<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.142-12
THE SOUTHLAND CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration 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>
[LOGO]
2711 NORTH HASKELL AVENUE
BOX 719
DALLAS, TEXAS 75221-0719
March 25, 1994
Dear Southland Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
The Southland Corporation on Wednesday, April 27, 1994, at 9:30 a.m., Central
Daylight Time, in the Joe C. Thompson Auditorium, on the ground floor at
Cityplace Center, 2711 North Haskell Avenue, Dallas, Texas. If you are planning
to attend the meeting in person, please check the appropriate space on the
enclosed proxy card. A map of Cityplace is included on the outside back cover of
the attached Proxy Statement showing entrances to the parking garage. The formal
Notice of Annual Meeting and Proxy Statement, which are contained in the
following pages, describe the proposals being presented to the shareholders for
consideration at this meeting and also provide additional important information.
At this meeting you will be voting on the election of fourteen directors and
ratification of the selection of auditors.
As described in the accompanying Proxy Statement, the Board of Directors
unanimously recommends that you vote FOR each of the persons nominated and FOR
the ratification of the selection of auditors.
A copy of Southland's 1993 Annual Report is being sent to you along with
this Proxy Statement and Notice of Annual Meeting. As always, we appreciate your
continued interest in Southland.
We urge you to complete, sign and mail the enclosed proxy card as soon as
possible so that your vote will be counted at the meeting.
Sincerely,
CLARK J. MATTHEWS, II
PRESIDENT AND CHIEF
EXECUTIVE OFFICER AND DIRECTOR
<PAGE>
THE SOUTHLAND CORPORATION
2711 NORTH HASKELL AVENUE
BOX 719
DALLAS, TEXAS 75221-0719
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 27, 1994
TO THE SHAREHOLDERS OF THE SOUTHLAND CORPORATION:
The Annual Meeting of Shareholders of The Southland Corporation (the
"Company") will be held on Wednesday, April 27, 1994, at 9:30 a.m., Central
Daylight Time, in the Joe C. Thompson Auditorium, on the ground floor, at
Cityplace Center, 2711 North Haskell Avenue, Dallas, Texas, for the following
purposes:
1. To elect fourteen directors to serve for the ensuing year;
2. To ratify the appointment of Coopers & Lybrand, certified public
accountants, to be the independent auditors of the Company for the year
1994; and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business Friday, March 4,
1994, as the record date for the determination of shareholders entitled to
receive notice of, and to vote at, the meeting.
Your attention is directed to the Proxy Statement for further information
about each of the matters to be considered.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO
BE PRESENT, PLEASE DATE AND SIGN THE ACCOMPANYING PROXY CARD EXACTLY AS YOUR
NAME APPEARS THEREON, INDICATING YOUR VOTES BY MARKING THE APPROPRIATE BALLOT
BOXES, AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
By order of the Board of Directors,
JOHN H. RODGERS
SECRETARY
Dallas, Texas
March 25, 1994
IF YOU PLAN TO ATTEND THE MEETING, PLEASE CHECK
THE APPROPRIATE BOX ON THE PROXY CARD
<PAGE>
PROXY STATEMENT
THE SOUTHLAND CORPORATION
2711 NORTH HASKELL AVENUE
DALLAS, TEXAS 75204
ANNUAL MEETING OF SHAREHOLDERS
APRIL 27, 1994
DATE FIRST SENT OR GIVEN TO SECURITY HOLDERS: MARCH 30, 1994
GENERAL INFORMATION
SOLICITATION AND REVOCABILITY OF PROXIES
The accompanying proxy is solicited on behalf of the Board of Directors of
The Southland Corporation (the "Company" or "Southland") for use at the Annual
Meeting of Shareholders to be held April 27, 1994, and at any adjournments
thereof. Neither the Company's officers or directors who held office during the
last fiscal year, nor any nominee or associate of any of the aforementioned
persons, has any interest, direct or indirect, in the matters to be voted upon,
other than election to office and as otherwise disclosed herein.
The Board of Directors requests that you execute and return the proxy
promptly, whether or not you plan to attend the meeting. In addition, if you
plan to attend the meeting in person, please so indicate in the appropriate
space on the proxy card. Each properly executed proxy not revoked will be deemed
to grant authority to vote and, unless a contrary instruction is indicated on
the proxy, will be voted for the election of fourteen directors and for
ratification of the appointment of the accounting firm of Coopers & Lybrand to
be the independent auditors of the Company for 1994. Any shareholder may revoke
such shareholder's proxy by giving written notice of revocation to the Company
at any time prior to the meeting or by advising the Secretary of the revocation
at the meeting; however, presence at the meeting will not automatically revoke
the proxy and revocation during the meeting will not affect any votes previously
taken. The signing of the proxy grants discretionary authority to vote upon
matters which may properly come before the meeting from the floor or at such a
late date as to prohibit additional notice. Other than approval of the minutes
of the 1993 Annual Meeting of Shareholders, no such matter is known to
management.
The cost of soliciting proxies will be borne by Southland. Southland has
retained Hill & Knowlton, Inc., New York, New York, to assist in the
solicitation, at an estimated cost of $5,000, plus reimbursement of reasonable
out-of-pocket expenses. In addition, the Company will reimburse brokers or other
persons holding stock in their names or in the names of their nominees for
charges and expenses incurred in forwarding proxies and proxy material to the
beneficial owners. Solicitation may also be made by officers and regular
employees of Southland, without additional compensation, by use of the mails,
telephone, telegraph or in person.
SHARES OUTSTANDING AND VOTING RIGHTS
Shareholders of record as of the close of business March 4, 1994 are
entitled to notice of, and to vote at, the meeting. At the record date there
were 409,922,935 shares of common stock, $.0001 par value (the "Common Stock"),
outstanding and entitled to vote, the only class of voting securities of the
Company outstanding, and there were 3,130 record holders on such date. Each
outstanding share is entitled to one vote.
Shareholders are not entitled to vote cumulatively for the election of
directors or on any other matter. In addition, an abstention from voting or a
broker non-vote will be counted toward determining the presence of a quorum, but
will not be included in determining the number of votes "for" the election of
directors and will not be counted "for" or "against" ratification of the
approval of auditors.
<PAGE>
OTHER INFORMATION
THE COMPANY'S RESTRUCTURING. On October 24, 1990, the Company filed a
voluntary petition for reorganization relief under Chapter 11 of the United
States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy
Court (the "Bankruptcy Court") for the Northern District of Texas, Dallas
Division (Case No. 390-37119-HCA-11).
The Company filed a Plan of Reorganization (the "Plan") which provided for,
among other things, Ito-Yokado Co., Ltd. ("Ito-Yokado") and Seven-Eleven Japan
Co., Ltd. ("Seven-Eleven Japan") to acquire, for an aggregate purchase price of
$430 million in cash, pursuant to a Stock Purchase Agreement among IYG Holding
Company ("IYG" or the "Purchaser"), Ito-Yokado, Seven-Eleven Japan and the
Company, newly issued shares of Common Stock representing approximately 70% of
the Company's outstanding shares following the consummation of the Plan. The
Plan also provided for holders of the Company's then outstanding securities to
receive new debt securities, Common Stock and, in certain cases, cash, in
exchange for their old securities. In addition, the Plan provided for the
Company to effect a one-for-ten reverse stock split of its Common Stock (the
"Stock Split") and, as subsequently modified, provided for the issuance by the
Company of new warrants (the "Thompson Warrants"), exercisable to acquire
certain shares of Common Stock owned by the "Warrant Shareholders" (as defined
below), at $1.75 per share from the Warrant Shareholders pursuant to a Warrant
Agreement with Wilmington Trust Company as Warrant Agent (the "Warrant
Agreement").
On February 21, 1991, the Bankruptcy Court issued an order confirming the
Plan and the closing under the Stock Purchase Agreement (the "Closing") occurred
on March 5, 1991. The Company issued 286,634,619 shares of Common Stock to IYG,
a Delaware corporation, jointly owned by Ito-Yokado and Seven-Eleven Japan, and
received $430 million in cash. In connection with the Closing, the Company
entered into the Shareholders Agreement, the Warrant Agreement and the
Employment Agreements, among others, all as described below.
SHAREHOLDERS AGREEMENT. Upon the Closing, the Company, IYG, Ito-Yokado and
various holders of the Company's Common Stock who held the old common stock
prior to the Closing (the "Existing Shareholders") entered into a shareholders
agreement (the "Shareholders Agreement") pursuant to which the parties may not
offer, sell, assign, transfer, grant a participation in, pledge or otherwise
dispose of any shares of Common Stock except in compliance with the Shareholders
Agreement. Although transfers are permitted to certain transferees or pursuant
to Rule 144 under the Securities Act of 1933, other transfers are subject to the
Purchaser's right of first refusal (see "Security Ownership of Certain Persons"
and "Security Ownership of Management," below).
The Shareholders Agreement provides each of the Existing Shareholders (and
any persons who hold employee options or employee convertible debentures to
purchase shares of Common Stock as a result of employment with the Company) with
the right and option to require IYG to purchase up to all of the shares of
Common Stock held by such person on the fifth anniversary of the date of the
Shareholders Agreement at the fair market value (to be determined in accordance
with the terms of the Shareholders Agreement) of such shares on such date.
In addition, the Shareholders Agreement (as amended effective December 30,
1992) provides that the parties to the agreement shall cause the Board to
consist of and shall vote their shares as to the election of directors (see
"Election of Directors," below) so that the Board shall consist of (i) two
individuals (the "Existing Shareholder Nominees") designated by Existing
Shareholders holding a majority of shares held by the Existing Shareholders,
(ii) ten individuals (the "Purchaser Nominees") selected by IYG, (iii) two
individuals (the "Other Shareholder Nominees") initially designated by the
Official Committee of Bondholders appointed by the Bankruptcy Court and, from
and after the 1992 annual meeting of the Company's shareholders, for those
persons receiving the most votes from shares of Common Stock held by
shareholders (the "Other Shareholders") other than IYG and the
2
<PAGE>
Existing Shareholders, and (iv) although no such obligation currently exists,
two independent directors if, and to the extent, required to meet the listing or
quotation requirements of any exchange or quotation system upon which the Common
Stock is or shall be listed or traded (and only if, and to the extent that, the
Other Shareholder Nominees fail to qualify as such independent directors).
In addition, the Shareholders Agreement provides the Existing Shareholders
with certain registration rights (if no exemption from registration is
applicable for their sales), parallel exit rights and preemptive rights in
certain circumstances.
Moreover, Ito-Yokado agreed to provide certain of the parties to the
Shareholders Agreement (including certain entities related to John P. Thompson
and Jere W. Thompson, two of the Company's directors, and their family
interests, but not including participants in the Company's Grant Stock Plan with
respect to shares acquired pursuant to participation in such Grant Stock Plan)
with certain loans (the "Loans") based on the pledge of shares of Common Stock
as collateral for the Loans (the "Collateral Shares"). Each Loan is a
nonrecourse obligation of the borrower except to the extent of the Collateral
Shares. Such Collateral Shares may not be sold unless the Loan secured by such
Shares is repaid simultaneously with such sales. (See "Security Ownership of
Management," below, for a description of the shares currently pledged as
collateral under these arrangements.)
THE WARRANT AGREEMENT. As part of the Plan and the Closing, on March 5,
1991, Thompson Brothers, L.P., The Hayden Company, The Philp Co., The
Williamsburg Corporation and Thompson Capital Partners, L.P. (collectively, the
"Warrant Shareholders") entered into a Warrant Agreement with Wilmington Trust
Company as Warrant Agent, the Company and Ito-Yokado. Pursuant to the Plan, the
Company, on behalf of the Warrant Shareholders, agreed to issue the Thompson
Warrants exercisable by the holders thereof to purchase up to an aggregate of
10,214,842 shares of Common Stock owned by the Warrant Shareholders.
Under the Warrant Agreement, each Thompson Warrant entitles the holder to
purchase, at the exercise price of $1.75 per Thompson Warrant, one of the
underlying common shares, subject to adjustment as provided in the Warrant
Agreement, during the period beginning three months after the date of the
Warrant Agreement and ending on February 23, 1996. As of March 4, 1994, a total
of 5,246,931 Thompson Warrants had been exercised.
Until the termination of the Warrant Agreement, the underlying common shares
will be issued to and held by the Warrant Agent (i) as trustee for the benefit
of the appropriate Warrant Shareholder and the holders of the Thompson Warrants
or (ii) if a secured loan is made pursuant to the terms of the Shareholders
Agreement, as collateral agent solely on behalf of Ito-Yokado. (See "Security
Ownership of Management," below, for a description of the shares subject to
warrants.)
Until the termination or expiration of the Warrant Agreement, neither a
Warrant Shareholder nor the Warrant Agent may, among other things, dispose of or
pledge the underlying common shares except in connection with (i) the exercise
of the Thompson Warrants, (ii) a secured loan to a Warrant Shareholder or (iii)
a sale of any pledged underlying common shares pursuant to, and in accordance
with, a Pledge Agreement (the "Pledge Agreement").
At all times during the term of the Warrant Agreement, all underlying common
shares held by the Warrant Agent as trustee, unless an event of default shall
occur under a Pledge Agreement, shall be voted, on any matters submitted to the
holders of record of Common Stock, in the same manner as a majority of the votes
cast by the holders of record of the Common Stock other than Ito-Yokado and the
Warrant Shareholders. If an event of default occurs under a Pledge Agreement,
all underlying common shares held as security shall be voted, pursuant to the
terms of such Pledge Agreement, in accordance with the instructions of
Ito-Yokado. (See "Security Ownership of Certain Beneficial Owners and
Management," below.)
THE EMPLOYMENT AGREEMENTS. As a condition to the Closing, the Company
entered into five-year Employment Agreements with Messrs. John P. Thompson, Jere
W. Thompson and Joe C. (Jodie) Thompson, Jr. (the "Thompsons"). As of December
30, 1992, the Employment Agreement with Joe C.
3
<PAGE>
Thompson, Jr. was terminated and Mr. Thompson was paid the present discounted
value of the remaining balance payable to him under the Employment Agreement.
Also effective December 30, 1992, Mr. Joe C. Thompson, Jr. resigned as a
director of the Company, and the Shareholders Agreement was amended to change
from three to two the number of directors to be designated by the Existing
Shareholders (see "Election of Directors," below). The Employment Agreements,
which were effective upon the Closing, provide for annual base salary of
$600,000 and annual bonus of $360,000 under each agreement and for the Thompsons
to have such duties and responsibilities as are agreed upon from time to time by
each of them and the Board. The Employment Agreements also provide that John P.
Thompson and Jere W. Thompson will participate in employee benefit plans and
arrangements offered to key management employees of the Company. The Employment
Agreements also provide vacation, holidays and expense reimbursement in
accordance with current Company policy.
PROPOSAL 1. ELECTION OF DIRECTORS
BOARD OF DIRECTORS
The Board of Directors has set the number of directors constituting the
entire board at fourteen, and fourteen directors are to be elected at this
meeting. Each director shall be elected to hold office until the next Annual
Meeting of Shareholders or until his earlier death, removal or resignation or
until his successor is duly elected and qualified.
Under the Shareholders Agreement (as amended), described above, the parties
to the agreement have agreed to vote their shares of Common Stock to elect (a)
two Existing Shareholder Nominees, selected by the "Existing Shareholders"
(defined in the Shareholders Agreement as The Philp Co., The Hayden Company, The
Williamsburg Corporation, Four J Investment, L.P., Thompson Brothers, L.P.,
Thompson Capital Partners, L.P., participants in the Company's Grant Stock Plan
who are signatories to the Shareholders Agreement and any permitted transferee
of any of such shareholders, including certain limited partners of Thompson
Capital Partners, L.P.), (b) ten Purchaser Nominees selected by IYG and (c) two
Other Shareholder Nominees as selected by the holders of shares of Common Stock
other than the Existing Shareholders and the Purchaser (see "Shareholders
Agreement," above).
Each of the nominees has been nominated pursuant to the terms of the
Shareholders Agreement (described above). Messrs. John and Jere Thompson are the
Existing Shareholder Nominees and Messrs. Pacholder and Fernandes are the Other
Shareholder Nominees. The remaining ten members of the Board are the Purchaser
Nominees. All nominees are currently members of the Board of Directors.
Each nominee has consented to serve as a director if elected. If any nominee
becomes unavailable for any reason or should a vacancy occur before the election
(which events are not anticipated), proxies may be voted for a substitute
nominee. The Shareholders Agreement provides that any vacancy occurring in the
Board of Directors may be filled pursuant to the terms of that agreement. A
director elected to fill a vacancy shall be elected for the unexpired term of
his predecessor in office.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1993, there were five meetings of the Board of Directors. Each of the
directors attended more than 75% of the combined meetings of the Board of
Directors and committees of which such director is a member, except Mr. Sekine
who attended all meetings of the Board of Directors (following his election on
April 28, 1993), but attended only one of three committee meetings.
The Board of Directors has an Audit Committee, which was composed of four
directors in 1993: Mr. Chai, who served as Chairman, Mr. Fernandes, Mr.
Pacholder and Mr. Sekine. The Audit Committee, which met five times during 1993,
has been assigned the functions of recommending the engagement of independent
auditors for the Company and reviewing with them the plan and scope of the
audit, its status during the year, the results when completed and the fees for
services performed, as well as reviewing the engagement of the independent
auditors to perform nonaudit services and the
4
<PAGE>
effect, if any, this may have on their independence. The Audit Committee also
reviews with the Company's internal auditors the plan, scope and results of
their operations. In addition, the Audit Committee discusses with management,
the independent auditors and the internal auditors the adequacy of internal
accounting controls and may also discuss with each of them, independently of the
other, any recommendations on matters which any of them considers to be of
importance. The Audit Committee may also review the Company's accounting and
financial reporting principles, policies and practices. It also undertakes such
other duties as may be assigned to it by the Board of Directors.
The Board of Directors has a Compensation and Benefits Committee, composed
of four directors: Mr. Suzuki, who served as Chairman, Mr. Ashida, Mr. Otsuka
and Mr. Fernandes (from April 28, 1993). The Compensation and Benefits Committee
met twice in 1993. (See "Compensation of Directors and Executive Officers,"
below, for a description of the functions of the Compensation and Benefits
Committee.)
The Board of Directors does not have a Nominating Committee, as matters
related to composition of the Board are controlled by the provisions of the
Shareholders Agreement until March 5, 1996.
INFORMATION ABOUT NOMINEES
The following biographical information includes the names, ages and year
first elected a director, the principal occupation or employment, as of March 1,
1994, of each person nominated, including all positions and offices with
Southland, and the principal directorships held by such persons in non-Southland
companies. All executive officers of Southland and the directors named herein
(other than Mr. Sekine) were in their positions within two years after October
24, 1990, the date Southland filed its voluntary petition for relief under
Chapter 11 of the U.S. Bankruptcy Code, as described above, although only the
Thompsons and Mr. Matthews were officers and/or directors of the Company prior
to, and at the time of, the bankruptcy filing.
<TABLE>
<CAPTION>
POSITION WITH SOUTHLAND,
PRINCIPAL OCCUPATION AND YEAR FIRST
NAME AGE BUSINESS EXPERIENCE PAST FIVE YEARS ELECTED DIRECTOR
- ------------------------- --- ------------------------------------------ ----------------
<S> <C> <C> <C>
Masatoshi Ito............ 69 Chairman of the Board and Director(1) 1991
Toshifumi Suzuki......... 61 Vice Chairman of the Board and Director(2) 1991
Clark J. Matthews, II.... 57 President, Chief Executive Officer and 1981-1987 and
Director(3) 1991
Yoshitami Arai........... 62 Director(4) 1991
Timothy N. Ashida........ 54 Director(5) 1991
Jay W. Chai.............. 60 Director(6) 1991
Gary J. Fernandes........ 50 Director(7) 1991
Masaaki Kamata........... 54 Director(8) 1991
Kazuo Otsuka............. 47 Director(9) 1991
Asher O. Pacholder....... 56 Director(10) 1991
Nobutake Sato............ 55 Director(11) 1991
Tatsuhiro Sekine......... 59 Director(12) 1993
Jere W. Thompson......... 62 Co-Vice Chairman of the Board and 1961
Director(13)
John P. Thompson......... 68 Co-Vice Chairman of the Board and 1948
Director(14)
<FN>
- ------------------------
(1) Chairman of the Board and Director of the Company since March 5, 1991.
Founder, Director and Advisor of Ito-Yokado Group, which includes
Ito-Yokado Co., Ltd., Seven-Eleven Japan Co., Ltd. and Denny's Japan Co.,
Ltd., as well as other companies. Ito-Yokado Co., Ltd. is one of Japan's
leading diversified retailing companies which, together with its
subsidiaries and affiliates, operates superstores, convenience stores,
department stores, supermarkets, specialty shops and discount stores.
President of Ito-Yokado Co., Ltd. from 1958 to 1992. Chairman of
Seven-Eleven
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Japan Co., Ltd. from 1978 to 1992, and President from 1973 to 1978.
Chairman of Denny's Japan Co., Ltd. from 1981 to 1992, and President from
1973 to 1981. Chairman of Famil Co., Ltd. since 1979. Chairman of York
Mart Co., Ltd. since 1979. President of York Matsuzakaya Co., Ltd. since
1979. President of Robinson's Japan Co., Ltd. since 1984. Chairman of
Maryann Co., Ltd. since 1977. President of Oshman's Japan Co., Ltd. since
1984. Chairman of Steps Co., Ltd. since 1981. Chairman of York-Keibi Co.,
Ltd. since 1977. President of Union Lease Co., Ltd. since 1975. Statutory
Auditor of Daikuma Co., Ltd. since 1982. Chairman of Marudai Co., Ltd.
since 1989. Director of Seven-Eleven (Hawaii), Inc. since 1989. Chairman
of Umeya Co., Ltd. since 1977. Director of Shop America Limited since
1990. Director and Chairman of the Board of IYG Holding Company since
1990.
(2) Vice Chairman of the Board and Director of the Company since March 5,
1991. President and Chief Executive Officer of Ito-Yokado Co., Ltd. since
October, 1992 and Director since 1971; Executive Vice President from 1985
to 1992; Senior Managing Director from 1983 to 1985; Managing Director
from 1977 to 1983; employee since 1963. Chairman of the Board and Chief
Executive Officer of Seven-Eleven Japan Co., Ltd. since October, 1992 and
Director since 1973; President from 1975 to 1992; Senior Managing Director
from 1973 to 1975. Statutory Auditor of Robinson's Japan Co., Ltd. since
1984. Chairman of Daikuma Co., Ltd. since 1978. President of Seven-Eleven
(Hawaii), Inc. since 1989. President of Shop America Limited since 1990.
President and Director of IYG Holding Company since 1990.
(3) Director of the Company since March 5, 1991, and from 1981 until 1987;
President and Chief Executive Officer since March 5, 1991; Executive Vice
President (or Senior Executive Vice President) and Chief Financial Officer
from 1979 to 1991; Vice President and General Counsel from 1973 to 1979;
employee since 1965.
(4) Director of the Company since March 5, 1991. Chairman of the Board of
Systems International Inc., a consulting firm for international
joint-ventures, licensing and investment arrangements, since 1977 and
President from 1970 to 1977. President of Tokyu Hotels International from
1977 to 1989. Director of Entry Strategies Inc., Parallel Inc., Nissho
Berol Inc., Europe Consultants S.A., and Industrial Suppliers S.A. Member
of Pacific Basin Economic Council and others.
(5) Director of the Company since March 5, 1991. President of A.K.K.
Associates, Inc., a consulting firm for Japanese/American investments, in
Glendale, California, since 1972. Director of Seven-Eleven Japan Co., Ltd.
since 1991; General Manager, Far East Division of Travel Systems Inter-
national in Los Angeles from 1969 to 1972. Interpreter/Technical
Coordinator at Kawaguchi Tour Services in Los Angeles from 1966 to 1969.
Mr. Ashida has entered into a "Consultant's Agreement" with the Company
pursuant to which he is paid $10,000 per month to serve as liaison with
the Board of Directors. This fee is inclusive of any director's fees to
which he would otherwise be entitled.
(6) Director of the Company since March 5, 1991. Chairman of the Board and
Chief Executive Officer of ITOCHU International Inc. (formerly known as C.
Itoh & Company (America) Inc.) since April 1991; Chief Operating Officer
from 1989 to 1991; Executive Vice President from 1986 to 1991; Senior Vice
President from 1982 to 1985; Director since 1983. Executive Vice President
of ITOCHU Corporation (formerly C. Itoh & Co., Ltd.), a Japanese trading
company, since July 1993; Senior Managing Director from 1991 to 1993;
Managing Director from 1989 to 1991; Director from 1986 to 1989. Managing
Director with Representation Rights, ITOCHU Corporation, since 1989.
Director of Isuzu Motors Limited since 1984. Voting Class B Representative
on the Board of Representatives of Time Warner Entertainment Company, L.P.
since June 1992. Strategic Planning Advisor with General Motors
Corporation throughout 1982.
(7) Director of the Company since April 11, 1991. Senior Vice President of
Electronic Data Systems Corporation ("EDS"), an information technology
service company, since 1984, and Director since 1981. Director of John
Wiley & Sons, Inc. since September, 1989, and of Westcott Communications
since May, 1989. Director of the Dallas Council on World Affairs; member
of the Advisory Board of the East Texas State University Foundation;
Trustee of the Boys and Girls Clubs of America and the Boys and Girls
Clubs of Greater Dallas, Inc.
(8) Director of the Company since March 5, 1991. Director, since 1978, and
Executive Vice President of Seven-Eleven Japan Co., Ltd.; Senior Managing
6
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Director since 1989; Managing Director from 1985 to 1989; employee since
1973. Director of Shop America Limited since 1990. Vice President of
Seven-Eleven (Hawaii), Inc. since 1989. Director and Treasurer of IYG
Holding Company since 1990.
(9) Director of the Company since March 5, 1991. General Manager, Corporate
Development, Ito-Yokado Co., Ltd., since 1986; Manager, Corporate
Development from 1982 to 1986; Assistant to Mr. Masatoshi Ito, President
and Chief Executive Officer, from 1978 to 1982; employee of Ito-Yokado Co.,
Ltd. since 1975. Assistant Secretary of IYG Holding Company since 1990.
(10) Director of the Company since March 5, 1991. Chairman of the Board and
Managing Director of Pacholder Associates, Inc., an investment advisory
firm, since 1984. Director of United Gas Holding Corp. (f.k.a. LaSalle
Energy Corp.), ICO, Inc., USF&G Pacholder Fund, Inc., TC/GP Inc., AM
International, Inc. and Forum Group, Inc. Vice President and Chief
Investment Officer of The Union Central Life Insurance Co. from 1980 to
1984. Mr. Pacholder was a director of MacLeod-Stedman, Inc., which went
into receivership in 1991 in Manitoba, Canada.
(11) Director of the Company since March 5, 1991. Executive Vice President,
Corporate Planning, Ito-Yokado Co., Ltd., since 1993; Senior Managing
Director from 1985 to 1993; Managing Director from 1983 to 1985; Director
from 1977 to 1983; employee since 1964. Director of Denny's Japan Co., Ltd.
since 1973, Maryann Co., Ltd. since 1982, Oshman's Japan Co., Ltd. since
1984 and Marudai Co., Ltd. since 1989. President of Urawa Building Co.,
Ltd. since 1985, Nitsu Systems Kaihatsu Co., Ltd. since 1986 and Waiaru
Kaihatsu Co., Ltd. since 1988. Director and Vice President of IYG Holding
Company since 1990.
(12) Director of the Company since 1993. Senior Managing Director, Finance,
Ito-Yokado Co., Ltd., since 1993; Managing Director from 1991 to 1993;
employee since April 1991. General Manager of the Overseas Construction
Department of ITOCHU Corporation (formerly known as C. Itoh and Co.) from
1989 to 1991; General Manager of Finance Department from 1986 to 1989.
(13) Director of the Company since 1961; Co-Vice Chairman of the Board since
March 5, 1991; President from 1973 to 1991; Chief Executive Officer from
1986 to 1991; employee since 1956. Director of MCorp. John and Jere
Thompson are brothers.
(14) Director of the Company since 1948; Co-Vice Chairman of the Board since
March 5, 1991; Chairman of the Board from 1969 to 1991; Chief Executive
Officer from 1961 to 1986; employee since 1948. Director of IRT
Corporation.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES, WHICH REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES
REPRESENTED AND ENTITLED TO VOTE AT THE MEETING. VOTES WILL BE TABULATED BY AN
INSPECTOR OF ELECTION. AN ABSTENTION FROM VOTING OR A BROKER NON-VOTE WILL BE
TABULATED AS A VOTE WITHHELD ON THE ELECTION, AND WILL BE INCLUDED IN COMPUTING
THE NUMBER OF SHARES PRESENT FOR PURPOSES OF DETERMINING THE PRESENCE OF A
QUORUM FOR THE SHAREHOLDERS MEETING AND WHETHER NOMINEES HAVE RECEIVED THE VOTE
OF A MAJORITY OF THE SHARES PRESENT AT THE MEETING.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
At March 4, 1994, the record date for the annual meeting, the Company was
aware of the following beneficial owner of 5% or more of the Company's shares of
Common Stock (the only class of voting security of the Company) of which a total
of 409,922,935 shares are issued and outstanding:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- ------------------------------ ------------------------------------ ----------------------- ------------
<S> <C> <C> <C>
Common Stock, IYG Holding Company(a) 263,642,493 Shares 64.3%
$.0001 par value 4-1-4, Shibakoen,
Minato-ku, Tokyo Japan 105
<FN>
- ------------------------
(a) IYG Holding Company is a Delaware corporation, created specifically for
the purpose of purchasing approximately 70% of the shares of Common Stock
of the Company, issued in connection with consummation of the Plan and as
contemplated therein and in the Stock Purchase Agreement (see "General
Information," above). It is a jointly owned subsidiary of Ito-Yokado Co.,
Ltd. and
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Seven-Eleven Japan Co., Ltd. Ito-Yokado owns 51%, and Seven-Eleven Japan
owns 49%, of IYG's outstanding common stock. Ito-Yokado owns 51% of
Seven-Eleven Japan's outstanding common stock. Messrs. Ito, Suzuki, Sato,
Kamata and Otsuka are the officers and directors of IYG (see "Security
Ownership of Management" and "Information About Nominees"). They each,
individually, disclaim beneficial ownership of the shares held by IYG. As
a result of private transactions, IYG's ownership is now approximately
64.3% of the Company's outstanding Common Stock.
</TABLE>
In addition, the Company has received a copy of a Schedule 13G, filed by
Highbridge Capital Corporation, Dubin & Swieca Asset Management, Inc. and Dubin
& Swieca Capital Management, Inc., reporting ownership of over 5% of the
outstanding Thompson Warrants, exercisable for 955,000 shares of the Common
Stock. The Thompson Warrants have no voting rights until exercised, and if
exercised, the shares received would be less than two-tenths of one percent of
Southland's outstanding Common Stock.
SECURITY OWNERSHIP OF MANAGEMENT
COMMON STOCK
The following table, and the footnotes that follow, show the beneficial
ownership of the Common Stock as of February 1, 1994, as required by the rules
and regulations of the Securities and Exchange Commission (the "Commission"), by
each director and each person nominated for director, by each of the five most
highly compensated Executive Officers of the Company, and by all officers and
directors of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNERSHIP(A) CLASS(A)
--------------------------- -------------
<S> <C> <C>
Masatoshi Ito.................................................... 2,000,000(b) .49%(b)
Toshifumi Suzuki................................................. 1,000,000(c) .24(c)
Clark J. Matthews, II............................................ 307,769(d) *
Yoshitami Arai................................................... 30,000(e) *
Timothy N. Ashida................................................ 30,000(f) *
Rodney A. Brehm.................................................. 40,001(g) *
Jay W. Chai...................................................... -0-(h) -0-(h)
Gary J. Fernandes................................................ -0- -0-
Masaaki Kamata................................................... 100,000(i) * (i)
Stephen B. Krumholz.............................................. 40,834(j) *
Kazuo Otsuka..................................................... 30,000(k) * (k)
Asher O. Pacholder............................................... -0- -0-
John H. Rodgers.................................................. 63,052(l) *
Michael K. Roemer................................................ 50,001(m) *
Nobutake Sato.................................................... 100,000(n) * (n)
Tatsuhiro Sekine................................................. -0- -0-
John P. Thompson................................................. 11,368,043(o) 2.77%
Jere W. Thompson................................................. 9,626,870(p) 2.35%
All officers and directors as a group (27 persons)............... 279,586,336(q) 68.12%
* Rounds to less than one-tenth of one percent
<FN>
- ------------------------
(a) As reported in the Company's records on February 1, 1994. At February 1,
1994, there were 409,922,935 shares of Common Stock outstanding. The
nature of beneficial ownership of the shares reported, if not direct, is
described in this footnote (a) and the footnotes that follow. Included in
the numbers of shares shown, as required by the rules and regulations of
the Commission, are those shares as to which such persons have or share
voting and/or investment power, or with respect to which they have a right
to receive such power within 60 days. Certain officers and directors
received Thompson Warrants as a result of their ownership of Southland's
old debt securities and preferred stock. Shares acquirable upon the
exercise of such warrants are included in the shares shown in the above
table because such warrants became exercisable on June 5, 1991 and will
not expire until February 23, 1996. Because of the applicable Commission
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
requirements, 9,032,295 shares are duplicated under John and Jere
Thompson. These duplications are excluded from the total number of shares
for all officers and directors as a group. Also excluded from the shares
shown are any shares held by limited partners of Thompson Capital
Partners, L.P. and the 1,333,758 shares held by Thompson Capital Partners,
L.P., which are subject to the Warrant Agreement and during the term of
the Warrant Agreement, the voting and distribution of such shares are
restricted by such Warrant Agreement.
(b) Mr. Ito owns 2,000,000 shares directly. Additionally, Mr. Ito is Chairman
of the Board and a Director of IYG Holding Company. See "Security
Ownership of Certain Beneficial Owners," above.
(c) Mr. Suzuki owns 1,000,000 shares directly. Additionally, Mr. Suzuki is
President and a Director of IYG Holding Company. See "Security Ownership
of Certain Beneficial Owners" above.
(d) Mr. Matthews owns 7,240 shares either directly or as custodian; 143,334
shares acquired under the Company's Grant Stock Plan which are subject to
the Shareholders Agreement; 156,667 shares acquirable upon the exercise of
options under the Company's Equity Participation Plan (see "Compensation
of Directors and Officers -- Executive Officers' Compensation," below)
only upon the occurrence of a triggering event; and holds 528 Thompson
Warrants which are exercisable for Common Stock.
(e) Mr. Arai owns 30,000 shares directly.
(f) Mr. Ashida owns 30,000 shares directly.
(g) Mr. Brehm owns 8,334 shares acquired under the Company's Grant Stock Plan
which are subject to the Shareholders Agreement; 31,667 shares acquirable
upon the exercise of options under the Company's Equity Participation Plan
(see "Compensation of Directors and Officers -- Executive Officers'
Compensation," below) only upon the occurrence of a triggering event.
(h) Mr. Chai owns no shares directly. ITOCHU Corporation, of which he is
Executive Vice President, and ITOCHU International Inc., of which he is
Chairman of the Board and Chief Executive Officer, together own a total of
20,397,834 shares of Southland Common Stock. Mr. Chai disclaims beneficial
ownership of such shares.
(i) Mr. Kamata owns 100,000 shares directly. Additionally, Mr. Kamata is
Treasurer and a Director of IYG Holding Company. See "Security Ownership of
Certain Beneficial Owners," above.
(j) Mr. Krumholz owns 9,167 shares acquired under the Company's Grant Stock
Plan which are subject to the Shareholders Agreement; 31,667 shares
acquirable upon the exercise of options under the Company's Equity
Participation Plan (see "Compensation of Directors and Officers --
Executive Officers' Compensation," below) only upon the occurrence of a
triggering event.
(k) Mr. Otsuka owns 30,000 shares directly. Additionally, Mr. Otsuka is
Assistant Secretary of IYG Holding Company. See "Security Ownership of
Certain Beneficial Owners," above.
(l) Mr. Rodgers owns 2,846 shares directly; 23,334 shares acquired under the
Company's Grant Stock Plan which are subject to the Shareholders Agreement;
36,667 shares acquirable upon the exercise of options under the Company's
Equity Participation Plan (see "Compensation of Directors and Officers --
Executive Officers' Compensation," below) only upon the occurrence of a
triggering event; and holds 205 Thompson Warrants which are exercisable for
Common Stock.
(m) Mr. Roemer owns 18,334 shares acquired under the Company's Grant Stock Plan
which are subject to the Shareholders Agreement; 31,667 shares acquirable
upon the exercise of options under the Company's Equity Participation Plan
(see "Compensation of Directors and Officers -- Executive Officers'
Compensation," below) only upon the occurrence of a triggering event.
(n) Mr. Sato owns 100,000 shares directly. Additionally, Mr. Sato is Vice
President and a Director of IYG Holding Company. See "Security Ownership of
Certain Beneficial Owners," above.
(o) Mr. John Thompson owns 2,296,057 shares and 39,691 Thompson Warrants held
by The Hayden Company (the voting stock of which is owned by John P.
Thompson), of which 590,452 shares are subject to Thompson Warrants and
2,293,142 shares are pledged to Ito-Yokado as collateral for the loans made
pursuant to the Shareholders Agreement; also included are 1,488,151 shares
and 32,221 Thompson Warrants held by The Philp Co. (the voting stock of
which is owned by two trusts, of which John and Jere Thompson serve as two
of the trustees), of which 352,308 shares are subject to Thompson Warrants
and 1,486,292 shares are pledged to Ito-Yokado as collateral for
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
the Loans made pursuant to the Shareholders Agreement; 7,511,923 shares by
Thompson Brothers, L.P., a Texas limited partnership in which three
Thompson family partnerships, each controlled by one of the Thompsons, are
the general partners and The Philp Co. is the limited partner, of which
2,533,724 shares are subject to Thompson Warrants and 7,511,923 are pledged
to Ito-Yokado as collateral for the Loans made pursuant to the Shareholders
Agreement.
(p) Mr. Jere Thompson owns 588,556 shares and 6,019 Thompson Warrants held by
The Williamsburg Corporation (the voting stock of which is owned by Jere W.
Thompson), of which 170,585 shares are subject to Thompson Warrants and
587,788 shares are pledged to Ito-Yokado as collateral for the Loans made
pursuant to the Shareholders Agreement; also included are 1,488,151 shares
and 32,221 Thompson Warrants held by The Philp Co. (see (o) above) and
7,511,923 shares by Thompson Brothers (see (o) above).
(q) The total shares shown are as follows: 3,305,812 shares owned by officers
and directors directly or with family members (including 1,071 shares which
can be acquired on exercise of Thompson Warrants); 7,511,923 shares owned
by Thompson Brothers; 2,296,057 shares owned by The Hayden Company;
1,488,151 shares owned by The Philp Co.; 588,556 shares owned by The
Williamsburg Corporation; 219,171 shares issued pursuant to the Grant Stock
Plan held by seven officers, and an additional 43,337 shares held under
such plan by non-officers, all of which grant stock shares are subject to
the Shareholders Agreement, and are to be voted in accordance with that
agreement; 490,836 shares acquirable by 13 officers upon exercise of
options or conversion of convertible debentures under the Equity
Participation Plan; and 263,642,493 shares held by IYG Holding Company of
which Messrs. Ito, Suzuki, Sato, Kamata and Otsuka are the directors and
officers, although they each disclaim individual beneficial ownership of
such shares.
</TABLE>
The Company has determined, based upon a review of the Forms 3, 4 and 5
filed by all officers and directors during 1993, that, due to the Company's
oversight, Mr. Sekine's Form 3, which should have been filed within ten days
following his election as a director, was filed approximately 60 days late. Mr.
Sekine owns no Southland securities.
PROPOSAL 2. RATIFICATION OF THE SELECTION OF AUDITORS
On September 24, 1991, the Board of Directors decided, upon recommendation
of the Audit Committee, to appoint the firm of Coopers & Lybrand, certified
public accountants, to be the independent auditors of the Company for 1992,
replacing the Company's former independent auditors, Deloitte & Touche. The
Company's Audit Committee recommended the change of accountants, after being
requested to do so by the new majority owners, so that Southland would use the
same independent accounting firm as the majority owners. The firm of Chuo-Shinko
Audit Corporation, member firm of Coopers & Lybrand (International), have been
the independent accountants for Ito-Yokado and Seven-Eleven Japan since 1970.
The appointment of Coopers & Lybrand as the Company's independent auditors for
1992 and 1993 was ratified by the shareholders in those years.
The change of independent auditors was not the result of any disagreement
with the former accountants on any matter of accounting principles or practices,
financial statement disclosures or auditing scope or procedures, and there have
been no such disagreements within the past two fiscal years and any prior period
or subsequent period; therefore, the Company did not consult with Coopers &
Lybrand concerning any such disagreements.
In their reports dated March 26, 1991 and March 27, 1992, Deloitte & Touche
issued an unqualified opinion on the Company's Consolidated Financial Statements
for the years ended December 31, 1990 and 1991.
Coopers & Lybrand, a nationally known firm, has no direct or indirect
interest in the Company.
10
<PAGE>
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed Coopers & Lybrand to be the independent auditors of the Company for
1994. Although not legally required to do so, upon the recommendation of the
Audit Committee, the Board is submitting the appointment of Coopers & Lybrand as
the Company's independent auditors for 1994 to the shareholders for ratification
at this meeting.
The services provided to the Company by Coopers & Lybrand in 1994 will
include, in addition to performing the audit, audits of certain domestic and
foreign subsidiaries and related companies and those of various employee benefit
plans; review of quarterly reports; issuance of letters to underwriters in
connection with registration statements, if any, filed by the Company with the
Securities and Exchange Commission; and consultation on accounting, financial
reporting, tax and related matters.
Representatives of Coopers & Lybrand will be at the meeting, will have an
opportunity to make a statement, if desired, and will be available to respond to
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF COOPERS & LYBRAND TO BE THE INDEPENDENT AUDITORS OF THE COMPANY
FOR 1994, WHICH REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES
REPRESENTED AND ENTITLED TO VOTE AT THE MEETING. VOTES WILL BE TABULATED BY AN
INSPECTOR OF ELECTION. AN ABSTENTION FROM VOTING AND BROKER NON-VOTES WILL BE
INCLUDED IN COMPUTING THE NUMBER OF SHARES PRESENT FOR PURPOSES OF DETERMINING
THE PRESENCE OF A QUORUM FOR THE SHAREHOLDERS MEETING AND WHETHER THE
AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES PRESENT AT THE MEETING HAS BEEN
RECEIVED, BUT WILL NOT BE COUNTED AS A VOTE EITHER "FOR" OR "AGAINST"
RATIFICATION.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
EXECUTIVE OFFICERS' COMPENSATION
The Company's executive compensation program is subject to the approval of
the Compensation and Benefits Committee of the Board of Directors. The committee
is composed of four directors, as follows: Mr. Suzuki, the chairman of the
committee, is Vice Chairman of the Board of Directors, but receives no
compensation from the Company for his service as Vice Chairman or as a director.
Mr. Suzuki is President of Ito-Yokado and IYG Holding Company and Chairman of
Seven-Eleven Japan. As described elsewhere herein, IYG Holding Company, which
owns approximately 64% of the Common Stock of the Company, is a jointly owned
subsidiary of Ito-Yokado and Seven-Eleven Japan. During 1992, Ito-Yokado
unconditionally guaranteed a $400 million commercial paper facility established
by the Company. Seven-Eleven Japan, a 51%-owned subsidiary of Ito-Yokado, is the
Company's area licensee in Japan and, through its subsidiary, Seven-Eleven
(Hawaii), Inc., is the Company's area licensee in Hawaii. The other committee
members are Timothy Ashida, a director of Seven-Eleven Japan, who, as described
elsewhere herein, has a consulting agreement with the Company to serve as
liaison with the Board of Directors, Kazuo Otsuka, who is an officer of
Ito-Yokado, and Gary Fernandes, Senior Vice President and a director of
Electronic Data Systems Corporation. As described elsewhere herein, the Company
has entered into contractual arrangements with EDS relating to (1) installation
of automatic teller machines in 7-Eleven stores over a ten-year period and (2)
providing the Company with retail automation systems, including host computer
services, over a five-year period and has paid EDS for certain consulting and
business planning services in 1993. In addition, during 1993, EDS purchased the
Company's interest in a California partnership that had been established to
facilitate the installation of ATMs in 7-Elevens and other retail stores in
California. John P. Thompson, formerly Chairman of the Board and an executive
officer of the Company, until March 5, 1991, was a member of the committee until
April 28, 1993.
The Company's Executive Officers, as well as all other management personnel,
receive annual compensation consisting of base salary and annual performance
incentive, or "bonus," under the Company's Annual Performance Incentive ("API")
Plan. The amount paid under this API plan is based upon the employee's or
officer's base salary, compensation grade level and the achievement of certain
pre-established performance criteria for the Company each year, more fully
described in the Report of the Compensation and Benefits Committee, included
elsewhere herein.
11
<PAGE>
The following table shows the compensation paid, or earned, during 1993, by
the Company's Chief Executive Officer and the next four most highly compensated
Executive Officers, as specifically required by the rules and regulations
relating to Proxy Statement disclosure.
TABLE 1
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------- -------------------------------------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OTHER
ANNUAL RESTRICTED ALL OTHER
NAME AND SALARY BONUS COMPENSA- STOCK OPTIONS/ LTIP COMPENSA-
PRINCIPAL POSITION YEAR ($)(I) ($)(II) TION($)(III) AWARD(S)($) SARS(#) PAYOUTS($) TION($)(IV)
- ------------------------- ---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
Clark J. Matthews, II 1993 390,000 131,040 N/A -0- -0- -0- 14,130
President and Chief 1992 390,000 161,850
Executive Officer 1991 * 390,000 144,300
John H. Rodgers 1993 285,000 79,800 N/A -0- -0- -0- 10,525
Executive Vice 1992 257,500 155,405
President, Chief 1991 230,000 106,590
Administrative Officer
and Secretary
Stephen B. Krumholz 1993 271,000 75,880 N/A -0- -0- -0- 10,472
Executive Vice President 1992 235,500 97,450
and Chief Operating 1991 200,000 66,600
Officer
Michael K. Roemer 1993 200,000 44,800 N/A -0- -0- -0- 10,261
Senior Vice President, 1992 184,000 55,776
Merchandising 1991 168,000 104,200
Rodney A. Brehm 1993 195,000 43,680 N/A -0- -0- -0- 10,190
Senior Vice President, 1992 183,750 58,100
Foodservice and 1991 175,000 51,800
Distribution
<FN>
- --------------------------
* Clark J. Matthews, II became President and Chief Executive Officer on March
5, 1991. Prior to that date, Mr. Matthews was Executive Vice President and
Chief Financial Officer of the Company.
(i) In general, officers received no salary increases in 1989, 1990 or 1991,
unless they were promoted to positions with additional responsibilities
during a particular year. Mr. Matthews has received neither a salary
increase nor any special bonus compensation since 1990.
(ii) During 1992, certain executive officers were granted special bonuses to
compensate them for the loss of income in prior years.
(iii) No "Other Annual Compensation" is shown because the total amounts paid for
perquisites in 1993 did not exceed the lesser of $50,000 or 10% of the
named executive officer's salary and bonus for 1993.
(iv) Includes only (a) the amount of Company contribution for 1993 to each of
the named executive officer's accounts in The Southland Corporation
Employees' Savings and Profit Sharing Plan (the "Savings and Profit Sharing
Plan"), a Section 401(k) defined contribution plan with over 25,535
participants, as follows: $9,512 each for Messrs. Rodgers, Krumholz, Roemer
and Brehm, and $12,683 for Mr. Matthews; and (b) for each of the named
executive officers, the full premiums paid for basic term life insurance
under the Company's group plan for all employees, as follows: Mr. Matthews
-- $1,447; Mr. Rodgers -- $1,013; Mr. Krumholz -- $960; Mr. Roemer -- $749
and Mr. Brehm -- $678.
</TABLE>
12
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The Company granted no options or SARs during 1993.
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(E)
(D) VALUE OF
NUMBER OF UNEXERCISED
(B) UNEXERCISED FY-END IN-THE-MONEY
SHARES (C) (#) OPTIONS/SARS AT OPTIONS/SARS AT
(A) ACQUIRED ON VALUE FY-END (#) FY-END($)
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE(I) UNEXERCISABLE(II)
- ------------------------------- -------------- ---------------- ------------------- ---------------
<S> <C> <C> <C> <C>
Clark J. Matthews, II.......... -- -- 156,667 N/A
John H. Rodgers................ -- -- 36,667 N/A
Stephen B. Krumholz............ -- -- 31,667 N/A
Michael K. Roemer.............. -- -- 31,667 N/A
Rodney A. Brehm................ -- -- 31,667 N/A
<FN>
- ------------------------
(i) All options shown are held pursuant to the Equity Participation Plan and
are not exercisable until December 31, 1994, except upon the occurrence of
an earlier Triggering Event, as defined in the plan.
(ii) All outstanding options are exercisable at $7.50 or $7.70 per share. The
Common Stock is currently trading at prices significantly below this level.
</TABLE>
LONG-TERM INCENTIVE PLAN AWARDS TABLE
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK
(B) (C) PRICE-BASED PLANS
NUMBER OF PERFORMANCE --------------------------
SHARES, OR OTHER
UNITS PERIOD UNTIL (D) (F)
(A) OR OTHER MATURATION OR THRESHOLD MAXIMUM ($
NAME RIGHTS(#) PAYOUT ($ OR #) OR #)
- ------------------------------------- ------------ ------------- ------------- -----------
<S> <C> <C> <C> <C>
Clark J. Matthews, II................ 333,960 12/31/94 -0- $ 333,960
John H. Rodgers...................... 178,150 12/31/94 -0- 178,150
Stephen B. Krumholz.................. 178,150 12/31/94 -0- 178,150
Michael K. Roemer.................... 76,000 12/31/94 -0- 76,000
Rodney A. Brehm...................... 76,000 12/31/94 -0- 76,000
</TABLE>
- ------------------------
Column (e) has been deleted because there is no "target" payout amount under the
plan.
The long-term incentive plan awards described in the above table were all
granted under the 1993 Performance Plan, adopted by the Company in 1993, with
two-year cumulative operating earnings targets. Under the 1993 Performance Plan
performance units are granted to eligible executives, including all officers,
based upon the salary administration grade level assigned to the executive's
job. All executives in the same grade level are awarded the same number of
units. Units are awarded for each year that the executive is a participant in
the plan. At the end of the plan period (December 31, 1994) the award pool for
this plan will equal a predetermined amount of each dollar of operating earnings
achieved by the Company above the threshold set for each year. The Plan contains
both annual and cumulative thresholds. Failure to meet the threshold operating
earnings in one year could possibly have no impact if the other year's results
were sufficient to offset any shortfall.
13
<PAGE>
In 1993, the amount to be accrued for the award pool for the 1993
Performance Plan was $.35 of each dollar over the threshold operating earnings
amount stated in the plan; however, the Company's 1993 operating earnings were
not above the threshold for 1993 and, pursuant to the terms of the plan, 1993
operating earnings will therefore not be used to calculate either the cumulative
threshold, or cumulative actual operating earnings under the plan. For 1994, the
amount that will be accrued for the award pool will be $.20 of every dollar over
the threshold operating earnings amount (which will be the Company's budgeted
operating earnings) and, if the Company's 1994 actual operating earnings are
sufficient to pay 100% of the targeted bonus amount under the Company's API
plan, then $.45 of every dollar of actual operating earnings above that amount
will be contributed to fund the award pool.
The maximum aggregate awards that can be paid under this plan are equal to
the total amount of API payable to the participants in this plan for the plan
period (i.e., the total of 1993 and 1994 API payable at 100% to all executives
eligible to participate in the plan).
DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE
The Company does not maintain a defined benefit pension plan for its
employees. It does maintain an Executive Protection Plan, covering approximately
60 executives, including each of the named executive officers. This plan
provides three benefits: salary continuation upon retirement at age 65 (or
later) equal to 150% of the executive's "final compensation," as determined for
plan purposes, payable in ten equal annual installments (if the executive
retires before age 65, but after age 55, an adjusted benefit will be paid);
post-retirement life insurance equal to 200% of the executive's "final
compensation," as determined for plan purposes, plus $15,000 (or, in lieu
thereof, if the executive dies prior to retirement, a salary continuation death
benefit shall be paid to the executive's named beneficiary, equal to 200% of
such compensation, plus $15,000, payable in ten equal annual installments); and
disability income in excess of the amount provided under the Company's group
long-term and short-term disability plans, if the executive becomes disabled
while a participant in this plan, that will bring the total amount paid to the
executive to the level of 80% of "final compensation" prior to the disability.
The Plan has not been amended, nor have benefits been adjusted, since 1989.
Under the current plan provisions, the "final compensation" on which benefits
would be calculated for each of the named executive officers is based on that
executive's 1988 earnings and would be as follows:
Mr. Matthews -- $510,000, Mr. Rodgers -- $285,650, Mr. Krumholz -- $162,000,
Mr. Roemer -- $224,138, and Mr. Brehm -- $167,500. Under the plan, normal
retirement age is 65; however, if an executive retires at age 55 or later, a
reduced benefit is payable under the plan. At age 55, the benefit is 50% of what
would have been paid at age 65; the benefit increases to 55% at age 56, and
increases 5% per year thereafter for each year up to age 65.
DIRECTORS' COMPENSATION
In 1993, the Company paid non-employee Directors an annual fee of $25,000
plus $1,000 for attendance at each meeting of the Board, or Committee thereof,
on which they serve. For this purpose, Clark J. Matthews, II, as well as
employees of Ito-Yokado and Seven-Eleven Japan, and the Thompsons (see "Other
Information -- The Employment Agreements," above) were not considered
non-employee directors. The Chairman of the Audit Committee receives an
additional annual fee of $5,000 for serving as Chairman of that Committee.
In addition, as described above under "Election of Directors" and elsewhere
herein, Mr. Ashida is paid $120,000 per year, inclusive of the director's fees
to which he would otherwise be entitled, under a Consulting Agreement entered
into on July 1, 1991, pursuant to which he serves as liaison with the Board of
Directors.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As described above, the Compensation and Benefits Committee of the Board of
Directors is composed of four directors. Mr. Suzuki, the chairman of the
committee, is Vice Chairman of the Board of Directors, but receives no
compensation from the Company for his service as Vice Chairman or as a director.
Mr. Suzuki is President of Ito-Yokado and IYG Holding Company and Chairman of
Seven-Eleven Japan. As described elsewhere herein, IYG Holding Company, which
owns approximately 64% of the Common Stock of the Company, is a jointly owned
subsidiary of Ito-Yokado and Seven-Eleven Japan. During 1992, Ito-Yokado
guaranteed a $400 million commercial paper facility established by the Company.
Seven-Eleven Japan, a 51% owned subsidiary of Ito-Yokado, is the Company's area
licensee in Japan and, through its subsidiary, Seven-Eleven (Hawaii), Inc., is
the Company's area licensee in Hawaii. The other committee members are Timothy
Ashida, who is a director of Seven-Eleven Japan and, as described elsewhere
herein, has a consulting agreement with the Company to serve as liaison with the
Board of Directors, Kazuo Otsuka, who is an officer of Ito-Yokado, Gary
Fernandes, Senior Vice President and a director of EDS, with which the Company
currently has several contracts for EDS to assist the Company with data
processing, consulting and business planning, as well as for installation and
operation of automatic teller machines (ATMs) in the Company's stores over
several years and, as described elsewhere herein, EDS purchased the Company's
interest in a California partnership that was formed to install ATMs in the
Company's California and Nevada stores; and John P. Thompson, formerly Chairman
of the Board and an executive officer of the Company, until March 5, 1991, who
has an Employment Agreement with the Company (see "Other Information -- The
Employment Agreements," above) was a member of the committee until April 28,
1993. As described elsewhere herein, pursuant to a split dollar life insurance
arrangement, under which the insurance policy is assigned as collateral to the
Company, Southland has advanced $496,020 to Mr. Thompson for premiums to
maintain the policy. The indebtedness is fully secured by the policy assignment.
Both Mr. Ito and Mr. Suzuki served as officers and/or directors of IYG
Holding Company, Ito-Yokado and Seven-Eleven Japan, as well as serving as
Chairman and Vice Chairman of the Company during 1993.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The functions of the Compensation and Benefits Committee are to review the
level, coverage and competitiveness of the Company's compensation, incentives,
benefits and perquisites and its plans, goals and objectives for officer level
and other executive positions, so as to retain and reward high quality personnel
in key positions, to administer the Equity Participation, Stock Unit Incentive
and Grant Stock Plans; to make amendments to the various plans; and to institute
new plans. It also undertakes such other duties as may be assigned to it by the
Board of Directors.
In carrying out its duties, the Committee has relied on recommendations
presented to it by outside consultants who have been utilized from time to time
to assist the Company in determining the competitiveness of its compensation
policies, as well as on recommendations of the Company's executive officers with
regard to the specific performance of individuals in carrying out their job
responsibilities, and on data collected and utilized by the Company's
Compensation and Benefits Department about compensation structure, practices and
payment levels in certain "Comparable Companies" (as described below).
During 1993, after performing a multi-year analysis of all exempt job
classifications, the Company revised its salary administration plan. All exempt
jobs were evaluated based upon the job responsibilities of each position which
were compared against the compensation paid by companies of similar size for
jobs of similar responsibilities, in the various geographic areas where the
Company's employees are located. The resulting job reclassification affected all
exempt job levels, including officers. Based upon the comparative data
collected, the Company's compensation structure is now designed so that the
combined total of full annual salary and full annual performance incentive
compensation will
15
<PAGE>
achieve a compensation level that is slightly above the median compensation
level for the same job responsibilities in the comparative data used. Salary
increases for 1994 for all exempt employees, including officers, are being
delayed until April 1.
The Company's executive officers and all exempt personnel receive annual
compensation consisting of a combination of base salary and the potential to
earn an annual performance incentive. The amount of annual performance incentive
received by any particular executive for service in 1993 was based on the
achievement, by the Company, of a threshold amount of operating earnings,
determined against a budgeted goal, as set forth in the Company's internal
budget documents. The amount of annual performance incentive that can be earned
by an individual is a predetermined percentage of that individual's base salary,
and is pegged to the salary administration grade level assigned to the
individual's job. In 1993, achievement of the full budgeted operating earnings
would have resulted in payment of 100% of the annual performance incentive;
however, although the Company's performance exceeded the threshold established
in the 1993 annual performance incentive plan, it did not reach the budgeted
target. Therefore, the annual performance incentive that was actually earned was
only 56% of the targeted amount.
The Chief Executive Officer and all executive officers are compensated under
this plan. The annual performance incentive potential for the Chief Executive
Officer, if the budgeted target is reached, is 60% of base salary. The Company's
senior officers (Mr. Rodgers and Mr. Krumholz) have annual performance incentive
potential of 50% of base salary. Other executive officers have a potential to
earn between 34% and 45% of their base salary. In addition, if the budgeted
target had been exceeded, an executive had the opportunity to earn additional
bonus.
For 1994, the annual performance incentive will again be based upon the
Company's achievement of certain operating earnings threshold, budgeted target
and above-budget goal levels. If the threshold level of operating earnings is
reached, executives will begin to earn 50% of their annual performance incentive
so that if the full budgeted operating earnings are achieved, 50% of the annual
performance incentive will be paid. If operating earnings exceed the budgeted
amount, then $.50 of each excess dollar of operating earnings will fund the
payment of additional annual performance incentive until 100% of the annual
performance incentive has been earned. Any operating earnings in excess of this
amount will continue to fund annual performance incentive awards, as well as
awards under the Company's mid-term incentive plan, described below.
As he had done in 1991 and 1992, Mr. Matthews again requested in 1993 that
he not be granted any increase in base salary. In light of the various
challenges the Company continues to face, the committee did not require that his
salary be increased, and did not review specific factors tied to Company
performance in reaching its decision.
To retain and reward employees, the committee adopted a mid-term incentive
plan, with two-year cumulative operating earnings targets. The 1993 Performance
Plan grants performance units to eligible executives, including all officers,
based upon the salary administration grade level assigned to the executive's
job. All executives in the same grade level are awarded the same number of
units. Units are awarded for each year that the executive is a participant in
this plan. At the end of the plan period (December 31, 1994) the award pool for
this plan will equal a predetermined amount of each dollar of operating earnings
achieved by the Company above the threshold set for that year. In 1993, the
amount to be accrued for the award pool was $.35 of each dollar over the
threshold amount stated in the plan; for 1994, the amount will be $.20 of every
dollar over the threshold amount (which will be the Company's budgeted operating
earnings) and, if the Company's operating earnings are sufficient to pay 100% of
the targeted bonus amount under the annual performance incentive plan, then $.45
of every dollar of operating earnings above that amount will fund the award
pool. The maximum aggregate awards that can be paid under this plan are equal to
the total amount of annual performance incentive payable to the participants in
this plan for the plan period (i.e., the total of 1993 and 1994 annual
performance incentive payable at 100% to all executives eligible to participate
in the plan).
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<PAGE>
The Committee does not currently intend to change the components of
compensation, other than as discussed above, for the Company's executive
officers. The Equity Participation Plan, adopted in 1987 following the Company's
leveraged buyout, remains in place. Options granted under that plan are not
exercisable until December 31, 1994, unless an earlier triggering event should
occur. The options are, under current market conditions, without value, as the
exercise price to acquire a share of Common Stock is $7.50 or $7.70 under the
plan.
In carrying out its functions, the Committee refers to data collected from
various sources by the Company's Compensation and Benefits Department. The
Company believes that, to effectively recruit talented executives, it must
compete with other national companies having a similar employee base,
approximately the same range of revenues and similar geographic locations,
although such companies are not in the same line of business as Southland (the
"Comparable Companies"). Therefore, the companies used for compensation
comparisons are not the same companies as those included in the peer group index
shown on the Performance Graph appearing elsewhere herein. The companies
included in that peer group are specifically selected because they are (1)
publicly owned with actively traded Common Stock (2) have a market
capitalization that can be analyzed for comparison with Southland's rate of
return on equity and (3) engage in either the convenience retailing or food
retailing business. The Company believes it competes with a much broader range
of companies in its quest for executive talent.
Changes in the tax laws for 1994 and thereafter will not permit companies to
recognize a tax deduction for compensation in excess of $1,000,000 to any of the
five most highly compensated officers, unless the plan under which such
compensation is paid is not only approved by the Board's Compensation Committee,
but is also performance-based and approved by the Company's shareholders. The
Committee considered whether or not shareholder approval should be sought for
any of the Company's current-year compensation plans to conform with this new
law. After reviewing the applicability of the limitation to the Company's
specific plans (awards under plans adopted prior to 1993 are excluded from the
limitation), the Committee determined that no action is necessary to solicit
shareholder approval for any compensation plans at this time.
The Committee will continue to review the compensation package provided for
the Chief Executive Officer and other executive officers, and to monitor its
competitiveness within the industry and the community, as well as its
relationship to shareholders' return on investment in the Company, making
adjustments that are deemed appropriate, both in compensation policies and
practices, compensation structure and the actual amounts paid.
Toshifumi Suzuki, Chairman
Timothy Ashida
Gary J. Fernandes
Kazuo Otsuka
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PERFORMANCE GRAPH
The Performance Graph, below, shows the value, at year-end 1991, 1992 and
1993, of an investment in Southland Common Stock of $100 on March 5, 1991 (the
date the stock was first traded in the public market following the consummation
of Southland's Restructuring). Also shown are the values, assuming $100 invested
in the NASDAQ Market Index and a peer group index selected by the Company
consisting of three publicly traded convenience store companies (Casey's General
Stores, Inc., Dairy Mart Convenience Stores, Inc. and Uni-Marts, Inc.) and three
food retailers (The Kroger Co., Safeway, Inc. and The Vons Companies Inc.), also
beginning on March 5, 1991, and at year-end 1991, 1992 and 1993. Missing from
the peer group are two of the Company's major convenience store competitors: the
Circle K Corporation ("Circle K") and National Convenience Stores ("NCS"), as
both companies were involved in Chapter 11 bankruptcy proceedings in 1993.
Although both companies emerged from Chapter 11 protection in 1993, Circle K's
stock is not publicly traded and NCS has only been publicly traded since March
1993; therefore, the Company could not include NCS in the peer group used for
this graph as comparative data, for the time period presented, is not available.
The Company may decide, in future years, to change the composition of the peer
group when comparative data is available.
ASSUMES $100 INVESTED ON MARCH 5, 1991
ASSUMES DIVIDEND REINVESTED (IF ANY)
FISCAL YEAR ENDING DECEMBER 31
<TABLE>
<CAPTION>
MARCH 5, DECEMBER 31, DECEMBER 31, DECEMBER 31,
COMPANY 1991 1991 1992 1993
- ------------------------------------------ ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
The Southland Corporation................. 100.00 200.00 323.34 720.00
Peer Group................................ 100.00 90.38 74.90 93.45
Broad Market.............................. 100.00 109.70 110.78 132.88
</TABLE>
18
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 9, 1992, the Company began issuing commercial paper in a
program under which it can issue up to $400 million based upon the Company's
needs. The commercial paper facility is unconditionally guaranteed by
Ito-Yokado.
Seven-Eleven Japan is the largest area licensee of the Company, operating,
as of December, 1993, over 5,400 7-Eleven stores in Japan under an area license
agreement entered into in 1973. In 1988, the Company entered into a financing
arrangement pursuant to which it pledged the royalty stream from Seven-Eleven
Japan as collateral for the approximately twenty-year term of the financing.
Thereafter, the royalties under the area license agreement, at a reduced
percentage, would again be paid to the Company. In 1993, the royalties from
Seven-Eleven Japan that were paid under this arrangement totalled $39,434,577.
In addition, Seven-Eleven (Hawaii), Inc., the Company's area licensee in
Hawaii, is a subsidiary of Seven-Eleven Japan, and operates 48 stores in Hawaii.
During 1993, Seven-Eleven (Hawaii), Inc. paid the Company approximately $62,538
in connection with the area license arrangement.
As of December 31, 1993, the Savings and Profit Sharing Plan leased a total
of 851 operating convenience stores to the Company plus 102 other locations at
rates slightly more favorable for the Savings and Profit Sharing Plan than
contemporaneously available similar transactions with third parties. Rentals,
including percentage rents, paid by the Company to the Savings and Profit
Sharing Plan for 1993 aggregated $31,634,015. During 1993, the Savings and
Profit Sharing Plan sold 62 locations to third parties that were leased to the
Company at the time of the sale. The leases with the Company were terminated
upon payment by the Company of $1,555,278 as termination fees.
During 1993, the Company leased a 7-Eleven store location from an entity
owned by Thompson family interests. The total rents paid in 1993 were $69,583.
This lease was entered into in the ordinary course of business in 1986 and is
expected to continue for its term of 14 years, 11 months, with three renewal
options of five years each.
Southguard Corporation, a company that is approximately 22% owned by Jodie
Thompson, brother of John and Jere Thompson, operates 7-Eleven stores in the
Corpus Christi, Victoria and Wichita Falls, Texas and the Lawton, Duncan and
Altus, Oklahoma areas pursuant to two Area License Agreements with the Company.
Southguard Corporation pays the Company a royalty for the continued use of the
7-Eleven name on these stores. Royalty payments under these area licenses
totalled $508,294 in 1993. The royalty payments are expected to continue in the
future.
John and Jere Thompson, through family interests, have an interest in
7-Eleven Stores of Oklahoma, a partnership that operates 7-Eleven stores in
Oklahoma pursuant to a license agreement from the Company.
Gary J. Fernandes, a director of Southland is an officer and director of
Electronic Data Systems Corporation ("EDS") from which Southland leases property
at 3308 S. Collins, Arlington, Texas 76019, for annual rental of $10,062.
In addition, during 1993, the Company entered into a ten-year agreement with
EDS for the installation and operation of ATMs in 7-Eleven stores. Payments from
EDS to the Company, under this agreement, include both a flat fee per month per
store and transaction-based fees determined by the number of transactions
completed on the ATM each month. In addition, during 1993 EDS purchased from the
Company, for $1,552,272, the Company's one-third partnership interest in CATS, a
California general partnership that had been formed to install, operate and
maintain ATMs in the Company's California stores as well as at other retailers.
EDS, through CATS, entered into an agreement with the Company to continue to
provide ATMs for certain of the Company's California and Nevada stores.
Payments to the Company under these agreements relating to operation of ATMs
in the Company's stores, totalled $1,176,264 in 1993. Such payments are expected
to continue in the future.
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<PAGE>
During 1993, EDS also provided the Company with certain consulting and
business systems planning services to assist the Company in its planning of
automated retail systems and, in December 1993, the Company and EDS entered into
an agreement which provides that EDS will operate the host computer and provide
a data network for the Company's retail automation project, which is being
installed in a phased approach. During 1993, the Company paid EDS a total of
approximately $1,166,200 in connection with these business systems planning and
retail automation projects. Such payments are expected to continue in the
future, pursuant to the terms of the relevant agreements.
Effective November 1, 1993, Southland and EDS entered into a two-year
agreement under which EDS is providing Southland with hardware, software
maintenance and data processing services in connection with Southland's combined
distribution center (CDC) and commissary programs and, in December 1993, under a
separate agreement, EDS delivered certain software to the Company for use in
connection with the CDC program. Southland paid EDS approximately $320,000
during 1993 for these services. Payments to EDS for these services have
continued in 1994.
ITOCHU Corporation (formerly C. Itoh & Co.) entered into a Consulting
Agreement with The Southland Corporation and Seven-Eleven Japan Co., Ltd. in
1973, related to the 7-Eleven convenience store chain operating in Japan, and
has performed under this agreement since then. Mr. Jay Chai, a director of the
Company, is Chairman and Chief Executive Officer of ITOCHU International Inc.
and Executive Vice President of ITOCHU Corporation.
Also, both ITOCHU International Inc. and ITOCHU Corporation are general
trading companies, and each has a 10% direct equity interest in Prime Deli,
Inc., a company that has just built and now operates a fresh-food commissary for
Southland. Southland will make payments to Prime Deli, Inc., in connection with
operation of the commissary in 1994. In connection with this, Southland provided
office space (with no rental charged) for use by employees of Prime Deli, Inc.
during the negotiations relating to the opening of this commissary. The value of
such space is believed to be less than $60,000 per year.
In addition, ITOCHU International Inc. and ITOCHU Corporation may, from time
to time, negotiate with the Company to provide additional goods or services.
As of December 31, 1993, Messrs. John P. Thompson, Jere W. Thompson and
their brother, Joe C. Thompson, Jr., as well as Clark J. Matthews, II, and one
former officer of the Company, were indebted to the Company under a split dollar
insurance arrangement. The Company has made advances to each insured to cover
the premiums due on an insurance policy obtained for them by the Company,
although no additional amounts were advanced in 1993 and no additional premiums
were paid during the year. The Company requires a promissory note and a
collateral assignment of the insurance policy to secure repayment of the amount
loaned, and the indebtedness is fully secured by the policy assignments. As of
December 31, 1993, the total amount of indebtedness outstanding was as follows:
John P. Thompson -- $496,020; Jere W. Thompson -- $349,974; Joe C. Thompson, Jr.
- -- $128,583 and Clark J. Matthews, II -- $158,919. Pursuant to the termination
of his Employment Agreement, no further amounts will be advanced to Joe C.
Thompson, Jr.
In addition, in February 1994, under the Company's relocation policy, a loan
of $204,300 was made to Stephen LeRoy, Vice President, Real Estate and Licensed
Operations, of the Company, to assist with his relocation at the Company's
request. As security for the loan, the Company was granted a security interest
in his old home and in the property purchased at the new location. Pursuant to
the terms of the loan, the Company is to be paid in full when Mr. LeRoy's old
home is sold.
SHAREHOLDER PROPOSALS
Any shareholder intending to present a proposal and wishing to have it
included in the Proxy Statement for the Company's 1995 Annual Meeting of
Shareholders, which is expected to be held during April or May 1995, must send
such proposal to the Company at its principal office, 2711 North
20
<PAGE>
Haskell Avenue, Dallas, Texas 75204, Attn: Secretary. Such proposal must be
received by the Company not later than December 1, 1994, and must comply with
the then current rules of the Securities and Exchange Commission relating to
shareholder proposals.
ANNUAL REPORT
The Annual Report of the Company for the year ended December 31, 1993 is
being mailed to shareholders with this Proxy Statement but such report is not
incorporated in this Proxy Statement and is not deemed to be a part of the proxy
soliciting material. A COPY OF SOUTHLAND'S ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED DECEMBER 31, 1993 (WITHOUT EXHIBITS) WILL BE FURNISHED TO
SHAREHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO: MANAGER, INVESTOR
RELATIONS, THE SOUTHLAND CORPORATION, 2711 NORTH HASKELL AVENUE, DALLAS, TEXAS
75204.
OTHER BUSINESS
Management knows of no other matters to be brought before this meeting.
However, if other business should come before this meeting, it is the intention
of each person named in the proxy to vote such proxy in accordance with his
respective judgment on such matters. Minutes of the last Annual Meeting of
Shareholders will be approved. Management's reports will be heard and received.
Neither the hearing of the reports nor the approval of the minutes will
constitute approval or disapproval of the matters set forth therein.
21
<PAGE>
APPENDIX
On the outside back cover of the Proxy Statement of The Southland Corporation
there is a map of the intersection of North Central Expressway and Lemmon Avenue
and North Central Expressway and Haskell Avenue, in Dallas, Texas, showing the
entrances to Cityplace Center.
<PAGE>
PROXY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, APRIL 27, 1994
THE SOUTHLAND CORPORATION
The undersigned hereby appoints Clark J. Matthews, II, John H. Rodgers and
Carol S. Hilburn, and each of them (acting by majority or if only one be
present, then by that one alone), my proxies, with full power of substitution,
to vote as directed below, for and in my name, place, and stead, all shares I
would be entitled to vote if personally present at the Annual Meeting of
Shareholders of The Southland Corporation to be held on April 27, 1994, and at
any adjournments thereof, as follows:
1. ELECTION OF DIRECTORS - Nominees: Masatoshi Ito; Toshifumi Suzuki; Clark J.
Matthews, II; Yoshitami Arai; Timothy N. Ashida; Jay W. Chai, Gary J. Fernandes;
Masaaki Kamata; Kazuo Otsuka; Asher O. Pacholder; Nobutake Sato; Tatsuhiro
Sekine; Jere W. Thompson; John P. Thompson.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
SOUTHLAND CORPORATION AND WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS
MARKED ON THE REVERSE SIDE. IF A CHOICE IS NOT INDICATED WITH RESPECT TO ITEMS
1. AND 2., THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES AND "FOR"
ITEM (2). THE PROXY HOLDERS WILL USE THEIR DISCRETION WITH RESPECT TO ANY MATTER
REFERRED TO IN ITEM 3.
(Please sign on the reverse side)
SEE REVERSE SIDE
<PAGE>
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
SHARES IN YOUR NAME
REINVESTMENT SHARES
1. Election of Directors (see reverse)
FOR / / WITHHELD / /
---------------------------------------------
For, except as marked to the contrary above.
2. Ratification of the appointment of the accounting firm of Coopers & Lybrand
as independent auditors of the Company for 1994.
FOR / / AGAINST / / ABSTAIN / /
3. Other Business - In their discretion, the proxies are authorized to vote
upon such other matters as may properly come before the Meeting or any
adjournments thereof.
SIGNATURE(S)________________________________________ DATE ______________
SIGNATURE(S)________________________________________ DATE ______________
DATE AND SIGN EXACTLY AS YOUR NAME APPEARS HEREON. WHEN SIGNING AS AN
ADMINISTRATOR, EXECUTOR, TRUSTEE, ATTORNEY, CORPORATE OFFICER, OR IN ANY OTHER
CAPACITY, SO INDICATE. RECEIPT OF 1993 ANNUAL REPORT AND MARCH 25, 1994,
NOTICE AND PROXY STATEMENT IS HEREBY ACKNOWLEDGED.
