<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / X /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ X / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section
240.14a-11(c) or
Section 240.14a-12
Fred Meyer, Inc.
- - -----------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Fred Meyer, Inc.
- - -----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ X / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(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
14a-6(i)(4) and 0-11
1) Title of each class of securities to which
transaction applies:
Not Applicable
-------------------------------------------
2) Aggregate number of securities to which transaction
applies:
Not Applicable
---------------------------------------------------
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11:*
Not Applicable
----------------------------------------------------
4) Proposed maximum aggregate value of transaction:
Not Applicable
----------------------------------------------------
* Set forth the amount on which the filing fee is
calculated and state how it was determined.
<PAGE>
<PAGE>
/ / 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:
Not Applicable
---------------------------------------------------
2) Form, Schedule or Registration Statement No.:
Not Applicable
--------------------------------------------------
3) Filing Party:
Not Applicable
---------------------------------------------------
4) Date Filed:
Not Applicable
---------------------------------------------------
<PAGE>
<PAGE>
FRED MEYER, INC.
Notice of Annual Meeting of Shareholders, June 28, 1994
To the Shareholders of Fred Meyer, Inc.:
The annual meeting of the shareholders of Fred Meyer,
Inc., a Delaware corporation, will be held on Tuesday, June 28,
1994 at 1:00 p.m., Pacific Time at the Red Lion Inn (East),
Jantzen Beach, 909 N. Hayden Island Drive, Portland, Oregon for
the following purposes:
1. to elect a Board of Directors for the ensuing year;
and
2. to transact such other business as may properly come
before the meeting and at any adjournment thereof.
Only shareholders of record at the close of business
on Monday, May 2, 1994, will be entitled to vote at the annual
meeting.
You are respectfully requested to date and sign the
enclosed proxy and return it in the postage prepaid envelope
enclosed for that purpose. You may attend the meeting in
person even though you have sent in your proxy, since retention
of the proxy is not necessary for admission to or
identification at the meeting.
By Order of the Board of Directors
Roger Cooke
Senior Vice President, General Counsel
and Secretary
Portland, Oregon
May 6, 1994<PAGE>
<PAGE>
PROXY STATEMENT
The mailing address of the principal executive
offices of the Company is PO Box 42121, Portland, Oregon 97242.
The approximate date this proxy statement and the accompanying
proxy form are first being sent to shareholders is May 9, 1994.
Upon written request to Roger Cooke, Senior Vice
President, General Counsel and Secretary, any person whose
proxy is solicited by this proxy statement will be provided
without charge a copy of the Company's Annual Report on Form
10-K.
SOLICITATION AND REVOCABILITY OF PROXY
The enclosed proxy is solicited on behalf of the
Board of Directors of Fred Meyer, Inc., a Delaware corporation,
for use at the annual meeting of shareholders to be held on
June 28, 1994 and at any adjournment thereof. The Company will
bear the cost of preparing and mailing the proxy, proxy
statement, and any other material solicited by use of the
mails. Officers and employees of the Company may also solicit
proxies by telephone or personal contact. Copies of
solicitation materials will be furnished to fiduciaries,
custodians and brokerage houses for forwarding to beneficial
owners of the stock held in their names.
Any person giving a proxy in the form accompanying
this proxy statement has the power to revoke it at any time
before its exercise. The proxy may be revoked by filing with
the Company, attention Roger Cooke, Senior Vice President,
General Counsel and Secretary, an instrument of revocation or a
duly executed proxy bearing a later date. The proxy may also
be revoked by affirmatively electing to vote in person while in
attendance at the meeting. However, a shareholder who attends
the meeting need not revoke his proxy and vote in person unless
he wishes to do so. All valid, unrevoked proxies will be voted
at the annual meeting.<PAGE>
<PAGE>
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
The Common Stock is the only authorized voting
security of the Company currently outstanding. The record date
for determining holders of Common Stock entitled to vote at the
annual meeting is May 2, 1994. On that date there were
26,483,237 shares of Common Stock outstanding entitled to one
vote per share. The Common Stock does not have cumulative
voting rights.
The following table shows ownership of shares of
Common Stock of the Company on March 1, 1994 by the only
persons who, to the knowledge of the Board of Directors,
beneficially owned more than 5% of the Common Stock, and by all
officers and directors as a group:
<TABLE>
<CAPTION>
Number of Approximate
Name Shares (1) Percent
- - ---- ---------- -----------
<S> <C> <C>
KKR Associates 10,700,038(2) 38.2%
9 West 57th Street
New York, NY 10019
20 officers and 11,588,565(3) 40.9%
directors as a group
____________________
<FN>
(1) Shares held directly with sole voting and sole
investment power unless otherwise indicated.
(2) KKR Associates is a limited partnership of which
Paul E. Raether, Michael W. Michelson and Saul A. Fox
(directors of the Company) are three of eight general
partners. Jerome Kohlberg, Jr., a director of the
Company, is a limited partner of KKR Associates.
Shares shown as owned by KKR Associates are owned of
record by FMI Associates Limited Partnership ("FMI
Associates"), of which KKR Associates is the sole
general partner and as to which it possesses 100% of
the voting power and investment power. Messrs.
Raether, Michelson and Fox beneficially own an
additional 11,000; 4,000; and 6,000 shares,
respectively. Shares shown as beneficially owned by
KKR Associates include 1,566,441 shares which FMI
Associates has the right to acquire pursuant to a
presently exercisable option. See "Certain
Transactions."
(3) Includes 1,920,729 shares subject to options that are
currently exercisable or become exercisable within 60
days of March 1, 1994. Includes 9,155,869 shares for
which beneficial ownership is disclaimed.
/TABLE
<PAGE>
<PAGE>
ELECTION OF DIRECTORS
The directors of the Company are elected at the annual
meeting in June to serve for one year and until their
successors are elected. The nominees for director are listed
below together with certain information about each of them.
<TABLE>
<CAPTION>
Name and Principal Number of
Year Occupation or Shares Held
Elected Position with on March 1, Approximate
to Board Company Age 1994(1) Percent
- - -------- ------------- --- ----------- -----------
<S> <C> <C> <C> <C>
Saul A. Fox General 40 10,706,038(2) 38.2%
(1986) Partner,
Kohlberg
Kravis Roberts
& Co.
A.M. Gleason Vice Chairman 63 5,208(3) less than
(1992) of the Board 1%
of PacifiCorp
Jerome Kohlberg, Jr. General 68 --(2) --
(1981) Partner,
Kohlberg & Co.
Roger S. Meier President, 68 17,008(4) less than
(1985) AMCO, Inc. 1%
Michael W. General 42 10,704,038(2)(5) 38.2%
Michelson Partner,
(1981) Kohlberg
Kravis Roberts
& Co.
Robert G. Miller Chairman of 49 195,067 less than
(1991) the Board and 1%
Chief
Executive
Officer of the
Company
Paul E. Raether General 47 10,711,038(2)(6) 38.3%
(1986) Partner,
Kohlberg
Kravis Roberts
& Co.
___________________
<FN>
(1) Shares held directly with sole voting and sole investment
power unless otherwise indicated.
(2) See "Voting Securities and Principal Shareholders."
(3) Includes 2,008 shares received under the Non-Employee
Directors Stock Compensation Plan.
(4) Includes 3,000 shares owned by Mr. Meier's spouse and 2,000
shares owned by a family partnership of which Mr. Meier is
general partner. Beneficial ownership is disclaimed as to
such shares. Also includes 1,606 shares received under the
Non-Employee Directors Stock Compensation Plan.
(5) Includes 2,334 shares owned by a family trust. Also
includes 1,666 shares owned by a children's trust as to
which ownership is disclaimed.
(6) Ownership is disclaimed as to 11,000 shares, which are owned
by a family trust.
/TABLE
<PAGE>
<PAGE>
Mr. Fox became a general partner of Kohlberg Kravis
Roberts & Co. ("KKR") in 1990 and prior to that time had been
an executive of KKR since June 1984. Mr. Fox is a director of
American Re Corporation, Union Texas Petroleum Holdings, Inc.
and Layne, Inc.
Mr. Gleason is Vice Chairman of the Board of Directors
of PacifiCorp, a diversified public utility. He is a former
president and chief executive officer of PacifiCorp and Pacific
Telecom, Inc., a telecommunications company. Mr. Gleason is a
director of Tektronix, Inc., Blount, Inc. and Comdial
Corporation.
Mr. Kohlberg was a general partner of KKR from its
organization in 1976 until 1987 when he became a limited
partner. He has been a general partner of Kohlberg & Co., a
privately owned merchant banking enterprise, since its
organization in 1987. Mr. Kohlberg is a director of
Northwestern Steel and Wire Company and ABT Building Products
Corporation.
Mr. Meier has been president and chief executive
officer of AMCO, Inc., a privately owned investment enterprise,
for more than the last five years. Mr. Meier is a director of
Key Bank of Oregon, Red Lion Properties, Inc., general partner
of Red Lion Inns Limited Partnership and he is a trustee of
Acorn Investment Trust.
Mr. Michelson has been associated with KKR since July
1981 and has been a general partner since January 1987.
Mr. Michelson is a director of Auto Zone, Inc., Owens-Illinois,
Inc., Owens-Illinois Group, Inc., Union Texas Petroleum
Holdings, Inc. and Red Lion Properties, Inc., general partner
of Red Lion Inns Limited Partnership.
Mr. Miller became Chairman of the Board and Chief
Executive Officer of the Company in August 1991. Prior to that
time he was employed by Albertson's Inc., where his most recent
positions were Executive Vice President of Retail Operations
from 1989 to 1991 and Senior Vice President and Regional
Manager from 1985 to 1989.
Mr. Raether has been a partner of KKR since April 1986.
Mr. Raether is a director of Duracell International Inc., IDEX
Corporation, RJR Nabisco Holdings Corp., RJR Nabisco, Inc., The
Stop & Shop Companies, Inc., Flagstar Companies, Inc. and
Flagstar Corporation.
Further information with respect to Messrs. Fox,
Kohlberg, Michelson and Raether is set forth in "Voting
Securities and Principal Shareholders" and "Certain
Transactions."
The Board of Directors met six times during the last
fiscal year. Each director (except for Messrs. Kohlberg and
Raether) attended at least 75% of the aggregate number of
meetings of the Board of Directors and any committee of which
the director was a member for the period during which such
director served. Directors who are not employees of the
Company receive an annual fee of $22,500 unless such director
participates in the Non-Employee Directors Stock Compensation
Plan. Directors who participate in the Non-Employee Directors
Stock Compensation Plan receive an annual fee of $10,000.
Under the Non-Employee Directors Stock Compensation Plan, the
balance of the current annual fee is paid in the Company's
Common Stock. Participants are awarded $62,500 worth of the
Company's Common Stock every five years. Participants having
fewer than five years of service<PAGE>
<PAGE>
remaining before reaching retirement age receive stock awards
equivalent to $12,500 for each remaining year. Shares awarded
under this plan are subject to forfeiture over the five-year period
following the award (or shorter period to retirement) if the
recipient ceases to be a director. The shares awarded under the
plan are purchased in the market with funds supplied by the Company,
and the certificates are then held by the Company until the
forfeiture restrictions lapse. Directors have voting and
dividend rights with respect to the shares.
Directors who are not employees of the Company also
receive a fee of $500 per board or committee meeting attended.
The current standing committees of the Board of Directors are
as follows:
- The Board of Directors has an Executive Committee
consisting of Robert G. Miller (Chairman), Roger S.
Meier and Michael W. Michelson. There were no meetings
of the Executive Committee held in 1993. The Executive
Committee has the authority to act for the Board of
Directors of the Company between meetings of the Board
to the full extent permitted by the Delaware General
Corporation Law.
- The Board of Directors has an Audit Committee
consisting of A. M. Gleason (Chairman) and Roger S.
Meier. The Audit Committee met three times during
1993. It reviews the planned scope and results of the
annual audit, confers with the independent auditors and
reviews their recommendations with respect to
accounting, internal controls and other matters, and
confers with Company finance, accounting and internal
audit personnel.
- The Board of Directors has a Compensation Committee
consisting of Roger S. Meier (Chairman), Saul A. Fox
and Michael W. Michelson. It met five times during
1993. The Board of Directors has delegated the
authority to administer the Company's stock incentive
plans and other compensation matters to the
Compensation Committee.
The shares represented by each proxy will be voted with
respect to the election of the nominees in accordance with the
instructions specified in the proxy form. If no instructions
are given, proxies will be voted for the election of the
nominees and in accordance with this proxy statement on any
other business that may properly come before the meeting. If
for some unforeseen reason any of the nominees should not be
available as a candidate for director, the number of directors
constituting the Board of Directors may be reduced prior to the
meeting or the proxies may be voted for such other candidate or
candidates as may be nominated by the Board of Directors, in
accordance with the authority conferred in the proxy.
Directors are elected by a plurality of the votes cast by
holders of the shares entitled to vote at the Annual Meeting if
a quorum is present. Abstentions and broker non-votes are
counted for purposes of determining whether a quorum exists at
the Annual Meeting, but have no effect in the determination of
whether a plurality exists with respect to a given nominee.
For purposes other than the election of directors, abstentions
are counted as no votes and broker non-votes are not counted
for any purpose in determining whether a proposal is approved.
<PAGE>
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth compensation paid to the
Chief Executive Officer of the Company and the other four most
highly compensated executive officers of the Company for
services in all capacities to the Company and its subsidiaries
during each of the last three fiscal years.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
----------------------------------- -------------------------------------
Awards Payouts
------------------------- ---------
Long-Term
Name and Other Restricted Securities Incentive All
Principal Annual Stock Underlying Plan Other
Position Year Salary(1) Bonus(1) Compensation Awards Options(2) Payouts Compensation(3)
- - --------------- ---- --------- -------- ------------ ------ ---------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert G. Miller 1993 $531,634 $212,654 $55,008(4) -- -- -- $51,566
Chairman of the 1992 505,610 409,251 53,941(4) -- -- -- 21,354
Board and Chief 1991 217,425 89,197 -- $1,982,000(5) 500,000 -- 6,553
Executive Officer
Cyril K. Green 1993 297,875 83,405 -- -- -- -- 48,117
President and 1992 288,882 164,299 -- -- -- -- 15,260
Chief Operating 1991 268,682 152,834 -- -- -- -- 23,580
Officer
Curt A. Lerew, III 1993 242,006 60,859 -- -- -- -- 18,923
Senior Vice 1992 229,362 103,499 120,419(6) -- -- -- 8,309
President 1991 65,637 45,000 -- 230,000(7) 100,000 -- 1,621
Mary F. Sammons 1993 225,481 43,100 -- -- -- -- 32,312
Senior Vice 1992 202,912 100,435 705 -- -- $10,600(8) 10,553
President 1991 191,622 79,927 1,378 -- -- 10,600(8) 18,819
Ronald J. McEvoy 1993 211,538 52,159 -- -- -- -- 14,798
Senior Vice 1992 204,053 85,161 210,933(9) -- -- -- 7,120
President 1991 111,999 46,025 -- -- 100,000 -- --
__________________
<FN>
(1) Includes compensation deferred at the election of the
executive under the Company's Profit Sharing Plan and under
the Company's Excess Deferral Plan. Under the Company's
Profit Sharing Plan, officers and other employees of the
Company may elect to defer up to the lesser of $8,994 or 15%
of their compensation, subject to limitations under the
Internal Revenue Code. Amounts under the Profit Sharing
Plan are generally paid to employees upon retirement.
(2) Represents shares of Common Stock issuable upon exercise of
nonstatutory and incentive stock options granted under the
Company's 1990 Stock Incentive Plan, as amended.
(3) Amounts shown for the fiscal year 1993 consist of:
(i) Company contributions of $30,823, $15,045, $11,202,
$10,602 and $9,711 to the above-named executive officers,
respectively, under the Profit Sharing Plan and Excess
Deferral Plan; (ii) $14,673, $27,568, $4,445, $19,019, and
$2,535, of above-market earnings on deferred compensation
under the Company's Excess Deferral Plan for the above-named
executive officers, respectively; and (iii) $6,070, $5,504,
$3,276, $2,691, and $2,552 paid by the Company to the above-
named executive officers, respectively, as premiums under
its Long-Term Disability Plan.<PAGE>
<PAGE>
(4) The Company has agreed to pay certain benefits to Mr. Miller
in connection with his employment, including (i) use of an
automobile and payment of all operating expenses associated
with its use; (ii) reimbursement of reasonable relocation
expenses (which in 1993 amounted to $54,420);
(iii) reimbursement of the cost of one club membership
(which in 1992 included a $39,042 initiation fee and dues);
and (iv) certain retirement benefits. In the event of his
termination for any reason other than death or permanent
disability, Mr. Miller is entitled to payment of the greater
of: (a) the aggregate amount of his unpaid, then-current,
annual salary through August 1994 or (b) one year of
compensation at his then-current, annual salary (payable in
either case without interest).
(5) Mr. Miller received a stock bonus upon commencing employment
with the Company; such shares vest over three years in equal
one-month installments unless Mr. Miller terminates his
employment prior to the stock bonus shares being fully
vested for any reason other than death or disability. At
January 29, 1994, the aggregate value of Mr. Miller's
restricted stock holdings of 14,384 shares, based on the
market value of the shares at January 28, 1994 without
giving effect to the diminution of value attributed to the
restrictions on such stock, was $523,218.
(6) The Company paid amounts to Mr. Lerew in 1992 as
reimbursement for reasonable relocation expenses in
connection with his employment.
(7) Mr. Lerew received a stock bonus upon commencing employment
with the Company; such shares vest over three years in equal
one-month installments unless Mr. Lerew terminates his
employment prior to the stock shares being fully vested for
any reason other than death or disability. At January 29,
1994, the aggregate value of Mr. Lerew's restricted stock
holdings of 2,772 shares, based on the market value of the
shares at January 28, 1994 without giving effect to the
diminution of value attributed to the restrictions on such
stock, was $100,832.
(8) Amounts represent payments pursuant to a cash incentive
award of 2,000 units, based upon an amount per unit
equivalent to the increase in book value over five years of
a share of common stock for the period the unit was
outstanding, adjusted to exclude certain items. The award
was granted in fiscal year 1985 in lieu of stock options and
was paid in three equal installments during the fiscal years
1992, 1991 and 1990.
(9) The Company paid amounts to Mr. McEvoy in 1992 as
reimbursement for reasonable relocation expenses in
connection with his employment.
/TABLE
<PAGE>
<PAGE>
Stock Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Values.
The following table indicates (i) stock options exercised by
certain executive officers during 1993, including the value
realized on the date of exercise, (ii) the number of shares
subject to exercisable (vested) and unexercisable (unvested)
stock options as of January 29, 1994, and (iii) the value of
"in-the-money" options, which represents the positive spread
between the exercise price of existing stock options and the
year-end price of the Common Stock.
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised In-the-Money
Unexercised Options Held Options Held
at January 29, 1994 at January 29, 1994
Shares Acquired -------------------------- --------------------------------
Name on Exercise Value Realized(1) Exercisable Unexercisable Exercisable(2) Unexercisable(2)
------------- --------------- ----------------- ----------- ------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Miller 100,000 $1,537,500 -- 300,000 -- $4,387,500
Cyril K. Green -- -- -- -- -- --
Curt A. Lerew, III -- -- 40,000 60,000 $ 535,000 802,500
Mary F. Sammons 21,204 373,721 79,796 -- 1,794,311 --
Ronald J. McEvoy 10,000 201,250 20,000 45,000 387,500 871,875
- - --------------
<FN>
(1) Aggregate market value of the shares covered by the
option, less the aggregate price paid by the executive.
(2) Calculated based on the January 28, 1994 stock price of
$36.375.
/TABLE
<PAGE>
<PAGE>
Long-Term Incentive Plan--Awards in Last Fiscal Year
The following table provides information regarding
incentive awards granted to the executive officers under the
Company's Capital Bonus Plan (the "Capital Bonus Plan") for
1993. Under the Capital Bonus Plan, 20% of the annual bonus an
individual officer would earn at the Company's budgeted goals
for pretax income, operational income, and/or departmental
expenses are deferred and held in a Company account, to be paid
to the officer based upon a defined distribution formula that
compares actual retail cash flows to projected retail cash
flows for new stores and major remodels with capital
expenditure budgets that exceed $1,000,000 each. The amount
paid out will be based on actual results achieved, measured in
the aggregate cash flow for all projects, plus interest
earnings based on the Company's average borrowing rate.
<TABLE>
<CAPTION>
Estimated Future Payouts
under Non-Stock Price-Based Plans
-----------------------------------------------
Number of Performance
Shares, Units or Other Period
or Other Until Maturation
Name Rights or Payout(1) Threshold(2)(5) Target(3)(5) Maximum(4)(5)
--------- ---------- ----------------- --------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Robert G. Miller -- 4/97 $0 $26,582 $53,163
4/98 0 26,581 53,163
Cyril K. Green -- 4/97 0 10,426 20,851
4/98 0 10,425 20,851
Curt A. Lerew, III -- 4/97 0 7,260 14,520
4/98 0 7,260 14,520
Mary F. Sammons -- 4/97 0 6,765 13,529
4/98 0 6,764 13,529
Ronald J. McEvoy -- 4/97 0 5,923 11,846
4/98 0 5,923 11,846
- - -----------------
<FN>
(1) Payments will be made after the end of the second and
third full years' operations after a remodel/new store is
in service. Fifty percent (50%) of the participant's
investment in the deferred account will be paid out in the
third year following the year in which the investment was
set aside and the balance will be paid out in the fourth
year.
(2) Cash flows of 90% of the projected cash flow entitle the
officer to a 50% payout; the Board of Directors has
discretion to determine payouts when cash flows are less
than 90%, which could be zero.
(3) The target award is 20% of a participant's annual bonus
earned at budgeted pretax income, operational income,
and/or departmental expense determined by multiplying the
individual's base salary by a pre-approved bonus
percentage.
(4) Cash flows of 120% of the projected cash flow entitle the
participant to a 200% payout.
(5) Excludes the amount of interest earned, which will be
determined based on the Company's average borrowing rate.
/TABLE
<PAGE>
<PAGE>
Retirement Plan.
The Company has adopted a nonqualified Supplemental Income
Plan to provide supplemental retirement and death benefits to
key executive employees. The plan is administered by the
Compensation Committee. Any key executive of the Company who
holds a position of Senior Vice President or higher is eligible
to participate in this plan. The Committee selects
participants from those eligible employees recommended by the
Company's Chief Executive Officer. A participant is entitled
to receive full benefits under the Company's plan upon normal
retirement by termination of employment after age 62. A
participant is also entitled to receive reduced benefits if the
participant voluntarily terminates his or her employment, is
terminated without cause or dies before age 62. The normal
retirement benefit is a projected annual amount, to be paid in
equal monthly installments for 15 years, based upon the
estimated cash surrender value, less the premiums paid and
other expenses of the Company, of a Company-owned life
insurance policy purchased on the life of the executive. The
actual benefit will vary from the projected benefit based on
actual dividend experience. The Company guarantees each
participant a minimum benefit equal to at least 60 percent of
the projected benefit. Based on certain assumptions, the
projected annual benefits payable to Messrs. Miller, Lerew and
McEvoy and Ms. Sammons upon retirement at normal retirement age
would be $63,000, $102,400, $102,400 and $96,250, respectively.
Compensation Committee Report on Executive Compensation.
The Compensation Committee of the Board of Directors (the
"Committee") is composed of three outside directors and,
pursuant to authority delegated by the Board, determines the
compensation to be paid to the Chief Executive Officer and each
of the other executive officers of the Company.
The Company's objectives for executive compensation are to
(i) attract and retain key executives important to the long
term success of the Company; (ii) reward executives for
performance and enhancement of shareholder value; and
(iii) align the interests of the executive officer with the
success of the Company by making a portion of the compensation
based upon corporate performance.
Section 162(m) of the Internal Revenue Code of 1986, as
adopted in 1993, limits to $1,000,000 per person the amount
that the Company may deduct for compensation paid to any of its
most highly compensated officers in any year after 1993. The
levels of salary and bonus generally paid by the Company do not
exceed this limit. Under proposed regulations, the $1,000,000
cap on deductibility will not apply to compensation received
through the exercise of a nonqualified stock option that meets
certain requirements. Option exercise compensation is equal to
the excess of the market price at the time of exercise over the
option price and, unless limited by Section 162(m), is
generally deductible by the Company. It is the Company's
current policy generally to grant options that meet the
requirements of the proposed regulations.
Executive Officer Compensation Program.
-------------------------------------- The primary
components of the Company's executive officer compensation
program are base salary, annual bonus plan, and long term
incentive compensation in the form of stock options and capital
bonus plan.
<PAGE>
<PAGE>
Base salary levels for the Company's executive officers
are set relative to companies of similar size in the retail
industry and other companies in the Pacific Northwest. In
determining salaries, the Company also takes into account
individual experience, job responsibility and performance.
The Company's Bonus Plan is an annual incentive program
for executive officers, department and group managers and other
selected employees of the Company. The purpose of the Bonus
Plan is to provide a direct financial incentive in the form of
an annual cash bonus to executives to achieve predetermined
departmental and Company financial goals. Target bonuses are
set for each executive officer as a percentage of base
compensation. The target bonus percentage depends upon level
of responsibility within the Company. In fiscal 1993, the
financial measure of performance under the Plan for the Company
was pretax income. Department performance is determined in
relation to pre-established budgets for departmental
operational income or expense. Generally, no bonus is paid if
threshold levels for Company performance are not achieved.
Twenty percent of the annual bonus payable to each executive
officer at budgeted pretax income, operational income, and/or
departmental expense is withheld pursuant to the Company's
Capital Bonus Plan. The Capital Bonus Plan provides for
amounts to be paid to executive officers based upon the
comparison of actual cash flow to projected cash flow for new
stores and major remodeling projects over the three years
following completion. Depending upon cash flow results,
officers may receive nothing or up to twice the amount withheld
under the Capital Bonus Plan, plus earnings on the deferred
amount.
The Company's stock option program is intended as a long
term incentive plan for executives, managers and other key
employees of the Company. The objectives of the program are to
align employee and shareholder long term interests by creating
a strong and direct link between compensation and shareholder
value. The Company's Stock Incentive Plan authorizes the
Committee to award stock options to executive officers and
other employees of the Company. Stock options are granted at
an option price equal to the fair market value of the Company's
Common Stock on the day preceding the date of grant. Options
generally become exercisable to the extent of 25 or 20 percent
of the grant on the anniversary date of the grant for the four
or five succeeding years. Stock options generally have 10-year
terms and terminate shortly after termination of employment.
The amount of stock option grants for an individual depends
upon the level of responsibility and position in the Company.
Compensation of the Chief Executive Officer.
------------------------------------------- The
compensation of the Chief Executive Officer of the Company was
determined by negotiation of an employment agreement at the
time of his employment in September 1991. The employment
agreement provides that Mr. Miller receive an annual salary and
be eligible for an annual bonus in an amount up to 100 percent
of his annual salary based upon the achievement of financial
objectives approved by the Board of Directors. The employment
agreement also provides for disability, pension, and severance
benefits, the amount of which will depend upon the term of Mr.
Miller's employment with the Company. Pursuant to the
employment agreement, the Compensation Committee of the Board
of Directors reviewed and increased the Chief Executive's base
salary in both 1992 and 1993. The Chief Executive's current
annual base salary is $540,000. The factors considered by the
Committee in approving the increases were (1) the achievement
of the goals that the Board had established for the Company's
management, including goals for operating profit, performance
relative to competitors and new and remodeled store
development, (2) the contribution made by the Chief Executive
in establishing the long-term strategic and business plan of
the Company,<PAGE>
<PAGE>
including the establishment and achievement of organizational and
management development goals, (3) enhancement of shareholder value
during the prior year and (4) levels of compensation paid to other
senior executives in the industry.
Roger S. Meier, Chairman
Saul A. Fox
Michael W. Michelson
<PAGE>
<PAGE>
Comparison of Five Year Cumulative Total Return
The following graph provides a comparison of the five year
cumulative total shareholder return on (i) the Company's Common
Stock, (ii) the S&P Retail Stores Composite Industry Index, in
each case assuming the reinvestment of any dividends, and (iii)
the S&P 500 Index.
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
FRED MEYER, INC. $100.00 $ 89.05 $ 78.83 $159.12 $189.78 $214.60
S&P RETAIL STORES COMPOSITE INDEX 100.00 114.84 134.75 188.28 224.74 216.61
S&P 500 INDEX 100.00 114.46 124.07 152.22 168.33 190.00
</TABLE>
The graph assumes that $100 was invested on January 31,
1989 in Company Common Stock, the S&P 500 Index and the S&P
Retail Stores Composite Industry Index, and that all dividends
were reinvested.
<PAGE>
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's directors and executive officers and
persons who own more than ten percent of a registered class of
the Company's equity securities, to file with the Securities
and Exchange Commission (the "SEC") initial reports of
ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers,
directors and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of
the copies of such reports furnished to the Company and
representations that no other reports were required, the
Company believes that during the fiscal year ended January 29,
1994 all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten-percent beneficial
owners were complied with, except that Ed Dayoob, an executive
officer of the Company, filed a late report on May 7, 1993
concerning a transfer of shares on March 31, 1993.
CERTAIN TRANSACTIONS
Relationship with Properties
At January 29, 1994, the Company leased or subleased 24
of its locations (land, buildings, and improvements) from Real
Estate Properties Limited Partnership (formerly Fred Meyer Real
Estate Properties, Ltd.), an Oregon limited partnership
("Properties"). At March 22, 1994, Cyril K. Green, President
of the Company held approximately .7% of the aggregate Class A
limited partnership interests in Properties, and Metropolitan
Life Insurance Company (the "Institutional Investor") held
approximately 70.9% of the Class A limited partnership
interests in Properties. Class A limited partners are entitled
to a cumulative 10.25% annual return on their adjusted capital
contributions; an annual distribution of 45% of certain funds
of Properties available after payment of certain expenses,
interest on indebtedness, and the fixed current return to the
Class A limited partners; 45% of other distributions (other
than Properties' final distribution), including distributions
of the net proceeds realized by Properties from any sale of its
properties after payment of a pro rata share of returns of
capital; and allocations for income tax purposes of various
items arising from the operation of Properties.
Mr. Green also holds approximately 5% of the limited
partnership interests in FMGP Associates, an Oregon limited
partnership, and the general partner of Properties. KKR
Associates holds 66% of the limited partnership interests in
FMGP Associates, and the general partner of FMGP Associates,
FMGP Incorporated, holds 1% of the partnership interests in
FMGP Associates. Messrs. Raether, Michelson, and Fox are three
of the eight general partners, and Mr. Kohlberg is a limited
partner of KKR Associates. Messrs. Raether, Michelson, and
Kohlberg are shareholders of FMGP Incorporated, a Delaware
corporation. See "Voting Securities and Principal
Shareholders." As general partner of Properties, FMGP
Associates is entitled to an annual distribution of 15% of
certain funds of Properties available after payment of certain
expenses, interest on indebtedness, and the fixed current
return to the Class A limited partners; 15% of other
distributions (other than Properties' final distribution),
including distributions of the net proceeds realized by
Properties from any sale of its properties after payment of a
pro rata share of returns of capital; and allocations for
income tax purposes of various<PAGE>
<PAGE>
items arising from the operations of Properties. KKR Associates
is entitled to 99% and FMGP Incorporated is entitled to 1% of
an annual priority allocation and special distribution, which
for calendar year 1993 was $402,628, and which will remain at
that level for subsequent years.
The following table sets forth the approximate cash
distributions and allocations of taxable income and losses
(including priority allocations) from Properties to its
partners for the 1993 partnership year (including certain
amounts paid after year-end relating to such year):
<TABLE>
<CAPTION>
Calendar Year 1993
-------------------
<S> <C>
Cash distributions:
Total $12,403,000
Mr. Green 110,000
KKR Associates and KKR 1,238,000
The Institutional Investor 5,090,000
Allocation of taxable income:
Total 14,222,000
Mr. Green 140,000
KKR Associates and KKR 1,597,000
The Institutional Investor 5,279,000
</TABLE>
Net lease payments made by the Company to Properties for
the year ended January 29, 1994 were approximately $18,971,000.
Leases between the Company and Properties require the Company
to pay all property taxes and certain other amounts relating to
the right to use the properties leased to the Company. Such
property taxes paid by the Company during the year ended
January 29, 1994 amounted to approximately $2,762,000.
Effective February 1993 one of the leases for the locations
which the Company leases from Properties was terminated and the
property is now leased from an unaffiliated landlord. During
fiscal 1993, the Company terminated two of its leases with
Properties, one each in October 1993 and January 1994.
The Company leased certain properties directly from two
companies controlled by Properties for the year ended
January 29, 1994. Rents and property taxes paid under these
leases for the year totalled approximately $2,319,000 and
$353,000, respectively.
The Institutional Investor owns 36 properties which are
leased to the Company. The Institutional Investor is an
investor in FMI Associates and a limited partner of Properties
and purchased these 36 properties from Properties in 1986 and
1987. At March 1, 1994 the Institutional Investor held a 29.1%
Class 1 limited partnership interest and all of the Class 2
partnership interest in FMI Associates. The FMI Associates
partnership agreement provides generally that (i) each Class 1
limited partner is entitled to a pro rata distribution upon the
sale of the Company's Common Stock by FMI Associates determined
on the basis of the shares sold plus approximately 85% of the
gain realized on the sale of the shares and (ii) the Class 2
limited partner, upon the sale of the FMI Associates option or
option shares, is entitled to a distribution in an amount equal
to the basis of the option or option shares plus 85% of the
gain realized on the sale of the option or option shares. See
"Voting Securities and Principal Shareholders." Under the
leases for the 36 properties purchased from Properties in 1986
and 1987, the Company paid approximately $39,573,000 during the
year ended January 29, 1994.<PAGE>
<PAGE>
Property taxes paid by the Company under these leases during
this period were approximately $6,142,000.
In December 1981, the Company and Properties agreed to
guarantee certain of the other's liabilities assumed from the
predecessor of the Company. This guarantee remains
outstanding; however, to date the Company has not been required
to make payment on any obligations assumed by Properties. The
transactions discussed herein were on terms believed by the
Board of Directors of the Company to be fair to the Company and
no less favorable than the Company could have obtained with an
unrelated party. The renegotiation, from time to time, of
leases by the Company is in the ordinary course of the
Company's business.
INDEPENDENT AUDITORS
Deloitte & Touche audited the Company's financial
statements for the year ended January 29, 1994.
Representatives of Deloitte & Touche will be present at the
annual meeting, will have the opportunity to make a statement
if they so desire and will be available to respond to
appropriate questions. The Board of Directors has selected
Deloitte & Touche as auditors for the current fiscal year.
DISCRETIONARY AUTHORITY
While the Notice of Annual Meeting of Shareholders
provides for transaction of such other business as may properly
come before the meeting, the Board of Directors has no
knowledge of any matters to be presented at the meeting other
than those referred to herein. However, the enclosed proxy
gives discretionary authority in the event that any other
matters should be presented.
SHAREHOLDER PROPOSALS
Any shareholder proposals to be considered for inclusion in
proxy material for the Company's June 1995 annual meeting must
be received at the principal executive offices of the Company
no later than January 9, 1995.
By Order of the Board of Directors
Roger Cooke
Senior Vice President,
General Counsel and Secretary
May 6, 1994<PAGE>
<PAGE>
FRED MEYER, INC.
Annual Meeting, June 28, 1994
Proxy/Voting Instruction Card
I appoint Robert G. Miller, Kenneth Thrasher and Roger Cooke,
individually and together, proxies with full power of substitution, to
vote all of my Fred Meyer, Inc. common stock at the Annual Meeting of
Shareholders to be held at the Red Lion Inn (East), Jantzen Beach, 909
N. Hayden Island Drive, Portland, Oregon, on Tuesday, June 28, 1994 at
1:00 p.m. and at any adjournment thereof; with all powers that I would
possess if personally present.
Your vote is important. Please mark this proxy as indicated on
the reverse side to vote on any item. If you wish to vote in
accordance with the Board of Directors' recommendations, please sign
the reverse side; no boxes need to be checked.
<PAGE>
<PAGE>
PROXY/VOTING INSTRUCTION CARD /X/ Please mark
your votes
like this.
Common
WITHHELD FOR ALL
FOR FOR ALL EXCEPT
The Board of Directors Recommends a / / / / / /
Vote FOR Item 1
Item 2--In their discretion, upon any and all such other matters as
may properly come before this meeting or any adjournment thereof.
Item 1--Election of Directors
Nominees: Saul A. Fox, A.M. Gleason, Jerome Kohlberg, Jr.,
Roger S. Meier, Michael W. Michelson, Robert G. Miller and
Paul E. Raether
I PLAN TO ATTEND MEETING / /
To withhold authority to vote for any individual, draw a line through
that nominee's name in the list provided.
COMMENTS/ADDRESS CHANGE / /
Please mark this box
if you have written
comments/address
change below
Signature(s) ________________________________________________________
Date ____________________________________.
Please sign exactly as name(s) appear(s) hereon. If acting as an
executor, administrator, trustee, guardian, etc. you should so
indicate in signing. If the shareholder is a corporation, please sign
the full corporate name by duly authorized officer. If shares are
held jointly, each shareholder named should sign. Date and promptly
return this card in the envelope provided.
