SYSCO CORP, DEF 14A, 1994-09-30

SYSCO CORP
DEF 14A, 1994-09-30
GROCERIES & RELATED PRODUCTS

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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant /x/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/x/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

SYSCO CORPORATION
- - - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

JOHN F. WOODHOUSE
- - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.

(1) Title of each class of securities to which transaction applies:

- - - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:

- - - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)

- - - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:

- - - --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.

(1) Amount previously paid:

- - - --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:

- - - --------------------------------------------------------------------------------
(3) Filing party:

- - - --------------------------------------------------------------------------------
(4) Date filed:

- - - --------------------------------------------------------------------------------

- - - ---------------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE> 2
[LOGO]

SYSCO CORPORATION
1390 ENCLAVE PARKWAY
HOUSTON, TEXAS 77077-2099

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 4, 1994

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Sysco
Corporation, a Delaware corporation (the "Company"), will be held November 4,
1994, at 10:00 A.M., in the Conference Center of the Sysco Corporate
Headquarters located at 1390 Enclave Parkway, Houston, Texas, for the following
purposes:

A. To elect five directors for terms of office as shown in the
attached Proxy Statement

B. To approve the Amended and Restated Sysco Corporation Management
Incentive Plan

C. To transact such other business as may properly come before the
meeting or any adjournment thereof.

Only Common Stockholders of record on the books of the Company at the close
of business on September 9, 1994, will be entitled to vote at the meeting.

We hope you will be able to attend the meeting in person but if you cannot
be present, it is important that you sign, date and promptly return the enclosed
proxy in order that your vote may be cast at the meeting.

JOHN F. WOODHOUSE
Chairman of the Board

Dated: September 30, 1994
Enclosure:

A copy of the Annual Report of Sysco Corporation for the fiscal year ended
July 2, 1994, containing financial statements, is enclosed herewith.
<PAGE> 3

SYSCO CORPORATION
1390 ENCLAVE PARKWAY
HOUSTON, TEXAS 77077-2099

1994 ANNUAL MEETING OF STOCKHOLDERS

PROXY STATEMENT

September 30, 1994

The following information is furnished in connection with the solicitation
of proxies for the 1994 Annual Meeting of Sysco Corporation (hereinafter called
the "Company").

A form of proxy for use at the meeting is enclosed. Any stockholder who
executes and delivers a proxy has the right to revoke the same at any time
before it is voted. The solicitation of proxies is made by and on behalf of the
management of the Company.

The cost of solicitation of proxies will be borne by the Company. The
Company will authorize banks, brokerage houses and other custodians, nominees or
fiduciaries to forward copies of proxy material to the beneficial owners of
shares or to request authority for the execution of the proxies and will
reimburse such banks, brokerage houses and other custodians, nominees or
fiduciaries for their out-of-pocket expenses incurred in connection therewith.
The Company has retained Kissel-Blake Inc. to assist in the solicitation of
proxies from such nominees and certain individual stockholders, in writing or by
telephone, at an estimated fee of $7,000 plus reimbursement for reasonable
out-of-pocket expenses. This Proxy Statement and form of proxy were first mailed
to stockholders on or about September 30, 1994.

As of September 9, 1994, the record date, there were outstanding
183,421,732 shares of the Company's Common Stock, $1 par value ("Common Stock").
The holders of Common Stock vote as a single class and are entitled to one vote
per share, noncumulative. As of September 9, 1994, no person or group was known
to the Company to own more than five percent of the Company's Common Stock. All
directors and executive officers of the Company as a group (20 persons) owned
beneficially 8,567,441 shares (constituting approximately 4.67%) of the
Company's outstanding Common Stock as of September 9, 1994. As stated in the
Notice of Annual Meeting of Stockholders attached hereto, only holders of Common
Stock of record at the close of business on September 9, 1994 will be entitled
to notice of and to vote at the meeting or any adjournment thereof. The stock
transfer book will not be closed.

ELECTION OF DIRECTORS

Five directors are to be elected. The Company's bylaws provide for the
election of directors for staggered terms, with each director serving a
three-year term. The Board of Directors has renominated four directors, John F.
Baugh, Charles H. Cotros, Jonathan Golden, and Thomas B. Walker, Jr., and has
nominated one additional person, Arthur J. Swenka, for three-year terms of
office. The proxyholders intend to vote for the first five persons named below
as directors. Messrs. Herbert Irving and James A. Schlindwein, whose terms of
office as directors of the Company expire at the 1994 Annual Meeting, have
chosen not to stand for re-election at that meeting. Messrs. Irving and
Schlindwein will be retiring after 25 and 14 years, respectively, of
distinguished service to the Company. The remaining ten persons named in the
table below will continue in office for the terms which expire at the Annual
Meeting of Stockholders in the year opposite their respective names.

Management recommends that the five nominees named below be elected to the
Board of Directors for the above-referenced terms of office. The five nominees
have consented to being named in the Proxy Statement and to serve if elected.
Unless otherwise directed in the proxy form, the proxyholders intend to vote in
favor of electing Messrs. Baugh, Cotros, Golden, Swenka and Walker as directors
for three-year terms of office and until their respective successors are elected
and shall qualify.

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<PAGE> 4

Although management does not contemplate the possibility, in the event any
nominee is not a candidate or is unable to serve as a director at the time of
the election, the proxies will be voted for any nominee who shall be designated
by the present Board of Directors to fill such vacancy.

The name and age of each nominee, the term of office for which he is
proposed to be elected, his principal occupation, the period during which he has
served as a director, the number of shares of Common Stock beneficially owned
directly or indirectly by each nominee as of the close of business on September
9, 1994 (according to information received by the Company) and the percentage of
outstanding shares of Common Stock such ownership represented at September 9,
1994, are set out below. Similar information is also provided for those
directors whose terms expire in future years.

<TABLE>
<CAPTION>
SHARES OF
COMMON
STOCK
BENEFICIALLY
OWNED AS
OF PERCENT
SEPTEMBER OF
PRINCIPAL DIRECTOR TERM 9, OUTSTANDING
NAME OCCUPATION AGE SINCE EXPIRES 1994(1)(2) SHARES
- - - ------------------------ ------------------------------------ --- ---- ---- --------- -----
<S> <C> <C> <C> <C> <C> <C>
Directors Standing for
Election for Three-Year
Terms of Office
- - - --------------------
John F. Baugh........... Senior Chairman of the Board of 78 1969 1994 811,350 .442%
Directors and Chairman of the
Executive Committee*
Charles H. Cotros....... Executive Vice President of the 57 1985 1994 182,357 .099%
Company; President, Foodservice
Operations of the Company
Jonathan Golden......... Partner, Arnall Golden & Gregory 57 1984 1994 24,000(4) .013%
(counsel for the Company)*(3)
Arthur J. Swenka........ President and Chief Executive 57 - - 87,431(5) .048%
Officer, Nobel/Sysco Food Services
Company; Chairman and Chief
Executive Officer, Sysco Food
Services of Montana, Inc.
Thomas B. Walker, Jr.... Limited Partner, The Goldman Sachs 70 1970 1994 136,000 .074%
Group, L.P. (investment
bankers)*(6)
Directors with
Continuing Terms
- - - ----------------
Colin G. Campbell....... President, Rockefeller Brothers Fund 58 1989 1995 1,000 .001%
(private philanthropic
foundation)(7)
Frank A. Godchaux III... Chairman, Riviana Foods Inc. (food 67 1987 1995 27,000(8) .015%
manufacturer)
Donald J. Keller........ Retired, formerly President, Chief 62 1986 1995 6,200 .003%
Operating Officer and Director,
WestPoint Pepperell (textile
manufacturer)*(9)
Frank H. Richardson..... Retired, formerly President and 61 1993 1995 2,000 .001%
Chief Executive Officer of Shell Oil
Company
John F. Woodhouse....... Chairman of the Board of Directors 63 1969 1995 665,722 .363%
and Chief Executive Officer of the
Company*(10)
John W. Anderson........ Retired, formerly Vice President -- 62 1981 1996 12,202 .007%
Customer Services, Southwestern
Bell Telephone Company
(telecommunications)
Bill M. Lindig.......... President, Chief Operating Officer 57 1983 1996 400,953(12) .219%
of the Company*(11)
Richard G. Merrill...... Retired, formerly Executive Vice 63 1983 1996 11,065 .006%
President, The Prudential
Insurance Company of America*(13)
</TABLE>

(Table continued on following page)

2
<PAGE> 5

- - - ---------------

* Member of Executive Committee

(1) Includes shares of Common Stock owned by the wives and/or dependent
children of each of the following named individuals: John F. Baugh, 251,456
shares; Colin G. Campbell, 500 shares; Frank A. Godchaux III, 6,000 shares;
Donald J. Keller, 200 shares; Donald H. Pegler, Jr., 5,216 shares and
Arthur J. Swenka, 519 shares. Includes 14,800 shares owned by the wives
and/or dependent children of other current executive officers and
directors.

(2) Includes shares of Common Stock subject to currently exercisable options as
follows: John F. Baugh, 10,916 shares; Charles H. Cotros, 10,916 shares;
and Bill M. Lindig, 4,316 shares.

(3) Mr. Golden is a partner of Arnall Golden & Gregory, counsel for the
Company.

(4) Includes 20,000 shares held by a trust created under the estate of Sol I.
Golden, of which Mr. Golden is a co-trustee.

(5) Includes 12,264 shares held by a trust of which he is a trustee.

(6) Mr. Walker is also a director of A.H. Belo Corporation and NCH Corp.

(7) Mr. Campbell is also a director of Pitney-Bowes Inc., Hartford Steam Boiler
Inspection and Insurance Company and Rockefeller Financial Services, Inc.

(8) Includes 10,000 shares held by Riviana Foods Inc. of which Mr. Godchaux and
his wife are affiliates.

(9) Mr. Keller served as President and a director of WestPoint Pepperell from
January 1986 through April 1989 and is currently a director of Air Express
International, Inc.

(10) Mr. Woodhouse is also a director of Shell Oil Company.

(11) Mr. Lindig is also a director of Santa Fe Pacific Corporation.

(12) Includes 46,300 shares held by trusts of which his wife is trustee.

(13) Mr. Merrill is also a director of Dr. Pepper/7-Up Companies and W.R.
Berkley Corporation.

(14) Mr. Pegler is also a director of the National Bank of Commerce and Lincoln
Telecommunications Co.

(15) Includes 24,000 shares held by the Pegler Family Foundation, of which Mr.
Pegler is a trustee.

(16) Mrs. Sewell is also a director of Pitney-Bowes Inc., U.S. Shoe Corp. and
Lee Enterprises, Inc.

(17) Includes 46,848 shares subject to currently exercisable options held by
current executive officers and directors.

(18) Unless otherwise noted, the persons named in the table have been engaged in
the principal occupation shown therein for the past five years or longer.

(19) Messrs. Irving and Schlindwein, whose terms of office as directors of the
Company expire at the 1994 Annual Meeting, have chosen not to stand for
re-election at that Meeting. As of September 9, 1994, Messrs. Irving and
Schlindwein owned 4,726,745 and 208,005 shares of Company Common Stock,
respectively, constituting 2.577% and .113%, respectively, of the
outstanding shares of Company Common Stock. Mr. Irving's ownership includes
168,742 shares held by his wife. As of September 9, 1994, Gregory K.
Marshall, Senior Vice President, Multi-Unit Sales and an executive named in
the Summary Compensation Table on page 8 hereof, owned 19,834 shares of
Company Common Stock constituting .011% of the outstanding shares of
Company Common Stock. Mr. Marshall's ownership includes currently
exercisable options to purchase 2,996 shares.

(20) On December 31, 1993 E. James Lowrey retired from his position as Executive
Vice President -- Finance & Administration of the Company and resigned as a
director of the Company. On February 9, 1994 the Board of Directors was
reduced to 16 directors. The Board of Directors has chosen to nominate
individuals for the vacancies created by five of the six directors whose
terms expire at the 1994 Annual Meeting and currently intends to reduce the
Board of Directors to 15 directors after the 1994 Annual Meeting. Proxies
may not be voted for more than five (5) persons.

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<PAGE> 6

DIRECTOR COMPENSATION

Directors whose principal occupation is other than employment with the
Company are compensated at the rate of $32,400 per year plus reimbursement of
expenses for all services as a director, including committee participation or
special assignments. Such directors are given the opportunity to defer their
annual compensation until their retirement from the Board or until the
occurrence of certain other events. Such deferred compensation accrues interest
at a rate equal to a long-term index (the index utilized is the monthly average
for the previous calendar year of the highest of the 20-year Treasury Bond,
10-year Treasury Note and Moody's Corporate Bond Yield Indices) plus 1%. The
current rate of interest in effect is 8.54% per annum. Messrs. Godchaux, Golden,
Merrill and Walker and Mrs. Sewell elected to defer their annual compensation
for 1994. No other remuneration was paid for services as a director during the
fiscal year ended July 2, 1994.

EXECUTIVE COMPENSATION

REPORT OF COMPENSATION AND STOCK OPTION COMMITTEE ON EXECUTIVE COMPENSATION

This report of the Compensation and Stock Option Committee of the Company
documents the components of the Company's compensation programs for its
executive officers and describes the basis on which fiscal 1994 compensation
determinations were made with respect to the executive officers of the Company,
including Mr. Woodhouse, the Chief Executive Officer. Prior to January 1, 1994,
compensation decisions with respect to the Company's 1991 Stock Option Plan were
made by the Company's Stock Option/SAR Committee, and all other compensation
decisions were made by the Company's Compensation Committee. On January 1, 1994,
these two committees were combined into one committee -- the Compensation and
Stock Option Committee. All members of the prior two committees are members of
the Compensation and Stock Option Committee (the "Committee"). In addition, Mrs.
Phyllis S. Sewell was appointed to the Committee as of January 1, 1994.

OVERALL EXECUTIVE COMPENSATION PHILOSOPHY

Since it became a publicly held corporation in 1970, the Company has always
directly linked the compensation of its executive officers to the performance of
the Company. Specifically, the Company has tied the level of its executive
compensation to increases in the Company's earnings and return on shareholders'
equity. This has been accomplished through the following means:

- - - - A "pay-for-performance" orientation based upon Company performance for
corporate officers and a combination of operating company and corporate
performance for operating company senior management;

- - - - Competitive base salaries;

- - - - Potentially significant annual incentive bonuses under the Company's
Management Incentive Plan;

- - - - The issuance of performance-based stock options; and

- - - - Customary benefits, including a supplemental retirement plan.

The factors and criteria upon which the determination of the fiscal 1994
compensation of Mr. Woodhouse, the Chief Executive Officer of the Company, was
based were the same as those discussed below with respect to all executive
officers named in the Summary Compensation Table.

BASE SALARIES

The Company has established base salaries of the executive officers of the
Company in the range of compensation payable to executive officers of United
States industrial corporations without reference to specific Company performance
criteria. This range of compensation is generally reexamined biannually through
a survey of compensation practices across a broad cross section of U.S.
industrial corporations. The survey sample does not necessarily include those
companies in the peer group included in the performance graphs on pages 12 and
13 due to the differing size, management responsibilities and organizational
structures

4
<PAGE> 7

of those corporations relative to the Company. The most recent survey conducted
for the use of the Committee and Company management (the "Survey") was performed
by an independent compensation consultant in October 1992. Base salaries for all
of the executive officers were last reviewed on November 4, 1993, and
adjustments were made in compensation which became effective January 1, 1994. At
that time, Mr. Woodhouse's base salary was increased approximately 4.3%. It has
been the consistent practice of the Company to maintain the chief executive
officer's base salary at or below the median of the range of base salaries
payable to chief executive officers of the surveyed industrial corporations
which have job content for their chief executive officers comparable to that of
the Company's. These base salaries along with the incentive compensation
described below are intended to provide an appropriate financial reward to its
executive officers.

ANNUAL INCENTIVE COMPENSATION

The Committee provides annual incentive compensation to all executive
officers of the Company through the Company's Management Incentive Plan ("MIP").
The MIP was adopted by the Board of Directors and approved by the shareholders
in 1974. Although the incentive criteria have been modified from time to time
since 1974, the plan itself has remained substantially the same since that time.
The MIP is proposed to be amended. See "Proposal to Approve Amended and Restated
Management Incentive Plan."

The MIP is designed to offer significant opportunities for compensation
which is directly tied to Company performance. In addition, the MIP is designed
to foster significant equity ownership in the Company by the executive officers
and all other participants in the MIP. The MIP is available not only to Mr.
Woodhouse and the other executive officers, but to approximately 100 others who
are members of the Company's corporate management or are managing officers of
the Company's operating subsidiaries and divisions. Compensation decisions under
the MIP are made with respect to all executive officers as a group, and as a
result, the same compensation criteria are utilized with respect to all
executives.

For executive officers, incentive bonuses under the MIP are calculated in
two parts. The first part depends on the overall performance of the Company and
is based upon the interplay between the percentage increase in earnings per
share and the return on shareholders' equity. The MIP utilizes a matrix based on
these two factors to determine a percentage number which is applied to 70% of
the participant's base salary. With respect to the determination of whether or
not there has been an increase in earnings per share for a fiscal year during
which the federal income tax rate has changed, such determination is made as if
federal income tax rates had not changed during such fiscal year. The percentage
determined by the matrix in fiscal 1994 was 70%, resulting in an award of 49% of
base salary to each executive officer participating in this portion of the MIP,
including Mr. Woodhouse, who was awarded $294,000.

The second portion of the annual incentive bonus for executive officers
under the MIP is dependent upon the number of Sysco operating companies which
achieve a target return on capital. For the first ten operating companies
achieving this goal, the participant earns 9% of the participant's base salary.
In order for this portion of the incentive bonus to be paid, the operating
companies achieving the goals, in the aggregate, must employ at least 50% of the
total capital of all of the Company's operating companies. For each additional
operating company achieving this goal, the participant earns 1 1/2% of the
participant's base salary. In fiscal 1994, forty-one (41) Sysco operating
companies met this goal, resulting in an award of 55.5% of base salary to each
executive officer participating in this portion of the MIP, including Mr.
Woodhouse, who was awarded $333,000.

In order to encourage significant equity ownership in the Company by its
executive officers and the management of its operating companies, the MIP
provides that participants may elect to receive up to 40% of their annual
incentive bonus in the form of Sysco Common Stock, based on a per share price
equal to the closing price on the New York Stock Exchange of Sysco Common Stock
on the last day of the fiscal year for which the MIP bonus is calculated. If the
participant makes such election, the participant is awarded one additional share
for each two shares received in accordance with the foregoing calculation.
Although such stock is owned by the participant who receives dividends on the
shares, for the first two years following the date of issue certain restrictions
apply to the shares. In addition, participants who elect to receive Common

5
<PAGE> 8

Stock are also entitled to receive an additional cash bonus ("Supplemental
Bonus") equal to the product of (i) the value of such matching shares received
by the participant (which is equal to the closing price of such shares on the
last trading day of the fiscal year) and (ii) the effective tax rate applicable
to the Company as described in the "Income Taxes" footnote to financial
statements contained in the Company's Annual Report to Stockholders. In fiscal
1994, Mr. Woodhouse elected to receive 40% of his bonus in Sysco Common Stock.
The stock portion of the bonus awarded Mr. Woodhouse under the MIP consisted of
16,180 shares valued at $376,185; he also received a Supplemental Bonus of
$51,414.

Finally, MIP participants are entitled to defer under the Company's
Deferred Compensation Plan up to 40% of their annual incentive bonus (without
considering any election to receive a portion of the bonus in stock). For
deferrals of up to 20% of the annual incentive bonus, the Plan provides for the
Company to make a payment equal to 50% of the amount deferred. This matching
payment vests upon the earliest to occur of (i) the tenth anniversary of the
date the matching payment is made, (ii) the participant's reaching age sixty,
(iii) the death or permanent disability of the participant, or (iv) a change in
control of the Company. In fiscal 1994, Mr. Woodhouse deferred 30% of his MIP
bonus.

As determined by the Committee, based upon the foregoing criteria, over
half of fiscal 1994 aggregate compensation (other than options, which are
discussed under "1991 Employee Stock Option Plan" in this Report below) for the
executive officers named in the Summary Compensation Table, including Mr.
Woodhouse, was in the form of bonuses and therefore directly dependent upon
Company performance.

BENEFITS

Executives also participate in the Company's regular employee benefit
programs, which include a pension program, a retirement and savings plan, group
medical and dental coverage, group life insurance and other group benefit plans.
In addition, executives are provided with a supplemental retirement plan which
is designed, generally, to provide annual payments equal to 50% of the
participant's final average annual compensation (i.e., the average compensation
over the five consecutive calendar years out of the ten calendar years preceding
retirement that provide the highest average annual compensation), less all
Company and other retirement plan benefits and Social Security payments
available to the participant upon retirement. Further details with respect to
the Company's qualified pension plan are provided on pages 10 to 12, below. All
decisions with respect to such benefits are made on a group basis; therefore, no
individual decisions were made with respect to Mr. Woodhouse and the other
executives named in the Summary Compensation Table.

1991 EMPLOYEE STOCK OPTION PLAN

In fiscal 1994, the Company granted options to purchase shares of Company
Common Stock to 616 key employees, including the Company's executive officers,
pursuant to its 1991 Employee Stock Option Plan (the "Plan"). Under the Plan,
the Company is permitted to issue stock options which are qualified as incentive
stock options under the Internal Revenue Code of 1986, as amended (the "Code"),
options which are not so qualified and stock appreciation rights. To date, the
Company has issued only stock options under the Plan and has no current plans to
issue stock appreciation rights. All fiscal 1994 grants were made in September
1993. No options which have an exercise price less than the fair market value of
the Company's Common Stock may be granted.

Prior to January 1, 1994, the Plan was administered by the Stock Option/SAR
Committee of the Board of Directors (the "Option Committee"). As of January 1,
1994, the duties of the Option Committee were assumed by the Committee. In
general, it was the practice of the Option Committee to consider issuing options
under the Plan only when participants in the Management Incentive Plan are
entitled to receive an annual incentive bonus thereunder. In other words, option
grants generally were considered only in years when the Company achieves certain
earnings per share and return on shareholders' equity targets. See "Annual
Incentive Compensation" above. It is the current intention of the Committee to
continue this practice, although it is not required to do so by the terms of the
Plan.

If the threshold earnings level for the grant of options is met, the
Committee will determine whether or not to grant options to purchase Common
Stock to the Chief Executive Officer and the other executive officers

6
<PAGE> 9

of the Company, along with certain managing officers of the Company's
significant operating subsidiaries and divisions. In addition, the Committee,
with the advice of Company senior management based upon input from the managing
officers of the respective operating companies, will determine whether or not to
grant option shares to those operating companies which have met their own
individual earnings requirements for option grants. Finally, the Committee, with
the advice of Company senior management, determines several other levels of
option grants which will be made available to corporate management employees of
the Company who have made significant contributions to the Company over the
prior fiscal year.

Although certain Company performance goals must be met before options are
issued to any Plan participant, it has been the consistent practice of the
Option Committee to impose additional Company performance goals before
participants may exercise their options. Therefore, all stock options contain
vesting requirements which, in the case of corporate employees, are based upon
increases in Company earnings and return on shareholders' equity. These vesting
requirements must be met in the first five fiscal years after the options are
granted. In effect, therefore, there are two different sets of performance
goals, one for the grant of the option and one for the exercise of the option.
The Committee currently anticipates continuing this practice. The options
granted under the Plan expire ten years after the date of grant, although the
options must vest within the five-year vesting period or they will expire at the
end of such five-year period.

During fiscal 1994, Mr. Woodhouse received one (1) grant of 3,700 options
at an exercise price of $28.875 per share. These options contain vesting
requirements which are identical to those discussed above.

REVIEW OF POTENTIAL EFFECT OF SECTION 162(M)

Section 162(m) of the Code ("Section 162(m)") generally sets a limit of $1
million on the amount of compensation (other than certain types of compensation,
including "performance-related" compensation that complies with the requirements
of Section 162(m)) that the Company can deduct for federal income tax purposes
in any given year with respect to the compensation of each of the executive
officers named in the Summary Compensation Table in the proxy statement with
respect to such year for taxable years beginning on or after January 1, 1994.
The Committee and the Board have determined, after reviewing the effect of
Section 162(m), that their policy will be to structure the performance-based
compensation arrangements for such named executive officers, to the extent
feasible and taking into account all relevant considerations, so as to satisfy
Section 162(m)'s conditions for deductibility. The proposal submitted to the
stockholders for approval of the Amended and Restated Management Incentive Plan
is intended to facilitate the Company's ability to qualify such compensation for
the performance-based compensation exemption from the general limitation imposed
by Section 162(m) on the Company's ability to deduct compensation paid to such
named executive officers. See "Proposal to Approve Amended and Restated
Management Incentive Plan" below.

COMPENSATION AND STOCK OPTION COMMITTEE:

Thomas B. Walker, Jr., Chairman
John W. Anderson
Colin G. Campbell
Frank A. Godchaux III
Jonathan Golden
Donald J. Keller
Richard G. Merrill
Phyllis S. Sewell

7
<PAGE> 10

The following tables set forth information with respect to the Chief
Executive Officer and the four most highly compensated executive officers of the
Company and its subsidiaries employed at the end of fiscal 1994 as to whom the
total annual salary and bonus for the fiscal year ended July 2, 1994, exceeded
$100,000:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS(5)
---------------------------------------- -------------------
(E) (G) (I)
OTHER (F) SECURITIES ALL
ANNUAL RESTRICTED UNDERLYING OTHER
(C) (D) COMPEN- STOCK OPTIONS COMPEN-
(A) (B) SALARY BONUS SATION AWARDS /SARS SATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1)(2) ($)(3) ($)(4) (#)(4) ($)(6)
- - - ----------------------------------------- ---- -------- -------- -------- -------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C>
John F. Woodhouse........................ 1994 $587,500 $427,629 -- $376,185 3,700 $ 97,349
Chairman of the Board of Directors 1993 562,500 403,664 -- 403,628 3,960 70,008
and Chief Executive Officer 1992 537,500 292,057 292,039 4,494 51,564
Bill M. Lindig........................... 1994 $512,500 $374,163 -- $329,174 3,700 $ 3,299
President and Chief Operating 1993 487,500 351,013 -- 350,980 3,960 2,733
Officer and Director 1992 462,500 252,231 252,216 4,494 44,927
Charles H. Cotros........................ 1994 $402,500 $299,340 -- $263,330 3,700 $ 47,178
Executive Vice President and 1993 367,500 270,277 -- 270,259 3,960 47,778
President, Foodservice Operations and 1992 341,500 185,855 -- 185,843 4,494 33,864
Director
James A. Schlindwein..................... 1994 $377,500 $274,399 -- $241,382 3,700 $ 43,338
Executive Vice President, 1993 360,000 259,753 -- 259,720 3,960 46,023
Procurement and Director 1992 341,500 185,855 -- 185,843 4,494 33,864
Gregory K. Marshall...................... 1994 $245,000 $178,195 $118,934 $156,728 3,700 $209,220
Senior Vice President, 1993 213,442 101,531 -- 101,505 3,960 2,183
Multi-Unit Sales 1992 195,000 121,087 -- 121,070 4,494 22,194
</TABLE>

- - - ---------------

(1) Includes amounts deferred pursuant to the Company's Executive Deferred
Compensation Plan.

(2) Does not include that portion of a participant's bonus which the participant
elected to receive in the form of restricted Common Stock of the Company.
See column (f).

(3) Does not include perquisites and other personal benefits, if any, the
aggregate of which in the case of each named individual does not exceed the
lesser of $50,000 or 10% of such individual's annual salary and bonus as
reported. The $118,934 paid to Mr. Marshall in fiscal 1994 represents
reimbursement for a portion of the tax liability resulting from the amount
paid to Mr. Marshall described in Note (6) below.

(4) The amount presented is determined by multiplying the number of shares
earned by the closing price of the Company's Common Stock on the New York
Stock Exchange on the date as of which the shares were earned, without
taking into consideration the following restrictions on the shares. The
shares are not transferable by the recipient for two years following
receipt thereof and are subject to certain repurchase rights on the part of
the Company in the event of termination of employment other than pursuant
to normal retirement or disability. The recipient receives dividends on the
shares during the restricted two-year period. During fiscal 1994, the
number of restricted shares received by the named individuals was as
follows: Mr. Woodhouse -- 16,180 shares; Mr. Lindig -- 14,158 shares; Mr.
Cotros -- 11,326 shares; Mr. Schlindwein -- 10,382 shares; and Mr.
Marshall -- 6,741 shares. At the end of fiscal 1994, the aggregate number
and dollar amount (computed as described above) of restricted shares held
by the named individuals were as follows: Mr. Woodhouse -- 24,376 shares at
$577,999; Mr. Lindig -- 21,285 shares at $504,664; Mr. Cotros -- 16,814
shares at $398,460; Mr. Schlindwein -- 15,656 shares at $371,143; and Mr.
Marshall -- 8,802 shares at $207,451.

(5) Column (h), Long Term Incentive Plan Payouts, is not included in the table
since no compensation required to be reported thereunder was paid to the
named individuals during the periods covered by the
(Footnotes continued on following page)

8
<PAGE> 11

table nor does the Company have any compensation plans which provide for
the payment of such compensation.

(6) With respect to Mr. Marshall, the amount shown includes payments made by the
Company to Mr. Marshall of $182,905 to reimburse him for the loss on and
cost of the sale of his home in Denver, Colorado upon his relocation to
Houston, Texas and $23,196 in moving costs paid by the Company in
connection with the relocation. In addition to the foregoing, the amounts
shown include the Company match equal to 50% of the amount each individual
elected to defer under the Company's Executive Deferred Compensation Plan
and the amount the Company paid for term life insurance coverage for each
individual as follows:

<TABLE>
<CAPTION>
1994 1993 1992
---------------------------- ---------------------------- ----------------------------
DEFERRED TERM DEFERRED TERM DEFERRED TERM
TOTAL MATCH INSURANCE TOTAL MATCH INSURANCE TOTAL MATCH INSURANCE
------- ------- ------ ------- ------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
John F. Woodhouse............. $97,349 $94,050 $3,299 $70,008 $67,275 $2,733 $51,564 $48,675 $2,889
Bill M. Lindig................ 3,299 None 3,299 2,773 None 2,733 44,927 42,038 2,889
Charles H. Cotros............. 47,178 43,830 3,288 47,778 45,045 2,733 33,864 30,975 2,889
James A. Schlindwein.......... 43,338 40,233 3,105 46,023 43,290 2,733 33,864 30,975 2,889
Gregory K. Marshall........... 3,119 None 3,119 2,183 None 2,183 22,194 20,180 2,014
</TABLE>

The following table provides, as to the individuals named in the Summary
Compensation Table, information regarding the grants of stock options during the
last fiscal year. The Company did not grant any stock appreciation rights during
the last fiscal year.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
GRANT
DATE
INDIVIDUAL GRANTS VALUE
- - - ------------------------------------------------------------------------------------ -----
(A) (B) (C) (D) (E) (F)

PERCENTAGE
OF TOTAL
NUMBER OF OPTIONS/SARS
SECURITIES GRANTED TO GRANT
UNDERLYING EMPLOYEES EXERCISE DATE
OPTIONS/SARS IN OR BASE PRESENT
GRANTED FISCAL PRICE EXPIRATION VALUE
NAME (#)(1) 1994 ($/SHARE) DATE ($)(2)
- - - ---------------------------- ----- ---- ------- ---------- -------
<S> <C> <C> <C> <C> <C>
John F. Woodhouse........... 3,700 .58% $28.875 9/3/2003 $48,951
Bill M. Lindig.............. 3,700 .58% 28.875 9/3/2003 48,951
Charles H. Cotros........... 3,700 .58% 28.875 9/3/2003 48,951
James A. Schlindwein........ 3,700 .58% 28.875 9/3/2003 48,951
Gregory K. Marshall......... 3,700 .58% 28.875 9/3/2003 48,951
</TABLE>

- - - ---------------

(1) The options do not vest and become exercisable unless the Company attains
certain levels of increases in pre-tax earnings and return on shareholders'
equity. If these increases are not attained within five years of the date
of grant, the options expire.

(2) The hypothetical grant value for the options was determined using a modified
Black-Scholes pricing model. In applying the model, the Company assumed a
12-month volatility of 26.74%, a 7.16% risk-free rate of return, a dividend
yield at the date of grant of 1.4%, and a 10-year option term. The Company
did not assume any option exercises or risk of forfeiture during the
10-year term. If used, such assumptions could have reduced the reported
grant date value. The actual value, if any, an executive may realize upon
exercise of options will depend on the excess of the stock price over the
exercise price on the date the option is exercised. Consequently, there is
no assurance that the value realized will be at or near the value estimated
by the modified Black-Scholes model.

9
<PAGE> 12

The following table provides information with respect to aggregate option
exercises in the last fiscal year and fiscal year-end option values for the
executive officers named in the Summary Compensation Table.

AGGREGATED OPTION/SAR EXERCISES
IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)

NUMBER OF
UNEXERCISED VALUE OF
SECURITIES UNEXERCISED
SHARES UNDERLYING IN-THE-MONEY
ACQUIRED OPTIONS/SARS AT OPTIONS/SARS AT
ON VALUE JULY 2, 1994(#) JULY 2, 1994 ($)(2)
EXERCISE REALIZED -------------------- -------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - - ------------------------ ------ -------- ------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
John F. Woodhouse....... 11,170 $133,056 None 4,138 None $1,498
Bill M. Lindig.......... 13,960 205,703 4,316 4,138 $ 2,996 1,498
Charles H. Cotros....... 7,360 122,820 10,916 4,138 55,384 1,498
James A. Schlindwein.... 26,826 448,057 2,850 4,138 1,530 1,498
Gregory K. Marshall..... None None 2,996 4,138 2,996 1,498
</TABLE>

- - - ---------------

(1) Computed based on the difference between the closing price of the Common
Stock on the day prior to exercise and the exercise price.

(2) Computed based on the difference between the closing price on July 2, 1994
and the exercise price.

DEFINED BENEFIT PENSION PLAN

The Company has a defined benefit retirement plan which was amended and
restated effective July 2, 1989 ("Retirement Plan"). In addition to the
amendment and restatement, all the defined benefit retirement plans for nonunion
employees provided by adopting employers of Sysco Corporation were merged into
the Retirement Plan. The resulting plan provides for a monthly benefit payable
for five years certain and life thereafter, depending upon when an employee
became a participant, as set forth below:

1. Employees Who Became Participants in the Retirement Plan Prior to
July 2, 1989.

Employees who were participants in the Retirement Plan on July 1,
1989, will receive an annual benefit equal to (a) the normal retirement
benefit which accrued prior to July 2, 1989, plus (b) an amount equal to
1 1/2% of the participant's aggregate career compensation earned on and
after July 2, 1989.

2. Employees Who Became Participants in the Retirement Plan on or
after July 2, 1989.

Employees who became participants in the Retirement Plan on or after
July 2, 1989, will receive an annual benefit equal to 1 1/2% of the
participant's aggregate career compensation earned on and after July 2,
1989.

In the event of a participant's death prior to his normal retirement age
(the first day of the month after age 65) or the commencement of a benefit, if
earlier, and if he has five or more years of credited service, the total death
benefit is an amount equal to the value of the pension accrued by the deceased
participant prior to his death or earlier termination of employment. The
surviving spouse receives a portion of that benefit equal to a 50% survivor
annuity unless the survivor annuity is waived by the participant with the
spouse's consent prior to the participant's death. The remaining death benefit
is payable to the participant's beneficiary for ten years certain and life
thereafter.

10
<PAGE> 13

The following table sets forth the estimated annual retirement benefit
payable under the Retirement Plan to persons in the specified compensation and
years-of-service classifications, assuming the benefit formula described in
clause (b) of paragraph 1 above applies, and therefore that all years of
credited service are performed on or after July 2, 1989:

PENSION PLAN TABLE(1)

<TABLE>
<CAPTION>
CAREER
AVERAGE
COMPENSATION
EARNED ON YEARS OF CREDITED SERVICE
AND AFTER ------------------------------------------------
JULY 2, 1989(2) 10 20 30 40
-------------------------------------- ------- ------- -------- --------
<S> <C> <C> <C> <C>
$ 50,000............................ $ 7,500 $15,000 $ 22,500 $ 30,000
100,000............................ 15,000 30,000 45,000 60,000
150,000............................ 22,500 45,000 67,500 90,000
200,000............................ 30,000 60,000 90,000 120,000(3)
250,000............................ 37,500 75,000 112,500 150,000(3)
</TABLE>

- - - ---------------

(1) Assumes that the annual benefit is payable for five years certain and life
thereafter and that Retirement Plan and Social Security retirement age is
65.

(2) Compensation for benefit calculation purposes is limited by law as follows
as to the plan years commencing in the following calendar years: (a) 1993
to $235,840, (b) 1992 to $228,860, (d) 1991 to $222,220, (d) 1990 to
$209,200. The maximum reverted to $150,000 for the plan year commencing in
calendar year 1994. Therefore, the table does not extend past $250,000 as
the compensation for plan purposes may not exceed the limits specified
above.

(3) Current law and regulations limit retirement benefits in 1994 to $115,641 if
they are payable for five years certain and life thereafter (assuming
Retirement Plan and Social Security retirement age of 65). This limitation
applies to total retirement benefits under the Retirement Plan as
determined by adding benefits accrued with respect to periods of employment
with the Company both before and after July 1, 1989. The Pension Plan Table
does not reflect this limitation.

Messrs. Cotros, Lindig, Schlindwein and Woodhouse, four of the five
executive officers named in the Summary Compensation Table, were each employed
by the Company prior to July 1, 1989, and are covered by the portion of the
Retirement Plan described at paragraph 1 on the previous page. Mr. Marshall, the
fifth executive officer named in the Summary Compensation Table, became a
participant in the Plan on July 2, 1989 and his retirement benefit is calculated
under paragraph 2 on page 10. Each of Messrs. Cotros, Lindig, Schlindwein,
Woodhouse and Marshall has five years of credited service after July 1, 1989,
and has, respectively, 13 years, 5 years, 9 years, 20 years and 5 years (vesting
only) of credited service prior to July 2, 1989. All amounts shown in the
Summary Compensation Table, other than deferred bonus, term life insurance
payments and the Company match under the Executive Deferred Compensation Plan,
are utilized to compute career average compensation. Messrs. Cotros, Lindig,
Schlindwein and Woodhouse have received compensation in excess of the maximums
permitted for retirement benefit calculations described in footnote (2) to the
Pension Plan Table above. As a result, the career average compensation for each
of these four named executive officers from July 2, 1989 through July 2, 1994
was $214,224. Since Mr. Marshall received less compensation than the maximum
permitted for one year, his career average compensation for this period was
$208,384.

Messrs. Cotros, Lindig, Schlindwein and Woodhouse are eligible for benefits
calculated under both of the benefit formulas described in clauses (a) and (b)
of paragraph 1 on page 10. Assuming an annual benefit payable for five years
certain and life thereafter and that the individual in question has reached
normal Retirement Plan and Social Security retirement age of 65, each of the
named executive officers has accrued the maximum benefit permitted under the
Retirement Plan for credited service after July 1, 1989, which is $16,067, and
has the following benefit calculated for credited service on and before July 1,
1989:

11
<PAGE> 14

Mr. Cotros -- $57,629; Mr. Lindig -- $48,047; Mr. Schlindwein -- $57,629; and
Mr. Woodhouse -- $152,367. As mentioned above, Mr. Marshall's benefit is
calculated under paragraph 2 on page 10 which results in an accrued benefit of
$15,629 for credited service on or after July 2, 1989. However, as noted in
footnote 3 to the Pension Plan Table, and given the above assumptions, under
current law and regulations the maximum retirement benefit that is payable in
1994 if the individual were qualified for retirement and did retire would be
$115,641. Therefore, if Mr. Woodhouse retired in 1994 his benefit would be
limited to this overall maximum.

PERFORMANCE GRAPHS
PERFORMANCE GRAPHS

The following two performance graphs compare the performance of the
Company's Common Stock to the S&P 500 Index and to a peer group for the
Company's last five and ten fiscal years, respectively. The peer group is
comprised of Fleming Companies, Inc., Nash Finch Company, Richfood Holdings,
Inc., Rykoff-Sexton, Inc., Super Food Services, Inc. and Super Value Stores,
Inc. These distributors of grocery or foodservice products were selected since
they comprise a broad group of publicly held corporations with food distribution
operations similar in some respects to the Company's operations. Rykoff-Sexton,
Inc. is the only other publicly held foodservice distributor, although, unlike
the Company, it also manufactures certain food products. Each other member of
the peer group is in the business of distributing grocery products to retail
supermarkets. The Company considers this to be a more representative peer group
than the "S&P Foods -- Wholesaler" index maintained by Standard & Poor's
Corporation and consisting of the Company, Fleming Companies, Inc. and Super
Value Stores, Inc. The returns of each member of the peer group are weighted
according to each member's stock market capitalization as of the beginning of
each period measured. The graphs assume that the value of the investment in each
of the Company's Common Stock, the index and the peer group was $100 at each of
July 1, 1989 and June 30, 1984, and that all dividends were reinvested.
Performance data for the Company is provided as of the last trading day of each
of the Company's last five and ten fiscal years, respectively. Performance data
for the S&P 500 Index and for each member of the peer group is provided for the
last trading day closest to June 30 of each year.

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN

<TABLE>
<CAPTION>
MEASUREMENT PERIOD S&P 500
(FISCAL YEAR COVERED) SYSCO INDEX PEER GROUP

12
<PAGE> 15

COMPARISON OF TEN-YEAR CUMULATIVE TOTAL RETURN

<TABLE>
<CAPTION>
MEASUREMENT PERIOD S&P 500
(FISCAL YEAR COVERED) SYSCO INDEX PEER GROUP
<S> <C> <C> <C>

1984 100.00 100.00 100.00
1985 121.88 130.96 145.25
1986 191.50 177.87 191.31
1987 237.82 222.63 204.38
1988 201.65 207.27 181.09
1989 326.72 249.86 210.44
1990 475.84 291.06 208.40
1991 573.24 312.60 216.80
1992 672.70 354.52 195.88
1993 700.95 402.84 243.87
1994 669.69 406.91 228.12
</TABLE>

13
<PAGE> 16

OTHER INFORMATION

The Company's Nominating Committee, consisting of Jonathan Golden
(Chairman), Colin G. Campbell, Donald J. Keller, Richard G. Merrill and Thomas
B. Walker, Jr., held three (3) meetings during fiscal year 1994. The function of
the Nominating Committee is to propose directors and officers for election or
reelection. The Nominating Committee will consider nominees recommended in
writing by stockholders.

The Company's Compensation Committee, consisting of Thomas B. Walker, Jr.
(Chairman), Jonathan Golden, Donald J. Keller and Richard G. Merrill, held two
(2) meetings, during fiscal year 1994. Prior to January 1, 1994, the function of
the Compensation Committee was to consider for recommendation to the Board of
Directors of the Company the annual compensation of directors and officers of
the Company, to administer the Management Incentive Plan and to provide guidance
in the area of employee benefits, including retirement plans and group
insurance. The Company's Stock Option/SAR Committee, consisting of John W.
Anderson (Chairman), Colin G. Campbell, Frank A. Godchaux III, Richard G.
Merrill and Thomas B. Walker, Jr. held one (1) meeting during fiscal year 1994.
The Stock Option/SAR Committee administered the Company's 1991 Employee Stock
Option Plan prior to January 1, 1994. The Compensation and Stock Option
Committee, consisting of Thomas B. Walker, Jr. (Chairman), Jonathan Golden,
Donald J. Keller, Richard G. Merrill, John W. Anderson, Colin G. Campbell, Frank
A. Godchaux III and Phyllis S. Sewell, held two (2) meetings during fiscal year
1994. The Compensation and Stock Option Committee succeeded to all functions of
the Compensation Committee and the Stock Option/SAR Committee as of January 1,
1994.

The Board of Directors held five (5) meetings during fiscal year 1994 and
all directors of the Company attended more than 75% of the aggregate of (1) the
total number of meetings of the Board of Directors and (2) the total number of
meetings held by all committees of the Board on which he or she served during
fiscal year 1994.

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than ten
percent of the Company's stock, to file initial reports of ownership and reports
of changes in ownership with the Securities and Exchange Commission (the "SEC")
and the New York Stock Exchange. Executive officers, directors and greater than
ten percent beneficial owners are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on a
review of the copies of such forms furnished to the Company or written
representations from the Company's executive officers and directors, the Company
believes that with respect to fiscal year 1994 all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
ten percent beneficial owners were met. Subsequent to the end of fiscal 1994,
Mr. Golden filed one report late on Form 4 which was required to have been filed
with respect to fiscal 1993. This report pertained to a change in the beneficial
ownership of shares transferred from an estate of which Mr. Golden was an
executor to a trust, created under such estate, of which he is a trustee.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Anderson, Campbell, Godchaux, Golden, Keller, Merrill, and Walker,
and Mrs. Sewell were the only members of the Company's Board of Directors to
serve on the Company's Compensation, Stock Option/SAR or Compensation and Stock
Option Committees during fiscal 1994 and were not, during fiscal year 1994 or
prior thereto, officers or employees of the Company or any subsidiary thereof.
Mr. Walker is a limited partner of The Goldman Sachs Group, L.P., an affiliate
of Goldman, Sachs & Co. Goldman, Sachs & Co. is an investment banking firm which
performed management services in connection with the Company's commercial paper
program and brokerage services in connection with the Company's stock repurchase
program. Mr. Golden is the sole stockholder of Jonathan Golden, P.C., a partner
in the law firm of Arnall Golden & Gregory, Atlanta, Georgia, counsel to the
Company. The Company believes that fees paid to such firm were fair and
reasonable in view of the level and extent of services rendered. Mr. Godchaux is
Chairman and the owner, with his wife, of 14% of the outstanding capital stock
of Riviana Foods Inc., a food products company which had sales to the Company of
approximately $858,000 during fiscal 1994. The Company

14
<PAGE> 17

believes that the terms of such transactions were fair and no less favorable to
the Company than those available from other suppliers.

PROPOSAL TO APPROVE
AMENDED AND RESTATED MANAGEMENT INCENTIVE PLAN

As noted in the Report of Compensation and Stock Option Committee under
"Annual Incentive Compensation" above, the Company has had a Management
Incentive Plan in effect since 1974 (the "Prior MIP"). On September 2, 1994,
however, the Board of Directors adopted, subject to stockholder approval, an
Amended and Restated Management Incentive Plan ("Restated MIP"). One of the
primary purposes for adopting the Restated MIP was to ensure that, with respect
to any given year, any compensation in excess of $1 million payable to each of
the executive officers listed in the Summary Compensation Table in the proxy
statement with respect to such year will remain deductible for income tax
purposes. See "Review of Potential Effect of Section 162(m)" in the Report of
the Compensation and Stock Option Committee. Set forth below are a brief
description of the material differences between the Restated MIP and the Prior
MIP and a summary of certain material provisions of the Restated MIP. Except as
noted below, the Restated MIP is materially unchanged from the Prior MIP. If the
shareholders do not approve the Restated MIP, no compensation will be paid
pursuant thereto.

MATERIAL DIFFERENCES BETWEEN THE AMENDED AND RESTATED MANAGEMENT INCENTIVE PLAN
AND THE COMPANY'S PRIOR MANAGEMENT INCENTIVE PLAN.

As discussed in the Report of Compensation and Stock Option Committee on
Executive Compensation, "Review of Potential Effect of Section 162(m)," above,
Section 162(m) of the Code sets a limit of $1 million on the amount of
compensation that the Company can deduct for federal income tax purposes for a
given year with respect to the compensation of each of the executive officers
listed in the Summary Compensation Table in the proxy statement with respect to
such year for taxable years beginning on or after January 1, 1994; provided,
however, that certain types of "performance-based" compensation may be deducted
regardless of such limit if the material terms under which such compensation is
paid, including the performance goals related thereto, are approved by the
Company's stockholders and the Company complies with certain other provisions of
Section 162(m).

SECTION 162(M) AMENDMENTS

Subject to stockholder approval, the Prior MIP has been amended as follows
in order to comply with Section 162(m) and the regulations promulgated pursuant
thereto:

Composition of Administering Committee

The committee which administers the Restated MIP (the "Committee") is
required to be composed of persons who are both "disinterested" within the
meaning of Rule 16b-3 promulgated pursuant to the Securities Exchange Act of
1934, as amended, and "outside directors" for purposes of Section 162(m), as
defined in the regulations thereunder. The Prior Plan was administered by the
Company's Compensation Committee, members of which were required only to be
"disinterested" pursuant to Rule 16b-3. It is currently anticipated that the
Restated MIP will be administered by the Company's Compensation and Stock Option
Committee or a subcommittee thereof.

Classes of Participants

The Restated MIP provides for three classes of participants, to be
designated by the Committee prior to each fiscal year: corporate participants
selected from officers of the Company elected by the Board of Directors and
employed by the Company or a subsidiary or division thereof ("Corporate
Participants"), certain officers of a division or subsidiary of the Company
("Subsidiary Participants") and "covered employees" of the Company within the
meaning of such term as contained in Section 162(m) and the

15
<PAGE> 18

regulations thereunder ("Senior Executive Participants"). If a participant
qualifies as both a Senior Executive Participant and a Corporate or Subsidiary
Participant during any fiscal year, he or she shall be considered to be a Senior
Executive Participant and not a Corporate or a Subsidiary Participant with
respect to such fiscal year. There are 21 Corporate Participants and 76
Subsidiary Participants with respect to fiscal 1995. Of these individuals, the
chief executive officer and the four most highly compensated executive officers
of the Company other than the chief executive officer will automatically be
designated as Senior Executive Participants at the end of the fiscal year
pursuant to the provisions of the Restated MIP. The Prior MIP provided for only
Corporate and Subsidiary Participants (and contained a provision for an
additional class of designated participants which was never utilized). Those
provisions of the Restated MIP which apply specifically to Senior Executive
Participants were not contained in the Prior MIP and are described at "Summary
of Certain Material Provisions of Amended and Restated Management Incentive
Plan, Senior Executive Participants" below.

Delegation of Committee's Duties

The Prior MIP provided that in certain circumstances the Committee could
delegate a number of its duties to the Chairman of the Board or the President of
the Company. The Restated MIP has eliminated the Committee's ability to delegate
its authority with respect to Senior Executive Participants since any such
delegation would violate the Section 162(m) "outside director" requirement.

Committee Certification

The Restated MIP provides that no payments may be made thereunder with
respect to Senior Executive Participants prior to the Committee's certification
that the relevant performance goals have been satisfied. This certification is
required by Section 162(m).

Amendments and Termination

The Prior MIP provided that it could be amended and/or terminated at any
time by the Compensation Committee of the Company. The Restated MIP may be
amended and/or terminated only by the Board of Directors of the Company. In
addition, any amendment to the performance goals contained in the Restated MIP
that is "material" within the meaning of Section 162(m) or any regulations
promulgated pursuant thereto must be approved by the stockholders of the Company
prior to the payment to any Senior Executive Participant of any amounts pursuant
to the terms of such amendment.

ADDITIONAL AMENDMENTS

In addition to amendments made in order to comply with Section 162(m) and
the regulations promulgated pursuant thereto, the Prior MIP has also been
amended, subject to stockholder approval, as follows:

Additional Bonus

The Restated MIP provides for an "Additional Bonus" which is potentially
available only to Subsidiary Participants. This bonus is discussed further in
connection with the "Summary of Certain Material Provisions of the Amended and
Restated Management Incentive Plan" below. The Prior MIP did not explicitly
provide for the payment of such bonus.

Ninety Day Designation Requirement Deleted

The Restated MIP provides that the Committee shall designate participants
prior to the commencement of each fiscal year or as soon as practicable
thereafter. The Prior MIP required such designation to be made by the Company's
Compensation Committee at least ninety (90) days prior to the commencement of
the fiscal year except in certain circumstances.

16
<PAGE> 19

SUMMARY OF CERTAIN MATERIAL PROVISIONS OF AMENDED AND RESTATED MANAGEMENT
INCENTIVE PLAN

Corporate Participants

Compensation to be paid to Corporate Participants in the Restated MIP is
determined in accordance with the performance criteria described in the "Report
of Compensation and Stock Option Committee on Executive Compensation -- Annual
Incentive Compensation" above.

Subsidiary Participants

Incentive bonuses under the Restated MIP for Subsidiary Participants are
calculated in up to four parts. The first part depends upon the results of
operations of the subsidiary or division employing such participant, and is
based upon the interplay between the percentage increase in pre-tax earnings and
return on capital ("Operations Bonus"). The Restated MIP utilizes a matrix based
on these two factors to determine a percentage number which is applied to 70% of
the participant's base salary.

The second portion of the annual incentive bonus for Subsidiary
Participants is based upon the interplay, for the Company as a whole, between
the percentage increase in earnings per share and the return on shareholders'
equity. The Restated MIP utilizes a matrix based on these two factors to
determine a percentage number which is applied to 20% of the Subsidiary
Participant's base salary.

Subsidiary Participants may also elect to receive up to 40% of their annual
incentive bonus in the form of Company Common Stock, pursuant to the same
conditions discussed with respect to Corporate Participants under the heading
"Report of Compensation and Stock Option Committee on Executive Compensation --
Annual Incentive Compensation" above. If this election is made, Subsidiary
Participants are eligible to receive the Supplemental Bonus discussed in the
"Report of Compensation and Stock Option Committee on Executive
Compensation -- Annual Incentive Compensation" above.

Subsidiary Participants may also receive an additional bonus (the
"Additional Bonus") to be awarded in the sole discretion of the Committee
administering the Restated MIP. The Additional Bonus is based, at the discretion
of the Committee, upon (i) annual sales increases over the prior year's sales in
excess of 15%, (ii) the development of management personnel made available to
other operations of the Company, (iii) the supervision of another subsidiary or
division of the Company in addition to the subsidiary or division which employs
the participant and to which he or she is primarily responsible, and (iv) such
other criteria as the Committee may develop in its sole discretion.

Unless otherwise determined by the Committee in its sole discretion, only
Subsidiary Participants whose operation achieved a 20% or greater pretax return
on capital for the fiscal year preceding the fiscal year for which the bonus is
being determined will be entitled to a bonus determined in the manner described
above. For any Subsidiary Participant whose operation did not achieve a 20% or
greater pretax return on capital for the prior fiscal year, the Committee may
establish a special bonus formula for, or it may decline to award a bonus to,
such Subsidiary Participant for the current fiscal year.

Finally, Subsidiary Participants are entitled to defer up to 40% of their
annual incentive bonus under the Company's Deferred Compensation Plan (without
considering any election to receive a portion of the bonus in stock). The
vesting, matching and other conditions applicable thereto are identical to those
described with respect to Corporate Participants under the heading "Report of
Compensation and Stock Option Committee on Executive Compensation -- Annual
Incentive Compensation" above.

Senior Executive Participants

Senior Executive Participants are compensated pursuant to the Restated MIP
in accordance with the criteria described above utilized in connection with
Corporate Participants and Subsidiary Participants, as applicable; provided,
however, that no Senior Executive Participant may in any event receive an
aggregate bonus under the Restated MIP, determined by aggregating the value of
all cash and securities received, which is in excess of one percent (1%) of the
Company's earnings before income taxes, as disclosed in the "Consolidated
Results of Operations" section of the Company's Annual Report to the Securities
and

17
<PAGE> 20

Exchange Commission on Form 10-K for the applicable fiscal year. In addition,
Senior Executive Participants who would otherwise be Subsidiary Participants are
ineligible to receive Additional Bonuses.

AMENDED AND RESTATED PLAN BENEFITS

It is impossible to determine the benefits which will be paid to any
individuals with respect to fiscal 1995 pursuant to the Restated MIP should it
be approved by the Company's stockholders. The following table sets forth the
dollar value of the bonuses paid to each of the following with respect to fiscal
1994 pursuant to the Prior MIP. The amounts which would have been paid with
respect to fiscal 1994 pursuant to the Restated MIP if it had been in effect are
identical to the amounts set forth below:

<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE($)
------------------------------------------------------ ---------------
<S> <C>
John F. Woodhouse $ 803,814
Chairman of the Board of
Directors and Chief
Executive Officer
Bill M. Lindig $ 703,337
President and Chief
Operating Officer and
Director
Charles H. Cotros $ 562,670
Executive Vice President
and President,
Foodservice Operations
and Director
James A. Schlindwein $ 515,781
Executive Vice President
Procurement and Director
Gregory K. Marshall $ 334,923
Senior Vice President
Multi-Unit Sales
Executive Group $ 3,538,458
Non-Executive Director Group $ 192,492
Non-Executive Officer $ 1,651,508
Employee Group
</TABLE>

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF APPROVAL OF THE
AMENDED AND RESTATED MANAGEMENT INCENTIVE PLAN.

VOTING PROCEDURES AND VOTE REQUIRED

The Board of Directors of the Company will select one or more Inspectors of
Election, who shall determine the number of shares of voting stock outstanding,
the voting power of each, the number of shares of stock represented at the
Annual Meeting, the existence of a quorum (which shall consist of thirty-five
percent (35%) of the shares entitled to vote), and the validity and effect of
proxies. The Inspectors of Election shall receive votes, ballots or consents,
hear and determine any challenges and questions arising in connection with the
right to vote, tabulate all votes cast for and against (and abstentions in
respect of) each proposal and determine the result of such vote.

18
<PAGE> 21

In accordance with the Delaware General Corporation Law, the election of
the nominees named herein as directors will require a plurality of the votes
cast by the shares of Company Common Stock entitled to vote in the election
provided that a quorum is present at the Annual Meeting. Abstentions and broker
non-votes will not be relevant to the outcome.

The proposal for approval of the Amended and Restated Management Incentive
Plan will require the affirmative vote of a majority of the shares of Common
Stock present in person or by proxy and entitled to vote on the proposal.
Abstentions will have the effect of "negative" votes with respect to this
proposal, while broker non-votes will have no effect on the outcome of the
proposal.

RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen LLP served as the independent certified public accountants
providing auditing, financial and tax services to the Company for fiscal year
1994 and will provide such services during the current fiscal year 1995. The
Company expects that representatives of Arthur Andersen LLP will be present at
the Annual Meeting with the opportunity to make a statement if they desire to do
so and that they will be available to respond to appropriate questions.

The Company has an Audit Committee of the Board of Directors which is
composed of Richard G. Merrill (Chairman), Colin G. Campbell, Frank A. Godchaux
III, Frank H. Richardson, Phyllis S. Sewell and Thomas B. Walker, Jr. The Audit
Committee held three (3) meetings during fiscal year 1994. The Audit Committee
reviews and reports to the Company's Board of Directors with respect to various
auditing and accounting matters, including recommendations as to the selection
of the Company's independent public accountants, the scope of the audit
procedure, the nature of the services to be performed for the Company, the fees
to be paid to the Company's independent public accountants, the performance of
the Company's independent public accountants and the accounting practices of the
Company.

STOCKHOLDER PROPOSALS

Appropriate proposals of stockholders intended to be presented at the
Company's 1995 Annual Meeting of Stockholders must be received by the Company by
June 2, 1995 for inclusion in its Proxy Statement and form of proxy relating to
that meeting. If the date of the next Annual Meeting is advanced by more than 30
calendar days or delayed by more than 90 calendar days from the date of the
Annual Meeting to which the Proxy Statement relates, the Company shall, in a
timely manner, inform its stockholders of the change and the date by which
proposals of stockholders must be received.

OTHER MATTERS TO COME BEFORE THE MEETING

Management does not know of any other matters to come before the Annual
Meeting. However, if any other matters properly come before the Annual Meeting,
it is the intention of the persons designated as proxies to vote in accordance
with their best judgment on such matters.

UPON THE WRITTEN REQUEST OF ANY RECORD OR BENEFICIAL OWNER OF COMMON STOCK
OF THE COMPANY WHOSE PROXY WAS SOLICITED IN CONNECTION WITH THE 1994 ANNUAL
MEETING OF STOCKHOLDERS, THE COMPANY WILL FURNISH SUCH OWNER, WITHOUT CHARGE, A
COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR ITS FISCAL YEAR ENDED JULY 2, 1994.
REQUEST FOR A COPY OF SUCH ANNUAL REPORT ON FORM 10-K SHOULD BE ADDRESSED TO
MRS. LA DEE G. RIKER, VICE PRESIDENT AND SECRETARY, SYSCO CORPORATION, 1390
ENCLAVE PARKWAY, HOUSTON, TEXAS 77077-2099.

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. STOCKHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO SIGN, DATE AND RETURN THE
PROXY IN THE ENCLOSED ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN
THE UNITED STATES.

19
<PAGE> 22
PROXY

SYSCO CORPORATION

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SYSCO CORPORATION
FOR THE ANNUAL MEETING OF STOCKHOLDERS NOVEMBER 4, 1994, 10:00 A.M.

The undersigned hereby constitutes and appoints John F. Baugh and
Herbert Irving, and each of them jointly and severally, proxies, with full
power of substitution to vote all shares of Common Stock which the undersigned
is entitled to vote at the Annual Meeting of Stockholders of Sysco Corporation
(the ""Company'') to be held on November 4, 1994, at 10:00 A.M., in the
Conference Center of the Sysco Corporate Headquarters located at 1390 Enclave
Parkway, Houston, Texas, or any adjournment thereof.

The undersigned scknowledges the receipt of Notice of the aforesaid
Annual Meeting and Proxy Statement, each dated September 30, 1994, grants
authority to any of said proxies, or their substitutes, to act in the absence
of others, with all the powers which the undersigned would possess if
personally present at such meeting, and hereby ratifies and confirms all that
said proxies, or their substitutes, may lawfully do in the undersigned's name,
place and stead. The undersigned instructs said proxies, or any of them, to
vote as set forth on the reverse side.

CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE

<PAGE> 23
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE.

ALL PROXIES SIGNED AND RETURNED WILL BE VOTED OR NOT VOTED IN ACCORDANCE WITH
YOUR INSTRUCTIONS, BUT THOSE WITH NO CHOICE SPECIFIED WILL BE VOTED "FOR" EACH
OF THE NOMINEES FOR DIRECTOR NAMED BELOW AND "FOR" APPROVAL OF THE AMENDED AND
RESTATED SYSCO CORPORATION MANAGEMENT INCENTIVE PLAN.

1. Election of Directors.

NOMINEES: John F. Baugh, Charles H. Cotros, Jonathan Golden, Arthur J. Swenka
and Thomas B. Walker, Jr.

FOR WITHHELD
/ / / /

/ /
FOR all nominees except those whose name(s) are written above

2. Approval of the Amended and Restated Sysco Corporation Management Incentive
Plan.
FOR AGAINST ABSTAIN
/ / / / / /

3. On all other matters which may properly come before the meeting or any
adjournment thereof.

NO POSTAGE REQUIRED IF THIS PROXY IS RETURNED IN THE ENCLOSED ENVELOPE AND
MAILED IN THE UNITED STATES.

Mark here for address change and note at left / /

(Signature should conform to name and title stenciled hereon. Where there is
more than one owner each should sign. Executors, administrators, trustees,
guardians and attorneys should add their titles upon signing).

PLEASE SIGN BELOW, DATE AND RETURN PROMPTLY.

Signature: _______________________________ Date ____________
Signature: _______________________________ Date ____________

<PAGE> 24
INDEX TO EXHIBITS

EXHIBIT
NUMBER
- - - -------

99 AMENDED AND RESTATED MANAGEMENT INCENTIVE PLAN FOR SYSCO CORP.

<PAGE> 1

SYSCO CORPORATION

AMENDED AND RESTATED MANAGEMENT INCENTIVE PLAN

Effective As Of July 3, 1994

This Sysco Corporation Amended and Restated Management Incentive Plan
(the "Plan") was adopted by unanimous action of the Plan Compensation Committee
(as hereinafter defined) of Sysco Corporation (the "Company") on September 1,
1994, and by the Board of Directors of the Company (the "Board of Directors")
on September 2, 1994.

1. STATEMENT OF PRINCIPLE

The purpose of the Plan is to reward (i) certain key management
personnel for outstanding performance in the management of the divisions or
subsidiaries of the Company (both a division and subsidiary of the Company are
herein referred to as a "Subsidiary") and (ii) certain corporate personnel
for managing the operations of the Company as a whole. Except as otherwise
provided in Section 8 hereof, the total number of shares of Sysco Common Stock,
$1 par value ("Common Stock"), which may be awarded pursuant to this Plan
shall not exceed 2,367,118 shares. All references to periods in the Plan are
to fiscal periods unless otherwise specifically noted.

2. PLAN COMPENSATION COMMITTEE

The Board of Directors has established a committee (the "Plan
Compensation Committee") which is charged with structuring, proposing the
implementation of, and implementing the terms and conditions of, the Plan. The
Plan Compensation Committee shall, at all times, consist of two or more
directors of the Company. The Plan Compensation Committee shall have the
authority to adopt, alter and repeal such rules, guidelines and practices
governing the Plan as it shall, from time to time, deem advisable; to interpret
the terms and provisions of the Plan and any award issued under the Plan (and
any agreements relating thereto); to otherwise supervise the administration of
the Plan; and, except as to the application of this Plan to Senior Executive
Participants (as defined in Section 3 below), to delegate such authority
provided to it hereunder as it may deem necessary or appropriate to the
Chairman of the Board, Chief Executive Officer, President, Chief Operating
Officer and any Executive Vice President with authority over food service
operations, and any of them individually. All decisions made by the Plan
Compensation Committee pursuant to the provisions of the Plan shall be made in
the Plan Compensation Committee's sole discretion and shall be final and
binding on all persons, including the Company and Participants. Each director
while a member of the Plan Compensation Committee shall (i) meet the definition
of "disinterested person" contained in Rule 16b-3 promulgated pursuant to
Section 16 of the Securities Exchange Act of 1934, as amended, and (ii)

- 1 -

<PAGE> 2
be an "outside director", within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), any regulations interpreting
Section 162(m) of the Code, or any other applicable Internal Revenue Service
pronouncements pertaining thereto.

3. PARTICIPANTS

The participants in the Plan for a fiscal year shall be designated by
the Plan Compensation Committee from the persons who are employed by any
Subsidiary ("Subsidiary Participants") or the Company ("Corporate
Participants"), in the following capacities (Subsidiary Participants, Corporate
Participants, and Senior Executive Participants are referred to collectively as
"Participants" or individually as a "Participant"):

Subsidiary Participants - Persons who serve as the Chairman of
the Board of Directors, Chief Executive Officer, Chief Operating
Officer, President, or an Executive Vice President of a Subsidiary,
regardless of whether such Participant works for a division or a
subsidiary of the Company.

Corporate Participants - Persons (i) who serve as Chairman of the
Board of Directors, Chief Executive Officer, Chief Operating Officer,
President, Executive or Senior Vice President, Vice President,
Secretary, Treasurer, Controller, Assistant Secretary, Assistant
Treasurer, Assistant Controller, General Counsel or any other officer
of the Company elected by the Board of Directors, and (ii) who are
also employees of the Company or a Subsidiary.

Senior Executive Participants - In addition to the participants
described above, persons who are "covered employees" of the Company
within the meaning of Code Section 162(m) and proposed Treasury
Regulation 1.162-27(c)(2) (or any successor statute or regulating
section, or any administrative interpretation thereof) (the "Executive
Compensation Provisions") during a fiscal year of the Company shall be
participants in the Plan for such fiscal year. If a Participant is
both a Senior Executive Participant and a Corporate or a Subsidiary
Participant during a fiscal year as a result of the application of the
Executive Compensation Provisions, he or she shall be considered a
Senior Executive Participant, and not a Corporate or a Subsidiary
Participant, during such fiscal year, and shall be subject to any and
all restrictions applicable to Senior Executive Participants hereunder
during such fiscal year.

To the extent possible, the Plan Compensation Committee shall
designate Participants in the Plan prior to the commencement of the fiscal year
in which such designated Participants will be entitled to a bonus under the
Plan, or as soon as practicable during the fiscal year in which a person first
becomes eligible to be a Participant. Once designated as a Participant, the
Plan Compensation Committee can remove an employee as a Participant with or
without cause at any time and the Participant shall not be entitled to any
bonus under the Plan for the year in which he or she is removed regardless of
when during such year he or she is removed.

-2-

<PAGE> 3

4. DEFINITIONS

(A) For Table A Calculations:

(i) Total Capital - for any Subsidiary, the sum of the
following components:

(a) Stockholders' equity - the average of the
amounts outstanding for such Subsidiary at
the end of each quarter for which the
computation is being made (quarterly average
basis).

(b) Long-term debt - the average of the long-term
portion of debt of such Subsidiary
outstanding at the end of each quarter for
which the computation is being made
(quarterly average basis).

(c) Intercompany borrowings - the average of the
amount outstanding at the end of each day
during the period for which the computation
is being made (daily average basis).

(d) FASB No. 13 leases - the average of the
capitalized value of long-term leases at the
end of each quarter during the period for
which the computation is being made
(quarterly average basis).

(e) Imputed plant and equipment - for
Subsidiaries which are leasing major capital
items, the estimated present value of the
cost of such items as of the end of the
fiscal year will be included in the
determination of Total Capital.

(ii) Return on Capital - the Return on Capital for any
Subsidiary is expressed as a percentage and is computed by dividing the
Subsidiary's pretax earnings by the Subsidiary's Total Capital.

(iii) Increase in Pretax Earnings - the Increase in Pretax
Earnings is expressed as a percentage increase of the Subsidiary's actual
pretax earnings for the current year compared to the greater of (a) the
Subsidiary's actual pretax earnings for the prior year, or (b) those earnings
which would have been required to have been earned by the Subsidiary in the
prior year in order to have obtained a 20% return on such Subsidiary's Total
Capital.

(B) For Table B Calculations:

(i) Return on Stockholders' Equity - expressed as a
percentage and computed by dividing the Company's net after-tax earnings for
the year by the Company's average stockholders' equity at the end of each
quarter during the year.

-3-
<PAGE> 4
(ii) Increase in Earnings Per Share - expressed as a
percentage increase of the net after-tax earnings per share for the year over
the prior year's net after-tax earnings per share.

In determining the average amount outstanding of stockholders'
equity, long-term debt, and capitalized value of long-term leases under
paragraphs 4(A)(i)(a), (b) and (d), above, and the quarterly average
stockholders' equity under paragraph 4(B)(i) above, such averages shall be
determined by dividing five (5) into the sum of the amounts outstanding of the
relevant category at the end of each of the four quarters of the fiscal year
plus the amount outstanding of the relevant category at the beginning of the
fiscal year.

5. METHOD OF OPERATION

The bonus which a Participant can earn is based on the performance of
the Company as a whole and either the performance of the Subsidiary which
employs such Participant (as to Subsidiary Participants) or of a select group
of Subsidiaries (as to Corporate Participants). The bonus is calculated with
respect to an entire fiscal year and, if earned, shall be paid in accordance
with Section 7 hereof.

(A) Subsidiary Participants and certain Senior Executive
Participants.

With respect to each Subsidiary Participant and each Senior
Executive Participant who would be a Subsidiary Participant but for the
application of the Executive Compensation Provisions, a portion of the bonus
may be earned on the basis of the results of operations of the Subsidiary
employing such Participant, and the balance of the bonus on the basis of the
results of operations of the Company as a whole, all as shown on Tables A and B
attached hereto and made a part hereof. The bonus for such a Participant shall
equal the sum of (i) 70% of the Participant's annual base salary in effect at
the fiscal year end times the applicable percentage determined from Table A,
the "Operations of the Subsidiary" (as adjusted, if applicable, as provided in
Section 5(B), plus (ii) 20% of the Participant's annual base salary in effect
at the fiscal year end times the applicable percentage determined from Table B,
the "Operations of the Company", subject to the further adjustments and
additions provided for in the Plan, unless the Plan Compensation Committee
shall formulate a different bonus structure as to any Subsidiary Participant.
No bonus shall be paid to a Subsidiary Participant or to a Senior Executive
Participant who would be a Subsidiary Participant but for the application of
the Executive Compensation Provisions based upon the Table B calculation unless
he or she is entitled to a bonus based upon the Table A calculation.

For Subsidiary Participants and Senior Executive Participants
who would be Subsidiary Participants but for the application of the Executive
Compensation provisions, the portion of the bonus based upon the results of
Operations of the Subsidiary is determined by multiplying the appropriate
percentage shown on Table A which coincides for the relevant Subsidiary with
the appropriate level of Return on Capital and Increase in Pretax Earnings by

-4-
<PAGE> 5

70% of the Participant's base salary. Accordingly, such a Participant will
not be entitled to any bonus under this Section 5(A) unless the Subsidiary that
employs the Participant achieves, as a minimum, an Increase in Pretax Earnings
of 4% and a 12% Return on Capital, unless the Plan Compensation Committee
formulates a different bonus structure for such Participant. By way of example
based upon Table A, if the Subsidiary achieves only these minimum results, the
Participant will be entitled to a bonus of 70% of his or her base salary
multiplied by a bonus factor of 5%.

Subject to the further adjustments and additions provided for
in this Plan, the remaining portion of the bonus for Subsidiary Participants
and Senior Executive Participants who would be Subsidiary Participants but for
the application of the Executive Compensation Provisions is based upon the
Operations of the Company. This portion of such a Participant's bonus is
calculated by determining the appropriate percentage shown on Table B which
coincides with the appropriate Increase in Earnings Per Share and Return on
Stockholders' Equity for the Company as a whole, and multiplying that
percentage by 20% of the Participant's base salary. A Subsidiary Participant
or a Senior Executive Participant who would be a Subsidiary Participant but for
the application of the Executive Compensation provisions will receive no bonus
as a result of the Table B calculation unless the Company achieves an Increase
in Earnings Per Share of at least 10% and achieves a Return on Stockholders'
Equity of at least 14%, unless the Plan Compensation Committee formulates a
different bonus structure for such Participant. By way of example, if the
Company achieves only these minimum results, such a Participant would receive,
based upon Table B, a bonus of 20% of his or her base salary multiplied by the
bonus factor of 10%, provided that the Participant is entitled to a bonus based
upon the Operations of the Subsidiary employing such Participant.

Notwithstanding the foregoing, unless otherwise determined by
the Plan Compensation Committee in its sole discretion, only Subsidiary
Participants whose Subsidiary achieved a 20% or greater Return on Capital for
the fiscal year preceding the fiscal year for which the bonus is being
determined (the "Prior Fiscal Year"; the fiscal year for which the bonus is
being calculated is the "Current Fiscal Year") shall be entitled to a bonus
determined from Tables A and B in the manner provided in this paragraph 5(A).
For any Subsidiary Participant whose Subsidiary did not achieve a 20% or
greater Return on Capital for the Prior Fiscal Year, the Plan Compensation
Committee may establish a special bonus formula for, or it may decline to award
a bonus to, such Subsidiary Participant for the Current Fiscal Year.

(B) Additional Bonus. In addition to the bonus calculated in
accordance with Section 5(A) above, a Subsidiary Participant may also be
entitled to an additional bonus ("Additional Bonus") if awarded by the Plan
Compensation Committee in its sole discretion. The Additional Bonus shall be
established by the Plan Compensation Committee, in its sole discretion, at one
or more times during such fiscal year or within ninety (90) days following the
end of such fiscal year. The Plan Compensation Committee shall determine the
Additional Bonus applicable to a particular Subsidiary Participant, if any,
based upon (i) annual sales increases of the Subsidiary which employs such
Participant over prior year's sales in excess of 15%, (ii) the development of
management personnel at the Subsidiary which employs such Participant who are
made available

-5-
<PAGE> 6
for transfer to other Subsidiaries or the corporate headquarters of the
Company, (iii) such Participant's supervision of another Subsidiary or
Subsidiaries in addition to the Subsidiary which employs them and to which they
are primarily responsible, and (iv) such other criteria as the Plan
Compensation Committee may develop in its sole discretion.

A Senior Executive Participant who would be a Subsidiary
Participant but for the application of the Executive Compensation Provisions
shall not be entitled to an Additional Bonus.

With respect to a Corporate Participant or Senior Executive
Participant who would be a Corporate Participant but for the application of the
Executive Compensation Provisions and subject to the further adjustments and
additions provided for in this Plan, a portion of the bonus shall depend upon
the results of the Operations of the Company as shown on Table B, and the
balance of his or her bonus shall depend on the number of Subsidiaries
obtaining a 20% or greater Return on Capital.

The portion of such Participant's bonus based upon the
Operations of the Company is calculated in the same manner as that portion of a
Subsidiary Participant's bonus which is based upon the Operations of the
Company except that it is equal to the product of (i) a percentage of such
Participant's base salary (the "Salary Percentage") and (ii) the appropriate
percentage shown on Table B which coincides with the appropriate Increase in
Earnings per Share and Return on Stockholder's Equity for the Company as a
whole. The Salary Percentage of a Corporate Participant or Senior Executive
Participant who would be a Corporate Participant but for the application of the
Executive Compensation Provisions shall be one hundred percent (100%) unless
reduced by the Plan Compensation Committee at such time as the Plan
Compensation Committee shall determine in its sole discretion.

A Corporate Participant or Senior Executive Participant who
would be a Corporate Participant but for the application of the Executive
Compensation Provisions will not receive any bonus (as a result of the Table B
calculation or otherwise) unless the Company achieves an Increase in Earnings
Per Share of at least 10% and achieves a Return on Stockholders' Equity of at
least 14%.

Subject to the further adjustments and additions provided for
in this Plan, the remainder of the bonus payable hereunder to a Corporate
Participant or a Senior Executive Participant who would be a Corporate
Participant but for the application of the Executive Compensation Provisions is
calculated by determining the number of Subsidiaries of the Company that have
attained at least a 20% or greater Return on Capital. If a minimum of ten
Subsidiaries have obtained a 20% or greater Return on Capital, and all
Subsidiaries which have obtained a 20% or greater Return on Capital employ at
least 50% or more of the aggregate of the Total Capital of all Subsidiaries,
then such Participant will be entitled to receive an additional bonus equal to
the product of (i) the Participant's Salary Percentage and (ii) 9% of the
Participant's base

-6-
<PAGE> 7

salary for the first ten Subsidiaries which obtain such a Return on Capital and
an additional 1-1/2% of the Participant's base salary for each additional
Subsidiary which obtains such a Return on Capital. By way of example, if 18
Subsidiaries (which, in the aggregate, employ 51% of the Total Capital of all
Subsidiaries) obtain a 20% or greater Return on Capital, a Corporate
Participant or Senior Executive Participant who would be a Corporate
Participant but for the application of the Executive Compensation Provisions
will receive a bonus equal to the product of (i) the Participant's Salary
Percentage and (ii) 21% of the Participant's base salary (9% for the
performance of the first ten Subsidiaries in the group, and 12% for the
performance of the additional eight Subsidiaries in the group).

(D) General Rules Regarding Bonus Calculation.

In determining whether or not the results of operations of a
Subsidiary or the Company for a given fiscal year results in a bonus, generally
accepted accounting principles shall be applied on a basis consistent with
prior periods, and such determination shall be based on the calculations made
by the Company, approved (in the case of Senior Executive Participants) by the
Plan Compensation Committee and binding on each Participant.

Except as provided in Section 11 as to Senior Executive
Participants, there is no limit to the bonus that can be obtained. Although
Tables A and B to the Plan have only been calculated to 160% and 142%,
respectively, the "grids" shall be deemed to continue to increase in the same
ratios as set forth.

(E) Tax Law Changes.

If the Internal Revenue Code is amended during any year and,
as a result of such amendment(s), the effective tax rate applicable to the
earnings of the Company (as described in the "Summary of Accounting Policies"
section of the Company's annual report to the Securities and Exchange
Commission on Form 10-K) changes during a year, the calculation of the net
after-tax earnings per share of the Company (which calculations determine the
appropriate "grid" set forth in Table B applicable to a Participant) for the
year in which such rate change becomes effective (the "Rate Change Year")
shall be made as if such rate change had not occurred during the Rate Change
Year. In determining the appropriate "grid" applicable to a Participant in the
year following the Rate Change Year, the calculation of the net after-tax
earnings per share of the Company for such following year shall be made after
taking into account such rate change, and shall be compared, for purposes of
computing the appropriate Increase in Earnings Per Share for such year, with
the net after-tax earnings per share of the Company for the Rate Change Year,
computed after taking into account such rate change.

6. NO EMPLOYMENT ARRANGEMENTS IMPLIED

Nothing herein shall imply any right of employment for a Participant
and if a Participant is terminated, voluntarily or involuntarily, with or
without cause, prior to the end of a given fiscal year, such Participant shall
not be entitled to any bonus for such fiscal year regardless of whether

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<PAGE> 8
or not such bonus had been or would have been earned in whole or in part, but
any unpaid bonus earned with respect to a prior fiscal year shall not be
affected.

7. PAYMENT

Within 90 days following the end of each fiscal year, the Company
shall determine, and, in the case of Senior Executive Participants, the Plan
Compensation Committee shall approve, the amount of any bonus earned by each
Participant pursuant to the provisions of Section 5 above. Such bonus shall be
payable in cash unless the Participant has given notice to the Plan
Compensation Committee within 90 days after the commencement of such fiscal
year that such Participant has elected the option provided in Section 7(A)
below. The amount of any bonus that a Participant is entitled to receive for a
fiscal year shall be determined as of the last day of such fiscal year and each
Participant shall be deemed to have constructively received his bonus
(including the value of the shares of stock if he or she elects to receive a
portion of his or her bonus in stock) as of the last day of such fiscal year
notwithstanding the fact that it may be paid or delivered to him or her
thereafter.

(A) Each Participant shall be entitled to receive, in increments
of 5%, up to 40% of his or her bonus in shares of Common Stock (with the exact
percent fixed by the Participant) with such shares to be valued at the closing
price of the Common Stock on the primary securities exchange on which such
stock is traded on the last trading day of such fiscal year. Such election
shall be made no later than 90 days after the beginning of the fiscal year in
respect of which the bonus is to be calculated and once made shall be
irrevocable for such fiscal year. If the Participant elects to receive such
shares, the Participant shall receive as additional compensation an additional
number of shares of Common Stock equal to 50% of the number of shares received
by reason of this election (the "Additional Shares"), plus the Additional Cash
Bonus (as defined in Section 7(B) below). For example, if a Participant earns
a $10,000 bonus and the Common Stock is selling at $50 per share, and the
Participant elects to receive 40% of the bonus in the form of Common Stock in a
timely manner, the Participant would receive $6,000 plus 120 shares of Common
Stock (80 shares pursuant to his election, plus 40 Additional Shares), plus
the Additional Cash Bonus (as defined in Section 7(B) below).

(B) If a Participant elects to receive Common Stock in accordance
with Section 7(A) above, he or she shall also receive, as an additional bonus
pursuant to the Plan, a cash amount equal to the value of the Additional Shares
(which shall be the aggregate closing price of the Additional Shares on the
last trading day of such fiscal year), multiplied by the effective tax rate
applicable to the Company for the fiscal year for which the bonus is
calculated, as described in the "Summary of Accounting Policies" section of the
Company's annual report to the Securities and Exchange Commission on Form 10-K
for such fiscal year (the "Additional Cash Bonus").

8. RECAPITALIZATION OF COMPANY

In the event of a recapitalization of the Company or its merger into
or consolidation with another corporation, a Participant shall be entitled to
receive such securities which he or she

-8-
<PAGE> 9

would have been entitled to receive had he or she been a shareholder of the
Company holding shares pursuant to this Plan at the time of such
recapitalization, merger or consolidation. In the event of a stock split,
stock, dividend or combination of shares with respect to the Common Stock of
the Company after the determination of the number of shares to which a
Participant is entitled but before delivery of such shares to the Participant,
then the number of shares that such Participant shall be entitled to receive
shall be proportionately adjusted.

9. INVESTMENT REPRESENTATION AND RESTRICTIONS ON THE STOCK AND RIGHT OF
REPURCHASE BY THE COMPANY

(A) The shares to be issued to a Participant may, at the option of
the Company, be unregistered and in such event the Participant shall execute an
investment letter in form satisfactory to the Company, which letter shall
contain an agreement that the Participant will not sell, transfer, give or
otherwise convey any of such shares for a period of two years from the date on
which such shares were issued to the Participant, except in the event of the
Participant's death or termination of employment due to disability or
retirement under normal Company benefit plans, but then only in accordance with
the requirements of the Securities Act of 1933, as amended, and the rules and
regulations thereunder, and the shares shall bear a legend reflecting the
investment representation and the unregistered status of the shares.

(B) If the shares to be issued to a Participant are registered
pursuant to the registration provisions of the Securities Act of 1933, as
amended, then the Participant shall enter into an agreement at the time of
issuance of such shares that the Participant will not sell, transfer, give or
otherwise convey any of such shares for a period of two years from the date on
which such shares were issued to the Participant, except in the event of death
or termination of employment due to disability or retirement under the normal
Company benefit plans, and such shares shall bear a legend reflecting the terms
of such restriction.

(C) If a Participant's employment is terminated at any time within
the first year following the issuance of shares for any reason, with or without
cause, other than his death or termination of employment due to disability or
retirement under normal Company benefit plans, then upon demand of the Company
made in writing within 30 days from the date of termination, such Participant
will sell to the Company all of the stock issued to the Participant within the
twelve months preceding the date of termination at a purchase price equal to
the lower of the then market price of the stock as hereinafter determined or
the price at which the stock was valued for purposes of issuing it pursuant to
this Plan. If a Participant's employment is terminated after one year but
before two years from the date on which any shares of Common Stock were issued
to him pursuant to this Plan, on the demand of the Company made in writing
within 30 days from the date of termination, such Participant will sell to the
Company, in addition to the shares he or she may be required to sell under the
preceding sentence, 50% of the stock issued to the Participant within
twenty-four months but more than twelve months preceding the date of
termination at a purchase price equal to the lower of the then market price of
the stock as hereinafter determined, or the price at which the stock was valued
for purposes of issuing it pursuant to this Plan. The market price of the
Common Stock shall be deemed to be the closing price of such stock on the

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<PAGE> 10
primary securities exchange on which such stock is traded on the date of
termination; and if such stock did not trade on such date, then on the next day
on which it does trade. The shares of Common Stock issued under this Plan
shall bear a legend reflecting these restrictions.

10. AMENDMENTS AND TERMINATION

This Plan may be amended at any time by the Board of Directors and any
such amendment shall be effective as of commencement of the fiscal year during
which the Plan is amended, regardless of the date of the amendment, unless
otherwise stated by the Board of Directors, provided that if such an amendment
affects any material term of a performance goal hereunder, and thus would
affect the ability of the Corporation to deduct payments of compensation to
Senior Executive Participants because of the provisions of Code Section 162(m),
any regulations issued interpreting Code Section 162(m), or any other
applicable Internal Revenue Service pronouncements pertaining thereto, such
amendment must be approved by the stockholders of the Company after disclosure
of the terms of such amendment to the stockholders, prior to the payment of any
amounts pursuant to the terms of such amendment to any Senior Executive
Participant. This Plan may be terminated at any time by the Board of Directors
and termination will be effective as of the commencement of the fiscal year in
which such action to terminate the Plan is taken.

11. OVERALL LIMITATION UPON PAYMENTS UNDER PLAN TO SENIOR EXECUTIVE
PARTICIPANTS.

Notwithstanding any other provision in this Plan to the contrary, in
no event shall any Senior Executive Participant be entitled to a bonus amount
for any fiscal year (which bonus amount shall include, if applicable, the value
of the Additional Shares (as defined in Section 7(A) above, and the Additional
Cash Bonus (as defined in Section 7(B) above)) in excess of one percent (1%)
of the Company's earnings before income taxes as publicly disclosed in the
"Consolidated Results of Operations" section of the Company's annual report to
the Securities and Exchange Commission on Form 10-K for such fiscal year.

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<PAGE> 11
EXHIBIT 1 - TABLE A
MANAGEMENT INCENTIVE PLAN

OPERATIONS OF THE SUBSIDIARY

SUBSIDIARY PARTICIPANT - 70% OF PARTICIPANT'S BASE SALARY
MULTIPLIED BY PERCENTAGE DETERMINED FROM TABLE A

<TABLE>
<CAPTION>
PERCENTAGE INCREASE IN PRETAX EARNINGS
RETURN
ON
CAPITAL 4-6 6-8 8-10 10-12 12-14 14-16 16-18 18-20 20-23 23-25 25-28 28-30 30-33 33-35 35-38 38-40 40-43 43-45 45-48 48-50 50-53
- - - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12-16 5 7 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
16-20 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 102 105
20-24 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 102 105 107 110
24-28 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 102 105 107 110 112 115
28-32 40 45 50 55 60 65 70 75 80 85 90 95 100 102 105 107 110 112 115 117 120
32-36 50 55 60 65 70 75 80 85 90 95 100 102 105 107 110 112 115 117 120 122 125
36-40 60 65 70 75 80 85 90 95 100 102 105 107 110 112 115 117 120 122 125 127 130
40-44 70 75 80 85 90 95 100 102 105 107 110 112 115 117 120 122 125 127 130 132 135
44-48 80 85 90 95 100 102 105 107 110 112 115 117 120 122 125 127 130 132 135 137 140
48-52 90 95 100 102 105 107 110 112 115 117 120 122 125 127 130 132 135 137 140 142 145
52-56 100 102 105 107 110 112 115 117 120 122 125 127 130 132 135 137 140 142 145 147 150
56-60 105 107 110 112 115 117 120 122 125 127 130 132 135 137 140 142 145 147 150 152 155
60-64 110 112 115 117 120 122 125 127 130 132 135 137 140 142 145 147 150 152 155 157 160

</TABLE>

<PAGE> 12
EXHIBIT 2 - TABLE B
MANAGEMENT INCENTIVE PLAN

OPERATIONS OF THE COMPANY

SUBSIDIARY PARTICIPANT - 20% OF THE PARTICIPANT'S BASE SALARY
MULTIPLIED BY PERCENTAGE DETERMINED FROM TABLE B

CORPORATE PARTICIPANT - 70% OF PARTICIPANT'S BASE SALARY
MULTIPLIED BY PERCENTAGE DETERMINED FROM TABLE B

<TABLE>
<CAPTION>
Return on PERCENTAGE INCREASE IN EARNINGS PER SHARE
Stockholders'
Equity
10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24 24-25 25-26 26-27 27-28 28-29 29-30
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
14% 10 20 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 102 105 107
15% 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 102 105 107 110 112
16% 40 45 50 55 60 65 70 75 80 85 90 95 100 102 105 107 110 112 115 117
17% 50 55 60 65 70 75 80 85 90 95 100 102 105 107 110 112 115 117 120 122
18% 60 65 70 75 80 85 90 95 100 102 105 107 110 112 115 117 120 122 125 127
19% 70 75 80 85 90 95 100 102 105 107 110 112 115 117 120 122 125 127 130 132
20% 80 85 90 95 100 102 105 107 110 112 115 117 120 122 125 127 130 132 135 137
21% 90 95 100 102 105 107 110 112 115 117 120 122 125 127 130 132 135 137 140 142
</TABLE>