<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Performance Food Group Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[PERFORMANCE FOOD GROUP LOGO]
6800 PARAGON PLACE, SUITE 500
RICHMOND, VIRGINIA 23230
(804) 285-7340
Dear Shareholder:
It is my pleasure to extend to you a cordial invitation to attend the
Annual Meeting of Shareholders of Performance Food Group Company (the "Company")
to be held at 10:00 a.m., eastern daylight time, on Tuesday, May 6, 1997, at the
Pocahontas Foods, USA, Inc. offices, located at 7420 Ranco Road, Richmond,
Virginia.
Shareholders will be asked to elect two directors and to consider and act
on a proposal to amend the Company's 1993 Outside Directors' Stock Option Plan.
In addition, we will present a report on the condition and performance of the
Company, and you will have an opportunity to question management on matters that
affect the interests of all shareholders.
We hope you will be able to attend the meeting in person. Whether you
expect to attend or not, we request that you complete and return the enclosed
proxy card in the enclosed post-paid envelope. Your vote is important.
I look forward to seeing you on May 6, 1997.
Sincerely,
/s/ Robert C. Sledd
------------------------------------
Robert C. Sledd
Chairman and Chief Executive Officer
<PAGE> 3
[PEFORMANCE FOOD GROUP LOGO]
6800 PARAGON PLACE, SUITE 500
RICHMOND, VIRGINIA 23230
(804) 285-7340
--------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the Annual Meeting of Shareholders (the "Annual
Meeting") of Performance Food Group Company (the "Company") will be held at
10:00 a.m., eastern daylight time, on Tuesday, May 6, 1997 at the Pocahontas
Foods, USA, Inc. offices, located at 7420 Ranco Road, Richmond, Virginia for the
following purposes:
1. To elect two (2) Class I directors to hold office for a term of
three (3) years and until their successors are elected and qualified;
2. To consider and act upon a proposal to amend the Company's 1993
Outside Directors' Stock Option Plan to increase the number of options
granted to non-employee directors on the date of each annual shareholders'
meeting; and
3. To transact such other business as may properly come before the
Annual Meeting.
The Board of Directors has fixed the close of business on March 17, 1997 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting.
Your attention is directed to the Proxy Statement accompanying this notice
for a more complete statement regarding matters to be acted upon at the Annual
Meeting.
By the Order of the Board of Directors
/S/ DAVID W. SOBER
-------------------------------------
DAVID W. SOBER, Secretary
Richmond, Virginia
March 27, 1997
YOUR REPRESENTATION AT THE ANNUAL MEETING IS IMPORTANT. TO ENSURE YOUR
REPRESENTATION, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY. SHOULD YOU DESIRE TO REVOKE
YOUR PROXY, YOU MAY DO SO AS PROVIDED IN THE ACCOMPANYING PROXY STATEMENT AT ANY
TIME BEFORE IT IS VOTED.
<PAGE> 4
[PERFORMANCE FOOD GROUP LOGO]
6800 PARAGON PLACE, SUITE 500
RICHMOND, VIRGINIA 23230
(804) 285-7340
--------------------
PROXY STATEMENT
--------------------
The accompanying proxy is solicited by the Board of Directors of
Performance Food Group Company (the "Company") for use at the Annual Meeting of
Shareholders of the Company (the "Annual Meeting") to be held on May 6, 1997,
and any adjournments thereof, notice of which is attached hereto.
The purposes of the Annual Meeting are to elect two Class I directors; to
consider and act upon a proposal to amend the Company's 1993 Outside Directors'
Stock Option Plan (the "Outside Directors' Plan") to increase the number of
options granted to non-employee directors on the date of each annual
shareholders' meeting; and to transact such other business as may properly be
brought before the Annual Meeting or any adjournment thereof.
A shareholder who signs and returns a proxy may revoke the same at any time
before the authority granted thereby is exercised by attending the Annual
Meeting and electing to vote in person, by filing with the Secretary of the
Company a written revocation or by duly executing a proxy bearing a later date.
Unless so revoked, the shares represented by the proxy will be voted at the
Annual Meeting. Where a choice is specified on the proxy, the shares represented
thereby will be voted in accordance with such specifications. If no
specification is made, such shares will be voted FOR the election of the two
director nominees and FOR the amendment of the Company's Outside Directors'
Plan.
The Board of Directors knows of no other matters which are to be brought to
a vote at the Annual Meeting. If any other matter does come before the Annual
Meeting, however, the persons appointed in the proxy or their substitutes will
vote in accordance with their best judgment on such matters.
The Board of Directors has fixed the close of business on March 17, 1997 as
the record date for the Annual Meeting. Only record holders of the Company's
common stock, $.01 par value per share (the "Common Stock"), at the close of
business on that date will be entitled to vote at the Annual Meeting. On the
record date, the Company had outstanding 11,693,229 shares of Common Stock.
Holders of the Common Stock will be entitled to one vote for each share of
Common Stock so held, which may be given in person or by proxy duly authorized
in writing.
The representation in person or by proxy of at least a majority of the
outstanding shares entitled to vote is necessary to provide a quorum at the
meeting. Abstentions and "non-votes" are counted as present in determining
whether the quorum requirement is satisfied. Because directors are elected by a
plurality of the votes cast by the holders of the Common Stock represented and
entitled to vote at the Annual Meeting, abstentions are not considered in the
election. Because the amendment to the Outside Directors' Plan will be approved
if votes for exceed votes cast against the proposal, abstentions are not
considered in that vote. Any other matters as may properly come before the
meeting or any adjournment thereof shall be approved by the affirmative vote of
a majority of the votes cast by the holders of Common Stock represented and
entitled to vote at the Annual Meeting. A "non-vote" occurs when a nominee
holding shares for a beneficial owner votes on one proposal, but does not vote
on another proposal because the nominee does not have discretionary voting power
and has not received instructions from the beneficial owner.
This Proxy Statement and the Company's Annual Report to Shareholders have
been mailed on or about March 27, 1997 to all shareholders of record at the
close of business on March 17, 1997. The cost of solicitation of proxies will be
borne by the Company, including expenses in connection with preparing,
assembling and mailing this Proxy Statement. Such solicitation will be made by
mail, and may also be made by the Company's regular officers or employees
personally or by telephone or telecopy. The Company may reimburse brokers,
custodians and nominees for their expenses in sending proxies and proxy
materials to beneficial owners.
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information furnished to the Company
as of March 17, 1997 concerning persons known to the Company to be the
beneficial owners of more than 5% of the outstanding shares of the Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS(1)
------------------- ---------- -----------
<S> <C> <C>
Performance Food Group Employee Savings and Stock Ownership Trust................. 1,481,697(2) 12.7%
6800 Paragon Place, Suite 500
Richmond, Virginia 23230
Palisade Capital Management, L.L.C................................................ 849,800(3) 7.3%
One Bridge Plaza, Suite 695
Fort Lee, New Jersey 07024
</TABLE>
- -----------------
(1) Computed in accordance with Rule 13d-3(d)(1) under the Securities Exchange
Act of 1934.
(2) 848,023 shares held by the ESOP have been allocated to an aggregate of
approximately 1,500 employees of the Company who exercise voting power over
such shares. The remaining 633,674 unallocated shares are voted by the
Trustee at the direction of the Plan Committee which is appointed by the
Board of Directors of the Company.
(3) Based solely on information contained in a Schedule 13G filed by Palisade
Capital Management, L.L.C. with the Securities and Exchange Commission (the
"SEC") on February 12, 1997.
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's Restated Charter classifies the Board of Directors into three
classes, each class to be as nearly equal in number as possible, designated
Class I, Class II and Class III. At each annual meeting, directors of the class
whose term of office expires in that year are elected for a three-year term. The
terms of the two Class I directors, Timothy M. Graven and Charles E. Adair, will
expire upon the election and qualification of new directors at this Annual
Meeting. The terms of each of the two Class II directors and each of the two
Class III directors will expire at the annual meeting in 1998 and 1999,
respectively. The Board of Directors has designated Timothy M. Graven and
Charles E. Adair as the two nominees for reelection as Class I directors for a
three-year term expiring at the annual meeting in 2000 and until their
successors are elected and qualified. Both of the nominees are currently
directors of the Company and were elected by the shareholders.
Unless contrary instructions are received, it is intended that the shares
represented by proxies solicited by the Board of Directors will be voted in
favor of the election of the two Class I nominees as directors. Each nominee has
consented to be a candidate and to serve, if elected. While the Board has no
reason to believe that any nominee will be unable to accept nomination or
election as a director, if such an event should occur, the persons named in the
form of proxy have advised the Company that they will vote for such substitute
or substitutes as shall be designated by the current Board of Directors.
2
<PAGE> 6
The following table contains, as of March 17, 1997, certain information
concerning the executive officers and directors of the Company, including the
nominees, which information has been furnished to the Company by the individuals
named.
<TABLE>
<CAPTION>
SHARES
COMMON
STOCK
DIRECTOR TERM BENEFICIALLY PERCENT
NAME AGE SINCE EXPIRES POSITION OWNED(1) OF CLASS
---- --- ----- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Robert C. Sledd........ 44 1987 1998 Chairman, Chief Executive 350,340(2) 2.9%
Officer and Director
C. Michael Gray........ 47 1992 1999 President, Chief Operating 142,205 1.2%
Officer and Director
Roger L. Boeve......... 58 Executive Vice President and 108,101(3) *
Chief Financial Officer
Thomas Hoffman......... 57 Senior Vice President 52,169 *
Jerry J. Caro.......... 54 1987 1999 Founding Chairman, 56,250 *
Senior Vice President
and Director
David W. Sober......... 64 Vice President of Human 32,172(3) *
Resources and Secretary
Fred C. Goad, Jr....... 56 1993 1998 Director 19,250 *
Timothy M. Graven...... 45 1993 1997 Director 16,250 *
Charles E. Adair....... 49 1993 1997 Director 19,250 *
All directors and
executive officers as a
group (9 persons)...... 797,487 6.5%
</TABLE>
- --------------------
* Less than one percent
(1) Includes the following shares which are not currently outstanding but which
the named individuals are entitled to acquire within 60 days of the date
hereof upon the exercise of options: Mr. Sledd - 2,250; Mr. Gray - 1,688;
Mr. Boeve - 1,547; Mr. Hoffman - 4,781; Mr. Caro - 1,688; Mr. Sober - 984;
Mr. Goad - 1,500; Mr. Graven - 1,500; Mr. Adair - 1,500; all directors and
executive officers as a group (9 persons) - 17,438 shares. The shares
described in this note are deemed to be outstanding for the purpose of
computing the percentage of outstanding common stock owned by such persons
individually and by the group, but are not deemed to be outstanding for the
purposes of computing the percentage of ownership of any other person.
(2) Includes 40,500 shares held by Mr. Sledd as trustee for the benefit of his
children. Also includes 2,250 shares held by Mr. Sledd's wife for which Mr.
Sledd disclaims beneficial ownership.
(3) Excludes unallocated shares held by the ESOP. Mr. Boeve and Mr. Sober are
trustees of the ESOP and are members of the Plan Committee which directs
the voting of such shares.
- ------------------
3
<PAGE> 7
The following is a brief summary of the business experience of each of the
executive officers and directors of the Company, including the nominees.
Robert C. Sledd has served as Chairman of the Board of Directors since
February 1995 and has served as Chief Executive Officer and a director of the
Company since 1987. Mr. Sledd served as President of the Company from 1987 to
February 1995. Mr. Sledd has served as a director of Taylor & Sledd Industries,
Inc., a predecessor of the Company, since 1974, and served as President and
Chief Executive Officer of that company from 1984 to 1987. Mr. Sledd also serves
as a director of SCP Pool Corporation.
C. Michael Gray has served as President and Chief Operating Officer of the
Company since February 1995 and has served as a director of the Company since
1992. Mr. Gray served as President of Pocahontas Foods, USA, Inc.
("Pocahontas"), a wholly-owned subsidiary of the Company, from 1981 to 1995. Mr.
Gray had been employed by Pocahontas since 1975, serving as Marketing Manager
and Vice President of Marketing. Prior to joining Pocahontas, Mr. Gray was
employed by the Kroger Company as a produce buyer.
Roger L. Boeve has served as Executive Vice President and Chief Financial
Officer of the Company since 1988. Prior to that date, Mr. Boeve served as
Executive Vice President and Chief Financial Officer for The Murray Ohio
Manufacturing Company and as Corporate Vice President and Treasurer for Bausch
and Lomb. Mr. Boeve is a certified public accountant.
Thomas Hoffman has served as Senior Vice President of the Company since
February 1995. Mr. Hoffman has also served as President of Kenneth O. Lester
Company, a wholly-owned subsidiary of the Company, since 1989. Prior to joining
the Company in 1989, Mr. Hoffman had served in executive capacities at Booth
Fisheries Corporation, a subsidiary of Sara Lee Corporation, as well as C.F.S.
Continental, Miami and International Foodservice, Miami, two foodservice
distributors.
Jerry J. Caro has served as Founding Chairman of the Company since February
1995, as a director of the Company since 1987, and as Senior Vice President
since 1989. Mr. Caro served as Vice Chairman of the Company from 1988 to
February 1995. Although Mr. Caro is no longer involved in day to day management
of the Company, pursuant to an agreement with the Company, he provides
consulting services as requested. Prior to joining the Company, Mr. Caro was the
President of Caro Produce & Institutional Foods, Inc., a wholly-owned subsidiary
of the Company.
David W. Sober has served as Vice President of Human Resources since 1987
and as Secretary of the Company since March 1991. Mr. Sober served as Vice
President for Purchasing of the Company from March 1991 to July 1994. Mr. Sober
served as Corporate Vice President and Secretary for Taylor & Sledd Industries,
Inc., a predecessor of the Company, during 1986 and 1987. Mr. Sober held various
positions in other companies in the wholesale and retail food industries,
including approximately 30 years with the A&P grocery store chain.
Fred C. Goad, Jr. has served as a director of the Company since July 1993.
Since June 1996, Mr. Goad has served as Chairman and Co-Chief Executive Officer
and a director of ENVOY Corporation ("ENVOY"), a provider of electronic
transaction processing services for the health care industry. From 1985 to June
1996, Mr. Goad served as President and Chief Executive Officer and as a director
of ENVOY. Prior to 1985, Mr. Goad served in executive positions with UCCEL
Corporation and FISI-Madison Financial Corp. Mr. Goad also serves as a director
of Oacis Healthcare Systems, Inc.
Timothy M. Graven has served as a director of the Company since August
1993. Mr. Graven is the Managing Partner and co-founder of Triad Investment
Company, LLC, a private investment firm founded in 1995. Mr. Graven previously
served as President and Chief Operating Officer of Steel Technologies, Inc. of
Louisville, Kentucky, a steel processing company, from March 1990 to November
1994, as Executive Vice President and Chief Financial Officer from May 1985 to
March 1990 and as a director from 1982 to 1994.
4
<PAGE> 8
Charles E. Adair has served as a director of the Company since August 1993.
Mr. Adair is the Chairman and founder of Adair & Associates, Inc., a consulting
and private investment firm founded in 1993 and is President of Kowaliga
Capital, Inc., a venture capital management company founded in 1994. Mr. Adair
was employed by Durr- Fillauer Medical, Inc., a distributor of pharmaceuticals
and other medical products, from 1973 to 1992, serving as Executive Vice
President from 1978 to 1981, as President and Chief Operating Officer from 1981
to 1992, and as a director from 1976 to 1992. Mr. Adair also serves as a
director of Tech Data Corporation, a distributor of microcomputers and related
hardware and software products. Mr. Adair is a certified public accountant.
The Board of Directors has established an Audit Committee for the purpose
of recommending the Company's auditors, reviewing the scope of their engagement,
consulting with such auditors, reviewing the results of the audit examination,
acting as a liaison between the Board and the auditors and reviewing various
Company policies, including those related to accounting and internal control
matters. Messrs. Goad, Graven and Adair comprise the Audit Committee, which met
two times during the fiscal year ended December 28, 1996.
The Board of Directors has established a Compensation Committee for the
purpose of evaluating the performance of the Company's officers, reviewing and
approving officers' compensation, formulating bonuses for the Company's
management and administering the Company's stock incentive plans. Messrs. Goad,
Graven and Adair comprise the Compensation Committee, which met two times during
the fiscal year ended December 28, 1996.
The Board of Directors held eight meetings, three of which were via
teleconference, during the fiscal year ended December 28, 1996. All incumbent
directors attended at least 75% of the meetings of the Board and each committee
of the Board on which such directors served, held during fiscal 1996. The Board
of Directors does not have a nominating committee.
5
<PAGE> 9
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued by the
Company during the three fiscal years ended December 28, 1996 (fiscal 1996),
December 30, 1995 (fiscal 1995), and December 31, 1994 (fiscal 1994) for (i) the
Chief Executive Officer of the Company and (ii) the four highest paid executive
officers of the Company whose salary and bonus payments exceeded $100,000
(collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------------- ------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) (#)(1)(2) ($)
------------------ ------ -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert C. Sledd 1996 $242,466 $111,139 $ -- 13,501 $7,174(8)
Chairman and Chief Executive 1995 189,780 121,523 50,697(4) 11,250 7,265(8)
Officer 1994 134,658 23,740(3) -- -- 5,995(8)
C. Michael Gray 1996 201,509 100,709 35,724(5) 18,751 7,174(8)
President and Chief Operating 1995 169,599 80,704 46,404(5) 11,250 7,265(8)
Officer 1994 121,747 103,562(3) -- -- 5,995(8)
Roger L. Boeve 1996 173,741 49,705 39,968(6) 14,251 7,174(8)
Executive Vice President and 1995 146,118 54,234 26,670(6) 7,500 7,265(8)
Chief Financial Officer 1994 130,730 15,690(3) -- -- 5,995(8)
Thomas Hoffman 1996 172,877 59,431 -- 16,501 7,174(8)
Senior Vice President 1995 141,759 160,126 -- 3,000 7,265(8)
1994 111,278 21,839(3) -- -- 5,995(8)
David W. Sober 1996 113,568 28,785 -- 4,200 6,931(8)
Vice President of Human 1995 100,133 25,471 -- 3,000 5,665(8)
Resources and Secretary 1994 84,378 9,846(3) 10,397(7) -- 4,376(8)
</TABLE>
- -------------------------
(1) Adjusted to reflect 3-for-2 stock split in the form of a stock dividend
paid on July 15, 1996.
(2) Number of stock options granted under the Company's 1993 Employee Stock
Incentive Plan (the "1993 Plan").
(3) Includes the value of bonus shares issued under the 1993 Plan. The shares
were fully vested upon issuance. Shares were granted as follows: Mr. Sledd
- 419, Mr. Gray - 693, Mr. Boeve - 267, Mr. Hoffman - 540 and Mr. Sober -
86 at a fair market value of $12.75 per share; Mr. Sledd - 109, Mr. Gray -
183, Mr. Boeve - 75, Mr. Hoffman - 41 and Mr. Sober - 46, at a fair market
value of $12.83 per share; Mr. Sledd - 165, Mr. Gray - 180, Mr. Boeve -
132, Mr. Hoffman - 138, and Mr. Sober - 44, at a fair market value of
$14.17 per share determined by the closing price of the Company's common
stock on The Nasdaq Stock Market on the date of the grant.
(4) Includes $42,851 for moving expenses in connection with the Company's
relocation of its headquarters to Richmond, Virginia.
(5) Includes $28,049 in 1996 and $38,487 in 1995 for moving expenses in
connection with Mr. Gray's temporary relocation to the Company's facility
in Atlanta, Georgia.
6
<PAGE> 10
(6) Includes $32,122 in 1996 and $18,824 in 1995 for moving expenses in
connection with the Company's relocation of its headquarters to Richmond,
Virginia.
(7) Includes $7,410 in 1994 as an automobile allowance.
(8) Includes the dollar value of allocations to the Named Executive Officer
under the Performance Food Group Employee Savings and Stock Ownership Plan
(the "ESOP") based on the closing price of the Company's Common Stock on
The Nasdaq Stock Market of $12.50 per share on December 31, 1994 for fiscal
1994, of $23.75 per share on December 30, 1995 for fiscal 1995, and $15.25
per share at December 28, 1996 for fiscal 1996. The 1996 allocations are
estimated, however, the Company does not believe that the allocations will
change materially.
- ------------------
The following table summarizes certain information concerning stock option
grants to each of the Named Executive Officers during the fiscal year ended
December 28, 1996:
OPTION GRANTS IN FISCAL YEAR 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------------- VALUED AT ASSUMED
NUMBER OF ANNUAL RATES OF
SECURITES PERCENT OF STOCK PRICE
UNDERLYING TOTAL OPTIONS EXERCISE APPRECIATION FOR
OPTIONS GRANTED TO OR OPTION TERM
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION -------------------------
NAME (#)(1)(2) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
- ----------------- ------------ ------------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Robert C. Sledd 13,501 4.5% $14.50 2/15/06 $123,115 $311,998
C. Michael Gray 18,751 6.2% $14.50 2/15/06 170,990 433,322
Roger L. Boeve 14,251 4.7% $14.50 2/15/06 129,954 329,330
Thomas Hoffman 16,501 5.5% $14.50 2/15/06 150,472 381,326
David W. Sober 4,200 1.4% $14.50 2/15/06 38,300 97,059
</TABLE>
- -------------------
(1) All options granted to the Named Executive Officers were granted on
February 15, 1996 pursuant to the 1993 Plan. The options become 100%
exercisable on February 15, 2000. If any of certain events, which generally
constitute a change in control of the Company occur, the options would
become immediately exercisable. The options were granted at an exercise
price determined by the closing price of the Company's Common Stock on The
Nasdaq Stock Market on the date of grant.
(2) Adjusted to reflect 3-for-2 stock split in the form of a stock dividend
paid on July 15, 1996.
The Company has not awarded stock appreciation rights to any employee and
has no long-term incentive plans, as that term is defined in regulations
promulgated by the SEC. During the fiscal year ended December 28, 1996, the
Company did not adjust or amend the exercise price of stock options awarded to
the Named Executive Officers, whether through amendment, cancellation or
replacement grants, or other means. Also, the Company presently has no defined
benefit or actuarial plans covering any employees of the Company.
7
<PAGE> 11
The following table sets forth certain information with respect to stock options
issued to the Named Executive Officers pursuant to the 1993 Plan and the 1989
Nonqualified Stock Option Plan. No stock options have been exercised by the
Named Executive Officers in fiscal 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL 1996 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED ON VALUE OPTIONS HELD AT OPTIONS AT
EXERCISE (#) REALIZED ($) DECEMBER 28, 1996 DECEMBER 28, 1996(1)
------------ ------------ --------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert C. Sledd....... NONE NONE 110,812 24,189 $1,170,363 $ 75,125
C. Michael Gray....... NONE NONE 80,999 28,877 864,246 73,892
Roger L. Boeve........ NONE NONE 85,266 21,423 903,041 54,452
Thomas Hoffman........ NONE NONE 20,718 23,532 198,834 68,173
David W. Sober........ NONE NONE 15,404 7,434 159,580 24,015
</TABLE>
- --------------------
(1) BASED ON THE CLOSING PRICE OF THE COMPANY'S COMMON STOCK ON THE NASDAQ
STOCK MARKET AT DECEMBER 28, 1996 OF $15.25 PER SHARE.
DIRECTOR COMPENSATION
Non-employee directors receive an annual retainer of $3,000 and a fee of
$1,000 for each Board meeting attended, $500 for each committee meeting attended
on a day on which there is no regularly scheduled Board meeting, $500 for each
meeting attended by telephone and are reimbursed for expenses reasonably
incurred in connection with their services as a director. Directors who are
officers or employees of the Company receive no compensation for serving as
members of the Board. The aggregate amount of fees paid to all of the
non-employee directors for fiscal 1996 was $25,500.
Each non-employee director participates in the Outside Directors' Plan,
which was approved by the shareholders of the Company on July 21, 1993.
Non-employee directors elected to the Board subsequent to the adoption of the
Outside Directors' Plan will receive an option for 5,250 shares upon their
election to the Board of Directors and, if the proposed amendment to the Outside
Directors' Plan is approved by the shareholders, all non-employee directors will
receive an annual option grant of 2,500 shares as of the date of each annual
meeting of shareholders. The options become exercisable, subject to a director's
continued service on the Board of Directors, one year from the date of grant,
and expire on the tenth anniversary of such date. All options issued under the
Outside Directors' Plan have an exercise price per share at the date of grant
equal to the closing sale price on The Nasdaq Stock Market on that date. At
December 28, 1996, there were three participants under the Outside Directors'
Plan who held options covering an aggregate of 15,750 shares at an exercise
price of $9.33 per share, 4,500 shares at an exercise price of $14.17 per share,
4,500 shares at an exercise price of $12.67 per share, and 4,500 shares at an
exercise price of $18.33 per share. There have been no exercises to date of
options granted under the Outside Directors' Plan.
The Board of Directors may in the future adjust the compensation of
directors as it deems advisable and consistent with the best interests of the
Company's shareholders and the financial abilities of the Company.
8
<PAGE> 12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1996, the Compensation Committee of the Board of Directors
was composed of Messrs. Goad, Graven and Adair. None of these persons has at any
time been an officer or employee of the Company or any of its subsidiaries. In
addition, there are no relationships among the Company's executive officers,
members of the Compensation Committee or entities whose executives serve on the
Board of Directors or the Compensation Committee that require disclosure under
applicable SEC regulations.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions with respect to compensation of the Named Executive Officers for
fiscal 1996 were made by the Compensation Committee of the Board of Directors,
which was composed of Messrs. Goad, Graven and Adair. None of these persons has
at any time been an officer or employee of the Company or any of its
subsidiaries. The Compensation Committee approves compensation actions and
long-term incentive awards to the Named Executive Officers and other key
employees of the Company, and reviews and administers the incentive
compensation, stock option and other compensation plans of the Company.
The overall objectives of the Company's executive compensation program for
fiscal 1996 were to:
- Attract and retain the highest quality talent to lead the Company
- Reward key executives based on business performance
- Design incentives to maximize shareholder value
- Assure that objectives for corporate and individual performance are
measured
The philosophy upon which these objectives were based is to provide
incentive to the Company's officers to enhance the profitability of the Company
and align closely the financial interests of the Company's officers with those
of its shareholders. In order to implement this philosophy for fiscal 1996, the
Compensation Committee reviewed the various elements of executive compensation,
including salaries, incentive compensation awards and stock option awards under
the 1993 Plan. In 1995, the Compensation Committee retained William M. Mercer,
Incorporated ("Mercer"), a nationally known consulting firm, to determine for
the Compensation Committee the Company's practices relative to a comparable
group of companies of similar size. The Mercer analysis and the recommendation
of the Company's Chairman, Robert C. Sledd, were used by the Compensation
Committee to establish compensation levels for fiscal 1996 for members of senior
management.
The Compensation Committee set annual salaries for the Named Executive
Officers somewhat below competitive levels so that the Company relies to a
significant degree on annual cash bonuses and long-term stock based incentive
compensation to attract and retain senior management of outstanding abilities
and to motivate them to perform to the full extent of their abilities. Beginning
in fiscal 1995, the Compensation Committee and the Board implemented an annual
cash bonus program for senior management, including the Named Executive
Officers, based on Economic Value Added ("EVA"). EVA measures the Company's
ability to generate after-tax operating profits in excess of the cost of
capital, including both debt and equity, employed to generate that profit. The
Company's bonus program includes a component based on the improvement in EVA
over the prior year and a component based on current year EVA. Under this
program, an executive's bonus varies directly with improvement in and with the
amount of after-tax operating profits in excess of the cost of capital.
Therefore, an executive is rewarded for creating shareholder wealth by most
effectively utilizing the Company's capital. In addition, an executive's bonus
is "at risk" in that no bonuses are paid if the Company fails to improve the
utilization of capital or generate after-tax operating profits in excess of the
cost of capital. Based on the foregoing, the Company's Chairman and Chief
Executive Officer, Robert C. Sledd, was paid a base salary in fiscal 1996 of
approximately $250,000 and earned bonuses under the cash bonus program totaling
$111,139.
9
<PAGE> 13
The long-term incentive program for senior management consists of stock
option and other stock-based awards granted under the 1993 Plan. During the
first quarter of 1996, the Compensation Committee approved the grant of an
aggregate of 67,204 stock options under the 1993 Plan to the Named Executive
Officers, including 13,501 to Mr. Sledd. These options were granted at the fair
market value on the date of grant and vest four years from the date of grant.
The Compensation Committee intends to consider granting stock options to members
of senior management, including the Named Executive Officers, periodically
following a review of the Company's operating results.
FEDERAL INCOME TAX DEDUCTIBILITY LIMITATIONS
The Compensation Committee believes it is appropriate to take into account
the $1,000,000 limit on the deductibility of executive compensation for federal
income tax purposes enacted as part of the 1993 Omnibus Budget Reconciliation
Act ("OBRA") and to seek to qualify the Company's long-term compensation awards
as performance-based compensation excluded from the $1,000,000 limit.
Compensation under the Company's stock incentive plans is currently excluded
from the $1,000,000 limit under the transition rules contained in the proposed
Treasury regulations under OBRA and none of the Company's executive officers has
received other compensation that could potentially exceed the applicable limits
under OBRA.
The tables set forth under "Executive Compensation," and the accompanying
narrative and footnotes, reflect the decisions covered by the above discussion.
Fred C. Goad, Jr. Timothy M. Graven Charles E. Adair
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the percentage change in the unaudited total
return on the Company's Common Stock against the cumulative total return of the
S&P 500 Index and the S&P Distributors (Consumer Products) Index between August
24, 1993 (the date the Company's Common Stock began trading on the Nasdaq
National Market) and December 28, 1996. The graph assumes the value of the
investment in the Company's Common Stock and each index was $100 at August 24,
1993, and that all dividends were reinvested.
<TABLE>
<CAPTION>
August 1993 1993 1994 1995 1996
----------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Performance Food Group Company $100 $158 $ 81 $153 $150
S&P 500 Index $100 $102 $104 $143 $175
S&P Distributors (Food and Health) $100 $ 97 $102 $128 $127
</TABLE>
10
<PAGE> 14
PROPOSAL 2: AMENDMENT OF 1993 OUTSIDE DIRECTORS' STOCK OPTION PLAN
The Committee (as defined herein) and the Board of Directors believe that
an important element of director compensation is equity-based incentive
compensation. Such compensation advances the interests of the Company by
encouraging, and providing for, the acquisition of equity interests in the
Company by outside directors, thereby providing substantial motivation for
superior performance and aligning their interest with shareholders. The
Committee, which consists entirely of outside directors, reviewed the Company's
non-qualified stock options and concluded that the number of options granted to
non-employee directors under the Outside Directors' Plan on the date of each
annual shareholders' meeting did not provide sufficient equity-based incentive
compensation. Accordingly, the Board of Directors at its February 13, 1997
meeting proposed the adoption, subject to shareholder approval, of an amendment
to the Outside Directors' Plan (the "Outside Directors' Plan Amendment") to
increase the number of options to purchase shares of Common Stock granted to
outside directors at each annual shareholders' meeting from 1,500 shares to
2,500 shares. The Board of Directors believes that the approval of the Outside
Directors' Plan Amendment is essential to further the long-term stability and
financial success of the Company by attracting, motivating and retaining
qualified non-employee directors through the use of stock incentives.
The full text of the Outside Directors' Plan Amendment is attached as
Exhibit A to this Proxy Statement. If approved by the shareholders at the Annual
Meeting, the Outside Directors' Plan Amendment will become effective
immediately.
SUMMARY OF THE OUTSIDE DIRECTORS' PLAN AMENDMENT
The Outside Directors' Plan Amendment would increase the number of options
granted to non-employee directors at the date of each annual shareholders'
meeting from 1,500 to 2,500.
SUMMARY OF MATERIAL PROVISIONS OF THE OUTSIDE DIRECTORS' PLAN
The following is a summary of the material provisions of the Outside
Directors' Plan, as proposed to be amended:
Shares. The Outside Directors' Plan currently authorizes 105,000 shares of
Common Stock for issuance or subject to issuance upon exercise of outstanding
awards under the Outside Directors' Plan. Options under the plan are awarded
pursuant to a formula: each non-employee director receives an option grant to
purchase 5,250 shares of Common Stock upon election to the Board of Directors.
In addition, each non-employee director receives on the date of each annual
meeting of shareholders an option grant to purchase 2,500 shares of Common
Stock. If shares subject to an option under the Outside Directors' Plan cease to
be subject to such option, if shares under the Outside Directors' Plan are
forfeited, or otherwise terminate without a payment being made to the
participant in the form of Common Stock and without the payment of any dividends
thereon, such shares will again be available for future distributions under the
Outside Directors' Plan.
Participation. Outside Directors' Plan awards may be made to outside
directors of the Company. The Outside Directors' Plan, as amended, imposes no
limit on the number of directors to whom awards may be made.
Administration. The Outside Directors' Plan is administered by a committee
of no less than two non-employee directors appointed by the Board of Directors
(the "Committee"). However, the Committee has no discretion to determine which
outside directors will receive options, to set the number of shares subject to
option awards or to set the exercise price for an option. The Outside Directors'
Plan is currently administered by the Committee which is comprised of three
outside directors.
A stock option will be exercisable on the first anniversary of the date of
grant, and the option price shall be the fair market value of the stock on the
date of grant. Options expire 10 years from the date of grant. Payment of the
option price may be made in cash, or, as determined by the Committee, by
unrestricted Common Stock having a fair market value equal to the option price.
11
<PAGE> 15
Upon termination of a participant's service as a director for cause, as
determined by the Committee, such director's stock options will terminate. If
service is involuntarily terminated without cause, stock options will be
exercisable for one year following termination or until the end of the option
period, whichever is shorter. On the death of a director, stock options will be
exercisable by his personal representative within the lesser of the remainder of
the option period or three years from the date of death. Upon the disability of
a director, stock options will be exercisable within the lesser of the remainder
of the option period or one year from the date of the director's disability.
Amendments. The Outside Directors' Plan may be amended by the Board of
Directors except that the Board may not, without the approval of the Company's
shareholders, (i) extend the term of the Outside Directors' Plan; (ii)
materially modify the eligibility requirements to receive options under the
Outside Directors' Plan; (iii) increase the number of shares of Common Stock
which may be issued pursuant to the exercise of options granted under the
Outside Directors' Plan; (iv) change the minimum purchase price; or (v)
materially increase the benefits accruing to optionees under the Outside
Directors' Plan.
Term. A stock option is not exercisable more than ten years from the date
of grant, and no stock option may be granted on or after August 24, 2003.
Adjustments. In the case of a stock split, stock dividend,
reclassification, recapitalization, merger, reorganization, or other change in
the Company's structure affecting the Common Stock, appropriate adjustments will
be made by the Committee, in its sole discretion, in the number of shares
reserved under the Outside Directors' Plan, in the number of shares covered by
options then outstanding under the Outside Directors' Plan and, where
applicable, the exercise price for awards under the Outside Directors' Plan.
Federal Income Tax Aspects. With respect to the non-qualified stock options
to be granted pursuant to the Outside Directors' Plan: (i) no income is realized
by the participant at the time the option is granted; (ii) generally upon
exercise of the option, the participant realizes ordinary income in an amount
equal to the difference between the option price paid for the shares and the
fair market value of the shares on the date of exercise, and the Company will be
entitled to a tax deduction of the same amount; and (iii) at disposition, any
appreciation (or depreciation) after date of exercise is treated as either
short-term or long-term capital gain or loss, depending upon the length of time
that the participant has held the shares.
AWARD GRANTS UNDER THE PLAN
The following table shows as to each of the outside directors, the
aggregate number of shares of Common Stock subject to awards under the Outside
Directors' Plan since its inception and the weighted average per share option
exercise price. As of March 17, 1997, the market value of a share of Common
Stock based on the closing price for such stock on The Nasdaq Stock Market on
that date was $17.63.
<TABLE>
<CAPTION>
Fred C. Timothy M. All Outside Directors
C. Goad, Jr. Graven Charles E. Adair as a Group
------------ ---------- ---------------- ---------------------
<S> <C> <C> <C> <C>
STOCK OPTIONS
Number of Shares 9,750 9,750 9,750 29,250
Weighted average
per share exercise
price.................. $11.97 $11.97 $11.97 $11.97
</TABLE>
12
<PAGE> 16
CONCLUSION AND RECOMMENDATION
The Board of Directors believes it is in the best interests of the Company
and its shareholders to adopt the amendment to the Outside Directors' Plan to
attract and retain the highest quality of experienced persons as directors and
to encourage greater stock ownership by directors to align the interests of the
directors of the Company more closely with the interests of the Company's
shareholders. The Board of Directors recommends a vote FOR approval of the
amendment to the 1993 Outside Directors' Stock Option Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of the
Company's common stock, to file reports of ownership and changes in ownership
with the SEC. Officers, directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Form 5s were
required for those persons, the Company believes that all filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with during the year ended December 31, 1996, except that
one transaction for Mr. Adair was not timely reported. Such transaction was
subsequently reported.
CERTAIN TRANSACTIONS
In 1988, Pocahontas leased certain land and buildings from Taylor & Sledd,
Inc., a Virginia corporation owned by Robert C. Sledd and certain members of his
family. The lease provides for monthly payments of approximately $48,000 and
expires on July 31, 2004, subject to certain renewal options on the same terms
for successive one year periods. Pocahontas made lease payments in the aggregate
amount of $601,100 during fiscal 1996.
H.C. Sledd, Jr., is a majority shareholder of Virginia Foodservice Group,
Inc. ("VFG"), an independent distributor located in Richmond, Virginia, which
participates in various buying programs sponsored and administered by the
Company. VFG receives its proportionate share of rebates received from
unaffiliated manufacturers or vendors participating in the programs. Mr. Sledd
has pledged 6,000 shares of the Company's Common Stock to secure any obligations
of VFG to the Company. Robert C. Sledd serves as a director of VFG.
During 1996, Jerry J. Caro was a minority owner in KMB Transport, Ltd.
("KMB Transport") in Houma, Louisiana, which provides trucking services to the
Company from time to time through one or more of the Company's wholly owned
subsidiaries. One of Mr. Caro's children now owns a minority interest in KMB
Transport. The Company made payments to KMB Transport during fiscal 1996 of
approximately $1,261,133.
In connection with the move of the Company's headquarters to Richmond,
Virginia, the Company adopted a relocation policy whereby the Company would
facilitate the relocation of its executive officers who were required to move.
Pursuant to that policy, the Company purchased the home of Roger L. Boeve in
March 1996 for $732,500, based on its fair market value calculated as the
average of appraisals of the property by two independent appraisers.
The Board of Directors of the Company has adopted a policy which provides
that any transaction between the Company and any of its directors, officers, or
principal shareholders or affiliates thereof must be on terms no less favorable
to the Company than could be obtained from unaffiliated parties and must be
approved by vote of a majority of the disinterested directors of the Company.
Management believes that past transactions have complied with this policy.
13
<PAGE> 17
INDEPENDENT AUDITORS
The Board of Directors of the Company has selected KPMG Peat Marwick LLP to
serve as independent auditors for the current fiscal year. Such firm has served
as the Company's independent auditors since 1987. Representatives of KPMG Peat
Marwick LLP are expected to be present at the Annual Meeting and will be given
the opportunity to make a statement if they desire to do so and to respond to
appropriate questions.
PROPOSALS OF SHAREHOLDERS
Shareholders intending to submit proposals for presentation at the next
annual meeting of the shareholders of the Company and inclusion in the proxy
statement and form of proxy for such meeting should forward such proposals to
David W. Sober, Secretary, Performance Food Group Company, 6800 Paragon Place,
Suite 500, Richmond, Virginia 23230. Proposals must be in writing and must be
received by the Company prior to November 27, 1997. Proposals should be sent to
the Company by certified mail, return receipt requested.
14
<PAGE> 18
EXHIBIT A
SECOND AMENDMENT TO PERFORMANCE FOOD GROUP COMPANY
1993 OUTSIDE DIRECTORS' STOCK OPTION PLAN
Section 3 of the Performance Food Group Company 1993 Outside Directors'
Stock Option Plan is hereby amended, effective May 6, 1997, subject to the
approval of the Performance Food Group Company shareholders at the 1997 Annual
Meeting of Shareholders, as follows:
1. By deleting the second sentence in its entirety and substituting
therefor the following:
"In addition, each non-employee director shall receive on the date of
the Annual Meeting of Shareholders, commencing with the 1997 Annual
Meeting, an option grant each for the purchase of 2,500 shares of
stock."
<PAGE> 19
Appendix A
PERFORMANCE FOOD GROUP COMPANY
ANNUAL MEETING OF SHAREHOLDERS
MAY 6, 1997
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR USE AT THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD AT 10:00 A.M. (EDT) ON MAY 6, 1997 AND
ANY ADJOURNMENT(S) THEREOF. The undersigned hereby appoints David W. Sober and
Roger L. Boeve, or either of them, with full power of substitution, as
attorneys, and hereby authorizes them to represent and to vote in the name of
and as proxy for the undersigned, as designated, all of the shares of common
stock of Performance Food Group Company held of record by the undersigned on
March 17, 1997.
1. ELECTION OF CLASS I DIRECTORS TO SERVE UNTIL THE 2000 ANNUAL MEETING OF
SHAREHOLDERS AND UNTIL THEIR SUCCESSORS ARE ELECTED AND QUALIFIED.
[ ] FOR all nominees listed below (except as marked to the contrary below).
TIMOTHY M. GRAVEN CHARLES E. ADAIR
To withhold authority to vote for any individual nominee, write that nominee's
name in the space below:
[ ] WITHHOLD AUTHORITY to vote for all nominees.
2. AMENDMENT OF THE 1993 OUTSIDE DIRECTORS' PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before this meeting or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION AS DIRECTORS OF THE NOMINEES REFERRED TO IN PROPOSAL 1
AND FOR THE AMENDMENT TO THE 1993 OUTSIDE DIRECTORS' PLAN.
The undersigned revokes any prior proxies to vote the shares covered by this
proxy.
Dated: _________________, 1997
______________________________
Signature
______________________________
Signature if Held Jointly
Please sign exactly as name
appears on your share
certificates. Each joint owner
must sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please give full
title as such. If a
corporation, please sign in
full corporate name as
authorized. If a partnership or
limited liability company,
please sign in such
organization's name by an
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED REPLY
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
