<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the registrant /X/
Filed by party other than the registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
------------------------
NASH-FINCH COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
------------------------
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a6(i)(4) and 0-11.
1 Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
2 Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
3 Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
-----------------------------------------------------------------------
4 Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
*Set forth the amount on which the filing fee is calculated and state how it is
determined.
/ / 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>
[LOGO]
7600 FRANCE AVENUE SOUTH
EDINA, MINNESOTA 55435
------------------------
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
LUTHERAN BROTHERHOOD BUILDING
625 FOURTH AVENUE SOUTH, MINNEAPOLIS, MINNESOTA
MAY 13, 1997
------------------------
The 1997 Annual Meeting of Stockholders of Nash Finch Company will be held
on Tuesday, May 13, 1997, at 10:00 a.m., local time, for the following purposes:
1. To elect three directors to serve for three-year terms.
2. To consider and act upon a proposal to adopt the 1997 Non-Employee
Director Stock Compensation Plan.
3. To consider and act upon a proposal to amend the 1994 Stock Incentive
Plan.
4. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
Only stockholders of record as of the close of business on March 24, 1997
are entitled to notice of and to vote at the Annual Meeting or any adjournment
or adjournments thereof.
TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, STOCKHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETING IN PERSON ARE REQUESTED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. A POSTAGE PAID ENVELOPE
HAS BEEN ENCLOSED FOR YOUR CONVENIENCE.
By Order Of The Board of Directors
Norman R. Soland
Vice President, Secretary
and General Counsel
Edina, Minnesota
April 7, 1997
<PAGE>
[LOGO]
7600 FRANCE AVENUE SOUTH
EDINA, MINNESOTA 55435
TELEPHONE NO. (612) 832-0534
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 13, 1997
------------------------
INTRODUCTION
The Board of Directors of Nash Finch Company ("Nash Finch") solicits your
proxy for use at the Annual Meeting of Stockholders to be held on May 13, 1997
(the "Annual Meeting"), and any adjournment or adjournments thereof. A proxy
card is enclosed. Any proxy given pursuant to this solicitation and received in
time for the Annual Meeting will be voted in accordance with the instructions
given in such proxy. Any stockholder who executes and delivers the proxy may
revoke it at any time prior to its use by giving notice in writing to the
Secretary of Nash Finch, by filing a revoking instrument or a duly executed
proxy bearing a later date with the Secretary of Nash Finch, or by attending the
Annual Meeting and voting said stock in person. The execution by a stockholder
of a later dated proxy will revoke all proxies previously executed by such
stockholder. However, a stockholder who attends the Annual Meeting need not
revoke his proxy and vote in person unless he wishes to do so. This proxy
material is first being mailed to the Nash Finch stockholders on or about April
7, 1997.
PURPOSES OF MEETING
The following business will be attended to at the Annual Meeting (the Board
of Directors recommends a vote FOR the following):
1. To elect three directors to serve for three-year terms.
2. To consider and act upon a proposal to adopt the 1997 Non-Employee
Director Stock Compensation Plan.
3. To consider and act upon a proposal to amend the 1994 Stock Incentive
Plan.
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment or adjournments thereof.
<PAGE>
OUTSTANDING SHARES; VOTING RIGHTS
The close of business on Monday, March 24, 1997 has been fixed by the Board
of Directors of Nash Finch as the record date for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting. On March
24, 1997, Nash Finch had outstanding 11,300,488 shares of common stock, par
value $1.66 2/3 per share ("Common Stock"), each such share entitling the holder
thereof to one vote in person or by proxy. The holders of a majority of the
total shares issued and outstanding (5,650,245 shares), whether present in
person or represented by proxy, will constitute a quorum for the transaction of
business at the Annual Meeting.
Shares of Common Stock represented by properly executed proxies will be
voted in accordance with the choices specified therein, and where no choice is
specified, such shares will be voted (i) for the election of the three nominees,
(ii) for the adoption of the Nash Finch 1997 Non-Employee Director Stock
Compensation Plan, (iii) for the adoption of the amendment to the Nash Finch
1994 Stock Incentive Plan, and (iv) with respect to any other business which may
properly come before the Annual Meeting or any adjournment or adjournments
thereof, according to the best judgment of the proxies named on the enclosed
proxy card.
In general, shares of Common Stock represented by a properly signed and
returned proxy will be counted as shares present and entitled to vote at the
Annual Meeting for purposes of determining a quorum, without regard to whether
the proxy reflects votes withheld from director nominees (or is left blank) or
reflects a "broker non-vote" on a particular matter (i.e., a proxy returned by a
broker on behalf of its beneficial owner customer that is not voted on that
particular matter because voting instructions have not been received and the
broker has no discretionary authority to vote).
Stockholders may vote for all nominees for director, or withhold authority
to vote for all or certain nominees. Withheld shares will be treated as shares
present and entitled to vote and will be counted as voted shares. In connection
with the other two proposals, stockholders may vote for or against the proposal,
or abstain. Abstentions will be treated as shares present and entitled to vote
but not cast in favor of the proposal, thus having the same effect as votes
against the proposal. Broker non-votes, as to a particular matter, will be
treated as shares not entitled to vote, and thus will not be counted as voted
shares. The election of directors and approval of each of the other two
proposals requires the affirmative vote of a majority of the total shares
present and entitled to vote on each such matter.
2
<PAGE>
PRINCIPAL STOCKHOLDERS AND BENEFICIAL
OWNERSHIP OF MANAGEMENT
Set forth in the following table is information, as of March 1, 1997 unless
otherwise indicated, pertaining to (a) persons who, to the best of Nash Finch's
knowledge, owned beneficially more than five percent of the outstanding shares
of Common Stock, (b) the individual ownership of Common Stock by directors,
nominees and named executive officers, and (c) the ownership of Common Stock by
directors and executive officers as a group. Options exercisable within 60 days
after March 1, 1997 are set forth in note (2) to the table.
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK BENEFICIALLY
OWNED (1)(2)
---------------------
PERCENT
NAME OF BENEFICIAL OWNER AMOUNT OF CLASS
- -------------------------------------------------- ---------- --------
<S> <C> <C>
Carole F. Bitter 1,000 *
Richard A. Fisher 2,000(3) *
Alfred N. Flaten 29,713(4) *
Allister P. Graham 1,000 *
John H. Grunewald 2,500(5) *
Richard G. Lareau 3,500(6) *
Russell N. Mammel 33,210(7) *
Don E. Marsh 640 *
Donald R. Miller 1,818 *
Robert F. Nash 103,565(8) *
Jerome O. Rodysill 21,015(9) *
William T. Bishop 9,352 *
David J. Richards 19,297(10) *
Charles M. Seiler 1,877 *
Norman R. Soland 10,142(11) *
All Directors and Executive 265,328(12) 2.35%
Officers as a Group (25 persons)
Sanford C. Bernstein & Co., Inc. 633,375(13) 5.60%
767 Fifth Avenue
New York, New York 10153
Franklin Resources, Inc. 669,500(14) 5.92%
777 Mariners Island Blvd.
San Mateo, CA 94404
</TABLE>
- ------------------------
* Less than 1%.
(1) Unless otherwise noted, all of the shares shown are held by individuals or
entities possessing sole voting and investment power with respect to such
shares.
(2) Not included are shares of Common Stock which may be acquired within 60
days of March 1, 1997 by the persons and group identified in this table
upon the exercise of options granted under the Nash
3
<PAGE>
Finch 1994 Stock Incentive Plan (the "1994 Stock Incentive Plan") and the
Nash Finch 1995 Director Stock Option Plan (the "1995 Director Stock Option
Plan"). For all directors and executives as a group, there are 30,570
shares of Common Stock issuable upon the exercise of options, which
include: 4,200 shares for Mr. Flaten; 1,920 shares for Mr. Bishop; 1,200
shares for Mr. Richards; 1,800 shares for Mr. Seiler; 1,800 shares for Mr.
Soland; 500 shares each for Ms. Bitter, Mr. Fisher, Mr. Marsh, and Mr.
Nash; and 1,000 shares each for Mr. Graham, Mr. Grunewald, Mr. Lareau, Mr.
Mammel, Mr. Miller, and Mr. Rodysill. The following assumes the exercise of
these options for purposes of calculating the percent of Common Stock
deemed to be beneficially owned by such individual or group: each named
executive officer and director of Nash Finch, less than 1%; and the
directors and executive officers of Nash Finch as a group, 2.62%.
(3) Includes 500 shares owned beneficially by Mr. Fisher's wife as to which he
may be deemed to share voting and investment power, but as to which he
disclaims any beneficial interest.
(4) Includes 1,000 shares owned beneficially by Mr. Flaten's wife as to which
he may be deemed to share voting and investment power, but as to which he
disclaims any beneficial interest.
(5) Includes 500 shares owned beneficially by a trust for which Mr. Grunewald's
wife serves as a trustee. As a result, Mr. Grunewald may be deemed to share
voting and investment power for such shares, but he disclaims any
beneficial interest in such shares.
(6) Includes 1,500 shares owned beneficially by Mr. Lareau's wife as to which
he may be deemed to share voting and investment power, but as to which he
disclaims any beneficial interest.
(7) Includes 32,810 shares owned beneficially by Mr. Mammel's living trust, as
to which he exercises voting and investment power as trustee and
beneficiary of such living trust.
(8) Includes 28,082 shares owned beneficially by Mr. Nash's wife as to which he
may be deemed to share voting and investment power, but as to which he
disclaims any beneficial interest.
(9) Includes 12,860 shares held by a trust for the benefit of Mr. Rodysill's
wife, of which Mr. Rodysill is a co-trustee with his son and as to which he
shares voting and investment power.
(10) Includes 1,500 shares owned beneficially by Mr. Richards' son as to which
he may be deemed to share voting and investment power, but as to which he
disclaims any beneficial interest.
(11) Includes 3,157 shares that are owned beneficially by Mr. Soland and his
wife jointly and as to which he shares voting and investment power.
(12) Includes 49,099 shares as to which voting and investment power are shared
or may be deemed to be shared.
(13) Sanford C. Bernstein & Co., Inc. has reported in a Schedule 13G filed with
the Securities and Exchange Commission on January 30, 1997 that, as of
December 31, 1996, it was the beneficial owner of all of such shares,
possessing sole investment power with respect to all such shares, sole
voting power with respect to 537,100 shares and shared voting power with
respect to 16,700 shares. Sanford C. Bernstein & Co., Inc. has also
reported that the filing was made in its capacities as an investment
adviser and broker/dealer, and that its beneficial ownership of such shares
is on behalf of certain accounts of its discretionary clients. These
clients have the right to receive dividends from and the proceeds of the
sale of such securities.
4
<PAGE>
(14) Franklin Resources, Inc. has reported in a Schedule 13G filed with the
Securities and Exchange Commission on February 12, 1997 that, as of
December 31, 1996, it was the beneficial owner of all of such shares,
possessing sole investment power and sole voting power with respect to all
such shares. Franklin Resources, Inc. has also reported that the filing was
made in its capacities as a holding company of direct and indirect
investment advisory subsidiaries. Such subsidiaries advise various open or
closed-end investment companies or other managed accounts pursuant to
advisory contracts. The advisory contracts grant to such subsidiaries all
voting and investment power over the securities owned by the advisory
clients, and as a result, such subsidiaries may be deemed as the beneficial
owners of such shares. These clients have the right to receive dividends
from and the proceeds of the sale of such securities.
ELECTION OF DIRECTORS
(PROPOSAL NO.1)
NOMINATION
The Nash Finch Restated Certificate of Incorporation and Bylaws, each as
amended, provide that the Board of Directors shall consist of not less than nine
nor more than 17 members, as determined from time to time by the Board of
Directors, divided into three classes of as nearly equal size as possible. The
term of each class of directors is three years, and the term of one class
expires each year in rotation. The Board of Directors has determined that there
will be eleven directors of Nash Finch for the ensuing year.
The terms of three current members of the Board of Directors will expire at
the Annual Meeting, one of whom will not stand for reelection. The terms of the
remaining eight current members of the Board of Directors will not expire this
year, but will expire as indicated below. The Board of Directors has nominated
three of the nominees listed below to serve as directors of Nash Finch for terms
of three years, expiring at the 2000 Annual Meeting of Stockholders or until
their successors are duly elected and qualified. Two of the nominees currently
serve as directors and have served continuously from the dates indicated below.
The remaining nominee is Jerry L. Ford, who is described below and has not
previously served on the Board of Directors.
The affirmative vote of a majority of the total shares represented in person
or by proxy and entitled to vote is required for the election of the three
nominees. It is the intention of the persons named in the enclosed form of proxy
to vote such proxy for the election of the three nominees named in the proxy,
unless otherwise directed by the stockholder. Nash Finch's Board of Directors
recommends a vote FOR the election of each of the nominees. While the Board of
Directors has no reason to believe that any of those named will not be available
as a candidate, should such a situation arise, the proxy will be voted for the
election as directors of such other persons as determined in the discretion of
the proxies named on the enclosed proxy card. Proxies cannot be voted for a
greater number of persons than the number of nominees named.
5
<PAGE>
INFORMATION ABOUT DIRECTORS AND NOMINEES
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ---------------------- --- -------------------------------------------------------------------------- -----------
<S> <C> <C> <C>
NOMINEES FOR THREE-YEAR TERMS EXPIRING IN 2000:
Jerry L. Ford 56 Executive Vice President and Chief Operating Officer of Comdisco Network N/A
Services, Inc. (computer network implementation and management)
Donald R. Miller 69 Management Consultant 1978
Robert F. Nash 63 Retired Vice President and Treasurer of Nash Finch 1968
DIRECTORS NOT STANDING FOR ELECTION THIS YEAR WHOSE TERMS EXPIRE IN 1999:
Carole F. Bitter 51 President and Chief Executive Officer of Harold Friedman, Inc. (operator 1993
of retail supermarkets)
Richard A. Fisher 67 Retired Vice President -- Finance and Treasurer of Network Systems 1984
Corporation (manufacturer of data communications systems)
John H. Grunewald 60 Retired Executive Vice President -- Finance and Administration, Polaris 1992
Industries, Inc. (manufacturer of recreational equipment)
Don E. Marsh 59 Chairman of the Board, President and Chief Executive Officer, Marsh 1995
Supermarkets, Inc. (supermarket and convenience store chain operator)
DIRECTORS NOT STANDING FOR ELECTION THIS YEAR WHOSE TERMS EXPIRE IN 1998:
Alfred N. Flaten 62 President and Chief Executive Officer of Nash Finch 1990
Allister P. Graham 60 Chairman and Chief Executive Officer of The Oshawa Group Limited (food and 1992
pharmaceutical distributor in Canada)
Richard G. Lareau 68 Partner, Oppenheimer Wolff & Donnelly (law firm) 1984
Jerome O. Rodysill 68 Retired Senior Vice President of Nash Finch 1974
</TABLE>
OTHER INFORMATION ABOUT DIRECTORS AND NOMINEES
Except as indicated below, there has been no change in principal occupations
or employment during the past five years for the directors or nominees for
election as directors.
Mr. Ford has served as Executive Vice President and Chief Operating Officer
of Comdisco Network Services, Inc. since June 30, 1994. He previously served as
Executive Director and Chief Operating Officer of Lindquist & Vennum, a law
firm, for more than five years.
Mr. Nash retired in January 1996 as Vice President and Treasurer of Nash
Finch, a position he had held for more than five years.
Mr. Fisher retired in December 1992 as Vice President -- Finance and
Treasurer of Network Systems Corporation, a position he had held for more than
five years.
6
<PAGE>
Mr. Grunewald retired in January 1997 as Executive Vice President, Finance
and Administration of Polaris Industries, Inc., a position he had held since
September 1993. He previously served as Executive Vice President, Chief
Financial Officer and Secretary of Pentair, Inc. for more than five years.
Mr. Flaten's election as Chief Executive Officer was effective in November
1994. Prior to such election, Mr. Flaten held the position of President and
Chief Operating Officer of Nash Finch effective in November 1991.
Mr. Lareau has been a partner in the law firm of Oppenheimer Wolff &
Donnelly for over 30 years. Oppenheimer Wolff & Donnelly has provided and is
expected to continue to provide legal services to Nash Finch. Mr. Lareau also
serves as a director of Merrill Corporation, Mesabi Trust, Northern Technologies
International Corporation and Ceridian Corporation.
Mr. Rodysill retired in January 1994 as Senior Vice President, Store
Development and Construction of Nash Finch, a position he had held for more than
five years.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND ITS COMMITTEES
Standing committees of the Board of Directors include the Audit Committee,
the Compensation Committee and the Nominating Committee.
The Audit Committee reviews and monitors accounting policies and control
procedures of Nash Finch, including recommending the engagement of independent
public accountants and reviewing the scope of the audit. The current members of
the Audit Committee are Carole F. Bitter, Richard A. Fisher, John H. Grunewald,
Richard G. Lareau and Jerome O. Rodysill. The Audit Committee met three times
during fiscal 1996.
The Compensation Committee determines salaries and bonuses for executive
officers, selects the officer and key employee participants and determines the
compensation awards to be made to such participants under the Nash Finch
Executive Incentive Bonus and Deferred Compensation Plan, and considers new
executive compensation plans for recommendation to the Board of Directors. The
Compensation Committee also administers the 1994 Stock Incentive Plan and the
1995 Director Stock Option Plan. The current members of the Compensation
Committee are Carole F. Bitter, Richard A. Fisher, Allister P. Graham, Russell
N. Mammel and Donald R. Miller. Alfred N. Flaten, as Chief Executive Officer of
Nash Finch, is a non-voting member of the committee. The Compensation Committee
met five times during fiscal 1996.
The Nominating Committee considers and recommends to the Board of Directors
the size of the Board, nominees who meet the criteria for Board membership, the
procedures for identifying potential Board nominees, nominees for election as
officers, and matters relating to director compensation. In addition, the
Nominating Committee recommends to the Board of Directors nominees for
appointment to Board committees as well as the functions, responsibilities and
procedures for the various Board committees. The Nominating Committee will
administer the 1997 Non-Employee Director Stock Compensation Plan if such plan
is approved. The current members of the Nominating Committee are Alfred N.
Flaten, Allister P. Graham, Richard G. Lareau, Don E. Marsh, Donald R. Miller
and Robert F. Nash. The Nominating Committee met four times during fiscal 1996.
Stockholder recommendations for director nominees may be considered, but there
are no established procedures for the submission of such recommendations to the
Nominating Committee for consideration.
7
<PAGE>
During 1996, the Board of Directors held six regularly scheduled meetings
and one special meeting. All of the directors attended 75% or more of the
aggregate meetings of the Board of Directors and all committees on which they
served during the periods that each served as a director and committee member,
with the exception of Don E. Marsh who, because of business conflicts, was
unable to attend one Board and three Nominating Committee meetings.
COMPENSATION OF DIRECTORS
DIRECTORS' FEES. Directors who are full-time employees of Nash Finch
receive no separate compensation for their services as directors. Directors who
are not full-time employees of Nash Finch receive out-of-pocket traveling
expenses incurred in attending Board and committee meetings. From the beginning
of fiscal 1996 through December 31, 1996, such directors received compensation
of $1,000 for each Board meeting attended, $500 for each committee meeting
attended, and a retainer of $1,100 per month. In addition, from the beginning of
the fiscal year until April 30, 1996, the director elected by the Board of
Directors to serve as Board Chair, if not a full-time employee of the Company,
received an additional retainer of $1,100 per month. Effective May 1, 1996, the
Board Chair receives an additional monthly retainer equal to two times the
monthly retainer paid to outside members of the Board of Directors generally.
Also, on April 9, 1996, the Board granted Mr. Miller a special award of 750
shares of Common Stock in recognition of his contributions as Board Chair since
his election to that position in May 1995. At April 9, 1996, the market price
for the Common Stock was $16.375 per share.
Effective January 1, 1997, directors who are not full-time employees of Nash
Finch receive compensation at a rate of $1,500 plus reasonable expenses incurred
for each meeting of the Board of Directors attended, $750 plus reasonable
expenses incurred for attendance at a committee meeting, a retainer of $1,250
per month for serving as a director, a retainer of $125 per month for serving as
a member of a committee of the Board, and a retainer of $125 per month for
serving as Chair of a committee of the Board. The Board Chair remains entitled
to receive an additional monthly retainer equal to two times the monthly
retainer paid to outside members of the Board of Directors generally.
1997 NON-EMPLOYEE DIRECTOR STOCK COMPENSATION PLAN. On February 11, 1997,
the Board of Directors adopted the 1997 Non-Employee Director Stock Compensation
Plan, subject to approval of the stockholders at the Annual Meeting. If
approved, this plan would provide non-employee directors with (i) a portion of
their annual retainer either in shares of Common Stock or credits to a phantom
stock account, and (ii) the opportunity to defer the remainder of their director
compensation through credits to a phantom stock account or an interest bearing
account. See "Approval of 1997 Non-Employee Director Stock Compensation Plan."
1995 DIRECTOR STOCK OPTION PLAN. Pursuant to the 1995 Director Stock Option
Plan, each director who is not an employee of Nash Finch is eligible to receive
an annual grant of an option to purchase 500 shares of Common Stock (the
"Option") immediately following each annual meeting of stockholders of Nash
Finch while the plan is in effect. On May 14, 1996, each director other than Mr.
Flaten was granted an Option. Mr. Flaten was ineligible because he was an
employee of the Company.
8
<PAGE>
EXECUTIVE COMPENSATION AND OTHER BENEFITS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth the cash and non-cash compensation earned
during the fiscal years ending December 28, 1996, December 30, 1995, and
December 31, 1994, by the Chief Executive Officer and the four most highly
compensated executive officers of Nash Finch whose salary and bonus exceeded
$100,000 for the fiscal year ended December 28, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------------------ PAYOUTS
RESTRICTED -----------------------------
---------------------- STOCK SECURITIES LTIP ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS (1) AWARDS (2) UNDERLYING PAYOUTS (4) COMPENSATION (5)
POSITION YEAR ($) ($) ($) OPTIONS (3) ($) ($)
- -------------------- ----------- --------- ----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alfred N. Flaten 1996 368,985 114,700 69,996 48,693 165,956 5,318
President, Chief 1995 279,232 130,000 -- -- -- 5,081
Executive Officer 1994 221,257 100,000 -- 7,000 -- 4,944
and Director
William T. Bishop 1996 179,506 43,200 29,998 20,868 50,478 --
(6) 1995 149,588 50,000 -- -- -- --
Senior Vice 1994 5,753 -- -- 3,200 -- --
President,
Sales and
Logistics
David J. Richards 1996 153,425 55,000 -- -- 37,836 --
(6) 1995 124,657 25,000 -- -- -- --
Vice President, 1994 7,192 -- -- -- -- --
Corporate Retail
Stores
Norman R. Soland 1996 139,616 34,720 21,597 15,024 39,247 5,318
Vice President, 1995 107,704 47,000 -- -- -- 4,398
Secretary and 1994 102,219 33,000 -- 3,000 -- 4,338
General Counsel
Charles M. Seiler 1996 128,646 41,600 -- -- 36,151 5,318
Vice President, 1995 113,189 30,000 -- -- -- 4,847
Corporate Retail 1994 83,770 30,000 -- 3,000 -- 3,625
Operations
</TABLE>
- ------------------------
(1) Cash bonuses for services rendered have been included as compensation for
the year earned, even though bonuses were actually paid in the following
year.
(2) These amounts reflect the value of the 25% discount related to the purchase
by certain executive officers of shares of Common Stock that are restricted
and subject to a risk of forfeiture for an aggregate purchase price equal to
75% of the fair market value of the Common Stock on January 31, 1996.
Pursuant to this program (the "Management Restricted Stock Purchase
Program"), which was implemented under the 1994 Stock Incentive Plan, 10% of
the aggregate purchase price was paid by such executive officer in cash and
the remainder was paid by delivery of a promissory note secured by a pledge
of the shares. Interest on the promissory note, at a rate of 5.61% per annum
(120% of the
9
<PAGE>
then applicable federal rate), is payable quarterly, with principal amounts
payable commencing two years from issuance of the promissory note and due in
full on February 28, 2001. The forfeiture restrictions on the shares
generally will lapse on February 28, 2001, although the shares will remain
pledged as collateral for the promissory note until repayment of the
promissory note or Nash Finch otherwise releases such shares. If, however,
the executive officer's employment is terminated by reason of death,
disability, retirement, or a change in control of Nash Finch occurs (as
defined in the 1994 Stock Incentive Plan), the forfeiture restrictions will
lapse. If the executive officer's employment is terminated prior to the
lapsing of forfeiture restrictions for any other reason, such restricted
shares will be repurchased by Nash Finch at the lesser of the purchase price
paid or an amount equal to the then fair market value of the shares divided
by 0.75. Although ordinary cash dividends on such restricted shares will be
paid to such executive officers, any other dividends or distributions on
such restricted shares will be subject to the same security interest and
forfeiture restrictions as the shares to which they relate. As of December
28, 1996, the number and fair market value of restricted shares held by each
of the named executive officers participating in the Management Restricted
Stock Purchase Program was as follows: (i) Mr. Flaten's shares (16,231) had
a fair market value of $353,024; (ii) Mr. Bishop's shares (6,956) had a fair
market value of $151,293; and (iii) Mr. Soland's shares (5,008) had a fair
market value of $108,924.
(3) Reflects the grant of options under the 1994 Stock Incentive Plan.
(4) These amounts reflect (i) the fair market value of shares of Common Stock
issued for performance units earned for fiscal 1996 pursuant to awards
granted under the 1994 Stock Incentive Plan (see "Executive Compensation and
other Benefits -- Long-Term Incentive Plan," and "Executive Compensation and
other Benefits -- Report of Compensation Committee on Executive
Compensation"), and (ii) cash payments representing dividends declared on an
equivalent number of shares ("dividend equivalents") from January 1, 1996
through March 1, 1997, the date the shares were issued. The fair market
value of the shares was determined as of February 10, 1997 ($20.125 per
share of Common Stock), the date that issuance of the shares was approved by
the Compensation Committee of the Board of Directors. These shares have been
included as payouts for fiscal 1996, the year for which they were earned,
even though the shares were not issued, and dividend equivalents paid, until
1997.
(5) "All Other Compensation" consists of contributions by Nash Finch in 1994,
1995 and 1996 to the Nash Finch Profit Sharing Plan.
(6) Mr. Bishop and Mr. Richards joined Nash Finch in December 1994.
STOCK OPTIONS
The following table summarizes the option grants during the fiscal year
ended December 28, 1996 to the executive officers named in the Summary
Compensation Table and the potential realizable value of the options held by
such executive officers on December 28, 1996.
10
<PAGE>
OPTION GRANTS IN FISCAL YEAR 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OR OPTION TERM (2)
OPTIONS TO EMPLOYEE IN BASE PRICE EXPIRATION ----------------------
GRANTED (1) FISCAL YEAR ($/SHARE) DATE 5% ($) 10%($)
----------- --------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Alfred N. Flaten 48,693 35.7% 17.25 02-28-03 341,825 797,104
William T. Bishop 20,868 15.3% 17.25 02-28-03 146,473 341,609
David J. Richards 0 N/A N/A N/A N/A N/A
Norman R. Soland 15,024 11.0% 17.25 02-28-03 105,468 245,943
Charles M. Seiler 0 N/A N/A N/A N/A N/A
</TABLE>
- ------------------------
(1) These options were granted in connection with the Management Restricted
Stock Purchase Program described in footnote (2) to the Summary Compensation
Table. Options to purchase three shares of Common Stock were granted for
each share of restricted Common Stock purchased under the program. Such
options have an exercise price equal to the fair market value of the Common
Stock on the date of grant, become exercisable in 10% increments in the
proportion that repayments of principal on the promissory notes bear to the
original principal amount of such promissory notes, become exercisable in
full in any event on February 28, 2002 and expire on February 28, 2003. If
the executive officer's employment terminates for any reason other than
death, disability or retirement, such options generally will terminate. Upon
a change in control of Nash Finch (as defined in the 1994 Stock Incentive
Plan), however, such options will become exercisable in full and will remain
exercisable for the remainder of their terms regardless of whether the
executive officer remains in the employ of Nash Finch. See "Amendment to
1994 Stock Incentive Plan -- Summary of 1994 Plan" for a description of
events constituting a change of control of Nash Finch.
(2) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent upon the future
performance of the Common Stock, overall market conditions and the executive
officer's continued involvement with Nash Finch. The amounts represented in
this table might not necessarily be achieved.
During fiscal year 1996, no options were exercised by the executive officers
named in the Summary Compensation Table. The following table summarizes the
number and value of such officers' unexercised options at the fiscal year end.
11
<PAGE>
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT DECEMBER 28, 1996 AT DECEMBER 28, 1996 (1)
---------------------------- --------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Alfred N. Flaten 4,200 51,493 $ 20,475 $ 232,770
William T. Bishop 1,920 22,148 $ 10,800 $ 101,100
David J. Richards 1,200 800 $ 6,750 $ 4,500
Norman R. Soland 1,800 16,224 $ 8,775 $ 73,458
Charles M. Seiler 1,800 1,200 $ 8,775 $ 5,850
</TABLE>
- ------------------------
(1) Value is calculated as the excess of the fair market value of the Common
Stock underlying the options over the option exercise price.
LONG-TERM INCENTIVE PLAN
The following table sets forth information regarding (a) the number of stock
equivalent ("phantom stock") units allocated for the fiscal year ended December
28, 1996 to each of the executive officers named in the Summary Compensation
Table under the Nash Finch Executive Incentive Bonus and Deferred Compensation
Plan (the "Deferred Compensation Plan") and (b) the number of performance share
units granted to such officers under the 1994 Stock Incentive Plan. Each phantom
stock unit has a base value of $18.495.
LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
PERFORMANCE OR NON-STOCK PRICE-BASED PLAN
NUMBER OF SHARES, OTHER PERIOD ---------------------------------------
UNITS OR OTHER UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME RIGHTS (#) OR PAYOUT (#) (#) (#)
- --------------------------------- ----------------- ----------------- --------------- --------- -----------
<S> <C> <C> <C> <C> <C>
Alfred N. Flaten 4,429(1) (2) -- -- --
23,646(3) 1996-1998 0 15,764 15,764
William T. Bishop 2,155(1) (2) -- -- --
7,188(3) 1996-1998 0 4,792 4,792
David J. Richards 1,616(1) (2) -- -- --
5,391(3) 1996-1998 0 3,594 3,594
Norman R. Soland 1,676(1) (2) -- -- --
5,592(3) 1996-1998 0 3,728 3,728
Charles M. Seiler 1,536(1) (2) -- -- --
5,151(3) 1996-1998 0 3,434 3,434
</TABLE>
- ------------------------
(1) The Deferred Compensation Plan provides additional long-term incentive
compensation to selected executive officers and other key employees.
Participants are selected annually by the Compensation Committee which also
determines the amounts to be allocated to participants for the year.
Normally, the Deferred Compensation Plan is effective only if the
consolidated net income of Nash Finch and its subsidiaries exceeds 6% of the
stockholders' equity as shown on Nash Finch's current financial
12
<PAGE>
statements, and then only 5% of such excess is available for allocation to
participants. The Compensation Committee may, however, in its discretion,
authorize any amount to be allocated under the Deferred Compensation Plan.
The amount allocated annually to each participant cannot exceed one-third of
the participant's annual base salary. The entire allotment to a participant
is contingently credited to the participant's account at the end of each
year. (Nash Finch does not fund or set aside any cash amounts which are
allocated to participants; instead, bookkeeping entries are made).
Allotments credited to each participant's account are converted to share
equivalents of Common Stock and each participant is entitled to additional
credits for dividends paid on such share equivalents during each subsequent
year. The dividend credits are also converted to share equivalents. In
addition, the value of each participant's account is increased or decreased,
whichever is applicable, by an amount equal to the increase or decrease in
fair market value of the share equivalents during the year, provided that
the participant is always entitled to the amounts originally allocated
regardless of any decrease in the market value of share equivalents.
(2) Amounts contingently credited to the participant's account are payable to
the participant in cash upon termination of employment, except that benefits
may be totally or partially forfeited under certain circumstances.
(3) These awards represent performance units granted under the 1994 Stock
Incentive Plan and payable, to the extent earned, in shares of Common Stock
(the "Performance Units"). Payout of the Performance Units is tied to
achieving specified levels of earnings per share ("EPS") growth, average
return on stockholders' equity ("ROE") and total stockholder return ("TSR").
Minimum and maximum performance goals for each category have been determined
by the Compensation Committee. If performance equals or exceeds the maximum
goal for the category, all of the Performance Units allocated to the
category are earned and paid out. If performance equals or is less than the
minimum goal, no Performance Units allocated to the category are earned or
paid out. If performance for a particular category exceeds the minimum goal
for that category, but is less than the maximum goal, Performance Units are
earned and paid out on a proportionate basis. Performance Units allocated to
EPS growth would be earned based upon 1996 performance and paid out in 1997.
Performance Units allocated to ROE and TSR would be earned based upon
performance for the period 1996 through 1998, and would not be paid out
until 1999. The maximum targeted EPS growth was achieved in 1996, and
therefore, Performance Units allocated to this category were earned and were
paid out in 1997. The payout of earned Performance Units is included in the
number of shares beneficially owned by the executive officers (see
"Principal Stockholders and Beneficial Ownership of Management"), and is
reported in the Summary Compensation Table. Since payout of the Performance
Units may not exceed 100% of the Performance Units granted, the target award
amount and the maximum award amount are the same. For more detail about the
Performance Units, see "Report of Compensation Committee on Executive
Compensation."
CHANGE IN CONTROL AGREEMENTS
The Board of Directors has authorized Nash Finch to enter into change in
control agreements with certain executive officers and key employees of Nash
Finch and its subsidiaries. Pursuant to these agreements, certain payments and
benefits would be provided to such employees in the event their employment is
terminated under certain conditions, including a change in control of Nash
Finch.
If an employee is terminated by Nash Finch or a subsidiary within 24 months
of a change in control (or, in limited circumstances, prior to such a change in
control) other than by reason of death, disability,
13
<PAGE>
retirement or cause, or the employee terminates for good reason, Nash Finch will
pay or cause to be paid to the employee a lump sum equal to the employee's
highest monthly compensation (as defined in the employee's change in control
agreement) multiplied by a number of months equal to either 12, 24 or 36 months
and will maintain or cause to be maintained benefit plans (including health,
life, dental and disability) for the employee and his or her dependents for 12,
24 or 36 months. Subject to certain limitations, the multiple referred to above
is 36 months for Mr. Flaten, 24 months for Mr. Bishop, Mr. Richards, Mr. Soland
and Mr. Seiler, and 24 months or 12 months for all other designated employees.
The options, Performance Units, and rights to purchase restricted stock
("Restricted Stock Awards") granted to the executive officers named in the
Summary Compensation Table were granted under the 1994 Stock Incentive Plan.
Pursuant to the terms of the 1994 Stock Incentive Plan and the agreements
evidencing such awards, the following occurs upon a change in control of Nash
Finch: (i) for options granted, the Compensation Committee, in its sole
discretion, may (a) accelerate the exercisability of options such that the
options will be immediately exercisable upon the change in control, or (b)
determine that the optionee will receive, as of the effective date of the change
in control, cash in an amount equal to the excess of the fair market value of
the option shares immediately prior to the effective date of the change in
control over the exercise price per share of the options; (ii) for Performance
Units granted, the Compensation Committee, in its sole discretion, may (a)
adjust the number and kind of securities subject to the Performance Unit and the
performance criteria which must be fulfilled in order to earn the award shares,
and (b) in the event of involuntary termination of employment following a change
in control, adjust the formula provided in the performance award to provide for
the issuance of more award shares than would be the case if the involuntary
termination were not preceded by a change in control; and (iii) for shares of
Common Stock purchased pursuant to Restricted Stock Awards, the Compensation
Committee, in its sole discretion, may declare such shares to be fully vested
and nonforfeitable.
Pursuant to the terms of the Deferred Compensation Plan, the following
occurs upon a change in control of Nash Finch: (i) an additional amount would be
allocated to the account of each participant equal to the amount allocated in
the previous year; (ii) forfeiture provisions would lapse; and (iii) the total
balance of the participant's account would become payable in full.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
OVERVIEW. The Compensation Committee (the "Committee") of the Board of
Directors is comprised of directors who are not full-time employees of Nash
Finch. The Chief Executive Officer ("CEO") of Nash Finch, EX OFFICIO, is a
non-voting member of the Committee.
The Committee has overall responsibility for executive compensation pursuant
to delegation by the Board of Directors. As described under "Election of
Directors -- Information About Board and Its Committees," the Committee
determines annual salaries and bonuses of executive officers and certain other
key employees, including the CEO; considers and makes recommendations to the
Board concerning new executive compensation plans; and administers the Deferred
Compensation Plan, the 1994 Stock Incentive Plan and the 1995 Director Stock
Option Plan.
As part of the Compensation Committee's on-going efforts to ensure the
continuing effectiveness and appropriateness of the Company's executive
compensation program, the program was reviewed in 1993
14
<PAGE>
with the assistance of an outside consultant. The review led to various changes
in Nash Finch's policies regarding executive compensation including
clarification and restatement of the basic objectives of the program, a more
defined performance focus, and an increased emphasis on performance-related
stock incentives.
COMPENSATION PHILOSOPHY. The fundamental objective of Nash Finch's
executive compensation program is to support the achievement of the Company's
business objectives. As such, the Company's philosophy is that executive
compensation should be designed to achieve the following:
- Enable the Company to attract and retain qualified key executives whose
skills and capabilities are needed to assure the continued growth and
success of Nash Finch in a highly competitive industry.
- Provide an incentive to executives by tying a meaningful portion of
compensation to the achievement of Company financial objectives.
- Align the interests of executives with those of Nash Finch stockholders by
providing a significant portion of compensation in Common Stock.
To maintain an appropriately competitive level of total compensation,
comparisons are made with the ranges of compensation paid to persons holding
comparable positions at other companies of similar size, with primary emphasis
on the food distribution industry. These comparisons, by necessity, extend
beyond the companies included in the peer group for the comparative performance
graph shown below, given the number and size of companies included in the
industry group.
COMPONENTS OF EXECUTIVE COMPENSATION. The principal components of executive
compensation include salaries, cash bonuses and longer-term incentive
compensation.
Salaries and cash bonuses for executive officers, including the CEO and the
other executive officers named in the Summary Compensation Table, are determined
annually, taking into consideration the executive's level of responsibility and
experience, individual and corporate performance, and competitive compensation
comparisons. Salaries for executive officers, including the CEO, are recommended
by the CEO to the Committee. The CEO's performance is evaluated by the
Committee, and each executive officer's performance is evaluated by the CEO and
reviewed by the Committee. After giving consideration to such recommendations,
performance evaluations and other relevant factors, the Committee makes its
final determination regarding salaries.
Effective for 1996, a new officer bonus plan was approved and implemented by
the Committee. Under the plan, annual cash bonuses for executive officers are
determined based upon performance against predetermined financial and other
goals. A maximum potential bonus is assigned by the Committee for each eligible
officer. For executive officers, these range from 30% of annual base salary to
50% of annual base salary for the CEO.
For each such officer, including the CEO, point values are established for
each annually predetermined goal. The goals for the CEO are approved by the
Committee; those for other executive officers are reviewed. Performance against
each goal is measured objectively after the end of the year, and the amount of
the officer's bonus for that year is determined on the basis of such measured
performance as a percentage of the maximum potential bonus. For 1996, 35% of the
CEO's maximum potential bonus was allocated to earnings per share and return on
equity goals; the remaining 65% was allocated to organizational development and
operational goals.
15
<PAGE>
Longer-term incentive compensation consists largely of awards of phantom
stock units to certain executives under the Deferred Compensation Plan. Such
awards are intended primarily to serve as a means of retaining key executives by
providing supplemental retirement income. The potential value of such awards is
linked to stock price appreciation providing an additional long-term incentive
to increase stockholder value during an executive's career with Nash Finch. The
Committee administers the Deferred Compensation Plan and is responsible for
selecting the executive officers and other key employees for participation in
the plan and determining the amounts of compensation awards allocated to the
selected participants. Refer to "Executive Compensation and Certain Other
Benefits -- Long-Term Incentive Plan" for a description of the key terms of the
Deferred Compensation Plan.
It has also been Nash Finch's policy to encourage a broad range of employees
(including executive officers) to participate in stock ownership. For this
purpose, a number of stock option plans have been adopted over the years. The
size of individual stock option grants made under such plans have largely been
determined by the employee's position and ability to purchase shares, as
measured by his or her cash compensation level.
The 1994 Stock Incentive Plan, among other things, authorizes the Committee
to award rights to executive officers and other key employees to receive shares
of Common Stock upon the achievement of established performance goals. Such
awards are referred to in the 1994 Stock Incentive Plan as "Performance Units."
Such Performance Units would have a maximum value at grant ranging from 60%
of a participant's 1996 base salary to 120% for the CEO. For 1996, the number of
share units which could be earned (an equal number of share units for each of
three corporate performance objectives) would be determined on the basis of the
average closing sales prices for the Common Stock for the last calendar quarter
of 1995. The three performance categories are earnings per share (EPS) growth in
1996 compared with the highest EPS for the preceding three years, average return
on stockholders' equity (ROE) for the three-year period beginning in 1996, and
total stockholder return (TSR) for the same three-year period. Minimum and
maximum performance goals have been determined by the Committee for each
category. In no case will any portion of an award for a performance category be
earned unless the minimum for that category is exceeded. An award for EPS growth
would be earned based on performance in 1996 and paid out in 1997. Awards for
ROE and TSR would, to the extent earned, not be paid out until 1999. Awards paid
out in Common Stock will be restricted, with respect to 60% of such shares, as
to transferability for three years following the issuance of such shares. For
1996, the maximum goal for EPS growth was exceeded. As a result, a total of
29,570 shares of Common Stock were earned and issued, with the Committee's
approval, to executive officers and other participants, including 7,882 shares
to the CEO, in accordance with the terms of the 1996 Performance Unit awards.
The Committee believes that such performance-based awards will serve the
purpose of more closely aligning executive and stockholder interests in that the
executives will benefit only if stockholder value is enhanced. Also, for this
purpose, the Committee has established stock ownership guidelines for executive
officers who will be encouraged, but not required, to satisfy these guidelines
within three to five years. The stock ownership guideline for the CEO is five
times annual base salary.
The 1994 Stock Incentive Plan also authorizes the Committee to grant awards
in the form of shares of restricted Common Stock. Such awards are referred to in
the 1994 Plan as "Restricted Stock Awards". In 1996, again for the purpose of
more closely aligning executive and stockholder interests, and in consultation
with an outside compensation consultant, the Committee granted Restricted Stock
Awards to a
16
<PAGE>
limited number of executive officers, including the CEO. Pursuant to these
grants, the participants purchased shares of restricted Common Stock at a price
equal to 75% of the fair market value of the shares at January 31, 1996, the
date of grant. A minimum down payment of 10% was required, with the balance
being payable to the Company, with interest, over a term of five years. The
shares purchased have been pledged to the Company as security for payment of the
balance of the purchase price, and are subject to forfeiture if the individual
does not satisfy a condition of continued employment with the Company, basically
for a term of five years. Each executive officer purchasing such restricted
shares also received a grant of an option to purchase an additional three shares
of unrestricted Common Stock, at an exercise price equal to 100% of fair market
value at January 31, 1996, for each restricted share purchased. The options,
having terms of seven years, become exercisable in 10% increments as the balance
of the restricted share purchase price is paid down. The number of shares of
restricted stock available for purchase by the CEO had an aggregate fair market
value equal to 100% of his 1995 base salary; for the other participants, the
aggregate fair market value was equal to 80% of 1995 base salary. A total of
32,832 shares of restricted stock were purchased under the Restricted Stock
Awards and are outstanding, including 16,231 shares issued to the CEO; related
stock options total 98,496 shares, including an option for 48,693 shares granted
to the CEO.
The Committee has no present plans to grant additional Restricted Stock
Awards.
CHIEF EXECUTIVE OFFICER COMPENSATION. For the 1996 fiscal year, Mr. Flaten
received a salary of $368,985, a bonus of $114,700, and a grant of 4,429 phantom
stock units under the Deferred Compensation Plan. The salary and bonus of Mr.
Flaten was determined in accordance with the policies outlined above.
Carole F. Bitter
Richard A. Fisher
Allister P. Graham
Russell N. Mammel
Donald R. Miller
Alfred N. Flaten (EX OFFICIO)
Members of the Compensation Committee
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Flaten, the Chief Executive Officer of Nash Finch, is a non-voting
member of the Compensation Committee. Mr. Mammel, the retired President and
Chief Operating Officer of Nash Finch, is also a member of and chaired the
Compensation Committee through 1996.
COMPLIANCE WITH FEDERAL TAX LEGISLATION
The Omnibus Budget Reconciliation Act of 1993 ("OBRA") disallows a deduction
for federal income tax purposes by public corporations for compensation in
excess of $1,000,000 paid in any year to a "covered employee" except under
certain circumstances, including the attainment of objective "performance based"
goals. Compensation that is deferred until retirement does not count toward the
$1,000,000 limit. "Covered employees" are deemed as the individuals who, at the
end of the fiscal year, are the chief executive officer and the other four most
highly compensated executive officers of a company.
17
<PAGE>
During fiscal year 1996, neither the Chief Executive Officer nor any other
executive officer received compensation in excess of $1,000,000. It is also
unlikely that Chief Executive Officer or any other executive officer will
receive total compensation in excess of $1,000,000 during fiscal year 1997. The
Compensation Committee intends to continue to monitor the executive compensation
program with respect to current federal tax law.
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on Nash
Finch Common Stock for the last five fiscal years with the cumulative total
return over the same period of the S & P 500 Index, the S & P SmallCap 600 Index
(in which Nash Finch is included) and a peer group of companies selected by Nash
Finch (weighted according to the peer companies' market capitalization at the
beginning of each fiscal year). The comparison assumes the investment of $100 in
Common Stock, the S & P 500 Index, the S & P SmallCap 600 Index and the peer
group at the end of fiscal 1991 and reinvestment of all dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NASH FINCH COMPANY S&P 500 S&P SMALLCAP 600 INDEX PEER GROUP
<S> <C> <C> <C> <C>
1991 $100.00 $100.00 $100.00 $100.00
1992 113.12 107.62 121.04 107.27
1993 112.55 118.46 143.76 115.06
1994 109.16 120.03 136.92 88.79
1995 125.93 165.13 177.94 106.81
1996 153.11 203.05 215.88 97.17
</TABLE>
Source: Standard & Poor's Compustat Services, Inc.
The companies included in the peer group are Fleming Companies, Inc., Super
Food Services, Inc. and Supervalu, Inc. They were selected on the basis that,
like Nash Finch, each is predominately a full-line wholesale distributor of
grocery products having several distribution centers and with operations which
extend over a wide geographic area. The Compensation Committee has approved the
selection of these companies.
Super Food Services, Inc. was acquired by Nash Finch in November 1996
pursuant to a cash tender offer of $15.50 per share. The closing market price
for Super Food Services, Inc. on October 7, 1996 (the day prior to the
announcement of the cash tender offer) was $11.25 per share.
18
<PAGE>
APPROVAL OF 1997 NON-EMPLOYEE DIRECTOR STOCK COMPENSATION PLAN
(PROPOSAL NO. 2)
INTRODUCTION
The Board of Directors believes that its compensation program for
non-employee directors will be tied more closely to the interests of the
stockholders if at least a portion of the directors' annual retainer is paid in
the form of shares of Common Stock either currently as earned or on a deferred
basis when a director leaves the Board of Directors.
Accordingly, on February 11, 1997, the Board of Directors adopted the 1997
Non-Employee Director Stock Compensation Plan (the "Director Plan"), subject to
approval by the stockholders. The purpose of the Director Plan is to provide
non-employee directors of Nash Finch ("Qualified Directors") with (a) 50 percent
(33- 1/3 percent with respect to the calendar quarters in the 1997 calendar
year) of their annual retainer in the form of either direct issuances of Common
Stock or credits to a phantom stock account (the "Share Account") established
under the Director Plan (the "Retainer Deferrals") and (b) the opportunity to
defer receipt of the remainder of their cash director compensation (the "Other
Compensation Deferrals") through credits to the Share Account or an interest
bearing account established under the Director Plan (the "Cash Account"). Nash
Finch has previously offered its Qualified Directors the option of deferring
cash director compensation into an interest bearing account, but the Director
Plan will provide the additional option of deferring into the Share Account.
ADMINISTRATION
The Director Plan will be administered by the Nominating Committee or such
other committee of the Board of Directors as may subsequently be designated by
the Board of Directors, and such committee may delegate any portion of its
duties to a named person. Such committee or person to whom administrative duties
are delegated is referred to as the "Administrator."
The Administrator has the discretionary power and authority to make, modify
and rescind such rules, policies, practices or procedures (the "Plan Rules") as
the Administrator determines to be necessary or advisable in connection with the
administration of the Director Plan. The Administrator has the sole
discretionary power and authority to make all determinations necessary for
administration of the Director Plan, except as otherwise required by the
Director Plan.
Nash Finch reserves the right at any time to amend the Director Plan to any
extent that it may deem advisable and to terminate the Director Plan. Upon the
termination of the Director Plan, any benefits to which participants in the
Director Plan (the "Participants") have become entitled prior to the effective
date of the termination will continue to be paid in accordance with the
provisions of the Director Plan.
DEFERRAL CREDITS
RETAINER DEFERRALS.
Each Qualified Director may elect to defer all (but not less than all) of
the Retainer Share Amount for such Qualified Director with respect to the
calendar quarters in a calendar year, in which case the Share Account of such
Qualified Director will be credited on a quarterly basis with Share Units. A
"Share Unit" is defined as the equivalent of one share of Common Stock and the
number of Share Units credited to a Share Account shall be determined by
dividing the Retainer Share Amount for the applicable calendar quarter by the
Market Price on the date the credit is made. The "Retainer Share Amount" is
determined
19
<PAGE>
by (a) taking an amount equal to 50 percent (33 1/3 percent with respect to the
calendar quarters in the 1997 calendar year) of the annual retainer payable to
Qualified Directors for the applicable calendar quarter and (b) multiplying such
amount by a fraction, the numerator of which is the number of days during such
calendar quarter that the individual served as a Qualified Director and the
denominator of which is the total number of days in such calendar quarter. The
term "Market Price" is defined as the closing sale price of the Common Stock on
a specified date or, if shares of Common Stock were not then traded, on the most
recent prior date when such shares were traded, as reported on the Nasdaq
National Market.
If a Qualified Director does not elect to defer such Retainer Share Amount
in the manner described above, such Retainer Share Amount will be paid to such
Qualified Director in the form of shares of Common Stock. The number of shares
issuable will be determined in the same manner as the number of Share Units was
determined for purposes of the Retainer Deferral.
OTHER COMPENSATION DEFERRALS.
Each Qualified Director may elect to defer into either the Cash Account or
Share Account any of the remaining portion of his or her cash director
compensation relating to his or her services during a calendar year.
EARNINGS CREDITS
A Participant's Cash Account will be credited with interest, calculated on
the basis of the balance in the Participant's Cash Account as of the last day of
the immediately preceding calendar quarter, in an amount equal to the
"applicable percentage" of the average daily balance of the Account for such
immediately preceding calendar quarter. The applicable percentage for a given
calendar quarter will be the quarterly equivalent of the average of the annual
yield set forth for each month during such calendar quarter in the Moody's Bond
Record, published by Moody's Investor's Service, Inc. (or any successor thereto)
under the heading of "Moody's Corporate Bond Yield Averages -- Av. Corp." or, if
such yield is no longer available, a substantially similar average selected by
the Administrator.
A Participant's Share Account will be credited with dividend equivalents, in
the form of additional Share Units, based on the amount of dividends that would
have been payable to the Participant if the number of Share Units credited to
the Participant's Share Account on the record date for such dividend payment had
then been shares of Common Stock.
DISTRIBUTIONS
GENERAL RULES.
Distributions of a Participant's Cash Account and Share Account will be made
or commence following the date on which the Participant ceases to be a member of
the Board of Directors. Distributions to a Participant will be made in the form
of a lump sum payment unless the Participant elects, on a properly completed
form and in accordance with Plan Rules, to receive his or her distribution in
the form of annual installment payments for a period of not more than 10 years.
In the event of a Participant's death, distributions will be made in a lump sum
payment whether or not payments have already commenced in the form of
installments. Any distribution from a Participant's Cash Account will be made in
cash only, and any distribution from a Participant's Share Account will be made
in shares of Common Stock only.
20
<PAGE>
SPECIAL RULES.
In certain circumstances, special distribution rules will apply. In all
circumstances, distributions from the Cash Account will be made in cash only,
and distributions from the Share Account will be made in shares of Common Stock
only.
UNFORESEEABLE EMERGENCY. A distribution will be made to a Participant from
his or her Share and Cash Accounts in the form of a lump sum payment if the
Participant submits a written distribution request to the Administrator and the
Administrator determines that the Participant has experienced an unanticipated
emergency that is caused by an event beyond the Participant's control resulting
in a severe financial hardship that cannot be satisfied through other means.
SMALL BENEFITS. If the balance in the Cash Account of a Participant who has
ceased to be a member of the Board of Directors is less than $5,000, such
balance will be distributed in a lump sum payment.
ACCELERATED DISTRIBUTIONS. A Participant may, at any time, elect an
immediate lump sum distribution of his or her Share and Cash Accounts in an
amount equal to 90 percent of the balance of such Accounts as of the date of the
distribution, in which case the remaining balance of such Accounts will be
forfeited.
SOURCE OF PAYMENTS; NATURE OF INTERESTS
The Director Plan is unfunded for tax purposes. All benefits and costs under
the Director Plan will be paid from Nash Finch's general assets, and the rights
of Participants to receive benefits will be no greater than that of any
unsecured general creditor of Nash Finch. Nash Finch may also establish a trust
with an independent corporate trustee for the purpose of paying such benefits.
Upon a Change in Control of Nash Finch (as defined below), Nash Finch is
required to establish such a trust and to transfer to such trust an amount equal
to 125% of the aggregate balance of all Participants' Accounts as of the end of
the month preceding such Change in Control. The benefits payable under the
Director Plan may not be sold, transferred, assigned, pledged, encumbered or
subjected to any charge or legal process.
For purposes of the Director Plan, a "Change in Control" is deemed to occur
upon the following: (a) a merger involving Nash Finch where the pre-merger
stockholders own 50% or more but not more than 80% of the surviving company's
voting stock (unless approved by the Board of Directors) or less than 50% of the
surviving company's voting stock (whether or not approved by the Board of
Directors); (b) a transfer of substantially all of Nash Finch's assets or a
liquidation of the company; (c) the acquisition by any person or group of 20% or
more but not more than 50% of Nash Finch's voting stock (unless approved by the
Board of Directors) or more than 50% of Nash Finch's voting stock (whether or
not approved by the Board of Directors); (d) the "continuity" directors (the
current directors and their future nominees) cease to constitute a majority of
the Board of Directors; and (e) any other change in control that would be
required by the Securities and Exchange Commission to be reported.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
A Participant's election to make a Retainer Deferral or Other Compensation
Deferral (collectively, a "Deferral") pursuant to the Director Plan will not be
a taxable event for federal income tax purposes. Participants will generally not
recognize taxable income until he or she receives distributions of cash or
shares of Common Stock. A Participant will generally recognize capital gain or
loss upon a subsequent taxable sale or disposition of any Common Stock received
under the Director Plan. The capital gain or loss
21
<PAGE>
will be long-term capital gain or loss if the Director's holding period of the
stock is longer than one year and will be short-term capital gain or loss if the
stock was held for one year or less.
In general, Nash Finch will be entitled to a compensation expense deduction
for any amounts includable in the taxable income of a Participant as ordinary
income, provided the Company complies with any applicable withholding
requirements.
DEFERRALS UNDER THE DIRECTOR PLAN
As of the date of this Proxy Statement, no Deferrals have been made under
the Director Plan. If the Director Plan is approved by the stockholders, and
assuming that each Qualified Director who is a nominee is elected at the Annual
Meeting and that all Qualified Directors make Retainer Deferrals, the amount of
the Retainer Deferrals (at the current level of the annual retainer) for the
Qualified Directors as a group for the 1997 calendar year (from and after the
date of the Annual Meeting) is set forth in the table below. These amounts are
expressed both in terms of the dollar amount of such Retainer Deferrals and the
number of Share Units that would be credited as a result of such Retainer
Deferrals.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
RETAINER DEFERRALS
----------------------------------
DOLLAR VALUE NUMBER OF SHARE
NAME AND POSITION ($) UNITS (1)(2)
- ------------------------------------------------------------------------------ --------------- -----------------
<S> <C> <C>
Qualified Directors as a Group
(10 persons) 31,586 1,651
</TABLE>
- ------------------------
(1) The number of Share Units in this column is based on the aggregate of the
Retainer Share Amount ($3,158.60) for each Qualified Director. This amount
is based on 33- 1/3 percent of the annual retainer during the portion of
calendar 1997 following the date of the Annual Meeting. For the 1998
calendar year and each year thereafter, this percentage will increase to 50
percent and will relate to a full calendar year, which at the current annual
retainer level would result in a Retainer Share Amount of $7,500 for each
Qualified Director. The Market Price used for this calculation was $19.125,
the price on March 31, 1997. The actual number of Share Units will be based
on the Market Price at the end of each calendar quarter.
(2) If Retainer Deferral elections are not made, this number will reflect the
number of shares of Common Stock to be issued to the Qualified Directors.
BOARD OF DIRECTORS RECOMMENDATION
The Board of Directors recommends that the stockholders vote FOR approval of
the Director Plan. The affirmative vote of a majority of the total votes cast by
the holders of shares present in person or represented by proxy at the Annual
Meeting and entitled to vote is necessary for approval. Unless a contrary choice
is specified, proxies solicited by the Board of Directors will be voted FOR
approval of the Director Plan.
22
<PAGE>
AMENDMENT TO 1994 STOCK INCENTIVE PLAN
(PROPOSAL NO. 3)
INTRODUCTION
On February 22, 1994, the Board of Directors adopted the 1994 Stock
Incentive Plan (the "1994 Plan"), which was submitted to and approved by Nash
Finch's stockholders at the 1994 Annual Meeting. On February 11, 1997, the Board
of Directors approved, subject to the approval of the Company's stockholders, an
amendment to the 1994 Plan to increase the number of shares of Common Stock
subject to the 1994 Plan and authorized the Compensation Committee of the Board
of Directors (the "Committee") to determine the number by which such shares
would be increased. With the assistance of an outside compensation consultant,
the Committee approved an increase of 200,000 shares. In connection with this
overall increase in the number of shares available for issuance under the 1994
Plan, the limitation on the number of shares that may be issued pursuant to
non-option awards has been increased by 150,000 shares.
The purpose of the 1994 Plan is to advance the interests of Nash Finch and
its stockholders by enabling Nash Finch and its subsidiaries to attract and
retain persons of ability to perform services for Nash Finch and its
subsidiaries by providing an incentive to such individuals through equity
participation in Nash Finch, thereby aligning the interests of such individuals
more closely with those of stockholders generally and by rewarding such
individuals who contribute to the achievement by Nash Finch of its economic
objectives. The Board of Directors approved the amendment to the 1994 Plan in
order to assure the continued fulfillment of this purpose, believing that the
number of shares which remain available for grants is not sufficient.
The major features of the 1994 Plan, as amended, are summarized below, which
summary is qualified in its entirety by reference to the actual text of the 1994
Plan, a copy of which may be obtained from Nash Finch.
SUMMARY OF THE 1994 PLAN
GENERAL. The 1994 Plan provides for awards ("Incentive Awards") to
employees (including, without limitation, officers and directors who are also
employees) of Nash Finch or any subsidiary of: (i) options to purchase Common
Stock that qualify as "incentive stock options" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code") ("Incentive
Options"); (ii) options to purchase Common Stock that do not qualify as such
Incentive Options ("Non-Statutory Options"); (iii) awards of shares of Common
Stock that are subject to certain forfeiture and transferability restrictions
that lapse after specified employment or performance periods ("Restricted Stock
Awards"); and (iv) rights entitling the recipient to receive a payment from Nash
Finch, in the form of shares of Common Stock, cash, or a combination of both,
upon the achievement of established performance goals ("Performance Units").
Incentive Options and Non-Statutory Options are collectively referred to herein
as "Options," and Options, Restricted Stock Awards, and Performance Units are
collectively referred to herein as "Incentive Awards."
The 1994 Plan is administered by the Committee, which selects the
participants to be granted Incentive Awards under the 1994 Plan, determines the
amount of the grants to the participants, and prescribes discretionary terms and
conditions of each grant not otherwise fixed under the 1994 Plan. Eligible
recipients under the 1994 Plan include all full time, salaried employees
(including, without limitation, officers and directors who are also employees)
of Nash Finch or any subsidiary of Nash Finch. As of January 1, 1997,
approximately 1,664 persons are eligible to participate in the 1994 Plan.
23
<PAGE>
As amended, the number of shares available for issuance under the 1994 Plan
is 600,000 (plus any unissued shares under Nash Finch's prior stock incentive
plan), of which no more than 450,000 may be issued pursuant to Incentive Awards
that are not Options. During the term of the Plan, no participant may be granted
Options, or other Incentive Awards with a value based solely on an increase in
the value of the Common Stock after the date of grant, relating to more than an
aggregate of 10% of the number of shares reserved under the 1994 Plan.
The 1994 Plan will terminate on February 22, 2004, unless sooner terminated
by action of the Board of Directors. No Incentive Award will be granted after
termination of the 1994 Plan. The Board of Directors may amend the 1994 Plan in
any respect that the Board deems to be in the best interests of Nash Finch
without stockholder approval, unless stockholder approval is then required
pursuant to the Code or the rules of the NASD. In the event of any
reorganization, merger, recapitalization, stock dividend, stock split or similar
change in the corporate structure or shares of Nash Finch, appropriate
adjustments will be made to the number and kind of shares reserved under the
1994 Plan and under outstanding Incentive Awards and to the exercise price of
outstanding Options. No right or interest in any Incentive Award may be assigned
or transferred by a participant, except by will or the laws of descent and
distribution, or subjected to any lien or otherwise encumbered.
OPTIONS. The exercise price for an Option must be not less than 100% of the
fair market value of the Common Stock on the day the Option is granted. In
determining the fair market value of the Common Stock, the Committee, as of the
date of grant, will use the mean between the high and low sales prices of the
Common Stock as reported on the Nasdaq National Market, or any exchange on which
the Common Stock is listed. On March 31, 1997, the mean between the high and low
sales prices for the Common Stock was $19.00.
Payment of an Option exercise price may be made either in cash or, in the
sole discretion of the Committee, by (i) delivery of a broker exercise notice
(pursuant to which the broker or dealer is instructed to sell enough shares or
loan the optionee enough money to pay the exercise price and to remit such sums
to Nash Finch), (ii) transfer from the participant to Nash Finch of previously
acquired shares of Common Stock having an aggregate fair market value on the
date of exercise equal to the payment required, (iii) a promissory note (on
terms acceptable to the Committee in its sole discretion), or (iv) a combination
of such methods. Options may be exercised in whole or in installments, as
determined by the Committee. Options will have a maximum term fixed by the
Committee, not to exceed 10 years from the date of grant.
RESTRICTED STOCK AWARDS. Restricted Stock Awards are grants to participants
of shares of Common Stock that are subject to restrictions and the possibility
of forfeiture for a period of time set by the Committee during which the
participant must remain continuously employed by or in the service of Nash Finch
or any of its subsidiaries. A participant will have all voting, dividend,
liquidation and other rights with respect to shares of Common Stock issued to
the participant as a Restricted Stock Award upon the participant becoming the
holder of record of such shares as if such participant were a holder of record
of shares of unrestricted Common Stock, except, unless the Committee determines
otherwise in its sole discretion, any dividends or distributions (including
regular quarterly cash dividends) paid with respect to shares of Common Stock
subject to the unvested portion of a Restricted Stock Award will be subject to
the same restrictions as the shares to which such dividends or distributions
relate.
PERFORMANCE UNITS. Performance Units may be awarded on such terms and
conditions as the Committee may specify. Such conditions may include payment or
vesting restrictions which involve continued employment or service with Nash
Finch and satisfaction by Nash Finch or a specified business
24
<PAGE>
unit or subsidiary of predetermined performance goals or criteria approved by
the Committee at the time the Performance Units are awarded. Upon satisfaction
of applicable terms and conditions, Performance Units will be payable in shares
of Common Stock, cash or some combination thereof in the Committee's sole
discretion. The Committee in its sole discretion may credit a participant's
Performance Units for dividend equivalents representing dividends or
distributions (including cash dividends or distributions) paid with respect to
shares of Common Stock during the period such Performance Units are outstanding.
EFFECT OF TERMINATION OF EMPLOYMENT. If a participant ceases to be employed
by or render services to Nash Finch and all subsidiaries ("Termination of
Service"), all Incentive Awards held by the participant will terminate as set
forth below.
Upon Termination of Service due to death, disability or retirement (i) all
outstanding Options then held by the participant will become immediately
exercisable in full and will remain exercisable for a period of one year, but in
no event after the expiration date of the Option, and (ii) all outstanding
Restricted Stock Awards and/or Performance Units then held by the participant
will terminate, vest and/or continue to vest in the manner determined by the
Committee and set forth in the agreement evidencing such award.
Upon Termination of Service for any reasons other than death, disability or
retirement, all rights of the participant under the 1994 Plan and any agreements
evidencing an Incentive Award will immediately terminate without notice of any
kind, and no Options then held by the participant will thereafter be
exercisable, all Restricted Stock Awards then held by the participant that have
not vested will be terminated and forfeited, and all Performance Units then held
by the participant will terminate, vest and/or continue to vest in the manner
determined by the Committee and set forth in the agreement evidencing such
Performance Units. The Committee, however, shall have the discretion to modify
the terms of Incentive Awards upon such a termination of employment.
Notwithstanding anything in the 1994 Plan to the contrary, in the event that
a participant materially breaches the terms of any confidentiality or
non-compete agreement entered into with Nash Finch or any subsidiary, whether
such breach occurs before or after termination of such participant's employment
or other service with Nash Finch or any subsidiary, the Committee in its sole
discretion may immediately terminate all rights of the participant under the
1994 Plan and any agreements evidencing an Incentive Award then held by the
participant without notice of any kind.
CHANGE IN CONTROL OF NASH FINCH. In the event a "change in control" of Nash
Finch occurs, then, if approved by the Committee in its sole discretion, (i) all
outstanding Options will become immediately exercisable in full and will remain
exercisable for the remainder of their terms, regardless of whether the
participant remains in the employ or service of Nash Finch or any subsidiary,
(ii) all outstanding Restricted Stock Awards will become immediately fully
vested and non-forfeitable, and (iii) all outstanding Performance Units vest
and/or continue to vest in the manner determined by the Committee and as set
forth in the agreement evidencing such Performance Units. In addition, the
Committee, without the consent of any affected participant, may determine that
some or all participants holding outstanding Options will receive cash in an
amount equal to the excess of the fair market value immediately prior to the
effective date of such change in control over the exercise price per share of
the Options.
For purposes of the 1994 Plan, a "change in control" of Nash Finch will be
deemed to have occurred, among other things, upon: (i) a sale, lease, exchange
or other transfer, directly or indirectly, of substantially all of the assets of
Nash Finch (in one transaction or in a series of related transactions) to a
person or an entity that is not controlled by Nash Finch; (ii) the approval by
the stockholders of Nash Finch of any plan
25
<PAGE>
or proposal for the liquidation or dissolution of Nash Finch; (iii) a merger or
consolidation to which Nash Finch is a party if the stockholders of Nash Finch
immediately prior to the effective date of such merger or consolidation have
"beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act),
immediately following the effective date of such merger or consolidation, of
securities of the surviving corporation representing (A) more than 50%, but not
more than 80% of the combined voting power of the surviving corporation's then
outstanding securities ordinarily having the right to vote at elections of
directors, unless such merger or consolidation has been approved in advance by
the Incumbent Directors (as defined in the 1994 Plan), or (B) 50% or less of the
combined voting power of the surviving corporation's then outstanding securities
ordinarily having the right to vote at elections of directors (regardless of any
approval by the Incumbent Directors); (iv) any person becomes, after the
effective date of the 1994 Plan, the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of (A) 20% or more, but
not 50% or more, of the combined voting power of Nash Finch's outstanding
securities ordinarily having the right to vote at elections of directors, unless
the transaction resulting in such ownership has been approved in advance by the
Incumbent Directors, or (B) 50% or more of the combined voting power of Nash
Finch's outstanding securities ordinarily having the right to vote at elections
of directors (regardless of any approval by the Incumbent Directors); (v) the
Incumbent Directors (as defined in the 1994 Plan) cease for any reason to
constitute at least a majority of the Board; or (vi) a change in control of Nash
Finch of a nature that would be required to be reported pursuant to Section 13
or 15(d) of the Exchange Act, whether or not Nash Finch is then subject to such
reporting requirements.
FEDERAL INCOME TAX CONSEQUENCES
The following description of federal income tax consequences is based on
current statutes, regulations and interpretations. The description does not
include state or local income tax consequences. In addition, the description is
not intended to address specific tax consequences applicable to an individual
participant who receives an Incentive Award.
INCENTIVE OPTIONS. There will not be any federal income tax consequences to
either the participant or Nash Finch as a result of the grant to an employee of
an Incentive Option under the 1994 Plan. The exercise by a participant of an
Incentive Option also will not result in any federal income tax consequences to
Nash Finch or the participant, except that (i) an amount equal to the excess of
the fair market value of the shares acquired upon exercise of the Incentive
Option, determined at the time of exercise, over the amount paid for the shares
by the participant will be includable in the participant's alternative minimum
taxable income for purposes of the alternative minimum tax, and (ii) the
participant may be subject to an additional excise tax if any amounts are
treated as excess parachute payments (see explanation below). Special rules will
apply if previously acquired shares of Common Stock are permitted to be tendered
in payment of an Option exercise price.
If the participant disposes of the Incentive Option shares acquired upon
exercise of the Incentive Option, the federal income tax consequences will
depend upon how long the participant has held the shares. If the participant
does not dispose of the shares within two years after the Incentive Option was
granted, nor within one year after the participant exercised the Incentive
Option and the shares were transferred to the participant, then the participant
will recognize a long-term capital gain or loss. The amount of the long-term
capital gain or loss will be equal to the difference between (i) the amount the
participant realized on disposition of the shares, and (ii) the Option price at
which the participant acquired the shares. Nash Finch is not entitled to any
compensation expense deduction under these circumstances.
26
<PAGE>
If the participant does not satisfy both of the above holding period
requirements (a "disqualifying disposition"), then the participant will be
required to report as ordinary income, in the year the participant disposes of
the shares, the amount by which the lesser of (i) the fair market value of the
shares at the time of exercise of the Incentive Option (or, for directors,
officers or greater than 10 percent stockholders of Nash Finch, generally the
fair market value of the shares six months after the date of exercise, unless
such persons file an election under Section 83(b) of the Code within 30 days of
exercise), or (ii) the amount realized on the disposition of the shares, exceeds
the Option price for the shares. Nash Finch will be entitled to a compensation
expense deduction in an amount equal to the ordinary income includable in the
taxable income of the participant. This compensation income may be subject to
withholding. The remainder of the gain recognized on the disposition, if any, or
any loss recognized on the disposition, will be treated as long-term or
short-term capital gain or loss, depending on the holding period.
NON-STATUTORY OPTIONS. Neither the participant nor Nash Finch incurs any
federal income tax consequences as a result of the grant of a Non-Statutory
Option. Upon exercise of a Non-Statutory Option, a participant will recognize
ordinary income, subject to withholding, on the date of exercise in an amount
equal to the difference between (i) the fair market value of the shares
purchased, determined on the date of exercise, and (ii) the Option exercise
price paid for the shares. The participant may be subject to an additional
excise tax if any amounts are treated as excess parachute payments (see
explanation below). Special rules will apply if previously acquired shares of
Common Stock are permitted to be tendered in payment of an Option exercise
price.
At the time of a subsequent sale or disposition of any shares of Common
Stock obtained upon exercise of a Non-Statutory Option, any gain or loss will be
a capital gain or loss. Such capital gain or loss will be long-term capital gain
or loss if the sale or disposition occurs more than one year after the date of
exercise and short-term capital gain or loss if the sale or disposition occurs
one year or less after the date of exercise.
In general, Nash Finch will be entitled to a compensation expense deduction
in connection with the exercise of a Non-Statutory Option for any amounts
includable in the taxable income of the participant as ordinary income, provided
Nash Finch complies with any applicable withholding requirements.
RESTRICTED STOCK AWARDS. With respect to shares issued pursuant to a
Restricted Stock Award that is not subject to a risk of forfeiture, a
participant will include as ordinary income in the year of receipt an amount
equal to the fair market value of the shares received on the date of receipt.
With respect to shares that are subject to a risk of forfeiture, a participant
may file an election under Section 83(b) of the Code, within thirty (30) days
after receipt, to include as ordinary income in the year of receipt an amount
equal to the fair market value of the shares received on the date of receipt
(determined as if the shares were not subject to any risk of forfeiture). If a
Section 83(b) election is made, the participant will not recognize any
additional income when the restrictions on the shares issued in connection with
the Restricted Stock Award lapse. Nash Finch will receive a corresponding tax
deduction for any amounts includable in the taxable income of the participant as
ordinary income.
A participant who does not make a Section 83(b) election within thirty (30)
days of the receipt of a Restricted Stock Award that is subject to a risk of
forfeiture will recognize ordinary income at the time of the lapse of the
restrictions in an amount equal to the then fair market value of the shares free
of restrictions. Nash Finch will receive a corresponding tax deduction for any
amounts includable in the taxable income of a participant as ordinary income.
27
<PAGE>
PERFORMANCE UNITS. A participant who receives a Performance Unit will not
recognize any taxable income at the time of the grant. When a Performance Unit
is paid out, the participant will realize ordinary income in an amount equal to
the fair market value of any shares of Common Stock and cash received by the
participant. Provided that proper withholding is made, Nash Finch would be
entitled to a compensation expense deduction for any amounts includable by the
participants as ordinary income.
EXCISE TAX ON PARACHUTE PAYMENTS. The Code also imposes a 20% excise tax on
the recipient of "excess parachute payments," as defined in the Code and denies
tax deductibility to Nash Finch on excess parachute payments. Generally,
parachute payments are payments in the nature of compensation to employees of a
company who are officers, stockholders, or highly compensated individuals, which
payments are contingent upon a change in ownership or effective control of the
company, or in the ownership of a substantial portion of the assets of the
company. For example, acceleration of the exercisability of Options, or the
vesting of Restricted Stock Awards, upon a change in control of Nash Finch may
constitute parachute payments, and in certain cases, "excess parachute
payments."
BOARD OF DIRECTORS RECOMMENDATIONS
The Board of Directors recommends that the stockholders vote FOR approval
and ratification of the amendment to the 1994 Plan. The affirmative vote of a
majority of the total shares represented in person or by proxy and entitled to
vote is required for approval. Unless a contrary choice is specified, proxies
solicited by the Board of Directors will be voted FOR approval of the amendment
to 1994 Plan.
COMPLIANCE WITH THE SECURITIES EXCHANGE ACT OF 1934, SECTION 16(A)
Section 16(a) of the Securities Exchange Act of 1934 requires Nash Finch's
directors and executive officers and all persons who beneficially own more than
10% of the outstanding shares of Common Stock to file with the SEC reports of
initial ownership and reports of changes in ownership in Common Stock. Copies of
such reports must also be furnished to Nash Finch, which offers assistance to
its directors and executive officers in complying with Section 16(a), including
preparing the reports and forwarding them to the SEC for filing.
During 1996, due to administrative oversight on the part of Nash Finch, an
exercise of a stock option by Suzanne S. Allen, an executive officer, was not
reported on a Current Report of Beneficial Ownership on Form 4. The transaction
was reported on an Annual Statement of Beneficial Ownership on Form 5 for 1996.
To Nash Finch's knowledge, based upon a review of the copies of reports
furnished to Nash Finch and written representations, all other filing
requirements applicable to directors and executive officers were complied with
during the fiscal year ended December 28, 1996.
INDEPENDENT AUDITORS
On September 24, 1996, the Board of Directors approved the engagement of
Ernst & Young LLP to serve as Nash Finch's independent certified public
accountants to audit its financial statements for the fiscal year ended December
28, 1996. The Audit Committee has not made a recommendation to the Board of
Directors regarding the re-engagement of Ernst & Young LLP to audit Nash Finch's
financial statements for the fiscal year ending January 3, 1998; however, there
is no reason to believe or expect that the Audit Committee will not make such a
recommendation to the Board of Directors during the year.
Nash Finch requested and expects a representative of Ernst & Young LLP to be
present at the Annual Meeting, to make a statement if he or she so desires and
to respond to appropriate questions.
28
<PAGE>
1997 STOCKHOLDER PROPOSALS
Any proposal of a Nash Finch stockholder intended to be presented at the
Annual Meeting of Stockholders in 1998 must be received by Nash Finch at its
principal executive office not later than December 8, 1997, for inclusion in its
proxy statement and form of proxy.
MISCELLANEOUS
The Board of Directors is not aware of any other matters which may be
presented to the stockholders for formal action at the Annual Meeting. If,
however, any other matters properly come before the Annual Meeting or any
adjournment or adjournments thereof, it is the intention of the persons named on
the proxy card to vote such proxies in accordance with their best judgment on
such matters.
The cost of soliciting proxies will be borne by Nash Finch. Directors,
officers and regular employees of Nash Finch may, without compensation other
than their regular compensation, solicit proxies by mail, telephone, telegram or
personal interview. Nash Finch may reimburse brokerage firms and others for
their expense in forwarding proxy materials to the beneficial owners of Common
Stock.
All stockholders who do not expect to attend the Annual Meeting, are urged
to execute and return the enclosed proxy card promptly.
BY ORDER OF THE BOARD OF DIRECTORS
NORMAN R. SOLAND
VICE PRESIDENT, SECRETARY
AND GENERAL COUNSEL
April 7, 1997
Minneapolis, Minnesota
29
<PAGE>
PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS.
[LOGO]
NASH FINCH COMPANY The undersigned hereby appoints Alfred
N. Flaten, John H. Grunewald and Robert
7600 FRANCE AVENUE SOUTH, P.O. BOX 355 F. Nash, and each of them, as Proxies,
MINNEAPOLIS, MN 55440-0355 each with the power of substitution, and
- -------------------------------------- hereby authorizes each of them to
represent and to vote, as designated
below, all the shares of common stock of
Nash Finch Company held of record by the
undersigned on March 24, 1997, at the
Annual Meeting of Stockholders to be
held on May 13, 1997 or any adjournment
thereof.
1. ELECTION OF DIRECTORS FOR all nominees listed WITHHOLD AUTHORITY to vote
below (except as for all
marked to the contrary nominees listed below / /
below) / /
(INSTRUCTION: To withhold authority to vote for any individual nominee strike
a line through the nominee's name)
Jerry L. Ford Robert F. Nash
Donald R. Miller
2. Proposal to adopt the 1997 Non-Employee Director Stock Compensation Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to amend the 1994 Stock Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3 ABOVE.
(PLEASE SIGN ON REVERSE SIDE)
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 2 AND 3, AND TO GRANT AUTHORITY TO VOTE FOR ALL
NOMINEES NAMED IN PROPOSAL 1 ABOVE.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
DATED ____________________, 1997
________________________________
SIGNATURE
________________________________
SIGNATURE IF HELD JOINTLY
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
