years. Representatives of that firm are expected to be present at
the meeting to respond to appropriate questions and make such statements as
they may desire. Should the firm not receive a majority vote, the Board of
Directors will reconsider its selection of independent auditors.
STOCKHOLDER PROPOSALS
The Company will consider including a stockholder's proposal for action at
the 1998 Annual Meeting of Stockholders in the proxy material to be mailed to
its stockholders in connection with that meeting if such proposal is received
at the principal office of the Company no later than January 25, 1998.
OTHER MATTERS
No business other than that set forth in the attached Notice of Annual
Meeting is expected to come before the meeting, but should any other matters
requiring a vote of stockholders arise, including the question of adjourning
the meeting, the persons named in the accompanying proxy will vote thereon
according to their best judgment in the interest of the Company. In the event
that any of the above-named nominees for the office of director or the nominee
for independent auditors shall withdraw or otherwise become unavailable, the
persons named as proxies may vote for other persons in their place in the best
interest of the Company.
By Order of the Board of Directors
Peter R. Brooker
Vice President and Secretary
Dated: May 22, 1997
EACH PERSON SOLICITED BY THIS PROXY STATEMENT, INCLUDING ANY PERSON WHO ON
MAY 20, 1997 IS A BENEFICIAL OWNER OF THE COMPANY'S COMMON STOCK, MAY REQUEST
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE LAST FISCAL YEAR.
SUCH WRITTEN REQUESTS SHOULD BE DIRECTED TO THE SECRETARY OF THE COMPANY AT
ITS ADDRESS AFORESAID.
12
<PAGE>
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
PROXY - FOR THE ANNUAL MEETING - JULY 15,1997
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned, having received the Notice of Meeting and Proxy
Statement dated May 22, 1997, appoints JAMES WOOD, FRED CORRADO and PETER R.
BROOKER, and each or any of them as Proxies with full power of substitution, to
represent and vote all the shares of Common Stock which the undersigned may be
entitled to vote at the Annual Meeting of Stockholders to be held at 10:00 A.M.,
July 15, 1997, at Sheraton Crossroads Hotel, One International Boulevard,
Mahwah, New Jersey, or at any adjournment thereof, with all powers which the
undersigned would possess if personally present.
The shares represented by this Proxy will be voted in the manner
directed herein by the undersigned. If no direction is made, the Proxy will be
voted "FOR" items (1) and (2), all of said items being more fully described in
the Notice of Meeting and the accompanying Proxy Statement. The undersigned
ratifies and confirms all that said Proxies or their substitutes may lawfully do
by virtue hereof.
(To be Signed on Reverse Side)
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
July 15, 1997
[ARROW] Please Detach and Mail in the Envelope Provided [ARROW]
- --------------------------------------------------------------------------------
A [X] Please mark your votes as in this example.
FOR all nominees WITHHOLD
listed at right(except AUTHORITY to
as marked to the vote all nominees
contrary below) listed at right
(1) Election of [_] [_]
Directors
(INSTRUCTION: To withhold authority to vote for
any individual nominee, write that nominee's name
on the following line):
- --------------------------------------------------
Nominees: J.D. Barline FOR AGAINST ABSTAIN
R. Baumeister 2. Election of Deloitte [_] [_] [_]
F. Corrado & Touche LLP as
C.F. Edley independent auditors.
C.W.E. Haub (THE DIRECTORS FAVOR A VOTE "FOR")
H. Haub
B.B. Hauptfuhrer Upon such other business as may properly come
W.A. Liffers before said meeting and at any adjournments
F. Teelen thereof.
R.L. Wetzel
J. Wood
SIGNATURE(S): _________________________________ Date: _________________________
NOTE: Please date and sign exactly as name appears hereon. Joint owners should
each sign. The full title or capacity of any person signing for a
corporation, partnership, trust or estate should be indicated.
<PAGE>
CONFIDENTIAL VOTING INSTRUCTION FORM
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
Savings Plan
BANK OF NEW YORK - TRUSTEE
I hereby direct that the voting rights pertaining to shares of THE GREAT
ATLANTIC & PACIFIC TEA COMPANY, INC. held by the Trustee and allocated to my
account shall be exercised at the Annual Meeting of Stockholders of the Company,
to be held on July 15, 1997, and at any adjournment of such meeting, as
specified herein, and if no vote is specified, that such rights be exercised
"FOR" items 1 and 2.
By my signature on the reverse, I hereby acknowledge receipt of the
Notice of the Annual Meeting, the Proxy Statement of the Company dated May 22,
1997, and a copy of the Annual Report.
PLEASE SIGN, DATE AND RETURN THIS FORM BEFORE JULY 7, 1997. As to
matters coming before the meeting for which no signed direction is received by
the Trustee prior to July 7, 1997, the Trustee may exercise voting rights on
your behalf in such manner as the Trustee may, in its discretion, determine.
PLEASE MARK, SIGN AND DATE ON THE REVERSE SIDE, AND RETURN IN THE
ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side)
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
July 15, 1997
[ARROW] Please detach and Mail in the Envelope Provided [ARROW]
- --------------------------------------------------------------------------------
A [X] Please mark your votes as in this example.
FOR all nominees WITHHOLD
listed at right(except AUTHORITY to
as marked to the vote all nominees
contrary below) listed at right
(1) Election of [_] [_]
Directors
FOR ALL, (except Nominee(s) written below)
- --------------------------------------------------
Nominees: J.D. Barline FOR AGAINST ABSTAIN
R. Baumeister 2. Election of Deloitte [_] [_] [_]
F. Corrado & Touche LLP as
C.F. Edley independent auditors.
C.W.E. Haub (THE DIRECTORS FAVOR A VOTE "FOR")
H. Haub
B.B. Hauptfuhrer The Confidential Voting Instuction form
W.A. Liffers represents voting rights in the following number
F. Teelen of equivalent shares of A & P Common Stock as of
R.L. Wetzel May 20, 1997.
J. Wood
SIGNATURE(S): _________________________________ Date: _________________________
NOTE: Please date and sign exactly as name appears hereon. Joint owners should
each sign. The full title or capacity of any person signing for a
corporation, partnership, trust or estate should be indicated.
