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:
[ ] Preliminary proxy statement
[X] 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):
[ ] 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:
(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:
<PAGE>
September 15, 1997
Dear Stockholder,
You are cordially invited to attend the 1997 Annual Meeting of
Stockholders of Grist Mill Co. The meeting will be held on Wednesday, October
29, 1997, 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 1997 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
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF GRIST MILL CO.
TO BE HELD ON WEDNESDAY, OCTOBER 29, 1997
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 Wednesday,
October 29, 1997 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. 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 September 2,
1997 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
September 15, 1997
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, OCTOBER 29, 1997
This Proxy Statement is being mailed to stockholders on or about
September 15, 1997 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
Wednesday, October 29, 1997, at the Holiday Inn Burnsville, 14201 Nicollet
Avenue South, Burnsville, Minnesota 55337, and any adjournments thereof. The
1997 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 AND (ii) 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 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
<PAGE>
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 September 2,
1997 (the "Record Date"). As of the Record Date, there were issued and
outstanding 6,733,650 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. 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 29, 1997, four (4)
individuals will be elected to serve on the Board of Directors until the Annual
Meeting of Stockholders in 1998 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 1997 Annual Meeting, the nominees will serve
until the 1998 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.
<PAGE>
The nominees for director for a term to expire in 1998 are:
Name Age Title
---- --- -----
Ronald K. Zuckerman 55 Chairman of the Board, Director
Glen S. Bolander 51 President, Chief Executive Officer,
Director
Charles H. Perlman 52 Director
Roger L. Weston 54 Director
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 Vice President, Industrial Sales, and
later served as Executive Vice President. Mr. Bolander is associated with the
National Institute of Food Technologists.
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 &
Nagelberg, 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., an Illinois multibank holding company. Mr. Weston invests in
and is on the board of directors of numerous public and private companies.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following persons were known to the Company, as of September 2,
1997, to be the beneficial owners of more than 5% of the Company's outstanding
Common Stock (the only class 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 672,868(3) 9.57%
21340 Hayes Avenue
Lakeville, MN 55044
Dimensional Fund Advisors Inc. 379,250(4) 5.63%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Heartland Advisors, Inc. 350,000(5) 5.20%
790 North Milwaukee Street
Milwaukee, WI 53202
</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 353,899 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
23,969 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 70,000 shares at
<PAGE>
$6.00 per share, 50,000 shares at $6.563, 75,000 shares at $8.625 per
share, 50,000 shares at $5.625 per share and 50,000 shares at $7.875
per share.
(4) The Company is relying on information provided by Dimensional Fund
Advisors Inc. in a Schedule 13G filed with the Securities and Exchange
Commission (the "SEC") on February 12, 1997. According to such Schedule
13G, Dimensional Fund Advisors Inc. has the sole power to dispose of
all 379,250 shares reported, but has the sole power to vote only
265,700 of such shares.
(5) The Company is relying on information provided by Heartland Advisors,
Inc. in a Schedule 13G filed with the SEC on February 14, 1997.
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 September
2, 1997 (except as noted below), by the Chief Executive Officer, by each of the
Company's four most highly compensated executive officers other than the Chief
Executive Officer who were serving as executive officers at the end of fiscal
year 1997 and by an individual who served as an executive officer of the Company
for a portion of fiscal year 1997 only (collectively, the "Named Executive
Officers") individually, by each director individually and by directors and
executive officers of the Company as a group:
<TABLE>
<CAPTION>
Name of Beneficial Ownership Percent of Shares
Beneficial Owner (1)(2)(3) Beneficially Owned
---------------- -------------------- ------------------
<S> <C> <C>
Glen S. Bolander 672,868 (4) 9.57%
Eric H. Beringause 7,758 (5) *
Michael J. Cannon 24,060 (6) *
Daniel J. Kinsella 24,275 (7) *
Michael A. Parent 6,456 (8) *
Thomas J. Tatoian 13,458 (9) *
Ronald K. Zuckerman 183,634(10) 2.73%
Charles H. Perlman 121,320(11) 1.78%
Roger L. Weston 106,444(12) 1.56%
All directors and
executive officers
as a group (10 persons) 1,161,573(13) 16.11%
</TABLE>
* Less than 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) Reflects stock ownership as of May 21, 1997, the effective date of the
termination of Mr. Beringause's employment with the Company. Includes
1,000 shares owned directly by Mr. Beringause and 2,638 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 4,000 shares at $9.625 per
share.
(6) Includes 16,020 shares owned directly by Mr. Cannon. Also includes
non-qualified stock options to purchase 880 shares at $7.00 per share,
900 shares at $6.25 per share, 4,000 shares at $9.75 per share, 680
shares at $9.00 per share, 1,200 shares at $5.50 per share and 380
shares at $5.00 per share.
(7) Includes 9,352 shares owned directly by Mr. Kinsella and 1,763 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 2,400 shares at $7.00 per share, 2,160
<PAGE>
shares at $6.25 per share, 6,000 shares at $9.75 per share, 920 shares
at $9.00 per share, 1,200 shares at $5.50 per share and 480 shares at
$5.00 per share.
(8) Includes 1,500 shares held directly by Mr. Parent and 1,516 shares
owned by the Grist Mill Co. Employees Retirement Savings Plan and Trust
for the benefit of Mr. Parent. Also includes non-qualified stock
options to purchase 1,200 shares at $7.00 per share, 1,200 shares at
$6.25 per share, 640 shares at $9.00 per share and 400 shares at $5.00
per share.
(9) Includes 7,370 shares owned directly by Mr. Tatoian and 6,088 shares
owned by the Grist Mill Co. Employee Retirement Savings Plan and Trust
for the benefit of Mr. Tatoian
(10) Includes 170,938 shares held directly by Mr. Zuckerman. Also includes
2,696 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.
(11) Includes 36,320 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 41,320 of such shares. Includes
non-qualified stock options to purchase 15,000 shares at $7.125 per
share, 15,000 shares at $6.25 per share, 15,000 shares at $9.375 per
share, 15,000 shares at $6.25 per share and 15,000 shares at $6.50 per
share. 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 5,443 of the shares represented by such options.
(12) Includes 31,444 shares held directly by Mr. Weston. Also includes
non-qualified stock options to purchase 15,000 shares at $7.125 per
share, 15,000 shares at $6.25 per share, 15,000 shares at $9.375 per
share, 15,000 shares at $6.25 per share and 15,000 shares at $6.50 per
share.
(13) Includes non-qualified stock options to purchase 474,560 shares at
prices ranging from $5.00 per share to $9.75 per share.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC") and the National Association of Securities Dealers. Officers, directors
and "greater than ten percent" stockholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms so filed.
Based solely on review of the copies of such forms furnished to the
Company for the period beginning on June 1, 1996 and ending on May 31, 1997 and
written representations from certain reporting persons that no Forms 5 were
required to be filed, all Section 16(a) filing requirements applicable to the
Company's officers, directors and "greater than ten percent" stockholders were
met.
<PAGE>
EXECUTIVE COMPENSATION
Set forth below is information concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal years
ended May 31, 1997, 1996 and 1995, of those persons who were, at May 31, 1997,
the Chief Executive Officer and the Named Executive Officers:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
-------------------------------------- ------------
Other Annual All Other
Compensation Options Compensation
Name and Principal Position Year Salary($) Bonus($) ($)(1) (#)(2) ($)(3)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Glen S. Bolander, Chief 1997 $399,000 $150,000 $ 500 70,000 $37,376(4)
Executive Officer and President 1996 385,900 125,000 1500 50,000 37,653(4)
1995 387,500 130,000 750 75,000 38,185(4)
Eric H. Beringause 1997 $155,000 $ 20,168 $ -0- -0- $54,500(7)
Vice President, Marketing(5) 1996 151,200 17,100 37,000(6) 5,900 1,066
1995 34,600 30,100 -0- 10,600 190
Michael J. Cannon, Vice 1997 $129,100 $ 24,618 $ 500 9,100 $ 1,395
President, Sales 1996 116,600 13,400 500 7,900 1,746
1995 105,800 39,700 -0- 11,700 1,708
Daniel J. Kinsella, Vice 1997 $133,400 $ 25,722 $ -0- 9,500 $ 2,557
President, Chief Financial 1996 119,000 12,900 -0- 8,400 2,709
Officer, Treasurer and Secretary 1995 109,000 39,900 -0- 12,300 2,490
Michael A. Parent, 1997 $ 91,200 $ 17,942 $ -0- 8,700 $ 1,744
Vice President, Operations 1996 78,800 4,900 -0- 2,000 -0-
1995 70,900 16,700 -0- 1,600 -0-
Thomas J. Tatoian 1997 $119,067 $ -0- $ 500 -0- $ 3,299
Vice President, Manufacturing 1996 120,777 4,873 550 -0- 2,841
1995 110,900 31,800 550 7,000 2,550
</TABLE>
(1) Represents amounts reimbursed during the fiscal year for the payment of
income tax preparation.
(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 except with respect to
Mr. Beringause.
(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. Beringause joined the Company in February 1995. His employment with
the Company terminated effective as of May 21, 1997.
(6) Includes $30,600 reimbursed to Mr. Beringause for moving expenses. Also
includes $6,400 representing a gross up for income tax purposes.
(7) Represents amounts paid to Mr. Beringause with respect to the
termination of his employment with the Company.
<PAGE>
Shown below is further information on grants of stock options pursuant
to the Company's Non-Qualified Stock Option Plan, as amended, during or
pertaining to the fiscal year ended May 31, 1997, to the Named Executive
Officers who are set forth in the Summary Compensation Table above. No stock
appreciation rights have ever been granted.
OPTION GRANTS WITH RESPECT TO FISCAL YEAR ENDED MAY 31, 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
% OF TOTAL STOCK PRICE APPRECIATION
OPTIONS OPTIONS GRANTED EXERCISE OR FOR OPTION TERM(3)
GRANTED TO EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------
NAME (#)(1) FISCAL YEAR(2) ($/Sh) DATE 5% 10%
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Glen S. Bolander 70,000 46.67% $6.00 10/28/03 $ 128,923 $ 297,421
Eric H. Beringause -0- -0- -0- -- -0- -0-
Michael J. Cannon 9,100 6.07% $6.875 01/31/03 $ 19,204 $ 44,303
Daniel J. Kinsella 9,500 6.33% $6.875 01/31/03 $ 20,048 $ 46,251
Michael A. Parent 8,700 5.80% $6.875 01/31/03 $ 18,360 $ 42,356
Thomas J. Tatoian -0- -0- -0- -- -0- -0-
</TABLE>
(1) All of these options were granted in July 1997 (with the exception of
Mr. Bolander's options which were granted in April 1997) based upon the
performance of the Named Executive Officers for the fiscal year ended
May 31, 1997. 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 1996-97, as of July 1997, a
total of 150,000 options were granted to employees of the Company,
including the Named Executive Officers. In addition, 30,000 options
were granted to the non-employee directors of the Company.
(3) The "potential realizable value" shown represents the potential gains
based on annual compound stock price appreciation of 5% and 10% from
the date of grant through the full five- and 1/2-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.
<PAGE>
Set forth below is information with respect to the unexercised options
to purchase the Company's Common Stock granted in fiscal year 1996-97 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, 1997. A total of 10,930
options were exercised by the Named Executive Officers during fiscal year
1996-97.
AGGREGATE OPTION EXERCISES DURING FISCAL YEAR ENDED
MAY 31, 1997 AND VALUE OF OPTIONS HELD AT MAY 31, 1997
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE OPTIONS AT MAY 31, 1997(#) MAY 31, 1997 ($)(1)
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------ ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Glen S. Bolander -0- $ -0- 325,000/0 $123,125/$0
Eric H. Beringause -0- $ -0- 4,120/12,260 $0/$7,588
Michael J. Cannon 4,080 $4,080 10,290/14,160 $4,649/$8,095
Daniel J. Kinsella 2,770 $3,000 16,310/14,140 $6,221/$15,281
Michael A. Parent -0- $ -0- 5,090/3,660 $2,819/$2,900
Thomas J. Tatoian 4,080 $3,695 7,680/7,320 $3,475/$1,150
</TABLE>
(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, 1997, 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.
OBJECTIVES OF EXECUTIVE COMPENSATION. 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, a significant portion of executive compensation includes bonuses and
stock options that are 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 benefited. The
Committee determines, on an annual basis, those executives who will receive
stock option grants and size of such grants awarded.
COMPENSATION COMMITTEE PROCEDURES. The Committee annually evaluates the
personal performance of the Chief Executive Officer of the Company as well as
the Company's performance. The Committee also compares the compensation of the
Chief Executive 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 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
<PAGE>
corporate and business unit financial and strategic goals are considered as well
as individual performance, including managerial effectiveness, teamwork,
leadership and innovation.
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits
the deductibility on the Company's tax return of compensation over $1 million to
the Chief Executive Officer and any of the Named Executive Officers of the
Company unless, in general, the compensation is paid pursuant to a plan which is
performance-related, non-discretionary and has been approved by the Company's
stockholders. The Committee's policy with respect to Section 162(m) is to make
reasonable efforts to ensure that compensation is deductible to the extent
permitted while simultaneously providing Company executives with appropriate
rewards for their performance.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The annual base salary for
the Company's Chief Executive Officer, Glen S. Bolander was $399,000 for fiscal
year 1996-97, which represented an increase of approximately 3% (or $13,100)
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 1995-96, 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 $150,000
with respect to fiscal year 1996-97, and he was granted options to purchase
70,000 shares of Common Stock at the market price at the time of grant ($6.00
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 1996-97.
SUBMITTED BY THE COMPENSATION COMMITTEE:
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 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 terminate his employment, he must give the Company three months' prior notice
and will receive no severance; however, if he desires to terminate his
employment within one 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 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
<PAGE>
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 and amended June 3, 1997, for a term
ending May 31, 2001. The agreement, as amended, provides for an annual salary of
$144,000 through May 31, 1998, and an annual salary of $75,000 from June 1, 1998
through the end of the term. In addition, Mr. Zuckerman is entitled to 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 equal to his annual
salary at such time, payable in 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 12
months thereafter.
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 21 years of age and
have completed one full year of service. Employees may make annual pre-tax
contributions to the Retirement Plan of up to 15% of their annual salaries or
wages. The Company makes a matching contribution of 30% on up to the first 7% of
each employee's annual salary and wages. All matching contributions are
automatically 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 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 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 June 5, 1997, the Board of Directors have assumed the
administration of the Non-Qualified Plan from the Committee. The Board of
Directors (previously the Committee) is responsible for determining which of the
eligible persons shall be granted options, the manner and time of exercise of
such options and the exercise price of the options. Mr. Bolander then recommends
the number of options to be granted to each individual. Members of the Committee
are now eligible for discretionary grants under the Non-Qualified Plan.
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 year from
date of death. If the cessation of employment is due to permanent disability,
the option must be exercised within one year. If the cessation of employment is
due to any other reason, the option terminates at the end of three months.
<PAGE>
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, 1992 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, 1992=100). The S&P
Foods Index is composed of 13 of the largest publicly traded food companies in
the United States. The graph assumes all dividends are reinvested.
[PLOT POINTS GRAPH]
Research
Total Return - Data Summary
GRST
Cumulative Total Return
---------------------------------------
5/92 5/93 5/94 5/95 5/96 5/97
GRIST ML CO GRST 100 164 98 173 122 124
NASDAQ STOCK MARKET (U.S.) INAS 100 120 127 151 219 246
S & P FOODS IFOO 100 105 104 131 155 204
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 $244,000 during the fiscal year ended May 31, 1997.
DIRECTORS MEETINGS
During the fiscal year ended May 31, 1997, the Board of Directors held
six meetings, each of which was attended by all directors. The Board of
Directors also conducted business by unanimous written consent on 17 occasions.
<PAGE>
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 five times during the last
fiscal year, with both Messrs. Perlman and Weston present at each such meeting.
The compensation committee, consisting of Messrs. Perlman and Weston, met once
in the 1996-97 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 15 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 1998 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 May 18,
1998, in order to be considered for inclusion in the 1998 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
September 15, 1997
<PAGE>
GRIST MILL CO.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON OCTOBER 29, 1997
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
Wednesday, October 29, 1997, 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 marked |_| WITHHOLD AUTHORITY
to the contrary on the line below) to vote for all nominees listed
below
Nominees (term, if elected, expires 1998):
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. In their discretion, on any and all other matters as may properly
come before the meeting.
AUTHORITY GRANTED AUTHORITY WITHHELD
under this Item 2. under this Item 2.
|_| 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 AND IN THE DISCRETION OF THE PERSONS NAMED AS
PROXIES HEREIN WITH RESPECT TO ANY AND ALL MATTERS REFERRED TO IN ITEM 2 ABOVE.
_________________________________________
_________________________________________
Signature of Stockholder
Dated: ____________________________, 1997
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.
