<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<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>
Marsh Supermarkets, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(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
MARSH (LOGO)
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 1, 1995
TO THE SHAREHOLDERS OF
MARSH SUPERMARKETS, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Marsh
Supermarkets, Inc. (the "Corporation") will be held at the principal executive
offices of the Corporation, 9800 Crosspoint Boulevard, Indianapolis, Indiana, on
Tuesday, August 1, 1995, at 10 o'clock A.M. (Eastern Standard Time), for the
following purposes:
1. To elect three directors for terms of three years each and until
their successors are duly elected and qualified;
2. To consider and act upon a proposal to approve an amendment to the
1991 Employee Stock Incentive Plan; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on Monday, June 5,
1995, as the record date for determining the shareholders entitled to notice of,
and to vote at, the meeting and at any adjournment thereof.
You are cordially invited to attend this meeting. Whether or not you expect
to attend the meeting, we encourage you to vote your shares by dating and
signing the enclosed proxy and returning it as promptly as possible in the
accompanying postage prepaid envelope.
By order of the Board of Directors.
MARSH SUPERMARKETS, INC.
By: P. Lawrence Butt
---------------------------
P. Lawrence Butt, Secretary
Indianapolis, Indiana
June 22, 1995
<PAGE> 3
MARSH SUPERMARKETS, INC.
9800 CROSSPOINT BOULEVARD
INDIANAPOLIS, INDIANA 46256-3350
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
AUGUST 1, 1995
This Proxy Statement and the accompanying proxy are being mailed to
shareholders of Marsh Supermarkets, Inc. (the "Corporation") in connection with
the solicitation of the enclosed proxy by and on behalf of the Board of
Directors of the Corporation for use at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held pursuant to the accompanying Notice of Annual
Meeting, and at any adjournment of such meeting. This Proxy Statement and the
accompanying proxy are being first mailed to shareholders on or about June 22,
1995.
VOTING SECURITIES
At June 5, 1995, the Corporation had outstanding 3,879,123 shares of Class
A Common Stock and 4,588,415 shares of Class B Common Stock. Each share of Class
A Common Stock entitles its owner to one vote upon each matter to come before
the Annual Meeting. Shares of Class B Common Stock are non-voting with respect
to the matters before the Annual Meeting. Only Class A Common Stock shareholders
of record at the close of business on Monday, June 5, 1995, will be entitled to
vote at the Annual Meeting and at any adjournment thereof.
PROXY, VOTING AND METHOD OF COUNTING VOTES
When the enclosed proxy is properly executed and returned, the shares it
represents will be voted at the Annual Meeting and at any adjournment thereof as
directed by the shareholder executing the proxy, unless it is earlier revoked.
If no directions are given on the proxy with respect to any particular matter to
be acted upon at the Annual Meeting, the shares represented by the proxy will be
voted in favor of such matter. Shares represented by proxies which are marked
"abstain" with respect to any matter before the Annual Meeting will be
considered only for the purpose of determining the presence of a quorum at the
meeting, but will neither be counted nor have any effect on the vote with
respect to such matter, except that with respect to the amendment of the 1991
Employee Stock Incentive Plan, an abstention will have the same effect as a vote
"against", since a majority of the shares present at the Annual Meeting is
necessary for the approval of Proposal 2. Similarly, shares beneficially owned
by persons who do not provide voting instructions on a matter before the Annual
Meeting with respect to which a broker is prohibited from exercising
discretionary authority will be deemed present at the meeting for quorum
purposes, but will not be included in the vote total with respect to such
matter. Brokers are not prohibited from exercising discretionary authority with
respect to each of the matters before the Annual Meeting except to the extent
they receive instructions to the contrary from their clients at least 10 days
prior to the Annual Meeting. Any shareholder executing and delivering a proxy
has the right to revoke it at any time before the authority granted thereby is
exercised by the due execution of another proxy bearing a later date or by
written notice to the Secretary of the Corporation. Shareholders who are present
in person at the Annual Meeting may revoke their proxy and vote in person if
they so desire.
<PAGE> 4
SOLICITATION OF PROXIES
This solicitation of proxies is being made by the Board of Directors of the
Corporation and the expenses thereof will be borne by the Corporation. The
principal solicitation is being made by mail; however, additional solicitations
may be made by telephone, telegraph, telecopier or personal interview by
officers of the Corporation who will not be additionally compensated therefor,
and by D.F. King & Co., Inc., which has been engaged to distribute proxies and
solicit votes for a fee estimated not to exceed $3,000, plus reimbursement of
out-of-pocket expenses. The Corporation expects to reimburse brokerage houses,
banks and other fiduciaries for reasonable expenses of forwarding proxy material
to beneficial owners.
PROPOSAL 1: ELECTION OF DIRECTORS
The Corporation's Board of Directors consists of nine members, each of whom
is elected to serve for a term of three years. Three directors will be elected
at the Annual Meeting to serve until the Annual Shareholders Meeting in 1998 and
until their successors are duly elected and qualified. Proxies representing
shares of Class A Common Stock held on the record date which are returned duly
executed will be voted, unless otherwise specified, in favor of the three
nominees for the Board of Directors named below. All such nominees are members
of the present Board of Directors and were elected as directors at the 1992
Annual Shareholders Meeting. All nominees have consented to serve if elected,
but should any nominees be unavailable to serve (which event is not
anticipated), the persons named in the proxy intend to vote for such substitute
nominee as the Board of Directors may recommend. The nominees shall be elected
by a plurality of the votes cast in the election by the holders of the Class A
Common Stock represented and entitled to vote at the Annual Meeting, assuming
the existence of a quorum.
2
<PAGE> 5
Biographical and other information for each nominee and for each incumbent
director is set forth below:
<TABLE>
<CAPTION>
NAME, AGE, PRINCIPAL OCCUPATION DIRECTOR
AND BUSINESS EXPERIENCE SINCE
- ------------------------------------------------------------------------------------ --------
<S> <C>
NOMINEES FOR DIRECTOR TO SERVE UNTIL THE 1998 ANNUAL MEETING:
JACK E. BUCKLES, 68................................................................. 1972
Partner, Beasley Gilkison Retherford Buckles & Clark, Attorneys at Law, Muncie,
Indiana. See Note (3).
K. CLAY SMITH, 57................................................................... 1989
President and Chief Executive Officer, Underwood Machinery Transport Company,
Inc., Indianapolis, Indiana (a heavy equipment transport company); director,
Bindley-Western Industries, Inc., Indianapolis, Indiana (a wholesale
pharmaceutical distributor). See Notes (1) and (2).
GARNET R. MARSH, 84................................................................. 1977
Widow of Ermal W. Marsh, founder of the Corporation; mother of Don E. Marsh, C.
Alan Marsh and William L. Marsh.
INCUMBENT DIRECTORS PREVIOUSLY ELECTED TO SERVE UNTIL THE 1996 ANNUAL MEETING:
CHARLES R. CLARK, 61................................................................ 1978
Partner, Beasley Gilkison Retherford Buckles & Clark, Attorneys at Law, Muncie,
Indiana. See Note (1).
C. ALAN MARSH, 53................................................................... 1968
Vice Chairman of the Board and Senior Vice President, Corporate Development, of
the Corporation; son of Garnet R. Marsh and brother of Don E. Marsh and William L.
Marsh. See Note (1).
JAMES K. RISK, III, 53.............................................................. 1986
President and Chief Executive Officer, Kirby Risk Supply Co., Inc., Lafayette,
Indiana (a wholesale electrical equipment distributor); director, Bindley-Western
Industries, Inc., Indianapolis, Indiana (a wholesale pharmaceutical distributor).
See Note (3).
INCUMBENT DIRECTORS PREVIOUSLY ELECTED TO SERVE UNTIL THE 1997 ANNUAL MEETING:
DON E. MARSH, 57.................................................................... 1959
Chairman of the Board, President and Chief Executive Officer of the Corporation;
son of Garnet R. Marsh and brother of C. Alan Marsh and William L. Marsh;
director, Indiana Energy Incorporated, Indianapolis, Indiana (a gas utility
company); director, National City Bank, Indiana, Indianapolis, Indiana; director,
Nash-Finch Company, Minneapolis, Minnesota (a supermarket chain). See Notes (1),
(2) and (4).
WILLIAM L. MARSH, 51................................................................ 1991
Vice-President - General Manager, Property Management, of the Corporation; son of
Garnet R. Marsh and brother of Don E. Marsh and C. Alan Marsh.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
NAME, AGE, PRINCIPAL OCCUPATION DIRECTOR
AND BUSINESS EXPERIENCE SINCE
- ------------------------------------------------------------------------------------ --------
<S> <C>
STEPHEN M. HUSE, 52................................................................. 1985
President and Chief Executive Officer, Huse Food Group, Incorporated, Bloomington,
Indiana (a retail restaurant management company); director, Society National Bank,
Central Indiana District, Indianapolis, Indiana; director, Signature Inn, Inc.,
Indianapolis, Indiana (a regional motel chain). See Notes (1), (2) and (3).
</TABLE>
- ---------------
(1) Member of the Audit Committee.
(2) Member of the Executive Committee.
(3) Member of the Salary Committee.
(4) Since April 2, 1994, the largest aggregate amount of indebtedness
outstanding and owed by Don E. Marsh to the Corporation was $248,292, which
is the principal amount of, and accrued interest at the rate of 6% per
annum on, a loan which the Salary Committee authorized the Corporation to
make to Mr. Marsh and to other optionees under the 1980 Marsh Stock Plan to
fund the exercise of options granted under such plan which would have
expired on May 31, 1993. The loan was due May 28, 1995, but has been
extended by the Salary Committee to May 28, 1998.
COMMITTEES OF THE BOARD
The Board of Directors has standing Executive, Audit and Salary committees,
membership in which is indicated in the preceding table, but does not have a
nominating committee. During the fiscal year 1995, the Board of Directors held
four meetings, the Audit Committee held three meetings, and the Salary Committee
held two meetings. The Executive Committee did not hold any formal meetings
during the fiscal year. All directors, other than Garnet R. Marsh, attended at
least 75% of the aggregate of all Board meetings and committee meetings of which
they were members during the fiscal year.
The Executive Committee is empowered to exercise authority over the affairs
of the Corporation during intervals between meetings of the Board of Directors.
The Audit Committee reviews matters involving the work of independent auditors
and is responsible for their selection, subject to the approval of the Board of
Directors.
The Salary Committee, composed entirely of directors who are not employees
of the Corporation, reviews and approves the compensation policies and actions
affecting officers, employment and severance arrangements, benefits awarded
under the Corporation's incentive plans, such as the Management Incentive Plan
and the 1991 Employee Stock Incentive Plan, and determines participation in the
Executive Life Insurance Plan and the Supplemental Retirement Plan.
COMPENSATION OF DIRECTORS
Each member of the Board of Directors who is not an employee of the
Corporation or any of its subsidiaries (an "Outside Director") received an
annual retainer of $20,000 during the fiscal year. The Chairman of each standing
committee of the Board of Directors who is an Outside Director also received an
additional fee of $5,000 for serving in that capacity. A director may elect to
have all or a portion of the foregoing fees deferred under a deferred
compensation plan offered by the Corporation.
Each Outside Director who was serving on the Board of Directors on August
4, 1992, or who is first elected to the Board of Directors thereafter, is
entitled to a one-time grant of 500 shares of restricted Class B
4
<PAGE> 7
Common Stock of the Corporation under the 1992 Stock Option Plan for Outside
Directors approved by the shareholders at the 1992 Annual Shareholders Meeting.
The 1992 Stock Option Plan also provides for the granting of non-qualified stock
options for 1,500 shares of Class B Common Stock upon each election of an
Outside Director to the Board of Directors during the term of the Plan, which
expires in 2002.
A director who is not an Outside Director does not receive any fee for
serving as a director, Chairman of the Board, or Chairman of any standing
committee and is not eligible to receive grants of either restricted stock or
options under the 1992 Stock Option Plan for Outside Directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. C. Alan Marsh owns 50% of the equity securities of Jorjess, Inc., a
bakery company which supplied the Corporation with $152,736 of products in the
ordinary course of business during fiscal year 1995 at prices no less favorable
than the Corporation could have obtained from unaffiliated third parties. Mr.
Marsh also owns a 17.5% interest in McWheel Properties, LLC, a limited liability
company from which the Corporation has agreed to lease a new supermarket in
Muncie, Indiana upon terms no less favorable than could have been obtained from
unaffiliated third parties.
Mr. Don E. Marsh owns controlling interest in Maison Blanche which provided
$37,450 of chartering services to the Corporation in fiscal year 1995 upon terms
which were no less favorable than those which could have been negotiated with an
unaffiliated chartering company.
See succeeding paragraphs and footnote 4 to the preceding table regarding
nominees and incumbent directors for information regarding other relationships
and related transactions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Jack E. Buckles is a director of the Corporation and a partner in the
law firm of Beasley Gilkison Retherford Buckles & Clark, which the Corporation
has retained and intends to continue to retain.
Mr. James K. Risk, III, is a director of the Corporation and President and
Chief Executive Officer of Kirby Risk Supply Co., Inc., a wholesale electrical
equipment distributor from whom the Corporation purchased $331,328 of electrical
supplies in the ordinary course of business during fiscal year 1995 upon terms
no less favorable than the Corporation could have obtained from unaffiliated
third parties.
Mr. Stephen M. Huse, a director of the Corporation and President and Chief
Executive Officer of Huse Food Group, Incorporated, purchased .76 acre of
residual real estate from a subsidiary of the Corporation at the appraised value
of $455,864.
5
<PAGE> 8
PROPOSAL 2: TO APPROVE AN AMENDMENT
TO 1991 EMPLOYEE STOCK INCENTIVE PLAN
The 1991 Employee Stock Incentive Plan (the "1991 Plan") was originally
adopted by the shareholders in May 1991 and was subsequently amended and
restated. The 1991 Plan initially authorized for issuance 300,000 shares of
either Class A Common Stock or Class B Common Stock, or any combination thereof
(collectively, the "Common Stock"). At April 1, 1995, there were approximately
12,200 shares of Common Stock available for issuance under the 1991 Plan.
The Salary Committee (the "Committee"), which consists entirely of Outside
Directors, reviewed the Corporation's stock-based incentive compensation plans
and concluded that the number of shares available for distribution under the
1991 Plan did not authorize sufficient number of shares of Common Stock to
provide flexibility with respect to equity-based incentive compensation. The
Committee and the Board of Directors believe that an important element of
officer and key employee compensation is equity-based incentive compensation.
Such compensation advances the interest of the Corporation by encouraging, and
providing for, the acquisition of equity interests in the Corporation by
officers and key employees, thereby providing substantial motivation for
superior performance. In order to provide the Committee with the ability to
continue utilizing equity-based incentive compensation strategies during the
remaining years of the 1991 Plan, which expires in 2001, the Board of Directors
at its May 1995 meeting, upon recommendation of the Committee, proposed the
adoption, subject to shareholder approval, of an amendment to the 1991 Plan (i)
to increase the number of shares of Common Stock reserved for distribution under
the 1991 Plan from 300,000 shares to 750,000 shares, and (ii) to impose limits
on the number of shares with respect to which any employee may be granted
equity-based compensation in any fiscal year to 75,000 shares and in the
aggregate under the 1991 Plan to 150,000 shares. The Board of Directors believes
that the approval of the amendment is essential to further the long-term
stability and financial success of the Corporation by attracting, motivating and
retaining qualified key employees through the use of stock incentives.
Under the Omnibus Budget Reconciliation Act of 1993 ("OBRA") compensation
expense with respect to stock options, stock appreciation rights ("SARs") and
other stock-based awards having an exercise price that is greater than or equal
to the fair market value of the underlying stock at the time of grant are exempt
from the $1,000,000 limitation on the deductibility if, among other things, the
options or SARs are granted pursuant to a plan approved by shareholders which
contains a per person limitation on the number of shares underlying stock-based
awards which may be granted during a specific period to a particular executive.
If the proposed amendment to the 1991 Plan is approved by the shareholders at
the Annual Meeting, it is anticipated that awards of such stock-based
compensation to executive officers will not be subject to the limitations of
OBRA.
The full text of the proposed amendment to the 1991 Plan (the "Amendment")
is attached as Exhibit A to this Proxy Statement. If approved by the
shareholders at the Annual Meeting, the Amendment will become effective
immediately.
SUMMARY OF THE AMENDMENT
The Amendment increases the number of shares of Common Stock which may be
issued upon the exercise of options or for issuance of SARs, restricted stock
awards, or other stock-based awards (as defined in the 1991 Plan) by 450,000
shares. As amended, the 1991 Plan will continue to provide for appropriate
adjustment in the number of shares in the event of a stock dividend, merger or
the like.
6
<PAGE> 9
In order to exclude the value of options and SARs from the limitations on
the federal tax deductibility of compensation paid to certain executive
officers, OBRA and applicable temporary regulations thereunder require that the
plan under which such awards are granted must be approved by shareholders and
contain a per person limitation on the number of options or SARs which may be
granted during a specific period to a particular executive. Accordingly, the
number of options and SARs which may be granted to any individual under the 1991
Plan after adoption of the Amendment will be limited to 75,000 shares in any
fiscal year and to an aggregate of 150,000 shares under the 1991 Plan.
SUMMARY OF MATERIAL PROVISIONS OF THE 1991 PLAN
The following is a summary of the material provisions of the 1991 Plan, as
proposed to be amended:
Shares. The 1991 Plan will be amended to authorize 450,000 additional
shares of either Class A Common Stock or Class B Common Stock, or any
combination thereof, or approximately 5.3% of the Common Stock outstanding
as of June 5, 1995. These shares are in addition to the 300,000 shares of
Common Stock initially reserved for issuance under the 1991 Plan when it
was adopted in 1991. Shares awarded under the 1991 Plan may be composed of,
in whole or in part, authorized and unissued shares or treasury shares of
Class A Common Stock and Class B Common Stock. Any number of shares of
Common Stock may be awarded so long as the total of such shares do not
exceed 750,000 shares. If shares subject to an option under the 1991 Plan
cease to be subject to such option, if shares under the 1991 Plan are
forfeited, or otherwise terminate without a payment being made to the
participant in the form of Common Stock, or if cash is paid upon exercise
of an option granted with a stock appreciation right, such shares will
again be available for future distribution under the 1991 Plan.
Participation. 1991 Plan awards may be made to key employees,
including officers, of the Corporation, its subsidiaries and affiliates,
but may not be granted to any director who is a member of the committee
designated to administer the 1991 Plan or to any other director unless the
director is also a key employee of the Corporation, its subsidiaries or
affiliates. The 1991 Plan, as amended, imposes no limit on the number of
officers and other key employees to whom awards may be made, but no
employee is eligible for awards relative to shares of Common Stock which
exceeds 75,000 shares in any fiscal year or 150,000 shares in the aggregate
under the 1991 Plan. The number of officers and other key employees
currently eligible for awards pursuant to the 1991 Plan is approximately
38.
Administration. The 1991 Plan is administered by a committee of no
less than three disinterested individuals appointed by the Board of
Directors. The 1991 Plan is currently administered by the Committee which
is comprised of three Outside Directors.
Awards under the 1991 Plan. The Committee will have the authority to
grant the following types of awards under the 1991 Plan: (1) stock options;
(2) stock appreciation rights; (3) restricted stock; (4) deferred stock;
(5) stock purchase rights; and/or (6) other stock-based awards.
1. Stock Options. Incentive stock options ("ISO") and non-qualified stock
options may be granted for such number of shares as the Committee shall
determine and may be granted alone or in conjunction with, or in tandem with,
other awards under the 1991 Plan and/or cash awards outside the 1991 Plan, but
subject to the per person limitation on awards.
A stock option will be exercisable at such times and subject to such terms
and conditions (including vesting) as the Committee will determine and over a
term to be determined by the Committee, which term shall be no more than ten
years after the date of grant. The option price for any ISO will not be less
than 100% (110% in the case of certain 10% shareholders) of the fair market
value of the Class A Common Stock or Class B Common Stock as of the date of
grant and for any non-qualified stock option will not be less than 50%
7
<PAGE> 10
of the fair market value as of the date of grant. Although the 1991 Plan, as
previously approved by the shareholders, permits the Committee to grant
non-qualified stock options exercisable at less than fair market value on the
date of grant but not below 50% of such fair market value, the Committee has not
done so and has no current intention of doing so. Payment of the option price
(in the case of an ISO) may be made in cash, or, as determined by the Committee,
by unrestricted Common Stock having a fair market value equal to the option
price. For non-qualified stock options, payment, as determined by the Committee,
may also be made in the form of restricted or deferred stock, and a cash award
may be included to defray the recipient's federal income taxes on account of
exercise of the non-qualified stock option.
Upon termination of a participant's employment for cause, such employee's
stock options will terminate. If employment is involuntarily terminated without
cause, stock options will be exercisable for three months following termination
or until the end of the option period, whichever is shorter. Upon a voluntary
termination of employment, the employee's stock option will terminate, except
that the Committee shall have the right to extend the exercise period for up to
three months following such voluntary termination. On the disability or
retirement of an employee, stock options will be exercisable within the lesser
of the remainder of the option period or three years from the date of disability
or retirement (or such shorter period as may be specified by the Committee).
Upon the death of an employee, stock options will be exercisable by the deceased
employee's representative within the lesser of the remainder of the option
period or one year from the date of the employee's death. Unless otherwise
determined by the Committee, only options which are exercisable on the date of
termination, death, disability or retirement may be subsequently exercised.
2. Stock Appreciation Rights. SARs may be granted in conjunction with all
or part of a stock option and will be exercisable only when the underlying stock
option is exercisable. Once an SAR has been exercised, the related portion of
the stock option underlying the SAR will terminate.
Upon the exercise of an SAR, the Committee will pay to the employee in cash
or Common Stock, or any combination thereof (the method of payment to be at the
discretion of the Committee), an amount of money equal to the excess between the
fair market value of the stock on the exercise date and the option price,
multiplied by the number of SARs being exercised.
In addition to the foregoing SARs, the Committee may grant limited SARs
which will be exercisable only in the event of a change of control or potential
change of control of the Corporation, as defined in the 1991 Plan. In awarding
SARs or limited SARs, the Committee may provide that in the event of a change of
control or a potential change of control of the Corporation, SARs or limited
SARs may be cashed-out on the basis of the change in control price, as defined
in the 1991 Plan.
3. Restricted Stock. Restricted stock may be granted alone or in
conjunction with, or in tandem with, other awards under the 1991 Plan and may be
conditioned upon the attainment of specific performance goals or such other
factors as the Committee may determine. The provisions attendant to a grant of
restricted stock may vary from participant to participant.
In making an award of restricted stock, the Committee will determine the
periods during which the stock is subject to forfeiture, and may grant such
stock at a purchase price equal to or less than the par value of the Class A
Common Stock or the Class B Common Stock.
During the restriction period, the employee may not sell, transfer, pledge,
or assign the restricted stock. The certificate evidencing the restricted stock
will remain in the possession of the Corporation until the restrictions have
lapsed.
8
<PAGE> 11
Upon the termination of a participant's employment for any reason during
the restriction period, all shares of restricted stock either will vest or be
subject to forfeiture, in accordance with the terms and conditions of the
initial award. During the restriction period, the employee will have the right
to vote the restricted stock and to receive any cash dividends. At the time of
the award, the Committee may require the deferral and reinvestment of any cash
dividends in the form of additional shares of restricted stock. Stock dividends
will be treated as additional shares of restricted stock and will be subject to
the same terms and conditions as the initial grant.
4. Other Stock-Based Awards. The Committee may also grant other types of
awards that are valued, in whole or in part, by reference to or otherwise based
on the Corporation's Class A Common Stock or Class B Common Stock. These awards
may be granted alone or in conjunction with, or in tandem with, stock options,
SARs and restricted stock. Such awards will be made upon terms and conditions as
the Committee may in its discretion provide.
Change in Control Provisions. If there is a change in control or a
potential change in control, any SARs and stock options which are not then
exercisable will become fully exercisable and vested. Similarly, the
restrictions applicable to the restricted stock and other stock-based awards
will lapse and such shares and awards will be deemed fully vested. Stock
options, SARs, limited SARs, restricted stock and other stock-based awards,
will, unless otherwise determined by the Committee in its sole discretion, be
cashed-out on the basis of the change in control price described below.
The change in control price will be the highest per share price paid in any
transaction reported on the NASDAQ National Market System or such other exchange
or market as is the principal trading market for the Class A Common Stock or the
Class B Common Stock or paid, or offered to be paid in any bona fide transaction
relating to a potential actual change in control of the Corporation, at any time
during the immediately preceding 60 day period as defined by the Committee. A
change in control occurs if (i) any person becomes a beneficial owner directly
or indirectly of 35% or more of the total voting stock of the Corporation
(subject to certain exceptions), (ii) as a result of, or in connection with, any
cash tender or exchange offer, merger or other business combination or similar
transaction, less than a majority of the combined voting power of the then
outstanding securities of the Corporation are held in the aggregate by the
holders of the Corporation's securities entitled to vote generally in the
election of directors immediately prior to such transaction, or (iii) during any
period of two consecutive years, individuals which at the beginning of such
period constitute the Board of Directors cease for any reason to constitute at
least a majority thereof (unless the election of each new director was approved
by a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period). A potential change in control means
(a) approval by the shareholders of an agreement, which, if completed, would
constitute a change in control, or (b) the acquisition by a person of 5% or more
of the total voting stock of the Corporation and the adoption by the Board of
Directors that a potential change of control, as defined in the 1991 Plan has
occurred.
Amendments. The 1991 Plan may be amended by the Board of Directors, except
that the Board may not, without the approval of the Corporation's shareholders,
increase the number of shares available for distribution, change the pricing
rules applicable for stock options or stock purchase rights, change the class of
employees eligible to receive awards under the 1991 Plan, or extend the term
within which awards must be granted.
Term. No stock option, SAR, restricted stock award, deferred stock award,
stock purchase right or other stock-based award may be granted on or after May
2001.
9
<PAGE> 12
Adjustments. In the case of a stock split, stock dividend,
reclassification, recapitalization, merger, reorganization, or other change in
the Corporation's structure affecting the Common Stock, appropriate adjustments
will be made by the Committee, in its sole discretion, in the number of shares
reserved under the 1991 Plan and in the number of shares covered by options and
other awards then outstanding under the 1991 Plan and, where applicable, the
exercise price for awards under the 1991 Plan.
Federal Income Tax Aspects. The following is a brief summary of the
federal income tax aspects of awards made under the 1991 Plan based on the
federal income tax laws currently in effect. This summary is not intended to be
exhaustive, and does not describe state or local tax consequences.
1. Incentive Stock Options. No taxable income is realized by the
participant upon the grant or exercise of an ISO. If Common Stock is issued to a
participant pursuant to an exercise of an ISO, and if no disqualifying
disposition of the shares is made by the participant within two years of the
date of grant or within one year after the transfer of the shares to the
participant, then (i) upon the sale of the shares, any amount realized in excess
of the option price will be taxed to the participant as a long-term capital
gain, and any loss sustained will be a capital loss, and (ii) no deduction will
be allowed to the Corporation for federal income tax purposes. The exercise of
an ISO will give rise to an item of tax preference that may result in an
alternative minimum tax liability for the participant unless the participant
makes a qualifying disposition of the shares received upon exercise.
If Common Stock acquired upon exercise of an ISO is disposed of prior to
the expiration of the holding periods described above, then generally (i) the
participant will realize ordinary income in the year of disposition in an amount
equal to the excess, if any, of the fair market value of the shares at exercise
(or, if less, the amount realized on disposition of the shares) over the option
price paid for such shares, and (ii) the Corporation will be entitled to deduct
any such recognized amount. Any further gain or loss realized by a participant
will be taxed as short-term or long-term gain or loss, as the case may be, and
will not result in any deduction by the Corporation.
Subject to certain exceptions for disability or death, if an ISO is
exercised more than three months following termination of the participant's
employment, the option will generally be taxed as a non-qualifying stock option.
2. Non-Qualified Stock Options. Except as noted below, with respect to
non-qualified stock options: (i) no income is realized by the participant at the
time the option is granted; (ii) generally upon exercise of the option, the
participant realizes ordinary income in an amount equal to the difference
between the option price paid for the shares and the fair market value of the
shares on the date of exercise and the Corporation will be entitled to a tax
deduction of the same amount; and (iii) at disposition, any appreciation (or
depreciation) after date of exercise is treated either as short-term or
long-term capital gain or loss, depending upon the length of time that the
participant has held the shares. See "Restricted Stock" for the tax rules
applicable where the spread value of an option is settled in an award of
restricted stock.
3. Stock Appreciation Rights. No income will be realized by a participant
in connection with the grant of an SAR. When the SAR is exercised, the
participant will generally be required to include as taxable ordinary income in
the year of exercise, an amount equal to the amount of cash and the fair market
value of any shares received. The Corporation will be entitled to a deduction at
the time and in the amount included in the participant's income by reason of the
exercise. If the participant receives Common Stock upon exercise of an SAR, the
post-exercise appreciation or depreciation will be treated in the same manner
discussed above under "Non-Qualified Stock Options".
10
<PAGE> 13
4. Restricted Stock. A participant receiving restricted stock generally
will recognize ordinary income in the amount of the fair market value of the
restricted stock at the time the stock is no longer subject to forfeiture, less
the consideration paid for the stock. However, a participant may elect, under
Section 83(b) of the Internal Revenue Code of 1986, as amended (the "Code"),
within 30 days of the grant of the stock, to recognize taxable ordinary income
on the date of grant equal to the excess of the fair market value of the shares
of restricted stock (determined without regard to the restrictions) over the
purchase price of the restricted stock. Thereafter, if the shares are forfeited,
the participant will be entitled to a deduction, refund, or loss, for tax
purposes only, in an amount equal to the purchase price of the forfeited shares
regardless of whether the participant made a Section 83(b) election. With
respect to the sale of shares after the forfeiture period has expired, the
holding period to determine whether the participant has a long-term or
short-term capital gain or loss generally begins when the restriction period
expires and the tax basis for such shares will generally be based on the fair
market value of such shares on such date. However, if the participant makes an
election under Section 83(b), the holding period will commence on the date of
grant, the tax basis will be equal to the fair market value of the shares on
such date (determined without regard to the restrictions), and the Corporation
generally will be entitled to a deduction equal to the amount that is taxable as
ordinary income to the participant in the year that such income is taxable.
5. Dividends and Dividend Equivalents. Dividends paid on restricted stock
generally will be treated as compensation that is taxable as ordinary income to
the participant, and will be deductible by the Corporation. If, however, the
participant makes a Section 83(b) election, the dividends will be taxable as
ordinary income to the participant but will not be deductible by the
Corporation.
6. Other Stock-Based Awards. The federal income tax treatment of other
stock-based awards will depend on the nature of any such award and the
restrictions applicable to such award. Such an award may, depending on the
conditions applicable to the award, be taxable as an option, an award of
restricted stock, or in a manner not described herein.
11
<PAGE> 14
The following table provides information as to awards made under the 1991
Plan in fiscal year 1995. The dollar value is based on the closing price per
share of the Class B Common Stock on April 1, 1995, less the exercise price per
share under the award. No SARs, restricted stock or other stock-based awards
were granted during fiscal year 1995.
FISCAL YEAR 1995 PLAN BENEFITS
1991 EMPLOYEE STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
DOLLAR VALUE OF
ALL STOCK-BASED STOCK
AWARDS GRANTED OPTIONS
NAME AND POSITION ($)(1) GRANTED(2)
- ---------------------------------------------------------------- --------------- -----------
<S> <C> <C>
Don E. Marsh,
Chairman of the Board, President & Chief Executive Officer.... $ 30,000 24,000
C. Alan Marsh,
Vice Chairman of the Board & Senior Vice President, Corporate
Development................................................... $ 15,000 12,000
Ronald R. Walicki,
President & Chief Operating Officer, Supermarket Division..... $ 14,375 11,500
David M. Redden,
President & Chief Operating Officer, Village Pantry
Division...................................................... $ 13,125 10,500
William L. Marsh,
Vice President - General Manager, Property Management......... $ 9,375 7,500
All executive officers as a group (10 persons).................. $ 114,125 91,300
Non-executive officer employee group............................ $ 48,125 38,500
</TABLE>
- ---------------
(1) The dollar value of the options granted in fiscal year 1995 are calculated
by determining the difference between the fair market value of the Class B
Common Stock underlying the options at April 1, 1995 and the exercise
price.
(2) All options granted during fiscal year 1995 were to purchase Class B Common
Stock.
CONCLUSION AND RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors believes it is in the best interest of the
Corporation and its shareholders to adopt the Amendment to help attract and
retain key employees and to further the identity of their interests with those
of the Corporation's shareholders generally, and to conform the terms of the
1991 Plan to the requirements of performance-based compensation under OBRA.
The affirmative vote of the holders of a majority of the shares of Class A
Common Stock represented (in person or by proxy) at the Annual Meeting is
required to approve the Amendment. The Board of Directors unanimously recommends
a vote FOR Proposal 2.
12
<PAGE> 15
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
BENEFICIAL OWNERS
MANAGEMENT'S STOCK OWNERSHIP
The following table sets forth, as of June 5, 1995, certain information
regarding the beneficial ownership of the Corporation's Common Stock by all
directors and nominees, by the Named Officers, and by all directors and
executive officers as a group. Except as otherwise indicated, each person has
sole voting and investment power over the shares of Class A Common Stock and the
Class B Common Stock listed as beneficially owned by such person.
<TABLE>
<CAPTION>
NUMBER AND NATURE OF PERCENT OF CLASS
BENEFICIAL OWNERSHIP OUTSTANDING(1)
--------------------- ---------------------
NAME CLASS A CLASS B CLASS A CLASS B
- ------------------------------------------------ ------- ------- ------- -------
<S> <C> <C> <C> <C>
Jack E. Buckles................................. 2,125 3,125(2)
Charles R. Clark................................ 375 1,750(3)
Stephen M. Huse................................. 589 874
C. Alan Marsh................................... 223,705(4) 235,943(4) 5.8% 5.1%
Don E. Marsh.................................... 350,422(5) 358,384(5) 9.0% 7.8%
Garnet R. Marsh................................. 285,912(6) 333,760(6) 7.4% 7.3%
William L. Marsh................................ 340,899(7) 274,689(7) 8.8% 6.0%
James K. Risk................................... 225 1,475
K. Clay Smith................................... 500 2,500(2)
Ronald R. Walicki............................... 26,716(8) 37,050(8)
David M. Redden................................. 16,909(9) 24,333(9)
All directors and executive officers as a group
(16 persons).................................. 784,672(10) 863,081(10) 20.2% 18.8%
</TABLE>
- ---------------
(1) Percentages less than 1% of the outstanding shares of each class of Common
Stock are not shown.
(2) Includes options to acquire 1,500 shares of Class B Common Stock which are
currently exercisable.
(3) Includes options to acquire 750 shares of Class B Common Stock which are
currently exercisable.
(4) Includes 113,343 shares owned by one of the trusts described in Note (2)
above with respect to which C. Alan Marsh is a co-trustee. Also includes
options to acquire 20,525 shares of Class A Common Stock and 32,450 shares
of Class B Common Stock which are currently exercisable.
(5) Includes 5,466 shares of Class A Common Stock and 3,312 shares of Class B
Common Stock owned by members of immediate family, 9,878 shares of Class A
Common Stock and 1,140 shares of Class B Common Stock with respect to which
Don E. Marsh is trustee, and 113,343 shares owned by one of the trusts
described in Note (2) above with respect to which Don E. Marsh is a
co-trustee. Also includes options to acquire 35,250 shares of Class A
Common Stock and 57,000 shares of Class B Common Stock which are currently
exercisable.
(6) Includes 267,993 shares owned by three trusts of which Garnet R. Marsh is
either the life tenant or income beneficiary. Don E. Marsh, C. Alan Marsh
and William L. Marsh each has a one-third remainder interest in each of the
foregoing trusts, subject to the life estate of Garnet R. Marsh in two of
the trusts, and share voting and investment powers with respect to 113,343
shares in one of such trusts with Garnet R. Marsh as co-trustees. William
L. Marsh is a co-trustee of one of the other trusts. Also includes options
to acquire 1,500 shares of Class B Common Stock which are currently
exercisable.
13
<PAGE> 16
(7) Includes 1,000 shares of Class A Common Stock and 135 shares of Class B
Common Stock owned by members of immediate family and 253,743 shares owned
by two of the trusts described in Note (2) above with respect to which
William L. Marsh is a co-trustee. Also includes options to acquire 11,725
shares of Class A Common Stock and 18,925 shares of Class B Common Stock
which are currently exercisable.
(8) Includes options to acquire 17,350 shares of Class A Common Stock and
27,775 shares of Class B Common Stock which are currently exercisable.
(9) Includes options to acquire 8,325 shares of Class A Common Stock and 17,025
shares of Class B Common Stock which are currently exercisable.
(10) Includes options to acquire 101,600 shares of Class A Common Stock and
174,050 shares of Class B Common Stock which are currently exercisable.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the knowledge of the Corporation, as of June 5, 1995, other than Garnet
R. Marsh*, Don E. Marsh*, C. Alan Marsh* and William L. Marsh* whose security
ownership is listed in the preceding table, the only other beneficial owner of
more than 5% of the outstanding shares of Class A Common Stock is set forth in
the following table:
<TABLE>
<CAPTION>
PERCENT OF
CLASS A
NAME AND ADDRESS OF AMOUNT AND NATURE OF COMMON STOCK
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING
- ------------------------- -------------------- ------------
<S> <C> <C>
GREAT AMERICAN INSURANCE 706,844 shares(1) 18.2%
COMPANY,
c/o American Financial
Corporation
One East Fourth Street
Cincinnati, Ohio
</TABLE>
- ---------------
* Mailing address is 9800 Crosspoint Boulevard, Indianapolis, Indiana.
(1) As reflected in Schedule 13D, dated March 18, 1983, as amended by Amendment
No. 1 thereto, dated March 23, 1983, Amendment No. 2 thereto, dated July
30, 1986, Amendment No. 3 thereto, dated November 1, 1991, and Amendment
No. 4 thereto, dated January 14, 1992, filed by American Financial
Corporation and Carl H. Lindner with the Securities and Exchange
Commission.
14
<PAGE> 17
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation paid
or distributed by the Corporation for services in all capacities for fiscal
years ended March 27, 1993, April 2, 1994 and April 1, 1995, to the Chief
Executive Officer and each of the other four (4) most highly compensated
executive officers of the Corporation whose compensation exceeded $100,000 (the
"Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------------- --------------------- ALL OTHER
NAME AND PRINCIPAL FISCAL OTHER ANNUAL SECURITIES UNDERLYING COMPENSATION
POSITION YEAR SALARY($)(A) BONUS($)(B) COMPENSATION($)(C) OPTIONS/SARS (#) (D)(E)($)
- -------------------------- ------ ------------ ----------- ------------------ --------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Don E. Marsh,
Chairman of the Board; 1995 $525,000 $ 75,000 $8,529 Class B 24,000 $ 23,992
Director; President & 1994 $516,635 $ 0 $7,408 Class B 0 $ 23,247
Chief Executive Officer 1993 $485,000 $ 84,875 $6,539 Class B 0 $ 27,430
C. Alan Marsh,
Director; Vice Chairman
of the Board and Senior 1995 $253,846 $ 25,000 $5,042 Class B 12,000 $ 16,242
Vice President, 1994 $301,442 $ 0 $6,550 Class B 0 $ 17,973
Corporate Development 1993 $275,000 $ 48,125 $5,782 Class B 0 $ 25,926
Ronald R. Walicki,
President & Chief 1995 $250,000 $ 22,115 $6,343 Class B 11,500 $ 19,427
Operating Officer 1994 $254,808 $ 27,885 $7,361 Class B 0 $ 18,658
Supermarket Division 1993 $250,000 $ 122,089 $6,497 Class B 0 $ 24,714
David M. Redden,
President & Chief 1995 $250,000 $ 0 $2,628 Class B 10,500 $ 9,086
Operating Officer, 1994 $231,731 $ 0 $1,873 Class B 0 $ 13,101
Village Pantry Division 1993 $200,000 $ 35,000 $1,653 Class B 0 $ 10,771
William L. Marsh,
Director; Vice
President -- General 1995 $210,000 $ 0 $2,283 Class B 7,500 $ 44,434
Manager, Property 1994 $204,808 $ 0 $2,443 Class B 0 $ 7,301
Management 1993 $190,000 $ 28,500 $2,156 Class B 0 $ 7,238
</TABLE>
- ---------------
(a) Includes salary earned in 53rd week of fiscal year 1994.
(b) Performance-based awards under the Management Incentive Plan or, with
respect to D. E. Marsh, C. A. Marsh and R. R. Walicki, added incentive
payments in fiscal years 1994 and 1995 authorized by the Committee.
(c) Represents reimbursement for income taxes applicable to premiums paid under
the Executive Life Insurance Plan.
(d) Perquisites or other personal benefits, securities or property received did
not exceed the lesser of $50,000 or 10% of salary and bonus, except for W.
L. Marsh, who received property valued at $32,012 upon expiration of a
vehicle lease.
(e) Includes for fiscal year 1995: (i) Executive Life Insurance Plan premiums of
$13,812, $8,166, $10,272, $4,256 and $3,697, respectively; (ii) Supplemental
Long-Term Disability Plan premiums of $10,180, $5,503, $6,816, $2,376 and
$3,303, respectively; and (iii) contributions to the Corporation's 401(k)
plan in the amount of $2,573, $2,339, and $2,454 for C. A. Marsh, R. R.
Walicki and D. M. Redden, respectively.
15
<PAGE> 18
OPTIONS/SAR GRANTS TABLE
The following table provides information as to options granted to the Named
Officers during fiscal year 1995. No separate SARs were granted during fiscal
year 1995.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF
SECURITIES % OF TOTAL STOCK PRICE
UNDERLYING OPTIONS/SARS APPRECIATION FOR
OPTIONS/SARS GRANTED TO EXERCISE OR OPTION TERM
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION --------------------
NAME (#)(1) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ---------------------------------------- ------------ ------------ ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Don E. Marsh............................ 24,000 18.16% $9.50 6/6/04 $371,387 $591,373
C. Alan Marsh........................... 12,000 9.08% $9.50 6/6/04 $185,694 $295,687
Ronald R. Walicki....................... 11,500 8.71% $9.50 6/6/04 $177,957 $283,366
David M. Redden......................... 10,500 7.95% $9.50 6/6/04 $162,482 $258,726
William L. Marsh........................ 7,500 5.68% $9.50 6/6/04 $116,059 $184,804
</TABLE>
- ---------------
(1) Options were granted on June 6, 1994 and vest equally over 4 years. There
are no criteria for vesting other than continued employment through the
vesting dates and no other material terms of the options except as
disclosed in the Change of Control Provisions paragraph under the SUMMARY
OF MATERIAL PROVISIONS OF THE PLAN section of the discussion of Proposal 2.
OPTIONS/SAR EXERCISES AND FISCAL YEAR END VALUES TABLE
The following table sets forth information with respect to the exercise of
options and SARs during, and the unexercised options and SARs held at the end
of, the fiscal year ended April 1, 1995, by the Named Officers. No SARs were
granted during the fiscal year 1995. No options were exercised during fiscal
year 1995.
AGGREGATE OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES TABLE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
FISCAL YEAR END AT FISCAL YEAR END($)(A)
------------------------------- -------------------------------
NAME CLASS EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------- ----- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Don E. Marsh.................................. A 35,250 0 $94,500 $ 0
B 57,000 31,250 $77,700 $ 0
C. Alan Marsh................................. A 20,525 0 $58,219 $ 0
B 32,450 15,975 $47,869 $ 0
Ronald R. Walicki............................. A 17,350 0 $48,938 $ 0
B 27,775 14,975 $40,235 $ 0
David M. Redden............................... A 8,325 0 $22,780 $ 0
B 17,025 13,400 $18,731 $ 0
William L. Marsh.............................. A 11,725 0 $31,219 $ 0
B 18,925 9,900 $25,669 $ 0
</TABLE>
- ---------------
(a) Value of unexercised options based on fiscal year end per share price of
$11.25 for Class A Common Stock and $9.25 for Class B Common Stock.
16
<PAGE> 19
RETIREMENT PLANS
The following table illustrates the estimated annual pension benefits under
the Employees' Pension Plan of Marsh Supermarkets, Inc. and Subsidiaries (taking
Social Security benefits into account, but without regard to any survivorship
benefit to an eligible spouse) (the "Pension Plan") payable for a single
straight life annuity upon normal retirement age at the compensation levels and
years of benefit service shown, as well as under the supplemental retirement
plan which provides benefits that would otherwise be denied to participants by
reason of certain Code limitations on qualified plan benefits.
ESTIMATED RETIREMENT BENEFITS TABLE
<TABLE>
<CAPTION>
AVERAGE ANNUAL
COMPENSATION ESTIMATED ANNUAL RETIREMENT
DURING LAST BENEFITS AT VARIOUS YEARS OF BENEFIT SERVICE
4 YEARS OF --------------------------------------------
SERVICE 10 YEARS 20 YEARS 30 YEARS
- -------------- -------- -------- --------
<S> <C> <C> <C>
$200,000 $ 85,612 $ 85,612 $ 85,612
280,000 125,612 125,612 125,612
360,000 165,612 165,612 165,612
440,000 205,612 205,612 205,612
520,000 245,612 245,612 245,612
600,000 285,612 285,612 285,612
680,000 325,612 325,612 325,612
760,000 365,612 365,612 365,612
</TABLE>
Under the Pension Plan, monthly retirement benefits are computed on the
basis of highest average monthly earnings during any 48 consecutive months of
the last 120 months preceding retirement. The compensation covered by the
Pension Plan includes all monthly earnings, but excludes amounts paid under the
Management Incentive Plan or similar plans prior to January 1, 1985. Benefits
payable under the supplemental plan exclude the sum of benefits payable under
(i) the Pension Plan, (ii) Social Security, and (iii) any other qualified
defined benefit plan of any prior employer.
As of April 1, 1995, Don E. Marsh, C. Alan Marsh, Ronald R. Walicki, David
M. Redden and William L. Marsh had 37, 30, 31, 25 and 29 years of benefit
service, respectively. Assuming that the Named Officers continue in their
present positions at their current salaries until retirement at age 65, their
estimated annual pensions under the Pension Plan and the supplemental retirement
plan would be $269,175, $129,896, $144,601, $108,496 and $105,349, respectively.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Corporation has employment agreements with Don E. Marsh, C. Alan Marsh
and William L. Marsh, which were amended and restated as of December 31, 1992,
for terms of three years each, subject to termination or automatic extension as
provided in the agreements. Under the agreements, the base annual salaries for
Don E. Marsh, C. Alan Marsh and William L. Marsh are $440,000, $275,000 and
$165,000, respectively, subject to periodic review and increase, but not
decrease, by the Committee or the Board of Directors. The agreements also
provide that, in the event of a "Change of Control" of the Corporation and the
subsequent severance of employment, the employee shall receive severance pay in
an amount equal to three times the sum of the employee's highest base salary
during the last 12 months and the highest cash bonus during the last 24 months,
together with certain other limited employee benefits, as described in the
17
<PAGE> 20
agreements. In addition, the Corporation has approved severance agreements with
Ronald R. Walicki, David M. Redden and 11 other employees who, under such
severance agreements, are entitled to certain payments in the event of a "Change
of Control" of the Corporation and subsequent severance of employment as
described in those agreements. The term of each severance agreement will be for
three years, subject to earlier termination and automatic extension.
REPORT OF THE SALARY COMMITTEE OF THE BOARD OF DIRECTORS
Compensation Philosophy
The Salary Committee of the Board of Directors believes that the primary
objective of the Corporation's executive compensation policies should be:
- To attract and retain talented executives by providing compensation that
is, overall, competitive with the compensation provided to executives at
selected peer companies of comparable size and position in the retail or
other businesses, as appropriate, while maintaining compensation within
levels that are consistent with the Corporation's business plan, financial
objectives and operating performance;
- To provide appropriate incentives for executives to work toward the
achievement of the Corporation's annual budgetary targets established in
the Corporation's business plan; and
- To align more closely the interests of executives with those of
shareholders and the long-term interest of the Corporation by providing
long-term incentive compensation in the form of stock options, restricted
stock or other equity-based long-term incentive compensation.
The Committee believes that the Corporation's executive compensation
policies should be reviewed each year following the time when the financial
results of the Corporation's prior fiscal year become available. The policies
are reviewed in light of their consistency with the Corporation's financial
performance, its business plan and its position within the retail industry, as
well as the compensation policies of similar companies in the retail business.
The compensation of individual executives is reviewed at least annually by the
Committee in light of its executive compensation policies for that year.
In reviewing the comparability of the Corporation's executive compensation
policies, the Committee looks to executive compensation for other companies with
businesses reasonably related to the Corporation's business, but may also
consider factors which are unique to the Corporation. The Committee believes
that for the current year and for the foreseeable future, the companies included
in the retail industry are generally appropriate for comparison, particularly
after taking into account differences in size and factors which might affect
limited segments of such industry. The Committee will continue to review
compensation information from the performance peer group and may supplement such
information with data from other organizations in the industry or geographic
area in which the Corporation operates.
The Committee believes that, in addition to corporate performance and
specific business unit performance, it is appropriate to consider, in setting
and reviewing executive compensation, the personal contributions a particular
individual may make to the success of the corporate enterprise. This includes
quantitative measures against objectives as well as qualitative factors such as
leadership skills, planning initiatives, development and morale skills, public
affairs and civic involvement. No relative weight is assigned to these
qualitative factors, which are applied subjectively by the Committee.
The Committee believes that the above philosophy furthers the shareholders'
interest since a significant part of executive compensation is based on
obtaining results that are beneficial to all shareholders. At the
18
<PAGE> 21
same time, the Committee believes the philosophy encourages responsible
management of the Corporation in the short term. The Committee regularly reviews
its philosophy so that the overall philosophy is as effective as practicable in
furthering shareholder interest. The Committee bases its review on the
experience of its members, on information requested from management, and on
discussions with and information compiled by independent compensation
consultants.
COMPENSATION OF EXECUTIVES OTHER THAN THE CHIEF EXECUTIVE OFFICER
The Committee believes that the compensation of executive officers (other
than the Chief Executive Officer) for fiscal year 1995 should be comprised of
base compensation, annual incentive compensation and long-term incentive
compensation and has applied the policies described herein as set forth below.
Base Compensation. Base compensation for executive officers of the
Corporation is currently set at approximately the fiftieth to seventy-fifth
percentile of the base compensation of executive officers with similar
responsibilities at other selected peer group companies included in the
performance graph. These compensation levels have enabled the Corporation
to attract and retain talented executives while keeping compensation in
line with the financial objectives of the Corporation. Accordingly, the
Committee believes that the current policy concerning base compensation
should be continued. In determining whether an increase in base
compensation was appropriate for fiscal year 1995, the Committee reviewed
the salary ranges recommended by management and consulted with the Chief
Executive Officer. The Committee subjectively determined on the basis of
discussions with the Chief Executive Officer and its experience in business
generally and with the Corporation specifically the levels of base
compensation it deemed appropriate for each executive officer after taking
into consideration their respective contributions and external
non-controllable market conditions. As a result of this analysis, the base
salaries of executive officers (other than the Chief Executive Officer)
remained the same during fiscal year 1995, except for a 5% increase in
connection with a promotion.
Annual Incentive Compensation. The Committee believes that
compensation should be in part directly linked to operating performance. To
achieve this link with regard to short-term performance, the Committee has
relied on cash bonuses. Generally, bonuses have been awarded under the
Management Incentive Plan under which cash awards equal to a percentage of
a fiscal year base salary can be granted to officers and key employees
based on the extent to which actual earnings of the Corporation during a
fiscal year are 80% or more of the earnings target approved by the
Committee for such fiscal year. The amount of any award varies with level
of responsibility and the percentage of actual earnings to target earnings,
with a maximum bonus predicated on 150% of the target bonus percentage for
each responsibility level. The Committee also has awarded periodically
discretionary bonuses to officers and other employees based on
recommendations from management and consultations with the Chief Executive
Officer. Based on discussions with the Chief Executive Officer and the
members' experience in business generally, the Committee determined
subjectively the amount of each such bonus after taking into consideration
the employee's past and potential for future contributions to the
Corporation. During fiscal year 1995, no bonuses were awarded under the
Management Incentive Plan, but discretionary bonuses aggregating $47,115
were awarded to executive officers other than the Chief Executive Officer.
Long-Term Incentive Compensation. Stock options are currently the
principal vehicle for payment of long-term incentive compensation. The
Committee believes that an integral part of the Corporation's executive
compensation policies is equity-based compensation plans which encourage
and create ownership of the Corporation's stock by its executives, thereby
aligning executives' long-term interests with those of the shareholders.
These long-term incentive programs are principally reflected in the Marsh
19
<PAGE> 22
Equity Ownership Plan, the 1987 Stock Option Plan and the 1991 Plan. The
Committee believes that significant stock ownership is a major incentive in
building shareholder value and reviews awards of options with that goal in
mind.
The Corporation has no set policy as to when stock options should be
awarded, although historically stock options generally have been awarded
during or near the period between the end of the fiscal year and the next
succeeding annual meeting of shareholders. The Committee believes that the
Corporation should make it a part of its regular executive compensation
policies to grant periodic awards of stock options to executive officers
and other key employees as part of the compensation package that is
reviewed annually for each executive officer. This grant should be made
within guidelines established at the time of the annual review. The
Committee's policy is that the material terms of stock options should not
be amended after grant and that the Committee should take into account the
number of shares and options held by each executive officer. During fiscal
1995, the Committee authorized grants under the 1991 Plan to officers and
other key employees, other than the Chief Executive Officer, of options to
purchase an aggregate of 104,300 shares of Class B Common Stock at an
exercise price of $9.50 per share, the per share closing price on the date
of the grants.
The Committee believes that greater reliance can be placed on
long-term incentive compensation, with a view to setting the overall values
of the Corporation's compensation package for executive officers at
approximately the 50th to 75th percentile of total compensation packages
for executives of the selected peer group companies if the Corporation
achieves the annual earnings target, with maximum total compensation at the
75th to 90th percentile. The long-term awards may be composed of vehicles
in addition to stock options, such as restricted stock, phantom stock, or
stock appreciation rights, still keeping within the target and maximum
total compensation levels.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Committee believes that the compensation package for the Chief
Executive Officer is consistent with its general policies concerning executive
compensation and is appropriate in light of the Corporation's financial
objectives and performance. Awards of long-term incentive compensation to the
Chief Executive Officer are considered concurrently with awards to other
executive officers and follow the same general policies as such other long-term
incentive awards.
1995 Compensation of the Chief Executive Officer. In setting the salary
and incentive compensation levels of the Chief Executive Officer for fiscal year
1995, the Committee reviewed his performance in moving the Corporation towards
its desired strategic direction. Although these strategic moves in conjunction
with competitive conditions have caused earnings dilution in the short term, the
Committee considered these strategic moves to be in the best long term interests
of the Corporation and its shareholders. Based on these factors, and considering
the leadership skills and individual efforts of the Chief Executive Officer in
guiding overall performance in light of significant past and future competitive
changes, as well as recognizing his continuing active leadership role in local,
state, and industry matters, the Committee awarded the Chief Executive Officer a
cash bonus of $75,000 and options for 24,000 shares of Class B Common Stock at
an exercise price of $9.50 per share, which the Committee determined on a
subjective basis to be appropriate considering the contributions of the Chief
Executive Officer and the performance of the Corporation. The Committee did not
award any increase in base compensation.
20
<PAGE> 23
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Code, enacted as a part of OBRA, generally disallows
a tax deduction to public companies for compensation paid to any executive
officer in excess of $1,000,000 annually. Under proposed IRS regulations,
qualifying performance-based compensation is excluded from the calculation of
the deduction limit if certain requirements are met. Because the regulations
have not been finalized and none of the Corporation's executive officers are
compensated in excess of the deduction limitation, the Committee has not
determined whether it will approve any compensation arrangements that will cause
the deduction limit to be exceeded in the future.
Stephen M. Huse, Chairman
Jack E. Buckles
James K. Risk, III
21
<PAGE> 24
PERFORMANCE GRAPH
MARSH SUPERMARKETS, INC., RUSSELL 2000, AND PEER GROUP
COMPARISON OF TOTAL RETURN TO SHAREHOLDERS(1)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD MARSH SUPERMARKETS, INC. MARSH SUPERMARKETS, INC. RUSSELL PEER
(FISCAL YEAR COVERED) (CLASS A)(3) (CLASS B)(3) 2000(3) GROUP(2)(3)
<S> <C> <C> <C> <C>
1990 100 100 100 100
1991 112 112 124 110
1992 96 98 118 121
1993 78 70 112 137
1994 58 63 102 136
1995 62 58 109 151
</TABLE>
(1) Assumes $100 investment on March 31, 1990 in Marsh Supermarkets, Inc.,
Russell 2000, and Peer Group. Total returns are calculated on dividends
reinvested basis. Indices are weighted by market capitalization. Total
returns for Marsh Supermarkets, Inc. include returns on Marsh Supermarkets,
Inc. Common Stock prior to the recapitalization in May 1991 creating the
Class A Common Stock and Class B Common Stock.
(2) Peer Group comprised of the following companies:
<TABLE>
<S> <C>
Bruno's Inc. Quality Food Centers Inc.
Casey's General Stores, Inc. Riser Foods, Inc. (Class A)
Delchamps, Inc. Seaway Food Town, Inc.
Eagle Food Centers, Inc. Smith's Food and Drug Centers, Inc.
Foodarama Supermarkets, Inc. Stop and Shop Companies, Inc.*
Giant Foods, Inc. Uni-Marts, Inc. (Class A)
Hannaford Bros. Company Village Supermarkets, Inc.
Ingles Markets Inc. The Vons Companies, Inc.
The Penn Traffic Company Weis Markets, Inc.
</TABLE>
* Five years of data were not available. Includes three years of data for
Stop and Shop.
(3) Data for Marsh Supermarkets, Inc., Peer Group and Russell 2000 was provided
by D.F. King & Co., Inc.
22
<PAGE> 25
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers, directors, and persons who own more than 10% of the outstanding shares
of a registered class of a corporation's equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and to furnish the corporation with copies of all Section 16(a) forms they file.
Based solely on a review of the Forms 3, 4 and 5 and amendments thereto and
certain written representations furnished to the Corporation, the Corporation
believes that, except for the Form 5 of P. Lawrence Butt for fiscal year 1994,
which was filed four days late with respect to shares actuarially allocated
under the Marsh Equity Ownership Plan at the end of the immediately preceding
calendar year, its executive officers, directors, and greater than 10%
beneficial owners complied with all applicable filing requirements of Section
16(a) during fiscal year 1995.
INDEPENDENT AUDITORS
Upon recommendation of the Audit Committee, the firm of Ernst & Young LLP,
which audited the Corporation's financial statements for the past fiscal year,
has been appointed by the Board of Directors as the Corporation's independent
auditors to audit the consolidated financial statements for the fiscal year to
end March 30, 1996. A representative of Ernst & Young LLP will be present at the
Annual Meeting, and will have an opportunity to make a statement and respond to
appropriate questions.
OTHER MATTERS
The Board of Directors is not aware presently of any matters to be
presented at the Annual Meeting other than the election of directors and the
proposal to amend the 1991 Plan. If, however, other matters are properly brought
before the Annual Meeting, the enclosed proxy gives discretionary authority to
the persons named therein to act in accordance with their best judgment on such
matters. Shareholder proposals, intended to be included in the proxy material
relating to the Annual Meeting of Shareholders to be held August 6, 1996, must
be received by the Corporation not later than February 23, 1996. Such proposals
should be addressed to the Corporate Secretary.
By order of the Board of Directors
MARSH SUPERMARKETS, INC.
By: P. Lawrence Butt
---------------------------
P. Lawrence Butt, Secretary
Indianapolis, Indiana
June 22, 1995
23
<PAGE> 26
EXHIBIT A
AMENDMENT
TO
1991 EMPLOYEE STOCK INCENTIVE PLAN
The 1991 Employee Stock Incentive Plan, as amended and restated through
August 4, 1992 (the "1991 Plan"), is hereby amended as follows:
1. The first paragraph of Section 3 of the 1991 Plan is hereby amended to
read as follows in its entirety:
"The aggregate number of shares of Stock reserved and available for
distribution under the Plan shall not exceed 750,000 shares. Any number of
Class A Common Stock or Class B Common Stock may be awarded so long as the
total shares of Stock awarded does not exceed 750,000 shares.
Notwithstanding the foregoing, after August 1, 1995, no officer or key
employee shall be eligible to receive awards relative to shares of Stock
which exceed 10% of the shares reserved for issuance under the Plan in any
fiscal year or 20% of the shares reserved for issuance under the Plan in
the aggregate granted after August 1, 1995."
2. The third paragraph of Section 3 of the 1991 Plan is hereby amended by
adding the following sentence to the end of such paragraph:
"The maximum number of shares that may be awarded to any participant
under this Section 3 of the Plan will be adjusted in the same manner as the
number of shares subject to outstanding Options."
3. This amendment shall become effective upon its approval by the
shareholders of the Corporation.
<PAGE> 27
APPENDIX A
MARSH SUPERMARKETS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James K. Risk, III, William L. Marsh and
Stephen M. Huse, or any one of them, as proxies, each with the power of
substitution, and authorizes them to represent the undersigned, and to vote as
indicated hereon all shares of Class A Common Stock of Marsh Supermarkets, Inc.
held of record by the undersigned on June 5, 1995, at the Annual Meeting of
Shareholders to be held August 1, 1995, and at any adjournment thereof.
1. The election of three (3) directors. NOMINEES ARE: Jack E. Buckles, K.
Clay Smith and Garnet R. Marsh for terms of three years each.
<TABLE>
<CAPTION>
<S> <C> <C>
/ / FOR ALL NOMINEES LISTED ABOVE / / WITHHOLD AUTHORITY TO VOTE
EXCEPT THOSE WHOSE NAMES ARE ALL NOMINEES
WRITTEN BELOW
</TABLE>
- -------------------------------------------------------
2. To approve an amendment to the 1991 Employee Stock Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion with respect to such other business as may properly
come before the meeting.
(PLEASE DATE AND SIGN ON REVERSE SIDE AND RETURN THIS PROXY IN THE ACCOMPANYING
ENVELOPE PROMPTLY)
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR
DIRECTOR AND FOR THE PROPOSAL TO APPROVE THE AMENDMENT TO THE 1991 EMPLOYEE
STOCK INCENTIVE PLAN.
Receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement,
dated June 22, 1995, and the 1995 Annual Report to Shareholders is hereby
acknowledged.
Please sign exactly as your name(s) appear hereon. If shares are owned
jointly, all owners should sign. If signing as attorney, executor,
administrator, trustee, guardian, corporate officer or other representative
capacity, please indicate your full title as such.
Dated:___________________________, 1995
Signature______________________________
Signature______________________________
<PAGE> 28
APPENDIX B
MARSH SUPERMARKETS, INC.
MARSH EQUITY OWNERSHIP PLAN
THIS INSTRUCTION CARD IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby authorizes the Trustee of the Marsh Equity Ownership
Plan ("Plan") to appoint James K. Risk, III, William L. Marsh and Stephen M.
Huse, or any one of them, as attorneys-in-fact and proxies, each with the power
of substitution, and authorizes such persons to represent the undersigned, and
to vote as indicated hereon all shares of Class A Common Stock of Marsh
Supermarkets, Inc. credited to the undersigned's account in the Plan as of June
5, 1995, at the Annual Meeting of Shareholders to be held August 1, 1995, and at
any adjournment thereof.
1. The election of three (3) directors. NOMINEES ARE: Jack E. Buckles, K.
Clay Smith and Garnet R. Marsh for terms of three years each.
<TABLE>
<CAPTION>
<S> <C> <C>
/ / FOR ALL NOMINEES LISTED ABOVE / / WITHHOLD AUTHORITY TO VOTE
EXCEPT THOSE WHOSE NAMES ARE ALL NOMINEES
WRITTEN BELOW
</TABLE>
- -------------------------------------------------------
2. To approve an amendment to the 1991 Employee Stock Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion with respect to such other business as may properly
come before the meeting.
(PLEASE DATE AND SIGN ON REVERSE SIDE AND RETURN THIS INSTRUCTION CARD IN THE
ACCOMPANYING ENVELOPE PROMPTLY)
UNLESS OTHERWISE SPECIFIED, THIS INSTRUCTION CARD WILL BE VOTED FOR ALL
NOMINEES FOR DIRECTOR AND FOR THE PROPOSAL TO APPROVE THE AMENDMENT TO THE 1991
EMPLOYEE STOCK INCENTIVE PLAN.
Receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement,
dated June 22, 1995, and the 1995 Annual Report to Shareholders is hereby
acknowledged.
Please sign exactly as your name(s) appear below.
Dated:_____________________________, 1995
Signature________________________________
Signature________________________________
<PAGE> 29
APPENDIX C
MARSH SUPERMARKETS, INC.
401-K PLAN
THIS INSTRUCTION CARD IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby authorizes the Trustee of the Marsh Supermarkets,
Inc. 401-K Plan ("Plan") to appoint James K. Risk, III, William L. Marsh and
Stephen M. Huse, or any one of them, as attorneys-in-fact and proxies, each with
the power of substitution, and authorizes such persons to represent the
undersigned, and to vote as indicated hereon all shares of Class A Common Stock
of Marsh Supermarkets, Inc. credited to the undersigned's account in the Plan as
of June 5, 1995, at the Annual Meeting of Shareholders to be held August 1,
1995, and at any adjournment thereof.
1. The election of three (3) directors. NOMINEES ARE: Jack E. Buckles, K.
Clay Smith and Garnet R. Marsh for terms of three years each.
<TABLE>
<CAPTION>
<S> <C> <C>
/ / FOR ALL NOMINEES LISTED ABOVE / / WITHHOLD AUTHORITY TO VOTE
EXCEPT THOSE WHOSE NAMES ARE ALL NOMINEES
WRITTEN BELOW
</TABLE>
- -------------------------------------------------------
2. To approve an amendment to the 1991 Employee Stock Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion with respect to such other business as may properly
come before the meeting.
(PLEASE DATE AND SIGN ON REVERSE SIDE AND RETURN THIS INSTRUCTION CARD IN THE
ACCOMPANYING ENVELOPE PROMPTLY)
UNLESS OTHERWISE SPECIFIED, THIS INSTRUCTION CARD WILL BE VOTED FOR ALL
NOMINEES FOR DIRECTOR AND FOR THE PROPOSAL TO APPROVE THE AMENDMENT TO THE 1991
EMPLOYEE STOCK INCENTIVE PLAN.
Receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement,
dated June 22, 1995, and the 1995 Annual Report to Shareholders is hereby
acknowledged.
Please sign exactly as your name(s) appear below.
Dated:_______________________, 1995
Signature__________________________
Signature__________________________
