<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 (S)240.14a-11(c) or (S)240.14a-12
Delchamps, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Board of Directors of Delchamps, Inc.
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------------
[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------
(3) Filing Party:
------------------------------------------------------
(4) Date Filed:
------------------------------------------------------
<PAGE>
LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on October 22, 1996
----------------
To the Shareholders of Delchamps, Inc.:
The annual meeting of shareholders of Delchamps, Inc. (the "Company") will
be held in the Alabama Ballroom of the Adam's Mark Riverview Plaza Hotel, 64
South Water Street, Mobile, Alabama, at 10:00 a.m., Central Daylight Time, on
Tuesday, October 22, 1996 for the purpose of considering and voting upon the
following matters:
1. The election of three directors for a three-year term expiring in
1999,
2. A proposal to approve the Directors' Stock Option Plan,
3. A proposal to amend the Company's Articles of Incorporation to add a
provision eliminating the personal liability of the Company's directors to
the Company or its shareholders for money damages under certain
circumstances as described herein,
4. A proposal to ratify the appointment of KPMG Peat Marwick LLP as
independent auditors for the fiscal year ending June 28, 1997, and
5. The transaction of such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on September 12, 1996
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting and at any adjournment or adjournments thereof.
All shareholders are cordially invited to attend the meeting in person.
However, if you are unable to attend in person and wish to have your stock
voted, PLEASE FILL IN, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE
ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE. Your proxy may be revoked by
appropriate notice to the Secretary of the Company at any time prior to the
voting thereof.
BY ORDER OF THE BOARD OF DIRECTORS
[Signature of Timothy E. Kullman appears here]
TIMOTHY E. KULLMAN
Senior Vice President, Chief
Financial
Officer, Treasurer and Secretary
Mobile, Alabama
September 16, 1996
DELCHAMPS, INC. . 305 DELCHAMPS DRIVE . P.O. BOX 1668 . MOBILE, ALA. 36633-
1668 . (205) 433-0431
<PAGE>
DELCHAMPS, INC.
305 DELCHAMPS DRIVE
P.O. BOX 1668
MOBILE, ALABAMA 36633-1668
----------------
PROXY STATEMENT
----------------
This proxy statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of Delchamps, Inc. (the "Company"), for
use at the annual meeting of shareholders of the Company to be held on
Tuesday, October 22, 1996 and at any adjournment thereof. It is anticipated
that this proxy statement and the accompanying form of proxy will be mailed to
shareholders commencing on or about September 16, 1996.
Only shareholders of record at the close of business on September 12, 1996
are entitled to notice of and to vote at the annual meeting. On that date, the
Company had outstanding 7,112,940 shares of Common Stock, each of which is
entitled to one vote.
A shareholder who has given a proxy may revoke it by voting in person at the
meeting, by giving written notice of revocation to the Secretary of the
Company or by giving a later dated proxy at any time before voting.
The cost of soliciting proxies in the enclosed form will be borne by the
Company. In addition to the use of the mails, proxies may be solicited
personally, or by telephone and facsimile transmission, by directors, officers
and regular employees of the Company who will not receive additional
compensation therefor. Additionally, banks, brokerage houses and other
institutions, nominees and fiduciaries will be requested to forward the
soliciting material to their principals and to obtain authorization for the
execution of proxies. The Company will, upon request, reimburse such
institutions for their reasonable expenses in forwarding proxy materials to
their principals.
ELECTION OF DIRECTORS
GENERAL
The Company's by-laws authorize the Board of Directors to fix the size of
the Board. Pursuant thereto, the Board has fixed the number of directors at
nine. The Board has nominated three persons for election as directors at the
meeting and proxies cannot be voted for more than three persons. The terms of
three directors, John A. Caddell, Carl F. Bailey and Timothy E. Kullman will
expire at the annual meeting. Messrs. Caddell and Bailey currently are serving
three-year terms that expire at the annual meeting and are being nominated for
re-election for three-year terms expiring in 1999. Mr. Kullman was elected to
the Board at the 1995 Shareholders Meeting to serve a one-year term and is
being nominated for re-election for a three-year term expiring in 1999. Unless
authority to vote for the election of directors is withheld, all shares
represented by the enclosed form of proxy will be voted in favor of the
election of each of the three nominees. Under the Company's by-laws, directors
are elected by plurality vote. If any nominee becomes unavailable for
election, proxies in the enclosed form will be voted for such person, if any,
as may be designated by the Board of Directors. Management has no reason to
believe that any nominee will be unavailable. Under the Company's by-laws, a
shareholder may nominate one or more persons for election as directors only if
written notice of such shareholder's intent to make such nomination, together
with certain other information, has been given to the Secretary of the Company
at least 90 days in advance of the annual meeting. Because no shareholder has
given such notice to the Secretary, no other nominations will be accepted at
the annual meeting.
<PAGE>
INFORMATION WITH RESPECT TO DIRECTORS
Set forth below is information regarding the age and principal occupation or
employment of each director. Unless otherwise indicated, each director has
been engaged in the principal occupation shown for more than the past five
years.
<TABLE>
<CAPTION>
FIRST NOMINATED
NAME, AGE, PRINCIPAL OCCUPATION AND ELECTED FOR TERM
DIRECTORSHIPS IN OTHER PUBLIC COMPANIES DIRECTOR EXPIRING
--------------------------------------- -------- ---------
<S> <C> <C>
NOMINEES FOR ELECTION:
Carl F. Bailey, 65(1)(2)(7)................................. 1987 1999
Retired President and Chief Executive Officer, South Cen-
tral Bell Telephone Company, Retired Co-Chairman, BellSouth
Telecommunications, Inc.
John A. Caddell, 66(1)(2)................................... 1977 1999
Chairman of the Board and Chief Executive Officer, Caddell
Construction
Company Inc.
Timothy E. Kullman, 40(5)................................... 1995 1999
Senior Vice-President, Chief Financial Officer, Treasurer
and Secretary of the Company
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE THREE NOMINEES
NAMED ABOVE.
<TABLE>
<CAPTION>
FIRST SERVING
NAME, AGE, PRINCIPAL OCCUPATION AND ELECTED TERM
DIRECTORSHIPS IN OTHER PUBLIC COMPANIES DIRECTOR EXPIRING
--------------------------------------- -------- --------
<S> <C> <C>
OTHER DIRECTORS:
J. Thomas Arendall, Jr., 54(1)(2)(8)......................... 1991 1997
President Arendall and Associates, Inc. (professional and
business services provider)
E. E. Bishop, 65(1)(2)(9).................................... 1989 1997
Member of Board of Directors, Morrison Fresh Cooking, Inc.
(family restaurant chain) and Morrison Health Care, Inc.
(food service provider for health care institutions)
James M. Cain, 63(1)(2)(3)................................... 1990 1998
Retired Vice Chairman, Entergy Corporation (electric and gas
utility holding company); Director, Whitney Holding
Corporation (bank holding company)
William W. Crawford, 68(1)(2)(4)............................. 1977 1998
Retired Senior Vice President and Secretary, Kraft, Inc.
(food, consumer and commercial products company)
Richard W. La Trace, 59(6)................................... 1995 1998
President of the Company
David W. Morrow, 64(1)(10)................................... 1994 1997
Chairman and Chief Executive Officer of the Company;
Director, Furr's Supermarkets, Inc.
</TABLE>
- --------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Mr. Cain retired September 1, 1993 as Vice Chairman of Entergy
Corporation, a position he had held since February 1991. Prior to that
time he was Chairman and Chief Executive Officer of Louisiana Power &
Light Co. and New Orleans Public Service, Inc., both subsidiaries of
Entergy.
(4) Prior to September 1988, Mr. Crawford also served as Kraft's general
counsel. He retired from Kraft in December 1988.
(5) Mr. Kullman joined the Company on August 22, 1994 as Senior Vice-President
and Chief Financial Officer. In 1995 he was also named Treasurer and
Secretary. From August 1989 to July 1994, Mr. Kullman served as Senior
Vice-President, Chief Financial Officer and Secretary of Farm Fresh, Inc.,
a retail grocery chain.
(Notes continued on following page)
2
<PAGE>
(6) Mr. La Trace was named President of the Company in June 1995 . He served
as President and Chief Operating Officer of XTRA Super Foods, Inc. from
July 1992 until his retirement in November 1993 and served as President of
Corporate Retail for Wetterau, Inc. from December 1990 to July 1992.
(7) In October 1991, Mr. Bailey retired as President and Chief Executive
Officer of South Central Bell Telephone Company and Co-Chairman of
BellSouth Telecommunications, Inc.
(8) Mr. Arendall has served as President of Arendall and Associates, Inc.
since October 1992. From May 1992 until its incorporation in October 1992,
Mr. Arendall was a partner of Arendall and Associates. Prior to May 1992
he was principally employed as President of Gulf Furniture Stores, Inc.
(9) Prior to June 1992, Mr. Bishop also served as Chief Executive Officer of
Morrison Restaurants, Inc.
(10) Mr. Morrow was named Chairman of the Board and Chief Executive Officer of
the Company in April 1995. In 1994, Mr. Morrow retired as President and
Chief Executive Officer of Pueblo International, Inc., a supermarket
chain ("Pueblo"). Mr. Morrow served as Chairman and Chief Executive
Officer of Pueblo from 1991 to 1993 and as President and Chief Operating
Officer from 1983 to 1991.
----------------
During the Company's last fiscal year the Board of Directors held five
meetings. The Board has a Compensation Committee and an Audit Committee. The
Audit Committee met one time during the last fiscal year with the Company's
internal auditor and with its independent public accountants to review their
accounting, financial and audit reports, their recommendations for
improvements in internal accounting controls and their audit plan for the 1996
annual audit. The Compensation Committee, which met four times during the last
fiscal year, sets all officers' compensation and administers the Company's
incentive compensation plans. No director attended fewer than 75% of the total
number of meetings of the Board and the committees on which he served.
COMPENSATION OF DIRECTORS
During the last fiscal year each director not otherwise employed by the
Company received an annual retainer of $16,000 as well as a fee of $1,500 for
each Board meeting attended and $650 for each Audit or Compensation Committee
meeting attended. The annual retainer has been increased to $18,000 for the
1997 fiscal year. A director may elect to defer his retainer and meeting fees
until the earlier of the director's 70th birthday or the date the director
ceases to be a member of the Board. Deferred amounts earn interest at a rate
equal to the interest paid on 90-day U.S. Treasury bills. During the last
fiscal year directors could also choose to use their retainer and meeting fees
to purchase Company Common Stock at a 10% discount from its trading price. The
discount will be increased to 25% for fiscal 1997.
3
<PAGE>
SECURITY HOLDINGS OF DIRECTORS, EXECUTIVE OFFICERS AND
CERTAIN BENEFICIAL OWNERS
SECURITY HOLDINGS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning the beneficial
ownership of Common Stock of the Company by each director, by each nominee for
director, by each executive officer for whom compensation information is
disclosed under the heading "Summary of Executive Compensation" and by all
directors and current executive officers of the Company as a group, as of
August 13, 1996, determined in accordance with Rule 13d-3 of the Securities
and Exchange Commission. Unless otherwise indicated, the Common Stock shown is
held with sole voting and investment power.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
NAME OF BENEFICIAL OWNER SHARES OF CLASS (1)
------------------------ --------- ------------
<S> <C> <C>
DIRECTORS AND NOMINEES FOR DIRECTOR
J. Thomas Arendall, Jr. .......................... 572 *
Carl F. Bailey.................................... 1,795 *
E. E. Bishop...................................... 1,686 *
John A. Caddell................................... 4,400 *
James M. Cain..................................... 600 *
William W. Crawford............................... 6,724(2) *
Timothy E. Kullman................................ 3,333(3) *
Richard W. La Trace............................... 16,667(3) *
David W. Morrow................................... 205,000(4) 2.8%
NAMED EXECUTIVE OFFICERS WHO ARE NOT ALSO
DIRECTORS OR NOMINEES
Frank L Bennen.................................... 1,667(3) *
Thomas P. Robbins................................. 1,667(3) *
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A
GROUP(5)......................................... 287,298 3.9%
</TABLE>
- --------
* Less than 1%.
(1) Shares subject to options exercisable within 60 days are deemed to be
outstanding for purposes of computing the percentage of the Common Stock
owned by such person individually and by all directors and executive
officers as a group but are not deemed to be outstanding for the purpose
of computing the ownership percentage of any other person.
(2) Includes 500 shares held of record by Mr. Crawford's wife.
(3) Shares entitled to be acquired pursuant to currently exercisable stock
options.
(4) Includes 200,000 shares entitled to be acquired pursuant to currently
exercisable stock options.
(5) Includes only current directors and executive officers.
SECURITY HOLDINGS OF CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
NUMBER OF PERCENT
NAME AND ADDRESS SHARES OF CLASS
---------------- --------- --------
<S> <C> <C>
First Alabama Bank
Trustee fbo Delchamps, Inc.
Employee Stock Ownership Trust(1)....................... 1,156,593 16.26%
Post Office Drawer 2527
Mobile, Alabama 36622
GAMCO Investors, Inc., Gabelli Funds Inc.,
Gabelli & Company, Inc., Mario J. Gabelli, Gabelli In-
ternational
Limited (2)............................................ 1,038,941 14.61%
One Corporate Center
Rye, New York 10580-1434
Heine Securities Corporation(3)......................... 479,679 6.74%
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
</TABLE>
4
<PAGE>
- --------
(1) Shares held by the Trustee are voted according to the instructions of each
participating employee to the extent of the number of shares allocated to
his account on all matters submitted to a vote of shareholders.
Unallocated shares are required to be voted as a block in the same manner
as a majority of the allocated shares.
(2) As reported on Amendment No. 13 to Schedule 13D dated April 21, 1995 and
filed with the Securities and Exchange Commission. A total of 99,029 of
such shares are held with sole investment power only.
(3) As reported on Schedule 13F as of June 30, 1996 and filed with the
Securities and Exchange Commission on August 15, 1996.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and greater-than-10% shareholders to file with
the Securities and Exchange Commission reports of beneficial ownership and
changes in beneficial ownership of the Company's Common Stock. The Company
inadvertently filed approximately 10 days late on behalf of Thomas P. Robbins,
an executive officer, one Statement of Changes of Beneficial Ownership of
Securities (Form 4) reporting one purchase of shares of Common Stock.
EXECUTIVE COMPENSATION
SUMMARY OF EXECUTIVE COMPENSATION
The following table sets forth information with respect to compensation paid
by the Company for services rendered in all capacities during the fiscal years
ended July 2, 1994, July 1, 1995 and June 29, 1996 to each person who served
as the Chief Executive Officer during the last fiscal year and to each of the
four other most highly compensated persons who served as executive officers of
the Company during the last fiscal year and whose salary and bonus exceeded
$100,000.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
---------------------- ------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- --------------------------- ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
David W. Morrow, Chairman of
the Board and Chief Executive
Officer(1)................... 1996 $520,000 -- 100,000 --
1995 112,000 -- 100,000 --
Richard W. La Trace,
President(2)................. 1996 300,000 $100,000 50,000 $32,000
Timothy E. Kullman, Senior
Vice President, Chief
Financial Officer, Treasurer
and Secretary(3)............. 1996 165,375 25,000 -- --
1995 131,149 -- 5,000 43,500(4)
Frank L. Bennen, Senior Vice
President, Operations(5)..... 1996 160,000 25,000 5,000 23,130(4)
1995 3,077 -- -- --
Thomas P. Robbins, Senior Vice
President, Sales and
Marketing(6)................. 1996 120,577 18,720 5,000 18,760(4)
</TABLE>
- --------
(1) Mr. Morrow was named Chairman and Chief Executive Officer in April, 1995.
(2) Mr. La Trace joined the Company in June, 1995.
(3) Mr. Kullman joined the Company in August, 1994.
(4) Consists of reimbursement of relocation expenses.
(5) Mr. Bennen joined the Company in June, 1995.
(6) Mr. Robbins joined the Company in October, 1995.
5
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENTAGE OF ASSUMED ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR OPTION
UNDERLYING GRANTED TO TERM
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION -----------------------------
NAME GRANTED FISCAL YEAR PRICE DATE 5% 10%
---- ---------- ------------- -------- ---------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
David W. Morrow......... 100,000(1) 62.5% $18.875 12/14/00 $521,500 $1,152,500
Richard W. La Trace..... 50,000(2) 31.3% 18.00 06/05/05 566,000 1,434,500
Frank L. Bennen......... 5,000(2) 3.1% 18.75 06/26/05 58,950 149,400
Thomas P. Robbins....... 5,000(2) 3.1% 18.25 10/08/05 57,400 145,450
</TABLE>
- --------
(1) The options are exercisable at any time before expiration.
(2) The options become exercisable in one-third annual increments, unless the
Compensation Committee elects to accelerate exercisability. In addition,
the options automatically become exercisable in the event of a change of
control of the Company.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-
SHARES IN-THE-MONEY OPTIONS AT THE-MONEY OPTIONS AT
ACQUIRED FISCAL YEAR END FISCAL YEAR END
ON VALUE ------------------------ -------------------------
NAME EXERCISE REALIZED EXECISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ---------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David W. Morrow......... None $0 200,000 -- $1,175,000 --
Richard W. La Trace..... None 0 16,667 33,333 164,169 $208,331
Frank L. Bennen......... None 0 1,667 3,333 9,168 18,332
Timothy E. Kullman...... None 0 1,667 3,333 9,585 19,165
Thomas P. Robbins....... None 0 -- 5,000 -- 30,000
</TABLE>
CHANGE OF CONTROL AGREEMENTS
The Company has entered into change of control agreements with each of the
executive officers named in the Summary Compensation Table. The purpose of the
agreements is to diminish the inevitable distraction of executives by the
personal economic concerns and anxieties that are created by the possibility,
threat or occurrence of a change of control and, thereby, to encourage the
continued dedication of the executives to advancing the Company's business
interests during such periods of uncertainty.
The agreements do not constitute employment contracts and only apply in
circumstances following a change of control. The agreements provide that
certain employment and severance arrangements become effective if a change of
control, as defined in the agreements, occurs within three years from the date
of the agreements, with automatic annual extensions unless terminated after
notice by the Company.
If a change of control occurs during the term of the agreements, the
agreements provide for continued employment of the executives, in at least
comparable positions with at least comparable compensation and benefits, for
three years following the change of control. If the Company terminates an
executive's employment during such three-year period other than for cause or
disability or if the executive terminates employment for good reason, the
executive is entitled to receive, in addition to other accrued amounts such as
vacation pay, a lump sum in cash equal to three times his annual base salary
and bonus. An executive who continues employment for one year after a change
of control earns a special bonus equal to his annual salary and bonus. In
addition, an executive who continues employment for such one-year period may
terminate employment during the 30-day period immediately following without
any reason and receive the same benefits as if he had terminated for good
6
<PAGE>
reason. The agreements further provide for payment to the executive of an
amount equal to the excise tax, if any, payable by the executive on his
severance benefits. Health and other welfare benefits continue, following
termination, for the remainder of the three-year period.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last fiscal year, all members of the Board of Directors of the
Company, other than David W. Morrow, Richard W. La Trace and Timothy E.
Kullman, served on the Compensation Committee. None of the members of the
Compensation Committee have been officers or employees of the Company or any
of its subsidiaries. No executive officer of the Company served in the last
fiscal year as a director or a member of the compensation committee of another
entity, one of whose executive officers served as a director or on the
Compensation Committee of the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for review and administration of the Company's executive
compensation program. The Committee's strategy is to develop and implement an
executive compensation program that allows the Company to attract and retain
highly qualified persons to manage the Company in order to enhance shareholder
value. The objectives of this strategy are to provide a compensation package
that permits the recognition of individual contributions and achievements as
well as Company results. Within this strategy, the Committee considers it
essential to the vitality of the Company to maintain levels of compensation
opportunity that are competitive with similar companies in the grocery
industry. The Committee recommends to the entire Board salary levels for the
executive officers of the Company. The Committee also administers the
Company's annual incentive plan and the 1993 Stock Incentive Plan. In its
deliberations, the Committee takes into account the recommendations of
appropriate Company officials and independent professional compensation
consultants.
Under the Omnibus Budget Reconciliation Act ("OBRA") enacted in 1993,
publicly held companies may be prohibited from deducting as an expense for
federal income tax purposes total compensation in excess of $1 million paid to
certain executive officers in a single year. However, OBRA provides an
exception for compensation that qualifies as "performance based." The
Committee has not taken any action to qualify any portion of executive
compensation as performance based. The Committee will periodically evaluate
compensation levels and may determine to take action in the future to ensure
that all executive compensation paid will be deductible.
Base Salaries
Salaries for executive officers, including the Chief Executive Officer, are
generally based on evaluations of the executives' performance, their
contributions to the performance of the Company, their responsibilities,
experience and potential, and compensation practices for comparable positions
at other companies in the grocery industry. The base salary opportunities are
targeted at the 50th percentile of a large group of both public and private
supermarket chains. The comparison group includes the companies that make up
the Dow Jones Food Retailers Index but is weighted more heavily toward
supermarket chains similar in size to the Company. Incremental amounts may be
earned above the 50th percentile for outstanding performance.
Annual Incentive Compensation
Executive officers are eligible for annual incentive awards. These awards
are not in addition to market level compensation but are designed to place a
significant part of an executive's annual compensation at risk. The Chief
Executive Officer's award is based on corporate performance measured against
pre-tax profit objectives set by the Committee at the beginning of the year.
Awards to other executive officers are based on the same corporate performance
measure and on individual achievement of specified objectives established by
the Chief Executive Officer at the beginning of the year. Targeted awards are
a percentage of the executive officer's base salary ranging from 15% to 50%
based on the officer's position and salary grade. Awards based on Company
performance may range from 25% of target for exceeding a threshold profit
level to a maximum award of 50%
7
<PAGE>
greater than target for achieving or exceeding a maximum pre-tax profit goal.
At year-end, individual performance of the other executive officers is
evaluated against pre-established objectives. Mr. Morrow was not eligible to
receive an annual incentive award for fiscal year 1996.
The combination of base salary and an annual incentive award are intended to
provide an executive the opportunity to earn total compensation slightly above
the 50th percentile of the competitive marketplace if Company and individual
goals are achieved.
Long-Term Incentive Plan
To be consistent with the Company's executive compensation philosophy, the
Committee recommends that a significant portion of total executive
compensation be tied directly to shareholders' results. Toward that end, the
Board of Directors adopted the 1993 Stock Incentive Plan (the "Incentive
Plan") and the Incentive Plan was approved by the Company's shareholders at
the 1993 annual meeting. Stock options and other stock incentives are an
integral part of the Company's executive compensation program in order to
align the interests of the executive officers with the interests of the
Company's shareholders. The Committee granted stock options to the Company's
executive officers in fiscal 1996 and intends to grant stock options annually
through the Incentive Plan to provide officers with the opportunity to buy and
maintain an equity interest in the Company, thereby encouraging them to direct
their efforts toward appreciation of the value of the Company's common shares.
The number of options that a particular executive officer receives is
generally based upon the officer's base salary and level of responsibility.
The options granted have an exercise price equal to the fair market value of
the shares on the grant date and, to encourage a long-term perspective,
generally vest over three years and have a ten-year term. Mr. Morrow was
granted 100,000 immediately exercisable options with a five year term. Mr.
Morrow was granted these options to provide him with a short-term and long-
term incentive in lieu of an annual bonus for fiscal 1996. Stock option
compensation bears a direct relationship to corporate performance in that,
over the long term, share price appreciation depends upon corporate
performance, and without share price appreciation the options are of no value.
Submitted by the Compensation Committee.
J. Thomas Arendall, Jr. John A. Caddell
Carl F. Bailey James M. Cain
E. E. Bishop William W. Crawford
8
<PAGE>
PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on the
Company's Common Stock for the last five fiscal years with the cumulative
total return on the S&P 500 Index and the Dow Jones Food Retailers Index, in
each case assuming the investment of $100 on July 1, 1991 at closing prices on
June 30, 1991 and the reinvestment of dividends. The Dow Jones Food Retailers
Index consists of the following eleven companies and is published periodically
in the Wall Street Journal: Albertson's, Inc., American Stores Company,
Bruno's, Inc., Flemming Companies Inc., Food Lion, Inc., Giant Food Inc., The
Great Atlantic & Pacific Tea Company, Inc., The Kroger Company, SUPERVALU
INC., The Vons Companies, Inc. and Winn-Dixie Stores, Inc.
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
TOTAL RETURN FOR THE YEAR
---------------------------------------
1991 1992 1993 1994 1995 1996
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Delchamps............................... 100 75.96 74.52 87.50 74.04 93.27
S&P 500................................. 100 109.96 121.38 119.70 146.77 181.16
Dow Jones Food Retailers Index.......... 100 107.62 106.33 103.21 128.25 148.43
</TABLE>
9
<PAGE>
PROPOSAL TO APPROVE THE
DIRECTORS' STOCK OPTION PLAN
GENERAL
The Directors' Stock Option Plan (the "DSOP") was approved by the Board
effective July 29, 1996, subject to the approval of the shareholders at the
annual meeting. The Board believes that the DSOP promotes the interests of the
Company and its shareholders by strengthening the Company's ability to
attract, motivate and retain directors of experience and ability, and by
encouraging the highest level of performance by providing directors with a
proprietary interest in the Company's financial success and growth. If the
DSOP is not approved by the shareholders at the annual meeting, the options
previously granted under the DSOP will be forfeited. The primary features of
the DSOP are summarized below. A complete copy of the DSOP is set forth as
Appendix A to this proxy statement and the following description of the DSOP
is qualified in its entirety by reference to the terms of the DSOP.
ELIGIBILITY AND GRANTS
Only non-employee directors of the Company are eligible to participate in
the DSOP, and the Company currently has six non-employee directors who will be
participants. The DSOP provides for the automatic grant on July 29, 1996 to
participants of an option to acquire 5,000 shares of the Company's Common
Stock. If a non-employee director is added to the Board from July 30, 1996 to
July 29, 1999, the director will also receive an option for 5,000 shares.
Subject to certain adjustment provisions described in the DSOP, the aggregate
number of shares of Common Stock that may be acquired upon the exercise of
options under the DSOP is 40,000. On September 11, 1996, the closing sale
price of a share of Common Stock, as reported on the Nasdaq National Market,
was $19.375.
OPTION TERMS AND CONDITIONS
The options granted to non-employee directors on July 29, 1996 become
exercisable in one-third annual increments beginning July 29, 1997, unless
accelerated as described below. Options granted to non-employee directors who
join the Board from July 30, 1996 to July 29, 1999 will become exercisable in
equal portions on July 29 of each year following the date of grant, such that
all options will be fully exercisable on July 29, 1999. In addition, the
Compensation Committee may accelerate the exercisability of any option at any
time in its discretion and the options become immediately exercisable in the
event of a change of control of the Company, as defined in the DSOP. If a non-
employee director ceases to serve on the Board of Directors for any reason,
exercisable options granted under the DSOP must be exercised within one year
from the date of termination of Board service. The options expire and may not
be exercised after July 29, 2001.
The exercise price will be the fair market value of a share of Common Stock
on the date of grant. The exercise price may be paid (i) in cash; (ii) by
check; (iii) by delivery of shares of Common Stock, which, unless otherwise
determined by the Compensation Committee, shall have been held by the
participant for at least six months; (iv) by simultaneously exercising options
and selling the shares of Common Stock acquired pursuant to a brokerage or
similar arrangement and using the proceeds from such sale as payment of the
exercise price; or (v) in such other manner as may be authorized from time to
time by the Compensation Committee.
No option or right under the DSOP will be assignable or subject to any
encumbrance, pledge or charge of any nature. Furthermore, no option under the
DSOP is transferable by a holder other than (i) by will, (ii) by the laws of
descent and distribution, (iii) pursuant to a domestic relations order, as
defined by the Internal Revenue Code of 1986, as amended (the "Code") or to
family members, a family partnership, a trust for family members or to
charitable institutions, if permitted by the Committee and so provided in the
option agreement or an amendment thereto.
ADJUSTMENT
In the event of any merger, consolidation or reorganization of the Company
with any other corporation or corporations, there will be substituted for each
of the shares of Common Stock then subject to the DSOP the
10
<PAGE>
number and kind of shares of stock or other securities to which the holders of
the shares of Common Stock will be entitled pursuant to the transaction. In
the event of any recapitalization, stock dividend, stock split, combination of
shares or other change in the Common Stock, the number of shares of Common
Stock then subject to the DSOP, including shares subject to options, will be
adjusted in proportion to the change in outstanding shares of Common Stock.
Participants will be provided with the same relative rights before and after
such adjustments.
ADMINISTRATION
The DSOP is administered by the Compensation Committee, which is composed of
non-employee directors who are eligible to participate in the DSOP. The
Compensation Committee has the power to interpret the Plan and to make all
other determinations necessary for the DSOP's administration.
The Board will have the power, in its discretion, to amend, suspend or
terminate the DSOP at any time. The Board may not, however, if necessary for
the availability of the exemption provided by Rule 16b-3 under the 1934 Act,
amend the eligibility requirements or the granting schedule more than once
every six months other than to comport with changes in the Code, the Employee
Retirement Income Security Act or the rules thereunder. Furthermore, no
amendment, suspensions or termination of the DSOP may alter, terminate, impair
or adversely affect any rights or obligations under any option previously
granted without the consent of the holder.
AWARDS TO BE GRANTED
Non-qualified stock options have been granted to the persons and group
described in the table below, subject to approval of the DSOP by the
shareholders at the annual meeting. Additional non-employee directors who join
the Board while the DSOP is in effect would also receive options under the
DSOP to the extent shares remain available for issuance through the DSOP.
NEW PLAN BENEFITS UNDER THE
DIRECTORS' STOCK OPTION PLAN
<TABLE>
<CAPTION>
NUMBER OF
NAME OPTIONS
---- ---------
<S> <C>
J. Thomas Arendall, Jr......................................... 5,000
Carl F. Bailey................................................. 5,000
E. E. Bishop................................................... 5,000
John A. Caddell................................................ 5,000
James M. Cain.................................................. 5,000
William W. Crawford............................................ 5,000
All current directors who are not executive officers as a
group.......................................................... 30,000
</TABLE>
FEDERAL TAX CONSEQUENCES
A non-employee director who receives an option under the DSOP will not
recognize any income, nor will the Company be entitled to any tax deduction,
in the year of the grant. At the time that an option is exercised, the non-
employee director will recognize ordinary income in an amount equal to the
excess of (i) the fair market value of the shares purchased over (ii) the
exercise price paid for such shares. The Company will be entitled to a
deduction in an amount equal to the amount includable in the income of the
non-employee director, in the taxable year in which the non-employee director
is required to recognize the income.
VOTE REQUIRED
Approval of the DSOP by the shareholders requires the affirmative vote of
the holders of a majority of the shares present or represented by proxy and
entitled to vote at the annual meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
PROPOSAL TO APPROVE THE DIRECTORS' STOCK OPTION PLAN.
11
<PAGE>
PROPOSAL TO AMEND THE COMPANY'S
ARTICLES OF INCORPORATION
Effective January 1, 1995, the Alabama Business Corporation Law (the
"ABCL"), under which the Company is organized, was amended to permit a
corporation's articles of incorporation to include a provision that eliminates
or limits, in certain circumstances, the exposure of the corporation's
directors to liability for monetary damages for breaches of their fiduciary
duty of care. The Board of Directors unanimously has approved and voted to
recommend to the shareholders an amendment to the Company's Articles of
Incorporation that would take advantage of the new statute and limit a
director's liability to the Company or its shareholders for monetary damages
to the fullest extent permitted by the ABCL. The proposed amendment would
eliminate liability for breaches of a director's fiduciary duty of care, but
would not eliminate a director's liability for monetary damages for (i) any
transaction from which the director receives an improper financial benefit,
(ii) an intentional infliction of harm on the Company or its shareholders,
(iii) an improper distribution or dividend to shareholders or improper
repurchase or redemption of Company stock, (iv) an intentional violation of
criminal law or (v) a breach of the director's duty of loyalty to the Company
or its shareholders. In addition, the proposed amendment would not apply to
claims made against directors by third parties, to persons who are officers as
well as directors when acting in their capacities as officers or to claims
arising from acts taken or omitted prior to the time the amendment becomes
effective. If approved by the shareholders, the amendment will be delivered
promptly after the annual meeting for filing in accordance with Alabama law
and will be effective when filed.
The Board of Directors believes that the limitation of personal liability
for the Company's directors is necessary to ensure that the Company continues
to be able to attract and retain qualified individuals to serve as directors.
Without such a limitation on a director's personal liability, individuals
serving or asked to serve as directors may question whether the risks
associated with serving as a director exceed the benefits they might receive
from such service. Therefore, the Board of Directors recommends that the
Company's Articles of Incorporation be amended to add the following Article
XII to the Company's Articles of Incorporation:
ARTICLE XII
A director of the Corporation shall not be personally liable to the
Corporation or its shareholders for monetary damages for any action
taken, or any failure to take any action in his or her capacity as a
director, except for liability for (a) the amount of a financial
benefit received by a director to which he or she is not entitled; (b)
an intentional infliction of harm on the Corporation or its
shareholders; (c) a violation of Section 10-2B-8.33 of the Alabama
Business Corporation Law; (d) an intentional violation of criminal
law; or (e) a breach of the director's duty of loyalty to the
Corporation or its shareholders. Any repeal or modification of this
Article XII shall not adversely affect any right or protection of a
director of the Corporation existing hereunder with respect to any act
or omission occurring prior to or at the time of such repeal or
modification. The provisions of this Article XII shall not be deemed
to limit or preclude indemnification of a director by the Corporation
for any liability of a director that has not been eliminated by the
provisions of this Article XII.
While the proposed amendment limits the right of shareholders and the
Company to sue the Company's directors for monetary damages for acts of
negligence, including gross negligence, and for certain breaches of the
director's fiduciary duty of care, it does not change or eliminate that duty.
It only eliminates monetary damage awards occasioned by certain breaches of
that duty. The Board of Directors believes that the diligence and care
exercised by directors stem primarily from their desire to act in the best
interest of the Company and its shareholders and not from a fear of monetary
damage awards. Therefore, the Board of Directors believes that the level of
care and diligence exercised by the Company's directors will not be lessened
by adoption of the proposed amendment.
The Board of Directors recognizes that if the proposed amendment is adopted,
its principal effect would be that the Company and its shareholders would no
longer be able to recover monetary damages based on a claim
12
<PAGE>
of breach of the directors' fiduciary duty of care, even if the directors'
conduct involved gross negligence, unless the conduct falls within the
statutory limitations. The Company and the shareholders will retain the right
to pursue equitable remedies, such as an injunction or rescission of a
contract. Such equitable remedies, however, may not always be effective,
particularly if the Company's shareholders are not aware of a transaction
until it is completed. It should be noted that the individual members of the
Board of Directors will personally benefit from adoption of the proposed
amendment. Also, the proposed amendment is not being proposed in response to
any specific resignation, threat of resignation, or refusal to serve by any
director or potential director, and the Company is not aware of any threatened
resignation if the proposed amendment is not adopted. However, the Board of
Directors strongly believes that the proposed amendment is in the best
interest of the Company and its shareholders in that it will enable the
Company to remain competitive in attracting and retaining qualified directors.
Approval by a majority of the votes cast at the meeting in person or by
proxy is required to approve the proposal to amend the Company's Articles of
Incorporation to add Article XII.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION.
PROPOSAL TO RATIFY THE SELECTION OF
INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors has
approved the retention of KPMG Peat Marwick LLP ("Peat Marwick") as
independent auditors of the Company for the fiscal year ending June 28, 1997,
which selection will be submitted to the shareholders for ratification. Peat
Marwick was initially engaged as the Company's independent auditors in
connection with its initial public stock offering in late 1983 and has
continued to serve in that capacity. If shareholders do not ratify the Board
of Directors' selection of Peat Marwick by the affirmative vote of at least a
majority of the votes cast at the meeting in person or by proxy, the selection
of independent auditors will be reconsidered by the Board.
Representatives of Peat Marwick are expected to be present at the Annual
Meeting and will have an opportunity to make a statement if they desire to do
so. Such representatives will also be available at the meeting to respond to
appropriate questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
OTHER MATTERS
SHAREHOLDER PROPOSALS
Any shareholder who desires to present a proposal qualified for inclusion in
the Company's proxy materials for the 1997 annual meeting must forward the
proposal in writing to the Secretary of the Company at the address shown on
the first page of this proxy statement in time to arrive at the Company no
later than May 19, 1997.
QUORUM, VOTING OF PROXIES AND VOTE REQUIRED
The presence at the meeting, in person or by proxy, of the holders of a
majority of the Common Stock of the Company entitled to vote is necessary to
constitute a quorum. Shareholders voting, or abstaining from voting, by proxy
on any issue will be counted as present for purposes of constituting a quorum.
The election of directors is determined by plurality vote. The affirmative
vote of the holders of a majority of the shares present or represented by
proxy and entitled to vote is required to approve the DSOP. Approval by a
majority of the votes cast at the meeting in person or by proxy is required to
approve the amendment to the Company's Articles of Incorporation and to ratify
the appointment of Peat Marwick as independent auditors for the fiscal year
ending June 28, 1997. Abstentions will be counted as a vote against, and
broker non-votes will be counted as not present with respect to, the proposal
to approve the DSOP, but abstentions and broker non-votes will not affect the
outcome of any other matter.
13
<PAGE>
The Board of Directors does not know of any matters other than those
described in this proxy statement that will be presented for consideration at
the meeting. If any other matter should properly be so presented, it is
intended that the proxies in the accompanying form will be voted on the matter
in accordance with the judgment of the person or persons voting them.
BY ORDER OF THE BOARD OF DIRECTORS
[Signature of Timothy E. Kullman appears here]
TIMOTHY E. KULLMAN
Senior Vice President, Chief
Financial
Officer, Treasurer and Secretary
Mobile, Alabama
September 16, 1996
YOUR VOTE IS IMPORTANT. PLEASE PROMPTLY COMPLETE AND
SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE
ACCOMPANYING POSTPAID ENVELOPE.
14
<PAGE>
APPENDIX A
DELCHAMPS, INC.
DIRECTORS' STOCK OPTION PLAN
1.PURPOSE OF THE PLAN.
The purpose of the Directors' Stock Option Plan of Delchamps, Inc. is to
promote the interests of the Company and its shareholders by strengthening the
Company's ability to attract, motivate and retain Directors of experience and
ability, and to encourage the highest level of Directors' performance by
providing Directors with a proprietary interest in the Company's financial
success and growth.
2.DEFINITIONS.
2.1 "Board" means the Board of Directors of the Company.
2.2 "Committee" means the Compensation Committee of the Board or a
subcommittee thereof as shall be appointed by the Board from time to time. The
Committee shall consist of two or more members of the Board none of whom shall
be Employees of the Company.
2.3 "Common Stock" means the common stock, $.01 par value per share, of the
Company.
2.4 "Company" means Delchamps, Inc., an Alabama corporation.
2.5 "Director" means a member of the Board who is not an Employee.
2.6 "Employee" means any full-time employee of the Company, or any of its
present or future parent or subsidiary corporations.
2.7 "Fair Market Value" means (i) if the Common Stock is listed on an
established stock exchange or any automated quotation system that provides
sale quotations, the closing sale price for a share of the Common Stock on
such exchange or quotation system on the applicable date, or if no sale of the
Common Stock shall have been made on that day, on the next preceding day on
which there was a sale of the Common Stock; (ii) if the Common Stock is not
listed on any exchange or quotation system, but bid and asked prices are
quoted and published, the mean between the quoted bid and asked prices on the
applicable date, and if bid and asked prices are not available on such day, on
the next preceding day on which such prices were available; and (iii) if the
Common Stock is not regularly quoted, the fair market value of a share of
Common Stock on the applicable date as established by the Committee in good
faith.
2.8 "Participant" means each Director.
2.9 "Option" means a stock option that does not satisfy the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended.
2.10 "Plan" means the Delchamps, Inc. Directors' Stock Option Plan as set
forth herein and as amended from time to time.
3.SHARES OF COMMON STOCK SUBJECT TO THE PLAN.
Subject to the provisions of Section 7, the aggregate number of shares of
Common Stock that may be issued or transferred pursuant to exercise of Options
under the Plan is 40,000 shares of Common Stock. Such shares may be either
authorized but unissued shares or shares issued and thereafter acquired by the
Company.
A-1
<PAGE>
4.ADMINISTRATION OF THE PLAN.
4.1 The Plan shall be administered by the Committee, which shall have the
power to interpret the Plan and, subject to its provisions, to prescribe,
amend and rescind rules and to make all other determinations necessary for the
Plan's administration.
4.2 All action taken by the Committee in the administration and
interpretation of the Plan shall be final and binding upon all parties. No
member of the Committee will be liable for any action or determination made in
good faith by the Committee with respect to the Plan or any Option.
5.ELIGIBILITY.
5.1 Each Director shall be automatically granted an Option to acquire 5,000
shares of Common Stock on July 29, 1996, subject to approval of the Plan by
the shareholders of the Company at the next annual meeting.
5.2 Each person who becomes a Director from July 30, 1996 to July 29, 1999
will also receive an Option to acquire 5,000 shares of Common Stock on the
date such person becomes a Director.
6.TERMS AND CONDITIONS OF OPTIONS.
6.1 Except in the event of acceleration of exercisability as provided in
Sections 6.5 and 8.2 hereof, the Options granted to Directors on July 29, 1996
under the Plan shall become exercisable as follows:
One-third of the total number of shares covered by the Option beginning July
29, 1997;
Two-thirds of the total number of Shares covered by the Option beginning
July 29, 1998,
less any shares previously issued;
100% of the total number of Shares covered by the Option beginning July 29,
1999, less any shares previously issued.
6.2 Except in the event of acceleration of exercisability as provided in
Sections 6.5 and 8.2 hereof, an Option granted to a person who becomes a
Director from July 30, 1996 to July 29, 1999 shall become exercisable in equal
portions on July 29 of each year following the date such person joins the
Board such that the Option shall be fully exercisable on July 29, 1999.
6.3 No Option granted to a Director under the terms of the Plan may be
exercised after July 29, 2001.
6.4 The exercise price of the Options granted to Directors shall be equal the
Fair Market Value, as defined in the Plan, of a share of Common Stock on the
date of grant.
6.5 The Committee may accelerate the exercisability of any Option at any time
in its discretion.
6.6 In the event a Director ceases to serve on the Board of Directors of the
Company for any reason, the Options granted hereunder must be exercised, to
the extent otherwise exercisable at the time of termination of Board service,
within one year from the date of termination of Board service.
6.7 An Option may be exercised, in whole or in part, by giving written notice
to the Company, specifying the number of shares of Common Stock to be
purchased. The exercise notice shall be accompanied by the full purchase price
for such shares. The option price shall be payable in United States dollars
and may be paid (a) in cash; (b) by uncertified or certified check; (c) by
delivery of shares of Common Stock, which shares shall be valued for this
purpose at their Fair Market Value on the date such option is exercised, and,
unless otherwise determined by the Committee, shall have been held by the
Participant for at least six months; (d) by simultaneously exercising options
and selling the shares of Common Stock acquired pursuant to a brokerage or
similar arrangement and using the proceeds from such sale as payment of the
exercise price; or (e) in such other manner as may be authorized from time to
time by the Committee. In the case of delivery of an uncertified check
A-2
<PAGE>
upon exercise of a stock option, no shares shall be issued until the check has
been paid in full. Prior to the issuance of shares of Common Stock upon the
exercise of an Option, a Participant shall have no rights as a shareholder.
7.ADJUSTMENT PROVISIONS.
In the event of any merger, consolidation or reorganization of the Company
with any other corporation or corporations, there shall be substituted for
each of the shares of Common Stock then subject to the Plan, including shares
subject to Options, the number and kind of shares of stock or other securities
to which the holders of the shares of Common Stock will be entitled pursuant
to the transaction. In the event of any recapitalization, stock dividend,
stock split, combination of shares or other change in the Common Stock, the
number of shares of Common Stock then subject to the Plan, including shares
subject to Options, shall be adjusted in proportion to the change in
outstanding shares of Common Stock. In the event of any such adjustments, the
purchase price of any Option shall be adjusted as and to the extent
appropriate, in the reasonable discretion of the Committee, to provide
Participants with the same relative rights before and after such adjustment.
8.CHANGE OF CONTROL.
8.1 A Change of Control shall mean:
(a) the acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the
"1934 Act")) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of more than 30% of the outstanding shares of
the Common Stock; provided, however, that for purposes of this subsection (a),
the following acquisitions shall not constitute a Change of Control:
(i) any acquisition of Common Stock directly from the Company,
(ii) any acquisition of Common Stock by the Company,
(iii) any acquisition of Common Stock by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or
(iv) any acquisition of Common Stock by any corporation pursuant to a
transaction that complies with clauses (i), (ii) and (iii) of subsection
(c) of this Section 8.1; or
(b) individuals who, as of the date the Plan was adopted by the Board of
Directors (the "Approval Date"), constitute the Board (the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the Approval
Date whose election, or nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered a member of the Incumbent Board,
unless such individual's initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal
of directors or other actual or threatened solicitation of proxies or consents
by or on behalf of a person other than the Incumbent Board; or
(c) consummation of a reorganization, merger or consolidation, or sale or
other disposition of all or substantially all of the assets of the Company (a
"Business Combination"), in each case, unless, following such Business
Combination,
(i) all or substantially all of the individuals and entities who were the
beneficial owners of the Company's outstanding Common Stock and the
Company's voting securities entitled to vote generally in the election of
directors immediately prior to such Business Combination have direct or
indirect beneficial ownership, respectively, of more than 50% of the then
outstanding shares of common stock, and more than 50% of the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, of the corporation resulting from
such Business Combination (which, for purposes of
A-3
<PAGE>
this paragraph (i) and paragraphs (ii) and (iii), shall include a
corporation which as a result of such transaction owns the Company or all
or substantially all of the Company's assets either directly or through one
or more subsidiaries), and
(ii) except to the extent that such ownership existed prior to the
Business Combination, no person (excluding any corporation resulting from
such Business Combination or any employee benefit plan or related trust of
the Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of the then
outstanding shares of common stock of the corporation resulting from such
Business Combination or 20% or more of the combined voting power of the
then outstanding voting securities of such corporation, and
(iii) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or
of the action of the Board, providing for such Business Combination; or
(d) approval by the shareholders of the Company of a plan of complete
liquidation or dissolution of the Company.
8.2 Upon a Change of Control, or immediately prior to the closing of a
transaction that will result in a Change of Control if consummated, all
outstanding Options granted pursuant to the Plan shall automatically become
fully exercisable.
9. GENERAL PROVISIONS.
9.1 Nothing in the Plan or in any instrument executed pursuant to the Plan
will confer upon any Participant any right to continue as a Director or affect
the right of the Company to terminate the services of any Participant.
9.2 No shares of Common Stock will be issued or transferred pursuant to an
Option unless and until all then-applicable requirements imposed by federal
and state securities and other laws, rules and regulations and by any
regulatory agencies having jurisdiction, and by any stock exchanges upon which
the Common Stock may be listed, have been fully met. As a condition precedent
to the issuance of shares pursuant to the exercise of an Option, the Company
may require the Participant to take any reasonable action to meet such
requirements.
9.3 No Participant and no beneficiary or other person claiming under or
through such Participant will have any right, title or interest in or to any
shares of Common Stock allocated or reserved under the Plan or subject to any
Option except as to such shares of Common Stock, if any, that have been issued
or transferred to such Participant.
9.4 Options granted under the Plan shall not be transferrable except: (a) by
will, (b) by the laws of descent or distribution; (c) pursuant to a domestic
relations order, as defined in the Code, to family members, to a family
partnership, to a trust for the benefit of family members or to charitable
institutions, if permitted by the Committee and so provided in the Option
agreement or an amendment thereto. Any attempt at assignment, transfer,
pledge, hypothecation or other disposition of an Option, or levy of attachment
or similar process upon the Option not specifically permitted herein, shall be
null and void and without effect.
9.5 Each Option shall be evidenced by a written instrument, including terms
and conditions consistent with the Plan, as the Committee may determine.
10. AMENDMENT AND TERMINATION.
10.1 The Board will have the power, in its discretion, to amend, suspend or
terminate the Plan at any time.
10.2 No amendment, suspension or termination of the Plan will, without the
consent of the holder, alter, terminate, impair or adversely affect any right
or obligation under any Option previously granted under the Plan.
A-4
<PAGE>
10.3 Notwithstanding the provisions of Section 10.1, if required for the
availability of the exemption provided by Rule 16b-3 under the 1934 Act, the
Board may not amend the provisions of Section 5 or the definition of Director
in Section 2 more than once every six months, other than to comport with
changes in the Internal Revenue Code, the Employment Retirement Income
Security Act or the rules thereunder.
11. EFFECTIVE DATE OF PLAN AND DURATION OF PLAN.
This Plan shall become effective upon adoption by the Board, subject to
approval by the holders of a majority of the shares of Common Stock
represented in person or by proxy and entitled to vote on the subject at the
1996 Annual Meeting of Shareholders of the Company.
A-5
<PAGE>
VOTING INSTRUCTIONS
The undersigned hereby instructs First Alabama Bank, as trustee of the
Delchamps, Inc. Retirement Savings Plan, to vote in the manner designated below
all shares of Delchamps, Inc. Common Stock held by such Trust for the account
of the undersigned on September 12, 1996, at the annual meeting of shareholders
to be held on October 22, 1996, or at any adjournment thereof.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4.
1. Election of Directors.
FOR [_] WITHHOLD AUTHORITY [_]
all nominees listed below to vote for all nominees
(except as marked to the listed below
contrary below)
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
John A. Carl F. Timothy E.
Caddell Bailey Kullman
for a term for a term for a term
expiring expiring expiring
1999 1999 1999
2. Proposal to approve the Directors' Stock Option Plan.
[_] FOR[_] AGAINST[_] ABSTAIN
3. Proposal to amend the Company's Articles of Incorporation to add a provision
eliminating the personal liability of the Company's directors to the Company
or its shareholders for money damages under the circumstances described in
the Company's 1996 proxy statement.
[_] FOR[_] AGAINST[_] ABSTAIN
4. Proposal to ratify the selection of KPMG Peat Marwick LLP as independent
auditors for the fiscal year ending June 28, 1997.
[_] FOR[_] AGAINST[_] ABSTAIN
UPON RECEIPT OF THESE INSTRUCTIONS PROPERLY EXECUTED, THE SHARES HELD FOR THE
ACCOUNT OF THE UNDERSIGNED WILL BE VOTED IN THE MANNER DIRECTED. IF THESE
INSTRUCTIONS ARE PROPERLY EXECUTED BUT NO DIRECTION IS GIVEN, SUCH SHARES WILL
BE VOTED FOR PROPOSALS 1, 2, 3 AND 4. THE TRUSTEE IS AUTHORIZED TO VOTE ALL
SHARES HELD BY IT IN ITS DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE MEETING.
Date: ____________, 1996 _____________________________________________________
Signature of Participant
_____________________________________________________
Name: Please Print
PLEASE MARK, SIGN, DATE AND RETURN THESE INSTRUCTIONS PROMPTLY USING THE
ENCLOSED ENVELOPE.
<PAGE>
VOTING INSTRUCTIONS
The undersigned hereby instructs First Alabama Bank, as trustee of the
Delchamps, Inc. Employee Stock Ownership Trust, to vote in the manner
designated below all shares of Delchamps, Inc. Common Stock held by such Trust
for the account of the undersigned on September 12, 1996, at the annual meeting
of shareholders to be held on October 22, 1996, or at any adjournment thereof.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4.
1. Election of Directors.
FOR [_] WITHHOLD AUTHORITY [_]
all nominees listed below to vote for all nominees
(except as marked to the listed below
contrary below)
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
John A. Carl F. Timothy E.
Caddell Bailey Kullman
for a term for a term for a term
expiring expiring expiring
1999 1999 1999
2. Proposal to approve the Directors' Stock Option Plan.
[_] FOR[_] AGAINST[_] ABSTAIN
3. Proposal to amend the Company's Articles of Incorporation to add a provision
eliminating the personal liability of the Company's directors to the Company
or its shareholders for money damages under the circumstances described in
the Company's 1996 proxy statement.
[_] FOR[_] AGAINST[_] ABSTAIN
4. Proposal to ratify the selection of KPMG Peat Marwick LLP as independent
auditors for the fiscal year ending June 28, 1997.
[_] FOR[_] AGAINST[_] ABSTAIN
UPON RECEIPT OF THESE INSTRUCTIONS PROPERLY EXECUTED, THE SHARES HELD FOR THE
ACCOUNT OF THE UNDERSIGNED WILL BE VOTED IN THE MANNER DIRECTED. IF THESE
INSTRUCTIONS ARE PROPERLY EXECUTED BUT NO DIRECTION IS GIVEN, SUCH SHARES WILL
BE VOTED FOR PROPOSALS 1, 2, 3 AND 4. THE TRUSTEE IS AUTHORIZED TO VOTE ALL
SHARES HELD BY IT IN ITS DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE MEETING.
Date: ____________, 1996 _____________________________________________________
Signature of Participant
_____________________________________________________
Name: Please Print
PLEASE MARK, SIGN, DATE AND RETURN THESE INSTRUCTIONS PROMPTLY USING THE
ENCLOSED ENVELOPE.
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
DELCHAMPS, INC.
The undersigned hereby appoints Timothy E. Kullman, Richard W. La Trace,
David W. Morrow, or any one of them, as proxies, each with the power to appoint
his substitute, and hereby authorizes each of them to represent and to vote, as
designated below, all the shares of common stock of Delchamps, Inc, (the
"Company") held of record by the undersigned on September 12, 1996, at the
annual meeting of shareholders to be held on October 22, 1996, or at any
adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4.
1. Election of Directors.
FOR [_] WITHHOLD AUTHORITY [_]
all nominees listed below to vote for all nominees
(except as marked to the listed below
contrary below)
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
John A. Carl F. Timothy E.
Caddell Bailey Kullman
for a term for a term for a term
expiring expiring expiring
1999 1999 1999
2. Proposal to approve the Directors' Stock Option Plan.
[_] FOR[_] AGAINST[_] ABSTAIN
3. Proposal to amend the Company's Articles of Incorporation to add a provision
eliminating the personal liability of the Company's directors to the Company
or its shareholders for money damages under the circumstances described in
the Company's 1996 proxy statement.
[_] FOR[_] AGAINST[_] ABSTAIN
4. Proposal to ratify the selection of KPMG Peat Marwick LLP as independent
auditors for the fiscal year ending June 28, 1997.
[_] FOR[_] AGAINST[_] ABSTAIN
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 3 AND 4. THE INDIVIDUALS DESIGNATED AS PROXIES ON THE
REVERSE SIDE HEREOF ARE AUTHORIZED TO VOTE IN THEIR DISCRETION ON ANY OTHER
MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
Date: ____________, 1996 _____________________________________________________
Signature of Shareholder
_____________________________________________________
Signature if held jointly
Please sign exactly as name appears on the
certificate or certificates representing shares
to be voted by this proxy. When signing as
executor, administrator, attorney, trustee or
guardian, please give full title as such. If a
corporation, please sign full corporate name by
president or other authorized officer. If a
partnership, please sign in partnership name by
authorized persons.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
