<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 [ ]
<TABLE>
<S> <C>
Check the appropriate box:
[ ] 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 transactions 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
[PFG 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 Wednesday,
May 3, 2000, at the Pocahontas Foods, USA, Inc. offices, located at 7420 Ranco
Road, Richmond, Virginia.
Shareholders will be asked to elect three directors. 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 3, 2000.
Sincerely,
/s/ Robert C. Sledd
Robert C. Sledd
Chairman and Chief Executive Officer
<PAGE> 3
[PFG 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 Wednesday, May 3, 2000, at the
Pocahontas Foods, USA, Inc. offices, located at 7420 Ranco Road, Richmond,
Virginia for the following purposes:
1. To elect three (3) Class I directors to hold
office for a term of three (3) years and until their successors
are elected and qualified; and
2. 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
14, 2000 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/ John D. Austin
John D. Austin, Secretary
Richmond, Virginia
April 3, 2000
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
[PFG 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 3, 2000,
and any adjournments thereof, notice of which is attached hereto.
The purposes of the Annual Meeting are to elect three Class I
directors 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 three
director nominees.
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
14, 2000 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 13,889,208 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. Any other matters that 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 and abstentions and "non-votes" will have no effect on
the outcome of the vote. 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 Form of Proxy and the Company's Annual
Report to Shareholders have been mailed on or about April 3, 2000 to all
shareholders of record at the close of business on March 14, 2000. 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 14, 2000 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...... 1,281,179(2) 9.2%
6800 Paragon Place, Suite 500
Richmond, Virginia 23230
J. & W. Seligman & Co. Incorporated.................................... 874,086(3) 6.3%
William C. Morris
100 Park Avenue
New York, New York 10017
</TABLE>
- -----------------
(1) Computed in accordance with Rule 13d-3(d)(1) under the Securities Exchange
Act of 1934.
(2) 833,309 shares held by the Performance Food Group Employee Savings and
Stock Ownership Plan (the "ESOP") have been allocated to an aggregate of
approximately 2,450 participants of the Company who exercise voting power
over such shares. The remaining 447,870 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/A filed by J. & W.
Seligman & Co. Incorporated ("JWS") and William C. Morris with the
Securities and Exchange Commission (the "SEC") on February 10, 2000. William
C. Morris is the owner of a majority of the outstanding voting securities of
JWS and may be deemed to beneficially own the shares reported to be owned by
JWS.
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 two Class I directors, Charles E. Adair and
Timothy M. Graven, 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
meetings in 2001 and 2002, respectively. The Board of Directors has designated
Charles E. Adair and Timothy M. Graven as the two nominees for reelection as
Class I directors for a three-year term expiring at the annual meeting in 2003
and until their successors are elected and qualified. These two nominees are
currently directors of the Company and were elected by the shareholders.
In addition, the Board of Directors has determined that it is in
the best interests of the Company to add an additional Class I director and has
nominated H. Allen Ryan for election. If elected, Mr. Ryan would serve a
three-year term expiring at the annual meeting in 2003 and until his successor
is elected and qualified. Mr. Ryan currently serves as the President of
NorthCenter Foodservice Corporation, a subsidiary of the Company, with which
the Company effected a business combination on February 26, 1999.
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 three 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 14, 2000, 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............... 47 1987 2001 Chairman, Chief Executive 364,238 (2) 2.6%
Officer and Director
C. Michael Gray............... 50 1992 2002 President, Chief Operating 168,128 1.2%
Officer and Director
Roger L. Boeve................ 61 -- -- Executive Vice President and 130,197 (3) *
Chief Financial Officer
Thomas Hoffman................ 60 -- -- Senior Vice President 58,227 *
Charles E. Adair.............. 52 1993 2000 Director 29,250 *
Fred C. Goad, Jr.............. 59 1993 2001 Director 29,250 *
Timothy M. Graven ............ 48 1993 2000 Director 24,750 *
H. Allen Ryan................. 58 -- -- Director Nominee 317,415 2.3%
John E. Stokely............... 48 1998 2002 Director 9,750 *
All directors and 1,131,205 8.0%
executive officers as
a group (9 persons)
</TABLE>
- --------------------
* Less than one percent
(1) Includes the following shares which are not currently outstanding but which
the named individuals are entitled to acquire as of March 14, 2000 and
within 60 days of such date upon the exercise of options: Mr. Sledd -
33,751; Mr. Gray - 53,626; Mr. Boeve - 27,939; Mr. Hoffman - 41,437; Mr.
Adair - 17,250; Mr. Goad - 17,250; Mr. Graven - 17,250; Mr. Ryan - 0; Mr.
Stokely - 7,750; all directors and executive officers as a group (9
persons) - 216,253 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 is a trustee of
the ESOP and is a member 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, a supplier of swimming pool
supplies and related products, and Eskimo Pie Corporation, a supplier of frozen
novelties, ice cream and sorbet products.
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. Since 1989, Mr. Hoffman has served as President of Kenneth O.
Lester Company, a wholly-owned subsidiary of the Company. Prior to joining the
Company in 1989, Mr. Hoffman 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.
Charles E. Adair has served as a director of the Company since August
1993. Since 1993, Mr. Adair has been a partner in Cordova Capital II, LLC, a
venture capital management company. Mr. Adair is also the Chairman and founder
of Adair & Associates, Inc., a consulting and private investment firm founded
in 1993. 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. In addition,
Mr. Adair 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.
Fred C. Goad, Jr. has served as a director of the Company since July 1993.
Since June 1996, Mr. Goad has served as Co-Chief Executive Officer and a
director of ENVOY Corporation ("ENVOY"), a provider of electronic transaction
processing services for the health care industry. From June 1996 through March
1999, Mr. Goad served as Chairman of ENVOY. From 1985 to June 1996, Mr. Goad
served as President and Chief Executive Officer and as a director of ENVOY. Mr.
Goad also serves as a director of Quintiles Transnational Corp., a provider of
research, sales consulting and information management services to the health
industry.
4
<PAGE> 8
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. Mr. Graven is also a certified
public accountant.
H. Allen Ryan has been nominated to serve as a director of the Company
following the Annual Meeting. Mr. Ryan has served as President of NorthCenter
Foodservice Corporation ("NorthCenter "), a subsidiary of the Company, since
1982. Mr. Ryan is past Chairman of Nugget Distributors, Inc., a foodservice
buying group, and the International Foodservice Distributors Association. Mr.
Ryan also serves on the Board of Directors of the Maine Restaurant Association
and the Board of Trustees of Thomas College in Waterville, Maine. NorthCenter
was the 1999 recipient of the ID Magazine Great Distributor Organization Award.
John E. Stokely has served as a director of the Company since April 1998.
Since August 1999, Mr. Stokely has been self-employed as a business consultant.
Mr. Stokely was the President, Chief Executive Officer and Chairman of the
Board of Directors of Richfood Holdings, Inc., a retail food chain and
wholesale grocery distributor ("Richfood"), from January 1997 until August
1999, when Richfood was acquired by Supervalu Inc. Mr. Stokely served on the
Board of Directors and as President and Chief Operating Officer of Richfood
from April 1995 to January 1997 and served as Executive Vice President and
Chief Financial Officer from 1990 to April 1995. Mr. Stokely also serves as a
director of Nash-Finch Company, a food wholesaler.
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,
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, Adair and Stokely comprise the Audit Committee,
which met three times during fiscal 1999.
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, Adair and Stokely comprise the Compensation Committee, which met three
times during fiscal 1999.
The Board of Directors held seven meetings, three of which were via
teleconference, during fiscal 1999. All incumbent directors attended at least
75% of the meetings of the Board and each committee of the Board on which such
directors served at the time of such meeting, held during fiscal 1999. 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 January 1, 2000 (fiscal 1999),
January 2, 1999 (fiscal 1998) and December 27, 1997 (fiscal 1997) for (i) the
Chief Executive Officer of the Company and (ii) the three highest paid
executive officers of the Company whose salary and bonus payments exceeded
$100,000 (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------- ------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND FISCAL SALARY BONUS OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) (#)(1) ($)
------------------ ------ --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Robert C. Sledd 1999 $ 357,950 $ 256,962 20,000 $ 7,929(2)
Chairman and Chief Executive 1998 275,396 150,334 50,600 9,817(2)
Officer 1997 269,807 164,864 -- 8,603(2)
C. Michael Gray 1999 266,078 104,535 15,000 7,929(2)
President and Chief Operating 1998 225,576 73,381 37,100 9,764(2)
Officer 1997 217,858 126,237 -- 8,636(2)
Roger L. Boeve 1999 211,262 56,374 8,000 7,929(2)
Executive Vice President and Chief 1998 193,262 50,581 21,900 9,753(2)
Financial Officer 1997 189,333 71,374 -- 8,652(2)
Thomas Hoffman 1999 216,980 66,690 10,000 7,929(2)
Senior Vice President 1998 190,535 149,467 16,870 9,664(2)
1997 185,244 19,530 -- 7,784(2)
</TABLE>
- -------------------------
(1) Number of stock options granted under the 1993 Stock Incentive Plan (the
"1993 Plan").
(2) Includes allocations by the Company to each Named Executive Officer's ESOP
account of $4,729, $7,264 and $6,359 for fiscal 1999, 1998 and 1997,
respectively. Allocations to the ESOP accounts are based on the closing
price of the Common Stock on The Nasdaq Stock Market of $24.38 per share
at December 31, 1999 for fiscal 1999, $28.13 per share at December 31,
1998 for fiscal 1998 and $21.00 per share at December 26, 1997 for fiscal
1997. Also includes contributions by the Company to each Named Executive
Officer's 401(k) account in fiscal 1999 as follows: Mr Sledd - $3,200; Mr
Gray - $3,200; Mr. Boeve - $3,200; and Mr. Hoffman - $3,200; in fiscal
1998 as follows: Mr. Sledd - $2,553; Mr. Gray - $2,500; Mr. Boeve -
$2,489; and Mr. Hoffman - $2,400; and in fiscal 1997 as follows: Mr. Sledd
- $2,244; Mr. Gray - $2,277; Mr. Boeve - $2,293; and Mr. Hoffman - $1,425.
6
<PAGE> 10
The following table summarizes certain information regarding stock
options issued to the Named Executive Officers during fiscal 1999. No stock
appreciation rights ("SARs") have been granted by the Company.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL POTENTIAL REALIZABLE VALUE
SECURITIES OPTIONS AT ASSUMED ANNUAL RATES
UNDERLYING GRANTED TO OF STOCK PRICE APPRECIATION
OPTIONS EMPLOYEES EXERCISE FOR OPTION TERM
GRANTED IN FISCAL PRICE EXPIRATION -----------------------------
NAME (#)(1) 1999 ($/SHARE) DATE 5%($) 10%($)
- --------------------- ---------------------------- ----------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert C. Sledd 17,800 6.6% $25.75 4/1/09 $ 288,254 $ 730,492
2,200 0.8% 25.93 5/5/09 35,876 90,917
C. Michael Gray 13,500 5.0% 25.75 4/1/09 218,619 554,025
1,500 0.6% 25.93 5/5/09 24,461 61,989
Roger L. Boeve 7,200 2.7% 25.75 4/1/09 116,597 295,480
800 0.3% 25.93 5/5/09 13,046 33,061
Thomas Hoffman 3,883 1.4% 25.75 4/1/09 62,881 159,354
6,117 2.3% 25.93 5/5/09 99,751 252,790
</TABLE>
- -----------------------
(1) The options granted to the Named Executive Officers were granted on April
1, 1999 and May 5, 1999 pursuant to the 1993 Plan. The options become 100%
exercisable on April 1, 2003 and May 5, 2003. 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
exercise prices determined by the closing price of the Common Stock on The
Nasdaq Stock Market on the dates of grant.
The Company has no long-term incentive plans, as that term is defined in
regulations promulgated by the SEC. Also, the Company presently has no defined
benefit or actuarial plans covering any employees of the Company. During fiscal
1999, 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.
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.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL 1999 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 ($) JANUARY 1, 2000 (#) JANUARY 1, 2000($) (1)
------------- ------------- ------------------------------ -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Robert C. Sledd 101,250 $1,960,200 20,250 84,101 $ 326,745 $ 430,918
C. Michael Gray 56,250 1,166,625 34,875 70,851 634,984 403,408
Roger L. Boeve 78,750 1,638,000 13,688 44,151 221,276 269,572
Thomas Hoffman -- -- 24,936 43,371 451,917 262,225
</TABLE>
- --------------------
(1) Based on the closing price of the Company's Common Stock on The Nasdaq
Stock Market at December 31, 1999 of $24.38 per share.
DIRECTOR COMPENSATION
Non-employee directors receive an annual retainer of $10,000 and a fee of
$1,000 for each Board meeting attended, $500 for each committee meeting
attended, $500 for each meeting attended by telephone, and are reimbursed for
expenses reasonably incurred in connection with their services as directors.
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 1999 was approximately $68,000.
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 grant for 5,250 shares upon
their election to the Board of Directors and 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 January 1, 2000, there were four 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, 4,500 shares
at an exercise price of $18.33 per share, 7,500 shares at an exercise price of
$20.00 per share, 12,750 shares at an exercise price of $20.13 per share and
10,000 shares at an exercise price of $25.93 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
CHANGE IN CONTROL AGREEMENTS
Effective as of October 29, 1997, the Company entered into agreements with
certain of its key executives (the "Agreement"), including the Chief Executive
Officer and Named Executive Officers, which provide for certain payments to be
made to the executive if, within two years following a Change in Control (as
defined in the Agreement) of the Company, his employment with the Company is
terminated for any reason other than Cause (as defined in the Agreement) or if
the executive terminates his employment with the Company for Good Reason (as
defined in the Agreement). Upon termination, the executive is entitled to
receive (i) 299.9% of his base salary (defined as the higher of the executive's
base salary prior to the Change in Control or immediately prior to
termination), (ii) 299.9% of his bonus (based upon the executive's bonus for
the three fiscal years prior to the Change in Control or bonus after the Change
in Control, whichever is higher) and (iii) an amount necessary to reimburse the
executive for any excise tax payable under Section 4999 of the Internal Revenue
Code in connection with the Change in Control. One-third of such amount must be
paid in equal semi-monthly installments over the twelve months following
termination and the balance in a lump sum payment made within five business
days after the expiration of the twelve-month period. Amounts payable pursuant
to clause (iii) above must be paid within thirty days following termination of
employment.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1999, the Compensation Committee of the Board of Directors
was composed of Messrs. Goad, Graven, Adair and Stokely. 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 1999 were made by the Compensation Committee of the Board of Directors,
which was composed of Messrs. Goad, Graven, Adair and Stokely. 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 1999 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 are based is to provide
incentive to the Company's officers to enhance the profitability of the Company
and closely align the financial interests of the Company's officers with those
of its shareholders. In order to uphold this philosophy for fiscal 1999, the
Compensation Committee reviewed the various elements of executive compensation,
including salaries, incentive compensation awards and stock option awards under
the 1993 Plan. In 1999, the Compensation Committee retained Slaubaugh, Morgan,
White & Associates ("SMW"), an independent consulting firm, to analyze the
Company's compensation programs in relation to a group of similarly sized
companies in comparable industries. These comparable companies are primarily in
the distribution industry, including certain of the Company's competitors for
which compensation data is available. The SMW analysis compares the
compensation levels of the CEO and Named Executive Officers to similar
positions at these peer companies. The Compensation Committee then uses this
information when establishing compensation levels for the Company's senior
management.
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<PAGE> 13
The Compensation Committee set annual base salaries for the Named
Executive Officers near or just below the midpoint of the relative salaries of
similar executives at these peer companies. To closely align an executive's
compensation to the Company's goals, the Compensation Committee believes that a
substantial portion of an executive's compensation should be incentive based.
Therefore, the Company relies to a significant degree on annual cash bonuses
and long-term stock based incentive compensation. 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 in part on
Economic Value Added ("EVA") and in part on individual performance objectives.
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 1999 of approximately $358,000 and earned bonuses under
the cash bonus program totaling approximately $257,000.
The long-term incentive program for senior management consists of stock
option and other stock-based awards granted under the 1993 Plan. Until 1999,
the Compensation Committee granted stock option awards on a bi-annual basis. In
1999, the Compensation Committee began to grant options to senior management
annually. During the first quarter of 1999, the Compensation Committee approved
the grant of an aggregate of 53,000 stock options under the 1993 Plan to the
Named Executive Officers, including 20,000 to Mr. Sledd. These options were
granted at the fair market value of the Common Stock on the date of grant and
vest 100% four years from the date of grant.
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. None of
the Company's executive officers has received 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 John E. Stokely
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SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the percentage change in the unaudited
cumulative total shareholder return on the Company's Common Stock against the
cumulative total return of the S&P 600 Index and the S&P Distributors Food and
Health Index between December 31, 1994 and December 31, 1999. The graph assumes
the value of the investment in the Company's Common Stock and each index was
$100 at December 31, 1994 and that all dividends, if any, were reinvested.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Performance Food Group Company 100 190 186 285 338 293
- ---------------------------------------------------------------------------------------------
S&P 600 Stock Index 100 138 169 226 290 351
- ---------------------------------------------------------------------------------------------
S&P Distr. Food & Health Index 100 125 124 174 239 143
- ---------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 15
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 regulations 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 Forms 5 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 January 1, 2000, with the
exception of one transaction for Mr. Adair which was not timely filed but was
subsequently reported on a Form 4.
CERTAIN TRANSACTIONS
On July 27, 1998, the Company purchased all of the assets used in the
operation of Virginia Food Service Group, the foodservice division of Taylor &
Sledd, Inc. ("Taylor & Sledd"). Robert C. Sledd, Chairman and Chief Executive
Officer of the Company, and certain members of his family are shareholders of
Taylor & Sledd. The purchase price for the assets was $3,652,158, plus
$4,453,303 paid in March 1999 pursuant to the terms of an earnout agreement.
The purchase price was determined by arm's-length negotiations between the
parties. Mr. Sledd's interest in the transaction, including the earnout
payment, was valued at $1,385,223. Mr. Sledd's parents' and siblings' interest
in the transaction, including the earnout payment, was valued at an additional
$5,719,213. In addition, in connection with the acquisition, Taylor & Sledd
entered into a lease with Virginia Foodservice Group, Inc., a subsidiary of the
Company, which provides for payments to Taylor & Sledd annually through June
2013. Virginia Foodservice Group, Inc. made lease payments to Taylor & Sledd in
the aggregate amount of approximately $264,000 during fiscal 1999.
In 1988, Pocahontas leased certain land and buildings from Taylor & Sledd.
The lease provides for monthly payments of approximately $54,000 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 approximately $643,000 during fiscal 1999.
On February 26, 1999, pursuant to an Agreement and Plan of Merger dated
February 2, 1999 (the "Merger Agreement"), the Company effected a business
combination with NorthCenter Foodservice Corporation ("NorthCenter") through
the merger of NorthCenter with a wholly owned subsidiary of the Company (the
"Merger"). As consideration for the Merger, H. Allen Ryan received 850,176
shares, or approximately 6.8%, of the Company's then outstanding Common Stock.
In connection with the Merger, Mr. Ryan and the Company entered into an
Indemnity and Escrow Agreement, and 46,296 shares of the Company's Common Stock
were placed in escrow to satisfy potential indemnification obligations arising
from breaches of representations, warranties or covenants made by Mr. Ryan in
the Merger Agreement. If and when Mr. Ryan sells any shares of the Company's
Common Stock, he has agreed to do so in accordance with Rule 145 of the
Securities Act of 1933, as amended, and in accordance with the rules and
regulations governing poolings-of-interest transactions.
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.
12
<PAGE> 16
INDEPENDENT AUDITORS
The Board of Directors of the Company has selected KPMG 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 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 should send such proposals in
writing, by certified mail, return receipt requested, to John D. Austin,
Secretary, Performance Food Group Company, 6800 Paragon Place, Suite 500,
Richmond, Virginia 23230. To be included in the proxy statement and form of
proxy relating to the Company's 2001 Annual Meeting of Shareholders or to be
presented at the Company's 2001 Annual Meeting of Shareholders, proposals must
be received by the Company prior to December 6, 2000.
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<PAGE> 17
PERFORMANCE FOOD GROUP COMPANY
ANNUAL MEETING OF SHAREHOLDERS
MAY 3, 2000
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 3, 2000 AND
ANY ADJOURNMENT(S) THEREOF. The undersigned hereby appoints John D. Austin 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 14, 2000.
1. ELECTION OF THREE CLASS I DIRECTORS TO SERVE UNTIL THE 2003 ANNUAL MEETING OF
SHAREHOLDERS AND UNTIL THEIR SUCCESSORS ARE ELECTED AND QUALIFIED.
<TABLE>
<S> <C> <C> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all nominees.
(except as marked to the contrary below).
</TABLE>
CHARLES E. ADAIR TIMOTHY M. GRAVEN H. ALLEN RYAN
To withhold authority to vote for any individual nominee, write that nominee's
name in the space below:
- --------------------------------------------------------------------------------
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.
The undersigned revokes any prior proxies to vote the shares covered by this
proxy.
Dated: , 2000
-------------------------
--------------------------------
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.
