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))
GRIST MILL CO.
- --------------------------------------------------------------------------------
(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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Items 22(a)(2) of Schedule A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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:
August 28, 1996
Dear Stockholder,
You are cordially invited to attend the 1996 Annual Meeting of
Stockholders of Grist Mill Co. The meeting will be held on Tuesday, October 1,
1996, at 2:00 p.m. local time, at the Holiday Inn Burnsville, 14201 Nicollet
Avenue South, Burnsville, Minnesota 55337.
The enclosed Proxy Statement, proxy form and Notice of Annual Meeting
contain important information about the matters to be acted upon at the meeting.
A copy of the 1996 Grist Mill Co. Annual Report is also enclosed.
We encourage you to carefully review all of the enclosed materials.
Whether or not you plan to attend the Annual Meeting, we urge you to promptly
complete, date and sign the enclosed proxy card and return it in the enclosed
envelope in order to make certain that your shares will be represented. If,
after submitting the enclosed proxy, you find that you are able to attend the
meeting, you will still be entitled to vote your shares in person.
Sincerely,
Glen S. Bolander
Chief Executive Officer and President
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF GRIST MILL CO.
TO BE HELD ON TUESDAY, OCTOBER 1, 1996
To the Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of Grist
Mill Co., a Delaware corporation (the "Company"), will be held on Tuesday,
October 1, 1996 at 2:00 p.m. local time at the Holiday Inn Burnsville, 14201
Nicollet Avenue South, Burnsville, Minnesota 55337, for the purpose of
considering and taking action upon the following:
1. The election of four (4) directors to the Company's Board of
Directors to hold office until the next Annual Meeting of
Stockholders or until their successors are elected and
qualified.
2. The amendment of the Company's Certificate of Incorporation to
increase the number of shares of Common Stock, $0.10 par value
per share, from 12,000,000 to 15,000,000 shares.
3. Such other matters as may properly come before the meeting and
any adjournments thereof.
The Board of Directors has fixed the close of business on August 19,
1996 as the Record Date for the Annual Meeting; only holders of record of the
Common Stock of the Company on that date will receive notice and be entitled to
vote at the meeting and at any adjournments thereof.
By order of the Board of Directors,
Daniel J. Kinsella
Secretary
August 28, 1996
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, OCTOBER 1, 1996
This Proxy Statement is being mailed to stockholders on or about August
28, 1996 in connection with the solicitation of proxies by the Board of
Directors of Grist Mill Co. (hereinafter referred to as the "Company") for use
at the Annual Meeting of Stockholders of the Company to be held on Tuesday,
October 1, 1996, at the Holiday Inn Burnsville, 14201 Nicollet Avenue South,
Burnsville, Minnesota 55337, and any adjournments thereof. The 1996 Annual
Report to Shareholders of Grist Mill Co. is being furnished to each stockholder
along with this Proxy Statement.
SOLICITATION OF PROXIES
Accompanying this Proxy Statement are the Board of Directors' proxies
for the Annual Meeting. The proxies enable stockholders to vote on all matters
which are scheduled to come before the meeting. All shares of Common Stock
represented by each properly executed and returned proxy form will be voted by
the persons named therein as proxies in accordance with each stockholder's
directions.
IF NO CONTRARY SPECIFICATION IS MADE, ALL VALID PROXIES WILL BE VOTED
(i) IN FAVOR OF ALL NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS, (ii) IN
FAVOR OF A PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION AND
(iii) IN THE DISCRETION OF THE BOARD OF DIRECTORS WITH RESPECT TO ANY OTHER
BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING.
Any stockholder who executes and returns the enclosed proxy form has
the right to revoke it by giving written notice to the Secretary of the Company
any time before such proxies are voted. Any stockholder in attendance at the
meeting may vote at the meeting, thereby canceling any proxy previously
submitted by such stockholder. Proxies may be revoked at any time prior to the
voting thereof by giving notice in writing to the Secretary of the Company, by
granting a proxy bearing a later date or by voting in person at the meeting.
The Company will bear the costs of this solicitation, which may include
the reimbursement of transfer agents, brokerage firms and others for expenses
incurred in forwarding proxy materials to and soliciting executed proxies from
certain beneficial owners of the Company's Common Stock.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the inspectors of election appointed for the meeting, and such
inspectors will determine whether or not a quorum is present. The inspectors of
election will treat abstentions as shares that are present and entitled to vote
for purposes of determining the presence of a quorum but as unvoted for purposes
of determining the approval of any matter submitted to the stockholders for a
vote. All matters presented to the stockholders require a vote greater than
fifty percent (50%) of those shares voted at the meeting. If a broker indicates
on the proxy that it does not have discretionary authority as to certain shares
to vote on a particular matter, those shares will not be considered as present
and entitled to vote with respect to that matter.
As a matter of policy, proxies, ballots and voting tabulations that
identify individual stockholders are treated as confidential material by the
Company, subject to the following limitations: (i) such documents are available
for examination by the inspectors of election and certain personnel associated
with processing proxies or ballots and tabulating the vote and (ii) the vote of
any stockholder is not disclosed except as may be necessary to meet legal
requirements.
VOTING RIGHTS
Each stockholder is entitled to one (1) vote for each share of Common
Stock of the Company owned of record at the close of business on August 19, 1996
(the "Record Date"). As of the Record Date, there were issued and outstanding
6,765,577 shares of Common Stock of the Company. A majority of the outstanding
shares of the Company's Common Stock, represented in person or by proxy, shall
constitute a quorum at the meeting. The affirmative vote of a majority of the
shares represented in person or by proxy will be required to elect directors and
to decide any other matters properly brought before the meeting. There is no
provision for cumulative voting.
MATTERS TO BE ACTED UPON AT THE MEETING
The proposals to be acted upon at the Annual Meeting are as follows:
1. The election of four (4) directors of the Company's Board of
Directors.
2. The approval of an amendment to the Company's Certificate of
Incorporation to increase the number of shares of Common
Stock, $0.10 par value per share, from 12,000,000 to
15,000,000 shares.
3. Such other matters as may properly come before the meeting and
any adjournments thereof.
ITEM 1
ELECTION OF DIRECTORS
At the Annual Meeting of Stockholders on October 1, 1996, four (4)
individuals will be elected to serve on the Board of Directors until the Annual
Meeting of Stockholders in 1997 or until their successors are duly elected and
qualified.
The proxy form provides instructions for voting for all director
nominees or for withholding authority to vote for one or more director nominees.
Unless instructed to the contrary, the persons named as proxies on the enclosed
proxy forms will vote FOR all of the nominees listed below. In the event,
however, that any nominee should be unable or, for good cause, unwilling to
serve, the persons named as proxies will have the authority to vote in their
discretion for a substitute nominee. As of the date of this Proxy Statement, the
Board of Directors fully anticipates that all nominees will be willing and able
to serve as directors.
Each of Ronald K. Zuckerman, Glen S. Bolander, Charles H. Perlman and
Roger L. Weston are current directors elected by the stockholders at the last
Annual Meeting. If elected at the 1996 Annual Meeting, the nominees will serve
until the 1997 Annual Meeting or until their successors are duly elected and
qualified. The directors of the Company are not paid any cash fees for
performing their duties as directors or serving on committees of the Board of
Directors; however, directors are eligible to receive options to purchase the
Company's Common Stock.
The nominees for director for a term to expire in 1997 are:
<TABLE>
<CAPTION>
Name Age Title
---- --- -----
<S> <C> <C>
Ronald K. Zuckerman 54 Chairman of the Board, Director
Glen S. Bolander 50 President, Chief Executive Officer, Director
Charles H. Perlman 51 Director
Roger L. Weston 52 Director
</TABLE>
Ronald K. Zuckerman, Chairman of the Board, also served as Chief
Financial Officer until 1992 and Chief Executive Officer until October 1993. He
has been a director and officer of the Company since 1975. From 1973 to 1981,
Mr. Zuckerman also worked as an independent management consultant.
Glen S. Bolander, President and Chief Executive Officer, has been a
director of the Company since 1986 and an officer of the Company since 1982. Mr.
Bolander joined the Company in 1982 as sales manager for industrial products,
and later served as Vice President and Executive Vice President. Mr. Bolander is
associated with the National Institute of Food Technologists and the American
Association of Cereal Chemists.
Charles H. Perlman has been a director of the Company since 1983. Mr.
Perlman is a partner in the law firm of Barack, Ferrazzano, Kirschbaum &
Perlman, specializing in corporate and securities law.
Roger L. Weston has been a director of the Company since 1984 and is
currently Chairman of the Board, President and Chief Executive Officer of
GreatBanc, Inc., Vice Chairman of the Board and Chief Executive Officer of the
Evanston Bank and Chairman of the Board and Chief Executive Officer of GreatBanc
Operations Center, Inc. In recent years, Mr. Weston has provided strategic
planning and financial consulting services to public and private companies. He
served from 1985 - 1987 as President and Chief Executive Officer of Evco, Inc.,
the former holding company for Evanston Bank.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following persons were known to the Company, as of August 19, 1996,
to be the beneficial owners of more than five percent (5%) of the Company's
outstanding Common Stock (the only claim of outstanding equity securities of the
Company):
<TABLE>
<CAPTION>
Name and Address Number of Shares Percent of Shares
of Beneficial Owner Beneficially Owned(1)(2) Beneficially Owned
------------------- ------------------------ ------------------
<S> <C> <C>
Glen S. Bolander 601,083(3) 8.6%
21340 Hayes Avenue
Lakeville, MN 55044
FMR Corp. 503,400(4) 7.4%
Edward C. Johnson 3d
Abigail P. Johnson
Fidelity Management
& Research Company
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
(1) All shares are subject to the named person's sole voting and investment
power, except as set forth in the footnotes below.
(2) Includes all stock options held by the named persons provided such
options are currently vested or will vest within sixty (60) days.
(3) Includes 323,899 shares owned directly by Mr. Bolander, of which 45,000
shares are owned by Mr. Bolander as a tenant in common with his spouse
with whom Mr. Bolander shares voting and investment power. Includes
22,184 shares owned by the Grist Mill Co. Employees Retirement Savings
Plan and Trust for the benefit of Mr. Bolander. Also includes
non-qualified stock options to purchase 50,000 shares at $6.563, 75,000
shares at $8.625 per share, 50,000 shares at $5.625 per share, 50,000
shares at $7.875 per share, and 30,000 shares at $5.75 per share.
(4) The Company is relying on information provided by FMR Corp., Mr.
Johnson, Ms. Johnson and Fidelity Management & Research Company, in a
joint filing of a Schedule 13G filed with the Securities and Exchange
Commission on February 14, 1996.
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the total number of shares of Common Stock
(the only class of outstanding equity securities of the Company) and the
percentage of the outstanding Common Stock beneficially owned, as of August 19,
1996, by the Chief Executive Officer, by each of the Company's four most highly
compensated executive officers other than the Chief Executive Officer
individually, by each director individually and by directors and executive
officers of the Company as a group:
<TABLE>
<CAPTION>
Name of Bene- Beneficial Ownership Percent of Shares
ficial Owner (1)(2)(3) Beneficially Owned
------------- -------------------- ------------------
<S> <C> <C>
Glen S. Bolander 601,083 (4) 8.6%
Harry E. Stephens III 41,877 (5) *
Eric H. Beringause 3,593 (6) *
Michael J. Cannon 23,250 (7) *
Daniel J. Kinsella 15,682 (8) *
Ronald K. Zuckerman 184,694 (9) 2.7%
Charles H. Perlman 109,320 (10) 1.6%
Roger L. Weston 91,444 (11) 1.3%
All directors and
executive officers
as a group (10 persons) 1,119,122 (12) 15.4%
</TABLE>
* Less than one percent (1%).
(1) All shares are subject to the named person's sole voting and investment
power, except as set forth in the footnotes below.
(2) Includes all stock options held by the named persons provided such
options are currently vested or will vest within sixty (60) days.
(3) Does not include any shares beneficially owned by the adult children of
such persons. Includes shares held in joint tenancy with certain family
members who share voting and investment power.
(4) See footnote (3) to the table entitled "Security Ownership of Certain
Beneficial Owners" for additional information regarding beneficial
ownership by Mr. Bolander.
(5) Includes 1,500 shares owned directly by Mr. Stephens. Also includes
1,027 shares owned by the Grist Mill Co. Employees Retirement Savings
Plan and Trust for the benefit of Mr. Stephens. Also includes
non-qualified stock options to purchase 33,350 shares at $6.25 per
share and 6,000 shares at $9.00 per share.
(6) Includes 1,000 shares owned directly by Mr. Beringause and 473 shares
owned by the Grist Mill Co. Employees Retirement Savings Plan and Trust
for the benefit of Mr. Beringause. Includes non-qualified stock options
to purchase 120 shares at $9.00 per share and 2,000 shares at $9.625
per share.
(7) Includes 13,770 shares owned directly by Mr. Cannon. Consists of
non-qualified stock options to purchase 4,080 shares at $5.00 per
share, 1,800 shares at $5.583 per share, 600 shares at $6.25 per share,
660 shares at $7.00 per share, 340 shares at $9.00 per share and 2,000
shares at $9.75 per share.
(8) Includes 2,981 shares owned directly by Mr. Kinsella and 1,451 shares
owned by the Grist Mill Co. Employees Retirement Savings Plan and Trust
for the benefit of Mr. Kinsella. Also includes non-qualified stock
options to purchase 3,000 shares at $5.00 per share, 2,520 shares at
$5.583 per share, 1,800 shares at $7.00 per share, 1,440 shares at
$6.25 per share, 2,000 shares at $9.75 per share and 460 shares at
$9.00 per share.
(9) Includes 142,000 shares held directly by Mr. Zuckerman. Also includes
2,694 shares owned by the Grist Mill Co. Employees Retirement Savings
Plan and Trust for the benefit of Mr. Zuckerman and 10,000 shares owned
by Mr. Zuckerman's spouse. Mr. Zuckerman disclaims beneficial ownership
of the securities owned by his spouse. Also includes non-qualified
stock options to purchase 30,000 shares at $5.75 per share.
(10) Includes 39,320 shares owned beneficially by Mr. Perlman's spouse, Mira
Perlman, 5,000 shares in trust for Mr. Perlman's children and 5,000
shares in an individual retirement account. Mr. Perlman disclaims
beneficial ownership with respect to 44,320 of such shares. Includes
non-qualified stock options to purchase 15,000 shares at $6.25 per
share, 15,000 shares at $7.583 per share, 15,000 shares at $7.125 per
share and 15,000 shares at $9.375. Such options are held by Mr. Perlman
for the benefit of Mr. Perlman and his partners in the law firm of
Barack, Ferrazzano, Kirschbaum & Perlman. Accordingly, Mr. Perlman
disclaims beneficial ownership of all but 3,550 of the shares
represented by such options.
(11) Consists of non-qualified stock options to purchase 15,000 shares at
$6.25 per share, 15,000 at $7.583 per share, 15,000 at $7.125 per share
and 15,000 at $9.375 per share.
(12) Includes non-qualified stock options to purchase 482,080 shares at
prices ranging from $5.00 per share to $9.75 per share.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC") and the National Association of Securities Dealers. Officers, directors
and "greater than ten-percent" stockholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms so filed.
Based solely on review of the copies of such forms furnished to the
Company for the period beginning on June 1, 1995 and ending on May 31, 1996 and
written representations from certain reporting persons that no Forms 5 were
required to be filed, all Section 16(a) filing requirements applicable to the
Company's officers, directors and "greater than ten-percent" stockholders were
met, except that the Forms 5 for six of the directors and executive officers of
the Company due on July 15, 1996 have not yet been filed.
EXECUTIVE COMPENSATION
Set forth below is information concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal years
ended May 31, 1996, 1995 and 1994, of those persons who were, at May 31, 1996,
the Chief Executive Officer and the other four most highly compensated executive
officers of the Company (collectively, the "Named Executive Officers"):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
------------------------------------------ --------------
Other
Annual All Other
Compensation Options Compensation
Name and Principal Position Year Salary ($) Bonus ($) ($)(1) (#)(2) ($)(3)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Glen S. Bolander, Chief 1996 $385,900 $125,000 $ 500 50,000 $37,653(4)
Executive Officer and 1995 367,500 130,000 750 75,000 38,185(4)
President 1994 350,000 -0- 750 50,000 38,326(4)
Harry E. Stephens III, 1996 $244,100 $55,000 -0- 25,000 1,843
Executive Vice President 1995 194,200(6) 70,000 $96,154(7) 80,000 -0-
and Chief Operating 1994 -0- -0- -0- -0- -0-
Officer (5)
Eric H. Beringause 1996 $151,200 $17,100 $37,000(9) 5,900 $ 1,066
Vice President, 1995 34,600 30,100 -0- 10,600 190
Marketing(8) 1994 -0- -0- -0- -0- -0-
Michael J. Cannon, Vice 1996 $116,600 $13,400 $ 500 7,900 $ 1,746
President, Sales 1995 105,800 39,700 -0- 11,700 1,708
1994 100,700 -0- 125 1,500 1,750
Daniel J. Kinsella, Vice 1996 $119,000 $12,900 $ -0- 8,400 2,700
President, Chief Financial 1995 109,000 39,900 -0- 12,300 2,490
Officer, Treasurer and 1994 91,200 6,000 -0- 3,600 1,856
Secretary
</TABLE>
(1) Represents amounts reimbursed during the fiscal year for the
payment of income tax preparation except with respect to Mr.
Stephens.
(2) Awarded during the fiscal year shown or in July or August of
the following fiscal year based on performance in the fiscal
year shown. All such options have an exercise price equal to
the last bid price per share of the Company's Common Stock on
the date of grant as reported on the National Association of
Securities Dealers, Inc. Automated Quotation System.
(3) Represents amounts contributed by the Company to the Grist
Mill Employees Retirement Savings Plan and Trust and amounts
paid by the Company in premiums for life insurance coverage.
(4) Includes a premium of $36,000 paid for a life insurance policy
under a split-dollar arrangement whereby the Company will
recoup the premium and Mr. Bolander will accrue earnings from
the policy.
(5) Mr. Stephens joined the Company as a consultant in June, 1994
and began serving as Executive Vice President and Chief
Operating Officer in August 1994. Mr. Stephens' employment
with the Company terminated effective as of August 1, 1996.
(6) Includes $25,000 paid to Mr. Stephens as consulting fees for
the period of June, 1994 through August, 1994.
(7) Includes $56,261 reimbursed to Mr. Stephens for moving
expenses. Also includes $39,893 representing a gross up for
income tax purposes.
(8) Mr. Beringause joined the Company in February, 1995.
(9) Includes $30,600 reimbursed to Mr. Beringause for moving
expenses. Also includes $6,400 representing a gross up for
income tax purposes.
Shown below is further information on grants of stock options pursuant
to the Company's Non-Qualified Stock Option Plan, as amended, during or
pertaining to the fiscal year ended May 31, 1996, to the Named Executive
Officers who are set forth in the Summary Compensation Table above. No stock
appreciation rights have ever been granted.
<TABLE>
<CAPTION>
OPTION GRANTS WITH RESPECT TO FISCAL YEAR ENDED MAY 31, 1996
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------------- VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
OPTIONS PRICE APPRECIATION FOR
GRANTED TO EXERCISE OR OPTION TERM(3)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ----------------
NAME GRANTED (#)(1) FISCAL YEAR(2) ($/SH) DATE 5% 10%
- --------------------- --------------- --------------- ---------------- ------------ ------------------------
<S> <C> <C> <C> <C> <C>
Glen S. Bolander 50,000 37.2% $6.5625 5/22/01 $90,700 $200,350
Harry E. Stephens III 25,000 18.6% $6.5625 5/22/01 $45,350 $100,175
Eric H. Beringause 1,900 1.4% $5.00 7/24/01 $2,622 $5,795
4,000 3.0% $5.50 7/15/01 $6,078 $13,428
Michael J. Cannon 1,900 1.4% $5.00 7/24/01 $2,622 $5,795
6,000 4.5% $5.50 7/15/01 $9,117 $20,142
Daniel J. Kinsella 2,400 1.8% $5.00 7/24/01 $3,312 $7,320
6,000 4.5% $5.50 7/15/01 $9,117 $20,142
</TABLE>
(1) All of these options were granted in July 1996 (with the
exception of Mr. Bolander's options and Mr. Stephens' options
which were granted in May 1996) based upon the performance of
the Named Executive Officers for the fiscal year ended May 31,
1996. With respect to Mr. Bolander, the options vest
immediately. With respect to Mr. Stephens, the option grants
vest according to the following schedule: one-third at the
one-year anniversary of the grant date, an additional
one-third at the two-year anniversary and the remainder at the
three-year anniversary. With respect to the other Named
Executive Officers, the option grants vest according to the
following schedule: one-fifth at the one-year anniversary of
the grant date, an additional one-fifth at the two-year
anniversary, an additional one-fifth at the three-year
anniversary, an additional one-fifth at the four year
anniversary and the remainder at the four-year eleven-month
anniversary of the grant date.
(2) With respect to performance in fiscal year 1995-96, as of July
1996, a total of 134,500 options were granted to employees of
the Company, including the Named Executive Officers. In
addition, it is anticipated that 30,000 options will be
granted to the non-employee directors of the Company pursuant
to the 1986 Non-Qualified Stock Option Plan.
(3) The "potential realizable value" shown represents the
potential gains based on annual compound stock price
appreciation of five percent (5%) and ten percent (10%) from
the date of grant through the full 5-year option term. The
amounts given represent assumed rates of appreciation only.
Actual gains, if any, on option exercises will depend on
future performance of the Company's Common Stock and overall
stock market conditions. There can be no assurance that the
amounts reflected in this table will be achieved.
Set forth below is information with respect to the unexercised options
to purchase the Company's Common Stock granted in fiscal year 1995-96 and prior
years under the Company's Non-Qualified Stock Option Plan, as amended, to the
Named Executive Officers and held by them at May 31, 1996. A total of 41,310
options were exercised by the Named Executive Officers during fiscal year
1995-96.
AGGREGATE OPTION EXERCISES DURING FISCAL YEAR ENDED
MAY 31, 1996 AND VALUE OF OPTIONS HELD AT MAY 31, 1996
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
MAY 31, 1996 (#) MAY 31, 1996 ($)(1)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------- --------------------------- -------------------------
Glen S. Bolander 255,000/0 132,500/0
Harry E. Stephens III 39,350/65,650 8,338/4,163
Eric H. Beringause 2,120/8,480 0/0
Michael J. Cannon 11,150/9,480 7,920/638
Daniel J. Kinsella 11,220/13,830 7,170/1,118
(1) "Value" has been determined based upon the difference between
the per share option exercise price and the last bid price per
share of the Company's Common Stock reported on the National
Association of Securities Dealers, Inc. Automated Quotation
system at the date of exercise or May 31, 1996, as applicable.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
is composed of independent outside directors, Messrs. Perlman and Weston. The
Committee is responsible for administering the policies which govern annual
executive compensation. Following review and approval by the Committee, all
issues pertaining to executive compensation are submitted to the full Board of
Directors for approval.
The Committee annually evaluates the personal performance of the Chief
Executive Officer and Chief Operating Officer of the Company as well as the
Company's performance. The Committee also compares the compensation of the Chief
Executive Officer and Chief Operating Officer over the preceding four fiscal
years to the executive compensation of other Midwest public companies. Finally,
the Committee analyzes the compensation history of the Chief Executive Officer
and Chief Operating Officer over the preceding four fiscal years. Personal
performance can include such qualitative factors as organizational and
management development exhibited from year to year. The compensation of the
remaining executive officers of the Company, including the other Named Executive
Officers, is recommended by Mr. Bolander. Increases in base salary are
determined primarily by performance -- both that of the Company and that of each
executive officer. The achievement of corporate and business unit financial and
strategic goals are considered as well as individual performance, including
managerial effectiveness, teamwork, leadership and innovation.
The Company maintains the philosophy that compensation of its executive
officers and others shall be directly and materially linked to operating
performance. To achieve this linkage, executive compensation is heavily weighted
towards bonuses paid and stock options granted on the basis of the Company's
performance. Thus, while annual salary increases are determined in light of the
Company's general performance, as well as the personal performance of the
executive officers, annual bonuses are more closely tied to the Company's actual
economic performance during the particular fiscal year in question.
Stock options are granted to the executive officers under the
provisions of the Company's Non-Qualified Stock Option Plan. Stock options are
granted to provide additional incentive to improve stockholder value over the
long-term and to encourage and facilitate executive stock ownership. Stock
options are granted at the market price of the Common Stock at the date of grant
to ensure that executives can only be rewarded for appreciation in the price of
the Common Stock when the Company's stockholders are similarly benefitted. The
Committee determines, on an annual basis, those executives who will receive
stock option grants and size of such grants awarded.
The annual base salary for the Company's Chief Executive Officer, Glen
S. Bolander was $385,075 for fiscal year 1995-96, which represented an increase
of approximately 5% (or $18,375) from the prior fiscal year. Mr. Bolander's
annual base salary and the increase thereto was based on the Company's
performance during fiscal year 1994-95, and Mr. Bolander's performance in
relation to the Company's operations and executive compensation for past years.
Mr. Bolander was awarded a cash bonus of $125,000 with respect to fiscal year
1995-96, and he was granted options to purchase 50,000 shares of Common Stock at
the market price at the time of grant ($6.5625 per share). The Committee
determined the number of options granted to Mr. Bolander and his cash bonus in
light of his contributions to the Company and performance for fiscal year
1995-96.
The annual base salary for the Company's Chief Operating Officer, Harry
E. Stephens III, who began serving as Chief Operating Officer in August 1994,
was $250,000 for fiscal year 1995-96, which represented an increase of
approximately 14% (or $30,000) from the prior fiscal year. Mr. Stephens' annual
base salary and the increase thereto was also based on the Company's performance
during fiscal year 1995-96, and Mr. Stephens' completion of his first year of
service to the Company. Mr. Stephens was awarded a cash bonus of $55,000 with
respect to fiscal year 1995-96, and he was granted options to purchase 25,000
shares of Common Stock at the market price at the time of grant ($6.5625 per
share). The Committee determined the number of options granted to Mr. Stephens
and his cash bonus in light of his contributions to the Company and performance
for fiscal year 1995-96. Mr. Stephens' employment with the Company terminated
effective as of August 1, 1996.
Charles H. Perlman
Roger L. Weston
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
Mr. Bolander made recommendations to the Company's Board of Directors
regarding the compensation of the executive officers of the Company, other than
compensation decisions with respect to himself. Mr. Bolander is an officer of
the Company and its wholly-owned subsidiary, Grist Mill Confections, Inc. Mr.
Zuckerman serves as a director and on the compensation committee of GreatBanc,
Inc., of which Mr. Weston is the Chairman of the Board, Chief Executive Officer
and President. Mr. Perlman serves as a director and on the compensation
committee of the Company as well as on the compensation committee of GreatBanc,
Inc. Mr. Weston serves as a director and on the compensation committee of the
Company and on the compensation committee of GreatBanc, Inc.
EMPLOYMENT CONTRACTS
GLEN S. BOLANDER. The Company entered into an employment agreement with
Mr. Bolander on January 10, 1990, which provides that Mr. Bolander will not
compete with the Company or its subsidiaries during his employment with the
Company and for an additional twelve (12) month period thereafter. The agreement
also provides that, upon Mr. Bolander's death or disability, he or his estate
will receive an amount equal to his then last annual salary. If Mr. Bolander
desires to quit, he must give the Company three (3) months' prior notice and
will receive no severance; however, if he desires to quit within one (1) year
after a change of control of the Company, Mr. Bolander will receive an amount
equal to one and one-half times his then last annual salary and bonus as
severance. Additionally, if Mr. Bolander is terminated within one year after a
change of control of the Company, with or without cause, he will receive an
amount equal to three times his then last annual salary and bonus as severance.
If Mr. Bolander is terminated within two years after a change of control of the
Company, with or without cause, he will receive an amount equal to two times his
then last annual salary and bonus as severance. If Mr. Bolander is terminated
within three years after a change of control of the Company, with or without
cause, he will receive an amount equal to his then last annual salary and bonus
as severance. The employment agreement was amended in October 1993 to provide
that upon any termination of Mr. Bolander, the Company shall continue to be
obligated to make the payments required by the Split Dollar Life Insurance
Agreement described below.
The Company entered into a Split Dollar Life Insurance Agreement with
Mr. Bolander on November 2, 1993 whereby the Company agreed to pay on behalf of
a trust established for the benefit of Mr. Bolander eight (8) annual premiums of
$36,000 each on a life insurance policy on the life of Mr. Bolander in the face
amount of $1,000,000. The Company has a claim to the cash surrender value (or
the proceeds of the policy upon the death of Mr. Bolander) for the amount of its
full contribution.
RONALD K. ZUCKERMAN. The Company entered into an employment agreement
with Mr. Zuckerman effective June 1, 1994, for a term ending May 31, 1998. The
agreement provides for an annual salary of $144,000 and such bonus and other
benefits as may be determined by the Company's Board of Directors. The agreement
provides that, upon the death or disability of Mr. Zuckerman, he or his estate
will receive an aggregate amount of $144,000, payable in twelve (12) equal
monthly installments. The agreement provides that Mr. Zuckerman will not compete
with the Company or its subsidiaries during his employment with the Company and
for an additional twelve (12) months thereafter.
HARRY E. STEPHENS III. The Company entered into an employment agreement
with M. Stephens effective August 15, 1994, for a term ending August 15, 1997.
The agreement provides for an annual salary of $220,000, subject to increase
from time to time by the Company's Board of Directors, and such bonus and other
benefits as may be determined by the Company's Board of Directors. Additionally,
the agreement provides that, if Mr. Stephens is terminated, without cause, any
time after a change of control of the Company, he will receive a salary for the
period from such termination through the remaining term of the agreement based
on his annual salary at the time of termination. Mr. Stephens' employment with
the Company terminated as of August 1, 1996.
EMPLOYEE BENEFIT PLANS
To provide stockholders with additional information regarding the plans
under which the Named Executive Officers have received compensation, the
following is a summary of the Grist Mill Employees Retirement Savings Plan and
Trust (the "Retirement Plan") and the Grist Mill 1986 Non-Qualified Stock Option
Plan (the "Non-Qualified Plan").
RETIREMENT PLAN. The Retirement Plan, in effect since 1986, was
formally approved by the stockholders at the 1991 Annual Meeting. Employees are
eligible to participate in the Retirement Plan when they are twenty-one (21)
years of age and have completed one (1) full year of service. Employees may make
annual pre-tax contributions to the Retirement Plan of up to fifteen percent
(15%) of their annual salaries or wages. The Company makes a matching
contribution of thirty percent (30%) on up to the first seven percent (7%) of
each employee's annual salary and wages. All matching contributions are
automatically one hundred percent (100%) vested when contributed. Each year the
Board of Directors, at its discretion, determines what amount, if any, the
Company will make as a profit sharing contribution to the Retirement Plan.
Although to date the Company has made no profit sharing contributions, a profit
sharing contribution, if made, would be allocated to the accounts of individual
employees meeting certain minimum service criteria for the fiscal year, based on
a formula which takes into account total years of service and total
compensation. Profit sharing contributions would continue to vest fully upon the
completion of five (5) years of service. The sum of annual salary deferrals,
matching contributions and profit sharing allocations per individual may not
exceed the lesser of $30,000 or twenty-five percent (25%) of the individual's
annual wages or salary.
The Retirement Plan is a defined contribution plan intended to qualify
under Section 401(a) of the Internal Revenue Code and contains a deferred
feature intended to qualify under Section 401(K) of the Internal Revenue Code.
Benefits may be paid out in the event of the retirement, disability, death or
termination of employment of an employee.
NON-QUALIFIED STOCK OPTION PLAN. In November, 1986 the Company adopted
the Non-Qualified Plan to provide incentives for certain key employees or other
persons to exert maximum efforts towards the success of the Company, and also to
help attract and retain personnel of the highest quality. All employees,
officers, directors or consultants of the Company, its parent and subsidiaries
are eligible to participate in the Non-Qualified Plan. The term of the
Non-Qualified Plan expires on November 1, 2001. The Company has reserved
2,500,000 shares of Common Stock for issuance under the Non-Qualified Plan.
Effective April 1991, the Board of Directors appointed Mr. Perlman and
Mr. Weston, as the sole members of the Committee, as administrators for the
Non-Qualified Plan. The Committee (previously the Board of Directors) is
responsible for determining which of the eligible persons shall be granted
options, the number of options granted per individual, the manner and time of
exercise of such options and the exercise price of the options. Members of the
Committee are no longer eligible for discretionary grants under the
Non-Qualified Plan; however, each August, each member of the Committee, provided
he is still on the Board of Directors, receives non-qualified options to
purchase 15,000 shares of Common Stock at the current market value.
Options must be exercised in accordance with the Non-Qualified Plan and
terms set by the Committee. Each option terminates if not exercised by the
exercise date set by the Committee. Unless otherwise specified when the option
is granted, options granted to an employee who ceases to become an employee
terminates in the following manner. If the cessation is due to death, the
options must be exercised by the decedent's beneficiary within one (1) year from
date of death. If the cessation of employment is due to permanent disability,
the option must be exercised within one (1) year. If the cessation of employment
is due to any other reason, the option terminates at the end of three (3)
months.
Unless otherwise specified when the option is granted, options are not
transferable except by will or by the laws of descent and distribution and
options may be exercised only by the person granted the option during that
person's lifetime.
The Non-Qualified Plan is not covered by the Employees Retirement
Income Security Act (ERISA). The Non-Qualified Plan is not qualified under
Section 401 of the Internal Revenue Code. Generally, there will be no federal
tax consequences to the Company or the recipient of the options at the time the
options are granted. When options are exercised, the Company incurs a "business
expense" federal income tax deduction equal to the difference, if any, between
the fair market value of each option on the exercise date and the option
exercise price. On exercise, the recipient of the options will have reportable
ordinary income equal to the difference, if any, between the fair market value
of the options on the exercise date and the option exercise price.
PERFORMANCE GRAPH
The graph set forth below depicts total cumulative shareholder return
and assumes $100 invested on May 31, 1991 in the Company's Common Stock, the
Standard & Poors ("S&P") Foods Index and the NASDAQ Stock Market--U.S. Index for
the period of the Company's last five fiscal years (May 31, 1990=100). The S&P
Foods Index is composed of thirteen (13) of the largest publicly traded food
companies in the United States. The graph assumes all dividends are reinvested.
RESEARCH DATA GROUP TOTAL RETURN - DATA SUMMARY
GRST
CUMULATIVE TOTAL RETURN
---------------------------------------
5/91 5/92 5/93 5/94 5/95 5/96
GRIST MI CO GRST 100 110 181 109 191 134
NASDAQ STOCK MARKET-US INAS 100 117 141 149 177 257
S & P FOODS IFOO 100 105 110 109 138 162
ITEM 2
APPROVAL OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION
The Board of Directors of the Company has unanimously approved an
amendment (the "Amendment") to Article Fourth of the Company's Certificate of
Incorporation that would increase the number of authorized shares of the
Company's Common Stock, $0.10 par value per share, from 12,000,000 to 15,000,000
shares. The Board of Directors has proposed adoption of the Amendment for
several reasons, including those set forth below.
The Company desires that shares of its Common Stock be available in
order to permit management to enter into transactions involving the use of
Common Stock that may be advisable from time to time. Such transactions could
include, but are not limited to, the acquisition by the Company of additional
subsidiaries or operations. Although no such transactions are planned for the
immediate future, management and the Board of Directors believe that it is in
the Company's best interests to have available a number of authorized shares of
Common Stock if such transactions become advisable. In addition, the additional
shares of Common Stock authorized by the proposed Amendment could be used to
raise additional working capital for the Company. The Board of Directors does
not currently have any plans to raise capital through the issuance of additional
shares or otherwise, but the proposed additional shares would be available for
that purpose.
While there are currently approximately 1,160,000 authorized but
unissued and unreserved shares of the Company's Common Stock available for
issuance, the issuance of such shares could reduce the effectiveness of the
Company's Stockholder Rights Plan, if triggered, as described below.
Consequently, the Board of Directors would like the flexibility of having
additional shares available for issuance.
The increase in the number of shares of Common Stock authorized by the
proposed Amendment could result in substantial dilution of the voting power of
current stockholders of the Company. The degree of any such dilution which would
occur following the issuance of any additional shares of Common Stock would
depend upon the number of shares of Common Stock that are actually issued, which
number cannot be determined at this time. Issuance of a large number of
additional shares could significantly dilute the voting power of existing
stockholders, but under current rules of the National Association of Securities
Dealers, the issuance of in excess of 20% of the outstanding stock in connection
with the acquisition of the stock or assets of another company would require the
approval of the Company's Stockholders at such time.
The Company's Stockholder Rights Plan (the "Plan") adopted in May 1996
provides in part that if any person or group becomes an Acquiring Person (as
defined in the Plan), then each holder of a right ("Right")(other than Rights
held by an Acquiring Person, which would become void) shall have the right to
receive, upon exercise of a Right and payment of the applicable purchase price,
either (i) a number of shares of Common Stock having a market value equal to two
times the purchase price of $30 per whole share, or (ii) if the number of shares
of Common Stock that would otherwise be issuable pursuant to the foregoing
clause (i) upon exercise of all exercisable Rights then outstanding is greater
than the number of shares then available to be so purchased from the Company, a
proportionate number of the shares of Common Stock that are so available at a
purchase price of $0.10 per share.
As a consequence of these terms of the Plan, an increase in the number
of authorized shares of the Company would in most cases have an impact on the
operation and effectiveness of the Plan, if triggered, as follows:
* The proposed amendment to increase the number of authorized
shares to 15,000,000 would affect the Plan by lowering the
percentage which the Acquiring Person would need to purchase
in order for clause (i) above to become applicable. For
example, at present the Acquiring Person would have to
purchase approximately 92.4% of the outstanding Common Stock
in order for clause (i) to be applicable. If the proposed
amendment is adopted, clause (i) would be applicable if the
Acquiring Person were to purchase 87.9% or more of the
outstanding Common Stock.
* The greater the number of shares which are authorized, then,
in most cases, the greater would be the dilution suffered by
the Acquiring Person upon exercise of the Rights.
Consequently, the proposed increase in the authorized Common
Stock of the Company from 12,000,000 to 15,000,000 would, in
most cases, affect the impact of the Plan. For example, in the
event an Acquiring Person purchased 15% of the Company's
Common Stock, the effect of the proposed amendment, assuming
full exercise of all exercisable Rights, would be to reduce
the Acquiring Person's original 15% stock interest to
approximately 6.8% (with the proposed amendment), as compared
to approximately 8.5% (without the proposed amendment).
* Similarly, an increase in the number of authorized shares
would, in most cases, also have an impact on the economic
value of the holdings of an Acquiring Person, decreasing the
value of such holdings as a percentage of the total market
capitalization of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The law firm of Barack, Ferrazzano, Kirschbaum & Perlman, of which
Charles H. Perlman is a partner, was engaged from time to time to represent the
Company in legal matters. For these services, the firm was paid legal fees and
expenses of approximately $367,000 during the fiscal year ended May 31, 1996.
DIRECTORS MEETINGS
During the fiscal year ended May 31, 1996, the Board of Directors six
(6) meetings, each of which was attended by all directors. The Board of
Directors also conducted business by unanimous written consent on seven (7)
occasions. The Company has a standing audit committee and a standing
compensation committee. The audit committee, consisting of Messrs. Perlman and
Weston, reviews and monitors the accounting policies and control procedures of
the Company, recommends the engagement of the independent accountants and
reviews the scope of the audit. The audit committee met three (3) times during
the last fiscal year, with Mr. Perlman present at each such meeting and Mr.
Weston present at one (1) of such meetings. The compensation committee,
consisting of Messrs. Perlman and Weston, met twice in the 1995-96 fiscal year,
with both Messrs. Perlman and Weston in attendance.
APPOINTMENT OF AUDITORS
The Board of Directors has selected Ernst & Young, LLP, independent
certified public accountants, as auditors to examine the financial statements of
the Company for the current fiscal year and to perform other appropriate
accounting services. Ernst & Young, LLP has examined the financial statements of
the Company for the past fourteen (14) fiscal years.
Representatives of Ernst & Young, LLP will be present at the annual
meeting, will have an opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions from stockholders.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1997 Grist Mill
Co. Annual Meeting and recommendations for election to the Company's Board of
Directors must be received by the Company in writing, no later than April 30,
1997, in order to be considered for inclusion in the 1997 Proxy Statement. Any
such proposal or recommendation should be sent to the attention of the Secretary
of Grist Mill Co. at 21340 Hayes Avenue, P.O. Box 430, Lakeville, Minnesota
55044-0430.
OTHER MATTERS
The Board of Directors is not currently aware of any other matters to
be presented for action at the meeting. If any other matters properly come
before the meeting, it is the intention of the persons named as proxies in the
accompanying proxy form to vote in their discretion all shares represented by
validly executed proxies.
Your cooperation in reviewing the material contained herein and in
promptly returning your executed proxy will be appreciated.
By Order of the Board of Directors
Daniel J. Kinsella
Secretary
August 28, 1996
GRIST MILL CO.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON OCTOBER 1, 1996
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Charles H. Perlman, Ronald K. Zuckerman, or
either of them, with full powers of substitution, as proxies of the undersigned,
with the authority to vote upon and act with respect to all shares of stock of
Grist Mill Co. (the "Company"), which the undersigned is entitled to vote, at
the Annual Meeting of Stockholders of the Company, to be held at the Holiday Inn
Burnsville, 14201 Nicollet Avenue South, Burnsville, Minnesota 55337, commencing
Tuesday, October 1, 1996, at 2:00 p.m., and at any and all adjournments thereof,
with all the powers the undersigned would possess if then and there personally
present, and especially (but without limiting the general authorization and
power hereby given) with the authority to vote on the following:
Item 1. Election of four directors:
[ ] FOR ALL NOMINEES (except as [ ] WITHHOLD AUTHORITY
marked to the contrary to vote for all nominees
on the line below) listed below
Nominees (term, if elected, expires 1997):
Glen S. Bolander Charles H. Perlman Roger L. Weston Ronald K. Zuckerman
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE OR NOMINEES, WRITE HIS
OR THEIR NAME OR NAMES IN THE SPACE BELOW:
- ----------------------------------------------------------------------
Item 2. Approval of Amendment to Certificate of Incorporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Item 3. In their discretion, on any and all other matters as may properly
come before the meeting.
AUTHORITY GRANTED AUTHORITY WITHHELD
under this Item 3. under this Item 3.
[ ] FOR [ ] AGAINST
The undersigned hereby revokes any proxy or proxies heretofore given to vote
upon or act with respect to said stock and hereby ratifies and confirms all that
the proxies named herein and their substitutes, or any of them, may lawfully do
by virtue hereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED HEREIN. IF THIS
PROXY DOES NOT INDICATE A CONTRARY CHOICE, IT WILL BE VOTED FOR THE NOMINEES FOR
DIRECTOR AS LISTED IN ITEM 1, FOR THE MATTERS REFERRED TO IN ITEM 2 ABOVE AND IN
THE DISCRETION OF THE PERSONS NAMED AS PROXIES HEREIN WITH RESPECT TO ANY AND
ALL MATTERS REFERRED TO IN ITEM 3 ABOVE.
_____________________________________
_____________________________________
Signature of Stockholder
Dated: ________________________, 1996
NOTE: Please date proxy and sign it exactly as name or names appear above. All
joint owners of shares should sign. State full title when signing as executor,
administrator, trustee, guardian, et cetera. Please return signed proxy in the
enclosed envelope.
