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:
[x] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
AMERICAN STORES COMPANY
________________________________________________________
(Name of Registrant as Specified in its Charter)
AMERICAN STORES COMPANY
________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(j)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(j)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(j)(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:*
4) Proposed maximum aggregate value of transaction:
*Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration
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:
Notes:
______
<PAGE>
AMERICAN STORES COMPANY
709 East South Temple, Salt Lake City, Utah 84102
P.O. Box 27447, Salt Lake City, Utah 84127-0447
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of American
Stores Company, a Delaware corporation, will be held at the Red Lion Hotel,
255 South West Temple, Salt Lake City, Utah on Tuesday, June 21, 1994 at
10:00 a.m., local time, for the following purposes:
1. To elect five Class I Directors of the Company to serve for a
term of three years;
2. To amend the Company's Restated Certificate of Incorporation to
increase the number of authorized shares of the Company's Common Stock from
200,000,000 to 325,000,000;
3. To ratify the appointment of Ernst & Young as independent
certified public accountants for fiscal year 1994; and
4. To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on April 25, 1994
will be entitled to vote at the meeting and at any adjournment thereof.
You are cordially invited to attend the Annual Meeting. No admission
ticket or other credentials will be necessary. Whether or not you plan to
attend the meeting, please mark, sign, date and promptly return the enclosed
proxy card. A return envelope, which requires no postage if mailed in the
United States, has been provided for your use.
JACK LUNT
Secretary
April 29, 1994
<PAGE>
AMERICAN STORES COMPANY
709 East South Temple, Salt Lake City, Utah 84102
P.O. Box 27447, Salt Lake City, Utah 84127-0447
PROXY STATEMENT
The solicitation of the proxy enclosed with this statement is made by
and on behalf of the Board of Directors of American Stores Company (the
"Company") for use at the 1994 Annual Meeting of Shareholders of the Company
to be held on Tuesday, June 21, 1994 at 10:00 a.m. local time, at the Red
Lion Hotel, 255 South West Temple, Salt Lake City, Utah and at any
postponements or adjournments thereof. It is anticipated that this Proxy
Statement, together with the form of proxy and the Company's 1993 Annual
Report to Shareholders, will first be mailed on or about April 29, 1994.
Each holder of record of shares of the Company's common stock, par value
$1.00 per share (the "Common Stock") on April 25, 1994, the record date, is
entitled to one vote for each share so held. The number of outstanding
shares of Common Stock of the Company as of the record date is _______ (after
giving effect to the two-for-one stock split effective April 7, 1994. A
complete list of the shareholders entitled to vote at the Annual Meeting will
be available for inspection by any shareholder, for any purpose germane to
the meeting, during ordinary business hours for a period of ten days prior to
the Annual Meeting at the Company's corporate headquarters located at 709
East South Temple, Salt Lake City, Utah. Votes cast by proxy or in person at
the Annual Meeting will be tabulated by the inspectors of election appointed
for the meeting and will determine whether or not a quorum is present. The
inspectors of election will treat abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a quorum but as
unvoted for purposes of determining the approval of any matter submitted to
the shareholders for a vote. If a broker indicates on the proxy that it does
not have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and entitled to vote
with respect to that matter. Shares represented by properly executed proxies
in the accompanying form will be voted as directed. If no direction is
given, proxies will be voted FOR the Election of Directors, FOR the Amendment
to the Company's Restated Certificate of Incorporation to increase the
authorized number of shares of the Company's Common Stock, and FOR the
Ratification of the appointment of Ernst & Young as Independent Certified
Public Accountants.
PROPOSAL 1 - Election of Directors
The Restated Certificate of Incorporation of the Company provides for a
Board of not less than 5 nor more than 20 directors, the exact number to be
fixed by the Board of Directors. The Board has currently fixed that number
at fifteen, effective June 22, 1993. The Board is divided into three
classes, with one class elected at each annual meeting to serve for a term of
three years. The Board of Directors has nominated five individuals to be
elected in 1994, as Class I directors, each to serve until the annual meeting
to be held in 1997 and until their respective successors have been duly
elected and qualified. All of the nominees are currently directors of the
Company. Only the five members of Class I are to be elected at the 1994
Annual Meeting. Directors are elected by plurality vote. Proxies will be
voted in favor of the election of each of the nominees named below unless
otherwise directed. If any of the nominees should be unable to serve,
proxies will be voted for such person, if any, as may be designated by the
Board of Directors to fill any such vacancy. The information provided below
for each director or nominee for election as a director is provided as of
March 1, 1994.
Information Regarding the Nominees Standing for Election in 1994 as Class I
Directors
Class I Directors Whose Terms of Office will Continue Until 1997 if Elected
Fernando R. Gumucio - Age: 59, Director since 1991. Retired. Former
Chairman of the Board and Chief Executive Officer of Del Monte USA from 1987
to 1988 and President from 1985 to 1987. Director of Basic American Foods
Corporation and Bay View Federal Savings, a California savings and loan
company.
Leon G. Harmon - Age: 68, Director since 1982. Retired. Member of the
Executive Board and former President and Chief Executive Officer of First
Interstate Bank of Utah, N.A. for more than five years.
John E. Masline - Age 66, Director since 1988. Retired. Former Senior
Partner, Ernst &
Young from 1967 to October 1986.
L. S. Skaggs - Age: 70, Director since 1950. Chairman of the Board of the
Company since1962. President of the Company from February 1987 to September
1988.
Arthur K. Smith - Age: 56, Director since 1992. President of the University
of Utah since August 1991. Executive Vice President and Provost of the
University of South Carolina from 1988 through August 1991. Director of
First Security Corp.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
NOMINEES FOR DIRECTOR.
Information Regarding Directors who are not Nominees for Election and Whose
Terms Continue Beyond 1994
Class II Directors Whose Terms of Office Continue Until 1995
Arden B. Engebretsen - Age: 62, Director since 1988. Chairman of the Board
of Herpak Limited, an international financial consulting firm, since January
1991. Vice Chairman of the Board of Hercules Incorporated from March 1987 to
January 1991. Chief Financial Officer of Hercules Incorporated from 1978 to
January 1991. Director of Mellon Bank Delaware. Member of Corporate Finance
Committee of Financial Executives Institute. Member, National Advisory
Council, University of Utah. Trustee, Financial Accounting Foundation.
James B. Fisher - Age: 62, Director since 1988. Retired. Former President
and Director of J. G. Boswell Company, an agricultural production,
processing and marketing company, from 1980 to September 1984.
Victor L. Lund - Age: 46, Director since 1988. Chief Executive Officer and
President of the Company since August 1992; Co-Chief Executive Officer from
March 1992 to August 1992; Chief Financial and Administrative Officer from
February 1989 to March 1992. Vice Chairman of the Board of the Company from
September 1988 to August 1992.
L. Tom Perry - Age: 71, Director since 1980. Member of the Council of the
Twelve Apostles of The Church of Jesus Christ of Latter-day Saints, Salt Lake
City, Utah for more than five years prior to the date hereof. Chairman of
the Board of ZCMI, Inc. and Director of Zions First National Bank.
J. L. Scott - Age: 64, Director since 1987. Retired. Former Co-Chief
Executive Officer of the Company from March 1992 to August 1992 and President
from September 1990 to August 1992. Chief Executive Officer from February
1989 to March 1992; Vice Chairman of the Board of the Company from September
1987 to June 1990. Director of TJ International.
Class III Directors Whose Terms of Office Continue Until 1996
Henry I. Bryant - Age: 51, Director since 1992. Managing Director of the
Financial Institutions Group in the Corporate Finance Unit of J. P. Morgan &
Co. Incorporated, an investment banking firm, since July 1992; prior thereto,
Managing Director, Corporate Finance, Western Region for more than five
years. Director of J. P. Morgan California from 1990 to 1992.
Louis H. Callister - Age: 58, Director since 1985. Chairman of the Board and
Senior Partner in the law firm of Callister, Duncan & Nebeker, P.C., Salt
Lake City, Utah for more than five years. Vice Chairman, University of Utah
Board of Trustees. Member, Board of Trustees of the Economic Development
Corporation of Utah.
Michael T. Miller - Age: 53, Director since 1992. President and Executive
Director of the ALSAM Foundation, a private charitable foundation, since July
1992. Chief Executive Officer and President of Jewel Osco Southwest, Inc., a
subsidiary of the Company, from June 1991 through June 1992; Chief Executive
Officer and President of Alpha Beta Company, a former subsidiary of the
Company, from October 1990 through May 1991; Senior Vice President
Governmental Relations of the Company from February 1989 to October 1990.
Barbara Scott Preiskel - Age: 69, Director since 1985. Retired. Former
Senior Vice President and General Counsel of the Motion Picture Association
of America, a trade association, from 1977 to March 1983. Director of
General Electric Company, Massachusetts Mutual Life Insurance Co., Textron,
Inc. and The Washington Post Co.
Aline W. Skaggs - Age: 68, Director since 1981. Member, Salt Lake City
Airport Authority from January 1986 until January 1989. Member, National
Advisory Council, University of Utah, Member, Health Sciences Council,
University of Utah, and civic leader. Aline W. Skaggs is the wife of L. S.
Skaggs, Chairman of the Board of the Company.
Beneficial Ownership of Securities
The following table sets forth, as of January 29, 1994, the number of
shares of the Company's Common Stock owned by directors (including nominees
for director), the five executive officers named in the Summary Compensation
Table on page ___ hereof, and by all executive officers and directors as a
group. The information set forth below also includes the number of shares of
the Company's Common Stock owned by each person known to the Company to be a
beneficial owner of more than five percent of such stock as of January 29,
1994.
Number of Shares Percent of Shares
Name (1) Beneficially Owned (2)(3) Beneficially Owned (3)(4)
Scott Bergeson 146,432 *
Henry I. Bryant 3,000 *
Louis H. Callister 31,800 *
Lawrence A. Del Santo 301,306 *
Arden B. Engebretsen 27,200 *
James B. Fisher 23,936 *
Fernando R. Gumucio 20,400 *
Leon G. Harmon 40,400 *
Victor L. Lund 516,446 *
David L. Maher 256,420 *
John E. Masline 24,000 *
Michael T. Miller 77,568 *
L. Tom Perry 1,200 *
Barbara Scott Preiskel 21,400 *
J. L. Scott 102,436 *
Aline W. Skaggs 185,452 *
L. S. Skaggs 24,818,960 17.42%
Arthur K. Smith 20,000 *
All directors and executive
officers as a group
(30 persons) 27,356,854 19.20%
Fayez S. Sarofim (5) 9,466,998 6.64%
* Does not exceed one percent of the outstanding shares.
(1) Correspondence to all officers and directors of the Company may be
mailed to 709 East South Temple, Salt Lake City, Utah 84102. The address of
Fayez S. Sarofim is Two Houston Center, Suite 2907, Houston, Texas 77010.
(2) On March 21, 1994, the Board of Directors of the Company approved a
two-for-one stock split, effected in the form of a 100% stock dividend paid
on April 21, 1994 to shareholders of record on April 7, 1994. All share and
per share amounts set forth in the proxy statement reflect such two-for-one
stock split.
(3) These totals include, pursuant to rules of the Securities and
Exchange Commission (the "SEC"), shares as to which sole or shared voting
power or sole or shared dispositive power is possessed. These totals also
include: (i) the indicated number of shares of Common Stock which such
persons have the right to acquire through stock options exercisable within 60
days: Mr. Bergeson - 40,560; Mr. Del Santo - 60,568; Mr. Lund - 5,876; Mr.
Maher - 2,264, Mr. Skaggs - 0; all directors and executive officers as a
group (30 persons) - 266,360; and (ii) the following number of shares of
Common Stock that could be allocated to the American Stores Retirement
Estates accounts of such persons for voting purposes on December 31, 1993:
Mr. Bergeson - 0; Mr. Del Santo - 0; Mr. Lund - 0; Mr. Maher - 7,588; Mr.
Skaggs - 169,000; all directors and executive officers as a group (30
persons) - 240,910.
(4) On January 29, 1994, there were 142,503,702 shares of Common Stock
issued and outstanding.
(5) Based upon information contained in a Schedule 13G filed with the
SEC, as of December 31, 1993, Mr. Sarofim may be deemed to be the beneficial
owner of 9,466,998 shares of Common Stock. Of such shares, Mr. Sarofim has
sole voting or dispositive power as to 200,000 shares and shared voting or
dispositive power as to 9,266,998 shares. All of the securities that are not
subject to sole voting and dispositive power are held in accounts managed by
Fayez Sarofim & Co. (of which Mr. Sarofim is the majority shareholder) or by
its wholly-owned subsidiary, Sarofim Trust Co., except for 6,200 shares which
are held in trust with respect to which Mr. Sarofim is one of several
trustees.
Compliance with Section 16(a) of the Exchange Act. Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires
the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership (Forms 3, 4 and 5) of Common
Stock with the Securities and Exchange Commission and the New York Stock
Exchange. Officers, directors and greater-than-ten-percent holders are
required to furnish the Company with copies of all forms filed by them. To
the Company's knowledge, based solely on the Company's review of copies of
such reports or written representations from certain reporting persons that
no Forms 5 were required to be filed by those persons, the Company believes
that during the fiscal year ended January 29, 1994 its officers, directors,
greater-than-ten-percent beneficial owners and other persons subject to
Section 16 of the Exchange Act complied with the applicable filing
requirements of Section 16(a).
Board of Directors and Committees
The Board of Directors of the Company held a total of six meetings
during fiscal year 1993. The Board had as standing committees on April 1,
1994, an Audit Committee, a Compensation and Stock Option Committee, an
Executive Committee, a Finance Committee and a Nominating Committee.
The Audit Committee is composed of eight directors who are not full-time
employees of the Company. It recommends to the Board the selection of the
independent certified public accountants for the Company, subject to
ratification by the shareholders at the Annual Meeting; reviews the audit
activities of the independent certified public accountants and the Company's
internal audit staff, the scope of non-audit functions to be performed by the
independent certified public accountants and the financial and accounting
control policies and practices of the Company; reviews related party
transactions; and periodically meets with the independent certified public
accountants, internal audit staff and management. There were four Audit
Committee meetings held in fiscal year 1993. Its current members are: John
E. Masline (Chairperson), Henry I. Bryant, Arden B. Engebretsen, James B.
Fisher, Fernando R. Gumucio, Michael T. Miller, L. Tom Perry and J. L. Scott.
The Compensation and Stock Option Committee is composed of seven non-
employee directors. It is responsible for administering the Company's stock
option plans and for setting compensation of officers and directors. Four
meetings of the Compensation and Stock Option Committee were held in fiscal
year 1993. Its current members are: Leon G. Harmon (Chairperson), Henry I.
Bryant, Louis H. Callister, Arden B. Engebretsen, James B. Fisher, L. Tom
Perry and Barbara S. Preiskel.
The Executive Committee is composed of seven directors. It has
authority to act for the Board on most matters during intervals between Board
meetings. The Executive Committee did not meet in fiscal year 1993. Its
current members are: Leon G. Harmon (Chairperson), Louis H. Callister,
Victor L. Lund, L. Tom Perry, Aline W. Skaggs, L. S. Skaggs and Arthur K.
Smith.
The Finance Committee is composed of seven directors. Its duties are to
evaluate the Company's financial planning, including the annual capital
budget and periodic financial forecasts, and to review and make
recommendations on matters related to the Company's financial requirements,
resources and policies. There were five meetings of the Finance Committee
held in fiscal year 1993. The current members of the Finance Committee are:
L. Tom Perry (Chairperson), Leon G. Harmon, Victor L. Lund, John E. Masline,
J. L. Scott, L. S. Skaggs and Arthur K. Smith.
The Nominating Committee is composed of six directors who are not full-
time employees of the Company. This Committee recommends persons to the
Board of Directors to be nominated for election to the Board of Directors and
for election as officers of the Company. The Nominating Committee has no
established procedure for consideration of persons recommended by
shareholders. The Nominating Committee held four meetings in fiscal year
1993. Its current members are: Barbara S. Preiskel (Chairperson), Louis H.
Callister, Fernando R. Gumucio, Leon G. Harmon, Michael T. Miller and Aline
W. Skaggs.
During fiscal year 1993, no director attended less than 75% of the
aggregate number of meetings of the Board of Directors and Committees on
which he or she served.
In addition to the foregoing committees of the Board of Directors, the
Company has a Benefit Plans Committee composed of one employee director
(Victor L. Lund) and five members of management. The members of the
Committee are appointed by the Board of Directors. This Committee is
responsible for the administration, funding, investment of assets,
interpretation and management of all benefit plans of the Company other than
stock option plans. The Benefit Plans Committee held nine meetings in fiscal
year 1993.
The Investment Management Subcommittee is composed of four directors,
three members of management and two other individuals. This Subcommittee
acts as an advisor to the Benefit Plans Committee on matters relating to
benefit plan fund structure, asset allocation, investment manager selection
and evaluation of investment manager performance. The Subcommittee has
authority to make recommendations to the Benefit Plans Committee. The
Investment Management Subcommittee held two meetings in fiscal year 1993.
The following directors are current members of the Committee: Leon G. Harmon,
Victor L. Lund, John E. Masline and Michael T. Miller.
At its March 22, 1994 meeting, the Board discussed the advisability of
meeting more frequently and on making decisions as a whole that were
previously referred first to a Board Committee. The discussions included the
possibility of eliminating the Nominating and the Finance Committees, but
leaving intact the Executive Committee and the independent Audit and
Compensation and Stock Option Committees. It is anticipated that the Board
will determine whether this course of action is advisable at its June 21,
1994 meeting.
Directors' Compensation
Directors who are active, full-time employees of the Company or one of
its subsidiaries receive no additional compensation as directors. All other
directors receive an annual retainer fee of $30,000, plus an additional
$1,000 for each Board meeting attended. Members of the Audit, the
Compensation and Stock Option, and the Nominating Committees receive a fee of
$1,000 for each Committee meeting attended, with the Chairpersons of the
Audit, the Compensation and Stock Option, the Executive and the Finance
Committees receiving an additional $8,000 per year for serving as
Chairpersons. The Nominating Committee Chairperson receives an additional
$4,000 per year. Non-employee members of the Finance Committee receive an
annual fee of $7,500. All non-employee members of the Executive Committee
receive an annual fee of $10,000 per year. No additional fees are paid for
attendance at Finance or Executive Committee meetings. Members of the
Investment Management Subcommittee who are not active, full-time employees of
the Company or one of its subsidiaries are paid $5,000 for each meeting
attended.
As noted above, at its March 22, 1994 meeting, the Board discussed the
advisability of meeting more frequently and on making decisions as a whole
that were previously referred first to a Board Committee. In light of these
contemplated changes, the Board also considered the advisability of revising
its compensation for directors who are not active, full-time employees of the
Company by eliminating fees paid for attendance at Board and Committee
meetings or for serving as a member of a Board Committee or as a Chairperson
of any Board Committee, and increasing the annual retainer fee from $30,000
to $80,000. It is anticipated that the Board will determine the advisability
of revising the Directors' compensation at its June 21, 1994 meeting.
Directors who are not active, full-time employees of the Company or one
of its subsidiaries are eligible to participate in a deferred compensation
plan which permits each director to elect that a portion or all of the
compensation earned by the director for service on the Board and its
committees be deferred until the period subsequent to the termination of the
director's service on the Board. Any amounts so deferred earn interest
during the period of the deferral at a stated fluctuating rate.
Directors who are not active, full-time employees of the Company or one
of its subsidiaries and their spouses are eligible and encouraged to
participate in the Scripps Executive Health Program that is available to
certain key executive officers of the Company and its subsidiaries. The
program consists of a comprehensive physical evaluation, private
consultations covering exercise, nutrition and stress management, and
attendance at a seminar covering various topics. The frequency of the
examination is generally based on the director's age. The cost of the
examination, including travel and hotel expenses, is paid by the Company.
On February 1, 1989 the Board adopted the American Stores Company
Retirement Plan for Non-Employee Directors (the "NED Plan"). Under the NED
Plan, non-employee directors are eligible for a retirement benefit if they
retire from the Board (i) between the ages of 65 and 71 and have served on
the Board for at least ten years, or (ii) at or after age 71 and have served
on the Board for at least five years. An eligible non-employee director who
retires from the Board shall be entitled to receive for the remainder of his
or her life, annual compensation equal to the annual retainer fees the
director received in the year just prior to retiring. A non-employee
director who becomes permanently and totally disabled, or who retires from
the Board between the ages of 65 and 71 and has served less than ten years,
or who retires from the Board after the age of 71 and has less than five
years of service, shall be entitled to annual compensation equal to the
annual retainer fees the director received just prior to retiring for the
same number of years and months the director served on the Board prior to
retirement. A retired non-employee director receiving payments under the NED
Plan is considered a Director Emeritus, must remain available on a reasonable
basis to consult with the Company and may not engage in any activity in
competition with the Company. All benefit payments under the NED Plan
terminate upon the death of the retired non-employee director. The NED Plan
is administered by the Benefit Plans Committee of the Company.
During 1992, the Company's shareholders approved the Board of Directors
Stock Purchase Incentive Plan (the "Director Plan"). All members of the
Board of Directors who are not officers or employees of the Company or its
subsidiaries, or the spouses of officers or employees, and who are younger
than 69 years of age are eligible to participate in the Director Plan (the
"Eligible Directors"). Under the Director Plan, Eligible Directors are
granted rights to purchase up to 20,000 shares of the Company's Common Stock
on a specified date at the average market price of the Common Stock on such
date. Eligible Directors also receive from the Company a full-recourse,
interest-bearing loan for the entire purchase price of the Common Stock, and
a deferred cash incentive award which is generally payable at the end of a
five-year performance cycle. A description of the deferred cash incentive
award under a similar plan for executive officers is included in the
Compensation Committee's report on executive compensation and can be found on
page ___ of this proxy statement. The Director Plan provides that the loans
will have an eight-year term and will accrue interest at the applicable
federal rate (as determined by Section 1274(d) of the Internal Revenue Code
of 1986, as amended) for eight-year loans on the purchase date, compounded
annually. Interest on the loans is payable during the first five years at
the rate of two percent per annum on the original principal amount of the
loan (which rate was approximately equal to the dividend yield on the Common
Stock at the time the Director Plan was approved). The Director Plan
provides that the proceeds of the deferred cash incentives be applied to
prepay the loans. Following such prepayment, the balance of the loans at the
end of the five-year performance cycle, together with accrued and unpaid
interest thereon, will be payable in three equal installments (plus interest)
on the sixth, seventh and eighth anniversaries of the purchase date. The
payment of the loan will be accelerated if a director's service is terminated
during the performance cycle for any reason other than retirement, and the
loan will generally become due on the 120th day after termination of service.
In the event of retirement, the loan must be repaid over a three-year period
following retirement. The loan may also be prepaid at any time at the
director's option. On June 16, 1992, the following directors each exercised
purchase awards for 20,000 shares of the Company's Common Stock and each
received from the Company a loan with an interest rate of 7.04% in the amount
of $348,750.00: Messrs. Callister, Engebretsen, Fisher, Gumucio, Harmon and
Masline, and Mrs. Preiskel. On December 30, 1992, Messrs. Bryant and Smith
exercised purchase awards and received loans with an interest rate of 6.15%
in the indicated amounts: Mr. Bryant - 3,000 shares, $65,343.75; and Mr.
Smith - 20,000 shares, $435,625.00. As of January 29, 1994, the aggregate
outstanding balance of loans made pursuant to the Director Plan was
$3,200,870, which includes accrued, unpaid interest, and which sum is the
largest aggregate amount outstanding during the fiscal year. At the end of
the Company's 1993 fiscal year, all of the Directors who are participants in
the Director Plan were vested in 7 1/2% of the service award component of the
deferred cash incentive award, the dollar amount of which is as follows:
Messrs. Callister, Engebretsen, Fisher, Gumucio, Harmon and Masline, and Mrs.
Preiskel - $27,475; Mr. Smith - $34,028; and Mr. Bryant - $5,104.
<TABLE>
Executive Compensation
The following table shows compensation paid by the Company to the Chief Executive Officer and the
four other most highly compensated executive officers at January 29, 1994 for services performed by
such individuals for all capacities in which they served during the last three fiscal years:
Summary Compensation Table
Long Term Compensation(1)
Annual Compensation (1) Awards Payouts
Other
Name and Annual All Other
Principal Position Compen- Options/ LTIP Compen-
at End of 1993 Salary Bonus sation SARs Payouts sation
Fiscal Year Year ($) ($)(2) ($)(3)(4) (#) ($)(5) ($)(3)(6)
<S> <C> <C> <C> <C> <C> <C> <C>
Victor L. Lund 1993 737,500 259,145 --- 0 683,785 159,922
President and Chief 1992 656,666 351,885 --- 0 343,835 188,763
Executive Officer 1991 445,834 105,173 --- 0 290,695 ---
Scott Bergeson 1993 340,000 119,470 --- 0 157,188 78,146
Senior Vice President, 1992 340,000 182,194 --- 0 233,419 116,707
Human Resources 1991 340,000 80,207 --- 0 238,000 ---
Lawrence A. Del Santo 1993 495,834 174,228 --- 0 407,931 107,339
Senior Executive Vice 1992 475,000 203,015 --- 0 0 96,473
President & Chief 1991 470,192 221,797 --- 0 0 ---
Operating Officer-Food
David L. Maher 1993 433,333 152,266 --- 0 381,808 84,048
Senior Executive Vice 1992 344,167 106,399 --- 0 210,363 97,453
President & Chief 1991 312,500 43,467 --- 0 169,194 ---
Operating Officer-Drug
L. S. Skaggs 1993 500,000 175,692 --- 0 108,898 110,969
Chairman of the Board 1992 500,000 267,933 --- 0 316,565 161,101
1991 483,334 114,019 --- 0 299,445 ---
(1) Compensation deferred at the election of the executive, pursuant to the American Stores
Retirement Estates 401(k) plan ("ASRE") and the Supplemental Executive Retirement Plan ("SERP"), is
included in the year earned.
(2) The bonus amount is payable pursuant to the Company's Key Management Annual Incentive Plan
described in the Compensation Committee Report on Executive and CEO Compensation on page _____ of this
proxy statement. Cash bonuses for services rendered in fiscal years 1993, 1992 and 1991 have been
listed in the year earned, and were generally paid in April of the following fiscal year.
(3) In accordance with the transitional provisions applicable to the rules of the SEC, information
with respect to amounts of Other Annual Compensation and All Other Compensation for fiscal year 1991
has not been included.
(4) Perquisites and other personal benefits paid to each named executive officer in each instance
aggregated less than $50,000 and, accordingly, are omitted from the table as permitted by the rules of
the SEC. Additionally, there is no other annual compensation requiring disclosure.
(5) The LTIP payout amounts reported represent (a) amounts payable pursuant to the Company's Key
Management Long-Term Performance Incentive Plan described in the Compensation Committee Report on
Executive and CEO Compensation on page ____ of this proxy statement, and (b) the vested amount of the
service component of the deferred cash incentive award earned under the Key Executive Stock Purchase
Incentive Plan described in the Compensation Committee Report on Executive and CEO Compensation on
page ____ of this proxy statement. The payout amounts pursuant to the Key-Management Long-Term
Performance Incentive Plan for services rendered in fiscal years 1993, 1992 and 1991 have been listed
in the year earned, were generally paid in April of the following fiscal year and were as follows for
the named executive officers: Mr. Lund - $135,082; Mr. Bergeson - $74,883; Mr. Del Santo - $106,145;
Mr. Maher - $80,022 and Mr. Skaggs - $108,898. The vested amount of the service component is a
deferred award that is payable at the end of the five-year performance cycle and the full amount of
the deferred award, less applicable taxes, must be applied towards repayment of the Purchase Loan,
also described on page ____. The amounts of the service award that vested during 1993 for the named
executive officers are as follows: Mr. Lund - $548,703; Mr. Bergeson - $82,305; Mr. Del Santo -
$301,787; and Mr. Maher - $301,787. Mr. Skaggs is not a participant in the Key Executive Plan.
(6) The compensation reported represents (a) Company contributions under ASRE, (b) Company
contributions under SERP, and (c) the dollar value of Company paid insurance premiums for term life
insurance for the executives. The amounts contributed by the Company during fiscal year 1993 to the
executives' ASRE and SERP accounts, and the insurance premiums paid were as follows: Mr. Lund -
$23,372; $132,169; $4,381; Mr. Bergeson - $23,372; $52,754; $2,020; Mr. Del Santo - $23,372; $81,022;
$2,945; Mr. Maher - $23,372; $58,102; $2,574; and Mr. Skaggs - $23,372; $87,498; $99.
</TABLE>
<TABLE>
The following table shows information concerning the exercise of stock options by each of the
named executive officers and the fiscal year end value of unexercised options.
Aggregated Option/SAR Exercises in Last Fiscal Year and
Fiscal Year-End Option/SAR Value
Number of Unexercised Value of Unexercised
Options/SARs at Fiscal In-the-Money Options/SARs
Value Year End (#) at Fiscal Year End($)(4)
Shares Acquired Realized
Name on Exercise(#)(1) ($)(2) Exercisable Unexercisable(3) Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Victor L. Lund 14,284 $302,195 5,876 42,864 $50,023 $900,144
Scott Bergeson 80,000 $1,112,500 40,560 71,440 $690,510 $828,365
Lawrence A.
Del Santo 0 0 60,568 93,728 $841,928 $1,860,788
David L. Maher 8,856 $180,441 2,264 14,576 $17,121 $306,096
L. S. Skaggs 0 0 0 0 0 0
(1) Totals include the gross number of options exercised and do not exclude shares exercised as
stock appreciation rights.
(2) Represents the average of the high and low value of the Company's common stock at date of
exercise minus the exercise price.
(3) If a Change of Control (as defined in the stock options plan(s) under which the options were
granted) were to occur before these options vest, the options would become immediately exercisable.
(4) Represents the difference between the closing price of the Company's Common Stock at 1993
fiscal year end ($21.25 per share) and the exercise price of the options.
</TABLE>
<TABLE>
The following table provides information concerning cash-incentive awards made during fiscal year
1993 under the Company's 1993-1994-1995 Key Management Long-Term Performance Incentive Plan (the "93-
94-95 LTIP"). Each award represents the right to receive an amount in cash for the three-year period
ending February 3, 1996 based on earnings per share over the three-year period compared to the target
established by the Compensation Committee. If earnings per share performance falls between the
threshold level and the target level or between the target level and the maximum level then the amount
of the award is prorated accordingly. Payments under the 93-94-95 LTIP will be made in April 1996
and will be reported in the Summary Compensation Table of the Company's 1996 Proxy Statement.
Long-Term Incentive Plans - Awards in Last Fiscal Year
Performance
Number of or Other Estimated Future Payouts Under Non-Stock Price
Shares, Units Period Until Based Plans
or Other Maturation
Name Rights (#) or Payout Threshold($) Target($)(1) Maximum($)(2)
<S> <C> <C> <C> <C> <C>
Victor L. Lund --- February 3, 1996 0 149,167 522,083
Scott Bergeson --- February 3, 1996 0 44,000 154,000
Lawrence A.
Del Santo --- February 3, 1996 0 99,722 349,028
David L. Maher --- February 3, 1996 0 88,889 311,111
L. S. Skaggs --- February 3, 1996 0 100,000 350,000
(1) Target awards are 20% of the executive's average annual base salary over the three-year
performance cycle. The target payout shown above assumes the executive's 1994 base salary remains
unchanged through the remainder of the three-year performance cycle.
(2) The maximum attainable award is 70% of the executive's average annual base salary over the
three-year performance cycle. The maximum payout shown above assumes the executive's 1994 base salary
remains unchanged through the remainder of the three-year performance cycle.
</TABLE>
Report of the Compensation Committee of the Board of Directors on Executive
and CEO Compensation
The SEC requires reporting companies to provide detailed information on
compensation and benefits provided to their CEO and to the four most highly
compensated executive officers whose annual base salary and bonus
compensation was in excess of $100,000. Pursuant to these rules, the
following report on executive and CEO compensation is submitted by the
following members of the Compensation and Stock Option Committee of the Board
of Directors of the Company (the "Committee"): Leon G. Harmon (Chairman),
Henry I. Bryant, Louis H. Callister, Arden B. Engebretsen, James B. Fisher,
L. Tom Perry and Barbara S. Preiskel. None of the Committee members is now
or has been an employee of the Company, and the Committee members are
ineligible to participate in any of the compensation plans that they
administer. As permitted by law and the Company's Certificate of
Incorporation, the Board has delegated to the Committee, among other duties,
responsibility for establishing policies and making decisions relating to
executive compensation. The Committee regularly reports to the Board on its
activities, and decisions made by the Committee are ratified by the full
Board.
The Committee's report summarizes the Company's compensation policies
towards its executive officers and explains how the compensation plans are
closely linked to the achievement of the Company's financial goals and to
increases in the Company's stock price.
Compensation Philosophy
A primary objective of the Company is to increase shareholder value. A
key element in achieving this objective is the Company's ability to attract
and retain a core group of executive officers whose individual and combined
efforts will provide the greatest likelihood of success. To this end, the
Company and the Committee have applied the following principles in developing
a compensation program applicable to all of the Company's and its
subsidiaries' executive management, including the CEO:
Align the financial interests of the Company's executive officers more
closely with those of the Company's shareholders by linking a significant
percentage of the officers' total target compensation to the attainment of
Company profitability and corporate goals.
Provide for each position competitive total target compensation at the
median level based on industry, peer group and national surveys.
Annually review performance measures necessary to establish varying
bonus levels to ensure consistency with the Company's overall strategic
goals.
Create additional incentives to promote the long-term growth and
financial success of the Company by encouraging and making it possible for
executives to increase their ownership of the Company's Common Stock through
the use of stock option and stock purchase plans that have been approved by
the Company's shareholders.
The Committee determines and approves the compensation paid to the CEO and
the executives named in the summary compensation table as well as the
compensation paid to all other Company officers. Additionally, the Committee
reviews the compensation paid to the officers of the Company's subsidiaries.
In reviewing the individual performance of the executives whose compensation
is detailed in this proxy statement (other than Mr. Lund), the Committee
takes into account the views of Mr. Lund and other members of management and
outside consultants to the extent deemed appropriate by the Committee.
Pursuant to Section 162(m) of the Internal Revenue Code, enacted in
1993, publicly traded corporations will not be permitted to deduct
compensation in excess of $1 million paid to the CEO and the four other most
highly compensated executive officers for 1994 and thereafter, unless the
compensation qualifies for an exception for "performance-based compensation."
To qualify as "performance-based," compensation payments must be based solely
upon the achievement of objective performance goals and made under a plan
that is administered by a committee of outside directors. In addition, the
material terms of the plan must be disclosed to and approved by shareholders,
and the Compensation Committee must certify that the performance goals were
achieved before payments can be made. The Compensation Committee is
currently studying the effect of this limitation on the Company's
compensation programs and believes that it would be premature to take any
action at this time, as the $1 million limitation is newly enacted, and the
Internal Revenue Service has not yet promulgated final regulations
interpreting it. It is not anticipated that compensation payable to any
executive officer in 1994 would be non-deductible. The Committee will
continue to address this issue when formulating compensation arrangements for
executive officers.
Relationship of Pay to Performance Under Compensation Plans
The Company uses industry, peer group and national surveys that are
updated annually to establish target compensation grade levels for its CEO
and executive officers that are based on median target compensation paid to
individuals holding similar positions at other companies in the retail food
and drug industries and companies of similar size. This comparison group
includes some of the companies comprising the Peer Group Index described on
page ___. The Committee uses the same criteria in establishing Mr. Lund's
target compensation objective as it does in determining compensation for the
Company's other executive officers. The cash compensation objective for
executive officers and Mr. Lund consists of a base salary and an overall
bonus target of 50% of the base salary (30% from the annual bonus plan and
20% from the long-term incentive plan). Thus, base salaries represent
approximately 67% of the targeted cash compensation objective, and the
combination of the annual and long-term incentive payments, which are based
on sales and/or earnings of the Company or its subsidiaries, represent
approximately 33% of the executive's targeted cash compensation objective.
Base salaries for executive officers are determined by evaluating the
responsibilities of the position held and the experience of the individual,
considered in the context of the total compensation paid to individuals in
similar positions at other companies in the retail food and drug industries
and companies of similar size. Executives' base salaries are reviewed by the
Committee on an annual basis and adjustments are determined by evaluating the
performance of the Company (or a subsidiary) and of each executive officer.
Changes in base salary also take into account changes in the responsibilities
of executives. In September 1992, Mr. Lund was elected CEO and President,
and at that time the Committee authorized an increase in Mr. Lund's salary
to $750,000, effective April 1, 1993. The Committee believes that Mr. Lund's
total compensation objective, including his base salary of $750,000, reflects
the median compensation paid to CEOs of peer companies and companies of
similar size and Mr. Lund's experience and qualifications for the position.
The executive compensation program also includes two stock option plans
and a stock purchase incentive plan. The performance features of these
plans, together with the Company's annual and long-term incentive bonus
plans, are described below.
Annual Bonus Plan
The Key Management Annual Incentive Plan is the Company's annual bonus
program (the "Annual Plan") for executive officers and key management. At
the beginning of each year, the Committee establishes minimum, target and
maximum performance goals on which a bonus will be paid. The Annual Plan for
1993 was designed to provide an incentive for participants to focus on
achieving and exceeding annual earnings goals. For Messrs. Lund, Bergeson,
DelSanto, Maher, and Skaggs, these performance goals were based on earnings
of the Company. The target performance goals approved by the Committee
required achievement of earnings above the prior year's results.
Individuals participating in the Annual Plan received an incentive award
equal to a specified percentage of their average annual salary during the
fiscal year. The target annual bonus for key executive officers was 30% of
base salary, which corresponded to 20% of the executives' targeted cash
compensation objective. The Committee determined the individual's percentage
participation by the individual's job classification and responsibilities.
In fiscal 1993, the Company exceeded its earnings target level. The bonus
under the Annual Plan paid to Mr. Lund and the four executives in the summary
compensation table represents 35% of each individual's average base
compensation for fiscal year 1993.
Long-Term Performance Incentive Plan
The Key Management Long-Term Performance Incentive Plan ("LTIP") is
intended to focus attention prospectively on the Company's long-term results
and reward achievement of the Company's long-term financial goals.
Participation in LTIP, as determined by the Committee, is limited to key
executives and officers who have a significant impact on the long-term
results of the Company. LTIP performance cycles are three years in length,
with a new three-year cycle starting every fiscal year. At the beginning of
each cycle, the Committee sets specific performance criteria and establishes
a minimum and a maximum range of performance on which a bonus will be paid.
If the Company's performance meets the minimum performance criteria at the
end of the three-year cycle, participants receive a cash payment. The degree
of attainment of the Company's long-term performance goals determines the
actual size of the participant's awards. Target awards are 20% of the
participants' average annual base salary, which corresponds to 13% of the
executives' targeted cash compensation objective over the three-year
performance cycle. The performance measurement for bonus amounts payable
under the 1991-1992-1993 LTIP was based on earnings per share for the three-
year period, and the Company exceeded its target level by 1% for this LTIP
cycle. The LTIP bonus paid to Mr. Lund and the four executives in the
summary compensation table represents 22% of each individual's average base
compensation for fiscal years 1991, 1992, and 1993.
Stock Option Plans
The Committee believes that stock option plans can serve as an effective
incentive to the Company's executive officers and key employees to further
the long-term growth and performance of the Company since the value of an
option bears a direct relationship to the Company's stock price. The
Committee administers the Company's stock option plans and determines the
individuals to whom stock options, stock appreciation rights ("SARs") and
restricted stock awards are granted. The Committee, however, does not grant
stock options on a regular basis. The Committee did not grant stock options,
SARs or restricted stock awards to Mr. Lund or any of the other executives
listed in the summary compensation table during 1993. Additionally, the
Committee did not reprice any outstanding options or SARs during 1993.
Stock Purchase Incentive Plan
During 1992, the Company's shareholders approved the Key Executive Stock
Purchase Incentive Plan (the "Executive Plan"). The Executive Plan was
developed in consultation with an outside compensation consultant after a
review by the Committee and such consultant of the Company's existing
compensation programs. The Executive Plan is intended to promote the long-
term growth and financial success of the Company by strengthening the links
between the Company's management and its shareholders. The Executive Plan
affords certain key executive officers of the Company and its subsidiaries
the opportunity to significantly increase their ownership of the Company's
Common Stock. The Executive Plan also offers the potential for substantial
financial incentives (in addition to potential appreciation in the value of
the Common Stock) based on continued service and long-term stock price
performance, but in a manner that places such executive officers at risk in
the event of poor Company performance. By having participants in the
Executive Plan share in both the upside and downside potential inherent in
stock ownership by purchasing Common Stock using full-recourse, interest-
bearing loans, the Committee believes the Executive Plan incorporates an
important element of investment risk that generally is not found in other
executive incentive plans.
During June 1992, under the Executive Plan, Mr. Lund, three of the
executives named in the summary compensation table and certain other
executive officers selected by the Committee received the rights to purchase
a specified number of shares of the Company's Common Stock on June 16, 1992
at the average market price of the Common Stock on such date. Pursuant to
the Executive Plan, the executive officers also received from the Company
full-recourse, interest-bearing loans for the entire purchase price of the
Common Stock. Each executive officer was required to pledge the Common Stock
he or she purchased with the proceeds of the loan to secure such loan. The
loans have an eight-year term and accrue interest at the rate of 7.04%,
compounded annually. Interest is payable prior to maturity to the extent of
dividends paid on the shares purchased under the Executive Plan, with the
balance due at the maturity of the loan. Under the Executive Plan, Mr. Lund
and three of the executives in the summary compensation table purchased the
indicated amounts of Common Stock at a purchase price of $17.44 per share:
Mr. Lund - 400,000 shares; Mr. Bergeson - 60,000 shares; Mr. Del Santo -
220,000 shares; and Mr. Maher - 220,000 shares. Due to Mr. Skaggs's current
significant stock ownership, he was not selected by the Committee to
participate in the Executive Plan.
Executive officers participating in the Executive Plan are also eligible
to receive a deferred cash incentive award (the "deferred award") which is
generally payable at the end of a five-year performance cycle. In the case
of the executives listed in the summary compensation table, the five-year
performance cycle will end on June 16, 1997. One-half of the deferred award
will be based on the executive officer's continued service with the Company
during the performance cycle (the "service award"), while the other half will
be based on the Company's Common Stock performance (including reinvested
dividends) over the five-year performance cycle relative to shareholder
returns for specified companies in the retail food and drug industry (the
"performance award"). The maximum amount of the deferred award which can be
earned by the executive officers is equal to the amount of the loan and
accrued and unpaid interest. Any deferred award must be applied towards
repayment of the loan. Certain deferred awards will be forfeited if, prior
to the end of the five-year performance cycle, an executive officer sells
shares purchased under the Executive Plan or the executive officer's service
with the Company is terminated.
Each executive officer will vest annually in a portion of the service
award in an amount equal to a cumulative percentage of the outstanding loan
balance at the time the service award is earned. The cumulative percentages
for each year are as follows: first year - 7 1/2%; second year - 15%; third
year - 22 1/2%; fourth year - 30%; and fifth year - 50%. The service award
may not exceed 50% of the loan balance. At the end of the Company's 1993
fiscal year, all of the executives listed in the summary compensation table
who participated in the Executive Plan were vested in 7 1/2% of the service
award, which amounts are included in the LTIP Payout Column of the Summary
Compensation Table.
The portion of the performance award earned as a percentage of the loan
amount at the time the performance award is paid will vary depending upon the
Company's total shareholder return versus shareholder returns of the members
of the specified peer group, with no performance award earned if the
Company's total shareholder return ranks below the 50th percentile of the
peer group, and 100% of the performance award earned if the Company's total
shareholder return is ranked in the 80th or higher percentile of the peer
group. The performance award may not exceed 50% of the loan balance. For
the period from June 16, 1992 through March 31, 1994, the Company's total
shareholder return versus the members of the peer group ranked in the 88.9th
percentile, and therefore 100% of the performance award would have been
earned, which would be 50% of the loan balance, assuming such performance was
maintained through the full five-year performance cycle. For a comparison of
the Company's total shareholder return over the last five years with the peer
group selected for comparison purposes under the Executive Plan (and a list
of the members of the peer group), see page ___ of this proxy statement. If
the Company's common stock price declines from the market value on the day of
the award, the loan balance may exceed the combined value of the stock and
plan payments to participants after taxes, in which event the participants
would be required to pay the remaining loan balance with personal funds.
Other Compensation Plans
The executive compensation program also includes other benefit plans
that are generally available to employees of the Company, including a profit
sharing/401(k) pension plan, a medical plan and a life insurance plan. Since
the end of 1984, the Company has not maintained a defined benefit pension
plan for its employees. Certain executive officers, including the executives
listed in the summary compensation table, are eligible to participate in a
supplemental executive retirement plan, which is a non-qualified plan
intended to provide benefits where limitations are imposed upon Company
contributions to certain employees due to limits under the Federal tax laws.
Except for the Company's profit sharing/401(k) pension plan none of the
foregoing plans are tied to Company performance. The Committee believes
these plans are comparable to other companies in the food and drug
industries and companies of similar size.
Conclusion
Through the programs described above, a very significant portion of the
Company's executive compensation is linked directly to individual and
corporate performance and stock price appreciation. The adoption of the
Executive Plan by the Company in 1992, which was approved by the shareholders
at the 1992 annual meeting, was a significant step in further strengthening
the link between executive pay and Company stock price performance. The
Committee intends to continue the policy of linking executive compensation to
corporate performance and return to shareholders.
Submitted by the Compensation and Stock Option Committee of the Board of
Directors of the Company.
Leon G. Harmon, Chairman
Henry I. Bryant Louis H. Callister
Arden B. Engebretsen James B. Fisher
L. Tom Perry Barbara S. Preiskel
American Stores Company Stock Price Performance
Set forth below is a line graph comparing the yearly percentage change
in the cumulative total shareholder return on the Company's Common Stock
against the cumulative total return of the S & P Composite-500 Stock Index
and a group of nine publicly-traded retail food and/or drug companies which
include The Great Atlantic & Pacific Tea Company, Inc., Albertson's, Inc.,
The Kroger Co., Longs Drug Stores Corporation, Safeway Inc., Smith's Food &
Drug Centers, Inc., The Vons Companies, Inc., Walgreen Co., and Winn-Dixie
Stores, Inc. (the "Peer Group Index") for the five-year fiscal period ended
January 30, 1994. The companies in the peer group are the same as those used
in calculating the performance awards under the Company's Key Executive Stock
Purchase Incentive Plan. Comparisons are based on the assumption that the
value of the investment on January 28, 1989 in the Company's Common Stock,
the securities comprising the S & P Composite-500 Stock Index and the Peer
Group Index was $100 and that all dividends were reinvested.
<TABLE>
Comparison of Five-Year Cumulative Return
American Stores Company Common, S&P Composite-500
& Peer Group Indices
<S> <C> <C> <C> <C> <C>
FISCAL YEAR 1/27/89 2/2/90 2/1/91 1/31/92 1/29/93 1/28/94
Peer Group $100.00 $126.80 $159.51 $181.86 $224.41 $231.34
S&P 500 $100.00 $116.47 $125.19 $153.94 $170.21 $190.86
American Stores $100.00 $102.13 $111.53 $118.83 $160.31 $159.53
</TABLE>
Compensation Committee Interlocks and Insider Participation
Mr. Bryant, a member of the Company's Board of Directors and its
Compensation and Stock Option Committee, is the Managing Director of the
Financial Institutions Group in the Corporate Finance unit of J. P. Morgan &
Co. Incorporated ("J. P. Morgan"). In connection with the acquisition of
Lucky Stores, Inc. in 1988, the Company entered into an agreement (the
"Credit Agreement") with a group of commercial banks including Morgan
Guaranty Trust Company of New York, a wholly-owned subsidiary of J. P.
Morgan, as agent bank and a lender under the Credit Agreement. During the
1993 fiscal year, the Company paid fees to J. P. Morgan Securities Inc.,
another wholly-owned subsidiary of J. P. Morgan, as an agent for the
Company's $250 million of Medium-Term Notes, Series A, the net proceeds of
which were used to reduce indebtedness under the Credit Agreement.
Other Information Pertaining to Directors and Executive Officers
Mr. Lawrence A. Del Santo is the Senior Executive Vice President and
Chief Operating Officer - Food of the Company and the former Chairman of the
Board and Chief Executive Officer of Lucky Stores, Inc. ("Lucky"), a
subsidiary of the Company acquired in 1988. Lucky and Mr. Del Santo entered
into a compensation agreement on March 27, 1985 (the "Deferred Agreement").
Under the Deferred Agreement, the right to payment is conditioned on Mr. Del
Santo's rendering certain services to Lucky (generally, full-time employment
until age 60 or earlier death, and availability as a consultant to Lucky
after retirement) and on Mr. Del Santo's not engaging in activities
competitive with the business of Lucky. Mr. Del Santo's Deferred Agreement
provides for ten annual payments of $35,000 per year, with payments to begin
upon cessation of employment. Upon Mr. Del Santo's death, payments may be
made to a designated beneficiary until the aggregate amount paid reaches
$225,000. Upon the Company's acquisition of Lucky in 1988, Mr. Del Santo and
the Company amended the Deferred Agreement to provide that, upon leaving
employment, Mr. Del Santo will be entitled to receive a lump sum payment of
the then present value of the future stream of payments to which he would be
entitled.
From June 1991 through June 1992, Mr. Michael T. Miller was the
President of Jewel Osco Southwest, Inc. ("Jewel Osco"), one of the Company's
primary operating subsidiaries. In connection with the sale in April 1992 of
the majority of the Jewel Osco assets to Albertson's, Inc., Jewel Osco
entered into an extended employment and separation agreement with Mr. Miller.
Pursuant to the terms of the agreement, Mr. Miller resigned from his position
as President of Jewel Osco and began an extended employment status that
expires on December 31, 1995. During the term of the agreement, Mr. Miller
performs such services as the Company may request in connection with its
business. The agreement provides that the Company will pay to Mr. Miller as
compensation during the term of the agreement the amount of $8,976.00 per
month. The agreement also entitles Mr. Miller to participate in all benefit
programs available to executive officers of the Company during the term of
the agreement except long-term disability. The agreement requires Mr.
Miller, until January 1, 1997, to refrain from performing part-time or full-
time services in any capacity for any competitor of the Company or any of its
subsidiaries without the Company's prior written consent, to keep
confidential non-public information he became familiar with as a result of
his employment, and to refrain from attempting to induce employees of the
Company or its subsidiaries to resign without the Company's prior written
consent.
On September 22, 1992, the Company entered into an extended employment
agreement with Mr. J. L. Scott, who has served as a director of the Company
since 1987 and who has held various officer positions with the Company, most
recently as Co-Chief Executive Officer and President. Mr. Scott's agreement
expired on January 31, 1994. The agreement was entered into to ensure an
orderly transition of authority from Mr. Scott, upon the termination of his
active employment, to the Company's new Chief Executive Officer and
President, and to retain the benefit of Mr. Scott's experience and knowledge
as an internal advisor and as a member of the Board of Directors of the
Company. Pursuant to the Agreement, Mr. Scott resigned his position as Co-
Chief Executive Officer and President and entered into an extended employment
status as a regular and continuing consultant employee of the Company. The
Agreement provided that the Company pay to Mr. Scott as compensation during
the term of the agreement the amount of $4,000.00 per month, and long-term
incentive plan payments based on actual results under plans in effect during
his employment, which amounted to $522,522 paid in April 1993 and $116,239 in
April 1994. Additionally, Mr. Scott received a lump sum payment of
$1,152,000 in December 1992 and his previously granted but unvested stock
options vested at that time. The agreement also entitled Mr. Scott to
participate in all benefit programs available to executive officers of the
Company during the term of the agreement except long-term disability. The
agreement required Mr. Scott, through January 31, 1995, to refrain from
performing part-time or full-time services in any capacity for any competitor
of the Company or any of its subsidiaries without the Company's prior written
consent, to keep confidential non-public information he became familiar with
as a result of his employment, and to refrain from attempting to induce
employees of the Company or its subsidiaries to resign without the Company's
prior written consent.
During 1992, Mr. Lund, three of the other executives in the summary
compensation table and certain other executive officers received full-
recourse, interest bearing loans for the entire purchase price of Common
Stock of the Company they purchased pursuant to the terms of the Executive
Plan described on page ___ of this proxy statement. The loans have an eight-
year term and accrue interest at the Applicable Federal Rate for eight-year
loans with interest compounded annually, as determined by Section 1274(d) of
the Internal Revenue Code of 1986, as amended, in effect on the Purchase
Date. Interest is payable prior to maturity to the extent of dividends paid
on the shares purchased under the Executive Plan, with the balance due at the
maturity of the loan. The proceeds of the deferred cash incentives awarded
during a five-year performance cycle under the Executive Plan must also be
applied to prepay the loans. Following such prepayment, the balance of the
loans at the end of the five-year performance cycle, together with accrued
and unpaid interest thereon, will be payable in three equal installments
(plus interest) on the sixth, seventh and eighth anniversaries of the
purchase date. The payment of the loan will be accelerated if an executive
officer's service is terminated during the performance cycle for any reason
other than retirement or following a change of control, and the loan will
generally become due on the 120th day after termination of service. In the
event of retirement or a change of control, the loan must be repaid over a
three-year period. The loan may also be prepaid at any time at the executive
officer's option. On June 16, 1992, Mr. Lund and three of the other
executives in the summary compensation table received loans in the indicated
amounts: Mr. Lund - $6,975,000; Mr. Bergeson - $1,046,250; Mr. Del Santo -
$3,836,250; and Mr. Maher - $3,836,250. As of January 29, 1994, the
aggregate outstanding balance of loans made pursuant to the Executive Plan
was $42,558,897, which includes accrued, unpaid interest. The largest
aggregate amount outstanding during the fiscal year was $42,585,368.
Proposal 2 - Amendment of the Company's Restated Certificate of Incorporation
to Increase the Number of Authorized Shares of Common Stock
The Board of Directors proposes and recommends that the shareholders
adopt an amendment to Section 4.01 of Article FOURTH of the Restated
Certificate of Incorporation to increase the number of shares of Common Stock
which the Company is authorized to issue from 200,000,000 to 325,000,000.
The proposed amendment would not change the terms of the Common Stock.
On March 21, 1994, the Board of Directors unanimously approved
resolutions declaring such amendment advisable. If approved by the
shareholders, Section 4.01 of Article FOURTH will read in its entirety as
follows:
4.01 The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 335,000,000, consisting of
(a) 325,000,000 shares of Common Stock, par value $1 per share
("Common Stock"), and
(b) 10,000,000 shares of Preferred Stock, par value $1 per share
("Preferred Stock").
At its March 21, 1994 meeting, the Board of Directors declared a two-
for-one stock split, entitling each holder of Common Stock to receive one
additional share of Common Stock for each share of Common Stock held of
record. The record date for the stock split was April 7, 1994, and the
distribution date was April 21, 1994. A shareholder's equity interest in the
Company or other relative rights or interests did not change as a result of
the Common Stock split because each shareholder received additional shares of
Common Stock in direct proportion to his or her holdings at the record date.
Prior to the stock split, there were 200,000,000 shares of Common Stock
authorized, of which 71,356,897 shares of Common Stock were issued and
outstanding, exclusive of 914,181 shares of Common Stock held in the
Company's treasury. Accordingly, there remained 127,728,922 shares of Common
Stock available for issuance, of which 7,167,532 shares have been reserved
for issuance in connection with the Company's stock purchase, stock option
and stock award plans, and its 7 1/4% Convertible Subordinated Notes.
Following the stock split, there were 142,713,794 shares of Common Stock
issued and outstanding, exclusive of 1,828,363 shares of treasury stock,
leaving only 55,457,844 shares of Common Stock available for issuance.
The Board of Directors believes that it is desirable and in the best
interest of the Company and its shareholders that the number of authorized
but unissued shares of Common Stock be increased to a number approximately
equal to the number before the stock split. The Board of Directors believes
that it is desirable to have authorized but unissued shares of Common Stock
available for proper corporate purposes, including, without limitation, the
raising of additional capital, stock dividends or splits, acquisitions, and
issuance pursuant to stock option or other employee benefit or incentive
compensation plans. If authorization of any increase in the Common Stock is
postponed until a specific need arises, the delay and expense incident to
obtaining the approval of shareholders at that time could impair the
Company's ability to meet its objectives. There are currently no plans for,
or negotiations relating to, any issuance of Common Stock, except in
connection with the Company's stock purchase, stock option and stock award
plans, and its 7 1/4% Convertible Subordinated Notes.
If the proposed amendment to Article FOURTH is approved, the additional
shares of Common Stock (as well as the existing authorized but unissued
shares of Common Stock and Preferred Stock) would be available for issuance
without further action by the shareholders, unless otherwise required by
applicable law or by the rules of any stock exchange on which the Company's
securities are listed. The New York Stock Exchange, on which the Common
Stock of the Company is listed, currently requires shareholder approval as a
prerequisite for listing Common Stock to be issued in any transaction or
series of related transactions, other than a public offering for cash, if the
Common Stock has or will have upon issuance voting power equal to or in
excess of 20% of the voting power outstanding before the issuance of such
stock or if the issuance will result in a change of control.
The additional shares of Common Stock would be identical to the Common
Stock currently outstanding. No shareholder has any preemptive rights, and
issuance of the additional (as well as the existing authorized but unissued)
Common Stock could dilute the voting rights of present holders of Common
Stock. It is possible, depending upon the type of transaction in which
Common Stock is issued, that issuance of such Common Stock could have a
dilutive effect on shareholders' equity and earnings per share attributable
to present holders.
The additional shares of Common Stock (as well as the existing
authorized but unissued shares of Common Stock and Preferred Stock) could
also be used to impede an unsolicited bid for control of the Company which
the Board of Directors believed was not in the best interests of the Company
and its shareholders. The availability of the additional Common Stock as a
defensive response to a takeover attempt was not a motivating factor in the
Board's approval of the proposed amendment to Article FOURTH, and the Board
is not aware of any effort to obtain control of the Company.
The affirmative vote of a majority of the outstanding Common Stock is
required for approval of the proposed amendment to the Restated Certificate
of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
PROPOSED AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION TO INCREASE
THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK.
Proposal 3 - Ratification of the Appointment of Independent Auditors
The Board of Directors, upon the recommendation of the Audit Committee,
has selected the firm of Ernst & Young, Independent Certified Public
Accountants, to audit the records of the Company for the fiscal year ending
January 28, 1995. This selection is subject to ratification by the
shareholders. A representative of Ernst & Young will be present at the
Annual Meeting of Shareholders. The representative will have an opportunity
to make a statement and will be available to respond to appropriate
questions. Ernst & Young is the Company's independent certified public
accountants for the fiscal year ended January 29, 1994.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG AS INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS.
SHAREHOLDERS' PROPOSALS FOR 1995 ANNUAL MEETING
Any proper shareholder proposal to be included in the Company's Proxy
Statement for the 1995 Annual Meeting of Shareholders must be received by the
Company no later than December 30, 1994 and should be sent to the Secretary,
American Stores Company, P.O. Box 27447, Salt Lake City, Utah 84127-0447 or
709 East South Temple, Salt Lake City, Utah 84102.
Method of Proxy Solicitation
The Company has retained D. F. King & Co., Inc., 77 Water Street, New
York, New York 10005, to assist in the solicitation of proxies. For these
services, the Company will pay a fee of $8,000.00 plus out-of-pocket
expenses. The expense of soliciting proxies will be borne by the Company.
Solicitation of proxies may also be made by directors, officers, and
regularly engaged employees of the Company, without additional compensation
therefor.
OTHER MATTERS
The Annual Meeting is called for those purposes set forth in the Notice
of Annual Meeting of Shareholders and for the transaction of such other
business as may properly come before the meeting. Management presently knows
of no other business which may be presented at the Annual Meeting. However,
if other matters are presented, it is the intention of the persons named in
the enclosed proxy to vote in accordance with their judgment.
It is important that all proxies be returned promptly to American Stores
Company, c/o First Chicago Trust Company of New York, P.O. Box 8187, Edison,
New Jersey 08818 or American Stores Company, P.O. Box 27447, Salt Lake City,
Utah 84127-0447. Proxies are revocable at any time prior to the exercise
thereof by written notice to the Secretary. A proxy may also be revoked if
the shareholder attends the meeting and elects to vote in person. Therefore,
shareholders are urged to mark, sign, date and mail the enclosed proxy in the
envelope provided, which requires no postage if mailed in the United States.
Whether or not you plan to attend the meeting, please mark, sign, date and
promptly return the enclosed proxy card.
<PAGE>
PROXY
AMERICAN STORES COMPANY
This Proxy is Solicited on Behalf of the Board of
Directors
for the Annual Meeting on June 21, 1994
The undersigned hereby constitutes and appoints Teresa Beck, Donald B.
Holbrook, Kathleen E. McDermott and each of them, his/her true and lawful
agents and proxies with full power of substitution in each, to represent the
undersigned at the Annual Meeting of Shareholders of AMERICAN STORES COMPANY
to be held at 10:00 AM, local time on June 21, 1994, at the Red Lion Hotel,
255 South West Temple, Salt Lake City, Utah, and at any postponements or
adjournments thereof, on all matters coming before such meeting.
You are encouraged to specify your choices by marking the appropriate boxes,
SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. Your shares cannot
abe voted unless you sign this card on the reverse and return it to the
Company.
(change of address/comments)
__________________________________________
__________________________________________
__________________________________________
__________________________________________
SEE REVERSE SIDE
<PAGE>
x
_____ Please mark your votes as in this example.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR election of
directors and FOR Proposals 2 and 3.
The Board of Directors recommends a vote FOR proposals 1, 2 and 3.
FOR WITHHELD Nominees for
Directors:
1. Election of Fernando R. Gumucio
Directors _______ ________ Leon G. Harmon
John E. Masline
For, except vote withheld from the following nominee(s): L. S. Skaggs
Arthur K. Smith
______________________________________________________
2. Approval of Ernst & Young independent certified public accountants, to
audit the accounts and records of the Company for the fiscal year ending
January 28, 1995.
FOR AGAINST ABSTAIN
__________ __________ __________
3. Proposal to amend the Restated Certificate of Incorporation to increase
the number of authorized shares of common stock.
FOR AGAINST ABSTAIN
__________ __________ __________
4. In their discretion upon such other matters as may properly come before
this meeting.
I PLAN TO ATTEND THE 1994 ANNUAL MEETING __________
CHANGE OF ADDRESS/COMMENTS ON REVERSE SIDE __________
SIGNATURE(S)_____________________________________ DATE ______________ 1994
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
