<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 240.14a-11(c) or 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):
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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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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
LOGO
- --------------------------------------------------------------------------------
Notice of Annual
Meeting of Stockholders
and Proxy Statement
- --------------------------------------------------------------------------------
Meeting of May 12, 1999
<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 12, 1999 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
April 8, 1999
<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
Nominees for Director............................. 3
Continuing Directors.............................. 3
Committees of the Board........................... 4
Attendance at Board and Committee Meetings........ 5
Remuneration of Directors......................... 5
Security Ownership of Certain Beneficial Owners and
Management............................................ 6
Security Ownership of Certain Beneficial Owners... 6
Security Ownership of Management.................. 8
Section 16(a) Beneficial Ownership Reporting
Compliance........................................ 9
Executive Compensation................................. 10
Summary of Cash and Certain Other Compensation.... 10
Stock Options..................................... 11
Performance Graph................................. 12
Employment Contracts, Employment Termination and
Change of Control Arrangements.................... 12
Compensation Committee Report on Executive
Compensation...................................... 13
Compensation Committee Interlocks and Insider
Participation..................................... 15
Other Relationships............................... 16
Matters Submitted to a Vote of Stockholders............ 16
Election of Directors............................. 16
Approval of the Amendment to the Company's Stock
Option Plan (1993)................................ 17
Ratification of Selection of Independent Public
Accountants....................................... 21
Voting Information..................................... 21
General Voting Information........................ 21
Votes Required for Approval....................... 22
Proposals of Stockholders.............................. 22
Other Matters.......................................... 23
</TABLE>
i
<PAGE> 5
LOGO
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 1999
The Annual Meeting of Stockholders of DREYER'S GRAND ICE CREAM, INC. will
be held on Wednesday, May 12, 1999 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 II of the Board of Directors;
2. Approving the amendment to the Company's Stock Option Plan (1993) to
increase the number of shares reserved for issuance thereunder from
4,400,000 to 6,400,000;
3. Approving the appointment of PricewaterhouseCoopers LLP as independent
public accountants for the fiscal year 1999 and thereafter until its
successor is appointed; and
4. 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 24, 1999 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
April 8, 1999
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 12, 1999, 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 8,
1999.
ANNUAL REPORT
The Company's Annual Report to Stockholders for the fiscal year ended
December 26, 1998 ("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 II of the Board of
Directors, FOR the approval of the amendment to the Company's Stock Option Plan
(1993), FOR the approval of PricewaterhouseCoopers 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 27,511,234 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 24, 1999. 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 of Series A Convertible Preferred Stock is convertible on the record
date for the meeting. The outstanding
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shares of Series A Convertible Preferred Stock are convertible into an aggregate
of 5,800,000 shares of Common Stock on March 24, 1999. 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 24, 1999 as the record date for the determination
of stockholders entitled to notice of and to vote at the meeting.
BOARD OF DIRECTORS
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 II will be
elected at the 1999 Annual Meeting of Stockholders and will hold office until
the 2002 Annual Meeting of Stockholders or until their successors are elected
and qualified. The nominees constitute Class II 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>
Robert A. Helman PARTNER, MAYER, BROWN & PLATT. Mr. Helman joined the
1998 Company's Board of Directors in 1998. Mr. Helman became a
Age: 65 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.
Edmund R. Manwell PARTNER, MANWELL & MILTON, GENERAL COUNSEL TO THE COMPANY.
1981 Mr. Manwell has served as Secretary of the Company since its
Age: 56 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.
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: 54 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>
CONTINUING DIRECTORS
Directors T. Gary Rogers, William F. Cronk, III and M. Steven Langman
("Class III") will hold office until the 2000 Annual Meeting of Stockholders.
Directors Jan L. Booth, John W. Larson and Jack O. Peiffer ("Class I") will hold
office until the 2001 Annual Meeting of Stockholders.
3
<PAGE> 8
The following brief statements contain biographical information about each
continuing director and the year she or he first became a director:
<TABLE>
<CAPTION>
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: 48 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.
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: 56 incorporation in 1977. Since April 1981, he has served as
the Company's President.
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: 37 Group LLC, a private investment banking firm, 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.
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: 61 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: 65 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.
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: 56 Chairman of the Board and Chief Executive Officer since its
incorporation in February 1977. Mr. Rogers is also a
director of Levi Strauss & 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 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 1998, Ms. Booth and Messrs. Helman, Langman, Larson, Manwell
(Chairman), Peiffer and Smucker were members of the Compensation Committee.
4
<PAGE> 9
Audit Committee
The Audit Committee in 1998 was 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 public 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 public 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 public 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 public accountants
with respect to the accounting and control functions and financial statement
presentation.
The Company has no nominating committee nor does any other committee
perform the functions of such a committee.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During fiscal 1998, there were six special meetings of the Board of
Directors and all directors attended each meeting, except Messrs. Rogers and
Langman who were each absent from one meeting. The Compensation Committee and
the Audit Committee each met twice. All members of the committees attended each
of the meetings of the respective committee, except for Mr. Langman who was
absent from one meeting 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. Directors' compensation includes, in addition
to the meeting fee and committee fee, an annual retainer fee of $6,000. The
Company also reimburses the reasonable travel expenses of a director to attend
board meetings. 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 "Non-Employee
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 are awarded to each Non-Employee Director on each
anniversary of the date the 1993 Plan was approved by the Company's
stockholders.
5
<PAGE> 10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of March 24, 1999 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 27.5%
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)........................... 3,741,322 13.3%
5929 College Avenue
Oakland, California 94618
Cortopassi Family Trust(4)..................... 3,047,050 11.1%
Stanislaus Food Products Co.
Stanislaus Partners
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
General Electric Capital Corporation(5)(6)..... 2,900,000 9.5%
260 Long Ridge Road
Stamford, Connecticut 06927
Trustees of General Electric Pension
Trust(5)(7).................................. 2,900,000 9.5%
GE Investment Private Placement Partners I,
Limited Partnership
P.O. Box 7900
3003 Summer Street
Stamford, Connecticut 06904
William F. Cronk, III(2)(8).................... 2,078,562 7.4%
5929 College Avenue
Oakland, California 94618
</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.
(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
6
<PAGE> 11
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 203,960 shares of Common Stock under the
Company's Stock Option Plan (1992) exercisable within 60 days, and options
to purchase 374,680 shares of Common Stock under the Company's Stock Option
Plan (1993) exercisable within 60 days.
(3) 2,942,072 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
20,610 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) 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, 663,650 shares; Stanislaus Food Products
Co., 748,400 shares; Stanislaus Partners, 100,000 shares; San Tomo Partners,
300,000 shares; Sierra Quality Canners, Inc., 650,000 shares; Trecento
Investors, Inc., 150,000 shares; LICO Brands, Inc., 65,000 shares; DACCO,
Inc., 150,000 shares; VICOR, LLC, 70,000 shares; Capecchio Foundation,
100,000 shares; Alpinello Investors, Inc., 30,000 shares; Wright Tract
Partners, LP, 20,000 shares. The listed entities filed a joint statement on
Schedule 13D as members of a group.
(5) 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.
(6) The holder has sole voting power and sole investment power with respect to
all of these shares.
(7) 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.
(8) 1,499,922 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.
7
<PAGE> 12
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of March 24, 1999 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)................................... 3,741,322 13.3%
William F. Cronk, III(1)(3)............................ 2,078,562 7.4%
William R. Oldenburg(4)................................ 234,756 **
Thomas M. Delaplane(5)................................. 219,384 **
J. Tyler Johnston(6)................................... 104,658 **
Edmund R. Manwell(7)................................... 70,000 **
John W. Larson(7)(8)................................... 53,500 **
Jan L. Booth(9)(10).................................... 24,200 **
Jack O. Peiffer(7)..................................... 22,000 **
Timothy P. Smucker(10)................................. 18,000 **
M. Steven Langman(10).................................. 16,000 **
Robert A. Helman(11)................................... 13,000 **
Directors and Executive Officers as a Group
(13 persons)(12)..................................... 6,595,382 22.5%
</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 203,960 shares of Common Stock under the
Company's Stock Option Plan (1992) (the "1992 Plan") exercisable within 60
days, and options to purchase 374,680 shares of Common Stock under the
Company's Stock Option Plan (1993) (the "1993 Plan") exercisable within 60
days.
(2) 2,942,072 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
20,610 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) 1,499,922 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 8,200 shares of Common Stock under the
Company's Incentive Stock Option Plan (1982) (the "ISO Plan") exercisable
within 60 days, options to purchase 30,400 shares of
8
<PAGE> 13
Common Stock under the 1992 Plan exercisable within 60 days, and options to
purchase 150,080 shares of Common Stock under the 1993 Plan exercisable
within 60 days.
(5) Includes options to purchase 8,200 shares of Common Stock under the ISO
Plan exercisable within 60 days, options to purchase 30,400 shares of
Common Stock under the 1992 Plan exercisable within 60 days, and options to
purchase 139,760 shares of Common Stock under the 1993 Plan exercisable
within 60 days.
(6) Includes options to purchase 7,200 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 87,248 shares of Common Stock under the 1993 Plan exercisable
within 60 days.
(7) Includes options to purchase 22,000 shares of Common Stock under the 1993
Plan exercisable within 60 days.
(8) 31,500 of these shares are held directly by trusts for the benefit of Mr.
Larson's adult children for which Mr. Larson serves as trustee.
(9) 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.
(10) Includes options to purchase 16,000 shares of Common Stock under the 1993
Plan exercisable within 60 days.
(11) Includes options to purchase 13,000 shares of Common Stock under the 1993
Plan exercisable within 60 days.
(12) Includes options to purchase 23,600 shares of Common Stock under the ISO
Plan exercisable within 60 days, options to purchase 471,320 shares of
Common Stock under the 1992 Plan exercisable within 60 days, and options to
purchase 1,253,448 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 1998 its officers, directors, and greater than 10 percent beneficial
owners complied with all applicable filing requirements, except that one Form 4
filed by Jeffrey P. Porter to report a stock option exercise in September 1998
was filed late due to an administrative oversight.
9
<PAGE> 14
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ended December 26, 1998,
December 27, 1997 and December 28, 1996, 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
AWARDS
ANNUAL COMPENSATION ------------
------------------------------------------------ SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(2) ($)(3)(4) (#) ($)(5)
--------------------------- ---- ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
T. Gary Rogers................. 1998 682,309 -0- 64,926 85,300 12,374
Chairman of the Board and 1997 666,171 162,500 52,231 120,000 16,021
Chief Executive Officer 1996 639,902 -0- 116,200(6) 16,806
William F. Cronk, III.......... 1998 682,309 -0- 52,157 85,300 12,000
President 1997 666,171 162,500 57,449 120,000 15,000
1996 639,902 -0- 116,200(6) 16,200
William R. Oldenburg........... 1998 366,164 -0- 29,000 12,000
Vice President -- Operations 1997 344,787 87,500 40,000 15,000
1996 329,403 -0- 37,600(6) 16,200
Thomas M. Delaplane............ 1998 351,164 -0- 29,000 12,000
Vice President -- Sales 1997 328,632 83,750 40,000 15,000
1996 309,402 -0- 37,600(6) 16,200
J. Tyler Johnston.............. 1998 330,205 -0- 29,000 12,000
Vice President -- Marketing 1997 304,787 77,500 40,000 15,000
1996 279,402 -0- 37,600(6) 13,350
</TABLE>
- ---------------
(1) Includes amounts contributed by the officers to the salary deferral portion
of Dreyer's Grand Ice Cream, Inc. Savings Plan, a 401(k) plan (the "Savings
Plan").
(2) Includes amounts paid under the Company's Incentive Bonus Plan.
(3) No disclosure for fiscal years 1998, 1997 and 1996 is made for Messrs.
Oldenburg, Delaplane and Johnston under Other Annual Compensation, and no
disclosure is made for Messrs. Rogers and Cronk for fiscal year 1996 under
Other Annual Compensation, as the aggregate incremental compensation
otherwise reportable in this column for each of 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 both 1997 and 1998 includes $26,000
paid each year to PricewaterhouseCoopers LLP for tax and accounting services
rendered on behalf of Mr. Rogers and $28,291 and $23,082 respectively in
1998 and 1997 for Mr. Roger's use of a Company automobile. The amount
reported for Mr. Cronk for both 1997 and 1998 includes $26,000 paid each
year to PricewaterhouseCoopers LLP for tax and accounting services rendered
on behalf of Mr. Cronk and $26,157 and $27,298 respectively in 1998 and 1997
for Mr. Cronk's use of a Company automobile.
(5) For each Named Executive Officer, the amounts reported include contributions
by the Company of $8,000 in 1998, $11,200 in 1997 and $10,500 in 1996 to the
Dreyer's Grand Ice Cream, Inc. Money Purchase Pension Plan. For each of
Messrs. Rogers, Cronk, Oldenburg and Delaplane, the amounts reported include
contributions by the Company of $4,000 in 1998, $3,800 in 1997 and $5,700 in
1996 to the Savings Plan. For Mr. Johnston, the amounts reported include
contributions to the Savings Plan by the Company of $4,000 in 1998, $3,800
in 1997 and $2,850 in 1996. Additionally, the Company paid split-dollar life
insurance premiums of $374 in 1998, $1,021 in 1997 and $606 in 1996 for the
benefit of Mr. Rogers.
(6) Excludes options granted in 1996 in lieu of a cash bonus for the Named
Executive Officers' performance in 1995.
10
<PAGE> 15
STOCK OPTIONS
The following table provides information concerning the grant of stock
options made during fiscal 1998 to the Named Executive Officers:
OPTION GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE VALUE($)(2)
---- ---------- -------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
T. Gary Rogers.................. 85,300 12.5% $22.88 3/3/08 $795,849
William F. Cronk, III........... 85,300 12.5% 22.88 3/3/08 795,849
William R. Oldenburg............ 29,000 4.3% 22.88 3/3/08 270,570
Thomas M. Delaplane............. 29,000 4.3% 22.88 3/3/08 270,570
J. Tyler Johnston............... 29,000 4.3% 22.88 3/3/08 270,570
</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 12-13 herein.
(2) Grant date 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 0.52 percent,
risk-free rate of return of 5.77 percent, six year expected term and an
expected volatility of 32.32 percent. The annual dividend yield equals the
quotient of the current annual dividend of $0.12 divided by the stock price
on the date of grant. The expected volatility used was based on the monthly
closing price of the Company's Common Stock over a three-year period. The
risk-free rate is the yield on a U.S. Zero Coupon Bond with a maturity equal
to the expected term of the grant. The approach used in developing the
assumptions upon which the Black-Scholes calculations were based is
consistent with the requirements of Statement of Financial Accounting
Standards No. 123 "Accounting for Stock-Based Compensation." The value
calculated by use of this model should not be viewed in any way as a
forecast of the future performance of the Company's Common Stock.
The following table provides information on option exercises in fiscal 1998
by the Named Executive Officers and the value of such officers' unexercised
in-the-money options as of December 26, 1998:
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
NUMBER UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
OF SHARES AT FY-END(#) AT FY-END($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
T. Gary Rogers.............. 0 0 464,120 344,540 $339,615 $80,085
William F. Cronk, III....... 0 0 464,120 344,540 339,615 80,085
William R. Oldenburg........ 10,260 $169,931 147,560 118,040 131,008 32,455
Thomas M. Delaplane......... 10,260 162,878 145,960 118,040 129,920 32,455
J. Tyler Johnston........... 4,620 71,321 64,746 106,964 27,073 8,040
</TABLE>
11
<PAGE> 16
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, 1993 through December 26,
1998:
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>
DREYER'S GRAND ICE CREAM S&P 500 S&P FOODS-500
------------------------ ------- -------------
<S> <C> <C> <C>
1993 100.00 100.00 100.00
1994 86.18 101.10 109.90
1995 116.69 139.13 140.44
1996 103.46 174.80 169.72
1997 172.70 220.24 232.92
1998 99.92 292.81 263.27
</TABLE>
- ---------------
* Assumes $100 investment on December 25, 1993, 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 that 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.
12
<PAGE> 17
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 indices described
under the caption "Performance Graph" on page 12 herein).
For 1998, the Committee determined that bonus compensation of the Chief
Executive Officer and the President should be based upon the Company's profit
plan earnings per share (the "Profit Plan"). Pursuant to the Committee's
determination, no bonus could have been awarded unless the Profit Plan was
achieved and a bonus equal to 50 percent of these officers' base salaries could
have been awarded if the Profit Plan was achieved. If the Profit Plan had been
exceeded by up to 25 percent, an additional bonus of up to 25 percent
(calculated by linear interpolation) of these officers' base salaries could have
been awarded. Under this policy no bonus was awarded for 1998. The Committee
believes that this policy for awarding bonuses appropriately ties the bonuses of
the Chief Executive Officer and the President to the performance of the Company.
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 20 executive staff members will receive options to
13
<PAGE> 18
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. In addition, the Committee from time to time
at its discretion, grants to other employees options to purchase 1,000 shares of
the Company's Common Stock. The size of the option grants 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 indices described under the caption
"Performance Graph" on page 12 herein). The stock option grants in 1998 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 Common Stock of the Company 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 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.
14
<PAGE> 19
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 1998
Edmund R. Manwell, Chairman
Jan L. Booth
Robert A. Helman
M. Steven Langman
John W. Larson
Jack O. Peiffer
Timothy P. Smucker
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
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.
Jack O. 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.
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 are exercisable
at any time prior to their expiration 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.
15
<PAGE> 20
M. Steven Langman and Robert A. Helman were named to the Board of Directors
of the Company pursuant to the terms of the Nestle Agreement. Mr. Langman was
appointed by NHI in March 1997 to replace Anthony J. Martino, who resigned as a
director of the Company effective December 31, 1996. Mr. Helman was appointed by
NHI in March 1998 to replace Timm Crull, who resigned as a director of the
Company effective December 31, 1997.
During fiscal 1998, Edmund R. 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 $738,380 in fees during fiscal 1998 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.
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 as 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.
During fiscal 1998, Herrero Brothers, Inc., a commercial general
contracting firm, provided construction services to the Company in the aggregate
amount of $61,871. Mark Herrero, the husband of director Jan Booth, is an
officer, director and 50 percent owner of Herrero Brothers, Inc.
During fiscal 1998, the Company loaned to Thomas M. Delaplane, Vice
President -- Sales of the Company, an aggregate principal amount of $281,000
pursuant to two separate Secured Promissory Notes ("Notes"). The Notes bear
interest at the annual rate of 6.50 percent and are payable in full on the
earliest to occur of (i) the date of the sale or other disposition of Mr.
Delaplane's primary residence, (ii) the date of Mr. Delaplane's termination of
employment with the Company for any reason or (iii) two years from the date of
the Notes. Mr. Delaplane's obligations under the Notes are secured by 30,000
shares of the Company's Common Stock held in the name of the Delaplane Family
Trust.
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 6 - 7 herein are described under the caption
"Compensation Committee Interlocks and Insider Participation" on pages 15-16
herein.
MATTERS SUBMITTED TO A VOTE OF STOCKHOLDERS
ELECTION OF DIRECTORS
The directors of Class II will be elected at the 1999 Annual Meeting of
Stockholders and will hold office until the 2002 Annual Meeting of Stockholders
or until their successors are elected and qualified. The nominees for directors
of Class II, Robert A. Helman, Edmund R. Manwell and Timothy P. Smucker,
constitute Class II 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 II, is set out under the caption "Board of Directors" on
pages 3-5 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
16
<PAGE> 21
captions "Compensation Committee Interlocks and Insider Participation" and
"Other Relationships" on pages 15-16 herein.
Unless otherwise directed, the persons named in the enclosed form of proxy
will vote such proxy for the election of Robert A. Helman, Edmund R. Manwell and
Timothy P. Smucker, each of whom has consented to be named as a director of the
Company and to serve if elected. In case any of Messrs. Helman, Manwell or
Smucker 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.
APPROVAL OF THE AMENDMENT TO THE COMPANY'S STOCK OPTION PLAN (1993)
The Board of Directors has approved, subject to stockholder approval, an
amendment to the Dreyer's Grand Ice Cream, Inc. Stock Option Plan (1993) (the
"1993 Plan"), increasing the number of shares subject to issuance under the Plan
from 4,400,000 to 6,400,000.
The 1993 Plan, approved by the Company's stockholders on May 11, 1994, and
amended on May 1, 1996, presently permits the grant of options to purchase up to
4,400,000 shares of the Company's Common Stock.
The 1993 Plan is intended to (i) provide a vehicle under which stock option
awards ("awards") may be granted to employees and directors of the Company and
its subsidiaries who are in a position to promote the sound performance of the
Company and its subsidiaries, and (ii) to further align the interests of
management with the stockholders of the Company.
Currently, pursuant to the 1993 Plan, the Company may grant options to
purchase up to 4,400,000 shares of the Company's Common Stock (which number is
subject to adjustment in the event of stock dividends, stock splits and other
similar events). If, at any time during the term of the 1993 Plan, an option
granted under the 1993 Plan expires or terminates for any reason without having
been exercised in full, the unpurchased shares shall become available for grant
to other employees. The shares of Common Stock available under the 1993 Plan may
be authorized and unissued shares or treasury shares. The Board of Directors, by
resolution, may terminate, amend or revise the 1993 Plan at any time, provided
however that the Board may not amend the terms of the 1993 Plan more frequently
than permitted under Rule 16b-3 in regard to provisions that affect members of
the Board of Directors who are not employees of the Company. Rights and
obligations under any option granted before any amendment of the 1993 Plan may
not be materially altered or impaired adversely by such amendment, except with
consent of the person to whom the option was granted.
The Compensation Committee of the Board of Directors is the Administrator
of the 1993 Plan. Subject to the terms and conditions of the 1993 Plan, the
Administrator has the authority to: (i) interpret and determine all questions of
policy and expediency pertaining to the 1993 Plan; (ii) adopt such rules,
regulations, agreements and instruments as it deems necessary for the 1993
Plan's proper administration; (iii) select the key employees to receive awards;
(iv) determine the form and terms of awards; (v) determine the number of shares
subject to awards; (vi) determine whether awards will be granted singly, in
combination, in tandem, in replacement of, or as alternatives to other grants
under the 1993 Plan or any other incentive or compensation plan of the Company,
a subsidiary or an acquired business unit; (vii) grant waivers of the 1993 Plan
or award conditions; (viii) accelerate the vesting of awards; (ix) correct any
defect, supply any omission, or reconcile any inconsistency in the 1993 Plan,
any award or any award notice; and (x) take any and all other actions it deems
necessary or advisable for the proper administration of the 1993 Plan.
The Administrator may also adopt such amendments, procedures, regulations
and subplans as it deems necessary to enable key employees and members of the
Board of Directors who are foreign nationals or are employed outside the United
States to receive stock option awards under the 1993 Plan.
Under the 1993 Plan, key employees may be granted options intended to be
incentive stock options under Section 422 of the Internal Revenue Code (the
"Code") or non-qualified stock options or both. Additionally, key employees may,
in the Administrator's discretion, also receive "Reload Options" (as described
below). Reload Options shall be in such form and contain such terms as the
Administrator deems appropriate under
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<PAGE> 22
the 1993 Plan. Options granted under the 1993 Plan are non-transferable except
by will or the laws of descent and distribution.
While the terms of options granted to key employees need not be identical,
each option is subject to the following terms: (i) the exercise price is the
price set by the Administrator but may not be less than 100 percent of the fair
market value of the Company's Common Stock on the date of the grant; (ii) the
exercise price may be paid in cash (including check, bank draft, wire transfer
or money order), or all or part of the purchase price may be paid by delivery of
the Company's Common Stock already owned by the participant for at least six
months and valued at its fair market value, or any combination of the foregoing
methods of payment; (iii) an option is treated as exercised on the later of the
date that proper notice of exercise accompanied by the aggregate exercise price
is received by the Company or such exercise date as may be specified in such
proper notice when accompanied by such aggregate exercise price; (iv) the term
of an option may not be greater than 10 years from the date of the grant; and
(v) neither a person to whom an option is granted nor such person's legal
representative, heir, legatee or distributee shall be deemed to be the holder
of, or have any of the rights of a holder with respect to, any shares subject to
such option unless and until the option has been exercised.
The following special terms apply to grants of incentive stock options
under the 1993 Plan: (i) no incentive stock option may be granted after the 10th
anniversary of the date the 1993 Plan was adopted by the Board of Directors;
(ii) the exercise price under each incentive stock option may not be less than
100 percent of the fair market value of the shares of the Company's Common Stock
on the date of grant provided that the exercise price under each incentive stock
option granted to any employee who directly or indirectly owns stock possessing
more than 10 percent of the total combined voting power of all classes of stock
of the Company must be at least 110 percent of the fair market value of the
Company's Common Stock on the grant date (and such option may not be exercisable
after the expiration of five years from the date of the grant); (iii) no
incentive stock option shall be granted to a person in such person's capacity as
a key employee of a subsidiary if the Company has less than a 50 percent
ownership interest in such subsidiary; and (iv) incentive stock options shall
contain such other terms as may be necessary to qualify the options granted
therein as incentive stock options pursuant to Section 422 of the Code, or any
successor statute.
Concurrently with the award of options to a participant, the Administrator
may authorize reload options ("Reload Options") granted at fair market value to
purchase for cash or shares a number of shares of the Common Stock. The number
of Reload Options will equal: (i) the number of shares of Common Stock used to
exercise the underlying options plus (ii) the number of shares of Common Stock
used to satisfy any tax withholding requirement incident to the exercise of the
underlying option, including shares withheld from those that would otherwise be
issuable to the optionee pursuant to exercise of the subject option. The grant
of a Reload Option will become effective upon the exercise of the underlying
options or Reload Options through the use of shares of Common Stock held by the
optionee for at least six months. Notwithstanding the fact that the underlying
option may be an incentive stock option, a Reload Option will not be intended to
qualify as an "incentive stock option" within the meaning of Section 422 of the
Code. Each Reload Option granted under the 1993 Plan is fully exercisable six
months from the effective date of grant. The exercise price of a Reload Option
shall equal the fair market value of the Company's Common Stock on the date of
grant of the Reload Option. The term of each Reload Option shall be equal to the
remaining option term of the underlying option. No additional Reload Options
shall be granted when options or Reload Options are exercised pursuant to the
terms of the 1993 Plan following cessation of the optionee's employment with the
Company for any reason.
On the date of approval of the 1993 Plan by the Company's stockholders (the
"Approval Date"), each member of the Board of Directors who was not an employee
of the Company or its subsidiaries (each a "Non-Employee Director") was awarded
a non-qualified stock option for 10,000 shares of the Company's Common Stock.
After the Approval Date, any person appointed or elected a Non-Employee Director
receives a non-qualified stock option for 10,000 shares of Common Stock on the
date such person is so appointed or elected. On each anniversary of the Approval
Date, each Non-Employee Director receives a non-qualified stock option for 3,000
shares of Common Stock. Options to Non-Employee Directors are subject to the
following terms: (i) the exercise price is equal to 100 percent of the fair
market value of the Company's Common Stock
18
<PAGE> 23
on the date of the grant; (ii) the term of the options is 10 years; and (iii)
the options are exercisable beginning six months after the date of the grant.
All options granted under the 1993 Plan, in addition to vesting as
described above, vest and become exercisable immediately prior to a Change of
Control (as defined on pages 12-13 under the caption "Employment Contracts,
Employment Termination and Change of Control Arrangements") and immediately upon
the death or retirement of an optionee.
As a condition to receiving or exercising an option granted under the 1993
Plan, a participant must pay the Company the amount of all applicable federal,
state, local and foreign taxes required by law to be paid or withheld relating
to receipt or exercise of the option. An optionee may satisfy such withholding
requirements in whole or in part by directing the Company to withhold shares
from those that would otherwise be issuable to the participant or by otherwise
tendering other shares of Common Stock owned by the participant. The withheld
shares and other tendered shares will be valued at the fair market value as of
the date that the tax withholding obligation arises.
Subject to the Change of Control provisions in the 1993 Plan, no stock
option granted pursuant to the 1993 Plan may be exercisable for at least six
months after the date of grant. No one participant may receive in the aggregate
options granting him more than 50 percent of the aggregate number of shares
issuable upon exercise of options granted under the 1993 Plan.
A participant who receives a non-qualified option under the 1993 Plan will
not recognize any taxable income upon the grant of such option. In general, upon
exercise of a non-qualified option a participant will be treated as having
received ordinary income in an amount equal to the excess of the fair market
value of the shares at the time of exercise over the exercise price. The
ordinary income recognized with respect to the transfer of shares upon exercise
of a non-qualified option under the 1993 Plan will be subject to both wage
withholding and employment taxes.
A participant's tax basis in the shares received on exercise of a
non-qualified option will be equal to the amount of any cash paid on exercise,
plus the amount of ordinary income recognized as a result of the receipt of such
shares. The holding period for such shares would begin just after the transfer
of such shares to the participant. Subject to the satisfaction of certain
conditions, a deduction for federal income tax purposes will be allowed to the
Company in an amount equal to the income recognized by the participant, as a
result of the receipt of such shares.
If a participant exercises a non-qualified option by delivering other
shares, the participant will not recognize gain or loss with respect to the
exchange of such shares, even if their then fair market value is different from
the participant's tax basis. The participant, however, will be taxed as
described above with respect to the exercise of the non-qualified option as if
he had paid the exercise price in cash, and the Company likewise generally will
be entitled to an equivalent tax deduction. Provided he receives a separate
identifiable stock certificate upon exercise, the participant's tax basis in
that number of shares received on such exercise, which is equal to the number of
shares surrendered on such exercise, will be equal to his tax basis in the
shares surrendered and his holding period for such number of shares received
will include the holding period for the shares surrendered. The participant's
tax basis and holding period for the additional shares received on exercise of a
non-qualified option paid for, in whole or in part, with shares will be the same
as if the participant had exercised the option solely for cash.
Under the Code, no taxable income is recognized by an employee at the time
an incentive stock option is granted and no taxable income is recognized at the
time such an option is exercised. However, the difference between the option
price and the fair market value of the shares on the date of exercise
constitutes an item of tax preference subject to the alternative minimum tax
under Section 55 of the Code. If the employee does not make a disposition of the
purchased shares within the two-year period measured from the date of option
grant nor within the one-year period measured from the date of issuance of the
shares upon exercise to the participant, any profit or loss recognized upon
disposition will be capital gain or loss. If the employee disposes of the
purchased shares within either the two-year or one-year period mentioned above
(a "disqualifying disposition"), then the employee will, in general, recognize
compensation income in the year of disposition
19
<PAGE> 24
equal to the amount by which the fair market value of the shares on the date the
option was exercised exceeded the exercise price or, in the case of a sale or
exchange in which a loss would otherwise be recognized, the lower of the amount
by which the fair market value of the shares on the date the option was
exercised or the fair market value of the shares on the date of sale exceeded
the exercise price. Any additional gain or loss recognized upon the disposition
will be capital gain or loss. So long as the employee does not make a
disqualifying disposition, no compensation deduction or other deduction may be
taken by the Company. To the extent that the employee must recognize
compensation income due to a disqualifying disposition, the Company will be
entitled to a corresponding compensation deduction. In the case of an employee
who is subject to Section 16(b) of the Securities and Exchange Act of 1934, the
amount of income realized by the optionee upon a disqualifying disposition and
the amount of the corresponding deduction allowable to the Company is measured
by the fair market value of the stock at the time of the expiration of the
period, not to exceed six months, during which a sale of the stock by the
optionee could subject the optionee to liability under Section 16(b).
The aggregate market value of the shares of the Company's Common Stock
which are subject to options under the 1993 Plan (including those shares subject
to options which were granted on February 23, 1999 subject to stockholder
approval of the Amendment to the 1993 Plan) was $63,879,027 on March 24, 1999.
The last reported sale price of the Company's Common Stock on the NASDAQ
National Market System on March 24, 1999 was $13.375 per share. As of March 24,
1999, options to purchase 50,448 shares of the Company's Common Stock were
available for grant under the 1993 Plan (including those shares available due to
lapses or cancellations of previously issued options). Approximately 24
executive-level employees of the Company, seven Non-Employee Directors and other
key staff members are eligible to participate in the 1993 Plan.
The following table sets out, as to the Named Executive Officers and the
various other indicated individuals and groups, (a) the number of shares of
Common Stock subject to options granted under the 1993 Plan since the effective
date of the 1993 Plan through March 24, 1999 (excluding any options which have
lapsed or have been cancelled), including those shares subject to options which
were granted on February 23, 1999 subject to stockholder approval of the
Amendment to the 1993 Plan and (b) the weighted average exercise price payable
per share.
OPTIONS TO PURCHASE SHARES RECEIVED SINCE INCEPTION UNDER
DREYER'S GRAND ICE CREAM, INC. STOCK OPTION PLAN (1993)
<TABLE>
<CAPTION>
NUMBER OF WEIGHTED AVERAGE
OPTIONS EXERCISE
NAME AND POSITION RECEIVED(1)(2) PRICE($)
----------------- -------------- ----------------
<S> <C> <C>
T. Gary Rogers, Chairman of the Board and Chief
Executive Officer(3)................................. 772,000 $14.75
William F. Cronk, III, President(3).................... 772,000 14.75
William R. Oldenburg, Vice
President -- Operations(4)........................... 282,800 14.45
Thomas M. Delaplane, Vice President -- Sales(4)........ 281,200 14.45
J. Tyler Johnston, Vice President -- Marketing(4)...... 217,710 15.76
Edmund R. Manwell, Secretary, Director and nominee for
Director............................................. 22,000 15.23
Robert A. Helman, Director and nominee for Director.... 13,000 23.45
Timothy P. Smucker, Director and nominee for
Director............................................. 16,000 17.43
All current executive officers as a group(5)........... 2,439,652 14.91
All current directors who are not executive officers as
a group.............................................. 127,000 16.90
All employees, including all current officers who are
not executive officers, as a group(6)................ 2,348,300 14.90
</TABLE>
- ---------------
(1) The total number of options received includes non-qualified options granted
in 1994, which certain of the listed Named Executive Officers elected to
receive pursuant to the Income Swap Plan (described in the Compensation
Committee Report on Executive Compensation on pages 13 - 15 herein). In this
regard,
20
<PAGE> 25
Messrs. Rogers and Cronk each received an option to purchase 38,800 shares
of the Company's Common Stock, Mr. Oldenburg received an option to purchase
17,400 shares of the Company's Common Stock and Mr. Delaplane received an
option to purchase 16,800 shares of the Company's Common Stock.
(2) The total number of options received includes non-qualified options granted
in 1996, which each of the listed Named Executive Officers elected to
receive pursuant to the Income Swap Plan (described in the Compensation
Committee Report on Executive Compensation on pages 13-15 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.
(3) The total number of options received includes an option to purchase 130,300
shares of the Company's Common Stock subject to stockholder approval of the
Amendment to the 1993 Plan.
(4) The total number of options received includes an option to purchase 43,450
shares of the Company's Common Stock subject to stockholder approval of the
Amendment to the 1993 Plan.
(5) The total number of options received by this group includes in the aggregate
options to purchase 434,400 shares of the Company's Common Stock subject to
stockholder approval of the Amendment to the 1993 Plan.
(6) The total number of options received by this group includes in the aggregate
options to purchase 198,000 shares of the Company's Common Stock subject to
stockholder approval of the Amendment to the 1993 Plan.
THE BOARD OF DIRECTORS RECOMMENDS THE APPROVAL OF THE AMENDMENT TO THE
COMPANY'S STOCK OPTION PLAN (1993).
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP has been appointed to be the Company's
independent public accountants for the fiscal year ending December 25, 1999, and
were the independent public accountants for the Company during the fiscal year
ended December 26, 1998.
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 PricewaterhouseCoopers LLP to
determine whether the rendering of such services would impair the independence
of PricewaterhouseCoopers 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 PricewaterhouseCoopers 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 PRICEWATERHOUSECOOPERS
LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE 1999 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
21
<PAGE> 26
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.
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 the amendment to the Company's Stock Option Plan (1993):
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.
Approval of PricewaterhouseCoopers 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 2000 Annual Meeting of Stockholders will be held on or about May 10,
2000. The deadline for submission of proposals by stockholders pursuant to Rule
14a-8 issued under the Securities Exchange Act of 1934 (the "Act"), which are
intended for inclusion in the proxy statement to be furnished to all
stockholders entitled to vote at the 2000 Annual Meeting of Stockholders of the
Company, is December 10, 1999. The deadline for providing timely notice to the
Company of matters that stockholders desire to introduce at the next Annual
Meeting of Stockholders of the Company (which are not otherwise submitted for
inclusion in the proxy statement in accordance with the preceding sentence) is
February 23, 2000. Board of Directors' proxies will be authorized to exercise
discretionary authority with respect to any such stockholder proposal not
included in the Company's proxy materials for the 2000 Annual Meeting of
Stockholders unless the Company receives notice of such proposal prior to
February 23, 2000 and the conditions set forth in Rule 14a-4(c)(2)(i) - (iii)
under the Act are met. In order to curtail any controversy as to the date on
which a proposal was received by the Company, it is suggested that proposals be
submitted by Certified Mail, Return Receipt Requested, addressed to the
Secretary of Dreyer's Grand Ice Cream, Inc., 5929 College Avenue, Oakland CA
94618.
22
<PAGE> 27
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
April 8, 1999
23
<PAGE> 28
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> 29
APPENDIX
DREYER'S GRAND ICE CREAM, INC.
STOCK OPTION PLAN (1993)*
1. Purpose
The purpose of the Plan is to provide a vehicle under which a variety
of stock option awards may be granted to employees and directors of the Company
and its Subsidiaries to further the profits and prosperity of the Company and
its Subsidiaries.
2. Definitions
A. "Award" means any form of stock option granted under the
Plan.
B. "Award Notice" means any written notice from the Company
to a Participant or agreement between the Company and a
Participant that establishes the terms applicable to an Award.
C. "Board of Directors" means the Board of Directors of the
Company.
D. "Code" means the Internal Revenue Code of 1986, as
amended.
E. "Committee" means the Compensation Committee of the Board of
Directors, or such other committee designated by the Board of
Directors, which is authorized to administer the Plan under Section 3
hereof. The Committee, and any separate committee to which it delegates
any of its authority and duties under the Plan, shall each have
membership composition which enable the Plan to qualify under Rule
16b-3 with regard to Awards to persons who are subject to Section 16 of
the Exchange Act.
F. "Common Stock" means common stock of the Company.
G. "Company" means Dreyer's Grand Ice Cream, Inc., a
Delaware corporation.
H. "Director" means a member of the Board of Directors.
- --------
*This plan has been revised to reflect the increase in the aggregate
number of shares of common stock reserved for issuance under the terms of this
plan from 4,400,000 to 6,400,000, which increase requires stockholder approval
at the May 12, 1999 Annual Meeting to be effective.
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<PAGE> 30
I. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
J. "Fair Market Value" means, as of a specified date, the mean of the
high and the low sales price of one share of Common Stock on the
over-the-counter market or the closing price on the principal stock
exchange where the Company's stock prices are officially quoted, or if
not traded on that date, then on the date last traded. If for any
reason the Company's stock ceases to be traded on the over-the-counter
market or listed on a stock exchange, the Committee shall establish the
method for determining the Fair Market Value of the Common Stock.
K. "Key Employee" means any employee of the Company or a Subsidiary
responsible for the management of the business of the Company (or a
Subsidiary) who is in a position to make substantial contributions to
the sound performance of the Company (or a Subsidiary). The term "Key
Employee" shall include officers as well as other employees devoting
full time to the Company (or a Subsidiary) and shall include Directors
who are also active officers or employees of the Company (or a
Subsidiary).
L. "Non-Employee Director" means a Director who is not an employee of
the Company or a Subsidiary.
M. "Participant" means any individual to whom an Award is granted
under the Plan.
N. "Plan" means this Plan, which shall be known as the Dreyer's Grand
Ice Cream, Inc. Stock Option Plan (1993).
O. "Rule 16b-3" means Rule 16b-3 issued under the Exchange Act or any
successor rule.
P. "Subsidiary" means a corporation or other business entity (i) of
which the Company directly or indirectly has an ownership interest of
50% or more, or (ii) of which it has a right to elect or appoint 50% or
more of the board of directors or other governing body.
3. Administration.
A. The Plan shall be administered by the Committee. Subject
to the terms and conditions of this Plan, the Committee shall
have the authority to:
(i) interpret and determine all questions of policy and expediency
pertaining to the Plan;
2
<PAGE> 31
(ii) adopt such rules, regulations, agreements and
instruments as it deems necessary for the Plan's proper
administration;
(iii) select Key Employees to receive Awards;
(iv) determine the form and terms of Awards;
(v) determine the number of shares subject to Awards;
(vi) determine whether Awards will be granted singly, in
combination, in tandem, in replacement of, or as alternatives
to other grants under the Plan or any other incentive or
compensation plan of the Company, a Subsidiary or an acquired
business unit;
(vii) grant waivers of Plan or Award conditions;
(viii) accelerate the vesting of Awards;
(ix) correct any defect, supply any omission, or reconcile
any inconsistency in the Plan, any Award or any Award Notice;
and
(x) take any and all other actions it deems necessary or
advisable for the proper administration of the Plan.
B. The interpretation and construction of any provision of the Plan by
the Committee shall be final, conclusive and binding on all parties,
including the Company, its Subsidiaries and stockholders, and the
Participants, their estates, executors, administrators, heirs and
assigns. No member of the Committee shall be liable for any action or
determination made by him in good faith.
C. The Committee may adopt such Plan amendments, procedures,
regulations, subplans and the like as it deems are necessary to enable
Key Employees and Directors who are foreign nationals or employed
outside the United States to receive Awards.
D. The Committee may delegate its authority to grant and administer
Awards to a separate committee; however, only the Committee may grant
and administer Awards with respect to persons who are subject to
Section 16 of the Exchange Act.
3
<PAGE> 32
4. Eligibility
A. Any Key Employee is eligible to become a Participant in the Plan.
B. Non-Employee Directors shall receive Awards in accordance with
Section 7.
5. Stock Subject to the Plan.
A. The aggregate number of shares of Common Stock which may be
delivered on exercise of options under this Plan shall not exceed six
million four hundred thousand (6,400,000)* shares, subject to
adjustment as provided hereinafter. If, at any time during the term of
this Plan, an option granted under this Plan shall have expired or
terminated for any reason without having been exercised in full, the
unpurchased shares shall become available for option to other
employees.
B. In the event that (i) the number of outstanding shares of Common
Stock shall be changed by reason of split-ups, combinations or
reclassifications of shares or otherwise, (ii) any share dividends are
distributed to the holders of Common Stock or (iii) the Common Stock is
converted into or exchanged for other shares as a result of any merger,
consolidation or recapitalization then, in any such case, the number of
shares for which options may thereafter be granted under this Plan,
both in the aggregate and as to any individual, and the number of
shares then subject to options theretofore granted under this Plan and
the price per share payable upon exercise of such options shall be
appropriately adjusted by the Committee so as to reflect such change.
C. The shares of Common Stock available under the Plan may be
authorized and unissued shares or treasury shares.
6. Term
This Plan shall be effective and operative, subject to approval of the
stockholders of the Company within twelve months after its adoption by the Board
of Directors, from the date that the Plan is approved by the Board of Directors
and shall remain in effect until terminated by the Board of Directors.
7. Awards to Non-Employee Directors
Non-Employee Directors shall receive awards in accordance with the
following terms:
A. On the day of adoption of this Plan by the Company's stockholders
(the "Approval Date"), each Non-Employee Director
- --------
*This plan has been revised to reflect the increase in the aggregate
number of shares of common stock reserved for issuance under the terms of this
plan from 4,400,000 to 6,400,000, which increase requires stockholder approval
at the May 12, 1999 Annual Meeting to be effective.
4
<PAGE> 33
shall receive a non-qualified option for 10,000** shares of Common
Stock.
B. After the Approval Date, any person who is appointed or elected a
Non-Employee Director shall receive a non-qualified stock option for
10,000** shares of Common Stock on the date such person is so appointed
or elected.
C. On each anniversary of the Approval Date each Non-Employee Director
shall receive a non-qualified stock option for 3,000** shares of Common
Stock.
D. Options to Non-Employee Directors shall be subject to the following
terms: (i) the exercise price shall be equal to 100% of the Fair Market
Value of the Common Stock on the date of the grant, payable in
accordance with all the alternatives stated in Section 8.B(ii); (ii)
the term of the options shall be 10 years; (iii) the options shall be
exercisable beginning 6 months after the date of the grant; and (iv)
the options shall be subject to Section 10.
8. Stock Options
A. Awards shall be granted in the form of stock options. Stock options
may be incentive stock options within the meaning of Section 422 of the
Code or non-qualified stock options (i.e., stock options which are not
incentive stock options).
B. Subject to Section 8.C relating to incentive stock options, options
shall be in such form and contain such terms as the Committee deems
appropriate. While the terms of options need not be identical, each
option shall be subject to the following terms:
(i) The exercise price shall be the price set by the
Committee but may not be less than 100% of the Fair Market
Value of the Common Stock on the date of the grant.
(ii) The exercise price shall be paid in cash (including
check, bank draft, or money order), or all or part of the
purchase price may be paid by delivery of the optionee's
delivery of Common Stock, already owned by the Participant for
at least six (6) months and valued at its Fair Market Value,
or any combination of the foregoing methods of payment.
(iii) An option shall be treated as exercised on the later of
(i) the date that proper notice of exercise accompanied by the
aggregate exercise price is received
** Adjusted to reflect the two-for-one stock split of the Company's Common
Stock effective October 30, 1997.
5
<PAGE> 34
by the Company, or (ii) such exercise date as may be specified
in such proper notice when accompanied by such aggregate
exercise price.
(iv) The term of an option may not be greater than 10 years
from the date of the grant.
(v) Neither a person to whom an option is granted nor his
legal representative, heir, legatee or distributee shall be
deemed to be the holder of, or to have any of the rights of a
holder with respect to, any shares subject to such option
unless and until he has exercised his option.
C. The following special terms shall apply to grants of
incentive stock options:
(i) No incentive stock option shall be granted after the
tenth (10th) anniversary of the date the Plan is adopted by
the Board of Directors.
(ii) Subject to Section 8.C.(iii), the exercise price under
each incentive stock option shall not be less than 100% of the
Fair Market Value of the Common Stock on the date of the
grant.
(iii) No incentive stock option shall be granted to any
employee who directly or indirectly owns stock possessing more
than 10% of the total combined voting power of all classes of
stock of the Company, unless the exercise price is at least
110% of the Fair Market Value of the Common Stock on the date
of the grant and such option is not exercisable after the
expiration of 5 years from the date of the grant.
(iv) No incentive stock option shall be granted to a person
in his capacity as a Key Employee of a Subsidiary if the
Company has less than a 50% ownership interest in such
Subsidiary.
(v) Incentive stock options shall contain such other terms
as may be necessary to qualify the options granted therein as
incentive stock options pursuant to Section 422 of the Code,
or any successor statute.
9. Reload Options
A. Concurrently with the award of options to any
Participant, the Committee may authorize reload options
("Reload Options") to purchase for cash or shares a number of
6
<PAGE> 35
shares of the Common Stock. The number of Reload Options
shall equal:
(i) the number of shares of Common Stock used to exercise the
underlying options; and
(ii) the number of shares of Common Stock used to satisfy any
tax withholding requirement incident to the exercise of the
underlying option, including shares withheld from those that
would otherwise be issuable to the optionee pursuant to
exercise of the subject option. The grant of a Reload Option
will become effective upon the exercise of the underlying
options or Reload Options through the use of shares of Common
Stock held by the optionee for at least six (6) months.
B. Notwithstanding the fact that the underlying option may be an
Incentive Stock Option, a Reload Option is not intended to qualify as
an "incentive stock option" within the meaning of Section 422 of the
Code.
C. Each Award Notice shall state whether the Committee has authorized
Reload Options with respect to the underlying options. Upon the
exercise of an underlying option or other Reload Option, the Reload
Option will be evidenced by an amendment to the underlying Award
Notice.
D. The option price per share of Common Stock deliverable upon the
exercise of a Reload Option shall be the Fair Market Value of a share
of Common Stock on the date the grant of the Reload Option becomes
effective.
E. Each Reload Option is fully exercisable six (6) months from the
effective date of grant. The term of each Reload Option shall be equal
to the remaining option term of the underlying option.
F. No additional Reload Options shall be granted when options or Reload
Options are exercised pursuant to the terms of this Plan following
cessation of the optionee's employment with the Company for any reason.
10. Exercise of Stock Option Upon Termination of Employment or Services
A. Options granted under Section 7 shall be exercisable upon the
Participant's termination of service within the following periods only.
Subject to Section 17, stock options to other Participants may permit
the exercise of options upon the Participant's termination of
employment within the following
7
<PAGE> 36
periods, or such shorter periods as determined by the
Committee at the time of grant:
(i) if on account of death, within 24 months of such event
by the person or persons to whom the Participant's rights
pass by will or the laws of descent or distribution.
(ii) if on account of disability (as defined in Section
22(e)(3) of the Code or any successor statute), non-qualified
stock options may be exercised within 24 months of such
termination and incentive stock options within 12 months.
(iii) if on account of retirement (as defined from time to
time by Company policy), non-qualified stock options may be
exercised within 24 months of such termination and incentive
stock options with 3 months.
(iv) if for any reason other than death, disability or
retirement (as defined from time to time by Company policy),
options may be exercised within 3 months of such termination.
B. An unexercised option shall be exercisable only to the extent that
such option was exercisable on the date the Participant's employment or
service terminated. However, terms relating to the exercisability of
options may be amended by the Committee before or after such
termination, except in respect to options granted under Section 7.
C. In no case may an unexercised option be exercised to any extent by
anyone after expiration of its term.
11. Acceleration of Vesting of Options.
A. In the event of a Change in Control (as defined below), death of an
optionee or retirement of an optionee (as defined from time to time by
Company policy), all options which have not yet vested shall vest,
mature and become exercisable in whole or in part immediately prior to
the event constituting the Change of Control, or immediately upon the
death or retirement of such optionee.
B. A Change of Control for these purposes shall be defined as, (i) the
acquisition by any person of beneficial ownership of forty percent
(40%) or more of the combined voting power of the Company's outstanding
securities immediately after such acquisition (which forty percent
(40%) shall be calculated after including the dilutive effect of the
conversion or exchange of any outstanding securities of the Company
8
<PAGE> 37
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 beginning with the date of adoption
of this Plan by the Board of Directors, 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. Notwithstanding
anything to the contrary in this Section 11.B, acquisitions by any
person (or any group of which such a person is a member) who is as of
the date of adoption of this Plan by the Board of Directors, a member
of the Board of Directors, of beneficial ownership of forty percent
(40%) or more of the combined voting power of the Company's outstanding
securities immediately after such acquisition (calculation of such
forty percent (40%) being made as described above), shall not be deemed
a Change of Control for purposes of this Plan.
12. Nonassignability
The rights of a Participant under the Plan shall not be assignable by
such Participant, by operation of law or otherwise, except by will or the laws
of descent and distribution. During the lifetime of the person to whom a stock
option is granted, he or she alone may exercise it.
13. Payment of Withholding Taxes
A. As a condition to receiving or exercising an Award, as the case may
be, the Participant shall pay to the Company the amount of all
applicable federal, state, local and foreign taxes required by law to
be paid or withheld relating to receipt or exercise of the Award.
B. An optionee may satisfy such withholding requirements in whole or in
part by directing the Company to withhold shares from those that would
otherwise be issuable to the Participant or by otherwise tendering
other shares of Common Stock owned by the Participant. The withheld
shares and other tendered shares will be valued at the Fair Market
Value as of the date that the tax withholding obligation arises.
14. Amendments
The Board of Directors may amend the Plan at any time and from time to
time, provided however that the Board shall not amend the
9
<PAGE> 38
terms of the Plan more frequently than permitted under Rule 16b-3 in regard to
provisions that affect persons receiving Awards under Section 7. Rights and
obligations under any Award granted before amendment of the Plan shall not be
materially altered or impaired adversely by such amendment, except with consent
of the person to whom the Award was granted.
15. Regulatory Approvals and Listings
Notwithstanding any other provision in the Plan, the Company shall have
no obligation to issue or deliver certificates of Common Stock under the Plan
prior to (A) obtaining approval from any governmental agency which the Company
determines is necessary or advisable, (B) admission of such shares to listing on
the stock exchange on which the Common Stock may be listed and (C) completion of
any registration or other qualification of such shares under any state or
federal law or ruling of any governmental body which the Company determines to
be necessary or advisable.
16. No Right to Continued Employment or Grants
Participation in the Plan shall not give any Key Employee any right to
remain in the employ of the Company or any Subsidiary. Further, the adoption of
this Plan shall not be deemed to give any Key Employee or other individual the
right to be selected as a Participant or to be granted an Award.
17. Special Provision Pertaining to Persons Subject to Section 16
Notwithstanding any other term of this Plan, the following shall apply
to persons subject to Section 16 of the Exchange Act, except in the case of
death or disability:
A. No stock option granted pursuant to the Plan may be exercisable for
at least 6 months after the date of grant.
18. Limitations on Awards Under the Plan
No one Participant shall receive in the aggregate Awards granting him
more than fifty percent (50%) of the aggregate number of shares (6,400,000)*
which may be delivered on exercise of options under the Plan.
- --------
*This plan has been revised to reflect the increase in the aggregate
number of shares of common stock reserved for issuance under the terms of this
plan from 4,400,000 to 6,400,000, which increase requires stockholder approval
at the May 12, 1999 Annual Meeting to be effective.
10
<PAGE> 39
PROXY
DREYER'S GRAND ICE CREAM, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE 1999
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 12, 1999, and at any postponements or
adjournments thereof, upon the following matters:
(CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE.)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
[DREYERS LOGO]
<PAGE> 40
Please mark
your votes as [X]
indicated in
this example.
FOR ALL WITHHOLD
1. The election of three Class II FOR ALL nominees AUTHORITY
directors. Instruction: To withhold nominees except as to vote for
authority for any individual listed crossed out nominees
nominee, cross out the nominee's below below listed below
name in the list below: [ ] [ ] [ ]
Robert A. Helman Edmund R. Manwell Timothy P. Smucker
2. The approval of the amendment to
the Company's Stock Option Plan FOR AGAINST ABSTAIN
(1993) to increase the number of [ ] [ ] [ ]
shares reserved for issuance
thereunder from 4,400,000 to
6,400,000.
3. The approval of PricewaterhouseCoopers FOR AGAINST ABSTAIN
LLP as the Company's independent public [ ] [ ] [ ]
accountants for fiscal year 1999.
4. 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 AND PROPOSAL 3.
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)____________________________________________________________________
Dated_______________________, 1999 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.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
