PRELIMINARY COPY--SUBJECT TO COMPLETION
ENVIRODYNE INDUSTRIES, INC.
701 HARGER ROAD, SUITE 190
OAK BROOK, ILLINOIS 60521
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 16, 1997
To the Stockholders of Envirodyne Industries, Inc.:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders
(the "Annual Meeting") of Envirodyne Industries, Inc., a Delaware
corporation ("Envirodyne" or the "Company"), will be held on Friday, May
16, 1997, at 9:00 a.m. local time, at Sidley & Austin, One First National
Plaza, 55th Floor Conference Center, Chicago, Illinois, for the following
purposes:
(1) To elect five (5) directors to serve until the 1998 Annual
Meeting of Stockholders or until their respective successors are duly
elected and qualified;
(2) To ratify the appointment of Coopers & Lybrand L.L.P. as the
Company's independent accountants for the fiscal year ending December 25,
1997; and
(3) To transact such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
The Board of Directors of the Company has set the close of business
on March 21, 1997 as the record date (the "Record Date") for the Annual
Meeting. Only holders of Envirodyne's common stock, $.01 par value, at
the close of business on the Record Date are entitled to notice of, and
to vote at, the Annual Meeting. The stock transfer books of the Company
will not be closed following the Record Date. For a period of ten (10)
days prior to the Annual Meeting, a complete list of stockholders
entitled to vote at the Annual Meeting will be available for examination
at the Company's offices, during normal business hours, by any Envirodyne
stockholder for any purpose germane to the Annual Meeting.
It is important that your shares be voted at the Annual Meeting.
Whether or not you plan to attend the Annual Meeting in person, you are
urged to complete, date and sign the accompanying WHITE proxy card and
return it promptly in the enclosed postage-paid envelope to ensure that
your shares are represented and voted in accordance with your wishes. You
may revoke your proxy by following the procedures set forth in the
accompanying Proxy Statement. If you so choose, you may still vote in
person at the Annual Meeting even though you previously submitted your
proxy.
By order of the Board of Directors,
Stephen M. Schuster
Vice President, General Counsel
and Secretary
Oak Brook, Illinois
April _, 1997
PRELIMINARY COPY--SUBJECT TO COMPLETION
ENVIRODYNE INDUSTRIES, INC.
701 Harger Road, Suite 190
Oak Brook, Illinois 60521
PROXY STATEMENT
This Proxy Statement and the accompanying proxy card are being
furnished in connection with the solicitation of proxies by and on behalf
of the Board of Directors (the "Board of Directors") of Envirodyne
Industries, Inc., a Delaware corporation ("Envirodyne" or the "Company"),
for use at the 1997 Annual Meeting of Stockholders of the Company (the
"Annual Meeting"). The Annual Meeting will be held on Friday, May 16,
1997, at 9:00 a.m. local time, at Sidley & Austin, One First National
Plaza, 55th Floor Conference Center, Chicago, Illinois. This Proxy
Statement and the accompanying WHITE proxy card will be mailed to the
holders of Envirodyne's common stock, $.01 par value (the "Common
Stock"), on or about April _, 1997.
Stockholders of the Company represented at the Annual Meeting will
consider and vote upon (i) the election of five (5) directors to serve
until the 1998 Annual Meeting of Stockholders of the Company or until
their respective successors are duly elected and qualified, (ii) the
ratification of the appointment of Coopers & Lybrand L.L.P. as the
Company's independent accountants for the fiscal year ending December 25,
1997, and (iii) such other business as may properly come before the
Annual Meeting.
VOTING RIGHTS AND QUORUM
The record date set by the Board of Directors for the determination
of stockholders entitled to notice of, and to vote at, the Annual Meeting
was the close of business on March 21, 1997 (the "Record Date"). Only
holders of record of Common Stock at the close of business on the Record
Date are entitled to notice of, and to vote at, the Annual Meeting. As of
the Record Date, there were 14,552,233 shares of Common Stock issued and
outstanding. The presence, in person or by proxy, of the holders of a
majority of the shares of Common Stock entitled to vote at the Annual
Meeting is necessary to constitute a quorum for the conduct of business
at the Annual Meeting.
In the election of directors, each share of Common Stock is
entitled to cast one vote for each director to be elected; cumulative
voting is not permitted. Nominees for director receiving the affirmative
vote of a plurality of shares of Common Stock present in person or by
proxy and entitled to vote at the Annual Meeting will be elected as
directors. For all matters except the election of directors, each share
of Common Stock is entitled to one vote. The affirmative vote of a
majority of Common Stock present in person or by proxy and entitled to
vote at the Annual Meeting is required for each of the other matters
submitted to the stockholders for approval or ratification. A "broker
non-vote" is a vote withheld by a broker on a particular matter in
accordance with stock exchange rules because the broker has not received
instructions from the customer for whose account the shares are held.
Abstentions, directions to withhold authority and broker non-votes will
be treated as present for determining a quorum. Abstentions, directions
to withhold authority and broker non-votes will have no effect on the
election of directors. On all other matters, abstentions will have the
effect of a negative vote, and broker non-votes will have no effect.
PROXY SOLICITATION
This proxy solicitation is being made by and on behalf of the Board
of Directors. The cost of soliciting proxies and preparing the proxy
materials will be borne by the Company. The Company has retained the
services of Morrow & Co., Inc. ("Morrow") to assist it in soliciting
proxies for a fee of approximately $25,000 plus reimbursement of
out-of-pocket expenses. The Company has agreed to indemnify Morrow
against certain liabilities and expenses. It is estimated that Morrow
will employ approximately forty (40) persons to solicit proxies on behalf
of the Board of Directors for the Annual Meeting. The Company believes
that it will incur additional expenses of approximately $100,000 for
public relations advisors' fees, attorneys' fees and printing and other
miscellaneous expenses. As of April __, 1997, the Company had incurred
expenses of approximately $________ in connection with the solicitation
of proxies. The Company will also request securities brokers, custodians,
nominees and fiduciaries to forward solicitation material to the
beneficial owners of Common Stock held of record by them and will
reimburse them for their reasonable out-of-pocket expenses in forwarding
such solicitation material. In addition to solicitation of proxies by
Morrow, proxies may be solicited personally or by telephone, facsimile,
overnight, certified or first-class mail, advertisement or telegram by
directors, officers and employees of the Company or its subsidiaries
without additional compensation to them.
The Board of Directors has selected F. Edward Gustafson and Stephen
M. Schuster to act as proxies, with full power of substitution. Unless
otherwise directed in the accompanying proxy, the persons named therein
will vote FOR the election of the five (5) director nominees listed below
and FOR the ratification of the appointment of Coopers & Lybrand L.L.P.
as the Company's independent accountants for the fiscal year ending
December 25, 1997. The Company has received written notice from Zapata
Corporation of its intent to nominate five (5) candidates for election as
directors and to bring a stockholder proposal for consideration at the
Annual Meeting. See "Other Matters." As to any other business which may
properly come before the Annual Meeting, the persons designated as
proxies on the enclosed proxy card will vote in accordance with their
judgment on such matters. Any stockholder executing a proxy may revoke
the proxy at any time before it is voted by filing with the Secretary of
the Company a revoking instrument or a duly executed proxy bearing a
later date. Any stockholder may attend the Annual Meeting and vote in
person whether or not the stockholder has previously given a proxy.
ELECTION OF DIRECTORS
At a meeting held on March 19, 1997, the Board of Directors voted
to reduce the number of directors from seven (7) members to five (5)
members upon the expiration of the current term of directors. In
addition, the Board of Directors nominated Messrs. Robert N. Dangremond,
F. Edward Gustafson, Michael E. Heisley, Gregory R. Page and Mark D.
Senkpiel as nominees for election as directors to serve until the 1998
Annual Meeting of Stockholders of the Company or until their respective
successors are duly elected and qualified. All of the nominees are
currently directors of the Company whose terms will expire at the Annual
Meeting. The Board of Directors believes that all of its present nominees
will be available for election at the Annual Meeting and will serve if
elected. Messrs. Avram A. Glazer and Malcolm I. Glazer, who are also
currently directors of the Company, were not renominated by the Board of
Directors and their terms will expire at the Annual Meeting.
All of the Board of Directors' nominees have demonstrated
leadership abilities and achievement in the companies in which they have
served as executive or director. The Board of Directors' nominees have
experience in a broad range of industries and bring to the Board of
Directors substantial business experience and knowledge. Each of the
Board of Directors' nominees has served on the Board of Directors for
over three (3) years and has extensive knowledge about the Company and
its industries.
Nominees for Directors. The following sets forth information with
respect to the nominees for election as directors at the Annual Meeting:
Name Age Principal Occupation
Robert N. Dangremond 54 Mr. Dangremond has been a principal with
Jay Alix & Associates, a consulting and
accounting firm specializing in
corporate restructurings and turnaround
activities, since August 1989. Since
August 1995, Mr. Dangremond has held the
positions of interim Chief Executive
Officer and President of Forstmann &
Company, Inc. ("Forstmann"), a producer
of clothing fabrics. Previously, Mr.
Dangremond was Chairman of the Board,
President and Chief Executive Officer of
AM International, Inc. ("AMI"), a
provider of graphics arts equipment,
supplies and services, from February
1993 to September 1994. Mr. Dangremond
is also a director of AMI and Forstmann.
Mr. Dangremond has served as a director
of the Company since 1993.
Mr. Dangremond's appointment as interim
Chief Executive Officer and President of
Forstmann and, prior thereto, as
Chairman of the Board, President and
Chief Executive Officer of AMI, was made
in connection with turnaround consulting
services provided by Jay Alix &
Associates. On May 17, 1993, AMI filed a
petition under Chapter 11 of the United
States Bankruptcy Code (the "Bankruptcy
Code"), and on September 29, 1993, a
plan of reorganization was confirmed
with respect to AMI. On September 22,
1995, Forstmann filed a petition under
Chapter 11 of the Bankruptcy Code. A
plan of reorganization has been
negotiated with Forstmann's creditors,
which plan of reorganization is expected
to be filed with the Bankruptcy Court in
the near future and confirmed by the
creditors sometime in the summer of
1997.
F. Edward Gustafson 55 Mr. Gustafson has been Chairman of the
Board, President and Chief Executive
Officer of the Company since March 1996
and a director of the Company since
1993. Mr. Gustafson was Executive Vice
President and Chief Operating Officer of
the Company from May 1989 to March 1996
and President of Viskase Corporation, a
wholly-owned subsidiary of the Company,
from February 1990 to August 1994. Mr.
Gustafson has also served as Executive
Vice President and Chief Operating
Officer of D.P. Kelly & Associates,
L.P., a management services and private
investment firm, since November 1988.
On January 7, 1993, Envirodyne and its
major domestic subsidiaries filed
petitions under Chapter 11 of the
Bankruptcy Code. On December 31, 1993,
Envirodyne and the debtor subsidiaries
consummated a plan of reorganization and
emerged from bankruptcy. Mr. Gustafson
is Executive Vice President of Emerald
Acquisition Corporation ("Emerald"), the
former parent company of Envirodyne. On
August 20, 1993, Emerald filed a
petition under Chapter 11 of the
Bankruptcy Code. The case is still
pending.
Michael E. Heisley 60 Mr. Heisley has for more than five years
been the Chief Executive Officer of
Heico Acquisitions, an investment
holding company, through which Mr.
Heisley has interests in various
manufacturing companies. Mr. Heisley is
also a director of Robertson CECO, Inc.,
a major construction company engaged in
the manufacture of metal buildings,
concrete forms and curtain walls. Mr.
Heisley has served as a director of the
Company since 1993.
Gregory R. Page 45 Mr. Page has been President of the Red
Meat Group of Cargill, Inc. ("Cargill"),
a multinational trader and processor of
foodstuffs and other commodities, since
August 1995. From 1994 to August 1995,
Mr. Page was President of Cargill's
Worldwide Beef Operations. From 1992 to
1994, Mr. Page was President of
Cargill's North American Beef
Operations. From 1989 to 1992, Mr. Page
was Managing Director of Sun Valley
Thailand, a joint venture between
Cargill and Nippon Meat Packers, as an
integrated processor of poultry-based
foods for the Japanese marketplace. Mr.
Page has served as a director of the
Company since 1993.
Mark D. Senkpiel 44 Mr. Senkpiel has been Senior Vice President
of Trust Company of the West, an
investment management firm, since
January 1996. Previously, Mr. Senkpiel
was for more than five (5) years
Investment Director of the Investment
Management Division of Allstate
Corporation, a property, liability and
life insurance company. Mr. Senkpiel has
served as a director of the Company
since 1993.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF
THE NOMINEES LISTED ABOVE, AND EACH PROXY WILL BE VOTED FOR SUCH NOMINEES
(UNLESS THE STOCKHOLDER EXECUTING SUCH PROXY HAS WITHHELD AUTHORITY). If
any nominee is not available for election at the Annual Meeting, the
proxies will be voted for an alternate selected by the Board of Directors
(unless authority is withheld), or the Board of Directors may elect not
to fill the vacancy and reduce the number of directors.
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
In fiscal year 1996, the Board of Directors met seven (7) times and
took action by written consent in lieu of a meeting on one (1) occasion.
Also during fiscal year 1996, the Audit Committee met twice and the
Compensation and Nominating Committee met three (3) times. Each director
participated in at least 75% of the total number of such meetings of the
Board of Directors and meetings of committees of the Board of Directors
on which he served.
The Board of Directors has established the following standing
committees:
Audit Committee. The principal responsibilities of the Audit
Committee are to review and recommend to the Board of Directors the
selection of the Company's independent accountants; to review with the
independent accountants the scope and results of the annual audit
engagement and the system of internal accounting controls; and to direct
and supervise special audit inquiries. The current members of the Audit
Committee are Mark D. Senkpiel, Chairman, Michael E. Heisley and Avram A.
Glazer, who was appointed to the Audit Committee in January 1997.
Compensation and Nominating Committee. The principal responsibilities
and authority of the Compensation and Nominating Committee are to review and
approve certain matters involving executive compensation; to review and
approve grants of stock options and stock appreciation rights under the
Company's stock option plan; to review and recommend adoption of or revisions
to compensation plans and policies; and to review and make recommendations to
the Board of Directors regarding such matters as the size and composition of
the Board of Directors, criteria for director nominations, director
candidates, including stockholder nominations, and such other related matters
as the Board of Directors may request from time to time. The Compensation and
Nominating Committee will consider nominees recommended by the Company's
stockholders. Any such recommendation should be addressed to: Corporate
Secretary, Envirodyne Industries, Inc., 701 Harger Road, Suite 190, Oak Brook,
Illinois 60521. See "Stockholder Proposals for 1998 Annual Meeting" for
procedures with respect to nominations by stockholders. The current members of
the Compensation and Nominating Committee are Robert N. Dangremond, Chairman,
and Gregory R. Page.
The Board of Directors may from time to time establish other committees
to assist it in the discharge of its responsibilities.
SECURITY OWNERSHIP
The following table sets forth the beneficial ownership of Common
Stock as of April 1, 1997 of (a) each person or group of persons known to
the Company to own beneficially more than 5% of the outstanding shares of
Common Stock, (b) each director and nominee for director of the Company,
(c) each executive officer of the Company listed in the Summary
Compensation Table below, and (d) all executive officers and directors of
the Company as a group. All information is taken from or based upon
ownership filings made by such persons with the Commission or upon
information provided by such persons to the Company.
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Address of Number of Shares Percent
Beneficial Owner Beneficially Owned (1) of Class (1)
Malcolm I. Glazer.......................... 5,886,283(2)(3) 40.44%
1482 South Ocean Boulevard
Palm Beach, Florida 33480
Zapata Corporation......................... 5,877,304 40.39%
P.O. Box 4240
Houston, Texas 77210
Donald P. Kelly........................... 1,883,691(4)(5) 12.83%
701 Harger Road, Suite 190
Oak Brook, Illinois 60521
James D. Bennett.......................... 1,180,882(6) 8.11%
450 Park Avenue
New York, New York 10022
F. Edward Gustafson....................... 1,264,419(5)(7) 8.67%
701 Harger Road, Suite 190
Oak Brook, Illinois 60521
Elliott Associates, L.P................... 1,136,600(8) 7.81%
Martley International, Inc.
Westgate International, L.P.
712 Fifth Avenue, 36th Floor
New York, New York 10019
Volk Enterprises, Inc..................... 989,190 6.80%
1230-1232 South Avenue
Turlock, California 95380
Bennett Restructuring Fund, L.P........... 862,011 5.92%
Restructuring Capital Associates, L.P.
450 Park Avenue
New York, New York 10022
Robert N. Dangremond...................... 11,663(3) *
Gordon S. Donovan......................... 42,739(9) *
Avram A. Glazer........................... 8,979(3) *
Michael E. Heisley........................ 167,101(3) 1.15%
Gregory R. Page........................... 11,052(3) *
Stephen M. Schuster....................... 89,275(10) *
Mark D. Senkpiel.......................... 16,591(3)(11) *
All directors and executive officers of
the Company as a group (9 persons)........ 7,498,102(12) 51.16%
</TABLE>
- ------------------------
* Less than 1%.
(1) Beneficial ownership is calculated in accordance with Section 13(d)
of the Securities Exchange Act of 1934 and the rules promulgated
thereunder. Accordingly, the "Number of Shares Beneficially Owned"
and the "Percent of Class" shown for each person listed in the
table are based on the assumption that both stock options which are
exercisable currently or within 60 days of April 1, 1997 and
warrants to purchase Common Stock ("Warrants") which are all
currently exercisable, held by such person, have been exercised.
Unless otherwise indicated, the persons listed in the table have
sole voting and investment power over those securities listed for
such person.
(2) The ownership indicated includes 5,877,304 shares owned by Zapata
Corporation ("Zapata"), which shares may be deemed to be
beneficially owned by Mr. Glazer because Mr. Glazer is the Chairman
of the Board of Zapata and owns approximately 35.2% of the
outstanding common stock of Zapata. Mr. Glazer disclaims beneficial
ownership of such shares.
(3) The ownership indicated includes 3,000 shares subject to stock
options owned by each non-employee director.
(4) The ownership indicated includes Warrants to purchase 119,809
shares owned by Mr. Kelly.
(5) The ownership indicated includes 70,287 shares and Warrants to
purchase 4,405 shares owned by D.P. Kelly & Associates, L.P.
("DPK"), of which Mr. Kelly and Mr. Gustafson are principals and
officers. The general partner of DPK is C&G Management Company,
Inc. ("C&G Management"), which is owned by Mr. Kelly and Mr.
Gustafson. The ownership indicated also includes 989,190 shares
owned by Volk Enterprises, Inc. ("Volk"). Volk is controlled by
Volk Holdings L.P., whose general partner is Wexford Partners I
L.P. ("Wexford Partners"). The general partner of Wexford Partners
is Wexford Corporation, which is owned by Mr. Kelly and Mr.
Gustafson. Mr. Kelly and Mr. Gustafson share voting and investment
power over the shares and Warrants owned by DPK and Volk. However,
Mr. Kelly and Mr. Gustafson each disclaim beneficial ownership of
shares and Warrants owned by DPK and Volk except to the extent of
their respective pecuniary interest in such entities.
(6) The ownership indicated includes 862,011 shares owned by Bennett
Restructuring Fund, L.P. ("Bennett Restructuring") and 318,871
shares owned by Bennett Offshore Restructuring Fund, Inc.
("Bennett Offshore"). Restructuring Capital Associates, L.P.
("RCA") is the general partner of Bennett Restructuring. The
general partner of RCA is Bennett Capital Corporation, of which
Mr. Bennett is the sole shareholder. Mr. Bennett is also the
President and controlling shareholder of Bennett Offshore
Investment Corporation, the investment manager of Bennett
Offshore.
(7) The ownership indicated includes 11,666 shares and 7,928 shares
subject to stock options and Warrants, respectively, owned by Mr.
Gustafson. The ownership indicated also includes 70,619 shares and
Warrants to purchase 4,405 shares owned by Mr. Gustafson's spouse.
Mr. Gustafson does not have or share voting or investment power
over the shares and Warrants owned by his spouse and disclaims
beneficial ownership of such shares and Warrants.
(8) Elliott Associates, L.P. ("Elliott"), Westgate International,
L.P. ("Westgate") and Martley International, Inc. ("Martley") filed
a group Schedule 13D indicating that 685,500 shares are
beneficially owned by Elliot and 451,100 shares are beneficially
owned by Westgate and Martley. Paul E. Singer and Braxton
Associates, L.P., which is controlled by Mr. Singer, are the
general partners of Elliott. Mr. Singer is also the President of
Martley and an executive officer of Hambledon, Inc., which is the
sole general partner of Westgate. Martley is the investment manager
of Westgate and disclaims beneficial ownership of, and pecuniary
interest in, any shares. Martley's business address is 712 Fifth
Avenue, 36th Floor, New York, New York 10019.
(9) The ownership indicated includes 26,000 shares subject to stock
options owned by Mr. Donovan, 3,000 shares owned jointly by Mr.
Donovan and his spouse, with whom Mr. Donovan shares voting and
investment power over such shares, and 1,000 shares owned by Mr.
Donovan's spouse. Mr. Donovan does not have or share voting power
over the 1,000 shares owned by his spouse but shares investment
power over those shares with his spouse. Mr. Donovan disclaims
beneficial ownership of such shares.
(10) The ownership indicated includes 30,483 shares subject to stock
options owned by Mr. Schuster and 20,104 shares owned by Mr.
Schuster's spouse. Mr. Schuster does not have or share voting or
investment power over the shares owned by his spouse and disclaims
beneficial ownership of such shares.
(11) The ownership indicated includes 3,000 shares held by Mr.
Senkpiel as custodian for accounts of his minor children under
the Uniform Gifts to Minors Act. Mr. Senkpiel disclaims
beneficial ownership of such shares.
(12) See Footnotes (1), (2), (3), (5), (7), (9), (10) and (11).
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers,
directors and persons who beneficially own more than 10% of the Company's
outstanding Common Stock to file reports of ownership and changes in
ownership of Common Stock with the Securities and Exchange Commission,
NASDAQ and the Company. Based upon a review of relevant filings and
written representations from the Company's officers, directors, and
persons who own more than 10% of the Company's Common Stock, the Company
believes that all required filings by such persons with respect to the
year ended December 26, 1996 have been made on a timely basis except that
each of the following reporting persons failed to file one report each
with respect to one transaction on a timely basis: Zapata Corporation,
Mr. F. Edward Gustafson, Mr. Malcolm I. Glazer, Mr. Avram A. Glazer and
Ms. Elizabeth Garcia-Economou.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation of Directors. Each director who is not an officer of
the Company received an annual retainer of $20,000 in 1996 and a fee of
$1,000 for each attended meeting of the Board of Directors. Chairmen of
committees of the Board of Directors received an annual retainer of
$1,500 in 1996. Directors also received a fee for each attended meeting
of a committee of the Board of Directors of $1,000 ($500 in the case of
committee meetings occurring immediately before or after meetings of the
full Board of Directors). Directors who are officers of the Company do
not receive compensation in their capacity as directors. On May 10, 1995
(the date of the Company's 1995 Annual Meeting of Stockholders), each
non-employee director of the Company received a non-qualified stock
option to purchase 2,000 shares of Common Stock at an option exercise
price equal to the fair market value of the Common Stock on the date of
grant in accordance with the terms of the Envirodyne Industries, Inc.
1993 Stock Option Plan, as amended and restated. Pursuant to this plan,
on the date of the 1996 Annual Meeting of Stockholders, non-employee
directors were granted an additional stock option to purchase 1,000
shares of Common Stock at an option exercise price equal to the fair
market value of the Common Stock on the date of grant. Pursuant to the
Non-Employee Directors' Compensation Plan, non-employee directors may
elect to receive their director fees in the form of shares of Common
Stock. The number of shares received is based on the average of the
closing bid and asked price of the Common Stock on the business day
preceding the date the Common Stock is issued. All of the non-employee
directors have elected to receive their director fees in the form of
shares of Common Stock.
Compensation Committee Interlocks and Insider Participation. The
Compensation and Nominating Committee of the Board of Directors consists
of Messrs. Dangremond and Page, each of whom is a non-employee director
of the Company. Mr. Page is the President of the Red Meat Group of
Cargill, Inc. In fiscal year 1996, Viskase Corporation, a wholly-owned
subsidiary of the Company, had sales of $19,795,000 made in the ordinary
course to Cargill, Inc. and its affiliates.
Summary of Cash and Certain Other Compensation of Executive
Officers. The Summary Compensation Table below provides certain summary
information concerning compensation by the Company for 1996, 1995 and
1994 for services rendered by the Company's Chief Executive Officer and
each of the other executive officers of the Company whose total annual
salary and bonus exceeded $100,000 in 1996.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation Awards
------------------------------ -------------------
Other Annual Restricted All Other
Name and Salary Bonus Compensation Stock Award Options Compensation
Principal Position(1) Year ($)(2) ($)(3) ($)(4) ($)(5) (#) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Donald P. Kelly 1996 112,500 -- 25,100 -- -- 65(6)
1995 450,000 -- -- -- -- 472
1994 450,000 -- 48,125 -- -- 472
F. Edward Gustafson 1996 435,692 -- 69,662 126,875 145,000 16,108(7)
Chairman of the Board, 1995 390,000 -- 67,772 -- -- 12,472
President and Chief 1994 390,000 -- 61,496 -- -- 16,203
Executive Officer
Stephen M. Schuster 1996 163,325 43,894 6,259 -- 22,900 7,096(8)
Vice President, General 1995 157,050 42,404 23,159 -- -- 7,154
Counsel and Secretary 1994 151,375 63,261 -- -- 22,850 6,197
Gordon S. Donovan 1996 134,042 31,776 3,035 -- 19,500 5,664(9)
Vice President, Chief 1995 121,156 33,520 -- -- 19,500 5,257
Financial Officer, 1994 110,190 45,629 -- -- -- 4,362
Treasurer and Assistant
Secretary
</TABLE>
(1) Mr. Kelly served as Chairman of the Board, President and Chief
Executive Officer of the Company until late March 1996. At that
time, Mr. Gustafson became Chairman of the Board, President and
Chief Executive Officer.
(2) The salaries set forth above for Messrs. Kelly and Gustafson for
1996 do not include $193,000 paid to D.P. Kelly & Associates, L.P.
under the Amended and Restated Management Services Agreement dated
December 31, 1993. See "Certain Relationships and Related
Transactions."
(3) Mr. Donovan's bonus for 1995 and 1994 includes $6,250 and $10,406,
respectively, earned under the Company's Long-Term Growth Plan
("LTGP") with respect to that fiscal year. Bonuses under the LTGP
are determined based on the Company's overall financial performance
for the fiscal year in which an award is made. Bonuses under the
LTGP are paid at the conclusion of the second year following the
year for which the bonus is earned and are subject to forfeiture if
the participant's employment with the Company is terminated for any
reason other than death, retirement or other specified
circumstances prior to payment.
(4) In 1996, the Company paid country club dues on behalf of Mr. Kelly
in an amount equal to $25,100. In 1994, Mr. Kelly was reimbursed
for personal travel expenses in the amount of $40,500. In 1996, Mr.
Gustafson had personal use of a Company automobile for a portion of
the year and, pursuant to his Employment Agreement, dated March 27,
1996, was paid cash in lieu of a Company automobile for the
remainder of the year, which use and cash payment was valued at
$24,604. In 1995 and 1994, Mr. Gustafson had personal use of a
Company automobile at an aggregate incremental cost to the Company
of $28,984 and $30,861, respectively. In addition, in 1996, 1995
and 1994, the Company paid country club dues on behalf of Mr.
Gustafson in an amount equal to $38,054, $12,062 and $12,190,
respectively.
(5) Pursuant to an Employment Agreement, dated March 27, 1996, Mr.
Gustafson was granted 35,000 restricted shares of the Company's
Common Stock with a value of $126,875. Such shares are
nontransferable and are subject to forfeiture until March 27, 1999.
See "Employment Agreements and Change-in-Control Arrangements." The
Company does not currently, and does not expect in the near future
to, pay dividends on shares of its Common Stock. Neither Mr.
Gustafson nor any of the other persons named in the Summary
Compensation Table holds any other restricted shares of Common
Stock.
(6) Amount paid for life insurance.
(7) Includes $2,527 paid for life insurance, $4,581 contributed to the
Envirodyne Retirement Income Plan and $9,000 contributed to the
Envirodyne Parallel Non-Qualified Thrift Plan.
(8) Includes $398 paid for life insurance, $4,581 contributed to the
Envirodyne Retirement Income Plan and $2,117 contributed to the
Envirodyne Parallel Non-Qualified Thrift Plan.
(9) Includes $300 paid for life insurance, $4,073 contributed to the
Envirodyne Retirement Income Plan and $1,291 contributed to the
Envirodyne Parallel Non-Qualified Thrift Plan.
Stock Option Grants. The following table provides information
concerning stock options granted to the persons named in the Summary
Compensation Table during the fiscal year ended December 26, 1996. No
stock appreciation rights ("SARs") have been granted.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Number of Percent of Potential Realizable Value
Securities Total Options Value at Assumed Annual
Underlying Granted to Exercise Rates ofStock Price
Options Employees or Base Appreciation for Option
Granted in Fiscal Price Expiration Term (2)
Name (#)(1) Year ($/Share) Date 5%($) 10%($)
---- ---------- ------------ --------- ---------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Donald P. Kelly........... -- -- -- -- -- --
F. Edward Gustafson (3)... 35,000 6.5% 3.50 03/27/06 77,040 195,234
35,000 6.5% 3.50 03/27/06 77,040 195,234
75,000 14.0% 3.50 03/27/06 -- --
Stephen M. Schuster....... 22,900 4.3% 4.375 05/15/06 63,007 159,673
Gordon S. Donovan........ 19,500 3.6% 4.375 05/15/06 53,653 135,966
</TABLE>
(1) Stock options are granted under the Envirodyne Industries, Inc.
1993 Stock Option Plan, as amended and restated (the "Stock Option
Plan"). Stock options generally become exercisable on a cumulative
basis in annual increments of one-third of the optioned shares,
commencing on the first anniversary of the grant date. Upon a
"Change of Control" of the Company, as defined in the Stock Option
Plan, all outstanding stock options become immediately exercisable.
(2) The potential realizable value is based on the term of the option
at the date of grant ( ten (10) years). It is calculated by
assuming that the stock price on the date of grant appreciates at
the indicated annual rate, compounded annually for the entire term,
and that the stock option is exercised and sold on the last day of
the stock option term for the appreciated stock price. These
amounts represent certain assumed rates of appreciation only.
Actual gains, if any, on stock option exercises and on the sale of
shares of Common Stock acquired upon exercise are dependent on the
future performance of the Common Stock and overall stock market
conditions. There can be no assurance that the amounts reflected in
this table will be achieved.
(3) Mr. Gustafson's stock options were granted pursuant to an Employment
Agreement, dated March 27, 1996, between Mr. Gustafson and the
Company. See "Employment Agreements and Change-in-Control
Arrangements." Mr. Gustafson's stock options are subject to and
governed by the Stock Option Plan. However, one stock option to
purchase 35,000 shares of Common Stock does not commence vesting
until the second anniversary of the grant date, and the
exercisability of the stock option to purchase up to 75,000 shares
of Common Stock was contingent upon the financial performance of
the Company during 1996. No portion of this stock option has or
will become exercisable. Therefore, no information has been given
with respect to the potential realizable value of the shares
underlying this stock option.
Stock Option Exercises and Holdings. The following table provides
information concerning the exercise of stock options during the fiscal year
ended December 26, 1996 and the fiscal year-end value of stock options with
respect to each of the persons named in the Summary Compensation Table.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN 1996
AND DECEMBER 26, 1996 OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired Value 12/26/96(#) 12/26/96($)
on Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
---- ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
Donald P. Kelly............... -- -- -- --
F. Edward Gustafson........... -- -- 0/70,000 0/166,250
Stephen M. Schuster........... -- -- 22,850/22,900 18,566/34,350
Gordon S. Donovan............. -- -- 19,500/19,500 15,844/29,250
</TABLE>
EMPLOYMENT AGREEMENTS AND CHANGE-IN-CONTROL ARRANGEMENTS
On March 27, 1996, the Company entered into an Employment Agreement
(the "Agreement") with Mr. F. Edward Gustafson. Pursuant to the
Agreement, Mr. Gustafson agreed to serve as Chairman of the Board,
President and Chief Executive Officer of the Company, and the Company
agreed to use its best efforts to cause Mr. Gustafson to be elected as a
director of the Company, during the term of the Agreement. The initial
term of the Agreement is three (3) years, provided, however, that on
March 26, 1997 and each subsequent anniversary thereof, the term of the
Agreement will be automatically extended for a period of one (1) year
unless the Company or Mr. Gustafson gives written notice to the other at
least thirty (30) days prior to the anniversary date that the term shall
not be so extended.
Under the Agreement, Mr. Gustafson will receive an initial annual
base salary of at least $450,000 and $30,000 per year in lieu of a
Company-provided automobile. Mr. Gustafson's base salary will be
increased by the Compensation and Nominating Committee of the Board of
Directors each year in a manner consistent with increases in base salary
for other senior officers of the Company. In addition, the Agreement
provides that with respect to the fiscal year ended December 26, 1996,
Mr. Gustafson would be eligible to receive a bonus based on a percentage
of his base salary depending on the Company's performance based on
earnings before interest, taxes and depreciation and amortization
("EBITDA"). Because the Company did not achieve the minimum goal for
EBITDA, Mr. Gustafson did not receive a bonus for fiscal year 1996. Mr.
Gustafson will be eligible to receive an annual bonus for future fiscal
years of the Company based on such financial performance or other
performance-related criteria as established by the Compensation and
Nominating Committee, after consultation with Mr. Gustafson. Mr.
Gustafson is also entitled to participate in any employee benefit plans
in effect for, and to receive other fringe benefits provided to, other
executive officers.
Pursuant to and upon execution of the Agreement, Mr. Gustafson was
granted two (2) stock options, each to purchase 35,000 shares of Common
Stock. One (1) stock option becomes exercisable in cumulative annual
increments of one-third commencing on the first anniversary of the date
of grant. The other stock option becomes exercisable in cumulative annual
increments of one-third commencing on the second anniversary of the date
of grant. In addition, Mr. Gustafson was granted a stock option to
purchase up to 75,000 shares of Common Stock depending on the financial
performance of the Company based on EBITDA for fiscal year 1996. The
Company did not achieve the minimum goal for EBITDA. Therefore, no
portion of this stock option became exercisable or will become
exercisable in the future. Lastly, Mr. Gustafson was granted 35,000
restricted shares of Common Stock which may not be transferred, and are
subject to forfeiture, until March 27, 1999.
If Mr. Gustafson's employment is terminated by the Company for
Cause, as defined in the Agreement, or by Mr. Gustafson other than for
Good Reason or Disability, as defined in the Agreement, Mr. Gustafson
will be paid all Accrued Compensation, as defined in the Agreement,
through the date of termination of employment. If Mr. Gustafson's
employment with the Company is terminated by the Company for any reason
other than for Cause, death or Disability, or by Mr. Gustafson for Good
Reason, (i) Mr. Gustafson will be paid all Accrued Compensation plus 200%
of his base salary and the prorated amount of annual bonus that would
have been payable to Mr. Gustafson with respect to the fiscal year in
which Mr. Gustafson's employment is terminated, provided that the
performance targets have been actually achieved as of the date of
termination (unless such termination of employment follows a Change in
Control, as defined in the Agreement, in which case Mr. Gustafson will
receive a bonus equal to 50% of his base salary regardless of the
Company's performance), (ii) Mr. Gustafson will continue to receive life
insurance, medical, dental and hospitalization benefits for a period of
twenty-four (24) months following termination of employment, and (iii)
all outstanding stock options and restricted shares of Common Stock will
become immediately exercisable, vested and nonforfeitable.
Pursuant to the Agreement, Mr. Gustafson is generally prohibited
during the term of the Agreement, and for a period of two (2) years
thereafter, from competing with the Company, soliciting any customer of
the Company or inducing or attempting to persuade any employee of the
Company to terminate his or her employment with the Company in order to
enter into competitive employment. For purposes of the Agreement, the
Company includes Envirodyne Industries, Inc. and any of its subsidiaries
over which Mr. Gustafson exercised, directly or indirectly, any
supervisory, management, fiscal or operating control during the term of
the Agreement.
In May 1996, the Compensation and Nominating Committee of the Board
of Directors approved the Envirodyne Industries, Inc. Severance Pay
Policy (the "Policy") which covers all permanent, full-time, salaried
executives and administrative personnel employed by the Company at its
corporate office, including Mr. Gordon S. Donovan and Mr. Stephen M.
Schuster. Mr. Donovan and Mr. Schuster are eligible for severance
benefits as set forth in the Policy upon the occurrence of one of the
following events (an "Event"): (i) involuntary separation of employment
from the Company for any reason other than death, disability or willful
misconduct, (ii) voluntary separation of employment from the Company (a)
following a reduction in base compensation or incentive bonus opportunity
from that in effect on the day immediately before the effective date of a
Change in Control, as defined in the Policy, or office consolidation or
elimination, or (b) following a reduction in the person's principal
responsibilities from those in effect on the day immediately before the
effective date of a Change in Control, as defined in the Policy, or
office consolidation or elimination. Upon the occurrence of an Event and
subject to the Company obtaining a general release, Mr. Donovan and Mr.
Schuster would receive severance pay equal to the equivalent to eighteen
(18) months' salary (at the highest annual rate in effect during the
three-year period prior to separation of employment) plus a target bonus
under the Management Incentive Plan in effect at the time of separation.
In addition, Mr. Donovan and Mr. Schuster would continue to receive
medical, life and dental insurance benefits in effect at the time of
separation of employment for a period of time following such separation
depending on form of payment of the severance pay elected (e.g., lump sum
or installment) and whether he is covered by another employer's plan. The
Policy may be amended or terminated at any time by the Company except
that in the event that a Change in Control or elimination or
consolidation of all of part of the corporate office occurs during the
term of the Policy, the Policy will be automatically extended for a
period of twenty-four (24) months following the effective date of the
Change in Control or office consolidation or elimination.
REPORT OF THE COMPENSATION AND NOMINATING
COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation and Nominating Committee (the "Committee") of the
Board of Directors of the Company is composed of two (2) directors,
neither of whom is an officer or employee of the Company, its
subsidiaries or affiliates.
General Policy
The Company's compensation program is intended to promote the
interests of the Company by attracting and retaining highly qualified key
employees and providing such key employees with incentives and rewards to
encourage superior performance and continued employment with the Company.
Accordingly, the Company's compensation program consists of three (3)
components: base salary, annual bonus and stock options.
Base Salary
The base salaries of the Company's executive officers are reviewed
and, if appropriate, adjusted on an annual basis. The base salaries of
executive officers, other than the Chief Executive Officer, are
determined by the Chief Executive Officer after consultation with the
Vice President, Human Resources. During 1996 the Company retained the
services of Towers Perrin, an executive compensation consultant, to
assist the Chief Executive Officer in determining the compensation,
including base salary, of the other executive officers. Compensation
survey information with respect to consumer nondurable product companies
(some of which are included in the peer group used by the Company in
constructing its Performance Graph included in this Proxy Statement) was
reviewed by the Chief Executive Officer in adjusting each executive
officer's base salary. Other factors such as the executive officer's
level of responsibility, individual performance and contributions to the
Company were also taken into account in determining the base salaries of
executive officers. The Company believes that its executive officers'
total compensation is at approximately the median of total compensation
when compared to other nondurable product companies.
Annual Bonus
In 1996 executive officers of the Company (other than Mr.
Gustafson) participated in the Management Incentive Plan ("MIP") pursuant
to which they were granted an annual bonus based primarily on the
financial performance of the Company and secondarily on personal
performance. At the beginning of the 1996 fiscal year, the Committee,
based on the recommendation of the Chief Executive Officer and the Vice
President, Human Resources, of the Company, established target and
maximum financial performance goals with respect to the Company's
Operating Income, Operating Cash Flow and Return on Net Managed Assets
and the bonus opportunity, stated as a percentage of base salary, that
each executive could earn under the MIP. In addition, personal
performance goals were jointly established by the executive officer and
the Chief Executive Officer.
The Company exceeded its target goal for Operating Cash Flow. Based
on the recommendation of the Chief Executive Officer, the Committee
determined that each of the executive officers achieved his primary
personal performance goals. Actual awards under the MIP varied depending
on the bonus opportunity for each executive officer.
Stock Options
Executive officers also participate in the 1993 Stock Option Plan,
as amended (the "Stock Option Plan"). Under the Plan, executive officers
were granted approximately the same number of stock options in 1996 as
their most recent past grant.
Chief Executive Officer Compensation
Mr. Donald P. Kelly resigned as President, Chief Executive Officer
and Chairman of the Board of the Company in March 1996. Prior to his
resignation, Mr. Kelly's compensation was governed by the terms of the
Amended and Restated Management Services Agreement (the "Management
Agreement"), dated as of December 31, 1993, between the Company and D.P.
Kelly and Associates, L.P. ("DPK"). See "Certain Relationships and
Related Transactions" for a description of, and more information relating
to, the Management Agreement. The salary disclosed in the Summary
Compensation Table for Mr. Kelly represents that portion of the
management fees payable to DPK under the Management Agreement elected to
be taken by Mr. Kelly in the form of salary. Mr. Kelly did not
participate in the Stock Option Plan or MIP. The terms and conditions of
the Management Agreement, including the compensation payable to DPK, were
approved by the Company's creditors in connection with the Company's plan
of reorganization, consummated December 31, 1993, under Chapter 11 of the
Bankruptcy Code. In March 1996, the Company terminated the Management
Services Agreement.
Mr. F. Edward Gustafson was elected President, Chief Executive
Officer and Chairman of the Board in March 1996. Prior to March 1996, Mr.
Gustafson served as Executive Vice President and Chief Operating Officer
of the Company, and his compensation was governed by the terms and
conditions of the Management Agreement. A portion of the salary disclosed
in the Summary Compensation Table for Mr. Gustafson represents that
portion of the management fees payable to DPK elected to be taken by Mr.
Gustafson in the form of salary. Mr. Gustafson serves as President, Chief
Executive Officer and Chairman of the Board of the Company pursuant to an
Employment Agreement with the Company dated March 1996 (the "Agreement").
For a description of the terms and conditions of the Employment
Agreement, see "Employment Agreements and Change-in-Control
Arrangements." Mr. Gustafson's base salary, annual bonus and stock option
grant for 1996 were established in accordance with the terms and
conditions set forth in the Agreement. The Company did not achieve the
minimum goal for EBITDA set forth in the Agreement, and Mr. Gustafson
therefore did not receive an annual bonus for 1996, and no portion of the
stock option to purchase up to 75,000 shares of Common Stock became
exercisable or will become exercisable in the future. The Committee
believes that Mr. Gustafson's base salary and stock option grants under
the Agreement are reasonable in light of his increased duties and
responsibilities and his continued contribution toward the success of the
Company.
Policy Regarding Section 162(m)
The Company has not adopted a policy regarding the $1 million
limitation on the deductibility of certain executive compensation under
Section 162(m) of the Internal Revenue Code of 1986, as amended. The
current compensation of the Company's executive officers falls
significantly below the $1 million deduction limit.
Compensation and Nominating Committee
Robert N. Dangremond (Chairman)
Gregory R. Page
PERFORMANCE GRAPH
Set forth below is a graph comparing the quarterly change in the
cumulative total stockholder return of the Common Stock against the
cumulative total return of the NASDAQ Non-Financial Services Index and a
peer group of plastic film manufacturing or food packaging companies
consisting of A.E.P. Industries, Inc., Atlantis Group, Inc., Ball
Corporation, Bemis Company, Inc., Carlisle Plastics Inc., Liqui-Box
Corp., Sealed Air Corp. and Sealright Co., Inc. for the period commencing
December 31, 1993, which, for financial reporting purposes, was the date
that the Common Stock was distributed to stockholders pursuant to
Envirodyne's Plan of Reorganization, and ending December 26, 1996. The
graph assumes an investment of $100 on December 31, 1993 and the
reinvestment of dividends and other distributions to stockholders.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
BASED ON REINVESTMENT OF $100 BEGINNING DECEMBER 31, 1993
[Graph Omitted]
- --------------------------------------------------------------------------------------
DEC. '93 DEC. '94 DEC. '95 DEC. '96
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ENVIRODYNE INDUSTRIES, INC. $100 $ 39 $ 33 $ 53
- --------------------------------------------------------------------------------------
NASDAQ NON-FINANCIAL COMPANIES
INDEX $100 $ 98 $138 $170
- --------------------------------------------------------------------------------------
PEER GROUP INDEX $100 $109 $120 $166
- --------------------------------------------------------------------------------------
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 31, 1993, the Company and D.P. Kelly & Associates, L.P.
("DPK") entered into an Amended and Restated Management Services
Agreement (the "Management Agreement") pursuant to which DPK provided
corporate management services to the Company. In consideration of the
services provided by DPK under the Management Agreement, the Company
agreed to pay $2,000,000 in management fees and salaries and the
reimbursement of expenses. On March 27, 1996, the Board of Directors
voted to terminate the Management Agreement. For fiscal 1996, the Company
paid $193,000 to DPK for services provided under the Management
Agreement. In addition, pursuant to the Agreement, the Company paid to
DPK a $2,000,000 termination fee. Messrs. Kelly and Gustafson are
executive officers and limited partners of DPK. Mr. Kelly's salary and
Mr. Gustafson's salary prior to March 27, 1996, disclosed in the Summary
Compensation Table, were paid pursuant to the Management Agreement.
During fiscal 1996, the Company purchased products in the ordinary
course and on arm's-length terms from affiliates of DPK in the amount of
$904,000. During fiscal 1996, the Company sublet office space from DPK
for which it paid $139,000 in rent. The rent is comparable to that which
would be charged to a nonaffiliated company for use of this office space.
Mr. Kelly and DPK have asserted common law and contractual rights
of indemnity against Envirodyne for attorneys' fees, costs and any
ultimate liability relating to the claims set forth in complaints filed
in two lawsuits. In ARTRA Group Incorporated v. Salomon Brothers Holding
Company Inc., Salomon Brothers Inc., D.P. Kelly & Associates, L.P.,
Donald P. Kelly, Charles K. Bobrinskoy, James L. Massey, William Rifkind
and Michael Zimmerman, Case No. 93 A 1616, United States Bankruptcy Court
for the Northern District of Illinois, Eastern Division, ARTRA Group
Incorporated ("ARTRA") alleges breach of fiduciary duty and tortious
interference in connection with the negotiation and consummation of the
Plan of Reorganization (ARTRA I). In ARTRA Group Incorporated v. Salomon
Brothers Holding Company Inc., Salomon Brothers Inc., D.P. Kelly &
Associates, L.P., Donald P. Kelly, Charles K. Bobrinskoy and Michael
Zimmerman, Case No. 93 L 2198, Circuit Court of the Eighteenth Judicial
Circuit, DuPage County, Illinois, ARTRA alleges breach of fiduciary duty,
fraudulent and negligent misrepresentation and breach of contract in
connection with the 1989 acquisition of Envirodyne by Emerald Acquisition
Corporation ("ARTRA II"). The plaintiff seeks damages in the total amount
of $136.2 million plus interest and punitive damages of $408.6 million.
Upon a motion of the defendants, the Bankruptcy Court dismissed ARTRA's
claims in ARTRA I. ARTRA appealed to the U.S. District Court, and on
October 31, 1996, the U.S. District Court affirmed the Bankruptcy Court's
decision. ARTRA has appealed to the U.S. Court of Appeals for the Seventh
Circuit. All briefs have been filed, and the parties are awaiting oral
argument.
In fiscal 1996, Viskase Corporation, a wholly-owned subsidiary of
the Company, had sales of $19,795,000 to Cargill, Inc. and its
affiliates, which sales were made in the ordinary course of business.
During 1996, Cargill Financial Services Corporation was the beneficial
owner of 9.4% of the Company's outstanding Common Stock, and Gregory R.
Page, President of the Red Meat Group of Cargill, Inc., is a director of
the Company.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Coopers & Lybrand L.L.P. has been appointed by the
Board of Directors as the Company's independent accountants for the
fiscal year ending December 25, 1997. Representatives of Coopers &
Lybrand L.L.P. are expected to attend the Annual Meeting. They will have
an opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THE RATIFICATION OF COOPERS & LYBRAND L.L.P. AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 25, 1997.
OTHER MATTERS
Zapata Corporation ("Zapata") has given the Company written notice
of its intent to nominate five candidates for election as directors. The
nominees are: Malcolm I. Glazer ("Glazer"), three of Glazer's sons, Avram
A. Glazer, Bryan G. Glazer and Edward Glazer, and Robert V. Leffler, Jr.
Mr. Glazer is the Chairman of the Board of Directors of Zapata. Avram A.
Glazer is President, Chief Executive Officer and a director of Zapata.
Robert V. Leffler, Jr. is also a director of Zapata.
Zapata has also indicated that it intends to bring a proposal to be
considered at the Annual Meeting (the "Zapata Proposal") recommending
that the Board of Directors take appropriate action to redeem as soon as
possible the rights issued under the Rights Agreement between the Company
and Harris Trust & Savings Bank, dated as of June 26, 1996, or otherwise
terminate the plan and not implement any other stockholder rights plan
without a binding vote of the Company's stockholders.
The persons designated as proxies on the enclosed proxy card intend
to vote against the Zapata Proposal. If any other matters properly come
before the Annual Meeting, the persons designated as proxies on the
enclosed proxy card will vote in accordance with their judgment on such
matters.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Stockholders may submit proposals on matters appropriate for
stockholder action at the Company's annual stockholder meetings,
consistent with rules adopted by the Securities and Exchange Commission.
Such proposals must be received by the Company not later than December _,
1997 to be considered for inclusion in the proxy statement and form of
proxy relating to the 1998 Annual Meeting of Stockholders. Any such
proposals should be addressed to: Corporate Secretary, Envirodyne
Industries, Inc., 701 Harger Road, Suite 190, Oak Brook, Illinois 60521.
In addition, the Amended and Restated By-Laws of the Company (the "By-
Laws") provide that any stockholder of record wishing to nominate a
person for election as director or to bring any other business before an
annual meeting of stockholders must provide to the Secretary of
Envirodyne notice of such nomination or other business to be brought, in
the proper written form specified in the By-Laws, not less than ninety
(90) days nor more than one hundred twenty (120) days prior to the
anniversary date of the immediately preceding annual meeting of
stockholders, provided, however, that in the event that the annual
meeting of stockholders is called for a date that is not within thirty
(30) days before or after such anniversary date, notice by the
stockholder in order to be timely must be received not later than the
close of business on the tenth (10th) day following the day on which such
notice of the date of the annual meeting was mailed or public disclosure
of the date of the annual meeting was made, whichever first occurs. For
the 1998 Annual Meeting of Stockholders, a stockholder must provide
written notice to the Company of any nomination or other business to be
brought under the By-Laws no earlier than January 6, 1998 and no later
than February 15, 1998. Any stockholder desiring a copy of the By-Laws
will be furnished one without charge upon request to the Corporate
Secretary.
1996 ANNUAL REPORT ON FORM 10-K
A copy of the Company's 1996 Annual Report on Form 10-K (the "Form
10-K"), as filed with the Securities and Exchange Commission, is included
as part of the Company's 1996 Annual Report which accompanies this Proxy
Statement. Additional copies of the Form 10-K are available to
stockholders without charge on request in writing to the following
address: Envirodyne Industries, Inc., 701 Harger Road, Suite 190, Oak
Brook, Illinois 60521, Attention: Corporate Secretary.
ENVIRODYNE INDUSTRIES, INC.
Oak Brook, Illinois
April _, 1997
APPENDIX 1
INFORMATION CONCERNING DIRECTORS, NOMINEES FOR
DIRECTOR, EXECUTIVE OFFICERS AND OTHER "PARTICIPANTS"
The following table sets forth the name and the principal occupation or
employment (except with respect to directors, whose principal occupation is
set forth in the Proxy Statement), and the name, principal business and
address of any corporation or organization (if other than the Company) in
which such employment is carried on, of (i) directors, nominees for director
and executive officers of the Company, and (ii) certain employees, if any,
of the Company and its subsidiaries who may assist in soliciting proxies
from stockholders of the Company.
Name and Principal Principal Occupation
Business Address or Employment
Robert N. Dangremond (1)
Jay Alix & Associates
575 Fifth Avenue
New York, New York 10017
Gordon S. Donovan (2) Vice President, Chief Financial
Officer, Treasurer and Assistant
Secretary
Avram A. Glazer (3)
Zapata Corporation
1717 James Place
Houston, Texas 7721
Malcolm I. Glazer (4)
1482 South Ocean Blvd.
Palm Beach, Florida 33480
F. Edward Gustafson (2) President, Chief Executive Officer
and Chairman of the Board of
Directors
Michael E. Heisley (1)
Heico Acquisitions
Three First National Plaza,
Ste. 5600
Chicago, Illinois 60602
Gregory R. Page (1)
Cargill, Inc./North American Beef
15615 McGinty Road, West
Wayzata, Minnesota 55440
Mark D. Senkpiel (1)
Trust Company of the West
11100 Santa Monica Blvd.,
Ste. 2050
Los Angeles, California 90025
Stephen M. Schuster (2) Vice President, General Counseland
Secretary
- ------------------------------------------
(1) Messrs. Dangremond, Gustafson, Heisley, Page and Senkpiel are
currently directors of the Company. A complete description of each
director's principal occupation or employment and the principal
business of any corporation or other organization in which such
employment is carried on is contained in the Proxy Statement.
(2) Messrs. Donovan, Gustafson and Schuster are executive officers of
the Company, whose business address is 701 Harger Road, Suite 190,
Oak Brook, Illinois 60521. The principal business of the Company is
the manufacture and sale of food packaging and food service supplies.
(3) Mr. Avram A. Glazer is currently a director of the Company but
was not nominated by the Board of Directors for reelection. Mr.
Glazer is the President and Chief Executive Officer of Zapata
Corporation, a marine protein business. Mr. Glazer is also the Vice
President of First Allied Corporation, an investment company.
4) Mr. Malcolm I. Glazer is currently a director of the Company but
was not nominated by the Board of Directors for reelection. Mr.
Glazer is a self-employed private investor. He is the owner of the
Tampa Bay Buccaneers, a National Football League franchise. In
addition, Mr. Glazer is the President and Chief Executive Officer of
First Allied Corporation. He is also Chairman of the Board of
Directors of Zapata Corporation.
APPENDIX 2
SHARES HELD BY DIRECTORS, NOMINEES FOR DIRECTOR,
EXECUTIVE OFFICERS AND OTHER
"PARTICIPANTS"
Current Ownership. The amount of each class of securities owned by
each director, nominee for director and executive officer and information
regarding beneficial and record ownership are set forth in the Security
Ownership table and the related footnotes in the Proxy Statement. It is
not known at this time which other employees of the Company, if any, will
solicit proxies on behalf of the Board of Directors.
Purchases and Sales. The following table sets forth information
concerning purchases and sales during the past two years by each of the
directors, nominees for directors and executive officers.
Date of Nature of
Name Transaction Amount Transaction
Robert N. Dangremond 4/24/95 2,000 Purchase
9/30/96 5,209 (1)
1/31/97 1,454 (1)
Gordon S. Donovan 7/24/96 2,000 Purchase
11/22/96 4,720 (2)
1/23/97 6,597 (2)
11/96-3/97 422 (3)
Avram A. Glazer 9/30/96 4,961 (1)
1/31/97 1,018 (1)
Malcolm I. Glazer 8/7/95 4,189,298 Sale
9/30/96 4,961 (1)
1/31/97 1,018 (1)
F. Edward Gustafson 4/17/95 272,668 (4)
4/24/95 50,000 (4)
5/17/95 20,000 Purchase
5/17/95 20,000 (6)
2/9/96 1,000 Purchase
2/12/96 4,000 Purchase
2/12/96 7,157 Purchase
3/27/96 35,000 (7)
4/15/96 3,000 Purchase
4/15/96 47,000 (6)
F. Edward Gustafson 4/15/96 57,853 (5)
10/2/96 5,638 (2)
10/17/96 4,555 (2)
10/96-3/97 6,345 (3)
Michael E. Heisley 4/15/96 157,853 Purchase
9/30/96 5,085 (1)
1/31/97 1,163 (1)
Gregory R. Page 9/30/96 4,961 (1)
1/31/97 1,091 (1)
Mark D. Senkpiel 4/25/96 2,000 Purchase
4/25/96 3,000 (8)
9/30/96 5,209 (1)
1/31/97 1,382 (1)
Stephen M. Schuster 3/1/96 10,000 (6)
5/31/96 604 (6)
6/7/96 2,500 (6)
11/11/96 5,000 (6)
11/15/96 12,156 (2)
1/22/97 3,000 (9)
2/13/97 6,445 (2)
11/96-3/97 1,993 (3)
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(1) These shares were issued pursuant to the Non-Employee Directors'
Compensation Plan, which provides that non-employee directors may
elect to receive their directors' fees in the form of shares of
Common Stock of the Company.
(2) These shares were acquired pursuant to intra-plan transfers under
the Company's Retirement Income Plan (e.g., 401(k) plan).
(3) These shares were acquired pursuant to regular payroll deductions
under the Company's Retirement Income Plan.
(4) These shares were acquired by Volk Enterprises, Inc. See Footnote
5 to the Security Ownership table in the Proxy Statement for an
explanation of beneficial ownership. Mr. Gustafson disclaims
beneficial ownership of these shares except to the extent of his
pecuniary interest in Volk Enterprises, Inc.
(5) These shares were acquired by D.P. Kelly & Associates, L.P. See
Footnote 5 to the Security Ownership table in the Proxy Statement
for an explanation of beneficial ownership. Mr. Gustafson disclaims
beneficial ownership of these shares except to the extent of his
pecuniary interest in D.P. Kelly & Associates, L.P.
(6) These shares were acquired by such person's spouse. Each such
person disclaims beneficial ownership of any shares acquired by his
spouse.
(7) These shares were issued pursuant to an Employment Agreement,
dated March 27, 1997, between the Company and Mr. Gustafson.
(8) These shares were acquired by Mr. Senkpiel as custodian of
accounts of his minor children under the Uniform Gifts to Minors
Act. Mr. Senkpiel disclaims beneficial ownership of these shares.
(9) These shares were issued by the Company as a bonus to Mr.
Schuster.
Other Information.
(a) The Company owns, directly or indirectly, all of the issued and
outstanding securities of all of its subsidiaries.
(b) Except as disclosed in this Appendix 2 and the Proxy Statement,
to the best of the Company's knowledge, none of the Company or any of its
directors, nominees for director or executive officers (i) owns
beneficially, directly or indirectly, any securities of the Company or
its subsidiaries, (ii) owns of record, but not beneficially, any
securities of the Company, (iii) has purchased or sold any securities of
the Company during the past two years, (iv) has incurred indebtedness for
the purpose of acquiring or holding securities of the Company, or (v) is,
or was during the past year, a party to any contract, arrangement or
understanding with respect to the securities of the Company.
(c) Except as disclosed in this Appendix 2 and the Proxy Statement,
to the knowledge of the Company, no associate of the Company, or any of
its directors, nominees for director or executive officers, owns
beneficially, directly or indirectly, any securities of the Company.
(d) Except as disclosed in this Appendix 2 and the Proxy Statement,
to the knowledge of the Company, neither the Company nor any of the
directors, nominees for director or executive officers or any other of
their associates (i) has a direct or indirect material interest in any
transactions or series of transactions with the Company since the
beginning of the Company's last fiscal year or any currently proposed
transaction, or series or transactions, to which the Company or any of
its subsidiaries was or is to be a party in which the amount in question
exceeded $60,000, (ii) has any arrangement or understanding with respect
to future employment by the Company or any of its affiliates, or (iii)
has any arrangement or understanding with respect to any future
transactions to which the Company or any of its affiliates will or may be
a party.
P ENVIRODYNE INDUSTRIES, INC. PROXY SOLICITED BY THE BOARD OF DIRECTORS
R 701 HARGER ROAD, SUITE 190 FOR THE ANNUAL MEETING OF STOCKHOLDERS
O OAK BROOK, ILLINOIS 60521 MAY 16, 1997
X
Y F. Edward Gustafson and Stephen M. Schuster, or either of them
individually, and each of them with power of substitution, are
hereby appointed Proxies of the undersigned to vote all shares of
Common Stock of Envirodyne
C Industries, Inc. owned on the record date by the undersigned at the
A Annual Meeting of Stockholders to be held on May 16, 1997, or any
R adjournments or postponements thereof, upon such business as may
D the meeting, including the items on the reverse side of this form as
properly come before set forth in the Notice of Annual Meeting of
Stockholders and Proxy Statement, dated April __, 1997. THIS PROXY
WILL BE VOTED AS DIRECTED ON THE REVERSE SIDE. IF NO DIRECTION IS
INDICATED, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1 AND 2.
Proposal 1--Election of Directors Nominees: Robert N. Dangremond,
F. Edward Gustafson,
Michael E. Heisley, Gregory R.
Page, Mark D. Senkpiel.
Proposal 2--Ratification of election of Coopers & Lybrand L.L.P.
as the Company's independent accountants for the 1997 fiscal year.
(Shares cannot be voted unless this Proxy Card is signed and
returned, or other specific arrangements are made to have the
shares represented at the meeting.)
PRELIMINARY COPY - SUBJECT TO COMPLETION
PRELIMINARY COPY -- SUBJECT TO COMPLETION
X PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
PROXY CARD This proxy, when properly executed, will be voted in the
manner directed herein by the undersigned stockholder.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
ALL NOMINEES LISTED AND FOR PROPOSAL 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2
FOR WITHHELD FOR AGAINST ABSTAIN
____ ____ ____ ____ ____
/____/ /____/ /____/ /____/ /____/
1. Election of 2. Ratifica- For, except vote WITHHELD
Directors tion of from the following nominee(s):
(See Reverse) Accountants
(See Re- ______________________________
verse) PLEASE SIGN AND DATE AND RETURN
IN ENCLOSED ENVELOPE.
Signature _________________________________________________________________
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Signature
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Please sign exactly as your name appears. If acting as attorney, executor,
trustee or in representative capacity, sign name and indicate title. Joint
owners should each sign personally.
