<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)
- --------------------------------------------------------------------------------
(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:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF THE VONS COMPANIES, INC.]
----------------
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
MAY 8, 1996
----------------
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
8, 1996, at 9:00 a.m., Pacific Daylight Savings Time, for the following
purposes:
1. To elect four directors;
2. To consider and act upon proposals to amend The Vons Companies, Inc.
1990 Stock Option and Restricted Stock Plan (the "Plan"): (i) to increase
the authorized number of shares to be issued thereunder by an additional
2,000,000 shares and (ii) to implement a per employee share limitation of
500,000 shares per year; and
3. To transact such other business as may be properly brought before the
meeting or any adjournments or postponement thereof.
Shareholders of record at the close of business on March 11, 1996 will be
entitled to vote at said meeting or any adjournments or postponement 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 28, 1996
<PAGE>
[LOGO OF THE VONS COMPANIES, INC.]
----------------
PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
MAY 8, 1996
----------------
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
(the "Meeting") to be held at The Vons Companies, Inc. headquarters building,
618 Michillinda Avenue, Arcadia, California 91007, on Wednesday, May 8, 1996,
at 9:00 a.m., Pacific Daylight Savings Time, and at any adjournments or
postponement thereof, for the purpose of (i) electing four directors and (ii)
considering and acting upon proposals to amend The Vons Companies, Inc. 1990
Stock Option and Restricted Stock Plan (the "Plan") to increase the authorized
shares to be issued thereunder by 2,000,000 and to implement a per employee
share limitation of 500,000 per year. 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 28, 1996.
GENERAL INFORMATION
VOTING SECURITIES AND SOLICITATION OF PROXIES
The close of business on March 11, 1996, 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 or postponement
thereof.
Shares of Vons common stock, of which 43,649,239 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.
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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 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 twelve directors
divided into three classes of four directors each serving staggered terms,
normally of three years. 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. 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 ownership of Vons capital stock. Vons may
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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 Lawrence A. Del Santo, 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>
William S. Davila................................... 64 1989 1999
James H. Greene, Jr................................. 45 1993 1999
John M. Lillie...................................... 59 1994 1999
Charles E. Rickershauser, Jr........................ 67 1991 1999
</TABLE>
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. 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, Bruno's Inc., Owens Illinois, Inc., Owens-Illinois Group, 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 had been President of American President Companies, Ltd. since
August 1990, serving initially as Chief Operating Officer and, commencing
January 1992, as Chief Executive Officer, until his resignation in October
1995. 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.
Lillie also serves on the Board of The Gap, Inc.
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.
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...................................... 46 1993 1997
Lawrence A. Del Santo............................... 62 1994 1998
Fritz L. Duda....................................... 58 1987 1997
Richard E. Goodspeed................................ 59 1996 1997
Robert I. MacDonnell................................ 58 1988 1998
Peter A. Magowan.................................... 53 1988 1998
Roger E. Stangeland................................. 66 1987 1997
William Y. Tauscher................................. 46 1987 1998
</TABLE>
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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."
Mr. Del Santo has been Chairman of Vons since May 1995 and Chief Executive
Officer of Vons since joining the Company in 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 as Chairman of Lucky Stores, Inc., a subsidiary of
American, ("Lucky") from 1989 to 1993.
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. Goodspeed has been President and Chief Operating Officer of Vons since
joining the Company in April 1994. Prior to that time, he was Executive Vice
President-Food of American and President and Chief Operating Officer of Lucky,
a position he held since September 1988.
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, Inc., Owens-Illinois Group, 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. Stangeland has been a director of Vons for more than the past five years
and served as Chief Executive Officer of Vons from 1987 until April 1994. Mr.
Stangeland also serves as Chairman of the Board of Grand Union Company.
Mr. Tauscher has been Chairman, Chief Executive Officer and President of
Vanstar, Inc. for more than the past five years.
MEETINGS OF BOARD OF DIRECTORS AND BOARD COMMITTEES
During the 1995 fiscal year, Vons' Board of Directors held five meetings.
Vons' Board has a standing Executive Committee, Audit Committee and
Compensation Committee. The Executive Committee, composed of Mr. Del Santo,
Mr. Greene, Mr. MacDonnell and Mr. Stangeland, did not meet in 1995. 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. Lillie and Mr. Rickershauser,
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, 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 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."
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Each director, except Messrs. Lillie, Magowan and Tauscher, attended 75% or
more 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
December 31, 1995.
AMENDMENTS TO THE VONS COMPANIES, INC. 1990 STOCK OPTION
AND RESTRICTED STOCK PLAN
On January 24, 1990, the Board of Directors adopted the Plan, which became
effective when approved by shareholder vote at the Annual Meeting of
Shareholders held on May 17, 1990, and will terminate on January 23, 2000. In
general, the Plan authorizes Vons (i) to grant incentive stock options (as
defined in Section 422A of the Internal Revenue Code) and/or other ("non-
qualified") options to purchase shares of its common stock to officers and
employees, and (ii) to issue restricted shares of common stock to its officers
and employees.
A maximum of 4,000,000 shares of Vons common stock is currently authorized
to be issued under the Plan as restricted stock or upon exercise of options
granted under the Plan. As of March 11, 1996, 972,407 shares of the Company's
common stock remained issuable under the Plan, and non-qualified options to
purchase 2,694,446 shares had been granted and had not yet been exercised. No
incentive stock options or restricted stock have yet been granted.
Approximately 600 employees are eligible to receive grants under the Plan.
Shares covered by options which terminate without exercise and shares
forfeited to Vons pursuant to the restrictions upon the shares are available
for issuance upon the grant of additional options or as restricted stock. The
Plan provides for appropriate adjustment in the number and kind of shares for
which options may be granted and the number and kind of shares of restricted
stock which may be issued pursuant to the Plan in the event of a stock split,
stock dividend, reorganization or other specified changes in the
capitalization of Vons.
AMENDMENT ONE: INCREASE THE NUMBER OF AUTHORIZED SHARES BY 2,000,000
On February 21, 1996, the Board of Directors, subject to shareholder
ratification, authorized an amendment to the Plan to increase the maximum
number of shares which may be issued as restricted stock or upon exercise of
options under the Plan by 2,000,000 shares. The Board of Directors believes
that the authorization of the additional shares under the Plan is desirable
and will permit the Company to continue to retain experienced and capable
persons who can make significant contributions to the future growth and
success of Vons. All officers (including officers who are also directors) and
employees of Vons and any parent or subsidiary corporation are eligible to
receive options or restricted stock under the Plan.
AMENDMENT TWO: LIMIT THE NUMBER OF OPTIONS GRANTED TO AN INDIVIDUAL EMPLOYEE
TO 500,000 PER YEAR
On February 21, 1996, the Board of Directors, subject to shareholder
ratification, also authorized an amendment to the Plan which would limit the
amount of stock options which could be granted to any employee to 500,000 per
year. The purpose of this proposed amendment is to assure that options granted
under the Plan will qualify as "performance-based compensation" within the
meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"). Currently there is no limit on the aggregate number of options
that may be granted to any individual employee under the Plan in a year. The
amendment providing the aforesaid limitation would bring the Plan into
compliance with Section 162(m).
PLAN DESCRIPTION
The following summary of the Plan is qualified in its entirety by the full
text of the Plan, a copy of which may be obtained by shareholders of the
Company upon request directed to: Mary McAboy, Vice President, Corporate
Communications, The Vons Companies, Inc., 618 Michillinda Avenue, Arcadia,
California 91007. For information regarding options granted to certain
officers with provisions that vary in certain respects from the following
description, see "Executive Compensation--Employment Arrangements, Retirement
Agreement and Change in Control Arrangements" below.
5
<PAGE>
OPTIONS
Option Price and Consideration for Shares Purchased. The Compensation
Committee of the Board of Directors ("Compensation Committee") has discretion
to set the price of non-qualified options subject to any applicable regulatory
requirements. The purchase price of each share of common stock covered by an
incentive stock option may not be less than 100% of the fair market value of
Vons common stock on the date of grant of the incentive stock option or 110%
of the fair market value in the case of an incentive stock option granted to a
person who owns, directly or indirectly, more than 10% of the total combined
voting power of all classes of stock of Vons. For purposes of the Plan, fair
market value of a share of Vons common stock is the average closing price for
the 10 trading days prior to the exercise or grant date of a share of Vons
common stock on the principal exchange on which shares of Vons common stock
are then trading. The Plan provides for alternative pricing formulas in the
event the stock is not listed on a principal exchange at the time. The
aggregate fair market value (determined as of the time the option is granted)
of the shares of Vons common stock with respect to which incentive stock
options are exercisable for the first time by an option holder during any
calendar year may not exceed $100,000.
In consideration of the granting of an option, the option holder must agree
to remain in the employ of Vons for one year after the date the option is
granted; provided, however, that nothing in the Plan or any Stock Option
Agreement confers, or will confer, upon any officer or employee the right to
continue to be employed by Vons or any of its subsidiaries or affects Vons'
right to terminate the employment of any officer or employee at any time.
Common stock purchased upon the exercise of options may be paid for by the
option holder either (i) in cash or by check; (ii) with the consent of the
Compensation Committee, by delivery of a full recourse promissory note bearing
interest and payable upon terms prescribed by the Compensation Committee;
(iii) with the consent of the Compensation Committee, with mature shares of
Vons common stock owned by the option holder with a fair market value on the
date of delivery equal to the aggregate purchase price of the shares with
respect to which the option or portion is thereby exercised; or (iv) in any
combination of the consideration described in the foregoing clauses (i), (ii)
and (iii).
Terms of Exercise and Expiration of Options. Depending upon the particular
option grant, options covering either 15% or 25% of the shares of Vons common
stock which have been granted become exercisable one year from the date of
grant. If the option holder is still employed by Vons or its successor or
affiliate, options under the Plan covering an additional 15% or 25%,
respectively, of the shares of Vons common stock included in each grant become
exercisable on each successive anniversary after the date of such grant until
100% of the options included in such grant are exercisable. No option may be
exercised after the expiration of a period of ten years from the date of grant
for incentive stock options and ten years and one day for non-qualified
options. Incentive stock options granted to persons then owning, directly or
indirectly, more than 10% of the total combined voting power of all classes of
stock of Vons may not be exercised after the expiration of a period of five
years from the date of grant. The Compensation Committee, may, however, vary
the vesting and expiration of options granted under the Plan, except that for
incentive stock options: (i) an option will expire not later than three months
after the termination of the employment of the option holder, unless such
termination is the result of death or disability, (ii) in the event of the
death of an option holder while an employee of Vons, the option will expire
twelve months after the date of the option holder's death, and (iii) in the
event an option holder becomes disabled and as a result ceases to be employed
by Vons, the option will terminate twelve months after the date of termination
of employment.
Vesting Upon Change of Control. Upon a "change of control" of Vons (defined
as a sale or other transfer of 50% or more of Vons' voting stock, or a merger
or other reorganization of Vons in which the shareholders of the Company prior
to such transaction beneficially own less than 50% of the voting stock of the
Company or a successor immediately after the transaction, or a sale of
substantially all of Vons' assets or a transaction resulting in the delisting
of Vons stock from the New York Stock Exchange) and subject to a surviving
corporation assuming or replacing the options, all options granted may be
exercised.
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RESTRICTED STOCK
Consideration for Restricted Stock Issued. Unless otherwise required by the
Compensation Committee in specific instances, no cash payment is required to
be made by the holder of restricted stock in connection with the issuance of
restricted stock by Vons. As partial consideration for the issuance of the
restricted stock, the holder of restricted stock must agree to remain in the
employ of Vons for a period of at least one year after the restricted stock is
issued; provided, however, that nothing in the Plan or in any individual
restricted stock agreement confers, or will confer, upon any officer or
employee the right to continue to be employed by Vons or any of its
subsidiaries or affects Vons right to terminate the employment of any officer
or employee at any time. If the Compensation Committee requires a cash payment
for the restricted stock, the amount and terms of such payment will be set
forth in the individual restricted stock agreement.
Restrictions. All shares of restricted stock issued under the Plan
(including any shares received by holders thereof as a result of stock
dividends, stock splits or any other forms of recapitalization) are subject to
the restrictions imposed by the Compensation Committee in each individual
restricted stock agreement. The Compensation Committee may, by a resolution
adopted after the restricted stock is issued, remove any or all of the
restrictions imposed by the terms of the restricted stock agreement. All
restrictions imposed under the Plan shall expire within ten years after the
date of issuance of the restricted stock. Immediately upon a termination of
employment of the holder of restricted stock by Vons, the restricted stock
then subject to restrictions under a restricted stock agreement will be
forfeited by the holder back to Vons. No forfeiture will occur, however, in
the event of a change of control of Vons, or of a termination of employment
because of the employee's normal retirement, death or total disability or upon
early retirement with the consent of the Board of Directors. The Secretary of
Vons, or other escrow holder appointed by the Compensation Committee, will
retain physical custody of the stock certificates representing restricted
stock issued under the Plan until all the restrictions imposed under the
individual restricted stock agreement expire or are removed by the
Compensation Committee. All certificates representing shares of restricted
stock issued under the Plan will contain a legend stating that the shares are
subject to restrictions under a restricted stock agreement.
Rights of Restricted Stock Holders. Upon issuance of the shares of
restricted stock and delivery of them to the Secretary of Vons, or other
escrow holder appointed by the Compensation Committee, the holder of the
restricted stock will have all rights of a shareholder (subject to the
restrictions in the individual restricted stock agreement), including the
right to vote the shares and to receive all dividends and other distributions
paid or made with respect to the shares.
Vesting Upon Change of Control. Upon a "change of control" of Vons as
defined in the Plan, subject to the payment of any cash consideration then
due, all issued restricted shares shall vest immediately free of all
restrictions, forfeiture provisions or legends.
NONTRANSFERABILITY OF OPTIONS AND RESTRICTED STOCK
Options and restricted stock are not transferable by the holder thereof
other than by will or the laws of descent and distribution.
ADMINISTRATION
The Plan is administered by the Compensation Committee of the Board of
Directors. The Compensation Committee has full power to interpret the Plan and
to establish and amend rules for its administration. The Compensation
Committee is also authorized to determine who from the eligible class of
persons shall be granted options or issued restricted stock and the terms and
provisions of the options granted and restricted stock issued.
AMENDMENT AND TERMINATION OF THE PLAN
The Board of Directors or the Compensation Committee may at any time amend
or terminate the Plan, although no amendment or termination may alter or
impair any rights or obligations under previously issued options or restricted
stock without the consent of the holder of the option or the restricted stock.
Any amendment
7
<PAGE>
to the Plan which would increase the aggregate number of shares which may be
issued under the Plan, modify the requirements of eligibility for
participation in the Plan, reduce the minimum price for incentive options
below 100% of the fair market value, or extend the period during which options
may be granted or restricted stock may be issued must be approved by a vote of
the holders of a majority of Vons voting stock present and entitled to vote at
a meeting.
MARKET VALUE OF COMMON STOCK
As of March 11, 1996, the market value of a share of Vons common stock,
determined in accordance with the formula set forth under the heading
"Options-Option Price and Consideration for Shares Purchased," was $29.67 per
share.
FEDERAL INCOME TAX CONSEQUENCES
The tax consequences of the Plan under the Code are summarized in the
following discussion, which deals with the general federal income tax
principles applicable to the Plan and is intended for general information
only. State and local income taxes are not discussed and may vary from
locality to locality.
Non-Qualified Stock Options. For federal income tax purposes, the recipient
of non-qualified stock options granted under the Plan will not have taxable
income upon the grant of the option, nor will Vons then be entitled to any
deduction. Generally, upon exercise of non-qualified stock options the
optionee will realize ordinary income, and Vons will be entitled to a
deduction in an amount equal to the difference between the option exercise
price and the fair market value of the stock at the date of exercise. Vons
will generally be required to withhold taxes on the income recognized by the
optionee. An optionee's basis for the stock for purposes of determining his
gain or loss on his subsequent disposition of the shares generally will be the
fair market value of the stock on the date of exercise of the non-qualified
stock option.
The tax consequences resulting from the exercise of a non-qualified stock
option through delivery of already-owned shares of common stock are not
completely certain. In published rulings, the Internal Revenue Service has
taken the position that, to the extent an equivalent value of shares is
acquired, the option holder will recognize no gain, and the option holder's
basis in the shares acquired upon exercise will be equal to the option
holder's basis in the surrendered shares. Any additional shares acquired upon
such exercise are compensation to the option holder, taxable under the rules
described above with the option holder's basis in these additional shares
being their then fair market value.
Incentive Stock Options. There is no taxable income to an employee when an
incentive stock option is granted to him or her or when that option is
exercised; however, the amount by which the fair market value of the shares at
the time of exercise exceeds the option price will be an "item of tax
preference" for the optionee. Gain realized by an optionee upon sale of stock
issued on exercise of an incentive stock option is taxable at capital gains
rates. No tax deduction is available to Vons, unless the optionee disposes of
the shares within two years after the date of grant of the option or within
one year of the date the shares were transferred to the optionee. In such
events, the difference between the option exercise price and the lesser of the
fair market value of the shares on the date of the option's exercise and the
sales price of the shares will be taxed at ordinary income rates, and Vons
will be entitled to a deduction to the extent the employee must recognize
ordinary income. An incentive stock option exercised more than three months
after an optionee's retirement from employment, other than by reason of death
or disability, will be taxed as a non-qualified stock option, with the
optionee deemed to have received income upon such exercise taxable at ordinary
income rates. Vons will be entitled to a tax deduction equal to the ordinary
income, if any, realized by the optionee.
The tax consequences resulting from the exercise of an incentive stock
option through delivery of already-owned shares of common stock are not
completely certain. In published rulings and proposed regulations, the
Internal Revenue Service has taken the position that generally (i) the option
holder will recognize no gain upon a stock-for-stock exercise (provided the
shares surrendered in the exercise are not disposed of within the one-year
8
<PAGE>
or two-year periods described above, and subject to the discussion above);
(ii) to the extent an equivalent number of shares is acquired, the option
holder's basis in the shares acquired upon exercise will be equal to the
option holder's basis in the surrendered shares; (iii) the option holder's
basis in any additional shares acquired upon exercise will be zero; and (iv)
any sale or other disposition of the acquired shares within the one-year or
two-year periods described above will be viewed first as a disposition of the
shares with the lowest basis.
Restricted Stock. Unless an election is made under Section 83(b) of the
Code, an employee to whom restricted stock is issued will not have taxable
income upon issuance and Vons will not then be entitled to a deduction.
However, when restrictions on shares of restricted stock expire or upon other
removal of the forfeiture restrictions in accordance with the Plan, the
employee will realize ordinary income and Vons will be entitled to a deduction
in an amount equal to the fair market value of the shares at the date such
restrictions lapse, less the purchase price therefor. If an election is made
under Section 83(b), the employee will realize ordinary income at the date of
issuance equal to the difference between the fair market value of the shares
at the date less any purchase price therefor, and Vons will be entitled to a
deduction in the same amount. Generally, whether or not an election is made
under Section 83(b), Vons will be required to withhold taxes on the income
recognized by the holder. Gain or loss realized by the holder on the
subsequent sale or disposition of the shares will normally be taxable as
capital gain or loss and no further deduction will be allowed to Vons.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL OF
THE AMENDMENTS TO THE 1990 STOCK OPTION AND RESTRICTED STOCK PLAN.
9
<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 34.7%
Fourth and Jackson Streets
Oakland, California 94660
Fidelity Management and Research Corp...................... 2,716,900 6.22%
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
- --------
(1) Safeway Southern California, Inc. is an indirect wholly-owned subsidiary
of Safeway, approximately 50.4% 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. Messrs. Greene,
MacDonnell, Saul A. Fox, Edward A. Gilhuly, Perry Golkin, Henry R. Kravis,
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. Mr. Burd, a
director of Vons and President and Chief Executive Officer of Safeway, Mr.
Greene, a director of Vons and a general partner of KKR Associates, Mr.
MacDonnell, a director of Vons and a general partner of KKR Associates,
and Mr. 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.
10
<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
BENEFICIAL 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 15,846 *
William S. Davila........ Director 170,494 10,971 *
Lawrence A. Del Santo.... Chairman and Chief 58,900 250,000 *
Executive Officer
Fritz L. Duda(4)(5)...... Director 1,035,506 23,412 2.42%
Richard E. Goodspeed(4).. Director, President 43,000 135,000 *
and Chief Operating
Officer
James H. Greene, Jr.(3).. Director 0 14,502 *
Phillip E. Hawkins....... Senior Vice President 0 23,302 *
Pamela K. Knous.......... Executive Vice 5,000 20,302 *
President, Chief
Financial Officer
and Treasurer
John M. Lillie(4)........ Director 5,000 6,073 *
Robert I. MacDonnell(3).. Director 0 23,068 *
Peter A. Magowan(3)...... Director 0 24,052 *
Charles E. Rickershauser,
Jr. .................... Director 5,000 11,053 *
Roger E.
Stangeland(6)(7)(8)..... Director 830,692 151,004 2.24%
William Y. Tauscher...... Director 0 11,779 *
Terrence J. Wallock...... Executive Vice 541 35,426 *
President, General
Counsel and
Secretary
Directors and Executive
Officers as a Group
(19 persons)
(3)(4)(5)(6)(7)(8)(9)... 2,163,214 803,314 6.67%
</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.
11
<PAGE>
(7) Includes 816,691 shares registered in the name of a corporation as to
which Mr. Stangeland claims beneficial ownership.
(8) Includes 14,000 shares held in a charitable foundation, of which Mr.
Stangeland is a director.
(9) Includes 800 shares held in a living trust, of which an officer is
trustee.
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.
12
<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 1995 (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
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------
LONG-TERM
COMPENSATION
BASE BASE AWARD ALL OTHER
NAME (1) PRINCIPAL POSITION YEAR SALARY (2) BONUS (3) OPTIONS (#)(4) COMPENSATION (5)
- -------- --------------------- ---- ---------- --------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence A. Del Santo... Chairman and 1995 $550,000 $437,250 0 $ 47,278
Chief Executive 1994 $370,192 $228,725 375,000 $ 86,014
Officer 1993 N/A N/A N/A N/A
Richard E. Goodspeed.... President and 1995 $400,000 $318,000 0 $ 32,178
Chief Operating 1994 $269,231 $136,000 272,500 $328,226
Officer 1993 N/A N/A N/A N/A
Phillip E. Hawkins...... Senior Vice President 1995 $166,272 $115,000 10,000 $ 12,051
Store Operations 1994 $148,761 $ 29,770 4,650 $ 9,634
1993 $141,664 $ 12,770 4,650 $ 7,550
Pamela K. Knous......... Executive Vice 1995 $195,326 $130,000 15,000 $ 14,400
President, Chief 1994 $163,436 $ 39,600 9,650 $ 10,138
Financial Officer 1993 $149,319 $ 8,931 4,650 $ 8,632
and Treasurer
Terrence J. Wallock..... Executive Vice 1995 $215,063 $136,000 15,000 $ 15,708
President, 1994 $203,000 $ 40,600 14,000 $ 12,258
General Counsel 1993 $199,543 0 7,450 $ 12,452
and Secretary
</TABLE>
- --------
(1) Terry R. Peets, Executive Vice President, joined the Company in September
1995 at an annual salary of $275,000. See "Executive Compensation--
Employment Arrangements, Retirement Agreement and Change in Control
Arrangements." Because he joined in mid-year, he did not qualify as one of
the four most highly compensated officers in addition to the Chief
Executive Officer so as to require disclosure under applicable proxy
rules. However, it is anticipated that he will qualify in future years.
(2) 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.
(3) 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.
(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 1995 of $9,000 for Messrs. Del Santo, Goodspeed, Wallock, Hawkins and
Ms. Knous and (ii) contributions to the wrap around plan for 1995 of
$38,278 for Mr. Del Santo, $23,178 for Mr. Goodspeed, $6,708 for Mr.
Wallock, $5,400 for Ms. Knous, and $3,051 for Mr. Hawkins.
13
<PAGE>
Option Grants. Shown below is information on grants of stock options during
the last fiscal year under the Plan to the Named Officers. No restricted stock
was awarded under the Plan during 1995.
OPTION GRANTS IN 1995 FISCAL YEAR(1)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------
PERCENT OF TOTAL
OPTIONS GRANTED GRANT DATE
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION PRESENT
NAME GRANTED (#) FISCAL YEAR PRICE ($/SH) DATE VALUE (2)
- ---- ----------- ---------------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Phillip E. Hawkins...... 10,000 2.00% $19.93 5/03/2005 $114,900
Pamela K. Knous......... 15,000 3.00% $19.93 5/03/2005 $172,350
Terrence J. Wallock..... 15,000 3.00% $19.93 5/03/2005 $172,350
</TABLE>
- --------
(1) All option grants are subject to the following provisions: Options shown
were granted on May 3, 1995, and are exercisable in cumulative 15%
installments commencing one year from date of grant, with full vesting
occurring on the seventh 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 .2584, a risk-free rate of return of 7.4%, 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.
14
<PAGE>
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 1995 FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS IN-THE-MONEY
AT FISCAL OPTIONS AT FISCAL
YEAR-END (#) YEAR-END
------------- -----------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE (1)
---- ------------- -----------------
<S> <C> <C>
Lawrence A. Del Santo........................ 125,000 $2,183,829
250,000 $4,367,671
Richard E. Goodspeed......................... 67,500 $1,191,700
205,000 $3,200,300
Phillip E. Hawkins........................... 19,477 $ 86,853
16,973 $ 134,595
Pamela K. Knous.............................. 15,727 $ 53,691
25,723 $ 218,833
Terrence J. Wallock.......................... 27,814 $ 104,508
31,086 $ 263,550
</TABLE>
- --------
(1) Based on closing price of $28.25 for the Company's common stock on the New
York Stock Exchange on December 29, 1995 (the last trading day prior to
the end of the fiscal year).
15
<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, 1996, at the normal
retirement age of 65.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS
BASED UPON INDICATED YEARS OF SERVICE (1)(2)
--------------------------------------------------------------------------
15 20 25 30 35
REMUNERATION (3) YEARS YEARS YEARS YEARS YEARS
---------------- ------- ------- ------- ------- -------
<C> <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, 1996, the credited years of service under both the Pension
Plan and SERP for the Named Officers were as follows: Mr. Hawkins, 27 years 5
months; Ms. Knous 4 years, 9 months; and Mr. Wallock 4 years, 10 months. With
respect to retirement benefits payable to Mr. Del Santo and Mr. Goodspeed, see
"Executive Compensation--Employment Arrangements, Retirement Agreement and
Change in Control Arrangements."
EMPLOYMENT ARRANGEMENTS, RETIREMENT AGREEMENT AND CHANGE IN CONTROL
ARRANGEMENTS
Employment Arrangements. The Company has three-year employment contracts
with Messrs. Del Santo and Goodspeed entered into as of April 26, 1994 and has
made employment commitments to Terry R. Peets, Executive Vice President,
pursuant to agreements dated September 6, 1995.
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
options at fair
16
<PAGE>
market value and 175,000 non-qualified stock options at 25% of fair market
value and all are exercisable 33 1/3% per year beginning one year after grant.
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 also paid 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 which are
exercisable 20% per year beginning one year after grant and 97,500 non-
qualified stock options at 25% of fair market value which are exercisable 33
1/3% per year beginning one year after grant. 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 paid for relocation of Mr. Goodspeed to Southern California,
including the cost of transfer of household goods, temporary living expenses
through October 1994, and purchased his former residence at his original cost.
Mr. Peets was extended an offer of employment by letter agreement providing
him a base salary of $275,000 per year plus a one-time signing bonus of
$30,000. Mr. Peets was also included in the Company's 1995 bonus plan for the
full year and received a stock option grant of 50,000 shares at $22.24 per
share, the fair market value on his date of hire. The Company agreed to defend
and indemnify Mr. Peets against any actions brought by his former employer
arising from his employment with the Company. The Company also entered into a
severance agreement with Mr. Peets which provides that he is to continue to
receive his base salary, along with medical benefits (but no bonus), through
September 5, 1997 if prior to that date he is terminated without "Cause" or
resigns with "Good Reason", as each term is defined therein.
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. Beginning January
2, 1995, Mr. Stangeland retired from the Company but remains 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. 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.
Pursuant to the terms of the Company's SERP, Mr. Stangeland received 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.
Change in Control Arrangements. Officers of the Company (excluding Messrs.
Del Santo 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
17
<PAGE>
50% of the total voting common stock of the surviving corporation after such
transaction, (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. 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 Plan provides, under certain circumstances, for options to vest upon a
change of control. See "Amendments to The Vons Companies, Inc. 1990 Stock
Option and Restricted Stock Plan--Plan Description."
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
annual meeting of
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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 1995, Annual Grants of 2,007 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 three directors: Mr. Burd,
Chairman, Mr. Magowan, 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 1995, Safeway and its affiliates sold certain inventory and other items
to the Company for an aggregate amount of approximately $27 million. Vons sold
certain inventory items to Safeway and its affiliates in 1995 for an aggregate
amount of approximately $6.4 million. All such sales between the parties were
on an "arm's length" basis.
Property Development Associates ("PDA") 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 and Safeway have interests
in eight supermarket properties located in Southern California which are
leased to Vons.
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Rentals under such leases in 1995 totaled approximately $600,000. 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.
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 is 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.
The Company's executive compensation structure is designed to provide a base
salary at the mid-range of salaries of comparable companies plus a performance
based bonus comprising a significant portion of overall compensation so as to
allow executives to earn total compensation at the higher end of the
competitive range if warranted by performance. The Company also provides long-
term compensation in the form of non-qualified stock options.
The performance measure which generates the executive bonus pool is derived
from the Company's annual annual budget. The annual budget each year is
developed on the basis of overall financial guidelines set by senior
management. Utilizing these guidelines, each store adopts sales and operating
income goals which cumulatively comprise the overall Company annual budget
goals after administrative and support costs are factored in. The Board of
Directors formally reviews and approves the annual budget after any suggested
changes have been incorporated.
From the annual budget, a bonus performance matrix is developed with two
variables consisting of same store sales increases over previous year sales
and operating income goals. On the basis of the Company's performance in these
two areas on the matrix, a bonus pool for officers is generated in an amount
ranging from 0% to 200% of the cumulative target bonuses of all executives
eligible for participation in the pool. The individual bonus targets for
executives range from 30% to 50% of their base salary depending on the level
of responsibility.
The bonus targets for both the Chief Executive Officer and the Chief
Operating Officer are 50% of base compensation. Each are paid a bonus directly
based on the Company performance matrix described above so that their bonus
potential ranges between 0% and 100% of base compensation.
With respect to other officers, including the Named Officers, the bonus pool
is funded by the Company performance matrix, but payout from the pool is based
upon individual performance goals of each officer. These goals vary depending
on the responsibilities of the officer. Payout is made on the basis of an
assessment of the achievements of each officer during the year with respect to
the individual goals and overall individual performance. As indicated above,
target bonus for this group ranges from 30% to 50% of base compensation and
payout can be from 0% to 100% of target.
Base salaries of all officers are evaluated annually based upon compensation
for similar positions in competitive companies, but also on the basis of
financial and strategic goals of the Company as well as Company performance.
Comparative salary data is reviewed for both other grocery companies
throughout the country as well as other companies in the region so as to
maintain a competitive salary package. Compensation paid for comparable
positions in grocery companies shown in the peer group index contained
elsewhere in the proxy statement is included in the survey along with industry
data available through other sources. On the basis of these surveys and other
information available to it, the Company believes that its salaries are at the
mid-range of positions surveyed.
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Under the terms of the Plan, the Committee is authorized to grant all stock
options. In determining the amount of the 1995 award, the Committee reviewed
prior years' stock option awards. A total of approximately 504 individuals,
including officers, store managers, and middle managers, received option
awards in May of 1995, at a strike price of $19.93 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. No stock option awards were
made to the Chief Executive Officer or Chief Operating Officer in 1995 since
they received contractually negotiated awards in 1994 as part of their
compensation arrangement upon joining the Company.
The 1995 total compensation of no executive officer exceeded the limitations
for deductibility set forth in Section 162(m) of the Internal Revenue Code.
Inasmuch as it is highly unlikely that any executive compensation in 1996 will
exceed the limitation by any substantial amount, the Committee sees no reason
to adopt a policy limiting executive compensation to that deductible under
Section 162(m). In the future the Committee may approve compensation in excess
of the deductibility limit if it feels that would be appropriate considering
all circumstances. The Company is in this proxy statement asking for
shareholder approval to adopt changes to the Company's stock option plan to
comply with Section 162(m) so that employee stock option grants will not
result in the loss of a deduction thereunder.
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
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, which was
utilized for 1994, (ii) the S & P 500 and (iii) 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' 1990 fiscal year to the last
trading day prior to the end of Vons' 1995 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(1)
AMONG VONS, S&P 400 MIDCAP 1994(2), TOP TEN SUPERMARKETS 1994(3),
S&P 500(2) AND TOP TEN SUPERMARKETS 1995(3)
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period S&P 400 TOP TEN S&P TOP TEN
(Fiscal Year Covered) VONS MIDCAP 1994 SUPERMARKETS 1994 500 SUPERMARKETS 1995
- --------------------- ------- ----------- ----------------- ----- -----------------
<S> <C> <C> <C> <C> <C>
Measurement Pt- 1990 $100 $100 $100 $100 $100
FYE 1991 $105.56 $149.87 $119.07 $130.01 $119.26
FYE 1992 $113.33 $167.75 $136.9 $139.69 $138.09
FYE 1993 $ 71.11 $191.09 $147.26 $153.56 $150.47
FYE 1994 $ 80 $184.25 $165.35 $155.51 $169.41
FYE 1995 $125.55 $241.15 $232.79 $213.24 $233.48
</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) For 1994 the Company used the S & P 400 Mid Cap as a comparative
measurement. Beginning in 1995 and going forward, it will use the S & P
500 which is the comparison which the Company believes is more commonly
utilized and more appropriate.
(3) 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 in 1995 are:
American Stores Company, Albertson's, Inc., The Great Atlantic & Pacific
Tea Company, Inc., Food Lion, Inc., Giant Food Inc., The Stop and Shop
Companies, Inc., The Kroger Co., The Penn Traffic Company, Safeway Inc.
and Winn-Dixie Stores. The 1995 peer group does not include Bruno's, Inc.,
which was included in 1994 (and has been removed from the 1994 peer group
presented above) because it is no longer a publicly held company. The 1995
peer group includes The Stop and Shop Companies, Inc. which replace
Bruno's. 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. In addition, in light of the
positive sales performance of the Company in 1995 and in the recognition of
Mr. Davila's efforts in the marketing area in 1995, Mr. Davila was paid a
$25,000 bonus for 1995.
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 December 31, 1995, Mr.
Rickershauser was indebted to the Company in the aggregate amount of
approximately $148,588, 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 1995 the Company
purchased approximately $4,717,526 of diesel fuel from such subsidiary.
Mr. Duda and Mr. Stangeland are general partners of Lido Partners, formerly
known as Newport Via Lido Association, 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. Commencing January 31, 1995, Lido Partners and the Company
entered into a new supermarket lease in the center for an additional 20 years
at an annual minimum rent of $330,000. 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.
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 year. 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 $250,000 to each partner in
1995. The Company ceased operating the warehouse in 1995 and a special
committee of disinterested directors has been appointed by the Board of
Directors to negotiate a termination arrangement with Miramar Associates and a
sale of the warehouse to a disinterested party.
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.
Pursuant to the Plan, approval of the amendment to the Plan requires the
vote of a majority of the shares represented and entitled to vote at the
Annual Meeting, a quorum being present. Michigan law and the Company's
Restated Articles of Incorporation and By-Laws do not otherwise require a vote
of the shareholders.
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All shares represented and entitled to vote at the Annual Meeting which the
holders of such shares vote "for", "against" or "abstain" from voting, will be
counted for purposes of determining the minimum number of affirmative votes
required for approval of the amendment to the Plan. The total number of votes
cast "for" the amendment to the Plan will be counted for purposes of
determining whether sufficient affirmative votes have been cast for the
approval of the proposal. Therefore, an abstention, broker non-votes and other
shares not voted on the proposed amendment to the Plan have the same legal
effect as a vote "against" the proposal.
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 1995 fiscal year, all Section 16(a) filing
requirements applicable to reporting persons were complied with.
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 appropriate questions, if any, from shareholders.
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 December 31, 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 1997 annual meeting must be received at
Vons' principal executive offices no later than November 30, 1996, 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.
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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 28, 1996
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THE VONS COMPANIES, INC.
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Lawrence A. Del Santo, Pamela K. Knous,
Terrence J. Wallock, and each of them, as proxies with power of substitution and
hereby authorizes them to represent and to vote, as designated on the reverse
side of this card, all the shares of Common Stock of The Vons Companies, Inc.
("Vons") held of record by the undersigned on March 11, 1996 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
8, 1996, at 9:00 a.m. local time, or any adjournments or postponement thereof,
with respect to the following matters as more particularly described in the
Proxy Statement dated March 28, 1996, receipt of which is hereby acknowledged.
This proxy, when properly executed, will be voted in the manner indicated
herein by the undersigned. If no direction is made, this proxy will be voted FOR
(i) the election of the persons named on the reverse side of this card and (ii)
the amendment of the Vons 1990 Stock Option and Restricted Stock Plan as
described in the proxy statement and according to the discretion of the proxies
on any other properly presented business. If any nominee named in the Proxy
Statement is unable or unwilling to serve or is otherwise unavailable, the
proxies shall have discretion and authority to vote in accordance with their
judgment for other nominees.
(Continued and to be signed and dated on other side)
THE VONS COMPANIES, INC.
P.O. BOX 11228
NEW YORK, N.Y. 10203-0228
<PAGE>
DETACH PROXY CARD HERE
- --------------------------------------------------------------------------------
1. Election of Directors
FOR all nominees [_] WITHHOLD AUTHORITY to vote [_] *EXCEPTIONS [_]
listed below for all nominees listed below.
Nominees: William S. Davila, James H. Greene, Jr., John M. Lillie, and
Charles E. Rickershauser, Jr. 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 amend the Vons 1990 Stock Option and Restricted Stock Plan as described
in the Proxy Statement.
FOR [_] AGAINST [_] ABSTAIN [_]
3. To vote upon such other business as may properly come before the meeting
or any adjournments or postponement thereof as to which the undersigned
hereby confers discretionary authority upon said proxies.
Change of Address and or Comments Mark Here. [_]
IMPORTANT: Please sign exactly as your name or names appear hereon.
When signing on behalf of a corporation, partnership, estate, trust or the
like, indicate title of person signing.
Dated: , 1996
-------------------------------------------------
-------------------------------------------------------------
Signature
-------------------------------------------------------------
Signature if held jointly
Please sign, date and return this proxy card promptly using the enclosed
envelope.
Votes MUST be indicated [X] in Black or Blue Ink. [_]
<PAGE>
THE VONS COMPANIES, INC.
1990 STOCK OPTION AND RESTRICTED STOCK PLAN
The Vons Companies, Inc., a corporation organized under the laws of the
State of Michigan (the "Company"), hereby adopts The Vons Companies, Inc. 1990
Stock Option and Restricted Stock Plan (the "Plan"). The purposes of this Plan
are as follows:
(1) To further the growth, development and financial success of the
Company by providing additional incentives to certain of its officers and
employees who have been or will be given responsibility for the management
or administration of the Company's business affairs, by assisting them to
become owners of capital stock of the Company and thus to benefit directly
from its growth, development and financial success.
(2) To enable the Company to obtain and retain the services of the
type of professional, technical and managerial employees considered
essential to the long-range success of the Company by providing and
offering them an opportunity to become owners of capital stock of the
Company.
ARTICLE I
DEFINITIONS
Section 1.1 Board: "Board" shall mean the Board of Directors of the
Company.
Section 1.2 Change of Control: "Change of Control" shall mean (a) one or
more acquisitions by any entity or group resulting in beneficial ownership of
50% or more of the voting stock of the Company, (b) a merger, consolidation,
business combination or other reorganization of the Company in which the
stockholders of the Company immediately prior to such transaction beneficially
own less than 50% of the voting stock of the Company or other surviving
corporation immediately after such transaction, or (c) the sale or other
transfer of all or substantially all of the assets of the Company, or (d) any
transaction resulting in a delisting of the stock of the Company from the New
York Stock Exchange or any other national exchange.
Section 1.3 Code: "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
Section 1.4 Committee: "Committee" shall mean the Compensation Committee
of the Board, appointed as provided in Section 8.1.
Section 1.5 Company: "Company" shall mean The Vons Companies, Inc., a
Michigan corporation.
Section 1.6 Director: "Director" shall mean a member of the Board.
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Section 1.7 Employee: "Employee" shall mean any employee (as defined in
accordance with the Regulations and Revenue Rulings then applicable under
Section 3401(c) of the Code) of the Company, or of any corporation which is then
a Parent Corporation or Subsidiary, whether such employee is so employed at the
time this Plan is adopted or becomes so employed subsequent to the adoption of
this Plan.
Section 1.8 Incentive Stock Option: "Incentive Stock Option" shall mean
an Option which qualifies as an "incentive stock option" under Section 422A of
the Code and which is designated as an Incentive Stock Option by the Committee.
Section 1.9 Non-Qualified Option: "Non-Qualified Option" shall mean an
Option which is not an Incentive Stock Option and which is designated as a Non-
Qualified Option by the Committee.
Section 1.10 Officer: "Officer" shall mean an officer of the Company, any
Parent Corporation or any Subsidiary.
Section 1.11 Option: "Option" shall mean an option to purchase capital
stock of the Company granted under the Plan. Options granted under the Plan
shall include both Non-Qualified Options and Incentive Stock Options.
Section 1.12 Optionee: "Optionee" shall mean an Officer or Employee to
whom an Option is granted under the Plan.
Section 1.13 Parent Corporation: "Parent Corporation" shall mean any
corporation in an unbroken chain of corporations ending with the Company if each
of the corporations other than the Company then owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
Section 1.14 Plan: "Plan" shall mean The Vons Companies, Inc. 1990 Stock
Option and Restricted Stock Plan.
Section 1.15 Restricted Stock: "Restricted Stock" shall mean capital
stock of the Company issued pursuant to Article VI of this Plan.
Section 1.16 Restricted Stockholder: "Restricted Stockholder" shall mean
an Officer or Employee to whom Restricted Stock has been issued under the Plan.
Section 1.17 Secretary: "Secretary" shall mean the Secretary of the
Company.
Section 1.18 Securities Act: "Securities Act" shall mean the Securities
Act of 1933, as amended.
Section 1.19 Exchange Act: "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
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Section 1.20 Subsidiary: "Subsidiary" shall mean any corporation in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain then owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
Section 1.21 Termination of Employment: "Termination of Employment" shall
mean the time when the employee-employer relationship between the Optionee or
the Restricted Stockholder, as the case may be, and the Company, a Parent
Corporation or a Subsidiary is terminated for any reason, in each case with or
without cause, but not including a termination by death, total disability or
retirement, and excluding terminations where there is a simultaneous
reemployment of the Optionee or Restricted Stockholder by the Company, a Parent
Corporation or a Subsidiary. The Committee, in its absolute discretion, shall
determine the effect of all other matters and questions relating to Termination
of Employment, including, but not by way of limitation, the question of whether
a Termination of Employment resulted from a discharge for good cause, and all
questions of whether particular leaves of absence constitute Terminations of
Employment. Termination of Employment shall not include terminations which in
any way result from a Change of Control, nor shall Termination of Employment
include removal or demotion of an Officer by the Board or failure by the Board
to reelect an Officer, unless such removal, demotion or failure to reelect is
due to a material breach by the Officer of the Company's employee policies.
ARTICLE II
SHARES SUBJECT TO PLAN
Section 2.1 Shares Subject to Plan: The shares of stock subject to
Options or to be issued as Restricted Stock shall be shares of the Company's
$.10 par value common stock. The aggregate number of such shares which may be
issued upon exercise of Options or as Restricted Stock shall not exceed
6,000,000 shares. No employee or officer may be granted Options to purchase
more than 500,000 shares of Common Stock per year.
Section 2.2 Unexercised Options: If any Option expires or is cancelled
without having been fully exercised, the number of shares subject to such Option
but as to which such Option was not exercised prior to its expiration or
cancellation may again be subject to Options granted hereunder or be issued as
Restricted Stock hereunder, subject to the limitations of Section 2.1.
Section 2.3 Forfeited Restricted Stock: Any shares of Restricted Stock
forfeited to the Company pursuant to the restrictions thereon may again be
issued as Restricted Stock hereunder or be subject to Options granted hereunder,
subject to the limitations of Section 2.1.
Section 2.4 Changes in Company's Shares: In the event that the
outstanding shares of the Company's Common Stock are hereafter changed into or
exchanged for a different number or kind of shares or other securities of the
Company, or of another corporation, by reason of reorganization, merger
(including reincorporation effected by means of merger), consolidation,
recapitalization, reclassification, stock split-up, stock dividend or
combination of shares, appropriate adjustments shall be made by the Committee in
the number and kind of
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shares for the purchase of which Options may be granted and in the number and
kind of Restricted Stock which may be issued, including adjustments of the
limitations in Section 2.1 on the maximum number and kind of shares which may be
issued on exercise of Options or as Restricted Stock.
ARTICLE III
GRANTING OF OPTIONS
Section 3.1 Eligibility: Any Employee or Officer (including Officers who
are also Directors) of the Company or a Parent Corporation or a Subsidiary shall
be eligible to be granted Options.
Section 3.2 Qualification of Incentive Stock Options: No Incentive Stock
Option shall be granted unless such Option, when granted, qualifies as an
"incentive stock option" under Section 422A of the Code.
Section 3.3 Granting of Options:
(a) The Committee shall from time to time, in its absolute
discretion:
(i) Select from among the Employees and Officers (including those
to whom Options and/or Restricted Stock have been previously granted
or issued under the Plan) such of them as shall be granted Options
under the Plan; and
(ii) Determine the number of shares to be subject to such Options
granted to such selected Employees and Officers, and determine whether
such Options are to be Incentive Stock Options or Non-Qualified
Options; and
(iii) Determine the terms and conditions of such Options
consistent with the Plan.
(b) Upon the selection of an Officer or Employee to be granted an
Option, the Committee shall instruct the Secretary to issue such Option and
may impose such conditions on the grant of such Option as it deems
appropriate. Without limiting the generality of the preceding sentence,
the Committee may, in its discretion and on such terms as it deems
appropriate, require as a condition of the grant of an Option to an Officer
or Employee, that the Officer or Employee surrender for cancellation some
or all of the unexercised Options which have been previously granted to the
Officer or Employee. An Option the grant of which is conditioned upon such
surrender may have an option price lower (or higher) than the option price
of the surrendered Option, may cover the same (or a lesser or greater)
number of shares as the surrendered Option, may contain such other terms as
the Committee deems appropriate and shall be exercisable in accordance with
its terms, without regard to the number of shares, price, option period or
any other term or condition of the surrendered Option.
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ARTICLE IV
TERMS OF OPTIONS
Section 4.1 Option Agreement: Each Option shall be evidenced by a
written Stock Option Agreement, which shall be executed by the Optionee and an
authorized officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with the Plan. Stock
Option Agreements evidencing Incentive Stock Options shall contain such terms
and conditions as may be necessary to qualify such Options as "incentive stock
options" under Section 422A of the Code.
Section 4.2 Option Price:
(a) The price of the shares subject to each Option shall be set by the
Committee; provided, however, that the price per share of Incentive Stock
Options shall not be less than 100% of the "fair market value" of such
shares on the date such Option is granted; and provided, further, that in
the case of an Incentive Stock Option, the price per share shall not be
less than 110% of the "fair market value" of such shares on the date such
Option is granted in the event such Option is granted to an individual then
owning (within the meaning of Section 425(d) of the Code) more than 10% of
the total combined voting power of all classes of stock of the Company, any
Subsidiary or any Parent Corporation. In the sole discretion of the
Committee the price per share subject to Non-Qualified Options may be less
than 100% of the "fair market value" of such shares on the date such Option
is granted.
(b) For purposes of the Plan, the "fair market value" of a share of
the Company's common stock as of a given date shall be: (i) the average
closing price for the ten trading days prior to the exercise or grant date
of a share of the Company's common stock on the principal exchange on which
shares of the Company's common stock are then trading, if any; or (ii) if
such stock is not traded on an exchange but is quoted on NASDAQ or a
successor quotation system, (1) the last sales price (if the stock is then
listed as a National Market Issue under the NASD National Market System) or
(2) the mean between the closing representative bid and asked prices (in
all other cases) for the stock on the day previous to such date as reported
by NASDAQ or such successor quotation system; or (iii) if such stock is not
publicly traded on an exchange and not quoted on NASDAQ or a successor
quotation system, the mean between the closing bid and asked prices for the
stock on the day previous to such date, as determined in good faith by the
Committee; or (iv) if the Company's common stock is not publicly traded,
the fair market value established by the Committee acting in good faith.
Section 4.3 Commencement of Exercisability:
(a) Except as the Committee may otherwise provide, no Option may be
exercised in whole or in part during the first year after such Option is
granted.
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(b) Subject to the provisions of Sections 4.3(a), 4.3(c), 4.3(d) and
9.3, Options shall become exercisable at such times and in such
installments (which may be cumulative) as the Committee shall provide in
the terms of each individual Option; provided, however, that by a
resolution adopted after an Option is granted the Committee may, on such
terms and conditions as it may determine to be appropriate and subject to
Sections 4.3(a), 4.3(c), 4.3(d) and 9.3, accelerate the time at which such
Option or any portion thereof may be exercised.
(c) Except as the Committee or this Plan may otherwise provide, no
portion of an Option which is unexercisable at an Employee's or Officer's
Termination of Employment shall thereafter become exercisable.
(d) Notwithstanding any other provision of this Plan, in the case of
an Incentive Stock Option, the aggregate fair market value (determined at
the time the Incentive Stock Option is granted) of the shares of the
Company's stock with respect to which "incentive stock options" (within the
meaning of Section 422A of the Code) are exercisable for the first time by
the Optionee during any calendar year (under the Plan and all other
incentive stock option plans of the Company, any Subsidiary and any Parent
Corporation) shall not exceed $100,000.
Section 4.4 Expiration of Options:
(a) No Incentive Stock Option may be exercised to any extent by anyone
after the first to occur of the following events:
(i) The expiration of ten years from the date the Option was
granted; or
(ii) In the case of an Optionee owning (within the meaning of
Section 425(d) of the Code), at the time the Option was granted, more
than 10% of the total combined voting power of all classes of stock of
the Company, any Subsidiary or any Parent Corporation, the expiration
of five years from the date the Option was granted; or
(iii) Except in the case of any Optionee who is disabled (within
the meaning of Section 22(e)(3) of the Code), the expiration of three
months from the date of the Optionee's Termination of Employment for
any reason other than such Optionee's death unless the Optionee dies
within said three-month period; or
(iv) In the case of an Optionee who is disabled (within the
meaning of Section 22(e)(3) of the Code), the expiration of one year
from the date of the Optionee's Termination of Employment for any
reason other than such Optionee's death unless the Optionee dies
within said one-year period; or
(v) The expiration of one year from the date of the Optionee's
death.
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(b) No Non-Qualified Option may be exercised to any extent by anyone
after the expiration of ten years and one day from the date the Option was
granted.
(c) Subject to the provisions of Section 4.4(a), the Committee shall
provide, in the terms of each individual Option, when such Option expires
and becomes unexercisable; and (without limiting the generality of the
foregoing) the Committee may provide in the terms of individual Options
that said Options expire immediately upon a Termination of Employment.
Section 4.5 Consideration: In consideration of the granting of the
Option, the Optionee shall agree, in the written Stock Option Agreement if the
Optionee is an Employee or an Officer, to remain in the employ of the Company, a
Parent Corporation or a Subsidiary for the period of at least one year after the
Option is granted. Nothing in this Plan or in any Stock Option Agreement
hereunder shall confer upon any Optionee any right to continue in the employ of
the Company, any Parent Corporation or any Subsidiary or shall interfere with or
restrict in any way the rights of the Company, its Parent Corporations and its
Subsidiaries, which are hereby expressly reserved, to discharge any Optionee at
any time for any reason whatsoever, with or without cause.
Section 4.6 Adjustments in Outstanding Options: In the event that the
outstanding shares of the stock subject to Options are changed into or exchanged
for a different number or kind of shares of other securities of the Company, or
of another corporation, by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, stock dividend or
combination of shares, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares as to which all outstanding Options,
or portions thereof then unexercised, shall be exercisable, to the end that
after such event the Optionee's proportionate interest shall be maintained as
before the occurrence of such event. Such adjustment in an outstanding Option
shall be made without change in the total price applicable to the Option or the
unexercised portion of the Option (except for any change in the aggregate price
resulting from rounding off of share quantities or prices) and with any
necessary corresponding adjustment in Option price per share; provided, however,
that, in the case of Incentive Stock Options, each such adjustment shall be made
in such manner as not to constitute a "modification" within the meaning of
Section 425(h)(3) of the Code. Any such adjustment made by the Committee shall
be final and binding upon all Optionees, the Company and all other interested
persons.
Section 4.7 Merger, Consolidation, Acquisition, Liquidation or
Dissolution: Subject to any required action by the shareholders of the Company
to approve an action which is a Change of Control, if there shall be a Change of
Control, each Optionee shall have the right prior to such Change of Control to
exercise his Options to the extent not theretofore exercised, whether or not
they are then exercisable in the ordinary course of events (notwithstanding any
restrictions contrary to such rights as may be contained elsewhere in this Plan
or in the written Stock Option Agreement), unless there is a surviving
corporation or a parent or subsidiary corporation thereof that shall assume
(with appropriate changes) the outstanding Options or replace them with new
options of comparable value. The Company shall give reasonable notice to
Optionees of any Change of Control. Every Option or any portion thereof
outstanding at the time of the Change of Control shall
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terminate at such time, unless there is a surviving corporation or a Parent or
Subsidiary Corporation thereof that shall assume (with appropriate changes) the
outstanding Options or replace them with new options of comparable value.
ARTICLE V
EXERCISE OF OPTIONS
Section 5.1 Person Eligible to Exercise: During the lifetime of the
Optionee, only he may exercise an Option granted to him, or any portion thereof.
After the death of the Optionee, any exercisable portion of an Option may, prior
to the time when such portion becomes unexercisable under Sections 4.4 or 4.7,
be exercised by the Optionee's personal representative or by any person
empowered to do so under the deceased Optionee's will or under the then
applicable laws of descent and distribution.
Section 5.2 Partial Exercise: At any time and from time to time prior to
the time when any exercisable Option or exercisable portion thereof becomes
unexercisable under Sections 4.4 or 4.7, such exercisable Option or portion
thereof may be exercised in whole or in part; provided, however, that the
Company shall not be required to issue fractional shares and the Committee may,
by the terms of the Option, require any partial exercise to be with respect to a
specified minimum number of shares.
Section 5.3 Manner of Exercise: An exercisable Option, or any exercisable
portion thereof, may be exercised solely by delivery to the Secretary or the
Secretary's office all of the following prior to the time when such exercisable
Option or portion thereof becomes unexercisable under Sections 4.4 or 4.7:
(a) Notice in writing signed by the Optionee or other person then
entitled to exercise such Option or portion, stating that such Option or
portion is exercised, such notice complying with all applicable rules
established by the Committee; and
(b) Either:
(i) Full payment (in cash or by check) for the shares with
respect to which such Option or portion is thereby exercised; or
(ii) With the consent of the Committee, a full recourse
promissory note bearing interest (of at least such rate as shall then
preclude the imputation of interest under the Code) and payable upon
such terms as may be prescribed by the Committee. The Committee may
also prescribe the form of such note and the security to be given for
such note. No Option may, however, be exercised by delivery of a
promissory note or by a loan from the Company when or where such loan
or other extension of credit is prohibited by law; or
(iii) With the consent of the Committee, shares of the Company's
common stock owned by the Optionee, duly endorsed for transfer to the
Company, with a fair market value (as determinable under Section
4.2(b)) on
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the date of delivery equal to the aggregate purchase price of the
shares with respect to which such Option or portion is thereby
exercised (Note: The Committee may decline to accept as payment for
any reason shares of the Company's Common Stock owned by the Optionee
including shares owned by Optionee for less than six months); or
(iv) Any combination of the consideration provided in the
foregoing subsections (i), (ii) or (iii); and
(c) Such representations and documents as the Committee, in its
absolute discretion, deems necessary or advisable to effect compliance with
all applicable provisions of the Securities Act or Exchange Act and any
other federal or state securities laws or regulations. The Committee may,
in its absolute discretion, also take whatever additional actions it deems
appropriate to effect such compliance, including, without limitation,
placing legends on share certificates and issuing stop-transfer orders to
transfer agents and registrars; and
(d) In the event that the Option or portion thereof shall be exercised
pursuant to Section 5.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the
Option or portion thereof.
Section 5.4 Conditions to Issuance of Stock Certificates: The shares of
stock issuable and deliverable upon the exercise of an Option, or any portion
thereof, may be either previously authorized but unissued shares or issued
shares which have then been reacquired by the Company. The Company shall not be
required to issue or deliver any certificate or certificates for shares of stock
purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges, if
any, on which such class of stock is then listed; and
(b) The Completion of any registration or other qualification of such
shares under any state or federal law or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental
regulatory body which the Committee shall, in its absolute discretion, deem
necessary or advisable; and
(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) The payment to the Company of all amounts which it is required to
withhold under federal, state or local law in connection with the exercise
of the Option (Note: The Company, at its sole option, may elect to
withhold a number of the Company's shares either at the time of the grant
or exercise of an Option the fair market value of which would satisfy any
withholding tax on said exercise or grant); and
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(e) The lapse of such reasonable period of time following the exercise
of the Option as the Committee may establish from time to time for reasons
of administrative convenience.
Section 5.5 Rights as Shareholders: A holder of an Option or Options
shall not be, nor shall such holder have any of the rights or privileges of, a
shareholder of the Company in respect of any shares purchasable upon the
exercise of any part of the Option or Options unless and until a certificate or
certificates representing such shares have been issued by the Company to such
holder.
Section 5.6 Transfer Restrictions: The Committee, in its absolute
discretion, may impose such restrictions on the transferability of the shares
purchasable upon the exercise of an Option as it deems appropriate. Any such
restriction shall be set forth in the respective Stock Option Agreement and may
be referred to on the certificates evidencing such shares. The Committee may
require the Employee or Officer to give the Company prompt notice of any
disposition of shares of stock acquired by exercise of an Incentive Stock Option
within two years from the date of grant of such Option or one year after the
issuance of such shares to such Employee. The Committee may direct that the
certificates evidencing shares acquired upon exercise of an Incentive Stock
Option refer to such requirement to give prompt notice of disposition.
ARTICLE VI
ISSUANCE OF RESTRICTED STOCK
Section 6.1 Eligibility: Any Employee or Officer (including Officers who
are also Directors) of the Company or a Parent Corporation or a Subsidiary shall
be eligible to be issued Restricted Stock.
Section 6.2 Issuance of Restricted Stock:
(a) The Committee shall from time to time, in its absolute discretion:
(i) Select from among the Employees and Officers (including those
to whom Options and/or Restricted Stock have been previously granted
or issued under the Plan) such of them as shall be issued Restricted
Stock under the Plan; and
(ii) Determine the number of shares of Restricted Stock to be
issued to such selected Employees and Officers; and
(iii) Determine the terms and conditions applicable to such
Restricted Stock, consistent with the Plan.
(b) Shares issued as Restricted Stock may be either previously
authorized but unissued shares or issued shares which have been reacquired
by the Company.
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Legal consideration, but (unless the Committee in its discretion specifies
otherwise) no cash payment, will be required for each issuance of
Restricted Stock.
(c) Upon the selection of an Employee or Officer to be issued
Restricted Stock, the Committee shall instruct the Secretary to issue such
Restricted Stock and may impose such conditions on the issue of such
Restricted Stock as it deems appropriate.
ARTICLE VII
TERMS OF RESTRICTED STOCK
Section 7.1 Restricted Stock Agreement: Restricted Stock shall be issued
only pursuant to a written Restricted Stock Agreement, which shall be executed
by the Restricted Stockholder and an authorized Officer of the Company and which
shall contain such terms and conditions as the Committee shall determine,
consistent with the Plan.
Section 7.2 Consideration:
(a) As partial consideration for the issuance of the Restricted Stock,
the Restricted Stockholder shall agree in the written Restricted Stock
Agreement, if the Restricted Stockholder is an Employee or an Officer, to
remain in the employ of the Company, a Parent Corporation or a Subsidiary
for a period at least one year after the Restricted Stock is issued.
Nothing in this Plan or in any Restricted Stock Agreement hereunder shall
confer upon any Restricted Stockholder any right to continue in the employ
of the Company, any Parent Corporation or any Subsidiary or shall interfere
with or restrict in any way the rights of the Company, its Parent
Corporations and its Subsidiaries, which are hereby expressly reserved, to
discharge any Restricted Stockholder at any time for any reason whatsoever,
with or without cause.
(b) If the Committee requires a cash payment as partial consideration
for the issuance of the Restricted Stock, the terms of such payment will be
set forth in the written Restricted Stock Agreement, the terms and
conditions of which may include either (or both) (i) full payment (in cash
or by check) or (ii) a full recourse promissory note bearing interest (of
at least such rate as shall then preclude the imputation of interest under
the Code) and payable upon such terms as may be prescribed by the
Committee. The Committee may also prescribe the form of such note and any
security to be given for such note. No Restricted Stock may, however, be
paid for by delivery of a promissory note or by a loan from the Company
when or where such loan or other extension of credit is prohibited by law.
(c) The Restricted Stockholder shall agree in the Restricted Stock
Agreement to pay to the Company all amounts which the Company is required
to withhold under federal, state or local law in connection with the
issuance, vesting or sale of Restricted Stock. The Company, at its sole
option, may elect to withhold a number of the Company's shares at the time
of issuance of the Restricted Stock, the
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fair market value of which would satisfy any withholding tax due or that
may become due on an actual or estimated basis.
Section 7.3 Rights as Shareholders: Upon delivery of the shares of
Restricted Stock to the escrow holder pursuant to Section 7.7, the Restricted
Stockholder shall have all the rights of a stockholder with respect to said
shares, subject to the restrictions in his Restricted Stock Agreement, including
the right to vote the shares and to receive all dividends and other
distributions paid or made with respect to the shares.
Section 7.4 Restrictions: All shares of Restricted Stock issued under
this Plan (including any shares received by holders thereof as a result of stock
dividends, stock splits or any other forms of recapitalization) shall be subject
to such restrictions as the Committee shall provide in the terms of each
individual Restricted Stock Agreement; provided, however, that by a resolution
adopted after the Restricted Stock is issued, the Committee may, on such terms
and conditions as it may determine to be appropriate and subject to Section 9.3,
remove any or all of the restrictions imposed by the terms of the Restricted
Stock Agreement. All restrictions imposed pursuant to this Section 7.4 shall
expire within ten years after the date of issuance. Restricted Stock may not
be sold, transferred, pledged, assigned, hypothecated, encumbered or otherwise
alienated until all restrictions are terminated or expire, except that subject
to Section 7.7, a Restricted Stockholder may transfer Restricted Stock which he
has been granted, but which still contain restrictions, to his spouse, his
lineal descendants, or to a trust for the benefit of the Restricted Stockholder,
his spouse or his lineal descendants, provided that such transferee agrees in
advance in writing to be bound by all the terms and conditions of the Plan and
the Restricted Stock Agreement.
Section 7.5 Forfeiture of Restricted Stock: The Committee may provide in
the terms of each individual Restricted Stock Agreement that the Restricted
Stock then subject to restrictions under the Restricted Stock Agreement be
forfeited by the Restricted Stockholder back to the Company immediately upon a
Termination of Employment; provided, however, that provision cannot be written
to require a forfeiture in the event of a Change of Control or in the event of a
Termination of Employment because of the Employee's or Officer's normal
retirement, death, total disability or early retirement with the consent of the
Board.
Section 7.6 Merger, Consolidation, Acquisition, Liquidation, Dissolution:
Subject to any required action by the shareholders of the Company to approve an
action which is a Change of Control, if there shall be a Change of Control, then
upon such event and notwithstanding any provisions of this Plan (including,
without limitation, Sections 7.4, 7.5, or 7.8), the Restricted Stock Agreement
or any other agreement, all Restricted Stock then issued under this Plan shall
immediately vest and all restrictions and forfeiture provisions shall
immediately expire and cease, except that any cash consideration previously
requested by the Committee shall be paid in full to the Company, or its
successor within ninety days of the effective date of a Change in Control.
Section 7.7 Escrow: The Secretary shall retain physical custody of the
certificates representing Restricted Stock until all of the restrictions imposed
under the Restricted Stock Agreement expire or shall have been removed;
provided, however, that in no event shall any
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Restricted Stockholder retain physical custody of any certificates representing
Restricted Stock issued to him that remains subject to any restrictions under
the Restricted Stock Agreement.
Section 7.8 Legend: In order to enforce the restrictions imposed upon
shares of Restricted Stock issued hereunder, the Committee shall cause a legend
or legends to be placed on certificates representing all shares of Restricted
Stock that are subject to restrictions under Restricted Stock Agreements, which
legend or legends shall make appropriate reference to the conditions imposed
thereby.
ARTICLE VIII
ADMINISTRATION
Section 8.1 Compensation Committee: The Compensation Committee shall
consist of at least three Directors who are not also employees of the Company
appointed by and holding office at the pleasure of the Board. Appointment of
Committee members shall be effective upon acceptance of appointment. Committee
members may resign at any time by delivering written notice of resignation to
the Board. Vacancies in the Committee shall be filled by the Board in
accordance with the Company's Articles and By-Laws.
Section 8.2 Duties and Powers of Committee: It shall be the duty of the
Committee to conduct the general administration of the Plan in accordance with
its provisions. The Committee shall have the power to interpret the Plan, the
Options, and the Restricted Stock and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith and to interpret, amend or revoke any such rules. Any such
interpretations and rules in regard to Incentive Stock Options shall be
consistent with the basic purpose of the Plan to grant "incentive stock options"
within the meaning of Section 422A of the Code. In its absolute discretion, the
Board may at any time and from time to time exercise any and all rights and
duties of the Committee under the Plan.
Section 8.3 Majority Rule: The Committee shall act by a majority of its
members in office. The Committee may act either by vote at a meeting or by a
memorandum or other written instrument signed by a majority of the Committee.
Section 8.4 Compensation; Professional Assistance; Good Faith Actions:
Members of the Committee shall receive such compensation for their services as
members as may be determined by the Board. All expenses and liabilities
incurred by members of the Committee in connection with the administration of
the Plan shall be borne by the Company. The Committee may, with the approval of
the Board, employ attorneys, consultants, accountants, appraisers, brokers or
other persons. The Committee, the Company and its Employees, Officers and
Directors shall be entitled to rely upon the advice, opinions or valuations of
any such persons. All actions taken and all interpretations and determinations
made by the Committee in good faith shall be final and binding upon all
Optionees and Restricted Stockholders, the Company and all other interested
persons. No member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith
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with respect to the Plan, the Options, or Restricted Stock, and all members of
the Committee shall be fully protected, indemnified and held harmless by the
Company with respect to any such action, determination or interpretation in
accordance with the Company's Articles and By-Laws.
ARTICLE IX
OTHER PROVISIONS
Section 9.1 Options and Restricted Stock Not Transferable: No Option,
Restricted Stock or interest or right therein or part thereof shall be subject
to or liable for the debts, contracts or engagements of the Optionee or
Restricted Stockholder, as the case may be, or his successors in interest or
shall be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect; provided,
however, that nothing in this Section 9.1 shall prevent transfers by will or by
the applicable laws of descent and distribution, or as provided for in Section
7.4.
Section 9.2 Amendment, Suspension or Termination of the Plan: The Plan
may be wholly or partially amended or otherwise modified, suspended or
terminated at any time or from time to time by the Board or the Committee. The
Board or the Committee may amend or modify the Plan to comply with or take
advantage of changes in any federal or state laws, regulations, or rulings,
including, without limitation, changes, modifications or additions to the
regulations and rulings of the Securities and Exchange Commission and in
particular Regulation 16b-3 of the Exchange Act. However, without approval of
the Company's shareholders given within 12 months before or after the action by
the Board or the Committee, no action of the Board or the Committee may, except
as provided in Section 2.4, increase any limit imposed in Section 2.1 on the
maximum number of shares which may be issued on exercise of Options or as
Restricted Stock, modify the eligibility requirements of Section 3.1 or Section
6. 1, reduce the minimum Option price requirements of Section 4.2(a), permit the
grant of options or issuance of restricted stock to Directors or extend the
limit imposed in this Section 9.2 on the period during which Options may be
granted or Restricted Stock may be issued. Neither the amendment, suspension
nor termination of the Plan shall, without the consent of the holder of the
Option or the Restricted Stockholder, alter or impair any rights or obligations
under any Option theretofore granted or Restricted Stock theretofore issued. No
Option may be granted and no Restricted Stock may be issued during any period of
suspension nor after termination of the Plan, and in no event may any Option be
granted or any Restricted Stock issued under this Plan after the first to occur
of the following events:
(a) The expiration of ten years from the date the Plan is adopted by
the Board; or
(b) The expiration of ten years from the date the Plan is approved by
the Company's shareholders under Section 9.3.
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Section 9.3 Effective Date of Plan; Approval of Plan by Shareholders:
This Plan shall become effective immediately upon adoption by the Board of
Directors and approval of the Company's shareholders within 12 months after the
date of the Board's initial adoption of the Plan. Options be granted or
Restricted Stock may be issued prior to such shareholder approval; provided,
however, that such Options shall not be exercisable and such Restricted Stock
shall not vest prior to the time when the Plan is approved by the shareholders;
and provided further, however, that if such approval has not been obtained at
the end of said 12-month period, all Options previously granted and all
Restricted Stock previously issued under the Plan shall thereupon be cancelled
and become null and void.
Section 9.4 Effect of Plan Upon Other Option and Compensation Plans: The
adoption of this Plan shall not affect any other compensation or incentive plans
in effect for the Company, any Parent Corporation or any Subsidiary. Nothing in
this Plan shall be construed to limit the right of the Company, any Parent
Corporation or any Subsidiary (a) to establish any other forms of incentives or
compensation for Employees or Officers of the Company, any Parent Corporation or
any Subsidiary or (b) to grant or assume options or to issue restricted stock
otherwise than under this Plan in connection with any proper corporate purposes,
including, but not by way of limitation, the grant or assumption of options or
the issuance of restricted stock in connection with the acquisition by purchase,
lease, merger, consolidation or otherwise, of the business, stock or assets of
any corporation, firm or association.
Section 9.5 Titles: Titles are provided herein for convenience only and
are not to serve as a basis for interpretation or construction of the Plan.
I hereby certify that the foregoing Plan was duly adopted by the Board of
Directors of The Vons Companies, Inc., on January 24, 1990.
Executed on this 24th day of January, 1990.
By: ROBERT P. BERMINGHAM
--------------------
Robert P. Bermingham
Secretary
(Corporate Seal)
15
<PAGE>
I hereby certify that the foregoing Plan was duly approved by the
shareholders of The Vons Companies, Inc., on the 17th day of May, 1990.
Executed on this 17th day of May, 1990.
By: ROBERT P. BERMINGHAM
--------------------
Robert P. Bermingham
Secretary
(Corporate Seal)
16
