-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BtnKI5mvnpM+3j76IpatAS6S/4RvyseVwCrKXYwhW01JmoqEICWBM4ekugVZN1O6 HSFReMNwAz6KKFNj6HtPdg== 0000893877-97-000326.txt : 19970521 0000893877-97-000326.hdr.sgml : 19970521 ACCESSION NUMBER: 0000893877-97-000326 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970201 FILED AS OF DATE: 19970520 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEYER FRED INC CENTRAL INDEX KEY: 0000701169 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DEPARTMENT STORES [5311] IRS NUMBER: 930798201 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-11274 FILM NUMBER: 97612174 BUSINESS ADDRESS: STREET 1: 3800 SE 22ND AVE CITY: PORTLAND STATE: OR ZIP: 97202 BUSINESS PHONE: 5032328844 MAIL ADDRESS: STREET 1: PO BOX 42121 CITY: PORTLAND STATE: OR ZIP: 97242 10-K/A 1 FORM 10-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A Amendment No. 1 /x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended February 1, 1997 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file No. 1-11274 FRED MEYER, INC. (Exact name of registrant as specified in its charter) Delaware 93-0798201 (State or other jurisdiction of (I.R.S. Employer Incorporation or organization) Identification No.) 3800 SE 22nd Avenue Portland, Oregon 97202 (Address of principal executive offices) (Zip Code) (503) 232-8844 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Name of each Exchange Title of class on which registered Common Stock, $.01 par value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /x/ No / / Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part II of this Form 10-K or any amendment to this Form 10-K. / / Aggregate market value of Common stock held by nonaffiliates of the Registrant at March 1, 1997: $1,025,998,079 Number of shares of Common Stock outstanding at March 1, 1997: 26,298,768 TABLE OF CONTENTS Item of Form 10-K/A Page - ------------------- ---- PART III Item 10. Directors and Executive Officers of the Registrant 3 Item 11. Executive Compensation 6 Item 12. Security Ownership of Certain Beneficial Owners and Management 13 Item 13. Certain Relationships and Related Transactions 14 SIGNATURE 16 2 PART III Item 10. Directors and Executive Officers of the Registrant Board of Directors The directors of the Company are elected at the Annual Meeting of the Company to serve for one year and until their successors are elected. The directors of the Company are listed below together with certain information about each of them.
Name and Year Principal Occupation Number of Elected or Position Shares Held Approximate to Board with Company Age on March 1, 1997(1) Percent ------------- -------------------- --- ------------------- ----------- Vivian A. Bull President, Linfield 62 2,696(2) * (1996) College James J. Curran Retired Chairman of the 57 3,898(2)(3) * (1996) Board and Chief Executive Officer of First Interstate Bank, Northwest Region A. M. Gleason Retired Chief Executive 66 26,679(2)(4) * (1992) Officer of PacifiCorp David J. Johnson Chairman of the Board 50 2,724(2) * (1996) and Chief Executive Officer, KinderCare Learning Centers, Inc. Roger S. Meier President, 71 22,279(2)(5) * (1985) AMCO, Inc. Robert G. Miller Chairman of the Board 52 433,292(6) 1.6% (1991) and Chief Executive Officer of the Company Steven R. Rogel President and Chief 54 2,696(2) * (1996) Executive Officer, Willamette Industries, Inc. * Less than 1%. (1) Shares held directly with sole voting and sole investment power unless otherwise indicated. See Item 12 below. 3 (2) Includes shares subject to the Non-Employee Directors Stock Compensation Plan as follows: 2,696; 2,898; 1,173; 2,724; 1,173 and 2,696 for Dr. Bull and Messrs. Curran, Gleason, Johnson, Meier and Rogel, respectively. (3) Includes 1,000 shares held in a family trust. (4) Includes 1,300 shares owned by Mr. Gleason's spouse as to which beneficial ownership is disclaimed. (5) Includes 7,000 shares owned by Mr. Meier's spouse and 2,500 shares owned by a family partnership of which Mr. Meier is general partner. Beneficial ownership is disclaimed as to such shares. (6) Includes 1,625 shares owned by Mr. Miller's son. Beneficial ownership is disclaimed as to such shares.
Dr. Bull has been President of Linfield College since August 1992. Prior to that time she was in the Department of Economics at Drew University from 1960 to 1992. Dr. Bull is a former Director at Chemical Bank in New Jersey. Mr. Curran retired from First Interstate Bancorp in April 1996. At the time of his retirement he was a member of the Executive Operating Committee of First Interstate Bancorp and Chairman and Chief Executive Officer of First Interstate Bank, Northwest Region. Mr. Curran is a director of Coeur d'Alene Mines Corp. Mr. Gleason retired from PacifiCorp, a diversified public utility in May 1995. At the time of his retirement he was Vice Chairman of PacifiCorp, having previously served as its President and Chief Executive Officer. Prior to that time he served as Chairman and Chief Executive Officer of Pacific Telecom, Inc., a PacifiCorp subsidiary. Mr. Gleason is a director of Tektronix, Inc. and Comdial Corporation and President of the Port of Portland. Mr. Johnson became Chairman of the Board, Chief Executive Officer and a director of KinderCare Learning Centers in February 1997. From 1991 until February 1997, he was Chairman of the Board and Chief Executive Officer of Red Lion Hotels. Mr. Meier has been President and Chief Executive Officer of AMCO, Inc., a privately owned investment enterprise, for more than twenty years. During that time Mr. Meier was Chairman of the State of Oregon Investment Council, a member of the Board of Directors of Red Lion Inns, Ltd. and a Director of Key Bank of Oregon. He is trustee of Acorn Fund, Acorn International and Acorn USA. He is also an Advisory Board Member of Key Bank of Oregon and Chairman of the Investment Committee for Legacy Health Systems. Mr. Miller became Chairman of the Board and Chief Executive Officer of the Company in August 1991. Prior to that time he was employed by Albertson's Inc., where his most recent positions were Executive Vice President of Retail Operations from 1989 to 1991 and Senior Vice President and Regional Manager from 1985 to 1989. Mr. Miller is a 4 director of PacifiCorp, Pathmark Stores, Inc. and Supermarkets General Holdings Corp. Mr. Rogel has been Chief Executive Officer and a director of Willamette Industries, Inc. since October 1995 and President since 1991. He served as Chief Operating Officer of Willamette Industries, Inc. until October 1995 and, prior to that time, as an executive and group vice president for more than five years. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers and persons who own more than ten percent of a registered class of the Company's equity securities, to file with the Securities and Exchange Commission (the "SEC") initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Officers, directors and greater than ten-percent shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. To the Company's knowledge, based solely on a review of the copies of such reports furnished to the Company and representations that no other reports were required, the Company believes that during the fiscal year ended February 1, 1997 all Section 16(a) filing requirements applicable to its officers, directors and greater than ten-percent beneficial owners were complied with, except for the following instances: Wayne W. Abbott and Sammy K. Duncan, officers of the Company, each filed a late report of initial statement of beneficial ownership on March 7, 1996; James J. Curran, a director of the Company, and Joseph Intile, an officer of the Company, each filed a late report of initial statement of beneficial ownership on July 17, 1996; and David R. Jessick, an officer of the Company, filed a late report of initial statement of beneficial ownership on February 5, 1997. 5 Item 11. Executive Compensation Summary Compensation Table The following table sets forth compensation paid to the Chief Executive Officer of the Company and the other four most highly compensated executive officers of the Company for services in all capacities to the Company and its subsidiaries during each of the last three fiscal years.
Annual Compensation Long Term Compensation --------------------------------- ------------------------------------ Awards Payouts ------------------------- --------- Securities Long-Term Other Restricted Underlying Incentive Name and Annual Stock Options Plan All Other Principal Position Year Salary(1) Bonus(1) Compensation Awards(2) (# of Shares) Payouts Compensation(3) - ------------------ ---- --------- -------- ------------ ---------- ------------- --------- --------------- Robert G. Miller 1996 $581,923 $196,329 -- $ 49,046 75,000 $ -- $ 59,593 Chairman of the 1995 597,115 86,250 -- -- -- 8,072 56,026 Board and Chief 1994 555,481 -- -- -- -- -- 63,831 Executive Officer Curt A. Lerew, III 1996 392,923 115,054 -- -- 125,000 -- 46,025 Former President 1995 280,705 24,438 -- -- 25,000 3,736 40,682 1994 249,327 6,000 -- -- -- -- 41,898 Mary F. Sammons 1996 287,308 56,422 -- 14,066 -- -- 41,398 Senior Vice 1995 281,538 24,438 -- -- 25,000 7,334 39,905 President, 1994 251,635 -- -- -- -- -- 40,497 Apparel and Home Electronics Group Edward A. Dayoob 1996 210,769 49,424 -- 424,834 -- -- 38,271 Senior Vice 1995 207,115 17,965 -- -- 10,000 15,253 37,513 President, 1994 190,962 47,414 -- -- -- -- 38,382 President, Fred Meyer Jewelers, Inc. Ronald J. McEvoy 1996 238,231 -- -- -- 10,000 -- 38,908 Former Senior Vice 1995 237,692 19,242 -- -- 10,000 3,736 37,835 President and Chief 1994 219,538 -- -- -- -- -- 39,486 Information Officer (1) Includes compensation deferred at the election of the executive under the Company's Profit Sharing Plan and under the Company's Excess Deferral Plan. Under the Company's Profit Sharing Plan, officers and other employees of the Company may elect to defer up to the lesser of $9,500 or 15% of their compensation, subject to limitations under the Internal Revenue Code. Amounts under these plans are generally paid to employees upon retirement. (2) Represents restricted stock grants made to Mr. Miller, Ms. Sammons and Mr. Dayoob in the amounts of 1,189, 341 and 10,299 shares, respectively. The amount included in the table represents the market value of the shares at March 31, 1997. 6 (3) Amounts shown for the fiscal year 1996 consist of: (i) Company contributions of $28,523, $17,252, $13,320, $9,749 and $10,986 to the above-named executive officers, respectively, under the Profit Sharing Plan and Excess Deferral Plan, (ii) $6,070, $3,773, $3,078, $3,522 and $2,922 paid by the Company to the above-named executive officers, respectively, as premiums under its Long-Term Disability Plan; and (iii) $25,000 for each named executive officer paid by the Company for life insurance under the Supplemental Income Plan.
Pursuant to an agreement with Mr. Lerew, who resigned as President of the Company effective April 2, 1997, Mr. Lerew will receive (i) eighteen months' salary continuation at his current base pay rate and continued health insurance during such period, (ii) a cash payment of $23,011, which is 20% of his 1996 bonus plan payment that would otherwise have been paid to the Capital Bonus Plan, (iii) forgiveness of a loan from the Company in the amount of $100,000 which funds had been made available to Mr. Lerew for the purchase of Company Common Stock and (iv), if requested by Mr. Lerew, out-placement assistance at a cost not to exceed $20,000. In addition, the Company has accelerated the vesting of options previously awarded to Mr. Lerew for 50,000 shares of Company Common Stock. Stock Option Grants in Last Fiscal Year The following table provides information as to options to purchase Common Stock granted to certain executive officers during 1996 pursuant to the Company's 1990 Stock Incentive Plan. No SARs were granted during 1996.
Potential Realizable Value Number of Percentage of at Assumed Annual Rates Securities Total Options of Stock Price Underlying Granted to Exercise Appreciation Options Employees Price Expiration for Option Term(2) Name Granted(1) in Fiscal Year Per Share Date 5% 10% ---- ---------- -------------- --------- ---------- ------------ ----------- Robert G. Miller 75,000 4.61% $28.00 July 2006 $1,320,750 $3,346,500 Curt A. Lerew, III 100,000 6.14 22.25 February 1,399,000 3,536,000 2006 25,000 1.54 28.00 July 2006 440,250 1,115,500 Mary F. Sammons -- -- -- -- -- -- Edward A. Dayoob -- -- -- -- -- -- Ronald J. McEvoy 10,000 0.61 28.00 July 2006 176,100 446,200 (1) Options were granted for the numbers of shares indicated at an exercise price equal to the fair market value of the Common Stock on the date of grant. The options, which have terms of ten years, become exercisable 20% per year on the first five anniversaries of the original grant date. 7 If the employment of any of the optionees is terminated within one year after a change in control of the Company, the options held by such optionee become exercisable free of any limitation on the number of shares with respect to which the option may be exercised. (2) The dollar amounts under these columns are the result of calculations of the 5% and 10% rates required by the Securities and Exchange Commission for the maximum option term of 10 years and therefore are not intended to and may not accurately forecast possible future appreciation, if any, of the Company's Common Stock price.
Stock Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values The following table indicates (i) stock options exercised by certain executive officers during 1996, including the value realized on the date of exercise, (ii) the number of shares subject to exercisable (vested) and unexercisable (unvested) stock options as of February 1, 1997, and (iii) the value of "in-the-money" options, which represents the positive spread between the exercise price of existing stock options and the year-end price of the Common Stock.
Number of Value of Securities Underlying Unexercised In-the-Money Unexercised Options Held Options Held at February 1, 1997 at February 1, 1997(2) Shares Acquired Value -------------------------- -------------------------- Name on Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable - ------------------ --------------- ---------- ----------- ------------- ----------- ------------- Robert G. Miller 4,597 $ 22,410 295,403 75,000 $3,803,314 $ 496,875 Curt A. Lerew, III -- -- 105,000 145,000 1,206,250 1,578,125 Mary F. Sammons 35,641 699,062 49,155 20,000 1,000,106 175,000 Edward A. Dayoob 5,859 21,239 33,442 8,000 562,139 70,000 Ronald J. McEvoy -- -- 52,000 18,000 898,750 136,250 (1) Aggregate market value on the exercise date of the shares covered by the option, less the aggregate exercise price. (2) Calculated based on the January 31, 1997 stock price of $34.625.
Executive Officer Loans During 1995, the Company made interest-free loans to executive officers of the Company to enable the executive officers to purchase Common Stock of the Company. The amount of each loan was a maximum of $100,000, and the loans are payable in a lump sum in June 1998, or upon earlier termination of employment or sale of stock. At April 22, 1997 loans were outstanding to the following executive officers under this program: Wayne W. 8 Abbott, Roger A. Cooke, Michael H. Don, Sammy K. Duncan, Keith W. Lovett, Cheryl D. Perrin, John A. Velke and Scott L. Wippel. Retirement Benefits The Company has adopted a nonqualified Supplemental Income Plan to provide supplemental retirement and death benefits to key employees. The plan is administered by the Compensation Committee. Any key executive of the Company who holds a position of Senior Vice President or higher is eligible to participate in this plan. The Committee selects participants from those eligible employees recommended by the Company's Chief Executive Officer. A participant is entitled to receive full benefits under the Supplemental Income Plan upon normal retirement by termination of employment after age 62. A participant is also entitled to receive reduced benefits if the participant voluntarily terminates his or her employment, is terminated without cause or dies before age 62. The normal retirement benefit under the Supplemental Income Plan is a projected annual amount, to be paid in equal monthly installments for 15 years, based upon the estimated cash surrender value, less the premiums paid and other expenses of the Company, of a Company-owned life insurance policy purchased on the life of the executive. The actual benefit will vary from the projected benefit based on actual dividend experience. The Company guarantees each participant a minimum benefit equal to at least 60 percent of the projected benefit. Based on certain assumptions, the projected annual benefits payable to Messrs. Miller and Dayoob and Ms. Sammons upon retirement at normal retirement age would be $60,400, $21,300 and $100,600, respectively. The Company has agreed to pay certain benefits to Mr. Miller in connection with his employment, including certain death, disability, retiree medical and retirement benefits. In the event of his termination for any reason other than cause, death or permanent disability, Mr. Miller is entitled to payment of two years of compensation at his then-current, annual salary (payable without interest). Assuming Mr. Miller retires at age 62, he will be entitled to receive an additional monthly retirement benefit of $10,805 for the remainder of his life. Directors Compensation Directors who are not employees of the Company receive an annual fee of $15,000 and participate in the Non-Employee Directors Stock Compensation Plan. Under the Non-Employee Directors Stock Compensation Plan, participants are awarded $87,500 worth of the Company's Common Stock every five years. Participants having fewer than five years of service remaining before reaching retirement age receive stock awards equivalent to $17,500 for each remaining year. Shares awarded under this plan are subject to forfeiture over the five-year period following the award (or shorter period to retirement) if the recipient ceases to be a director. The shares awarded under the plan are purchased in the market with funds supplied by the Company, and the certificates are then held by the Company until the forfeiture restrictions lapse. Directors have voting and dividend rights 9 with respect to the shares. Directors who are not employees of the Company also receive a fee of $1,000 per board or committee meeting attended. Compensation Committee Report on Executive Compensation The Compensation Committee of the Board of Directors (the "Committee") is composed of four outside directors and, pursuant to authority delegated by the Board, determines the compensation to be paid to the Chief Executive Officer and each of the other executive officers of the Company. The Company's objectives for executive compensation are to (i) attract and retain key executives important to the long term success of the Company; (ii) reward executives for performance and enhancement of shareholder value; and (iii) align the interests of the executive officers with the success of the Company by making a portion of the compensation based upon corporate performance. Section 162(m) of the Internal Revenue Code of 1986 generally disallows a federal income tax deduction to the Company for compensation over $1,000,000 paid to any of the Company's chief executive officer and four other most highly compensated executive officers unless such compensation is payable only on account of the attainment of one or more performance goals determined by a Board committee such as the Compensation Committee and otherwise qualifies as performance based pursuant to Section 162(m). The levels of salary and bonus paid by the Company for fiscal 1996 did not exceed the $1,000,000 limit. The Compensation Committee's policy with respect to the tax deductibility of executive compensation under Section 162(m) of the Internal Revenue Code is to qualify such compensation for deductibility where practicable. In this regard, the Company amended the 1990 Stock Incentive Plan two years ago to impose an individual limit on the maximum number of stock option shares which may be granted to participants to ensure that compensation resulting from stock option exercises by the Chief Executive Officer and the other four most highly compensated proxy-named executives will be tax deductible by the Company. Executive Officer Compensation Program. The primary components of the Company's executive officer compensation program are base salary, annual bonus plan, and long term incentive compensation in the form of stock options and capital bonus plan. Base salary levels for the Company's executive officers are set relative to companies of similar size in the retail industry and other companies in the Pacific Northwest. In determining salaries, the Company also takes into account individual experience, job responsibility and performance. The Company's Bonus Plan is an annual incentive program for executive officers, department and group managers and other selected employees of the Company. The purpose 10 of the Bonus Plan is to provide a direct financial incentive in the form of an annual cash bonus to executives to achieve predetermined departmental and Company financial goals. Target bonuses are set for each executive officer as a percentage of base compensation. The target bonus percentage depends upon level of responsibility within the Company. In fiscal 1996, the financial measure of performance under the Plan for the Company was pretax income and, to a lesser extent, control of net inventory. Department performance is determined in relation to pre-established targets for store contribution income and control of net inventory and for departmental operational income or expense. Generally, no bonus is paid under the Bonus Plan if threshold levels for Company, store or department performance are not achieved. Eighty percent of the annual bonus payable to each executive officer at bonus plan targeted pretax income, net inventory, operational income and/or departmental expense was paid in cash. The remaining twenty percent was withheld pursuant to the Company's Capital Bonus Plan and paid in the form of restricted shares of Company Common Stock. The shares were issued based on the closing price of the Company's Common Stock on March 31, 1997 and vest in an equal number of shares over three years (i.e., 1996's restricted shares vest on March 31, 1998; March 31, 1999 and March 31, 2000), subject to the officer being an employee at the time of vesting. The shares also vest on the retirement, death or disability of the officer. The Company's stock option program is intended as a long term incentive plan for executives, managers and selected salaried employees of the Company. The objectives of the program are to align employee and shareholder long term interests by creating a strong direct link between compensation and shareholder value. The Company's Stock Incentive Plan authorizes the Committee to award stock options to executive officers and other employees of the Company. Stock options are granted at an option price equal to the fair market value of the Company's Common Stock on the day preceding the date of grant. Options generally become exercisable to the extent of 25 or 20 percent of the grant on the anniversary date of the grant for the four or five succeeding years. Stock options generally have 10-year terms and terminate shortly after termination of employment. The amount of stock option grants for an individual depends upon his or her level of responsibility and position in the Company. Compensation of the Chief Executive Officer. The compensation of the Chief Executive Officer of the Company was determined by negotiation of an employment agreement at the time of his employment in September 1991. The agreement was amended in 1994. The employment agreement provides that Mr. Miller receive an annual salary and be eligible for an annual bonus in an amount up to 100 percent of his annual salary based upon the achievement of financial objectives approved by the Board of Directors. The employment agreement also provides for disability, pension, and severance benefits, the amount of which will depend upon the term of Mr. Miller's employment with the Company. Pursuant to the employment agreement, the Compensation Committee of the Board of Directors reviewed and increased the Chief Executive's base salary in 1992, 1993, 1994 and 1996. The Chief Executive's current annual base salary is $590,000. The factors considered by the Committee in approving the increases were (1) the achievement of the goals that the 11 Board had established for the Company's management, including goals for operating profit, performance relative to competitors and new and remodeled store development, (2) the contribution made by the Chief Executive in establishing the long-term strategic and business plan of the Company, including the establishment and achievement of organizational and management development goals, (3) enhancement of shareholder value during the prior year and (4) levels of compensation paid to other senior executives in the industry. Roger S. Meier, Chairman James J. Curran A. M. Gleason David J. Johnson 12 Item 12. Security Ownership of Certain Beneficial Owners and Management The Common Stock is the only authorized voting security of the Company currently outstanding. The Common Stock is entitled to one vote per share. The Common Stock does not have cumulative voting rights. The following table shows ownership of shares of Common Stock of the Company on March 1, 1997, except as noted, by the only persons who, to the knowledge of the Board of Directors, beneficially owned more than 5% of the Common Stock, by certain current and former executive officers of the Company and by all executive officers and directors as a group:
Number of Approximate Name Shares(1) Percent - ---- ------------ ----------- Metropolitan Life Insurance Company 3,645,667(2) 13.9% 1 Madison Avenue New York, New York 10010 Cramer Rosenthal McGlynn, Inc. 1,897,350(3) 7.2 707 Westchester Avenue White Plains, New York 10604 Robert G. Miller 433,292(4)(5) 1.6 Curt Lerew, III 139,300(4)(6) * Mary F. Sammons 96,969(4)(7) * Edward A. Dayoob 53,401(4) * Ronald J. McEvoy 4,400(8) * 21 Current Executive Officers and Directors as a group 1,026,715(9) 3.8 * Less than 1%. (1) Shares held directly with sole voting and sole investment power unless otherwise indicated. (2) Based upon information provided by the shareholder in a Schedule 13G, dated February 6, 1997, filed with the Securities and Exchange Commission. (3) Based upon information provided by the shareholder in a Schedule 13G, dated April 14, 1997, filed with the Securities and Exchange Commission, shares are held directly with shared voting and shared investment power. (4) Includes 295,403, 125,000, 33,442 and 49,155 shares of Messrs. Miller, Lerew and Dayoob and Ms. Sammons, respectively, subject to options that are currently exercisable or become exercisable within 60 days of the date of this table. 13 (5) Includes 1,625 shares owned by Mr. Miller's son. Beneficial ownership is disclaimed as to such shares. (6) Mr. Lerew resigned as an officer of the Company on April 2, 1997. (7) Includes 1,161 shares held by Ms. Sammons' spouse and son for which beneficial ownership is disclaimed. (8) Number of shares owned on February 4, 1997, the date Mr. McEvoy resigned as an officer of the Company. (9) Includes 620,643 shares subject to options that are currently exercisable or become exercisable within 60 days of the date of this table. Includes 18,886 shares for which beneficial ownership is disclaimed.
See Item 10 of this Annual Report on Form 10-K for information relating to stock ownership by directors of the Company. Item 13. Certain Relationships and Related Transactions At February 1, 1997, the Company leased or subleased 10 of its locations (land, buildings, and improvements) from Real Estate Properties Limited Partnership, an Oregon limited partnership ("Properties"). At February 1, 1997, Metropolitan Life Insurance Company, (the "Institutional Investor") which holds approximately 14% of the outstanding stock of the Company, held approximately 71% of the aggregate Class A limited partnership interests in Properties. Class A limited partners are entitled to a cumulative 10.25% annual return on their adjusted capital contributions; an annual distribution of 45% of certain funds of Properties available after payment of certain expenses, interest on indebtedness, and the fixed current return to the Class A limited partners; 45% of other distributions (other than Properties' final distribution), including distributions of the net proceeds realized by Properties from any sale of its properties after payment of a pro rata share of return of capital; and allocations for income tax purposes of various items arising from the operation of Properties. Properties made cash distributions of approximately $23,489,500 and allocations of taxable income and losses of approximately $17,086,000 to the Institutional Investor for the 1996 partnership year (including amounts paid after year-end relating to such year). Net lease payments made by the Company to Properties for the year ended February 1, 1997 were approximately $13,379,000. Leases between the Company and Properties require the Company to pay all property taxes and certain other amounts relating to the right to use the properties leased to the Company. Such property taxes paid by the Company during the year ended February 1, 1997 amounted to approximately $1,816,000. The Company leased two properties directly from two companies under common control with Properties for the year ended February 1, 1997. Rents and property taxes paid under these leases for the year totaled approximately $2,313,000 and $259,000, respectively. 14 At February 1, 1997, the Institutional Investor owned 36 properties which were leased to the Company. The Institutional Investor purchased these 36 properties from Properties in 1986 and 1987. During the year ended February 1, 1997, the Company paid approximately $46,070,000 in lease payments and approximately $5,528,000 in property taxes under these leases. During the year ended February 1, 1997, the Company entered into purchase agreements with Properties for the acquisition of seven properties leased to the Company by Properties. The acquisitions were completed using a bank to acquire the properties and lease them to the Company pursuant to a synthetic lease financing vehicle. In addition, the Company and Properties terminated the lease by the Company of one property and extended lease terms and set modified rent at other properties leased by Properties to the Company. On February 4, 1997, the Company and the Institutional Investor entered into purchase agreements covering six retail store locations and a distribution center, under which the fee interests in such locations were sold to the Company (or its bank designee in connection with sale and leaseback financing). The purchase price for the properties aggregated approximately $112,000,000 and was determined on the basis of discounted rental obligations for the remaining terms of the leases. In connection with the transactions, lease renewal options were exercised and rental amounts were amended for the remaining 29 retail locations and the Company acquired options to buy land relating to 18 locations leased from the Institutional Investor. The amount of the purchase price and the other terms of this transaction were negotiated on behalf of the Company by Mr. Miller and approved by the disinterested members of the Board of Directors. In December 1981, the Company and Properties agreed to guarantee certain of the other's liabilities assumed from the predecessor of the Company. This guarantee remains outstanding; however, to date the Company has not been required to make payment on any obligations assumed by Properties. The transactions discussed herein were on terms believed by the Board of Directors of the Company to be fair to the Company and no less favorable than the Company could have obtained with an unrelated party. The renegotiation, from time to time, of leases by the Company is in the ordinary course of the Company's business. 15 SIGNATURE Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: May 20, 1997 FRED MEYER, INC. By: DAVID R. JESSICK ------------------------------------- David R. Jessick Chief Financial Officer and Senior Vice President 16 -----END PRIVACY-ENHANCED MESSAGE-----