[LOGO]
1550 South Redwood Road, Salt Lake City, Utah 84104
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held April 26, 1994
To the Stockholders of
SMITH'S FOOD & DRUG CENTERS, INC.
The Annual Meeting of the Stockholders of Smith's Food & Drug Centers,
Inc. (the "Corporation"), will be held at the Corporation's principal
executive offices at 1550 South Redwood Road, Salt Lake City, Utah 84104,
on Tuesday, April 26, 1994 at 5:00 p.m. MST for the following purposes:
1. To elect a Board of Directors to serve for the ensuing year;
2. To ratify and approve the Corporation's bonus program with respect to
the Corporation's executive officers;
3. To ratify the selection of Ernst & Young as the Corporation's
independent auditors for 1994; and
4. To transact such other business as may properly come before the meeting
and any postponements and adjournments thereof.
The close of business on February 28, 1994, has been fixed by the Board
of Directors as the record date (the "Record Date") for the determination
of the stockholders entitled to notice of, and to vote at, the Annual
Meeting.
We hope all stockholders who can do so will attend the Annual Meeting in
person. Whether or not you plan to attend, we urge you to complete and
sign the enclosed proxy card and return it in the enclosed postage-prepaid
envelope. Returning your proxy will not deprive you of your right to
attend the meeting and vote your shares in person.
If you own any combination of Series I Preferred Shares, Class A Common
Stock, or Class B Common Stock, please sign and return all proxy cards
provided to you for each type of stock owned by you as of the Record Date.
By Order of the Board of Directors,
/s/ Michael C. Frei
Michael C. Frei
Secretary
Salt Lake City, Utah
March 25, 1994
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [XX]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[XX] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Smith's Food & Drug Centers, Inc.
(Name of Registrant as Specified In Its Charter)
Smith's Food & Drug Centers, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[XX] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
___________________________________________________________________________
___________________________________________________________________________
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:(1)
___________________________________________________________________________
___________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
___________________________________________________________________________
___________________________________________________________________________
(1)Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] 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) Filing Date
<PAGE>
[LOGO]
1550 South Redwood Road, Salt Lake City, Utah 84104
PROXY STATEMENT
This Proxy Statement is furnished by Smith's Food & Drug Centers, Inc.,
a Delaware corporation (hereinafter called the "Corporation"), in
connection with the solicitation by the Board of Directors of the
Corporation of the enclosed proxies for use at the Annual Meeting of
Stockholders to be held at the Corporation's principal executive offices at
1550 South Redwood Road, Salt Lake City, Utah 84104, on Tuesday, April 26,
1994 at 5:00 p.m. MST, and at any postponements or adjournments thereof
(the "Annual Meeting").
Stockholders owning any combination of Series I Preferred Stock, Class A
Common Stock, or Class B Common Stock of the Corporation will receive
separate proxy cards for each type of stock owned and are requested to sign
and date all of the enclosed proxy cards and return them in the envelope
provided.
Any stockholder may revoke a proxy at any time before its use by
delivering to the Corporation a written notice of revocation or a duly
executed proxy bearing a later date, or upon request if the stockholder
attends the meeting and chooses to vote in person. If a proxy is properly
signed and not revoked, the shares it represents will be voted in
accordance with the instructions of the stockholder. If no specific
instructions are given, the shares will be voted FOR the election as
directors of the nominees described below, FOR the approval of the
Corporation's bonus program, and FOR ratification of the selection of
Ernst & Young as the Corporation's independent auditors for fiscal 1994.
This proxy statement and the proxy cards were first mailed to
stockholders on or about March 31, 1994. The cost of soliciting proxies
will be borne by the Corporation. Regular employees and directors of the
Corporation may solicit proxies in person, by telephone, or by mail. No
additional compensation will be given to employees or directors for such
solicitation. The Corporation will request brokers and nominees who hold
stock in their names to furnish proxy material to beneficial owners of the
shares and will reimburse such brokers and nominees for their reasonable
expenses incurred in forwarding solicitation material to such beneficial
owners.
VOTING SECURITIES; RECORD DATE
Stockholders will be entitled to one vote for each share of Class B
Common Stock and ten votes for each share of Series I Preferred Stock or
Class A Common Stock held of record at the close of business on February
28, 1994 (the "Record Date"). All classes of stock will vote together as a
single class with respect to the election of directors, the ratification
and approval of the Corporation's bonus program, the ratification and
approval of the selection of Ernst & Young as the Corporation's
independent auditors and any other proposal for stockholder action as may
properly come before the Annual Meeting. An automated system administered
by the Corporation's transfer agent will tabulate votes cast by proxy at
the Annual Meeting, and an employee of the Corporation will tabulate votes
cast in person at the Annual Meeting. Abstentions and broker non-votes are
each included in the determination of the number of shares present at the
Meeting and whether a quorum is present, and each is tabulated separately.
Abstentions and broker non-votes are not counted in determining whether a
nominee is elected. In determining whether a proposal has been approved,
abstentions are counted as votes against the proposal and broker non-votes
are not counted either for or against the proposal.
As of the Record Date, the Corporation had issued and outstanding
17,357,636 shares of Class B Common Stock, 12,493,665 shares of Class A
Common Stock, and 18,656,697 shares of Series I Preferred Stock.
ELECTION OF DIRECTORS
Thirteen persons have been nominated by the Board of Directors for
election as directors at the Annual Meeting to serve until the next Annual
Meeting of Stockholders and until their respective successors are elected
or appointed. The thirteen nominees receiving the highest number of votes
at the Annual Meeting will be elected as directors. It is the intention of
the proxy holders to vote FOR the election of ALL of the nominees listed
below in the absence of contrary instructions on the proxy cards. If the
candidacy of any one or more of such nominees should, for any reason, be
withdrawn, the proxy holders will vote in favor of the remainder of those
nominated and for such substituted nominees (if any) as shall be designated
by the proxy holders, or the number of directors to be elected at this time
may be reduced by the Board of Directors. The Board of Directors has no
reason to believe that any of the persons named will be unable or unwilling
to serve as a nominee or as a director if elected.
The following information is furnished regarding the nominees:
DeLonne Anderson, age 64, has been a director of the Corporation since
1965. He was previously the Secretary and Marketing Director,
Intermountain Region, of the Corporation before retiring in 1985.
Robert D. Bolinder, age 62, has been a director of the Corporation since
1985. He has served as Executive Vice President, Corporate Planning and
Development of the Corporation since 1993. He served as Executive Vice
President and Chief Financial Officer of the Corporation from 1988 to 1993,
after serving four years as a supermarket industry management consultant.
He is also a director of Hannaford Bros. Company, Inc., a regional
supermarket chain, and Idaho Power Company, a public utility company.
Prior to 1984, Mr. Bolinder was Vice Chairman and a director of
Albertson's, Inc. for many years.
Rodney H. Brady, age 61, has been a director of the Corporation since
1985. Since 1985, he has been President, Chief Executive officer and a
director of Bonneville International, a broadcasting company headquartered
in Salt Lake City, Utah. Prior to 1985, Mr. Brady served as President of
Weber State University. Mr. Brady is also a director of First Security
Corporation, a bank holding company; Flying J., Inc., an integrated oil
company; Deseret Mutual Benefit Association, an employee benefits insurance
company; and Bergen Brunswig Corporation, a wholesale drug company.
Alan R. Hoefer, age 59, has been a director of the Corporation since
1985. Since 1988, he has been Managing Partner of Alan Hoefer & Company, a
private investment banking partnership located in San Francisco,
California. He currently is serving as a director of Barry's Jewelers,
Inc., a jewelry retailer. He also served as President of Hoefer Capital
Management Inc., a registered investment advisor, from September, 1990
through September, 1993. Prior to 1988, Mr. Hoefer was President of Hoefer
& Arnett, Incorporated, an investment banking firm.
Allen P. Martindale, age 62, has been a director of the Corporation
since 1970. Mr. Martindale is a director of JP Realty, Inc., a publicly
held real estate investment trust. Mr. Martindale was Chairman of the
Board of Directors and Chief Executive Officer of the Corporation between
1984 and 1988.
Duane Peters, age 73, has been a director of the Corporation since 1985.
He is President of Duane Peters, Inc., a consulting firm located in Rancho
Santa Fe, California. Previously, Mr. Peters was Executive Vice President
and General Manager of H.E. Butt Grocery Company and a director of
Hannaford Bros. Co., a regional supermarket chain.
Ray V. Rose, age 70, has been a director of the Corporation since 1984.
He is retired, and was President of King Sooper Supermarkets of Denver,
Colorado, until 1979. Mr. Rose is also a director of Hormel Company, a
meat processing company.
Fred L. Smith, age 47, has been a director of the Corporation since
1968. Since 1988, he has been President of Fred Smith's Honda Automobiles
of Palm Springs, an auto dealership, prior to which time he was a private
investor. Since 1989, he has also been President of Fred Smith's
Jaguar/Rolls Royce of Rancho Mirage, an auto dealership.
Jeffrey P. Smith, age 44, has been a director of the Corporation since
1971. He has been Chairman and Chief Executive Officer of the Corporation
since 1988. He served as Chief Operating Officer and President of the
Corporation from 1984 to 1988.
Richard D. Smith, age 39, has been a director of the Corporation since
1975. He has been President and Chief Operating Officer of the Corporation
since 1988, prior to which time he served as Executive Vice President of
Operations and Assistant Chief Operating Officer.
Sean D. Smith, age 23, has served as a director of the Corporation since
1992. Since 1992, he also has served as a District Manager of the
Corporation's Intermountain Region, renamed Region I during 1993, after
serving as a Store Manager since 1991 and holding various other positions
with the Corporation in retail operations since 1983 while attending
school, including the University of Utah.
Douglas John Tigert, age 55, has been a director of the Corporation
since 1986. He is the Charles Clark Reynolds Professor of Marketing of
Babson College, Boston, Massachusetts. He is currently serving as director
of the Hudson Bay Company, a retail department store chain. From 1970
through 1993 he was President of Psychographics International of Canada,
Ltd., a marketing research firm. Prior to 1986, he was Dean of the School
of Business at the University of Toronto.
Kenneth A. White, age 51, has been a director of the Corporation since
1986. Since 1992, he has served as Senior Vice President, Regional Manager
of the Corporation's California Region, renamed Region II during 1993. He
served as Vice President, Regional Manager of the Corporation's California
Region from 1991 to 1992. From 1980 to 1991, he served as Vice President,
Regional Manager of the Corporation's Intermountain Region.
Jeffrey P. Smith, Richard D. Smith and Fred L. Smith are brothers. Sean
D. Smith is the son of Jeffrey P. Smith.
BOARD OF DIRECTORS, COMMITTEE MEETINGS
AND COMPENSATION OF DIRECTORS
The Board of Directors held four meetings during fiscal 1993. All of
the directors attended 75% or more of the meetings of the Board and
Committees of which they are members. Directors who are not also employees
of the Corporation receive an annual retainer of $7,200 for their services
as directors. Additionally, directors who are not also employees of the
Corporation receive $2,500 for each Board of Directors meeting attended.
Directors who are members of committees of the Board of Directors receive
$1,000 for each committee meeting attended. In addition, certain directors
have been retained from time to time to provide consulting services to the
Corporation in their individual areas of expertise, including in the area
of long-range planning. During fiscal 1993, Messrs. Anderson, Martindale,
and Tigert received fees totaling $2,000 each in connection with such
services and Mssrs. Peters, Rose and Hoefer received fees totaling $5,000,
$3,000 and $6,000, respectively.
Messrs. Bolinder, Jeffrey P. Smith (Chair), Richard D. Smith and White
are members of the Executive Committee of the Board of Directors. Such
Committee only exercises the powers of the Board in the management of the
business and affairs of the Corporation between regularly scheduled
meetings of the Board of Directors, when necessary. The Executive Committee
did not meet during fiscal 1993. The Executive Committee serves as the
nominating committee for the Board of Directors and, although there are no
formal procedures for stockholders to recommend nominations, the Committee
will consider any recommendations from stockholders. Recommendations
should be sent to Michael C. Frei, Secretary, Smith's Food & Drug Centers,
Inc., 1550 South Redwood Road, Salt Lake City, Utah 84104.
Messrs. Brady, Hoefer and Martindale (Chair) are members of the Audit
Committee of the Board of Directors. Such Committee, which met three times
during fiscal 1993, reports to the Board of Directors with respect to
various auditing and accounting matters, the scope of audit procedures, and
the performance of the Corporation's independent auditors.
Messrs. Anderson (Chair), Peters and Rose are members of the
Compensation Committee of the Board of Directors. Such Committee, which
met once during fiscal 1993, administers the stock option and stock
purchase plans of the Corporation on behalf of the Board of Directors. The
Compensation Committee also determines compensation for executive officers
of the Corporation.
APPROVAL OF THE CORPORATION'S BONUS PROGRAM
FOR EXECUTIVE OFFICERS
The Corporation's stockholders are being asked to approve the material
terms of the Corporation's bonus program (the "Bonus Program") which
provides for the payment of cash bonuses to the Corporation's executive
officers based upon certain financial performance measures. Approval of
the proposal requires the affirmative vote of a majority of the shares of
Series I Preferred Stock, Class A Common Stock and Class B Common Stock
voting on the proposal, with all such shares voting together as a class and
with each share of Series I Preferred Stock and Class A Common Stock being
entitled to ten votes and each share of Class B Common Stock being entitled
to one vote. Approval of the Bonus Program is being sought for the purpose
of qualifying the Bonus Program under new provisions of the Federal
Internal Revenue Code which, in the absence of such approval, disallow
deductions for compensation paid to executives above certain limits. In
the event that the stockholders do not approve the Bonus Program, the
Corporation currently anticipates that it will continue to pay bonuses
generally in accordance with the terms of the Bonus Program as described
below, although the amount of such bonuses would likely be affected by the
ability of the Corporation to deduct compensation in excess of limits that
would be imposed under the federal tax laws.
The class of employees eligible for bonuses under the Bonus Program is
all executive officers (including the Chief Executive Officer). The
purpose of the Bonus Program is to provide a financial incentive to the
executive officers based upon the achievement of the Corporation's budgeted
pre-tax income. The annual amount budgeted for pre-tax income was approved
by the Board of Directors for the 1994 fiscal year of the Corporation
during its January 1994 meeting and for future fiscal years will be
approved by the Executive Committee of the Board of Directors prior to the
beginning of such fiscal year. At the beginning of the 1994 fiscal year,
the Compensation Committee established the maximum amount of bonus payable
for such year for each executive officer. In reviewing the amount, the
Compensation Committee considered a number of factors including each
officer's overall compensation package, bonus and other compensation
opportunities at competing companies and the officer's level of
responsibility. The Compensation Committee also established a formula for
payment of bonuses based on the extent of achievement of the Board-approved
budgets. Under the terms of the Bonus Program, the cash bonus to be paid
for fiscal 1994 to each officer equals the maximum bonus amount determined
for such officer multiplied by a percentage based on a comparison of actual
pre-tax income to budgeted pre-tax income, up to a maximum of 100 percent
of the maximum bonus amount in each case. However, the Compensation
Committee retains discretion under the Bonus Program to pay a bonus to any
executive officer that is smaller than the maximum amount determined under
the formula. Unless otherwise approved by the stockholders in the future,
the maximum bonus payable to any executive officer under the Bonus Program
for fiscal 1994 and for each future fiscal year of the Corporation will be
$1,000,000.
The following table sets forth the total maximum amounts of bonus
payable under the Bonus Program for fiscal 1994 to (i) the Corporation's
Chief Executive Officer and and its four other most highly compensated
executive officers, and (ii) all executive officers as a group. The full
amounts shown will be paid only if the overall corporate budgeted amount of
pre-tax income is met. The maximum bonus amount payable to such officers
under the Bonus Program in fiscal years after fiscal 1994 is not currently
determinable, but will in no event exceed the $1,000,000 maximum set forth
above unless further stockholder approval is obtained.
Plan Benefits
Maximum
Name Bonus Amount
Jeffrey P. Smith $ 516,000
Richard D. Smith 300,000
Kenneth A. White 323,200
Robert D. Bolinder 200,000
J. Craig Gilbert 323,200
All Executive Officers as a Group (10 persons) 2,079,400
The Board of Directors recommends a vote FOR approval and ratification
of the Bonus Program.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following tables set forth certain information concerning
compensation of the Corporation's Chief Executive Officer and its four
other most highly compensated executive officers (the "named executive
officers").
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
Name and Principal Position Year Salary($)<F1> Bonus($) Options/SARs(#)
<S> <C> <C> <C> <C>
Jeffrey P. Smith 1993 $683,606 $539,000 ---
Chairman of the Board of Directors 1992 669,300 689,920 ---
and Chief Executive Officer 1991 596,499 573,937 ---
Richard D. Smith 1993 546,895 300,000 ---
President and Chief 1992 535,440 549,120 ---
Operating Officer 1991 447,200 456,807 ---
Kenneth A. White 1993 127,817 440,000 ---
Senior Vice President and 1992 124,831 630,000 ---
Regional Manager, Region II 1991 117,797 630,000 40,000
Robert D. Bolinder 1993 529,072 --- 25,000
Executive Vice President, Corporate 1992 517,980 --- ---
Planning and Development 1991 461,740 --- ---
J. Craig Gilbert 1993 143,716 255,700 20,000
Senior Vice President and 1992 141,098 259,550 20,000
Regional Manager, Region I 1991 132,398 220,000 ---
<FN>
<F1> Fiscal 1992 includes 53 weeks compared to 52 weeks for fiscal 1993 and
1991.
</TABLE>
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
The following table sets forth information concerning the grant of stock
options to the named executive officers during fiscal 1993.
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------
Number of Percentage
Securities of Total Potential Realizable Value
Underlying Options/SARs Market at Assumed Annual Rates of
Options/SARs Granted to Exercise Price on Stock Price Appreciation for
Granted Employees in or Base Date of Expiration Option Term <F1>
Name (#)<F2> Fiscal Year Price Grant Date 0%($) 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert D. Bolinder 25,000 <F3> 4.0% $19.00 $35.00 01/04/98 $400,000 $588,568 $806,088
J. Craig Gilbert 20,000 <F4> 3.2% $19.00 $20.25 12/19/04 25,000 279,702 670,466
<FN>
<F1> The potential realizable value is determined based upon hypothetical
increases in the Common Stock price over the market price of the
Common Stock on the date of grant. The 5% and 10% assumed rates of
appreciation are suggested by the rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection
of the future Common Stock price. There can be no assurance that any
of the values reflected in the table will be achieved. Actual gains,
if any, on stock option exercises and Common Stock holdings are
dependent upon a number of factors, including the future performance
of the Common Stock, overall market conditions and the timing of
option exercises, if any.
<F2> Under the terms of the Company's Amended and Restated 1989 Stock
Option Plan (the "Option Plan"), the Board of Directors retains the
discretion, subject to certain limitations within the Option Plan, to
modify, extend, or renew outstanding options and to reprice
outstanding options. In the event of a change in control of the
Corporation, all options outstanding under the Option Plan will become
fully exercisable. For purposes of the Option Plan, a change occurs
if (i) a person acquires or is reasonably believed by the Board of
Directors to have acquired 51% or more of the combined voting power of
the Corporation's outstanding securities in a transaction not approved
by the Board of Directors serving immediately prior to such
transaction, (ii) a majority of the members of the Board of Directors
is replaced during any period of two consecutive years, or (iii) the
Corporation's stockholders approve a plan of liquidation in connection
with a transaction not approved by the Board of Directors serving
immediately prior to the date of the stockholders' meeting at which
such approval was given.
<F3> All such stock options vest on January 4, 1997.
<F4> All such stock options vest on December 19, 2003.
</TABLE>
FISCAL YEAR-END OPTION VALUE
The following table sets forth the number of shares covered by stock
options held by the named executive officers as of the end of fiscal 1993,
and the value of "in-the-money" stock options, which represents the
positive spread between the exercise price of a stock option and the market
price of the shares subject to such options, as of the end of fiscal 1993.
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs In-the-money Options
at Fiscal Year End at Fiscal Year End(2)
Name(1) Exercisable/Unexercisable Exercisable/Unexercisable
Kenneth A. White 0/70,000 0/$131,250
Robert D. Bolinder 30,000/25,000 $56,250/$46,875
J. Craig Gilbert 0/70,000 0/$131,250
(1) Except as set forth in the table, during fiscal 1993 no named
executive officer held any stock options.
(2) Calculated on the basis of the closing price per share for the
Corporation's Class B Common Stock on the New York Stock Exchange of
$20 7/8 on December 31, 1993, the last trading day in fiscal 1993.
PENSION PLAN AND OTHER RETIREMENT, DEATH AND DISABILITY ARRANGEMENTS
Pension Plan. The Corporation sponsors a retirement plan (the "Pension
Plan") for its nonunion employees, including executive officers, which is
funded entirely by the Corporation's contributions. An employee's monthly
benefit under the Pension Plan is determined by multiplying a fixed dollar
amount by the number of years of the employee's employment. The fixed
dollar amount, which has varied from year to year, is currently $30 per
month and is not subject to reduction for social security benefits. The
fixed dollar amount is adjusted from time to time on the basis of a number
of factors, including the other compensation and benefits offered to the
Corporation's employees generally, the Corporation's overall budget and
earnings and pension benefits offered by comparable employers. As of the
end of fiscal 1993, the estimated annual amounts payable following
retirement to Messrs. Jeffrey P. Smith, Richard D. Smith, White, Bolinder
and Gilbert under the Pension Plan were $11,604, $12,768, $8,669, $2,160
and $10,662, respectively.
Additional Retirement Benefits. The Corporation has entered into
agreements with nine of its executive officers, including each of the named
executive officers, which provide that if the officer serves in his present
position or a higher position with the Corporation through age 65, such
officer or his beneficiary will receive following such officer's retirement
or death fixed equal monthly payments over a ten-year period totaling
$100,000.
Supplemental Compensation Agreements. The Corporation has entered into
agreements with Mr. White and five other current executive officers which
provide for monthly cash payments following the officer's disability or
death, or upon reaching a date specified in the agreement (the "Payment
Date"). The agreements provide that if the employee becomes disabled while
employed by the Corporation and before the Payment Date, the employee is
entitled to receive fixed monthly payments for the duration of the
disability or for a period of twenty years, whichever period is shorter.
The agreements also provide that if the employee dies while employed by the
Corporation and before the Payment Date, his beneficiary is entitled to
receive fixed monthly payments for a period of twenty years. Unless the
employee dies prior to the Payment Date, he is entitled to receive monthly
payments for a period of twenty years beginning on the Payment Date. The
amount of these monthly payments is based on the employee's number of years
of employment from the date of the agreement through the Payment Date. If
the employee dies after the Payment Date, the employee's beneficiary is
entitled to receive any remaining payments. The payment of benefits under
the agreements is subject to forfeiture if the employee accepts employment
prior to the Payment Date with a company in the food or drug business
(either wholesale or retail) without the prior written consent of the
Corporation. In the event of a change in control of the Corporation,
defined as either a sale of substantially all of the assets of the
Corporation or the sale of 51% of the Corporation's outstanding capital
stock to an entity other than one owned and controlled by the Smith family,
the Corporation must purchase a fully paid insurance annuity for the
benefit of the employees that will fully vest the employees in their
benefits under the agreements. Mr. White and all executive officers as a
group are entitled to receive maximum monthly payments of $12,500 and
$46,875, respectively, under the supplemental compensation agreements,
subject to pro rata reduction in the event that employment ceases prior to
the Payment Date other than as a result of death or disability. Mr.
White's agreement provides for a Payment Date in 2000, and those of the
other executive officers provide for Payment Dates ranging from 2000 to
2010. The Corporation has purchased cost-recovery life insurance to cover
its obligations under these agreements.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the
Corporation's previous or future filings under the Securities Act of 1933
or the Securities Exchange Act of 1934 that might incorporate this Proxy
Statement or future filings with the Securities and Exchange Commission, in
whole or in part, the following report and the Performance Graph which
follows shall not be deemed to be incorporated by reference into any such
filings.
The Compensation Committee is responsible for developing and making
recommendations to the Board with respect to the Corporation's executive
compensation policies. In addition, the Compensation Committee, pursuant
to authority delegated by the Board, reviews and approves on an annual
basis the compensation policies applicable to the Chief Executive Officer
and the other executive officers of the Corporation.
The objectives of the Corporation's executive compensation program are
to:
- Support the achievement of desired performance by the Corporation.
- Provide compensation that will attract and retain superior talent and
reward performance.
- Align the executive officers' personal interests and financial
renumeration with the success of the Corporation by basing a
significant portion of their compensation upon corporate performance.
The executive compensation program provides an overall level of
compensation opportunity that is competitive within the retail food and
drug industry, including those companies which compete directly with the
Corporation in its regions, as well as companies outside the industry with
which the Corporation may compete for executive talent. Companies are
selected for the purpose of comparing compensation practices on the basis
of a number of factors relative to the Corporation, such as their size and
complexity, the nature of their businesses, the regions in which they
operate, the structure of their compensation programs (including the extent
to which they rely on bonuses and other contingent forms of compensation),
and the availability of compensation information. In reviewing the
compensation practices of other companies, the Compensation Committee
considers the fact that the compensation structure of most peer companies
tend to be significantly different than those of the Corporation in a
number of respects, particularly in such areas as the amount of bonus
relative to salary paid by such companies, their use of stock appreciation
rights and stock options, the time period over which stock options vest and
the nature and amount of pension benefits made available to executive
officers. For these reasons, although the Compensation Committee has
considered the compensation policies of certain companies which are among
the Corporation's peer group in the Performance Graph below, the
Compensation Committee does not believe that all of such companies are
comparable to the Corporation for the purpose of setting the compensation
for the Corporation's executive officers. The Compensation Committee uses
its discretion to set executive compensation at levels warranted by
external, internal and individual circumstances. Actual compensation
levels may be greater or less than average competitive levels in other
companies based upon annual and long-term performance of the Corporation
and each individual executive officer's performance. Based upon a survey
of compensation levels at such peer companies in recent periods, the
Compensation Committee believes that the Corporation's compensation levels,
corresponds to the top one-third of compensation paid to executive officers
of companies in the peer group.
The Corporation's executive officer compensation program is comprised of
base salary, cash bonus compensation, long-term incentive compensation in
the form of stock options, and various other benefits such as those
available through the Corporation's medical and pension plans.
Base Salary. Base salary levels for the Corporation's executive
officers, including the Chief Executive Officer, are set such that the
overall cash compensation package for executive officers, including bonus
opportunity, compares favorably to companies with which the Corporation
competes for executive talent. In determining salaries, the Compensation
Committee also takes into account a number of factors, which primarily
include individual experience and performance, the officer's level of
responsibility, the cost of living and historical salary levels. The
measures of individual performance considered include, to the extent
applicable to an individual executive officer, a number of quantitative and
qualitative factors such as the Corporation's historical and recent
financial performance in the region or other principal area of
responsibility of the officer (including such measures as gross margin, net
income, same-store sales, customer count, cost savings and market share),
the individual's achievement of particular non-financial goals within his
or her responsibility (such as store openings, site acquisitions or other
specific tasks), and other contributions made by the officer to the
Corporation's success. The Compensation Committee has not found it
practicable to, and has not attempted to, assign relative weights to the
specific factors considered in determining base salary levels, and the
specific factors used may vary among officers. As is typical for most
companies, payment of base salary amounts generally is not conditioned upon
the achievement of any specific, pre-determined performance targets.
Cash Bonus. The Corporation's cash bonus program includes all executive
officers. Its purpose is to provide a direct financial incentive in the
form of an annual cash bonus to executive officers to achieve the
Corporation's goals and budgets. The Corporation believes that as compared
to other companies in its industry, the Corporation pays a relatively
higher proportion of total executive compensation in the form of bonus
rather than salary.
Prior to fiscal 1993, the Corporation's executive officers (including
the Chief Executive Officer) received bonuses based upon a predetermined
share of a bonus pool established at the beginning of each fiscal year.
The bonus pool consisted of a predetermined percentage of the Corporation's
pre-tax income of the region for which the officer had primary
responsibility. Each officer's share of the bonus pool was based
principally on the officer's level of responsibility, and typically was not
subject to adjustment during the fiscal year.
As a result of lower than expected earnings for fiscal 1993, in
September 1993 the Compensation Committee undertook a special review of the
Corporation's compensation policies for executive officers and other key
employees and managers. In connection with this review, the Corporation's
bonus policies were revised and the Bonus Program, as described in this
Proxy Statement under the caption, "Approval of the Corporation's Bonus
Program for Executive Officers," was adopted effective for the 1994 fiscal
year. In addition, as a result of the review, the Compensation Committee
determined to pay lower bonuses for fiscal 1993 than would otherwise be
payable under the bonus pool determined at the beginning of fiscal 1993.
In order to provide a transition to the new Bonus Program, the Compensation
Committee instead determined each officer's fiscal 1993 bonus as a fixed
amount based upon a number of factors, including the officer's level of
responsibility in the Corporation and performance through the date of the
determination, the Corporation's overall financial performance for the
fiscal year relative to targeted performance, and the bonus that would have
been payable to such officer under the previous bonus plan. Overall
corporate performance for these purposes was measured principally by the
Corporation's total pre-tax income through the first three quarters of
fiscal 1993, and the Compensation Committee's general estimation of the
contribution made by each officer's position to such performance. Although
the Committee did not for such purposes measure corporate performance with
respect to any specific targets, the committee generally considered the
fact that the growth in the Corporation's pre-tax income for the relevant
period was below that of recent historical periods. The fixed bonus amount
paid to each officer for fiscal 1993 was typically significantly lower than
the bonus paid to such officer for fiscal 1992 and somewhat lower than the
maximum bonus amounts for which such officer will be eligible to receive in
fiscal 1994 under the Bonus Program, assuming that the Corporation achieves
the budgeted level of pre-tax income. Because the bonus amounts paid for
fiscal 1993 were significantly lower than the bonus amounts otherwise
payable under the previous bonus plan, payment of such bonuses was not
conditioned upon satisfaction of any predetermined financial goals or
targets. The Compensation Committee did not find it practicable to, and
did not attempt to, assign relative weights to the specific factors used to
determine the fiscal 1993 bonuses paid to the Corporation's executive
officers.
The Corporation's current policy is to qualify compensation paid to its
executive officers for deductibility under Section 162(m) of the Internal
Revenue Code, and in accordance with this policy the material terms of the
Bonus Program are being submitted for stockholder approval at the annual
Meeting. See "Approval of the Corporation's Bonus Program for Executive
Officers".
Stock Option Plan. The Corporation's Amended and Restated 1989 Stock
Option Plan authorizes the Compensation Committee to grant stock options to
executives and key managers. Grants of options are made in amounts
commensurate with the individual's responsibility and at a level calculated
to be competitive within the retail food and drug industries as well as a
broader group of companies of comparable size and complexity. Option
grants are made from time to time and, depending upon the circumstances,
typically are not made to each executive officer during each year. Options
granted to executive officers typically do not vest until ten years after
the grant date, and do not include any specific, pre-determined performance
targets as a condition to vesting or granting. The Corporation believes
that such long-term grants serve the primary objective of retaining
executives and key managers, while also aligning executive and shareholder
interests by creating a strong and direct link between compensation and
stockholder return and by enabling executives and key managers to develop
and maintain a significant, long-term ownership interest in the
Corporation's Common Stock. Additional stock options were granted to only
two of the named executive officers during 1993 because the Compensation
Committee determined that, in general, stock and options held by such
officers (including the stock holdings of the Chief Executive Officer)
currently provide such officers with a strong identity of interest with the
Corporation's stockholders and, in the case of stock options, are adequate
to achieve the goals discussed above. Grants of additional stock options
to the named executive officers may be considered in future periods by the
Compensation Committee. Since the Corporation's initial public offering in
1989, the Corporation has granted all stock options, including those
granted in fiscal 1993, at an exercise price of $19.00 per share, which was
the initial public offering price for the Corporation's Class B Common
Stock. The Compensation Committee believes that despite the nominal
compensation expense incurred by the Corporation in granting stock options
below the then-current market value of the Corporation's stock, this policy
promotes morale among executive officers while providing adequate
incentives to maximize shareholder value, given that typically no portion
of the Corporation's stock options become exercisable for ten years from
the date of grant.
Benefits. The Corporation provides medical and pension benefits to the
executive officers, including the Chief Executive Officer, that are
generally available to the Corporation's employees. The Corporation also
provides certain executive officers with supplemental retirement, death and
disability benefits, as more fully described under the caption, "Pension
Plan and Other Retirement, Death and Disability Arrangements." The
benefits available under such arrangements generally are the same for each
of the Corporation's executive officers, including the Chief Executive
Officer, except to the extent benefits are payable based upon the length of
an officer's employment with the Corporation.
Chief Executive Officer Compensation. The Chief Executive Officer's
compensation is reviewed and approved independently by the Compensation
Committee. The Compensation Committee members determine the Chief Executive
Officer's compensation based upon the factors applicable to the
Corporation's other executive officers, which are described in detail
above, as well as a number of additional qualitative and quantitative
factors appropriate to his position as the Corporation's principal
executive. For 1993, these factors included providing the strategic
leadership necessary when faced with the current challenges of the
Corporation and the supermarket industry. In particular, the Chief
Executive Officer, recognizing the importance of positioning the
Corporation for the future in the Southern California market was involved
in the planning and development of the new one million square foot, fully-
integrated distribution center in Riverside, California, including a dairy
processing plant, which was completed and placed in operation in the fourth
quarter of 1993. This backstage integration offers important advantages in
the Corporation's competitive purchasing environment, including better
support, service and improved profitability. Another priority for the
Chief Executive Officer was maintaining store sales volume and market share
and reinforcing the Corporation's every day low price program. To this
end, a more aggressive pricing program was implemented in the Utah area.
The Committee noted that a pricing program such as this was possible only
after a year devoted to cutting costs, streamlining business and reducing
in-store operational expenses which the Chief Executive Officer implemented
and sustained. The Committee also noted that while the Corporation is
numbered among the leading low-cost operators in the industry, as measured
by selling, general and administrative expenses as a percentage of sales,
the Chief Executive Officer continued to achieve reductions in operating
costs during 1993. The Intermountain Region and the Southwest Region were
consolidated into one region. The new organization eliminated many
duplicate supervisory positions and empowered the store managers to be more
autonomous and responsive to consumer needs. The Chief Executive Officer
also commenced during 1993 a re-engineering process of several key store
systems to better utilize available computer technology, streamline the
systems and reduce operating costs primarily through labor efficiencies.
The Compensation Committee has not found it practicable to, and has not
attempted to, assign relative weights to the specific factors considered in
determining the Chief Executive Officer's compensation.
In accordance with the Corporation's compensation policies for all
executive officers, a large component of the Chief Executive Officer's
compensation is paid in the form of bonus, which, in order to provide an
appropriate incentive to maximize the Corporation's financial performance,
is determined based upon the Corporation's pre-tax income. For fiscal
1993, the Chief Executive Officer's bonus represented a 21.9% decrease from
the previous year and his total cash compensation for 1993 represented a
10.1% decrease from the previous year. The Compensation Committee believes
that the Chief Executive Officer's compensation is appropriate in light of
the Corporation's lower than expected earnings in fiscal 1993 and the other
factors described above. Based upon its survey of compensation levels at
the peer companies included in the Performance Graph below, the Committee
noted that the Chief Executive Officer's cash compensation during fiscal
1993 was third relative to the fiscal 1992 cash compensation of the CEOs of
such companies. The Compensation Committee noted, however, that, while the
Chief Executive Officer's compensation for fiscal 1993 consisted solely of
cash compensation, a substantial majority of the peer companies also
provided substantial equity or stock appreciation compensation to their
CEOs during fiscal 1992. For this reason, the Chief Executive Officer's
overall compensation would most likely rank lower relative to CEO
compensation at the peer companies when the value of such non-cash
compensation is included. In determining the compensation of the Chief
Executive Officer, the Compensation Committee considers compensation levels
at these peer companies, however, the Compensation Committee has not deemed
it practicable or appropriate to target the Chief Executive Officer's
compensation at any particular percentile relative to the peer group.
DeLonne Anderson
Duane Peters
Ray V. Rose
Members of the Compensation
Committee of the Board of
Directors
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. DeLonne Anderson, Duane
Peters and Ray V. Rose. Mr. Anderson served as an officer of the
Corporation until 1985. Mr. Jeffrey P. Smith, an officer of the
Corporation, served as a member of the Compensation Committee until April,
1993. During his membership on the Compensation Committee, Mr. Smith did
not participate in any decisions concerning his own compensation.
PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on the
Class B Common Stock of the Corporation with the cumulative total return on
the Standard & Poor's 500 Index and a peer group of eleven companies in the
Corporation's industry over the period indicated (assuming the investment
of $100 in the Class B Common Stock on June 21, 1989, the date of the
Corporation's initial public offering, and reinvestment of all dividends).
In accordance with guidelines of the SEC, the stockholder return for each
entity in the peer group index have been weighted on the basis of market
capitalization as of the beginning of each fiscal year set forth on the
graph. The stock price performance shown on the graph below is not
necessarily indicative of future price performance.
[PERFORMANCE GRAPH FILED ON FORM SE]
(1) The selected peer group consists of the following companies: Bruno's,
Inc.; Fred Meyer, Inc.; Giant Food, Inc.; Great Atlantic & Pacific Tea
Co.; Hannaford Brothers Co.; Kroger Co.; Quality Food Centers, Inc.;
Safeway, Inc.; Stop & Shop Cos., Inc.; Vons Companies, Inc.; and Weis
Markets, Inc. Such companies have been selected for the peer group on
the basis of, among other factors, the similarity of their business to
that of the Corporation and their market capitalization relative to
that of the Corporation.
CERTAIN TRANSACTIONS
During fiscal 1993, the Corporation paid $429,818 in advertising fees to
radio and television stations operated by subsidiary companies of
Bonneville International Corporation ("Bonneville"). Rodney H. Brady, a
director of the Corporation, serves as President and Chief Executive
Officer of Bonneville, but has no role in the Corporation's advertising
decisions. Also during fiscal 1993, the Corporation paid $81,193 to an
automobile dealership owned by Fred Smith, one of the Corporation's
directors, in connection with the purchase of automobiles for use by the
Corporation. The Corporation believes that the terms of the foregoing
transactions were no less favorable to the Corporation that those which
could have been obtained from unaffiliated third parties.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table provides certain information which has been
furnished to the Corporation regarding ownership of the Corporation's
voting securities as of February 28, 1994, with respect to (i) each
director of the Corporation; (ii) each executive officer of the Corporation
named in the Summary Compensation Table above who beneficially owns shares;
(iii) all directors and executive officers of the Corporation as a group;
and (iv) each beneficial owner of five percent or more of any class of the
Corporation's voting securities:
<TABLE>
<CAPTION>
Amount and Percent of
Nature of all Votes of
Title of Beneficial Percent all Classes
Name Class Ownership <F1> of Class of Stock
<S> <C> <C> <C> <C>
Jeffrey P. Smith Class A 3,397,543 <F2> 27.2% 44.4%
c/o Smith's Food & Drug Centers, Inc. Preferred 11,205,000 <F3> 60.1
1550 South Redwood Road
Salt Lake City, UT 84104
Dee Glen Smith Marital Trust I Class A 466,166 <F4> 3.7 35.5
c/o Ida W. Smith Preferred 11,205,000 <F4> 60.1
1066 North East Capital Blvd.
Salt Lake City, UT 84103
Richard D. Smith Class A 2,576,302 <F5> 20.6 7.8
c/o Smith's Food & Drug Centers, Inc.
1550 South Redwood Road
Salt Lake City, UT 84104
Corporation of the President of Preferred 2,400,009 12.9 7.3
the Church of Jesus Christ of
Latter-day Saints
50 East North Temple
Salt Lake City, UT 84150
Fred L. Smith Class A 1,916,996 <F6> 15.3 5.8
74285 Quail Lake Dr.
Indian Wells, CA 92210
Trust for the Children Class A 1,155,300 <F4> 9.2 3.5
of Jeffrey P. Smith
2551 Brentwood Circle
Salt Lake City, UT 84121
Trust for the Children Class A 1,155,300 <F7> 9.2 3.5
of Richard D. Smith
1038 North East Capital Blvd.
Salt Lake City, UT 84103
Trust for the Children Class A 1,155,300 <F8> 9.2 3.5
of Fred L. Smith
74285 Quail Lakes Dr.
Indian Wells, CA 92210
University of Utah Medical School Preferred 1,200,000 6.4 3.6
c/o Treasurer
University of Utah
407 Park Building
Salt Lake City, UT 84112
The United Way of the Preferred 1,269,669 6.8 3.9
Greater Salt Lake Area
455 East 4th South
Salt Lake City, UT 84111
DeLonne Anderson Class A 537,642 <F9> 4.3 1.7
1443 West Cheever Class B 159,000 <F10> *
Farmington, UT 84025
Allen P. Martindale Class A 653,500 <F11> 5.2 2.0
Sean D. Smith Class A 499,434 <F12> 4.0 1.5
Robert D. Bolinder Class A 100,000 * *
Class B 30,000 <F13>
Ray V. Rose Class A 90,000 <F14> * *
Douglas John Tigert Class A 75,000 * *
Alan R. Hoefer Class A 30,000 * *
Kenneth A. White Class A 66,900 * *
Class B 66,999 *
Rodney H. Brady Class A 63,500 <F15> * *
Duane Peters Class A 30,500 <F16> * *
J. Craig Gilbert Class A 65,000
All Directors and Executive Class A 9,840,288 78.8%
Officers as a Group(19 persons) Class B 261,224 1.5% 64.1%
Preferred 11,205,000 60.1%
<FN>
* Less than one-percent.
<F1> Each person has sole investment and voting power with respect to the
shares indicated, except as otherwise set forth in the footnotes to
this table. Each share of Class A Common Stock is convertible at
any time at the option of the holder into one share of Class B
Common Stock.
<F2> Includes 1,545,399 shares which are held of record by four trusts of
which Jeffrey P. Smith is the trustee and of which his children and
the children of Richard D. Smith are beneficiaries, 43,100 shares
held of record by Mr. Smith's wife, and 466,166 shares held of
record by a trust for benefit of Ida W. Smith and of which Mr. Smith
is trustee.
<F3> Such shares are held of record by a trust for the benefit of Ida W.
Smith and of which Jeffrey P. Smith trustee.
<F4> Included in the shares shown for Jeffrey P. Smith.
<F5> Includes 1,645,090 shares which are held of record by six trusts of
which Richard D. Smith is trustee and of which his children and the
children of Jeffrey P. Smith are beneficiaries and 11,742 shares
held of record by Mr. Smith's wife.
<F6> Includes 1,358,778 shares which are held of record by four trusts of
which Fred L. Smith is trustee and of which his children are
beneficiaries, and 35,200 shares held of record by Mr. Smith's wife.
<F7> Included in the shares shown for Richard D. Smith.
<F8> Included in the shares shown for Fred L. Smith.
<F9> Includes shares held of record by the following partnerships, of
which Mr. Anderson is a general partner: Cheever Investments,
14,611 shares; Cheever Limited, 62,797 shares; Ricks Creek
Investment, 88,961 shares; Ricks Creek Ltd., 50,485 shares; Lupine
Investment, 105,651; and Lupine Assoc. Ltd., 6,000 shares. Also
includes 159,137 shares held of record by Mr. Anderson's wife.
<F10 Includes shares held of record by the following partnerships, of
which Mr. Anderson is a general partner: Cheever Investments, 70,000
shares; and Lupine Assoc. Ltd., 50,000 shares.
<F11> Such shares are held of record by a trust for the benefit of Mr.
Martindale and his wife and of which Mr. Martindale is trustee.
<F12> Includes 498,588 shares held of record by trusts for the benefit of
Mr. Sean D. Smith of which Messrs. Richard D. Smith and Jeffrey P.
Smith are trustees. Of such shares, 113,488 shares are included in
shares shown for Richard D. Smith and 385,100 shares are included in
shares shown for Jeffrey P. Smith. Also includes 846 shares held of
record by trust of which Sean D. Smith is trustee and of which his
child is beneficiary.
<F13> Includes 30,000 shares of issuable upon exercise of vested options
as of February 28, 1994.
<F14> Includes 60,000 shares held of record by a trust of which Mr. Rose
is trustee and of which the members of the family of Mr. Rose are
beneficiaries.
<F15> Such shares are held by a trust for the benefit of Mr. Brady and his
wife and of which Mr. Brady is trustee.
<F16> Includes 6,450 shares held of record by two trusts of which Mr.
Peters is trustee and of which the members of the family of Mr.
Peters are beneficiaries. Also includes 24,050 shares held in an
IRA account of which Mr. Peters is beneficiary.
</TABLE>
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young as the independent
auditors to examine the accounts of the Corporation for the 1994 fiscal
year. Ernst & Young has served as the Corporation's independent auditors
since prior to 1970. In the event that ratification of this selection of
auditors is not approved by the affirmative vote of a majority of the
shares of Series I Preferred Stock, Class A Common Stock and Class B Common
Stock voting on the proposal, with all such shares voting together and with
each share of Series I Preferred Stock and Class A Common Stock entitled to
ten votes and each share of Class B Common Stock entitled to one vote,
management will review its future selection of auditors.
A member of Ernst & Young is expected to be in attendance at the Annual
Meeting with the opportunity to make a statement and respond to questions.
The Board of Directors recommends a vote FOR ratification of the
selection of Ernst & Young as the Corporation's independent auditors for
the 1994 fiscal year.
OTHER MATTERS
Compliance with Section 16(a) of the Exchange Act. Section 16(a) of the
Exchange Act requires the Corporation's officers and directors and persons
who own more than ten percent of the Corporation's Class B Common Stock
(collectively, "Reporting Persons") to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and the
New York Stock Exchange. Reporting Persons are required by SEC regulations
to furnish the Corporation with copies of all Section 16(a) forms they
file. Based solely on its review of the copies of such forms received or
written representations from certain Reporting Persons, the Corporation
believes that during fiscal 1993 all the Reporting Persons complied with
all applicable filing requirements, except that one statement of changes in
beneficial ownership was inadvertently filed 4 days late on behalf of Mr.
Jeffrey P. Smith and the Dee Glen Smith Marital Trust.
Other Matters. The Board of Directors knows of no other business which
will be presented to the Annual Meeting. If any other business is properly
brought before the Annual Meeting, it is intended that proxies in the
enclosed form will be voted in respect thereof in accordance with the
judgments of the persons voting the proxies.
STOCKHOLDERS' PROPOSALS FOR NEXT ANNUAL MEETING
Stockholders' proposals intended to be presented at the 1995 Annual
Meeting of Stockholders of the Corporation must be received by the
Corporation no later than December 1, 1994 for inclusion in the
Corporation's Proxy Statement and proxy card related to the 1995 Annual
Meeting.
Salt Lake City, Utah
March 25, 1994
<PAGE>
[FORM OF FRONT OF PROXY CARD]
SMITH'S FOOD & DRUG CENTERS, INC. PROXY
1550 SOUTH REDWOOD ROAD
SALT LAKE CITY, UTAH 84104
JEFFREY P. SMITH, ROBERT D. BOLINDER AND MICHAEL C. FREI, or any of them
each with the power of substitution, are hereby authorized to represent and
vote the shares of the undersigned, with all the powers which the
undersigned would possess if personally present, at the Annual Meeting of
Stockholders of Smith's Food & Drug Centers, Inc. (the "Corporation"), to
be held on Tuesday, April 26, 1994, and any adjournments or postponements
thereof.
Election of all thirteen directors (or if any nominee is not available
for election, such substitute as the Board of Directors or the proxy
holders may designate). Nominees: JEFFREY P. SMITH, RICHARD D. SMITH,
ROBERT D. BOLINDER, KENNETH A. WHITE, DELONNE ANDERSON, RODNEY H. BRADY,
ALAN R. HOEFER, ALLEN P. MARTINDALE, DUANE V. PETERS, RAY V. ROSE, FRED L.
SMITH, SEAN D. SMITH, AND DOUGLAS J. TIGERT.
If you wish to vote in accordance with the Board of Directors'
recommendations, just sign and date on the reverse side. You need not mark
any boxes.
1. Election of Directors (see above):
___ FOR ___ WITHHOLD
FOR, except vote withheld from the following nominee(s):
___________________________________________________________________________
___________________________________________________________________________
2. To ratify and approve the Corporation's bonus program with
respect to the Corporation's executive officers:
___ FOR ___ AGAINST ___ ABSTAIN
3. To ratify the appointment of Ernst & Young as the Corporation's
independent auditors for 1994:
___ FOR ___ AGAINST ___ ABSTAIN
- ---------------------------------------------------------------------------
[FORM OF BACK OF PROXY CARD]
Shares represented by this proxy will be voted as directed on the
reverse side by the stockholder. If no such directions are indicated, the
Proxies will have authority to vote FOR the election of all directors, and
FOR items 2 and 3. In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before the Annual Meeting.
The Board of Directors recommends a vote FOR the election of Directors
and FOR proposals 2 and 3.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING ON APRIL 26, 1994.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED REPLY ENVELOPE.
Please sign exactly as your name appears herein. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
Signature__________________________________________ Date_________________
Signature__________________________________________ Date_________________
