<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 [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
THE VONS COMPANIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
TERRENCE J. WALLOCK, EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF THE VONS
COMNPANIES, INC.]
----------------
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
MAY 3, 1995
----------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of The Vons
Companies, Inc. ("Vons") will be held at The Vons Companies, Inc. headquarters
building, 618 Michillinda Avenue, Arcadia, California 91007, on Wednesday, May
3, 1995, at 9:00 a.m., Pacific Daylight Savings Time, for the following
purposes:
1. To elect four directors; and
2. To transact such other business as may be properly brought before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on March 13, 1995 will be
entitled to vote at said meeting or any adjournment thereof.
The Board of Directors urges each shareholder to read carefully the enclosed
proxy statement.
Shareholders are requested to vote for their choices and to date, sign and
return the enclosed proxy card in the enclosed envelope, to which no postage
need be affixed if mailed in the United States. If you plan to attend the
meeting and wish to vote your shares personally, you may do so at any time
before the proxy is voted.
All shareholders are cordially invited to attend the meeting.
/s/ TERRENCE J. WALLOCK
Terrence J. Wallock,
Secretary
March 27, 1995
<PAGE>
[LOGO OF THE VONS
COMPANIES, INC.]
----------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
MAY 3, 1995
----------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of The Vons Companies, Inc., a Michigan corporation ("Vons"
or the "Company"), of proxies to be used at the Annual Meeting of Shareholders
to be held at The Vons Companies, Inc. headquarters building, 618 Michillinda
Avenue, Arcadia, California 91007, on Wednesday, May 3, 1995, at 9:00 a.m.,
Pacific Daylight Savings Time (the "Meeting"), and at any adjournments thereof,
for the purpose of electing four directors. A form of proxy is enclosed for use
at the Meeting.
Unless contrary instructions are indicated on the proxy, all shares
represented by valid proxies received pursuant to this solicitation (and not
revoked before they are voted) will be voted for all the directors named below.
As for any other business which may properly come before the Meeting and be
submitted to a vote of shareholders, proxies received by the Board of Directors
will be voted in accordance with the best judgment of the designated proxy
holders.
A proxy may be revoked at any time before it is exercised by giving written
notice of revocation to the Secretary of Vons or by submitting prior to the
time of the Meeting a properly executed proxy bearing a later date.
Shareholders who have executed and returned a proxy and who then attend the
Meeting and desire to vote in person are requested to so notify the Secretary
prior to the time of the Meeting.
The mailing address of Vons is 618 Michillinda Avenue, Arcadia, California
91007, and its telephone number is 818/821-7000. The approximate date when this
Proxy Statement and form of proxy are being first sent to shareholders is March
27, 1995.
GENERAL INFORMATION
VOTING SECURITIES AND SOLICITATION OF PROXIES
The close of business on March 13, 1995, has been fixed by the Board of
Directors as the Record Date for the determination of shareholders entitled to
notice of and to vote at the Meeting or at any adjournments thereof.
Shares of Vons common stock, of which 43,404,092 shares were outstanding as
of the Record Date, are the only voting securities of Vons. Each shareholder of
record at the close of business on the Record Date is entitled to one vote for
each share of Vons common stock then held on each matter to come before the
Meeting, including the election of directors.
Vons will bear the cost of solicitation of proxies. In addition to the use of
mail, proxies may be solicited by personal interview, telephone or telegraph by
officers, directors and other employees of Vons. Vons will also request
persons, firms and corporations holding shares in their names, or in the names
of their nominees
1
<PAGE>
which are beneficially owned by others, to send or cause to be sent proxy
material to, and obtain proxies from, such beneficial owners and will reimburse
such holders for their reasonable expenses in so doing. In addition, Vons has
retained Georgeson & Company Inc. ("Georgeson") to assist in the solicitation
of proxies. Georgeson may solicit proxies by mail, telephone, telegraph and
personal solicitation, and will request brokerage houses and other nominees,
fiduciaries and custodians nominally holding shares of record of Vons common
stock to forward proxy soliciting material to the beneficial owners of such
shares. For these services, Vons will pay Georgeson a fee estimated not to
exceed $6,500, plus reimbursement of expenses.
BUSINESS HISTORY
Vons' grocery business was founded in 1906. From 1969 until December 1985, it
was owned, along with certain other merchandising businesses, by Household
International, Inc. In 1985 these merchandising businesses were acquired in a
leveraged buy-out by a newly formed corporation, which kept the grocery
business and sold all of the other merchandising businesses. In 1987 the newly
formed corporation was merged with and into Allied Supermarkets, Inc., a
Michigan corporation, (the "Allied Merger") and the surviving corporation was
renamed The Vons Companies, Inc., a Michigan corporation. On the same date as
the Allied Merger, substantially all of the business previously operated by
Allied was sold to a company organized by the former management of Allied,
leaving the Company with operations located only in Southern California and
Clark County, Nevada, as they existed prior to the Allied Merger.
In August 1988, Vons purchased substantially all of the operations of Safeway
Inc. ("Safeway") in Southern California (the "Safeway Acquisition"). As a
result of the Safeway Acquisition and other purchases of Vons common stock,
Vons' largest shareholder, owning approximately 35% of the outstanding shares
of Vons common stock on the Record Date, is Safeway Southern California, Inc.,
an indirect subsidiary of Safeway, which is an affiliate of Kohlberg Kravis
Roberts & Co. ("KKR").
ELECTION OF DIRECTORS
The Board of Directors of Vons is currently comprised of eleven directors
divided into three classes serving staggered terms, normally of three years
each. The term of office of one class of directors expires each year, and, at
each annual meeting, the successors to the directors of the class whose term is
expiring in that year are elected to hold office for a term of three years and
until their successors are elected and qualified. The current terms of four
directors expire in 1996, three expire in 1997 and four expire this year. In
the event that a nominee for director should become unavailable for election,
it is intended that the shares represented by proxies voted in favor of the
nominee will be voted for such substitute nominee as may be named by the Board
of Directors.
Under Article III, Section 2, of Vons' By-Laws, nominations of persons for
election to the Board, other than those made by or at the direction of the
Board, may be made at the Meeting only if pursuant to a timely notice delivered
or mailed to the Secretary of Vons. To be timely, a shareholder's notice must
be delivered to or mailed and received at Vons' principal executive offices not
less than 50, nor more than 75, days prior to the Meeting, unless less than 65
days' notice or prior public disclosure of the date of the Meeting is given or
made to shareholders, in which case notice of a nomination must be received not
later than the close of business on the 15th day following the day on which
notice of the date of the Meeting was mailed to shareholders or public
disclosure of the Meeting date was made, whichever is earlier. A notice of
nomination must set forth each nominee's name, age, business and residential
addresses, principal occupation or employment, beneficial ownership of Vons
capital stock and any other information relating to the nominee that is
required to be disclosed in solicitations for proxies pursuant to Regulation
14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
The notice must additionally set forth the name and record address of the
shareholder making the nomination, as well as such shareholder's beneficial
2
<PAGE>
ownership of Vons capital stock. Vons may require any proposed nominee to
furnish such other information as may reasonably be required by Vons to
determine the eligibility of such proposed nominee. At the Meeting, nominations
by or at the direction of the Board will be made on its behalf by Roger E.
Stangeland, the Chairman of the Board, or by such other person or persons as
the Board may direct.
The following table sets forth certain information about the directors
standing for election at the Meeting:
NOMINEES FOR ELECTION AS DIRECTOR
<TABLE>
<CAPTION>
YEAR
DIRECTOR NEW TERM
AGE SINCE WILL EXPIRE
--- -------- -----------
<S> <C> <C> <C>
Lawrence A. Del Santo............................... 61 1994 1998
Robert I. MacDonnell................................ 57 1988 1998
Peter A. Magowan.................................... 52 1988 1998
William Y. Tauscher................................. 45 1987 1998
</TABLE>
Mr. Del Santo has been Vice Chairman and Chief Executive Officer of Vons
since April 1994. Prior to joining the Company, he served as Senior Executive
Vice President and Chief Operating Officer--Food of American Stores Company
("American") from March 1993 to April 1994, and prior to that Chairman of Lucky
Stores, Inc., a subsidiary of American, from 1989 to 1993.
Mr. MacDonnell has been a General Partner of KKR since 1982. Affiliates of
KKR may be deemed to be controlling persons of Safeway. Mr. MacDonnell is also
a director of Safeway, Owens-Illinois Group, Inc., Owens-Illinois, Inc. and
AutoZone, Inc. He is one of four representatives of Safeway on Vons' Board of
Directors. See "Principal and Management Shareholders."
Mr. Magowan is Chairman of the Board of Safeway and President and Managing
General Partner of the San Francisco Giants. Mr. Magowan was Chief Executive
Officer of Safeway from 1980 to May 1993. He served as President of Safeway
from March 1988 to October 1992. He also serves on the Board of Directors of
Chrysler Corporation and Caterpillar, Inc. He is one of four representatives of
Safeway on Vons' Board of Directors. See "Principal and Management
Shareholders."
Mr. Tauscher has been Chairman, Chief Executive Officer and President of
Vanstar, Inc., formerly ComputerLand Corporation, for more than the past five
years.
The following table sets forth certain information about the continuing
directors of Vons:
DIRECTORS CONTINUING IN OFFICE
<TABLE>
<CAPTION>
YEAR
DIRECTOR NEW TERM
AGE SINCE WILL EXPIRE
--- -------- -----------
<S> <C> <C> <C>
Steven A. Burd...................................... 45 1993 1997
William S. Davila................................... 63 1989 1996
Fritz L. Duda....................................... 57 1987 1997
James H. Greene, Jr. ............................... 44 1993 1996
John M. Lillie...................................... 58 1994 1996
Charles E. Rickershauser, Jr. ...................... 66 1991 1996
Roger E. Stangeland................................. 65 1987 1997
</TABLE>
Mr. Burd has been President of Safeway since October 1992, serving initially
as Chief Operating Officer and, commencing May 1993, as Chief Executive
Officer. From 1987 to October 1992, Mr. Burd was a principal of Burd &
Associates, a management consulting firm. Mr. Burd is also a director of
Safeway and is one of the four representatives of Safeway on Vons' Board of
Directors. See "Principal and Management Shareholders."
3
<PAGE>
Mr. Davila served as President of Vons and its predecessor from 1984 until
his retirement in March 1992, after which he became President Emeritus. From
July 1987 to February 1990, he was President and Chief Operating Officer of
Vons. Mr. Davila also serves on the Boards of Directors of Wells Fargo Bank,
Pacific Gas and Electric Company and Geo. A. Hormel & Co.
Mr. Duda has been President of the Fritz Duda Company, a real estate
investment, building and development firm, for more than the past five years.
Mr. Greene has been an executive of KKR for more than the last five years and
a General Partner of KKR since January 1993. Affiliates of KKR may be deemed to
be controlling persons of Safeway. Mr. Greene is also a director of Safeway,
Owens Illinois, Inc., Owens-Illinois Group, Inc., RJR Nabisco Holdings Corp.,
RJR Nabisco, Inc., The Stop & Shop Companies, Inc. and Union Texas Petroleum
Holdings, Inc. He is one of four representatives of Safeway on Vons' Board of
Directors. See "Principal and Management Shareholders."
Mr. Lillie has been President of American President Companies, Ltd. since
August 1990, serving initially as Chief Operating Officer and, commencing
January 1992, as Chief Executive Officer. From May 1989 to August 1990 Mr.
Lillie was General Partner of Sequoia Associates, a private investment firm.
Prior to that Mr. Lillie had been Chairman and Chief Executive Officer of Lucky
Stores, Inc. since 1986.
Mr. Rickershauser served as Chairman of the Board and Chief Executive Officer
of the Pacific Stock Exchange Incorporated from January 1980 to March 1986, at
which time he joined the law firm of Fried, Frank, Harris, Shriver & Jacobson
of Los Angeles as a partner. In November 1990, Mr. Rickershauser retired. He
now serves as Chairman of the Board and Chief Executive Officer of PS Group,
Inc., positions he has held since April 1991 and September 1994, respectively.
In addition to PS Group, Inc., Mr. Rickershauser also serves on the Boards of
Directors of City National Corporation and its subsidiary, City National Bank,
and Lee Enterprises, Inc.
Mr. Stangeland has been Chairman and an officer of Vons for more than the
past five years. He served as Chief Executive Officer of Vons from 1987 until
April 1994. He is also a director of Advanced Promotion Technologies, Inc.
MEETINGS OF BOARD OF DIRECTORS AND BOARD COMMITTEES
During the 1994 fiscal year, Vons' Board of Directors held six meetings.
Vons' Board has a standing Executive Committee, Audit Committee and
Compensation Committee. The Executive Committee, composed of Mr. Stangeland,
Chairman, Mr. Del Santo, Mr. Greene and Mr. MacDonnell, met one time in 1994.
Its functions are to exercise such powers as the full Board of Directors may
delegate to the Executive Committee from time to time. The Audit Committee,
currently composed of Mr. Duda, Chairman, Mr. Davila, and Mr. Lillie, met two
times during the fiscal year. Its functions are (1) to meet periodically with
Vons' management and independent public accountants to make inquiries regarding
the manner in which the responsibilities of each are being discharged and to
report thereon to the Board; (2) to recommend for the approval of Vons' Board
of Directors the annual appointment of independent public accountants; and (3)
to review with the independent public accountants the scope of audit and non-
audit assignments, the accounting principles being applied by Vons, the scope
of internal financial and auditing procedures and the adequacy of internal
controls. The Compensation Committee, currently composed of Mr. Burd, Chairman,
Mr. Magowan, Mr. Rickershauser, and Mr. Tauscher, met two times during the
fiscal year. Its functions have been (1) to review Vons' general compensation
strategy; (2) to establish the salaries of, and review and administer the
benefit and compensation programs for, Vons' executive officers; (3) to review
and administer the Vons 1990 Stock Option and Restricted Stock Plan; and (4) to
approve any contractual obligations relating to employment of officers. For
additional information with respect to the Compensation Committee, see
"Executive Compensation--Compensation Committee Interlocks and Insider
Participation."
No current member of the Board of Directors attended fewer than 75% of the
total number of meetings of the Board or of the Committees, if any, on which
such member served that were held during the fiscal year ended January 1, 1995.
4
<PAGE>
PRINCIPAL AND MANAGEMENT SHAREHOLDERS
PRINCIPAL SHAREHOLDERS
Except as set forth below, the management of Vons is not aware of any
beneficial holder of 5% or more of outstanding Vons common stock as of the
Record Date.
<TABLE>
<CAPTION>
AMOUNT
BENEFICIALLY PERCENT
OWNED ON OF
RECORD DATE CLASS
------------ -------
<S> <C> <C>
Safeway Southern California, Inc.(1)....................... 15,126,000 34.8
Fourth and Jackson Streets
Oakland, California 94660
</TABLE>
- --------
(1) Safeway Southern California, Inc. is an indirect wholly-owned subsidiary of
Safeway, approximately 62% of the outstanding stock of which is owned by
two limited partnerships, of which the sole general partner is KKR
Associates, a New York limited partnership and an affiliate of KKR. KKR
Associates, in its capacity as general partner, may be deemed to
beneficially own such shares of common stock of Safeway. Saul A. Fox,
Eduard A. Gilhuly, Perry Golkin, James H. Greene, Jr., Henry R. Kravis,
Robert I. MacDonnell, Michael W. Michelson, Paul E. Raether, Clifton S.
Robbins, George R. Roberts, Scott M. Stuart and Michael T. Tokarz are the
general partners of KKR Associates and, in such capacity, may be deemed to
have beneficial ownership of any shares of common stock of Safeway
beneficially owned by KKR Associates, but disclaim any such beneficial
ownership. Steven A. Burd, a director of Vons and President and Chief
Executive Officer of Safeway, James H. Greene, Jr., a director of Vons and
a general partner of KKR Associates, Robert I. MacDonnell, a director of
Vons and a general partner of KKR Associates, and Peter A. Magowan, a Vons
director and Chairman of the Board of Safeway, all disclaim beneficial
ownership of Vons common stock owned by Safeway Southern California Inc.
and Safeway.
5
<PAGE>
MANAGEMENT SHAREHOLDERS
The following table sets forth as to each director, nominee and certain
executive officers, individually, and all executive officers and directors as a
group, the number of shares of Vons common stock beneficially owned by such
person or group as of the Record Date.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICAL OWNERSHIP(1)
------------------------------
CURRENTLY
SHARES OF EXERCISABLE TOTAL AS
COMMON STOCK PERCENT
NAME OF BENEFICIAL OWNER CAPACITY STOCK OPTIONS(2) OF CLASS
------------------------ -------- --------- ----------- --------
<S> <C> <C> <C> <C>
Steven A. Burd(3)...................... Director 0 7,889 *
William S. Davila...................... Director 173,494 8,948 *
Lawrence A. Del Santo.................. Vice Chairman and Chief 58,900 125,000 *
Executive Officer
Fritz L. Duda(4)(5).................... Director 1,035,506 16,967 2.42%
Richard E. Goodspeed(4)................ President and Chief 43,000 67,500 *
Operating Officer
James H. Greene, Jr.(3)................ Director 0 7,327 *
Robert J. Kelly........................ Executive Vice President 29,847 37,875 *
John M. Lillie(4)...................... Director 5,000 1,908 *
Robert I. MacDonnell(3)................ Director 0 15,992 *
Peter A. Magowan(3).................... Director 0 19,387 *
Charles E. Rickershauser, Jr. ......... Director 5,000 9,030 *
Roger E. Stangeland(6)(7)(8)........... Chairman 858,692 150,000 2.32%
William Y. Tauscher.................... Director 0 9,756 *
Terrence J. Wallock.................... Executive Vice President 401 27,814 *
Directors and Executive Officers as a
Group (15 persons) (3)(4)(5)(6)(7)(8). 2,209,840 517,995 6.21%
</TABLE>
- --------
* Less than 1%
(1) Unless otherwise indicated, (a) beneficial ownership is direct, and (b) the
person indicated has sole voting and investment power over the shares of
common stock indicated.
(2) Shares that may be acquired pursuant to options exercisable within 60 days
of the Record Date. All expressions of percentage of shares held assume
that the options of the particular person or group in question have been
exercised and no others.
(3) Does not include 15,126,000 shares of Vons common stock presently owned by
Safeway Southern California, Inc. and Safeway. See the immediately
preceding table for information regarding shares owned by Safeway Southern
California, Inc. and Safeway. Mr. Burd, Mr. Greene, Mr. MacDonnell and Mr.
Magowan each disclaim beneficial ownership of the shares of Vons common
stock owned by Safeway Southern California, Inc. and Safeway, which are not
included in the above table.
(4) Shares held in trust.
(5) Does not include 4,000 shares of Vons common stock held by Duda Children's
Trust No. 3. Mr. Duda disclaims any beneficial ownership of such shares,
inasmuch as they are administered by an independent trustee, and he has no
shared or other voting power over them.
(6) Does not include 96,435 shares of Vons common stock held by three
children's trusts. Mr. Stangeland disclaims any beneficial ownership of
such shares, inasmuch as they are administered by an independent trustee
and he has no shared or other voting power over them.
(7) Includes 816,691 shares registered in the name of a corporation as to which
Mr. Stangeland claims beneficial ownership.
(8) Includes 42,000 shares held in a charitable foundation, of which Mr.
Stangeland is a director.
6
<PAGE>
CHANGES IN CONTROL AND VOTING AGREEMENTS
As of December 3, 1987, Vons entered into an Acquisition Agreement and Plan
of Merger and Reorganization, as amended, among Vons, certain Vons
subsidiaries, Safeway Southern California, Inc., Safeway, and certain
subsidiaries of Safeway Southern California, Inc., in connection with the
Safeway Acquisition. At the same time, Vons entered into a Standstill Agreement
with KKR, Safeway Southern California, Inc., Safeway and certain of their
affiliates (collectively, the "Safeway Holders") with regard to the Vons common
stock that Safeway Southern California, Inc. would ultimately receive pursuant
to the Safeway Acquisition and any additional shares that the Safeway Holders
may acquire.
The term of the Standstill Agreement was five years from the date of the
Safeway Acquisition, and it expired on August 29, 1993. However, certain
provisions thereof remain operative after expiration of the term. As long as
the Safeway Holders beneficially own at least 10% of the voting stock of Vons,
Vons has agreed to nominate to its Board of Directors two persons designated by
the Safeway Holders; if the Safeway Holders beneficially own between 5% and 10%
of the voting stock of Vons, Vons will nominate one such person. The Standstill
Agreement provides further that, until the later of five years from the date of
the Acquisition or the time that the Safeway Holders in the aggregate own less
than 3% of the voting stock of Vons, the Safeway Holders will have the right
twice to require Vons at its expense to use its best efforts to effect a
registration under the Securities Act of the Vons common stock owned by them.
The Safeway Holders additionally may require Vons at its expense, subject to
the terms of the Standstill Agreement and to certain exceptions, to include
their shares in any registered securities offering commenced by Vons.
7
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation. The materials set forth below contain information on
certain cash and non-cash compensation provided to Vons' Chief Executive
Officer and the four other executive officers of the Company serving at the end
of the year who were the most highly compensated executive officers for fiscal
year 1994 (the "Named Officers"). The table shows total annual and long-term
compensation of such individuals during the last fiscal year and certain
information for the two previous fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------ --------------
SECURITIES
PRINCIPAL BASE OTHER ANNUAL UNDERLYING ALL OTHER
NAME POSITION YEAR SALARY (1) BONUS (2) COMPENSATION (3) OPTIONS (#)(4) COMPENSATION (5)
- ---- ----------------- ---- ---------- --------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lawrence A. Del Santo... Vice Chairman 1994 $370,192 $228,725 $ 0 375,000(6) $ 86,014
and Chief 1993 N/A N/A N/A N/A N/A
Executive Officer 1992 N/A N/A N/A N/A N/A
Roger E. Stangeland(7).. Chairman and 1994 $606,050 $ 76,799 $ 0 40,000 $121,811
Former Chief 1993 $700,660 $ 0 $ 0 40,000 $ 70,061
Executive Officer 1992 $690,000 $689,718 $17,493 40,000 $ 52,255
Richard E. Goodspeed.... President and 1994 $269,231 $136,000 $ 0 272,500(8) $328,226
Chief Operating 1993 N/A N/A N/A N/A N/A
Officer 1992 N/A N/A N/A N/A N/A
Robert J. Kelly......... Executive Vice 1994 $228,688 $ 45,738 $ 0 14,000 $ 20,656
President, 1993 $246,252 $ 0 $ 0 14,000 $ 22,554
Retailing 1992 $214,000 $174,656 $ 7,007 14,000 $ 22,280
Terrence J. Wallock..... Executive Vice 1994 $203,000 $ 40,600 $ 0 14,000 $ 12,258
President, 1993 $199,543 $ 0 $ 0 7,450 $ 12,452
General Counsel 1992 $185,456 $118,960 $ 0 7,450 $ 17,414
</TABLE>
- --------
(1) Represents the dollar value of cash base salary earned by each Named
Officer during the fiscal year indicated. No non-cash base salary was
earned by any of the Named Officers during the fiscal years indicated.
(2) Represents the dollar value of cash bonus earned by the Named Officer with
respect to the fiscal year indicated. No non-cash bonus was earned by any
of the Named Officers with respect to the fiscal years indicated.
(3) Represents reimbursement of income taxes payable by the Named Officer on
account of contributions made by the Company for 1992 profit sharing plan
in excess of applicable tax limits.
(4) Represents the number of stock options granted during the period. No tandem
stock appreciation rights ("SARs") were issued.
(5) Represents (i) Company contributions to the profit sharing plan consisting
in 1994 of $9,240 for Messrs. Stangeland and Del Santo, $6,995 for Mr.
Kelly and $6,129 for Mr. Wallock; (ii) the Company's matching contribution
to the profit sharing plan in 1994 consisting of $4,500 for Messrs.
Stangeland, Del Santo, Kelly and Wallock; (iii) contributions to the 401
(k) wrap-around plan for 1994 of $23,620 for Mr. Stangeland, $7,836 for Mr.
Del Santo, $2,495 for Mr. Kelly, and $1,629 for Mr. Wallock; (iv) Company
paid relocation costs of $64,438 for Mr. Del Santo and $328,226 for Mr.
Goodspeed; (v) above-market interest (as defined in applicable regulations)
accrued on compensation deferred under the 1987 deferred income plan for
1994 of $12,191 for Mr. Stangeland and $6,666 for Mr. Kelly; and (vi)
payment of accrued vacation benefits of $72,260 for Mr. Stangeland.
8
<PAGE>
(6) Includes discounted stock options awarded to Mr. Del Santo to acquire
175,000 shares of common stock at $4.15 per share. Such options were
awarded as a one-time incentive upon becoming employed by the Company. One
third of such options are vested each anniversary date.
(7) Following his resignation as Chief Executive Officer in April 1994, Mr.
Stangeland continued to serve as an executive officer of the Company
through January 1, 1995.
(8) Includes discounted stock options awarded to Mr. Goodspeed to acquire
97,500 shares of common stock at $4.15 per share. Such options were awarded
as a one-time incentive upon becoming employed by the Company. One third of
such options are vested each anniversary date.
Option Grants. Shown below is information on grants of stock options during
the last fiscal year under the Company's 1990 Stock Option and Restricted Stock
Plan to the Named Officers. No restricted stock was awarded under the Plan
during 1994.
OPTION GRANTS IN 1994 FISCAL YEAR(1)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------------------
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS GRANTED MARKET PRICE GRANT DATE
OPTIONS TO EMPLOYEES IN EXERCISE AT DATE OF EXPIRATION PRESENT
NAME GRANTED (#) FISCAL YEAR PRICE ($/SH) GRANT DATE VALUE (2)
- ---- ----------- ---------------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Lawrence A. Del Santo... 175,000(3) 15.03% $ 4.15 $16.58 4/26/2004 $2,539,250
200,000(4) 17.18% $16.58 $16.58 4/26/2004 $1,856,000
Roger E. Stangeland..... 40,000 3.44% $16.77 $16.77 4/18/2004 $ 376,000
Richard E. Goodspeed.... 97,500(3) 8.38% $ 4.15 $16.58 4/26/2004 $1,414,725
175,000(5) 15.03% $16.58 $16.58 4/26/2004 $1,624,000
Robert J. Kelly......... 14,000 1.20% $16.77 $16.77 4/18/2004 $ 131,600
Terrence J. Wallock..... 14,000 1.20% $16.77 $16.77 4/18/2004 $ 131,600
</TABLE>
- --------
(1) Except for specific provisions of certain grants which are footnoted below,
all option grants are subject to the following provisions: Options shown
were granted on April 18, 1994 and are exercisable in cumulative 25%
installments commencing one year from date of grant, with full vesting
occurring on the fourth anniversary date. Vesting may be accelerated in
certain events relating to changes in control of the Company. Options were
granted at an exercise price equal to the average closing price of the
Company's common stock for the ten trading days prior to the grant date.
Options are nontransferable other than by will or by the laws of descent
and distribution upon the death of the grantee, and will terminate one year
after termination of employment by reason of retirement, disability or
death, and will terminate 30 days after termination of employment for any
other reason. The Plan under which all options were granted is administered
by the Compensation Committee of the Board, which retains discretion,
subject to certain limits, to modify the terms of outstanding options.
(2) Present value determinations were made using a Black-Scholes option pricing
model based on the following assumptions: an expected stock-price
volatility factor of .2592, a risk-free rate of return of 7.16%, a dividend
yield of 0.00% and a time of exercise of 10 years. The actual value, if
any, an executive may realize will depend on the excess of the stock price
over the exercise price on the date the option is exercised, so there is no
assurance the value realized by an executive will be at or near the value
estimated by the Black-Scholes model.
(3) Options shown were granted on April 26, 1994, at an exercise price equal to
25% of the average closing price of the Company's common stock for the ten
trading days prior to the grant date and are exercisable 33 1/3% per year
beginning one year after grant. Vesting will accelerate upon death or
disability or upon resignation for "Good Reason" or termination without
"Cause," as both terms are defined in employment agreements with grantees.
See "Executive Compensation--Employment Contracts, Retirement Agreement and
Change in Control Arrangements." Options will expire (a) one year after
9
<PAGE>
termination of employment by reason of death or disability, (b) ten years
after date of grant in the event of termination of employment by reason of
retirement, and (c) 30 days after termination of employment for any other
reason except resignation for "Good Reason" or termination without "Cause."
All other provisions of option grant are as described in footnote (1).
(4) Options shown were granted on April 26, 1994 at fair market value and are
exercisable 33 1/3% per year beginning one year after grant. Options will
terminate ten years after date of grant in the event of termination by
reason of retirement. All other provisions of option grant are as described
in footnote (1).
(5) Options shown were granted on April 26, 1994 at fair market value and are
exercisable 20% per year beginning one year after grant. Options will
terminate ten years after date of grant in the event of termination by
reason of retirement. All other provisions of option grant are as described
in footnote (1).
Option Exercises. Shown below is information with respect to the exercise of
stock options during the last fiscal year by each of the Named Officers and the
value of unexercised options held by each of them as of the end of the last
fiscal year.
AGGREGATED OPTION EXERCISES IN 1994 FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED IN-
OPTIONS THE-MONEY OPTIONS
AT FISCAL AT FISCAL YEAR-
YEAR-END (#) END
------------- -----------------
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) VALUE REALIZED UNEXERCISABLE UNEXERCISABLE (1)
---- --------------- -------------- ------------- -----------------
<S> <C> <C> <C> <C>
Lawrence A. Del Santo... 0 $ 0 0/ $ 0/
375,000 $2,707,750
Roger E. Stangeland..... 0 $ 0 150,000/ $ 49,200/
0 $ 0
Richard E. Goodspeed.... 0 $ 0 0/ $ 0/
272,500 $1,598,875
Robert J. Kelly......... 0 $ 0 27,375/ $ 16,350/
34,000 $ 17,220
Terrence J. Wallock..... 0 $ 0 16,839/ $ 0/
27,061 $ 17,220
</TABLE>
- --------
(1) Based on closing price of $18.00 for the Company's common stock on the New
York Stock Exchange on December 30, 1994 (the last trading day prior to the
end of the fiscal year).
10
<PAGE>
DEFINED BENEFIT PLANS
The following table shows the estimated annual retirement benefit payable on
a straight life annuity basis to participating employees, including officers,
in the earnings and years of service classifications indicated, under the Vons
Pension Plan (the "Pension Plan") and the Vons Supplemental Executive
Retirement Plan ("SERP"). SERP benefits are available to officers only, and an
officer qualifying for both the Pension Plan and SERP will be paid a retirement
benefit in accordance with the terms of both plans. The illustration below
assumes retirement at January l, 1995, at the normal retirement age of 65.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS
BASED UPON INDICATED YEARS OF SERVICE (1)(2)
--------------------------------------------------------------------------
REMUNERATION (3) 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
---------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 100,000................... $ 30,000 $ 40,000 $ 40,000 $ 40,000 $ 40,000
150,000................... 45,000 60,000 60,000 60,000 60,000
200,000................... 60,000 80,000 80,000 80,000 80,000
300,000................... 90,000 120,000 120,000 120,000 120,000
400,000................... 120,000 160,000 160,000 160,000 160,000
500,000................... 150,000 200,000 200,000 200,000 200,000
600,000................... 180,000 240,000 240,000 240,000 240,000
700,000................... 210,000 280,000 280,000 280,000 280,000
800,000................... 240,000 320,000 320,000 320,000 320,000
900,000................... 270,000 360,000 360,000 360,000 360,000
1,000,000................... 300,000 400,000 400,000 400,000 400,000
1,250,000................... 375,000 500,000 500,000 500,000 500,000
</TABLE>
- --------
(1) "Years of Service" equals the total number of credited years under a plan,
which may be different for purposes of the Pension Plan and the SERP.
(2) Benefits are not subject to any deduction for social security or other
offset amounts.
(3) The calculation of retirement benefits generally is based upon average
compensation for the highest five years of the ten years preceding
retirement. Such compensation includes that listed in the Summary
Compensation Table, except that the amounts shown under the column entitled
"All Other Compensation" are excluded (other than the Company's annual
contribution to the profit sharing plan). The SERP benefit is paid in a
lump sum upon retirement in an amount equal to the actuarial value of the
SERP portion of the defined benefit shown in the table.
As of January 1, 1995, the credited years of service under both the Pension
Plan and SERP for the Named Officers were as follows: Mr. Del Santo, not
eligible; Mr. Stangeland, 34 years, 5 months; Mr. Goodspeed, not eligible; Mr.
Kelly, 31 years, 6 months; Mr. Wallock, 3 years, 10 months. With respect to
retirement benefits payable to Mr. Del Santo and Mr. Goodspeed, see "Executive
Compensation--Employment Contracts, Retirement Agreement and Change in Control
Arrangements."
EMPLOYMENT CONTRACTS, RETIREMENT AGREEMENT AND CHANGE IN CONTROL ARRANGEMENTS
Employment Contracts. The Company has three-year employment contracts with
Messrs. Del Santo and Goodspeed entered into as of April 26, 1994 which
guarantees payment of base salaries thereunder throughout the term unless
either resigns without "Good Reason" or is terminated for "Cause," as each term
is defined in the contracts.
Mr. Del Santo's agreement provides for a base salary of $550,000, with an
annual bonus of up to 100% of base salary contingent upon the achievement by
the Company of performance goals which are to be determined by the Company's
Board of Directors. Mr. Del Santo was granted 200,000 non-qualified stock
11
<PAGE>
options at fair market value and 175,000 non-qualified stock options at 25% of
fair market. See "Executive Compensation--Option Grants in 1994 Fiscal Year."
Mr. Del Santo is also to receive upon retirement in May 1997 a monthly
retirement benefit of $16,667 for the duration of his life, and, in the event
of his death before retirement, his spouse is to receive the actuarially
equivalent benefit (based on 100% joint and survivor benefit) of such payments.
The Company was also to pay all reasonable expenses incurred by Mr. Del Santo
for relocation to Southern California, including transfer of household goods
and temporary living expenses through September 1994.
Mr. Goodspeed's agreement provides for a base salary of $400,000 per year,
with an annual bonus of up to 100% of base salary contingent upon the
achievement by the Company of performance goals. Mr. Goodspeed was also granted
175,000 non-qualified stock options at fair market value and 97,500 non-
qualified stock options at 25% of fair market value. See "Executive
Compensation--Option Grants in 1994 Fiscal Year." Mr. Goodspeed is also
eligible to receive retirement benefits from a SERP in accordance with the
schedule of defined benefits shown in the Pension Plan Table above, but he is
to receive credit for an additional five years of service upon completion of
five years employment with the Company. See "Executive Compensation--Pension
Plan Table."
In the event of Mr. Goodspeed's death, his spouse will receive the actuarial
equivalent benefit (based on 100% joint and survivor benefit) of the amounts
set forth in the above table. In the event of termination without "Cause" or
resignation for "Good Reason", as each term is defined in the contract, Mr.
Goodspeed shall receive a monthly retirement benefit for life, in lieu of the
above described pension benefit, in the amount of $8,333 beginning at age 65.
The Company also was to pay for relocation of Mr. Goodspeed to Southern
California, including the cost of transfer of household goods, temporary living
expenss through October 1994, sales commission on the sale of his former
residence or purchase of it at his original cost if such residence was not sold
by October, 1994.
Retirement Agreement. The Company entered into a Retirement Agreement with
Mr. Stangeland in July 1994, pursuant to which Mr. Stangeland resigned his
position as Chief Executive Officer but continued as an officer of the Company
through the end of fiscal 1994 at his then existing salary of $606,050 per
year, plus a bonus with a maximum payment of 100% of salary. See "Executive
Compensation--Compensation of Executive Officers." Beginning January 2, 1995,
Mr. Stangeland was to resign employment with the Company but remain as a
consultant through December 31, 1996 for a fee of $269,425 per year. In the
event of his death, all such payments are to be made to Mr. Stangeland's
estate. Effective with the May 1995 directors' meeting, Mr. Stangeland is to
resign as Chairman of the Board but remain a Board member through his existing
term ending May 1997. While a consultant, he will receive no director's fees.
The agreement also provided that all of Mr. Stangeland's existing stock options
vest effective at his retirement and remain exercisable through their
respective ten year terms. See "Executive Compensation--Aggregated Option
Exercises in 1994 Fiscal Year and Fiscal Year-End Option Values." The agreement
further confirms that, pursuant to the terms of the Company's SERP, Mr.
Stangeland is to receive a payment of $2,790,939 upon his retirement,
representing the current actuarial value of the defined benefits to which he
was entitled under such plan. See "Executive Compensation--Defined Benefit
Plans."
Change in Control Arrangements. Officers of the Company (excluding Messrs.
Del Santo, Stangeland and Goodspeed) are covered under a Severance Plan for
Senior Management and Key Employees (the "Severance Plan"). The Severance Plan
was adopted in 1992.
Under the terms of the Severance Plan, a participating executive will
generally become entitled to receive benefits if the executive's employment is
terminated by the executive for "Good Reason," or by the Company without
"Cause," within two years following a "Change of Control." For purposes of the
Plan, a "Change of Control" is deemed to include (i) any acquisition of stock
if the acquiring person would thereafter be the beneficial owner of 50% or more
of the Company's voting stock, (ii) a merger or consolidation of the Company
resulting in the holders of the Company's voting stock immediately prior to
such transaction holding less than 50% of the total voting common stock of the
surviving corporation after such transaction,
12
<PAGE>
(iii) a sale or exchange of all or substantially all of the property and assets
of the Company, or (iv) any change over a two-year period or less in a majority
of the Board of Directors that is not approved by a majority of the directors
either in office at the commencement of such two-year period or who were
elected with the approval of a majority of directors in office at the
commencement of such two-year period. The term "Cause" is defined to mean the
commission of certain crimes, habitual neglect of duty if such neglect is not
cured within five days of notice, or knowing, intentional or malicious conduct
contrary to the Company's best interests that causes the Company material harm.
An executive's termination of employment is deemed for "Good Reason" if any of
the following occur within six months of such termination without the
executive's consent: (i) substantial change in the nature, or diminution in the
status, of the individual's duties or position, (ii) reduction in the annual
base salary or overall value of benefits provided to the individual, (iii)
failure to continue any incentive compensation plan or a reduction of the
employee's relative participation without providing an alternative plan, (iv)
reduction in vacation days or a material reduction in other benefits,
(v) relocation of the executive's principal place of business by more than 35
miles, or (vi) breach or failure to assume the Severance Plan or any agreement
entered into pursuant to the Severance Plan; provided, that, for purposes of
clauses (ii) through (iv), "Good Reason" will not exist if the aggregate value
of all salary, benefits, incentive compensation and other compensation is
reasonably equivalent to the value of such items before the Change of Control.
The Company considers it unlikely that the employment of all of the executives
anticipated to be covered under the Severance Plan would be terminated
following a Change of Control.
The benefits payable under the Severance Plan consist of a lump sum cash
payment equal to from one to two and one-half times the sum of (a) the higher
of (i) the executive's annual base salary at the time of termination or (ii)
the highest annual base salary of the executive during the three fiscal years
prior to the Change of Control, and (b) the average annual short-term incentive
compensation bonus and average annual profit sharing plan contribution for the
executive with respect to any of the three fiscal years preceding the
executive's termination. Other benefits provided under the Severance Plan
include the addition of between one and two and one-half years of credited
service for all purposes under each of the Company's retirement plans, except
the Profit Sharing Plan, and, subject to certain setoffs for benefits earned in
subsequent employment, continuation of certain health, disability,
dismemberment and life insurance benefits for three years. Participation at the
two and one-half times level has been provided to Messrs. Kelly and Wallock.
The Severance Plan is anticipated to have an initial term of two years and to
thereafter be subject to cancellation or amendment by the Company on two years'
prior notice given after the conclusion of such initial term. Benefits under
the Severance Plan may be subject to an excise tax payable by the executive,
and may not be deductible for tax purposes by the Company, to the extent they
exceed certain limits set forth in the Internal Revenue Code and applicable
state tax codes.
The 1990 Stock Option and Restricted Stock Plan provides, under certain
circumstances, for options to vest upon a change of control. See "Executive
Compensation--Compensation of Executive Officers."
DIRECTOR COMPENSATION
Directors who are not also employees of Vons receive an annual retainer fee
of $20,000 per year, as well as a fee of $1,000 paid for each Board of
Directors' meeting attended and a fee of $1,000 for each Committee meeting
attended. In addition, the Chairpersons of the Compensation and Audit
Committees each receive an annual chairperson retainer fee of $4,000.
On September 19, 1991, the Board of Directors adopted the Directors' Stock
Option Plan (the "DSOP") covering the grant of up to 225,000 shares of common
stock. The DSOP was approved by shareholder vote at the Annual Meeting of
Shareholders held on May 13, 1992, and became effective on that date. Members
of the Board of Directors who are not also employees of Vons are eligible to
receive options under the DSOP for up to a maximum of 30,000 shares of common
stock. Options are granted pursuant to a formula, under which there is an
appointment grant (the "Appointment Grant") which was made for all current
eligible directors at the effective date of the DSOP and which will be made for
new eligible directors joining thereafter. In addition, annual grants (the
"Annual Grants") are awarded to all eligible directors on the date of each
13
<PAGE>
annual meeting of shareholders, including the meeting at which a director is
first elected. Appointment Grants are made in the amount of shares which, at
"fair market value," on the date of grant are equal in value to six times the
annual retainer then paid to directors (currently $20,000) as adjusted from
time to time. Annual Grants will be in an amount of Vons common stock equal in
value on the date of grant to twice the annual retainer. The exercise price of
Appointment and Annual Grants is at "fair market value." "Fair market value" of
a share for purposes of the DSOP equals the average closing price for the ten
trading days prior to the grant date of a share of Vons common stock on the
NYSE. In 1994, Annual Grants of 2,249 shares were made to each eligible non-
executive director.
Under the DSOP, eligible directors may also elect to forego cash payment of
all or a portion of their annual retainer fee, including Chairperson fees, and
receive additional stock option grants instead. The exercise price of each
option so granted will be discounted 20% from the "fair market value" of a
share of Company common stock on the date of grant, and the number of options
to be granted will be determined by dividing the discount per share into the
non-cash retainer fee.
Options under the DSOP are non-transferable except by inheritance upon an
optionee's death, terminate one year after the retirement, disability or death
of the optionee, and are otherwise granted for ten year terms. Director options
are exercisable in cumulative 25% installments commencing six months from the
date of grant and continuing on each anniversary of the date of grant
thereafter, with full vesting occurring on the third anniversary date. Vesting
may be accelerated in certain events relating to changes in control of the
Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is composed of four directors: Mr. Burd, Chairman,
Mr. Magowan, Mr. Rickershauser and Mr. Tauscher. For a description of the
background of each of these individuals and their term of service on the Board
of Directors, see "Election of Directors."
In the Safeway Acquisition (see "General Information-Business History"), Vons
paid $288.5 million in cash (including $20 million allocable to an Agreement
Not to Compete) and issued 11,667,800 shares of Vons common stock to Safeway
Southern California, Inc. See "Principal and Management Shareholders." The
parties also agreed to share certain of the expenses incurred in connection
with the Safeway Acquisition and entered into various other agreements. The
Agreement Not to Compete provides that, for stated periods of time, Safeway,
Safeway Southern California, Inc., its immediate parent, and their affiliates
may not (a) engage in the retail grocery business in any county in California
or Nevada where the Safeway subsidiaries did business immediately prior to the
Safeway Acquisition, (b) permit or license any entity to use trademarks, trade
rights or similar rights owned or used by them in any such county or (c)
disclose any of Vons' confidential information or trade secrets. Mr.
MacDonnell, a director of Safeway, and Mr. Magowan, a director and then Chief
Executive Officer of Safeway, became directors of Vons after the Safeway
Acquisition. Mr. Burd, current President, Chief Executive Officer and a
director of Safeway, and Mr. Greene, a director of Safeway, have subsequently
become directors of Vons. Under the Acquisition Agreement, each party agreed to
indemnify other parties for liability arising from or relating to a breach of,
or a failure to perform, certain of such party's representation(s),
warrant(ies), covenant(s) or agreement(s) in the Acquisition Agreement and in
certain other agreements and documents entered into or furnished pursuant to
the Acquisition Agreement or any document furnished or to be furnished under
the Acquisition Agreement.
In 1994, Safeway and its affiliates sold certain inventory and other items to
the Company for an aggregate amount of approximately $21.3 million. Vons sold
certain inventory items to Safeway and its affiliates in 1994 for an aggregate
amount of approximately $6.6 million. All such sales between the parties were
on an "arm's length" basis.
14
<PAGE>
Property Development Associates is a partnership 80% owned by a subsidiary of
Safeway and 20% owned by M&T Group, which is a subsidiary of Pac Trust, which
is, in turn, an affiliate of KKR ("PDA"). PDA and Safeway have interests in
eight supermarket properties located in Southern California which are leased to
Vons. Rentals under such leases in 1994 totaled approximately $700,000. In
addition, Vons is secondarily liable under four leases, for which the annual
minimum rental is approximately $200,000, all of which is currently being paid
by assignees. All of the leases relating to the above properties were
negotiated by Vons or its predecessors on an "arm's length" basis, and none of
the lease terms have been modified or amended since PDA's or Safeway's
acquisition.
In accordance with a Board of Directors' policy encouraging stock ownership
by directors and authorizing loans to facilitate such ownership, Mr.
Rickershauser borrowed funds from the Company in 1992 to purchase 5,000 shares
of Vons common stock. The indebtedness is evidenced by promissory notes secured
by the common stock purchased. The notes accrue interest at the Federal mid-
term rate in effect each month and the notes and accrued interest are due on
December 31, 1997. As a result, at January 1, 1995, Mr. Rickershauser was
indebted to the Company in the aggregate amount of approximately $139,133,
including accrued interest.
Mr. Rickershauser serves as Chairman of the Board and Chief Executive Officer
of PS Group, Inc. A subsidiary of PS Group, Inc. sells diesel fuel to the
Company for use in its transportation activities. The fuel price was
competitively bid and anticipates the sale to the Company of approximately
4,000,000 gallons of diesel fuel over a one-year period. In 1994 the Company
purchased approximately $256,000 of diesel fuel from such subsidiary.
Mr. Duda, Mr. Stangeland, Mr. Tauscher and other unrelated parties were
partners in Newport Via Lido Associates, a California limited partnership
founded in 1986 to acquire a shopping center containing office, commercial and
retail space. Vons succeeded to the interest of a former supermarket operator
in the center and has made annual fixed lease payments which on January 1, 1995
were approximately $100,000 under a lease for such supermarket expiring in
1996. Commencing January 1995, Mr. Tauscher no longer has an interest in the
aforesaid partnership, which is now known as Lido Partners. Mr. Stangeland and
Mr. Duda remain as general partners thereof. On January 31, 1995, Lido Partners
and the Company entered into a new supermarket lease for an additional 20 years
at a new base rent of $330,000. The parties have also agreed that Lido Partners
will renovate the shopping center and that the Company will remodel its
supermarket, for which it will be reimbursed $150,000 by Lido Partners. In the
Company's opinion, the lease was negotiated by Vons on an "arm's length" basis
on terms and conditions no less favorable to Vons then were otherwise available
from independent third parties.
15
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors has furnished the
following report on employee compensation. Such report shall not be deemed to
be incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act of 1933
or under the Securities Exchange Act of 1934, except to the extent that Vons
specifically incorporates the report by reference, and shall not otherwise be
deemed soliciting material or be deemed filed under such Acts.
The Compensation Committee of the Board of Directors has been responsible for
the review and administration of the Company's various compensation plans,
including base salaries for officers, the Company's stock option plan, and
annual bonus plan.
Chief Executive Officer Compensation.
Mr. Del Santo, Chief Executive Officer, joined Vons from a similar position
in another company in mid-year 1994 after an extensive search conducted by the
Executive Committee of the Board of Directors. His compensation arrangements
were negotiated prior to his joining the Company and were incorporated into an
employment contract dated as of April 26, 1994. Consequently, the salary and
other terms of compensation contained therein were arrived at through
negotiation and without consideration of several primary factors which the
Committee had previously taken into account in setting executive compensation,
namely the Company's performance and its performance relevant to its peers.
However, market compensation levels for similar executive positions were relied
upon as in the past to provide guidance as to appropriate salary ranges for the
negotiations. These comparative positions included the companies currently
described in the Company's Top Ten Supermarkets peer group index set forth
under the caption "Stock Price Performance" in the Company's Proxy Statement.
Recent survey data shows that Mr. Del Santo's base compensation as set by his
employment contract is below the median of the chief executives of the
aforesaid companies.
With respect to the bonus paid to Mr. Del Santo for 1994, the Committee
viewed an appropriate bonus to be comprised of two components, the period for
which Mr. Del Santo was with the Company and the period of the year of prior
employment, from which he relinquished a bonus when he joined the Company. For
his period with the Company, the Committee included Mr. Del Santo in the
Company bonus plan for the second half of the year as described below and paid
him the same percentage of target bonus earned by the officer group under that
plan. The target bonus assigned was 65%, the same as his predecessor in 1993.
For the first half of the year, the Committee attempted to compensate Mr. Del
Santo for the bonus which he relinquished at his prior employment by awarding
him one-half of the full year bonus which he had received from his prior
employer in 1993. Consequently, the 1994 bonus of $228,725 paid to Mr. Del
Santo represented $153,725 paid pursuant to the Vons 1994 second half plan and
$75,000, which was one-half of his previous year's bonus from his prior
employer. The aforesaid bonus, when added to the annualized base compensation
specified in Mr. Del Santo's employment contract, results in total cash
compensation which is also below the median paid to the chief executive
officers of the peer group described above.
With respect to 1995, Mr. Del Santo will be included in the Company's annual
bonus plan for the entire year with amount of payout depending on the Company's
achievement of financial goals based on same store sales increases and
operating income. All other officers of the Company will be included within the
same plan, with bonus amounts to be generated by the same financial goals, but
the range of bonus payable to each officer determined by achievement of
personalized goals, which may or may not be financial goals.
The stock options awarded Mr. Del Santo when he joined the Company, 200,000
shares at fair market value and 175,000 shares at 25% of fair market value,
reflected compensation for financial opportunities which were also relinquished
from former employment, as well as an incentive to join the Company. The
significant grants of options were also intended to tie overall compensation to
the performance of the Company. In this respect, Mr. Del Santo was also asked
to make a substantial investment of personal funds in Company stock, which he
did by subsequently purchasing 58,900 shares of Vons common stock in the open
market.
16
<PAGE>
The retirement benefit of $16,667 per month to be awarded Mr. Del Santo upon
expiration of his employment contract replaces a similar benefit to which he
would have been entitled at his prior employment.
Other Officers.
Mr. Goodspeed, President and Chief Operating Officer, joined the Company
under the same circumstances as Mr. Del Santo, and his employment arrangements
mirror those of Mr. Del Santo, with appropriate adjustments for position and
personal situation. In 1995, his bonus participation will be generally under
the same terms and conditions as Mr. Del Santo, with target bonus adjusted
appropriately.
With respect to other officers of the Company, the basic compensation
structure was developed in 1991 by the Committee, with the assistance of a
nationally recognized compensation consulting firm, which undertook a
comprehensive review of the Company's compensation plans, resulting in the
adoption of appropriate compensation levels and the basic structure of the
compensation plans currently in effect. The Committee's review considered
several factors, including the Company's performance, its performance relevant
to its peers, and market compensation levels for similar executive positions at
similarly situated companies. These included a diversified group of high
performance retailers, as well as a group of supermarket retailers, including
the companies currently included in the Company's Top Ten Supermarkets peer
group index described under the caption Stock Price Performance in the
Company's Proxy Statement. Performance measures which were reviewed included
absolute levels of and/or changes in total shareholder return, return on
equity, cash flow return on assets and sales and earnings per share. These
measures were not assigned specific weights in the analysis. Subsequent to the
1991 review, the overall structure and makeup of and policies respecting the
Company's compensation programs has not changed materially.
Base Salary. The targeted base salary for all incumbent officers was frozen
for 1994 at the 1993 level in light of the Company's financial results. Recent
survey data shows that base compensation levels for officers are at or slightly
below the median of those of the peer group companies listed in the Proxy
Statement.
Annual Bonus. Under the annual bonus plan, target bonuses (expressed as a
percentage of annual salary), are set for each participant. For 1994, the
target bonus for officers ranged from 30% to 60% of base salary, with a
potential bonus payment of 0% to 100% of base compensation depending on Company
and individual performance. The aforementioned target bonus and payout ranges
were unchanged versus 1993. The Company's performance for 1994 (or that of the
unit, department or store, as the case may be), was generally measured for
purposes of bonus determination against annual budgeted earnings per share or
operating profit approved by the Board at the beginning of the year as well as
sales goals and cost savings achieved. Some officers' and managers' bonuses
were based upon a combination of total Company performance and/or performance
of his or her individual unit, department or store.
By mid year 1994 when Messrs. Del Santo and Goodspeed joined the Company, it
was apparent that the Company would be unable to meet its performance goals for
the year, although some department, store or cost saving goals could be met. In
order to provide additional incentive to the new management team assembled by
Mr. Del Santo, the Committee, in consultation with the Board of Directors,
adopted a second half bonus plan for the July through December 1994 period in
which new financial and individual goals were set and target bonus awards were
reset to one-half their full year level. Payments were to be made under either
the existing full year plan or the new half year plan, whichever resulted in
the larger payment. Bonuses were subsequently awarded in varying amounts
depending on Company, unit or expense reduction targets, resulting in bonus
payments ranging from approximately 10% to 25% of base salary for the officer
group.
Stock Options. Under the terms of the stock option plan, the Committee is
authorized to grant all stock options. In determining the amount of the 1994
award, the Committee reviewed prior years' stock option awards. Beginning in
1992, the award for officers was determined by granting an aggregate value of
options proportionate to each officer's targeted annual cash compensation
(including salary and target bonus) using a variation of the Black-Scholes
methodology to value each option. Subsequently the committee decided to
17
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award generally the same number of options per officer in 1993 and 1994. Option
awards for other participants were similarly determined. A total of
approximately 551 individuals, including officers, store managers, and middle
managers, received option awards in April of 1994, at a strike price of $16.77
per share, which was determined based upon the price of the Company's stock at
the time of the award, in accordance with the terms of the plan.
The 1994 total compensation of no executive officer exceeded the limitations
for deductibility recently adopted for 1994 in Section 162(m) of the Internal
Revenue Code. Inasmuch as the compensation payable to Mr. Del Santo under his
employment agreement can only exceed the limitation by a relatively small
amount, but an amount which is contractually driven, and inasmuch as it is
highly unlikely that any other executive compensation will approach the
limitation, the Committee sees no reason to adopt a policy limiting executive
compensation to that deductible under Section 162(m). However, at such time in
the future as Messrs. Del Santo and Goodspeed exercise their discounted stock
options, a deduction may not be available to the Company for the full amount of
the gain on the transactions. Within the transitional period allowed, the
Company will consider adopting changes to the Company's stock option plan to
comply with Section 162(m).
No member of the Committee is a former officer, current officer or employee
of the Company or any of its subsidiaries, or is employed by a company whose
Board of Directors includes a member of the management of the Company.
Steven A. Burd
Peter A. Magowan
Charles E. Rickershauser, Jr.
William Y. Tauscher
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STOCK PRICE PERFORMANCE
The information set forth below shall not be deemed incorporated by reference
by any general statement incorporating by reference this Proxy Statement into
any filing under the Securities Act of 1933 or under the Securities Exchange
Act of 1934, except to the extent Vons specifically incorporates this
information by reference, and shall not otherwise be deemed soliciting material
or be deemed filed under such Acts.
The graph below compares the cumulative total return of Vons common stock
with the cumulative total return of (i) the S&P 400 Mid-Cap Index and (ii) ten
companies described in the footnote to the graph. The comparison covers the
five-year period from the last trading day prior to the end of Vons' 1989
fiscal year to the last trading day prior to the end of Vons' 1994 fiscal year
and assumes that $100 was invested at the beginning of the period in Vons
common stock and in each index.
The past performance shown for Vons common stock is not necessarily
indicative of future performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG VONS, S&P MID CAP AND TOP 10 SUPERMARKET IND
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period S&P TOP 10
(Fiscal Year Covered) VONS MID CAP SUPERMARKET IND
- --------------------- -------- -------- ---------------
<S> <C> <C> <C>
Measurement Pt- 1989 $100 $100 $100
FYE 1990 $115.39 $ 94.86 $103.19
FYE 1991 $121.80 $142.18 $130.34
FYE 1992 $130.77 $159.13 $149.47
FYE 1993 $ 82.05 $181.30 $160.90
FYE 1994 $ 92.31 $174.83 $180.65
</TABLE>
(1) Total shareholders' return assumes reinvestment of dividends on the date
such dividends were declared. The dollar amounts shown at each year-end are
as of the last trading day prior to the end of the Company's fiscal year.
(2) The ten largest United States companies (measured by most recently
available fiscal year revenues) which had publicly traded equity for at
least the most recent three years and which derived revenue predominately
from supermarket retail sales. The companies included are: American Stores
Company, Albertson's, Inc., The Great Atlantic & Pacific Tea Company, Inc.,
Bruno's, Inc., Food Lion, Inc., Giant Food Inc., The Kroger Co., The Penn
Traffic Company, Safeway Inc. and Winn-Dixie Stores, Inc. Safeway Inc. is
included in the calculation beginning in 1990, which is the year in which
its equity was first publicly traded. The returns of each component issuer
of the group have been weighted according to each respective issuer's stock
market capitalization.
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CERTAIN TRANSACTIONS
In his role as President Emeritus, Mr. Davila provides advisory services to
the Company, primarily in the marketing area, and acts as spokesperson in the
Company's advertising campaigns. For these services he is paid $120,000
annually, but receives no director's fees. From January through June 1994,
because of the resignation of the former Chief Operating Officer and the
implementation of an extensive new marketing campaign by the Company, Mr.
Davila agreed to temporarily increase the amount of time devoted to these
activities. Accordingly during such period, his compensation was increased to
the annual rate of $377,000. From July through December 1994, he resumed his
former more limited activities and was paid at the $120,000 annual rate.
The Company leases a San Diego warehouse facility from Miramar Associates, a
California general partnership. The general partners of Miramar Associates are
Vons (50%) and Fritz Duda Interests, a Texas general partnership, (50%) of
which Mr. Duda, a director of Vons, is a general partner. The lease payments to
Miramar Associates approximate $1.9 million per annum. The Company believes
that the terms and conditions of the lease are no less favorable to Vons than
were otherwise available from independent third parties. Distributions made by
Miramar Associates to the partners, representing profits after operating
expenses of the partnership, were approximately $70,000 to each partner in
1994.
For further information regarding additional certain transactions with
directors, see "Executive Compensation--Compensation Committee Interlocks and
Insider Participation."
VOTES REQUIRED
The nominees for election as directors who receive the vote of a plurality of
the shares cast at the Meeting, a quorum being present, shall become directors
at the conclusion of the tabulation of the votes. Under Michigan law and the
Company's Restated Articles of Incorporation and By-Laws, abstentions, withheld
votes, broker non-votes and other shares not cast will not be counted as shares
cast in the election of any director.
The holders of a majority of the common stock issued and outstanding as of
the record date, present in person or represented by proxy, shall constitute a
quorum at the Meeting.
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
officers, directors and persons who are beneficial owners of more than ten
percent of the Company's common stock ("reporting persons") to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Reporting persons are required to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the 1994 fiscal year, all Section 16(a) filing
requirements applicable to reporting persons were complied with, except that
Richard E. Goodspeed, an officer of the Company, filed a report involving the
purchase of 38,000 shares on Form 4 three months late.
OTHER MATTERS
INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of its Audit Committee, the Board of Directors of Vons
has selected KPMG Peat Marwick LLP ("KPMG") to serve as independent auditors
during the current fiscal year. A representative of KPMG is expected to be
present at the Meeting, will have an opportunity to make a statement and will
be available to answer questions, if any, from shareholders.
20
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ANNUAL REPORT
A copy of Vons' Annual Report to Shareholders is enclosed herewith, but is
not to be considered as part of the proxy solicitation material.
Vons will also furnish without charge a copy of its annual report on Form 10-
K for the year ended January 1, 1995, including financial statements but
without exhibits, to each person whose vote is solicited by this Proxy
Statement. Upon request Exhibits to the Form 10-K will be furnished to
shareholders of record making a written request for such Exhibits at a fee of
$.50 per page, paid in advance. Requests and inquiries should be addressed to:
Mary McAboy, Vice President, Corporate Communications, The Vons Companies,
Inc., 618 Michillinda Avenue, Arcadia, California 91007.
SHAREHOLDER PROPOSALS
A proposal to be presented at the 1996 annual meeting must be received at
Vons' principal executive offices no later than November 27, 1995, in order to
be considered for inclusion in the proxy materials to be disseminated by the
Board of Directors for such annual meeting. To be eligible for inclusion in
such proxy materials, such proposals must conform to the requirements set forth
in Regulation 14A under the Securities Exchange Act of 1934, as amended, as
well as in Vons' By-Laws.
ADDITIONAL BUSINESS
The Board of Directors does not know of any matter to be presented at the
Meeting which is not listed on the Notice of Meeting and discussed above. If
other matters should properly come before the Meeting, however, the persons
named in the accompanying proxy will vote all proxies in accordance with their
best judgment.
By order of the Board of Directors
/s/ TERRENCE J. WALLOCK
Terrence J. Wallock, Secretary
March 27, 1995
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THE VONS COMPANIES, INC.
618 Michillinda Avenue
Arcadia, California 91007
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 3, 1995
Notice is hereby given that the Annual Meeting of Shareholders of The Vons
Companies, Inc. ("Vons") will be held at The Vons Companies, Inc. headquarters
building, 618 Michillinda Avenue, Arcadia, California 91007, on Wednesday, May
3, 1995, at 9:00 a.m. Pacific Daylight Savings Time, for the following purposes:
1. To elect four directors; and
2. To transact such other business as may be properly brought before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on March 13, 1995, will be
entitled to vote at said meeting or any adjournment thereof.
The Board of Directors urges each shareholder to read carefully the enclosed
proxy statement.
Shareholders are requested to vote for their choices and to date, sign and
return the enclosed proxy card in the enclosed envelope, to which no postage
need be affixed if mailed in the United States. If you plan to attend the
meeting and wish to vote your shares personally, you may do so at any time
before the proxy is voted.
All shareholders are cordially invited to attend the meeting.
Terrence J. Wallock,
Secretary
March 27, 1995
DETACH PROXY CARD HERE
- --------------------------------------------------------------------------------
[__]
1. Election of Directors
FOR all nominees [X] WITHHOLD AUTHORITY to vote [X] EXCEPTIONS [X]
listed below for all nominees listed below.
Nominees: Lawrence A. Del Santo, Robert I. MacDonnell, Peter A. Magowan and
William Y. Tauscher for the terms indicated in the Proxy Statement.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
mark the "EXCEPTIONS" box and write that nominee's name in the space
provided below.)
EXCEPTIONS
------------------------------------------------------------------
2. To vote upon such other business as may properly come before the meeting or
any adjournment or adjournments thereof as to which the undersigned hereby
confers discretionary authority upon said proxies.
Change of Address and/or [X]
Comments Mark Here.
IMPORTANT: Please sign exactly as
your name or names appear hereon.
When signing on behalf of a
corporation, partnership, estate,
trust of the lien, indicate title
of person signing.
Date: , 1995
----------------------
----------------------------------
Signature
----------------------------------
Signature if held jointly
Please sign, date and return this proxy Votes MUST be indicated
card promptly using the enclosed envelope. (X) in black or blue ink [X]
