<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.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
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Notice of Annual Meeting of Stockholders
to be Held Thursday, June 29, 2000
The Annual Meeting of Stockholders of SUPERVALU INC. will be held on
Thursday, June 29, 2000, at 11:00 a.m., eastern time, at The Jefferson Hotel,
Franklin & Adams Streets, Richmond, Virginia 23220 for the following purposes:
.to elect four directors;
.to ratify the appointment of KPMG Peat Marwick LLP as independent
auditors;
and to transact such other business as may properly come before the meeting.
Record Date
The Board of Directors has fixed the close of business on May 1, 2000, as
the record date for the purpose of determining stockholders who are entitled
to notice of, and to vote at the meeting. Common and preferred stockholders
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
check the appropriate box on the proxy card when you return your proxy or
follow the instructions on your proxy card to vote and to confirm your
attendance by telephone. Please note that the meeting will not be held in
Minneapolis, Minnesota this year. In recognition of the acquisition of
Richfood Holdings, Inc. during the past fiscal year, the meeting will be held
in Richmond, Virginia, where the principal offices of Richfood are located.
Directions to the Jefferson Hotel are included on your proxy card. If you need
special assistance because of a disability, please contact me at P.O. Box 990,
Minneapolis, Minnesota 55440.
BY ORDER OF THE BOARD OF DIRECTORS
John P. Breedlove
Secretary
May 24, 2000
<PAGE>
PROXY STATEMENT--VOTING PROCEDURES
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YOUR VOTE IS VERY IMPORTANT
. Voting by Mail. Whether or not you expect to attend the meeting, please
sign, date, and mail your proxy promptly in the enclosed postage paid
envelope.
. Voting by Telephone and the Internet. If you wish to vote by telephone or
by the Internet, please follow the instructions on the enclosed proxy card.
If you vote by telephone or the Internet you do not need to return the
proxy card.
It is important that all stockholders vote. If you sign, date and mail your
proxy without indicating how you want to vote, your proxy will be voted as
recommended by the Board of Directors.
Vote Required and Method of Counting Votes
. Number of Shares Outstanding. SUPERVALU has two classes of capital stock
outstanding, Common and Preferred. The holders of each class are entitled
to one vote for each share held, voting together as one class. 132,066,766
shares of Common Stock and 1,341 shares of Preferred Stock are eligible to
vote at the meeting.
. Vote Required. The following is an explanation of the vote required for
each of the items to be voted on.
Election of Directors (Item 1)
The four nominees receiving the highest number of votes will be elected.
Stockholders who do not wish their shares to be voted for a particular nominee
may so indicate in the space provided on the proxy card.
Ratification of the appointment of KPMG LLP as independent auditors (Item 2)
The affirmative vote of a majority of shares present in person or by proxy is
required for approval of Item 2. Shares represented by a proxy marked
"abstain" on any matter 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 voted in favor of the item. Therefore, any proxy marked
"abstain" will have the effect of a vote of the shares against the item.
Shares represented by a proxy as to which there is a "broker non-vote" (i.e.
where a broker does not have discretionary authority to vote the shares) will
be considered present at the meeting for purposes of determining a quorum, but
will have no effect on the vote.
Revoking Your Proxy
You may revoke your proxy at any time before it is voted by sending a written
statement to the Secretary, or by submitting another proxy with a later date.
You may also revoke your proxy by appearing and voting at the meeting.
Voting By Participants in SUPERVALU Benefit Plans
If you own SUPERVALU shares as a participant in one or more of SUPERVALU's
employee benefit plans, you will receive a single proxy card that covers both
the shares credited to your plan account(s) and shares you own that are
registered in the same name. If any of your plan accounts are not in the same
name as your shares of record, you will receive separate proxy cards for your
record and plan holdings. Proxies submitted by plan participants will serve as
voting instructions to the trustee(s) for the plans whether provided by mail,
telephone or the Internet.
Other Business
The Board knows of no other matters to be presented for stockholder action at
the meeting. If other matters are properly brought before the meeting, the
persons named in the accompanying proxy card intend to vote the shares
represented by them in accordance with their best judgment. This Proxy
Statement will be first mailed to stockholders on or about May 24, 2000.
1
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
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The Board of Directors held six regular meetings and one special meeting
during the last fiscal year. Each director attended more than 75% of the
meetings of the Board and its committees on which the director served, except
for Lawrence A. Del Santo who attended 64%. The Executive Committee of the
Board does not have scheduled meetings and did not meet during the year. The
Board maintains four other committees: Audit, Finance, Executive Personnel and
Compensation, and Director Affairs. Membership on the Audit and Executive
Personnel and Compensation Committees is limited to non-employee directors.
Audit Committee
The following directors serve on the Audit Committee: Garnett L. Keith, Jr.
(Chairman), Susan E. Engel, Charles M. Lillis, Harriet Perlmutter and Steven
S. Rogers. The Audit Committee met three times in the last fiscal year.
The primary responsibilities of the Audit Committee are to assist the Board of
Directors:
. In its oversight of the Company's accounting and financial reporting
principles and policies, and internal audit controls and procedures;
. In its oversight of the Company's financial statements and the independent
audit thereof;
. In selecting, nominating, evaluating and, where deemed appropriate,
replacing the outside auditors; and
. In evaluating the independence of the outside auditors.
Finance Committee
The following directors serve on the Finance Committee: Charles M. Lillis
(Chairman), Susan E. Engel, Garnett L. Keith, Jr., Harriet Perlmutter, Steven
S. Rogers, Carole F. St. Mark and Michael W. Wright. The Finance Committee met
three times in the last fiscal year.
The primary responsibilities of the Finance Committee are to review the
financial structure, policies, and future financial plans of the Company and
to make recommendations concerning them to the Board. In carrying out these
responsibilities, the Finance Committee periodically reviews:
. The annual operating and capital budgets of the Company as proposed by
management, and performance by the Company as compared to the approved
budgets;
. Dividend policy and rates;
. Investment performance of the Company's employee benefit plans;
. Company financing arrangements;
. The Company's capital structure, including key financial ratios such as
debt to equity ratios and coverage of fixed charges; and
. Proposals for changes in the capitalization of the Company, including
purchases of treasury stock.
Director Affairs Committee
The following directors serve on the Director Affairs Committee: William A.
Hodder (Chairman), Lawrence A. Del Santo, Edwin C. Gage, Richard L. Knowlton
and Michael W. Wright. The Director Affairs Committee met two times in the
last fiscal year.
The mission of the Director Affairs Committee is to recommend a framework to
assist the Board in fulfilling its corporate governance responsibilities. In
carrying out its mission, the Director Affairs Committee establishes and
regularly reviews the Board of Directors' policies and procedures which
provide:
. Criteria for the size and composition of the Board;
. Procedures for the conduct of Board meetings including executive sessions
of the Board;
. Policies on director retirement and resignation;
. Criteria regarding personal qualifications needed for Board membership; and
2
<PAGE>
. Appropriate compensation for directors.
In addition, the Director Affairs Committee has responsibility to:
. Consider and recommend nominations for Board membership and the composition
of Board Committees;
. Evaluate Board practices at SUPERVALU and other well-managed companies and
recommend appropriate changes to the Board (see "SUPERVALU Board Practices"
below); and
. Consider governance issues raised by stockholders and recommend appropriate
responses to the Board.
Executive Personnel and Compensation Committee
The following directors serve on the Executive Personnel and Compensation
Committee: Edwin C. Gage (Chairman), Lawrence A. Del Santo, William A. Hodder,
Richard L. Knowlton and Carole F. St. Mark. This Committee met four times in
the last fiscal year. When necessary for purposes of Section 162(m) of the
Internal Revenue Code, the Committee acts by subcommittee comprised solely of
the members of the Committee who are "outside directors" as defined pursuant
to Section 162(m). This subcommittee met two times in the last fiscal year and
took action once by written consent, and was comprised of all of the members
of the Committee except for Mr. Gage. See "Compensation Committee Interlocks
and Insider Participation."
The primary functions of the Executive Personnel and Compensation Committee
are to:
. Determine the process to evaluate the performance of the Chief Executive
Officer;
. Review and recommend to the Board the compensation of the Chief Executive
Officer;
. Review and recommend to the Board major changes in executive compensation
programs, executive stock options and retirement plans for officers;
. Consider and make recommendations to the Board concerning the annual
election of corporate officers and the Company's succession plan;
. Approve annual salaries and bonuses of corporate officers and other
executives at specified levels;
. Review and approve participants and performance targets under annual and
long-term incentive compensation plans; and
. Approve stock option grants and awards under the Company's stock option
plans, bonus and other incentive plans.
SUPERVALU BOARD PRACTICES
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In order to help our stockholders better understand SUPERVALU's Board
practices, we are including the following description of current practices.
The Director Affairs Committee periodically reviews these practices.
Evaluation of Board Performance
In order to continue to evaluate and improve the effectiveness of the Board,
the Director Affairs Committee evaluates the Board's performance as a whole
once every two years. The evaluation process includes a survey of the
individual views of all directors, a summary of which is then shared with the
Board.
Size of the Board
Although the size of the Board may vary from time to time, the Board believes
the size should preferably be not less than ten or more than fourteen members.
The Board believes that the size of the Board should accommodate the
objectives of effective discussion and decision-making and adequate staffing
of Board committees. The Board also believes that the SUPERVALU Board should
be made up of a substantial majority of independent, non-employee directors.
It is the Board's policy that no more than three members of the Board will be
employees of SUPERVALU. These management members will include the Chief
Executive Officer and up to two additional persons whose duties and
responsibilities identify them as top management individuals in the Company.
The Board currently has eleven members, one of which is the CEO.
3
<PAGE>
Director Retirement
It is Board policy that non-employee directors retire at the annual meeting
following the date they attain the age of seventy and that non-employee
directors elected after February 27, 1994 will serve a maximum term of fifteen
years. Directors who change the occupation they held when initially elected to
the Board are expected to offer to resign from the Board. At that time, the
Director Affairs Committee will review the continuation of Board membership
under these new circumstances, and make a recommendation to the full Board.
The Board also has adopted a policy that requires employee directors, other
than the CEO, to retire from the Board at the time of a change in their status
as an officer of SUPERVALU. A former CEO may continue to serve on the Board
until the third anniversary after his or her separation from the Company. If a
former CEO, however, leaves the Company to accept another position, the CEO
will retire as a director effective simultaneously with his or her separation
from the Company.
Selection of Directors
All directors are encouraged to submit the name of any candidate deemed
qualified to serve on the Board, together with all available information on
the candidate, to the Chairperson of the Director Affairs Committee. The
Director Affairs Committee considers potential Board candidates and makes its
recommendation to the full Board.
Board Meetings
The Board meets at least six times per year. Board meetings normally do not
exceed one day in length. The Board meets in Executive Session, without
management in attendance, at the beginning of each regularly scheduled Board
meeting. The Board also schedules a longer multi-day off-site strategic
planning meeting every other year.
Executive Sessions of Outside Directors
Outside directors generally meet together as a group, without the CEO or other
inside directors in attendance, during three scheduled Executive Sessions of a
Board meeting each year. The Chairperson of the Director Affairs Committee
will preside during any session of the Board at which only outside directors
are present; provided, however, that the Chairperson of the Executive
Personnel and Compensation Committee will preside during any non-employee
director session held for the purpose of conducting the CEO's performance
review.
Stock Ownership Guidelines
Non-employee directors are encouraged to acquire and own Company stock with a
fair market value of five times their annual retainer, within five years after
the director is first elected.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
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The following table sets forth information with respect to the only persons or
groups known to the Company as of April 15, 2000, to be the beneficial owner
of more than 5% of its Common Stock.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent of
Beneficial Holder Beneficial Ownership Class
------------------- -------------------- ----------
<S> <C> <C>
AMVESCAP PLC 10,275,061 7.4%
11 Devonshire Square
London, EC2M 4YR
England (1)
Sanford C. Bernstein & Co., Inc. 10,249,969 7.3%
One State Street Plaza
New York, New York 10004(2)
Morgan Stanley Dean Witter 7,248,127 5.2%
1585 Broadway, 38th Floor
New York, New York 10036(3)
</TABLE>
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(1) Based on information in a Schedule 13G Report dated February 3, 2000,
delivered to the Company and indicating that AMVESCAP PLC and certain of
its subsidiaries are the beneficial owners of 10,275,061 shares of Common
Stock and possess shared voting and dispositive power with respect to such
shares as of February 3, 2000.
4
<PAGE>
(2) Based on information in a Schedule 13G Report dated February 9, 2000,
delivered to the Company and indicating that Sanford C. Bernstein & Co.,
Inc. is beneficial owner of 10,249,969 shares, possesses sole voting power
with respect to 4,705,832 shares, shared voting power with respect to
1,108,156 shares, and sole dispositive power with respect to 10,249,969
shares as of December 31, 1999.
(3) Based on information in a Schedule 13G Report dated February 4, 2000,
delivered to the Company and indicating that Morgan Stanley Dean Witter is
beneficial owner of 7,248,127 shares, possesses shared voting power with
respect to 7,108,922 shares, and shared dispositive power with respect to
7,248,127 shares as of November 30, 1999.
SECURITY OWNERSHIP OF MANAGEMENT
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The following table sets forth information, as of April 15, 2000, concerning
beneficial ownership of SUPERVALU Common Stock by each director, 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 of Percent
Name of Beneficial Options Exercisable of
Beneficial Owner Ownership (1) Within 60 Days (2) Class (2)
---------------- -------------------- ------------------- ----------
<S> <C> <C> <C>
Lawrence A. Del Santo 5,590 14,000 *
Susan Engel 1,484 4,000 *
Edwin C. Gage 43,178 17,466 *
William A. Hodder 18,104 20,885 *
Garnett L. Keith, Jr. 16,828 23,059 *
Richard L. Knowlton 13,195 18,589 *
Charles M. Lillis 13,235 20,000 *
Harriet Perlmutter 18,741 26,000 *
Steven S. Rogers 4,296 5,000 *
Carole F. St. Mark 6,643 23,600 *
Michael W. Wright (3) 424,679 782,009 1%
David L. Boehnen 124,649 228,827 *
William J. Bolton 30,052 258,000 *
Pamela K. Knous 51,107 124,000 *
Jeffrey Noddle 118,787 459,385 *
All directors and
executive officers as a
group (27 persons) 1,296,786 2,870,380 3.2%
</TABLE>
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* Less than 1%.
(1) The persons listed have sole voting and investment power with respect to
the shares listed except as follows. The following persons have shared
voting and investment power: Mr. Gage: 8,000 shares; Ms. Perlmutter: 3,000
shares; and Mr. Wright: 43,552 shares. The following non-employee
directors have sole voting power, but no investment power, over shares
held in the Non-Employee Directors Deferred Stock Plan Trust as follows:
Lawrence A. Del Santo: 5,590 shares; Susan E. Engel: 1,484 shares; Edwin
C. Gage: 3,244 shares; William A. Hodder: 12,589 shares; Garnett L. Keith,
Jr.: 9,887 shares; Richard L. Knowlton: 9,784 shares; Charles M. Lillis:
11,235 shares; Harriet Perlmutter: 5,341 shares; Steven S. Rogers: 1,296
shares; and Carole F. St. Mark: 3,244 shares.
(2) Options exercisable within 60 days are deemed beneficially owned and are
included in the percent of class owned.
(3) Includes 8,000 shares held in a retirement trust for Mr. Wright.
5
<PAGE>
NOMINEES FOR ELECTION AS DIRECTORS FOR TERMS EXPIRING
AT THE ANNUAL MEETING IN 2003
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. If a vacancy occurs 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 elect a director to
fill the balance of the unexpired term or the term established by the Board.
Lawrence A. Del Santo, Susan E. Engel, William A. Hodder and Harriet
Perlmutter are nominated for three-year terms expiring in 2003. There are
currently eleven members of the Board.
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 another person as the holders
of the proxies decide.
The following sets forth information, as of April 15, 2000, concerning the
four nominees for election as directors of the Company and as to the seven
directors of the Company whose terms of office will continue after the Annual
Meeting.
ELECTION OF DIRECTORS (ITEM 1)
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LAWRENCE A. DEL SANTO, age 66
. Chief Executive Officer of The Vons Companies (a retail grocery company)
from 1994 to April 1997
. Elected a Director of SUPERVALU in 1997
. Also a Director of Hussman Corporation and PETsMART, Inc.
SUSAN E. ENGEL, age 53
. Chairwoman of the Board, and Chief Executive Officer of Department 56, Inc.
(a designer, importer and distributor of fine quality collectibles and
other giftware products) and of D 56, Inc. (Department 56, Inc.'s principal
operating subsidiary), since September 1997 and November 1996,
respectively.
. President and Chief Operating Officer of Department 56, Inc. and of D 56
Inc. from September 1994 to November 1996
. Elected a Director of SUPERVALU in 1999
. Also a Director of Wells Fargo & Co., and K2, Inc.
WILLIAM A. HODDER, age 68
. Chief Executive Officer of Donaldson Company, Inc. (a manufacturer of
filtration devices) from 1982 to 1996
. Elected a Director of SUPERVALU in 1990
. Also a Director of Cowles Media Company, The Musicland Stores Corporation,
ReliaStar Financial Corp. and Wells Fargo & Company
HARRIET PERLMUTTER, age 68
. Trustee of the Papermill Playhouse (The State Theatre of New Jersey)
. Elected a Director of SUPERVALU in 1978
6
<PAGE>
DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL MEETING IN 2001
CHARLES M. LILLIS, age 58
. Chairman, President, and Chief Executive Officer of MediaOne Group, Inc. (a
broad-band communications company) since 1998
. Executive Vice President of US West, Inc. from 1987 to 1998 and a director
of US West, Inc. from 1997 to 1998
. President and Chief Executive Officer of US WEST Media Group, a division of
US WEST, Inc. from April 1995 to 1998
. Elected a Director of SUPERVALU in 1995
STEVEN S. ROGERS, age 42
. Clinical Professor of Finance and Management at J.L. Kellogg Graduate
School of Management at Northwestern University since 1995
. Owner of Fenchel Lampshade Company (a private manufacturing company) from
1988 to 1995
. Elected a Director of SUPERVALU in 1998
Also a Director of DQE, Inc.
MICHAEL W. WRIGHT, age 61
. Chairman of the Board, President and Chief Executive Officer of the Company
since 1982
. Elected a Director of SUPERVALU in 1977
. Also a Director of Honeywell International Inc., The Musicland Stores
Corporation and Wells Fargo & Company
DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL MEETING IN 2002
EDWIN C. GAGE, age 59
. Chairman and Chief Executive Officer of GAGE Marketing Group, L.L.C. (an
integrated marketing services company) since 1991
. Elected a Director of SUPERVALU in 1986
. Also a Director of AHL Services, Inc.
GARNETT L. KEITH, JR., age 64
. Chairman and Chief Executive Officer of SeaBridge Investment Advisors, LLC
(a registered investment advisor) since 1996
. Vice Chairman of The Prudential Insurance Company of America from 1984 to
1996
. Elected a Director of SUPERVALU in 1984
. Also a Director of Pan-Holding Societe Anonyme
RICHARD L. KNOWLTON, age 67
. Chairman of the Hormel Foundation (a charitable foundation controlling
41.7% of Hormel Foods Corporation) since 1995
. Chairman of Hormel Foods Corporation (a food manufacturing company) from
1993 to 1995
. Elected a Director of SUPERVALU in 1994
. Also a Director of ReliaStar Financial Corp. and U.S. Bancorp, and a member
of the Board of Trustees, Mayo Foundation
CAROLE F. ST. MARK, age 57
. President and Chief Executive Officer of Growth Management, LLC (a business
development and strategic management company) since 1997
. President and Chief Executive Officer of Pitney Bowes Business Services, a
unit of Pitney Bowes, Inc. from 1994 to 1997
. Elected a Director of SUPERVALU in 1989
. Also a Director of Gerber Scientific, Inc., Polaroid Corporation and Royal
& SunAlliance Insurance Group plc.
7
<PAGE>
COMPENSATION OF DIRECTORS
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Non-employee directors receive the following compensation for their Board
service:
. Cash retainer of $22,000 per year;
. Deferred retainer of $15,000 per year payable in SUPERVALU Common Stock
under the Non-Employee Directors Deferred Stock Plan;
. $1,800 for each Board meeting attended;
. $1,000 for each Committee meeting attended; and
. At the time of the 1999 Annual Meeting, each director received an option to
purchase 2,000 shares. At the time of the 2000 Annual Meeting and at each
Annual Meeting thereafter, each director will receive an option to purchase
6,000 shares and newly appointed directors will receive an option to
purchase 6,000 shares when such directors join the Board. Options granted
to directors are at current fair market value and are fully exercisable
upon grant.
Committee chairpersons receive an additional annual retainer in the following
amounts:
. Audit, Finance and Director Affairs Committees: $2,500; and
. Executive Personnel and Compensation Committee: $4,000.
Effective June 27, 1996, the Company's retirement/deferral program for
directors was discontinued and benefits previously earned by directors were
frozen. A director first elected to SUPERVALU's Board prior to June 27, 1996
will receive at termination an annual payment of $20,000 per year for the
number of years of the director's service on the Board prior to June 27, 1996,
but not more than ten years. Directors first elected to the Board after June
27, 1996 do not participate in the retirement/deferral program.
Directors may elect to defer payment of their directors' fees under one or
more of the following arrangements:
. Directors Deferred Compensation Plan and Executive Deferred Compensation
Plans. Fees and quarterly interest are credited to an account for the
director, until payment is made from the plan following retirement from the
Board.
. Non-Employee Directors Deferred Stock Plan. Fees are credited to a deferred
stock account for each director. To encourage increased stock ownership, a
director who chooses to defer payment of cash fees into this plan will
receive deferred stock equal to 110% of the fees otherwise payable. The
Company contributes the deferred cash fees to an irrevocable trust and the
trust purchases shares of SUPERVALU Common Stock. The trust assets remain
subject to the claims of the Company's creditors. Each director is entitled
to direct the trustee to vote all shares allocated to the director's
account in the trust. The Common Stock will be distributed to each director
following the director's retirement from the Board.
8
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
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The following table shows compensation for each of the last three fiscal years
of the Chief Executive Officer and the other four most highly compensated
persons serving as executive officers at the end of the fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
-------------------------------- -----------------------
Other Restricted Securities
Annual Stock Underlying All Other
Name and Year Salary Bonus Compensation Awards Options/SARs Compensation
Principal Position (1) ($) ($) ($) ($)(2) (#)(3) ($)(4)
------------------ ---- -------- ---------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael W. Wright 2000 $931,505 $1,583,559 $ 0 $ 801,279 0 $116,943
Chairman, President and 1999 873,582 682,442 0 1,179,068 1,806,697 70,277
Chief Executive Officer 1998 868,140 1,215,396 82 1,166,905 318,924 39,293
David L. Boehnen 2000 $361,971 $ 361,971 $ 0 $ 217,961 50,000 $ 14,244
Executive Vice President 1999 345,727 194,368 0 320,726 115,441 6,800
1998 297,115 266,955 0 317,411 66,070 4,960
William J. Bolton 2000 $475,000 $ 475,000 $ 0 $ 265,942 60,000 $ 2,263
Executive Vice President 1999 440,000 247,368 0 391,330 40,000 0
1998(5) 157,115 149,260 0 908,339 300,000 0
Pamela K. Knous 2000 $350,000 $ 350,000 $ 0 $ 173,876 50,000 $ 2,305
Executive Vice 1999 330,000 185,526 0 255,855 40,000 0
President, 1998(6) 132,692 127,384 0 113,751 100,000 0
Chief Financial Officer
Jeffrey Noddle 2000 $489,955 $ 489,955 $ 0 $ 320,334 60,000 $ 8,578
Executive Vice President 1999 473,118 261,256 0 471,366 40,000 18,380
1998 445,404 427,588 9 1,630,872 251,970 14,323
</TABLE>
- --------
(1) Fiscal 1998 was a 53 week fiscal year. This table includes 53 weeks of
salary and bonus for fiscal 1998.
(2) The amounts reflected represent the value of the shares of restricted
stock earned under the Company's Long-Term Incentive Plan based on the
achievement of designated levels of corporate return on invested capital
and sales for fiscal 1998, 1999 and 2000, respectively. The shares earned
in fiscal 1999 and 1998 vested and the restrictions were removed on
February 28, 2000, for each of the named executive officers. The shares
earned in fiscal 2000 will vest and the restrictions will be removed at
the end of fiscal 2001, if such named executive officers remain in the
employ of the Company at the time of vesting. The number of shares earned
in fiscal 1998 are as follows: 48,748 shares for Mr. Wright; 13,260 shares
for Mr. Boehnen; 5,518 shares for Mr. Bolton; 4,752 shares for Ms. Knous;
and 19,488 shares for Mr. Noddle. The number of shares earned in fiscal
1999 are as follows: 48,747 shares for Mr. Wright; 13,260 shares for Mr.
Boehnen; 16,179 shares for Mr. Bolton; 10,578 shares for Ms. Knous; and
19,488 shares for Mr. Noddle. The number of shares earned in fiscal 2000
are as follows: 48,747 shares for Mr. Wright; 13,260 shares for Mr.
Boehnen; 16,179 shares for Mr. Bolton; 10,578 shares for Ms. Knous; and
19,488 shares for Mr. Noddle. In addition, in fiscal 1998, Mr. Bolton and
Mr. Noddle received a special award of 40,000 and 60,000 restricted stock
units, respectively, under the Company's 1993 Stock Plan. The award of
restricted stock units was made to incent Mr. Bolton and Mr. Noddle to
remain with the Company. See "Report of Executive Personnel and
Compensation Committee." For purposes of this table, the restricted stock
and the restricted stock units are valued based on the closing price of
the Company's Common Stock on the date earned. Dividends are paid on the
shares of restricted stock. Dividends are not paid on restricted stock
units. As of February 26, 2000, the number and fair market value of all
shares of restricted stock and restricted stock units held or earned by
the above named executive officers were as follows: Mr. Wright: 146,242,
$3,141,159; Mr. Boehnen: 39,780, $854,441; Mr. Bolton: 77,876, $1,563,589;
Ms. Knous: 25,908, $542,160; and Mr. Noddle: 118,464, $2,420,136.
(3) The total number of option awards in fiscal 1999 and fiscal 1998 includes
restoration options (as more fully described below) received by the
following named executive officers in the amounts stated: Mr. Wright,
206,697 and 158,924 shares in fiscal 1999 and fiscal 1998, respectively;
Mr. Boehnen, 65,441 and 16,070 shares in fiscal 1999 and fiscal 1998,
respectively; and Mr. Noddle, 61,970 shares in fiscal 1998. In fiscal
1999, Mr. Wright received a premium price option award to purchase
1,400,000 shares of SUPERVALU Common Stock. See "Report of Executive
Personnel and Compensation Committee" on page 14. A limited stock
appreciation right has been granted in tandem with each option reported in
the table for grants made in fiscal 1998, and is exercisable for cash in
lieu of the related option only upon a Change of Control. Except for Mr.
Wright's premium price option award that includes 700,000 tandem limited
stock appreciation rights, no limited stock appreciation rights were
granted in tandem with the grants made in fiscal 1999 or fiscal 2000.
(4) For fiscal 2000, the amount of All Other Compensation reflects
contributions during the fiscal year by the Company under the Qualified
Pre-Tax Savings and Profit Sharing (401(k)) Plan ("401(k) Plan") and to an
unfunded non-qualified deferred compensation plan because of limitations
on the annual compensation that can be taken into account under the 401(k)
Plan as follows: $4,000 and $48,224 for Mr. Wright; $3,565 and $10,679 for
Mr. Boehnen; $2,263 and $0 for Mr. Bolton; $2,305 and $0 for Ms. Knous;
and $3,565 and $5,013 for Mr. Noddle. In addition, for fiscal 2000, the
amount shown under All Other Compensation for Mr. Wright includes $64,719,
representing the value of a split dollar life insurance arrangement.
(5) Mr. Bolton's employment with the Company began on October 20, 1997.
(6) Ms. Knous' employment with the Company began on September 22, 1997.
9
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
- -------------------------------------------------------------------------------
The following table provides information on grants of stock options and stock
appreciation rights for fiscal 2000 to the named executive officers.
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------
Potential
Percent of Realizable Value
Number of Total at Assumed Annual
Securities Options/SARs Rates of Stock Price
Underlying Granted to Exercise Appreciation for Prior Columns
Options/SARs Employees or Base Option Term (1) Annualized (1)(2)
Granted in Price Expiration --------------------- ------------------
Name (#)(3) Fiscal Year ($/Share) Date 5%($) 10%($) 5%($) 10%($)
---- ------------ ------------ --------- ---------- --------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael W. Wright 0 -- -- -- -- -- -- --
David L. Boehnen 50,000 $20.6875 04/06/09 650,513 1,648,527 65,051 164,853
WIlliam J. Bolton 60,000 20.6875 04/06/09 780,615 1,978,233 78,062 197,823
Pamela K. Knous 50,000 20.6875 04/06/09 650,513 1,648,527 65,051 164,853
Jeffrey Noddle 60,000 20.6875 04/06/09 780,615 1,978,233 78,062 197,823
</TABLE>
Total potential realizable value for the named officers who received stock
option grants is $2,862,256 and $7,253,520 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, 1999, the increase in total stockholder
value from stock price appreciation alone for all shares outstanding on that
date would be $1,590,596,578 and $4,031,796,335.
- --------
(1) These amounts are the result of calculations at the 5% and 10% rates set
by the Securities and Exchange Commission and therefore are not intended
to forecast possible future appreciation, if any, in the Company's stock
price.
(2) Computed by dividing potential realizable value at the assumed annual
rates of stock price appreciation by the term of the option. Original
options are granted with a ten year term. Restoration options (described
below) have a term equal to the remaining term of the original option.
(3) The option has been granted with a ten-year term. 20% of the option is
exercisable upon grant and an additional 20% becomes exercisable on each
of the next four anniversary dates of grant, except that the option
becomes fully exercisable upon a Change of Control. 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) is granted when the option is exercised
and payment of the exercise price is made by delivery of SUPERVALU Common
Stock. Each restoration option is granted for the number of shares of
Common Stock tendered as payment for the exercise price and withheld for
tax purposes, upon exercise of the original option. The exercise price of
each restoration option is the fair market value of SUPERVALU 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 original
option. All options reported in the table are entitled to restoration
options.
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 2000 by
the named executive officers, and the value of such officers' unexercised
options/SARs at the end of the fiscal year.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised In-
Underlying Unexercised the-
Options/SARs at Fiscal Money Options/SARs
Shares Year-End (#) at Fiscal Year-End ($)
Acquired on Value ------------------------- -------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael W. Wright ...... 0 $ 0 917,530 1,616,000(1) $389,629 $20,000
David L. Boehnen........ 11,005 84,976 178,827 94,000 38,992 20,374
William J. Bolton....... 0 0 208,000 192,000 0.00 0.00
Pamela K. Knous......... 0 0 86,000 104,000 0.00 0.00
Jeffrey Noddle.......... 0 0 408,932 158,000 388,420 29,499
</TABLE>
- --------
(1) Includes a premium price stock option award to purchase 1,400,000 shares
of SUPERVALU Common Stock, granted in December, 1998.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
- -------------------------------------------------------------------------------
The following table provides information on awards made to the named executive
officers during the fiscal year.
<TABLE>
<CAPTION>
Number of Shares, Units Performance or Other Period
Name or Other Rights (#)(1) Until Maturation or Payout (1)
---- ----------------------- ------------------------------
<S> <C> <C>
Michael W. Wright........ 0 --
David L. Boehnen......... 6,990 Fiscal Years 2000-2002
William J. Bolton........ 9,172 Fiscal Years 2000-2002
Pamela K. Knous.......... 6,758 Fiscal Years 2000-2002
Jeffrey Noddle........... 9,461 Fiscal Years 2000-2002
</TABLE>
- --------
(1) Awards are of stock units under the Company's Long-Term Incentive Plan,
each of which represents the right to receive one share of restricted
stock upon achievement of specified performance objectives. Stock units
will be converted to restricted stock based on the Company's total return
on invested capital ("ROIC") relative to the specified performance
objectives for the fiscal 2000--fiscal 2002 performance period. No stock
units will be converted to restricted stock if the pre-established minimum
ROIC performance objective is not achieved. If the minimum, target or
maximum ROIC performance objective is achieved, then 50%, 100% or 150%,
respectively, of the awarded stock units will be converted to restricted
stock. If the Company's actual ROIC performance falls between the minimum
and target or the target and maximum objectives, the percent of stock
units converting to restricted stock will be extrapolated accordingly.
Shares earned for ROIC performance as described above may be increased if
Company sales exceed 2% of a pre-established sales target, but only if the
ROIC performance is at or above target. At sales growth of 3% over the
sales target, the stock units to be converted to restricted stock will be
increased by 10%, progressing linearly to a 50% increase in such
restricted stock for Company sales of 7% or more over the sales target.
Shares of restricted stock issued upon conversion of stock units would
vest at the end of fiscal 2003, provided that the named officer continues
in the employ of the Company at the time of vesting. No dividends are paid
on stock units. Dividends are paid on all shares of restricted stock that
are issued.
11
<PAGE>
PENSION PLANS
- -------------------------------------------------------------------------------
The following table shows estimated maximum annual benefits which would be
paid to an employee 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 Benefit
Plan) maintained for certain highly compensated employees, and the "Retirement
Benefit Plan Account" of the Company's deferred compensation plans. The table
does not reflect the $135,000 per year limitation on annual benefits payable
from the plans imposed by Section 415 of the Internal Revenue Code, nor the
$170,000 per year limitation on compensation included in final annual average
pay imposed by Section 401(a)(17) of the Internal Revenue 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, at least the benefits they would have been entitled to
receive if such Sections did not impose maximum limitations.
<TABLE>
<CAPTION>
Years of Service (1)(2)(3)
Final Annual -----------------------------------
Average Pay (including Salary and Bonus) 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 estimates of annual benefits payable on normal retirement are
computed using the straight-life annuity method and are based on certain
assumptions, including (a) that the employee remains until the normal
retirement age of 65 (although retirement is permitted at age 62 without
benefit reduction because of age); and (b) that the present retirement
plans remain in force until the retirement date. Benefits under plans are
not reduced by the participant's Social Security benefit.
(2) If Mr. Wright retires as CEO of the Company after he reaches age 62,
instead of the benefits shown in the above table, he will be entitled to
receive annual payments calculated as 60% of this average (five highest
years) salary plus bonus, offset by the sum of (i) the value of any
matching contributions to the Company's Pre-Tax Savings and Profit Sharing
(401(k)) Plan made through the date of retirement, (ii) any Company
additions to non-qualified deferred compensation accounts made through the
date of retirement, (iii) one half of primary social security, and (iv)
the present value of the split dollar life insurance policy funded by the
Company for Mr. Wright beginning in fiscal 1999, which has a more
favorable long term expense impact on the Company than payments from the
Supplemental Executive Retirement Plan. Assuming Mr. Wright's employment
continues until age 62, based on current compensation and payment levels
from other plans, Mr. Wright would receive payments of $439,689 per year.
(3) Mr. William Bolton, Executive Vice President, President and Chief
Operating Officer--Retail Food Companies, is entitled to two years of
credited service for each year of employment subject to offset by the
earned qualified retirement plan benefit and all vesting conditions of the
qualified retirement plan, pursuant to the terms of a supplemental
retirement agreement entered into with the Company in recognition of the
fact that he was hired by the Company later in his career and would not be
able to derive full benefit from SUPERVALU's qualified retirement plan.
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 26, 2000, were as follows: Mr. Wright: $1,648,985, 23 years;
Mr. Boehnen: $431,814, 8.8 years; Mr. Bolton: $655,814, 3.8 years; Ms. Knous:
$496,455, 2.4 years; and Mr. Noddle: $664,277, 23.8 years.
12
<PAGE>
CHANGE IN CONTROL AGREEMENTS
- -------------------------------------------------------------------------------
Change in Control Agreements. The Company has entered into Severance
Agreements with officers and certain other employees of the Company, including
those identified in the Summary Compensation Table above.
In general, these agreements entitle the executive to a lump sum payment if
the executive's employment is terminated (other than for Cause or disability)
within two years after a Change of Control (as defined). The lump-sum cash
payment is equal to a multiple of one, two or three times the executive's
annual base salary, annual bonus and the value of the executive's annual
perquisites. The multiple is three for Mr. Wright, Mr. Boehnen, Mr. Bolton,
Ms. Knous and Mr. Noddle; and one or two for all other recipients. Each
executive would also receive a lump-sum retirement benefit equal to the
present value of the additional qualified pension plan benefits the executive
would have accrued under the plan absent the early termination. Generally, the
executive would also be entitled to continued family medical coverage, dental
and life insurance coverage until the earlier of 24 months after termination
or the commencement of comparable coverage with a subsequent employer. Mr.
Wright's Severance Agreement also provides for payment to be made if his
employment is terminated for any reason during the seventh month following a
Change of Control. Each Severance Agreement includes a covenant not to compete
with the Company. Due to the possible imposition of excise taxes on the
payments, the severance benefits payable to an executive would be increased by
the amount equal to the excise tax imposed on the executive's severance
payments.
Several of the Company's compensation and benefit plans contain provisions for
enhanced benefits on a Change of Control. They include stock options,
performance shares and restricted stock awards. Executive officers also hold
limited stock appreciation rights that become exercisable upon a Change of
Control, allowing the executive to receive cash for the bargain element in the
related stock option. The Company's Executive Deferred Compensation Plans may
be increased by 130% to compensate the executive for any excise tax liability
incurred following a Change of Control. 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 the
benefit of plan participants for five years following a Change of Control.
The Company may set aside funds in an irrevocable grantor trust to satisfy its
obligations arising from certain of its benefit plans. Funds will be set aside
in the trust automatically upon a Change of Control. The trust assets would
remain subject to the claims of the Company's creditors.
13
<PAGE>
REPORT OF EXECUTIVE PERSONNEL AND COMPENSATION COMMITTEE
- -------------------------------------------------------------------------------
Compensation Principles
The Executive Personnel and Compensation Committee of the Board of Directors,
composed entirely of independent non-employee directors, has adopted a
comprehensive Executive Compensation Program based on the following
principles:
. The program will enable SUPERVALU to attract, retain and motivate the key
executives necessary for current and long-term success.
. Compensation plans are designed to support SUPERVALU's long range business
strategy.
. Executive compensation is linked to corporate performance and attainment of
designated strategic objectives.
. A significant portion of executive gain is tied to the enhancement of
stockholder value.
. The Committee exercises independent judgment and approval authority with
respect to the Executive Compensation Program and the awards made under the
program.
Compensation Methodology
The structure of the Executive Compensation Program is based on a market
comparison of compensation for equivalent positions in industries from which
SUPERVALU 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 are the eight companies (seven prior to
fiscal year 2000) comprising the peer group for the 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 eight years. These market comparisons
are the basis for designing the Company's current compensation structure that
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 market comparisons were performed in each year to ensure that the dollar
values of the various plan components as well as total compensation was
comparable to that of the Compensation Peer Group. In addition to a review of
compensation plan design and compensation levels, 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 SUPERVALU's 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 SUPERVALU's stock price.
A summary follows which explains the major components of the Executive
Compensation Program, including factors and criteria upon which compensation
was awarded to the Chief Executive Officer for fiscal 2000.
Annual Compensation
Base Salaries. The base salary levels for executive officers are determined
based on three objectives:
. Internal equity based on job responsibility;
. Individual performance and experience; and
. Competitive salary levels with industries from which the Company draws
executive talent.
The Company's salary structure is based on the median salary levels of
companies in similar industries and similar in size to SUPERVALU. Actual
salaries may be set above or below this median depending on individual job
performance and experience.
14
<PAGE>
The Committee annually reviews and approves all salary increases for executive
officers, other than the CEO. Increases for executives below the CEO level are
proposed by the CEO based on performance evaluations, which include both
progress on achievement of financial results and a qualitative assessment of
performance.
The Chairman of the Committee conducts an annual 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 made on a biannual or annual basis depending on
competitive conditions and practices. In fiscal 2000, Mr. Wright's base salary
was increased from $878,778 to $931,505.
Annual Bonuses. All of the Company's executive officers are eligible to
receive an annual cash bonus. The annual bonus plan is designed to motivate
executives to meet or exceed corporate financial goals that support
SUPERVALU's business plans. Specifically, the annual bonus plan for executive
officers is designed to stimulate and reward growth in Company earnings. The
Committee assigns target bonus levels to each executive, which are competitive
with the Compensation Peer Group. Among executive officers, these range from
25% of annual base salary to 85% of annual base salary for the CEO. The bonus
award potential for corporate officers is tied solely to corporate net profit
performance. Bonus payments increase, as net profit growth meets and exceeds
the annual growth rate targeted by the Board. The maximum bonus is limited to
twice the target bonus level. Bonuses for the CEO and four other executive
officers are paid from a special plan structured so that the payment will be
tax deductible as "performance based compensation" under Internal Revenue Code
Section 162(m).
Long-Term Incentive Compensation
The Company has implemented 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 long-term incentive potential is
intended to be competitive with programs offered by the Compensation Peer
Group.
Long-Term Incentive Plan. The Committee selects Plan participants, approves
awards and interprets and administers the Long-Term Incentive Plan. In fiscal
2000, the Committee made awards of "performance shares" to executive officers
and profit center presidents. The awards covered the performance period of
fiscal year 2000 through fiscal year 2002. Such awards are set at levels that
are expected to be competitive with long-term compensation offered by the
Compensation Peer Group. The Committee determined minimum, target and maximum
payout amounts for each participant and awards are earned for officers based
on corporate return on invested capital (ROIC) performance relative to pre-set
objectives. If these objectives are met or exceeded, and overall corporate
sales exceed the Company's sales plan by more than 2%, performance shares
earned by ROIC performance may be increased. The awards provide that, if
earned, performance shares will be converted to restricted stock that will
vest after one year of further employment. Executives who receive restricted
stock are motivated 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 for the fiscal 1998 through fiscal 2000 performance period based
on corporate ROIC and sales performance for corporate officers, and corporate
ROIC/sales and profit center ROIC/sales performance for key profit center
executives. Application of the criteria set forth in the awards for the fiscal
1998 through fiscal 2000 performance period resulted in corporate officers
earning an aggregate of 174,029 shares of restricted stock and key profit
center executives earning an aggregate of 61,934 shares of restricted stock in
fiscal 2000. Mr. Wright received a payout of 48,747 shares of restricted stock
in fiscal 2000.
Stock Option Plans. The Committee believes that executive gain tied to stock
price
15
<PAGE>
appreciation is the most effective way of aligning executive and stockholder
interests. Two key programs together cause executives to view themselves as
owners of a meaningful equity stake in the business over the long term. They
are:
. The executive stock option program; and
. Stock ownership targets for executive officers.
Annual Option Grants. The Committee makes annual grants of stock options to
key employees under established grant guidelines intended to be competitive
with 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. Corporate, profit center 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 profit center presidents. Based on the stock grant
guidelines and the subjective factors described above, annual grant recom-
mendations are developed by management, reviewed by the Chief Executive
Officer and presented to the Committee for final approval.
Stock options are granted with an exercise price equal to the market price of
the Company's stock on the date of grant. In order to encourage option
exercise and share ownership, SUPERVALU also permits executives to exercise
options using shares of SUPERVALU stock to pay the exercise price and taxes
attributable to the exercise. Upon such exercise, SUPERVALU grants the
executive a restoration stock option (commonly referred to as a reload option)
for that number of shares surrendered. Reload options are exercisable at the
then current market price and extend for the remainder of the original
option's term.
In December 1998, the Board awarded Mr. Wright a special premium price stock
option grant for 1,400,000 shares, with an exercise price equal to $40. The
vesting of the option award is contingent on the Company achieving either one
of two performance hurdles: (a) either the market price of SUPERVALU Common
Stock exceeds the option exercise price for 10 consecutive trading days prior
to February 28, 2003 or (b) the net income growth of the Company during fiscal
2000--2003 must exceed 12.5% compounded annually, over the base year of fiscal
1999, subject to a minimum ROIC threshold. As a result of this special grant
in 1998 no stock options or long term incentive plan performance shares were
granted to Mr. Wright during fiscal year 2000.
Stock Ownership Guidelines
Stock ownership guidelines for executive officers have been established so
that they face the same downside risk, and upside potential, as stockholders
experience. Executives are expected to show significant progress toward
reaching these ownership goals. The goal for the CEO is six times annual base
salary, excluding vested and unexercised stock options. Mr. Wright's current
stock ownership, excluding vested and unexercised stock options, exceeds six
times his annual base salary.
16
<PAGE>
Policy Regarding Applicable Tax Code
Provision
Section 162(m) of the Internal Revenue Code imposes limits on tax deductions
for executive compensation in excess of $1 million paid to any of the top five
executive officers named in the Summary Compensation Table unless certain
conditions are met. The Committee makes every reasonable effort to preserve
this tax deduction consistent with the principles of the Executive
Compensation Program.
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 SUPERVALU's compensation plans implement its
key compensation principles. Independent compensation consultants have
assisted the Committee in designing these plans, assessing the effectiveness
of the overall program and keeping overall compensation competitive with that
of relevant peer companies. Total compensation is intended to be above
industry averages when performance is superior, and below competitive levels
when performance is below expected levels or SUPERVALU 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
Lawrence A. Del Santo
William A. Hodder
Richard L. Knowlton
Carole F. St. Mark
17
<PAGE>
PERFORMANCE GRAPHS
- -------------------------------------------------------------------------------
The following graphs compare the cumulative total stockholder return on
SUPERVALU'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 retail food and food
distribution industries. The peer group was revised in fiscal 2000. Each graph
assumes the investment of $100 in each company on February 26, 1995 and the
reinvestment of all dividends on a quarterly basis, with results calculated to
the last business day in February each year. The returns of the companies were
weighted based on their respective market capitalization and on the relative
percentage of SUPERVALU's operating profit realized from retail food and food
distribution operations for each year. The stock price performance shown in
each graph below is not a projection of future price performance.
Comparison of Five-Year Cumulative Total Return
SUPERVALU INC., S&P 500, and New Composite Peer Group
The new composite peer group is comprised of the following retail food and
food distribution companies: Albertson's, Inc., Fleming Companies, Inc., Food
Lion, Inc., Great Atlantic & Pacific Tea Company, The Kroger Company, Nash
Finch Company, Safeway Inc. and Winn-Dixie Stores Inc., which was added to the
peer group in fiscal 2000, to reflect the growing portion of SUPERVALU's
retail food operations.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Feb-95 Feb-96 Feb-97 Feb-98 Feb-99 Feb-00
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
SUPERVALU....................... $100.00 $129.25 $128.42 $202.51 $212.48 $154.58
S&P 500......................... $100.00 $134.59 $169.71 $228.99 $274.23 $306.41
New Composite Peer Group........ $100.00 $118.13 $130.59 $177.58 $213.31 $138.08
</TABLE>
SUPERVALU INC., S&P 500, and Old Composite Peer Group
The old composite peer group was comprised of the following retail food and
food distribution companies: Albertson's, Inc., Fleming Companies, Inc., Food
Lion, Inc., Great Atlantic & Pacific Tea Company, The Kroger Company, Nash
Finch Company and Safeway Inc.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Feb-95 Feb-96 Feb-97 Feb-98 Feb-99 Feb-00
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
SUPERVALU....................... $100.00 $129.25 $128.42 $202.51 $212.48 $154.58
S&P 500......................... $100.00 $134.59 $169.71 $228.99 $274.23 $306.41
Old Composite Peer Group........ $100.00 $118.94 $135.79 $182.47 $236.64 $153.30
</TABLE>
18
<PAGE>
PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS (ITEM 2)
- -------------------------------------------------------------------------------
The Company is seeking the ratification by the stockholders of its appointment
of KPMG LLP to audit the books and accounts of the Company and its
subsidiaries for the fiscal year ending February 24, 2001. A representative of
KPMG LLP will be present at the Annual Meeting with the opportunity to make a
statement and to respond to questions.
The Board of Directors recommends a vote "FOR" the proposal to ratify the
appointment of KPMG LLP as independent auditors.
Change in Accountants. On May 8, 1998, the Company determined not to re-engage
its former independent auditors, Deloitte & Touche LLP ("Deloitte") and
appointed KPMG LLP as its new independent auditors, effective im-mediately.
This determination followed the Company's decision to seek proposals from
independent accounting firms, including Deloitte, with respect to the
engagement of independent accountants to audit the Company's financial
statements for the fiscal year ending February 27, 1999. The decision not to
re-engage Deloitte and to retain KPMG LLP was approved by the unanimous
consent of the Company's Board of Directors upon the recommendation of its
Audit Committee.
The reports of Deloitte on the financial statements of the Company for its
fiscal years ended February 28, 1998 (fiscal 1998) and February 22, 1997
(fiscal 1997) did not contain any adverse opinion or disclaimer of opinion and
were not qualified or modified as to uncertainty, audit scope or accounting
principles. During fiscal 1998 and fiscal 1997 and the interim period from
February 28, 1998 through May 8, 1998, (i) there were no disagreements between
the Company and Deloitte on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure which, if not
resolved to the satisfaction of Deloitte, would have caused Deloitte to make
reference to the subject matter of the disagreement in connection with its
reports (a "Disagreement") and (ii) there were no reportable events, as
defined in Item 304(a)(1)(v) of Regulation S-K of the Securities and Exchange
Commission (a "Reportable Event").
The Company had not, during fiscal 1998 and fiscal 1997 or the interim period
from February 28, 1998 through May 8, 1998, consulted with KPMG LLP regarding
(i) the application of accounting principles to a specified transaction,
either completed or proposed, or the type of audit opinion that might be
rendered on the Company's financial statements, and either a written report
was provided to the Company or oral advice was provided that KPMG LLP
concluded was an important factor considered by the Company in reaching a
decision as to the accounting, auditing or financial reporting issue, or (ii)
any matter that was either the subject of a Disagreement with Deloitte or a
Reportable Event.
The Company reported the change in accountants on Form 8-K on May 12, 1998.
The Form 8-K contained a letter from Deloitte addressed to the Securities and
Exchange Commission stating that it agreed with certain of the above
statements, and had no basis to agree or disagree with the remaining
statements.
19
<PAGE>
OTHER INFORMATION
- -------------------------------------------------------------------------------
SUPERVALU Mailing Address
The Company's mailing address is: P.O. Box 990, Minneapolis, MN 55440.
Stockholders Proposals for 2000 Annual Meeting
All proposals of stockholders that are requested to be included in the
Company's proxy statement for the 2001 Annual Meeting must be received by the
Corporate Secretary on or before January 24, 2001, to be included.
Any other stockholder proposals to be presented at the 2001 Annual Meeting
must be given in writing to the Secretary of the Company and received at the
principal executive offices of the Company no later than the close of business
on March 1, 2001 nor earlier than January 31, 2001. The proposal must contain
specific information required by the Company's Restated Bylaws, a copy of
which may be obtained by writing to the Secretary of the Company.
Director Nominations
In accordance with procedures set forth in the Company's Bylaws, stockholders
may propose nominees for election to the Board of Directors by timely written
notice to the Corporate Secretary, generally no less than sixty days and no
more than ninety days prior to the first anniversary date of the last annual
meeting.
Expenses of Solicitation
This solicitation of proxies is being made by SUPERVALU and it pays the cost
of soliciting proxies. The Company arranges with brokerage houses, custodians,
nominees and other fiduciaries to send proxy material to their principals, and
the Company reimburses them for their expenses. In addition to solicitation by
mail, proxies may be solicited by SUPERVALU employees, by telephone or
personally. No additional compensation would be paid for such employee
solicitation. The Company has also retained Innisfree M&A Incorporated to
assist in the solicitation of proxies for an estimated fee of $9,000 plus out-
of-pocket expenses.
Compensation Committee Interlocks and Insider Participation
As indicated above, Edwin C. Gage (Chairman), Lawrence A. Del Santo, William
A. Hodder, Richard L. Knowlton and Carole F. St. Mark served as members of the
Executive Personnel and Compensation Committee during fiscal 2000. The members
of the Committee do not participate in any interlocking directorships. 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 $224,000,
increasing to $232,000 in 2003, which the Company believes to be a fair market
rental. The leased premises are subleased to an independent retail supermarket
operator.
Section 16(a) Beneficial Ownership Reporting Compliance
The rules of the Securities and Exchange Commission require the Company's
directors, executive officers, and holders of more than 10% of the Company's
Common Stock to file reports of stock ownership and changes in ownership. To
the best of the Company's knowledge, there were no late or inaccurate filings
in fiscal 2000. In making this statement, the Company has relied upon written
representations of its directors and executive officer.
20
<PAGE>
Printed with soy
based inks on
recycled
paper containing at least 10% fibers from
paper recycled by
consumers.
<PAGE>
SUPERVALU INC.
June 29, 2000 Annual Meeting of Stockholders
The Jefferson Hotel
Franklin & Adams Streets
Richmond, Virginia 23220
804-788-8000
The Annual Meeting will begin at 11:00 A.M. EDT at The Jefferson Hotel.
DIRECTIONS TO THE JEFFERSON HOTEL
<TABLE>
<CAPTION>
FROM NORTH: FROM EAST:
- ----------- ----------
<S> <C>
* Take I-95 South to Exit 76B (Belvidere Street) (Airport)
* First stoplight turn left onto Leigh Street * Take I-64 West to Exit 190 (Fifth Street/Coliseum)
* Next stoplight turn right onto Belvidere Street * Stay on Fifth Street
* Fifth stoplight turn left onto Franklin Street * At 6th intersection (Main Street) turn right
* The Jefferson is four blocks, on the right * Go six (6) blocks, turn right on Adams Street
* The Jefferson is on the left
<CAPTION>
FROM SOUTH: FROM WEST:
- ----------- ----------
<S> <C>
* Take I-95 North to Exit 74A (Downtown Expressway) * Take I-64 East merge with I-95 South
* Take Belvidere Street Exit * Follow I-95 South to Exit 76B (Belvidere Street)
* Turn right onto Belvidere Street * At stoplight, turn left onto Leigh Street
* Third stoplight turn right onto Franklin Street * Next stoplight, turn right onto Belvidere Street
* The Jefferson is four blocks, on the right * At the 5th stoplight, turn left onto Franklin Street
* The Jefferson is four blocks on the right
<CAPTION>
FROM POWHITE:
-------------
<S> <C>
* Powhite Parkway to Downtown Expressway
* Take Second Street Exit (toll road)
* Follow exit to stoplight (Second Street)
* Turn left onto Second Street follow to Main Street
* Turn left onto Main Street
* Follow Main Street to Adams Street turn right
* The Jefferson is on the left
</TABLE>
SUPERVALU INC.
JUNE 29, 2000 ANNUAL MEETING OF STOCKHOLDERS
This Proxy is solicited on behalf of the Board of Directors of the Company.
The stockholder(s) named on this card hereby appoint Michael W. Wright and
John P. Breedlove, and each of them, as their proxy, with power of substitution,
to vote at the Annual Meeting as directed below. The proxies may also vote, in
their discretion, upon all other matters that may properly come before the
Meeting, or any adjournment or adjournments thereof. The shares will be voted as
if the stockholder(s) were personally present at the Meeting. All former proxies
are revoked. If not otherwise specified, shares will be voted as recommended by
the Board of Directors.
* Voting by Mail. If you wish to vote by mailing this proxy, please sign,
mark, date and return it in the enclosed postage-paid envelope.
* Voting by Telephone. If you wish to vote by telephone, please follow the
instructions on the reverse side of this card; if you vote by telephone you
do not need to return the proxy card.
* Voting by Internet. If you wish to vote by Internet, please follow the
instructions on the reverse side of this card; if you vote by Internet you
do not need to return the proxy card.
* SUPERVALU Employees. If you are a current or former employee of SUPERVALU
and have an interest in SUPERVALU common stock through a SUPERVALU employee
benefit plan, your interest as of May 1, 2000 is shown on this card. Your
vote will provide voting instructions to the Trustees of the plans. If no
instructions are given, the Trustees will vote the shares pursuant to the
terms of the plans.
Please mark this Proxy as indicated on the reverse side to vote on any item.
(Continued and to be signed on other side.)
<PAGE>
----------------------
There are three ways to vote your proxy COMPANY #
CONTROL #
----------------------
Your telephone or Internet vote authorizes the Named Proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE -- TOLL FREE -- 1-800-240-6326 -- QUICK *** EASY *** IMMEDIATE
* Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week.
* You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which is located above.
* Follow the simple instructions provided.
* Please DO NOT hang up until you have been prompted and have replied
regarding your attendance at the Annual Meeting.
VOTE BY INTERNET -- http://www.eproxy.com/svu/ -- QUICK *** EASY *** IMMEDIATE
* Use the Internet to vote your proxy 24 hours a day, 7 days a week.
* You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which is located above, to obtain your records and create an
electronic ballot.
VOTE BY MAIL
* Mark, sign and date your proxy card and return it in the postage-paid
envelope we have provided, or return it to SUPERVALU INC., c/o Shareowner
Services, P.O. Box 64873, St. Paul, MN 55164-0873.
NOTE: The deadline for electronic voting by telephone or Internet is
11:59 p.m. (CDT), Tuesday, June 27, 2000.
IF YOU VOTE BY TELEPHONE OR INTERNET, DO NOT MAIL BACK YOUR PROXY CARD.
\|/ Please detach here \|/
- --------------------------------------------------------------------------------
The Board of Directors Recommends a Vote FOR Items 1 and 2
1. ELECTION OF DIRECTORS: 01 Lawrence A. Del Santo 02 Susan E. Engel
03 William A. Hodder 04 Harriet Perlmutter
[ ] Vote FOR [ ] Vote WITHHELD
all nominees from all nominees
(Instructions: To withhold authority to vote ---------------------------------
for any indicated nominee, write the number(s)
of the nominee(s) in the box provided to the ---------------------------------
right.)
2. APPOINTMENT OF INDEPENDENT AUDITORS [ ] For [ ] Against [ ] Abstain
3. I PLAN TO ATTEND THE MEETING [ ] Yes [ ] No
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box [ ] Indicate changes below:
Date___________________________
-------------------------------
-------------------------------
Signature(s) in Box
Please sign exactly as your
name(s) appear on the Proxy. If
held in joint tenancy, all
persons must sign. Trustees,
administrators, etc., should
include title and authority.
Corporations should provide full
name of corporation and title of
authorized officer signing the
Proxy.
<PAGE>
SUPERVALU INC.
JUNE 29, 2000 ANNUAL MEETING OF STOCKHOLDERS
This Proxy is solicited on behalf of the Board of Directors of the Company.
The stockholder(s) named on this card hereby appoint Michael W. Wright and
John P. Breedlove, and each of them, as their proxy, with power of substitution,
to vote at the Annual Meeting as directed below. The proxies may also vote, in
their discretion, upon all other matters that may properly come before the
Meeting, or any adjournment or adjournments thereof. The shares will be voted as
if the stockholder(s) were personally present at the Meeting. All former proxies
are revoked. If not otherwise specified, shares will be voted as recommended by
the Board of Directors.
Please mark this Proxy as indicated on the reverse side to vote on any item.
(Continued and to be signed on other side.)
<PAGE>
\|/ Please detach here \|/
- --------------------------------------------------------------------------------
The Board of Directors Recommends a Vote FOR Items 1 and 2
1. ELECTION OF DIRECTORS: 01 Lawrence A. Del Santo 02 Susan E. Engel
03 William A. Hodder 04 Harriet Perlmutter
[ ] Vote FOR [ ] Vote WITHHELD
all nominees from all nominees
(Instructions: To withhold authority to vote ---------------------------------
for any indicated nominee, write the number(s)
of the nominee(s) in the box provided to the ---------------------------------
right.)
2. APPOINTMENT OF INDEPENDENT AUDITORS [ ] For [ ] Against [ ] Abstain
3. I PLAN TO ATTEND THE MEETING [ ] Yes [ ] No
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box [ ] Indicate changes below:
Date_____________________________
---------------------------------
---------------------------------
Signature(s) in Box
Please sign exactly as your
name(s) appear on the Proxy. If
held in joint tenancy, all
persons must sign. Trustees,
administrators, etc., should
include title and authority.
Corporations should provide full
name of corporation and title of
authorized officer signing the
Proxy.
