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
(X) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
RICHFOOD HOLDINGS, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
( ) $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[logo]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
July 26, 1996
To the Shareholders of
Richfood Holdings, Inc.:
We are pleased to invite you to attend the annual meeting of
shareholders of Richfood Holdings, Inc. (the "Company") to be held at the
Company's Headquarters, 8258 Richfood Road, Mechanicsville, Virginia, on
Thursday, August 29, 1996, at 10:00 A.M. for the following purposes:
(1) to elect 13 directors of the Company to serve until the next
annual meeting of shareholders;
(2) to approve the amendment and restatement of the Richfood
Holdings, Inc. Omnibus Stock Incentive Plan; and
(3) to transact such other business as may properly come before the
meeting, or any adjournments thereof.
Only shareholders of record at the close of business on July 12, 1996,
are entitled to notice of, to vote at and to participate in the meeting.
You are requested to mark, date, sign and return the enclosed form of
proxy in the enclosed envelope whether or not you expect to attend the meeting
in person.
By order of the Board of Directors
Daniel R. Schnur
Senior Vice President, General Counsel
& Secretary
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
[logo]
GENERAL INFORMATION
Solicitation of the enclosed proxy is made by the Board of Directors of
the Company for use at the annual meeting of shareholders to be held at the
Company's Headquarters, 8258 Richfood Road, Mechanicsville, Virginia, on
Thursday, August 29, 1996, at 10:00 A.M. and at any adjournments of such
meeting. An annual report, including consolidated financial statements for the
fiscal year ended April 27, 1996 ("fiscal 1996"), is enclosed with this proxy
statement.
The expenses of this solicitation will be paid by the Company.
Officers, directors and employees of the Company may make solicitations of
proxies by telephone or telegraph or by personal calls. Brokerage houses,
nominees and fiduciaries have been requested to forward proxy soliciting
material to the beneficial owners of the stock held of record by them, and the
Company will reimburse them for their charges and expenses.
The Company's charter authorizes the issuance of up to 60,000,000
shares of Common Stock, without par value ("Common Stock"), and 5,000,000 shares
of Preferred Stock, without par value. Only shareholders of record at the close
of business on July 12, 1996, are entitled to notice of, to vote at and to
participate in the meeting. On the record date, 31,517,998 shares of Common
Stock were issued and outstanding. Holders of Common Stock will vote as a single
class at the annual meeting. Each outstanding share of Common Stock will entitle
the holder to one vote on all matters submitted to a vote of shareholders at the
annual meeting. All shares of Common Stock represented by properly executed and
delivered proxies will be voted at the meeting or any adjournments.
A majority of the votes entitled to be cast on matters to be considered
at the meeting constitutes a quorum. If a share is represented for any purpose
at the meeting, it is deemed to be present for quorum purposes for all other
matters as well. Abstentions and shares held of record by a broker or its
nominee ("Broker Shares") that are voted on any matter are included in
determining the number of votes present or represented at the meeting. Broker
Shares that are not voted on any matter at the meeting will not be included in
determining whether a quorum is present at such meeting. Directors are elected
by a plurality of the votes cast by holders of Common Stock at a meeting at
which a quorum is present. Votes that are withheld and Broker Shares that are
not voted in the election of directors will not be included in determining the
number of votes cast. Approval of the amendment and restatement of the Richfood
Holdings, Inc. Omnibus Stock Incentive Plan (the "Omnibus Stock Incentive Plan")
requires the affirmative vote of the holders of a majority of the shares of
Common Stock present or represented by properly executed and delivered proxies,
and entitled to vote with respect thereto, at a meeting at which a quorum is
present. Abstentions will have the same effect as a negative vote for purposes
of approving the amendment and restatement of the Omnibus Stock Incentive Plan.
Broker Shares that are not voted with respect to approval of the amendment and
restatement of the Omnibus Stock Incentive Plan will not be included in
determining the number of shares entitled to vote thereon.
This proxy statement and the enclosed form of proxy were first mailed
to shareholders on July 26, 1996.
-1-
ELECTION OF DIRECTORS
(Proposal 1)
At the annual meeting, 13 directors are expected to be elected to hold
office until the next annual meeting of shareholders and until their respective
successors are duly elected and qualified. Unless authority to do so is
withheld, shares of Common Stock represented by properly executed proxies in the
enclosed form will be voted for the election of the persons named below. Each of
the nominees is currently a director and has served continuously since the year
he or she joined the Board. If any of the nominees should become unavailable,
the Board of Directors may designate substitute nominees for whom the proxies on
the enclosed form will be voted. In the alternative, the Board of Directors may
reduce the size of the Board to the number of remaining nominees for whom the
proxies will be voted.
Nominees for Election to the Board of Directors
<TABLE>
<CAPTION>
Principal Occupation or Director
Name Employment During Last Five Years Continuously Since Age
---- --------------------------------- ------------------ ---
<S> <C>
Donald D. Bennett Chairman of the Board (since 1995) and Chief 1990 60
Executive Officer of the Company; former President
of the Company; Director, Best Products Co., Inc.
Roger L. Gregory Managing Partner, Wilder & Gregory Law Office. 1994 43
Grace E. Harris Provost and Vice President for Academic Affairs, 1994 63
Virginia Commonwealth University.
John C. Jamison Chairman, Mallardee Associates, a corporate 1990 62
financial advisory service, and Limited Partner,
Goldman, Sachs & Co., an investment banking and
brokerage firm; former President and Chief
Executive Officer, The Mariner's Museum, an
international maritime museum (1990-1992);
Director, Hershey Foods Corporation and Best
Products Co., Inc.
Michael E. Julian, Jr. Chairman, President and Chief Executive Officer, 1988 46
Farm Fresh, Inc., a retail grocery chain.
G. Gilmer Minor, III Chairman of the Board (since 1994), President and 1988 55
Chief Executive Officer, Owens & Minor, Inc., a
wholesale distributor of medical and surgical
supplies; Director, Crestar Financial Corporation.
Claude B. Owen, Jr. Chairman of the Board and Chief Executive Officer, 1988 51
DIMON Incorporated (successor to Dibrell Brothers,
Incorporated), an importer and exporter of leaf
tobacco and fresh cut flowers; former Chairman of
the Board, Chief Executive Officer and, since 1993,
President, Dibrell Brothers, Incorporated;
Director, American National Bankshares, Inc.
-2-
Principal Occupation or Director
Name Employment During Last Five Years Continuously Since Age
---- --------------------------------- ------------------ ---
John F. Rotelle Chairman (since 1995) and former President of 1994 60
Rotelle, Inc.
Albert F. Sloan Former Director of Lance, Inc., a manufacturer of 1990 66
cookies, crackers and snack foods; Director, Basset
Furniture Industries, Inc., Cato Corporation and
PCA International, Inc.
John E. Stokely President and Chief Operating Officer of the 1995 43
Company; former Executive Vice President -
Finance and Administration (1993-1995), Senior
Vice President - Finance and Chief Financial
Officer (1991-1993), and Vice President - Finance
and Chief Financial Officer (1990-1991) of the
Company.
George H. Thomazin Chief Executive Officer, Thomazin Enterprises, a 1990 56
business investment firm; former Chief Executive
Officer, Continental Brokers Co., a food brokerage
firm (1989-1992).
James E. Ukrop Vice-Chairman and Chief Executive Officer (since 1987 59
1994), Ukrop's Super Markets, Inc., a retail grocery
chain; former President and Chief Executive Officer,
Ukrop's Super Markets, Inc.; Director, Legg
Mason, Inc. and Owens & Minor, Inc.
Edward Villanueva Financial Consultant; Director, Circuit City Stores, 1990 61
Inc.
</TABLE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 1
TO ELECT THE FOREGOING NOMINEES TO THE BOARD OF DIRECTORS TO SERVE UNTIL THE
NEXT ANNUAL MEETING OF SHAREHOLDERS.
-3-
Board of Directors and Committees
The Board of Directors meets regularly every quarter and following each
annual meeting of shareholders. During fiscal 1996, there were nine meetings of
the Board.
The Board has standing Executive, Audit, Executive Compensation and
Nominating Committees. Members of the Executive Committee are Messrs. Bennett
(Chairman), Owen, Sloan, Stokely and Thomazin. During fiscal 1996, there were
three meetings of the Executive Committee. The Executive Committee reviews
various matters and submits proposals or recommendations to the Board of
Directors. The Executive Committee is empowered to and does act for the Board of
Directors on certain matters.
Members of the Audit Committee are Messrs. Jamison (Chairman), Gregory,
Minor, Rotelle and Villanueva. During fiscal 1996, there were three meetings of
the Audit Committee. The Audit Committee recommends an independent public
accounting firm to be selected by the Board of Directors for the upcoming fiscal
year. The Audit Committee reviews and approves various audit functions including
the annual audit performed by the Company's independent public accountants.
Periodically, the Company's internal auditors and independent public accountants
report directly to the Audit Committee.
Members of the Executive Compensation Committee are Messrs. Sloan
(Chairman), Julian, Thomazin and Ukrop and Dr. Harris. During fiscal 1996, there
were five meetings of the Executive Compensation Committee. The Executive
Compensation Committee recommends to the Board the compensation of the Company's
Chief Executive Officer, approves the compensation of the Company's other
executive officers and administers the Company's annual and long-term incentive
plans.
Members of the Nominating Committee are Messrs. Minor (Chairman),
Bennett and Ukrop. During fiscal 1996, there was one meeting of the Nominating
Committee. The Nominating Committee recommends to the full Board of Directors
persons to serve as directors of the Company and establishes such procedures as
it deems proper to receive and review information concerning potential
candidates for election or reelection to the Board of Directors. Shareholders
entitled to vote for the election of directors may nominate candidates for
consideration by the Nominating Committee. Notice of nominations made by
shareholders with respect to the 1997 annual meeting must be received in writing
by the Secretary of the Company no earlier than May 12, 1997, and no later than
June 6, 1997, and must set forth (i) the name, age, business address and, if
known, residence address of each nominee proposed in such notice, (ii) the
principal occupation or employment of each such nominee and (iii) the number and
class of capital shares of the Company beneficially owned by each such nominee.
The Company's employment and severance benefits agreements with Mr. Bennett and
Mr. Stokely include provisions related to their election to the Board of
Directors. See "Employment Continuity Agreements."
Persons who are employees of the Company or of its subsidiaries receive
no compensation for their services as directors of the Company. During fiscal
1996, directors who were not employees of the Company or of its subsidiaries
received an annual retainer of $12,000 and fees of $1,000 for each meeting of
the Company's Board and $750 for each meeting of a Board committee attended. In
addition, chairmen of each Board committee who were not employees of the Company
or of its subsidiaries received an additional annual retainer of $2,500.
Effective April 28, 1996, the annual retainer was increased to $15,000, the fee
for attendance at each meeting of the Board was increased to $1,200 and a fee of
$500 was established for participation in a telephonic meeting of the Board or a
Board committee. The attendance fee for committee meetings and the additional
retainer for chairmen of Board committees remained unchanged. In addition,
pursuant to the Company's Non-Employee Directors' Stock Option Plan, each year
each director who is not an employee of the Company or of its subsidiaries is
granted an option to purchase 1,000 shares of Common Stock for a per share
exercise price equal to the fair market value of one share of Common Stock on
the date of grant.
During fiscal 1996, all directors attended at least 75% of the meetings
of the Board of Directors and the committees to which they were assigned, except
Mr. Minor.
-4-
Security Ownership of Certain Beneficial Owners and Management
The following table shows, as of June 28, 1996 (except as provided
below), the direct and indirect beneficial ownership of shares of Common Stock
by (i) all directors of the Company, (ii) each executive officer named in the
Summary Compensation Table, (iii) all directors and executive officers of the
Company as a group and (iv) each person known by the Company to beneficially own
more than 5% of the outstanding shares of Common Stock.
<TABLE>
<CAPTION>
Sole Voting
and Investment Percentage
Name Power (1) Other (2) Total Ownership (3)
---- ---------- --------- ----- -------------
<S> <C>
Donald D. Bennett 200,153 731 200,884
Roger L. Gregory 250 0 250
Grace E. Harris 450 0 450
John C. Jamison 10,250 0 10,250
Michael E. Julian, Jr. 4,250 0 4,250
G. Gilmer Minor, III 5,250 0 5,250
Claude B. Owen, Jr. 20,350 0 20,350
John F. Rotelle 94,513 332 94,845
Albert F. Sloan 4,250 3,000 7,250
John E. Stokely 75,639 290 75,929
George H. Thomazin 5,500 0 5,500
James E. Ukrop 12,350 985,034 997,384 3.16%
Edward Villanueva 103,030 0 103,030
Edgar E. Poore 165,992 558 166,550
Christopher A. Brown 38,773 2,502 41,275
All Directors and
Executive Officers as a Group
(23 persons) 859,219 997,648 1,856,867 5.86
FMR Corp.(4)
82 Devonshire Street
Boston, Massachusetts 02109 0 2,403,200 2,403,200 7.62
</TABLE>
- ----------------------------
(1) Includes the following number of shares of Common Stock that may be
acquired within sixty days of June 28, 1996, under one or more of the Company's
stock-based incentive plans by the following directors, executive officers and
group: Mr. Bennett - 60,000; Mr. Gregory - 250; Dr. Harris - 250; Mr. Jamison -
250; Mr. Julian -250; Mr. Owen - 150; Mr. Rotelle - 1,000; Mr. Sloan - 250; Mr.
Ukrop - 250; Mr. Villanueva - 250; Mr. Poore -57,000; Mr. Brown - 34,500; and
all directors and executive officers as a group - 191,759.
(2) With respect to Mr. Sloan, reflects shares held by his wife. Mr.
Sloan disclaims beneficial ownership of such shares. With respect to Mr. Ukrop,
reflects shares held by Ukrop's Super Markets, Inc. Mr. Ukrop disclaims
beneficial ownership of such shares. With respect to Messrs. Bennett, Stokely,
Rotelle, Poore and Brown, and all directors and executive officers as a group,
reflects shares held under the Company's 401(k) savings plans as of March 31,
1996.
(3) Except as indicated, each person or group beneficially owns less
than 1% of the outstanding shares of Common Stock.
(4) As reported in a Form 13G dated February 14, 1996, as of December
31, 1995, Fidelity Management & Research Company ("Fidelity"), a subsidiary of
FMR Corp., beneficially owned 2,403,200 shares of the Company's Common Stock as
a result of acting as an investment adviser to several investment companies. The
ownership of one investment company, Fidelity Contrafund, amounted to 1,781,300
shares of the Company's Common Stock. Edward C. Johnson 3d and FMR Corp.,
through it control of Fidelity, each has the power to dispose of the shares
owned by the investment companies. The Boards of Trustees of the individual
investment companies have power to vote and dispose of the shares owned by such
investment companies.
-5-
EXECUTIVE COMPENSATION
Executive Compensation Committee Report on Executive Compensation
The Executive Compensation Committee of the Board of Directors (the
"Committee") is delegated the power to administer the compensation programs of
the Company applicable to its executive officers. The Committee, which is
comprised of five outside directors, recommends to the Board the compensation of
the Company's Chief Executive Officer, approves the compensation of the
Company's other executive officers and administers the Company's annual and
long-term incentive plans.
The purposes of the Company's compensation plans and the objectives of
the Committee are to:
o provide a competitive compensation program to enable the Company to
attract and retain qualified top management personnel;
o emphasize the relationship between pay and performance by placing
variable compensation "at risk" based on the achievement of
specific and measurable goals and objectives;
o balance the Company's short-term and long-term objectives
appropriately; and
o align the financial interests of the executive officers with those
of the Company's shareholders by encouraging and promoting
executive ownership of the Company's Common Stock.
The Committee believes that compensation programs should enable
management to understand clearly what the potential rewards are and what
performance must be achieved to earn such awards. An independent consultant is
used to recommend compensation structures for the Company. To further the
objectives stated above, the compensation programs for all executive officers
include three components: (i) base salary; (ii) annual cash incentive
compensation; and (iii) long-term incentives in the form of stock options,
restricted stock, stock appreciation rights ("SARs") and/or performance shares.
The Committee's policy on the tax deductibility of compensation for the Chief
Executive Officer and other executive officers is to maximize the deductibility
thereof, to the extent possible, while preserving the Committee's flexibility to
maintain competitive compensation programs.
Base Salary. The Company seeks to maintain executive compensation at levels
competitive with other corporations in the Company's market and industry in
accordance with information, including survey data, available to the Company.
Corporations considered included the companies included in the Company's Peer
Group, as defined below, as well as other companies in the grocery industry.
Periodic increases in base salary are based on evaluations of each executive's
past and current performance, competitive market conditions and the Company's
performance. As discussed below, the base salary of the Chairman and Chief
Executive Officer, Mr. Bennett, for fiscal 1996 was established pursuant to an
employment agreement executed in May 1993. The base salary of the President and
Chief Operating Officer, Mr. Stokely, for fiscal 1996 was established pursuant
to an employment agreement executed in June 1995. The base salary of the
Company's other executive officers is determined by the Company's Chief
Executive Officer, subject to the approval of the Committee.
Annual Cash Incentive Compensation. It is the Committee's policy that a
significant portion of total compensation be "at risk" based on performance
criteria. The Committee believes that this approach relates compensation levels
to performance and is in the best interests of the shareholders. The Company's
Executive Officer Performance Plan is designed to reward certain officers and
other key employees for the Company's operating performance, as measured by
established earnings criteria, and for individual and departmental performance.
Under this Plan as in effect for fiscal 1996, an incentive compensation pool was
funded based on predetermined threshold, target and maximum levels of the
Company's adjusted pre-tax FIFO earnings. A participant shared in the incentive
compensation pool, up to a predetermined maximum percentage of annual base
salary. Awards, established as a percentage of base salary, varied by management
level. Adjustments to awards and flexibility for special awards were available
to reflect individual performance. The Committee approved the threshold, target
and maximum levels of the Company's adjusted pre-tax FIFO earnings and
corresponding percentages of annual base salary in conjunction with its review
of the Company's annual fiscal plan. All executive officers other than Mr.
Bennett and Mr. Stokely participated in this Plan for fiscal 1996. As discussed
below, the formulas for determining Mr.
-6-
Bennett's and Mr. Stokely's incentive compensation for fiscal 1996 were
established under the terms of their respective employment agreements.
Long-Term Incentives. The Company's Omnibus Stock Incentive Plan, which was
approved by the shareholders in fiscal 1992, permits the Committee, in its
discretion, to grant options to purchase shares of the Company's Common Stock,
SARs, shares of restricted stock and performance shares to any employee of the
Company or its subsidiaries who the Committee believes has contributed
significantly or can be expected to contribute significantly to the profits or
growth of the Company. The Committee determines the amount of the grant, the
term of the options, SARs, restricted stock or performance shares and the
requisite conditions for exercise and vesting. The Committee does not take into
account stock ownership of plan participants in determining the amount or terms
of grants under the Omnibus Stock Incentive Plan. The granting or award of
stock-based compensation is intended to encourage executives to take a longer
view of the impact of their individual contributions to the Company. As with
base pay and annual incentive compensation, the Committee reviews survey data to
establish competitive long-term compensation structures.
During fiscal 1996, 86 employees, including Messrs. Bennett, Stokely
and Brown, received grants of options under the Omnibus Stock Incentive Plan.
Options granted during fiscal 1996 were granted at the fair market value of the
Common Stock on the date of grant; accordingly, the market value of the Common
Stock must increase before the employee receives any benefit from the grant. The
options granted during fiscal 1996 were exercisable in installments over a
four-year period. No shares of restricted stock, performance shares or SARs were
granted during fiscal 1996. During fiscal 1996, 34 employees, including 5
executive officers, received awards of Common Stock under the Omnibus Stock
Incentive Plan.
Compensation of the Chief Executive Officer. Effective May 21, 1993, the
Company and Mr. Bennett entered into a four-year employment agreement that
provided for an annual salary of $350,000. In June 1995, Mr. Bennett's
employment agreement was amended to increase his annual salary for fiscal 1996
and 1997 to $425,000. Mr. Bennett's agreement, as in effect for fiscal 1996,
also provided for annual incentive compensation equal to a predetermined
percentage (up to a maximum of 150%) of Mr. Bennett's annual salary based on the
same threshold, target and maximum levels of adjusted pre-tax FIFO earnings of
the Company established for the Company's other executive officers under the
Company's Executive Officer Performance Plan. Mr. Bennett also is entitled to
participate in the Company's long-term incentive plans generally applicable to
its executive officers. During fiscal 1996, the Company achieved the maximum
level of adjusted pre-tax FIFO earnings established by the Committee, resulting
in Mr. Bennett earning the maximum amount of annual incentive compensation
permitted under his employment agreement. In addition, Mr. Bennett received a
special cash award during fiscal 1996 of $562,500, and vesting of all of his
stock options and shares of restricted stock was accelerated, as a result of his
role in directing the Company's acquisition of Super Rite Corporation, a
transaction which doubled the size of the Company and which the Committee
believes positions the Company for continued growth. In determining Mr.
Bennett's compensation under his employment agreement, as amended, the Committee
also considered his exemplary performance and contribution to the growth and
success of the Company and his outstanding leadership in bringing about the
achievement of nonfinancial goals as well as financial results clearly exceeding
those of industry competitors, including six consecutive years of record
operating profit. In addition, the Committee reviewed compensation of other
chief executive officers in the wholesale and retail grocery industry, including
those employed by companies in the Peer Group used in the performance graph set
forth below. The Committee considered the Company's financial performance during
Mr. Bennett's tenure to be superior relative to the companies in the industry.
During Mr. Bennett's tenure as Chief Executive Officer, the total market
capitalization of the Company (determined by multiplying share price by number
of shares outstanding) has risen from approximately $55 million during fiscal
1991 to more than $1 billion at the end of fiscal 1996.
In conclusion, the Committee believes that the compensation policies
and practices of the Company herein described are fair and equitable and are in
keeping with the best interests of the Company and its shareholders.
Executive Compensation Committee
Albert F. Sloan, Chairman
Grace E. Harris
Michael E. Julian, Jr.
George H. Thomazin
James E. Ukrop
-7-
Summary of Cash and Certain Other Compensation
The following table shows, for the fiscal years ended April 27, 1996,
April 29, 1995, and April 30, 1994, the cash compensation paid, as well as
certain other compensation paid or accrued, by the Company to the Company's
Chief Executive Officer and its four other most highly compensated executive
officers (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards(2)
----------------------------------------- ----------------------------
Other Securities
Name and Annual Underlying All Other
Principal Position Fiscal Compen- Options/ Compen-
at April 27, 1996 Year Salary Bonus sation (1) SARs (3) sation (4)
- ---------------------------------------------------------------------------------------------- -----------------------------
<S> <C>
Donald D. Bennett 1996 $417,794 $637,500 $691,875 30,000 $ 6,671
Chairman and Chief 1995 350,000 630,000 30,000 2,529
Executive Officer 1994 348,077 525,000 20,000 5,785
John E. Stokely 1996 242,804 250,000 479,375 15,000 7,002
President and Chief 1995 174,433 160,000 31,000 12,000 5,820
Operating Officer 1994 169,846 150,000 10,000 3,852
John F. Rotelle 1996 250,000 50,000 16,108
Chairman - 1995 160,305 100,000 4,000 481
Rotelle, Inc.(5)
Edgar E. Poore 1996 164,621 107,250 2,748
Executive Vice 1995 161,000 110,000 12,000 4,025
President 1994 160,942 104,650 10,000 5,525
Christopher A. Brown 1996 155,178 113,750 10,000 1,482
Senior Executive 1995 149,592 107,250 10,000 1,379
Vice President - 1994 114,962 78,000 10,000 1,707
Super Rite Foods, Inc.
</TABLE>
- -------------------
(1) With respect to Messrs. Bennett and Stokely, reflects: receipt of
special cash awards in fiscal 1996 of $562,500 and $350,000, respectively, as a
result of their respective roles in completing the Company's acquisition of
Super Rite Corporation; and the dollar value of awards of Common Stock under the
Omnibus Stock Incentive Plan, based on the fair market value of Common Stock on
the date of grant. None of the Named Executive Officers received other
perquisites or other personal benefits, securities or property with an aggregate
value in excess of the lesser of $50,000 or 10% of the total of his salary and
bonus shown above.
(2) The aggregate number and value of shares of restricted stock held by
the Named Executive Officers as of April 27, 1996, were as follows: Mr. Bennett
- - 0, $0; Mr. Stokely - 8,000, $264,000; Mr. Rotelle - 0, $0; Mr. Poore - 8,000,
$264,000; and Mr. Brown - 4,000, $132,000. None of such shares vest, in whole or
in part, in less than three years from the date of grant. Dividends are paid on
restricted stock at the same rate and times as on all other shares of Common
Stock. No awards of restricted stock were made in fiscal 1996.
(3) Reflects nonqualified stock options granted under the Company's Omnibus
Stock Incentive Plan.
(4) "All Other Compensation" for fiscal 1996 consists of: (i) the Company's
25% matching contributions under the Company's Savings and Stock Ownership Plan
to the Named Executive Officers as follows: Mr. Bennett - $1,768; Mr. Stokely -
$2,194; Mr. Rotelle - $1,685; Mr. Poore - $1,479; and Mr. Brown - $1,482; and
(ii) the amounts awarded to the following Named Executive Officers under the
Company's Vacation to Stock Conversion Plan (which amounts, net of applicable
withholdings, were distributed in the form of shares of Common Stock based on
the fair market value of the Common Stock as of the plan's determination date):
Mr. Bennett - $4,904; Mr. Stokely - $4,808; Mr. Rotelle - $14,423; and Mr. Poore
- - $1,269.
(5) Mr. Rotelle became an executive officer of Richfood on August 23, 1994,
as a result of the Company's acquisition of Rotelle, Inc.
-8-
Stock Options and SARs
The following table contains information concerning the grants of
options made during fiscal 1996 under the Company's Omnibus Stock Incentive Plan
to the Named Executive Officers. No SARs were granted during fiscal 1996.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants for Option Term (1)
- ----------------------------------------------------------------------------------------------- ------------------------------
% of Total 5% (4) 10% (4)
Number of Options/ (Assumes (Assumes
Securities SARs a Company a Company
Underlying Granted to Common Common
Options/ Employees Exercise Stock Stock
SARs in Fiscal or Base Expiration Price of Price of
Name Granted (2) Year Price (3) Date $42.15) $67.11)
- ----------------------------------------------------------------------------------------------- ------------------------------
<S> <C>
Donald D. Bennett 30,000 11.6% $25 7/8 10/15/2005 $488,178 $1,237,140
John E. Stokely 15,000 5.8 $25 7/8 10/15/2005 244,089 618,570
John F. Rotelle 0 - - - - -
Edgar E. Poore 0 - - - - -
Christopher A. Brown 10,000 3.9 $25 7/8 10/15/2005 162,726 412,380
</TABLE>
- ------------
(1) The potential realizable value is based upon assumed future prices for
the Common Stock that are derived from the specified assumed annual rates of
appreciation. Actual gains, if any, on stock option exercises and Common Stock
holdings are dependent on the actual future performance of the Common Stock.
There can be no assurance that the amounts reflected in this table will be
achieved.
(2) All option grants consisted of nonqualified stock options granted under
the Omnibus Stock Incentive Plan. Except with respect to Mr. Bennett, these
grants become exercisable in one-fourth installments on December 15, 1996, 1997,
1998 and 1999. On April 18, 1996, the Executive Compensation Committee of the
Board of Directors accelerated the vesting of all of Mr. Bennett's stock
options.
(3) The exercise price was set at the fair market value of Common Stock on
the date of the grant. The exercise price may be paid in cash or in Common Stock
valued at fair market value on the date preceding the date of exercise, or a
combination of cash and Common Stock.
(4) The 5% and 10% assumed annual rates of stock price appreciation used to
calculate potential option gains shown above are required by the rules of the
Securities and Exchange Commission. The actual gains that will be realized, if
and when the Named Executive Officers exercise the options granted in fiscal
1996, will be dependent on the future performance of the Common Stock. The
following is provided to illustrate the relationship between the hypothetical
gain that would be realized by the Named Executive Officers upon the exercise of
such options and the hypothetical gain that would be realized by all
shareholders as a result of the assumed stock price appreciation:
<TABLE>
<CAPTION>
Annual Rate of Stock Price
Appreciation
------------------------------------------
5% 10%
----------------- ------------------
<S> <C>
Resulting stock price based on $25 7/8 starting price $ 42.15 $ 67.11
Per share gain 16.27 41.24
Aggregate gain that would be realized by all shareholders (based on 31,207,989 shares 507,753,981 1,287,017,466
outstanding on the effective date of the grant)
Aggregate hypothetical gain on all fiscal 1996 options granted to the Named Executive 894,993 2,268,090
Officers if $42.15 and $67.11 prices, respectively, are achieved
Hypothetical aggregate gains for the Named Executive Officers as a percentage of all 0.18% 0.18%
shareholders' gains
</TABLE>
-9-
Option/SAR Exercises and Holdings
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options and SARs during fiscal
1996, and unexercised options and SARs held by them on April 27, 1996.
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
<CAPTION>
Number of Securities Value of Unexercised
Underlying In-the-Money
Unexercised Options/SARs at Fiscal
Options/SARs at Year-End(3)
Fiscal Year-End(2)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (1) Realized Unexercisable(4) Unexercisable(4)
---- --------------- -------- ---------------- -----------------
<S> <C>
Donald D. Bennett 5,000 $33,125 75,000/0 $1,001,250/$0
John E. Stokely 0 0 22,250/40,000 500,734/547,373
John F. Rotelle 0 0 1,000/3,000 17,500/52,500
Edgar E. Poore 0 0 107,000/22,000 2,846,188/440,500
Christopher A. Brown 0 0 34,500/26,500 840,225/387,750
</TABLE>
- -----------
(1) Represents only nonqualified stock options granted under the Company's
Omnibus Stock Incentive Plan.
(2) Represents only nonqualified stock options granted under the Company's
Long-Term Incentive Plan and/or Omnibus Stock Incentive Plan. Each nonqualified
stock option granted under the Company's Long-Term Incentive Plan includes a
tandem SAR.
(3) The value of unexercised in-the-money options represents the positive
spread between the April 27, 1996, closing price of Common Stock ($33.00) and
the exercise price of any unexercised options.
(4) The options represented could not be exercised by the named executive
as of April 27, 1996, and future exercisability is subject to the executive
remaining employed by the Company or its subsidiaries or, in the case of Mr.
Poore, continuing to serve as a consultant to the Company, for up to four years
from the date of grant, subject to acceleration for death or total disability of
the executive or a "change in control" of the Company (as defined in the
applicable option agreements).
Pension Plan Table
The table below illustrates the approximate aggregate retirement benefits
payable under the Company's funded defined benefit pension plan for its salaried
employees and supplemental retirement plan for certain officers and other key
employees retiring at age 65. The amounts reflected in the table are stated in
payments in the form of a life annuity. Other actuarially equivalent forms of
benefit may be selected. The amounts reflected in the table are subject to
offset for Social Security and other benefits.
<TABLE>
<CAPTION>
Annual Years of Credited Service (2)
Compensation (1) 10 15 20 25
------------ ------------------------------------------------------------------------
<S> <C>
$ 100,000 . . . . . $ 60,000 $ 65,000 $ 70,000 $ 70,000
200,000 . . . . . 120,000 130,000 140,000 140,000
300,000 . . . . . 180,000 195,000 210,000 210,000
400,000 . . . . . 240,000 260,000 280,000 280,000
500,000 . . . . . 300,000 325,000 350,000 350,000
600,000 . . . . . 360,000 390,000 420,000 420,000
</TABLE>
- ------------
(1) Annual compensation is the average of a participant's highest five
consecutive years' compensation (base salary plus overtime and commissions)
during the last ten years and approximates, in the case of the Named Executive
Officers, the amounts reported as salary in the Summary Compensation Table.
(2) The years of credited service for the Named Executive Officers as of
April 27, 1996, were as follows: Mr. Bennett - 6; Mr. Stokely - 6; Mr. Rotelle -
2; Mr. Poore - 10; and Mr. Brown - 6. With respect to Mr. Bennett's benefits
under the Company's Supplemental Executive Retirement Plan, see "Employment
Continuity Agreements."
-10-
Employment Continuity Agreements
Mr. Bennett. The Company entered into a new employment and severance
benefits agreement with Mr. Bennett, effective April 28, 1996, to ensure his
continued service to the Company through his retirement. The agreement provides
for Mr. Bennett's employment in his current capacity of Chairman of the Board
and Chief Executive Officer through December 1996, and as Chairman of the Board
from January 1997 through December 1998. The agreement further provides that,
prior to its expiration in December 1998, the Company and Mr. Bennett will enter
into a consulting agreement which will provide for his continued service to the
Company through age 65. The agreement also provides that the Board of Directors
will nominate Mr. Bennett for election to the Board at each annual meeting of
shareholders during the term of the agreement, and will use its best efforts to
cause Mr. Bennett to be duly elected to the Board at each such meeting.
The agreement sets Mr. Bennett's salary at $500,000 per year through
1998, and provides that (i) during the term of the agreement the Company will
pay Mr. Bennett's portion of the premiums for coverage under the Company's life,
accident, medical and dental benefits plans, and (ii) unless Mr. Bennett's
employment is terminated during the term of the agreement by the Company for
cause or by Mr. Bennett (other than upon his disability or following a "change
in control" of the Company, as defined below), the Company will provide to Mr.
Bennett following the termination of his employment (at the Company's expense)
coverage under life insurance policies consistent with those currently provided
by the Company for his benefit through age 65, and medical and dental benefits
of the type generally provided from time-to-time to the Company's executive
employees until his death. In addition, the agreement provides for the payment
of a lump-sum severance benefit equal to one year's salary in the event Mr.
Bennett is terminated during the term of the agreement (i) by the Company other
than for cause or upon his death or disability, (ii) by the Company for any
reason other than death or disability within one year following a "change in
control" of the Company or (iii) by Mr. Bennett within one year following a
"change in control" of the Company. The agreement also provides that Mr. Bennett
is entitled to a vested benefit under the Company's Supplemental Executive
Retirement Plan (the "SERP") based upon his having attained age 65 and having
completed 20 years of credited service, with credited monthly compensation to be
based upon the base salary contemplated in the agreement. In addition, the
agreement provides that, upon any "change in control" of the Company, Mr.
Bennett shall be entitled to receive a lump-sum payment in an amount equal to
the actuarial equivalent of the benefit he otherwise would be entitled to
receive under the SERP upon retirement. In addition, if a "change in control" of
the Company occurs during the term of the agreement and Mr. Bennett becomes
liable for any excise tax with respect to any payment or benefit under this
agreement or any of the Company's benefit plans, the Company shall pay Mr.
Bennett an amount equal to (i) such excise tax, plus (ii) the federal, state and
local income taxes, and federal hospitalization tax, for which Mr. Bennett is
liable on account of the payment described in clause (i) of this sentence and
the additional payments described in this clause (ii).
Mr. Stokely. The Company entered into a new employment and severance
benefits agreement with Mr. Stokely, effective April 28, 1996, to extend his
employment with the Company through April 2001. The agreement provides for Mr.
Stokely's employment in his current capacity of President and Chief Operating
Officer through December 1996, and as President and Chief Executive Officer
through April 28, 2001. The agreement also provides that the Board of Directors
will nominate Mr. Stokely for election to the Board of Directors at each annual
meeting of shareholders during the term of the agreement, and will use its best
efforts to cause Mr. Stokely to be duly elected to the Board at each such
meeting.
The agreement sets Mr. Stokely's salary at $400,000 per year (subject
to annual review for possible increase in light of his performance), and
provides for annual incentive compensation equal to the sum of (i) 50% of his
base salary if the Company achieves target pre-tax FIFO earnings, plus (ii) 1%
of the amount by which the Company's pre-tax FIFO earnings exceed target pre-tax
FIFO earnings. The agreement also provides that (i) during the term of the
agreement the Company will pay Mr. Stokely's portion of the premiums for
coverage under the Company's life, accident, medical and dental benefits plans,
and (ii) unless Mr. Stokely's employment is terminated during the term of the
agreement by the Company for cause or by Mr. Stokely (other than upon his
disability or following a "change in control" of the Company), the Company will
provide to Mr. Stokely for a period of 5 years following the termination of his
employment (at the Company's expense) coverage under life insurance policies
consistent with those currently provided by the Company for his benefit, and
medical and dental benefits of the type generally provided from time-to-time to
the Company's executive employees. In addition, the agreement provides for the
payment of a lump-sum severance benefit equal to one year's salary in the event
Mr. Stokely is terminated during the term of the agreement (i) by the Company
other than for cause or upon his death or disability, (ii) by the Company for
any reason other than death or disability within one year following a "change in
control" of the
-11-
Company or (iii) by Mr. Stokely within one year following a "change in control"
of the Company. The agreement also provides that upon any "change in control" of
the Company Mr. Stokely shall be entitled to receive a lump-sum payment in an
amount equal to the actuarial equivalent of the benefit he otherwise would be
entitled to receive under the SERP upon retirement. In addition, if a "change in
control" of the Company occurs during the term of the agreement and Mr. Stokely
becomes liable for any excise tax with respect to any payment or benefit under
this agreement or any of the Company's benefit plans, the Company shall pay Mr.
Stokely an amount equal to (i) such excise tax, plus (ii) the federal, state and
local income taxes, and federal hospitalization tax, for which Mr. Stokely is
liable on account of the payment described in clause (i) of this sentence and
the additional payments described in this clause (ii).
Mr. Rotelle. In connection with the Company's acquisition of Rotelle,
Inc. in August 1994, the Company entered into an employment and severance
benefits agreement with Mr. Rotelle. The agreement provides for Mr. Rotelle's
employment by Rotelle, Inc. through August 1998 at a salary of $250,000 per year
and provides for annual incentive compensation equal to a pre-determined
percentage (up to a maximum of 40%) of Mr. Rotelle's annual base salary based on
the Company's adjusted pre-tax FIFO earnings. In addition, the agreement
provides for the payment of a lump-sum severance benefit equal to one year's
salary in the event Mr. Rotelle is terminated during the term of the agreement
(i) by the Company other than for cause or upon his death of disability, (ii) by
the Company for any reason other than death or disability within one year
following a "change in control" of the Company or (iii) by Mr. Rotelle within
one year following a "change in control" of the Company if his job title or
responsibilities are materially reduced.
Definition of "Change in Control." For purposes of the foregoing
employment and severance benefits agreements, a "change in control" of the
Company means, in general, the occurrence of any of the following events: (i)
any person or group becomes the beneficial owner of securities representing more
than 50% of the aggregate voting power of all classes of the Company's
then-outstanding voting securities; or (ii) the shareholders of the Company
approve (a) a plan of merger, consolidation or share exchange between the
Company and any entity other than a subsidiary, or (b) a proposal with respect
to the sale, lease, exchange or other disposal of all, or substantially all, of
the Company's property.
-12-
Performance Graph
The following graph compares the cumulative total return for Company
Common Stock to the cumulative total returns for the Standard & Poor's 500
Composite Index and an index of peer companies (the "Peer Group") selected by
the Company for the Company's last five fiscal years. Companies in the Peer
Group are as follows: Fleming Companies Inc., Nash-Finch Company, Super Food
Services, Inc. and Supervalu Inc. The index of peer companies presented by the
Company in its proxy statements for use in connection with its 1993, 1994 and
1995 annual meetings of shareholders included Super Rite Corporation ("Super
Rite"). Super Rite was acquired by the Company, and ceased trading as a public
company, effective October 15, 1995. Accordingly, Super Rite has been eliminated
from the Peer Group. The graph assumes an investment of $100 in Company Common
Stock and in each index as of April 26, 1991, and that all dividends were
reinvested.
5 Year Comparison: Richfood Holdings, Inc.
vs. Standard & Poor's 500 vs. Peer Group
<TABLE>
<CAPTION>
4/2/91 5/1/92 4/30/93 4/29/94 4/28/95 4/26/96
<S> <C>
Richfood Holdings, Inc. $100 $119 $184 $231 $277 $459
Standard & Poor's 500 $100 $112 $123 $130 $153 $198
Peer Group $100 $ 93 $109 $106 $ 95 $ 99
</TABLE>
-13-
Certain Relationships and Related Transactions
During fiscal 1996, the Company sold products and services to, and
engaged in certain other transactions with, entities affiliated with Messrs.
Julian and Ukrop. See "Company Compensation Committee Interlocks and Insider
Participation." The Company believes that all such transactions were made on
terms comparable to those that would have been agreed to with unaffiliated third
parties in similar transactions.
During fiscal 1995, the Company made a secured loan to Mr. Donald D.
Bennett, Chairman and Chief Executive Officer of the Company, in the amount of
$60,000 at a rate of interest equal to 6.0% per annum. In addition, during
fiscal 1996 the Company made secured loans to Mr. Bennett in the aggregate
amount of $110,000 at rates of interest equal to 5.90% and 5.79% per annum. The
largest aggregate amount of indebtedness outstanding under such loans during
fiscal 1996, including accrued interest, was $179,522, and the aggregate unpaid
balance thereof on July 1, 1996, was $120,000.
During fiscal 1994, the Company made a $73,938 secured loan to Mr. John
E. Stokely, President and Chief Operating Officer of the Company, at a rate of
interest equal to 3.68% per annum. In addition, in June 1994, the Company made
secured loans to Mr. Stokely in the aggregate amount of $457,127, at a rate of
interest equal to 5.56% per annum. The largest aggregate amount of indebtedness
outstanding under such loans during fiscal 1996, including accrued interest, was
$143,767, and the aggregate unpaid balance thereof on July 1, 1996, was
$131,064.
During fiscal 1994, the Company made a $348,750 secured loan to Mr.
Edgar E. Poore, Executive Vice President of the Company, at a rate of interest
equal to 5.07% per annum. Also during fiscal year 1994, the Company made a
$220,000 secured loan to Mr. Poore at a rate of interest equal to 4.51% per
annum. The largest aggregate amount of indebtedness outstanding under such loans
during fiscal 1996, including accrued interest, was $446,386, and the aggregate
unpaid balance thereof on July 1, 1996, was $355,917.
During fiscal 1996, the Company made a $114,764 secured loan to Mr. J.
Stuart Newton, Senior Vice President and Chief Financial Officer of the Company,
at a rate of interest equal to 5.76% per annum. The largest amount of
indebtedness outstanding under such loan during fiscal 1996, including accrued
interest, was $115,180, and the unpaid balance thereof on July 1, 1996, was
$114,764.
Prior to the Company's October 1995 acquisition of Super Rite, Super
Rite made a $186,559 secured loan, without interest, to Mr. David G. Gundling,
President and Chief Operating Officer -Wholesale of Super Rite. The largest
amount of indebtedness outstanding under such loan during fiscal 1996 was
$186,559. Such loan was repaid in full during fiscal 1996.
Prior to the Company's October 1995 acquisition of Super Rite, Super
Rite made various loans, without interest, to Mr. John D. Ryder, President and
Chief Operating Officer - Retail of Super Rite, in the aggregate principal
amount of $537,000. The largest aggregate amount of indebtedness outstanding
under such loans during fiscal 1996 was $537,000. All of such loans were repaid
in full during fiscal 1996.
Prior to the Company's October 1995 acquisition of Super Rite, Super
Rite made a $396,858 secured loan, without interest, to Mr. Peter Vanderveen,
former President of Super Rite. The largest amount of indebtedness outstanding
under such loan during fiscal 1996 was $396,858. Such loan was repaid in full
during fiscal 1996.
-14-
Compensation Committee Interlocks and Insider Participation
The Executive Compensation Committee of the Board is composed of
Messrs. Albert F. Sloan (Chairman), Michael E. Julian, Jr., George H. Thomazin
and James E. Ukrop and Dr. Grace E. Harris.
Mr. Julian is Chairman, President and Chief Executive Officer of Farm
Fresh, Inc. ("Farm Fresh"). During fiscal 1996, Farm Fresh and its affiliates
paid $365,384,617 to the Company for products and services purchased from the
Company. During fiscal 1993, the Company assisted Marketplace Acquisition Corp.
("MAC"), an affiliate of Farm Fresh, in its purchase of seven retail grocery
stores operated under the "Gene Walter's Marketplace" format and related assets
from Marketplace Foods, Inc. During fiscal 1993, a Company subsidiary made a
secured purchase money bridge loan to MAC at a rate of interest equal to Crestar
Bank's prime lending rate plus two percent. The largest amount outstanding under
such loan since the beginning of fiscal 1996, including accrued interest, was
$1,115,348. The outstanding principal balance of such loan on July 1, 1996, was
$1,113,000. In addition, the Company leases 10 retail grocery store sites and
subleases such sites to Farm Fresh and its affiliates. Such subleases require
Farm Fresh and its affiliates to pay and perform all obligations of the Company
under such leases. The aggregate base rental for such stores during fiscal 1996,
all of which was paid by Farm Fresh and its affiliates, was $2,703,568. During
fiscal 1995, the Company agreed to guarantee certain of Farm Fresh's obligations
under two retail grocery store leases; one such guarantee became effective in
fiscal 1996, and the second guarantee became effective in fiscal 1997. Farm
Fresh's rental obligation that was guaranteed by the Company during fiscal 1996
was $403,861. In fiscal 1997, Farm Fresh's aggregate rental obligations under
the two leases that will be guaranteed by the Company will be $807,004. Mr.
Julian formerly was Executive Vice President and Chief Operating Officer of the
Company (1987) and of Richfood, Inc. (1986-1987).
Mr. Ukrop is Vice-Chairman and Chief Executive Officer of Ukrop's Super
Markets, Inc. ("Ukrop's"). During fiscal 1996, Ukrop's paid $208,257,292 to the
Company for products and services purchased from the Company. In addition,
Ukrop's subleases from the Company approximately 32,000 square feet of warehouse
space in the Company's Chester, Virginia, facility. The aggregate rental paid by
Ukrop's to the Company under the sublease during fiscal 1996 was $108,969. The
sublease has been extended on a month-to-month basis until October 31, 1996, at
a monthly rental of $9,535.
The Company believes that all of the transactions with affiliates
described above were made on terms comparable to those that would have been
agreed to with unaffiliated third parties in similar transactions.
Section 16(a) Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and persons who own
more than 10% of the Common Stock, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission and
the National Association of Securities Dealers, Inc. Executive officers,
directors and owners of more than 10% of the Common Stock are required by
regulation to furnish the Company with copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received and written representations from certain reporting persons who were not
required to file a Form 5 for fiscal 1996, the Company believes that all of its
executive officers, directors and owners of more than 10% of the Common Stock
complied with all Section 16(a) filing requirements applicable to them with
respect to transactions during fiscal 1996, except that (i) during fiscal 1996
Mr. James E. Ukrop filed an amended Form 5 for fiscal 1995 to report one
disposition by gift of shares of Common Stock, and (ii) Mr. John E. Ryder filed
one late report on Form 4 with respect to two sale transactions during fiscal
1996.
-15-
APPROVAL OF THE AMENDMENT AND RESTATEMENT
OF THE OMNIBUS STOCK INCENTIVE PLAN
(Proposal 2)
The Board proposes that the shareholders approve the amendment and
restatement of the Omnibus Stock Incentive Plan. The Omnibus Stock Incentive
Plan was originally approved by the shareholders at the 1991 annual meeting. The
amended and restated Omnibus Stock Incentive Plan (the "Amended Plan") was
adopted by the Board on June 13, 1996, subject to approval by the Company's
shareholders. If the Amended Plan is approved by the shareholders, no further
awards will be made under the Super Rite Corporation 1991 Omnibus Stock
Incentive Plan, and the balance of the pre-amendment share authorization under
the Omnibus Stock Incentive Plan will be cancelled.
The Omnibus Stock Incentive Plan amendments (i) increase the number of
shares of Common Stock that may be issued under the Amended Plan, (ii) impose
limits on the awards that may be made to any individual, and (iii) identify
objective performance criteria that may apply to awards. The following
paragraphs summarize the principal features of the Amended Plan. Such summary is
subject, in all respects, to the terms of the Amended Plan, which is
incorporated herein by reference. The Company will provide promptly, upon
request and without charge, a copy of the full text of the Amended Plan to each
person to whom a copy of this proxy statement is delivered. Requests should be
directed to: Daniel R. Schnur, Senior Vice President, General Counsel &
Secretary, Richfood Holdings, Inc., 8258 Richfood Road, Mechanicsville, Virginia
23111 (telephone (804) 746-6000).
The Board of Directors believes that the Amended Plan will benefit the
Company by (i) assisting it in recruiting and retaining officers and key
employees with ability and initiative, (ii) providing greater incentive for
officers and key employees and (iii) associating the interests of officers and
key employees with those of the Company and its shareholders through
opportunities for increased stock ownership. The principal features of the
Amended Plan are summarized below.
Summary of the Amended and Restated Omnibus Stock Incentive Plan
The Executive Compensation Committee will administer the Amended Plan,
although the Committee may delegate its authority to an officer of the Company.
However, the Committee may not delegate its authority with respect to employees
who are subject to Section 16 of the Securities Exchange Act of 1934, as
amended. The Committee or its delegate will select the employees who will
participate in the Amended Plan ("Participants"). The Committee or its delegate
may, from time to time, grant stock options, SARs, stock awards and performance
shares to Participants. No person may participate in the Amended Plan while he
is a member of the Committee.
Any employee of the Company or any affiliate (as defined) who, in the
Committee's or its delegate's judgment, has contributed to the profitability or
growth of the Company or one of its affiliates may be granted awards under the
Amended Plan. All awards made under the Amended Plan will be evidenced by
written agreements between the Company and the Participant. The Committee or its
delegate may establish guidelines supplementing the provisions of the Amended
Plan to aid in the selection of Participants and to determine the amounts, time
and other terms of the awards. The Company is not able to estimate the number of
individuals that the Committee or its delegate will select to participate in the
Amended Plan or the type or size of awards that the Committee or its delegate
will approve in the future.
Options granted under the Amended Plan may be incentive stock options
("ISOs") or nonqualified stock options. A stock option entitles the Participant
to purchase shares of Common Stock from the Company at the option price. The
option price will be fixed by the Committee or its delegate at the time the
option is granted, but the price cannot be less than the fair market value of a
share of Common Stock on the date of the grant, in the case of an ISO, or less
than 50% of the fair market value of a share of Common Stock on the date of the
grant in the case of a nonqualified stock option. The option price may be paid
in cash, with shares of Common Stock, by reducing the number of shares otherwise
issuable under the option, a combination of cash and shares of Common Stock or,
with the consent of the Committee or its delegate, in installments. Options may
be exercised at such times and subject to such conditions as may be prescribed
by the Committee or its delegate. The maximum period in which an option may be
exercised will be fixed by the Committee or its delegate at the time the option
is granted but cannot exceed ten years. Options are nontransferable except by
will or the laws of descent and distribution.
-16-
No employee may be granted ISOs (under the Amended Plan or any other
plan of the Company) that are first exercisable in a calendar year for Common
Stock having a fair market value (determined as of the date the option is
granted) exceeding $100,000. In addition, no Participant may be granted options
in any calendar year for more than 75,000 shares of Common Stock.
SARs generally entitle the Participant to receive the excess of the
fair market value of shares of Common Stock on the date of exercise over the
initial value of the SAR. The initial value of the SAR is the fair market value
of a share of Common Stock on the date of grant. The Amended Plan provides that
the Committee or its delegate may prescribe that the Participant will realize
appreciation on a different basis than described in the preceding sentences. For
example, the Committee or its delegate may limit or increase the amount of
appreciation that may be realized upon the exercise of an SAR.
SARs may be granted as corresponding SARs or independent of option
grants. To exercise a corresponding SAR, the Participant must surrender
unexercised that portion of the stock option to which the corresponding SAR
relates.
SARs may be exercised at such times and subject to such conditions as
may be prescribed by the Committee or its delegate. The maximum period in which
a SAR may be exercised will be fixed by the Committee or its delegate at the
time the SAR is granted but cannot exceed ten years. SARs are nontransferable
except by will or the laws of descent and distribution.
No Participant may be granted SARs that are independent of option
grants in any calendar year for more than 25,000 shares of Common Stock or
corresponding SARs for more than 75,000 shares of Common Stock. For purposes of
this limitation (and the limitation on individual option grants), an option and
a corresponding SAR are treated as a single award.
The Amended Plan also permits the grant of shares of Common Stock as
stock awards (a "Stock Award"). A Stock Award may be subject to forfeiture or
nontransferable or both unless and until certain conditions are satisfied. No
Participant may be granted Stock Awards (other than Stock Awards issued in
settlement of performance shares) in any calendar year for more than 25,000
shares of Common Stock.
Performance shares also may be granted to Participants. A performance
share award (a "Performance Share") is stated with reference to a specified
number of shares of Common Stock. To the extent that a Performance Share is
earned, the Participant may receive a Stock Award, a cash payment or a
combination of cash and a Stock Award based on the fair market value of the
number of shares earned under the Performance Share award. No Participant may be
granted Performance Shares with respect to more than 25,000 shares of Common
Stock in any calendar year.
The exercisability of an option or SAR, the vesting or transferability
of a Stock Award and the Participant's rights under a Performance Share award
may be conditioned upon the attainment of certain performance goals. The Amended
Plan provides that those goals or objectives may be stated with reference to the
Company's, an affiliate's or an operating unit's return on equity, earnings per
share, total earnings, earnings growth, total sales, sales growth, return on
capital, return on assets or the fair market value of the Common Stock.
A maximum of 1,500,000 shares of Common Stock may be issued under the
Amended Plan in connection with awards made after June 13, 1996. This limitation
will be adjusted, as the Committee or its delegate determines is appropriate, in
the event of a change in the number of outstanding shares of capital stock by
reason of a stock dividend, stock split, combination, reclassification,
recapitalization or other similar event. The terms of outstanding awards also
may be adjusted by the Committee or its delegate to reflect such changes.
No option or SAR may be granted, and no Stock Awards and Performance
Shares may be awarded, under the Amended Plan after June 13, 2006. The Board of
Directors may, without further action by shareholders, terminate or suspend the
Amended Plan in whole or in part. The Board of Directors also may further amend
the
-17-
Amended Plan, except that without shareholder approval no such amendment may
materially increase the number of shares of Common Stock that may be issued
under the Amended Plan, materially change the class of individuals who may be
selected to participate in the Amended Plan or materially increase the benefits
that may be provided under the Amended Plan.
The Company has been advised by counsel that for federal income tax
purposes, no taxable income is recognized by a Participant at the time an option
is granted. If the option is an ISO, no income will be recognized upon the
Participant's exercise of the option. Income is recognized by a Participant when
he disposes of shares acquired under an ISO. The exercise of a nonqualified
stock option generally is a taxable event that requires the Participant to
recognize, as ordinary income, the difference between the fair market value of
the shares of Common Stock received upon such exercise and the option price.
No taxable income is recognized by a Participant upon the grant of an
SAR. The exercise of an SAR generally is a taxable event. The Participant
generally must recognize income equal to any cash that is paid, plus the fair
market value of shares of Common Stock that are received, in settlement of an
SAR.
Income is recognized on account of a Stock Award when the shares first
become transferable or are no longer subject to a substantial risk of
forfeiture. At that time the Participant recognizes income equal to the fair
market value of the shares of Common Stock received.
No taxable income is recognized by a Participant upon an award of
Performance Shares. Income is recognized when the Performance Shares are settled
in an amount equal to any cash that is paid, plus the fair market value of any
shares of Common Stock that are received.
A Participant's employer (either the Company or an affiliate) will be
entitled to claim a federal income tax deduction on account of the exercise of a
nonqualified option or SAR or the vesting of a Stock Award or the settlement of
Performance Shares. The amount of the deduction is equal to the ordinary income
recognized by the Participant. The employer will not be entitled to a federal
income tax deduction on account of the grant or the exercise of an ISO. The
employer may claim a federal income tax deduction on account of certain
dispositions of shares of Common Stock received upon the exercise of an ISO.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 2 TO
APPROVE THE AMENDMENT AND RESTATEMENT OF THE RICHFOOD HOLDINGS, INC.
OMNIBUS STOCK INCENTIVE PLAN.
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY
KPMG Peat Marwick LLP ("Peat Marwick") served as independent public
accountants for the Company for fiscal 1996. The Company believes that, in light
of its recent growth, the increasing complexity of its business and the cost of
accounting services, it is an appropriate time to review its selection of
independent public accountants. Accordingly, the Company has submitted a request
for proposal to each of the six nationally-recognized independent public
accounting firms, including Peat Marwick, requesting that such firms submit
proposals to serve as the Company's independent public accountants for fiscal
1997. Such proposals are not yet due and, accordingly, no independent public
accounting firm has yet been selected, or recommended to the Company's
shareholders for ratification, for fiscal 1997. Representatives of Peat Marwick
are expected to be present at the annual meeting and will be given an
opportunity to make a statement if they desire to do so and to respond to
appropriate questions.
-18-
PROPOSALS FOR 1997 ANNUAL MEETING
Any proposal submitted by a shareholder for inclusion in the proxy
materials for the next annual meeting of shareholders must be delivered to the
Company at its principal office not later than March 21, 1997.
In addition to any other applicable requirements, for business to be
properly brought before the 1997 annual meeting by a shareholder, even if the
proposal is not to be included in the Company's proxy statement, the Company's
bylaws provide that the shareholder must give timely notice in writing to the
Secretary of the Company not later than May 27, 1997. As to each such matter,
the notice must contain (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name, record address of, and class and number of
shares beneficially owned by, the shareholder proposing such business and (iii)
any material interest of the shareholder in such business.
OTHER MATTERS
As of the date of this statement, management knows of no business that
will be presented for consideration at the annual meeting other than that stated
in this notice. As to other business, if any, and matters incident to the
conduct of the annual meeting that may properly come before the meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the judgment of the person or persons voting the proxies.
Shareholders, whether or not they expect to attend in person, are
requested to mark, date and sign the enclosed proxy and return it to the
Company. Please sign exactly as your name appears on the accompanying proxy.
Shareholders may revoke their proxy by delivering a written notice of revocation
to the Company at its principal office to the attention of Daniel R. Schnur,
Senior Vice President, General Counsel & Secretary, at any time before the proxy
is exercised.
Daniel R. Schnur
Senior Vice President, General Counsel
& Secretary
July 26, 1996
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APPENDIX I - Forms of Proxy Cards and Related Instructions
RICHFOOD HOLDINGS, INC.
Richmond, Virginia 23261
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Donald D. Bennett and John E. Stokely
and each of them proxies (and if the undersigned is a proxy, as substitute
proxies) each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all of the shares of Common
Stock of the Company held of record by the undersigned on July 12, 1996, at the
annual meeting of shareholders to be held at 10:00 a.m. on August 29, 1996, or
any adjournments thereof.
PROXY VOTE AUTHORIZATION FOR RICHFOOD HOLDINGS, INC.
ANNUAL MEETING AUGUST 29, 1996 CUSIP 763408101-RICHFOOD HOLDINGS, INC.
The Board of Directors unanimously recommends a vote "FOR" each of the following
proposals
1. ELECTION OF DIRECTORS
FOR all nominees listed below WITHHOLD AUTHORITY to vote
( ) (except as marked to the contrary) ( ) for all nominees listed
Donald D. Bennett, Roger L. Gregory, Grace E. Harris, John C. Jamison,
Michael E. Julian, Jr., G. Gilmer Minor, III, Claude B. Owen, Jr.,
Albert F. Sloan, John E. Stokely, John F. Rotelle, George H. Thomazin,
James E. Ukrop, Edward Villanueva
To withhold authority to vote for any individual nominee, write that
name on the line below.
- --------------------------------------------------------------------------------
2. To approve the amendment and restatement of the Richfood Holdings, Inc.
Omnibus Stock Incentive Plan.
( ) FOR ( ) AGAINST ( ) ABSTAIN
IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AND MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENTS THEREOF.
Please sign exactly as your name appears
hereon. When shares are held by joint
tenants, only one of such persons need sign.
When signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such. If a corporation,
please sign in full corporate name by the
president or other authorized officer. If a
partnership, please sign in partnership name
by an authorized person. Please mark, sign,
date and return the proxy card promptly,
using the enclosed envelope.
--------------------------------------------
Signature
Date _________________________________, 1996
RICHFOOD HOLDINGS, INC.
SAVINGS AND STOCK OWNERSHIP PLAN
Voting Procedure
TO: PARTICIPANTS IN THE RICHFOOD HOLDINGS, INC.
SAVINGS AND STOCK OWNERSHIP PLAN, THE SUPER
RITE CORPORATION EMPLOYEE INVESTMENT OPPORTUNITY
PLAN, AND THE SUPER RITE FOODS, INC. INVESTMENT
OPPORTUNITY PLAN AND TRUST FOR RETAIL UNION
EMPLOYEES (collectively, the "Savings Plans")
As a participating employee in one or more of the Savings Plans, you have the
right to direct the Trustees of your Savings Plan (the "Trustees") to vote the
shares of Common Stock of Richfood Holdings, Inc. ("Common Stock") represented
by your interest in the Trust Fund under the applicable Savings Plan at the
annual meeting of shareholders of Richfood Holdings, Inc. to be held on August
29, 1996. For your information, copies of the Notice of Annual Meeting and Proxy
Statement are forwarded herewith.
If the Trustees do not receive your instructions by August 26, 1996, (i) they
will not vote the shares of Common Stock held in your Pre-tax Contribution and
Rollover Accounts under the applicable Savings Plan at the annual meeting, and
(ii) they will vote the shares of Common Stock held in your Employer Matching
Contribution and Employer Discretionary Matching Contribution Accounts under the
applicable Savings Plan at the annual meeting in accordance with the
recommendations of management. Please indicate your instructions on the
accompanying card and return the card promptly to the Trustees in the enclosed
envelope.
TO: THE TRUSTEES OF THE RICHFOOD HOLDINGS, INC.
SAVINGS AND STOCK OWNERSHIP PLAN, THE SUPER
RITE CORPORATION EMPLOYEE INVESTMENT OPPORTUNITY
PLAN, AND THE SUPER RITE FOODS, INC. INVESTMENT
OPPORTUNITY PLAN AND TRUST FOR RETAIL UNION
EMPLOYEES (collectively, the "Savings Plans")
With respect to the shares of Common Stock of Richfood Holdings, Inc.
represented by my interest in the Trust Fund for one or more of the Savings
Plans, you are directed to sign and forward a proxy in the form being solicited
by the Board of Directors of Richfood Holdings, Inc. to instruct the
persons named therein, or their substitutes, to vote in accordance with
the proxy statement as designated below:
PROXY VOTE AUTHORIZATION FOR RICHFOOD HOLDINGS, INC.
ANNUAL MEETING AUGUST 29, 1996 CUSIP 763408101-RICHFOOD HOLDINGS, INC.
The Board of Directors unanimously recommends a vote "FOR" each of the
following proposals
1. ELECTION OF DIRECTORS
FOR all nominees listed below WITHHOLD AUTHORITY to vote
( ) (except as marked to the contrary) ( ) for all nominees listed
Donald D. Bennett, Roger L. Gregory, Grace E. Harris, John C. Jamison,
Michael E. Julian, Jr., G. Gilmer Minor, III, Claude B. Owen, Jr.,
Albert F. Sloan, John E. Stokely, John F. Rotelle, George H. Thomazin,
James E. Ukrop, Edward Villanueva
To withhold authority to vote for any individual nominee, write that
name on the line below.
- --------------------------------------------------------------------------------
2. To approve the amendment and restatement of the Richfood Holdings, Inc.
Omnibus Stock Incentive Plan.
( ) FOR ( ) AGAINST ( ) ABSTAIN
IN THEIR DISCRETION, THE TRUSTEES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AND MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENTS THEREOF.
Please sign and return promptly
to the Trustees in the enclosed
envelope.
---------------------------------
Signature
Dated _____________________, 1996
<PAGE>
APPENDIX II - Amended and Restated Omnibus Stock Incentive Plan
RICHFOOD HOLDINGS, INC.
OMNIBUS STOCK INCENTIVE PLAN
Amended and Restated
Effective June 13, 1996
<PAGE>
INTRODUCTION
The Richfood Holdings, Inc. Omnibus Stock Incentive Plan (the Plan)
was adopted by the Board of Directors of Richfood Holdings, Inc. on March 7,
1991, and was approved by shareholders at the 1991 annual meeting. The Plan
authorized the grant of Options, SARs and Stock Awards.
The Plan was amended and restated effective November 4, 1993. The
amendments adopted at that time (i) clarified the definition of Common Stock,
(ii) revised the manner in which the option price and withholding tax
obligations may be settled and (iii) clarified that immediately vested and
transferable Stock Awards may be granted under the Plan.
The Plan was further amended and restated effective June 13, 1996,
subject to the approval of shareholders. The amendments (i) increased the number
of shares that may be issued under the Plan, (ii) included provisions that will
permit the award of "performance based compensation" under Section 162(m) of the
Internal Revenue Code of 1986, as amended and (iii) clarified the provisions
regarding the grant of Performance Shares under the Plan.
The Plan, as amended and restated herein, is effective June 13,
1996, subject to the approval of the shareholders at the 1996 annual meeting.
The terms of the Plan stated herein will govern awards granted on and after June
6, 1996. Awards granted under the Plan before that date will be governed by the
<PAGE>
terms of the Plan in effect on the date of such awards and the terms of the
applicable Agreements.
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<PAGE>
ARTICLE I
DEFINITIONS
1.01. Affiliate means any "subsidiary or "parent" corporation (within the
meaning of Section 424 of the Code) of the Company.
1.02. Agreement means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the terms
and conditions of an award of Performance Shares, or an Option, SAR or Stock
Award granted to such Participant.
1.03. Board means the Board of Directors of the Company.
1.04. Committee means the Executive Compensation Committee of the Board.
1.05. Common Stock means the common stock, without par value, of the Com-
pany.
1.06. Company means Richfood Holdings, Inc.
1.07. Corresponding SAR means an SAR that is granted in relation to a
particular Option and that can be exercised only upon the surrender to the
Company, unexercised, of that portion of the Option to which the SAR relates.
1.08. Fair Market Value means, on any given date, the last sales price of
a share of Common Stock as reported on the NASDAQ over-the-counter national
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<PAGE>
reporting system of the National Association of Securities Dealers as reported
by the National Quotation Bureau, Inc. on such date. The preceding sentence to
the contrary notwithstanding, if the Common Stock is listed upon any established
stock exchange, the Fair Market Value on any given day shall be the closing
price of the Common Stock on such exchange. If the Common Stock was not traded
on the NASDAQ over-the-counter national market or on an established stock
exchange on such day, then the Fair Market Value is determined with reference to
the next preceding day that the Common Stock was so traded.
1.09. Initial Value means, with respect to an SAR, the Fair Market Value of one
share of Common Stock on the date of grant, as set forth in the Agreement.
1.10. Option means a stock option that entitles the holder to purchase from the
Company a stated number of shares of Common Stock at the price set forth in an
Agreement.
1.11. Participant means an employee of the Company or an Affiliate, including an
employee who is a member of the Board, who satisfies the requirements of Article
IV and is selected by the Committee to receive an award of Performance Shares,
an Option, a SAR, or a Stock Award or a combination thereof.
-4-
<PAGE>
1.12. Performance Shares means an award which, in accordance with and subject to
an Agreement, will entitle the Participant to receive a Stock Award, a payment
of cash, or a combination thereof.
1.13. Plan means the Richfood Holdings, Inc. Omnibus Stock Incentive Plan.
1.14. Restricted Stock means shares of Common Stock that are nontransferable or
subject to a substantial risk of forfeiture or both and that the Committee may
grant to a Participant pursuant to a Stock Award. Shares of Common Stock shall
cease to be Restricted Stock when, in accordance with the terms of the
applicable Agreement, they become transferable and free of a substantial risk of
forfeiture.
1.15. SAR means a stock appreciation right that entitles the holder to receive,
with respect to each share of Common Stock encompassed by the exercise of such
SAR, the amount determined by the Committee and specified in an Agreement. In
the absence of such a determination, the holder shall be entitled to receive,
with respect to each share of Common Stock encompassed by the exercise of such
SAR, the excess of the Fair Market Value on the date of exercise over the
Initial Value. References to "SARs" include both Corresponding SARs and SARs
granted independently of Options, unless the context requires otherwise.
-5-
<PAGE>
1.16. Stock Award means Common Stock awarded to a Participant under Article X
(including an award of Restricted Stock) or in full or partial settlement of an
award of Performance Shares.
-6-
<PAGE>
ARTICLE II
PURPOSES
The Plan is intended to assist the Company and Affiliates in recruiting
and retaining employees with ability and initiative by enabling employees to
participate in its future success and to associate their interests with those of
the Company and its shareholders. The Plan authorizes the award of Performance
Shares, the grant of Stock Awards, SARs, and the grant of both Options
qualifying under Section 422 of the Code ("incentive stock options") and Options
not so qualifying. No Option that is intended to be an incentive stock option
shall be invalid for failure to qualify as an incentive stock option. The
proceeds received by the Company from the sale of Common Stock pursuant to this
Plan shall be used for general corporate purposes.
-7-
<PAGE>
ARTICLE III
ADMINISTRATION
Except as provided in this Article III, the Plan shall be administered
by the Committee. The Committee shall have authority to award Performance Shares
and to grant Options, SARs and Stock Awards upon such terms (not inconsistent
with the provisions of this Plan) as the Committee may consider appropriate.
Such terms may include conditions (in addition to those contained in this Plan)
on the exercisability of all or any part of an Option or SAR or on the
transferability or forfeitability of Performance Shares or a Stock Award.
Notwithstanding any such conditions, the Committee may, in its discretion,
accelerate the time at which any Option or SAR may be exercised, the time at
which an award of Performance Shares may be earned or the time at which
Restricted Stock may become transferable or nonforfeitable. In addition, the
Committee shall have complete authority to interpret all provisions of this
Plan; to prescribe the form of Agreements; to adopt, amend, and rescind rules
and regulations pertaining to the administration of the Plan; and to make all
other determinations necessary or advisable for the administration of this Plan.
The express grant in the Plan of any specific power to the Committee shall not
be construed as limiting any power or authority of the Committee. Any decision
made, or action taken,
-8-
<PAGE>
by the Committee or in connection with the administration of this Plan shall be
final and conclusive. No member of the Committee shall be liable for any act
done in good faith with respect to this Plan or any Agreement, Option, SAR,
Stock Award or an award of Performance Shares. All expenses of administering
this Plan shall be borne by the Company.
The Committee, in its discretion, may delegate to one or more officers
of the Company all or part of the Committee's authority and duties with respect
to grants and awards to individuals who are not subject to the reporting and
other provisions of Section 16 of the Securities Exchange Act of 1934, as in
effect from time to time. In the event of such delegation, and as to matters
encompassed by the delegation, references in the Plan to the Committee shall be
interpreted as a reference to the Committee's delegate or delegates. The
Committee may revoke or amend the terms of a delegation at any time but such
action shall not invalidate any prior actions of the Committee's delegate or
delegates that were consistent with the terms of the Plan.
-9-
<PAGE>
ARTICLE IV
ELIGIBILITY
4.01. General. Any employee of the Company or an Affiliate (including a
corporation that becomes an Affiliate after the adoption of this Plan) is
eligible to participate in this Plan if the Committee, in its sole discretion,
determines that such person has contributed significantly or can be expected to
contribute significantly to the profits or growth of the Company or an
Affiliate. Directors of the Company who are employees of the Company or an
Affiliate may be selected to participate in this Plan. A person who is a member
of the Committee may not be awarded Performance Shares or granted Options, SARs,
or Stock Awards under this Plan.
4.02. Grants. The Committee will designate individuals to whom Performance
Shares are to be awarded and to whom Options, SARs and Stock Awards are to be
granted and will specify the number of shares of Common Stock subject to each
award or grant. An Option may be granted with or without a related SAR. An SAR
may be granted with or without a related Option. Each award of Performance
Shares and all Options, SARs, and Stock Awards granted under this Plan shall be
evidenced by Agreements which shall be subject to applicable provisions of this
Plan and to such other provisions as the Committee may adopt. No Par-
-10-
<PAGE>
ticipant may be granted incentive stock options or related SARs (under all
incentive stock option plans of the Company and its Affiliates) which are first
exercisable in any calendar year for stock having an aggregate Fair Market Value
(determined as of the date an Option is granted) exceeding $100,000. The
preceding annual limitation shall not apply with respect to Options that are not
incentive stock options.
-11-
<PAGE>
ARTICLE V
STOCK SUBJECT TO PLAN
Upon the award of shares of Common Stock pursuant to a Stock Award, the
Company may issue authorized but unissued Common Stock. Upon the exercise of any
Option or SAR, the Company may deliver to the Participant (or the Participant's
broker if the Participant so directs) authorized but unissued Common Stock. The
maximum aggregate number of shares of Common Stock that may be issued under this
Plan with respect to Stock Awards, Options, SARs and Performance Shares granted
on or after June 13, 1996, is 1,500,000 shares, subject to adjustment as
provided in Article XII. If an Option or SAR is terminated, in whole or in part,
for any reason other than its exercise, the number of shares of Common Stock
allocated to the Option or SAR or portion thereof may be reallocated to other
Options, SARs, Stock Awards and awards of Performance Shares to be granted under
this Plan. If an award of Performance Shares is forfeited, in whole or in part,
without the issuance of a Stock Award, the number of shares of Common Stock
allocated to the award of Performance Shares or a portion thereof may be
reallocated to other Options, SARs, Stock Awards and Performance Shares to be
granted under this Plan.
-12-
<PAGE>
ARTICLE VI
AWARDS OF OPTIONS AND SARS
In accordance with the provisions of Article IV, the Administrator will
designate each individual to whom an Option or SAR is to be granted and will
specify the number of shares of Common Stock covered by such awards.
Notwithstanding the preceding sentence, no individual may, in any calendar year,
be granted (i) Options covering more than 75,000 shares of Common Stock, (ii)
Corresponding SARs covering more than 75,000 shares of Common Stock or (iii)
SARs granted independently of Options covering more than 25,000 shares of Common
Stock. For purposes of this Article VI, an Option and Corresponding SAR shall be
treated as a single award.
-13-
<PAGE>
ARTICLE VII
OPTION PRICE
The price per share for Common Stock purchased on the exercise of an
Option shall be determined by the Committee on the date of grant; provided,
however, that the price per share for Common Stock purchased on the exercise of
any Option shall not be less than fifty percent of the Fair Market Value on the
date the Option is granted and provided further that the price per share for
Common Stock purchased on the exercise of any Option that is an incentive stock
option shall not be less than the Fair Market Value on the date the Option is
granted.
-14-
<PAGE>
ARTICLE VIII
EXERCISE OF OPTIONS AND SARS
8.01. Maximum Option or SAR Period. The maximum period in which an Option or SAR
may be exercised shall be determined by the Committee on the date of grant,
except that no Option or SAR shall be exercisable after the expiration of ten
years from the date the Option or SAR was granted. The terms of any Option or
SAR may provide that it is exercisable for a period less than such maximum
period.
8.02. Nontransferability. Any Option or SAR granted under this Plan shall be
nontransferable except by will or by the laws of descent and distribution. In
the event of any such transfer, the Option and any Corresponding SAR that
relates to such Option must be transferred to the same person(s). During the
lifetime of the Participant to whom the Option or SAR is granted, the Option or
SAR may be exercised only by the Participant. No right or interest of a
Participant in any Option or SAR shall be liable for, or subject to, any lien,
obligation, or liability of such Participant.
8.03. Employee Status. For purposes of determining the applicability of Section
422 of the Code (relating to incentive stock options), or in the event that the
terms of any Option or SAR provide that it may be exercised only during
-15-
<PAGE>
employment or within a specified period of time after termination of employment,
the Committee may decide to what extent leaves of absence for governmental or
military service, illness, temporary disability, or other reasons shall not be
deemed interruptions of continuous employment. 8.04. Performance Objectives. The
Committee may prescribe that an Option or SAR is exercisable only to the extent
that certain performance objectives are attained. Such performance objectives
may be based on the Company's, an Affiliate's or an operating unit's return on
equity, earnings per share, total earnings, earnings growth, total sales, sales
growth, return on capital, return on assets, or Fair Market Value. If the
Committee, on the date of the award, prescribes that an Option or SAR shall
become exercisable only upon the attainment of performance objectives stated
with respect to one or more of the foregoing criteria, the Option or SAR shall
become exercisable only to the extent the Committee certifies that such
objectives have been achieved.
-16-
<PAGE>
ARTICLE IV
METHOD OF EXERCISE
9.01. Exercise. Subject to the provisions of Articles VIII and XIII, an Option
or SAR may be exercised in whole at any time or in part from time to time at
such times and in compliance with such requirements as the Committee shall
determine; provided, however, that a Corresponding SAR that is related to an
incentive stock option may be exercised only to the extent that the related
Option is exercisable and when the Fair Market Value exceeds the option price of
the related Option. An Option or SAR granted under this Plan may be exercised
with respect to any number of whole shares less than the full number for which
the Option or SAR could be exercised. A partial exercise of an Option or SAR
shall not affect the right to exercise the Option or SAR from time to time in
accordance with this Plan and the applicable Agreement with respect to remaining
shares subject to the Option or related to the SAR. The exercise of either an
Option or Corresponding SAR shall result in the termination of the other to the
extent of the number of shares with respect to which the Option or Corresponding
SAR is exercised.
9.02. Payment. Unless otherwise provided by the Agreement, payment of the Option
price shall be made in cash or a cash equivalent acceptable to the
-17-
<PAGE>
Committee. Payment of all or part of the Option price also may be made by
surrendering shares of Common Stock to the Company or by withholding or reducing
the number of shares of Common Stock otherwise issuable to the Participant upon
the exercise of an Option. If Common Stock is used to pay all or part of the
Option price, the sum of the cash and cash equivalent and the Fair Market Value
(determined as of the day preceding the date of exercise) of the shares
surrendered, withheld or reduced must not be less than the Option price of the
shares for which the Option is being exercised.
9.03. Installment Payment. If the Agreement provides, and if the Participant is
employed by the Company or an Affiliate on the date the Option is exercised,
payment of all or part of the Option price may be made in installments. In that
event, the Participant shall pay not less than ten percent (10%) of the Option
price of the shares acquired upon the exercise of an Option. If the Agreement
provides, payment of such portion of the Option price may be made in cash, a
cash equivalent or by surrendering shares of Common Stock to the Company or by
withholding or reducing the number of shares of Common Stock otherwise issuable
to the Participant upon the exercise of the Option. If Common Stock is used to
pay part of the Option price, the amount deemed to be paid with Common Stock
shall be the Fair Market Value (determined as of the day
-18-
<PAGE>
preceding the date of exercise) of the shares surrendered, withheld or reduced.
In the event that payment of all or part of the Option price is made in
installments, the Company shall lend the Participant an amount equal to not more
than ninety percent (90%) of the Option price of the shares acquired by the
exercise of the Option. This amount shall be evidenced by the Participant's
promissory note and shall be payable in not more than five equal annual
installments, unless the amount of the loan exceeds the maximum loan value for
the shares purchased, which value shall be established from time to time by
regulations of the Board of Governors of the Federal Reserve System. In that
event, the note shall be payable in equal quarterly installments over a period
of time not to exceed five years. The Committee, however, may vary such terms
and make such other provisions concerning the unpaid balance of such purchase
price in the case of hardship, subsequent termination of employment, absence on
military or government service, or subsequent death of the Participant as in its
discretion are necessary or advisable in order to protect the Company, promote
the purposes of the Plan and comply with regulations of the Board of Governors
of the Federal Reserve System relating to securities credit transactions.
The Participant shall pay interest on the unpaid balance at the minimum
rate necessary to avoid imputed interest or original issue discount under the
Code.
-19-
<PAGE>
All shares acquired with cash borrowed from the Company shall be pledged to the
Company as security for the repayment thereof. In the discretion of the
Committee, shares of stock may be released from such pledge proportionately as
payments on the note (together with interest) are made, provided the release of
such shares complies with the regulations of the Federal Reserve System relating
to securities credit transactions then applicable. While shares are so pledged,
and so long as there has been no default in the installment payments, such
shares shall remain registered in the name of the Participant, and he shall have
the right to vote such shares and to receive all dividends thereon.
9.04. Determination of Payment of Cash and/or Common Stock Upon Exercise of SAR.
At the Committee's discretion, the amount payable as a result of the exercise of
an SAR may be settled in cash, Common Stock, or a combination of cash and Common
Stock. No fractional shares shall be deliverable upon the exercise of an SAR but
a cash payment will be made in lieu thereof.
9.05. Shareholder Rights. No Participant shall have any rights as a stockholder
with respect to shares subject to an Option or SAR until the date of exercise of
such Option or SAR.
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ARTICLE X
STOCK AWARDS
10.01. Awards. In accordance with the provisions of Article IV, the Committee
will designate each individual to whom a Stock Award is to be made and will
specify the number of shares of Common Stock covered by such award; provided,
however, that no Participant may receive Stock Awards in any calendar year for
more than 25,000 shares of Common Stock. The preceding sentence shall not limit
the issuance of Stock Awards in settlement of Performance Share awards.
10.02. Vesting. The Committee, on the date of the award, may, but shall not be
required to, prescribe that a Participant's rights in the Stock Award shall be
forfeitable or otherwise restricted for a period of time set forth in the
Agreement. By way of example and not of limitation, the restrictions may
postpone transferability of the shares until the attainment of performance
objectives prescribed by the Committee or may provide that the shares will be
forfeited if the Participant separates from the service of the Company and its
Affiliates before the expiration of a stated term.
10.03. Performance Objectives. In accordance with Section 10.02, the Committee
may prescribe that Stock Awards will become vested or transferable
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or both based on objectives stated with respect to the Company's, an Affiliate's
or an operating unit's return on equity, earnings per share, total earnings,
earnings growth, total sales, sales growth, return on capital, return on assets,
or Fair Market Value. If the Committee, on the date of the award, prescribes
that a Stock Award shall become nonforfeitable and transferrable only upon the
attainment of performance objectives stated with respect to one or more of the
foregoing criteria, the shares subject to such Stock Award shall become
nonforfeitable and transferrable only to the extent the Committee certifies that
such objectives have been achieved.
10.04. Shareholder Rights. In accordance with the terms of the Agreement, a
Participant will have all rights of a shareholder with respect to the Common
Stock covered by a Stock Award, including the right to receive dividends and
vote the shares; provided, however, that (i) a Participant may not sell,
transfer, pledge, exchange, hypothecate, or otherwise dispose of Restricted
Stock, (ii) the Company shall retain custody of the certificates evidencing
shares of Restricted Stock, and (iii) the Participant will deliver to the
Company a stock power, endorsed in blank, with respect to each award of
Restricted Stock. The limitations set forth in the preceding sentence shall not
apply after the Restricted Stock is, in accordance with the terms of the
applicable Agreement, transferable and no longer forfeitable.
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ARTICLE XI
AWARD OF PERFORMANCE SHARES
11.01. Award. In accordance with the provisions of Article IV, the Committee
will designate individuals to whom an award of Performance Shares is to be
granted and will specify the number of shares of Common Stock covered by such
award; provided, however, that no Participant may receive Performance Share
awards in any calendar year for more than 25,000 shares of Common Stock.
11.02. Earning the Award. The Committee, on the date of the grant of an award,
may prescribe that the Performance Shares, or a portion thereof, will be earned
according to the terms of the applicable Agreement. By way of example and not of
limitation the Agreement may specify that Performance Shares shall be earned
only upon the Participant's completion of a specified period of employment with
the Company or an Affiliate or upon the attainment of stated performance
objectives or goals. Such performance objectives or goals may be based on the
Company's an Affiliate's or an operating unit's return on equity, earnings per
share, total earnings, earnings growth, total sales, sales growth, return on
capital, return on assets, or Fair Market Value. If the Committee, on the date
of the award, prescribes that Performance Shares shall be earned only upon the
attainment of performance objectives stated with respect to one or more
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of the foregoing criteria, such Performance Shares shall be earned only to the
extent the Committee certifies that such objectives have been achieved.
11.03. Settlement. In the Committee's discretion, the amount payable when an
award of Performance Shares is earned may be settled in cash, by the grant of a
Stock Award or a combination of cash and a Stock Award. A fractional share shall
not be deliverable when a Performance Shares is settled, but a cash payment will
be made in lieu thereof.
11.04. Shareholder Rights. No Participant shall, as a result of receiving an
award of Performance Shares, have any rights as a shareholder until and to the
extent that the award of Performance Shares is earned and a Stock Award is made.
A Participant may not sell, transfer, pledge, exchange, hypothecate, or
otherwise dispose of an award of Performance Shares or the right to receive
Common Stock thereunder other than by will or the laws of descent and
distribution. After and to the extent that an award of Performance Shares is
settled with a Stock Award, a Participant will have all the rights of a
shareholder as described in Plan section 11.03.
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ARTICLE XII
ADJUSTMENT UPON CHANGE IN COMMON STOCK
The maximum number of shares which may be issued pursuant to Options,
SARs and Stock Awards under this Plan and the individual limits on the award of
Options, SARs, Stock Awards and Performance Shares in a calendar year shall be
proportionately adjusted, and the terms of outstanding awards of Performance
Shares, Options, SARs and Stock Awards shall be adjusted, as the Committee shall
determine to be equitably required in the event that the Company (a) effects one
or more stock dividends, stock split-ups, subdivisions or consolidations of
shares or (b) engages in a transaction to which Section 424 of the Code applies.
Any determination made under this Article XI by the Committee shall be final and
conclusive.
The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
maximum number of shares which may be issued pursuant to Options, SARs and Stock
Awards under
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this Plan, the individual limits on the award of Options, SARs, Stock Awards and
Performance Shares in a calendar year or outstanding awards of Performance
Shares, Options, SARs or Stock Awards.
The Committee may award Performance Shares or grant Options, SARs and
Stock Awards in substitution for performance shares, stock awards, stock
options, stock appreciation rights, or similar awards held by an individual who
becomes an employee of the Company or an Affiliate in connection with a
transaction described in the first paragraph of this Article XII.
Notwithstanding any provision of the Plan (other than the limitation of Article
V), the terms of such substituted award of Performance Shares, or grant of an
Option, SAR, or Stock Award shall be as the Committee, in its discretion,
determines is appropriate.
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ARTICLE XIII
COMPLIANCE WITH LAW AND
APPROVAL OF REGULATORY BODIES
No Option or SAR shall be exercisable, no Common Stock shall be issued,
no certificates for shares of Common Stock shall be delivered, and no payment
shall be made under this Plan except in compliance with all applicable federal
and state laws and regulations (including, without limitation, withholding tax
requirements), any listing agreement to which the Company is a party, and the
rules of all domestic stock exchanges on which the Company's shares may be
listed. The Company shall have the right to rely on an opinion of its counsel as
to such compliance. Any share certificate issued to evidence Common Stock for
which a Stock Award is granted or for which an Option or SAR is exercised may
bear such legends and statements as the Committee may deem advisable to assure
compliance with federal and state laws and regulations. No Option or SAR shall
be exercisable, no Stock Award shall be granted, no Common Stock shall be
issued, no certificate for shares shall be delivered, and no payment shall be
made under this Plan until the Company has obtained such consent or approval as
the Committee may deem advisable from regulatory bodies having jurisdiction over
such matters.
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ARTICLE XIV
GENERAL PROVISIONS
14.01. Effect on Employment. Neither the adoption of this Plan, its operation,
nor any documents describing or referring to this Plan (or any part thereof)
shall confer upon any individual any right to continue in the employ or service
of the Company or an Affiliate or in any way affect any right and power of the
Company or an Affiliate to terminate the employment or service of any individual
at any time with or without assigning a reason therefor.
14.02. Unfunded Plan. The Plan, insofar as it provides for awards or grants,
shall be unfunded, and the Company shall not be required to segregate any assets
that may at any time be represented by awards or grants under this Plan. Any
liability of the Company to any person with respect to any award or grant under
this Plan shall be based solely upon any contractual obligations that may be
created pursuant to this Plan. No such obligation of the Company shall be deemed
to be secured by any pledge of, or other encumbrance on, any property of the
Company.
14.03. Disposition of Stock. A Participant shall notify the Committee of any
sale or other disposition of Common Stock acquired pursuant to an Option that
was an incentive stock option if such sale or disposition occurs (i) within two
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years of the grant of an Option or (ii) within one year of the issuance of the
Common Stock to the Participant. Such notice shall be in writing and directed to
the Secretary of the Company.
14.04. Withholding Taxes. Each Participant shall be responsible for satisfying
any income and employment tax withholding obligations attributable to
participation in the Plan. Unless otherwise provided by the Agreement, any such
withholding tax obligations may be satisfied in cash (including from any cash
payable in settlement of an award of Performance Shares or an SAR) or a cash
equivalent acceptable to the Committee. Any withholding tax obligations may also
be satisfied by surrendering shares of Common Stock to the Company, by
withholding or reducing the number of shares of Common Stock otherwise issuable
to the Participant upon the exercise of an Option or SAR, the settlement of an
award of Performance Shares or the grant or vesting of a Stock Award, or by any
other method as may be approved by the Committee. If shares of Common Stock are
used to pay all or part of such withholding tax obligation, the Fair Market
Value of the shares surrendered, withheld or reduced shall be determined as of
the day preceding the date the Option or SAR is exercised, the Restricted Stock
vests or the Performance Shares are earned, as applicable.
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14.05. Rules of Construction. Headings are given to the articles and sections of
this Plan solely as a convenience to facilitate reference. The reference to any
statute, regulation, or other provision of law shall be construed to refer to
any amendment to or successor of such provision of law.
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ARTICLE XV
AMENDMENT
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until shareholder approval is
obtained if (i) the amendment materially increases the aggregate number of
shares of Common Stock that may be issued under the Plan, (ii) the amendment
materially changes the class of individuals eligible to become Participants, or
(iii) the amendment materially increases the benefits that may be provided under
the Plan. No amendment shall, without a Participant's consent, adversely affect
any rights of such Participant under any outstanding award of Performance
Shares, or any Option, SAR or Stock Award outstanding at the time such amendment
is made.
ARTICLE XIV
DURATION OF PLAN
No Performance Shares may be awarded and no Option, SAR or Stock Award
may be granted under this Plan after March 6, 2006. Awards of Performance Shares
and Options, SARs and Stock Awards granted on or before that date shall remain
valid in accordance with their terms.
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