SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
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[X] Preliminary Proxy Statement [ ] Confidential, for Use
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[ ] Soliciting Material Pursuant to Rule 14a-6(e)(2))
(ss.)240.14a-11(c) or (ss.)240.14a-12
SYSCO CORPORATION
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
847948v13
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[LOGO]
SYSCO CORPORATION
1390 ENCLAVE PARKWAY
HOUSTON, TEXAS 77077-2099
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 5, 1999
To the Stockholders of SYSCO Corporation:
We are giving notice that the Annual Meeting of Stockholders of SYSCO
Corporation, a Delaware corporation, will be held November 5, 1999 at 10:00 a.m.
at the Omni Houston Hotel located at Four Riverway, Houston, Texas 77056-1999
for the following purposes:
A. To elect five directors.
B. To approve the adoption of an amendment to SYSCO's Restated
Certificate of Incorporation to increase the shares of common
stock that SYSCO will have the authority to issue to one
billion (1,000,000,000) shares.
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 SYSCO at the close
of business on September 10, 1999 will be entitled to vote at the annual
meeting.
We hope you will be able to attend the annual meeting in person, but
if you cannot attend, please vote your shares by telephone, by the Internet or
by returning the enclosed proxy card promptly in order that your vote may be
cast at the annual meeting.
By order of the Board of Directors
/s/ Bill M. Lindig
BILL M. LINDIG
Chairman of the Board
September __, 1999
A copy of the Annual Report of SYSCO Corporation for the fiscal year ended July
3, 1999, containing financial statements, is enclosed.
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SYSCO CORPORATION
1390 ENCLAVE PARKWAY
HOUSTON, TEXAS 77077-2099
1999 ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
September __, 1999
INFORMATION ABOUT ATTENDING THE ANNUAL MEETING
Our annual meeting will be held on Friday, November 5, 1999 at 10:00 a.m. at the
Omni Houston Hotel located at Four Riverway, Houston, Texas 77056-1999.
INFORMATION ABOUT THIS PROXY STATEMENT
We sent you these proxy materials because our Board of Directors is soliciting
your proxy to vote your shares at the annual meeting. On September 24, 1999, we
began mailing these proxy materials to all stockholders of record at the close
of business on September 10, 1999.
WHO CAN VOTE
If you owned shares at the close of business on September 10, 1999, you are
entitled to vote. You are entitled to one vote for each share you owned on that
date on each matter presented at the annual meeting.
On September 1, 1999, there were 330,390,755 shares of common stock outstanding.
We do not know of any person or group who owned more than 5% of our common stock
as of this date. All of our directors and officers (24 persons) owned 3,137,727
shares, which is approximately 1% of our outstanding stock as of September 1,
1999. We expect that all officers and directors will vote their shares in favor
of the five nominees named below and in favor of the amendment to our Restated
Certificate of Incorporation to increase the authorized number of shares of
common stock to one billion (1,000,000,000) shares.
HOW TO VOTE
You may vote your shares by either one of the following:
o in person at the annual meeting;
o by telephone;
o by Internet; or
o by mail by signing, dating and mailing the enclosed proxy card.
If you vote by proxy, the individuals named on the card (your proxies) will vote
your shares in the manner you indicate.
You may specify whether your shares should be voted for all, some or none of the
nominees for director and whether your shares should be voted for or against the
adoption of an amendment to SYSCO's Restated Certificate of Incorporation. If
you sign and return the card without indicating your instructions, your shares
will be voted for:
o the election of the five nominees for directors; and
o the amendment to SYSCO's Restated Certificate of Incorporation to
increase the total number of authorized shares of common stock to one
billion shares.
If your shares are not registered in your own name and you plan to attend the
annual meeting and vote your shares in person, you should contact your broker or
agent in whose name your shares are registered to obtain a broker's proxy card
and bring it to the annual meeting in order to vote.
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HOW TO REVOKE OR CHANGE YOUR VOTE
You may revoke or change your proxy at any time before it is exercised by:
o writing to SYSCO's Corporate Secretary in time for her to receive it before
the annual meeting; o voting again by telephone, Internet or mail; or o voting
in person at the annual meeting.
Your last vote that we receive will be the vote that is counted.
QUORUM REQUIREMENT
A quorum is necessary to hold a valid meeting. A quorum will exist if
stockholders entitled to cast at least 35% of all the votes entitled to be cast
at the meeting are present in person or by proxy. Abstentions and broker
non-votes are counted as present for establishing a quorum. A broker non-vote
occurs when a broker votes on some matter on the proxy card but not on others
because the broker does not have the authority to do so.
VOTES NECESSARY FOR ACTION TO BE TAKEN
Five directors will be elected at the meeting by a plurality of all the votes
cast at the meeting, meaning that the five nominees for director with the most
votes will be elected. The affirmative vote of a majority of all of the
outstanding shares of common stock is required to approve the amendment to
SYSCO's Restated Certificate of Incorporation to increase the number of
authorized shares of common stock. Abstentions and broker non-votes will have
the effect of a "no" vote on the proposed amendment to SYSCO's Restated
Certificate of Incorporation and will have no effect on the vote on the election
of directors.
WHO WILL COUNT VOTES
We will select one or more Inspectors of Election who will determine the number
of shares of voting stock outstanding, the voting power of each, the number of
shares represented at the annual meeting, the existence of a quorum and whether
or not proxies are valid and effective.
The Inspectors of Election will determine any challenges and questions arising
in connection with the right to vote and will count all votes cast for and
against and any abstentions with respect to all proposals and will determine the
results of each vote.
COST OF PROXY SOLICITATION
We will pay the cost of solicitation of proxies including preparing, printing
and mailing this proxy statement. We will authorize banks, brokerage houses and
other custodians, nominees and fiduciaries to forward copies of proxy materials
and will reimburse them for their costs in sending the materials.
We have retained Kissel-Blake Inc. to help us solicit proxies from these
nominees and certain individual stockholders, in writing or by telephone, at an
estimated fee of $8,000 plus reimbursement for their expenses.
OTHER MATTERS
The Board of Directors does not know of any other matter that will be presented
at the annual meeting other than the proposals discussed in this proxy
statement. However, if any other matter properly comes before the annual
meeting, your proxies will act on such matter in their best judgment.
We will furnish a copy of this year's Annual Report on Form 10-K without charge
upon your written request if you are a record or beneficial owner of Common
Stock whose proxy we are soliciting in connection with the 1999 Annual Meeting
of Stockholders. Please address requests for a copy of the Annual Report to the
Investor Relations Department, Sysco Corporation, 1390 Enclave Parkway, Houston,
Texas 77077-2099.
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Your vote is very important. If you do not expect to attend the annual meeting
in person, please vote your shares by telephone, by the Internet or by promptly
signing, dating and returning the enclosed proxy card in the enclosed postage
paid envelope.
ELECTION OF DIRECTORS
ITEM NO. 1 ON THE PROXY CARD
We will elect five directors. Our bylaws provide for the election of
directors for staggered terms, with each director serving a three-year term. The
Board of Directors has nominated the following five directors for three-year
terms of office:
o John W. Anderson
o Judith B. Craven
o Bill M. Lindig
o Richard G. Merrill
o Phyllis S. Sewell
The remaining ten persons named in the table set forth on page ____
will continue in office for the terms which expire at the annual meeting in the
years opposite their names.
Management recommends that the first five nominees named below be
elected to the Board of Directors for three-year terms of office. The five
nominees have consented to being named in this proxy statement and to serve if
elected. Unless you direct otherwise on your proxy form, the proxyholders intend
to vote in favor of electing Mr. Anderson, Dr. Craven, Mr. Lindig, Mr. Merrill
and Ms. Sewell as directors for three-year terms of office and until their
respective successors are elected.
Director Biographies
The five members of our Board of Directors who are nominees for
election at the 1999 annual meeting have provided the following information:
John W. Anderson, 67, has served as a director of SYSCO since 1981. Mr. Anderson
is retired, having formerly served as the Vice President of Customer Services of
Southwestern Bell Telephone Company.
Judith B. Craven, 53, has served as a director of SYSCO since 1996. She retired
in October 1998 as President of the United Way of the Texas Gulf Coast, where
she had served in that capacity since July 1992. Dr. Craven is also a director
of A.H. Belo Corporation, Compaq Corporation, Luby's Cafeterias, Inc. and the
Houston Branch, Federal Reserve Bank of Dallas.
Bill M. Lindig, 62, has served as a director of SYSCO since 1983. Mr. Lindig has
been the Chairman and Chief Executive Officer of SYSCO since January 1999 and is
a member of the Executive Committee. From January 1995 to December 1998, he was
President and Chief Executive Officer of SYSCO. Mr. Lindig also serves as a
director of Burlington Northern Santa Fe Corporation.
Richard G. Merrill, 68, has served as a director of SYSCO since 1983. Currently
retired, he formerly served as Executive Vice President of The Prudential
Insurance Company of America. Mr. Merrill is also a director of W.R. Berkley
Corporation. Mr. Merrill is a member of the Executive Committee.
Phyllis S. Sewell, 68, has served as a director of SYSCO since 1991. Mrs.
Sewell, currently retired, formerly served as Senior Vice President of Federated
Department Stores, Inc. Mrs. Sewell is also a director of Pitney Bowes Inc. and
Lee Enterprises, Inc.
The ten members of our Board of Directors whose terms of office extend
beyond the 1999 annual meeting have provided the following information:
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Gordon M. Bethune, 58, was elected by the board as a director of SYSCO in
September 1998. Mr. Bethune is Chairman of the Board and Chief Executive Officer
of Continental Airlines, Inc. and has served in that capacity since 1996. Prior
to joining Continental Airlines in 1994 as President and Chief Operating
Officer, he was Vice President and General Manager of the Renton Division of the
Commercial Airline Group of Boeing Corporation. Mr. Bethune is also a director
of Honeywell, Inc.
Colin G. Campbell, 63, has served as a director of SYSCO since 1989. Mr.
Campbell is the President of Rockefeller Brothers Fund, a private philanthropic
foundation, and also serves as a director of Pitney Bowes Inc., HSB Group and
Rockefeller Financial Services, Inc. Mr. Campbell is a member of the Executive
Committee.
Charles H. Cotros, 62, has served as a director of SYSCO since 1985. Mr. Cotros
serves as President and Chief Operating Officer of SYSCO and is a member of the
Executive Committee. Mr. Cotros also serves as a director of Metamor Worldwide,
Inc.
Frank A. Godchaux III, 72, has served as a director of SYSCO since 1987. Mr.
Godchaux is the Chairman of the Board of Directors of Riviana Foods Inc., a food
manufacturer.
Jonathan Golden, 62, has served as a director of SYSCO since 1984. Mr. Golden is
a partner of Arnall Golden & Gregory, LLP, counsel to SYSCO. He is a member of
the Executive Committee. Mr. Golden also serves as a director of The Profit
Recovery Group International, Inc.
Frank H. Richardson, 66, has served as a director of SYSCO since 1993. Mr.
Richardson served as President and Chief Executive Officer of Shell Oil Company
until his retirement in 1993.
Richard J. Schnieders, 51, has served as a director of SYSCO since 1997. Mr.
Schnieders was elected Executive Vice President, Foodservice Operations in
January 1999 after previously serving as Senior Vice President, Merchandising
Services and Multi-Unit Sales since 1997. He is a member of the Executive
Committee. Mr. Schnieders also serves as a director of Aviall, Inc.
Arthur J. Swenka, 62, has served as a director of SYSCO since 1994. Mr. Swenka
was elected Senior Vice President, Operations of SYSCO in December 1994.
Previously, Mr. Swenka had served since 1984 as President and Chief Executive
Officer of Nobel/SYSCO Food Services Company.
Thomas B. Walker, Jr., 75, has served as a director of SYSCO since 1970. Mr.
Walker is a limited partner of The Goldman Sachs Group, L.P. and is a director
of Riviana Foods Inc. and NCH Corp. Mr. Walker is a member of the Executive
Committee.
John F. Woodhouse, 68, has served as a director and officer of SYSCO since its
formation in 1969. Mr. Woodhouse is Senior Chairman of the Board of Directors of
SYSCO. From 1985 until November 1994, Mr. Woodhouse served as Chairman and Chief
Executive Officer of SYSCO. He also serves as a director of Shell Oil Company.
Mr. Woodhouse is Chairman of the Executive Committee.
Unless otherwise noted, the persons named above have been engaged in
the principal occupations shown for the past five years or longer.
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 is designated by
the present Board of Directors to fill the vacancy.
Director Stock Ownership
The information below provides the name of each nominee, the name of
the other directors, the term of office for which the nominee stands to be
elected, and the remaining terms of office of each other director, the number of
shares of common stock that each nominee and director (and all directors and
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executive officers as a group) beneficially owns directly or indirectly as of
the close of business on September 1, 1999 (according to information received by
SYSCO) and the percentage of outstanding shares of common stock such ownership
represented at September 1, 1999.
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<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially
Current Owned as of Percent of
Term September [1], Outstanding
Expires 1999 (1)(2) Shares (3)
Name _____________ __________________ _________________
----
<S> <C> <C> <C>
Directors Standing for Election for Three-Year
Terms of Office
John W. Anderson ......................... 1999 24,105 *
Judith B. Craven.......................... 1999 2,400 *
Bill M. Lindig............................ 1999 858,905 (4) *
Richard G. Merrill........................ 1999 28,370 *
Phyllis S. Sewell......................... 1999 16,000 *
Directors with Continuing Terms
Charles H. Cotros......................... 2000 349,175 *
Jonathan Golden........................... 2000 54,000 (5) *
Richard J. Schnieders..................... 2000 106,088 *
Arthur J. Swenka.......................... 2000 137,666 *
Thomas B. Walker, Jr...................... 2000 219,200 *
Gordon M. Bethune......................... 2001 2,000 *
Colin G. Campbell......................... 2001 8,000 *
Frank A. Godchaux III..................... 2001 60,000 (6) *
Frank H. Richardson....................... 2001 14,500 *
John F. Woodhouse......................... 2001 1,257,318 *
All Executive Officers and Directors as a Group
(24 Persons)(7)(8)........................... 3,137,727 1.0%
- ----------
</TABLE>
* Less than 1% of outstanding shares, after rounding.
(1) Includes shares of common stock owned by the spouses and/or dependent
children of each of the following named individuals: Colin G.
Campbell, 1,000 shares; Frank A. Godchaux III, 12,000 shares; Richard
J. Schnieders, 21,536 shares; and Arthur J. Swenka, 466 shares. Also
includes an additional 42,459 shares owned by the spouses and/or
dependent children of current executive officers.
(2) Includes options to acquire an aggregate 95,829 shares of common stock
which are presently exercisable or will become exercisable within 60
days after the date of this proxy statement as follows: John W.
Anderson, 2,667 shares; Colin G. Campbell, 4,000 shares; Charles H.
Cotros, 13,334 shares; Frank A. Godchaux III, 4,000 shares; Jonathan
Golden, 4,000 shares; Bill M. Lindig, 20,000 shares; Richard G.
Merrill, 4,000 shares; Frank H. Richardson, 4,000 shares; Richard J.
Schnieders, 16,000 shares; Phyllis S. Sewell, 4,000 shares; Arthur J.
Swenka, 2,494 shares; Thomas B. Walker, Jr., 4,000 shares; and John F.
Woodhouse, 13,334 shares.
(3) Rounded to the nearest 1/10 of one percent.
(4) Includes 92,600 shares held by trusts of which Mr. Lindig's wife is
co-trustee.
(5) Includes 40,000 shares held by a trust created under the estate of Sol
I. Golden, of which Mr. Golden is a co-trustee.
(6) Includes 20,000 shares held by Riviana Foods Inc. of which Mr.
Godchaux and his wife are affiliates.
(7) Includes options to acquire 254,168 shares of common stock which are
presently exercisable or will become exercisable within 60 days after
the date of this proxy statement held by current executive officers
other than as set forth in note (2) above.
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(8) As of September 1, 1999, Thomas E. Lankford, Executive Vice President,
Merchandising and Multi-Unit Sales and an executive named in the
Summary Compensation Table on page __ , beneficially owned 294,444
shares of common stock, constituting less than .09% of the outstanding
shares of SYSCO common stock. Mr. Lankford's ownership includes
options to acquire 27,320 shares of common stock which are presently
exercisable or will become exercisable within 60 days after the date
of this proxy statement.
Director Compensation
Fees
We pay non-employee directors $50,000 per year plus reimbursement of
expenses for all services as a director, including committee participation or
special assignments. These directors may defer their annual retainer, which
earns interest until their retirement from the Board or until the occurrence of
certain other events. The current rate of interest in effect is 7.87% per year.
Messrs. Bethune, Godchaux, Golden, Merrill and Walker and Mrs. Sewell elected to
defer their annual compensation for fiscal 1999.
Directors Stock Option Plan
In May 1998, the Board of Directors adopted and our stockholders
subsequently approved the SYSCO Non-Employee Directors Stock Plan. Under this
plan, non-employee directors receive:
o a one-time retainer stock award of 2,000 shares of common stock when
first elected as a non-employee director; and
o an automatic grant of options to purchase 4,000 shares of common stock
each year if our earnings per share for the previous year increased by
10% or more as compared to the prior year.
In order for the annual options to vest and become exercisable,
rigorous performance goals must be met during the five-year period after we
issue the options. If the options do not vest during the five-year period after
they are issued, the options will nonetheless vest six months before the
expiration of the ten-year life of the grant if the director is still serving on
the Board. During fiscal 1999, we granted options to purchase an aggregate of
40,000 shares under this plan to ten non-employee directors.
Additionally, this plan permits each non-employee director to elect to
receive up to one-half of his or her annual retainer in common stock in which
case we will provide a matching grant of 50% of the number of shares received as
a portion of the retainer. Messrs. Anderson, Bethune, Campbell, Godchaux,
Golden, Merrill, Richardson, Walker and Mrs. Sewell made this election during
fiscal 1999.
No other compensation was paid for services as a director during the
fiscal year ended July 3, 1999.
BOARD MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held five meetings during fiscal 1999 and all
directors, except for Messrs. Bethune and Walker and Dr. Craven, attended 75% or
more of the aggregate of:
o the total number of meetings of the Board of Directors, and
o the total number of meetings held by all committees of the Board on
which he or she served during fiscal 1999.
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The Nominating Committee held three meetings during fiscal 1999. The
function of the Nominating Committee is to propose directors, Board Committee
members and officers for election or reelection. The members of our Nominating
Committee are:
o Jonathan Golden (Chairman);
o Colin G. Campbell;
o Frank A. Godchaux III;
o Richard G. Merrill;
o Frank H. Richardson;
o Phyllis S. Sewell ; and
o Thomas B. Walker, Jr.
The Compensation and Stock Option Committee held five meetings during
fiscal 1999. The function of the Compensation Committee is to consider the
annual compensation of directors and officers for recommendation to the Board of
Directors, to oversee the administration of SYSCO's 1995 Management Incentive
Plan, the 1991 Stock Option Plan and the Split Dollar Life Insurance Plan and to
provide guidance in the area of employee benefits, including retirement plans
and group insurance. The members of our Compensation and Stock Option Committee
are:
o Richard G. Merrill (Chairman);
o John W. Anderson;
o Gordon M. Bethune;
o Colin G. Campbell;
o Judith B. Craven;
o Frank H. Richardson; and
o Phyllis S. Sewell.
The Audit Committee held four meetings during fiscal 1999. This
committee reviews and reports to the Board with respect to various auditing and
accounting matters, including recommendations of the selection of our
independent public accountants, the scope of the audit procedures, the nature of
the services to be performed, the fees to be paid to the independent public
accountants, the performance of our independent public accountants and our
accounting practices. The members of our Audit Committee are:
o Colin G. Campbell (Chairman);
o John W. Anderson;
o Gordon M. Bethune;
o Judith B. Craven;
o Frank A. Godchaux III;
o Richard G. Merrill;
o Frank H. Richardson;
o Phyllis S. Sewell; and
o Thomas B. Walker, Jr.
CERTAIN RELATIONSHIPS
Mr. Godchaux is chairman of Riviana Foods Inc., a food products company
which had sales to SYSCO or its wholly owned subsidiaries of approximately
$438,000 during fiscal 1999. We believe that the terms of these transactions
were fair and no less favorable to us than those available from other suppliers.
Mr. Golden is the sole stockholder of Jonathan Golden, P.C., a partner
in the law firm of Arnall Golden & Gregory, LLP, Atlanta, Georgia, counsel to
SYSCO. We believe that the fees paid to this firm were fair and reasonable in
view of the level and extent of services rendered.
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PROPOSAL TO AMEND THE RESTATED CERTIFICATE OF INCORPORATION
ITEM NO. 2 ON THE PROXY CARD
The Board of Directors has proposed a resolution amending Article
Fourth, Section A, of our Restated Certificate of Incorporation to increase the
total number of shares of common stock which we have authority to issue from
five hundred million (500,000,000) shares to one billion (1,000,000,000) shares,
$1.00 par value.
The authorized shares of common stock were last increased by the
stockholders at the 1990 annual meeting when the number of shares was increased
from 200,000,000 shares to 500,000,000 shares. We currently have 1,500,000
authorized shares of Preferred Stock, 450,000 of which have been designated as
"Series A Junior Participating Preferred Stock." No shares of Preferred Stock
are currently outstanding. As of September 1, 1999, of the 500,000,000 shares of
common stock which we are authorized to issue, 330,390,755 issued and
outstanding (excluding 52,196,695 shares which were held by SYSCO as treasury
stock) and an aggregate of 37,610,046 shares were reserved for issuance under
existing benefit plans and in connection with certain completed acquisitions.
The Board believes that the amendment is necessary to ensure that we
will have sufficient authorized shares available to meet our ongoing business
needs and to take advantage of future corporate opportunities. There are no
present plans to issue any of the proposed additional authorized shares of
common stock. Further stockholder authorization would not be necessary prior to
any such issuance, except for certain situations where stockholder approval may
be required under the New York Stock Exchange rules or Delaware law.
Under our Restated Certificate of Incorporation, holders of stock are
not entitled to preemptive rights.
The affirmative vote of a majority of the outstanding shares of common
stock entitled to vote is required to adopt the proposed amendment. If this
proposal is adopted, Article Fourth, Section A, will read as follows:
"FOURTH: A. The total number of shares of stock which the
corporation shall have authority to issue is One Billion One Million
Five Hundred Thousand (1,001,500,000) shares, consisting of One Million
Five Hundred Thousand (1,500,000) shares of Preferred Stock with a par
value of One ($1.00) Dollar each, and One Billion (1,000,000,000)
shares of Common Stock with a par value of One ($1.00) Dollar each. The
corporation may issue fractional shares of stock, which will be
entitled to proportionate dividends, voting and liquidation rights."
The Board of Directors has unanimously approved the amendment and
recommends a vote FOR the proposed amendment to our Restated Certificate of
Incorporation.
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EXECUTIVE COMPENSATION
COMPENSATION AND STOCK OPTION COMMITTEE REPORT
This report documents the components of SYSCO's compensation programs
for its executive officers and describes the basis on which fiscal 1999
compensation determinations were made with respect to the executive officers of
SYSCO, including Mr. Lindig, the Chief Executive Officer. All fiscal 1999
compensation decisions with respect to base salaries, annual incentive
compensation and all option grants under the 1991 Stock Option Plan were made by
the Compensation and Stock Option Committee (the "Committee").
Overall Executive Compensation Philosophy
Since Sysco became a publicly held corporation in 1970, we have always
directly linked the compensation of executive officers to Sysco's performance.
Specifically, the Committee has tied the level of SYSCO's executive compensation
to increases in SYSCO's earnings and return on shareholders' equity. We have
accomplished this through the following means:
o A "pay-for-performance" orientation based upon SYSCO performance for
corporate officers (other than senior vice presidents, operations) and
a combination of operating company and SYSCO performance for corporate
senior vice presidents, operations and operating company senior
management;
o Competitive base salaries;
o Potentially significant annual incentive bonuses under SYSCO's
management incentive plan; o The issuance of performance-based stock
options; and o Customary benefits, including a supplemental executive
retirement plan.
The factors and criteria upon which the determination of the fiscal
1999 compensation of Mr. Lindig, the Chief Executive Officer, were based were
the same as those discussed below with respect to all executive officers, except
as otherwise described below with respect to SYSCO's senior vice presidents,
operations.
Base Salaries
We have established base salaries of our executive officers in the
range of compensation payable to executive officers of United States industrial
corporations without reference to specific SYSCO performance criteria. We
reexamine this range of compensation from time to time through a survey of
compensation practices by an independent compensation consultant 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 ___ and ___ due to the differing size, management
responsibilities and organizational structures of those corporations relative to
SYSCO. We last reviewed base salaries for all of the executive officers on
November 5, 1998, and made adjustments in compensation which became effective
January 1, 1999. At that time, Mr. Lindig's base salary was increased
approximately 9.2%. It has been our consistent practice 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 chief executive officers with job content and/or
responsibilities comparable to those of SYSCO's Chief Executive Officer.
Annual Incentive Compensation
SYSCO provides annual incentive compensation to all executive officers
through the SYSCO Corporation 1995 Management Incentive Plan ("MIP"). The MIP is
designed to offer opportunities for compensation which are tied directly to our
performance. In addition, the MIP is designed to foster significant equity
ownership in SYSCO by the executive officers and all other participants in the
MIP.
For executive officers, fiscal 1999 incentive bonuses were calculated
under the MIP in two parts. The first part was based on the overall performance
of SYSCO and was based upon the interplay between the percentage increase in
earnings per share and the return on shareholders' equity. The MIP utilized a
matrix based on these two factors to determine award levels, resulting in an
award of 98% of base salary to each executive officer participating in this
portion of the MIP, including Mr. Lindig, who was awarded $818,300.
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<PAGE>
The second portion of the fiscal 1999 incentive bonus under the MIP for
executive officers was based upon the number of SYSCO operating companies which
achieve a target return on capital. This portion of the incentive bonus is paid
only when the operating companies achieving the goals, in the aggregate, employ
at least 50% of the total capital of all of SYSCO's operating companies, which
was the case during fiscal 1999, resulting in an award of 62% of base salary to
each executive officer participating in this portion of the MIP, including Mr.
Lindig, who was awarded $513,525.
For senior vice presidents, operations, a portion of their bonus was
based upon the two-part calculation set forth above and a portion was based upon
the aggregate financial results of those operating subsidiaries or divisions for
which they are responsible, considered as one company. This portion is based
upon the interplay between the aggregate percentage increase in pretax earnings
of their supervised operations and the aggregate return on capital of their
supervised operations, adjusted in certain instances for operating companies
that are involved in SYSCO's facility expansion ("fold-out") program.
In order to encourage significant equity ownership in SYSCO by its
executive officers, 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 such election is made, the participant is awarded one
additional share for each two shares received in accordance with the foregoing
calculation.
In addition, participants who elect to receive common stock are also
entitled to receive an additional cash bonus equal to the product of :
o 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
o the effective tax rate applicable to SYSCO.
In fiscal 1999, Mr. Lindig elected to receive 40% of his bonus in SYSCO
common stock. The stock portion of the bonus awarded Mr. Lindig under the MIP
consisted of 25,986 shares valued at $799,070. He also received an additional
cash bonus of $103,882.
Finally, MIP participants may defer up to 40% of their annual incentive
bonus (without considering any election to receive a portion of the bonus in
stock) under the Executive Deferred Compensation Plan. For deferrals of up to
20% of the annual incentive bonus, the Executive Deferred Compensation Plan
provides for SYSCO to make a payment equal to 50% of the amount deferred. This
matching payment vests upon the earliest to occur of:
o the tenth anniversary of the date the matching payment is made;
o the participant's reaching age sixty;
o the death or permanent disability of the participant; or
o a change in control of SYSCO.
In fiscal 1999, Mr. Lindig deferred 20% of his MIP bonus, and therefore
received a matching payment equal to 50% of the amount deferred.
1991 Stock Option Plan
During fiscal 1999, SYSCO granted options to purchase shares of its
common stock to 890 key employees, including executive officers, under the 1991
Stock Option Plan. All fiscal 1999 grants to executive officers were made in
September 1998.
The Committee administers this plan. In general, it is the practice of
the Committee to consider issuing options under this plan only when participants
in the MIP are entitled to receive an annual incentive bonus. In other words,
option grants generally are considered only in years when SYSCO 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 by the terms of this plan.
11
<PAGE>
In addition to requiring that certain performance goals must be met
before options are issued to any plan participant, it has been our consistent
practice to impose rigorous performance goals which must be met before the
options will vest and participants may exercise their options. In the case of
corporate employees, these performance goals are based upon increases in our
earnings per share and return on shareholders' equity. In effect, there have
been two different sets of performance goals, one for the grant of the option
and one for the exercise of the option. We currently anticipate continuing this
practice.
It also has been our practice to provide that options granted under
this plan expire ten years after the date of grant, with a five year initial
vesting period. The Committee currently anticipates continuing the practice of
providing that options which have not vested during this five-year period will
vest six (6) months before the end of the ten-year life provided the holder
remains an active employee of SYSCO or one of its operating companies at that
time. The Committee has not historically considered the current number of
outstanding options held by an officer when making its grant decisions.
During fiscal 1999, Mr. Lindig received one (1) grant of 16,000 options
at an exercise price of $21.875 per share. These options contain vesting
requirements which are identical to those discussed above.
Benefits
Executives also participate in SYSCO's regular employee benefit
programs, which include a pension plan, a retirement 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, less all SYSCO and other
retirement plan benefits and social security payments available to the
participant upon retirement. Further details with respect to SYSCO's qualified
pension plan are provided on pages ___ and ___.
In February, the Committee approved SYSCO offering split dollar life
insurance arrangements to certain key executive officers as an alternative to
part or all of their accrued and future benefits in the Executive Deferred
Compensation Plan and the Supplemental Retirement Plan. Any insurance purchased
under the arrangements by SYSCO will not have a present value cost that is in
excess of the net present value of the projected after tax cost of the waived
deferred compensation and supplemental retirement benefits. In September 1999,
the Committee designated Messrs. Lindig and Cotros as participants under the
split dollar life insurance plan. In approving these insurance arrangements, the
Committee considered that SYSCO would experience a positive impact on its
earnings with these arrangements in place, as compared to the earnings impact of
Messrs. Lindig's and Cotros's current participation in the Executive Deferred
Compensation and Supplemental Retirement Plans.
Income Deduction Limitations
Section 162(m) of the Internal Revenue Code 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 SYSCO 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 with respect to such
year. The Board and the Committee have determined, after reviewing the effect of
Section 162(m), that our 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.
COMPENSATION AND STOCK OPTION COMMITTEE
Richard G. Merrill, Chairman
John W. Anderson
Gordon M. Bethune
Colin G. Campbell
Judith B. Craven
Frank H. Richardson
Phyllis S. Sewell
12
<PAGE>
The following tables set forth information with respect to the Chief
Executive Officer and the other four most highly compensated executive officers
of SYSCO and its subsidiaries employed at the end of fiscal 1999 whose total
annual salary and bonus exceeded $100,000 for the fiscal year ended July 3,
1999:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation (5)
---------------------------------------- ---------------------------
Other Restricted Securities
Annual Stock Underlying All Other
Fiscal Bonus Compensation Awards Options Compensation
Name and Principal Position Year Salary ($) (1)(2)($) (3)($) (4)($) (#) (6)($)
--------------------------- ------ ----------- ------------- ------------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Bill M. Lindig................1999 $800,000 $903,002 -- $799,070 16,000 $149,329
Chairman and Chief Executive 1998 727,500 694,499 -- 614,601 19,000 118,580
Officer and Director 1997 660,000 561,385 -- 496,799 20,000 97,542
Charles H. Cotros.............1999 $622,500 $702,925 -- $622,042 16,000 $119,821
President and Chief 1998 565,000 540,166 -- 478,023 19,000 95,817
Operating Officer 1997 510,000 435,306 -- 385,170 20,000 76,548
and Director
John F. Woodhouse.............1999 $612,500 $594,778 -- $526,348 16,000 $124,265
Senior Chairman and 1998 645,000 612,805 -- 542,283 19,000 126,923
Director 1997 615,000 500,385 -- 442,779 20,000 107,820
Richard J. Schnieders.........1999 $350,000 $432,588 -- $382,776 16,000 $ 70,136
Executive Vice President, 1998 287,500 272,372 -- 241,001 15,000 44,703
Foodservice Operations 1997 240,625 223,753 -- 197,987 16,000 36,045
and Director
Thomas E. Lankford............1999 $325,000 $359,533 $318,140 13,000 $ 59,074
Executive Vice President, 1998 287,500 321,702 -- 235,161 15,000 44,811
Merchandising and 1997 257,500 186,097 -- 164,650 16,000 31,712
Multi-Unit Sales
- ----------
</TABLE>
(1) Includes amounts deferred under the 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.
See "Restricted Stock Awards" column.
(3) Does not include perquisites and other personal benefits if they do not
in the aggregate exceed the lesser of $50,000 or 10% of each
individual's annual salary and bonus as reported.
(4) The amount presented is determined by multiplying the number of shares
earned by the closing price of our common stock on the New York Stock
Exchange on July 2, 1999, 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 and are subject to certain repurchase rights on the
part of SYSCO in the event of termination of employment other than by
normal retirement or disability. The recipient receives dividends on
the shares during the restricted two-year period.
During fiscal 1999, the number of restricted shares earned by the named
individuals was as follows:
o Mr. Lindig -- 25,986 shares;
o Mr. Cotros -- 20,229 shares;
o Mr. Woodhouse -- 17,117 shares;
o Mr. Schnieders -- 12,488 shares; and
o Mr. Lankford -- 10,346 shares.
13
<PAGE>
At the end of fiscal 1999, the aggregate number and dollar amount
(computed using the closing price of our common stock on July 2, 1999 as
described above) of restricted shares earned by the named individuals were as
follows:
o Mr. Lindig -- 50,088 shares at $1,540,206;
o Mr. Cotros -- 38,975 shares at $1,198,481;
o Mr. Woodhouse -- 38,383 shares at $1,180,227;
o Mr. Schnieders -- 21,899 shares at $673,394; and
o Mr. Lankford -- 19,568 shares at $601,716.
(5) The column on Long Term Incentive Plan Payouts is not included in the
table since no compensation required to be reported under that column
was paid to the named individuals during the periods covered by the
table nor do we have any compensation plans that provide for the
payment of this type of compensation.
(6) The amounts shown include a SYSCO match equal to 50% of the first 20%
of the annual incentive bonus which each individual elected to defer
under our Executive Deferred Compensation Plan and the amount we paid
for term life insurance coverage for each individual, as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------------- ---------------------------------- ------------------
Deferred Term Deferred Term Deferred Term
Name Total Match Insurance Total Match Insurance Total Match Insurance
---- --------- --------- --------- --------- --------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bill M. Lindig......... $149,329 $133,183 $16,146 $ 118,580 $ 102,434 $ 16,146 $ 97,542 $82,800 $ 14,742
Charles H. Cotros...... 119,821 103,675 16,146 95,817 79,671 16,146 76,548 64,200 12,348
John F. Woodhouse...... 124,265 87,725 36,540 126,923 90,383 36,540 107,820 73,800 34,020
Richard J. Schnieders.. 70,136 63,800 6,336 44,703 40,170 4,533 36,045 33,000 3,045
Thomas E. Lankford..... 59,074 53,026 6,048 44,811 39,195 5,616 31,712 27,445 4,267
</TABLE>
The following table provides information regarding the grants of stock
options during the last fiscal year to the individuals named in the Summary
Compensation Table. We have never granted any stock appreciation rights to
executive officers under the 1991 Stock Option Plan.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Number of Percentage
Securities of Total Options
Underlying Granted to Exercise or Grant Date
Options Granted Employees in Base Price Expiration Present
Name (#)(1) Fiscal 1999 ($/Share) Date Value ($)(2)
---- ------ ----------- ---------------- ---- ------------
<S> <C> <C> <C> <C> <C>
Bill M. Lindig..... 16,000 1.03% $21.875 09/02/2008 $128,000
Charles H. Cotros.. 16,000 1.03% $21.875 08/02/2008 $128,000
John F. Woodhouse.. 16,000 1.03% $21.875 09/02/2008 $128,000
Richard J. Schnieders 16,000 1.03% $21.875 09/02/2008 $128,000
Thomas E. Lankford 13,000 .84% $21.875 09/02/2008 $104,000
- ----------
</TABLE>
(1) The options do not vest and become exercisable unless we attain certain
levels of increases in earnings per share and return on shareholders'
equity. If these increases are not attained within five years of the date of
grant, the options will not vest until six months before the expiration of
the ten-year life of the grant, and only if the recipient is still an active
employee at that time.
(2) We determined the hypothetical grant value for the options of $8.00 per
share using a modified Black-Scholes pricing model. In applying the model,
we assumed a volatility of 23%, a 5.4% risk-free rate of return, a dividend
yield at the date of grant of 1.65%, and a 10-year option term. We did not
assume any option exercises or risk of forfeiture during the 10-year term.
If used, such assumptions could have reduced the reported grant date value.
The actual value, if any, an executive may realize upon exercise of options
will depend on the excess of the stock price over the exercise price on the
date the option is exercised. Consequently, there is no assurance that the
value realized will be at or near the value estimated by the modified
Black-Scholes model.
14
<PAGE>
The following table provides information with respect to aggregate
option exercises in the last fiscal year and fiscal year-end option values for
the executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES
IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
Number of
Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
Shares Value July 3, 1999 (#)(2) July 3, 1999 (2)(3)
Acquired on Realized ------------------------------ -------------------------
Name Exercise (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ---------------------- -------------- ------------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bill M. Lindig............ 7,400 73,075 20,000 75,000 $360,000 $ 1,017,500
Charles H. Cotros......... 10,040 99,538 20,000 75,000 360,000 1,017,500
John F. Woodhouse......... 14,066 170,704 13,334 75,000 240,012 1,017,500
Richard J. Schnieders.... 12,680 149,050 16,000 63,000 288,000 839,750
Thomas E. Lankford........ 8,400 139,650 27,320 60,000 480,262 813,125
- ----------
</TABLE>
(1) Computed based on the difference between the closing price of the
common stock on the day of exercise and the exercise price.
(2) Based on option vesting status as of September 10, 1999.
(3) Computed based on the difference between the closing price on July 2,
1999 and the exercise price.
Retirement Plan
We have a defined benefit retirement plan which was amended and
restated effective July 2, 1989 and further amended effective January 1, 1998.
The Retirement Plan provides for an annual benefit payable monthly for five
years certain and life thereafter, equal to:
o the normal retirement benefit which accrued under the prior plan as of
July 2, 1989, plus
o an amount 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 before his or her normal
retirement age (age 65) or the commencement of a benefit, if earlier, and if the
participant has five or more years of credited service, a death benefit is
payable in an amount equal to the value of the pension accrued by the deceased
participant prior to his or her death or earlier termination of employment.
Under current law and regulations, the maximum annual retirement
benefit that may be payable in 1999 under the five years certain and life
thereafter form of payment to an individual retiring at age 65 is $128,388.
Without regard to this maximum limitation, the named executive officers
have accrued the following benefits and credited benefit service as of July 3,
1999:
o Mr. Lindig -- $75,739 and 15 years;
o Mr. Cotros -- $85,321 and 23 years;
o Mr. Woodhouse -- $180,059 and 30 years;
o Mr. Schnieders -- $35,401 and 16 years; and
o Mr. Lankford -- $37,989 and 18 years.
15
<PAGE>
The named executive officers also have anticipated future service to
age 65 as follows (except for Mr. Woodhouse who is currently 68):
o Mr. Lindig -- 3 years;
o Mr. Cotros -- 3 years;
o Mr. Schnieders -- 14 years; and
o Mr. Lankford -- 13 years.
In addition to benefits accrued to date, each named executive officer
will accrue benefits in the future in accordance with the table below:
<TABLE>
<CAPTION>
PENSION PLAN TABLE (1)(2)
Career Average
Compensation Earned On Years of Credited Service
------------------------------------------
And After July 3, 1999 (3) 10 15 20 25 30 35
-------------------------- ------- -------- -------- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
$ 50,000.................. 7,500 11,250 15,000 18,750 22,500 26,250
100,000.................. 15,000 22,500 30,000 37,500 45,000 52,500
150,000.................. 22,500 33,750 45,000 56,250 67,500 78,750
200,000.................. 30,000 45,000 60,000 75,000 90,000 105,000
- ----------
</TABLE>
(1) Assumes the annual benefit is payable for five years certain and life
thereafter and that retirement age is 65. Pension plan benefits are not
subject to deduction by social security or any other offsets.
(2) Current law and regulations limit retirement benefits in 1999 to
$128,388 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 SYSCO both before and after July 3, 1999.
The Pension Plan Table does not reflect this limitation.
(3) Compensation for benefit calculation purposes is limited by law to
$160,000 for 1999 and later years subject to future cost-of-living
adjustments. Pay limitations are not taken into account in the Pension
Plan Table.
To the extent included in W-2 income, we use all amounts shown in the
Summary Compensation Table, other than deferred bonus, term life insurance
payments and the SYSCO match under the Executive Deferred Compensation Plan to
compute career average compensation subject to the pay limitations noted in
footnote (3).
16
<PAGE>
PERFORMANCE GRAPHS
The following two performance graphs compare the performance of SYSCO's
common stock to the S&P 500 Index and to a peer group for SYSCO's last five and
ten fiscal years, respectively. The ten-year graph is intended to provide you
with a longer-term view of SYSCO's performance. The peer group is comprised of :
o Fleming Companies, Inc.;
o Nash Finch Company;
o Richfood Holdings, Inc.;
o Supervalu, Inc.; and
o U.S. Foodservice.
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 our operations. U.S. Foodservice, through
its predecessors JP Foodservice, Inc. and Rykoff-Sexton, Inc., is the only other
publicly held foodservice distributor that was in existence throughout both the
five and ten-year periods, although, unlike SYSCO, it also manufactured certain
food products during these periods. Each other member of the peer group is in
the business of distributing grocery products to retail supermarkets and was in
existence throughout these periods. Although we have previously included Super
Food Services, Inc. in our peer group, we have chosen to delete it due to its
acquisition by Nash Finch Company. We also did not include Performance Food
Group Company, a publicly-traded food service distributor, due to the lack of
available historical financial data for the ten-year graph. We consider this to
be a more representative peer group than the "S&P Distributors (Food & Health)"
index maintained by Standard & Poor's Corporation and consisting of SYSCO,
Supervalu, Inc., Cardinal Health, Inc. and McKesson HBOC, Inc., which includes
two healthcare service distributors.
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 our common
stock, the S&P 500 Index and the peer group was $100 the last trading day of
June, 1994 and 1989, and that all dividends were reinvested. Performance data
for SYSCO, the S&P 500 Index and for each member of the peer group is provided
as of the last trading day in June each year.
Comparison of Five-Year Cumulative Total Return
[Insert Graph]
Value of $100 invested on the last trading day of June 1994
Measurement Period
(Fiscal Year Covered) SYSCO S&P 500 Peer Group
--------------------- ----- -------- ----------
1994 100.00 100.00 100.00
1995 128.85 126.07 104.05
1996 151.89 158.85 109.44
1997 164.66 213.97 129.10
1998 235.58 278.50 141.68
1999 278.11 341.52 152.57
Total return assumes reinvestment of dividends
17
<PAGE>
Comparison of Ten-Year Cumulative Total Return
[Insert Graph]
Value of $100 invested on the last trading day of June 1989
Measurement Period
(Fiscal Year Covered) SYSCO S&P 500 Peer Group
--------------------- ----- ------- ----------
1989 100.00 100.00 100.00
1990 145.60 116.49 101.88
1991 175.49 125.11 107.29
1992 205.94 141.89 97.76
1993 214.59 161.23 125.07
1994 205.00 163.50 114.16
1995 264.14 206.12 118.78
1996 311.37 259.72 124.93
1997 337.55 349.84 147.38
1998 482.94 455.35 161.74
1999 570.11 558.40 174.18
Total return assumes reinvestment of dividends
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and
the rules issued thereunder, our executive officers and directors and any
persons holding more than ten percent (10%) of our common stock are required to
file with the Securities and Exchange Commission and the New York Stock Exchange
reports of initial ownership of our common stock and any changes in ownership of
such common stock. Specific due dates have been established and we are required
to disclose in our Annual Report on Form 10-K and proxy statement any failure to
file the reports by these dates. Copies of these reports are required to be
furnished to us. Based solely on our review of the copies of the reports
furnished to us, or written representations that no reports were required, we
believe that, during fiscal 1999, all of our executive officers (including the
named executive officers), directors and persons owning more than 10% of its
common stock complied with the Section 16(a) requirements except that Mr.
Gregory Marshall filed a late Form 5 reporting one late transaction.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Anderson, Bethune, Campbell, Merrill and Richardson, Dr. Craven
and Ms. Sewell were the only members of our Board to serve on the Compensation
and Stock Option Committee during fiscal 1999 and were not, during fiscal 1999
or before that, officers or employees of SYSCO or any of our subsidiaries.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP served as the independent public accountants
providing auditing, financial and tax services for fiscal year 1999 and will
provide such services during the current fiscal year 2000. Approval or selection
of the independent certified public accountants is not submitted to the annual
meeting of Stockholders. The Board has historically selected the independent
certified public accountants with the advice of the Audit Committee, and the
18
<PAGE>
Board believes it would be to the detriment of SYSCO and its stockholders for
there to be any impediment (such as selection or ratification by the
stockholders) to exercising judgment to select the independent certified public
accountants or to remove them if, in its opinion, such removal is in the best
interest of SYSCO and the stockholders.
We expect 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.
STOCKHOLDER PROPOSALS
Presenting Business
If you want to present a proposal under Rule 14a-8 of the Securities
Exchange Act of 1934 at our 2000 annual meeting of Stockholders, send the
proposal in time for us to receive it by May 28, 2000. If the date of our 2000
annual meeting is subsequently changed by more than 30 days from the date of
this year's annual meeting, we will inform you of the change and the date by
which we must receive proposals. If you want to present business at our 2000
annual meeting outside of the shareholder proposal rules of Rule 14a-8 of the
Exchange Act, the Secretary must receive notice of your proposal by August 8,
2000, but not before June 29, 2000 and you must be a stockholder of record on
the date notice to stockholders is mailed and on the record date for
stockholders entitled to notice of the meeting and to vote.
Nominating Directors for Election
The Nominating Committee will consider any director nominees you
recommend in writing for the 2000 annual meeting if the Secretary receives
notice by August 8, 2000, but not before June 29, 2000 and you are a stockholder
of record on the date notice to stockholders is mailed and on the record date
for stockholders entitled to notice of the meeting and to vote.
In addition, your notice must provide the following for each person you
are nominating for election as a director:
o the name, age, business address and residence address of the person;
o the principal occupation or employment of the person; o the class or
series and number of shares of SYSCO capital stock which the person
owns beneficially or of record; and
o any other information relating to the person that must be disclosed in
a proxy statement or other filings required to be made in connection
with solicitations of proxies for election of directors under Section
14 of the Securities Exchange Act of 1934 and its rules and
regulations.
In addition, your notice must provide the following information
relating to yourself:
o your name and record address;
o the class or series and number of shares of capital stock of SYSCO that
you own beneficially or of record;
o a description of all arrangements or understandings between you and
each proposed nominee and any other person or persons, including their
names, pursuant to which the nomination(s) are to be made;
o a representation that you intend to appear in person or by proxy at the
meeting to nominate the persons named in your notice; and
o any other information about yourself that must be disclosed in a proxy
statement or other filings required to be made in connection with
solicitations of proxies for election of directors under Section 14 of
the Securities Exchange Act of 1934 and its rules and regulations.
The notice must include a written consent by each proposed nominee to
being named as a nominee and to serve as a director if elected. No person will
be eligible for election as a director of SYSCO unless nominated in accordance
with the procedures set forth above.
19
<PAGE>
Change in Annual Meeting Date
If the date of next year's annual meeting is advanced by more than 30
days prior to or delayed by more than 60 days after the date of this year's
annual meeting, we will inform you of the change and we must receive your
director nominee notices by the latest of 90 days before the annual meeting, 10
days after we mail the notice of the changed date of the annual meeting or 10
days after we publicly disclose the changed date of the annual meeting.
847948v13
<PAGE>
ANNEX
PROXY
SYSCO CORPORATION
Proxy For The Annual Meeting Of Stockholders November 5, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Bill M. Lindig and
Charles H. Cotros, 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
to be held on November 5, 1999 at 10:00 a.m., at the Omni Houston Hotel, Four
Riverway, Houston, Texas 77056-1999, or any adjournment thereof.
The undersigned acknowledges the receipt of Notice of the annual
meeting and proxy statement, each dated September __, 1999, 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.
SEE REVERSE SIDE (CONTINUED AND TO BE SIGNED ON REVERSE SIDE) SEE REVERSE SIDE
847948v9
<PAGE>
SYSCO CORPORATION
1390 ENCLAVE PARKWAY
HOUSTON, TX 77077
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Call Toll-Free on a Touch-Tone Phone and your vote is
1-877-PRX-VOTE (1-877-779-8683). immediately confirmed and
posted.
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Follow these four easy steps: Follow these four easy steps:
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1. Read the accompanying Proxy Statement 1. Read the accompanying Proxy Statement
and Proxy Card. and Proxy Card.
2. Call the toll-free number 2. Go to the Website 1-877-PRX-VOTE
(1-877-779-8683). For stockholders http://www.eproxyvote.com/syy
residing outside the United States call collect on
a touch-tone phone 1-201-536-8073
3. Enter your 14-digit Voter Control Number 3. Enter your 14-digit Voter Control Number
located on your Proxy Card above your name. located on your Proxy Card above your name.
4. Follow the recorded instructions. 4. Follow the instructions provided.
Your vote is important! Your vote is important!
Call 1-877-PRX-VOTE anytime!. Go to http://www.eproxyvote.com/syy
anytime!
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Do not return your Proxy Card if you are voting by
Telephone or Internet. Proxies voted by Telephone or Internet must
be received by 5:00 P.M. EST - November 4, 1999
Please Mark
[X] Votes As In
This Example
The Board of Directors recommends a vote "FOR" the following Proposals:
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<S> <C>
FOR AGAINST ABSTAIN
1. To elect five directors of SYSCO 2. Approval of SYSCO's proposal to [ ] [ ] [ ]
NOMINEES: (01) John W. Anderson, increase the number of authorized
(02) Judith B. Craven, (03) Bill M. Lindig, shares to one billion (1,000,000,000) shares.
(04) Richard G. Merrill and
(05) Phyllis S. Sewell
FOR [ ] WITHHELD [ ]
ALL FROM ALL
NOMINEES NOMINEES
[ ]------------------------------------
For all nominees except as noted above.
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All proxies signed and returned will be voted or not voted in accordance with
your instructions, but those with no choice will be voted "FOR" each of the
nominees for director named, "FOR" the proposal to increase the number of
authorized shares and in the discretion of the proxy holder on any other matter
that may properly come before the meeting and any adjournment or postponement of
the annual meeting.
MARK HERE FOR ADDRESS [ ]
CHANGE AND NOTE AT LEFT
Please sign, date and return promptly. No postage required if this proxy is
returned in the enclosed envelope and mailed in the United States.
Please sign as name appears on this card. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title. If signer is a corporation, please sign with the full corporation
name by authorized officer or officers.
Signature:___________________________ Date:_______________________________
Signature:___________________________ Date:_______________________________
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