<PAGE> 1
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
DREYER'S GRAND ICE CREAM, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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<PAGE> 2
LOGO
- --------------------------------------------------------------------------------
Notice of Annual
Meeting of Stockholders
and Proxy Statement
- --------------------------------------------------------------------------------
Meeting of May 14, 1997
<PAGE> 3
LOGO
TO THE STOCKHOLDERS OF DREYER'S GRAND ICE CREAM, INC.
You are cordially invited to attend the Annual Meeting of Stockholders of
Dreyer's Grand Ice Cream, Inc. (the "Company") that will be held at the
Claremont Resort Hotel, Ashby and Domingo Avenues, Oakland, California on
Wednesday, May 14, 1997 at 2:00 p.m. We hope you will be able to attend,
participate and hear management's report to stockholders.
On the following pages, you will find a Notice of Annual Meeting and Proxy
Statement. We suggest that you read the Proxy Statement carefully.
It is important that your shares be represented at the meeting, regardless
of the size of your holding. Therefore, we urge you to SIGN, DATE and RETURN AS
SOON AS POSSIBLE the enclosed proxy card in the postage-paid envelope furnished
for that purpose. This should be done whether or not you now plan to attend the
meeting and to vote in person. A summary of the proceedings of the meeting will
be sent to all stockholders.
The Directors and Officers of the Company look forward to meeting with you.
T. GARY ROGERS WILLIAM F. CRONK, III
Chairman of the Board and President
Chief Executive Officer
Oakland, California
March 31, 1997
<PAGE> 4
LOGO
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Notice of Annual Meeting of Stockholders.............................................. 1
Proxy Statement....................................................................... 2
Introduction.......................................................................... 2
Annual Report....................................................................... 2
Solicitation by the Board of Directors; Revocation of Proxies....................... 2
Costs of Solicitation............................................................... 2
Voting of Board of Directors' Proxies............................................... 2
Shares Outstanding, Voting Rights and Record Date................................... 2
Board of Directors.................................................................... 3
Changes in Board of Directors....................................................... 3
Nominees for Director............................................................... 3
Continuing Directors................................................................ 4
Committees of the Board............................................................. 5
Attendance at Board and Committee Meetings.......................................... 5
Remuneration of Directors........................................................... 6
Security Ownership of Certain Beneficial Owners and Management........................ 7
Security Ownership of Certain Beneficial Owners..................................... 7
Security Ownership of Management.................................................... 9
Section 16(a) Beneficial Ownership Reporting Compliance............................. 10
Executive Compensation................................................................ 11
Summary of Cash and Certain Other Compensation...................................... 11
Stock Options....................................................................... 12
Performance Graph................................................................... 14
Employment Contracts, Employment Termination and Change of Control Arrangements..... 14
Compensation Committee Report on Executive Compensation............................. 15
Compensation Committee Interlocks and Insider Participation......................... 17
Other Relationships................................................................. 18
Matters Submitted to a Vote of Stockholders........................................... 18
Election of Directors............................................................... 18
Ratification of Selection of Independent Public Accountants......................... 19
Voting Information.................................................................... 19
General Voting Information.......................................................... 19
Votes Required for Approval......................................................... 20
Proposals of Stockholders............................................................. 20
Other Matters......................................................................... 20
</TABLE>
<PAGE> 5
LOGO
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 1997
The Annual Meeting of Stockholders of DREYER'S GRAND ICE CREAM, INC. will
be held on Wednesday, May 14, 1997 at 2:00 p.m. at the Claremont Resort Hotel,
Ashby and Domingo Avenues, Oakland, California for the following purposes:
1. Electing three directors to Class III of the Board of Directors;
2. Approving the appointment of Price Waterhouse LLP as independent
public accountants for the fiscal year 1997 and thereafter until its
successor is appointed; and
3. Considering and acting upon such other business as may properly come
before the meeting or at any adjournments or postponements thereof.
A complete list of the stockholders entitled to vote at the meeting,
including the address and number of shares registered in the name of each such
stockholder, will be open for examination by any such stockholder, for any
purpose germane to the meeting, at the Company's corporate office (5929 College
Avenue, Oakland, California) during ordinary business hours for 10 days before
the date of the meeting. The list will also be available for inspection at the
meeting.
The close of business on March 28, 1997 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
meeting. The stock transfer books will not be closed.
EDMUND R. MANWELL
Secretary
March 31, 1997
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. PLEASE SIGN,
DATE AND MAIL THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO
POSTAGE. YOU MAY NEVERTHELESS VOTE IN PERSON IF YOU ATTEND THE MEETING.
1
<PAGE> 6
PROXY STATEMENT
------------------------
INTRODUCTION
This Proxy Statement is furnished to stockholders by the Board of Directors
of Dreyer's Grand Ice Cream, Inc., a Delaware corporation (the "Company"), in
connection with the solicitation of proxies for use at the Annual Meeting of
Stockholders of the Company to be held on Wednesday, May 14, 1997 and at all
adjournments or postponements thereof. The mailing address of the Company is
5929 College Avenue, Oakland, California 94618, and its telephone number is
(510) 652-8187. The approximate date on which this Proxy Statement and the
enclosed form of proxy are to be sent to stockholders is on or about April 4,
1997.
ANNUAL REPORT
The Annual Report of the Company for the year ended December 28, 1996 is
furnished concurrently to all stockholders entitled to vote at the Annual
Meeting. The Annual Report is not to be regarded as proxy soliciting material or
as a communication by means of which any solicitation is to be made except to
the extent portions of the Annual Report are incorporated herein by reference.
SOLICITATION BY THE BOARD OF DIRECTORS; REVOCATION OF PROXIES
The proxy in the form enclosed is solicited by the Board of Directors. A
proxy may be revoked by the stockholder prior to exercise thereof by filing with
the Secretary of the Company a written revocation or a duly executed proxy
bearing a later date. The powers of the proxy holders will be suspended if the
person executing the proxy is present at the stockholders' meeting and elects to
vote in person.
COSTS OF SOLICITATION
The entire cost of soliciting these proxies will be borne by the Company.
The Company may make arrangements with brokerage houses, nominees, fiduciaries
and other custodians to send proxies and proxy materials to beneficial owners of
the Company's stock and may reimburse them for their expenses in so doing. The
Company has retained Skinner & Co. to assist in obtaining proxies from brokers
and nominees at an estimated cost of $3,500 plus out of pocket expenses.
Proxies may be solicited by directors, officers and regular employees of
the Company personally or by telephone, facsimile or mail. These services will
be provided without additional compensation.
VOTING OF BOARD OF DIRECTORS' PROXIES
The shares represented by the Board of Directors' proxies will be voted FOR
the election of the Board of Directors' nominees for Class III of the Board of
Directors, FOR the approval of Price Waterhouse LLP as independent public
accountants and at the discretion of the proxy holders on any other matters that
may properly come before the Annual Meeting, if no contrary instruction is
indicated on a proxy.
SHARES OUTSTANDING, VOTING RIGHTS AND RECORD DATE
There were 13,400,607 shares of Common Stock ($1.00 par value) of the
Company, 1,007,522 shares of Series B Convertible Preferred Stock ($1.00 par
value) of the Company, no shares of Series A Convertible Preferred Stock ($1.00
par value) of the Company, and no shares of Series A Participating Preference
Stock ($1.00 par value) of the Company outstanding at the close of business on
March 28, 1997. Each share of Common Stock is entitled to one vote at the
meeting. Each share of Series B Convertible Preferred Stock is entitled to vote
that number of votes which could be cast by a holder of the number of shares of
Common Stock into which such shares of Series B Convertible Preferred Stock is
convertible on the record date for the meeting. The outstanding shares of Series
B Convertible Preferred Stock are convertible into an aggregate of 2,900,000
shares of Common Stock on March 28, 1997. There are no cumulative voting rights.
2
<PAGE> 7
Pursuant to the By-Laws of the Company, the Board of Directors has fixed
the close of business on March 28, 1997 as the record date for the determination
of stockholders entitled to notice of and to vote at the meeting.
BOARD OF DIRECTORS
CHANGES IN BOARD OF DIRECTORS
The Company has regretfully accepted the resignations of three Board
members who, for personal reasons, have recently resigned from the Company's
Board of Directors. Mr. Anthony J. Martino, who had served on the Company's
Board of Directors, Class III, since 1994, resigned from the Board effective
December 31, 1996. The vacancy created by his resignation was filled by Mr. M.
Steven Langman, an appointee named by Nestle Holdings, Inc. ("NHI") pursuant to
the terms of the Stock and Warrant Purchase Agreement dated June 14, 1994
between the Company and NHI (the "Nestle Agreement"). Mr. Martino had also been
appointed by NHI pursuant to the Nestle Agreement. The Nestle Agreement is
further described under the caption "Compensation Committee Interlocks and
Insider Participation" on page 17 herein. Mr. Merril M. Halpern, who had served
on the Company's Board of Directors, Class I, since 1977, resigned from the
Board effective February 28, 1997. Ms. Jan L. Booth was appointed by the
Company's Board of Directors to fill the vacancy created by Mr. Halpern's
resignation. Mr. Jerome L. Katz, who had served on the Company's Board of
Directors, Class II, since 1977, resigned from the Board effective March 3,
1997. Mr. Timothy P. Smucker was appointed by the Company's Board of Directors
to fill the vacancy created by Mr. Katz's resignation. All three newly appointed
directors were appointed on March 4, 1997, and Mr. Langman participated in the
March 4, 1997 meeting of the Board of Directors of the Company.
NOMINEES FOR DIRECTOR
Under the Company's By-Laws and Certificate of Incorporation, the Board of
Directors consists of nine directors and is divided into three classes, with
each class having a term of three years. The directors of Class III will be
elected at the 1997 Annual Meeting of Stockholders and will hold office until
the 2000 Annual Meeting of Stockholders or until their successors are elected
and qualified. The nominees constitute Class III of the Board of Directors with
each of their terms expiring as of the date of this Annual Meeting.
The following brief statements contain biographical information about the
nominees and the years they first became directors:
<TABLE>
<CAPTION>
NOMINEE
YEAR FIRST ELECTED A
DIRECTOR
AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ----------------------- --------------------------------------------------------------------
<S> <C>
T. Gary Rogers............. CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER, DREYER'S GRAND
1977 ICE CREAM, INC. Mr. Rogers has served as the Company's Chairman of
Age: 54 the Board and Chief Executive Officer since its incorporation in
February 1977.
William F. Cronk, III...... PRESIDENT, DREYER'S GRAND ICE CREAM, INC. Mr. Cronk has served on
1977 the Company's Board of Directors since its incorporation in 1977.
Age: 54 Since April 1981, he has served as the Company's President.
M. Steven Langman.......... PRESIDENT AND CHIEF EXECUTIVE OFFICER, UNION BANCAIRE PRIVEE
1997 INTERNATIONAL, INC. Mr. Langman joined the Company's Board of
Age: 35 Directors in 1997. Prior to joining Union Bancaire Privee in May
1996, Mr. Langman was employed with Lazard Freres & Co. L.L.C. for
nine years, most recently serving as a Managing Director. Mr.
Langman worked for Goldman, Sachs & Co. for two years before joining
Lazard Freres.
</TABLE>
3
<PAGE> 8
CONTINUING DIRECTORS
Directors John W. Larson, Jack O. Peiffer and Jan L. Booth ("Class I") will
hold office until the 1998 Annual Meeting of Stockholders. Directors Timm F.
Crull, Edmund R. Manwell and Timothy P. Smucker ("Class II") will hold office
until the 1999 Annual Meeting of Stockholders.
The following brief statements contain biographical information about each
continuing director and the year he or she first became a director:
<TABLE>
<CAPTION>
NAME
YEAR FIRST ELECTED A
DIRECTOR
AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ----------------------- --------------------------------------------------------------------
<S> <C>
Jan L. Booth........... PRIVATE INVESTOR. Ms. Booth joined the Company's Board of Directors
1997 in 1997. From 1988 to 1990, Ms. Booth was self-employed as a
Age: 46 business consultant. Ms. Booth served as Vice President of Marketing
of the Company from 1981 to 1987. Before joining the Company, Ms.
Booth was employed by Crown Zellerbach's consumer products division.
Timm F. Crull.......... RETIRED CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF NESTLE USA, INC. Mr.
1995 Crull joined the Company's Board of Directors in 1995. Mr. Crull
Age: 66 became Chairman and Chief Executive Officer of Nestle USA, Inc. in
1991, after having served since 1985 as President and Chief
Executive Officer of Carnation Company, a Nestle subsidiary. He
retired from his positions with Nestle in 1994. Mr. Crull is also a
director of Smart & Final Inc., a warehouse store retail company,
and of BankAmerica Corporation, a bank holding company.
John W. Larson......... PRIVATE INVESTOR. Mr. Larson joined the Company's Board of Directors
1993 in 1993. From 1989 to early 1993, Mr. Larson served as Chief
Age: 59 Operating Officer of The Chronicle Publishing Company, a
privately-held, diversified media company. From 1984 to 1989, Mr.
Larson was a General Partner of J.H. Whitney & Co., a venture
capital and buyout firm. Prior to joining J.H. Whitney, Mr. Larson
was the Managing Director of the San Francisco office of McKinsey &
Company, Inc. Mr. Larson is also a member of the Board of Control of
Crown Pacific Partners, LP, a forest products concern.
Edmund R. Manwell...... PARTNER, MANWELL & MILTON, GENERAL COUNSEL TO THE COMPANY. Mr.
1981 Manwell has served as Secretary of the Company since its
Age: 54 incorporation in 1977 and as a director of the Company since April
1981. Mr. Manwell is a partner in the law firm of Manwell & Milton,
general counsel to the Company. Mr. Manwell is also a director of
Hanover Direct, Inc., a direct marketing company.
Jack O. Peiffer........ RETIRED SENIOR VICE PRESIDENT -- CORPORATE HUMAN RESOURCES, GENERAL
1993 ELECTRIC COMPANY. Mr. Peiffer joined the Company's Board of
Age: 63 Directors in 1993. Mr. Peiffer was employed by GE Company for over
38 years and held a variety of financial and general management
positions prior to his appointment as Senior Vice President --
Corporate Human Resources, including acting as Vice President and
General Manager of GE Supply Company from November 1983 to January
1985.
Timothy P. Smucker..... CHAIRMAN, THE J.M. SMUCKER COMPANY. Mr. Smucker joined the Company's
1997 Board of Directors in 1997. Mr. Smucker has served The J.M. Smucker
Age: 52 Company, a food products manufacturer, for over 28 years, and has
held a variety of positions prior to his appointment as Chairman.
Mr. Smucker is also a director of Huntington BancShares
Incorporated, a regional bank holding company, and the Kellogg
Company, a food products company.
</TABLE>
4
<PAGE> 9
COMMITTEES OF THE BOARD
Committees of the Board of Directors are the following:
Compensation Committee
The Compensation Committee is composed of seven directors, none of whom are
employees of the Company in any capacity. The Committee makes recommendations to
the Board of Directors with respect to the salaries and bonuses and other forms
of remuneration to be paid to the Chief Executive Officer and the President and
the terms and conditions of their employment. In addition, the Committee is the
Administrator of the Company's Incentive Stock Option Plan (1982), the Company's
Section 423 Employee Stock Purchase Plan (1990), the Company's Employee Secured
Stock Purchase Plan (1990), the Company's Stock Option Plan (1992) and the
Company's Stock Option Plan (1993).
During fiscal 1996, Messrs. Crull, Halpern, Katz, Larson, Manwell, Martino
and Peiffer were members of the Compensation Committee. Commencing in March
1997, the Compensation Committee is comprised of Messrs. Crull, Langman, Larson,
Manwell, Peiffer and Smucker, and Ms. Booth.
Audit Committee
The Audit Committee composition in 1996 was, and as of March 1997 is,
identical to that of the Compensation Committee. The Committee meets on the call
of any member and, on at least one occasion each year, it meets with the
independent accountants to discuss: (1) the scope of the audit engagement; (2)
the results of each annual audit and the financial statements and notes included
in the Company's Annual Report to the Stockholders; and (3) other matters
pertaining to the audit, including the Company's accounting policies and
internal controls. The Committee is also responsible for recommending for
appointment by the Board of Directors, subject to submission to the stockholders
for their approval, independent public accountants to audit the Company's
financial statements, as well as advising the Board of Directors with respect to
the scope of the audit, the Company's accounting policies and internal controls.
The purpose and function of the Audit Committee is to review and monitor
the Company's financial reports and accounting practices, as well as to provide
the means for direct communication among the Company's Board of Directors, its
financial management and independent accountants.
The Committee is concerned with the accuracy and completeness of the
Company's financial statements and matters that relate to them. However, the
Committee's role does not contemplate providing to stockholders, or others,
special assurances regarding such matters. Moreover, the Committee's role does
not involve the professional evaluation of the quality of the audit conducted by
the independent accountants. While it is believed that the Committee's
activities are beneficial because they provide an ongoing oversight on behalf of
the full Board of Directors, they do not alter the traditional roles and
responsibilities of the Company's management and independent accountants with
respect to the accounting and control functions and financial statement
presentation.
The Company has no nominating committee or other committee performing the
functions of such a committee.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During fiscal 1996, there were four special meetings of the Board of
Directors and all directors attended each meeting occurring while such director
was a member of the Board of Directors except Mr. Katz who was absent from one
meeting. The Compensation Committee met one time and the Audit Committee met
twice. Except as set out hereinafter, all members of the committees attended
each of the meetings of the respective committee on which they sit occurring
while such person was a member of the committee in question:
5
<PAGE> 10
Messrs. Halpern and Katz were absent from one meeting and two meetings,
respectively, of the Audit Committee.
REMUNERATION OF DIRECTORS
Directors' compensation consists of a meeting fee of $4,000 for each
meeting of the Board of Directors actually attended and an annual fee of $4,000
for each member of each committee. The Board of Directors generally meets four
times each year. Each committee meets at least annually and more frequently if
requested by any member. Employee directors receive no compensation as
directors. Members of the Board of Directors who were not employees of the
Company (each a "NonEmployee Director") received an option to purchase 5,000
shares of the Company's Common Stock on the date the Company's Stock Option Plan
(1993) (the "1993 Plan") was approved by the Company's stockholders or received
such an option upon appointment to the Board of Directors, if appointment
occurred subsequent to such approval. Also, additional stock option grants to
purchase 1,500 shares of the Company's Common Stock will be awarded to each Non-
Employee Director on each anniversary of the date the 1993 Plan was approved by
the Company's stockholders.
6
<PAGE> 11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of March 24, 1997 concerning
the beneficial ownership of Common Stock of the Company by each person
(including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934 (the "Exchange Act")) who is known to the
Company to be the beneficial owner of more than five percent of such class:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP* CLASS*
- --------------------------------------------------------------- -------------------- ----------
<S> <C> <C>
Nestle Holdings, Inc.(1)....................................... 5,056,008 32.8%
c/o Nestle USA, Inc.
800 North Brand Boulevard
Glendale, California 91203
Nestle S.A.(1)
Avenue Nestle
Vevey, Switzerland CH-1800
T. Gary Rogers(2)(3)........................................... 1,833,658 13.5%
5929 College Avenue
Oakland, California 94618
General Electric Capital Corporation(4)(5)..................... 1,450,000 9.8%
260 Long Ridge Road
Stamford, Connecticut 06927
Trustees of General Electric Pension Trust(4)(6)............... 1,450,000 9.8%
GE Investment Private Placement Partners I, Limited Partnership
P.O. Box 7900
3003 Summer Street
Stamford, Connecticut 06904
William F. Cronk, III(2)(7).................................... 1,003,681 7.4%
5929 College Avenue
Oakland, California 94618
Robert E. Torray & Co., Inc.(8)................................ 809,000 6.0%
The Torray Corporation
Robert E. Torray
6610 Rockledge Drive, Suite 450
Bethesda, Maryland 20817-1869
Cortopassi Family Trust(9)..................................... 799,900 6.0%
Stanislaus Food Products Co.
San Tomo Partners
Sierra Quality Canners, Inc.
LICO Brands, Inc.
Trecento Investors, Inc.
DACCO, Inc.
Capecchio Foundation
Alpinello Investors, Inc.
VICOR, LLC
Wright Tract Partners, LP
11292 North Alpine Road
Stockton, California 95212
Wilke/Thompson Capital Management, Inc.(5)..................... 692,300 5.2%
3800 Norwest Center
90 S. 7th Street
Minneapolis, Minnesota 55402
</TABLE>
- ---------------
* The amounts and percentages indicated as beneficially owned were calculated
pursuant to Rule 13d-3(d)(1) under the Exchange Act which provides that
beneficial ownership of a security is acquired by a person if that person has
the right to acquire beneficial ownership of such security within
7
<PAGE> 12
60 days through the exercise of a right such as the exercise of an option or
the conversion of a convertible security into common stock. Any securities
not outstanding which are subject to options or conversion privileges are
deemed outstanding for the purpose of computing the percentage of outstanding
securities of the class owned by the person who owns the option or conversion
privilege but are not deemed outstanding for the purpose of computing the
percentage of the class owned by any other person.
(1) Includes warrants to purchase 2,000,000 shares of Common Stock which are
currently exercisable by Nestle Holdings, Inc. ("NHI"). NHI has sole voting
power and sole investment power with respect to all of these shares. Nestle
S.A. ("Nestle") filed a joint statement on Schedule 13D with NHI and may be
deemed to have sole voting power and sole investment power with respect to
these shares because NHI is a wholly-owned subsidiary of Nestle.
(2) Includes options to purchase 68,520 shares of Common Stock under the
Company's Stock Option Plan (1992) exercisable within 60 days, and options
to purchase 85,200 shares of Common Stock under the Company's Stock Option
Plan (1993) exercisable within 60 days.
(3) 1,571,036 and 100,000 of these shares are held directly by the Rogers
Revocable Trust and the Four Rogers Trust, respectively, for which Mr.
Rogers and his wife serve as co-trustees. Mr. Rogers and his wife share the
voting and investment power with respect to such shares. Also includes 8,902
shares held in Mr. Rogers' account in the Dreyer's Grand Ice Cream, Inc.
Savings Plan (a 401(k) plan), based upon the most recent available plan
statement.
(4) Assumes full conversion of the Series B Convertible Preferred Stock of the
Company held by the named entity or entities into the Company's Common
Stock. These parties filed a Schedule 13D (reporting the beneficial
ownership described above) jointly with General Electric Capital Services,
Inc. (formerly known as General Electric Financial Services, Inc.) and
General Electric Company each of which disclaimed beneficial ownership of
all shares of the Company's Common Stock beneficially owned by General
Electric Capital Corporation, Trustees of General Electric Pension Trust and
GE Investment Private Placement Partners I, Limited Partnership.
(5) The holder has sole voting power and sole investment power with respect to
all of these shares.
(6) Trustees of General Electric Pension Trust ("GEPT") have sole voting power
and sole investment power with respect to 586,495 of these shares. GE
Investment Private Placement Partners I, Limited Partnership ("GEIPPP") has
sole voting power and sole investment power with respect to 863,505 of these
shares. GEPT and GEIPPP may constitute a group as such term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
(7) 849,961 of these shares are held directly by the Cronk Revocable Trust for
which Mr. Cronk and his wife serve as co-trustees. Mr. Cronk and his wife
share the voting and investment power with respect to such shares. Excludes
42,000 shares held in irrevocable trusts for the benefit of Mr. Cronk's
sons. Mr. Cronk does not have voting or investment power with respect to
these 42,000 shares and Mr. Cronk disclaims beneficial ownership of all of
the shares held in these irrevocable trusts.
(8) Robert E. Torray & Co., Inc. ("RETC") has shared voting and investment power
with respect to 739,000 of these shares. The Torray Corporation ("TTC") has
shared voting and investment power with respect to 70,000 of these shares.
Robert E. Torray, an individual, has shared voting and investment power with
respect to all of these shares, and has filed a joint statement on Schedule
13G as a "parent holding company" of RETC and TTC in reliance upon certain
Security & Exchange Commission No Action Letters. RETC and TTC are
registered investment advisors under Section 203 of the Investment Advisors
Act of 1940, and are deemed to have beneficial ownership of the shares
indicated above because they hold investment discretion with respect to the
accounts in which the shares are held.
(9) Each entity has sole voting and sole investment power with respect to only
those shares of Common Stock registered in the name of the entity, as
follows: Cortopassi Family Trust, 250,200 shares; Stanislaus Food Products
Co., 111,500 shares; San Tomo Partners, 116,000 shares; Sierra Quality
Canners, Inc., 150,000 shares; LICO Brands, Inc., 25,000 shares; Trecento
Investors, Inc., 45,000 shares; DACCO, Inc., 40,000 shares; Capecchio
Foundation, 25,000 shares; Alpinello Investors, Inc., 12,200 shares; VICOR,
LLC, 20,000 shares; Wright Tract Partners, LP, 5,000 shares. The listed
entities filed a joint statement on Schedule 13D as members of a group.
8
<PAGE> 13
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of March 24, 1997 concerning
the beneficial ownership of Common Stock of the Company by each director and
nominee of the Company, the Chief Executive Officer and each of the four most
highly compensated executive officers of the Company (the "Named Executive
Officers") and all directors and executive officers of the Company as a group.
Except as otherwise noted, each person has sole voting and sole investment power
with respect to the shares shown:
<TABLE>
<CAPTION>
AMOUNT OF
BENEFICIAL PERCENT OF
NAME OWNERSHIP(1) CLASS(1)
- --------------------------------------------------------------------- ------------ ----------
<S> <C> <C>
Jan L. Booth(2)...................................................... 4,100 *
William F. Cronk, III(3)(4).......................................... 1,003,681 7.4%
Timm F. Crull(5)..................................................... 12,000 *
Thomas M. Delaplane(6)............................................... 79,036 *
M. Steven Langman.................................................... -0- *
John W. Larson(5).................................................... 28,000 *
Edmund R. Manwell(5)................................................. 32,000 *
William R. Oldenburg(7).............................................. 77,702 *
Jack O. Peiffer(5)................................................... 8,000 *
T. Gary Rogers(3)(8)................................................. 1,833,658 13.5%
Timothy P. Smucker................................................... 1,000 *
Paul R. Woodland(9).................................................. 69,753 *
Directors and Executive Officers as a Group (13 persons)(10)......... 3,169,377 22.8%
</TABLE>
- ---------------
* Less than one percent.
(1) The amounts and percentages indicated as beneficially owned were calculated
pursuant to Rule 13d-3(d)(1) under the Exchange Act which provides that
beneficial ownership of a security is acquired by a person if that person
has the right to acquire beneficial ownership of such security within 60
days through the exercise of a right such as the exercise of an option or
the conversion of a convertible security into common stock. Any securities
not outstanding which are subject to options or conversion privileges are
deemed outstanding for the purpose of computing the percentage of
outstanding securities of the class owned by the person who owns the option
or conversion privilege but are not deemed outstanding for the purpose of
computing the percentage of the class owned by any other person.
(2) 2,000 of these shares are held directly by the Herrero/Booth Revocable
Trust for which Ms. Booth and her husband serve as co-trustees. Ms. Booth
and her husband share the voting and investment power with respect to such
shares. Also includes 2,100 shares held by the Herrero Bros. Inc. Employee
Profit Sharing and Retirement Plan & Trust, for which Ms. Booth's husband
serves as a co-trustee and is a plan participant. Ms. Booth disclaims
beneficial ownership of these shares except to the extent of her pecuniary
interest therein.
(3) Includes options to purchase 68,520 shares of Common Stock under the
Company's Stock Option Plan (1992) (the "1992 Plan") exercisable within 60
days, and options to purchase 85,200 shares of Common Stock under the
Company's Stock Option Plan (1993) (the "1993 Plan") exercisable within 60
days.
(4) 849,961 of these shares are held directly by the Cronk Revocable Trust for
which Mr. Cronk and his wife serve as co-trustees. Mr. Cronk and his wife
share the voting and investment power with respect to such shares. Excludes
42,000 shares held in irrevocable trusts for the benefit of Mr. Cronk's
sons. Mr. Cronk does not have voting or investment power with respect to
these 42,000 shares and Mr. Cronk disclaims beneficial ownership of all of
the shares held in these irrevocable trusts.
(5) Includes options to purchase 8,000 shares of Common Stock under the 1993
Plan exercisable within 60 days.
9
<PAGE> 14
(6) Includes options to purchase 7,384 shares of Common Stock under the
Company's Incentive Stock Option Plan (1982) (the "ISO Plan") exercisable
within 60 days, options to purchase 9,120 shares of Common Stock under the
1992 Plan exercisable within 60 days, and options to purchase 39,360 shares
of Common Stock under the 1993 Plan exercisable within 60 days. Also
includes 5,840 shares held in Mr. Delaplane's account in the Dreyer's Grand
Ice Cream, Inc. Savings Plan (a 401(k) plan), based upon the most recent
available plan statement.
(7) Includes options to purchase 7,384 shares of Common Stock under the ISO
Plan exercisable within 60 days, options to purchase 9,120 shares of Common
Stock under the 1992 Plan exercisable within 60 days, and options to
purchase 38,160 shares of Common Stock under the 1993 Plan exercisable
within 60 days.
(8) 1,571,036 and 100,000 of these shares are held directly by the Rogers
Revocable Trust and the Four Rogers Trust, respectively, for which Mr.
Rogers and his wife serve as co-trustees. Mr. Rogers and his wife share the
voting and investment power with respect to such shares. Also includes
8,902 shares held in Mr. Rogers account in the Dreyer's Grand Ice Cream,
Inc. Savings Plan (a 401(k) plan), based upon the most recent available
plan statement.
(9) Includes options to purchase 7,384 shares of Common Stock under the ISO
Plan exercisable within 60 days, options to purchase 9,120 shares of Common
Stock under the 1992 Plan exercisable within 60 days, and options to
purchase 36,860 shares of Common Stock under the 1993 Plan exercisable
within 60 days.
(10) Includes options to purchase 26,540 shares of Common Stock under the ISO
Plan exercisable within 60 days, options to purchase 165,180 shares of
Common Stock under the 1992 Plan exercisable within 60 days, and options to
purchase 327,920 shares of Common Stock under the 1993 Plan exercisable
within 60 days.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10 percent of a registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Officers,
directors and greater than 10 percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 (required
by Section 16(a) in the event of failure to comply with certain filing
requirements) were required for those persons, the Company believes that during
fiscal 1996 its officers, directors, and greater than 10 percent beneficial
owners complied with all applicable filing requirements, except that one Form 4
report timely filed by Jeffrey P. Porter was subsequently amended to include a
stock option exercise transaction that had been inadvertently omitted.
10
<PAGE> 15
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ended December 28, 1996,
December 30, 1995 and December 31, 1994, the cash compensation paid by the
Company, as well as certain other compensation paid or accrued for those years,
to the Named Executive Officers in all capacities in which they served:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------- ------------
OTHER ANNUAL SECURITIES ALL OTHER
COMPEN- UNDERLYING COMPEN-
SALARY($) BONUS($) SATION($) OPTIONS/SARS SATION($)
NAME AND PRINCIPAL POSITION YEAR (1) (2) (3)(4) (#) (5)
- --------------------------------- ----- --------- -------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
T. Gary Rogers................... 1996 $639,902 58,100(6) $16,806
Chairman of the Board and 1995 599,791 79,600(7) 17,038
Chief Executive Officer 1994 551,637 $280,000 42,600(8) 19,213
William F. Cronk, III............ 1996 639,902 58,100(6) 16,200
President 1995 599,791 79,600(7) 16,044
1994 551,637 280,000 $ 50,914 42,600(8) 17,892
William R. Oldenburg............. 1996 329,403 18,800(6) 16,200
Vice President -- Operations 1995 324,598 29,700(7) 13,272
1994 299,623 152,500 21,800(8) 14,196
Thomas M. Delaplane.............. 1996 309,402 18,800(6) 16,200
Vice President -- Sales 1995 305,560 29,200(7) 16,044
1994 285,585 145,000 21,800(8) 17,892
Paul R. Woodland................. 1996 299,402 18,800(6) 16,200
Vice President -- Finance 1995 295,560 29,000(7) 16,044
and Administration, 1994 275,585 140,000 21,800(8) 17,892
Chief Financial Officer
and Assistant Secretary
</TABLE>
- ---------------
(1) Includes amounts contributed by the officers to the salary deferral portion
of Dreyer's Grand Ice Cream, Inc. Money Purchase Pension Plan (the "Pension
Plan") and the Dreyer's Grand Ice Cream, Inc. Savings Plan (the "Savings
Plan").
(2) Includes amounts paid under the Company's Incentive Bonus Plan.
(3) No disclosure for fiscal years 1996, 1995 and 1994 is made for Messrs.
Rogers, Oldenburg, Delaplane and Woodland under Other Annual Compensation,
and no disclosure is made for Mr. Cronk for fiscal years 1996 and 1995 under
Other Annual Compensation, as the aggregate incremental compensation
otherwise reportable in this column for these individuals is less than
$50,000 or 10% of the respective officer's combined salary and bonus for
such fiscal years.
(4) The amount reported for Mr. Cronk for 1994 includes $25,000 paid to Price
Waterhouse LLP for tax and accounting services rendered on behalf of Mr.
Cronk and $22,671 for Mr. Cronk's use of a Company automobile.
(5) For each of Messrs. Rogers, Cronk, Delaplane and Woodland, the amounts
reported include contributions by the Company of $10,500 in 1996, $10,500 in
1995 and $10,500 in 1994 to the Pension Plan and $5,700 in 1996, $5,544 in
1995 and $7,392 in 1994 to the Savings Plan. For Mr. Oldenburg the amounts
reported include contributions by the Company of $10,500 in 1996, $10,500 in
1995 and $10,500 in 1994 to the Pension Plan and $5,700 in 1996, $2,772 in
1995 and $3,696 in 1994 to the Savings Plan. Additionally, the Company paid
split-dollar life insurance premiums of $606 in 1996, $994 in 1995 and
$1,321 in 1994 for the benefit of Mr. Rogers.
(6) Excludes options granted in 1996 in lieu of a cash bonus for the Named
Executive Officer's performance in 1995. These excluded options were
included in the number of options reported for the Named Executive Officer
in 1995 and are more fully described in footnote 7 below.
11
<PAGE> 16
(7) Each of the Named Executive Officers earned a bonus for his performance in
1995. Prior to earning such bonus each Named Executive Officer elected to
receive non-qualified stock options in lieu of a cash bonus pursuant to the
"Income Swap Plan" of the Compensation Committee. The Income Swap Plan is
described in the Compensation Committee Report on Executive Compensation on
pages 15-17 herein. In this regard, Messrs. Rogers and Cronk each received
an option to purchase 14,000 shares of the Company's Common Stock, Mr.
Oldenburg received an option to purchase 7,500 shares of the Company's
Common Stock, Mr. Delaplane received an option to purchase 7,000 shares of
the Company's Common Stock, and Mr. Woodland received an option to purchase
6,800 shares of the Company's Common Stock. All of these stock options were
granted on March 5, 1996 under the Company's Stock Option Plan (1993) and
vested on September 6, 1996.
(8) Excludes options granted in 1994 in lieu of salary and/or a cash bonus for
the Named Executive Officer's performance in 1993.
STOCK OPTIONS
The following table provides information concerning the grant of stock
options made during fiscal 1996 to the Named Executive Officers:
OPTION GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR ($/SH) DATE VALUE($)
- ------------------------------- ------------ ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
T. Gary Rogers................. 14,000(1) 3.2% $ 31.50 3/4/06 $124,460(3)
58,100(2) 13.2 $ 31.50 3/4/06 757,043(4)
William F. Cronk, III.......... 14,000(1) 3.2 $ 31.50 3/4/06 124,460(3)
58,100(2) 13.2 $ 31.50 3/4/06 757,043(4)
William R. Oldenburg........... 7,500(1) 1.7 $ 31.50 3/4/06 66,675(3)
18,800(2) 4.3 $ 31.50 3/4/06 244,964(4)
Thomas M. Delaplane............ 7,000(1) 1.6 $ 31.50 3/4/06 62,230(3)
18,800(2) 4.3 $ 31.50 3/4/06 244,964(4)
Paul R. Woodland............... 6,800(1) 1.5 $ 31.50 3/4/06 60,452(3)
18,800(2) 4.3 $ 31.50 3/4/06 244,964(4)
</TABLE>
- ---------------
(1) Options were granted on March 5, 1996 under the Company's Stock Option Plan
(1993) (the "1993 Plan") in lieu of a cash bonus for the Named Executive
Officer's performance in fiscal 1995 pursuant to the Company's Income Swap
Plan (referenced in footnote 6 to the "Summary Compensation Table" on pages
11-12 herein and described in the Compensation Committee Report on Executive
Compensation on pages 15-17 herein). These options became exercisable on
September 6, 1996, six (6) months after the date of grant.
(2) Options were granted pursuant to the 1993 Plan and begin vesting two years
from the date of grant as follows: The options may be exercised only as to
40 percent of the optioned shares after two years from the date of grant and
as to an additional 20 percent after each of the succeeding three years. The
options granted under the 1993 Plan expire 10 years from the date of grant,
terminate within various periods ranging from three to 24 months after the
employee's termination of employment, death or disability, and are
non-transferable except by will or the laws of descent and distribution. The
exercise price of options granted under the 1993 Plan equaled the fair
market value of the shares of the Company's Common Stock on the date of
grant. In the event of a Change of Control of the Company, all then
outstanding options issued under the 1993 Plan shall vest and become
immediately exercisable. The term "Change of Control" as defined in the 1993
Plan is more completely described under the caption "Employment Contracts,
Employment Termination and Change of Control Arrangements" on pages 14-15
herein.
12
<PAGE> 17
(3) Present value was calculated using the Black-Scholes option pricing model.
For the options granted, the following assumptions were used in the
Black-Scholes valuation calculation: dividend yield of 0.76 percent,
risk-free rate of return of 5.49 percent, three year term and a volatility
coefficient of 34.04 percent. The annual dividend yield equals the quotient
of the current annual dividend of $0.24 divided by the stock price on the
date of grant. All volatility coefficients used were based on the monthly
closing price of the Company's Common Stock over a three-year period. The
risk-free rate is the yield on a U.S. Zero Coupon Bond with a maturity equal
to the modified term of the grant. The approach used in developing the
assumptions upon which the Black-Scholes calculations were based is
consistent with the requirements of Statement of Financial Accounting
Standards No. 123 "Accounting for Stock-Based Compensation." The value
calculated by use of this model should not be viewed in any way as a
forecast of the future performance of the Company's Common Stock.
(4) Present value was calculated using the Black-Scholes option pricing model.
For the options granted, the following assumptions were used in the
Black-Scholes valuation calculation: dividend yield of 0.76 percent,
risk-free rate of return of 5.91 percent, six year term and a volatility
coefficient of 34.34 percent. The annual dividend yield equals the quotient
of the current annual dividend of $0.24 divided by the stock price on the
date of grant. All volatility coefficients used were based on the monthly
closing price of the Company's Common Stock over a six-year period. The
risk-free rate is the yield on a U.S. Treasury Zero Coupon Bond with a
maturity equal to the modified term of the grant. The approach used in
developing the assumptions upon which the Black-Scholes calculations were
based is consistent with the requirements of Statement of Financial
Accounting Standards No. 123 "Accounting for Stock-Based Compensation." The
value calculated by use of this model should not be viewed in any way as a
forecast of the future performance of the Company's Common Stock.
The following table provides information on option exercises in fiscal 1996
by the Named Executive Officers and the value of such officers' unexercised
in-the-money options as of December 28, 1996:
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
NUMBER UNEXERCISED OPTIONS/SARS OPTIONS/SARS
OF SHARES AT FY-END AT FY-END($)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
T. Gary Rogers.............. 0 0 115,984 190,496 $ 316,447 $ 500,309
William F. Cronk, III....... 0 0 115,984 190,496 316,447 500,309
William R. Oldenburg........ 0 0 43,304 62,826 178,828 195,313
Thomas M. Delaplane......... 5,400 $97,200 42,504 62,826 177,103 106,513
Paul R. Woodland............ 0 0 42,004 62,826 175,378 195,313
</TABLE>
13
<PAGE> 18
PERFORMANCE GRAPH
The following graph shows the Company's total return to stockholders
compared to the Standard & Poor's 500 Index and the Standard & Poor's Food
Products Index over the five year period from December 27, 1991 through December
28, 1996:
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG DREYER'S GRAND ICE CREAM, INC., THE S&P 500 INDEX
AND THE S&P FOOD PRODUCTS INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD DREYER'S GRAND S&P FOOD
(FISCAL YEAR COVERED) ICE CREAM, INC. S&P 500 INDEX PRODUCTS INDEX
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 66.10 111.49 104.34
1993 81.05 121.82 95.18
1994 69.85 124.05 105.39
1995 94.57 170.50 134.36
1996 83.85 212.99 161.36
</TABLE>
- ---------------
* Assumes $100 investment in each of Dreyer's Grand Ice Cream, Inc., the S&P 500
Index and the S&P Food Products Index, and the reinvestment of dividends.
EMPLOYMENT CONTRACTS, EMPLOYMENT TERMINATION AND CHANGE OF CONTROL ARRANGEMENTS
Currently, all options which have been and may in the future be issued
under the Company's Incentive Stock Option Plan (1982) (the "ISO Plan"), the
Company's Stock Option Plan (1992) (the "1992 Plan") and the Company's Stock
Option Plan (1993) (the "1993 Plan") (collectively, the "Plans") immediately
vest and become subject to exercise upon a Change of Control of the Company. A
Change of Control is defined under the Plans to include (i) the acquisition by
any person of beneficial ownership of 40 percent or more of the combined voting
power of the Company's outstanding securities immediately after such acquisition
(which 40 percent shall be calculated after including the dilutive effect of the
conversion or exchange of any outstanding securities of the Company convertible
into or exchangeable for voting securities), or (ii) a change in the composition
of majority membership of the Board of Directors over any two-year period
commencing, with respect to the ISO Plan and the 1992 Plan, on or after March 7,
1994, or, with respect to the 1993 Plan, on or after September 9, 1993, or (iii)
a change in ownership of the Company such that the Company becomes subject to
the delisting of its Common Stock from the NASDAQ National Market System, or
(iv) the approval by the Board of Directors of the sale of all or substantially
all of the assets of the Company, or (v) the approval by the Board of Directors
of any merger, consolidation, issuance of securities or purchase of assets, the
result of which would be the occurrence of any event described in clause (i),
(ii) or (iii) above.
14
<PAGE> 19
Further, the acquisition by any person (or any group of which such a person is a
member) who is (with respect to the ISO Plan and the 1992 Plan, as of March 7,
1994, or, with respect to the 1993 Plan, as of September 9, 1993) a member of
the Board of Directors, of beneficial ownership of 40 percent or more of the
combined voting power of the Company's outstanding securities immediately after
such acquisition (the calculation of such 40 percent being made as described
above), shall not be deemed a Change of Control for purposes of the Plans.
The 1993 Plan also includes provisions whereby the options granted an
optionee thereunder immediately vest and become exercisable upon the death or
retirement of the optionee. Additionally, under the 1993 Plan, the Administrator
may, in its discretion, accelerate the vesting of an optionee's options. Except
for these provisions of the Company's stock option plans, the Company has no
employment contracts or any employment termination or Change of Control
arrangements.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Pursuant to regulations adopted by the SEC in October 1992, the
Compensation Committee is required to disclose its bases for compensation of the
Named Executive Officers and to discuss the relationship between the Company's
performance during the last fiscal year and such compensation. The Compensation
Committee notes that except in its capacity as Plan Administrator of the
Company's Incentive Stock Option Plan (1982) (the "ISO Plan"), the Company's
Stock Option Plan (1992) (the "1992 Plan") and the Company's Stock Option Plan
(1993) (the "1993 Plan"), the Committee does not establish compensation for the
Named Executive Officers (or any other executive officer of the Company) except
the Chief Executive Officer and the President. Except for stock option grants,
the compensation of the Company's executive officers (including the Named
Executive Officers other than the Chief Executive Officer and the President) is
determined by the Chief Executive Officer and the President in their sole
discretion.
The Chief Executive Officer's and the President's aggregate compensation is
comprised of three principal components: base salary, bonus and stock options.
While the Committee does not review any particular quantitative issues in
establishing the Chief Executive Officer's and the President's base salary
specifically and total compensation generally, the Committee does consider two
principal factors which are evenly weighted in its deliberations: (1)
performance of the Company measured by the long-term growth of the Company's
income; and (2) the roles of the Chief Executive Officer and the President in
achieving the Company's performance. Although the Committee has not reviewed any
compensation surveys relating specifically to chief executive officer and
president salaries, the Committee believes that each of the Chief Executive
Officer's and the President's base salary appropriately reflects the
satisfactory long-term performance of the Company and each of their roles in the
Company's performance and is competitive with the salaries of their counterparts
at other companies of similar size and history (although such other companies
are not necessarily companies which are represented in the indexes described
under the caption "Performance Graph" on page 14 herein).
In 1994, the Company announced a new five-year plan (the "Strategic Plan").
The Board of Directors approved the Strategic Plan, which anticipated an initial
reduction in earnings and a subsequent increase in market share and future
earnings above those levels that would be attained in the absence of the
Strategic Plan. Because of the anticipated reduction in earnings, the Committee
determined that the method used to calculate the bonus portion of the
compensation package for the Chief Executive Officer and President did not
accurately measure the performance of the Company. As a result, the Committee
determined it would base bonus compensation for 1994 and 1995 directly on
certain quantitative elements of the Company's performance as measured against
the Strategic Plan. The most important, in terms of relative weighting, of these
elements are: the effective price per gallon, the production cost per gallon,
the distribution cost per gallon and the retail products' volume. For 1996 and
1997, the Committee determined that bonus compensation should be based one half
on such measurement of the quantitative elements of the Strategic Plan and one
half on the Company achieving its profit plan earnings per share (the "Profit
Plan"). Under this policy, a bonus (equal to 12.5 percent of the officer's base
salary) is awarded if, based upon the quantitative elements, the Company has
achieved 80 percent of the anticipated results of the Strategic Plan. The
Strategic Plan based portion of the bonus award is increased (up to a maximum of
25 percent of base salary), calculated
15
<PAGE> 20
by linear interpolation, if based upon the quantitative elements the Company has
achieved more than 80 percent and up to 100 percent of the anticipated results
of the Strategic Plan. Additional bonus (equal to 12.5 percent of the officer's
base salary) is awarded if the Company's actual earnings per share for the
fiscal year has achieved 80 percent of the Profit Plan. The Profit Plan based
portion of the bonus award is increased (up to a maximum of 25 percent of the
officer's base salary), calculated pro-rata, based upon the Company's actual
earnings per share for the fiscal year having achieved more than 80 percent and
up to 100 percent of the Profit Plan. A maximum potential bonus of 50 percent of
base salary may be awarded under the policy. The Committee believes that this
policy for determining bonuses more accurately ties the Chief Executive
Officer's and the President's compensation to the performance of the Company by
acknowledging the effects upon the long-term earnings of the Company of the
Strategic Plan and the Profit Plan.
In awarding options under the ISO Plan, the 1992 Plan and the 1993 Plan,
the Committee has adopted a policy pursuant to which (1) Messrs. Rogers and
Cronk will receive options to purchase the Company's Common Stock with a current
market value equal to three times annual base salary, (2) all other Named
Executive Officers (and the other vice president of the Company) will receive
options to purchase the Company's Common Stock with a current market value equal
to two times the average annual base salary of vice presidents of the Company,
(3) approximately 16 executive staff members will receive options to purchase
the Company's Common Stock with a current market value equal to the average
annual base salary of executive staff members, and (4) approximately 50
management staff members will receive options to purchase the Company's Common
Stock with a current market value equal to one half the average annual base
salary of management staff members. The option grant sizes included in the
Committee's policy are competitive with a broad general industry sampling
according to a 1993 survey of competitive practice in 275 diversified companies
received from the Company's compensation consultants (which survey included some
companies which are represented in the indexes described under the caption
"Performance Graph" on page 14 herein). The stock option grants in 1996 are
consistent with the Committee's stated policies.
The Committee has also adopted a policy whereby key executive employees of
the Company and its subsidiaries may, at the Committee's discretion, be offered
the opportunity to receive options in lieu of current cash compensation,
including bonuses, for options to purchase shares of the Company's Common Stock
(the "Income Swap Plan"). Options granted in exchange for cash compensation are
non-qualified and may be granted under either the 1992 Plan or the 1993 Plan.
The exchange ratio used to determine the proper number of shares to be subject
to such options is based on the Black-Scholes valuation method. The exercise
price of options granted under the Income Swap Plan is set at the current fair
market value of the Company's Common Stock as of the date of grant. The vesting
of options granted by the Committee under the Income Swap Plan depends on
whether the options are granted under the 1992 Plan or the 1993 Plan. Options
granted under the 1992 Plan vest as follows: The options granted begin vesting
two years from the date of grant and may be exercised only as to 40 percent of
the optioned shares after two years from the date of grant and as to an
additional 20 percent after each of the succeeding three years. Options granted
under the 1993 Plan in connection with the Income Swap Plan vest six months from
the date of grant. Options granted under the Income Swap Plan are exercisable
for cash or by exchanging previously-acquired shares of Common Stock of the
Company. Further, any tax withholding requirement can be satisfied through
surrender of additional shares previously acquired by the employee. Options
granted under the 1993 Plan in connection with the Income Swap Plan may have a
"reload" feature which would result in the option holder receiving, upon the
exercise of such option, a "reload" grant equal to the number of shares of
Common Stock utilized to pay the exercise price and/or tax withholdings. If
granted, the "reload" options will have an exercise price equal to the fair
market value of the Company's Common Stock on the date of grant of the reload
option and an exercise term equal to the remaining term of the option exercised.
Beginning in 1994, Section 162(m) of the Internal Revenue Code limits
deductibility of compensation in excess of $1 million paid to the Company's
chief executive officer and to any of its four other highest paid executive
officers. However, certain performance based compensation is specifically exempt
from the limitation on deductibility. To date, no employee of the Company has
been paid compensation in excess of $1 million that would be subject to the Code
Section 162(m) limitation. While the tax impact of any compensation arrangement
is one factor to be considered, such impact is evaluated in light of the
Committee's
16
<PAGE> 21
overall compensation philosophy. The Committee's general intention is to
establish executive officer compensation programs which will maximize the
Company's deduction if the Committee determines that such actions are consistent
with its philosophy and in the best interests of the Company and its
stockholders. However, from time to time the Committee may award compensation
which is not fully deductible if the Committee determines that such award is
consistent with its philosophy and in the best interests of the Company and its
stockholders.
The Committee notes that generally options granted to executive officers
will only realize value to the extent the fair market value of the Company's
stock increases after the date of grant. The Committee believes that this
furthers the Committee's goal of aligning management's interests with those of
the Company's stockholders.
THE COMPENSATION COMMITTEE FOR FISCAL YEAR 1996
Timm F. Crull
John W. Larson
Edmund R. Manwell
Jack O. Peiffer
Messrs. Merril M. Halpern, Jerome L. Katz and Anthony J. Martino were also
members of the Compensation Committee in fiscal 1996, but resigned from the
Board of Directors prior to preparation of this Report.
The foregoing Compensation Committee Report on Executive Compensation shall
not be deemed to be incorporated by reference into any filing of the Company
under the Securities Act of 1933 or the Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporates such information by
reference.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1996, Mr. Manwell was the Secretary of the Company and a
partner in the law firm of Manwell & Milton, general counsel to the Company. The
Company paid Manwell & Milton $832,200 in fees during fiscal 1996 for services
rendered as general counsel to the Company. Mr. Manwell is not separately
compensated for his services as Secretary of the Company although some of the
fees received by Manwell & Milton may be for services that, in other
corporations, are performed by the corporate secretary.
On June 14, 1994 the Company completed a transaction with Nestle Holdings,
Inc. ("NHI") pursuant to a Stock and Warrant Purchase Agreement (the "Nestle
Agreement") whereby NHI purchased from the Company, for an aggregate price of
$106,000,000, three million shares of Common Stock of the Company and warrants
for the purchase of two million shares of Common Stock of the Company. NHI
agreed that neither it nor its affiliates will acquire in the aggregate 35
percent or more of the outstanding common stock of the Company (including for
purposes of this calculation outstanding stock options and other securities
convertible into, or entitling the holder thereof to acquire Common Stock,
hereafter "Voting Stock") without the prior consent of the Company's Board of
Directors, subject to certain limited exceptions, for a period of 10 years. The
Nestle Agreement also provides that the Company will recommend and use the same
efforts as are used to cause the elections of all other nominees to the Board of
Directors of the Company to cause the election to the Board of two nominees
selected by NHI. Thereafter, throughout the term of the Nestle Agreement, NHI
may nominate that number of nominees proportionate to the amount of Voting Stock
owned by NHI and its affiliates. NHI and its affiliates have certain rights to
purchase additional shares of Common Stock in open market transactions in the
event their aggregate equity ownership in the Company is diluted to certain
levels.
Messrs. Martino and Crull were named to the Board of Directors of the
Company pursuant to the terms of the Nestle Agreement. Mr. Crull served as
Chairman of the Board and Chief Executive Officer of Nestle USA, Inc.
("Nestle"), Chairman of the Board of NHI and as director of Nestle Food Company
("NFC"), until his retirement or resignation from these positions in December
1994. Mr. Martino served as Executive Vice President, Chief Financial Officer of
Nestle and as director of NFC until his retirement in July 1994 or
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<PAGE> 22
resignation in January 1994, respectively. Nestle and NFC are affiliates of NHI.
Mr. Martino resigned his position on the Board of Directors of the Company
effective December 31, 1996, and Mr. M. Steven Langman was appointed by NHI to
replace him.
In June 1993, the Company issued in a private placement to General Electric
Capital Corporation ("GECC"), Trustees of General Electric Pension Trust and GE
Investment Private Placement Partners I, Limited Partnership (each individually,
a "Holder"), pursuant to a Securities Purchase Agreement (the "GE Agreement"),
an aggregate of $100,752,000 of 6.25 percent convertible subordinated debentures
of the Company due June 30, 2001. In August 1995, the Company caused the
conversion of the debentures into Series B Convertible Preferred Stock ($1.00
par value) of the Company. The shares of Series B Convertible Preferred Stock
are convertible at an initial conversion price of $34.74 into a total of
2,900,000 shares of Common Stock of the Company, subject to adjustment. Mr.
Peiffer was named to the Board of Directors of the Company pursuant to a
provision of the GE Agreement that allows a designated Holder to select one
nominee to the Board of Directors. Mr. Peiffer served as Senior Vice
President -- Corporate Human Resources of General Electric Company ("GEC") until
his retirement in February 1993. GEC is an affiliate of the Holders.
OTHER RELATIONSHIPS
On June 14, 1994, the Company entered into an agreement with Nestle Ice
Cream Company ("NICC"), an affiliate of Nestle Holding, Inc., to distribute in
certain markets frozen novelty and ice cream products manufactured by or for
NICC (the "NICC Products"). The Company purchases the NICC Products in the
ordinary course of business and at prices consistent with those offered to other
distributors.
Timothy P. Smucker was appointed a director of the Company on March 4,
1997. Mr. Smucker is Chairman of The J.M. Smucker Company ("JMS"), a supplier
for the Company of certain raw materials used in production of the Company's
products. The Company purchases raw materials from JMS in the ordinary course of
business and at prices consistent with those offered by other suppliers. The
Company is currently negotiating an agreement with JMS to produce for the
Company a new product in accordance with specifications and quality control
provided by the Company. The Company is proposing to compensate JMS for such
manufacturing services at prices consistent with those offered by other
manufacturers who provide such services.
Any other business relationships existing between any of the nominees or
continuing directors and the Company, or between the Company and any of the
beneficial owners identified under the caption "Security Ownership of Certain
Beneficial Owners" on pages 7-10 herein are described under the caption
"Compensation Committee Interlocks and Insiders Participation" on pages 17-18
herein.
MATTERS SUBMITTED TO A VOTE OF STOCKHOLDERS
ELECTION OF DIRECTORS
The directors of Class III will be elected at the 1997 Annual Meeting of
Stockholders and will hold office until the 2000 Annual Meeting of Stockholders
or until their successors are elected and qualified. The nominees for directors
of Class III, T. Gary Rogers, William F. Cronk, III and M. Steven Langman,
constitute Class III of the Board of Directors with each of their terms expiring
as of the date of this Annual Meeting. Information regarding the Board of
Directors of the Company, including the business experience of the nominees for
directors of Class III, is set out under the caption "Board of Directors" on
pages 3-6 herein. No family relationship exists between any nominee and any of
the other directors. Any business relationship existing between any of the
nominees or continuing directors and the Company are described under the
captions "Compensation Committee Interlocks and Insider Participation" and
"Other Relationships" on pages 17-18 herein.
Unless otherwise directed, the persons named in the enclosed form of proxy
will vote such proxy for the election of T. Gary Rogers, William F. Cronk, III
and M. Steven Langman, each of whom has consented to be named as a director of
the Company and to serve if elected. In case any of Messrs. Rogers, Cronk or
Langman becomes unavailable for election or declines to serve for any unforeseen
reason, an event
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<PAGE> 23
management does not anticipate, the persons named in the proxy will have the
right to use their discretion to vote for a substitute.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Price Waterhouse LLP has been appointed to be the Company's independent
public accountants for the fiscal year ending December 27, 1997, and were the
independent public accountants for the Company during the fiscal year ended
December 28, 1996.
The appointment of independent public accountants is made annually by the
Board of Directors and is subsequently submitted by them to the stockholders for
approval. The decision of the Board of Directors is, in turn, based upon the
recommendation of the Audit Committee of the Board of Directors. In making its
recommendations, the Audit Committee reviews both the audit scope and estimated
audit fees for the coming year. In addition, the Audit Committee reviews the
types of professional services provided by Price Waterhouse LLP to determine
whether the rendering of such services would impair the independence of Price
Waterhouse LLP. Should stockholder approval not be obtained, the Board of
Directors will consider it a directive to select and retain other independent
public accountants.
A representative or representatives of Price Waterhouse LLP will be present
at the stockholders' meeting and will be afforded an opportunity to make a
statement if they so desire and will be available to respond to questions raised
orally at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS THE APPROVAL OF PRICE WATERHOUSE LLP AS
THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE 1997 FISCAL YEAR AND
THEREAFTER UNTIL A SUCCESSOR IS APPOINTED.
VOTING INFORMATION
GENERAL VOTING INFORMATION
A stockholder may, with respect to the election of directors (i) vote for
the election of all the director nominees named herein, or (ii) withhold
authority to vote for the director nominees or (iii) vote for the election of
any of such director nominee(s) and against any of the other director nominee(s)
by so indicating on the proxy. Withholding authority to vote for a director
nominee will not prevent such director nominee from being elected. A stockholder
may, with respect to each other matter specified in the notice of the meeting
(i) vote "FOR" the matter, (ii) vote "AGAINST" the matter or (iii) "ABSTAIN"
from voting on the matter. Shares will be voted as instructed in the
accompanying proxy on each matter submitted to stockholders. If there are no
instructions from the stockholder on an executed proxy, the proxy will be voted
as recommended by the Board of Directors.
Abstentions and broker non-votes are each included in the determination of
the number of shares present for quorum purposes. Abstentions are counted in
tabulations of votes cast on proposals presented to stockholders. While not
counted as votes for or against a proposal, abstentions have the same effect as
votes against a proposal. Broker non-votes are not counted for purposes of
determining whether a proposal has been approved. Approval of each matter
specified in the Annual Meeting notice requires the affirmative vote of either a
majority or a plurality of the shares of Common Stock present in person or by
proxy at the meeting and entitled to vote on such matter, including the shares
of Common Stock into which the outstanding shares of Series B Convertible
Preferred Stock are convertible on the record date for the meeting that the
holders of the Series B Convertible Preferred Stock are entitled to vote.
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<PAGE> 24
VOTES REQUIRED FOR APPROVAL
Election of Directors: Plurality of the votes of the shares of Common Stock
present in person or by proxy and entitled to vote at the meeting, including the
shares of Common Stock into which the outstanding shares of Series B Convertible
Preferred Stock are convertible on the record date for the meeting.
Approval of Price Waterhouse LLP as independent public accountants:
Majority of the shares of Common Stock present in person or by proxy and
entitled to vote at the meeting, including the shares of Common Stock into which
the outstanding shares of Series B Convertible Preferred Stock are convertible
on the record date for the meeting.
PROPOSALS OF STOCKHOLDERS
The 1998 Annual Meeting of Stockholders will be held on or about May 13,
1998. Proposals of stockholders intended to be presented at the 1998 Annual
Meeting must be received by the Secretary, Dreyer's Grand Ice Cream, Inc., 5929
College Avenue, Oakland, California 94618 no later than December 1, 1997.
OTHER MATTERS
The management knows of no other business to be presented at the meeting.
If other matters do properly come before the meeting, it is intended that the
proxy holders will vote on them in accordance with their best judgment.
By Order of the Board of Directors,
EDMUND R. MANWELL
Secretary
DREYER'S GRAND ICE CREAM, INC.
Oakland, California
March 31, 1997
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<PAGE> 25
COPIES OF DREYER'S GRAND ICE CREAM, INC.'S FORM 10-K REPORT,
A CORPORATE OPERATIONAL AND FINANCIAL REPORT
FILED ANNUALLY WITH THE
SECURITIES AND EXCHANGE COMMISSION,
ARE AVAILABLE WITHOUT CHARGE BUT WITHOUT EXHIBITS
FOR THOSE STOCKHOLDERS WHO WISH TO HAVE MORE DETAILED INFORMATION
ABOUT THE COMPANY.
If you would like a copy, or have any other inquiries
about the Company or your stockholder account, please write to:
WILLIAM C. COLLETT
TREASURER
DREYER'S GRAND ICE CREAM, INC.
5929 COLLEGE AVENUE
OAKLAND, CALIFORNIA 94618
(LOGO)printed on recycled paper
<PAGE> 26
PROXY
DREYER'S GRAND ICE CREAM, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE 1997
ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints T. Gary Rogers, William F. Cronk, III
and Edmund R. Manwell, or any one of them, each with power of substitution and
revocation, as the proxy or proxies of the undersigned to represent the
undersigned and vote all shares of Common Stock, $1.00 par value, of DREYER'S
GRAND ICE CREAM, INC., which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders of DREYER'S GRAND ICE
CREAM, INC. to be held at the Claremont Resort Hotel, Oakland, California, at
2:00 p.m. on Wednesday, May 14, 1997, and at any postponements or adjournments
thereof, upon the following matters:
(Continued, and to be signed, on reverse side)
FOLD AND DETACH HERE
<PAGE> 27
PLEASE MARK [ X ]
YOUR VOTES AS
INDICATED IN
THIS EXAMPLE
1. The election of three Class III directors.
Instruction: to withhold authority for any individual nominee, cross out
the nominee's name in the list below:
FOR ALL WITHHOLD
FOR ALL NOMINEES EXCEPT AUTHORITY TO
THE NOMINEES AS CROSSED VOTE FOR NOMINEES
LISTED BELOW OUT BELOW LISTED BELOW
[ ] [ ] [ ]
T. GARY ROGERS WILLIAM F. CRONK, III M. STEVEN LANGMAN
2. The approval of Price Waterhouse LLP as the Company's independent public
accountants for fiscal year 1997.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. With discretionary authority on such matters as may properly come before the
meeting.
THE SHARES COVERED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE CHOICES
MADE. WHEN NO CHOICE IS MADE, THIS PROXY WILL BE VOTED FOR THE LISTED NOMINEES
FOR DIRECTOR AND FOR PROPOSAL 2.
The Annual Meeting of Stockholders may be held as scheduled only if a majority
of the shares outstanding are represented at the meeting by attendance or
proxy. Accordingly, please complete this proxy and return it promptly in the
enclosed envelope.
_______________________________________________
Signature(s)
Please date and sign exactly as your name(s)
appears on your shares. If signing for estates,
trusts, or corporations, title or capacity
should be stated. If shares are held jointly,
each holder should sign.
Dated____________________________________, 1997
FOLD AND DETACH HERE
