<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
INTERNATIONAL MULTIFOODS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction 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>
[LOGO]
INTERNATIONAL MULTIFOODS CORPORATION
33 SOUTH 6TH STREET
P.O. BOX 2942
MINNEAPOLIS, MINNESOTA 55402
612-340-3300
MAY 15, 1997
Dear Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of Stockholders
of International Multifoods Corporation. The meeting will be held on Friday,
June 20, 1997, at 10:00 a.m. local time, in the Lutheran Brotherhood Auditorium,
625 Fourth Avenue South, Minneapolis, Minnesota. The attached Notice of Annual
Meeting of Stockholders and Proxy Statement describe the matters to be acted
upon during the meeting.
Your copy of the Annual Report to Stockholders for the fiscal year ended
February 28, 1997 is enclosed or has been sent to you.
WE HOPE THAT YOU WILL BE ABLE TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN
TO ATTEND THE MEETING, PLEASE PROMPTLY COMPLETE, SIGN, DATE AND RETURN YOUR
PROXY CARD IN THE ENCLOSED ENVELOPE IN ORDER TO MAKE CERTAIN THAT YOUR SHARES
WILL BE REPRESENTED AT THE MEETING.
Sincerely,
[SIG]
Gary E. Costley, Ph.D.
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
<PAGE>
INTERNATIONAL MULTIFOODS CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 20, 1997
TO THE STOCKHOLDERS OF
INTERNATIONAL MULTIFOODS CORPORATION:
The Annual Meeting of Stockholders of International Multifoods Corporation
(the "Company") will be held on Friday, June 20, 1997, at 10:00 a.m. local time,
in the Lutheran Brotherhood Auditorium, 625 Fourth Avenue South, Minneapolis,
Minnesota, for the following purposes:
1. To elect three directors for a term of three years;
2. To consider and vote on a proposal to approve the Company's 1997
Stock-Based Incentive Plan;
3. To approve the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending February 28, 1998; and
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Holders of record of the Company's Common Stock as of the close of business
on May 1, 1997 are entitled to notice of and to vote at the meeting and any
adjournment thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH
NEEDS NO POSTAGE STAMP IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors,
FRANK W. BONVINO
SECRETARY
May 15, 1997
<PAGE>
INTERNATIONAL MULTIFOODS CORPORATION
33 SOUTH 6TH STREET
P.O. BOX 2942
MINNEAPOLIS, MINNESOTA 55402
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 20, 1997
GENERAL MATTERS
SOLICITATION OF PROXIES
This Proxy Statement and the enclosed form of proxy are being furnished to
stockholders of International Multifoods Corporation (the "Company") in
connection with the Annual Meeting of Stockholders of the Company to be held on
June 20, 1997, and any adjournment thereof (the "Annual Meeting"). The Board of
Directors of the Company is soliciting proxies for voting on the matters
described in the accompanying Notice of Annual Meeting of Stockholders. This
Proxy Statement and the enclosed form of proxy, along with the Company's Annual
Report to Stockholders, are first being sent to stockholders of the Company on
or about May 15, 1997. The Company is paying the costs of solicitation,
including the cost of preparing and mailing this Proxy Statement. The Company
has retained Georgeson & Company Inc. to assist in the solicitation of proxies
from stockholders for a fee of $6,000 plus out-of-pocket expenses. The
solicitation by mail may be followed by solicitation in person, or by telephone
or facsimile, by regular employees of the Company without additional
compensation or by employees of Georgeson & Company Inc. The Company will
reimburse brokers, banks and other custodians and nominees for their reasonable
out-of-pocket expenses incurred in sending proxy materials to the Company's
stockholders.
VOTING PROCEDURES
Only stockholders of record as of the close of business on May 1, 1997 will
be entitled to vote at the Annual Meeting. As of that date, there were
18,002,919 shares of Common Stock, par value $.10 per share ("Common Stock"),
issued and outstanding and entitled to vote at the Annual Meeting. Stockholders
are entitled to one vote for each share held.
The presence at the Annual Meeting, in person or by proxy, of the holders of
a majority of the shares of Common Stock will constitute a quorum for the
transaction of business at the Annual Meeting. Assuming a quorum is present, the
three director nominees receiving the most votes for their election will be
elected directors. With respect to the approval of all other matters to come
before the Annual Meeting, including the Company's 1997 Stock-Based Incentive
Plan and the appointment of KPMG Peat Marwick LLP as the independent auditors of
the Company, the affirmative vote of a majority of the total votes cast will be
required.
A proxy, in the accompanying form, which is properly signed, received in
time for the Annual Meeting and not revoked will be voted in accordance with the
instructions contained thereon. With respect to the election of directors, a
stockholder may (i) vote for the nominees named herein as a group, (ii) withhold
authority to vote for the nominees as a group or (iii) vote for such nominees
other than any nominee the stockholder identifies in the appropriate space on
the proxy. With respect to each other matter submitted to the stockholders for a
vote, a stockholder may (i) vote FOR the matter, (ii) vote AGAINST the matter or
(iii) ABSTAIN from voting on the matter. An abstention will be deemed to be a
vote cast at the Annual Meeting and therefore will have the effect of a vote
against a matter. If no specific instructions are indicated on the proxy, the
shares represented thereby will be voted (i) FOR the election of the three
directors as nominated, (ii) FOR the approval of the Company's 1997 Stock-Based
Incentive Plan, (iii) FOR the approval of the appointment of KPMG Peat Marwick
LLP as the independent auditors of the Company and (iv) with respect to such
other matters that may properly come before the Annual Meeting, in accordance
with the judgment of the persons named as proxies in the enclosed proxy. If a
broker indicates on the proxy that it does not have authority to vote certain
shares on a particular matter, those shares will not be considered as votes cast
with respect to that matter and, therefore, will not affect the outcome of the
vote with respect to that matter.
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A stockholder may revoke a proxy at any time prior to its exercise by giving
written notice of revocation to the Secretary of the Company, by submitting a
properly signed proxy that is dated subsequent to the earlier proxy or by
delivering a written revocation at the Annual Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 14, 1997 (unless otherwise
noted), certain information with respect to all stockholders known to the
Company to be the beneficial owners of more than 5% of the Company's Common
Stock and certain information with respect to the beneficial ownership of the
Company's Common Stock by each director, nominee and executive officer of the
Company named in the Summary Compensation Table under the heading "Executive
Compensation" below and all directors and executive officers of the Company as a
group. Unless otherwise noted, the stockholders listed in the table have sole
voting and investment powers with respect to the shares of Common Stock owned by
them.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NAME AND ADDRESS NATURE OF COMMON STOCK
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING
- --------------------------------------------- -------------------- ------------
<S> <C> <C>
Archer-Daniels-Midland Company............... 1,621,650(1) 9.00%
4666 Faries Parkway
Decatur, Illinois 62526
Wellington Management Company, LLP........... 1,048,800(2) 5.82%
75 State Street
Boston, Massachusetts 02109
First Bank System, Inc....................... 966,308(3) 5.36%
601 2nd Avenue South
Minneapolis, Minnesota 55402
Anthony Luiso................................ 305,808(4) 1.67%
Robert F. Maddocks........................... 152,048(5) *
Gary E. Costley, Ph.D........................ 110,000(6) *
Duncan H. Cocroft............................ 106,704(7) *
James G. Fifield............................. 46,440(8) *
Robert M. Price.............................. 45,511(9) *
Robert S. Wright............................. 38,383(10) *
Devendra Mishra.............................. 24,826(11) *
Nicholas L. Reding........................... 20,390(12) *
Jack D. Rehm................................. 20,175(13) *
Lois D. Rice................................. 12,071(14) *
D. Bruce Kean................................ 10,267(15) *
Richard K. Smucker........................... 8,000(16) *
Jeffrey E. Boies............................. 5,265 *
Dolph W. von Arx............................. 0 *
All Executive Officers and Directors
as a Group (18 persons).................... 991,354(17) 5.27%
</TABLE>
- ----------
* Less than 1%
(1) The information was reported on an amended Schedule 13D, dated June 4,
1993.
(2) Wellington Management Company, LLP ("WMC") reported on a Schedule 13G,
dated January 24, 1997, filed with the Securities and Exchange Commission,
that it does not have sole voting or dispositive power with respect to the
shares, but has shared voting power with respect to 665,400 shares and
shared
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dispositive power with respect to all of the shares. WMC also reported that
the filing was made in its capacity as an investment adviser and that the
shares are owned of record by WMC's clients, none of which was known to have
a beneficial ownership interest with respect to more than 5% of the
Company's Common Stock.
(3) First Bank System, Inc. ("FBS") reported on a Schedule 13G filed with the
Securities and Exchange Commission that, as of December 31, 1996, it had
sole voting power with respect to 893,989 shares, shared voting power with
respect to 70,219 shares, sole dispositive power with respect to 694,391
shares and shared dispositive power with respect to 63,734 shares. FBS also
reported that the filing was made on behalf of certain of its bank
subsidiaries, that other persons and accounts have the right to receive
dividends from or the proceeds from the sale of the shares, and that none of
such persons or accounts was known to have an interest relating to more than
5% of the Company's Common Stock.
(4) Includes 273,496 shares issuable pursuant to stock options which are
currently exercisable and 6,277 shares held in trust for the benefit of Mr.
Luiso under the Employees' Voluntary Investment and Savings Plan of the
Company (the "Savings Plan").
(5) Includes 127,204 shares issuable pursuant to stock options which are
currently exercisable and 3,201 shares held in trust for the benefit of Mr.
Maddocks under the Savings Plan.
(6) Includes 100,000 shares issuable pursuant to stock options which are
currently exercisable.
(7) Represents shares issuable pursuant to stock options which are currently
exercisable.
(8) Includes 40,440 shares issuable pursuant to stock options which are
currently exercisable.
(9) Includes 29,386 shares issuable pursuant to stock options which are
currently exercisable.
(10) Includes 24,000 shares issuable pursuant to stock options which are
currently exercisable or which will become exercisable prior to May 14, 1997
and 1,233 shares held in trust for the benefit of Mr. Wright under the
Savings Plan.
(11) Includes 5,000 shares issuable pursuant to stock options which will become
exercisable prior to May 14, 1997 and 396 shares held in trust for the
benefit of Mr. Mishra under the Savings Plan.
(12) Includes 18,000 shares issuable pursuant to stock options which are
currently exercisable.
(13) Includes 12,000 shares issuable pursuant to stock options which are
currently exercisable.
(14) Includes 11,163 shares issuable pursuant to stock options which are
currently exercisable.
(15) Includes 10,000 shares issuable pursuant to stock options which are
currently exercisable or which will become exercisable prior to May 14, 1997
and 267 shares held in trust for the benefit of Mr. Kean under the Savings
Plan.
(16) Includes 3,000 shares held in a trust of which Mr. Smucker is the trustee.
Mr. Smucker disclaims beneficial ownership of such shares.
(17) Includes 811,768 shares issuable pursuant to stock options which are
currently exercisable or which will become exercisable prior to May 14, 1997
and 18,886 shares held in trust for the benefit of the executive officers
under the Savings Plan.
ELECTION OF DIRECTORS
The Board of Directors of the Company is composed of eight members divided
into three classes. The members of each class are elected to serve three-year
terms with the term of office of each class ending in successive years. Gary E.
Costley, Nicholas L. Reding and Jack D. Rehm are Class III directors whose terms
expire at the Annual Meeting. The Board of Directors has nominated Dr. Costley
and Messrs. Reding and Rehm for election to the Board of Directors at the Annual
Meeting for terms of three years, and each has agreed to serve if elected. The
other directors of the Company will continue in office for their existing terms.
Lois D. Rice and Dolph W. von Arx are Class I directors whose terms expire in
1998. James G. Fifield, Robert M. Price and Richard K. Smucker are Class II
directors whose terms expire in 1999. All of the directors were elected to the
Board of Directors by the stockholders, except for Dr. Costley, who was elected
by the Board effective January 1, 1997, and Messrs. von Arx and Smucker, who
were elected by the Board on March 20, 1997.
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Proxies solicited by the Board of Directors will, unless otherwise directed,
be voted for the election of the nominees named. In the event that any nominee
becomes unavailable for election at the Annual Meeting, the persons named as
proxies will vote for a substitute nominee as recommended by the Board of
Directors.
The following sets forth certain biographical information, present
occupation and business experience for the past five years for each director and
director nominee:
<TABLE>
<S> <C>
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GARY E. COSTLEY, Ph.D., 53 Director since 1997
[PHOTO] Dr. Costley is Chairman of the Board, President and Chief Executive
Officer of the Company, which office he has held since January 1997.
From May 1995 to December 1996, Dr. Costley served as dean of the
Babcock Graduate School of Management at Wake Forest University. Prior
to July 1994, Dr. Costley was an Executive Vice President of Kellogg
Company and President, Kellogg North America. Dr. Costley is a director
of Candlewood Hotel Company, Inc. and Pharmacopeia, Inc.
- --------------------------------------------------------------------------------------------------
JAMES G. FIFIELD, 55 Director since 1990
[PHOTO] Mr. Fifield is President and Chief Executive Officer of EMI Music
(recording and music publishing), which office he has held since April
1989. From 1965 to 1985, Mr. Fifield held various positions at General
Mills, Inc., including Executive Vice President. Mr. Fifield is a
director of The EMI Group and The North Face, Inc.
- --------------------------------------------------------------------------------------------------
ROBERT M. PRICE, 66 Director since 1983
[PHOTO] Mr. Price is President of PSV, Inc. (management consulting--technology
and strategy), which position he has held since May 1990. From May 1996
to December 1996, Mr. Price served as interim Chairman of the Board and
Chief Executive Officer of the Company. Mr. Price is a director of
Fourth Shift Corporation, Public Service Company of New Mexico, Rohr,
Inc. and Tupperware Corporation.
- --------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
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NICHOLAS L. REDING, 62 Director since 1988
[PHOTO] Mr. Reding is Vice Chairman of the Board of Monsanto Company (chemicals,
agriculture and pharmaceuticals), which office he has held since January
1993. Prior to January 1993, Mr. Reding was Executive Vice President--
Environment, Safety, Health & Manufacturing of Monsanto Company. Mr.
Reding is also a director of CPI Corp. and Meredith Corporation.
- --------------------------------------------------------------------------------------------------
JACK D. REHM, 64 Director since 1991
[PHOTO] Mr. Rehm is Chairman of the Board of Meredith Corporation (diversified
media), which office he has held since January 1997. From July 1994 to
January 1997, Mr. Rehm was Chairman of the Board and Chief Executive
Officer of Meredith Corporation. From July 1992 to July 1994, Mr. Rehm
was Chairman of the Board, President and Chief Executive Officer of
Meredith Corporation. Prior to July 1992, Mr. Rehm was President and
Chief Executive Officer of Meredith Corporation. Mr. Rehm is also a
director of Equitable of Iowa Companies.
- --------------------------------------------------------------------------------------------------
LOIS D. RICE, 64 Director since 1991
[PHOTO] Mrs. Rice is a guest scholar at The Brookings Institution (an education
and public policy research organization), a position she has held since
October 1991. Prior to October 1991, Mrs. Rice was Senior Vice
President-- Governmental Affairs and a director of Control Data
Corporation. Mrs. Rice is a director of Fleet Financial Group, Inc., The
Hartford Steam Boiler Inspection and Insurance Company, The McGraw-Hill
Companies, Inc. and UNUM Corporation.
- --------------------------------------------------------------------------------------------------
RICHARD K. SMUCKER, 48 Director since 1997
[PHOTO] Mr. Smucker is President of The J.M. Smucker Company (jams, jellies, ice
cream toppings, juices and other food products), which office he has
held since 1987. Mr. Smucker is a director of The J.M. Smucker Company,
The Sherwin-Williams Company and Wm. Wrigley Jr. Company.
- --------------------------------------------------------------------------------------------------
</TABLE>
5
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<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------
DOLPH W. VON ARX, 62 Director since 1997
[PHOTO] Mr. von Arx is Chairman of the Board of Morrison Fresh Cooking, Inc.
(cafeterias, buffets and mall food court units), which office he has
held since March 1996. Mr. von Arx was Chairman, President and Chief
Executive Officer of Planters LifeSavers Company, a division of RJR
Nabisco, Inc., until his retirement in 1991. Mr. von Arx is also a
director of BMC Fund, Inc., Cree Research, Inc., MacKenzie Investment
Management, Inc. and Ruby Tuesday, Inc.
- --------------------------------------------------------------------------------------------------
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held seven meetings during the fiscal year ended
February 28, 1997, five of which were regularly scheduled meetings. During the
fiscal year, each director attended at least 75% of the aggregate of the total
number of meetings of the Board of Directors plus the total number of meetings
held by all committees of the Board on which he or she served. The Board of
Directors has several committees, which are described below.
AUDIT COMMITTEE. Messrs. Price and Rehm and Mrs. Rice are members of the
Audit Committee. The Audit Committee recommends to the Board of Directors
annually the selection of independent accountants, reviews the activities and
reports of the Company's independent accountants, reviews the financial
statements to be included in the Annual Report to Stockholders and recommends
approval by the Board of Directors, monitors accounting and financial reporting
practices throughout the Company, reviews internal accounting controls and
monitors compliance with the Company's prescribed procedures, policies and code
of ethics. The Audit Committee held four meetings during the fiscal year ended
February 28, 1997.
COMPENSATION COMMITTEE. Messrs. Fifield, Reding and Rehm are members of the
Compensation Committee. The Compensation Committee approves the compensation
policies of the Company, determines the compensation paid to officers of the
Company, makes recommendations to the Board of Directors with respect to the
cash compensation of the Chief Executive Officer of the Company and establishes
and reviews performance standards under compensation programs for officers of
the Company. The Compensation Committee administers the Company's stock option,
stock-based incentive and bonus plans and makes grants or awards under such
plans. The Compensation Committee also recommends to the Board of Directors the
adoption of or amendments to employee benefit plans and stock-based incentive
plans of the Company. The Compensation Committee held seven meetings during the
fiscal year ended February 28, 1997.
EXECUTIVE COMMITTEE. Dr. Costley and Messrs. Price, Reding and Rehm are
members of the Executive Committee. The Executive Committee has such powers and
authority as may be expressly conferred upon it from time to time by the Board
of Directors. The Executive Committee did not hold any meetings during the
fiscal year ended February 28, 1997.
FINANCE AND BENEFIT INVESTMENT COMMITTEE. Dr. Costley, Messrs. Price, Reding
and Rehm and Mrs. Rice are members of the Finance and Benefit Investment
Committee. The Finance and Benefit Investment Committee reviews the capital
structure, source and use of funds and financial position of the Company, makes
periodic reports to the Board of Directors on such reviews and provides advice
and counsel regarding financial policies to management of the Company and the
Board of Directors. The Finance and Benefit Investment Committee also
establishes investment policies and guidelines for employee benefit plans,
approves investment managers of employee benefit plan assets and reviews
investment performance of such plan assets. The Finance and Benefit Investment
Committee held six meetings during the fiscal year ended February 28, 1997.
6
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NOMINATING AND CORPORATE GOVERNANCE COMMITTEE. Messrs. Fifield and Reding
and Mrs. Rice are members of the Nominating and Corporate Governance Committee.
The Nominating and Corporate Governance Committee reviews, evaluates and
recommends director candidates for nomination by the Board of Directors and
establishes guidelines for the Board of Directors in considering nominees. The
Nominating and Corporate Governance Committee will consider nominees recommended
by stockholders if a written recommendation is submitted to the Secretary of the
Company at least 90 days prior to the date of the annual meeting of
stockholders, along with the written consent of such nominee to serve as
director. The Nominating and Corporate Governance Committee also reviews
corporate governance issues and makes recommendations to the Board of Directors
on corporate governance matters. The Nominating and Corporate Governance
Committee held two meetings during the fiscal year ended February 28, 1997.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company each receive an annual
retainer of $20,000 plus $1,000 for each meeting of the Board of Directors
($1,250 for meetings lasting more than one day) and $1,000 for each meeting of
any committee thereof ($1,250 in the case of the chair of such committee) that
the director attends. Directors may elect to receive all or part of the amount
of their annual retainer and meeting fees in shares of restricted Common Stock
or options to purchase shares of Common Stock under Part II of the Company's
Amended and Restated 1989 Stock-Based Incentive Plan. During the fiscal year
ended February 28, 1997, Messrs. Fifield, Reding and Rehm made such election.
Amounts received by a director also may be deferred pursuant to the Company's
Fee Deferral Plan for Non-Employee Directors for a minimum period of two years.
Interest is paid on deferred amounts at a rate which is calculated quarterly and
corresponds to the Company's short-term borrowing rate then in effect. None of
the directors deferred compensation under such plan during the fiscal year ended
February 28, 1997.
In addition, on the first business day in July of each year, each director
who is not an employee of the Company is granted a non-qualified stock option to
purchase 1,500 shares of Common Stock at a purchase price per share equal to the
fair market value of a share of Common Stock on such date.
Directors who are also employees of the Company are not separately
compensated for any services provided as a director.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The philosophy of the Compensation Committee (the "Committee") with respect
to the compensation of the Company's executive officers consists of the
following core principles:
- Base salary and benefits should be competitive in order to attract and
retain well-qualified executives.
- Incentive compensation should be directly related to achieving specified
levels of corporate financial performance. A significant part of the
executive officers' compensation should be at risk, based upon the success
of the Company.
- Long-term stock ownership of the Company's Common Stock by the Company's
executive officers creates a valuable link between the Company's
management and stockholders. Stock ownership gives management strong
incentives to properly balance the need for short-term profits with
long-term goals and objectives and to develop strategies that build and
sustain stockholder returns.
EXECUTIVE COMPENSATION PROGRAM
The Company's executive compensation program comprises four components which
are intended to reflect the Company's compensation philosophy.
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BASE SALARY. Base salary and adjustments to base salary for the Company's
executive officers are targeted at the median of the competitive market. An
executive officer's base salary may be above or below the median, depending upon
the officer's individual performance. For the purpose of determining the median
of the competitive market, the Committee reviews and considers the salary ranges
of officers in comparable positions at companies of comparable size to the
Company. The peer group of companies used in the comparison consists of
approximately 120 companies that have annual sales ranging from $1 billion to $3
billion. The Company uses a broad base of companies of comparable size to
reflect the market in which the Company competes for executive talent.
Accordingly, the peer group is not limited to food companies included in the Dow
Jones Food Index, which has been used for the purpose of comparison in the Stock
Performance Graph in this Proxy Statement.
The Committee reviews the base salary of each executive officer at every
regularly scheduled Committee meeting. The Committee generally grants a salary
increase to an executive officer once every 15 to 18 months, based upon the
Committee's judgment of the officer's individual performance and contribution to
the Company, the financial performance of the Company and the Company's
established merit increase guidelines.
ANNUAL BONUS. Under the Company's Management Incentive Plan, the executive
officers are eligible for an annual cash bonus, the amount of which may range
from 15% to 100% of annual base salary, depending upon the level of financial
performance achieved for the fiscal year by the Company, or by the applicable
business unit in the case of an executive officer who is the President of a
business unit. The Committee establishes threshold, target and maximum financial
objectives at the beginning of the fiscal year, but retains discretion to adjust
the financial objectives to reflect the impact of acquisitions, divestitures or
other events or unusual circumstances during the fiscal year. Bonuses are paid
only if the threshold financial objectives for the fiscal year are achieved. For
fiscal year 1997, the performance objectives for corporate executive officers
were based on operating earnings and earnings per share of the Company's North
America business units (weighted 44%), operating earnings and earnings per share
of the Company's Venezuela Foods segment (weighted 36%), and individual
performance (weighted 20%). The performance objectives for executive officers
who are Presidents of the business units were based on operating earnings (after
adjustment for interest cost on invested assets) and return on investment (or
pre-tax earnings in the case of the Company's Venezuela Foods segment) (weighted
80%) and individual performance (weighted 20%). The individual performance
component of the bonus is awarded in the discretion of the Committee and only if
the threshold financial objectives for the fiscal year are achieved. The
Committee also has the discretion to award bonuses under the Management
Incentive Plan based on other performance objectives or criteria.
The target annual bonus opportunity, represented as a percentage of base
salary, for each executive officer is set at approximately the median of
competitive practice. For this purpose, the Committee reviews and considers
bonus amounts awarded to officers in comparable positions at companies of
comparable size to the Company, as described above. The target bonus opportunity
for the Chief Executive Officer is 65% of base salary and for the other
executive officers is 50% of base salary.
For fiscal year 1997, Mr. Kean received a bonus at the target level of
financial performance. No bonuses were paid to the other executive officers of
the Company named in the Summary Compensation Table below because the threshold
financial objectives were not achieved. Dr. Costley did not participate in the
Management Incentive Plan for fiscal year 1997. Mr. Boies received a guaranteed
bonus outside of the Management Incentive Plan in connection with his employment
by the Company during the fiscal year.
LONG-TERM COMPENSATION. Long-term compensation comprises stock options and
the Company's long-term incentive program. In addition, the Committee
occasionally grants restricted stock to motivate and retain selected key
employees. Shares of stock issued under these programs are authorized by Part I
of the Amended and Restated 1989 Stock-Based Incentive Plan (the "1989 Plan") or
the 1986 Stock Option Incentive Plan (the "1986 Plan") of the Company. The
amounts of the long-term compensation awards are targeted to be at the median of
similar awards granted to officers in comparable positions at companies of
comparable size to the Company. In addition, the Committee takes into account
the number of stock options or shares of
8
<PAGE>
restricted stock outstanding or previously granted in determining the amounts of
awards. The Committee, in its discretion, may also consider the scope of an
officer's responsibilities and the officer's individual performance in
determining the size of an award.
In consideration of the small number of shares remaining available for
awards under the 1989 Plan and the expiration of the 1986 Plan, the Board of
Directors of the Company adopted, upon recommendation of the Committee, the 1997
Stock-Based Incentive Plan (the "1997 Plan"), subject to stockholder approval.
See "Proposal to Approve 1997 Stock-Based Incentive Plan" in this Proxy
Statement. The Committee believes that the continuation of stock-based
incentives is essential to implementing its compensation philosophy that a
significant part of the executive officers' compensation should be at risk and
linked to the interests of the Company's stockholders.
STOCK OPTIONS. The Committee grants stock options to the executive officers
of the Company on a discretionary basis. The Committee considers, among other
things, the financial performance of the Company in determining whether or not
to grant options to the executive officers. In addition, the Committee grants
stock options to new officers and key employees of the Company in order to
provide appropriate incentives to promote the long-term growth of the Company.
Stock options granted to the executive officers have an exercise price equal to
the market price of the Company's Common Stock on the date of grant and have
ten-year terms.
LONG-TERM INCENTIVE PROGRAM. The Company has a long-term incentive program
for corporate executive officers and a separate long-term incentive program for
executive officers who are Presidents of the Company's business units. Awards
under the long-term incentive program for corporate executive officers are
intended to be made once every two years and, accordingly, no awards under the
program were made during fiscal year 1997. In lieu of awards that were scheduled
to be made during fiscal year 1996, the Committee modified the targeted
performance measures under the long-term incentive awards granted in fiscal year
1994 and provided for a new three-year performance cycle ending on February 28,
1998 (rather than the prior three-year period which would have ended on February
29, 1996) in order to provide more meaningful incentives to the executive
officers. Under the existing long-term incentive program, as amended in fiscal
year 1996, participating executive officers hold shares of restricted stock that
will vest in three annual installments beginning February 28, 1998 only if the
Company achieves specified earnings per share and operating earnings objectives
over the three-year period ending on February 28, 1998. If the performance
objectives are not met, the shares of restricted stock will vest on February 28,
2003, subject to the continued employment of the executive officer.
During fiscal year 1997, the Presidents of the Company's business units were
granted awards under the Company's cash long-term incentive program. Awards
under the long-term incentive program for the Company's business units are made
at the Committee's discretion. The cash program has a three-year performance
cycle ending on February 28, 1999. Payments will be made under the program only
if the applicable business unit achieves specified financial objectives, such as
cumulative operating earnings, compound sales growth rate and/or return on
sales, during the performance cycle. Any payout under the program will be made
in three equal annual installments beginning February 28, 1999, subject to the
continued employment of the executive officer.
STOCK OWNERSHIP TARGETS. In 1992, the Committee established a stock
ownership program including stock ownership targets for key management employees
of the Company, including the Company's executive officers. Each participant in
the stock ownership program is expected to achieve the stock ownership target
established for the participant during an eight-year period beginning January 1,
1993. The target for each participant was based on a multiple of the
participant's annual base salary, ranging from one to five times the amount of
such salary, depending on the participant's level of responsibility within the
Company. The target is expressed as a number of shares determined by dividing
such multiple of annual base salary by the approximate market price of a share
of Common Stock of the Company at the time the stock ownership program was
adopted.
9
<PAGE>
Participants in the stock ownership program as a group achieved 162% of the
aggregate annual stock ownership target during calendar year 1995. In
determining the number of shares of Common Stock acquired by the participants
during the year under the program, the Committee included shares purchased by
individual participants in the open market or upon the exercise of stock
options, shares of restricted stock that vested and were retained by the
participant during the year, shares of restricted stock that would have vested
during the year but with respect to which the participant elected to defer
vesting, and shares of restricted stock previously awarded relating to any
salary amount waived by the participant for calendar year 1995. In March 1996,
the Committee awarded to certain participants in the stock ownership program
shares of restricted stock which have a three-year vesting period subject to the
continued employment of the participant during that period. The participants
selected to receive awards and the number of shares subject to each award were
determined in the discretion of the Committee and were based upon the
Committee's assessment of the participant's job performance and contributions to
the Company and, more particularly, were based upon the number of shares of the
Company's Common Stock acquired by the participant during calendar year 1995
toward the participant's annual stock ownership target under the program. The
number of shares of restricted stock awarded to each participant was equal to
approximately 15% of the number of shares of Common Stock acquired by the
participant during calendar year 1995 up to a limit of 1.5 times the annual
stock ownership target for the participant for that year. The Committee believes
that such awards of restricted stock will encourage the Company's management to
continue to obtain and hold a significant number of shares of the Company's
Common Stock.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
GARY E. COSTLEY. Dr. Costley became Chairman of the Board, President and
Chief Executive Officer of the Company on January 1, 1997. The Company and Dr.
Costley entered into an employment agreement, dated as of November 1, 1996,
which is described in this Proxy Statement under the heading, "Executive
Compensation -- Employment Agreement."
The Committee and the Board of Directors approved a total compensation
package that was designed to be competitive with compensation provided to chief
executive officers at companies of comparable size to the Company as well as
provide a compensation level and structure necessary to obtain an executive with
Dr. Costley's experience and credentials. Dr. Costley's employment agreement
provides for an initial annual salary of $600,000, participation in the
Company's Management Incentive Plan commencing in fiscal year 1998 and an award
of two separate stock options to purchase an aggregate of 200,000 shares of the
Company's Common Stock, as described below.
Effective as of January 1, 1997, Dr. Costley was granted an option to
purchase 100,000 shares of the Company's Common Stock at a price of $18.1875 per
share, the market price of a share of Common Stock on December 31, 1996. The
option was granted under the 1989 Plan, was immediately exercisable and has a
ten-year term. In addition, effective January 1, 1997, Dr. Costley was granted
another stock option to purchase 100,000 shares of the Company's Common Stock at
a price of $18.1875 per share. That option was granted under the 1997 Plan,
subject to approval of the 1997 Plan by the Company's stockholders. While the
option becomes fully exercisable on January 1, 2005, subject to Dr. Costley's
continued employment, it may become exercisable earlier (i) in installments of
25,000 shares annually, beginning with the fiscal year ending on February 28,
1998, if the Company's net pre-tax earnings for the applicable fiscal year
increase by at least 15% over the previous year's net pre-tax earnings or (ii)
in cumulative installments of 25,000 shares annually, beginning with the fiscal
year ending on February 28, 1998, if the Company's aggregate net pre-tax
earnings for any period of consecutive fiscal years reflect an average increase
of at least 15% annually from the fiscal year ending on February 28, 1997.
ROBERT M. PRICE. Mr. Price, a director of the Company for many years, served
as Chairman and Chief Executive Officer of the Company during the interim
following the resignation of Anthony Luiso, the Company's former Chairman,
President and Chief Executive Officer, on May 17, 1996. During such period, Mr.
Price received cash compensation of $40,000 per month, but did not receive the
annual retainer and meeting fees paid to the Company's outside directors. In
addition, Mr. Price was awarded 15,000 shares of
10
<PAGE>
restricted Common Stock, which shares vested upon the election of a new Chief
Executive Officer of the Company. The salary and the restricted stock award were
determined based on Mr. Price's additional responsibilities and his role in
providing a smooth transition in management following Mr. Luiso's resignation.
ANTHONY LUISO. Mr. Luiso resigned as Chairman of the Board, President and
Chief Executive Officer of the Company on May 17, 1996. Mr. Luiso's annual
salary at the time of his resignation was $550,000. His last salary increase was
in March 1995, at which time he received a 4% salary increase. Mr. Luiso
continued to receive his base salary through June 17, 1996, his last day of
employment with the Company.
Mr. Luiso did not receive a cash bonus under the Company's Management
Incentive Plan for the fiscal year ended February 28, 1997.
In March 1996, Mr. Luiso was granted an option to purchase 25,000 shares of
the Company's Common Stock in accordance with the guidelines described above
under the heading, "Long-Term Compensation." The option was forfeited upon Mr.
Luiso's resignation from employment with the Company.
In March 1996, Mr. Luiso received 2,250 shares of restricted Common Stock of
the Company in connection with the Company's management stock ownership program.
The number of shares of restricted stock awarded to Mr. Luiso was determined as
described above under the heading, "Stock Ownership Targets." The Committee
waived the vesting requirements of such shares of restricted stock in connection
with Mr. Luiso's resignation from employment with the Company.
In connection with Mr. Luiso's resignation, the Company entered into a
Separation Agreement with Mr. Luiso which is described in this Proxy Statement
under the heading, "Executive Compensation -- Separation Agreements -- Anthony
Luiso."
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
In the event that compensation paid by the Company to any executive officer
of the Company during the current or any subsequent fiscal year exceeds
$1,000,000, such excess amount may not qualify as a tax deduction for the
Company under the provisions of Section 162(m) of the Internal Revenue Code of
1986, as amended. Section 162(m) and the transitional regulations thereunder
exclude from the $1,000,000 limitation any income realized by an executive
officer of the Company upon the exercise of outstanding stock options granted
under the 1989 Plan or the 1986 Plan. In addition, the Company is seeking
stockholder approval of the 1997 Plan, as required by Section 162(m), so that
compensation attributable to stock options and certain other awards granted
under the 1997 Plan may be excluded from the $1,000,000 limitation as well. See
"Proposal to Approve 1997 Stock-Based Incentive Plan" in this Proxy Statement.
The Committee, along with the Company, will continue to evaluate the Company's
compensation plans and programs in view of the Section 162(m) limitation.
Nicholas L. Reding, Chairman
James G. Fifield
Jack D. Rehm
Members of the Compensation Committee
11
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash compensation and certain other
components of compensation for the last three fiscal years of the Chief
Executive Officer of the Company, the four other most highly compensated
executive officers of the Company, two other individuals who served as chief
executive officer during the last fiscal year and two other individuals who
ceased to serve as an executive officer during the last fiscal year.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------------------------
AWARDS
ANNUAL COMPENSATION ------------------------------ PAYOUTS
-------------------------------------------- RESTRICTED SECURITIES -------- ALL OTHER
NAME AND PRINCIPAL OTHER ANNUAL STOCK UNDERLYING LTIP COMPEN-
POSITION(1) YEAR SALARY BONUS(7) COMPENSATION AWARDS(17) OPTIONS(#) PAYOUTS SATION(29)
- -------------------- ---- -------------- ------------ ------------ ---------------- ----------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gary E. Costley, 1997 $100,000 $0 $50,518(10) $0 200,000(26) $0 $0
Ph.D. ............. 1996
CHAIRMAN, PRESIDENT 1995
AND CHIEF EXECUTIVE
OFFICER
D. Bruce Kean ...... 1997 $217,154 $100,000 $0 $0 5,000 $0 $3,144
PRESIDENT, 1996 $202,000 $0 $0 $0 5,000 $0 $1,961
MULTIFOODS 1995
SPECIALTY
DISTRIBUTION, INC.
Robert F. 1997 $283,188 $0 $30,619(11) $102,072(18)(19) 0 $0 $5,625
Maddocks .......... 1996 $195,208(2) $0 $0 $9,312(20) 10,000 $0 $4,620
EXECUTIVE VICE 1995 $173,333(2) $114,840(2) $0 $7,756(21) 0 $0 $4,620
PRESIDENT
Robert S. Wright ... 1997 $270,417 $0 $0 $2,887(18) 5,000 $0 $5,642
VICE PRESIDENT AND 1996 $143,188 $190,000(8) $276,900(12) $226,250(22) 15,000 $0 $2,651
PRESIDENT, NORTH 1995
AMERICA FOODS
Jeffrey E. Boies ... 1997 $99,130 $160,000(9) $99,730(13) $96,744(23) 6,000 $0 $0
PRESIDENT, VSA, 1996
INC. 1995
Robert M. Price .... 1997 $299,130 $0 $0 $290,625(24) 0 $0 $0
FORMER CHAIRMAN AND 1996
CHIEF EXECUTIVE 1995
OFFICER
Anthony Luiso ...... 1997 $211,997(3) $0 $40,548(14) $43,312(18) 25,000(27) $0 $1,230,748(30)
FORMER CHAIRMAN, 1996 $425,000(4) $0 $265,170(2) $0 $41,906(20) 30,000 $0 $4,620
PRESIDENT AND CHIEF 1995 $380,000(5) $0 $41,063(21) 20,513(28) $0 $4,620
EXECUTIVE OFFICER
Duncan H. 1997 $284,989(6) $0 $0 $10,106(18) 7,500(27) $0 $364,964(31)
Cocroft ........... 1996 $250,208(2) $0 $0 $12,572(20) 10,000 $0 $4,620
FORMER VICE 1995 $231,250(2) $73,550(2) $0 $12,319(21) 0 $0 $4,620
PRESIDENT - FINANCE
AND CHIEF FINANCIAL
OFFICER
Devendra Mishra .... 1997 $273,750 $0 $46,525(15) $3,272(18) 5,000 $0 $201,029(32)
FORMER PRESIDENT 1996 $260,000 $0 $323,232(16) $300,008(25) 7,500 $0 $2,188
AND CHIEF EXECUTIVE 1995
OFFICER, VSA, INC.
</TABLE>
- ----------
(1) Dr. Costley was elected Chairman, President and Chief Executive Officer
effective January 1, 1997. Mr. Kean became an executive officer in fiscal
year 1996. Mr. Wright was hired by the Company effective August 14, 1995.
Mr. Boies was hired by the Company effective October 28, 1996. Mr. Price
served as interim Chairman and Chief Executive Office from May 17, 1996
through December 31, 1996. Mr. Luiso resigned as Chairman, President and
Chief Executive Officer on May 17, 1996 and terminated employment with the
Company on June 17, 1996. Mr. Cocroft resigned as an executive officer on
December 31, 1996. Mr. Mishra became an executive officer in fiscal year
1996 and he ceased to serve as an executive officer in fiscal year 1997.
(2) The salary and bonus amounts for Mr. Maddocks and Mr. Cocroft exclude
portions of cash compensation waived over a five-year period in exchange for
stock options which were granted in fiscal year 1991. The
12
<PAGE>
bonus amount for Mr. Luiso in fiscal year 1995 excludes cash compensation
waived in exchange for stock options which were granted to Mr. Luiso in
fiscal year 1995. The amounts of salary and bonus waived for each of the
fiscal years shown are as follows:
<TABLE>
<CAPTION>
Mr. Maddocks and Mr. Cocroft: Mr. Luiso:
<S> <C> <C> <C> <C>
SALARY BONUS BONUS
------- -------- -------
1996........... $24,792 $ 0 1996........... $ 0
1995........... $35,000 $ 70,000 1995........... $100,000
</TABLE>
(3) The amount includes a cash payment of $49,288 in lieu of unused earned and
accrued vacation.
(4) The salary amount excludes $125,000 of $450,000 of cash compensation that
Mr. Luiso waived over a three-year period, which ended December 31, 1995, in
exchange for 16,035 shares of restricted stock which were granted to Mr.
Luiso in fiscal year 1993.
(5) The salary amount excludes $150,000 of $450,000 of cash compensation waived
over a three-year period, as described above in note 4.
(6) The amount includes a cash payment of $33,462 in lieu of unused earned and
accrued vacation.
(7) Except as otherwise noted, the amounts were paid pursuant to the Company's
Management Incentive Plan described above in the Compensation Committee
Report on Executive Compensation.
(8) The amount comprises a guaranteed bonus of $130,000 under the Company's
Management Incentive Plan which was offered to Mr. Wright in connection with
his employment with the Company and an employment bonus of $60,000.
(9) The amount is a guaranteed bonus which was offered to Mr. Boies in
connection with his employment with the Company.
(10) The amount includes certain relocation expenses, including $26,959 paid to
Dr. Costley as reimbursement of loss on the sale of his house in connection
with his relocation from North Carolina to Minnesota. The amount does not
include payments made pursuant to the Company's standard relocation policy.
(11) The amount includes $25,846 paid to Mr. Maddocks as a monthly housing
allowance.
(12) The amount relates to relocation expenses, including $275,000 paid to Mr.
Wright as reimbursement of loss on the sale of his house in connection with
his relocation from California to Minnesota.
(13) The amount includes certain relocation expenses, including $44,593 paid to
Mr. Boies as reimbursement of loss on the sale of his house in connection
with his relocation from Ohio to Colorado and $35,137 as tax reimbursement
on such payment. The amount does not include payments made pursuant to the
Company's standard relocation policy.
(14) The amount includes $31,042 for personal financial planning.
(15) The amount relates to expenses for maintaining a business office for Mr.
Mishra through January 31, 1997.
(16) The amount relates to relocation expenses, including $242,500 paid to Mr.
Mishra as reimbursement of loss on the sale of his house in connection with
his relocation from California to Colorado.
(17) The value of each restricted stock award was determined by multiplying the
closing market price of the Company's Common Stock on the date of grant by
the number of shares awarded. As of February 28, 1997, the number and value
(based on the closing market price of the Company's Common Stock on February
28, 1997) of the aggregate restricted stock holdings of each of the named
executive officers were as follows: 0 shares ($0) by Dr. Costley, 0 shares
($0) by Mr. Kean, 13,695 shares ($289,307) by Mr. Maddocks, 10,150 shares
($214,419) by Mr. Wright, 5,265 shares ($111,223) by Mr. Boies, 0 shares
($0) by Mr. Price, 0 shares ($0) by Mr. Luiso, 0 shares ($0) by Mr. Cocroft,
and 19,430 shares ($410,459) by
13
<PAGE>
Mr. Mishra. Dividends are paid on the shares of restricted stock at the same
rate as paid to all stockholders, but the executive officer is not entitled
to receive such dividends unless and until the related shares vest.
(18) The shares of restricted stock were awarded by the Compensation Committee
to the executive officer in recognition of his achievement of progress
toward his individual stock ownership target under the management stock
ownership program, as described above in the Compensation Committee Report
on Executive Compensation. The numbers of shares awarded were as follows:
270 shares to Mr. Maddocks, 150 shares to Mr. Wright, 2,250 shares to Mr.
Luiso, 525 shares to Mr. Cocroft and 170 shares to Mr. Mishra. The shares
vest on March 17, 1999, subject to the continued employment of the executive
officer. However, Mr. Luiso's shares vested in connection with his
resignation from the Company. The shares also vest in the event of a change
in control of the Company.
(19) Mr. Maddocks was also awarded 5,000 shares of restricted stock on June 17,
1996. The shares vested on March 31, 1997.
(20) The shares of restricted stock were awarded under the management stock
ownership program, as described above in note 18. The numbers of shares
awarded were as follows: 500 shares to Mr. Maddocks, 2,250 shares to Mr.
Luiso and 675 shares to Mr. Cocroft. The shares vest on March 17, 1998,
subject to the continued employment of the executive officer. However, Mr.
Luiso's shares vested in connection with his resignation from the Company.
The shares also vest in the event of a change in control of the Company.
(21) The shares of restricted stock were awarded under the management stock
ownership program, as described above in note 18. The numbers of shares
awarded were as follows: 425 shares to Mr. Maddocks, 2,250 shares to Mr.
Luiso and 675 shares to Mr. Cocroft. The shares vested on March 17, 1997,
except that Mr. Luiso's shares vested in connection with his resignation
from the Company and Mr. Cocroft forfeited his shares in connection with his
resignation from office.
(22) Mr. Wright was awarded 10,000 shares of restricted stock under the
Company's long-term incentive program relating to a three-year performance
cycle ending on February 28, 1998, as described above in the Compensation
Committee Report on Executive Compensation. Although the full value of the
shares awarded is shown for fiscal year 1996, no payout will be made under
the program until the end of the three-year performance cycle, and then only
if established corporate financial performance objectives are achieved. If
no payout is made at the end of the three-year cycle, the shares will vest
on February 28, 2003, provided that the executive officer remains employed
by the Company until such date. The shares also vest in the event of a
change in control of the Company.
(23) The Company awarded Mr. Boies 5,265 shares of restricted stock to
compensate him for the loss of certain deferred compensation that occurred
upon his termination of employment with his former employer. The shares vest
on December 19, 1999, subject to Mr. Boies' continued employment. The shares
also vest in the event of a change in control of the Company.
(24) Mr. Price was awarded 15,000 shares of restricted stock on June 17, 1996,
as described above in the Compensation Committee Report on Executive
Compensation. The shares vested on January 1, 1997.
(25) In addition to the amount specified above in note 16, Mr. Mishra received a
grant in September 1995 of 13,260 shares of restricted stock as
reimbursement of loss on the sale of his house in connection with his
relocation from California to Colorado. The shares vested on March 17, 1997
upon Mr. Mishra's termination of employment with the Company.
(26) The number includes an option to purchase 100,000 shares, which option is
subject to stockholder approval of the 1997 Plan. See "Proposal to Approve
1997 Stock-Based Incentive Plan" in this Proxy Statement.
(27) The executive officer forfeited the options in connection with his
resignation from office.
14
<PAGE>
(28) The options were granted to Mr. Luiso in connection with his waiver of
$100,000 of cash bonus awarded to him for fiscal year 1995 as described
above in note 2.
(29) Except as otherwise noted, the amounts reported represent the Company's
matching contributions to the Company's Savings Plan.
(30) The amount includes $1,100,000 in severance pay, $47,000 for outplacement
services, $25,000 for income tax preparation and financial planning for 1996
and 1997, $19,200 as a car allowance through June 17, 1997, $16,000 for Mr.
Luiso's attorneys' fees in connection with his separation from employment
with the Company, $14,145 for maintaining a business office for Mr. Luiso
through June 18, 1997, $2,500 as reimbursement for medical insurance
premiums to continue coverage for 18 months, $1,917 for a club membership
through June 15, 1997 and an estimated $1,330 for the costs of a physical
examination in 1997.
(31) The amount includes $255,000 in severance pay, $88,880 in salary
continuation payments, $10,000 for outplacement services and an estimated
$7,200 for medical and life insurance benefits through June 30, 1998.
(32) The amount includes $171,329 in severance pay, $12,004 in salary
continuation payments, $10,000 for outplacement services and $2,217 as
reimbursement for medical insurance premiums to continue coverage for a
period of six months after termination of employment.
STOCK OPTIONS
The following tables summarize stock option grants to and exercises by the
executive officers named in the Summary Compensation Table above during the
Company's fiscal year 1997 and the value of stock options held by such officers
at the end of fiscal year 1997.
OPTION GRANTS IN FISCAL YEAR 1997
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT
INDIVIDUAL GRANTS ASSUMED ANNUAL
-------------------------------------------------------- RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN OR BASE EXPIRATION ------------------
NAME GRANTED(1) FISCAL YEAR PRICE ($/SHARE) DATE 5% 10%
- ------------------------- ---------- ------------ --------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Gary E. Costley, Ph.D.... 100,000(2) 28.66% $18.1875 12/31/06 $1,143,794 $2,898,619
100,000(3) 28.66% $18.1875 12/31/06 $1,143,794 $2,898,619
D. Bruce Kean............ 5,000 1.43% $19.3125 3/14/06 $60,727 $153,896
Robert S. Wright......... 5,000 1.43% $19.3125 3/14/06 $60,727 $153,896
Jeffrey E. Boies......... 6,000 1.72% $16.0000 10/27/06 $60,373 $152,999
Anthony Luiso............ 25,000 7.17% $19.3125 6/27/96 $0 $0
Duncan H. Cocroft........ 7,500 2.15% $19.3125 12/31/96 $0 $0
Devendra Mishra.......... 5,000 1.43% $19.3125 3/14/06 $60,727 $153,896
</TABLE>
- ----------
(1) The options granted to Dr. Costley were granted on January 1, 1997, the
options granted to Mr. Boies were granted on October 28, 1996 and the
options granted to the other executive officers were granted on March 15,
1996. The options have an exercise price equal to the market price of the
Company's Common Stock on the date of grant and, unless otherwise noted,
become exercisable one year from the date of grant. The options also become
exercisable in the event of a change in control of the Company.
(2) The options were immediately exercisable.
(3) The options have performance vesting requirements, which are described above
in the Compensation Committee Report on Executive Compensation under the
heading, "Compensation of the Chief Executive Officer -- Gary E. Costley."
15
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997 AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES FISCAL YEAR END FISCAL YEAR END(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gary E. Costley, Ph.D........................ 0 $0 100,000 100,000 $293,750 $293,750
D. Bruce Kean................................ 0 $0 5,000 5,000 $12,187 $9,062
Robert F. Maddocks........................... 0 $0 127,204 0 $36,187 $0
Robert S. Wright............................. 0 $0 19,000 5,000 $0 $9,062
Jeffrey E. Boies............................. 0 $0 0 6,000 $0 $30,750
Robert M. Price.............................. 0 $0 29,386 0 $36,484 $0
Anthony Luiso................................ 0 $0 273,496 0 $87,180 $0
Duncan H. Cocroft............................ 0 $0 106,704 0 $0 $0
Devendra Mishra.............................. 17,500 $69,844(1) 0 5,000 $0 $9,062
</TABLE>
- ----------
(1) The value was determined by subtracting the exercise price per share from
the closing market price per share of the Company's Common Stock on the date
of exercise.
(2) The value was determined by subtracting the exercise price per share from
the closing market price per share of the Company's Common Stock on February
28, 1997.
LONG-TERM INCENTIVE AWARDS
The following table summarizes long-term incentive awards made to executive
officers named in the Summary Compensation Table above pursuant to the Company's
cash long-term incentive program, as described above in the Compensation
Committee Report on Executive Compensation.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF OR OTHER NON-STOCK PRICE-BASED PLANS
SHARES, UNITS PERIOD UNTIL --------------------------------
OR OTHER MATURATION OR THRESHOLD TARGET(2) MAXIMUM
NAME RIGHTS(1) PAYOUT ($ OR #) ($ OR #) ($ OR #)
- ---------------------------------------------------- --------------- ------------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Fiscal Years
D. Bruce Kean....................................... 0 1997-1999 N/A $ 225,000 N/A
Robert S. Wright.................................... 0 1997-1999 N/A $ 325,000 N/A
Devendra Mishra..................................... 0 1997-1999 N/A $ 325,000 N/A
</TABLE>
- ----------
(1) The award was not expressed in these terms.
(2) Any payout under the program will be made in three equal annual installments
commencing at the end of the performance period. Mr. Mishra forfeited his
award upon his termination of employment with the Company.
PENSION EQUITY PLAN AND MANAGEMENT BENEFIT PLAN
The Company maintains the Multifoods Pension Equity Plan (the "Pension
Plan") for salaried and certain other employees of the Company and its
subsidiaries who have completed one year of service with the Company or a
subsidiary of the Company. The Pension Plan was adopted in fiscal year 1996 as a
continuation and amendment of the Company's Employees' Retirement Plan. The
Pension Plan is a tax qualified defined benefit pension plan which provides for
lump sum payments upon termination of employment. In lieu of a single lump sum
payment, an employee may elect to receive immediate or deferred monthly payments
for life. An employee's pension benefits are based on years of service with the
Company or a subsidiary of the Company, the employee's "Final Average Pay" and
the "Integration Level." Final Average Pay is the average
16
<PAGE>
of the employee's base pay for the three consecutive calendar years in which the
employee's base pay was the highest during the last ten full calendar years
prior to termination of employment. Base pay does not include bonuses and other
additional compensation. In addition, the amount of base pay covered by the
Pension Plan is limited by requirements of the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code") and the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Integration Level is one-half of
the taxable wage base in effect under the Social Security Act at the time of
termination of employment. Under the Pension Plan, an employee earns "Base
Points" and "Integration Points" for each year of service. The number of points
earned is based on the employee's age at the end of the calendar year and
increases as the employee's age increases. Base Points are also awarded based on
the amount of accrued benefit that an employee has earned under the Company's
Employees' Retirement Plan as of December 31, 1995. Base Points and Integration
Points are expressed as a percentage of Final Average Pay. An employee's accrued
lump sum benefit equals the total number of Base Points earned times the
employee's Final Average Pay plus the total number of Integration Points earned
times the employee's Final Average Pay in excess of the Integration Level. An
employee becomes vested in his or her benefits under the Pension Plan after five
years of service. An employee who has completed ten years of service as of
December 31, 1995 and whose age plus service as of December 31, 1995 totals 60
or more may elect to have his or her benefit calculated and paid in accordance
with the provisions of the pension formula in effect as of December 31, 1995
under the Pension Plan.
The Company's Management Benefit Plan provides for the payment of additional
amounts to certain key employees of the Company and its subsidiaries (including
the executive officers named in the Summary Compensation Table) so that they
will receive in the aggregate the benefits they would have been entitled to
receive under the Pension Plan without the limitations imposed by the Internal
Revenue Code or ERISA. The Management Benefit Plan was amended and restated
effective January 1, 1997. Participants in the Management Benefit Plan as of
January 1, 1997 (referred to as "grandfathered" participants) generally are
eligible to continue their participation under the terms of the Management
Benefit Plan in effect prior to January 1, 1997. Grandfathered participants will
receive in the aggregate the benefits they would have been entitled to receive
under the Pension Plan formula in effect as of December 31, 1995 (regardless of
whether such benefit is actually calculated under that formula) without the
limitations imposed by the Internal Revenue Code or ERISA. Grandfathered
participants in the Management Benefit Plan are also entitled to lifetime annual
income upon retirement equal to 50% of the "Bonus Base." For employees who
became participants in the Management Benefit Plan prior to March 1, 1990, the
Bonus Base is the average of the five highest bonuses awarded to the participant
under the Management Incentive Plan during the last ten years of employment by
the Company prior to retirement. For employees who became participants in the
Management Benefit Plan on or after March 1, 1990, the Bonus Base includes such
bonuses awarded only while the employee is a participant in the Management
Benefit Plan unless the Compensation Committee prescribes otherwise. The level
of annual benefits is reduced if a grandfathered participant retires prior to
age 62. A participant in the Management Benefit Plan becomes vested in his or
her benefits under the Management Benefit Plan upon completion of five years of
service with the Company or when he or she attains age 65, if earlier.
17
<PAGE>
The following table shows the estimated combined annual amounts payable with
respect to various classifications of earnings and years of service to
participants in both the Pension Plan and Management Benefit Plan who retire at
the normal retirement age of 65 and elect payment of a straight life annuity.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------------------
REMUNERATION* 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 42,729 $ 50,458 $ 58,188 $ 65,917 $ 73,646 $ 81,375 $ 89,104
$ 400,000 $ 86,086 $102,173 $118,259 $134,345 $150,432 $166,518 $182,604
$ 600,000 $129,443 $153,887 $178,330 $202,774 $227,217 $251,661 $276,104
$ 800,000 $172,801 $205,601 $238,402 $271,203 $304,003 $336,804 $369,604
$1,000,000 $216,158 $257,316 $298,473 $339,631 $380,789 $421,947 $463,104
$1,200,000 $259,515 $309,030 $358,545 $408,060 $457,575 $507,089 $556,604
</TABLE>
- ----------
*For purposes of this table, it is assumed that remuneration is comprised 65% of
Final Average Pay and 35% of Bonus Base (both terms as defined above). The
benefits are not subject to any reduction for Social Security or other offset
amounts.
The number of years of service under the Pension Plan for each of the
executive officers named in the Summary Compensation Table is as follows: Dr.
Costley -- 0, Mr. Kean -- 3, Mr. Maddocks -- 7, Mr. Wright -- 4, Mr. Boies -- 0,
Mr. Luiso -- 9, Mr. Cocroft -- 7, and Mr. Mishra -- 2. Messrs. Maddocks, Luiso
and Cocroft are fully vested in the Management Benefit Plan. Mr. Price does not
participate in the Pension Plan or the Management Benefit Plan. Mr. Wright and
Mr. Boies have additional retirement benefits as described below.
SUPPLEMENTAL RETIREMENT BENEFITS
Mr. Wright has an arrangement with the Company pursuant to which he will
receive supplemental retirement benefits in addition to any benefits he may
receive under the Pension Plan and the Management Benefit Plan, as described
above. Mr. Wright has been credited with two years of service, which was
reinstated from his prior employment with the Company from 1992 to 1994. In
addition, commencing with his re-employment with the Company in August 1995, Mr.
Wright will be credited with two years of service under the Pension Plan for
each additional year of employment with the Company. Mr. Wright may also elect
to have his supplemental pension benefit calculated and paid in accordance with
the provisions of the pension formula in effect as of December 31, 1995 under
the Pension Plan. The supplemental retirement arrangement also provides for
immediate vesting in an annual benefit equal to 50% of the five highest bonuses
payable to him under the Company's Management Incentive Plan in his last ten
years of employment with the Company, including bonuses paid during his previous
period of employment. If Mr. Wright had terminated employment with the Company
on February 28, 1997, the annual supplemental retirement benefit payable to Mr.
Wright upon attaining age 55 would have been $36,475.
Mr. Boies has an arrangement with the Company pursuant to which he will
receive supplemental retirement benefits in addition to any benefits he may
receive under the Pension Plan and the Management Benefit Plan, as described
above. Mr. Boies will be credited with one and one-half years of service under
the Pension Plan for each year of employment with the Company. Mr. Boies may
also elect to have his supplemental pension benefit calculated and paid in
accordance with the provisions of the pension formula in effect as of December
31, 1995 under the Pension Plan. If Mr. Boies had terminated employment with the
Company on February 28, 1997, no annual supplemental retirement benefit would be
payable to Mr. Boies upon attaining age 55.
18
<PAGE>
EMPLOYMENT AGREEMENT
On November 1, 1996, the Company entered into an employment agreement with
Dr. Costley pursuant to which Dr. Costley became employed as Chairman of the
Board, President and Chief Executive Officer for the period from January 1, 1997
through December 31, 1999 (with automatic one-year renewals thereafter unless
the Company gives notice of termination). The agreement provides for an annual
base salary of $600,000, an annual bonus (commencing with fiscal year 1998) if
performance goals to be determined by the Compensation Committee are met,
participation in the Company's employee benefit plans, and specified perquisites
and relocation benefits. The agreement also provided for an award of two
separate stock options to purchase an aggregate of 200,000 shares of the
Company's Common Stock, which are described above in the Compensation Committee
Report on Executive Compensation.
If, prior to December 31, 1999, the Company terminates Dr. Costley's
employment for a reason other than "cause" (as defined in the agreement) or Dr.
Costley resigns for "good reason" (as defined in the agreement), Dr. Costley
will receive a severance payment in installments over a two-year period in the
aggregate amount of (i) two times his annual base salary as of the termination
date, (ii) two times the average of his bonuses for the two previous fiscal
years (subject to a minimum of 65% of his annual base salary for fiscal year
1998) and (iii) either 65% of his annual base salary or a pro rata portion of
his actual bonus for the previous fiscal year (based on the number of weeks
employed in the then-current fiscal year), whichever is greater. In the event of
termination of employment after December 31, 1999, the agreement provides for a
severance payment to be made over an 18-month period based on 1.5 times his
annual base salary and average bonuses. If the Company terminates Dr. Costley's
employment following a "change of control" (as defined in the agreement) or if
Dr. Costley resigns for any reason within 180 days after a change of control,
Dr. Costley will receive a severance payment in installments over a three-year
period in the aggregate amount of (i) three times his annual base salary as of
the termination date, (ii) three times the average of his bonuses for the three
previous fiscal years (subject to a minimum of 65% of his annual base salary for
fiscal year 1998) and (iii) either 65% of his annual base salary or his actual
bonus for the previous fiscal year, whichever is greater. In the event that any
payments by the Company to Dr. Costley are subject to an excise tax, including
interest and penalties, under the Internal Revenue Code, the Company is
obligated to reimburse Dr. Costley for such amounts. Assuming a change of
control had occurred and the Company terminated Dr. Costley's employment or Dr.
Costley resigned on February 28, 1997, the amount payable to Dr. Costley would
have been approximately $3,485,245.
SEPARATION AGREEMENTS
ANTHONY LUISO. The Company entered into a separation agreement with Mr.
Luiso, former Chairman of the Board, President and Chief Executive Officer of
the Company, in connection with his resignation from office on May 17, 1996.
Under the agreement, Mr. Luiso continued to receive his base salary through June
17, 1996, his last day of employment, and received a payment for his accrued
vacation. The separation agreement also provided to Mr. Luiso a severance
payment of $1,100,000 and other benefits, which are shown above in the Summary
Compensation Table. As part of the separation agreement, Mr. Luiso agreed not to
engage in competitive activities with the Company through June 17, 1997.
In connection with Mr. Luiso's resignation, the Compensation Committee
extended the option exercise periods for certain vested stock options held by
Mr. Luiso and waived the vesting requirements with respect to 52,035 shares of
restricted stock held by Mr. Luiso. Mr. Luiso forfeited 25,000 shares of
restricted stock which had been granted to him under the Company's long-term
incentive program.
Mr. Luiso is also entitled to a supplemental retirement benefit, in
accordance with the terms of his prior employment agreement, as well as amounts
he is eligible for under the Pension Plan and the Management Benefit Plan. Upon
attaining age 55, Mr. Luiso will be entitled to an annual supplemental
retirement benefit of $67,294, plus an annual retirement benefit of $180,758
under these plans. In the event of a change in control of the Company, Mr. Luiso
is entitled to a lump sum payment of his supplemental retirement benefit, which
would have been approximately $770,968 if a change in control had occurred on
February 28, 1997.
19
<PAGE>
DUNCAN H. COCROFT. The Company entered into a separation agreement with Mr.
Cocroft, former Vice President - Finance and Chief Financial Officer of the
Company, in connection with his resignation from office on December 31, 1996.
Under the agreement, the Company agreed to retain Mr. Cocroft as an inactive
employee until June 30, 1998, at which time Mr. Cocroft will be eligible for
retirement from the Company. During such period, Mr. Cocroft will receive a
monthly salary of $5,555 and medical and life insurance benefits under the
Company's benefit plans in exchange for his agreement to assist the Company with
certain business matters. The separation agreement also provided for a severance
payment of $255,000 and other amounts shown above in the Summary Compensation
Table. As part of the separation agreement, Mr. Cocroft agreed that all stock
options and shares of restricted Common Stock of the Company held by him would
terminate, expire or be forfeited in accordance with their terms as if Mr.
Cocroft's employment had terminated on December 31, 1996. Accordingly, all
shares of restricted stock held by Mr. Cocroft were forfeited as of December 31,
1996. Mr. Cocroft also agreed not to engage in any competitive activities with
the Company through June 30, 1998. Upon retirement from the Company, Mr. Cocroft
will be eligible to receive an aggregate annual retirement benefit of
approximately $66,000 under the Pension Plan and the Management Benefit Plan.
DEVENDRA MISHRA. Mr. Mishra ceased to serve as an executive officer of the
Company on June 26, 1996, but continued as an employee of the Company until
March 17, 1997. Under a separation agreement between Mr. Mishra and the Company,
the Company agreed to make a severance payment and provide certain benefits to
Mr. Mishra, the amounts of which are shown above in the Summary Compensation
Table. As part of the separation agreement, Mr. Mishra agreed not to engage in
certain competitive activities with the Company through April 30, 1999.
In connection with Mr. Mishra's termination of employment, the Compensation
Committee waived the vesting requirements with respect to 19,260 shares of
restricted stock held by Mr. Mishra. Mr. Mishra forfeited 170 shares of
restricted stock upon his termination of employment.
SEVERANCE AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
The Company is a party to severance agreements with Messrs. Kean, Maddocks,
Wright and Boies. The two-year term of each agreement is automatically extended
each year for one additional year unless the Company gives notice to the officer
that the Company does not wish to extend the agreement. No such notice has been
given to any executive officer. Under each agreement, the Company has agreed to
employ the executive officer for a period of two years following a change in
control of the Company (as defined in the agreement). If, during such two-year
period, the officer's employment is terminated by the Company for any reason
other than cause, death or disability, or the officer terminates his employment
for "good reason" (as defined in the agreement), the Company is obligated to pay
to such officer, in a lump sum, the aggregate of (i) the amounts of any accrued
or deferred compensation and (ii) an amount equal to 2.5 times the total of the
officer's annual base salary in effect at the time of the change in control plus
the average of the bonus awards paid to the officer under the Company's
Management Incentive Plan for the three fiscal years immediately preceding the
change in control, subject to increase in the event the payment or any other
payments made in connection with a change in control constitute "parachute
payments" under the Internal Revenue Code. Assuming a change in control of the
Company had occurred and each of the officers' employment was terminated by the
Company or each officer terminated his employment for "good reason" on February
28, 1997, the amounts payable to Messrs. Kean, Maddocks, Wright and Boies under
the agreements would have been approximately $1,069,808, $1,442,068, $956,100
and $713,553, respectively.
Mr. Wright has a severance agreement with the Company whereby the Company
has agreed to pay him 18 months' salary in the event the Company terminates his
employment for any reason other than cause prior to August 14, 1997.
Mr. Boies has an additional severance agreement with the Company. If the
Company terminates Mr. Boies' employment for any reason other than cause during
his first year of employment, which period ends
20
<PAGE>
on October 27, 1997, the Company will pay him three years' salary. If
termination of employment occurs during the second year, the Company will pay
him two years' salary and, if termination occurs at any time thereafter, the
Company will pay him one year's salary.
The Company has certain other compensatory arrangements with its executive
officers which will result from a change in control of the Company. The
Management Incentive Plan provides that in the event of a change in control of
the Company during the first six months of the Company's fiscal year, each
participant in the Management Incentive Plan will receive an immediate cash
payment equal to 100% of the target annual bonus amount for that fiscal year as
if the target performance objective had been met. In the event of a change in
control during the last six months of the Company's fiscal year, each
participant will receive an immediate cash payment equal to 100% of the greater
of (i) the target annual bonus amount for that fiscal year as if the target
performance objective had been met or (ii) the amount determined based upon the
anticipated results relating to the performance objective for that fiscal year.
In addition, in the event of a change in control of the Company, stock
options outstanding under the Company's stock-based incentive plans which are
not yet exercisable become immediately exercisable and all shares of restricted
stock outstanding vest in full.
The Management Benefit Plan provides for lump sum payments to the
participants in the event of a change in control of the Company plus an
additional amount in the event the payment constitutes a "parachute payment"
under the Internal Revenue Code. In addition, the Board of Directors authorized
the establishment and funding of a trust for the purpose of assisting the
Company in fulfilling its obligations to the participants in the Management
Benefit Plan, which trust will become irrevocable upon the earlier of (i) a
change in control of the Company or (ii) a favorable ruling from the Internal
Revenue Service that the creation and funding of the trust does not result in
constructive receipt to the participants, neither of which event has yet
occurred. Assuming a change in control of the Company had occurred on February
28, 1997, the lump sums payable to the executive officers named in the Summary
Compensation Table would have been approximately as follows: Dr. Costley -- $0,
Mr. Kean -- $125,171, Mr. Maddocks -- $539,085, Mr. Wright -- $90,538, Mr. Boies
- -- $0, Mr. Luiso -- $1,873,991, Mr. Cocroft -- $627,772, and Mr. Mishra --
$23,810. Mr. Price does not participate in the Management Benefit Plan.
21
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Common Stock
of the Company for the last five fiscal years with the cumulative total return
of the Standard & Poor's 500 Composite Stock Index (the "S&P 500") and the Dow
Jones Food Index for the same period (assuming the investment of $100 in the
Company's Common Stock, the S&P 500 and the Dow Jones Food Index on February 29,
1992 and reinvestment of all dividends). The cumulative returns are as of
February 28 or February 29 of each year, as the case may be, the Company's
fiscal year end.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INTERNATIONAL MULTIFOODS
CORP. S&P 500 DOW JONES FOOD
<S> <C> <C> <C>
2/92 100 100 100
2/93 101 111 108
2/94 70 120 99
2/95 79 129 113
2/96 82 173 146
2/97 97 219 173
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who beneficially own more than ten percent
of the Company's Common Stock, to file reports of ownership and changes in
ownership of the Company's Common Stock and other equity securities with the
Securities and Exchange Commission and the New York Stock Exchange. Such
officers, directors and greater than ten-percent beneficial owners are required
by regulation of the Securities and Exchange Commission to furnish the Company
with copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on the Company's review of copies
of such reports furnished to the Company and written representations from
reporting persons that no other reports were required for those persons, the
Company believes that, during the fiscal year ended February 28, 1997, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were met.
22
<PAGE>
PROPOSAL TO APPROVE 1997 STOCK-BASED INCENTIVE PLAN
INTRODUCTION
The Company's Board of Directors adopted, upon the recommendation of the
Compensation Committee of the Board, the 1997 Stock-Based Incentive Plan of
International Multifoods Corporation (the "1997 Plan"), subject to stockholder
approval at the 1997 Annual Meeting. The 1997 Plan would become effective upon
approval by the stockholders at the Annual Meeting. The 1997 Plan provides for
the grant of stock-based awards to officers and key employees of the Company and
its subsidiaries as determined by the Compensation Committee of the Board.
Generally, the consideration to be received by the Company for awards under the
1997 Plan will be the officers' and employees' past, present or expected future
contributions to the Company. The Compensation Committee and the Board of
Directors believe that the continuation of stock-based compensation programs is
essential to implementing the Compensation Committee's philosophy as described
in the Compensation Committee Report on Executive Compensation in this Proxy
Statement.
The Board of Directors adopted the 1997 Plan in consideration of the small
number of shares remaining available for awards to officers and employees under
the Company's existing stock-based plans. The Company's existing stock-based
plans are the 1986 Stock Option Incentive Plan (the "1986 Plan"), Part I of the
Amended and Restated 1989 Stock-Based Incentive Plan (the "1989 Plan") and Part
II of the 1989 Plan. All of these plans were approved by the Company's
stockholders. As of March 31, 1997, only 21,314 shares remained available for
awards under Part I of the 1989 Plan and no further awards may be made under the
1986 Plan. Part II of the 1989 Plan provides for grants of stock options and
shares of restricted Common Stock to the Company's non-employee directors in
accordance with the specific terms of that plan. No changes are proposed to Part
II of the 1989 Plan. If the 1997 Plan is approved by the Company's stockholders,
no additional awards will be granted under Part I of the 1989 Plan. However, all
outstanding awards under Part I of the 1989 Plan, as well as the 1986 Plan, will
continue in accordance with their terms.
The following summary of the 1997 Plan is qualified in its entirety by
reference to the full text of the 1997 Plan, which is attached to this Proxy
Statement as Exhibit A. The 1997 Plan has been designed to meet the requirements
of Section 162(m) of the Internal Revenue Code, regarding the deductibility of
executive compensation.
SUMMARY OF THE 1997 PLAN
PURPOSE. The purpose of the 1997 Plan is to enable the Company and its
subsidiaries to attract and retain officers and key employees capable of
assuring the future success of the Company and to provide opportunities for
stock ownership by such officers and employees in order to link their interests
with those of the Company's stockholders.
ADMINISTRATION. The Plan will be administered by a committee of the Board of
Directors (the "Committee") comprised of at least the number of directors as is
required to permit the 1997 Plan to satisfy the requirements of Rule 16b-3 under
the Securities Exchange Act of 1934, as amended ("Rule 16b-3"). Each member of
the Committee will be a "Non-Employee Director" within the meaning of Rule 16b-3
and an "outside director" within the meaning of Section 162(m) of the Internal
Revenue Code. The Compensation Committee of the Board will be the Committee that
administers the Plan, all of whose members are both "Non-Employee Directors"
within the meaning of Rule 16b-3 and "outside directors" within the meaning of
Section 162(m) of the Internal Revenue Code. The Committee will have full power
to determine when and to whom awards will be granted and the form, amount and
other terms and conditions of each award, subject to the provisions of the 1997
Plan. The Committee will have full authority to interpret the 1997 Plan and to
adopt rules, regulations and procedures with respect to the administration of
the 1997 Plan. The Committee is permitted to grant awards prior to stockholder
approval of the 1997 Plan at the Annual Meeting, provided that all awards are
contingent upon such approval. See "New Plan Benefits" below.
ELIGIBILITY AND NUMBER OF SHARES. Officers and key employees of the Company
and its subsidiaries will be eligible to be selected by the Committee to
participate in the 1997 Plan. The Company and its subsidiaries currently have
approximately 7,100 employees. Members of the Committee and other non-employee
directors
23
<PAGE>
of the Company are not eligible to receive awards under the 1997 Plan. The 1997
Plan provides for the issuance of up to 750,000 shares of the Company's Common
Stock, subject to adjustment in the event of a reorganization, recapitalization,
stock split, stock dividend, merger or other changes in the corporate structure
or stock of the Company. Shares of the Company's Common Stock subject to awards
under the 1997 Plan which are not used or are forfeited because the terms and
conditions of the awards are not met may again be used for awards under the 1997
Plan. Shares of the Company's Common Stock used by a participant as full or
partial payment to the Company of the purchase price relating to an award or in
connection with the satisfaction of tax obligations relating to an award will
also again be available for awards under the 1997 Plan.
Of the 750,000 shares authorized under the 1997 Plan, a maximum of 150,000
shares will be available for issuance pursuant to awards of restricted stock or
restricted stock units. In addition, no participant may be granted stock options
and any other award, the value of which is based solely on an increase in the
price of the Company's Common Stock, relating to more than 100,000 shares in the
aggregate in any calendar year.
TYPES OF AWARDS AND CERTAIN TERMS AND CONDITIONS. The types of awards that
may be granted under the 1997 Plan are stock options, stock appreciation rights,
restricted stock, restricted stock units and performance awards, and any
combination of these. The 1997 Plan provides that all awards are to be evidenced
by written agreements containing the terms and conditions of the awards. The
Committee may not amend or discontinue any outstanding award without the consent
of the holder of the award if the Committee's action would adversely affect the
rights of the holder. An award may not have a term longer than ten years from
the date of grant. Awards will not be transferable other than by will or by the
laws of descent and distribution. During the lifetime of a participant, a stock
option or stock appreciation right may be exercised only by the participant to
whom such award is granted.
STOCK OPTIONS. Incentive stock options meeting the requirements of Section
422 of the Internal Revenue Code and non-qualified stock options may be granted
under the 1997 Plan. The Committee will establish the exercise price of each
option, but in no event will the exercise price be less than 100% of the fair
market value of the Company's Common Stock on the date of grant. Stock options
may be exercised in whole or in part by payment in full of the exercise price in
cash or such other form of consideration as the Committee may specify, including
delivery of shares of Common Stock having a fair market value on the date of
exercise equal to the exercise price. Stock options will be exercisable at such
times as the Committee determines. However, stock options will become
immediately exercisable following the occurrence of a "designated event" (as
defined in the 1997 Plan).
STOCK APPRECIATION RIGHTS. The Committee may grant a stock appreciation
right in connection with a stock option or separately from a stock option. Upon
exercise of a stock appreciation right by a recipient, the recipient is entitled
to receive the excess of the fair market value of one share of Common Stock on
the date of exercise over the fair market value of one share of Common Stock on
the date of grant. The payment will be made in cash or shares of Common Stock,
or a combination of cash and shares, as determined by the Committee. Stock
appreciation rights will be exercisable at such times as the Committee
determines, but will become immediately exercisable following the occurrence of
a "designated event" (as defined in the 1997 Plan).
RESTRICTED STOCK AND RESTRICTED STOCK UNITS. The Committee may grant shares
of restricted stock and restricted stock units subject to such restrictions and
terms and conditions as the Committee may impose. Shares of restricted stock
granted under the 1997 Plan will be evidenced by stock certificates, which will
be held by the Company, and the Committee may, in its discretion, grant voting
and dividend rights with respect to such shares. No shares of stock will be
issued at the time of award of restricted stock units. A restricted stock unit
will have a value equal to the fair market value of one share of Common Stock of
the Company and may include, if so determined by the Committee, the value of any
dividends or other rights or property received by stockholders after the date of
grant of the restricted stock unit. The Committee has the right to waive any
vesting requirements or to accelerate the vesting of restricted stock or
restricted stock units.
PERFORMANCE AWARDS. A performance award will entitle the recipient to
payments based upon the achievement of specified performance goals. The
Committee will establish the terms and conditions of a
24
<PAGE>
performance award, including the performance goals to be achieved during the
performance period, the length of the performance period and the amount and form
of payment of the performance award. A performance award may be denominated or
payable in cash, shares of stock or other securities, or other awards. The
Committee has the right to waive any performance requirements with respect to
performance awards.
DURATION, TERMINATION AND AMENDMENT. The 1997 Plan (but not awards
outstanding under the 1997 Plan) will terminate on June 20, 2007 and no awards
may be granted after that date. The 1997 Plan permits the Board of Directors to
amend or terminate the 1997 Plan at any time, except that such action may not
adversely affect the rights of any participant under an outstanding award
without the participant's consent. It is intended that the 1997 Plan qualify as
an incentive stock option plan meeting the requirements of Section 422 of the
Internal Revenue Code and that certain awards under the 1997 Plan constitute
"qualified performance-based compensation" within the meaning of Section 162(m)
of the Internal Revenue Code. Unless otherwise determined by the Board of
Directors, amendments to the 1997 Plan will be subject to stockholder approval
to the extent necessary to satisfy such requirements and meet such
qualifications as in effect from time to time under the Internal Revenue Code,
or to the extent necessary to satisfy the requirements of the listing rules of
The New York Stock Exchange, Inc.
FEDERAL TAX CONSEQUENCES
The Company has been advised by its counsel that awards made under the 1997
Plan generally will result in the following tax consequences for United States
citizens under current United States federal income tax laws.
INCENTIVE STOCK OPTIONS. A recipient will realize no taxable income, and the
Company will not be entitled to any related deduction, at the time an incentive
stock option is granted under the 1997 Plan. If certain statutory employment and
holding period conditions are satisfied before the recipient disposes of shares
acquired pursuant to the exercise of such an option, then no taxable income will
result upon the exercise of such option and the Company will not be entitled to
any deduction in connection with such exercise. Upon disposition of the shares
after expiration of the statutory holding periods, any gain or loss realized by
a recipient will be a capital gain or loss. The Company will not be entitled to
a deduction with respect to a disposition of the shares by a recipient after the
expiration of the statutory holding periods.
Except in the event of death, if shares acquired by a recipient upon the
exercise of an incentive stock option are disposed of by such recipient before
the expiration of the statutory holding periods (a "disqualifying disposition"),
such recipient will be considered to have realized as compensation, taxable as
ordinary income in the year of disposition, an amount, not exceeding the gain
realized on such disposition, equal to the difference between the exercise price
and the fair market value of the shares on the date of exercise of the option.
The Company will be entitled to a deduction at the same time and in the same
amount as the recipient is deemed to have realized ordinary income. Generally,
any gain realized on the disposition in excess of the amount treated as
compensation or any loss realized on the disposition will constitute capital
gain or loss, respectively. If the recipient pays the option price with shares
that were originally acquired pursuant to the exercise of an incentive stock
option and the statutory holding periods for such shares have not been met, the
recipient will be treated as having made a disqualifying disposition of such
shares, and the tax consequences of such disqualifying disposition will be as
described above.
The foregoing discussion applies only for regular tax purposes. For
alternative minimum tax purposes an incentive stock option will be treated as if
it were a non-qualified stock option, the tax consequences of which are
discussed below.
NON-QUALIFIED STOCK OPTIONS. A recipient will realize no taxable income, and
the Company will not be entitled to any related deduction, at the time a
non-qualified stock option is granted under the 1997 Plan. Generally, at the
time of exercise of a non-qualified stock option, the recipient will realize
ordinary income,
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<PAGE>
and the Company will be entitled to a deduction, equal to the excess of the fair
market value of the shares on the date of exercise over the option price. Upon
disposition of the shares, any additional gain or loss realized by the recipient
will be taxed as a capital gain or loss.
STOCK APPRECIATION RIGHTS, RESTRICTED STOCK UNITS AND PERFORMANCE AWARDS.
Generally, (i) a recipient will not realize income upon the grant of a stock
appreciation right, restricted stock unit or performance award, (ii) the
recipient will realize ordinary income, and the Company will be entitled to a
corresponding deduction, in the year cash, shares of Common Stock or a
combination of cash and shares are delivered to the recipient upon exercise of a
stock appreciation right or in payment of a restricted stock unit or performance
award and (iii) the amount of such ordinary income and deduction will be the
amount of cash received plus the fair market value
of the shares of Common Stock received. When the recipient disposes of the
shares, the difference between the amount received upon such disposition and the
fair market value of such shares on the date the recipient realized ordinary
income will be treated as a capital gain or loss.
RESTRICTED STOCK. Unless a recipient files an election to be taxed under
Section 83(b) of the Internal Revenue Code, generally (i) the recipient will not
realize income upon the grant of restricted stock, (ii) the recipient will
realize ordinary income, and the Company will be entitled to a corresponding
deduction, when the restrictions have been removed or expire and (iii) the
amount of such ordinary income and deduction will be the fair market value of
the restricted stock on the date the restrictions are removed or expire. If the
recipient files an election to be taxed under Section 83(b) of the Internal
Revenue Code, the tax consequences to the recipient and the Company will be
determined as of the date of the grant of the restricted stock rather than as of
the date of the removal or expiration of the restrictions. When the recipient
disposes of the shares, the difference between the amount received upon such
disposition and the fair market value of such shares on the date the recipient
realized ordinary income will be treated as a capital gain or loss.
WITHHOLDING. The 1997 Plan permits the Company to require a recipient
receiving shares of Common Stock under the 1997 Plan to pay the Company in cash
an amount sufficient to cover any required withholding taxes. In lieu of cash,
the Committee may permit a recipient to cover withholding obligations through a
reduction in the number of shares delivered to such recipient or by delivery to
the Company of shares already owned by the recipient.
NEW PLAN BENEFITS
The only awards that have been granted under the 1997 Plan are non-qualified
stock options. The stock options were granted subject to approval of the 1997
Plan by the stockholders at the 1997 Annual Meeting, and, if not so approved,
these awards will be null and void. Set forth below are the numbers of shares
underlying the stock options which have been granted under the 1997 Plan to the
persons and the groups identified. The numbers and types of awards that will be
granted in the future under the 1997 Plan are not determinable as the Committee
will make such determinations in its sole discretion.
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING STOCK
NAME AND POSITION OPTIONS GRANTED
- ----------------------------------------------------------------------------- ----------------
<S> <C>
Gary E. Costley, Ph.D. ...................................................... 100,000(1)
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
All Current Executive Officers as a Group (including Dr. Costley)............ 130,000
All Directors who are not Executive Officers as a Group (not eligible)....... 0
All Employees, Not Executive Officers, as a Group............................ 0
</TABLE>
- ----------
(1) The exercise price of the stock option is $18.1875 per share, the fair
market value of a share of the Company's Common Stock on the date of grant.
The expiration date of the stock option is December 31, 2006. The other
material terms and conditions of the stock option are described in this
Proxy Statement in the Compensation Committee Report on Executive
Compensation under the heading, "Compensation of the Chief Executive Officer
-- Gary E. Costley."
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<PAGE>
BOARD RECOMMENDATION
The Board of Directors recommends a vote FOR the approval of the 1997 Plan.
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed KPMG Peat Marwick LLP,
certified public accountants, as the Company's independent auditors for the
fiscal year ending February 28, 1998, subject to stockholder approval. KPMG Peat
Marwick LLP has audited the books of the Company for many years. The action of
the Board of Directors was taken upon the recommendation of the Audit Committee
of the Board of Directors.
Representatives of KPMG Peat Marwick LLP will be present at the Annual
Meeting and will have the opportunity to make a statement if they desire to do
so and to respond to appropriate questions from stockholders.
The Board of Directors recommends a vote FOR the approval of the appointment
of KPMG Peat Marwick LLP.
STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Any stockholder proposal intended to be presented for consideration at the
1998 Annual Meeting of Stockholders and to be included in the Company's proxy
statement must be received at the principal executive offices of the Company by
the close of business on January 15, 1998. Proposals should be sent to the
attention of the Secretary.
OTHER MATTERS
The Company is not aware of any other matters which may come before the
Annual Meeting. If other matters are properly presented at the Annual Meeting,
it is the intention of the persons named as proxies in the enclosed proxy to
vote in accordance with their judgment as to the best interests of the Company.
By Order of the Board of Directors
FRANK W. BONVINO
SECRETARY
May 15, 1997
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EXHIBIT A
1997 STOCK-BASED INCENTIVE PLAN OF
INTERNATIONAL MULTIFOODS CORPORATION
The purpose of the 1997 Stock-Based Incentive Plan of International
Multifoods Corporation is to enable International Multifoods Corporation
("Multifoods") and its subsidiaries to attract and retain officers and key
employees capable of assuring the future success of Multifoods and to provide
opportunities for stock ownership by such officers and employees which will
increase their proprietary interest in Multifoods and, consequently, their
identification with the interests of the stockholders of Multifoods. The 1997
Stock-Based Incentive Plan of International Multifoods Corporation shall be
referred to herein as the "Plan."
The Plan shall become effective upon being approved by the requisite
affirmative vote of the stockholders of Multifoods entitled to vote thereon at
the annual meeting of stockholders of Multifoods to be held on June 20, 1997, or
any adjournment thereof. From and after the effective date of the Plan, no
awards of any kind shall be made under Part I of the Amended and Restated 1989
Stock-Based Incentive Plan of International Multifoods Corporation, but all
outstanding awards previously granted under Part I of such plan shall remain
outstanding in accordance with the terms thereof. The Plan (but not Options,
Stock Appreciation Rights, Restricted Stock, Restricted Stock Units and
Performance Awards theretofore granted under the Plan) shall terminate on, and
no Awards shall be granted after, June 20, 2007.
SECTION 1. DEFINITIONS
For purposes of the Plan, the following terms shall have the meanings set
forth below:
"Award" shall mean an award granted to a Participant in accordance with
the provisions of the Plan in the form of Options, Stock Appreciation
Rights, Restricted Stock, Restricted Stock Units or Performance Awards, or
any combination thereof.
"Award Agreement" shall mean the written agreement evidencing each Award
granted to a Participant under the Plan.
"Board" shall mean the Board of Directors of Multifoods.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Committee" shall mean the Compensation Committee of the Board or such
other committee of Directors as may be designated by the Board to administer
the Plan. The Committee shall be comprised of not less than such number of
Directors as shall be required to permit the Plan to satisfy the
requirements of Rule 16b-3, and each member of the Committee shall be a
"Non-Employee Director" within the meaning of Rule 16b-3 and an "outside
director" within the meaning of Section 162(m).
"Date of Grant" shall mean the date on which the Committee grants the
Award or such other date as the Committee may designate.
"Designated Event" shall mean any of the following:
(a) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person")
of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (i) the then outstanding
shares of Stock (the "Outstanding Stock") or (ii) the combined voting
power of the then outstanding voting securities of Multifoods entitled to
vote generally in the election of Directors (the "Outstanding Voting
Securities"); provided, however, that for purposes of this provision (a),
the following acquisitions shall not constitute a Designated Event: (i)
any acquisition directly from Multifoods, (ii) any acquisition by
Multifoods, (iii) any acquisition by any employee benefit plan (or
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related trust) sponsored or maintained by Multifoods or any corporation
controlled by Multifoods or (iv) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i), (ii) and (iii)
of provision (c) of this definition; or
(b) individuals, who, as of the date hereof, constitute the Board
(the "Incumbent Board"), cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
Director subsequent to the date hereof whose election, or nomination for
election by Multifoods' stockholders, was approved by a vote of at least
a majority of the Directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of Directors or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
(c) the consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
Multifoods (a "Business Combination"), in each case, unless, following
such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of
the Outstanding Stock and Outstanding Voting Securities immediately prior
to such Business Combination beneficially own, directly or indirectly,
more than 60% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a
result of such transaction owns Multifoods or all or substantially all of
Multifoods' assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Stock and
Outstanding Voting Securities, as the case may be, (ii) no Person
(excluding any employee benefit plan (or related trust) of Multifoods or
such corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such
ownership existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or
(d) the approval by the stockholders of Multifoods of a complete
liquidation or dissolution of Multifoods.
"Director" or "Directors" shall mean a member, or more than one member,
of the Board of Directors of Multifoods.
"Eligible Employee" shall mean any officer or key employee of Multifoods
or any Subsidiary designated by the Committee to receive an Award.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Fair Market Value" shall mean, as of any date, the mean of the high and
low sale prices of a share of Stock on The New York Stock Exchange, Inc., or
its successor on such date (or, if no sale took place on such exchange on
such date, the mean between the high and low sale prices on such exchange on
the most recent preceding date on which a sale took place).
"Incentive Stock Option" shall mean an Option which is designated as
such by the Committee and which meets the requirements of Section 422 of the
Code on the Date of Grant.
"Multifoods" shall mean International Multifoods Corporation, a Delaware
corporation.
"Non-Qualified Stock Option" shall mean an Option other than an
Incentive Stock Option.
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"Option" shall mean a stock option awarded pursuant to the Plan to
purchase Stock.
"Participant" shall mean an Eligible Employee who receives an Award
which has not been terminated, expired or been fully exercised.
"Performance Award" shall mean a performance award made to a Participant
pursuant to the Plan.
"Plan" shall mean this 1997 Stock-Based Incentive Plan of International
Multifoods Corporation.
"Restricted Stock" shall mean the award of Stock pursuant to the Plan.
"Restricted Stock Unit" shall mean a unit awarded pursuant to the Plan
having a value equal to the Fair Market Value of one share of Stock (plus,
if so determined by the Committee, the value of any dividends or other
rights or property received by holders of Stock after the Date of Grant of
such Restricted Stock Unit).
"Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Exchange Act or any successor rule or
regulation.
"Section 162(m)" shall mean Section 162(m) of the Code.
"Stock" shall mean common stock (par value $.10 per share) of
Multifoods.
"Stock Appreciation Right" shall mean a stock appreciation right awarded
pursuant to the Plan, which need not be granted in tandem with an Option.
"Subsidiary" shall mean any subsidiary or affiliate of Multifoods.
SECTION 2. SHARES OF STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 11 hereof, an aggregate of
750,000 shares of Stock shall be available to Participants under the Plan. Of
such shares of Stock, a maximum of 150,000 shares shall be available for
issuance pursuant to Awards of Restricted Stock and Restricted Stock Units. The
shares of Stock deliverable upon the exercise of any Award may be made available
from authorized but unissued shares or shares reacquired by Multifoods,
including shares of Stock purchased in the open market or in private
transactions. For purposes of this Section 2, if an Award entitles the holder
thereof to receive or purchase shares of Stock, the number of shares subject to
such Award shall reduce as of the Date of Grant the aggregate number of shares
available for granting Awards under the Plan by the number of shares subject to
such Award. If Stock Appreciation Rights are granted in tandem with an Option
under Section 4 hereof and the exercise of the Option would cancel the Stock
Appreciation Rights and vice versa, then the grant of such Stock Appreciation
Rights shall not reduce the number of shares of Stock available for granting
Awards under the Plan. Any shares of Stock that are used by a Participant as
full or partial payment to Multifoods of the purchase price relating to an
Award, or in connection with the satisfaction of tax obligations relating to an
Award, shall again be available for granting Awards (other than Incentive Stock
Options) to Eligible Employees. If any Award granted under the Plan shall
terminate, the shares of Stock subject to, but not delivered under, such Award
shall be available for other Awards.
SECTION 3. GRANTS OF AWARDS; EXPIRATION OF AND LIMITATIONS ON AWARDS
(a) Officers and other key employees of Multifoods or any Subsidiary shall
be eligible to be selected by the Committee to participate in the Plan. The
Committee may require any Participant to remain in the employ of Multifoods or a
Subsidiary for a stated period or periods of time before an Award may be
exercised; provided that nothing in the Plan or in any Award Agreement shall
confer upon any Participant any right to remain in the employ of Multifoods or
any of its Subsidiaries, and nothing herein shall be construed in any manner to
interfere in any way with the right of Multifoods or any Subsidiary to terminate
such Participant's employment at any time.
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(b) Subject to the provisions of the Plan, the Committee shall:
(i) determine and designate from time to time those Eligible Employees
to whom Awards are to be granted;
(ii) determine the form or forms of Award to be granted;
(iii) determine the amount or number of shares of Stock subject to each
Award; and
(iv) determine the terms and conditions of each Award, provided that no
Award shall have a term that extends beyond 10 years from the Date of Grant.
(c) Each Award granted under the Plan shall be evidenced by a written Award
Agreement. Each Award Agreement shall be subject to the applicable terms and
conditions of the Plan and any other terms and conditions (not inconsistent with
the Plan) determined by the Committee.
(d) In case of termination of employment, the following provisions shall
apply:
(i) if a Participant who has been granted an Option or Stock
Appreciation Rights shall die before such Option or Stock Appreciation
Rights have expired, his or her Option or Stock Appreciation Rights may be
exercised, to the extent exercisable at the date of death, by the personal
representatives or administrators of the Participant or by any person or
persons to whom the Participant's rights under the Option or Stock
Appreciation Rights pass by will or the applicable laws of descent and
distribution, as follows:
(A) in the case of an Incentive Stock Option and Stock Appreciation
Rights granted in tandem with such Incentive Stock Option, at any time,
or from time to time, within 12 months after the date of the
Participant's death or such shorter period as the Committee may specify
as set forth in the Award Agreement; and
(B) in the case of a Non-Qualified Stock Option, Stock Appreciation
Rights granted in tandem with a Non-Qualified Stock Option and Stock
Appreciation Rights not granted in tandem with an Option, at any time, or
from time to time, within such period as the Committee may specify as set
forth in the Award Agreement;
but, in either event, not later than the expiration of the applicable
exercise period.
(ii) if a Participant's employment terminates because of any reason
other than his or her death, such Participant may exercise his or her
Options or Stock Appreciation Rights, to the extent exercisable at the date
of termination of employment as follows:
(A) in the case of an Incentive Stock Option and Stock Appreciation
Rights granted in tandem with such Incentive Stock Option, at any time,
or from time to time, within three months after the date of termination
of employment or such shorter period as the Committee may specify as set
forth in the Award Agreement; and
(B) in the case of a Non-Qualified Stock Option, Stock Appreciation
Rights granted in tandem with a Non-Qualified Stock Option and Stock
Appreciation Rights not granted in tandem with an Option, at any time, or
from time to time, within such period as the Committee may specify as set
forth in the Award Agreement;
but, in either event, not later than the expiration of the applicable
exercise period.
(e) No Eligible Employee may be granted any Award or Awards under the Plan,
the value of which Award or Awards is based solely on an increase in the value
of the Stock after the Date of Grant thereof, for more than 100,000 shares of
Stock in the aggregate in any calendar year. The foregoing annual limitation
specifically includes the grant of any Award or Awards representing
"qualified-performance-based compensation" within the meaning of Section 162(m).
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(f) No Award granted under the Plan shall be transferable other than by will
or by the laws of descent and distribution. During the lifetime of a
Participant, an Option or Stock Appreciation Right shall be exercisable only by
the Participant to whom the Option or Stock Appreciation Right is granted.
(g) The Committee may grant Awards prior to approval of the Plan by the
stockholders of Multifoods at the annual meeting of stockholders of Multifoods
to be held on June 20, 1997, or any adjournment thereof, provided that all such
Awards shall be contingent upon such approval.
SECTION 4. OPTIONS
(a) Subject to the provisions of paragraph (d) of this Section 4, any Option
granted by the Committee may be either an Incentive Stock Option or a
Non-Qualified Stock Option, as the Committee shall determine.
(b) The option price of the shares of Stock covered by each Option shall not
be less than 100% of the Fair Market Value of such shares on the Date of Grant.
(c) Subject to the other provisions of the Plan, any Option may be exercised
in whole or in part at such time or times, and the Participant may make payment
of the option price in such form or forms, including without limitation payment
by delivery of Stock having a Fair Market Value on the exercise date equal to
the total option price, or by a combination of Stock and other consideration, as
the Committee may specify in the applicable Award Agreement.
(d) To the extent that the aggregate Fair Market Value (determined as of the
Date of Grant) of the Stock with respect to which all Incentive Stock Options
are exercisable for the first time by a Participant during any calendar year
(under all plans described in Section 422(d) of the Code of Multifoods and its
Subsidiaries) exceeds $100,000, such Option shall be treated as an Option which
does not qualify as an Incentive Stock Option.
(e) Notwithstanding anything else contained herein, any Option may be
exercised in full at any time following the occurrence of a Designated Event.
SECTION 5. STOCK APPRECIATION RIGHTS
(a) Stock Appreciation Rights granted under the Plan may, but need not,
relate to a specific Option granted under Section 4 hereof. Any Stock
Appreciation Right related to a Non-Qualified Stock Option may be granted at the
same time the Option is granted or at any time thereafter before exercise or
expiration of the Option. Any Stock Appreciation Right related to an Incentive
Stock Option must be granted at the same time the Option is granted. Any Stock
Appreciation Right related to any Option shall be exercisable only to the extent
the related Option is exercisable. The Committee may impose such conditions or
restrictions on the exercise of Stock Appreciation Rights as it shall deem
appropriate.
(b) Upon the exercise of each Stock Appreciation Right, Multifoods shall pay
to the Participant the excess of (i) the Fair Market Value of one share of Stock
on the date of exercise over (ii) the Fair Market Value of one share of Stock on
the Date of Grant (the "Base Value"). Any such payment by Multifoods may be made
in cash, in shares of Stock (valued at the Fair Market Value on the date of
exercise) or in a combination thereof, as the Committee shall determine.
(c) Notwithstanding anything else contained herein, any Stock Appreciation
Right may be exercised in full at any time following the occurrence of a
Designated Event.
SECTION 6. RESTRICTED STOCK AND RESTRICTED STOCK UNITS
The Committee may grant Awards of Restricted Stock and Restricted Stock
Units to Participants with the following terms and conditions and with such
additional terms and conditions not inconsistent with the provisions of the Plan
as the Committee shall determine:
(a) Shares of Restricted Stock and Restricted Stock Units shall be subject
to such restrictions as the Committee may impose (including, without limitation,
any limitation on the right to vote a share of Restricted
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Stock or the right to receive any dividend or other right or property with
respect thereto), which restrictions may lapse separately or in combination at
such time or times, in such installments or otherwise as the Committee may deem
appropriate.
(b) Any Restricted Stock granted under the Plan shall be evidenced by
issuance of a stock certificate or certificates, which certificate or
certificates shall be held by Multifoods. Such certificate or certificates shall
be registered in the name of the Participant and shall bear an appropriate
legend referring to the restrictions applicable to such Restricted Stock. In the
case of Restricted Stock Units, no shares of Stock shall be issued at the time
such Awards are granted.
(c) Except as otherwise determined by the Committee, upon termination of
employment (as determined under criteria established by the Committee) during
the applicable restriction period, all shares of Restricted Stock and all
Restricted Stock Units at such time subject to restriction shall be forfeited
and reacquired by Multifoods; provided, however, that the Committee may, when it
finds that a waiver would be in the best interest of Multifoods, waive in whole
or in part any or all remaining restrictions with respect to shares of
Restricted Stock or Restricted Stock Units. Shares representing Restricted Stock
that is no longer subject to restrictions shall be delivered to the holder
thereof promptly after the applicable restrictions lapse or are waived. Upon the
lapse or waiver of restrictions and the restricted period relating to Restricted
Stock Units evidencing the right to receive shares of Stock, such shares shall
be issued and delivered to the holders of the Restricted Stock Units.
(d) Without limiting the generality of the foregoing, the Committee may
specify in an Award Agreement granting an Award of Restricted Stock or
Restricted Stock Units, or subsequently determine in its discretion, that, upon
the occurrence of a Designated Event, the restrictions applicable to such Award
shall lapse with respect to, and the Participant shall be unconditionally vested
in, all or any part of the Award.
SECTION 7. PERFORMANCE AWARDS
(a) The Committee may grant Performance Awards to Participants subject to
the terms of the Plan and any applicable Award Agreement. A Performance Award
granted under the Plan (i) may be denominated or payable in cash, shares of
Stock (including, without limitation, Restricted Stock), other securities or
other Awards and (ii) shall confer on the holder thereof the right to receive
payments, in whole or in part, upon the achievement of such performance goals
during such performance periods as the Committee shall establish. Subject to the
terms of the Plan and any applicable Award Agreement, the performance goals to
be achieved during any performance period, the length of any performance period,
the amount of any Performance Award granted and the amount of any payment or
transfer to be made pursuant to any Performance Award shall be determined by the
Committee.
(b) Without limiting the generality of the foregoing, the Committee may
specify in an Award Agreement granting a Performance Award, or subsequently
determine in its discretion, that, upon the occurrence of a Designated Event,
the performance requirements applicable to such Performance Award shall
terminate with respect to, and the Participant shall be unconditionally vested
in, all or any part of the Performance Award.
SECTION 8. ADMINISTRATION OF THE PLAN
The Committee shall have the full power and authority to interpret and
administer the Plan. The Committee may adopt such rules, regulations and
procedures with respect to the administration of the Plan as it deems
appropriate. Any decisions, determinations or actions made or taken by the
Committee pursuant to the Plan shall be final, conclusive and binding on all
persons for all purposes. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem desirable to carry the Plan into effect.
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SECTION 9. DELIVERY OF SHARES; SECURITIES LAW COMPLIANCE
(a) No shares of Stock shall be issued or delivered pursuant to any exercise
of an Award hereunder until the requirements of such laws and regulations as may
be deemed by the Committee to be applicable thereto are satisfied.
(b) Without limiting the generality of the foregoing, all certificates for
shares of Stock delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such restrictions as the Committee may deem
advisable under the Plan or the rules, regulations and other requirements of the
Securities and Exchange Commission and any applicable federal or state
securities laws.
SECTION 10. WITHHOLDING
Upon exercise or receipt of (or the lapse of restrictions relating to) any
Award, the delivery of shares of Stock subject to such Award shall be subject to
payment of any required withholding taxes. A Participant receiving shares of
Stock subject to withholding taxes may, as a condition precedent to receiving
the shares of Stock, be required to pay Multifoods a cash amount equal to the
amount of required withholdings. In lieu of all or any part of such a cash
payment, the Committee may permit the Participant to elect to cover all or any
part of the required withholdings, and to cover any additional withholdings up
to the amount needed to cover the Participant's full Federal Insurance
Contributions Act and federal, state and local income taxes with respect to
income arising from exercise of Options or receipt of Restricted Stock or shares
of Stock in payment of Performance Awards, through a reduction of the number of
shares of Stock delivered to the Participant and/or through the return to
Multifoods of shares of Stock delivered to the Participant in connection with
the Award or shares otherwise held by such Participant.
SECTION 11. ADJUSTMENT OF AND CHANGES IN STOCK
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, distribution of assets,
or any other changes in the corporate structure or stock of Multifoods, the
Committee shall make such adjustments as it deems appropriate in the number and
kind of shares of Stock authorized by the Plan, in the number and kind of shares
of Stock covered by the Awards granted and in the exercise price of outstanding
Options or the Base Value of outstanding Stock Appreciation Rights.
SECTION 12. NO RIGHTS OF STOCKHOLDERS
Except with respect to Restricted Stock, neither a Participant nor the
Participant's legal representative shall be, or have any of the rights and
privileges of, a stockholder of Multifoods in respect of any shares of Stock
receivable upon the exercise of any Award, in whole or in part, unless and until
certificates for such shares of Stock shall have been issued.
SECTION 13. AMENDMENTS
(a) The Board may, at any time, amend or terminate the Plan, subject to the
following:
(i) No such amendment may adversely affect the rights of any
Participant under an Award which has not terminated, expired or been fully
exercised without the consent of such Participant or beneficiary thereof.
(ii) It is intended that the Plan qualify as an incentive stock option
plan meeting the requirements of Section 422 of the Code or any successor
thereto, and that certain Awards constitute "qualified performance-based
compensation" within the meaning of Section 162(m). Unless otherwise
determined by the Board, amendments to the Plan shall be subject to approval
of the stockholders of Multifoods to the extent necessary to satisfy such
requirements and meet such qualifications as in effect from time to time.
(iii) Unless otherwise determined by the Board, amendments to the Plan
shall be subject to approval of the stockholders of Multifoods to the extent
necessary to satisfy the requirements of the listing rules of The New York
Stock Exchange, Inc.
A-7
<PAGE>
(b) The Committee may not amend, alter, suspend, discontinue or terminate
any outstanding Award if such action would adversely affect the rights of the
holder of such Award, without the consent of the Participant or beneficiary
thereof.
SECTION 14. GOVERNING LAW.
The validity, construction and effect of the Plan and any Award shall be
determined in accordance with the laws of the State of Delaware.
SECTION 15. SEVERABILITY.
If any provision of the Plan or any Award is or becomes or is deemed to be
invalid, illegal or unenforceable or would disqualify the Plan or any Award
under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to applicable laws, or if it cannot be so
construed or deemed amended without, in the determination of the Committee,
materially altering the purpose or intent of the Plan or the Award, such
provision shall be stricken, and the remainder of the Plan or any such Award
shall remain in full force and effect.
A-8
<PAGE>
[RECYCLED LOGO]
PRINTED ON RECYCLED
PAPER CONTAINING AT
LEAST 10% FIBERS FROM
PAPER RECYCLED BY
CONSUMERS.
<PAGE>
PROXY INTERNATIONAL MULTIFOODS CORPORATION
1997 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby appoints Gary E. Costley, Nicholas L. Reding and
Jack D. Rehm, and each of them, with power to appoint a substitute, to vote, in
accordance with the specifications appearing below, all shares the undersigned
is entitled to vote at the Annual Meeting of Stockholders of International
Multifoods Corporation, a Delaware corporation, to be held on Friday, June 20,
1997, at 10:00 a.m. local time, and at all adjournments thereof, and, in their
discretion, upon all other matters that may properly come before the Annual
Meeting or any adjournment or adjournments thereof, and hereby revokes all
former proxies. The undersigned hereby acknowledges receipt of the Proxy
Statement for the Annual Meeting.
1. ELECTION OF DIRECTORS. NOMINEES: Gary E. Costley, Nicholas L. Reding and Jack
D. Rehm
/ / VOTE FOR all nominees listed above, / / WITHHOLD AUTHORITY
except those whose names are written below: to vote for all nominees listed
above
- --------------------------------------------------------------------------------
2. PROPOSAL TO APPROVE THE 1997 STOCK-BASED INCENTIVE PLAN.
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO APPROVE THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT
AUDITORS OF THE COMPANY.
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED, AND TO BE SIGNED AND DATED, ON OTHER SIDE)
<PAGE>
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT
OR ADJOURNMENTS THEREOF.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION
IS GIVEN, THIS PROXY SHALL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR
PROPOSALS 2 AND 3.
Dated: -------------------------, 1997
-------------------------------------
Signature
---------------------------------------
(If there are co-owners both must sign)
THE SIGNATURE(S) SHOULD BE EXACTLY AS
THE NAME(S) APPEAR PRINTED TO THE LEFT.
IF A CORPORATION, PLEASE SIGN THE
CORPORATION NAME IN FULL BY A DULY
AUTHORIZED OFFICER AND INDICATE THE
OFFICE OF THE SIGNER. WHEN SIGNING AS
EXECUTOR, ADMINISTRATOR, FIDUCIARY,
ATTORNEY, TRUSTEE OR GUARDIAN, OR AS
CUSTODIAN FOR A MINOR, PLEASE GIVE FULL
TITLE AS SUCH. IF A PARTNERSHIP, SIGN
IN THE PARTNERSHIP NAME.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE
<PAGE>
CONFIDENTIAL VOTING INSTRUCTIONS TO NORWEST BANK
MINNESOTA, N.A., AS TRUSTEE UNDER THE EMPLOYEES' VOLUNTARY
INVESTMENT AND SAVINGS PLAN OF INTERNATIONAL MULTIFOODS CORPORATION
I hereby direct that the voting rights pertaining to shares of Common Stock
of INTERNATIONAL MULTIFOODS CORPORATION, a Delaware corporation, held by the
Trustee and allocated to my Member Account shall be exercised at the Annual
Meeting of Stockholders of INTERNATIONAL MULTIFOODS CORPORATION, to be held at
Minneapolis, Minnesota on June 20, 1997, and at all adjournments thereof, upon
the matters set forth below and upon such other business as may properly come
before the Annual Meeting, all as set forth in the Proxy Statement. The
undersigned hereby acknowledges receipt of the Proxy Statement for the Annual
Meeting.
1. ELECTION OF DIRECTORS. NOMINEES: Gary E. Costley, Nicholas L. Reding and Jack
D. Rehm
/ / VOTE FOR all nominees listed above, / / WITHHOLD AUTHORITY
except those whose names are written below: to vote for all nominees listed
above
- --------------------------------------------------------------------------------
2. PROPOSAL TO APPROVE THE 1997 STOCK-BASED INCENTIVE PLAN.
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO APPROVE THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT
AUDITORS OF THE COMPANY.
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED, AND TO BE SIGNED AND DATED, ON OTHER SIDE)
<PAGE>
THIS CARD IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES BY THE
BOARD OF DIRECTORS OF THE COMPANY. THE VOTING RIGHTS REPRESENTED HEREBY WILL BE
EXERCISED AS DIRECTED BY YOU. AS TO MATTERS COMING BEFORE THE MEETING FOR WHICH
NO VOTING INSTRUCTIONS ARE RECEIVED BY THE TRUSTEE PRIOR TO THE MEETING, THE
TRUSTEE WILL EXERCISE VOTING RIGHTS IN PROPORTION TO THE VOTING INSTRUCTIONS
ACTUALLY RECEIVED BY THE TRUSTEE PRIOR TO THE MEETING.
Dated: -------------------------, 1997
-------------------------------------
Signature
(PLEASE DATE AND SIGN EXACTLY AS YOUR
NAME APPEARS HEREON.)
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD
PROMPTLY USING THE ENCLOSED ENVELOPE
<PAGE>
CONFIDENTIAL VOTING INSTRUCTIONS TO THE CANADA TRUST COMPANY
AS TRUSTEE UNDER THE STOCK PURCHASE PLAN OF
ROBIN HOOD MULTIFOODS INC.
I hereby direct that the voting rights pertaining to shares of Common Stock
of INTERNATIONAL MULTIFOODS CORPORATION, a Delaware corporation, held by the
Trustee and allocated to my Member Account shall be exercised at the Annual
Meeting of Stockholders of INTERNATIONAL MULTIFOODS CORPORATION, to be held at
Minneapolis, Minnesota on June 20, 1997, and at all adjournments thereof, upon
the matters set forth below and upon such other business as may properly come
before the Annual Meeting, all as set forth in the Proxy Statement. The
undersigned hereby acknowledges receipt of the Proxy Statement for the Annual
Meeting.
1. ELECTION OF DIRECTORS. NOMINEES: Gary E. Costley, Nicholas L. Reding and Jack
D. Rehm
/ / VOTE FOR all nominees listed above, / / WITHHOLD AUTHORITY
except those whose names are written below: to vote for all nominees listed
above
- --------------------------------------------------------------------------------
2. PROPOSAL TO APPROVE THE 1997 STOCK-BASED INCENTIVE PLAN.
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO APPROVE THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT
AUDITORS OF THE COMPANY.
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED, AND TO BE SIGNED AND DATED, ON OTHER SIDE)
<PAGE>
THIS CARD IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES BY THE
BOARD OF DIRECTORS OF THE COMPANY. THE VOTING RIGHTS REPRESENTED HEREBY WILL BE
EXERCISED AS DIRECTED BY YOU. AS TO MATTERS COMING BEFORE THE MEETING FOR WHICH
NO VOTING INSTRUCTIONS ARE RECEIVED BY THE TRUSTEE PRIOR TO THE MEETING, THE
TRUSTEE MAY EXERCISE VOTING RIGHTS IN SUCH MANNER AS THE TRUSTEE MAY, IN ITS
DISCRETION, DETERMINE.
Dated: -------------------------, 1997
-------------------------------------
Signature
(PLEASE DATE AND SIGN EXACTLY AS YOUR
NAME APPEARS HEREON.)
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD
PROMPTLY USING THE ENCLOSED ENVELOPE
