SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
[X] Preliminary proxy statement
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
GENERAL MILLS
- --------------------------------------------------------------------------------
(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 transactions applies:
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pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
PRELIMINARY COPY
1997 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
GENERAL MILLS
P.O. BOX 1113 MINNEAPOLIS, MN 55440
August 11, 1997
To Our Stockholders:
The 1997 annual meeting of stockholders will be held in the auditorium of the
Children's Theatre Company, 2400 Third Avenue South, Minneapolis, Minnesota, on
Monday, September 22, 1997, at 11:00 a.m. Central Daylight Savings Time. If you
hold the Company's common stock on July 24, 1997 or hold shares of Ralcorp
Holdings, Inc. common stock which can be exchanged for General Mills common
stock, you can vote at the annual meeting.
During the annual meeting we will discuss each item of business described in
this Notice of Annual Meeting and Proxy Statement and give a current report on
the Company's business operations. There will also be time for questions. We
expect the meeting to adjourn at approximately 12:15 p.m.
WE HOPE YOU WILL BE ABLE TO ATTEND THE ANNUAL MEETING. IF YOU NEED SPECIAL
ASSISTANCE AT THE MEETING BECAUSE OF A DISABILITY, PLEASE CONTACT THE SECRETARY
OF THE COMPANY AT THE ADDRESS ABOVE. WHETHER OR NOT YOU EXPECT TO ATTEND, PLEASE
SIGN AND RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE SO YOUR SHARES WILL BE
VOTED AT THE ANNUAL MEETING.
Sincerely,
/s/ Stephen W. Sanger
Stephen W. Sanger
Chairman of the Board and
Chief Executive Officer
TABLE OF CONTENTS
PAGE
Notice of Annual Meeting of Stockholders iii
Proxy Statement 1
Election of Directors (Item No. 1) 2
Board Compensation and Benefits 2
Committees of the Board 3
Share Ownership of Directors and Executive Officers 5
Information Concerning Nominees 6
Approval of Appointment of Independent Auditors (Item No. 2) 8
Adoption of Amendment to Certificate of Incorporation (Item No.3) 8
Stockholder Resolution on Cumulative Voting (Item No. 4) 9
Other Business 10
Report of Compensation Committee on Executive Compensation 10
Introduction 10
Program Elements 11
Base Salary 11
Annual Incentive 11
Long-Term Incentive 11
Stock Ownership Grants 12
Performance Units 12
CEO Compensation 12
Deductibility of Executive Compensation 12
Conclusion 13
Total Return to Stockholders 14
Summary Compensation Table 15
Option Grants in Fiscal 1997 16
Aggregated Option Exercises in Fiscal 1997 17
Defined Benefit Retirement Plan 18
Change of Control Arrangements 18
Stockholder Proposals for 1998 Annual Meeting 19
GENERAL MILLS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS -- SEPTEMBER 22, 1997
The annual meeting of stockholders of General Mills, Inc. will be held on
Monday, September 22, 1997, at 11:00 a.m., Central Daylight Savings Time, in the
auditorium of the Children's Theatre Company, 2400 Third Avenue South,
Minneapolis, Minnesota. The purpose of the meeting is to:
1. Elect 12 directors;
2. Approve KPMG Peat Marwick LLP as General Mills' independent auditors
for the 1998 fiscal year;
3. Adopt an amendment to the Company's Certificate of Incorporation;
4. If presented, act on one stockholder proposal on cumulative voting; and
5. Act on any other proper business of the meeting.
The record date for the annual meeting is July 24, 1997. Only stockholders of
record at the close of business on that date and holders of Ralcorp Holdings,
Inc. common stock who are entitled to exchange their Ralcorp shares for General
Mills common stock but have not yet done so can vote at the meeting.
By Order of the Board of Directors,
IVY S. BERNHARDSON
Secretary
August 11, 1997
GENERAL MILLS, INC.
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
MONDAY, SEPTEMBER 22, 1997
VOTING PROCEDURES
THE BOARD OF DIRECTORS IS SOLICITING PROXIES TO BE USED AT THE 1997 ANNUAL
MEETING. THIS PROXY STATEMENT AND THE FORM OF PROXY WILL BE MAILED TO
STOCKHOLDERS BEGINNING AUGUST 11, 1997.
WHO CAN VOTE
Record holders of General Mills common stock on July 24, 1997 and holders of
Ralcorp Holdings, Inc. common stock eligible for exchange to General Mills
common stock may vote at the meeting. On July 24, 1997 shares of common
stock and shares of Ralcorp Holdings, Inc. common stock, which may be
exchanged for shares of General Mills common stock but have not yet been
exchanged, were outstanding. The shares of common stock in the Company's
treasury on that date will not be voted.
HOW YOU CAN VOTE BY PROXY
If you return your signed proxy before the annual meeting, we will vote your
shares as you direct. You have three choices on each matter to be voted upon.
For the election of directors, you may vote for (1) all of the nominees, (2)
none of the nominees or (3) all of the nominees except those you designate. See
"General Information" under Item No. 1. For each of the other items, you may
vote "FOR," "AGAINST" or "ABSTAIN" from voting.
IF YOU DO NOT SPECIFY ON YOUR PROXY CARD HOW YOU WANT TO VOTE YOUR SHARES, WE
WILL VOTE THEM "FOR" THE ELECTION OF ALL NOMINEES FOR DIRECTOR, "FOR" APPROVAL
OF THE AUDITORS AND THE CHARTER AMENDMENT AND "AGAINST" THE SHAREHOLDER
PROPOSAL.
HOW YOU MAY REVOKE OR CHANGE YOUR VOTE
You can revoke your proxy at any time before it is voted at the meeting by
* sending written notice of revocation to the Secretary;
* submitting another proxy that is properly signed and dated later than
the revoked proxy; or
* attending the annual meeting and voting in person.
You may also be represented by another person at the meeting by
executing a proper proxy designating that person.
VOTES REQUIRED/VOTING PROCEDURE
You are entitled to cast one vote for each share of common stock you own. The
election of each director nominee, the appointment of KPMG Peat Marwick LLP as
independent auditors and the shareholder proposal on cumulative voting must each
be approved by a majority of shares entitled to vote and represented at the
meeting in person or by proxy. The charter amendment must be approved by
two-thirds of the shares entitled to vote and represented at the meeting.
Although abstentions and broker non-votes (described below) are counted as
present or represented at the meeting in order to determine whether there is a
quorum, they are treated as shares not voted in determining the outcome of a
specific matter and therefore have no effect on the outcome of that matter.
Proxies submitted by brokers that do not indicate a vote for some of the
proposals because the brokers don't have discretionary voting authority and
haven't received instructions from the beneficial owners on how to vote on those
proposals are called "broker non-votes." The Company has a policy of
confidential voting; Norwest Bank Minnesota tabulates the votes received.
AUTOMATIC DIVIDEND REINVESTMENT PLAN AND SAVINGS PLAN
Shares of common stock held by participants in the Company's dividend
reinvestment plan (including employee payroll deduction) have been added to the
participants' other holdings on their proxy cards. If a stockholder is a
participant in the Company's Savings Plan and has common stock in a Savings Plan
account, the proxy also serves as voting instructions to the Savings Plan
trustee. The Savings Plan trustee also votes allocated shares of common stock
for which it has not received direction, as well as shares not allocated to
individual participant accounts, in the same proportion as directed shares are
voted.
CERTAIN OWNERS OF COMMON STOCK
The Company does not know of any holder with more than five percent of the
outstanding common stock, except that, for the quarter ended March 31, 1997, The
Capital Research and Management Group, 333 South Hope Street, 52nd Floor, Los
Angeles, CA 90071, filed a Form 13F with the Securities Exchange Commission
indicating that it held 11,413,800 shares of common stock (7.08% of the
outstanding common stock).
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on Company records and written representations from the Company's
executive officers and directors, each of the Company's executive officers and
directors has filed reports under Section 16(a) of the Securities Exchange Act
of 1934 on time.
COSTS OF SOLICITATION
The Company will pay for preparation, printing and mailing this proxy statement.
We have engaged Georgeson & Company Inc. to help us solicit proxies from
stockholders for a fee of $10,500 plus their out-of-pocket expenses. Proxies may
also be solicited personally or by telephone by regular employees of the Company
without additional compensation, as well as by employees of Georgeson & Company
Inc. The Company will reimburse banks, brokers and other custodians, nominees
and fiduciaries for their costs of sending the proxy materials to our beneficial
owners.
ANNUAL REPORT
The 1997 Annual Report to Stockholders, which includes the consolidated
financial statements of the Company for the fiscal year ended May 25, 1997, was
mailed on or about August 11, 1997 to all stockholders entitled to vote at the
annual meeting. If you have not received the annual report, please call
1-800-245-5703 and a copy will be sent to you.
ITEM NO. 1
ELECTION OF DIRECTORS
GENERAL
Twelve directors will be elected at the annual meeting. Directors are elected
for a one-year term and serve until the next annual meeting where their
successors are elected, or, if earlier, until their resignation or removal. If
unforseen circumstances (such as death or disability) make it necessary for the
Board of Directors to substitute another person for any of the nominees, we will
vote your shares for that other person, unless you tell us not to on your proxy
card.
It is the Board of Directors' policy that non-employee directors serve on the
Board for no more than 15 years and retire at age 70 or five years after normal
retirement from their principal organization, whichever comes first.
BOARD COMPENSATION AND BENEFITS
General Mills structures director compensation to attract and retain qualified
non-employee directors, and to further align the interests of those directors
with the interests of stockholders by linking a portion of their compensation to
stock performance. If they choose to, directors can receive the entire amount of
their board remuneration in stock and stock-related compensation. Directors are
expected to keep all of the stock they receive as board compensation, net of any
stock used to pay taxes on such compensation, until they own shares equal in
market value to at least five times their annual cash retainer. The Company does
not have a retirement plan for its non-employee directors. Employee directors do
not receive additional compensation for serving on the board.
The Company has a planned gift program for directors which is funded by life
insurance policies on all directors. Upon the death of a director, the Company
donates $1 million to a qualifying charity recommended by the director. The
Company is then reimbursed by life insurance proceeds. The cost of the program
is not material to the Company and individual directors derive no financial
benefit from the program since the Company receives the entire charitable
deduction. The Company also pays the premiums on directors' and officers'
liability and travel accident insurance policies covering the directors.
MEETING FEES
Non-employee directors receive the following fees for their service on the
board:
Annual Retainer $35,000
Fee for Each Board Meeting 1,000
Fee for Each Committee Meeting 1,000
Directors can elect to have these amounts paid quarterly in cash or in Company
common stock having a market value equal to the payment, or to defer payment
until a later date. If deferred, the deferred amount earns interest based on the
director's selection from among the funds offered to employees participating in
the Company's deferred compensation plan. One of the fund rates tracks the
return on the Company's common stock.
In fiscal 1997, L. D. DeSimone, M. D. Rose and C. A. Wurtele elected to
receive all of their remuneration in common stock; W. T. Esrey, A. M. Spence
and D. A. Terrell received cash payments; R. M. Bressler and J. R. Hope
deferred cash payments and K. A. Macke received 50% in common stock and 50%
in cash.
RESTRICTED STOCK
Each year they are elected to the board, non-employee directors receive 500
shares of restricted common stock which cannot be sold or transferred until the
next annual meeting and are forfeited if the director leaves the board before
the end of the restricted period. Directors may elect to defer receiving the
common stock issuable at the end of the restricted period by choosing to receive
restricted stock units instead of restricted stock. Stock units earn amounts
equal to the dividend payments on the Company's common stock. These amounts can
be reinvested or paid to the director.
STOCK OPTIONS
Non-employee directors also receive options to purchase 2,500 shares of common
stock each time they are elected. The per share price the director pays at
exercise is the market price of the common stock on the date of the grant. The
options become exercisable at the next annual meeting and expire ten years after
grant.
COMMITTEES OF THE BOARD
During the fiscal year ended May 25, 1997, the board of directors met eight
times and various committees of the board met a total of eight times. Director
attendance at board meetings and all committee meetings averaged 96%. Each
director attended more than 84% of the board meetings and the meetings of board
committees on which the director served.
AUDIT COMMITTEE
Number of Members: Six non-employee directors
Members: Michael D. Rose (Chair), Richard M. Bressler, William T. Esrey, Judith
Richards Hope, A. Michael Spence, C. Angus Wurtele
Number of Meetings in 1997: Three
Functions: * Oversees internal controls, audits, compliance program and
financial reporting
* Recommends independent accountants, subject to shareholder
approval, and ensures their independence
* Consults with these accountants and reviews and approves the scope
of their audit
* Reviews the Company's use of derivative instruments
COMPENSATION COMMITTEE
Number of Members: Four non-employee directors
Members: Richard M. Bressler (Chair), Livio D. DeSimone, Kenneth A. Macke,
Michael D. Rose
Number of Meetings in 1997: Three
Functions: * Reviews compensation policies of the Company to ensure they
provide appropriate motivation for corporate performance and
increased shareholder value; determines compensation policy for
executives
* Recommends compensation of the board members including the
chairman and the management members of the board and approves
compensation and stock grants to other senior executives
EXECUTIVE COMMITTEE
Number of Members: Eight
Members: Stephen W. Sanger (Chair), Richard M. Bressler, Livio D. DeSimone,
William T. Esrey, Charles W. Gaillard, Kenneth A. Macke, Michael D.
Rose, Raymond G. Viault
Number of Meetings in 1997: None
Functions: * May take all action that could be taken by full board
* May meet between regular board meetings to take action necessary
for the Company to operate efficiently
FINANCE COMMITTEE
Number of Members: Five non-employee directors
Members: William T. Esrey (Chair), Livio D. DeSimone, A. Michael Spence, Dorothy
A. Terrell, C. Angus Wurtele
Number of Meetings in 1997: Two
Functions: * Reviews financial policies and performance objectives,
including dividend policy
* Reviews changes in the Company's capital structure, including debt
issuances, common stock sales, repurchases and stock splits
NOMINATING COMMITTEE
Number of Members: Six non-employee directors
Members: Kenneth A. Macke (Chair), Richard M. Bressler, William T. Esrey, Judith
Richards Hope, Michael D. Rose, A. Michael Spence
Number of Meetings in 1997: None
Functions: * Recommends candidates for election to the board
* Develops policy on composition, participation and size of board;
tenure and retirement of directors
* Recommends changes in the organization and procedures of the
board, including corporate governance
The Nominating Committee will consider director candidates proposed by
stockholders. Candidates must be highly qualified and be both willing and
expressly interested in serving on the board. Candidates should represent the
interests of all stockholders and not those of a special interest group. A
stockholder wishing to nominate a candidate should forward the candidate's name
and a detailed background of the candidate's qualifications to the Secretary of
the Company.
PUBLIC RESPONSIBILITY COMMITTEE
Number of Members: Five non-employee directors
Members: C. Angus Wurtele (Chair), Livio D. DeSimone, Judith Richards Hope,
Kenneth A. Macke, Dorothy A. Terrell
Number of Meetings in 1997: None
Functions: * Reviews public policy and social trends affecting the Company
* Monitors the Company's corporate citizenship activities
* Evaluates Company policies to ensure they meet ethical obligations
to employees, consumers and society
SHARE OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The table below shows how much General Mills common stock each director and
executive officer named in the Summary Compensation Table owned on June 30,
1997. It includes restricted stock and restricted stock units as well as shares
allocated to participant accounts under the Savings Plan. No director or
executive officer owns more than 0.32% of the total outstanding shares
(including exercisable options). All directors and executive officers as a group
own 2.34% of the total outstanding shares (including exercisable options).
NAME SHARES(A)
R. M. Bressler 14,602(b)
S. R. Demeritt 35,883
L. D. DeSimone 10,461
W. T. Esrey 6,804
C. W. Gaillard 72,357(c)
J. R. Hope 7,355
K. A. Macke 6,991
S. S. Marshall 19,792
M. D. Rose 11,604(d)
S. W. Sanger 31,521
A. M. Spence 4,008
D. A. Terrell 2,056
R. G. Viault 21,993
C. A. Wurtele 23,854
All directors and
executive officers
as a group 561,067
(a) In addition, the following shares may be acquired within 60 days pursuant
to exercisable options: R. M. Bressler, 2,500 shares; S. R. Demeritt, 236,249
shares; C. W. Gaillard, 426,136 shares; S. S. Marshall, 9,320 shares; S. W.
Sanger, 460,324 shares; R. G. Viault, 10,920 shares and all other listed
persons 5,538 shares each; and all directors and executive officers as a
group, 2,800,163 shares. (b) In addition to the shares listed, Mr. Bressler
has 180 share equivalents in a deferred compensation account tracking the
value of the Company's common stock. (c) Included in the shares for Mr.
Gaillard are 672 shares owned by members of his family, in which he disclaims
any beneficial interest. (d) Included in the shares for Mr. Rose are 600
shares owned by or held in trust for members of his family, in which he
disclaims any beneficial interest.
INFORMATION CONCERNING NOMINEES
[PHOTO] RICHARD M. BRESSLER Director since 1984
Richard M. Bressler, age 66, is the retired Chairman of the Board of El Paso
Natural Gas Company. He joined Burlington Northern Inc. as President and Chief
Executive Officer in 1980 and retired from that position in 1990. He previously
served as a General Mills director in 1978-79. Mr. Bressler is also a director
of H. F. Ahmanson & Company and Rockwell International Corporation.
[PHOTO] LIVIO D. DESIMONE Director since 1989
Livio D. DeSimone, age 61, is Chairman of the Board and Chief Executive Officer,
Minnesota Mining and Manufacturing Company (3M). Mr. DeSimone joined 3M in 1957
and has served in various U.S. and international capacities. Mr. DeSimone was
elected an Executive Vice President in 1981 and named Chairman and Chief
Executive Officer in 1991. He is a director of 3M, Cargill, Incorporated, Dayton
Hudson Corporation and Vulcan Materials Company.
[PHOTO] WILLIAM T. ESREY Director since 1989
William T. Esrey, age 57, is Chairman and Chief Executive Officer of Sprint
Corporation. Mr. Esrey has been Chairman of Sprint since 1990 and Chief
Executive Officer since 1985. Mr. Esrey is a director of Sprint, The Equitable
Life Assurance Society of the United States, Everen Capital Corporation and Duke
Energy Corp.
[PHOTO] CHARLES W. GAILLARD Director since 1993
Charles W. Gaillard, age 56, has been President of General Mills since 1995. Mr.
Gaillard joined General Mills in 1966 and advanced through various food
marketing management positions, becoming Executive Vice President in 1989 and
Vice Chairman in 1993. From 1989 to 1993 he was Chief Executive Officer of
Cereal Partners Worldwide, a joint venture of the Company and Nestle, S.A. Mr.
Gaillard is a director of Whitman Corporation. He also serves as a member of the
Industry Productivity Council of the Grocery Manufacturers of America and Vice
President of the Minnesota Orchestral Association Board.
[PHOTO] JUDITH RICHARDS HOPE Director since 1989
Judith Richards Hope, age 56, is senior counsel to the law firm of Paul,
Hastings, Janofsky & Walker LLP, Los Angeles, California and Washington, DC. Ms.
Hope is also a director of Union Pacific Corporation and Zurich Reinsurance
Center Holdings, Inc. She is a member of the Harvard Corporation (The President
and Fellows of Harvard College) and President of the International Law
Institute.
[PHOTO] KENNETH A. MACKE Director since 1991
Kenneth A. Macke, age 59, is the retired Chairman and Chief Executive Officer of
Dayton Hudson Corporation (DHC). He joined Dayton's in 1961 and advanced through
various management positions at Dayton's and Target. He served as President of
DHC from 1981 to 1984. He was elected Chief Operating Officer of DHC in 1982,
Chief Executive Officer in 1983 and Chairman of the Board in 1984. He is a
director of Fingerhut Companies, Inc., First Bank System, Inc. and Unisys
Corporation. He is also the general partner of Macke Partners, a private venture
capital firm.
[PHOTO] MICHAEL D. ROSE Director since 1985
Michael D. Rose, age 55, is Chairman of the Board of Promus Hotel Corporation.
Promus hotel brands are Embassy Suites, Hampton Inn, Homewood Suites and Hampton
Inn & Suites. Rose joined Promus' predecessor company, Holiday Corporation, in
1975 and subsequently held positions at Holiday and Promus of President (1979-84
and 1988-91), Chief Executive Officer (1981- 94) and Chairman (1984-1995). Mr.
Rose is a director of Ashland, Inc., Darden Restaurants, Inc., First Tennessee
National Corp. and Stein Mart, Inc.
[PHOTO] STEPHEN W. SANGER Director since 1992
Stephen W. Sanger, age 51, has been Chairman and Chief Executive Officer of
General Mills since 1995. Mr. Sanger joined the Company in 1974 and served as
the head of several business units, including Yoplait USA and Big G. He was
elected a Senior Vice President in 1989, an Executive Vice President in 1991,
Vice Chairman in 1992 and President in 1993. He is a director of Dayton Hudson
Corporation and Donaldson Company, Inc.
[PHOTO] A. MICHAEL SPENCE Director since 1992
Dr. A. Michael Spence, age 53, has been Dean of the Graduate School of Business
at Stanford University since 1990. Dean Spence served on the faculty at Harvard
University in both the Business School and the Faculty of Arts and Sciences as
professor of economics and business administration from 1975 to 1990. From 1984
to 1990 he served as the Dean of the Faculty of Arts and Sciences at Harvard.
Dean Spence is a director of BankAmerica Corporation, Nike, Inc., Sun
Microsystems, Inc. and Siebel Systems, Inc. He is a Fellow of the Econometric
Society and is Chairman of the National Research Council Board on Science,
Technology and Economic Policy.
[PHOTO] DOROTHY A. TERRELL Director since 1994
Dorothy A. Terrell, age 52, is Vice President of Sun Microsystems, Inc., a
position she has held since 1991. Sun Microsystems, Inc. is a leading provider
of hardware, software and services for establishing enterprise-wide intranets
and expanding the power of the Internet. She previously served in various
management capacities at Digital Equipment Corporation from 1976 to 1991. Ms.
Terrell is a director of Sears Roebuck and Company and is on the board of the
Massachusetts Technology Development Corporation and the National Housing
Partnership Foundation.
[PHOTO] RAYMOND G. VIAULT Director since 1996
Raymond G. Viault, age 53, is Vice Chairman of the Company, with overall
responsibility for all international operations, business development and all
financial activities. Mr. Viault joined the Company in January 1996 from Philip
Morris, where he had been based in Zurich, Switzerland, serving since 1990 as
President of Kraft Jacobs Suchard. Mr. Viault had been with Kraft General Foods
a total of 20 years, serving in a variety of major marketing and general
management positions. Mr. Viault is a director of Willis Corroon plc. He also
serves on the Board of Overseers for the Columbia Graduate School of Business.
[PHOTO] C. ANGUS WURTELE Director since 1985
C. Angus Wurtele, age 62, has been Chairman of the Board of The Valspar
Corporation since 1973 and served as Chief Executive Officer from 1973 through
1995. Mr. Wurtele is a director of Bemis Company, Inc., Donaldson Company, Inc.
and IDS Mutual Funds Group. He is a member of the Advisory Council of the
Graduate School of Business of Stanford University and the Minnesota Business
Partnership. He is also a director of the Walker Art Center.
IF YOU SIGN AND RETURN THE PROXY FORM AND DO NOT SPECIFY OTHERWISE, WE WILL VOTE
YOUR SHARES FOR THE ELECTION OF THE TWELVE NOMINEES LISTED ABOVE.
ITEM NO. 2
APPROVAL OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee of the board of directors selects and hires independent
public accountants to audit the Company's books, subject to ratification by the
stockholders. The Audit Committee recommends KPMG Peat Marwick LLP to audit the
Company's consolidated financial statements for the fiscal year beginning May
26, 1997. KPMG has audited the books of the Company since 1928. During fiscal
1997, General Mills paid KPMG $3,600,000 for audit and other services.
Representatives of the firm will be at the annual meeting, where they will have
an opportunity to make a statement and answer questions.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE APPOINTMENT OF KPMG PEAT
MARWICK LLP AS AUDITORS. IF YOU SIGN AND RETURN THE PROXY FORM AND DO NOT
SPECIFY OTHERWISE, WE WILL VOTE YOUR SHARES TO APPROVE THE APPOINTMENT OF KPMG
PEAT MARWICK LLP AS THE INDEPENDENT AUDITORS.
ITEM NO. 3
AMENDMENT TO CERTIFICATE OF INCORPORATION
On June 23, 1997, the Board of Directors adopted an amendment to the Company's
Restated Certificate of Incorporation (the "Charter"), subject to approval by
the stockholders. This amendment removes a requirement for super-majority
(66-2/3%) shareholder approval of new stock and profit-sharing plans and
provides for approval, when required, by a simple majority of shares voting as
provided pursuant to Delaware Corporate law.
The super majority requirement was added to the Charter in 1937 and is the only
such provision in the Charter. In today's corporate governance environment, it
is inconsistent with the widely-shared principle of majority rule, since it
permits a minority of shareholders to defeat proposed plans which a majority, as
well as the Board of Directors, believe are in the Company's best interest. That
is why we believe that this super majority requirement, which is highly unusual
for today's public companies, is outmoded and inconsistent with fundamental
principles of modern corporate governance.
The proposed simple majority requirement is also consistent with the New York
Stock Exchange approval requirement for plans covering officers and directors
and the Internal Revenue Code provision that requires shareholder approval to
preserve the full tax deductibility of awards to certain executive officers.
The Charter amendment removes Article VI, Section (3), which reads as
follows:
Upon the affirmative vote of not less than 66-2/3% of the shares of
Common Stock voting thereon at any meeting of stockholders, the Board
of Directors may adopt and carry out profit sharing, stock option
and/or restricted stock plans for any or all of the Corporation's
directors, officers or employees, and for any or all of the officers
and employees of its subsidiaries.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE REMOVAL OF THE
SUPER-MAJORITY PROVISION FROM THE CHARTER. IF YOU SIGN AND RETURN THE PROXY
FORM AND DO NOT SPECIFY OTHERWISE, WE WILL VOTE YOUR SHARES TO ADOPT THE
CHARTER AMENDMENT.
ITEM NO. 4
STOCKHOLDER RESOLUTION ON CUMULATIVE VOTING
John J. Gilbert, owner of 766 shares, and Margaret R. Gilbert and John J.
Gilbert, both of 29 East 64th Street, New York, New York 10021, who state that
they are co-trustees under the will of Samuel Rosenthal for 800 shares, have
notified the Company in writing that they intend to present the following
resolution at the Annual Meeting:
"RESOLVED: That the stockholders of General Mills, Inc., assembled in
annual meeting in person and by proxy, hereby request the Board of
Directors to take the steps necessary to provide for cumulative voting
in the election of directors, which means each stockholder shall be
entitled to as many votes as shall equal the number of shares he or she
owns multiplied by the number of directors to be elected, and he or she
may cast all of such votes for a single candidate."
The statement of the stockholders in support of the resolution is as
follows:
"Continued very strong support along the lines we suggest were shown at
the last annual meeting when 30.5%, 2,496 owners of 34,507,341 shares, were cast
in favor of this proposal. The vote against included 3,076 unmarked proxies.
"California law still requires that unless stockholders have voted not
to have cumulative voting they do have it. Ohio has the same provision.
"The National Bank Act provides for cumulative voting. In many cases
companies get around it by forming holding companies without cumulative voting.
Banking authorities have the right to question the capability of directors to be
on banking boards. In many cases authorities come in after and say the director
or directors were not qualified. We were delighted to see the SEC has finally
taken action to prevent bad directors from being on boards of public companies.
The SEC should have hearings to prevent such persons becoming directors before
they harm investors.
"When Alaska became a state it took away cumulative voting over our
objections. The Valdez oil spill might have been prevented if environmental
directors were elected through cumulative voting. The huge derivative losses
might have also been prevented with cumulative voting.
"Many successful corporations have cumulative voting. Example, Pennzoil
defeated Texaco in that famous case. Texaco's recent problems might have also
been prevented with cumulative voting getting directors on the board to prevent
such things. Ingersoll-Rand, also having cumulative voting, won two awards.
FORTUNE magazine ranked it second in its industry as "America's Most Admired
Corporations" and the WALL STREET TRANSCRIPT noted on almost any criteria used
to evaluate management, Ingersoll-Rand excels.' In 1994 and 1995 they raised
their dividend. Also, Hewlett Packard, a very successful company, has cumulative
voting.
"Lockheed-Martin, as well as VWR Corporation, now have a provision that
if anyone has 40% or more of the shares cumulative voting applies; it does apply
at the latter company.
"In 1995 American Premier adopted cumulative voting. Alleghany Power
System tried to take away cumulative voting, as well as put in a stagger system,
and stockholders defeated it, showing stockholders are interested in their
rights.
"If you agree, please mark your proxy for this resolution; otherwise it
is automatically cast against it, unless you have marked to abstain."
RESOLVED, THAT THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF
THE STOCKHOLDER RESOLUTION ON CUMULATIVE VOTING FOR THE FOLLOWING REASONS:
The Board of Directors believes that the adoption of cumulative voting could
hurt the Company rather than help it become more successful. General Mills has
consistently maintained a strong, independent Board of Directors, with each
member elected annually. Directors are chosen for their accomplishment,
commitment, integrity and diversity of background and experience. Cumulative
voting can create "special interest" directors who may focus on representing the
interests of their constituencies rather than the stockholders as a whole.
Cumulative voting at General Mills could permit a stockholder or group of
holders owning substantially less than a majority of the Company's stock to
elect their own director. Having a special interest director on the Board could
alter the proper balance, diversity and independence of the Board and inhibit
its discussions and decision-making, shifting the Board's attention away from
the Company's strategic plans to the director's single interest agenda.
Even advocates for cumulative voting acknowledge that it will not be a useful
tool to enhance shareholder value at every company. Because of our strong
commitment to corporate governance and focus on financial performance goals,
General Mills would not benefit from cumulative voting and could be harmed by
its adoption.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE AGAINST THIS STOCKHOLDER PROPOSAL.
IF YOU SIGN AND RETURN YOUR PROXY FORM AND DO NOT SPECIFY OTHERWISE, WE WILL
VOTE YOUR SHARES AGAINST THIS STOCKHOLDER PROPOSAL.
OTHER BUSINESS
We do not know of any other matters to be presented at the meeting. If any other
matter is properly presented for a vote at the meeting, your shares will be
voted by the holders of the proxies using their best judgment.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
INTRODUCTION
The Compensation Committee is responsible for setting and administering the
Company's executive compensation policy.
The Committee bases the Company's compensation programs on performance. Base
salaries are generally lower than at comparable companies in the consumer
products business sector, but they are coupled with an incentive system that
pays more with good performance and less for below par performance. The
Committee also believes that broad and deep employee stock ownership effectively
motivates the building of stockholder wealth and aligns the interests of
employees with those of stockholders. The Committee has set specific stock
ownership objectives for key management employees and has established programs
that encourage all employees to have an ownership interest in the Company.
Each year, the Committee evaluates Company performance, actual compensation and
share ownership, compared with both large consumer product companies and a
broader group of leading industrial companies.
PROGRAM ELEMENTS
General Mills' executive compensation program is made up of base salary, annual
incentive and long-term incentive compensation. The incentive compensation has
two parts: an annual incentive compensation program and a stock compensation
plan. The Company also provides several innovative programs to encourage
long-term stock ownership.
BASE SALARY
Base salaries for executives are generally lower than at comparable companies
because of the Company's emphasis on performance-oriented incentive compensation
and because executives are eligible to participate in the Salary Replacement
Stock Option Plan (described below). All salaried employees, including
executives, are eligible for an annual merit increase to their base salary
determined primarily by performance of their job responsibilities and
accomplishment of pre-determined performance objectives.
ANNUAL INCENTIVE
The Company provides executives with an annual opportunity to earn cash
incentive awards through the Executive Incentive Plan (EIP), which was last
approved by shareholders in 1996. Awards are based upon corporate, business unit
and individual performance. The corporate performance rating is directly tied to
the Company's earnings per share and return on capital performance during the
fiscal year. The Committee and management believe these two factors are the key
drivers of stock performance over time. Historical performance on these two
measures is summarized inside the front cover of the 1997 annual report.
Business unit ratings are based primarily on profit, market share, and volume
performance of the business unit. Factors such as new product development,
diversity, and progress on strategic goals are also considered as appropriate.
Individual performance ratings are based on each executive's achievement of
specific annual financial objectives, as well as other factors like the quality
of the strategic plan and progress in organization and management development.
For senior officers, cash incentive awards are determined by multiplying a
target incentive rate (a percentage of salary that increases with the level of
responsibility) by the individual performance rating and by the corporate
performance rating. For other executive officers, the corporate rating may be
weighted with a business unit rating. Corporate and business unit ratings can
range from 0 to 1.80, with top quartile performance resulting in ratings of 1.50
or higher. Individual ratings can range from 0 to 1.50. Receipt of cash
incentive awards under the EIP may be deferred to a subsequent date or to
retirement.
Under the EIP, executives are also eligible to receive a supplemental restricted
stock matching award equal to 25% of the cash EIP award. To receive this award,
the executive must place on deposit with the Company personally-owned shares
equal in number to the number of shares awarded as restricted stock. The
restricted shares vest 50% after three years and 50% after six years, provided
the owned shares remain on deposit with the Company for the entire six-year
period. Restricted shares granted under the EIP are included in the Summary
Compensation Table on page 15 under the "Restricted Stock Awards" heading.
LONG-TERM INCENTIVE
The Company provides executives with a long-term incentive compensation
opportunity through the 1993 Stock Option and Long-Term Incentive Plan (approved
by stockholders with a 93.7% favorable vote). Each December, stock options are
granted to officers and other selected employees based upon their level of
responsibility in the Company, ability to impact results, and individual
performance. The size of regular stock option grants to the executive officers,
including the Chief Executive Officer, is periodically reviewed against option
grants made by other large consumer products companies to their CEO and other
senior executives. The Company's option grants rank in size above the median
range of option grants made by the comparative organizations, because of (i) the
payment of generally lower base salaries (described above), and (ii) the
Company's emphasis on employee stock ownership and reliance on option grants as
the fundamental means of long-term incentive compensation, both of which are
intended to maximize personal performance of Company managers and align their
interests with shareholders. The table on page 16 summarizes the options granted
in fiscal 1997 to all employees and to the five proxy-named officers.
Also, the Company has periodically provided special all-employee stock options,
which are granted to all employees not receiving regular stock option grants.
The Company made such grants to eligible employees in 1993 and 1995. These
broad-based option awards are designed to expand employee stock ownership and
provide further motivation throughout the Company to achieve corporate
performance objectives. From time to time the Company makes limited special
grants of restricted stock to certain key employees.
STOCK OWNERSHIP GRANTS
The stock matching feature of the EIP is designed to encourage additional
longer-term stock ownership by Company executive officers. The Company also
provides two additional programs to encourage additional share ownership:
deposit stock options and salary replacement stock options.
The deposit stock option program, introduced in 1987, offers executives a
supplemental stock option opportunity equal to the most recent incentive award
divided by the current stock price. To receive this grant, the optionee must
place on deposit with the Company one share of owned stock for every two option
shares granted and leave the shares on deposit with the Company for five years.
A total of 233 employees participated in this program in fiscal 1997.
The Salary Replacement Stock Option Plan, which was approved by shareholders in
1995 with a 91.3% favorable vote, provides executives and certain selected
employees with the choice of exchanging merit-related base salary increases for
a supplemental stock option grant. The size of the option grant is determined by
calculating the estimated present value of the foregone salary increase
(including pay-related compensation and benefits such as annual incentive,
savings plan match and pension accrual), and dividing it by the estimated
present value of a stock option, assuming an 8% annual growth rate in the common
stock. A total of 807 employees participated in this program in fiscal 1997; the
table on page 16 includes stock options granted under this program to the five
proxy-named officers.
PERFORMANCE UNITS
The Company discontinued grants of performance units in 1993. Performance units
were granted in conjunction with stock options and were valued based upon
three-year earnings per share and return on equity performance. Vested
performance units are payable in cash and an optionee may withdraw them as an
alternative to the exercise of regular stock options. The exercise of a stock
option or withdrawal of a corresponding performance unit cancels the other on a
one-for-one basis. As of August 1, 1997, no performance units had a value in
excess of the value of their corresponding stock option.
CEO COMPENSATION AND PERFORMANCE
The compensation of the Chief Executive Officer for fiscal 1997 consisted of
base salary, annual incentive and stock options. The Committee determined the
level for each of these elements using methods consistent with those used for
other senior executives. When determining the CEO's merit increase to base
salary, individual incentive rating and annual stock option grant, the Committee
meets without him to evaluate his performance and reports on that evaluation to
the independent directors of the board.
The Committee decided that the corporate performance rating for fiscal 1997
should be a 1.00, which is down significantly from the rating of 1.80 for fiscal
1996. The Committee also set a lower individual performance rating for Mr.
Sanger. These ratings were based upon the Committee's assessment of the
Company's financial, strategic and operating performance for the year, as well
as Mr. Sanger's personal performance versus pre-established objectives.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Internal Revenue Code requires that the Company meet specific criteria,
including shareholder approval of certain stock and incentive plans, in order to
deduct for federal income tax purposes compensation over $1 million paid to the
proxy-named officers. The Company expects to meet the requirements of the Code
and receive a deduction for all compensation paid to those executive officers.
CONCLUSION
The Committee is satisfied that the compensation and long-term incentive plans
provided to the officers of the Company are structured and operated to create
strong alignment with the long-term best interests of the Company and its
stockholders.
COMPENSATION COMMITTEE
Richard M. Bressler, Chair
Livio D. DeSimone
Kenneth A. Macke
Michael D. Rose
TOTAL RETURN TO STOCKHOLDERS
This is a line graph comparing the annual percentage in cumulative total
shareholder return for holders of General Mills common stock with the cumulative
total return of the Standard & Poor's 500 Stock Index and the Standard & Poor's
Food Index.
[GRAPH OMITTED]
TOTAL RETURN INDEX MAY 92 MAY 93 MAY 94 MAY 95 MAY 96 MAY 97
General Mills 100 105 91 104 126 144
S&P Food 100 105 104 127 156 204
S&P 500 100 112 117 137 182 232
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------
ANNUAL COMPENSATION AWARDS
- ------------------------------------------------------------------------------- --------------------------
OTHER RESTRICTED
ANNUAL STOCK ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARD(s) COMPENSATION
POSITION YEAR ($) ($) ($) ($)(a) OPTIONS (#) ($)(b)
------------------ ---- ------ ----- ------------ -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
S. W. SANGER 1997 624,750 437,300 -- 109,270 269,586 22,398
Chairman of the Board and 1996 600,000 810,000 -- 202,551 224,800 33,699
Chief Executive Officer 1995 472,917 -- -- -- 124,811 (c) 12,997
C. W. GAILLARD 1997 525,000 405,700 -- -- 170,466 33,304
President 1996 475,000 707,940 -- -- 129,196 28,712
1995 364,792 72,000 -- 17,967 108,375 (c) 98,040
R. G. VIAULT 1997 500,000 540,000 (d) -- 134,995 106,720 18,459
Vice Chairman 1996 189,423 437,300 (d) -- 1,304,553 (e) 100,000 8,333
1995 -- -- -- -- -- --
S. R. DEMERITT 1997 339,091 268,200 -- 67,061 72,498 176,856
Executive Vice President 1996 290,344 236,100 14,663 (f) 58,987 44,806 163,166
1995 254,188 183,000 23,119 (f) 37,170 40,622 (c) 72,033
S. S. MARSHALL 1997 256,000 145,900 -- 36,465 55,164 12,820
Senior Vice President and 1996 250,000 353,100 (g) -- 63,233 39,542 7,343
General Counsel 1995 146,795 296,800 (g) -- 1,272,779 (h) 27,540 (c) --
</TABLE>
(a) The amounts in this column reflect the value of the restricted stock or
RSU's awarded annually under the EIP, except as described in notes (e)
and (h). Recipients must deposit with the Company one personally-owned
share of common stock for each share of restricted stock awarded. The
restricted shares vest 50% at three years and 50% at six years,
provided the participant's shares remain on deposit until the end of
the deposit period. Regular dividends are paid on the restricted
shares. Restricted stock under the EIP vests in the event of a change
of control. Participants age 55 or older may elect not to participate
in the stock matching provisions of the EIP and to receive an
additional cash award equal to 15% of the cash incentive award, or they
may participate on a partial basis, depositing shares having a value of
5%, 10% or 15% of the cash incentive award, receiving in those
circumstances 12%, 9% or 6%, respectively, as an additional cash award.
A participant under age 55 who elects not to deposit shares does not
receive an additional cash award. At the end of fiscal 1997, the number
and value of the aggregate restricted stockholdings for the named
officers were:
S. W. Sanger 6,166 shares $ 395,009
C. W. Gaillard 4,180 $ 267,781
R. G. Viault 18,424 $1,180,288
S. R. Demeritt 3,435 $ 220,055
S. S. Marshall 15,180 $ 972,469
(b) The amounts for all listed officers, other than Mr. Gaillard and Mr.
Demeritt, are the Company's contributions or allocations relating to
defined contribution (savings) plans (tax-qualified and supplemental)
on behalf of the named officers. The 1995 amount for Mr. Gaillard
includes $87,220 of moving expenses related to his return from Cereal
Partners Worldwide. The amounts for Mr. Demeritt include $160,844 in
1997, $139,234 in 1996 and $57,926 in 1995 related to his foreign
assignments in Canada and Cereal Partners Worldwide.
(c) In 1995, the number and exercise price of stock options awarded to each
officer were adjusted for the Darden distribution, under the terms of
the applicable plans, to avoid diminution of the benefits granted under
such plans as a result of the distribution.
(d) Mr. Viault became an employee of the Company effective January 15,
1996. The fiscal 1997 amount includes a deferred hiring bonus of
$192,000; the fiscal 1996 amount includes a hiring bonus of $200,000.
(e) This amount includes the value of Company restricted stock granted to
Mr. Viault to compensate him for restricted stock, non-vested stock
option gains and other compensation forfeited as a result of leaving
his prior employer.
(f) This amount represents the "above-market" portion of the earnings on
deferred compensation credited and paid to Mr. Demeritt each year based
on the three-year performance of the Canada Foods division. Under the
Company's Deferred Compensation Plan, election of such a crediting rate
was available only to eligible key managers with respect to the
business operation for which they were responsible. This program is no
longer offered.
(g) Ms. Marshall became a Company employee effective October 31, 1994. The
fiscal 1996 amount includes a deferred hiring bonus of $100,000; the
fiscal 1995 amount includes a hiring bonus of $150,000.
(h) This amount includes the value of Company restricted stock granted to
Ms. Marshall to compensate her for restricted stock, non-vested stock
options and pension benefits lost as a result of leaving her former
employer.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS (a) FOR OPTION TERM ($) (b)
- -------------------------------------------------------------------------------- ----------------------------------------------
% OF TOTAL
OPTIONS
OPTIONS GRANTED TO EXERCISE
GRANTED EMPLOYEES IN PRICE EXPIRATION 0%
NAME (#) FISCAL YEAR ($/SHARE) DATE ($)(c) 5%($) 10%($)
- -------------------- --------- ------------ ----------- ---------- --------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sanger 75,000 (d) 1.89% 53.69 7/24/06 0 2,558,053 6,497,543
150,000 (e) 3.78% 62.56 1/9/07 0 5,961,327 15,141,974
29,500 (f) 0.74% 60.13 10/30/06 0 1,126,855 2,862.251
15,086 (g) 0.38% 53.69 7/24/06 0 514,544 1,306,959
Gaillard 35,000 (d) 0.88% 53.69 7/24/06 0 1,193,758 3,032,187
70,000 (e) 1.76% 62.56 1/9/07 0 2,781,952 7,066,255
54,000 (f) 1.36% 60.13 10/30/06 0 2,062,718 5,239,374
11,466 (g) 0.29% 53.69 7/24/06 0 391,075 993,344
Viault 25,000 (d) 0.63% 53.69 7/24/06 0 852,684 2,165,848
50,000 (e) 1.26% 62.56 1/9/07 0 1,987,109 5,047,325
27,300 (f) 0.69% 60.13 10/30/06 0 1,042,819 2,648,795
4,420 (g) 0.11% 53.69 7/24/06 0 150,755 382,922
Demeritt 15,000 (d) 0.38% 53.69 7/24/06 0 511,611 1,299,509
35,000 (e) 0.88% 62.56 1/9/07 0 1,390,976 3,533,127
18,100 (f) 0.46% 60.13 10/30/06 0 691,393 1,756,161
4,398 (g) 0.11% 53.69 7/24/06 0 150,004 381,016
Marshall 15,000 (d) 0.38% 53.69 7/24/06 0 511,611 1,299,509
30,000 (e) 0.76% 62.56 1/9/07 0 1,192,265 3,028,395
10,900 (f) 0.27% 60.13 10/30/06 0 416,363 1,057,577
4,714 (g) 0.12% 53.69 7/24/06 0 160,782 408,392
All Stockholders NA NA NA NA 0 6,025,653,799(h) 15,305,367,568(h)
All Optionees 3,973,277 100% 59.33(i) (i) 0 149,753,887 380,380,016
As a % of All
Stockholders Gain NA NA NA NA NA 2.5% 2.5%
</TABLE>
(a) All options are granted at the fair market value of the common stock on
the grant date and generally expire 10 years and one month from the
grant date. All options vest in the event of a change of control.
Options include the right to pay the exercise price in cash or
previously-acquired common stock and the right to have shares withheld
by the Company to pay withholding tax obligations due in conjunction
with the exercise.
(b) These assumed values result from certain prescribed rates of stock
price appreciation. The actual value of these option grants is
dependent on future performance of the common stock and overall stock
market conditions. There is no assurance that the values reflected in
this table will be achieved. The Company did not use an alternative
formula for a grant date valuation, as it is not aware of any formula
which will determine with reasonable accuracy a present value based on
future unknown or volatile factors.
(c) No gain to the optionees is possible without stock price appreciation,
which will benefit all stockholders commensurately. Zero percent stock
price appreciation will result in zero dollars for the optionee.
(d) In fiscal 1997, the Company changed the time of regular, annual stock
option grants from June to December. This stock option grant under the
1993 Plan becomes exercisable on June 24, 2001 and relates to the
half-year transition period June to December 1996.
(e) This stock option grant under the 1993 Plan becomes exercisable on
December 9, 2001. It is the first regular, annual grant to be made in
December instead of June.
(f) This option, granted under the 1995 Salary Replacement Stock Option
Plan, benefits the Company by reducing the cash compensation paid to
executives, with corresponding reductions in cash bonuses, lower
pension accruals and similar effects on other benefits which are tied
to base salary. It further increases the percentage of key employee
compensation and benefits tied to stock ownership, in keeping with the
company's philosophy to more closely align stockholder and employee
interests. This option becomes exercisable over a four-year period
beginning on the grant date.
(g) To encourage retention of common stock, this deposit stock option grant
under the 1993 Plan (which becomes exercisable five years from the
grant date) requires the deposit of one share of owned common stock for
every two option shares granted. The number of option shares granted is
equal to the value of the executive's prior year cash incentive payment
divided by the exercise price.
(h) "All Stockholders" value is calculated from $59.33, the weighted
average exercise price for all options awarded in fiscal 1997 based on
the outstanding shares of common stock on May 25, 1997.
(i) The exercise price shown is a weighted average of all options awarded
in fiscal 1997. Options expire on various dates through the fiscal year
2007.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED VALUE OPTIONS AT 5/25/97 (#) OPTIONS AT 5/25/97 ($)(1)
ON EXERCISE REALIZED ----------------------------- -----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sanger 0 0 373,526 849,467 9,321,983 9,975,062
Gaillard 21,659 2,782,272 353,363 469,403 7,438,902 5,471,758
Viault 0 0 5,460 201,260 21,471 1,466,420
Demeritt 11,348 1,362,895 200,785 164,538 4,958,349 1,616,528
Marshall 0 0 5,850 116,396 60,228 1,158,369
</TABLE>
(1) Value of unexercised options equals fair market value of the shares
underlying in-the-money options at May 25, 1997 ($64.0625), less the
exercise price, times the number of in-the-money options outstanding.
DEFINED BENEFIT RETIREMENT PLAN
<TABLE>
<CAPTION>
FINAL AVERAGE EARNINGS 10 YEARS OF 15 YEARS OF 20 YEARS OF 25 YEARS OF 30 OR MORE YEARS OF
(AS DEFINED) SERVICE SERVICE SERVICE SERVICE SERVICE*
---------------------- ----------- ----------- ----------- ----------- -------------------
<S> <C> <C> <C> <C> <C>
$ 100,000 $ 16,666 $ 25,000 $ 33,333 $ 41,666 $ 50,000
300,000 50,000 75,000 100,000 125,000 150,000
500,000 83,333 125,000 166,666 208,333 250,000
600,000 100,000 150,000 200,000 250,000 300,000
700,000 116,666 175,000 233,333 291,666 350,000
800,000 133,333 200,000 266,666 333,333 400,000
900,000 150,000 225,000 300,000 375,000 450,000
1,000,000 166,666 250,000 333,333 416,666 500,000
1,100,000 183,333 275,000 366,666 458,333 550,000
1,200,000 200,000 300,000 400,000 500,000 600,000
1,300,000 216,666 325,000 433,333 541,666 650,000
1,400,000 233,333 350,000 466,666 583,333 700,000
1,500,000 250,000 375,000 500,000 625,000 750,000
1,600,000 266,666 400,000 533,333 666,666 800,000
1,700,000 283,333 425,000 566,666 708,333 850,000
</TABLE>
* No additional benefits accrue after 30 years of service.
The table above sets forth the pension benefits payable under the Company's
Retirement Income Plan (the "RIP") to the persons named in the Summary
Compensation Table, showing the estimated annual aggregate benefits payable at
normal retirement (age 65) for various classifications of earnings and years of
benefit service. This table is based on the maximum benefit under the RIP of 50%
of Final Average Earnings for a participant with 30 years of benefit service,
less 50% of the employee's projected Social Security benefit. Final Average
Earnings is the average of the employee's five highest consecutive years'
remuneration. Such remuneration generally equals the salary and bonus reported
in the Summary Compensation Table plus the value of vested common stock granted
under the EIP. The effects of integration with Social Security benefits have
been excluded from the table, because the amount of the reduction in benefits
due to integration varies depending on the participant's age at the time of
retirement and changes in the Social Security laws. The table does not reflect
any limitations on benefits imposed by federal law. The Company's Supplemental
Retirement Plan provides for the payment of additional amounts to certain
executive officers (including certain officers named in the Summary Compensation
Table) so that they will receive, in the aggregate, the benefits they would have
been entitled to receive had federal law not imposed maximum limitations.
The officers listed in the Summary Compensation Table are credited,
respectively, with the following full years of benefit service under the RIP:
S. W. Sanger, 23 years; S. R. Demeritt, 27 years; C. W. Gaillard, 31 years;
S. S. Marshall, 2 years; and R. G. Viault, 1 year.
In addition, the Company has agreed to provide supplemental retirement benefits
to R. G. Viault to compensate for the difference, if any, between the pension
benefit he would have received from his previous employer's retirement plan and
the benefit he receives from the combination of his previous employer's plan and
the Company's plans.
CHANGE OF CONTROL ARRANGEMENTS
The Company has agreements with most of its executive officers providing for
guaranteed severance payments equal to three times the annual compensation of
the officer (salary plus cash incentive award) and continuation of health and
similar benefits for a three-year period if the officer is terminated within two
years after a change of control. These agreements also provide for a cash
payment of the amount necessary to insure that the foregoing payments are not
subject to reduction due to the imposition of excise taxes payable under Code
Section 4999 or any similar tax.
The Company has two nominally-funded trusts to provide for payments under its
non-qualified deferred compensation plans, including the directors' compensation
plan, the EIP, the management continuity agreements and the Supplemental Savings
and Retirement Plans. Full funding is required in the event of a change of
control.
STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Any stockholder proposal intended to be presented at the 1998 Annual Meeting and
included in the Company's proxy statement must be received at the principal
executive offices of the Company by the close of business on April 13, 1998.
Proposals should be sent to the attention of the Secretary.
YOUR VOTE IS IMPORTANT!
Please sign and promptly return your proxy card in the enclosed envelope.
NOTICE OF 1997 ANNUAL MEETING
AND
PROXY STATEMENT
GENERAL MILLS, INC.
[LOGO]
Preliminary Copy
GENERAL MILLS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
1997
I appoint S.W. Sanger, C.W. Gaillard and R.G. Viault, together and
separately, as proxies to vote all shares of common stock which I have power
to vote at the annual meeting of stockholders to be held on September 22,
1997 at Minneapolis, Minnesota, and at any adjournment thereof, in accordance
with the following instructions and with the same effect as though I were
present in person and voting such shares. The proxies are authorized in their
discretion to vote upon such other business as may properly come before the
meeting and they may name others to take their place.
THE DIRECTORS RECOMMEND A VOTE "FOR" ITEMS 1 THROUGH 3
1. Election of Directors
R.M. Bressler; L.D. DeSimone; W.T. Esrey; C.W. Gaillard; J.R. Hope;
K.A. Macke; M.D. Rose; S.W. Sanger; A.M. Spence; D.A. Terrell; R.G.
Viault; C.A. Wurtele
[ ] FOR all listed nominees
[ ] WITHHOLD AUTHORITY to vote for all listed nominees
[ ] LISTED NOMINEES except the following: (Instruction: To
withhold authority to vote for any individual nominee, write
the name of such nominee(s) on the line below.)
----------------------------------------------------------------------
(Continued, and to be signed and dated on reverse side)
[LOGO]
GENERAL MILLS, INC.
ANNUAL MEETING
CHILDREN'S THEATRE COMPANY
2400 THIRD AVENUE S.
MINNEAPOLIS, MINNESOTA
SEPTEMBER 22, 1997
11:00 A.M. CENTRAL DAYLIGHT TIME
Continued from other side
2. Approval of appointment of KPMG Peat Marwick LLP as independent
auditors
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Adoption of amendment to the General Mills, Inc. Certificate of
Incorporation
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE DIRECTORS RECOMMEND A VOTE "AGAINST" ITEM 4
4. Stockholder proposal concerning cumulative voting
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE, IT WILL BE
VOTED "FOR" ITEMS 1 THROUGH 3 AND "AGAINST" ITEM 4.
Dated: , 1997
----------------------------
-------------------------------------------
Signature(s) of Stockholder(s)
-------------------------------------------
Signature if held jointly
PLEASE SIGN exactly as name appears above.
Joint owners should each sign. Executors,
administrators, trustees, etc. should so
indicate when signing. If signer is a
corporation, please sign full name by duly
authorized officer.
