Susser Holdings DEF 14A 2008
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant x
Filed by a Party other than the Registrant ¨
Check the appropriate box:
SUSSER HOLDINGS CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
April 14, 2008
To our fellow shareholders:
You are cordially invited to attend the annual meeting of shareholders of Susser Holdings Corporation to be held on Tuesday, May 13, 2008 at 11:00 a.m. Central Time, at Texas A&M UniversityCorpus Christi, 6300 Ocean Drive, Corpus Christi, Texas 78412, Harte Research Institute Building, Room #127. Directions to our annual meeting have been posted to our website at http://investor.susser.com.
Details regarding the meeting and the business to be conducted are more fully described in the accompanying notice of annual meeting and proxy statement.
We hope you plan to attend the annual meeting, but even if you are planning to do so, we strongly encourage you to vote as soon as possible by completing and returning the enclosed proxy card in the pre-addressed envelope. Your vote is very important and returning the proxy card will ensure that your vote is counted at the meeting, even if you are present. Additional information about proxy voting can be found in the enclosed proxy statement.
Thank you for your continuing support of Susser Holdings Corporation. We look forward to your participation in the annual meeting.
TABLE OF CONTENTS
Susser Holdings Corporation
4433 Baldwin Boulevard
Corpus Christi, Texas 78408
This notice of annual meeting and proxy statement and form of proxy are first being distributed on or
about April 15, 2008.
1. Why am I receiving these materials?
The Board of Directors (the Board) of Susser Holdings Corporation (Susser or the Company) is providing these proxy materials for you in connection with Sussers annual meeting of shareholders (the Meeting), which will take place on Tuesday, May 13, 2008. As a shareholder, you are invited to attend the Meeting and are entitled to and requested to vote on the items of business described in this proxy statement.
2. What information is contained in this proxy statement?
The information in this proxy statement relates to the proposals to be voted on at the Meeting, the voting process, Susser's Board and Board committees, the compensation of directors and certain executive officers, and other required information.
3. How may I obtain Sussers Form 10-K and other financial information?
A copy of our 2007 Annual Report, which includes our 2007 Form 10-K, is enclosed.
Shareholders may request another free copy of our 2007 Annual Report, which includes our 2007 Form 10-K, from:
Susser Holdings Corporation
Attn: Investor Relations
P.O. Box 9036
Corpus Christi, TX 78469-9036
Alternatively, current and prospective investors can access the 2007 Annual Report, which includes our 2007 Form 10-K and other financial information, on our Investor Relations web site at:
We will also furnish any exhibit to the 2007 Form 10-K if specifically requested.
4. How may I obtain a separate set of proxy materials?
If you share an address with another shareholder, you may receive only one set of proxy materials (including our 2007 Annual Report with our 2007 Form 10-K and proxy statement) unless you have provided contrary instructions. If you wish to receive a separate set of proxy materials, please request the additional copies by contacting our Investor Relations department at the address and/or phone number specified in question 3 above. A separate set of proxy materials will be sent promptly following receipt of your request.
If you are a shareholder of record and wish to receive a separate set of proxy materials in the future, please call Computershare Investor Services, LLC (Computershare) at (303) 262-0600.
5. How may I request a single set of proxy materials for my household?
If you share an address with another shareholder and have received multiple copies of our proxy materials, you may write us at the address specified in question 3 above to request delivery of a single copy of these materials.
6. What should I do if I receive more than one set of voting materials?
You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a shareholder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive.
7. What items of business will be voted on at the annual meeting?
The items of business scheduled to be voted on at the Meeting are:
We also will consider any other business that properly comes before the Meeting. See question 18 What happens if additional matters are presented at the annual meeting? below.
8. How does the Board recommend that I vote?
Our Board recommends that you vote your shares FOR each of the nominees to the Board, FOR the ratification of the adoption of our Employee Stock Purchase Plan and FOR the ratification of the appointment of our independent registered public accounting firm for the 2008 fiscal year.
9. How many shares must be present or represented to conduct business at the annual meeting?
The quorum requirement for holding the Meeting and transacting business is that holders of a majority of shares of Susser common stock entitled to vote must be present in person or represented by proxy. Both abstentions and broker non-votes described in question 17 are counted for the purpose of determining the presence of a quorum.
10. What shares can I vote?
Each share of Susser common stock issued and outstanding as of the close of business on March 28, 2008 (the Record Date) is entitled to be voted on a one vote per share basis on all items being voted upon at the Meeting. You may vote all shares owned by you as of this time, including shares held directly in your name as the shareholder of record, and shares held for you as the beneficial owner through a broker, trustee or other nominee such as a bank (i.e., in street name). On the Record Date, Susser had approximately 17,025,338 shares of common stock issued and outstanding.
11. How can I vote my shares in person at the annual meeting?
Shares held in your name as the shareholder of record may be voted in person at the Meeting. Shares held beneficially in street name may be voted in person at the Meeting only if you obtain a legal proxy from the broker, trustee or nominee that holds your shares giving you the right to vote the shares. Even if you plan to attend the Meeting, we recommend that you also submit your proxy or voting instructions as described below so that your vote will be counted if you later decide not to attend the meeting.
12. How can I vote my shares without attending the annual meeting?
Whether you hold shares directly as the shareholder of record or beneficially in street name, you may direct how your shares are voted without attending the Meeting. If you are a shareholder of record, you may vote by submitting a proxy. If you hold shares beneficially in street name, you may vote by submitting voting instructions to your broker, trustee or nominee.
Shareholders of record may submit proxies by completing, signing and dating their proxy cards and mailing them in the accompanying pre-addressed envelopes. Susser shareholders who hold shares beneficially in street name may vote by mail by completing, signing and dating the voting instruction cards provided and mailing them in the accompanying pre-addressed envelopes.
13. What is the deadline for voting my shares?
If you hold shares as the shareholder of record, your vote by proxy must be received before the polls close at the Meeting. If you hold shares beneficially in street name with a broker, trustee or nominee, please follow the voting instructions provided by your broker, trustee or nominee.
14. May I change my vote?
You may change your vote at any time prior to the vote at the Meeting. If you are the shareholder of record, you may change your vote by granting a new proxy bearing a later date (which automatically revokes the earlier proxy), by providing a written notice of revocation to the Corporate Secretary prior to your shares being voted, or by attending the Meeting and voting in person. Attendance at the Meeting will not cause your previously granted proxy to be revoked unless you specifically make that request. For shares you hold beneficially in street name, you may change your vote by submitting new voting instructions to your broker, trustee or nominee, or, if you have obtained a legal proxy from your broker or nominee giving you the right to vote your shares, by attending the Meeting and voting in person.
15. Is my vote confidential?
Proxy instructions, ballots and voting tabulations that identify individual shareholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within Susser or to third parties, except: (1) as necessary to meet applicable legal requirements, (2) to allow for the tabulation of votes and certification of the vote and (3) to facilitate a successful proxy solicitation.
16. How are votes counted?
In the election of directors, you may vote FOR or WITHHOLD with respect to each of the nominees. In tabulating the voting results for the election of directors, only FOR votes are counted. For the ratification of the adoption of our Employee Stock Purchase Plan and for the ratification of the appointment of our independent registered public accounting firm, and any other items of business that may be properly brought before the Meeting, you may vote FOR, AGAINST or ABSTAIN. If you elect to ABSTAIN, the abstention has the same effect as a vote AGAINST.
If you provide specific instructions with regard to certain items, your shares will be voted as you instruct on such items. If you sign your proxy card or voting instruction card without giving specific instructions, your shares will be voted in accordance with the recommendations of the Board (FOR all of the proposals).
17. What is the voting requirement to approve each of the proposals?
In the election of directors, each director will be elected by the vote of a plurality of FOR votes cast with respect to that director nominee. For the ratification of the appointment of our independent registered public
accounting firm, the ratification of the adoption of the Employee Stock Purchase Plan and any other items of business that may be properly brought before the meeting, the affirmative vote of a majority of those shares present in person or by proxy and entitled to vote is required.
If you hold shares beneficially in street name and do not provide your broker with voting instructions, your shares may constitute broker non-votes. Generally, broker non-votes occur on a matter when a broker is not permitted to vote on that matter without instructions from the beneficial owner and instructions are not given. In tabulating the voting result for any particular proposal, shares that constitute broker non-votes are not considered entitled to vote on that proposal. Thus, broker non-votes will not affect the outcome of any matter being voted on at the Meeting, assuming that a quorum is obtained. Abstentions have the same effect as votes against the matter except in the election of directors, as described above.
18. What happens if additional matters are presented at the annual meeting?
Other than the three items of business described in this proxy statement, we are not aware of any other business to be acted upon at the Meeting. If you grant a proxy, the persons named as proxy holders, E.V. Bonner, Jr. and Mary E. Sullivan, will have the discretion to vote your shares on any additional matters properly presented for a vote at the Meeting. If for any reason any of our nominees is not available as a candidate for director, the persons named as proxy holders will vote your proxy for such other candidate or candidates as may be nominated by the Board.
19. Who will bear the cost of soliciting votes for the annual meeting?
Susser is making this solicitation and will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic communication by our directors, officers and employees, who will not receive any additional compensation for such solicitation activities.
20. Where can I find the voting results of the Meeting?
We intend to announce preliminary voting results at the Meeting and publish final results in our quarterly report on Form 10-Q for the second quarter of fiscal 2008.
21. What is the difference between holding shares as a shareholder of record and as a beneficial owner?
Most Susser shareholders hold their shares through a broker or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially.
22. What is a Shareholder of Record?
If your shares are registered directly in your name with Sussers transfer agent, Computershare, you are considered, with respect to those shares, the shareholder of record, and these proxy materials are being sent directly to you by Susser. As the shareholder of record, you have the right to grant your voting proxy directly to Susser or to a third party, or to vote in person at the Meeting. Susser has enclosed a proxy card for you to use.
23. What is a Beneficial Owner?
If your shares are held in a brokerage account or by another nominee, you are considered the beneficial owner of shares held in street name and these proxy materials are being forwarded to you together with a voting
instruction card on behalf of your broker, trustee or nominee. As the beneficial owner, you have the right to direct your broker, trustee or nominee how to vote and you also are invited to attend the Meeting. Your broker, trustee or nominee has enclosed or provided voting instructions for you to use in directing the broker, trustee or nominee how to vote your shares.
Because a beneficial owner is not the shareholder of record, you may not vote these shares in person at the Meeting unless you obtain a legal proxy from the broker, trustee or nominee that holds your shares, giving you the right to vote the shares at the Meeting.
24. What if I have questions for Sussers transfer agent?
Please contact our transfer agent, at the phone number or address listed below, with questions concerning stock certificates, transfer of ownership or other matters pertaining to your stock account.
Computershare Investor Services
350 Indiana Street, Suite 800
Golden, CO 80401
BENEFICIAL OWNERSHIP OF OUR COMMON STOCK
The following table sets forth, as of March 28, 2008 information regarding the beneficial ownership of the common stock of Susser Holdings Corporation and shows the number of shares and percentage owned by:
Beneficial ownership for the purposes of the following table is determined in accordance with the rules and regulations of the Securities and Exchange Commission. These rules generally provide that a person is the beneficial owner of securities if they have or share the power to vote or direct the voting thereof, or to dispose or direct the disposition thereof, or have the right to acquire such powers with 60 days. Accordingly, the foregoing table does not include options to purchase our shares of common stock by any of such persons which are not exercisable within the next 60 days.
Our amended and restated certificate of incorporation and bylaws provide for an authorized number of directors of between six and nine members (as determined by the Board) and for a classified Board consisting of three classes of directors, each serving staggered three-year terms. The Board currently consists of seven members, four of whom have been determined by the Board to be independent under the rules and regulations of the NASDAQ Global Market. Directors of each class are chosen for three-year terms upon the expiration of their current terms, and one class of directors will be elected by the shareholders each year. We believe that classification of our Board helps to assure the continuity and stability of our business strategies and policies as determined by the Board. Holders of common stock will have no right to cumulative voting in the election of directors. Consequently, at each annual meeting of shareholders, the holders of a plurality of shares of common stock will be able to elect all of the successors of the class of directors whose term expires at that meeting.
Our Board of Directors held nine meetings in the 2007 fiscal year, four of which were regularly scheduled and five of which were specially called for purposes of discussing the acquisition of TCFS Holdings, Inc.the parent company of Town & Country Food Stores, Inc.which we acquired on November 13, 2007 (the TCFS Acquisition). Directors are expected, but are not required, to attend all Board meetings and meetings of the Board committees on which they serve. In the 2007 fiscal year, each of our Directors attended 75% or more of the total number of meetings of the Board of Directors and of the meetings of the Board committees on which he served. Directors are also requested, but are not required, to attend each annual meeting of security holders.
NASDAQ Global Market rules require that our Board be comprised of a majority of independent directors. The Board has determined that, of its current members, each of Messrs. Engel, Krysiak, Shapiro and Thompson qualifies as an independent director within the meaning of that term under the rules and regulations of the NASDAQ Global Market. In accordance with NASDAQ Global Market rules, our Board holds executive sessions of the non-management directors regularly.
Each of our non-employee directors who are not affiliated with Wellspring currently receives an annual retainer ranging between $40,000 to $75,000 and received an award of 5,000 restricted shares of our common stock on February 29, 2008 for their services as directors. Messrs. Shapiro, Krysiak and Sam J. Susser were also granted 14,408 class B units of Stripes Holdings LLC on December 21, 2005 for their services as directors. Concurrently with the consummation of our initial public offering, those class B units were converted into 1,874 restricted shares of our common stock and options to purchase 14,158 shares of our common stock at the initial public offering price of $16.50. Mr. Thompson, who was elected to the Board in May 2006, received options to purchase 14,158 shares of our common stock at the initial public offering price of $16.50. Mr. Engel, who was elected to the Board in September 2007, received options to purchase 14,158 shares of our common stock at an exercise price of $23.58. These director shares and options vest over five years, with one-third vesting on the third, fourth and fifth anniversary of the original grant date. Other directors receive no additional compensation for serving as a director. All directors are entitled to reimbursement for their expenses incurred in attending meetings.
Committees of Our Board of Directors
Audit Committee. Our Board of Directors has formed an audit committee currently chaired by Mr. Shapiro, who has been determined to be an independent board member, and qualifies as an audit committee financial expert as defined under Securities and Exchange Commission rules Mr. Thompson and Mr. Engel also serve on the audit committee. The audit committee reviews and monitors our internal controls, financial reports and accounting practices, as well as the scope and extent of the audits performed by both the independent and internal auditors, reviews the nature and scope of our internal audit program and the results of internal audits, and meets with the independent auditors. The audit committee operates under a written charter adopted by the Board,
a current copy of which is available on our website at http://investor.susser.com/governance.cfm. The audit committee held five meetings during the 2007 fiscal year to discuss matters relating to the engagement of the Companys independent auditors, to review Company financial statements and periodic filings and to address standing agenda items and met an additional six times with members of company management, the Companys internal audit department and the Companys independent auditors to discuss compliance initiatives relating to the Sarbanes Oxley Act of 2002.
Compensation Committee. Our Board of Directors has formed a compensation committee currently chaired by Mr. Krysiak. Mr. Shapiro and Mr. Thompson also serve on the compensation committee. The compensation committee oversees our compensation and employee benefit plans and practices and produces a report on executive compensation. The compensation committee operates under a written charter adopted by the Board, a current copy of which is available on our website at http://investor.susser.com/governance.cfm. The compensation committee held three meetings during the 2007 fiscal year.
Nominating and Governance Committee. Our Board of Directors has formed a nominating and governance committee which is chaired by Mr. Thompson. Mr. Shapiro and Mr. Krysiak also serve on the nominating and governance committee. The primary purpose of the nominating and corporate governance committee is to identify and to recommend to the Board individuals qualified to serve as directors of our company and on committees of the board, advise the board with respect to the Board composition, procedures and committees, develop and recommend to the board a set of corporate governance principles and guidelines applicable to us; and oversee the evaluation of the Board and our management. The nominating and governance committee held one meeting during the 2007 fiscal year.
Other Committees. Our Board of Directors may on occasion establish other committees as it deems necessary or required.
Procedure for Nominations of Directors
Shareholder Recommendations and Nominations. Our nominating and corporate governance committee will consider properly submitted shareholder recommendations of candidates for membership on the Board. In evaluating such recommendations, the nominating and corporate governance committee seeks to achieve a balance of independence, sound judgment, business specialization, technical skills, diversity and other desired qualities within the membership criteria described below and the Board composition requirements of the NASDAQ Global Market rules. Any shareholder recommendations proposed for consideration by the nominating and corporate governance committee should include the candidates name and qualifications for Board membership and should be addressed to:
Susser Holdings Corporation
P.O. Box 9036
Corpus Christi, TX 78469-9036
Our Bylaws also provide procedures for the nomination of directors directly by our shareholders. Our Bylaws provide that nominations for the election of directors may be made, if certain procedures are followed, by any shareholder who is entitled to vote generally in the election of directors. Any shareholder of record entitled to vote generally in the election of directors may nominate one or more persons for election as directors at a meeting of shareholders only if written notice of such shareholders intent to make such nomination or nominations has been delivered to our Secretary at our principal executive offices not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding years annual meeting (provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 70 days after such anniversary date, notice by the shareholder must be so delivered not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which we first publicly announce the date of such meeting). Each such notice of a shareholders intent to nominate a director must set forth certain information as specified in our Bylaws.
Director Selection Criteria and Procedures. Although our nominating and corporate governance committee does not believe in setting specific minimum qualifications for candidates for membership on the Board, the nominating and corporate governance committee is committed to the belief that candidates for membership on the Board should have the highest professional and personal ethics and valuesconsistent with the Companys longstanding values and standardsand should have broad experience at the policy-making level in business, government, education, the retail industry or public service. They should be committed to enhancing shareholder value and should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. Their service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform responsibly all director duties. Each director must represent the interests of all shareholders of the Company.
The nominating and corporate governance committee uses a variety of methods for identifying and evaluating nominees for director and regularly assesses the appropriate size of the Board and to recommend to the Board any appropriate changes. The Companys bylaws provide for a minimum of six and a maximum of nine directors. In the event that vacancies are anticipated, or otherwise arise, the nominating and corporate governance committee will consider various potential candidates for director. Candidates may come to the attention of the nominating and corporate governance committee through current Board members, professional search firms, shareholders or other persons. Identified candidates will be evaluated at regular or special meetings of the nominating and corporate governance committee and may be considered at any point during the year. As described above, the nominating and corporate governance committee will consider properly submitted shareholder recommendations for candidates for the Board to be included in the Companys annual proxy statement. Following verification of the shareholder status of people proposing candidates, recommendations will be considered together by the nominating and corporate governance committee at a regularly scheduled meeting. The nominating and corporate governance committee may also engage the services of a professional search firm to identify and assist in evaluating and conducting due diligence on potential director nominees.
Our shareholders may communicate directly with the members of the Board or the individual chairperson of standing Board committees by writing directly to those individuals at the following address: Susser Holdings Corporation, P.O. Box 9036, Corpus Christi, Texas 78469. Our general policy is to forward, and not to intentionally screen, any mail received at our corporate office that is sent directly to an individual unless we believe the communication may pose a security risk.
Code of Ethics
Our Board has approved Sussers Code of Business Conduct and Ethics, which is applicable to all directors, officers and employees of the Company, including the principal executive officer and the principal financial officer. The Code of Business Conduct and Ethics is available on our website at http://investor.susser.com/governance.cfm and in print without charge to any shareholder who sends a written request to the Company's Secretary at our principal executive offices. The Company intends to post any amendments to or waivers of this code for its directors and executive officers, including its principal executive officer and principal financial officer, at this location on its website.
Compensation Committee Report
The Compensation Committee of the Susser Holdings Corporation Board of Directors (the Compensation Committee) is comprised of three independent directors and operates under a written charter. In carrying out its responsibilities, the Compensation Committee reviewed the section of this report entitled Compensation Discussion and Analysis (CD&A), with Susser management and provided comments on its content.
Based on the review and discussions described above, the Compensation Committee recommended to the Board that the CD&A be included in the Proxy Statement for the Companys 2008 Annual Meeting of Shareholders.
Submitted by our Compensation Committee
Bruce Krysiak (Chair)
Compensation Committee Interlocks and Insider Participation
None of the members of our compensation committee was formerly an officer or employee of the Company or is a related person as defined by the regulations to the Securities Exchange Act of 1934. None of our executive officers has served as a director or member of a compensation committee (or other committee serving an equivalent function) of any other entity whose executive officers serve as a director of the Company or member of our compensation committee.
Our compensation setting process consists of establishing targeted compensation levels for each member of senior management and then allocating that compensation among base salary and incentive compensation. Our incentive compensation program is designed to reward company-wide performance by tying short-term and long-term awards to (i) the achievement of targeted company financial objectives, (ii) the achievement of specific operational goals within the purview of an individuals scope of responsibilities, as applicable and (iii) growth in shareholder value. Our executive officers are also eligible to participate in benefit plans generally available to our other employees. We believe our approach to compensation will enable us to achieve several key objectives necessary to promote growth in shareholder value, while practicing good corporate governance, including the following:
Process and Timing of Compensation Decisions. The compensation committee reviews and approves all compensation targets and payments for senior management, including the named executive officers. The Chief Executive Officer evaluates the performance of other officers and develops individual recommendations for the committees assessment. Both the Chief Executive Officer and the compensation committee may make adjustments to the recommended compensation based upon an assessment of an individuals performance and contributions to the Company. The compensation for the Chief Executive Officer is reviewed and approved by the compensation committee and by the Board, based upon their independent evaluation of the Chief Executive Officers performance and contributions.
The compensation committee meets annually in the first quarter of each fiscal year to establish the target bonus levels for that fiscal year, approve salaries to become effective approximately two weeks thereafter and consider bonuses for the prior fiscal year and long-term incentive awards. The compensation committee may, however, review salary and bonus levels at other times in the event of mid-year appointments, changes in responsibility or promotions. The compensation committee may also consider recommendations and grant long-term incentive awards from time to time as deemed appropriate during the year.
Since it was formed prior to the Companys initial public offering, the compensation committees practice has been to hold this meeting during the first week of February. Consequently, any long-term incentive awards approved at this meeting are generally made at a grant date preceding the Companys release of fourth quarter earnings. The Company does not, however, coordinate awards with the release of earnings for the purpose of affecting executive compensation and generally makes any mid-year grants during approved trading windows under the Companys insider trading policy following the release of earnings information.
The following table summarizes the approximate timing of some of our more significant compensation events:
Components of Executive Compensation. The following is a summary description of the key components of our executive compensation program:
Relative Size of Major Compensation Elements. In setting executive compensation, the compensation committee considers the aggregate amount of compensation payable to an executive officer and the form of the compensation. The compensation committee seeks to achieve an appropriate continuing balance between immediate cash compensation and long-term incentives designed to retain key personnel and align their interests with those of long-term shareholders. The level of incentive compensation typically corresponds to an executive officers responsibilities within the Company, with the level of incentive compensation for more senior executive officers being a greater percentage of total compensation than for less senior executive officers.
Although we typically consider long-term incentive grants when we recruit new management personnel, or upon hiring or promoting senior employees, we have not historically perceived a need to make long-term incentive awards a significant component of annual compensation. However, the compensation committee does, from time to time, consider paying portions of annual compensation in the form of long-term incentive awards and our president and chief executive officer, in lieu of a cash award and in consultation with the compensation committee, elected to receive his 2006 bonus in the form of 7,500 shares of restricted common stock, and received 5,000 shares of restricted stock for 2007 performance in addition to a cash bonus.
Because we have generally paid annual compensation primarily in cashand because our named executive officers are eligible to participate in our 401(k) and non-qualified deferred compensation plans that permit them to defer tax recognition of a portion of that cash compensationour compensation committee has not historically based compensation decisions upon tax or accounting considerations. Similarly, the compensation committee has not historically considered gains recognized from prior stock option or restricted stock awards because no outstanding stock options or shares of restricted stock have yet vested. However, the compensation committee may take these, or other, issues into consideration when making future compensation decisions.
Determination of Executive Compensation Levels.
In making any compensation decision, the compensation committee generally considers external, objective criteriasuch as market trends in executive compensation practicesas well as each individuals attributes, performance objectives, responsibilities and contributions. Compensation for our Chief Executive Officer is reviewed and approved by the compensation committee and, ultimately, by the Board. For officers other than the Chief Executive Officer, individual performance is evaluated and compensation decisions are made with the recommendations of the Chief Executive Officer.
Individual Performance and Contributions. Individual performance objectives are specific to each officer position and may relate to the following matters, among others:
These subjective evaluative criteria are used to supplement objective financial performance metrics for purposes of assisting the compensation committee in considering increases in annual base salary above the level specified in an individuals employment agreement and/or increases or decreases in an individuals annual performance bonus above or below the level called for by reference to achievement of specific financial targets.
Comparison Analysis. In 2007, the compensation committee, with the assistance of Company personnel and in consultation with the Companys financial advisors, began compiling a comparison study of compensation practices at other companies for purposes of guiding 2008 compensation decisions. Due to the Companys unique retail convenience store, wholesale fuel distribution and restaurant business structure and its relative size, the Company has no pure peer companies against which to benchmark. Accordingly, after considering an initial field of approximately 30 reporting companies, the compensation committee selected a comparison group comprised of the following 14 companies operating in the convenience store, discount store, retail grocery and foodservice industries:
The compensation committee considered the mean, median and 25th and 75th percentile compensation levels by executive office, in total and by individual compensation component, across this comparison group, while giving proper deference to differences in size and profitability by comparing group distribution of enterprise value, trailing 12 month revenue, trailing 12 month EBITDA and number of employees. On a pro-forma basis for the acquisition of the parent company of Town & Country Food Stores in November of 2007, the Companys size and financial results placed it above median but below mean levels of enterprise value, trailing 12 month EBITDA and employee count and significantly above both median and mean levels of trailing 12 month revenue. The Compensation Committee also evaluated the Companys same store and total growth rates as well as other quantitative and qualitative factors in evaluating compensation. After considering this
analysis of peer group compensation levels, the Compensation Committee determined that adjustments to named executive officer compensation reflected below were warranted both by external market conditions, as well as by the quantitative and qualitative performance criteria discussed in greater detail below.
Adjustments to Base Compensation and Target Bonus Levels. Each of our named executive officers is currently party to an employment agreement that sets his or her base annual salary and target bonus level, in either case, subject to annual review and discretionary increase by our compensation committee for reasons such as changes in job responsibility or market trends or to reward individual performance. The table below presents the annual base salary levels and target bonus level (expressed as a percentage of base salary) for each of our named executive officers after giving effect to any increases approved by the compensation committee from the base levels specified in the executives 2006 employment agreements:
In 2007, the compensation committee approved increases to Ms. Sullivans and Mr. Dewbres base salary levels. Ms. Sullivans base salarys was increased by 3.5%, reflecting acceptable financial performance, achievement of certain growth objectives and successful execution of the initial public offering. Mr. Dewbres base salary was increased by $36,595 or approximately 19%, in view of strong financial performance in 2005 and 2006. No adjustments were made to the salaries of the other named executive officers.
In 2008, the Company adjusted the base compensation for Ms. Sullivan from $170,775 to $220,775 for outstanding performance as Chief Financial Officer as it relates to accurate, timely financial reporting, transparency and accessibility to shareholders, bondholders and lenders, recruiting highly qualified staff and retaining and developing critical team members in a competitive regional economy. Ms. Sullivan was also instrumental in the due diligence and financing processes necessary to complete our acquisition of the parent company of Town & Country Food Stores in November of 2007.
Mr. Dewbres base salary was adjusted in 2008 from $225,000 to $232,875, reflecting the achievement of targets relating to EBITDAR (earnings before interest, taxes, depreciation, amortization and rent) and new store
openings in the wholesale division. Mr. Dewbre was the team leader in a successful renegotiation of pricing under a major supply agreement and was a key member of the due diligence and integration teams working to complete the Town & Country acquisition.
Mr. Bonners compensation was adjusted from $279,537 in 2006 and 2007 to $289,321 in 2008, reflecting his contribution to our successful initial public offering in 2006, and to the due diligence effort, negotiations, and financing and integration processes relating to the Town & Country acquisition. Also, the compensation committee recognized Mr. Bonners success in strengthening the legal and construction groups in 2007 and his continued success in overseeing the execution of our real estate development objectives.
Target bonus levels for 2008 for each of Ms. Sullivan and Mssrs. Dewbre and Bonner were also increased from 33% (the base level specified in their employment agreements) to 40% to reflect market considerations and the challenge associated with meeting internal performance targets.
Mr. Sussers base salary remains unchanged from 2004 to 2008 as he has recommended to the compensation committee and to the Board that, in lieu of increases to base salary, the committee and Board consider equity incentives or one-time bonuses to better align his interests with those of other shareholders. Mr. Sussers 2008 target bonus level was increased from 40% to 50% to reflect market considerations and the challenge associated with meeting internal performance targets.
Annual Bonuses. Annual bonuses are intended to motivate and reward the Companys named executive officers by tying performance awards to both the achievement of Company and segment-specific financial goals for the performance year and individual performance and achievements. Target bonus levels, based on the target percentages specified in each of the named executive officers employment agreementsas they may be increased from time to time in the discretion of the compensation committee, form the benchmark for making annual bonus decisions. These target bonus levels are currently 50% of base salary for our Chief Executive Officer and 40% for each of our other named executive officers, as discussed above. The compensation committee considers company performance for the preceding fiscal year based upon one or more categories of financial or operational metrics to further refine its estimation of target bonus dollars available for the named executive officers. Final bonus awards are determined, however, within the sole discretion of the compensation committee after assessing the subjective performance criteria discussed under the preceding caption, Individual Performance and Contributions. The compensation committee chooses to retain such discretionary authority over bonus decisionswithout relying solely on a formulaic assessment of pre-determined performance metricsdue to the impact that outside variables, such as fuel margins or weather, have historically had on our results of operations, and its observation that Company or segment-specific performance metrics may not reflect the growth or performance of individuals within the Company. Consequently, while the compensation committee considers the objective performance criteria established as part of the management bonus program discussed below to be important components in making award determinations, bonus decisions are nonetheless entirely discretionary in nature.
At the beginning of the 2007 fiscal year, the compensation committee determined that its objective assessment of Mr. Cobens performance would be based 66.7% on achievement of targeted consolidated EBITDAR (earnings before interest, taxes, depreciation, amortization and rent) with the remaining 33.3% being based on achieving targeted levels of retail segment EBITDAR and retail segment non-fuel gross income, respectively. Similarly, Mr. Dewbres objective performance criteria for fiscal 2007 were weighted 66.7% on achievement of targeted consolidated EBITDAR with the remaining 33.3% being based on achieving targeted levels of wholesale segment EBITDAR. The performance of our other named executive officers was assessed based upon performance of the Company relative to internal target levels of consolidated adjusted EBITDAR. The following table reflects the correlation between (i) achievement of internal target levels of these metrics and (ii) corresponding target bonus dollars available for each of our named executive officers (expressed as a percentage of base salary) for the 2007 fiscal year. For the 2007 fiscal year, without giving effect to the impact of the TCFS Acquisition, the company achieved EBITDAR slightly in excess of internal targets. The compensation committee considered this financial performance, together with the management teams successful execution of the TCFS Acquisition and the other achievements discussed above under the caption Adjustments to Base Compensation and Target Bonus Levels, in awarding the bonuses reflected in the Summary Compensation Table.
2007 Management Bonus Program
Relationship of Target Bonus Dollars (As Percentage of Annual Salary)
To Achievement of Internal EBITDAR Target
For fiscal 2008, the compensation committee determined that modifications to the management bonus program were necessary to reflect the Companys increased scale following the Town & Country acquisition. The following table reflects the 2008 management bonus program, after giving effect to these modifications.
2008 Management Bonus Program
Relationship of Target Bonus (As Percentage of Annual Salary)
To Achievement of Internal EBITDAR Target
For purposes of assisting its annual bonus determinations, the compensation committee selects internal performance targets that it believes are achievable while also aspirational, insofar as they are indicative of strong company-wide or, as the case may be, segment-specific performance. While the Company believes that target levels are reasonably attainable, they are necessarily based on certain assumptions as to variables beyond the Companys control, including future weather patterns, commodity price levels and the impact of outside competitionall of which have historically had a significant impact on our business. The compensation committee also notes the impact to the Companys financial performance of any acquired business that was not contemplated at the time the internal targets were finalized. Consequently, while the compensation committee looks generally to these objective performance measures, it does not take a purely formulaic approach to making bonus decisions and retains authority to consider any number of subjective factors in making award determinations.
Long Term Incentive Awards
In connection with our initial public offering, we adopted the Susser Holdings Corporation 2006 Equity Incentive Plan (the Plan) which governs the terms of equity awards granted to our management team prior to our initial public offering as well as any future equity awards granted by us. The Plan is intended to provide incentives that will attract, retain and motivate highly competent persons as directors and employees of, and consultants to, the Company and our subsidiaries, by providing them with opportunities to acquire shares of our common stock or to receive monetary payments. Additionally, the Plan provides us a means of directly tying our executives financial reward opportunities to our shareholders return on investment.
Employees and directors of, and consultants to, us or any of our subsidiaries are eligible to participate in the Plan, which is administered by the compensation committee. The Plan makes available an aggregate of 2,637,277 shares of our common stock, subject to adjustments. The Plan provides for the grant of stock options, including incentive stock options and non-qualified stock options, shares of restricted stock, and other stock-based awards. The committee determines, with regard to each type of award, the terms and conditions of the award, including the number of shares subject to the award, the vesting terms of the award, and the purchase price for each award.
Long-term incentive grants have been historically made at, or near, the beginning of the employment relationship and generally vest over a five year term. These initial awards are generally made at levels intended to provide a meaningful incentive for continued employment, and for strong financial performance, over the vesting period. We believe the incentivizing characteristics of these awards continue throughout the full vesting period. Additionally, members of our executive management team have historically made significant personal equity investments in the Company. Consequently, in recent years our compensation committee has not made long-term incentive awards a significant component of annual executive compensation other than where prior awards to existing management personnel are vesting, and incremental awards are desirable to maintain comparable levels of long term performance and retention incentives.
Adjustment of Awards. In the event of any corporate event or transaction such as a merger, consolidation, reorganization, recapitalization, stock split, or other like change in capital structure (other than normal cash dividends) or similar corporate event or transaction, the compensation committee will determine whether and to what extent it should substitute or adjust, as applicable, the number and kind of shares of stock that may be issued under the Plan or under particular form and conditions of such awards.
In the event we are a party to a merger or consolidation or similar transaction (including a change of control), the compensation committee is authorized (but not obligated) to make adjustments in the terms and conditions of outstanding awards, including, without limitation, that at any time prior to such transaction, all then outstanding awards shall become immediately exercisable or vested and any restrictions on any awards shall immediately lapse. In addition, the compensation committee may provide that all awards held by participants who are at the time of the event in our service or the service of any of our subsidiaries or affiliates shall remain exercisable for the remainder of their terms notwithstanding any subsequent termination of a participants service or that all awards will be substituted with awards that will substantially preserve the otherwise applicable terms of affected awards previously granted hereunder, in each case, as determined by the compensation committee in its sole discretion.
Amendment and Termination. The compensation committee has the right to amend, suspend or terminate the Plan at any time, provided that no amendment may adversely affect in any material respect any participants rights under any award grant previously made or granted under the Plan without the participants consent. Also, no amendment of the Plan may be made without approval of our shareholders if the approval is necessary to comply with any tax or regulatory requirement applicable to the Plan.
Compliance with Code Section 409A. In the event that the compensation committee determines that the Plan and/or awards are subject to Code Section 409A, the compensation committee may, in its sole discretion and
without a participants prior consent, amend the Plan and/or awards, adopt policies and procedures, or take any other actions (including amendments, policies, procedures and actions with retroactive effect) as are necessary or appropriate to (i) exempt the Plan and/or any award from the application of Code Section 409A, (ii) preserve the intended tax treatment of any such award, and (iii) comply with the requirements of Code Section 409A, including any regulations or other interpretive guidance that may be issued after the grant of any award. However, neither the Company nor the compensation committee is obligated to ensure that awards comply with Code Section 409A or to take any actions to ensure such compliance.
Termination and Change of Control Benefits
Employment agreements with each of the named executive officers provide for severance payments upon certain events of termination. Generally, if we terminate any of our named executive officers without cause, or the executive elects to terminate employment for good reason, he or she is entitled to two times (three times in the case of Mr. Susser) base salary paid out in five installments over two years, plus any earned and accrued but unpaid bonus and any accrued vacation pay, 24 months of continued health insurance coverage for the executive and his or her family, and the reimbursement of any previously-incurred job-related expenses. For purposes of these employment agreements, good reason includes, (i) a reduction of the executives base salary or target bonus percentage; (ii) the relocation of the executives principal office location to a location outside of Corpus Christi or Houston, Texas; (iii) our failure to provide any employee benefits due to be provided to the executive; (iv) a material breach of the executives employment agreement by us; or (v) the acquisition by a financial or strategic buyer of 51% of the outstanding equity interests of the company, provided, in the latter case, the executive negotiates to provide continued transition services for a reasonable period. Under these employment agreements, our named executive officers are also entitled to various gross-up payments for certain excise taxes they may incur in connection with annual compensation or any severance payments.
We believe the termination and change of control provisions contained in our executive employment agreements play an important role in attracting and recruiting executive talent by partially offsetting the career and relocation risks associated with changing jobs and, frequently, moving from larger cities offering greater opportunities for executive-level employment. Additionally, we believe the employment agreements provide long term protections for the Company through non-competition provisions prohibiting the named executive officers from working (or maintaining anything other than a de minimis ownership interest in a company operating in) the convenience store or wholesale fuel distribution industryin any county in which the Company operates at the date of termination of employmentas well as non-solicitation agreements prohibiting the named executive officers from hiring Company employees, for a period of two years from the date of termination.
Perquisites and Other Benefits
We provide certain perquisites to our executive officers. Executives are eligible to receive annual health examinations and personal administrative and financial services support from corporate staff. In addition, we provide our President and Chief Executive Officer with a company vehicle and reimburse him for the business use of his private aircraft.
We do not provide executive officers with supplemental executive medical benefits or coverage. In addition, we generally do not reimburse executives for aircraft time relating to personal use, such as travel to and from vacation destinations. However, spouses (or other family members) occasionally accompany executives when executives are traveling on private aircraft for business purposes, such as attending an industry business conference at which spouses are invited and expected to attend.
We provide other benefits, including medical, life, dental, and disability insurance in line with competitive market conditions. Our named executive officers are eligible for the same benefit plans provided to our other non-store employees, including insurance plans and supplemental plans chosen and paid for by employees who wish additional coverage.
We have established a 401(k) benefit plan for the benefit of our employees. All full-time employees who are over 21 years of age and have greater than six months tenure are eligible to participate. Under the terms of the 401(k) plan, employees can contribute up to 100% of their wages, subject to IRS limitations, which, for 2007, were generally a maximum contribution amount of $15,500 on maximum compensation of $225,000. We match 20% of the first 6% of salary that the employee contributes as a guaranteed match. Additionally, we may make a discretionary match that we determine in the first quarter of each year, based on the prior years financial performance against internal targets. For fiscal 2005, 2006 and 2007, we made a discretionary match of 30%, 0%, and 10%, respectively, of the first 6% of salary that each employee contributed in addition to the 20% match.
We have also implemented a nonqualified deferred compensation (NQDC) plan for key executives, officers, and certain other employees to allow compensation deferrals in addition to that allowable under the 401(k) plan limitations, in that the contribution limits and compensation limits of the 401(k) plan do not apply to the NQDC plan. Participants in the NQDC plan may defer up to 75% of their salary. We match a portion of the participants contribution each year on the first 6% of salary deferred, using the same percentage of guaranteed and discretionary matches that are used for its 401(k) plan. The investment options available in the NQDC plan are identical to those offered in the 401(k) plan. Plan benefits are paid from our assets upon termination or retirement, and the Plan does not otherwise permit early withdrawals, distributions or loans, except for certain hardship withdrawals in the event of unforeseen emergencies.
Stock Ownership Guidelines
Our Board, the compensation committee and our executives recognize that ownership of our common stock is an effective means by which to align the interests of our directors and executives with those of our shareholders. We have long emphasized the importance of stock ownership among our executives and directors. We believe the existing ownership positions of our named executive officers combined with Plan-based equity awards issued in 2005, 2006 and 2007 create a strong incentive to achieve long-term growth in the price of our common stock. We encourage our management team to continue to invest in our stock and intend to continue to use Plan-based equity awards to promote the further alignment of management and shareholder interests.
Prohibition on Insider Trading
We have established policies prohibiting our officers, directors, and employees from purchasing or selling Susser securities while in possession of material, nonpublic information, or outside of certain window periods following the release of annual and quarterly financial results, or otherwise using such information for their personal benefit or in any manner that would violate applicable laws and regulations.
Summary Compensation Table
The following table provides a summary of total compensation paid for 2006 and 2007 to our named executive officers, and the base salary, bonus and other compensation for 2005. The table shows amounts earned by such persons for services rendered to Susser in all capacities in which they served. The elements of compensation listed in the table are more fully described in the Compensation Discussion and Analysis section of this report and in the footnotes that follow this table.
The amounts stated in the table reflect Sussers accounting expense for these awards in accordance with SFAS No. 123(R). While these amounts reflect the portion of the grant date fair value of the awards
recognized as accounting expense over the requisite service period, they do not correspond to the actual value that may be recognized by the named executive officers upon any disposition of vested stock. The amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For additional information on the valuation assumptions with respect to the restricted shares, refer to Note 19Share Based Compensation of our Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC on March 14, 2008. Amounts have not been presented for 2005 fiscal year.
The amounts stated in the table reflect Sussers accounting expense for these awards in accordance with SFAS No. 123(R). While these amounts reflect the portion of the grant date fair value of the awards recognized as accounting expense over the requisite service period, they do not correspond to the actual value that may be recognized by the named executive officers upon any disposition of vested stock. The amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For additional information on the valuation assumptions with respect to the stock options, refer to Note 19Share Based Compensation of our Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC on March 14, 2008. Amounts have not been presented for 2005 fiscal year.
All Other Compensation Table
For Fiscal Year Ended December 30, 2007
Outstanding Equity Awards at December 30, 2007
Option Exercises and Stock Vesting
No options were exercised by any named executive officer, and no options or shares of restricted stock owned by any named executive officer vested in fiscal 2007.
Other than our 401(k) and non-qualified deferred compensation plans described elsewhere in this document, we do not maintain any other plan that provides for payments or other benefits at, following, or in connection with retirement.
Non-Qualified Deferred Compensation
The following table provides information regarding contributions by Susser and each named executive officer under our non-qualified deferred compensation plan during 2007. The table also presents each named executive officers earnings and year-end balances in the plan. Our non-qualified deferred compensation plan is described above in Compensation Discussion and Analysis under the caption Perquisites and Other Benefits.
Potential Payments Upon Termination or Change of Control
In addition to the termination and change of control provisions in our employment agreements with our named executive officers, each of our named executive officers currently holds stock options and/or shares of restricted stock, none of which have vested. These shares and options are ordinarily subject to a five-year vesting period, with one third of the shares and options vesting ratably over each of the final three years in the vesting period. However, all of the shares and options will vest immediately upon a change of control in the Company, irrespective of whether the employment of any named executive officer is terminated, or upon the termination of the executive due to death or disability.
The following table shows the amount of incremental value received by each of the named executive officers upon certain events of termination or a change of control in the Company on December 30, 2007.
In the event an executive resigns for reasons other than death, disability or good reason, our employment agreements do not provide for any special payments or benefits.
Compensation of Directors
The following table provides a summary of compensation paid to members of our Board of Directors during 2007:
The following table presents additional information regarding stock options granted to our non-employee directors during 2007:
The following table presents the outstanding equity awards held by our non-employee directors as of December 30, 2007:
On February 7, 2008, the Compensation Committee recommended, and the Board of Directors approved, new non-employee Director compensation levels effective for fiscal 2008 and restricted stock grants as follows:
Pursuant to our Bylaws, our Board has fixed the size of our board of directors at six members: two Class I directors with terms expiring at the 2010 annual meeting of shareholders, two Class II directors with terms expiring at this years annual meeting of shareholders and three Class III directors with terms expiring at the 2009 annual meeting of shareholders. At this years annual meeting, Susser shareholders will vote for the two nominees for Class II directors listed below, each of whom has been approved by the Board for nomination for reelection at the annual meeting, to serve until the 2011 annual meeting of shareholders or until the election and qualification of their successors. The election of each director requires the plurality vote of the shares of our Common Stock present, in person, or by proxy, at the Annual Meeting.
Our Board has no reason to believe that the persons named above as nominees will be unable or will decline to serve if elected. In the event of death or disqualification of any nominee or the refusal or inability of any nominee to serve as a director, proxies voted for that nominee may be voted with discretionary authority for a substitute or substitutes as shall be designated by our Board.
OUR BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF THESE NOMINEES.
The following describes current members of our board of directors whose terms will continue beyond the Meeting.
The following table sets forth the names and ages (as of April 1, 2008) of each of our executive officers and a brief account of their business experience:
Sam L. Susser has served as our President and Chief Executive Officer since 1992. From 1988 to 1992, Mr. Susser served as our General Manager and Vice President of Operations. From 1985 through 1987, Mr. Susser served in the corporate finance division and the mergers and acquisitions group with Salomon Brothers Inc, an investment bank. Mr. Susser currently serves as a director of a number of charitable, educational and civic organizations. Sam L. Susser is the son of Sam J. Susser, who is also a member of Susser Holdings Corporations Board of Directors.
E.V. Bonner, Jr. has served as our Executive Vice President and General Counsel since March 2000. Prior to joining us, Mr. Bonner was a stockholder in the law firm of Porter, Rogers, Dahlman & Gordon, P.C. from 1986 to 2000. He is board certified in commercial real estate law by the Texas Board of Legal Specialization. Mr. Bonner has been involved in numerous charitable, educational and civic organizations.
Rocky B. Dewbre has served as our Executive Vice President and President/Chief Operating Officer-Wholesale since January 2005. Mr. Dewbre served as our Executive Vice President and Chief Operating Officer-Wholesale from 1999 to 2005, as Vice President from 1995 to 1999 and as Manager of Finance and Administration from 1992 to 1995. Before joining us in 1992, Mr. Dewbre was a corporate internal auditor with Atlantic Richfield Corporation, a petroleum/chemical company, from 1991 to 1992 and an auditor and consultant at Deloitte & Touche LLP from 1988 to 1991.
W. Alvin New has served as our Executive Vice President and President/Chief Executive Officer-Retail Operations since November 2007. Mr. New was previously with TCFS Holdings, Inc., the parent company of Town & Country Food Stores, Inc., since 1984 where he held various positions, the most recent being as President and Chief Executive Officer and a member of the Board of Directors from November 2002. Mr. New previously announced his intention to resign and has informed us that he expects to depart on or about April 18, 2008. Sam L. Susser, will assume the responsibilities of President and Chief Executive Officer of our retail division while we continue the recruiting process to find a successor for Mr. New.
Mary E. Sullivan has served as our Executive Vice President, Chief Financial Officer and Treasurer since November 2005. Ms. Sullivan served as our Vice President of Finance since joining us in February 2000. Ms. Sullivan served as Director of Finance for the City of Corpus Christi from 1999 to 2000. Ms. Sullivans previous experience includes serving as the Controller and member of the board of directors of Elementis Chromium, a producer of chromium chemicals, from 1993 to 1999, and various positions with Central Power and Light Company, culminating in Treasurer, over the 13 year period from 1979 to 1992.
On April 7, 2008, our Board approved the Susser Holdings Corporation 2008 Employee Stock Purchase Plan (the Employee Purchase Plan), a copy of which is set forth as Appendix A to this Proxy Statement, and which is intended to qualify as an Employee Stock Purchase Plan under Section 423 of the Internal Revenue Code.
The purpose of the Employee Purchase Plan is to provide our employees with an opportunity to purchase our common stock through accumulated payroll deductions. Our Board believes that the Employee Purchase Plan helps motivate our employees to increase shareholder value and provides them with additional compensation. The approval of Proxy Proposal 2 requires the affirmative vote of the holders of a majority of the shares of our Common Stock present, in person or by proxy, at the annual meeting.
The following summary of certain material features of the Employee Purchase Plan does not purport to be complete and is qualified in its entirety by reference to the text of the Employee Purchase Plan, set forth as Appendix A to this Proxy Statement.
Shares Subject to the Employee Purchase Plan
The Employee Purchase Plan provides eligible employees the right to purchase our common stock on a quarterly basis through payroll deductions. Up to 750,000 shares of our common stock are reserved under the plan. In the case of (i) a merger, consolidation, dissolution, liquidation, reorganization, exchange of shares, sale of all or substantially all of the assets or stock of the Company or its subsidiaries or a transaction similar thereto, (ii) stock splits, dividends, or stock reclassifications, or (iii) any other event which in the judgment of the Committee (as defined below) necessitates action by way of adjusting the number or kind of shares, or both, which thereafter may be sold under the Employee Purchase Plan, then the Committee may take any such action as in its judgment shall be necessary to preserve to the participating employees rights substantially proportionate to the rights existing prior to such event, and to maintain the continuing availability of shares of common stock under the Employee Purchase Plan (if shares are otherwise then available).
The Employee Purchase Plan is administered by a committee appointed by our Board (the Committee). The Committee may make such rules and regulations and establish such procedures for the administration of the Employee Purchase Plan as it deems appropriate. The Committee has the authority to interpret the Employee Purchase Plan, which interpretations shall be binding on all persons, and accorded the maximum deference permitted by law and shall take any other actions and make any other determinations or decisions that it deems necessary or appropriate in connection with the Employee Purchase Plan or the administration or interpretation thereof.
All employees with at least six months employment with the Company, including our executive officers, are generally eligible to participate in the Employee Purchase Plan, subject to tax law limitations which limit participation for employees who own or have the option to purchase 5% or more of our stock or who have the right to purchase over $25,000 worth of our stock under all employee stock purchase plans under Section 423 of the Internal Revenue Code. However, the plan grants the Committee discretion to exclude from participation certain groups of (i) highly-compensated employees, (ii) employees of less than two years, (iii) employees who work less than five months per year and (iv) employees who customarily work 20 hours per week or less. Participation under the Employee Purchase Plan is voluntary and is dependent upon each eligible employees election to participate and his or her determination to participate in accordance with the terms of the Employee
Purchase Plan. As of April 7, 2008, it is estimated that approximately 3,000 employees were eligible to participate in the Employee Purchase Plan. Since participation is voluntary and the purchase price of shares under the Employee Purchase Plan are in part a function of prevailing market prices of our common stock which vary from time to time, the benefits to be received by participants are not determinable. No current directors who are not employees will receive any benefit under the Employee Purchase Plan.
Election to Participate and Payroll Deductions.
Eligible employees are permitted to apply up to 10% of their gross compensation for each pay period toward the purchase of shares of stock under the plan, subject to the limits set forth in the Eligibility section above. All payroll deductions shall be credited to a payroll account in the name of the participating employee. Eligible employees may cancel their election to participate in the Employee Purchase Plan one time during each offer period at which time the entire balance in the employees payroll account shall be repaid to the employee in accordance with the terms of the Employee Purchase Plan. The Committee may also determine that an eligible employee who is a participating employee prior to the beginning of an offer period will be deemed to have elected to participate in that offer period with the same percentage payroll deduction currently in effect on the day before the offer period begins. The purchase price for shares purchased shall be 85% of the fair market value of our common stock at the end of each quarterly stock purchase period.
Method of Purchase; Transfer Restrictions
All shares of our common stock purchased by participating employees shall be initially maintained in separate stock accounts for such employee at a brokerage firm selected by, and pursuant to an arrangement with, the Company. Unless otherwise permitted by the Committee, a participating employee may not undertake a disposition (as that term is defined in Section 424 of the Internal Revenue Code) of the common stock in his or her stock account, whether by sale, exchange, gift or other transfer of legal title, until the earlier of six months after the end of the offer period in which such shares were acquired or the participating employees termination of employment with the Company.
Unless otherwise permitted by the Committee, in no event shall fractional shares of common stock be purchased under the Employee Purchase Plan and any remaining cash in a participating employees payroll account resulting from such failure to invest in fractional shares shall remain in the payroll account for use in the next offer period; provided, however, that, if the participating employee is not an active participating employee for such next offer period, such remaining cash shall be returned to the participating employee as soon as practicable.
Rights Not Transferable
Rights granted under the Employee Purchase Plan are not transferable by a participating employee other than by will or the laws of descent and distribution and are exercisable during his or her lifetime only by him or her.
Termination of Participation
When an eligible employees employment is terminated for any reason, he or she will be deemed to have elected to withdraw from the Employee Purchase Plan, and all funds not yet used to purchase stock will be returned to that person. Participation also terminates (i) immediately when a participating employee voluntarily cancels his or her election to participate in the Employee Purchase Plan, (ii) if, immediately after the purchase date, the participating employee is not re-enrolled in the Employee Purchase Plan for the next offer period or (iii) if the participating employee has suspended payroll deductions during any offer period and has not re-enrolled in the Employee Purchase Plan for the next offer period.
Amendment of the Employee Purchase Plan
The Board may at anytime, or from time to time, amend the Employee Purchase Plan in any respect; provided, however, that the Employee Purchase Plan may not be amended in any way that would cause, if such amendment were not approved by the Companys shareholders, the Employee Purchase Plan to fail to comply with the requirements for such plan under Section 4423 of the Internal Revenue Code or any other requirement of applicable law or regulation.
Termination of the Employee Purchase Plan
The Board may terminate the Employee Purchase Plan at any time. The Employee Purchase Plan shall also terminate on the date that participating employees become entitled to purchase a number of shares of common stock greater than the number of reserved shares remaining available for purchase. In the event the Employee Purchase Plan terminates as a result of the preceding sentence, reserved shares of common stock remaining as of the termination date shall be subject to purchase by participating employees on a pro rata basis.
United States Federal Income Tax Consequences
The following is a general summary of the material United States federal income tax consequences to the Company and to participants in the Employee Purchase Plan based on the Internal Revenue Code as currently in effect. This summary is necessarily general in nature, does not address individual income tax consequences for non-U.S. participants, or employment taxes, estate or gift taxes, or foreign, state or local tax consequences, and is not complete.
The Employee Purchase Plan is intended to be an employee stock purchase plan as defined in Section 423 of the Internal Revenue Code, under which neither the grant nor the exercise of rights to acquire our Common Stock under the Employee Purchase Plan is taxable to the participant or gives rise to a deduction for the Company. Amounts deducted from a participants compensation to purchase Common Stock under the Employee Purchase Plan are taxable to the participant in the year in which the amounts would otherwise have been received.
If a participant sells the Common Stock acquired under the Employee Purchase Plan more than two years after the beginning of the applicable offer period and one year from the purchase date, the participant will recognize as ordinary income the lesser of the amount by which the fair market value of the Common Stock when purchased exceeds the purchase price (i.e., the discount below fair market value) or the amount, if any, by which the fair market value of the Common Stock at the time of the sale exceeds the purchase price. The participants tax basis in the purchased Common Stock will increase by the amount recognized as ordinary income and any further gain recognized on the sale will be treated as a capital gain. The Company will not be entitled to a deduction with respect to that sale.
If the participant sells the Common Stock acquired under the Employee Purchase Plan within two years after the beginning of the applicable offer period or within one year of the purchase date, the participant will recognize ordinary income in the year of the sale, the amount of which generally will be the excess of the fair market value of the Common Stock on the date the Common Stock was purchased (i.e., the end of the applicable offer period) over the purchase price for the Common Stock. The participants tax basis will increase by the amount recognized as ordinary income and any further gain or loss realized upon the sale will be capital gain or loss. In general, the Company will be entitled to a tax deduction at the time of the sale in an amount equal to the ordinary income recognized by the participant. However, if the participant is one of our most highly compensated employees for purposes of Section 162(m) of the Internal Revenue Code in the year of the sale, no deduction will be available to us to the extent the participants total ordinary income during that year (other than compensation qualifying for Section 162(m) exemption) exceeds $1 million.
OUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE EMPLOYEE PURCHASE PLAN AND RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROXY PROPOSAL 2.
The following table presents fees for audit services rendered by Ernst & Young LLP (Ernst & Young) for the audit of our annual consolidated financial statements for fiscal 2007 and fiscal 2006, and fees billed for services rendered by Ernst & Young during the same periods.
Fees for audit services billed or expected to be billed related to both years consisted of:
Fees for audit-related services provided during fiscal 2007 consisted of fees for due diligence services provided during fiscal 2007 related primarily to the TCFS acquisition.
Fees for tax services provided during fiscal 2007 consisted of fees for tax preparation and tax planning.
In considering the nature of services provided by Ernst & Young, the audit committee determined that such services are compatible with the provisions of independent audit services. The audit committee discussed these services with Ernst & Young and our management to determine that they are permitted under the rules and regulations concerning auditor independence promulgated by the SEC to implement the Sarbanes-Oxley Act of 2002, as well as the American Institute of Certified Public Accountants.
Policy for Approval of Audit and Non-audit Services
Our audit committee charter requires that all services provided by our independent public accountants, both audit and non-audit, must be pre-approved by the audit committee. The pre-approval of audit and non-audit services may be given at any time up to a year before commencement of the specified service.
In determining whether to approve a particular audit or permitted non-audit service, the audit committee will consider, among other things, whether such service is consistent with maintaining the independence of the independent public accountants. The audit committee will also consider whether the independent public accountants are best positioned to provide the most effective and efficient service to us and whether the service might be expected to enhance our ability to manage or control risk or improve audit quality.
We became subject to the rules of the Securities and Exchange Commission relating to qualification of accountants, including provisions regarding pre-approval of audit and non-audit services, on October 18, 2006, the effective date of our registration statement for our initial public offering. All audit and non-audit services provided by our independent public accountants after that point in time were pre-approved by our audit committee.
Audit Committee Report
In the performance of its oversight function, the audit committee has met and held discussions with management, who represented to the audit committee that our consolidated financial statements were prepared in
accordance with generally accepted accounting principles. The audit committee has reviewed and discussed the consolidated financial statements with both management and the independent public accountants. The audit committee also discussed with the independent public accountants matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees), as currently in effect.
Our independent public accountants also provided to the audit committee the written disclosures and the letter required by the current version of Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and the audit committee discussed their independence with the independent public accountants. In connection with that, the audit committee has considered whether the provision of non-auditing services (and the aggregate fees billed for these services) in fiscal 2007 by Ernst & Young LLP to us is compatible with maintaining the independent public accountants independence.
The members of the audit committee are not professionally engaged in the practice of auditing or accounting and are not experts in the fields of accounting or auditing, including in respect of auditor independence. Management is responsible for our internal control over financial reporting and the financial reporting process. Our independent public accountants are responsible for performing an independent audit of our consolidated financial statements in accordance with generally accepted auditing standards and to issue a report thereon. The audit committees responsibility is to monitor and oversee these processes, including our system of internal control over financial reporting and the preparation of our consolidated financial statements, and members of the audit committee rely without independent verification on the information provided to them and on the representations made by management and the independent public accountants. The audit committee also hires and sets the compensation for our independent public accountants.
The audit committees oversight does not provide it with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the audit committees considerations and discussions with management and the independent public accountants do not assure that our financial statements are presented in accordance with generally accepted accounting principles, that the audit of our financial statements has been carried out in accordance with generally accepted auditing standards or that our independent accountants are in fact independent.
Based upon the reports and discussions described in this report, and subject to the limitations on the role and responsibilities of the audit committee referred to above and in the audit committee charter, the audit committee recommended to our Board of Directors that our audited consolidated financial statements for the fiscal year ended December 30, 2007, be included in our Annual Report on Form 10-K filed with the SEC. The audit committee also retained Ernst & Young LLP as our independent public accountants for the 2008 fiscal year.
Submitted by our audit committee
Armand S. Shapiro (Chair)
David P. Engel
Jerry E. Thompson
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The audit committee of our Board of Directors is solely responsible for selecting our independent public accountants. The audit committee has selected Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2008. Although shareholder approval is not required to appoint Ernst & Young as our independent public accountants, we believe that submitting the appointment of Ernst & Young to our shareholders for ratification is a matter of good corporate governance. If our shareholders do not ratify the appointment, the appointment will be reconsidered by the audit committee. The proxy will be voted as specified, and if no specification is made, the proxy will be cast FOR this proposal.
During our fiscal year ended December 30, 2007, there were no disagreements with Ernst & Young on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which if not resolved to their satisfaction would have caused them to make reference to the subject matter of the disagreements in connection with their opinion.
The audit report of Ernst & Young on our consolidated financial statements for the years ended January 1, 2006, December 31, 2006 and December 30, 2007, did not contain any adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles.
Representatives of Ernst & Young will be present at the Meeting and available to answer shareholder questions.
OUR BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP FOR FISCAL YEAR 2008.
We have not received notice as required under our bylaws of any other matters to be proposed at the Meeting. Consequently, the only matters to be acted on at the Meeting are those described in this proxy statement, along with any necessary procedural matters related to the Meeting. As to procedural matters, or any other matters that are determined to be properly brought before the Meeting calling for a vote of the shareholders, it is the intention of the persons named in the accompanying proxy, unless otherwise directed in that proxy, to vote on those matters in accordance with their best judgment.
Certain Relationships and Related Party Transactions
Leasing Transactions. We lease 12 of our convenience stores and two of our dealer locations from related parties, including: Sam L. Susser, our President and Chief Executive Officer and a director; Sam J. Susser, a director; Jerry Susser; and various entities affiliated with Sam L. Susser, Sam J. Susser, E.V. Bonner, Jr. and members of their immediate families. In connection with the leasing of these properties, we made rental payments during the previous fiscal year to the persons set forth below and in the amounts set forth opposite such persons name.
Generally, we have the option to renew these leases. We believe the lease and renewal rates for such leased properties are no less favorable to us than we could have obtained in an arms length transaction.
Use of Private Aircraft. Sam L. Susser owns an aircraft that we use for business purposes in the course of our operations. We currently pay Mr. Susser a fee of $1,750 per flight hour, plus the cost of pilots and their related expenses, for our use of the aircraft. For 2008, this reimbursement is expected to be $2,250 per hour. We made payments to Sam L. Susser totaling $0.4 million in 2007. Based on current market rates for chartering of private aircraft, we believe that the terms of this arrangement are no worse than we could obtain in an arms length transaction.
Employment of Jerry Susser. Jerry Susser acts as Vice President of Real Estate for us and, for services performed during 2007, received annual compensation of $124,200 and a bonus of $39,671. Mr. Susser is the brother of Sam J. Susser, one of our directors, and an uncle of Sam L. Susser, our President and Chief Executive Officer.
Susser Company Ltd. Our subsidiary, Susser Company Ltd., a Texas limited partnership, is 85.18% owned by its limited partner Stripes LLC, 7.41% owned by its general partner Sam J. Susser and 7.41% owned by its general partner Jerry Susser. Sam J. Susser and Jerry Susser have agreed that they have no right to distributions from Susser Company Ltd. and no management or voting control and have given their proxy for all partnership matters to Stripes LLC.
Town & Country Merger Consideration. Immediately prior to the TCFS Acquisition, Alvin New, our Executive Vice President and the President and CEO of our retail operations, served as President and CEO of TCFS and owned 950,002 shares of TCFS common stock, or approximately 21% of TCFS shares outstanding.
Policy Regarding Transactions with Affiliates. In accordance with the rules of the NASDAQ Global Market, our audit committee monitors and reviews related party transactions on an ongoing basis and, pursuant to the audit committees charter, the Company is required to seek the approval of the audit committee prior to entering into any such transaction.
Registration Rights. In connection with our IPO, the holders of approximately 9,349,162 shares of common stock, including Wellspring, Sam L. Susser and members of senior management, were provided certain rights with respect to the registration of such shares under the Securities Act. Under the terms of the agreement between us and the holders of such registrable securities, if we propose to register any of our securities under the Securities Act, either for our own account or for the account of other security holders exercising registration rights, these holders are entitled to notice of such registration and are entitled to include shares of such common stock therein. Additionally, these holders are also entitled to certain demand registration rights pursuant to which they may require us to file a registration statement under the Securities Act at our expense with respect to our shares of common stock. Each of Wellspring and Sam L. Susser has two demand registration rights. We are not required to effect a demand registration (1) if we have effected a demand registration in the preceding six months, (2) during the period starting 45 days prior to our good faith estimate of the filing date of, and ending 90 days after the effective date of, a company-initiated registration on which our stockholders can piggyback, or (3) in some cases if it would require premature disclosure. Under these registration rights, the underwriters of an offering may limit the number of shares included in the registration, but in the case of piggyback registration the amount of securities requested to be included cannot be reduced below 25% of the total amount of securities included in such registration. All of these stockholders have agreed that in connection with any public offering of common stock, if requested by us and a managing underwriter, they will not, without the consent of us and the managing underwriter, sell their shares of common stock for up to 180 days (365 days in the case of shares controlled by Sam L. Susser) after the date of the related prospectus.
Section 16(a) Beneficial Ownership Reporting Compliance
Each director, executive officer (and, for a specified period, certain former directors and executive officers) and each holder of more than 10 percent of a class of our equity securities is required to report to the SEC his or her pertinent position or relationship, as well as transactions in those securities, by specified dates. Based solely upon a review of reports on Forms 3 and 4 (including any amendments) furnished to us during our most recent fiscal year and reports on Form 5 (including any amendments) furnished to us with respect to our most recent fiscal year, and written representations from officers and directors that no Form 5 was required, we believe that all filings applicable to our officers, directors and beneficial owners required by Section 16(a) of the Exchange Act were filed on a timely basis during 2007.
2009 Annual Meeting
Any shareholder who wants to present a proposal at the 2009 annual meeting of shareholders and to have that proposal set forth in the proxy statement and form of proxy mailed in conjunction with that annual meeting must submit the proposal in writing to the Secretary of the company at our principal executive offices by December 16, 2008 to be considered for inclusion in the proxy statement and form of proxy relating to that meeting.
Our bylaws require that for nominations of persons for election to the board of directors or the proposal of business not included in our notice of the meeting to be considered by the shareholders at an annual meeting, a shareholder must give timely written notice thereof. To be timely for the 2009 annual meeting of shareholders, that notice must be delivered to the Secretary of the company at our principal executive offices not less than 90 days and not more than 120 days prior to May 13, 2009. However, if the 2009 annual meeting of shareholders is advanced by more than 30 days, or delayed by more than 30 days, from May 13, 2009, then the notice must be delivered not later than the close of business on the tenth day following the earlier of the day on which notice of the meeting is first mailed or public announcement of the date of the meeting is first made. The notice must contain and be accompanied by certain information as specified in the bylaws. We recommend that any shareholder desiring to make a nomination or submit a proposal for consideration obtain a copy of our bylaws, which may be obtained without charge from the Secretary of the company upon written request addressed to the Secretary at our principal executive offices.
Incorporation by Reference
To the extent that this Proxy Statement is incorporated by reference into any other filing we make under the U.S. Securities Act of 1933 or the U.S. Securities Exchange Act of 1934, the sections of this Proxy Statement entitled Audit Committee Report and Compensation Committee Report (to the extent permitted by the applicable rules of the SEC) will not be deemed incorporated, unless specifically provided otherwise in such filing.
EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED PROXY.
SUSSER HOLDINGS CORPORATION
2008 EMPLOYEE STOCK PURCHASE PLAN
The Company wishes to attract employees to the Company and its Subsidiaries and to induce employees to remain with the Company and its Subsidiaries, and to encourage them to increase their efforts to make the Companys business more successful, whether directly or through its Subsidiaries. In furtherance thereof, the Plan is designed to provide equity-based incentives to the eligible employees of the Company and its Subsidiaries. The Plan is intended to comply with the provisions of Section 423 of the Code and shall be administered, interpreted and construed accordingly.
When used herein, the following terms shall have the respective meanings set forth below:
Board of Directors means the Board of Directors of the Company.
Code means the Internal Revenue Code of 1986, as amended.
Committee means the committee appointed by the Board of Directors of the Company under Section 3 hereof.
Common Stock means the Common Stock, par value $0.01 per share, of the Company.
Company means Susser Holdings Corporation, a Delaware corporation.
Effective Date means , 2008.
Eligible Compensation for any pay period means, unless otherwise determined by the Committee, the amount of gross compensation for such period. Eligible Compensation does not include, without limitation, any payments for reimbursement of expenses and other non-basic payments, unless otherwise determined by the Committee.
Eligible Employee means employees eligible to participate in the Plan pursuant to the provisions of Section 4.
Enrollment Period means such period preceding an Offer Period as is specified by the Committee with respect to such Offer Period.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Fair Market Value per Share as of a particular date means (i) if Shares are then listed on a national stock exchange, the closing price per Share on the exchange for the last preceding date on which there was a sale of Shares on such exchange, as determined by the Committee, (ii) if Shares are not then listed on a national stock exchange but are then traded on an over-the-counter market, the average of the closing bid and asked prices for such Shares in such over-the-counter market for the last preceding date on which there was a sale of such Shares in such market, as determined by the Committee, or (iii) if Shares are not then listed on a national exchange or traded on an over-the-counter market, such value as the Committee in its discretion may in good faith determine; provided that, where such shares are so listed or traded, the Committee may make discretionary determinations where the shares have not been traded for 10 trading days.
Offer Date means the first date of each fiscal quarter of the Company, unless otherwise provided by the Committee.
Offer Period means the period commencing on each Offer Date and ending on the next succeeding Purchase Date.
Participating Employee means an employee (i) for whom payroll deductions are currently being made or (ii) for whom payroll deductions are not currently being made because he or she has reached the limitation set forth in the first sentence of Section 6.
Payroll Account means an account maintained by the Company with respect to each Participating Employee as contemplated by Section 5.
Plan means this Susser Holdings Corporation, 2008 Employee Stock Purchase Plan, as it may from time to time be amended.
Plan Year means the fiscal year.
Purchase Date means the last trading day of each Offer Period, unless otherwise provided by the Committee.
Shares means shares of Common Stock.
Stock Account means a brokerage account as contemplated by Section 8.
Subsidiary means any corporation that is a subsidiary corporation with respect to the Company under Section 424(f) of the Code.
There shall be reserved for issuance and purchase by employees under the Plan an aggregate of 750,000 Shares, subject to adjustment as provided in Section 13. Shares subject to the Plan may be Shares now or hereafter authorized but unissued, or Shares that were once issued and subsequently reacquired by the Company. If and to the extent that any right to purchase reserved Shares shall not be exercised by any employee for any reason or if such right to purchase shall terminate as provided herein, Shares that have not been so purchased hereunder shall again become available for the purposes of the Plan unless the Plan shall have been terminated, but such unpurchased Shares shall not be deemed to increase the aggregate number of Shares specified above to be reserved for purposes of the Plan (subject to adjustment as provided in Section 13).
The Plan shall be administered by the Committee appointed by the Board of Directors. The Board of Directors shall consider the rules of Rule 16b-3 promulgated under the Exchange Act and Section 162(m) of the Code in connection with any such appointment, if and to the extent that such appointments may have an effect thereunder. Each member of the Committee shall serve at the pleasure of the Board of Directors. The acts of a majority of the members present at any meeting of the Committee at which a quorum is present, or acts approved in writing by a majority of the entire Committee, shall be the acts of the Committee for purposes of the Plan. If and to the extent applicable, no member of the Committee may act as to matters under the Plan specifically relating to such member. Notwithstanding the foregoing, the Board of Directors may designate the Compensation Committee of the Board of Directors to act as the Committee hereunder.
The Committee may make such rules and regulations and establish such procedures for the administration of the Plan as it deems appropriate. The Committee shall have authority to interpret the Plan, with such interpretations to be conclusive and binding on all persons and otherwise accorded the maximum deference permitted by law and shall take any other actions and make any other determinations or decisions that it deems necessary or appropriate in connection with the Plan or the administration or interpretation thereof.
Except as described below, all employees of the Company and each Subsidiary designated for participation herein by the Committee who have been employed by the Company or such Subsidiary for at least six (6) months
shall be eligible to participate in the Plan, provided that each of such employees does not own, for purposes of Section 423 of the Code, immediately after the right is granted, stock possessing 5% or more of the total combined voting power or value of all classes of capital stock of the Company or of a Subsidiary.
The Committee may also exclude from participation in the Plan any or all of (i) a group of highly compensated employees designated by the Committee as being ineligible to participate in the Plan as permitted by Section 423(b)(4)(D) of the Code, (ii) employees who have been employed by the Company or any Subsidiary for less than two years, (iii) employees whose customary employment is for not more than five months in any calendar year, and (iv) employees who customarily work 20 hours per week or less. The employment of an employee of a Subsidiary which ceases to be a Subsidiary as defined herein shall, automatically and without any further action, be deemed to have terminated (and such employee shall cease to be an Eligible Employee hereunder).
Each Eligible Employee may elect to participate in the Plan during the Enrollment Period immediately prior to the beginning of each Offer Period during a Plan Year. Each Eligible Employee may elect a payroll deduction of from 1% to 10% of Eligible Compensation from each paycheck, in increments of 1% (i.e., 1%, 2%, 3%, etc.), unless otherwise so provided by the Committee. Elections under this Section 5 are subject to the limits set forth in Section 6. All payroll deductions shall be credited, as promptly as practicable, to a Payroll Account in the name of the Participating Employee. All funds held by the Company under the Plan shall not be segregated from other corporate funds (except that the Company may in its discretion establish separate bank or investment accounts in its own name) and may be used by the Company for any corporate purpose.
Each Eligible Employee may cancel his or her election to participate in the Plan by signing and delivering written notice to the Committee, on a form specified for such purpose by the Committee, at such times as may be established by the Committee, up to one (1) time. In such case, the entire balance in the Payroll Account of such Eligible Employee shall be repaid to such Eligible Employee as promptly as practicable in accordance with Section 9. A Participating Employees voluntary withdrawal during an Offer Period shall have no effect upon such Participating Employees eligibility to participate during any other Offer Period under the Plan, but such Participating Employee shall be required to deliver a new enrollment form in order to participate during a subsequent Offer Period.
If so provided by the Committee, an Eligible Employee who is a Participating Employee immediately prior to the beginning of an Offer Period will be deemed (i) to have elected to participate for such Offer Period and (ii) to have authorized the same percentage payroll deduction for such Offer Period in effect for such Eligible Employee as that in effect (without regard to Section 6) on the day before such Offer Period. The Committee may adopt the procedures set forth in the foregoing sentence for some but not all Offer Periods (for example, for Offer Periods commencing after the beginning of a fiscal year but not for Offer Periods commencing on January 1).
No right to purchase Shares under the Plan shall permit an employee to purchase stock under all employee stock purchase plans of the Company and its subsidiaries (as defined for purposes of Section 423 of the Code) at a rate which in the aggregate exceeds $25,000 of the fair market value of such stock (determined under Section 423 of the Code at the time the right is granted) for each calendar year in which the right is outstanding at any time.
The purchase price for each Share shall be 85% of the Fair Market Value of such Shares on the Purchase Date.
As of the Purchase Date, each Participating Employee shall be deemed, without any further action, to have purchased the number of whole Shares which the balance of his or her Payroll Account at that time will purchase, determined by dividing the balance in his or her Payroll Account not theretofore invested by the purchase price as determined in Section 7.
All Shares purchased as provided in the foregoing paragraph shall be initially maintained in separate Stock Accounts for the Participating Employees at a brokerage firm selected by, and pursuant to an arrangement with, the Company. Unless otherwise permitted by the Committee, a Participating Employee may not undertake a disposition (as that term is defined in Section 424 of the Code) of the Shares in his or her Stock Account, whether by sale, exchange, gift or other transfer of legal title, until the earlier of six (6) months after the end of the Offer Period in which such Shares were acquired or the Participating Employees termination of employment with the Company. In the absence of such a disposition of such Shares unless otherwise provided by the Committee, the Shares must remain in the Participating Employees Stock Account at the brokerage firm so selected until the holding period set forth in Section 423(a) of the Code has been satisfied. With respect to those Shares for which the Section 423(a) holding period has been satisfied, the Participating Employee may, without limitation, move those Shares to another brokerage account of the Participating Employees choosing or request that a stock certificate be issued and delivered to him or her.
If and to the extent provided by the Committee, for so long as such Shares are maintained in Stock Accounts, all dividends paid with respect to such Shares shall be paid directly to the holder of record of such Shares on such dividend payment date. The Committee may provide that transaction fees incurred with respect to dividend reinvestment may be paid by the Company.
Unless otherwise provided by the Committee, in no event shall fractional Shares be purchased hereunder, and any remaining cash in a Participating Employees Payroll Account resulting from such failure to invest in fractional Shares shall remain in the Payroll Account for use in the next Offer Period; provided, however, that, if the Participating Employee is not an active Participating Employee for such next Offer Period, such remaining cash shall be returned to the Participating Employee as soon as practicable. Notwithstanding any other provision of the Plan, the Committee may permit the purchase of fractional Shares hereunder and establish rules and procedures relating thereto.
The right to participate in the Plan shall terminate immediately when a Participating Employee ceases to be employed by the Company for any reason (including death or disability) or a Participating Employee otherwise becomes ineligible. Participation also terminates: (i) immediately when the Participating Employee voluntarily cancels his or her election to participate in the Plan as provided in Section 5, (ii) if, immediately after the Purchase Date, the Participating Employee is not re-enrolled in the Plan for the next Offer Period or (iii) if the Participating Employee has suspended payroll deductions during any Offer Period and has not re-enrolled in the Plan for the next Offer Period.
Notwithstanding any other provision of the Plan to the contrary, the Company shall distribute to such former Participating Employee (or, in the event of death, to his or her estate), the balance in their Payroll Account not theretofore invested, any such distribution or payment to be made as soon as practicable. The Committee shall also cause to be delivered to the former Participating Employee (or his or her estate), a certificate for the number of whole shares held in his or her Stock Account within 90 days of the termination of employment or as soon as practicable thereafter. If applicable, fractional shares will be sold on the open market and the Participating Employee will receive the net proceeds, if any, after all fees have been paid.
Each Stock Account may be in the name of the Participating Employee or, if permitted by the Committee and the Participating Employee so indicates on the appropriate form, in his or her name jointly with another person, with right of survivorship. If permitted by the Committee, a Participating Employee who is a resident of a jurisdiction that does not recognize such a joint tenancy may have a Stock Account in his or her name as tenant in common with another person without right of survivorship. To the extent the Committee allows for the purchase of fractional Shares, in the event that a Participating Employee directs in accordance with the Plan that his or her Shares be transferred from the applicable Stock Account, any fractional Shares in the Participating Employees Stock Account shall be paid in cash in accordance with the generally applicable rules and procedures of the brokerage firm maintaining the Stock Accounts.
At the time funds from a Participating Employees Payroll Account are used to purchase the Common Stock, he or she shall have all of the rights and privileges of a stockholder of the Company with respect to the Shares purchased under the Plan whether or not certificates representing such Shares have been issued.
Rights granted under the Plan are not transferable by a Participating Employee other than by will or the laws of descent and distribution and are exercisable during his or her lifetime only by him or her.
If (i) the Company shall at any time be involved in a merger, consolidation, dissolution, liquidation, reorganization, exchange of shares, sale of all or substantially all of the assets or stock of the Company or its Subsidiaries or a transaction similar thereto, (ii) any stock dividend, stock split, reverse stock split, stock combination, reclassification, recapitalization or other similar change in the capital structure of the Company, or any distribution to holders of Common Stock other than cash dividends, shall occur or (iii) any other event shall occur which in the judgment of the Committee necessitates action by way of adjusting the number or kind of shares, or both, which thereafter may be sold under the Plan, then the Committee may forthwith take any such action as in its judgment shall be necessary to preserve to the Participating Employees rights substantially proportionate to the rights existing prior to such event, and to maintain the continuing availability of Shares under Section 2 (if Shares are otherwise then available) in a manner consistent with the intent hereof, including, without limitation, adjustments in (x) the number and kind of shares subject to the Plan, (y) the purchase price of such shares under the Plan, and (z) the number and kind of shares available under Section 2. To the extent that such action shall include an increase or decrease in the number of Shares (or units of other property then available) subject to the Plan, the number of Shares (or units) available under Section 2 above shall be increased or decreased, as the case may be, proportionately, as may be provided by Committee in its discretion.
Notwithstanding any other provision of the Plan, if the Common Stock ceases to be listed or traded, as applicable, on a national stock exchange or over-the-counter market (a Triggering Event), then, in the discretion of the Committee, (i) the balance in the Participating Employees Payroll Account not theretofore invested may be refunded to the Participating Employee, and such Participating Employee shall have no further rights or benefits under the Plan, (ii) an amount equal to the product of the Fair Market Value of a Share on the date of the Triggering Event multiplied by the number of Shares such Participating Employee would have been able to purchase with the balance of his or her Payroll Account on such Triggering Event if such Triggering Event were the Purchase Date may be paid to the Participating Employee, and such Participating Employee shall have no further rights or benefits under the Plan, or (iii) the Plan may be continued without regard to the application of this sentence.
The Board of Directors may at any time, or from time to time, amend the Plan in any respect; provided, however, that the Plan may not be amended in any way that would cause, if such amendment were not approved by the Companys shareholders, the Plan to fail to comply with
unless and until stockholder approval is obtained. No amendment of the Plan shall alter or impair any rights outstanding at the time of the such amendment to purchase Shares pursuant to any offer hereunder.
The Plan and all rights of employees hereunder shall terminate:
In the event that the Plan terminates under circumstances described in (i) above, reserved Shares remaining as of the termination date shall be subject to purchase by Participating Employees on a pro rata basis.
The Plan, and the grant and exercise of the rights to purchase Shares hereunder, and the Companys obligation to sell and deliver Shares upon the exercise of rights to purchase Shares, shall be subject to all applicable federal, state and foreign laws, rules and regulations, and to such approvals by any regulatory or governmental agency as may be required. The Company shall not be required to issue or deliver any certificates for Shares prior to the completion of any registration or qualification of such Shares under, and the obtaining of any approval under or compliance with, any state or federal law, or any ruling or regulation of any government body which the Company shall, in its sole discretion, determine to be necessary or advisable. Certificates for Shares issued hereunder may be legended as the Committee may deem appropriate.
The Participating Employee shall take whatever additional actions and execute whatever additional documents the Committee may in its reasonable judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on the Participating Employee pursuant to the Plan.
Without amending the Plan, the Committee may allow for participation under the terms hereunder by Eligible Employees of non-U.S. Subsidiaries with such modifications of the terms and conditions otherwise specified hereunder as may in the judgment of the Committee be necessary or desirable to foster and promote achievement of the purposes hereof, and, in furtherance of such purposes, the Committee may make such amendments, procedures and the like as may be necessary or advisable to comply with provisions of laws (including tax laws) in other countries in which such Subsidiaries operate or have employees. Without limiting the generality of the foregoing, and notwithstanding any other provision of the Plan, the participation hereunder of each participating non-U.S. Subsidiary shall be deemed to be under a separate and distinct plan rather than under the Plan. Notwithstanding the foregoing, any limitations on the number of Shares set forth hereunder shall be applied and administered with respect to the aggregate of the Plan and all such separate plans.
The Company shall indemnify and hold harmless the members of the Board of Directors of the Company and the members of the Committee from and against any and all liabilities, costs and expenses incurred by such persons as a result of any act or omission to act in connection with the performance of such persons duties, responsibilities and obligations under the Plan if such person acts in good faith and in a manner that he or she reasonably believes to be in, or not opposed to, the best interests of the Company, to the maximum extent permitted by law.
Notwithstanding any other provision of the Plan, the Company shall deduct from all Payroll Accounts paid under the Plan all federal, state, local and other taxes required by law to be withheld with respect to such payments.
If Shares acquired under the Plan are disposed of in a disposition that does not satisfy the holding period requirements of Section 423(a) of the Code, such Participating Employee shall notify the Company in writing as soon as practicable thereafter of the date and terms of such disposition and, if the Company (or any affiliate thereof) thereupon has a tax-withholding obligation, shall pay to the Company (or such affiliate) an amount equal to any withholding tax the Company (or affiliate) is required to pay as a result of the disqualifying disposition (or satisfy such other arrangements as may be permitted by the Committee.)
All notices under the Plan shall be in writing (which for these purposes shall include reasonably acceptable means of electronic transmission), and if to the Company, shall be delivered to the Board of Directors or mailed to its principal office, addressed to the attention of the Board of Directors; and if to a Participating Employee, shall be delivered personally or mailed to such Participating Employee at the address appearing in the records of the Company. Such addresses may be changed at any time by written notice to the other party given in accordance with this Section 20.
If any particular provision of this Plan is found to be invalid or unenforceable, such provision shall not affect the other provisions of the Plan, but the Plan shall be construed in all respects as if such invalid provision had been omitted.
The Plan and any right to purchase Common Stock granted hereunder shall not confer upon any employee any right with respect to continued employment by the Company or any Subsidiary, nor shall they restrict or interfere in any way with the right of the Company or any Subsidiary by which an employee is employed to terminate his or her employment at any time.
The use of captions in the Plan is for convenience. The captions are not intended to and do not provide substantive rights.
The Plan shall be effective as of the Effective Date, provided that the Plan is approved by stockholders prior thereto.
The provisions of the Plan shall be governed by and construed in accordance with the laws of the State of Delaware.
Annual Meeting Proxy Card
Proxy Susser Holdings Corporation May 13, 2008 Annual Meeting
Proxy Solicited on Behalf of the Board of Directors
The Board of Directors has determined that the 2008 Annual Meeting of Stockholders of Susser Holdings Corporation will be held on Tuesday, May 13, 2008 at 11:00 a.m., Central Time, at the Texas A&M UniversityCorpus Christi, 6300 Ocean Drive, Corpus Christi, Texas 78412, Harte Research Institute Building, Room #127.
By signing on the reverse side, I (we) hereby appoint each of E.V. Bonner, Jr. and Mary E. Sullivan as proxies (with full power to act without the other and with full power of substitution) to attend, represent and vote my (our) shares entitled to vote at the Companys Annual Meeting of Stockholders to be held on May 13, 2008, or at any adjournment or postponement thereof, in the manner stated on the reverse side hereof, and in their discretion on any other matter that may properly come before the meeting.
Sign, date and return this card promptly using the enclosed envelope. The shares represented by this proxy will be voted in accordance with the instructions designated on the reverse side. If this proxy is signed and returned without specific instructions as to any item or both items, it will be voted FOR the election of each of the two directors named, FOR the ratification of the Adoption of the Susser Holdings Corporation 2008 Employee Stock Purchase Plan and FOR the ratification of the appointment of the independent registered public accounting firm.