<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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
DEAN FOODS COMPANY
.............................................................................
(Name of Registrant as Specified In Its Charter)
DEAN FOODS COMPANY
..............................................................................
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $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: _/
.......................................................................
4) Proposed maximum aggregate value of transaction:
.......................................................................
_/ Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
1) Amount Previously Paid:
......................................................
2) Form, Schedule or Registration Statement No.:
......................................................
3) Filing Party:
......................................................
4) Date Filed:
......................................................
Notes:
<PAGE>
LOGO
3600 North River Road
Franklin Park, Illinois 60131
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Dean Foods Company which will be held on Tuesday, October 4, 1994, at 10:00
A.M., local time, in Oakbrook Terrace, Illinois.
The enclosed Notice of 1994 Annual Meeting and Proxy Statement contain
details concerning the business to be conducted at the Annual Meeting. The
Board of Directors of the Company recommends a vote "FOR" the election of the
four directors nominated to serve until the 1997 Annual Meeting of Stockholders
and the one nominee nominated to serve until the 1996 Annual Meeting of
Stockholders to fill a vacancy resulting from the retirement of a director;
"FOR" the amendments to the Company's 1989 Stock Awards Plan proposed by the
Board of Directors; "FOR" the approval of the bases for certain annual
incentive bonuses; and "FOR" the ratification of Price Waterhouse as
independent accountants of the Company for the 1995 fiscal year. As is
customary, there will be a report on the Company's business, and stockholders
will have an opportunity to inquire about the affairs of the Company that may
be of general interest.
Please sign and return your proxy card in the enclosed envelope at your
earliest convenience to assure that your shares will be represented and voted
at the meeting even if you are unable to attend.
Sincerely,
/s/ Howard M. Dean
Howard M. Dean
Chairman of the Board and
Chief Executive Officer
August 19, 1994
<PAGE>
NOTICE OF 1994 ANNUAL MEETING
The Annual Meeting of Stockholders of Dean Foods Company will be held on
Tuesday, October 4, 1994, at 10:00 A.M., Central Daylight Savings Time, at the
Drury Lane Oakbrook Terrace, 100 Drury Lane, Oakbrook Terrace, Illinois, for
the purpose of considering and acting upon the following:
(1)The election of four directors to serve until the 1997 Annual Meeting.
(2)The election of one director to serve until the 1996 Annual Meeting.
(3) A proposal of the Board of Directors to approve amendments to the
Company's 1989 Stock Awards Plan.
(4) A proposal of the Board of Directors to approve the bases for certain
annual incentive bonuses.
(5) Approval of the selection of Price Waterhouse as independent
accountants for the Company and its subsidiaries for the fiscal year
ending May 28, 1995.
(6) Such other matters as may properly come before the meeting.
Directions to the site of the Annual Meeting appear at the conclusion of the
Proxy Statement.
The Board of Directors has fixed the close of business on August 5, 1994, as
the record date for the determination of stockholders entitled to vote at the
meeting, and only holders of shares of Company Common Stock of record at the
close of business on that day will be entitled to vote. The stock transfer
books will not be closed. A complete list of stockholders entitled to vote at
the meeting will be available for examination by any stockholder of record for
any purpose germane to the meeting during normal business hours at the offices
of the Drury Lane Oakbrook Terrace, 100 Drury Lane, Oakbrook Terrace, Illinois,
during the 10-day period preceding the meeting. A copy of the Company's Annual
Report for fiscal year 1994 is concurrently being mailed to each person named
in such list.
The 1994 Annual Meeting may be postponed or adjourned from time to time
without any notice other than by announcement at the meeting of any
postponements or adjournments thereof, and any and all business for which
notice is hereby given may be transacted at any such postponed or adjourned
meeting.
Whether or not you expect to be present at the meeting, please date, sign and
return the enclosed proxy, which is solicited by the Board of Directors. The
proxy is revocable and will not affect your right to vote in person in the
event you attend the meeting.
Eric A. Blanchard
Secretary
August 19, 1994
YOU ARE URGED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY. THANK
YOU.
<PAGE>
DEAN FOODS COMPANY
3600 NORTH RIVER ROAD
FRANKLIN PARK, ILLINOIS 60131
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of Dean Foods
Company, a Delaware corporation, for use at the Annual Meeting of Stockholders
to be held on October 4, 1994 (the "1994 Annual Meeting") and any adjournment
thereof. A proxy in the accompanying form, properly executed and received by
the Secretary prior to the closing of the polls on the particular matter and
not revoked, will be voted FOR the election of directors as set forth therein
(unless otherwise designated), and will be voted in accordance with the
specifications made thereon with regard to the proposal of the Board of
Directors to amend the Company's 1989 Stock Awards Plan, the proposal to
approve the bases for certain annual incentive bonus amounts and the proposal
of the Board of Directors to approve the selection of independent accountants,
or, to the extent no specification is made, will be voted in the election of
directors as described under "Election of Directors" below, will be voted FOR
such amendments, FOR such bases and FOR the selection of independent
accountants. A proxy with respect to any matter may be revoked at any time
prior to the closing of the polls on such matter at the 1994 Annual Meeting by
giving notice of revocation or a duly executed proxy bearing a later date to
the Secretary prior to the closing of the polls on such matter. The approximate
date of mailing this Proxy Statement is August 19, 1994. The cost of soliciting
proxies will be borne by the Company. The Company will solicit proxies by mail,
and directors, officers and employees of the Company may solicit proxies by
telephone, telegraph or in person.
Only holders of Company Common Stock of record on the books of the Company at
the close of business on August 5, 1994 will be entitled to vote at the
meeting. On that date there were 39,821,839 shares outstanding, the holders of
which are entitled to one vote per share. A majority of the outstanding shares
of Company Common Stock will constitute a quorum for the transaction of
business at the 1994 Annual Meeting.
Pursuant to Delaware law, shares entitled to cast votes on a matter at the
1994 Annual Meeting which are the subject of an ABSTAIN on that matter will be
treated for quorum and all other purposes relevant to that matter as being
present at the meeting and entitled to vote and thus will have the same effect
as a vote of such shares against that matter. Shares entitled to cast votes on
a matter at the meeting which are the subject of a broker non-vote on that
matter will be treated as present for quorum purposes relevant to that matter,
but will not be included in determining whether a majority or other required
percentage of the "shares present and entitled to vote" on that matter has been
obtained.
ELECTION OF DIRECTORS
The Board of Directors consists of three classes of directors elected to serve
staggered three-year terms of office. The class to be elected at the 1994
Annual Meeting consists of four directors to hold office until the 1997 Annual
Meeting of Stockholders and until their successors shall have been elected and
qualified. The nominees for the class to be elected are Paula H. Crown, John P.
Frazee, Jr., Thomas A. Ravencroft, and Thomas L. Rose (all of whom currently
serve on the Board of Directors).
An additional nominee will stand for election to the Board of Directors due
to the retirement of Delbert C. Staley. Mr. Staley, a director of the Company
since 1975 and currently Chairman of the
<PAGE>
Compensation Committee and a member of the Nominating Committee, has
voluntarily tendered his resignation from the Board effective October 4, 1994.
The Board regretfully accepted Mr. Staley's resignation. To fill the vacancy
resulting from the retirement of Mr. Staley, the Board has nominated John S.
Llewellyn, Jr. for election to the Board of Directors for the remainder of the
three-year term expiring in 1996 to which Mr. Staley had been elected.
A policy governing the retirement of Directors from the Board was adopted in
1989 and amended in 1993. Pursuant to such policy, (i) any non-employee
Director who is elected as a Director of the Company prior to his/her 65th
birthday and discontinues his/her principal position or identification which
prevailed at the time of election must submit his/her resignation as a Director
upon the request of the Nominating Committee of the Board of Directors and the
Chairman of the Board; (ii) any non-employee Director who is elected as a
Director of the Company to a term expiring after his/her 70th birthday must
submit his/her resignation as of the first day of the month after such
birthday; (iii) any Director who is an employee of the Company or any of its
subsidiaries must submit his/her resignation as a Director of the Company at
the first meeting of the Board after termination of his/her employment with the
Company and its subsidiaries; and (iv) notwithstanding the foregoing, a
Director who is serving or has previously served as Chief Executive Officer of
the Company must submit his/her resignation as a Director of the Company upon
the request of a majority of the Board of Directors made at any time subsequent
to one month before his/her 70th birthday.
If the accompanying form of proxy is properly executed, the persons named as
proxies therein will (unless otherwise designated) vote the shares of Company
Common Stock represented by such executed proxy for the election of the five
persons named below. In case any of the nominees is not a candidate at the
meeting, an event which the Board of Directors does not anticipate, the
enclosed proxy may be voted for a substitute nominee and (unless otherwise
designated) will be voted for the other nominees named. Information supplied by
the nominees and all other directors concerning their ages, business
experience, and periods of service as Directors is shown below.
NOMINEES FOR ELECTION AT THE 1994 ANNUAL MEETING
FOR THREE-YEAR TERMS EXPIRING IN 1997:
PAULA HANNAWAY CROWN, Vice President of Henry Crown and Company (a [PHOTO]
private investment company) since 1985. Director of the Company
since 1992; member of Audit and Nominating Committees. Age 35.
2
<PAGE>
JOHN P. FRAZEE, JR., Retired since 1993. President and Chief [PHOTO]
Operating Officer of Sprint Corporation (a telecommunications
company) from March 1993 to August 1993. Chairman and Chief
Executive Officer of Centel Corporation (a telecommunications
company) from 1988 to 1993. Director of Nalco Chemical Company (a
specialty chemical company) since 1985, and Security Capital Group
Incorporated (creator and operator of real estate investment
trusts) since 1991. Director of the Company since 1988; Chairman
of Audit Committee; member of Nominating Committee. Age 49.
THOMAS A. RAVENCROFT, Senior Vice President of the Company since [PHOTO]
1989, Group Vice President from 1988 to 1989 and Vice President,
Corporate Planning from 1970 to 1988. Director of the Company
since 1979; Chairman of Pension Committee. Age 57.
THOMAS L. ROSE, President and Chief Operating Officer of the [PHOTO]
Company since December, 1993, Senior Vice President from October,
1992 to December, 1993, Vice President, Production from 1985 to
1993 and Vice President, Food Plants from 1979 to 1985. Director
of the Company since 1988; member of Executive and Pension
Committees. Age 57.
FOR A TWO-YEAR TERM EXPIRING IN 1996:
JOHN S. LLEWELLYN, JR., President and Chief Executive Officer of [PHOTO]
Ocean Spray Cranberries, Inc. (marketing cooperative of cranberry
and citrus growers) since 1988. Age 59.
DIRECTORS WHOSE TERMS EXPIRE IN 1995:
LEWIS M. COLLENS, President of Illinois Institute of Technology [PHOTO]
and Chairman and Chief Executive Officer of IIT Research Institute
since 1990; Dean of IIT Chicago-Kent College of Law from 1974 to
1990; Director of the Teacher's Academy for Mathematics and
Science since 1990, AMSTED Industries (a manufacturer of
components for the railroad and construction industries) since
1991, and TIE Communications (a distributor of communications
equipment) since 1992. Director of the Company since December,
1991. Member of Compensation and Audit Committees. Age 56.
3
<PAGE>
HOWARD M. DEAN, Chairman of the Board of Directors of the Company [PHOTO]
since 1989, Chief Executive Officer since 1987 and President and
Chief Operating Officer from 1969 to 1989. Director of Ball
Corporation (a diversified manufacturer of containers and hi-tech
products) since 1984, Yellow Freight Systems, Inc. (a nationwide
common carrier) since 1987 and Nalco Chemical Company (a specialty
chemical company) since 1987. Director of the Company since 1970;
Chairman of Executive Committee. Age 57.
BERT A. GETZ, Chairman, President and Director of Globe [PHOTO]
Corporation (a diversified investment firm) since 1974. Director
of Iliff, Thorn & Company (a commercial real estate brokerage
firm) since 1986, Ameritas Life Insurance Corporation since 1990
and Continental Bank Corporation (a bank holding company) and its
subsidiary, Continental Bank, since 1992. Director of the Company
since 1989; member of Compensation, Pension and Nominating
Committees. Age 57.
ANDREW J. MCKENNA, Chairman, President, Chief Executive Officer [PHOTO]
and Director of Schwarz Paper Company (a printer, converter and
distributor of packaging and promotional materials) since 1964.
Director of AON Corporation (an insurance holding company) since
1970, Skyline Corporation (a manufacturer of mobile homes) since
1971, Chicago National League Ball Club, Inc. since 1981, Tribune
Company (a communications company) since 1982, Chicago Bears
Football Club, Inc. since 1985, McDonald's Corporation since 1991,
and First Chicago Corp. (a bank holding company) and its subsidiary, First
National Bank of Chicago, since 1993, and Member of the Board of Governors of
the Chicago Stock Exchange since 1994. Director of the Company since 1983;
Chairman of Nominating Committee, member of Executive and Compensation
Committees. Age 64.
DIRECTORS WHOSE TERMS EXPIRE IN 1996:
WILLIAM D. FISCHER, Retired since December, 1993. President and [PHOTO]
Chief Operating Officer of the Company from 1989 to December,
1993, Vice President, Finance from 1971 to 1989, Secretary from
1973 to 1988 and Treasurer from 1973 to 1984. Director of John B.
Sanfilippo & Son, Inc. (a processor and marketer of nuts and snack
items) since 1991, and Allied Products Corporation (a manufacturer
of agricultural and industrial equipment) since 1993. Director of
the Company since 1979; member of Audit and Pension Committees.
Age 65.
ALEXANDER J. VOGL, Chairman of the Board and Chief Executive [PHOTO]
Officer of Wilton Corporation (a diversified manufacturer of
industrial products) since 1969. Director of Clark Foodservice,
Inc. (a wholesale distributor) since 1979. Director of the Company
since 1975; member of Compensation, Audit and Executive
Committees. Age 68.
4
<PAGE>
CERTAIN INFORMATION REGARDING THE BOARD OF DIRECTORS
The Board of Directors held nine meetings during fiscal year 1994.
The Audit Committee of the Board of Directors meets with management of the
Company and the Company's independent accountants to discuss the scope and
results of the annual audit by the independent accountants, the fees of and
services to be performed by the independent accountants and the adequacy of the
Company's system of internal controls. The Audit Committee met three times in
fiscal year 1994.
The Compensation Committee of the Board of Directors reviews and recommends,
subject to the approval of the Board of Directors, salaries and other forms of
cash compensation of elected Company officers, grants options and other awards
under the Company's 1989 Stock Awards Plan, administers such plan, the
Company's Supplemental Incentive Compensation Plan and the Company's
Supplemental Benefits Plan, and reviews other personnel and compensation
matters with the Company's management. The Compensation Committee met five
times in fiscal year 1994.
The Nominating Committee of the Board of Directors nominates individuals for
election or reelection to the Board at any Annual Meeting of Stockholders and
appoints individuals to fill any vacancy resulting from the resignation or
retirement of a director. The Nominating Committee considers suggestions
regarding candidates for election to the Board submitted by stockholders in
writing to the Secretary of the Company. With regard to the 1995 Annual
Meeting, any such suggestion must be received by the Secretary no later than
the date by which stockholder proposals for the 1995 Annual Meeting must be
received as described below under the heading "Submission of Stockholder
Proposals". The Nominating Committee met twice in fiscal year 1994.
During fiscal year 1994, each director of the Company who was not a salaried
officer, employee, or paid consultant was paid an annual fee of $24,000 and
fees of $1,000 for each meeting of the Board of Directors attended in person,
$800 for each committee meeting attended in person and $800 for each Board or
committee meeting attended by telephone. Such directors were also reimbursed
for their out-of-pocket expenses of attending Board and committee meetings.
Under a deferred compensation plan adopted in 1982 by the Board, directors may
elect to defer payment of all or a portion of their annual fees, board meeting
fees and committee meeting fees until after they cease to be directors.
Deferred fees accrue interest semiannually at the average prime rate. Directors
may elect to have all or a portion of their deferred fees credited to a Company
Common Stock account in Units based upon the market value of Company Common
Stock on the dates credited. Additional Units are automatically awarded based
upon dividends paid on Company Common Stock. Following termination of service
as a director, a director is entitled to receive in cash (paid in annual
installments determined by the Compensation Committee which administers the
plan) the market value of the Company Common Stock underlying the Units in such
director's Company Common Stock account.
The following table sets forth the number of Units credited, as of July 30,
1994, to the Company Common Stock Accounts for the directors who were not
officers, employees, or paid consultants
5
<PAGE>
participating in the Company's deferred compensation plan for directors. Each
Unit is equivalent in value to one share of Company Common Stock.
<TABLE>
<CAPTION>
NAME NUMBER OF UNITS
------------------ ---------------
<S> <C>
Lewis M. Collens........................................ 2,255.17
Paula Hannaway Crown.................................... 351.87
John P. Frazee, Jr...................................... 3,601.97
Bert A. Getz............................................ 5,885.27
Andrew J. McKenna....................................... 6,317.67
Alexander J. Vogl....................................... 2,591.87
</TABLE>
Under the Company's Director Stock Option Plan adopted in 1992 (the "1992
Plan"), on the third trading date after the Annual Meetings held in each of the
years 1992, 1993, 1994 and 1995, directors of the Company who are not and have
not been employees of the Company and who have not previously been awarded any
options under the 1992 Plan are automatically granted non-qualified stock
options to purchase shares of Company Common Stock at the market value on the
date of grant (4,000 shares and 3,000 shares in the case of each option granted
in 1992 and 1993, respectively; and 2,000 and 1,000 shares in the case of each
option to be granted in 1994 and 1995, respectively). Each option is
exercisable immediately upon grant with respect to 1,000 shares and, provided
the optionee is still a Company director and is not an employee of the Company,
becomes exercisable with respect to an additional 1,000 shares on each
anniversary of grant. Upon exercise of an option, the Company is obligated to
make a cash payment to the optionee sufficient to reimburse the optionee for
the individual federal income tax liability incurred in connection with the
exercise of such option. Each option has a term of ten years, but, if earlier,
will expire five years after the optionee terminates his or her service with
the Board of Directors. A maximum of 40,000 shares of Company Common Stock may
be awarded under the 1992 Plan. In fiscal year 1993, Directors Frazee, Getz,
McKenna, Staley, Vogl, Collens and Crown each were granted options to purchase
4,000 shares at an exercise price of $26.87. No options were granted under the
1992 Plan in fiscal year 1994.
Under a retirement plan adopted by the Board of Directors in 1986, a director
who is not, nor has ever been, an employee, and who retires as a director after
reaching age 55 and having served on the Board for at least five full years, is
to be paid annually, during his or her lifetime, for a period not to exceed the
length of his or her service on the Board, an amount equal to 10% of the annual
fee being paid at the time of retirement to directors who are not salaried
officers, employees, or paid consultants multiplied by each full year of his or
her service on the Board (not to exceed 100% of such annual fee). Directors
receiving retirement income under the plan are obligated, upon request, to make
themselves available, at the Company's expense, at reasonable times and places
taking into account their health, age and other duties, to consult with
directors and senior officers of the Company.
EXECUTIVE COMPENSATION
The following tables and text discuss the compensation paid in fiscal year 1994
and the two prior fiscal years to the Company's Chief Executive Officer and the
four other most highly compensated executive officers of the Company serving at
the end of fiscal year 1994.
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------------------- ------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL OTHER ANNUAL OPTIONS/SARS COMPENSATION
POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(4)(5) (#) ($)(4)
- - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Howard M. Dean 1994 $507,000 $338,675 -- 30,000 $ 14,592(6)
Chairman of The Board 1993 $448,095 $300,222 -- 30,000 $ 12,072(7)
and Chief Executive
Officer 1992 $428,233 $274,068 -- 21,000 --
Thomas L. Rose 1994 $262,417 $175,295 -- 12,500 $155,730(6)(8)
President and 1993 $180,279 $124,422(3) -- 7,429 $ 6,611(7)
Chief Operating Officer 1992 $173,333 $115,093(3) -- 8,000 --
Thomas A. Ravencroft 1994 $199,501(1) $138,578(3) -- 5,479 $ 7,285(6)
Senior Vice President 1993 $183,891(1) $135,491(3) -- 9,986 $ 6,660(7)
1992 $177,391(1) $102,114(3) -- 2,960 --
Jeffrey P. Shaw
Group Vice President--
Vegetables and 1994 $143,000 $135,432(3) -- 3,265 $ 5,407(6)
President of Dean 1993 $135,000 $ 50,750 -- -- $ 5,009(7)
Foods Vegetable Company 1992 -- -- -- -- --
Timothy J. Bondy 1994 $152,750(2) $ 98,307(3) -- 3,537 $ 5,328(6)
Vice President, Finance 1993 $146,250(2) $ 93,600 -- 3,265 $ 5,151(7)
1992 $132,167(2) $ 87,758(3) -- 2,203 --
</TABLE>
- - -----------
(1) Includes $2,400 of deferred compensation.
(2) Includes $12,000 of deferred compensation.
(3) Pursuant to the Company's 1989 Stock Awards Plan, eligible employees may
elect to receive Company Common Stock in lieu of all or a portion of
incentive cash bonuses otherwise payable to them. At the time of issuance,
the shares have a fair market value equal to 115% of the cash bonus which
the employee elects to receive in Company Common Stock. The bonuses
reflected include the fair market value of such shares in excess of the
bonus amounts which the executive elected to receive in Company Common
Stock.
(4) Under the Securities and Exchange Commission ("SEC") rules regarding
executive compensation disclosure, no disclosure regarding items included
in this column is required for fiscal year 1992.
(5) The SEC rules regarding executive compensation do not require disclosure
for fiscal year 1994 or 1993 unless the amount of such other annual
compensation for such fiscal year is greater than or equal to either
$50,000 or 10 percent of the total annual salary and bonus for such fiscal
year reported for the named executive officer, whichever is less.
(6) Consists of matching contributions (Mr. Dean: $2,310; Mr. Rose: $3,227; Mr.
Ravencroft: $2,389; Mr. Shaw: $2,521; and Mr. Bondy: $2,286) and other
contributions (Mr. Dean: $5,188; Mr. Rose: $4,338; Mr. Ravencroft: $4,130;
Mr. Shaw: $2,886; and Mr. Bondy: $3,042) for eligible covered employees
made by the Company pursuant to the Dean Foods Company Investment and
Profit Sharing Plan and accruals (Mr. Dean: $7,094; Mr. Rose: $621; Mr.
Ravencroft: $766; Mr. Shaw:
7
<PAGE>
$0; and Mr. Bondy: $0) for lump sum payments at retirement under the Dean
Foods Company Supplemental Benefit Plan in addition to the payments
thereunder described under "Retirement Benefits" below and the amounts
described in Footnote 8 below.
(7) Consists of matching contributions and other contributions for eligible
covered employees made by the Company pursuant to the Dean Foods Company
Investment and Profit Sharing Plan and accruals for lump sum payments at
retirement under the Dean Foods Company Supplemental Benefit Plan in
addition to the payments thereunder described under "Retirement Benefits"
below.
(8) Also includes $147,544 paid by the Company to provide Mr. Rose with a
relocation allowance. The $147,544 paid to Mr. Rose in fiscal year 1994
reimburses him for additional home mortgage interest and taxes relating to
Mr. Rose's move from Rockford, Illinois to the Chicago metropolitan area.
The Company will further reimburse Mr. Rose during the next four fiscal
years in an amount of $55,500 per year, provided that Mr. Rose maintains
his position as an officer of the Company.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE APPRECIATION FOR
OPTION TERM (10 YEARS)(3)
---------------------------------------------
INDIVIDUAL GRANTS 5% ($) 10%($)
--------------------------------------- ---------------------- ----------------------
% OF
TOTAL
OPTIONS
GRANTED POTENTIAL POTENTIAL
TO EXERCISE PRICE PER AGGREGATE PRICE PER AGGREGATE
OPTIONS EMPLOYEES OR BASE SHARE AT POTENTIAL SHARE AT POTENTIAL
GRANTED IN FISCAL PRICE EXPIRATION EXPIRATION REALIZABLE EXPIRATION REALIZABLE
NAME (#) YEAR ($/SH) DATE DATE VALUE DATE VALUE
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Howard M. Dean.......... 15,113(1) .06% 26.87 10/01/03 $43.77 $255,409.70 $69.69 $647,138.66
14,887(2) .06% 26.87 10/01/03 $43.77 $251,590.30 $69.69 $637,461.34
Thomas L. Rose.......... 6,737(1) .03% 26.87 10/01/03 $43.77 $113,855.30 $69.69 $288,478.34
5,763(2) .02% 26.87 10/01/03 $43.77 $ 97,394.70 $69.69 $246,771.66
Thomas A. Ravencroft.... 2,915(1) .01% 26.87 10/01/03 $43.77 $ 49,263.50 $69.69 $124,820.30
2,564(2) .01% 26.87 10/01/03 $43.77 $ 43,331.60 $69.69 $109,790.48
Jeffrey P. Shaw......... 3,265(2) .01% 26.87 10/01/03 $43.77 $ 55,178.50 $69.69 $139,807.30
Timothy J. Bondy........ 3,537(2) .01% 26.87 10/01/03 $43.77 $ 59,775.30 $69.69 $151,454.34
</TABLE>
- - -----------
(1) Non-qualified option granted under the Company's 1989 Stock Awards Plan at
an exercise price equal to the market price on the date of grant. Such
option becomes exercisable over four years at the rate of 25% per year,
commencing one year after the date of grant, subject to acceleration in the
event of a "change in control" of the Company (defined the same as in the
agreements described below under the heading "Change in Control
Agreements"). The Company is obligated to compensate the optionee for the
tax liability incurred in connection with the exercise of such option, but
not in excess of the aggregate increase in the market value of the shares
after the date of grant.
(2) Incentive stock option granted under the Company's 1989 Stock Awards Plan
at an exercise price equal to the market price on the date of grant. Such
option becomes exercisable over four years at the rate of 25% per year,
commencing one year after the date of grant, subject to acceleration in the
event of a "change in control" of the Company (defined the same as in the
agreements described below under the heading "Change in Control
Agreements").
8
<PAGE>
(3) The potential prices per share at expiration date and aggregate potential
realizable values result from calculations assuming 5% and 10% growth rates
in share price as prescribed by the SEC and are not intended to forecast
future price appreciation of Common Stock of the Company nor the actual
value that the named executives will realize. Executives will realize the
indicated values only if the price of Company Common Stock appreciates by
the hypothetical annual percentage increases indicated.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED IN-
UNEXERCISED THE-MONEY
OPTIONS/SARS AT FY- OPTIONS/SARS AT
END(#) FY-END($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED($) UNEXERCISABLE UNEXERCISABLE(1)
- - ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Howard M. Dean 4,857 $ 99,957 67,926/69,642 $201,250/$44,183
Thomas L. Rose 7,500 $154,350 17,857/23,572 $ 49,004/$13,086
Thomas A. Ravencroft 5,454 $ 99,972 16,313/16,062 $ 49,608/$ 8,965
Jeffrey P. Shaw -- -- 4,302/6,800 $ 11,238/$ 4,072
Timothy J. Bondy 7,500 $154,350 5,392/8,213 $ 9,520/$ 6,031
</TABLE>
- - -----------
(1) Based upon a 1994 fiscal year end Company Common Stock price of $27.37 per
share.
RETIREMENT BENEFITS
Nearly half of the Company's salaried employees, including salaried employees
of certain wholly-owned subsidiaries, are covered under the Dean Foods Company
Salaried Employees Pension Plan, a qualified defined benefit plan to which only
the Company and such subsidiaries contribute. Benefits are based upon the
following: (a) for years of service through 1985, a participant's highest
average "qualifying earnings" (base compensation excluding bonuses and deferred
compensation (in the case of executives named in the Summary Compensation
Table, the equivalent of "Salary" excluding the amounts described in Footnotes
1 and 2 to such table), subject to such year's limit applicable to tax-
qualified retirement plans ($235,840 for calendar year 1993; $150,000 for
calendar year 1994 and indexed for each year thereafter)) paid during five
consecutive years out of the last 15 years of service (including earnings for
years after 1985), and (b) for years of service after 1985, the sum of the
benefits accrued for each year of service by the participant based on
qualifying earnings in each such year in the case of each executive named in
the Summary Compensation Table, except that benefits relating to a
participant's service at an entity acquired by the Company may be based on a
slightly different formula which takes into account the pension benefits for
service covered under the acquired entity's plan prior to the date such plan
was merged into the Company's pension plan. Benefits are integrated with Social
Security on a step-rate basis with the following integration levels: (a) for
benefits earned through 1985, $10,200 and (b) for benefits earned thereafter,
Social Security covered compensation ($24,000 for 1994). Annual benefits
payable from the plan are currently subject to a limit of $118,800 under the
Internal Revenue Code of 1986, as amended. Such limit is subject to additional
upward adjustments for cost-of-living increases each year.
9
<PAGE>
Since a substantial portion of the compensation for elected officers of the
Company does not qualify as pension plan earnings, the Board of Directors, in
January 1981, adopted the Dean Foods Company Supplemental Benefits Plan which
provides for the payment of supplemental benefits. Under the plan as amended,
each officer is eligible for either Class I benefits or Class II benefits, as
the Compensation Committee of the Board of Directors designates. Class I annual
benefits are the greatest of (a) 20% of the last twelve months' compensation,
(b) 20% of average annual compensation for the highest sixty consecutive months
out of the last 180 months or (c) if the officer has reached age 60, the excess
of 55% of average annual compensation as described in (b) over the benefit
payable under the Salaried Employees Pension Plan determined under the 50%
joint and survivor form of benefit. Class I benefits are payable in equal
monthly installments for 15 years (or, if longer, for life) commencing upon the
first to occur of the officer's (i) disability during active employment, (ii)
termination of employment after age 60 for any reason other than death or
disability, or (iii) death during active employment. Currently, Mr. Dean is the
only officer entitled to Class I benefits.
Class II annual benefits are the greater of the amounts described in clauses
(a) and (b) of the paragraph above regarding Class I benefits, payable in equal
monthly installments for 10 years (or, if longer, in the case of disability,
until age 65) commencing upon the first to occur of the officer's (i)
disability during active employment, or (ii) death during active employment.
The plan also provides a ten-year retirement benefit equal to the Class II
annual benefits described in the preceding sentence to Class II officers who
are 60 or older at the time of their retirement. Currently, Messrs. Rose,
Ravencroft, Shaw, and Bondy and ten other executive officers are entitled to
Class II benefits. The plan also provides additional retirement benefits to
officers equal to the excess of what their benefits under the Salaried
Employees Pension Plan would have been without regard to Internal Revenue
Service limitations over their actual benefits under such plan.
Total estimated annual benefits for the executive officers named in the
Summary Compensation Table are shown below. The benefits shown (i) are based on
each executive officer's current compensation, (ii) in the case of the Salaried
Employees Pension Plan, are assumed payable under the plan option providing
benefits for the life of the employee only, (iii) in the case of the
Supplemental Benefits Plan, are assumed payable for 15 years (or, if longer,
for life) for Class I benefits and for 10 years for Class II benefits, and (iv)
are based on service through normal retirement age (age 65). Pension benefits
may be payable prior to age 65 upon early retirement, disability or death.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
NAME ESTIMATED ANNUAL PENSION AT AGE 65
--------------------------------------------------------------------------
<S> <C> <C>
Howard M. Dean.............................................. $517,299
Thomas L. Rose.............................................. $245,358
Thomas A. Ravencroft........................................ $195,018
Jeffrey P. Shaw............................................. $120,461
Timothy J. Bondy............................................ $102,416
</TABLE>
CHANGE IN CONTROL AGREEMENTS
The Company has entered into agreements with Messrs. Dean, Rose, Ravencroft,
Shaw and Bondy and 11 other executive officers which provide that in the event
of such executive's voluntary or involuntary termination of employment (other
than retirement at or after his or her "normal retirement date", or termination
for "good cause", or death, or being "permanently disabled" for six months, as
such terms are defined in the agreements) within two years after a "change in
control" of the Company,
10
<PAGE>
he or she will promptly be paid (i) accrued salary and vacation pay, (ii) any
unpaid bonus for the preceding year and (iii) the equivalent of base salary,
annual bonus and the value of certain financial planning and tax preparation
services for two years (or, if less, for the period until his or her normal
retirement date), based on levels during the preceding year. In addition,
during the two years following such termination (or any lesser period until the
executive's death or normal retirement date), the Company will maintain all
life insurance, dental, medical, health and accident and disability plans,
programs or arrangements in which the executive was entitled to participate
immediately prior to the change in control (or will arrange for substantially
the same benefits); and at the expiration of such period will provide the
executive with at least the same life insurance and health coverage to which he
or she would be entitled if he or she retired at that time with fifteen years
of service; in each case subject to offset for any substantially similar
benefits provided by any new employer. The executive will also be given credit
under the Dean Foods Company Salaried Employees Pension Plan (or any successor
plan) and supplemental benefits plan for service during such period, and his or
her compensation for purposes of such plans will reflect the payments referred
to above. To the extent such credit or calculation of compensation is not
permitted by the terms of a plan, the present value of the benefit he or she
would otherwise receive will be paid to him or her promptly after termination
of employment. In the event the payments to the executive on account of accrued
amounts and additional salary, bonus and financial planning and tax preparation
services, either alone or together with other amounts the executive would have
the right to receive from the Company, would constitute a "parachute payment"
as defined in Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), and if the reduction of such payments would result in no portion
of such payments or other amounts being subject to the excise tax imposed by
Section 4999 of the Code and in no disallowance of a deduction by the Company
pursuant to Section 280G(a) of the Code, such payments are to be reduced to the
extent necessary to accomplish such results. The Company has agreed to
reimburse the executive for legal fees and expenses incurred by him or her in
enforcing any right or benefit provided by his or her agreement.
For purposes of the agreements, a "change in control" of the Company occurs
if: (i) there is a change in control that would be required to be reported
under Item 5(f) of Schedule 14A of Regulation 14A under the Securities Exchange
Act of 1934, as amended, (ii) any person, entity or group is, directly or
indirectly, the beneficial owner of securities representing 20% or more of the
Company's combined voting power, (iii) a majority of the members of any class
of Company directors are persons not nominated or elected by the Board of
Directors or (iv) the Company (or any substantial portion of its assets) is
combined with or acquired by another person or entity. However, no "change in
control" occurs on account of: (i) any transaction or series of transactions
which has been approved in advance by a majority of the Board of Directors
(exclusive of directors employed or otherwise affiliated with the person or
entity seeking the change in control), (ii) certain acquisitions by
underwriters in connection with underwritten public offerings or (iii) any
acquisition by any defined contribution plan qualified pursuant to the Code
maintained for the benefit of employees of the Company and/or its subsidiaries.
In return for the benefits provided by his or her agreement, each executive
agrees to continue to perform the regular duties of his or her current office
(and/or such duties of such other positions to which he or she may be elected
or assigned), subject to termination of employment by the Company at any time
and to resignation by him or her at any time on at least three months' prior
written notice or on his or her normal retirement date on 30 days' prior
written notice.
The Company may terminate any agreement, as of and with respect to any change
in control occurring after a date at least two years after notice of
termination, by written notice to the executive.
These agreements may be regarded as having an "anti-takeover" effect.
11
<PAGE>
COMPARISON OF FIVE YEAR(1) CUMULATIVE TOTAL RETURN(2) OF DEAN FOODS
COMPANY COMMON STOCK, S&P 500 INDEX AND S&P FOOD PRODUCTS INDEX(3)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement Period DEAN FOODS S&P S&P
(Fiscal Year Covered) CO. 500 INDEX FOOD
- - ------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-
6/ 1/89 $100 $100 $100
FYE 5/31/90 $111 $117 $117
FYE 5/31/91 $151 $130 $149
FYE 5/31/92 $122 $143 $156
FYE 5/31/93 $135 $160 $164
FYE 5/31/94 $141 $167 $163
</TABLE>
- - -----------
(1) Compares fiscal years ending on or about May 31st of the years indicated.
(2) The comparison of total return on investment (change in year end stock
price plus reinvested dividends) for each of the periods assumes that $100
was invested on June 1, 1989 in Dean Foods Company Common Stock, and in
each of the Standard & Poors ("S&P") 500 Composite Index and the S&P Food
Products Index, both of which are published industry indices.
(3) Companies in the S&P Food Products Index are as follows: Archer Daniels
Midland Company, Borden, Inc., CPC International, Inc., Campbell Soup
Company, ConAgra, General Mills, Inc., Gerber Products Company, The H.J.
Heinz Company, Hershey Foods Corporation, Kellogg Company, Pet,
Incorporated, The Quaker Oats Company, Ralston Purina Company, Sara Lee
Corporation and Wm. Wrigley, Jr. Company.
12
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during fiscal year 1994 consisted of
Messrs. Staley (Chair), McKenna, Collens, Vogl and Getz, none of whom is a
former or current officer or employee of the Company or any of its
subsidiaries. There were no interlocks or relationships requiring disclosure
under applicable SEC rules.
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors of the Company (the
"Committee") is composed of five directors, none of whom is a former or current
officer or employee of the Company or any of its subsidiaries. The Committee
reviews and recommends, subject to the approval of the Board of Directors, the
Company's compensation policies and programs. In its deliberations, the
Committee receives and considers recommendations from Mr. Dean, the Company's
Chairman and Chief Executive Officer, and Mr. Rose, the Company's President.
However, Messrs. Dean and Rose are not present during any deliberations
directly involving their respective compensation.
The Company's compensation policies are designed to attract and retain highly
capable executives and provide performance incentives for such executives. The
ultimate objective of the Company's compensation policies and programs is to
increase stockholder value by linking management's compensation to the
Company's performance. Accordingly, a Company executive's total cash
compensation will vary in relation to the Company's performance, the financial
performance of those business operations in which the executive is most
directly involved, if applicable, individual achievement and other factors. In
addition, the grant of stock options to Company executives is considered an
effective incentive for the creation of shareholder value since the value of
these awards is directly linked to increases in the per share price of Company
Common Stock.
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the
deductibility of certain compensation for the Chief Executive Officer and the
other four highest paid executive officers at the end of each fiscal year, with
respect to fiscal years commencing on or after January 1, 1994. For a more
detailed discussion, see "Proposal to Amend the 1989 Stock Awards Plan". The
Committee's policy related to this provision is to establish and maintain a
compensation program which maximizes the creation of long-term stockholder
value. The Committee intends to take such actions, including seeking
stockholder approval, to qualify most of the Company's compensation approaches
to ensure deductibility, except in those cases where the Committee believes
stockholder interests are best served by retaining flexibility of approach.
In conformance with the foregoing compensation philosophy, the total annual
compensation for executives of the Company and its subsidiaries is determined
under three principal compensation programs--base salary, annual incentive
bonuses and stock-based awards granted under the Company's 1989 Stock Awards
Plan. These three compensation programs, as implemented for the 1994 fiscal
year, are described below.
Base Salary. An executive's base salary is determined by external comparisons
using studies prepared by compensation consulting firms, other salary surveys
and internal comparisons against peers. Such data may or may not include some
of the companies reflected in the S&P Food Products
13
<PAGE>
Index used in the stock performance graph above. Salary reviews typically occur
once a year. A general goal is to establish the Company's base salaries at the
25th percentile of the base salaries paid by comparable companies to their
managers in comparable positions (i.e., at levels such that 75% of comparable
companies pay higher base salaries for a comparable position and 25% pay lower
base salaries). As described below, if certain performance goals are achieved,
annual incentive bonus payments permit Company executives to achieve
competitive levels of total cash compensation. Adjustments may be made to base
salary for geographic disparities in the cost of living, salary anomalies
resulting from acquisitions, individual potential for advancement and other
factors.
Incentive Bonus. Annual incentive bonus payments are discretionary payments
calculated as a percentage of an executive's base salary. Generally, a target
bonus is determined for each executive which ranges from 15% to 90% of base
salary depending upon the executive's position and scope of responsibility. The
actual bonus amount earned, which may be greater or less than the target bonus,
increases or decreases as the return on stockholders' equity increases or
decreases. The incentive bonus amounts paid to particular executives are
largely dependent on Company and/or business unit results with an appropriate
adjustment for individual contribution.
Under a separate cash bonus plan, the Company pays bonuses to certain other
executive officers who have primary responsibilities within a particular
operating subsidiary or division of the Company and who normally do not
participate in the plan described above. Under this plan, the bonus amounts are
based upon various divisional targets relating to sales, earnings, return on
assets, and achievement of individual performance goals established each year
by the Company's senior management.
Beginning with bonuses for fiscal year 1995, certain annual incentive bonuses
are being paid pursuant to a program under the Company's 1989 Stock Awards
Plan. See "Proposal to Approve Bases for Certain Annual Incentive Bonuses".
Stock-Based Awards. Under the Company's 1989 Stock Awards Plan, executives
may be granted stock options, stock bonus awards, stock appreciation rights,
restricted stock, performance shares awards and other equity-related awards. It
is the Committee's belief that Company executives are more effectively
motivated to manage the Company's business in the best interest of its
stockholders when such executives possess an ownership interest in the Company
parallel to the stockholders. It has been the Committee's practice to utilize
incentive stock options, non-qualified options and equity-related bonus awards
to achieve commonality of interest with the stockholders in the long-term
performance of the Company.
Stock option grants have been made on a discretionary basis by the
Compensation Committee. Generally, the number of stock options granted to a
particular executive correlates to a certain percentage of current base salary.
Such percentage is determined with reference to the median percentage of
options awarded to a survey group of similarly compensated executives (i.e.,
the 50th percentile). The survey group was developed by a nationally recognized
compensation consulting firm using survey data relating to executives of food
and other consumer goods companies with gross revenues comparable to those of
the Company. Such survey group may or may not have included some of the
companies reflected in the S&P Food Products Index used in the stock
performance graph above.
Executives also have the opportunity to receive, in lieu of cash, all or a
portion of their annual incentive bonus in the form of Company Common Stock
having a fair market value on the date of the award of 115% of that portion of
the bonus elected to be received in Company Common Stock. This
14
<PAGE>
feature is designed to further encourage Company Common Stock ownership by
Company executives. Of the aggregate annual incentive bonus amounts granted by
the Company for fiscal year 1994, 12.66% was issued in the form of Company
Common Stock.
Beginning with awards for fiscal years or periods after fiscal year 1994,
executives may also receive performance shares awards on the basis described
under "Proposal to Approve Amendments to the 1989 Stock Awards Plan".
Other. As of December 1, 1993, Thomas L. Rose became President and Chief
Operating Officer of the Company. Mr. Rose's new position required the
relocation of his family from Rockford, Illinois to the Chicago area. Such
relocation has resulted in a substantial increase in living expenses for Mr.
Rose. As a result, the Compensation Committee has provided Mr. Rose with a
relocation allowance, more specifically described in Footnote 6 to the Summary
Compensation Table.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The base salary of Howard M. Dean during fiscal year 1994 was established in
accordance with the Company's compensation policy for base salaries described
above. Mr. Dean's base salary of $507,000 fell between the 25th and 50th
percentiles of base salaries paid by the survey group during calendar 1993. His
increase in base salary for fiscal year 1994 reflected a decision by the
Committee to bring Mr. Dean's base salary somewhat above the 25th percentile of
CEO compensation for comparable companies within the survey group.
Mr. Dean's total base salary and incentive bonus payments of $845,675 for
fiscal year 1994 was below the median total compensation level of the survey
group previously noted. Stock options were awarded to Mr. Dean based upon a
percentage of his base salary. Such percentage was at the 50th percentile of
stock options awarded CEOs in the survey group.
Delbert C. Staley, Chairman
Andrew J. McKenna
Lewis M. Collens
Alexander J. Vogl
Bert A. Getz
Members of the Compensation Committee
CERTAIN TRANSACTIONS
Gary D. Flickinger, Vice President--Production of the Company, obtained a
$100,000 real estate purchase loan on or about December, 1993 from the Company
in connection with his relocation. As of the date hereof, the loan amount
outstanding is $100,000. Douglas A. Parr, Vice President--Dairy Sales and
Marketing of the Company, obtained a $140,000 real estate purchase loan on or
about December, 1993 from the Company in connection with his relocation. As of
the date hereof, the loan amount outstanding is $140,000. Both loans are no
interest, unsecured loans.
15
<PAGE>
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth as of August 5, 1994, information with respect
to the Company Common Stock beneficially owned by: (i) any person known by the
Company to be the beneficial owner of more than five percent of the outstanding
Company Common Stock, (ii) each director and each nominee for director of the
Company, (iii) each executive officer named in the Summary Compensation Table,
and (iv) all directors and officers of the Company as a group. Each of the
directors had, as of such date, sole voting and disposition power as to the
shares shown in the table as beneficially owned by him or her, other than those
shown as being shares as to which beneficial ownership is disclaimed.
<TABLE>
<CAPTION>
SHARES PERCENT
BENEFICIALLY OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED CLASS
- - --------------------------------------------------------------------------------
<S> <C> <C>
Lydia M. O'Connor, 2384 Camino Vida,
Palm Springs, CA 92264, owns individually ............. 307,545 .8%
and has sole voting and investment power as to......... 1,930,703(1) 4.8%
--------- ---
2,238,248 5.6%
========= ===
Timothy J. Bondy........................................ 17,049(2) *
Lewis M. Collens........................................ 3,000(3) *
Paula H. Crown.......................................... 3,000(4) *
Howard M. Dean.......................................... 462,820(5) 1.2%
William D. Fischer...................................... 154,729(6) .4%
John P. Frazee, Jr...................................... 14,823(7) *
Bert A. Getz............................................ 13,500(8) *
John S. Llewellyn, Jr................................... 0 *
Andrew J. McKenna....................................... 11,018(9) *
Thomas A. Ravencroft.................................... 142,813(10) .4%
Thomas L. Rose.......................................... 65,445(11) .2%
Jeffrey P. Shaw......................................... 8,500(12) *
Delbert C. Staley....................................... 17,643(13) *
Alexander J. Vogl....................................... 12,951(14) *
All directors and officers of the Company
as a group (25 persons)................................ 1,118,335(15) 2.8%
</TABLE>
- - -----------
*Less than 0.1%
(1) Ms. O'Connor is the sole trustee (with sole voting and investment power) of
two trusts holding, in the aggregate, 1,930,703 shares. She has a 50% life
interest in the income from such trusts.
(2) Includes 7,543 shares which may be acquired pursuant to stock options
within 60 days after August 5, 1994.
(3) Includes 2,000 shares which may be acquired pursuant to stock options
within 60 days after August 5, 1994.
(4) Includes 2,000 shares which may be acquired pursuant to stock options
within 60 days after August 5, 1994.
(5) Includes 170,614 shares with respect to which Mr. Dean disclaims beneficial
ownership and 88,176 shares which may be acquired pursuant to stock options
within 60 days after August 5, 1994.
16
<PAGE>
(6) Includes 86,867 shares which may be acquired pursuant to stock options
within 60 days after August 5, 1994.
(7) Includes 9,500 shares which may be acquired pursuant to stock options
within 60 days after August 5, 1994.
(8) Includes 2,500 shares with respect to which Mr. Getz disclaims beneficial
ownership and 9,500 shares which may be acquired pursuant to stock options
within 60 days after August 5, 1994.
(9) Includes 9,500 shares which may be acquired pursuant to stock options
within 60 days after August 5, 1994.
(10) Includes 19,669 shares which may be acquired pursuant to stock options
within 60 days after August 5, 1994.
(11) Includes 24,839 shares which may be acquired pursuant to stock options
within 60 days after August 5, 1994.
(12) Includes 6,252 shares which may be acquired pursuant to stock options
within 60 days after August 5, 1994.
(13) Includes 9,500 shares which may be acquired pursuant to stock options
within 60 days after August 5, 1994.
(14) Includes 5,000 shares which may be acquired pursuant to stock options
within 60 days after August 5, 1994.
(15) Includes 173,114 shares with respect to which directors and officers
disclaim beneficial ownership and 331,600 shares which directors and
officers have the right to acquire pursuant to stock options within 60
days after August 5, 1994.
PROPOSAL TO AMEND THE 1989 STOCK AWARDS PLAN
On July 22, 1994, the Board of Directors approved several amendments to the
Company's 1989 Stock Awards Plan. In doing so, the Board of Directors provided
that the amendments would be submitted to the stockholders of the Company at
the 1994 Annual Meeting, and that if such amendments were not approved by the
stockholders the amendments would terminate and be of no force or effect. For
purposes of the following discussion, the 1989 Stock Awards Plan as it exists
prior to the effectiveness of such amendments is referred to as the "Existing
Plan."
The amendments to the Existing Plan: (1) increase the maximum number of
shares which may be issued upon the exercise or payment of awards by 1,400,000
shares (subject to adjustment as provided in the Existing Plan); (2) make
certain changes related to the addition to the Internal Revenue Code of 1986,
as amended (the "Code"), of Section 162(m) (as interpreted by regulations
proposed by the Department of the Treasury, "Code Section 162(m)"), including:
(a) the addition of a definition of performance shares awards (a form of award
permitted as an "other award" under the Existing Plan), including a statement
of the basis upon which such awards may be granted; (b) the addition of a
limitation of 250,000 shares (subject to adjustment in certain events), as the
number of shares with respect to which options, stock appreciation rights
and/or performance shares may be awarded during the next five fiscal years
(1995-1999) to any employee; (c) the addition of a requirement that directors
17
<PAGE>
who are members of the administrative committee be outside directors (as such
term is used in Code Section 162(m)) in addition to the current requirement
that they be disinterested persons (as such term is used in Rule 16b-3 under
the Securities Exchange Act of 1934, as amended ("Rule 16b-3")) and (d) with
respect to certain matters dealt with by Code Section 162(m), the addition of a
limitation on the power of such committee to delegate its authority; and (3)
make certain other changes including: (a) the addition of certain definitions
and references related to the foregoing and (b) insofar as may be necessary to
avoid disqualification under Rule 16b-3, the addition of a restriction on the
availability for subsequent awards of shares subject to awards which expire
unexercised or unpaid or are cancelled, terminated or forfeited in any manner
without the issuance of shares thereunder.
The action by the Board of Directors was prompted by a review of Code Section
162(m). That section, added to the Code in August 1993, provides that for
fiscal years commencing on or after January 1, 1994, publicly held corporations
may not deduct employee remuneration with respect to any covered employee
(generally, an employee who is the chief executive officer or one of the other
four highest compensated officers as of the end of the fiscal year) to the
extent that the amount of such covered employee's remuneration for the fiscal
year exceeds $1,000,000. Provided certain requirements are met (or if certain
exceptions apply under transition rules), Code Section 162(m) excludes from the
remuneration counted toward the $1,000,000 the appreciation in the value of
stock options and stock appreciation rights granted under a plan at not less
than fair market value at the date of grant and the value of certain other
performance-based compensation, including performance shares awards. All of
these requirements as to options, SARs and performance shares awards either are
met or in the case of particular grants thereof can be met by the Existing
Plan, except two--the requirement that the plan include a limitation on the
number of shares with respect to which options, stock appreciation rights
and/or performance shares awards may be awarded during a specified period to
any employee and the requirement that stockholders have approved the basis upon
which performance shares awards are granted. The Board of Directors determined
that the Existing Plan should be amended so that these two requirements are met
independent of the transition rules, notwithstanding that the transition rules
appear to exclude from remuneration counted toward the $1,000,000, the
appreciation in the value of options and stock appreciation rights which have
been or may be awarded under the Existing Plan at not less than fair market
value on the date of award, and further exclude from such remuneration the
value of shares which are the subject of performance shares awards which have
been or may be awarded under the Existing Plan on the basis described in the
proposed amendments to the Existing Plan, prior to the earlier of any material
modification of the Existing Plan or the 1997 Annual Meeting. Recognizing that
these amendments would require stockholder approval, the Board of Directors
also reviewed the number of shares which remained available for delivery under
the Existing Plan (any increase in which also requires stockholder approval)
and determined that this would be an appropriate time to increase the number of
shares available for delivery. The review also resulted in approval of the
other amendments referred to above, none of which requires stockholder
approval, but all of which are also being submitted for such approval.
The Existing Plan was adopted by the Board of Directors and approved by the
Company's stockholders in 1989. The purpose of the Existing Plan is to promote
the long-term financial interests of the Company and its Affiliates by (i)
attracting and retaining personnel, (ii) motivating personnel by means of
growth-related incentives, (iii) providing incentive compensation opportunities
that are competitive with those of other major corporations and (iv) furthering
the identity of interests of participants with those of the stockholders of the
Company. The Board of Directors believes that the Existing Plan has been
successful to date in accomplishing its purpose, and that its purpose will be
further served by the proposed amendments.
18
<PAGE>
Approval of the proposed amendments will not necessarily result in the
awarding of options, stock appreciation rights and/or performance shares awards
which would not otherwise have been awarded had sufficient shares been
available, nor in assuring that the deductibility of the remuneration of
covered employees will not be affected by Code Section 162(m). For a statement
of the Compensation Committee's policy regarding the awarding of options and
performance shares awards, and for a statement of its current policy with
respect to qualifying compensation paid to the Company's executive officers
under Section 162(m), see "Report of Compensation Committee."
In the event the proposed amendments are not approved by the Company's
stockholders, there will be no immediate effect upon the Company's ability to
grant awards under the Existing Plan and the Existing Plan will continue in
effect. As of August 5, 1994, of the 1,800,000 shares originally available for
issuance upon the exercise or payment of awards granted under the Existing Plan
(after giving effect to the 3-for-2 stock split which occurred on August 16,
1991), 1,509,392 shares (969,246 of which were the subject of outstanding
awards) remained available for issuance.
The following is a brief summary of some of the terms of the Existing Plan as
amended by the proposed amendments (the "Plan") and is qualified in its
entirety by, and made subject to, the Plan set forth as Appendix A hereto.
Plan Summary
The Plan permits the granting of stock options, stock appreciation rights
("SARs"), restricted stock, performance shares awards and other awards to full-
time employees of the Company and its Affiliates (i.e., its subsidiaries and
other entities in which the Company has a direct or indirect equity interest).
Stock options may be either "incentive stock options" ("ISOs") under Section
422 of the Code or other options ("non-qualified options").
Administration and Eligibility. The Plan is administered by a committee of
the Board of Directors (the "Committee"). The Plan empowers the Committee,
among other things, to interpret the Plan, to make all determinations deemed
necessary or advisable for its administration, to choose the times at which and
the employees to whom awards are to be made and to award to such employees
options (including ISOs), SARs, shares of restricted stock, performance shares
awards and other awards. Although certain employees have heretofore been
granted awards as described below under "Awards Heretofore Granted under the
Existing Plan," the employees to receive future awards under the Plan have not
yet been selected. The Company and its subsidiaries currently employ
approximately 9,263 persons.
Shares Subject to the Plan; Adjustment. The maximum number of shares of
Common Stock which may be issued pursuant to the Plan is 3,200,000. If awards
expire unexercised or unpaid or are cancelled, terminated or forfeited without
the issuance of shares, such shares are again available under the Plan unless
such availability would prevent the Plan from qualifying under Rule 16b-3.
Shares issued pursuant to the Plan may be authorized and unissued shares,
treasury shares or a combination thereof.
The maximum number of shares of Common Stock with respect to which options,
SARs and/or performance shares awards may be awarded during the period of five
fiscal years ending in 1999 to any employee is 250,000.
The maximum number of shares subject to the Plan and the maximum number of
shares with respect to which options, SARs and/or performance shares awards may
be awarded during the period
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<PAGE>
of five fiscal years ending in 1999 to any eligible employee, and the shares
and option and reference prices under outstanding awards, are subject to
adjustment in the event of certain "Organic Changes" (as defined in the Plan)
and/or to prevent dilution or enlargement of award rights. The Committee may
provide in award agreements that in the event of a change in control (or tender
offer or accumulation of Common Stock), merger, consolidation, reorganization,
recapitalization, sale or exchange of substantially all of the assets or
dissolution of the Company, the benefits under such awards may be accelerated
and/or cash payments may be made in lieu of such benefits in order to prevent
the dilution or enlargement of rights thereunder.
Options. The Plan authorizes the Committee to award options to purchase
Common Stock. Options may be either ISOs or non-qualified options, except that,
as long as required by Code Section 422, no ISO may be awarded after August 1,
1999 or to any employee of an Affiliate which is not a subsidiary corporation
(as such term is used in Code Section 424(f)) of the Company. In the case of
ISOs, the option price may not be less than 100% of the fair market value of
such stock at the time the option is granted or the par value of such stock. In
the case of non-qualified options, the option price may not be less than 85% of
the fair market value of such stock at the time the option is granted and not
less than the par value of such stock. The Plan allows optionees, to the extent
permitted by the Committee, to pay the exercise price of options in cash,
Common Stock (valued at its fair market value on the date of exercise), a
combination thereof or any other consideration.
SARs. The Plan authorizes the Committee to grant SARs. An SAR entitles the
holder to receive upon exercise the excess of the fair market value of a
specified number of shares of Common Stock at the time of exercise over a
specified price. The Company will pay such amount to the holder in Common Stock
(valued at its fair market value on the date of exercise), cash or a
combination thereof, as the Committee may determine (which determination may
take into account any preference expressed by the holder). SARs granted as an
alternative to a previously or contemporaneously granted option entitle the
optionee, in lieu of exercising the option, to receive the excess of the fair
market value of a share of Common Stock on the date of exercise over the option
price multiplied by the number of shares as to which he or she is exercising
the SAR. If an SAR is alternative to an option, the option is cancelled to the
extent the appreciation right is exercised and the SAR is cancelled to the
extent the option is exercised.
Restricted Stock. The Plan authorizes the Committee to grant restricted
Common Stock with such restriction periods as the Committee may designate.
During the restriction period, stock certificates evidencing restricted shares
are held by the Company and restricted shares may not be sold, assigned,
transferred, pledged or otherwise encumbered. Other than these restrictions on
transfer and any other restrictions the Committee may impose, the participant
has all the rights of a holder of Common Stock as to shares of restricted
stock. The Committee may permit or require the payment of cash dividends to be
deferred and, if the Committee so determines, reinvested in additional
restricted stock or otherwise invested or accruing a yield. Restricted stock
may be awarded without any consideration other than services rendered and/or
(to the extent permitted by applicable corporate law on the date of award)
services to be rendered. Except as otherwise provided by the Committee at or
subsequent to the time of grant, upon termination of the participant's
employment during the restriction period all shares still subject to
restriction are forfeited by the participant.
Performance Shares Awards. The Plan authorizes the Committee to grant
performance shares awards. A performance shares award grants the holder the
right to receive, following the end of a period of at least one fiscal year
specified by the Committee, cash or Common Stock or a combination thereof as
determined by the Committee in an aggregate amount based on the achievement of
targets for such
20
<PAGE>
period based on one or more Company financial performance criteria established
by the Committee not later than the ninetieth day of the period. For
performance shares awards made not later than the ninetieth day of the current
fiscal year of the Company, the criterion is earnings per share, but the
Committee may in the future use, either in substitution therefor or in addition
thereto, total shareholder return (i.e., appreciation in the market price of
Common Stock plus dividends paid), return on stockholders' equity and/or return
on invested capital. Subject to the provisions of the Plan, the Committee has
the sole and complete authority to determine all the conditions of such awards.
No recipient of a performance shares award has or acquires any rights as a
holder of the Common Stock subject to such award, including without limitation
voting and dividend rights, unless and until the certificates representing the
shares potentially issuable pursuant to such award are issued to the recipient.
The Committee may impose restrictions on the transfer of shares issued pursuant
to such awards. Performance shares awards may be awarded without any
consideration other than services rendered and/or (to the extent permitted by
applicable corporate law on the date of award) services to be rendered. Except
as otherwise provided by the Committee at or subsequent to the time of grant,
upon a termination of employment during the performance measurement period, the
performance shares award is forfeited by the participant.
Other Awards. Other awards, either alone or in addition to options, SARs,
restricted stock and performance shares awards, may be granted under the Plan.
These may include, without limitation, convertible securities, and other forms
of award measured in whole or in part by the value of shares, the performance
of the participant or the performance of the Company, any Affiliate or any
operating unit thereof. Such awards may be payable in Common Stock, cash or a
combination thereof. Subject to the provisions of the Plan, the Committee has
the sole and complete authority to determine the numbers of shares to be
awarded pursuant to such awards and all other conditions of the awards. A
participant may defer all or a portion of any such award in accordance with
procedures established by the Committee. In the case of awards involving the
right to purchase Common Stock, the purchase price may not be less than 85% of
the fair market value of such stock at the time the award is granted and not
less than the par value of such stock. Other awards may be awarded without any
consideration other than services rendered and/or (to the extent permitted by
applicable corporate law on the date of award) services to be rendered.
Supplemental Cash Payments. Subject to the Committee's discretion, a non-
qualified option or SAR agreement may require the Company to make a cash
payment to the holder thereof upon exercise based on a formula designed to
reimburse the holder for any income tax liability resulting from such exercise
and the receipt of such payment.
Fair Market Value. Fair market value for purposes of the Plan is determined
in accordance with procedures established by the Committee. The closing price
of Common Stock on August 12, 1994 was $30.25.
Surrender. If so provided by the Committee, an award may be surrendered to
the Company on such terms and conditions, and for such consideration, as the
Committee determines.
Foreign Alternatives. Without amending and notwithstanding the other
provisions of the Plan, in the case of any award to be held by any participant
who is employed outside the U.S. or is a foreign national, the Committee may
specify that such award shall be made on such terms and conditions different
from those specified in the Plan as may, in the judgment of the Committee, be
necessary or desirable to further the purposes of the Plan.
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<PAGE>
Term and Exercisability of Awards. Awards may be granted for such terms, and
are exercisable, as the Committee determines. Awards are not transferable,
except by will and the laws of descent and distribution, and during a
participant's lifetime are exercisable or receivable only by the participant or
his or her legal representative.
Withholding. The Committee has the power to withhold, or require a
participant to remit to the Company, an amount sufficient to cover withholding
taxes with respect to shares issuable and/or amounts payable pursuant to the
Plan. If so permitted by the Committee, a participant may elect to satisfy such
taxes by having shares issuable under the Plan withheld or by delivering other
shares to the Company.
Amendment and Termination. The Plan may be suspended, terminated or amended
by the Board of Directors or the Committee at any time, but no suspension,
termination or amendment shall impair the rights of the holder of any award
therefore granted without his or her consent. Subject to the same limitation on
impairment of rights, the Committee may amend or modify an outstanding award to
the extent it would have had the authority to initially grant the award as so
amended or modified. Notwithstanding the general rights of the Board of
Directors and the Committee to amend the Plan, the Plan may not be amended
without stockholder approval to the extent such approval is required by law,
agreement or the rules of any exchange upon which the Common Stock is listed.
EQUITY-RELATED AWARDS HERETOFORE GRANTED UNDER THE EXISTING PLAN:
As of August 5, 1994, awards under the Existing Plan had been made as
follows(1):
<TABLE>
<CAPTION>
SECURITIES
UNDERLYING
SECURITIES PERFORMANCE
UNDERLYING SHARES
NAME OPTIONS(2) AWARDS(3)
- - ---------------------------------------------------------------------
<S> <C> <C> <C>
Howard M. Dean FY 1994 30,000 0
FY 1995 0 6,000-18,000
In Total 30,000 6,000-18,000
Thomas L. Rose FY 1994 12,500 0
FY 1995 0 3,500-10,500
In Total 12,500 3,500-10,500
Thomas A. Ravencroft FY 1994 5,479 0
FY 1995 0 1,250-3,750
In Total 5,479 1,250-3,750
Jeffrey P. Shaw FY 1994 3,265 0
FY 1995 0 1,250-3,750
In Total 3,265 1,250-3,750
Timothy J. Bondy FY 1994 3,537 0
FY 1995 0 1,250-3,750
In Total 3,537 1,250-3,750
All Current Executive Officers of FY 1994 81,094 0
the Company as a Group FY 1995 0 42,250-126,750
In Total 81,094 42,250-126,750
All Recipients FY 1994 248,259 0
FY 1995 0 42,250-126,750
In Total 248,259 42,250-126,750
</TABLE>
22
<PAGE>
- - -----------
(1) Table does not include bonuses under the Existing Plan described below
under "Proposal to Approve Bases For Certain Annual Incentive Bonuses."
(2) Non-qualified options granted under the Company's 1989 Stock Awards Plan at
an exercise price equal to the market price on the date of grant. Such
options become exercisable over four years at the rate of 25% per year,
commencing one year after the date of grant, subject to acceleration in the
event of a "change in control" of the Company (defined the same as in the
agreements described above under the heading "Change in Control
Agreements"). The Company is obligated to compensate the optionee for the
tax liability incurred in connection with the exercise of such options, but
not in excess of the aggregate increase in the market value of the shares
after the date of grant.
(3) The ranges of the shares which may be awarded are based upon the extent to
which the Company achieves earnings per share goals during the fiscal years
1995-1997.
Federal Income Tax Consequences
The following discussion is intended only as a brief summary of the federal
income tax consequences of stock options, SARs, restricted stock, Performance
Shares Awards, other awards and supplemental cash payments. The laws governing
the tax aspects of awards are highly technical and such laws are subject to
change in the future, and any such change could be retroactive and affect the
validity of the following discussion.
The discussion which follows assumes that, to the extent relevant at the time
a non-qualified option is exercised as to any shares, the optionee will make a
timely election under Section 83(b) of the Code (a "Section 83(b) election") to
have the excess of the fair market value of the shares at the time of exercise
over their option price included in his or her taxable income for the year of
exercise. It is anticipated that, to the extent relevant, optionees will be
required to make such elections.
Non-Qualified Options. The holder of a non-qualified option does not
recognize taxable income upon the grant thereof, nor is the Company entitled to
a deduction in respect of such grant. Upon the exercise of a non-qualified
option as to any shares, the excess of the fair market value of such shares on
the date of exercise over their option price (the "spread") constitutes
compensation taxable to the optionee as ordinary income. Provided it complies
with applicable withholding requirements, the Company should be entitled to a
deduction, in the year of exercise, in an amount equal to such compensation
taxable to the optionee as ordinary income.
Upon an optionee's sale of shares acquired pursuant to the exercise of a non-
qualified option, the difference between the selling price and the tax basis of
the shares (generally the fair market value of such shares on the date of
exercise) is a capital gain or loss (long- or short-term, depending on the
optionee's holding period for the shares). The Company is not entitled to a
deduction as a result of such a sale.
ISOs. The holder of an ISO does not recognize taxable income upon the grant
or exercise thereof, nor is the Company entitled to a deduction in respect of
such grant or exercise. However, the spread at exercise constitutes an item
includible in alternative minimum taxable income and may subject the optionee
to, or increase the optionee's liability for, alternative minimum tax. Such
alternative minimum tax or increase therein may be payable even though the
optionee receives no cash upon the exercise of his or her ISO with which to pay
such tax or increase.
Upon an optionee's disposition of shares acquired pursuant to the exercise of
an ISO, if the shares have been held for at least one year and if at least two
years have elapsed since the date of grant (i.e.,
23
<PAGE>
if the "ISO Holding Period" has expired), the difference between the selling
price and the tax basis of such shares (such basis generally being the option
price of such shares) is a long-term capital gain or loss to the optionee. The
Company is not entitled to a deduction as a result of such a sale.
If option shares are disposed of before the expiration of the ISO Holding
Period (a "disqualifying disposition"), then (i) if the selling price exceeds
the fair market value of the shares on the date of exercise, the excess of such
fair market value over the tax basis of the shares is taxable to the optionee
as ordinary income, and the excess of the selling price over such fair market
value is taxable to the optionee as a capital gain (long- or short-term,
depending on the optionee's holding period), (ii) if the selling price exceeds
the tax basis of the shares but does not exceed the fair market value of the
shares on the date of exercise, the excess of the selling price over the tax
basis of the shares is taxable to the optionee as ordinary income, and (iii) if
the selling price is less than the tax basis of the shares, the difference is a
capital loss to the optionee (long- or short-term, depending on the optionee's
holding period). If, however, the disposition is a sale to a related party (as
defined in Section 267(b) of the Code to include, for example, a member of the
optionee's family or a corporation of which the optionee owns a majority of the
equity interest) or a gift, then the excess of the fair market value of the
shares on the date of exercise over the tax basis of the shares is taxable to
the optionee as ordinary income.
An exception to the foregoing treatment may occur in the event a person who
is subject to "six month short-swing profit" liability under Section 16(b) of
the Securities Exchange Act of 1934 ("Section 16(b)") (generally directors and
officers of the Company) disposes of shares in a disqualifying disposition. In
certain circumstances, the fair market value of the shares used in calculating
gain or loss may be determined, and the optionee's holding period may commence,
on a date other than the date of exercise.
The Company should be entitled to a deduction for the year of disposition in
an amount equal to any amount taxable to the optionee as ordinary income upon a
disqualifying disposition.
SARs. The holder of an SAR does not recognize taxable income upon the grant
thereof, nor is the Company entitled to a deduction in respect of such grant.
Upon the exercise of an SAR, the holder generally recognizes ordinary income
equal to the amount of any cash and the fair market value (measured on the date
of exercise) of any Common Stock received. Provided it complies with applicable
withholding requirements, the Company should be entitled to a deduction in an
amount equal to the amount of ordinary income recognized by the holder.
Upon a holder's sale of any shares received pursuant to the exercise of an
SAR, the difference between the selling price and the tax basis of the shares
(generally the fair market value of such shares on the date of exercise) is a
capital gain or loss (long- or short-term, depending on the holder's holding
period for the shares).
An exception to the foregoing treatment may occur in the event a holder who
is subject to Section 16(b) receives Common Stock upon the exercise of an SAR.
In certain circumstances, the fair market value of the shares received may be
determined, and the holder's holding period may commence, on a date other than
the date of exercise.
Use of Stock to Pay Option Price. The general statements as to tax basis in
the previous paragraphs relating to the disposition of stock received on the
exercise of options apply in the event the optionee pays cash for the option
shares. If, however, the optionee pays for the option shares in
24
<PAGE>
whole or in part by delivering already-owned Common Stock ("old" shares), the
tax basis for the option shares, and thus the consequences of a disposition,
differs.
If an optionee delivers old shares, however acquired, in payment of all or
part of the exercise price of a non-qualified option, the optionee does not
recognize a gain or loss as a result of such delivery (but the exercise
continues to give rise to taxable compensation and to a Company deduction as
described above). The optionee's tax basis in, and holding period for, the
option shares is determined as follows: as to option shares equal in number to
the old shares delivered, the basis in and holding period for the old shares
carry over on a share-for-share basis; as to each remaining share, its basis is
the fair market value on the date of exercise and its holding period begins on
that date. Any capital gain or loss on the sale of a particular option share is
measured based on the difference between the selling price and the optionee's
actual tax basis for such share.
If an optionee delivers old shares (other than old shares acquired upon
exercise of an ISO which were not held for the ISO Holding Period) in payment
of all or part of the exercise price of an ISO, generally the optionee does not
recognize a gain or loss as a result of such delivery. The optionee's tax basis
in and holding period for the option shares is determined as follows: as to
option shares equal in number to the old shares delivered, the basis in and the
holding period for the old shares carries over on a share-for-share basis; as
to each remaining share, its basis equals the exercise price paid in cash (if
any). Any capital gain or loss on the sale of a particular option share is
measured based on the difference between the selling price and the optionee's
actual tax basis for such share. Pursuant to proposed regulations, if an ISO is
exercised using old shares, a later disqualifying disposition of the shares
received is deemed to have been a disposition of the shares having the lowest
tax basis first.
If an optionee pays the exercise price of an option in whole or in part with
old shares that were acquired upon the exercise of an ISO and that have not
been held for the ISO Holding Period, the optionee generally recognizes
ordinary income under the rules applicable to disqualifying dispositions. The
Company should be entitled to a corresponding deduction. The optionee's tax
basis in the option shares which reflect a carry-over basis from the old shares
surrendered is increased by the amount of ordinary income the optionee
recognizes.
Restricted Stock. A participant who is granted restricted stock may, if the
restrictions constitute a "substantial risk of forfeiture" as defined in
Section 83 of the Code, make a Section 83(b) election to have the grant taxed
as compensation income at the date of grant in an amount equal to the fair
market value on the date of grant of the shares subject to such award less any
amount paid by the participant for the shares. If the participant does not make
a timely Section 83(b) election, the grant is generally taxed to him or her as
compensation income at the date(s) that the restrictions imposed on the shares
expire, in an amount on each such date equal to the fair market value on such
date of the shares as to which the restrictions expire. Unless a participant
makes a timely Section 83(b) election, any dividends paid on the shares subject
to the award while such shares remain subject to the restrictions are
compensation income to the participant. Provided it complies with applicable
withholding requirements, the Company is generally entitled to a deduction for
any compensation income taxed to the participant.
Upon a participant's sale of shares received pursuant to a grant of
Restricted Stock, the difference between the selling price and the tax basis of
the shares (generally, if a timely Section 83(b) election is made, the fair
market value of the shares on the date of grant or, if a timely Section 83(b)
election is not made, the fair market value of the shares on the date(s) on
which the restrictions on the shares
25
<PAGE>
expire) is a capital gain or loss (long- or short-term, depending on the
participant's holding period for the shares). A participant's holding period
begins on the date of grant if a timely Section 83(b) election is made or on
the date(s) on which the restrictions on the shares expire if no timely Section
83(b) election is made.
An exception to the foregoing treatment may occur in the event that the
participant is subject to Section 16(b). In certain circumstances, the fair
market value of particular shares may be determined, and the participant's
holding period for such shares may commence, on a date other than the date of
grant or the date on which the restrictions on such shares lapse.
Performance Shares Awards. The recipient of a performance shares awards does
not recognize taxable income upon the grant thereof, nor is the Company
entitled to a deduction in respect of such grant. Upon the issuance of shares
and/or the payment of cash pursuant to the Award, the recipient recognizes
compensation in an amount equal to the sum of the fair market value of the
issued shares on the date of issuance plus the amount of such cash. Such
compensation is taxed to the recipient as ordinary income for the year of
issuance. Provided it complies with applicable withholding requirements, the
Company is generally entitled to a deduction for any compensation income taxed
to the recipient. The recipient's holding period begins on the date the shares
are issued.
Upon a recipient's sale of shares received pursuant to a performance shares
award, the difference between the selling price and the tax basis of the shares
(generally the fair market value of the shares on the date such shares were
issued) is a capital gain or loss (long- or short-term, depending on the
recipient's holding period for the shares).
An exception to the foregoing treatment may occur in the event a recipient
who is subject to Section 16(b) receives shares pursuant to a performance
shares award. In certain circumstances, the fair market value of the shares
received may be determined, and the recipient's holding period may commence, on
a date other than the date the shares are issued.
Supplemental Cash Payments. The amount of any supplemental cash payment to a
participant who exercises a non-qualified option or SAR constitutes
compensation taxable to the participant as ordinary income, and the Company
should be entitled to a deduction for the year of payment in an amount equal to
such compensation.
The supplemental cash payment to the participant is intended to provide the
participant with sufficient funds to pay the federal income tax arising both
from the exercise of the option or SAR and the receipt of such payment. The
Company's cash outlay to the participant should be offset to some extent by the
Company's tax savings arising from the deductions to which the Company is
entitled because of the exercise of the option or SAR and the making of such
payment. The extent of offset depends on the relative income tax rates
applicable to corporations and individuals at the time of exercise.
Surrender. The amount paid to a participant upon surrender of an award is
compensation taxable to the participant as ordinary income. The Company should
be entitled to a deduction for the year of payment in an amount equal to such
compensation.
Accelerated Benefits. In the event that a participant's benefits with respect
to an award pursuant to the Plan are accelerated as the result of a change in
the ownership of the Company or a substantial portion of the Company's assets,
then pursuant to Sections 280G and 4999 of the Code (which deal
26
<PAGE>
with the treatment of "excess parachute payments") the Company may not be
entitled to a deduction for some or all of the accelerated benefits (and
potentially for certain other amounts payable to the participant) and the
participant may be subject, in addition to the federal income taxes otherwise
payable with respect to the award, to a 20% excise tax on the non-deductible
portion of the accelerated benefits (or amounts).
Other Awards. Because other awards may take many other forms, as determined
by the Committee, it is not possible to describe generally what their tax
treatment will be.
Accounting Treatment
If a non-qualified option or other award involving the right to purchase Common
Stock is granted at an exercise or purchase price less than fair market value
on the date of grant, the Company incurs compensation expense to the extent of
the difference, which is immediately chargeable against income unless such non-
qualified option or award is subject to a vesting period, whereupon such
expense would be chargeable to income over the vesting period. The Company
incurs similar compensation expense upon the grant of any award not involving
the right to purchase Common Stock (which inherently is generally granted for
nominal consideration), but in the case of restricted stock such expense is
generally chargeable to income over the period during which restrictions
expire. The award of an SAR, a right to a supplemental cash payment, a non-
qualified option which includes a right to a supplemental cash payment, or a
performance shares award results in a charge by the Company against income as
compensation expense of an amount equal to (a) in the case of a performance
shares award, the fair market value at the date of grant of the Common Stock
subject to such award and (b) in all cases, any periodic increase in any
supplemental cash payment and any periodic decrease in such aggregate fair
market value. Each charge against or credit to income resulting from an award
under the Plan is adjusted for the tax effect attributable thereto. ISOs and
non-qualified options granted at fair market value without any right to a
supplemental cash payment do not affect the Company's income except for the tax
effects discussed in the preceding section.
The affirmative vote of a majority of the outstanding shares of Common Stock
voted at the meeting is required for approval of the proposed amendments to the
Plan.
Approval of the proposed amendments will also constitute approval of the
basis on which performance shares awards are granted under the Plan.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS AN AFFIRMATIVE VOTE FOR THE
APPROVAL OF THE PROPOSED AMENDMENTS TO THE PLAN.
PROPOSAL TO APPROVE BASES FOR CERTAIN ANNUAL INCENTIVE BONUSES
As discussed under "Proposal to Amend the 1989 Stock Awards Plan", Code Section
162(m) excludes the value of certain performance-based compensation from the
remuneration counted toward its $1,000,000 limitation provided certain
conditions are satisfied. In connection with its review of Code Section 162(m),
the Board of Directors concluded that stockholder approval should be obtained
for the basis upon which the Company's annual incentive bonuses to be paid
pursuant to the 1989 Stock Awards Plan are to be paid so that, if certain other
conditions within the control of the Compensation Committee are met, such
bonuses may be excluded. Such bonuses, based on Company financial performance
criteria established by the Compensation Committee, may be awarded to any
executive
27
<PAGE>
officer of the Company or any manager who has primary responsibility within a
particular operating subsidiary or division of the Company. For such bonuses
payable for the current fiscal year of the Company, the financial performance
criterion is return on stockholders' equity, but the Compensation Committee may
subsequently use, either in substitution therefor or in addition thereto,
earnings per share, total shareholder return (i.e., appreciation in the market
value of a share of Common Stock plus dividends paid), and/or return on
invested capital. The amount of bonus paid for a fiscal year will depend on the
Company's achieving certain financial performance goals during the fiscal year
which have been set by the Compensation Committee not later than the ninetieth
day of the fiscal year. In no event may the amount of such a bonus paid to an
employee under this bonus program for a fiscal year exceed $950,000.
The Committee anticipates that a substantial majority of the potential annual
incentive bonus payable for a particular fiscal year to an employee who
participates in the foregoing bonus program will consist of the performance-
based bonus. Under a separate incentive bonus program which is not part of the
1989 Stock Awards Plan, which may also involve but is not necessarily limited
to financial performance goals set during the first ninety days of a fiscal
year, such participants (and others) may also receive other annual incentive
bonuses. The Company is not seeking to qualify such other annual incentive
bonuses for exclusion from Code Section 162(m).
The affirmative vote of a majority of the outstanding shares of Common Stock
voted at the meeting is required for approval of the proposed financial
performance criteria bases for certain annual incentive bonuses.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS AN AFFIRMATIVE VOTE FOR THE
APPROVAL OF THE PROPOSED FINANCIAL PERFORMANCE CRITERIA BASES FOR CERTAIN
ANNUAL INCENTIVE BONUSES.
APPROVAL OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has again selected Price Waterhouse as
independent accountants to audit the accounts of the Company and its
subsidiaries for the fiscal year ending May 28, 1995, subject to approval of
the stockholders. Such selection was last submitted for stockholder approval at
the 1993 Annual Meeting.
Representatives of Price Waterhouse are expected to be present at the meeting
with the opportunity to make a statement if they desire to do so, and are
expected to be available to respond to appropriate questions.
The Company's financial statements for the fiscal year ended May 29, 1994
were audited by Price Waterhouse. In connection with their audit function,
Price Waterhouse also reviewed filings with the Securities and Exchange
Commission and reports to stockholders, and provided technical assistance to
the Company's accounting staff.
The selection of Price Waterhouse will be considered approved if a majority
of the shares of Company Common Stock voted at the meeting is voted for
approval. If the stockholders do not approve the selection of Price Waterhouse,
the selection of other independent accountants will be considered by the Board
of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL.
28
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OTHER MATTERS
The Board of Directors of the Company does not know of any other matters that
are to be presented for action at the meeting. Should any other matter come
before the meeting, however, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies with respect to such matter in
accordance with their judgment.
SUBMISSION OF STOCKHOLDER PROPOSALS
All proposals of stockholders intended to be presented at the 1995 Annual
Meeting of Stockholders must be received by the Company at its principal
executive offices not later than the close of business on April 20, 1995 for
inclusion in the Company's Proxy Statement and form of proxy relating to that
meeting.
Eric A. Blanchard
Secretary
August 19, 1994
29
<PAGE>
APPENDIX A
DEAN FOODS COMPANY
1989 STOCK AWARDS PLAN
(As Proposed to Be Amended Effective October 4, 1994)
1. Purpose. The purpose of the Dean Foods Company 1989 Amended Stock Awards
Plan (the "Plan") is to promote the long-term financial interests of the
Company and its Affiliates by (a) attracting and retaining personnel, (b)
motivating personnel by means of growth-related incentives, (c) providing
incentive compensation opportunities that are competitive with those of other
major corporations and (d) furthering the identity of interests of participants
with those of the stockholders of the Company.
2. Definitions. The following definitions are applicable to the Plan:
"Affiliate" means (a) any subsidiary and (b) any other entity in which
the Company has a direct or indirect equity interest which is designated an
"Affiliate" by the Committee.
"Board of Directors" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute.
"Committee" means the Compensation Committee or, if the Board of
Directors so determines, another committee of three or more directors of
the Company who are "disinterested persons" as such term is used in Rule
16b-3 and are "outside directors" as such term is used in Section 162(m) of
the Code.
"Common Stock" means Common Stock, $1.00 par value, of the Company or
such other securities as may be substituted therefor pursuant to paragraph
5(c).
"Company" means Dean Foods Company, a Delaware corporation, and its
successors.
"eligible employee" means any full-time employee of the Company or an
Affiliate.
The "fair market value" of the Common Stock shall be determined in
accordance with procedures established by the Committee.
"fiscal year" means the Company's fiscal year.
"participant" means any employee of the Company or an Affiliate who has
been granted an award pursuant to the Plan.
"Rule 16b-3" means such rule adopted under the Securities Exchange Act of
1934, as amended, or any successor rule.
"subsidiary" means any corporation fifty percent or more of the voting
stock of which is owned, directly or indirectly, by the Company.
3. Limitation on Aggregate Shares/Individual Five-Year Limitation on Option,
SAR and Performance Shares Awards. Subject to adjustment as provided in
paragraph 5(c), the number of shares of Common Stock which may be issued upon
the exercise or payment of awards granted under the Plan shall not exceed, in
the aggregate, 3,200,000 shares; it being understood that to the extent any
awards expire unexercised or unpaid or are cancelled, terminated or forfeited
in any manner without the issuance of shares of Common Stock thereunder, such
shares shall again be available under the
A-1
<PAGE>
Plan unless such availability would prevent the Plan from complying with Rule
16b-3. Such 3,200,000 shares of Common Stock may be either authorized and
unissued shares, treasury shares, or a combination thereof, as the Committee
shall determine.
Subject to adjustment as provided in Paragraph 5(c), the number of shares of
Common Stock with respect to which options and stock appreciation rights may be
awarded, and the maximum number of shares of Common Stock potentially issuable
under performance shares awards awarded, during the period of five fiscal years
ending in 1999 to any eligible employee may not exceed, in the aggregate,
250,000 shares.
4. Awards. The Committee may grant to eligible employees, in accordance with
this paragraph 4 and the other provisions of the Plan, stock options, stock
appreciation rights ("SARs"), restricted stock, performance shares awards and
other awards.
(a) Options.
(i) Options granted under the Plan may be incentive stock options ("ISOs")
within the meaning of Section 422A of the Code or any successor provision, or
in such other form, consistent with the Plan, as the Committee may determine;
except that, so long as so provided in such Section, no ISO may be granted
under the Plan after August 1, 1999 or to any employee of an Affiliate which is
not a subsidiary corporation (as such term is used in subsection (b) of such
Section) of the Company.
(ii) The option price per share of Common Stock shall be fixed by the
Committee at (a) in the case of ISOs, not less than 100% of the fair market
value of a share of Common Stock on the date of grant and not less than the par
value of a share of Common Stock and (b) in the case of other options, not less
than 85% of the fair market value of a share of Common Stock on the date of
grant and not less than the par value of a share of Common Stock.
(iii) Options shall be exercisable at such time or times as the Committee
shall determine at or subsequent to grant.
(iv) An option shall be exercised in whole or in part by written notice to
the Company (to the attention of the Secretary) at any time prior to its stated
expiration and payment in full of the option price for the shares as to which
the option is being exercised. Payment of the option price may be made, at the
discretion of the optionee, and to the extent permitted by the Committee, (A)
in cash (including check, bank draft, or money order), (B) in Common Stock
already owned by the optionee (valued at the fair market value thereof on the
date of exercise), (C) by a combination of cash and Common Stock, or (D) with
any other consideration.
(b) SARs.
(i) An SAR shall entitle its holder to receive from the Company, at the time
of exercise of such right, an amount equal to the excess of the fair market
value (at the date of exercise) of a share of Common Stock over a specified
price fixed by the Committee multiplied by the number of shares as to which the
holder is exercising the SAR. SARs may be in tandem with any previously or
contemporaneously granted option or independent of any option. The specified
price of a tandem SAR shall be the option price of the related option. The
amount payable may be paid by the Company in Common Stock (valued at its fair
market value on the date of exercise), cash or a combination thereof, as the
Committee may determine, which determination may take into consideration any
preference expressed by the holder.
A-2
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(ii) An SAR shall be exercised by written notice to the Company (to the
attention of the Secretary) at any time prior to its stated expiration. To the
extent a tandem SAR is exercised, the related option will be cancelled and, to
the extent the related option is exercised, the tandem SAR will be cancelled.
(c) Restricted Stock.
(i) The Committee may award to any eligible employee shares of Common Stock,
subject to this paragraph 4(c) and such other terms and conditions as the
Committee may prescribe (such shares being called "restricted stock"). Each
certificate for restricted stock shall be registered in the name of the
participant and deposited, together with a stock power endorsed in blank, with
the Company.
(ii) Restricted Stock may be awarded without any consideration other than
services rendered and/or (to the extent permitted by applicable corporate law
on the date of award) services to be rendered.
(iii) There shall be established for each restricted stock award a
restriction period (the "restriction period") of such length as shall be
determined by the Committee. Shares of restricted stock may not be sold,
assigned, transferred, pledged or otherwise encumbered, except as hereinafter
provided, during the restriction period. Except for such restrictions on
transfer and such other restrictions as the Committee may impose, the
participant shall have all the rights of a holder of Common Stock as to such
restricted stock. The Committee, in its sole discretion, may permit or require
the payment of cash dividends to be deferred and, if the Committee so
determines, reinvested in additional restricted stock or otherwise invested or
accruing a yield. At the expiration of the restriction period, the Company
shall redeliver to the participant (or the participant's legal representative
or designated beneficiary) the certificates deposited pursuant to this
paragraph.
(iv) Except as provided by the Committee at or subsequent to the time of
grant, upon a termination of employment for any reason during the restriction
period all shares still subject to restriction shall be forfeited by the
participant.
(d) Performance Shares Awards.
(i) A performance shares award shall entitle its holder to receive from the
Company, following the expiration of a period of at least one fiscal year
specified by the Committee (the "performance measurement period"), cash or
Common Stock or a combination thereof as determined by the Committee (either at
the time of grant or thereafter) in an aggregate amount based on the level of
achievement during the performance measurement period of one or more Company
financial performance criteria. The aggregate amount received by a participant
shall be determined by a formula for such participant established by the
Committee not later than the ninetieth day of the performance measurement
period. The formula shall establish a range between a minimum level of
achievement before any amount will be received and a level of achievement at or
above which the maximum potential amount will be received. Initially, the
financial performance criterion shall be earnings per share, but the Committee
may subsequently use, either in substitution therefor or in addition thereto,
total shareholder return (i.e., appreciation in the market value of a share of
Common Stock plus dividends paid), return on stockholders' equity and/or return
on invested capital.
(ii) Performance shares awards may be awarded without any consideration other
than services rendered and/or (to the extent permitted by applicable corporate
law on the date of award) services to be rendered.
A-3
<PAGE>
(iii) The Committee may impose restrictions on the transfer of shares of
Common Stock issued as a result of achieving formula levels of performance.
Except for such restrictions on transfer, the recipient shall have all the
rights of a holder of Common Stock as to such shares.
(iv) Except as provided by the Committee at or subsequent to the time of
grant, upon the termination of employment for any reason during the performance
measurement period the performance shares award shall be forfeited by the
participant.
(e) Other Awards.
(i) Other awards may be granted under the Plan, including, without
limitation, convertible debentures, other convertible securities and other
forms of award measured in whole or in part by the value of shares of Common
Stock, the performance of the participant, or the performance of the Company,
any Affiliate or any operating unit thereof. Such awards may be payable in
Common Stock, cash or a combination thereof, and shall be subject to such
restrictions and conditions, as the Committee shall determine. At the time of
such an award, the Committee shall, if applicable, determine a performance
period and performance goals to be achieved during the performance period,
subject to such later revisions as the Committee shall deem appropriate to
reflect significant unforeseen events such as changes in laws, regulations or
accounting practices, unusual or nonrecurring items or occurrences. Following
the conclusion of each performance period, the Committee shall determine the
extent to which performance goals have been attained or a degree of achievement
between maximum and minimum levels during the performance period in order to
evaluate the level of payment to be made, if any.
(ii) The purchase price per share of Common Stock under other awards
involving the right to purchase Common Stock (including for this purpose the
right to acquire Common Stock upon the conversion of convertible securities)
shall be fixed by the Committee at not less than 85% of the fair market value
of a share of Common Stock on the date of award and not less than the par value
of a share of Common Stock. Other awards not involving the right to purchase
Common Stock may be awarded without any consideration other than services
rendered and/or (to the extent permitted by applicable corporate law on the
date of award) services to be rendered.
(iii) A participant may elect to defer all or a portion of any such award in
accordance with procedures established by the Committee. Deferred amounts will
be subject to such terms and conditions and shall accrue such yield thereon
(which may be measured by the fair market value of the Common Stock and
dividends thereon) as the Committee may determine. Payment of deferred amounts
may be in cash, Common Stock or a combination thereof, as the Committee may
determine. Deferred amounts shall be considered an award under the Plan. The
Committee may establish a trust or trusts to hold deferred amounts or any
portion thereof for the benefit of participants.
(f) Cash Payments. SARs and options which are not ISOs may, in the
Committee's discretion, provide that in connection with exercises thereof the
holders will receive cash payments based on formulas designed to reimburse
holders for their income tax liability resulting from such exercise and the
payment made pursuant to this paragraph 4(f).
(g) Surrender. If so provided by the Committee at or subsequent to the time
of grant, an award may be surrendered to the Company on such terms and
conditions, and for such consideration, as the Committee shall determine.
A-4
<PAGE>
(h) Foreign Alternatives. Without amending and notwithstanding the other
provisions of the Plan, in the case of any award to be held by any participant
who is employed outside the United States or who is a foreign national, the
Committee may specify that such award shall be made on such terms and
conditions different from those specified in the Plan as may, in the judgment
of the Committee, be necessary or desirable to further the purposes of the
Plan.
5. Miscellaneous Provisions.
(a) Administration. The Plan shall be administered by the Committee. Subject
to the limitations of the Plan, the Committee shall have the sole and complete
authority: (i) to select participants, (ii) to make awards in such forms and
amounts as it shall determine, (iii) to impose such limitations, restrictions
and conditions upon such awards as it shall deem appropriate, (iv) to interpret
the Plan and to adopt, amend and rescind administrative guidelines and other
rules and regulations relating to the Plan, (v) to correct any defect or
omission or to reconcile any inconsistency in the Plan or in any award granted
hereunder and (vi) to make all other determinations and to take all other
actions necessary or advisable for the implementation and administration of the
Plan. The Committee's determinations on matters within its authority shall be
conclusive and binding upon the Company and all other persons. All expenses
associated with the Plan shall be borne by the Company, subject to such
allocation to its Affiliates and operating units as it deems appropriate. The
Committee may, to the extent that any such action will not prevent the Plan
from complying with Rule 16b-3 or Section 162(m) of the Code, delegate any of
its authority hereunder to such persons as it deems appropriate.
(b) Non-Transferability. Subject to the provisions of paragraph 5(f), no
award under the Plan, and no interest therein, shall be transferable by a
participant otherwise than by will or the laws of descent and distribution. All
awards shall be exercisable or received during a participant's lifetime only by
the participant or the participant's legal representative. Any purported
transfer contrary to this provision will nullify the award.
(c) Adjustments Upon Certain Changes. In the event of any reorganization,
recapitalization, reclassification, merger, consolidation, or sale of all or
substantially all of the Company's assets followed by liquidation, which is
effected in such a way that holders of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for Common Stock (an
"Organic Change"), the Committee shall make appropriate changes to insure that
each outstanding award involving the right to acquire Common Stock thereafter
represents the right to acquire, in lieu of or in addition to the shares of
Common Stock immediately theretofore acquirable upon exercise or payment, such
securities or assets as may be issued or payable with respect to or in exchange
for an equivalent number of shares of Common Stock, and appropriate changes in
other outstanding awards; and in the event of any stock dividend, stock split
or combination of shares, the Board of Directors shall make appropriate changes
in the number of shares authorized by the Plan to be delivered thereafter and
in the maximum number of shares with respect to which options, SARs and
performance shares awards may be awarded to any eligible employee during the
period of five fiscal years ending in 1999, and the Committee shall make
appropriate changes in the numbers of shares covered by, or with respect to
which payments are measured under, outstanding awards and the exercise prices
and reference prices specified therein (and in the event of a spinoff, the
Committee may make similar changes), in order to prevent the dilution or
enlargement of award rights. However, no right to purchase or receive a
fraction of a share shall be created; and if, as a result of any such change, a
fractional share would result or the right to purchase or receive the same
would result, the number of shares in question shall be decreased
A-5
<PAGE>
to the next lower whole number of shares. The Committee may provide in the
agreement evidencing any award for adjustments to such award in order to
prevent the dilution or enlargement of rights thereunder or for acceleration of
benefits thereunder and/or cash payments in lieu of benefits thereunder in the
event of a change in control (or tender offer or accumulation of Common Stock),
merger, consolidation, reorganization, recapitalization, sale or exchange of
all or substantially all of the assets or dissolution of the Company.
(d) Tax Withholding. The Committee shall have the power to withhold, or
require a participant to remit to the Company, an amount sufficient to satisfy
any withholding or other tax due with respect to any amount payable and/or
shares issuable under the Plan, and the Committee may defer such payment or
issuance unless indemnified to its satisfaction. Subject to the consent of the
Committee, a participant may make an irrevocable election to have shares of
Common Stock otherwise issuable under an award withheld, tender back to the
Company shares of Common Stock received pursuant to an award or deliver to the
Company shares of Common Stock already owned by the participant having a fair
market value sufficient to satisfy all or part of the participant's estimated
tax obligations associated with the transaction. Such election must be made by
a participant prior to the date on which the relevant tax obligation arises.
The Committee may disapprove of any election and may limit, suspend or
terminate the right to make such elections.
(e) Listing and Legal Compliance. The Committee may suspend the exercise or
payment of any award if it determines that securities exchange listing or
registration or qualification under any securities laws is required in
connection therewith and has not been completed on terms acceptable to the
Committee.
(f) Beneficiary Designation. To the extent permitted by the Committee,
participants may name, from time to time, beneficiaries (who may be named
contingently or successively) to whom benefits under the Plan are to be paid in
the event of their death before they receive any or all of such benefits. Each
designation will revoke all prior designations by the same participant, shall
be in a form prescribed by the Committee, and will be effective only when filed
by the participant in writing with the Committee during the participant's
lifetime. In the absence of any such designation, benefits remaining unpaid at
a participant's death shall be paid to the participant's estate.
(g) Rights of Participants. Nothing in the Plan shall interfere with or limit
in any way the right of the Company or any Affiliate to terminate any
participant's employment at any time, nor confer upon any participant any right
to continue in the employ of the Company or any Affiliate for any period of
time or to continue his or her present or any other rate of compensation. No
employee shall have a right to be selected as a participant, or, having been so
selected, to be selected again as a participant.
(h) Amendment, Suspension and Termination of Plan. The Board of Directors or
the Committee may suspend or terminate the Plan or any portion thereof at any
time and may amend it from time to time in such respects as the Board of
Directors or the Committee may deem advisable; provided, however, that no such
amendment shall be made without stockholder approval to the extent such
approval is required by law, agreement or the rules of any exchange upon which
the Common Stock is listed. No such amendment, suspension or termination shall
impair the rights of participants under outstanding awards without the consent
of the participants affected thereby or make any change that would disqualify
the Plan, or any other plan of the Company intended to be so qualified, from
the exemption provided by Rule 16b-3.
A-6
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The Committee may amend or modify any award in any manner to the extent that
the Committee would have had the authority under the Plan to initially grant
the award as so amended or modified. No such amendment or modification shall
impair the rights of the participant under such award without the consent of
such participant.
6. Effective Date. The effective date of the Plan shall be August 2, 1989,
the date of its adoption by the Board of Directors; provided, however, that no
award shall be granted under the Plan unless the holders of at least a majority
of the outstanding shares of Common Stock voting at the Company's 1989 Annual
Meeting of Stockholders approve and ratify the Plan.
A-7
<PAGE>
DIRECTIONS TO DEAN FOODS COMPANY
ANNUAL MEETING OF STOCKHOLDERS
DRURY LANE OAKBROOK TERRACE
100 DRURY LANE
OAKBROOK TERRACE, ILLINOIS 60181
(708) 530-8300
Drury Lane is located just north of the Oakbrook Shopping Center. Access
to the complex is somewhat difficult. The map which follows should prove
helpful.
Although Drury Lane is bordered on the north by Roosevelt Road, there is
no access to the complex from Roosevelt Road. There is also no access from
the westbound lanes of Butterfield Road.
If you are coming from the City on the Eisenhower/I-290, or from the
north or south on the Tri-State/I-294, follow the exit signs to the East-
West Tollway/I-88. From the Tollway, exit to the right at the "Cermak
Road/22nd Street" ramp immediately after the toll booth. Proceed straight
across Cermak Road to Spring Road. Take Spring Road north to Drury Lane.
If you are coming from the north or south on Route 83, take Route 56
(Butterfield Road) east. Once on Butterfield, you will immediately exit to
the right onto Spring Road, following the signs marked "Drury Lane/Spring
Road".
If you are coming from the west on the East-West Tollway/I-88, exit at
Midwest Road (exact toll required). Proceed north on Midwest Road to Route
56 (Butterfield Road) east. Once on Butterfield, you will immediately exit
to the right onto Spring Road, following the signs marked "Drury
Lane/Spring Road".
[MAP APPEARS HERE]
<PAGE>
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PROXY
DEAN FOODS COMPANY
SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 4, 1994
The undersigned Stockholder of Dean Foods Company hereby appoints Howard M.
Dean, Timothy J. Bondy and Eric A. Blanchard, and each of them, proxies, with
power of substitution, to vote at the Annual Meeting of Stockholders of the
Company to be held at the Drury Lane Oakbrook Terrace, 100 Drury Lane, Oakbrook
Terrace, Illinois, on Tuesday, October 4, 1994, at 10:00 A.M., Central Daylight
Savings Time, or at any postponement or adjournment thereof, on the following
matters:
(Continued and to be signed on reverse side.)
- - -------------------------------------------------------------------------------
<PAGE>
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PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [_]
1. ELECTION OF DIRECTORS FOR A THREE-YEAR TERM EXPIRING IN 1997:
Nominees: Paula Hannaway Crown, John P. Frazee, Jr., Thomas A. Ravencroft and
Thomas L. Rose
THE BOARD OF DIRECTORS FAVORS A VOTE FOR ALL NOMINEES.
FOR WITHHOLD FOR ALL (Except Nominee(s)
[_] [_] [_] written below)
______________________________________________________________________________
2. ELECTION OF A DIRECTOR FOR A TWO-YEAR TERM EXPIRING IN 1996:
Nominee: John S. Llewellyn, Jr.
THE BOARD OF DIRECTORS FAVORS A VOTE FOR THIS NOMINEE
FOR WITHHOLD
[_] [_]
3. PROPOSAL TO APPROVE the amendments to the 1989 Stock Awards Plan:
THE BOARD OF DIRECTORS FAVORS A VOTE FOR ITEM 3.
FOR AGAINST ABSTAIN
[_] [_] [_]
4. PROPOSAL TO APPROVE the bases for certain annual incentive bonuses:
THE BOARD OF DIRECTORS FAVORS A VOTE FOR ITEM 4.
FOR AGAINST ABSTAIN
[_] [_] [_]
5. PROPOSAL TO APPROVE the selection of Price Waterhouse as the independent
accountants for the Company and its subsidiaries for the fiscal year ending
May 28, 1995:
THE BOARD OF DIRECTORS FAVORS A VOTE FOR ITEM 5.
FOR AGAINST ABSTAIN
[_] [_] [_]
6. In the discretion of the proxies, the transaction of such other business
which may properly come before the meeting, all as described in the Notice of
1994 Annual Meeting of Stockholders.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED ON ITEMS 1
THROUGH 5, BUT WHERE NO DIRECTION IS INDICATED WILL BE VOTED FOR ITEMS 1
THROUGH 5.
Dated: ______________________________, 1994
________________________________________________________________________________
________________________________________________________________________________
(Signature of Stockholder(s))
Important: Please sign exactly as name appears above. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the President or other
authorized officer. If a partnership, please sign in partnership name by an
authorized person.
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<PAGE>
<TABLE>
<CAPTION>
PAGE WHERE
GRAPHIC APPEARS DESCRIPTION OF GRAPHIC OR CROSS-REFERENCE
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<S> <C>
2 - 4 Photos of the Directors and Nominees for Director
appear to the right of each respective name on
pages 2, 3 and 4.
12 A performance graph showing cumulative total return
of Dean Foods Company Common stock, S&P 500 Index
and S&P Food Products Index appears on page 12.
A map showing the location of the Dean Foods Annual
Meeting of Stockholders at Drury Lane Oakbrook
Terrace appears immediately following page A-7.
</TABLE>
