<PAGE> 1
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 [ ]
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):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
(MARSH LOGO)
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 3, 1999
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 3, 1999, at 10:00 A.M. (Eastern Standard Time), for the
following purposes:
1. To elect four directors for terms of three years each and until
their successors are duly elected and qualified;
2. To consider and approve the 1999 Outside Directors' Stock Option
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 Tuesday, June 1,
1999, 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: /s/ P. LAWRENCE BUTT
-----------------------------------
P. Lawrence Butt, Secretary
Indianapolis, Indiana
June 24, 1999
<PAGE> 3
MARSH SUPERMARKETS, INC.
9800 CROSSPOINT BOULEVARD
INDIANAPOLIS, INDIANA 46256-3350
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
AUGUST 3, 1999
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 24,
1999.
VOTING SECURITIES
At June 1, 1999, the Corporation had outstanding 4,010,108 shares of Class
A Common Stock and 4,510,478 shares of Class B Common Stock (collectively, the
"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 June 1, 1999 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
"withhold authority" with respect to the election of directors 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. Shares represented by proxies which are marked "abstain"
with respect to proposal 2 will be considered only for the purpose of
determining the presence of a quorum, but will neither be counted nor have any
effect on the vote with respect to such proposal. 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 matter 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
<PAGE> 4
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.
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 of the Common Stock.
PROPOSAL 1: ELECTION OF DIRECTORS
The Corporation's Board of Directors consists of ten members, each of whom
is elected to serve for a term of three years. Four directors will be elected at
the Annual Meeting to serve until the Annual Shareholders Meeting in 2002 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 four
nominees for the Board of Directors named below. All such nominees are members
of the present Board of Directors and, except for P. Lawrence Butt, were elected
at the 1996 Annual Shareholders Meeting. Mr. Butt was elected by the Board of
Directors on May 25, 1999 to fill the vacancy created by the retirement of C.
Alan Marsh as a director of the Corporation. 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.
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 2002 ANNUAL
MEETING:
CHARLES R. CLARK, 65........................................ 1978
Partner, Beasley Gilkison Retherford Buckles & Clark,
Attorneys at Law, Muncie, Indiana. See Note (1).
JAMES K. RISK, III, 57...................................... 1986
President and Chief Executive Officer, Kirby Risk
Corporation, Lafayette, Indiana (a wholesale electrical
equipment distributor); director, Bindley-Western
Industries, Inc., Indianapolis, Indiana (a wholesale
pharmaceutical distributor); director, Lafayette Life
Insurance Company, Lafayette, Indiana (an insurance
company). See Note (3).
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
NAME, AGE, PRINCIPAL OCCUPATION DIRECTOR
AND BUSINESS EXPERIENCE SINCE
------------------------------- --------
<S> <C>
J. MICHAEL BLAKLEY, 58...................................... 1996
President and Chief Executive Officer, The Blakley
Corporation, Indianapolis, Indiana (a full service
flooring company). See Note (3).
P. LAWRENCE BUTT, 57........................................ 1999
Senior Vice President, Counsel and Secretary of the
Corporation.
INCUMBENT DIRECTORS ELECTED TO SERVE UNTIL THE 2000
ANNUAL MEETING:
DON E. MARSH, 61............................................ 1959
Chairman of the Board, President and Chief Executive
Officer of the Corporation; son of Garnet R. Marsh and
brother of William L. Marsh; director, Indiana Energy
Incorporated, Indianapolis, Indiana (a gas utility
company); director, National City Bank, Indiana,
Indianapolis, Indiana. See Notes (1) and (2).
WILLIAM L. MARSH, 55........................................ 1991
Senior Vice President-Property Management, of the
Corporation; son of Garnet R. Marsh and brother of Don E.
Marsh.
STEPHEN M. HUSE, 56......................................... 1985
President and Chief Executive Officer, Huse Food Group,
Incorporated, Bloomington, Indiana (a retail restaurant
management company); director, KeyBank, Indiana,
Indianapolis, Indiana; director, Signature Inn, Inc.,
Indianapolis, Indiana (a regional motel chain). See Notes
(2), (3) and (4).
INCUMBENT DIRECTORS ELECTED TO SERVE UNTIL THE 2001
ANNUAL MEETING:
GARNET R. MARSH, 88......................................... 1977
Widow of Ermal W. Marsh, founder of the Corporation;
mother of Don E. Marsh and William L. Marsh.
CATHERINE A. LANGHAM, 41.................................... 1998
President, Future Enterprises, Inc., Indianapolis, Indiana
(an expedited transport services, warehousing and
distribution company). See Note (1).
K. CLAY SMITH, 61........................................... 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), (2) and (4).
</TABLE>
- ---------------
(1) Member of Audit Committee.
(2) Member of Executive Committee.
(3) Member of Compensation Committee.
(4) Member of Stock Award Committee.
3
<PAGE> 6
COMMITTEES OF THE BOARD
The Board of Directors has standing Executive, Audit, Compensation and
Stock Award committees, membership in which is indicated in the preceding table,
but does not have a nominating committee. During fiscal year 1999, the Board of
Directors held four meetings, the Audit Committee held two meetings, the
Compensation Committee held one meeting, and the Stock Award Committee held one
meeting. The Executive Committee did not hold any 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 Compensation Committee, composed entirely of directors who are not
employees of the Corporation, reviews and approves the compensation policies and
actions affecting management's employment and severance arrangements, benefits
awarded under certain of the Corporation's incentive plans, such as the
Management Incentive Plan and the 1991 Employee Stock Incentive Plan, and
determines participation in the Supplemental Retirement Plan.
The Stock Award Committee, composed entirely of independent non-employee
directors, reviews and approves awards under the Marsh Supermarkets, Inc. 1998
Stock Incentive Plan.
COMPENSATION OF DIRECTORS
Each member of the Board of Directors who was not an employee of the
Corporation or any subsidiary or affiliated company in which the Corporation has
a direct or indirect ownership interest (an "Outside Director") received an
annual retainer of $30,000 during the fiscal year. The Chairman of each standing
committee of the Board of Directors who was an Outside Director also received an
additional annual 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 or may use all or a portion of such
fees to purchase at market value shares of Class B Common Stock of the
Corporation pursuant to the Outside Directors' Stock Plan. In fiscal year 1999,
fees paid to Outside Directors for services in all capacities aggregated
$215,000.
Each Outside Director who was serving on the Board of Directors on August
4, 1992, or who is elected to the Board of Directors thereafter, is entitled to
a one-time grant of 500 shares of restricted Class B Common Stock of the
Corporation under the 1992 Stock Option Plan for Outside Directors (the "1992
Stock Option Plan") approved by the shareholders at the 1992 Annual 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 at an exercise price equal to
the closing price of the Class B Common Stock on the date of grant upon each
election of an Outside Director to the Board of Directors during the term of the
1992 Stock Option Plan, which expires in 2002.
Each Outside Director has the opportunity to use all or any portion of the
fees paid by the Corporation for services as a director to purchase shares of
Class B Common Stock in lieu of cash payment of such fees under the provisions
of the Outside Directors' Stock Plan approved by the shareholders at the 1998
Annual Meeting. In fiscal year 1999, Outside Directors acquired an aggregate of
4,266 shares of Class B Common Stock pursuant to the Outside Directors' Stock
Plan in lieu of cash payment of fees.
4
<PAGE> 7
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 options or restricted stock
under the 1992 Stock Option Plan or, if approved by the shareholders at the
Annual Meeting, under the 1999 Outside Directors' Stock Option Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal year 1999, Don E. Marsh, a director and President and Chief
Executive Officer of the Corporation, was indebted to the Corporation in the
amount of $301,800 for the principal amount of, and accrued interest at the rate
of 6% per annum on, a loan due May 28, 2000, which the Compensation 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 May 31, 1993. Mr. Marsh also was indebted to the
Corporation for up to $205,837 during fiscal year 1999 for expenses incurred in
connection with business travel.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. J. Michael Blakley is a director and President and Chief Executive
Officer of The Blakley Corporation, a full service flooring company, which, as a
subcontractor of the general contractors which constructed two supermarket
facilities in fiscal year 1999, indirectly supplied $568,613 of flooring
material to the Corporation. In fiscal year 1999, The Blakley Corporation also
supplied in the ordinary course of business $17,366 of flooring materials to the
Corporation upon terms which the Corporation believes were no less favorable
than the Corporation could have obtained from unaffiliated third parties.
Mr. James K. Risk, III, is a director and President and Chief Executive
Officer of Kirby Risk Corporation, a wholesale electrical equipment distributor
from which the Corporation purchased in the ordinary course of business $344,086
of electrical supplies during fiscal year 1999 upon terms which the Corporation
believes were no less favorable than it could have obtained from unaffiliated
third parties.
PROPOSAL 2: TO APPROVE THE 1999 OUTSIDE DIRECTORS'
STOCK OPTION PLAN
The Board of Directors believes that the interests of the Corporation and
its shareholders are advanced by attracting and retaining the highest quality of
experienced persons as non-employee directors and aligning their interests more
closely with those of the shareholders. Accordingly, the Board of Directors
adopted the 1999 Outside Directors' Stock Option Plan (the "1999 Plan").
The full text of the 1999 Plan is attached as Exhibit A to this Proxy
Statement. If approved by the shareholders at the Annual Meeting, the 1999 Plan
will become effective as of June 1, 1999 and will terminate ten years after its
effective date.
SUMMARY OF MATERIAL PROVISIONS OF THE DIRECTORS' PLAN
The following is a summary of the material provisions of the 1999 Plan as
proposed:
Shares. The aggregate number of shares reserved and available for
distribution under the 1999 Plan shall not exceed 150,000 shares of the
Corporation's Common Stock, a number equal to less than 1.8% of the
Corporation's Common Stock outstanding as of June 1, 1999. The shares
issued pursuant to the 1999 Plan may be composed, in whole or in part, of
authorized but unissued shares or treasury shares
5
<PAGE> 8
of Common Stock. If shares subject to an option or restriction under the
1999 Plan cease to be subject to such option or restriction, or if shares
awarded under the 1999 Plan are forfeited or otherwise terminated, such
shares will again be available for future distribution.
Participation. Awards under the 1999 Plan shall be made only to
Outside Directors. The Corporation believes that seven persons will be
eligible to participate in the 1999 Plan during fiscal year 2000. The 1999
Plan limits the number of shares of restricted stock which may be granted
to 40% of the shares authorized for the 1999 Plan.
Administration. The 1999 Plan will be administered by the Board of
Directors (the "Board"). See the complete text of the 1999 Plan attached as
Exhibit A for a full description of the powers of the Board in the
administration of the 1999 Plan.
Awards Under the 1999 Plan. The Board will have the authority to
grant stock options and restricted stock under the 1999 Plan.
1. Stock Options. Non-qualified stock options may be granted for
such number of shares as the Board may determine and may be granted
alone, in conjunction with, or in tandem with, other awards under the
1999 Plan and/or cash awards outside the 1999 Plan.
A stock option will be exercisable at such time or times and
subject to such terms and conditions as the Board may determine and over
a term to be determined by the Committee, which term will be no more
than ten years after the date of grant. The option price for any
non-qualified stock option may not be less than 85% of the fair market
value as of the date of grant. Payment of the option price may be in
cash, or may also be made in the form of restricted stock.
Upon termination of an Outside Director's membership on the Board
of Directors for cause, such director's stock options will terminate. If
the director's membership on the Board is involuntarily terminated
without cause, unless determined otherwise by the Board at or after the
date of grant, stock options will be exercisable for three months
following termination or until the end of the option period, whichever
is shorter. On the disability or retirement of the Outside Director,
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. Upon the death of an Outside Director, the director's stock
options will be exercisable by the deceased director'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
Board, only options which are exercisable on the date of termination,
death, disability or retirement may be subsequently exercised.
The stock options may not be transferred without the prior written
consent of the Board other than (i) transfers by the optionee to a
member of his or her immediate family or a trust for the benefit of the
optionee or a member of his or her immediate family, or (ii) transfers
by will or the laws of descent and distribution.
2. Restricted Stock. Restricted stock may be granted alone, in
conjunction with, or in tandem with, other awards under the 1999 Plan
and/or cash awards outside of the 1999 Plan and may be conditioned upon
the attainment of specific performance goals or such other factors as
the Board may determine. The provisions attendant to a grant of
restricted stock may vary from participant to participant.
6
<PAGE> 9
In making an award of restricted stock, the Board will determine
the purchase price and periods during which the stock is subject to
forfeiture.
During the restriction period, the Outside Director 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.
Upon the termination of an Outside Director's membership on the
Board for any reason during the restriction period, all restricted stock
either will vest or be subject to forfeiture, in accordance with the
terms and conditions established by the Board at or after grant. During
the restriction period, the director will have the right to vote the
restricted stock and to receive any cash dividends. At the time of
award, the Board 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.
At the time of the award of the restricted stock, the Board may
provide for other awards, payable either in stock or cash, to be made to
the Outside Director so as to ensure payment of a minimum value at the
time the restrictions lapse on the restricted stock, subject to such
performance, future service, deferral and/or other terms and conditions
as the Board may specify.
Amendment. The 1999 Plan may be amended by the Board of Directors,
but no such amendment may become effective without shareholder approval if
such amendment would increase the maximum number of shares issuable under
the 1999 Plan or if shareholder approval is required by law, rule or
regulation, or without the participant's consent if such amendment would
impair the rights of an Outside Director with respect to any options or
restricted stock theretofore issued to such Outside Director.
CONCLUSION AND RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors believes that it is in the best interests of the
Corporation and its shareholders to adopt the 1999 Plan to help to attract and
retain Outside Directors and to align further the interests of such directors
with those of the shareholders generally.
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 1999 Plan. The Board of Directors unanimously recommends
a vote FOR Proposal 2.
7
<PAGE> 10
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
BENEFICIAL OWNERS
MANAGEMENT'S STOCK OWNERSHIP
The following table sets forth, as of June 1, 1999, certain information
regarding the beneficial ownership of Common Stock by all directors and
nominees, by the Named Officers (as defined herein), 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>
J. Michael Blakley.............................. 1,500 4,473(2)
P. Lawrence Butt................................ 56,205(3) 22,371(3) 1.4%
Charles R. Clark................................ 375 4,318(4)
Stephen M. Huse................................. 1,089(5) 4,190(5)
Catherine A. Langham............................ 0 980
Don E. Marsh.................................... 466,304(6) 359,942(6) 11.8% 8.0%
Garnet R. Marsh................................. 269,262(7) 266,903(7) 6.8% 5.9%
William L. Marsh................................ 312,812(8) 277,917(8) 7.9% 6.1%
James K. Risk, III.............................. 2,225 4,639(9)
K. Clay Smith................................... 1,500(10) 4,914(10)
Douglas W. Dougherty............................ 44,712(11) 9,692(11) 1.1%
Frank J. Bryja.................................. 44,311(12) 23,164(12) 1.1%
Robert J. Ahlstrom.............................. 0 0
All directors and executive officers as a group
(17 persons).................................. 855,235(13) 590,746(13) 21.7% 13.1%
</TABLE>
- ---------------
(1) Percentages less than 1% of the outstanding shares of either 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 18,100 shares of Class A Common Stock and
15,300 shares of Class B Common Stock which are currently exercisable.
(4) Includes 125 shares of Class B Common Stock owned by member of immediate
family and options to acquire 3,000 shares of Class B Common Stock which
are currently exercisable.
(5) Includes 93 shares of Class A and Class B Common Stock owned by a
corporation in which Mr. Huse has an ownership interest and options to
acquire 2,250 shares of Class B Common Stock which are currently
exercisable.
(6) Includes 5,466 shares of Class A Common Stock and 4,108 shares of Class B
Common Stock owned by members of immediate family, 9,878 shares of Class A
Common Stock and 11,370 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 (7) below with respect to which Don E. Marsh is a
co-trustee. Also includes options to acquire 32,050 shares of Class A
Common Stock and 42,300 shares of Class B Common Stock which are currently
exercisable.
(7) Includes 253,743 shares owned by two trusts of which Garnet R. Marsh is
either the life tenant or income beneficiary. Don E. Marsh and William L.
Marsh each has a one-third remainder interest in
8
<PAGE> 11
each of the foregoing trusts, subject to the life estate of Garnet R.
Marsh, 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 the other trust. Also includes options to
acquire 3,000 shares of Class B Common Stock which are currently
exercisable.
(8) Includes 1,276 shares of Class A Common Stock and 2,181 shares of Class B
Common Stock owned by members of immediate family and 253,743 shares owned
by the trusts described in Note (7) above with respect to which William L.
Marsh is a co-trustee. Also includes options to acquire 11,250 shares of
Class A Common Stock and 21,550 shares of Class B Common Stock which are
currently exercisable.
(9) Includes options to acquire 3,000 shares of Class B Common Stock which are
currently exercisable.
(10) Includes 1,000 shares of Class A Common Stock held as custodian and options
to acquire 3,000 shares of Class B Common Stock which are currently
exercisable.
(11) Includes options to acquire 15,000 shares of Class A Common Stock and 7,300
shares of Class B Common Stock which are currently exercisable.
(12) Includes options to acquire 13,950 shares of Class A Common Stock and
13,300 shares of Class B Common Stock which are currently exercisable.
(13) Includes options to acquire 119,900 shares of Class A Common Stock and
129,250 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 1, 1999, other than Garnet
R. Marsh*, Don E. 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 COMPANY 729,844 shares(1) 18.5%
c/o American Financial Corporation
One East Fourth Street
Cincinnati, Ohio
</TABLE>
- ---------------
* Mailing address is 9800 Crosspoint Boulevard, Indianapolis, Indiana
46256-3350.
(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, Amendment No. 4
thereto, dated January 14, 1992, Amendment No. 5 thereto, dated April 12,
1995, and in a Form 4, dated November 8, 1996, filed by American Financial
Corporation and Carl H. Lindner with the Securities and Exchange Commission.
9
<PAGE> 12
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 the fiscal
years ended March 29, 1997, March 28, 1998 and March 27, 1999 to the Chief
Executive Officer and each of the other four (4) most highly compensated
executive officers of the Corporation whose compensation exceeded $100,000 (the
"Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------
ANNUAL COMPENSATION AWARDS
-------------------------------------- ------------------------------
OTHER ALL
ANNUAL RESTRICTED SECURITIES OTHER
FISCAL COMPENSATION STOCK UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(A) ($)(B) AWARDS($)(C) OPTIONS/SARS(#) (D)(E)($)
--------------------------- ------ --------- ----------- ------------ ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Don E. Marsh,
Director; Chairman
of the Board, 1999 688,462 150,000 0 800,000 0 13,136
President & Chief 1998 550,000 150,000 10,425 479,415 0 4,189
Executive Officer 1997 550,000 110,000 10,425 0 0 29,858
Frank J. Bryja,
President &
Chief Operating 1999 259,615 50,000 988 0 12,500 6,348
Officer, Supermarket 1998 225,000 50,000 1,956 309,535 0 3,349
Division 1997 206,538 10,000 1,640 0 0 2,770
Douglas W. Dougherty,
Senior Vice
President, Chief 1999 252,308 50,000 0 120,000 0 6,146
Financial Officer & 1998 235,000 50,000 0 309,535 0 2,744
Treasurer 1997 225,769 10,000 3,839 0 0 8,586
William L. Marsh,
Director; Senior Vice 1999 263,846 25,000 0 0 3,750 3,483
President -- Property 1998 250,000 20,000 0 0 0 581
Management 1997 243,846 0 2,794 0 0 7,601
Robert J. Ahlstrom,
Vice President -- 1999 231,923 45,000 0 0 3,750 2,120
Management 1998 218,846 35,000 0 0 0 1,015
Information Systems 1997 99,231 10,000 6,678 0 0 16,934
</TABLE>
- ---------------
(a) Cash bonuses authorized by the Compensation Committee.
(b) Represents reimbursement for income taxes on premiums paid under the
Executive Life Insurance Plan.
(c) Value of 50,000 shares of Class A Common Stock for Don E. Marsh and 7,500
shares of Class A Common Stock for Mr. Dougherty at date of grant. The
shares were granted at fair market value as of the date of grant and vest
equally on each of the first four anniversaries of the date of grant and are
subject to certain other restrictions. The value of such shares based on the
per share closing price of the Class A Common Stock at fiscal year end was
$643,750 and $96,563, respectively.
(d) Includes for fiscal year 1999: (i) Executive Life Insurance Plan premiums
of $1,520 for Frank J. Bryja; (ii) Supplemental Long-Term Disability Plan
premiums of $10,736, $2,572, $4,133, $3,483 and $0,
10
<PAGE> 13
respectively; and (iii) contributions to the Corporation's 401(k) plan in
the amount of $2,400, $2,256, $2,043, $0 and $2,120, respectively.
(e) Perquisites or other personal benefits, securities or property received did
not exceed the lesser of $50,000 or 10% of salary and bonus, except for
reimbursement of housing, relocation and automobile expenses incurred in
fiscal year 1997 primarily in connection with Mr. Ahlstrom's employment by
the Company.
OPTIONS/SAR EXERCISES AND FISCAL YEAR END VALUES TABLE
The following table sets forth information with respect to the exercise of
options and SARs during, and the unexercised options and SARs held at the end
of, the fiscal year ended March 27, 1999, by the Named Officers. No SARs were
granted during fiscal year 1999.
AGGREGATE OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES TABLE
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS/SARS
SHARES /SARS AT FISCAL YEAR END AT FISCAL YEAR END($)(A)
ACQUIRED ON --------------------------- ---------------------------
NAME CLASS EXERCISE(#) VALUE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----- ----------- ----------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Don E. Marsh................ A 37,500 98,438 32,050 18,750 0 0
B 6,000 28,500 42,300 0 0 0
Frank J. Bryja.............. A 2,350 3,388 13,950 16,250 0 0
B 2,350 1,294 13,300 0 9,562 0
Douglas W. Dougherty........ A 0 0 15,000 5,000 0 0
B 0 0 7,300 0 15,512 0
William L. Marsh............ A 4,450 11,971 11,250 7,500 0 0
B 0 0 21,550 0 15,937 0
Robert H. Ahlstrom.......... A 0 0 0 3,750 0 0
B 0 0 0 0 0 0
</TABLE>
- ---------------
(a) Value of unexercised options based on fiscal year end per share price of
$12.875 for Class A Common Stock and $11.625 for Class B Common Stock.
11
<PAGE> 14
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 $ 83,512 $ 83,512 $ 83,512
280,000 123,512 123,512 123,512
360,000 163,512 163,512 163,512
440,000 203,512 203,512 203,512
520,000 243,512 243,512 243,512
600,000 283,512 283,512 283,512
680,000 323,512 323,512 323,512
760,000 363,512 363,512 363,512
840,000 403,512 403,512 403,512
720,000 443,512 443,512 443,512
800,000 483,512 483,512 483,512
880,000 523,512 523,512 523,512
960,000 563,512 563,512 563,512
1,040,000 603,512 603,512 603,512
</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 Retirement Plan exclude the sum of benefits
payable under the Pension Plan and Social Security. Effective December 31, 1996,
the accrual of benefits under the Pension Plan was curtailed and the benefit
formula under the Supplemental Retirement Plan was modified with respect to any
participants designated after January 1, 1997.
As of June 1, 1999, Don E. Marsh, Frank J. Bryja, Douglas W. Dougherty,
William L. Marsh and Robert H. Ahlstrom had 41, 33, 5, 35 and 3 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 $420,005, $133,527, $125,834, $136,425 and $0, respectively.
12
<PAGE> 15
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Corporation has employment agreements with Don E. 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
and William L. Marsh are $440,000 and $165,000, respectively, subject to
periodic review and increase, but not decrease, by the Compensation Committee or
the Board of Directors. The agreements also provide that, in the event of a
change in control of the Corporation and the subsequent severance of employment,
each 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 agreements. In addition, the
Corporation has severance agreements with Douglas W. Dougherty and Frank J.
Bryja, all of which provide that, in the event of a change in control of the
Corporation and subsequent severance of employment, the employee shall receive
severance pay equal to three times the sum of the employee's highest base salary
during the 12 months immediately preceding his termination and his highest
annual bonus during the 36 months immediately preceding termination. The term of
each of such agreement is for a period of three years, subject to earlier
termination and automatic extension. If a change in control had occurred on
March 27, 1999 and the employment of all the Named Officers had been severed as
of that date, Don E. Marsh, Frank J. Bryja, Douglas W. Dougherty and William L.
Marsh would have been entitled to receive severance pay in the aggregate amount
of $2,515,386, $928,845, $906,924, and $866,538, respectively.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Compensation Philosophy
The Compensation Committee and the Stock Award Committee of the Board of
Directors (collectively, the "Committee") believe 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
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 performance 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
and general industry. 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 in general industry as
well as for other companies with businesses reasonably
13
<PAGE> 16
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 retail industry and
general industry are generally appropriate for comparison, particularly after
taking into account differences in size and other factors. 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 retail
or general industry or the 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 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
shareholders' 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 1999 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 including those set
forth 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 Compensation 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 1999, the
Compensation Committee reviewed the salary ranges recommended by management
and consulted with the Chief Executive Officer. The Compensation 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, increases in base salaries (other
than those related to increased responsibilities) averaging 10.2% were
awarded to executive officers (other than the Chief Executive Officer)
during fiscal year 1999 reflecting the Compensation Committee's subjective
judgement as to individual contributions to the success of meeting the
Corporation's budgetary and other targets and to the Corporation's overall
performance.
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
14
<PAGE> 17
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
or the relevant business unit during a fiscal year exceed the minimum
earnings threshold approved by the Compensation Committee for such fiscal
year. The amount of any award varies with the level of responsibility and
actual earnings relative to threshold and target earnings. The Compensation
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 1999, bonuses
awarded under the Management Incentive Plan aggregated $175,338 were
awarded to executive officers (other than the Chief Executive Officer).
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 1991 Employee Stock
Incentive Plan and the Marsh Supermarkets, Inc. 1998 Stock Incentive Plan
("1998 Plan"). The Committee believes that significant stock ownership is a
major incentive in building shareholder value and reviews awards of options
and restricted stock with that goal in mind.
The Corporation has no set policy as to when equity-based incentives
should be awarded, although historically stock options have been the
principal vehicle for payment of long-term incentive compensation and
generally have been awarded, along with any restricted stock grants, 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 equity-based incentives to executive
officers and other key employees as part of the compensation package that
is reviewed annually for each executive officer and key employee. 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 year 1999, the Stock Award Committee authorized
grants under the 1998 Plan to executive officers (other than the Chief
Executive Officer) of 101,250 options to purchase Class A Common Stock
based on their individual efforts in moving the Corporation towards its
strategic goals, among other factors, in the subjective view of the Stock
Award Committee.
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 fiftieth to seventy-fifth percentile of total
compensation packages for executives of selected peer group companies if
the Corporation achieves the annual earnings target, with total
compensation at the seventy-fifth to ninetieth percentile for above target
performance. The long-term awards may be composed of stock options,
restricted stock, or other stock-based awards.
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
15
<PAGE> 18
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.
1999 Compensation of the Chief Executive Officer. In setting the
salary and incentive compensation levels of the Chief Executive Officer for
fiscal year 1999, 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 the subjective application of 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
Compensation Committee awarded the Chief Executive Officer, an increase in
base compensation of $200,000 and a cash bonus of $150,000, and the Stock
Award Committee awarded the Chief Executive Officer under the 1998 Plan
options to purchase 75,000 shares of Class A Common Stock.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Code generally disallows a tax deduction to public
companies for compensation paid to any executive officer in excess of $1,000,000
annually. The Committee intends for executive compensation pursuant to the
Corporation's stock incentive plans generally to qualify as performance-based
compensation and therefore be excluded from the deduction limit found under
Internal Revenue Service regulations. Although the Committee currently
anticipates that the compensation to be paid in future years to substantially
all executive officers will be deductible under Section 162(m) because executive
officer compensation is generally well below the limit and because the Committee
intends to continue utilizing performance-based compensation, the Committee
believes its primary responsibility is to provide a compensation program that
will attract, retain and award executive talent necessary to maximize returns to
shareholders and that the loss of the tax deduction may be necessary in some
instances to achieve this purpose.
Compensation Committee Stock Award Committee
Stephen M. Huse, Chairman Stephen M. Huse, Chairman
J. Michael Blakley K. Clay Smith
James K. Risk, III
16
<PAGE> 19
PERFORMANCE GRAPH
MARSH SUPERMARKETS, INC., RUSSELL 2000, AND PEER GROUP
COMPARISON OF TOTAL RETURN TO SHAREHOLDERS(1)
<TABLE>
<CAPTION>
MARSH MARSH
SUPERMARKETS, SUPERMARKETS,
MEASUREMENT PERIOD INC. (CLASS INC. (CLASS RUSSELL PEER
(FISCAL YEAR COVERED) A)(2) B)(2) 2000(2) GROUP(2)(3)
<S> <C> <C> <C> <C>
1994 100 100 100 100
1995 112 92 104 108
1996 124 124 132 123
1997 138 132 136 130
1998 172 173 191 161
1999 128 136 158 159
</TABLE>
- ---------------
(1) Assumes $100 investment on March 29, 1994 in Marsh Supermarkets, Inc.,
Russell 2000, and Peer Group. Total returns are calculated on dividends
reinvested basis. Indices are weighted by market capitalization.
(2) Data for Marsh Supermarkets, Inc., Peer Group and Russell 2000 was provided
by D.F. King & Co., Inc.
(3) 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>
* Data unavailable for 1999.
17
<PAGE> 20
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, 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 its executive officers, directors and greater than 10% beneficial
owners complied with all applicable filing requirements of Section 16(a) during
fiscal year 1999, except J. J. Bayt whose sale of shares of Class B Common Stock
failed to be reported timely through no fault of Mr. Bayt.
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 April 1, 2000. 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.
SHAREHOLDER PROPOSALS
Shareholder proposals, intended to be included in the proxy material
relating to the Annual Meeting of Shareholders to be held August 1, 2000, must
be received by the Corporation not later than February 24, 2000 and must comply
with Rule 14a-8 of the Securities Exchange Act of 1934, as amended. In addition,
the Corporation's Bylaws establish an advance notice procedure with regard to
certain matters, including shareholder proposals not included in the
Corporation's proxy statement. In general, in order for any such matters to be
brought before an annual meeting of shareholders, notice must be received by the
Corporation not less than 60 days and not more than 90 days prior to the annual
meeting date and must contain specified information concerning the matters and
the shareholder proposing such matters. Such proposals should be addressed to
the Corporate Secretary at the Corporation's principal executive offices.
18
<PAGE> 21
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
approval of the 1999 Outside Directors' Stock Option 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.
By order of the Board of Directors.
MARSH SUPERMARKETS, INC.
By: /s/ P. LAWRENCE BUTT
-----------------------------------
P. Lawrence Butt, Secretary
Indianapolis, Indiana
June 24, 1999
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED MARCH 27, 1999 MAY BE OBTAINED WITHOUT CHARGE BY ANY SHAREHOLDER TO WHOM
THIS PROXY STATEMENT IS SENT, UPON WRITTEN REQUEST TO P. LAWRENCE BUTT,
SECRETARY, MARSH SUPERMARKETS, INC., 9800 CROSSPOINT BOULEVARD, INDIANAPOLIS,
INDIANA 46256-3350. COPIES OF EXHIBITS TO THE FORM 10-K ALSO WILL BE AVAILABLE
UPON WRITTEN REQUEST UPON PAYMENT OF CHARGES APPROXIMATING THE CORPORATION'S
COST.
19
<PAGE> 22
EXHIBIT A
1999 OUTSIDE DIRECTORS' STOCK OPTION PLAN
SECTION 1. PURPOSE; DEFINITIONS.
The purpose of the 1999 Outside Directors' Stock Option Plan (the "Plan")
is to enable Marsh Supermarkets, Inc. (the "Corporation") to attract, retain and
reward members of the Board of Directors who are not employees of either the
Corporation or its Subsidiaries and Affiliates, and to strengthen the mutuality
of interests between such Outside Directors and the shareholders by awarding
Outside Directors performance-based stock incentives and/or other equity
interests or equity-based incentives in the Corporation. The creation of the
Plan shall not diminish or prejudice other compensation programs approved from
time to time by the Board.
For purposes of the Plan, the following terms shall be defined as set forth
below:
A. "Affiliate" means any entity other than the Corporation and its
Subsidiaries that is designated by the Board as a participating employer
under the Plan, provided that the Corporation directly or indirectly owns
at least 20% of the combined voting power of all classes of stock of such
entity or at least 20% of the ownership interests in such entity.
B. "Board" means the Board of Directors of the Corporation.
C. "Change in Control" has the meaning provided in Section 7(b) of the
Plan.
D. "Change in Control Price" has the meaning provided in Section 7(d)
of the Plan.
E. "Class A Common Stock" means the Corporation's Class A Common
Stock, without par value.
F. "Class B Common Stock" means the Corporation's Class B Common
Stock, without par value.
G. "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
H. "Common Stock" means the Corporation's Class A Common Stock and/or
Class B Common Stock.
I. "Corporation" means Marsh Supermarkets, Inc., a corporation
organized under the laws of the State of Indiana or any successor
corporation.
J. "Disability" means disability as determined under the Corporation's
Group Disability Insurance Plan as may be in effect from time to time.
K. "Effective Date" has the meaning provided in Section 11 of the
Plan.
L. "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.
M. "Fair Market Value" means with respect to the Common Stock, as of
any given date or dates, unless otherwise determined by the Board in good
faith, the reported closing price of a share of Common Stock on the Nasdaq
or such other market or exchange as is the principal trading market for the
Common Stock, or, if no such sale of a share of Common Stock is reported on
the Nasdaq or other exchange or principal trading market on such date, the
fair market value of a share of Common Stock as determined by the Board in
good faith.
<PAGE> 23
N. "Immediate Family" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall
include adoptive relationships.
O. "Nasdaq" means the Nasdaq Stock Market.
P. "Outside Director" means a member of the Board who is not an
officer or employee of the Corporation or any Subsidiary or Affiliate of
the Corporation.
Q. "Plan" means this 1999 Outside Directors' Stock Option Plan, as
amended from time to time.
R. "Retirement" means retirement from membership on the Board.
S. "Restricted Stock" means an award of shares of Common Stock that is
subject to the restrictions under Section 6 of the Plan.
T. "Restriction Period" has the meaning provided in Section 6 in the
Plan.
U. "Stock Option" or "Option" means any non-qualified stock option to
purchase shares of Common Stock (including Restricted Stock, if the Board
so determines) granted pursuant to Section 5 below.
V. "Subsidiary" means any person (other than the Corporation) in an
unbroken chain of persons beginning with the Corporation if each of the
persons (other than the last person in the unbroken chain) owns stock
possessing 50% or more of the total combined voting power of all classes of
stock or other ownership interest in one of the other persons in the chain.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by the Board. The Board shall have
authority to grant Stock Options or Restricted Stock, pursuant to the terms of
the Plan, to any Outside Director.
In particular, the Board shall have the authority, consistent with the
terms of the Plan:
(a) to select the Outside Directors to whom Stock Options and/or
Restricted Stock may from time to time be granted hereunder;
(b) to determine whether and to what extent Stock Options and/or
Restricted Stock are to be granted hereunder to one or more eligible
persons;
(c) to determine the number and class of shares of Common Stock to be
covered by each such award granted hereunder;
(d) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder (including, but not
limited to, the share price and any restriction or limitation, or any
vesting acceleration or waiver of forfeiture restrictions regarding any
Stock Option or Restricted Stock and/or the shares of Common Stock relating
thereto, based in each case on such factors as the Board shall determine,
in its sole discretion); and to amend or waive any such terms and
conditions to the extent permitted by Section 8 hereof;
(e) to determine whether and under what circumstances a Stock Option
may be settled in cash or Restricted Stock instead of Common Stock;
(f) to determine whether, to what extent, and under what circumstances
Option grants and Restricted Stock grants under the Plan are to be made,
and operate, on a tandem basis vis-a-vis other awards under the Plan and/or
cash awards made outside of the Plan;
<PAGE> 24
(g) to determine whether, to what extent, and under what circumstances
shares of Common Stock and other amounts payable with respect to an award
under this Plan shall be deferred either automatically or at the election
of the participant (including providing for and determining the amount (if
any) of any deemed earnings on any deferred amount during any deferral
period);
(h) to determine the terms, conditions and restrictions of any
performance goals and the number of Options or shares of Restricted Stock
subject thereto;
(i) to determine whether to require payment of tax withholding
requirements in shares of Common Stock subject to the award; and
(j) to impose any holding period required to satisfy Section 16 under
the Exchange Act.
The Board shall have the authority to adopt, alter, and repeal such rules,
guidelines, and practices governing the Plan as it shall, from time to time,
deem advisable; to interpret the terms and provisions of the Plan and any award
issued under the Plan (and any agreements relating thereto); and to otherwise
supervise the administration of the Plan. All decisions made by the Board
pursuant to the provisions of the Plan shall be made in the Board's sole
discretion and shall be final and binding on all persons, including the
Corporation and Plan participants.
SECTION 3. SHARES OF COMMON STOCK SUBJECT TO PLAN.
(a) As of the Effective Date, the aggregate number of shares of Common
Stock that may be issued under the Plan shall be 150,000 shares. The shares of
Common Stock issuable under the Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares.
(b) If any shares of Common Stock that have been optioned cease to be
subject to a Stock Option, or if any shares of Common Stock that are subject to
any Restricted Stock granted hereunder are forfeited prior to the payment of any
dividends, if applicable, with respect to such shares of Common Stock, or any
such award otherwise terminates without payment being made to the participant in
the form of Common Stock, such shares shall again be available for distribution
in connection with future awards under the Plan.
(c) In the event of any merger, reorganization, consolidation,
recapitalization, extraordinary cash dividend, stock dividend, stock split or
other change in corporate structure affecting the Common Stock, an appropriate
substitution or adjustment shall be made in the maximum number of shares that
may be awarded under the Plan, in the number and option price of shares subject
to outstanding Options granted under the Plan, and in the number of shares
subject to outstanding Restricted Stock awards granted under the Plan, as may be
determined to be appropriate by the Board, in its sole discretion, provided that
the number of shares subject to any award shall always be a whole number.
SECTION 4. ELIGIBILITY.
All Outside Directors are eligible to be granted awards under the Plan.
SECTION 5. STOCK OPTIONS.
Stock Options may be granted alone, in addition to, or in tandem with
Restricted Stock granted under the Plan and/or cash awards granted outside of
the Plan. Any Stock Option granted under the Plan shall be in such form as the
Board may from time to time approve.
Stock Options granted under the Plan shall be non-qualified Stock Options.
<PAGE> 25
The Board shall have the authority to grant to any optionee Stock Options.
Options granted to Outside Directors under the Plan shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Board shall deem
desirable.
(a) Option Price. The option price per share of Common Stock
purchasable under a Stock Option shall be determined by the Board at the
time of grant but shall be not less than 100% of the Fair Market Value of
the Common Stock on the date of grant.
(b) Option Term. The term of each Stock Option shall be fixed by the
Board.
(c) Exercisability. Stock Options shall be exercisable at such time
or times and subject to such terms and conditions as shall be determined by
the Board at or after grant; provided, however, that except as provided in
Section 5(f) and (g) and Section 7, unless otherwise determined by the
Board at or after grant, no Stock Option shall be exercisable prior to the
first anniversary date of the granting of the Option. The Board may provide
that a Stock Option shall vest over a period of future service at a rate
specified at the time of grant, or that the Stock Option is exercisable
only in installments. If the Board provides, in its sole discretion, that
any Stock Option is exercisable only in installments, the Board may waive
such installment exercise provisions at any time at or after grant, in
whole or in part, based on such factors as the Board shall determine in its
sole discretion.
(d) Method of Exercise. Subject to whatever installment exercise
restrictions apply under Section 5(c), Stock Options may be exercised in
whole or in part at any time during the option period by giving written
notice of exercise to the Corporation specifying the number of shares to be
purchased. Such notice shall be accompanied by payment in full of the
purchase price, either by check, note, or such other instrument as the
Board may accept. As determined by the Board, in its sole discretion, at or
after grant, payment in full or in part may also be made in the form of
shares of Common Stock already owned by the optionee or shares of
Restricted Stock or shares subject to such Option (in each case valued at
the Fair Market Value of the Common Stock on the date the Option is
exercised). If payment of the exercise price is made in part or in full
with Common Stock, the Board may award to the Outside Director a new Stock
Option to replace the Common Stock which was surrendered. If payment of the
option exercise price of a Stock Option is made in whole or in part in the
form of Restricted Stock, such Restricted Stock (and any replacement shares
relating thereto) shall remain (or be) restricted in accordance with the
original terms of the Restricted Stock award in question, and any
additional Common Stock received upon the exercise shall be subject to the
same forfeiture restrictions, unless otherwise determined by the Board, in
its sole discretion, at or after grant. No shares of Common Stock shall be
issued until full payment therefor has been made. An optionee shall
generally have the rights to dividends or other rights of a shareholder
with respect to shares subject to the Option when the optionee has given
written notice of exercise, has paid in full for such shares, and, if
requested, has given the representation described in Section 10(a).
(e) Transferability of Options. No Stock Option shall be transferable
by the optionee without the prior written consent of the Board other than
(i) transfers by the optionee to a member of his or her Immediate Family or
a trust for the benefit of the optionee or a member of his or her Immediate
Family, or (ii) transfers by will or by the laws of descent and
distribution.
(f) Termination by Death. If an optionee's membership on the Board
terminates by reason of death, any Stock Option held by such optionee may
thereafter be exercised, to the extent such Stock
<PAGE> 26
Option was exercisable at the time of death (or on such accelerated basis
as the Board may determine at or after grant) by the legal representative
of the estate or by the legatee of the optionee under the will of the
optionee, for a period of one year (or such other period as the Board may
specify at or after grant) from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter.
(g) Termination by Reason of Disability. If an optionee's membership
on the Board terminates by reason of Disability, any Stock Option held by
such optionee may thereafter be exercised by the optionee at any time
during the stated term of such Stock Option (or on such accelerated basis
as the Board may determine at or after the date of grant), to the extent it
was exercisable on the date of any such exercise; provided however, that,
if the optionee dies during the stated term of such Option after
termination of membership on the Board by reason of Disability, any
unexercised Stock Option held by such optionee shall thereafter be
exercisable, to the extent to which it was exercisable at the time of
death, for a period of twelve months from the date of such death or until
the expiration of the stated term of such Stock Option, whichever period is
shorter.
(h) Termination by Reason of Retirement. If an optionee's membership
on the Board terminates by reason of Retirement, any Stock Option held by
such optionee may thereafter be exercised by the optionee at any time
during the stated term of such Option, to the extent it was exercisable on
the date of exercise (or on such accelerated basis as the Board may
determine at or after grant); provided however, that, if the optionee dies
during the Term after termination of membership by reason of Retirement,
any unexercised Stock Option held by such optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time of death
for a period of twelve months from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is
shorter.
(i) Other Termination. Unless otherwise determined by the Board (or
pursuant to procedures established by the Board) at or after grant, if an
optionee's membership on the Board is involuntarily terminated for any
reason other than death, Disability or Retirement, the Stock Option shall
thereupon terminate, except that such Stock Option may be exercised, to the
extent otherwise then exercisable, for the lesser of three months or the
balance of such Stock Option's term if the involuntary termination is
without Cause. For purposes of this Plan, "Cause" means (i) a felony
conviction of a participant or the failure of a participant to contest
prosecution for a felony, or (ii) a participant's willful misconduct or
dishonesty, which is directly and materially harmful to the business or
reputation of the Corporation or any Subsidiary or Affiliate. If an
optionee voluntarily terminates membership on the Board (except for
Disability or Retirement), the Stock Option shall thereupon terminate;
provided, however, that the Board at grant or thereafter may extend the
exercise period in this situation for the lesser of three months or the
balance of such Stock Option's term.
(j) Buyout Provisions. The Board may at any time offer to buy out
for a payment in cash or Common Stock or Restricted Stock an Option
previously granted, based on such terms and conditions as the Board shall
establish and communicate to the optionee at the time that such offer is
made.
(k) Settlement Provisions. If the option agreement so provides at
grant or is amended after grant and prior to exercise to so provide (with
optionee's consent), the Board may require that all or part of the shares
to be issued with respect to the spread value of an unexercised Option take
the form of Restricted Stock, which shall be valued on the date of exercise
on the basis of the Fair Market Value (as determined by the Board) of such
Restricted Stock determined without regard to the forfeiture restrictions
involved.
<PAGE> 27
(l) Performance and Other Conditions. The Board may condition the
exercise of any Option upon the attainment of specified performance goals
or other factors as the Board may determine, in its sole discretion.
SECTION 6. RESTRICTED STOCK.
(a) Administration. Shares of Restricted Stock may be issued either alone,
in addition to, or in tandem with Stock Options granted under the Plan and/or
cash awards made outside the Plan. The Board shall determine the eligible
persons to whom, and the time or times at which, grants of Restricted Stock will
be made, the number of shares of Restricted Stock to be awarded to any person,
the price (if any) to be paid by the recipient of Restricted Stock (subject to
Section 6(b)), the time or times within which such awards may be subject to
forfeiture, and the other terms, restrictions and conditions of the awards in
addition to those set forth in Section 6(c). The Board may condition the grant
of Restricted Stock upon the attainment of specified performance goals or such
other factors as the Board may determine, in its sole discretion. The provisions
of Restricted Stock awards need not be the same with respect to each recipient.
(b) Awards and Certificates. The prospective recipient of a Restricted
Stock award shall not have any rights with respect to such award, unless and
until such recipient has executed an agreement evidencing the award and has
delivered a fully executed copy thereof to the Corporation, and has otherwise
complied with the applicable terms and conditions of such award.
(i) The purchase price for shares of Restricted Stock shall be
established by the Board and may be zero.
(ii) Awards of Restricted Stock must be accepted within a period of 60
days (or such shorter period as the Board may specify at grant) after the
award date, by executing a Restricted Stock Award Agreement and paying
whatever price (if any) is required under Section 6(b)(i).
(iii) Each participant receiving a Restricted Stock award shall be
issued a stock certificate in respect of such shares of Restricted Stock.
Such certificate shall be registered in the name of such participant (or a
transferee permitted by Section 10(g) hereof), and shall bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such award.
(iv) The Board shall require that the stock certificates evidencing
such shares be held in custody by the Corporation until the restrictions
thereon shall have lapsed, and that, as a condition of any Restricted Stock
award, the participant shall have delivered a stock power, endorsed in
blank, relating to the shares of Common Stock covered by such award.
(c) Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to this Section 6 shall be subject to the following restrictions and
conditions:
(i) In accordance with the provisions of this Plan and the award
agreement, during a period set by the Board commencing with the date of
such award (the "Restriction Period"), the participant shall not be
permitted to sell, transfer, pledge, assign, or otherwise encumber shares
of Restricted Stock awarded under the Plan. Within these limits, the Board,
in its sole discretion, may provide for the lapse of such restrictions in
installments and may accelerate or waive such restrictions, in whole or in
part, based on service, the attainment of performance goals, or such other
factors or criteria as the Board may determine in its sole discretion.
<PAGE> 28
(ii) Except as provided in this paragraph (ii) and Section 6(c)(i),
the participant shall have, with respect to the shares of Restricted Stock,
all of the rights of a shareholder of the Corporation, including the right
to vote the shares, and the right to receive any cash dividends. The Board,
in its sole discretion, as determined at the time of award, may permit or
require the payment of cash dividends to be deferred and, if the Board so
determines, reinvested, subject to Section 10(d), in additional Restricted
Stock to the extent shares are available under Section 3, or otherwise
reinvested. Pursuant to Section 3 above, stock dividends issued with
respect to Restricted Stock shall be treated as additional shares of
Restricted Stock that are subject to the same restrictions and other terms
and conditions that apply to the shares with respect to which such
dividends are issued. If the Board so determines, the award agreement may
also impose restrictions on the right to vote and the right to receive
dividends.
(iii) Subject to the applicable provisions of the award agreement and
this Section 6, upon termination of a participant's employment with the
Corporation and any Subsidiary or Affiliate for any reason during the
Restriction Period, all shares still subject to restriction will vest, or
be forfeited, in accordance with the terms and conditions established by
the Board at or after grant.
(iv) If and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock subject to such Restriction Period,
certificates for an appropriate number of unrestricted shares shall be
delivered to the participant (or a transferee permitted by Section 10(g)
hereof) promptly.
(d) Minimum Value Provisions. In order to better ensure that award
payments actually reflect the performance of the Corporation and service of the
participant, the Board may provide, in its sole discretion, for a tandem
performance-based or other award designed to guarantee a minimum value, payable
in cash or Common Stock to the recipient of a Restricted Stock award, subject to
such performance, future service, deferral, and other terms and conditions as
may be specified by the Board.
(e) Maximum Number of Shares of Restricted Stock. Notwithstanding anything
contained herein to the contrary, the number of shares of Restricted Stock
granted under the Plan and outstanding at any time shall not exceed in the
aggregate forty percent (40%) of the total number of shares of Common Stock
issuable under the Plan pursuant to Section 3(a).
SECTION 7. CHANGE IN CONTROL PROVISIONS.
(a) Impact of Event. In the event of:
(1) a "Change in Control" as defined in Section 7(b); or
(2) a "Potential Change in Control" as defined in Section 7(c), but
only if and to the extent so determined by the Board at or after grant
(subject to any right of approval expressly reserved by the Board at the
time of such determination),
(i) Subject to the limitations set forth below in this Section
7(a), the following acceleration provisions shall apply:
(a) Any Stock Options awarded under the Plan not previously
exercisable and vested shall become fully exercisable and vested.
(b) The restrictions applicable to any Restricted Stock, to the
extent not already vested under the Plan, shall lapse and such awards
shall be deemed fully vested.
<PAGE> 29
(ii) Subject to the limitations set forth below in this Section
7(a), the value of all outstanding Stock Options and Restricted Stock,
in each case to the extent vested, shall, unless otherwise determined by
the Board in its sole discretion prior to any Change in Control, be
cashed out on the basis of the "Change in Control Price" as defined in
Section 7(d) as of the date such Change in Control or such Potential
Change in Control is determined to have occurred or such other date as
the Board may determine prior to the Change in Control.
(iii) The Board may impose additional conditions on the
acceleration or valuation of any award in the award agreement.
(b) Definition of Change in Control. For purposes of Section 7(a), a
"Change in Control" means the happening of any of the following:
(i) any person or entity, including a "group" as defined in Section
12(d)(3) of the Exchange Act, other than the Corporation or a wholly-owned
subsidiary thereof or any employee benefit plan of the Corporation or any
of its Subsidiaries, becomes the beneficial owner of the Corporation's
securities having 35% or more of the combined voting power of the then
outstanding securities of the Corporation that may be cast for the election
of directors of the Corporation (other than as a result of an issuance of
securities initiated by the Corporation in the ordinary course of
business); or
(ii) as the result of, or in connection with, any cash tender or
exchange offer, merger or other business combination, sales of assets or
contested election, or any combination of the foregoing transactions, less
than a majority of the combined voting power of the then outstanding
securities of the Corporation or any successor corporation or entity
entitled to vote generally in the election of the directors of the
Corporation or such other corporation or entity after such transaction are
held in the aggregate by the holders of the Corporation's securities
entitled to vote generally in the election of directors of the Corporation
immediately prior to such transaction; or
(iii) during any period of two consecutive years, individuals who at
the beginning of any such period constitute the Board cease for any reason
to constitute at least a majority thereof, unless the election, or the
nomination for election by the Corporation's shareholders, of each director
of the Corporation first elected during such period was approved by a vote
of at least two-thirds of the directors of the Corporation then still in
office who were directors of the Corporation at the beginning of any such
period.
(c) Definition of Potential Change in Control. For purposes of Section
7(a), a "Potential Change in Control" means the happening of any one of the
following:
(i) The approval by shareholders of an agreement by the Corporation,
the consummation of which would result in a Change in Control of the
Corporation as defined in Section 7(b); or
(ii) The acquisition of beneficial ownership, directly or indirectly,
by any entity, person or group (other than the Corporation or a Subsidiary
or any Corporation employee benefit plan (including any trustee of such
plan acting as such trustee)) of securities of the Corporation representing
5% or more of the combined voting power of the Corporation's outstanding
securities and the adoption by the Board of a resolution to the effect that
a Potential Change in Control of the Corporation has occurred for purposes
of this Plan.
(d) Change in Control Price. For purposes of this Section 7, "Change in
Control Price" means the highest price per share paid in any transaction
reported on the Nasdaq or such other exchange or market as is the principal
trading market for the Common Stock, or paid or offered in any bona fide
transaction related to a
<PAGE> 30
Potential or actual Change in Control of the Corporation at any time during the
60 day period immediately preceding the occurrence of the Change in Control (or,
where applicable, the occurrence of the Potential Change in Control event), in
each case as determined by the Board.
SECTION 8. AMENDMENTS AND TERMINATION.
The Board may at any time amend, alter or discontinue the Plan; provided,
however, that, without the approval of the Corporation's shareholders, no
amendment or alteration may be made which would increase the maximum number of
shares that may be issued under the Plan, or make any change for which
applicable law or regulatory authority (including the regulatory authority of
the Nasdaq or any other market or exchange on which the Common Stock is traded)
would require shareholder approval. No amendment, alteration, or discontinuation
shall be made which would impair the rights of an optionee or participant under
a Stock Option or Restricted Stock theretofore granted, without the
participant's consent.
The Board may amend the terms of any Stock Option or Restricted Stock award
theretofore granted, prospectively or retroactively, but, subject to Section 3
above, no such amendment shall impair the rights of any holder without the
holder's consent. The Board may also substitute new Stock Options for previously
granted Stock Options (on a one for one or other basis), including previously
granted Stock Options having higher option exercise prices.
SECTION 9. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Corporation, nothing contained herein shall give
any such participant or optionee any rights that are greater than those of a
general creditor of the Corporation. In its sole discretion, the Board may
authorize the creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver Common Stock or payments in lieu of or with
respect to awards hereunder; provided, however, that, unless the Board otherwise
determines with the consent of the affected participant, the existence of such
trusts or other arrangements is consistent with the "unfunded" status of the
Plan.
SECTION 10. GENERAL PROVISIONS.
(a) The Board may require each person purchasing shares pursuant to a Stock
Option or Restricted Stock award under the Plan to represent to and agree with
the Corporation in writing that the optionee or participant is acquiring the
shares without a view to distribution thereof. The certificates for such shares
may include any legend which the Board deems appropriate to reflect any
restrictions on transfer. All certificates for shares of Common Stock delivered
under the Plan shall be subject to such stock-transfer orders and other
restrictions as the Board may deem advisable under the rules, regulations, and
other requirements of the Commission, any stock market or exchange upon which
the Common Stock is then listed, and any applicable federal or state securities
law, and the Board may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to shareholder approval
if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases.
(c) No later than the date as of which an amount first becomes includible
in the gross income of the participant for federal income tax purposes with
respect to any award under the Plan, the participant shall pay
<PAGE> 31
to the Corporation, or make arrangements satisfactory to the Board regarding the
payment of, any federal, state, or local taxes of any kind required by law to be
withheld with respect to such amount. The Board may require withholding
obligations to be settled with Common Stock, including Common Stock that is part
of the award that gives rise to the withholding requirement. The obligations of
the Corporation under the Plan shall be conditional on such payment or
arrangements and the Corporation shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
participant.
(d) The actual or deemed reinvestment of dividends or dividend equivalents
in additional Restricted Stock at the time of any dividend payment shall only be
permissible if sufficient shares of Common Stock under Section 3 for such
reinvestment (taking into account then outstanding Stock Options and restricted
Stock awards.
(e) The Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Indiana.
(f) The members of the Board administering the Plan shall not be liable to
any Outside Director or other person with respect to any determination made
hereunder in a manner that is not inconsistent with their legal obligations as
members of the Board. In addition to such other rights of indemnification as
they may have as directors, the members of the Board administering the Plan
shall be indemnified by the Corporation against the reasonable expenses,
including attorneys' fees actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of their
administration of the Plan, including any action taken or failure to act under
or in connection with the Plan or any option granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Corporation) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such Board member is liable for negligence or misconduct in the
performance of his duties; provided that within 60 days after institution of any
such action, suit or proceeding, the Board member shall in writing offer the
Corporation the opportunity, at its own expense, to handle and defend the same.
(g) In addition to any other restrictions on transfer that may be
applicable under the terms of this Plan or the applicable award agreement, no
Stock Option or Restricted Stock award issued under this Plan is transferable by
the participant without the prior written consent of the Board, other than (i)
transfers by an optionee to a member of his or her Immediate Family or a trust
for the benefit of the optionee or a member of his or her Immediate Family or
(ii) transfers by will or by the laws of descent and distribution. The
designation of a beneficiary will not constitute a transfer.
(h) The Board may, at or after grant, condition the receipt of any payment
in respect of any award or the transfer of any shares subject to an award on the
satisfaction of a six-month holding period, if such holding period is required
for compliance with Section 16 under the Exchange Act.
SECTION 11. EFFECTIVE DATE OF PLAN.
The Plan shall be effective June 1, 1999 (the "Effective Date"), provided
that it has been approved by the Board of the Corporation and approved by the
holders of the Corporation's Class A Common Stock.
<PAGE> 32
SECTION 12. TERM OF PLAN.
No Stock Option or Restricted Stock shall be granted pursuant to the Plan
on or after the tenth anniversary of the Effective Date of the Plan, but awards
granted prior to such tenth anniversary may be extended beyond that date.
<PAGE> 33
MARSH
SUPERMARKETS, INC.
YOUR VOTE IS VERY IMPORTANT
Please sign, date, detach and return the card below in the envelope provided.
DETACH CARD
- --------------------------------------------------------------------------------
MARSH SUPERMARKETS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William L. Marsh, Catherine A. Langham and K.
Clay Smith, 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 1, 1999, at the Annual Meeting of Shareholders
to be held August 3, 1999, and at any adjournment thereof.
1. The election of four (4) directors. NOMINEES ARE: Charles R. Clark, James K.
Risk, III, J. Michael Blakley and P. Lawrence Butt for terms of three years
each.
[ ] FOR ALL NOMINEES LISTED ABOVE EXCEPT THOSE WHOSE NAMES ARE WRITTEN BELOW:
[ ] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES
- ------------------------------------------------------------
2. To approve the 1999 Outside Directors' Stock Option 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.)
<PAGE> 34
DETACH CARD
- --------------------------------------------------------------------------------
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR
DIRECTOR, AND FOR APPROVAL OF THE 1999 OUTSIDE DIRECTORS' STOCK OPTION PLAN.
Receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement,
dated June 24, 1999, and the 1999 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: , 1999
-----------------
-----------------------------
Signature
-----------------------------
Signature
<PAGE> 35
MARSH
SUPERMARKETS, INC.
YOUR VOTE IS VERY IMPORTANT
Please sign, date, detach and return the card below in the envelope provided.
DETACH CARD
- --------------------------------------------------------------------------------
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 William L. Marsh, Catherine A. Langham and K.
Clay Smith, 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
1, 1999, at the Annual Meeting of Shareholders to be held August 3, 1999, and at
any adjournment thereof.
1. The election of four (4) directors. NOMINEES ARE: Charles R. Clark, James K.
Risk, III, J. Michael Blakley and P. Lawrence Butt for terms of three years
each.
[ ] FOR ALL NOMINEES LISTED ABOVE EXCEPT THOSE WHOSE NAMES ARE WRITTEN BELOW:
[ ] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES
- ------------------------------------------------------------
2. To approve the 1999 Outside Directors' Stock Option 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.)
<PAGE> 36
DETACH CARD
- --------------------------------------------------------------------------------
UNLESS OTHERWISE SPECIFIED, THIS INSTRUCTION CARD WILL BE VOTED FOR ALL
NOMINEES FOR DIRECTOR AND FOR APPROVAL OF THE 1999 OUTSIDE DIRECTORS' STOCK
OPTION PLAN.
Receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement,
dated June 24, 1999, and the 1999 Annual Report to Shareholders is hereby
acknowledged.
Please sign exactly as your name(s) appear below.
Dated: , 1999
-----------------
-----------------------------
Signature
-----------------------------
Signature
<PAGE> 37
MARSH
SUPERMARKETS, INC.
YOUR VOTE IS VERY IMPORTANT
Please sign, date, detach and return the card below in the envelope provided.
DETACH CARD
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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 William L. Marsh, Catherine A. Langham and K. Clay
Smith, 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
1, 1999, at the Annual Meeting of Shareholders to be held August 3, 1999, and at
any adjournment thereof.
1. The election of four (4) directors. NOMINEES ARE: Charles R. Clark, James K.
Risk, III, J. Michael Blakley and P. Lawrence Butt for terms of three years
each.
[ ] FOR ALL NOMINEES LISTED ABOVE EXCEPT THOSE WHOSE NAMES ARE WRITTEN BELOW:
[ ] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES
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2. To approve the 1999 Outside Directors' Stock Option 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.)
<PAGE> 38
DETACH CARD
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UNLESS OTHERWISE SPECIFIED, THIS INSTRUCTION CARD WILL BE VOTED FOR ALL
NOMINEES FOR DIRECTOR, FOR APPROVAL OF THE 1999 OUTSIDE DIRECTORS' STOCK OPTION
PLAN.
Receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement,
dated June 24, 1999, and the 1999 Annual Report to Shareholders is hereby
acknowledged.
Please sign exactly as your name(s) appear below.
Dated: , 1999
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Signature
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Signature
