<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
KFC National Purchasing Cooperative, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
KFC NATIONAL PURCHASING COOPERATIVE, INC.
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
TO BE HELD MARCH 2, 2000
TO THE STOCKHOLDER MEMBERS:
The Annual Meeting (the "Annual Meeting") of the stockholders of KFC
National Purchasing Cooperative, Inc. (the "KFC Co-op") will be held on
Thursday, March 2, 2000 at 10:00 a.m. at the KFC Co-op's offices at 950
Breckenridge Lane, Louisville, Kentucky, for the purpose of considering and
acting upon:
1. ELECTION OF DIRECTORS. Election of one director by the holders of
each of the Series A, E, F and H Membership Common Stock and the
election of the Independent Director nominated by the KFC Co-op's Board
of Directors and elected by the holders of all shares of Membership
Common Stock.
2. OTHER BUSINESS. Such other matters and business as may properly be
brought before the meeting or any adjournment thereof.
Information regarding the matters to be acted upon at the Annual
Meeting is contained in the Proxy Statement accompanying this Notice.
Stockholders of record at the close of business on January 27, 2000 are entitled
to notice of and to vote at the Annual Meeting, and any adjournments thereof.
ALL STOCKHOLDER MEMBERS ARE ENTITLED TO VOTE IN THE ELECTION OF THE
INDEPENDENT DIRECTOR. IN ADDITION, HOLDERS OF SERIES A, E, F AND H MEMBERSHIP
COMMON STOCK ARE ENTITLED TO VOTE IN THE ELECTION OF THE DIRECTOR NOMINATED BY
THE HOLDERS OF THEIR RESPECTIVE SERIES OF MEMBERSHIP COMMON STOCK.
THE PRESENCE IN PERSON OR BY PROXY OF STOCKHOLDER MEMBERS REPRESENTING
A MAJORITY OF THE STOCKHOLDER MEMBERS ENTITLED TO VOTE AT THE ANNUAL MEETING IS
REQUIRED FOR THE CONDUCT OF THE ANNUAL MEETING. YOU ARE URGED TO SIGN, DATE AND
RETURN THE ENCLOSED FORM OF PROXY WHETHER OR NOT A DIRECTOR FOR YOUR SERIES IS
BEING ELECTED.
A PROMPT RESPONSE WILL BE APPRECIATED.
By Order of the Board of Directors.
Daniel E. Woodside
President and Chief Executive Officer
Louisville, Kentucky
January 28, 2000
<PAGE> 3
KFC NATIONAL PURCHASING COOPERATIVE, INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 2, 2000
Proxies are being solicited on behalf of the Board of Directors of the
KFC National Purchasing Cooperative, Inc. (the "KFC Co-op"), in connection with
the Annual Meeting of Stockholders (the "Annual Meeting") to be held at the KFC
Co-op's offices at 950 Breckenridge Lane, Louisville, Kentucky, on Thursday,
March 2, 2000, at 10:00 a.m., and at any adjournments thereof. As set forth in
the accompanying Notice, the purpose of the Annual Meeting is to consider the
election of certain directors and such other matters and business as may
properly be brought before the meeting. The Board of Directors does not know of
any such other matters to be brought before the meeting as of the date of this
proxy statement.
All properly executed proxies delivered pursuant to this solicitation
and not revoked will be voted at the Annual Meeting in accordance with the
directions given. Except in the election of Series A, E, F and H Directors, as
discussed below, each stockholder member has one vote per share of Membership
Common Stock on all matters coming before the meeting. With regard to the
election of directors, (a) each stockholder member is entitled to cast one vote
each to elect the Independent Director, and (b) only stockholders of each of
Series A, E, F and H Membership Common Stock are entitled to cast one vote each
to elect one member to the Board of Directors to represent their Series. Proxies
may be revoked at any time in writing or in person at the Annual Meeting or at
any adjournment thereof.
The persons named in the enclosed form of proxy or their substitutes
will not vote a proxy for any director nominee unless the stockholder member
appointing the proxy is eligible to vote for the nominee and designates the
stockholder's preference by checking one of the appropriate boxes on the form of
proxy.
The presence in person or by proxy of stockholders representing a
majority of the stockholder members entitled to vote at the Annual Meeting shall
constitute a quorum at the Annual Meeting. The affirmative vote of two-thirds of
the shares of Membership Common Stock present in person or by proxy at the
meeting is required to take any action at the Annual Meeting, other than the
election of directors. Abstentions are counted for purposes of determining the
presence or absence of a quorum for the transaction of business and in
tabulations of the votes cast on proposals presented to stockholders.
The mailing address of the principal executive offices of the KFC Co-op
is 950 Breckenridge Lane, Louisville, Kentucky 40207. The approximate date on
which this Proxy Statement and form of proxy are first being sent or given to
stockholders is January 28, 2000. Only those holders of Membership Common Stock
of record at the close of business on January 27, 2000 are entitled to notice of
and to vote at the Annual Meeting and any adjournment thereof. On January 27,
2000, there were 552 holders of Membership Common Stock.
- 2 -
<PAGE> 4
ELECTION OF DIRECTORS
At the Annual Meeting, the Independent Director and directors
representing the Series A, E, F and H Membership Common Stockholders will be
elected. The terms of the directors set forth below will expire at the meeting.
Vacancies also exist with respect to the Series M and N director positions, but
no persons have been nominated to fill these positions at the Annual Meeting;
these positions will be eliminated at the time the KFC Co-op no longer has any
Series M and N Membership Common Stock shares outstanding.
EXPIRED DIRECTORSHIPS
<TABLE>
<CAPTION>
Name Series Class Area or Holder
- ---- ------ ----- --------------
<S> <C> <C> <C>
James B. Royster A III Indiana, Michigan, Ohio and West
Virginia
David G. Neal E III Alabama, Florida, Georgia, Kentucky,
Louisiana, Mississippi, North Carolina,
South Carolina, Tennessee and Virginia
William E. Allen F III Illinois, Iowa, Minnesota, Nebraska,
North Dakota, South Dakota and Wisconsin
James D. Olson H III Harman Management Corporation
William R. Carden Independent III Independent
</TABLE>
NOMINEES
Each of Series A, E, F and H Membership Common Stock is entitled to
nominate and elect as a Series one member of the Board of Directors.
James B. Royster is the sole nominee to serve as the Series A Director.
Certain information with respect to Mr. Royster is provided below at
"Management."
Each of the following two stockholder members have been nominated to
serve as the Series E Director: David G. Neal and Richard L. Schleicher. Mr.
Neal, 53 years of age, currently operates 95 KFC stores. Mr. Neal has served as
the Series E Director of the KFC Co-op since 1991. Before 1991, Mr. Neal served
on the Board of Directors of the KFC Co-op as one of the two directors
representing the National Franchisee Advisory Council. Mr. Schleicher, 63 years
of age, currently owns and operates 55 KFC stores.
Each of the following two stockholder members have been nominated to
serve as the Series F Director: William E. Allen and Michael T. Kohlman. Mr.
Allen, 60 years of age, currently owns and operates six KFC stores. Mr. Allen
has served as the Series F Director of the KFC Co-op since 1988. Mr. Kohlman, 37
years of age, currently owns and operates four KFC stores.
- 3 -
<PAGE> 5
James D. Olson is the sole nominee to serve as the Series H Director.
Certain information with respect to Mr. Olson is provided below at "Management."
William R. Carden is the nominee of the Board of Directors to serve as
the Independent Director. Mr. Carden, 63 years of age, is the owner and
President of The Carden Group, a management and financial consulting company.
Each of the A, E, F and H Series Directors are elected by the
affirmative vote of a plurality of the shares of the respective Series entitled
to vote for the director voting in person or by proxy at the Annual Meeting. As
of the Record Date, there were 106 holders of Series A Membership Common Stock,
122 holders of Series E Membership Common Stock, 63 holders of Series F
Membership Common Stock, and one holder of Series H Membership Common Stock. The
Independent Director is elected by a plurality vote of all shares of Membership
Common Stock entitled to vote at the Annual Meeting; as of the Record Date there
were 552 holders of all Series of Membership Common Stock.
Each of the nominees described herein has agreed to serve if elected.
The terms of the Class III Directors elected at the Annual Meeting will expire
at the KFC Co-op's Annual Meeting for 2003, the terms of the Class I Directors
will expire at the KFC Co-op's Annual Meeting for 2001, and the terms of the
Class II Directors will expire at the KFC Co-op's Annual Meeting for 2002.
MANAGEMENT OF THE KFC CO-OP
WHO ARE THE MEMBERS OF THE KFC CO-OP BOARD OF DIRECTORS?
The KFC Co-op's Bylaws provide for a board of directors consisting of
up to 21 members, plus the Chief Executive Officer of the KFC Co-op who is a
non-voting ex-officio member of the board. The directors representing each
series are nominated by the stockholder members of each series. Each of Series
A - J and M is entitled to elect, as a series, one member of the Board of
Directors, and each of Series K and L is entitled to elect, as a series, two
members of the Board of Directors.
In addition, the Board of Directors nominates an independent director,
who is elected by a plurality vote of the outstanding shares of Membership
Common Stock at the annual meeting of members.
The affirmative vote of three-fifths of all voting members of the Board
of Directors is, except as otherwise specifically provided for in the Bylaws,
the act of the Board of Directors on any matter properly submitted to the Board
of Directors. The Chairman of the Board is elected at each annual meeting by the
affirmative vote of three-fifths of the entire board of directors.
- 4 -
<PAGE> 6
The following table lists, in addition to other information, the
current directors and executive officers of the KFC Co-op as of the date of this
proxy statement, their position with the KFC Co-op, and their present principal
occupations.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
POSITIONS
AND OFFICES YEAR FIRST STORE
CURRENTLY BECAME TERM AS PRESENT COMMON PERCENT OF
HELD WITH THE DIRECTOR OR DIRECTOR SERIES PRINCIPAL STOCK STORE STOCK
NAME AND ADDRESS AGE KFC CO-OP OFFICER EXPIRES REPRESENTED OCCUPATION OWNERSHIP OUTSTANDING
---------------- --- --------- ------- ------ ----------- ---------- --------- -----------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William E. Allen 60 Director, 1988 2000 F Operator 6 **
1624 Lloyd Lane Secretary
Cedar Falls, Iowa 50613
- ------------------------------------------------------------------------------------------------------------------------------------
Christian L. Campbell 49 Director 1999 2001 K Sr. Vice -- --
Tricon Global Restaurants, Inc. President,
P.O. Box 32070 Tricon Global
Louisville, Kentucky 40232 Restaurants,
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
William R. Carden 63 Director 1999 2000 Independent President, The -- --
4800 Lakewood, Suite 2 Carden Group
Waco, TX 76702-3222
- ------------------------------------------------------------------------------------------------------------------------------------
Robert C. Carle 43 Director 1998 2002 D Operator 7 **
6921 Brayton Drive, Suite 105
Anchorage, Alaska 99507
- ------------------------------------------------------------------------------------------------------------------------------------
James G. Cocolin 50 Director 1996 2002 C Operator 10 **
17 James Street
Kingston, Pennsylvania 18704
- ------------------------------------------------------------------------------------------------------------------------------------
Ben E. Edwards 57 Director 1998 ++ 2002 B Operator 10 **
West Texas Foods, Inc.
P.O. Box 64490
Lubbock, Texas 79464
- ------------------------------------------------------------------------------------------------------------------------------------
Lois G. Foust 55 Director 1997 2001 L Operator 2 **
4000 Chestnut Avenue
Long Beach, California 90807
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- 5 -
<PAGE> 7
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
POSITIONS
AND OFFICES YEAR FIRST STORE
CURRENTLY BECAME TERM AS PRESENT COMMON PERCENT OF
HELD WITH THE DIRECTOR OR DIRECTOR SERIES PRINCIPAL STOCK STORE STOCK
NAME AND ADDRESS AGE KFC CO-OP OFFICER EXPIRES REPRESENTED OCCUPATION OWNERSHIP OUTSTANDING
---------------- --- --------- ------- ------ ----------- ---------- --------- -----------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William B. Hecht 59 Non-Voting 1999 -- -- Operator 5 **
P. O. Box 1031 Director
St. Charles, MO 63302
- ------------------------------------------------------------------------------------------------------------------------------------
Edward J. Henriquez, Jr. 62 Director 1994 2002 J Operator 12 **
610 Valencia Avenue #503
Coral Gables, Florida 33134
- ------------------------------------------------------------------------------------------------------------------------------------
David G. Neal 53 Director, 1991 + 2000 E Operator 95 1.4
JRN, Inc. Chairman of
P.O. Box 1257 the Board
Columbia, Tennessee 38402
- ------------------------------------------------------------------------------------------------------------------------------------
James D. Olson 49 Director 1997 2000 H President, 266 4.0
Harman Management Corp. Harman
199 First Street, Suite 212 Management
Los Altos, California 94022 Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
Don Parkinson 56 Non-Voting 1999 -- -- Sr. Vice -- --
P. O. Box 32070 Director President,
Louisville, Kentucky 40232 KFC Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
Darlene Pfeiffer 62 Director 1997 2001 L Operator 4 **
P.O. Box 1185
Port Ewen, New York 12466
- ------------------------------------------------------------------------------------------------------------------------------------
Charles E. Rawley, III 49 Director 1999 2001 K President and -- --
Tricon Global Restaurants, Inc. Chief Operating
P.O. Box 32070 Officer, KFC
Louisville, Kentucky 40232 U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- 6 -
<PAGE> 8
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
POSITIONS
AND OFFICES YEAR FIRST STORE
CURRENTLY BECAME TERM AS PRESENT COMMON PERCENT OF
HELD WITH THE DIRECTOR OR DIRECTOR SERIES PRINCIPAL STOCK STORE STOCK
NAME AND ADDRESS AGE KFC CO-OP OFFICER EXPIRES REPRESENTED OCCUPATION OWNERSHIP OUTSTANDING
---------------- --- --------- ------- ------- ----------- ---------- --------- -----------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James B. Royster 61 Director, Vice 1998 ++ 2000 A Operator 5 **
1110 West Michigan Avenue Chairman
Jackson, Michigan 49202
- ------------------------------------------------------------------------------------------------------------------------------------
Dean M. Sorgdrager 37 Director 1996 2002 G Operator 1 **
6851 Beach Boulevard
Buena Park, California 90620
- ------------------------------------------------------------------------------------------------------------------------------------
Daniel E. Woodside 53 Director, 1999 -- -- President and -- --
Unified Foodservice Purchasing President, Chief Chief Executive
Co-op, LLC ("UFPC") Executive Officer Officer, UFPC
950 Breckinridge Lane
Louisville, Kentucky 40207
- ------------------------------------------------------------------------------------------------------------------------------------
William L. Bickley 47 Chief Financial 1999 -- -- Chief Financial -- --
UFPC Officer Officer, UFPC
950 Breckinridge Lane
Louisville, Kentucky 40207
- ------------------------------------------------------------------------------------------------------------------------------------
Alice LeBlanc 42 Vice President 1998 -- -- Vice President, -- --
UFPC UFPC
950 Breckinridge Lane
Louisville, Kentucky 40207
- ------------------------------------------------------------------------------------------------------------------------------------
All directors and officers as a group (19 persons) +++ 423 7.5%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
** Less than one-half of one percent.
+ Mr. Neal has previously served on the Board as one of the two
directors representing the National Franchisee Advisory Council, the
former holder of the Series L share of Membership Common Stock. He
first began serving on the Board as a representative of Series E in
February 1991.
++ Previously served as a director appointed by the National Franchisee
Advisory Council.
+++ Each director and nominee, other than Messrs. Woodside and Carden, is,
or is affiliated with a member which is, the owner of one share of
Membership Common Stock. All directors and officers as a group (19
persons) own 12 shares of Membership Common Stock, 2% percent of the
total number of Shares of Membership Common Stock outstanding. The
Store Common Stock ownership reflects the number of shares which each
director, other than Messrs. Woodside and Carden, beneficially owns.
Except as required by law, Store Common Stock has no voting rights.
Messrs. Woodside and Carden are neither the owners, nor affiliates of
the owners, of any Membership or Store Common Stock.
- 7 -
<PAGE> 9
HISTORY
During the last five years, Directors Allen, Carle, Cocolin, Edwards,
Foust, Hecht, Henriquez, Neal, Olson, Pfeiffer, Royster and Sorgdrager have been
principally engaged in business as Operators, and Mr. Carden has been the owner
and President of The Carden Group, a management and financial consulting
company.
Charles E. Rawley, III is President and Chief Operating Officer of KFC
U.S.A. Mr. Rawley joined KFC in 1985 as a Director of Operations. He served as
Vice President of Operations for the Southwest, West, Northeast, and
Mid-Atlantic Divisions from 1988 to 1994, when he became Senior Vice President,
Concept Development for KFC. Mr. Rawley assumed his position of Chief Operating
Officer in 1995 and President in 1998.
Christian L. Campbell is Senior Vice President, General Counsel and
Secretary of Tricon. He has served in this position since September 1997. From
1995 to September 1997, Mr. Campbell served as Senior Vice President, General
Counsel and Secretary of Owens Corning, a building products company. Before
joining Owens Corning, Mr. Campbell served as Vice President, General Counsel
and Secretary of Nalco Chemical Company in Naperville, Illinois, from 1990
through 1994.
Since March 1, 1999, Daniel E. Woodside has served as the President and
Chief Executive Officer of the KFC Co-op and UFPC. From September 1997 through
February 1999, Mr. Woodside served as Chief Operating Officer of UniPro
Foodservice, Inc. UniPro was formed by the merger of EMCO Food Service Systems,
Inc. and ComSource Independent Food Distribution in September 1997. Mr. Woodside
served as President of EMCO from 1991 to September 1997. Before his service with
EMCO, Mr. Woodside served in various positions with General Foods Corporation
for 21 years.
William L. Bickley is Vice President and Chief Financial Officer of the
KFC Co-op. He is also Sr. Vice President and Chief Financial Officer of UFPC.
Before joining the KFC Co-op and UFPC in March 1999, Mr. Bickley had served
PepsiCo, Inc./Tricon Global Restaurants, Inc. Since 1983, his positions with
PepsiCo/Tricon included Vice President, Acquisitions and Divestitures - Kentucky
Fried Chicken (1996 - 1999); Vice President, North American
SmartSourcing-PepsiCo Restaurant Services (1995 - 1996); and Senior Director,
Business Planning - Kentucky Fried Chicken (1992 - 1995).
Alice LeBlanc is Vice President of the KFC Co-op and Vice President -
KFC Operations for UFPC. Ms. LeBlanc previously served as the KFC Co-op's Vice
President and General Manager - KFC Domestic & Canada and Vice President and
General Manager of Canadian Operations. From 1992 to 1996, Ms. LeBlanc was the
Director of Purchasing for Cara Operations Limited. From 1985 to 1992, she was
Director of Purchasing and Technical Services for PepsiCo Food Service
International.
- 8 -
<PAGE> 10
STANDING COMMITTEES
The Board of Directors of the KFC Co-op had three regular meetings in
fiscal 1999 and three special meetings. The Board of Directors currently has
three standing committees: Executive, Audit and Budget, and Purchasing and
Distribution.
The Executive Committee is currently comprised of Messrs. Cocolin,
Edwards, Neal, Rawley, and Royster and Ms. Pfeiffer, and, as a non-voting
member, Mr. Woodside. The Executive Committee, between the meetings of the Board
and while the Board is not in session, has all the powers and may exercise all
the duties of the Board of Directors in the management of the business of the
KFC Co-op which may lawfully be delegated to it by the Board.
The Audit and Budget Committee is currently comprised of Messrs.
Campbell, Carden, Cocolin, Neal, Rawley and Sorgdrager and Ms. Pfeiffer, and, as
non-voting members, Messrs. Hecht, Woodside and Bickley and Ms. LeBlanc, and met
three times during fiscal 1999. The Audit and Budget Committee meets
periodically with management and representatives of the KFC Co-op's independent
accountants. The independent accountants have free access to the Committee and
the Board of Directors. The Committee considers the scope, timing and fees for
the annual audit and the results of audit examinations performed by the
independent public accountants, including certain recommendations to improve the
KFC Co-op's systems of accounting and internal controls, and the follow-up
reports prepared by management of the KFC Co-op pursuant to such
recommendations. The Committee reviews the KFC Co-op's annual budget before its
consideration by the Board of Directors.
The Purchasing and Distribution Committee is currently comprised of
Messrs. Allen, Carle, Edwards, Henriquez and Royster and Ms. Faust, and, as
non-voting members, Messrs. Woodside and Bickley and Ms. LeBlanc. The
responsibilities of the Purchasing and Distribution Committee include: reviewing
strategic and centralized purchasing policies for the KFC Concept; monitoring
and making recommendations to the Board of Directors with respect to distributor
monitoring, the supplier and approval process, KFC Corporation's requests for
reimbursement and fees related to quality assurance, research and development
and marketing, and other purchasing activities; developing effective
communications with KFC purchasing program customers; and developing a strategic
plan for distribution throughout the KFC system.
The Board of Directors does not currently have a Nominating Committee.
The Board of Directors considers the nomination of the Independent Director.
Members of the KFC Co-op nominate their own candidates for director to represent
their respective Series of Membership Common Stock.
- 9 -
<PAGE> 11
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the
"1934 Act") requires the KFC Co-op's directors, executive officers and certain
persons to file initial reports of ownership and reports of changes in ownership
with the Securities and Exchange Commission (the "SEC"). Based solely upon a
review of forms filed by the appropriate persons and written representations
from such persons, the KFC Co-op believes that all such filing requirements were
complied with in fiscal 1999.
EXECUTIVE COMPENSATION
The following table shows all cash compensation paid by the KFC Co-op
to its Chief Executive Officer for the years ended October 31, 1999, 1998, and
1997 (1).
<TABLE>
<CAPTION>
Summary of Annual Compensation
------------------------------
Fiscal All Other
Name and Principal Position Year Salary Bonus Compensation
- --------------------------- ---- ------ ----- ------------
<S> <C> <C> <C> <C>
Thomas D. Henrion 1999 $ 98,873 $ - 0 - $ - 0 -
President and Chief 1998 212,127 90,640 16,200
Executive Officer 1997 208,460 49,940 20,583
Daniel E. Woodside
President and Chief
Executive Officer 1999 $ - 0 - $ - 0 - $ - 0 -
</TABLE>
(1) As of March 1, 1999, Daniel E. Woodside became President and Chief
Executive Officer. Mr. Woodside receives no compensation directly from
the KFC Co-op. See Transactions with Stockholders, Directors and
Officers.
COMPENSATION OF DIRECTORS
No director, other than the Independent Director, receives any
remuneration from the KFC Co-op other than reimbursement for long distance
travel, hotel accommodations, and $400 per board meeting for out-of-pocket
expenses. The Independent Director receives an annual fee of $10,000, plus fees
of $1,000 per board meeting attended.
REPORT OF BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
Following the KFC Co-op's corporate reorganization on March 1, 1999,
the Board of Directors eliminated its Personnel Committee. Following the
corporate reorganization, the KFC Co-op did not pay any compensation to any of
its executive officers and has no other employees. For a discussion concerning
the compensation expenses allocated to the KFC Co-op by the
- 10 -
<PAGE> 12
Unified Food Purchasing Co-op, LLC, see Transactions with Stockholders,
Directors and Officers below.
Board of Directors
William E. Allen David G. Neal
Christian L. Campbell James D. Olson
William R. Carden Don Parkinson
Robert C. Carle Darlene Pfeiffer
James G. Cocolin Charles E. Rawley, III
Ben E. Edwards James B. Royster
Lois G. Foust Dean M. Sorgdrager
William B. Hecht Daniel E. Woodside
Edward J. Henriquez, Jr.
PERFORMANCE GRAPH
Under rules adopted by the Securities and Exchange Commission, each
corporation with securities registered under the Securities Exchange Act of 1934
is required to provide in its proxy statement a line graph comparing, for the
previous five years, the cumulative total return on its common stock with the
cumulative total return of a broad equity market index and an industry index or
peer group. The KFC Co-op cannot provide this graph because there is no
meaningful information with respect to cumulative return on any class of the KFC
Co-op's capital stock. The KFC Co-op's stockholder members purchase Membership
Common Stock and Store Common Stock to participate in the KFC Co-op's member
programs, including the patronage dividend program, and to participate in the
KFC Co-op's management through the election of directors. The stockholder
members do not purchase the KFC Co-op's capital stock with any expectation of
return on their investment through stock appreciation or per share dividends.
The KFC Co-op's Membership Common Stock and Store Common Stock are issued only
to Operators. No class of the KFC Co-op's capital stock is listed on an exchange
or traded in any other public trading market. Since July 1, 1983, the KFC Co-op
from time to time has offered shares of its Membership Common Stock at a per
share price of $10 and shares of its Store Common Stock at a per share price of
$400.
TRANSACTIONS WITH STOCKHOLDERS, DIRECTORS AND OFFICERS
All present voting members of the Board of Directors and nominees for
the Board, except the Independent Director, are Operators or represent Operators
and have purchased or may purchase equipment and supplies from the KFC Co-op or
UFPC or from distributors who purchase from the KFC Co-op or UFPC. All purchases
by directors and nominees or their affiliates from the KFC Co-op or UFPC are
made on the same terms and conditions as purchases by any other Operator.
Several Operators are also in the business of purchasing equipment and supplies
for sale and distribution to other Operators and may purchase such equipment and
supplies from the KFC Co-op or UFPC.
The UFPC and the KFC Co-op entered into a Purchasing Program Management
- 11 -
<PAGE> 13
Agreement on March 1, 1999 which sets forth the terms pursuant to which UFPC
administers the KFC Co-op's purchasing programs. The initial term of this
Management Agreement extends through December 31, 2003 and may be terminated
then or on any December 31 thereafter upon one year's notice of termination. In
general, the management services provided by UFPC include: (i) negotiating the
lowest possible sustainable prices for goods and equipment from suppliers
approved by Tricon for sale through UFPC or directly by the supplier to
Tricon-approved distributors selected by the KFC Co-op and the outlet operators;
(ii) assisting the KFC Co-op and outlet operators in negotiating and monitoring
freight and distribution arrangements; (iii) administering related insurance and
other service programs; and (iv) negotiating arrangements such as master
beverage agreements and regional poultry contracts.
In exchange for administering these services, UFPC may retain 10% of
the net income generated by the KFC Co-op purchasing program. UFPC distributes
the remaining net income to the KFC Co-op on a quarterly and annual basis.
However, the KFC Co-op is required to reimburse UFPC for any net losses. In
determining the net income attributable to the KFC Co-op, the UFPC allocates a
portion of the compensation expenses of its officers, including Messrs. Woodside
and Bickley and Ms. LeBlanc, to each of the UFPC's member cooperatives. In
fiscal 1999, the UFPC allocated to the KFC Coop $209,611, $82,401 and $162,240
with respect to these officers respectively. In addition, as part of the KFC's
Co-op's corporate reorganization in March 1999, Mr. Henrion, the KFC Co-op, and
UFPC executed a Separation and Consulting Agreement. The Separation and
Consulting Agreement provided for Mr. Henrion to resign his employment on March
1, 1999 and, thereafter, to provide consulting services to UFPC and KFC Co-op
for two years. Mr. Henrion also agreed to non-compete provisions whereby, for
two years following the date of the Separation and Consulting Agreement, Mr.
Henrion will not work for companies that are specifically listed in the
Separation and Consulting Agreement. Under the Separation and Consulting
Agreement, Mr. Henrion was paid by UFPC $500,000 on March 1, 1999 and was paid
$456,300 on the first business day of January 2000 along with health insurance
coverage for 10 years.
STOCKHOLDER PROPOSALS FOR THE ANNUAL MEETING
Proposals of stockholders intended to be presented at the 2001 Annual
Meeting of Stockholders must be received by the KFC Co-op on or before November
2, 2000 to be eligible for inclusion in the KFC Co-op's proxy statement and
proxy relating to that meeting.
OTHER INFORMATION
The officers and directors of the KFC Co-op do not know of any matters
to be presented at the meeting and submitted to a vote of the Stockholder
Members other than those specified above. If any other matter should come before
the meeting, it is intended that the persons named in the enclosed form of
proxy, or their substitutes, will vote the proxy in accordance with their
discretion on such matters. All expenses incurred in connection with the
solicitation of proxies will be borne by the KFC Co-op. Solicitation may be
undertaken by mail, telephone and personal contact by Directors, officers and
employees of the KFC Co-op without additional compensation.
- 12 -
<PAGE> 14
Upon recommendation of the KFC Co-op's Audit Committee, the Board
dismissed KPMG Peat Marwick LLP, now KPMG LLP ("KPMG") as its principal
accountants on May 18, 1998. KPMG's report on the KFC Co-op's financial
statements for the past fiscal year did not contain any adverse opinion or
disclaimer of opinion, and was not qualified or modified as to uncertainty,
audit scope, or accounting principles. Furthermore, during the KFC Co-op's two
most recent fiscal years and through the date of dismissal, there were no
disagreements with KPMG on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure.
Upon recommendation of the KFC Co-op's Audit Committee, on May 18,
1998, the Board engaged PricewaterhouseCoopers LLP as its principal accountants
to audit the KFC Co-op's financial statements. A representative of neither KPMG
nor PricewaterhouseCoopers LLP will be present at the Annual Meeting.
"KFC" is a registered trademark of KFC Corporation and is used in these
materials for identification purposes only. The KFC Co-op is an independent
provider of products and is not affiliated with KFC Corporation, except that KFC
Management is a stockholder member of the KFC Co-op.
Louisville, Kentucky
January 28, 2000
- 13 -
<PAGE> 15
KFC NATIONAL PURCHASING COOPERATIVE, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 2, 2000
PLEASE MARK, SIGN, DATE AND RETURN IMMEDIATELY
WHETHER OR NOT A DIRECTOR FOR YOUR PARTICULAR SERIES IS BEING ELECTED.
I, the undersigned Stockholder Member of KFC National Purchasing
Cooperative, Inc. (the "Cooperative") do hereby appoint James B. Royster, Daniel
E. Woodside and Alice LeBlanc my true and lawful attorney(s), with full power of
substitution, for me and in my name, place and stead to vote all of the
Membership Common Stock of the Cooperative standing in my name on its books and
which I am entitled to vote at the annual meeting of its stockholder members to
be held at 10:00 a.m. on March 2, 2000, at the Cooperative's offices at 950
Breckenridge Lane, Louisville, Kentucky, and at any adjournment thereof, with
all the powers the undersigned would possess if personally present, as follows:
1. ELECTION OF DIRECTORS BY ALL MEMBERS.
ALL HOLDERS OF MEMBERSHIP COMMON STOCK MAY VOTE IN ITEM 1 to elect the
following indicated nominee as a member of the Cooperative's Board of Directors
to serve as the Independent Director.
SERIES NAME FOR
------ ---- ---
Independent William R. Carden [ ]
2. ELECTION OF SERIES DIRECTORS BY SERIES MEMBERS ONLY.
DO NOT VOTE IN ITEM 2 UNLESS YOU HOLD SERIES A, E, F OR H MEMBERSHIP
COMMON STOCK. CHECK ONE BOX ONLY--VOTE ONLY FOR A NOMINEE OF YOUR SERIES IN ITEM
2. YOUR SERIES IS INDICATED ON THE LABEL ON THE BACK OF THIS FORM. To elect the
following indicated nominee as a member of the Cooperative's Board of Directors
to represent his respective Series of Membership Common Stock.
SERIES NAME FOR
------ ---- ---
A James B. Royster [ ]
- --------------------------------------------------------------------------------
E David G. Neal [ ]
E Richard L. Schleicher [ ]
- --------------------------------------------------------------------------------
F William E. Allen [ ]
F Michael T. Kohlman [ ]
- --------------------------------------------------------------------------------
H James D. Olson [ ]
<PAGE> 16
3. OTHER BUSINESS
To transact all other matters and business which may properly come
before the meeting.
Information regarding the matters to be acted upon at the Annual
Meeting is contained in the Proxy Statement accompanying this Proxy. This Proxy
will be voted as specified. If no instruction is indicated on a properly
executed and dated proxy form, then the above-named proxy or any of his
substitutes, will vote the share represented IN ACCORDANCE WITH THEIR DISCRETION
on any matters or business, other than the election of directors, that may
properly come before the meeting. (The above-named proxy will not vote for any
director nominees named above to represent a Series unless a nominee has been
specified.) THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
IN WITNESS WHEREOF, I have signed my name on __________________, 2000.
- -------------------------------- ----------------------------
SERIES OF MEMBERSHIP COMMON (SIGNATURE OF STOCKHOLDER)
STOCK HELD BY STOCKHOLDER)
----------------------------
(PRINTED NAME)
Please sign exactly as your name appears in the address on this form of
proxy. When shares are held by joint tenants, both should sign. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
TO CONDUCT THE ANNUAL MEETING, WE MUST HAVE THE PRESENCE IN PERSON OR
BY PROXY OF STOCKHOLDER MEMBERS REPRESENTING A MAJORITY OF ALL STOCKHOLDER
MEMBERS AS OF THE RECORD DATE. THEREFORE, YOU ARE URGED TO SIGN, DATE AND RETURN
THE PROXY CARD WHETHER OR NOT A DIRECTOR FOR YOUR PARTICULAR SERIES IS BEING
ELECTED.
PLEASE MAIL IN STAMPED ENVELOPE PROVIDED TO: JAMES A. GIESEL, BROWN,
TODD & HEYBURN PLLC, 400 WEST MARKET STREET, 32ND FLOOR, LOUISVILLE,
KENTUCKY 40202.
A PROMPT RESPONSE WILL BE APPRECIATED.
