<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
<TABLE>
<S> <C>
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 Rule 14a-11(c) or Rule
14a-12
</TABLE>
<TABLE>
<S> <C>
LANDEC CORPORATION
------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / 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:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------
</TABLE>
<PAGE>
[LANDEC LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 12, 2000
TO THE SHAREHOLDERS OF LANDEC CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Landec
Corporation ("Landec") will be held on Wednesday, April 12, 2000, at 5:00 p.m.,
local time, at the Hotel Sofitel, 223 Twin Dolphin Drive, Redwood City, CA 94065
for the following purposes:
1. To elect four directors to serve for a term expiring at the Annual
Meeting of Shareholders held in the second year following the year of
their election and until their successors are duly elected and qualified;
2. To ratify the appointment of Ernst & Young LLP as Landec's independent
auditors for the fiscal year ending October 29, 2000; and
3. To transact such other business as may properly come before the meeting
or any postponement or adjournment(s) thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on February 15, 2000
are entitled to notice of and to vote at the meeting and any adjournment(s)
thereof.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ GEOFFREY P. LEONARD
GEOFFREY P. LEONARD
SECRETARY
Menlo Park, California
February 28, 2000
- --------------------------------------------------------------------------------
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE. IF A QUORUM IS NOT REACHED, THE COMPANY WILL HAVE THE ADDED
EXPENSE OF RE-ISSUING THESE PROXY MATERIALS. IF YOU ATTEND THE MEETING AND
SO DESIRE, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON. THANK YOU FOR
ACTING PROMPTLY.
- --------------------------------------------------------------------------------
<PAGE>
[LANDEC LOGO]
------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 12, 2000
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
Landec Corporation ("Landec" or "the Company"), a California corporation, for
use at the Annual Meeting of Shareholders to be held on Wednesday, April 12,
2000 at 5:00 p.m., local time, or at any postponement or adjournment(s) thereof,
for the purposes set forth herein and in the accompanying Notice of Annual
Meeting of Shareholders. The Annual Meeting will be held at the Hotel Sofitel,
223 Twin Dolphin Drive, Redwood City, California, 94065. The telephone number at
that location is (650) 598-9000.
Landec's principal executive offices are located at 3603 Haven Avenue, Menlo
Park, California 94025. The Company's telephone number at that location is (650)
306-1650.
SOLICITATION
These proxy solicitation materials were mailed on or about February 28, 2000
to all shareholders entitled to vote at the meeting. The costs of soliciting
these proxies will be borne by Landec. These costs will include the expenses of
preparing and mailing proxy materials for the Annual Meeting and the
reimbursement of brokerage firms and others for their expenses incurred in
forwarding solicitation material regarding the Annual Meeting to beneficial
owners of Landec's Common Stock. The Company may conduct further solicitation
personally, telephonically or by facsimile through its officers, directors and
regular employees, none of whom will receive additional compensation for
assisting with the solicitation.
Landec will provide a copy of its Annual Report on Form 10-K for the year
ended October 31, 1999, including financial statements and financial statement
schedules (but not exhibits), without charge to each shareholder upon written
request to Gregory S. Skinner, Chief Financial Officer, Landec Corporation, 3603
Haven Avenue, Menlo Park, CA 94025 (telephone number: (650) 306-1650). Exhibits
to the Annual Report may be obtained on written request to Mr. Skinner and
payment of Landec's reasonable expenses in furnishing such exhibits.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to Landec (Attention: Gregory
S. Skinner, Inspector of Elections) a written notice of revocation or a duly
executed proxy bearing a later date or by attending the meeting of shareholders
and voting in person.
<PAGE>
VOTING
Holders of Common Stock are entitled to one vote per share and holders of
Series A Preferred Stock, each share of which is convertible into ten (10)
shares of Common Stock, are entitled to one vote for each share of Common Stock
into which such Preferred Stock could be converted.
Votes cast in person or by proxy at the Annual Meeting will be tabulated by
the Inspector of Elections with the assistance of Landec's transfer agent. The
Inspector of Elections will also determine whether or not a quorum is present.
Except with respect to the election of directors, the affirmative vote of a
majority of shares represented and voting at a duly held meeting at which a
quorum is present is required under California law for approval of proposals
presented to shareholders. In addition, the shares voting affirmatively must
also constitute at least a majority of the required quorum. In general,
California law also provides that a quorum consists of a majority of the shares
entitled to vote, represented either in person or by proxy. The Inspector of
Elections will treat abstentions as shares that are present and entitled to vote
for purposes of determining the presence of a quorum and in determining the
approval of any matter submitted to the shareholders for a vote. Accordingly,
abstentions will have the same effect as a vote against a proposal. Any proxy
which is returned using the form of proxy enclosed and which is not marked as to
a particular item will be voted for the election of directors, for ratification
of the appointment of the designated independent auditors, and as the proxy
holders deem advisable on other matters that may come before the meeting, as the
case may be, with respect to the item not marked. If a broker indicates on the
enclosed proxy or its substitute that it does not have discretionary authority
as to certain shares to vote on a particular matter ("broker non-votes"), those
shares will be counted for purposes of determining the presence of a quorum, but
will not be considered as voting with respect to that matter. While there is no
definitive specific statutory or case law authority in California concerning the
proper treatment of abstentions and broker non-votes, Landec believes that the
tabulation procedures to be followed by the Inspector of Elections are
consistent with the general statutory requirements in California concerning
voting of shares and determination of a quorum.
RECORD DATE AND SHARE OWNERSHIP
Only shareholders of record at the close of business on February 15, 2000,
are entitled to notice of and to vote at the meeting. As of the record date,
15,924,476 shares of Landec's Common Stock, par value $0.001 per share, were
issued and outstanding and 166,667 shares of Landec's Series A Preferred Stock,
par value $0.001 per share, convertible into ten shares of Common Stock for each
share of Preferred Stock, were issued and outstanding.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS FOR LANDEC'S ANNUAL MEETING OF
SHAREHOLDERS IN YEAR 2001
Proposals of shareholders of Landec that are intended to be presented by
such shareholders at its 2001 Annual Meeting of Shareholders must be received by
the Chief Financial Officer of Landec no later than October 27, 2000, in order
that they may be considered for inclusion in the proxy statement and form of
proxy relating to that meeting.
Also, if a shareholder does not notify Landec on or before January 12, 2001
of a proposal for the 2001 Annual Meeting of Shareholders, management intends to
use its discretionary voting authority to vote on such proposal, even if the
matter is not discussed in the proxy statement for the 2001 Annual Meeting of
Shareholders.
2
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES
Landec's bylaws currently provide for not less than four or more than seven
directors, and its Articles of Incorporation provide for the classification of
the Board of Directors into two classes serving staggered terms. Landec's Board
of Directors currently consists of seven persons, including three Class I
directors and four Class II directors. Each Class I and Class II director is
elected for a two year term, with Class I directors elected in odd-numbers years
(E.G., 2001) and the Class II directors elected in even numbered years (E.G.,
2000). Accordingly, at the Annual Meeting, four Class II directors will be
elected.
The Board of Directors has nominated the four persons named below to serve
as Class II directors until the next even-numbered year Annual Meeting during
which their successors will be elected and qualified. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for
Landec's four nominees named below, all of whom are presently directors of
Landec. In the event that any nominee of Landec is unable or declines to serve
as a director at the time of the Annual Meeting, the proxies will be voted for
any nominee who shall be designated by the present Board of Directors to fill
the vacancy. In the event that additional persons are nominated for election as
directors, the proxy holders intend to vote all proxies received by them in such
a manner as will assure the election of as many of the nominees listed below as
possible, and, in such event, the specific nominees to be voted for will be
determined by the proxy holders. Assuming a quorum is present, the four nominees
for director receiving the greatest number of votes cast at the Annual Meeting
will be elected.
NOMINEES FOR CLASS II DIRECTORS
The names of the nominees for Landec's Class II directors and certain other
information about them as of January 7, 2000 are set forth below:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
- --------------- -------- -------------------------------------- --------
<S> <C> <C> <C>
Gary T. Steele........................ 51 President, Chief Executive Officer and 1991
Chairman of the Board of Directors
of the Company
Kirby L. Cramer....................... 63 Chairman Emeritus of Hazleton 1994
Laboratories Corporation
Richard Dulude........................ 66 Private Investor and Retired Vice 1996
Chairman, Corning, Inc.
Damion E. Wicker, M.D................. 39 General Partner of Chase Capital 1997
Partners
</TABLE>
Except as set forth below, each of the nominees has been engaged in the
principal occupation set forth next to his name above during the past five
years. There is no family relationship between any director or executive officer
of Landec.
Gary T. Steele has served as President, Chief Executive Officer and a
director since September 1991 and as Chairman of the Board of Directors since
January 1996. Mr. Steele has over 20 years of experience in the biotechnology,
instrumentation and material science fields. From 1985 to 1991, Mr. Steele was
President and Chief Executive Officer of Molecular Devices Corporation, a
bioanalytical instrumentation company. From 1981 to 1985, Mr. Steele was Vice
President, Product Development and Business Development at Genentech, Inc., a
biomedical company focusing on
3
<PAGE>
pharmaceutical drug development. Mr. Steele has also worked with McKinsey and
Co. and Shell Oil Company. Mr. Steele received a B.S. from Georgia Institute of
Technology and an M.B.A. from Stanford University.
Kirby L. Cramer has served as a director since December 1994. Since April
1987, Mr. Cramer has been Chairman Emeritus of Hazleton Laboratories
Corporation. He also serves as a director of Immunex Corporation, Huntingdon
Life Sciences, Sonosite, Inc., Ragen Mackenzie Group and several private
companies. Mr. Cramer received a B.A. from Northwestern University, an M.B.A.
from the University of Washington and completed the Advanced Management Program
at Harvard Business School.
Richard Dulude has served as a director since May 1996. Mr. Dulude retired
as Vice Chairman of Corning Inc. in 1993 after a 36 year career in which he held
various general management positions in Corning's telecommunications, materials,
consumer and international businesses, including positions as Chairman and Chief
Executive Officer of SIECOR Corporation and Chairman and Chief Executive Officer
of Corning-Vitro Corporation. Mr. Dulude is currently a director of AMBAC, Inc.
Mr. Dulude received a B.S. in Mechanical Engineering from Syracuse University.
Damion E. Wicker, M.D. has served as a director since February 1997.
Dr. Wicker has been a general partner of Chase Capital Partners, responsible for
medical venture capital investments since January 1997. From April 1993 to
December 1996, Dr. Wicker was a principal of Chase Capital Partners. From June
1991 to April 1993, Dr. Wicker served as a founder and president of Adams
Scientific, a biotechnology diagnostic company specializing in monoclonal and
DNA probes for detection of infectious diseases. Dr. Wicker currently serves on
the board of directors of Hepatix and Vitex, privately-held companies.
Dr. Wicker received a B.S. from the Massachusetts Institute of Technology, an
M.D. from the Johns Hopkins University School of Medicine, and an M.B.A. from
the Wharton School of the University of Pennsylvania.
CLASS I DIRECTORS
Directors continuing in office until the 2001 annual meeting of
shareholders:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ---- -------- -------------------------------------- --------
<S> <C> <C> <C>
Frederick Frank....................... 67 Vice Chairman and Director of Lehman 1999
Brothers
Stephen E. Halprin.................... 61 General Partner of OSCCO Ventures 1988
Richard S. Schneider, Ph.D............ 58 General Partner of Domain Partners II, 1991
L.P.
</TABLE>
Except as set forth below, each of the Class I directors has been engaged in
the principal occupation set forth next to his name above during the past five
years.
Frederick Frank has served as a director since December 1999. Mr. Frank has
been with Lehman Brothers for 30 years and was named to his current position of
Vice Chairman in 1996. Before that, Mr. Frank was associated with Smith Barney
where he was Vice President, Co-Director of Research, and a director. During his
40 years on Wall Street, Mr. Frank has been involved in hundreds of financings
and merger and acquisition transactions. He serves on the board of directors of
several companies, including Diagnostic Products Corp., Digital Arts and
Sciences, and eSoft, Inc. He is a graduate of Yale University and received an
M.B.A. from Stanford University.
Stephen E. Halprin has served as a director since April 1988. Since 1971,
Mr. Halprin has been a general partner of OSCCO Ventures. Mr. Halprin has been
an active member of the venture community since 1968 and serves on the Board of
Directors of Hybrid Networks, Inc. and a number of
4
<PAGE>
privately-held technology companies. Mr. Halprin received a B.S. from the
Massachusetts Institute of Technology and an M.B.A. from Stanford University.
Richard S. Schneider, Ph.D. has served as a director since September 1991.
Since October 1990, Dr. Schneider has been a general partner of Domain
Associates and Domain Partners II, L.P. Dr. Schneider has over 25 years of
product development experience in the fields of medical devices and
biotechnology. Prior to his pursuing a career in venture capital, Dr. Schneider
was Vice President of Product Development at Syva/Syntex Corporation and
President of Biomedical Consulting Associates. He is a member of the Board of
Directors of Fusion Medical Technologies, Inc. and a number of privately-held
life science companies. Dr. Schneider received a Ph.D. in chemistry from the
University of Wisconsin, Madison.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors held a total of four meetings during the fiscal year
ended October 31, 1999. The Board of Directors has an Audit Committee, a
Compensation Committee and a Nominating Committee.
The Audit Committee of the Board of Directors currently consists of
directors Stephen E. Halprin and Richard Dulude and held six meetings during
fiscal year 1999. The Audit Committee recommends engagement of Landec's
independent auditors and is primarily responsible for approving the services
performed by the independent auditors and for reviewing and evaluating Landec's
accounting principles and its system of internal accounting controls.
The Compensation Committee of the Board of Directors currently consists of
directors Kirby L. Cramer, Richard Dulude, and Richard S. Schneider and held
three meetings during fiscal year 1999. The function of the Compensation
Committee is to review and set the compensation of Landec's Chief Executive
Officer and certain of its most highly compensated officers, including salary,
bonuses and other incentive plans, stock options and other forms of
compensation, to administer the Company's stock plans and approve stock option
awards and to oversee the career development of senior management.
The Nominating Committee of the Board of Directors was formed in December
1997 and currently consists of Kirby L. Cramer, Stephen E. Halprin, and Damion
E. Wicker. It did not meet in fiscal year 1999. The function of the Nominating
Committee is to recommend qualified candidates for election as officers and
directors of Landec. Shareholders wishing to recommend candidates for
consideration by the Nominating Committee may do so by writing to the Secretary
of Landec and providing the candidate's name, biographical data and
qualifications.
No incumbent director attended fewer than 75% of the aggregate number of
meetings of the Board of Directors and meetings of the committees of the Board
of Directors on which he serves during the fiscal year ended October 31, 1999.
COMPENSATION OF DIRECTORS
For the fiscal year ended October 31, 1999, directors did not receive any
cash fees for services provided in that capacity but were reimbursed for
out-of-pocket expenses incurred in connection with attendance at meetings of the
Board of Directors and committees thereof.
Nonemployee directors of Landec are automatically granted options to
purchase shares of Landec's Common Stock pursuant to the terms of the 1995
Directors' Stock Option Plan (the "Directors' Plan"). Under the Directors' Plan,
each nonemployee director who has not previously been granted an equivalent
option under any stock option plan of Landec will be granted a nonstatutory
stock option to purchase 20,000 shares of Common Stock (the "First Option") on
the date on which the optionee first becomes a nonemployee director. Thereafter,
on the date of each annual meeting of
5
<PAGE>
the shareholders, such nonemployee director (including directors who were not
eligible for a First Option) will be granted an additional option to purchase
10,000 shares of Common Stock (a "Subsequent Option") if, on such date, he or
she shall have served on the Board of Directors for at least six months prior to
the date of such annual meeting. The First Option and each Subsequent Option are
fully vested and exercisable on the date of grant. Options granted under the
Directors' Plan have an exercise price equal to the fair market value of
Landec's Common Stock on the date of grant with a term of ten years.
Subject to their election to the Board of Directors by the shareholders at
the Annual Meeting, Messrs. Cramer and Dulude and Dr. Wicker, as well as
Mr. Halprin and Dr. Schneider, will each be automatically granted an option to
purchase 10,000 shares of Common Stock on the date of the Annual Meeting
pursuant to the Directors' Plan. As of January 28, 2000, options to purchase
4,492,777 shares of Landec's Common Stock were outstanding. As of the same date,
Messrs. Cramer, Dulude, Frank, Halprin, Schneider, and Wicker, nonemployee
directors, had been granted options to purchase 66,520, 49,000, 20,000, 36,956,
36,956 and 43,478 shares of Landec's Common Stock, respectively.
REQUIRED VOTE
The four Class II director nominees receiving the highest number of
affirmative votes of shares of Landec's capital stock present at the Annual
Meeting in person or by proxy and entitled to vote shall be elected as
directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES LISTED ABOVE.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of Ernst & Young LLP,
independent auditors to audit the financial statements of Landec for the fiscal
year ending October 29, 2000, and recommends that the shareholders vote for
ratification of this appointment. In the event the shareholders do not ratify
such appointment, the Board of Directors will reconsider its selection. Ernst &
Young LLP has audited Landec's financial statements for the fiscal years ending
October 31, 1994 through 1999. Representatives of Ernst & Young LLP are expected
to be present at the meeting with the opportunity to make a statement if they
desire to do so, and are expected to be available to respond to appropriate
questions.
REQUIRED VOTE
The ratification of the appointment of Ernst & Young LLP as Landec's
independent auditors requires the affirmative vote of the holders of a majority
of the shares of Landec's capital stock present at the Annual Meeting in person
or by proxy and entitled to vote and constituting a majority of the required
quorum.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF ERNST & YOUNG LLP
AS LANDEC'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING OCTOBER 29, 2000.
6
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The following sets forth certain information with regard to executive
officers of Landec Corporation. Ages are as of January 7, 2000.
Gary T. Steele (age 51) has been President and Chief Executive Officer since
1991 and Chairman of the Board of Directors since January 1996. Mr. Steele has
over 18 years of experience in the biotechnology, instrumentation and material
science fields. From 1985 to 1991, Mr. Steele was President and Chief Executive
Officer of Molecular Devices Corporation, a bioanalytical instrumentation
company. From 1981 to 1985, Mr. Steele was Vice President, Product Development
and Business Development at Genentech, Inc., a biomedical company focusing on
pharmaceutical drug development. Mr. Steele has also worked with McKinsey and
Co. and Shell Oil Company.
David D. Taft, Ph.D. (age 61) has been Chief Operating Officer since 1993.
Dr. Taft also served as a director of Landec from June 1990 through
December 1995. From February 1986 to April 1993, Dr. Taft was Vice President and
Group Manager of the Manufacturing Group at Raychem Corporation. From July 1983
to January 1986, Dr. Taft was Group Manager of the Telecom Group at Raychem
Corporation and was appointed to the position of Vice President in
October 1984. Dr. Taft has over 25 years of experience in the specialty chemical
industry in research and development, sales and marketing, manufacturing and
general management. Prior to joining Raychem Corporation, Dr. Taft was Executive
Vice President of the Chemical Products Division and a Director of Henkel
Corporation, a chemical manufacturing company. Dr. Taft was also an executive
with General Mills Chemicals.
Ray F. Stewart, Ph.D (age 46) is Landec's founder and has served as Senior
Vice President of Intellicoat Corporation since November 1996. From Landec's
inception to November 1996 he served as the Vice President, Technology of Landec
Corporation. He has also served as a director of Landec from 1986 to 1999.
Dr. Stewart has over 16 years of experience in the material science industry.
Prior to founding Landec, Dr. Stewart worked at Raychem Corporation from 1979 to
1986. While at Raychem Corporation, Dr. Stewart managed development efforts in
the areas of adhesives, plastic electrodes, sensors and synthetic polymer
chemistry, and led the development and commercialization of several new product
lines.
Thomas F. Crowley (age 55) has been President and Chief Executive Officer of
Intellicoat Corporation, a subsidiary of Landec, since November, 1996. From 1991
to 1995, Mr. Crowley was President and Chief Executive Officer of Broadcast
Partners, a satellite communications firm serving farmers throughout North
America with its FarmDayta information service. Broadcast Partners was a joint
venture of Pioneer Hybrid, Farmland Industries and Illinois Farm Bureau and was
sold to Data Transmission Network, Inc. in May 1996.
A. Wayne Tamarelli, Ph.D. (age 58) has been Senior Vice President of Landec
since April 1997, when Landec acquired Dock Resins Corporation, where he has
served as the Chairman and Chief Executive Officer since 1983. Dr. Tamarelli has
over 30 years of experience in specialty chemicals, advanced materials, and
process licensing. He was formerly employed by Exxon Corporation, and later by
Engelhard Corporation as Senior Vice President where he managed groups of
worldwide businesses in chemicals, environmental protection products, and energy
conservation technologies. Previously he was a professor at Carnegie-Mellon
University. Dr. Tamarelli has been involved in leadership positions in a number
of industry, community and civic organizations, including serving as a Chairman
of the Synthetic Organic Chemical Manufacturers' Association, Chairman of the
Chemical Industry Council of New Jersey, Chairman of the Metropolitan New York
Paint and Coatings Association.
Gregory S. Skinner (age 38) has been Chief Financial Officer and Vice
President of Finance of Landec since November 1999. From May 1996 to
October 1999, Mr. Skinner served as Landec's Controller. From 1994 to 1996,
Mr. Skinner was Controller of DNA Plant Technology, an agricultural
biotechnology company, and from 1988 to 1994 he was with Litton Industries, Inc.
and Litton Electron
7
<PAGE>
Devices, a defense contractor of electronic components, where he held a variety
of managerial positions. Prior to joining Litton, Mr. Skinner was with Arthur
Anderson & Company.
Larry Greene (age 45) has been Vice President of Manufacturing since 1996.
From 1995 to 1996, Mr. Greene served as General Manager of Landec's
QuickCast-TM- business line. From 1993 to 1995, Mr. Greene served as Vice
President of Product Development for Landec, and from 1987 to 1993 he held a
variety of product development and commercial development positions. Prior to
joining Landec, Mr. Greene was Manager of the Asia Pacific Region for Zoecon
Corporation, a manufacturer of consumer and animal healthcare products, where he
was responsible for product development, marketing and technology licensing in
Japan, Taiwan, Korea and China.
Guy J. Stokes (age 51) has been Vice President of Commercial Development for
specialty polymers since October 1996. From 1995 to September 1996, he was a
general partner and director of Resin Technology Incorporated in Daytona Beach,
Florida, a developer of thermoset products. From 1976 to 1995, Mr. Stokes held a
variety of sales, marketing and general management positions at Hexcel
Corporation including Business Manager of the Resins Product Division and of
Advanced Tooling Products.
8
<PAGE>
COMMON STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Landec's Common
Stock as of January 28, 2000 as to (i) each person who is known to beneficially
own more than five percent of any class of Landec's voting stock, (ii) each of
Landec's directors, (iii) each of the executive officers named in the Summary
Compensation Table of this proxy statement, and (iv) all directors and executive
officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED(1)
--------------------------------------------------------------------------
NUMBER OF COMMON STOCK
SHARES OF AND
NUMBER OF SERIES A SERIES A PREFERRED
5% SHAREHOLDERS, DIRECTORS, NAMED EXECUTIVE OFFICERS, SHARES OF PERCENT OF PREFERRED PERCENT OF STOCK VOTING POWER
AND DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP COMMON STOCK TOTAL(2) STOCK TOTAL(3) PERCENTAGE
- ----------------------------------------------------- -------------- ---------- ---------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
Chase Venture Capital Associates, L.P............... 1,396,667(5) 8.74% 0 * 7.92%
380 Madison Avenue, 12th Floor
New York, NY 10128(4)
Zesiger Capital Group LLC........................... 1,301,200(6) 8.17% 0 * 7.40%
320 Park Avenue
30th Floor
New York, NY 10022
Vanguard Horizon Funds -- Vanguard Capital 1,015,000(7) 6.37% 0 * 5.77%
Opportunity Fund..................................
P.O. Box 2600, VM #V34
Valley Forge, PA 19482(8)
Domain Partners II, L.P; Domain Associates.......... 842,610(10) 5.29% 0 * 4.79%
One Palmer Square, Suite 515
Princeton, NJ 08542(9)
Michael Williams.................................... 1,342,347 8.43% 0 * 7.63%
306 N. Main Street
Monticello, IN 47960(11)
Timothy Murphy...................................... 833,333 5.23% 0 * 4.74%
4575 West Main Street
Guadalupe, CA 93434
Mr. Nicholas Tompkins............................... 833,333 5.23% 0 * 4.74%
Chief Executive Officer of Apio, Inc. and Senior Vice
President(12)
Gary T. Steele...................................... 413,369(13) 2.55% 0 * 2.31%
Chairman of the Board of Directors, Chief Executive
Officer and President
David D. Taft, Ph.D................................. 276,409(14) 1.71% 0 * 1.55%
Chief Operating Officer
A. Wayne Tamarelli.................................. 472,147(15) 2.96% 0 * 2.68%
Senior Vice President; Chairman of the Board of
Directors and Chief Executive Officer of Dock
Resins Corporation
Thomas Crowley...................................... 33,288(16) * 0 * *
President and Chief Executive Officer of Intellicoat
Corporation
Joy T. Fry.......................................... 164,119(17) 1.02% 0 * *
Vice President Administration
Damion E. Wicker, M.D., Director.................... 1,396,667(18) 8.74% 0 * 7.92%
Kirby L. Cramer, Director........................... 110,000(19) * 0 * *
Richard Dulude, Director............................ 61,903(20) * 0 * *
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED(1)
--------------------------------------------------------------------------
NUMBER OF COMMON STOCK
SHARES OF AND
NUMBER OF SERIES A SERIES A PREFERRED
5% SHAREHOLDERS, DIRECTORS, NAMED EXECUTIVE OFFICERS, SHARES OF PERCENT OF PREFERRED PERCENT OF STOCK VOTING POWER
AND DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP COMMON STOCK TOTAL(2) STOCK TOTAL(3) PERCENTAGE
- ----------------------------------------------------- -------------- ---------- ---------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
Frederick Frank, Director........................... 20,000(21) * 1,666,670(22) 100% 9.58%
Stephen E. Halprin, Director........................ 102,657(23) * 0 * *
Richard S. Schneider, Ph.D., Director............... 842,610(24) 5.29% 0 * 4.79%
All directors and executive officers as a group (17
persons).......................................... 5,228,699(25) 32.84% 1,666,670 100% 39.05%
</TABLE>
- ------------------------
* Less than 1%.
(1) Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, the persons named in the table have
sole voting and investment power with respect to all shares of capital
stock.
(2) As of January 28, 2000, 15,923,831 shares of Common Stock were issued and
outstanding. Percentages are calculated with respect to a holder of options
exercisable prior to March 28, 2000 as if such holder had exercised its
options. Option shares held by other holders are not included in the
percentage calculation with respect to any other holder.
(3) As of January 28, 2000, 166,667 shares of Series A Preferred Stock,
convertible into 1,666,670 shares of Common Stock, were issued and
outstanding.
(4) This information is based on a Schedule 13G/A filed with the SEC on
February 11, 2000 by Chase Venture Capital Associates, L.P.
(5) This number includes 43,478 shares subject to outstanding stock options
exercisable on or before March 28, 2000, which are owned by Damion E.
Wicker, M.D., a director of Landec, who is a general partner of Chase
Venture Capital Associates, L.P. Also includes 10,938 shares subject to
outstanding stock options exercisable on or before March 28, 2000, which
are owned by Mitchell Blutt, who is a general partner of Chase Venture
Capital Associates, L.P.
(6) This information is based on a Schedule 13G/A filed with the SEC on January
28, 2000 by Zesiger Capital Group LLC. Zesiger Capital Group LLC has sole
voting power with respect to 729,000 shares, sole dispositive power with
respect to 1,301,200 shares and has no shared voting or dispositive power.
(7) This information is based on a Schedule 13G filed with the SEC on
February 8, 2000 by Vanguard Horizon Funds -- Vanguard Capital Opportunity
Fund.
(8) Vanguard Horizon Funds -- Vanguard Capital Opportunity Fund have sole
voting power and share dispositive power with respect to 1,015,000 shares.
(9) This information is based on a Schedule 13G/A filed with the SEC on
February 3, 2000, by Domain Partners II, L.P.
(10) This number includes 793,951 shares owned by Domain Partners II, L.P. and
3,217 shares owned by Domain Associates, L.L.C. Dr. Schneider, who is a
director of Landec, is a general partner of the general partner of Domain
Partners II, L.P. Dr. Schneider disclaims beneficial ownership of the
Domain Partners II, L.P. shares, except to the extent of his pecuniary
interest in such shares. Pursuant to a letter agreement with Domain
Associates, L.L.C., Dr. Schneider has beneficial ownership of 574 shares
of the shares owned by Domain Associates, L.L.C. This also includes 12,903
shares held in a Trust of which Dr. Schneider is a beneficial owner and
10,292 shares owned directly by Dr. Schneider. This also includes 22,247
shares for which Dr. Schneider
10
<PAGE>
disclaims beneficial ownership which are subject to outstanding stock
options exercisable on or before March 28, 2000.
(11) Mr. Williams is President of Fielder's Choice Direct, a division of
Intellicoat Corporation and Senior Vice President of Intellicoat
Corporation, a subsidiary of Landec.
(12) Mr. Tompkins is Chief Executive Officer of Apio, Inc., a subsidiary of
Landec and Senior Vice President of Landec. This number includes 416,666
shares owned by Kathleen Tompkins, Mr. Tompkins wife.
(13) This number includes 112,697 shares held in a Trust of which Mr. Steele is
a beneficial owner and 5,772 shares owned directly by Mr. Steele and
3,000 shares owned by Mr. Steele's children. This also includes 291,900
shares subject to outstanding stock options exercisable on or before
March 28, 2000.
(14) This number includes 1,739 shares owned by Dr. Taft's children. This also
includes 251,623 shares subject to outstanding stock options exercisable
on or before March 28, 2000.
(15) This number includes 12,187 shares subject to outstanding stock options
exercisable on or before March 28, 2000.
(16) This number includes 18,124 shares subject to outstanding stock options
exercisable on or before March 28, 2000. Excludes 416,666 shares subject
to outstanding Intellicoat Corporation stock options exercisable on or
before March 28, 2000.
(17) This number includes 140,271 shares subject to outstanding stock options
exercisable on or before March 28, 2000.
(18) This number includes 43,478 shares subject to outstanding stock options
exercisable on or before March 28, 2000. Also includes 10,938 shares
subject to outstanding stock options exercisable on or before March 28,
2000, which are owned by Mitchell Blutt who is a general partner of Chase
Venture Capital Associates, L.P. Also includes 1,342,251 shares owned by
Chase Venture Capital Associates, L.P., of which Dr. Wicker is a general
partner. Dr. Wicker disclaims beneficial ownership of shares held by Chase
Venture Capital Associates, L.P. and Mitchell Blutt except to the extent
of his pecuniary interest in such shares.
(19) This number includes 66,520 shares subject to outstanding stock options
exercisable on or before March 28, 2000.
(20) This number includes 49,000 shares subject to outstanding stock options
exercisable on or before March 28, 2000.
(21) This number includes 20,000 shares subject to outstanding stock options
exercisable on or before March 28, 2000. This number does not include
166,670 shares of Series A Preferred Stock that are convertible into
1,666,670 shares of Common Stock.
(22) This number includes 166,670 shares of Series A Preferred Stock that are
convertible into 1,666,670 shares of Common Stock.
(23) This number includes 20,033 shares owned by OSCCO III, L.P. of which
Mr. Halprin is a general partner. Includes 51,319 shares held in a Trust
of which Mr. Halprin is a beneficial owner. Also includes 31,305 shares
subject to outstanding stock options exercisable on or before March 28,
2000. Mr. Halprin disclaims beneficial ownership in the shares owned by
OSCCO III, L.P. except to the extent of his pecuniary interest therein.
(24) This number includes 793,951 shares owned by Domain Partners II, L.P. and
3,217 shares owned by Domain Associates, L.L.C. Dr. Schneider, who is a
director of Landec, is a general partner of the general partner of Domain
Associates II, L.P. Dr. Schneider disclaims beneficial ownership of
11
<PAGE>
the Domain Partners II, L.P. shares, except to the extent of his pecuniary
interest in such shares. Pursuant to a letter agreement with Domain
Associates, L.L.C., Dr. Schneider has beneficial ownership of 574 shares
of the shares owned by Domain Associates, L.L.C. This number also includes
12,903 shares held in a Trust of which Dr. Schneider is a beneficial owner
and 10,292 shares owned directly by Dr. Schneider. Also includes 22,247
shares for which Dr. Schneider disclaims beneficial ownership which are
subject to outstanding stock options exercisable on or before March 28,
2000.
(25) This number includes an aggregate of 1,182,336 shares held by officers and
directors which are subject to outstanding stock option exercisable on or
before March 28, 2000. Also includes 1,342,251 shares owned by Chase
Venture Capital Associates, L.P., (of which Dr. Wicker, a director of the
Company, is a general partner) and 797,168 shares owned by Domain Partners
II, L.P. and Domain Associates (of which Dr. Schneider, a director of the
Company, is a general partner). This number also includes 20,033 shares
owned by OSCCO III, L.P. of which Mr. Halprin is a general partner.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF LANDEC'S
PREVIOUS OR FUTURE FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE
FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING
REPORT AND THE PERFORMANCE GRAPH IN THIS PROXY STATEMENT SHALL NOT BE
INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
12
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
GENERAL
Landec's executive compensation policies are determined by the Compensation
Committee (the "Committee") of the Board of Directors. The Committee is
comprised of three non-employee directors.
The objective of Landec's executive compensation program is to align
executive compensation with the Company's business objectives and performance,
and to enable the Company to attract, retain and reward executives who
contribute to the long-term business success. Landec's executive compensation
program is based on the same four basic principles that guide compensation
decisions for all employees of Landec:
- Compensate for demonstrated and sustained performance.
- Compensate competitively.
- Strive for equity and fairness in the administration of compensation.
- Ensure that each employee understands how his or her compensation is
determined.
Landec believes in compensating its executives for demonstrated and
sustained levels of performance in their individual jobs. The achievement of
higher levels of performance and contribution are rewarded by higher levels of
compensation. In order to ensure that it compensates its executives
competitively, Landec regularly compares its compensation practices to those of
other companies of comparable size within similar industries. Through the use of
independent compensation surveys and analysis, employee compensation training,
and periodic pay reviews, Landec strives to ensure that compensation is
administered equitably and fairly and that a balance is maintained between how
executives are paid relative to other employees and relative to executives with
similar responsibilities in comparable companies.
The Committee meets at least twice annually. Additionally, the Committee may
hold special meetings to approve the compensation program of a newly hired
executive or an executive whose scope of responsibility has significantly
changed. Each year, the Committee meets with the Chief Executive Officer ("CEO")
regarding executive compensation projections for the next three years and
proposals for executive compensation for the next operating year. Compensation
plans are based on compensation surveys and assessments as to the demonstrated
and sustained performance of the individual executives. The Committee then
independently reviews the performance of the CEO and Landec, and develops the
annual compensation plan for the CEO based on competitive compensation data and
the Committee's evaluation of the CEO's demonstrated and sustained performance
and its expectation as to his future contributions in leading Landec. At a
subsequent meeting of the full Board of Directors, the Committee presents for
adoption its findings on the compensation of each individual executive.
COMPENSATION OF EXECUTIVE OFFICERS
During the fiscal year that ended on October 31, 1999, the executive
compensation program was comprised of the following key components: base salary,
annual bonus, and equity-based incentives.
BASE SALARY.
The Compensation Committee annually reviews the salaries of executives. When
setting base salary levels, in a manner consistent with the objectives outlined
above, the Committee considers competitive market conditions for executive
compensation, Company performance and individual performance.
13
<PAGE>
ANNUAL BONUS.
Landec's cash bonus program seeks to motivate executives to work effectively
to achieve the Company's financial performance objectives and to reward them
when objectives are met. Fiscal year 1999 executive bonus payments for
Messrs. Skinner and Tamarelli and Ms. Fry were based upon specified components
of revenue, margin and other strategic objectives.
EQUITY-BASED INCENTIVES.
Stock options are an important component of the total compensation of
executives. Landec believes that stock options align the interests of each
executive with those of the shareholders. They also provide executives a
significant, long-term interest in Landec's success and help retain key
executives in a competitive market for executive talent.
The 1996 Stock Option Plan authorizes the Committee to grant stock options
to executives. The number of shares owned by, or subject to options held by,
each executive officer is periodically reviewed and additional awards are
considered based on past performance of the executive and the relative holdings
of other executives of Landec and at other companies in the comparable industry.
The option grants generally utilize four-year vesting periods to encourage
executives to continue contributing to Landec, and they expire ten years from
the date of grant.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER.
The CEO's compensation plan includes the same elements and performance
measures as the plans of the other executive officers. The Compensation
Committee evaluates the performance of the CEO, sets his base compensation and
determines bonuses and awards stock or option grants, if any.
Mr. Steele's salary for fiscal year 1999 was $304,648, compared to $306,730
for fiscal year 1998. He received a bonus of $120,000 for fiscal year 1999 and
did not receive a bonus for fiscal year 1998. This reflects Mr. Steele's
performance against pre-determined goals and objectives for the fiscal year as
well as his role in the attainment of Landec's overall objectives.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION.
The Committee has considered the impact of Section 162(m) of the Internal
Revenue Code, which section disallows a deduction for any publicly held
corporation for individual compensation exceeding $1 million in any taxable year
for the CEO and four other most highly compensated executive officers, unless
such compensation meets the requirements for the "performance-based" exception
to the general rule. Since the cash compensation paid by Landec to each of its
executive officers is expected to be below $1 million, the Committee believes
that this section will not affect the tax deductions available to Landec. It
will be the Committee's policy to qualify, to the extent reasonable, the
executive officers' compensation for deductibility under applicable tax law.
COMPENSATION COMMITTEE
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ KIRBY L. CRAMER /s/ RICHARD DULUDE /s/ RICHARD S. SCHNEIDER, PH.D.
- -------------------------- -------------------------- ---------------------------------
Kirby L. Cramer Richard Dulude Richard S. Schneider, Ph.D.
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 1999, Mr. Cramer, Mr. Dulude and Dr. Schneider served as
members of the Compensation Committee. Landec has a consulting agreement with
Mr. Dulude pursuant to which he earned $30,000 per year in 1997 and 1998 and
$1,000 in 1999 and will continue to earn $1,000 per year until terminated and
pursuant to which he was granted stock options to purchase 4,000 shares of
Landec's Common Stock.
14
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth the compensation earned
by the Chief Executive Officer and the four other highest-paid executive
officers whose salary and bonus for the fiscal year ended on October 31, 1999
were in excess of $100,000 (collectively, the "Named Executive Officers") for
services rendered in all capacities for that fiscal year, as well as the
compensation earned by each such individual for the two preceding fiscal years.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
------------------------------ -------------------------------------------
RESTRICTED
FISCAL SALARY BONUS STOCK STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(2) OPTIONS AWARD($)(3) COMPENSATION($)(4)
- --------------------------- -------- -------- -------- -------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Gary T. Steele...................... 1999 304,648 120,000 0 0 1,908
Chief Executive Officer, President 1998 306,730 0 450,000 12,697 2,444
and Chairman of the Board 1997 258,333 75,000 350,000 0 3,830
David D. Taft....................... 1999 253,001 0 50,000 0 0
Chief Operating Officer 1998 225,385 23,000 145,000 0 1,313
1997 205,000 25,000 45,000 0 830
A. Wayne Tamarelli.................. 1999 180,000 33,750 45,000 0 0
Senior Vice President; Chief 1998 178,077 40,500 0 51,613 330
Executive Officer and Chairman of 1997 92,069 0 460,000 0 12,193
the Board of Dock Resins
Corporation(5)(6)
Thomas Crowley...................... 1999 180,000 0 15,000 0 0
President and Chief Executive 1998 177,115 0 25,000 10,323 545
Officer 1997 165,000 0 500,000(8) 0 830
of Intellicoat Corporation(7)
Joy T. Fry.......................... 1999 160,000 35,000 30,000 0 0
Vice President, Administration and 1998 156,153 0 130,000 0 0
former Chief Financial Officer 1997 137,500 25,000 50,000 0 830
</TABLE>
- ------------------------
(1) Includes amounts deferred under Landec's 401(k) plan.
(2) Includes bonuses earned in the indicated year and paid in the subsequent
year. Excludes bonuses paid in the indicated year but earned in the
preceding year.
(3) Subject to the right of repurchase, at cost, by Landec, which lapsed a rate
of 1/12th of the total number of shares purchased at the end of each month
following the date of purchase.
(4) Comprised of premiums paid by Landec under its group term life insurance
policy. For Mr. Steele, also includes premiums paid by Landec under its
disability insurance policy.
(5) Dock Resins is a subsidiary of Landec.
(6) Mr. Tamarelli became a Senior Vice President of Landec in April 1997, and
the stated amount represents the compensation earned from April to the end
of fiscal year 1997.
(7) Intellicoat Corporation ("Intellicoat") is a subsidiary of Landec.
(8) This number represents options to purchase Common Stock of Intellicoat.
15
<PAGE>
STOCK OPTION GRANTS IN FISCAL YEAR 1999
The following table sets forth information for the Named Executive Officers
with respect to grants of options to purchase Common Stock of Landec made in the
fiscal year ended October 31, 1999.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------- GRANT DATE
NUMBER OF % OF TOTAL VALUE
SECURITIES OPTIONS/SARS -------------
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE
NAME GRANTED* FISCAL YEAR ($/SH) DATE ($) (1)
- ---- ------------ ------------ ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Gary T. Steele..................... 0 0 n/a n/a 0
David D. Taft...................... 50,000(2) 8.15% $4.938 2/11/2009 90,109
A. Wayne Tamarelli................. 45,000(2) 7.34% $4.938 2/11/2009 81,618
Thomas Crowley..................... 15,000(2) 2.45% $4.938 2/11/2009 27,206
Joy T. Fry......................... 30,000(2) 4.89% $4.938 2/11/2009 54,065
</TABLE>
- ------------------------
* Stock options granted pursuant to the 1996 Stock Option Plan generally vest
in 2.08% increments monthly commencing 30 days from the date of the grant,
becoming fully vested on the fourth anniversary of the date of the grant.
** Total number of options granted by the Company to employees for the fiscal
year ended October 31, 1999 was 613,000 shares.
(1) Landec uses a Black-Scholes model of option valuation to determine grant
date present value. Landec does not advocate or necessarily agree that the
Black-Scholes model can properly determine the value of an option.
Calculations for the Named Executive Officers are based on a 3.3 year
expected option life which reflects Landec's experience that its options, on
average, are exercised within 3.3 years of grant. Other assumptions used for
the valuations are: interest rate (risk-free rate of return) of 5.08%;
annual dividend yield of 0%; and volatility of 43%. Actual gains, if any, on
stock option exercises and Common Stock holdings are dependent upon a number
of factors, including the future performance of the Common Stock, overall
market conditions and the timing of option exercises, if any.
(2) Granted pursuant to the 1996 Stock Option Plan.
16
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information for the executive officers named
in the Summary Compensation Table with respect to stock options held by each of
them as of October 31, 1999. During the fiscal year that ended on October 31,
1999, no shares were acquired by the Named Executive Officers upon exercise of
options.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
NAME (EXERCISABLE/UNEXERCISABLE)(1) (EXERCISABLE/UNEXERCISABLE)(2)
- ---- ------------------------------ ------------------------------
<S> <C> <C>
Gary T. Steele............................ 253,983/391,668 $720,040/0
David D. Taft............................. 231,310/120,211 $587,023/0
A. Wayne Tamarelli........................ 7,500/37,500 $0/0
Thomas Crowley............................ 13,958/26,042 $0/0
Joy T. Fry................................ 123,778/95,884 $209,864/0
</TABLE>
- ------------------------
(1) No stock appreciation rights (SARs) were outstanding during fiscal year
1999.
(2) Based on the closing price of Landec's Common Stock as reported on the
NASDAQ National Market System on October 29, 1999 of $4.438 per share minus
the exercise price of the in-the-money options.
17
<PAGE>
PERFORMANCE GRAPH
The following graph summarizes cumulative total shareholder return data
(assuming reinvestment of dividends) for the period since Landec's stock was
first registered under Section 12 of the Securities Exchange Act of 1934
(February 15, 1996). The graph assumes that $100 was invested (i) on
February 15, 1996 in the Common Stock of Landec at a price per share of $12.00,
the price at which such stock was first offered to the public on that date,
(ii) on January 31, 1996 in the Standard & Poor's 500 Stock Index and (iii) on
January 31, 1996 in the NASDAQ Industrial Index. The stock price performance on
the following graph is not necessarily indicative of future stock price
performance.
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
The following description data are supplied in accordance with Rule 304(d)
of Regulation S-T:
<TABLE>
<CAPTION>
1/31/96(1) 10/31/96 10/31/97 10/30/98 10/29/99
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Landec Corporation................................ 100 73.96 40.63 32.82 36.98
Standard & Poor's 500 Index....................... 100 110.89 143.80 172.74 214.29
NASDAQ Industrial Index........................... 100 111.05 141.84 115.02 172.73
</TABLE>
- ------------------------
(1) February 15, 1996 for Landec Corporation.
18
<PAGE>
EMPLOYMENT CONTRACTS, CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In April 1997, in connection with the purchase of Dock Resins Corporation,
Landec entered into an employment agreement with Dr. Tamarelli, for a term of
five years. Under the employment agreement, Dr. Tamarelli was and will be
employed as Senior Vice President of Landec and Chairman and Chief Executive
Officer of Dock Resins Corporation until April 2002. Furthermore, Landec elected
Dr. Tamarelli to the Board of Directors of Dock Resins Corporation. Also, in the
case of involuntary termination other than for cause or Dr. Tamarelli's
resignation for good reason, salary will continue to be paid through
April 2002.
In September 1997, in connection with the merger of Landec's subsidiary,
Intellicoat Corporation, with Fielder's Choice Direct, Landec entered into an
employment agreement with Michael Williams, President of the Fielder's Choice,
for a term of two years. Under this employment agreement, Mr. Williams was
employed as Senior Vice President of Intellicoat Corporation until
September 1999, at an annual salary of $156,177. In addition, on November 1,
1998, the Company made a secured loan of $500,000 to Mr. Williams. The loan
carries an interest rate of 7.5% per annum and is due and payable before
July 31, 2000. The balance of this loan as of October 31, 1999, was $137,736.
On November 19, 1999, Landec sold 166,667 shares of Series A Preferred Stock
(representing 1,666,670 shares of common stock on an as-converted basis) to
Mr. Frederick Frank at a price of $60.00 per share for $10,000,000 and paid
Mr. Frank $800,000 as a finder's fee pursuant to a Series A Preferred Stock
Purchase Agreement between Mr. Frank and Landec.
In connection with the purchase of Apio, Inc., and certain related entities
(the "Apio Acquisition") Landec entered into an employment agreement with
Mr. Nicholas Tompkins for a term of five (5) years at an initial annual salary
of $200,000. Under the employment agreement, Mr. Tompkins was and will be
employed as a Senior Vice President of Landec and Chief Executive Officer of
Apio, Inc., a wholly-owned subsidiary of Landec. Also, in the case of his
involuntary termination other than for cause or his resignation for good reason,
his salary will continue to be paid until December 2004. Pursuant to the
employment agreement, Mr. Tompkins was issued options to purchase up to
1,000,000 shares of Common Stock of Landec, and an option to purchase up to
2,000,000 shares of common stock of Apio, Inc. In addition, in connection with
the Apio Acquisition, Mr. Tompkins may receive earn-out payments of up to
$10 million if Apio exceeds certain earnings targets in 2000 and 2001.
In connection with the Apio Acquisition, Landec entered into an employment
agreement with Mr. Timothy Murphy for a term of one (1) year at an annual salary
of $100,000. In the case of Mr. Murphy's involuntary termination other than for
cause or his resignation for good reason, his salary will continue to be paid
until December 2000. In addition, in connection with the Apio Acquisition,
Mr. Murphy will receive deferred payments totalling $1,060,000 over the next
five years.
Mr. Frank, a director, is Vice Chairman of Lehman Brothers Inc. ("Lehman
Brothers"). As compensation for services rendered by Lehman Brothers in
connection with the closing of the Apio Acquisition, Landec (i) issued 62,500
shares of Common Stock of Landec to Lehman Brothers and (ii) paid Lehman
Brothers a total of $450,000 in cash before expenses, pursuant to a letter
agreement between Landec and Lehman Brothers. From time to time, Lehman Brothers
or its affiliates have provided, and may continue to provide, investment banking
services to Landec, for which they received or will receive customary fees.
Mr. Frank has no personal interest in these transactions.
19
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Landec's directors and executive
officers, and persons who own more than ten percent of a registered class of
Landec's equity securities to file with the SEC initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the Company. Officers, directors and holders of more than ten percent of the
Company's Common Stock are required by SEC regulations to furnish Landec with
copies of all Section 16(a) forms they file.
To Landec's knowledge, based solely upon review of the copies of such
reports furnished to Landec and written representations that no other reports
were required, during the fiscal year ended October 31, 1999 all Section
16(a) filing requirements applicable to Landec's officers, directors and holders
of more than ten percent of Landec's Common Stock were complied with, except
that (1) Mr. Frank of Lehman Brothers filed a Form 3 late; and (2) Chase Venture
Capital Associates and Dr. Schneider filed Form 4's late.
OTHER MATTERS
The Board of Directors knows of no other matters to be submitted to the
meeting. If any other matters properly come before the meeting, then the persons
named in the enclosed form of proxy will vote the shares they represent in such
manner as the Board may recommend.
It is important that the proxies be returned promptly and that your shares
be represented. Shareholders are urged to mark, date, execute and promptly
return the accompanying proxy card in the enclosed envelope.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ GEOFFREY P. LEONARD
GEOFFREY P. LEONARD
SECRETARY
20
<PAGE>
PROXY PROXY
2000 ANNUAL MEETING OF SHAREHOLDERS
The undersigned shareholder of Landec Corporation, a California corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders and
Proxy Statement, each dated February 28, 2000, and hereby appoints Gary T.
Steele and Gregory S. Skinner, and each of them, with full power of
substitution, as proxies and attorneys-in-fact, on behalf and in the name of the
undersigned, to represent the undersigned at the Annual Meeting of Shareholders
of Landec Corporation to be held on April 12, 2000 at 5:00 p.m. local time, at
the Hotel Sofitel, 223 Twin Dolphin Drive, Redwood City, California 94065, and
at any adjournment or postponement thereof, and to vote all shares of capital
stock which the undersigned would be entitled to vote if then and there
personally present, on the matters set forth on the reverse side. This Proxy
will be voted as directed or, if no contrary direction is indicated, will be
voted as follows: (1) FOR the Election of Directors in the manner described in
the Proxy Statement and (2) FOR the proposal to ratify the selection of Ernst &
Young LLP as Landec's independent auditors for the fiscal year ending
October 29, 2000.
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder(s). The Board of Directors unanimously
recommends a vote FOR all nominees for directors and proposal 2.
1. Election of Directors
FOR all Nominees: Gary T. Steele, Kirby L. Cramer, Richard Dulude, Damion E.
Wicker, M.D.
/ / FOR / / AGAINST / / ABSTAIN
For all nominees except as noted:
(INSTRUCTION: to withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below)
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CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE SIDE
<PAGE>
2. To ratify the appointment of Ernst & Young LLP as independent auditors of
Landec for the fiscal year ending October 29, 2000.
/ / FOR / / AGAINST
and in their discretion, the proxies are authorized to vote on such other
business as may properly come before the meeting or any adjournment hereof.
DATED: ___________________, 2000
--------------------------------
SIGNATURE
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SIGNATURE
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD USING THE
ENCLOSED ENVELOPE. Please sign
exactly as name appears hereon.
Where shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee, or
guardian, please give full title
as such. If a corporation,
please sign in full corporate
name by President or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
