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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)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
----------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
(INGLES LOGO)
INGLES MARKETS, INCORPORATED
P.O. BOX 6676
ASHEVILLE, NORTH CAROLINA 28816
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 13, 2001
To the Stockholders of Ingles Markets, Incorporated:
NOTICE IS HEREBY GIVEN that Ingles Markets, Incorporated will hold its 2001
Annual Meeting of Stockholders at the Grove Park Inn, 290 Macon Avenue,
Asheville, North Carolina 28804, on Tuesday, February 13, 2001, at 1:00 P.M.
local time, for the following purposes:
(1) To elect nine Directors to serve until the 2002 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, 2001, 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, 2001, 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
Asheville, North Carolina
January 12, 2001
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
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PAGE
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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 and Executive Officers........ 3
Committees of the Board of Directors...................... 5
The Executive Committee................................ 6
The Audit/Compensation Committee....................... 6
The Employee Benefit Plan Committee.................... 6
The Human Resources Advisory Committee................. 6
Compensation Committee Interlocks and Insider
Participation in Compensation Decisions................ 7
Meetings of the Board of Directors and Committees......... 7
AUDIT COMMITTEE REPORT...................................... 7
EXECUTIVE COMPENSATION...................................... 8
Report on Executive Compensation.......................... 8
Executive Compensation Policies........................ 8
Salaries and Cash Incentive Bonus Awards............... 9
1997 Nonqualified Stock Option Plan.................... 9
Investment/Profit Sharing Plan......................... 9
Life Insurance......................................... 10
Executive Compensation Summary............................ 11
Summary Compensation Table............................. 11
Option/SAR Grants in Last Fiscal Year.................. 12
Aggregated Option/SAR Exercises in Last Fiscal Year and
Fiscal Year-End Option/SAR Values..................... 12
Stock Performance Price Graph.......................... 13
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL
OWNERS.................................................... 14
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS........ 15
RELATIONSHIP WITH INDEPENDENT AUDITORS...................... 15
OTHER MATTERS............................................... 15
Solicitation of Proxies................................... 15
Stockholders' Proposals for the 2002 Annual Meeting....... 15
Action on Other Matters at the 2001 Annual Meeting........ 16
Section 16(a) Beneficial Ownership Reporting Compliance... 16
Incorporation by Reference of this Proxy Statement........ 16
Availability of Form 10-K................................. 16
</TABLE>
<PAGE> 4
INGLES MARKETS, INCORPORATED
P. O. BOX 6676
ASHEVILLE, NORTH CAROLINA 28816
ANNUAL STOCKHOLDERS MEETING
FEBRUARY 13, 2001
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 2001 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 13, 2001, 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 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, 2001, 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. This Proxy Statement and
the accompanying forms of proxy are first being sent or given to stockholders on
or about January 12, 2001.
EXECUTION AND REVOCATION OF PROXIES
If a stockholder completes and signs one of the enclosed proxies as
instructed 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 the
proxy will be voted at the Annual Meeting in accordance with the instructions on
the 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 a 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
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<PAGE> 5
named under the heading "ELECTION OF DIRECTORS." As of the date of this Proxy
Statement, the Company's 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 9,935,076 shares of Class A Common Stock
and 12,642,663 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 of each class 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, unless otherwise provided in the
Company's Articles of Incorporation or the North Carolina Business Corporation
Act. 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 2002 Annual Meeting
or until an additional candidate meeting the criteria for audit committee
membership is identified, as discussed below, at which time the Board intends to
increase the number of directors to ten. In accordance with the Company's
Articles of Incorporation and Bylaws, two of the nine directors will be elected
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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 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 67.
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 also serves on the Board of Directors of the
North Carolina Food Dealers Association. Mr. Fisher is
62.
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 53.
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 53.
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
44.
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
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<PAGE> 7
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 41.
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. He has been employed by Milkco in
various positions since September 1985. Mr. Gaither is
57.
Ralph H. Gardner A Director since 1985, Mr. Gardner was President of
Milkco, Inc., a subsidiary of the Company that
processes, packages and distributes milk, fruit juices
and spring water, 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 80.
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 41.
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 32.
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 40.
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 56.
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 August 1995. Mr. Outlaw is 54.
John O. Pollard A Director since 1987, Mr. Pollard has been managing
partner of the Charlotte, North Carolina Office of the
law firm of McGuireWoods LLP 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 63.
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
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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 44.
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 46.
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 43.
J. Alton Wingate A Director since 1987, Mr. Wingate is Chairman,
President 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 61.
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 38.
Nathan C. Fisher Mr. Fisher was named Vice President -- Frozen Foods in
May 2000. Mr. Fisher joined the Company in November
1979 and has served in various capacities including
store manager and frozen food director. Mr. Fisher is
40.
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 42.
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.
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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.
THE AUDIT/COMPENSATION COMMITTEE. The Board has established, through the
Company's Bylaws, an Audit/Compensation Committee. When acting in its capacity
as Audit Committee, this committee acts under the authority of and has the
responsibilities described in the Company's Audit Committee Charter, a copy of
which is attached to this Proxy Statement as Appendix A. In this capacity, the
Board has empowered the Audit 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.
When the committee is acting as the Compensation Committee, the Board has
empowered the committee to:
- Approve compensation levels and increases in compensation of each
executive officer and of other employees of the Company whose annual
base salary is in excess of $100,000, and
- 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.
The Audit/Compensation Committee consists of Messrs. Robert P. Ingle, Pollard
and Wingate. During fiscal 2000, the National Association of Securities Dealers
adopted new listing maintenance requirements regarding the independence of audit
committee members and required that all members of the audit committee meet the
independence requirements by June 2001. Both Messrs. Pollard and Wingate are
independent members of the Committee under the new definition. Mr. Robert P.
Ingle is not an independent member due to the fact that Mr. Ingle served as the
Company's Chief Executive Officer during fiscal 2000 and that Mr. Ingle is
related to certain executive officers. See "IDENTIFICATION OF DIRECTORS AND
EXECUTIVE OFFICERS" for a description of Mr. Ingles' family relationships with
other executive officers. Although Mr. Ingle is not independent, the Board chose
to continue his membership on the Audit/Compensation Committee during fiscal
2000 to provide continuity with prior years. The Board is currently searching
for an additional director who will meet the new audit committee requirements
and intends to replace Mr. Ingle on this committee prior to June 2001.
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.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
All compensation decisions made during fiscal 2000 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 2000 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 2000 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 McGuireWoods LLP which, from time to time, handles labor matters for the
Company. During fiscal 2000, the Company accrued approximately $217,000 in fees
for services rendered by that firm. 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 2000, the
Company paid Community Bank & Trust approximately $112,000 in fees for services
rendered by Financial Supermarkets, Inc.
The Company believes that the transactions described above between the
Company and each of McGuireWoods LLP 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."
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board held four formal meetings during fiscal 2000. The Executive
Committee held no formal meetings during fiscal 2000, but met on an informal
basis. The Audit/Compensation Committee held one formal meeting during fiscal
2000, met on an informal basis and acted by unanimous written consent. The
Employee Benefit Plan Committee held no formal meetings during fiscal 2000, but
met on an informal basis and acted by unanimous written consent. The Human
Resources Advisory Committee held one formal meeting during fiscal 2000 and
received updates on human resource issues at each quarterly Board meeting. For
the period in fiscal 2000 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 2000.
AUDIT COMMITTEE REPORT
The Audit/Compensation Committee has reviewed and discussed the audited
financial statements of the Company for the fiscal year ended September 30, 2000
with the Company's management. The Audit/Compensation Committee has discussed
with Ernst & Young LLP, the Company's independent public accountants, the
matters required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees).
The Audit/Compensation Committee has also received the written disclosures
and the letter from Ernst & Young LLP required by Independence Standards Board
Standard No. 1 (Independence Discussion with Audit Committees) and the
Audit/Compensation Committee has discussed the independence of Ernst & Young LLP
with that firm.
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The Audit/Compensation Committee recommended to the Board of Directors that
the Company's audited financial statements be included in the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 2000 for filing with
the Securities and Exchange Commission.
<TABLE>
<S> <C> <C> <C>
SUBMITTED BY:
THE AUDIT/COMPENSATION COMMITTEE
Robert P. Ingle John O. Pollard J. Alton Wingate
</TABLE>
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 2000. 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 of these Committees 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 1934, as
amended (the "Exchange Act"), 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 2000 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 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.
8
<PAGE> 12
SALARIES AND CASH INCENTIVE BONUS AWARDS. In fiscal 2000, Mr. Robert P.
Ingle received a salary of $170,045 and no bonus, which was substantially
unchanged from compensation paid to him in 1999. His current salary is $170,045
per year. Payment of Mr. Robert P. 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 2000 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 bonus paid to Mr. Gaither, President of the
Company's subsidiary, Milkco, Inc., was based on a pre-determined quantitative
formula. He 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 stockholders
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.
On May 19, 2000, the Company granted options to purchase an aggregate of
1,281,000 shares of Class A Common Stock to certain of its executive officers.
Each of Messrs. Ashley, Brabson, Davey, Federico, Robert P. Ingle, II, Myers,
Outlaw and Tasler and Ms. Hughes and Tudor received options to purchase 105,000
shares of Class A Common Stock. Mr. Fisher received options to purchase 210,000
shares of Class A Common Stock. Messrs. Keathley and Gaither each received
options to purchase 10,500 shares of Class A Common Stock.
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, quarterly
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 quarter.
9
<PAGE> 13
Employees who participate in the Profit Sharing Plan may contribute to
their 401(k) account between one percent and fifteen 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.
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 $714,000 to the Profit Sharing Plan during fiscal
2000. These contributions were allocated to the matching contribution accounts
in each participant's 401(k) accounts. 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 30, 2000, 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
$150,000 based on the W-2 compensation of the employee. The premiums paid by the
Company for the benefit of the executive officers named in the Summary
Compensation Table are included in the last column of that table.
<TABLE>
<S> <C> <C> <C>
SUBMITTED BY:
THE AUDIT/COMPENSATION COMMITTEE
Robert P. Ingle John O. Pollard J. Alton Wingate
THE EMPLOYEE BENEFIT PLAN COMMITTEE
John O. Pollard J. Alton Wingate
</TABLE>
10
<PAGE> 14
EXECUTIVE COMPENSATION SUMMARY
The following tables set forth information concerning the compensation of
the Company's Chief Executive Officer and each of its other four most highly
compensated executive officers at the end of fiscal 2000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------- ---------------------
SECURITIES UNDERLYING ALL OTHER
FISCAL SALARY BONUS OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#)(2) ($)(3)
--------------------------- ------ ------- ------- --------------------- ------------
<S> <C> <C> <C> <C> <C>
Robert P. Ingle 2000 170,045 -- -- 2,111
Chairman and 1999 170,045 -- 100,000 2,845
Chief Executive Officer 1998 195,385 -- -- 3,569
Vaughn C. Fisher 2000 350,000 25,000 210,000 4,171
President and 1999 350,000 25,000 200,000 3,345
Chief Operating Officer 1998 350,000 20,000 -- 3,927
Charles L. Gaither, Jr. 2000 100,000 162,505 10,500 2,668
President, Milkco, Inc. 1999 100,000 170,666 -- 2,416
July 1, 1998 -- present(1) 1998(1) 76,923 144,822 -- 2,559
Joseph G. Ashley 2000 150,000 21,797 105,000 378
Vice President -- Meats 1999 150,000 21,645 -- 736
1998 150,000 21,512 -- 1,218
Anthony S. Federico 2000 130,000 61,557 105,000 2,164
Vice President -- Non-Foods 1999 130,000 61,425 100,000 3,006
1998 104,616 61,059 -- 3,176
</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.
(2) Each award represents the grant by the Company of an option to purchase
shares of Class A Common Stock pursuant to the 1997 Nonqualified Stock
Option Plan.
(3) Includes contributions to the Profit Sharing Plan on behalf of the named
individuals in the following amounts for 2000: Mr. Ingle, $1,733; Mr.
Fisher, $3,793; Mr. Gaither, $2,290; Mr. Ashley, $0 and Mr. Federico,
$1,786. Also includes $378 in premiums paid by the Company for the benefit
of each of the named individuals for term life insurance.
11
<PAGE> 15
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------ VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS/SARS STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION FOR
OPTIONS/SARS EMPLOYEES IN EXERCISE OR OPTION TERM
GRANTED FISCAL BASE PRICE EXPIRATION --------------------
NAME (#)(1) YEAR(2) ($/SH) DATE 5%($) 10%($)
---- ------------ ------------ ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Robert P. Ingle -- -- -- -- -- --
Vaughn C. Fisher 210,000 10.22% 9.5625 5/19/02 $205,833 $421,706
Charles L. Gaither, Jr. 10,500 0.51% 9.5625 5/19/04 $ 21,638 $ 46,599
Joseph G. Ashley 105,000 5.11% 9.5625 5/19/04 $216,382 $465,985
Anthony S. Federico 105,000 5.11% 9.5625 5/19/04 $216,382 $465,985
</TABLE>
---------------
(1) Each option has anti-dilution provisions for stock splits, stock dividends
and similar events.
(2) Based on 2,054,700 options granted to employees during fiscal year 2000.
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR-END FISCAL YEAR-END
------------------ ---------------
SHARES VALUE EXERCISABLE/ EXERCISABLE/
ACQUIRED ON REALIZED UNEXERCISABLE UNEXERCISABLE
NAME EXERCISE (#) ($) (#)(1) ($)(1)
---- ------------ --------- ------------------ ---------------
<S> <C> <C> <C> <C>
Robert P. Ingle 100,000 $(118,750)(2) 0/0 $0/$0
Vaughn C. Fisher N/A N/A 200,000(3)/210,000(4) $0(3)/$301,875(4)
Charles L. Gaither, Jr. N/A N/A 0/20,500(5) $0/$15,094(5)
Joseph G. Ashley N/A N/A 0/205,000(6) $0/$150,938(6)
Anthony S. Federico N/A N/A 0/205,000(7) $0/$200,938(7)
</TABLE>
---------------
(1) Represents options to purchase shares of Class A Common Stock pursuant to
the 1997 Plan. The fair market value of the Class A Common Stock on
September 30, 2000 was $11.00 per share.
(2) The option exercised had an exercise price of $10.50 per share. On the date
of exercise, the fair market value of the Class A Common Stock was $9.3125
per share.
(3) The option is exercisable at $11.375 per share during the one-year period
beginning February 18, 2000.
(4) The option is exercisable at $9.5625 per share during the one-year period
beginning May 19, 2001.
(5) The option is exercisable at $9.5625 per share during the one-year period
beginning May 19, 2003.
(6) Includes options for 100,000 shares exercisable at $14.00 per share during
the one-year period beginning February 18, 2002, and 105,000 shares
exercisable at $9.5625 per share during the one-year period beginning May
19, 2003.
(7) Includes options for 100,000 shares exercisable at $10.50 per share during
the one-year period beginning October 13, 2003, and 105,000 shares
exercisable at $9.5625 per share during the one-year period beginning May
19, 2003.
12
<PAGE> 16
STOCK PRICE PERFORMANCE GRAPH
In accordance with the rules and regulations of the Securities and Exchange
Commission, set forth below are a graph and accompanying tables 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 "Peer
Group"), for the five-year period ended September 30, 2000. The companies
included in the peer group are companies that management believes are comparable
to the Company in terms of size and markets served. The Peer Group consists of
Blue Square Ltd., Bruno's, Inc., Delchamps, Inc., Marsh Supermarkets, Inc.,
Schultz Sav O Stores, Inc., Wild Oats Markets, Inc. and the Company. The graph
and tables assume that $100 was invested on September 30, 1995, and that
dividends were reinvested quarterly. Returns of the companies included in the
Peer Group have been weighted according to each company's stock market
capitalization at the beginning of each section for which a return is presented.
INGLES MARKETS, INCORPORATED
COMPARATIVE RETURN TO STOCKHOLDERS
(TOTAL SHAREHOLDERS GRAPH)
INDEXED RETURNS OF INITIAL $100 INVESTMENT*
<TABLE>
<CAPTION>
COMPANY/INDEX 1995 1996 1997 1998 1999 2000
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ingles Markets, Incorporated
Class A Common Stock $100.00 $170.84 $145.81 $139.01 $164.21 $145.51
---------------------------------------------------------------------------------------------------------
S&P 500 Comprehensive-
Last Trading Day Index $100.00 $120.33 $169.00 $184.29 $235.53 $266.82
---------------------------------------------------------------------------------------------------------
Peer Group $100.00 $122.10 $111.03 $104.87 $128.02 $ 90.98
---------------------------------------------------------------------------------------------------------
</TABLE>
* Assumes $100 invested in the Class A Common Stock of Ingles Markets,
Incorporated after the close of the market on September 30, 1995.
13
<PAGE> 17
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 December 1, 2000, 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 PERCENTAGE OF
OWNED BENEFICIALLY COMMON STOCK
------------------------------- ------------------------
NAME CLASS A CLASS B CLASS A CLASS B
---- --------- ---------- ------- -------
<S> <C> <C> <C> <C>
Robert P. Ingle(1) 200,000 11,822,641(2)(3) 55.3%(2)(4) 93.5%(2)(3)
Anthony S. Federico(1) 110,000 138,075 2.5%(4) 1.1%
Vaughn C. Fisher(1) 223,000(5) 1,774,041(2) 16.8%(2)(4)(5) 14.0%(2)
Ralph H. Gardner(1) 15,800(6) 750 *(4)(6) *
Robert P. Ingle, II(1) 92,500 154,950 2.5%(4) 1.2%
John O. Pollard(1) 100 0 * --
Laura Ingle Sharp(1) 1,663(7) 79,725 *(4) *
Brenda S. Tudor(1) 0 1,774,191(2) 15.2%(2)(4) 14.0%(2)
J. Alton Wingate(1) 1,100 150 *(4) *
Joseph G. Ashley(1) 315 0 * --
Charles L. Gaither, Jr.(1) 1,874 0 * --
Mario J. Gabelli, et al(8) 743,000(9) 0 7.5%(9) --
All Directors and Executive
Officers as a group (18
persons) 655,052(5)(6)(7) 12,196,441(2)(3) 58.1%(2)(4) 96.5%(2)
Total Shares Outstanding 9,935,076 12,642,663 100.0% 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 the 1,774,041 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 reflect 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 percentage of Class A Common Stock held by
all directors and executive officers as a group also reflects the conversion
into Class A Common Stock of each share of Class B Common Stock held by each
director and executive officer.
(5) Includes options to purchase 200,000 shares of Class A Common Stock which
are currently exercisable.
(6) Includes 300 shares of Class A Common Stock held by the estate of Mr.
Gardner's wife.
(7) Includes 448 shares of Class A Common Stock held by Ms. Sharp's minor
children.
14
<PAGE> 18
(8) The address of this beneficial owner is Gabelli Funds, Inc., One Corporate
Center, Rye, New York 10580.
(9) The information as to Mario J. Gabelli includes entities controlled directly
or indirectly by Mr. Gabelli ("Gabelli Entities") and is derived from a
statement dated November 21, 2000 filed with the Commission pursuant to
Section 13(d) of the Exchange Act. Such statement discloses that (i) Mr.
Gabelli is the chief investment officer for most of the Gabelli Entities
signing such statements and is deemed to have beneficial ownership of the
shares owned by all Gabelli Entities, (ii) Mr. Gabelli and the Gabelli
Entities do not admit that they constitute a group within the meaning of
Section 13(d) of the Exchange Act and the rules and regulations thereunder
and (iii) Mr. Gabelli and the Gabelli Entities have the sole power to vote
and dispose of all the shares of which they are beneficial owners (unless
the aggregate voting interest of all Gabelli Entities exceeds 25% of the
Company's total voting interest or other special circumstances exist, in
which case the proxy voting committees of certain of the Gabelli Entities
would have the sole voting power to vote certain of the shares of Class A
Common Stock). The Gabelli Entities which beneficially own shares of the
Company's Class A Common Stock are registered investment advisors and
beneficially own such shares in an agent capacity.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
See "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN
COMPENSATION DECISIONS."
Other than the transactions of the nature described or referred to under
the heading "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN
COMPENSATION DECISIONS," 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 2001 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 2001 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 2002 ANNUAL MEETING
The Company plans to hold its 2002 Annual Meeting of Stockholders in
February or early March. Any proposal that a stockholder wants to be presented
at the 2002 Annual Meeting of Stockholders must be received by the Secretary no
later than September 14, 2001 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
15
<PAGE> 19
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 the Securities
and Exchange Commission to be eligible to be included in the proxy materials for
the Company's 2002 Annual Meeting.
ACTION ON OTHER MATTERS AT THE 2001 ANNUAL MEETING
If notice of a shareholder proposal that has not been submitted to be
included in this Proxy Statement was not received by the Company on or before
November 28, 2000 or the date which is 45 days before the date this Proxy
Statement is mailed, the persons named in the enclosed form of proxy will have
discretionary authority to vote all proxies with respect thereto in accordance
with their best judgment. No proposals had been received as of that date.
At this time, the Company does not know of any matters to be presented for
action at the 2001 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 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 2000 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 2000
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), no Reporting Person who was required to comply with Section 16(a) of
the Exchange Act failed to comply with such requirements during fiscal 2000,
other than Charles L. Gaither, Jr., who inadvertently failed to timely file a
Form 4 to report a stock option grant and Robert Ingle, II, who inadvertently
failed to timely file a Form 4 to report a stock sale.
INCORPORATION BY REFERENCE OF THIS PROXY STATEMENT
The Audit Committee Report and the Report on Executive Compensation set
forth on pages 7 through 10 of this Proxy Statement and the graph and related
data set forth under the heading "STOCK PRICE PERFORMANCE GRAPH" on page 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 30,
2000, 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.
16
<PAGE> 20
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
17
<PAGE> 21
APPENDIX A
AUDIT COMMITTEE CHARTER
INTRODUCTION
Ingles Markets, Incorporated's executive management is primarily
responsible for the completeness and accuracy of its financial reporting and the
adequacy of its internal financial and operating controls. Its Board of
Directors has responsibility to oversee management's exercise of these
responsibilities. To assist the Board, the Corporation has established, through
its bylaws, an Audit Committee whose authority and responsibilities are
described by this Charter.
PURPOSE
This Charter is created in order to define the Audit Committee's
objectives, the range of its authority, the scope of its activities and its
duties and responsibilities. It is intended to give Audit Committee members,
management and external auditors a clear understanding of their respective
roles. The Audit Committee and the Board of Directors will review and assess the
adequacy of this Charter annually.
MISSION STATEMENT
Oversight of the (i) financial reporting process, the system of internal
controls and the audit process and (ii) independent auditors. In carrying out
this purpose, the Committee will maintain and facilitate free and open
communication between directors, the independent auditors and the financial
management of the Corporation.
GENERAL GUIDELINES
Size, Composition and Term of Appointment
The Audit Committee shall consist of no fewer than three directors each of
whom are independent of management and the Corporation, provided that, until a
third independent member of the Board of Directors is identified and elected by
the stockholders of the Corporation, the Audit Committee shall consist of no
fewer than two directors each of whom are independent of management and the
Corporation. Each member shall be financially literate and at least one of
member shall have accounting or related financial management expertise as
defined by the relevant rules promulgated by the Financial Accounting Standards
Board ("FASB"), Securities and Exchange Commission ("SEC"), and the National
Association of Securities Dealers ("NASD") or other regulatory body. The Board
of Directors shall appoint the Audit Committee's Chairperson and members
annually.
Meetings
The Committee will meet on a quarterly basis in connection with the
quarterly meetings of the Board of Directors and special meetings may be called
when circumstances require, including upon the request of the external auditors.
Oversight by the Board of Directors
The Committee will report its activities to the full Board on a regular
basis so that the Board is kept informed of its activities on a current basis.
The Committee will perform all duties determined by the Board.
The Board will determine annually that the Committee's members are
independent, as defined by the relevant rules promulgated by FASB, the SEC and
the NASD, and that the Committee has fulfilled its duties and responsibilities.
A-1
<PAGE> 22
Authority
The Committee derives its authority from the By-Laws of the Corporation and
is hereby given all resources and authority necessary to properly discharge its
duties and responsibilities.
The Committee acts on the Board's behalf in the matters outlined below.
External Auditors
The Committee, as representatives of the shareholders, has the ultimate
authority to select, evaluate and, where appropriate, replace the independent
public accountants, or to nominate the independent public accountants to be
proposed for shareholder approval in the proxy statement. The Committee will
consider management's recommendation of the appointment of the independent
public accountants. The Committee will review with management the performance,
appointment and/or termination of the independent public accountants.
The Committee will ensure that the independent public accountants provide a
formal written statement to the Committee setting forth all relationships
between the independent public accountants and the Company, consistent with the
Independence Standards Board Standard No. 1. The Committee will discuss with the
independent public accountants any disclosed relationships or services which may
impact the objectivity and independence of the independent public accountants.
The Committee will take, or recommend that the full Board take, appropriate
action to ensure the independence of the independent public accountants.
The Committee will review with management and the independent public
accountants the annual audit scope and approach, significant accounting
policies, audit conclusions regarding significant accounting estimates/reserves,
and proposed fee arrangements for ongoing and special projects.
The Committee will review with management and the independent public
accountants their assessments of the adequacy of internal controls, and the
resolution of identified material weaknesses and reportable conditions in
internal controls, including the prevention or detection of management override
or compromise of the internal control system.
The Committee will review with management and the independent public
accountants the Company's compliance with laws and regulations having to do with
accounting and financial matters.
The Committee and the Board of Directors should consider whether the
independent public accountants should meet with the full Board to discuss any
matters relative to the financial statements and/or any potentially relevant
matters, and to answer any questions that other directors may have.
Financial Statements
The Committee will review with management and the independent public
accountants, the Company's interim and year-end financial statements, including
management's discussion and analysis, and audit findings (including any
significant suggestions for improvements provided to management by the
independent public accountants). Such review will include a discussion of
significant adjustments recorded or adjustments passed and will conform with the
requirements of SAS 61. Following such review, the Committee will recommend to
the Board whether the audited financial statements should be included in the
Corporation's annual report on Form 10-K.
The Committee will request from financial management and the independent
public accountants, a briefing on any significant accounting and reporting
issues, including any changes in accounting standards or rules promulgated by
the FASB, SEC or other regulatory bodies, that have an effect on the financial
statements.
The Committee will inquire about the existence and substance of any
significant accounting accruals, reserves, or estimates made by management that
had a material impact on the financial statements.
A-2
<PAGE> 23
The Committee will inquire of management and the independent public
accountants if there were any significant financial accounting or reporting
issues discussed during the accounting period and, if so, how they were resolved
or if not resolved, inquire as to the disagreements.
The members of the Committee will discuss among themselves, without
management or the independent public accountants present, the quality of the
accounting principles applied in the preparation of the Company's financial
statements and significant judgments affecting the financial statements; and the
independent public accountants' view of the quality of those principles and such
judgments.
Private Discussions with Independent Public Accountants
Upon request of the Committee or the independent public accountants, the
Committee will meet privately with the independent public accountants to discuss
their opinion on various matters including the quality of the Company's
accounting principles as applied in its financial reporting, and the quality and
performance of its financial and accounting personnel.
The Committee will also discuss privately with the independent public
accountants any issues required from time to time by rules of the SEC, FASB and
NASD.
Post-Audit Review
The Committee will review with management and the independent public
accountants the annual Management Letter comments and management's responses to
each.
The Committee will ask the independent public accountants what their
greatest concerns were (including any serious difficulties encountered) and if
they believe anything else should be discussed with the Committee that has not
been raised or covered elsewhere.
Litigation
The Committee will discuss/review with management, company counsel, and the
independent public accountants the substance of any significant issues raised by
counsel concerning litigation, contingencies, claims or assessments. The
Committee should understand how such matters are reflected in the Company's
financial statements.
Other
The Committee will review the internal accounting function of the
Corporation.
The Committee will initiate the investigation of any matter brought to its
attention within the scope of its duties, with the power to retain outside
counsel for this purpose if, in its judgment, that is appropriate.
The Committee will prepare a report for inclusion in the Corporation's
proxy statement for its annual meeting of shareholders describing the activities
in which it has engaged during the prior year pursuant to its charter. The
report will address all issues then required by the rules of the SEC.
A-3
<PAGE> 24
CLASS A
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD FEBRUARY 13, 2001
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,
2001, at the Annual Meeting of Stockholders of Ingles Markets, Incorporated to
be held on February 13, 2001, 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> 25
(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 13, 2001.
Dated: , 2001
-------------------------
(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> 26
CLASS B
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD FEBRUARY 13, 2001
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,
2001, at the Annual Meeting of the Stockholders of Ingles Markets, Incorporated
to be held on February 13, 2001, 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> 27
(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 13, 2001.
Dated: , 2001
-------------------------
(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 __________
