<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
CANANDAIGUA WINE COMPANY, 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):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] 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:
-------------------------------------------------------------------------
[X] 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:
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Notes:
<PAGE>
December 27, 1995
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Canandaigua Wine Company, Inc. at Chase Tower, One Chase Square, Rochester, New
York, on Thursday, January 18, 1996 at 11:00 a.m.
The matters expected to be acted upon at the meeting are described in detail
in the accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement. The Company's 1995 Annual Report, which is contained in this
package, sets forth important business and financial information concerning the
Company.
We hope you are able to attend this year's Annual Meeting.
VERY TRULY YOURS,
MARVIN SANDS RICHARD SANDS
Chairman of the Board President and
Chief Executive Officer
<PAGE>
CANANDAIGUA WINE COMPANY, INC.
116 BUFFALO STREET
CANANDAIGUA, NEW YORK 14424
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JANUARY 18, 1996
----------------
NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Meeting") of
Stockholders of CANANDAIGUA WINE COMPANY, INC. (the "Company") will be held at
Chase Tower, One Chase Square, Rochester, New York, on Thursday, January 18,
1996 at 11:00 a.m., local time, for the following purposes more fully described
in the accompanying Proxy Statement:
1. To elect directors of the Company ("Proposal No. 1").
2. To approve an Amended and Restated Certificate of Incorporation of the
Company which amends the Company's Restated Certificate of Incorporation to
authorize the issuance of 1,000,000 shares of a class of preferred stock
("Proposal No. 2").
3. To consider and act upon a proposal to approve and ratify the selection of
Arthur Andersen LLP, Certified Public Accountants, as the Company's independent
auditors for the fiscal year ending August 31, 1996 ("Proposal No. 3").
4. To transact such other business as may properly come before the Meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on November 27, 1995
as the record date for the determination of stockholders entitled to notice of
and to vote at the Meeting.
A Proxy Statement and Proxy are enclosed.
WE HOPE YOU WILL ATTEND THIS MEETING IN PERSON, BUT IF YOU CANNOT, PLEASE
SIGN AND DATE THE ENCLOSED PROXY. RETURN THE PROXY IN THE ENCLOSED ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
BY ORDER OF THE BOARD OF DIRECTORS
ROBERT SANDS, Secretary
Dated at Canandaigua, New York
December 27, 1995
<PAGE>
CANANDAIGUA WINE COMPANY, INC.
116 BUFFALO STREET
CANANDAIGUA, NEW YORK 14424
DATED DECEMBER 27, 1995
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
(JANUARY 18, 1996)
This Proxy Statement is furnished to stockholders in connection with the
solicitation of proxies by the Board of Directors of CANANDAIGUA WINE COMPANY,
INC. (the "Company") to be used at the Annual Meeting of Stockholders of the
Company, which will be held on Thursday, January 18, 1996 (the "Meeting"), and
at any adjournments thereof. This Proxy Statement and accompanying proxy are
being first mailed to stockholders on or about December 29, 1995. The proxy,
when properly executed and received by the Secretary of the Company prior to
the Meeting, will be voted as therein specified unless revoked by filing with
the Secretary prior to the Meeting a written revocation or a duly executed
proxy bearing a later date. A stockholder may also revoke his or her proxy in
person at the Meeting. Unless authority to vote for one or more of the
director nominees is specifically withheld, a signed proxy will be voted FOR
the election of the director nominees named herein (Proposal No. 1), unless
otherwise indicated, FOR the Amended and Restated Certificate of Incorporation
of the Company which amends the Restated Certificate of Incorporation to
authorize the issuance of 1,000,000 shares of a class of preferred stock
(Proposal No. 2) and, unless otherwise indicated, FOR the selection of Arthur
Andersen LLP as the Company's independent auditors for the fiscal year ending
August 31, 1996 (Proposal No. 3).
As described below under the heading "Voting Securities," the outstanding
capital stock of the Company consists of Class A Common Stock and Class B
Common Stock. The Company has enclosed with the proxy materials a proxy which
has been designed in a manner so that it can be used by stockholders owning
Class A Common Stock or Class B Common Stock or both Class A Common Stock and
Class B Common Stock.
The cost of soliciting proxies will be borne by the Company. In addition to
the solicitation by use of the mails, directors, officers or regular employees
of the Company, without extra compensation, may solicit proxies personally, by
telephone, telegraph or facsimile transmission. The Company has requested
persons holding stock for others in their names or in the names of nominees to
forward soliciting material to the beneficial owners of such shares and will,
if requested, reimburse such persons for their reasonable expenses in so
doing.
VOTING SECURITIES
The total outstanding capital stock of the Company as of November 27, 1995,
consisted of 16,246,046 shares of Class A Common Stock, par value $.01 per
share (the "Class A Stock"), and 3,365,958 shares of Class B Common Stock, par
value $.01 per share (the "Class B Stock"). Each share of Class B Stock is
convertible into one share of Class A Stock at any time at the option of the
holder. Only holders of Class A Stock and holders of Class B Stock of record
on the books of the Company at the close of business on November 27, 1995, the
record date for eligibility to vote at the Meeting (the "Record Date"), are
entitled to notice of and to vote at the Meeting and at any adjournments
thereof. Each holder of Class A Stock is entitled to one (1) vote for each
share of Class A Stock registered in his or her name and each holder of Class
B Stock is entitled to ten (10) votes for each share of Class B Stock
registered in his or her name. Pursuant to the Company's Restated Certificate
of Incorporation, the holders of the Class A Stock, voting as a separate
class, are entitled to elect one-fourth (1/4) of the number of directors to
be elected at the
<PAGE>
Meeting (rounded, if the total number of directors to be elected is not evenly
divisible by four (4), to the next higher whole number) and the holders of the
Class B Stock, voting as a separate class, are entitled to elect the remaining
number of directors to be elected at the Meeting. Pursuant to the provisions
of the Delaware General Corporation Law, the certificate of incorporation or
by-laws of a corporation authorized to issue stock may specify the votes that
shall be necessary to elect directors. In the absence of such specification,
directors shall be elected by a plurality of the votes of the shares present
in person or represented by proxy at the meeting and entitled to vote on the
election of directors. Such votes of the shares shall include abstentions but
shall not include votes of shares registered on the books of the corporation
in the name of brokers who are not present in person or represented by proxy
at the meeting. The Company's Restated Certificate of Incorporation and By-
Laws provide for an equivalent method for the election of directors as under
the Delaware General Corporation Law. Subject to the provisions of the
Delaware General Corporation Law and the Company's Restated Certificate of
Incorporation, the holders of the Class A Stock and the holders of the Class B
Stock vote together as a single class on all other items of business before
the stockholders.
With regard to the election of directors, votes may be cast in favor or
withheld; because directors are elected by a plurality, votes that are
withheld will be excluded entirely from the vote and will have no effect.
Abstentions and broker "non-votes" will be counted toward determining the
presence of a quorum for the transaction of business. Abstentions may be
specified on all proposals except the election of directors. With respect to
all proposals other than the election of directors, abstentions will have the
effect of a negative vote. A broker "non-vote" will have the effect of a
negative vote with respect to the Amended and Restated Certificate of
Incorporation authorizing a class of preferred stock but will not have an
effect with respect to approving Arthur Andersen LLP as the Company's
independent auditors. The treatment of abstentions and broker "non-votes" is
consistent with applicable Delaware law and the Company's By-Laws.
2
<PAGE>
BENEFICIAL OWNERSHIP
The following table, with notes thereto, sets forth as of the Record Date or
such other date specifically noted (i) the persons known to the Company to own
beneficially more than 5% of the Company's Class A Stock or Class B Stock, (ii)
the number of shares owned by them, and (iii) the percent of such class so
owned, rounded to the nearest one-tenth of one percent (such information being
based on information furnished by or on behalf of each person concerned):
SHARES BENEFICIALLY OWNED
CLASS A STOCK
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OF AMOUNT AND NATURE OF OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
------------------- -------------------- -------
<S> <C> <C>
Marvin Sands (1) 1,738,418(2)(3) 10.7%(2)(3)
116 Buffalo Street
Canandaigua, NY 14424
Marilyn Sands (1) 1,738,418(2)(4) 10.7%(2)(4)
116 Buffalo Street
Canandaigua, NY 14424
Richard Sands (1) 1,738,418(2)(5) 10.7%(2)(5)
116 Buffalo Street
Canandaigua, NY 14424
Robert Sands (1) 1,738,418(2)(6) 10.7%(2)(6)
116 Buffalo Street
Canandaigua, NY 14424
CWC Partnership-I (1) 1,738,418(2)(7) 10.7%(2)(7)
116 Buffalo Street
Canandaigua, NY 14424
CWC Partnership-II (1) 1,738,418(2)(8) 10.7%(2)(8)
116 Buffalo Street
Canandaigua, NY 14424
Marilyn Sands, as Trustee under Irrevocable 1,738,418(2)(9) 10.7%(2)(9)
Declarations of Trust Nos. 3 and 4 (1)
116 Buffalo Street
Canandaigua, NY 14424
Richard Sands and Robert Sands, as Co- 1,738,418(2)(10) 10.7%(2)(10)
Trustees under
Irrevocable Trust Agreement (1)
116 Buffalo Street
Canandaigua, NY 14424
David A. Rocker (11) 929,279(11) 5.7%(11)
Suite 1759
45 Rockefeller Plaza
New York, NY 10111
Wellington Management Company (12) 1,040,780(12) 6.4%(12)
75 State Street
Boston, MA 02109
</TABLE>
3
<PAGE>
CLASS B STOCK
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OF AMOUNT AND NATURE OF OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
------------------- -------------------- -------
<S> <C> <C>
Marvin Sands (1) 2,838,371(13) 84.3%(13)
116 Buffalo Street
Canandaigua, NY 14424
Marilyn Sands (1) 2,838,371(14) 84.3%(14)
116 Buffalo Street
Canandaigua, NY 14424
Richard Sands (1) 2,838,371(15) 84.3%(15)
116 Buffalo Street
Canandaigua, NY 14424
Robert Sands (1) 2,838,371(16) 84.3%(16)
116 Buffalo Street
Canandaigua, NY 14424
Richard Sands and Robert Sands, as Co-Trustees 2,838,371(17) 84.3%(17)
under
Irrevocable Trust Agreement (1)
116 Buffalo Street
Canandaigua, NY 14424
Marilyn Sands, as Trustee under Irrevocable 2,838,371(18) 84.3%(18)
Declarations of
Trust Nos. 3 and 4 (1)
116 Buffalo Street
Canandaigua, NY 14424
CWC Partnership-I (1) 2,838,371(19) 84.3%(19)
116 Buffalo Street
Canandaigua, NY 14424
CWC Partnership-II (1) 2,838,371(20) 84.3%(20)
116 Buffalo Street
Canandaigua, NY 14424
</TABLE>
- --------
(1) Richard and Robert Sands are adult children of Marvin and Marilyn Sands.
Laurie Sands, an adult child of Marvin and Marilyn Sands, died on March 9,
1995. On June 17, 1993, Richard Sands, Robert Sands and Laurie Sands
entered into a Stockholders Agreement (the "Stockholders Agreement") which
provided each with a right of first refusal to purchase, under certain
circumstances, the shares of Class A Stock and Class B Stock owned by the
others and which may be terminated only by the consent of all parties. On
January 17, 1995, Richard Sands, Robert Sands and Laurie Sands each
executed a consent, permitting Laurie Sands to transfer, free of all
restrictions arising under the Stockholders Agreement, all of her shares
of Class A and Class B Stock to CWC Partnership-I, a New York partnership
formed on January 17, 1995 ("CWCP-I"). The partners of CWCP-I are Richard
Sands, Robert Sands and the Estate of Laurie Sands. See footnote (7)
below. Also on January 17, 1995, CWCP-I agreed to be bound by the terms of
the Stockholders Agreement. Pursuant to the terms of an Affiliates
Agreement, dated June 29, 1993 (the "Affiliates Agreement"), each of the
following agreed to vote his/her Class B Stock to cause Ellis Goodman and
Sir Harry Solomon to be elected to the Board of Directors as Class B
Directors subject to certain conditions as set forth in the Affiliates
Agreement: Marvin Sands; Marilyn Sands; Richard Sands; Robert Sands;
Laurie Sands; Marilyn Sands, as Trustee under Irrevocable Declarations of
Trust Nos. 1, 2, 3, and 4, each dated November 18, 1987; and Richard
Sands, Robert Sands and Laurie Sands, as Co-Trustees under an Irrevocable
Trust Agreement dated November 18, 1987. For additional information
regarding the Affiliates Agreement, see "PROPOSAL NO. 1--NOMINATION AND
ELECTION OF DIRECTORS." Irrevocable Declaration of Trust, No. 1, referred
to above, terminated by its terms on November 18, 1993. As a result of
such Trust's termination, 22,500 shares of Class B Stock were distributed
to each of Richard Sands, Robert Sands and Laurie Sands. Irrevocable
Declaration of Trust, No. 2, referred to above, terminated by its terms on
November 18, 1995. As a result of such Trust's termination, 22,500 shares
of Class B
4
<PAGE>
Stock are being distributed to Richard Sands, 22,273 shares of Class B Stock
are being distributed to Robert Sands and 22,727 shares of Class B Stock are
being distributed to CWC Partnership-II, a New York partnership formed on
January 17, 1995 ("CWCP-II"), the partners of which are the Estate of Laurie
Sands and The Robert Sands Descendants Trust. See footnote (8) below.
Pursuant to Rule 13(d)-5(b)(1) under the Securities Exchange Act (the
"Exchange Act"), by virtue of the Stockholders Agreement, the Affiliates
Agreement and the partnership agreements governing CWCP-I and CWCP-II, the
aforementioned persons, Trusts and partnerships are a group (the "Group")
and, as such, the Group is deemed to have beneficial ownership of all
securities of the Company beneficially owned by the members of the Group.
Except with respect to the shares subject to the Stockholders Agreement, the
shares subject to the Affiliates Agreement, the shares owned by CWCP-I and
CWCP-II and the shares subject to the Irrevocable Trust Agreement described
in footnote (10) below, no member of the Group is required to consult with
any other family member with respect to the voting or disposition of any
shares of the Company and each such member of the Group disclaims beneficial
ownership of each others' shares with respect to matters not governed by the
Stockholders Agreement, the Affiliates Agreement, the partnership agreements
governing CWCP-I and CWCP-II or the Irrevocable Trust Agreement described in
footnote (10) below.
(2) The number of shares and the percentage of ownership is exclusive of
shares of Class A Stock issuable pursuant to the conversion feature of the
Class B Stock beneficially owned by the members of the Group. Each of the
Sands family stockholders, Marilyn Sands as Trustee of Irrevocable
Declarations of Trust Nos. 3 and 4, Richard and Robert Sands, in their
capacities as Co-Trustees of the Trust described in footnote (10) below,
CWCP-I and CWCP-II has advised the Company that he/she/it has no plans to
convert any Class B Stock into Class A Stock. If such shares of Class A
Stock issuable upon conversion of the Class B Stock were to be added to
the amount in the table, the amount of Class A Stock beneficially owned by
the Group would be 4,576,789 shares and the percentage of ownership would
be 24.0% based upon 19,084,417 shares deemed outstanding pursuant to Rule
13-3(d)(1) under the Securities Exchange Act.
(3) Excluding the shares of Class A Stock beneficially owned as a result of
his membership in the Group, Marvin Sands beneficially owns 792,283 shares
of Class A Stock, which is 4.9% of such Class. This total includes 788,867
shares of Class A Stock owned by Mr. Sands' wife, Marilyn Sands. The
788,867 shares include 787,501 shares of Class A Stock, a life estate in
which is held by Marilyn Sands and the remainder interest in which is held
by Richard Sands, Robert Sands and CWCP-II. Mr. Sands disclaims beneficial
ownership with respect to all shares owned by Marilyn Sands. Excluding the
effect of his membership in the Group, and adding the 248,100 shares of
Class A Stock issuable pursuant to the conversion feature of Class B Stock
beneficially owned by Mr. Sands to his 792,283 shares of Class A Stock,
the amount of Class A Stock beneficially owned by Mr. Sands would be
1,040,383 shares and the percentage of ownership would be 6.3%. These
amounts include an aggregate of 146,250 shares of Class B Stock as to
which Mr. Sands disclaims beneficial ownership. See Class B Stock table
and footnotes (13) and (14) below.
(4) Excluding the shares of Class A Stock beneficially owned as a result of
her membership in the Group, Marilyn Sands beneficially owns 788,867
shares of Class A Stock, which is 4.9% of such Class. With respect to
787,501 shares of the 788,867 shares, Marilyn Sands is the beneficial
owner of a life estate which includes the right to receive income from and
the power to vote and dispose of such shares. Excluding the effect of her
membership in the Group, and adding the 146,250 shares of Class A Stock
issuable pursuant to the conversion feature of Class B Stock beneficially
owned by Marilyn Sands to her 788,867 shares of Class A Stock, the amount
of Class A Stock beneficially owned by Mrs. Sands would be 935,117 shares
and the percentage of ownership would be 5.7%. See Class B Stock table and
footnotes (14) and (17) below. The 788,867 shares do not include 3,416
shares of Class A Stock owned by Marilyn Sands' husband, Marvin Sands.
Marilyn Sands disclaims beneficial ownership of all such securities owned
by Marvin Sands.
(5) Excluding the shares of Class A Stock beneficially owned as a result of
his membership in the Group, Richard Sands beneficially owns 314,304
shares of Class A Stock or 1.9%. Such total includes an aggregate of
10,045 shares of Class A Stock owned by Richard Sands' wife individually
and as custodian for her children. Richard Sands disclaims beneficial
ownership with respect to all shares owned by his wife individually and as
custodian for her children. Mr. Sands is a managing partner of CWCP-I,
which owns for its own account 308,951 shares of Class A Common Stock.
Excluding the effect of his membership in the Group, and adding the
691,279 shares of Class A Stock issuable pursuant to the conversion
feature of Class B Stock beneficially owned by Richard Sands to his
314,304 shares of Class A Stock, the amount of Class A Stock beneficially
owned by Mr. Sands would be 1,005,583 shares and the percentage of
ownership would be 5.9%. See Class B Stock table and footnote (15) below.
None of the foregoing amounts include the remainder interest in 262,501
shares of Class A Stock owned by Richard Sands. The remainder interest is
in 787,501 shares of Class A Stock, a life estate in which is held by
Marilyn Sands. The remainder interest is held by Richard Sands, Robert
Sands and CWCP-II. See footnote (4) above. Richard Sands disclaims
beneficial ownership with respect to such 262,501 shares.
(6) Excluding the shares of Class A Stock beneficially owned as a result of
his membership in the Group, and excluding any ownership interest arising
out of The Robert Sands Descendants Trust, Robert Sands beneficially owns
322,880 shares of Class A Stock or 2.0%. Such total includes an aggregate
of 18,564 shares of Class A Stock owned by Mr. Sands' wife, individually
and as custodian for their children. Robert Sands is a managing partner of
CWCP-I, which owns for its own account 308,951 shares of Class A Common
Stock. Excluding the effect of his membership in the Group and any
ownership interest arising out of The Robert Sands Descendants Trust, and
adding the 691,051 shares of Class A Stock issuable pursuant to the
conversion feature of Class B Stock owned by Robert Sands to his 322,880
shares of Class A Stock, the amount of Class A Stock beneficially owned by
Robert Sands would be 1,013,931 shares and the percentage of ownership
would be 6.0%. See Class B Stock table and footnote (16) below. None
5
<PAGE>
of the foregoing amounts include the remainder interest in 259,849 shares
of Class A Stock owned by Robert Sands. The remainder interest is in
787,501 shares of Class A Stock, a life estate in which is held by Marilyn
Sands. The remainder interest is held by Richard Sands, Robert Sands and
CWCP-II. See footnote (4) above. Robert Sands disclaims beneficial
ownership with respect to such 259,849 shares.
(7) As a result of capital contributions upon its formation on January 17,
1995, CWCP-I acquired 308,951 shares of Class A Stock or 1.9% (as of the
Record Date). The partners of CWCP-I are Richard Sands, Robert Sands and
the Estate of Laurie Sands. Upon final settlement or earlier
distribution, the partnership interests owned by the Estate of Laurie
Sands will be distributed in accordance with Ms. Sands' Will to a marital
trust for the benefit of Ms. Sands' husband, Andrew Stern, M.D., and to
trusts for the benefit of Ms. Sands' children, Abigail and Zachary Stern.
Excluding the effect of its membership in the Group, and adding the
678,964 shares of Class A Stock issuable pursuant to the conversion
feature of Class B Stock held by CWCP-I to its 308,951 shares of Class A
Stock, the amount of Class A Stock held by CWCP-I would be 987,915 shares
and the percentage of ownership would be 5.8%. See Class B Stock table
and footnote (19) below.
(8) Excluding the shares of Class A Stock beneficially owned as a result of
its membership in the Group, CWCP-II beneficially owns no shares of Class
A Stock. The partners of CWCP-II are the Estate of Laurie Sands and The
Robert Sands Descendants Trust. Upon final settlement or earlier
distribution, the partnership interests owned by the Estate of Laurie
Sands will be distributed in accordance with Ms. Sands' Will to a marital
trust for the benefit of Ms. Sands' husband, Andrew Stern, M.D., and to
trusts for the benefit of Ms. Sands' children, Abigail and Zachary Stern.
Excluding the effect of its membership in the Group, and as a result of
capital contributions upon its formation on January 17, 1995 and the
termination of Irrevocable Declaration of Trust No. 2, and adding the
22,727 shares of Class A Stock issuable pursuant to the conversion
feature of Class B Stock owned by CWCP-II, the amount of Class A Stock
held by CWCP-II would be 22,727 shares and the percentage of ownership
would be 0.1%. See Class B Stock table and footnote (20) below. None of
the foregoing amounts include the remainder interest in 265,151 shares of
Class A Stock owned by CWCP-II. The remainder interest is in 787,501
shares of Class A Stock, a life estate in which is held by Marilyn Sands.
See footnote (4) above. The remainder interest is held by Richard Sands,
Robert Sands and CWCP-II. CWCP-II disclaims beneficial ownership with
respect to such 265,151 shares.
(9) Excluding the shares of Class A Stock beneficially owned as a result of
their membership in the Group, and excluding the 141,750 shares of Class
A Stock issuable pursuant to the conversion feature of the Class B Stock
owned by the two Trusts, neither of the Trusts beneficially owns any
shares of Class A Stock. If the 141,750 shares of Class A Stock issuable
pursuant to the conversion feature of Class B Stock owned by the two
Trusts were included, the amount of Class A Stock beneficially owned by
the two Trusts would be 141,750 shares and the percentage of ownership
would be 0.9%. See Class B Stock table and footnote (18) below.
(10) Excluding the shares of Class A Stock beneficially owned as a result of
its membership in the Group, and excluding the 506,250 shares of Class A
Stock issuable pursuant to the conversion feature of the Class B Stock
owned by the Trust, the Trust beneficially owns no shares of Class A
Stock. If the 506,250 shares of Class A Stock issuable pursuant to the
conversion feature of the Class B Stock were included, the Trust would
own 506,250 shares of Class A Stock and the percentage of ownership would
be 3.0%. See Class B Stock Table and footnote (17) below.
(11) The number of shares is as of December 2, 1994, as reported in Amendment
No. 11 to Schedule 13D filed with the Securities and Exchange Commission
by David A. Rocker on December 15, 1994. The percentage of ownership is
calculated on the basis of 16,246,046 shares of Class A Stock outstanding
on the Record Date. The total number of shares consists of 878,929 shares
of Class A Stock owned by Rocker Partners, L.P. (5.4% of the outstanding
shares of Class A Stock), 27,350 shares of Class A Stock owned by Compass
Holdings, Ltd. (0.2% of the outstanding shares of Class A Stock), and
23,000 shares of Class A Stock owned by Centennial Partners I, L.P. (0.1%
of the outstanding shares of Class A Stock). David A. Rocker (i) serves
as the sole Managing Partner of Rocker Partners, L.P., (ii) through
Rocker Offshore Management Company, Inc., serves as investment adviser to
Compass Holdings, Ltd. and (iii) serves as investment advisor for
Centennial Partners I, L.P. David Rocker possesses sole power to vote and
direct the disposition of all shares of Class A Stock owned by Rocker
Partners, L.P., Compass Holdings, Ltd. and Centennial Partners I, L.P.
For further information pertaining to Mr. Rocker, Rocker Partners, L.P.,
Compass Holdings, Ltd., and Centennial Partners I, L.P., reference should
be made to Schedule 13D and Amendments Nos. 1 through 11 thereto filed
with the Securities and Exchange Commission by David A. Rocker.
(12) The number of shares equals the number of shares of Class A Stock
reported by Wellington Management Company ("WMC") in its Schedule 13G
dated February 3, 1995, filed with the Securities and Exchange
Commission. The percentage of ownership is calculated on the basis of
16,246,046 shares of Class A Stock outstanding on the Record Date. In its
Schedule 13G, WMC states that, in its capacity as investment advisor, it
may be deemed the beneficial owner of 1,040,780 shares of Class A Stock
of the Company which are owned by a variety of investment advisory
clients of WMC, which clients are entitled to receive dividends and the
proceeds from the sale of such shares. Further, the Schedule 13G states
that no such client is known to have such interest with respect to more
than five percent (5%) of the Class A Stock. The Schedule 13G also
reports that Wellington Trust Company, N.A. (BK) is the subsidiary of WMC
which acquired the Class A Stock reported on by WMC. The Schedule 13G
indicates that of the number of shares beneficially owned by WMC, WMC
shares voting power with respect to 733,430 shares and shares dispositive
6
<PAGE>
power with respect to 1,040,780 shares. WMC reported no sole voting or sole
dispositive power with respect to the Class A Stock beneficially owned. For
further information pertaining to WMC, reference should be made to WMC's
Schedule 13G.
(13) Excluding the shares of Class B Stock beneficially owned as a result of
his membership in the Group, Marvin Sands beneficially owns 248,100
shares of Class B Stock or 7.4%. These 248,100 shares include an
aggregate of 141,750 shares of Class B Stock held by certain trusts for
the benefit of Mr. Sands' wife and children. Such total also includes
4,500 shares of Class B Stock owned by his wife, Marilyn Sands. Mr. Sands
disclaims beneficial ownership with respect to all such shares. The
248,100 shares do not include 506,250 shares of Class B Stock held in
Trust under the Irrevocable Trust Agreement described in footnote (17)
below.
(14) Excluding the shares of Class B Stock beneficially owned as a result of
her membership in the Group, Marilyn Sands beneficially owns 146,250
shares of Class B Stock or 4.3%. These 146,250 shares include 141,750
shares of Class B Stock held by two Trusts, of which Marilyn Sands is the
trustee and a beneficiary. See footnote (18) below. The 146,250 shares do
not include 101,850 shares of Class B Stock owned by Marvin Sands. The
146,250 shares also do not include 506,250 shares of Class B Stock held
in Trust under the Irrevocable Trust Agreement described in footnote (17)
below.
(15) Excluding the shares of Class B Stock beneficially owned as a result of
his membership in the Group, Richard Sands beneficially owns 691,279
shares of Class B Stock or 20.5%. This total includes 22,500 shares of
Class B Stock being distributed to Richard Sands as a result of the
termination of Irrevocable Declaration of Trust No. 2. See footnote (1)
above. This total does not include the 506,250 shares of Class B Stock
held in Trust under the Irrevocable Trust Agreement described in footnote
(17) below. Richard Sands is a managing partner of CWCP-I, which owns
678,964 shares of Class B Stock. See footnote (19) below.
(16) Excluding the shares of Class B Stock beneficially owned as a result of
his membership in the Group, and excluding his interest arising out of
the Robert Sands Descendants Trust, Robert Sands beneficially owns
691,051 shares of Class B Stock or 20.5%. This total includes 22,273
shares of Class B Stock being distributed to Robert Sands as a result of
the termination of Irrevocable Declaration of Trust No. 2. See footnote
(1) above. This total does not include the 506,250 shares of Class B
Stock held in Trust under the Irrevocable Trust Agreement described in
footnote (17) below. Robert Sands is a managing partner of CWCP-I, which
owns 678,964 shares of Class B Stock. See footnote (19) below.
(17) Excluding the shares of Class B Stock beneficially owned as a result of
its membership in the Group, 506,250 shares of Class B Stock, or 15%, are
owned by a Trust created by Marvin Sands under the terms of an
Irrevocable Trust Agreement dated November 18, 1987 (the "Trust"). The
Trust is for the benefit of the present and future grandchildren of
Marvin and Marilyn Sands. The Co-Trustees of the Trust are Richard Sands
and Robert Sands. Unanimity of the Co-Trustees is required with respect
to voting and disposing of the Class B Stock owned by the Trust. Each of
Richard Sands and Robert Sands, in his individual capacity, disclaims
beneficial ownership with respect to all such shares owned by the Trust.
Each of Marvin Sands and Marilyn Sands also disclaims beneficial
ownership with respect to all such shares owned by the Trust.
(18) Excluding the shares of Class B Stock beneficially owned as a result of
their membership in the Group, the two Trusts own in the aggregate
141,750 shares of Class B Stock. Neither of these Trusts individually
owns more than 5% of the outstanding shares of Class B Stock.
(19) Excluding the shares of Class B Stock beneficially owned as a result of
its membership in the Group, as a result of capital contributions upon
its formation on January 17, 1995, CWCP-I acquired 678,964 shares of
Class B Stock or 20.2% (as of the Record Date). The partners of CWCP-I
are Richard Sands, Robert Sands and the Estate of Laurie Sands. Upon
final settlement or earlier distribution, the partnership interests owned
by the Estate of Laurie Sands will be distributed in accordance with Ms.
Sands' Will to a marital trust for the benefit of Ms. Sands' husband,
Andrew Stern, M.D., and to trusts for the benefit of Ms. Sands' children,
Abigail and Zachary Stern.
(20) Excluding the shares of Class B Stock beneficially owned as a result of
its membership in the Group, and as a result of capital contributions
upon its formation on January 17, 1995, and including shares which are
being distributed to it as a result of termination of Irrevocable
Declaration of Trust No. 2, CWCP-II owns 22,727 shares of Class B Stock
or 0.7%. See footnote (1) above. The partners of CWCP-II are the Estate
of Laurie Sands and The Robert Sands Descendants Trust. Upon final
settlement or earlier distribution, the partnership interests owned by
the Estate of Laurie Sands will be distributed in accordance with Ms.
Sands' Will to a marital trust for the benefit of Ms. Sands' husband,
Andrew Stern, M.D., and to trusts for the benefit of Ms. Sands' children,
Abigail and Zachary Stern.
Information with respect to share ownership of management is set forth in
the table under "Nomination and Election of Directors."
7
<PAGE>
EXECUTIVE COMPENSATION
To meet the goal of providing stockholders with a concise, comprehensive
overview of compensation, shown in the table below is information on the
annual and long-term compensation for services rendered to the Company in all
capacities, for the fiscal years ended August 31, 1995, 1994 and 1993, paid by
the Company to those persons who were, at August 31, 1995, (i) the chief
executive officer of the Company and (ii) the other four most highly
compensated executive officers of the Company during fiscal 1995 (the "Named
Executives"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------------------------------------------- -----------------------------------------
AWARDS PAYOUTS
----------------------------- -----------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
----- ---- ------------- ------------ ------------- ------------ ---------------- ----------- -------------
OTHER ANNUAL RESTRICTED SECURITIES ALL OTHER
NAME AND COMPENSATION STOCK UNDERLYING LTIP COMPEN-
PRINCIPAL POSITION(1) YEAR SALARY ($)(2) BONUS ($)(2) ($)(3) AWARD(S) ($) OPTIONS/SARS (#) PAYOUTS ($) SATION ($)(4)
- --------------------- ---- ------------- ------------ ------------- ------------ ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard Sands, 1995 $387,750 $148,314 $22,456
President and Chief 1994 $371,635 $241,748 -- -- -- -- $31,001
Executive Officer(1) 1993 $176,522 $ 60,000 $21,960
Marvin Sands, 1995 $415,531 $158,941 $44,358
Chairman of the 1994 $401,196 $260,978 -- -- -- -- $41,203
Board(1) 1993 $248,173 $ 60,000 $27,950
Ellis Goodman, 1995 $385,200 $308,150 $39,509(6)
Executive Vice 1994 $363,283 $214,200 -- -- -- -- $47,452
President, Chief 1993 $ 62,769 $ 10,356 $ 6,497
Executive Officer--
Spirits and Beers(5)
Robert Sands, 1995 $389,546 $149,001 15,000 $22,130
Executive Vice 1994 $322,356 $209,692 -- -- -- -- $30,643
President and 1993 $161,105 $ 60,000 5,000 $19,099
General Counsel
Lynn Fetterman, 1995 $198,769 $ 66,500 7,500 $26,558
Sr. Vice President 1994 $163,077 $ 76,529 -- -- 6,000 -- $25,284
and Chief Financial 1993 $143,047 $ 33,632 12,500 $21,089
Officer
</TABLE>
- --------
(1) On October 28, 1993, Richard Sands succeeded Marvin Sands as the Company's
Chief Executive Officer. Marvin Sands, Chairman of the Board of Directors,
continues to serve as an executive officer of the Company.
(2) Amounts shown include cash compensation earned and received by the Named
Executives as well as amounts earned but deferred. All non-cash
compensation has been disclosed in items (f)-(i) of the Summary
Compensation Table.
(3) Individual perquisites do not exceed the lesser of $50,000 or 10% of
salary and bonus for any Named Executive.
(4) Amounts reported for 1995 consist of:
--Company contributions under the Company's Retirement Savings Plan (a plan
established under Section 401(k) of the Internal Revenue Code of 1986, as
amended (the "Code")): Richard Sands $2,310; Marvin Sands $642; Robert Sands
$1,148; and Lynn Fetterman $2,546.
--Company contributions to the Canandaigua Wine Company, Inc. Profit Sharing
Retirement Plan: Richard Sands $16,346; Marvin Sands $16,346; Robert Sands
$16,346; and Lynn Fetterman $16,346.
--Company contributions to the profit sharing plan for Ellis Goodman under
the Barton Incorporated Employees' Profit Sharing and 401(k) Plan: $18,750.
--"Flex credits" under the Canandaigua Wine Company, Inc. flexible health
care benefits plan: Richard Sands $3,265; Marvin Sands $3,265; Robert Sands
$3,265; and Lynn Fetterman $3,265.
8
<PAGE>
--Imputed income from Company Group Term Life Insurance coverage: Richard
Sands $535; Marvin Sands $11,884; Ellis Goodman $2,250; Robert Sands $346;
and Lynn Fetterman $913.
--Company owned automobiles for: Marvin Sands $12,221; Robert Sands $1,025;
and Lynn Fetterman $3,488.
(5) On June 29, 1993, the Company acquired Barton Incorporated, and in July
1993, Ellis Goodman, the Chief Executive Officer of Barton Incorporated,
was appointed a Vice President of Canandaigua Wine Company, Inc. In
October 1993, he was appointed an Executive Vice President of the Company.
Mr. Goodman continues in his capacity as Chief Executive Officer of Barton
Incorporated.
(6) On June 29, 1993, as part of its acquisition of Barton Incorporated, the
Company extended Ellis Goodman's employment agreement with Barton
Incorporated. This agreement provides for reimbursement of club
memberships, which amounted to $16,999 in fiscal year 1995. Barton
Incorporated also made a premium payment for a whole life (split dollar)
policy which included $1,510 representing the economic benefit to Mr.
Goodman during fiscal year 1995.
STOCK OPTION GRANTS
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- ---------------------------------------------------------------------- -------------------
(A) (B) (C) (D) (E) (F) (G)
----- ------------ ------------ --------- ---------- -------- ----------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SARS EXERCISE
OPTIONS/SARS GRANTED TO OR BASE
GRANTED (#) EMPLOYEES IN PRICE EXPIRATION
NAME (1)(2) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- ------------ ------------ --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Richard Sands,
President and Chief
Executive Officer -- -- -- -- -- --
Marvin Sands,
Chairman of the Board -- -- -- -- -- --
Ellis Goodman,
Executive Vice Presi-
dent,
Chief Executive Offi-
cer--
Spirits and Beers -- -- -- -- -- --
Robert Sands,
Executive Vice Presi-
dent
and General Counsel 15,000(3) 5.2% $44.75(4) 8/27/05 $422,100 $1,069,800
Lynn Fetterman, Sr.
Vice President and
Chief Financial Offi-
cer 7,500(3) 2.6% $44.75(4) 8/27/05 $211,050 $ 534,900
</TABLE>
- --------
(1) The options were granted under the Company's Stock Option and Stock
Appreciation Right Plan and are "non-qualified stock options" (i.e.,
options other than "incentive stock options" within the meaning of Section
422(b) of the Code). The options granted in fiscal 1995 are exercisable
starting on August 28, 2000.
(2) The options were granted for a term of no greater than 10 years, subject
to earlier termination upon the occurrence of certain events related to
termination of employment.
(3) The securities underlying the options are shares of Class A Stock.
(4) The exercise price per share is equal to the closing market price of a
share of Class A Stock on the date of grant.
The table on the next page sets forth information regarding stock options
which were exercised by the Named Executives during the fiscal year ended
August 31, 1995, the number of shares acquired and the value realized, and the
number and value of exercisable and unexercisable stock options at August 31,
1995. There are no outstanding SARs. The stock options which were exercised
were granted under the Company's Stock Option and Stock Appreciation Right
Plan.
9
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
--- --------------- ------------------ ---------------------- ------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS AT
AT FY-END (#) (1) FY-END ($)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ------------------ ---------------------- ------------------------
<S> <C> <C> <C> <C>
Richard Sands,
President and Chief
Executive Officer -- -- -- --
Marvin Sands,
Chairman of the Board -- -- -- --
Ellis Goodman,
Executive Vice Presi-
dent,
Chief Executive Offi-
cer --
Spirits and Beers -- -- -- --
Robert Sands,
Executive Vice Presi-
dent
and General Counsel -- -- 20,000 (Unexercisable) $226,250 (Unexercisable)
Lynn Fetterman,
Sr. Vice President
and Chief Financial 2,500 (Exercisable) $108,264 (Exercisable)
Officer 4,250(2) $137,611 26,000 (Unexercisable) $417,111 (Unexercisable)
</TABLE>
- ---------------------
(1) Number of underlying securities relates to shares of Class A Stock
underlying options.
(2) Shares of Class A Stock were acquired on exercise of options.
REPORT OF THE COMPENSATION COMMITTEE WITH RESPECT TO EXECUTIVE COMPENSATION
The following report of the Compensation Committee required by the rules of
the Securities and Exchange Commission to be included in this Proxy Statement
shall not be deemed incorporated by reference into any filing under the
Securities Act of 1933, as amended (the "Securities Act"), or the Securities
Exchange Act of 1934, as amended (the "Exchange Act") by virtue of any general
statement in such filing incorporating this Proxy Statement by reference,
except to the extent that the Company specifically incorporates the information
contained in this section by reference, and shall not otherwise be deemed filed
under either the Securities Act or the Exchange Act.
GENERAL
The Compensation Committee of the Board of Directors administers the
Company's Executive Compensation Program. The Compensation Committee is
composed of the following individuals: Marvin Sands (director and executive
officer), Richard Sands (director and executive officer), and George Bresler
(non-employee director of the Company).
The objective of the Company's Executive Compensation Program is to develop
and maintain executive award programs (i) which are competitive with the pay
practices of other companies of comparable revenues, including those in the
beverage alcohol industry and (ii) which attract, motivate and retain key
executives who are vital to the long-term success of the Company. As discussed
in detail below, the Company's Executive Compensation Program consists of both
fixed (base salary) and variable (incentive) compensation elements. These
elements are designed to operate together to comprise total compensation value.
The Compensation Committee reviewed executive compensation in light of the
Company's performance during the fiscal year and compensation data for
companies that it considered comparable. In reviewing the Company's performance
during fiscal year 1995, the Compensation Committee considered a variety of
factors without assigning specific weight to any particular factors. Among
other factors considered, the
10
<PAGE>
Compensation Committee took into account that net sales during fiscal year 1995
increased approximately 44% to $906.5 million, that net income increased
approximately 249.6% to $41 million, and earnings per share on a fully diluted
basis amounted to $2.13, up from $0.74 for fiscal year 1994. (Excluding the
impact of nonrecurring restructuring expenses, net income was $42.4 million in
fiscal year 1995 as compared to $26.6 million in fiscal year 1994; and fully
diluted earnings per share increased to $2.20 in fiscal year 1995 from $1.65 in
fiscal year 1994.)
The Compensation Committee believes that these results reflect the Company's
rapid growth, which has been due primarily to the acquisitions of (i) Barton
Incorporated, which occurred on June 29, 1993, (ii) the assets and business of
Vintners International Company, Inc., which occurred on October 15, 1993, and
(iii) the Almaden, Inglenook and other brands, a grape juice concentrate
product line and related facilities and assets, which occurred on August 5,
1994. The Compensation Committee also recognized that, during fiscal year 1995,
the Company was negotiating to acquire certain assets of United Distillers
Glenmore, Inc., including the Mr. Boston, Canadian LTD, Skol, Old Thompson,
Kentucky Tavern, Glenmore and di Amore distilled spirits brands and the rights
to the Fleischmann's and Chi Chi's distilled spirits brands under long-term
license agreements, which acquisition was agreed to on August 29, 1995, and was
consummated on September 1, 1995.
COMPENSATION OF CEO
For fiscal year 1995, the compensation of Richard Sands was reviewed by the
Compensation Committee in the context of (i) the Company's performance and
growth discussed above; and (ii) compensation packages of chief executive
officers at comparable companies selected by William H. Mercer Incorporated
("Mercer"). The companies included in the comparison were not the same as the
companies included in the peer group index contained in the performance graph
included in this Proxy Statement. The Compensation Committee believes that the
Company's most direct competitors for executive talent are not necessarily the
same companies to which the Company compares itself for stock performance
purposes.
BASE SALARY
Base salary levels for the Company's executives are determined by the
Compensation Committee based on factors such as individual performance (e.g.,
leadership, level of responsibility, management skills and industry
activities), Company performance (as discussed above) and competitive pay
practices. The Company has received data relating to executive compensation
packages of other public companies from Mercer.
ANNUAL CASH INCENTIVES
The annual cash incentive is designed to provide a short-term (one year)
incentive to an executive based on a percentage of that executive's base
salary. The incentive opportunities for the Named Executives vary based on,
among other things, the Company meeting certain pre-determined individual
performance goals. These individual goals may include objective and subjective
factors, such as leadership and management skills, successful acquisitions or
financings, and improved performance of assets.
For fiscal year 1995, annual cash incentives in the amounts indicated in the
Summary Compensation Table were awarded to each of the Named Executives based
on the achievement of certain goals, as described above.
STOCK OPTIONS AND SARS
Stock options and SARs are designed to provide incentives and rewards tied to
the price of the Company's Class A Stock. Given the fluctuations of the stock
market, stock price performance and financial performance are not always
consistent. The Compensation Committee believes that stock options and SARs
provide value to participants only when the Company's stockholders benefit from
stock price appreciation, an important component of the Company's Executive
Compensation Program.
The Compensation Committee believes that through the use of stock options,
executives' interests are directly tied to enhanced stockholder value. The
exercise prices of all stock options granted were generally
11
<PAGE>
equal to the market value of the underlying Class A Stock on the date of the
grant. Accordingly, the value of these grants depends solely upon the future
growth and share value of the Company's Class A stock.
The foregoing report is given by the members of the Compensation Committee,
namely:
COMPENSATION COMMITTEE
Marvin Sands
Richard Sands
George Bresler
INSIDER PARTICIPATION IN COMPENSATION COMMITTEE
The Compensation Committee of the Company's Board of Directors consists of
Marvin Sands, Richard Sands and George Bresler. Marvin Sands is the Chairman
of the Board and serves in this capacity as the Company's senior executive
officer. Richard Sands is the Company's President and Chief Executive Officer.
Mr. Bresler is a partner in the law firm of Rosner, Bresler, Goodman & Bucholz
in New York, New York.
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a line graph comparing, for the five most recently
concluded fiscal years, the cumulative total stockholder return on a weighted
average of the Company's Class A Stock and Class B Stock, based on the market
price of the Class A Stock and the Class B Stock and assuming reinvestment of
dividends, with the cumulative total return of companies on the Nasdaq Market
Index and an index comprised of companies in the beverage industry (the
"Selected Peer Group Index").*
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG CANANDAIGUA WINE
COMPANY, INC., THE NASDAQ MARKET INDEX AND SELECTED PEER GROUP INDEX
[GRAPHIC APPEARS HERE]
<TABLE>
<CAPTION>
MEASUREMENT PERIOD CANANDAIGUA NASDAQ SELECTED PEER GROUP
(FISCAL YEAR COVERED) WINE COMPANY, INC. INDEX INDEX
- --------------------- ------------------ ------ -------------------
<S> <C> <C> <C>
Measurement PT-
8/31/90 $ 100 $ 100 $ 100
FYI 08/31/91 $ 222.22 $ 113.67 $ 116.13
FYI 08/31/92 $ 274.73 $ 115.60 $ 125.50
FYI 08/31/93 $ 452.05 $ 150.49 $ 144.60
FYI 08/31/94 $ 624.38 $ 164.43 $ 148.78
FYI 08/31/95 $ 949.06 $ 195.65 $ 165.97
</TABLE>
- ---------------------
* The Selected Peer Group Index is comprised of securities of the following
Companies: Anheuser-Busch Companies Inc., Brown-Forman Corporation (Class A
and Class B Shares), Cable Car Beverage Corporation, Cadbury-Schwepps plc,
Canandaigua Wine Company, Inc. (Class A and Class B Shares), Chalone Wine
Group Ltd., Coca Cola Bottling Consolidated, Coca Cola Company, Coca Cola
Enterprises, Adolph Coors Company (Class B Shares), Genesee Corporation
(Class B Shares), Kirin Brewery Ltd. ADR, LVMH Moet-Hen Louis Vuit, Pepsico
Inc., Seagram Company Ltd., Whitman Corporation.
12
<PAGE>
There can be no assurance that the Company's stock performance will continue
into the future with the same or similar trends depicted by the graph above.
The Company neither makes nor endorses any predictions as to future stock
performance. On November 10, 1995, the price of the Company's Class A Stock
fell approximately 38% and the price of the Company's Class B Stock fell
approximately 30%.
The Stock Price Performance Graph set forth above shall not be deemed
incorporated by reference into any filing under the Securities Act or the
Exchange Act by virtue of any general statement in such filing incorporating
this Proxy Statement by reference, except to the extent that the Company
specifically incorporates the information contained in this section by
reference, and shall not otherwise be deemed filed under either the Securities
Act or the Exchange Act.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 29, 1993, as part of the acquisition of Barton Incorporated
("Barton"), the Company extended Ellis Goodman's employment agreement with
Barton (the "Agreement"). Ellis Goodman serves as Chief Executive Officer of
Barton and is an executive officer of the Company and is currently a director
of the Company. Mr. Goodman has, consistent with past practices and subject to
annual approval by the Company's Board of Directors of the Barton annual plan
for the coming year, full and exclusive strategic and operational
responsibility for Barton and all of its subsidiaries, including responsibility
for: (i) day-to-day operations; (ii) all employee welfare, benefit, profit-
sharing and pension programs; (iii) compensation for all officers and
employees; and (iv) all matters impacting Barton's earnings. If Barton fails to
achieve certain earnings levels in any fiscal year during the term of the
Agreement, then Mr. Goodman's employment may be terminated. If Mr. Goodman's
employment is terminated for this reason, he is entitled to the severance
benefits described in the following paragraph.
The Agreement expires on December 31, 1999, and provides that Mr. Goodman
will serve as the Chairman of the Board and Chief Executive Officer of Barton
and its subsidiaries (the Company's beer and spirits division). Under the
Agreement, (i) Barton is obligated to review Mr. Goodman's compensation
annually as of September 1 each year and afford him participation under
employee benefit and compensation plans offered from time to time to other key
executives of Barton, and (ii) Mr. Goodman has agreed not to compete with
Barton for a period of 12 months following the termination of his employment
with Barton for certain reasons. Upon the expiration of the Agreement or its
earlier termination for certain reasons, Barton is obligated to make a
severance payment to Mr. Goodman in an amount equal to 200% of his then base
salary and 200% of the incentive compensation payable to him for Barton's
fiscal year ended immediately prior to the date of termination, plus an amount
equal to the base compensation, if any, remaining to be paid to Mr. Goodman for
the years then remaining in the term of the Agreement.
Pursuant to the terms of the Stock Purchase Agreement dated April 27, 1993,
as amended, among the Company, Barton and the former stockholders of Barton
(the "Stock Purchase Agreement"), Ellis Goodman, the Gillian and Ellis Goodman
Foundation, and certain trusts established for the benefit of Mr. Goodman's
children (collectively, the "Goodman Recipients") have received, since 1993,
cash payments aggregating $72,559,782. Under the Stock Purchase Agreement, the
Goodman Recipients also received an aggregate of 673,021 shares of the
Company's Class A Stock. On November 29, 1996, the Goodman Recipients are
entitled to receive additional payments upon the satisfaction by Barton of
certain performance goals.
Pursuant to the terms of the Stock Purchase Agreement, certain trusts
established for the benefit of Sir Harry Solomon (a current director of the
Company) and his wife and children (collectively, the "Trusts") have received,
since 1993, cash payments aggregating $17,393,676. Under the Stock Purchase
Agreement, the Trusts also received an aggregate of 161,334 shares of the
Company's Class A Stock. On November 29, 1996, the Trusts are entitled to
receive additional payments upon the satisfaction by Barton of certain
performance goals.
On July 12, 1993, the Company adopted a policy to pay its non-employee
directors $35,000 per year for their services as directors. George Bresler,
James Locke and Sir Harry Solomon qualify for such payments.
13
<PAGE>
Mr. Locke has waived the payment of directors' fees. The Company also
reimburses its directors for reasonable expenses incurred in connection with
attending meetings of the Board of Directors and Committees of the Board of
Directors.
By an Agreement dated December 20, 1990, the Company entered into a split-
dollar agreement with a Trust established by Marvin Sands of which Robert Sands
is Trustee. Pursuant to the Agreement, the Company pays the annual premium on
an insurance policy (the "Policy") held in the Trust net of the amount paid by
the Trust. The Trust pays the portion of the premium equal to the "economic
benefit" to Marvin Sands calculated in accordance with the United States
Treasury Department rules then in effect.
The Policy is a joint life policy payable upon the death of the second to die
of the insureds, Marvin Sands and his wife, Marilyn. The face value of the
Policy is $5 million. Pursuant to the terms of the Trust, Richard Sands and
Robert Sands (in his individual capacity) will each receive one-half of the
proceeds of the Policy (less the reimbursement to the Company described below)
if they survive Marvin Sands and Marilyn Sands.
The amount of all premiums paid by the Company constitutes indebtedness from
the Trust to the Company and is secured by a collateral assignment of the
Policy. Upon the termination of the Agreement, whether by the death of the
survivor of the insureds or the sooner cancellation of the Agreement, the
Company is entitled to receive from the Trust the amount equal to the premiums
which it has paid.
The premium paid during fiscal year 1995 with respect to this arrangement was
$209,063; of this amount, the Company, during December 1994, advanced $200,380
and the Trust paid $8,683, which amount represents the "economic benefit" to
Marvin Sands. (Marvin Sands is the Company's Chairman of the Board of
Directors, Richard Sands is the Company's President and Chief Executive Officer
and a director, and Robert Sands is an Executive Vice President, General
Counsel, Secretary and a director of the Company. Each of Marvin Sands, Marilyn
Sands, Richard Sands and Robert Sands is the beneficial owner of more than five
percent of each class of the Company's Common Stock. Richard and Robert Sands
are adult children of Marvin and Marilyn Sands.)
By an Agreement dated August 12, 1988, Barton entered into a split-dollar
insurance agreement with a trust established by Ellis M. Goodman of which
Gillian Goodman and Edwin H. Goldberger are the trustees. Pursuant to the
Agreement, Barton pays the annual premium on an insurance policy (the "Policy")
held in the trust. The Policy is a single life policy payable upon the death of
Mr. Goodman. The face value of the Policy is $1 million. The amount of all
premiums paid by Barton is secured by an assignment of certain rights in the
Policy. Upon the termination of the Agreement, whether by the death of Mr.
Goodman or the sooner cancellation of the Agreement, Barton is entitled to
receive an amount equal to the premiums which it has paid. The premium paid
during fiscal year 1995 with respect to this Agreement was $19,370.
Under the terms of a letter agreement with the Company, if Mr. Fetterman's
employment with the Company is terminated by the Company for any reason, except
gross misconduct, then he is entitled to receive from the Company bi-weekly
severance payments equalling his then-current, bi-weekly, base gross
compensation for a period of nine (9) months from the date of his execution of
a mutually acceptable separation agreement with the Company.
Richard Sands, Robert Sands and the Estate of Laurie Sands are the beneficial
owners of a limited partnership which owns railroad cars. These cars are leased
by the Company from the partnership at fair market rates. The Company's
payments are offset to the extent that railroads using these cars reimburse the
partnership for such use.
George Bresler, a director of the Company, is a partner in the law firm of
Rosner, Bresler, Goodman & Bucholz in New York, New York. Mr. Bresler has in
the past rendered legal services to the Company. It is expected that he will
continue to render legal services to the Company as required by the Company.
James A. Locke, III, a director of the Company, is a partner in the law firm
of Harter, Secrest & Emery, Rochester, New York, the Company's principal
outside counsel.
14
<PAGE>
PROPOSAL NO. 1--NOMINATION AND ELECTION OF DIRECTORS
On April 26, 1993, the Board of Directors of the Company increased the
number of directors on the Board of Directors from six (6) to eight (8)
pursuant to the terms of the Affiliates Agreement with the former stockholders
of Barton Incorporated (the "Affiliates Agreement"). On July 12, 1993, the
Board of Directors first appointed Ellis Goodman and Sir Harry Solomon to fill
the newly created vacancies. (Pursuant to the Affiliates Agreement, certain
holders of a majority of the Class B Stock* agreed to cause Ellis Goodman and
Sir Harry Solomon to be nominated and elected to the Company's Board of
Directors as Class B Directors, to hold office until the later to occur of (i)
payment of all amounts due to the former stockholders of Barton pursuant to
the Stock Purchase Agreement; or (ii) the Company's 1997 Annual Meeting of
Stockholders. During October, 1995, Messrs. Goodman and Solomon informed the
Board of Directors of the Company that, for personal reasons, they had decided
not to stand for re-election to the Board of Directors. On November 17, 1995,
the Board of Directors of the Company decreased the number of directors on the
Board of Directors to be elected at the Meeting from eight (8) to six (6). On
the same date, the Board of Directors nominated six (6) directors to be
elected by the stockholders to hold office until the next Annual Meeting of
Stockholders and until their successors are elected and qualified. The
nominees for election to the Board of Directors are Marvin Sands, Richard
Sands, Robert Sands, George Bresler, James A. Locke, III and Bertram E. Silk.
Messrs. Bresler and Locke have been designated as the nominees to be elected
by the holders of the Class A Stock, voting as a separate class. The remaining
directors are to be elected by the holders of the Class B Stock, voting as a
separate class. Unless authority to vote for one or more of the nominees is
specifically withheld, it is intended that the shares represented by the
enclosed proxy, when properly executed, will be voted FOR the election of the
six (6) nominees.
Management does not anticipate that any of the nominees will become
unavailable for any reason, but if that should occur before the Meeting,
proxies will be voted FOR another nominee or nominees to be selected by the
management of the Company.
The information appearing in the following table and in the notes thereto
has been furnished to the Company by the current directors and the respective
nominees to the Board of Directors and the Company's Executive Officers.
Unless otherwise indicated, the named individual has sole voting power and
investment discretion with respect to the shares attributed to him.
<TABLE>
<CAPTION>
SHARES OF STOCK
BENEFICIALLY
SERVED AS OWNED AS OF PERCENT
DIRECTOR NOVEMBER 27, OF
NAME AND BACKGROUND SINCE 1995 CLASS(1)
------------------- --------- ---------------- --------
<S> <C> <C> <C>
Marvin Sands, age 71, is the founder of 1946 1,738,418 10.7%(2)
the Company, which is the successor to a Class A Stock(2)
business he started in 1945. Mr. Sands 2,838,371 84.3%(2)
continues to serve as an officer of the Class B Stock(2)
Company as Chairman of its Board of
Directors. He has been a director of the
Company and its predecessor since 1946
and was Chief Executive Officer until
October 1993. He is the father of
Richard Sands and Robert Sands.
Richard Sands, Ph.D., age 44, has been 1982 1,738,418 10.7%(2)
employed by the Company in various Class A Stock(2)
capacities since 1979. He was elected 2,838,371 84.3%(2)
Executive Vice President and a director Class B Stock(2)
in 1982, became President and Chief
Operating Officer in May 1986, and was
elected President and Chief Executive
Officer in October 1993. He is a son of
Marvin Sands and the brother of Robert
Sands.
</TABLE>
- ---------------------
* The Class B Stockholders who executed the Affiliates Agreement are: Marvin
Sands; Marilyn Sands; Richard Sands; Robert Sands; Laurie Sands (deceased);
Marilyn Sands under Irrevocable Declaration of Trust Nos. 1 (subsequently
terminated), 2 (subsequently terminated), 3 and 4 each dated November 18,
1987; and Richard Sands, Robert Sands and Laurie Sands, as Co-Trustees under
an Irrevocable Trust Agreement dated November 18, 1987.
15
<PAGE>
<TABLE>
<CAPTION>
SHARES OF STOCK
BENEFICIALLY
SERVED AS OWNED AS OF PERCENT
DIRECTOR NOVEMBER 27, OF
NAME AND BACKGROUND SINCE 1995 CLASS(1)
------------------- --------- ---------------- --------
<S> <C> <C> <C>
Robert Sands, age 37, was appointed Vice 1989 1,738,418 10.7%(2)
President, General Counsel in June 1990 Class A Stock(2)
and was elected Executive Vice President 2,838,371 84.3%(2)
of the Company in October 1993. He has Class B Stock(2)
served as a director since 1989. From
June 1986, until his appointment as Vice
President, General Counsel, Mr. Sands
was employed by the Company as General
Counsel. He is a son of Marvin Sands and
the brother of Richard Sands.
George Bresler, age 71, has been a 1992 10,000 (3)
director of the Company since 1992 and Class A Stock
has been engaged in the practice of law 0 --
since 1957. From August 1987 through Class B Stock
July 1992, Mr. Bresler was engaged in
the practice of law as a partner in the
law firm of Bresler and Bab, New York,
New York. Currently, Mr. Bresler is a
partner in the law firm of Rosner,
Bresler, Goodman & Bucholz in New York,
New York. (3)
Lynn Fetterman, age 48, joined the -- 4,244 (4) (4)
Company during April 1990 as its Vice Class A Stock
President, Finance and Administration, 0 --
Secretary and Treasurer and was elected Class B Stock
Senior Vice President and Chief
Financial Officer in October 1993. For
more than ten years prior to that, he
was employed by Reckitt and Colman in
various executive capacities, including
Vice President, Finance of its Airwick
Industries Division and Vice President,
Finance of its Durkee-French Foods
Division. Mr. Fetterman's most recent
position with Reckitt and Colman was as
its Vice President--Controller. Reckitt
and Colman's principal business relates
to consumer food and household products.
Ellis Goodman, age 58, has been a 1993 259,680(5) 1.6%(5)
director and Vice President since July Class A Stock
1993 and was elected as an Executive 0 --
Vice President of the Company in October Class B Stock
1993. Mr. Goodman has been Chief
Executive Officer of Barton Incorporated
since 1987 and Chief Executive Officer
of Barton Brands, Ltd. (predecessor of
Barton Incorporated) since 1982. Also,
Mr. Goodman is currently a director of
American National Bank and Trust Company
of Chicago, a subsidiary of First
Chicago Corporation.
James A. Locke, III, age 53, has served 1983 3,082(6) (6)
as a director of the Company since 1983. Class A Stock
He is a partner in the law firm of 33 (6)
Harter, Secrest & Emery, Rochester, New Class B Stock
York, which firm is the Company's
principal outside counsel, and has been
associated with the firm since 1967. (6)
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
STOCK
BENEFICIALLY
SERVED AS OWNED AS OF PERCENT
DIRECTOR NOVEMBER 27, OF
NAME AND BACKGROUND SINCE 1995 CLASS(1)
------------------- --------- ------------- --------
<S> <C> <C> <C>
Bertram E. Silk, age 63, has been a 1973 4,607(7) (7)
director and a Vice President of the Class A Stock
Company since 1973 and was elected a 1,125 (7)
Senior Vice President of the Company in Class B Stock
October 1993. He has been employed by the
Company since 1965. Currently, Mr. Silk
is in charge of the Company's grape
grower relations in California. Before
moving from Canandaigua, New York to
California in 1989, Mr. Silk was in
charge of production for the Company.
From 1989 to August 1994, Mr. Silk was in
charge of the Company's grape juice
concentrate product line in California.
Sir Harry Solomon, age 58, has been a 1993 92,190(8) (8)
director since July 1993. From 1976 to Class A Stock
1993, he was Chairman of the Board of 0 --
Hillsdown Holdings plc, a British food Class B Stock
company. Currently, he is a director of
Hillsdown Holdings plc, Frogmore Estates
plc, a real estate development and
investment company, and Princedale plc,
an industrial design and management
consulting company, all of which are
publicly quoted United Kingdom companies.
Sir Harry is also a director of US
Industries, Inc., a diversified
industrial management corporation.
All Executive Officers and Directors as a 2,112,221 13.0%(9)
Group (10 persons) Class A Stock
2,839,529 84.4%(10)
Class B Stock
</TABLE>
- --------
(1) Unless otherwise noted, percentages of ownership are calculated on the
basis of 16,246,046 shares of Class A Stock outstanding and 3,365,958
shares of Class B Stock outstanding on November 27, 1995.
(2) See tables and footnotes under "Beneficial Ownership," above.
(3) In his capacity as an attorney, Mr. Bresler has in the past rendered
legal services to the Company. It is expected that he will continue to
render legal services to the Company as required by the Company. The
percentage of the Class A Stock beneficially owned by Mr. Bresler does
not exceed one percent of such Class.
(4) The number of shares of Class A Stock includes presently exercisable
options to purchase up to 2,500 shares of Class A Stock. The percentage
of the Class A Stock beneficially owned by Mr. Fetterman does not exceed
one percent of such Class.
(5) Includes 34,680 shares owned of record by the Gillian and Ellis Goodman
Foundation (the "Foundation"). Mr. Goodman is president of the Foundation
with full voting power with respect to the shares and disclaims
beneficial ownership of such shares.
(6) Mr. Locke has informed the Company that, effective January 1, 1996, he
will become a partner in the law firm of Nixon, Hargrave, Devans & Doyle,
Rochester, New York. The number of shares of Class A Stock includes
presently exercisable options to purchase up to 3,000 shares of Class A
Stock and 33 shares of Class A Stock issuable pursuant to the conversion
feature of the Company's Class B Stock owned by Mr. Locke. The percentage
of the Class A Stock beneficially owned by Mr. Locke does not exceed one
percent of such Class. The percentage of the Class B Stock beneficially
owned by Mr. Locke does not exceed one percent of such Class.
(7) The number of shares of Class A Stock includes 1,125 shares of Class A
Stock issuable pursuant to the conversion feature of the Company's Class
B Stock owned by Mr. Silk. The percentage of the Class A Stock
beneficially owned by Mr. Silk does not exceed one percent of such Class.
The percentage of the Class B Stock beneficially owned by Mr. Silk does
not exceed one percent of such Class.
(8) Includes 46,095 shares which the Rothschild Trust (Schweiz) AG and
Rothschild Trust Cayman Limited, as Trustees of the Harry and Judith
Solomon 1986 Own Settlement have the right to vote. Sir Harry Solomon and
his spouse are the Grantors of the Own Settlement and have a lifetime
pecuniary interest in the income of the Own Settlement. Includes 46,095
shares which the Rothschild Trust (Schweiz) AG and Rothschild Trust
Cayman Limited, as Trustees of the Harry and Judith Solomon 1986 No. III
Children's Settlement have the right to vote. Sir Harry Solomon and his
spouse are the Grantors of the Children's Settlement. Sir Harry Solomon
disclaims beneficial ownership of such shares. The percentage of the
Class A Stock beneficially owned by Sir Harry Solomon does not exceed one
percent of such Class.
17
<PAGE>
(9) The percentage of ownership of all executive officers and directors as a
group is based on 16,252,704 shares of Class A Stock deemed outstanding
pursuant to Rule 13d-3(d)(1) under the Securities Exchange Act. The
amount in the table includes presently exercisable options to purchase up
to 5,500 shares of Class A Stock and 1,158 shares of Class A Stock
issuable to members of the group pursuant to the conversion feature of
Class B Stock into Class A Stock, but excludes shares of Class A Stock
issuable to Marvin Sands, Richard Sands and Robert Sands pursuant to the
conversion feature of Class B Stock beneficially owned by them. If such
shares of Class A Stock were to be added to the amount in the table, the
amount of Class A Stock beneficially owned by all executive officers and
directors as a group would be 4,950,592 shares and the percentage of
ownership would be 25.9%, based upon 19,091,075 shares deemed outstanding
pursuant to Rule 13d-3(d)(1) under the Securities Exchange Act. (See
table and footnotes under "Beneficial Ownership," above.)
(10) See table and footnotes under "Beneficial Ownership," above.
The Board of Directors of the Company held seven meetings and additionally
acted by unanimous written consent on eight occasions during the fiscal year
ended August 31, 1995. There were also two meetings of the Audit Committee
during the fiscal year ended August 31, 1995. The Audit Committee is
responsible for assisting the Board of Directors in overseeing the financial
reporting and internal operating controls of the Company. It also reviews and
approves the services provided by the Company's independent auditors. The
members of the Audit Committee are Richard Sands and Messrs. Bresler and
Locke. The Compensation Committee acted by unanimous written consent on eight
occasions during the fiscal year ended August 31, 1995. The Compensation
Committee administers the Company's Executive Compensation Program, its Stock
Option and Stock Appreciation Right Plan and its Employee Stock Purchase Plan.
The members of the Compensation Committee are Marvin Sands, Richard Sands and
George Bresler.
Under the securities laws of the United States, generally, the Company's
directors, its executive officers, and any persons holding ten percent or more
of any class of the Company's equity securities are required to report their
ownership of the Company's securities and any changes in that ownership to the
Securities and Exchange Commission (the "Commission"). Specific due dates for
these reports have been established and the Company is required to report in
this Proxy Statement any failure to file by these dates during fiscal year
1995. During the fiscal year ended August 31, 1995, Richard Sands filed two
reports late, with one report pertaining to four transactions and the other
report pertaining to one transaction; Robert Sands filed two reports late,
with one report pertaining to six transactions and the other report pertaining
to one transaction; Laurie Sands filed one report late pertaining to six
transactions; each of The 1995 Robert Sands Descendants Trust, CWC
Partnership--I and CWC Partnership--II filed an Initial Statement of
Beneficial Ownership report late; The 1995 Robert Sands Descendants Trust
filed one other report late pertaining to two transactions; each of Marvin
Sands and Marilyn Sands filed one report late pertaining to four transactions;
and each of Trust for the Benefit of Abigail Stern U/W Laurie Sands and Trust
for the Benefit of Zachary Stern U/W Laurie Sands filed a late report
pertaining to its initial beneficial ownership of securities of the Company.
In making these statements, the Company has relied on written representations
of its incumbent directors, executive officers and ten percent holders and/or
copies of the reports that they have filed with the Commission.
PROPOSAL NO. 2--PROPOSED AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION AUTHORIZING
A CLASS OF PREFERRED STOCK
GENERAL
The Board of Directors of the Company has adopted a resolution unanimously
approving and recommending to the Company's stockholders for their approval,
an Amended and Restated Certificate of Incorporation to authorize the issuance
of 1,000,000 shares of a class of preferred stock, par value $.01 per share
("Preferred Stock"). The text of the proposed amendments to the Restated
Certificate of Incorporation is attached to this Proxy Statement as Annex A.
Except as set forth in Annex A, there are no other proposed amendments to the
Company's Restated Certificate of Incorporation.
18
<PAGE>
The Company's Restated Certificate of Incorporation does not currently
authorize the issuance of shares of preferred stock. While it is not currently
contemplated that any shares of Preferred Stock will be issued by the Company
in the foreseeable future, the Company believes that this class of securities
will provide greater flexibility for financing the Company's activities in the
future. Since no Preferred Stock has been issued, and the issuance of the same
is not currently contemplated, it is not possible to know whether such
Preferred Stock, if issued, would have preference over the holders of Class A
Stock and Class B Stock in the distribution of any assets in the event of a
liquidation.
The Board of Directors believes the authorization of the Preferred Stock is
in the best interests of the Company and its stockholders and believes it
advisable to authorize such shares.
BOARD'S AUTHORITY TO ISSUE PREFERRED STOCK
The designations, preferences, conversion rights, cumulative, relative,
participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions of the Preferred Stock will be
determined by the Board of Directors of the Company. As such, the Board of
Directors of the Company will, if this proposal is approved by the Company's
stockholders, be entitled to authorize the issuance of 1,000,000 shares of
Preferred Stock in one or more series, with such rights, qualifications,
limitations and restrictions as may be determined in the Board's sole
discretion, with no further authorization required of the stockholders. The
proposed amendments to the Restated Certificate of Incorporation are subject to
the consent of certain banks under the Company's bank credit agreement. The
Company expects to receive this consent prior to the Meeting.
The Board of Directors is required to make any determination to issue shares
of Preferred Stock based on its judgment as to the best interests of the
stockholders and the Company. Although the Board of Directors has no present
intention of doing so, it could issue shares of Preferred Stock that could,
depending on the terms of such series, make more difficult or discourage an
attempt to obtain control of the Company by means of a merger, tender offer,
proxy contest or other means. For example, such shares could be used to create
voting or other impediments or to discourage persons seeking to gain control of
the Company. Such shares could be privately placed with purchasers favorable to
the Board of Directors in opposing such action. In addition, the Board of
Directors could authorize holders of a series of Preferred Stock to vote either
separately as a class or with the holders of the Company's Class A Stock or
Class B Stock on any merger, sale or exchange of assets by the Company or any
other extraordinary corporate transaction. The existence of the additional
authorized shares could have the effect of discouraging unsolicited takeover
attempts. The issuance of new shares also could be used to dilute the stock
ownership of a person or entity seeking to obtain control of the Company should
the Board of Directors consider the action of such entity or person not to be
in the best interests of the stockholders and the Company.
The Company currently has no agreements or understandings with any third
party to effect any sale or offering of Preferred Stock and no assurances are
given that any sale will in fact be effected. Therefore, the terms of any
Preferred Stock subject to this Proposal No. 2 cannot be stated or estimated
with respect to any or all of the shares authorized.
VOTE REQUIRED
In accordance with applicable Delaware law and the Company's Restated
Certificate of Incorporation, approval of Proposal No. 2 to authorize a class
of preferred stock requires the affirmative vote of the holders of a majority
of the outstanding shares of Class A and Class B Stock entitled to vote
thereon, voting together as a single class, provided that the holders of Class
A Stock shall have one (1) vote per share and the holders of Class B Stock
shall have ten (10) votes per share.
NO DISSENTERS' RIGHTS
Under applicable Delaware law, stockholders are not entitled to dissenters'
rights of appraisal with respect to the proposed Amended and Restated
Certificate of Incorporation which authorizes a class of preferred stock.
19
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS APPROVE THE AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION TO AUTHORIZE A CLASS OF PREFERRED
STOCK AND ACCORDINGLY RECOMMENDS THAT YOU VOTE FOR PROPOSAL NO. 2.
PROPOSAL NO. 3--SELECTION OF INDEPENDENT AUDITORS
The firm of Arthur Andersen LLP, Certified Public Accountants, served as the
independent auditors of the Company for the fiscal year ended August 31, 1995,
and the Board of Directors has again selected Arthur Andersen LLP as the
Company's independent auditors for the fiscal year ending August 31, 1996. This
selection will be presented to the stockholders for their approval at the
Meeting. The Board of Directors recommends a vote in favor of the proposal to
approve and ratify this selection and (unless otherwise directed therein) it is
intended that the shares represented by the enclosed properly executed proxy
will be voted FOR such proposal. If the stockholders do not approve this
selection, the Board of Directors may reconsider its choice.
A representative of Arthur Andersen LLP is expected to be present at the
Meeting. The representative will be given an opportunity to make a statement if
he so desires and will be available to respond to appropriate questions
concerning the audit of the Company's financial statements.
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
In order for any stockholder proposal to be included in the Company's proxy
statement to be issued in connection with the 1997 Annual Meeting of
Stockholders, such proposal must be delivered to the Company no later than
August 29, 1996.
FINANCIAL INFORMATION
The Company has furnished its financial statements to stockholders in its
1995 Annual Report, which accompanies this Proxy Statement. In addition, the
Company will promptly provide, without charge to any stockholder, on the
request of such stockholder, an additional copy of the 1995 Annual Report and
the Company's most recent Form 10-K. Written requests for such copies should be
directed to Canandaigua Wine Company, Inc., Attention: Kristen H. Jenks,
Director, Investor Relations, 116 Buffalo Street, Canandaigua, New York 14424;
telephone number (716) 394-7900.
OTHER
As of the date of this Proxy Statement, the Board of Directors does not
intend to present, and has not been informed that any other person intends to
present, any matter other than those specifically referred to in this Proxy
Statement. If any other matters properly come before the Meeting, it is
intended that the holders of the proxies will act in respect thereto in
accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
ROBERT SANDS, Secretary
Dated at Canandaigua, New York
December 27, 1995
20
<PAGE>
ANNEX A
PROPOSED AMENDMENTS TO RESTATED
CERTIFICATE OF INCORPORATION TO
AUTHORIZE A CLASS OF PREFERRED STOCK
1. Article 4 is hereby amended and restated in its entirety as follows:
4. Capitalization; General Authorization. The total number of shares of
stock which the Corporation shall have authority to issue is Eighty-One
Million (81,000,000) consisting of:
(a) Class A Common. Sixty Million (60,000,000) shares designated as
Class A Common Stock, having a par value of One Cent ($.01) per share
(the "Class A Common");
(b) Class B Common. Twenty Million (20,000,000) shares designated as
Class B Common Stock, having a par value of One Cent ($.01) per share
(the "Class B Common"); and
(c) Preferred Stock. One Million (1,000,000) shares designated as
Preferred Stock, having a par value of One Cent ($.01) per share (the
"Preferred Stock").
2. Article 5 is hereby amended by adding the following paragraph as the first
paragraph of Article 5:
The designations, powers, preferences and relative participation,
optional or other special rights and the qualifications, limitations and
restrictions thereof in respect of each class of capital stock of the
Corporation are as follows:
3. Article 5 is hereby further amended by adding the following paragraph as
the last paragraph of Article 5:
Preferred Stock. Subject to the terms contained in any designation of a
series of Preferred Stock, the Board of Directors is expressly authorized,
at any time and from time to time, to fix, by resolution or resolutions,
the following provisions for shares of any class or classes of Preferred
Stock of the Corporation or any series of any class of Preferred Stock:
(a) the designation of such class or series, the number of shares to
constitute such class or series which may be increased or decreased
(but not below the number of shares of that class or series then
outstanding) by resolution of the Board of Directors, and the stated
value thereof if different from the par value thereof;
(b) whether the shares of such class or series shall have voting
rights, in addition to any voting rights provided by law, and, if so,
the terms of such voting rights;
(c) the dividends, if any, payable on such class or series, whether
any such dividends shall be cumulative, and, if so, from what dates,
the conditions and dates upon which such dividends shall be payable,
and the preference or relation which such dividends shall bear to the
dividends payable on any shares of stock of any other class or any
other series of the same class;
(d) whether the shares of such class or series shall be subject to
redemption by the Corporation, and, if so, the times, prices and other
conditions of such redemption;
(e) the amount or amounts payable upon shares of such series upon,
and the rights of the holders of such class or series in, the voluntary
or involuntary liquidation, dissolution or winding up, or upon any
distribution of the assets, of the Corporation;
(f) whether the shares of such class or series shall be subject to
the operation of a retirement or sinking fund and, if so, the extent to
and manner in which any such retirement or sinking fund
A-1
<PAGE>
shall be applied to the purchase or redemption of the shares of such
class or series for retirement or other corporate purposes and the
terms and provisions relative to the operation thereof;
(g) whether the shares of such class or series shall be convertible
into, or exchangeable for, shares of stock of any other class or any
other series of the same class or any other securities and, if so, the
price or prices or the rate or rates of conversion or exchange and the
method, if any, of adjusting the same, and any other terms and
conditions of conversion or exchange;
(h) the limitations and restrictions, if any, to be effective while
any shares of such class or series are outstanding upon the payment of
dividends or the making of other distributions on, and upon the
purchase, redemption or other acquisition by the Corporation of the
Common Stock or shares of stock of any other class or any other series
of the same class;
(i) the conditions or restrictions, if any, upon the creation of
indebtedness of the Corporation or upon the issue of any additional
stock, including additional shares of such class or series or of any
other series of the same class or of any other class;
(j) the ranking (be it pari passu, junior or senior) of each class or
series vis-a-vis any other class or series of any class of Preferred
Stock as to the payment of dividends, the distribution of assets and
all other matters; and
(k) any other powers, preferences and relative, participating,
optional and other special rights, and any qualifications, limitations
and restrictions thereof, insofar as they are not inconsistent with the
provisions of this Restated Certificate of Incorporation, to the full
extent permitted in accordance with the laws of the State of Delaware.
The powers, preferences and relative, participating, optional and other
special rights of each class or series of Preferred Stock, and the
qualifications, limitations or restrictions thereof, if any, may differ from
those of any and all other series at any time outstanding.
A-2
<PAGE>
CANANDAIGUA WINE COMPANY, INC.
PROXY FOR CLASS A COMMON STOCK AND CLASS B COMMON STOCK
BALLOT
The undersigned hereby appoints Bertram E. Silk and Lynn K. Fetterman, or
any one of them, proxies for the undersigned with full power of substitution to
vote all shares of CANANDAIGUA WINE COMPANY, INC. (the "Company") owned by the
undersigned at the Annual Meeting of Stockholders to be held at Chase Tower, One
Chase Square, Rochester, New York, on Thursday, January 18, 1996, at 11:00 a.m.,
local time, and at any adjournments thereof.
Class A Stockholders, voting as a separate class, are entitled to elect two
directors at the Meeting. Class B Stockholders, voting as a separate class, are
entitled to elect four directors at the Meeting. Please refer to Proxy Statement
for details. Your Shares (if any) of Class A Common Stock on the back are
designated "CLA" and/or "ESP" and your Shares (if any) of Class B Common Stock
are designated "CLB". PLEASE SIGN ON THE BACK.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
THIS PROXY WILL BE VOTED AS SPECIFIED BY THE UNDERSIGNED. THIS PROXY REVOKES ANY
PRIOR PROXY GIVEN BY THE UNDERSIGNED. UNLESS AUTHORITY TO VOTE FOR ONE OR MORE
OF THE NOMINEES IS SPECIFICALLY WITHHELD, A SIGNED PROXY WILL BE VOTED FOR THE
ELECTION OF DIRECTORS AND UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED
FOR PROPOSAL 2, AND FOR PROPOSAL 3.
TO APPROVE THE BOARD OF DIRECTORS' RECOMMENDATIONS, SIMPLY SIGN THE BACK.
YOU NEED NOT MARK ANY BOXES.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
[SEE REVERSE SIDE]
<PAGE>
[X] Please mark
votes as in
this example.
1. Election of Directors:
To elect Directors as set forth in the Proxy Statement.
<TABLE>
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Class A Stockholders Class B Stockholders 2. Proposal to approve an Amended and Restated
George Bresler, James A. Locke, III Marvin Sands, Richard Sands, Robert Certificate of Incorporation of the Company
Sands, Bertram E. Silk which amends the Company's Restated Certificate
FOR WITHHELD FOR WITHHELD of Incorporation to authorize the issuance of
[ ] [ ] [ ] [ ] 1,000,000 shares of a class of preferred stock.
FOR AGAINST ABSTAIN
[ ]----------------------- [ ]-------------------------- [ ] [ ] [ ]
For, except vote withheld For, except vote withheld
from the following nominee: from the following nominee(s): 3. Proposal to approve and ratify the selection of
Arthur Andersen LLP, Certified Public Account-
ants, as the Company's independent auditors for
the fiscal year ending August 31, 1996.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In their discretion, the proxies are authorized
to vote upon such other business not known at
the time of the solicitation of this Proxy as
may properly come before the Meeting or at any
adjournments thereof.
MARK HERE FOR ADDRESS
CHANGE AND NOTE AT LEFT [ ]
NOTE: Please date and sign name exactly as it appears hereon. Executors, administrators,
trustees, etc. should so indicate when signing. If the stockholder is a corporation, the
The undersigned acknowledges receipt full corporate name should be inserted and the Proxy signed by an officer of the
with this Proxy of a copy of the corporation, indicating his title.
Notice of Annual Meeting and Proxy
Statement dated December 27, 1995, Signature:--------------------------------------------------- Dated:------------------------
describing more fully the proposals
set forth herein. Signature:--------------------------------------------------- Dated:------------------------
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