<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] 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 Section 240.14a-11(c) or Section 240.14a-12
SUPERVALU INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Not Applicable
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
LOGO
SUPERVALU INC.
NOTICE OF 1996 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, JUNE 27, 1996
TO THE STOCKHOLDERS OF SUPERVALU INC.:
Notice is hereby given that the Annual Meeting of Stockholders of SUPERVALU
INC. (the "Company") will be held on Thursday, June 27, 1996, at 10:30 a.m.,
local time, at The Minneapolis Convention Center, 1301 Second Avenue South,
Minneapolis, Minnesota 55403 for the following purposes:
. to elect four directors of the Company;
. to vote on ratification of the appointment of Deloitte & Touche LLP to
audit the books and accounts of the Company for the fiscal year ending
February 22, 1997;
. to vote on approval of the Non-Employee Directors Deferred Stock Plan, a
copy of which is attached as Exhibit A to the Proxy Statement;
. to vote on certain amendments to the 1983 Employee Stock Option Plan, a
copy of which is attached as Exhibit B to the Proxy Statement;
. to consider a stockholder proposal; and
. to transact such other business as may properly come before the meeting.
Common and Preferred Stockholders of record at the close of business on May
8, 1996, are entitled to one vote for each share held of record at that time.
IMPORTANT: We hope you will be able to attend the meeting in person and you
are cordially invited to attend. If you expect to attend the meeting, please
complete the appropriate box on the proxy card when you return your proxy.
NOTE THAT THIS YEAR'S ANNUAL MEETING IS AT THE MINNEAPOLIS CONVENTION CENTER.
Parking is available in the Plaza municipal parking ramp and the Orchestra
Hall ramp located across the street from The Minneapolis Convention Center. A
map showing the location of the Convention Center and designated parking areas
is included on the enclosed proxy card. If you need special assistance because
of a disability, please contact the Corporate Secretary at P.O. Box 990,
Minneapolis, MN 55440.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND RETURN YOUR
PROXY PROMPTLY. It is important that all stockholders, however small their
holdings, execute, date and return the proxy, utilizing the enclosed envelope
to which no postage need be affixed if mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
TERESA H. JOHNSON
Secretary
May 24, 1996
<PAGE>
SUPERVALU INC.
P.O. BOX 990
MINNEAPOLIS, MINNESOTA 55440
PROXY STATEMENT
This Proxy Statement is furnished for solicitation by the Board of Directors
of SUPERVALU INC. (hereinafter referred to as the "Company") of proxies in the
enclosed form from holders of Common and Preferred Stock to be voted at the
Annual Meeting of Stockholders to be held on June 27, 1996, at 10:30 a.m.,
local time, at The Minneapolis Convention Center, 1301 Second Avenue South,
Minneapolis, Minnesota 55403 and at any adjournment of the meeting. This Proxy
Statement and accompanying form of proxy will be first mailed or given to
stockholders on or about May 20, 1996.
The cost of soliciting proxies will be borne by the Company. Arrangements
will be made with brokerage houses, custodians, nominees and other fiduciaries
to send proxy material to their principals, and the Company will reimburse
them for their expenses. In addition to solicitation by mail, certain officers
and directors of the Company, who will receive no compensation for their
services other than their regular salaries, may solicit proxies by telephone,
telegraph and personally. The Company has also retained Georgeson & Company,
Inc. to assist in the solicitation of proxies for an estimated fee of $10,000
plus out-of-pocket expenses.
The Company has two classes of capital stock outstanding: Common Stock, par
value $1 per share, and Preferred Stock, no par value. The holders of Common
Stock and Preferred Stock of record at the close of business on May 8, 1996,
are entitled to vote at the meeting. Holders of Common Stock and Preferred
Stock are entitled to one vote for each share held of record, voting together
as one class, on each proposal being voted upon; 67,490,492 shares of Common
Stock and 5,876 shares of Preferred Stock are eligible to vote at the meeting.
Shares of Common Stock and Preferred Stock represented by proxies in the
form solicited will be voted in the manner directed by the holder of such
shares, and, if no direction is made, such shares will be voted for the
proposals in Items 1 through 4, including the election of the nominees for
directors; such shares will be voted against the stockholder proposal in Item
5. If an executed proxy card is returned and the stockholder has voted
"abstain" on any matter (or "withhold authority" as to the election of any
director), the shares represented by such proxy will be considered present at
the meeting for purposes of determining a quorum and for purposes of
calculating the vote, but will not be considered to have been voted in favor
of such matter. If an executed proxy is returned by a broker holding shares in
street name which indicates that the broker does not have discretionary
authority as to certain shares to vote on one or more matters, such shares
will be considered present at the meeting for purposes of determining a
quorum, but will not be considered to be represented at the meeting for
purposes of calculating the vote with respect to such matters. A stockholder
may revoke his or her proxy at any time before it is voted by written notice
to the Secretary, or by filing with the Secretary another proxy bearing a
later date, or by appearing and voting at the meeting. The affirmative vote of
a majority of the shares of Common Stock and Preferred Stock entitled to vote,
present in person or by proxy at the 1996 Annual Meeting of Stockholders and
voting together as one class, will be necessary for the election of directors
and the approval of each other matter submitted to the stockholders for
approval at the Annual Meeting.
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS
The following table sets forth information with respect to the only persons
or groups known to the Company as of April 1, 1996, to be the beneficial owner
of more than 5% of its Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS OF NATURE OF PERCENT
BENEFICIAL HOLDER BENEFICIAL OWNERSHIP OF CLASS
------------------- -------------------- --------
<S> <C> <C>
INVESCO PLC 6,775,500 9.97%
11 Devonshire Square
London, EC2M 4YR
England (1)
FMR Corp. 6,039,562 8.89%
82 Devonshire Street
Boston, MA 02109 (2)
Sanford C. Bernstein & Co., Inc. 4,480,063 6.6%
One State Street Plaza
New York, NY 10004 (3)
</TABLE>
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(1) Based on information in a Schedule 13G Report dated February 2, 1996,
delivered to the Company and indicating that INVESCO PLC and certain of
its subsidiaries are the beneficial owners of 6,775,500 shares of Common
Stock and possess shared voting and dispositive power with respect to such
shares as of February 2, 1996.
(2) Based on information in a Schedule 13G Report dated February 14, 1996,
delivered to the Company and indicating that FMR Corp. and certain of its
subsidiaries and affiliates are beneficial owners of 6,039,562 shares of
Common Stock and possess sole dispositive power with respect to all such
shares and sole voting power with respect to 205,471 of such shares as of
December 31, 1995.
(3) Based on information in a Schedule 13G Report dated February 7, 1996,
delivered to the Company and indicating that Sanford C. Bernstein & Co.,
Inc. is beneficial owner of 4,480,063 shares of Common Stock and possesses
sole dispositive power with respect to all such shares, sole voting power
with respect to 2,610,200 shares, and shared voting power with respect to
458,289 shares as of December 31, 1995.
2
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information, as of April 1, 1996, concerning
beneficial ownership of the Company's Common Stock by each director and
nominee, by each of the executive officers named in the Summary Compensation
Table on page 9, and by all directors and executive officers as a group. The
definition of beneficial ownership for proxy statement purposes includes
shares over which a person has sole or shared voting power, and shares over
which a person has sole or shared dispositive power, whether or not a person
has any economic interest in the shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OPTIONS
NAME OF OF BENEFICIAL EXERCISABLE WITHIN PERCENT OF
BENEFICIAL OWNER OWNERSHIP(2) 60 DAYS(3) CLASS
---------------- ----------------- ------------------ ----------
<S> <C> <C> <C>
Herman Cain 1,000 4,200 *
Stephen I. D'Agostino 800 4,200 *
Edwin C. Gage 15,700 4,200 *
Vernon H. Heath 2,000 4,200 *
William A. Hodder 1,400 3,000 *
Garnett L. Keith, Jr. 2,000 4,200 *
Richard L. Knowlton 1,000 1,200 *
Charles M. Lillis 1,000 -0-
Harriet Perlmutter 6,700 4,200 *
Carole F. St. Mark 1,700 3,000 *
Winston R. Wallin 1,000 4,200 *
Michael W. Wright(1) 118,889 235,826 *
Laurence L. Anderson 53,370 114,029 *
Phillip A. Dabill 43,595 88,357 *
Jeffrey C. Girard 11,011 90,550 *
Jeffrey Noddle 25,415 102,890 *
All directors and 393,923 1,117,377 (3)
executive officers
as a group
(30 persons)
</TABLE>
- --------
*Less than 1%.
(1) Includes 5,600 shares held by or for a child of Mr. Wright, as to which
shares he disclaims beneficial ownership; and 8,000 shares held in a
retirement trust for Mr. Wright.
(2) The persons listed have sole voting and investment power with respect to
the shares listed except the following persons have shared voting and
investment power: Ms. Perlmutter: 1,500 shares; Mr. Wright: 21,776 shares;
Mr. Gage: 4,000 shares; and Mr. Anderson: 15,855 shares.
(3) All directors and executive officers as a group (30 persons) beneficially
owned 1,511,300 shares of the outstanding Common Stock constituting
approximately 2.2% of the outstanding Common Stock of the Company as of
April 1, 1996. Options exercisable within 60 days are deemed beneficially
owned.
SECTION 16(A) REPORTING
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
holders of more than 10% of the Company's Common Stock to file with the
Securities and Exchange Commission (the "Commission") initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the
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<PAGE>
Company. The Company believes that during the fiscal year ended February 24,
1996, its directors, executive officers, and holders of more than 10% of the
Company's Common Stock complied with all Section 16(a) filing requirements,
except that Mr. Dabill amended one transaction contained in a previously filed
Form 5 and Mr. Shives amended a previously filed Form 5 to reflect one
transaction that had been inadvertently omitted. In making these statements,
the Company has relied upon the written representations of its directors and
executive officers.
ELECTION OF DIRECTORS
(ITEM 1)
Pursuant to the Bylaws of the Company, the Board is divided into three
classes with the number of directors to be divided as equally as possible
among the three classes. Directors are elected for staggered terms of three
years. The Bylaws of the Company also provide that in the event of any vacancy
on the Board of Directors occurring during the year, the vacant directorship
may be filled by the vote of the remaining directors until the next Annual
Meeting, at which time the stockholders shall elect a director to fill the
balance of the unexpired term or the term established by the Board pursuant to
the Bylaws. Edwin C. Gage, Garnett L. Keith, Jr., Richard L. Knowlton and
Carole F. St. Mark are nominated for three-year terms expiring in 1999. There
are currently 12 members of the Board of Directors.
The Board of Directors is informed that each of the four nominees is willing
to serve as a director; however, if any nominee is unable to serve or for good
cause will not serve, the proxy may be voted for such other person as the
proxies shall, in their discretion, determine.
The following sets forth information, as of April 1, 1996, concerning the
four nominees for election as directors of the Company and as to the eight
directors of the Company whose terms of office will continue after the Annual
Meeting.
NOMINEES FOR ELECTION AS DIRECTORS FOR
TERMS EXPIRING AT THE ANNUAL MEETING IN 1999
EDWIN C. GAGE, age 55; Chairman and Chief Executive Officer of GAGE
Marketing Group, LLC (an integrated marketing services company) since 1991.
Mr. Gage was President and Chief Executive Officer of Carlson Companies, Inc.
(a diversified services company principally engaged in hotel, restaurant,
travel services and incentives businesses) from 1989 to 1991, and from 1984 to
1989 he was President and Chief Operating Officer of that company. Mr. Gage
was elected a director of the Company in 1986. He is also a director of
Fingerhut Companies, Inc.
GARNETT L. KEITH, JR., age 60; Vice Chairman of The Prudential Insurance
Company of America (an insurance company) since 1984. Mr. Keith was elected a
director of the Company in 1984. He is also a director of Pan-Holding Societe
Anonyme.
RICHARD L. KNOWLTON, age 63; Chairman of the Hormel Foundation (a public
foundation) since 1995. Mr. Knowlton was Chairman of the Board of Hormel Foods
Corporation (a food manufacturing company) from 1981 to 1995. From 1979 to
1992 Mr. Knowlton was President and from 1981 to 1993 he also served as Chief
Executive Officer of that company. He is also a director of ReliaStar
Financial Corp., First Bank System, Inc. and a member of the Board of
Trustees, Mayo Foundation. Mr. Knowlton was elected a director of the Company
in 1994.
CAROLE F. ST. MARK, age 53; President and Chief Executive Officer of Pitney
Bowes Business Services, a unit of Pitney Bowes, Inc. (a company engaged in
the production and supply of business and business-related products and
services) since 1994. From 1990 to 1994, Ms. St. Mark was
4
<PAGE>
President of Pitney Bowes Logistics Systems and Business Services, from 1988
to 1990, she was President of the Business Supplies and Services Division, and
from 1985 to 1988 she was Vice President, Corporate Planning & Development of
Pitney Bowes, Inc. Ms. St. Mark was elected a director of the Company in 1989.
She is also a director of Grand Metropolitan, PLC.
DIRECTORS WHOSE TERMS EXPIRE
AT THE ANNUAL MEETING IN 1998
HERMAN CAIN, age 50; Chairman of the Board and Chief Executive Officer of
Godfather's Pizza, Inc. (a company engaged in the operation and franchising of
pizza restaurants) since 1986. Mr. Cain was elected a director of the Company
in 1991. He is also a director of Whirlpool Corporation, Federal Reserve Bank
of Kansas City, Utilicorp United, Inc. and Nabisco Holdings, Inc.
STEPHEN I. D'AGOSTINO, age 62; President and Chief Executive Officer of
D'Agostino Enterprises (an investment management company) since 1994. From
1992 to 1994 he served as Chairman of D'Agostino Investments (an investment
management company). From 1988 to 1992, he was Chairman of Lord Capital
Corporation (an investment management company). Mr. D'Agostino was elected a
director of the Company in 1983. He is also a director of Catalina Marketing
Corp. and Kysor Industrial Corporation.
CHARLES M. LILLIS, age 54; Executive Vice President of U S WEST, Inc. (a
diversified multimedia communications company) since 1987, and President and
Chief Executive Officer of U S WEST Media Group, a division of U S WEST, Inc.,
since April 1995. Mr. Lillis is also a director of Commercial Federal Bank
Corp.
MICHAEL W. WRIGHT, age 57; Chairman of the Board, President, and Chief
Executive Officer of the Company since 1982. Mr. Wright was elected a director
of the Company in 1977. He is also a director of Honeywell Inc., The Musicland
Group, Inc., ShopKo Stores, Inc. and Norwest Corporation.
DIRECTORS WHOSE TERMS EXPIRE
AT THE ANNUAL MEETING IN 1997
VERNON H. HEATH, age 67; Chairman of the Board of Rosemount Office Systems,
Inc. (an office furnishings company) since October, 1994. Mr. Heath was
Chairman of the Board of Rosemount Inc. (a company engaged in the manufacture
of measurement and control instrumentation) from 1991 to February, 1994. From
1968 to 1991, he was Chairman and Chief Executive Officer of that company. Mr.
Heath was elected a director of the Company in 1982. He is also a director of
Medtronic, Inc.
WILLIAM A. HODDER, age 64; Chairman, Chief Executive Officer and a Director
of Donaldson Company, Inc. (a manufacturer of filtration and noise abatement
equipment) since 1984. Mr. Hodder was elected a director of the Company in
1990. He is also a director of Norwest Corporation, The Tennant Company,
ReliaStar Financial Corp. and The Musicland Group, Inc.
HARRIET PERLMUTTER, age 64; Trustee of the Papermill Playhouse (The State
Theatre of New Jersey). Ms. Perlmutter was elected a director of the Company
in 1978.
WINSTON R. WALLIN, age 70; Chairman of the Board and a director of
Medtronic, Inc. (a manufacturer of therapeutic medical devices). Mr. Wallin
has been a director of Medtronic since 1978 and Chairman since 1986. From 1985
to his retirement in 1991, Mr. Wallin was President and Chief Executive
Officer of that company. Mr. Wallin was elected a director of the Company in
1991. He is also a director of Bemis Company, Inc.
5
<PAGE>
MEETINGS AND COMMITTEES
OF THE BOARD OF DIRECTORS
The Board of Directors held six meetings during the last full fiscal year of
the Company. Each incumbent director attended 75 percent or more of the
aggregate of (i) the total number of meetings of the Board and (ii) the total
number of meetings held by all Committees on which such director served.
The Company has an Audit Committee consisting of six directors who are not
employees of the Company: Mr. Keith (Chairperson), Mr. D'Agostino, Mr. Heath,
Mr. Knowlton, Mr. Lillis, and Ms. Perlmutter. Two meetings of the Committee
were held during the last fiscal year. The Audit Committee recommends to the
full Board of Directors the selection of independent auditors, reviews the
activities and reports of the independent auditors, monitors the internal
audit controls of the Company, and has such other duties as may be provided by
the Board of Directors.
The Company has an Executive Personnel and Compensation Committee consisting
of six directors who are not employees of the Company: Mr. Gage (Chairperson),
Mr. Cain, Mr. Hodder, Mr. Knowlton, Ms. St. Mark and Mr. Wallin. Three
meetings of the Committee were held during the last fiscal year and the
Committee also took three actions by Unanimous Written Consent. The Committee
is responsible for reviewing, approving and reporting to the Board of
Directors on compensation of corporate officers, adopting and changing major
Company compensation programs, and election recommendations for corporate
officers and succession planning. The Committee also grants stock options,
stock appreciation rights, and awards under the Company's Executive Incentive
Bonus Plan, Long-Term Incentive Plan, 1993 Stock Plan, 1983 Employee Stock
Option Plan, and the Annual Cash Bonus Plan for Designated Corporate Officers.
The Company has a Director Affairs Committee consisting of six members of
the Board of Directors: Mr. Hodder (Chairperson), Mr. Heath, Ms. Perlmutter,
Ms. St. Mark, Mr. Wallin and Mr. Wright. The Committee met four times during
the last fiscal year. The Committee is responsible for recommending to the
Board of Directors nominees for election to the Board of Directors of the
Company, and policies and procedures for the Board of Directors. The Committee
considers candidates for Board membership suggested by directors, officers, or
stockholders of the Company and makes an evaluation of each candidate.
Stockholders may suggest candidates for consideration by the Committee by
submitting the candidate's name to the Secretary of the Company. Any
stockholder wishing to nominate a candidate to be considered by the Committee
must furnish a certificate of nomination signed by the stockholder setting
forth the name, address and qualifications of the nominee and the nominee's
written consent to be named in the proxy statement and to serve as a director
if nominated and elected. To be considered by the Committee, any certificate
of nomination for nominees to be elected at the 1997 Annual Meeting of
Stockholders must be received by the Company on or before April 27, 1997. The
Committee will evaluate each candidate and make its recommendation to the full
Board of Directors.
Stockholders may nominate persons for election to the Board of Directors, at
an annual meeting of stockholders, by timely notice in proper written form to
the Secretary of the Company. The Company's Bylaws provide that to be timely,
a stockholder's notice shall be delivered to the Secretary at the principal
executive offices of the Company not less than 60 days nor more than 90 days
prior to the first anniversary of the preceding year's annual meeting;
provided, however, that in the event that the date of the annual meeting is
advanced by more than 30 days or delayed by more than 60 days from such
anniversary date, notice by the stockholder to be timely must be so delivered
not earlier than the 90th day prior to such annual meeting and not later than
the close of business on the later of the 60th day prior to such annual
meeting or the 10th day following the day on which public announcement of the
date of such meeting is first made. To be in proper form, the stockholder's
notice shall set forth in writing (a) as to each person whom the stockholder
proposes to nominate for election or reelection as a director, all information
relating to such person that is required to be disclosed in solicitations of
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<PAGE>
proxies for election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Exchange Act, including, without
limitation, such person's written consent to be named in the proxy statement
as a nominee and to serving as a director if elected; and (b) as to the
stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination is made (i) the name and address of such stockholder, as
they appear on the Company's books, and of such beneficial owner, and (ii) the
class and number of shares of the Company that are owned beneficially and of
record by such stockholder and such beneficial owner. However, in the event
that the number of directors to be elected to the Board of Directors of the
Company is increased and there is no public announcement naming all of the
nominees for director or specifying the size of the increased Board of
Directors made by the Company at least 70 days prior to the first anniversary
of the preceding year's annual meeting, a stockholder's notice shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the Company not later than the close of
business on the 10th day following the day on which such public announcement
is first made by the Company. "Public announcement" shall mean disclosure in a
press release reported by the Dow Jones News Service, Associated Press or
comparable national news service or in a document publicly filed by the
Company with the Commission pursuant to Sections 13, 14, or 15(d) of the
Exchange Act.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company or one of its subsidiaries do not
receive additional remuneration as directors. Directors who are not employees
currently receive the following directors' fees: a retainer of $20,000 per
year plus $1,300 for each Board meeting attended and $700 for each Committee
meeting attended. Committee chairpersons receive an additional $300 for each
Committee meeting attended, and an additional annual retainer in the following
amounts: Audit Committee: $2,000; Executive Personnel and Compensation
Committee: $3,000; Finance Committee: $1,000; and Director Affairs Committee:
$1,000. Directors also participate in a retirement/consulting plan which
currently provides that non-employee directors who have served at least four
years will receive an annual fee equal to the annual Board retainer fee in
effect on their termination date, payable for the number of years of Board
service, not to exceed ten years. A former director receiving payments under
the retirement/consulting program must be available to management for
consultation services and not engage in any activity directly competitive to
the Company's business. Under the new compensation structure described below,
the Directors' retirement/consulting program will be discontinued and replaced
with a deferred retainer payable in Company Common Stock.
The Director Affairs Committee has approved a new compensation structure for
non-employee directors which will become effective June 27, 1996. Under the
new program, directors who are not employees will receive the following
compensation: cash retainer of $20,000 per year; deferred retainer of $15,000
per year payable in Company Common Stock pursuant to the Non-Employee
Directors Deferred Stock Plan (which is proposed for approval by the
stockholders at the 1996 Annual Meeting); $1,300 for each Board meeting
attended; and $1,000 for each Committee meeting attended. Committee
chairpersons will receive the same meeting attendance fee as all other
Committee members but will receive an annual retainer in the following
amounts: Audit Committee: $2,500; Executive Personnel and Compensation
Committee: $4,000; Finance Committee: $2,500; and Director Affairs Committee:
$2,500. Effective June 27, 1996, the Directors' retirement/consulting program
will be discontinued. Benefits previously earned by directors will be frozen
and will be limited as follows: Directors first elected to the Company's Board
prior to June 27, 1996 will receive at termination an annual payment equal to
$20,000 per year for the number of years of Board service prior to June 27,
1996, not to exceed ten years. Directors first elected to the Company's Board
on or after June 27, 1996 will not participate in the Directors'
retirement/consulting program.
Non-employee directors may elect to defer payment of their directors' fees
under a Deferred Compensation Plan, until they no longer serve as a director;
the accrued amounts in each account are
7
<PAGE>
credited quarterly with interest until payment is made from the plan. Interest
is credited on accruals prior to July 1, 1996, at the rate of 11%; accruals
after July 1, 1996, will be credited with interest at the prime interest rate
as published in The Wall Street Journal on the first business day of January
each year. The interest rate for the balance of 1996 will be 8.5%. In
addition, directors may elect to defer payment of their directors' fees under
the Company's Executive Deferred Compensation Plans; depending on the date the
election to defer was made, amounts deferred under such plans accrue interest
at either four percent over the average rate for the twelve months preceding
the beginning of each plan year of Moody's Corporate Bond Yield Average-
Monthly Average Corporates as published by Moody's Investors Service, Inc.,
120% of the ten year rolling average of ten year U. S. Treasury Notes, or 105%
of the ten year rolling average of ten year U.S. Treasury Notes.
Beginning July 1, 1996 non-employee directors will also be entitled to elect
to defer payment of their directors' fees under the Non-Employee Directors
Deferred Stock Plan ("Deferred Stock Plan"), which is proposed for approval by
the stockholders at the 1996 Annual Meeting. Amounts credited to the Deferred
Stock Plan in lieu of cash compensation (but not the $15,000 annual deferred
retainer) will be increased by 10%. A deferred stock account will be
established for each director which will be credited with shares of Company
Common Stock with a market value equal to the Company's cash contribution. The
Company has established an irrevocable grantor trust pursuant to which the
Company will contribute funds and the trust will purchase shares of Company
Common Stock in the amounts credited to each director's deferred stock account
under the Deferred Stock Plan. The directors will not have any preferred claim
on the trust assets, which will remain subject to the claims of the Company's
creditors. Each director will be entitled to direct the trustee to vote all
shares of Common Stock allocated to the director's account in the trust. The
trust will distribute the shares of Company Common Stock to each director as
payments become due pursuant to the terms of the Deferred Stock Plan. See Item
3 below for a more complete description of the Deferred Stock Plan.
Under the Company's 1983 Employee Stock Option Plan, each non-employee
director serving on the Board of Directors on June 30, 1992 was granted an
option on that date to purchase 3,000 shares of Common Stock and each non-
employee director first elected or appointed to the Board of Directors after
June 30, 1992 and during the term of the plan will be granted, as of the date
of such election or appointment, an option to purchase 3,000 shares of Common
Stock. After the initial grant to each non-employee director, each such
director is granted an option to purchase 3,000 shares of Common Stock as of
each even numbered anniversary of the initial grant if such director's term of
office continues thereafter. All options granted or to be granted to non-
employee directors have an exercise price equal to the fair market value of
the shares on the date of grant. All options granted to directors become
exercisable in installments over a period of three years from the date of
grant. If the stockholders approve the proposed amendments to the 1983
Employee Stock Option Plan included as Item 4 to this Proxy Statement, future
option grants to directors will be immediately exercisable in full.
8
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning compensation for
services in all capacities to the Company and its subsidiaries for each of the
last three fiscal years for the Company's Chief Executive Officer and the
other four most highly compensated executive officers in fiscal 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------- ---------------------
SECURITIES
OTHER RESTRICTED UNDERLYING
ANNUAL STOCK OPTIONS/ ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSTION AWARDS SARS COMPENSATION
POSITION YEAR ($) ($) ($) ($)(1) (#)(2) ($)(3)
------------------ ---- -------- -------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
MICHAEL W. WRIGHT 1996 $780,000 $438,516 $ 1,254 $ 0 150,000 $1,848
Chairman, President and 1995 780,000 0 7,292 0 50,000 6,120
Chief Executive Officer 1994 675,000 801,900 9,433 0 42,792 5,846
LAURENCE L. ANDERSON 1996 402,500 193,864 3,149 0 45,000 1,848
Executive Vice President 1995 387,000 19,350 2,569 321,250 25,000 6,120
1994 365,000 352,737 13,593 0 20,629 5,846
PHILLIP A. DABILL 1996 355,000 167,436 392 0 45,000 1,848
Executive Vice President 1995 338,000 16,900 1,633 0 18,750 6,120
1994 325,000 305,825 8,097 0 15,000 5,846
JEFFREY C. GIRARD 1996 353,600 166,775 192 0 45,000 1,848
Executive Vice President 1995 340,000 17,000 1,872 0 18,750 6,120
and Chief Financial 1994 325,000 309,075 8,775 0 17,250 5,846
Officer
JEFFREY NODDLE 1996 387,300 190,416 146 0 55,000 1,848
Executive Vice President 1995 327,003 16,350 4,443 0 18,750 6,120
1994 310,000 294,810 8,705 0 15,000 5,846
</TABLE>
- --------
(1) In fiscal 1995, Mr. Anderson received a special award of 10,000 shares of
restricted stock. The 10,000 shares awarded to Mr. Anderson had a fair
market value as of February 24, 1996 of $318,750. No other shares of
restricted stock are held by the named officers. For the purposes of this
table, shares of restricted stock are valued based on the closing price of
the Company's Common Stock on the date of grant. Dividends are paid on all
shares of restricted stock.
(2) A limited stock appreciation right has been granted in tandem with each
option reported in the table, and is exercisable for cash in lieu of such
option only upon a Change of Control.
(3) Amounts of All Other Compensation are the amounts contributed during the
fiscal year by the Company under the Pre-Tax Savings and Profit Sharing
(401k) Plan.
9
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information on grants of stock options and
stock appreciation rights for fiscal 1996 to the named executive officers.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK
PRICE APPRECIATION
FOR PRIOR COLUMNS
INDIVIDUAL GRANTS OPTION TERM ($)(4) ANNUALIZED(4)(5)
----------------------------------------------- ------------------- ----------------
NUMBER OF PERCENT OF
SECURITIES TOTAL
UNDERLYING OPTIONS/SARS EXERCISE
OPTIONS/SARS GRANTED TO OR BASE
GRANTED EMPLOYEES IN PRICE EXPIRATION
NAME (#)(3) FISCAL YEAR ($/SHARE) DATE 5% 10% 5% 10%
---- ------------ ------------ --------- ---------- -------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael W. Wright....... 50,000(1) 3.0% 28.25 6/26/05 $888,006 $2,250,205 88,801 225,021
100,000(2) 5.9% 28.25 6/26/00 -0- 1,724,691 -0- 344,938
Laurence L. Anderson.... 15,000(1) .9% 26.38 4/11/05 248,720 630,256 24,872 63,026
30,000(2) 1.8% 28.25 6/26/00 -0- 517,407 -0- 103,481
Phillip A. Dabill....... 15,000(1) .9% 26.38 4/11/05 248,720 630,256 24,872 63,026
30,000(2) 1.8% 28.25 6/26/00 -0- 517,407 -0- 103,481
Jeffrey C. Girard....... 15,000(1) .9% 26.38 4/11/05 248,720 630,256 24,872 63,026
30,000(2) 1.8% 28.25 6/26/00 -0- 517,407 -0- 103,481
Jeffrey Noddle.......... 25,000(1) 1.5% 26.38 4/11/05 414,534 1,050,427 41,453 105,043
30,000(2) 1.8% 28.25 6/26/00 -0- 517,407 -0- 103,481
</TABLE>
Total potential realizable value for the five officers who received stock
option grants is $2,048,700 and $8,985,719, at the 5% and 10% stock price
growth assumptions respectively. Assuming 5% and 10% stock price growth over a
period of 10 years commencing April 1, 1995, the increase in total stockholder
value from stock price appreciation alone for all shares outstanding on that
date would be $1,180,320,000 and $2,991,500,866, respectively.
- -------
(1) The term of these options is 10 years with 20% of such options exercisable
upon grant and an additional 20% becoming exercisable on each of the next
four anniversary dates of grant, except that all such options become fully
exercisable upon a Change of Control.
(2) These options are a special grant of "price vesting" options with a term
of 5 years. "Price vesting" options will become exercisable only (i) if
the optionee remains in the employ of the Company for an additional two
years following the grant date and the Company's Common Stock attains an
average price of $40 per share for 20 consecutive trading days prior to
the expiration of the options or (ii) upon a Change of Control.
(3) The exercise price may be paid by delivery of already-owned shares, and
tax withholding obligations related to exercise may be paid by delivery of
already-owned shares or offset of the underlying shares. A "restoration"
option (also referred to as a "reload" option) may be granted when the
payment of the exercise price of another option (the "Base Option") is
made by delivery of the Company's Common Stock; each restoration option is
for the number of shares of Common Stock tendered as payment for the
exercise price and withheld for tax purposes, upon exercise of the Base
Option. The exercise price of each restoration option is the fair market
value of the Company's Common Stock on the date of grant. Each restoration
option is exercisable in full on the date of grant, and will expire on the
same date as the Base Option. All options reported in the table are
entitled to restoration options. A limited stock appreciation right has
been granted in tandem with each option reported in the table, and is
exercisable for cash in lieu of such option only upon a Change of Control.
(4) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent on the future
performance of the Company and overall market conditions. There can be no
assurance that the amounts reflected in this table will be achieved.
(5) Computed by dividing potential realizable value at the assumed annual
rates of stock price appreciation by the term of the option.
10
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table provides information on option exercises in fiscal 1996
by the named executive officers and the value of such officers' unexercised
options/SARs at fiscal year end (February 24, 1996).
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTIONS/SARS AT FISCAL IN-THE-MONEY OPTIONS/SARS
ON VALUE YEAR-END (#) AT FISCAL YEAR-END ($)
EXERCISE REALIZED ------------------------- -------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael W. Wright....... 15,000 $117,113 235,826 187,118 $1,243,988 $530,000
Laurence L. Anderson.... -0- -0- 99,603 72,552 251,879 203,234
Phillip A. Dabill....... 5,000 44,663 75,733 62,126 246,089 190,960
Jeffrey C. Girard....... -0- -0- 76,900 63,600 316,452 194,122
Jeffrey Noddle.......... 3,500 24,920 88,841 69,551 327,650 232,013
</TABLE>
- --------
(1) The value received is in the form of stock ownership as none of such
shares acquired upon exercise by the named executive officer have been
sold.
PENSION PLANS
The following table sets forth various estimated maximum annual benefits
which would become payable upon retirement at age 65 under the combination of
the Company's tax-qualified defined benefit retirement plan, the Non-qualified
Supplemental Executive Retirement Plan (or, if applicable, the Excess Benefits
Plan) maintained for certain highly compensated employees, and the "Retirement
Benefit Plan Account" of the Company's deferred compensation plans, to
participants in the final average pay and years of credited service categories
indicated. The table does not reflect the $120,000 per year limitation on
annual benefits payable from the plans imposed by Section 415 of the Code, nor
the $150,000 per year limitation on compensation included in final annual
average pay imposed by Section 401(a)(17) of the Code; the Company's Non-
qualified Supplemental Executive Retirement Plan and Excess Benefits Plan
allow payment of additional benefits so that retiring employees may receive,
in the aggregate, the benefits they would have been entitled to receive had
such Code Sections not imposed maximum limitations.
<TABLE>
<CAPTION>
YEARS OF SERVICE(1)
FINAL ANNUAL ---------------------------------------------------------------
AVERAGE PAY(2) 15 20 25 30
-------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 250,000 $ 55,875 $ 74,500 $ 93,125 $111,750
450,000 103,875 138,500 173,125 207,750
650,000 151,875 202,500 253,125 303,750
850,000 199,875 266,500 333,125 399,750
1,350,000 319,875 423,500 526,125 625,750
1,800,000 427,875 567,500 705,125 841,750
</TABLE>
- --------
(1) The above calculations of annual benefits estimated to be payable upon
normal retirement are computed using the straight-life annuity method and
are necessarily based upon certain assumptions, including (a) that the
employee remains in the employ of the Company or a subsidiary until the
normal retirement age of 65 (although retirement is permitted at age 62
without benefit reduction because of age); and (b) that the Company's
present retirement plans remain in force until the retirement date.
Benefits under such plans are not reduced by the participant's Social
Security benefit.
(2) Includes salary and bonus.
11
<PAGE>
As to each of the individuals named in the Summary Compensation Table above,
their final annual average pay and credited years of service under the plans
as of February 24, 1996 were as follows: Mr. Wright: $1,266,901, 19 years; Mr.
Anderson: $561,736, 21.3 years; Mr. Dabill: $509,832, 33.6 years; Mr. Girard:
$510,527, 5.5 years; and Mr. Noddle: $500,026, 19.8 years.
SEVERANCE AGREEMENTS AND
CHANGE-IN-CONTROL ARRANGEMENTS
The Company has entered into change of control severance agreements (the
"Severance Agreements") with officers of the Company, including those
identified in the Summary Compensation Table above. The Severance Agreements
provide that, if, within two years after a Change of Control (as defined
therein), the Company terminates the individual's employment other than for
Cause (as defined therein) or disability, or the individual terminates his or
her employment for Good Reason (as defined therein), then the individual will
be entitled to a lump-sum cash payment equal to (1) a multiple of one, two or
three times the individual's annual base salary, plus (2) a multiple of one,
two or three times his or her average annual bonus for the three fiscal years
immediately preceding the date of termination. Such multiple is three for Mr.
Wright; two for Mr. Anderson, Mr. Dabill, Mr. Girard and Mr. Noddle; and one
or two for all other officers of the Company. Each individual would also
receive his or her salary through the date of termination, all other amounts
owed to the individual at the date of termination under the Company's benefit
plans, and a lump-sum retirement benefit equal to the difference between (a)
the actuarial equivalent of the benefit the individual would receive under the
Company's retirement plans if he or she remained employed by the Company at
the compensation level provided by the Severance Agreement for a one, two or
three year period following the date of termination, and (b) the actuarial
equivalent of the benefit to which the individual is otherwise then entitled
under the Company's retirement plans. In addition, under such circumstances,
the individual will be entitled to continued medical coverage, including
family coverage, for a one, two or three year period after the date of
termination. Mr. Wright's Severance Agreement provides that any termination by
him during the 30-day period immediately after the six-month anniversary of
the Change of Control will be considered to be for Good Reason. The Severance
Agreements contain provisions designed to deal with the golden parachute tax
rules. These provisions would decrease the severance benefits owed to the
individual, but only if the result is to give the individual a larger after-
tax benefit than if the payments are not reduced. The individual is permitted
to elect which payments would be reduced.
Certain of the Company's benefit plans and related agreements contain
provisions intended to preserve the economic benefits conferred thereby in the
event of a Change of Control (as defined in such plans or agreements).
Outstanding stock options, as well as performance shares and restricted stock
awards, become fully vested upon a Change of Control. Outstanding stock
appreciation rights also become exercisable upon a Change of Control, allowing
the holder to receive cash instead of exercising the related stock option.
Amounts payable under the Executive Deferred Compensation Plans are to be
maintained following a Change of Control and may be increased by 130% to deal
with the golden parachute tax rules. The Company's retirement plans provide
for full vesting if employment terminates under specified circumstances
following a Change of Control, and preserve any excess plan assets for five
years following a Change of Control for the benefit of plan participants at
the time of a Change of Control.
The Company has established an irrevocable grantor trust under which the
Company may set aside funds in the future at the Board of Directors'
discretion (except that if a Change of Control, as defined therein, occurs
with respect to the Company, such setting aside of funds shall occur
automatically) to satisfy the Company's obligations under certain of its
retirement, deferred compensation and other benefit plans. The participants in
those plans do not have any preferred claim
12
<PAGE>
on the trust assets, which remain subject to the claims of the Company's
creditors. If any funds set aside in the trust are insufficient to pay amounts
due to beneficiaries of the trust, then the Company will be liable for those
amounts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Gage, Hodder, Cain, Knowlton, Wallin and Ms. St. Mark served on the
Executive Personnel and Compensation Committee during fiscal 1996.
Mr. Gage and certain family members, as trustees for revocable trusts, are
general partners, among others, of Carlson Real Estate Company, a limited
partnership which leases a retail supermarket in Shakopee, Minnesota, to the
Company for a term ending in 2008, with options to renew. The annual rental is
$199,000, increasing to $224,000 in 1998 and $232,000 in 2003, which the
Company believes to be a fair market rental. The leased premises are subleased
by the Company to an independent retail supermarket operator.
REPORT OF EXECUTIVE PERSONNEL
AND COMPENSATION COMMITTEE
The Executive Personnel and Compensation Committee of the Board of Directors
(the "Committee"), composed entirely of independent non-employee directors,
has implemented a comprehensive Executive Compensation Program within the
Company. The Committee has structured this program to serve the interests of
stockholders by providing compensation to executive officers in direct
proportion to their responsibilities and efforts as these impact the
objectives of the Company. The program consists of both cash and stock
elements, with the majority of executive officers' total compensation value in
the form of variable compensation tied to Company performance and stock price
performance.
The Company's Executive Compensation Program is based on the following
principles:
1. The program will enable the Company to attract, retain and motivate the
key executives necessary for the Company's current and long-term
success.
2. Compensation plans are designed to support the Company's long range
business strategy.
3. Executive compensation is linked to corporate performance and attainment
of designated strategic objectives.
4. A significant portion of executive gain is tied to the enhancement of
stockholder value.
5. The Committee exercises independent judgment and approval authority with
respect to the Executive Compensation Program and the awards made under
the Program.
The structure of the Company's Executive Compensation Program is based on a
market comparison of compensation for equivalent positions in industries from
which the Company draws executive talent as well as a position evaluation
designed to achieve internal equity based on job responsibility. The Company's
primary market comparison for compensation is the 11 companies comprising the
composite peer group for the comparative performance graph on page 18 plus
three additional non-grocery distribution companies, all adjusted for size
based primarily on market capitalization (collectively the "Compensation Peer
Group"). The Company engaged outside consulting firms to perform this market
comparison in each of the past four years. These market comparisons are the
basis for designing the Company's current compensation structure, which has a
mix of fixed to variable compensation and short-term to long-term incentive
potential approximating the mix within the Compensation Peer Group. The 1993,
1994 and 1995 market comparisons were performed to ensure
13
<PAGE>
that the dollar values of the various plan components as well as total
compensation approximated those within the Compensation Peer Group. In
addition to a review of compensation plan design and compensation levels
relative to the Compensation Peer Group, the Committee also reviews the
Company's performance on a number of key financial measures relative to the
Compensation Peer Group plus selected other industry companies.
The variable compensation components of the program are designed so that
executives' total compensation will be above that of the Compensation Peer
Group when Company performance is superior, and below that of the Compensation
Peer Group when performance is below industry norms. This fluctuation in
compensation value is increased by the substantial use of stock in the program
(as described in more detail in the remainder of this report), so that total
compensation will significantly increase or decrease in direct relation to
increases or decreases in the price of the Company's stock.
The application of the above stated principles is described in the following
sections which summarize the major components of the Company's Executive
Compensation Program, including factors and criteria upon which compensation
was awarded to the Company's Chief Executive Officer for fiscal 1996.
BASE SALARIES
The base salary levels for executive officers are determined from a position
evaluation process designed to achieve internal equity based on job
responsibility, and by reference to base salary levels in industries from
which the Company draws executive talent as analyzed by an outside
compensation consulting firm. The Company's salary structure is based on the
median salary levels of companies in these industries which are similar in
size to the Company. Actual salaries may be set above or below this median
depending on individual job performance and experience.
The Committee annually reviews and approves all salary increases for
executive officers other than the CEO. Increases for these executives are
proposed to the Committee by the CEO based on financial results and a
qualitative assessment of performance. After discussion, the Committee makes a
final determination of any salary increases.
The Chairman of the Committee conducts an annual formal performance
evaluation of the CEO based on written input from all Board members. The
following factors are considered in this performance evaluation: financial
results, strategic planning, leadership, customer service, succession
planning, human resource management/EEO, communications, external relations
and Board interface. Salary adjustments for the CEO are currently made every
other year. There was no change to the CEO's base salary for fiscal 1996 since
an increase had occurred for fiscal 1995.
ANNUAL INCENTIVE
All of the Company's executive officers are eligible to receive an annual
cash bonus designed to motivate these executives to meet or exceed individual
and financial goals which support the Company's business plans as these are
translated into annual performance measures. Specifically, the annual bonus
plan for executive officers is designed to stimulate and reward growth in
Company earnings. The Committee assigns eligible executives target bonus
levels which approximate the bonus opportunity for comparable positions within
the Compensation Peer Group. Among executive officers, these range from 20% of
annual base salary to 60% of annual base salary for the CEO. These target
bonus levels have been in effect for several years, and normally change only
when an individual enters a new position. Ninety percent of this award
potential (100% in the case of the CEO) is tied to the Company's net profit
performance. The remaining ten percent for executives other than the CEO is
based on a subjective evaluation of performance relative to personal
objectives. Bonus payments increase, and can go above target levels, as net
profit growth meets and exceeds the annual rate of
14
<PAGE>
profit growth targeted by the Board in advance of the fiscal year. In no event
can the amount paid as annual incentive bonus exceed two times the target
bonus level of the position.
For fiscal 1996, all bonuses to the five named executive officers were paid
under the Annual Cash Bonus Plan for Designated Corporate Officers which was
administered by the Committee. This Plan, as approved by stockholders, is
intended to qualify compensation paid thereunder as "qualified performance
based compensation" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code"), so that the
Company may claim federal income tax deductions for payments made under the
Plan. For fiscal 1996, the only bonus awards paid under this Plan are shown in
the "Bonus" column of the Summary Compensation Table on page 9.
LONG-TERM INCENTIVE COMPENSATION
The Company has implemented, with stockholder approval, a Long-Term
Incentive Plan and Stock Option Plans. Together, these plans tie a significant
portion of the executives' total compensation to long term results. The
Executive Compensation Program is structured so that the overall value of the
long term incentive potential approximates that of the Compensation Peer
Group. The Committee has structured these long term plans so that normally
there is approximately equal value between the awards under the Long-Term
Incentive Plan and the grants under the Stock Option Plans.
Long-Term Incentive Plan. The Plan empowers the Committee to select Plan
participants, approve awards under the Plan, and in general, interpret and
administer the Plan. In fiscal 1995, the Committee granted executive officers
and division presidents performance shares with a value equal to a fixed
percent of the participant's base salary plus target annual bonus. These
percentages are set at a level which is expected to produce a value, when
combined with the value of stock options, approximately equal to the long term
compensation potential of the Compensation Peer Group. Awards under the Plan
cover the three-year period consisting of fiscal 1995 through fiscal 1997. For
corporate officers, half of any award depends on annual performance for each
of the three years in the three year period relative to a return on invested
capital objective. The other half of the award potential is dependent on the
Company's total stockholder return performance for the entire three year
period relative to the group of companies comprising the performance graph
peer group on page 18. This design aligns more of the executives' compensation
with stockholder return, specifically as this stockholder return relates to
the peer group disclosed in the proxy statement. Award value is dependent on
both corporate ROIC performance and total shareholder return (which determines
the number of shares earned) and stock price (which determines the value of
the shares earned). If an award is earned, performance shares are converted to
restricted stock with a one to two year requirement of further employment, so
that termination before the restrictions lapse, or a decrease in the stock
price, will result in forfeiture of the award or diminishment in its value.
This provides a continuing incentive for executives to remain with the Company
and focus on stockholder value after the award has actually been earned. The
Committee determined minimum, target and maximum payout amounts for each
participant based on fiscal 1996 corporate ROIC performance for officers, and
corporate ROIC and division return on capital employed ("ROCE") performance
for division presidents. Application of the criteria set forth in the awards
under the Plan for fiscal 1996 resulted in Division Presidents earning an
aggregate of 17,531 shares of restricted stock based on division performance
criteria. No restricted shares were earned by corporate officers for fiscal
1996, and no additional awards were made to the named officers in fiscal 1996.
Stock Option Plans. The Committee believes that executive gain tied to stock
price appreciation is the most effective way of aligning executive and
stockholder interests. The Company historically has utilized stock options to
accomplish this objective, but in 1992 also established stock ownership
targets for executive officers. These two programs together cause executives
to view themselves as owners with a meaningful equity stake in the business
over the long term.
15
<PAGE>
Under the Company's stock option plans, the Committee makes annual grants of
stock options to key employees. The Committee has established grant guidelines
intended to produce a value which, when combined with the value of Long-Term
Incentive Plan awards, approximately equals the long term compensation
potential of the Compensation Peer Group. The Committee also considers
subjective factors in determining grant size; grants are not automatically
tied to a formula or the optionee's position in the Company. Poor corporate,
division or individual performance will impact the size of an optionee's
grant. In addition, current ownership of stock is a consideration in the size
of option grants for officers and division presidents. That is, minimal
ownership can result in future grants being reduced in size. Based on the
stock grant guidelines and the subjective factors described above, annual
grant recommendations are developed, reviewed by the CEO and presented to the
Committee for final approval.
The Committee awarded Mr. Wright grants of stock options in fiscal 1996
which were based on the criteria described above and the performance review
process described in the section on base salary.
Stock options are designed to align executive gain with stockholder gain,
and for that reason options are granted with an exercise price equal to the
market price of the Company's stock on the date of grant. To maintain
executives' carried interest in Company stock, the Company implemented in
1992, following stockholder approval, a restoration stock option program
(commonly referred to as a reload option program) which provides that stock
surrendered to exercise an option would be replaced with a new option grant
exercisable at the then current market price for the remainder of the option
term.
Price Vesting Options. In June of 1995, the Committee approved a special
grant of stock options to officers and select key operation heads. These
options, granted to the named executive officers at the then current market
price of $28.25, are shown in the Table on Option/SAR Grants on page 10. This
grant was in addition to normal annual grant levels, but these options will
only become exercisable if the optionee remains employed with the company for
at least two years after grant and the price of SUPERVALU stock averages
$40.00 or more for twenty consecutive trading days during the five year term
of these options. If this price target is not met within five years, the
options will expire and be of no value to the recipients. The objective of
this special grant is to focus top management on increasing the price of
Company stock to the designated level during a critical period of
transformation in business operations. Any compensation value generated by
these grants will come solely from stock price appreciation to at least $40.00
per share.
STOCK OWNERSHIP GUIDELINES
Stock ownership guidelines for executive officers were established in 1992
so that these executives would face the same downside risk, in addition to
upside potential, as stockholders experience. Executives are expected to show
significant progress toward reaching these ownership goals. The goal for the
Chief Executive Officer is six times annual base salary excluding vested and
unexercised stock options.
POLICY REGARDING TAX DEDUCTION FOR COMPENSATION UNDER INTERNAL REVENUE CODE
SECTION 162(M)
Section 162(m) of the Internal Revenue Code prohibits the Company from
deducting executive compensation in excess of $1 million for the five
executive officers named in the Summary Compensation Table, unless certain
conditions are met. In 1994, the Company proposed and the stockholders
approved, an annual incentive plan which met the required conditions and
preserved the
16
<PAGE>
tax deductions for compensation paid under the plan. The Committee will make
every reasonable effort to continue to preserve this tax deduction consistent
with the Executive Compensation Program principles stated at the beginning of
this report.
CONCLUSION
The Committee believes that the caliber and motivation of executive
management is fundamentally important to the Company's performance. The
Committee plays a very active role in ensuring that the compensation
principles stated previously are being met by the Company's compensation
plans. Independent compensation consultants have assisted the Committee in
designing these plans, assessing the effectiveness of the overall program, and
comparing the value of these programs and the Company's performance to
relevant peer companies. Program value is reviewed by individual component and
in the aggregate, with special attention given to the mix of fixed and
variable compensation, and short-term and long-term award potential. At the
top executive levels of the Company, the majority of total compensation is
variable in nature (that is, dependent on performance results) with more than
half of such variable compensation tied to long term performance. Both stock
price appreciation and financial factors related to this appreciation, such as
earnings growth (in the annual bonus plan) and return on invested capital (in
the Long-Term Incentive Plan) determine the variable compensation. This is
intended to result in total compensation being above industry averages when
performance is superior, and being below competitive levels when performance
is below expected levels or the Company stock fails to appreciate. The
Committee believes that the Executive Compensation Program has been a
substantial contributor toward motivating executives to focus on the creation
of stockholder value.
Respectfully submitted,
Edwin C. Gage, Chairman Richard L. Knowlton
Herman Cain Carole F. St. Mark
William A. Hodder Winston R. Wallin
17
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
the Company's Common Stock for the last five fiscal years with that of the
S&P 500 Stock Index and a group of peer companies in the wholesale and
retail grocery industries (assuming the investment of $100 in each vehicle
on February 28, 1991, and the reinvestment of all dividends on a quarterly
basis). The stock price performance shown on the graph below is not
necessarily indicative of future price performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
SUPERVALU INC., S&P 500 STOCK INDEX AND COMPOSITE PEER GROUP(1)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
SUPERVALU 100 104.19 133.31 156.70 112.76 145.76
S&P 500 100 115.96 128.25 138.85 148.99 200.44
Peer Group 100 97.03 105.73 99.02 89.36 119.35
</TABLE>
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(1) The composite peer group is comprised of the following food wholesalers
and food retailers: Albertson's, Inc., American Stores Company, Fleming
Companies, Inc., Food Lion, Inc., Great Atlantic & Pacific Tea, The
Kroger Company, Nash Finch Company, Richfood Holdings Inc., Safeway
Inc., Super Food Services, Inc., and The Vons Companies, Inc. Super
Rite Foods was acquired by Richfood Holdings Inc. in fiscal 1996 and is
no longer reported as a separate company with the peer group. The
returns of the peer group companies were weighted based on their
respective market capitalization and on the relative percentage of the
Company's operating profit realized from wholesale and retail food
operations (excluding restructuring charges) for each year. The
performance graph indicates results calculated to the last business day
in February each year.
18
<PAGE>
PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM 2)
The Board of Directors, upon recommendation of its Audit Committee, has
appointed Deloitte & Touche LLP to audit the books and accounts of the Company
and its subsidiaries for the fiscal year ending February 22, 1997, and is
seeking the ratification of this appointment by the stockholders.
A partner of Deloitte & Touche LLP is expected to be present at the Annual
Meeting with the opportunity to make a statement if he or she desires to do
so, and is expected to be available to respond to appropriate questions.
PROPOSAL TO ADOPT THE NON-EMPLOYEE
DIRECTORS DEFERRED STOCK PLAN
(ITEM 3)
On February 14, 1996, the Board of Directors, upon recommendation of the
Director Affairs Committee, adopted the Non-Employee Directors Deferred Stock
Plan (the "Deferred Stock Plan") and recommended that the Deferred Stock Plan
be submitted for approval by the stockholders at the 1996 Annual Meeting of
Stockholders. A copy of the Deferred Stock Plan is attached as Exhibit A to
this Proxy Statement, and the following discussion is qualified by reference
to the full text of the Deferred Stock Plan.
The purpose of the Deferred Stock Plan is to further strengthen the
alignment of interests between members of the Company's Board of Directors who
are not employees of the Company and the Company's stockholders through
increased ownership by Board members of Company Common Stock.
Under the Deferred Stock Plan, each non-employee director will receive an
annual award, as a credit to his or her deferred stock account, of that number
of shares of Company Common Stock having a fair market value on the award date
of $15,000 (the "Deferred Stock Retainer"). The aggregate amount of the
Deferred Stock Retainers payable to all non-employee directors is expected to
be $165,000 for fiscal 1997.
Each non-employee director may also elect to defer all or any part of the
director's cash compensation for serving as a member of the Board of Directors
into the Deferred Stock Plan. Each director who elects to defer compensation
pursuant to the Deferred Stock Plan will receive a credit, on each quarterly
payment date, for that number of shares of Company Common Stock having a fair
market value equal to 110% of the cash compensation otherwise payable to the
director on that date. Dividends on shares credited to a director's deferred
stock account will be reinvested in shares of the Company's Common Stock.
Prior to the time amounts are credited to the director's deferred stock
account, each director must make an irrevocable election as to the year in
which payments from the account will be made, either in a lump sum or in
annual installments over not more than 15 years; provided, however, that upon
a Change of Control (as defined in the Deferred Stock Plan) all accounts will
be immediately payable. Payment of the deferred stock accounts will be made in
shares of Company Common Stock.
The Deferred Stock Plan will be administered by the Director Affairs
Committee (excluding any member who would not be considered a "disinterested
director") which has authority to establish rules for its administration. The
Board may terminate, suspend or amend the Deferred Stock Plan at any time.
The Company has established an irrevocable grantor trust pursuant to which
the Company will contribute funds and the trust will purchase shares of
Company Common Stock in the amounts
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<PAGE>
credited to each director's account under the Deferred Stock Plan. The
directors will not have any preferred claim on the trust assets, which will
remain subject to the claims of the Company's creditors. Each director will be
entitled to direct the trustee to vote all shares of Common Stock allocated to
the director's account in the trust. The trust will distribute the shares of
Common Stock to each director as payments become due pursuant to the terms of
the Deferred Stock Plan.
The Board of Directors recommends a vote "FOR" the proposal to approve the
Deferred Stock Plan, as set forth in Exhibit A to this Proxy Statement. The
affirmative vote of a majority of the shares of Common Stock entitled to vote
and present in person or by proxy at the 1996 Annual Meeting of Stockholders
will be necessary for approval of the Deferred Stock Plan.
PROPOSAL TO AMEND THE
1983 EMPLOYEE STOCK OPTION PLAN
(ITEM 4)
Management of the Company believes that stock options have become an
important element in attracting and retaining members of the Board of
Directors who are not also employees of the Company or its subsidiaries ("Non-
Employee Directors") and in enhancing such Directors' identification with the
Company's stockholders.
The 1983 Employee Stock Option Plan ("1983 Plan") currently provides for the
automatic grant of options which do not qualify as incentive stock options to
Non-Employee Directors. Each Non-Employee Director serving on the Board of
Directors is granted an option to purchase 3,000 shares of Common Stock on
first election or appointment to the Board and on each even numbered
anniversary of the initial grant. Each option granted to a Non-Employee
Director has an exercise price equal to the fair market value of the shares of
Common Stock on the date of grant and expires on the tenth anniversary of the
date of grant. Currently, each option granted to a Non-Employee Director is
exercisable as to 40% of the shares on the first anniversary of the date of
grant and as to an additional 30% of the shares on each of the second and
third anniversaries of the date of grant. If a Non-Employee Director retires
from the Board, the Director has a limited period of time ranging from three
months to two years within which to exercise the option.
On February 14, 1996, the Board of Directors authorized submission to the
stockholders at the 1996 Annual Meeting of Stockholders of an amendment to the
1983 Plan to eliminate the restrictions on exercise of stock options following
a Non-Employee Director's retirement from the Board, and to no longer require
that options granted to Non-Employee Directors vest over a period of three
years. The amendment would further provide that following the initial option
grant, additional options would be granted to Non-Employee Directors at the
rate of 3,000 shares every other year on the date of the Company's Annual
Meeting in each even numbered year, provided the Director would continue to
serve on the Board following such Annual Meeting.
The Company believes that these amendments will make the 1983 Plan more
competitive with similar option plans for non-employee directors of other
companies and will enable Non-Employee Directors to more rapidly increase
their equity investment in Company Common Stock.
A copy of the 1983 Plan, reflecting the changes outlined above, is attached
as Exhibit B to this Proxy Statement, and the discussion of the 1983 Plan and
the amendments thereto is qualified by reference to the full text of the 1983
Plan.
SUMMARY OF 1983 PLAN. The 1983 Plan is administered by the Executive
Personnel and Compensation Committee ("Committee"). Options may be granted
only to key salaried management employees of the Company or any subsidiary and
to Non-Employee Directors.
20
<PAGE>
The aggregate number of shares of the Company's Common Stock which may be
issued under all options granted pursuant to the 1983 Plan is 4,500,000
shares. As of April 1, 1996, 1,658,593 shares had been issued, 2,372,801
shares were subject to outstanding options and 468,606 shares were available
for future grants under the 1983 Plan. As of such date, approximately 364
optionees held options under the 1983 Plan. The closing price of the Company's
Common Stock on the New York Stock Exchange on May 1, 1996 was $31.875.
Except with respect to Non-Employee Director options, the Committee
determines at the time of grant whether the option is to qualify as an
incentive stock option under the Internal Revenue Code of 1986, as amended
("Code"), the number of shares subject to the option and the term of the
option. No option can have a term in excess of ten years from the date of
grant. Options may be exercisable in installments or otherwise, as the
Committee may determine for each grant. All options become fully exercisable
upon a Change of Control (as defined in the 1983 Plan). No option granted
under the 1983 Plan may be assigned or transferred except by will or the laws
of descent and distribution, and each option may be exercised during the life
of the optionee only by the optionee.
The 1983 Plan provides that the Committee may grant "restoration" options to
any optionee (other than a Non-Employee Director), separately or together with
any option, and may establish the terms and conditions of such "restoration"
options. Pursuant to a "restoration" option, the optionee is granted a new
option when the payment of the exercise price of the option to which such
"restoration" option relates is made by using shares of Common Stock owned by
the optionee. The new option granted upon such exercise is an option to
purchase the number of shares not exceeding the sum of (i) the number of
shares of Common Stock tendered as payment upon the exercise of the option to
which such "restoration" option relates and (ii) the number of shares of the
Company's Common Stock tendered as payment of the amount to be withheld under
income tax laws in connection with the exercise of the option to which such
"restoration" option relates.
The number and class of shares, and the exercise price, under each
outstanding option may be adjusted in the event of any stock dividends, split-
ups, recapitalizations, mergers, consolidations, combinations, exchanges of
shares or other changes in the Common Stock of the Company. In the event of
any such changes, the aggregate number and class of shares available under the
1983 Plan will also be adjusted.
The 1983 Plan may be terminated or amended by the stockholders of the
Company. The Board of Directors may terminate or amend the 1983 Plan without
stockholder approval, except that the Board may not make any material change
in the class of employees eligible to receive incentive stock options or
increase the total number of shares reserved under the 1983 Plan without
stockholder approval. The Board of Directors may not amend the foregoing
provisions governing the grant of options to Non-Employee Directors more than
once every six months other than to comport with changes in the Code, the
Employee Retirement Income Security Act or the rules and regulations
thereunder. The 1983 Plan will expire on February 7, 1999, and no options can
be granted under the 1983 Plan after such date.
There are no federal income tax consequences to the Company or the optionee
upon the granting of an option. Under current federal income tax law, an
optionee who exercises an incentive stock option will realize no ordinary
taxable income at the time of exercise (but does realize income for purposes
of the alternative minimum tax), and the Company will not be entitled to a tax
deduction when the optionee exercises the option. If the optionee holds the
shares for at least one year after exercise and two years from the date the
incentive stock option was granted, no tax deduction will be allowed to the
Company upon the sale of such shares by the optionee. In the event of such
sale of shares, the optionee will recognize long-term capital gain or loss in
an amount equal to the difference between the option price for the shares and
the sale price if, as is usually the case, the shares are a capital asset in
the hands of the optionee. Upon the exercise of an option not qualifying as an
incentive stock option,
21
<PAGE>
the optionee will realize ordinary income equal to the difference between the
exercise price and the market value of the shares on the date of exercise,
unless the optionee is a person subject to Section 16(b) of the Securities
Exchange Act of 1934 (the "Exchange Act"). An optionee subject to Section
16(b) of the Exchange Act will also recognize ordinary income on the date of
exercise if the option was held for six months from the date of grant and
there was no separate non-exempt purchase of Company securities by such
optionee within six months before the date of exercise. Subject to the general
rules concerning deductibility of compensation, the Company will be allowed an
income tax deduction in the amount that, and for its taxable year in which, a
holder of an option (which is not an incentive stock option) recognizes
ordinary income upon the exercise thereof.
The Board of Directors recommends a vote "FOR" the above proposal to amend
the 1983 Plan to provide for the changes outlined above as set forth in
Exhibit B to this Proxy Statement. The affirmative vote of a majority of the
shares of Common Stock entitled to vote and present in person or by proxy at
the 1996 Annual Meeting of Stockholders will be necessary for amendment of the
1983 Plan.
STOCKHOLDER PROPOSAL
(ITEM 5)
A stockholder (name and address and Common Stock holdings of proponent will
be supplied upon oral or written request to the Secretary of the Company) has
submitted the following proposal for action at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST" THIS
PROPOSAL.
Stockholder Proposal
RESOLVED: That the stockholders of SUPERVALU INC. ("SUPERVALU" or the
"Company") request the Board of Directors to redeem the preferred share
purchase rights issued in 1989 unless such issuance is approved by the
affirmative vote of a majority of the outstanding shares at a meeting of the
stockholders to be held as soon as may be practicable.
Supporting Statement of the Stockholder
On April 12, 1989 the Board of Directors of SUPERVALU declared, without
stockholder approval, a dividend of preferred share purchase rights
("rights"). We strongly believe that such rights are a type of anti-takeover
device, commonly known as a poison pill, which injures stockholders by
reducing management accountability and adversely affecting stockholder value.
The stockholders of the Company believe the terms of the rights are designed
to discourage or thwart an unwanted takeover of the Company. While management
and the Board of Directors should have appropriate tools to ensure that all
stockholders benefit from any proposal to acquire the Company, the
stockholders do not believe that the future possibility of a takeover
justifies unilateral implementation of such a poison pill.
Rather, we believe that it is the stockholders who should have the right to
vote on the necessity of such a powerful tool which could be used to entrench
existing management. Rights plans such as the Company's have become
increasingly unpopular in recent years.
The negative effects of poison pill rights plans on the trading value of
companies' stock have been the subject of extensive research. A 1986 study
(covering 245 companies adopting poison pills between 1983 and July 1986) was
prepared by the Office of the Chief Economist of the U.S. Securities and
Exchange Commission on the effect of poison pills on the wealth of target
stockholders. It states
22
<PAGE>
that "empirical tests, taken together, show that poison pills are harmful to
target stockholders, on net." A 1992 study by Professor John Pound of
Harvard's Corporate Research Project and Lilli A. Gordon of the Gordon Group
found a correlation between high corporate performance and the absence of
poison pills.
At SUPERVALU's 1995 Annual Meeting of Stockholders, 63% of the voting shares
were cast in favor of this proposal. Nevertheless, SUPERVALU rejected this
majority opinion by subsequently failing to implement the proposal.
We therefore resubmit this stockholder proposal based on our continuing
beliefs that the unilateral and undemocratic adoption of the rights plan by
the Company is unjustified, that the continued existence of such a rights plan
is unjustified and not in the best interest of the stockholders. We believe
that the preferred share purchase rights should either be redeemed or voted on
by stockholders.
WE URGE YOU TO VOTE FOR THIS RESOLUTION
----------------
Company's Statement in Opposition to Proposal
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL
FOR THE FOLLOWING REASONS:
The Preferred Share Purchase Rights Plan (the "Rights Plan") was adopted by
the Board of Directors in 1989 to protect the Company's stockholders against
certain abusive takeover practices prevalent in the marketplace and to ensure
that all stockholders are treated fairly and equally. The overriding objective
of the Board of Directors in adopting the Rights Plan was, and continues to
be, the preservation and maximization of the Company's value for all
stockholders.
The Board believes that the Rights Plan is a sound and reasonable means of
protecting against unfair and abusive takeover practices and is both
appropriately within its discretion and an essential exercise of its fiduciary
obligations to the stockholders. The Board also believes that many
stockholders have come to recognize the effectiveness of these plans in
protecting and enhancing value for all stockholders.
The Rights Plan does not preclude a prospective bidder from making an offer
for the Company. Moreover, the Rights Plan is not intended to prevent a
takeover of the Company nor would it do so. The Rights Plan is intended to
give the Board sufficient time, if presented with an offer to acquire the
Company, to evaluate the offer and any possible alternatives and to take those
steps that the Board believes would be necessary to maximize the value that
can be achieved for all stockholders.
The Rights Plan is designed to encourage any prospective bidder for the
Company to negotiate with the Company's Board. The Board believes that its
ability to negotiate effectively with a potential acquiror on behalf of all
stockholders is significantly greater than that of the stockholders
individually. A bidder who chooses to bypass the Board is pursuing his own
interests and is not concerned with the interests of the other stockholders.
In this regard, it is important to remember that hostile acquirors are
interested in buying a company as cheaply as they can. Without the Rights
Plan, the Company could find itself negotiating with the acquiror from a
defensive posture rather than at arm's-length. While a bidder may make an
offer for the Company's stock which is in excess of the stock's current market
price, without such negotiations the premium offered may not reflect the long-
term value of the Company.
The Board strongly disagrees with the view that rights plans deter
legitimate acquisition proposals from being made or depress the price of the
stock of corporations adopting them. Since 1986, at least
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<PAGE>
52 companies which had rights plans have been acquired or were parties to
agreements to be acquired, including 37 companies which were acquired after
receiving an unsolicited bid. Furthermore, in 31 of the 37 acquisitions of
companies with rights plans that were initiated by unsolicited bids, the
prices ultimately received by stockholders exceeded the initial bids and did
so by an average premium to the initial bid of more than 20%.(1)
Studies by Georgeson & Company, Inc., a leading investor communications
firm, have concluded that "[rights plans] do not prevent takeovers nor do they
diminish the value of a company's stock." These studies also indicated that
"companies with [rights plans] receive premiums 69% higher in takeover
contests than companies without [rights plans]."
FOR THE FOREGOING REASONS, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE "AGAINST" THIS PROPOSAL.
- --------
(1) Based on data obtained from Securities Data Corporation and other industry
sources.
PROPOSALS OF STOCKHOLDERS FOR 1997 ANNUAL MEETING
All proposals of stockholders intended to be presented at the Company's 1997
Annual Stockholder Meeting pursuant to the Securities Exchange Act of 1934
must be received by the Company at its executive offices on or before January
25, 1997 to be included in the proxy statement for that meeting.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters which may
come before the meeting. However, if any matters other than those referred to
above should properly come before the meeting, it is the intention of the
persons named in the enclosed proxy to vote such proxy in accordance with
their discretion.
BY ORDER OF THE BOARD OF DIRECTORS
TERESA H. JOHNSON
Secretary
Dated: May 24, 1996
24
<PAGE>
EXHIBIT A
SUPERVALU INC.
NON-EMPLOYEE DIRECTORS DEFERRED STOCK PLAN
1. Purpose. The purpose of the SUPERVALU INC. Non-Employee Directors
Deferred Stock Plan (the "Plan") is to further strengthen the alignment of
interests between members of the Board of Directors (the "Board") of SUPERVALU
INC. (the "Company") who are not employees of the Company (the "Participants")
and the Company's stockholders through the increased ownership by Participants
of shares of the Company's common stock, par value $1.00 per share ("Common
Stock"). This will be accomplished by (i) providing to Participants deferred
compensation in the form of the right to receive shares of Common Stock for
services rendered in their capacity as directors, and (ii) allowing
Participants to elect voluntarily to defer all or a portion of their fees for
services as members of the Board pursuant to the Plan in exchange for the
right to receive shares of Common Stock valued at 110% of the cash fees
otherwise payable.
2. Eligibility. Each member of the Board of Directors of the Company who is
not an employee of the Company or of any subsidiary of the Company shall be
eligible to participate in the Plan.
3. Formula Share Award. Effective on July 1, or the first business day
thereafter in each year (the "Award Date"), the Company shall award each
Participant who shall continue to serve on the Board following the Award Date,
as a credit to the Participant's account under the Plan (the "Deferred Stock
Account"), that number of shares (rounded to the nearest one-hundredth share)
of Common Stock, having an aggregate fair market value on the Award Date of
Fifteen Thousand Dollars ($15,000) (the "Award"). The Award shall be in
addition to any cash retainer, stock options, or other remuneration received
by the Participant for services rendered as a director. If, after receiving an
Award, the Participant shall cease to serve on the Board prior to the
Company's next annual meeting, for any reason other than death or permanent
disability, then such Participant's Deferred Stock Account shall be reduced by
(i) that number of shares equal to 1/12 of the Award for each full calendar
month during which the Participant did not serve as a director of the Company,
plus (ii) any dividends paid on that number of shares of Common Stock
specified in (i) above during the period that the Participant did not serve as
a director of the Company.
4. Election to Defer Cash Compensation. A Participant may elect to defer, in
the form of a credit to the Participant's Deferred Stock Account all or a
portion of the annual cash retainer, meeting fees for attendance at meetings
of the Board and its committees, committee chairperson retainers, and any
other fees and retainers ("Compensation") otherwise payable to the director in
cash during the period following the effective date of the deferral election.
Such deferral election shall be made pursuant to Section 5.
5. Manner of Making Deferral Election. A Participant may elect to defer
Compensation pursuant to the Plan by filing, no later than December 31 of each
year (or by such other date as the Committee shall determine), an irrevocable
election with the Corporate Secretary on a form provided for that purpose
("Deferral Election"). The Deferral Election shall be effective with respect
to Compensation payable on or after July 1 of the following year unless the
Participant shall revoke or change the election by means of a subsequent
Deferral Election in writing that takes effect on the date specified therein
but in no event earlier than six (6) months (or such other period as the
Committee, as defined in Section 17, shall determine) after the subsequent
Deferral Election is received by the Company. The Deferral Election form shall
specify an amount to be deferred expressed as a dollar amount or as a
percentage of the Participant's Compensation otherwise payable in cash for the
director's services.
6. Credits to Deferred Stock Account for Elective Deferrals. On the first
day of each calendar quarter (the "Credit Date"), a Participant shall receive
a credit to his or her Deferred Stock Account.
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<PAGE>
The amount of the credit shall be the number of shares of Common Stock
(rounded to the nearest one-hundredth of a share) determined by dividing an
amount equal to 110% of the Participant's Compensation payable on the Credit
Date and specified for deferral pursuant to Section 5 hereof, by the fair
market value on the Credit Date of a share of Common Stock.
7. Fair Market Value. The fair market value of shares of Common Stock as of
a given date for all purposes of the Plan, shall be the closing sale price per
share of Common Stock as reported on the consolidated tape of the New York
Stock Exchange on the relevant date or, if the New York Stock Exchange is
closed on such day, then the day closest to such date on which it was open.
8. Dividend Credit. Each time a dividend is paid on the Common Stock, the
Participant shall receive a credit to his or her Deferred Stock Account equal
to that number of shares of Common Stock (rounded to the nearest one-hundredth
of a share) having a fair market value on the dividend payment date equal to
the amount of the dividend payable on the number of shares credited to the
Participant's Deferred Stock Account on the dividend record date.
9. Maximum Number of Shares to be Credited Under the Plan. Subject to
adjustment as provided in Section 10, the maximum number of shares of Common
Stock that may be credited under the Plan is 500,000 shares.
10. Adjustments for Certain Changes in Capitalization. If the Company shall
at any time increase or decrease the number of its outstanding shares of
Common Stock or change in any way the rights and privileges of such shares by
means of the payment of a stock dividend or any other distribution upon such
shares payable in Common Stock, or through a stock split, subdivision,
consolidation, combination, reclassification, or recapitalization involving
the Common Stock, then the numbers, rights, and privileges of the shares
credited under the Plan shall be increased, decreased, or changed in like
manner as if such shares had been issued and outstanding, fully paid, and
nonassessable at the time of such occurrence.
11. Deferral Payment Election. At the time of making the Deferral Election,
each Participant shall also complete a deferral payment election specifying
one of the payment options described in Sections 12 and 13, and the year in
which amounts credited to the Participant's Deferred Stock Account shall be
paid in a lump sum pursuant to Section 12, or in which installment payments
shall commence pursuant to Section 13. The deferral payment election shall be
irrevocable as to all amounts credited to the Participant's Deferred Stock
Account. The Participant may change the deferral payment election by means of
a subsequent deferral payment election in writing that will take effect for
deferrals credited after the date the Company receives such subsequent
deferral payment election.
12. Payment of Deferred Stock Accounts in a Lump Sum. Unless a Participant
elects to receive payment of his or her Deferred Stock Account in installments
as described in Section 13, credits to a Participant's Deferred Stock Account
shall be payable in full on January 10 of the year following the Participant's
termination of service on the Board (or the first business day thereafter) or
such other date as elected by the Participant pursuant to Section 11. All
payments shall be made in shares of Common Stock plus cash in lieu of any
fractional share. Notwithstanding the foregoing, in the event of a Change of
Control (as defined in Section 19), credits to a Participant's Deferred Stock
Account as of the business day immediately prior to the effective date of the
transaction constituting the Change of Control shall be paid in full to the
Participant or the Participant's beneficiary or estate, as the case may be, in
whole shares of Common Stock (together with cash in lieu of a fractional
share) on such date.
13. Payment of Deferred Stock Accounts in Installments. A Participant may
elect to have his or her Deferred Stock Account paid in annual installments
following termination of service as a director or at such other time as
elected by the Participant pursuant to Section 11. All payments shall be made
in shares of Common Stock plus cash in lieu of any fractional share. All
installment payments shall be
A-2
<PAGE>
made annually on January 10 of each year (or the first business day
thereafter). The amount of each installment payment shall be computed as the
number of shares credited to the Participant's Deferred Stock Account on the
Computation Date, multiplied by a fraction, the numerator of which is one and
the denominator of which is the total number of installments elected (not to
exceed fifteen) minus the number of installments previously paid. Amounts paid
prior to the final installment payment shall be rounded to the nearest whole
number of shares; the final installment payment shall be for the whole number
of shares then credited to the Participant's Deferred Stock Account, together
with cash in lieu of any fractional shares. Notwithstanding the foregoing, in
the event of a Change of Control (as defined in Section 19), credits to a
Participant's Deferred Stock Account as of the business day immediately prior
to the effective date of the transaction constituting the Change of Control
shall be paid in full to the Participant or the Participant's beneficiary or
estate, as the case may be, in whole shares of Common Stock (together with
cash in lieu of a fractional share) on such date.
14. Death of Participant. If a Participant dies before receiving all
payments to which he or she is entitled under the Plan, payment shall be made
in accordance with the Participant's designation of a beneficiary on a form
provided for that purpose and delivered to and accepted by the Committee (as
hereinafter defined) or, in the absence of a valid designation or if the
designated beneficiary does not survive the Participant, to such Participant's
estate.
15. Nonassignability. No right to receive payments under the Plan nor any
shares of Common Stock credited to a Participant's Deferred Stock Account
shall be assignable or transferable by a Participant other than by will or the
laws of descent and distribution. The designation of a beneficiary by a
Participant pursuant to Section 14 does not constitute a transfer.
16. Participants Are General Creditors of the Company. Benefits due under
this Plan shall be funded out of the general funds of the Company. The
Participants and beneficiaries thereof shall be general, unsecured creditors
of the Company with respect to any payments to be made pursuant to the Plan
and shall not have any preferred interest by way of trust, escrow, lien or
otherwise in any specific assets of the Company. If the Company shall, in
fact, elect to set aside monies or other assets to meet its obligations
hereunder (there being no obligation to do so), whether in a grantor's trust
or otherwise, the same shall, nevertheless, be regarded as a part of the
general assets of the company subject to the claims of its general creditors,
and neither any Participant nor any beneficiary of any Participant shall have
a legal, beneficial, or security interest therein.
17. Administration. The Plan shall be administered by a committee (the
"Committee") of three or more individuals appointed by the Board to administer
the Plan. The members of the Committee must be members of, and shall serve at
the discretion of, the Board. The members of the Committee shall be
"disinterested persons" as defined in Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (the "Act"), or any successor rule or definition
adopted by the Securities and Exchange Commission ("Rule 16b-3"), if, in the
opinion of counsel for the Company, the absence of "disinterested"
administrators would adversely impact the availability of the exemption from
Section 16(b) of the Act provided by Rule 16b-3 for any Participant's
acquisition of Common Stock under the Plan.
Subject to the provisions of the Plan, the Committee shall have sole and
complete authority to construe and interpret the Plan; to establish, amend and
rescind appropriate rules and regulations relating to the Plan; to administer
the Plan; and to take all such steps and make all such determinations in
connection with the Plan as it may deem necessary or advisable to carry out
the provisions and intent of the Plan. All determinations of the Committee
shall be made by a majority of its members, and its determinations shall be
final and conclusive for all purposes and upon all persons, including, but
without limitation, the Company, the Committee, the Participants and their
respective successors in interest.
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18. Amendment and Termination. The Board may at any time terminate, suspend,
or amend this Plan; provided, however, that the provisions of Sections 2 and 3
may not be amended more than once in every six months other than to comport
with changes in the Internal Revenue Code, ERISA, or the rules thereunder. No
such action shall deprive any Participant of any benefits to which he or she
would have been entitled under the Plan if termination of the Participant's
service as a director had occurred on the day prior to the date such action
was taken, unless agreed to by the Participant.
19. Change of Control. "Change of Control" means any one of the following
events:
(a) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
20% or more of either (i) the then outstanding shares of Common Stock (the
"Outstanding Company Common Stock") or (ii) the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection (a),
the following acquisitions shall not constitute a Change of Control: (i)
any acquisition directly from the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled
by the Company or (iv) any acquisition by any corporation pursuant to a
transaction which complies with clauses (i), (ii) and (iii) of subsection
(c) hereof; or
(b) individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least a majority
of the directors then constituting the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption
of office occurs as a result of an actual or threatened election contest
with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(c) approval by the shareholders of the Company of a reorganization,
merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Business Combination"),
in each case, unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly
or through one or more subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (ii) no Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except
to the extent that such ownership existed prior to the Business Combination
and (iii) at least a majority of the members of the Board of Directors of
the corporation resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the initial agreement,
or of the action of the Board, providing for such Business Combination; or
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(d) approval by the stockholders of the Company of a complete liquidation
or dissolution of the Company.
20. Effective Date. The effective date of the Plan shall be the date of
approval of the Plan by the Company's stockholders.
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EXHIBIT B
SUPERVALU INC.
1983 EMPLOYEE STOCK OPTION PLAN
1. PURPOSE. The purpose of this Plan is to promote the interests of
SUPERVALU INC., a Delaware corporation (the "Corporation"), and its
stockholders by encouraging selected key salaried management employees of the
Corporation, and members of the Board of Directors who are not also employees
of the Corporation, to invest in shares of the Corporation's Common Stock with
the increased personal interest and effort in the continued success and
progress of the business that stock ownership can produce, and by providing
additional means of attracting and retaining competent executive personnel and
directors.
2. ADMINISTRATION; GRANTING OF OPTIONS. The Plan shall be administered by
the Board of Directors of the Corporation.
The Board of Directors shall have full authority in its discretion, but
subject to the express provisions of the Plan, to:
(a) determine the purchase price of the Common Stock covered by each
option;
(b) determine the persons to whom and the time or times at which options
shall be granted;
(c) determine the number of shares to be subject to each option;
(d) determine terms and provisions (and amendments thereof) of the
respective option agreements (which need not be identical), including such
terms and provisions (and amendments) as shall be required in the judgment
of the Board to conform to any law or regulation applicable thereto;
(e) determine which options shall be Incentive Stock Options within the
meaning of Section 422[A] of the Internal Revenue Code of 1986, as amended
(the "Code");
(f) accelerate the time at which all or any part of an option may be
exercised;
(g) modify or amend any outstanding option agreement subject to the
consent of optionee;
(h) interpret the Plan and prescribe, amend and rescind rules and
regulations relating to it;
(i) make all other determinations deemed necessary or advisable for the
administration of the Plan.
All decisions, determinations and selections made by the Board of Directors
on the foregoing matters shall be conclusive.
The granting of an option pursuant to the Plan shall be effective only when
an option is duly awarded to an employee or director by the Board of
Directors.
The Executive Committee of the Corporation, in addition to and not to the
exclusion of the Board of Directors of the Corporation, is authorized to
exercise all of the powers authorized and conferred by the Plan on the Board
of Directors other than the power under Section 13 of this Plan to terminate
and amend the Plan.
The Board of Directors may also authorize, at any time, the formation of a
Stock Option Committee (the "Committee"), consisting of three or more members
appointed from time to time by the Board, which Committee would have authority
to exercise the powers conferred on the Board under the Plan, other than the
power under Section 13 herein to terminate and amend the Plan. In addition,
the Board of Directors may authorize, at any time, the Chief Executive Officer
of the Corporation to extend the period of exercise of certain Incentive Stock
Options and non-incentive (non-qualified) stock options in accordance with the
provisions of Section 10 of the Plan.
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3. ELIGIBILITY; FACTORS TO BE CONSIDERED IN GRANTING STOCK OPTIONS.
Incentive Stock Options may be granted only to key salaried management
employees (which term, as used herein, includes officers) of the Corporation
and of its present and future subsidiary corporations. Options which do not
qualify as Incentive Stock Options may be granted to key salaried management
employees of the Corporation and of its present and future subsidiary
corporations and to members of the Board of Directors of the Corporation who
are not also employees of the Corporation or one of its subsidiaries ("Non-
Employee Directors"), provided, however, that options shall be granted to Non-
Employee Directors only pursuant to Section 7 hereof.
In determining the employees to whom options shall be granted and the number
of shares to be covered by each such option, the Board of Directors may take
into account the nature of the services rendered by the respective employees,
their present and potential contributions to the success of the Corporation
and such other factors as the Board of Directors, in its discretion, shall
deem relevant.
Subject to the provisions of Section 11 herein, an employee who has been
granted an option under the Plan or under any prior stock option plan of the
Corporation may be granted an additional option or options under the Plan if
the Board of Directors shall so determine.
4. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided in Section 12
herein:
(a) the stock to be offered under the Plan shall be shares of the
Corporation's authorized Common Stock, par value $1.00 per share, which may
be either shares reacquired and held in the treasury of the Corporation or
authorized but unissued shares; and
(b) the aggregate number of shares which may be issued under all options
granted pursuant to the Plan shall be 4,500,000 shares.
Shares subject to, but not issued under, any option terminating or expiring
for any reason prior to exercise thereof in full shall again be available for
other options thereafter granted under the Plan.
5. TERM OF PLAN AND OF EACH OPTION AGREEMENT; EXERCISE OF OPTIONS. The
period during which options may be granted under the Plan shall expire
February 7, 1999. The term of each option so granted shall expire not more
than ten years from the date the option is granted.
[Except with respect to options granted to Non-Employee Directors pursuant to
Section 7 hereof.] The Board of Directors may determine at the time of granting
whether each such option is exercisable in full, in part from time to time or
in installments, which may be cumulative from year to year during such term to
the extent not exercised in a prior year; provided, however, that
notwithstanding the foregoing, from and after a Change of Control (as
hereinafter defined), all options granted under the Plan, including options
granted to Non-Employee Directors pursuant to Section 7 hereof, shall become
immediately exercisable to the full extent of the original award. As used
herein, "Change of Control" shall mean any of the following events:
(i) The acquisition by any person, entity or "group", within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), other than the Corporation or any of its
wholly-owned subsidiaries, or any employee benefit plan of the Corporation
and/or one or more of its wholly-owned subsidiaries, of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of either the then outstanding shares of Common Stock
or the combined voting power of the Corporation's then outstanding voting
securities in a transaction or series of transactions not approved in
advance by a vote of at least three-quarters of the Continuing Directors
(as hereinafter defined); or
(ii) Individuals who, as of April 13, 1988, constitute the Board of
Directors of the Corporation (generally the "Directors" and as of April 13,
1988 the "Continuing Directors") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a Director
subsequent to April 13, 1988 whose nomination for election was approved in
advance by a vote
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of at least three-quarters of the Continuing Directors (other than a
nomination of an individual whose initial assumption of office is in
connection with an actual or threatened solicitation with respect to the
election or removal of the Directors of the Corporation, as such terms are
used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be
deemed to be a Continuing Director; or
(iii) The approval by the stockholders of the Corporation of a
reorganization, merger, consolidation, liquidation or dissolution of the
Corporation or of the sale (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Corporation
other than a reorganization, merger, consolidation, liquidation,
dissolution or sale approved in advance by a vote of at least three
quarters of the Continuing Directors; or
(iv) The first purchase under any tender offer or exchange offer (other
than an offer by the Corporation or any of its subsidiaries) pursuant to
which shares of Common Stock are purchased.
Options granted under this Plan need not be identical with respect to the
terms of exercise thereof. Subject only to the foregoing limitations, options
may be exercised in whole at any time or in part from time to time during the
option term by serving written notice of exercise on the Corporation,
accompanied by payment of the purchase price.
The Board of Directors or the Committee, as the case may be, may grant
"restoration" options, separately or together with another option, pursuant to
which, subject to the terms and conditions established by the Board of
Directors or the Committee, as the case may be, and any applicable
requirements of Rule 16b-3 promulgated under the Exchange Act or any other
applicable law, the optionee would be granted a new option when the payment of
the exercise price of the option to which such "restoration" option relates is
made by the delivery of shares of the Corporation's Common Stock owned by the
optionee, as described in Section 6 hereof, which new option would be an
option to purchase the number of shares not exceeding the sum of (a) the
number of shares of the Corporation's Common Stock tendered as payment upon
the exercise of the option to which such "restoration" option relates and (b)
the number of shares of the Corporation's Common Stock, if any, tendered as
payment of the amount to be withheld under applicable income tax laws in
connection with the exercise of the option to which such "restoration" option
relates, as described in Section 15 hereof. "Restoration" options may be
granted with respect to options previously granted under this Plan or any
prior stock option plan of the Corporation, and may be granted in connection
with any option granted under this Plan (other than an option granted to a
Non-Employee Director pursuant to Section 7 hereof) at the time of such grant.
The purchase price of the Common Stock under each such new option, and the
other terms and conditions of such option, shall be determined by the Board of
Directors or the Committee, as the case may be, consistent with the provisions
of the Plan.
6. OPTION PRICES. Except with respect to options granted to Non-Employee
Directors pursuant to Section 7 hereof, the purchase price of the Common Stock
under each option shall be determined by the Board of Directors, but shall not
be less than 100% of the fair market value of the Common Stock at the time of
granting the option as found by the Board.
The purchase price of the shares as to which an option shall be exercised
shall be paid in full in cash at the time of exercise as shall be provided in
the option agreement, and any optionee, without limitation, shall also be
entitled to pay the exercise price by tendering to the Corporation shares of
the Corporation's Common Stock, previously owned by the optionee, having a
fair market value on the date of exercise equal to the option price (or the
portion thereof not paid in cash).
7. OPTIONS TO NON-EMPLOYEE DIRECTORS. The Board of Directors or the
Committee, as the case may be, shall issue options which do not qualify as
Incentive Stock Options to Non-Employee Directors in accordance with this
Section 7.
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<PAGE>
Each Non-Employee Director serving on the Corporation's Board of Directors
immediately following the Annual Meeting of Stockholders of the Corporation on
June 30, 1992 shall be granted, as of June 30, 1992, an option to purchase
3,000 shares of Common Stock. Each Non-Employee Director first elected or
appointed to the Corporation's Board of Directors after June 30, 1992 and
during the term of the Plan shall be granted, as of the date of such
Director's first election or appointment to the Board of Directors, an option
to purchase 3,000 shares of Common Stock. After the initial grant to each Non-
Employee Director as set forth above in this Section 7, each such Director
shall be granted during the term of the Plan, as of [each even-numbered
anniversary of the date of such initial grant to such Director] the date of the
Corporation's Annual Meeting of Stockholders in each even-numbered year, if
such Director's term of office continues after such [anniversary date] Annual
Meeting, an option to purchase 3,000 shares of Common Stock.
Each option granted to a Non-Employee Director pursuant to this Section 7
shall [be exercisable as to 40% of the shares subject to such option on the
first anniversary of the date of grant and as to an additional 30% of the
shares subject to such option on each of the second and third anniversaries of
the date of grant, shall] have an exercise price equal to the fair market value
of the shares of Common Stock as of the date of grant and shall expire on the
tenth anniversary of the date of grant. "Restoration" options may not be
granted to any Non-Employee Director. This Section 7 shall not be amended more
than once every six months other than to comport with changes in the Code, the
Employee Retirement Income Security Act or the rules and regulations
thereunder.
8. ADDITIONAL TERMS. Options granted under the Plan shall not be affected by
any change of duties or position so long as the optionee continues to be an
employee of the Corporation or of a subsidiary (or continues to be a Director
of the Corporation in the case of any Non-Employee Director). Each option
agreement may contain such provisions as the Board of Directors shall approve
with reference to the effect of approved leaves of absence, provided that with
respect to Incentive Stock Options such provisions conform to the requirements
of the Code.
Nothing in the Plan or in any option granted pursuant thereto shall confer
on any person any right to continue in the employ of the Corporation or of any
of its subsidiaries (or to continue as a Director of the Corporation in the
case of any Non-Employee Director) or affect, in any way, the right of the
Corporation or any of its subsidiaries to terminate his employment (or to
terminate his directorship in the case of any Non-Employee Director) at any
time.
9. NON-TRANSFERABILITY OF OPTIONS. No option granted under the Plan may be
assignable or transferable except by will or the laws of descent and
distribution, and each option may be exercised, during the lifetime of the
optionee, only by him.
10. DEATH; OTHER TERMINATION OF EMPLOYMENT OR DIRECTORSHIP. If an optionee
(other than a Non-Employee Director) shall cease to be employed by the
Corporation or a subsidiary of the Corporation [(or shall cease to be a
Director of the Corporation in the case of any Non-Employee Director)] for any
reason other than death, except as otherwise provided in the following
paragraphs, he may, within three months following the date of such termination
of employment [(or following the date of such termination of directorship in
the case of any Non-Employee Director),] exercise his option; provided,
however, that the option may not be exercised after the expiration of the
applicable period referred to in Section 5 hereof [(or Section 7 hereof with
respect to any option granted to a Non-Employee Director)] and may be exercised
only to the extent of the number of shares the optionee was entitled to
purchase under the option on the date of such termination of employment [(or on
the date of such termination of directorship in the case of any Non-Employee
Director)], subject to [(except with respect to options granted to Non-Employee
Directors pursuant to Section 7 hereof),] any right of the Board of Directors
to accelerate the vesting of options at the time of such termination of
employment or otherwise and any right of repurchase by the Corporation
provided for in the option agreement.
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Except as otherwise provided in this paragraph, if an optionee (other than a
Non-Employee Director) retires at or after age 55 with ten or more years of
service with the Corporation or a subsidiary of the Corporation [(or if a Non-
Employee Director terminates his directorship at or after age 55 with ten or
more years of service as a Director of the Corporation, or at or after age 65
regardless of the number of years of service as a Director of the
Corporation)], he may, within two years following the date of such retirement
[(or following the date of such termination of directorship in the case of any
Non-Employee Director)], exercise his option; provided, however, that the
option may not be exercised after the original expiration date of such option
set forth in the related option agreement and may be exercised only to the
extent of the number of shares the optionee was entitled to purchase under the
option on the date of such retirement [(or on the date of such termination of
directorship in the case of any Non-Employee Director)], subject to [(except
with respect to options granted to Non-Employee Directors pursuant to Section
7 hereof)] any right of the Board of Directors to accelerate the vesting of
options at the time of retirement or otherwise and any right of repurchase by
the Corporation provided for in the option agreement. With respect to
Incentive Stock Options granted before February 16, 1991, if an optionee
retires at or after age 55 with ten or more years of service with the
Corporation, he may, if so determined by the Chief Executive Officer of the
Corporation (or by the Committee in the case of an optionee who is subject to
the provisions of Section 16 of the Exchange Act) in their sole and absolute
discretion, within two years following the date of such retirement, exercise
his option; provided, however, that the option may not be exercised after the
original expiration date of such option set forth in the related option
agreement and may be exercised only to the extent of the number of shares the
optionee was entitled to purchase under the option on the date of such
retirement, subject to any right of the Board of Directors to accelerate the
vesting of options at the time of retirement or otherwise and any right of
repurchase by the Corporation provided for in the option agreement. If an
optionee (other than a Non-Employee Director) retires (which term shall
include termination of employment due to disability) at or after age 55 with
ten or more years of service with the Corporation or a subsidiary of the
Corporation, he may (if so determined by the Committee in its sole and
absolute discretion, and only if such optionee is not subject to the
provisions of Section 16 of the Securities Exchange Act of 1934, as amended)
exercise his option at any time prior to the expiration date of such option
set forth in the related option agreement; provided, however, that the option
may be exercised only to the extent of the number of shares the optionee was
entitled to purchase under the option on the date of such retirement, subject
to any right of the Board of Directors to accelerate the vesting of options at
the time of retirement or otherwise and any right of repurchase by the
Corporation provided for in the option agreement. Any determination made
pursuant to this paragraph by the Chief Executive Officer or the Committee, as
the case may be, regarding the extension of the exercise period of an option
shall be made on a case-by-case basis, at or about the time of retirement,
taking into account the optionee's service on behalf of the Corporation, the
value of the Corporation's Common Stock and the option price.
If any optionee who was a Non-Employee Director shall cease to be a Director
for any reason, including the death of the optionee, such optionee may
exercise his or her options at such time as set forth in the related option
agreement.
In the event that the Corporation ceases to own at least 50% or more of the
outstanding capital stock of ShopKo Stores, Inc. ("ShopKo"), an optionee who
is employed by ShopKo and who is not subject to Section 16 of the Exchange Act
with respect to the Corporation may, if so determined by the Chief Executive
Officer of the Corporation in his sole and absolute discretion, exercise his
option within two years following the date on which the Corporation ceases to
own at least 50% or more of the outstanding capital stock of ShopKo (the
"Termination Date"); provided, however, that the option may not be exercised
after the original expiration date of such option set forth in the related
option agreement and may be exercised only to the extent of the number of
shares the optionee was entitled to purchase under the option on the
Termination Date, subject to any right of the Board of Directors to accelerate
the vesting of options prior to the Termination Date or otherwise and any
right of repurchase by the Corporation provided for in the option agreement;
provided, further, that the optionee is
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<PAGE>
employed by ShopKo at the time of exercise of the option. The determination by
the Chief Executive Officer of the Corporation regarding the extension of the
exercise period of an option pursuant to the terms of this paragraph shall be
made on a case-by-case basis, at or about the Termination Date, taking into
account the optionee's service on behalf of the Corporation and ShopKo, the
value of the Corporation's Common Stock and the option price.
If a person to whom an option has been granted under the Plan shall die
prior to the exercise or expiration of all options granted, such options may
be exercised by a legatee or legatees of the option holder under his last will
or by his personal representatives or distributees within one year following
the date of his death to the full extent of the number of shares covered by
the option not previously purchased, whether or not such shares have become
purchasable by such optionee at the date of such death; provided, however,
that the option may not be exercised after the expiration of the applicable
period referred to in Section 5 hereof (or Section 7 hereof with respect to
any option granted to a Non-Employee Director); and provided further, that if
an optionee (other than a Non-Employee Director) dies at or after age 55 with
ten or more years of service with the Corporation or a subsidiary of the
Corporation and while employed by the Corporation or a subsidiary, such
legatee, legatees, representatives or distributees may (if so determined by
the Committee in its sole and absolute discretion, and only if such optionee
is not subject to the provisions of Section 16 of the Securities Exchange Act
of 1934, as amended) exercise such option at any time prior to the expiration
date of such option set forth in the related option agreement to the full
extent of the number of shares covered by the option not previously purchased,
whether or not such shares have become purchasable by such optionee at the
date of such death. Any determination made pursuant to this paragraph by the
Committee regarding the extension of the exercise period of an option shall be
made on a case-by-case basis, at or about the time of death, taking into
account the optionee's service on behalf of the Corporation, the value of the
Corporation's Common Stock and the option price.
11. INCENTIVE STOCK OPTIONS. Except with respect to options granted to Non-
Employee Directors pursuant to Section 7 hereof, the Board of Directors is
hereby authorized to determine, upon the granting of each option, whether such
option shall be an Incentive Stock Option under Section 422[A] of the Code or
shall be an option which is not an Incentive Stock Option under Section 422[A].
For Incentive Stock Options granted before January 1, 1987, the aggregate fair
market value of the stock (determined as of the time the Incentive Stock
Option is granted) covered under all Incentives Stock Options granted (under
this Plan and all other incentive stock option plans of the Corporation or any
subsidiary), in any calendar year, shall not exceed $100,000 plus any unused
limit carry-over (as provided under [Section 422A(c)(4) of the Code] former
Section 422(c)(4) of the Code effective for options granted before January 1,
1987). For Incentive Stock Options granted after December 31, 1986, the
aggregate fair market value (determined at the time the Incentive Stock Option
is granted) of the stock with respect to which all Incentive Stock Options are
exercisable for the first time by an employee during any calendar year (under
all plans described in subsection (b)[7] of Section 422[A] of the Code of his
employer corporation and its parent and subsidiary corporations) shall not
exceed $100,000.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Notwithstanding any other
provision of the Plan, the Board of Directors may adjust the number and class
of shares subject to each outstanding option and the option prices in the
event of changes in the outstanding Common Stock of the Corporation by reason
of stock dividends, split-ups, recapitalizations, mergers, consolidations,
combinations or exchanges of shares and the like. In the event of any such
change in the outstanding Common Stock of the Corporation, the aggregate
number and class of shares available under the Plan shall be appropriately
adjusted by the Board of Directors, whose determination shall be conclusive.
13. TERMINATION AND AMENDMENT. The Plan may be terminated, modified or
amended by the stockholders of the Corporation.
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Subject to Section 7 hereof, the Board of Directors of the Corporation may
also terminate the Plan or make such modifications or amendments thereof as it
shall deem advisable, or to conform to any change in any law or regulation
applicable thereto; provided, however, that the Board of Directors may not,
without further approval by the holders of a majority of the outstanding stock
of the Corporation having general voting power, make any modification or
amendment which operates:
(a) to make any material change in the class of employees eligible to
receive Incentive Stock Options as defined in Section 3 above; and
(b) to increase the total number of shares for which options may be
granted under the Plan, except as resulting from the operation of Section
12 above.
No termination, modification or amendment of the Plan may, without the
consent of the employee to whom any option shall theretofore have been
granted, adversely affect the rights of such employee under such option.
14. EFFECTIVE DATE OF PLAN. The Plan shall become effective February 23,
1983, subject to approval by the shareholders of the Corporation within 12
months thereafter.
15. TAX WITHHOLDING. Subject to such rules as the Board of Directors or the
Committee may adopt not inconsistent with the provisions of the Plan:
(a) At any time when an optionee is required to pay the Corporation an
amount required to be withheld under applicable income tax laws in
connection with the exercise of an option which does not qualify as an
Incentive Stock Option under Section 422[A] of the Code, the optionee may
elect to have the Corporation retain from the distribution shares of Common
Stock to satisfy this obligation in whole or in part (an "Election"). The
shares to be withheld shall be valued at 100% of the fair market value of
the shares on the date that the amount of tax required to be paid shall be
determined (the "Tax Date"). Fair market value of the shares shall equal
the mean of the opening and closing trade prices of the shares as reported
on the New York Stock Exchange on the Tax Date, or, if no trading in the
shares occurs on the Tax Date, on the immediately preceding trading date.
(b) Each election must be made prior to the Tax Date. The Board or the
Committee may disapprove of any Election, may suspend or terminate the
right to make Elections, may limit the amount of any Election, may provide
at the time of grant with respect to any option that the right to make
Elections shall not apply to such option and may make rules concerning the
required information to be included in any Election. An Election is
irrevocable.
(c) The Election may be made in an amount equal to the amount of tax
required by law to be withheld with respect to the option exercise. Any
fractional share withholding amount must be paid in cash.
(d) If an optionee makes an Election and the optionee's Tax Date is
deferred for six months from the date of exercise of the option, the
optionee will initially receive the full amount of the shares, but will be
unconditionally obligated to surrender to the Corporation on the Tax Date
the proper number of shares to satisfy the withholding obligation, plus
cash for any remainder of the withholding obligation including any
fractional shares withholding amount.
(e) Optionees who are "officers" or "directors" of the Corporation, as
those terms are used in Section 16(b) of the Exchange Act, may only make an
Election in compliance with the rules established by the Board or the
Committee to comply with Section 16(b).
B-7
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LOGO
LOGO
Printed with soy
based inks on
recycled
paper containing at least 10% fibers from
paper recycled by
consumers.
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SUPERVALU INC.
11840 VALLEY VIEW ROAD
EDEN PRAIRIE, MINNESOTA 55344
1996 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
The undersigned hereby appoints Michael W. Wright and Teresa H. Johnson, and
each of them, the undersigned's agent and proxy, with power of substitution to
vote as the undersigned's proxy in accordance with the specifications appearing
below, and, in their discretion, upon all other matters that may properly come
before the Annual Meeting of Stockholders of SUPERVALU INC., a Delaware
corporation, to be held on Thursday, June 27, 1996 at 10:30 a.m., local time,
or any adjournment or adjournments thereof, according to the number of votes
that the undersigned would be entitled to vote if the undersigned were
personally present at said meeting, and hereby revoking all former proxies.
PLEASE MARK THIS PROXY AS INDICATED ON THE REVERSE SIDE TO VOTE ON ANY ITEM.
COMMENTS/ADDRESS CHANGE:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NUMBER OF STOCKHOLDERS ATTENDING ANNUAL MEETING
PLEASE SEND ME INFORMATION ON THE DIVIDEND REINVESTMENT PLAN.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE.)
SUPERVALU INC.
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, JUNE 27, 1996
MINNEAPOLIS CONVENTION CENTER
1301 SECOND AVENUE SOUTH
MINNEAPOLIS, MN 55403
Free parking for the Annual Meeting of Stockholders is available in the Plaza
Parking Ramp and the Orchestra Hall Ramp. Upon entering either ramp, take a
parking ticket, sign your name on the back and tell the attendant you are
attending SUPERVALU's Annual Meeting.
A map of the parking facilities is shown on the reverse side of this card.
The Annual Meeting will begin at 10:30 a.m. in Ballroom A in the Minneapolis
Convention Center. Refreshments will be available before and after the Annual
Meeting in Ballroom B.
* * * * *
IMPORTANT INFORMATION REGARDING QUARTERLY REPORTS:
SUPERVALU is no longer distributing quarterly reports to shareholders.
Shareholders may, however, elect to receive a quarterly earnings release at no
charge as soon as results are made public by one of the following methods:
. Through a Wall Street Journal service by calling 1-800-965-4404, or give
the ticker symbol, SVU, and fax your request to 1-800-965-6766.
. By calling Company News on Call at 1-800-758-5804. An automated operator
will ask for SUPERVALU's extension number, which is 831017, and a fax
number at which the release may be received.
. Via the Internet World Wide Web at http://www.prnewswire.com.
. You may add your name to SUPERVALU's mailing list by writing to: SUPERVALU
INC., Investor Relations & Communications, P.O. Box 990, Minneapolis, MN
55440, or phone 612-828-4599, or fax 612-828-8955.
<PAGE>
- -------------------------------------------------------------------------------
IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS,
PLEASE SIGN BELOW; NO BOXES NEED TO BE CHECKED.
[X] Please mark
your votes
as this
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR ELECTION OF
DIRECTORS AND FOR THE PROPOSALS IN ITEMS 2, 3 AND 4.
ITEM 1--ELECTION OF DIRECTORS
NOMINEES: EDWIN C. GAGE, GARNETT L. KEITH, JR., FOR WITHHELD
RICHARD L. KNOWLTON, CAROLE F. ST. MARK ALL FOR ALL
[_] [_]
TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME IN
THE SPACE PROVIDED.
- ------------------------------------------------------------------------------
ITEM 2--RATIFY APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS
FOR AGAINST ABSTAIN
[_] [_] [_]
ITEM 3--PROPOSAL TO APPROVE THE NON-EMPLOYEE DIRECTORS DEFERRED STOCK PLAN
FOR AGAINST ABSTAIN
[_] [_] [_]
ITEM 4--PROPOSAL TO AMEND THE 1983 EMPLOYEE STOCK OPTION PLAN
FOR AGAINST ABSTAIN
[_] [_] [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE STOCKHOLDER PROPOSAL IN
ITEM 5.
ITEM 5--STOCKHOLDER PROPOSAL RELATING TO PREFERRED SHARE PURCHASE RIGHTS
FOR AGAINST ABSTAIN
[_] [_] [_]
Date
--------------------------------------------------------------------, 1996
Signature(s)
-------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE DATE AND SIGN ABOVE exactly as name appears, indicating, if appropriate,
official position or capacity. If co-owners, both should sign.
- -------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
RETURN PROXY CARD IN ENCLOSED ENVELOPE AFTER COMPLETING, SIGNING AND DATING
[LOGO OF MINNEAPOLIS CONVENTION CENTER PARKING & SKYWAY SYSTEM]
<PAGE>
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SUPERVALU INC. EMPLOYEE STOCK OWNERSHIP PLAN
CONFIDENTIAL VOTING INSTRUCTIONS TO NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, TRUSTEE
SUPERVALU INC.
11840 VALLEY VIEW ROAD
EDEN PRAIRIE, MINNESOTA 55344
1996 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
I hereby direct that the voting rights pertaining to the stock of SUPERVALU
INC. held by the SUPERVALU INC. Employee Stock Ownership Plan Trust and
allocable to my accounts under the above plan shall be exercised at the 1996
Annual Meeting of Stockholders to be held on Thursday, June 27, 1996 at 10:30
a.m., local time, or any adjournment or adjournments thereof, in accordance
with the specifications appearing below, and in the Trustee's discretion, upon
all other matters that may properly come before said Meeting of Stockholders.
The undersigned hereby acknowledges receipt of the Proxy Statement for the
meeting.
THIS VOTING INSTRUCTION CARD IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
PLEASE MARK THIS PROXY AS INDICATED ON THE REVERSE SIDE TO VOTE ON ANY ITEM.
COMMENTS/ADDRESS CHANGE:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NUMBER OF STOCKHOLDERS ATTENDING
ANNUAL MEETING
PLEASE SEND ME INFORMATION ON THE DIVIDEND REINVESTMENT PLAN.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE.)
SUPERVALU INC.
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, JUNE 27, 1996
MINNEAPOLIS CONVENTION CENTER
1301 SECOND AVENUE SOUTH
MINNEAPOLIS, MN 55403
Free parking for the Annual Meeting of Stockholders is available in the Plaza
Parking Ramp and the Orchestra Hall Ramp. Upon entering either ramp, take a
parking ticket, sign your name on the back and tell the attendant you are
attending SUPERVALU's Annual Meeting.
A map of the parking facilities is shown on the reverse side of this card.
The Annual Meeting will begin at 10:30 a.m. in Ballroom A in the Minneapolis
Convention Center. Refreshments will be available before and after the Annual
Meeting in Ballroom B.
* * * * *
IMPORTANT INFORMATION REGARDING QUARTERLY REPORTS:
SUPERVALU is no longer distributing quarterly reports to shareholders.
Shareholders may, however, elect to receive a quarterly earnings release at no
charge as soon as results are made public by one of the following methods:
. Through a Wall Street Journal service by calling 1-800-965-4404, or give
the ticker symbol, SVU, and fax your request to 1-800-965-6766.
. By calling Company News on Call at 1-800-758-5804. An automated operator
will ask for SUPERVALU's extension number, which is 831017, and a fax
number at which the release may be received.
. Via the Internet World Wide Web at http://www.prnewswire.com.
. You may add your name to SUPERVALU's mailing list by writing to: SUPERVALU
INC., Investor Relations & Communications, P.O. Box 990, Minneapolis, MN
55440, or phone 612-828-4599, or fax 612-828-8955.
<PAGE>
IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS,
PLEASE SIGN BELOW; NO BOXES NEED TO BE CHECKED.
[X] Please mark
your votes
as this
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR ELECTION OF
DIRECTORS AND FOR THE PROPOSALS IN ITEMS 2, 3 AND 4.
ITEM 1--ELECTION OF DIRECTORS FOR WITHHELD
NOMINEES: EDWIN C. GAGE, GARNETT L. KEITH, JR., ALL FOR ALL
RICHARD L. KNOWLTON, CAROLE F. ST. MARK [_] [_]
TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME IN
THE SPACE PROVIDED.
- ------------------------------------------------------------------------------
ITEM 2--RATIFY APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS
FOR AGAINST ABSTAIN
[_] [_] [_]
ITEM 3--PROPOSAL TO APPROVE THE NON-EMPLOYEE DIRECTORS DEFERRED STOCK PLAN
FOR AGAINST ABSTAIN
[_] [_] [_]
ITEM 4--PROPOSAL TO AMEND THE 1983 EMPLOYEE STOCK OPTION PLAN
FOR AGAINST ABSTAIN
[_] [_] [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE STOCKHOLDER PROPOSAL IN
ITEM 5.
ITEM 5--STOCKHOLDER PROPOSAL RELATING TO PREFERRED SHARE PURCHASE RIGHTS
FOR AGAINST ABSTAIN
[_] [_] [_]
Date
--------------------------------------------------------------------, 1996
Signature(s)
------------------------------------------------------------
- --------------------------------------------------------------------------------
The signature(s) should be exactly as the name(s) appear printed above. If
there are co-owners, both must sign.
- -------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
RETURN PROXY CARD IN ENCLOSED ENVELOPE AFTER COMPLETING, SIGNING AND DATING
[LOGO OF MINNEAPOLIS CONVENTION CENTER PARKING & SKYWAY SYSTEM]
