0000899243-95-000622.txt : 19950919
0000899243-95-000622.hdr.sgml : 19950919
ACCESSION NUMBER: 0000899243-95-000622
CONFORMED SUBMISSION TYPE: DEF 14A
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 19951024
FILED AS OF DATE: 19950918
SROS: NASD
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: DELCHAMPS INC
CENTRAL INDEX KEY: 0000729970
STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411]
IRS NUMBER: 630245434
STATE OF INCORPORATION: AL
FISCAL YEAR END: 0630
FILING VALUES:
FORM TYPE: DEF 14A
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-12923
FILM NUMBER: 95574498
BUSINESS ADDRESS:
STREET 1: 305 DELCHAMPS DR
STREET 2: P O BOX 1668
CITY: MOBILE
STATE: AL
ZIP: 36602
BUSINESS PHONE: 2054330431
MAIL ADDRESS:
STREET 1: 305 DELCHAMPS DR
STREET 2: PO BOX 1668
CITY: MOBILE
STATE: AL
ZIP: 36602
DEF 14A
1
DEFINITIVE N&PS
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Delchamps, Inc.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Delchamps, Inc.
------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
(4) Proposed maximum aggregate value of transaction:
--------
*Set forth the amount on which the filing is calculated and state how it was
determined.
[_] 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:
Notes:
(LOGO OF DELCHAMPS APPEARS HERE)
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on October 24, 1995
----------------
To the Shareholders of Delchamps, Inc.:
The annual meeting of shareholders of Delchamps, Inc. (the "Company") will be
held in the Alabama Ballroom of the Adam's Mark Riverview Plaza Hotel, 64 South
Water Street, Mobile, Alabama, at 10:00 a.m., Central Daylight Time, on
Tuesday, October 24, 1995 for the purpose of considering and voting upon the
following matters:
1. The election of three directors for a three-year term expiring in 1998
and one director for a one-year term expiring in 1996,
2. A proposal to ratify the appointment of KPMG Peat Marwick LLP as
independent auditors for the fiscal year ending June 29, 1996, and
3. The transaction of such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on September 13, 1995
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting and at any adjournment or adjournments thereof.
All shareholders are cordially invited to attend the meeting in person.
However, if you are unable to attend in person and wish to have your stock
voted, PLEASE FILL IN, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE
ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE. Your proxy may be revoked by
appropriate notice to the Secretary of the Company at any time prior to the
voting thereof.
BY ORDER OF THE BOARD OF DIRECTORS
(SIGNATURE OF TIMOTHY E. KULLMAN
APPEARS HERE)
TIMOTHY E. KULLMAN
Senior Vice President, Chief
Financial Officer, Treasurer
and Secretary
Mobile, Alabama
September 18, 1995
DELCHAMPS, INC. . 305 DELCHAMPS DRIVE . P.O. BOX 1668 . MOBILE, ALA. 36633-1668
. (205) 433-0431
DELCHAMPS, INC.
305 DELCHAMPS DRIVE
P.O. BOX 1668
MOBILE, ALABAMA 36633-1668
----------------
PROXY STATEMENT
----------------
This proxy statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of Delchamps, Inc. (the "Company"), for
use at the annual meeting of shareholders of the Company to be held on Tuesday,
October 24, 1995 and at any adjournment thereof. It is anticipated that this
proxy statement and the accompanying form of proxy will be mailed to
shareholders commencing on or about September 18, 1995.
Only shareholders of record at the close of business on September 13, 1995
are entitled to notice of and to vote at the annual meeting. On that date, the
Company had outstanding 7,108,781 shares of Common Stock, each of which is
entitled to one vote.
A shareholder who has given a proxy may revoke it by voting in person at the
meeting, by giving written notice of revocation to the Secretary of the Company
or by giving a later dated proxy at any time before voting.
The cost of soliciting proxies in the enclosed form will be borne by the
Company. In addition to the use of the mails, proxies may be solicited
personally, or by telephone and facsimile transmission, by directors, officers
and regular employees of the Company who will not receive additional
compensation therefor. Additionally, banks, brokerage houses and other
institutions, nominees and fiduciaries will be requested to forward the
soliciting material to their principals and to obtain authorization for the
execution of proxies. The Company will, upon request, reimburse such
institutions for their reasonable expenses in forwarding proxy materials to
their principals.
ELECTION OF DIRECTORS
GENERAL
The Company's by-laws authorize the Board of Directors to fix the size of the
Board. Pursuant thereto, the Board has fixed the number of directors at nine.
The Board has nominated four persons for election as directors at the meeting
and proxies cannot be voted for more than four persons. The terms of three
directors, James W. Cain, William W. Crawford and Richard LaTrace will expire
at the annual meeting, and the Board has one vacancy resulting from a
resignation in June 1995. Messrs. Cain and Crawford currently are serving
three-year terms that expire at the annual meeting and are being nominated for
re-election for three-year terms expiring in 1998. Mr. LaTrace was appointed to
the Board in June 1995 to fill a vacancy and is being nominated for election
for a three-year term expiring in 1998. Timothy E. Kullman does not currently
serve on the Board and is being nominated for election for a one-year term
expiring in 1996.. Unless authority to vote for the election of directors is
withheld, all shares represented by the enclosed form of proxy will be voted in
favor of the election of each of the four nominees listed below. Under the
Company's by-laws, directors are elected by plurality vote. If any nominee
becomes unavailable for election, proxies in the enclosed form will be voted
for such person, if any, as may be designated by the Board of Directors.
Management has no reason to believe that any nominee will be unavailable. Under
the Company's by-laws, a shareholder may nominate one or more persons for
election as directors only if written notice of such
shareholder's intent to make such nomination, together with certain other
information, has been given to the Secretary of the Company at least 90 days in
advance of the annual meeting. Because no shareholder has given such notice to
the Secretary, no other nominations will be accepted at the annual meeting.
INFORMATION WITH RESPECT TO DIRECTORS
Set forth below is information regarding the age and principal occupation or
employment of each director. Unless otherwise indicated, each director has been
engaged in the principal occupation shown for more than the past five years.
FIRST NOMINATED
NAME, AGE, PRINCIPAL OCCUPATION AND ELECTED FOR TERM
DIRECTORSHIPS IN OTHER PUBLIC COMPANIES DIRECTOR EXPIRING
--------------------------------------- -------- ---------
NOMINEES FOR ELECTION:
James M. Cain, 62(1)(2)(3)................................. 1990 1998
Retired Vice Chairman, Entergy Corporation (electric and
gas utility holding company); Director, Whitney Holding
Corporation (bank holding company)
William W. Crawford, 66(1)(2)(4)........................... 1977 1998
Retired Senior Vice President and Secretary, Kraft, Inc.
(food, consumer and commercial products company)
Timothy E. Kullman, 39(5).................................. 1996
Senior Vice-President, Chief Financial Officer, Treasurer
and Secretary of the Company
Richard W. La Trace, 58(6)................................. 1998
President of the Company
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOUR NOMINEES NAMED
ABOVE.
FIRST SERVING
NAME, AGE, PRINCIPAL OCCUPATION AND ELECTED TERM
DIRECTORSHIPS IN OTHER PUBLIC COMPANIES DIRECTOR EXPIRING
--------------------------------------- -------- --------
OTHER DIRECTORS:
Carl F. Bailey, 63(1)(2)(7).................................. 1987 1996
Retired President and Chief Executive Officer, South Central
Bell Telephone Company, Retired Vice Chairman, BellSouth
Telecommunications, Inc.
John A. Caddell, 65(1)(2).................................... 1977 1996
President and Chief Executive Officer, Caddell Construction
Company Inc.
J. Thomas Arendall, Jr., 53(1)(2)(8)......................... 1991 1997
President Arendall and Associates, Inc. (professional and
business services provider)
E. E. Bishop, 64(1)(2)(9).................................... 1989 1997
Member of Board of Directors, Morrison Restaurants Inc.
(cafeteria and specialty restaurant company)
David W. Morrow, 63(1)(10)................................... 1997
Chairman and Chief Executive Officer of the Company;
Director, Furr's Supermarkets, Inc.
--------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(Notes continued on following page)
2
(3) Mr. Cain retired September 1, 1993 as Vice Chairman of Entergy Corporation,
a position he had held since February 1991. Prior to that time he was
Chairman and Chief Executive Officer of Louisiana Power & Light Co. and New
Orleans Public Service, Inc., both subsidiaries of Entergy.
(4) Prior to September 1988, Mr. Crawford also served as Kraft's general
counsel. He retired from Kraft in December 1988.
(5) Mr. Kullman joined the Company on August 22, 1994 as Senior Vice-President
and Chief Financial Officer. In 1995 he was also named Treasurer and
Secretary. From August 1989 to July 1994, Mr. Kullman served as Senior
Vice-President, Chief Financial Officer and Secretary of Farm Fresh, Inc.,
a retail grocery chain.
(6) Mr. LaTrace was named President of the Company in June 1995 . He served as
President and Chief Operating Officer of XTRA Super Foods, Inc. from July
1992 until his retirement in November 1993 and served as President of
Corporate Retail for Wetterau, Inc. from December 1990 to July 1992.
(7) In October 1991, Mr. Bailey retired as President and Chief Executive
Officer of South Central Bell Telephone Company and Vice Chairman of
BellSouth Telecommunications, Inc.
(8) Mr. Arendall has served as President of Arendall and Associates, Inc. since
October 1992. From May 1992 until its incorporation in October 1992, Mr.
Arendall was a partner of Arendall and Associates. Prior to May 1992 he was
principally employed as President of Gulf Furniture Stores, Inc.
(9) Prior to June 1992, Mr. Bishop also served as Chief Executive Officer of
Morrison Restaurants, Inc.
(10) Mr. Morrow was named Chairman of the Board and Chief Executive Officer of
the Company in April 1995. In 1994, Mr. Morrow retired as President and
Chief Executive Officer of Pueblo International, Inc., a supermarket chain
("Pueblo"). Mr. Morrow served as Chairman and Chief Executive Officer of
Pueblo from 1991 to 1993 and as President and Chief Operating Officer from
1983 to 1991.
----------------
During the Company's last fiscal year the Board of Directors held six
meetings. The Board has a Compensation Committee and an Audit Committee. The
Audit Committee met three times during the last fiscal year with the Company's
internal auditor and with its independent public accountants to review their
accounting, financial and audit reports, their recommendations for improvements
in internal accounting controls and their audit plan for the 1995 annual audit.
The Compensation Committee, which met five times during the last fiscal year,
sets all officers' compensation and administers the Company's incentive
compensation plans. No director attended fewer than 75% of the total number of
meetings of the Board and the committees on which he served.
COMPENSATION OF DIRECTORS
During the last fiscal year each director not otherwise employed by the
Company received an annual retainer of $16,000 as well as a fee of $1,500 for
each Board meeting attended and $650 for each Audit or Compensation Committee
meeting attended. A director may elect to defer his retainer and meeting fees
until the earlier of the director's 70th birthday or the date the director
ceases to be a member of the Board. Deferred amounts earn interest at a rate
equal to the interest paid on 90-day U.S. Treasury bills. Directors may also
choose to use their retainer and meeting fees to purchase Company Common Stock
at a 10% discount from its current trading price.
A special ad hoc committee of the Board was established during the last
fiscal year to review the performance of the chief executive officer. Each
member of the committee was paid $1000 per day for each of the five days on
which the committee met. An ad hoc committee was also established during the
last fiscal year to search for a new president. Each member was paid $650 for
each of the two meetings held by the committee.
3
SECURITY HOLDINGS OF DIRECTORS, EXECUTIVE OFFICERS AND
CERTAIN BENEFICIAL OWNERS
SECURITY HOLDINGS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning the beneficial
ownership of Common Stock of the Company by each director, by each nominee for
director, by each executive officer (or former executive officer) for whom
compensation information is disclosed under the heading "Summary of Executive
Compensation" and by all directors and current executive officers of the
Company as a group, as of September 13, 1995, determined in accordance with
Rule 13d-3 of the Securities and Exchange Commission. Unless otherwise
indicated, the Common Stock shown is held with sole voting and investment
power.
NUMBER OF PERCENT
NAME OF BENEFICIAL OWNER SHARES OF CLASS
------------------------ --------- --------
DIRECTORS AND NOMINEES FOR DIRECTOR
J. Thomas Arendall, Jr............................... 572 *
Carl F. Bailey....................................... 1,000 *
E. E. Bishop......................................... 500 *
John A. Caddell...................................... 2,824 *
James M. Cain........................................ 600 *
William W. Crawford.................................. 5,004(1) *
Timothy E. Kullman................................... 0 0
Richard W. LaTrace................................... 0 0
David W. Morrow...................................... 105,000(2) 1.4%
NAMED EXECUTIVE OFFICERS WHO ARE NOT ALSO DIRECTORS OR NOMINEES
Randy Delchamps(3)................................... 254,723(4) 3.6%
Patrick C. Curran.................................... 0 0
Larry S. Griffin..................................... 10,526(5) *
Hugh C. Van Hooser(6)................................ 23,045(7) *
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (8).. 140,884 1.9%
--------
* Less than 1%.
(1) Includes 500 shares held of record by Mr. Crawford's wife.
(2) Includes 100,000 shares entitled to be acquired pursuant to currently
exercisable stock options.
(3) Mr. Delchamps resigned as Chairman of the Board, President and Chief
Executive Officer on April 13, 1995.
(4) Includes 9,666 shares held of record by Mr. Delchamps' wife and 60,000
shares entitled to be acquired pursuant to currently exercisable stock
options.
(5) Includes 40 shares held of record by Mr. Griffin's wife and 3,166 shares
entitled to be acquired within 60 days upon the exercise of stock options.
(6) Mr. Van Hooser retired July 1, 1995.
(7) Includes 7,250 shares entitled to be acquired pursuant to currently
exercisable stock options.
(8) Includes only current directors and executive officers.
SECURITY HOLDINGS OF CERTAIN BENEFICIAL OWNERS
NUMBER OF PERCENT
NAME AND ADDRESS SHARES OF CLASS
---------------- --------- --------
First Alabama Bank
Trustee fbo Delchamps, Inc.
Employee Stock Ownership Trust(1).................... 1,318,606 18.55%
Post Office Drawer 2527
Mobile, Alabama 36622
GAMCO Investors, Inc., Gabelli Funds Inc.,
Gabelli & Company, Inc., Mario J. Gabelli, Gabelli
International
Limited (2)......................................... 1,044,229 14.68%
One Corporate Center
Rye, New York 10580-1434
Heine Securities Corporation(3)...................... 461,879 6.50%
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
4
--------
(1) Shares held by the Trustee are voted according to the instructions of each
participating employee to the extent of the number of shares allocated to
his account on all matters submitted to a vote of shareholders. Unallocated
shares are required to be voted as a block in the same manner as a majority
of the allocated shares.
(2) As reported on Amendment No. 13 to Schedule 13D dated April 21, 1995 and
filed with the Securities and Exchange Commission. A total of 99,029 of
such shares are held with sole investment power only.
(3) As reported on Schedule 13G dated January 18, 1995 and filed with the
Securities and Exchange Commission.
EXECUTIVE COMPENSATION
SUMMARY OF EXECUTIVE COMPENSATION
The following table sets forth information with respect to compensation paid
by the Company for services rendered in all capacities during the fiscal years
ended July 3, 1993, July 2, 1994 and July 1, 1995 to each person who served as
the Chief Executive Officer during the last fiscal year and to each of the four
other most highly compensated persons who served as executive officers of the
Company during the last fiscal year and whose salary and bonus exceeded
$100,000.
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------- ------------
AWARDS
------------
SECURITIES
NAME AND PRINCIPAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
------------------ ---- -------- -------- ------------ ------------
David W. Morrow, Chair-
man of the 1995 $112,000 -- 100,000 --
Board and Chief Execu-
tive Officer(1)
Randy Delchamps, Chair-
man 1995 342,630 -- 30,000(2) $1,126,388(3)
of the Board, President 1994 348,920 -- 30,000(2) 4,905(4)
and Chief Executive Of-
ficer(5) 1993 323,300 $201,739 -- 5,108(4)
Patrick C. Curran, Se-
nior Vice President 1995 152,351 -- 7,500 39,846(6)
of Merchandising 1994 32,105 -- --
Timothy E. Kullman, Se-
nior Vice 1995 131,149 -- 5,000 43,500(6)
President, Chief Finan-
cial Officer,
Treasurer and Secre-
tary(7)
Larry S. Griffin, Vice 1995 118,948 -- 2,500 5,144(9)
President of Real Es-
tate(8) 1994 135,200 -- 3,500 4,016(4)
1993 132,500 57,876 -- 2,956(4)
Hugh C. Van Hooser, Se-
nior Vice 1995 111,917 -- 3,750(11) 447,982(12)
President of Retail Op-
erations(10) 1994 106,600 -- 3,500(11) 3,122(4)
1993 99,558 43,487 -- 2,220(4)
--------
(1) Mr. Morrow was named Chairman and Chief Executive Officer April 14, 1995.
(2) Under the original terms of Mr. Delchamps' options, unexercisable options
would be forfeited at the time of termination of employment and all
exercisable options would be forfeited if not exercised within thirty days
after termination of employment. In connection with Mr. Delchamps'
severance arrangements, the option terms were amended to provide that all
options would be exercisable for five years after their date of grant.
(3) Consists of $2,329 in Company contributions under the Company's 401(k)
Plan, $968,959 in severance benefits and a $155,100 longevity bonus.
(4) Consists of Company contributions under the Company's Employee Stock
Ownership Plan.
(5) Mr. Delchamps' resigned April 13, 1995.
(Notes continued on following page)
5
(6) Consists of reimbursement of relocation expenses.
(7) Mr. Kullman joined the Company August 22, 1994.
(8) Mr. Griffin holds 9,000 shares of restricted stock awarded to him in
fiscal year 1989 with a value of $173,250 based on the closing sale price
of the Common Stock on June 30, 1995.
(9) Consists of $2,573 in Company contributions under the Company's Employee
Stock Ownership Plan and $2,571 in Company contributions under the
Company's 401(k) Plan.
(10) Mr. Van Hooser retired from the Company July 1, 1995.
(11) Under the original terms of Mr. Van Hooser's options, unexercisable
options would be forfeited at the time of retirement and all exercisable
options would be forfeited if not exercised within one year of retirement.
In connection with Mr. Van Hooser's severance arrangements, the option
terms were amended to provide that all options would be exercisable for
five years following their date of grant.
(12) Consists of $2,421 in Company contributions under the Company's Employee
Stock Ownership Plan, $2,498 in Company contributions under the Company's
401(k) Plan, $365,188 in severance benefits and a $77,875 longevity bonus.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
---------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENTAGE OF ASSUMED ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION -----------------------------
NAME GRANTED(1) FISCAL YEAR PRICE DATE 5% 10%
---- ---------- ------------- -------- ---------- -----------------------------
David Morrow(1)......... 100,000 45.40% $17.875 04/13/00 $496,000 $1,091,287
Randy Delchamps(1)...... 30,000 13.62% 18.50 10/15/99 349,037 884,527
Patrick C. Curran(2).... 7,500 3.41% 18.50 10/15/04 87,259 221,131
Timothy E. Kullman(2)... 5,000 2.27% 18.50 10/15/04 58,172 147,421
Larry S. Griffin(2)..... 2,500 1.14% 18.50 10/15/04 29,086 73,711
Hugh C. Van Hooser(1)... 3,750 1.70% 18.50 10/15/99 43,630 110,565
--------
(1) The options are exercisable at any time before expiration.
(2) The options become exercisable in one-third annual increments, unless the
Committee elects to accelerate exercisability. In addition, the options
automatically become exercisable in the event of a change of control of the
Company.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES FISCAL YEAR END FISCAL YEAR END
ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
David W. Morrow......... None $0 100,000 -- $137,500 --
Randy Delchamps......... None 0 60,000 -- 22,500 --
Patrick C. Curran....... None 0 -- 7,500 -- $5,625
Timothy E. Kullman...... None 0 -- 5,000 -- 3,750
Larry S. Griffin........ None 0 1,166 4,834 -- 1,875
Hugh C. Van Hooser...... None 0 7,250 -- 5,437 --
6
CHANGE OF CONTROL AGREEMENTS
The Company has entered into change of control agreements with each of the
executive officers named in the Summary Compensation Table other than David W.
Morrow. The purpose of the agreements is to diminish the inevitable distraction
of executives by the personal economic concerns and anxieties that are created
by the possibility, threat or occurrence of a change of control and, thereby,
to encourage the continued dedication of the executives to advancing the
Company's business interests during such periods of uncertainty.
The agreements do not constitute employment contracts and only apply in
circumstances following a change of control. The agreements provide that
certain employment and severance arrangements become effective if a change of
control, as defined in the agreements, occurs within three years from the date
of the agreements, with automatic annual extensions unless terminated after
notice by the Company.
If a change of control occurs during the term of the agreements, the
agreements provide for continued employment of the executives, in at least
comparable positions with at least comparable compensation and benefits, for
three years following the change of control. If the Company terminates an
executive's employment during such three-year period other than for cause or
disability or if the executive terminates employment for good reason, the
executive is entitled to receive, in addition to other accrued amounts such as
vacation pay, a lump sum in cash equal to three times his annual base salary
and bonus. An executive who continues employment for one year after a change of
control earns a special bonus equal to his annual salary and bonus. In
addition, an executive who continues employment for such one-year period may
terminate employment during the 30-day period immediately following without any
reason and receive the same benefits as if he had terminated for good reason.
The agreements further provide for payment to the executive of an amount equal
to the excise tax, if any, payable by the executive on his severance benefits.
Health and other welfare benefits continue, following termination, for the
remainder of the three-year period.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last fiscal year, all members of the Board of Directors of the
Company, other than Randy Delchamps, David W. Morrow, and Richard W. LaTrace,
served on the Compensation Committee. None of the members of the Compensation
Committee have been officers or employees of the Company or any of its
subsidiaries. No executive officer of the Company served in the last fiscal
year as a director or a member of the compensation committee of another entity,
one of whose executive officers served as a director or on the Compensation
Committee of the Company.
The Company leases ten of its supermarkets under standard commercial leases
from ten partnerships in which T. W. Mitchell, a former director who served on
the Compensation Committee, owns general partnership interests ranging from
6.67% to 20%. Each of these leases has an initial term of 20 years and several
renewal options. The Company paid an aggregate of $3,967,097 in rental payments
to these ten partnerships during the fiscal year ended July 1, 1995.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for review and administration of the Company's executive
compensation program. The Committee's strategy is to develop and implement an
executive compensation program that allows the Company to attract and retain
highly qualified persons to manage the Company in order to enhance shareholder
value. The objectives of this strategy are to provide a compensation package
that permits the recognition of individual contributions and achievements as
well as Company results. Within this strategy, the Committee considers it
essential to the vitality of the Company to maintain levels of compensation
opportunity that are competitive with similar companies in the grocery
industry. The Committee recommends to the entire Board salary levels for the
executive officers of the Company. The Committee also administers the Company's
annual incentive plan
7
and the 1993 Stock Incentive Plan. In its deliberations, the Committee takes
into account the recommendations of appropriate Company officials and
independent professional compensation consultants.
Decisions with respect to severance benefits provided to Randy Delchamps
(other than decisions with respect to stock options and restricted stock) were
made by the full Board. For that reason, the full Board joins in this report.
Under the Omnibus Budget Reconciliation Act ("OBRA") enacted in 1993,
publicly held companies may be prohibited from deducting as an expense for
federal income tax purposes total compensation in excess of $1 million paid to
certain executive officers in a single year. However, OBRA provides an
exception for compensation that qualifies as "performance based." The Committee
has not taken any action to qualify any portion of executive compensation as
performance based. The Committee will periodically evaluate compensation levels
and may determine to take action in the future to ensure that all executive
compensation paid will be deductible.
Base Salaries
Salaries for executive officers, including the Chief Executive Officer, are
generally based on evaluations of the executives' performance, their
contributions to the performance of the Company, their responsibilities,
experience and potential, and compensation practices for comparable positions
at other companies in the grocery industry. The base salary opportunities are
targeted at the 50th percentile of a large group of both public and private
supermarket chains. The comparison group includes the companies that make up
the Dow Jones Food Retailers Index but is weighted more heavily toward
supermarket chains similar in size to the Company. Incremental amounts may be
earned above the 50th percentile for outstanding performance.
The Committee agreed to pay David W. Morrow a base salary of $10,000 per week
from April 14, 1995 through December 31, 1995 to serve as the Company's Chief
Executive Officer. The level of salary agreed to was based upon the Committee's
subjective evaluation of the Company's immediate need for a qualified leader,
Mr. Morrow's extensive prior experience and the responsibilities he would
assume.
Annual Incentive Compensation
Executive officers are eligible for annual incentive awards. These awards are
not in addition to market level compensation but are designed to place a
significant part of an executive's annual compensation at risk. The Chief
Executive Officer's award is based on corporate performance measured against
pre-tax profit objectives set by the Committee at the beginning of the year.
Awards to other executive officers are based on the same corporate performance
measure and on individual achievement of specified objectives established by
the Chief Executive Officer at the beginning of the year. Targeted awards are a
percentage of the executive officer's base salary ranging from 25% to 60% based
on the officer's position and salary grade. Awards based on Company performance
may range from 50% of target for exceeding a threshold profit level to a
maximum award of 75% greater than target for achieving or exceeding a maximum
pre-tax profit goal. At year-end, individual performance of the other executive
officers is evaluated against pre-established objectives. The resulting
performance evaluation produces a multiplier that may increase or decrease an
executive's incentive compensation award by up to 15%. No bonuses were paid to
executive officers for 1995 because the minimum pre-tax profit objectives set
by the Committee were not achieved. Mr. Morrow was not eligible to receive an
annual incentive award for fiscal year 1995.
The combination of base salary and an annual incentive award are intended to
provide an executive the opportunity to earn total compensation slightly above
the 50th percentile of the competitive marketplace if Company and individual
goals are achieved.
Long-Term Incentive Plan
To be consistent with the Company's executive compensation philosophy, the
Committee recommends that a significant portion of total executive compensation
be tied directly to shareholders' results. Toward
8
that end, the Board of Directors adopted the 1993 Stock Incentive Plan (the
"Incentive Plan") and the Incentive Plan was approved by the Company's
shareholders at the 1993 annual meeting. Stock options and other stock
incentives are an integral part of the Company's executive compensation program
in order to align the interests of the executive officers with the interests of
the Company's shareholders. The Committee granted stock options to the
Company's executive officers in fiscal 1995 and intends to grant stock options
annually through the Incentive Plan to provide officers with the opportunity to
buy and maintain an equity interest in the Company, thereby encouraging them to
direct their efforts toward appreciation of the value of the Company's common
shares. The number of options that a particular executive officer receives is
generally based upon the officer's base salary and level of responsibility. The
options granted have an exercise price equal to the fair market value of the
shares on the grant date and, to encourage a long-term perspective, generally
vest over three years and have a ten-year term. Mr. Morrow was granted 100,000
immediately exercisable options with a five year term. Mr. Morrow was granted
these options to compensate him for assuming the positions of Chairman,
President and Chief Executive Officer and to provide him with a short-term and
long-term incentive in lieu of an annual bonus for fiscal 1995. Stock option
compensation bears a direct relationship to corporate performance in that, over
the long term, share price appreciation depends upon corporate performance, and
without share price appreciation the options are of no value.
Severance Arrangements
In connection with its acceptance of the resignation of Randy Delchamps as
Chairman, President and Chief Executive Officer, the Board approved the payment
of severance benefits to Mr. Delchamps after consulting with an independent
executive compensation consultant. The consultant advised the Board that the
terms of the severance package provided to Mr. Delchamps were reasonable and
consistent with severance packages provided to chief executives of companies
comparable to the Company.
Submitted by the Compensation Committee and the Board of Directors.
J. Thomas Arendall, Jr. James M. Cain
Carl F. Bailey William W. Crawford
E. E. Bishop Richard W. LaTrace*
John A. Caddell David W. Morrow*
*Board member only
9
PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on the
Company's Common Stock for the last five fiscal years with the cumulative total
return on the S&P 500 Index and the Dow Jones Food Retailers Index, in each
case assuming the investment of $100 on July 1, 1990 at closing prices on June
30, 1990 and the reinvestment of dividends. The Dow Jones Food Retailers Index
consists of the following eleven companies and is published periodically in the
Wall Street Journal: Albertson's, Inc., American Stores Company, Bruno's, Inc.,
Fleming Companies Inc., Food Lion, Inc, Giant Food Inc., The Great Atlantic &
Pacific Tea Company, Inc., The Kroger Company, SUPERVALU INC., The Vons
Companies, Inc. and Winn-Dixie Stores, Inc.
COMPARISON OF DELCHAMPS, INC., S&P 500 AND
DOW JONES FOOD RETAILERS INDEX
6/90 6/91 6/92 6/93 6/94 6/95
------ ------ ------ ------ ------ ------
Delchamps 100.00 104.00 79.00 77.50 91.00 77.00
S&P 500 100.00 103.67 114.00 125.84 124.09 152.16
Dow Jones Food Retailers Index 100.00 117.89 126.87 125.35 121.67 151.20
10
CERTAIN TRANSACTIONS
In addition to the resignation of Randy Delchamps and the retirement of Hugh
C. Van Hooser, the Company's employment relationship with six other executive
officers was terminated during fiscal year 1995. Those officers were John D.
Foshee, Vice President, Real Estate; Roy W. Henderson, Vice President, Finance
and Treasurer; Donald A. Mathews, Vice President, Distribution; James H.
McDonald, Jr., Vice President and General Counsel; George J. Waldron, III,
Senior Vice President, Marketing and Corporate Relations; and Robert E.
Whitlock, Vice President, Engineering. In connection with their termination of
employment, those individuals received severance packages with values of
approximately $330,000, $652,000, $121,114, $222,328, $337,565 and $145,564,
respectively, including longevity bonuses of $30,510 and $41,803, respectively,
paid to Messrs. Henderson and Waldron. The severance arrangements with Messrs.
Henderson, McDonald and Foshee were provided in settlement of litigation
initiated by them against the Company alleging, among other things, that their
employment had been wrongfully terminated.
For information concerning certain financial transactions between the Company
and T. W. Mitchell, a former director who served on the Compensation Committee,
see "Executive Compensation--Compensation Committee Interlocks and Insider
Participation."
PROPOSAL TO RATIFY THE SELECTION OF
INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors has
approved the retention of KPMG Peat Marwick LLP ("Peat Marwick") as independent
auditors of the Company for the fiscal year ending June 29, 1996, which
selection will be submitted to the shareholders for ratification. Peat Marwick
was initially engaged as the Company's independent auditors in connection with
its initial public stock offering in late 1983 and has continued to serve in
that capacity. If shareholders do not ratify the Board of Directors' selection
of Peat Marwick by the affirmative vote of at least a majority of the shares of
Common Stock represented at the meeting in person or by proxy, the selection of
independent auditors will be reconsidered by the Board.
Representatives of Peat Marwick are expected to be present at the Annual
Meeting and will have an opportunity to make a statement if they desire to do
so. Such representatives will also be available at the meeting to respond to
appropriate questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
11
OTHER MATTERS
SHAREHOLDER PROPOSALS
Any shareholder who desires to present a proposal qualified for inclusion in
the Company's proxy materials for the 1996 annual meeting must forward the
proposal in writing to the Secretary of the Company at the address shown on the
first page of this proxy statement in time to arrive at the Company no later
than May 21, 1996.
QUORUM AND VOTING OF PROXIES
The presence at the meeting, in person or by proxy, of the holders of a
majority of the Common Stock of the Company entitled to vote is necessary to
constitute a quorum. Shareholders voting, or abstaining from voting, by proxy
on any issue will be counted as present for purposes of constituting a quorum.
If a quorum is present, the election of directors is determined by plurality
vote; however the affirmative vote of a majority of the shares present or
represented by proxy and entitled to vote is required to ratify the appointment
of auditors.
The Board of Directors does not know of any matters other than those
described in this proxy statement that will be presented for consideration at
the meeting. If any other matter should properly be so presented, it is
intended that the proxies in the accompanying form will be voted on the matter
in accordance with the judgment of the person or persons voting them.
BY ORDER OF THE BOARD OF DIRECTORS
(SIGNATURE OF TIMOTHY E. KULLMAN
APPEARS HERE)
TIMOTHY E. KULLMAN
Senior Vice President, Chief
Financial
Officer, Treasurer and Secretary
Mobile, Alabama
September 18, 1995
YOUR VOTE IS IMPORTANT. PLEASE PROMPTLY COMPLETE AND
SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE
ACCOMPANYING POSTPAID ENVELOPE.
12
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
DELCHAMPS, INC.
The undersigned hereby appoints Timothy E. Kullman, Richard W. La Trace,
David W. Morrow, or any one of them, as proxies, each with the power to appoint
his substitute, and hereby authorizes each of them to represent and to vote, as
designated below, all the shares of common stock of Delchamps, Inc. (the
"Company") held of record by the undersigned on September 13, 1995, at the
annual meeting of shareholders to be held on October 24, 1995, or at any
adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
1. Election of Directors.
FOR [_] WITHHOLD AUTHORITY [_]
all nominees listed below to vote for all nominees
(except as marked to the contrary below)
listed below
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
James M. William W. Richard W. Timothy E.
Cain Crawford La Trace Kullman
for a term for a term for a term for a term
expiring expiring expiring expiring
1998 1998 1998 1996
2. Proposal to ratify the selection of KPMG Peat Marwick LLP as independent
auditors for the fiscal year ending June 29, 1996.
[_] FOR[_] AGAINST[_] ABSTAIN
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2. THE INDIVIDUALS DESIGNATED AS PROXIES ON THE
REVERSE SIDE HEREOF ARE AUTHORIZED TO VOTE IN THEIR DISCRETION ON ANY OTHER
MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
Date: ____________, 1995 -----------------------------------------------------
Signature of Shareholder
-----------------------------------------------------
Signature if held jointly
Please sign exactly as name appears on the
certificate or certificates representing shares
to be voted by this proxy. When signing as
executor, administrator, attorney, trustee or
guardian, please give full title as such. If a
corporation, please sign full corporate name by
president or other authorized officer. If a
partnership, please sign in partnership name by
authorized persons.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
VOTING INSTRUCTIONS
The undersigned hereby instructs First Alabama Bank, as trustee of the
Delchamps, Inc. Employee Stock Ownership Trust, to vote in the manner
designated below all shares of Delchamps, Inc. Common Stock held by such Trust
for the account of the undersigned on September 13, 1995, at the annual meeting
of shareholders to be held on October 24, 1995, or at any adjournment thereof.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
1. Election of Directors.
FOR [_] WITHHOLD AUTHORITY [_]
all nominees listed below to vote for all nominees
(except as marked to the contrary below)
listed below
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
James M. William W. Richard W. Timothy E.
Cain Crawford La Trace Kullman
for a term for a term for a term for a term
expiring expiring expiring expiring
1998 1998 1998 1996
2. Proposal to ratify the selection of KPMG Peat Marwick LLP as independent
auditors for the fiscal year ending June 29, 1996.
[_] FOR[_] AGAINST[_] ABSTAIN
UPON RECEIPT OF THESE INSTRUCTIONS PROPERLY EXECUTED, THE SHARES HELD FOR THE
ACCOUNT OF THE UNDERSIGNED WILL BE VOTED IN THE MANNER DIRECTED. IF THESE
INSTRUCTIONS ARE PROPERLY EXECUTED BUT NO DIRECTION IS GIVEN, SUCH SHARES WILL
BE VOTED FOR PROPOSALS 1 AND 2. THE TRUSTEE IS AUTHORIZED TO VOTE ALL SHARES
HELD BY IT IN ITS DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE
THE MEETING.
Date: ____________, 1995 -----------------------------------------------------
Signature of Participant
-----------------------------------------------------
Name: Please Print
PLEASE MARK, SIGN, DATE AND RETURN THESE INSTRUCTIONS PROMPTLY USING THE
ENCLOSED ENVELOPE.
VOTING INSTRUCTIONS
The undersigned hereby instructs First Alabama Bank, as trustee of the
Delchamps, Inc. Retirement Savings Plan, to vote in the manner designated below
all shares of Delchamps, Inc. Common Stock held by such Trust for the account
of the undersigned on September 13, 1995, at the annual meeting of shareholders
to be held on October 24, 1995, or at any adjournment thereof.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
1. Election of Directors.
FOR [_] WITHHOLD AUTHORITY [_]
all nominees listed below to vote for all nominees
(except as marked to the contrary below)
listed below
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
James M. William W. Richard W. Timothy E.
Cain Crawford La Trace Kullman
for a term for a term for a term for a term
expiring expiring expiring expiring
1998 1998 1998 1996
2. Proposal to ratify the selection of KPMG Peat Marwick LLP as independent
auditors for the fiscal year ending June 29, 1996.
[_] FOR[_] AGAINST[_] ABSTAIN
UPON RECEIPT OF THESE INSTRUCTIONS PROPERLY EXECUTED, THE SHARES HELD FOR THE
ACCOUNT OF THE UNDERSIGNED WILL BE VOTED IN THE MANNER DIRECTED. IF THESE
INSTRUCTIONS ARE PROPERLY EXECUTED BUT NO DIRECTION IS GIVEN, SUCH SHARES WILL
BE VOTED FOR PROPOSALS 1 AND 2. THE TRUSTEE IS AUTHORIZED TO VOTE ALL SHARES
HELD BY IT IN ITS DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE
THE MEETING.
Date: ____________, 1995 -----------------------------------------------------
Signature of Participant
-----------------------------------------------------
Name: Please Print
PLEASE MARK, SIGN, DATE AND RETURN THESE INSTRUCTIONS PROMPTLY USING THE
ENCLOSED ENVELOPE.