<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant
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 Section 240.14a-11(c) or Section
240.14a-12
KEEBLER FOODS COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[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:
--------------------------------------------------------------------------
<PAGE> 2
KEEBLER FOODS COMPANY
April 14, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
(the "Meeting") of Keebler Foods Company (the "Company") to be held on Tuesday,
May 25, 1999, at 1:00 p.m., Central Daylight Time, at First Chicago Center, One
First National Plaza, Chicago, Illinois 60670. The purpose of the Meeting is to
consider and vote upon proposals (i) to elect three directors, (ii) to approve
the appointment of PricewaterhouseCoopers LLP as the Company's independent
auditors for fiscal 1999 and (iii) to transact such other business as may
properly come before the Meeting. Additional information with respect to these
matters is set forth in the enclosed Proxy Statement.
Whether or not you plan to attend the Meeting and regardless of the
number of shares you own, it is important that your shares be represented at the
Meeting. Therefore, after you read the enclosed Proxy Statement, please mark,
date, sign, and return the enclosed proxy card in the envelope provided to
ensure that your vote on the important matters to be considered at the Meeting
will be recorded.
The Board of Directors appreciates your investment and your interest in
the Company. I look forward to your participation in the Meeting.
Sincerely,
/S/ Robert P. Crozer
Robert P. Crozer
Chairman of the Board
<PAGE> 3
KEEBLER FOODS COMPANY
677 LARCH AVENUE
ELMHURST, ILLINOIS 60126
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MAY 25, 1999
1:00 P.M., CENTRAL DAYLIGHT TIME
FIRST CHICAGO CENTER
ONE FIRST NATIONAL PLAZA
CHICAGO, ILLINOIS 60670
-------------------
April 14, 1999
The Annual Meeting of Stockholders of Keebler Foods Company, a Delaware
corporation, will be held Tuesday, May 25, 1999, at 1:00 p.m., Central Daylight
Time, at First Chicago Center, One First National Plaza, Chicago, Illinois
60670. The purpose of the meeting is to:
- elect three directors;
- approve the appointment of PricewaterhouseCoopers LLP as our
independent auditors for fiscal 1999; and
- conduct any other business to properly come before the meeting.
Attendance and voting is limited to stockholders of record at the close
of business on April 5, 1999. A list of stockholders entitled to vote at the
meeting will be available for your review between the hours of 9:00 a.m. and
5:00 p.m. at our offices for ten days prior to the meeting and also at the
meeting.
Your vote is important. Whether you plan to attend or not, please sign
and date the enclosed proxy card and return it in the envelope provided. If you
attend the meeting and prefer to vote in person, you may do so.
By Order of the Board of Directors
/s/ Thomas E. O'Neill
Thomas E. O'Neill
Vice President, Secretary
and General Counsel
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INTRODUCTION ............................................................ 1
ELECTION OF DIRECTORS
(PROPOSAL NO. 1) ............................................... 3
INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES ................. 6
Executive Committee ............................................ 6
Audit Committee ................................................ 6
Compensation Committee ......................................... 6
Nominating Committee ........................................... 7
Compensation of Directors ...................................... 7
Director's Equity Incentive Plan ............................... 7
OWNERSHIP ............................................................... 8
Security Ownership of Certain Beneficial Owners and Management . 8
COMPENSATION COMMITTEE REPORT ........................................... 10
Introduction ................................................... 10
Executive Compensation Policy .................................. 10
Base Salary .................................................... 10
Annual Incentives .............................................. 10
Stock-Based Incentives ......................................... 11
Chief Executive Officer Compensation ........................... 11
Tax Treatment of Executive Compensation ........................ 11
EXECUTIVE COMPENSATION .................................................. 12
Summary Compensation Table ..................................... 12
Option Grants and Exercises in Last Fiscal Year ................ 13
Pension Plan and Benefits ...................................... 13
1996 Stock Option Plan ......................................... 14
1998 Omnibus Stock Incentive Plan .............................. 15
Deferred Compensation Plan ..................................... 15
1998 Keebler Incentive Program ................................. 15
Employment and Other Agreements ................................ 16
COMPENSATION COMMITTEE INTERLOCKSAND INSIDER PARTICIPATION .............. 17
PERFORMANCE GRAPH ....................................................... 18
</TABLE>
i
<PAGE> 5
<TABLE>
<S> <C>
APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL NO. 2) ............................................... 19
OTHER MATTERS ........................................................... 20
Section 16(a) Beneficial Ownership Reporting Compliance ........ 20
Stockholder Proposals for 2000 Annual Meeting of Stockholders .. 20
Stockholder List ............................................... 20
Revocation of Proxy ............................................ 20
</TABLE>
ii
<PAGE> 6
KEEBLER FOODS COMPANY
677 LARCH AVENUE
ELMHURST, ILLINOIS 60126
-----------------
PROXY STATEMENT
----------------
INTRODUCTION
Annual Meeting: The Annual Meeting of Stockholders will be held at First Chicago
Center, One First National Plaza, Chicago, Illinois 60670, on
Tuesday, May 25, 1999, at 1:00 p.m. Central Daylight Time.
Record Date: If you were a stockholder at the close of business on April 5,
1999, then you may vote at the meeting.
Mailing Date: We anticipate first mailing this proxy statement and the
enclosed proxy card on or about April 14, 1999.
Agenda: The agenda for the meeting is:
- to elect three directors;
- to approve the appointment of PricewaterhouseCoopers
LLP as independent auditors for 1999; and
- to conduct any other business to properly come before
the meeting.
Proxy Solicitation: Our Board of Directors is soliciting this proxy. Certain of
our officers and employees may also solicit proxies
personally and by telephone. We are paying the cost of
solicitation including the cost of mailing. We have
requested that banks, brokers and other custodian nominees
and fiduciaries supply, at our expense, proxy material to
the beneficial owners of our common stock.
Voting of Proxies: We will vote proxies that are properly dated, executed and
returned in accordance with your instructions. If no
specific instructions are given, your shares will be voted
"FOR" the Board's nominees in item one and "FOR" the
approval of PricewaterhouseCoopers LLP as independent
auditors for 1999 in item two.
We do not intend to introduce any matters before the
meeting other than those listed in the Notice of Annual
Meeting and we do not know of any matter which anyone else
intends to introduce at the meeting. If any other matters
properly come before the meeting, however, the persons
named in this proxy statement will be authorized to vote or
otherwise act in accordance with their judgment.
1
<PAGE> 7
Revoking Proxies: You may revoke your proxy at any time before it is voted at
the meeting:
- by delivering to Thomas E. O'Neill, Vice President,
Secretary and General Counsel, a signed, written
revocation letter dated later than the proxy;
- by submitting a proxy with a later date; or
- if you attend the meeting, requesting a ballot and
voting in person (attending the meeting alone will not
revoke your proxy).
Outstanding Shares: On the record date, 83,813,524 shares of our common stock
were issued and outstanding.
Quorum: A quorum is established when a majority of shares entitled
to vote is present at the meeting, either in person or by
proxy. Abstentions and broker non-votes are counted as
present for purposes of establishing a quorum.
Voting: Each share of common stock that you hold as of the record
date entitles you to one vote, without cumulation, on each
matter to be voted upon at the meeting.
Required Vote: Our directors are elected by a plurality of the votes cast
by the stockholders. "Plurality" means that the three
individuals who receive the largest number of the votes
shall be elected as directors. In an uncontested election
for directors, the plurality requirement is not a factor.
Approval of the appointment of our independent auditors
requires the affirmative vote of the majority of shares
present (in person or by proxy) at the meeting and entitled
to vote. Any shares not voted with respect to the
appointment of independent auditors will have no effect on
the outcome of the vote.
Broker Votes: Brokers who hold shares in street name have the authority to
vote on certain routine matters on which they have not
received instructions from beneficial owners. Brokers
holding shares in street name who do not receive
instructions from beneficial owners by the date specified
in the statement accompanying this proxy material are
entitled to vote on the election of directors and the
appointment of the independent auditors.
Annual Report: Our 1998 Annual Report is being mailed to you with this
proxy statement.
2
<PAGE> 8
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
Our Board consists of three classes. One class of directors is elected
at each annual meeting of stockholders to serve a three year term. Directors
elected at the 1999 Annual Meeting will hold office until their successors are
elected at the 2002 Annual Meeting. Directors not up for election this year will
continue in office for the remainder of their term.
The Nominating Committee of the Board has nominated Sam K. Reed, Amos
R. McMullian and Wayne H. Pace to stand for election to our Board. Unless you
give contrary instructions, the shares represented by the enclosed proxy will be
voted "FOR" the election of all nominees.
All nominees have consented to being named in this proxy statement and
to serve if elected. However, if any nominee becomes unable to serve, proxy
holders will have discretion and authority to vote for another nominee proposed
by the Board. Alternatively, the Board may reduce the number of directors to be
elected at the meeting.
NOMINEES FOR TERMS EXPIRING IN 2002
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE POSITION
---- --- ----- --------
<S> <C> <C> <C>
Sam K. Reed ...................................... 52 1996 President, Chief Executive
Officer and Director
Amos R. McMullian ................................ 61 1996 Director
Wayne H. Pace .................................... 52 1998 Director
</TABLE>
Sam K. Reed: Mr. Reed has been the President, Chief Executive Officer
and a Director of Keebler since January 1996. Mr. Reed has
twenty-five years experience in the snack and baking
industries. From January 1994 to January 1995 he served as
Chief Executive Officer of Specialty Foods Corporation's
$450 million Western Bakery Group division. Prior to that,
he was President and Chief Executive Officer of Mother's
Cake and Cookie Co. from 1991 to 1994, and held Executive
Vice President positions at Wyndham Bakery Products from
1988 to 1990 and Murray Bakery Products from 1985 to 1988.
Mr. Reed managed a natural foods company from 1984 to 1985,
which later became The Quaker Oats Company's rice cake
division. He started his career in 1974 with Oroweat Foods
Company where he spent ten years in finance, manufacturing
and general management. Mr. Reed received a B.A. from Rice
University and an M.B.A. from Stanford University.
Amos R. McMullian: Mr. McMullian has been a Director of Keebler since March
1996. Mr. McMullian has served as Chief Executive Officer
of Flowers Industries, Inc. since April 1981 and Chairman
of the Board of Directors of Flowers since January 1985.
Since joining Flowers in 1963, Mr. McMullian has also
served as
3
<PAGE> 9
assistant controller, data processing coordinator,
assistant plant manager, plant manager, plant
president, regional vice president and President
of the Bakery and Snack Groups. In 1976, he was
appointed President and Chief Operating Officer of
Flowers and was elected to the Board of Directors
of Flowers. He served as Vice Chairman of the
Board of Directors of Flowers from 1984 to 1985.
Mr. McMullian received a B.S. from Florida State
University.
Wayne H. Pace: Mr. Pace has been a Director of Keebler since
February 1998. Mr. Pace has been Executive Vice
President and Chief Financial and Administrative
Officer of Turner Broadcasting System, Inc. since
October 1996. Mr. Pace joined Turner as Vice
President and Chief Financial Officer. Mr. Pace is
a director of Turner. Prior to joining Turner, Mr.
Pace was a partner at Price Waterhouse where he
was employed for over 20 years. Mr. Pace received
a B.A. from Austin Peay State University and a
masters degree in accounting from the J.M. Tull
School of Accountancy at the University of
Georgia.
YOUR BOARD RECOMMENDS A VOTE "FOR"
THE ELECTION OF EACH NOMINEE.
CONTINUING DIRECTORS
Robert P. Crozer: Mr. Crozer was elected Chairman of the Board of
Directors of Keebler in February 1998. Mr. Crozer
has been a Director of Keebler since March 1996.
Mr. Crozer has served as Vice Chairman of the
Board of Directors of Flowers since 1989. He
joined Flowers in 1973 and has been a Director of
Flowers since 1989. Mr. Crozer served as Vice
President-Marketing of Flowers from 1985 to 1989,
Corporate Director of Marketing Planning of
Flowers from 1979 to 1985, as well as President
and Chief Operating Officer, Convenience Products
Group of Flowers from 1979 to 1989. Mr. Crozer's
term as a Director expires in 2001.
Johnston C. Adams, Jr.: Mr. Adams has been a Director of Keebler since
February 1998. Mr. Adams has been the Chairman of
AutoZone, Inc. since 1997 and was named President
and Chief Executive Officer of AutoZone in 1996.
He joined AutoZone in 1994 as Executive Vice
President of Distribution and was appointed Chief
Operating Officer and elected as a Director of
AutoZone in 1996. Mr. Adams' term as a Director
expires in 2001.
G. Anthony Campbell: Mr. Campbell has been a Director of Keebler since
February 1998. Mr. Campbell has served as a
Director of Flowers since 1991 and is currently
the General Counsel and Secretary of Flowers. Mr.
Campbell joined Flowers in 1983. Mr. Campbell's
term as a Director expires in 2001.
Dr. Melvin T. Stith: Dr. Stith has been a Director of Keebler since
April 1999. Dr. Stith has been Dean of the College
of Business at Florida State University since
1991. From 1985 to 1991, Dr. Stith served as
Chairman of the Department of Marketing at
4
<PAGE> 10
Florida State University. Dr. Stith has also
served in various academic positions at Syracuse
University, University of South Florida and
Florida A&M University. Dr. Stith also serves as a
Director of Synovus Financial Corporation,
Correctional Services Corporation and Rexall
Sundown, Inc. Dr. Stith's term as a Director
expires in 2001.
Franklin L. Burke: Mr. Burke has been a Director of Keebler since
February 1998. Mr. Burke has been a Director of
Flowers since 1994 and also serves as a Director
of William Bird & Co. Previously, Mr. Burke was
the Chairman and Chief Executive Officer of Bank
South, N.A. as well as a Director of Bank South
Corporation. Mr. Burke's term as a Director
expires in 2000.
C. Martin Wood III: Mr. Wood has been a Director of Keebler since
March 1996. Mr. Wood has served as Senior Vice
President and Chief Financial Officer of Flowers
since September 1978. Mr. Wood joined Flowers in
1970 as Director of New Product Development. He
was appointed Director of Marketing Services of
Flowers the following year, Director of Finance in
1973, and Vice President-Finance in 1976. Mr. Wood
has been a director of Flowers since 1975. Mr.
Wood's term as a Director expires in 2000.
Jimmy M. Woodward: Mr. Woodward has been a Director of Keebler since
February 1998. Mr. Woodward has served as
Treasurer and Chief Accounting Officer of Flowers
since 1997. Mr. Woodward joined Flowers in 1985 as
Tax Accounting Manager and served as Assistant
Treasurer of Flowers from 1990 to 1997. Mr.
Woodward's term as a Director expires in 2000.
5
<PAGE> 11
INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES
In 1998, our full Board met seven times. In addition to our full Board
meetings, our directors attend meetings of permanent committees established by
our Board. The membership of the Executive, Audit, Compensation and Nominating
Committees is determined by our Board. Each director participated in at least
75% of the total number of meetings of our Board and the committees on which he
serves.
EXECUTIVE COMMITTEE
The Executive Committee did not meet during 1998. Mr. Crozer, Mr.
Campbell, Mr. McMullian and Mr. Reed are members of the Executive Committee. Mr.
Crozer serves as Chairman. Mr. Raymond Debbane, who resigned as a director on
January 21, 1999, also served on the Executive Committee during 1998. The
Executive Committee may exercise certain powers of our Board in the general
supervision and control of our business and affairs when the Board is not in
session.
AUDIT COMMITTEE
The Audit Committee held four meetings during 1998. Mr. Pace, Mr.
Adams and Dr. Stith are members of the Audit Committee. Mr. Pace serves as
Chairman. The primary responsibilities of the Audit Committee are:
- to participate with management in selecting and recommending
to our Board independent auditors to conduct the annual
audit;
- to review the proposed scope of the annual audit with
management and auditors;
- to review the non-audit services performed by the
independent auditors to ensure that performance of these
services does not impair the independence of the auditors;
- to review with management any examinations made by
regulatory authorities and any replies required in
connection with these examinations;
- to review with management the role and scope of the work
performed by internal auditors;
- to review the periodic summary reports of audits performed
by the internal auditors; and
- to advise our Board on any developments which the Audit
Committee believes should be considered by our Board.
COMPENSATION COMMITTEE
The Compensation Committee held four meetings during 1998. Mr. Adams,
Mr. Pace and Mr. Burke are members of the Compensation Committee. Mr. Adams
serves as Chairman. Mr. Debbane also served on the Compensation Committee during
1998 prior to his resignation from the Board. The primary responsibilities of
the Compensation Committee are:
- to review and approve salaries, bonuses and other benefits
relating to compensation of our executive officers; and
6
<PAGE> 12
- to approve awards under the 1996 Stock Option Plan, the 1998
Omnibus Stock Incentive Plan and any other benefit plan
which may exist.
NOMINATING COMMITTEE
The Nominating Committee did not meet during 1998. The Nominating
Committee has met several times in 1999 both to nominate the current directors
and to recommend the election of Dr. Stith. Mr. Burke, Mr. Wood, Mr. Crozer and
Dr. Stith are members of the Nominating Committee. Mr. Burke serves as Chairman.
Mr. Sacha Lainovic, who resigned as a director on January 21, 1999, also served
on the Nominating Committee during 1998. The Nominating Committee has
responsibility and authority to recommend to our Board:
- nominees for election to our Board;
- candidates for membership on the various committees of our
Board; and
- in the event of a vacancy in the office of Chief Executive
Officer, a successor Chief Executive Officer.
The Nominating Committee will consider recommendations for director
nominees made by our stockholders. Recommendations for next year's annual
meeting must be made in writing to Thomas E. O'Neill, Vice President, Secretary
and General Counsel, prior to December 31, 1999, and must state the name, age,
address, principal occupation, background and qualifications of the person
recommended.
COMPENSATION OF DIRECTORS
None of our directors who are also employees of Keebler or Flowers
Industries, Inc., or who were nominated by Artal Luxembourg S.A., received
remuneration for serving as a director in 1998. The remaining directors in 1998
received an annual retainer of $24,000 and a fee of $1,000 per meeting. In
addition, each Committee Chairman received a $3,000 retainer.
DIRECTORS EQUITY INCENTIVE PLAN
We maintain a Non-Employee Director Stock Plan (the "Directors' Plan")
pursuant to which options for a maximum of 300,000 shares of common stock may be
awarded. The participants in the Directors' Plan are non-employee directors. In
1998, an aggregate of 22,500 options were granted by the Board under the
Directors' Plan. Options granted under the Directors' Plan are exercisable at a
price per share not less than the fair market value of the common stock at the
date of the grant. The exercise price for the options granted in 1998 pursuant
to the Directors' Plan was $27.44. In April 1999, 7,500 options were granted
under the Directors' Plan with an exercise price of $35.22.
7
<PAGE> 13
OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of our common stock as of April 6, 1999 by:
- all persons known by us to own beneficially 5% or more of
our common stock;
- each of our directors;
- the Chief Executive Officer and certain other executive
officers; and
- all directors and executive officers as a group.
Unless otherwise indicated, each of the stockholders listed below has
sole voting and investment power with respect to the shares of common stock
beneficially owned by such stockholder.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENTAGE OF
OWNED BENEFICIALLY(1) COMMON STOCK(1)
--------------------- ---------------
<S> <C> <C>
Flowers Industries, Inc. (2) .................. 46,197,466 55.1%
1919 Flowers Circle
Thomasville, Georgia 31757
Sam K. Reed (3) ............................... 1,655,272 1.9%
David B. Vermylen (4) ......................... 369,272 *
E. Nichol McCully (5) ......................... 296,525 *
Jack M. Lotker (6) ............................ 311,030 *
James T. Willard (7) .......................... 311,030 *
Robert P. Crozer (8) .......................... 10,000 *
Franklin L. Burke (9)(10) ..................... 9,500 *
Johnston C. Adams, Jr. (9) .................... 8,900 *
Wayne H. Pace (9) ............................. 8,500 *
Dr. Melvin T. Stith (9) ....................... 7,500 *
G. Anthony Campbell (8) ....................... 2,004 *
Amos R. McMullian (8) ......................... 2,000 *
C. Martin Wood III (8) ........................ 2,000 *
Jimmy M. Woodward (11) ........................ 2,000 *
All directors and executive officers as a group
(consisting of 18 persons)(12) ................ 3,448,715 4.0%
</TABLE>
- --------------------
* Less than 1%
8
<PAGE> 14
(1) Shares beneficially owned and percentage of ownership are based on
83,856,517 shares of common stock outstanding and exercisable stock
options.
(2) Flowers Industries, Inc. is currently subject to the periodic
reporting and other information requirements of the Securities and
Exchange Act of 1934. Flowers Industries' common stock is listed on
the New York Stock Exchange.
(3) Mr. Reed's shares and options are held by The Sam K. Reed and Victoria
P. Reed January 19, 1995 Inter Vivos Trust of which Mr. Reed and his
wife are trustees. Includes 1,082,222 shares subject to stock options
that are currently exercisable; excludes 457,541 shares subject to
stock options that are not exercisable within 60 days.
(4) Mr. Vermylen's shares and options are held by the David B. Vermylen
Declaration of Trust dated August 22, 1997 of which Mr. Vermylen is
trustee. Includes 268,954 shares subject to stock options that are
currently exercisable; excludes 140,227 shares subject to stock
options that are not exercisable within 60 days.
(5) Includes 231,207 shares subject to stock options that are currently
exercisable; excludes 134,649 shares subject to stock options that are
not exercisable within 60 days.
(6) Mr. Lotker's shares are held by the Jack M. Lotker Revocable Trust of
which Mr. Lotker and his wife are co-trustees. Includes 260,712 shares
subject to stock options that are currently exercisable; excludes
123,494 shares subject to stock options that are not exercisable
within 60 days.
(7) Mr. Willard's shares and options are held by the James T. Willard
Living Trust dated October 14, 1998 of which Mr. Willard and his wife
are co-trustees. Includes 260,712 shares subject to stock options that
are currently exercisable; excludes 123,494 shares subject to stock
options that are not exercisable within 60 days.
(8) A director and executive officer of Flowers Industries, Inc.
(9) Includes 7,500 shares subject to stock options that are currently
exercisable.
(10) A director of Flowers Industries, Inc. Of the total shares held by Mr.
Burke, 1,000 are held by Mr. Burke's wife and 1,000 shares are held by
the Franklin L. Burke IRA.
(11) An executive officer of Flowers Industries, Inc.
(12) Includes 2,509,407 shares subject to stock options that are currently
exercisable; excludes 1,186,979 shares subject to stock options that
are not exercisable within 60 days.
- ------------------
9
<PAGE> 15
COMPENSATION COMMITTEE REPORT
REGARDLESS OF ANYTHING SET FORTH IN ANY PREVIOUS OR FUTURE FILINGS
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934, THIS
PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT AND THE PERFORMANCE
GRAPH WHICH FOLLOWS SHALL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE.
INTRODUCTION
Our Compensation Committee determines the salaries and other
entitlements of the executive officers and designs all of our compensation
programs and policies. The Compensation Committee is currently composed of three
members: Messrs. Adams, Pace and Burke.
EXECUTIVE COMPENSATION POLICY
The objectives of our compensation policies are to:
- optimize profitability and growth;
- link the interests of management with those of stockholders;
- provide management with incentive for excellence in
individual performance;
- promote teamwork among managers; and
- attract and retain highly qualified and effective officers,
key employees and directors.
The Compensation Committee targets total remuneration (i.e., base salary, annual
incentives and long-term incentives) of our senior executives in the third
quartile of our peer group in return for comparable performance. A discussion of
each component of executive compensation follows.
BASE SALARY
Base salaries for our executive officers are established at levels
considered appropriate in light of the duties and scope of responsibilities of
each officer's position. In this regard, the Compensation Committee considers
the compensation practices and corporate financial performance of similarly
situated companies based on research provided by independent consultants. The
Compensation Committee focuses primarily on total compensation, including
incentive awards, rather than base salary alone, as the appropriate measure of
executive officer remuneration.
ANNUAL INCENTIVES
Our key managers, including the executive officers, are eligible to
receive an annual award under the 1999 Keebler Management Incentive Program,
individual percentage-of-pay targets are established based on position level
with the objective of directly relating a significant portion of executive
officer compensation to the performance of the company. Payments under the
1999 Incentive Program can vary from zero to 260% of the individual's
percentage-of-pay target based upon achieving net-income targets and personal
performance. Additional detail regarding the 1999 Incentive Program is
described in "1999 Keebler Incentive Program."
10
<PAGE> 16
STOCK-BASED INCENTIVES
We believe that stock-based, long-term incentive plans align the
interests of management and stockholders. The executive officers participate in
the 1996 Stock Option Plan discussed in "1996 Stock Option Plan" and the 1998
Stock Option Plan discussed in "1998 Omnibus Stock Incentive Plan." Pursuant to
the 1998 Stock Option Plan, our executive officers were granted stock options on
January 28, 1998 at the then-market price of $24.00 per share. The options vest
in five (5) years, or sooner, in one-third increments in the event that the
average of our share price for twenty (20) consecutive trading days exceeds
$36.00, $42.00 and $48.00, respectively. The stock option grants were made by a
subjective determination of the Compensation Committee based upon
recommendations by the President and Chief Executive Officer (for grants other
than those for the President and Chief Executive Officer) based upon the
recipient's past performance and current responsibilities.
CHIEF EXECUTIVE OFFICER COMPENSATION
In accordance with the terms of his employment agreement, Mr. Reed
received a salary in the amount of $700,000 for his services rendered during the
fiscal year ending January 2, 1999. Detailed compensation disclosure and a
discussion of the factors used to determine compensation contained in Mr. Reed's
employment agreement is described in "Executive Compensation Summary
Compensation Table" and "Executive Compensation Employment and Other
Agreements."
TAX TREATMENT OF EXECUTIVE COMPENSATION
As one of the factors in its consideration of compensation matters, the
Compensation Committee considers the anticipated tax treatment to Keebler and to
the executives of the various payments and benefits. Generally, the Compensation
Committee intends to comply with the requirements of Section 162(m) of the
Internal Revenue Code with respect to annual and long-term incentives in order
to avoid losing the tax deduction for non-performance based compensation in
excess of $1,000,000 paid to one or more of the named executive officers
appearing in the Summary Compensation Table. The Compensation Committee may,
however, determine that it is necessary to exceed the limitation on
deductibility under Section 162(m) to insure executive officers are compensated
in a manner consistent with the best interests of our stockholders.
COMPENSATION COMMITTEE
Johnston C. Adams, Jr.-Chairman
Franklin L. Burke
Wayne H. Pace
11
<PAGE> 17
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth annual and long-term compensation for
our top five executive officers in the fiscal year ended January 2, 1999, as
well as certain other compensation information for such executive officers
during the fiscal periods indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------
ANNUAL
COMPENSATION AWARDS
--------------------------------------------- -----------
SECURITIES
OTHER UNDERLYING ALL
NAME AND ANNUAL OPTIONS/ OTHER
PRINCIPAL POSITIONS YEAR SALARY(1) BONUS COMPENSATION SARS (#) COMPENSATION
------------------- ---- --------- ----- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Sam K. Reed.................... 1998 $700,000 $1,183,000 (2) 249,750 $5,000(4)
President and Chief 1997 $650,000 $1,098,500 (2) -- $4,750(4)
Executive Officer 1996 $650,000 $845,000 $167,818 (3) 1,289,813 --
David B. Vermylen.............. 1998 $355,000 $461,500 (2) 108,225 $5,000(4)
President - Keebler Brands 1997 $341,302 $355,000 (2) -- $4,750(4)
1996 $325,000 $300,000 $ 66,545 (3) 300,956 --
E. Nichol.McCully.............. 1998 $300,000 $390,000 (2) 99,900 $5,000(4)
Senior Vice President 1997 $270,010 $280,800 (2) -- $4,750(4)
and Chief Financial 1996 $240,000 $250,000 $ 77,029 (3) 300,956 --
Officer
Jack M. Lotker................. 1998 $270,000 $216,000 (2) 83,250 $5,000(4)
President - Specialty 1997 $260,000 $187,200 (2) -- $4,750(4)
Products 1996 $240,000 $211,200 $ 87,650 (3) 300,956 --
James T. Willard............... 1998 $305,000 $305,000 (2) 83,250 $5,000(4)
Senior.Vice President....... 1997 $294,008 $211,700 (2) -- $4,750(4)
- Operations................ 1996 $280,000 $271,581 $121,565 (3) 300,956 --
</TABLE>
- ----------
(1) Amounts listed for the named executive officers are annual base
salaries, including amounts to be deferred in accordance with any
deferred salary option plan of Keebler.
(2) Perquisites and other personal benefits, securities or property in the
aggregate do not exceed the threshold reporting level of the lesser of
$50,000 or 10% of total salary and bonus reported for the named
executive officers.
(3) Includes amounts reimbursed during the fiscal year for the payment of
taxes related to relocation reimbursements. For 1996, the amounts are:
Mr. Reed, $140,515; Mr. Vermylen, $42,330; Mr. McCully, $53,604; Mr.
Lotker, $63,496; and Mr. Willard, $95,964.
(4) Represents company matching contributions to the named executive
officers' accounts in the Keebler Foods Company Salaried Savings Plan.
Vesting occurs 20% per year over five years, based on years of
service.
12
<PAGE> 18
OPTION GRANTS AND EXERCISES IN LAST FISCAL YEAR
The following table indicates the options granted to each of the named
executive officers during the fiscal year ended January 2, 1999 and the
potential value of those options on an aggregated basis.
OPTION GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS GRANT DATE VALUE
----------------- ----------------
SECURITIES
UNDERLYING % OF TOTAL
NUMBER OF GRANTED TO
OPTIONS EMPLOYEES EXERCISE GRANT
GRANTED IN PRICE EXPIRATION DATE PRESENT
NAME (#) FISCAL YEAR ($/SHARE) DATE(1) VALUE(2)
---- ----------- ------------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Sam K. Reed..................... 249,750 9.1% $24.00 1/28/03 $2,130,368
David B. Vermylen............... 108,225 4.0% $24.00 1/28/03 $923,159
E. Nichol McCully............... 99,900 3.6% $24.00 1/28/03 $852,147
Jack M. Lotker.................. 83,250 3.0% $24.00 1/28/03 $710,123
James T. Willard................ 83,250 3.0% $24.00 1/28/03 $710,123
</TABLE>
- ---------------
(1) Should certain stock option targets be met, the expiration date could
be extended to January 28, 2008.
(2) The dollar amounts under this column represent the present value at
the grant date using the weighted average grant date fair value of
options granted during the year of $8.53 calculated using the
Black-Scholes option-pricing model.
The following table indicates the value of stock options exercised
during the fiscal year ended January 2, 1999 and the value of unexercised stock
options held as of January 2, 1999 by each of the named executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED OPTIONS AT VALUE OF UNEXERCISED
----------------------- IN-THE-MONEY OPTIONS
SHARES ACQUIRED VALUE JANUARY 2, 1999 AT JANUARY 2, 1999(1)
ON EXERCISE REALIZED ----------------------- ------------------------
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- --------------- ------------ ----------------------- -------------------------
<S> <C> <C> <C> <C>
Sam K. Reed........................... -- -- 1,082,022/457,541 $40,711,078/$17,214,980
David B. Vermylen..................... -- -- 268,954/140,227 $10,119,394/$5,276,041
E. Nichol McCully..................... 35,000 $1,043,412 231,207/134,649 $8,699,163/$5,066,169
Jack M. Lotker........................ -- -- 260,712/123,494 $9,809,289/$4,646,462
James T. Willard...................... -- -- 260,712/123,494 $9,809,289/$4,646,462
</TABLE>
- ------------------
(1) Based on the year-end closing market price of Keebler's common stock
($37.625 per share).
PENSION PLAN AND BENEFITS
Our principal non-contributory defined benefit plan covers qualifying
salaried and certain hourly-paid employees who have completed twelve months of
service. Our top five executive officers participate in this plan on the same
basis as do approximately 16,200 other eligible participants. Benefit amounts
are based on years of service and average monthly compensation for the five
highest consecutive years out of the last fifteen years of employment for
salaried employees and some hourly employees. Certain hourly groups can have
different benefit schedules than salaried participants. The following table
illustrates the estimated annual benefits to be paid upon normal retirement at
age 65 to
13
<PAGE> 19
individuals in specified compensation and years of service classifications. The
table does not reflect benefit limitations contained in the Internal Revenue
Code. Pursuant to a separate plan, supplemental payments in excess of those
limitations will be made to participants in order to maintain benefits upon
retirement at the levels provided under the defined benefit plan's formula. In
addition to the plans noted above, Keebler also maintains an unfunded
supplemental retirement plan for certain former executives. No current named
executive officers are covered by the supplemental plan.
PENSION TABLE
<TABLE>
<CAPTION>
ESTIMATED ANNUAL NORMAL RETIREMENT BENEFITS
---------------------------------------------------------------------------------------------
Years of service at normal retirement (1)
Compensation (2) 10 15 20 25 30 35 40
-------- -------- --------- -------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 400,000........................ $58,000 $ 87,000 $ 116,000 $145,000 $ 174,000 $ 203,000 $ 232,000
600,000........................ 88,000 132,000 176,000 220,000 264,000 308,000 352,000
800,000........................ 118,000 177,000 236,000 295,000 354,000 413,000 472,000
1,000,000........................ 148,000 222,000 296,000 370,000 444,000 518,000 592,000
1,200,000........................ 178,000 267,000 356,000 445,000 534,000 623,000 712,000
1,400,000........................ 208,000 312,000 416,000 520,000 624,000 728,000 832,000
1,600,000........................ 238,000 357,000 476,000 595,000 714,000 833,000 952,000
1,800,000........................ 268,000 402,000 536,000 670,000 804,000 938,000 1,072,000
2,000,000........................ 298,000 447,000 596,000 745,000 894,000 1,043,000 1,192,000
</TABLE>
- ------------------
(1) Years of service as of January 2, 1999 for the named executive officers
were as follows: Mr. Reed, Mr. Vermylen, Mr. McCully and Mr. Lotker,
approximately 3.0 years, and Mr. Willard, approximately 2.5 years. In
addition, a separate agreement between Mr. Willard and Keebler provides
a minimum level of benefit to Mr. Willard based on what he could have
been entitled to under his previous employment.
(2) Compensation includes all amounts shown under the columns entitled
"Annual Compensation" in the Summary Compensation Table.
At age 65, it is estimated that under the plans Mr. Reed will have 16
years of service, Mr. Vermylen will have 19.75 years of service, Mr. McCully
will have 23.5 years of service, Mr. Lotker will have 12 years of service and
Mr. Willard will have 9 years of service.
1996 Stock Option Plan
Pursuant to our the 1996 Stock Option Plan, certain management
employees are eligible to receive awards of stock options. The Compensation
Committee administers the 1996 Stock Option Plan. Subject to the terms of the
1996 Stock Option Plan, the Compensation Committee selects the management
employees eligible to receive awards under the 1996 Stock Option Plan,
determines the size of awards granted and administers and interprets the plan.
Executives have been awarded options to purchase 6,807,457 shares of
common stock, net of forfeitures, under the 1996 Stock Option Plan pursuant to
Non-Qualified Stock Option Agreements (the "1996 Option Agreements"). Up to
2,821,250 additional shares of common stock are reserved for issuance under the
1996 Stock Option Plan. In 1998, no options were granted pursuant to the 1996
Stock Option Plan. Keebler intends that any additional options granted under the
1996 Stock Option Plan are exercisable at a price per share not less than the
fair market value of the common stock at the date of the
14
<PAGE> 20
grant. The exercise price of options granted under the 1996 Stock Option Plan
range from $1.74 to $5.23. The 1996 Option Agreements provide for options that
vest based on the period of employment and options that vest based on the
attainment of specified performance objectives ("Performance Options"). In 1998,
the 1996 Option Agreements were amended to provide that: (i) options that would
have vested in fiscal 1998 vested on the last day of fiscal 1997, subject, in
the case of Performance Options, to the satisfaction of the performance criteria
applicable for fiscal 1997; (ii) one-half of the options that would have vested
in fiscal 1999 vested on the last day of fiscal 1998, subject, in the case of
Performance Options, to the satisfaction of the performance criteria applicable
for fiscal 1998; (iii) one-half of the options that would have vested in fiscal
1999 vested on the last day of fiscal 1999, subject, in the case of Performance
Options, to the satisfaction of the performance criteria applicable to such
year, and (iv) options that vest in fiscal 2000 will remain unchanged.
1998 OMNIBUS STOCK INCENTIVE PLAN
Pursuant to the 1998 Omnibus Stock Incentive Plan (the "1998 Stock
Incentive Plan") certain management employees are eligible to receive awards of
stock options, performance shares, restricted stock, stock appreciation rights
or other stock-based awards. Up to 2,850,000 shares of common stock are reserved
for issuance under the 1998 Stock Incentive Plan. The Compensation Committee
administers the 1998 Stock Incentive Plan. The Compensation Committee selects
the employees eligible to receive awards under the 1998 Stock Incentive Plan,
determines the size of the awards granted thereunder and administers and
interprets the plan. In 1998, 2,715,636 options, net of forfeitures, were
granted pursuant to the 1998 Omnibus Stock Incentive Plan. Options granted under
the 1998 Stock Incentive Plan are exercisable at a price per share not less than
the fair market value of the common stock at the date of the grant. The exercise
price of options granted under the 1998 Stock Incentive Plan in 1998 ranged from
$24.00 to $32.13.
DEFERRED COMPENSATION PLAN
Effective January 1, 1999, we adopted a deferred compensation plan (the
"Deferred Compensation Plan") for certain eligible management and highly
compensated employees. The Deferred Compensation Plan is intended to provide
eligible employees with benefits in excess of those that can be provided under
Keebler's Salaried Savings Plan (the "Savings Plan") because of Internal Revenue
Code limits. Each year participants may defer up to 15% of base salary and bonus
under the Deferred Compensation Plan, reduced by the amount of salary and bonus
that is deferred by the participant under the Savings Plan for such year. In
addition, participants may be credited with matching amounts of up to 50% of the
amount of salary and bonus deferred under the Deferred Compensation Plan and
Savings Plan that is not in excess of 6% of such compensation, reduced by
matching contributions under the Savings Plan. The rate of matching amounts for
any year will be determined based on our profitability, in the same manner that
the rate of matching contribution for the year is determined under the Savings
Plan. Matching amounts become vested in accordance with the same rules as apply
to the vesting of matching contributions under the Savings Plan and become 100%
vested in the case of death, disability or retirement or upon a change in
control of the Company. Distributions from the Deferred Compensation Plan are
made following the participant's termination of employment in a lump sum payment
or in substantially equal annual installments for up to three years, as elected
by the participant at least 12 months prior to the distribution date.
15
<PAGE> 21
1998 KEEBLER INCENTIVE PROGRAM
Under the 1998 Keebler Incentive Program (the "1998 Incentive
Program"), certain management and professional employees are eligible to receive
incentive bonuses based on individual performance and Keebler's results of
operations. The 1998 Incentive Program specifies a minimum, maximum and target
award level based on achievement of our financial performance goals. The 1998
Incentive Program is administered by the Compensation Committee of the Board of
Directors. The Compensation Committee and the President and Chief Executive
Officer approve incentive awards under the 1998 Incentive Program annually. Cash
bonuses, if any, are paid annually in the first quarter of each fiscal year.
EMPLOYMENT AND OTHER AGREEMENTS
Keebler has entered into an employment agreement with Mr. Reed which
provides for Mr. Reed's continued employment as President and Chief Executive
Officer, and continued service as a director. Mr. Reed's employment agreement
has severance terms identical to those for the seven executive officers named
below. Additionally, the agreement provides that Mr. Reed's cash compensation
and future participation in management incentive and option plans will be set by
the Compensation Committee, and will be based on the compensation of other chief
executive officers of branded food companies comparable to Keebler. The
Compensation Committee is responsible for maintaining an employment package for
Mr. Reed which ranks in the third highest quartile for chief executives of such
companies but in no event will his cash compensation be less than its current
levels. Mr. Reed's employment agreement will terminate according to the
provisions for termination of the Employment and Severance Agreements described
below.
Seven other executive officers of Keebler are parties to a termination
of employment and change of control agreement (the "Employment and Severance
Agreements"). Each such Employment and Severance Agreement provides for the
continuing employment of the executive for three years on terms and conditions
no less favorable than those in effect before our initial public offering in
February 1998. If we terminate the executive's employment without "cause" or if
the executive terminates his own employment for "good reason" (each as defined
in the Employment and Severance Agreements), at any time during the term, the
executive is entitled to receive continued benefits equal to the remainder of
the term of the Employment and Severance Agreement, but in no event less than 12
months or, if such termination occurs within two years after a "change of
control" (as defined in the Employment and Severance Agreements), in no event
less than 24 months. The Employment and Severance Agreements also provide that
in the event of (i) the death, normal retirement or disability of the
participant or (ii) termination of the executive's employment with Keebler
without "cause" or for "good reason" (each as defined in the Employment and
Severance Agreement), all remaining unvested options under the 1996 Stock Option
Plan will immediately vest with the employee. Each Employment and Severance
Agreement also provides that at our option, the employee may not compete for a
period of up to one year following termination, but if termination is without
"cause" or the employee terminates his own employment for "good reason," we must
continue to pay the employee's annual compensation during such period, counting
the payments above. Except for our obligations to make payments to the executive
upon a change of control, all obligations under the Employment and Severance
Agreements terminate in February, 2001, including the non-competition agreement
of the executive.
16
<PAGE> 22
Approximately twenty other executives are the beneficiaries of a
company policy (a "Change of Control Policy"). Such Change of Control Policy
provides that if the employee is terminated within two years after a "change of
control", if termination is without "cause" or if the employee terminates his
own employment for "good reason," the employee will be entitled to receive
continued benefits equal to such employee's annual compensation (including
bonus) and continuation of certain benefits for 12 months. Further, such Change
of Control Policy provides that regardless of a "change of control," in the
event of (i) death, normal retirement or disability of the executive or (ii)
termination of such executive's employment with us without "cause" or for "good
reason," all remaining unvested options under the 1996 Stock Option Plan will
immediately vest with the employee.
The above-referenced executives and Mr. Reed are parties to a liquidity
arrangement with Keebler and Flowers Industries. The arrangement provides that
Keebler or Flowers Industries has a right of first refusal to purchase any
shares of common stock a member of management wishes to sell. Keebler or Flowers
Industries must exercise such right by the end of the next succeeding business
day following receipt of notice of such sale. The purchase price for the shares
will be the average of the closing price of the common stock on the date notice
was delivered to Keebler and the closing price on the next succeeding business
day on which Keebler or Flowers Industries has to elect to purchase the shares.
If Keebler or Flowers Industries does not elect to purchase the shares of common
stock, the selling executive may sell such shares at any time during the next 30
days.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Mr. Adams, Mr. Pace and Mr. Burke are members of our Compensation
Committee. No member of the Compensation Committee was, during the fiscal year
ended January 2, 1999, an officer, former officer or employee of Keebler or any
of its subsidiaries. None of our executive officers served as a member of:
- the compensation committee of another entity in which one of
the executive officers of such entity served on our
Compensation Committee;
- the board of directors of another entity, one of whose
executive officers served on our Compensation Committee; or
- the compensation committee of another entity in which one of
the executive officers of such entity served as a member of
our Board.
17
<PAGE> 23
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return of
Keebler from February 3, 1998, the date of our initial public offering, through
December 31, 1998, the S&P 500, and a peer group of food companies selected by
Standard and Poor's for purposes of the comparison as more fully described
below. The graph assumes an investment of $100 on February 3, 1998 in our common
stock, in the stocks comprising the S&P 500 Index, and in the stocks comprising
the S&P Foods Index.
<TABLE>
<CAPTION>
PERFORMANCE GRAPH
MEASUREMENT PERIOD KEEBLER FOODS
(FISCAL YEAR COVERED) COMPANY S&P 500 S&P FOODS INDEX (1)
- --------------------- ------- ------- -------------------
<S> <C> <C> <C> <C>
2/3/98 100.00 100.00 100.00
3/31/98 108.84 109.52 109.14
6/30/98 99.77 112.70 109.31
9/30/98 94.33 101.09 95.70
12/31/98 136.53 122.21 108.86
</TABLE>
- ---------------
(1) Consists of Bestfoods, Campbell Soup Company, Conagra, Inc., General
Mills, Inc., H.J. Heinz Company, Hershey Foods Corporation, Kellogg
Company, The Quaker Oats Company, Ralston Purina Company, Sara Lee
Corporation, Unilever N.V.
and Wm. Wrigley Jr. Company.
18
<PAGE> 24
APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL NO. 2)
Our Board, upon the recommendation of our Audit Committee, has
appointed PricewaterhouseCoopers LLP as our independent auditors for the current
year ending January 1, 2000. A proposal will be presented at the meeting to
approve the appointment of PricewaterhouseCoopers LLP as our independent
auditors for the 1999 fiscal year. If the stockholders fail to ratify such
selection by the affirmative vote of a majority of the shares present in person
or represented by proxy at the meeting, other independent auditors will be
considered by our Board upon the recommendation of the Audit Committee. We have
been advised that a representative of PricewaterhouseCoopers LLP will be present
at the meeting, will be available to respond to appropriate questions, and will
be given an opportunity to make a statement if he or she so desires.
RECOMMENDATION
YOUR BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS
FOR 1999.
19
<PAGE> 25
OTHER MATTERS
We know of no other matters to be submitted to the stockholders at the
meeting. If any other matters properly come before the meeting, it is the
intention of the persons named in the enclosed proxy to vote the shares they
represent in accordance with the judgments of the persons voting the proxies.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on our review of reports filed with the Securities and Exchange
Commission by our directors and executive officers and by beneficial owners of
10% or more of our shares, and based on written representations received from
these same persons, we believe that all reports required under Section 16(a) of
the Securities Exchange Act were timely made other than with respect to initial
reports for G. Anthony Campbell and Franklin L. Burke which inadvertently
omitted certain information as a result of clerical errors. Amendments to the
reports were filed promptly after Keebler and the reporting persons became aware
of the clerical omissions.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING OF STOCKHOLDERS
Stockholders who intend to present proposals at the 2000 Annual Meeting
of Stockholders pursuant to Securities and Exchange Commission Rule 14a-8 must
send notice of their proposal to us so that we receive it no later than December
17, 1999. Stockholders who intend to present proposals at an annual meeting
other than pursuant to Rule 14a-8 must comply with the notice provisions in our
by-laws. These notice provisions require that, for a proposal to be properly
brought before the 2000 Annual Meeting of Stockholders, proper notice of the
proposal be received by us no sooner than January 15, 2000 and no later than
February 14, 2000. Stockholder proposals should be addressed to Thomas E.
O'Neill, Keebler Foods Company, 677 Larch Avenue, Elmhurst, Illinois 60126.
STOCKHOLDER LIST
A stockholder list will be available for your examination during normal
business hours at 677 Larch Avenue, Elmhurst, Illinois 60126, at least ten days
prior to the meeting and at the meeting.
Revocation of Proxy
You may revoke the enclosed proxy by filing a written notice of
revocation with us, by providing a later executed proxy or by attending the
meeting, requesting a ballot and voting in person.
20
<PAGE> 26
UPON WRITTEN REQUEST BY ANY STOCKHOLDER ENTITLED TO VOTE AT THE
MEETING, WE WILL FURNISH, WITHOUT CHARGE, A COPY OF THE FORM 10-K ANNUAL REPORT
FOR 1998 WHICH WE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING
FINANCIAL STATEMENTS AND SCHEDULES. IF THE PERSON REQUESTING THE REPORT WAS NOT
A STOCKHOLDER OF RECORD ON APRIL 5, 1999, THE REQUEST MUST CONTAIN A GOOD FAITH
REPRESENTATION THAT HE OR SHE WAS A BENEFICIAL OWNER OF OUR COMMON STOCK AT THE
CLOSE OF BUSINESS ON THAT DATE. REQUESTS SHOULD BE ADDRESSED TO THOMAS E.
O'NEILL, KEEBLER FOODS COMPANY, 677 LARCH AVENUE, ELMHURST, ILLINOIS 60126.
BY ORDER OF THE BOARD OF DIRECTORS
Thomas E. O'Neill
Vice President, Secretary
and General Counsel
23
<PAGE> 27
FORM OF PROXY
PROXY PROXY
KEEBLER FOODS COMPANY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 25, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas E. O'Neill, E. Nichol McCully, James T.
Spear, and each of them, as proxies with full power of substitution to represent
and to vote, as designated on the reverse side of this proxy, all of the shares
of common stock, par value $0.01 per share, of Keebler Foods Company which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be held
on May 25, 1999 at 1:00 p.m. Central Daylight Time, at First Chicago Center, One
First National Plaza, Chicago, Illinois 60670 and at any adjournments thereof
and, in such proxies' discretion, to vote upon such other business as may
properly come before the meeting, all as more fully set forth in the Proxy
Statement related to such meeting, receipt of which is hereby acknowledged.
Comments/Change of Address:
-----------------------------
-----------------------------
-----------------------------
<PAGE> 28
<TABLE>
<CAPTION>
REVERSE SIDE OF PROXY
<S> <C> <C> <C> <C>
1. Election of three Directors For All Against For All
for a term of three years each / / All / / Except* / /
Nominees: Sam K. Reed
Amos R. McMullian
Wayne H. Pace
--------------------------------------------
(vote withheld for the Nominee(s) written above.)
2. To approve the appointment of PricewaterhouseCoopers For / / Against / / Abstain / /
LLP as independent auditors of the Company for the
fiscal year ended January 1, 2000.
/ / Check here for address change
Dated ________________, 1999
Signature(s) ________________
--------------------------
The signer hereby revokes all proxies
heretofore given by the signer to vote
at said meeting or any adjournment
thereof
</TABLE>
