<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
/ / 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/ No fee required.
/ / 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 1997 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 14, 1997
---------------------
TO THE SHAREHOLDERS OF SCHULTZ SAV-O STORES, INC.:
NOTICE IS HEREBY GIVEN that the 1997 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 14, 1997, at 3:00 p.m., for the following purposes:
1. To elect two directors for three-year terms.
2. To ratify the Board of Directors' selection of the Company's 1997
independent public accountants.
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 26,
1997 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
April 2, 1997
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.
---------------
[LOGO]
PROXY STATEMENT
---------------------
FOR
1997 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 14, 1997
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 April 2, 1997 in connection with the solicitation by the
Board of Directors of the Company ("Board") of proxies for use at the Company's
1997 annual meeting of shareholders to be held at the John Michael Kohler Arts
Center, 608 New York Avenue, Sheboygan, Wisconsin, on Wednesday, May 14, 1997,
at 3:00 p.m., and at any adjournment thereof ("Meeting"), for the purposes set
forth in the attached Notice of 1997 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 26, 1997 ("Record Date")
are entitled to notice of, and to vote at, the Meeting. As of the Record Date,
4,623,098 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 two nominees for director, FOR ratification of the Board's
selection of the Company's 1997 independent public accountants 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
Two members of the Board are to be elected at the Meeting for three-year
terms to expire at the Company's 2000 annual meeting of shareholders. Howard C.
Dickelman and Michael R. Houser 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 two 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 two 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.
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
HOWARD C. DICKELMAN AND MICHAEL R. HOUSER
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED (1)
DIRECTOR ----------------------
NAME AND AGE CURRENT PRINCIPAL OCCUPATION SINCE SHARES PERCENT
- -------------------------- --------------------------------------------------------- ----------- --------- -----------
<S> <C> <C> <C> <C>
CLASS II -- NOMINEES FOR TERMS TO EXPIRE IN 2000
- --------------------------------------------------------------------------------------------------------------------------
Howard C. Dickelman Retired; formerly Chairman of the Board 1959 304,100 6.58%
78
Michael R. Houser Senior Vice President - Marketing and Merchandising 1992 75,642 1.62%
45
CLASS III -- DIRECTORS WHOSE TERMS EXPIRE IN 1998
- --------------------------------------------------------------------------------------------------------------------------
James H. Dickelman Chairman of the Board, President and Chief Executive 1978 223,996 4.74%
49 Officer
William K. Jacobson Senior Vice President - Retail Operations 1996 55,128 1.19%
46
Bernard S. Kubale Former Chief Executive Officer and current Partner in the 1962 2,524 *
68 law firm of Foley & Lardner
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED (1)
DIRECTOR ----------------------
NAME AND AGE CURRENT PRINCIPAL OCCUPATION SINCE SHARES PERCENT
- -------------------------- --------------------------------------------------------- ----------- --------- -----------
CLASS I -- DIRECTORS WHOSE TERMS EXPIRE IN 1999
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John H. Dahly Executive Vice President, Chief Financial Officer, 1984 97,750 2.09%
56 Treasurer and Secretary
Martin Crneckiy, Jr. Executive Vice President and Chief Financial Officer of 1989 3,000 *
51 The Vollrath Company, LLC (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 Vinyl Plastics, 1989 2,000 *
61 Inc. (manufacturer of solid vinyl floor products, custom
extruded sheets and sound barrier materials for
automotive applications)
</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, 1996, over which such individuals retain
sole investment power and shared voting power, as described under "Principal
Shareholders": James H. Dickelman, 68,674; John H. Dahly, 17,694; Michael R.
Houser, 18,412; and William K. Jacobson, 25,995. The figures also include
the following shares issuable under stock options exercisable within 60 days
of the Record Date: James H. Dickelman, 104,000; John H. Dahly, 56,300;
Michael R. Houser, 48,900; and William K. Jacobson, 29,133. 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).
During 1996, the Board held nine meetings. The Board has an Audit Committee
consisting of Bernard S. Kubale (Chairman), Martin Crneckiy, Jr., R. Bruce
Grover and Howard C. Dickelman. In 1996, the
3
<PAGE>
Audit Committee met twice. The principal functions of the Audit Committee are to
meet with the Company's independent public accountants 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 public accountants.
In May 1996, the Board bifurcated its Compensation and Stock Option Committee
into two separate and distinct committees, the Stock Option Committee and the
Compensation Committee. The Stock Option Committee currently consists of Martin
Crneckiy, Jr. (Chairman), Howard C. Dickelman and R. Bruce Grover, and its
principal function is to evaluate, establish and grant stock options and other
equity incentive awards and administer the Company's stock option and equity
incentive plans. The Stock Option Committee met three times in 1996, including
two times as part of the combined Compensation and Stock Option Committee. The
Compensation Committee currently consists of Bernard S. Kubale (Chairman), R.
Bruce Grover, Howard C. Dickelman and Martin Crneckiy, Jr. The principal
function of the Compensation Committee, which met three times in 1996, including
two times as part of the combined Compensation and Stock Option Committee, is to
evaluate and establish compensation and benefit levels of the Company's
officers, except with respect to stock option and equity incentive awards
administered by the Stock Option Committee. 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 1996. Written shareholder recommendations for
director candidates, including appropriate background information, will be kept
on file by the Company and considered by the Nominating Committee.
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).......................................... 821,194 17.76%
Delaware Management Holdings, Inc. (2).................................................... 446,800 9.67%
Howard C. Dickelman (3)................................................................... 304,100 6.58%
Dimensional Fund Advisors Inc. (4)........................................................ 258,100 5.58%
Neuberger & Berman, LLC (5)............................................................... 331,000 7.16%
Reich & Tang Asset Management L.P. (6).................................................... 250,700 5.42%
Delphi Management, Inc. (7)............................................................... 242,300 5.24%
James H. Dickelman (8).................................................................... 223,996 4.74%
John H. Dahly (8)......................................................................... 97,750 2.09%
Michael R. Houser (8)..................................................................... 75,642 1.62%
William K. Jacobson (8)................................................................... 55,128 1.19%
All directors and executive officers as a group (13 persons) (9).......................... 949,845 19.23%
</TABLE>
- ------------------------
(1) The share amount listed is derived from the amended Schedule 13G dated as
of February 3, 1997 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
December 31, 1996 filed with the SEC and the Company. The address of
Delaware Management Holdings, Inc. is 2005 Market Street, Philadelphia,
Pennsylvania 19103.
(3) 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."
(4) The share amount listed is from the amended Schedule 13G dated as of
February 5, 1997 filed with the SEC and the Company. The address of
Dimensional Fund Advisors Inc. is 1299 Ocean Avenue, 11th Floor, Santa
Monica, California 90401.
(5) The share amount listed is from the amended Schedule 13G dated as of
February 10, 1997 filed with the SEC and the Company. The address of
Neuberger & Berman L.P. is 605 Third Avenue, New York, New York 10158-3698.
(6) The share amount listed is from the Schedule 13G dated as of February 15,
1997 filed with the SEC and the Company. The address of Reich & Tang Asset
Management is 600 Fifth Avenue, New York, New York 10020.
(7) The share amount listed is from the Schedule 13G dated as of January 29,
1997 filed with the SEC and the Company. The address of Delphi Management,
Inc. is 50 Rowes Wharf, Suite 440, Boston, Massachusetts 02110.
(8) 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, Michael R. Houser and William K.
Jacobson, respectively.
(9) The share amount listed includes 316,533 shares issuable under stock options
exercisable within 60 days of the Record Date and 229,632 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 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 is comprised of salary, stock option grants,
corporate contributions to the Company's Retirement Saving Plan and cash bonuses
under the Officer Annual Incentive Plan ("Incentive Plan"). The Incentive Plan
is 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 deposited 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. Fifty percent of the resultant total incentive pool is
then distributed 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, as determined by the Committee. A total
bonus pool of $228,000 was established in 1996 under the Incentive Plan, with
$213,000 contributed as a result of the Company's economic value added amount
for 1996 and $15,000 as a result of the amount of 1996 economic value added
generated by the Company being in excess of the amount of the Company's 1995
economic value added.
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. Objective performance criteria are established for each of the
officers which the Committee considers in its salary adjustment decisions and
bonus allocations. The Committee also 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, for 1996 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 the estimated 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. For executive officers
other than Mr. Dickelman, the Committee considered the compensation
recommendations of Mr. Dickelman. In raising the salary levels of executive
officers, including Mr. Dickelman, and in allocating discretionary bonuses for
1996 out of the bonus pool for other executives, the Committee considered
specifically the Company's outstanding earnings and sales increases in 1996
compared to 1995 results and budgeted expectations. For the first time since
1992, the Company's annual revenues increased from the prior year. Fiscal 1996
earnings and earnings per share set new records and were 10.7% and 12.5%,
respectively, ahead of last year. Also, the Committee took into account the
increase in the Company's ratio of after tax earnings as a percent of sales from
1.33% to 1.42% from 1995 to 1996, as well as the Company's success in generating
6
<PAGE>
same-store sales growth by introducing its new card marketing program into
almost 60% of its franchised and corporate stores by the end of 1996. Also, the
amount of cash dividends per share paid to shareholders increased by almost 64%
in 1996 from the amount paid in 1995. Mr. Dickelman's bonus amount of $59,060
for 1996 was based on his pro rata share of the bonus pool established under the
Incentive Plan and on his achievement of individual and group financial and
other goals and objectives established at the beginning of 1996 by the
Committee. These goals and objectives included specified targeted levels of
sales, earnings and economic value added, all of which were 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 distribution operations.
Stock options are generally granted annually to executive officers shortly
after the end of each year by the Stock Option Committee (which includes all of
the members of the Compensation Committee, except Bernard S. Kubale) 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 1995 Equity Incentive Plan is 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 Stock Option 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 Stock Option
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 Stock Option 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 Stock Option 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 eligible (1,000
hours or more per year) salaried employees of 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. The Company may make an additional
discretionary contribution as determined by the Board. Basic contributions are
allocated to each participant's account on the basis of the participant's
eligible 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 the
allocation of discretionary contributions. The Company's discretionary
contribution to the Retirement Savings Plan in 1996 was approximately 4.3% of
each participant's eligible compensation. The Retirement Savings Plan permits
pretax employee contributions pursuant to Internal Revenue Code Section 401(k).
The Company provides a 25% matching contribution on pretax employee
contributions up to 4% of pay. Most of the Company's executive officers
(including
7
<PAGE>
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 1996, the Company's nine
current executive officers as a group held 229,632 shares, or approximately 5.0%
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.
Other than bifurcating its Compensation and Stock Option 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).
<TABLE>
<S> <C>
BY THE COMPENSATION COMMITTEE: BY THE STOCK OPTION COMMITTEE:
Bernard S. Kubale, Chairman Martin Crneckiy, Jr., Chairman
Martin Crneckiy, Jr. Howard C. Dickelman
Howard C. Dickelman R. Bruce Grover
R. Bruce Grover
</TABLE>
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 1996. 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) ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1) (SHARES) COMPENSATION (3)
- ----------------------------------- --------- ----------- --------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
James H. Dickelman 1996 $ 247,500 $ 59,060 $ 0 26,000 $ 51,358
Chairman of the Board, President 1995 $ 225,000 $ 48,974 $ 0 26,000 $ 39,595
and Chief Executive Officer 1994 $ 205,000 $ 0 $ 19,344 24,000 $ 26,661
John H. Dahly 1996 $ 136,000 $ 32,453 $ 0 12,000 $ 21,054
Executive Vice President, Chief 1995 $ 126,000 $ 27,426 $ 0 12,000 $ 15,335
Financial Officer, Treasurer and 1994 $ 117,000 $ 0 $ 13,003 11,200 $ 14,303
Secretary
Michael R. Houser 1996 $ 130,000 $ 32,236 $ 0 11,200 $ 20,036
Senior Vice President - Marketing 1995 $ 120,000 $ 26,669 $ 0 11,200 $ 14,640
and Merchandising 1994 $ 112,000 $ 0 $ 6,929 10,600 $ 13,544
William K. Jacobson 1996 $ 84,000 $ 20,045 $ 0 8,000 $ 18,039
Senior Vice President - Retail 1995 $ 75,000 $ 16,669 $ 0 7,600 $ 7,878
Operations 1994 $ 67,000 $ 0 $ 0 7,400 $ 6,549
</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) 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
to Messrs. Dickelman, Dahly and Houser in 1996 and 1995 and Mr. Jacobson in
1996, and (ii) the Company's 1990 Stock Option Plan with respect to stock
options granted to Mr. Jacobson in 1995 and to Messrs. Dickelman, Dahly,
Houser and Jacobson in 1994. See footnote (1) to the table set forth under
"Stock Options -- Option Grants in 1996 Fiscal Year" below for additional
information.
(3) For all of the named executive officers other than Mr. Jacobson, amounts set
forth under this column represent benefit accruals under the Company's
Executive Benefit Restoration Plan and Company contributions to the
Retirement Savings Plan. In 1996, Mr. Dickelman, Mr. Dahly and Mr. Houser
received benefit accruals of $32,327, $2,023 and $1,005, respectively, under
the Company's Executive Benefit Restoration Plan and each also received
$19,031 of Company contributions to the Retirement Savings Plan. For Mr.
Jacobson, the amounts include $5,652 of moving expenses and $12,387 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 1996 to the
named executive officers.
OPTION GRANTS IN 1996 FISCAL YEAR
<TABLE>
<CAPTION>
PERCENTAGE OF
TOTAL OPTIONS
SHARES GRANTED TO ALL
UNDERLYING EMPLOYEES IN EXERCISE GRANT DATE
OPTIONS 1996 FISCAL PRICE (2) PRESENT
NAME GRANTED (1) YEAR (PER SHARE) EXPIRATION DATE VALUE (3)
- ------------------------------------------ ----------- --------------- ----------- --------------------- -----------
<S> <C> <C> <C> <C> <C>
James H. Dickelman........................ 26,000 29.35% $ 15.75 January 30, 2003 $ 90,220
John H. Dahly............................. 12,000 13.54% $ 15.75 January 30, 2003 $ 41,640
Michael R. Houser......................... 11,200 12.64% $ 15.75 January 30, 2003 $ 38,864
William K. Jacobson....................... 8,000 9.03% $ 15.75 January 30, 2003 $ 27,760
</TABLE>
- ------------------------
(1) The options reflected in the table are nonqualified stock options under the
Internal Revenue Code and were granted on January 30, 1996. 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 5.47%; (b) stock price volatility of 17.16% (based on 36-month stock
price history ending January 31, 1997); and (c) a current dividend yield of
2.57%.
The following table sets forth certain information with respect to the named
executive officers concerning their exercise of stock options during the 1996
fiscal year and the value of their unexercised stock options held as of the end
of fiscal 1996.
10
<PAGE>
1996 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 OF FISCAL 1996 END OF FISCAL 1996 (1)
ACQUIRED UPON VALUE -------------------------- --------------------------
NAME EXERCISE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------- -------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James H. Dickelman................ 14,400 $ 106,452 93,867 51,333 $ 628,043 $ 124,667
John H. Dahly..................... 10,500 $ 77,621 55,567 23,733 $ 373,283 $ 57,800
Michael R. Houser................. 7,200 $ 53,226 45,500 22,200 $ 305,916 $ 54,258
William K. Jacobson............... 7,000 $ 50,750 21,467 15,533 $ 148,092 $ 37,258
</TABLE>
- ------------------------
(1) The dollar values were calculated by determining the difference between the
fair market value of the underlying shares of Common Stock and the various
applicable exercise prices of the named executive officers' outstanding
options at exercise or the end of fiscal 1996, respectively. The fair market
value at the end of fiscal 1996 was $14.00, the closing sale price per share
on December 27, 1996, the last trading day of such fiscal year.
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 1996 Fiscal Year," upon a "change in control" of the Company, stock options
granted to the named executive officers will become 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 COMMITTEE 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 Compensation Committee for many
years. Mr. Dickelman is also a member of the Stock Option Committee.
11
<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., Richfood Holdings, Inc., and Seaway
Food Town, Inc. 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>
12/27/91 12/31/92 12/31/93 12/30/94 12/29/95 12/27/96
<S> <C> <C> <C> <C> <C> <C>
Wilshire 5000 Index $ 100 112 125 124 169 208
Company Index $ 100 111 126 161 248 241
Peer Group Index $ 100 113 135 120 176 221
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
12/27/91 12/31/92 12/31/93 12/30/94 12/29/95 12/27/96
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Wilshire 5000 Index 100 112 125 124 169 208
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Company Index 100 111 126 161 248 241
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Peer Group Index 100 113 135 120 176 221
</TABLE>
12
<PAGE>
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
AND OTHER MATTERS
Arthur Andersen LLP has been selected by the Board as the Company's
independent public accountants for 1997. 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 independent public
accountants. Arthur Andersen LLP has served as the Company's independent public
accountants 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 1997 independent
public accountants 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 1996 ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS) AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION.
Any shareholder proposal intended for consideration at the 1998 annual
meeting of shareholders must be received by the Company no later than November
28, 1997 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
April 2, 1997
13
<PAGE>
SCHULTZ SAV-O STORES, INC.
1997 ANNUAL MEETING OF SHAREHOLDERS - MAY 14, 1997
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 26, 1997 at the 1997
annual meeting of shareholders scheduled to be held on May 14, 1997 and any
adjournment thereof.
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 two specified director nominees, FOR the ratification
of Arthur Andersen LLP as the Company's 1997 independent public accountants,
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 1997
Annual Meeting of Shareholders, and the Company's 1996 Annual Report.
DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
- ------------------------------------------------------------------------------
SCHULTZ SAV-O-STORES, INC. 1997 ANNUAL MEETING
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS: 1-Howard C. Dickelman, / / FOR all / / WITHHOLD AUTHORITY
2-Michael R. Houser nominees listed to to vote for all
the left (except as nominees listed
specified below). to the left.
</TABLE>
------------------------------
(Instructions: To withhold authority to vote
for any indicated nominee, write the number(s)
of the nominee(s) in the box provided to the
right.) ------------------------------
2. Ratification of Arthur Andersen LLP
as the Company's 1997 independent public / /FOR / / AGAINST / / ABSTAIN
accountants.
3. In their discretion, upon such other business as may properly come before
the meeting and at any adjournment thereof.
Address Change?
Mark Box / / Date NO. OF SHARES
indicate changes below: ---------- ------------------------
------------------------
Signature(s) in Box
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.
