<PAGE> 1
ANNEX A
AMERICAN MAIZE-PRODUCTS COMPANY
250 HARBOR DRIVE
STAMFORD, CT 06902
------------------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
------------------------
This Information Statement is being mailed on February 28, 1995, as part of
the American Maize-Products Company's (the "Company")
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
to the holders of record of the Company's Class A common stock, par value $0.80
per share (the "Class A Common Stock") and the Company's Class B common stock,
par value $0.80 per share (the "Class B Common Stock" and, together with the
Class A Common Stock, the "Shares"). Capitalized terms used and not otherwise
defined herein shall have the meaning set forth in the Schedule 14D-9. You are
receiving this Information Statement in connection with the possible election of
persons designated by Purchaser to seats on the Company's Board of Directors.
You are urged to read this Information Statement carefully. You are not,
however, required to take any action.
The Merger Agreement provides that, upon request of Purchaser, the Company
shall, subject to compliance with applicable law and promptly following the
purchase by Merger Sub of more than 50 percent of the outstanding shares of
Class A Common Stock and more than 50 percent of the outstanding shares of Class
B Common Stock pursuant to the Offer, the Stock Purchase Agreement or otherwise,
take all actions necessary to cause persons designated by Purchaser ("Purchaser
Designees") to become directors of the Company so that the total number of such
persons equals that number of directors, rounded up to the next whole number,
which represents (i) the product of (w) the total number of directors on the
Board of Directors the shares of Class A Common Stock are entitled to elect
multiplied by (x) the percentage that the number of shares of Class A Common
Stock so accepted for payment plus any shares of Class A Common Stock
beneficially owned by Purchaser or its affiliates on the date of the Merger
Agreement bears to the number of shares of Class A Common Stock outstanding at
the time of such acceptance for payment plus (ii) the product of (y) the total
number of directors on the Board of Directors the shares of Class B Common Stock
are entitled to elect multiplied by (z) the percentage that the number of shares
of Class B Common Stock so accepted for payment plus any shares of Class B
Common Stock beneficially owned by Purchaser or its affiliates on the date of
the Merger Agreement bears to the number of shares of Class B Common Stock
outstanding at the time of such acceptance for payment. In furtherance thereof,
the Company shall increase the size of the Company's Board of Directors, or use
its best efforts to secure the resignation of directors, or both, as is
necessary to permit Purchaser Designees to be elected to the Company's Board of
Directors; provided, however, that prior to the Effective Time, the Company's
Board of Directors shall always have at least two members who are neither
officers of Purchaser or the Company (or any of their respective affiliates) nor
designees of Purchaser (or any of its affiliates), nor shareholders or
affiliates of Purchaser, nor beneficial owners of 5% or more of any class of
capital stock of the Company (or any of their respective affiliates)
("Insiders"). At such time, the Company, if so requested, will use its best
efforts to cause persons designated by Purchaser to constitute the same
percentage of each committee of such board, each board of directors of each
subsidiary of the Company and each committee of each such board (in each case to
the extent of the Company's ability to elect such persons). This Information
Statement is required by Section 14(f) of the Exchange Act, and Rule 14f-1
promulgated thereunder.
For purposes of provisions of the Merger Agreement relating to termination
of the Merger, modification or amendment of the Merger Agreement, or waiver of
conditions to the Company's obligations to consummate the Merger, no action
taken by the Board of Directors of the Company prior to the Merger shall be
effective
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<PAGE> 2
unless such action is approved by the affirmative vote of at least a majority of
the directors of the Company who are not Insiders.
Pursuant to the Merger Agreement, on February 28, 1995, Merger Sub
commenced the Offer. The Offer is scheduled to expire at 12:00 midnight, New
York City time, on March 27, 1995, unless extended pursuant to the terms of the
Offer. The terms of the Merger Agreement, a summary of the events leading up to
the Offer and the execution of the Merger Agreement and other information
concerning the Offer and the Merger are contained in the Schedule 14D-9.
The information contained in this Information Statement concerning
Purchaser, Merger Sub and Purchaser Designees has been furnished to the Company
by such persons, and the Company assumes no responsibility for the accuracy or
completeness of such information.
INFORMATION WITH RESPECT TO THE COMPANY
The outstanding voting securities of the Company as of February 21, 1995
consisted of 8,558,474 shares of Class A Common Stock and 1,742,057 shares of
Class B Common Stock. Class A Common Stock and Class B Common Stock are
substantially similar, except as to voting rights. Except as required by the
Maine Business Corporations Act (the "MBCA") or otherwise provided in the
Company's Articles of Incorporation or By-Laws, voting power is vested solely
with the holders of shares of the Class B Common Stock. The holders of Class A
Common Stock are entitled only to such limited voting rights as are described
below. The holders of Class A Common Stock are entitled to elect 30% of the
total membership of the Company's Board of Directors (or the nearest larger
whole number if such percentage is not a whole number), and the holders of Class
B Common Stock are entitled to elect the remaining members of the Company's
Board of Directors. In addition, holders of Class A Common Stock and holders of
Class B Common Stock are entitled to vote together as a single class with
respect to the following matters: (a) the reservation of any shares of capital
stock of the Company for options granted or to be granted to officers, directors
or employees of the Company and (b) the acquisition of the stock or assets of
any other company if (i) any officer, director or holder of 10% or more of any
class of shares of Common Stock has a direct or indirect interest in the company
or assets to be acquired or in the consideration to be paid in the transaction,
(ii) the transaction involves the issuance of Class A Common Stock or Class B
Common Stock or securities convertible into either, or any combination of the
three, and the aggregate number of shares of Common Stock so issued together
with the Class B Common Stock which could be issued upon conversion of such
securities approximates, in the reasonable judgment of the Board of Directors of
the Company, 20% of the aggregate number of shares of Class A Common Stock and
Class B Common Stock outstanding immediately prior to such transaction or (iii)
the transaction involves the issuance of Class A Common Stock or Class B Common
Stock and any additional consideration, and if the value of the aggregate
consideration to be issued has, in the reasonable judgment of the Board of
Directors of the Company, a combined fair value of approximately 20% or more of
the aggregate market value of shares of Class A Common Stock and Class B Common
Stock outstanding immediately prior to such transaction (each a "Voting
Acquisition Transaction"). A separate class vote consisting of the holders of
Class A Common Stock and holders of Class B Common Stock is required for any
Voting Acquisition Transaction involving a merger or consolidation of the
Company. Each share of Class A Common Stock and Class B Common Stock is entitled
to one vote per share.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of February 21, 1995 with
respect to the Shares beneficially owned by each person known by the Company to
be the beneficial owner of more than five percent of a class of the Company's
outstanding Common Stock.
<TABLE>
<CAPTION>
TITLE OF CLASS AMOUNT AND NATURE PERCENT
NAME OF COMMON STOCK OF BENEFICIAL OWNERSHIP OF CLASS
- ---------------------------- --------------- ----------------------------------- --------
<S> <C> <C> <C>
William Ziegler, III........ Class A(1) Aggregate Amount -- 1,330,098 15.5%
250 Harbor Drive Sole Voting Power -- 65,504 *
P.O. Box 10128 Shared Voting Power -- 1,264,594 14.8%
Stamford, CT 06904 Sole Investment Power -- 65,504 *
Shared Investment Power -- 1,264,594 14.8%
Class B(1) Aggregate Amount -- 949,920 54.5%
Sole Voting Power -- 73,762 4.2%
Shared Voting Power -- 876,158 50.3%
Sole Investment Power -- 73,762 4.2%
Shared Investment Power -- 876,158 50.3%
Helen Z. Steinkraus......... Class A(2) Aggregate Amount -- 1,257,989(3) 14.7%
250 Harbor Drive Sole Voting Power -- 3,394 *
P.O. Box 10128 Shared Voting Power -- 1,254,595 14.7%
Stamford, CT 06904 Sole Investment Power -- 3,394 *
Shared Investment Power -- 1,254,595 14.7%
Class B(2) Aggregate Amount -- 882,040(3) 50.6%
Sole Voting Power -- 5,883 *
Shared Voting Power -- 876,157 50.3%
Sole Investment Power -- 5,883 *
Shared Investment Power -- 876,157 50.3%
United States Trust......... Class A(4) Aggregate Amount -- 1,256,767 14.7%
Company of New York Sole Voting Power -- 0 --
114 West 47th Street Shared Voting Power -- 1,256,767 14.7%
New York, NY 10036 Sole Investment Power -- 0 --
Shared Investment Power -- 1,256,767 14.7%
14.7%
Class B(4) Aggregate Amount -- 876,158 50.3%
Sole Voting Power -- 0 --
Shared Voting Power -- 876,158 50.3%
Sole Investment Power -- 0 --
Shared Investment Power -- 876,158 50.3%
First Fidelity Bank......... Class A(5) Aggregate Amount -- 1,264,594 14.8%
P.O. Box 1297 Sole Voting Power -- 0 --
Stamford, CT 06904 Shared Voting Power -- 1,264,594 14.8%
Sole Investment Power -- 0 --
Shared Investment Power -- 1,264,594 14.8%
Class B(5) Aggregate Amount -- 876,158 50.3%
Sole Voting Power -- 0 --
Shared Voting Power -- 876,158 50.3%
Sole Investment Power -- 0 --
Shared Investment Power -- 876,158 50.3%
GIH Corp.................... Class A(6) Aggregate Amount -- 1,140,294 13.3%
250 Harbor Drive Sole Voting Power -- 1,140,294 13.3%
P.O. Box 10128 Shared Voting Power -- 0 --
Stamford, CT 06904 Sole Investment Power -- 1,140,294 13.3%
Shared Investment Power -- 0 --
Class B(6) Aggregate Amount -- 824,521 47.3%
Sole Voting Power -- 824,521 47.3%
Shared Voting Power -- 0 0
Sole Investment Power -- 824,521 47.3%
Shared Investment Power -- 0 0
</TABLE>
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<TABLE>
<CAPTION>
TITLE OF CLASS AMOUNT AND NATURE PERCENT
NAME OF COMMON STOCK OF BENEFICIAL OWNERSHIP OF CLASS
- ---------------------------- --------------- ----------------------------------- --------
<S> <C> <C> <C>
Archer Daniels Midland Co... Class A(7) Aggregate Amount -- 2,429,700 28.4%
4666 Faries Parkway Sole Voting Power -- 2,115,200 24.7%
P.O. Box 1470 Shared Voting Power -- 0 --
Decatur, IL 62525 Sole Investment Power -- 2,429,700 28.4%
Shared Investment Power -- 0 --
Marvin C. Schwartz.......... Class B(8) Aggregate Amount -- 143,300 8.2%
c/o Kenneth E. Leopold Sole Voting Power -- 143,300 8.2%
Neuberger & Berman Shared Voting Power -- 0 --
522 Fifth Avenue Sole Investment Power -- 143,300 8.2%
New York, NY 10036 Shared Investment Power -- 0 --
</TABLE>
- ---------------
* Does not exceed one percent of the total outstanding shares of such class.
(1) Based upon Schedule 13G, Amendment No. 16, dated February 13, 1995, filed
with the Securities and Exchange Commission (the "SEC"). Mr. Ziegler reports
that he shares voting and investment power over 1,264,594 and 876,158 of
such shares of the Company's Class A Common Stock and Class B Common Stock,
respectively. Mr. Ziegler shares voting and investment power of such shares
with First Fidelity Bank ("First Fidelity") as co-trustees of two trusts
(the "Ziegler Trusts"). Of such shares, 1,140,294 shares of the Company's
Class A Common Stock and 824,521 shares of the Company's Class B Common
Stock are owned by GIH Corp. ("GIH"). GIH is wholly owned by Mr. Ziegler,
Mrs. Steinkraus and the co-trustees of the Ziegler Trusts and the Steinkraus
Trusts.
(2) Based upon Schedule 13D, Amendment Nos. 1 and 3, dated March 2, 1992, filed
with the SEC and information received from United States Trust Company of
New York ("U.S. Trust"). Mrs. Steinkraus and U.S. Trust report that she
shares voting and investment power over 1,254,595 and 876,157 of such shares
of the Company's Class A Common Stock and the Company's Class B Common
Stock, respectively. Mrs. Steinkraus shares such voting and investment power
with U.S. Trust as co-trustees of two trusts (the "Steinkraus Trusts"). Of
such shares, 1,140,294 shares of the Company's Class A Common Stock and
824,521 shares of the Company's Class B Common Stock are owned by GIH. GIH
is wholly owned by Mr. Ziegler, Mrs. Steinkraus and the co-trustees of the
Ziegler Trusts and the Steinkraus Trusts.
(3) Excludes 132.25 shares of the Company's Class A Common Stock owned by Eric
M. Steinkraus and 695 shares of the Company's Class B Common Stock owned by
Philip C. Steinkraus (based upon Schedule 13D, Amendment Nos. 1 and 3, dated
March 2, 1992, filed with the SEC by Helen Z. Steinkraus, Eric M. Steinkraus
and Philip C. Steinkraus, who stated therein that they are members of a
group and have executed a joint filing agreement pursuant to Rule 13d-1(f)
under the Securities Exchange Act of 1934).
(4) Based upon Schedule 13G, Amendment No. 16, dated February 11, 1995, filed
with the SEC. U.S. Trust reports that it shares voting and investment power
with Mrs. Steinkraus as co-trustee of certain trusts. Included in such
shares are 1,140,294 shares of the Company's Class A Common Stock and
824,521 shares of the Company's Class B Common Stock owned by GIH.
(5) Based upon Schedule 13G dated April 8, 1994, filed with the SEC.
(6) Based upon Schedule 13G, Amendment No. 16, dated February 24, 1995, filed
with the SEC. See also Footnote Nos. 1 and 2 above.
(7) Based upon Schedule 13D, Amendment No. 7, dated September 17, 1993, filed
with the SEC.
(8) Based upon Schedule 13D, Amendment No. 1, dated January 10, 1991, filed with
the SEC.
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SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of February 21, 1995,
as to shares of Common Stock beneficially owned by the Company's directors, the
Chief Executive Officer of the Company, and each of the four most highly
compensated executive officers, other than the Chief Executive Officer, and all
officers and directors of the Company as a group. Unless otherwise indicated in
the footnotes, each of the following persons has sole voting and investment
power with respect to the shares of the Company's Common Stock set forth in the
table.
<TABLE>
<CAPTION>
TITLE OF CLASS AMOUNT AND NATURE PERCENT
NAME OF COMMON STOCK OF BENEFICIAL OWNERSHIP OF CLASS
- ----------------------------------------------- --------------- ----------------------- --------
<S> <C> <C> <C>
William Ziegler, III........................... Class A 1,330,098(1)(2) 15.5%
Class B 949,920(1)(3) 54.5%
Charles B. Cook, Jr............................ Class A 2,336 *
Class B 2,669 *
Jane E. Downey................................. Class A 15,395(2) *
Class B -0- --
Paul F. Engler................................. Class A 2,500 *
Class B -0- --
James E. Harwood............................... Class A 1,000 *
Class B -0- --
John R. Kennedy................................ Class A 800 *
Class B 200 *
Charles A. Koons............................... Class A 16,083(2) *
Class B -0- --
Leslie C. Liabo................................ Class A 14,475(2) *
Class B 3,875 *
Patric J. McLaughlin........................... Class A 106,672(2) 1.3%
Class B -0- --
C. Alan MacDonald.............................. Class A 1,000 *
Class B -0- --
H. Barclay Morley.............................. Class A 2,500 *
Class B -0- --
Edward P. Norris............................... Class A 48,042(2) *
Class B -0- --
William L. Rudkin.............................. Class A 1,000(4) *
Class B -0- --
Wendell M. Smith............................... Class A -0- --
Class B 100 *
William C. Steinkraus.......................... Class A 110(5) *
Class B -0-(5) --
Robert M. Stephan.............................. Class A 20,117(2) *
Class B -0- --
Raymond S. Troubh.............................. Class A 3,000 *
Class B 500 *
All directors and officers as a group.......... Class A 1,643,851 19.2%
Class B 957,264 55.0%
</TABLE>
- ---------------
* Does not exceed one percent of the total outstanding shares of such class.
(1) Based upon Schedule 13G, Amendment No. 16, dated February 13, 1995, filed
with the SEC. Mr. Ziegler reports that he shares voting and investment power
over 1,264,594 and 876,158 of such shares of the Company's Class A Common
Stock and Class B Common Stock, respectively. Mr. Ziegler shares voting and
investment power of such shares with First Fidelity as co-trustees of the
Ziegler Trusts. Of such shares, 1,140,294 shares of the Company's Class A
Common Stock and 824,521 shares of the
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<PAGE> 6
Company's Class B Common Stock are owned by GIH. GIH is wholly owned by Mr.
Ziegler, Mrs. Steinkraus and the co-trustees of the Ziegler Trusts and the
Steinkraus Trusts.
(2) Includes the following shares of the Company's Class A Common Stock that may
be acquired within 60 days pursuant to the exercise of options: Ms. Downey,
14,400 shares; Mr. Koons, 15,300 shares; Mr. Liabo, 8,000 shares; Mr.
McLaughlin, 96,000 shares: Mr. Norris, 36,750 shares; Mr. Stephan, 15,000
shares; Mr. Ziegler, 54,948 shares; and all directors and officers as a
group, 304,498 shares. Also includes shares of the Company's Class A Common
Stock credited under the Company's capital accumulation plan through
December 31, 1994 as follows: Ms. Downey, 995.4392 shares, Mr. McLaughlin,
8,666.5407 shares; Mr. Koons, 783.0609 shares; Mr. Norris, 11,167.1858
shares; and Mr. Stephan, 2,116.6837 shares.
(3) Excludes 1,003 shares of the Company's Class B Common Stock owned by Mr.
Ziegler's wife. Mr. Ziegler disclaims beneficial ownership of such shares.
(4) Excludes 587 shares of the Company's Class A Common Stock owned by Mr.
Rudkin's wife. Mr. Rudkin disclaims beneficial ownership of such shares.
(5) Excludes shares of the Company's Class A and Class B Common Stock owned by
Mrs. Steinkraus and disclosed above. Mr. Steinkraus disclaims beneficial
ownership of such shares.
DIRECTORS AND EXECUTIVE OFFICERS
PURCHASER DESIGNEES
As of the date of this Information Statement, Purchaser has not determined
who will be Purchaser Designees. However, it is expected that Purchaser
Designees shall be selected from among the directors and executive officers of
Purchaser and its affiliates. Certain information regarding the list of
candidates as Purchaser Designees will be provided at a later date when such
information becomes available. It is expected that the Purchaser Designees will
assume office promptly following the purchase by Purchaser pursuant to the Offer
and the Stock Purchase Agreement of such number of shares as represents at least
a majority of the outstanding shares of both the Company's Class A Common Stock
and Class B Common Stock.
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CURRENT AND CONTINUING DIRECTORS
The following table sets forth the ages (as of February 21, 1995) and other
information with respect to the current directors of the Company.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ------------------------------------- --- --------------------------------------- --------
<S> <C> <C> <C>
CLASS A DIRECTORS
PAUL F. ENGLER (1)................... 65 President and Chief Executive Officer 1993
of Cactus Feeders, Inc. (farming,
ranching and cattle feeding).
JOHN R. KENNEDY...................... 64 President, Chief Executive Officer and 1992
a director of Federal Paper Board
Company, Inc. (paper and wood
products). Also a director of
DeVliegBullard, Inc., First Fidelity
Bancorporation, Magma Copper Company
and Chase Brass Industries, Inc.
WILLIAM L. RUDKIN (1)................ 68 Retired Chairman of Pepperidge Farm 1993
Incorporated (consumer food products).
WENDELL M. SMITH..................... 59 Chairman and Chief Executive Officer of 1993
Baldwin Technology Company, Inc.
(manufacturer of printing press
controls and accessories). Also a
director of Bowne & Company.
CLASS B DIRECTORS
CHARLES B. COOK, JR.................. 65 Vice Chairman and a director of Janney 1964
Montgomery Scott Inc. (investment
bankers).
JAMES E. HARWOOD..................... 58 President, Sterling Equities, Inc. 1992
(venture capitalists and management
advisors); formerly Corporate Vice
President of Technical Operations of
Schering Plough Corporation. Also a
director of Morgan Keegan & Company and
Leader Financial Corporation Inc.
LESLIE C. LIABO (1).................. 71 Former Vice Chairman of the Board of 1975
the Company (1986-1993)
C. ALAN MACDONALD.................... 61 General Partner, The Marketing 1992
Partnership, Inc.; formerly Chairman
and Chief Executive Officer of Lincoln
Snacks Company (1992-1994) and
President and Chief Executive Officer
of Nestle Foods Corporation. Also a
director of Lord Abbett & Company,
Fountainhead Water Company, J.B.
Williams Company, Great American
Restaurants and Lincoln Snacks Company.
PATRIC J. MCLAUGHLIN(1).............. 49 President and Chief Executive Officer 1988
of the Company since July 1, 1993;
formerly President and Chief Operating
Officer of the Company (1992-1993) and
President of its Corn Processing
Division (1984-1992).
</TABLE>
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<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ------------------------------------- --- --------------------------------------- --------
<S> <C> <C> <C>
H. BARCLAY MORLEY.................... 65 Retired Chairman and Chief Executive 1991
Officer of Stauffer Chemical Company.
Also a director of Champion
International Corporation, Schering
Plough Corporation and The Bank of New
York Company.
WILLIAM C. STEINKRAUS (1)(2)......... 69 Private investor and Chairman Emeritus 1980
of United States Equestrian Team,
Incorporated, a charitable organization
responsible for providing United States
international equestrian
representation.
RAYMOND S. TROUBH.................... 68 Financial consultant. Also a director 1992
of ADT Limited; America West Airlines,
Inc.; Applied Power Incorporated; ARIAD
Pharmaceuticals, Inc.; Becton,
Dickinson and Company; Benson Eyecare
Corporation; Foundation Health
Corporation; General American Investors
Company, Inc.; Manville Corporation;
The Olsten Corporation; Petrie Stores
Corporation; Riverwood International
Corporation; Time Warner Inc.; Triarc
Companies, Inc.; and WHX Corporation.
WILLIAM ZIEGLER, III (1)(2).......... 66 Chairman of the Board of the Company 1958
since 1964; formerly Chief Executive
Officer of the Company (1976-1993).
</TABLE>
- ---------------
(1) Member of the Executive Committee.
(2) Mr. Ziegler and Mr. Steinkraus's wife are brother and sister.
AGREEMENTS AFFECTING BOARD MEMBERSHIP
The Company's Class B Common Stock has the power to elect 70% of the
Company's Board of Directors. GIH Corp. owns approximately 13.4% of the Class A
Common Stock and approximately 47.3% of the Class B Common Stock. All the shares
of GIH Corp. are held directly by, or in various trusts for the benefit of,
William Ziegler, III and his sister, Mrs. Helen Steinkraus.
Control over GIH Corp. is the subject of litigation initiated in New York
Surrogate's Court by the children of Mrs. Helen Steinkraus challenging the prior
distribution of the controlling share of GIH Corp. common stock to a trust for
the benefit of William Ziegler, III. On April 4, 1994, the New York Surrogate's
Court issued a decision in favor of Mr. Ziegler, and Mrs. Steinkraus' children
have filed an appeal of such decision. The appeal was argued on February 15,
1995.
Until the final resolution of the litigation described above, Mr. Ziegler,
Mrs. Steinkraus and GIH Corp. agreed in March, 1991 that their shares of the
Company will be voted for directors nominated by the Company in accordance with
the succession resolutions adopted by the Board of Directors in March, 1991. The
resolutions provide for Board seats for Mr. Ziegler and Mrs. Steinkraus or their
designees and require that the majority of the Board consist of directors who
are neither employees of the Company nor members of the Ziegler or Steinkraus
families.
Mr. Ziegler has informed the Board of Directors of the Company that it is
his position that the March, 1991 agreement is no longer in effect as a result
of the Surrogate's Court decision. The Company believes that the March, 1991
agreement remains in effect. See the Schedule 14D-9 for further information with
respect to the dispute over the control of GIH Corp.
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<PAGE> 9
CERTAIN INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES THEREOF
The Board of Directors held twelve meetings during 1994. Attendance at
Board meetings averaged 96.2% and attendance at Board committee meetings
averaged 86.5%. Each incumbent director attended at least 75% of the Board
meetings and the meetings of Board committees on which the director served. The
principal standing committees of the Board are the Executive Committee, Audit
Committee, Compensation Committee and Pension Committee.
Executive Committee. The Executive Committee consists of six directors:
William L. Rudkin (Chair), Paul F. Engler, Leslie C. Liabo, Patric J.
McLaughlin, William C. Steinkraus and William Ziegler, III. Pursuant to the
By-Laws, the Executive Committee has all the powers and authority of the Board
of Directors in the management of the business and affairs of the Company,
except those powers which, by law, cannot be delegated by the Board of
Directors. The Executive Committee also serves as the nominating committee of
the Board of Directors. In this capacity it selects potential candidates for
director subject to ratification by the Board of Directors. The Executive
Committee considers shareholder recommendations for directors. The Executive
Committee met seven times in 1994.
Audit Committee. The Audit Committee consists of five directors: Wendell
M. Smith (Chair), Paul F. Engler, James E. Harwood, John R. Kennedy and Raymond
S. Troubh. The Audit Committee meets independently with the Company's internal
auditing staff, with senior management and with representatives of the Company's
independent accountants. The Audit Committee recommends the engagement or
discharge of the Company's independent accountants; reviews the scope, fees, and
results of the annual audit; reviews the performance of additional services by
the Company's independent accountants; monitors compliance with corporate
policies; and reviews the effectiveness of the Company's internal control
systems. The Audit Committee met four times in 1994.
Compensation Committee. The Compensation Committee consists of five
directors: H. Barclay Morley (Chair), Charles B. Cook, Jr., John R. Kennedy, C.
Alan MacDonald and William L. Rudkin. The committee approves the compensation of
officers and other senior executives, including salary, incentive bonus, and
stock options, in accordance with the Company's stock option and management
incentive plans. The Compensation Committee met four times in 1994. (See below
for the committee's report on 1994 compensation of executive officers.)
Pension Committee. The Pension Committee consists of six directors;
Charles B. Cook, Jr. (Chair), Paul F. Engler, James E. Harwood, Leslie C. Liabo,
C. Alan MacDonald and William Ziegler, III. The Pension Committee is responsible
for supervision of the investment of all assets held by the Company's pension
and savings plans. The Pension Committee met three times in 1994.
Directors who are not employees of the Company or its subsidiaries are paid
an annual retainer of $15,000 plus an attendance fee of $1,000 for each Board
meeting and each Board committee meeting. Directors are also reimbursed for
travel expenses to attend Board and committee meetings. Committee chairs receive
additional annual retainers ranging from $5,000 to $12,000. In lieu of the
annual director's retainer and Executive Committee attendance fees, Mr.
MacDonald received until October 1994 an annual retainer of $120,000 and was
granted 20,000 stock appreciation rights for his service as a director and
Chairman of the Executive Committee. In lieu of the annual director's retainer
and Board meeting attendance fees, Mr. Ziegler receives an annual retainer of
$120,000, use of an office and part-time secretarial support and use of a club
membership for his service as a director and Chairman of the Board.
Directors with five years or more of service as a non-employee member of
the Board participate in a directors' retirement plan that provides eligible
directors, upon retirement, with an annual retirement income equal to 50-100%
(depending on the number of years served) of the director's highest twelve
monthly consecutive retainers paid during the last 120 months of Board service.
For purposes of this calculation, the current annual retainer for the Chairman
of the Board is deemed to be $15,000.
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<PAGE> 10
CERTAIN LEGAL PROCEEDINGS
On February 22, 1995, William Ziegler, III, Chairman of the Board of the
Company, on behalf of himself and, purportedly, GIH Corp., filed suit in
Superior Court, Cumberland County, Maine seeking declaratory and injunctive
relief against the Merger Agreement, the Stock Purchase Agreement and the
transactions contemplated thereby. The complaint, entitled GIH Corp. and William
Ziegler, III v. American-Maize Products Co. et. al., alleges that the approval
by the remaining members of the Company's Board of Directors of the Merger
Agreement and Stock Purchase Agreement and their authorization of "break-up" fee
provisions in the Merger Agreement constituted a breach of their fiduciary
duties. The complaint asserts that the proposed issuance of additional shares of
Class B Common Stock by the Company pursuant to the Stock Purchase Agreement is
ultra vires and requests the court to declare such issuance unlawful and void.
The complaint also alleges that the defendant directors' approval of certain
termination agreements with senior officers of the Company violated the
directors' fiduciary duties. The Company believes all of the claims contained in
the complaint are without merit and intends to defend against them vigorously.
In January 1995, alleged shareholders of the Company filed complaints in
Connecticut Superior Court in three purported class actions against the Company
and its Board of Directors, entitled Kenneth Steiner and William Steiner v.
American Maize-Products Co., et al., Alan Katz v. American Maize-Products Co.,
et al. and Mitchell Saltzman and Miriam Sarnoff v. American Maize-Products Co.,
et al. The actions allege that the Company's Board of Directors breached its
fiduciary duties to shareholders by not adequately considering Purchaser's
initial offer on December 19, 1994 to acquire the Company at a purchase price of
$32 per share, by rejecting such offer, by failing to make adequate disclosure
of the Offer and by placing personal interests, including an alleged attempt by
Mr. Ziegler to retain control of the Company, ahead of the interest of the
public shareholders. The complaints seek equitable relief and unspecified
damages. The Company believes that the allegations in the complaint are without
merit and intends to defend the actions vigorously.
EXECUTIVE OFFICERS
Set forth below is the age as of February 21, 1995 and certain other
information regarding each person, currently serving as an executive officer of
the Company.
<TABLE>
<CAPTION>
NAME AGE TITLE
-------------------------------------- --- --------------------------------------
<S> <C> <C>
William Ziegler, III(1)............... 66 Chairman of the Board
Patric J. McLaughlin(1)............... 49 President and Chief Executive Officer
Robert A. Britton..................... 48 Vice President, Treasurer and
Assistant Secretary
Jane E. Downey........................ 44 Vice President -- Human Resources
Thomas H. Fisher...................... 48 Director of Taxes
Edmond G. Herve, Jr................... 45 Controller
Charles A. Koons...................... 51 Vice President -- Corporate
Development and Planning
Edward P. Norris...................... 54 Vice President and Chief Financial
Officer
Robert M. Stephan..................... 52 Vice President, General Counsel and
Secretary
</TABLE>
- ---------------
(1) Member of Board of Directors and its Executive Committee
Messrs. Britton, Herve, Fisher, Koons and Norris have served in their
respective capacities with the Company for more than the past five years.
Mr. Ziegler retired as Chief Executive Officer effective July 1, 1993 and
remains Chairman of the Board of Directors; prior thereto he served as Chairman
and Chief Executive Officer since 1976.
Mr. McLaughlin was elected President and Chief Executive Officer of the
Company effective July 1, 1993; prior thereto he served as President and Chief
Operating Officer (1992-1993) and President of the Corn Processing Division
(1984-1992).
A-10
<PAGE> 11
Ms. Downey was elected Vice President -- Human Resources of the Company
effective August 1, 1993; prior thereto she served as Vice President -- Human
Resources of the Corn Processing Division (1988-1993).
Mr. Stephan was elected Vice President and General Counsel of the Company
in April, 1992 and Secretary in January, 1995. Prior thereto he served as Vice
President, General Counsel and Secretary of Erbamont, N.V. since 1983.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company subleases office space to and shares certain office facilities
with GIH Corp., of which Mr. Ziegler is President, for an annual fee of
approximately $15,000. Swisher International, Inc., a subsidiary of the Company,
has engaged the consulting services of Mr. Harwood in its business and paid Mr.
Harwood $30,000 in 1994 for such services. During 1994, the Company and its
subsidiaries have had purchase, sale, financial and other transactions in the
normal course of business with companies or organizations (including their
affiliates) with which some of the Company's directors are associated, including
the following: Champion International Corporation, The Bank of New York Company
and Janney Montgomery Scott Inc. To the best of the Company's knowledge, none of
the above transactions resulted in aggregate payments that were large enough to
require disclosure of such transactions by the Company. Management believes that
all of the above transactions were on terms that were reasonable and
competitive. Additional transactions of this nature may be expected to take
place in the ordinary course of business in the future.
In connection with his relocation from Illinois to Connecticut, Mr.
McLaughlin was granted a housing loan by the Company on April 29, 1993 in the
amount of $150,000 payable in three equal annual installments commencing April
29, 1994 with interest at the rate of 5.24% per annum. The note is secured by a
second mortgage on Mr. McLaughlin's principal residence.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and any persons who are beneficial owners of more than ten percent of
any class of the Company's Common Stock, to report their initial ownership of
Common Stock and any subsequent changes in that ownership to the SEC and the
American Stock Exchange. Based solely on the Company's review of forms submitted
to the Company in accordance with the Exchange Act, and the representations of
its officers and directors, the Company believes that all of its officers,
directors and greater than ten percent beneficial owners complied with all
filing requirements applicable to them with respect to transactions during the
fiscal year 1994.
A-11
<PAGE> 12
EXECUTIVE COMPENSATION
The following table sets forth compensation paid or awarded during the last
three fiscal years to the Chief Executive Officer and the four other most highly
compensated executive officers of the Company in 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------------
------------------------------------- SECURITIES
OTHER UNDERLYING ALL OTHER
NAME AND ANNUAL OPTIONS/ COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) SARS(2) SATION(3)
- -------------------------- ----- -------- -------- --------------- ------------------ ------------
($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C>
Patric J. McLaughlin...... 1994 $420,000 $396,000 $37,854 30,000 $ 34,489
President and Chief 1993 350,000 272,000 27,120 20,000 28,848
Executive Officer 1992 254,000 157,000 11,808 10,000 22,204
Edward P. Norris.......... 1994 206,000 127,200 39,922 12,000 29,120
Vice President and Chief 1993 185,850 108,000 36,224 6,000 29,356
Financial Officer 1992 166,100 98,000 20,211 3,000 29,025
Robert M. Stephan(4)...... 1994 177,250 108,000 30,775 7,000 27,120
Vice President, General 1993 166,750 94,000 28,733 5,000 27,165
Counsel and Secretary 1992 124,058 70,000 16,328 3,000 23,441
Charles A. Koons.......... 1994 148,000 79,500 28,253 5,000 22,920
Vice President,
Corporate 1993 140,500 68,000 27,138 3,000 22,620
Development and
Planning............. 1992 132,000 63,000 15,520 3,000 22,280
Jane E. Downey(5)......... 1994 125,000 69,300 51,474 6,000 45,860
Vice President, 1993 108,333 60,000 16,963 4,000 23,473
Human Resources
</TABLE>
- ---------------
(1) Amounts in this column represent tax reimbursements on life insurance and
company automobiles. The amounts with respect to life insurance are as
follows: Mr. McLaughlin $23,126; Mr. Norris $22,540; Mr. Stephan $17,119;
Mr. Koons $13,858 and Ms. Downey $33,309.
(2) All amounts in this column represent option grants and all such options were
immediately exercisable (see Option Grants in Last Fiscal Year and
Aggregated Option Exercises in Last Fiscal Year and Year-End Option Values
tables).
(3) Amounts in this column represent the following items as set forth in the
table below: (a) Company contributions to the executive's 401(k) plan
account (b) universal life insurance premiums paid by the Company on
policies owned by the executives.
<TABLE>
<CAPTION>
PATRIC J. EDWARD P. ROBERT M. CHARLES A. JANE E.
1994 MCLAUGHLIN NORRIS STEPHAN KOONS DOWNEY
------------------------------------- ---------- --------- --------- ---------- -------
<S> <C> <C> <C> <C> <C>
401(k) Contribution.................. $ 6,120 $ 6,120 $ 6,120 $ 5,920 $ 5,000
Life Insurance Premiums.............. 28,369 23,000 21,000 17,000 40,860
---------- --------- --------- ---------- -------
$ 34,489 $29,120 $27,120 $ 22,920 $45,860
</TABLE>
(4) Mr. Stephan was elected Secretary of the Company on January 25, 1995 and
Vice President and General Counsel of the Company on April 24, 1992. Prior
thereto, he served for a one-month period as Vice President and Associate
General Counsel of the Company.
(5) Ms. Downey was elected Vice President, Human Resources on August 1, 1993.
Prior thereto she served as Vice President -- Human Resources of the
Company's Corn Processing Division (1988-1993).
A-12
<PAGE> 13
STOCK OPTION TABLES
The following tables provide information with respect to stock options
granted to, exercised or held by the named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(2)
OPTIONS EMPLOYEES PRICE EXPIRATION ---------------------------
NAME GRANTED(1) IN 1994 $/SH DATE 5%($) 10%($)
- --------------------------- ---------- ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Patric J. McLaughlin....... 30,000 17.80% $20.00 6/29/04 $646,200 $1,384,200
Edward P. Norris........... 12,000 7.12 20.00 6/29/04 258,480 553,680
Robert M. Stephan.......... 7,000 4.15 20.00 6/29/04 150,780 322,980
Charles A. Koons........... 5,000 2.97 20.00 6/29/04 107,700 230,700
Jane E. Downey............. 6,000 3.56 20.00 6/29/04 129,240 276,840
</TABLE>
- ---------------
(1) All amounts in this column represent option grants and all such options were
immediately exercisable.
(2) Potential realizable value is based on the assumed annual growth of the
Company's Class A Common Stock for the ten-year option term. Annual growth
of 5% results in a stock price of $41.54 per share and 10% results in a
price of $66.14 per share. Actual gains, if any, on stock option exercises
are dependent on the future performance of the stock. There can be no
assurance that the amounts reflected in this table will be achieved.
The following table details the value on December 31, 1994 of options to
purchase Common Stock held by those persons named in the Summary Compensation
Table above.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS AT FISCAL YEAR-END OPTIONS AT YEAR-END
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Patric J. McLaughlin............. 2,750 $8,415 96,000 0 $ 779,156 0
Edward P. Norris................. 750 2,389 36,750 0 285,576 0
Robert M. Stephan................ 0 0 15,000 0 96,000 0
Charles A. Koons................. 0 0 15,300 0 85,563 0
Jane E. Downey................... 0 0 14,400 0 91,606 0
</TABLE>
A-13
<PAGE> 14
RETIREMENT BENEFITS
The approximate annual retirement benefits provided under Company
retirement plans for employees in higher salary classifications retiring from
the Company at age 62 or later are shown in the table below.
<TABLE>
<CAPTION>
EARNINGS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 OR MORE
CREDITED FOR OF OF OF OF YEARS OF
RETIREMENT BENEFITS SERVICE SERVICE SERVICE SERVICE SERVICE
- ------------------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
$ 100,000 $ 18,568 $ 27,775 $ 36,981 $ 46,188 $ 55,395
150,000 29,175 43,595 58,014 72,434 86,853
250,000 50,389 75,234 100,080 124,925 149,770
350,000 71,603 106,874 142,145 177,416 212,687
450,000 92,817 138,513 184,210 229,906 275,603
550,000 114,031 170,153 226,275 282,397 338,520
650,000 135,245 201,793 268,341 334,888 401,436
750,000 156,458 233,432 310,405 387,379 464,352
850,000 177,672 265,071 352,471 439,870 527,269
</TABLE>
The amounts of earnings credited for retirement benefits ("Credited
Earnings") are essentially salaries and bonuses as shown in the Summary
Compensation Table above. The calculation of each individual's "Credited
Earnings" is based on the highest consecutive 60 months during his or her last
120 months of employment.
The amounts shown in the table are 10 year certain and continuous benefits,
converted to straight life annuities. Pay is assumed to remain constant to
Normal Retirement Date. The figures shown are not limited by any law or
regulation such as Section 415(b) and (e) or Section 401(a)(17) of the Internal
Revenue Code of 1986, as amended. The benefits shown reflect the total benefit
to be paid under both the 1952 Plan and the Supplemental Plan.
As of December 31, 1994, the executive officers named in the Summary
Compensation Table had the following credited years of service under the
retirement plan: Mr. McLaughlin 20.5 years; Mr. Norris 16.8 years, Mr. Stephan
2.8 years, Mr. Koons 18.0 years, and Ms. Downey 6.3 years.
PERFORMANCE MEASUREMENT COMPARISON
The following Performance Graph compares the Company's cumulative total
shareholder return on its Common Stock for a five-year period (1989-1994) with
the cumulative total return of the Wilshire 5000 stock index and the Russell
2000 stock index. The graph assumes that $100 was invested on December 31, 1989
in the Company's Class A Common Stock and that $100 was invested at that time in
each of the indexes. The comparison assumes that all dividends are reinvested.
The graph below shall not be deemed to be incorporated by reference into
any filing of the Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates such performance graph by reference, and shall
not otherwise be deemed filed under such Acts.
A-14
<PAGE> 15
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
MEASUREMENT PERIOD AMERICAN
(FISCAL YEAR COVERED) MAIZE WILSHIRE 5000 RUSSELL 2000
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 104.61 93.82 80.49
1991 118.16 125.91 117.56
1992 127.04 137.20 139.21
1993 90.41 152.68 165.52
1994 152.39 152.58 162.51
</TABLE>
The Company actively operates in two business segments: (i) the corn wet
milling business, in which it manufactures and markets corn syrup, high fructose
corn syrup, corn starch and other corn derivatives, principally for use in
manufacturing processes in a variety of industries and (ii) the manufacture and
sale of consumer tobacco products through which the Company manufactures and
markets cigars and various smokeless tobacco products.
The Company does not believe there is either a published industry or
line-of-business mix or a group of companies whose overall business is
sufficiently similar to the Company's business to allow a meaningful benchmark
against which the Company can be compared. Competitors in each of the Company's
two business segments either operate in other, completely unrelated, businesses
or have a significantly different product index, effectively making overall
competitive comparisons from public information misleading. For these reasons,
the Company has elected to use a published index of companies of similar market
capitalization -- the Russell 2000 -- rather than a peer group, in addition to
the Wilshire 5000 broad equity market index. The Russell 2000 index has a median
market capitalization of approximately $130,000,000.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Overview
The Compensation Committee of the Board of Directors (the "Committee") has
the responsibility for the design, implementation and administration of the
Company's executive compensation program. The Committee is comprised entirely of
outside independent directors.
The objective of the Company's executive compensation program is to attract
and retain the management talent necessary to maximize long-term profitability
and shareholder value. The program is designed to accomplish this objective
through plans that (i) motivate senior managers, and align their interests with
those of the Company's shareholders, by tying incentive compensation to Company
profitability and individual performance and (ii) provide a base level of
compensation that is competitive with other industrial companies in similar
businesses as well as a cross section of general industry.
A-15
<PAGE> 16
Elements of Compensation
The three principal components of the Company's executive compensation
program are salary, annual incentives and stock options, each of which is
discussed in detail below.
1. Salary
Of the three elements of executive compensation, salary is the least
affected by Company performance; although it is very much dependent on
individual performance. Salary is intended to provide a base level of
compensation that is competitive at the market median with companies of similar
type, particularly those in the food and kindred products industry group and
capital intensive process industries. The Committee reviews and approves salary
levels and increases for each employee of the Company and its subsidiaries whose
base salary exceeds $100,000.
Following a procedure used for all salaried employees of the Company, each
of the executive officers is assigned a salary range for his or her particular
job. The range is set at 80% to 120% of the median market value of the position.
The median market value is established by an evaluation of the degree of
accountability, expertise and problem solving required in each position and the
results of salary surveys conducted by major compensation consultants and
associations. The salary ranges are reviewed annually using current survey data
to determine the amount of adjustment, if any.
Individual salaries are reviewed every 9 to 18 months. The timing and
amount of any increase to salaried employees, including executive officers, are
both dependent upon (i) the performance of the individual and, to a lesser
extent (ii) the relationship of his or her actual salary to the midpoint of the
salary range.
Executive officer salaries are recommended by the Chief Executive Officer
and reviewed and approved by the Committee. The Chief Executive Officer's
recommendations on the amount of increase are based on his subjective evaluation
of each individual's performance in his or her respective functional area.
During 1994 the Committee concurred with and approved all salary recommendations
made by the Chief Executive Officer.
In determining Mr. McLaughlin's salary increase on July 1, 1994, the
Committee considered an executive compensation study prepared by an outside
compensation consultant. The Committee rated Mr. McLaughlin's performance based
on its evaluation of his contribution to the successful operations of the
Company during the preceding year. Mr. McLaughlin's base salary is subject to
the terms of his employment agreement. See "Employment Agreements".
2. Annual Incentives
The executive officers of the Company all participate in a Management
Incentive Plan under which annual cash bonuses are paid, based on the
achievement of specific financial and/or operational targets and each
participant's individual performance. The current plan was established in 1994
with the assistance of an outside compensation consultant.
For each business unit, bonuses are based on the achievement of financial
performance targets and individual performance goals. The financial objectives
are developed by the Committee during the first quarter of the year.
Each participant in the plan has a target bonus opportunity that is
expressed as a percentage of his or her base salary. The target bonus
opportunity ranges from 20% to 60% and is based on the potential of the position
to have a positive impact on the performance of the Company.
Seventy percent of the target bonus opportunity is tied directly to the
financial performance of the participant's business unit. The remaining thirty
percent of the target bonus opportunity is made available if certain thresholds
related to financial performance are met, and is awarded on a discretionary
basis that recognizes individual contributions.
A-16
<PAGE> 17
Performance above goal increases actual bonus awards, up to a maximum of
150% of the target bonus. Performance below goal decreases actual bonus awards,
and they are reduced to zero in the event the financial results are sufficiently
below target.
The discretionary portion of each participant's bonus is based on his or
her individual performance during the year. Individual performance ratings are
recommended to the Committee by management. The Committee sets Mr. McLaughlin's
performance rating based on its evaluation of the overall Company performance
during the year and its evaluation of his performance in relation to the
specific objectives which were set for him for the award year.
The Committee awarded Mr. McLaughlin a bonus of 150% of his target bonus
opportunity, based on the excellent performance of the Company in 1994.
3. Stock Options
Stock options are designed to provide long-term incentives and rewards tied
to increases in the price of the Company's common stock. The Committee believes
that stock options, which provide value to the participants only when the
Company's shareholders benefit from stock price appreciation, are an integral
component of the Company's executive compensation program.
Approximately 70 key employees, including the executive officers,
participate in shareholder-approved stock option plans. Stock options are issued
at an exercise price equal to 100% of the fair market value of the Company's
common stock on the date of grant. Options granted under the plans have terms of
up to ten years and may expire earlier in the event of termination of
employment.
In determining the 1994 stock option recipients and the overall number of
options granted, the Committee reviewed the details of the last two stock option
grants. The factors considered in awarding the specific number of options to
each participant included the individual's total compensation, organizational
level, and his or her potential for contributing to the successful operations of
the Company. The options granted were all incentive stock options except where
the limits of the plan and IRS regulations required the granting of
non-qualified options.
The Committee awarded Mr. McLaughlin 30,000 options in 1994 to recognize
his direct involvement in enhancing the operations of the Company.
Compliance with Internal Revenue Code Sections 162(m). Section 162(m) of
the Code, effective in 1994, generally disallows a tax deduction to public
companies for compensation over $1 million paid to the corporation's Chief
Executive Officer and four other most highly compensated executive officers.
Qualifying performance-based compensation will not be subject to the deduction
limit if certain requirements are met. Absent extraordinary circumstances, the
Company's current compensation programs are not likely to trigger the $1 million
limit on deductibility. Future grants of stock options, stock appreciation
rights and restricted stock under the 1994 Stock Plan would not be subject to
the deduction limit. The Company will consider whether new compensation programs
should be structured in a manner that would be exempt from the deduction limit
at the time such programs are designed.
Compensation Committee
H. Barclay Morley, Chair
Charles B. Cook, Jr.
John R. Kennedy
C. Alan MacDonald
William L. Rudkin
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee are current or former
employees of the Company or its affiliates.
A-17
<PAGE> 18
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Patric J. McLaughlin
as President and Chief Executive Officer (the "Agreement") commencing July 1,
1993 and terminating June 30, 1996, subject to automatic one-year extensions on
each anniversary date until July 1, 2000. The Agreement provides for a base
salary of $400,000 per annum, subject to annual reviews by the Compensation
Committee, plus an annual incentive bonus under the Company's management
incentive plan with a bonus "target" rate at 50% of base salary. Under the
Agreement, in the event Mr. McLaughlin's employment is terminated without
"cause," he shall be entitled to severance benefits until the Agreement's
termination date, including (i) salary, (ii) target bonus payments and (iii)
continued participation in welfare benefit plans, retirement plans and the
Company's 401(k) Plan. In such case, stock options awarded prior to his
termination without "cause" shall remain exercisable until the earlier of their
expiration date or the third anniversary of the termination of his employment.
In the event of termination of employment for "cause" or due to death or
disability, the Company shall not be obligated to make any severance payments to
Mr. McLaughlin. The Agreement provides that the Company will pay an amount
necessary to reimburse Mr. McLaughlin, on an after tax basis, for any excise tax
due under Section 4999 of the Code as a result of any payment under the
Agreement being treated as a "parachute payment" under Section 280G of the Code.
The Agreement contains provisions relating to nondisclosure of confidential
information by Mr. McLaughlin and nonsolicitation of Company employees for a
period of two years after his termination. The Agreement is not assignable by
either party, but is binding upon successors of the Company.
The Company entered into employment agreements with Jane E. Downey, Charles
A. Koons, Edward P. Norris, Robert M. Stephan and three other executive officers
of the Company (the "Agreements") commencing as of January 2, 1995 and
terminating December 31, 1997 subject to automatic one-year extensions as of
December 31, 1995 and each December 31st thereafter, unless timely notice is
given that the term shall not be extended. The Agreements provide that each of
the executive officers will serve the Company in the offices listed (with
respect to named executive officers) in the Summary Compensation Table and set
forth in the Agreements at specified annual base salary rates. The base salaries
are subject to annual reviews by the Compensation Committee, plus annual
incentive bonuses under the Company's management incentive plan at the bonus
"target" rate specified in each Agreement. The Agreements include provisions
that are effective in the event the employment of the executive officer is
terminated by the Company without "cause" or by the executive officer for "good
reason" (each as defined in the Agreements). In such cases, the executive
officer is entitled to severance benefits for the remainder of the agreement
term, including (i) salary, (ii) target bonus payments and (iii) continued
participation in welfare benefit plans, retirement plans and the Company's
401(k) Plan. In such case, stock options awarded prior to the executive
officer's termination without "cause" shall become fully vested and shall remain
exercisable until the earlier of their expiration date or the third anniversary
of the termination of his or her employment. Pursuant to the terms of the
Agreements, the Company will pay each executive officer an amount necessary to
reimburse him or her, on an after tax basis, for any excise tax due under
Section 4999 of the Code as a result of any payment under the Agreements being
treated as a "parachute payment" under Section 280G of the Code. The Agreements
contain a provision relating to nondisclosure of confidential information by the
executive officers. The Agreements are not assignable by either party, but are
binding upon successors of the Company.
February 28, 1995 American Maize-Products Company
A-18
