<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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
</TABLE>
LANCASTER COLONY 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.
<TABLE>
<S> <C>
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: __________________________________________________________________________________.
[ ] 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: ______________________________________________________________________________________.
</TABLE>
<PAGE> 2
LANCASTER COLONY CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held November 17, 1997
The annual meeting of shareholders of Lancaster Colony
Corporation (the "Corporation") will be held at 11:00 a.m., Eastern
Standard Time, November 17, 1997, in the Congressional Room of the
Hyatt on Capitol Square, 75 East State Street, Columbus, Ohio 43215.
The meeting will be held for the following purposes:
1. To elect three directors for a term which expires in 2000.
2. To consider and act on a proposal to amend Article FOURTH of
the Corporation's Articles of Incorporation to increase the
number of authorized shares of Common Stock from 35,000,000 to
75,000,000 and the number of authorized shares of Class A
Preferred Stock from 350,000 to 750,000.
3. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
By action of the Board of Directors, only persons who are holders
of record of shares of the Corporation at the close of business on
September 19, 1997 will be entitled to notice of and to vote at the
meeting.
If you do not expect to attend the meeting, please sign, date and
return the enclosed proxy. A self-addressed envelope which requires no
postage is enclosed for your convenience in returning the proxy. Its
prompt return would be appreciated. The giving of the proxy will not
affect your right to vote in person should you find it convenient to
attend the meeting.
October 15, 1997 JOHN B. GERLACH, JR.
Chairman of the Board,
Chief Executive Officer
and President
<PAGE> 3
LANCASTER COLONY CORPORATION
37 West Broad Street, Columbus, Ohio 43215
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished to the shareholders of Lancaster Colony
Corporation (the "Corporation") in connection with the solicitation by the
Board of Directors of the Corporation of proxies to be used in voting at the
annual meeting of shareholders to be held November 17, 1997, in the
Congressional Room, Hyatt on Capitol Square, 75 East State Street, Columbus,
Ohio 43215, at 11:00 a.m., Eastern Standard Time (the "Annual Meeting"). The
enclosed proxy, if completed and forwarded to the Corporation, will be voted in
accordance with the instructions contained therein. The proposals referred to
therein are described in this Proxy Statement.
The proxy may be revoked by the person giving it any time before it is
exercised. Such revocation, to be effective, must be communicated to the
Secretary or Assistant Secretary of the Corporation. The presence of a
shareholder at the Annual Meeting will not revoke the proxy unless specific
notice thereof is given.
The Corporation will bear the cost of solicitation of proxies, including
any charges and expenses of brokerage firms and others for forwarding
solicitation material to the beneficial owners of stock. In addition to the use
of the mails, proxies may be solicited by personal interview, by telephone or
through the efforts of officers and regular employees of the Corporation.
The Board of Directors has fixed the close of business on September 19,
1997 as the record date for the determination of shareholders entitled to
receive notice and to vote at the Annual Meeting or any adjournment thereof. At
that date the Corporation had outstanding and entitled to vote 28,993,991
shares of Common Stock, each share entitling the holder to one vote. The
Corporation has no other class of stock outstanding. This Proxy Statement is
first being mailed to shareholders on or about October 15, 1997.
NOMINATION AND ELECTION OF DIRECTORS
The Board of Directors of the Corporation currently consists of nine
members and is divided into three classes. The members of the three classes are
elected to serve for staggered terms of three years. Pursuant to Section 2.04
of the Code of Regulations, the number of directors constituting each class
will, as nearly as practicable, be equal. Thus, the Board of Directors of the
Corporation currently consists of three classes of three members each.
The names and ages of the "Nominees" and the "Continuing Directors," their
principal occupations during the past five years and certain other information
together with their beneficial ownership of the Corporation's Common Stock as
of September 8, 1997, are listed below. As of September 8, 1997, the
Corporation had outstanding and entitled to vote 29,003,991 shares of Common
Stock.
NOMINEES FOR TERM TO EXPIRE IN 2000
<TABLE>
<CAPTION>
NAME; OFFICE WITH CORPORATION; DIRECTOR SHARES OWNED AT PERCENT OF
PRINCIPAL OCCUPATION AGE SINCE SEPTEMBER 8, 1997 CLASS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kerrii B. Anderson; 39 500 *
Senior Vice President and
Chief Financial Officer of
M/I Schottenstein Homes, Inc.
(homebuilders)
Morris S. Halpern; Retired; 67 1963 76,577 *
formerly Vice President
of the Corporation(1)(2)
Robert S. Hamilton; 69 1985 8,816 *
Vice Chairman and Director
of Liqui-Box Corporation
(plastic packaging manufacturer)(1)
</TABLE>
- ----------------------------------
* Less than 1%
2
<PAGE> 4
(1)See footnote 2 under "Continuing Directors" which explanation applies to
Messrs. Halpern and Hamilton.
(2)Mr. Halpern served as an officer of the Corporation until June 1992. The
Corporation and Mr. Halpern have entered into a formal consulting
agreement discussed under "Compensation of Directors."
Ms. Anderson is standing for election to the Board seat previously held by
Mr. David J. Zuver, who chose not to stand for reelection. Mr. Zuver had been a
member of the Board of Directors for 31 years. All the nominees have indicated
a willingness to stand for election and to serve if elected. It is intended
that the shares represented by the enclosed proxy will be voted for the
election of the above named nominees. Although it is anticipated that each
nominee will be available to serve as a director, should any nominee be
unavailable to serve, the proxies will be voted by the proxy holders in their
discretion for another person designated by the Board of Directors.
CONTINUING DIRECTORS
<TABLE>
<CAPTION>
NAME; OFFICE WITH CORPORATION; DIRECTOR TERM SHARES OWNED AT PERCENT OF
PRINCIPAL OCCUPATION AGE SINCE EXPIRES SEPTEMBER 8, 1997 CLASS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Frank W. Batsch; Retired; 66 1963 1998 36,474 *
formerly Vice President
of the Corporation(2)(5)
Robert L. Fox; 48 1991 1999 705,091 2.43%
Investment Executive for
Advest, Inc. (stock brokerage
firm) since 1978(2)(3)
John B. Gerlach, Jr.; 43 1985 1999 5,231,346 18.04%
Chairman of the Board,
Chief Executive Officer
and President(1)(2)(3)(4)(6)
Edward H. Jennings; 60 1990 1999 533 *
President Emeritus and
Professor of Finance at
The Ohio State University;
formerly President of The
Ohio State University from
1981 to 1990(8)
Richard R. Murphey, Jr.; 72 1973 1998 44,224 *
Of Counsel, law firm of
Squire, Sanders & Dempsey(7)
Henry M. O'Neill, Jr.; 62 1976 1998 13,101 *
Chairman, Chief Executive Officer
of AGT International, Inc. (voice
response systems) since 1988;
Chairman of the Board of Evergreen
Quality Catering (mobile caterer)
since 1987
All Directors and Executive Officers 5,803,966 19.97%
as a group (12 Persons)(1)
</TABLE>
- --------------------------------
* Less than 1%
(1)Includes shares held by the Employee Stock Ownership Plan allocated to
the accounts of Lancaster Colony Corporation employees. Employees have
the right to direct the voting of such shares.
(2)Holdings include shares owned by spouses, minor children and shares held
in custodianship or as trustee. The following persons disclaim
beneficial ownership in such holdings with respect to the number of
shares indicated: Mr. Batsch, 1,000; Mr. Fox, 546,173; Mr. John B.
Gerlach, Jr., 4,894,331; Mr. Halpern, 3,439; and Mr. Hamilton, 2,683.
3
<PAGE> 5
(3)Mr. Gerlach, Jr., trustee of Gerlach Foundation, Inc., and Mr. Fox, a
trustee of Fox Foundation, Inc., share voting and investment power with
their respective foundations, both of which are private charitable
foundations. Gerlach Foundation, Inc. holds 339,955 shares and Fox
Foundation, Inc. holds 49,713 shares. These shares are included in the
above table. Gerlach Foundation, Inc. and Fox Foundation, Inc. together
control an additional 413,415 shares held by Lehrs, Inc. The shares
held by Lehrs, Inc. are also included in the total number of shares held
by Mr. Gerlach, Jr. and Mr. Fox. The trustees each disclaim beneficial
ownership of any of these shares in footnote 2. Additionally, Mr.
Gerlach, Jr., together with his brother and sister, shares voting and
investment power in the John J. Gerlach Trust. This trust presently
holds 578,586 shares of Common Stock of the Corporation which were
distributed from the Estate of John J. Gerlach, Deceased. These shares
have been included in the total number of shares held by Mr. Gerlach,
Jr. in the above table. Mr. Gerlach, Jr. has disclaimed beneficial
ownership of these shares in footnote 2.
(4)Mr. Gerlach, Jr. by virtue of his stock ownership and positions with the
Corporation may be deemed a "control person" of the Corporation.
(5)Mr. Batsch served as an officer of the Corporation until November 1992
and continues as a part-time consultant to the Corporation. See
"Compensation of Directors" for further discussion.
(6)Mr. Gerlach, Jr. is trustee and his mother is special trustee of the
John B. Gerlach Trust. This trust presently holds 3,297,807 shares of
Common Stock of the Corporation which were distributed from the Estate
of John B. Gerlach, Deceased. These shares are included in the
total number of shares held by Mr. Gerlach, Jr. in the above table.
Mr. Gerlach, Jr. has disclaimed beneficial ownership of these shares in
footnote 2.
(7)Mr. Murphey is Of Counsel to a law firm which the Corporation has
retained from time to time during the last two full fiscal years and
proposes to retain during the current year.
(8)Mr. Jennings is also a director of Borden Chemicals & Plastic Ltd.
Partnership.
The Board of Directors has established an audit committee (the "Audit
Committee") currently consisting of Messrs. Hamilton, Jennings and O'Neill. Mr.
Hamilton serves as Chairman of the Audit Committee. The Audit Committee is
charged with the responsibility of reviewing financial information (both
external and internal) about the Corporation and its subsidiaries, so as to
assure (i) that the overall audit coverage of the Corporation and its
subsidiaries is satisfactory and appropriate to protect the shareholders from
undue risks and (ii) that an adequate system of internal financial control has
been implemented throughout the Corporation and is being effectively followed.
The Audit Committee held three meetings during the fiscal year ended June 30,
1997 ("fiscal 1997").
The Board of Directors has established a compensation committee (the
"Compensation Committee") currently consisting of Messrs. Hamilton, Jennings
and O'Neill as its members. Mr. Jennings serves as Chairman of the Compensation
Committee. The powers and duties of the Compensation Committee are to consider
and formulate recommendations to the Board of Directors with respect to all
aspects of compensation to be paid to the executive officers of the
Corporation, to undertake such evaluations and make such reports as are
required by the applicable rules of the Securities and Exchange Commission and
to perform and exercise such other duties and powers as shall from time to time
be designated by action of the Board of Directors. The Compensation Committee
held one meeting during fiscal 1997.
The Board of Directors does not have a Nominating Committee.
In addition to the committee meetings previously mentioned, the Board of
Directors held a total of four meetings during fiscal 1997. Each director
attended at least 75% of the aggregate of all meetings of the Board of
Directors and the committees on which they served during fiscal 1997.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, during fiscal year ended June 30, 1997, all
filing requirements applicable to the officers, directors and beneficial owners
of more than 10% of the outstanding Common Shares under Section 16 (a) of the
Securities Exchange Act of 1934, as amended, were complied with, except that
(1) Dareth A. Gerlach, beneficial owner of more than 10% of the outstanding
shares of the Company, was late in filing one Form 3 with respect to one
transaction, and (2) Morris S. Halpern, director, amended filings on three Form
4s with respect to three transactions which had previously been filed on a
timely basis.
COMPENSATION OF DIRECTORS
Except as noted below, directors who are not employees of the Corporation
or any of its subsidiaries received during fiscal 1997 an annual retainer fee
of $10,000 plus $750 for each meeting attended. Directors who also serve on the
Audit Committee and/or Compensation Committee received $750 for each such
committee meeting attended. Effective August 1997, the annual retainer fee and
the per meeting fee became $14,000 and $1,000, respectively.
4
<PAGE> 6
The Corporation has a consulting agreement with Mr. Halpern pursuant to
which Mr. Halpern agrees to perform advisory and consulting services for an
annual fee of $50,000 per year. The Corporation retains Mr. Batsch as a
part-time consultant for an annual fee of $18,000. The payments to Messrs.
Halpern and Batsch also include their compensation as directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following individuals have beneficial ownership, directly or
indirectly, of more than five percent of the outstanding Common Stock of the
Corporation:
<TABLE>
<CAPTION>
NATURE OF
NAME AND BENEFICIAL AMOUNT PERCENT OF
ADDRESS OWNERSHIP OWNED OWNERSHIP
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
John B. Gerlach, Jr. Direct and 5,231,346(1)(2) 18.04%
Lancaster Colony Corporation Indirect
37 West Broad Street
Columbus, Ohio 43215
Dareth A. Gerlach Direct and 4,089,376(2) 14.10%
c/o Lancaster Colony Corporation Indirect
37 West Broad Street
Columbus, Ohio 43215
Pioneering Management Corporation Direct 1,820,600(3) 6.28%
60 State Street
Boston, Massachusetts 02109
</TABLE>
- -------------------
(1)See footnotes 1, 2, 3, and 4 under "Continuing Directors," which
explanations apply to Mr. Gerlach, Jr.
(2)Includes 3,297,807 shares of Common Stock of the Corporation which are
held by the John B. Gerlach Trust, of which Mrs. Gerlach is special
trustee and has sole voting power with respect to the shares. See
footnote 6 under Continuing Directors.
(3)Based on holdings reported on Schedule 13G as of December 31, 1996.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes compensation earned during the fiscal years
ended June 30, 1997, 1996 and 1995 by those persons who were the Chief
Executive Officer and the three other most highly compensated, reportable
executive officers of the Corporation during fiscal 1997:
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION(1) COMPENSATION
NAME AND FISCAL ---------------------- ------------ ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) COMPENSATION(2)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John B. Gerlach; 1997 $350,000
Chairman of the 1996 550,000 $2,646
Board and Chief 1995 517,500 2,905
Executive Officer(3)
John B. Gerlach, Jr.; 1997 $453,333 $2,722
Chairman of the 1996 364,583 2,646
Board, Chief Executive 1995 345,833 2,905
Officer and President
Larry G. Noble; 1997 $237,600 $244,800 15,000 $2,722
Vice President(4) 1996 235,558 272,000 2,646
1995 228,267 272,000 15,000 2,905
John L. Boylan; 1997 $152,500 $ 30,000 10,000 $2,722
Treasurer, Vice President 1996 130,000 20,000 2,562
and Chief Financial Officer 1995 118,750 15,000 4,000 2,436
</TABLE>
(1)The named executive officers received certain perquisites in 1997, 1996
and 1995, the amount of which did not exceed the reportable threshold of
the lesser of $50,000 or 10% of any such officer's salary and bonus.
5
<PAGE> 7
(2) Approximate amounts contributed on behalf of such executive officer to
the Employee Stock Ownership Plan (ESOP).
(3) John B. Gerlach served as Chairman of the Board and Chief Executive
Officer until his death on January 31, 1997.
(4) Bonus amounts listed as paid to Mr. Noble are discretionarily
determined and relate to the preceding fiscal year. The bonus
relating to fiscal 1997 has not yet been determined but is currently
expected to at least equal that paid in fiscal 1997 for fiscal 1996.
GRANTS OF STOCK OPTIONS
The following table sets forth information concerning individual grants of
stock options made during the 1997 fiscal year to each of the executive
officers named in the Summary Compensation Table. The Corporation has never
granted stock appreciation rights.
OPTIONS GRANTED IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF POTENTIAL REALIZABLE VALUE AT
TOTAL OPTIONS ASSUMED ANNUAL RATES OF
GRANTED TO STOCK PRICE APPRECIATION
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION FOR OPTION TERM(2)
NAME GRANTED(#)(1) FISCAL YEAR PRICE($/SH) DATE 5% 10%
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Larry G. Noble 15,000 5.9% $46.125 01/31/02 $191,000 $422,000
John L. Boylan 10,000 3.9% $46.125 01/31/01 $ 99,000 $214,000
</TABLE>
(1)Options were granted with an exercise price equal to the market price at
the grant date pursuant to the Corporation's 1995 Key Employee Stock
Option Plan. Such options become exercisable in partial amounts through
January 1, 2001.
(2)The amounts reflected in this table are based upon certain assumed rates
of appreciation as specified by the Securities and Exchange Commission.
Actual realized values, if any, on exercise of the option will be
dependent on the actual appreciation in the price of the Common Stock of
the Corporation over the term of the option. There can be no assurances
that the Potential Realizable Values reflected in this table will be
achieved.
STOCK OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information with respect to stock
options exercised during fiscal 1997 by each of the executive officers named in
the Summary Compensation Table and unexercised stock options held as of June
30, 1997 by such executive officers:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
UNDERLYING FISCAL YEAR-END(#) FISCAL YEAR-END($)(1)(2)
OPTIONS VALUE ---------------------------- ----------------------------
NAME EXERCISED(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Larry G. Noble 10,151 $200,065 18,701 27,814 $89,265 $545,713
John L. Boylan 4,000 $ 37,500 2,168 7,832 $ 4,878 $ 17,622
</TABLE>
(1)All values are shown pretax and are rounded to the nearest whole dollar.
(2)Based on the 1997 fiscal year-end closing price of $48.375 per share.
SEVERANCE AGREEMENT
Mr. Boylan is a party to an agreement entitling him to severance benefits
equal to (i) full salary paid through the date of his termination plus (ii) an
amount equal to the lesser of (a) 100% of the highest annual rate of salary and
highest annual bonus paid to Mr. Boylan during the three-year period prior to
his date of termination, or (b) twice his annual compensation (salary plus
bonus) paid for the full fiscal year immediately preceding the date of his
termination, in the event that within a period of one year after a "change of
control" (as defined in the agreement) his employment is terminated by the
Corporation (other than for cause) or by Mr. Boylan (if there has been any
material adverse change in the terms of his employment).
6
<PAGE> 8
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
consists entirely of outside, non-employee directors. The compensation of
executive officers of the Corporation, other than the chief executive officer
("CEO") is established annually by the CEO in consultation with the Committee.
In establishing the compensation of executive officers, various factors are
considered including the scope of responsibilities, the quality of the
executive officer's performance in discharging those responsibilities, and in
certain cases, the financial performance of the Corporation or of a particular
division of the Corporation under that executive officer's supervision. The
determination of the compensation of executive officers is essentially
subjective and dependent upon the recommendation of the CEO, and no specific
weight is given to any of the foregoing factors.
The compensation of the CEO was established by the Committee based on its
evaluation of his performance toward the achievement of the Company's
financial, strategic and other goals as an executive officer. In determining
the CEO's compensation, the Committee considered the CEO's hands-on oversight of
all of the Corporation's operations, his attention to detail and his reputation
as a business leader in the industries in which the Corporation operates as
well as competitive chief executive officer pay information. The determination
of the CEO's compensation was subjective, with no specific weight given to any
particular factor.
Edward H. Jennings, Chairman
Robert S. Hamilton
Henry M. O'Neill, Jr.
7
<PAGE> 9
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN OF
LANCASTER COLONY CORPORATION, THE S & P 500 INDEX,
THE S & P MANUFACTURING (DIVERSIFIED) INDEX AND THE S & P MIDCAP 400 INDEX
The graph set forth below compares the five-year cumulative total return
from investing $100 on June 30, 1992 in each of the Corporation's Common Stock,
the Standard and Poor's 500 Index, the S & P Manufacturing (Diversified) Index
and the S & P Midcap 400 Index.
The S & P 400 Midcap Index was selected to replace the S & P 500 Index
which will be removed from performance graphs presented in future years. The
Corporation is a member of the S & P Midcap 400 and this index should better
reflect the performance of companies with similar market capitalizations to the
Corporation.
Additionally, the S & P Manufacturing (Diversified) Index was selected to
replace the S & P Conglomerates Index which was discontinued by Standard and
Poor's on July 1, 1996.
<TABLE>
<CAPTION>
LANCASTER S & P S & P
COLONY MANUFACTURING MIDCAP
CORP S & P 500 (DIVERSIFIED) 400
(LANC) (I500) (IMNV) (IMID)
--------- --------- ------------- ------
Cumulative Total Return
<S> <C> <C> <C> <C>
6/92 100 100 100 100
6/93 176 114 119 123
6/94 221 115 132 123
6/95 226 145 175 150
6/96 241 183 223 182
6/97 317 247 332 225
</TABLE>
8
<PAGE> 10
OTHER TRANSACTIONS
John B. Gerlach, Chief Executive Officer of the Corporation until his
death in January 1997, owned a 49% interest in an accounting partnership known
as John Gerlach & Co. ("the Firm") which, pursuant to an arrangement that was
approved by the Audit Committee, provides internal auditing, accounting, tax
and internal management advisory services of a type generally available from an
independent accounting firm, including services relating to local taxation,
mergers and acquisitions and pension matters. The fee paid to the Firm for its
services is measured by the volume of work performed and is reviewed by the
Audit Committee. The fees for services for the fiscal year ended June 30, 1997
were $428,760.
The Corporation believes that the terms of the above transactions are as
favorable to it as those which could have been obtained from independent
parties.
PROPOSAL TO APPROVE AND ADOPT AMENDMENT TO
ARTICLES OF INCORPORATION
Article FOURTH of the Corporation's Articles of Incorporation provides
that the Corporation is authorized to issue 37,650,000 shares of capital stock
consisting of 35,000,000 shares of Common Stock, without par value (the "Common
Stock"); 350,000 shares of Class A Participating Preferred Stock, $1.00 par
value ("Class A Preferred Stock"); 1,150,000 shares of Class B Voting Preferred
Stock, without par value ("Class B Preferred Stock"); and 1,150,000 shares of
Class C Nonvoting Preferred Stock, without par value ("Class C Preferred
Stock"). The proposed amendment to Article FOURTH would increase the number of
authorized shares of Common Stock from 35,000,000 to 75,000,000 and the number
of authorized shares of Class A Preferred Stock from 350,000 to 750,000.
As of June 30, 1997, 29,016,836 of the Corporation's authorized shares of
Common Stock were issued and outstanding and an additional 2,077,348 shares of
Common Stock were reserved for issuance under the Corporation's 1995 Key
Employee Stock Option Plan or its 1981 Incentive Stock Option Plan.
Accordingly, as of June 30, 1997, there were only 3,905,816 authorized shares
of Common Stock which were not issued or reserved for issuance.
Holders of shares of Common Stock hold one Class A Preferred Stock
purchase right (individually, a "Right" and collectively, the "Rights") for
each outstanding share of Common Stock. Under certain conditions, each Right
may be exercised to purchase one one-hundredth of a share (a "Unit") of Class A
Preferred Stock for a purchase price of $70.00 per Unit, subject to certain
adjustments. The authorized number of shares of Class A Preferred Stock is
350,000 which is equal to one one-hundredth of the authorized number of shares
of Common Stock. There are no shares of Class A Preferred Stock presently
outstanding.
The Board of Directors recommends approval and adoption of the proposed
amendment to Article FOURTH. Although the Board of Directors is in the process
of considering a possible stock split, it has no present plans, arrangements,
commitments or undertakings for the issuance of additional shares of Common
Stock but believes that it is necessary and desirable to increase the number of
authorized shares of Common Stock in order to enable the Corporation to (i) meet
future capital needs, (ii) take advantage of business opportunities when they
arise, and (iii) declare stock dividends or stock splits when warranted. The
proposed increase in the number of authorized shares of Class A Preferred Stock
from 350,000 to 750,000 is necessary to maintain the ratio of one one-hundredth
of a share of Class A Preferred Stock for each authorized share of Common Stock
so that there will be a sufficient number of shares of Class A Preferred Stock
to cover any Rights which may be exercised.
All shares of Common Stock, including those now authorized and those which
would be authorized by the proposed amendment, are equal in rank and have the
same voting, dividend and liquidation rights. Holders of Common Stock do not
have preemptive rights. Authorized but unissued shares of Common Stock may be
issued at some later date without further shareholder approval. All shares of
Class A Preferred Stock, including those now authorized and those which would
be authorized by the proposed amendment, are equal in rank and have the same
voting, dividend and liquidation rights.
Although the Board of Directors would only authorize the issuance of
additional shares of Common Stock based on its judgement as to the best
interest of the Corporation and its shareholders, the issuance of additional
shares of Common Stock could have the effect of diluting the voting power or
book value per share of the outstanding shares of Common Stock. Authorization
of additional shares of Common Stock may also have a potential antitakeover
effect since such shares could be issued in a manner which might discourage
third parties from attempting to gain control in a transaction viewed favorably
by some shareholders but which the Board of Directors opposes. There are also
certain provisions in the Articles of Incorporation which may have an effect of
delaying, deferring or preventing a change of control of the Corporation.
Article TENTH of the Articles of Incorporation sets forth procedures for
obtaining shareholder consent for "control share acquisitions" subject to the
right of the Board of Directors to screen out proposals that do not meet
certain standards
9
<PAGE> 11
specified in Article TENTH. Article TENTH defines a "control share acquisition"
as any acquisition, directly or indirectly, of shares of the Corporation which,
when added to all other shares of the Corporation owned or controlled by the
acquirer, would entitle the acquirer, alone or with others, to exercise or
direct the exercise of the voting power of the Corporation in the election of
directors within the following ranges of voting power: (a) one-fifth or more but
less than one-third; (b) one-third or more but less than a majority; and (c) a
majority or more. A control share acquisition which meets certain criteria set
forth in Article TENTH as determined by the Board of Directors must be presented
to a meeting of shareholders for approval. Approval by shareholders of a control
share acquisition requires the affirmative vote of both (i) a majority of the
voting power represented at the meeting and (ii) a majority of that portion of
such voting power excluding the votes of any "interested shares", that is, those
shares held by the acquiring person, executive officers of the Corporation and
employees of the Corporation who are also directors.
Article TWELFTH of the Articles of Incorporation provides that the
affirmative vote required to approve a merger, consolidation, dissolution, or
disposition of all or substantially all of the Corporation's assets is 80% of
the voting power of the Corporation if any "Prior Holder" (which is defined to
mean any corporation, person or entity other than the Corporation or any of its
subsidiaries) owns or controls, directly or indirectly, 5% or more of the
outstanding shares of the Corporation entitled to vote and if such merger,
consolidation, dissolution or disposition is with or into such Prior Holder or
any of its affiliates, subsidiaries or associates. Such 80% affirmative vote is
not required if the Corporation's Board of Directors has approved the action or
transaction before direct or indirect ownership of 5% or more of the
outstanding shares of the Corporation entitled to vote is acquired by the Prior
Holder.
To effect the proposed increase in the authorized shares of Common Stock
and Class A Preferred Stock, it is proposed that the first paragraph of Article
FOURTH of the Articles of Incorporation of the Corporation be amended to read
as follows:
FOURTH: The amount of the total authorized capital stock which the
Corporation shall have the authority to issue is Seventy-Eight Million Fifty
Thousand (78,050,000) shares, consisting of Seventy-Five Million (75,000,000)
shares of Common Stock (the "Common Stock") which are common shares without par
value, Seven Hundred and Fifty Thousand (750,000) shares of Class
A Participating Preferred Stock ("Class A Preferred Stock") which are preferred
shares with $1.00 par value, One Million One Hundred Fifty Thousand (1,150,000)
shares of Class B Voting Preferred Stock ("Class B Preferred Stock") which are
preferred shares without par value, and One Million One Hundred Fifty Thousand
(1,150,000) shares of Class C Nonvoting Preferred Stock ("Class C Preferred
Stock") which are preferred shares without par value.
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock is required for approval and adoption of the proposed
amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE CORPORATION
VOTE FOR THE AMENDMENT TO THE ARTICLES OF INCORPORATION.
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP has acted as independent certified public
accountants of the Corporation during the fiscal year ended June 30, 1997.
Deloitte & Touche LLP is expected to have a representative present at the
Annual Meeting who may make a statement, if desired, and will be available to
answer appropriate questions.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be in the proxy statement for the 1998
Annual Meeting of Shareholders must be received by the Corporation at its
principal executive offices no later than June 17, 1998.
10
<PAGE> 12
OTHER MATTERS
As of the date of this statement, the Board of Directors knows of no other
business that will come before the Annual Meeting. Should any other matter
requiring the vote of the shareholders arise, the enclosed proxy confers upon
the proxy holders discretionary authority to vote the same in respect to the
resolution of such other matters as they, in their best judgment, believe to be
in the interest of the Corporation.
By Order of the Board of Directors
October 15, 1997
JOHN B. GERLACH, JR.
Chairman of the Board,
Chief Executive Officer
and President
11
<PAGE> 13
LANCASTER COLONY CORPORATION
Proxy For The Annual Meeting of Shareholders November 17, 1997
This Proxy Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Edward H. Jennings, Richard R. Murphey,
Jr. and Henry M. O'Neill, Jr., or any of them, proxies of the undersigned,
with power of substitution, to vote all shares of stock of the Corporation
which the undersigned would be entitled to vote if personally present at the
Annual Meeting of Shareholders to be held November 17, 1997, or at any and all
adjournment thereof, and to exercise all of the powers which the undersigned
would be entitled to exercise as a shareholder if personally present upon the
following matters:
(To Be Continued and Signed On The Other Side)
................................................................................
A /X/ Please mark your
votes as in this
example.
<TABLE>
<CAPTION>
If no contrary specification is made, this proxy will be voted FOR proposals 1 and 2.
<S> <C> <C> <C>
FOR WITHHELD Nominees: For term expiring 2000:
Kerrii B. Anderson
1. Election of / / / / Morris S. Halpern
Directors Robert S. Hamilton
For, except vote withheld from the following nominee(s):
- ---------------------------------------------------------------------------
2. Approval of a proposal to amend Article FOURTH of the Articles of
Incorporation.
FOR AGAINST ABSTAIN
/ / / / / /
3. The transaction of all other matters as may properly come before the meeting.
(Continued from other side)
SIGNATURE(S)___________________________________ DATE_____________________, 1997
SIGNATURE(S)___________________________________ DATE_____________________, 1997
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. Please date, sign and mail this proxy in the enclosed
envelope. No postage is required for mailing in the United States.
</TABLE>
