<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. _)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] 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
BERINGER WINE ESTATES HOLDINGS, INC
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
Notes:
<PAGE>
[LOGO OF BERINGER WINE APPEARS HERE]
BERINGER WINE ESTATES HOLDINGS, INC.
1000 PRATT AVENUE
ST. HELENA, CA 94947
---------------------------
NOTICE OF ANNUAL MEETING
---------------------------
Dear Beringer Wine Estates Holdings, Inc. Shareholders:
On Thursday, November 5, 1998, Beringer Wine Estates Holdings, Inc. will
hold its Annual Meeting of Shareholders at Beringer Vineyards, 2000 Main
Street, St. Helena, California. The meeting will begin at 10:30 a.m.
Only shareholders that own stock at the close of business on September 8,
1998 can vote at this meeting. At the meeting we will:
1. Elect a Board of Directors;
2. Approve the appointment of our independent auditors for fiscal year
1999;
3. Approve the proposed 1998 Incentive Stock Plan; and any other matter
properly brought before the meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE THREE
PROPOSALS OUTLINED IN THIS PROXY STATEMENT.
Walter T. Klenz, our Chairman and Chief Executive Officer, will also report
on our fiscal year 1998 business results and other matters of interest to
shareholders at the meeting.
By Order of the Board of Directors,
/s/ DOUGLAS W. ROBERTS
-----------------------------------
Douglas W. Roberts
Vice President, General Counsel and
Secretary
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Questions and Answers..................................................... 3
Proposals You May Vote On................................................. 5
Nominees for the Board of Directors....................................... 7
Statement on Corporate Governance......................................... 9
Board Committee Membership Roster......................................... 10
Directors' Compensation................................................... 10
Stock Ownership Guidelines................................................ 10
Directors' and Officers' Ownership of Beringer Wine Estates Holdings, Inc.
Stock.................................................................... 11
Executive Compensation: Report of the Compensation Committee.............. 11
Summary Compensation Table................................................ 14
Option Grants in Fiscal 1998 Table........................................ 15
Aggregate Option Exercises and Year-End Values Table...................... 16
Stock Performance Graph................................................... 17
Directors' and Officers' Indemnification.................................. 17
Section 16(a) Beneficial Ownership Reporting Compliance................... 18
Exhibit A 1998 Incentive Stock Plan....................................... 19
</TABLE>
2
<PAGE>
QUESTIONS AND ANSWERS
- -------------------------------------------------------------------------------
1. Q: WHO IS SOLICITING MY VOTE?
A: This proxy solicitation is being made and paid for by Beringer Wine
Estates.
- -------------------------------------------------------------------------------
2. Q: WHEN WAS THIS PROXY STATEMENT MAILED TO SHAREHOLDERS?
A: This proxy statement was first mailed to shareholders on or about
September 25, 1998.
- -------------------------------------------------------------------------------
3. Q: WHAT MAY I VOTE ON?
A: (1)The election of nominees to serve on our Board of Directors; AND
(2)The approval of the appointment of our independent auditors for
fiscal year 1999; AND
(3)The approval of the Beringer Wine Estates 1998 Incentive Stock Plan.
- -------------------------------------------------------------------------------
4. Q: HOW DOES THE BOARD RECOMMEND I VOTE ON THE PROPOSALS?
A: The Board recommends a vote FOR each of the nominees. The Board
recommends a vote FOR the appointment of PricewaterhouseCoopers LLP as
independent accountants for fiscal 1999. The Board also recommends a
vote FOR the 1998 Incentive Stock Plan.
- -------------------------------------------------------------------------------
5. Q: WHO IS ENTITLED TO VOTE?
A: Shareholders as of the close of business on September 8, 1998 (the
Record Date) are entitled to vote at the Annual Meeting.
- -------------------------------------------------------------------------------
6. Q: HOW DO I VOTE?
A: Sign and date each proxy card you receive and return it in the prepaid
envelope. If you return your signed proxy card but do not mark the boxes
showing how you wish to vote, your shares will be voted FOR the three
proposals. You have the right to revoke your proxy at any time before
the meeting by:
(1)notifying the Corporate Secretary, Douglas W. Roberts, at the
address shown above;
(2)voting in person; OR
(3)returning a later-dated proxy card.
- -------------------------------------------------------------------------------
7. Q: WHO WILL COUNT THE VOTE?
A: Representatives of our transfer agent, Boston EquiServe, will count the
votes and act as the inspector of election.
- -------------------------------------------------------------------------------
8. Q: IS MY VOTE CONFIDENTIAL?
A: Proxy cards, ballots and voting tabulations that identify individual
shareholders are mailed or returned directly to Boston EquiServe, and
handled in a manner that protects your voting privacy. Your vote will
not be disclosed except: (1) as needed to permit Boston EquiServe to
tabulate and certify the vote; and (2) as required by law. Additionally,
all comments written on the proxy card or elsewhere will be forwarded to
management. Your identity will be kept confidential unless you ask that
your name be disclosed.
- -------------------------------------------------------------------------------
9. Q: HOW MANY SHARES CAN VOTE?
A: As of June 30, 1998, 1,374,764 shares of Class A Common Stock and
18,039,913 shares of Class B Common Stock were issued and outstanding.
Every shareholder of Class A Common Stock is entitled to twenty (20)
votes for each share held. Every shareholder of Class B Common Stock is
entitled to one (1) vote for each share held. In summary, there were a
total of 45,535,193 eligible votes as of June 30, 1998.
- -------------------------------------------------------------------------------
3
<PAGE>
10. Q: WHAT IS A "QUORUM"?
A: A "quorum" is a majority of the outstanding shares. They may be present
at the meeting or represented by proxy. There must be a quorum for the
meeting to be held. A proposal must receive more than 50% of the shares
voting to be adopted. If you submit a properly executed proxy card, even
if you abstain from voting, then you will be considered part of the
quorum. An abstention has the same effect as a vote AGAINST a proposal.
A WITHHELD vote will be counted for quorum purposes. However, a WITHHELD
vote is not deemed present for purposes of determining whether
shareholder approval has been obtained.
- -------------------------------------------------------------------------------
11. Q: WHO CAN ATTEND THE ANNUAL MEETING AND HOW DO I GET A TICKET?
A: All shareholders on September 8, 1998 can attend. An invitation and
registration form is included in the mailing that includes this Notice
of Annual Meeting and Proxy Statement and our Annual Report. You may
also check the box on your proxy card or, if your shares are held
through a broker and you'd like to attend, please write to Douglas W.
Roberts, Secretary at Beringer Wine Estates Holdings, Inc., 1000 Pratt
Avenue, St. Helena, CA 94574. Include a copy of your brokerage account
statement or an omnibus proxy (which you can get from your broker), and
we will send you a ticket.
- -------------------------------------------------------------------------------
12. Q: HOW WILL VOTING ON ANY OTHER BUSINESS BE CONDUCTED?
A: We do not know of any business to be considered at the 1998 Annual
Meeting other than the proposals described in this proxy statement. If
any other business is presented at the Annual Meeting, your signed proxy
card gives authority to Peter F. Scott, our Chief Financial Officer, and
Douglas W. Roberts, our Secretary, to vote on such matters at their
discretion.
- -------------------------------------------------------------------------------
13. Q: WHO ARE THE LARGEST PRINCIPAL SHAREHOLDERS?
A: As of June 30, 1998, Texas Pacific Group and its related entities owned
1,259,902 shares of Class A Common Stock (55.3% of the voting shares)
and 8,860,814 shares of Class B Common Stock (19.5% of the voting
shares). These combine for a total of 74.8% of the voting shares.
- -------------------------------------------------------------------------------
14. Q: WHEN ARE THE SHAREHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING DUE?
A: All shareholder proposals to be considered for inclusion in next year's
proxy statement must be submitted in writing to Douglas W. Roberts,
Secretary, Beringer Wine Estates Holdings, Inc., 1000 Pratt Avenue, St.
Helena, CA 94574 prior to May 28, 1999.
Additionally, the proxy for next year's annual meeting will confer
discretionary authority to vote on any shareholder proposal which we do
not know about before August 16, 1999.
- -------------------------------------------------------------------------------
15. Q: CAN A SHAREHOLDER NOMINATE SOMEONE TO BE A DIRECTOR OF THE COMPANY?
A: As a shareholder, you may recommend any person as a nominee for director
by writing to the Nominating Committee of the Board of Directors, c/o
Beringer Wine Estates Holdings, Inc., 1000 Pratt Avenue, St. Helena, CA
94574. Recommendations must be received by May 28, 1999 for the
1999 Annual Meeting. They must be accompanied by the name, residence and
business address of the nominating shareholder. They must include a
representation that the shareholder is a record holder of the stock or
holds the stock through a broker. They must state the number and class
of shares held. The recommendations must include a representation that
the shareholder intends to appear in person or by proxy at the meeting
of the shareholders to nominate the individual(s) if the nominations are
to be made at a shareholder meeting. They must include information
regarding each nominee that would be required to be included in a proxy
statement. They must also include a description of any arrangement or
understanding between and among the shareholder and each and every
nominee. Finally, the recommendations must include the written consent
of each nominee to serve as a director, if elected.
4
<PAGE>
PROPOSALS YOU MAY VOTE ON
1. ELECTION OF DIRECTORS
There are 12 nominees for election this year. All directors are elected
annually, and serve a one-year term until the next Annual Meeting. If any
director is unable to stand for re-election, the Board may reduce its size or
designate a substitute. If a substitute is designated, proxies voting on the
original director candidate will be cast for the substituted candidate.
YOUR BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THESE DIRECTORS.
2. APPROVAL OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
AUDITORS.
The Audit Committee has recommended, and the Board has approved, the
appointment of PricewaterhouseCoopers LLP as our independent auditors for
fiscal 1999 (July 1, 1998 until June 30, 1999) subject to your approval.
PricewaterhouseCoopers LLP has served as our independent auditors since
1996. They have unrestricted access to the Audit Committee to discuss audit
findings and other financial matters.
Audit services provided by PricewaterhouseCoopers LLP during fiscal 1998
included an audit of our consolidated financial statements. They also
included an audit of the financial statements of our employee benefit plan.
They reviewed our Annual Report and certain other filings with the SEC and
certain other governmental agencies. PricewaterhouseCoopers LLP also
provided various non-audit services to us during fiscal 1998.
A representative of PricewaterhouseCoopers LLP is expected to attend the
Annual Meeting. He or she will have the opportunity to speak at the meeting
if he or she wishes. He or she will also respond to appropriate questions.
YOUR BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS FOR
FISCAL 1999.
3. APPROVE THE PROPOSED BERINGER WINE ESTATES 1998 INCENTIVE STOCK PLAN; AND
ANY OTHER MATTER PROPERLY BROUGHT BEFORE THE MEETING.
The Board of Directors approved the 1998 Plan in August 1998, subject to
your approval. The full text of the Plan is attached to this Proxy
Statement as Exhibit A.
PURPOSE: The purpose of the Plan is to continue to increase employee stock
ownership by providing employees the benefit of purchasing our Class B
Common Stock at a discount from the market price.
ELIGIBLE EMPLOYEES AND TAX TREATMENT: The Plan will be offered to all our
regular, full-time employees who are employed on November 1, 1998. The Plan
will also be offered to all regular, full-time employees employed after
November 1, 1998, once they have been employed by us for six months or
longer. The Plan is designed to qualify under Section 423 of the Internal
Revenue Code. As a result, federal income taxes on the purchase discount
and any appreciation of the stock are deferred until the employee sells the
stock.
MAXIMUM NUMBER OF SHARES: The maximum number of shares to be issued under
the Plan is 300,000. This number is subject to adjustment for any changes
affecting our capital structure.
TERM: The Plan begins on November 1, 1998. The Board of Directors can
terminate it at any time.
5
<PAGE>
PAYROLL DEDUCTION OR LUMP SUM: Employees may elect to purchase shares for
between one and fifteen percent of their base pay for each three month
purchase period (subject to a $25,000 annual limit). Our Plan provides for
lump sum or payroll deductions.
PURCHASE PERIODS: Shares will be purchased on the last business day of each
three month purchase period, beginning January 29, 1999.
PURCHASE PRICE: Employees may purchase shares at a price that is the lower
of (1) 85% of the closing price on the first day of the first three month
purchase period; or (2) 85% of the closing price on the last day of each
three month purchase period.
STOCK ISSUANCE AND SALE: Employees must pay for stock certificates if they
desire them and the brokerage commissions when they sell the shares.
AMENDMENTS: The Board may amend the Plan, except to the extent the tax-
qualified status of the Plan would be jeopardized. Shareholder approval is
required to change the eligibility requirements or increase the maximum
number of shares that may be issued.
YOUR BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE 1998
INCENTIVE STOCK PLAN.
6
<PAGE>
NOMINEES FOR THE BOARD OF DIRECTORS
WALTER T. KLENZ DIRECTOR SINCE JANUARY 1996
Age 53
Mr. Klenz has been a director since January 1996 and became Chairman of the
Board in August 1997. Mr. Klenz joined Beringer Wine Estates in 1976 as
director of marketing for the Beringer brand, and has served as its President
and Chief Executive Officer since 1990. From 1984 until 1990, he served as
Senior Vice President, Finance/Operations. He currently also serves on the
Boards of Directors of America West Holdings Corporation, and its
subsidiaries, America West Airlines, Inc. and The Leisure Company.
RICHARD L. ADAMS DIRECTOR SINCE JANUARY 1996
Age 47
Mr. Adams joined our Board of Directors in January 1996. Mr. Adams is managing
partner of the law firm Worsham, Forsythe & Wooldridge, L.L.P. He has been
employed by that firm since 1978 and has been managing partner since 1988.
DAVID BONDERMAN DIRECTOR SINCE JANUARY 1996
Age 55
Mr. Bonderman joined our Board of Directors in January 1996. Mr. Bonderman is
a principal of Texas Pacific Group, a partnership he co-founded in 1992. He
currently serves on the Boards of Directors of Continental Airlines, Inc.;
Realty Information Group; Denbury Resources, Inc.; Bell & Howell Company;
Virgin Cinemas Limited; Washington Mutual, Inc.; Ducati Motorcycles, S.p.A.;
Oxford Health Plan, Inc.; Ryanair, Ltd.; and Urogensys, Inc.
RANDY CHRISTOFFERSON DIRECTOR SINCE JANUARY 1996
Age 41
Mr. Christofferson joined our Board of Directors in January 1996. Since 1995
Mr. Christofferson has served as President of First USA Bank, and from 1990 to
1995 held various positions in the travel and related service business of
American Express. He currently serves on the Board of Directors of First USA
Bank and is chairman of the Board of USAVE.
JAMES G. COULTER DIRECTOR SINCE JANUARY 1996
Age 38
Mr. Coulter joined our Board of Directors in January 1996 and served as Co-
Chairman of the Board from January 1996 to August 1997. Mr. Coulter is a
principal of Texas Pacific Group, a partnership he co-founded in 1992. Mr.
Coulter currently serves on the Boards of Directors of several companies,
including America West Airlines, Inc.; J. Crew Group, Inc.; Oxford Health
Plans, Inc.; Paradyne Partners, L.P.; and Virgin Cinemas Limited.
TIMM F. CRULL DIRECTOR SINCE JANUARY 1996
Age 67
Mr. Crull joined our Board of Directors in January 1996. Mr. Crull was
Chairman of the Board of Nestle USA from 1991 to 1994, and is currently a
member of the Boards of Directors of BankAmerica Corporation; Hallmark Cards;
and Smart & Final Inc.
WILLIAM A. FRANKE DIRECTOR SINCE JANUARY 1996
Age 61
Mr. Franke joined our Board of Directors in January 1996. Mr. Franke has been
Chairman and Chief Executive Officer of America West Holdings Corporation
since it was formed in February 1997. Mr. Franke has been Chairman of the
Board of its principal subsidiary, America West Airlines, Inc. since 1992, as
well as of The
7
<PAGE>
Leisure Company, another subsidiary, since its formation in January 1998. He
also served as Chief Executive Officer of America West Airlines, Inc. from
1994 to 1997. Since 1987, Mr. Franke also has been the owner and president of
Franke & Company, Inc., a financial services company, and a managing partner
of Newbridge Latin America, L.P., a private equity fund. He is also a director
of Central Newspapers, Inc. and Phelps Dodge Corporation. He also serves as a
Director and Chairman of the Board of Airplanes Limited and a controlling
trustee and Chairman of Airplanes U.S. Trust, entities involved in aircraft
financing and leasing.
E. MICHAEL MOONE DIRECTOR SINCE JANUARY 1996
Age 58
Mr. Moone joined our Board of Directors in January 1996. Mr. Moone has been
Chairman of Napa Valley Kitchens in St. Helena, California, Chairman of Luna
Vineyards in Napa, California and Chairman and a managing partner of Silverado
Equity Partners, L.P. ("Silverado Partners") since 1995. From 1990 to 1992,
Mr. Moone served as President and Chief Executive Officer of Stouffer Foods
Corporation, where he also served as President of Nestle Frozen Food Company.
He is currently a member of the Board of Directors of Ruiz Mexican Foods, Inc.
WILLIAM S. PRICE III DIRECTOR SINCE JANUARY 1996
Age 42
Mr. Price joined our Board of Directors in January 1996 and served as Co-
Chairman of the Board from January 1996 to August 1997. Mr. Price is a
principal of Texas Pacific Group, a partnership he co-founded in 1992.
Mr. Price is currently Chairman of the Board of Favorite Brands International,
Inc. and serves on the Boards of Directors of Continental Airlines, Inc.;
Belden & Blake Corporation; Del Monte Holdings; Denbury Resources, Inc.;
Zilog, Inc.; and Vivra Specialty Partners, Inc. Mr. Price is also an officer
of the general partner of Newbridge Investment Partners.
JESSE ROGERS DIRECTOR SINCE JANUARY 1996
Age 41
Mr. Rogers joined our Board of Directors in January 1996. Since 1989, Mr.
Rogers has been an officer of Bain & Company, Inc., an international strategic
consulting firm, where he currently serves as a director. He is currently a
member of the Board of Directors of Ruiz Food Products, Inc. and the United
Way of the Bay Area.
GEORGE A. VARE DIRECTOR SINCE JANUARY 1996
Age 61
Mr. Vare joined our Board of Directors in January 1996. Since 1995, Mr. Vare
has been President of Luna Vineyards and a managing partner of Silverado
Partners. From 1991 to 1994, Mr. Vare was President and Chief Executive
Officer of the Henry Wine Group, then the fourth largest California wine
wholesaler.
EMILY WOODS DIRECTOR SINCE JANUARY 1998
Age 37
Ms. Woods joined our Board of Directors in January 1998. Ms. Woods has been
Chairman of J. Crew Group, Inc., a leading mail order and store retailer of
men's and women's apparel, shoes and accessories, since 1997. Ms. Woods co-
founded the J. Crew brand in 1983.
8
<PAGE>
STATEMENT OF CORPORATE GOVERNANCE
Beringer Wine Estates' business is managed under the direction of the Board
of Directors. The Board delegates the conduct of business to Beringer Wine
Estates' senior management team.
Our Board usually meets four times a year in regularly scheduled meetings.
It may meet more often if necessary. The Board held five meetings in fiscal
1998. The CEO in consultation with the Executive Committee usually determines
the agenda for the meetings. Board members receive the agenda and supporting
information in advance of the meetings. Board members may raise other matters
at the meetings. The CEO, CFO and other members of senior management make
presentations to the Board at the meetings and a substantial portion of the
meeting time is devoted to the Board's discussion of these presentations.
Significant matters that require Board approval are voted on at the meetings.
Each year the independent, outside directors meet in executive session,
where the CEO is not present, to review the evaluation and recommendations
made by the Compensation Committee regarding the CEO. The Chairman of the
Executive Committee chairs these executive sessions. Whenever the CEO is also
the Chairman of the Board, the Chairman of the Executive Committee must be an
independent, outside director.
Board members have complete access to senior management. They may also seek
independent, outside advice.
COMMITTEE STRUCTURE. The Board considers all major decisions. The Board has
established four standing committees so that certain areas can be addressed in
more depth than may be possible at a full Board meeting. Each committee is
chaired by an independent, outside director.
EXECUTIVE COMMITTEE. This committee exercises the authority of the Board
during intervals between Board meetings. This committee held two meetings
in fiscal 1998.
AUDIT COMMITTEE. This committee assures the credibility of our financial
reporting by providing oversight of our financial reporting process and our
internal controls. The Audit Committee reports on its activities to the
Board. This committee held one meeting in fiscal 1998.
COMPENSATION COMMITTEE. This committee reviews the compensation of the CEO
and senior management, as well as our general employee compensation and
benefits policies and practices. They approve the goals for our incentive
plans and they monitor results against those goals. This committee held two
meetings in fiscal 1998.
NOMINATING COMMITTEE. This committee identifies individuals with the
experience, judgment and skills to become Board members. It recommends to
the Board and our shareholders the slate of directors for nomination and
election each year. This committee was formed in August 1998.
9
<PAGE>
BOARD COMMITTEE MEMBERSHIP ROSTER
(AS OF JUNE 30, 1998)
<TABLE>
<CAPTION>
NAME EXECUTIVE AUDIT COMPENSATION NOMINATING (1)
---- --------- ----- ------------ --------------
<S> <C> <C> <C> <C>
Richard L. Adams.............. X
David Bonderman............... X
Randy Christofferson.......... X
James G. Coulter.............. X* X* X*
Timm F. Crull................. X
William A. Franke............. X
Walter T. Klenz............... X
E. Michael Moone.............. X X
William S. Price III.......... X
Jesse Rogers.................. X
George A. Vare................ X*
Emily Woods...................
</TABLE>
--------
* denotes Chairman of the committee.
(1)The Nominating Committee was established on August 13, 1998.
DIRECTORS' COMPENSATION
Each director (except Walter T. Klenz, who is an employee) receives $2,500
for each Board meeting attended. Directors may elect to receive this
compensation in cash, in shares of our Class B Common Stock or 50% in cash and
50% in stock. All eligible directors currently elect to receive all the Board
meeting compensation in stock. The stock is valued at its closing price on the
day of the Board meeting. Board members are also paid $1,000 for each
committee meeting they attend. Board members are reimbursed for travel
expenses to the meetings. They also each receive ten cases of our wines each
year. Employee directors are not eligible for any additional compensation for
service on the Board or its committees.
STOCK OWNERSHIP GUIDELINES
The Board has adopted stock ownership guidelines for directors. Directors
are expected to have an ownership interest equal to at least five times their
annual compensation for attendance at Board meetings in our stock within five
years of joining the Board. This ownership interest may include stock held in
family trusts and stock held by partnerships in which the director is a
general partner.
10
<PAGE>
DIRECTORS' AND OFFICERS' OWNERSHIP OF BERINGER WINE ESTATES' STOCK
The following table shows how much each of our directors and named executive
officers owned as of June 30, 1998. This table includes both Class A and Class
B Common Stock. The table also includes option shares that are exercisable
within 60 days. Shares held in family trust or held in partnerships where the
director or officer is a general partner or exercises voting control are
included in the table.
<TABLE>
<CAPTION>
SHARES OF PERCENT OF
COMMON STOCK COMMON STOCK
NAME BENEFICIALLY OWNED OWNED
- ---- ------------------ ------------
<S> <C> <C>
Walter T. Klenz................................ 110,625 ***
Robert E. Steinhauer........................... 57,518 ***
Edward B. Sbragia.............................. 56,556 ***
Peter F. Scott................................. 16,667 ***
Richard G. Carter.............................. 47,314 ***
Richard L. Adams............................... 5,357 ***
David Bonderman................................ *10,120,716 52.13%
Randy Christofferson........................... 2,757 ***
James G. Coulter............................... *10,120,716 52.13%
Timm F. Crull.................................. 151,797 ***
William A. Franke.............................. 2,702 ***
E. Michael Moone............................... **628,189 3.24%
William S. Price III........................... *10,120,716 52.13%
Jesse Rogers................................... 24,544 ***
George A. Vare................................. **323,422 1.67%
Emily Woods.................................... 121 ***
Texas Pacific Group and its related entities... 10,120,716 52.13%
All directors and executive officers as a group
including those named above................... 11,529,125 59.38%
</TABLE>
- --------
* denotes stock owned by TPG Partners L.P. and four of its related limited
partnerships ("TPG"). Mr. Bonderman, Mr. Coulter and Mr. Price are general
partners of TPG Advisors, Inc., which has voting and investment power over
shares owned by TPG. Each of them disclaims their beneficial ownership
except to the extent of their respective proportionate interest in each
entity. Texas Pacific Group maintains an office at 201 Main Street, Suite
2420, Fort Worth, Texas 76102.
** includes stock owned by Silverado Partners Advisors, Inc. Mr. Moone and Mr.
Vare are directors of Silverado Partners Advisors, Inc. Each of them
disclaims their beneficial ownership except to the extent of their
respective proportionate interest in this entity.
*** owns less than 1%.
EXECUTIVE COMPENSATION: REPORT OF THE COMPENSATION COMMITTEE
COMPENSATION PHILOSOPHY. The Compensation Committee of the Board of
Directors has instituted a management compensation plan that:
Provides a competitive level of total compensation in order to attract and
retain the best managers;
Links compensation to performance. Compensation is comprised of a balance of
rewards for both short-term and long-term results;
Encourages long-term commitment to Beringer Wine Estates;
Encourages the strong financial and operational performance of Beringer Wine
Estates; and
Recognizes both individual and team performance.
11
<PAGE>
COMPENSATION METHODOLOGY. Each year the Compensation Committee reviews
market data and assesses Beringer Wine Estates' competitive position in each
component of executive compensation. These components are base salary, annual
bonus and long-term incentive compensation. Executive compensation surveys
compiled by independent consultants are purchased to assist in this
benchmarking process. Similar survey results are also obtained through
participation in selected surveys. This information is supplemented with
general compensation information that is available from the business press.
Decisions are also based on factors such as individual performance, the level
of responsibility or the unique skills or experience of the executive.
COMPONENTS OF COMPENSATION.
.BASE SALARY. The annual base salary is designed to compensate executives
for their sustained performance and level of responsibility. Base salary is
based on individual performance and the executive's grade level. The
Committee approves all salary increases for executive officers.
.ANNUAL BONUS. The annual bonus is given in order to promote the
achievement of Beringer Wine Estates' performance objectives. We set
certain performance criteria that must be met before any payments are made.
The system is to fix a percentage of base salary as the guideline annual
incentive. These range from 30% to 50% of base salary. Payments may range
from 0 to 150% of the guideline incentive, depending on the pre-tax
operating income achievement.
.LONG-TERM INCENTIVE COMPENSATION. The CEO recommends to the Committee the
number of option shares, if any, to be granted to each executive. These
recommendations are based on:
The executive's ability to impact the financial and operational
performance of Beringer Wine Estates;
The executive's past performance; and
The CEO's expectation of the executive's future performance and
contributions.
The CEO also recommends the vesting schedule and exercise price of the
options. In fiscal 1998 one half of the options granted to each senior
manager had an exercise price of the fair market value on the date of
grant. These options vested in equal installments over four years. The
other half had an exercise price of 150% of the fair market value on the
date of grant. These options vest in the fifth year following the date they
were granted. These rewards were directly tied to increasing shareholder
value. The Committee approves all option grants for executive officers and
the guidelines to be used for option grants for other senior management and
employees. In fiscal 1998, options were granted to all full-time, regular
employees of Beringer Wine Estates at the date the grants were made.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The Committee meets annually to
evaluate the performance of the CEO. Based on this evaluation, the Committee
may recommend for approval a salary increase, annual bonus and long-term
incentive awards, if any, at an executive session of the Board. Only
independent, outside directors participate in these executive sessions. The
CEO's compensation reflects a higher degree of policy and decision-making
authority and a higher level of responsibility with respect to the strategic
direction of Beringer Wine Estates and its financial and operating results. It
also reflects the CEO's long term commitment and contributions to the success
of Beringer Wine Estates.
In June 1997 the Board, in executive session, approved a 21.74% base salary
increase for Mr. Klenz for fiscal 1998. Based on Beringer Wine Estates'
financial performance in fiscal 1997, Mr. Klenz received an annual bonus of
$97,500. Due to the change from calendar year to fiscal year ending June 30,
Mr. Klenz bonus was earned for the six-month period of January 1, 1997 through
June 30, 1997. The Board also approved an option grant of 34,000 shares of
Class B Common Stock. These options were granted at the then fair market value
of $22 per share. This option grant vests in equal amounts over four years.
The Board also approved an option grant of 34,000 shares of Class B Common
Stock at an exercise price of $33 per share that vests on September 15, 2002.
12
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. William A.
Franke, Chairman and CEO of America West Holdings Corporation, and Chairman of
its subsidiaries America West Airlines, Inc. and The Leisure Company, is a
member of the Compensation Committee. Walter T. Klenz, Chairman and CEO of
Beringer Wine Estates Holdings, Inc. was elected to the Boards of Directors of
America West Holdings Corporation, America West Airlines, Inc. and The Leisure
Company in April 1998. Mr. Klenz currently serves as a member of the
compensation committees of America West Holdings Corporation and America West
Airlines, Inc. and also as the chairman of the compensation committee of The
Leisure Company.
We used approximately $38.7 million to retire the Series A Preferred Stock
in connection with the IPO. Entities associated with Texas Pacific Group, an
entity affiliated with Mr. Moone and Mr. Vare, Mr. Klenz, Mr. Sbragia, Mr.
Steinhauer and Mr. Carter, were holders of Preferred Stock and received
approximately $25.5 million in the aggregate as part of this redemption. They
used part of the proceeds of the redemption to participate in the direct
offering of 600,000 shares of Class B Common Stock. This stock was sold at the
IPO price less the underwriting discount. This direct offering occurred in
connection with the IPO.
Rutherford Quarry Vineyard, which is owned by a family trust for which Timm
Crull is a trustee, has a long-term crop share agreement with Beringer Wine
Estates. During fiscal 1998 the trust was paid $5,706 under this agreement. We
expect to pay the trust approximately $50,000 in fiscal 1999. The increase is
the result of the maturation of the vineyard and the expected increased crop.
William S. Price III controls Sand Hill L.L.C.-Durrell Vineyards. This
company purchased Durrell Vineyards, a well-established and renowned vineyard
in the Carneros and Sonoma Valley appellations of Sonoma County, California,
in fiscal 1998. In fiscal 1998 Mr. Price's company entered into a multi-year
agreement with Beringer Wine Estates to supply grapes from Durrell Vineyards.
We expect to pay Mr. Price's company approximately $295,700 in fiscal 1999 for
these grapes. Mr. Price did not own Durrell Vineyards at the time of the 1997
harvest so no payments for grapes were made to him or his company in fiscal
1998.
We entered into a warehouse lease agreement in December 1990 with a
partnership in which E. Michael Moone and Walter T. Klenz hold interests. We
paid this partnership rent expense payments of $948,000 in fiscal 1998 and we
expect to pay the same amount in fiscal 1999.
We purchase certain gourmet food products for resale at our hospitality
facilities from Napa Valley Kitchens. Mr. Moone is Chairman of the Board of
Napa Valley Kitchens. In fiscal 1998 we purchased $67,924 worth of food
products from Napa Valley Kitchens.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS:
James G. Coulter, Chairman
Timm F. Crull
William A. Franke
E. Michael Moone
Jesse Rogers
13
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------ ---------------------- -------
RESTRICTED SECURITIES LTIP ALL OTHER
NAME AND PRINCIPAL BASE SALARY BONUS STOCK UNDERLYING PAYOUTS COMPENSATION
POSITION YEAR ($) ($)(3) (4) AWARDS ($) OPTIONS ($) ($) ($)(2)
- ------------------ ---- ----------- -------- --- ---------- ----------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Walter T. Klenz......... 1998 $350,000 $ 97,500 0 68,000 0 $ 26,113
President, Chief 1997 $287,500 $255,000 0 0 0 $474,275
Executive Officer and 1996 $250,508 $116,057 0 123,268 0 $ 9,588
Chairman of the Board
of Directors
Robert E. Steinhauer.... 1998 $200,000 $ 31,500 0 24,000 0 $ 14,195
Senior Vice-President-- 1997 $147,000 $ 92,576 0 0 0 $281,187
Vineyard Operations 1996 $144,508 $ 70,391 0 65,374 0 $ 8,544
Edward B. Sbragia....... 1998 $225,000 $ 34,650 0 24,000 0 $ 15,946
Senior Vice-President 1997 $156,666 $103,210 0 0 0 $258,181
and Winemaster 1996 $135,508 $ 63,766 0 65,374 0 $ 7,876
Richard G. Carter....... 1998 $165,500 $ 65,511 0 16,000 0 $ 12,919
Vice-President--Sales 1997 $160,000 $ 73,319 0 0 0 $155,999
1996 $157,508 $ 67,050 0 44,392 0 $ 6,945
Peter F. Scott.......... 1998 $225,000 $ 20,000 0 24,000 0 $ 10,782
Senior Vice-President-- 1997 $ 68,750 0 0 90,000 0 $ 458
Finance & Operations, 1996 0 0 0 0 0 0
Chief Financial Officer
(5)
</TABLE>
- --------
(2) These amounts represent matching contributions made by Beringer Wine
Estates under its 401-K and Executive Deferred Compensation Plans. In
fiscal 1997 the former owner of Beringer Wine Estates paid to Mr. Klenz,
Mr. Steinhauer, Mr. Sbragia and Mr. Carter a stay bonus of $458,000,
$274,000, $250,000 and $149,000, respectively. The stay bonus was paid
pursuant to agreements that required the individuals to continue their
employment with Beringer Wine Estates until September 1996.
(3) The bonus paid in fiscal 1998 was for the six month period beginning
January 1, 1997 and ending June 30, 1997. The period was changed in
connection with the change from a calendar year to a fiscal year ending
June 30. This does not include Mr. Carter's bonus, which is paid twice a
year based on sales results.
(4) The "Other Annual Compensation" column was omitted since this compensation
did not exceed the lesser of $50,000 or 10% of the total of any named
executive officer's salary and bonus.
(5) Mr. Scott joined Beringer Wine Estates in June 1997.
14
<PAGE>
The following table presents additional information concerning the option
awards shown in the Summary Compensation Table for fiscal year 1998. These
options to purchase Class B Common Stock were granted to the Named Executive
Officers under the 1996 Stock Option Plan.
OPTION GRANTS IN FISCAL 1998
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
---------------------------------------------- AT ASSUMED ANNUAL RATES OF
PERCENT OF STOCK PRICE APPRECIATION
SECURITIES TOTAL FOR OPTION TERMS(6)
UNDERLYING OPTIONS -------------------------------
OPTIONS GRANTED TO EXERCISE 0% 5% 10%
GRANTED(7) EMPLOYEES OR BASE STOCK STOCK STOCK
-------------- IN FISCAL PRICE EXPIRATION PRICE PRICE PRICE
NAME DATE NUMBER YEAR ($/SHARE) DATE $22 $35.84 $57.06
- ---- ------- ------ ---------- --------- ---------- ----- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Walter T. Klenz......... 9/15/97 34,000 5.0595 $22.00 9/15/07 $0.00 $470,413.18 $1,192,119.36
President, Chief 9/15/97 34,000 5.0595 $33.00 9/15/07 $0.00 $ 96,413.19 $ 818,119.36
------ ------ ----------- -------------
Executive Officer and 68,000 10.1190 $566,826.37 $2,010,238.72
Chairman of the Board
of Directors
Robert E. Steinhauer.... 9/15/97 12,000 1.7857 $22.00 9/15/07 $0.00 $166,028.19 $ 420,748.01
Senior Vice-President-- 9/15/97 12,000 1.7857 $33.00 9/15/07 $0.00 $ 34,028.19 $ 288,748.01
------ ------ ----------- -------------
Vineyard Operations 24,000 3.5714 $200,056.38 $ 709,496.02
Edward B. Sbragia....... 9/15/97 12,000 1.7857 $22.00 9/15/07 $0.00 $166,028.19 $ 420,748.01
Senior Vice-President 9/15/97 12,000 1.7857 $33.00 9/15/07 $0.00 $ 34,028.19 $ 288,748.01
------ ------ ----------- -------------
and Winemaster 24,000 3.5714 $200,056.38 $ 709,496.02
Richard G. Carter....... 9/15/97 8,000 1.1905 $22.00 9/15/07 $0.00 $110,685.45 $ 280,498.67
Vice-President--Sales 9/15/97 8,000 1.1905 $33.00 9/15/07 $0.00 $ 22,685.46 $ 192,498.67
------ ------ ----------- -------------
16,000 2.3810 $133,370.91 $ 472,997.34
Peter F. Scott.......... 9/15/97 12,000 1.7857 $22.00 9/15/07 $0.00 $166,028.18 $ 420,748.01
Senior Vice-President-- 9/15/97 12,000 1.7857 $33.00 9/15/07 $0.00 $ 34,028.19 $ 288,748.01
------ ------ ----------- -------------
Finance & Operations, 24,000 3.5714 $200,056.37 $ 709,496.02
Chief Financial Officer
</TABLE>
- --------
(6) These dollar amounts are not intended to forecast future appreciation of
the common stock price. Executives will not benefit unless the common
stock price increases above the stock options exercise price. Any gain to
the executives resulting from common stock appreciation would benefit all
shareholders of the common stock. The additional value realized by all
shareholders of Beringer Wine Estates common stock as a group, based on
these assumed appreciation levels is as follows:
<TABLE>
<CAPTION>
APPRECIATION
LEVEL ADDITIONAL VALUE
------------ ----------------
<S> <C>
0%........... 0
5%........... $268,615,293
10%........... $680,723,892
</TABLE>
(7) The option grants to the Named Executive Officers were made one half at
the fair market value; and one half at the fair market value plus 50%. The
options granted at fair market value are exercisable in four equal
installments at each of the next four annual anniversaries of the date of
grant. The options granted at the fair market value plus 50% are
exercisable on the fifth anniversary of the grant.
15
<PAGE>
AGGREGATED OPTION EXERCISES AND YEAR-END VALUES
The following table shows information for the Named Executive Officers,
concerning:
(i) exercises of stock options during 1998; and
(ii) the amount and values of unexercised stock options as of June 30, 1998.
AGGREGATED OPTION EXERCISES IN 1998 AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SECURITIES VALUE OF UNEXERCISED
SECURITIES UNDERLYING OPTIONS IN-THE-MONEY
UNDERLYING GRANTED (#) OPTIONS AT YEAR-END ($)
OPTIONS VALUE ----------------------- -----------------------
NAME EXERCISED (#) REALIZED ($) EXERCISABLE UNEXERCISED EXERCISABLE UNEXERCISED
- ---- ------------- ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Walter T. Klenz......... 0 $0.00 49,306 141,962 $1,926,040 $4,015,462
President, Chief
Executive Officer and
Chairman of the Board
of Directors
Robert E. Steinhauer.... 0 $0.00 24,668 64,706 $963,606 $1,987,610
Senior Vice-President--
Vineyard Operations
Edward B. Sbragia....... 0 $0.00 24,668 64,706 $963,606 $1,987,610
Senior Vice-President
and Winemaster
Richard G. Carter....... 0 $0.00 18,908 41,484 $738,603 $1,260,489
Vice-President--Sales
Peter F. Scott.......... 0 $0.00 16,666 97,334 $634,358 $2,228,824
Senior Vice-President--
Finance & Operations,
Chief Financial Officer
</TABLE>
16
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph was prepared by Standard & Poor's Compustat Group. It
shows how an initial investment of $100 in Beringer Wine Estates' stock would
have compared to an equal investment in the S&P 500 Index or in an index of
peer group companies. We selected Brown Forman Corporation, Canandaigua Brands,
Chalone Wine Group LTD, R.H. Phillips Inc. and Robert Mondavi Corporation as
our peer group. The graph compares the total cumulative return and assumes all
dividends, if any, were reinvested.
[PERFORMANCE GRAPH INDEXED RETURNS]
<TABLE>
<CAPTION>
QUARTER ENDING
-----------------------------------------
COMPANY/INDEX 29 OCT 97 DEC 97 MAR 98 JUN 98
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BERINGER WINE EST HLD -CL B 100 146.15 198.56 169.47
S&P 500 INDEX 100 105.90 120.67 124.66
PEER GROUP 100 112.53 110.93 117.02
</TABLE>
DIRECTORS' AND OFFICERS' INDEMNIFICATION
Our bylaws require that we indemnify our directors and officers, to the
extent permitted under Delaware law. They are indemnified against any costs,
expenses (including legal fees) and other liabilities in connection with their
service to Beringer Wine Estates. We have purchased liability insurance to
insure against these liabilities. We have also entered into indemnification
agreements with each of our directors and executive officers. The insurance and
indemnification agreements supplement the provisions of our Certificate of
Incorporation that eliminate the potential liability of directors and officers
to Beringer Wine Estates or its shareholders in certain situations, as
permitted by law.
17
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
We believe that during fiscal 1998, all SEC filings of directors, officers
and ten percent shareholders complied with the requirements of Section 16 of
the Securities Exchange Act. This belief is based on our review of forms
filed, or written notice that no forms were required.
By Order of the Board of Directors,
/s/ DOUGLAS W. ROBERTS
-----------------------------------
Douglas W. Roberts
Vice President, General Counsel and
Secretary
St. Helena, California
September 25, 1998
18
<PAGE>
EXHIBIT A
BERINGER WINE ESTATES
1998 INCENTIVE STOCK PLAN
1. Purpose
The purpose of the Beringer Wine Estates 1998 Incentive Stock Plan is to
motivate employees of Beringer Wine Estates Holdings, Inc. and its
Participating Subsidiaries through added incentives to make a maximum
contribution to Company objectives.
2. Definitions
As used in this Plan, the following words shall have the following meanings:
(a) "Benefits" means the benefits awarded to participants as described in
Sections 5 through 9 of the Plan. Benefits may be awarded individually or in
any combination
(b) "Board of Directors" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended. Reference to
a section of the Code shall include that section and any comparable section or
sections of any future legislation that amends, supplements or supersedes that
section.
(d) "Committee" means a committee appointed by the Board of Directors to
administer this Plan, which committee is composed solely of two or more Non-
Employee Directors.
(e) "Common Stock" means the Class B Common Stock of the Company.
(f) "Company" means Beringer Wine Estates Holdings, Inc.
(g) "Date of Grant" has the meaning set forth in Section 8(b) of this Plan.
(h) "Effective Date" means November 1, 1998.
(i) "Eligible Employee" has the meaning set forth in Section 4(a) of this
Plan.
(j) "Employee" means any common-law employee of the Company or a
Participating Subsidiary who (i) is classified as a regular employee, (ii) is
customarily employed for more than twenty (20) hours per week and more than
(5) five months in a calendar year and (iii) has completed at least six (6)
months of Service; provided, however, that an Employee on November 1, 1998 who
has met the requirement of paragraphs (i) and (ii) of this Section 2(j) but
who has not met the requirements of paragraph (iii) of this Section 2(j) on
November 1, 1998 shall be eligible to enroll in the Plan on such date or any
subsequent enrollment date.
(k) "Employee Stock Purchase Plan" has the meaning set forth in Section 8(a)
of this Plan.
(l) "Incentive Stock Option" has the meaning set forth in Section 5 of this
Plan.
(m) "Fair Market Value" means the fair market value of one share of Common
Stock as of a particular day, which shall generally be the last transaction
price of Common Stock as reported on the Nasdaq National Market.
(n) "Non-Employee Directors" means any director of the Company who meets the
definition of that term as set forth in Rule 16b-3(b)(3)(i) promulgated under
the Securities Exchange Act
19
<PAGE>
(o) "Nonqualified Stock Option" has the meaning set forth in Section 5 of
this Plan.
(p) "Offering" has the meaning set forth in Section 8 of this Plan.
(q) "Options" means Incentive Stock Options and Nonqualified Stock Options.
(r) "Participant" means each eligible Employee who receives an amount of
Benefit under the Plan.
(s) "Participating Subsidiary" means a Subsidiary that is participating in
the Plan. A Subsidiary of the Company as of the Effective Date will be deemed
to have adopted the Plan for its eligible Employees as of the Effective Date
and any corporation that becomes a Subsidiary after the Effective Date will be
deemed to have adopted the Plan for its eligible Employees immediately upon
becoming a Subsidiary, unless the Company acts to exclude the Subsidiary and
its eligible Employees from participation in the Plan.
(t) "Plan" means the Beringer Wine Estates 1998 Incentive Stock Plan, as
amended from time to time.
(u) "Reporting Person" means any person who is a director or officer (as
defined in Rule 16a-l(f) promulgated under the Securities Exchange Act), of
the Company or any Participant who is the beneficial owner, directly or
indirectly of more than ten percent of the Common Stock of the Company.
(v) "Section 423 Options" has the meaning set forth in Section 8 of this
Plan.
(w) "Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(x) "Service" means the period of time that has elapsed from the date an
Employee first performs duties for the Company or a Subsidiary for which such
Employee is paid or entitled to payment by the Company or a Subsidiary and
ending on the date such Employee terminates employment, is discharged, retires
or dies; provided, however, that only the period of time during which an
Employee meets the requirements of paragraphs (i) and (ii) of Section 2(j)
shall be counted in determining such Employee's Service. The Service of an
Employee who terminates employment, is discharged or retires and is re-
employed by the Company or Subsidiary within twelve (12) consecutive months
after such termination, discharge or retirement shall include the time which
elapsed between the date of such a termination, discharge or retirement and
the date of re-employment. Service with a predecessor employer may be included
in an Employee's Service at the discretion of the Committee.
(y) "Subsidiary" means any corporation that is a member of a controlled
group of corporations (as defined in section 414(b) of the Code) which
includes the Company; any trade or business (whether or not incorporated)
which is under common control (as defined in section 414(c) of the Code) with
the Company; and any organization (whether or not incorporated) which is a
member of an affiliated service group (as defined in section 414(m) of the
Code) which includes the Company; and any other entity required to be
aggregated with the Company under section 414(o) of the Code. Anything
contained herein to the contrary notwithstanding, for the purpose of Incentive
Stock Options and options granted pursuant to the Employee Stock Purchase
Plan, "Subsidiary" shall have the same meaning as the term "subsidiary
corporation" as defined in Section 425 of the Code.
3. Administration
(a) General. The Plan shall be administered by the Committee. Subject to the
provisions of the Plan, the Committee shall have exclusive authority to
interpret and administer the Plan, to establish appropriate rules relating to
the Plan, to select the Participants under the Plan, to make awards of the
Benefits provided by the Plan, to determine the terms and conditions to which
such awards are subject, to delegate its authority and duties under the Plan,
and to take such steps and make all such determinations in connection with the
Plan and any of the Benefits provided by the Plan as it may deem necessary or
advisable.
20
<PAGE>
The Committee may from time to time award any of the Benefits described in
the Plan either individually, or in any combination, to Eligible Employees.
Each Participant shall enter into an agreement with the Company in the form
specified by the Committee agreeing to the terms and conditions of the award
and such other matters consistent with the Plan as the Committee in its sole
discretion shall determine.
(b) Committee's Discretion. The award of any Benefit under the Plan may be
subject to any provision (whether or not applicable to a Benefit awarded any
other similarly situated Participant) that the Committee determines
appropriate which is consistent with the terms and conditions specifically
provided for in the Plan, including, without limitation, (i) provisions for
the purchase of shares of Common Stock under Options in installments, (ii)
provisions for the payment of the purchase of price of shares under Options by
delivery of Common Stock, (iii) restrictions on resale or other disposition,
(iv) provisions as may be appropriate to comply with federal or state
securities laws and stock exchange requirements, (v) provisions regarding
understandings or conditions with respect to the Participant's employment,
(vi) provisions for making the grant of Benefits conditional upon election by
a Participant to defer payment of a portion of his salary, (vii) provisions
for giving a Participant a choice between two Benefits or combinations of
Benefits, (viii) provisions regarding the award of Benefits in the alternative
so that the acceptance or exercise of one Benefit cancels the right of a
Participant to another; and (ix) provisions regarding the award of Benefits in
any combination or combinations. Any election by a Reporting Person to receive
compensation in the form of Common Stock or credits therefor shall be made
prior to the time the Benefit is awarded or at such other time or times so as
to comply with Rule 16b-3(f) promulgated under the Securities Exchange Act.
4. Eligibility
(a) General. Any individual who is an Employee of the Company or a
Participating Subsidiary, at the time the Benefits under the Plan are awarded
shall be eligible to receive an award of Benefits in accordance with the terms
of the Plan ("Eligible Employee").
(b) Benefits Awarded in Accordance Under Sections 5, 6, 7 and 9. In making
any award of Benefits under Sections 5, 6, 7 or 9 of the Plan (or any
combination of such Sections), the Committee may take into account the nature
of services rendered by an Eligible Employee, the capacity of the Eligible
Employee to contribute to the success of the Company, and other factors that
the Committee may consider relevant.
5. Stock Options
The Committee from time to time may grant Options to Eligible Employees to
purchase shares of Common Stock from the Company. Options may be granted in
the form of an "Incentive Stock Option", which are intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code, or in
the form of a "Nonqualified Stock Option," which are not intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
Each Option agreement between the Company and a Eligible Employee shall be in
such form and shall contain such provisions as the Committee from time to time
shall deem appropriate. Option agreements need not be identical, but each
Option agreement by appropriate language shall include the substance of all of
the provisions set forth in subsections (a) through (e) below:
(a) The purchase price shall be payable in full in cash upon exercise of the
Option. In lieu of cash Participant may, to the extent permitted by and
subject to the conditions contained in the terms of his Option agreement, make
payment in whole or in part by tendering shares of Common Stock valued at Fair
Market Value on the date of exercise.
(b) An Option shall not be transferable by the Participant to whom granted
except by will or by the laws of descent and distribution and only such
Participant may exercise such an Option during the lifetime of such
Participant.
(c) The Committee in its discretion may provide in any Option agreement that
the Option shall be exercisable in full at any time or from time to time
during the term of the Option, or may provide for the exercise
21
<PAGE>
of the Option in such installments and at such times during the term of the
Option as the Committee may determine.
(d) The maximum term of an Option shall be ten years from the date it was
granted.
(e) The purchase price of the shares covered by each Incentive Stock Option
shall be not less than 100% of the Fair Market Value of the Common Stock
subject to the Option at the time the Option is granted; and the purchase
price of any other Option shall not be less than 85% of the Fair Market Value
of the Common Stock subject to the Option at the time such Option is granted.
The aggregate Fair Market Value (as determined by the Committee as of the
time an Incentive Stock Option is granted) of the Common Stock covered by any
Incentive Stock Option or Incentive Stock Option awarded a Participant under
the Plan or any plan of a parent corporation or Subsidiary which become
exercisable for the first time during any calendar year shall not exceed One
Hundred Thousand Dollars ($100,000.00) or such other maximum applicable to
Incentive Stock Options as may be in effect from time to time under the Code.
No Incentive Stock Option shall be awarded after the day preceding the tenth
anniversary of the effective date of the Plan.
No person entitled to exercise any Option granted under the Plan shall have
any of the rights or privileges of a shareholder of the Company with respect
to shares issuable upon exercise of such Option until certificates
representing such shares shall have been issued and delivered to such person.
6. Stock Appreciation Rights
A Stock Appreciation Right entitles the holder to receive upon surrender of
such right an amount in cash or Common Stock, measured in whole or in part by
the Common Stock's appreciation in value during a specified period as
determined by the Committee.
A Stock Appreciation Right may be satisfied in cash or in shares of Common
Stock of the Company, as determined by the Committee. Each Participant who is
awarded Stock Appreciation Rights shall enter into an agreement with the
Company in a form specified by the Committee agreeing to the terms and
conditions of the award and such other matters consistent with the Plan as the
Committee in its sole discretion shall determine.
7. Restricted Shares
A Restricted Share consists of Common Stock that is subject to certain
restrictions on the disposition of such share and rights of the Company to
reacquire the share upon specified terms upon the occurrence of certain events
during a specified period, as determined by the Committee. Each Participant
who is awarded Restricted Shares shall enter into an agreement with the
Company in a form specified by the Committee agreeing to the terms and
conditions of the award and such other matters consistent with the Plan as the
Committee in its sole discretion shall determine.
Restricted Shares may not be sold, transferred, pledged or otherwise
encumbered during a Restricted Period. A Restricted Period shall commence on
the date of the award and end at such later date as the Committee may
designate at the time of the award. During such Restricted Period, a
Participant shall have the entire beneficial ownership and most of the rights
and privileges of a shareholder with respect to Restricted Shares awarded to
him, including the right to receive dividends and the right to vote such
Restricted Shares.
The Committee in its sole discretion from time to time may establish the
terms and conditions under which Restricted Stock shall be forfeited by the
Participant during the Restricted Period.
Notwithstanding anything in this Section to the contrary, the Company may
make an award of "phantom stock credits" to any Participant which shall serve
as a basis for an award of shares of Restricted Stock at a later point in
time.
22
<PAGE>
The Participant shall not be entitled to delivery of the certificate
representing shares of Common Stock until the expiration of the Restricted
Period applicable to such Restricted Shares.
8. Employee Stock Purchase Plan
Solely for purposes of the Code, this Section 8 shall be treated as a
separate plan and referred to as the Beringer Wine Estates Employee Stock
Purchase Plan ("Employee Stock Purchase Plan"). Notwithstanding anything to
the contrary in the Plan, the following provisions shall apply to any options
awarded Participants ("Offering") in accordance with this Section 8 ("Section
423 Options"):
(a) Section 423 Options awarded in accordance with the Employee Stock
Purchase Plan shall be granted only to Employees.
(b) Section 423 Options granted pursuant to an Offering made under the
Employee Stock Purchase Plan shall be granted to each individual who is an
Employee on the Date of Grant of the Offering. For purposes of this Section 8
"Date of Grant" shall have the same meaning as set forth in Treasury
Regulation 1.421-7(c). However, one or more of the following categories of
Employees may be excluded from the grant of a Section 423 Option under the
Employee Stock Purchase Plan: (1) Employees who have been employed by the
Company or Subsidiary for less than two (2) years; (2) Employees whose
customary employment is for not more than five (5) months in any calendar
year; (3) Employees whose customary employment is twenty (20) hours or less
per week; and (4) officers or persons whose principal duties consist of
supervising the work of other Employees, or highly compensated Employees.
Irrespective of any other provision of the Plan or the Employee Stock
Purchase Plan, no Section 423 Option may be granted to an Employee who owns
stock possessing 5% or more of the total combined voting power or value of all
classes of the Company or a Subsidiary as determined in accordance with
Section 423(b)(3) of the Code; and no Section 423 Option may be granted to any
Employee if such option permits the Employee's rights to purchase stock under
all employee stock purchase plans (as defined in Section 423 of the Code) of
the Company or any Subsidiary to accrue at a rate that exceeds Twenty-Five
Thousand Dollars ($25,000.00) of the Fair Market Value of such stock
(determined at the time the Section 423 Option is granted) for each calendar
year in which such option is outstanding at any time.
(c) All Employees granted Section 423 Options under the Employee Stock
Purchase Plan shall have the same rights and privileges, as required by
Section 423(b)(5) of the Code.
(d) No Section 423 Option awarded in accordance with the provisions of the
Employee Stock Purchase Plan shall be exercisable after the expiration of the
five (5) year period beginning on the Date of Grant of such option.
(e) The price per share at which the Common Stock subject to a Section 423
Option awarded under the Employee Stock Purchase Plan may be purchased
("Purchase Price") shall not be less than the lesser of (1) 85% of the fair
market value of a share of Common Stock on the Date of Grant and (2) 85% of
the fair market value of a share of Common Stock on the date the Section 423
Option is exercised.
(f) No Section 423 Option awarded in accordance with the terms of the
Employee Stock Purchase Plan shall be transferable otherwise than by will or
by the laws of descent and distribution and shall be exercisable only by the
Participant to whom it is granted during the lifetime of the Participant.
9. Other Benefits
The Committee may award Common Stock or the right to acquire Common Stock to
any Eligible Employee upon such terms and conditions as the Committee in its
discretion shall determine. Such awards may consist of a combination of the
Benefits described in the preceding sections, or any other right to acquire
Common Stock subject to any conditions the Committee may prescribe, such as a
right of first refusal by the Company to repurchase the shares; provided,
however, that any Benefit awarded in accordance with the provisions of this
23
<PAGE>
Plan which grants the right to purchase shares of Common Stock, except any
Benefit which is subject to restrictions that in the aggregate would amount to
a substantial risk of forfeiture for purposes of Section 83 of the Code, shall
require that the price at which the Participant may purchase such shares shall
be at least 85% of the Fair Market Value of such shares as determined by the
Committee at the time such benefit is awarded.
10. Shares Subject to Plan
Subject to the provisions of Section 11 (relating to adjustment for changes
in capital stock), the maximum number of shares that may be issued under the
Plan (including shares to be issued under the Employee Stock Purchase Plan)
shall not exceed in the aggregate 300,000 shares of Common Stock. Such shares
may be unissued shares or treasury shares.
If there is a lapse, expiration, termination or cancellation of any Benefit
without the issuance of shares, or if shares are issued in connection with any
Benefit and later are reacquired by the Company pursuant to rights reserved on
issuance, the shares subject to or reserved for such Benefit may again be used
in connection with the grant of any of the Benefits described in this Plan;
provided that in no event may the number of shares of Common Stock issued
under this Plan exceed 300,000, subject to adjustment as described in Section
11.
11. Adjustment Upon Changes in Stock
If any change is made in the shares of Common Stock by reason of any merger,
consolidation, reorganization, recapitalization, stock dividend, split up,
combination of shares, exchange of shares, change in corporate structure, or
otherwise, appropriate adjustments shall be made by the Committee to the kind
and maximum number of shares subject to the Plan and the kind and number of
shares and price per share of stock to each outstanding Benefit. Any increase
in the shares, or the right to acquire shares, as the result of such an
adjustment shall be subject to the same terms and conditions that apply to the
Benefit for which such increase was received. No fractional shares of Common
Stock shall be issued under the Plan on account of any such adjustment, and
rights to shares always shall be limited after such an adjustment to the lower
full share.
12. Amendment of the Plan
The Board of Directors may at any time amend the Plan (including the
provisions of the Employee Stock Purchase Plan), provided that the Board of
Directors may not, without approval (within twelve months before or after the
date of such change) of such number of the stockholders as may be required by
either federal income tax or securities law for any particular amendment: (a)
increase the maximum number of shares of Common Stock in the aggregate which
may be issued under the Plan, except as may be permitted under the adjustment
provisions of Section 11, or (b) adopt any other amendment for which
shareholder approval is required by federal income tax or securities laws and
regulations, including the regulations of the stock exchange or other market
upon which the Common Stock may be listed at the time of the amendment. The
Board of Directors may not alter or impair any Benefit previously granted
under the Plan without the consent of the person to whom the Benefit was
granted.
13. Termination of the Plan
The Board of Directors may terminate or suspend the Plan (including the
Employee Stock Purchase Plan) at any time. No Benefit shall be awarded after
termination of the Plan.
Rights and obligations under a Benefit awarded while the Plan is in effect
shall not be altered or impaired by termination or suspension of the Plan
except by consent of the person to whom the Benefit was awarded.
14. Withholding Tax
The Company shall have the right to withhold with respect to any payments
made to Participants under the Plan any taxes required by law to be withheld
because of such payments.
24
<PAGE>
15. Rules of Construction
The terms of the Plan shall be construed in accordance with the laws of the
State of California, provided that the terms of the Plan as they relate to
Incentive Stock Options shall be construed first in accordance with the
meaning under and in a manner that will result in the Plan satisfying the
requirements of the provisions of the Code governing incentive stock options;
and provided further that the terms of Section 8 of the Plan shall be
construed first in accordance with the meaning under and in a manner that will
result in the Employee Stock Purchase Plan satisfying the requirements of the
Code governing such plans.
16. Nontransferability
Each Option or similar right (including a Stock Appreciation Right) granted
under this Plan shall not be transferable other than by will or the laws of
descent and distribution, and shall be exercisable during the holder's
lifetime only by the holder or the holder's guardian or legal representative.
17. Effective Date
The Plan shall become effective as of November 1, 1998.
25
<PAGE>
PROXY
BERINGER WINE ESTATES HOLDINGS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS, NOVEMBER 5, 1998
The undersigned shareholder of Beringer Wine Estates Holdings, Inc. hereby
appoints Peter F. Scott and Douglas W. Roberts or each of them attorneys and
proxies, with full power of substitution, to represent the undersigned and vote
all of the shares of Beringer Wine Estates Holdings, Inc.'s Common Stock, of
which the undersigned is entitled to vote at the Annual Meeting of Shareholders,
on November 5, 1998, at 10:30 A.M. (local time) or any adjournment(s) thereof.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE SIGN ON REVERSE SIDE AND RETURN PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE
************* *************
*SEE REVERSE* CONTINUED AND TO BE SIGNED ON REVERSE SIDE *SEE REVERSE*
* SIDE * * SIDE *
************* *************
- --------------------------------------------------------------------------------
DETACH HERE
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
The shares represented by this proxy will be voted as directed by the
shareholder. If no direction is given when the duly executed proxy is returned,
such shares will be voted "FOR ALL" NOMINEES IN ITEM 1, "FOR" Item 2 and "FOR"
Item 3.
1. Election of the following nominees as Directors:
NOMINEES: Richard L. Adams, David Bonderman, Randy Christofferson, James G.
Coulter, Timm F. Crull, William A. Franke, Walter T. Klenz (Chairman),
E. Michael Moone, William S. Price III, Jesse Rogers, George A. Vare and
Emily Woods.
FOR WITHHELD
ALL FROM ALL
NOMINEES [ ] [ ] NOMINEES
[ ]
---------------------------------------------------------------------------
To withhold authority to vote for any individual nominee, write that
nominee's name on the line provided above.
2. Ratification of Independent Public Accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Approval of Employee Stock Purchase Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
The undersigned hereby authorizes the proxies, in their discretion, to vote on
any other business as may properly be brought before the meeting or any
adjournment thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please mark, date and sign as your name appears hereon and return in the
enclosed envelope. If acting as executor, administrator, trustee, guardian, etc.
you should so indicate when signing. If the signer is a corporation, please sign
in full corporate name, by duly authorized officer.
Signature: Date:
--------------------------------- -------------------------
Signature: Date:
--------------------------------- -------------------------
