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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
Fleming Companies, Inc.
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(Name of Registrant as Specified In Its Charter)
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[FLEMING COMPANIES, INC. LOGO] A GREAT PLACE TO WORK
A GREAT PLACE TO TRADE
A GREAT PLACE TO INVEST
FLEMING COMPANIES, INC. NOTICE OF 2001 ANNUAL MEETING
1945 Lakepointe Drive AND PROXY STATEMENT
Lewisville, Texas 75057
Dear Fellow Shareholders:
Please come to our annual meeting on May 15, 2001. We are holding this
year's meeting at 10:00 a.m. Central Time at our Customer Support Center, 1945
Lakepointe Drive, Lewisville, Texas. You will hear about our performance for
fiscal 2000 and have the opportunity to ask questions. Enclosed with this proxy
statement are your proxy card, our 2000 Form 10-K, and our 2000 annual report.
We first mailed these materials to shareholders on April 3, 2001.
I look forward to seeing you at our annual meeting.
Sincerely,
Mark S. Hansen
Chairman and Chief Executive Officer
April 3, 2001
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FLEMING COMPANIES, INC.
1945 LAKEPOINTE DRIVE
LEWISVILLE, TEXAS 75057
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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TIME.................................. 10:00 a.m. on Tuesday, May 15, 2001
PLACE................................. Customer Support Center
1945 Lakepointe Drive
Lewisville, Texas
ITEMS OF BUSINESS..................... (1) To elect seven members to the board
of directors to serve for one year
terms.
(2) To ratify the selection of Deloitte
& Touche LLP as our independent
auditors for the 2001 fiscal year.
(3) To approve our Key Executive
Retention Plan.
(4) To transact such other business as
may properly come before the meeting
and any adjournment or postponement.
RECORD DATE........................... You can vote if you are a shareholder of
record on March 19, 2001.
LIST OF SHAREHOLDERS.................. A list of shareholders entitled to vote
at the meeting will be made available
for examination by any shareholder, for
any purpose germane to the meeting,
during ordinary business hours, for a
period of ten days prior to the meeting
at the Customer Support Center, 1945
Lakepointe Drive, Lewisville, Texas.
PROXY VOTING.......................... It is important that your shares be
represented and voted at the meeting.
Please vote in one of these ways:
PLEASE NOTE THAT ALL VOTES CAST VIA
TELEPHONE
OR THE INTERNET MUST BE CAST BEFORE
12:00 A.M. EASTERN DAYLIGHT SAVINGS
TIME
ON TUESDAY, MAY 15, 2001. (1) MARK, SIGN, DATE AND PROMPTLY
RETURN the enclosed proxy card in the
postage-paid envelope, or
(2) CALL 1-877-PRX-VOTE (1-877-779-8683)
from the U.S. and Canada, OR
(3) LOG ON to the following web address:
http://www.eproxyvote.com/flm
Any proxy may be revoked at any time
prior to its exercise at the meeting.
APRIL 3, 2001 Carlos M. Hernandez
Senior Vice President,
General Counsel and Secretary
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QUESTIONS AND ANSWERS
Q: WHAT AM I VOTING ON?
A: You are voting on three things:
- election of seven directors (Herbert M. Baum, Kenneth M. Duberstein,
Archie R. Dykes, Carol B. Hallett, Robert S. Hamada, Mark S. Hansen
and Guy A. Osborn),
- ratification of Fleming's independent auditors for the 2001 fiscal
year, and
- approval of our Key Executive Retention Plan. (A copy of the plan is
attached as Exhibit A.)
Q: WHO IS ENTITLED TO VOTE?
A: Shareholders as of the close of business on
March 19, 2001 (the record date). Each share of common stock is
entitled to one vote.
Q: HOW DO I VOTE?
A: In addition to attending the meeting and
casting your vote in person, you may either:
- Mark your selection on the enclosed proxy card, date and sign the
card, and return the card in the enclosed envelope; or
- Dial 1-877-PRX-VOTE (1-877-779-8683) from the U.S. and Canada, enter
your control number (found on your proxy card) and follow the voice
prompts; or
- Go to the following website: http://www.eproxyvote.com/flm enter your
control number and follow the simple instructions on the screen.
Q: IF I VOTE BY TELEPHONE OR INTERNET,
DO I NEED TO RETURN MY PROXY CARD?
A: No.
Q: WHAT IS THE DIFFERENCE BETWEEN
VOTING VIA TELEPHONE OR THE INTERNET OR RETURNING A PROXY CARD AND
VOTING IN PERSON?
A: Voting by proxy, regardless of whether it is via
telephone or the internet or by returning your proxy card by mail,
appoints Mark S. Hansen, our chairman and chief executive officer, Neal
J. Rider, our executive vice president and chief financial officer and
Carlos M. Hernandez, our senior vice president, general counsel and
secretary, as your proxies. They will be required to vote on the three
proposals exactly as you voted. However, if any other matter requiring
a shareholder vote is properly raised at the meeting, then Messrs.
Hansen, Rider and Hernandez are authorized to use their discretion to
vote on the issues on your behalf.
Q: HOW DOES DISCRETIONARY
AUTHORITY APPLY?
A: If you sign your proxy card, but do not make
any selections, you give authority to Mark S. Hansen, Neal J. Rider or
Carlos M. Hernandez to vote on the proposals and any other matter that
may arise at the annual meeting.
Q. IF I VOTE VIA TELEPHONE OR THE
INTERNET OR BY MAILING MY PROXY CARD, MAY I STILL ATTEND THE MEETING?
A: Yes.
Q: WHAT IF I WANT TO CHANGE MY
VOTE?
A: You can revoke your vote at any time before
the meeting.
Q: IS MY VOTE CONFIDENTIAL?
A: Yes, only First Chicago Trust Company, the
inspector of election, Morrow & Co., our proxy solicitor, and certain
employees of Fleming will have access to your voting information. All
comments will remain confidential, unless you ask that your name be
disclosed.
Q: WHO WILL COUNT THE VOTES?
A: First Chicago Trust Company will tabulate
the votes and act as inspector of election.
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Q: WHAT DOES IT MEAN IF I GET MORE
THAN ONE PROXY CARD?
A: Your shares are probably registered differently
or are in more than one account. Vote all proxy cards to ensure that
all your shares are voted. Contact our transfer agent,
(1-800-317-4445), to have your accounts registered in the same name and
address.
Q: WHAT CONSTITUTES A QUORUM?
A: As of March 19, 2001, 39,781,469 shares of
Fleming common stock were issued and outstanding and entitled to vote
at the annual meeting. A majority of the shares entitled to vote,
present in person or represented by proxy, constitutes a quorum. If you
vote by telephone or the internet or by returning your proxy card, you
will be considered part of the quorum. The inspector of election will
treat shares represented by a properly executed proxy as present at the
meeting. Abstentions and broker non-votes are counted for purposes of
determining a quorum. A broker non-vote occurs when a nominee holding
shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power with
respect to that item and has not received instructions from the
beneficial owner.
Q: WHEN ARE THE SHAREHOLDER
PROPOSALS DUE FOR THE YEAR 2002 ANNUAL MEETING?
A: To be included in next year's proxy statement,
shareholder proposals must be received in writing by December 4, 2001
by our corporate secretary. We will include a proposal in next year's
proxy statement if it complies with the rules of the Securities and
Exchange Commission and we are required to include it in our proxy
statement pursuant to the rules of the Securities and Exchange
Commission. In accordance with our bylaws, if a shareholder wishes to
present a proposal for consideration at the 2002 annual meeting, but
not have it included in our proxy statement, he or she must send
written notice of the proposal to our corporate secretary. To be
timely, the notice must be delivered to, or mailed and received at, our
principal executive offices during the period beginning February 14,
2002 and ending March 16, 2002.
Q: HOW DOES A SHAREHOLDER
NOMINATE A DIRECTOR OF FLEMING?
A: Submit a written recommendation
(accompanied by the written consent of the nominee to serve as a
director if elected and a list of the nominee's principal occupations
or employment over the past five years) to our corporate secretary. To
be timely, the notice must be delivered to, or mailed and received at,
our principal executive offices during the period beginning February
14, 2002 and ending March 16, 2002. You can contact our corporate
secretary at Fleming Companies, Inc., 1945 Lakepointe Drive,
Lewisville, Texas 75057.
Q: WHO PAYS THE SOLICITATION
EXPENSES?
A: The accompanying proxy is being solicited on
behalf of the Fleming board of directors, and Fleming pays the cost of
solicitation. We generally solicit proxies by mail, but certain
officers or associates of Fleming may solicit proxies by telephone or
in person without additional compensation. We hired Morrow & Co. to
assist in the distribution of proxy materials and solicitation of votes
for $7,500 plus out-of-pocket expenses. Upon request, we will reimburse
stockbrokers and other custodians, nominees, and fiduciaries for their
reasonable out-of-pocket expenses for forwarding proxy material to the
beneficial owners of shares of our common stock.
Q: WHERE CAN I FIND THE VOTING
RESULTS OF THE MEETING?
A: We will announce voting results at the
meeting, and we will publish final results in our quarterly report on
Form 10-Q for the first quarter of 2001. We will file that report with
the Securities and Exchange Commission. You can get a copy by
contacting either our investor relations department (972-906-8592) or
the Securities and Exchange Commission at 1-800-SEC-0330 or
www.sec.gov.
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PROPOSALS
1. ELECTION OF DIRECTORS
Since 1983, our board of directors has been divided into three classes with each
class serving a three year term. At our annual meeting in 1999, our shareholders
voted to amend our Certificate of Incorporation to phase out classification of
the board of directors. Pursuant to authority in the company's Restated
Certificate of Incorporation, the directors recently voted to increase the
number of members on the board from seven to nine. The board filled one of the
two new vacancies at its meeting in February 2001 by appointing Robert S. Hamada
to the board. The directors recommend that Kenneth M. Duberstein be elected to
the board to fill the remaining vacancy.
The individuals named below are nominated for election as directors to serve one
year terms. Beginning with the annual meeting in 2002, the classification of the
board will terminate and all nominees will be subject to annual election.
Nominees for election this year:
- Kenneth M. Duberstein
Nominees for re-election this year are:
- Herbert M. Baum (director since 1998)
- Archie R. Dykes (director since 1981)
- Carol B. Hallett (director since 1993)
- Robert S. Hamada (director since February 2001)
- Mark S. Hansen (director since 1998)
- Guy A. Osborn (director since 1992)
Each has consented to serve a one year term. (See pages 5-7 for biographical
information.)
If any nominee is unable to stand for re-election, the board may provide for a
lesser number of directors or designate a substitute. In the latter event,
shares represented by proxies may be voted for a substitute nominee.
The seven nominees receiving the highest number of "yes" votes will be elected
as directors. This number is called a plurality. Abstentions and broker
non-votes are not counted for purposes of the election of directors. OUR BOARD
OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES.
2. RATIFICATION OF DELOITTE &
TOUCHE LLP AS INDEPENDENT AUDITORS FOR 2001
Our board of directors, upon recommendation of the audit and compliance
committee, has selected Deloitte & Touche LLP to serve as our independent
auditors for the 2001 fiscal year and is soliciting your ratification of that
selection. Representatives of Deloitte & Touche LLP will attend the annual
meeting, have the opportunity to make a statement if they so desire, and be
available to answer appropriate questions.
The affirmative vote of the majority of shares present in person or by proxy and
entitled to vote at the annual meeting is required to ratify Deloitte & Touche
LLP as independent auditors for 2001. For purposes of approving this proposal,
abstentions are counted as a vote against the proposal and broker non-votes are
not counted. OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS FOR 2001.
3. APPROVAL OF THE FLEMING
COMPANIES, INC. KEY EXECUTIVE RETENTION PLAN.
Subject to shareholder approval, our board of directors has adopted the Fleming
Companies, Inc. Key Executive Retention Plan. The plan authorizes the
compensation and organization committee to grant performance-based cash awards
annually to a limited number of key executives. A description of the plan begins
on page 27. A copy of the plan is attached as Exhibit A.
The affirmative vote of the majority of the shares present in person or by proxy
and entitled to vote at the annual meeting is required to approve the Key
Executive Retention Plan. For purposes of approving the plan, abstentions are
counted as a vote against the proposal and broker non-votes are not counted. OUR
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE KEY EXECUTIVE
RETENTION PLAN.
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BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH NOMINEE.
The persons named on your proxy card intend to vote in favor of the seven
nominees listed below. Should any of these nominees become unavailable for
election, the proxy will be voted for a substitute nominee. If the nominees are
elected, our board will be comprised of nine members, of which eight are
non-management directors and one is an officer of Fleming.
NOMINEE FOR ELECTION AS DIRECTOR
NAME (AGE) OF NOMINEE
KENNETH M. DUBERSTEIN (56)
Chairman and CEO of The Duberstein Group, Inc., an independent
strategic planning and consulting company. Mr. Duberstein
previously served as Chief of Staff to President Ronald Reagan in
1988-1989. During President Reagan's two terms in office, he also
served in the White House as Deputy Chief of Staff (1987), as well
as both the Assistant and the Deputy Assistant to the President
for Legislative Affairs (1981-1983).
Mr. Duberstein is a director of The Boeing Company, Conoco, Inc.,
Fannie Mae, GVG, The St. Paul Companies, Inc. and on the Board of
Governors for the American Stock Exchange and NASD. He serves as
well on a wide range of educational, cultural and volunteer
boards: Vice Chairman of the Kennedy Center for Performing Arts,
Chairman of Ethics Oversight Committee for U.S. Olympics
Committee, trustee of Franklin & Marshall College and Johns
Hopkins University, the Council on Foreign Relations, the
Institute of Politics at Kennedy School and National Alliance to
End Homelessness.
NOMINEES FOR RE-ELECTION AS DIRECTORS
NAME (AGE), YEAR FIRST BECAME A DIRECTOR
HERBERT M. BAUM (64), 1998
Chairman, president and chief executive officer of The Dial
Corporation (a consumer products company). Prior to joining The
Dial Corporation in August 2000, Mr. Baum served as president and
chief operating officer of Hasbro, Inc. from January 1999. From
1993 to 1998, Mr. Baum served as chairman and chief executive
officer of Quaker State Corporation. From 1978 to 1993, Mr. Baum
served in a variety of positions for Campbell Soup Company where
his last position held was president Campbell North and South
America. Mr. Baum is a director of Grocery Manufacturers of
America, The Dial Corporation, Midas, Inc., Meredith Corporation
and PepsiAmericas, Inc. (formerly Whitman Corporation).
ARCHIE R. DYKES (70), 1981
Chairman and chief executive officer of Capital City Holdings,
Inc. (a venture capital organization). He is nonexecutive chairman
and a director of PepsiAmericas, Inc. (formerly Whitman
Corporation), Midas, Inc. and the Employment Corporation. A former
chancellor of the University of Kansas and of the University of
Tennessee, Mr. Dykes also serves as a trustee of the Kansas
University Endowment Association and of the William Allen White
Foundation.
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CAROL B. HALLETT (63), 1993
President and chief executive officer of the Air Transport
Association of America, Washington, D.C. (the nation's oldest and
largest airline trade organization). Prior to joining the Air
Transport Association in April 1995, Mrs. Hallett served as senior
government relations advisor with Collier, Shannon, Rill & Scott
from February 1993 to March 1995. From November 1989 through
January 1993, Mrs. Hallett served as the Commissioner of the
United States Customs Service. From September 1986 to May 1989,
she served as the U.S. Ambassador to The Commonwealth of the
Bahamas. From July 1983 to August 1986, Mrs. Hallett served as the
national vice chairman and field director of Citizens for America.
Mrs. Hallett also served three terms in the California legislature
and as minority leader in the State Assembly. Mrs. Hallett is a
director of Litton Industries, Inc. and Mutual of Omaha Insurance
Company. She is a trustee for the Junior Statesmen of America.
Mrs. Hallett also serves on the President's Cabinet of California
Polytechnic State University.
ROBERT S. HAMADA (64), 2001
Dean of the University of Chicago Graduate School of Business. Mr.
Hamada also is the Edward Eagle Brown Distinguished Service
Professor of Finance. He has been a member of the faculty since
1966. An internationally known authority in finance, he served as
deputy dean for the faculty at the Graduate School of Business
from 1985 to 1990 and was director of the school's Center for
Research in Security Prices from 1980 to 1985. He also was a
director of the school's Center for International Business and
Research from 1992 to 1993. Mr. Hamada is a director of Northern
Trust Corp., A. M. Castle & Co., Flying Food Fare, Window To The
World Communications, Inc. (WTTW Channel 11), and the National
Bureau of Economic Research (NBER).
MARK S. HANSEN (46), 1998
Chairman and chief executive officer. Mr. Hansen served as
president and chief executive officer of SAM'S Club, a division of
Wal-Mart Stores, Inc., from 1997 through 1998. Prior to joining
Wal-Mart, Mr. Hansen served in multiple capacities from 1989 to
1997 including as president and chief executive officer of
PETsMART, Inc. a retailer of pet food, pet supplies and related
products. Prior to 1989, Mr. Hansen served in various management
capacities in the supermarket industry. He serves as an executive
advisory board member of Swander Pace Capital and is a director of
Applebee's Restaurants.
GUY A. OSBORN (65), 1992
Retired as chairman of Universal Foods Corp. in April 1997. He
joined that company in 1971, became president in 1984 and chairman
in 1990. He serves on the boards of Boys and Girls Club of Greater
Milwaukee and Alverno College and is a trustee of Northwestern
Mutual Life Insurance Company.
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DIRECTORS WHOSE TERMS EXPIRE IN 2002
NAME (AGE), YEAR FIRST BECAME A DIRECTOR
EDWARD C. JOULLIAN III (71), 1984
Chairman of Mustang Fuel Corp. (energy development and services)
since 1964. He also served as chief executive officer of that
company until his retirement in 1998. Mr. Joullian also served
Fleming as interim chairman of the board of directors from July
18, 1998 until November 30, 1998. He is a director of The LTV
Corp.
ALICE M. PETERSON (48), 1998
President of RIM Finance, LLC (a wholly-owned subsidiary of the
Canadian company, Research In Motion Limited, the maker of the
BlackBerry wireless handheld device), since December 2000. From
April 2000 to September 2000, Ms. Peterson served as Chief
Executive Officer of GuidanceResources.com (an Internet-based
service that employers provide as a value-added benefit to enhance
employee productivity). From October 1998 to February 2000, Ms.
Peterson served as vice president and general manager of Sears
Online, the unit of Sears, Roebuck and Co. where all
business-to-consumer Internet activities are conducted, including
interactive marketing. Ms. Peterson was vice president and
treasurer of Sears, Roebuck and Co. from 1993 to 1998. She joined
that company in 1989 as corporate director of finance, became
managing director -- corporate finance in 1992, and vice
president -- treasurer in 1993. Prior to joining Sears, Ms.
Peterson served as assistant treasurer of Kraft, Inc. from 1988 to
1989. From 1984 to 1988, Ms. Peterson served in a variety of
financial positions for PepsiCo, Inc., where her last position
held was director of capital markets. Ms. Peterson is a director
of RIM Finance, LLC and she serves on the Ravinia Festival Board
of Trustees.
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BOARD AND COMMITTEE MEETINGS
Our board of directors met 11 times in 2000.
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NUMBER OF
MEETINGS IN
COMMITTEE AND MEMBERS FUNCTIONS OF COMMITTEE 2000
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AUDIT AND COMPLIANCE - Considers selection of independent
Carol B. Hallett auditors and recommends appointment
Edward C. Joullian III - Reviews scope of annual audit and
Alice M. Peterson* auditors' annual report and discusses
reviews of interim financial
information
- Oversees internal audit programs and 4
policies, as well as programs related
to ethical standards and compliance
- Addresses independent auditors'
relationships with, and non-audit
services provided to, Fleming
- See Exhibit B to this proxy statement
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COMPENSATION AND ORGANIZATION - Oversees all compensation and benefits
Herbert M. Baum policies and programs
Carol B. Hallett - Reviews objectives, structure, cost
Edward C. Joullian III and administration of major compensation 5
Guy A. Osborn* and benefits policies and programs
- Administers stock option and incentive
plans
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GOVERNANCE/NOMINATING - Considers matters relating to
Archie R. Dykes* corporate governance
Robert S. Hamada - Establishes standards, subject to
Guy A. Osborn annual review, for governing operation
of Fleming by the board through
management
- Annually assesses board and committee
effectiveness
- See Exhibit C to this proxy statement 7
- Develops and recommends guidelines and
criteria for selecting directors
- Recommends nominees
- Considers shareholder recommendations
and makes recommendations on board
composition
- See Exhibits D-1 and D-2 to this proxy
statement
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EXECUTIVE COMMITTEE - Oversees executive and company matters
Herbert M. Baum - Authorized to act on behalf of the
Mark S. Hansen* board except as restricted by law 4
Edward C. Joullian III
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FINANCE - Reviews all financial matters not
Herbert M. Baum* under the authority of the audit and
Archie R. Dykes compliance committee or indenture
Robert S. Hamada committee
Alice M. Peterson - Oversees pension plans, funds and 1
trusts
- Oversees investment policy with
respect to pension trust assets
- Reviews long-term financial strategy
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* Chairperson
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REPORT OF THE AUDIT & COMPLIANCE COMMITTEE
The audit and compliance committee is appointed by the board and operates
pursuant to a written charter that was adopted by the board in May 2000. The
Audit and Compliance Committee Charter is attached as Exhibit B to this proxy
statement.
Under the terms of its charter, the audit and compliance committee approves
fees paid by Fleming to its independent auditor. For the fiscal year ending
December 30, 2000, Fleming paid the following fees to Deloitte & Touche LLP:
FINANCIAL INFORMATION
SYSTEMS DESIGN AND
AUDIT FEES IMPLEMENTATION FEES ALL OTHER FEES
---------- --------------------- --------------
$800,000 $0 $2,032,468
In fulfilling its duties for the 2000 fiscal year, the audit and compliance
committee has done each of the following:
- reviewed Fleming's audited financial statements for 2000 and discussed
the financial statements with Fleming's management;
- discussed with Deloitte & Touche the matters required to be discussed
with the auditor by the Auditing Standards Board Statement on Auditing
Standards No. 61;
- received written disclosure from Deloitte & Touche about any
relationships between Deloitte & Touche and Fleming which the auditor
believes may affect its independence;
- received a confirmation letter from Deloitte & Touche that the auditor is
independent of Fleming; and
- discussed Deloitte & Touche's independence with the auditor.
Based on the review and discussions above, the audit and compliance
committee recommended to the board that the audited financial statements for
2000 be included in Fleming's 10-K filed with the Securities and Exchange
Commission.
Ms. Peterson and Mrs. Hallett are "independent" in accordance with the New
York Stock Exchange listing standards. Mr. Joullian served as Fleming's interim
chairman for a brief period in 1998. The board of directors has determined that,
in its opinion, Mr. Joullian is independent of management and has no
relationship that would interfere with the exercise of his independent judgment
as a member of the Audit Committee. In reaching its determination, the board
took into consideration the brevity of Mr. Joullian's tenure as an officer of
Fleming, his previous service as an independent director, the fact that he
served as interim chairman only during the process of identifying a new chairman
and the fact that more than two years have passed since he was an officer of the
company.
Alice M. Peterson, Chairperson
Carol B. Hallett
Edward C. Joullian III
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DIRECTORS COMPENSATION
Directors who are also associates of Fleming do not receive compensation
for serving on the board of directors or its committees other than their normal
salaries. Directors who are not associates of Fleming received the following in
2000:
STOCK BASED COMPENSATION
- 3,500 shares of restricted stock - Prior to vesting, shares have voting and
dividend rights.
- 4,000 subsidiary options
- Shares will vest five years from March
CASH COMPENSATION 15, 2000 if adjusted net earnings from
operations for the 13 four-week
- $1,000 for each board or committee meeting attended* accounting periods preceding the date of
determination exceed adjusted net
- $500 for chairing a committee earnings from operations for fiscal 1998
by at least 10%.
- reimbursement of travel expenses for attending meetings
- Shares are held in escrow by Fleming's
--------------- corporate secretary, pending vesting.
* No fees are paid for telephone board meetings unless they
are longer than thirty minutes and are meetings for which - Unvested shares will be forfeited.
an agenda has been set.
- If, on a date prior to the end of the
STOCK OWNERSHIP REQUIREMENTS first year vesting period, a director
ceases to be a member of the board,
In March 1999, the board adopted stock ownership under certain conditions, vesting can be
requirements for directors. Directors who are not also accelerated.
associates of Fleming must >meet the following stock
ownership requirements.
- 1,000 shares of Fleming common stock within one year of
first being elected.
- 12,000 shares of Fleming common stock within four years of
first being elected.
- Members of the board on March 1, 1999 have until March 1,
2003 to satisfy the four year requirements since the
policy was not in effect when they were first elected.
The board also adopted stock ownership Each director exercised options granted on January 18, 2000
requirements for corporate officers which are to purchase 4,000 shares of common stock of Cerespan.com,
described on page 18. Inc., a subsidiary of the company, for $0.20 per share. No
public market exists for Cerespan's shares. The market
value per share is estimated to be less than $1 per share.
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BENEFICIAL OWNERSHIP
This table indicates how much Fleming common stock and stock equivalent
units were beneficially owned as of March 9, 2001 by the directors, nominees and
each of the named executive officers listed in the Summary Compensation Table
who retained his position as of March 9, 2001 and by beneficial owners of more
than 5% as of the dates indicated in the footnotes. Beneficial ownership of
directors and executive officers as a group (20 persons) represents 3.10% of the
total outstanding shares. No director or executive officer owns in excess of 1%
of the outstanding shares except for Mr. Hansen. As of March 9, 2001, 39,752,794
shares of Fleming common stock were issued and outstanding.
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EXECUTIVE
SHARES OF DIRECTORS' OFFICERS'
COMMON STOCK STOCK STOCK
BENEFICIALLY EQUIVALENT EQUIVALENT PERCENT
NAME OWNED(1) UNITS(2) UNITS(3) OF CLASS
------------------------------------------------------------------------------------------------------------
Mark S. Hansen(4)(5)(6) 474,998 -- 300,000 1.18%
------------------------------------------------------------------------------------------------------------
Herbert M. Baum(6)(7) 6,250 750 --
------------------------------------------------------------------------------------------------------------
Archie R. Dykes(6)(7)(8) 11,467 5,314 --
------------------------------------------------------------------------------------------------------------
Carol B. Hallett(6)(7) 8,422 4,456 --
------------------------------------------------------------------------------------------------------------
Robert S. Hamada -- --
------------------------------------------------------------------------------------------------------------
Edward C. Joullian(6)(7)(8) 25,605 14,337 --
------------------------------------------------------------------------------------------------------------
Guy A. Osborn(6)(7) 23,450 5,314 --
------------------------------------------------------------------------------------------------------------
Alice M. Peterson(6)(7) 9,250 2,250 --
------------------------------------------------------------------------------------------------------------
E. Stephen Davis(4)(5)(7)(8)(9) 138,708 -- 200,000 --
------------------------------------------------------------------------------------------------------------
Dennis C. Lucas(4)(7)(9) 108,450 -- 150,000 --
------------------------------------------------------------------------------------------------------------
William H. Marquard(4)(6)(7) 71,625 -- 150,000 --
------------------------------------------------------------------------------------------------------------
Neal J. Rider(4)(5)(8)(9) 121,423 -- 200,000 --
------------------------------------------------------------------------------------------------------------
All directors and executive officers as a
group(4)(5)(7)(8) 1,257,747 32,421 1,990,000 3.10%
------------------------------------------------------------------------------------------------------------
Dimensional Fund Advisors, Inc.(10) 2,432,997 -- 6.12%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
------------------------------------------------------------------------------------------------------------
FMR Corp.(11) 2,291,139 -- 5.76%
82 Devonshire Street
Boston, Massachusetts 02109
------------------------------------------------------------------------------------------------------------
High Rock Capital LLC(12) 2,070,800 -- 5.21%
28 State Street, 16th Floor
Boston, Massachusetts 02109
------------------------------------------------------------------------------------------------------------
Mellon Financial Corporation(13) 2,218,167 -- 5.58%
One Mellon Center
Pittsburgh, Pennsylvania 15258
------------------------------------------------------------------------------------------------------------
Southeastern Asset Management, Inc.(14) 7,636,900 -- 19.21%
6410 Poplar Avenue, Suite 900
Memphis, Tennessee 38119
------------------------------------------------------------------------------------------------------------
---------------
(1) This column includes Fleming common stock held by directors and officers or
by certain members of their families (for which the directors and executive
officers have sole or shared voting or investment power), Fleming common
stock which the officers have the right to acquire within 60 days of March
9, 2001 under Fleming's stock option and stock incentive plans and shares
of Fleming restricted common stock, subject to forfeiture, awarded under
Fleming's stock incentive plans.
11
14
(2) These stock equivalent units are payable in cash only when a director
ceases to be a member of the board.
(3) The initial grant vests in one-third increments on the first through third
anniversaries of the date of the grant.
(4) The amounts shown include shares which the following persons have the right
to acquire within 60 days of March 9, 2001 under the company's stock option
and stock incentive plans:
Hansen 399,998 shares
Davis 54,500 shares
Lucas 81,250 shares
Marquard 28,125 shares
Rider 87,500 shares
All directors and officers as a group (including those named above):
813,273
(5) The following shares have been excluded from the share totals for
individuals and group named in the table as they do not have voting or
investment power with respect to such shares:
Hansen 300,000 shares of restricted stock
Davis 100,000 shares of restricted stock
Rider 12,500 shares of restricted stock
All directors and officers as a group (including those named above):
425,000 shares of restricted stock
(6) The amounts shown do not include shares of common stock of Cerespan.com,
Inc., a subsidiary of the company, which the following persons acquired as
a result of exercising options granted by Cerespan on January 18, 2000. On
January 18, 2001, 25% of the purchased shares vested. The remaining shares
vest in evenly-divided monthly increments February 18, 2001 through January
18, 2004.
Hansen 150,000 shares of subsidiary
Baum 4,000 shares of subsidiary
Dykes 4,000 shares of subsidiary
Hallett 4,000 shares of subsidiary
Joullian 4,000 shares of subsidiary
Osborn 4,000 shares of subsidiary
Peterson 4,000 shares of subsidiary
Marquard 100,000 shares of subsidiary
All directors and officers as a group (including those named above):
282,000 shares of subsidiary
(7) The individuals and group named in the table have sole voting power with
respect to the following shares of restricted stock:
Baum 5,250 shares
Dykes 5,250 shares
Hallett 5,250 shares
Joullian 5,250 shares
Osborn 5,250 shares
Peterson 5,250 shares
Davis 68,000 shares
Lucas 10,000 shares
Marquard 20,000 shares
All directors and officers as a group (including those named above):
168,900 shares
12
15
(8) The individuals and group named in the table have shared voting and
investment power with respect to the following shares of common stock:
Dykes 642 shares
Joullian 20,355 shares
Davis 9,000 shares
Rider 32,500 shares
All directors and officers as a group (including those named above): 69,498
shares
(9) The amounts shown do not include shares of common stock of Cerespan.com,
Inc., a subsidiary of the company, which the following persons have the
right to acquire within 60 days of March 9, 2001 pursuant to options
granted by Cerespan on January 18, 2000.
Davis 25,000 shares of subsidiary
Lucas 25,000 shares of subsidiary
Rider 25,000 shares of subsidiary
All directors and officers as a group (including those named above):
141,000 shares of subsidiary
(10) In a Schedule 13G dated February 2, 2001, Dimensional Fund Advisors, Inc.
disclosed it held 2,432,997 shares of Fleming common stock and had sole
power to vote and dispose of all shares. Dimensional disclaims beneficial
ownership of all of the shares.
(11) In a Schedule 13G filed January 10, 2001, FMR Corp. disclosed that it held
2,291,139 shares of Fleming common stock, had sole power to vote none of
the shares and had sole power to dispose of, or direct the disposition of,
all shares.
(12) In a Schedule 13G dated February 12, 2001, High Rock Capital LLC disclosed
that it held 2,070,800 shares of Fleming common stock, had sole power to
vote 1,536,500 of the shares and had sole power to dispose of, or direct
the disposition of, 1,914,100 of the shares. With the exception of the
1,914,100 shares of Fleming common stock that it holds of record, High Rock
Capital LLC disclaims beneficial ownership of any shares of Fleming stock,
including 156,700 shares of Fleming common stock which High Rock Capital
LLC may be deemed to beneficially own by virtue of its relationship with
High Rock Asset Management LLC.
(13) In a Schedule 13G dated January 17, 2001, Mellon Financial Corporation
disclosed that it held 2,218,167 shares of Fleming common stock, shared
voting and investment power with respect to 199,600 shares, had sole voting
power with respect to 1,936,497 shares, and had sole power to dispose of
all shares.
(14) In a Schedule 13G dated February 8, 2001, Southeastern Asset Management,
Inc. disclosed that it held 7,636,900 shares of Fleming common stock and
that it shared voting and investment power with respect to 6,444,000 of the
held shares with Longleaf Partners Small-Cap Fund. In the same Schedule
13G, Southeastern Asset Management disclosed that it had sole power to vote
564,900 shares, had sole power to dispose of 1,192,900 shares, and had no
voting power with regard to 628,000 shares. The Schedule 13G identifies Mr.
O. Mason Hawkins as Chairman of the Board and Chief Executive Officer of
Southeastern Asset Management, but Mr. Hawkins does not claim any voting or
dispositive power with regard to the shares of Fleming common stock held by
Southeastern.
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16
SUMMARY COMPENSATION TABLE
-------------------------------------------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
-------------------------------------------------------------------------------------------------------------------
RESTRICTED
OTHER ANNUAL STOCK SECURITIES ALL OTHER
NAME AND PRINCIPAL COMPENSATION AWARDS UNDERLYING COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($)(1) ($)(2) OPTIONS(#) ($)(3)
-------------------------------------------------------------------------------------------------------------------
Mark S. Hansen (4) 2000 847,115 1,700,000 90 4,481,250 -- 65,335
Chairman and Chief 1999 750,000 980,813 -- -- -- 90,818
Executive Officer 1998 57,692 -- -- 300,000 800,000 306,478
-------------------------------------------------------------------------------------------------------------------
E. Stephen Davis (5) 2000 393,654 600,000 396 -- -- 6,029
Executive Vice President- 1999 330,858 342,104 570 690,000 25,000 --
President of Wholesale 1998 324,643 -- 570 -- 25,000 --
-------------------------------------------------------------------------------------------------------------------
Dennis C. Lucas (5) 2000 407,692 600,000 138 -- 25,000 27,871
Executive Vice President- 1999 166,910 191,803 -- 235,000 300,000 534,995
President of Retail 1998 -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------------
William H. Marquard (4) 2000 407,692 600,000 60 -- 25,000(6) 156,082
Executive Vice President- 1999 229,231 261,550 -- 418,750 200,000(7) 415,562
Chief Knowledge Officer 1998 -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------------
Neal J. Rider (5) 2000 516,735 675,000 36 223,438 350,000 670,411
Executive Vice President- 1999 -- -- -- -- -- --
Chief Financial Officer 1998 -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------------
---------------
(1) The company provides term life insurance to all associates. There is no
imputed income to the associate with respect to the first $50,000 of
coverage except for highly compensated associates. Accordingly, the company
is required to impute income to the named individuals with respect to the
first $50,000 of coverage and reimburses them for its tax effect. The
amounts shown in this column reflect such tax reimbursement amounts.
(2) The following officers received restricted stock awards in connection with
their employment with Fleming which vest as follows based on their
continuous employment through the applicable vesting dates:
Hansen 32,000 shares on 16,000 shares vested
November 30, 1998 on November 30, 1999;
16,000 shares vested
on November 30, 2000
300,000 shares on 300,000 shares will
February 29, 2000 vest on February 28,
2002
Lucas 20,000 shares on July 10,000 shares vested
28, 1999 on July 28, 2000;
10,000 shares will
vest on July 28, 2001
14
17
Marquard 20,000 shares on June 10,000 shares vested
1, 1999 on June 1, 2000;
10,000 shares will
vest on June 1, 2001
20,000 shares on 10,000 shares vested
December 21, 1999 on December 21, 2000;
10,000 shares will
vest on December 21,
2001
Rider 25,000 shares on 12,500 shares vested
January 18, 2000 on January 18, 2001;
12,500 shares will
vest on January 18,
2002
Mr. Davis was awarded 100,000 shares of restricted stock on November 1,
1997 in connection with termination of the company's Supplemental
Retirement Income Plan (the "SRP"). With respect to Mr. Davis' award,
66,667 shares have vested and 33,333 will vest if Mr. Davis remains
continuously employed through July 20, 2001 and meets certain targets in
connection with Fleming's Low Cost Pursuit Program. No vested shares are
distributable to Mr. Davis until termination of his employment. Mr. Davis
received an additional award of 60,000 shares of restricted stock on July
20, 1999 which will vest on July 20, 2001 if Mr. Davis remains continuously
employed through that date and meets certain targets in connection with
Fleming's Low Cost Pursuit Program. Mr. Marquard received an additional
award of 20,000 shares of restricted stock on December 21, 1999, of which
vested 50% on December 21, 2000, and 50% of which will vest on December 21,
2001 based on his continuous employment through the vesting date.
All shares of restricted stock will vest upon the occurrence of a change of
control and upon termination of the executive's employment due to death or
disability, without cause or by the executive for good reason. As of
December 30, 2000, there were held in escrow the following shares of
restricted stock for each officer with the following values (based on the
market price per share of $11.81 on December 29, 2000):
Hansen 300,000 shares $3,543,000
Davis 168,000 shares $1,984,080
Lucas 10,000 shares $ 118,100
Marquard 20,000 shares $ 236,200
Rider 25,000 shares $ 295,250
(3) Included in this column are the following amounts:
Mr. Hansen: For 2000: $64,200 attributable to personal use of
the company plane (includes reimbursement for his
tax liability associated with such amount) and
$1,135 for moving expenses. For 1999: $52,145
attributable to personal use of the company plane
(includes reimbursement for his tax liability
associated with such amount) and $38,673 for
relocation expenses. For 1998: $299,105
reimbursement for his tax liability associated with
restricted stock award and $7,373 attributable to
personal use of company plane (includes
reimbursement for his tax liability associated with
such amount).
Mr. Davis: For 2000: $1,029 for moving expenses and $5,000 for
loss of company car.
15
18
Mr. Lucas: For 2000: $16,489 for moving expenses and $11,382
attributable to personal use of the company plane
(includes reimbursement for his tax liability
associated with such amount). For 1999, $73,973 for
moving expenses and $461,022 for taxes incurred in
connection with an 83(b) election.
Mr. Marquard: For 2000: $39,208 attributable to personal use of
the company plane (includes reimbursement for his
tax liability associated with such amount), $23,752
for moving expenses, $13,098 for temporary living
expenses, $67,210 for reimbursement for taxes
incurred in connection with an 83(b) election and
$12,814 for transportation allowance. For 1999:
$387,314 reimbursement for his tax liability
associated with restricted stock awards and $28,248
for temporary living expenses.
Mr. Rider: For 2000: $26,938 attributable to personal use of
the company plane (includes reimbursement for his
tax liability associated with such amount), $11,226
for expenses incurred in connection with the sale
of his home, $253,219 for moving expenses and
$379,028 for reimbursement for taxes incurred in
connection with an 83(b) election.
(4) The amounts shown do not include shares of common stock of Cerespan.com,
Inc., a subsidiary of the company, which the following persons acquired as a
result of exercising options granted by Cerespan on January 18, 2000. On
January 18, 2001, 25% of the purchased shares vested. The remaining shares
vest in evenly-divided monthly increments February 18, 2001 through January
18, 2004.
Hansen 150,000 shares of subsidiary
Marquard 100,000 shares of subsidiary
(5) The amounts shown do not include shares of common stock of Cerespan.com,
Inc., a subsidiary of the company, which the following persons have the
right to acquire within 60 days of March 9, 2001 pursuant to options granted
by Cerespan on January 18, 2000.
Davis 25,000 shares of subsidiary
Lucas 25,000 shares of subsidiary
Rider 25,000 shares of subsidiary
(6) Includes 12,500 securities underlying options as to which Mr. Marquard can
only exercise upon instructions from a third party for shares that Mr.
Marquard will not beneficially own upon exercise.
(7) Includes 100,000 securities underlying options as to which Mr. Marquard can
only exercise upon instructions from a third party for shares that Mr.
Marquard will not beneficially own upon exercise.
16
19
REPORT OF THE COMPENSATION AND ORGANIZATION COMMITTEE
COMPENSATION PHILOSOPHY
The company's compensation philosophy is based primarily on "pay for
performance" and a significant portion of our executive compensation is
incentive based. The objectives of the Fleming executive compensation programs
are to motivate executive officers to enhance financial performance by focusing
attention on specific business objectives emphasizing company profitability and
teamwork, and to reward executive officers based on company and individual
performance.
There are three parts to Fleming's executive compensation program:
- Base salary;
- Annual bonuses; and
- Stock based compensation.
The compensation and organization committee, comprised of non-management
directors, administers the executive compensation programs, policies and
practices. The committee decides compensation for all executive officers, except
the chief executive officer, upon recommendation of the CEO. The committee's
decisions are submitted to the full board of directors for its information and
review only. The CEO, who is also a director, does not participate in the
board's review of the committee's decisions regarding his compensation.
BASE SALARIES
Decisions as to base salary for the named executive officers for 2000,
except Mr. Rider, were determined by the committee in reliance on the company's
salary administration program, the objectives of which are to attract, retain
and motivate productive executive officers. For each job classification, the
program requires a written job description, an evaluation of the job with
assigned points based on the nature of the job, its function and the level of
the position, and an assigned salary range based on the total point value. Mr.
Rider's base salary was based on the negotiation of his employment agreement.
Decisions as to Mr. Rider's employment agreement were based on the committee's
view that the company needed to attract a top notch candidate to his position,
the value of an executive such as Mr. Rider in the market place and the general
competition for executives of his caliber. Annual salaries are adjusted based on
individual performance. In addition, the committee reviews the earnings of the
company and the market value of the company's common stock for the previous
fiscal year-end and, based on these factors, the committee makes a subjective
determination of the nature and extent of salary adjustments. The committee
generally establishes target salaries in the middle of the assigned salary
ranges. In order to measure competitiveness, the committee also considers salary
surveys comparing company jobs with similar jobs held by employees of companies
included in the company's peer group. See "Company Performance."
BONUSES
Bonuses are paid to executives under the corporate officer incentive plan.
The plan has the following primary goals:
- Attain substantial improvement in sales;
- Substantially improve earnings;
- Provide a concrete and understandable linkage between performance, reward
and share value creation for shareholders; and
- Encourage teamwork.
Bonus awards are based on pre-determined performance targets in relation to
adjusted earnings per share, sales and adjusted earnings. In order to be
entitled to a bonus, the adjusted earnings per share target must be met or
exceeded. Then, the bonus will be weighted based on sales and adjusted earnings.
For fiscal 2000, the committee determined that 60% of the bonus would be based
on sales and 40% would be based on adjusted earnings. The bonus for fiscal 2000
was determined by the committee at its meeting in February 2001. Target
percentages for all executive officers were set based on position and
responsibilities, comparative market place
17
20
data and internal equity. Since the adjusted earnings per share target for 2000
was met, all executive officers received a bonus for 2000. These bonuses were
paid in March 2001.
STOCK BASED COMPENSATION
The committee can award restricted stock and stock options to executives
and other key associates under the company's stock option and stock incentive
plans. The committee believes stock based compensation is important in aligning
the interests of executives and shareholders. The committee believes restricted
stock awards build stock ownership and provide a long-term focus since the stock
is restricted from being sold, transferred or assigned and is forfeitable until
vested. The committee believes stock options help to retain and motivate key
associates. All executive officers, except Mr. Hansen, Mr. Almond and Mr. Davis,
received stock option grants during fiscal 2000. The basis of the grants was not
only to provide incentive to these executives to drive company performance, but
also to help retain these executives in an increasingly competitive market for
top talent.
CHIEF EXECUTIVE OFFICER
Mark S. Hansen became CEO of the company on November 30, 1998. His salary
for 2000 was determined by the committee considering the following factors:
competitive levels of compensation, his experience in managing operations of a
size and complexity similar to the company, his general knowledge of the
distribution and retail food industry, his track record in making changes and
the committee's belief that Mr. Hansen has the qualifications necessary to
responsibly manage the company. His bonus for 2000 was determined in accordance
with the Corporate Officer Incentive Plan which provides for a bonus if certain
pre-determined levels of adjusted earnings per share, sales and adjusted
earnings are met. The amount of his bonus was based on a percentage of his
salary. Mr. Hansen received 300,000 restricted shares on February 29, 2000 in
connection with the bonus he received for 1999.
MANAGEMENT STOCK OWNERSHIP GUIDELINES
Fleming is committed to strengthening the alignment of its executives'
financial interests with those of its shareholders. Corporate officers are
required to own the following levels of stock:
---------------------------------------------------------------
POSITION STOCK OWNERSHIP LEVEL
---------------------------------------------------------------
Chairman and CEO 3 times base salary
---------------------------------------------------------------
Executive Vice Presidents 2 times base salary
---------------------------------------------------------------
Senior Vice Presidents 1.5 times base salary
---------------------------------------------------------------
Vice Presidents 1 times base salary
---------------------------------------------------------------
Officers must meet the required stock ownership levels by March 2004 or
five years from their election as an officer, whichever is later. Neither
unvested restricted stock nor stock options, whether vested or unvested, are
counted for purposes of determining stock ownership. Fleming has a loan program
which provides interest free, full recourse loans to officers in order to assist
them in meeting their stock ownership levels. None of the named executive
officers participated in the loan program during 2000, except that Mr. Rider
received a loan from the company to purchase 20,000 shares of Fleming common
stock on March 3, 2000 at a purchase price of $300,307.88. At March 9, 2001,
officers subject to the stock ownership requirements owned a total of 298,179
shares of Fleming Stock.
18
21
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The committee has adopted and the board of directors has ratified the
following policy regarding Section 162(m) of the Internal Revenue Code of 1986,
as amended:
Section 162(m) limits the deductibility of certain compensation paid by the
company to certain of its executive officers. It is possible that future
circumstances may warrant compensation payments which will not qualify as a tax
deductible expense. It shall be the policy of the committee to compensate
executive officers based on performance, and the committee recognizes that
flexibility with respect to the payment of compensation must be insured in order
to maintain this policy. Accordingly, although the committee will to the extent
possible attempt to qualify all compensation payments for deductibility under
Section 162(m), circumstances may arise which require it to authorize
compensation which is not deductible under Section 162(m).
Guy A. Osborn, Chairman Carol B. Hallett
Herbert M. Baum Edward C. Joullian III
19
22
PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total
returns for the company, the S&P 500 composite index and an index of peer
companies selected by the company with the investment weighted based on market
capitalization at the beginning of each year.
[GRAPH]
----------------------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000
----------------------------------------------------------------------------------------------------------------
Fleming Companies, Inc. 100 86 67 52 52 60
S&P 500 100 123 164 211 251 229
Peer Group 100 100 126 138 96 82
The total cumulative return on investment (change in the year-end stock
price plus reinvested dividends) for each year for the company, the peer group
and the S&P 500 composite is based on the stock price or composite index at the
end of calendar 1995.
Companies in the peer group are as follows: Fleming Companies, Inc.,
SUPERVALU, Inc., Nash Finch Company, Super Food Services, Inc. and Richfood
Holdings, Inc. Richfood Holdings, Inc. was acquired by SUPERVALU, Inc. in 1999
and Super Food Services, Inc. was acquired by Nash Finch Company in 1996.
20
23
STOCK OPTION INFORMATION
OPTION GRANTS
This table sets forth information concerning the grant of stock options to
the named executive officers during the fiscal year ended December 30, 2000.
OPTION GRANTS IN LAST FISCAL YEAR
-----------------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR
OPTIONS EMPLOYEES BASE GRANT DATE
GRANTED IN PRICE EXPIRATION PRESENT
NAME (#)(1)(2) FISCAL YEAR ($/SH) DATE VALUE $(3)
-----------------------------------------------------------------------------------------------
Mark S. Hansen (4) -- -- -- -- --
-----------------------------------------------------------------------------------------------
E. Stephen Davis (4) -- -- -- -- --
-----------------------------------------------------------------------------------------------
Dennis C. Lucas (4) 25,000 1.25% 14.9375 02/28/10 191,511.06
-----------------------------------------------------------------------------------------------
William H. Marquard (4)(5) 25,000 1.25% 14.9375 02/28/10 191,511.06
-----------------------------------------------------------------------------------------------
Neal J. Rider (4) 250,000 12.54% 8.9688 01/17/10 1,101,635.25
-----------------------------------------------------------------------------------------------
Neal J. Rider (4) 100,000 5.02% 8.9375 01/17/10 438,955.48
-----------------------------------------------------------------------------------------------
---------------
(1) The listed options are exercisable in four twenty-five percent (25%)
increments on the first through fourth anniversaries of the date of grant.
(2) The vesting of all options accelerates in the case of a change of control of
the company. In the case of Messrs. Hansen, Lucas, Marquard and Rider, if
their employment is terminated within one year following a change of control
of the company, they will each have three years from such termination date
to exercise their stock options.
(3) Based on Black-Scholes option pricing model adapted for use in valuing
executive stock options. The estimated values under the model are based on
assumptions as to variables such as risk free interest rate, stock price
volatility and future dividend yield as follows: the options are assumed to
be exercised at the end of a ten year term; yield volatility of 38.45%;
annual dividend yield ranging from .54% to .90% and a risk free rate of
return ranging from 6.61% to 6.64.
(4) Also received a grant of options to purchase securities of a subsidiary of
the company. Please see footnotes 6 and 9 to the Beneficial Ownership Table.
(5) Includes 12,500 securities underlying options as to which Mr. Marquard can
only exercise upon instructions from a third party for shares that Mr.
Marquard will not beneficially own upon exercise.
21
24
OPTION EXERCISES
This table sets forth information regarding the value as of the fiscal year
ended December 30, 2000 of any unexercised options held by the named executive
officers who retained their positions with the company as of such date. No stock
options were exercised by any of the named executive officers for his benefit
during the fiscal year ended December 30, 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END(#) FY-END($)(1)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
Mark S. Hansen (2) -- -- 399,998/400,002 4,723,976/4,724,024
E. Stephen Davis -- -- 48,250/36,750 73,813/221,438
Dennis C. Lucas -- -- 75,000/250,000 885,750/2,952,500
William H. Marquard (2) (3) -- 25,000/175,000(4) 295,250/2,066,750
Neal J. Rider -- -- 0/350,000 0/4,133,500
---------------
(1) The market price of the company's common stock at 2000 fiscal year-end was
$11.81 per share.
(2) Each of Messrs. Hansen and Marquard also exercised options to purchase
securities of a subsidiary of the company. Please see footnote 6 to the
Beneficial Ownership Table.
(3) Mr. Marquard exercised options to purchase 25,000 shares upon the
instructions of a third party. Mr. Marquard did not acquire beneficial
ownership of the shares upon exercise of the options.
(4) Includes 0/87,500 securities underlying options as to which Mr. Marquard can
only exercise upon instructions from a third party for shares that Mr.
Marquard will not beneficially own upon exercise.
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25
PENSION PLAN
This table shows the estimated annual retirement benefits payable on a
straight-life annuity basis to covered participants, including the named
executive officers, assuming retirement at age 65 under Fleming's qualified
Pension Plan as well as non-qualified supplemental benefits under the Executive
Deferred Compensation Plan, based on final average earnings formulas and years
of service.
YEARS OF SERVICE
ANNUAL FINAL ---------------------------------------------------------------------------------------------
COMPENSATION(1) 10 15 20 25 30 35 40 45
$ 500,000 $ 83,350 $125,000 $166,700 $208,375 $ 250,050 $ 275,050 $ 300,050 $ 325,050
600,000 100,020 150,030 200,040 250,050 300,060 330,060 360,060 390,060
700,000 116,690 175,035 233,380 291,725 350,070 385,070 420,070 455,070
800,000 133,360 200,040 266,720 333,400 400,080 440,080 480,080 520,080
900,000 150,030 225,045 300,060 375,076 450,090 495,090 540,090 585,090
1,000,000 166,700 250,050 333,400 416,750 500,100 550,100 600,100 650,100
1,100,000 183,370 275,055 366,740 458,425 550,110 605,110 660,110 715,110
1,200,000 200,040 300,060 400,080 500,100 600,120 660,120 720,120 780,120
1,300,000 216,710 325,065 433,420 541,775 650,130 715,130 780,130 845,130
1,400,000 233,380 350,070 466,760 583,450 700,140 770,140 840,140 910,140
1,500,000 250,050 375,075 500,100 625,125 750,150 825,150 900,150 975,150
1,600,000 266,720 400,080 533,440 666,800 800,160 880,160 960,160 1,040,160
1,700,000 283,390 425,085 566,780 708,475 850,170 935,170 1,020,170 1,105,170
1,800,000 300,060 450,090 600,120 750,150 900,180 990,180 1,080,180 1,170,180
1,900,000 316,730 475,095 633,460 791,825 950,190 1,045,190 1,140,190 1,235,190
2,000,000 333,400 500,100 666,800 833,500 1,000,200 1,100,200 1,200,200 1,300,200
2,100,000 350,070 525,105 700,140 875,175 1,050,210 1,155,210 1,260,210 1,365,210
2,200,000 366,740 550,110 733,480 916,850 1,100,220 1,210,220 1,320,220 1,430,220
---------------
(1) Under the Executive Deferred Compensation Plan, Annual Final Compensation is
average total compensation earned for the three consecutive calendar years
of employment prior to retirement.
As of December 30, 2000, Messrs. Hansen, Davis, Lucas, Marquard and Rider
each had 2, 40, 1, 1 and 1 years, respectively, of credited service under
the Pension Plan. All named executive officers participated in the
Executive Deferred Compensation Plan during 2000. Amounts shown in the
table are subject to offset for Social Security. Benefits under the
Executive Deferred Compensation Plan are subject to offset for amounts
payable under the Pension Plan. As of December 30, 2000, Annual Final
Compensation was $1,260,057 for Mr. Hansen, $581,675 for Mr. Davis,
$537,289 for Mr. Lucas, $567,457 for Mr. Marquard and $543,933 for Mr.
Rider.
23
26
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
EMPLOYMENT AGREEMENTS
Our named executive officers, except for Mr. Davis, have five-year
employment agreements. Below is a summary of the basic terms of the agreements
followed by a summary of the specific terms for each named executive officer as
of their date of employment. Base salaries and bonus targets are reviewed
annually by the corporation and organization committee and could increase over
the five-year term of the employment agreement.
If Fleming terminates employment without cause or the executive resigns for
good reason, the executive receives:
- Base salary and accrued vacation through termination date;
- Base salary for the next 24 months; and
- Continued coverage under all medical and life insurance programs for the
next 24 months.
If Fleming terminates employment with cause or executive resigns without
good reason, the executive receives:
- Base salary and accrued vacation through the termination date.
If Fleming terminates employment due to disability, the executive receives
- Base salary through date of termination;
- Disability benefits under the company's disability program; and
- Accrued vacation through termination date.
Upon death of the executive, his beneficiary receives his base salary
through date of death.
The executive has also agreed not to compete with Fleming for two years
following termination of employment, but not if he has been terminated without
cause or he resigns for good reason. In addition, Mr. Hansen participated in the
company's relocation program for senior executives, which provided for
reimbursement of various relocation expenses and the purchase of his home by the
company at the greater of his documented invested cost or the value determined
by an appraiser selected by the company.
HANSEN AGREEMENT
- Agreement term is from November 30, 1998 to November 29, 2003
- Annual base salary of $750,000, subject to increase but not decrease
- Bonus target of 100% of base salary with a maximum annual of 200% of base
salary
- 32,000 shares of restricted stock (vests at 50% per year) plus $299,105
to reimburse him for his tax liability associated with the award
- 800,000 nonqualified stock options which vest at 25% per year on the
first four anniversary dates of the award
LUCAS AGREEMENT
- Agreement term is from July 28, 1999 to July 27, 2004
- Annual base salary of $400,000, subject to increase
- Bonus target of 75% of base salary with a maximum annual of 150% of base
salary
- 20,000 shares (vests at 50% per year) of restricted stock plus $461,022
to reimburse him for his tax liability associated with the award
- 300,000 nonqualified stock options which vest at 25% per year on the
first four anniversary dates of the award
24
27
MARQUARD AGREEMENT
- Agreement term is from June 1, 1999 to May 31, 2004
- Annual base salary of $400,000, subject to increase but not decrease
- Bonus target of 75% of base salary with a maximum annual of 150% of base
salary
- 20,000 shares (vests at 50% per year) of restricted stock plus $196,547
to reimburse him for his tax liability associated with the award
- 200,000 nonqualified stock options which vest at 25% per year on the
first four anniversary dates of the award
RIDER AGREEMENT
- Agreement term is from January 18, 2000 to January 17, 2005
- Annual base salary of $450,000, subject to increase but not decrease
- Bonus target of 75% of base salary with a maximum annual of 150% of base
salary
- 25,000 shares (vests at 50% per year) of restricted stock plus $379,082
to reimburse him for his tax liability associated with the award
- 350,000 nonqualified stock options which vest at 25% per year on the
first four anniversary dates of the award
CHANGE OF CONTROL EMPLOYMENT AGREEMENTS
Since 1995, we have entered into change of control employment agreements
with our senior executives. The purpose of these agreements is to assure
objective judgment and to keep the loyalties of key executives if Fleming is
ever faced with a potential change of control by providing for a continuation of
salary, bonus, health and other benefits for a maximum period of three years. In
addition, if the executive is terminated during the three years following the
change of control or in anticipation of the change of control for other than
cause, death, disability, or he terminates for good reason, then the executive
receives a lump sum payment comprised of:
- His base salary through the date of termination at the annual rate in
effect on the date of termination or, if higher, at the highest annual
rate paid or payable during the three out of the five years preceding the
change of control date which yield the highest base salary (the "Highest
Base Salary");
- The pro-rated portion of his annual bonus or, if higher, an amount equal
to the middle target level bonus payable, regardless of whether specified
targets are met, under the company's incentive compensation plan
applicable to the executive for his position on the date his employment
is terminated (the "Highest Bonus");
- The product obtained by multiplying 2.99 times the sum of the Highest
Base Salary and the Highest Bonus; and
- Any amounts previously deferred by the executive (plus any accrued
interest thereon) and any accrued vacation pay.
In addition, there are provisions for the "gross up" of certain payments to
cover certain taxes on these termination payments and for extension of
indemnification and insurance coverage for five years following the termination
date. For a period of 30 days following the first year after a change of
control, the executive can terminate his employment for any reason and receive
all the benefits of the agreement as if he had terminated for good reason. Under
the change of control employment agreements, assuming a change of control on
December 30, 2000, and termination of employment of the named executive for
other than cause, death or disability or by the executive for good reason, the
company would be required to pay the following amounts (plus any applicable
"gross up" amounts): Mr. Hansen, $7,624,500, Mr. Davis, $2,990,000, Mr. Lucas,
$2,990,000, Mr. Marquard $2,990,000, and Mr. Rider, $3,363,750.
25
28
OTHER CHANGE OF CONTROL ARRANGEMENTS
SUPPLEMENTAL TRUSTS. Fleming has two trust agreements to provide for the
payment of its obligations under the Change of Control Employment Agreements,
severance and employment agreements available to certain associates who are not
named executive officers, to former associates receiving benefits under the
company's former supplemental retirement income plan and to participants in the
Past Service Plan and the Executive Deferred Compensation Plan. These trusts
include provisions which require full funding in the event of a change of
control.
PAST SERVICE PLAN. Fleming adopted the Past Service Plan in connection
with the termination of its supplemental retirement income plan. Benefits
payable under the plan are based on the benefit payable under the terminated
plan assuming the executive retired as of November 1, 1997 and was fully vested.
Mr. Davis is the only named executive officer participating in this plan. Upon a
change of control, all participants will be fully vested in this plan. Assuming
(i) a change of control on December 30, 2000 and termination of Mr. Davis'
employment, and (ii) he elected a life only payment method, the company would be
required under the Past Service Plan to pay Mr. Davis $110,297 annually for
life.
EXECUTIVE DEFERRED COMPENSATION PLAN. Under the company's Executive
Deferred Compensation Plan, which supplements retirement benefits under the
Pension Plan, each participant will be fully vested in his benefit upon a change
of control, benefits will be paid immediately following termination of
employment and no reduction will be made for any early retirement adjustment
factors. Assuming (i) a change of control on December 30, 2000 and termination
of employment of the following persons, and (ii) each of the following persons
elected a life only payment method, the company would be required under the
Executive Deferred Compensation Plan to pay the following amounts to the
following persons annually for life: Mr. Davis, $217,785; Mr. Hansen, $41,267;
Mr. Lucas, $12,804; Mr. Marquard, $14,532; and Mr. Rider, $7,418.
OTHER ARRANGEMENTS. Provisions of Fleming's stock option and stock
incentive plans permit the committee administering the plan to accelerate
vesting upon a change of control. The vesting of all stock options held by the
named executive officers will accelerate upon a change of control. All shares of
restricted stock awarded to directors and the named executive officers will
become fully vested and nonforfeitable in the event of a change of control.
26
29
KEY EXECUTIVE RETENTION PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE KEY EXECUTIVE
RETENTION PLAN.
Subject to shareholder approval, the compensation and organization
committee of the board of directors has adopted the Fleming Companies, Inc. Key
Executive Retention Plan. Approval by the shareholders is necessary to qualify
for the exception from Section 162(m) of the Code for qualified
performance-based compensation. Adoption of the plan is contingent upon
shareholder approval and any awards granted by the committee will be forfeited
if the shareholders do not approve the plan. The retention plan authorizes
Fleming's compensation and organization committee to grant performance-based
cash awards to a limited number of key executives described in "Eligibility for
Participation" below.
ABOUT THE PLAN
The purpose of the key executive retention plan is to emphasize Fleming's
pay for performance philosophy and create incentives designed to motivate the
company's key executives to significantly contribute toward the growth and
profitability of the company. Our board of directors anticipates that the plan
will enable Fleming to improve company results by paying individual executives
for distinguished performance that contributes to Fleming's success. The key
executive retention plan provides certain key executives with incentives to
motivate and financially reward the key executives by providing the opportunity
to earn a bonus if certain targets are met. The primary goals of the plan are
to:
- improve earnings,
- encourage certain key executives to remain with the company,
- provide a link between performance, rewards and share value creation for
Fleming's shareholders, and
- encourage teamwork.
Our board of directors recommends approval of the key executive retention
plan as it believes that the plan will provide the additional incentives
necessary to retain and motivate our current key executives.
ELIGIBILITY FOR PARTICIPATION
The key executive retention plan is administered exclusively by the
compensation and organization committee and key executives eligible for
participation in the plan are selected solely by the committee.
Any of Fleming's Chairman, Chief Executive Officer, President, Executive
Vice Presidents, Senior Vice Presidents or Vice Presidents or any other
associate who is an officer of the company, a subsidiary or an affiliated entity
may be selected by the committee for participation in the plan.
DESCRIPTION OF AWARDS
OVERVIEW. Although the term of the plan is ten years, each participating
executive is limited to a five-year award period. Under the key executive
retention plan, participating executives are eligible to receive
performance-based annual awards during the first three years of the award period
and thrift awards during the last two years of their award period. Annual awards
and thrift awards will be earned only if the performance goal established by the
committee has been met. The performance goal requires that adjusted earnings per
share of the company's common stock for the applicable year in the award period
must exceed the company's adjusted earnings per share for the prior year by at
least 5%. The plan constitutes an "unfunded" plan for incentive compensation.
Any award granted or earned under the plan is not transferable.
ANNUAL AWARD. The annual awards are a maximum of two times the executive's
base pay for each of the first three years of an executive's participation in
the plan. Base pay for the applicable year will be fixed each year by the
compensation and organization committee and will not be adjusted for increases
or decreases during the year.
27
30
ALLOCATION OF EARNED ANNUAL AWARDS. Participating executives may elect to
receive up to 50% of their earned annual awards in cash. Any amount the
participant is eligible to receive in cash but elects to defer will be 100%
vested. The 50% of the earned annual award which is not currently payable will
be automatically credited to a deferred account and subject to the vesting
schedule described below. Interest is credited on any deferred amounts at 1%
over prime.
THRIFT AWARD. In the fourth and fifth years of a key executive's
participation in the plan, an additional thrift award credit will be added to
the year-end balance equal to 33% of the prior year's balance plus interest upon
achievement of the established performance goal. The thrift award will be
credited to a deferred account and subject to the vesting schedule described
below.
VESTING. Participating executives fully vest in 50% of each year's earned
annual award and vest in the remaining 50% of the earned annual award and the
thrift award, plus interest on all deferred amounts, at the following rates:
--------------------------------------------------------------------------------------------
YEAR OF VESTED PORTION AT END OF YEAR
AWARD 1 2 3 4 5
--------------------------------------------------------------------------------------------
1 0% 0% 50% 75% 100%
--------------------------------------------------------------------------------------------
2 0% 50% 75% 100%
--------------------------------------------------------------------------------------------
3 50% 75% 100%
--------------------------------------------------------------------------------------------
4 75% 100%
--------------------------------------------------------------------------------------------
5 100%
--------------------------------------------------------------------------------------------
DISTRIBUTION. Account balances are generally distributed only at the end
of the five-year period. The vested deferred portion of the balance will be paid
earlier only in the event of death or termination of employment for reason other
than cause. Payments of the deferred vested portion for hardship purposes may be
approved by the compensation and organization committee. No interest will be
paid on any distributions to a participant prior to the end of the third year
except for payments due upon a change in control and subsequent termination of
the executive's employment.
CHANGE IN CONTROL. In the event of a change in control and termination of
the executive's employment, the plan will vest 100% as if the executive met all
requirements for the five-year term and will be paid within 30 days after
termination. The amount paid will be grossed up for income, withholding and
excise taxes. The provisions relating to termination following a "change in
control" will parallel similar provisions in the executive's change in control
employment agreement.
DEDUCTIBILITY OF AWARDS. Section 162(m) of the Code places a $1 million
annual limit on the deductible compensation of certain executives of publicly
traded corporations. The limit, however, does not apply to "qualified
performance-based compensation." The company intends to comply with qualified
performance-based compensation exemption from the general limitations of Section
162(m) in order to deduct all or substantially all of the awards when paid. The
compensation and organization committee has established the performance goal
based on adjusted earnings per share, and will administer the plan in accordance
with Section 162(m) and the regulations promulgated thereunder. For purposes of
Section 162(m), the maximum dollar amount which may be paid under the plan to
any participant over the five-year award period is five times annual "base pay."
For purposes of the calculation of this limitation, "base pay" will be
$3,000,000.
TAXES. Cash payments to executives under this plan will be included in the
executive's income in the year received. All amounts paid under the plan will be
subject to applicable withholding and employment taxes.
28
31
ESTIMATE OF 5-YEAR MAXIMUM TOTAL COST. The following table sets forth an
estimate of the 5-year maximum total cost of the plan. This assumes an annual
cost of awards if the participants' (6-7) annual base pay totals $3,400,000 and
compliance with Section 162(m) restrictions. This table is for illustrative
purposes only and the company cannot predict whether the performance goal will
be met during any fiscal year during the award period or whether any awards will
be earned and paid under the plan.
-------------------------------------------------------------------------------------------
EXPENSE WITH TAX
YEAR MAXIMUM EXPENSE DEDUCTION
-------------------------------------------------------------------------------------------
1 $ 4,349,167 $ 2,609,500
-------------------------------------------------------------------------------------------
2 $ 6,239,000 $ 3,743,400
-------------------------------------------------------------------------------------------
3 $ 9,234,853 $ 5,540,912
-------------------------------------------------------------------------------------------
4 $10,236,959 $ 6,142,176
-------------------------------------------------------------------------------------------
5 $15,487,226 $ 9,292,336
-------------------------------------------------------------------------------------------
Total $45,547,205 $27,328,323
-------------------------------------------------------------------------------------------
EFFECTIVE DATE. The effective date of the key executive retention plan is
February 27, 2001, upon approval of the shareholders at this annual meeting.
AMENDMENTS. The plan may be amended, suspended or terminated at any time
at the sole discretion of the committee, however, no such action by the
committee shall adversely effect the executive's earned and vested award.
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
common stock, to file with the Securities and Exchange Commission and the New
York Stock Exchange initial reports of beneficial ownership and reports of
changes in beneficial ownership of common stock of the company. Such persons are
also required by applicable regulations 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 written
representations that no other reports were required to be filed, during 2000,
all Section 16(a) filing requirements were met except that Mr. Rider's Form 3
was not filed timely and one Form 4 of Charles L. Hall was not filed timely.
OTHER BUSINESS
The board of directors knows of no other business which will be presented
for action at the meeting other than as described in the notice of annual
meeting. If other matters come before the meeting, the proxies will be voted in
accordance with the judgment of the persons named on the proxy card.
By Order of the Board of Directors
Carlos M. Hernandez
Senior Vice President,
General Counsel and Secretary
29
32
EXHIBIT A
FLEMING COMPANIES, INC.
KEY EXECUTIVE RETENTION PLAN
33
FLEMING COMPANIES, INC.
KEY EXECUTIVE RETENTION PLAN
TABLE OF CONTENTS
PAGE
----
ARTICLE I NAME AND PURPOSE OF PLAN........................................ A-1
1.1 Name of Plan................................................ A-1
1.2 Purpose..................................................... A-1
1.3 Establishment............................................... A-1
ARTICLE II DEFINITIONS AND CONSTRUCTION................................... A-1
2.1 Definitions................................................. A-1
2.2 Construction................................................ A-5
ARTICLE III PARTICIPATION................................................. A-5
3.1 Selection for Participation................................. A-5
3.2 Timing of Deferral Elections................................ A-5
ARTICLE IV DETERMINATION OF AWARDS........................................ A-5
4.1 Determination............................................... A-5
4.2 Thrift Award................................................ A-6
4.3 Account Earnings............................................ A-6
4.4 Maximum Award Payment....................................... A-6
ARTICLE V PAYMENT OF AWARDS............................................... A-7
5.1 Date of Payment of Awards................................... A-7
5.2 Hardship Withdrawals........................................ A-7
5.3 Beneficiary Designation..................................... A-7
5.4 Forfeiture of Award for Cause............................... A-7
5.5 Change of Control Event..................................... A-7
ARTICLE VI GENERAL BENEFIT PROVISIONS..................................... A-8
6.1 No Trust.................................................... A-8
6.2 Withholding for Income and Employment Taxes................. A-8
6.3 Payments by the Company, Subsidiary or Affiliated Entity.... A-8
6.4 No Transferability.......................................... A-8
6.5 Expenses.................................................... A-8
6.6 No Prior Right or Offer..................................... A-8
6.7 Right to Continued Employment............................... A-8
6.8 No Part of Other Benefits................................... A-9
6.9 Other Plans................................................. A-9
6.10 Amendment or Termination of Plan............................ A-9
6.11 Obligations Binding Upon Successors......................... A-9
6.12 Construction................................................ A-9
6.13 Governing Law; Severability................................. A-9
6.14 Consent to Plan Terms....................................... A-9
ARTICLE VII PROVISIONS RELATING TO PARTICIPANTS........................... A-9
7.1 Information Required of Participants........................ A-9
7.2 Benefits Payable to Incompetents............................ A-9
(i)
34
PAGE
----
ARTICLE VIII ADMINISTRATION............................................... A-10
8.1 The Committee Shall Administer the Plan..................... A-10
8.2 Claims Procedure............................................ A-10
8.3 Review Procedure............................................ A-10
8.4 Records and Reports......................................... A-10
8.5 Rules and Decisions......................................... A-10
(ii)
35
FLEMING COMPANIES, INC.
KEY EXECUTIVE RETENTION PLAN
FLEMING COMPANIES, INC., an Oklahoma corporation, hereby adopts the Fleming
Companies, Inc. Key Executive Retention Plan upon the following terms and
conditions:
ARTICLE I
NAME AND PURPOSE OF PLAN
1.1 Name of Plan. This Plan shall be hereafter known as the FLEMING
COMPANIES, INC. KEY EXECUTIVE RETENTION PLAN.
1.2 Purpose. The purpose of the Plan is to provide the Key Associates who
are selected to be Participants under the Plan an incentive to motivate and
financially reward such individuals by providing the opportunity to earn a bonus
if the Target is met, and such person remains in the employ of the Company, a
Subsidiary or an Affiliated Entity for a fixed period of time. Certain primary
goals of the Plan are to (i) improve earnings, (ii) encourage certain key
executives to remain with the Company, (iii) provide a concrete and
understandable linkage between performance, rewards and share value creation for
the Company's stockholders, and (iv) encourage teamwork. The Company and the
Committee intend for the Plan and the payments thereunder to qualify for the
exception from Section 162(m) of the Code for "qualified performance-based
compensation."
1.3 Establishment. The Plan is effective February 27, 2001 and for a
period of ten years thereafter. The Plan shall be approved by the holders of a
majority of the outstanding shares of common stock of the Company, present, or
represented, and entitled to vote at a meeting called for such purpose, which
approval must occur within the period ending twelve months after the date the
Plan is adopted by the Committee. Pending such approval by the shareholders,
Awards under the Plan may be granted to Key Associates, but no such Awards may
be paid prior to and without receipt of shareholder approval. In the event
shareholder approval is not obtained within such twelve-month period, all such
Awards shall be void.
ARTICLE II
DEFINITIONS AND CONSTRUCTION
2.1 Definitions. Where the following capitalized words and phrases appear
in this instrument, they shall have the respective meanings set forth below
unless a different context is clearly expressed herein.
(a) Account: The word "Account" shall mean the bookkeeping account
maintained by the Company to which will be credited the Participant's
Deferred Award, Company Deferred Award and Account Earnings.
(b) Account Earnings: The words "Account Earnings" means the earnings
deemed to be credited to the Account pursuant to Section 4.3 herein.
(c) Affiliated Entity: The words "Affiliated Entity" means any
partnership or limited liability company in which a majority of the
partnership or other similar interest thereof is owned or controlled,
directly or indirectly, by the Company or one or more of its Subsidiaries
or Affiliated Entities or a combination thereof. For purposes hereof, the
Company, a Subsidiary or an Affiliated Entity shall be deemed to have a
majority ownership interest in a partnership or limited liability company
if the Company, such Subsidiary or Affiliated Entity shall be allocated a
majority of partnership or limited liability company gains or losses or
shall be or control a managing director or a general partner of such
partnership or limited liability company.
(d) Anniversary Date: The words "Anniversary Date" shall mean the
last Saturday of December, which is end of each Year of the Company.
(e) Award: The word "Award" shall mean, with respect to any
Participant, the amount of bonus calculated in accordance with Article IV
hereof.
A-1
36
(f) Award Period: The words "Award Period" shall mean the five Year
period during which the Award may be earned by a Participant.
(g) Beneficiary: The word "Beneficiary" shall mean that person
designated by the Participant pursuant to Section 5.3 hereof.
(h) Base Salary: The words "Base Salary" shall mean the Participant's
annual base salary as determined by the Committee for each Year of the
Award Period with no adjustment for salary merit increases or any salary
decreases occurring during such Year.
(i) Board: The word "Board" shall mean the Board of Directors of the
Company.
(j) Cause: The word "Cause" shall mean if the Participant (i) is
convicted of a felony, (ii) engages in an act of personal dishonesty which
is intended to result in personal enrichment of the Executive at the
expense of the Company, a Subsidiary or Affiliated Entity, or (iii)
"willfully" fails to follow a direct, reasonable and lawful order of the
Board and/or the Chairman and Chief Executive Officer, within the
reasonable scope of the Participant's duties, and such failure, if curable,
is not cured within 30 days. No act, or failure to act, by the Participant
shall be deemed "willful" unless done, or omitted to be done, by the
Participant not in good faith and without reasonable belief that the
Participant's action or omission was in the best interest of the Company, a
Subsidiary or Affiliated Entity. Cause shall not exist under this
Subsection 2.1(j) unless and until the Company has delivered to Participant
a copy of a resolution duly adopted by not less than 3/4ths of the Board
(excluding, if applicable, the Participant) at a meeting of the Board
called and held for such purpose (after reasonable notice to the
Participant and an opportunity for the Participant, together with his
counsel, to be heard before the Board), finding that in the good faith
opinion of the Board, the Participant was guilty of the conduct set forth
above and specifying the particulars of such conduct in detail.
(k) Change of Control Event: The words "Change of Control Event"
means each of the following:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more (the "Triggering Percentage") of either (i)
the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, in the event the "Incumbent Board" (as
such term is hereinafter defined) pursuant to authority granted in any
rights agreement to which the Company is a party (the "Rights
Agreement") lowers the acquisition threshold percentages set forth in
such Rights Agreement, the Triggering Percentage shall be automatically
reduced to equal the threshold percentages set pursuant to authority
granted to the board in the Rights Agreement; and provided, further,
however, that the following acquisitions shall not constitute a Change
of Control: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, or (iv) any acquisition by
any corporation pursuant to a transaction which complies with clauses
(x), (y), and (z) of subsection (iii) of this Section 2.1(k); or
(ii) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, appointment or
nomination for election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for purposes of this
definition, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
A-2
37
(iii) Approval by the shareholders of the Company of a
reorganization, share exchange, merger or consolidation or acquisition
of assets of another corporation (a "Business Combination"), in each
case, unless, following such Business Combination, (x) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such
Business Combination will beneficially own, directly or indirectly, more
than 50% of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may
be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction will own the Company through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior
to such Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (y) no Person
(excluding any employee benefit plan (or related trust) of the Company
or such corporation resulting from such Business Combination) will
beneficially own, directly or indirectly, 20% or more of, respectively,
the then outstanding shares of common stock of the corporation resulting
from such Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination, and (z)
at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination will have been
members of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for such
Business Combination; or
(iv) Approval by the shareholders of the Company of (x) a complete
liquidation or dissolution of the Company or, (y) the sale or other
disposition of all or substantially all of the assets of the Company,
other than to a corporation, with respect to which following such sale
or other disposition, (A) more than 50% of, respectively, the then
outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors will
be beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the
case may be, (B) less than 20% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power
of the then outstanding voting securities of such corporation entitled
to vote generally in the election of directors will be beneficially
owned, directly or indirectly, by any Person (excluding any employee
benefit plan (or related trust) of the Company or such corporation),
except to the extent that such Person owned 20% or more of the
Outstanding Company Common Stock or Outstanding Company Voting
Securities prior to the sale or disposition, and (C) at least a majority
of the members of the board of directors of such corporation will have
been members of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for such
sale or other disposition of assets of the Company.
(l) Code: The word "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
(m) Committee: The word "Committee" shall mean the Compensation &
Organization Committee appointed by the Board which in accordance with
Article VIII herein will administer the Plan.
(n) Company: The word "Company" shall mean Fleming Companies, Inc.,
or its successor.
(o) Company Deferred Award: The words "Company Deferred Award" will
equal 50% of any Earned Award which will be automatically deemed deferred
into the Account as provided in the Plan.
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(p) Deferral Election: The words "Deferral Election" shall mean the
election made by the Participant to defer that portion of his Participant
Earned Award which could be otherwise payable immediately following the
Year when earned.
(q) Deferred Award: The words "Deferred Award" shall mean that
portion of a Participant's Earned Award and the Company Deferred Award
which has been deferred into the Account.
(r) Earned Award: The words "Earned Award" shall mean the Award after
the Target applicable for the Year has been attained.
(s) Earnings: The word "Earnings" shall mean, for the Year of
determination of an Award, the consolidated gross revenues of the Company
(excluding Extraordinary Revenue Items) computed in accordance with GAAP,
consistently applied, from which shall be deducted an amount for such
period equal to the aggregate of all consolidated costs, expenses and other
charges for such period (excluding Extraordinary Charge Items) and income
taxes for such period computed in accordance with GAAP, consistently
applied.
(t) Earnings Per Share: The words "Earnings Per Share" shall mean,
for the applicable Year of determination of an Award, Earnings divided by
the weighted average shares outstanding for a fully diluted earnings per
share calculation as determined in accordance with GAAP consistently
applied.
(u) Effective Date: The words "Effective Date" shall mean February
27, 2001.
(v) Employer: The word "Employer" shall mean the Company, any
Subsidiary or an Affiliated Entity.
(w) Extraordinary Charge Items: The words "Extraordinary Charge
Items" shall mean for the Year of determination of an Award: (i) expense
items and other charges as determined extraordinary in accordance with
GAAP, consistently applied, as shall appear on the consolidated earnings
statements of the Company for such Year; and (ii) expense items and other
charges the Committee considers non-operating and by nature unusual or
infrequent.
(x) Extraordinary Revenue Items: The words "Extraordinary Revenue
Items" shall mean for the Year of determination of an Award: (i) revenue
items determined as extraordinary in accordance with GAAP, consistently
applied, as shall appear on the consolidated earnings statements of the
Company, and (ii) revenue items the Committee considers non-operating and
by nature unusual or infrequent.
(y) GAAP: "GAAP" shall mean Generally Accepted Accounting Principles.
(z) Key Associate: The words "Key Associate" shall mean any full time
employee of the Company, a Subsidiary or Affiliated Entity who holds the
position of Chairman, Chief Executive Officer, President, Executive Vice
President, Senior Vice President or Vice President or any other associate
who is an officer of the Company, a Subsidiary or Affiliated Entity who may
be selected for participation in the Plan.
(aa) Participant: The word "Participant" shall mean a Key Associate
who has been selected for participation in the Plan by the Committee.
(bb) Participant Deferred Award: The words "Participant Deferred
Award" shall mean that portion of an Earned Award (not to exceed 50% of the
Earned Award) which is deferred into his Account.
(cc) Plan: The word "Plan" shall mean the "Fleming Companies, Inc.
Key Executive Retention Plan" as set forth in this instrument, and as
hereafter amended from time to time.
(dd) Subsidiary: The word "Subsidiary" shall mean any corporation
consolidated with Company under GAAP.
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(ee) Target: The word "Target" shall mean the goal established by the
Committee that requires Earnings Per Share for each Year to exceed the
prior Years Earnings Per Share by at least 5% before the Award for such
Year will be earned.
(ff) Thrift Award: The words "Thrift Award" means the additional
credit made to a Participant's Account as provided in Section 4.2 herein.
(gg) Vesting Date: The words "Vesting Date" means the last Saturday
of each Year, when the Participant earns a nonforfeitable right to a
portion of his Company Deferred Award if he is then in the employ of the
Company, a Subsidiary or Affiliated Entity, as provided in Subsection
4.1(c).
(hh) Year: The word "Year" shall mean the fiscal year of the Company.
2.2 Construction. The masculine gender, wherever appearing in the Plan,
shall be deemed to include the feminine gender, unless the context clearly
indicates to the contrary. Any word appearing herein in the plural shall include
the singular, where appropriate, and likewise the singular shall include the
plural, unless the context clearly indicates to the contrary.
ARTICLE III
PARTICIPATION
3.1 Selection for Participation. A Key Associate must be selected by the
Committee to be a Participant based on criteria determined by the Committee,
which may include the Key Associate's overall job level and ability to impact
financial results of the Company, any Subsidiary or Affiliated Entity. The
Committee may add Key Associates at any time during each Year in its sole
discretion. Unless the Committee determines to the contrary, or as otherwise
provided in this Plan, any Participant whose employment with the Company, a
Subsidiary or an Affiliated Entity is terminated for any reason other than death
shall not participate in the Plan for the Year of termination.
3.2 Timing of Deferral Elections. On or before the end of the Year
immediately preceding each Year (or in the case of a person who first becomes a
Participant during the Year, within 30 days after becoming a Participant), each
Participant may make an irrevocable election, to receive all or any portion of
his Participant's Earned Award for the Year (but not to exceed 50% of the Earned
Award), in cash, or defer to the Account all or any portion of the Participant's
Earned Award (but not to exceed 50% of the Earned Award). Provided, the
foregoing notwithstanding, with respect to the initial Participants in the Plan
in 2001, such Participant must make an election to defer all or any portion of
his or her Earned Award prior to April 1, 2001, and such election shall be
applicable to the remainder for 2001. Deferral Elections made for the applicable
Year may not be changed.
ARTICLE IV
DETERMINATION OF AWARDS
4.1 Determination.
(a) Award. In each of the first three years of a Participant's Award
Period, a Participant is eligible to receive an Award calculated by
multiplying the Participant's Base Salary by a percentage designated by the
Committee. Within the first 90 days of each of the first three Years of a
Participant's Award Period, the Committee will determine the two components
of the formula used to calculate each Participant's Award by determining
the Participant's Base Salary for that Year and selecting a designated
percentage of the Participant's Base Salary that may be earned as an Award
for such Year up to a maximum of 200% of Base Salary. The designated
percentage of Base Salary may not be the same for each Participant. Once an
Award has been granted, the Committee may not increase the amount of such
Award either before or after the date the Award has been earned.
(b) Calculation of Award. For any Participant to be entitled to an
Earned Award, the Target level of Earnings Per Share for the applicable
Year first must be attained or exceeded. Failure of the Company
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to attain the Target for the Award for the applicable Year will result in
forfeiture of such Award for that Year. Once the Target for Earnings Per
Share for such Year has been achieved, the Company Deferred Award will be
automatically deferred into the Account. Depending upon the election made
by the Participant in his Deferral Election, up to 50% of the Earned Award
will be paid in cash within 30 days after the Committee certifies that the
Company has met the applicable Target for the Year, and the balance shall
be the Participant's Deferred Award credited to his Account.
(c) Vesting -- Company Deferred Award. In addition to the requirement
that the applicable Target for the Year of the Award be attained, the
Participant must also remain in the employ of the Company, a Subsidiary or
any Affiliated Entity until the applicable Vesting Date scheduled below to
become vested in the portion of his Company Deferred Award (including
Account Earnings) unless otherwise provided in the Plan. The vesting
schedule applicable to the Company Deferred Award will be as follows:
--------------------------------------------------------------------------------------------------
YEAR OF VESTED PORTION OF COMPANY DEFERRED AWARD AT VESTING DATE
AWARD 2001 2002 2003 2004 2005
--------------------------------------------------------------------------------------------------
2001 0% 0% 50% 75% 100%
--------------------------------------------------------------------------------------------------
2002 0% 50% 75% 100%
--------------------------------------------------------------------------------------------------
2003 50% 75% 100%
--------------------------------------------------------------------------------------------------
2004 75% 100%
--------------------------------------------------------------------------------------------------
2005 100%
--------------------------------------------------------------------------------------------------
Except as otherwise provided in this Plan, in the event a Participant's
employment terminates with the Company, a Subsidiary and any Affiliated
Entity prior to attainment of the applicable Vesting Date, such Participant
shall forfeit the unvested portion of his Company Deferred Award and any
Account Earnings attributable to such unvested portion of his Company
Deferred Award. Transfers of employment between or among any of such
entities shall not be a termination of employment which causes a forfeiture
of a Company Deferred Award.
(d) Vesting -- Participant Deferred Award. A Participant shall at all
times be 100% vested and nonforfeitable in his Participant Deferred Award.
4.2 Thrift Award. At the end of the fourth Year in the Award Period, the
Company shall credit to the Account an amount equal to 33% of the prior balance
in the Account (including Account Earnings) as of the end of the fourth Year in
the Award Period if the Target has been achieved for the fourth Year. At the end
of the fifth Year in the Award Period, then, a similar credit of 33% of the
balance of the Account at the end of the fifth Year (including Account Earnings)
will be made to the Account if the Target has been achieved for the fifth Year.
The Thrift Award shall be considered to be part of the Participant's Company
Deferred Award for all purposes under this Plan which shall include vesting,
allocation of Account Earnings, and payment.
4.3 Account Earnings. The Account (including the Thrift Award) shall be
credited to reflect Account Earnings as of the last day of each calendar quarter
with interest calculated at a rate equal to the prime rate of interest plus 1%
as published in the Wall Street Journal (Southwest Edition) in the Money Rate
Section as of the beginning of each calendar quarter, and Account Earnings will
continue to be allocated until the applicable Account has been paid in full.
4.4 Maximum Award Payment. Notwithstanding any other provision of the
Plan to the contrary, the maximum dollar amount which may be paid to any
Participant over the Participant's Award Period is an amount which is equal to
five times a base salary of $3,000,000.
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ARTICLE V
PAYMENT OF AWARDS
5.1 Date of Payment of Awards. Depending upon the election made by the
Participant in his Deferral Election as to the amount of Earned Award which may
be paid or deferred, payment of up to 50% of an Earned Award may be made, in
cash, as soon as practicable following the Anniversary Date of the Year which
relates to the Award; and, the balance of the Earned Award will be credited to
the Account as the Participant's Deferred Award. Unless sooner paid as provided
in this Plan, the vested portion of the Participant's Account will be paid
within 30 days following the end of the last Year in the Award Period. In the
event of the termination of employment of the Participant for any reason
whatsoever prior to the end of the Award Period other than termination of
employment of the Participant for Cause, the Participant, or his Beneficiary in
the case of death, shall receive his vested portion of his Account within 30
days following such termination, and the nonvested portion of the Company
Deferred Award (and Thrift Award) shall be forfeited.
5.2 Hardship Withdrawals. In the event of an unforeseeable emergency
prior to the date of payment as provided in Section 5.1 above, if requested by
the Participant, the Committee, in its sole discretion, may approve a
distribution to a Participant of the portion of the Participant's Account
balance consisting of the Participant's Deferred Award that is reasonably needed
to satisfy the emergency need. An emergency withdrawal will be approved only in
a circumstance of severe financial hardship to the Participant resulting from a
sudden and unexpected illness or accident of the Participant or of a dependant
of the Participant, loss of property due to casualty, or some other
extraordinary or unforeseeable circumstance arising from events beyond the
control of the Participant. The Account Earnings otherwise credited to the
Participant's Account shall be determined as if the withdrawal had been debited
from the Participant's Account on the first day of the calendar quarter in which
the withdrawal occurs.
5.3 Beneficiary Designation. In the event of the death of a Participant,
the vested portion of the Participant's Account shall be paid to the Beneficiary
designated by the Participant on a form provided by the Committee, who is (i) an
individual or a trust established for the benefit of an individual, and (ii)
living on the date of the Participant's death. If there is no Beneficiary then
living, the benefit will be paid to the estate of the Participant in the form of
a single lump sum. While a Participant is employed by the Employer, the
Participant may change his Beneficiary by delivering to the Committee a properly
executed form designating a new Beneficiary.
5.4 Forfeiture of Award for Cause. Unless the Committee otherwise
determines, if a Participant's employment with the Company is terminated prior
to the date of payment of his Award for Cause, the Participant, his Beneficiary
and any other person will forfeit any interest (vested and nonvested) which the
Participant had in the Company Deferred Award (and Thrift Award). Until any
Award is paid, no Participant, Beneficiary or any other person shall have any
right to or interest in such Award except as provided in this Plan.
5.5 Change of Control Event.
(a) Acceleration of Vesting. Each Participant is a party to an
employment agreement with the Company which is effective upon a "change of
control" as such term is defined in the agreement ("Change of Control
Agreement"). In the event of the occurrence of a Change of Control Event
and the Participant's employment is involuntarily terminated without Cause
or for Good Reason (as defined under the Participant's Change of Control
Agreement), so that the Participant is entitled to payment under his Change
of Control Agreement, the Participant shall be deemed to be 100% vested and
nonforfeitable in all of his Award as if he had remained in the continuous
employ of the Company, a Subsidiary or an Affiliated Entity for the entire
Award Period, Base Pay was as determined for the Year in which the Change
of Control Event occurred and the applicable Target for the Year in which
the Change of Control Event occurs has been met. This will include
allocating to such Account the amount of any Thrift Award which would
otherwise be required to be added to the Account as provided in Section 4.2
above (and Account Earnings on the Account) for the remainder of the Award
Period.
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(b) Accelerated Payment. Within 30 days of the occurrence of the
termination of the Participant's employment as provided under Subsection
(a) above, and the Participant is entitled to payment under his Change of
Control Agreement for one of the reasons stated in said Subsection (a), the
Account of the Participant will be paid to him in a single lump sum
payment. In addition, an additional amount will be distributed (a "gross up
payment") in an amount equal to the Participant's liability for income,
excise and employment taxes attributable to the payment of the Account. It
is the intent that if a Change of Control Event occurs and payment is made
pursuant to this Section 5.5, the Participant shall be paid an aggregate
amount so that after payment of all such income, withholding and excise
taxes, the amount received by the Participant will equal the balance in the
Account as of the date of payment before reduction for any such taxes.
ARTICLE VI
GENERAL BENEFIT PROVISIONS
6.1 No Trust. No action under this Plan by the Company, its Board or the
Committee shall be construed as creating a trust, escrow or other secured or
segregated fund in favor of the Participant or any other persons otherwise
entitled to his Award. The status of the Participant and any other person
entitled to his Award with respect to any liabilities assumed by the Company,
any Subsidiary or Affiliated Entity hereunder shall be solely those of unsecured
creditors of the Company, Subsidiary or Affiliated Entity. Any asset acquired or
held by the Company, any Subsidiary or Affiliated Entity in connection with
liabilities assumed by it hereunder, shall not be deemed to be held under any
trust, escrow or other secured or segregated fund for the benefit of the
Participant or any other person entitled to his Award or to be security for the
performance of the obligations of the Company, any Subsidiary or Affiliated
Entity (who is the employer of the Participant), but shall be, and remain, a
general, unpledged, unrestricted asset of the Company, such Subsidiary or
Affiliated Entity (who is the employer of the Participant) at all times subject
to the claims of general creditors of the Company, then, such Subsidiary or
Affiliated Entity.
6.2 Withholding for Income and Employment Taxes. Subject to Section 5.5
herein, since all amounts to be paid under the Plan to a Participant are to be
considered as compensation paid for services rendered by the Participant, the
Company shall comply with all federal and state laws and regulations respecting
the withholding, deposit and payment of any income, employment or other taxes
relating to the Awards and any payments made under this Plan, and all Awards
shall be subject to and reduced by the amount of such taxes.
6.3 Payments by the Company, Subsidiary or Affiliated Entity. The
payments required to fund the cost of the Awards provided by the Plan shall be
made solely by the Company, any Subsidiary or Affiliated Entity whose Key
Associates are participating in the Plan from its general assets. The Plan is an
"unfunded plan" for incentive compensation.
6.4 No Transferability. No right or benefit under this Plan shall be
subject in any manner to garnishment, attachment, anticipation, alienation,
sale, transfer, assignment, gift, pledge, encumbrance, or disposition,
hypothecation, levy, execution or the claim to creditors, either voluntarily or
involuntarily of the Participant, and any attempt to so garnish, attach,
anticipate, alienate, sell, transfer, assign, gift, pledge, encumber, dispose,
hypothecate, levy or execute on the same shall be null and void, and neither
shall such benefits or beneficial interest be liable or subject to the debts,
contracts, liabilities, engagements or torts of any person to whom such funds
are payable.
6.5 Expenses. All expenses and costs in connection with adoption and
administration of the Plan shall be borne by the Company.
6.6 No Prior Right or Offer. No Key Associate shall have any contractual
or other right to participate in the Plan until he is selected for participation
by the Committee. No Award to any Participant in any Year shall be deemed to
create a right to receive any Award or to participate in the Plan in any
subsequent Year.
6.7 Right to Continued Employment. Participation in the Plan shall not
give any Key Associate any right to remain in the employ of the Company, any
Subsidiary, or any Affiliated Entity. The Company or, in the case of employment
with a Subsidiary or an Affiliated Entity, the Subsidiary or Affiliated Entity
reserves
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the right to terminate any Key Associate at any time. Further, the adoption of
this Plan shall not be deemed to give any Key Associate or any other individual
any right to be selected as a Participant or to be granted an Award.
6.8 No Part of Other Benefits. The benefits provided in this Plan shall
not be deemed a part of or considered in calculating any other benefit provided
by the Company, any Subsidiary or Affiliated Entity to its Key Associates. The
Company assumes and shall have no obligation to Participants except as expressly
provided in the Plan. This Plan is a complete statement of the terms and
conditions of the Plan.
6.9 Other Plans. Nothing contained herein shall limit the Company's power
to grant other bonuses to Key Associates regardless of their participation in
the Plan.
6.10 Amendment or Termination of Plan. The Committee may alter, suspend
or terminate the Plan at any time. In addition, the Committee may, from time to
time, amend the Plan in any manner, but no such termination or amendment shall
adversely affect a Participant in the Plan with respect to his or her rights
thereunder with respect to any Award which has been made without the affected
Participant's written consent. Any such alteration, amendment, suspension or
termination of the Plan shall be prospective only. Provided, the foregoing
notwithstanding, the Committee may make any amendment necessary in order for the
Plan to meet the requirements of Section 162(m) of the Code for qualified
performance-based compensation.
6.11 Obligations Binding Upon Successors. The obligations of the Company
under this Plan shall be binding upon successors of the Company, its assigns and
transferees.
6.12 Construction. Masculine pronouns and other words of masculine gender
shall refer to both men and women. The titles and headings of the Sections in
the Plan are for the convenience of reference only, and in the event of any
conflict, the text of the Plan rather than such title or heading shall control.
6.13 Governing Law; Severability. The validity of the Plan or any of its
provisions shall be construed, administered and governed in all respects under
the laws of the State of Texas. If any provisions of this instrument shall be
held by a court of competent jurisdiction to be invalid or unenforceable, the
remaining provisions shall continue to be fully effective.
6.14 Consent to Plan Terms. By electing to participate in this Plan, a
Participant shall be deemed conclusively to accept and consent to all the terms
of this Plan and to all actions and decisions of the Company, the Board and/or
Committee. Such terms and consent shall apply to and be binding upon each
Participant's Beneficiary or Beneficiaries, personal representative's and other
successors in interest.
ARTICLE VII
PROVISIONS RELATING TO PARTICIPANTS
7.1 Information Required of Participants. Payment of Awards shall be made
as provided in this Plan and no formal claim shall be required therefor.
7.2 Benefits Payable to Incompetents. Any benefits payable hereunder to a
minor or other person under legal disability may be made, at the discretion of
the Committee, (i) directly to such person, or (ii) to a parent, spouse,
relative by blood or marriage, or the legal representative of such person. The
Committee shall not be required to see to the application of any such payment,
and the payee's receipt shall be a full and final discharge of the Committee's
responsibility hereunder.
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ARTICLE VIII
ADMINISTRATION
8.1 The Committee Shall Administer the Plan. A member of the Committee
may not be eligible to become a Participant in the Plan. The Committee shall
have the power where consistent with the general purpose and intent of the Plan
to (i) establish Targets, (ii) modify the requirements of the Plan to conform
with the law or to meet special circumstances not anticipated or covered in the
Plan, (iii) suspend or discontinue the Plan, (iv) establish policies, (v)
prepare agreements evidencing the grant and conditions of the Award and (vi)
adopt rules and regulations and prescribe forms for carrying out the purposes
and provisions of the Plan. The Committee shall have the authority to interpret
and construe the Plan, and determine all questions arising under the Plan in its
sole discretion. Any interpretation, decision or determination made by the
Committee shall be final, binding and conclusive. A majority of the Committee
shall constitute a quorum, and an act of the majority of the members present at
any meeting at which a quorum is present shall be the act of the Committee.
8.2 Claims Procedure. The Committee shall in its sole discretion make all
determinations as to the right of any person to benefits under the Plan. If any
request for a benefit is wholly or partially denied, the Committee shall notify
the person requesting the benefits, in writing, of such denial, including in
such notification the following information:
(a) The specific reason or reasons for such denial;
(b) The specific references to the pertinent Plan provisions upon
which the denial is based;
(c) A description of any additional material and information which may
be needed to clarify the request, including an explanation of why such
information is required; and
(d) An examination of this Plan's review procedure with respect to
denial of benefits.
8.3 Review Procedure. Any Participant or Beneficiary whose claim has been
denied in accordance with Section 8.2 above may appeal to the Committee for
review of such denial by making a written request therefor within 60 days of
receipt of the notification of such denial. Such Participant or Beneficiary may
examine documents pertinent to the review and may submit to the Committee
written issues and comments. Within 60 days after receipt of the request for
review, the Committee shall communicate to the claimant, in writing, its
decision, and the communication shall set forth the reason or reasons for the
decision and specific references to those Plan provisions upon which the
decision is based.
8.4 Records and Reports. The Committee shall exercise such authority and
responsibility as it deems appropriate in order to comply with governmental laws
and regulations.
8.5 Rules and Decisions. The Committee may adopt such rules as it deems
necessary, desirable, or appropriate. When making a determination or
calculation, the Committee shall be entitled to rely upon information furnished
by a Participant, the Employer, the accountants of the Company or the legal
counsel of the Company.
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EXHIBIT B
AUDIT & COMPLIANCE COMMITTEE
MEMBERS
Alice M. Peterson, Chairperson
Carol B. Hallett
Edward C. Joullian III
CHARTER
The Audit and Compliance Committee is appointed by the Board to assist the
Board in monitoring (1) the integrity of the financial statements of the
Company, (2) the compliance by the Company with legal and regulatory
requirements and (3) the independence and performance of the Company's internal
and external auditors.
The members of the Committee shall meet the independence and experience
requirements of the New York Stock Exchange. The members of the Committee shall
be appointed by the Board on the recommendation of the Governance/Nominating
Committee.
The Committee shall have the authority to retain special legal, accounting
or other consultants to advise the Committee. The Committee may request any
officer or employee of the Company or the Company's outside counsel or
independent auditor to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.
The Committee shall make regular reports to the Board.
The Committee shall:
1. Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval.
2. Review the annual audited financial statements with management,
including major issues regarding accounting principles and practices as
well as the adequacy of internal controls that could significantly
affect the Company's financial statements.
3. Review an analysis prepared by management and the independent auditor of
significant financial reporting issues and judgments made in connection
with the preparation of the Company's financial statements.
4. Review with management and the independent auditor the Company's
quarterly financial statements.
5. Meet periodically with management to review the Company's major
financial risk exposures and the steps management has taken to monitor
and control such exposures.
6. Review major changes to the Company's accounting principles and
practices as suggested by the independent auditor, internal auditors or
management.
7. Recommend to the Board the appointment of the independent auditor, which
firm is ultimately accountable to the Committee and the Board.
8. Approve the fees to be paid to the independent auditor.
9. Receive periodic reports from the independent auditor regarding the
auditor's independence, discuss such reports with the auditor, and if so
determined by the Committee, recommend that the Board take appropriate
action to satisfy itself of the independence of the auditor.
10. Evaluate together with the Board the performance of the independent
auditor and, if so determined by the Committee, recommend that the
Board replace the independent auditor.
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11. Review the significant reports to management prepared by the internal
auditing department and management's responses.
12. Meet with the independent auditor prior to the audit to review the
planning and staffing of the audit.
13. Discuss with the independent auditor the matters required to be
discussed by the applicable Statements on Auditing Standards.
14. Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the
auditor and the Company's response to that letter. Such review should
include:
(a) Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access to
required information.
(b) Any changes required in the planned scope of the internal audit.
(c) The internal audit department responsibilities, budget, and
staffing.
15. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement.
16. Obtain reports from management, the Company's senior internal auditing
executive and the independent auditor, that the Company and its
subsidiaries are in conformity with the Company's Code of Conduct.
17. Advise the Board with respect to the Company's policies and procedures
regarding compliance with the Company's Code of Conduct.
18. Review with the Company's General Counsel legal matters that may have a
material impact on the financial statements, the Company's compliance
policies and any material reports or inquiries received from regulators
or governmental agencies.
19. Meet at least three times each year with the chief financial officer,
chief accounting officer, the senior internal auditing executive, and
the independent auditor in separate executive sessions.
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statements are complete and accurate and
are in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor. Nor is it the duty of
the Committee to conduct investigations, to resolve disagreements, if any,
between management and the independent auditor or to assure compliance with laws
and regulations and the Company's Code of Conduct.
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EXHIBIT C
FLEMING COMPANIES, INC.
FEBRUARY 2001
CORPORATE GOVERNANCE
THE PHILOSOPHY.
The Company will operate pursuant to the highest possible ethical standards
with integrity, propriety, and fairness, and in full compliance with the law.
Each director and management associate is expected to conduct himself or herself
at all times in accordance with these tenets. Every action by each director and
management associate will be taken with full consideration for the interests and
well-being, first, of all Company stockholders and, second, of all other Company
stakeholders. Equal opportunity without qualification is the Company's policy in
employment practices, in its daily management, and in its procurement and sale
of goods and services. Discrimination will not be permitted based on race,
color, religion, sex, age, disability status, national origin, citizenship, or
Vietnam veteran status.
THE STANDARDS.
The Governance/Nominating Committee (the "Governance Committee") of the
Board has adopted and will administer the following Corporate Governance
Standards for the guidance of the Company:
1. The Board will operate in accordance with a statement of Requirements of
Management and Directors attached hereto as Attachment I.
2. The Chairman of the Compensation and Organization Committee (the
"Compensation Committee") shall conduct a performance appraisal review
with the CEO at least annually. In connection with the annual review,
the Chairman shall seek consultation with, and request information from,
the other members of the Compensation Committee and other independent
directors.
3. The Board will annually review and approve a three-year strategic plan
and a one-year operating plan for the Company.
4. Beginning with the annual meeting of stockholders in 2002, all directors
will stand for election annually.
5. The Board believes that as a general rule, former Company associates
should not serve on the Board; provided, however, this standard shall
not apply to former Company associates five years after he/she has no
longer been an associate.
6. The Audit and Compliance Committee (the "Audit Committee") and the
Compensation Committee shall consist entirely of independent directors.
7. The Board will appoint all committee members of the designated standing
committees of the Board (Audit and Compliance, Compensation and
Organization, Finance, Governance/Nominating and an Executive Committee)
upon the recommendation of the Governance Committee. The intent will be
to rotate various members of the Board through various committees so
that each independent member of the Board has an opportunity to become
more experienced about the internal operations and affairs of the
Company. Effective with the annual meeting in 2000, the Board has the
following standing committees: Audit and Compliance, Compensation and
Organization, Governance/ Nominating, Finance and an Executive
Committee.
C-1
48
8. The Governance Committee will annually assess Board and committee
effectiveness through the use of the "Board Evaluation" questionnaire
attached hereto as Attachment II. Each independent member of the Board
will be required to complete the questionnaire annually. The
questionnaires shall become a part of the permanent records of the
Company and maintained by the Company's corporate secretary.
9. Whenever feasible, directors will receive materials well in advance of
meetings for items to be acted upon. In addition, independent directors
shall meet outside of the presence of non-independent directors from
time to time as deemed appropriate.
10. Interlocking directorships will not be allowed; provided, however, that
this shall not preclude members of the Fleming Board of Directors from
serving together on boards of other public companies. (An interlocking
directorship would occur if a Fleming director or officer served on the
board of company X and a director or an officer of company X served on
the Fleming Board, or if a major supplier or customer served on
Fleming's Board.) Joint ventures will be permitted between the Company
and independent Board members subject to approval by the Board and
Securities and Exchange Commission disclosure rules.
11. Directors are required to own at least 1,000 shares of Fleming common
stock within one year of election (by the Board or the Stockholders)
and 12,000 shares within four years of such election. Directors
currently serving as of March 1, 1999 have until March 1, 2003 to meet
this requirement. A substantial portion of each independent director's
annual compensation shall be paid in Fleming common stock or its
equivalent.
12. Each director will retire upon the earlier of 30 days upon his/her 15th
anniversary as a director; provided, however, the 15 year limitation
shall not apply to directors holding office at the time these standards
were first adopted by the Board in 1997.
13. Succession planning and management development will be reported
annually to the independent directors by the CEO.
14. All corporate officers are required to own Fleming common stock, with a
value equal to a specified multiple of their base salary with the
ownership requirements to be met over a five-year period. The
Compensation Committee will be responsible for setting the multiples on
which the ownership requirements will be based.
15. Generally, management's incentive compensation will be linked directly
and objectively to measured financial goals set in advance by the
Compensation Committee; however, the Board recognizes that flexibility
is important in determining compensation and that all management
compensation may not be so linked.
16. Stock options will not be repriced (the exercise price for options will
not be lowered even if the current market price of the stock is below
the exercise price) and all stock option plans will be subject to
stockholder approval.
17. All stockholders have equal voting rights except as may be provided by
law, the Restated Certificate of Incorporation or, if applicable, under
a share rights plan adopted by the Company.
18. These Corporate Governance standards have been developed and approved
by the Board and will be reviewed by the Board and published at least
annually and revised where appropriate.
C-2
49
ATTACHMENT I
REQUIREMENTS OF MANAGEMENT AND DIRECTORS
The Governance Committee shall direct the operation of the Company through
management in accordance with the following Requirements of Management and
Directors in order to enhance Board effectiveness:
BOARD REQUIREMENTS FLEMING REQUIREMENTS
OF MANAGEMENT OF DIRECTORS
----------------------------------------- -----------------------------------------
- Strong principled and ethical - Represent and act in the best interests
leadership. of the stockholders.
- Develop strategies to deliver strong - Critique and approve strategic and
market franchises and build stockholder operating plans.
wealth over the long term.
- Recommend appropriate strategic and - Select, motivate, evaluate, and
operating plans. compensate the CEO and all senior
officers.
- Maintain effective control of - Good understanding of strategies and
operations. the business.
- Measure performance against peers. - Review succession planning and
management development. (For
independent directors only.)
- Assure sound succession planning and - Advise and consult on key
management development. organizational changes.
- Sound organizational structure. - Careful study of Board materials and
issues.
- Inform the Board regularly regarding - Active, objective and constructive
the status of key initiatives. participation at meetings of Board and
Committees.
- No surprises. - Assistance in representing Fleming to
the outside world.
- Board meetings which are well planned, - Counsel on corporate issues.
allow meaningful participation, and
provide for timely resolution of
issues.
- Advance Board materials which contain - Good understanding of general economic
the right amount of information and are trends and corporate governance.
received sufficiently in advance of
meetings.
C-3
50
ATTACHMENT II
BOARD EVALUATION QUESTIONNAIRE
This questionnaire shall be provided to each independent director on or
about January 1 of each year and such directors shall complete the questionnaire
by entering a number grade from 1 to 5 (where 1 is considered "poor" and 5 is
considered "excellent") and written comments, where appropriate, as to each of
the following 14 standards. IF YOU GRADE ONE OR MORE QUESTIONS WITH A 2 OR
LOWER, PLEASE PROVIDE COMMENTS IN THE SPACE PROVIDED BELOW.
QUESTION POINTS
------------------------------------------------------------ -----
1. The Board knows and understands the Company's vision,
strategic precepts, strategic plan and operating plan.
-----
2. The Board reflects its understanding of the Company's
vision, strategic precepts, strategic plan, and
operating plan in its discussions and actions on key
issues throughout the year.
-----
3. Board meetings are conducted in a manner which ensures
open communication, meaningful participation, and
timely resolution of issues.
-----
4. Board materials contain the right amount of
information, and Board members receive their materials
sufficiently in advance of meetings.
-----
5. Board members are diligent in preparing for meetings
-----
6. The Board reviews and adopts an annual operating budget
and regularly monitors performance against it
throughout the year.
-----
7. The Board monitors the Company's income statement,
balance sheet, and cash flow
-----
8. The Board reviews and adopts an annual capital budget
and receives regular written or oral reports of
performance against it throughout the year.
-----
9. In tracking Company performance, the Board regularly
considers the performance of peer companies.
-----
10. The Board reviews on at least an annual basis the
performance of the CEO through the Compensation
Committee.
-----
11. On an annual basis, the Board and/or the Compensation
Committee will review the performance and ethics of the
senior officers.
-----
12. The correlation between executive pay and Company
performance will be reviewed on an annual basis by the
Board and/or the Compensation Committee.
-----
13. On an annual basis, the independent directors shall
review the succession plans for the CEO and key senior
management.
-----
14. No less frequently than prior to his/her nomination
every third year, each individual director standing for
re-election will receive a performance review prior to
his/her nomination from those members of the Governance
Committee who are not standing for re-election. This
assures that each director receives feedback from his
fellow directors on his/her performance as a director.
-----
COMMENTS:
The Governance Committee will analyze the numerical ratings and comments in
detail and develop recommendations to enhance Board effectiveness. The Chairman
of the Governance Committee shall present the assessments and recommendations to
the full Board annually at its meeting immediately prior to the mailing of the
proxy materials. The Governance Committee will oversee the process of
implementing recommendations.
C-4
51
EXHIBIT D-1
GUIDELINES FOR BOARD COMPOSITION
Size: Between 3 and 20 members (as set by Restated
Certificate of Incorporation). Board chooses within
those parameters.
Election: Board of directors to be elected annually.
Mix: Maximum of 3 inside directors; must always be a
majority of independent directors.
Independent Director: Must offer to stand down at end of term following
change in occupation or profession that would
diminish director's ability to contribute as a
board member.
Inside Director:
(Non-CEO) Must offer to resign from board upon the earlier of
either reaching age 65 or retirement, resignation,
other termination from company, or downward
revision status in company.
Disability: Must stand down if suffering from disability or ill
health sufficiently serious to prevent active
participation in board affairs over a sustained
period.
Attendance: If cumulative attendance at board and committee
meetings over two successive years falls below 60%,
director must offer to stand down.
D-1
52
EXHIBIT D-2
GUIDELINES FOR BOARD CANDIDATES
1. A director should have the ability to apply good independent judgment to
a business situation and should be able to represent broadly the
interests of all the company's shareholders and constituencies. Board
members should be recommended primarily on the basis of their
qualification to meet these fundamental criteria.
2. A director must be free of any conflicts of interest which would
interfere with his or her loyalty to the company and its shareholders.
Those who have positions with or significant interests in competitors of
the company may not be considered. To avoid even the appearance of a
conflict of interest, members of legal firms which provide legal counsel
to the company and representatives of investment banking houses,
commercial banks or management consulting firms which have or are
anticipated to have business relations with the company should not be
considered.
3. In addition, the following criteria should be considered in recommending
candidates for board membership, although these should not be applied
rigidly:
a. Maturity and Experience
A director should be mature and have practical or academic
experience in business, economics, government or the sciences.
Ideally, a director would have 15 or more years of experience
including management responsibilities.
b. Geography
Since the company's operations are primarily mainland United
States in scope, it is desirable to have a balanced geographic
representation with major geographic areas of the company's
business being reflected on the board to the extent practicable.
c. Past Experience in Order of Preference
(1) Chief executive officer, chief operating officer or senior
executive officer of a public or substantial private company,
preferably of an industrial, distribution or retailing company,
with sales in excess of $500,000,000.
(2) An educator from fields of business, economics or the sciences
with management experience.
d. Women, Minorities and Special Interests
Since a director represents broadly the interests of all the
company's shareholders and constituencies, he or she should be
chosen for his or her individual abilities and not be recommended
based upon gender, minority group status or as a representative
of any special interest group. However, it is desirable to have a
cross section of backgrounds, and candidates otherwise qualified
may be recommended with due consideration given to their gender,
minority status or special interests.
D-2
53
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD ON MAY 15, 2001 AT 10:00 A.M. AT OUR CUSTOMER
SUPPORT CENTER, 1945 LAKEPOINTE DRIVE, LEWISVILLE, TEXAS.
Mark S. Hansen, Neal J. Rider, or Carlos M. Hernandez is hereby constituted the
proxy of the undersigned with full power of substitution to represent and to
vote as specified all shares of common stock which the Shareholder(s) named on
the reverse side is entitled to vote at the above Annual Meeting or at any
adjournment thereof, and their discretion to vote upon all matters as may
properly be brought before the Meeting.
First Chicago Trust Company, a division of EquiServe, as Custodian under the
Dividend Reinvestment and Stock Purchase Plan, is hereby authorized to execute a
proxy with identical instructions for any shares of common stock held for the
benefit of the Shareholder(s) named on the reverse side.
Nominees for election to the Board of Directors for a one-year term expiring in
2002 are:
01. Herbert M. Baum, 02. Kenneth M. Duberstein, 03. Archie R. Dykes, 04. Carol
B. Hallett, 05. Robert S. Hamada, 06. Mark S. Hansen and 07. Guy A. Osborn.
Please sign and date on the reverse side and mail promptly in the enclosed
postage-paid envelope or otherwise to vote by telephone or Internet, please see
the reverse of this card.
--------------------------------------------------------------------------------
Comments:
---------------
SEE REVERSE
SIDE
---------------
--------------------------------------------------------------------------------
FOLD AND DETACH HERE ONLY IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL
FLEMING COMPANIES, INC.
Annual Meeting of Stockholders
May 15, 2001
10:00 a.m.
Lewisville, Texas
Your Vote is Important
Thank You for Voting.
A GREAT PLACE TO WORK
A GREAT PLACE TO TRADE
A GREAT PLACE TO INVEST
54
[X] PLEASE MARK YOUR 4867
VOTES AS IN THIS
EXAMPLE.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED, OR IF NO
DIRECTION IS INDICATED, THEY WILL BE VOTED "FOR" THE ELECTION OF THE DIRECTORS
NOMINATED BY THE BOARD AND "FOR" PROPOSALS 2 AND 3. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" PROPOSALS 2 AND 3.
--------------------------------------------------------------------------------------- -------------------------------------------
The Board of Directors Recommends a vote FOR Proposals 2 and 3. SPECIAL ACTION
--------------------------------------------------------------------------------------- -------------------------------------------
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Ratification of Deloitte & [ ] [ ] [ ] I have included comments or
Directors. Touche LLP as Independent change of address. [ ]
(see reverse) Auditors for 2001
I do not wish to receive future
For, except vote from the annual reports for this account
following nominee(s): 3. Approval of the Key at this address. [ ]
Executive Retention Plan. [ ] [ ] [ ]
-------------------------------- I agree to accept I plan to
--------------------------------------------------------------------------------------- future proxy attend the
statements and [ ] annual [ ]
annual reports meeting.
electronically.
-------------------------------------------
THE PROXY WILL VOTE IN HIS/HER DISCRETION,
ON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF.
I RESERVE THE RIGHT TO REVOKE THIS PROXY
AT ANY TIME BEFORE THE EXERCISE THEREOF.
NOTE: Please sign exactly as name appears
hereon. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such.
-----------------------------------------
-----------------------------------------
SIGNATURE(S) DATE
------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE ONLY IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL
FLEMING COMPANIES, INC.
Dear Shareholder:
Fleming encourages you to take advantage of new and convenient ways by which you
can vote your shares. You can vote your shares electronically through the
Internet or the telephone. This eliminates the need to return the proxy card.
To vote your shares electronically you must use the control number printed in
the box above, just below the perforation. The series of numbers that appear in
the box above is your personal code to access the system.
1. To vote over the Internet:
o Log on to the Internet and go to the web site
http://www.eproxyvote.com/flm.
2. To vote over the telephone:
o On a touch-tone telephone call 1-877-PRX-VOTE (1-877-779-8683) 24
hours a day, 7 days a week from the U.S. and Canada to vote your
proxy.
Your electronic vote authorizes the named proxies in the same manner as if you
marked, signed, dated and returned the proxy card.
If you choose to vote your shares electronically, do not mail back your proxy
card.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.