<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(3)(2))
/X/ Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
SCHULTZ SAV-O STORES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement
number,or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
SCHULTZ SAV-O STORES, INC.
2215 UNION AVENUE
SHEBOYGAN, WISCONSIN 53081
------------------------
LOGO
NOTICE OF 1996 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 8, 1996
---------------------
TO THE SHAREHOLDERS OF SCHULTZ SAV-O STORES, INC.:
NOTICE IS HEREBY GIVEN that the 1996 annual meeting of shareholders of
Schultz Sav-O Stores, Inc., a Wisconsin corporation ("Company"), will be held at
the John Michael Kohler Arts Center, 608 New York Avenue, Sheboygan, Wisconsin,
on Wednesday, May 8, 1996, at 3:00 p.m., for the following purposes:
1. To elect three directors for three-year terms.
2. To ratify the Board of Directors' selection of the Company's 1996
independent auditors.
3. To transact such other business as may properly come before the annual
meeting or any adjournments thereof.
Only holders of record of Common Stock at the close of business on March 20,
1996 will be entitled to notice of, and to vote at, the annual meeting.
It is desirable that as many shareholders as possible be represented at the
meeting, in person or by proxy. Even if you expect to attend the meeting in
person, please complete, date, sign and mail the accompanying proxy in the
enclosed postage paid envelope. You may revoke your proxy at any time before it
is actually voted by notice in writing to the undersigned or by voting in person
at the meeting. Your attention is directed to the attached Proxy Statement and
accompanying proxy.
On Behalf of the Board of Directors
[SIGNATURE]
John H. Dahly
EXECUTIVE VICE PRESIDENT,
TREASURER AND SECRETARY
Sheboygan, Wisconsin
March 22, 1996
YOUR VOTE IS IMPORTANT NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE. TO
ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE DATE THE ENCLOSED PROXY, WHICH
IS SOLICITED BY THE BOARD OF DIRECTORS, SIGN EXACTLY AS YOUR NAME APPEARS AND
RETURN IMMEDIATELY IN THE ENVELOPE PROVIDED.
<PAGE>
SCHULTZ SAV-O STORES, INC.
---------------
PROXY STATEMENT
LOGO
---------------------
FOR
1996 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 8, 1996
GENERAL INFORMATION
This Proxy Statement and accompanying proxy are being furnished to the
shareholders of Schultz Sav-O Stores, Inc., a Wisconsin corporation ("Company"),
beginning on or about March 25, 1996 in connection with the solicitation by the
Board of Directors of the Company ("Board") of proxies for use at the Company's
1996 annual meeting of shareholders to be held at the John Michael Kohler Arts
Center, 608 New York Avenue, Sheboygan, Wisconsin, on Wednesday, May 8, 1996, at
3:00 p.m., and at any adjournment thereof ("Meeting"), for the purposes set
forth in the attached Notice of 1996 Annual Meeting of Shareholders and in this
Proxy Statement.
Only record holders of outstanding shares of the Company's Common Stock
("Common Stock") as of the close of business on March 20, 1996 ("Record Date")
are entitled to notice of, and to vote at, the Meeting. As of the Record Date,
4,653,598 shares of Common Stock were outstanding. The record holder of each
outstanding share of Common Stock as of the Record Date is entitled to one vote
per share for each proposal submitted for shareholder consideration at the
Meeting.
A proxy, in the accompanying form, which is properly executed, duly returned
to the Company or its authorized representatives or agents and not revoked will
be voted in accordance with the instructions contained therein. If no
specification is indicated on the proxy, the shares represented thereby will be
voted FOR the Board's three nominees for director, FOR ratification of the
Board's selection of the Company's 1996 independent auditors and on such other
matters which may properly come before the Meeting in accordance with the best
judgment of the individual proxies named in the proxy. Execution of a proxy
given in response to this solicitation will not affect a shareholder's right to
attend the Meeting and to vote in person. Presence at the Meeting of a
shareholder who has signed a proxy does not in itself revoke a proxy. Each proxy
granted may be revoked by the person giving it at any time before its exercise
by giving written notice to such effect to the Company's Secretary or the
Company's authorized representatives or agents at the Meeting, by execution and
delivery of a subsequent proxy or by attendance and voting in person at the
Meeting, except as to any matter upon which, prior to such revocation, a vote
shall have been cast pursuant to the authority conferred by such proxy.
<PAGE>
ELECTION OF DIRECTORS
Three members of the Board are to be elected at the Meeting for three-year
terms to expire at the Company's 1999 annual meeting of shareholders. John H.
Dahly, Martin Crneckiy, Jr. and R. Bruce Grover are the Board's nominees for
such directorships.
It is intended that the persons named as proxies in the accompanying proxy
will vote FOR the election of the Board's three nominees. If any nominee should
become unable to serve as a director prior to the Meeting, the shares
represented by proxies otherwise voted in favor of the Board's three nominees or
which do not contain any instructions will be voted FOR the election of such
other person as the Board may recommend. Under Wisconsin law, directors are
elected by a plurality of the votes cast by the shares entitled to vote in the
election, assuming a quorum is present. For this purpose, "plurality" means that
the individuals receiving the largest number of votes are elected as directors,
up to the maximum number of directors to be chosen at the election. Therefore,
any shares of Common Stock which are not voted on this matter at the Meeting,
whether by abstention, broker nonvote or otherwise, will have no effect on the
election of directors at the Meeting.
Thomas H. Fox, a member of the Board since 1978 and the Senior Vice
President - Director of Retail Operations, retired from the Board and as an
executive officer effective March 1, 1996. William K. Jacobson, the new Senior
Vice President - Retail Operations of the Company was appointed by the Board to
fill the vacancy created by Mr. Fox's retirement for the remainder of Mr. Fox's
term, which expires in 1998.
Certain information about the Board's nominees and its continuing members is
set forth below. Unless otherwise indicated, all occupations listed are or were
with the Company.
THE BOARD RECOMMENDS A VOTE FOR
JOHN H. DAHLY, MARTIN CRNECKIY, JR. AND R. BRUCE GROVER
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED (1)
DIRECTOR ----------------------
NAME AND AGE CURRENT PRINCIPAL OCCUPATION SINCE SHARES PERCENT
- -------------------------- -------------------------------------------- ----------- --------- -----------
<S> <C> <C> <C> <C>
CLASS I -- NOMINEES FOR TERMS TO EXPIRE IN 1999
John H. Dahly Executive Vice President, Chief Financial 1984 84,212 1.81%
55 Officer, Treasurer and Secretary
Martin Crneckiy, Jr. Executive Vice President and Chief Financial 1989 3,000 *
50 Officer of The Vollrath Company
(manufacturer of stainless steel and
plastic wares and light equipment for the
international food service industry)
R. Bruce Grover President and Chief Executive Officer of 1989 2,000 *
60 Vinyl Plastics, Inc. (manufacturer of solid
vinyl floor products, custom extruded
sheets and sound barrier materials for
automotive applications)
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED (1)
DIRECTOR ----------------------
NAME AND AGE CURRENT PRINCIPAL OCCUPATION SINCE SHARES PERCENT
- -------------------------- -------------------------------------------- ----------- --------- -----------
<S> <C> <C> <C> <C>
CLASS II -- DIRECTORS WHOSE TERMS EXPIRE IN 1997
Howard C. Dickelman 1959 304,100 6.53%
76 Retired; formerly Chairman of the Board
Michael R. Houser Senior Vice President - Marketing and 1992 68,778 1.48%
44 Merchandising
CLASS III -- DIRECTORS WHOSE TERMS EXPIRE IN 1998
James H. Dickelman Chairman of the Board, President and Chief 1978 196,166 4.22 %
48 Executive Officer
William K. Jacobson 1996 53,925 1.16 %
45 Senior Vice President - Retail Operations
Bernard S. Kubale Former Chief Executive Officer and current 1962 2,524 *
67 Partner in the law firm of Foley & Lardner
</TABLE>
- ------------------------
* Less than 1%.
(1) Individuals have sole voting and investment power over all shares listed.
Shares owned separately by wives and certain adult children are not included
and beneficial ownership of such shares is disclaimed, including 37,860
shares owned by a revocable trust for the benefit of Howard C. Dickelman's
wife, 5,474 shares owned by James H. Dickelman's adult son, 5,474 shares
owned by James H. Dickelman's adult daughter and 984 shares owned by John H.
Dahly's wife. James H. Dickelman also disclaims beneficial ownership of the
304,100 and 37,860 shares held by Howard C. Dickelman and his wife,
respectively, pursuant to separate revocable trusts, over each of which he
serves as co-trustee. Such disclaimed shares are not included in James H.
Dickelman's share totals set forth above. The figures include the following
shares allocated to the accounts of certain directors (who are also
officers) in the Schultz Sav-O Stores Retirement Savings Plan ("Retirement
Savings Plan") as of December 31, 1995, over which such individuals retain
sole investment power and shared voting power, as described under "Principal
Shareholders": James H. Dickelman, 66,177; John H. Dahly, 15,889; Michael R.
Houser, 18,248; and William K. Jacobson, 25,458. The figures also include
the following shares issuable under stock options exercisable within 60 days
of the Record Date: James H. Dickelman, 93,867; John H. Dahly, 55,567;
Michael R. Houser, 45,500; and William K. Jacobson, 28,467. See "Executive
Compensation -- Stock Options."
During the last five years, all directors have held the same or a similar
position with the Company or other employer as described in the table above,
except William K. Jacobson, who was Vice President-Franchise Operations prior to
January 1996 and Senior Vice President-Franchise Operations from January 1996 to
March 1, 1996. James H. Dickelman is the son of Howard C. Dickelman.
Bernard S. Kubale retired as the Chairman and Chief Executive Officer of
Foley & Lardner as of January 31, 1994. He currently serves as a director of
Banta Corporation (printing and graphic arts) and Consolidated Papers, Inc.
(manufacturer of coated printing papers).
3
<PAGE>
During 1995, the Board held six meetings. The Board has an Audit Committee
consisting of Bernard S. Kubale (Chairman), Martin Crneckiy, Jr., R. Bruce
Grover and Howard C. Dickelman. In 1995, the Audit Committee met twice. The
principal functions of the Audit Committee are to meet with the Company's
independent auditors to review the scope and results of their audit; to review
the adequacy of the financial and accounting control mechanisms used by the
Company; and to approve the performance of any nonaudit professional services by
the Company's independent auditors. The Board also has a Compensation and Stock
Option Committee consisting of Bernard S. Kubale (Chairman), Martin Crneckiy,
Jr., R. Bruce Grover and Howard C. Dickelman. The principal functions of the
Compensation and Stock Option Committee, which met three times in 1995, are to
evaluate and establish compensation and benefit levels for the Company's
officers, including administering the Company's stock option plans. The Board's
Nominating Committee recommends criteria for selection to the Board, helps
determine potential Board candidates, reviews Board compensation policies and
recommends candidates to serve on each standing committee of the Board. Members
of the Nominating Committee include James H. Dickelman (Chairman), John H.
Dahly, Bernard S. Kubale, R. Bruce Grover, Martin Crneckiy, Jr. and Howard C.
Dickelman. The Nominating Committee met twice in 1995. Written shareholder
recommendations for director candidates, including appropriate background
information, will be kept on file by the Company and considered by the
Nominating Committee.
At the annual meeting of the Board scheduled to be held May 8, 1996, the
Board intends to bifurcate the current Compensation and Stock Option Committee
into two separate and distinct committees to be named the Compensation Committee
and the Stock Option Committee. The principal function of the Stock Option
Committee will be to evaluate, establish and grant stock options and other
equity incentive awards and administer the Company's stock option and equity
incentive plans. The principal function of the Compensation Committee will be to
evaluate and establish the compensation and benefits levels for the Company's
officers, except with respect to stock option and equity incentive awards
administered by the Stock Option Committee. It is expected that the new Stock
Option Committee will consist of Martin Crneckiy, Jr. (Chairman), Howard C.
Dickelman and R. Bruce Grover, and it is expected that the new Compensation
Committee will consist of Bernard S. Kubale (Chairman), Howard C. Dickelman,
Martin Crneckiy, Jr. and R. Bruce Grover.
4
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information as of the Record Date
regarding the beneficial ownership of Common Stock held by (i) each person or
entity known to the Company who beneficially owned 5% or more of the Common
Stock; (ii) each executive officer of the Company who is named in the Summary
Compensation Table set forth below under "Executive Compensation -- Summary
Compensation Information;" and (iii) all current directors and executive
officers of the Company as a group. Except as otherwise indicated, all shares
listed are owned with sole voting and investment power.
<TABLE>
<CAPTION>
NAME OF SHAREHOLDER OR GROUP SHARES PERCENT
- -------------------------------------------------------------------------------------------- --------- -----------
<S> <C> <C>
Schultz Sav-O Stores Retirement Savings Plan (1)............................................ 957,065 20.57%
Neuberger & Berman L.P. (2)................................................................. 370,000 7.95%
Delaware Management Holdings, Inc. (3)...................................................... 425,400 9.14%
Howard C. Dickelman (4)..................................................................... 304,100 6.53%
Dimensional Fund Advisors Inc. (5).......................................................... 259,000 5.57%
James H. Dickelman (6)...................................................................... 196,166 4.22%
John H. Dahly (6)........................................................................... 84,212 1.81%
Michael R. Houser (6)....................................................................... 68,778 1.48%
All directors and executive officers as a group (13 persons) (7)............................ 886,629 19.05%
</TABLE>
- ------------------------------
(1) The share amount listed is derived from the amended Schedule 13G dated as of
January 30, 1996 filed with the Securities and Exchange Commission ("SEC")
and the Company. The listed shares were held by Marshall & Ilsley Trust
Company ("M&I"), as trustee for the Retirement Savings Plan. A Plan
Administrative Committee, consisting of James H. Dickelman, John H. Dahly,
William K. Jacobson, Armand C. Go and Daniel L. Weigel, administers the
Retirement Savings Plan and shares voting power for the shares listed with
the participants in the Retirement Savings Plan in that the Committee is
entitled to vote all shares for which no voting instructions are received
from participants. The Retirement Savings Plan participants have investment
power over the listed shares held by the Retirement Savings Plan which are
allocated to their accounts. The address of M&I is 1000 North Water Street,
Milwaukee, Wisconsin 53202. The address for the individual members of the
Committee is c/o Schultz Sav-O Stores, Inc., 2215 Union Avenue, Sheboygan,
Wisconsin 53081. See "Executive Compensation -- Report on Executive
Compensation."
(2) The share amount listed is from the amended Schedule 13G dated as of
February 12, 1996 filed with the SEC and the Company. The address of
Neuberger & Berman L.P. is 605 Third Avenue, New York, New York 10158-3698.
(3) The share amount listed is from the amended Schedule 13G dated as of
February 12, 1996 filed with the SEC and the Company. The address of
Delaware Management Holdings, Inc. is 2005 Market Street, Philadelphia,
Pennsylvania 19103.
(4) The address for Mr. Dickelman is c/o Schultz Sav-O Stores, Inc., 2215 Union
Avenue, Sheboygan, Wisconsin 53081. The share amount listed for Mr.
Dickelman has been derived from his amended Schedule 13G dated as of January
7, 1996 filed with the SEC and the Company. See footnote (1) to the table
set forth under "Election of Directors."
(5) The share amount listed is from the amended Schedule 13G dated as of January
31, 1995 filed with the SEC and the Company, adjusted to reflect the two for
one stock split effected in the form of a stock dividend on September 15,
1995. The Company has not received a subsequent amendment to such amended
Schedule 13G. The address of Dimensional Fund Advisors Inc. is 1299 Ocean
Avenue, 11th Floor, Santa Monica, California 90401.
(6) See footnote (1) to the table set forth under "Election of Directors" for
certain additional information concerning the beneficial ownership of Common
Stock by James H. Dickelman, John H. Dahly and Michael R. Houser,
respectively.
(7) The share amount listed includes 286,300 shares issuable under stock options
exercisable within 60 days of the Record Date and 226,149 shares
beneficially held by current directors and executive officers in the
Retirement Savings Plan, but excludes 49,792 shares as to which beneficial
ownership is disclaimed by certain of such individuals. See footnote (1) to
the table set forth under "Election of Directors" and footnote (1) above for
additional information.
5
<PAGE>
EXECUTIVE COMPENSATION
REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee of the Board ("Committee")
evaluates and establishes the compensation of the Company's executive officers.
The Committee's executive compensation policies and practices generally reflect
the Company's efforts to attract, motivate and retain the Company's executive
officers by providing a total compensation package based on corporate and
personal performance and which is competitive within the Company's industry.
Executive officers' compensation has historically been comprised of salary,
stock option grants and corporate contributions to the Company's Retirement
Saving Plan. Beginning in 1995, the Committee adopted an Officer Annual
Incentive Plan ("Incentive Plan") intended to further motivate the Company's
executive officers to achieve annual corporate financial performance goals for
the economic benefit of all shareholders by rewarding executive officers
individually and as a team for the achievement of such goals. The Incentive Plan
provides for the establishment of an annual variable bonus pool based on the
Company's achievement of certain specified levels of economic value added for
the year then ended. For purposes of the Incentive Plan, economic value added is
determined by calculating the difference between the Company's annual net
earnings after tax and a pre-established target threshold investment return
based on the Company's weighted average cost of capital. Ten percent of the
resulting economic value added for the year is placed in the incentive pool,
together with 5% of any increase in the current year's economic value added over
the prior year's economic value added. The resultant total incentive pool is
then distributed 50% to all executive officers pro rata according to relative
salary levels and 50% based on each officer's relative achievement of
pre-established individual and group performance goals. A total bonus pool of
$209,000 was established in 1995 under the Incentive Plan, with $184,000
contributed as a result of the Company's economic value added amount for 1995
and $25,000 as a result of 1995 economic value added generated by the Company
being in excess of 1994 economic value added generated by the Company.
The Committee adjusts each executive officer's salary, including the salary
of James H. Dickelman, the Chairman of the Board, President and Chief Executive
Officer of the Company, at the end of each fiscal year for the forthcoming
fiscal year. Although the Committee does not set specific objective performance
criteria upon which it bases its salary adjustment decisions, the Committee
analyzes and evaluates the Company's relative sales, earnings, return on sales,
cost and expense levels, and balance sheet strength for the year then ending
compared to the Company's historical results, as well as to the current trends
and results within the Company's industry. Based on such analysis and
evaluation, supplemented by the advice and guidance of a national executive
compensation consulting firm, for 1995 the Committee subjectively determined Mr.
Dickelman's and the other executives' salaries, in conjunction with the other
elements of each such executive's base compensation package, to fall generally
within a range of 15% of the estimated market values of the average salaries and
compensation packages of similarly situated executives at other generally
comparable food wholesalers and retailers, including several companies included
in the Company's stock performance peer group index. Variations within or
outside of that range for each officer were based on the Committee's evaluation
of the Company's and the individual's relative performance and achievements for
1994. For executive officers other than Mr. Dickelman, the Committee considered
the compensation recommendations of Mr. Dickelman. In establishing salary levels
for 1996, including Mr. Dickelman's, and discretionary bonuses for 1995 out of
the bonus pool for other executives, the Committee considered specifically the
success of the Company's shareholder value enhancement plan (as evidenced by the
Company's total shareholder return between 1994 and 1995 as set forth under
"Stock Performance Information"). Also, the Committee took into account the
increase in the Company's ratio of
6
<PAGE>
after tax earnings as a percent of sales from 1.21% to 1.33% from 1994 to 1995,
as well as the reduction in 1995 expense levels resulting from the Company's
continued successful strategy of converting corporate stores into franchise
units and emphasizing wholesale over retail sales. One-half of Mr. Dickelman's
bonus amount of $48,974 for 1995 was based on his pro rata share of the bonus
pool established under the Incentive Plan and the remaining one-half was based
on his achievement of individual and group financial and other goals and
objectives established at the beginning of 1995 by the Committee. These goals
and objectives included specified targeted levels of sales, earnings and
economic value added, which were all substantially achieved or exceeded. Other
established goals and objectives which were achieved by Mr. Dickelman and which
were considered by the Committee included improving the financial performance of
both the Company's corporate stores and the Company's warehouse and distribution
operations, as well as the success of the Company's shareholder value
enhancement plan.
Stock options are generally granted annually to executive officers each
January by the Committee and are based principally on the executive officer's
relative position at the Company, his existing and anticipated ability to
directly impact corporate performance, compensation, seniority, grants made in
the past, options held and stock ownership. Each executive officer's individual
initiatives and achievements within the Company over the prior year also affect
the level of such officer's option grants. The Company's 1990 Stock Option Plan
and the 1995 Equity Incentive Plan are intended to promote the best interests of
the Company and its shareholders by providing key employees with the opportunity
to acquire, or increase, their ownership interests in the Company and thereby
develop a stronger incentive to put forth maximum effort for the continued
success and growth of the Company. Options have historically been granted at
100% of the Common Stock's fair market value on the date of grant, have a term
of not to exceed seven years and vest in increments of one-third on each of the
first, second and third anniversaries of the grant date. Since the economic
value of stock options is inherently dependent upon the level of future market
price appreciation of the underlying Common Stock, stock options granted by the
Committee will only provide executive officers with value to the extent the
market price of the Common Stock increases above the option exercise price on
the grant date. Thus, the Committee believes that stock option grants help
better align the economic interests of the Company's management with its
shareholders. Under the 1995 Equity Incentive Plan, the Committee has the
additional flexibility to grant other types of equity-based incentive awards
(including stock appreciation rights, restricted stock and performance shares)
in addition to stock options. However, the Committee has to date continued its
historical practice of granting stock options on terms substantially identical
to past practice.
The Company's Retirement Savings Plan is a qualified profit sharing plan
which provides for supplemental income at retirement for all salaried employees
of the Company who meet the service requirement (generally, one complete
calendar year of service with the Company). The retirement benefits provided by
the Retirement Savings Plan for each participant are based upon the value of the
participant's account balance at retirement. The Retirement Savings Plan
requires the Company to make an annual basic contribution which, when added to
forfeitures for the year, is equal to 5% of the participant's salary for the
year, plus an additional aggregate discretionary contribution as determined by
the Board based on corporate performance and other factors. Basic contributions
are allocated to each participant's account on the basis of the participant's
eligible total compensation compared to the compensation of all participants for
such year. Discretionary contributions are allocated in the same way, except
that Company contributions to Social Security benefits are taken into account in
determining allocations of discretionary contributions. The Company's
discretionary contribution to the Retirement Savings Plan in 1995 was
approximately 4.3% of each participant's eligible compensation. Effective as of
October 1, 1994, the Retirement Savings Plan permitted pretax employee
contributions pursuant to Internal Revenue Code Section 401(k). The
7
<PAGE>
Company provides a 25% matching contribution on pretax employee contributions up
to 4% of pay. Most of the Company's executive officers (including all of the
named executives officers set forth below) have typically invested all, or a
substantial portion, of their annual Retirement Savings Plan allocations in
shares of Common Stock. At the end of 1995, the Company's 9 current executive
officers as a group held 226,149 shares, or approximately 4.9% of the total
outstanding Common Stock on the Record Date, in their accounts under the
Retirement Savings Plan. See "Principal Shareholders."
The Company also maintains an Executive Benefit Restoration Plan, which is
an unfunded supplemental benefit pension plan intended to provide benefits
otherwise denied to participants under the Retirement Savings Plan by reason of
limitations imposed by the Internal Revenue Code. The Executive Benefit
Restoration Plan provides benefit accruals on pay in excess of the amount able
to be recognized by the Retirement Savings Plan equivalent to the rate of
Company basic and discretionary contributions made under the Retirement Savings
Plan for the year.
As described above under "Election of Directors," in order to allow the
continued tax deductibility by the Company of all compensation realized by
executive officers from the exercise of stock options, the Board intends to
bifurcate the Committee into a Stock Option Committee and a Compensation
Committee. Given the levels of compensation and benefits provided currently to
the named executive officers, the Committee does not otherwise believe it is
necessary to conform or adjust its compensation policies, plans or practices to
comply with the $1 million executive compensation deductibility cap imposed by
Internal Revenue Code Section 162(m).
BY THE COMPENSATION AND STOCK
OPTION COMMITTEE:
Bernard S. Kubale, Chairman
Howard C. Dickelman
Martin Crneckiy, Jr.
R. Bruce Grover
8
<PAGE>
SUMMARY COMPENSATION INFORMATION
The following table sets forth certain information concerning compensation
paid by the Company for its last three fiscal years to the Company's Chief
Executive Officer and the other executive officers of the Company who earned
over $100,000 in fiscal 1995. The persons named in the table below are
hereinafter sometimes referred to as the "named executive officers."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
STOCK OPTION
FISCAL ANNUAL ANNUAL OTHER ANNUAL GRANTS (2),(3) ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1) (SHARES) COMPENSATION (4)
- ---------------------------------- --------- ----------- --------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
James H. Dickelman 1995 $ 225,000 $ 48,974 0 26,000 $ 39,595
Chairman of the Board, President 1994 $ 205,000 0 $ 19,344 24,000 $ 26,661
and Chief Executive Officer 1993 $ 180,000 0 0 18,000 $ 23,320
John H. Dahly 1995 $ 126,000 $ 27,426 0 12,000 $ 15,335
Executive Vice President, Chief 1994 $ 117,000 0 $ 13,003 11,200 $ 14,303
Financial Officer, Treasurer and 1993 $ 111,115 0 0 11,100 $ 13,139
Secretary
Michael R. Houser 1995 $ 120,000 $ 26,669 0 11,200 $ 14,640
Senior Vice President - Marketing 1994 $ 112,000 0 $ 6,929 10,600 $ 13,544
and Merchandising 1993 $ 105,097 0 0 10,500 $ 12,250
</TABLE>
- ------------------------
(1) Amounts set forth under this column represented payments by the Company in
1994 of a tax offset bonus on the exercise of stock options granted under
the Company's 1987 Stock Option Plan. No other tax offset bonuses have been
granted to executive officers.
(2) Adjusted to reflect two for one Common Stock split effected in the form of a
100% stock dividend on September 15, 1995.
(3) Granted at 100% fair market value on the date of grant under (i) the
Company's 1995 Equity Incentive Plan with respect to stock options granted
in 1995, and (ii) the Company's 1990 Stock Option Plan with respect to stock
options granted in 1994 and 1993. See footnote (1) to the table set forth
under "Stock Options-Option Grants in 1995 Fiscal Year" below for additional
information.
(4) For all of the named executive officers other than Mr. Dickelman, amounts
set forth under this column represent solely Company contributions to its
Retirement Savings Plan for the account of each named executive officer. For
Mr. Dickelman, the amounts include benefit accruals under the Company's
Executive Benefit Restoration Plan and Company contributions to the
Retirement Savings Plan. In 1995, Mr. Dickelman received a benefit accrual
of $20,349 under the Company's Executive Benefit Restoration Plan and
$19,246 of Company contributions to the Retirement Savings Plan. See
"Severance and Change in Control Arrangements" below with respect to certain
severance arrangements between the Company and the named executive officers
in the event of a "change in control" of the Company.
9
<PAGE>
STOCK OPTIONS
The following table sets forth information concerning the grant of stock
options under the Company's 1995 Equity Incentive Plan during fiscal 1995 to the
named executive officers.
OPTION GRANTS IN 1995 FISCAL YEAR
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES TOTAL OPTIONS
UNDERLYING GRANTED TO ALL EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE (2) PRESENT
NAME GRANTED (1) 1995 FISCAL YEAR (PER SHARE) EXPIRATION DATE VALUE (3)
- ------------------------------------------ ----------- ---------------- ----------- --------------------- -----------
<S> <C> <C> <C> <C> <C>
James H. Dickelman........................ 26,000 27.0% $ 9.75 January 30, 2002 $ 86,060
John H. Dahly............................. 12,000 12.5% $ 9.75 January 30, 2002 $ 39,720
Michael R. Houser......................... 11,200 11.6% $ 9.75 January 30, 2002 $ 37,072
</TABLE>
- ------------------------
(1) The options reflected in the table are nonqualified stock options under the
Internal Revenue Code and were granted on January 30, 1995. The exercise
price of each option granted was equal to 100% of the fair market value of
the Common Stock on the date of grant, as determined by the Committee. The
options granted vest in increments of one-third on each of the first, second
and third anniversaries of the grant date; provided, however, that no
options may be exercised more than seven years after the date of grant. The
options are subject to early vesting in the event of the optionee's death,
disability or retirement after reaching age 65. Under the Award Agreements
granting the options, upon a "change in control" of the Company (as defined
in such Award Agreements), all options then outstanding will become
immediately exercisable in full for the remainder of their term and each
optionee will have the right for a period of 30 days to require the Company
to purchase his outstanding options for cash at the aggregate "acceleration
price" for all shares of Common Stock then subject to such options, provided
that at least six months has elapsed since the grant date.
(2) The exercise price of options may be paid in cash, by delivering previously
issued shares of Common Stock or any combination thereof.
(3) The option values presented are based on the Black-Scholes option pricing
model adapted for use in valuing stock options. The actual value, if any,
that an optionee may realize upon exercise will depend on the excess of the
market price of the Common Stock over the option exercise price on the date
the option is exercised. There is no assurance that the actual value
realized by an optionee upon the exercise of an option will be at or near
the value estimated under the Black-Scholes model. The estimated values
under the Black-Scholes model are based on arbitrary assumptions as to
variables such as interest rates, stock price volatility and future dividend
yield, including the following: (a) an assumed United States Treasury bond
rate of 7.7%; (b) stock price volatility of 13.6% (based on 36-month stock
price history ending January 31, 1995); and (c) a current dividend yield of
1.2%.
10
<PAGE>
The following table sets forth certain information with respect to the named
executive officers concerning their exercise of stock options during the 1995
fiscal year and the value of their unexercised stock options held as of the end
of fiscal 1995.
1995 FISCAL YEAR-END AGGREGATED OPTION VALUE TABLE
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
NUMBER OF UNDERLYING OPTIONS AT END IN-THE- MONEY OPTIONS AT
SHARES VALUE OF FISCAL 1995 END OF FISCAL 1995 (2)
ACQUIRED UPON REALIZED -------------------------- --------------------------
NAME EXERCISE (1) (2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------- -------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James H. Dickelman................ 13,800 $ 64,377 85,600 48,000 $ 651,212 $ 292,640
John H. Dahly..................... 9,676 45,139 54,633 23,167 412,579 143,207
Michael R. Houser................. 6,900 32,189 41,933 21,767 318,685 134,735
</TABLE>
- ------------------------
(1) Adjusted to reflect two for one Common Stock split effected in the form of a
100% stock dividend on September 15, 1995.
(2) The dollar values were calculated by determining the difference between the
fair market value of the underlying shares of Common Stock ($14.75, the
closing sale price per share on December 29, 1995) and the various
applicable exercise prices of the named executive officers' outstanding
options at exercise or the end of fiscal 1995, respectively.
DIRECTOR COMPENSATION
Directors, other than directors who are Company employees or who receive
legal fees for their attendance at Board meetings, are paid an annual retainer
of $5,000 plus $300 for each attended Board meeting and committee meeting not
held in conjunction with Board meetings.
SEVERANCE AND CHANGE IN CONTROL ARRANGEMENTS
The Company has severance agreements with the named executive officers which
provide that, following a "change of control" of the Company (as defined in the
severance agreements), such executive officer will be employed for three years
in the same position, performing equivalent duties, and at the same location as
in effect immediately prior to the change of control. During the employment
period, the officer is entitled to receive a salary based upon his compensation
rate in effect at the date of change of control (subject to increase by the
Committee) and to be included in the Company's benefit plans available to
employees of comparable status. If during the employment period the officer's
employment is terminated by the Company, other than for "cause" (as defined in
the severance agreements) or the officer's disability, or the officer's duties
are changed substantially without his written consent and the officer terminates
his employment as a result, the officer is entitled to receive a lump sum
payment equal to the officer's base salary for the greater of the remainder of
the employment period or one year, plus the actuarially determined present value
of the benefit accruals that would have been made through the end of the
employment period under the Company's retirement plans applicable to the
officer. The officer and his eligible dependents are also entitled to coverage
under the Company's medical benefit plans through the end of the employment
period.
Additionally, as described in footnote (1) to the table under "Option Grants
in 1995 Fiscal Year," upon a "change in control" of the Company, stock options
granted to the named executive officers will become
11
<PAGE>
fully exercisable and the optionee will then have the right to require the
Company to purchase his outstanding options for cash at the aggregate
"acceleration price" for all shares of Common Stock subject to such options.
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Howard C. Dickelman, a retired former executive officer of the Company, and
Bernard S. Kubale, a partner in the law firm which serves as the Company's
general counsel, have both been members of the current Compensation and Stock
Option Committee for many years. Upon the bifurcation of the Committee into the
Compensation Committee and the Stock Option Committee, Mr. Dickelman is expected
to be a member of both such Committees and Mr. Kubale is expected to be a member
of the Compensation Committee only.
12
<PAGE>
STOCK PERFORMANCE INFORMATION
Set forth below is a line graph comparing the quarterly percentage change
during the last five years in the Company's cumulative total shareholder return
on the Common Stock, compared to the cumulative total return of companies
included within The Wilshire 5000 Index and companies in a peer group of food
retailers and wholesalers selected in good faith by the Company. The companies
comprising the peer group index include: Arden Group, Inc., Delchamps, Inc.,
Marsh Supermarkets, Inc., Nash Finch Co., Rich Food Holdings, Inc., Seaway Food
Town, Inc. and Super Food Services, Inc. Super Rite Corp., a company included in
the peer group index in past years, was acquired by Rich Food Holdings, Inc. in
October 1995 and is therefore no longer included in the peer group index. The
shareholder returns of each of these companies have been weighted based on each
such company's relative market capitalization as of the beginning of each
period.
COMPARISON OF FIVE-YEAR TOTAL RETURNS
(ON A DIVIDEND REINVESTED BASIS)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
12/30/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
<S> <C> <C> <C> <C> <C> <C>
Wilshire 5000 Index 100 134 146 163 163 222
Company Index 100 103 114 129 166 255
Peer group Index 100 97 103 124 110 158
</TABLE>
13
<PAGE>
RATIFICATION OF AUDITORS AND OTHER MATTERS
Arthur Andersen LLP has been selected by the Board as the Company's
independent auditors for 1996. The Board recommends a shareholder vote FOR
ratification of such selection. The affirmative vote of more shares than those
voted against such ratification at the Meeting is required for ratification.
Under Wisconsin law, any shares of Common Stock which are not voted on this
matter at the Meeting, whether by abstention, broker nonvote or otherwise, will
have no effect on the ratification of auditors. Arthur Andersen LLP has served
as the Company's independent auditors for many years. A representative of Arthur
Andersen LLP is expected to be present at the Meeting and will have an
opportunity to make a statement if he desires to do so and to respond to
appropriate questions.
The election of directors and ratification of the Company's 1996 auditors
are the only matters known to the Board which will be presented for shareholder
consideration at the Meeting. If any other matters should properly come before
the Meeting, the proxies named in the accompanying proxy will vote on such
matters in accordance with their best judgment.
The cost of soliciting proxies will be borne by the Company. The Company
expects to solicit proxies primarily by mail. Proxies may also be solicited
personally and by telephone by certain officers and regular employees of the
Company. It is not anticipated that anyone will be specially engaged to solicit
proxies or that special compensation will be paid for that purpose. The Company
will reimburse brokers and other nominees for their reasonable expenses in
communicating with the persons for whom they hold Common Stock.
UPON THE WRITTEN REQUEST OF ANY SHAREHOLDER, ADDRESSED TO THE SECRETARY OF
THE COMPANY, THE COMPANY WILL PROVIDE TO SUCH SHAREHOLDER WITHOUT CHARGE A COPY
OF THE COMPANY'S 1995 ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS) AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION.
Any shareholder proposal intended for consideration at the 1997 annual
meeting of shareholders must be received by the Company no later than November
25, 1996 in order to be considered for inclusion in the Company's proxy
statement and proxy for that meeting.
By Order of the Board of Directors
[SIGNATURE]
John H. Dahly
EXECUTIVE VICE PRESIDENT,
TREASURER AND SECRETARY
March 22, 1996
14
<PAGE>
[FRONT]
SCHULTZ SAV-O STORES, INC.
1996 ANNUAL MEETING OF SHAREHOLDERS - MAY 8, 1996
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints James H. Dickelman and John H. Dahly, and
each or either of them as proxies, each with the power to appoint his
substitute, and hereby authorizes each or either of them to represent and to
vote, as designated below, all the shares of Common Stock of Schultz Sav-O
Stores, Inc. held of record by the undersigned on March 20, 1996 at the 1996
annual meeting of shareholders scheduled to be held on May 8, 1996 and any
adjournment thereof.
1. Election of Directors / / FOR all nominees listed below / / WITHHOLD
(except as marked to the authority to
contrary below). vote for all
nominees listed
below.
JOHN H. DAHLY, MARTIN CRNECKIY, JR. AND R. BRUCE GROVER
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below).
-----------------------------------------------------------------------
2. Ratification of Arthur Andersen LLP as the Company's 1996 independent
auditors.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, upon such other business as may properly come before
the meeting and at any adjournment thereof.
(Continued on reverse side)
[BACK]
(Continued from reverse side)
RETIREMENT SAVINGS PLAN
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy will
be voted FOR the three specified director nominees, FOR the ratification of
Arthur Andersen LLP as the Company's 1996 independent auditors, and on such
other business as may properly come before the meeting in accordance with the
best judgment of the proxies named herein.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
and accompanying Proxy Statement relating to the Company's 1996 Annual Meeting
of Shareholders, and the Company's 1995 Annual Report.
Dated: -----------------------------------, 1996
Signed -----------------------------------------
-----------------------------------------
Signature(s) of Shareholder(s)
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON.
When shares are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give
your full title as such. If a corporation, please
sign in full corporate name by the president or
other authorized officer. If a partnership, please
sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD IMMEDIATELY USING THE
ENCLOSED ENVELOPE.
<PAGE>
[FRONT]
SCHULTZ SAV-O STORES, INC.
1996 ANNUAL MEETING OF SHAREHOLDERS - MAY 8, 1996
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints James H. Dickelman and John H. Dahly, and
each or either of them as proxies, each with the power to appoint his
substitute, and hereby authorizes each or either of them to represent and to
vote, as designated below, all the shares of Common Stock of Schultz Sav-O
Stores, Inc. held of record by the undersigned on March 20, 1996 at the 1996
annual meeting of shareholders scheduled to be held on May 8, 1996 and any
adjournment thereof.
1. Election of Directors / / FOR all nominees listed below / / WITHHOLD
(except as marked to the authority to
contrary below). vote for all
nominees listed
below.
JOHN H. DAHLY, MARTIN CRNECKIY, JR. AND R. BRUCE GROVER
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below).
-----------------------------------------------------------------------
2. Ratification of Arthur Andersen LLP as the Company's 1996 independent
auditors.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, upon such other business as may properly come before
the meeting and at any adjournment thereof.
(Continued on reverse side)
[BACK]
(Continued from reverse side)
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy will
be voted FOR the three specified director nominees, FOR the ratification of
Arthur Andersen LLP as the Company's 1996 independent auditors, and on such
other business as may properly come before the meeting in accordance with the
best judgment of the proxies named herein.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
and accompanying Proxy Statement relating to the Company's 1996 Annual Meeting
of Shareholders, and the Company's 1995 Annual Report.
Dated: -----------------------------------, 1996
Signed -----------------------------------------
-----------------------------------------
Signature(s) of Shareholder(s)
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON.
When shares are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give
your full title as such. If a corporation, please
sign in full corporate name by the president or
other authorized officer. If a partnership, please
sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD IMMEDIATELY USING THE
ENCLOSED ENVELOPE.
