SEAWAY FOOD TOWN, INC.
1020 Ford Street - P. O. Box 892 - Maumee, Ohio 43537-0892
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
_______________________
TO THE SHAREHOLDERS OF SEAWAY FOOD TOWN, INC.:
Notice is hereby given that the ANNUAL MEETING of the shareholders of Seaway
Food Town, Inc., an Ohio corporation, will be held at the Brandywine Country
Club, Fireside Room, 6904 Salisbury Road, Maumee, Ohio, on Thursday, the 9th
of January, 1997, at 2:00 p.m., Eastern Standard Time, for the purpose of
considering and acting upon:
(1) The election of three (3) Directors to serve as members of Class III
during the ensuing three years and until their successors are elected and
qualified.
(2) A proposal to ratify the selection of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending August 30, 1997.
(3) The transactions of such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business November 22, 1996 will
be entitled to vote at the meeting or any adjournment thereof.
Accompanying this notice is a copy of the Annual Report of the Company
reflecting operations for the 1995-1996 fiscal year.
By the Order of the Board of Directors
GARY D. SIKKEMA
Secretary
Maumee, Ohio
December 13, 1996
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT IN PERSON ON JANUARY 9, 1997 ARE
REQUESTED TO SIGN, DATE AND RETURN THE ATTACHED PROXY AS PROMPTLY AS POSSIBLE.
<PAGE>
PROXY STATEMENT
OF
SEAWAY FOOD TOWN, INC.
1020 FORD STREET, P. O. BOX 892, MAUMEE, OHIO 43537-0892
December 13, 1996
THE ACCOMPANYING PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF SEAWAY
FOOD TOWN, INC., for use at the Annual Meeting of Shareholders to be held
January 9, 1997, and at any adjournment thereof. This proxy statement and the
accompanying form of proxy are being mailed to security holders on or about
December 13, 1996. Any shareholder giving a proxy may revoke it by giving
written notice to the Secretary of the Company, or in open meeting, at any
time before it is voted. The Company will bear the cost of the solicitation
and will reimburse brokers or other persons holding Common Shares of the
Company in their names, or in the name of their nominees, for reasonable
expenses in forwarding the proxy and proxy statement to the beneficial owners
of such shares.
VOTING SECURITIES
At the close of business on November 22, 1996, the record date for the
determination of shareholders entitled to vote at the Annual Meeting, there
were outstanding 2,195,209 shares of Common Stock, without par value (stated
value $2 per share). The voting power of the shareholders of the Company is
vested exclusively in the holders of such Common Shares. The presence in
person or by proxy of the holders of a majority of the outstanding shares
will constitute a quorum at the Annual Meeting of Shareholders. Holders of
Common Shares of record at the close of business on November 22, 1996 will
be entitled to one vote per share on all business which is conducted at the
meeting, except that shareholders have cumulative voting rights in the
election of directors. Cumulative voting means that each shareholder is
entitled to multiply the number of shares he is entitled to vote by the
number of directors to be elected and to allocate the resulting aggregate
votes among the nominees for election in such manner as desired. In order
to exercise the right to vote cumulatively upon the election of directors,
a shareholder must give notice in writing to the President, the Treasurer
or the Secretary of the Company, which notice must be given on or before
2:00 P.M., January 7, 1997, and shall state the desire of the shareholder
to exercise cumulative voting rights in the election of directors. Announce-
ment thereof must be given at the meeting, as provided by Section 1701.55(C)
of the Ohio Revised Code, and thereupon all shareholders shall have the
right to vote cumulatively. The Chairman of the meeting or the Secretary
will make an announcement at the meeting of any such notice that may be
received.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The total number of Directors on the Board of Directors of the Company fixed
under the Code of Regulations is twelve (12). However, the Board of Directors
is operating with nine (9) members.
The Board of Directors of the Company is divided into three (3) Classes, each
consisting of three (3) Directors. The terms of office for the members of
Class III of the Board of Directors will expire with this Annual Meeting and
until their successors are elected and qualified. The terms of office of the
nominees for Class III, if elected, will expire with the Annual Meeting held
subsequent to the close of the fiscal year ending August 28, 1999, and until
their successors are elected and qualified.
With respect to the Class III nominees, Paul L. Pope has decided not to seek
another term as a Company Director. W. Geoffrey Lyden III has been nominated
to run for the position being vacated by Mr. Pope. In light of Mr. Pope's
long and distinguished service with and for the Company and his particular
expertise in the Company's business, he will remain with the Board as a
Director Emeritus. The Director Emeritus designation means that Mr. Pope
will serve the board in a advisory capacity only. He will not vote on any
matters before the board and will not serve on any Board Committees.
It is presently intended that the shares represented by management proxies
will, unless a contrary intent is expressed, be voted for the election of the
nominees listed below, each to serve as a member of Class III for a three-year
term and to hold office until a successor is elected and qualified.
All nominees have consented to being named in this Proxy Statement and to
serve if elected. If any nominee subsequently declines or is unable to
accept such nomination to serve as a Director, an event which the management
does not now expect, the persons voting the shares represented by management
proxies will vote for such substitute nominee as may be named by the Board of
Directors.
<PAGE>
An affirmative vote of the holders of a majority of the shares represented
at the Annual Meeting is required to elect a nominee unless cumulative voting
rights are exercised. Proxies cannot be voted for a greater number of persons
than the number of nominees named in Class III to be elected at the Annual
Meeting. The holders of management proxies will have discretionary authority
to cumulate votes.
INFORMATION CONCERNING NOMINEES AND DIRECTORS
The following table sets forth certain information as of November 22, 1996
with respect to those persons who are Directors and/or nominees for election
as Directors:
<TABLE>
<CAPTION>
YEAR COMMON STOCK
NAME AND AGE DIRECTOR TERM BENEFICIALLY PERCENT
OF DIRECTOR PRINCIPAL OCCUPATION SINCE EXPIRES OWNED (1)(2)(3) OF CLASS
CLASS III DIRECTORS (NOMINEES FOR ELECTION)
<S> <C> <C> <C> <C> <C>
Wallace D. Iott Chairman of the Board 1957 1997 436,879 (6)(8) 19.90%
Age 81 of the Company
W. Geoffrey Lyden III Chairman of the Board NEW 1997 0 0%
Age 44 and Chief Executive Officer,
The Lyden Company,
Toledo, Ohio
David J. Walrod Executive Vice President, 1987 1997 30,510 (6) 1.39%
Age 50 Operations of the Company
CLASS I DIRECTORS (CONTINUING IN OFFICE)
Thomas M. O'Donnell Chairman of the Board, 1970 1998 3,600 (9) *
Age 59 McDonald & Company Invest-
ments, Inc., Investment
Bankers, Cleveland, Ohio
Richard K. Ransom President,Ransom Consulting 1989 1998 2,000 *
Age 77 Partnership; Former Chairman
of the Board and President of
Hickory Farms of Ohio, Inc.
Joel A. Levine Of Counsel, Spengler 1995 1998 0 *
Age 58 Nathanson,
Attorneys at Law (4)
CLASS II DIRECTORS (CONTINUING IN OFFICE)
Waldo E. Yeager Chief Financial Officer, 1987 1999 5,962 (6) *
Age 60 Treasurer of the Company
Richard B. Iott Chief Executive Officer 1987 1999 183,225 (6)(7) 8.35%
Age 45 and President of the
Company
Eugene R. Wos Owner, Cross Winds One-Stop 1996 1999 0 *
Age 65 Travel, Inc., Maumee, Ohio;
former Managing Partner
Ernst & Young LLP, Certified Public
Accountants, Toledo, Ohio. (5)
* Less than 1%
</TABLE>
The Board of Directors has appointed an Audit Committee whose members for
the fiscal year ended August 31, 1996 were Eugene R. Wos, Thomas M. O'Donnell,
Richard K. Ransom, and Joel A. Levine (14). The Committee's purpose is to
recommend outside auditors and to review the scope of audit procedures, audit
reports and other matters with respect to the Company's financial reporting.
This Committee met two (2) times during the fiscal year.
The Board of Directors appointed an Executive Compensation Committee whose
members for the fiscal year ended August 31, 1996 were Wallace D. Iott, Richard
B. Iott, Thomas M. O'Donnell, Joel A. Levine and Eugene R. Wos (14). This
Committee's purpose is to review compensation paid to the members of the Board
of Directors and the corporate officers of the Company and recommend changes
in their compensation. This Committee met one (1) time during the fiscal
year.
The Board of Directors appointed a Nominating Committee for the fiscal
year ended August 31, 1996 whose members were Wallace D. Iott, Richard B.
Iott, Thomas M. O'Donnell, Joel A. Levine, and Eugene R. Wos (14). This
<PAGE>
Committee's purpose is to review the desirability of new members of the
Board of Directors and to seek out and recommend candidates for positions
on the Board of Directors. Shareholders who desire to have an individual
considered by the Nominating Committee for the next vacant position on the
Board of Directors should submit the recommendation in writing to the
Secretary of the Company before the September 1 preceding the next Annual
Meeting of the Shareholders and include biographical information and
qualifications for service as a director. The Nominating Committee met
one (1) time during the fiscal year.
During the fiscal year ended August 31, 1996, the Board of Directors met
a total of four (4) times. All Directors attended at least 75% of the
aggregate of the meetings of the Board of Directors and the committees on
which they served, except for Mr. Pope.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth, as of November 22, 1996, the names and
addresses of beneficial owners, amounts beneficially owned, and the percent-
age of common shares owned beneficially by those persons (including any
"group" as the term is used in Section 13(d)(3) of the Securities Exchange
Act of 1934) known to management to be the beneficial owner of more than 5%
of the Company's Common Shares:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT BENEFICIALLY PERCENT OF
OF BENEFICIAL OWNER OWNED (1)(2)(3) CLASS
<S> <C> <C>
Wallace D. Iott 436,879 (6) (8) 19.90%
3402 Chapel Drive
Toledo, Ohio 43615
Evergreen Asset 134,000 (11) 6.10%
Management Group
2500 Westchester
Purchase, New York
10577
Key Trust Co. of Ohio 229,656 (12) 10.46%
N.A., Trustee
P. O. Box 10099
Toledo, Ohio 43699-0099
Richard B. Iott 183,225 (6)(7) 8.35%
5245 Keener Road
Monclova, Ohio 43542
Constance J. Braciak 153,793 (13) 7.01%
6744 Sweet Bush
Sylvania, Ohio 43560
Paul L. Pope 124,122 (10) 5.65%
4532 Sanderling Lane
Quail Ridge No. 73
Boynton Beach, Florida 33436
All executive officers 786,298 (6) 35.82%
and directors
as a group (9 persons)
</TABLE>
INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
The Company leases supermarkets in Temperance, Michigan and Sylvania,
Ohio and a Floral Operations Center in Toledo, Ohio, from MS Associates, a
limited partnership controlled by members of the Wallace D. Iott family.
The primary term for the Temperance supermarket lease expires in the year
2002; $138,901 in rent was paid during the fiscal year for the Temperance
location. The primary term for the Sylvania supermarket lease expires in
the year 2004; $306,821 in rent was paid during the fiscal year for the
Sylvania location. The primary term for the Toledo Floral Operations Center
lease expires in the year 1997; $17,500 in rent was paid during the fiscal
year for the Floral Operation Center.
The Company believes that the terms of the foregoing leases and other
transactions are at least as favorable as those that could have been obtained
from non-affiliated parties for comparable properties or goods.
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The Summary Compensation Table shows certain compensation information for
the Chairman of the Board and the three other most highly compensated
executive officers for services rendered in all capacities during the fiscal
years ended August 27, 1994, August 26, 1995, and August 31, 1996. This
information includes the dollar value of base salaries and certain other
compensation. The Company does not award bonuses or Stock Appreciation Rights
("SARs"). In addition, the Company's stock option plan expired in 1993, and
there are no unexercised options outstanding.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
All
Other Ann. Restricted Other
Compen- Stock Options/ LTIP Compensa-
Name and Principal Bonus sation Award(s) SARs Payouts tion ($)
Position Year Salary ($) ($) ($) (A) ($) (#) ($) (B)(C)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wallace D. Iott,
Chairman of the 1996 310,000 0 -- 0 0 0 60,150
Board 1995 310,000 0 -- 0 0 0 60,150
1994 310,000 0 -- 0 0 0 63,716
Richard B. Iott,
Chief Executive 1996 191,062 0 -- 0 0 0 12,639
Officer and 1995 185,471 0 -- 0 0 0 12,187
President 1994 180,500 0 -- 0 0 0 13,512
David J. Walrod,
Executive Vice- 1996 181,290 0 -- 0 0 0 14,144
President-- 1995 176,000 0 -- 0 0 0 12,870
Operations 1994 171,300 0 -- 0 0 0 13,913
Waldo E. Yeager,
Chief Financial 1996 166,429 0 -- 0 0 0 19,154
Officer & 1995 161,529 0 -- 0 0 0 19,466
Treasurer 1994 157,100 0 -- 0 0 0 20,460
</TABLE>
(A) Perquisites and other benefits for each executive officer amount
to less than 10% of salary and bonus.
(B) Includes amounts paid by the Company on behalf of the executive
for some or all of the following: Matching 401(k) Contributions
("401(k)"), ESOP Contributions ("ESOP"); insurance premiums on
life insurance for the executive paid by the Company and fully
included on the executive's W-2 ("Premiums"); insurance premiums
paid by the Company pursuant to a "split-dollar" arrangement
with the executive ("Insurance").
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Wallace D. Iott:
401(k) $4,500 $4,500 $ 4,620
ESOP $3,750 $3,750 $ 7,196
Premiums $51,900 $51,900 $51,900
Richard B. Iott:
401(k) $4,389 $4,937 $ 4,289
ESOP $3,750 $3,750 $ 5,723
Insurance $4,500 $3,500 $ 3,500
David J. Walrod
401(k) $4,394 $4,920 $ 4,299
ESOP $3,750 $3,750 $ 5,414
Insurance $6,000 $4,200 $ 4,200
Waldo E. Yeager
401(k) $4,404 $4,716 $ 4,497
ESOP $3,750 $3,750 $ 4,963
Insurance $11,000 $11,000 $11,000
</TABLE>
<PAGE>
(C) Under the terms of a split-dollar insurance arrangement
between the Company and the executive, upon surrender of
the policy, the executive is entitled to the cash surrender
value in excess of premiums paid by the Company. Currently,
premiums paid by the Company exceed the cash surrender value.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The Company does not currently sponsor any program through which
options or SARs are granted.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The Company has not awarded and does not award SARs and has no
unexercised options outstanding.
LONG-TERM INCENTIVE PLANS/AWARDS IN LAST FISCAL YEAR
The Company does not maintain any long-term incentive plans. No long-
term incentive awards were made in the last fiscal year.
COMPENSATION COMMITTEE REPORT
The Company's compensation program is designed to motivate, reward and
retain the management talent needed to achieve the Company's business
objectives and maintain its competitive position in an industry characterized
by complexity, competitiveness and change.
The compensation of the Company's top executives is reviewed and approved
annually by the Compensation Committee. The Compensation Committee makes
recommendations to the Board of Directors as to the salaries of the CEO and
the President, sets the salaries of other elected officers, and reviews
salaries of other senior executives. There are now no incentive programs in
place for Company executives.
BASE SALARY
The goal of the compensation program is to reward each employee based
on his or her performance and level of responsibility. Assessments of both
individual and corporate performance influence executives' compensation
levels. It is important to encourage a performance-based environment that
motivates individual performance by recognizing the past year's results while
simultaneously providing incentives for further improvement in the future.
This includes the ability to implement the Company's business plan as well
as reacting to unanticipated external factors that can have a significant
impact on the Company's performance. At the same time, however, executive
compensation must be competitive within the supermarket industry. Inflation
and other general economic factors, competitive positioning within the
industry is the primary consideration in establishing the budget for salary
expenditures.
With respect to the determination of compensation for Wallace D. Iott,
the Company's Chairman of the Board, the following factors in addition to
those described previously were considered: Comparable Executive Compensation
within the Supermarket Industry, Mr. Iott's 38-year tenure with the Company,
his present and cumulative contributions to the Company, both personal and
in his capacity as an officer of the Company, the sales and gross profit
margin of the Company and its various subsidiaries and affiliates, and other
intangible criteria. Based on these factors, the Compensation Committee
approved an increase for Mr. Iott in 1995, however, Mr. Iott declined to
accept this increase. His 1996 base salary of $310,000.00 is shown under
the caption "Salary" in the Summary Compensation Table.
SUMMARY
The Compensation Committee has the responsibility for ensuring that the
Company's compensation program continues to be in the best interest of its
shareholders while adequately compensating its executives.
The Compensation Committee believes that the compensation program is
not only appropriate but competitive within the supermarket industry.
The Compensation Committee is also reviewing new and innovative forms of
compensation and incentive programs that may further enhance the retention
and productivity of its management and, therefore, growth and profitability.
<PAGE>
SHARE INVESTMENT PERFORMANCE
The following graph compares the yearly percentage change in the
cumulative total shareholder return, including reinvested dividends, of
Seaway Food Town, Inc. Common Stock, with two other indexes.
SEE GRAPH DESCRIPTION BELOW
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
8/91 8/92 8/93 8/94 8/95 8/96
<S> <C> <C> <C> <C> <C> <C>
Seaway Food Town, Inc. 100 93 88 78 132 157
Peer Group 100 81 82 76 72 87
NASDAQ Stock Market 100 108 143 149 201 226
</TABLE>
The peer group companies are: Buttrey Food & Drug Stores (went public in
1991), Delchamps, Inc., Eagle Food Centers, Inc., Foodarama Supermarkets,
Inc., Ingles Markets, Inc., Marsh Supermarkets, Inc. and Village Supermarket,
Inc. These are moderately capitalized companies engaged in the same line of
business as the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Two members of the Compensation Committee, are Executive Officers of the
Company. Wallace D. Iott is the Chairman of the Board, and Richard B. Iott
is Chief Executive Officer and President of the Company.
<PAGE>
COMPENSATION OF DIRECTORS
Members of the Board of Directors who have not previously served and who
are not currently serving as employees of the Company are paid an annual fee
of $4,000 for service as a Director of the Company. Non-employee Directors
are paid $1,500 for each Board meeting attended and $600 for each day
Committee meetings are attended on a day other than a day the entire Board
of Directors meets. No fees for services as a Director or Secretary of the
Company were paid to Mr. Sikkema. Legal fees are paid to Spengler Nathanson
as compensation for his services in connection with Board and Committee
activities. Paul Pope receives supplemental pension payments of $15,000 per
year for life, attributable solely to service rendered during his employment
with the Company. These payments were originally scheduled to expire in 1990.
By agreement dated October 12, 1989, these payments were extended through the
year 2000, but terminating at the death of both Mr. Pope and his wife, if
earlier.
EXECUTIVE OFFICERS
David J. Walrod has served as an executive officer of the Company since
1979. Waldo E. Yeager has served as an executive officer of the Company
since 1974. Richard B. Iott was elected to executive officer status in 1984
and was elected to Chief Executive Officer in January, 1996. He has been
employed by the Company since 1971 in a variety of capacities. Prior to his
election to the office of President he was employed primarily in the
marketing and merchandising areas. Richard B. Iott is the son of Wallace
D. Iott, Chairman of the Board. Gary D. Sikkema is the Company Secretary
and is a partner of the law firm of Spengler Nathanson. Mr. Sikkema has
been a partner of Spengler Nathanson for the most recent five (5) year
period. The term of office for all executive officers is one (1) year.
FOOTNOTES:
(1) Based in part on information furnished by the nominees and directors
or their agents, and in part on Company records.
(2) The inclusion of shares owned by the spouse or any of the minor
children of any of the nominees or directors as being beneficially
owned shall not be construed as an admission of beneficial ownership
by such director or nominee.
(3) No shares reported hereunder are owned of record but not owned
beneficially.
(4) Spengler Nathanson has served as general counsel to the Company since
incorporation in 1957 and will remain as such in the current fiscal
year. Fees paid to said firm by the Company for legal services
amounted to $318,650 during the Company's fiscal year ended August
31, 1996.
(5) Mr. Wos is also a member of the Board of Directors of General Alum &
Chemical Corporation.
(6) Includes the number of shares allocated as of the record date under
the Seaway Food Town, Inc. Employee Stock Ownership Plan.
(7) Includes 33,706 shares owned by Richard B. Iott as custodian for his
minor children and 10,675 shares owned by his wife.
(8) Includes 199,200 shares owned by Wallace D. Iott's wife.
(9) Includes 400 shares owned by Mr. O'Donnell's wife.
(10) Includes 31,786 shares owned independently by Mr. Pope's wife.
(11) Based on information in Schedule 13G filed with the Securities and
Exchange Commission on or about June 25, 1987, and any amendments
thereto and information provided by the beneficial owner.
(12) Held as Trustee for Seaway Food Town, Inc. Employee Stock Ownership
Plan.
(13) Includes 10,185 shares owned by Constance J. Braciak as custodian for
her minor child, and 1,000 shares owned by Mrs. Braciak's husband.
(14) Mr. Wos replaced Mr. Kirk on the Audit, Executive Compensation, and
Nominating Committees effective January 4, 1996. Mr. Richard B. Iott
was appointed to the Executive Compensation Committee effective
January 4, 1996. Mr. Levine replaced Mr. Pope on the Nominating
Committee effective January 4, 1996.
<PAGE>
RATIFICATION OF SELECTION OF AUDITORS
(PROPOSAL 2)
At the Annual Meeting, shareholders will consider and act upon the
approval of auditors for the Company's fiscal year ending August 30, 1997.
The Board of Directors, upon recommendation of its Audit Committee and
subject to such approval, has selected the independent certified public
accounting firm of Ernst & Young LLP as such auditors. Ernst & Young LLP
have been auditors for the Company for many years. Representatives of
Ernst & Young LLP are expected to be present at the annual meeting and
will have an opportunity to make a statement if they desire to do so and
are expected to be available to respond to appropriate questions.
The Board of Directors of the Corporation recommends a vote for approval
of the selection of Ernst & Young LLP. Unless otherwise specified, shares
represented by proxies will be voted for approval of Ernst & Young LLP as
auditors. Although the submission of this matter for approval by share-
holders is not required legally, the Board of Directors believes that such
submission follows sound corporate practice and is in the best interests of
shareholders. If approval of Ernst & Young LLP by an affirmative vote by
the holders of a majority of the shares presented is not received, the
selection of a firm as auditors for the Corporation will be considered by
the Audit Committee and the Board of Directors.
SHAREHOLDER PROPOSALS
Shareholders may submit proposals for consideration at a meeting of the
shareholders if the shareholder desiring to do so complies with the proxy
solicitation rules of the Securities and Exchange Commission. In order for
such proposal to be included in the proxy statement for the Annual Meeting
in 1998, the proposal must be received by the Secretary no later than
September 1, 1997.
OTHER MATTERS
At the date of this proxy statement the Management knows of no other
business to be presented at the meeting. However, if any other business
should come before the meeting, the persons named in the accompanying proxy
will vote in accordance with their best judgment .
By Order of the Board of Directors
Gary D. Sikkema, Secretary
SEAWAY FOOD TOWN, INC.
December 13, 1996
Maumee, Ohio
