<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
UNIVERSAL FOODS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
UNIVERSAL FOODS CORPORATION
433 EAST MICHIGAN STREET
MILWAUKEE, WISCONSIN 53202
(414) 271-6755
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
JANUARY 22, 1998
----------------
GENERAL
This proxy statement and accompanying proxy are first being furnished to the
shareholders of Universal Foods Corporation, a Wisconsin corporation
("Company"), beginning on or about December 16, 1997, in connection with the
solicitation by the Board of Directors of the Company ("Board") of proxies for
use at the Company's 1998 Annual Meeting of Shareholders to be held at the
Italian Community Center, 631 East Chicago Street, Milwaukee, Wisconsin, on
Thursday, January 22, 1998, at 2:00 p.m., Central Standard Time, and at any
adjournments thereof ("Meeting"), for the purposes set forth in the attached
Notice of Annual Meeting of Shareholders and in this proxy statement.
Accompanying this proxy statement are a Notice of Annual Meeting of
Shareholders and a form of proxy for the Meeting solicited by the Board. The
Annual Report to Shareholders, which also accompanies this proxy statement,
contains financial statements for the three years ended September 30, 1997,
and certain other information concerning the Company. The Annual Report and
financial statements are neither a part of this proxy statement nor
incorporated herein by reference.
Only holders of record of the Company's Common Stock ("Common Stock") as of
the close of business on December 5, 1997, are entitled to notice of, and to
vote at, the Meeting. On that date, the Company had 25,525,066 shares of
Common Stock outstanding, each of which is entitled to one vote per share for
each proposal submitted for Shareholder consideration at the Meeting.
A proxy, in the enclosed form, which is properly executed, duly returned to
the Company or its authorized representatives or agents and not revoked will
be voted in accordance with the Shareholder's instructions contained in the
proxy. If no instructions are indicated on the proxy, the shares represented
thereby will be voted "FOR" the Board's four nominees for director, "FOR"
approval of the Universal Foods Corporation 1998 Stock Option Plan, "FOR"
ratification of the Board's selection of Deloitte & Touche LLP as the
Company's 1998 independent auditors, and on such other matters that may
properly come before the Meeting in accordance with the best judgment of the
individual proxies named in the proxy. Any Shareholder giving a proxy may
revoke it at any time before it is exercised by delivering written notice
thereof to the Secretary. Any Shareholder attending the Meeting may vote in
person whether or not the Shareholder has previously filed a proxy. Presence
at the Meeting by a Shareholder who has signed a proxy does not in itself
revoke the proxy. The shares represented by all properly executed proxies
received prior to the Meeting will be voted as directed by the Shareholders.
The cost of soliciting proxies will be borne by the Company. Proxies may be
solicited by directors, officers or employees of the Company in person, by
telephone or by telegram. The Company will use the services of D.F. King &
Co., Inc., New York, New York, to aid in the solicitation of proxies. Their
charges will be $7,500 plus reasonable expenses. The Company will also
reimburse brokerage houses and other custodians, nominees and fiduciaries for
their expenses in sending proxy materials to the beneficial owners.
<PAGE>
ITEM 1. ELECTION OF DIRECTORS
The Board of Directors consists of eleven members divided into three
classes. One class is elected each year to serve for a term of three years.
Four directors are to be elected at the Meeting. All of the nominees are
currently directors of the Company. The remaining seven directors will
continue to serve in accordance with their previous elections.
It is intended that the persons named as proxies in the accompanying proxy
will vote FOR the election of the Board's four nominees. If any nominee should
become unable to serve as a director prior to the Meeting, the shares
represented by proxies otherwise voted in favor of the Board's four nominees
or which do not contain any instructions will be voted FOR the election of
such other person as the Board may recommend. Under Wisconsin law, directors
are elected by a plurality of the votes cast by the shares entitled to vote in
the election, assuming a quorum is present. For this purpose, "plurality"
means that the individuals receiving the largest number of votes are elected
as directors, up to the maximum number of directors to be chosen at the
election. Therefore, any shares of Common Stock which are not voted on this
matter at the Meeting, whether by abstention, broker nonvote or otherwise,
will have no effect on the election of directors at the Meeting.
Pursuant to the Company's By-laws, written notice of other qualifying
nominations by Shareholders for election to the Board must have been received
by the Secretary no later than December 3, 1997. As no notice of any such
other nominations was received, no other nominations for election to the Board
of Directors may be made by Shareholders at the Meeting.
Set forth below is certain information about the Board's nominees for
director and the seven continuing members.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES.
SHARES OF COMMON STOCK REPRESENTED AT THE MEETING BY EXECUTED
BUT UNMARKED PROXIES WILL BE VOTED FOR ALL NOMINEES.
2
<PAGE>
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
TERMS EXPIRING JANUARY, 2001
<TABLE>
<CAPTION>
YEAR FIRST
POSITION WITH COMPANY ELECTED
NAME AND AGE OR OTHER OCCUPATION DIRECTOR
------------ -------------------------------------- ----------
<S> <C> <C>
[PHOTO] MICHAEL E. BATTEN Chairman of the Board and Chief 1980
F, N...........57 Executive Officer of Twin Disc, Inc.,
a manufacturer of transmission
components; Director of Briggs &
Stratton Corporation, Firstar
Corporation, and Simpson Industries
[PHOTO] JAMES A.D. CROFT Director of Richard Ellis Holdings 1997
...............60 Limited, Property and Investment
Consultants; Chairman of Richard Ellis
European Group (1)
[PHOTO] GUY A. OSBORN..61 Retired Chairman of the Board of the 1983
Company; Director of WICOR, Inc.,
Wisconsin Gas Company, Fleming
Companies, Inc., and Northwestern
Mutual Life Insurance Company (2)
[PHOTO] ESSIE WHITELAW President and Chief Operating Officer 1993
C, N...........49 of Blue Cross & Blue Shield United of
Wisconsin, a comprehensive health
insurer; Director of WICOR, Inc., and
Compcare
</TABLE>
- --------
A--Audit Committee F--Finance Committee
C--Compensation and Development Committee
N--Nominating Committee
E--Executive Committee S--Scientific Advisory Committee
(1) Mr. Croft was elected to the Board on October 1, 1997, to fill the vacancy
created by Mr. Parfet's resignation.
(2) Mr. Osborn retired and resigned as Chairman and from the Executive
Committee on April 30, 1997, when Mr. Manning was elected Chairman.
3
<PAGE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRING JANUARY, 2000
<TABLE>
<CAPTION>
YEAR FIRST
POSITION WITH COMPANY ELECTED
NAME AND AGE OR OTHER OCCUPATION DIRECTOR
------------ -------------------------------------- ----------
<S> <C> <C>
[PHOTO] JOHN F. BERGSTROM Chairman and Chief Executive Officer 1994
C, E, N..........51 of Bergstrom Corporation, which owns
automotive dealerships, hotels and
commercial real estate; Director of
Wisconsin Energy Corporation,
Wisconsin Electric Co., Kimberly-Clark
Corporation, and Midwest Express
Airlines.
[PHOTO] WILLIAM V. HICKEY President and Chief Operating Officer 1997
A, E, F..........53 of Sealed Air Corporation, a leading
global manufacturer of a wide range of
protective and speciality packaging
materials and systems and selected
food packaging products (1)
[PHOTO] LEON T. KENDALL Professor of Finance and Real Estate, 1985
A, N.............69 J. L. Kellogg Graduate School of
Management, Northwestern University;
Retired Chairman of the Board of MGIC,
a mortgage insurer; Director of Avatar
Holdings Corp., AMF Mutual Funds,
Inc., and Chicago Board Options
Exchange
[PHOTO] KENNETH P. MANNING Chairman of the Board, President and 1989
E, S.............55 Chief Executive Officer of the
Company; Director of Firstar
Corporation, Firstar Trust Company,
and Badger Meter, Inc. (2)
</TABLE>
- --------
A--Audit Committee F--Finance Committee
C--Compensation and Development Committee
N--Nominating Committee
E--Executive Committee S--Scientific Advisory Committee
(1) Mr. Hickey served as Executive Vice President and Chief Operating Officer
of Sealed Air Corporation from 1994 to 1996 and as its Senior Vice
President--Finance and Chief Financial Officer from 1991 to 1994.
(2) Mr. Manning was elected Chief Executive Officer effective October 1, 1996,
and Mr. Osborn continued as Chairman. Mr. Osborn retired and resigned as
Chairman April 30, 1997, and Mr. Manning was elected Chairman.
4
<PAGE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRING JANUARY, 1999
<TABLE>
<CAPTION>
YEAR FIRST
POSITION WITH COMPANY ELECTED
NAME AND AGE OR OTHER OCCUPATION DIRECTOR
------------ -------------------------------------- ----------
<S> <C> <C>
[PHOTO] JAMES L. FORBES President, Chief Executive Officer and 1989
A, E, F...........65 Director of Badger Meter, Inc., a
manufacturer and marketer of flow
measurement and control products;
Director of Blue Cross & Blue Shield
United of Wisconsin, United Wisconsin
Services, Inc., Firstar Corporation,
and Journal Communications, Inc.
[PHOTO] JAMES H. KEYES Chairman of the Board and Chief 1990
C, E..............57 Executive Officer of Johnson Controls,
Inc., a supplier of automated building
controls, automotive seating,
interiors, and batteries; Director of
LSI Logic Corporation and Firstar
Corporation
[PHOTO] DR. CAROL I. WASLIEN Professor and Chair, Public Health 1981
GHAZAII Sciences, School of Public Health,
A, S..............57 University of Hawaii
</TABLE>
- --------
A--Audit Committee F--Finance Committee
C--Compensation and Development Committee
N--Nominating Committee
E--Executive Committee S--Scientific Advisory Committee
5
<PAGE>
All nominees and directors continuing in office have been employed in their
current executive positions or otherwise have served in executive officer
positions with the listed organizations for more than five years. No director,
nominee for director or executive officer had any material interest, direct or
indirect, in any business transaction of the Company or any subsidiary during
the 1997 fiscal year, nor does any director, nominee, or executive officer
have any material interest, direct or indirect, in any such proposed
transaction.
The Board of Directors met five times during fiscal 1997, and, except for
Mr. Parfet, each director attended at least 80% of the meetings of the Board
and the Board Committees on which he or she served that were held during the
period in which he or she was a director.
COMMITTEES OF THE BOARD OF DIRECTORS
The Executive Committee of the Board of Directors, which currently consists
of Messrs. Bergstrom, Forbes, Hickey, Keyes, and Manning, met twice during
fiscal 1997. This Committee has the power and authority of the Board of
Directors in directing the management of the business and affairs of the
Company in the intervals between Board of Directors meetings, except to the
extent limited by law. Mr. Osborn also served on the Committee until his
resignation on April 30, 1997, and was replaced by Mr. Hickey.
The Audit Committee of the Board of Directors met twice during fiscal 1997.
Messrs. Kendall, Forbes, Hickey and Dr. Waslien Ghazaii are the members of the
Audit Committee. This Committee, among other things: (a) recommends the
engagement of the independent auditors of the Company, approves their fee and
the scope and timing of their audit services; (b) reviews with the independent
auditors the internal control structure; (c) reviews with the independent
auditors their report on the consolidated financial statements of the Company,
their recommendations for improvements in the internal controls of the Company
and the implementation of such recommendations; (d) reviews the Company's
internal audit program; and (e) reviews the adequacy and appropriateness of
the various policies of the Company dealing with the principles governing
performance of corporate activities. These policies include antitrust
compliance, conflict of interest and business ethics.
Members of the Compensation and Development Committee of the Board of
Directors, which held four meetings during fiscal 1997, include Messrs.
Bergstrom, Keyes, and Ms. Whitelaw. Mr. Parfet also served on the Compensation
and Development Committee until his resignation on September 30, 1997. This
Committee reviews and approves all compensation programs for senior management
of the Company including salary structure, base salary, and short- and long-
term incentive compensation plans including stock options and nonqualified
fringe benefit programs. The Committee also reviews and approves annual
changes in each elected officer's compensation including base salary and
short- and long-term incentive awards and approves all executive employment
contracts. The Committee annually recommends to the Board of Directors the
election of Company officers. In addition, the Committee annually reviews the
performance of the Chief Executive Officer and reviews and approves the Chief
Executive Officer's management development and succession plans for the
Company.
The Nominating Committee of the Board of Directors, which consists of
Messrs. Bergstrom, Batten, Kendall, and Ms. Whitelaw, met twice during fiscal
1997. This Committee studies and makes recommendations concerning the
composition of the Board of Directors and its committee structure and reviews
the compensation of Board and Committee members. The Committee also recommends
persons to be nominated by the Board of Directors for election as directors of
the Company at the Annual Meeting of Shareholders. The Committee will consider
nominees recommended by Shareholders. Recommendations by Shareholders should
be forwarded to the Secretary of the Company and should identify the nominee
by name and provide detailed information concerning his or her qualifications.
The Company's By-laws require that Shareholders give advance notice and
furnish certain information to the Company in order to nominate a person for
election as a director. See the discussion under "Future Shareholder Proposals
and Nominations" on page 23.
6
<PAGE>
The Scientific Advisory Committee of the Board of Directors, which met twice
during fiscal 1997, reviews the Company's research and development programs in
respect to the quality and scope of work undertaken. It advises the Company on
maintaining product leadership through technological innovation, reports on
new technological trends that would significantly affect the Company and
suggests possible new emphases in respect to its research programs. Members of
the Scientific Advisory Committee are Dr. Waslien Ghazaii and Mr. Manning.
The Finance Committee of the Board of Directors, which held two meetings
during fiscal 1997, reviews and monitors the Company's financial planning and
structure to ensure conformance with the Company's requirements for growth and
fiscally sound operation. The Committee reviews and approves: (a) the
Company's annual capital budget, long-term financing plans, existing credit
facilities and investments, and commercial and investment banking
relationships; (b) existing insurance programs, foreign currency management
and the stock repurchase program; (c) the Company's dividend policy including
payout levels and timing; and (d) the financial management and administrative
operation of the Company's qualified and nonqualified benefit plans.
Messrs. Batten, Forbes, and Hickey are the members of the Finance Committee.
Mr. Parfet served on the Finance Committee until his resignation on September
30, 1997.
DIRECTOR COMPENSATION AND BENEFITS
Directors who are not officers of the Company received during fiscal 1997 an
annual retainer of $22,000 and fees of $1,000 for each Board and Committee
meeting attended in addition to reimbursable expenses for such attendance.
Each Committee chairperson receives an additional $1,000 annually for serving
in that capacity. A portion of the annual retainer is paid in Common Stock
pursuant to the Universal Foods Corporation Director Stock Grant Plan (the
"Director Plan") as approved by the Shareholders on January 23, 1992. Under
the Director Plan, each nonemployee director automatically receives an award
of Common Stock on October 1 of each year. The value of the award was $5,500
for fiscal 1997. The award consists of a number of shares of Common Stock
determined by dividing the value of the award by the per share closing price
of Common Stock on the New York Stock Exchange on October 1. The shares may
not be sold or otherwise transferred for a period of six months after the
grant date, except in the event of death or disability. On October 1, 1996,
170 shares of Common Stock were awarded to each of the following current
nonemployee directors: Messrs. Batten, Bergstrom, Forbes, Kendall, Keyes,
Parfet, Dr. Waslien Ghazaii, and Ms. Whitelaw. Such shares were transferred
from the Company's treasury stock.
The Company has an unfunded retirement plan for nonemployee directors who
have at least three years (one full term) of service with the Company as a
director. The plan provides a benefit equal to the annual retainer fee for
directors in effect at the time of the director's departure from the Board.
This benefit, payable only during the lifetime of the participant, continues
for a period equal to the amount of time the individual was an active
director. During the benefit period, the participant must be available to the
Chairman of the Board for consultation.
The Company has a Deferred Compensation Plan available to any director who
is entitled to compensation as a Board member. Under this plan, the maximum
amount that is eligible to be deferred is the total of all fees paid to the
director by reason of his or her membership on the Board or any Committee
thereof other than the portion of the annual retainer paid in Common Stock.
The fees deferred are credited to individual deferred compensation accounts
which bear interest at the rate of 6.5%. The amounts deferred pursuant to this
plan will be paid in either (i) a lump sum on January 31st of the calendar
year following the year in which the director ceases to be a director or (ii)
five equal consecutive annual installments commencing on January 31st of the
first calendar year after the director ceases to serve as a director. In the
event of death, the balance in a director's account will be paid in a lump sum
to a designated beneficiary or to the director's estate.
7
<PAGE>
PRINCIPAL SHAREHOLDERS
MANAGEMENT
The following table sets forth certain information as of December 5, 1997,
regarding the beneficial ownership of Common Stock by each of the executive
officers of the Company who is named in the Summary Compensation Table set
forth below, each director and nominee and all of the directors and executive
officers of the Company as a group. Except as otherwise indicated, all shares
listed are owned with sole voting and investment power.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
AND
NAME OF BENEFICIAL OWNER PERCENT OF CLASS (1)(2)
------------------------ -----------------------
<S> <C>
Michael E. Batten................................. 1,791
John F. Bergstrom................................. 1,632
James A.D. Croft.................................. 535
James L. Forbes................................... 1,566
Michael Fung...................................... 29,694
Dr. Carol I. Waslien Ghazaii...................... 1,019
William V. Hickey................................. 1,135
Richard F. Hobbs.................................. 80,200
Leon T. Kendall................................... 2,541
James H. Keyes.................................... 2,708
Kenneth P. Manning................................ 207,968
Guy A. Osborn (3)................................. 452,420
James F. Palo..................................... 94,749
Essie Whitelaw.................................... 777
Michael A. Wick................................... 105,357
All directors and executive officers
as a group (24 persons).......................... 1,240,078
</TABLE>
- --------
(1) No director or named executive officer owns 1% or more of the Company's
Common Stock, except Mr. Osborn (whose beneficial ownership represents
1.8% of the Common Stock). The beneficial ownership of all directors and
executive officers as a group represents 4.7% of the outstanding Common
Stock. In each case this percentage is based upon the assumed exercise of
that number of options which are included in the total number of shares
shown (see Note (2), below).
(2) Includes the following shares subject to stock options which are currently
exercisable or exercisable within 60 days of December 5, 1997: Mr. Fung--
21,666 shares; Mr. Hobbs--61,449 shares; Mr. Manning--164,633 shares; Mr.
Osborn--282,750 shares; Mr. Palo--69,083 shares; Mr. Wick--91,387 shares;
and all directors and executive officers as a group--883,047 shares.
(3) Includes 22,230 shares held by Mr. Osborn's spouse.
8
<PAGE>
OTHER BENEFICIAL OWNERS
The following table sets forth information regarding beneficial ownership by
those persons whom the Company believes to be beneficial owners of more than
5% of the Common Stock of the Company. The following information is based on
reports on Schedule 13G filed with the Securities and Exchange Commission by
the following persons.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT
NATURE OF OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS
------------------------------------ ---------- -------
<S> <C> <C>
Marshall & Ilsley Corporation
770 North Water Street
Milwaukee, WI 53202................................. 1,818,695(1) 7.13%
Principal Mutual Life Ins. Co.
711 High Street
Des Moines, IA 50392-0088........................... 1,427,900(2) 5.59%
</TABLE>
- --------
(1) Marshall & Ilsley Corporation reported that, as of February 14, 1997, it
had sole voting power as to 72,934 shares of Common Stock and shared
voting power as to 1,737,314 shares, and it had sole dispositive power as
to 84,968 shares of Common Stock and shared dispositive power as to
1,733,727 shares. Marshall & Ilsley Corporation is trustee of the
Universal Foods Corporation Retirement Employee Stock Ownership Plan and
Universal Foods Corporation 401(k) Savings Plan.
(2) Principal Mutual Life Ins. Co. ("Principal"), in a Schedule 13G combined
with Invista Capital Management, Inc., 699 Walnut, 1500 Hub Tower, Des
Moines, IA 50309 ("Invista") filed on February 13, 1997, reported as of
February 13, 1997, the holding of shared voting power and shared
dispositive power with respect to 1,427,900 shares. According to the
Schedule 13G, Principal and Invista are investment advisors registered
under Section 203 of the Investment Advisors Act of 1940.
COMPENSATION AND DEVELOPMENT COMMITTEE REPORT
Introduction
This report describes the Company's executive compensation programs and the
basis on which fiscal year 1997 compensation was determined with respect to
the executive officers of the Company. The Committee is composed entirely of
independent nonemployee directors and met four times during fiscal 1997. A
more complete description of the Committee functions is set forth under the
heading "Committees of the Board of Directors."
Compensation Policy and Objectives
The Company has developed an overall compensation policy and specific
compensation plans that tie a significant portion of executive compensation to
the Company's success in meeting specified performance goals ("Program"). The
overall objectives of this policy are to attract and retain the best possible
executive talent, to motivate these executives to achieve the Company's
business strategy and financial goals, to link executive and shareholder
interests through equity-based plans and to provide a program that recognizes
individual contributions and achievement.
Each year the Committee conducts a review of the Company's Program. This
review includes a meeting with an independent compensation consultant
assessing the effectiveness of the Program and comparing it to a group of
public corporations that represent the Company's competition for executive
talent. The Committee approves the selection of comparator companies used for
this analysis. The comparator group used for compensation analysis currently
consists of 14 companies, including companies in the S&P Food Index which has
been chosen as the Company's industry index for purposes of the Performance
Graph which follows this report. The comparator group does not include all of
the companies in the S&P Food Index because the
9
<PAGE>
Committee believes that the Company's most direct competitors for executive
talent are not necessarily all of the companies included in the S&P Food
Index. The Committee determines the compensation for the 14 elected officers
including the 5 most highly compensated Company executives. In reviewing
individual performance, the Committee takes into account the recommendations
of Mr. Manning. Key elements of the Company's Program are base salary, short-
term (annual) incentives and long-term incentives.
Base Salaries
Base salaries are initially determined by evaluating the responsibilities of
the position, the experience of the individual and by reference to the
competitive marketplace for executive talent, including a comparison with base
salaries for comparator positions at other comparator companies. The base
salary levels of the Company's executives are targeted at the 50th percentile
of the range of base pay levels of similarly positioned executives in
comparator companies. Base pay levels are determined using regression analysis
because of the difference in size between the comparator companies and the
Company. The Committee annually reviews each executive's base salary.
Adjustments are determined by evaluating the financial performance of the
Company, the performance of each executive officer against job specifications,
any new responsibilities and average percentage pay increases provided by the
comparator companies for similar positions. In the case of executive officers
with responsibility for a particular business unit, such unit's financial
results are also considered.
As reflected in the Summary Compensation Table on page 12, Mr. Manning's
base salary was increased in fiscal 1997 by $50,000 (13.1%). In determining
Mr. Manning's base salary, the Committee weighed the aforementioned criteria,
in particular his promotion to Chief Executive Officer.
Annual Bonuses
The Management Incentive Plan for Major Corporate Executives ("Annual Plan")
promotes the Company's pay-for-performance policy by providing annual cash
payments to executives based upon achieving overall Company or divisional and
individual performance goals. The Annual Plan has both a Formula and
Discretionary portion subject to a maximum of 45% to 85% of fiscal base salary
depending on a participant's position in the Company. The Formula award is
based on the level of achievement of a targeted Earnings Per Share level for
the fiscal year, with 80% of the maximum Formula award being paid upon
achieving the targeted level. The Discretionary portion is fully awarded based
on the executive achieving specific non-financial personal objectives agreed
upon with his/her immediate supervisor at the beginning of each fiscal year.
Mr. Manning's non-financial objectives under the Discretionary portion are
established by the Committee and typically deal in such areas as acquisitions,
divestitures, capital allocation and organizational development.
Bonus awards are targeted at levels approximating the 50th percentile
(adjusted for company size) of comparator companies' practices for each
executive position. For performance exceeding the targeted levels, the bonus
opportunities are tied to 75th percentile practices among comparator
companies. In fiscal 1997, Mr. Manning's bonus opportunity was 85% of his base
salary. As reflected in the Summary Compensation Table, his bonus award under
the Annual Plan was $322,776 or approximately 75% of his base salary. The
Company's Earnings Per Share level for fiscal 1997 achieved the targeted
level.
Stock Awards--Long-Term Incentives
Under the Company's 1990 Employee Stock Plan and 1994 Employee Stock Plan,
which were approved by Shareholders, and under the Company's 1998 Stock Option
Plan, which is being submitted for shareholder approval at the Meeting,
restricted stock or stock options may be granted to the Company's executive
officers and other key employees. The Committee makes annual decisions
regarding appropriate stock-based grants for each executive based on the
following equally weighted factors. The Committee considers the Company's
financial performance, executives' levels of responsibilities and predicted
award values at the 50-75th percentile of long-term incentive compensation
practices for similar positions at the comparator companies. These factors
determine the amount which may be represented by the determined grant value of
options and restricted stock.
10
<PAGE>
Generally, restricted stock is only awarded if the executive's total award
value is in excess of the 50th percentile or to recognize a significant
contribution to the Company's performance. If restricted stock is awarded, it
vests in five years. All outstanding options have an exercise price equal to
the market price on the date of grant and vest 1/3 each year from the date of
grant. This compensation approach is designed to provide incentive to create
shareholder value over the long-term since the full benefit of the
compensation cannot be realized unless stock price appreciation occurs over a
number of years. In fiscal 1997, Mr. Manning received options to purchase
38,000 shares at their fair market value on the date of grant and received
3,000 shares of restricted stock. Other named executive officers who each
received 2,000 shares of restricted stock during fiscal 1997 were Mr. Fung,
Mr. Hobbs, Mr. Palo, and Mr. Wick.
Code Section 162(m)
Section 162(m) of the Internal Revenue Code limits the Company's income tax
deduction for compensation paid in any taxable year to certain executive
officers to $1,000,000, subject to several exceptions. The Committee intends
to grant awards under the 1998 Stock Option Plan that are designed to qualify
for the performance-based compensation exception. However, the Committee may
grant such awards, and the Company may enter into compensation arrangements
from time to time, which do not qualify for deductibility under Section
162(m).
Compensation and Development Committee
John F. Bergstrom
James H. Keyes, Chairperson
Essie Whitelaw
11
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information on the compensation of the Chief
Executive Officer, each of the other four most highly compensated executive
officers, and Mr. Osborn (collectively, the "named executive officers") of the
Company as of September 30, 1997.
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
----------------- --------------------- ALL
RESTRICTED OTHER
BASE STOCK SECURITIES COMPEN-
NAME AND PRINCIPAL SALARY BONUS AWARDS UNDERLYING SATION
POSITION YEAR ($) ($)(1) ($)(2) OPTIONS(#) ($)(3)
------------------ ---- ------ ------ ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Guy A. Osborn 1997 $540,000 $404,406 $ 0 0 $230,698
Director(4) 1996 540,000 324,756 0 45,000 137,785
1995 515,000 372,760 82,500 45,000 133,957
Kenneth P. Manning 1997 431,000 322,776 120,563 38,000 68,140
Chairman, President
and 1996 381,000 229,133 0 45,000 64,137
Chief Executive Offi-
cer 1995 351,000 254,054 66,000 35,000 59,343
Michael Fung 1997 264,000 151,193 80,375 20,000 37,013
Vice President and 1996 250,000 106,128 0 25,000 32,449
Chief Financial Offi-
cer 1995(5) 52,085 27,032 33,000 20,000 6,830
Michael A. Wick 1997 215,000 148,415 80,375 14,000 32,344
President--Color
Products 1996 203,000 105,176 0 18,500 30,697
1995 188,000 94,000 66,000 16,000 28,246
James F. Palo 1997 210,000 148,050 80,375 13,000 46,354
President--Dehydrated 1996 200,000 127,883 0 16,500 43,960
Products 1995 184,000 92,000 66,000 14,000 40,067
Richard F. Hobbs 1997 195,000 103,077 80,375 17,000 29,160
Vice President-- 1996 187,000 79,383 0 20,000 29,098
Administration 1995 175,000 97,829 16,500 17,000 27,302
</TABLE>
- --------
(1) Consists of awards under the Company's management incentive plans.
(2) The amounts in the table reflect the market value on the date of award of
restricted shares of Common Stock. Total number and value of restricted
shares held as of September 30, 1997, (based on the closing price of the
Common Stock on September 30, 1997, of $40.25 per share) for each named
individual are: Kenneth P. Manning--11,200 shares/$442,750; Michael Fung--
3,000 shares/$120,750; Richard F. Hobbs--4,600 shares/$185,150; Michael A.
Wick--7,200 shares/$289,800; and James F. Palo--7,000 shares/ $281,750.
Dividends are paid on restricted shares when paid on Common Stock.
(3) Consists of contributions in fiscal 1997 under Company benefit plans for
the six named individuals as follows:
<TABLE>
<CAPTION>
ESOP SAVINGS TRANSITION
-------- ------- ----------
<S> <C> <C> <C>
Guy A. Osborn............................... $108,785 $72,523 $49,390
Kenneth P. Manning.......................... 39,608 26,405 2,127
Michael Fung................................ 22,208 14,805 0
Michael A. Wick............................. 19,211 12,807 326
James F. Palo............................... 20,248 13,499 12,607
Richard F. Hobbs............................ 16,463 10,975 1,722
</TABLE>
(4) Mr. Osborn was Chairman of the Company until April 30, 1997, when Mr.
Manning was elected Chairman.
(5) For the period beginning with Mr. Fung's date of hire, July 17, 1995,
through September 30, 1995.
12
<PAGE>
STOCK OPTIONS
The following table sets forth information concerning the grant of stock
options under the Company's 1994 Employee Stock Plan during fiscal 1997 to the
named executive officers.
<TABLE>
<CAPTION>
PERCENTAGE POTENTIAL REALIZABLE VALUE
NUMBER OF OF TOTAL AT ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO FOR
OPTIONS EMPLOYEES EXERCISE OR TEN YEAR OPTION TERM (3)
GRANTED IN 1997 BASE PRICE EXPIRATION ---------------------------
NAME (#)(1) FISCAL YEAR ($/SHARE) (2) DATE 5% 10%
- ---- ---------- ----------- ------------- ---------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Guy A. Osborn 0 n/a n/a n/a 0 0
Kenneth P. Manning 38,000 11.1% $40.1875 9/15/07 $ 960,401 $ 2,433,844
Michael Fung 20,000 5.8% 40.1875 9/15/07 505,474 1,280,970
Michael A. Wick 14,000 4.1% 40.1875 9/15/07 353,832 896,679
James F. Palo 13,000 3.8% 40.1875 9/15/07 328,558 832,631
Richard F. Hobbs 17,000 5.0% 40.1875 9/15/07 429,653 1,088,825
All Shareholders(4) -- -- -- -- 646,784,033 1,639,077,269
</TABLE>
- --------
(1) The options reflected in the table are nonqualified stock options and
incentive stock options under the Internal Revenue Code and were granted
on September 15, 1997. The exercise price of each option granted was equal
to 100% of the fair market value of the Common Stock on the date of grant.
The options granted vest in increments of one-third on each of the three
anniversaries of the grant date. The options are subject to early vesting
in the event of the optionee's death, disability or retirement. Upon a
"change in control" of the Company (as defined in the 1994 Employee Stock
Plan), all options then outstanding will become immediately exercisable in
full.
(2) The exercise price of options may be paid in cash, by delivering
previously issued shares of Common Stock or any combination thereof.
(3) The option values presented were calculated based on a per-share price of
$40.1875 on the date of grant at assumed 5% and 10% annualized rates of
appreciation for the term of the grant. The actual value, if any, that an
optionee may realize upon exercise will depend on the excess of the market
price of the Common Stock over the option exercise price on the date the
option is exercised. There is no assurance that the actual value realized
by an optionee upon the exercise of an option will be at or near the value
estimated under the model described above.
(4) The potential realizable value for "All Shareholders" is determined on the
assumption that the price of the Company's Common Stock appreciated over
the term of the options from the $40.1875 per share market price as of the
date of grant at an annualized rate (a) of 5% (which would result in a
value on September 15, 2007, of $65.46 per share); and (b) 10% (which
would result in a value on September 15, 2007, of $104.24 per share). The
"All Shareholders" information is calculated based on 25,591,189 shares of
the Company's Common Stock outstanding as of September 30, 1997. Thus, for
comparative purposes, the total value of such Common Stock as of September
15, 1997, the date on which the options were granted, would be
$1,028,445,908.
13
<PAGE>
AGGREGATE OPTION EXERCISES IN 1997 FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information regarding the exercise of stock
options by each of the named executive officers during the 1997 fiscal year
and the fiscal year-end value of unexercised stock options held by such
officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
ACQUIRED OPTIONS/SARS AT END OF THE- MONEY OPTIONS AT END
ON FISCAL 1997 (#)(1) OF FISCAL 1997 ($) (2)
EXERCISE VALUE ------------------------- -------------------------
NAME (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Guy A. Osborn 22,500 $242,813 282,750 0 $2,253,156 $ 0
Kenneth P. Manning 100 494 164,633 79,667 1,403,781 360,711
Michael Fung 0 0 21,666 43,334 172,703 201,672
Michael A. Wick 1,688 36,573 91,387 31,668 943,325 152,094
James F. Palo 27,780 482,327 69,083 28,667 538,946 135,023
Richard F. Hobbs 3,500 36,021 61,449 36,001 553,240 163,821
</TABLE>
- --------
(1) SARs are rights, granted in tandem with an option, to receive cash
payments equal to any appreciation in value of the shares subject to
option from the date of the option grant to the date of exercise, in lieu
of exercise of the option.
(2) The dollar values were calculated by determining the difference between
the fair market value of the underlying shares of Common Stock and the
various applicable exercise prices of the named executive officers'
outstanding options at the end of fiscal 1997. As provided by the
Company's 1990 Employee Stock Plan and 1994 Employee Stock Plan, the fair
market value of the underlying shares of Common Stock on any date is equal
to the price of the Company's Common Stock as reported on the New York
Stock Exchange. On September 30, 1997, the closing price of the Common
Stock as reported on the New York Stock Exchange was $40.25 per share.
EMPLOYMENT AGREEMENTS
The Company has an employment contract with Mr. Manning. The initial term of
the agreement is for three years which is automatically extended for
additional one-year periods, except that in no event will the term of
employment extend beyond the calendar month in which his 65th birthday occurs
or he becomes disabled or dies. In the event of a "change of control" as
defined in the agreement, he will be automatically employed for a period of
three years. During this employment period, the agreement provides for the
payment of base salary subject to annual adjustment, bonus plus customary
fringe benefits. The agreement can be terminated upon 30 days' notice by the
Board of Directors with or without cause. If terminated without cause, certain
termination benefits are payable to Mr. Manning in an amount equal to his base
salary then in effect plus the bonus for the most recently completed fiscal
year, and he continues to receive fringe benefits for not more than one year.
If Mr. Manning's employment is terminated after a "change of control," the
Company will pay him a lump sum equal to three times the sum of his annual
base salary then in effect and the amount of the largest bonus paid to him
during the three years preceding termination and continue coverage under
existing benefit plans for three years. Further, if Mr. Manning's employment
terminates before he becomes 100% vested in his entire account balance under
the Universal Foods Corporation 401(k) Savings Plan ("Savings Plan") or the
Universal Foods Corporation Retirement Employee Stock Ownership Plan ("ESOP"),
he will be fully vested under both plans.
The Company also has Change of Control Employment and Severance Agreements
with 13 other executive officers who are part of the executive officer group.
Each of these agreements provides that in the event of a "change of control,"
as defined in the respective agreement, the Company will continue to employ
the executive for a period of three years following the date of such change of
control. During this employment period, the executive will receive as
compensation a base salary, subject to annual adjustment, bonus awards in
accordance
14
<PAGE>
with past practice, and all other customary fringe benefits in effect as of
the date of the change of control. The agreements can be terminated upon 30
days' notice by the Board of Directors in the event of the executive's
disability. The agreements can also be terminated by the Company for "cause"
and by the executive for "good reason." If terminated by the Company other
than for cause or disability, or by the executive for good reason, the Company
will pay the executive an amount equal to the sum of (i) three times the
executive's base salary plus the higher annual bonus for the last two fiscal
years, and (ii) the amount of unpaid deferred compensation and vacation pay.
The executive will also be entitled to coverage under existing benefit plans
for three years and a payment equal to the vested amounts under the Savings
Plan, ESOP and supplemental retirement plans. If terminated for cause, the
Company will pay the executive his annual base salary through termination. If
the executive's employment is terminated by reason of death or disability, the
Company will pay certain accrued obligations and other customary death or
disability benefits. In all cases, the Company will pay any excise taxes
assessed against any payments made to the executive.
The Company provides a nonqualified supplemental executive retirement
benefit for selected officers and key employees. Generally, participants
contribute to the plan, in each year until death or retirement, an amount
equal to the term insurance premium applicable to a life insurance benefit of
two times the participant's base salary in effect on the date of acceptance
into the plan, unless all amounts were previously paid under a predecessor
plan. A pre-retirement survivor income benefit equal to 20%, 25% or 30% of
base salary payable for 15 or 20 years is available to designated
beneficiaries if the participant dies prior to retirement. At the time of
retirement, the participant may continue the survivor income benefit or elect
to receive a supplemental retirement income benefit equal to 20%, 25% or 30%
of base salary for 15 or 20 years or an actuarially equivalent survivor
benefit. The benefit obligations under this plan are funded through Company-
owned life insurance policies. The executive officers named in the Summary
Compensation Table on page 12 participate in this plan. The program is
designed so that if the assumptions made as to mortality experience, policy
dividends and other factors are realized, the Company will recover all its
payments plus an interest factor for the use of Company money. The Company
also has a split-dollar insurance program which has been terminated, except as
to outstanding benefits.
The Company has established two so-called "Rabbi Trusts" by entering into
trust agreements with Marshall & Ilsley Trust Company ("Trustee") to assure
the satisfaction of the obligations of the Company under various plans and
agreements to make deferred and other payments to certain of its past, present
and future executives including the current executive officers named in the
executive compensation table on Page 12 ("Rabbi Trusts I and II"). Pursuant to
Rabbi Trusts I and II, which are irrevocable, the Company has deposited, and
is obligated to maintain on deposit, with the Trustee, either amounts of cash,
marketable securities and/or insurance policies sufficient to fund such
payments. Rabbi Trusts I and II will terminate upon the earlier of the
exhaustion of the trust corpus or the final payment to the executives pursuant
to all of such plans and agreements, and any remaining assets will be paid to
the Company.
The Company has also entered into another trust agreement ("Rabbi Trust
III") with the Trustee to assure that payments to nonemployee directors will
not be improperly withheld. Rabbi Trust III was established on substantially
the same terms as Rabbi Trusts I and II, except that Rabbi Trust III is
revocable under certain circumstances and is currently funded with a nominal
amount but is required to be fully funded by the Company in the event of a
potential change in control or a change in control (as defined in Rabbi Trust
III) or at such other time as the Board of Directors may determine.
RETIREMENT ARRANGEMENTS
In consideration of Mr. Osborn's early retirement on April 30, 1997, the
Company entered into an agreement that paid Mr. Osborn an amount equal to the
sum of (i) one year's base pay ($540,000) and (ii) one year's bonus payment (a
maximum of $459,000). Mr. Osborn also received miscellaneous paid benefits
including financial planning, club memberships and a Company car worth
approximately $75,000. He also continues to participate in the Company's
welfare plans as an employee until April 30, 1998. Mr. Osborn has agreed to
consult with Mr. Manning in exchange for the agreement.
15
<PAGE>
COMPANY STOCK PERFORMANCE
The following graph compares on a cumulative basis the yearly percentage
change since September 30, 1992, in (a) the total shareholder return on the
Common Stock with (b) the total return on the Standard & Poor's 500 Composite
Index (the "S&P 500 Index") and (c) the total return on the Standard & Poor's
Food Index (the "S&P Food Index"). Such yearly percentage change has been
measured by dividing (a) the sum of (i) the amount of dividends for the
measurement period, assuming dividend reinvestment, and (ii) the difference
between the price per share at the end of and the beginning of the measurement
period, by (b) the price per share at the beginning of the measurement period.
COMPARISON OF FIVE-YEAR TOTAL RETURN
AMONG S&P 500 INDEX, S&P FOOD INDEX AND UNIVERSAL FOODS CORPORATION
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Universal Foods Corporation $100.00 $110.83 $ 99.63 $120.93 $116.03 $147.92
S&P Food Index $100.00 $ 90.37 $100.15 $124.30 $153.32 $203.52
S&P 500 Index $100.00 $112.94 $117.14 $151.83 $182.63 $255.31
</TABLE>
The graph assumes $100 was invested on September 30, 1992, in the S&P 500
Index, S&P Food Index and Universal Foods Corporation Common Stock, and that
dividends are reinvested at the end of the month in which they are paid.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors to file reports of ownership and changes in ownership
with the Securities and Exchange Commission ("SEC") and the New York Stock
Exchange. SEC regulations require officers and directors to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on a
review of the copies of such forms furnished to the Company, the Company
believes that during the fiscal year ended September 30, 1997, all its
officers and directors complied with Section 16(a) filing requirements.
16
<PAGE>
ITEM 2. 1998 STOCK OPTION PLAN
The following summary of the Company's 1998 Stock Option Plan (the "1998
Plan") is qualified in its entirety by reference to the full text of the 1998
Plan which is attached to this Proxy Statement as Appendix A. Capitalized
terms used in this summary are defined in the 1998 Plan.
GENERAL
The purpose of the 1998 Plan is to advance the interests of the Company by
encouraging and providing for the acquisition of an equity interest in the
Company by officers and key employees, and by enabling the Company to attract
and retain the services of officers and key employees upon whose judgment,
interest and special effort the successful conduct of its operations largely
depends.
The 1998 Plan authorizes the granting of Stock Options and Restricted Stock
to eligible employees.
AVAILABLE SHARES
Up to 1,200,000 shares of Common Stock will be available for Awards under
the 1998 Plan, of which no more than 300,000 shares may be Restricted Stock.
The aggregate number of shares of Common Stock authorized for issuance is
subject to adjustment in the event of any stock dividend or split,
recapitalization, merger, consolidation, combination, spin-off, split-up,
exchange of shares or other similar corporate change which affects the total
number of shares outstanding.
ADMINISTRATION
The 1998 Plan is administered by the Compensation and Development Committee
of the Board of Directors ("Committee"). The Committee must consist of not
less than two directors who are "non-employee directors" within the meaning of
Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and who are "outside directors" within the meaning of Section
162(m)(4)(C) of the Internal Revenue Code. If each member of the Committee
does not so qualify, the Committee may designate a subcommittee (each of the
members of which does so qualify) to approve an award to any particular
individual.
Among other functions, the Committee has the authority to establish rules
for the administration of the 1998 Plan; to determine the officers and
employees of the Company and its affiliates to whom Awards will be granted; to
determine the types of Awards to be granted and the number of shares covered
by such Awards; and to set the terms and conditions of such Awards. In the
discretion of the Committee, the terms of Awards may differ from Participant
to Participant. Subject to the express terms of the 1998 Plan, determinations
and interpretations with respect thereto will be in the sole discretion of the
Committee, whose determinations and interpretations will be binding on all
parties.
ELIGIBILITY
Participants in the 1998 Plan are selected by the Committee from among those
officers and key employees who are recommended for participation by the Chief
Executive Officer and who, in the opinion of the Committee, are in a position
to contribute materially to the Company's continued growth and development and
to its long-term financial success. The Committee's designation of any person
to receive an Award does not require the Committee to designate such person to
receive an Award at any subsequent time. Approximately 125 officers and key
employees are eligible for consideration to receive Awards under the 1998
Plan.
EFFECTIVE DATE
The 1998 Plan will become effective on the date it is approved by the
shareholders of the Company, which is expected to occur on the date of the
Meeting, January 22, 1998.
17
<PAGE>
STOCK OPTIONS
Options granted under the 1998 Plan may be either incentive stock options
meeting the requirements of Section 422 of the Internal Revenue Code ("ISOs")
or nonstatutory stock options ("NSOs"). There is no limitation on the number
of options which may be granted to any individual employee; however, the Fair
Market Value (determined on the date of grant) of all shares of Common Stock
with respect to which ISOs are exercisable for the first time by a Participant
during any calendar year may not exceed $100,000.
Exercise Price. The exercise price per share of Options granted under the
1998 Plan may not be less than the Fair Market Value of a share of Common
Stock on the date of grant. There will be no consideration received by the
Company from a Participant in exchange for the original grant of an option.
Term. The term of any Option will be as determined by the Committee,
provided that the term of an ISO may not exceed ten years from the date of its
grant.
When Exercisable. Options will become exercisable in such manner and within
such period or periods and in such installments or otherwise as determined by
the Committee. The Committee may establish for any Option provisions relating
to the vesting thereof over a period of time, upon the attainment of specified
performance goals, or otherwise. Any Option granted to a Participant who is
subject to the reporting requirements under Section 16 of the Exchange Act
("Section 16 Participant") may not be exercised until at least six (6) months
following the date of its grant.
Manner of Exercise. Options may be exercised by payment as follows:
(a) in cash;
(b) in the discretion of the Committee, a promissory note issued to the
Company by the Participant (any such note must (i) be secured by the Common
Stock issued; (ii) be for a term of not more than 10 years; (iii) bear
interest at a rate of not less than the prime rate (as determined by the
Committee) in effect on the date the note is issued; and (iv) require at
least annual payments of principal and interest; the note may contain such
other terms and conditions as the Committee determines);
(c) tendering shares of Common Stock having a Fair Market Value at the
time of exercise equal to the total Option price;
(d) by any combination of (a) through (c), above; or
(e) by electing to have the Company withhold from the shares of Common
Stock otherwise issuable upon exercise of the Option that number of shares
of Common Stock having a Fair Market Value at the time of exercise plus
cash for any fractional share amounts, equal to the total Option price;
provided that any such election by a Section 16 Participant must be made
during the ten-day period beginning on the third business day following the
release of the Company's quarterly or annual consolidated financial
statements.
Section 422. All ISOs granted under the 1998 Plan will also be required to
comply with all other terms of Section 422 of the Internal Revenue Code.
Adjustment of Outstanding Awards. In the event of any stock dividend or
split, recapitalization, merger, consolidation, combination, spin-off, split-
up, exchange of shares or other similar corporate change which affects the
total number of shares outstanding, the Committee shall make an appropriate
adjustment to change the number of options or the stated option price, or
both, under each outstanding Award.
Transferability. The Committee may, in its discretion, permit Options to be
transferable by the Participant: (a) to the Participant's spouse, or natural
or adoptive children or grandchildren ("Immediate Family Members"); (b) to a
trust or trusts for the exclusive benefit of one or more Immediate Family
Members; or (c) to a partnership in which all partners are Immediate Family
Members; provided that there may be no consideration for any such
18
<PAGE>
transfer and the transferee shall be expressly prohibited from any further
transfer of such Options other than by will or pursuant to the laws of descent
and distribution. Unless expressly so permitted, no Option may be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated, other
than by will or pursuant to the laws of descent and distribution, and all
Options granted to a Participant hereunder shall be exercisable during his
lifetime only by such Participant.
Forfeiture. Except as otherwise determined by the Committee, upon
termination of a Participant's employment for any reason, any Option which was
not exercisable immediately prior to such termination will be forfeited.
Change of Control. In the event of a "Change of Control" (as defined; see
"Change of Control," below), each outstanding Option shall immediately become
exercisable (regardless of whether the Option was previously exercisable).
Each Participant holding Options shall have the right, within sixty (60) days
after the Change of Control, to receive, in exchange for the surrender of an
Option or portion thereof, an amount of cash equal to the highest of: (i) the
difference between the Fair Market Value of the Common Stock covered by the
Option on the date of the Change in Control and the Option exercise price;
(ii) the difference between the Fair Market Value of the Common Stock covered
by the Option on the date of surrender and the Option exercise price; or (iii)
the difference between the highest price per share of Common Stock paid in the
transaction giving rise to the Change of Control and the Option exercise
price.
Substitute Options. If the Company at any time should succeed to the
business of another corporation through merger or consolidation, or through
the acquisition of stock or assets of such corporation, the Committee may
grant Options under the 1998 Plan in substitution of options previously
granted by such corporation and which are outstanding at the date of the
succession. The Committee shall have discretion to determine the terms and
conditions upon which such "Substitute Options" will be granted so as to
preserve the economic benefits to the optionees.
RESTRICTED STOCK
Shares of Restricted Stock granted to Participants under the 1998 Plan will
be subject to such restrictions as the Committee may impose. The restrictions
imposed on the shares may lapse separately or in combination at such time or
times, or in such installments or otherwise, as the Committee may deem
appropriate. The Committee may condition the lapse of such restrictions on the
passage of time, the attainment of specified performance goals, or otherwise.
Such conditions may differ from Participant to Participant.
Forfeiture. Except as otherwise determined by the Committee, upon
termination of a Participant's employment for any reason during the applicable
restriction period, all shares of Restricted Stock still subject to
restriction will be forfeited.
Maximum Number of Shares. No more than 300,000 shares of Restricted Stock
may be issued under the 1998 Plan (subject to adjustment).
Voting and Dividends. Prior to the lapse of the applicable restrictions
thereon, shares of Restricted Stock are entitled to vote and receive dividends
on the same basis as all other shares of outstanding Common Stock.
Limits on Transferability. No Restricted Stock, other than Restricted Stock
on which the restrictions have lapsed, may be assigned, sold, transferred or
encumbered by any participant, otherwise than by will, by designation of a
beneficiary, or by the laws of descent and distribution.
Change of Control. In the event of a "Change of Control" (as defined; see
"Change of Control," below), Restricted Stock that is not then vested shall
vest upon the date of the Change of Control and each holder of Restricted
Stock shall have the right, within sixty (60) days after the Change of
Control, to receive, in exchange for the surrender of such Restricted Stock,
an amount of cash equal to the highest of (i) the Fair Market Value of
19
<PAGE>
such Restricted Stock on the date of surrender; (ii) the highest price per
share of Common Stock paid in the transaction giving rise to the Change of
Control multiplied by the number of shares of Restricted Stock surrendered; or
(iii) the Fair Market Value of such Restricted Stock on the effective date of
the Change of Control.
Resale to Company. A Participant, or in the case of his death his
beneficiary or estate, may require the Company to repurchase up to one-half of
the shares of Restricted Stock upon which any restrictions have lapsed within
sixty (60) days after the last day of the Period of Restriction for such
shares of Restricted Stock and shall be for a price equal to the Fair Market
Value determined as of the last business day of the Period of Restriction of
the shares of Restricted Stock to be sold. Unless otherwise agreed, such price
shall be payable in one lump sum payment.
CHANGE OF CONTROL DEFINED
"Change of Control" is defined in Section 12 of the 1998 Plan to include any
of the following:
(a) Any "Person" (as defined for purposes of the Exchange Act, including
a "group"), other than certain excepted Persons (such as the Company or an
affiliate of the Company in certain cases), acquires securities
representing 50% or more of either the then outstanding shares of Common
Stock or the combined voting power of the Company's then outstanding voting
securities;
(b) The following persons cease (for any reason other than death or
resignation) to constitute a majority of the number of directors then
serving: persons who, on the Effective Date, constitute the Board and any
new director whose appointment or election by the Board or nomination for
election by the Company's shareholders was approved by a vote of at least
two-thirds ( 2/3) of the directors then still in office who either were
directors on the Effective Date, or whose appointment, election or
nomination for election was previously so approved;
(c) The shareholders of the Company approve a merger or consolidation of
the Company with any other corporation or approve the issuance of voting
securities of the Company in connection with a merger or consolidation of
the Company, except in certain circumstances not involving an actual change
of control of the Company;
(d) The shareholders of the Company approve a plan of liquidation or
dissolution of the Company or approve an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets (other than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity in which at least
75% of the combined voting power of the voting securities of which entity
are owned by Persons in substantially the same proportions as their
ownership of Common Stock immediately prior to such sale or disposition).
Notwithstanding the foregoing, no "Change of Control" shall be deemed to
have occurred if immediately following any transaction or series of integrated
transactions the record holders of the Common Stock immediately prior to such
transaction(s) continue to have substantially the same proportionate ownership
in an entity which owns all or substantially all of the assets of the Company
immediately following such transaction(s).
The Committee may, in its sole and absolute discretion, amend, modify or
rescind the provisions of Section 12 if it determines that the operation
thereof may prevent a transaction in which the Company is a party from being
accounted for on a pooling-of-interests basis.
AMENDMENT, MODIFICATION AND TERMINATION
The Board may at any time amend, alter, suspend, discontinue or terminate
the 1998 Plan (subject to shareholder approval if required by or deemed by the
Board to be desirable under applicable law, regulation, or exchange listing
requirement). Termination of the 1998 Plan shall not affect the rights of
Participants with respect to Awards previously granted to them, and all
unexpired Awards shall continue in force and effect after termination of the
1998 Plan except as they may lapse or be terminated by their own terms and
conditions.
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WITHHOLDING
The Company is entitled to withhold the amount of any tax attributable to
any amount payable or shares of Common Stock deliverable under the 1998 Plan
after giving the affected Participant notice as far in advance as practicable,
and the Company may defer making any such payment or delivery if any such tax
may be pending, unless and until indemnified to its satisfaction. A
Participant may elect to pay all or a portion of the federal, state and local
withholding taxes arising in connection with (a) the exercise of a NSO; (b) a
disqualifying disposition of Common Stock received upon the exercise of an
ISO; (c) the lapse of restrictions on Restricted Stock, by electing to (i)
have the Company withhold shares of Common Stock, (ii) tender back shares of
Common Stock received in connection with such benefit, or (iii) deliver other
previously owned shares of Common Stock, in each case having a Fair Market
Value equal to the amount to be withheld, up to the amount of the
Participant's estimated total federal, state and local tax obligations
associated with the transaction.
The Committee may, in its discretion, grant a cash bonus to a Participant
who holds Restricted Stock to enable the Participant to pay all or a portion
of the federal, state or local tax liability incurred by the Participant upon
the vesting of Restricted Stock. The Company must deduct from any cash bonus
such amount as may be required for the purpose of satisfying the Company's
obligation to withhold federal, state or local taxes.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Stock Options. The grant of a stock option under the 1998 Plan will create
no income tax consequences to the Participant or the Company. A Participant
who is granted a NSO will generally recognize ordinary income at the time of
exercise of the NSO in an amount equal to the excess of the fair market value
of the Common Stock at such time over the exercise price. The Company will be
entitled to a deduction in the same amount and at the same time as ordinary
income is recognized by the Participant. A subsequent disposition of the
Common Stock by the Participant will give rise to capital gain or loss to the
extent the amount realized from the sale differs from the tax basis. This
capital gain or loss will be a long-term capital gain or loss if the Common
Stock has been held for the required holding period under the Internal Revenue
Code.
In general, a Participant will recognize no income or gain as a result of
the grant or exercise of an ISO (except that the alternative minimum tax may
apply). Except as described below, any gain or loss realized by the
Participant on the disposition of the Common Stock acquired pursuant to the
exercise of an ISO will be treated as a capital gain or loss and no deduction
will be allowed to the Company. The capital gain or loss shall be treated as
long-term or short-term depending on the Participant's holding period.
Further, if the Participant fails to hold the shares of Common Stock acquired
pursuant to the exercise of an ISO for at least two years from the date of
grant of the ISO and one year from the date of exercise (a "Disqualifying
Disposition"), the Participant will recognize ordinary income at the time of
the disposition equal to the lesser of (a) the gain realized on the
Disqualifying Disposition, or (b) the excess of the fair market value of the
shares of Common Stock on the date of exercise over the exercise price. In the
event of a Disqualifying Disposition, the Company will be entitled to a
deduction in the same amount and at the same time as ordinary income is
recognized by the Participant. Any gain or loss realized by the Participant
over the fair market value at the time of exercise of the ISO will be treated
as a capital gain or loss. This capital gain or loss will be a long-term
capital gain if the Common Stock has been held for the required holding period
under the Internal Revenue Code.
Certain additional tax consequences may attach in the event a Participant is
permitted to pay the exercise price of an Option with an interest-bearing
promissory note, as described above; in particular, the Company may be
required to recognize taxable interest income with respect to any interest
received on such promissory note.
Restricted Stock. A Participant will not recognize income at the time an
award of Restricted Stock is made under the 1998 Plan, unless the Participant
makes the election described below. However, a Participant who has not made
such an election will recognize ordinary income at the time the restrictions
on the Common Stock lapse. The ordinary income recognized will be in an amount
equal to the fair market value of the Restricted Stock at such time. The
Company will be entitled to a corresponding deduction in the same amount and
at the same time
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as the Participant recognizes income. Any otherwise taxable disposition of the
Restricted Stock after the time the restrictions lapse will result in capital
gain or loss (long-term or short-term depending on the length of time the
Restricted Stock is held after the time the restrictions lapse). Dividends
paid in cash and received by a Participant prior to the time the restrictions
lapse will constitute ordinary income to the Participant in the year paid. Any
dividends paid in Common Stock will be treated as an award of additional
Restricted Stock subject to the tax treatment described herein.
A Participant may, within 30 days after the date of the award of Restricted
Stock, elect to recognize ordinary income as of the date of the award in an
amount equal to the fair market value of such Restricted Stock on the date of
the award. The Company will be entitled to a corresponding deduction in the
same amount and at the same time as the Participant recognizes income. If the
election is made, any cash dividends received with respect to the Restricted
Stock will be treated as dividend income to the Participant in the year of
payment and will not be deductible by the Company. Any otherwise taxable
disposition of the Restricted Stock (other than by forfeiture) will result in
capital gain or loss (long-term or short-term depending on the holding
period). If the Participant who has made an election subsequently forfeits the
Restricted Stock, the Participant will not be entitled to deduct any loss. In
addition, the Company would then be required to include as ordinary income the
amount of the deduction it originally claimed with respect to such shares.
VOTE REQUIRED
Assuming that a quorum is present, the 1998 plan will be approved if more
shares are voted in favor of approval than are voted against approval. Under
Wisconsin law, any shares not voted at the Annual Meeting with respect to the
1998 Plan (whether as a result of abstention, broker nonvote or otherwise)
will have no impact on the vote.
THE BOARD RECOMMENDS A VOTE FOR THE 1998 PLAN. SHARES OF
COMMON STOCK REPRESENTED AT THE ANNUAL MEETING BY EXECUTED
BUT UNMARKED PROXIES WILL BE VOTED FOR THE 1998 PLAN.
ITEM 3. APPOINTMENT OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee of the Board of Directors,
the Board, subject to Shareholder ratification, has selected Deloitte & Touche
LLP, certified public accountants, to audit the financial statements of the
Company for the year ending September 30, 1998. Deloitte & Touche LLP has been
the independent auditors of the Company for many years and has advised the
Company that neither the firm nor any of its partners have any direct or
indirect material financial interest in the Company. Assuming that a quorum is
present, the selection of Deloitte & Touche LLP will be ratified if more
shares are voted in favor of ratification than are voted against ratification.
Under Wisconsin law, any shares of Common Stock which are not voted on this
matter at the Meeting, whether by abstention, broker nonvote or otherwise,
will have no effect on the ratification of auditors. Representatives of
Deloitte & Touche LLP are expected to be present at the Meeting and will have
an opportunity to make a statement if they desire to do so and to respond to
appropriate Shareholder questions.
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
SELECTION OF DELOITTE & TOUCHE LLP. SHARES OF COMMON STOCK
REPRESENTED AT THE ANNUAL MEETING BY EXECUTED BUT UNMARKED PROXIES
WILL BE VOTED FOR RATIFICATION OF SUCH SELECTION.
ITEM 4. OTHER MATTERS
Company management knows of no business which will be presented for action
at the Meeting other than those items identified in the Notice of Annual
Meeting. Pursuant to the Company's By-Laws, written notice of
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any Shareholder proposals to be presented at the Meeting must have been
received by the Secretary no later than December 3, 1997. As no notice of any
Shareholder proposals was received, no business may be brought before the
Meeting by any Shareholders. If other matters are brought before the Meeting
by the Board of Directors, it is intended that proxies will be voted at the
Meeting in accordance with the judgment of the person or persons exercising
the authority conferred by such proxies.
FUTURE SHAREHOLDER PROPOSALS AND NOMINATIONS
The Company welcomes comments or suggestions from its Shareholders. In the
event a Shareholder desires to have a proposal formally considered at the 1999
Annual Shareholders' Meeting and included in the proxy statement for that
meeting, the proposal must be in writing and received by the Secretary of the
Company on or before August 23, 1998.
In addition, the Company's By-laws establish procedures for Shareholder
nominations for election of directors of the Company and bringing business
before any annual meeting of Shareholders of the Company. Among other things,
to bring business before an annual meeting or to nominate a person for
election as a director at an annual meeting, a Shareholder must give written
notice to the Secretary of the Company not more than 90 nor less than 50 days
prior to the fourth Thursday in the month of January next following the last
annual meeting held. The notice must contain certain information about the
proposed business or the nominee and the Shareholder making the proposal. Any
Shareholder interested in making a nomination or proposal should request a
copy of the applicable By-law provisions from the Secretary of the Company.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS
ARE REQUESTED TO DATE, SIGN AND RETURN THE PROXY CARD AS SOON AS POSSIBLE. IF
YOUR SHARES ARE REGISTERED IN THE NAME OF A BROKER OR BANK, ONLY YOUR BROKER
OR BANK CAN SUBMIT THE PROXY CARD ON YOUR BEHALF. PLEASE CONTACT THE PERSON
RESPONSIBLE FOR YOUR ACCOUNT AND DIRECT HIM OR HER TO SUBMIT THE PROXY CARD ON
YOUR BEHALF.
UPON THE WRITTEN REQUEST OF ANY SHAREHOLDER, ADDRESSED TO THE SECRETARY OF
THE COMPANY, THE COMPANY WILL PROVIDE TO SUCH SHAREHOLDER WITHOUT CHARGE A
COPY OF THE COMPANY'S 1997 ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS) AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
By Order of the Board of Directors
Terrence M. O'Reilly
Secretary
December 16, 1997
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APPENDIX A
UNIVERSAL FOODS CORPORATION
1998 STOCK OPTION PLAN
Section 1. Establishment, Purpose and Effective Date of Plan.
1.1 Establishment. Universal Foods Corporation, a Wisconsin corporation,
hereby establishes the "UNIVERSAL FOODS CORPORATION 1998 STOCK OPTION PLAN"
(the "Plan") for officers and key employees. This Plan permits the grant of
Stock Options and Restricted Stock.
1.2 Purpose. The purpose of this Plan is to advance the interests of the
Company by encouraging and providing for the acquisition of an equity interest
in the Company by officers and key employees, and by enabling the Company to
attract and retain the services of officers and key employees upon whose
judgment, interest and special effort the successful conduct of its operations
is largely dependent.
1.3 Effective Date. This Plan shall become effective on the Effective Date.
Section 2. Definitions.
2.1 Definitions. Whenever used herein, the following terms shall have the
respective meanings set forth below:
(a) "Award" means any Option or Restricted Stock, or any other benefit
conferred under the terms hereof.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the Compensation and Development Committee of the
Board.
(e) "Company" means Universal Foods Corporation, a Wisconsin corporation,
and its subsidiaries.
(f) "Effective Date" means January 22, 1998, or such other date that this
Plan is approved by the shareholders of the Company at an annual or special
meeting thereof by a simple majority of the number of shares represented at
such meeting in person or by proxy.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(h) "Fair Market Value" means the closing price of a share of Stock on
the date of the Award on the New York Stock Exchange as reported on the
composite list used by the Wall Street Journal for reporting stock prices,
or if no such sale shall have been made on that day, on the last preceding
day on which there was such a sale.
(i) "Option" means the right to purchase Stock at a stated price for a
specified period of time. For purposes of this Plan an Option may be
either: (i) an "incentive stock option" within the meaning of Section
422(b) of the Code; or (ii) an option which is not intended to qualify as
an incentive stock option (a "nonstatutory stock option").
(j) "Participant" means any individual designated by the Committee to
participate in this Plan.
(k) "Period of Restriction" means the period during which the transfer of
shares of Restricted Stock is restricted pursuant to Section 8 hereof.
(l) "Restricted Stock" means Stock granted to a Participant pursuant to
Section 8 hereof.
(m) "Stock" means the Common Stock of the Company, par value of $0.10.
2.2 Gender and Number. Except when otherwise indicated by the context, words
in the masculine gender when used in this Plan shall include the feminine
gender, the singular shall include the plural and the plural shall include the
singular.
Section 3. Eligibility and Participation. Participants in this Plan shall be
selected by the Committee from among those officers and key employees of the
Company and its subsidiaries, including subsidiaries which
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become such after adoption hereof, who are recommended for participation by
the Chief Executive Officer and who, in the opinion of the Committee, are in a
position to contribute materially to the Company's continued growth and
development and to its long-term financial success. The Committee's
designation of any person to receive an Award shall not require the Committee
to designate such person to receive an Award at any subsequent time.
Section 4. Administration.
4.1 Administration. This Plan shall be administered by the Committee.
4.2 Powers and Authority of the Committee. The Committee, by majority action
thereof, shall have complete and sole authority to:
(a) designate officers and key employees to receive Awards;
(b) determine the type of Awards to be granted to Participants;
(c) determine the number of shares of Stock to be covered by Awards
granted to Participants;
(d) determine the terms and conditions of any Award granted to any
Participant (which may, in the discretion of the Committee, differ from
Participant to Participant), including, without limitation, provisions
relating to the vesting of Options or Restricted Stock rights over a period
of time, upon the attainment of specified performance goals, or otherwise;
(e) interpret this Plan and apply its provisions, and prescribe, amend
and rescind rules, regulations, procedures, and forms relating to this
Plan;
(f) authorize any person to execute, on behalf of the Company, any
instrument required to carry out the purposes of this Plan;
(g) amend any outstanding agreement relating to any Award, subject to
applicable legal restrictions and to the consent of the Participant who
entered into such agreement;
(h) prescribe the consideration for the grant of each Award hereunder and
determine the sufficiency of such consideration; and
(i) make all other determinations and take all other actions deemed
necessary or advisable for the administration hereof and provide for
conditions and assurances deemed necessary or advisable to protect the
interests of the Company in connection herewith;
but only to the extent that any of the foregoing are not contrary to the
express provisions hereof . Determinations, interpretations or other actions
made or taken by the Committee pursuant to the provisions hereof shall be
final, binding and conclusive for all purposes and upon all persons. The
Committee's decisions need not be uniform and may be made selectively among
Participants, whether or not they are similarly situated.
4.3 Composition of the Committee. The Committee shall consist of not less
than two directors. Each member of the Committee shall be both a "nonemployee
director" (within the meaning of Rule 16b-3 under the Exchange Act) and an
"outside director" (within the meaning of Section 162(m)(4)(C) of the Code);
provided, however, that in the event any Committee member does not satisfy
both conditions of the first clause of this sentence, then the Committee
shall, with respect to any Award to be made to any Participant who is subject
to Section 16 of the Exchange Act ("Section 16 Participant") or who is subject
to the provisions of Section 162(m) of the Code, delegate its functions with
respect to such Award to a subcommittee (of not less than two directors) which
consists exclusively of members who meet both conditions of the first clause
of this sentence. Further, the Committee may delegate to one or more senior
officers of the Company any or all of the authority and responsibility of the
Committee with respect to this Plan, other than with respect to Section 16
Participants or Participants who are subject to Section 162(m) of the Code. A
majority of the members of the Committee (or subcommittee, as the case may be)
shall constitute a quorum and all determinations of the Committee shall be
made by a majority of its members. Any determination of the Committee may be
made without notice or meeting of the Committee by a writing signed by a
majority of the Committee members.
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Section 5. Stock Subject to Plan.
5.1 Number. The total number of shares of Stock reserved and available for
issuance under this Plan shall initially be 1,200,000. The number of shares of
Stock reserved and available for issuance hereunder shall be subject to
adjustment upon occurrence of any of the events indicated in Subsection 5.3
hereof. Of this total number, not more than 300,000 shares may at any time
consist of Restricted Stock. The shares to be issued under this Plan may
consist, in whole or in part, of authorized but unissued Stock or treasury
Stock, not reserved for any other purpose.
5.2 Unused Stock. In the event any shares of Stock that are subject to an
Award cease to be subject to such Award (whether due to expiration,
cancellation, termination, forfeiture, or otherwise) without such shares of
Stock being issued or cash being paid to the Participant, then the shares of
Stock subject to such Award shall again become available for future Awards
hereunder.
5.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock that occurs, whether prior to or after the
Effective Date, by reason of a Stock dividend or split, recapitalization,
merger, consolidation, combination, spin-off, split-up, exchange of shares or
other similar corporate change, the aggregate number of shares of Stock
authorized for issuance hereunder as well as Stock subject to each outstanding
Award, and its stated Option or other price (as applicable), shall be
appropriately adjusted by the Committee, whose determination shall be
conclusive; provided, however, that fractional shares shall be rounded to the
nearest whole share. In such event, the Committee shall also have the
discretion to make appropriate adjustments in the number of shares of Stock
authorized for issuance hereunder.
Section 6. Duration of Plan. This Plan shall remain in effect, subject to
the Board's right to earlier terminate this Plan pursuant to Section 12
hereof, until all shares of Stock subject to it shall have been purchased or
acquired pursuant to the provisions hereof. Notwithstanding the foregoing, no
Award may be granted hereunder on or after the tenth (10th) anniversary of the
Effective Date.
Section 7. Stock Options.
7.1 Grant of Options. Subject to the provisions of Sections 5 and 6 hereof,
Options may be granted to Participants at any time and from time to time as
shall be determined by the Committee. The Committee shall have complete
discretion in determining the number of Options granted to each Participant.
The Committee also shall determine whether an Option is to be an incentive
stock option within the meaning of Section 422(b) of the Code or a
nonstatutory stock option.
7.2 Incentive Stock Options. Incentive stock options shall be subject to the
limitation that the Fair Market Value (determined on the date of grant) of all
shares of Stock with respect to which incentive stock options are exercisable
for the first time by a Participant during any calendar year shall not exceed
$100,000. This limitation shall not apply to nonstatutory stock options.
7.3 Option Agreement. Each Option shall be evidenced by a written agreement
("Option Agreement") that shall specify the type of Option granted, the Option
price, the duration of the Option, the number of shares of Stock to which the
Option pertains, and such other provisions as the Committee shall determine.
No Participant shall have any rights hereunder until an Option Agreement has
been executed.
7.4 Option Price. No Option granted pursuant hereto shall have an Option
price that is less than the Fair Market Value of the Stock on the date the
Option is granted.
7.5 Duration of Options. Each Option shall expire at such time as the
Committee shall determine; provided, however, that no incentive stock option
shall be exercisable later than the tenth (10th) anniversary date of its
grant.
7.6 Exercise of Options. Options granted hereunder shall be exercisable at
such times and be subject to such restrictions and conditions as the Committee
shall in each instance approve, which need not be the same for all
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Participants. Any Option granted to a Section 16 Participant may not be
exercised until at least six (6) months following the date of its grant.
7.7 Payment. The Option price of any Option shall be payable to the Company
in full upon exercise:
(a) in cash or its equivalent, including, in the discretion of the
Committee, a promissory note issued to the Company by the Participant
(which note shall (i) be secured by the Stock issued; (ii) be for a term of
not more than ten (10) years; (iii) bear interest at a rate of not less
than the prime rate (as determined by the Committee) in effect on the date
such promissory note is issued; (iv) require at least annual payments of
principal and interest; and (v) contain such other terms and conditions as
the Committee determines);
(b) by tendering shares of Stock having a Fair Market Value at the time
of exercise equal to the total Option price;
(c) by a combination of cash or its equivalent (as defined in clause (a)
above) and shares of Stock; or
(d) by electing to have the Company withhold from the shares of Stock
otherwise issuable upon exercise of the Option that number of shares of
Stock having a Fair Market Value at the time of exercise plus cash for any
fractional share amounts, equal to the total Option price; provided that
any such election by a Section 16 Participant must be made during the ten-
day period beginning on the third business day following the release of the
Company's quarterly or annual consolidated financial statements.
The proceeds from such a payment shall be added to the general funds of the
Company and shall be used for general corporate purposes.
7.8 Restrictions on Stock Transferability. The Committee shall impose such
restrictions on any shares of Stock acquired pursuant to the exercise of an
Option as it may deem advisable, including, without limitation, restrictions
under applicable Federal securities laws, under the requirements of any stock
exchange upon which such shares of Stock are then listed, and under any blue
sky or state securities laws applicable to such shares.
7.9 Transferability of Options. The Committee may, in its discretion, and
only by expressly so providing in the Option Agreement covering any Options
(which Option Agreement must be approved by the Committee), permit all or a
portion of Options to be granted to a Participant to be transferable by the
Participant: (a) to the Participant's spouse, or natural or adoptive children
or grandchildren ("Immediate Family Members"); (b) to a trust or trusts for
the exclusive benefit of one or more Immediate Family Members; or (c) to a
partnership in which all partners are Immediate Family Members; provided that
there may be no consideration for any such transfer and the transferee shall
be expressly prohibited from any further transfer of such Options other than
by will or pursuant to the laws of descent and distribution. Following such
transfer, any Options so transferred shall be subject to the same terms and
conditions as were applicable immediately prior to such transfer, provided
that for purposes of this Plan, the term "Participant" shall be deemed to
include such transferee. The circumstances under which any transferred Option
may be terminated, canceled, or forfeited (whether such circumstances are set
forth in this Plan or in the Option Agreement covering such Options) shall be
applied with respect to the transferor Participant to which the Option was
originally granted. Unless expressly so provided in the Option Agreement
covering an Option, no Option granted hereunder may be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated, other than by will
or pursuant to the laws of descent and distribution, and all Options granted
to a Participant hereunder shall be exercisable during his lifetime only by
such Participant.
7.10 Substitute Options. If the Company at any time should succeed to the
business of another corporation through merger or consolidation, or through
the acquisition of stock or assets of such corporation, Options may be granted
under this Plan ("Substitute Options") in substitution of options previously
granted by such corporation and which are outstanding at the date of the
succession ("Surrendered Options"). The Committee shall have discretion to
determine the extent to which such Substitute Options shall be granted, the
persons to receive such Substitute Options, the number of Shares to be subject
to such Substitute Options, and the terms and conditions of such Substitute
Options (which terms and conditions shall, to the extent permissible within
the terms and conditions of this Plan, be equivalent to the terms and
conditions of the Surrendered Options). The Exercise Price of the Substitute
Option may be determined without regard to Section 7.4 hereof; provided
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however, that the Exercise Price of each Substitute Option shall be an amount
such that, in the sole and absolute judgment of the Committee (and if the
Substitute Options are to be incentive stock options, in compliance with
Section 424(a) of the Code), the economic benefit provided by such Substitute
Option is not greater than the economic benefit represented by the Surrendered
Option as of the date of the succession.
7.11. Forfeiture. Except as otherwise determined by the Committee and set
forth in the Option Agreement, upon termination of employment of a Participant
due to death, disability, or for any other reason, all Options not exercisable
in accordance with the Option Agreement immediately prior to such termination
shall be immediately and automatically forfeited to the Company.
Section 8. Restricted Stock.
8.1 Grant of Restricted Stock. Subject to the provisions of Sections 5 and 6
hereof, the Committee, at any time and from time to time, may grant shares of
Restricted Stock hereunder to such Participants and in such amounts as it
shall determine. Each grant of Restricted Stock shall be evidenced by a
written agreement ("Restricted Stock Agreement).
8.2 Other Restrictions. The Committee shall, in the terms and conditions of
the Restricted Stock Agreement, impose such restrictions on any shares of
Restricted Stock granted pursuant to this Plan as it may deem advisable
(including, without limitation, restrictions under applicable Federal or state
securities laws), and may legend the certificates representing Restricted
Stock to give appropriate notice of such restrictions. Any Restricted Stock
granted to a Section 16 Participant may not be sold for at least six (6)
months after the date it is granted.
8.3 Registration. Any Restricted Stock granted hereunder to a Participant
may be evidenced in such manner as the Committee may deem appropriate,
including, without limitation, book-entry registration or issuance of a stock
certificate or certificates. In the event any stock certificate is issued in
respect of shares of Restricted Stock granted hereunder to a Participant, such
certificate shall be registered in the name of the Participant and shall bear
an appropriate legend (as determined by the Committee) referring to the terms,
conditions and restrictions applicable to such Restricted Stock. In the event
such Restricted Stock is issued in book-entry form, the depository and the
Company's Transfer Agent shall be provided with notice referring to the terms,
conditions and restrictions applicable to such Restricted Stock, together with
such stop-transfer instructions as the Committee deems appropriate.
8.4 Forfeiture. Except as otherwise determined by the Committee, upon
termination of employment of a Participant due to death, disability, or for
any other reason, during the applicable period of restriction, all shares of
Restricted Stock still subject to restriction under the terms of the
Restricted Stock Agreement shall be immediately and automatically forfeited to
the Company.
8.5 Voting Rights. During the Period of Restriction, Participants holding
shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those shares.
8.6 Dividends and Other Distributions. During the Period of Restriction,
Participants holding shares of Restricted Stock granted hereunder shall be
entitled to receive all dividends and other distributions paid with respect to
those shares while they are so held. If any such dividends or distributions
are paid in shares of Stock, the shares shall be subject to the same
restrictions on transferability as the shares of Restricted Stock with respect
to which they were paid.
8.7 Nontransferability of Restricted Stock. Except as provided in Section
8.8 hereof, no shares of Restricted Stock granted hereunder may be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution, until the termination
of the applicable Period of Restriction. All rights with respect to the
Restricted Stock granted to a Participant hereunder shall be exercisable
during his lifetime only by such Participant.
8.8 Election to Sell Shares to the Company. A Participant, or in the case of
his death his beneficiary or estate, may elect to sell to the Company up to
one-half of the shares of Restricted Stock issued to him pursuant
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to this Plan and upon which any restrictions set forth in the Restricted Stock
Agreement have lapsed. To the extent permitted by law, the Company shall
purchase all such shares of Restricted Stock. Each such sale must occur within
sixty (60) days after the last day of the Period of Restriction for such
shares of Restricted Stock and shall be for a price equal to the Fair Market
Value determined as of the last business day of the Period of Restriction of
the shares of Restricted Stock to be sold. Such price shall be payable in cash
or by check in one lump sum payment, unless provisions relating to payment for
such shares of Restricted Stock in installments are agreed to by the Committee
and the Participant (or his beneficiary or estate).
Section 9. Beneficiary Designation. Each Participant may, from time to time,
name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit hereunder is to be paid in case of his death
before he receives any or all of such benefit. 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 his lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be
paid to his estate.
Section 10. Rights of Employees. Nothing in this Plan shall interfere with
or limit in any way the right of the Company to terminate any Participant's
employment at any time nor confer upon any Participant any right to continue
in the employment of the Company.
Section 11. Change of Control.
(a) In the event of a "Change of Control" (as hereinafter defined):
(i) each holder of an Option (A) shall have the right at any time
thereafter to exercise the Option in full whether or not the Option was
previously exercisable; and (B) shall have the right, exercisable by
written notice to the Company within sixty (60) days after the Change of
Control, to receive, in exchange for the surrender of an Option or any
portion thereof to the extent the Option is then exercisable in accordance
with clause (A), the highest of (1) an amount of cash equal to the
difference between the Fair Market Value of the Stock covered by the Option
or portion thereof that is so surrendered on the date of the Change of
Control and the purchase price of such Stock under the Option; (2) an
amount of cash equal to the difference between the highest price per share
of Stock paid in the transaction giving rise to the Change of Control and
the Option price multiplied by the number of shares of Stock covered by the
Option; or (3) an amount of cash equal to the difference between the Fair
Market Value of the Stock covered by the Option or portion thereof that is
so surrendered, calculated on the date of surrender, and the purchase price
of such Stock under the Option; provided that the right described in this
clause (B) shall be exercisable only if a positive amount would be payable
to the holder pursuant to the formula specified in this clause (B);
(ii) Restricted Stock that is not then vested shall vest upon the date of
the Change of Control and each holder of such Restricted Stock shall have
the right, exercisable by written notice to the Company within sixty (60)
days after the Change of Control, to receive, in exchange for the surrender
of such Restricted Stock, an amount of cash equal to the highest of (A) the
Fair Market Value of such Restricted Stock on the date of surrender; (B)
the highest price per share of Stock paid in the transaction giving rise to
the Change of Control multiplied by the number of shares of Restricted
Stock surrendered; or (C) the Fair Market Value of such Restricted Stock on
the effective date of the Change of Control.
(b) A "Change of Control" of the Company shall be deemed to have occurred
for purposes of this Plan if the event set forth in any one of the following
paragraphs shall have occurred:
(i) any "Person" (as such term is defined in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) of the Exchange Act; except
that for purposes of this Section 13, the term "Person" shall not include
(A) the Company or any of its subsidiaries, (B) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company
or any of its subsidiaries, (C) an underwriter temporarily holding
securities Pursuant to an offering of such securities, or (D) a corporation
owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock in the
Company) is or becomes the "Beneficial Owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
A-6
<PAGE>
securities of the Company (not including in the securities beneficially
owned by such Person any securities acquired directly from the Company or
its affiliates) representing 50% or more of either the then outstanding
shares of Stock of the Company or the combined voting power of the
Company's then outstanding voting securities; or
(ii) the following individuals cease, for any reason other than death or
resignation, to constitute a majority of the number of directors then
serving: individuals who, on the Effective Date, constitute the Board and
any new director (other than a director whose initial assumption of office
is in connection with an actual or threatened election contest, including
but not limited to a consent solicitation, relating to the election of
directors of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A under the Exchange Act) whose appointment or election by the
Board or nomination for election by the Company's stockholders was approved
by a vote of at least two-thirds ( 2/3) of the directors then still in
office who either were directors on the Effective Date, or whose
appointment, election or nomination for election was previously so
approved; or
(iii) the shareholders of the Company approve a merger or consolidation
of the Company with any other corporation or approve the issuance of voting
securities of the Company in connection with a merger or consolidation of
the Company (or any direct or indirect subsidiary of the Company) pursuant
to applicable stock exchange requirements, other than (A) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof) at least
50% of the combined voting power of the voting securities of the Company or
such surviving entity or any parent thereof outstanding immediately after
such merger or consolidation, or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in
which no Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Company (not including in the securities beneficially
owned by such Person any securities acquired directly from the Company or
its Affiliates) representing 50% or more of either the then outstanding
shares of common stock of the Company or the combined voting power of the
Company's then outstanding voting securities; or
(iv) the shareholders of the Company approve a plan of liquidation or
dissolution of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets (in one
transaction or a series of related transactions within any period of
twenty-four (24) consecutive months), other than a sale or disposition by
the Company of all or substantially all of the Company's assets to an
entity in which at least 75% of the combined voting power of the voting
securities of which entity are owned by Persons in substantially the same
proportions as their ownership of Stock of the Company immediately prior to
such sale or disposition.
Notwithstanding the foregoing, no "Change of Control" shall be deemed to
have occurred if there is consummated any transaction or series of integrated
transactions immediately following which the record holders of the Stock of
the Company immediately prior to such transactions or series of transactions
continue to have substantially the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company immediately
following such transaction or series of transactions.
(c) The Committee may, in its sole and absolute discretion, amend, modify or
rescind the provisions of this Section 11 if it determines that the operation
of this Section 11 may prevent a transaction in which the Company is a party
from being accounted for on a pooling-of-interests basis.
Section 12. Amendment, Modification and Termination of Plan.
12.1 Amendments and Termination. The Board may at any time amend, alter,
suspend, discontinue or terminate this Plan; provided, however, that
stockholder approval of any amendment of this Plan shall be obtained if
otherwise required by (a) the Code or any rules promulgated thereunder (in
order to allow for incentive stock options to be granted hereunder or to
enable the Company to comply with the provisions of
A-7
<PAGE>
Section 162(m) of the Code so that the Company can deduct compensation in
excess of the limitation set forth therein), or (b) the listing requirements
of the principal securities exchange or market on which the Stock is then
traded (in order to maintain the listing or quotation of the Stock thereon).
Termination of this Plan shall not affect the rights of Participants with
respect to Awards previously granted to them, and all unexpired Awards shall
continue in force and effect after termination of this Plan except as they may
lapse or be terminated by their own terms and conditions.
12.2 Waiver of Conditions. The Committee may, in whole or in part, waive any
conditions or other restrictions with respect to any Award granted hereunder.
Section 13. Taxes. The Company shall be entitled to withhold the amount of
any tax attributable to any amount payable or shares of Stock deliverable
under this Plan after giving the person entitled to receive such amount or
shares of Stock notice as far in advance as practicable, and the Company may
defer making any such payment or delivery if any such tax may be pending
unless and until indemnified to its satisfaction. A Participant may elect to
pay all or a portion of the federal, state and local withholding taxes arising
in connection with (a) the exercise of a nonstatutory stock option; (b) a
disqualifying disposition of Stock received upon the exercise of an incentive
stock option; (c) the lapse of restrictions on Restricted Stock, by electing
to (i) have the Company withhold shares of Stock, (ii) tender back shares of
Stock received in connection with such benefit, or (iii) deliver other
previously owned shares of Stock, having a Fair Market Value equal to the
amount to be withheld; provided, however, that the amount to be withheld shall
not exceed the Participant's estimated total federal, state and local tax
obligations associated with the transaction. The written election must be made
on or before the date as of which the amount of tax to be withheld is
determined. The Fair Market Value of fractional shares of Stock remaining
after payment of the withholding taxes shall be paid to the Participant in
cash.
The Committee may, in its discretion, grant a cash bonus to a Participant
who holds Restricted Stock to enable the Participant to pay all or a portion
of the federal, state or local tax liability incurred by the Participant upon
the vesting of Restricted Stock. The Company shall deduct from any cash bonus
such amount as may be required for the purpose of satisfying the Company's
obligation to withhold federal, state or local taxes.
Section 14. Indemnification. Each person who is or shall have been a member
of the Committee or of the Board shall be indemnified and held harmless by the
Company against and from any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting
from any claim, action, suit or proceeding to which he may be a party or in
which he may be involved by reason of any action taken or failure to act under
this Plan and against and from any and all amounts paid by him in settlement
thereof, with the Company's approval, or paid by him in satisfaction of any
judgment in any such action, suit or proceeding against him, provided he shall
give the Company an opportunity, at its own expense, to handle and defend the
same before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights
of indemnification to which such persons may be entitled under the Company's
Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.
Section 15. Miscellaneous. Any Award may also be subject to other provisions
(whether or not applicable to any Award made to any other Participant) as the
Committee determines appropriate, including, without limitation, provisions
for: (a) restrictions on resale or other disposition of financed shares; and
(b) compliance with federal or state securities laws and stock exchange or
market requirements.
Section 16. Requirements of Law.
16.1 Requirements of Law. The granting of Awards and the issuance of shares
of Stock upon the exercise of any Option shall be subject to all applicable
laws, rules and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required.
16.2 Governing Law. This Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the internal laws of the State of
Wisconsin.
A-8
<PAGE>
[logo]
UNIVERSAL FOODS CORPORATION
433 East Michigan Street
Milwaukee, Wisconsin 53202
Notice of Annual Meeting
To be Held January 22, 1998
December 1997
Dear Fellow Shareholder:
You are invited to attend the Annual Meeting of Shareholders of Universal Foods
Corporation. The meeting will be held on Thursday, January 22, 1998, at 2:00
p.m. at the Italian Community Center, 631 East Chicago Street, Milwaukee,
Wisconsin. Directions to the meeting and a map are provided on the reverse side
of this letter.
We hope that you will be able to join us at the meeting to review the year and
take a look at what the future holds for our company. In addition, the business
to be transacted is the election of directors, approval of the 1998 Stock Option
Plan and ratification of the appointment of auditors.
Whether or not you plan to attend, it is important that you exercise your right
to vote as a shareholder. Please indicate your vote on the proxy card below,
sign and date the card, detach it from this letter and return it promptly to
Corporate Election Services, Inc., our independent proxy tabulator, in the
envelope provided. Be assured that your votes are completely confidential.
We look forward to seeing you at the meeting. On behalf of the management and
directors of Universal Foods Corporation, we want to thank you for your
continued support and confidence.
Sincerely,
/s/ Kenneth P. Manning
Kenneth P. Manning
Chairman, President and Chief Executive Officer
- --------------------------------------------------------------------------------
UNIVERSAL FOODS CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 22, 1998
The undersigned constitutes and appoints KENNETH P. MANNING, and TERRENCE
M. O'REILLY, and each of them, with full power of substitution, the true and
lawful proxies of the undersigned, to represent and vote, as designated below,
all shares of Common Stock of Universal Foods Corporation which the undersigned
is entitled to vote at the Annual Meeting of Shareholders of such corporation to
be held at the Italian Community Center, 631 East Chicago Street, Milwaukee,
Wisconsin, on Thursday, January 22, 1998, 2:00 p.m. Central standard Time, and
at any adjournment thereof:
1. Election of Directors [ ] FOR all nominees listed [ ] WITHHOLD authority
below (except as marked to vote for all
to the contrary below). nominees listed below.
Michael E. Batten, James A.D. Croft, Guy A. Osborn, Essie Whitelaw
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
-----------------------------------------------------------------------
2. Proposal to approve the Universal Foods Corporation 1998 Stock Option Plan.
[ ] For [ ] Against [ ] Abstain
3. Proposal to ratify the appointment of Deloitte & Touche LLP as the;
independent auditors of the corporation.
[ ] For [ ] Against [ ] Abstain
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES AND FOR ITEMS 2 AND 3.
Sincerely,
/s/ Kenneth P. Manning
Kenneth P. Manning
Chairman, President and Chief Executive Officer
<PAGE>
UNIVERSAL FOODS [AREA MAP OF SHAREHOLDERS MEETING & PARKING]
CORPORATION
ANNUAL MEETING
OF SHAREHOLDERS
JANUARY 22, 1998 Convenient Free Parking
AT 2:00 P.M.
PLEASE FOLD HERE BEFORE DETACHING PROXY CARD
- --------------------------------------------------------------------------------
SAVINGS PLAN -- 401(K)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED
"FOR" ALL NOMINEES LISTED IN ITEM 1 AND FOR ITEMS 2 AND 3.
The undersigned acknowledges receipt of the Notice
of said Annual Meeting and the accompanying Proxy
Statement and Annual Report.
Dated: _____________________________________, 199__
Signed ____________________________________________
____________________________________________
(Please print name)
NOTE: please sign exactly as your name appears on
your stock certificate. Joint owners should each
sign personally. A corporation should sign full
corporate name by duly authorized officers and
affix corporate seal. When signing as attorney,
executor, administrator, trustee or guardian, give
full title as such.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF UNIVERSAL FOODS CORPORATION
<PAGE>
[logo]
UNIVERSAL FOODS CORPORATION
433 East Michigan Street
Milwaukee, Wisconsin 53202
Notice of Annual Meeting
To be Held January 22, 1998
December 1997
Dear Fellow Shareholder:
You are invited to attend the Annual Meeting of Shareholders of Universal Foods
Corporation. The meeting will be held on Thursday, January 22, 1998, at 2:00
p.m. at the Italian Community Center, 631 East Chicago Street, Milwaukee,
Wisconsin. Directions to the meeting and a map are provided on the reverse side
of this letter.
We hope that you will be able to join us at the meeting to review the year and
take a look at what the future holds for our company. In addition, the business
to be transacted is the election of directors, approval of the 1998 Stock Option
Plan and ratification of the appointment of auditors.
Whether or not you plan to attend, it is important that you exercise your right
to vote as a shareholder. Please indicate your vote on the proxy card below,
sign and date the card, detach it from this letter and return it promptly to
Corporate Election Services, Inc., our independent proxy tabulator, in the
envelope provided. Be assured that your votes are completely confidential.
We look forward to seeing you at the meeting. On behalf of the management and
directors of Universal Foods Corporation, we want to thank you for your
continued support and confidence.
Sincerely,
/s/ Kenneth P. Manning
Kenneth P. Manning
Chairman, President and Chief Executive Officer
- --------------------------------------------------------------------------------
UNIVERSAL FOODS CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 22, 1998
The undersigned constitutes and appoints KENNETH P. MANNING, and TERRENCE
M. O'REILLY, and each of them, with full power of substitution, the true and
lawful proxies of the undersigned, to represent and vote, as designated below,
all shares of Common Stock of Universal Foods Corporation which the undersigned
is entitled to vote at the Annual Meeting of Shareholders of such corporation to
be held at the Italian Community Center, 631 East Chicago Street, Milwaukee,
Wisconsin, on Thursday, January 22, 1998, 2:00 p.m. Central Standard Time, and
at any adjournment thereof:
1. Election of Directors [ ] FOR all nominees listed [ ] WITHHOLD authority
below (except as marked to vote for all
to the contrary below). nominees listed below.
Michael E. Batten, James A.D. Croft, Guy A. Osborn, Essie Whitelaw
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
-----------------------------------------------------------------------
2. Proposal to approve the Universal Foods Corporation 1998 Stock Option Plan.
[ ] For [ ] Against [ ] Abstain
3. Proposal to ratify the appointment of Deloitte & Touche LLP as the;
independent auditors of the corporation.
[ ] For [ ] Against [ ] Abstain
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES AND FOR ITEMS 2 AND 3.
<PAGE>
UNIVERSAL FOODS [AREA MAP OF SHAREHOLDERS MEETING & PARKING]
CORPORATION
ANNUAL MEETING
OF SHAREHOLDERS
JANUARY 22, 1998 Convenient Free Parking
AT 2:00 P.M.
PLEASE FOLD HERE BEFORE DETACHING PROXY CARD
- --------------------------------------------------------------------------------
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED
"FOR" ALL NOMINEES LISTED IN ITEM 1 AND FOR ITEMS 2 AND 3.
The undersigned acknowledges receipt of the Notice
of said Annual Meeting and the accompanying Proxy
Statement and Annual Report.
Dated: _____________________________________, 199__
Signed ____________________________________________
____________________________________________
(Please print name)
NOTE: please sign exactly as your name appears on
your stock certificate. Joint owners should each
sign personally. A corporation should sign full
corporate name by duly authorized officers and
affix corporate seal. When signing as attorney,
executor, administrator, trustee or guardian, give
full title as such.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF UNIVERSAL FOODS CORPORATION
================================================================================
<PAGE>
[logo]
UNIVERSAL FOODS CORPORATION
433 East Michigan Street
Milwaukee, Wisconsin 53202
Notice of Annual Meeting
To be Held January 22, 1998
December 1997
Dear Fellow Shareholder:
You are invited to attend the Annual Meeting of Shareholders of Universal Foods
Corporation. The meeting will be held on Thursday, January 22, 1998, at
2:00 p.m. at the Italian Community Center, 631 East Chicago Street, Milwaukee,
Wisconsin. Directions to the meeting and a map are provided on the reverse side
of this letter.
We hope that you will be able to join us at the meeting to review the year and
take a look at what the future holds for our company. In addition, the business
to be transacted is the election of directors, approval of the 1998 Stock Option
Plan and ratification of the appointment of auditors.
Whether or not you plan to attend, it is important that you exercise your right
to vote as a shareholder. Please indicate your vote on the proxy card below,
sign and date the card, detach it from this letter and return it promptly to
Corporate Election Services, Inc., our independent proxy tabulator, in the
envelope provided. Be assured that your votes are completely confidential.
We look forward to seeing you at the meeting. On behalf of the management and
directors of Universal Foods Corporation, we want to thank you for your
continued support and confidence.
Sincerely,
/s/ Kenneth P. Manning
Kenneth P. Manning
Chairman, President and Chief Executive Officer
- --------------------------------------------------------------------------------
UNIVERSAL FOODS CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 22, 1998
The undersigned constitutes and appoints KENNETH P. MANNING, and TERRENCE
M. O'REILLY, and each of them, with full power of substitution, the true and
lawful proxies of the undersigned, to represent and vote, as designated below,
all shares of Common Stock of Universal Foods Corporation which the undersigned
is entitled to vote at the Annual Meeting of Shareholders of such corporation to
be held at the Italian Community Center, 631 East Chicago Street, Milwaukee,
Wisconsin, on Thursday, January 22, 1998, 2:00 p.m. Central Standard Time, and
at any adjournment thereof:
1. Election of Directors [ ] FOR all nominees listed [ ] WITHHOLD authority
below (except as marked to vote for all
to the contrary below). nominees listed below.
Michael E. Batten, James A.D. Croft, Guy A. Osborn, Essie Whitelaw
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
-----------------------------------------------------------------------
2. Proposal to approve the Universal Foods Corporation 1998 Stock Option Plan.
[ ] For [ ] Against [ ] Abstain
3. Proposal to ratify the appointment of Deloitte & Touche LLP as the;
independent auditors of the corporation.
[ ] For [ ] Against [ ] Abstain
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES AND FOR ITEMS 2 AND 3.
<PAGE>
UNIVERSAL FOODS [AREA MAP OF SHAREHOLDERS MEETING & PARKING]
CORPORATION
ANNUAL MEETING
OF SHAREHOLDERS
JANUARY 22, 1998 Convenient Free Parking
AT 2:00 P.M.
PLEASE FOLD HERE BEFORE DETACHING PROXY CARD
- --------------------------------------------------------------------------------
EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED
"FOR" ALL NOMINEES LISTED IN ITEM 1 AND FOR ITEMS 2 AND 3.
The undersigned acknowledges receipt of the Notice
of said Annual Meeting and the accompanying Proxy
Statement and Annual Report.
Dated: _____________________________________, 199__
Signed ____________________________________________
____________________________________________
(Please print name)
NOTE: please sign exactly as your name appears on
your stock certificate. Joint owners should each
sign personally. A corporation should sign full
corporate name by duly authorized officers and
affix corporate seal. When signing as attorney,
executor, administrator, trustee or guardian, give
full title as such.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF UNIVERSAL FOODS CORPORATION
