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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): FEBRUARY 28, 2006
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SYSCO CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 1-06544 74-1648137
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
1390 ENCLAVE PARKWAY, HOUSTON, TX 77077-2099
(Address of principal executive office) (zip code)
Registrant's telephone number, including area code: (281) 584-1390
N/A
(Former name or former address, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[_] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
DIRECTOR COMPENSATION
The response to Item 5.02 below is incorporated herein by reference.
On February 28, 2006, after consideration of the conclusions and recommendations
of the Corporate Governance and Nominating Committee, the Board of Directors (a)
acted in accordance with its authority under the Company's Non-Employee
Directors Stock Plans (the "Plans") to treat Mr. Campbell's tentatively planned
resignation from the Board of Directors as though Mr. Campbell was retiring from
the Board of Directors on or after he reached the age of 71 so that Mr.
Campbell's Options and Restricted Stock (as such terms are defined under the
Plans) shall not be forfeited and shall remain in effect, vest, become
exercisable and expire as if Mr. Campbell had remained a non-employee director
of the Company and had not ceased to provide services to the Board solely for
purposes of maintaining the benefits of the Options and Restricted Stock, and
(b) authorized the Company to make a cash payment to Mr. Campbell in an amount
sufficient to reimburse Mr. Campbell for the sum of the amount of additional
tax, if any, which may be owed by Mr. Campbell under Section 409A of the
Internal Revenue Code as a result of the foregoing actions, plus any income tax
payable by Mr. Campbell as a result of such payments to Mr. Campbell.
ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPAL OFFICERS
RESIGNATION OF DIRECTOR
On March 1, 2006, Mr. Colin Campbell tendered his resignation from the Board of
Directors of SYSCO Corporation (the "Company"), effective immediately. Mr.
Campbell is the President, Chief Executive Officer and Chairman of the Board of
The Colonial Williamsburg Foundation ("CWF") and The Colonial Williamsburg
Company ("CWC"). CWC is a wholly-owned subsidiary of CWF. The Company is
expected to enter into a contract to supply food and related items to CWC on
March 3, 2006. Management believes that it is reasonably likely that sales to
CWC will exceed 2% of CWC's consolidated gross annual revenues. As a result of
the duality of interests, Mr. Campbell has informed the Board that he believes
it would no longer be appropriate for him to be considered an independent
director and he has therefore determined that he will leave the Board at this
time. There was no disagreement between Mr. Campbell and the Board over any
matter. In connection with Mr. Campbell's resignation, the Board of Directors
reduced the size of the Board of Directors to eleven members. A copy of the
press release dated March 1, 2006 related to Mr. Campbell's departure is filed
as Exhibit 99.1 hereto and incorporated by reference herein. Mr. Campbell has no
other material relationships with the Company other than as disclosed in the
Company's proxy statement filed with the SEC on September 30, 2005.
ITEM 7.01. REGULATION FD DISCLOSURE.
CHANGES IN COMMITTEE COMPOSITION
Following Mr. Campbell's resignation, directors Cassaday, Craven, Hafner,
Merrill, Newcomb, Sewell, Tilghman and Ward will continue to be designated as
independent. Mr. Tilghman is the non-executive Vice Chairman of CWF and CWC. He
has no other relationships with the Company or its management or with the
management of CWF or CWC. Neither CWC nor the Company is dependent on the
contract. After considering the foregoing and all other relevant factors, the
independent members of the Board, upon the recommendation of the Corporate
Governance and Nominating Committee, have determined that Mr. Tilghman does not
have a material relationship with the Company or its management.
As a result of the foregoing, the composition of the standing Board committees
has been revised, effective as of March 1, 2006. Following the changes, the
Company's standing committees include the following:
COMPENSATION AND STOCK OPTION COMMITTEE. Mr. Cassaday, Chairman; Messrs. Merrill
and Tilghman, and Ms. Ward.
CORPORATE GOVERNANCE AND NOMINATING COMMITTEE. Ms. Ward, Chairman; Mr. Cassaday,
Dr. Craven and Ms. Sewell.
AUDIT COMMITTEE. Mr. Tilghman, Chairman; Messrs. Hafner and Merrill, Ms. Newcomb
and Ms. Sewell.
FINANCE COMMITTEE. Mr. Hafner, Chairman; Messrs. Golden and Schnieders, and Dr.
Craven and Ms. Newcomb.
CERTAIN RELATIONSHIPS
The following familial relationships currently exist between certain executive
officers of the Company and certain other Company employees, whose current
annualized salary, fiscal 2005 salary and bonus, and fiscal 2005 and 2006 option
grant values are set forth below:
EXECUTIVE FAMILY RELATIONSHIP POSITION FISCAL 2005 CURRENT BLACK SCHOLES BLACK SCHOLES
OFFICER MEMBER TO EXECUTIVE WITH SYSCO SALARY AND SALARY OF VALUE OF VALUE OF OPTIONS
OFFICER BONUS OF FAMILY MEMBER OPTIONS GRANTED TO
FAMILY MEMBER GRANTED TO FAMILY MEMBER IN
FAMILY MEMBER FISCAL 2006
IN FISCAL 2005
----------------- ------------ --------------- -------------- --------------- --------------- ---------------- ------------------
James Lankford, Frederick brother President, $ 1,196,714.28 $ 315,000.00 $ 99,400 $ 0
Senior VP of Lankford Lankford
Foodservice Sysco Food
Operations Services,
Inc.
----------------- ------------ --------------- -------------- --------------- --------------- ---------------- ------------------
Jim Graham, Gordon brother President, $ 587,640.47 $ 240,000.00 $ 78,100 $ 0
Senior VP of Graham Sysco
Foodservice Foodservices
Operations of Atlanta,
Inc.
----------------- ------------ --------------- -------------- --------------- --------------- ---------------- ------------------
Larry Accardi, Michelle daughter Regional $ 73,500.48 $ 75,000.00 $ 0 $ 0
Executive Vice Connors Corporate
President Trainer at
Sysco
Corporation
----------------- ------------ --------------- -------------- --------------- --------------- ---------------- ------------------
Jim Danahy, William F. brother-in-law Marketing $ 83,374.00 * $ 0 $ 0
Senior VP of MacDonald Associate at
Operations Hallsmith
Sysco
----------------- ------------ --------------- -------------- --------------- --------------- ---------------- ------------------
Steve Smith, Callie F. daughter Director of $ 71,811.13 $ 65,000.00 $ 0 $ 19,225
Senior VP of Smith Davis Business
Operations Review
Sysco Gulf
Coast
----------------- ------------ --------------- -------------- --------------- --------------- ---------------- ------------------
* Mr. MacDonald is paid on a commission-only basis.
In addition to the foregoing, James and Frederick Lankford are the brothers of
Thomas Lankford, who retired as a director and as President and Chief Operating
Officer of the Company on July 2, 2005. Hunter Lankford, a Marketing Associate
at Sysco Foodservices of West Coast Florida, Inc., is Thomas Lankford's son.
James Lankford's aggregate fiscal 2005 salary and bonus was $1,664,508.82 and
his fiscal 2006 salary is $460,000. He received option grants in fiscal 2005 and
2006 having Black Scholes values of $184,600 and $314,730, respectively. Hunter
Lankford's aggregate fiscal 2005 salary and bonus was $72,757.37 and his fiscal
2006 salary is $78,250.00. Further, Gregory Marshall was Senior Vice President
of Operations of the Company, and Chairman of SYGMA Network, Inc. Mr. Marshall
will retire from employment with the Company and SYGMA on March 7, 2006. He
resigned his officer positions on September 1, 2005. Mr. Marshall's son-in-law,
Gregory Keller, is a vice president of sales for SYGMA. Mr. Keller's aggregate
fiscal 2005 salary and bonus was $184,598.10 and his fiscal 2006 salary is
$139,000. He received an option grant in fiscal 2005 having a Black Scholes
value of $12,425. James Lankford, Frederick Lankford and Gordon Graham
participate in the Company's executive benefit plans, including the management
incentive plan, executive deferred compensation plan, long term incentive cash
plans and supplemental executive retirement plan. They received grants of
performance units under the 2005 long-term incentive cash plan, as follows:
James Lankford--5,600 units, Frederick Lankford--2,750 units, and Gordon
Graham--2,750 units, the terms of which are described in the Company's Report on
Form 8-K filed on September 14, 2005. In addition, they received grants of
performance units under the 2004 long-term incentive cash plan, as follows:
James Lankford--4,750 units, Frederick Lankford--2,500 units, and Gordon
Graham--2,500 units, the terms of which are described in the Company's Report on
Form 8-K filed on September 10, 2004.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Shell company transactions.
Not applicable.
(d) Exhibits.
Exhibit Number Description
99.1 Press Release dated March 1, 2006
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, SYSCO
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
SYSCO CORPORATION
Date: March 3, 2006 By: /s/ Michael C. Nichols
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Michael C. Nichols
Vice President, General Counsel
and Corporate Secretary