<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
Coca-Cola Bottling Co. Consolidated
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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:
4) Date Filed:
<PAGE>
COCA-COLA BOTTLING CO. CONSOLIDATED
1900 REXFORD ROAD
CHARLOTTE, NORTH CAROLINA 28211
(704) 551-4400
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on
May 14, 1997
TO THE SHAREHOLDERS OF
COCA-COLA BOTTLING CO. CONSOLIDATED:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Coca-Cola
Bottling Co. Consolidated, a Delaware corporation (the "Company"), will be held
at the Snyder Production Center, 4901 Chesapeake Drive, Charlotte, North
Carolina 28216 on Wednesday, May 14, 1997, at 10:00 a.m., Eastern Daylight Time,
for the purpose of considering and acting upon the following:
1. Fixing the number of directors at ten;
2. Electing three directors, each for a term of three years or until his
successor shall be elected and shall qualify;
3. Approving the performance goals under the Company's Annual Bonus Plan in
order to permit bonuses paid thereunder to qualify as
"performance-based" compensation within the meaning of Section 162(m) of
the Internal Revenue Code of 1986, as amended; and
4. Such other business as may properly come before the Annual Meeting of
Shareholders, or any adjournment or adjournments thereof.
Only shareholders of record of the Company's common stock (including both
Common Stock and Class B Common Stock) at the close of business on March 27,
1997, are entitled to notice of, and to vote at, the meeting or any adjournment
thereof. A list of shareholders will be available for inspection at least ten
days prior to the meeting at the principal executive offices of the Company,
1900 Rexford Road, Charlotte, North Carolina 28211.
By Order of the Board of Directors.
John F. Henry, Jr.
SECRETARY
Date: April 11, 1997
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS OF
COCA-COLA BOTTLING CO. CONSOLIDATED
TO BE HELD ON MAY 14, 1997
INTRODUCTION
This Proxy Statement is being furnished by the Board of Directors of
Coca-Cola Bottling Co. Consolidated, a Delaware corporation (the "Company"), in
connection with the solicitation of proxies by the Company for use at the Annual
Meeting of Shareholders to be held at the Snyder Production Center, 4901
Chesapeake Drive, Charlotte, North Carolina 28216 on Wednesday, May 14, 1997, at
10:00 a.m., Eastern Daylight Time, and at any adjournment or adjournments
thereof (the "Annual Meeting"). It is contemplated that the Proxy Statement and
accompanying form of proxy will be mailed to shareholders of the Company on or
about April 11, 1997. The principal executive offices of the Company are located
at 1900 Rexford Road, Charlotte, North Carolina 28211, telephone (704) 551-4400.
At the Annual Meeting, holders of the Company's Common Stock, par value
$1.00 per share ("Common Stock"), and of the Company's Class B Common Stock, par
value $1.00 per share ("Class B Common Stock"), will be asked to fix the number
of directors at ten and to elect three directors, each for a term of three
years.
The Board of Directors recommends that the Company's shareholders vote FOR
fixing the number of directors at ten, FOR electing the three nominees for
director and FOR approving the performance goals under the Company's Annual
Bonus Plan.
RECORD DATE, VOTE REQUIRED, AND RELATED MATTERS
The Board of Directors has fixed the close of business on March 27, 1997,
as the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting. As of the close of business on March 10,
1997, the Company had issued and outstanding 7,044,985 shares of Common Stock
(which number excludes 3,062,374 shares held in the Company's treasury) entitled
to one vote per share on all matters brought before the Annual Meeting and
1,319,862 shares of Class B Common Stock (which number excludes 628,114 shares
held in the Company's treasury) entitled to twenty votes per share on all
matters brought before the Annual Meeting (7,044,985 votes for the Common Stock
and 26,397,240 votes for the Class B Common Stock, for an aggregate of
33,442,225 votes). Each shareholder may exercise his right to vote either in
person or by properly executed proxy. Cumulative voting is not permitted. The
Common Stock and Class B Common Stock will vote as a single class on each of the
specific matters to be presented at the Annual Meeting which are discussed
herein.
Shares represented at the Annual Meeting by properly executed proxies will
be voted in accordance with the instructions indicated in the proxies unless
such proxies have previously been revoked.
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<PAGE>
If no instructions are indicated, such shares will be voted: (i) FOR fixing
the number of directors at ten, (ii) FOR electing the Board of Directors' three
nominees for director as set forth in this Proxy Statement and (iii) FOR
approving the performance goals under the Company's Annual Bonus Plan.
Any proxy given pursuant to this solicitation may be revoked at any time by
the shareholder giving it, insofar as it has not been exercised, by delivering
to the Secretary of the Company a written notice of revocation bearing a later
date than the proxy or by submission of a later-dated, properly executed proxy.
Attendance at the Annual Meeting will not, in and of itself, constitute a
revocation of a proxy. Any written notice revoking a proxy should be sent to
Coca-Cola Bottling Co. Consolidated, Post Office Box 31487, Charlotte, North
Carolina 28231, Attention: John F. Henry, Jr., Secretary.
The persons designated as proxies in the accompanying form of proxy have
been selected by the Board of Directors and are John M. Belk, David L. Kennedy,
Jr. and Reid M. Henson, directors of the Company. The cost of solicitation of
proxies will be borne by the Company.
The presence, in person or by proxy, of the holders of a majority of the
votes eligible to be cast by the holders of the outstanding shares of Common
Stock and Class B Common Stock entitled to vote (16,721,113 votes) is necessary
to constitute a quorum at the Annual Meeting. The affirmative vote of a majority
of the total votes represented at the Annual Meeting, in person or by proxy, by
holders of outstanding shares of Common Stock and Class B Common Stock is
required to fix the number of directors at ten and to approve the performance
goals under the Company's Annual Bonus Plan, and a plurality of the vote is
necessary to elect the Board of Directors' nominees. Abstentions and broker
non-votes shall not be considered affirmative votes, and will have no effect
upon the election of directors by a plurality vote. With respect to fixing the
number of directors at ten and approving the performance goals under the
Company's Annual Bonus Plan, an abstention will have the same effect as a "NO"
vote and broker non-votes will have no effect.
The Board of Directors has been informed that J. Frank Harrison, Jr., J.
Frank Harrison, III and Reid M. Henson intend to vote an aggregate of 3,008,522
shares of the Company's Common Stock and 1,317,942 shares of the Company's Class
B Common Stock (representing an aggregate of 29,367,362 votes) FOR fixing the
number of directors at ten, FOR electing the Board of Directors' nominees for
director and FOR approving the performance goals under the Company's Annual
Bonus Plan. Such number of shares includes the 2,213,007 shares of Common Stock
and the 269,158 shares of Class B Common Stock owned by The Coca-Cola Company,
which are voted by J. Frank Harrison, III pursuant to the terms of a Voting
Agreement between The Coca-Cola Company and Messrs. Harrison, Jr., Harrison, III
and Henson (in Mr. Henson's capacity as co-trustee of certain trusts holding
shares of Class B Common Stock). See "Principal Shareholders" and "Certain
Transactions." Accordingly, it is anticipated that the number of directors will
be fixed at ten, the Board of Directors' nominees for director will be elected
and the performance goals under the Company's Annual Bonus Plan will be
approved.
The Board of Directors of the Company is not aware of any other matter to
be brought before the Annual Meeting. If, however, other matters are properly
presented, proxies received in response to this solicitation representing shares
of Common Stock and Class B Common Stock will be cast in accordance with the
best judgment of the proxyholders on such other matters.
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<PAGE>
A copy of the Company's Annual Report for the fiscal year ended December
29, 1996, is enclosed herewith.
PRINCIPAL SHAREHOLDERS
The following table sets forth information as to the shares of Common Stock
and Class B Common Stock, the only classes of voting securities of the Company
with shares outstanding, beneficially owned as of March 10, 1997 (except as
otherwise noted), by each person known to the Company to be the beneficial owner
of more than 5% of the outstanding Common Stock or Class B Common Stock. As of
such date, the Company had issued and outstanding 7,044,985 shares of Common
Stock and 1,319,862 shares of Class B Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT PERCENT
TITLE BENEFICIAL OF AGGREGATE OF TOTAL
NAME OF CLASS OWNERSHIP (1) CLASS (2) VOTE VOTE (2)
<S> <C> <C> <C> <C> <C>
J. Frank Harrison, Jr., Common Stock 4,797,250(3)(4) 55.8
J. Frank Harrison, III Class B Common Stock 1,317,942(3)(4)(5) 99.9 29,603,148 88.5
and Reid M. Henson,
as a Group
2 Union Square
Chattanooga, TN 37402
The Coca-Cola Company Common Stock 2,213,007(6) 31.4
One Coca-Cola Plaza Class B Common Stock 269,158(6) 20.4 7,596,167 22.7
Atlanta, GA 30313
Tweedy, Browne Common Stock 560,915(7) 8.0 560,915 1.7
Company, L.P.
TBK Partners, L.P.
Vanderbilt Partners, L.P.
52 Vanderbilt Avenue
New York, NY 10017
</TABLE>
(1) In general, a person is deemed to be a beneficial owner of a security
if that person has or shares voting power, which includes the power to
vote or direct the voting of such security, or investment power, which
includes the power to dispose of, or to direct the disposition of, such
security; or if a person has the right to acquire either voting power
or investment power over such security through the exercise of an
option or conversion of another security within 60 days. More than one
person may be a beneficial owner of the same securities, and a person
may be deemed to be a beneficial owner of securities as to which he has
no personal economic interest or which he may not vote.
(2) The percentages shown are based upon the number of shares outstanding
(net of shares held in treasury). In the case of J. Frank Harrison,
Jr., J. Frank Harrison, III and Reid M. Henson, in which beneficial
ownership includes (i) shares of Common Stock that would result from a
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<PAGE>
conversion of Class B Common Stock into such shares or (ii) shares of
Common Stock which Messrs. Harrison, Jr. and Harrison, III presently
have the right to acquire through exercise of options, the percentages
of class shown give effect to such conversion and to the exercise of
such options. In calculating the aggregate vote and percent of total
vote, however, no effect is given to conversion of Class B Common Stock
into Common Stock or to the exercise of such unexercised options. In
the case of The Coca-Cola Company, beneficial ownership shown in the
table does not include shares of Common Stock that would result from a
conversion of Class B Common Stock into such shares.
(3) The amounts shown include (a) as to Common Stock: (i) 792,796 shares
owned outright by J. Frank Harrison, Jr. as to which he has sole voting
and investment power; (ii) 235,786 shares held by a trust for the
benefit of certain relatives of Mr. Harrison, Jr. as to which he has
sole voting power and no investment power; (iii) 2,213,007 shares held
by The Coca-Cola Company subject to the terms of the Voting Agreement
and Irrevocable Proxy (described elsewhere) as to which J. Frank
Harrison, III has sole voting and no investment power; (iv) 719 shares
held by Mr. Harrison, III as custodian for certain of his children
under the North Carolina Uniform Gifts to Minors Act, as to which Mr.
Harrison, III possesses sole voting and investment power; (v) 2,000
shares owned outright by Reid M. Henson; (vi) 1,317,942 shares of Class
B Common Stock, convertible into Common Stock on a one for one basis at
the option of the holder of such shares, and which are beneficially
owned by Messrs. Harrison, Jr., Harrison, III and Henson as described
in subsection (b) of this Note (3); and (vii) 100,000 shares of Common
Stock which Mr. Harrison, Jr. presently has the right to acquire
through exercise of options and 135,000 shares of Common Stock which
Mr. Harrison, III presently has the right to acquire through exercise
of options; and (b) as to Class B Common Stock: (i) 712,796 shares
owned outright by Mr. Harrison, Jr. as to which he has sole voting and
investment power; (ii) 235,786 shares held by a trust for the benefit
of Mr. Harrison, Jr. and certain of his relatives as to which Mr.
Harrison, III and Mr. Henson share investment power as co-trustees and
as to which Mr. Harrison, Jr. possesses sole voting power; (iii) 260
shares held by Mr. Harrison, III as custodian for certain of his
children under the North Carolina Uniform Gifts to Minors Act, as to
which Mr. Harrison, III possesses sole voting and investment power;
(iv) 99,942 shares held by certain trusts as to which Mr. Harrison, III
and Mr. Henson share investment power as co-trustees and as to which
Mr. Harrison, Jr. possesses sole voting power; and (v) 269,158 shares
held by The Coca-Cola Company subject to the terms of the Voting
Agreement and Irrevocable Proxy (described elsewhere) as to which Mr.
Harrison, III has sole voting and no investment power.
(4) J. Frank Harrison, Jr., J. Frank Harrison, III and Reid M. Henson (as
trustee of certain trusts holding shares of Class B Common Stock) are
parties to a Voting Agreement and a Shareholder's Agreement entered
into with The Coca-Cola Company. Pursuant to the Voting Agreement, Mr.
Harrison, III has been granted an Irrevocable Proxy for life and,
thereafter, to Mr. Harrison, Jr., covering the shares of Common Stock
and Class B Common Stock held by The Coca-Cola Company. Accordingly,
Messrs. Harrison, Jr., Harrison, III and Henson may be deemed to be a
group as such term is defined in certain regulations of the Securities
and
4
<PAGE>
Exchange Commission. Information concerning the Voting Agreement,
Shareholder's Agreement and Irrevocable Proxy is disclosed hereinafter
under the heading "Certain Transactions."
(5) A trust of which J. Frank Harrison, Jr. is a beneficiary and J. Frank
Harrison, III and Reid M. Henson are co-trustees has the right to
acquire 292,396 shares of Class B Common Stock from the Company in
exchange for an equal number of shares of Common Stock. Mr. Harrison,
Jr. would have sole voting power, and Messrs. Harrison, III and Henson
would have shared investment power upon such acquisition. The trust
does not own any shares of Common Stock with which to make such
exchange and, accordingly, the number of shares shown does not include
such shares.
(6) The information presented is derived from a report on Schedule 13D
dated May 18, 1987, as amended through Amendment Number 16 thereto
dated February 20, 1997, filed by The Coca-Cola Company as to its
beneficial ownership of Common Stock and Class B Common Stock of the
Company. The Coca-Cola Company has granted the power to vote all
2,213,007 shares of Common Stock and 269,158 shares of Class B Common
Stock it beneficially owns to J. Frank Harrison, III for life and,
thereafter, to J. Frank Harrison, Jr., pursuant to a Voting Agreement
and Irrevocable Proxy described elsewhere herein under the heading
"Certain Transactions."
(7) The information presented is derived from a report on Schedule 13D
dated March 31, 1995, as amended through Amendment Number 3 thereto
dated April 4, 1997, filed by Tweedy, Browne Company, L.P. ("TBC"), TBK
Partners, L.P. ("TBK") and Vanderbilt Partners, L.P. ("Vanderbilt")
with respect to their aggregate beneficial ownership of shares of
Common Stock of the Company. TBC is a registered broker-dealer and
investment adviser and each of TBK and Vanderbilt is a private
investment partnership. The four general partners of TBC are also
general partners of TBK and Vanderbilt. They report beneficial
ownership as follows: (i) TBC has shared investment power with respect
to 524,020 shares of Common Stock held in discretionary accounts of
various TBC customers and has sole voting power with respect to 467,318
of such shares; (ii) TBK has sole voting and investment power with
respect to 25,300 shares of Common Stock; and (iii) Vanderbilt has sole
voting and investment power with respect to 11,595 shares of Common
Stock.
PROPOSALS 1 AND 2
ELECTION OF DIRECTORS
GENERAL
The Certificate of Incorporation of the Company provides that the Board of
Directors shall consist of not less than nine nor more than twelve members as
fixed from time to time by the shareholders of the Company or the Board of
Directors. It also provides that the Board of Directors shall be divided into
three classes, as nearly equal in number as possible, with staggered three-year
terms. The Board of Directors is permitted to appoint individuals as directors
to fill the unexpired terms of directors who resign.
5
<PAGE>
The Board of Directors has recommended to the shareholders fixing the
number of directors at ten and electing the three nominees listed below to serve
for three-year terms. The directors to be elected at this year's Annual Meeting
will hold office until the 2000 Annual Meeting of Shareholders, or until their
successors are elected and qualified.
It is intended that the persons named as proxies in the accompanying form
of proxy will vote for the three nominees listed below, unless the authority to
vote is withheld. Each nominee is at present a member of the Board of Directors.
Although the Company's management expects that each of the nominees will be
available for election, in the event a vacancy in the slate of nominees should
occur, it is intended that shares represented by proxies in the accompanying
form will be voted for the election of a substitute nominee selected by the
Board of Directors.
The names and terms of office of the nominees and directors of the Company,
their ages, their principal occupations or employments (which have continued for
at least the past five years unless otherwise noted), directorships held by them
in certain other publicly held corporations or investment companies, the dates
they first became directors of the Company and certain other information with
respect to such nominees and directors are as follows:
NOMINEES FOR ELECTION OF DIRECTORS IN 1997
(Terms Expiring in 2000)
H. W. MCKAY BELK, age 40, is President, Chief Merchandising Officer of Belk
Stores Services Inc., operators of retail department stores, a position which he
has held since March 1997. Mr. Belk served as President, Merchandise and Sales
Promotion of Belk Stores Services, Inc. from April 1995 through March 1997, and
he had previously served as Senior Vice President, Merchandising from April 1992
through April 1995. Prior to April 1992, Mr. Belk had served as Vice President,
General Merchandise Manager of Belk Brothers Company, Charlotte, North Carolina,
since 1988. He has been a director of the Company since May 18, 1994 and is
Chairman of the Compensation Committee.
H. REID JONES, age 62, is retired. Prior to his retirement in 1982, he was
a Commercial Account Representative of Bagwell & Bagwell, Inc., an independent
insurance agency in Raleigh, North Carolina. He has been a director of the
Company since 1970 and is a member of the Audit Committee.
JOHN W. MURREY, III, age 54, is a member of the law firm of Witt, Gaither &
Whitaker, P.C., general counsel to the Company, in Chattanooga, Tennessee with
which he has been associated since 1970. He served as Secretary of the Company
from 1985 to 1993. He has been a director of the Company since March 17, 1993.
Mr. Murrey is a director of Dixie Yarns, Inc. He is a member of the Audit
Committee and the Retirement Benefits Committee.
DIRECTORS WHOSE TERMS DO NOT EXPIRE THIS YEAR
(Terms Expiring in 1998)
J. FRANK HARRISON, JR., age 66, is Chairman Emeritus of the Board of
Directors of the Company. Mr. Harrison, Jr. served the Company as Chairman of
the Board of Directors from 1977
6
<PAGE>
through December 1996, and served as Chief Executive Officer of the Company from
August 1980 until April 1983. He had previously served the Company as Vice
Chairman of the Board of Directors. He has been a director of the Company since
1973. Mr. Harrison, Jr. presently is a director of Dixie Yarns, Inc. Mr.
Harrison, Jr. is Chairman of the Executive Committee and the Finance Committee
of the Company's Board of Directors.
J. FRANK HARRISON, III, age 42, is Chairman of the Board of Directors and
Chief Executive Officer of the Company. Mr. Harrison, III served in the capacity
of Vice Chairman of the Board of Directors from his election in November 1987
through his election as Chairman in December 1996 and was appointed as the
Company's Chief Executive Officer in May 1994. He was first employed by the
Company in 1977, and has served as a Division Sales Manager and as a Vice
President of the Company. Mr. Harrison, III is a director of Wachovia Bank &
Trust Co., N.A., Southern Region Board. He is a member of the Executive
Committee, the Audit Committee and the Finance Committee.
JAMES L. MOORE, JR., age 54, is President and Chief Operating Officer of
the Company. Prior to his election as President in March 1987, he served as
President and Chief Executive Officer of Atlantic Soft Drink Co., a soft drink
bottling subsidiary of Grand Metropolitan USA. Mr. Moore has been a director of
the Company since March 1987. Mr. Moore is a director of Brothers Gourmet
Coffees, Inc. He is a member of the Executive Committee and is Chairman of the
Retirement Benefits Committee.
NED R. MCWHERTER, age 66, is Chairman of the Board of Directors of
Volunteer Distributing Company, Inc. and Eagle Distributors, Inc. of Dresden,
Tennessee. Mr. McWherter served as Governor of the State of Tennessee from
January 1987 to January 1995. He has been a director of the Company since 1995
and is a member of the Compensation Committee and the Finance Committee.
(Terms Expiring in 1999)
JOHN M. BELK, age 77, is Chairman of the Board of Directors of Belk Stores
Services Inc., operators of retail department stores, and of Belk Brothers
Company, Charlotte, North Carolina. He serves as an officer or director, or
both, of approximately 140 retail corporations in the Belk organization. Mr.
Belk presently is a director of Lowe's Companies, Inc. and Chaparral Steel
Company. Mr. Belk has been a director of the Company since 1972 and is a member
of the Audit Committee.
DAVID L. KENNEDY, JR., age 50, is Executive Vice President -- Coca-Cola
USA, in which capacity he has served since April 1996. He served as Senior Vice
President and General Manager -- Coca-Cola USA -- Fountain from October 1992
through April 1996. Mr. Kennedy also is a Vice President of The Coca-Cola
Company and previously served as its Director of Business Development. Mr.
Kennedy has been a director of the Company since 1990. He is a member of the
Finance Committee and the Compensation Committee.
REID M. HENSON, age 57, has served as a Vice Chairman of the Board of
Directors of the Company since 1983. Prior to that time, Mr. Henson served as a
consultant to JTL Corporation, a
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<PAGE>
management company, and later as President of JTL Corporation. He has been a
director of the Company since 1979, is Chairman of the Audit Committee and is a
member of the Executive Committee, the Retirement Benefits Committee and the
Finance Committee.
No director, nominee or executive officer of the Company has any family
relationship, not more remote than first cousin, to any other director, nominee
or executive officer, except that J. Frank Harrison, III is J. Frank Harrison,
Jr.'s son and H. W. McKay Belk is John M. Belk's nephew.
BENEFICIAL OWNERSHIP OF MANAGEMENT
The following table presents certain information regarding the amount and
nature of beneficial ownership of the Company's equity securities by its
directors and nominees, by the Company's executive officers named in the Summary
Compensation Table (see "Executive Compensation") and by all directors and
executive officers, as a group, as of March 10, 1997. Information concerning
beneficial ownership of the Company's equity securities by Messrs. Harrison,
Jr., Harrison, III and Henson is presented above under the caption "Principal
Shareholders" and is not set forth below.
<TABLE>
<CAPTION>
PERCENT
BENEFICIAL OF
NAME CLASS OWNERSHIP (1) CLASS (2)
<S> <C> <C> <C>
John M. Belk Common Stock 10,475(3) *
H.W. McKay Belk Common Stock 520(4) *
H. Reid Jones Common Stock 79,715 1.1
David L. Kennedy, Jr. Common Stock 1,000 *
Ned R. McWherter Common Stock 1,000 *
James L. Moore, Jr. Common Stock -- --
John W. Murrey, III Common Stock 1,000 *
David V. Singer Common Stock 2,000 *
James B. Stuart Common Stock 1,000 *
Directors and executive officers Common Stock 96,810(5) 1.4
as a group (excluding Messrs.
Harrison, Jr., Harrison, III and
Henson) (17 persons)
</TABLE>
* Indicates the number of shares owned is less than 1% of the total shares
of that class outstanding.
(1) See note 1 to table of Principal Shareholders.
(2) The percentages shown are based upon the number of shares outstanding
and do not include shares held in treasury.
(3) The amount shown includes (i) 8,975 shares held by a trust as to which
John M. Belk and his spouse serve as co-trustees and with respect to
which he shares voting and investment power
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<PAGE>
and (ii) 1,500 shares held by a trust for the benefit of John M. Belk's
daughter, as to which his spouse serves as trustee with sole voting and
investment power.
(4) The amount shown includes 300 shares held by H.W. McKay Belk as
custodian for certain of his children under the North Carolina Uniform
Transfers to Minors Act.
(5) Of the number of shares indicated: (i) 86,235 shares of Common Stock
are owned with sole voting and sole investment power; (ii) 100 shares
of Common Stock are owned by an executive officer as joint tenants with
such officer's spouse; (iii) 8,975 shares are owned by a director and
his spouse in a joint fiduciary capacity and (iv) 1,500 shares of
Common Stock are owned by directors' spouses, either directly or in a
fiduciary capacity.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, and regulations of
the Securities and Exchange Commission ("SEC") thereunder, require the Company's
executive officers and directors and persons who beneficially own more than 10%
of the Company's Common Stock, as well as certain affiliates of such persons, to
file initial reports of ownership and monthly transactions reports covering any
changes in ownership with the SEC and the National Association of Securities
Dealers. Executive officers, directors and persons owning more than 10% of the
Company's Common Stock are required by SEC regulations to furnish the Company
with all such reports they file. Based solely on its review of the copies of
such reports received by it and written representations that no other reports
were required for such persons, the Company believes that, during fiscal year
1996, all filing requirements applicable to its executive officers, directors
and owners of more than 10% of the Company's Common Stock were complied with.
DIRECTORS' FEES AND ATTENDANCE
Directors who are not employees of the Company are paid a retainer of
$17,600 per year, $1,100 for each Board meeting attended and $880 for each
committee meeting attended. During 1996, the Board of Directors held four
meetings. No director attended fewer than 75% of the total number of meetings of
the Board of Directors and any committees of the Board of Directors on which he
served.
The Board of Directors has an Executive Committee whose current members are
Messrs. Harrison, Jr., Harrison, III, Henson and Moore. Except as otherwise
limited by law or by resolution of the Board of Directors, the Committee has and
may exercise all of the powers and authority of the Board of Directors for the
management of the business and affairs of the Company, which power the Committee
exercises between the meetings of the full Board of Directors. The Executive
Committee met one time in 1996.
The Board of Directors has a standing Audit Committee whose current members
are Messrs. Harrison, III, John M. Belk, Jones, Henson and Murrey. The Audit
Committee evaluates audit performance, handles relations with the Company's
independent accountants and evaluates policies and procedures relating to
internal accounting functions and controls. The Committee recommends to the
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<PAGE>
Board of Directors the appointment of the independent accountants for the
Company. The Audit Committee met four times in 1996.
The Board of Directors has a Compensation Committee whose current members
are Messrs. H. W. McKay Belk, Kennedy and McWherter. Messrs. Harrison, Jr. and
Harrison, III also served as members of this committee during 1996. The
Compensation Committee administers the Company's compensation plans, reviews and
may establish the compensation of the Company's officers and makes
recommendations to the Board of Directors concerning such compensation and
related matters. The Compensation Committee met two times in 1996.
The Board of Directors has a Finance Committee whose current members are
Messrs. Harrison, Jr., Harrison, III, Henson, Kennedy and McWherter. The Finance
Committee reviews, formulates and recommends to the Board of Directors financial
policies of the Company. The Finance Committee met four times in 1996.
The Board of Directors has a Retirement Benefits Committee whose current
members are Messrs. Henson, Moore and Murrey. The Retirement Benefits Committee
oversees various benefits for retired employees, including those of the
Company's employee retirement plans that are intended to meet the requirements
of the Internal Revenue Code as being qualified for favorable tax treatment. The
Retirement Benefits Committee met two times in 1996.
The Board of Directors does not have a standing nominating committee or
committee performing similar functions.
EXECUTIVE COMPENSATION
Set forth below is information concerning the annual and long-term
compensation for all services rendered in all capacities to the Company for each
of the last three (3) fiscal years for those persons who were at December 29,
1996 (i) the chief executive officer and (ii) the other four most highly
compensated executive officers of the Company (the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(1)(2) COMPENSATION(3) COMPENSATION(4)
<S> <C> <C> <C> <C> <C>
J. Frank Harrison, III 1996 $337,325 $ 384,087 $ 132,192 $ 241,915
Chairman of the Board and 1995 308,250 352,000 84,205 246,116
Chief Executive Officer 1994 306,682 345,000 106,453 255,022
Reid M. Henson 1996 366,251 415,512 26,924 55,748
Vice Chairman of 1995 349,350 399,000 19,464 54,443
the Board of Directors 1994 337,067 391,000 12,481 70,274
James L. Moore, Jr. 1996 473,972 537,722 33,851 101,449
President and 1995 452,100 517,000 28,934 99,633
Chief Operating Officer 1994 435,689 506,000 16,586 108,537
David V. Singer 1996 259,663 147,350 21,272 31,128
Vice President and 1995 246,600 141,000 16,053 30,391
Chief Financial Officer 1994 237,500 138,000 75,392 39,537
James B. Stuart 1996 269,816 152,995 11,143 59,276
Vice President, 1995 258,499 148,000 9,690 59,582
Marketing 1994 251,069 144,659 4,177 61,672
</TABLE>
10
<PAGE>
(1) The amounts shown for Salary and Bonus include any amounts elected by
any Named Officer to be deferred under either the Company's
Supplemental Savings Incentive Plan (as discussed herein) or, pursuant
to Section 401(k) of the Internal Revenue Code, under the terms of the
Coca-Cola Bottling Co. Consolidated Savings Plan. Company contributions
on behalf of the Named Officers under each of these plans are included
in the "All Other Compensation" column of this table.
(2) The Company's Annual Bonus Plan is administered by the Compensation
Committee of the Board. Any officer of the Company or any of its
subsidiaries holding a key position with the Company (or a subsidiary)
is eligible to participate, and participants are selected annually
based on management recommendations approved by the Compensation
Committee. Annual Bonus Plan awards are determined by the Compensation
Committee based on corporate or divisional goals for selected
performance indicators which it establishes annually. Awards are
generally made on the basis of a graduated scale ranging from a "goal
achievement" exceeding 89% of the target to a maximum achievement of
110% of the target. See "Report of the Compensation Committee on Annual
Compensation of Executive Officers."
(3) In the case of Mr. Harrison, III, includes an amount, $97,054,
representing the value of Mr. Harrison, III's personal use of Company
aircraft.
(4) Detail of amounts reported in the "All Other Compensation" column for
1996 is provided in the table below. Split-dollar insurance represents
the premiums paid by the Company for the benefit of each Named Officer.
<TABLE>
<CAPTION>
ITEM MR. HARRISON, III MR. HENSON MR. MOORE MR. SINGER MR. STUART
<S> <C> <C> <C> <C> <C>
(Bullet) Company contributions to the
Savings Plan $ 3,585 $ 3,585 $ 3,585 $ 3,585 $ 3,585
(Bullet) Company contributions to the
Supplemental Savings Incentive
Plan 11,342 15,363 15,810 8,704 14,117
(Bullet) Split-Dollar Insurance Premium
Value 226,988 36,800 82,054 18,839 41,574
Total All Other Compensation $ 241,915 $ 55,748 $ 101,449 $ 31,128 $ 59,276
</TABLE>
11
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
Following is information with respect to unexercised options to purchase
the Company's Common Stock held by Named Officers as of December 29, 1996. None
of the Named Officers exercised any stock options during fiscal year 1996. Based
on the closing price of $48.75 for shares of the Company's Common Stock on
NASDAQ/NMS on December 27, 1996, the last trading day prior to the end of the
Company's 1996 fiscal year, the value of the unexercised options as of the end
of the Company's fiscal year was as disclosed in the table below. The Company
has no outstanding SARs.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED OPTIONS/ IN-THE-MONEY OPTIONS/
SARS HELD AT SARS HELD AT
DECEMBER 29, 1996 DECEMBER 29, 1996
(#) ($)
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
J. Frank Harrison, III (1) 135,000 15,000 $ 2,565,000 $ 285,000
</TABLE>
(1) All options set forth above were granted to Mr. Harrison, III pursuant
to a Stock Option Agreement effective August 9, 1989 and are
exercisable at the price of $29.75 per share. The unexercisable options
will become exercisable in 7,500 share increments following December 31
of each year commencing in 1997 through 1998. Subject to the foregoing,
the option may be exercised in whole or in part at any time during a 15
year period commencing on the date of grant.
RETIREMENT PLAN
The Company has in effect a unit benefit retirement plan for the majority
of its non-union employees (the "Retirement Plan"), with payments thereunder
computed on an actuarial basis. The following table shows the estimated annual
benefits payable upon retirement at age 65 to persons born in 1947 for various
classifications of compensation and years of service.
ANNUAL BENEFIT UNDER RETIREMENT PLAN
For Plan Participants Born in 1947
<TABLE>
<CAPTION>
FIVE-YEAR
AVERAGE YEARS OF SERVICE
COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
<S> <C> <C> <C> <C> <C>
$ 125,000 $25,190 $33,586 $41,983 $50,379 $50,379
150,000 (1) 31,190 41,586 51,983 62,379 62,379 (2)
</TABLE>
(1) Prior to January 1, 1989, the formula for determining benefits did not
limit the amount of compensation (generally compensation as reported on
Form W-2 for income tax withholding purposes) which could be
considered. Benefits which accrue after December 31, 1988 are limited
as to the amount of compensation which may be considered. Beginning in
1989, this amount was limited to $200,000 to be adjusted for cost of
living increases beginning in 1990. In 1994 the amount was further
reduced to $150,000, which amount will be adjusted for cost
12
<PAGE>
of living increases beginning in 1995, but only to the extent that such
increases exceed increments of $10,000. The limit did not increase for
1995 or 1996; however, the amount will increase to $160,000 for
benefits earned in 1997. No retroactive adjustments are permitted.
Since the allowable annual benefit amount is the same for all
compensation levels in excess of the current limit of $150,000, the
table does not separately list the annual benefit for such additional
levels of compensation.
(2) The annual benefit from the Retirement Plan may not exceed $90,000 as
adjusted for cost of living increases beginning in 1988. In 1996 the
amount, as adjusted, is $120,000; it will be $125,000 in 1997. This
benefit is reduced by 1/15 for each of the first three years that
actual retirement precedes a participant's Social Security Retirement
Age. For someone born in 1947, the Social Security Retirement Age is
66. In 1996 the maximum benefit was $112,000 for a person who retires
at age 65, the earliest Normal Retirement Age specified by the
Retirement Plan; the maximum benefit amount is $116,667 for 1997.
The benefits listed in the table, which are based on straight life annuity
amounts, are not subject to any deduction for Social Security or other offset
amounts, except to the extent that the benefits formula includes average
compensation in excess of Covered Compensation (as defined below). As of
December 31, 1996, the Named Officers have the following full years of service
as defined in the Retirement Plan: Mr. Harrison III, 20 years; Mr. Henson, 14
years; Mr. Moore, 10 years; Mr. Singer, 11 years; and Mr. Stuart, 7 years.
Generally, compensation is remuneration paid to Retirement Plan
participants by the Company for services rendered as reported or reportable for
federal income tax withholding purposes. During a period of disability, a
participant is deemed to have earned compensation at the same rate he was paid
during the last full year prior to the disability. In general, Covered
Compensation is the average of the Social Security taxable wage base during the
35 year period ending in the year that the participant reaches full Social
Security Retirement Age. At any point in time, this taxable wage base is assumed
to continue without increasing for all years after the year in which it is
calculated. Pursuant to these assumptions, Covered Compensation for 1996 for the
Named Officers is as follows: Mr. Moore, $46,692; Mr. Stuart, $46,692; Mr.
Henson, $42,108; Mr. Singer, $60,720; Mr. Harrison, III, $59,592. No benefits
are payable to a participant whose employment terminates before he has been
credited with five years of service or has both reached age 65 and begun to
participate in the Retirement Plan at least five years before his employment
terminated.
OFFICER RETENTION PLAN
Under the Company's Officer Retention Plan ("ORP"), a participant receives
a 20-year annuity payable in equal monthly installments commencing at retirement
or, in certain instances, upon termination of employment. The retirement
benefits under the ORP increase with each year of the participant's
participation in the ORP based on the product of an assumed rate of increase in
a participant's beginning salary (as determined by the Compensation Committee)
and factors prescribed by the ORP. The
13
<PAGE>
retirement benefits under the ORP are not payable to the participants unless
they remain in the employment of the Company until they attain age 60, except in
the event of total disability (at which time they would be paid on a present
value basis).
The ORP contains a death benefit which must be paid in a lump sum. If the
participant dies before annuity payments begin, then the death benefit equals
the retirement benefit accrued as of the date of death, except that there is a
further reduction of 50% of the amount otherwise payable for deceased
participants whose employment with the Company terminated prior to age 60. If
the participant dies after annuity payments have begun, the monthly installments
remaining are paid to the participant's beneficiary in a lump sum after applying
a discount rate of 8% per annum.
The ORP provides that in the event of a Change in Control in the ownership
of the common stock of the Company (as more specifically described in connection
with the Supplemental Savings Incentive Plan below), if in connection therewith
(i) the ORP is terminated by the Company or amended so as to materially reduce
the rights and benefits of an ORP participant, (ii) the participant is
terminated by the Company without cause, (iii) the participant is demoted or has
his salary and/or benefits materially reduced, or (iv) the Company takes other
action which denies the participant the position and economic entitlements which
he had under the ORP prior to the Change in Control, then the participant may
elect to have paid to him 100% of the retirement benefits to which he was
entitled at the time of the Change in Control, plus 50% of any increase in his
retirement benefits which accrued between the date of the Change in Control
through the date of his election.
The 1996 annual compensation used for determining benefits under the ORP
for the Named Officers is as follows: Mr. Harrison, III, $249,018; Mr. Henson,
$356,243; Mr. Moore, $451,681; Mr. Singer, $236,112; and Mr. Stuart, $290,354.
Each of those individuals presently is credited with five years of participation
in the ORP.
SUPPLEMENTAL SAVINGS INCENTIVE PLAN
Pursuant to the Company's Supplemental Savings Incentive Plan ("SSIP"), the
Company and the participant agree to defer a portion of salary and bonuses. The
Company matches 30% of the first 6% of salary (excluding bonuses) deferred by
the participant. The Company may also make discretionary contributions to any
one or more participants which contributions are to be both based on merit and
intended to offset the impact of the reduced compensation limit for qualified
plans (see "Retirement Plan," above). A participant is fully vested in the
salary and bonuses he defers and becomes fully vested in Company contributions
upon death, disability, retirement on or after age 55, the completion of at
least five years of service (vesting occurring at a 20% rate for each year of
service) or a Change in Control. "Change in Control" for these purposes includes
the acquisition by any person or group of more than 50% of the total vote of all
shares of common stock of the Company for the election of the Board of Directors
and is presumed to occur in the event that J. Frank Harrison, Jr. and his issue
(or persons acting on their behalf) should be entitled to vote less than 50% of
the total votes of all shares of common stock of the Company for the election of
directors. Deferrals and Company contributions may be placed in either a Fixed
Benefit Option or designated among investment funds specified by the
14
<PAGE>
Company. Such investment funds are only used to measure the value of benefits,
which benefits comprise the Supplemental Account of a participant. There is no
requirement that any money held in the SSIP actually be invested in any such
fund.
The schedule of benefits for a Fixed Benefit Option provides for earnings
up to 13% (depending on the participant's age and years of service at retirement
or termination due to total disability, as applicable). Benefits which start
after age 60 are increased at the rate of 6% compounded annually, while benefits
paid on account of severance are deemed to earn 8% compounded annually.
Amounts held in a Supplemental Account may be transferred to a Fixed
Benefit Option. No investment in a Fixed Benefit Option may be transferred to a
Supplemental Account.
Benefits paid on account of a Change in Control are made within 30 days
following a Change in Control; all other payments are made (or begin) in the
first January after a payment has been requested and satisfactory evidence has
been furnished that the participant has become entitled to receive such benefit.
All benefits for severance, benefits arising from a Change in Control, death
benefits for participants who are not insurable, and benefits payable out of
Supplemental Accounts are made in a lump sum. Other payments made from the Fixed
Benefit Option are normally paid on a monthly basis for 180 months, although the
Compensation Committee may approve a lump sum payment or an annuity for a period
of less than 180 months. No executive officer received a distribution during
1996. The amount of Company contributions allocated to each of the Named
Officers during 1996 is reflected in the Summary Compensation Table under the
heading, "All Other Compensation."
OFFICERS' SPLIT-DOLLAR LIFE INSURANCE PLAN
The Company has established an Officers' Split-Dollar Life Insurance Plan
for all officers, including the Named Officers. Special arrangements have been
provided for J. Frank Harrison, III and Reid M. Henson, as described below.
Insurance policies purchased under the plan are whole life policies having a
face amount, in most instances, equal to approximately three times each
officer's salary (approximately six times in the case of the Named Officers).
The Company pays all premiums on each officer's policy. Policy dividends are
used to purchase paid up additions. Upon the death of any participant, the
participant's beneficiary would receive a stated death benefit, with the balance
of the proceeds from the participant's policy being paid to the Company.
The dollar amount representing the insurance premiums paid by the Company
for the benefit of each of the Named Officers under the Officers' Split-Dollar
Life Insurance Plan is included in the Summary Compensation Table under the
heading "All Other Compensation."
A separate split-dollar insurance policy has been obtained covering Mr.
Henson. In the event of his death, the Company would receive an amount equal to
all premiums paid on the policy, subject to the death benefit payable to Mr.
Henson's beneficiary being not less than $1,000,000.
The split-dollar life insurance arrangement for J. Frank Harrison, III
varies from the standard split-dollar plan. A trust established by Mr. Harrison,
III pays the PS-58 cost and the Company pays the remaining portion of the
premium. This arrangement allows Mr. Harrison, III to obtain additional
insurance coverage with no increase in the net present value of the projected
costs of this arrangement
15
<PAGE>
for the Company. Under this revised arrangement, at the death of the insured the
Company receives a return of the aggregate premiums it has paid.
EMPLOYMENT AGREEMENTS
James L. Moore, Jr., is employed as President and Chief Operating Officer
pursuant to an employment agreement dated March 16, 1987, as amended on May 18,
1994, at an annual salary of not less than $275,000. Mr. Moore is also entitled
under the agreement to other fringe benefits generally available from time to
time to the Company's executive officers. The agreement provides that it may be
terminated by either party at any time, with or without cause. In the event Mr.
Moore's employment is terminated by the Company for cause (as defined in the
agreement), or if Mr. Moore voluntarily terminates his employment with the
Company, Mr. Moore will receive only benefits accrued through the date his
employment is terminated. If the Company terminates Mr. Moore's employment
without cause, Mr. Moore shall receive his salary (i) at the annual rate of
$275,000 for the period through May 18, 1999 or (ii) for a period of two years
from the date of termination at the specified annual rate of $440,000, whichever
is greater.
Effective January 1, 1997, the Company entered into an Agreement for
Consultation and Services with J. Frank Harrison, Jr., who previously served as
Chairman of the Board of Directors. Pursuant to the agreement, Mr. Harrison, Jr.
has agreed to continue to serve as a director of the Company and as Chairman of
the Board of Directors' Executive Committee and Finance Committee. He will
provide consultation and assistance to management of the Company with respect to
major strategic decisions and special projects, as well as concerning general
oversight and guidance of the Company. The agreement also provides that Mr.
Harrison, Jr. will continue to personally assist the Company in maintaining a
good relationship with The Coca-Cola Company to promote the best interests of
the Company and its shareholders. Mr. Harrison, Jr. has agreed to devote his
full time business resources, as required by Company management, to carrying out
these duties. Under the terms of the agreement, Mr. Harrison, Jr. will be paid a
consulting fee of $200,000 per year and will also receive a retirement benefit
of $500,000 per year on account of his past service as an officer of the
Company, both payable in equal monthly installments commencing January 1, 1997.
He will also be provided with insurance and other fringe benefits comparable
with the past practice of the Company. The agreement contains confidentiality
and non-competition provisions and provides that, in the event of a change in
control of the Company, he will continue to receive the retirement benefit
provided under the agreement for the remainder of his lifetime. The agreement is
for a term of one year, and is self-renewing for successive terms of one year
each unless terminated by either Mr. Harrison, Jr. or by the Board of Directors
upon notice given at least 60 days in advance of the expiration of the prior one
year term.
16
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON ANNUAL
COMPENSATION OF EXECUTIVE OFFICERS
The Board's Compensation Committee, composed of Messrs. H. W. McKay Belk,
J. Frank Harrison, Jr., J. Frank Harrison, III, David L. Kennedy, Jr. and Ned R.
McWherter, administers the Company's compensation plans, reviews and may
establish executive compensation and makes recommendations to the Board of
Directors concerning such compensation and related matters. The following is a
report submitted by the Compensation Committee members addressing the Company's
compensation policy as it relates to the Company's executive officers, including
the Named Officers, for 1996.
COMPENSATION POLICY AND FISCAL 1996 COMPENSATION
The Company's executive compensation policy is designed to establish an
appropriate relationship between executive pay and the creation of long term
shareholder value, while motivating and retaining key employees. To achieve
these goals, the Company's executive compensation policy supplements annual base
compensation with an opportunity to earn bonuses based upon corporate
performance as well as factors related to each individual's performance.
Accordingly, a significant portion of any executive's compensation may consist
of performance-based bonuses. Measurement of corporate performance is primarily
based on Company objectives which are set based on industry conditions and
industry-wide performance levels and approved by the Board of Directors. The
performance of individual executives is evaluated on the basis of both
pre-determined performance goals for the Company and factors related to the
contributions of each individual.
Base salaries, including the base salary of J. Frank Harrison, III, the
Company's Chairman and Chief Executive Officer, were adjusted from the prior
year. The Company periodically reviews base salary levels for its executives in
comparison with those of other companies in the soft drink bottling industry, as
well as other industries. For 1996, the Company utilized a study published by
Wyatt Executive Compensation Services which surveyed over 1,200 public
corporations, including many "Fortune 500" companies. The survey provided
compensation information by separate categories of employers. Employer
categorization factors included, but were not limited to, those defined by
industry, size and geographic location. The Company strives to maintain base
executive salaries at a level that will permit it to compete with other major
companies for managers with comparable qualifications and abilities. Based on
information contained in the Wyatt survey, the Compensation Committee believes
that the overall compensation of the Company's executive officers, taken in the
aggregate, places them at the median range of the compensation scale of
similarly situated executives in all industries covered by the survey. The
Compensation Committee believes that Mr. Harrison, III's overall compensation
places him below the median range for similarly situated executives.
Other factors considered by the Company in its periodic review of executive
salary levels include (i) the Company's total operating budget for each fiscal
year; (ii) the impact of annual changes in the consumer price index; and (iii) a
comparison of the Company's executive compensation program to available
information concerning those of other companies in the soft drink bottling
industry, focusing specifically on the three publicly traded soft drink bottlers
utilized by the Company in developing the "peer group index" utilized in the
stock price performance graph included elsewhere in this Proxy
17
<PAGE>
Statement. Due to wide disparities in levels of executive compensation revealed
in the published information regarding the other companies included in the
Company's peer group index, the Compensation Committee does not believe that
such information provides a meaningful basis for evaluating the overall
compensation of the Company's executive officers for the current fiscal year,
and therefore relied principally upon the information contained in the Wyatt
survey for purposes of such evaluation.
The Company's Annual Bonus Plan is administered by the Compensation
Committee, which annually selects participants (based on management
recommendations) who hold key positions with the Company or one of its
subsidiaries. The total cash bonus awardable to a participant is determined by
multiplying such participant's base salary by three factors: (i) the
participant's approved bonus percentage factor; (ii) the individual's indexed
performance factor; and (iii) the overall goal achievement factor. The
participant's approved bonus percentage factor is based on the relative
responsibility and contribution to the Company's performance attributed to the
participant's position with the Company, while the individual's indexed
performance factor is determined by such individual's actual performance during
the fiscal year. The overall goal achievement factor is determined by the
Company's performance in relation to pre-set goals, as discussed below.
Annual goals for selected performance indicators are set in the fourth
quarter for the succeeding year. These goals are reviewed by the Compensation
Committee and approved by the Board of Directors. The selected performance
indicators for fiscal 1996 were operating cash flow, free cash flow, net income,
equivalent case volume, market share and a value measure. The Compensation
Committee also assigns different weights to each of the performance indicators
based on the perceived need to focus more or less on any particular objective in
a given year. The corporate performance indicators and related weights are
established after evaluating the industry conditions, available information on
performance of other companies in the soft drink bottling industry, prior year
performance and the Company's specific needs for the current year. For fiscal
1996, the following weights were assigned to the performance indicators:
operating cash flow -- 30%; free cash flow -- 30%; net income -- 10%; equivalent
case volume -- 10%; market share -- 10%; and value measure -- 10%. The
performance indicators, as weighted, make up the Company's overall goal
achievement factor, which is calculated on the basis of a graduated scale
ranging from a goal achievement exceeding 89% of the target to a maximum
achievement of 110% of the target for each performance indicator. Target goals
were met or exceeded for each of the performance indicators.
Although the Company's Annual Bonus Plan enables the Compensation Committee
to calculate bonuses derived from the factors described above, the Compensation
Committee has absolute discretion to decrease, eliminate or otherwise amend
awards under the Company's Annual Bonus Plan. The Compensation Committee elected
to award bonuses to executive officers in an amount equal to 113% of 1996 base
salary multiplied by each officer's approved bonus percentage factor. The amount
of annual bonus payments for each of the Named Officers for the years 1994, 1995
and 1996 is shown in the Summary Compensation Table under the heading "Bonuses."
In addition to the annual base salary and performance-based bonus
components, the Company's total annual compensation package for its executives
includes the opportunity: (i) to participate, on the same basis as other
non-union employees, in the Coca-Cola Bottling Co. Consolidated Savings Plan
18
<PAGE>
(Company contributions for each of the Named Officers are included under "All
Other Compensation" in the Summary Compensation Table); (ii) to participate in
the Officers' Split-Dollar Life Insurance Plan; (iii) to participate in the
Company's Retirement Plan which is available to all eligible employees; (iv) to
elect to defer a certain portion of each executive's compensation and receive
limited matching contributions from the Company under the Supplemental Savings
Incentive Plan (Company contributions for each of the Named Officers are
included under "All Other Compensation" in the Summary Compensation Table); and
(v) for certain key executives selected by the Compensation Committee, to
receive additional retirement and survivor benefits pursuant to the Officer
Retention Plan. (The Retirement Plan, the Officers' Split-Dollar Life Insurance
Plan, the Supplemental Savings Incentive Plan and the Officer Retention Plan are
each discussed in greater detail in the preceding section of this Proxy
Statement.) This overall package is designed to attract and retain qualified
executives and to ensure that such executives have a continuing stake in the
long-term success of the Company.
For 1996 Mr. Moore's aggregate applicable remuneration (as defined by
Section 162(m)) was $1,013,582. No other executive officer of the Company has
been paid applicable employee remuneration in excess of $1,000,000 in any fiscal
year. The performance goals under the Company's Annual Bonus Plan have been
submitted for approval at this year's annual meeting of Shareholders. A
discussion of the terms of the Annual Bonus Plan and further information
concerning Shareholder approval are set forth elsewhere in this Proxy Statement.
Effective March 11, 1997, the membership of the Compensation Committee will be
Messrs. H. W. McKay Belk, David L. Kennedy, Jr. and Ned R. McWherter. Messrs. J.
Frank Harrison, Jr. and J. Frank Harrison, III, will no longer serve as
Compensation Committee members. Approval of the performance goals under the
Annual Bonus Plan as submitted to Shareholders and administration of the Plan by
a Compensation Committee consisting solely of outside directors, will permit
bonuses awarded under the Plan to qualify for deductibility as performance based
compensation within the meaning of Section 162(m) of the Internal Revenue Code.
The Company's compensation policies apply equally to all of its executive
officers, including each of those named in the compensation table.
Although Mr. Harrison, III served as a member of the Compensation
Committee, he did not participate in any of the Committee's decisions related to
the determination of his own compensation.
Submitted by the Compensation Committee of the Board of Directors.
<TABLE>
<S> <C>
H. W. McKay Belk David L. Kennedy, Jr.
J. Frank Harrison, Jr. Ned R. McWherter
J. Frank Harrison, III
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Board of Directors' Compensation Committee for fiscal
1996 were Messrs. H. W. McKay Belk, Harrison, Jr., Harrison, III, Kennedy and
McWherter. Mr. Harrison, Jr. is Chairman Emeritus of the Board of Directors of
the Company, and Mr. Harrison, III is Chairman of the Board of Directors and the
Company's Chief Executive Officer.
19
<PAGE>
On November 30, 1992, the Company and the owner of the property on which
the Company operates its Snyder Production Center agreed to the early
termination of the Company's lease of this property. Harrison Limited
Partnership One ("HLP One"), a North Carolina limited partnership, purchased the
property contemporaneously with the termination of the lease, and the Company
and HLP One entered into an agreement pursuant to which the Company is leasing
the property for a ten-year term which commenced December 1, 1992. JFH
Management, Inc., a North Carolina corporation of which J. Frank Harrison, Jr.
is the sole shareholder, serves as sole general partner of the limited
partnership that purchased the production center property. The sole limited
partner of this limited partnership is a trust as to which J. Frank Harrison,
III and Reid M. Henson are co-trustees, share investment powers, and as to which
they share voting power for purposes of this partnership interest. The
beneficiaries of this trust are J. Frank Harrison, Jr. and his descendants.
On June 1, 1993, Beacon Investment Corporation, a North Carolina
corporation of which J. Frank Harrison, III is sole shareholder, purchased the
office building located on Rexford Road in Charlotte, North Carolina, in which
the Company leases its executive offices. Contemporaneously, the Company entered
into a ten-year lease commencing June 1, 1993 with Beacon Investment Corporation
for office space within the building.
Under these agreements, the annual base rents which the Company is
obligated to pay for its lease of the Snyder Production Center and its executive
offices are subject to annual adjustments corresponding to the Consumer Price
Index. The base rent for the lease of the Snyder Production Center is further
subject to increases and decreases based on the London Interbank Offered Rate of
interest ("LIBOR"), and the base rent for the lease of the executive offices is
subject to increases and decreases, as the case may be, in an Adjusted
Eurodollar Rate determined by NationsBank of North Carolina, N.A. The current
annual lease payments, as so adjusted, are $2,553,000 for the Snyder Production
Center and $1,484,000 for the Company's executive offices.
The material terms of the Snyder Production Center and office building
lease agreements are substantially similar to the lease agreements between the
Company and the properties' prior owners. The Company believes that the terms of
the Snyder Production Center and office building lease agreements are generally,
in each instance, at least as favorable as the Company could have obtained from
the prior owners.
COMMON STOCK PERFORMANCE
As part of the executive compensation information presented in this Proxy
Statement, the Securities and Exchange Commission requires a five-year
comparison of stock performance with a broad market equity index and with a peer
group of similar companies. The Company's Common Stock is traded on the Nasdaq
National Market System and the Company has selected the S&P 500 for use as a
broad equity market index for the purpose of this comparison. The Company
selected three publicly traded soft drink bottlers in developing a peer group
index (the "Custom Composite Index"). The peer group comprising the Custom
Composite Index consists of Coca-Cola Enterprises Inc., Coca-Cola Beverages Ltd.
and National Beverage Corp.
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<PAGE>
CUMULATIVE TOTAL RETURN (1)
BASED ON INVESTMENT OF $100 BEGINNING DECEMBER 31, 1991
(Performance Graph appears here. The plot points are listed in the table
below.)
SOURCE: GEORGESON & COMPANY INC.
Dec-91 Dec-92 Dec-93 Dec-94 Dec-95 Dec-96
Coca-Cola Bottling
Co. Consolidated $100 $ 95 $196 $148 $201 $288
S&P 500(R) $100 $108 $118 $120 $165 $203
Custom Composite Index
(3 Stocks) $100 $ 76 $ 96 $109 $164 $300
The 3-Stock Custom Composite Index includes Coca-Cola Beverages, Ltd.,
Coca-Cola Enterprises Inc., and National Beverage Corp.
(1) Assumes that the value of the investment in Company Common Stock and in
each index was $100 on December 31, 1991 and that all dividends were
reinvested on a quarterly basis. Returns for the companies in the
Custom Composite Index have been weighted on the basis of total market
capitalization for each company.
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PROPOSAL 3
APPROVAL OF THE PERFORMANCE GOALS
UNDER THE COMPANY'S ANNUAL BONUS PLAN
The Company's Annual Bonus Plan (as amended and restated by the Company's
Board of Directors and Compensation Committee effective March 11, 1997) (the
"Bonus Plan") is being submitted by the Board of Directors to the Company's
shareholders for approval of the performance goals thereunder at the Annual
Meeting. The purpose of asking shareholders to approve these goals is to enable
all compensation paid to "covered employees" pursuant to the Bonus Plan to
qualify as "performance-based" within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended ("Section 162(m)"). Such payments will
thereby be exempt from the provisions of Section 162(m) that would otherwise
deny the Company a federal income tax deduction for compensation expense to the
extent that aggregate compensation payments to any "covered employee" may exceed
$1 million in any future period. Section 162(m) defines the term "covered
employee" to include the Company's Chief Executive Officer and any other
executive officer whose compensation is required to be disclosed in the Summary
Compensation Table of the Company's Proxy Statement (e.g., any of the Named
Officers).
The purpose of the Bonus Plan is to advance the best interests of the
Company and its Shareholders by providing key management employees with
additional incentives to assist the Company in meeting and exceeding its
business goals. The Company's Bonus Plan is administered by the Compensation
Committee of the Board of Directors. In order to satisfy the requirements of
Section 162(m), the amended and restated Bonus Plan provides that, during any
period in which the Compensation Committee is not comprised entirely of two or
more "outside directors" (as defined in the regulations under Section 162(m)),
the Board of Directors will delegate administration of the Bonus Plan to a
separate Bonus Plan Committee that is so comprised. At the March 11, 1997
meeting of the Board of Directors, the membership of the Compensation Committee
was adjusted to include Messrs. H. W. McKay Belk, Kennedy and McWherter.
Accordingly, all of the present members of the Compensation Committee are
"outside directors" for purposes of Section 162(m).
The Compensation Committee will annually select participants (based on
management recommendations) who hold key positions with the Company or one of
its subsidiaries to be eligible to receive cash awards under the Bonus Plan.
Approximately 35 employees are currently participants in the Bonus Plan. The
total cash bonus which may be awarded to a participant is determined by
multiplying such participant's base salary by three factors: (i) the
participant's Approved Bonus Percentage Factor; (ii) the participant's Indexed
Performance Factor; and (iii) an Overall Goal Achievement Factor based on
specified performance targets.
The Approved Bonus Percentage Factor for each participant is determined by
the participant's position with the Company and is based upon the relative
responsibility and contribution to the Company's performance attributed to such
position. The maximum Approved Bonus Percentage Factor for any participant is
100%.
The Indexed Performance Factor for each participant is determined by such
participant's actual performance during the fiscal year, as evaluated by the
Compensation Committee at year end. In order
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<PAGE>
to satisfy the requirements of Section 162(m) that all "performance-based"
compensation be determined in accordance with an objective formula, the amended
and restated Bonus Plan provides that the Indexed Performance Factor will be
fixed at 1.2 for all participants who are "covered employees" under Section
162(m).
The Overall Goal Achievement Factor will be determined for each fiscal year
by the Company's performance in relation to annual goals established by the
Compensation Committee for six selected performance indicators. These indicators
are: (1) operating cash flow; (2) free cash flow; (3) net income; (4) equivalent
case volume; (5) market share; and (6) a value measure based on operating cash
flow. Annual performance goals with respect to each of these indicators will be
established by the Compensation Committee in the fourth quarter for the
succeeding fiscal year. The annual performance goal for each indicator consists
of a performance target weighted (which weights must add to 100%) on the basis
of the Compensation Committee's determination regarding need to focus more or
less on any particular objective in establishing the goals for a given year. In
establishing these goals, the Compensation Committee considers industry
conditions, available information on performance of other companies in the soft
drink bottling industry, performance in prior years and the Company's specific
needs for the current year. The Overall Goal Achievement Factor, which is used
to derive a participant's total cash bonus in accordance with the above formula,
is calculated on the basis of a graduated scale ranging from 0.8 (for goal
achievement exceeding 89% of the target) to a maximum of 1.2 (for goal
achievement of 110% of the target), multiplied by the weight assigned to each
performance indicator.
Payment of cash awards under the Bonus Plan for each fiscal year will be
made following year end, upon certification by the Compensation Committee of the
level of attainment with respect to the performance goals for such year. Awards
under the Bonus Plan will not be made if any material aspects of the Company's
bottle contracts with The Coca-Cola Company have been violated during the fiscal
year. The Compensation Committee has discretion to approve a pro-rated award for
any employee who assumes a key position with the Company during the fiscal year,
provided that any such participant will have been employed by the Company for a
minimum of three calendar months during the fiscal year.
Although the formula described above permits a precise, objective
calculation of the annual bonuses to be paid to each participant, the
Compensation Committee has discretion to decrease, eliminate or otherwise amend
awards under the Company's Bonus Plan; provided, however, that, in accordance
with Section 162(m), such authority may only be exercised in a manner which
reduces (by lowering the Indexed Performance Factor or otherwise), but not in a
manner which increases, the amount of any participant's bonus award as
calculated in accordance with such formula. In any event, in accordance with the
requirements of Section 162(m), the amended and restated Bonus Plan sets a
maximum limit of $1 million on the amount of the bonus that may be awarded to
any individual participant based on performance during a single fiscal year. The
amount of annual bonus awards actually paid to each of the Named Officers for
the years 1994, 1995 and 1996 is shown in the Summary Compensation Table under
the heading "Bonuses." The Compensation Committee is authorized to amend, modify
or terminate the Bonus Plan retroactively at any time, in part or in whole, in
any manner that would not cause payments to "covered employees" under the Bonus
Plan to cease to qualify as "performance-based compensation" under Section
162(m). Such amendments may, for example,
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<PAGE>
correct any defect or supply any omission or reconcile any inconsistency in the
Bonus Plan or in the awards made thereunder that does not constitute the
modification of a material term of the Bonus Plan. No action may be taken,
however, that would cause payments to "covered employees" under the Bonus Plan
to cease to qualify as "performance-based" compensation under Section 162(m)
unless such amendment has been approved by the full Board of Directors of the
Company.
The performance goals under the Bonus Plan, as amended and restated, will
become effective upon their approval by a majority of the total votes of the
shares of the Company's Common Stock and Class B Common Stock represented and
entitled to vote at the Annual Meeting. In accordance with Section 162(m),
payment of any future awards under the Bonus Plan has been made subject to
receipt of any approval of the performance goals thereunder by the Company's
shareholders which may be required by Section 162(m).
CERTAIN TRANSACTIONS
The Company's business consists primarily of the production, marketing and
distribution of soft drink products of The Coca-Cola Company, which is the sole
owner of the secret formulas under which the primary components (either
concentrates or syrups) of its soft drink products are manufactured.
Accordingly, the Company purchases substantially all of its requirements of
concentrates and syrups from The Coca-Cola Company in the ordinary course of its
business. During fiscal year 1996 the Company paid The Coca-Cola Company
approximately $185 million for sweetener, syrups and concentrate purchases.
Additionally, the Company engages in a variety of marketing programs, local
media advertising and similar arrangements to promote the sale of products of
The Coca-Cola Company in territories operated by the Company. During fiscal year
1996, total direct marketing support provided to the Company by The Coca-Cola
Company was approximately $36 million. In addition, the Company paid
approximately $20 million for local media and marketing program expense pursuant
to cooperative advertising and cooperative marketing arrangements with The
Coca-Cola Company.
On July 2, 1993, Piedmont Coca-Cola Bottling Partnership, a Delaware
general partnership (the "Partnership"), was formed by wholly owned subsidiaries
of the Company and The Coca-Cola Company (together, the "Partners") to engage in
the business of distributing and marketing finished bottle/can and fountain
beverage products under trademarks of The Coca-Cola Company and other third
party licensors in portions of North Carolina, South Carolina, Virginia and
Georgia. A Company subsidiary ("CCBCC Sub") is a general partner and owns a 50%
interest in the Partnership. A subsidiary of The Coca-Cola Company ("KO Sub") is
the other general partner, and it owns the remaining 50% interest in the
Partnership. All distributions of cash flow and profits and losses of the
Partnership are allocated between KO Sub and CCBCC Sub on a 50/50 basis. The
Partnership has an initial term of 25 years subject to early termination as a
result of any Dissolving Event, as defined in the Partnership Agreement. Each
Partner's partnership Interest is subject to certain limitations on transfers,
rights of first refusal and other purchase rights upon the occurrence of certain
events. CCBCC Sub and KO Sub made equal initial capital contributions with KO
Sub's contribution being in the form of cash and CCBCC Sub's contribution being
comprised of the Wilson, North Carolina and Greenville and Beaufort, South
Carolina bottling territories and other related assets and cash. Following the
formation
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<PAGE>
of the Partnership, the Company and certain of its subsidiaries caused the sale
to the Partnership of the Charleston, Greenwood, Columbia, Anderson and Aiken,
South Carolina and Plymouth, North Carolina bottling territories and other
related assets and The Coca-Cola Company caused the sale to the Partnership of
assets and capital stock of subsidiaries having bottling territories located in
and around Kinston, Greenville, Goldsboro, Wilmington, Rocky Mount, Weldon and
Kelford, North Carolina; Marion, Conway and Florence, South Carolina; and
Emporia, Virginia.
The Company is providing the manufacture, production and packaging of the
products and the management of the Partnership pursuant to a Management
Agreement. In consideration for its services, the Company receives a management
fee based on total case sales, reimbursement for its out-of-pocket expenses and
reimbursement for sales branch, divisional and certain other expenses. The term
of the Management Agreement is 25 years, subject to early termination in the
event of a "Change in Control" as defined therein, a termination of the
Partnership or a material default by either party. For the fiscal year ending
December 29, 1996, the Partnership recorded management fees in the amount of
approximately $11.4 million to the Company pursuant to the Management Agreement.
The Company previously leased vending equipment from Coca-Cola Financial
Corporation ("CCFC"), a subsidiary of The Coca-Cola Company. During 1996, the
Company made lease payments to CCFC totaling $6.9 million. On January 14, 1997,
the Company purchased all of the leases with CCFC for approximately $66.3
million. If this transaction had occurred prior to year-end, no future lease
payments to CCFC would have been due as of December 29, 1996.
Mr. David L. Kennedy, Jr., a director of the Company, is Executive Vice
President -- Coca-Cola USA. During the period 1987-1997, The Coca-Cola Company
and the Company have engaged in various transactions pursuant to which The
Coca-Cola Company presently owns an aggregate of 2,213,007 shares of Common
Stock (31.4% of the outstanding shares of such class as of March 10, 1997) and
269,158 shares of Class B Common Stock (20.4% of the outstanding shares of such
class as of March 10, 1997) from the Company. These transactions occurred
pursuant to: (i) a negotiated, direct purchase of shares from the Company; (ii)
an exchange of Common Stock for all of the outstanding shares of The Coca-Cola
Bottling Company of West Virginia, Inc., which were owned by The Coca-Cola
Company; (iii) the exercise by The Coca-Cola Company of its preemptive right to
purchase additional shares of Common Stock pursuant to the Stock Rights and
Restrictions Agreement (described below) that was triggered by the Company's
issuance of Common Stock to Mr. Harrison, Jr. in connection with the Company's
acquisition of Whirl-i-Bird, Inc. in April 1993; and (iv) the Company's February
20, 1997 repurchase of 275,490 shares of Common Stock from The Coca-Cola Company
pursuant to the Stock Rights and Restrictions Agreement, as described below.
See "Principal Shareholders" and the notes to the tabular information
presented therein for additional information concerning The Coca-Cola Company's
beneficial ownership of Common Stock and Class B Common Stock.
Pursuant to a Stock Rights and Restrictions Agreement dated January 27,
1989, between the Company and The Coca-Cola Company, The Coca-Cola Company
agreed not to purchase or acquire additional shares of Common Stock or Class B
Common Stock except as contemplated or provided in the agreement; and not to
sell or otherwise dispose of shares of Class B Common Stock without converting
25
<PAGE>
them into Common Stock. The Coca-Cola Company granted the Company a right of
first refusal with respect to any sale, assignment, transfer or other
disposition by The Coca-Cola Company of such shares, and the Company granted The
Coca-Cola Company certain registration rights with respect to such shares. The
Stock Rights and Restrictions Agreement contains provisions under which The
Coca-Cola Company has agreed that if its equity ownership or voting interest at
any time reaches 30.67% or more of the Company's outstanding common stock of all
classes, or 23.59% or more of the votes of all outstanding shares of all classes
(both as adjusted by the Company's right to call described below), then it will
negotiate in good faith with the Company to sell to the Company the number of
shares of Common Stock or convert the number of shares of Class B Common Stock
necessary to reduce its equity ownership to 29.67% of the outstanding common
stock of all classes (including not less than 20% nor more than 21% of the
outstanding shares of Class B Common Stock) and to maintain its voting interest
at not less than 22.59% nor more than 23.59% of the votes of all outstanding
shares of all classes, as adjusted. Following the purchase by the Company of (i)
508,690 shares of Common Stock pursuant to a Dutch auction self-tender offer in
December 1996 and (ii) 145,260 shares of Common Stock in a private transaction
with a single shareholder in January 1997, The Coca-Cola Company owned shares of
Common Stock and Class B Common Stock aggregating to 33.99% of the outstanding
common stock of all classes and approximately 20.39% of the votes of all
outstanding shares of all classes. In accordance with the provisions of the
Stock Rights and Restrictions Agreement, the Company repurchased 275,490 shares
of Common Stock from The Coca-Cola Company at a cash price of $47.50 per share
in a negotiated transaction effective February 20, 1997. This transaction
reduced The Coca-Cola Company's ownership of Common Stock and Class B Common
Stock to the levels prescribed in the Stock Rights and Restrictions Agreement.
Additionally, in the event that the Company issues new shares of Class B
Common Stock upon the conversion or exercise of any security, warrant or option
of the Company which results in The Coca-Cola Company owning less than 20% of
the outstanding shares of Class B Common Stock and less than 20% of the total
votes of all outstanding shares of all classes of the Company, The Coca-Cola
Company has the right, under the Stock Rights and Restrictions Agreement, to
convert shares of Common Stock to shares of Class B Common Stock in order to
maintain its ownership of 20% of the outstanding shares of Class B Common Stock
and 20% of the total votes of all outstanding shares of all classes of the
Company. Under the Stock Rights and Restrictions Agreement, The Coca-Cola
Company has a preemptive right to purchase a percentage of any newly issued
shares of any class as necessary to allow it to maintain ownership of both
29.67% of the outstanding shares of Common Stock of all classes and 22.59% of
the total votes of all outstanding shares of all classes. The number of shares
issuable to The Coca-Cola Company as a result of any exercise of its conversion
right or its preemptive right described herein is subject to adjustment by the
Company's right to call described below and by any voluntary disposition of the
shares held by The Coca-Cola Company.
Pursuant to the Stock Rights and Restrictions Agreement, The Coca-Cola
Company granted the Company the right, from and after the sixth anniversary of
the date of such agreement through the thirtieth anniversary, at the Company's
sole option and from time to time, to call for redemption that number of
Purchased Shares (as defined in such agreement) which would reduce The Coca-Cola
Company's ownership of the equity of the Company to 20% at a price and on such
terms as set forth in the
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<PAGE>
agreement; provided, however, that in no event shall the price be less than
$42.50 per share (subject to appropriate adjustment to reflect changes in the
Company's capital structure and except for shares issued to The Coca-Cola
Company to maintain its proportionate ownership of Common Stock).
The Coca-Cola Company was also given the right to have its designee
proposed by the Company for nomination to the Company's Board of Directors and
to have such person (or a successor) nominated at each subsequent election of
the Company's directors, subject to certain conditions. Mr. Kennedy's nomination
for election as a director of the Company was made in accordance with the terms
of this agreement.
The Coca-Cola Company, J. Frank Harrison, Jr., J. Frank Harrison, III and
Reid M. Henson, in his capacity as co-trustee of certain trusts holding shares
of Class B Common Stock, also entered into a Voting Agreement dated January 27,
1989 (the "Voting Agreement"). Pursuant to the Voting Agreement, Mr. Harrison,
Jr., Mr. Harrison, III and Mr. Henson (as co-trustee), agreed to vote their
shares of Common Stock and Class B Common Stock for a nominee of The Coca-Cola
Company for election, as a director, to the Company's Board of Directors, and
The Coca-Cola Company granted an irrevocable proxy (the "Irrevocable Proxy")
with respect to all shares of Class B Common Stock and Common Stock owned by The
Coca-Cola Company (and any shares of Common Stock into which shares of Class B
Common Stock are converted or exchanged) to J. Frank Harrison, III for life and
thereafter to J. Frank Harrison, Jr. The Irrevocable Proxy covers any matters on
which holders of Class B Common Stock or Common Stock are entitled to vote,
other than certain mergers, consolidations, sales of assets and other similar
corporate reorganizations or corporate transactions.
Pursuant to the terms of the Voting Agreement, J. Frank Harrison, III (or,
in the event of his death, J. Frank Harrison, Jr.) was granted the option
(assignable to the Company or to J. Frank Harrison, Jr.) to purchase the shares
of Class B Common Stock held by The Coca-Cola Company at a price per share
determined in accordance with the Voting Agreement, exercisable on certain
conditions relating to termination of the disproportionate voting rights of the
Class B Common Stock.
The Voting Agreement and Irrevocable Proxy terminate upon the written
agreement of the parties, or at such time as The Coca-Cola Company is not the
beneficial owner of any shares of the Company's common stock. The Irrevocable
Proxy terminates at such time as: (i) J. Frank Harrison, Jr. or J. Frank
Harrison, III do not collectively own all 712,796 shares of Class B Common Stock
owned by J. Frank Harrison, Jr., or (ii) certain trusts holding shares of Class
B Common Stock subject to the Voting Agreement do not collectively own at least
50% of the Class B Common Stock held by them at the date of the Voting
Agreement.
On December 17, 1988, J. Frank Harrison, Jr., J. Frank Harrison, III and
certain trusts holding shares of Class B Common Stock entered into a
Shareholder's Agreement with The Coca-Cola Company. Pursuant to the agreement,
which has a term of ten years, expiring in 1998: (i) the Harrisons expressed a
commitment to remain actively involved and interested in the management and
operations of the Company during the term of the agreement; (ii) the Harrisons
agreed not to dispose of their shares of Common Stock and Class B Common Stock
during the term of the agreement (other than to certain permitted transferees)
without first offering such shares to The Coca-Cola Company; (iii) the Harrisons
were granted the right (the exercise of which could result in a change in
control of the
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<PAGE>
Company), exercisable for a period of five years following the fifth anniversary
of the agreement, to cause The Coca-Cola Company to purchase all or a portion of
their shares of Common Stock and Class B Common Stock subject to the agreement
at a price per share and on such terms as determined by the agreement; and (iv)
The Coca-Cola Company was granted the right to acquire the Harrisons' shares of
Common Stock and Class B Common Stock at a price per share and on such terms as
determined by the agreement upon the circumstance of an offer having been made
which, if consummated, would result in a change in control of the Company or the
sale of all or substantially all of the assets of the Company, and provided that
the Harrisons intend to vote in favor of such transaction.
During the fiscal year ended December 29, 1996, the Company paid legal fees
of $528,000 to Witt, Gaither & Whitaker, P.C., a law firm in which John W.
Murrey, III, a director of the Company, and John F. Henry, Jr., Secretary of the
Company, are members.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has appointed the firm of Price
Waterhouse LLP to serve as the Company's independent accountants for the fiscal
year ending December 28, 1997. Price Waterhouse LLP has served in that capacity
since 1968.
A representative of Price Waterhouse LLP will be present at the Annual
Meeting and will have the opportunity to make a statement if he desires to do so
and is expected to be available to respond to appropriate questions.
RECOMMENDATIONS OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the Company's shareholders vote FOR
fixing the number of directors at ten, FOR electing the Board of Directors'
nominees for directors and FOR approving the performance goals under the
Company's Annual Bonus Plan, as set forth in this Proxy Statement.
SHAREHOLDER PROPOSALS
In the event any shareholder wishes to present a proposal to the
shareholders of the Company at the 1998 Annual Meeting of Shareholders, such
proposal must be received by the Company for inclusion in the proxy statement
and form of proxy relating to such meeting on or before December 12, 1997.
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ADDITIONAL INFORMATION
The entire cost of soliciting proxies will be borne by the Company. In
addition to this solicitation of proxies by mail, proxies may be solicited by
the Company's directors, officers and other employees by personal interview,
telephone and telegram. Such persons will receive no additional compensation for
such services. Furthermore, Georgeson & Co., Inc., Wall Street Plaza, New York,
New York 10005, has been retained to assist the Company in the solicitation of
brokers, banks and other similar entities holding shares for other persons.
Georgeson & Co., Inc. will receive a payment of $6,500 for these services. All
brokers, banks and other similar entities and other custodians, nominees and
fiduciaries will be requested to forward solicitation materials to the
beneficial owners of the shares of Common Stock and Class B Common Stock held of
record by such persons, and the Company will pay such brokers, banks and other
fiduciaries all of their reasonable out-of-pocket expenses incurred in
connection therewith.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
intend to present, and has not been informed that any other person intends to
present, any matter to be acted upon at the Annual Meeting other than those
specifically referred to in this Proxy Statement. If other matters should
properly come before the Annual Meeting, it is intended that the holders of the
proxies will act in respect thereto in accordance with their best judgment.
John F. Henry, Jr.
SECRETARY
Date: April 11, 1997
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*******************************************************************************
APPENDIX
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
COCA-COLA BOTTLING CO. CONSOLIDATED
PROXY
ANNUAL MEETING OF SHAREHOLDERS, MAY 14, 1997
The undersigned hereby appoints John M. Belk, David L. Kennedy, Jr. and
Reid M. Henson, and each of them proxies, with full power of substitution, to
act and to vote the shares of common stock which the undersigned is entitled to
vote at the Annual Meeting of Shareholders to be held at Snyder Production
Center, 4901 Chesapeake Drive, Charlotte, North Carolina 28216, at 10:00 a.m.,
E.D.T., on May 14, 1997, and any adjournment or adjournments thereof, as
follows:
<TABLE>
<S> <C> <C> <C>
1. FIXING THE NUMBER OF DIRECTORS AT [ ] FOR [ ] AGAINST [ ] ABSTAIN
TEN:
2. ELECTION OF DIRECTORS: [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(Except as marked to the contrary to vote for all nominees listed
below) below
</TABLE>
H. W. McKay Belk; H. Reid Jones; and John W. Murrey, III
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
3. APPROVING THE PERFORMANCE GOALS UNDER THE COMPANY'S ANNUAL BONUS PLAN:
<TABLE>
<S> <C> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
(Continued on other side)
<PAGE>
(Continued from other side)
4. Acting upon any other business which may be
properly brought before said meeting or any
adjournments thereof; according to the number of
votes and as fully as the undersigned would be
entitled to vote if personally present, hereby
ratifying and confirming all that said proxies or
any of them lawfully do or cause to be done by
virtue hereof. A majority of said proxies who
shall be present and acting as such at the meeting
or any adjournment thereof, or if only one such
proxy be present and acting, then that one, shall
have and may exercise all the powers herein conferred.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
IN FAVOR OF PROPOSALS 1, 2 AND 3, AND WILL BE VOTED IN ACCORDANCE WITH THE BEST
JUDGMENT OF THE PROXYHOLDERS IN ACTING UPON ANY OTHER BUSINESS WHICH MAY BE
PROPERLY BROUGHT BEFORE SAID MEETING OR ANY ADJOURNMENT OR ADJOURNMENTS THEREOF.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders, dated April 11, 1997, and the Proxy Statement furnished
therewith.
If you plan to attend the Annual Meeting of Shareholders on May 14, 1997,
please check the following box: [ ]
Dated this ..... day of ..... , 1997
______________________________(Seal)
Note: Signature should agree with
name on stock certificate as printed
thereon. Executors, administrators,
trustees and other fiduciaries and
persons signing on behalf of
corporations or partnerships, should
so indicate when signing.
PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ACCOMPANYING PREPAID
SELF-ADDRESSED ENVELOPE. THANK YOU.
