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 toss. 240.14a-11(c) orss. 240.14a-12
Central European Distribution Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] 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:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
April 26, 2000
Dear Stockholder:
On behalf of the Board of Directors of Central European Distribution
Corporation ("the Company"), it is my pleasure to invite you to the 2000 Annual
Meeting of Stockholders (the "Annual Meeting"). The Annual Meeting will be held
on Tuesday, May 23, 2000 at 10:00 a.m., local time, at the offices of Hogan &
Hartson L.L.P., 885 Third Avenue, 26th Floor, New York, New York.
The Annual Meeting has been called for the following purposes: (1) to
elect six directors to serve on the Board of Directors, each for a one-year
term; (2) to ratify the Board of Directors' appointment of Ernst & Young Audit
Sp. z o.o. as the Company's independent public accountants for the 2000 fiscal
year; and (3) to transact such other business as may properly come before the
Annual Meeting or any adjournment thereof, all as more fully described in the
accompanying Proxy Statement. Management will also review 1999 results and
respond to stockholder questions.
The Board of Directors has approved the matters being submitted by the
Company for stockholder approval at the Annual Meeting and recommends that
stockholders vote "FOR" such proposals. It is important that your views be
represented at the Annual Meeting. Whether or not you plan to attend the Annual
Meeting, please complete, sign and date the enclosed Proxy Card and promptly
return it in the prepaid envelope.
Sincerely,
William V. Carey
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
CENTRAL EUROPEAN
DISTRIBUTION CORPORATION
1343 MAIN STREET, SARASOTA, FLORIDA 34236
(941) 330-1558
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 23, 2000
NOTICE IS HEREBY GIVEN that the 2000 annual meeting of stockholders
(the "Annual Meeting") of Central European Distribution Corporation, a Delaware
corporation (the "Company"), will be held on Tuesday, May 23, 2000 at 10:00
a.m., local time, at the offices of Hogan & Hartson L.L.P., 885 Third Avenue,
26th Floor, New York, New York, for the purpose of considering and voting upon
the following matters:
1. To elect six (6) directors to serve on the Board of Directors, each for
a one-year term and until their respective successors are elected;
2. To ratify the Board of Directors' appointment of Ernst & Young Audit
Sp. z o.o. as the Company's independent public auditors for the 2000
fiscal year; and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy Statement
accompanying this notice.
Pursuant to the Company's Bylaws, the Board of Directors has fixed
March 31, 2000 as the record date for the determination of stockholders entitled
to notice of and to vote at the Annual Meeting and at all adjournments thereof.
Only stockholders of record at the close of business on that date will be
entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof. A list of all stockholders entitled to vote at the Annual Meeting will
be open for examination by any stockholder for any purpose germane to the Annual
Meeting during ordinary business hours for a period of ten (10) days before the
Annual Meeting at the offices of the Company located at 1343 Main Street,
Sarasota, Florida 34236.
By Order of the Board of Directors
Jeffrey Peterson
VICE-CHAIRMAN AND SECRETARY
Sarasota, Florida
April 26, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
POSTAGE PREPAID ENVELOPE. IF YOU SIGN AND RETURN YOUR PROXY CARD WITHOUT
SPECIFYING A CHOICE, YOUR SHARES WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS. YOU MAY, IF YOU WISH, REVOKE YOUR
PROXY AT ANY TIME PRIOR TO THE TIME IT IS VOTED BY FILING WITH THE SECRETARY OF
THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE
OR BY ATTENDING THE ANNUAL MEETING AND VOTING IN PERSON.
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<PAGE>
CENTRAL EUROPEAN
DISTRIBUTION CORPORATION
1343 MAIN STREET, SARASOTA, FLORIDA 34236
(941) 330-1558
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PROXY STATEMENT
2000 ANNUAL MEETING OF STOCKHOLDERS
MAY 23, 2000
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SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This Proxy Statement and the accompanying Proxy Card are furnished to
stockholders of Central European Distribution Corporation, (the "Company") in
connection with the solicitation by the Company's Board of Directors (the "Board
of Directors" or the "Board") of proxies to be used at the 2000 annual meeting
of stockholders (the "Annual Meeting"), to be held on Tuesday, May 23, 2000, at
10:00 a.m., local time, at the offices of Hogan & Hartson L.L.P., 885 Third
Avenue, 26th Floor, New York, New York and at any adjournments thereof.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the annual meeting, stockholders will act upon the matters outlined
in the accompanying notice of meeting, including the election of directors and
the ratification of CEDC independent auditors. In addition, CEDC management will
report on the performance of CEDC during 1999 and respond to appropriate
questions from stockholders.
WHO IS ENTITLED TO VOTE?
Only stockholders of record at the close of business on the record
date, March 31, 2000, are entitled to receive notice of the annual meeting and
to vote the shares of common shares that they held on that date at the meeting,
or any postponement or adjournment of the meeting. Each outstanding share
entitles its holder to cast one vote on each matter to be voted upon.
Please note that if you hold your shares in "street name" (that is,
through a broker or other nominee), you will need to bring appropriate
documentation from your broker or nominee to personally vote at the meeting.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of common stock outstanding on the record date will
constitute a quorum, permitting the meeting to conduct its business. As of the
record date, 4,134,230 shares of common stock of CEDC were outstanding. Proxies
received but marked as abstentions and broker non-votes will be included in the
calculation of the number of shares considered to be present at the meeting for
purposes of determining the presence of a quorum. A "broker non-vote" occurs
when a broker or other nominee indicates on the proxy card that it does not have
discretionary authority to vote on a particular matter.
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<PAGE>
HOW DO I VOTE?
If you complete and properly sign the accompanying proxy card and
return it to CEDC, it will be voted as you direct. If you are a registered
stockholder and attend the meeting, you may deliver your completed proxy card in
person. "Street name" stockholders who wish to vote at the meeting will need to
obtain a proxy from the institution that holds their shares.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after you have submitted your proxy, you may change your vote
at any time before the proxy is exercised by filing with the secretary of CEDC
either a notice of revocation or a duly executed proxy, bearing a later date.
The powers of the proxy holders will be suspended if you attend the meeting in
person and so request, although attendance at the meeting will not by itself
revoke a previously granted proxy.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Unless you give other instructions on your proxy card, the persons
named as proxy holders on the proxy card will vote in accordance with the
recommendations of the Board of Directors. The Board's recommendation is set
forth together with the description of each item in this proxy statement. The
Board recommends a vote:
o for election of the nominated slate of six directors (see page 5);
o for ratification of the appointment of Ernst and Young Audit Sp.
z o.o. as CEDC's independent auditors (see page 15).
With respect to any other matter that properly comes before the
meeting, the proxy holders will vote as recommended by the Board of Directors
or, if no recommendation is given, in their own discretion.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS. The affirmative vote of a plurality of the votes
cast at the meeting is required for the election of directors. A properly
executed proxy marked "WITHHOLD AUTHORITY" with respect to the election of one
or more directors will not be voted with respect to the director or directors
indicated, although it will be counted for purposes of determining whether there
is a quorum. Abstentions and broker non-votes will have no legal effect on the
election of directors.
RATIFICATION OF INDEPENDENT AUDITORS AND OTHER ITEMS. For the
ratification of CEDC's independent auditors and any other item voted upon at the
annual meeting, the affirmative vote of the holders of a majority of the shares
represented in person or by proxy and entitled to vote on the item will be
required for approval. Abstentions will not be voted for any such matter.
Accordingly, abstentions will have the same legal effect as a negative vote.
Broker non-votes will not be counted in determining the number of shares
necessary for approval.
WHO WILL BEAR THE COSTS OF SOLICITING PROXIES FOR THE ANNUAL MEETING?
The cost of soliciting proxies for the annual meeting will be borne by
CEDC. In addition to the use of the mails, proxies may be solicited personally
or by telephone, by officers and employees of CEDC who will not receive any
additional compensation for their services. Proxies and proxy material will also
be distributed at the expense of CEDC by broker, nominees, custodians, and other
similar parties.
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If the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with instructions marked thereon. EXECUTED
BUT UNMARKED PROXIES WILL BE VOTED: "FOR" PROPOSAL 1 TO ELECT THE BOARD OF
DIRECTORS' SIX NOMINEES FOR DIRECTOR; AND "FOR" PROPOSAL 2 TO RATIFY THE BOARD
OF DIRECTORS' APPOINTMENT OF ERNST & YOUNG AUDIT SP. Z O.O. AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE 2000 FISCAL YEAR. If any other matters
properly come before the Annual Meeting, the persons named in the accompanying
proxy will vote the shares represented by such proxies on such matters in
accordance with their best judgment.
The presence of a stockholder at the Annual Meeting will not
automatically revoke such stockholder's proxy. Stockholders may, however, revoke
a proxy at any time prior to its exercise by filing with the Secretary of the
Company a written revocation or a duly executed proxy bearing a later date, or
by attending the Annual Meeting and voting in person.
The cost of solicitation of proxies in the form enclosed herewith will
be borne by the Company. In addition to the solicitation of proxies by mail, the
Company, through its officers, directors or employees, also may solicit proxies
personally or by telephone or other means. Such persons will not be specifically
compensated for such solicitation activities. Arrangements also will be made
with brokerage houses and other custodians, nominees and fiduciaries for
forwarding solicitation materials to the beneficial owners of shares held of
record by such persons, and the Company will reimburse such persons for their
reasonable expenses incurred in that connection.
The close of business on March 31, 2000 has been fixed by the Board of
Directors as the record date (the "Record Date") for determination of
stockholders entitled to vote at the Annual Meeting. As of the Record Date, the
outstanding voting stock of the Company consisted of 4,134,230 shares of the
Company's common stock, par value $.01 per share (the "Common Stock"). Each
holder of Common Stock is entitled to one vote per share with respect to all
matters as to which a vote is taken at the Annual Meeting.
The Bylaws of the Company (the "Bylaws") provide that the holders of a
MAJORITY of the voting rights of the shares of Common Stock present in person or
represented by proxy and entitled to vote shall constitute a quorum at the
Annual Meeting. Stockholders' votes will be tabulated by persons appointed by
the Board of Directors to act as inspectors of election for the Annual Meeting.
Assuming the presence of a quorum at the Annual Meeting, a PLURALITY of
the votes cast at the Annual Meeting is required for election of directors, and
a majority of the votes cast at the Annual Meeting is required to ratify the
appointment of Ernst & Young Audit Sp. z o.o. as the Company's independent
public accountants. Unless otherwise required by applicable law or the
Certificate of Incorporation or Bylaws, the affirmative vote of a MAJORITY of
the votes cast at the Annual Meeting is required to decide any other matter
submitted to a stockholder vote.
Abstentions and broker non-votes will be treated as shares that are
present, in person or by proxy, and entitled to vote for purposes of determining
the presence of a quorum at the Annual Meeting. Broker non-votes will not be
counted as a vote cast on any matter presented at the Annual Meeting. As a
result, abstentions and broker non-votes will not have any effect on the
approval of Proposals 1 and 2 or any other matter that properly comes before the
meeting.
The Certificate of Incorporation does not provide for cumulative voting
in the election of directors.
This Proxy Statement, the Notice of Annual Meeting of Stockholders, the
Proxy Card and the Company's Annual Report to Stockholders were first mailed to
stockholders on or about April 26, 2000.
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<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL
OF THE PROPOSALS SET FORTH IN THIS PROXY STATEMENT.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Certificate of Incorporation provides that the Board of Directors
shall consist of not fewer than two directors nor more than nine directors and
that the number of directors, within such limits, shall be determined by
resolution of the Board of Directors at any meeting, approved by two-thirds of
the directors then in office. The Board of Directors currently consists of seven
directors, each serving a one-year term. At the Annual Meeting, six directors
will be elected, each for a one-year term. The Board of Directors has nominated
for director William V. Carey, James T. Grossmann, Tony Housh, Jan W. Laskowski,
Jeffrey Peterson and Joe M. Richardson, to be elected at the Annual Meeting.
Unless otherwise specified on the proxy, it is the intention of the
persons named in the proxy to vote the shares represented by each properly
executed proxy for the election as directors of Messrs. Carey, Grossmann, Housh,
Laskowski, Peterson and Richardson. The Board of Directors believes that such
nominees will stand for election and will serve if elected as directors.
However, if any person nominated by the Board of Directors fails to stand for
election or is unable to accept election, the proxies will be voted for the
election of such other person or persons as the persons named in the
accompanying proxy shall determine in accordance with their best judgment.
Pursuant to the Bylaws, directors are elected by plurality vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ITS
NOMINEES FOR DIRECTORS.
INFORMATION AS TO NOMINEES FOR DIRECTORS
<TABLE>
<CAPTION>
Name Age Position(s)
----- --- -----------
<S> <C> <C>
William V. Carey . . . . . . . . 35 Chairman, President and Chief Executive Officer
Jeffrey Peterson . . . . . . . . 49 Vice Chairman and Executive Vice President
James T. Grossmann . . . . . . . 59 Director
Tony Housh . . . . . . . . . . . 33 Director
Jan W. Laskowsi . . . . . . . . 43 Director
Joe M. Richardson . . . . . . . 47 Director
</TABLE>
Directors and executive officers of the Company are elected to serve until
they resign or are removed, or until their successors are elected. All directors
of the Company are elected annually at the annual meeting of stockholders.
Executive officers of the Company generally are appointed at the board's first
meeting after each annual meeting of stockholders. Mr. Joseph S. Conti and Mr.
James B. Kelly, Directors in 1999, chose not to stand for re-election. Mr. Tony
Housh stands for election for the first time.
WILLIAM V. CAREY has served as Chairman, President and Chief Executive
Officer of the Company since its inception. Mr. Carey began working for the
Company's wholly owned Polish subsidiary, Carey
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<PAGE>
Agri International Poland Sp. z o.o. ("Carey Agri") in 1990 and in 1993 Mr.
Carey instituted and supervised the direct delivery system for Carey Agri's
nationwide expansion. Mr. Carey, a 1987 graduate of the University of Florida,
played briefly on the professional golf circuit before joining the Company. Mr.
Carey is a member of the American Chamber of Commerce in Poland.
JEFFREY PETERSON has served as Vice Chairman, Executive Vice President and
director of the Company since its inception. Mr. Peterson was a co-founder of
Carey Agri in 1990, and is a member of the management board of that entity.
Prior thereto, Mr. Peterson contracted with African, Middle Eastern, South
American and Asian governments and companies for the supply of American
agricultural exports and selected agribusiness products, such as livestock, feed
supplements and veterinary supplies. Mr. Peterson has worked with international
banks and United States government entities to facilitate support for exports
from the United States.
JAMES T. GROSSMANN, a retired United States Foreign Service officer, has
served as a director of the Company since its inception. With the United States
Agency for International Development ("U.S.A.I.D."), during the years 1977 to
1996, Mr. Grossmann served in emerging markets in Central Europe, Central
America, Africa and Asia with a concentration on developing private sector
trading and investment through United States government-sponsored aid programs.
Immediately prior to his retirement in 1996, he managed a $300 million mass
privatization and capital markets development program that assisted 14 former
state-controlled countries in Central Europe transition to market economies.
TONY HOUSH is a Director at the Warsaw, Poland based investment company
Millennium Capital, focusing on capital development, strategic advisory and new
technology projects. Mr. Housh joined Millenium Capital from the American
Chamber of Commerce in Poland, where he is completing his tenure as the Director
(June 2000). In this role, he has served as a primary government relations and
investment advisor to over three hundred US companies on the market. Mr. Housh
previously served as a US Department of the Treasury banking and tax analyst at
the Polish Ministry of Finance, and provided advice and expertise to the Slovak
and Czech government as needed. He has extensive experience throughout the
region as a business and regulatory advisor as well as a Board member of
multinational organizations such as the Fulbright Commission. He is a double
major B.A. graduate of the University of Kansas and the University of Essex
(U.K.) in Soviet/East European Studies and Political Science.
JAN W. LASKOWSKI has served as a director of the Company since its
inception. Mr. Laskowski has lived and worked in Poland since 1991 where since
1999 he has a Consultancy and Investment Banking practice. He was the Vice
President and member of the management board of American Bank in Poland
("Amerbank") until February 1999, a position he had held since 1996, where he
was responsible for business development. Before joining Amerbank in 1991, Mr.
Laskowski worked in London for Bank Liechtenstein (UK) Ltd from 1989 to 1991. He
began his career with Credit Suisse, also in London, where he worked for 11
years.
JOE M. RICHARDSON has served as a director of the Company since its
inception. Since October 1994, Mr. Richardson has served as the Director of
Sales and Marketing Europe of Sutter Home Winery Inc., where he is responsible
for developing and managing the importation, distribution and sales of Sutter
Home Wines within Europe. From October 1993 until October 1994, Mr. Richardson
assisted Carey Agri in marketing development. Prior thereto, Mr. Richardson had
19 years experience in the wine industry.
Each of the two representatives in the Company's initial public offering
has the right, through July 31, 2003, to designate one person for election to
the Board of Directors. In the event that one or both of the representatives
elects not to exercise this right, then a person may be designated by each of
the representatives to attend all meetings of the Board of Directors for such
period of time. Such person will be entitled to receive all notices and other
correspondence as if such person were a member of the Board of
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Directors and to be reimbursed for out-of-pocket expenses incurred in connection
with attendance of meetings of the Board of Directors.
Brean Murray and Co., Inc., one of the representatives, has not designated
a person as a member of the Board of Directors of the Company or to attend
meetings of the Board. The other representative, Fine Equities Inc., designated
Joe Conti to serve as a director of the Company during 1999. Mr. Conti chose not
to stand for re-election.
THE BOARD AND ITS COMMITTEES
The Board held seven meetings in 1999 in addition to acting by unanimous
written consent four times. Each director attended at least 75 percent of all
meetings of the Board and committees of the Board to which he was assigned that
were held during the portion of fiscal year 1999 as to which such director was a
member of the Board or applicable committee.
The Board has two standing committees, an audit committee and a
compensation committee. The Company does not have a separate nominating
committee for recommending to Stockholders candidates for positions on the
Board.
THE AUDIT COMMITTEE
The Audit Committee oversees management's fulfillment of its financial reporting
and disclosure responsibilities and its maintenance of and appropriate internal
control system. It also recommends the appointment of the Company's independent
public accountants and oversees the activities of the Company's internal audit
function. All members of the Audit Committee are non-employee directors.
To insure independence, the Audit Committee also meets separately with the
Company's independent public accountants, internal auditor and other members of
management.
The Audit Committee has a charter that specifies it responsibilities and the
Committee believes it fulfills its charter. The Board of Director's, upon the
recommendation of the Audit Committee, approved a charter in response to the
Audit Committee requirements adopted by the Securities and Exchange Commission
in December 1999. A copy of the Audit Committee charter is attached to the Proxy
Statement as Appendix A.
The Audit Committee met with the Independent public Auditors twice during 1999.
The Audit Committee, which held two meetings separate from full Board Meetings
during fiscal 1999, consisted of Joe Conti and Jan Laskowski. The Committee's
responsibilities include reviewing (i) the scope and findings of the annual
audit, (ii) accounting policies and procedures and the Company's financial
reporting and (iii) the internal controls employed by the Company.
THE COMPENSATION COMMITTEE
The Compensation Committee, which held one meeting during 1999, consists
of Joe Richardson and Jan Laskowski. The Committee's responsibilities include
(i) making recommendations to the Board on salaries, bonuses and other forms of
compensation for the Company's officers and other key management and executive
employees, (ii) administering the 1997 Stock Incentive Plan (the "Plan") and
(iii) reviewing management recommendations for grants of stock options and any
proposed plans or practices of the Company relating to compensation of its
employees and directors.
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<PAGE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors has prepared
the following report on the Company's policies with respect to the compensation
of executive officers for 1999.
The Board of Directors appointed the Compensation Committee in November
1997. Since that time, decisions on compensation of the Company's executive
officers have been made by the full Board of Directors or by the Compensation
Committee. No member of the Compensation Committee is an employee of the
Company. Prior to July 1997, there were no Board committees.
COMPENSATION POLICIES TOWARD EXECUTIVE OFFICERS
The base salaries for the two most senior executive officers were
established at the time of the Company's Initial Public Offering in 1998. The
salaries were agreed to and approved by the full Board after discussions with
the company's underwriters and after comparisons with salaries paid by other
Small cap public companies and companies in the Company's Central European
market area. The following criteria is being used to evaluate compensation
policies toward executive officers.
The compensation policies of the Company are designed to (i) attract,
motivate and retain experienced and qualified executives, (ii) increase the
overall performance of the Company, (iii) increase stockholder value, and (iv)
increase the performance of individual executives. The Compensation Committee
seeks to provide competitive salaries based upon individual performance together
with annual cash bonuses awarded based on the Company's overall performance
relative to corporate objectives, taking into account individual contributions,
teamwork and performance levels. The Compensation Committee believes that the
level of base salaries plus bonuses of executives should generally be managed to
compete in the Central European geographical area with other public and private
companies. In addition, it is the policy of the Company to grant stock options
to executives upon their commencement of employment with the Company and
annually thereafter in order to strengthen the alliance of interest between such
executives and the Company's stockholders and to give executives the opportunity
to reach the top compensation levels of the competitive market depending on the
Company's performance (as reflected in the market price of the Common Stock).
The following describes in more specific terms the elements of
compensation that implement the Compensation Committee's compensation policies,
with specific reference to compensation reported for 1999:
BASE SALARIES. Base salaries of executives are initially determined by
evaluating the responsibilities of the position, the experience and knowledge of
the individual, and the competitive marketplace for executive talent, including
a comparison to base salaries for comparable positions at peer public and
private companies in the Company's Central European geographic region. Base
salaries for executive officers are reviewed annually based upon, among other
things, individual performance and responsibilities.
Annual salary adjustments are recommended by the Chief Executive
Officer and Executive Vice-President by evaluating the performance of each
executive officer after considering new responsibilities and the previous year's
performance. Individual performance ratings take into account such factors as
achievement of specific goals that are driven by the Company's strategic plan
and attainment of specific individual objectives. The factors impacting base
salary levels are not assigned specific weights but are subject to adjustments
by the Compensation Committee and the Board.
BONUSES. The Company's annual bonuses to its executive officers are
based on both corporate and individual performance, as measured by reference to
factors which reflect objective performance criteria
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over which management generally has the ability to exert some degree of control.
These corporate performance factors consist of revenue and earnings targets
established in the Company's annual budget. The Compensation Committee is in the
process of formulating an annual bonus scheme to be approved and implemented in
the current year. It will reward executive officers in relation to set
performance targets.
STOCK OPTIONS. A third component of executive officers' compensation is
the 1997 Plan pursuant to which the Company grants executive officers and other
key employees' options to purchase shares of Common Stock.
The Compensation Committee or the full Board of Directors grants stock
options to the Company's executives in order to align their interests with the
interests of the stockholders. Stock options are considered by the Compensation
Committee to be an effective long-term incentive because the executives' gains
are linked to increases in the stock value which in turn provides stockholder
gains. The Compensation Committee generally grants options to new executive
officers and other key employees upon their commencement of employment with the
Company and annually thereafter. The options generally are granted at an
exercise price equal to the market price of the Common Stock at the date of the
grant. Options granted to executive officers typically vest over a period of one
to five years following the date of grant. The maximum option term is ten years.
The full benefit of the options is realized upon appreciation of the stock price
in future periods, thus providing an incentive to create value for the Company's
stockholders through appreciation of stock price. Management of the Company
believes that stock options have been helpful in attracting and retaining
skilled executive personnel.
Stock option grants made to newly hired executive officers and
other employees in 1999 reflect the significant individual contributions they
are expected to make to the Company's operations and implementation of the
Company's development and growth programs. During 1999, the Company granted
stock options covering a total of 128,000 shares of Common Stock.
Respectfully submitted,
Compensation Committee
Jan Laskowski
Joe Richardson
COMPENSATION COMMITTEE INTERLOCKS
Joe Richardson is the Director for Sutter Homes Wines Europe, which the
Company distributes. See ,"Certain Transactions".
DIRECTOR COMPENSATION
Each director receives annual directors' fees of $2,000. Additionally,
Mr. Carey and Mr. Peterson annually receive $10,000 and $5,000, respectively,
for serving as Chairman and Vice-Chairman of the Board of Directors. Members of
the Board of Directors have received grants of stock options under the Plan
described below. The Company reimburses directors for out-of-pocket travel
expenditures relating to their service on the Board of Directors.
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EXECUTIVE OFFICERS
The names, ages, current positions held and date from which the current
position was held of all executive officers of the Company as of April 24, 2000
are set forth below.
<TABLE>
<CAPTION>
Name Age Position(s) Position Since
---- --- ----------- --------------
<S> <C> <C> <C>
William V. Carey......... 35 Chairman, President and 1997
Chief Executive Officer
Jeffrey Peterson......... 49 Vice Chairman and 1997
Executive Vice President
Evangelos Evangelou ..... 32 Chief Operating Officer 1998
Neil Crook............... 37 Vice President and Chief
Financial Officer 2000
</TABLE>
The following sets forth the business experience, principal occupations
and employment of each of the executive officers who do not serve on the Board.
NEIL CROOK joined the Company in February 2000 as Vice President and
Chief Financial Officer. From April 1996 to January 2000, he held the position
of Financial Controller in Xerox Polska Ltd, the autonomous subsidiary of Xerox
(Europe) Ltd in Poland. Prior thereto, he worked with Continental Can Polska
where he oversaw the financial operation of the construction of an aluminum can
manufacturing plant. Mr. Crook has six years experience in Poland and is a
United Kingdom registered F.C.M.A
EVANGELOS EVANGELOU joined the Company in September 1998. From October
1993 until July 1998, Mr. Evangelou was both Assistant Manager and General
Manager of Louis Poland where he was responsible for the day-to-day operations
of all food and beverage outlets within Warsaw International Airport. Prior to
coming to Poland for Louis, Mr. Evangelou was in food and beverage management in
the United Kingdom.
EXECUTIVE COMPENSATION
The following table shows, for the periods indicated, compensation awarded
or paid by the Company to its Chief Executive Officer (the highest compensated
employee of the Company).
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual
Compensation
------------
Name and Principal Position Year Salary Other(1)
- --------------------------- ---- ------ --------
<S> <C> <C> <C>
William V. Carey 1998 93,333 35,000
Chairman, President 1999 148,333 35,000
</TABLE>
(1) During 1998 and 1999, Carey Agri provided Mr. Carey with the free use of an
automobile and housing valued at $35,000.
-10-
<PAGE>
COMPENSATION PLANS
EMPLOYMENT AGREEMENTS. Mr. Carey has entered into an employment contract
with the Company, which commenced on July 31, 1998 and ends July 30, 2001. Mr.
Carey is paid an annual base salary at the rate of $165,000 per year, $76,000
payable by Carey Agri and $89,000 by the Company. If Mr. Carey is not elected
the Chairman of the Board of Directors in accordance with the Bylaws, his base
salary paid by the Company will be increased by $10,000. Mr. Carey's base salary
is to be reviewed no less frequently than annually.
Additionally, as partial consideration for the execution of the continuing
employment agreement, the Company has granted to Mr. Carey options to purchase
34,500 shares of Common Stock at the time of the Initial Public Offering with an
exercise price of $6.50 and has granted in 1999 16,500 options with an exercise
price of $6.875. Such options are granted under the Plan and will vest and
become exercisable on July 31, 2000. For options granted Mr. Carey because of
his work on the board of directors of the Company and Carey Agri, see "1997
Stock Incentive Plan."
Mr. Carey may terminate his employment agreement only for "good reason,"
which includes the Company's' failure to perform its obligations under the
agreement. The Company may terminate the agreement for "cause" as defined, which
includes Mr. Carey's willful refusal to follow written orders or willful
engagement in conduct materially injurious to the Company or continued failure
to perform his required duties. If the Company terminates the agreement for
cause or Mr. Carey terminates it without good reason, Mr. Carey's salary and
benefits will be paid only through the date of termination. If the Company
terminates the employment agreement other than for cause or if Mr. Carey
terminates it for good reason, the Company will pay Mr. Carey his salary and
benefits through the date of termination in a single lump sum payment and other
amounts or benefits at the time such amounts would have been due.
Pursuant to the agreement, Mr. Carey has agreed that during the term of
employment, and for a one-year period following a termination of employment, he
will not compete with the Company. The ownership by Mr. Carey of less than five
percent of the outstanding stock of any corporation listed on a national
securities exchange conducting any competitive business shall not be viewed as
competition.
Jeffrey Peterson has entered into an employment contract with the Company,
which commenced on July 31, 1998 and ends on July 30, 2000. In the first year of
his employment, Mr. Peterson will be paid $45,000 for serving as the Executive
Vice President of the Company and $48,000 for serving on the management board of
Carey Agri. In the second year, Mr. Peterson will be paid $39,000 by the Company
and $36,000 by Carey Agri. The Company may terminate this agreement, with or
without cause, on three months' prior written notice; Mr. Peterson may terminate
only for good reason. For options granted to Mr. Peterson as a member of the
board of directors of the Company and Carey Agri, see "--1997 Stock Incentive
Plan."
1997 STOCK INCENTIVE PLAN
The Companys' 1997 Stock Incentive Plan, as amended (the "Plan"), provides
for the grant of incentive stock options within the meaning of Section 422 of
the Code, non-qualified options, stock appreciation rights, restricted stock and
restricted stock units to directors, executives and other employees of the
Company and any of its subsidiaries or of any service provider, as defined,
whose participation in the Plan is determined to be in the best interest of the
Company. The Plan authorizes the issuance of up to 750,000 shares of Common
Stock (subject to anti-dilution adjustments in the event of a stock split,
recapitalization or similar transaction).
-11-
<PAGE>
The Board of Directors has the full power and authority to take all actions
and to make all determinations required under the Plan, but has currently
delegated that authority to its Compensation Committee, which has the authority
to interpret the Plan and to prescribe, amend and rescind rules and regulations
relating to the Plan. The Compensation Committee's interpretations of the Plan
and its determinations pursuant to the Plan will be final and binding on all
parties claiming an interest under the Plan. The Plan was adopted by the Board
of Directors on November 27, 1997, which is the effective date of the Plan, and
approved by the Companys' stockholders in December 1997. The term of the Plan is
ten years from its effective date, and no grants may be made under the Plan
after that date.
Automatic grants to purchase 3,000 shares of common stock are made to
outside directors of the Company. These grants are made upon initial election to
the board.
The option exercise price for incentive stock options granted under the
Plan may not be less than 100% of the fair market value of the Common Stock on
the date of grant of the option. Options may be exercised up to 10 years after
grant, except as otherwise provided in the particular option agreement. Payment
for shares purchased under the Plan shall be made in cash or cash equivalents.
With respect to any participant who owns stock possessing more than 10% of the
voting power of all classes of stock of the Company, however, the exercise price
of any incentive stock option granted must equal at least 110% of the fair
market value on the grant date and the maximum term of an incentive stock option
must not exceed five years.
The Plan also authorizes the grant of stock appreciation rights whereby the
grantee of a stock option may receive payment from the Company of an amount
equal to the excess of the fair market value of the shares of Common Stock
subject to the option surrendered over the exercise price of such shares. A
particular award agreement may permit payment by the Company either in shares of
Common Stock, cash or a combination thereof.
Options granted under the Plan are generally not transferable except that
non-qualified options may, in certain circumstances, be transferred to family
members of the grantee. If any optionee's employment with the Company or a
service provider terminates by reason of death, options will fully vest and may
be exercised within 24 months after such death. If the optionee's employment
terminates by reason of disability, options will continue to vest and shall be
exercisable to the extent vested for a period of one year after the termination
of employment. If the optionee's employment terminates for any other reason,
options not vested will terminate and vested options held by such optionee will
terminate 90 days after such termination.
The Plan also authorizes the grant of restricted stock or restricted stock
units, which are rights to receive shares of Common Stock in the future. Both
the restricted stock and restricted stock units will be subject to restrictions
and risk of forfeiture. Such restriction may include not only a period of time
of further employment or service to the Company or Carey Agri or a service
provider but the satisfaction of individual or corporate performance objectives.
Performance objectives may include, among others, the trading price of the
shares of Common Stock, market share, sales, earnings per share and return on
equity. Unless the particular award agreement states otherwise, the holders of
restricted stock shall have the right to vote such shares of Common Stock and
the right to receive any dividends declared and paid with respect to such stock,
but the holders of restricted stock units shall have no such rights.
If the grantee's employment with the Company or Carey Agri or a service
provider terminates by reason of death, all restricted stock and restricted
stock units granted under the Plan shall fully vest. If the grantee's employment
terminates by reason of disability, the grantee's restricted stock or restricted
stock units shall continue to vest for a period of one year. If the grantee's
employment is terminated for any other reason, the restricted stock or
restricted stock units shall be forfeited.
-12-
<PAGE>
In the event of the dissolution or liquidation of the Company or upon a
merger, consolidation or reorganization of the Company in which the Company is
not the surviving entity, or upon a sale of substantially all of the assets of
the Company or upon any transaction (including one in which the Company is the
surviving entity) approved by the Board of Directors that results in any person
or entity owning eighty percent or more of the combined voting power of all
classes of securities of the Company, outstanding restricted stock and
restricted stock units shall vest and all options become immediately
exercisable, within a stated period, unless provision is made in writing in
connection with such transaction for the continuation of the Plan or the
assumption or substitution of such options, restricted stock and restricted
stock units.
The Board of Directors may amend, suspend or terminate the Plan with
respect to the shares of Common Stock as to which grants have not been made.
However, the Companys' stockholders must approve any amendment that would cause
the Plan not to comply with the Code.
OPTION GRANTS AND EXERCISES. The following table sets forth information with
respect to grants of stock options to the Company's Chief Executive Officer
during the year ended December 31, 1999.
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------------
Percent of Potential Realized
Total Value at
Number of Options Assumed Annual
Securities Granted to Rates of Stock
Underlying Employees Price Appreciation
Options in Exercise For Option Term
Name Granted Fiscal Year Price Grant Exercise Expiration 5% 10%
---- ------- ----------- ----- ---------- --------- ----------- ------ ------
Date Date Date
---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William V. 16,500 30% $6.875 8/17/99 Sept 17 2000 Sept 17 2009 $64,659 $146,334
-----------
Carey
-----
</TABLE>
The market price of the Common Stock at December 31, 1999 was lower than the
exercise price. No stock options were exercised in 1999.
CERTAIN TRANSACTIONS
The Company distributes Sutter Home wines in Poland. Mr. Richardson, a
director of the Company, is Director of Sales and Marketing Europe of Sutter
Home Winery, Inc. The total value of Sutter Home wines sold by the Company in
1999 was approximately $1.2 million.
For certain transactions with regard to Mr. Laskowski, see "The Board and
Its Committees".
-13-
<PAGE>
COMPARATIVE STOCK PRICES
The following chart sets forth comparative information regarding the
Company's cumulative stockholder return on its Common Stock since its initial
public offering completed in July 1998. Total stockholder return is measured by
dividing total dividends (assuming dividend reinvestment) plus share price
change for a period by the share price at the beginning of the measurement
period. The Company's cumulative stockholder return based on an investment of
$100 at July 28, 1998, when the Common Stock was first traded on the NASDAQ
market, at its closing price of $6.50 is compared to the cumulative total return
of the CRSP Total Return Index for the NASDAQ Market (US and Foreign) and the
NASDAQ Non-Financial Stocks Index, comprised of publicly traded companies which
are principally in Non-Financial business during that same period.
Comparison of Six Quarter periods Cumulative Total Return*
Among the Company, the NASDAQ Market
And NASDAQ Non-Financial Stocks
[COMPARISON GRAPH APPEARS BELOW]
JUN-98 SEP-98 DEC-98 MAR-99 JUN-99 SEP-99 DEC-99
------ ------ ------ ------ ------ ------ ------
CEDC 100 550 613 700 850 625 500
CRSP Total Return Index
for the NASDAQ Market 100 556 715 798 875 894 1310
(US & Foreign)
NASDAQ Non-Financial 100 556 730 680 762 661 684
Stocks
-14-
<PAGE>
* $100 invested on July 28, 1998, including reinvestment of dividends. Six
quarter periods ending December 31, 1999.
RATIFICATION OF THE APPOINTMENT
OF THE COMPANY'S INDEPENDENT PUBLIC AUDITORS
(PROPOSAL 2)
On March 2, 1993, the Company engaged the accounting firm of Ernst &
Young Audit Sp. z o.o. as the Company's principal independent auditors.
Stockholder ratification of Proposal 2 is not required by the Bylaws or
otherwise. However, the Board of Directors is submitting Proposal 2 to the
stockholders for ratification as a matter of good corporate practice. If the
stockholders fail to ratify Proposal 2, the Board of Directors will reconsider
whether or not to retain Ernst & Young Audit Sp. z o.o. Even if Proposal 2 is
ratified, the Board of Directors in its discretion may direct the appointment of
a different independent accountant at any time during the year if the Board of
Directors determines that such a change would be in the best interests of the
Company and its stockholders.
Representatives of Ernst & Young Audit Sp. z o.o. will not be present
at the Annual Meeting.
The affirmative vote of a majority of the votes cast at the Annual
Meeting is required to approve Proposal 2.
-15-
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
SECURITY OWNERSHIP OF
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the outstanding Common Stock as of March 31, 2000 : (i) by each
person who is known by the Company to beneficially own more than 5% of the
Common Stock; (ii) by each director and nominee for director of the Company;
(iii) by each of the executive officers of the Company; and (iv) by all
directors and executive officers of the Company as a group. All information in
this section is given on the basis of outstanding securities plus securities
deemed outstanding under Rule 13d-3 of the Securities Exchange Act of 1934, as
amended. Except as otherwise noted, the persons named in the table have sole
voting and investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
<TABLE>
<CAPTION>
Name and Address of Option as Beneficial Percent by
Beneficial Owner Ownership Class
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
William V. Carey (1) 1,114,480 27%
1602 Cottagewood Drive
Brandon, FL 33511
William V. Carey Stock Trust (1) 503,740 12.2%
1602 Cottagewood Drive
Brandon, FL 33511
Jeffrey Peterson (2) 619,240 15%
1707 Waldemere Street
Sarasota, FL 34239
Joseph S. Conti (3) 7,500 *
744 Metropolitan Avenue
Staten Island, NY 10301
James T. Grossmann (4) 21,000 *
805 S. Fairfax Street
Alexandria, VA 22314
James B. Kelly (3) 4,500 *
7606 Hamilton Spring Road
Bethesda, MD 20817
</TABLE>
-16-
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Options as Beneficial Percent by
Beneficial Owner Ownership Class
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
Jan W. Laskowski (3) 8,000 *
11 Corwell Lane
Hillingdon
Middlesex UB8 3DD
Joe M. Richardson (5) 9,340 *
P.O. Box 22154
Louisville, KY 40252
Evangelos Evangelou (6) 5,200 *
Polnejrozy 1 # 1409
02-798 Warsaw, Poland
All Directors and Officers as a Group
(Nine Persons) 1,789,760 43.3 %
</TABLE>
* Less than 1%
(1) Includes 611,740 shares beneficially owned by Mr. Carey (9,500 shares of
Common Stock can be acquired upon the exercise of currently exercisable
options) and 503,740 shares held in the name of the William V. Carey Stock
Trust. Represents. Mr. Carey is the beneficiary of the shares of the Common
Stock held in the William V. Carey Stock Trust, and he will become the sole
owner of these shares and may terminate the trust on December 11, 2005. Mr.
Carey administers the trust, which includes the power to vote the
securities held and make any investment decisions, with one other trustee,
Remy Hermida, 1707 West Reynolds Street, Plant City, Florida 33567. The
trust instrument permits one trustee to delegate any and all power, duties
or directions to the other trustee, although this action has not been
taken.
(2) Represents 12,000 shares of Common Stock that can be acquired upon the
exercise of currently exercisable options.
(3) Represents shares of Common Stock that can be acquired upon the exercise
of currently exercisable options.
(4) Represents 20,000 shares of Common Stock that can be acquired upon the
exercise of currently exercisable options and 1,000 shares held of record.
(5) Represents 5,500 shares of Common Stock that can be acquired upon
exercising currently exercisable options and 3,840 shares held of record.
(6) Represents 4,000 shares of Common Stock that can be acquired upon
exercising currently exercisable options and 1,200 shares held of record.
-17-
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, officers and beneficial
owners of more than 10% of the Common Stock to file with the SEC initial reports
of ownership of the Company's equity securities and to file subsequent reports
when there are changes in such ownership. Officers, directors and beneficial
owners of more than 10% of the Common Stock are required by SEC regulations to
furnish the Company with copies of all Section 16(a) reports they file.
SUBMISSION OF STOCKHOLDER PROPOSALS FOR ANNUAL MEETINGS
Any proposal or proposals by a stockholder intended to be included in
the Company's proxy statement and form of proxy relating to the 2001 annual
meeting of stockholders must be received by the Company no later than December
22, 2000, pursuant to the proxy solicitation rules of the SEC. Nothing in this
paragraph shall be deemed to require the Company to include in its proxy
statement and proxy relating to the 2001 annual meeting of stockholders any
stockholder proposal which may be omitted from the Company's proxy materials
pursuant to applicable regulations of the SEC in effect at the time such
proposal is received.
Under the Company's Bylaws, to be timely, a stockholder's notice must
be delivered to or mailed and received at the principal executive office of the
Company not less than 60 days and not more than 90 days prior to the meeting;
provided, however, that in the event that less than 75 days notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received not later than the
close of business on the 15th day following the day on which such notice of the
date of the annual meeting was mailed or such public disclosure was made. Since
the first notice of the Annual Meeting has been given through this Proxy
Statement, a stockholder's notice must be delivered to the Company no later than
May 4, 2000.
A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (b) the name and
address, as they appear on the Company's books, of the stockholder proposing
such business, (c) the class and number of shares of the Company's stock which
are beneficially owned by the stockholder, and (d) any material interest of the
stockholder in such business.
-18-
<PAGE>
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The Board of Directors of the Company does not know of any other
matters to be presented for a vote at the Annual Meeting. If, however, any other
matter should properly come before the Annual Meeting or any adjournment
thereof, the persons named in the accompanying proxy will vote such proxy in
accordance with their best judgment.
By Order of the Board of Directors
William V. Carey
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Sarasota, Florida
April 26, 2000
A COPY OF THE ANNUAL REPORT TO STOCKHOLDERS FOR THE FISCAL YEAR ENDED DECEMBER
31, 1999 ACCOMPANIES THIS PROXY STATEMENT. THIS REPORT IS A COMBINED REPORT WITH
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE COMPANY WILL PROVIDE
COPIES OF THE EXHIBITS TO THE FORM 10-K UPON PAYMENT OF A REASONABLE FEE, UPON
RECEIPT OF A REQUEST ADDRESS TO THE CORPORATE SECRETARY, CENTRAL EUROPEAN
DISTRIBUTION CORPORATION, 1343 MAIN AVE., SUITE 301, SARASOTA, FLORIDA 34236
-19-
<PAGE>
APPENDICE A
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
AUDIT COMMITTEE CHARTER
ORGANIZATION
There shall be a committee of the Board of Directors to be known as the Audit
Committee which will be composed and organized within the requirements of the
Securities and Exchange Commission. The Audit Committee shall be composed of
Directors who are independent of the management of the Company and are free of
any relationship that in the opinion of the board of Directors, would interfere
with their independent judgment as committee members. The Audit Committee will
keep open communication but will meet formally at least twice a year, ideally
four times a year to coincide with the announcement of quarterly financial
reports.
STATEMENT OF POLICY
The Audit Committee shall provide assistance to the Directors in fulfilling
their responsibility to the shareholders, potential shareholders and investment
community relating to corporate accounting reporting practices of the Company.
In so doing, it is the responsibility of the Audit Committee to maintain free
and open communication between the Directors, the independent auditors and the
financial management of the company.
RESPONSIBILITIES
In carrying out its responsibilities, the audit committee believes its policies
should remain flexible, in order to best react to changing conditions and to
ensure to the Directors and shareholders that the corporate accounting and
reporting practices of the Company are in accordance with all requirements and
are of the highest quality.
In carrying out its responsibilities, the Audit Committee will:
o Review and recommend to the Directors, the independent auditors to be
selected to audit the financial statements of the Company and subsidiaries.
o Review and concur with management's appointment, terminations or
replacement of the financial management of the Company, principally the
Finance Director.
-20-
<PAGE>
o Meet with the independent auditors and financial management of the Company
to review the scope of the proposed audit for the current year and the
audit procedures to be utilized, THE LEVEL of the independent auditor's
compensation and at the conclusion there of review such audit, including
any comments or recommendations of the independent auditors.
o Review with the independent auditors, the Company's financial and
accounting personnel, the adequacy and effectiveness of the accounting
personnel, the adequacy and effectiveness of the accounting and financial
controls of the company and elicit any recommendations for the improvement
of such internal controls or particular areas where new or more detailed
controls to procedures are desirable. Particular emphasis should be given
to the adequacy of internal controls to expose any payments, transactions
or procedures that might be deemed illegal or otherwise improper.
o Review the internal audit function of the company including the
independence and authority of its reporting obligations, the proposed audit
plans for the coming year and the coordination of such plans with the
independent auditor.
o Receive prior to each meeting, a summary of findings from completed
internal audits and a progress report on the proposed internal audit plan
with explanations for any deviations from the original plan.
o Review the financial statements in the quarterly and annual reports to the
shareholders with management and the independent auditors to determine that
the independent auditors are satisfied with the disclosure and content of
the financial statements to be presented to shareholders. Any changes in
accounting principles should be reviewed
o Review with the financial management the results of their timely analysis
of significant financial reporting issues and practices, including changes
in, or adoptions of, accounting principles and disclosure practices. Also
review with financial management and the auditors their quantitative
judgments about the appropriateness, not just acceptability, of accounting
principles and financial disclosure practices used or proposed to be used
and particularly, the degree of aggressiveness or conservatism of the
organization's accounting principles and underlying estimates. Attention
should be paid to accounting principles and reporting requirements in
Poland where the Company conducts it's business.
o Provide sufficient opportunity for the Finance Director and independent
auditors to meet with the members of the audit committee without members of
executive management present. Among the items to be discussed in these
meetings are the Finance Director's evaluation of the company's financial
accounting and auditing personnel and the cooperation that the independent
auditors received during the course of audit.
o Review accounting and financial human resources and succession planning
within the Company.
o Report the results of the annual audit to the board of directors. If
requested by the board, invite the independent auditors to attend the full
board of directors meeting to assist in
-21-
<PAGE>
reporting the results of the annual audit or to answer other Directors
questions (alternatively the other Directors, particularly the other
independent directors may be invited to attend the audit committee meeting
during which the results of the annual audit are reviewed).
o Review the nature and scope of other professional services provided to the
Company by the independent auditors and consider the relationship to the
auditors' independence.
o Within the scope of its activities pay special attention to matters
specific to the Company's activities and areas of operation. More
specifically to review the proper translation and reporting of business
activities of subsidiaries in Poland into the consolidated Company
accounts and also to review the impact of new acquisitions and their
integration and consolidation into the Group.
o Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if in
its judgment that is appropriate.
o To consider any potential conflict of interest between the activities of
the independent Board of Directors and the interests of the Company.
Possible conflicts of interest must be referred to Directors at Board
Meetings and consulted with the independent auditors, the Chairman, Vice
Chairman or legal counsel as appropriate.
POWERS
The audit committee shall have the power to conduct or authorize investigations
into matters within the committee's scope of responsibilities. The committee
shall be empowered to retain independent counsel, accountants or others to
assist it in the conduct of any investigation. The committee may ask members of
management or others, as appropriate, to attend its meeting and provide
pertinent information as necessary.
RELATIONSHIP WITH AUDITORS AND BOARD OF DIRECTORS
The company's independent auditors are ultimately accountable to the board of
directors of the company and to the audit committee, as representatives of the
stockholders of the company. The board of directors and the audit committee as
representatives of the company's stockholders, have ultimate authority and
responsibility to select, evaluate and, where appropriate, replace the
independent auditors. While the audit committee has the responsibilities and
powers set forth in this charter, it is not the duty of the audit committee to
plan or conduct audits or to determine that the company's financial statements
are complete and accurate and are in accordance with generally accepted market
principles. This is the responsibility of management and independent auditors.
Nor is it the duty of the audit committee to conduct investigations, to resolve
disagreements, if any, between management and independent auditors or to assure
compliance with laws and regulations and the company's code of conduct, if any.
-22-
<PAGE>
PROXY PROXY
- ----- -----
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
(Solicited on behalf of the Board of Directors)
The undersigned holder of common stock of Central European Distribution
Corporation, revoking all proxies heretofore given, hereby constitutes and
appoints William V. Carey and Jeffrey Peterson, and each of them Proxies, with
full power of substitution, for and in the name, place and stead of the
undersigned, to vote all of the undersigned's shares of the said stock,
according to the number of votes and with all the powers the undersigned would
possess if personally present, at the Annual Meeting of Stockholders of Central
European Distribution Corporation, to be held at the offices of Hogan & Hartson,
L.L.P., 885 Third Avenue, 26th Floor, New York, New York, Tuesday, May 23, 2000,
at 10:00 a.m., local time, and at any adjournments thereof.
The undersigned hereby acknowledges receipt of the Notice of Meeting and
Proxy Statement relating to the meeting and hereby revokes any proxy or proxies
heretofore given.
Each properly executed Proxy will be voted in accordance with the
specifications made on the reverse side of this Proxy and in the discretion of
the Proxies on any other matter which may properly come before the meeting.
Where no choice is specified, this Proxy will be voted FOR all listed nominees
to serve as directors and FOR proposal 2.
PLEASE MARK, DATE AND SIGN THIS PROXY ON THE REVERSE SIDE
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
May 23, 2000
(arrow) Please Detach and Mail in the Envelope Provided (arrow)
[x] Please mark your
votes as in this
example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR MATTERS (1)
AND (2) LISTED BELOW, TO COME BEFORE THE ANNUAL MEETING.
<TABLE>
<CAPTION>
FOR all nominees WITHHOLD
listed at right AUTHORITY
(except as marked to to vote for all
the contrary below). nominees listed at right.
<S> <C> <C> <C>
1. Election of [ ] [ ] Nominees: William W. Carey
six (6) Tony Housh
directors, to James T. Grossmann
serve on the Jan W. Laskowski
Board of Directors, Jeffrey K. Peterson
each for a one-year term and Joe M. Richardson
until their respective successors
are elected
FOR, except withhold from the following nominees:
- ---------------------------------------
</TABLE>
FOR AGAINST ABSTAIN
2. To ratify the Board of Directors' [ ] [ ] [ ]
appointment of Ernst & Young Audit Sp.
z.o.o. as the Company's independent
public accountants for the year 2000.
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
This Proxy, which is solicited on behalf of the Board of Directors, will be
voted FOR the matters described in paragraphs (1) and (2) unless the
shareholder specifies otherwise, (in which case it will be voted as specified).
SIGNATURE______________________________________ DATED_________________, 2000
SIGNATURE______________________________________ DATED_________________, 2000
NOTE: Please sign exactly as name or names appear hereon. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If a corporation, please sign in full corporate name by president or
other authorized officer. If a partnership, please sign in partnership name by
authorized partner.
