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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
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
(Ingles Logo)
INGLES MARKETS, INCORPORATED
P. O. BOX 6676
ASHEVILLE, NORTH CAROLINA 28816
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 16, 1999
To the Stockholders of Ingles Markets, Incorporated:
NOTICE IS HEREBY GIVEN that Ingles Markets, Incorporated will hold its 1999
Annual Meeting of Stockholders at the Grove Park Inn, 290 Macon Avenue,
Asheville, North Carolina 28804, on Tuesday, February 16, 1999, at 1:00 P.M.
local time, for the following purposes:
(1) To elect nine Directors to serve until the 2000 Annual Meeting of
Stockholders; and
(2) To transact any other business that may properly come before the
meeting and any adjournment thereof.
These items and other matters relating to the 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 5, 1999, are entitled to receive notice of and to vote at
the Annual Meeting. We will make available at the Company's corporate offices a
list of stockholders as of the close of business on January 5, 1999, for
inspection during normal business hours during the ten-day period immediately
preceding the Annual Meeting.
Whether or not you expect to attend the 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 Annual Meeting. If you return an executed
proxy card and later decide to attend the 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 19, 1999
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. IF YOU DECIDE TO
ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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PROXY STATEMENT............................................. 1
Execution and Revocation of Proxies....................... 1
Action to be Taken Under the Proxy Cards.................. 1
Voting Rights............................................. 2
Quorum Requirements.................................... 2
Election of Directors.................................. 2
Other Matters.......................................... 2
ELECTION OF DIRECTORS....................................... 2
Identification of Directors, Nominees for Election as a
Director and Executive Officers........................ 3
Committees of the Board of Directors...................... 5
Compensation Committee Interlocks and Insider
Participation.......................................... 6
Meetings of the Board of Directors and Committees......... 7
EXECUTIVE COMPENSATION...................................... 7
Report on Executive Compensation.......................... 7
Executive Compensation Policies........................ 7
Salaries and Cash Incentive Bonus Awards............... 8
1997 Nonqualified Stock Option Plan.................... 8
Investment/Profit Sharing Plan......................... 8
Life Insurance......................................... 9
Executive Compensation Summary............................ 10
Summary Compensation Table............................. 10
Aggregated Option/SAR Exercises in Last Fiscal Year and
Fiscal Year-End Option/SAR Values..................... 11
Stock Price Performance Graph.......................... 12
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL
OWNERS.................................................... 13
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS........ 14
RELATIONSHIP WITH INDEPENDENT AUDITORS...................... 15
OTHER MATTERS............................................... 15
Solicitation of Proxies................................... 15
Stockholders' Proposals for the 2000 Annual Meeting....... 15
Action on Other Matters at the 1999 Annual Meeting........ 15
Section 16(a) Beneficial Ownership Reporting Compliance... 15
Incorporation by Reference of this Proxy Statement........ 16
Availability of Form 10-K................................. 16
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INGLES MARKETS, INCORPORATED
P. O. BOX 6676
ASHEVILLE, NORTH CAROLINA 28816
ANNUAL STOCKHOLDERS MEETING
FEBRUARY 16, 1999
GROVE PARK INN
290 MACON AVENUE
ASHEVILLE, NORTH CAROLINA 28804
PROXY STATEMENT
The Board of Directors of Ingles Markets, Incorporated (the "COMPANY")
furnishes you with this Proxy Statement to solicit proxies on its behalf to be
voted at the 1999 Annual Meeting of Stockholders of the Company. The meeting
will be held at the Grove Park Inn, 290 Macon Avenue, Asheville, North Carolina
28804, on Tuesday, February 16, 1999, at 1:00 p.m., local time, for the purposes
set forth in the Notice of Annual Meeting of Stockholders that accompanies this
Proxy Statement. The proxies also may be voted at any adjournments or
postponements of the meeting. The Company is sending this Proxy Statement to
each holder of record (a "STOCKHOLDER") 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") as of January 5, 1999, the record
date for the meeting (the "RECORD DATE"). Class A Common Stock and Class B
Common Stock are sometimes referred to collectively in this Proxy Statement as
"Common Stock."
The Company's principal executive offices are located at 1560 Highway 70
East, Asheville (Black Mountain), North Carolina 28711. The date on which this
Proxy Statement and the accompanying forms of proxy are first being sent or
given to Stockholders is January 19, 1999.
EXECUTION AND REVOCATION OF PROXIES
If a Stockholder completes and signs one of the enclosed proxies in
accordance with the instructions thereon and returns the proxy to the Secretary
of the Company in care of the Company's transfer agent, First Union National
Bank, so that it is received at or before the Annual Meeting, the shares of
Common Stock represented by such proxy will be voted at the Annual Meeting in
accordance with the instructions on such proxy. Proxies that are not properly
executed or are not received by the Secretary at or before the Annual Meeting
will not be effective.
A duly authorized person should sign each proxy on the Stockholder's behalf
if the Stockholder is a corporation or partnership. If the shares of Common
Stock represented by a proxy are registered in more than one name, each
registered owner should sign the proxy. If an authorized person executes the
proxy 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 and
enclose a certificate or other evidence of appointment with the proxy when
delivering it to the Secretary. Proxies that are not properly executed will not
be effective.
A Stockholder can revoke a proxy at any time prior to the exercise of the
authority granted under that proxy. A proxy may be revoked by a Stockholder in
any of the following ways: by attending the Annual Meeting and giving oral
notice of the Stockholder's election to vote in person; by delivering to the
Secretary an instrument revoking the proxy; or by delivering a later-dated,
properly executed proxy with respect to shares covered by the original proxy.
ACTION TO BE TAKEN UNDER THE PROXY CARDS
Unless instructed otherwise on such proxy, shares of Common Stock
represented by a properly executed proxy will be voted at the Annual Meeting
"FOR" the election of each of the Board of Directors nominees named under the
heading "ELECTION OF DIRECTORS." As of the date of this Proxy Statement, the
Company's
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management knows of no other matter to be brought before the Annual Meeting.
Should any other matter properly come before the Annual Meeting, all shares of
Common Stock represented by effective proxies will be voted, at their
discretion, by the persons acting under such proxies.
VOTING RIGHTS
Only holders of record of shares of Class A Common Stock or Class B Common
Stock at the close of business on the Record Date are entitled to vote at the
meeting or adjournments or postponements of the meeting. At the close of
business on the Record Date, there were 9,604,441 shares of Class A Common Stock
and 12,773,298 shares of Class B Common Stock outstanding.
QUORUM REQUIREMENTS. The presence in person or by proxy of holders of a
majority of the outstanding shares of Class A Common Stock constitutes a quorum
for purposes of the election of directors by the holders of Class A Common
Stock. The presence in person or by proxy of holders of a majority of the
outstanding shares of Class B Common Stock constitutes a quorum for purposes of
the election of directors by the holders of Class B Common Stock. If holders of
a majority of the aggregate number of outstanding shares of Class A Common Stock
and Class B Common Stock are present at the Annual Meeting in person or by
proxy, a quorum will be present for purposes of voting on any other matter that
may be presented at the Annual Meeting. Abstentions with respect to a proposal
and broker non-votes are counted for purposes of establishing a quorum.
ELECTION OF DIRECTORS. If a quorum for each such vote is present at the
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 Common Stock held by the Stockholder as of the Record Date. Pursuant to the
North Carolina Business Corporation Act, directors will be elected by a
plurality of the votes cast by the holders of shares entitled to vote in the
election. Thus, abstentions and broker non-votes will not be included in vote
totals and will not affect the outcome of the vote.
Because the Company was a public corporation on the Record Date, cumulative
voting will not be applicable to the election of directors at the Annual
Meeting.
OTHER MATTERS. Unless otherwise provided in the Company's Articles of
Incorporation or the North Carolina Business Corporation Act, holders of Class A
Common Stock and Class B Common Stock would vote as a single class with respect
to any other matter that may be voted upon at the Annual Meeting. In any such
vote, Stockholders would be entitled to one vote for each share of Class A
Common Stock held as of the Record Date and ten 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. Shares not voted with respect to any
such matters (whether by abstention or broker non-vote) would not be included in
vote totals and would not impact the vote. As of the date of this Proxy
Statement, the Company knows of no matters other than the election of directors
to be presented for action at the Annual Meeting.
ELECTION OF DIRECTORS
Each member of the Board of Directors (the "BOARD") is 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 Board may from time to time fix by
resolution the number of directors that constitutes the Board, which shall be
not less than five nor more than eleven. The Board has determined by resolution
that the number of directors will be fixed at nine until the 2000 Annual
Meeting. 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.
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IDENTIFICATION OF DIRECTORS, NOMINEES FOR ELECTION AS A DIRECTOR AND EXECUTIVE
OFFICERS
THE BOARD HAS NOMINATED, AND RECOMMENDS A VOTE FOR, JOHN O. POLLARD AND J.
ALTON WINGATE AS DIRECTORS 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 AS DIRECTORS
TO BE ELECTED BY THE HOLDERS OF THE CLASS B COMMON STOCK.
All of these nominees are currently directors. Proxies received by the
Board will be voted "FOR" the election of all of the nominees unless
Stockholders specify a contrary choice in their proxy. It is not anticipated
that any nominee for election as a director will become unable to accept the
nomination, but if such an event should occur the person or persons acting under
the proxies will vote for any substitute nominee who may be designated by the
Board. The person or persons acting under the proxies will vote for no more or
fewer than nine nominees, unless the Board votes to change the number of
directors, or fewer than nine individuals are nominated at the Annual Meeting.
The biographical information set forth below was furnished by each named
director and executive officer of the Company. Except as otherwise indicated,
each such person has been engaged in his or her most recent occupation or
employment for more than five years.
DIRECTORS AND EXECUTIVE OFFICERS
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 65.
Vaughn C. Fisher Mr. Fisher joined the Company in 1972 and became the
Company's President and Chief Operating Officer in
December 1996. He has also been a Director since 1985.
He held several positions in the Company, including
store manager, district manager and Vice
President -- Sales Manager, until he became President.
Prior to joining the Company, Mr. Fisher was employed
by Allied Supermarkets for 16 years in various
capacities throughout Michigan and the Southeast. Mr.
Fisher is 61.
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 51.
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 51.
Timothy A. Davey Mr. Davey has served as a bakery director since he
joined the Company in July 1994 and was elected Vice
President -- Bakery in August 1995. 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
42.
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 39.
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Charles L. Gaither, Jr. In July 1998, Mr. Gaither was elected President of
Milkco, Inc., a subsidiary of the Company that
processes, packages and distributes milk, fruit juices
and spring water. Prior to that time, he was Vice
President and General Manager of Milkco since 1986. Mr.
Gaither is 55.
Ralph H. Gardner A Director since 1985, Mr. Gardner was President of
Milkco, Inc., until June 1998, since which time he has
served Milkco in a special projects capacity. 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 78.
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., a
supermarket chain 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 39.
Robert P. Ingle, II Robert P. Ingle, II, has been a Director since February
1997. He has been employed by the Company since 1984
and on a full-time basis since 1991. Mr. Ingle has held
various positions with the Company, including
management of new store development, store design,
construction, training and development. He became Vice
President -- Operations in February 1996. He is 30.
David L. Keathley A certified public accountant, Mr. Keathley joined the
Company as Secretary and Controller in June 1998. Prior
to that time, he was Director of Corporate
Disbursements for Richfood Holdings, Inc., a grocery
distribution company, from October 1995 until June
1998, Assistant Controller of Homeland Stores, Inc., a
regional supermarket chain, from April to October 1995,
and Financial Systems Manager of Fleming Foods, a
grocery distribution company, from January 1990 until
April 1995. Mr. Keathley is 38.
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 54.
J. Thomas Outlaw, Jr. Mr. Outlaw has been employed by the Company in various
capacities since joining in 1977, including Vice
President -- Produce, Vice President -- Frozen Food,
District Manager, Produce Merchandiser, and Dairy
Merchandiser. He has served as Vice President -- Sales
Manager since January 1997. Mr. Outlaw is 52.
John O. Pollard A Director since 1987, Mr. Pollard has been managing
partner of the Charlotte, North Carolina office of the
law firm of McGuire, Woods, Battle & Boothe, L.L.P.
since January 1998. Prior to that time, he was a
partner in the Charlotte law firm of Blakeney &
Alexander, with which he was affiliated since 1973. Mr.
Pollard is 61.
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 42.
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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 44.
Brenda S. Tudor Ms. Tudor has served as a Director and as Vice
President -- Finance, Chief Financial Officer and
Treasurer of the Company since February 1998. She
joined the Company in 1984 and served as general
accounting manager until 1988 when she became
Controller and Secretary of the Company. Before she
joined the Company, Ms. Tudor worked in public
accounting for five years. She is a certified public
accountant. Ms. Tudor is 41.
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. (which provides consulting
services in connection with the placement of banks
within supermarkets), and as Chairman, President and
Chief Executive Officer of 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 59.
OTHER OFFICERS OF THE COMPANY
Cynthia L. Brooks Ms. Brooks joined the Company in September 1998 and was
elected Vice President -- Human Resources in November
1998. From November 1992 until September 1998 she was
Vice President -- Administration for Thomas & Howard
Company of Asheville, Inc., which handled distribution
for the Company. Ms. Brooks is 36.
William Randolph Jameson Mr. Jameson joined the Company in September 1998 and
was elected Vice President -- Distribution in November
1998. Prior to that time, he was President of Thomas &
Howard Company of Asheville, Inc., which handled
distribution for the Company. Mr. Jameson is 40.
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 or
executive officers of the Company.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board has four standing committees: an Executive Committee, an
Audit/Compensation Committee, an Employee Benefit Plan Committee and a Human
Resources Advisory 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 and Fisher, and Ms. Tudor.
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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:
- 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 and regulations. Where such laws or
regulations require that grants or awards under the Company's stock-based
employee benefit plans be made by the full Board or by a committee of
non-employee or 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.
THE HUMAN RESOURCES ADVISORY COMMITTEE. The Human Resources Advisory
Committee was established in August 1998 to oversee certain of the Company's
human resources compliance policies and programs. Ms. Tudor, Ms. Sharp and Mr.
Wingate are members of this committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All compensation decisions made during fiscal 1998 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 1998 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 1998 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 managing partner of the Charlotte, North Carolina office of the law
firm of McGuire, Woods, Battle & Boothe, L.L.P. which, from time to time,
handles labor matters for the Company. During fiscal 1998, the Company accrued
approximately $641,000 in fees for services rendered by that firm and its
predecessor firm Blakeney & Alexander. Mr. Wingate is Chairman, Chief Executive
Officer and President 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 1998, the
Company paid Community Bank & Trust approximately $115,000 in fees for services
rendered by Financial Supermarkets, Inc.
The Company believes that the transactions described above between the
Company and each of McGuire, Woods, Battle & Boothe 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.
See also "CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS."
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MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board held four formal meetings during fiscal 1998. The Executive
Committee held no formal meetings during fiscal 1998, but met on an informal
basis. The Audit/Compensation Committee held one formal meeting during fiscal
1998, met on an informal basis and acted by unanimous written consent. The
Employee Benefit Plan Committee held no formal meetings during fiscal 1998, but
met on an informal basis. The Human Resources Advisory Committee did not meet
during fiscal 1998. For the period in fiscal 1998 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."
Directors who were not officers of the Company received a fee of $500 for
each Board meeting they attended in person in fiscal 1998.
EXECUTIVE COMPENSATION
REPORT ON EXECUTIVE COMPENSATION
The Board of Directors' Audit/Compensation and Employee Benefit Plan
Committees were responsible for administering executive compensation during
fiscal 1998. The duties of these committees are set forth on page 6 under the
headings "COMMITTEES OF THE BOARD OF DIRECTORS -- AUDIT/COMPENSATION COMMITTEE
AND -- EMPLOYEE BENEFIT PLAN COMMITTEE." This report describes the compensation
policies established by each such Committee for the executive officers of the
Company.
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 general performance and
that of the individual executive officer, 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. Bonuses
paid to officers of the Company's subsidiary, Milkco, Inc. are based on
established quantitative measurements of Milkco's performance.
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 Securities Exchange Act of 1934
or Section 162(m) of the Internal Revenue Code requires that such grants or
awards be made by the full Board or by a committee of "non-employee" or "outside
directors." See "COMMITTEES OF THE BOARD OF DIRECTORS."
The Internal Revenue Code generally provides that corporate deductions will
be disallowed for annual compensation in excess of $1 million paid to certain
executive officers of publicly held corporations. "Performance-based"
compensation is excluded from the cap. Although the $1 million compensation
deduction cap would be applicable to the executive officers named in the
"SUMMARY COMPENSATION TABLE" their compensation levels for fiscal 1998 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 the Internal Revenue Code's compensation
deductibility cap when they determine
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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. In fiscal 1998, Mr. Robert P.
Ingle received a salary of $195,385 and no bonus, which was substantially
unchanged from compensation paid to him in 1997. His current salary is $170,000
per year. Payment of Mr. Ingle's salary was approved by the Audit/Compensation
Committee. Mr. Ingle and the Audit/Compensation Committee believe the
compensation paid to Mr. Ingle in 1998 is on the low end of competitive
compensation paid to other chief executive officers in the industry.
Other executive officers of the Company received a salary and bonus, the
amounts of which were determined by Mr. Ingle and approved by the
Audit/Compensation Committee. The bonuses paid to Messrs. Gardner and Gaither,
who each served as President of the Company's subsidiary, Milkco, Inc. for a
portion of 1998, were based on a pre-determined quantitative formula. These
executive officers received a bonus equal to a percentage of Milkco's earnings
before taxes and payment of the bonus. All other executive officers' bonuses
were subjectively determined.
1997 NONQUALIFIED STOCK OPTION PLAN. In 1997, the Board and Shareholders
adopted the Ingles Markets, Incorporated 1997 Nonqualified Stock Option Plan
(the "1997 Plan"), pursuant to which options to purchase up to 5,000,000 shares
of Class A Common Stock may be granted. 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.
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 option; the dates on
which options are granted, become exercisable and expire; and any other
conditions to which the options will be subject. If an optionee's employment is
terminated for any reason other than death, 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.
Except for options granted to Mr. David Keathley in connection with his
joining the Company, during fiscal year 1998 there were no options granted to
any of the Company's executive officers.
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 employer 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 in accordance with the Internal Revenue
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.
8
<PAGE> 12
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.
The Company contributed $815,000 to the Profit Sharing Plan during fiscal
1998. 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 26, 1998, 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. Participants' interests in
contributions allocated to their accounts vest over seven years.
LIFE INSURANCE. The Company maintains, at its expense, for the benefit of
each of its full-time employees life insurance policies in amounts up to
$150,000 based on the W-2 compensation of the employee. The premiums paid by the
Company for the benefit of the executive officers named in the Summary
Compensation Table are included in the last column of that table.
SUBMITTED BY:
THE AUDIT/COMPENSATION COMMITTEE
Robert P. Ingle John O. Pollard J. Alton Wingate
THE EMPLOYEE BENEFIT PLAN COMMITTEE
John O. Pollard J. Alton Wingate
9
<PAGE> 13
EXECUTIVE COMPENSATION SUMMARY
The following tables set forth information concerning the compensation of
the Company's Chief Executive Officer, each of its other four most highly
compensated executive officers at the end of fiscal 1998, and Ralph H. Gardner,
who retired as an executive officer of the Company on June 30, 1998. Mr. Gardner
remains on the Company's Board of Directors.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION COMPENSATION
------------ ------------
AWARDS
-------
SECURITIES UNDERLYING ALL OTHER
FISCAL SALARY BONUS OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#)(2) ($)(3)
- - -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert P. Ingle 1998 $195,385 -- -- $3,569
Chairman and
Chief Executive Officer 1997 200,000 -- 100,000 3,263
1996 211,000 300,000 -- 3,529
- - -----------------------------------------------------------------------------------------------------
Vaughn C. Fisher 1998 350,000 20,000 -- 3,926
President and
Chief Operating Officer 1997 283,308 10,329 100,000 4,033
1996 112,000 21,732 -- 2,589
- - -----------------------------------------------------------------------------------------------------
Charles L. Gaither, Jr. 1998 76,923 144,822 -- 2,558
President, Milkco, Inc.
July 1, 1998 - present(1) 1997(1)
1996(1)
- - -----------------------------------------------------------------------------------------------------
Ralph H. Gardner 1998 50,769 230,468 -- 2,659
President of Milkco, Inc.
through June 30, 1998(1) 1997 60,000 296,184 100,000 2,459
1996 60,000 207,617 -- 2,490
- - -----------------------------------------------------------------------------------------------------
Joseph G. Ashley 1998 150,000 21,512 -- 1,218
Vice President -- Meats
1997 150,000 21,588 100,000 876
1996 150,000 22,320 -- 948
- - -----------------------------------------------------------------------------------------------------
Anthony S. Federico 1998 104,616 61,059 -- 3,176
Vice President -- Non-Foods
1997 100,000 61,637 -- 2,851
1996 100,000 61,546 -- 2,476
- - -----------------------------------------------------------------------------------------------------
</TABLE>
(1) Mr. Gaither became an executive officer of the Company on July 1, 1998, the
effective date of his election as President of Milkco, Inc. to fill the
vacancy created by Mr. Gardner's retirement from that position. Mr. Gardner
remains on the Company's Board of Directors.
10
<PAGE> 14
(2) Each award represents the grant by the Company of an option to purchase
100,000 shares of Class A Common Stock pursuant to the 1997 Nonqualified
Stock Option Plan. There were no options granted to the named individuals
during fiscal 1998.
(3) Includes contributions to the Profit Sharing Plan on behalf of the named
individuals in the following amounts for 1998: Mr. Ingle, $3,281; Mr.
Fisher, $3,638; Mr. Gaither, $2,270; Mr. Gardner, $2,371; Mr. Ashley, $930;
and Mr. Federico, $2,888. Also includes $288 in premiums paid by the Company
for the benefit of each of the named individuals for term life insurance.
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FISCAL AT FISCAL
YEAR-END YEAR-END
---------------------------------------------------------
SHARES
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) ($)
- - ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert P. Ingle 100,000(1) $(75,000)(1) 0/0 v N/A
Chairman and Chief Executive Officer
- - ---------------------------------------------------------------------------------------------------
Vaughn C. Fisher N/A N/A 100,000/0(2) $0/$0(3)
President and Chief Operating Officer
- - ---------------------------------------------------------------------------------------------------
Charles L. Gaither, Jr. N/A N/A 0/10,000(4) $0/$0(3)
President, Milkco, Inc.
July 1, 1998 -- Present
- - ---------------------------------------------------------------------------------------------------
Ralph H. Gardner N/A N/A 0/100,000(4) $0/$0(3)
President, Milkco, Inc.,
Through June 30, 1998
- - ---------------------------------------------------------------------------------------------------
Joseph G. Ashley N/A N/A 0/100,000(4) $0/$0(3)
Vice President -- Meats
- - ---------------------------------------------------------------------------------------------------
Anthony S. Federico 100,000(5) $725,000(5) 0/0 N/A
Vice-President
Non-Foods
- - ---------------------------------------------------------------------------------------------------
</TABLE>
(1) Shares of Class A Common Stock received upon the exercise of this option
were acquired at $14.00 per share. The fair market value of the Class A
Common Stock on the date of exercise was $13.25 per share.
(2) 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.
(3) The fair market value of the Company's Class A Common Stock on September 26,
1998, was $11.625 per share. The exercise price of the option is $14.00 per
share. Because the option was not in-the-money on September 26, 1998, the
option had no value for purposes of this table.
11
<PAGE> 15
(4) Represents an option to purchase 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.
(5) Shares of Class A Common Stock received upon the exercise of this option
were acquired at $5.75 per share. The fair market value of the Class A
Common Stock on the date of exercise was $13.00 per share.
STOCK PRICE PERFORMANCE GRAPH
In accordance with the rules and regulations of the Securities and Exchange
Commission, set forth below are a graph and an accompanying table comparing the
cumulative total stockholder return on the Class A Common Stock to the
cumulative total return of (i) the S&P 500 Comprehensive-Last Trading Day Index
and (ii) a peer group of companies in the Company's line of business (the "NEW
PEER GROUP"), each for the five-year period ended September 30, 1998. The
Company has revised its peer group from that used in prior years to include
companies that management believes are more comparable to the Company in terms
of size and markets served. The New Peer Group consists of Blue Square, Bruno's,
Inc., Delchamps, Inc., Marsh Supermarkets, Inc., Schultz Sav O Stores, Inc.,
Wild Oats Markets, Inc. and the Company. As required by the rules of the
Securities and Exchange Commission, the graph and table below also present the
cumulative total stockholder returns of the peer group used in the Company's
proxy statement for its 1998 Annual Meeting (the "OLD PEER GROUP"). The Old Peer
Group is comprised of American Stores Company, Giant Food, Inc., The Great
Atlantic & Pacific Tea Company, Inc., and The Kroger Co. The graph and tables
assume that $100 was invested on September 30, 1993, and that dividends were
reinvested quarterly. Returns of the companies included in the New and Old Peer
Groups have been weighted according to each company's stock market
capitalization at the beginning of each period for which a return is presented.
INGLES MARKETS, INCORPORATED
COMPARATIVE RETURN TO STOCKHOLDERS
[GRAPH APPEARS HERE]
12
<PAGE> 16
INDEXED RETURNS OF INITIAL $100 INVESTMENT
<TABLE>
<CAPTION>
September 30
---------------------------------------------------------
Company/Index 1993 1994 1995 1996 1997 1998
- - ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ingles Markets, Incorporated
Class A Common Stock $100.00 $142.89 $128.94 $220.28 $188.01 $179.24
- - ----------------------------------------------------------------------------------------------------
S&P 500 Comprehensive-
Last Trading Day Index $100.00 $103.69 $134.53 $161.88 $227.36 $247.92
- - ----------------------------------------------------------------------------------------------------
Old Peer Group $100.00 $114.57 $142.07 $182.16 $226.69 $326.69
- - ----------------------------------------------------------------------------------------------------
New Peer Group $100.00 $ 94.07 $109.57 $133.79 $121.65 $114.91
- - ----------------------------------------------------------------------------------------------------
</TABLE>
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 5, 1999, by each
director and nominee for director, each of the executive officers of the Company
named in the "SUMMARY COMPENSATION TABLE," all directors and executive officers
as a group, and 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, 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 CLASS A CLASS B
- - -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert P. Ingle(1) 100,000 11,935,641(2)(3) 55.9%(4)(2) 93.4%(2)
- - -----------------------------------------------------------------------------------------------------------
Anthony S. Federico(1) 110,000 138,075 2.5%(4) 1.1%
- - -----------------------------------------------------------------------------------------------------------
Vaughn C. Fisher(1) 123,000(5) 1,887,041(2) 17.5%(4)(2) 14.8%(2)
- - -----------------------------------------------------------------------------------------------------------
Ralph H. Gardner(1) 15,800(6) 750 *(4) *
- - -----------------------------------------------------------------------------------------------------------
Robert P. Ingle, II (1) 100,000 154,950 2.6%(4) 1.2%
- - -----------------------------------------------------------------------------------------------------------
John O. Pollard 100 0 * --
- - -----------------------------------------------------------------------------------------------------------
Laura Ingle Sharp 3,639(7) 79,725(8) *(4) *
- - -----------------------------------------------------------------------------------------------------------
Brenda S. Tudor(1) 0 1,887,191(2) 16.4%(4)(2) 14.8%(2)
- - -----------------------------------------------------------------------------------------------------------
J. Alton Wingate 1,100 150 *(4) *
- - -----------------------------------------------------------------------------------------------------------
Joseph G. Ashley(1) 315 0 * --
- - -----------------------------------------------------------------------------------------------------------
Charles L. Gaither, Jr.(1) 1,670 0 * --
- - -----------------------------------------------------------------------------------------------------------
Ingles Markets, Incorporated
Investment/Profit Sharing
Plan and Trust(1) 0 1,887,041 16.4%(4) 14.8%
- - -----------------------------------------------------------------------------------------------------------
All Directors and Executive
Officers as a group
(18 persons) 461,324(5)(6)(7) 12,309,441(2)(3)(8) 58.3%(4)(2) 96.4%(2)
- - -----------------------------------------------------------------------------------------------------------
Total Shares Outstanding 9,604,441 12,773,298 100.0% 100.0%
- - -----------------------------------------------------------------------------------------------------------
</TABLE>
* Less than 1%.
13
<PAGE> 17
(1) The address of this beneficial owner is P.O. Box 6676, Highway 70,
Asheville, North Carolina 28816.
(2) Includes the 1,887,041 shares of Class B Common Stock held by the Company's
Investment/Profit Sharing Plan and Trust, of which Ms. Tudor and Messrs.
Ingle and Fisher are trustees. The trustees have sole voting power and
dispositive power with respect to such shares. However, Ms. Tudor and
Messrs. Ingle and Fisher disclaim beneficial ownership of such shares.
(3) 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.
(4) 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 percentage of Class A Common Stock 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.
(5) Includes 100,000 shares of Class A Common Stock subject to currently
exercisable options. Such options expire on February 18, 1999.
(6) Includes 300 shares of Class A Common Stock held by the estate of Mr.
Gardner's wife.
(7) Includes 399.3583 and 3,240 shares of Class A Common Stock held by Ms.
Sharp's minor children and husband, respectively.
(8) 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
and Chief Executive Officer 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. The Company did not
incur any direct expense for such services because Mr. Sharp was paid by the
third-party sellers in such transactions. Based on information available to the
Company, TMS Realty, Inc., which is owned by Mr. Sharp, received gross revenues
of $474,824 during fiscal 1998 as a result of such purchases of real property.
In addition, during fiscal 1998 the Company paid remuneration to Mr. Sharp of
$15,094 for services rendered by Mr. Sharp as a pilot for the Company. Broadway
Electric Service, Inc., is majority owned by Mr. Sharp's father. The Company
paid Broadway Electric Service approximately $23,000 for electrical repair
services during 1998. 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 INSIDER PARTICIPATION."
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.
14
<PAGE> 18
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 1999 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 1999 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
SOLICITATION OF PROXIES
The Company will solicit proxies for the 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 brokerage firms and other nominees, custodians and
fiduciaries for the reasonable out-of-pocket expenses they incur in forwarding
proxy solicitation materials to the beneficial owners of Common Stock held of
record by them.
STOCKHOLDERS' PROPOSALS FOR THE 2000 ANNUAL MEETING
The Company plans to hold its 2000 Annual Meeting of Stockholders in
February or early March. Any proposal that a stockholder wants to be presented
at the 2000 Annual Meeting of Stockholders must be received by the Secretary no
later than September 21, 1999, 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 of by the Securities and Exchange Commission to be eligible to be
included in the proxy materials for the Company's 2000 Annual Meeting. In
addition, any stockholder proposal for which notice is submitted to the Company
after December 5, 1999, will be considered untimely for purposes of the 2000
Annual Meeting.
ACTION ON OTHER MATTERS AT THE 1999 ANNUAL MEETING
At this time, the Company does not know of any matters to be presented for
action at the 1999 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 Annual Meeting, it is intended that the persons
who are named in the proxies will vote the shares represented by effective
proxies in their discretion.
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
Securities and Exchange Commission any report that was required to be filed
during fiscal 1998 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 1998 was (a) a
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 1998. Based on information that
15
<PAGE> 19
the Reporting Persons known to the Company provided to the Company, with respect
to fiscal 1998, Charles L. Gaither, Jr. failed to file on a timely basis an
Initial Statement of Beneficial Ownership of Securities report with respect to
his appointment as President of Milkco, Inc. Mr. Gaither has advised the Company
that he has filed his report.
INCORPORATION BY REFERENCE OF THIS PROXY STATEMENT
The Report on Executive Compensation set forth on pages 7 through 9 of this
Proxy Statement and the graph and related data set forth under the heading
"STOCK PRICE PERFORMANCE GRAPH" on pages 12 and 13 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 Securities and Exchange Commission
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 26,
1998, as filed with the Securities and Exchange Commission (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 Brenda S. Tudor, Vice
President-Finance and Chief Financial Officer, at Ingles Markets, Incorporated,
P. O. Box 6676, Asheville, North Carolina 28816, or by telephone at (828)
669-2941, ext. 223.
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
16
<PAGE> 20
APPENDIX A
CLASS A
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD FEBRUARY 16, 1999
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 5,
1999, at the Annual Meeting of Stockholders of Ingles Markets, Incorporated to
be held on February 16, 1999, 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)
(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 16, 1999.
Dated: , 1999
-------------------
(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
I PLAN TO ATTEND __________ THE UNITED STATES.
<PAGE> 21
APPENDIX B
CLASS B
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD FEBRUARY 16, 1999
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 5,
1999, at the Annual Meeting of the Stockholders of Ingles Markets, Incorporated
to be held on February 16, 1999, 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)
(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 16, 1999.
Dated: , 1999
-----------------------
(SEAL)
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(SEAL)
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(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
I PLAN TO ATTEND __________ THE UNITED STATES.
