<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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
Ingles Markets, Incorporated
------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[LOGO]
INGLES MARKETS, INCORPORATED
P. O. BOX 6676
ASHEVILLE, NORTH CAROLINA 28816
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 17, 1998
To the Stockholders of Ingles Markets, Incorporated:
NOTICE IS HEREBY GIVEN that Ingles Markets, Incorporated (the
"COMPANY") will hold its 1998 Annual Meeting of Stockholders at the Grove Park
Inn, 290 Macon Avenue, Asheville, North Carolina 28804, on Tuesday, February 17,
1998, at 1:00 P.M. local time, for the following purposes:
(1) To elect nine Directors for the ensuing year; and
(2) To transact any other business that may properly come before
the 1998 Annual Meeting.
These items and other matters relating to the 1998 Annual Meeting are more fully
discussed in the Proxy Statement that accompanies this notice.
Holders of record of the Company's Class A Common Stock, $.05 par value
per share, and Class B Common Stock, $.05 par value per share, at the close of
business on January 6, 1998, are entitled to receive this notice and to vote at
the 1998 Annual Meeting. The Company will maintain a list of stockholders
entitled to vote at the 1998 Annual Meeting at its corporate offices during the
10-day period before the 1998 Annual Meeting.
Whether or not you expect to attend the 1998 Annual Meeting, please
sign and date the accompanying proxy card(s) and return the proxy card(s)
promptly in the enclosed postage paid reply envelope. Your prompt return of the
proxy card(s) will help the Company prepare for the 1998 Annual Meeting. If you
return an executed proxy card and later decide to attend the 1998 Annual
Meeting, you may revoke your proxy at the meeting and vote your shares in
person.
By Order of the Board of Directors
/s/ Robert P. Ingle
Robert P. Ingle
Chairman of the Board
January 21, 1998
Asheville, North Carolina
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY CARD(S) PROMPTLY SO THAT YOUR VOTE
MAY BE RECORDED AT THE MEETING IF YOU DO NOT ATTEND PERSONALLY.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
PROXY STATEMENT .................................................................................. 1
Solicitation of Proxies ................................................................. 1
Effective Proxy Cards ................................................................... 2
Signing of Proxy Cards ......................................................... 2
Revocation of Proxies .......................................................... 2
Action to be Taken Under the Proxy Cards ................................................ 2
Election of Directors .......................................................... 2
Other Matters .................................................................. 2
Voting Rights ........................................................................... 3
Quorum Requirements ............................................................ 3
Election of Directors .......................................................... 3
Other Matters .................................................................. 4
Vote by Directors and Executive Officers ....................................... 4
ELECTION OF DIRECTORS ............................................................................ 4
Identification of Directors, Nominees for Election as a Director and Executive Officers . 4
Committees of the Board of Directors .................................................... 7
Additional Information with Respect to Compensation Committee Interlocks and Insider
Participation in Compensation Decisions .............................................. 8
Meetings of the Board of Directors and Committees ....................................... 9
Compensation of Non-Management Directors ................................................ 9
EXECUTIVE COMPENSATION ........................................................................... 10
General ................................................................................. 10
Employment Contracts, Termination of Employment and Change-in-Control Arrangements ...... 10
Report on Executive Compensation ........................................................ 10
Executive Compensation Policies ................................................ 10
Salaries and Cash Incentive Bonus Awards ....................................... 11
Stock Option Plans ............................................................. 11
Deferred Compensation Plan ..................................................... 14
Life Insurance ................................................................. 15
EXECUTIVE COMPENSATION SUMMARY ................................................................... 16
Summary Compensation Table .............................................................. 16
Options Grants Table .................................................................... 18
Option Exercise Table ................................................................... 20
Stock Price Performance Graph ........................................................... 22
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS ................................... 24
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS ............................................. 25
RELATIONSHIP WITH INDEPENDENT AUDITORS ........................................................... 26
OTHER MATTERS .................................................................................... 26
Stockholders' Proposals for the 1999 Annual Meeting ..................................... 26
Action on Other Matters at the 1998 Annual Meeting ...................................... 26
Section 16(a) Beneficial Ownership Reporting Compliance ................................. 26
Incorporation by Reference of this Proxy Statement....................................... 27
Availability of Form 10-K ............................................................... 27
</TABLE>
<PAGE> 4
INGLES MARKETS, INCORPORATED
P. O. BOX 6676
ASHEVILLE, NORTH CAROLINA 28816
ANNUAL STOCKHOLDERS MEETING
FEBRUARY 17, 1998
GROVE PARK INN
290 MACON AVENUE
ASHEVILLE, NORTH CAROLINA 28804
PROXY STATEMENT
This Proxy Statement is furnished on behalf of the Board of Directors
(the "BOARD") of Ingles Markets, Incorporated (the "COMPANY") in connection with
the solicitation of proxies to be voted at the Annual Meeting of the
Stockholders to be held on February 17, 1998, and any postponements or
adjournments thereof (collectively the "1998 ANNUAL MEETING"), for the purposes
set forth in the Notice of Annual Meeting of Stockholders that accompanies this
Proxy Statement. The Company will hold the 1998 Annual Meeting at the Grove Park
Inn, 290 Macon Avenue, Asheville, North Carolina 28804, on Tuesday, February 17,
1998, at 1:00 P.M., local time. The Company is sending this Proxy Statement to
each holder of record (a "STOCKHOLDER" and collectively the "STOCKHOLDERS") of
the Company's Class A Common Stock, $.05 par value per share ("CLASS A COMMON
STOCK"), and Class B Common Stock, $.05 par value per share ("CLASS B COMMON
STOCK"). The Class A Common Stock and Class B Common Stock are referred to
collectively as the "COMMON STOCK") as of the January 6, 1998 record date (the
"RECORD DATE"). Enclosed with this Proxy Statement are one or two forms of proxy
(each a "PROXY CARD" and collectively the "PROXY CARDS") appointing two officers
of the Company as proxies (the "PROXIES") to vote the shares of Common Stock
represented by each effective proxy card at the 1998 Annual Meeting in
accordance with the instructions on the proxy card. Also enclosed with this
Proxy Statement is the Company's Annual Report for the year ended September 27,
1997 (the "1997 ANNUAL REPORT"), which contains financial and other information
regarding the Company and its subsidiaries. The 1997 Annual Report is not
incorporated in this Proxy Statement and is not deemed to be a part of the
Company's proxy solicitation materials. The Company first sent or gave this
Proxy Statement, the accompanying Proxy Card(s) and the 1997 Annual Report to
Stockholders on or about January 21, 1998.
The Company's principal executive offices are located at 1560 Highway
70 East, Asheville (Black Mountain), North Carolina 28711.
SOLICITATION OF PROXIES
The Company will solicit proxies for the 1998 Annual Meeting by mail.
The Company will bear the cost of preparing, assembling, printing, mailing and
soliciting proxy solicitation materials. The Company's officers and regular
employees may also solicit proxies in person or by telephone, but they will not
be specially compensated for such services. The Company's regularly retained
investor relations firm, Corporate Communications, Inc., may also solicit
proxies by telephone and mail. The Company will not pay Corporate
Communications, Inc. a separate fee for any such proxy solicitations. The
Company will reimburse banks, brokers, nominees and other custodians and
fiduciaries for the reasonable out-of-pocket expenses they incur when they
forward proxy solicitation materials to the beneficial owners of Common Stock
held of record by such custodians and fiduciaries.
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EFFECTIVE PROXY CARDS
If a Stockholder completes and signs one of the enclosed Proxy Cards in
accordance with the instructions on the Proxy Card and returns the Proxy Card to
the Company's corporate Secretary (the "SECRETARY") in care of the Company's
Transfer Agent, First Union National Bank, so that it is received by the
Secretary at or before the 1998 Annual Meeting, the shares of Common Stock
represented by the Proxy Card will be voted at the 1998 Annual Meeting in
accordance with the instructions on the Proxy Card. Proxy Cards that are not
properly completed or signed or are not received by the Secretary at or before
the 1998 Annual Meeting will not be effective.
SIGNING OF PROXY CARDS. If a Stockholder is a corporation or a
partnership, a duly authorized person should sign each Proxy Card in the
Stockholder's full corporate or partnership name. If the shares of Common Stock
represented by a Proxy Card are registered in more than one name, each
registered owner should sign the Proxy Card. If an authorized person executes
the Proxy Card pursuant to a power of attorney or as an executor, administrator,
trustee or guardian, the person should include his or her full title on the
Proxy Card and enclose a certificate or other evidence of appointment with the
Proxy Card when delivering it to the Secretary. Proxy Cards that are not
properly executed will not be effective.
REVOCATION OF PROXIES. If a Stockholder revokes a Proxy Card that the
Stockholder delivered to the Secretary, that Proxy Card will not be effective.
If a Stockholder delivers an effective Proxy Card with respect to specific
shares of Common Stock, that Proxy Card will revoke all Proxy Cards previously
delivered by that Stockholder with respect to those shares of Common Stock. Any
Stockholder may revoke an effective Proxy Card at any time prior to the exercise
of the proxy granted by that Proxy Card. A Proxy Card may be revoked by the
Stockholder executing the Proxy Card without complying with any other
formalities if the Stockholder attends the 1998 Annual Meeting and gives oral
notice of the Stockholder's election to vote in person. In addition, a Proxy
Card with respect to any shares of Common Stock may be revoked prior to the 1998
Annual Meeting by the Stockholder executing the Proxy Card if the Stockholder
delivers to the Secretary an instrument revoking it or an effective Proxy Card
with respect to such shares bearing a later date.
ACTION TO BE TAKEN UNDER THE PROXY CARDS
ELECTION OF DIRECTORS. Unless instructed otherwise on the Proxy Cards,
one or both of the Proxies who are named on the Proxy Cards will vote all
effective Proxy Cards at the 1998 Annual Meeting "FOR" the election of each of
the nominees for election as a member of the Board (each a "DIRECTOR") set forth
under the heading "ELECTION OF DIRECTORS" (collectively, the "NOMINEES").
OTHER MATTERS. As of the date of this Proxy Statement, the Company's
management knew of no matter to be brought before the 1998 Annual Meeting other
than those mentioned in this Proxy Statement. However, if any other matter
properly comes before the 1998 Annual Meeting, one or both of the Proxies who
are named on the Proxy Cards will vote all effective Proxy Cards in accordance
with the judgment of such persons. If a broker indicates on a Proxy Card that
the broker does not have discretionary authority to vote the shares of Common
Stock represented by the Proxy Card on a particular matter, those shares will
not be voted on that matter.
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VOTING RIGHTS
Only Stockholders holding Class A Common Stock or Class B Common Stock
on the Record Date are entitled to vote at the 1998 Annual Meeting. Pursuant to
the Company's Bylaws, the Board has fixed January 6, 1998, at the close of
business, as the Record Date for the determination of the holders of Common
Stock that are entitled to receive notice of and to vote at the 1998 Annual
Meeting. Based on information available to the Company from its Transfer Agent,
First Union National Bank, at the close of business on January 6, 1998, there
were 9,077,666 shares of Class A Common Stock and 12,788,073 shares of Class B
Common Stock outstanding and entitled to be voted at the 1998 Annual Meeting.
QUORUM REQUIREMENTS. No matters may be voted on at the 1998 Annual
Meeting unless a quorum is present at the meeting for purposes of that vote. If
a majority of the outstanding shares of the Class A Common Stock represented at
the 1998 Annual Meeting is present, in person or by proxy, a quorum will be
present for purposes of the election of Directors by the holders of the Class A
Common Stock. If a majority of the outstanding shares of the Class B Common
Stock represented at the 1998 Annual Meeting is present, in person or by proxy,
a quorum will be present for purposes of the election of Directors by the
holders of the Class B Common Stock. If a majority of the aggregate votes
represented by all outstanding shares of the Class A Common Stock and Class B
Common Stock are present at the 1998 Annual Meeting, in person or by proxy, a
quorum will be present for purposes of voting on any other matters that may be
presented at the 1998 Annual Meeting.
ELECTION OF DIRECTORS. At the 1998 Annual Meeting, the holders of
Class A Common Stock voting as a class will elect two Directors and the holders
of Class B Common Stock voting as a class will elect seven Directors. Each
Stockholder will have one vote for each share of Class A Common Stock held by
the Stockholder as of the Record Date and one vote for each share of Class B
Common Stock held by the Stockholder as of the Record Date. If a quorum is
present for purposes of the vote, the North Carolina Business Corporation Act
provides that the nominees receiving a plurality of the votes cast by the shares
entitled to vote in the election will be elected as Directors. If there are more
than two nominees to be elected by the holders of Class A Common Stock, the two
nominees receiving more votes "for" than any other nominees will have received a
plurality of the vote. If there are more than seven nominees to be elected by
the holders of the Class B Common Stock, the seven nominees receiving more votes
"for" than any other nominees will have received a plurality of the vote. In an
election of Directors, only shares that are voted (votes cast for nominees and
votes withheld) will be counted. Any shares not voted (whether by abstention,
broker non-vote or otherwise) will have no impact on the vote because such
shares will be treated as not having been voted. For purposes of the 1998 Annual
Meeting, a broker non-vote is a Proxy Card that (a) indicates that the
Stockholder is a broker that holds the shares of record for a beneficial owner,
(b) does not reflect a vote on certain matters because the broker does not have
discretionary authority to vote the shares of Common Stock represented by the
Proxy Card on those matters because the beneficial owner sent no voting
instructions to the broker and (c) reflects a vote for the election of Directors
because the broker can exercise discretionary authority to vote the shares for
the election of Directors. Broker non-vote shares are deemed to be present for
purposes of determining if a quorum exits.
The North Carolina Business Corporation Act provides that, except for
stockholders of public corporations, every stockholder of a corporation that was
incorporated between July 1, 1957, and July 1, 1990, who is otherwise entitled
to vote at an election of directors shall have the right to vote in that
election, in person or by proxy, either (a) by voting the number of shares held
of record by that stockholder for as many persons as there are directors to be
elected and for whose election the stockholder has a right to vote, or (b) by
cumulative voting, whereby the stockholder has as many votes as the number of
such directors multiplied by the number of the stockholder's shares, and such
stockholder can either (i) give one nominee all of such votes or (ii) distribute
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the same number of votes among any number of the nominees. This right of
cumulative voting may not be exercised unless a stockholder or proxy holder
announces in open meeting before the voting for directors states an intention to
vote cumulatively. This provision of the North Carolina Business Corporation Act
does not apply to corporations that are public corporations as of the date the
share records are closed for purposes of setting a record date for the meeting.
Because the Company was a public corporation on the Record Date, cumulative
voting will not be applicable to the election of Directors at the 1998 Annual
Meeting. Nevertheless, if, for any reason, cumulative voting is determined to be
applicable to the election of Directors at the 1998 Annual Meeting,
discretionary authority is hereby solicited so that, except as limited in any
Proxy Card, the Proxies who are named in the Proxy Cards will have full
authority to vote for the largest number of nominees that can be elected by
cumulative voting of the shares of Common Stock to which the Proxy Cards relate
or for such lesser number as may be instructed by the Board, and the Proxies
will have full authority to distribute their votes in such manner as may be
instructed by the Board among nominees for whom the authority to vote has not
been withheld in the Proxy Cards.
OTHER MATTERS. Unless otherwise provided in the Company's Articles of
Incorporation or the North Carolina Business Corporation Act, with respect to
all other matters to be voted upon at the 1998 Annual Meeting, the holders of
Class A Common Stock and Class B Common Stock will vote as a single class, and
each holder of Class A Common Stock will be entitled to one vote for each share
of Class A Common Stock held as of the Record Date and each holder of Class B
Common Stock will be entitled to 10 votes for each share of Class B Common Stock
held as of the Record Date. For purposes of any such vote, if a quorum is
present, a proposal will pass if the votes cast "for" the action exceed the
votes cast "against" the action. Any shares not voted with respect to any such
matters (whether by abstention, broker non-vote or otherwise) will have no
impact on the vote because the shares will be treated as not having been voted.
As of the date of this Proxy Statement, the Company does not know of any other
matters to be presented for action at the 1998 Annual Meeting.
VOTE BY DIRECTORS AND EXECUTIVE OFFICERS. For purposes of any vote at
the 1998 Annual Meeting, as of the Record Date, the Company's Directors and
Executive Officers as a group (18 persons) held 54,935 shares of Class A Common
Stock (less than 1%) and 12,325,100 shares of Class B Common Stock
(approximately 96.4%). See "SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
BENEFICIAL OWNERS."
ELECTION OF DIRECTORS
Each member of the Board will be elected for a term of one year and
until their successors are elected and qualified or until their earlier death,
resignation or removal from office. The Company's Articles of Incorporation and
Bylaws provide that the number of Directors can not be less than five or more
than 11 and that the number of Directors may be fixed from time to time by
resolution of the Board. The Board has determined by resolution that the number
of Directors will be fixed at nine for the ensuing year. In accordance with the
Company's Articles of Incorporation and Bylaws, two of the Directors will be
elected by a vote of the holders of the Class A Common Stock and the remaining
seven Directors will be elected by a vote of the holders of the Class B Common
Stock.
IDENTIFICATION OF DIRECTORS, NOMINEES FOR ELECTION AS A DIRECTOR AND EXECUTIVE
OFFICERS
THE BOARD HAS NOMINATED JOHN O. POLLARD AND J. ALTON WINGATE TO BE
ELECTED BY THE HOLDERS OF THE CLASS A COMMON STOCK AND ROBERT P. INGLE, ANTHONY
S. FEDERICO, VAUGHN C. FISHER, RALPH H. GARDNER, ROBERT P. INGLE, II, LAURA
INGLE SHARP AND BRENDA S. TUDOR TO BE ELECTED BY THE HOLDERS OF THE CLASS B
COMMON STOCK. All of these Nominees are currently Directors except Brenda S.
Tudor. Ms. Tudor
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has been nominated to replace Jack R. Ferguson as a member of the Board. Mr.
Ferguson announced his retirement as a member of the Board and as Vice
President-Finance and Chief Financial Officer effective as of the close of
business on February 16, 1998.
The Proxies who are named in the Proxy Cards intend to vote "FOR" the
election of each of the Nominees who are to be elected by the holders of Class A
Common Stock and by the holders of Class B Common Stock. If for any reason any
Nominee is no longer a candidate when the election occurs at the 1998 Annual
Meeting, the Proxies intend to vote for the remaining Nominees and to vote in
accordance with their best judgment if any substitute nominee is designated by
the proxy holders or by the Board to fill the vacancy. As of the date of this
Proxy Statement, the Company anticipates that all of the Nominees will continue
to be candidates at the 1998 Annual Meeting. Under no circumstances will the
Proxies vote for more or fewer then nine nominees, unless the Board votes to
change the number of Directors or fewer than nine individuals are nominated at
the 1998 Annual Meeting.
The information set forth below was furnished by the respective
Directors, Nominees and executive officers of the Company named below (each an
"EXECUTIVE OFFICER"). Except as otherwise indicated, each Director, each Nominee
and each Executive Officer has been or was engaged in his or her present or last
principal employment, in the same or a similar position, for more than five
years. None of the Directors, Nominees or Executive Officers, other than Robert
P. Ingle and J. Alton Wingate, is a director of any other publicly-owned
company.
<TABLE>
<CAPTION>
NAME INFORMATION ABOUT DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
- ----------------------------- ------------------------------------------------------------
<S> <C>
Robert P. Ingle Mr. Ingle has been Chairman of the Board and
Chief Executive Officer since the Company was
incorporated in 1965. He was President of the
Company until 1982. Mr. Ingle also serves on
the Asheville Board of Directors Advisory Board
of First Union National Bank of North Carolina,
Asheville. Mr. Ingle is 64.
Joseph G. Ashley Mr. Ashley has served as Vice President-Meats
since he joined the Company in May 1991. He
served as a regional supervisor of meat
operations for Food Lion, Inc., a regional
supermarket chain, from 1973 until May 1991.
Mr. Ashley is 50.
H. James Brabson Mr. Brabson has served as Vice President-Store
Operations since January 1997. He joined the
Company in 1972 and held various positions
until 1984 when he became a District Manager.
Mr. Brabson is 50.
Timothy A. Davey Mr. Davey has served as a Bakery director since
he joined the Company in July 1994 and is
currently Vice President-Bakery. Mr. Davey
served as Director of Bakery Operations for
Kash n' Karry Food Stores, Inc., a regional
supermarket chain, from 1989 until 1994. From
1978 to 1989, he was employed by the Kroger
Company in a variety of positions. Mr. Davey is
41.
Anthony S. Federico Mr. Federico has served as a Director since May
1991 and as Vice President-Non-Foods since
October 1992. Prior to joining the Company in
October 1992, he served as President of
Ultimate Food Sales, Inc., a food brokerage
company based in Asheville, North Carolina,
which he founded in 1985. Mr. Federico is 38.
</TABLE>
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<TABLE>
<CAPTION>
NAME INFORMATION ABOUT DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
- ----------------------------- ------------------------------------------------------------
<S> <C>
Jack R. Ferguson Mr. Ferguson has served as a Director and as
Vice President-Finance and Chief Financial
Officer of the Company since January 1988.
Prior to joining the Company in December 1987,
Mr. Ferguson served as Treasurer of BI-LO,
Inc., a regional supermarket chain, where he
had been employed since 1971. Mr. Ferguson is
57. Mr. Ferguson announced his retirement as a
member of the Board and as Vice
President-Finance and Chief Financial Officer
effective as of the close of business on
February 16, 1998.
Vaughn C. Fisher A Director since 1985, Mr. Fisher joined the
Company in 1972 and currently serves as the
Company's President and Chief Operating
Officer. He served as the Company's Vice
President-Sales Manager until December 28,
1996. Mr. Fisher is 60.
Ralph H. Gardner A Director since 1985, Mr. Gardner is President
of Milkco, Inc., a subsidiary of the Company
that processes and packages milk, fruit juices
and spring water. Mr. Gardner worked for Kraft,
Inc. as Area Sales Manager for 34 years prior
to joining the Company as an officer in 1982.
He is 77.
Nancy L. Hughes Ms. Hughes joined the Company in January 1997
and has served as Vice President-Deli since
February 1997. Prior to joining the Company,
Ms. Hughes served as Bakery Buyer/Corporate
Merchandiser for BI-LO, Inc., where she was
employed from 1989 until January 1997. She was
previously employed by the Company from 1979
until 1989 in a variety of job positions. Ms.
Hughes is 38.
Robert P. Ingle, II Robert P. Ingle, II, has been a Director since
February 1997. He has also been employed by the
Company on a full-time basis since 1991. He
became Vice President-Operations in February
1996. He is 29.
Edward J. Kolodzieski Mr. Kolodzieski has served as Vice
President-Strategic Planning since he joined
the Company in August 1995. Prior to joining
the Company, Mr. Kolodzieski was employed by
Kash n' Karry Food Stores, Inc., a regional
supermarket chain, from 1978 until 1995. He
held several positions at Kash n' Karry,
including Regional Manager, Marketing Manager,
Director of Deli Marketing, and Vice President
of Operations, and served in the capacity as
Senior Vice President-Operations prior to
joining the Company. Mr. Kolodzieski is 37.
Gordon S. Myers Mr. Myers has served as Vice President-Real
Estate since he joined the Company in March
1993. Prior to joining the Company, he was
President of Commercial Developers, Inc., a
real estate company, where he consulted with
the Company on matters relating to real estate.
He is 53.
John O. Pollard A Director since 1987, Mr. Pollard is a partner
in the Charlotte, North Carolina law firm of
Blakeney & Alexander, with which he has been
affiliated since 1973. Mr. Pollard is 60.
J. Thomas Outlaw, Jr. Mr. Outlaw has been employed by the Company in
various capacities since 1977. He is currently
Vice President-Sales Manager. Mr. Outlaw is 51.
</TABLE>
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<TABLE>
<CAPTION>
NAME INFORMATION ABOUT DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
- ----------------------------- ------------------------------------------------------------
<S> <C>
Laura Ingle Sharp The Company's "Laura Lynn" private label
products are named after Ms. Sharp. She has
been a Director since February 1997. She has
also served the Company in several capacities
on a full-time and part-time basis since 1975,
including appearances in advertisements
promoting the Company's private label products.
Ms. Sharp is 41.
Leonard E. Tasler Mr. Tasler has served as Vice President-Produce
since he joined the Company in March 1993.
Prior to joining the Company, he served as
Senior Produce Buyer for Safeway Stores, Inc.,
a national supermarket chain, in its Omaha,
Phoenix, and Denver division from 1973 through
1993. He is 43.
Brenda S. Tudor A certified public accountant, Ms. Tudor is
Controller and Secretary of the Company. She
joined the Company in 1984 and served as
general accounting manager until 1988. Before
she joined the Company, Ms. Tudor was employed
as an accountant with the Asheville, North
Carolina office of Strand, Skees, Jones &
Company, certified public accountants, for
three years. Ms. Tudor is 40.
J. Alton Wingate A Director since 1987, Mr. Wingate is Chairman
and Chief Executive Officer of Community Bank &
Trust-Cornelia, Georgia, where he has been
employed as an executive officer since 1977. He
also serves as President, Chief Executive
Officer and a director of Financial
Supermarkets, Inc. and Community Bankshares,
Inc. Mr. Wingate also serves as a director of
Community Bank & Trust-Commerce, Georgia, and
Cherokee National Life Insurance Company and as
Chairman and a director of Community Bank &
Trust-Alabama and Community Bank & Trust-Troup,
Georgia. Mr. Wingate is 58.
</TABLE>
Robert P. Ingle, II and Laura Ingle Sharp are the son and daughter,
respectively, of Robert P. Ingle. Anthony S. Federico is the son-in-law of
Robert P. Ingle and the brother-in-law of Robert P. Ingle, II and Laura Ingle
Sharp. There are no other family relationships among any of the Directors,
Nominees or Executive Officers of the Company.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board has three standing committees: an Executive Committee, an
Audit/Compensation Committee and an Employee Benefit Plan Committee. The Company
does not have a separate nominating committee.
THE EXECUTIVE COMMITTEE. The Executive Committee can exercise the
powers of the full Board between meetings of the Board, except for powers that
may not be delegated to a committee of the Board under the North Carolina
Business Corporation Act. The Executive Committee currently consists of Messrs.
Robert P. Ingle, Fisher and Ferguson.
THE AUDIT/COMPENSATION COMMITTEE. The Board approved resolutions that
provide that up to three of its independent, non-employee members will serve on
the Audit/Compensation Committee and empowered the committee to:
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- Recommend the appointment or removal of the Company's
independent auditors, review the scope and results of the
independent audit of the Company, review audit fees and review
changes in accounting policies that have a significant effect
on the Company's financial reports.
- Approve compensation levels and increases of each Executive
Officer and of other employees of the Company whose annual
base salary is in excess of $100,000.
- Approve all incentive payments to Executive Officers and any
incentive payments in excess of $25,000, paid in cash or
property, in any calendar year to any other employee.
- Undertake administration of employee benefit plans.
The Audit/Compensation Committee consists of Messrs. Robert P. Ingle, Pollard
and Wingate.
THE EMPLOYEE BENEFIT PLAN COMMITTEE. The Employee Benefit Plan
Committee was established during fiscal 1997. The Board appointed two of its
members to serve on the Employee Benefit Plan Committee and empowered the
committee to undertake administration of employee benefit plans and other
compensation matters where independent, disinterested administration was
required by applicable tax or securities laws. Where Rule 16b-3 of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), or Section
162(m) of the Internal Revenue Code of 1986, as amended (the "CODE"), requires
that grants or awards under the Company's stock-based employee benefit plans be
made by the full Board or by a "disinterested" committee or a committee of
"outside directors," the Employee Benefit Plan Committee or the Board, as
appropriate, will make such decisions. The Employee Benefit Plan Committee
consists of Messrs. Pollard and Wingate.
ADDITIONAL INFORMATION WITH RESPECT TO COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
All compensation decisions made during fiscal 1997 that were not made
exclusively by the Board, the Audit/Compensation Committee or the Employee
Benefit Plan Committee were made by the Chief Executive Officer (in certain
instances in consultation with the Chief Operating Officer).
The only member of the Audit/Compensation Committee who was an officer
or employee of the Company and its subsidiaries during fiscal 1997 was Mr.
Robert P. Ingle. Messrs. Pollard and Wingate, who are the other members of the
Audit/Compensation Committee and the sole members of the Employee Benefit Plan
Committee, were not officers or employees of the Company or its subsidiaries
during fiscal 1997 or any prior fiscal year.
While Messrs. Pollard and Wingate do not have any employment
relationship with the Company, they do have certain other relationships with the
Company. Mr. Pollard is a partner in the Charlotte, North Carolina, law firm of
Blakeney & Alexander which, from time to time, handles labor matters for the
Company. Blakeney & Alexander bills the Company on a calendar year basis. During
fiscal 1997, the Company accrued approximately $198,000 in fees for services
rendered by Blakeney & Alexander. Mr. Wingate is President, Chief Executive
Officer and a director of Community Bankshares, Inc. and of its subsidiaries,
Financial Supermarkets, Inc. and Community Bank & Trust. Financial Supermarkets,
Inc. provides consulting services to the Company in connection with the
placement of banks within the Company's supermarkets. During fiscal 1997, the
Company paid Community Bank & Trust $104,158 in fees for services rendered by
Financial Supermarkets, Inc.
8
<PAGE> 12
The Company believes that the transactions described above between the
Company and each of Blakeney & Alexander and Community Bank & Trust have been
and will continue to be on terms no less favorable to the Company than those
available from unaffiliated third parties in transactions negotiated at
arms-length.
From time to time, the Company has made cash advances to Mr. Robert P.
Ingle, and Mr. Ingle has made cash advances to the Company. Such advances, both
to and from Mr. Ingle, have been payable on demand and have been unsecured. The
rate of interest on each of these advances was eight percent (8%). During fiscal
1997, Mr. Ingle advanced the Company $102,022 in the aggregate under this
arrangement and the Company advanced Mr. Ingle $101,392 in the aggregate. The
highest aggregate amount of advances from the Company to Mr. Ingle that were
outstanding as of the end of any month during fiscal 1997 was $7,781 and the
highest aggregate amount of advances from Mr. Ingle to the Company that were
outstanding as of the end of any month during fiscal 1997 was $16,184. As of
September 27, 1997, no balances were outstanding under this arrangement.
See also "CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS."
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board held four formal meetings during fiscal 1997. The Executive
Committee held no formal meetings during fiscal 1997, but met on an informal
basis. The Audit/Compensation Committee held one formal meeting during fiscal
1997, met on an informal basis and acted by unanimous written consent. The
Employee Benefit Plan Committee held no formal meetings during fiscal 1997, but
met on an informal basis and acted by unanimous written consent. For the period
in fiscal 1997 during which he or she served as a Director, each incumbent
Director attended at least 75% of all meetings of the Board and of the
committees of the Board on which he or she served. See "COMMITTEES OF THE BOARD
OF DIRECTORS."
COMPENSATION OF NON-MANAGEMENT DIRECTORS
Directors who were not officers of the Company received a fee of $500
for each Board meeting they attended in fiscal 1997.
9
<PAGE> 13
EXECUTIVE COMPENSATION
GENERAL
In order to improve stockholders' understanding of all forms of
compensation paid to executive officers, the criteria used to reach such
compensation decisions, and any relationship between executive compensation and
corporate performance, the Securities and Exchange Commission (the "SEC")
adopted rules regarding the form and substance of the executive compensation
disclosure to be made by publicly-held corporations to their stockholders. The
SEC's rules also require the Company to include in this Proxy Statement a report
from the Audit/Compensation Committee and the Employee Benefit Plan Committee
addressing the following aspects of executive compensation with respect to the
most recently completed fiscal year (the fiscal year ended September 27, 1997):
(a) the Company's policies regarding executive compensation generally, (b) the
factors and criteria considered in setting the compensation of the Company's
Chief Executive Officer, Robert P. Ingle, and (c) any relationship between such
compensation and the Company's performance. Accordingly, set forth below is the
report submitted by Messrs. Robert P. Ingle, John O. Pollard and J. Alton
Wingate in their capacity as the Company's Audit/Compensation Committee and by
Messrs. Pollard and Wingate in their capacity as the Employee Benefit Plan
Committee.
The Company believes that the following disclosure provides its
stockholders with an understanding of the Company's executive compensation
structure during fiscal 1997 and insight into the Company's policies that shaped
such compensation decisions.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
None of the Executive Officers had an employment contract, a
termination of employment arrangement or a change in control arrangement with
the Company or any of its subsidiaries during fiscal 1997.
REPORT ON EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION POLICIES. The Company's Chief Executive Officer
periodically reviews the compensation paid by the Company to its Executive
Officers and other employees. Based on the Company's performance, he makes final
subjective determinations (in certain instances in consultation with the Chief
Operating Officer) with respect to any changes to be made to that compensation.
Neither the full Board, the Audit/Compensation Committee nor the
Employee Benefit Plan Committee generally reviews or ratifies the Chief
Executive Officer's decisions relating to executive compensation unless
otherwise required by the Company's Bylaws, by resolutions adopted by the Board
or by the North Carolina Business Corporation Act. Decisions are made by the
Board, the Audit/Compensation Committee or the Employee Benefit Plan Committee
if such decisions require the adoption of documents relating to employee benefit
plans or programs. In addition, the Audit/Compensation Committee is required by
resolution to approve any increases in compensation that the Company will pay to
an employee whose base salary is in excess of $100,000, all incentive
compensation that the Company will pay to Executive Officers and any incentive
payments that the Company will pay to any other employee in excess of $25,000.
Decisions about grants or awards under the Company's stock-based employee
benefit plans are made either by the Employee Benefit Plan Committee or by the
Board, as appropriate, where Rule 16b-3 of the Exchange Act or Section 162(m) of
the Code requires that such grants or awards be made by the full Board or by a
"disinterested" committee or a committee of "outside directors." See "COMMITTEES
OF THE BOARD OF DIRECTORS."
10
<PAGE> 14
Section 162(m) of the Code generally limits to $1 million the corporate
tax deduction for compensation paid to certain executive officers, unless
certain requirements are met. On December 20, 1995, the Internal Revenue Service
and Department of Treasury issued final regulations regarding compliance with
Section 162(m). The regulations clarify that the Section 162(m) limitations
apply to certain compensation paid to the chief executive officer and any of the
other four highest paid officers of a publicly-held corporation. To qualify for
exemption from these limitations, the compensation must be "performance based"
as defined in Section 162(m). To be considered "performance based," the
compensation must be paid solely because the officers have met one or more
pre-established, objective performance goals established by a committee of
"outside directors." In addition, the material terms of these performance goals
must be disclosed to and approved by the corporation's stockholders and a
committee of "outside directors" must certify that the performance goals were
attained. The Chief Executive Officer and the Audit/Compensation Committee have
determined that, while the $1 million compensation deduction cap would be
applicable to the Executive Officers named in the "SUMMARY COMPENSATION TABLE,"
their compensation levels for fiscal 1997 were substantially below the cap.
Nevertheless, the Chief Executive Officer, the Audit/Compensation Committee and
the Employee Benefit Plan Committee, as appropriate, intend to consider Section
162(m) of the Code when they determine compensation levels and to evaluate
appropriate alternatives to mitigate any adverse impact this limitation may have
on the deductibility of executive compensation paid by the Company and its
subsidiaries.
SALARIES AND CASH INCENTIVE BONUS AWARDS.
THE CHIEF EXECUTIVE OFFICER'S SALARY AND BONUS. In fiscal 1997, Mr.
Robert P. Ingle received a salary of $200,000 and no bonus. Payment of Mr.
Ingle's salary was approved by the Audit/Compensation Committee. Mr. Ingle's
salary was fixed effective December 6, 1992, at $170,000 per year in accordance
with a three-year employment agreement entered into with the Company. The
employment agreement included a bonus provision and certain other benefits.
Effective September 26, 1993, Mr. Ingle's employment agreement was amended to
extend the term until September 26, 1996, amend the bonus provision effective
with fiscal 1994, and increase his base salary to no less than $200,000 per year
effective with fiscal 1995. The employment agreement expired at the end of
fiscal 1996.
SALARY AND BONUS AWARDS FOR OTHER EXECUTIVE OFFICERS. In fiscal 1997,
Mr. Fisher received a salary of $283,308 and a bonus of $10,329, the payment
which was approved by the Audit/Compensation Committee.
Mr. Ashley's salary was fixed at $150,000 per year pursuant to an oral
agreement that Mr. Ashley and the Company entered into as a condition of his
accepting employment with the Company.
Of the five Executive Officers of the Company named in the "SUMMARY
COMPENSATION TABLE," only four earned compensation during fiscal 1997 in an
amount that was based on corporate performance. These Executive Officers
received a fixed salary and a bonus based on the Company's performance. Mr.
Gardner's annual bonus was tied to the pre-tax income (before bonus) of Milkco,
Inc. The bonuses paid by the Company to Messrs. Fisher, Ashley and Ferguson were
tied to the Company's operating performance for the fiscal year.
STOCK OPTION PLANS.
STOCK OPTION AGREEMENTS WITH EXECUTIVE OFFICERS. As of August 2, 1995,
the Company entered into a nonqualified stock option agreement with Edward J.
Kolodzieski, the Company's Vice President-Strategic Planning under which up to
100,000 shares of the Company's Class A Common Stock may be issued to him at
11
<PAGE> 15
an exercise price of $10.625 per share (the fair market value of the stock at
the date the option was granted). The agreement was approved by the Company's
Board of Directors and its stockholders. The agreement provides that Mr.
Kolodzieski may exercise this option during a three-month period that begins on
August 2, 2000. Mr. Kolodzieski may also exercise his option upon his death or
disability or his retirement approved by the Company.
1997 NONQUALIFIED STOCK OPTION PLAN. On January 17, 1997, the Board
adopted the Ingles Markets, Incorporated 1997 Nonqualified Stock Option Plan
(the "1997 PLAN"). The Company's stockholders adopted and approved the 1997 Plan
on February 18, 1997. The purposes of the 1997 Plan are to attract, retain and
motivate officers and key employees of the Company and its subsidiaries and to
provide incentives and rewards for superior performance. The Company may grant
options under the 1997 Plan only to officers or key employees of the Company or
any of its subsidiaries or to anyone who agrees to be an officer or key employee
no more than 90 days before the date the options are granted.
During fiscal 1997, the Employee Benefit Plan Committee administered
the 1997 Plan. The Employee Benefit Plan Committee or the Board, as appropriate
(in its sole discretion subject to the terms of the 1997 Plan), determines the
following pursuant to the 1997 Plan: the number of shares of Class A Common
Stock that are subject to each option granted; the exercise price for each such
share to be issued when an option is exercised; the dates on which options will
be granted, will become exercisable and will expire; and any other conditions to
which the options will be subject. Each optionee is required to enter into an
option agreement with the Company specifying the terms of his or her option.
Options will terminate, become null and void and no longer be of any force and
effect if the options have not been exercised by the expiration date set forth
in the optionee's option agreement.
If an optionee's employment is terminated for any reason other than by
reason of death, a material disability or retirement with the consent of the
Company, any portion of the option that has not been previously exercised will
terminate immediately. If the optionee dies while employed or within a period of
three months after any termination of employment as a result of a material
disability or retirement with the consent of the Company, the option may be
exercised, at any time within the three-month period after the optionee's death
during which the option would otherwise be exercisable, by the executor or
administrator of the optionee's estate or by persons who have acquired the
option directly from the optionee by bequest or inheritance. If the optionee's
employment is terminated due to a material disability or retirement with the
consent of the Company, the optionee will have the right to exercise the option
at any time within the three-month period after such termination during which
the option would otherwise be exercisable.
During February 1997, the Company granted options to purchase 1,150,000
shares of Class A Common Stock to its key employees. The exercise price per
share for each of these options is 100% of the fair market value of the Class A
Common Stock on the grant date. Included in these option grants were two options
for 100,000 shares of Class A Common Stock each to Robert P. Ingle, the
Company's Chairman of the Board and Chief Executive Officer, and Vaughn C.
Fisher, the Company's President and Chief Operating Officer. These options
become exercisable in February 1998 and may be exercised until February 1999.
Options for an additional 950,000 shares of Class A Common Stock were granted to
other Executive Officers and key employees in February 1997. Each of these
options becomes exercisable in February 2002 and may be exercised until February
2003.
As of the date of this Proxy Statement, the maximum number of shares of
the Company's Class A Common Stock that could be issued upon the exercise of
Options under the 1997 Plan is 5,000,000 shares. During the 1997 fiscal year,
1,150,000 options were granted under the 1997 Plan and options for 13,000 shares
were canceled. As of September 27, 1997, no options had been exercised, no
options were exercisable, options
12
<PAGE> 16
to purchase 1,137,000 shares of Class A Common Stock were outstanding and
options to purchase 3,863,000 shares of Class A Common Stock were available for
future grants under the 1997 Plan.
AMENDED AND RESTATED 1991 NONQUALIFIED STOCK OPTION PLAN. The Board
adopted a nonqualified stock option plan in August 1991. This plan was
retroactively amended and restated during the fourth quarter of fiscal 1995 to
make certain technical corrections reflecting the original intent of the Board
when the plan was originally adopted (as amended and restated, the "1991 PLAN").
On February 20, 1996, the 1991 Plan was approved and adopted by the Company's
stockholders. Under the 1991 Plan, up to 1,000,000 shares of the Company's Class
A Common Stock were issuable to key employees until August 6, 1996, at a price
not less than 100% of the fair market value of the shares on the grant date.
Options granted under the 1991 Plan may be exercised, in whole or in
part, during a three-month period that begins on the fifth anniversary of the
grant date. Generally, these options are not exercisable after the optionee
ceases to be employed by the Company. If an optionee dies before the 63rd month
after the grant date, the option may be exercised at any time within the period
after the optionee's death during which the option would otherwise be
exercisable, by the optionee's estate or by any person(s) who may have acquired
the option directly from the optionee by bequest or inheritance.
The Company's ability to issue options under the 1991 Plan ceased
pursuant to the terms of the 1991 Plan as of August 7, 1996. As of September 27,
1997, 391,000 options had been exercised, no options were exercisable and
options to purchase 500,000 shares of Class A Common Stock were outstanding.
During fiscal 1997, 100,000 option shares of Class A Common Stock were canceled.
AMENDED AND RESTATED 1987 EMPLOYEE INCENTIVE STOCK OPTION PLAN. The
Board and stockholders of the Company adopted and approved an incentive stock
option plan in 1987. This plan was retroactively amended and restated during the
fourth quarter of fiscal 1995 to make certain technical corrections reflecting
the original intent of the Board when the plan was originally adopted (as
amended and restated, the "ISO PLAN"). The ISO Plan provided for the grant of
incentive stock options on or before September 8, 1997, to key employees to
purchase up to 250,000 shares of Class A Common Stock. Participation in the ISO
Plan was limited to salaried employees who (a) were officers or employed in an
executive, administrative or professional capacity by the Company and (b)
possessed less than 10% of the total combined voting power of all classes of
stock of the Company immediately after the option was granted. Options were
granted by the committee responsible for overseeing the ISO Plan, which
established the exercise price of the options at not less than 100% of the fair
market value of the Class A Common Stock on the grant date.
Options granted under the ISO Plan may be exercised, in whole or in
part, within a three-month period that begins on the fifth anniversary of the
grant date. If an optionee dies, becomes disabled or retires with the consent of
the Company before the 63rd month after the grant date, the option may be
exercised at any time within the period after the optionee's death during which
the option would otherwise be exercisable, by the personal representative of the
optionee (in the event of the optionee's disability or death) or by the
optionee.
The Company's ability to issue options under the ISO Plan ceased
pursuant to the terms of the ISO Plan as of September 8, 1997. During fiscal
1997, options to purchase 66,000 shares of Class A Common Stock were granted
under the ISO Plan, options for 48,200 shares of Class A Common Stock were
exercised, and options to purchase 32,300 shares of Class A Common Stock were
canceled. As of September 27, 1997, no options were exercisable and options to
purchase 147,000 shares of Class A Common Stock were outstanding.
13
<PAGE> 17
DEFERRED COMPENSATION PLAN.
INVESTMENT/PROFIT SHARING PLAN. The Company maintains the Ingles
Markets, Incorporated Investment/Profit Sharing Plan (the "PROFIT SHARING PLAN")
to provide retirement benefits to eligible employees. The Profit Sharing Plan
includes 401(k) and discretionary employee matching contribution features. The
assets of the Profit Sharing Plan are held in trust for participants and are
distributed upon the retirement, disability, death or other termination of
employment of the participant. The Board, in its discretion, annually determines
the amount of any Company contributions, including the amount of any matching
contributions to be made based on participants' 401(k) contributions for the
year.
Employees who participate in the Profit Sharing Plan may contribute to
their 401(k) account between one percent and ten percent (in increments of one
percent) of their compensation by way of salary reductions that cannot exceed a
maximum amount that varies annually (the indexed amount was $9,500 in 1997 and
is $10,000 in 1998) in accordance with the Code. The Company also makes
available to Profit Sharing Plan participants the ability to direct the
investment of their 401(k) accounts (including the Company's matching
contributions) in various investment funds.
The Company's contributions to the participants' profit sharing
accounts are held in a separate fund (the "INGLES FUND") that invests primarily
in shares of the Company's Class B Common Stock and also includes cash reserves
to facilitate distributions from the fund. See "SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS" regarding the shares of Class B Common Stock held
by the Profit Sharing Plan in the Ingles Fund.
The Company contributed $700,000 to the Profit Sharing Plan during
fiscal 1997. These contributions were allocated to the matching contribution
accounts in each participant's 401(k) accounts and to the Ingles Fund. The
Company's contributions to each of the Executive Officers named in the "SUMMARY
COMPENSATION TABLE" are reflected in the last column of that table. As of
September 27, 1997, all of the Company's Executive Officers who are named in the
"SUMMARY COMPENSATION TABLE" and who had account balances under the Profit
Sharing Plan were 100% vested in their accounts except for Joseph G. Ashley who
was 80% vested. Participants' interests in contributions allocated to their
accounts vest over seven years.
14
<PAGE> 18
LIFE INSURANCE. The Company maintains, at its expense, for the benefit
of each of its full-time employees life insurance policies on the life of that
employee in amounts up to $150,000 based on the W-2 compensation of the
employee. The premiums paid by the Company for the benefit of the Executive
Officers named in the "SUMMARY COMPENSATION TABLE" are included in the last
column of that table.
SUBMITTED BY:
THE AUDIT/COMPENSATION COMMITTEE
Robert P. Ingle John O. Pollard J. Alton Wingate
THE EMPLOYEE BENEFIT PLAN COMMITTEE
John O. Pollard J. Alton Wingate
15
<PAGE> 19
EXECUTIVE COMPENSATION SUMMARY
The Company prepared the tables and graphs in this section in
accordance with the SEC's rules regarding the disclosure to stockholders of
compensation paid by publicly-held corporations to their executive officers.
SUMMARY COMPENSATION TABLE
The table below (the "SUMMARY COMPENSATION TABLE") summarizes the
compensation paid by the Company to the following Executive Officers: (a) its
Chief Executive Officer and (b) each of the other four most highly compensated
Executive Officers (other than the CEO) who was serving as an Executive Officer
at the end of fiscal 1997 and received total annual salary and bonus for the
1997 fiscal year equal to or in excess of $100,000. The table reflects all
compensation paid by the Company to each such Executive Officer for services
rendered in all capacities to the Company and its subsidiaries. The Company did
not make any restricted stock awards, option awards, stock appreciation right
awards or other Long Term Investment Plan (LTIP) awards during fiscal 1997,
1996, or 1995, other than pursuant to the 1997 Plan, the 1991 Plan, the ISO Plan
and the stock option agreement with Edward J. Kolodzieski, all of which are
described under the caption "REPORT ON EXECUTIVE COMPENSATION--STOCK OPTION
PLANS."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
AWARDS
------
UNDERLYING ALL OTHER
FISCAL SALARY BONUS SECURITIES OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) (#)(2) ($)
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert P. Ingle 1997 $200,000 $ -- 100,000 $3,263(3)
Chairman and
Chief Executive Officer 1996 211,000 300,000 -- 3,529
1995 199,962 -- -- 4,835
------------------------------------------------------------------------------------------------------------------
Vaughn C. Fisher 1997 283,308 10,329 100,000 4,033(4)
President and
Chief Operating Officer 1996 112,000 21,732 -- 2,589
1995 107,692 21,726 -- 3,047
------------------------------------------------------------------------------------------------------------------
Joseph G. Ashley 1997 150,000 21,588 100,000 876(5)
Vice President-Meats
1996 150,000 22,320 -- 948
1995 150,000 17,452 -- 261
------------------------------------------------------------------------------------------------------------------
Jack R. Ferguson 1997 169,231 11,792 100,000 3,695(6)
Vice President-Finance and
Chief Financial Officer 1996 100,000 51,546 -- 2,777
1995 100,000 46,635 -- 3,315
------------------------------------------------------------------------------------------------------------------
Ralph H. Gardner 1997 60,000 296,184 100,000 2,459(7)
President of Milkco, Inc.
1996 60,000 207,617 -- 2,490
1995 60,000 156,657 -- 3,208
------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 20
(1) The Company establishes the amount it pays as bonuses to its Executive
Officers after the end of the fiscal year based on the Company's
performance during the fiscal year just ended. The Company accrues the
amount it pays as bonuses based on the Company's performance. Amounts
disclosed in this column in Proxy Statements for fiscal years before
fiscal 1996 reflected the year in which the bonus was awarded and paid
rather than earned, as is currently reflected.
(2) Each award represents the grant by the Company of an option to purchase
100,000 shares of Class A Common Stock to the Executive Officer
pursuant to the 1997 Plan.
(3) Includes $2,975 paid by the Company as contributions to the Profit
Sharing Plan and $288 in insurance premiums paid by the Company for
term life insurance for Mr. Ingle's benefit.
(4) Includes $3,745 paid by the Company as contributions to the Profit
Sharing Plan and $288 in insurance premiums paid by the Company for
term life insurance for Mr. Fisher's benefit.
(5) Includes $588 paid by the Company as contributions to the Profit
Sharing Plan and $288 in insurance premiums paid by the Company for
term life insurance for Mr. Ashley's benefit.
(6) Includes $3,407 paid by the Company as contributions to the Profit
Sharing Plan and $288 in insurance premiums paid by the Company for
term life insurance for Mr. Ferguson's benefit.
(7) Includes $2,171 paid by the Company as contributions to the Profit
Sharing Plan and $288 in insurance premiums paid by the Company for
term life insurance for Mr. Gardner's benefit.
17
<PAGE> 21
OPTIONS GRANTS TABLE
The table below sets forth the following information with respect to
each of the Executive Officers named in the "SUMMARY COMPENSATION TABLE": (a)
the number of shares of Class A Common Stock underlying all individual options
that the Company granted to the Executive Officers during fiscal 1997, (b) the
ratio that the number of such options bears to the total number of options that
the Company granted to all of its employees during fiscal 1997, (c) the
per-share exercise price of such options, (d) the date on which such options
expire and (e) the amount that the Executive Officer will receive when he
exercises the option assuming that (i) the Executive Officer will exercise his
option on its expiration date and (ii) the market price per share of the
underlying Class A Common Stock will appreciate in value from the grant date to
the exercise date at assumed annualized rates of appreciation (compounded
annually over the term) of 5% and 10%, respectively. The Company made no grants
of stock appreciation rights, separately or in tandem with options, during
fiscal 1997.
<TABLE>
<CAPTION>
OPTION GRANTS IN THE 1997 FISCAL YEAR
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term (3)
-------------------------------------------------------- -------------------------
Number of
Securities Percent of
Underlying Total Options Five Ten
Options Granted to Exercise Percent Percent
Granted Employees in Price Expiration (5%) (10%)
NAME (1)(#) Fiscal Year ($/Sh)(2) Date ($) ($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert P. Ingle 100,000 8.22% $14.00 2/17/99 $143,500 $ 294,000
Chairman and
Chief Executive Officer
- ------------------------------------------------------------------------------------------------------------------
Vaughn C. Fisher 100,000 8.22% $14.00 2/17/99 $143,500 $ 294,000
President and
Chief Operating Officer
- ------------------------------------------------------------------------------------------------------------------
Joseph G. Ashley 100,000 8.22% $14.00 2/17/03 $476,134 $1,080,185
Vice President-Meats
- ------------------------------------------------------------------------------------------------------------------
Jack R. Ferguson 100,000 8.22% $14.00 2/17/03 $476,134 $1,080,185
Vice President-Finance and
Chief Financial Officer
- ------------------------------------------------------------------------------------------------------------------
Ralph H. Gardner 100,000 8.22% $14.00 2/17/03 $476,134 $1,080,185
President of Milkco, Inc.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All of the reported options were granted on February 18, 1997. Messrs.
Ingle's and Fisher's options vest 100% on February 17, 1998. Messrs.
Ashley's, Ferguson's and Gardner's options vest 100% on February 17,
2002. All of the options are exercisable during the one-year period
ending on the first anniversary of the vesting date.
18
<PAGE> 22
(2) The exercise price for these options is equal to 100% of the fair
market value of the Company's Class A Common Stock on the grant date,
which equals the closing price of the stock on that date.
(3) The potential realizable value equals the assumed appreciated market
price per share (approximately $15.44 per share at 5% for Messrs.
Ingle and Fisher, approximately $18.76 per share at 5% for Messrs.
Ashley, Ferguson and Gardner; approximately $16.94 per share at 10%
for Messrs. Ingle and Fisher, approximately $24.80 per share at 10%
for Messrs. Ashley, Ferguson and Gardner) less the $14.00 per share
exercise price which is then multiplied by the number of shares of
Class A Common Stock underlying the options. The 5% and 10% assumed
rates of appreciation method for calculating the potential value of
the options the Executive Officers may receive is entirely dependent
on appreciation in the market price of the Class A Common Stock. The
5% and 10% rates are included for illustration only and are not a
prediction of market appreciation. The actual value that an Executive
Officer will realize will be based on the actual market price on the
date the Executive Officer exercises his option. If the per share
price does not increase, no Executive Officer will realize any gain.
For example, the options were not in-the-money on September 27, 1997,
because the fair market value per share was $13.0625 on that date,
which was less than the exercise price. If all of the holders of the
8,858,868, shares of Class A Common Stock outstanding as of February
18, 1997 (the date the options were granted), realized the same
appreciation in the value of their shares over the six year term of
the options granted to Messrs. Ashley, Ferguson and Gardner, the
aggregate increase in value of the outstanding shares would be
approximately $42,168,000 (approximately $18.76 per share at 5%) and
approximately $95,676,000 (approximately $24.80 per share at 10%).
19
<PAGE> 23
OPTION EXERCISE TABLE
The table below sets forth the following information with respect to
each of the Executive Officers named in the "SUMMARY COMPENSATION TABLE": (a)
the number of shares received when the Executive Officer exercised an option
during fiscal 1997, (b) the aggregate dollar value realized when he exercised
the option, (c) the total number of shares of Class A Common Stock underlying
all outstanding, unexercised options held at the end of fiscal 1997, separately
identifying the exercisable and unexercisable options, and (d) the aggregate
dollar value (determined by calculating the difference at fiscal year end
between the fair market value of the shares underlying the option and the
aggregate exercise price of the option) of all such unexercised options that
were in-the-money (which means when the fair market value of the underlying
shares exceeds the exercise price of the option) at the end of fiscal 1997,
separately identifying the exercisable and unexercisable options.
AGGREGATED OPTION EXERCISES IN THE
1997 FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Fiscal Options at
Year-End Fiscal Year-End
-------------------------------------------------------------------------------
Shares Acquired Value Exercisable/ Exercisable/
on Exercise Realized Unexercisable Unexercisable
Name (#) ($) (#) ($)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert P. Ingle -- -- 0/100,000(1) $0/$0(2)
Chairman and Chief Executive Officer
- -------------------------------------------------------------------------------------------------------------------------
Vaughn C. Fisher 100,000(3) 658,048(4) 0/100,000(1) $0/$0(2)
President and Chief Operating Officer
- -------------------------------------------------------------------------------------------------------------------------
Joseph G. Ashley 100,000(3) 656,772(5) 0/100,000(6) $0/$0(2)
Vice President-Meats
- -------------------------------------------------------------------------------------------------------------------------
Jack R. Ferguson 100,000(3) 658,521(7) 0/100,000(6) $0/$0(2)
Vice-President Finance and Chief
Financial Officer
- -------------------------------------------------------------------------------------------------------------------------
Ralph H. Gardner -- -- 0/100,000(6) $0/$0(2)
President of Milkco, Inc.
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents an option to purchase 100,000 shares of Class A Common Stock
granted to this Executive Officer pursuant to the 1997 Plan. The option
is exercisable at $14.00 per share only during the one-year period
beginning on February 18, 1998.
(2) The fair market value of the Company's Class A Common Stock on September
27, 1997, was $13.0625 per share. The exercise price of the option is
$14.00 per share. Because the option was not in-the-money on September
27, 1997, the option had no value for purposes of this table.
20
<PAGE> 24
(3) Represents an option to purchase 100,000 shares of Class A Common Stock
granted to this Executive Officer pursuant to the 1991 Plan.
(4) Shares of Class A Common Stock received upon the exercise of this option
were acquired at $6.875 per share and were sold on the open market at
prices ranging from $12.875 to $14.625 per share.
(5) Shares of Class A Common Stock received upon the exercise of this option
were acquired at $6.875 per share and were sold on the open market at
prices ranging from $12.875 to $14.625 per share.
(6) Represents an option to purchase 100,000 shares of Class A Common Stock
granted to this Executive Officer pursuant to the 1997 Plan. The option
will be exercisable at $14.00 per share only during the one-year period
beginning on February 18, 2002.
(7) Shares of Class A Common Stock received upon the exercise of this option
were acquired at $6.875 per share and were sold on the open market at
prices ranging from $12.875 to $14.625 per share.
21
<PAGE> 25
STOCK PRICE PERFORMANCE GRAPH
Set forth on the following page are a graph and accompanying tables
comparing (a) the cumulative total stockholder return on the Class A Common
Stock to (b) the cumulative total return of (i) the S&P 500 Comprehensive-Last
Trading Day Index and (ii) the Company's Peer Group Index (as defined below),
each for the five-year period that started on September 30, 1992, and ended
September 30, 1997. The graph and tables assume that $100 was invested on
September 30, 1992, in (a) the Company's Class A Common Stock, (b) the publicly
traded securities of the companies included in the S&P 500 Comprehensive-Last
Trading Day Index and (c) the publicly traded securities of the companies
included in the Peer Group Index, and, in each case, that all dividends were
reinvested in the same securities. The peer group index (the "PEER GROUP INDEX")
consists of the Standard & Poor's 500 Retail (Food Chains) Sub Index, an
established market index, but excludes from that index two companies
(Albertson's Inc. and Winn-Dixie Stores, Inc.). Returns for the S&P 500
Comprehensive-Last Trading Day Index and the Peer Group Index have been market
weighted annually, as of each October 1, within the group to produce returns for
the group. The data reflected in the graph and tables was prepared for the
Company by Standard & Poor's Compustat.
The composition of the S&P 500 Comprehensive-Last Trading Day Index and
the Peer Group Index may have changed since the date of the Proxy Statement
prepared in connection with the Annual Meeting of Stockholders of the Company
held February 18, 1997 (the "1997 PROXY STATEMENT") solely as a result of a
change in the Standard & Poor's 500 Retail (Food Chains) Sub Index. The Standard
& Poor's 500 Retail (Food Chains) Sub Index is the same index used by the
Company in the 1997 Proxy Statement. All information in the graph and tables
regarding each of (a) the Class A Common Stock, (b) the Standard & Poor's 500
Retail (Food Chains) Sub Index and (c) the Peer Group Index is based on a year
ending September 30. The methods of determining the Measurement Period and
calculating dividend reinvestment used in this Proxy Statement have not changed
from those used in previous years.
22
<PAGE> 26
INGLES MARKETS, INCORPORATED
COMPARATIVE RETURN TO STOCKHOLDERS
[GRAPHIC OMITTED]
INDEXED RETURNS OF INITIAL $100 INVESTMENT*
<TABLE>
<CAPTION>
September 30
----------------------------------------------------------------------
Company/Index 1992 1993 1994 1995 1996 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ingles Markets, Incorporated $100.00 $140.52 $200.79 $181.19 $309.53 $264.20
Class A Common Stock
- -----------------------------------------------------------------------------------------------------------
S&P 500 Comprehensive - $100.00 $113.00 $117.17 $152.02 $182.93 $256.92
Last Trading Day Index
- -----------------------------------------------------------------------------------------------------------
Peer Group $100.00 $116.11 $133.03 $164.95 $211.50 $263.21
- -----------------------------------------------------------------------------------------------------------
</TABLE>
*Assumes $100 invested in the Class A Common Stock of Ingles Markets,
Incorporated after the close of the market on September 30, 1992.
COMPARATIVE ANNUAL RETURN PERCENTAGE
<TABLE>
<CAPTION>
September 30
----------------------------------------------------------
Company/Index 1993 1994 1995 1996 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ingles Markets, Incorporated 40.52% 42.89% -9.76% 70.84% -14.65%
Class A Common Stock
- -----------------------------------------------------------------------------------------------------------
S&P 500 Comprehensive - 13.00% 3.69% 29.74% 20.33% 40.45%
Last Trading Day Index
- -----------------------------------------------------------------------------------------------------------
Peer Group 16.11% 14.57% 24.00% 28.22% 24.45%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE> 27
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth the number of shares of Class A Common
Stock and Class B Common Stock owned beneficially as of January 6, 1998, by the
following: (a) each Director, (b) each Nominee, (c) each of the Executive
Officers of the Company named in the "SUMMARY COMPENSATION TABLE," (d) all
Directors and Executive Officers as a group and (e) each person known by the
Company to be a beneficial owner of more than five percent (5%) of either class
of the outstanding Common Stock. The table also sets forth the percentage of
each class of Common Stock held by such stockholders. Except as otherwise
indicated, and subject to applicable community property laws, each beneficial
owner has sole voting and investment power with respect to the Common Stock
listed.
<TABLE>
<CAPTION>
Number of Shares Owned Beneficially Percentage of Common Stock
----------------------------------- --------------------------
NAME Class A Class B (2) Class A Class B
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert P. Ingle (1) 100,000(2) 11,951,300(3)(4) 57.0% (5)(3) 93.5%
- --------------------------------------------------------------------------------------------------------------------------
Ingles Markets, Incorporated
Investment/Profit Sharing Plan
and Trust(1) 0 1,902,700 17.3% (5) 14.9%
- --------------------------------------------------------------------------------------------------------------------------
Anthony S. Federico (1) 110,000(6) 138,075 2.7% (5) 1.1%
- --------------------------------------------------------------------------------------------------------------------------
Joseph G. Ashley (1) 315 0 * --
- --------------------------------------------------------------------------------------------------------------------------
Jack R. Ferguson (1) 300 1,902,700(3) 17.3% (5)(3) 14.9%
- --------------------------------------------------------------------------------------------------------------------------
Vaughn C. Fisher (1) 123,000(2) 1,902,700(3) 18.3% (5)(3) 14.9%
- --------------------------------------------------------------------------------------------------------------------------
Ralph H. Gardner (1) 15,800(7) 750 * (5) *
- --------------------------------------------------------------------------------------------------------------------------
Robert P. Ingle, II (1) 100,000(6) 154,950 2.7% (5) 1.2%
- --------------------------------------------------------------------------------------------------------------------------
John O. Pollard 100 0 * --
- --------------------------------------------------------------------------------------------------------------------------
Laura Ingle Sharp 3,620(8) 79,725(9) * (5) *
- --------------------------------------------------------------------------------------------------------------------------
Brenda S. Tudor 0 150 * (5) *
- --------------------------------------------------------------------------------------------------------------------------
J. Alton Wingate 1,100 150 * (5) *
- --------------------------------------------------------------------------------------------------------------------------
All Directors and Executive Officers as a
group (18 persons) 454,935(2)(6)(7)(8) 12,325,100(3)(4)(9) 58.6% (5)(3) 96.4%
- --------------------------------------------------------------------------------------------------------------------------
Total Shares Outstanding 9,077,666 12,788,073 100.0% 100.0%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Less than 1%.
(1) The address of this beneficial owner is P.O. Box 6676, Highway 70,
Asheville, North Carolina 28816.
(2) Includes 100,000 shares of Class A Common Stock that this Executive
Officer has an option to purchase pursuant to an option granted under
the 1997 Plan. The option is exercisable beginning on February 18,
1998.
24
<PAGE> 28
(3) Includes the 1,902,700 shares of Class B Common Stock held by the
Company's Investment/Profit Sharing Plan and Trust, of which Messrs.
Robert P. Ingle, Ferguson and Fisher are trustees. Messrs. Robert P.
Ingle, Ferguson and Fisher have sole voting power and dispositive power
with respect to such shares. However, Messrs. Robert P. Ingle, Ferguson
and Fisher disclaim beneficial ownership of such shares.
(4) Includes 48,600 shares of Class B Common Stock held by Mr. Ingle's
wife, with respect to which Mr. Ingle disclaims any beneficial
ownership interest.
(5) Each share of Class B Common Stock is convertible, at any time at the
option of the holder, into one share of Class A Common Stock. If the
holder of any shares of Class B Common Stock transfers the shares to
anyone other than an immediate family member or the Company's
Investment/Profit Sharing Plan and Trust, then each share of Class B
Common Stock will be automatically converted into a share of Class A
Common Stock. Accordingly, for each holder of Class B Common Stock the
percentages of Class A Common Stock that are set forth in this table
also reflects the Class A Common Stock into which such stockholder's
shares of Class B Common Stock are convertible. However, these
converted shares are not used to calculate such percentages for any
other stockholder in this table. The number of shares of Class A Common
Stock held by all Directors and Executive Officers as a group does
reflect the conversion into Class A Common Stock of each share of Class
B Common Stock held by each Director and Executive Officer.
(6) Includes 100,000 shares of Class A Common Stock that this Executive
Officer has an option to purchase pursuant to an option granted under
the 1991 Plan. The option became exercisable in November 1997.
(7) Includes 300 shares of Class A Common Stock held by the estate of Mr.
Gardner's wife.
(8) Includes 379.6022 shares of Class A Common Stock held by Ms. Sharp's
minor children.
(9) Includes 2,025 shares of Class B Common Stock held by Ms. Sharp's
husband.
- ------------
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Terry M. Sharp, son-in-law of Robert P. Ingle (who is Chairman of the
Board, Chief Executive Officer and a Director of the Company) and husband of
Laura Ingle Sharp (who is a Director of the Company) has received certain
remuneration in connection with purchases of real property by the Company.
Except as described below, the Company did not incur any direct expense for such
services because Mr. Sharp was paid by the third-party sellers in such
transactions. TMS Realty, Inc. is owned by Mr. Sharp. Based on information
available to the Company, Mr. Sharp or TMS Realty, Inc. received gross revenues
of $262,442 during fiscal 1997 (including $50,000 in connection with a real
property transaction that closed in fiscal 1997, one-half of which was paid by
the Company) and $325,972 during fiscal 1998 (through January 6, 1998) as a
result of such purchases of real property. In addition, during fiscal 1997 the
Company paid remuneration to Mr. Sharp of $18,278 for services rendered by Mr.
Sharp as a pilot for the Company. Energy Management Systems, Inc. is owned by
Mr. Sharp and his father. During fiscal 1997, Energy Management Systems, Inc.
performed consulting services in connection with the Company's purchase of
energy management systems for certain of its supermarkets. However, because
these projects are not yet complete, Energy Management Systems, Inc. has not
billed the Company for such services. The Company will pay for such services
when it is billed by Energy
25
<PAGE> 29
Management Systems, Inc. BESCO, a Division of Broadway Electric Service, Inc.,
is majority owned by Mr. Sharp's father. The Company paid BESCO approximately
$13,410 for electrical repair services. The Company believes that it entered
into these transactions on terms no less favorable to the Company than otherwise
would have been available to the Company from unaffiliated third parties in
arms-length transactions.
See also "COMPENSATION COMMITTEE INTERLOCKS AND ADDITIONAL INFORMATION
WITH RESPECT TO COMPENSATION DECISIONS."
Other than transactions of the nature described or referred to under
this heading, the Company does not intend to enter into any transactions in the
future with or involving any of its officers or Directors or any members of
their immediate family on terms that would be less favorable to the Company than
those that would be available from unaffiliated third parties in arms-length
transactions.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Company's Board of Directors has selected Ernst & Young LLP as the
independent auditors for the Company and its subsidiaries for the 1998 fiscal
year. Ernst & Young LLP has served as the independent auditors for the Company
and its subsidiaries since March 1989. Representatives of Ernst & Young LLP are
expected to be present at the 1998 Annual Meeting. These representatives will
have the opportunity to make a statement if they desire to do so and will
respond to appropriate questions.
OTHER MATTERS
STOCKHOLDERS' PROPOSALS FOR THE 1999 ANNUAL MEETING
The Company plans to hold its 1999 Annual Meeting of Stockholders in
February or early March. Any proposal that a stockholder wants to be presented
at the 1999 Annual Meeting of Stockholders must be received by the Secretary no
later than September 23, 1998, or the proposal will automatically be excluded
from proxy materials for that meeting. Such proposals must be received by the
Secretary at the Company's principal office, the address of which is set forth
on page 1 of this Proxy Statement, and must meet the requirements of the
regulations passed by the SEC to be eligible to be included in the proxy
materials for the Company's 1999 Annual Meeting.
ACTION ON OTHER MATTERS AT THE 1998 ANNUAL MEETING
At this time, the Company does not know of any matters to be presented
for action at the 1998 Annual Meeting other than those mentioned in the Notice
of Annual Meeting of Stockholders and referred to in this Proxy Statement. If
any other matter comes before the 1998 Annual Meeting, it is intended that the
Proxies who are named in the Proxy Cards will vote the shares represented by
effective Proxy Cards in accordance with their judgment.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), the Company is required to identify any Reporting
Person (as defined below) that failed to file on a timely basis with the SEC any
report that was required to be filed during fiscal 1997 with the SEC pursuant to
Section 16(a) of the Exchange Act. Such required filings include a Form 3 (an
initial report of beneficial ownership of Common Stock) and a Form 4 and Form 5
(which reflect changes in beneficial ownership of Common Stock). For purposes of
this Proxy Statement, a "Reporting Person" is a person who at any time during
fiscal 1997 was (a) a
26
<PAGE> 30
Director of the Company, (b) an executive officer of the Company or its
subsidiaries, (c) a beneficial owner of more than 10% of the Class A Common
Stock or Class B Common Stock or (d) any other person who was subject to Section
16 of the Exchange Act with respect to the Company. Based solely on a review of
such Forms 3, 4 and 5 and all amendments thereto that were furnished to the
Company by the Reporting Persons known to the Company, as required by Rule
16a-3(e), except as set forth below, no Reporting Person that was required to
comply with Section 16(a) of the Exchange Act failed to comply with such
requirements during fiscal 1997. Based on information that the Reporting Persons
known to the Company provided to the Company, with respect to fiscal 1997, (i)
H. James Brabson failed to file on a timely basis an Initial Statement of
Beneficial Ownership of Securities report with respect to his appointment as
Vice President-Store Operations, (ii) Nancy L. Hughes failed to file on a timely
basis an Initial Statement of Beneficial Ownership of Securities report with
respect to her appointment as Vice President-Deli and (iii) Gordon S. Myers
failed to file on a timely basis one report with respect to one transaction. Mr.
Brabson, Ms. Hughes and Mr. Myers have each advised the Company that they filed
their respective reports.
INCORPORATION BY REFERENCE OF THIS PROXY STATEMENT
The Report on Executive Compensation set forth on pages 10 through 15 of
this Proxy Statement and the graph and related data set forth under the heading
"STOCK PRICE PERFORMANCE GRAPH" on pages 22 and 23 of this Proxy Statement shall
not be deemed to be incorporated by reference into any report, statement or
other filing made by the Company with the SEC under the Securities Act of 1933,
as amended, or the Exchange Act, or in any related prospectus, that incorporates
this Proxy Statement by reference, in whole or in part, notwithstanding anything
to the contrary set forth therein.
AVAILABILITY OF FORM 10-K
Upon written request, the Company will provide, without charge, to
Stockholders that are entitled to receive this Proxy Statement a copy of the
Company's Annual Report on Form 10-K for the fiscal year ended September 27,
1997, as filed with the SEC (including the financial statements and related
schedules, but not including the exhibits thereto, which will be provided upon
written request at the Stockholder's expense). Requests for copies should be
directed to Jack R. Ferguson, Vice President-Finance and Chief Financial
Officer, at Ingles Markets, Incorporated, P. O. Box 6676, Asheville, North
Carolina 28816, or by telephone at (704) 669-2941, ext. 222.
STOCKHOLDERS ARE URGED TO DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED
PROXY CARD(S) IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES. YOUR COOPERATION WILL BE APPRECIATED. YOUR PROXY WILL BE
VOTED WITH RESPECT TO THE MATTERS IDENTIFIED ON THE PROXY CARD(S) IN ACCORDANCE
WITH ANY SPECIFICATIONS ON THE PROXY CARD(S).
By Order of the Board of Directors
/s/ Robert P. Ingle
Robert P. Ingle
Chairman of the Board
27
<PAGE> 31
EXHIBIT
CLASS A
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD FEBRUARY 17, 1998
INGLES MARKETS, INCORPORATED
The undersigned hereby appoints Robert P. Ingle and Vaughn C. Fisher, or
either of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote as designated below all the
shares of Class A Common Stock held of record by the undersigned on January 6,
1998, at the Annual Meeting of Stockholders of Ingles Markets, Incorporated to
be held on February 17, 1998, at 1:00 P.M. at the Grove Park Inn, 290 Macon
Avenue, Asheville, North Carolina, or any postponements or adjournments thereof.
1. ELECTION OF DIRECTORS:
<TABLE>
<S> <C>
[ ] FOR ALL NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY TO VOTE FOR ALL
(EXCEPT AS MARKED TO THE CONTRARY BELOW). NOMINEES LISTED BELOW.
</TABLE>
(Instruction: To withhold authority to vote for any individual nominee strike a
line through the nominee's name in the list below.)
John O. Pollard; J. Alton Wingate
2. In their discretion, the Proxies are authorized to vote upon such other
business as may come before the meeting or any postponements or adjournments
thereof.
THIS PROXY, DULY EXECUTED, WILL BE VOTED AS SPECIFIED. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED "FOR" PROPOSAL 1.
(Continued on other side)
<PAGE> 32
(Continued from other side)
INGLES MARKETS, INCORPORATED
PROXY
The undersigned hereby acknowledges receipt of the Proxy Statement and Notice of
Annual Meeting of Stockholders to be held February 17, 1998.
Dated:_________________________, 1998
_______________________________(SEAL)
_______________________________(SEAL)
(Please sign exactly as your name
appears hereon. If stock is
registered in more than one name,
each holder should sign. When signing
as an attorney, administrator,
executor, guardian or trustee, please
add your title as such. If executed
by a corporation, the proxy should be
signed by a duly authorized officer.)
PLEASE SIGN, DATE AND PROMPTLY RETURN
THIS PROXY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
I PLAN TO ATTEND________
<PAGE> 33
CLASS B
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD FEBRUARY 17, 1998
INGLES MARKETS, INCORPORATED
The undersigned hereby appoints Robert P. Ingle and Vaughn C. Fisher, or
either of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote as designated below all the
shares of Class B Common Stock held of record by the undersigned on January 6,
1998, at the Annual Meeting of the Stockholders of Ingles Markets, Incorporated
to be held on February 17, 1998, at 1:00 P.M. at the Grove Park Inn, 290 Macon
Avenue, Asheville, North Carolina, or any postponements or adjournments thereof.
1. ELECTION OF DIRECTORS:
<TABLE>
<S> <C>
[ ] FOR ALL NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY TO VOTE FOR ALL
(EXCEPT AS MARKED TO THE CONTRARY BELOW). NOMINEES LISTED BELOW.
</TABLE>
(Instruction: To withhold authority to vote for any individual nominee strike a
line through the nominee's name in the list below.)
Anthony S. Federico; Vaughn C. Fisher; Ralph H. Gardner; Robert P. Ingle;
Robert P. Ingle, II; Laura Ingle Sharp; Brenda S. Tudor
2. In their discretion, the Proxies are authorized to vote upon such other
business as may come before the meeting or any postponements or adjournments
thereof.
THIS PROXY, DULY EXECUTED, WILL BE VOTED AS SPECIFIED. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED "FOR" PROPOSAL 1.
(Continued on other side)
<PAGE> 34
(Continued from other side)
INGLES MARKETS, INCORPORATED
PROXY
The undersigned hereby acknowledges receipt of the Proxy Statement and Notice of
Annual Meeting of Stockholders to be held February 17, 1998.
Dated:_________________________, 1998
_______________________________(SEAL)
_______________________________(SEAL)
(Please sign exactly as your name
appears hereon. If stock is
registered in more than one name,
each holder should sign. When signing
as an attorney, administrator,
executor, guardian or trustee, please
add your title as such. If executed
by a corporation, the proxy should be
signed by a duly authorized officer.)
PLEASE SIGN, DATE AND PROMPTLY RETURN
THIS PROXY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
I PLAN TO ATTEND________
