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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OFProxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
Dreyer's Grand Ice Cream, Inc./ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
DREYER'S GRAND ICE CREAM, INC.
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(Name of Registrant as Specified Inin Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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LOGO
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Notice of Annual
Meeting of Stockholders
and Proxy Statement
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Meeting of May 1, 199614, 1997
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LOGO
To the Stockholders of Dreyer's Grand Ice Cream, Inc.TO THE STOCKHOLDERS OF DREYER'S GRAND ICE CREAM, INC.
You are cordially invited to attend the Annual Meeting of Stockholders of
Dreyer's Grand Ice Cream, Inc. (the "Company") that will be held at the
Claremont Resort Hotel, Ashby and Domingo Avenues, Oakland, California on
Wednesday, May 1, 199614, 1997 at 2:00 p.m. We hope you will be able to attend,
participate and hear management's report to stockholders.
On the following pages, you will find a Notice of Annual Meeting and Proxy
Statement. We suggest that you read the Proxy Statement carefully.
It is important that your shares be represented at the meeting, regardless
of the size of your holding. Therefore, we urge you to SIGN, DATE and RETURN AS
SOON AS POSSIBLE the enclosed proxy card in the postage-paid envelope furnished
for that purpose. This should be done whether or not you now plan to attend the
meeting and to vote in person. A summary of the proceedings of the meeting will
be sent to all stockholders.
The Directors and Officers of the Company look forward to meeting with you.
T. GARY ROGERS WILLIAM F. CRONK, III
Chairman of the Board and President
Chief Executive Officer
Oakland, California
March 26, 199631, 1997
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LOGO
TABLE OF CONTENTS
PAGE
----
Notice of Annual Meeting of Stockholders.............................................. 1
Proxy Statement....................................................................... 2
Introduction.......................................................................... 2
Annual Report....................................................................... 2
Solicitation by the Board of Directors; Revocation of Proxies....................... 2
Costs of Solicitation............................................................... 2
Voting of Board of Directors' Proxies............................................... 2
Shares Outstanding, Voting Rights and Record Date................................... 2
Board of Directors.................................................................... 3
Changes in Board of Directors....................................................... 3
Nominees for Director............................................................... 3
Continuing Directors................................................................ 4
Committees of the Board............................................................. 5
Attendance at Board and Committee Meetings.......................................... 5
Remuneration of Directors........................................................... 6
Security Ownership of Certain Beneficial Owners and Management........................ 37
Security Ownership of Certain Beneficial Owners..................................... 37
Security Ownership of Management.................................................... 49
Section 16(a) Beneficial Ownership Reporting Compliance............................. 10
Executive Compensation................................................................ 611
Summary of Cash and Certain Other Compensation...................................... 611
Stock Options....................................................................... 712
Performance Graph................................................................... 914
Employment Contracts, Employment Termination and Change of Control Arrangements..... 9
Remuneration of Directors........................................................... 1014
Compensation Committee Report on Executive Compensation............................. 15
Compensation Committee Interlocks and Insider Participation......................... 10
Compensation Committee Report on Executive Compensation............................. 11
Board of Directors.................................................................... 13
Committees of the Board............................................................. 13
Meetings of the Board of Directors.................................................. 14
Compliance with Section 16(a) of the Securities Exchange Act of 1934................ 14
Certain Transactions................................................................ 1417
Other Relationships................................................................. 18
Matters Submitted to thea Vote of Stockholders......................................... 15Stockholders........................................... 18
Election of Directors............................................................... 15
Approval18
Ratification of the Amendment to the Company's Stock Option Plan (1993)................. 16
ApprovalSelection of Independent Public Accountants.......................................... 20Accountants......................... 19
Voting Information.................................................................... 2119
General Voting Information.......................................................... 2119
Votes Required for Approval......................................................... 2120
Proposals of Stockholders............................................................. 2220
Other Matters......................................................................... 2220
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LOGO
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 1, 199614, 1997
The Annual Meeting of Stockholders of DREYER'S GRAND ICE CREAM, INC. will
be held on Wednesday, May 1, 199614, 1997 at 2:00 p.m. at the Claremont Resort Hotel,
Ashby and Domingo Avenues, Oakland, California for the following purposes:
1. Electing three directors to Class IIIII of the Board of Directors;
2. Approving the amendment to the Company's Stock Option Plan (1993)
to increase the number of shares reserved for issuance thereunder from
1,200,000 to 2,200,000;
3. Approving the appointment of Price Waterhouse LLP as independent
public accountants for the fiscal year 19961997 and thereafter until its
successor is appointed; and
4.3. Considering and acting upon such other business as may properly come
before the meeting or at any adjournments or postponements thereof.
A complete list of the stockholders entitled to vote at the meeting,
including the address and number of shares registered in the name of each such
stockholder, will be open for examination by any such stockholder, for any
purpose germane to the meeting, at the Company's corporate office (5929 College
Avenue, Oakland, California) during ordinary business hours for 10 days before
the date of the meeting. The list will also be available for inspection at the
meeting.
The close of business on March 21, 199628, 1997 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
meeting. The stock transfer books will not be closed.
EDMUND R. MANWELL
Secretary
March 26, 199631, 1997
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. PLEASE SIGN,
DATE AND MAIL THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO
POSTAGE. YOU MAY NEVERTHELESS VOTE IN PERSON IF YOU ATTEND THE MEETING.
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PROXY STATEMENT
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INTRODUCTION
This Proxy Statement is furnished to stockholders by the Board of Directors
of Dreyer's Grand Ice Cream, Inc., a Delaware corporation (the "Company"), in
connection with the solicitation of proxies for use at the Annual Meeting of
Stockholders of the Company to be held on Wednesday, May 1, 199614, 1997 and at all
adjournments or postponements thereof. The mailing address of the Company is
5929 College Avenue, Oakland, California 94618, and its telephone number is
(510) 652-8187. The approximate date on which this Proxy Statement and the
enclosed form of proxy are to be sent to stockholders is on or about March 29,
1996.April 4,
1997.
ANNUAL REPORT
The Annual Report of the Company for the year ended December 30, 199528, 1996 is
furnished concurrently to all stockholders entitled to vote at the Annual
Meeting. The Annual Report is not to be regarded as proxy soliciting material or
as a communication by means of which any solicitation is to be made except to
the extent portions of the Annual Report are incorporated herein by reference.
SOLICITATION BY THE BOARD OF DIRECTORS; REVOCATION OF PROXIES
The proxy in the form enclosed is solicited by the Board of Directors. A
proxy may be revoked by the stockholder prior to exercise thereof by filing with
the Secretary of the Company a written revocation or a duly executed proxy
bearing a later date. The powers of the proxy holders will be suspended if the
person executing the proxy is present at the stockholders' meeting and elects to
vote in person.
COSTS OF SOLICITATION
The entire cost of soliciting these proxies will be borne by the Company.
The Company may make arrangements with brokerage houses, nominees, fiduciaries
and other custodians to send proxies and proxy materials to beneficial owners of
the Company's stock and may reimburse them for their expenses in so doing. The
Company has retained Skinner & Co. to assist in obtaining proxies from brokers
and nominees at an estimated cost of $3,500 plus out of pocket expenses.
Proxies may be solicited by directors, officers and regular employees of
the Company personally or by telephone, facsimile or mail. These services will
be provided without additional compensation.
VOTING OF BOARD OF DIRECTORS' PROXIES
The shares represented by the Board of Directors' proxies will be voted FOR
the election of the Board of Directors' nominees for Class IIIII of the Board of
Directors, FOR the approval of the amendment to the Company's Stock Option Plan
(1993), FOR the approval of Price Waterhouse LLP as independent public
accountants and at the discretion of the proxy holders on any other matters that
may properly come before the Annual Meeting, if no contrary instruction is
indicated on a proxy.
SHARES OUTSTANDING, VOTING RIGHTS AND RECORD DATE
There were 13,011,27913,400,607 shares of Common Stock ($1.00 par value) of the
Company, 1,007,522 shares of Series B Convertible Preferred Stock ($1.00 par
value) of the Company, no shares of Series A Convertible Preferred Stock ($1.00
par value) of the Company, and no shares of Series A Participating Preference
Stock ($1.00 par value) of the Company outstanding at the close of business on
March 21, 1996.28, 1997. Each share of Common Stock is entitled to one vote at the
meeting. Each share of Series B Convertible Preferred Stock is entitled to vote
that number of votes which could be cast by a holder of the number of shares of
Common Stock into which such shares of Series B Convertible Preferred Stock is
convertible on the record date for the meeting. The outstanding shares of Series
B Convertible Preferred Stock are convertible into an aggregate of 2,900,000
shares of Common Stock on March 21, 1996.28, 1997. There are no cumulative voting rights.
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Pursuant to the By-Laws of the Company, the Board of Directors has fixed
the close of business on March 21, 199628, 1997 as the record date for the determination
of stockholders entitled to notice of and to vote at the meeting.
2BOARD OF DIRECTORS
CHANGES IN BOARD OF DIRECTORS
The Company has regretfully accepted the resignations of three Board
members who, for personal reasons, have recently resigned from the Company's
Board of Directors. Mr. Anthony J. Martino, who had served on the Company's
Board of Directors, Class III, since 1994, resigned from the Board effective
December 31, 1996. The vacancy created by his resignation was filled by Mr. M.
Steven Langman, an appointee named by Nestle Holdings, Inc. ("NHI") pursuant to
the terms of the Stock and Warrant Purchase Agreement dated June 14, 1994
between the Company and NHI (the "Nestle Agreement"). Mr. Martino had also been
appointed by NHI pursuant to the Nestle Agreement. The Nestle Agreement is
further described under the caption "Compensation Committee Interlocks and
Insider Participation" on page 17 herein. Mr. Merril M. Halpern, who had served
on the Company's Board of Directors, Class I, since 1977, resigned from the
Board effective February 28, 1997. Ms. Jan L. Booth was appointed by the
Company's Board of Directors to fill the vacancy created by Mr. Halpern's
resignation. Mr. Jerome L. Katz, who had served on the Company's Board of
Directors, Class II, since 1977, resigned from the Board effective March 3,
1997. Mr. Timothy P. Smucker was appointed by the Company's Board of Directors
to fill the vacancy created by Mr. Katz's resignation. All three newly appointed
directors were appointed on March 4, 1997, and Mr. Langman participated in the
March 4, 1997 meeting of the Board of Directors of the Company.
NOMINEES FOR DIRECTOR
Under the Company's By-Laws and Certificate of Incorporation, the Board of
Directors consists of nine directors and is divided into three classes, with
each class having a term of three years. The directors of Class III will be
elected at the 1997 Annual Meeting of Stockholders and will hold office until
the 2000 Annual Meeting of Stockholders or until their successors are elected
and qualified. The nominees constitute Class III of the Board of Directors with
each of their terms expiring as of the date of this Annual Meeting.
The following brief statements contain biographical information about the
nominees and the years they first became directors:
NOMINEE
YEAR FIRST ELECTED A
DIRECTOR
AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
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T. Gary Rogers............. CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER, DREYER'S GRAND
1977 ICE CREAM, INC. Mr. Rogers has served as the Company's Chairman of
Age: 54 the Board and Chief Executive Officer since its incorporation in
February 1977.
William F. Cronk, III...... PRESIDENT, DREYER'S GRAND ICE CREAM, INC. Mr. Cronk has served on
1977 the Company's Board of Directors since its incorporation in 1977.
Age: 54 Since April 1981, he has served as the Company's President.
M. Steven Langman.......... PRESIDENT AND CHIEF EXECUTIVE OFFICER, UNION BANCAIRE PRIVEE
1997 INTERNATIONAL, INC. Mr. Langman joined the Company's Board of
Age: 35 Directors in 1997. Prior to joining Union Bancaire Privee in May
1996, Mr. Langman was employed with Lazard Freres & Co. L.L.C. for
nine years, most recently serving as a Managing Director. Mr.
Langman worked for Goldman, Sachs & Co. for two years before joining
Lazard Freres.
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CONTINUING DIRECTORS
Directors John W. Larson, Jack O. Peiffer and Jan L. Booth ("Class I") will
hold office until the 1998 Annual Meeting of Stockholders. Directors Timm F.
Crull, Edmund R. Manwell and Timothy P. Smucker ("Class II") will hold office
until the 1999 Annual Meeting of Stockholders.
The following brief statements contain biographical information about each
continuing director and the year he or she first became a director:
NAME
YEAR FIRST ELECTED A
DIRECTOR
AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
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Jan L. Booth........... PRIVATE INVESTOR. Ms. Booth joined the Company's Board of Directors
1997 in 1997. From 1988 to 1990, Ms. Booth was self-employed as a
Age: 46 business consultant. Ms. Booth served as Vice President of Marketing
of the Company from 1981 to 1987. Before joining the Company, Ms.
Booth was employed by Crown Zellerbach's consumer products division.
Timm F. Crull.......... RETIRED CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF NESTLE USA, INC. Mr.
1995 Crull joined the Company's Board of Directors in 1995. Mr. Crull
Age: 66 became Chairman and Chief Executive Officer of Nestle USA, Inc. in
1991, after having served since 1985 as President and Chief
Executive Officer of Carnation Company, a Nestle subsidiary. He
retired from his positions with Nestle in 1994. Mr. Crull is also a
director of Smart & Final Inc., a warehouse store retail company,
and of BankAmerica Corporation, a bank holding company.
John W. Larson......... PRIVATE INVESTOR. Mr. Larson joined the Company's Board of Directors
1993 in 1993. From 1989 to early 1993, Mr. Larson served as Chief
Age: 59 Operating Officer of The Chronicle Publishing Company, a
privately-held, diversified media company. From 1984 to 1989, Mr.
Larson was a General Partner of J.H. Whitney & Co., a venture
capital and buyout firm. Prior to joining J.H. Whitney, Mr. Larson
was the Managing Director of the San Francisco office of McKinsey &
Company, Inc. Mr. Larson is also a member of the Board of Control of
Crown Pacific Partners, LP, a forest products concern.
Edmund R. Manwell...... PARTNER, MANWELL & MILTON, GENERAL COUNSEL TO THE COMPANY. Mr.
1981 Manwell has served as Secretary of the Company since its
Age: 54 incorporation in 1977 and as a director of the Company since April
1981. Mr. Manwell is a partner in the law firm of Manwell & Milton,
general counsel to the Company. Mr. Manwell is also a director of
Hanover Direct, Inc., a direct marketing company.
Jack O. Peiffer........ RETIRED SENIOR VICE PRESIDENT -- CORPORATE HUMAN RESOURCES, GENERAL
1993 ELECTRIC COMPANY. Mr. Peiffer joined the Company's Board of
Age: 63 Directors in 1993. Mr. Peiffer was employed by GE Company for over
38 years and held a variety of financial and general management
positions prior to his appointment as Senior Vice President --
Corporate Human Resources, including acting as Vice President and
General Manager of GE Supply Company from November 1983 to January
1985.
Timothy P. Smucker..... CHAIRMAN, THE J.M. SMUCKER COMPANY. Mr. Smucker joined the Company's
1997 Board of Directors in 1997. Mr. Smucker has served The J.M. Smucker
Age: 52 Company, a food products manufacturer, for over 28 years, and has
held a variety of positions prior to his appointment as Chairman.
Mr. Smucker is also a director of Huntington BancShares
Incorporated, a regional bank holding company, and the Kellogg
Company, a food products company.
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COMMITTEES OF THE BOARD
Committees of the Board of Directors are the following:
Compensation Committee
The Compensation Committee is composed of seven directors, none of whom are
employees of the Company in any capacity. The Committee makes recommendations to
the Board of Directors with respect to the salaries and bonuses and other forms
of remuneration to be paid to the Chief Executive Officer and the President and
the terms and conditions of their employment. In addition, the Committee is the
Administrator of the Company's Incentive Stock Option Plan (1982), the Company's
Section 423 Employee Stock Purchase Plan (1990), the Company's Employee Secured
Stock Purchase Plan (1990), the Company's Stock Option Plan (1992) and the
Company's Stock Option Plan (1993).
During fiscal 1996, Messrs. Crull, Halpern, Katz, Larson, Manwell, Martino
and Peiffer were members of the Compensation Committee. Commencing in March
1997, the Compensation Committee is comprised of Messrs. Crull, Langman, Larson,
Manwell, Peiffer and Smucker, and Ms. Booth.
Audit Committee
The Audit Committee composition in 1996 was, and as of March 1997 is,
identical to that of the Compensation Committee. The Committee meets on the call
of any member and, on at least one occasion each year, it meets with the
independent accountants to discuss: (1) the scope of the audit engagement; (2)
the results of each annual audit and the financial statements and notes included
in the Company's Annual Report to the Stockholders; and (3) other matters
pertaining to the audit, including the Company's accounting policies and
internal controls. The Committee is also responsible for recommending for
appointment by the Board of Directors, subject to submission to the stockholders
for their approval, independent public accountants to audit the Company's
financial statements, as well as advising the Board of Directors with respect to
the scope of the audit, the Company's accounting policies and internal controls.
The purpose and function of the Audit Committee is to review and monitor
the Company's financial reports and accounting practices, as well as to provide
the means for direct communication among the Company's Board of Directors, its
financial management and independent accountants.
The Committee is concerned with the accuracy and completeness of the
Company's financial statements and matters that relate to them. However, the
Committee's role does not contemplate providing to stockholders, or others,
special assurances regarding such matters. Moreover, the Committee's role does
not involve the professional evaluation of the quality of the audit conducted by
the independent accountants. While it is believed that the Committee's
activities are beneficial because they provide an ongoing oversight on behalf of
the full Board of Directors, they do not alter the traditional roles and
responsibilities of the Company's management and independent accountants with
respect to the accounting and control functions and financial statement
presentation.
The Company has no nominating committee or other committee performing the
functions of such a committee.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During fiscal 1996, there were four special meetings of the Board of
Directors and all directors attended each meeting occurring while such director
was a member of the Board of Directors except Mr. Katz who was absent from one
meeting. The Compensation Committee met one time and the Audit Committee met
twice. Except as set out hereinafter, all members of the committees attended
each of the meetings of the respective committee on which they sit occurring
while such person was a member of the committee in question:
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Messrs. Halpern and Katz were absent from one meeting and two meetings,
respectively, of the Audit Committee.
REMUNERATION OF DIRECTORS
Directors' compensation consists of a meeting fee of $4,000 for each
meeting of the Board of Directors actually attended and an annual fee of $4,000
for each member of each committee. The Board of Directors generally meets four
times each year. Each committee meets at least annually and more frequently if
requested by any member. Employee directors receive no compensation as
directors. Members of the Board of Directors who were not employees of the
Company (each a "NonEmployee Director") received an option to purchase 5,000
shares of the Company's Common Stock on the date the Company's Stock Option Plan
(1993) (the "1993 Plan") was approved by the Company's stockholders or received
such an option upon appointment to the Board of Directors, if appointment
occurred subsequent to such approval. Also, additional stock option grants to
purchase 1,500 shares of the Company's Common Stock will be awarded to each Non-
Employee Director on each anniversary of the date the 1993 Plan was approved by
the Company's stockholders.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of March 21, 199624, 1997 concerning
the beneficial ownership of Common Stock of the Company by each person
(including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934 (the "Exchange Act")) who is known to the
Company to be the beneficial owner of more than five percent of such class:
AMOUNT AND NATURE OF
BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP* CLASS*
------------------------------------- --------------------------------------------------------------- -------------------- ---------------------
Nestle Holdings, Inc.(1)....................................... 5,056,008 33.7%
Five High Ridge Park
Stamford, Connecticut 0690532.8%
c/o Nestle USA, Inc.
800 North Brand Boulevard
Glendale, California 91203
Nestle S.A.(1)
Avenue Nestle
Vevey, Switzerland CH-1800
T. Gary Rogers(2)(3)........................................... 1,767,2841,833,658 13.5%
5929 College Avenue
Oakland, California 94618
General Electric Capital Corporation(4)(5)..................... 1,450,000 10.0%9.8%
260 Long Ridge Road
Stamford, Connecticut 06927
Trustees of General Electric Pension Trust(4)(6)............... 1,450,000 10.0%9.8%
GE Investment Private Placement Partners I, Limited Partnership
P.O. Box 7900
3003 Summer Street
Stamford, Connecticut 06904
William F. Cronk, III(2)(7).................................... 934,525 7.1%1,003,681 7.4%
5929 College Avenue
Oakland, California 94618
Robert E. Torray & Co., Inc.(8)................................ 809,000 6.0%
The Torray Corporation
Robert E. Torray
6610 Rockledge Drive, Suite 450
Bethesda, Maryland 20817-1869
Cortopassi Family Trust(8)Trust(9)..................................... 660,500 5.1%799,900 6.0%
Stanislaus Food Products Co.
San Tomo Partners
Sierra Quality Canners, Inc.
LICO Brands, Inc.
Trecento Investors, Inc.
DACCO, Inc.
Capecchio Foundation
Alpinello Investors, Inc.
CORVI,VICOR, LLC
Wright Tract Partners, LP
11292 North Alpine Road
Stockton, California 95212
Wilke/Thompson Capital Management, Inc.(5)..................... 692,300 5.2%
3800 Norwest Center
90 S. 7th Street
Minneapolis, Minnesota 55402
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* The amounts and percentages indicated as beneficially owned were calculated
pursuant to Rule 13d-3(d)(1) under the Exchange Act which provides that
beneficial ownership of a security is acquired by a person if that person has
the right to acquire beneficial ownership of such security within
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60 days through the exercise of a right such as the exercise of an option or
the conversion of a convertible security into common stock. Any securities
not outstanding which are subject to options or conversion privileges are
deemed outstanding for the purpose of computing the percentage of outstanding
securities of the class owned by the person who owns the option or conversion
privilege but are not deemed outstanding for the purpose of computing the
percentage of the class owned by any other person.
(1) Includes warrants to purchase 2,000,000 shares of Common Stock which are
currently exercisable by Nestle Holdings, Inc. ("NHI"). NHI has sole voting
power and sole investment power with respect to all of these shares. Nestle
S.A. ("Nestle") filed a joint statement on Schedule 13D with NHI and may be
deemed to have sole voting power and sole investment power with respect to
these shares because NHI is a wholly-owned subsidiary of Nestle.
(2) Includes options to purchase 68,520 shares of Common Stock under the
Company's Stock Option Plan (1992) exercisable within 60 days, and options
to purchase 85,200 shares of Common Stock under the Company's Stock Option
Plan (1993) exercisable within 60 days.
(3) 1,571,036 and 100,000 of these shares are held directly by the Rogers
Revocable Trust and the Four Rogers Trust, respectively, for which Mr.
Rogers and his wife serve as co-trustees. Mr. Rogers and his wife share the
voting and investment power with respect to such shares. Also includes 8,902
shares held in Mr. Rogers' account in the Dreyer's Grand Ice Cream, Inc.
Savings Plan (a 401(k) plan), based upon the most recent available plan
statement.
(4) Assumes full conversion of the Series B Convertible Preferred Stock of the
Company held by the named entity or entities into the Company's Common
Stock. These parties filed a Schedule 13D (reporting the beneficial
ownership described above) jointly with General Electric Capital Services,
Inc. (formerly known as General Electric Financial Services, Inc.) and
General Electric Company each of which disclaimed beneficial ownership of
all shares of the Company's Common Stock beneficially owned by General
Electric Capital Corporation, Trustees of General Electric Pension Trust and
GE Investment Private Placement Partners I, Limited Partnership.
(5) The holder has sole voting power and sole investment power with respect to
all of these shares.
(6) Trustees of General Electric Pension Trust ("GEPT") have sole voting power
and sole investment power with respect to 586,495 of these shares. GE
Investment Private Placement Partners I, Limited Partnership ("GEIPPP") has
sole voting power and sole investment power with respect to 863,505 of these
shares. GEPT and GEIPPP may constitute a group as such term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
(7) 849,961 of these shares are held directly by the Cronk Revocable Trust for
which Mr. Cronk and his wife serve as co-trustees. Mr. Cronk and his wife
share the voting and investment power with respect to such shares. Excludes
42,000 shares held in irrevocable trusts for the benefit of Mr. Cronk's
sons. Mr. Cronk does not have voting or investment power with respect to
these 42,000 shares and Mr. Cronk disclaims beneficial ownership of all of
the shares held in these irrevocable trusts.
(8) Robert E. Torray & Co., Inc. ("RETC") has shared voting and investment power
with respect to 739,000 of these shares. The Torray Corporation ("TTC") has
shared voting and investment power with respect to 70,000 of these shares.
Robert E. Torray, an individual, has shared voting and investment power with
respect to all of these shares, and has filed a joint statement on Schedule
13G as a "parent holding company" of RETC and TTC in reliance upon certain
Security & Exchange Commission No Action Letters. RETC and TTC are
registered investment advisors under Section 203 of the Investment Advisors
Act of 1940, and are deemed to have beneficial ownership of the shares
indicated above because they hold investment discretion with respect to the
accounts in which the shares are held.
(9) Each entity has sole voting and sole investment power with respect to only
those shares of Common Stock registered in the name of the entity, as
follows: Cortopassi Family Trust, 250,200 shares; Stanislaus Food Products
Co., 111,500 shares; San Tomo Partners, 116,000 shares; Sierra Quality
Canners, Inc., 150,000 shares; LICO Brands, Inc., 25,000 shares; Trecento
Investors, Inc., 45,000 shares; DACCO, Inc., 40,000 shares; Capecchio
Foundation, 25,000 shares; Alpinello Investors, Inc., 12,200 shares; VICOR,
LLC, 20,000 shares; Wright Tract Partners, LP, 5,000 shares. The listed
entities filed a joint statement on Schedule 13D as members of a group.
8
13
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of March 24, 1997 concerning
the beneficial ownership of Common Stock of the Company by each director and
nominee of the Company, the Chief Executive Officer and each of the four most
highly compensated executive officers of the Company (the "Named Executive
Officers") and all directors and executive officers of the Company as a group.
Except as otherwise noted, each person has sole voting and sole investment power
with respect to the shares shown:
AMOUNT OF
BENEFICIAL PERCENT OF
NAME OWNERSHIP(1) CLASS(1)
- --------------------------------------------------------------------- ------------ ----------
Jan L. Booth(2)...................................................... 4,100 *
William F. Cronk, III(3)(4).......................................... 1,003,681 7.4%
Timm F. Crull(5)..................................................... 12,000 *
Thomas M. Delaplane(6)............................................... 79,036 *
M. Steven Langman.................................................... -0- *
John W. Larson(5).................................................... 28,000 *
Edmund R. Manwell(5)................................................. 32,000 *
William R. Oldenburg(7).............................................. 77,702 *
Jack O. Peiffer(5)................................................... 8,000 *
T. Gary Rogers(3)(8)................................................. 1,833,658 13.5%
Timothy P. Smucker................................................... 1,000 *
Paul R. Woodland(9).................................................. 69,753 *
Directors and Executive Officers as a Group (13 persons)(10)......... 3,169,377 22.8%
- ---------------
* Less than one percent.
(1) The amounts and percentages indicated as beneficially owned were calculated
pursuant to Rule 13d-3(d)(1) under the Exchange Act which provides that
beneficial ownership of a security is acquired by a person if that person
has the right to acquire beneficial ownership of such security within 60
days through the exercise of a right such as the exercise of an option or
the conversion of a convertible security into common stock. Any securities
not outstanding which are subject to options or conversion privileges are
deemed outstanding for the purpose of computing the percentage of
outstanding securities of the class owned by the person who owns the option
or conversion privilege but are not deemed outstanding for the purpose of
computing the percentage of the class owned by any other person.
(1) Includes warrants to purchase 2,000,000 shares of Common Stock which may be
exercised by Nestle Holdings, Inc. ("NHI") within 60 days. NHI has sole
voting power and sole investment power with respect to all of these shares.
Nestle S.A. ("Nestle") filed a joint statement on Schedule 13D with NHI and
may be deemed to have sole voting power and sole investment power with
respect to these shares because NHI is a wholly-owned subsidiary of Nestle.
3
8
(2) Includes options to purchase 48,124 shares of Common Stock under the
Company's Stock Option Plan (1992) exercisable within 60 days, and options
to purchase 36,440 shares of Common Stock under the Company's Stock Option
Plan (1993) exercisable within 60 days.
(3) 1,574,652 and 100,0002,000 of these shares are held directly by the RogersHerrero/Booth Revocable
Trust and the Four Rogers Trust, respectively, for which Mr.
RogersMs. Booth and his wifeher husband serve as co-trustees. Mr. RogersMs. Booth
and his wifeher husband share the voting and investment power with respect to such
shares. Also includes 8,0682,100 shares acquired during the period July 1, 1995 through September 30, 1995
pursuant to the Dreyer's Grand Ice Cream, Inc. Savings Plan (a 401K plan),
based upon the most recent available plan statement dated December 31, 1995.
(4) Assumes full conversion of the Series B Convertible Preferred Stock of the
Company held by the named entity or entities into the Company's Common
Stock. These parties filedHerrero Bros. Inc. Employee
Profit Sharing and Retirement Plan & Trust, for which Ms. Booth's husband
serves as a Schedule 13D (reporting the beneficial
ownership described above) jointly with General Electric Capital Services,
Inc. (formerly known as General Electric Financial Services, Inc.)co-trustee and General Electric Company each of which disclaimedis a plan participant. Ms. Booth disclaims
beneficial ownership of allthese shares except to the extent of her pecuniary
interest therein.
(3) Includes options to purchase 68,520 shares of Common Stock under the
Company's Stock Option Plan (1992) (the "1992 Plan") exercisable within 60
days, and options to purchase 85,200 shares of Common Stock beneficially owned by General
Electric Capital Corporation, Trustees of General Electric Pension Trust and
GE Investment Private Placement Partners I, Limited Partnership.
(5) The holder has sole voting power and sole investment power with respect to
all of these shares.
(6) Trustees of General Electric Pension Trust have sole voting power and sole
investment power with respect to 586,495 of these shares. GE Investment
Private Placement Partners I, Limited Partnership has sole voting power and
sole investment power with respect to 863,505 of these shares.
(7)under the
Company's Stock Option Plan (1993) (the "1993 Plan") exercisable within 60
days.
(4) 849,961 of these shares are held directly by the Cronk Revocable Trust for
which Mr. Cronk and his wife serve as co-trustees. Mr. Cronk and his wife
share the voting and investment power with respect to such shares. Excludes
42,000 shares held in irrevocable trusts for the benefit of Mr. Cronk's
sons. Mr. Cronk does not have voting or investment power with respect to
these 42,000 shares and Mr. Cronk disclaims beneficial ownership of all of
the shares held in these irrevocable trusts.
(8) Each entity has sole voting and sole investment power with respect to only
those shares of Common Stock registered in the name of the entity, as
follows: Cortopassi Family Trust, 200,000 shares; Stanislaus Food Products
Co., 100,000 shares; San Tomo Partners, 100,000 shares; Sierra Quality
Canners, Inc., 100,000 shares; LICO Brands, Inc., 25,000 shares; Trecento
Investors, Inc., 41,500 shares; DACCO, Inc., 40,000 shares; Capecchio
Foundation, 20,000 shares; Alpinello Investors, Inc., 20,000 shares; CORVI,
LLC, 14,000 shares. The listed entities filed a joint statement on Schedule
13D as members of a group.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of March 21, 1996 concerning
the beneficial ownership of Common Stock of the Company by each director and
nominee of the Company, the Chief Executive Officer and each of the four most
highly compensated executive officers of the Company (the "Named Executive
Officers") and all directors and executive officers of the Company as a group.
Except as otherwise noted, each person has sole voting and sole investment power
with respect to the shares shown:
AMOUNT OF
BENEFICIAL PERCENT OF
NAME OWNERSHIP CLASS
---- ---------- ---------
William F. Cronk, III(1)(2)............................................ 934,525 7.1%
Timm F. Crull(3)....................................................... 10,500 *
Thomas M. Delaplane(4)................................................. 53,664 *
Merril M. Halpern(3)................................................... 10,352 *
Jerome L. Katz(3)...................................................... 9,500 *
John W. Larson(3)...................................................... 26,500 *
Edmund R. Manwell(3)................................................... 30,500 *
Anthony J. Martino(3).................................................. 6,500 *
William R. Oldenburg(5)................................................ 54,776 *
Jack O. Peiffer(3)..................................................... 6,500 *
T. Gary Rogers(1)(6)................................................... 1,767,284 13.5%
Paul R. Woodland(7).................................................... 47,527 *
Directors and Executive Officers as a Group (14 persons)(8)............ 3,024,962 22.6%
- ---------------
* Less than one percent.
4
9
(1)(5) Includes options to purchase 48,124 shares of Common Stock under the
Company's Stock Option Plan (1992) (the "1992 Plan") exercisable within 60
days, and options to purchase 36,440 shares of Common Stock under the
Company's Stock Option Plan (1993) (the "1993 Plan") exercisable within 60
days.
(2) 849,961 of these shares are held directly by the Cronk Revocable Trust for
which Mr. Cronk and his wife serve as co-trustees. Mr. Cronk and his wife
share the voting and investment power with respect to such shares. Excludes
42,000 shares held in irrevocable trusts for the benefit of Mr. Cronk's
sons. Mr. Cronk does not have voting or investment power with respect to
these 42,000 shares and Mr. Cronk disclaims beneficial ownership of all of
the shares held in these irrevocable trusts.
(3) Includes options to purchase 6,5008,000 shares of Common Stock under the 1993
Plan exercisable within 60 days.
(4)9
14
(6) Includes options to purchase 8,2387,384 shares of Common Stock under the
Company's Incentive Stock Option Plan (1982) (the "ISO Plan") exercisable
within 60 days, options to purchase 6,0809,120 shares of Common Stock under the
1992 Plan exercisable within 60 days, and options to purchase 17,12039,360 shares
of Common Stock under the 1993 Plan exercisable within 60 days. Also
includes 5,1795,840 shares acquired during the period July 1, 1995 through
September 30, 1995 pursuant toheld in Mr. Delaplane's account in the Dreyer's Grand
Ice Cream, Inc. Savings Plan (a 401K401(k) plan), based upon the most recent
available plan statement
dated December 31, 1995.
(5)statement.
(7) Includes options to purchase 8,2387,384 shares of Common Stock under the ISO
Plan exercisable within 60 days, options to purchase 6,0809,120 shares of Common
Stock under the 1992 Plan exercisable within 60 days, and options to
purchase 17,42038,160 shares of Common Stock under the 1993 Plan exercisable
within 60 days.
(6) 1,574,652(8) 1,571,036 and 100,000 of these shares are held directly by the Rogers
Revocable Trust and the Four Rogers Trust, respectively, for which Mr.
Rogers and his wife serve as co-trustees. Mr. Rogers and his wife share the
voting and investment power with respect to such shares. Also includes
8,0688,902 shares acquired during the period July 1, 1995 through September 30, 1995
pursuant toheld in Mr. Rogers account in the Dreyer's Grand Ice Cream,
Inc. Savings Plan (a 401K401(k) plan), based upon the most recent available
plan statement dated December 31, 1995.
(7)statement.
(9) Includes options to purchase 8,2387,384 shares of Common Stock under the ISO
Plan exercisable within 60 days, options to purchase 6,0809,120 shares of Common
Stock under the 1992 Plan exercisable within 60 days, and options to
purchase 16,82036,860 shares of Common Stock under the 1993 Plan exercisable
within 60 days.
(8)(10) Includes options to purchase 36,47526,540 shares of Common Stock under the ISO
Plan exercisable within 60 days, options to purchase 121,768165,180 shares of
Common Stock under the 1992 Plan exercisable within 60 days, and options to
purchase 188,220327,920 shares of Common Stock under the 1993 Plan exercisable
within 60 days.
Also includes 1,774 shares acquiredSECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10 percent of a registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Officers,
directors and greater than 10 percent stockholders are required by another executive
officerSEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 (required
by Section 16(a) in the event of failure to comply with certain filing
requirements) were required for those persons, the Company believes that during
the period July 1, 1995 through September 30, 1995 pursuantfiscal 1996 its officers, directors, and greater than 10 percent beneficial
owners complied with all applicable filing requirements, except that one Form 4
report timely filed by Jeffrey P. Porter was subsequently amended to the Dreyer's Grand Ice Cream, Inc. Savings Plan (a 401K plan), based upon
the most recent available plan statement dated December 31, 1995.
(THIS SPACE INTENTIONALLY LEFT BLANK)
5include a
stock option exercise transaction that had been inadvertently omitted.
10
1015
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ended December 28, 1996,
December 30, 1995 and December 31, 1994, and December 25, 1993 the cash compensation paid by the
Company, as well as certain other compensation paid or accrued for those years,
to the Named Executive Officers in all capacities in which they served:
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
--------------------------------------------------------------------------------- ------------
OTHER ANNUAL SECURITIES ALL OTHER
COMPEN- UNDERLYING COMPEN-
SALARY($) BONUS($) SATION($) OPTIONS/SARS SATION($)
NAME AND PRINCIPAL POSITION YEAR (1) (2) (3)(4) (#) (5)
- -------------------------------------------------------------- ----- --------- -------- ------------ ------------ --------------------
T. Gary Rogers............... 1995 $ 599,791 $ 41,341 79,600(6) $ 17,038Rogers................... 1996 $639,902 58,100(6) $16,806
Chairman of the Board and 1995 599,791 79,600(7) 17,038
Chief Executive Officer 1994 551,637 $280,000 42,357 42,600(7)42,600(8) 19,213
Chief Executive Officer 1993 415,744(8) 50,145 93,300(9) 22,808
William F. Cronk, III........III............ 1996 639,902 58,100(6) 16,200
President 1995 599,791 47,014 79,600(6)79,600(7) 16,044
President
1994 551,637 280,000 $ 50,914 42,600(7)42,600(8) 17,892
1993 415,744(8) 60,156 93,300(9) 21,006
William R. Oldenburg.........Oldenburg............. 1996 329,403 18,800(6) 16,200
Vice President -- Operations 1995 324,598 29,700(6)29,700(7) 13,272
Vice President -
1994 299,623 152,500 21,800(7)21,800(8) 14,196
Operations 1993 276,602 28,000(9) 19,207
Thomas M. Delaplane..........Delaplane.............. 1996 309,402 18,800(6) 16,200
Vice President -- Sales 1995 305,560 29,200(6)29,200(7) 16,044
Vice President - Sales
1994 285,585 145,000 21,800(7)21,800(8) 17,892
1993 265,640 27,700(9) 21,006
Paul R. Woodland.............Woodland................. 1996 299,402 18,800(6) 16,200
Vice President -- Finance 1995 295,560 29,000(6)29,000(7) 16,044
Vice President - Financeand Administration, 1994 275,585 140,000 21,800(7)21,800(8) 17,892
and Administration, 1993 257,564 27,400(9) 21,006
Chief Financial Officer
and Assistant Secretary
- ---------------
(1) Includes amounts contributed by the officers to the salary deferral portion
of Dreyer's Grand Ice Cream, Inc. Money Purchase Pension Plan (the "Pension
Plan") and the Dreyer's Grand Ice Cream, Inc. Savings Plan (the "Savings
Plan").
(2) Includes amounts paid under the Company's Incentive Bonus Plan.
(3) No disclosure for fiscal years 1996, 1995 1994 and 19931994 is made for Messrs.
Rogers, Oldenburg, Delaplane and Woodland under Other Annual Compensation,
and no disclosure is made for Mr. Cronk for fiscal years 1996 and 1995 under
Other Annual Compensation, as the aggregate incremental compensation
otherwise reportable in this column for these individuals does not require disclosure underis less than
$50,000 or 10% of the rules.respective officer's combined salary and bonus for
such fiscal years.
(4) The amountsamount reported for each of Messrs. Rogers andMr. Cronk include $25,000
for 1995, $25,000 for 1994 and $30,250 for 1993includes $25,000 paid to Price
Waterhouse LLP for tax and accounting services rendered on behalf of each of Messrs.
Rogers and Cronk. The amounts reported also include $16,341 in 1995,
$16,479 in 1994 and $15,583 in 1993 for Mr. Rogers, and $22,014 in 1995,
$22,671 in 1994 and $24,254 in 1993 for Mr.
Cronk in connection with each
of Mr. Rogers' and $22,671 for Mr. Cronk's use of a Company automobiles.automobile.
(5) For each of Messrs. Rogers, Cronk, Delaplane and Woodland, the amounts
reported include contributions by the Company of $10,500 in 1995,1996, $10,500 in
19941995 and $15,610$10,500 in 19931994 to the Pension Plan and $5,700 in 1996, $5,544 in
1995 and $7,392 in 1994 and $5,396 in 1993 to the Savings Plan. For Mr. Oldenburg the amounts
reported include contributions by the Company of $10,500 in 1995,1996, $10,500 in
19941995 and $16,509$10,500 in 19931994 to the Pension Plan and $5,700 in 1996, $2,772 in
1995 and $3,696 in 1994 and $2,698 in 1993 to the Savings Plan. Additionally, the Company paid
split-dollar life insurance premiums of $606 in 1996, $994 in 1995 and
$1,321 in 1994 and $1,802 in 1993 for the benefit of Mr. Rogers.
(6) Excludes options granted in 1996 in lieu of a cash bonus for the Named
Executive Officer's performance in 1995. These excluded options were
included in the number of options reported for the Named Executive Officer
in 1995 and are more fully described in footnote 7 below.
11
16
(7) Each of the Named Executive Officers earned a bonus for his performance in
1995. Prior to earning such bonus each Named Executive Officer elected to
receive non-qualified stock options in lieu of a cash bonus pursuant to the
"Income Swap Plan" of the Compensation Committee. The Income Swap Plan is
described in the Compensation Committee Report on Executive Compensation on
pages 11-13
6
1115-17 herein. In this regard, Messrs. Rogers and Cronk each received
an option to purchase 14,000 shares of the Company's Common Stock, Mr.
Oldenburg received an option to purchase 7,500 shares of the Company's
Common Stock, Mr. Delaplane received an option to purchase 7,000 shares of
the Company's Common Stock, and Mr. Woodland received an option to purchase
6,800 shares of the Company's Common Stock. All of these stock options were
granted on March 5, 1996 under the Company's Stock Option Plan (1993) and
will vestvested on September 5,6, 1996.
(7)(8) Excludes options granted in 1994 in lieu of salary and/or a cash bonus for
the Named Executive Officer's performance in 1993.
These excluded options
were included in the number of options reported for the Named Executive
Officer in 1993 and are more fully described in footnote 9 below.
(8) After being offered the opportunity by the Compensation Committee of the
Board of Directors, Messrs. Rogers and Cronk each elected to receive stock
options granted under the Company's Stock Option Plan (1992) (the "1992
Plan") in lieu of $100,000 of salary, prior to earning such salary
compensation. These elections were made pursuant to the Income Swap Plan
(referenced in footnote 6 above and described in the Compensation Committee
Report on Executive Compensation on pages 11-13 herein).
(9) For Messrs. Rogers and Cronk the amount listed includes options granted
under the 1992 Plan pursuant to the Income Swap Plan (these options are
further described in footnote 8 above). Additionally, each of the Named
Executive Officers earned a bonus for his performance in 1993. Prior to
earning such bonus each Named Executive Officer elected to receive
non-qualified stock options in lieu of a cash bonus pursuant to the Income
Swap Plan. In this regard, Messrs. Rogers and Cronk each received an option
to purchase 13,100 shares of the Company's Common Stock, Mr. Oldenburg
received an option to purchase 8,700 shares of the Company's Common Stock,
Mr. Delaplane received an option to purchase 8,400 shares of the Company's
Common Stock, and Mr. Woodland received an option to purchase 8,100 shares
of the Company's Common Stock. All of these stock options were granted on
March 7, 1994 under the Company's Stock Option Plan (1993) and vested on
November 11, 1994.
STOCK OPTIONS
The following table provides information concerning the grant of stock
options made during fiscal 19951996 to the Named Executive Officers:
OPTION GRANTS IN THE LAST FISCAL YEAR
INDIVIDUAL GRANTS
----------------------------------------------------------------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED(1)(2)GRANTED FISCAL YEAR ($/SH) DATE VALUE($)(3)
---- ------------- -------------
- ------------------------------- ------------ ------------ ----------- ---------- ---------------------
T. Gary Rogers.................. 65,600 15.2% $25.625Rogers................. 14,000(1) 3.2% $ 31.50 3/6/05 $936,1124/06 $124,460(3)
58,100(2) 13.2 $ 31.50 3/4/06 757,043(4)
William F. Cronk, III........... 65,600 15.2 25.625III.......... 14,000(1) 3.2 $ 31.50 3/6/05 936,1124/06 124,460(3)
58,100(2) 13.2 $ 31.50 3/4/06 757,043(4)
William R. Oldenburg............ 22,200 5.1 25.625Oldenburg........... 7,500(1) 1.7 $ 31.50 3/6/05 316,7944/06 66,675(3)
18,800(2) 4.3 $ 31.50 3/4/06 244,964(4)
Thomas M. Delaplane............. 22,200 5.1 25.625Delaplane............ 7,000(1) 1.6 $ 31.50 3/6/05 316,7944/06 62,230(3)
18,800(2) 4.3 $ 31.50 3/4/06 244,964(4)
Paul R. Woodland................ 22,200 5.1 25.625Woodland............... 6,800(1) 1.5 $ 31.50 3/6/05 316,7944/06 60,452(3)
18,800(2) 4.3 $ 31.50 3/4/06 244,964(4)
- ---------------
(1) Excludes optionsOptions were granted inon March 5, 1996 under the 1993Company's Stock Option Plan
(1993) (the "1993 Plan") in lieu of a cash bonus for the Named Executive
Officer's performance in fiscal 1995 pursuant to the Company's Income Swap
Plan (referenced in footnotesfootnote 6 8 and 9 to the "Summary Compensation Table" on pages
6-711-12 herein and described in the Compensation Committee Report on Executive
Compensation on pages 11-1315-17 herein), as such. These options were not granted in fiscal 1995.
7
12became exercisable on
September 6, 1996, six (6) months after the date of grant.
(2) Options were granted pursuant to the Company's Stock Option1993 Plan (1993) (the
"1993 Plan") and begin vesting two years
from the date of grant as follows: The options may be exercised only as to
40 percent of the optioned shares after two years from the date of grant and
as to an additional 20 percent after each of the succeeding three years. The
options granted under the 1993 Plan expire 10 years from the date of grant,
terminate within various periods ranging from three to 24 months after the
employee's termination of employment, death or disability, and are
non-transferable except by will or the laws of descent and distribution. The
exercise price of options granted under the 1993 Plan equalledequaled the fair
market value of the shares of the Company's Common Stock on the date of
grant. In the event of a Change of Control of the Company, all then
outstanding options issued under the 1993 Plan shall vest and become
immediately exercisable. The term "Change of Control" as defined in the 1993
Plan is more completely described under the caption "Employment Contracts,
Employment Termination and Change of Control Arrangements" on pages 9-1014-15
herein.
12
17
(3) Present value was calculated using the Black-Scholes option pricing model
which involves an extrapolation to future stock prices based solely on past
performance.model.
For the options granted, the following assumptions were used in the
Black-Scholes valuation calculation: dividend yield of .940.76 percent,
risk-free rate of return of 7.635.49 percent, 10three year term and a volatility
coefficient of 0.352.34.04 percent. The annual dividend yield equals the quotient
of the current annual dividend of $0.24 divided by the stock price on the
date of grant. All volatility coefficients used were based on the dailymonthly
closing price of the Company's Common Stock over a two-yearthree-year period. The
risk-free rate is the yield on a U.S. Government Zero Coupon Bond with a maturity equal
to the modified term of the grant. The approach used in developing the
assumptions upon which the Black-Scholes calculations were based is
consistent with the requirements of Statement of Financial Accounting
Standards No. 123 "Accounting for Stock-Based Compensation." The value
calculated by use of this model should not be viewed in any way as a
forecast of the future performance of the Company's Common Stock.
(4) Present value was calculated using the Black-Scholes option pricing model.
For the options granted, the following assumptions were used in the
Black-Scholes valuation calculation: dividend yield of 0.76 percent,
risk-free rate of return of 5.91 percent, six year term and a volatility
coefficient of 34.34 percent. The annual dividend yield equals the quotient
of the current annual dividend of $0.24 divided by the stock price on the
date of grant. All volatility coefficients used were based on the monthly
closing price of the Company's Common Stock over a six-year period. The
risk-free rate is the yield on a U.S. Treasury Zero Coupon Bond with a
maturity equal to the modified term of the grant. The approach used in
developing the assumptions upon which the Black-Scholes calculations were
based is consistent with the requirements of Statement of Financial
Accounting Standards No. 123 "Accounting for Stock-Based Compensation." The
value calculated by use of this model should not be viewed in any way as a
forecast of the future performance of the Company's Common Stock.
The following table provides information on option exercises in fiscal 19951996
by the Named Executive Officers and the value of such officers' unexercised
in-the-money options as of December 30, 1995:28, 1996:
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
NUMBER UNEXERCISED OPTIONS/SARS OPTIONS/SARS
OF SHARES AT FY-END(1)FY-END AT FY-END($)(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ --------------------------------------- ----------- ----------- ------------- ----------- -------------
T. Gary Rogers.............. 9,6000 0 115,984 190,496 $ 123,720 67,428 166,952316,447 $ 417,039 $ 1,304,939500,309
William F. Cronk, III....... 9,600 123,720 67,428 166,952 417,039 1,304,9390 0 115,984 190,496 316,447 500,309
William R. Oldenburg........ 11,800 192,900 21,658 58,172 190,620 492,8630 0 43,304 62,826 178,828 195,313
Thomas M. Delaplane......... 6,400 100,400 26,758 58,172 295,057 492,8635,400 $97,200 42,504 62,826 177,103 106,513
Paul R. Woodland............ 9,240 197,925 21,058 58,172 184,845 492,8630 0 42,004 62,826 175,378 195,313
- ---------------
(1) Those options referenced in footnote 6 to the table titled "Summary
Compensation Table" on pages 6-7 herein, which were granted in 1996 in lieu
of a cash bonus for the Named Executive Officer's performance in 1995, are
not included in this table as such options were not granted to the recipient
in fiscal 1995.
813
1318
PERFORMANCE GRAPH
The following graph shows the Company's total return to stockholders
compared to the Standard & Poor's 500 Index and the Standard & Poor's Food
Products Index over the five year period from December 29, 199027, 1991 through December
30, 1995:28, 1996:
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG DREYER'S GRAND ICE CREAM, INC., THE S&P 500 INDEX
AND THE S&P FOOD PRODUCTS INDEX
MEASUREMENT PERIOD DREYER'S GRAND S&P 500 S&P FOOD
(FISCAL YEAR COVERED) ICE CREAM, INC. S&P 500 INDEX PRODUCTS INDEX
19901991 100.00 100.00 100.00
1991 174.75 127.87 139.03
1992 115.51 142.56 148.5766.10 111.49 104.34
1993 141.63 155.77 135.5581.05 121.82 95.18
1994 122.05 158.62 150.0969.85 124.05 105.39
1995 165.26 218.01 191.3594.57 170.50 134.36
1996 83.85 212.99 161.36
- ---------------
* Assumes $100 investment in each of Dreyer's Grand Ice Cream, Inc., the S&P 500
Index and the S&P Food Products Index, and the reinvestment of dividends.
EMPLOYMENT CONTRACTS, EMPLOYMENT TERMINATION AND CHANGE OF CONTROL ARRANGEMENTS
Currently, all options which have been and may in the future be issued
under the Company's Incentive Stock Option Plan (1982) (the "ISO Plan"), the
Company's Stock Option Plan (1992) (the "1992 Plan") and the Company's Stock
Option Plan (1993) (the "1993 Plan") (collectively, the "Plans") immediately
vest and become subject to exercise upon a Change of Control of the Company. A
Change of Control is defined under the Plans to include (i) the acquisition by
any person of beneficial ownership of 40 percent or more of the combined voting
power of the Company's outstanding securities immediately after such acquisition
(which 40 percent shall be calculated after including the dilutive effect of the
conversion or exchange of any outstanding securities of the Company convertible
into or exchangeable for voting securities), or (ii) a change in the composition
of majority membership of the Board of Directors over any two-year period
commencing, with respect to the ISO Plan and the 1992 Plan, on or after March 7,
1994, or, with respect to the 1993 Plan, on or after September 9, 1993, or (iii)
a change in ownership of the Company such that the Company becomes subject to
the delisting of its Common Stock from the NASDAQ National Market System, or
(iv) the approval by the Board of Directors of the sale of all or substantially
all of the assets of the Company, or (v) the approval by the Board of Directors
of any merger, consolidation, issuance of securities or purchase of assets, the
result of which would be the occurrence of any event described in clause (i),
(ii) or (iii) above.
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19
Further, the acquisition by any person (or any group of which such a person is a
member) who is (with respect to the ISO Plan and the 1992 Plan, as of March 7,
1994, or, with respect to the 1993 Plan, as of September 9, 1993) a member of
the Board of Directors, of beneficial ownership of 40 percent or more of the
combined
9
14 voting power of the Company's outstanding securities immediately after
such acquisition (the calculation of such 40 percent being made as described
above), shall not be deemed a Change of Control for purposes of the Plans.
The 1993 Plan also includes provisions whereby the options granted an
optionee thereunder immediately vest and become exercisable upon the death or
retirement of the optionee. Additionally, under the 1993 Plan, the Administrator
may, in its discretion, accelerate the vesting of an optionee's options. Except
for these provisions of the Company's stock option plans, the Company has no
employment contracts or any employment termination or Change of Control
arrangements.
REMUNERATION OF DIRECTORS
Directors'COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Pursuant to regulations adopted by the SEC in October 1992, the
Compensation Committee is required to disclose its bases for compensation consists of a meeting fee of $4,000 for each
meeting of the
Board of Directors actually attendedNamed Executive Officers and an annual fee of $4,000
for each member of each committee.to discuss the relationship between the Company's
performance during the last fiscal year and such compensation. The Board of Directors generally meets four
times each year. Each committee meets at least annually and more frequently if
requested by any member. Employee directors receive no compensationCompensation
Committee notes that except in its capacity as directors. Members of the Board of Directors who were not employees of the
Company (each a "Non-Employee Director") received an option to purchase 5,000
sharesPlan Administrator of the
Company's CommonIncentive Stock onOption Plan (1982) (the "ISO Plan"), the dateCompany's
Stock Option Plan (1992) (the "1992 Plan") and the Company's Stock Option Plan
(1993) (the "1993 Plan") was approved, the Committee does not establish compensation for the
Named Executive Officers (or any other executive officer of the Company) except
the Chief Executive Officer and the President. Except for stock option grants,
the compensation of the Company's executive officers (including the Named
Executive Officers other than the Chief Executive Officer and the President) is
determined by the Chief Executive Officer and the President in their sole
discretion.
The Chief Executive Officer's and the President's aggregate compensation is
comprised of three principal components: base salary, bonus and stock options.
While the Committee does not review any particular quantitative issues in
establishing the Chief Executive Officer's and the President's base salary
specifically and total compensation generally, the Committee does consider two
principal factors which are evenly weighted in its deliberations: (1)
performance of the Company measured by the long-term growth of the Company's
stockholders or receivedincome; and (2) the roles of the Chief Executive Officer and the President in
achieving the Company's performance. Although the Committee has not reviewed any
compensation surveys relating specifically to chief executive officer and
president salaries, the Committee believes that each of the Chief Executive
Officer's and the President's base salary appropriately reflects the
satisfactory long-term performance of the Company and each of their roles in the
Company's performance and is competitive with the salaries of their counterparts
at other companies of similar size and history (although such an option upon appointment toother companies
are not necessarily companies which are represented in the indexes described
under the caption "Performance Graph" on page 14 herein).
In 1994, the Company announced a new five-year plan (the "Strategic Plan").
The Board of Directors approved the Strategic Plan, which anticipated an initial
reduction in earnings and a subsequent increase in market share and future
earnings above those levels that would be attained in the absence of the
Strategic Plan. Because of the anticipated reduction in earnings, the Committee
determined that the method used to calculate the bonus portion of the
compensation package for the Chief Executive Officer and President did not
accurately measure the performance of the Company. As a result, the Committee
determined it would base bonus compensation for 1994 and 1995 directly on
certain quantitative elements of the Company's performance as measured against
the Strategic Plan. The most important, in terms of relative weighting, of these
elements are: the effective price per gallon, the production cost per gallon,
the distribution cost per gallon and the retail products' volume. For 1996 and
1997, the Committee determined that bonus compensation should be based one half
on such measurement of the quantitative elements of the Strategic Plan and one
half on the Company achieving its profit plan earnings per share (the "Profit
Plan"). Under this policy, a bonus (equal to 12.5 percent of the officer's base
salary) is awarded if, appointment
occurred subsequentbased upon the quantitative elements, the Company has
achieved 80 percent of the anticipated results of the Strategic Plan. The
Strategic Plan based portion of the bonus award is increased (up to such approval. Also, additionala maximum of
25 percent of base salary), calculated
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20
by linear interpolation, if based upon the quantitative elements the Company has
achieved more than 80 percent and up to 100 percent of the anticipated results
of the Strategic Plan. Additional bonus (equal to 12.5 percent of the officer's
base salary) is awarded if the Company's actual earnings per share for the
fiscal year has achieved 80 percent of the Profit Plan. The Profit Plan based
portion of the bonus award is increased (up to a maximum of 25 percent of the
officer's base salary), calculated pro-rata, based upon the Company's actual
earnings per share for the fiscal year having achieved more than 80 percent and
up to 100 percent of the Profit Plan. A maximum potential bonus of 50 percent of
base salary may be awarded under the policy. The Committee believes that this
policy for determining bonuses more accurately ties the Chief Executive
Officer's and the President's compensation to the performance of the Company by
acknowledging the effects upon the long-term earnings of the Company of the
Strategic Plan and the Profit Plan.
In awarding options under the ISO Plan, the 1992 Plan and the 1993 Plan,
the Committee has adopted a policy pursuant to which (1) Messrs. Rogers and
Cronk will receive options to purchase the Company's Common Stock with a current
market value equal to three times annual base salary, (2) all other Named
Executive Officers (and the other vice president of the Company) will receive
options to purchase the Company's Common Stock with a current market value equal
to two times the average annual base salary of vice presidents of the Company,
(3) approximately 16 executive staff members will receive options to purchase
the Company's Common Stock with a current market value equal to the average
annual base salary of executive staff members, and (4) approximately 50
management staff members will receive options to purchase the Company's Common
Stock with a current market value equal to one half the average annual base
salary of management staff members. The option grant sizes included in the
Committee's policy are competitive with a broad general industry sampling
according to a 1993 survey of competitive practice in 275 diversified companies
received from the Company's compensation consultants (which survey included some
companies which are represented in the indexes described under the caption
"Performance Graph" on page 14 herein). The stock option grants in 1996 are
consistent with the Committee's stated policies.
The Committee has also adopted a policy whereby key executive employees of
the Company and its subsidiaries may, at the Committee's discretion, be offered
the opportunity to receive options in lieu of current cash compensation,
including bonuses, for options to purchase 1,500 shares of the Company's Common Stock
will(the "Income Swap Plan"). Options granted in exchange for cash compensation are
non-qualified and may be awardedgranted under either the 1992 Plan or the 1993 Plan.
The exchange ratio used to each Non-
Employee Directordetermine the proper number of shares to be subject
to such options is based on each anniversarythe Black-Scholes valuation method. The exercise
price of options granted under the Income Swap Plan is set at the current fair
market value of the Company's Common Stock as of the date of grant. The vesting
of options granted by the Committee under the Income Swap Plan depends on
whether the options are granted under the 1992 Plan or the 1993 Plan. Options
granted under the 1992 Plan vest as follows: The options granted begin vesting
two years from the date of grant and may be exercised only as to 40 percent of
the optioned shares after two years from the date of grant and as to an
additional 20 percent after each of the succeeding three years. Options granted
under the 1993 Plan was approvedin connection with the Income Swap Plan vest six months from
the date of grant. Options granted under the Income Swap Plan are exercisable
for cash or by exchanging previously-acquired shares of Common Stock of the
Company. Further, any tax withholding requirement can be satisfied through
surrender of additional shares previously acquired by the employee. Options
granted under the 1993 Plan in connection with the Income Swap Plan may have a
"reload" feature which would result in the option holder receiving, upon the
exercise of such option, a "reload" grant equal to the number of shares of
Common Stock utilized to pay the exercise price and/or tax withholdings. If
granted, the "reload" options will have an exercise price equal to the fair
market value of the Company's Common Stock on the date of grant of the reload
option and an exercise term equal to the remaining term of the option exercised.
Beginning in 1994, Section 162(m) of the Internal Revenue Code limits
deductibility of compensation in excess of $1 million paid to the Company's
chief executive officer and to any of its four other highest paid executive
officers. However, certain performance based compensation is specifically exempt
from the limitation on deductibility. To date, no employee of the Company has
been paid compensation in excess of $1 million that would be subject to the Code
Section 162(m) limitation. While the tax impact of any compensation arrangement
is one factor to be considered, such impact is evaluated in light of the
Committee's
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21
overall compensation philosophy. The Committee's general intention is to
establish executive officer compensation programs which will maximize the
Company's deduction if the Committee determines that such actions are consistent
with its philosophy and in the best interests of the Company and its
stockholders. However, from time to time the Committee may award compensation
which is not fully deductible if the Committee determines that such award is
consistent with its philosophy and in the best interests of the Company and its
stockholders.
The Committee notes that generally options granted to executive officers
will only realize value to the extent the fair market value of the Company's
stock increases after the date of grant. The Committee believes that this
furthers the Committee's goal of aligning management's interests with those of
the Company's stockholders.
THE COMPENSATION COMMITTEE FOR FISCAL YEAR 1996
Timm F. Crull
John W. Larson
Edmund R. Manwell
Jack O. Peiffer
Messrs. Merril M. Halpern, Jerome L. Katz and Anthony J. Martino were also
members of the Compensation Committee in fiscal 1996, but resigned from the
Board of Directors prior to preparation of this Report.
The foregoing Compensation Committee Report on Executive Compensation shall
not be deemed to be incorporated by reference into any filing of the Company
under the Securities Act of 1933 or the Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporates such information by
reference.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Messrs. Crull, Halpern, Katz,
Larson, Manwell, Martino and Peiffer.During fiscal 1996, Mr. Manwell was the Secretary of the Company and a
partner in the law firm of Manwell & Milton, general counsel to the Company, during fiscal 1995.Company. The
Company paid Manwell & Milton $784,800$832,200 in fees during fiscal 19951996 for services
rendered as general counsel to the Company. Mr. Manwell is not separately
compensated for his services as Secretary of the Company although some of the
fees received by Manwell & Milton may be for services that, in other
corporations, are performed by the corporate secretary.
On June 14, 1994 the Company completed a transaction with Nestle Holdings,
Inc. ("NHI") pursuant to a Stock and Warrant Purchase Agreement (the "Nestle
Agreement") whereby NHI purchased from the Company, for an aggregate price of
$106,000,000, three million shares of Common Stock of the Company and warrants
for the purchase of two million shares of Common Stock of the Company. NHI
agreed that neither it nor its affiliates will acquire in the aggregate 35
percent or more of the outstanding common stock of the Company (including for
purposes of this calculation outstanding stock options and other securities
convertible into, or entitling the holder thereof to acquire Common Stock,
hereafter "Voting Stock") without the prior consent of the Company's Board of
Directors, subject to certain limited exceptions, for a period of 10 years. The
Nestle Agreement also provides that the Company will recommend and use the same
efforts as are used to cause the elections of all other nominees to the Board of
Directors of the Company to cause the election to the Board of two nominees
selected by NHI. Thereafter, throughout the term of the Nestle Agreement, NHI
may nominate that number of nominees proportionate to the amount of Voting Stock
owned by NHI and its affiliates. NHI and its affiliates have certain rights to
purchase additional shares of Common Stock in open market transactions in the
event their aggregate equity ownership in the Company is diluted to certain
levels.
Messrs. Martino and Crull were named to the Board of Directors of the
Company pursuant to the terms of the Nestle Agreement. Mr. Crull served as
Chairman of the Board and Chief Executive Officer of Nestle USA, Inc.
("Nestle"), Chairman of the Board of NHI and as director of Nestle Food Company
("NFC"), until his retirement or resignation from these positions in December
1994. Mr. Martino served as Executive Vice President, Chief Financial Officer of
Nestle and as director of NFC until his retirement in July 1994 or
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22
resignation in January 1994, respectively. Nestle and NFC are affiliates of NHI.
10
15Mr. Martino resigned his position on the Board of Directors of the Company
effective December 31, 1996, and Mr. M. Steven Langman was appointed by NHI to
replace him.
In June 1993, the Company issued in a private placement to General Electric
Capital Corporation ("GECC"), Trustees of General Electric Pension Trust and GE
Investment Private Placement Partners I, Limited Partnership (each individually,
a "Holder"), pursuant to a Securities Purchase Agreement (the "GE Agreement"),
an aggregate of $100,752,000 of 6.25 percent convertible subordinated debentures
of the Company due June 30, 2001. In August 1995, the Company caused the
conversion of the debentures into Series B Convertible Preferred Stock ($1.00
par value) of the Company. The shares of Series B Convertible Preferred Stock
are convertible at an initial conversion price of $34.74 into a total of
2,900,000 shares of common stockCommon Stock of the Company, subject to adjustment. Mr.
Peiffer was named to the Board of Directors of the Company pursuant to a
provision of the GE Agreement that allows a designated Holder to select one
nominee to the Board of Directors. Mr. Peiffer served as Senior Vice
President --- Corporate Human Resources of General Electric Company ("GEC") until
his retirement in February 1993. GEC is an affiliate of the Holders.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Pursuant to regulations adopted by the SEC in October 1992, the
Compensation Committee is required to disclose its bases for compensation of the
Named Executive Officers and to discuss the relationship between the Company's
performance during the last fiscal year and such compensation. The Compensation
Committee notes that except in its capacity as Plan Administrator of the
Company's Incentive Stock Option Plan (1982) (the "ISO Plan"), the Company's
Stock Option Plan (1992) (the "1992 Plan") and the Company's Stock Option Plan
(1993) (the "1993 Plan"), the Committee does not establish compensation for the
Named Executive Officers (or any other executive officer of the Company) except
the Chief Executive Officer and the President. Except for stock option grants,
the compensation of the Company's executive officers (including the Named
Executive Officers other than the Chief Executive Officer and the President) is
determined by the Chief Executive Officer and the President in their sole
discretion.
The Chief Executive Officer's and the President's aggregate compensation is
comprised of three principal components: base salary, bonus and stock options.
While the Committee does not review any particular quantitative issues in
establishing the Chief Executive Officer's and the President's base salary
specifically and total compensation generally, the Committee does consider two
principal factors which are evenly weighted in its deliberations: (1)
performance of the Company measured by the long-term growth of the Company's
income; and (2) the roles of the Chief Executive Officer and the President in
achieving the Company's performance. Although the Committee has not reviewed any
compensation surveys relating specifically to chief executive officer and
president salaries, the Committee believes that each of the Chief Executive
Officer's and the President's base salary appropriately reflects the
satisfactory long-term performance of the Company and each of their roles in the
Company's performance and is competitive with the salaries of their counterparts
at other companies of similar size and history (although such other companies
are not necessarily companies which are represented in the indexes described
under the caption "Performance Graph" on page 9 herein).
In 1994, the Company announced a new five-year plan (the "Strategic Plan").
The Board of Directors approved the Strategic Plan, which anticipated an initial
reduction in earnings and a subsequent increase in earnings and share value
above the level which would be expected in the absence of the Strategic Plan.
Because of the anticipated reduction in earnings, the Committee determined that
the prior method of calculating the bonus portion of the compensation package
for the Chief Executive Officer and President did not accurately measure the
performance of the Company during at least the initial period of the Strategic
Plan. As a result, the Committee determined it would base bonus compensation for
1994 and 1995 directly on certain quantitative elements of the Company's
performance as measured against the Strategic Plan. The most important, in terms
of relative weighting, of these elements are: the effective price per gallon,
the production cost per gallon, the distribution cost per gallon and the retail
products' volume. Under the new policy, a bonus (equal to 25 percent of the
officer's base salary) is awarded if, based upon the quantitative elements, the
Company has achieved 80 percent of the anticipated results of the Strategic
Plan. The bonus award is increased (up to a maximum of 50 percent of base
salary), calculated by linear interpolation, if based upon the quantitative
elements the Company has achieved more than 80 percent and up to 100 percent of
the
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16
anticipated results of the Strategic Plan. If the Company achieves more than 100
percent of the anticipated results of the Strategic Plan, the maximum potential
bonus of 50 percent of base salary would be awarded. The Committee believes that
this policy for determining bonuses more accurately ties the Chief Executive
Officer's and the President's compensation to the performance of the Company by
acknowledging the effects of the Strategic Plan upon the long-term earnings of
the Company.
In awarding options under the ISO Plan, the 1992 Plan and the 1993 Plan,
the Committee has adopted a policy pursuant to which each year (1) Messrs.
Rogers and Cronk will receive options to purchase the Company's Common Stock
with a current market value equal to three times annual base salary, (2) all
other Named Executive Officers (and the other two vice presidents of the
Company) will receive options to purchase the Company's Common Stock with a
current market value equal to two times the average annual base salary of vice
presidents of the Company, and (3) approximately 16 executive staff members will
receive options to purchase the Company's Common Stock with a current market
value equal to the average annual base salary of executive staff members. The
option grant sizes included in the Committee's policy are competitive with a
broad general industry sampling according to a 1993 survey of competitive
practice in 275 diversified companies received from the Company's compensation
consultants (which survey included some companies which are represented in the
indexes described under the caption "Performance Graph" on page 9 herein). The
stock option grants in 1995 are consistent with the Committee's stated policies.
The Committee has also adopted a policy whereby key executive employees of
the Company and its subsidiaries may, at the Committee's discretion, be offered
the opportunity to receive options in lieu of current cash compensation,
including bonuses, for options to purchase shares of the Company's Common Stock
(the "Income Swap Plan"). Options granted in exchange for cash compensation are
non-qualified and may be granted under either the 1992 Plan or the 1993 Plan.
The exchange ratio used to determine the proper number of shares to be subject
to such options is based on the Black-Scholes valuation method. The exercise
price of options granted under the Income Swap Plan is set at the current fair
market value of the Company's Common Stock as of the date of grant. The vesting
of options granted by the Committee under the Income Swap Plan depends on
whether the options are granted under the 1992 Plan or the 1993 Plan. Options
granted under the 1992 Plan vest as follows: The options granted begin vesting
two years from the date of grant and may be exercised only as to 40 percent of
the optioned shares after two years from the date of grant and as to an
additional 20 percent after each of the succeeding three years. Options granted
under the 1993 Plan in connection with the Income Swap Plan vest six months from
the date of grant (See also footnote 2 to the table titled "Option Grants in the
Last Fiscal Year" on pages 7-8 herein). Options granted under the Income Swap
Plan are exercisable for cash or by exchanging previously-acquired shares of
Common Stock of the Company. Further, any tax withholding requirement can be
satisfied through surrender of additional shares previously acquired by the
employee. Options granted under the 1993 Plan in connection with the Income Swap
Plan may have a "reload" feature which would result in the option holder
receiving, upon the exercise of such option, a "reload" grant equal to the
number of shares of Common Stock utilized to pay the exercise price and/or tax
withholdings. If granted, the "reload" options will have an exercise price equal
to the fair market value of the Company's Common Stock on the date of grant of
the reload option and an exercise term equal to the remaining term of the option
exercised.
Pursuant to Internal Revenue Code (the "Code") Section 162(m), for tax
years beginning on or after January 1, 1994, publicly-held corporations, subject
to certain exceptions, may no longer deduct that amount of compensation paid to
an individual in excess of $1 million. The SEC requires a statement of the
Compensation Committee's policy with respect to Code Section 162(m). To date, no
employee of the Company has been paid compensation in excess of $1 million that
would be subject to the Code Section 162(m) limitation. Therefore, the Committee
has not formulated a policy with respect to Code Section 162(m). The Committee
will address the issues presented by Code Section 162(m) at such time as an
employee or employees of the Company is likely to be paid compensation in excess
of $1 million that would be subject to the Code Section 162(m) limitation. The
Committee notes that performance-based compensation in excess of $1 million is
one exception to the compensation deductibility rules. The Committee has been
advised that the terms of the Company's stock option plans in conjunction with
the current manner in which it
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17
awards stock options under such plans excepts such awards from the limitation on
deductibility imposed by Code Section 162(m).
The Committee notes that generally options granted to executive officers
will only realize value to the extent the fair market value of the Company's
stock increases after the date of grant. The Committee believes that this
furthers the Committee's goal of aligning management's interests with those of
the Company's stockholders.
THE COMPENSATION COMMITTEE
Timm F. Crull
Merril M. Halpern
Jerome L. Katz
John W. Larson
Edmund R. Manwell
Anthony J. Martino
Jack O. Peiffer
The foregoing Compensation Committee Report on Executive Compensation shall
not be deemed to be incorporated by reference into any filing of the Company
under the Securities Act of 1933 or the Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporates such information by
reference.
BOARD OF DIRECTORS
COMMITTEES OF THE BOARD
Committees of the Board of Directors are the following:
Compensation Committee
The Compensation Committee is composed of seven directors, none of whom are
employees of the Company in any capacity. The Committee makes recommendations to
the Board of Directors with respect to the salaries and bonuses and other forms
of remuneration to be paid to the Chief Executive Officer and the President and
the terms and conditions of their employment. In addition, the Committee is the
Administrator of the Company's Incentive Stock Option Plan (1982), the Company's
Section 423 Employee Stock Purchase Plan (1990), the Company's Employee Secured
Stock Purchase Plan (1990), the Company's Stock Option Plan (1992) and the
Company's Stock Option Plan (1993).
Audit Committee
The Audit Committee is identical in composition to that of the Compensation
Committee. The Committee meets on the call of any member and, on at least one
occasion each year, it meets with the independent auditors to discuss: (1) the
scope of the audit engagement; (2) the results of each annual audit and the
financial statements and notes included in the Company's Annual Report to the
Stockholders; and (3) other matters pertaining to the audit, including the
Company's accounting policies and internal controls. The Committee is also
responsible for recommending for appointment by the Board of Directors, subject
to submission to the stockholders for their approval, independent public
accountants to audit the Company's financial statements, as well as advising the
Board of Directors with respect to the scope of the audit, the Company's
accounting policies and internal controls.
The purpose and function of the Audit Committee is to review and monitor
the Company's financial reports and accounting practices, as well as to provide
the means for direct communication among the Company's Board of Directors, its
financial management and external auditors.
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18
The Committee is concerned with the accuracy and completeness of the
Company's financial statements and matters that relate to them. However, the
Committee's role does not contemplate providing to stockholders, or others,
special assurances regarding such matters. Moreover, the Committee's role does
not involve the professional evaluation of the quality of the audit conducted by
the independent auditors. While it is believed that the Committee's activities
are beneficial because they provide an ongoing oversight on behalf of the full
Board of Directors, they do not alter the traditional roles and responsibilities
of the Company's management and independent auditors with respect to the
accounting and control functions and financial statement presentation.
Messrs. Crull, Halpern, Katz, Larson, Manwell, Martino and Peiffer are
members of both the Compensation and Audit Committees.
The Company has no nominating committee.
MEETINGS OF THE BOARD OF DIRECTORS
During fiscal 1995, there were four special meetings of the Board of
Directors and all directors attended each meeting occurring while such director
was a member of the Board of Directors except Mr. Crull who was absent from one
meeting. The Compensation Committee met two times and the Audit Committee met
twice. Except as set out hereinafter, all members of the committees attended
each of the meetings of the respective committee on which they sit occurring
while such person was a member of the committee in question: Messrs. Halpern and
Crull were absent from one meeting and two meetings, respectively, of the Audit
Committee.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10 percent of a registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Officers,
directors and greater than 10 percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 (required
by Section 16(a) in the event of failure to comply with certain filing
requirements) were required for those persons, the Company believes that during
fiscal 1995 its officers, directors, and greater than 10 percent beneficial
owners complied with all applicable filing requirements.
CERTAIN TRANSACTIONSOTHER RELATIONSHIPS
On June 14, 1994, the Company entered into an agreement with Nestle Ice
Cream Company ("NICC"), an affiliate of Nestle Holding, Inc., to distribute in
certain markets frozen novelty and ice cream products manufactured by or for
NICC (the "NICC Products"). The Company purchases the NICC Products in the
ordinary course of business and at prices consistent with those offered to other
distributors.
Timothy P. Smucker was appointed a director of the Company on March 4,
1997. Mr. Smucker is Chairman of The J.M. Smucker Company ("JMS"), a supplier
for the Company of certain raw materials used in production of the Company's
products. The Company purchases raw materials from JMS in the ordinary course of
business and at prices consistent with those offered by other suppliers. The
Company is currently negotiating an agreement with JMS to produce for the
Company a new product in accordance with specifications and quality control
provided by the Company. The Company is proposing to compensate JMS for such
manufacturing services at prices consistent with those offered by other
manufacturers who provide such services.
Any other business relationships existing between any of the nominees or
continuing directors and the Company, or between the Company and any of the
beneficial owners identified under the caption "Security Ownership of Certain
Beneficial Owners" on pages 7-10 herein are described under the caption
"Compensation Committee Interlocks and Insiders Participation" on pages 10-1117-18
herein.
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19
MATTERS SUBMITTED TO THEA VOTE OF STOCKHOLDERS
ELECTION OF DIRECTORS
General
Under the Company's By-Laws and Certificate of Incorporation, the Board of
Directors consists of nine directors and is divided into three classes, with
each class having a term of three years. The directors of Class IIIII will be elected at the 19961997 Annual Meeting of
Stockholders and will hold office until the 19992000 Annual Meeting of Stockholders
or until their successors are elected and qualified. The nominees for directors
of Class III, T. Gary Rogers, William F. Cronk, III and M. Steven Langman,
constitute Class III of the Board of Directors with each of their terms expiring
as of the date of this Annual Meeting. Information regarding the Board of
Directors of the Company, including the business experience of the nominees for
directors of Class III, is set out under the caption "Board of Directors" on
pages 3-6 herein. No family relationship exists between any nominee and any of
the other directors. Any business relationship existing between any of the
nominees or continuing directors and the Company are described under the
captions "Compensation Committee Interlocks and Insider Participation" and
"Other Relationships" on pages 17-18 herein.
Unless otherwise directed, the persons named in the enclosed form of proxy
will vote such proxy for the election of TimmT. Gary Rogers, William F. Crull, Jerome L. KatzCronk, III
and Edmund R. Manwell,M. Steven Langman, each of whom has consented to be named as sucha director of
the Company and to serve if elected. In case any of Messrs. Crull, KatzRogers, Cronk or
ManwellLangman becomes unavailable for election or declines to serve for any unforeseen
reason, an event
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23
management does not anticipate, the persons named in the proxy will have the
right to use their discretion to vote for a substitute.
The nominees
constitute Class II of the Board of Directors with each of their terms expiring
as of the date of this annual meeting. No family relationship exists between any
nominee and any of the other directors. Any business relationships existing
between any of the nominees or continuing directors and the Company are
described under the caption "Compensation Committee Interlocks and Insider
Participation" on pages 10-11 herein.
The following brief statements contain biographical information about the
nominees and the years they first became directors:
NOMINEE
YEAR FIRST ELECTED A DIRECTOR
AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ----------------------------- ------------------------------------------
Timm F. Crull................ RETIRED CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF NESTLE USA, INC.
1995 Mr. Crull joined the Company's Board of Directors in 1995. Mr.
Age: 65 Crull became Chairman and Chief Executive Officer of Nestle USA,
Inc. in 1991, after having served since 1985 as President and
Chief Executive Officer of Carnation Company, a Nestle
subsidiary. He retired from his positions with Nestle in 1994.
Mr. Crull is also a director of Smart & Final Inc., a food
distribution company, and of BankAmerica Corporation, a bank
holding company.
Jerome L. Katz............... PRESIDENT AND CO-CHIEF EXECUTIVE, CHARTERHOUSE GROUP
1977 INTERNATIONAL, INC. Mr. Katz has served on the Company's Board
Age: 62 of Directors since its incorporation in 1977 until April 1981
and was re-elected to the Board in June 1981. Since October
1984, he has served as President of Charterhouse Group
International, Inc. ("Charterhouse"), a privately-held company
which specializes in leveraged buyouts and turn-arounds. From
1973 to 1984 Mr. Katz served as Executive Vice President of
Charterhouse. Mr. Katz is also a director of Charter Power
Systems ("Charter Power"), a manufacturer of battery power
systems and their components, and of Cryenco Sciences, Inc., a
manufacturer of sophisticated leak-tight containment systems.
Edmund R. Manwell............ PARTNER, MANWELL & MILTON, GENERAL COUNSEL TO THE COMPANY. Mr.
1981 Manwell has served as Secretary of the Company since its
Age: 53 incorporation in 1977 and as a director of the Company since
April 1981. Mr. Manwell is a partner in the law firm of Manwell
& Milton, general counsel to the Company. Mr. Manwell is also a
director of Hanover Direct, Inc., a direct marketing company.
Continuing Directors
Directors Merril M. Halpern, John W. Larson and Jack O. Peiffer ("Class I")
will hold office until the 1998 Annual Meeting of Stockholders. Directors T.
Gary Rogers, William F. Cronk, III and Anthony J. Martino ("Class III") will
hold office until the 1997 Annual Meeting of Stockholders.
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The following brief statements contain biographical information about each
continuing director and the year he first became a director:
NAME
YEAR FIRST ELECTED A DIRECTOR
AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ----------------------------- ------------------------------------------
Merril M. Halpern............ CHAIRMAN AND CO-CHIEF EXECUTIVE, CHARTERHOUSE GROUP INTERNATIONAL,
1977 INC. Mr. Halpern has served on the Company's Board of Directors
Age: 61 since its incorporation in 1977. Since October 1984, Mr. Halpern
has served as Chairman of the Board of Charterhouse. From 1973
to October 1984, he served as Charterhouse's President and Chief
Executive Officer. Mr. Halpern is also a director of Charter
Power, Del Monte Corporation, a processed foods company,
Insignia Financial Group, Inc., a fully integrated real estate
service organization, and of Microwave Power Devices, Inc., a
manufacturer of wireless telecommunications products.
John W. Larson............... PRIVATE INVESTOR. Mr. Larson joined the Company's Board of
1993 Directors in 1993. From 1989 to early 1993, Mr. Larson served as
Age: 58 Chief Operating Officer of The Chronicle Publishing Company, a
privately-held, diversified media company. From 1984 to 1989,
Mr. Larson was a General Partner of J.H. Whitney & Co., a
venture capital and buyout firm. Prior to joining J.H. Whitney,
Mr. Larson was the Managing Director of the San Francisco office
of McKinsey & Company, Inc. Mr. Larson is also a member of the
Board of Control of Crown Pacific Partners, LP, a forest
products concern.
Jack O. Peiffer.............. RETIRED SENIOR VICE PRESIDENT -- CORPORATE HUMAN RESOURCES,
1993 GENERAL ELECTRIC COMPANY. Mr. Peiffer joined the Company's Board
Age: 62 of Directors in 1993. Mr. Peiffer was employed by GE Company for
over 38 years and held a variety of financial and general
management positions prior to his appointment as Senior Vice
President - Corporate Human Resources, including acting as Vice
President and General Manager of GE Supply Company from November
1983 to January 1985.
T. Gary Rogers............... CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER, DREYER'S GRAND
1977 ICE CREAM, INC. Mr. Rogers has served as the Company's Chairman
Age: 53 of the Board and Chief Executive Officer since its incorporation
in February 1977.
William F. Cronk, III........ PRESIDENT, DREYER'S GRAND ICE CREAM, INC. Mr. Cronk has served on
1977 the Company's Board of Directors since its incorporation in
Age: 53 1977. Since April 1981, he has served as the Company's
President.
Anthony J. Martino........... RETIRED EXECUTIVE VICE PRESIDENT -- CHIEF FINANCIAL OFFICER,
1994 NESTLE USA, INC. Mr. Martino joined the Company's Board of
Age: 60 Directors in 1994. Mr. Martino retired from his position as
Executive Vice President - Chief Financial Officer of Nestle
USA, Inc. after having served Nestle in various positions for 21
years, including acting as Senior Vice President - Finance of
Nestle Enterprises, Inc.
APPROVALRATIFICATION OF THE AMENDMENT TO THE COMPANY'S STOCK OPTION PLAN (1993)
The Board of Directors has approved, subject to stockholder approval, an
amendment to the Dreyer's Grand Ice Cream, Inc. Stock Option Plan (1993) (the
"Plan"), increasing the number of shares subject to issuance under the Plan from
1,200,000 to 2,200,000.
The Plan, approved by the Company's stockholders on May 11, 1994, presently
permits the grant of options to purchase up to 1,200,000 shares of the Company's
Common Stock.
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21
The Plan is intended to (i) provide a vehicle under which stock option
awards ("awards") may be granted to employees and directors of the Company and
its subsidiaries who are in a position to promote the sound performance of the
Company and its subsidiaries, and (ii) to further align the interests of
management with the stockholders of the Company.
Currently, pursuant to the Plan, the Company may grant options to purchase
up to 1,200,000 shares of the Company's Common Stock (which number is subject to
adjustment in the event of stock dividends, stock splits and other similar
events). If, at any time during the term of the Plan, an option granted under
the Plan expires or terminates for any reason without having been exercised in
full, the unpurchased shares shall become available for grant to other
employees. The shares of Common Stock available under the Plan may be authorized
and unissued shares or treasury shares. The Board of Directors, by resolution,
may terminate, amend or revise the Plan at any time and from time to time,
provided however that the Board may not amend the terms of the Plan more
frequently than permitted under Rule 16b-3 in regard to provisions that affect
members of the Board of Directors who are not employees of the Company. Rights
and obligations under any option granted before any amendment of the Plan may
not be materially altered or impaired adversely by such amendment, except with
consent of the person to whom the option was granted.
The Compensation Committee of the Board of Directors is the Administrator
of the Plan. Subject to the terms and conditions of the Plan, the Administrator
has the authority to: (i) interpret and determine all questions of policy and
expediency pertaining to the Plan; (ii) adopt such rules, regulations,
agreements and instruments as it deems necessary for the Plan's proper
administration; (iii) select the key employees to receive awards; (iv) determine
the form and terms of awards; (v) determine the number of shares subject to
awards; (vi) determine whether awards will be granted singly, in combination, in
tandem, in replacement of, or as alternatives to other grants under the Plan or
any other incentive or compensation plan of the Company, a subsidiary or an
acquired business unit; (vii) grant waivers of the Plan or award conditions;
(viii) accelerate the vesting of awards; (ix) correct any defect, supply any
omission, or reconcile any inconsistency in the Plan, any award or any award
notice; and (x) take any and all other actions it deems necessary or advisable
for the proper administration of the Plan.
The Administrator may also adopt such amendments, procedures, regulations
and subplans as it deems necessary to enable key employees and members of the
Board of Directors who are foreign nationals or are employed outside the United
States to receive stock option awards under the Plan.
Under the Plan, key employees may be granted options intended to be
incentive stock options under Section 422 of the Internal Revenue Code (the
"Code") or non-qualified stock options or both. Additionally, key employees may,
in the Administrator's discretion, also receive "Reload Options" (as described
below). Reload Options shall be in such form and contain such terms as the
Administrator deems appropriate under the Plan. Options granted under the Plan
are non-transferable except by will or the laws of descent and distribution.
While the terms of options granted to key employees need not be identical,
each option is subject to the following terms: (i) the exercise price is the
price set by the Administrator but may not be less than 100 percent of the fair
market value of the Company's Common Stock on the date of the grant; (ii) the
exercise price may be paid in cash (including check, bank draft, wire transfer
or money order), or all or part of the purchase price may be paid by delivery of
the Company's Common Stock already owned by the participant for at least six
months and valued at its fair market value, or any combination of the foregoing
methods of payment; (iii) an option is treated as exercised on the later of (x)
the date that proper notice of exercise accompanied by the aggregate exercise
price is received by the Company, or (y) such exercise date as may be specified
in such proper notice when accompanied by such aggregate exercise price; (iv)
the term of an option may not be greater than 10 years from the date of the
grant; (v) neither a person to whom an option is granted nor such person's legal
representative, heir, legatee or distributee shall be deemed to be the holder
of, or have any of the rights of a holder with respect to, any shares subject to
such option unless and until the option has been exercised.
The following special terms apply to grants of incentive stock options
under the Plan: (i) no incentive stock option may be granted after the 10th
anniversary of the date the Plan was adopted by the Board of
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Directors; (ii) the price under each incentive stock option may not be less than
100 percent of the fair market value of the shares of the Company's Common Stock
on the date of grant provided that the price under each incentive stock option
granted to any employee who directly or indirectly owns stock possessing more
than 10 percent of the total combined voting power of all classes of stock of
the Company must be at least 110 percent of the fair market value of the
Company's Common Stock on the grant date (and such option may not be exercisable
after the expiration of five years from the date of the grant); (iii) no
incentive stock option shall be granted to a person in such person's capacity as
a key employee of a subsidiary if the Company has less than a 50 percent
ownership interest in such subsidiary; and (iv) incentive stock options shall
contain such other terms as may be necessary to qualify the options granted
therein as incentive stock options pursuant to Section 422 of the Code, or any
successor statute.
Concurrently with the award of options to a participant, the Administrator
may authorize reload options ("Reload Options") granted at fair market value to
purchase for cash or shares a number of shares of the Common Stock. The number
of Reload Options will equal: (i) the number of shares of Common Stock used to
exercise the underlying options plus (ii) the number of shares of Common Stock
used to satisfy any tax withholding requirement incident to the exercise of the
underlying option, including shares withheld from those that would otherwise be
issuable to the optionee pursuant to exercise of the subject option. The grant
of a Reload Option will become effective upon the exercise of the underlying
options or Reload Options through the use of shares of Common Stock held by the
optionee for at least six months. Notwithstanding the fact that the underlying
option may be an incentive stock option, a Reload Option will not be intended to
qualify as an "incentive stock option" within the meaning of Section 422 of the
Code. Each Reload Option granted under the Plan is fully exercisable six months
from the effective date of grant. The exercise price of a Reload Option shall
equal the fair market value of the Company's Common Stock on the date of grant
of the Reload Option. The term of each Reload Option shall be equal to the
remaining option term of the underlying option. No additional Reload Options
shall be granted when options or Reload Options are exercised pursuant to the
terms of the Plan following cessation of the optionee's employment with the
Company for any reason.
On the date of approval of the Plan by the Company's stockholders (the
"Approval Date"), each member of the Board of Directors who was not an employee
of the Company or its subsidiaries (each a "Non-Employee Director") was awarded
a non-qualified stock option for 5,000 shares of the Company's Common Stock.
After the Approval Date, any person appointed or elected a Non-Employee Director
receives a non-qualified stock option for 5,000 shares of Common Stock on the
date such person is so appointed or elected. On each anniversary of the Approval
Date, each Non-Employee Director receives a non-qualified stock option for 1,500
shares of Common Stock. Options to Non-Employee Directors are subject to the
following terms: (i) the exercise price is equal to 100 percent of the fair
market value of the Company's Common Stock on the date of the grant; (ii) the
term of the options is 10 years; and (iii) the options are exercisable beginning
six months after the date of the grant.
All options granted under the Plan, in addition to vesting as described
above, vest and become exercisable (x) immediately prior to a Change of Control
(as defined on pages 9-10 under the caption "Employment Contracts, Employment
Termination and Change of Control Arrangements"), and (y) immediately upon the
death or retirement of an optionee.
As a condition to receiving or exercising an option granted under the Plan,
a participant must pay the Company the amount of all applicable federal, state,
local and foreign taxes required by law to be paid or withheld relating to
receipt or exercise of the option. An optionee may satisfy such withholding
requirements in whole or in part by directing the Company to withhold shares
from those that would otherwise be issuable to the participant or by otherwise
tendering other shares of Common Stock owned by the participant. The withheld
shares and other tendered shares will be valued at the fair market value as of
the date that the tax withholding obligation arises.
Subject to the Change of Control provisions in the Plan, no stock option
granted pursuant to the Plan may be exercisable for at least six months after
the date of grant. No one participant may receive in the aggregate options
granting him more than 50 percent of the aggregate number of shares issuable
upon exercise of options granted under the Plan.
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23
A participant who receives a non-qualified option under the Plan will not
recognize any taxable income upon the grant of such option. In general, upon
exercise of a non-qualified option a participant will be treated as having
received ordinary income in an amount equal to the excess of the fair market
value of the shares at the time of exercise over the exercise price. The
ordinary income recognized with respect to the transfer of shares upon exercise
of a non-qualified option under the Plan will be subject to both wage
withholding and employment taxes.
A participant's tax basis in the shares received on exercise of a
non-qualified option will be equal to the amount of any cash paid on exercise,
plus the amount of ordinary income recognized as a result of the receipt of such
shares. The holding period for such shares would begin just after the transfer
of such shares to the participant. Subject to the satisfaction of certain
conditions, a deduction for federal income tax purposes will be allowed to the
Company in an amount equal to the income recognized by the participant, as a
result of the receipt of such shares.
If a participant exercises a non-qualified option by delivering other
shares, the participant will not recognize gain or loss with respect to the
exchange of such shares, even if their then fair market value is different from
the participant's tax basis. The participant, however, will be taxed as
described above with respect to the exercise of the non-qualified option as if
he had paid the exercise price in cash, and the Company likewise generally will
be entitled to an equivalent tax deduction. Provided he receives a separate
identifiable stock certificate upon exercise, the participant's tax basis in
that number of shares received on such exercise, which is equal to the number of
shares surrendered on such exercise, will be equal to his tax basis in the
shares surrendered and his holding period for such number of shares received
will include the holding period for the shares surrendered. The participant's
tax basis and holding period for the additional shares received on exercise of a
non-qualified option paid for, in whole or in part, with shares will be the same
as if the participant had exercised the option solely for cash.
Under the Code, no taxable income is recognized by an employee at the time
an incentive stock option is granted and no taxable income is recognized at the
time such an option is exercised. However, the difference between the option
price and the fair market value of the shares on the date of exercise
constitutes an item of tax preference subject to the alternative minimum tax
under Section 55 of the Code. If the employee does not make a disposition of the
purchased shares within the two-year period measured from the date of option
grant nor within the one-year period measured from the date of issuance of the
shares upon exercise to the participant, any profit or loss recognized upon
disposition will be capital gain or loss. If the employee disposes of the
purchased shares within either the two-year or one-year period mentioned above
(a "disqualifying disposition"), then the employee will, in general, recognize
compensation income in the year of disposition equal to the amount by which the
fair market value of the shares on the date the option was exercised exceeded
the exercise price or, in the case of a sale or exchange in which a loss would
otherwise be recognized, the lower of the amount by which the fair market value
of the shares on the date the option was exercised or the fair market value of
the shares on the date of sale exceeded the exercise price. Any additional gain
or loss recognized upon the disposition will be capital gain or loss. So long as
the employee does not make a disqualifying disposition, no compensation
deduction or other deduction may be taken by the Company. To the extent that the
employee must recognize compensation income due to a disqualifying disposition,
the Company will be entitled to a corresponding compensation deduction. In the
case of an employee who is subject to Section 16(b) of the Securities and
Exchange Act of 1934, the amount of income realized by the optionee upon a
disqualifying disposition and the amount of the corresponding deduction
allowable to the Company is measured by the fair market value of the stock at
the time of the expiration of the period, not to exceed six months, during which
a sale of the stock by the optionee could subject the optionee to liability
under Section 16(b).
The aggregate market value of the shares of the Company's Common Stock
which are subject to options under the Plan was $40,417,473.75 on March 21,
1996. The last reported sale price of the Company's Common Stock on the NASDAQ
National Market System on March 21, 1996 was $35.25 per share. As of March 21,
1996, options to purchase 40,845 shares of the Company's Common Stock were
available for grant under the Plan (without regard to any lapses or
cancellations). Approximately 23 executive-level employees of the Company, seven
Non-Employee Directors and other key staff members are eligible to participate
in the Plan.
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The following table sets out, as to the Named Executive Officers and the
various other indicated individuals and groups, the number of shares of Common
Stock subject to options granted under the Plan since the effective date of the
Plan through March 21, 1996 (without regard to any lapses or cancellations),
together with the weighted average exercise price payable per share:
OPTIONS TO PURCHASE SHARES RECEIVED SINCE INCEPTION UNDER
DREYER'S GRAND ICE CREAM, INC. STOCK OPTION PLAN (1993)
NUMBER OF
WEIGHTED AVERAGE UNITS/OPTIONS
NAME AND POSITION EXERCISE PRICE($) RECEIVED(1)(2)
----------------- ----------------- --------------
T. Gary Rogers, Chief Executive Officer........................ $26.19 141,600
William F. Cronk, III, President............................... 26.19 141,600
William R. Oldenburg, Vice President - Operations.............. 26.91 79,000
Thomas M. Delaplane, Vice President - Sales.................... 26.89 78,200
Paul R. Woodland, Vice President - Finance and
Administration............................................... 26.89 77,700
Timm F. Crull, nominee for director............................ 27.15 6,500
Jerome L. Katz, nominee for director........................... 22.64 6,500
Edmund R. Manwell, Secretary and nominee for director.......... 22.64 6,500
All current executive officers as a group...................... 26.88 648,055
All current directors who are not executive officers as a
group........................................................ 23.85 39,000
All employees, including all current officers who are not
executive officers, as a group............................... 27.24 472,100
- ---------------
(1) The total number of units/options received includes non-qualified options
granted in 1994, which each of the listed Named Executive Officers elected
to receive pursuant to the Income Swap Plan (described in the Compensation
Committee Report on Executive Compensation on pages 11-13 herein), in lieu
of a cash bonus for performance in 1993. In this regard, Messrs. Rogers and
Cronk each received an option to purchase 13,100 shares of the Company's
Common Stock, Mr. Oldenburg received an option to purchase 8,700 shares of
the Company's Common Stock, Mr. Delaplane received an option to purchase
8,400 shares of the Company's Common Stock, and Mr. Woodland received an
option to purchase 8,100 shares of the Company's Common Stock.
(2) The total number of units/options received includes non-qualified options
granted in 1996, which each of the listed Named Executive Officers elected
to receive pursuant to the Income Swap Plan (described in the Compensation
Committee Report on Executive Compensation on pages 11-13 herein), in lieu
of a cash bonus for performance in 1995. In this regard, Messrs. Rogers and
Cronk each received an option to purchase 14,000 shares of the Company's
Common Stock, Mr. Oldenburg received an option to purchase 7,500 shares of
the Company's Common Stock, Mr. Delaplane received an option to purchase
7,000 shares of the Company's Common Stock, and Mr. Woodland received an
option to purchase 6,800 shares of the Company's Common Stock. The other two
vice presidents received options to purchase an aggregate of 12,300 shares
of the Company's Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS THE APPROVAL OF THE AMENDMENT TO THE
COMPANY'S STOCK OPTION PLAN (1993).
APPROVALSELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Price Waterhouse LLP has been appointed to be the Company's independent
public accountants for the fiscal year ending December 28, 1996,27, 1997, and were the
independent public accountants for the Company during the fiscal year ended
December 30, 1995.28, 1996.
The appointment of independent public accountants is made annually by the
Board of Directors and is subsequently submitted by them to the stockholders for
approval. The decision of the Board of Directors is, in
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25 turn, based upon the
recommendation of the Audit Committee of the Board of Directors. In making its
recommendations, the Audit Committee reviews both the audit scope and estimated
audit fees for the coming year. In addition, the Audit Committee reviews the
types of professional services provided by Price Waterhouse LLP to determine
whether the rendering of such services would impair the independence of Price
Waterhouse LLP. Should stockholder approval not be obtained, the Board of
Directors will consider it a directive to select and retain other independent
public accountants.
A representative or representatives of Price Waterhouse LLP will be present
at the stockholders' meeting and will be afforded an opportunity to make a
statement if they so desire and will be available to respond to questions raised
orally at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS THE APPROVAL OF PRICE WATERHOUSE LLP AS
THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE 19961997 FISCAL YEAR AND
THEREAFTER UNTIL A SUCCESSOR IS APPOINTED.
VOTING INFORMATION
GENERAL VOTING INFORMATION
A stockholder may, with respect to the election of directors (i) vote for
the election of all the director nominees named herein, or (ii) withhold
authority to vote for the director nominees or (iii) vote for the election of
any of such director nominee(s) and against any of the other director nominee(s)
by so indicating on the proxy. Withholding authority to vote for a director
nominee will not prevent such director nominee from being elected. A stockholder
may, with respect to each other matter specified in the notice of the meeting
(i) vote "FOR" the matter, (ii) vote "AGAINST" the matter or (iii) "ABSTAIN"
from voting on the matter. Abstention from voting on a matter may have the legal
effect of a vote against such matter. Shares will be voted as instructed in the
accompanying proxy on each matter submitted to stockholders. If there are no
instructions from the stockholder on an executed proxy, the proxy will be voted
as recommended by the Board of Directors.
When aAbstentions and broker is not permitted to vote stock held in street name on certain
mattersnon-votes are each included in the absence of instructions from the beneficial ownerdetermination of
the stock
and so indicates that it isnumber of shares present for quorum purposes. Abstentions are counted in
tabulations of votes cast on proposals presented to stockholders. While not
voting certain stock on anycounted as votes for or all matters onagainst a proposal, abstentions have the proxy, the shares whichsame effect as
votes against a proposal. Broker non-votes are not being voted with respect to a particular
matter (the "non-voted shares") will be considered shares not present and
entitled to vote on such matter, although such shares may be considered present
and entitled to vote for other purposes and will countcounted for purposes of
determining the presence ofwhether a quorum. (Shares voted to abstain as to a
particular matter will not be considered non-voted shares.)proposal has been approved. Approval of each matter
specified in the Annual Meeting notice requires the affirmative vote of either a
majority or a plurality of the shares of Common Stock present in person or by
proxy at the meeting and entitled to vote on such matter, including the shares
of Common Stock into which the outstanding shares of Series B Convertible
Preferred Stock are convertible on the record date for the meeting that the
holders of the Series B Convertible Preferred Stock are entitled to vote.
Accordingly, non-voted shares with respect to such matters will not affect the
determination of whether such matters are approved or the outcome of the
election of directors.19
24
VOTES REQUIRED FOR APPROVAL
Election of Directors: Plurality of the votes of the shares of Common Stock
present in person or by proxy and entitled to vote at the meeting, including the
shares of Common Stock into which the outstanding shares of Series B Convertible
Preferred Stock are convertible on the record date for the meeting.
Approval of the amendment to the Company's Stock Option Plan (1993):
Majority of the shares of Common Stock present in person or by proxy and
entitled to vote at the meeting, including the shares of Common Stock into which
the outstanding shares of Series B Convertible Preferred Stock are convertible
on the record date for the meeting.
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26
Approval of Price Waterhouse LLP as independent public accountants:
Majority of the shares of Common Stock present in person or by proxy and
entitled to vote at the meeting, including the shares of Common Stock into which
the outstanding shares of Series B Convertible Preferred Stock are convertible
on the record date for the meeting.
PROPOSALS OF STOCKHOLDERS
The 19971998 Annual Meeting of Stockholders will be held on or about May 7,
1997.13,
1998. Proposals of stockholders intended to be presented at the 19971998 Annual
Meeting must be received by the Secretary, Dreyer's Grand Ice Cream, Inc., 5929
College Avenue, Oakland, California 94618 no later than November 28, 1996.December 1, 1997.
OTHER MATTERS
The management knows of no other business to be presented at the meeting.
If other matters do properly come before the meeting, it is intended that the
proxy holders will vote on them in accordance with their best judgment.
By Order of the Board of Directors,
EDMUND R. MANWELL
Secretary
DREYER'S GRAND ICE CREAM, INC.
Oakland, California
March 26, 1996
2231, 1997
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2725
COPIES OF DREYER'S GRAND ICE CREAM, INC.'S FORM 10-K REPORT,
A CORPORATE OPERATIONAL AND FINANCIAL REPORT
FILED ANNUALLY WITH THE
SECURITIES AND EXCHANGE COMMISSION,
ARE AVAILABLE WITHOUT CHARGE BUT WITHOUT EXHIBITS
FOR THOSE STOCKHOLDERS WHO WISH TO HAVE MORE DETAILED INFORMATION
ABOUT THE COMPANY.
If you would like a copy, or have any other inquiries
about the Company or your stockholder account, please write to:
WILLIAM C. COLLETT
TREASURER
DREYER'S GRAND ICE CREAM, INC.
5929 COLLEGE AVENUE
OAKLAND, CALIFORNIA 94618
(LOGO)printed on recycled paper
2826
PROXY
DREYER'S GRAND ICE CREAM, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE 19961997
ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints T. GARY ROGERS, WILLIAMGary Rogers, William F. CRONK,Cronk, III
and EDMUNDEdmund R. MANWELL,Manwell, or any one of them, each with power of substitution and
revocation, as the proxy or proxies of the undersigned to represent the
undersigned and vote all shares of Common Stock, $1.00 par value, of DREYER'S
GRAND ICE CREAM, INC., which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders of DREYER'S GRAND ICE
CREAM, INC., to be held at the Claremont Resort Hotel, Oakland, California, at
2:00 p.m. on Wednesday, May 1, 1996,14, 1997, and at any postponements or adjournments
thereof, upon the following matters:
1. The election of three Class II(Continued, and to be signed, on reverse side)
FOLD AND DETACH HERE
27
PLEASE MARK [ X ]
YOUR VOTES AS
INDICATED IN
THIS EXAMPLE
1. The election of three Class III directors.
FOR ALL THE NOMINEES FOR ALL NOMINEES EXCEPT WITHHOLD AUTHORITY TO VOTE
LISTED BELOW / / AS CROSSED OUT BELOW / / FOR THE NOMINEES LISTED BELOW / /
Instruction: Toto withhold authority for any individual nominee, cross out
the nominee's name in the list below:
TIMMFOR ALL WITHHOLD
FOR ALL NOMINEES EXCEPT AUTHORITY TO
THE NOMINEES AS CROSSED VOTE FOR NOMINEES
LISTED BELOW OUT BELOW LISTED BELOW
[ ] [ ] [ ]
T. GARY ROGERS WILLIAM F. CRULL JEROME L. KATZ EDMUND R. MANWELLCRONK, III M. STEVEN LANGMAN
2. The approval of the amendment to the Company's Stock Option Plan
(1993) to increase the number of shares reserved for issuance
thereunder from 1,200,000 to 2,200,000.
FOR / / AGAINST / / ABSTAIN / /
3. The approval of Price Waterhouse LLP as the Company's independent public
accountants for fiscal year 1996.1997.
FOR / / AGAINST / / ABSTAIN
/ /
4.[ ] [ ] [ ]
3. With discretionary authority on such matters as may properly come before the
meeting.
THE SHARES COVERED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE CHOICES
MADE. WHEN NO CHOICE IS MADE, THIS PROXY WILL BE VOTED FOR THE LISTED NOMINEES
FOR DIRECTOR AND FOR PROPOSAL 2 AND PROPOSAL 3.
(Continued, and to be signed, on reverse side)
29
(Continued from other side)2.
The Annual Meeting of Stockholders may be held as scheduled only if a majority
of the shares outstanding are represented at the meeting by attendance or
proxy. Accordingly, please complete this proxy and return it promptly in the
enclosed envelope.
_______________________________________________
Signature(s)
Please date and sign exactly as your name(s)
appears on your shares. If signing for estates,
trusts, or corporations, title or capacity
should be stated. If shares are held jointly,
each holder should sign.
-------------------------
-------------------------
Signature of
Stockholder(s)
Dated , 1996.
30
APPENDIX
DREYER'S GRAND ICE CREAM, INC.
STOCK OPTION PLAN (1993)*
1. Purpose
The purpose of the Plan is to provide a vehicle under which a variety
of stock option awards may be granted to employees and directors of the Company
and its Subsidiaries to further the profits and prosperity of the Company and
its Subsidiaries.
2. Definitions
A. "Award" means any form of stock option granted under the
Plan.
B. "Award Notice" means any written notice from the Company
to a Participant or agreement between the Company and a
Participant that establishes the terms applicable to an Award.
C. "Board of Directors" means the Board of Directors of the
Company.
D. "Code" means the Internal Revenue Code of 1986, as
amended.
E. "Committee" means the Compensation Committee of the Board of
Directors, or such other committee designated by the Board of
Directors, which is authorized to administer the Plan under Section 3
hereof. The Committee, and any separate committee to which it delegates
any of its authority and duties under the Plan, shall each have
membership composition which enable the Plan to qualify under Rule
16b-3 with regard to Awards to persons who are subject to Section 16 of
the Exchange Act.
F. "Common Stock" means common stock of the Company.
G. "Company" means Dreyer's Grand Ice Cream, Inc., a
Delaware corporation.
H. "Director" means a member of the Board of Directors.
- --------
*This plan has been revised to reflect the increase in the aggregate
number of shares of common stock reserved for issuance under the terms of this
plan from 1,200,000 to 2,200,000, which increase requires stockholder approval
at the May 1, 1996 Annual Meeting to be effective.
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I. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
J. "Fair Market Value" means, as of a specified date, the mean of the
high and the low sales price of one share of Common Stock on the
over-the-counter market or the closing price on the principal stock
exchange where the Company's stock prices are officially quoted, or if
not traded on that date, then on the date last traded. If for any
reason the Company's stock ceases to be traded on the over-the-counter
market or listed on a stock exchange, the Committee shall establish the
method for determining the Fair Market Value of the Common Stock.
K. "Key Employee" means any employee of the Company or a Subsidiary
responsible for the management of the business of the Company (or a
Subsidiary) who is in a position to make substantial contributions to
the sound performance of the Company (or a Subsidiary). The term "Key
Employee" shall include officers as well as other employees devoting
full time to the Company (or a Subsidiary) and shall include Directors
who are also active officers or employees of the Company (or a
Subsidiary).
L. "Non-Employee Director" means a Director who is not an employee of
the Company or a Subsidiary.
M. "Participant" means any individual to whom an Award is granted
under the Plan.
N. "Plan" means this Plan, which shall be known as the Dreyer's Grand
Ice Cream, Inc. Stock Option Plan (1993).
O. "Rule 16b-3" means Rule 16b-3 issued under the Exchange Act or any
successor rule.
P. "Subsidiary" means a corporation or other business entity (i) of
which the Company directly or indirectly has an ownership interest of
50% or more, or (ii) of which it has a right to elect or appoint 50% or
more of the board of directors or other governing body.
3. Administration.
A. The Plan shall be administered by the Committee. Subject
to the terms and conditions of this Plan, the Committee shall
have the authority to:
(i) interpret and determine all questions of policy and expediency
pertaining to the Plan;
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(ii) adopt such rules, regulations, agreements and
instruments as it deems necessary for the Plan's proper
administration;
(iii) select Key Employees to receive Awards;
(iv) determine the form and terms of Awards;
(v) determine the number of shares subject to Awards;
(vi) determine whether Awards will be granted singly, in
combination, in tandem, in replacement of, or as alternatives
to other grants under the Plan or any other incentive or
compensation plan of the Company, a Subsidiary or an acquired
business unit;
(vii) grant waivers of Plan or Award conditions;
(viii) accelerate the vesting of Awards;
(ix) correct any defect, supply any omission, or reconcile
any inconsistency in the Plan, any Award or any Award Notice;
and
(x) take any and all other actions it deems necessary or
advisable for the proper administration of the Plan.
B. The interpretation and construction of any provision of the Plan by
the Committee shall be final, conclusive and binding on all parties,
including the Company, its Subsidiaries and stockholders, and the
Participants, their estates, executors, administrators, heirs and
assigns. No member of the Committee shall be liable for any action or
determination made by him in good faith.
C. The Committee may adopt such Plan amendments, procedures,
regulations, subplans and the like as it deems are necessary to enable
Key Employees and Directors who are foreign nationals or employed
outside the United States to receive Awards.
D. The Committee may delegate its authority to grant and administer
Awards to a separate committee; however, only the Committee may grant
and administer Awards with respect to persons who are subject to
Section 16 of the Exchange Act.
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4. Eligibility
A. Any Key Employee is eligible to become a Participant in the Plan.
B. Non-Employee Directors shall receive Awards in accordance with
Section 7.
5. Stock Subject to the Plan.
A. The aggregate number of shares of Common Stock which may be
delivered on exercise of options under this Plan shall not exceed two
million two hundred thousand (2,200,000) shares, subject to adjustment
as provided hereinafter. If, at any time during the term of this Plan,
an option granted under this Plan shall have expired or terminated for
any reason without having been exercised in full, the unpurchased
shares shall become available for option to other employees.
B. In the event that (i) the number of outstanding shares of Common
Stock shall be changed by reason of split-ups, combinations or
reclassifications of shares or otherwise, (ii) any share dividends are
distributed to the holders of Common Stock or (iii) the Common Stock is
converted into or exchanged for other shares as a result of any merger,
consolidation or recapitalization then, in any such case, the number of
shares for which options may thereafter be granted under this Plan,
both in the aggregate and as to any individual, and the number of
shares then subject to options theretofore granted under this Plan and
the price per share payable upon exercise of such options shall be
appropriately adjusted by the Committee so as to reflect such change.
C. The shares of Common Stock available under the Plan may be
authorized and unissued shares or treasury shares.
6. Term
This Plan shall be effective and operative, subject to approval of the
stockholders of the Company within twelve months after its adoption by the Board
of Directors, from the date that the Plan is approved by the Board of Directors
and shall remain in effect until terminated by the Board of Directors.
7. Awards to Non-Employee Directors
Non-Employee Directors shall receive awards in accordance with the
following terms:
A. On the day of adoption of this Plan by the Company's stockholders
(the "Approval Date"), each Non-Employee Director
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34
shall receive a non-qualified option for 5,000 shares of Common
Stock.
B. After the Approval Date, any person who is appointed or elected a
Non-Employee Director shall receive a non-qualified stock option for
5,000 shares of Common Stock on the date such person is so appointed or
elected.
C. On each anniversary of the Approval Date each Non-Employee Director
shall receive a non-qualified stock option for 1,500 shares of Common
Stock.
D. Options to Non-Employee Directors shall be subject to the following
terms: (i) the exercise price shall be equal to 100% of the Fair Market
Value of the Common Stock on the date of the grant, payable in
accordance with all the alternatives stated in Section 8.B(ii); (ii)
the term of the options shall be 10 years; (iii) the options shall be
exercisable beginning 6 months after the date of the grant; and (iv)
the options shall be subject to Section 10.
8. Stock Options
A. Awards shall be granted in the form of stock options. Stock options
may be incentive stock options within the meaning of Section 422 of the
Code or non-qualified stock options (i.e., stock options which are not
incentive stock options).
B. Subject to Section 8.C relating to incentive stock options, options
shall be in such form and contain such terms as the Committee deems
appropriate. While the terms of options need not be identical, each
option shall be subject to the following terms:
(i) The exercise price shall be the price set by the
Committee but may not be less than 100% of the Fair Market
Value of the Common Stock on the date of the grant.
(ii) The exercise price shall be paid in cash (including
check, bank draft, or money order), or all or part of the
purchase price may be paid by delivery of the optionee's
delivery of Common Stock, already owned by the Participant for
at least six (6) months and valued at its Fair Market Value,
or any combination of the foregoing methods of payment.
(iii) An option shall be treated as exercised on the later of
(i) the date that proper notice of exercise accompanied by the
aggregate exercise price is received
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by the Company, or (ii) such exercise date as may be specified
in such proper notice when accompanied by such aggregate
exercise price.
(iv) The term of an option may not be greater than 10 years
from the date of the grant.
(v) Neither a person to whom an option is granted nor his
legal representative, heir, legatee or distributee shall be
deemed to be the holder of, or to have any of the rights of a
holder with respect to, any shares subject to such option
unless and until he has exercised his option.
C. The following special terms shall apply to grants of
incentive stock options:
(i) No incentive stock option shall be granted after the
tenth (10th) anniversary of the date the Plan is adopted by
the Board of Directors.
(ii) Subject to Section 8.C.(iii), the exercise price under
each incentive stock option shall not be less than 100% of the
Fair Market Value of the Common Stock on the date of the
grant.
(iii) No incentive stock option shall be granted to any
employee who directly or indirectly owns stock possessing more
than 10% of the total combined voting power of all classes of
stock of the Company, unless the exercise price is at least
110% of the Fair Market Value of the Common Stock on the date
of the grant and such option is not exercisable after the
expiration of 5 years from the date of the grant.
(iv) No incentive stock option shall be granted to a person
in his capacity as a Key Employee of a Subsidiary if the
Company has less than a 50% ownership interest in such
Subsidiary.
(v) Incentive stock options shall contain such other terms
as may be necessary to qualify the options granted therein as
incentive stock options pursuant to Section 422 of the Code,
or any successor statute.
9. Reload Options
A. Concurrently with the award of options to any
Participant, the Committee may authorize reload options
("Reload Options") to purchase for cash or shares a number of
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36
shares of the Common Stock. The number of Reload Options
shall equal:
(i) the number of shares of Common Stock used to exercise the
underlying options; and
(ii) the number of shares of Common Stock used to satisfy any
tax withholding requirement incident to the exercise of the
underlying option, including shares withheld from those that
would otherwise be issuable to the optionee pursuant to
exercise of the subject option. The grant of a Reload Option
will become effective upon the exercise of the underlying
options or Reload Options through the use of shares of Common
Stock held by the optionee for at least six (6) months.
B. Notwithstanding the fact that the underlying option may be an
Incentive Stock Option, a Reload Option is not intended to qualify as
an "incentive stock option" within the meaning of Section 422 of the
Code.
C. Each Award Notice shall state whether the Committee has authorized
Reload Options with respect to the underlying options. Upon the
exercise of an underlying option or other Reload Option, the Reload
Option will be evidenced by an amendment to the underlying Award
Notice.
D. The option price per share of Common Stock deliverable upon the
exercise of a Reload Option shall be the Fair Market Value of a share
of Common Stock on the date the grant of the Reload Option becomes
effective.
E. Each Reload Option is fully exercisable six (6) months from the
effective date of grant. The term of each Reload Option shall be equal
to the remaining option term of the underlying option.
F. No additional Reload Options shall be granted when options or Reload
Options are exercised pursuant to the terms of this Plan following
cessation of the optionee's employment with the Company for any reason.
10. Exercise of Stock Option Upon Termination of Employment or Services
A. Options granted under Section 7 shall be exercisable upon the
Participant's termination of service within the following periods only.
Subject to Section 17, stock options to other Participants may permit
the exercise of options upon the Participant's termination of
employment within the following
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37
periods, or such shorter periods as determined by the
Committee at the time of grant:
(i) if on account of death, within 24 months of such event
by the person or persons to whom the Participant's rights
pass by will or the laws of descent or distribution.
(ii) if on account of disability (as defined in Section
22(e)(3) of the Code or any successor statute), non-qualified
stock options may be exercised within 24 months of such
termination and incentive stock options within 12 months.
(iii) if on account of retirement (as defined from time to
time by Company policy), non-qualified stock options may be
exercised within 24 months of such termination and incentive
stock options with 3 months.
(iv) if for any reason other than death, disability or
retirement (as defined from time to time by Company policy),
options may be exercised within 3 months of such termination.
B. An unexercised option shall be exercisable only to the extent that
such option was exercisable on the date the Participant's employment or
service terminated. However, terms relating to the exercisability of
options may be amended by the Committee before or after such
termination, except in respect to options granted under Section 7.
C. In no case may an unexercised option be exercised to any extent by
anyone after expiration of its term.
11. Acceleration of Vesting of Options.
A. In the event of a Change in Control (as defined below), death of an
optionee or retirement of an optionee (as defined from time to time by
Company policy), all options which have not yet vested shall vest,
mature and become exercisable in whole or in part immediately prior to
the event constituting the Change of Control, or immediately upon the
death or retirement of such optionee.
B. A Change of Control for these purposes shall be defined as, (i) the
acquisition by any person of beneficial ownership of forty percent
(40%) or more of the combined voting power of the Company's outstanding
securities immediately after such acquisition (which forty percent
(40%) shall be calculated after including the dilutive effect of the
conversion or exchange of any outstanding securities of the Company
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38
convertible into or exchangeable for voting securities), or (ii) a
change in the composition of majority membership of the Board of
Directors over any two-year period beginning with the date of adoption
of this Plan by the Board of Directors, or (iii) a change in ownership
of the Company such that the Company becomes subject to the delisting
of its Common Stock from the NASDAQ National Market System, or (iv) the
approval by the Board of Directors of the sale of all or substantially
all of the assets of the Company, or (v) the approval by the Board of
Directors of any merger, consolidation, issuance of securities or
purchase of assets, the result of which would be the occurrence of any
event described in clause (i), (ii) or (iii) above. Notwithstanding
anything to the contrary in this Section 11.B, acquisitions by any
person (or any group of which such a person is a member) who is as of
the date of adoption of this Plan by the Board of Directors, a member
of the Board of Directors, of beneficial ownership of forty percent
(40%) or more of the combined voting power of the Company's outstanding
securities immediately after such acquisition (calculation of such
forty percent (40%) being made as described above), shall not be deemed
a Change of Control for purposes of this Plan.
12. Nonassignability
The rights of a Participant under the Plan shall not be assignable by
such Participant, by operation of law or otherwise, except by will or the laws
of descent and distribution. During the lifetime of the person to whom a stock
option is granted, he or she alone may exercise it.
13. Payment of Withholding Taxes
A. As a condition to receiving or exercising an Award, as the case may
be, the Participant shall pay to the Company the amount of all
applicable federal, state, local and foreign taxes required by law to
be paid or withheld relating to receipt or exercise of the Award.
B. An optionee may satisfy such withholding requirements in whole or in
part by directing the Company to withhold shares from those that would
otherwise be issuable to the Participant or by otherwise tendering
other shares of Common Stock owned by the Participant. The withheld
shares and other tendered shares will be valued at the Fair Market
Value as of the date that the tax withholding obligation arises.
14. Amendments
The Board of Directors may amend the Plan at any time and from time to
time, provided however that the Board shall not amend the
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39
terms of the Plan more frequently than permitted under Rule 16b-3 in regard to
provisions that affect persons receiving Awards under Section 7. Rights and
obligations under any Award granted before amendment of the Plan shall not be
materially altered or impaired adversely by such amendment, except with consent
of the person to whom the Award was granted.
15. Regulatory Approvals and Listings
Notwithstanding any other provision in the Plan, the Company shall have
no obligation to issue or deliver certificates of Common Stock under the Plan
prior to (A) obtaining approval from any governmental agency which the Company
determines is necessary or advisable, (B) admission of such shares to listing on
the stock exchange on which the Common Stock may be listed and (C) completion of
any registration or other qualification of such shares under any state or
federal law or ruling of any governmental body which the Company determines to
be necessary or advisable.
16. No Right to Continued Employment or Grants
Participation in the Plan shall not give any Key Employee any right to
remain in the employ of the Company or any Subsidiary. Further, the adoption of
this Plan shall not be deemed to give any Key Employee or other individual the
right to be selected as a Participant or to be granted an Award.
17. Special Provision Pertaining to Persons Subject to Section 16
Notwithstanding any other term of this Plan, the following shall apply
to persons subject to Section 16 of the Exchange Act, except in the case of
death or disability:
A. No stock option granted pursuant to the Plan may be exercisable for
at least 6 months after the date of grant.
18. Limitations on Awards Under the Plan
No one Participant shall receive in the aggregate Awards granting him
more than fifty percent (50%) of the aggregate number of shares (2,200,000)
which may be delivered on exercise of options under the Plan.
10Dated____________________________________, 1997
FOLD AND DETACH HERE