<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:
---------------------------------------------------------------------
(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):
---------------------------------------------------------------------
(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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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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1
<PAGE> 2
LOGO
- --------------------------------------------------------------------------------
Notice of Annual
Meeting of Stockholders
and Proxy Statement
- --------------------------------------------------------------------------------
Meeting of May 6, 1998
<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 6, 1998 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.
<TABLE>
<S> <C>
T. GARY ROGERS WILLIAM F. CRONK, III
Chairman of the Board and President
Chief Executive Officer
</TABLE>
Oakland, California
March 25, 1998
<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................................... 4
Attendance at Board and Committee Meetings................ 5
Remuneration of Directors................................. 5
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>
i
<PAGE> 5
LOGO
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 6, 1998
The Annual Meeting of Stockholders of DREYER'S GRAND ICE CREAM, INC. will
be held on Wednesday, May 6, 1998 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 I of the Board of Directors;
2. Approving the appointment of Price Waterhouse LLP as independent public
accountants for the fiscal year 1998 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 19, 1998 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 25, 1998
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 6, 1998 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 3,
1998.
ANNUAL REPORT
The Company's Annual Report to Stockholders for the fiscal year ended
December 27, 1997 ("Annual Report to Stockholders") is furnished concurrently to
all stockholders entitled to vote at the Annual Meeting. The Annual Report to
Stockholders 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 to Stockholders 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 I 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
On November 18, 1997, the Company issued shares of common stock to holders
of record on October 30, 1997 to effect a two-for-one common stock split.
Accordingly, the number of shares appearing in this Proxy Statement have been
restated to reflect this stock split on a retroactive basis.
There were 27,087,949 shares of Common Stock ($1.00 par value) of the
Company, 1,007,522 shares of Series A Convertible Preferred Stock ($1.00 par
value) of the Company, no shares of Series B 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 19, 1998. Each share of Common Stock is entitled to one vote at the
meeting. Each share of Series A Convertible Preferred Stock is entitled to vote
that number of votes equal to the number of shares of Common Stock into which
such shares
2
<PAGE> 7
of Series A Convertible Preferred Stock is convertible on the record date for
the meeting. The outstanding shares of Series A Convertible Preferred Stock are
convertible into an aggregate of 5,800,000 shares of Common Stock on March 19,
1998. There are no cumulative voting rights.
Pursuant to the By-Laws of the Company, the Board of Directors has fixed
the close of business on March 19, 1998 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 resignation of one Board member
who, for personal reasons, has recently resigned from the Company's Board of
Directors. Mr. Timm F. Crull, who had served on the Company's Board of
Directors, Class II, since 1995, resigned from the Board effective December 31,
1997. The vacancy created by his resignation was filled by Mr. Robert A. Helman,
an appointee named by Nestle Holdings, Inc. ("NHI") pursuant to the terms of the
Stock and Warrant Purchase Agreement dated as of May 6, 1994 and amended June
14, 1994, between the Company and NHI (the "Nestle Agreement"). Mr. Crull 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 pages 17-18 herein. The newly appointed
director was appointed on March 3, 1998 and participated in the March 3, 1998
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 I will be
elected at the 1998 Annual Meeting of Stockholders and will hold office until
the 2001 Annual Meeting of Stockholders or until their successors are elected
and qualified. The nominees constitute Class I 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 AS
DIRECTOR
AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- --------------------- ------------------------------------------
<C> <S>
Jan L. Booth PRIVATE INVESTOR. Ms. Booth joined the Company's Board of
1997 Directors in 1997. From 1988 to 1990, Ms. Booth was
Age: 47 self-employed as a 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.
John W. Larson PRIVATE INVESTOR. Mr. Larson joined the Company's Board of
1993 Directors in 1993. From 1989 to early 1993, Mr. Larson
Age: 60 served as Chief 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.
Jack O. Peiffer RETIRED SENIOR VICE PRESIDENT - CORPORATE HUMAN RESOURCES,
1993 GENERAL ELECTRIC COMPANY. Mr. Peiffer joined the Company's
Age: 64 Board of 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
Vice President and General Manager of GE Supply Company from
November 1983 to January 1985.
</TABLE>
3
<PAGE> 8
CONTINUING DIRECTORS
Directors Edmund R. Manwell, Timothy P. Smucker and Robert A. Helman
("Class II") will hold office until the 1999 Annual Meeting of Stockholders.
Directors T. Gary Rogers, William F. Cronk, III and M. Steven Langman ("Class
III") will hold office until the 2000 Annual Meeting of Stockholders.
The following brief statements contain biographical information about each
continuing director and the year he first became a director:
<TABLE>
<CAPTION>
NOMINEE
YEAR FIRST ELECTED AS
DIRECTOR
AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- --------------------- ------------------------------------------
<C> <S>
William F. Cronk, III PRESIDENT, DREYER'S GRAND ICE CREAM, INC. Mr. Cronk has
1977 served on the Company's Board of Directors since its
Age: 55 incorporation in 1977. Since April 1981, he has served as
the Company's President.
Robert A. Helman PARTNER, MAYER, BROWN & PLATT. Mr. Helman joined the
1998 Company's Board of Directors in 1998. Mr. Helman became a
Age: 64 partner at Mayer, Brown & Platt in 1967. Prior to 1967, Mr.
Helman was an associate and partner in the law firm of
Isham, Lincoln & Beale. Mr. Helman is also a director of
Northern Trust Corporation and Zenith Electronics
Corporation, both publicly traded companies. In addition,
Mr. Helman serves as a director of the following privately
owned organizations: The Chicago Stock Exchange and The
Brookings Institution.
M. Steven Langman MANAGING DIRECTOR, RHONE GROUP LLC. Mr. Langman joined the
1997 Company's Board of Directors in 1997. Prior to joining Rhone
Age: 36 Group LLC 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.
Edmund R. Manwell PARTNER, MANWELL & MILTON, GENERAL COUNSEL TO THE COMPANY.
1981 Mr. Manwell has served as Secretary of the Company since its
Age: 55 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.
T. Gary Rogers CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER, DREYER'S
1977 GRAND ICE CREAM, INC. Mr. Rogers has served as the Company's
Age: 55 Chairman of the Board and Chief Executive Officer since its
incorporation in February 1977. Mr. Rogers is also a
director of Il Fornaio (America) Corporation.
Timothy P. Smucker CHAIRMAN, THE J.M. SMUCKER COMPANY. Mr. Smucker joined the
1997 Company's Board of Directors in 1997. Mr. Smucker has been
Age: 53 employed by The J.M. Smucker Company, a food products
manufacturer, for over 28 years, and has held a variety of
positions prior to his appointment as Chairman. He has been
a director of The J.M. Smucker Company since 1973. Mr.
Smucker is also a director of Huntington BancShares
Incorporated, a regional bank holding company.
</TABLE>
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
4
<PAGE> 9
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 1997, Ms. Booth and Messrs. Crull, Langman, Larson, Manwell
(Chairman), Peiffer and Smucker were members of the Compensation Committee.
Commencing in March 1998, the Compensation Committee is comprised of Ms. Booth
and Messrs. Helman, Langman, Larson, Manwell (Chairman), Peiffer and Smucker.
Audit Committee
The Audit Committee composition in 1997 was comprised of Ms. Booth and
Messrs. Crull, Langman, Larson (Chairman), Manwell, Peiffer and Smucker.
Commencing in March 1998, the Audit Committee is comprised of Ms. Booth and
Messrs. Helman, Langman, Larson (Chairman), Manwell, Peiffer and Smucker. The
Committee meets on the call of any member and, on at least one occasion each
year, 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 include 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 1997, 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. Crull who was absent from one
meeting. The Compensation Committee met four times 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, except Mr. Crull
who was absent from two meetings of the Compensation 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 Company also reimburses the reasonable
travel expenses of a director to attend board meetings. Commencing in fiscal
year 1998, Directors' compensation includes, in addition to the meeting fee and
committee fee, an annual retainer fee of $6,000. 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 "NonEm-
5
<PAGE> 10
ployee Director") received an option to purchase 10,000 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 3,000 shares
of the Company's Common Stock will be awarded to each NonEmployee 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 19, 1998 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>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP* CLASS*
------------------- --------------------- ----------
<S> <C> <C>
Nestle Holdings, Inc.(1)......................... 8,112,016 27.9%
c/o Nestle USA, Inc.
800 North Brand Boulevard
Glendale, California 91203
Nestle S.A.
Avenue Nestle
Vevey, Switzerland CH-1800
T. Gary Rogers(2)(3)............................. 3,796,587 13.8%
5929 College Avenue
Oakland, California 94618
General Electric Capital Corporation(4)(5)....... 2,900,000 9.7%
260 Long Ridge Road
Stamford, Connecticut 06927
Trustees of General Electric Pension
Trust(4)(6).................................... 2,900,000 9.7%
GE Investment Private Placement Partners I,
Limited Partnership
P.O. Box 7900
3003 Summer Street
Stamford, Connecticut 06904
William F. Cronk, III(2)(7)...................... 2,085,202 7.6%
5929 College Avenue
Oakland, California 94618
Cortopassi Family Trust(8)....................... 1,874,000 6.9%
Stanislaus Food Products Co.
San Tomo Partners
Sierra Quality Canners, Inc.
Trecento Investors, Inc.
LICO Brands, Inc.
DACCO, Inc.
VICOR, LLC
Capecchio Foundation
Alpinello Investors, Inc.
Wright Tract Partners, LP
11292 North Alpine Road
Stockton, California 95212
Robert E. Torray & Co., Inc.(9).................. 1,618,000 6.0%
The Torray Corporation
Robert E. Torray
6610 Rockledge Drive, Suite 450
Bethesda, Maryland 20817-1869
</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 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
7
<PAGE> 12
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 175,120 shares of Common Stock under the
Company's Stock Option Plan (1992) exercisable within 60 days, and options
to purchase 260,160 shares of Common Stock under the Company's Stock Option
Plan (1993) exercisable within 60 days.
(3) 3,142,072 and 200,000 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
19,235 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 A 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 1,172,990 of these shares. GE
Investment Private Placement Partners I, Limited Partnership ("GEIPPP") has
sole voting power and sole investment power with respect to 1,727,010 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) 1,649,922 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
84,000 shares held in irrevocable trusts for the benefit of Mr. Cronk's
sons. Neither Mr. Cronk nor his wife have voting or investment power with
respect to these 84,000 shares, and Mr. Cronk and his wife disclaim
beneficial ownership of all of the shares held in these irrevocable trusts.
(8) 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, 500,000 shares; Stanislaus Food Products
Co., 304,000 shares; San Tomo Partners, 300,000 shares; Sierra Quality
Canners, Inc., 300,000 shares; Trecento Investors, Inc., 120,000 shares;
LICO Brands, Inc., 100,000 shares; DACCO, Inc., 100,000 shares; VICOR, LLC,
60,000 shares; Capecchio Foundation, 50,000 shares; Alpinello Investors,
Inc., 30,000 shares; Wright Tract Partners, LP, 10,000 shares. The listed
entities filed a joint statement on Schedule 13D as members of a group.
(9) Robert E. Torray & Co., Inc. ("RETC") has shared voting and investment power
with respect to 1,478,000 of these shares. The Torray Corporation ("TTC")
has shared voting and investment power with respect to 140,000 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.
8
<PAGE> 13
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of March 19, 1998 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* CLASS*
---- ---------- ----------
<S> <C> <C>
T. Gary Rogers(1)(2)....................................... 3,796,587 13.8%
William F. Cronk, III(1)(3)................................ 2,085,202 7.6%
William R. Oldenburg(4).................................... 197,816 **
Thomas M. Delaplane(5)..................................... 197,761 **
J. Tyler Johnston(6)....................................... 75,542 **
Edmund R. Manwell(7)....................................... 67,000 **
John W. Larson(7).......................................... 59,000 **
Jan L. Booth(8)(9)......................................... 21,200 **
Jack O. Peiffer(7)......................................... 19,000 **
Timothy P. Smucker(9)...................................... 15,000 **
M. Steven Langman(9)....................................... 13,000 **
Robert A. Helman........................................... -0- **
Directors and Executive Officers as a Group (13
persons)(10)............................................. 6,547,108 23.0%
</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 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.
** Less than one percent.
(1) Includes options to purchase 175,120 shares of Common Stock under the
Company's Stock Option Plan (1992) (the "1992 Plan") exercisable within 60
days, and options to purchase 260,160 shares of Common Stock under the
Company's Stock Option Plan (1993) (the "1993 Plan") exercisable within 60
days.
(2) 3,142,072 and 200,000 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
19,235 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.
(3) 1,649,922 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 84,000 shares held in irrevocable trusts for the benefit of Mr.
Cronk's sons. Neither Mr. Cronk nor his wife have voting or investment
power with respect to these 84,000 shares, and Mr. Cronk and his wife
disclaim beneficial ownership of all of the shares held in these
irrevocable trusts.
(4) Includes options to purchase 18,460 shares of Common Stock under the
Company's Incentive Stock Option Plan (1982) (the "ISO Plan") exercisable
within 60 days, options to purchase 24,320 shares of
9
<PAGE> 14
Common Stock under the 1992 Plan exercisable within 60 days, and options to
purchase 108,960 shares of Common Stock under the 1993 Plan exercisable
within 60 days.
(5) Includes options to purchase 18,460 shares of Common Stock under the ISO
Plan exercisable within 60 days, options to purchase 24,320 shares of
Common Stock under the 1992 Plan exercisable within 60 days, and options to
purchase 107,360 shares of Common Stock under the 1993 Plan exercisable
within 60 days. Also includes 12,957 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.
(6) Includes options to purchase 11,140 shares of Common Stock under the ISO
Plan exercisable within 60 days, options to purchase 2,600 shares of Common
Stock under the 1992 Plan exercisable within 60 days, and options to
purchase 50,524 shares of Common Stock under the 1993 Plan exercisable
within 60 days.
(7) Includes options to purchase 19,000 shares of Common Stock under the 1993
Plan exercisable within 60 days.
(8) 4,000 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 4,200 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 and her husband
disclaim beneficial ownership of these shares except to the extent of their
pecuniary interest therein.
(9) Includes options to purchase 13,000 shares of Common Stock under the 1993
Plan exercisable within 60 days.
(10) Includes options to purchase 48,060 shares of Common Stock under the ISO
Plan exercisable within 60 days, options to purchase 401,480 shares of
Common Stock under the 1992 Plan exercisable within 60 days, and options to
purchase 883,164 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 1997 its officers, directors, and greater than 10 percent beneficial
owners complied with all applicable filing requirements.
10
<PAGE> 15
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ended December 27, 1997,
December 28, 1996 and December 30, 1995, 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
------------------------------------------------- -------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
COMPENSATION OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(2) ($)(3)(4) (#) ($)(5)
- --------------------------- ---- ------------ ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
T. Gary Rogers............. 1997 666,171 162,500 52,231 120,000 16,021
Chairman of the Board and 1996 639,902 -0- 116,200(6) 16,806
Chief Executive Officer 1995 599,791 -0- 159,200(7) 17,038
William F. Cronk, III...... 1997 666,171 162,500 57,449 120,000 15,000
President 1996 639,902 -0- 116,200(6) 16,200
1995 599,791 -0- 159,200(7) 16,044
William R. Oldenburg....... 1997 344,787 87,500 40,000 15,000
Vice President -- 1996 329,403 -0- 37,600(6) 16,200
Operations 1995 324,598 -0- 59,400(7) 13,272
Thomas M. Delaplane........ 1997 328,632 83,750 40,000 15,000
Vice President -- Sales 1996 309,402 -0- 37,600(6) 16,200
1995 305,560 -0- 59,400(7) 16,044
J. Tyler Johnston.......... 1997 304,787 77,500 40,000 15,000
Vice President -- 1996 279,402 -0- 37,600(6) 13,350
Marketing 1995 194,440 -0- 33,110(7) 13,272
</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 1997, 1996 and 1995 is made for Messrs.
Oldenburg, Delaplane and Johnston under Other Annual Compensation, and no
disclosure is made for Messrs. Rogers and 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 the smaller of $50,000 or 10% of the respective officer's combined
salary and bonus for such fiscal years.
(4) The amount reported for Mr. Rogers for 1997 includes $26,000 paid to Price
Waterhouse LLP for tax and accounting services rendered on behalf of Mr.
Rogers and $23,082 for Mr. Roger's use of a Company automobile. The amount
reported for Mr. Cronk for 1997 includes $26,000 paid to Price Waterhouse
LLP for tax and accounting services rendered on behalf of Mr. Cronk and
$27,298 for Mr. Cronk's use of a Company automobile.
(5) For each of Messrs. Rogers, Cronk, Oldenburg, Delaplane and Johnston, the
amounts reported include contributions by the Company of $11,200 in 1997,
$10,500 in 1996 and $10,500 in 1995 to the Pension Plan. For each of Messrs.
Rogers, Cronk and Delaplane, the amounts reported include contributions by
the Company of $3,800 in 1997, $5,700 in 1996 and $5,544 in 1995 to the
Savings Plan. For each of Messrs. Oldenburg and Johnston, the amounts
reported include contributions by the Company of $3,800 in 1997, $5,700 and
$2,850, respectively, in 1996 and $2,772 in 1995 to the Savings Plan.
Additionally, the Company paid split-dollar life insurance premiums of
$1,021 in 1997, $606 in 1996 and $994 in 1995 for the benefit of Mr. Rogers.
11
<PAGE> 16
(6) Excludes options granted in 1996 in lieu of a cash bonus for the Named
Executive Officers' performance in 1995. These excluded options were
included in the number of options reported for the Named Executive Officer
in 1995 and are more fully described in footnote 7 below.
(7) Each of the Named Executive Officers earned a bonus for his performance in
1995. Prior to earning such bonus each Named Executive Officer elected to
receive non-qualified stock options in lieu of a cash bonus pursuant to the
"Income Swap Plan" of the Compensation Committee. The Income Swap Plan is
described in the "Compensation Committee Report on Executive Compensation"
on pages 15-17 herein. In this regard, Messrs. Rogers and Cronk each
received an option to purchase 28,000 shares of the Company's Common Stock,
Mr. Oldenburg received an option to purchase 15,000 shares of the Company's
Common Stock, Mr. Delaplane received an option to purchase 14,000 shares of
the Company's Common Stock, and Mr. Johnston received an option to purchase
11,400 shares of the Company's Common Stock. All of these stock options were
granted on March 5, 1996 under the Company's Stock Option Plan (1993) and
vested on September 6, 1996.
STOCK OPTIONS
The following table provides information concerning the grant of stock
options made during fiscal 1997 to the Named Executive Officers:
OPTION GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE VALUE($)(2)
---- ------------- ------------ ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
T. Gary Rogers....................... 120,000 13.7% $15.19 3/4/07 $747,000
William F. Cronk, III................ 120,000 13.7 15.19 3/4/07 747,000
William R. Oldenburg................. 40,000 4.6 15.19 3/4/07 249,000
Thomas M. Delaplane.................. 40,000 4.6 15.19 3/4/07 249,000
J. Tyler Johnston.................... 40,000 4.6 15.19 3/4/07 249,000
</TABLE>
- ---------------
(1) Options were granted pursuant to the Company's Stock Option Plan (1993) (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.
(2) 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 0.79 percent,
risk-free rate of return of 6.61 percent, six year term and a volatility
coefficient of 31.78 percent. The annual dividend yield equals the quotient
of the current annual dividend of $0.12 divided by the stock price on the
date of grant. All volatility coefficients used were based on the monthly
closing price of the Company's Common Stock over a three-year period. The
risk-free rate is the yield on a U.S. Zero Coupon Bond with a maturity equal
to the modified term of the grant. The approach used in developing the
assumptions upon which the Black-Scholes calculations were based is
consistent with the requirements of Statement of Financial Accounting
Standards No. 123 "Accounting for Stock-Based Compen-
12
<PAGE> 17
sation." The value calculated by use of this model should not be viewed in
any way as a forecast of the future performance of the Company's Common
Stock.
The following table provides information on option exercises in fiscal 1997
by the Named Executive Officers and the value of such officers' unexercised
in-the-money options as of December 27, 1997:
AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
NUMBER OPTIONS/SARS OPTIONS/SARS
OF SHARES AT FY-END(#) AT FY-END($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
T. Gary Rogers................ 0 0 342,280 381,080 $3,863,680 $3,870,390
William F. Cronk, III......... 0 0 342,280 381,080 3,863,680 3,870,390
William R. Oldenburg.......... 5,400 $6,750 117,460 129,400 1,393,040 1,333,209
Thomas M. Delaplane........... 5,400 9,788 115,860 129,400 1,376,553 1,333,209
J. Tyler Johnston............. 2,200 3,438 43,584 103,746 440,511 936,652
</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 Foods-500
Index over the five-year period from December 25, 1992 through December 27,
1997:
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG DREYER'S GRAND ICE CREAM, INC., THE S&P 500 INDEX
AND THE S&P FOODS-500 INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD DREYER'S GRAND ICE S&P 500 S&P FOODS-500
(FISCAL YEAR COVERED) CREAM, INC. INDEX INDEX
<S> <C> <C> <C>
1992 100 100 100
1993 122.61 109.28 91.24
1994 105.67 110.48 100.31
1995 143.07 152.03 128.23
1996 126.86 191.01 154.96
1997 211.75 240.66 212.67
</TABLE>
- ---------------
* Assumes $100 investment in each of Dreyer's Grand Ice Cream, Inc., the S&P 500
Index and the S&P Foods-500 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
14
<PAGE> 19
of assets, the result of which would be the occurrence of any event described in
clause (i), (ii) or (iii) above. 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 embarked on a strategic plan (the "Strategic Plan") to
accelerate the sales of its brand throughout the country. The Board of Directors
approved the Strategic Plan, which anticipated an initial reduction in earnings
and the potential benefits of increasing 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 were: 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) was awarded
if, based upon the quantitative elements, the Company achieved 80 percent
15
<PAGE> 20
of the anticipated results of the Strategic Plan. The Strategic Plan based
portion of the bonus award was increased (up to a maximum of 25 percent of base
salary), calculated by linear interpolation, if based upon the quantitative
elements the Company 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) was awarded if the Company's actual
earnings per share for the fiscal year achieved 80 percent of the Profit Plan.
The Profit Plan based portion of the bonus award was 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 could have been awarded under the policy. The
Committee believes that this policy for determining bonuses more accurately tied
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 1997 were
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. Stock options granted under the Company's
stock option plans are an example of
16
<PAGE> 21
exempt performance based compensation. 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 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 1997
Jan L. Booth
M. Steven Langman
John W. Larson
Edmund R. Manwell
Jack O. Peiffer
Timothy P. Smucker
Mr. Timm F. Crull was a member of the Compensation Committee in fiscal
1997, 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 1997, 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 $948,625 in fees during fiscal 1997 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 dated as of May
6, 1994, and amended June 14, 1994 (the "Nestle Agreement") whereby NHI
purchased from the Company, for an aggregate price of $106,000,000, six million
shares of Common Stock of the Company and warrants for the purchase of four
million shares of Common Stock of the Company. Warrants for two million shares
expired unexercised on June 14, 1997 and the remaining warrants will expire on
June 14, 1999. 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.
17
<PAGE> 22
Messrs. Crull and Langman 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. Crull resigned his position on the Board of Directors of the Company
effective December 31, 1997, and Mr. Robert A. Helman was appointed by NHI to
replace him. NHI also appointed Mr. M. Steven Langman in March, 1997 to replace
Mr. Anthony J. Martino, who resigned as a director of the Company effective
December 31, 1996.
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 Series B Convertible Preferred Stock was
converted on October 3, 1997 into a total of 1,007,522 shares of Series A
Convertible Preferred Stock, redeemable on June 30, 2001. The shares of Series A
Convertible Preferred Stock are convertible at an initial conversion price of
$17.37 into a total of 5,800,000 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 also has an agreement with JMS to produce one of the Company's products
in accordance with specifications and quality control provided by the Company.
The Company compensates 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 7-8 herein are described under the caption
"Compensation Committee Interlocks and Insider Participation" on pages 17-18
herein.
MATTERS SUBMITTED TO A VOTE OF STOCKHOLDERS
ELECTION OF DIRECTORS
The directors of Class I will be elected at the 1998 Annual Meeting of
Stockholders and will hold office until the 2001 Annual Meeting of Stockholders
or until their successors are elected and qualified. The nominees for directors
of Class I, Jan L. Booth, John W. Larson and Jack O. Peiffer, constitute Class I
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 I, 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
18
<PAGE> 23
"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 Jan L. Booth, John W. Larson and Jack
O. Peiffer, each of whom has consented to be named as a director of the Company
and to serve if elected. In case any of Ms. Booth or Messrs. Larson or Peiffer
becomes unavailable for election or declines to serve for any unforeseen reason,
an event 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 26, 1998, and were the
independent public accountants for the Company during the fiscal year ended
December 27, 1997.
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 1998 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 will be considered as shares not
entitled to vote and will therefore not be considered in the tabulation of the
votes. 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 A Convertible Preferred Stock are convertible on the record date for
the meeting.
19
<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 A 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 A Convertible Preferred Stock are convertible
on the record date for the meeting.
PROPOSALS OF STOCKHOLDERS
The 1999 Annual Meeting of Stockholders will be held on or about May 12,
1999. Proposals of stockholders intended to be presented at the 1999 Annual
Meeting must be received by the Secretary, Dreyer's Grand Ice Cream, Inc., 5929
College Avenue, Oakland, California 94618 no later than November 26, 1998.
OTHER MATTERS
The Company 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
Oakland, California
March 25, 1998
20
<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 1998
ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints T. Gary Rogers, William F. Cronk, III and Edmund
R. Manwell, or any 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, Ashby and Domingo Avenues, Oakland, California,
94623 at 2:00 p.m. on Wednesday, May 6, 1998, and at any postponements or
adjournments thereof, upon the following matters:
(Continued, and to be signed, on reverse side)
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FOLD AND DETACH HERE
[DREYER'S LOGO]
<PAGE> 27
Please mark [X]
your votes as
indicated on
the example.
<TABLE>
<CAPTION>
FOR ALL FOR ALL WITHHOLD
the nominees AUTHORITY
nominees except to vote for
listed as crossed nominees
The election of three Class 1 directors. below out below listed below
-------- ---------- ------------
<S> <C> <C> <C>
1. Instruction: To withhold authority for [ ] [ ] [ ]
any individual nominee, cross out the
nominee's name in the list below:
Jan L. Booth John W. Larson Jack O. Peiffer
FOR FOR ABSTAIN
-------- -------- ----------
2. The approval of Price Waterhouse LLP [ ] [ ] [ ]
as the Company's independent public
accountants for fiscal year 1998.
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.
</TABLE>
Signature(s) ______________________________________________ Dated ________, 1998
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.
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FOLD AND DETACH HERE
