<PAGE>
RYKOFF-SEXTON, INC.
1050 WARRENVILLE ROAD
LISLE, ILLINOIS 60532-5201
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 15, 1995
---------------------
TO THE STOCKHOLDERS OF RYKOFF-SEXTON, INC.:
The Annual Meeting of Stockholders of Rykoff-Sexton, Inc. (the "Company")
will be held at the Park Hyatt Hotel, 800 North Michigan Avenue, Chicago,
Illinois 60611 on Friday, September 15, 1995 at 10:00 A.M., or at any
adjournment thereof, for the following purposes:
1. To elect four persons to the Board of Directors, three of whom will
serve in Class B with terms ending in 1998 and one of whom will serve in
Class C with a term ending in 1997;
2. To ratify the appointment of Arthur Andersen LLP as independent public
accountants for the Company for fiscal 1996; and
3. To transact any other business that may properly come before the meeting
or any adjournment thereof.
Pursuant to due action of the Board of Directors, stockholders of record as
of the close of business on July 21, 1995 will be entitled to vote at the
meeting or any adjournments thereof.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE AS PROMPTLY AS
POSSIBLE. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW THE PROXY AND VOTE IN
PERSON.
By Order of the Board of Directors
Neil I. Sell
SECRETARY
July 27, 1995
<PAGE>
PROXY STATEMENT
OF
RYKOFF-SEXTON, INC.
1050 WARRENVILLE ROAD
LISLE, ILLINOIS 60532-5201
------------------------
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
SEPTEMBER 15, 1995
---------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Rykoff-Sexton, Inc. (the "Company") for use
at the Annual Meeting of Stockholders (the "Annual Meeting") of the Company to
be held on September 15, 1995 and any adjournment thereof. The approximate date
of mailing of this Proxy Statement and the accompanying proxy to stockholders is
July 27, 1995.
The number of outstanding voting securities of the Company at the close of
business on the record date, July 21, 1995, was 14,614,158 shares of common
stock, $.10 par value per share (the "Common Stock"). Each share of Common Stock
is entitled to one vote. Only stockholders of record at the close of business on
July 21, 1995 will be entitled to vote at the meeting or any adjournments
thereof. All share amounts included herein give effect to a five-for-four stock
split, effected in the form of a stock dividend, which was distributed on
January 24, 1995 to stockholders of record on December 21, 1994.
The holders of a majority of the shares issued and outstanding and entitled
to vote at the Annual Meeting, present in person or by proxy, shall constitute a
quorum at the Annual Meeting. Directors are elected by plurality vote.
Ratification of the appointment of the independent public accountants and
approval of all other matters to be acted upon at the Annual Meeting requires
the affirmative vote of the holders of a majority of the shares having voting
power and present in person or by proxy.
Votes cast in person or by proxy at the Annual Meeting will be tabulated by
the inspectors of election appointed for the meeting and who will determine
whether or not a quorum is present. With respect to the election of directors,
votes may be cast in favor or withheld. Abstentions may be specified on all
proposals (other than the election of directors), will be counted for purposes
of determining the total votes cast on the matter for which such abstention is
noted and will have the effect of a negative vote on such matter. Broker
non-votes on a particular matter are not deemed to be shares present and
entitled to vote on such matter.
Each stockholder who signs and returns a proxy in the form enclosed with
this Proxy Statement may revoke the same at any time prior to its use by giving
notice of such revocation to the Company in writing or in open meeting. Unless
so revoked, the shares represented by each such proxy will be voted at the
meeting and any adjournment thereof. Presence at the meeting of a stockholder
who has signed a proxy does not alone revoke that proxy.
The Company will bear the cost of soliciting proxies for the meeting. The
Company will also reimburse brokerage houses and other custodians, nominees and
fiduciaries for their reasonable expenses in forwarding the soliciting material
to beneficial owners of stock. Proxies are being solicited primarily by mail,
but officers and regular employees of the Company may also solicit proxies
personally, by telephone or by special letter. The Company will also use the
services of Chemical Mellon Shareholder Services to aid in the solicitation of
proxies at an anticipated fee of $4,500, plus reasonable expenses.
1
<PAGE>
ELECTION OF DIRECTORS
NOMINATION AND CLASSIFICATION
The Restated Certificate of Incorporation of the Company provides that the
Company's Board of Directors shall be divided into three classes and requires
that at each Annual Meeting, successors to directors whose terms expire at that
Annual Meeting shall be elected for three-year terms. The terms of the directors
in Class B expire with this Annual Meeting. On June 19, 1995, the Board of
Directors unanimously approved an increase in the size of the Board from seven
to eight members. In connection therewith, the Board determined to place the
newly created board seat in Class C to equalize the relative size between the
classes. The terms of the directors in Class C expire in 1997.
The Board of Directors has nominated Mr. James P. Miscoll, Mr. Bernard Sweet
and Mr. Mark Van Stekelenburg for election as directors in Class B at this
meeting to serve for three-year terms expiring at the 1998 Annual Meeting of
Stockholders, and has also nominated Mr. Jan W. Jeurgens for election as a
director in Class C to serve a two-year term expiring at the 1997 Annual Meeting
of Stockholders, or until their respective successors are elected and qualified.
Each nominee has consented to serve for their term if elected.
All proxies will be voted in favor of the four nominees listed below unless
a contrary choice is specified. If, prior to the Annual Meeting, the Board of
Directors learns that a nominee will be unable to serve by reason of death,
incapacity or other unexpected occurrence, the proxies will be voted for the
election of such substitute nominee as may be selected by the Board of
Directors.
Biographical information for each person nominated and for each person whose
term of office as a director will continue after the Annual Meeting is set forth
below.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION,
BUSINESS EXPERIENCE
PAST FIVE YEARS AND DIRECTOR
NAME AND AGE DIRECTORSHIPS SINCE
- -------------------------------------- ------------------------------ --------
<S> <C> <C>
NOMINEES
CLASS B (TERMS EXPIRING IN 1998)
James P. Miscoll (60) Retired since 1992. Mr. 1992
Miscoll was previously Vice
Chairman of BankAmerica
Corporation. He is a director
of Coast Federal Financial,
Inc., Northern Technology,
Inc., Montgomery-Watson,
Inc., Winkler McManus and
CHELA (California Higher
Education Loan Authority).
Bernard Sweet (71) Retired since 1985. Mr. Sweet 1978
was previously President and
Chief Executive Officer of
Republic Airlines, Inc. He is
a director of G&K Services,
Inc.
Mark Van Stekelenburg (44) President and Chief Executive 1992
Officer of the Company since
December 1992. Mr. Van
Stekelenburg joined the
Company in 1991 and was
Executive Vice President
until December 1992. He was
previously President and
Chief Executive Officer of
Grootverbruik Ahold, the
foodservice division of Royal
Ahold, N.V., The Netherlands.
CLASS C (TERM EXPIRING IN 1997)
Jan W. Jeurgens (74) Retired since 1983. From Nominee
1968-1983, Mr. Jeurgens
served as Chief Executive
Officer of Netherlands-based
Makro International, a
world-wide wholesaler of food
and non-food products. Mr.
Jeurgens continues an active
involvement in the
international distribution
industry.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION,
BUSINESS EXPERIENCE
PAST FIVE YEARS AND DIRECTOR
NAME AND AGE DIRECTORSHIPS SINCE
- -------------------------------------- ------------------------------ --------
<S> <C> <C>
CONTINUING DIRECTORS
CLASS A (TERMS EXPIRING IN 1996)
James I. Maslon (68) Retired since 1992. Mr. Maslon 1962
was previously Vice President
-- Manufacturing of the
Company's S.E. Rykoff & Co.
division.
Robert G. Zeller (77) Retired since 1979. Mr. Zeller 1972
was previously Chairman of
the Board and Chief Executive
Officer of F. Eberstadt &
Co., Inc., an investment
banking firm. He is a
director of Salomon Inc.
CLASS C (TERMS ENDING IN 1997)
R. Burt Gookin (81) Retired since 1979. Mr. Gookin 1985
was previously Vice Chairman
of the Board and Chief
Executive Officer of H. J.
Heinz Company.
Neil I. Sell (54) Secretary of the Company. Mr. 1982
Sell is a partner in the law
firm of Maslon Edelman Borman
& Brand, a Professional
Limited Liability
Partnership. He is a director
of Grand Casinos, Inc. and
Stratosphere Corporation.
</TABLE>
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors held twelve meetings during the last fiscal year, and
took action by Written Consent on two occasions. The Board of Directors has an
Audit Committee, a Management Development -- Compensation and Stock Option
Committee and a Nominating Committee. In fiscal 1995, the Board of Directors
determined to consolidate each of its Management Development -- Compensation and
Stock Option Committees into a single committee, which it named the Management
Development -- Compensation and Stock Option Committee.
The Company's Audit Committee, which consists of Messrs. James I. Maslon,
James P. Miscoll, Neil I. Sell, Bernard Sweet and Robert G. Zeller, held two
meetings during the last fiscal year. The Audit Committee recommends to the full
Board of Directors the engagement of the independent public accountants, reviews
the audit plan and results of the audit engagement, reviews the independence of
the auditors and reviews the adequacy of the Company's system of internal
accounting controls.
The Company's Management Development -- Compensation and Stock Option
Committee, which consists of Messrs. R. Burt Gookin, James P. Miscoll, Bernard
Sweet and Robert G. Zeller, held an aggregate of seven meetings during the last
fiscal year. Three of these meetings were held by the committee formerly known
as the Stock Option Committee and four were held by the committee formerly known
as the Management Development -- Compensation Committee. The Management
Development -- Compensation and Stock Option Committee reviews the Company's
remuneration policies and practices, administers each of the Rykoff-Sexton, Inc.
1980 Stock Option Plan, the 1988 Stock Option and Compensation Plan (the "1988
Plan") and the 1989 Director Stock Option Plan, administers the Company's
incentive compensation programs and makes recommendations to the full Board of
Directors in connection with all compensation matters affecting the Company.
The Company's Nominating Committee, which consists of Messrs. R. Burt
Gookin, James I. Maslon, Neil I. Sell and Bernard Sweet, held one meeting during
the last fiscal year. The Nominating Committee makes recommendations to the full
Board of Directors on the following matters: the size and constituency of the
Board of Directors, the age limit for Board of Directors membership, the filling
of vacancies on the Board of Directors and the removal of any director for
cause. In recommending
3
<PAGE>
persons to the Board of Directors as potential nominees for election as
directors, the Nominating Committee will consider written suggestions regarding
the qualifications that nominees should possess, but it will not entertain
stockholder nominations of specific individuals.
COMPENSATION OF DIRECTORS
During fiscal 1995, directors who were not employees of the Company received
an annual retainer of $15,000. Directors also receive a fee of $1,750 for each
meeting of the Board of Directors attended, $875 for each telephonic meeting of
the Board of Directors and $500 for each committee meeting attended.
The 1993 Director Stock Option Plan provides for an annual grant to
non-employee directors of options to purchase 1,250 shares at an option exercise
price equal to the fair market value of such shares on the grant date. Each such
option has a ten year term and generally becomes exercisable on the first
anniversary of the grant date. Messrs. Gookin, Maslon, Miscoll, Sell, Sweet and
Zeller each were granted options to purchase 1,250 shares at an exercise price
of $16.30 on September 9, 1994. Each of these directors also received a one-time
grant of options to purchase 6,250 shares of Common Stock at an exercise price
of $11.20 on June 21, 1993. These options have ten year terms and generally
become exercisable in three equal annual installments commencing on June 21,
1994.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth all persons known by the Company to be the
beneficial owners of more than five percent (5%) of the outstanding Common Stock
of the Company as of July 1, 1995:
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OF CLASS
- ------------------------------------------------------- ------------ --------
<S> <C> <C>
State Farm Mutual Automobile Insurance Company
and related entities.................................. 1,538,635 10.53%
One State Farm Plaza
Bloomington, Illinois 61701
John Hancock Mutual Life Insurance Company and related
entities.............................................. 1,279,062 8.75%
P.O. Box 111
Boston, Massachusetts 02117
The Prudential Insurance Company of America............ 1,063,406 7.27%
Prudential Plaza
Newark, New Jersey 07102-3777
David L. Babson & Co., Inc............................. 843,125 5.77%
One Memorial Drive
Cambridge, Massachusetts 02142
FMR Corp............................................... 814,575 5.57%
82 Devonshire Street
Boston, Massachusetts 02109-3605
ICM Asset Management, Inc.............................. 791,119 5.41%
601 West Main Avenue, Suite 917
Spokane, Washington 99201
Archer Daniels Midland Company......................... 754,625 5.16%
4666 Faries Parkway
P.O. Box 1470
Decatur, Illinois 62525
</TABLE>
4
<PAGE>
The following table sets forth beneficial ownership of Common Stock as of a
recent date for each director of the Company, each executive officer named in
the Summary Compensation Table under "EXECUTIVE COMPENSATION" herein and all
directors and executive officers as a group. Unless otherwise stated and subject
to applicable community property laws, each beneficial owner has sole voting and
investment powers with respect to the shares shown.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
NAME OWNED OF CLASS
- ------------------------------------------------------ ------------- --------
<S> <C> <C>
Mark Van Stekelenburg................................. 260,829(1) 1.76%
Harold E. Feather..................................... 100,813(2) *
R. Burt Gookin........................................ 8,697(3) *
Alan V. Giuliani...................................... 50,896(4) *
Robert J. Harter, Jr.................................. 54,742(5) *
Richard J. Martin..................................... 32,109(6) *
James I. Maslon....................................... 372,728(7) 2.55%
James P. Miscoll...................................... 9,167(8) *
Neil I. Sell.......................................... 9,580(9) *
Bernard Sweet......................................... 12,837(10) *
Robert G. Zeller...................................... 31,368(11) *
All directors and executive officers as a group
(fourteen persons)................................... 998,682(12) 6.61%
<FN>
- ------------------------
* Less than 1%.
(1) Includes options exercisable within 60 days to purchase 233,438 shares
pursuant to the 1988 Stock Option and Compensation Plan. Also includes 62
shares owned by one of his children.
(2) Includes options exercisable within 60 days to purchase 84,376 shares
pursuant to the 1980 Stock Option Plan and the 1988 Stock Option and
Compensation Plan.
(3) Includes options exercisable within 60 days to purchase 6,667 shares
pursuant to the 1993 Director Stock Option Plan. Also includes 1,718 shares
owned by his spouse.
(4) Includes options exercisable within 60 days to purchase 42,969 shares
pursuant to the 1988 Stock Option and Compensation Plan.
(5) Includes options exercisable within 60 days to purchase 31,250 shares
pursuant to the 1988 Stock Option and Compensation Plan.
(6) Includes options exercisable within 60 days to purchase 31,719 shares
pursuant to the 1988 Stock Option and Compensation Plan.
(7) Includes 23,515 shares held of record by Mr. Maslon as trustee for his
children, 203,460 shares held of record by Mr. Maslon as co-trustee for his
mother and 125 shares owned by his spouse. Includes options exercisable
within 60 days to purchase 6,667 shares pursuant to the 1993 Director Stock
Option Plan.
(8) Includes options exercisable within 60 days to purchase 6,667 shares
pursuant to the 1993 Director Stock Option Plan.
(9) Includes options exercisable within 60 days to purchase 6,667 shares
pursuant to the 1993 Director Stock Option Plan.
(10) Includes options exercisable within 60 days to purchase 8,666 pursuant to
the 1989 Director Stock Option Plan and the 1993 Director Stock Option
Plan. Also includes 1,406 shares owned by his spouse.
(11) Includes options exercisable within 60 days to purchase 7,197 shares
pursuant to the 1989 Director Stock Option Plan and the 1993 Director Stock
Option Plan.
(12) Includes options exercisable within 60 days to purchase an aggregate of
502,902 shares pursuant to the Company's stock option plans.
</TABLE>
5
<PAGE>
The information contained in the foregoing footnotes is for explanatory
purposes only and none of the persons named therein is the beneficial owner of
shares designated as beneficially owned by or held in trust for any other
person, including family members.
REPORT OF THE MANAGEMENT DEVELOPMENT -
COMPENSATION AND STOCK OPTION COMMITTEE
The following report of the Management Development -- Compensation and Stock
Option Committee (the "Committee"), as well as the Performance Graph set forth
herein, are not soliciting materials, are not deemed filed with the Securities
and Exchange Commission (the "SEC") and are not incorporated by reference in any
filing of the Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether made
before or after the date of this Proxy Statement and irrespective of any general
incorporation language in any such filing.
As described on page three of this Proxy Statement, the Committee is
responsible for establishing and reviewing the Company's executive compensation
policies, advising the full Board of Directors on all compensation matters and
administering the Company's stock option plans (other than the 1993 Director
Stock Option Plan, which is administered by the entire Board of Directors). The
Committee is comprised exclusively of outside directors. All decisions of the
Committee relating to compensation of the President and Chief Executive Officer
are reviewed and approved by the full Board of Directors. Decisions by the
Committee on grants or awards pursuant to the 1988 Plan are made solely by the
Committee.
COMPENSATION POLICY
The Company's executive compensation policies are designed to foster the
Company's business goals of achieving profitable growth and premium returns to
stockholders. The principal objectives of these policies are as follows: (1) to
attract, motivate and retain executives of outstanding ability and character,
(2) to provide rewards that are closely related to the performance of the
Company and the individual executive by placing a significant portion of
compensation at risk and (3) to align the interests of executives and
stockholders through long-term, equity-based incentives and programs to
encourage and reward stock ownership. The Committee uses the services of
independent executive compensation consultants in developing and evaluating
compensation plans in order to achieve the foregoing objectives.
This report discusses the manner in which base salaries, short-term
incentive compensation and long-term, equity-based incentives for the Company's
President and Chief Executive Officer and the other executive officers named in
the Summary Compensation Table (the "Named Executives") were determined for the
1995 fiscal year.
EXECUTIVE COMPENSATION
The key components of executive compensation are base salary, short-term
incentive compensation and long-term, equity-based incentives. Base salary
levels are generally targeted to be competitive with the average salaries paid
at other companies of similar size and complexity both within and outside of the
foodservice distribution and manufacturing industries. The Committee
periodically has commissioned outside independent executive compensation
consultants to analyze competitive compensation levels at comparable companies.
BASE SALARY
The Committee intends that base salaries should be set at approximately the
50th percentile of comparable companies, and previously determined to limit base
salary increases for those Named Executives whose base salaries were above the
50th percentile, except where the Committee deemed merit increases to be
warranted on an individual basis or necessary to retain key executives. Fiscal
1995 base salaries were based on fiscal 1994 base salaries, with adjustments
based primarily on
6
<PAGE>
individual performance evaluations and overall annual salary budget guidelines.
Fiscal 1995 base salaries for the Named Executives were in the middle to the
upper end of the range for comparable companies.
SHORT-TERM INCENTIVE COMPENSATION
The Named Executives and other executives of the Company and its
subsidiaries are eligible for annual cash bonuses under the Company's Management
Incentive Plan. This plan, which is administered by the Committee, is designed
to reward executives for their contributions to the Company's achievement of
specified annual financial performance goals. The Committee selects
participants, determines each participant's minimum, targeted and maximum bonus
opportunities and establishes the annual financial performance goals for the
Company and its operating units. Performance goals for the Named Executives are
based upon the consolidated results for the Company. Fiscal 1995 performance
goals for the Named Executives were based upon a matrix of the Company's
attainment of operating profit and average return on equity goals. No bonuses
are payable to the Named Executives under the Company's Management Incentive
Plan unless the Company achieves a minimum of 80% of budgeted operating profit.
Named Executives are eligible for targeted bonuses that range from 30% to 50% of
base salary if the performance goals are met, and for maximum bonuses that range
from 60% to 100% of base salary if maximum performance goals are met. In fiscal
1995, the Company achieved more than the 80% minimum of its budgeted operating
profit and, when weighted on a matrix in combination with the average return on
equity, payout achievement was approximately 49% of an individual's target
objectives.
During fiscal 1995, the Board of Directors awarded a discretionary bonus of
$300,000 to Mr. Van Stekelenburg and $50,000 to each of the Named Executives in
recognition of their accomplishments while implementing "Project RESULTS"
(Realizing Excellence through Strategy, Unity, Leadership, Teamwork and
Systems). These awards were made in light of the significant progress made by
the Company under Project RESULTS in fiscal 1995. During this period, income
from continuing operations rose to $9,376,000, or $.64 per share, from
$4,121,000 or $.28 per share in the prior year. Sales also increased to $1.57
billion or 8.6% over the prior year, while operating expenses from continuing
operations decreased as a percentage of sales from 20.6% to 19.2%. The Committee
believes that Mr. Van Stekelenburg's leadership was a significant factor in the
Company's fiscal 1995 performance.
In order to encourage equity ownership in the Company by its executive
officers, including the Named Executives, and the executive management of its
operating companies, the Company implemented a Convertible Award Plan which
provides that participants may elect to receive up to 50% of their annual
incentive bonus under the Management Incentive Plan in the form of shares of
Common Stock, based on a per share price equal to the closing price on the New
York Stock Exchange of the Common Stock on the fourth day following the
announcement of the Company's annual earnings for the year preceding the year in
which the annual incentive bonus is calculated. If the participant makes such
election, the participant is awarded one additional share of Common Stock for
each five shares received in accordance with the foregoing calculation. Although
such stock is owned by the participant and any dividends that the Company may
declare will be paid to the participant, certain restrictions on transferability
and forfeiture apply to these shares during the three years following the
original date of issue.
LONG-TERM INCENTIVE COMPENSATION
The Company also grants stock options and other equity incentives under the
1988 Plan in order to link compensation to the Company's long-term growth and
performance and to increases in stockholder value. Under the 1988 Plan, the
Committee may grant stock options, stock appreciation rights, stock awards,
restricted stock, performance shares and cash awards to eligible employees of
the Company and its subsidiaries. The Committee has broad discretion to
establish the terms of such grants. It typically grants awards on an annual
basis and may also grant awards to designated employees upon commencement of
employment or following a significant change in any employee's
7
<PAGE>
responsibility or title. Awards are based on guidelines relating to the
employee's position in the Company which are set by the Committee, as well as
the employee's current performance and anticipated future contributions. The
Committee also considers the amount and terms of stock options previously
granted to each of the Named Executives. Each member of the Committee
individually evaluates these factors with respect to each Named Executive and
then the Committee reaches consensus on the appropriate award. All stock options
granted in fiscal 1995 had an exercise price that was equal to the fair market
value of the Common Stock on the date of grant.
CANCELLATION OF CONVERGING STOCK OPTIONS
In fiscal 1993 and 1994, the Company granted converging non-qualified stock
options to a total of seven executive officers, including the Named Executives.
These options had an initial exercise price of $28.00 per share, which was
substantially in excess of the $13.90 and $11.20 fair market value of the Common
Stock on the respective grant dates. During the first five years of the options'
ten-year term, the exercise price was subject to reductions for each year the
Company attained predetermined performance objectives. If the market price of
the Common Stock and the adjusted exercise price of these stock options
converged during the first five years of the option term, the options were to
become immediately exercisable at the converging price.
In fiscal 1994, the Committee reviewed the converging stock option grants in
light of the Company's announced restructuring effort, and concluded that these
options would not provide sufficient incentive to the executives as the Company
focused on improving its operational performance and earnings during this
transition period. Accordingly, the Committee granted new non-qualified stock
options with an exercise price equal to $15.40, the fair market value of the
Common Stock on June 20, 1994. This amount was within the range recommended by
the Committee's independent outside compensation consulting firm. The new grants
were subject, in each such case, to the cancellation of the converging stock
option grant. The details with respect to the option exchange are set forth more
fully in the Ten-Year Option Repricing Table appearing on page 12 of this Proxy
Statement.
COMPENSATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICER
The base salary of Mr. Van Stekelenburg, the Company's President and Chief
Executive Officer, is primarily based upon a survey of salaries paid to Chief
Executive Officers of competitor companies. In 1994, the Company entered into a
five-year employment agreement with Mr. Van Stekelenburg which provides for a
minimum annual salary of $450,000, and a minimum target award of annual
incentive bonus under the Management Incentive Plan (or any similar plan) of 50%
of annual base salary if certain performance goals are met. A detailed
discussion of Mr. Van Stekelenburg's employment agreement is set forth under
"Employment Agreements and Change-in-Control Arrangements" under "EXECUTIVE
COMPENSATION".
As part of the initial compensation package offered to Mr. Van Stekelenburg
when he joined the Company as an Executive Vice President in fiscal 1991, the
Company made an interest-free, secured demand loan to him in connection with the
purchase of his residence (the "1991 Loan"). The maximum amount outstanding
under such loan in fiscal 1995 was $469,000, which Mr. Van Stekelenburg repaid
in March 1995. The Company subsequently made an interest-free, secured demand
loan to Mr. Van Stekelenburg in connection with the purchase of another
residence following the Company's relocation to Illinois (the "1995 Loan"). The
maximum amount outstanding under this loan in fiscal 1995 was $350,000. The
Committee believes that these loans have enhanced the competitiveness of Mr. Van
Stekelenburg's compensation package, and will encourage Mr. Van Stekelenburg to
remain with the Company, in view of the Company's right to demand repayment of
the 1995 Loan in the event Mr. Van Stekelenburg were to leave the Company.
Mr. Van Stekelenburg was awarded a $109,710 cash bonus under the Management
Incentive Plan for fiscal 1995, half of which he elected to convert into shares
of Common Stock under the Company's Convertible Award Plan. Mr. Van Stekelenburg
also received the $300,000 discretionary bonus described above related to
Company improvements under Project RESULTS, and was granted a non-
8
<PAGE>
qualified stock option to purchase 77,500 shares of Common Stock, in connection
with the cancellation of his converging stock options. These options had an
exercise price of $15.40 per share, which was the fair market value of the
Common Stock on the grant date.
SECTION 162(M) OF THE INTERNAL REVENUE CODE OF 1986
In 1993, changes were made to the federal corporate income tax law that
limit the ability of public companies to deduct compensation in excess of $1
million paid annually to the five most highly compensated executive officers.
There are exemptions from this limit, including compensation that is based on
the attainment of performance goals that are established by the Committee and
subsequently approved by the Company's stockholders, and forms of current
compensation provided under a binding contract pre-dating the new tax law. It is
the Committee's policy to seek to qualify executive compensation for
deductibility to the extent consistent with the Company's overall objectives in
attracting, motivating and retaining its executives. The Committee has reviewed
the Company's executive compensation structure in light of the new tax law and
believes that grants of stock options and stock appreciation rights under the
1988 Plan qualify as stockholder-approved performance-based compensation under a
transition rule proposed by the Internal Revenue Service and, therefore, will be
fully deductible when an option is exercised. Grants of restricted stock,
performance stock and cash awards made after the new tax law's effective date,
under each of the 1988 Plan and the Company's Management Incentive Plan,
however, do not qualify as stockholder-approved performance-based compensation
and, therefore, may not be fully deductible to the extent that such
compensation, when added to other non-exempt compensation for a particular
executive, exceeds the limit in any tax year. The Committee believes, however,
that based upon current compensation levels, only compensation paid to the
Company's President and Chief Executive Officer, Mark Van Stekelenburg, is at
risk of not being fully deductible.
In fiscal 1995, due to the receipt of payments made in connection with the
Company's relocation to the Chicago area, the compensation of the Company's
President and Chief Executive Officer exceeded the $1,000,000 pay limit by
almost $100,000. The excess amount resulted from payments totaling $277,561
related to Mr. Van Stekelenburg's relocation to Chicago, Illinois. The Committee
will continue to evaluate the advisability of qualifying the deductibility of
the Company's executive compensation.
The Company sponsors other employee benefit plans for both executives and
non-management employees. The Committee neither administers nor makes any
determinations with respect to any such plan or program.
MANAGEMENT DEVELOPMENT-COMPENSATION AND STOCK OPTION COMMITTEE
Robert G. Zeller, Chairman
R. Burt Gookin
James P. Miscoll
Bernard Sweet
9
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below sets forth annual and long-term compensation for each of the
last three fiscal years awarded to or earned by the President and Chief
Executive Officer of the Company and the four other most highly compensated
executive officers of the Company and its subsidiaries who were serving as
executive officers at the end of the last fiscal year.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION ---------------------------
----------------------------- RESTRICTED SECURITIES
FISCAL OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL YEAR SALARY BONUS COMPENSATION AWARDS(S) OPTIONS COMPENSATION
POSITION (1) ($)(2) ($)(3) ($) ($)(7) (#)(8) ($)(5)
- -------------------- ------- -------- -------- -------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Mark Van 1995 453,485 354,855 314,821(4)(6) 75,758 77,500 6,696
Stekelenburg ...... 1994 432,000 67,050 31,483(4) 0 30,625 3,348
President and Chief 1993 371,407 0 31,905(4) 0 262,500(9) 0
Executive Officer
Harold E. 1995 289,839 81,444 0 21,368 37,500 0
Feather ........... 1994 347,200 44,336 0 0 46,875 0
Executive Vice 1993 307,200 0 0 0 62,500(9) 0
President,
Corporate Planning
Alan V. Giuliani ... 1995 238,653 71,262 0 29,348 25,000 0
President of the 1994 232,560 25,329 0 0 23,438 0
Company's 1993 221,048 14,110 0 0 35,000(9) 0
Rykoff-Sexton
Manufacturing
Division
Robert J. Harter, 1995 222,083 65,737 84,531(6) 21,735 22,500 0
Jr. ............... 1994 219,960 15,940 0 0 32,500(9) 0
Senior Vice 1993 217,401 0 0 0 5,000 0
President -- Human
Resources and
General Counsel
Richard J. 1995 221,054 81,597 0 0 21,250 0
Martin ............ 1994 210,000 19,551 0 0 43,438(9) 0
Senior Vice 1993 184,140 0 0 0 5,000 0
President and Chief
Financial Officer
<FN>
- ------------------------------
(1) Information furnished is for the 52-week fiscal years ended April 29, 1995,
April 30, 1994, and May 1, 1993.
(2) Includes amounts deferred by the Named Executive under the Company's 401(k)
Savings Plan. Includes cash automobile allowances.
(3) Does not include portion of a participant's bonus which the participant
elected to receive in the form of restricted Common Stock of the Company.
The discretionary portion of each bonus awarded to a Named Executive for
fiscal year 1995 was $300,000 for Mr. Van Stekelenburg and $50,000 for each
of the other Named Executives.
(4) Includes $ 37,260, as the aggregate amount of imputed interest during
fiscal year 1995 on Mr. Van Stekelenburg's interest-free demand mortgage
loans. The imputed interest for prior years is also shown in this column.
The 1991 Loan had a principal balance of $469,000 from May, 1991 through
March, 1995, and the 1995 Loan had a principal balance of $350,000 at April
29, 1995. The imputed rate of interest is based on the interest charged by
commercial banks on short-term residential mortgage loans during each of
the fiscal years, and is calculated for informational purposes only. The
Company believes that the mortgage loans to Mr. Van Stekelenburg meet the
conditions set forth in Treasury Regulation 1.7872-5T(c) and, therefore, no
interest need be imputed for income tax purposes.
(5) Term life insurance premiums.
(6) Includes payments totaling $277,561 and $84,531 to each of Messrs. Van
Stekelenburg and Harter, respectively, relating to their relocation to
Chicago, Illinois.
(7) The amount presented is the value of the shares awarded under the Company's
Convertible Award Plan. For fiscal year 1995, the number of restricterd
shares awarded to the Named Executives, including the one-for-five
matching, were as follows: Mr. Van Stekelenburg -- 4,331; Mr. Feather --
1,223; Mr. Giuliani -- 1,679; Mr. Harter -- 1,242; and Mr. Martin -- 0. The
number of shares earned is calculated by dividing the amount of annual
incentive bonus deferred by the Named Executive by the price of the
Company's Common Stock on the New York Stock Exchange ("NYSE") on the
fourth day following the announcement of the Company's annual earnings for
the year preceding the year in which the annual incentive bonus was earned.
For fiscal year 1995, the shares under the plan were earned at a price of
$15.20 per share, and were awarded at a price of $17.75 per share, the
closing price of the Company's Common Stock on the NYSE on the fourth day
following the announcement of the Company's annual earnings for fiscal year
1995. The shares awarded under the plan are not transferable by the
recipient for three years following receipt thereof; however, any dividends
that the Company may declare, will be paid to the recipient during the
three-year restriction period.
(8) Stock option awards for fiscal years 1994 and 1993 have been adjusted to
reflect the Company's 5-for-4 stock dividend of January 24, 1995, with the
exception of converging stock option awards, which were canceled in June
1994.
(9) Stock option awards under the Company's Converging Stock Option Award
program which was canceled in fiscal year 1995. See summary of shares
canceled in "Ten-Year Option Repricing" table on page 12.
</TABLE>
10
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The table below sets forth information on grants of stock options during
fiscal 1995 to the Named Executives under the 1988 Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------
% OF TOTAL GRANT DATE
NUMBER OF OPTIONS VALUE
SECURITIES GRANTED TO ------------
UNDERLYING EMPLOYEES EXERCISE OR GRANT DATE
OPTIONS IN FISCAL BASE EXPIRATION PRESENT
NAME GRANTED (#)(1) YEAR PRICE($/SH) DATE VALUE ($)(4)
- ------------------------- ---------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
Mark Van Stekelenburg.... 77,500(2) 23.80% 15.40 6/20/04 437,100
Harold E. Feather........ 37,500(2) 11.52% 15.40 6/20/04 211,500
Alan V. Giuliani......... 25,000(2) 7.68% 15.40 6/20/04 141,000
Robert J. Harter, Jr..... 22,500(3) 6.91% 15.40 6/20/04 126,900
Richard J. Martin........ 21,250(3) 6.53% 15.40 6/20/04 119,850
<FN>
- ------------------------
(1) All of these non-qualified stock options were granted at a price equal to
the fair market value of the Company's Common Stock on the grant date and
will expire ten years from the date of grant.
(2) 50% of these options become exercisable immediately upon signing of the
Stock Option Agreement and an additional 25% become exercisable on each of
the first and second anniversaries of the grant date.
(3) 25% of these options become exercisable immediately upon signing of the
Stock Option Agreement and 25% each year commencing on the first
anniversary of the grant date.
(4) The estimated grant date present value reflected in the above table is
determined using a modified Black-Scholes model. The material assumptions
and adjustments incorporated in the Black-Scholes model in estimating the
value of the options reflected in the above table include the following:
(i) a grant price of $15.40 per share; (ii) an exercise price of $15.40;
(iii) a stock volatility factor of 0.27; (iv) a risk-free interest rate of
5.94%; (v) a dividend yield of 2.60%; (vi) an option term of 10 years; and
(vii) a 3% annual discount for the four-year vesting period applicable to
such options to adjust for the risk of forfeiture during such period. The
ultimate values of the options will depend on the future market price of
the Common Stock, which cannot be forecast with reasonable accuracy. The
actual value, if any, an optionee will realize upon exercise of an option
will depend on the excess of the market value of the Common Stock over the
exercise price on the date an option is exercised.
</TABLE>
11
<PAGE>
AGGREGATE OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth information on stock options held by the
Named Executives at the end of fiscal 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL AT FISCAL
SHARES YEAR END (#) YEAR END ($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ------------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mark Van Stekelenburg.... 0 0 202,656 92,969 $ 268,609 $365,078
Harold E. Feather........ 0 0 75,783 60,516 181,643 289,609
Alan V. Giuliani......... 0 0 7,110 36,329 89,165 160,995
Robert J. Harter, Jr..... 0 0 20,000 30,000 56,500 107,000
Richard J. Martin........ 0 0 18,516 36,797 61,446 156,338
</TABLE>
TEN-YEAR OPTION REPRICINGS
The table below sets forth information on the Company's repricing of stock
options held by any executive officer of the Company during the last ten
completed fiscal years. In fiscal 1993 and 1994, the Company granted converging
non-qualified stock options to a total of seven executive officers, including
the Named Executives, with an initial exercise price of $28.00 per share, which
was substantially in excess of the $13.40 and $11.20 fair market value of the
Common Stock on the respective grant dates. During the first five years of the
options' ten-year term, the purchase price was subject to reductions for each
year the Company attained predetermined performance objectives. If the market
price of the Common Stock and the adjusted price of these stock options
converged during the first five years of the option term, the options were to
become immediately exercisable at the converging price. In fiscal 1994, the
Committee reviewed the converging stock option grants in light of the Company's
announced restructuring effort, and concluded that these options would not
provide sufficient incentive to executives as the Company focused on improving
its operational performance and earnings during this transition period.
Accordingly, the Committee granted new non-qualified stock options with an
exercise price equal to $15.40, the fair market value of the Common Stock on
June 20, 1994. This amount which was within the range recommended by the
Committee's independent outside compensation consulting firm. The new grants
were subject, in each such case, to the cancellation of the converging stock
option grant.
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES LENGTH OF
UNDERLYING MARKET PRICE EXERCISE OPTION TERM
OPTIONS OF STOCK AT PRICE AT NEW REMAINING AT
REPRICED OR REPRICING OR REPRICING OR EXERCISE REPRICING OR
NAME DATE AMENDED (#) AMENDMENT ($) AMENDMENT ($) PRICE ($) AMENDMENT
- ------------------------- ------- ----------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Mark Van Stekelenburg.... 6/20/94 77,500 15.40 28.00 15.40 Eight Years
Harold E. Feather........ 6/20/94 37,500 15.40 28.00 15.40 Eight Years
Alan V. Giuliani......... 6/20/94 25,000 15.40 28.00 15.40 Eight Years
Robert J. Harter, Jr..... 6/20/94 22,500 15.40 28.00 15.40 Nine Years
Richard J. Martin........ 6/20/94 21,250 15.40 28.00 15.40 Nine Years
Chris G. Adams........... 6/20/94 18,750 15.40 28.00 15.40 Eight Years
Donald E. Willis, Jr..... 6/20/94 21,250 15.40 28.00 15.40 Ten Years
</TABLE>
12
<PAGE>
RETIREMENT BENEFITS
The Pension Plan Table below is based on the Company's tax-qualified
noncontributory defined benefit pension plan (the "Pension Plan"). That table
contains the estimated annual retirement benefits payable on a single life
annuity basis to participating employees, including officers, based on average
earnings and years of participation at retirement.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
- -----------------------------------------------------------------------------
REMUNERATION 10 15 20 25 30 35 40
- ------------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
$150,000 $15,000 $22,500 $30,000 $37,500 $45,000 $52,500 $60,000
175,000 17,500 26,250 35,000 43,750 52,500 61,250 70,000
200,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000
225,000 22,500 33,750 45,000 56,250 67,500 78,750 90,000
235,840 23,584 35,376 47,168 58,960 70,752 82,544 94,336
</TABLE>
The Company and its subsidiary, John Sexton & Co., maintain the Pension Plan
for officers and other eligible employees who are not covered by a union
sponsored retirement plan. The Pension Plan covers employees of the Company for
periods after April 29, 1989. Full vesting under the Pension Plan occurs after
five years of service with the Company and its subsidiaries.
The Pension Plan provides an annual lifetime benefit equal to one percent
(1%) of a participant's final average pay for each year of participation. This
annual benefit is subject to actuarial reduction if the pension is payable
before age 65. Final average pay means the average of the participant's eligible
compensation for the highest five calendar years during the participant's final
fifteen years of participation. Eligible compensation generally includes all
cash compensation, and for fiscal years beginning after 1993, excludes amounts
exceeding $150,000 annually. The $150,000 limit will be adjusted for inflation
in $10,000 increments, to be added each time the cumulative adjustment equals or
exceeds $10,000. However, the limit for compensation earned in the 1993 calendar
year was $235,840, and pension benefits based on that compensation will not be
reduced below the level accrued as of April 30, 1994. Benefits under the Pension
Plan are not subject to deduction for Social Security or other offset amounts.
The Named Executives have the following years of participation as of April
29, 1995: Mr. Van Stekelenburg -- 4, Mr. Feather -- 30, Mr. Giuliani -- 4, Mr.
Martin -- 6 and Mr. Harter -- 5. Mr. Feather's annual pension benefit payable at
age 65 is estimated to be $100,752 ($9,800 more than his projected benefit under
the qualified plan) because he is accruing benefits under a supplemental
non-qualified plan using a more favorable and complex formula provided in the
Pension Plan prior to 1989. This supplemental plan is subject to the
compensation limits described in the preceding paragraph.
The following Pension Plan Table for the President and Chief Executive
Officer is based on an individual arrangement between the Company and Mr. Van
Stekelenburg. The Company has entered into a separate agreement to provide Mr.
Van Stekelenburg with a supplemental executive retirement plan (the "SERP"),
effective July 20, 1994, in connection with his employment agreement. The table
shows the estimated annual retirement benefits payable to Mr. Van Stekelenburg
under the Pension Plan and the SERP on a joint and survivor basis, based on his
average earnings and years of service at retirement. Accrued SERP benefits are
fully vested after five years of Company service or upon disability.
13
<PAGE>
PENSION PLAN TABLE FOR PRESIDENT AND CHIEF EXECUTIVE OFFICER
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------
REMUNERATION 5 10 15 20
- ------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
$ 450,000 $ 67,500 $ 135,000 $ 202,500 $ 270,000
500,000 75,000 150,000 225,000 300,000
600,000 90,000 180,000 270,000 360,000
700,000 105,000 210,000 315,000 420,000
800,000 120,000 240,000 360,000 480,000
900,000 135,000 270,000 405,000 540,000
</TABLE>
The SERP and the Pension Plan (described above) together provide an annual
lifetime benefit equal to sixty percent (60%) of Mr. Van Stekelenburg's final
average pay, reduced by three percent (3%) for each year of Company service less
than 20 years. The annual SERP benefit is reduced by any Social Security
retirement benefits received by Mr. Van Stekelenburg and is actuarially reduced
if the pension is payable before age 60. Final average pay under the SERP means
the average of Mr. Van Stekelenburg's cash compensation during the last three
years of his Company employment. The amounts in the Pension Plan Table For
President and Chief Executive Officer include both SERP and Pension Plan
benefits, but have not been reduced by any Social Security benefits (currently a
maximum of $14,400 annually).
The SERP provides a lifetime disability benefit, payable without actuarial
reduction. The minimum disability benefit is thirty percent (30%) of Mr. Van
Stekelenburg's final average pay. After his death, the SERP also provides a
lifetime benefit for his surviving spouse. The surviving spouse's pension is
sixty percent (60%) of Mr. Van Stekelenburg's retirement benefits under the SERP
and the Pension Plan, reduced by any survivor benefits paid under the Pension
Plan.
EMPLOYMENT AGREEMENTS AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company entered into an employment agreement with Mark Van Stekelenburg
effective July 20, 1994. The employment agreement provides for a five-year term
(with automatic one-year renewals thereafter unless either party gives notice of
termination), a minimum annual base salary of $450,000, and a minimum annual
incentive bonus under the Management Incentive Plan (or any similar plan) of 50%
of annual base salary if certain performance goals are met.
If Mr. Van Stekelenburg's employment is involuntarily terminated without
cause, he will be entitled to receive salary, health and welfare benefits, and
an annual bonus (equal to the average amount of his incentive bonuses during the
three years preceding termination) for the two years following such termination.
In addition, if such involuntary termination occurs during the five year initial
term of the employment agreement, Mr. Van Stekelenburg's stock options will
become immediately exercisable and his years of service for calculating SERP
benefits will be increased by two years. Severance payments will be offset by
any payments (other than tax reimbursements) made under his "change in control"
agreement described below. In general, "cause" is defined as a willful and
continued failure to perform assigned duties after notice of such failure, or
willful misconduct that is materially injurious to the Company. Mr. Van
Stekelenburg will be deemed to have been involuntarily terminated without cause
in any of the following events: (1) the Company's non-renewal of his employment
agreement without cause; (2) Mr. Van Stekelenburg's disability, failure to be
reappointed as President or Chief Executive Officer, or failure to be re-elected
to the Board of Directors or (3) the Board of Director's failure to approve Mr.
Van Stekelenburg's strategic plans for the Company as a result of irreconcilable
differences with respect to the future direction of the Company.
The Company entered into an employment agreement with Harold E. Feather
effective June 20, 1994, which provides that Mr. Feather will be paid a minimum
base salary of $275,000 and an annual car allowance of no less than $7,200
through December 31, 1998. In the event that Mr. Feather is
14
<PAGE>
terminated by the Company for any reason other than Mr. Feather's death,
disability, or for cause, Mr. Feather will continue to receive his base salary
through December 31, 1998, provided that Mr. Feather does not directly or
indirectly compete against the Company.
The Company has entered into agreements with each Named Executive and
certain other officers that provide for the payment of specified benefits if,
within two years after a "change in control," the Company terminates the
employment of the officer other than for disability or cause or if the officer
elects to terminate his employment for "good reason" (as defined in such
agreements). In general, a "change in control" is deemed to occur if any person
becomes the beneficial owner of 25% or more of the combined voting power of the
Company's outstanding securities, or upon a change in the membership of the
Company's Board of Directors within any 12 month period, with the result that
the incumbent directors do not constitute a majority of the Board of Directors.
Under such circumstances, the officer will receive an amount equal to 2.99 times
the sum of his base salary plus the amount that would otherwise be earned under
any executive compensation plan. Mr. Van Stekelenburg will receive an amount
equal to 2.99 times the sum of his base salary plus the amount that would
otherwise be earned under any executive compensation plan if, within two years
subsequent to a change in control, his employment is terminated by the Company
for any or no reason or if Mr. Van Stekelenburg elects to terminate his
employment for any or no reason. The agreements with Messrs. Van Stekelenburg
and Feather also provide for payment of an amount necessary to restore any
benefit diminution if the 20% excise tax imposed under Section 4999 of the
Internal Revenue Code is applicable to their agreements.
15
<PAGE>
PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on the
Common Stock of the Company for the last five fiscal years with the cumulative
total return on the Standard & Poor's 500 Index and the Dow Jones Consumer
Non-Cyclical Index over the same period (assuming the investment of $100 in the
Company's Common Stock and in each index on April 29, 1990 and the reinvestment
of all dividends).
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG RYKOFF-SEXTON, INC., THE S&P 500 INDEX
AND THE DOW JONES CONSUMER NON-CYCLICAL INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
RYKOFF-SEXTON, INC.
<S> <C> <C> <C> <C> <C> <C>
Cumulative
Total Re-
turn
4/90 4/91 4/92 4/93 4/94 4/95
Rykoff-Sexton, Inc. $100 $116 $122 $98 $128 $149
S&P 500 Index $100 $118 $134 $147 $154 $181
Dow Jones Consumer
Non-Cyclical Index $100 $143 $166 $152 $158 $206
</TABLE>
16
<PAGE>
CERTAIN TRANSACTIONS
During fiscal 1995, Mr. Mark Van Stekelenburg, President and Chief Executive
Officer of the Company, was indebted to the Company in the amount of $469,000 in
connection with the 1991 Loan. This amount was repaid in full in March 1995. Mr.
Van Stekelenburg was also indebted to the Company during fiscal 1995 in the
amount of $350,000 in connection with the 1995 Loan. The largest aggregate
amount of indebtedness outstanding during fiscal 1995 was $469,000. The amount
of such indebtedness outstanding as of July 21, 1995 was $350,000. The 1995
indebtedness is evidenced by a secured, non-interest bearing demand promissory
note.
The law firm of Maslon Edelman Borman & Brand, a Professional Limited
Liability Partnership, of which Mr. Neil I. Sell is a partner, provided legal
services to the Company during fiscal 1995.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee, has
selected Arthur Andersen LLP as independent public accountants for fiscal 1996.
Arthur Andersen LLP has been the independent public accountants for the Company
since 1972. A representative of Arthur Andersen LLP is expected to attend the
meeting and to have an opportunity to make a statement and respond to
appropriate questions from stockholders.
Unless instructed to the contrary, all proxies will be voted for
ratification of the appointment of Arthur Andersen LLP as independent public
accountants for the Company for fiscal 1996.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who beneficially own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC. Officers, directors and greater
than ten percent beneficial owners are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms filed by them.
Based solely on its review of copies of such forms furnished to the Company,
or written representations that no filings of Form 5 reports were required, the
Company believes that during the fiscal year ended April 29, 1995, the Company's
officers, directors and greater than ten percent beneficial owners complied with
all Section 16(a) filing requirements applicable to them.
PROPOSALS OF STOCKHOLDERS
All proposals of stockholders intended to be presented at the 1996 Annual
Meeting of Stockholders of the Company pursuant to the Exchange Act must be
received by the Company at its executive offices on or before March 30, 1996.
OTHER MATTERS
The Board of Directors does not intend to present to the meeting any other
matters not referred to above and does not presently know of any matters that
may be presented to the meeting by others. If other matters are properly brought
before the meeting, the persons named in the enclosed proxy will vote in
accordance with their best judgment.
By Order of the Board of Directors
Neil I. Sell
SECRETARY
17
<PAGE>
RYKOFF-SEXTON, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS--SEPTEMBER 15, 1995
The undersigned, a stockholder of Rykoff-Sexton, Inc., hereby appoints James I.
Maslon and R. Burt Gookin, and each of them, as proxies, with full power of
substitution, to vote on behalf of the undersigned the number of shares which
the undersigned is then entitled to vote, at the Annual Meeting of the
Stockholders of Rykoff-Sexton, Inc. to be held at the Park Hyatt Hotel, 800
North Michigan Avenue, Chicago, Illinois, 60611, on Friday, September 15, 1995,
at 10:00 A.M., and at any adjournments thereof, with all the powers which the
undersigned would possess if personally present, upon the following:
(CONTINUED ON THE REVERSE SIDE)
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. It will be
voted on the proposals set forth herein as directed by the stockholders,
but if no direction is made in the space provided, it will be voted FOR
each of the proposals.
/X/ PLEASE MARK YOUR CHOICES LIKE THIS
------------------- -------------------------
COMMON D.R.S.
PLEASE MARK YOUR CHOICE
IN BLUE OR BLACK INK
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH PROPOSAL
- --------------------------------------------------------------------------------
(1) To elect four persons to the Board of Directors, three of whom have terms
ending in 1998 and one of whom has a term ending in 1997.
FOR all nominees WITHHOLD AUTHORITY
(except as marked to vote for all nominees
to the contrary) listed
/ / / /
James P. Miscoll Bernard Sweet
Jan W. Jeurgens Mark Van Stekelenburg
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name in the space provided below.)
_______________________________________________________________________________
(2) Approval of Arthur Andersen, LLP as independent public accountants for the
Company for fiscal 1996.
(3) Upon such other business as may properly come before the meeting or any
adjornment thereof.
FOR AGAINST ABSTAIN
/ / / / / /
The undersigned hereby revokes all previous
proxies relating to the shares covered hereby
and acknowledges receipt of the Notice and
Proxy Statement relating to the Annual Meeting.
Dated ___________________________________ ,1995
_______________________________________________
Signature
_______________________________________________
Signature
(Stockholder must sign exactly as the name
appears at left. When signed as a corporate
officer, executor, administrator, trustee,
guardian, etc., please give full title as
such. Both joint tenants must sign.)
