<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
LANCE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[LANCE, INC. LOGO]
Charlotte, North Carolina
Notice of Annual Meeting of Stockholders to be held April 16, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Lance,
Inc. (the Company) will be held at the principal office of the Company, 8600
South Boulevard, Charlotte, North Carolina, on Friday, April 16, 1999, at 2:00
p.m., Local Time, for the purpose of considering and acting upon the following:
1. The election of four Directors.
2. A proposal to ratify the selection of KPMG LLP as independent public
accountants for fiscal year 1999.
3. Any and all other matters that may properly come before the meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on February 19, 1999
as the record date for determining the stockholders entitled to notice of and to
vote at the meeting and any adjournment thereof, and only holders of Common
Stock of the Company of record at such date will be entitled to notice of or to
vote at the meeting.
The Board of Directors will appreciate the prompt return of the enclosed
proxy, dated and signed. The proxy may be revoked by you at any time before it
is exercised and will not be exercised if you attend the meeting and vote in
person.
By Order of the Board of Directors
Robert S. Carles
Secretary
Charlotte, North Carolina
March 19, 1999
<PAGE> 3
LANCE, INC.
P. O. Box 32368, Charlotte, North Carolina 28232
PROXY STATEMENT
General
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of proxies to be used at the Annual Meeting of
Stockholders of Lance, Inc. (the Company) to be held at its principal office,
8600 South Boulevard, Charlotte, North Carolina, at 2:00 p.m., Local Time, on
Friday, April 16, 1999. This Proxy Statement and accompanying Proxy are first
being sent to the stockholders of the Company on or about March 19, 1999.
Solicitation other than by mail may be made personally and by telephone by
regularly employed officers and employees of the Company who will not be
additionally compensated therefor. The Company will request brokers, dealers,
banks or voting trustees, or their nominees, who hold stock in their names for
others or hold stock for others who have the right to give voting instructions,
to forward proxy materials to their principals and request authority for the
execution of the proxy and will reimburse such institutions for their reasonable
expenses in so doing. In addition, the Company has engaged Corporate Investor
Communications, Inc. (CIC) to deliver proxy materials to, and solicit proxies
from, these institutions. CIC will be reimbursed for its printing costs, postage
and freight charges, and other expenses and be paid a solicitation fee of
$5,500. The total cost of soliciting proxies will be borne by the Company.
Any proxy delivered in the accompanying form may be revoked by the person
executing the proxy at any time before the authority thereby granted is
exercised by written request addressed to Secretary, Lance, Inc., Box 32368,
Charlotte, North Carolina 28232 or by attending the meeting and electing to vote
in person. Proxies received in such form will be voted as therein set forth at
the meeting or any adjournment thereof.
The only matters to be considered at the meeting, so far as known to the
Board of Directors, are the matters set forth in the Notice of Annual Meeting of
Stockholders and routine matters incidental to the conduct of the meeting.
However, if any other matters should come before the meeting or any adjournment
thereof, it is the intention of the persons named in the accompanying form of
proxy, or their substitutes, to vote said proxy in accordance with their
judgment on such matters.
Stockholders present or represented and entitled to vote on a matter at the
meeting or any adjournment thereof will be entitled to one vote on such matter
for each share of Common Stock of the Company held by them of record at the
close of business on February 19, 1999, which is the record date for determining
the stockholders entitled to notice of and to vote at such meeting or any
adjournment thereof. Voting on all matters, including the election of Directors,
will be by voice vote or by show of hands, unless the holders of at least 25% of
the shares entitled to vote on such matter demand a vote by ballot prior to the
vote. The number of shares of Common Stock of the Company outstanding on
February 19, 1999 was 29,997,235.
<PAGE> 4
Principal Stockholders and Holdings of Management
At February 1, 1999, the only persons known to the Company to be the
beneficial owners of more than 5% of the Common Stock of the Company were as
follows:
<TABLE>
<CAPTION>
Number of Shares Percent of
Name and Address of and Nature of Common Stock
Beneficial Owner Beneficial Ownership Outstanding
- ------------------- -------------------- -----------
<S> <C> <C>
Nan Davis Van Every 1,664,819 (1) 5.5%
6001 Pelican Bay Boulevard
Naples, FL 33963
S. Lance Van Every 2,145,672 (1)(2) 7.1%
4010 Seminole Court
Charlotte, NC 28210
</TABLE>
(1) Includes 1,575,743 shares held in trust as to which Mrs. Van Every will
acquire sole power to vote and dispose on April 30, 1999 of which 1,289,245
are held in a trust as to which S. Lance Van Every currently has sole power
to vote and dispose.
(2) Includes 62,500 shares subject to options currently exercisable, 26,315
shares held by Mr. Van Every's wife, 33,589 shares held by Mr. Van Every
either as custodian or in trust for his children and grandchildren. Mr. Van
Every had sole power to vote and dispose of all of these shares, except for
52,044 shares held as co-trustee and 3,123 shares held by his daughters as
to which he had shared power to vote and dispose.
Based on information available to the Company, the Van Every family,
consisting of the descendants of Salem A. Van Every, Sr., deceased, and their
spouses, owned beneficially on February 1, 1999, approximately 12,000,000 shares
of the Common Stock of the Company (approximately 40% of the outstanding
shares). Of such shares, approximately 800,000 shares are held by fiduciaries
having the sole power to vote and dispose. Members of the Van Every family may
own or may have disposed of shares in nominee or other accounts, information as
to the amounts of which may not be available to the Company. There are
approximately 90 Van Every family stockholders, including stockholders who are
minors.
The following table sets forth, as of February 1, 1999, information as to
the beneficial ownership of the Company's $.83-1/3 par value Common Stock by all
Directors, named Executive Officers (as defined herein), and Directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
Number of Shares Percent of
and Nature of Common Stock
Name of Beneficial Owner Beneficial Ownership (1) Outstanding (2)
- ------------------------ ------------------------ ---------------
<S> <C> <C>
Alan T. Dickson 46,700 (3) *
J.W. Disher 29,685 (4) *
1,409,292 (5) 7.1%
James H. Hance, Jr. 9,500 (6) *
William R. Holland 8,500 (7) *
Weldon H. Johnson 4,500 (8) *
Scott C. Lea 14,500 (9) *
Nancy Van Every McLaurin 949,089 (10) 3.2%
</TABLE>
3
<PAGE> 5
<TABLE>
<CAPTION>
Number of Shares Percent of
and Nature of Common Stock
Name of Beneficial Owner Beneficial Ownership (1) Outstanding (2)
- ------------------------ ------------------------ ---------------
<S> <C> <C>
Wilbur J. Prezzano 2,500 (11) *
Robert V. Sisk 248,420 (12) *
Paul A. Stroup, III 55,690 (13) *
1,409,292 (5) 4.7%
Isaiah Tidwell 8,000 (7) *
S. Lance Van Every 2,145,672 (14) 7.1%
Peter M. Duggan 10,308 (15) *
Earl D. Leake 21,433 (16) *
B. Clyde Preslar 15,457 (17) *
Richard G. Tucker 15,069 (18) *
Gregory M. Venner 5,953 (19) *
Directors and executive officers 5,014,556 (20) 16.6%
as a group (21 persons)
</TABLE>
* Less than 1%.
(1) All shares are owned directly and with sole voting and dispositive power
except as otherwise noted. Common Stock ownership is as of February 1,
1999.
(2) Based on the number of shares outstanding plus options held by Directors
and executive officers that are currently exercisable or exercisable within
60 days of February 1, 1999.
(3) Includes 7,500 shares subject to exercisable options, 32,000 shares held by
The Dickson Foundation, Inc. of which Mr. Dickson is a member of the Board
of Directors and its investment committee and 7,200 shares held by a trust
for which Mr. Dickson, his brother and NationsBank, N.A., a subsidiary of
BankAmerica Corporation (BankAmerica), are co-trustees.
(4) Includes 7,500 shares subject to exercisable options and 700 shares held by
Mr. Disher's wife.
(5) Consists of shares held by the Philip L. Van Every Foundation (the
Foundation) of which Messrs. Disher and Stroup are members of the Board of
Administrators, which holds sole voting and dispositive power over such
shares, and NationsBank, N.A. is trustee.
(6) Includes 7,500 shares subject to exercisable options but does not include
shares held by BankAmerica, or its subsidiaries, of which Mr. Hance is Vice
Chairman and Chief Financial Officer.
(7) Includes 7,500 shares subject to exercisable options.
(8) Includes 2,500 shares subject to exercisable options.
(9) Includes 7,000 shares held by a revocable trust of which Mr. Lea is the
grantor and beneficiary and 7,500 shares subject to exercisable options.
(10) Includes 7,500 shares subject to exercisable options and 28,988 shares held
by Mrs. McLaurin as custodian for her children or by her children who
reside in the same household.
4
<PAGE> 6
(11) Includes 2,500 shares subject to exercisable options.
(12) Includes 7,500 shares subject to exercisable options and 240,862 shares
held by Mr. Sisk's wife.
(13) Includes 33,275 shares subject to exercisable options, 589 shares held by
Mr. Stroup's wife and 9,000 shares of restricted stock.
(14) Includes 62,500 shares subject to options currently exercisable, 26,315
shares held by Mr. Van Every's wife, 33,589 shares held by Mr. Van Every
either as custodian or in trust for his children and grandchildren. Mr. Van
Every had sole power to vote and dispose of all of these shares, except for
52,044 shares held as co-trustee and 3,123 shares held by his daughters as
to which he had shared power to vote and dispose. Also includes 1,289,245
shares held in trust as to which Mr. Van Every currently has sole power to
vote and to dispose.
(15) Includes 8,862 shares subject to exercisable options.
(16) Includes 14,463 shares subject to exercisable options, 4,000 shares of
restricted stock and 90 shares held as custodian for his child.
(17) Includes 6,413 shares subject to exercisable options and 4,850 shares of
restricted stock.
(18) Includes 5,413 shares subject to exercisable options and 4,850 shares of
restricted stock.
(19) Includes 2,000 shares subject to exercisable options and 2,750 shares of
restricted stock.
(20) Includes 201,677 shares subject to exercisable options held by Directors
and executive officers, 1,409,292 shares held by the Foundation of which
Messrs. Disher and Stroup are members of the Board of Administrators and
NationsBank, N.A. is trustee and 36,600 shares of restricted stock. Does
not include shares held by BankAmerica (other than shares held by
NationsBank, N.A. as trustee of the Foundation) of which Mr. Hance is Vice
Chairman and Chief Financial Officer or shares held by Mr. Duggan who
retired in June 1998.
Stockholder Proposals
Any proposal that a stockholder intends to present for action at the 2000
Annual Meeting of Stockholders, currently scheduled for April 21, 2000, must be
received by the Company no later than November 22, 1999, in order for the
proposal to be included in the proxy statement and form of proxy for the 2000
Annual Meeting of Stockholders. The proposal should be sent to Secretary, Lance,
Inc., Box 32368, Charlotte, North Carolina 28232.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors and executive officers and persons who own more than 10% of
the Company's Common Stock to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of the Common
Stock. Officers, Directors and greater than 10% stockholders are required to
furnish the Company with copies of all such reports they file. To the Company's
knowledge, based solely on a review of the copies of such reports furnished to
the Company and written representations that no other reports were required,
during the fiscal year ended December 26, 1998, all Section 16(a) filing
requirements applicable to its executive officers, Directors and greater than
10% beneficial owners were complied with, except that Dominic Sidari was late
filing a Form 4 reporting one transaction and S. Lance Van Every was late filing
a Form 4 reporting two transactions.
5
<PAGE> 7
Election of Directors
At the meeting, four Directors will be elected to serve until the Annual
Meeting of Stockholders in 2002. Each such Director shall be elected to serve,
subject to the provisions of the Bylaws and until their successors are duly
elected and qualified. Directors are elected by a plurality of the votes cast by
the holders of the shares entitled to vote at a meeting at which a quorum is
present. Provided a quorum is present, abstentions and shares not voted are not
taken into account in determining a plurality.
It is the intention of the persons named in the accompanying proxy to vote
all proxies solicited by the Board of Directors FOR all the nominees indicated
below unless authority to vote for the nominees or any individual nominee is
withheld by a stockholder in such stockholder's proxy. If for any reason any
nominee shall not become a candidate for election as a Director at the meeting,
an event not now anticipated, the proxies will be voted for four nominees
including such substitutes as shall be designated by the Board of Directors.
The four nominees are listed below, all of whom are currently members of
the Board of Directors. The nominees were elected to their current terms, which
expire in 1999, at the Annual Meeting of Stockholders held on April 19, 1996,
except Scott C. Lea was elected at the Annual Meeting of Stockholders on April
18, 1997 and Wilbur J. Prezzano was elected by the Board of Directors on April
27, 1998. They are nominees for election to a term expiring in 2002.
<TABLE>
<CAPTION>
Name and Director Since (1) Age Information About Nominees and Directors
- --------------------------- --- ----------------------------------------
<S> <C> <C>
J. W. Disher (2) 65 Private Investor since 1996; Chairman of the Board of the Company
1968 1991-1996, Chief Executive Officer 1990-1995 and President 1988-1994
Scott C. Lea (2) 67 Chairman of the Board of the Company since 1996; Private Investor
1994 since 1992; Chairman of the Board of Rexham, Inc. (Manufacturer of
packaging and coated and laminated products) 1989-1991; President, Chief
Executive Officer and Director of Rexham 1974-1989; Director of Speizman
Industries, Inc.
Wilbur J. Prezzano 58 Private Investor since 1997; Vice Chairman of the Board of Directors
1998 of Eastman Kodak, Inc., Rochester, NY 1996-1997, Chairman of its
Greater China Region 1994-1997 and Group Vice President 1983-1994;
Director of Canada Trust and Roper Industries, Inc.
Robert V. Sisk (2)(3) 63 President of Piedmont Engineering Corp., Charlotte, NC (Industrial
1990 refrigeration systems) since 1965
</TABLE>
6
<PAGE> 8
The four members of the Board of Directors listed below were elected to
their current terms, which expire in 2001, at the Annual Meeting of Stockholders
held April 17, 1998.
<TABLE>
<CAPTION>
Name and Director Since (1) Age Information About Nominees and Directors
- --------------------------- --- ----------------------------------------
<S> <C> <C>
Alan T. Dickson (2) 67 Chairman of the Board and Chief Executive Officer of Ruddick
1983 Corporation, Charlotte, NC (Diversified holding company) since 1994
and President 1968-1994; Director of Ruddick Corporation,
BankAmerica Corporation, Sonoco Products Company and Bassett
Furniture Industries, Inc.
James H. Hance, Jr. 54 Vice Chairman of BankAmerica Corporation, Charlotte, NC since 1993
1995 and Chief Financial Officer since 1988; Director of Caraustar
Industries, Inc., Family Dollar Stores, Inc. and Summit Properties,
Inc.
Nancy Van Every McLaurin (3) 54 Private investor for more than the past five years
1995
S. Lance Van Every (3) 51 Private investor for more than the past five years
1990
</TABLE>
The four members of the Board of Directors listed below were elected to
their current terms, which expire in 2000, at the Annual Meeting of Stockholders
held April 18, 1997, except Weldon H. Johnson was elected at the Annual Meeting
of Stockholders on April 17, 1998.
<TABLE>
<CAPTION>
Name and Director Since (1) Age Information About Nominees and Directors
- --------------------------- --- ----------------------------------------
<S> <C> <C>
William R. Holland (2) 60 Chairman and Chief Executive Officer of United Dominion Industries
1993 Limited, Charlotte, NC (Diversified manufacturing company) since
1986; Director of United Dominion Industries Limited and Coltec
Industries, Inc.
Weldon H. Johnson 61 Private investor since 1997; Senior Vice President of The Coca-Cola
1997 Company and President Coca-Cola Latin America group 1987-1996;
Director of NorAm Energy Corp. and Panamerican Beverages, Inc.
Paul A. Stroup, III (2) 47 Chief Executive Officer of the Company since 1995, President since
1986 1994 and Executive Vice President 1989-1994
Isaiah Tidwell 54 Executive Vice President and Southern/Western Regional Executive of
1995 Wachovia Bank, N.A., Charlotte, NC since 1996, Southern Regional
Executive 1993-1995 and Regional Vice President 1990-1995
</TABLE>
(1) The information about the Directors was furnished to the Company by the
Directors.
(2) Member of the Executive Committee.
(3) S. Lance Van Every and Nancy Van Every McLaurin are cousins and Mr. Sisk's
wife is their cousin.
NationsBank, N.A., a subsidiary of BankAmerica, provides a line of credit
to the Company which the Company has not used. Also, a subsidiary of BankAmerica
provides securities brokerage services to the Company for which the Company pays
BankAmerica's standard fees. Mr. Dickson is a director of BankAmerica and Mr.
Hance is the Vice Chairman and Chief Financial Officer of BankAmerica.
Subsidiaries of Ruddick Corporation purchase products from the Company in
the ordinary course of business
7
<PAGE> 9
at the Company's standard prices. Mr. Dickson is the Chairman of the Board and
Chief Executive Officer of Ruddick Corporation.
The Board of Directors and its Committees
The Board of Directors met six times during the fiscal year. Each director
attended 75% or more of the total number of meetings of the Board of Directors
and meetings of all Committees on which he or she served.
The Audit Committee is composed of Robert V. Sisk, Chairman, James H.
Hance, Jr., Weldon H. Johnson, Scott C. Lea, Nancy Van Every McLaurin, Wilbur J.
Prezzano and Isaiah Tidwell and is responsible for recommending independent
auditors for the Company, reviewing the Company's financial statements, audit
report, internal financial controls and internal audit procedures and approving
services to be performed by the Company's independent auditors. The Audit
Committee met four times during the fiscal year.
The Nominating Committee is composed of J. W. Disher, Chairman, Alan T.
Dickson, Scott C. Lea, Robert V. Sisk, Paul A. Stroup, III and S. Lance Van
Every. Its functions include the screening and recommendation of candidates for
election to the Board of Directors of the Company. The Committee will consider
nominees recommended by stockholders, which nominations may be made in writing
and directed to J. W. Disher, Chairman of the Committee. The Nominating
Committee met one time during the fiscal year.
The Compensation/Stock Option Committee provides overall guidance to the
Company's executive compensation program. The Committee is currently composed of
five members of the Board of Directors: Alan T. Dickson, Chairman, J. W. Disher,
James H. Hance, Jr., William R. Holland and S. Lance Van Every. The Committee
met four times during the fiscal year. The Committee's recommendations regarding
the salary of the Chief Executive Officer and the other officers of the Company
are subject to approval by the Board, except for decisions about grants under
the Company's stock incentive plans, which are made solely by the Committee in
order for the grants to satisfy tax law requirements.
Compensation/Stock Option Committee Report
The Company's philosophy for executive compensation is designed to link
executive pay with the Company's annual and long-term performance and to
attract, motivate and retain excellent people by providing compensation
opportunities that are both competitive and consistent with Company performance.
The compensation program provides for lower base salaries and a significant
portion of compensation that is "at risk." In connection with its restructuring
in 1996, the Company received from an independent consulting firm a
comprehensive review of the Company's compensation programs. The Company and the
Committee have continued to utilize consulting firms to assist in the design and
implementation of the executive and other compensation programs of the Company.
Substantially all of the employees of the Company participate in incentive
compensation plans.
The compensation program is composed of three elements: base salary, cash
bonus and long-term stock based incentives. The cash bonus is performance based
and the long-term incentives are tied to stock price performance, continued
employment and the achievement of a multiple year financial performance goal.
For 1998, the stock based incentives were limited to stock options and
restricted stock awards. For 1998, the Board of Directors adopted the Lance,
Inc. Annual Corporate Performance Incentive Plan for Officers for 1998 (the
Annual Incentive Plan) as recommended by the Committee to reward advancement of
annual financial performance goals and the 1998 Lance, Inc. Long-Term Incentive
Plan for Officers (the Long-Term Plan) pursuant to the Company's 1997 Incentive
Equity Plan, which was approved by the stockholders in 1997.
In addition during 1997, in consultation with compensation consultants,
the Committee designed Compensation and Benefits Assurance Agreements and
Executive Severance Agreements for key executives of the Company. Currently the
Company has entered into such agreements with the Chief Executive Officer and
seven other senior executives of the Company and its subsidiaries. The
Compensation and Benefits Assurance Agreements and the Executive Severance
Agreements are described under "Executive Officer Compensation"
8
<PAGE> 10
below.
In 1998 and prior years, the Committee granted increases in base salary to
the officers based on recommendations from the Chief Executive Officer who has
consulted with other officers of the Company. From time to time, the Committee
has made adjustments to such recommendations. In 1998, the Board accepted and
approved the recommendations of the Committee. Those who served during the
fiscal year as Chief Executive Officer, the four other highest paid executive
officers and Mr. Duggan are collectively referred to as the named Executive
Officers. The Committee also takes into account the fact that each of the named
Executive Officers has entered into a Compensation and Benefits Assurance
Agreement and an Executive Severance Agreement, each described above.
In considering base salaries for 1998, the Committee considered the
compensation review, participation in the Annual Incentive Plan and
participation in the Long-Term Plan, including the grant of stock options and
restricted stock awards. The salaries of the named Executive Officers, excluding
the Chief Executive Officer and Mr. Duggan who retired in June 1998, were
increased an average of 4.5% for 1998 over 1997.
With respect to the Chief Executive Officer during 1998, Mr. Stroup, the
Committee did not make special note of performance factors but considered the
same factors as it considered for all officers of the Company. Mr. Stroup's
salary rate was increased 5.5% for 1998 over 1997.
The purposes of the Annual Incentive Plan and the Long-Term Plan include
the following:
o motivate behavior that leads to the successful achievement of specific
financial and operations goals that support the Company's stated
business strategy
o emphasize the link between performance and rewards for meeting
predetermined specific goals
o improve the competitiveness of total cash pay opportunities
o continue to help establish performance orientation at the Company and
communicate that greater responsibilities create greater rewards
because more pay is "at risk"
o aligning the interests of executives and senior managers with those of
stockholders by linking a substantial portion of pay to the price of
the Company's Common Stock
o provide a way to attract and retain executives and senior managers who
are critical to the Company's future success
o increase total pay for executives and senior managers to competitive
levels
o keep fixed compensation costs low.
Under the Annual Incentive Plan, cash bonus awards are paid as a percentage
of base salary depending on the attainment of specified financial performance
goals as to 75% of the bonus, with the balance determined at the discretion of
the Committee based on the executive meeting individual objectives. In 1998, the
specified performance goals were not achieved and no cash bonuses were earned
under the Annual Incentive Plan.
Under the Long-Term Plan, the long-term incentives awarded to executives to
date are stock options and restricted stock awards. Stock options provide
executives with the opportunity to buy and maintain an equity interest in the
Company and share the appreciation in the value of the Company's Common Stock.
During 1998, the Committee awarded stock options for an aggregate of 33,600
shares and 10,400 shares of restricted stock to the named Executive Officers,
excluding the Chief Executive Officer. Mr. Stroup was awarded stock options to
purchase 13,650 shares and 4,150 restricted shares. In addition, the Committee
awarded stock options totaling
9
<PAGE> 11
271,700 shares to approximately 120 other executives and senior managers and
eight of these executives and senior managers received an aggregate of 8,300
restricted shares.
The above report is presented by the following current members of the
Compensation/Stock Option Committee: Alan T. Dickson, Chairman, J. W. Disher,
James H. Hance, Jr., William R. Holland and S. Lance Van Every.
Compensation/Stock Option Committee Interlocks and Insider Participation
J. W. Disher, who retired as Chief Executive Officer of the Company in
April 1995, was appointed to the Compensation/Stock Option Committee after his
retirement.
Director Compensation
Directors who are employees of the Company or its subsidiaries receive no
additional compensation for serving as directors. Directors who are not
employees of the Company or its subsidiaries (other than the Chairman of the
Board) receive an annual fee of $12,000 plus $600 for each Board meeting
attended and $450 for each Committee meeting attended, except the fee for a
Committee meeting held on the same day as a Board meeting is $300. Non-employee
directors who serve as a Committee Chairman receive an additional $1,500 per
year.
Mr. Lea receives a monthly fee of $16,500 for serving as Chairman of the
Board of Directors which began upon his election in April 1996 pursuant to the
agreement executed upon his election (the 1996 Agreement). He serves
substantially full time as an adviser to the Company. His focus is on the
Company's strategic direction, management development and creation of
stockholder value. The Company has agreed to continue Mr. Lea's monthly fee for
12 months after his death or disability while serving as Chairman of the Board.
Under the 1996 Agreement, Mr. Lea will receive incentive compensation equal to
$10,000 for each 1% that the Highest Average Sales Price (as defined below) of
the Company's Common Stock exceeds $15.8125 per share. In February 1999, the
1996 Agreement was amended to provide that the Highest Average Sales Price would
be the higher of (i) the average of the highest sales price of the Company's
Common Stock on The Nasdaq Stock Market during the four consecutive interim
(quarterly accounting) periods of the Company which have the highest average
sales price of the Company's Common Stock, beginning in March 1996 and ending
four years after Mr. Lea's completion of service as Chairman of the Board or
(ii) the average of the highest sales price of the Common Stock on The Nasdaq
Stock Market for any 10 consecutive trading days during the period from April
19, 1996 until four years after his completion of service as Chairman of the
Board. Such incentive compensation will be paid in one lump sum four years after
Mr. Lea completes his service as Chairman of the Board. In October 1998, the
Board of Directors of the Company, upon recommendation of the Compensation/Stock
Option Committee, approved additional incentive compensation for Mr. Lea because
his service as Chairman of the Board had required a greatly expanded commitment
of time, energy and expertise than had been contemplated when the 1996 Agreement
was approved. The additional incentive compensation is outlined in the 1998
agreement (the 1998 Agreement) which provides for a bonus of $162,000 payable to
Mr. Lea upon completion of his three year term as Chairman of the Board and
additional incentive compensation equal to $25,000 for each 1% of the Highest
Average Sales Price (as described below) exceeds $20.875 per share. In February
1999, the 1998 Agreement was amended to provide that the Highest Average Sales
Price means the higher of (i) the average of the highest sales price of the
Company's Common Stock on The Nasdaq Stock Market during the four consecutive
interim (quarterly accounting) periods of the Company which have the highest
average sales price of the Company's Common Stock, beginning in March 1998 and
ending four years after the completion of service by Mr. Lea as Chairman of the
Board or (ii) the average of the highest sales price of the Common Stock on The
Nasdaq Stock Market for any 10 consecutive trading days during the period from
April 17, 1998 until four years after his completion of services as Chairman of
the Board. This additional incentive compensation will be paid in one lump sum
four years after completion of service of Mr. Lea as Chairman of the Board. In
the event of a Change of Control, the Highest Average Sales Price for all such
incentive compensation will be the highest per share consideration paid or
payable for the Company's Common Stock in connection with the transaction that
results in a Change of Control. For purposes of the 1996 and 1998 Agreements, a
Change in Control means the acquisition of 35% or more of the voting securities
of the Company by any persons
10
<PAGE> 12
or group other than members of the Van Every Family which consists of the
descendents of Salem A. Van Every, Sr. and their spouses. The incentive
compensation will be paid in one lump sum concurrently with a Change of Control.
Non-employee directors are also eligible to receive stock options under the
Company's 1995 Nonqualified Stock Option Plan for Non-Employee Directors (the
Director Plan). Each non-employee director receives an initial option grant to
purchase 2,500 shares of Common Stock upon becoming a director (exercisable
after six months of service). The Director Plan also provides for annual option
grants to purchase 4,000 shares of Common Stock on every May 1 to each
non-employee director continuing in office (other than the initial year) which
become exercisable after one year's service. Each current non-employee director
will be granted an option to purchase 4,000 shares of Common Stock on May 1,
1999 at an option price equal to the fair market value of the Common Stock on
such date. At the Annual Meeting of Stockholders on April 17, 1998, the
stockholders approved an amendment to the Director Plan to increase the
aggregate authorized number of shares issuable under the Director Plan to
300,000.
Stockholder Return Performance Graph
Included below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock against
the cumulative total return of The Nasdaq Stock Market (U.S. Companies) Index
and the Company's Peer Group for the period commencing December 25, 1993 and
ending December 26, 1998 covering the Company's five fiscal years ended December
31, 1994, December 30, 1995, December 28, 1996, December 27, 1997 and December
26, 1998.
The Company has selected a Peer Group consisting of the four
publicly-traded companies named below, which are in the snack foods industry.
Virtually all of the Company's direct competitors and peers are privately-held
companies or subsidiaries or divisions of larger publicly-held companies so that
the available members of the Peer Group are limited.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, NASDAQ STOCK MARKET INDEX AND PEER GROUP
[Performance Graph Omitted]
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
Company 100 98.382 108.506 167.055 167.055 133.79
Nasdaq Stock Market 100 100.254 174.581 205.592 205.592 296.915
Peer Group 100 78.965 94.582 123.64 123.64 129.256
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<PAGE> 13
[GRAPH]
This graph assumes that $100 was invested in the Company's Common Stock on
December 25, 1993, in The Nasdaq Stock Market (U.S. Companies) Index and in the
Peer Group, which consists of Golden Enterprises, Inc., J&J Snack Foods Corp.,
Ralcorp Holdings, Inc. and Tasty Baking Company and that dividends were
reinvested.
Executive Officer Compensation
The table below shows the compensation paid or accrued by the Company, for
the three fiscal years ended December 26, 1998, December 27, 1997 and December
28, 1996 to or for the account of each of those persons who served during the
1998 fiscal year as the Chief Executive Officer and the Company's five other
highest paid executive officers (collectively, the named Executive Officers).
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
--------------------------------- -------------------------------
Name and Other Annual Securities All Other
Principal Fiscal Compensation Restricted Stock Underlying Compensation
Position Year Salary ($) Bonus ($) ($) (1) Award(s) ($)(2) Options (#Sh) ($) (3)
- -------- ---- ---------- --------- ------- ---------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Paul A. Stroup, III 1998 249,171 0 -- 86,761 13,650 24,556
President and 1997 236,032 189,000 -- 89,119 18,300 24,194
Chief Executive Officer 1996 223,336 181,100 -- 0 29,200 11,717
</TABLE>
12
<PAGE> 14
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Peter M. Duggan (4) 1998 89,544 0 -- 49,130 7,650 493,000
Senior Vice President 1997 176,784 96,200 -- 48,694 10,050 16,923
1996 166,800 99,500 -- 0 12,700 8,482
B. Clyde Preslar 1998 179,646 0 -- 48,084 7,400 15,977
Vice President and 1997 170,718 103,000 -- 46,856 9,650 6,027
Treasurer 1996 106,255 95,700 80,428 0 8,000 20,316
Richard G. Tucker 1998 180,185 0 -- 48,084 7,400 15,859
Vice President 1997 170,918 104,400 -- 46,856 9,650 5,718
1996 97,158 57,000 -- 0 6,000 94
Gregory M. Venner (5) 1998 158,449 0 -- 33,450 5,150 6,227
Vice President 1997 130,098 73,200 -- 39,506 8,000 345
Earl D. Leake 1998 143,217 0 -- 59,582 6,000 12,550
Vice President 1997 139,060 80,800 -- 39,506 8,050 13,218
1996 135,762 79,700 -- 0 10,800 6,210
</TABLE>
(1) No named Executive Officer has received personal benefits during the listed
years in excess of 10% of the total of annual salary and bonus, except Mr.
Preslar who received $75,343 in 1996 for moving expenses in connection with
his employment by the Company.
(2) Amount represents the dollar value of shares of restricted stock and
performance restricted stock issued to the named Executive Officers as of
the date of the award. At December 26, 1998, the market value and holdings
for each named Executive Officer was as follows: Mr. Stroup $178,875 (3,700
restricted shares and 5,300 performance restricted shares); Mr. Preslar
$96,394 (2,000 restricted shares and 2,850 performance restricted shares);
Mr. Tucker $96,394 (2,000 restricted shares and 2,850 performance
restricted shares); Mr. Venner $54,656 (1,400 restricted shares and 2,350
performance shares) and Mr. Leake $79,500 (1,650 restricted shares and
2,350 performance restricted shares). Vesting of 50% of the restricted
shares occurs on each of the second and fourth anniversaries of the award
date of such shares if still employed by the Company. Vesting of the
performance restricted shares occurs on the third anniversary of the award
date if the Company achieves a specified financial performance goal for the
three fiscal years following the award date. Dividends are payable on all
restricted shares and performance restricted shares.
(3) For fiscal year 1998, includes amounts contributed by the Company under the
Company's Profit-Sharing Retirement Plan as follows: Mr. Stroup $7,596, Mr.
Duggan $6,361, Mr. Preslar $7,393, Mr. Tucker $7,393, Mr. Venner $5,568 and
Mr. Leake $7,596; amounts contributed by the Company under the Company's
Employee Stock Purchase Plan as follows: Mr. Stroup $1,560, Mr. Duggan $68,
Mr. Preslar $1,726, Mr. Tucker $1,636 and Mr. Leake $629; premiums paid by
the Company for term life insurance for the benefit of the respective named
Executive Officer as follows: Mr. Stroup $2,154, Mr. Duggan $3,429, Mr.
Preslar $783, Mr. Tucker $783, Mr. Venner $659 and Mr. Leake $1,034; and
amounts contributed by the Company under the Company's Benefit Restoration
Plan as follows: Mr. Stroup $13,246, Mr. Preslar $6,075, Mr. Tucker $6,047
and Mr. Leake $3,291. Also includes $483,142 which the Company agreed to
pay Mr. Duggan in connection with his early retirement.
(4) Mr. Duggan retired June 1998.
(5) Mr. Venner was first elected as an executive officer in 1997.
In 1997, each of the named Executive Officers, entered into a Compensation
and Benefits Assurance Agreement (a Benefits Agreement) and an Executive
Severance Agreement (a Severance Agreement) with the Company.
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<PAGE> 15
The Benefits Agreements for the named Executive Officers are substantially
identical except that the initial term for Messrs. Stroup and Leake extend until
December 31, 2011, the year in which they each reach age 60, which was the same
end of term date under their prior Executive Employment Agreement. The Benefits
Agreements provide for the payment of specified benefits in the event of a
Change in Control, as defined. A Change in Control for the purposes of a
Benefits Agreement and a Severance Agreement means the acquisition of 25% or
more of the voting securities of the Company by a person or group other than
members of the Van Every Family which consists of the descendants of Salem A.
Van Every, Sr. and their spouses; a change in the majority of the Board of
Directors of the Company over a two year period or approval by the stockholders
of the Company of a sale of substantially all of the assets to an entity of
which current Company stockholders own less than 60% of voting control,
liquidation of the Company or a merger, consolidation or reorganization after
which current Company stockholders own less than 60% of voting control. Benefits
are payable under a Benefits Agreement only in the event of a Change in Control
and one of the following occurring within three years thereafter: involuntary
termination of the executive without Cause, as defined; voluntary termination
for Good Reason, as defined, including demotion, relocation or pay reduction;
voluntary termination for any reason during the 13th month after the Change in
Control or breach of the Benefits Agreement by the Company or a successor to the
Company. In such event, the executive would receive accrued compensation and
benefits including the current year's bonus; an amount equal to three times base
salary plus three times the greater of the prior year's actual or current year's
target bonus; an amount equal to the Profit Sharing Plan contribution based on
the base salary and target bonus payment; up to 36 months of health insurance
coverage, outplacement services and an amount equal to any Federal excise taxes
payable by the executive. The initial term for the named Executive Officers
under a Benefits Agreement is three years except for Messrs. Stroup and Leake,
as described above. After the initial term, each Benefit Agreement automatically
renews for successive one year terms and may be terminated by the Company on one
year's notice prior to the end of an initial or renewal term. In the event of a
Change in Control, there is an automatic three year extension.
Each of the named Executive Officers entered into a Severance Agreement.
The provisions of the Severance Agreements are identical for each of the named
Executive Officers except for Mssrs. Stroup and Leake. In the event of
involuntary termination of the executive without Cause, as defined, and prior to
a Change in Control, as defined, the executive will receive accrued compensation
and benefits including current year's bonus plus an amount equal to base salary
plus the current year's target bonus. The initial term for a Severance Agreement
is three years with automatic renewals for successive one year terms. Each
Severance Agreement may be terminated on one year's notice prior to the end of
an initial or renewal term.
In connection with the agreements by Messrs. Stroup and Leake to terminate
their respective prior Executive Employment Agreements, their respective
Severance Agreements provide for the continuation of supplemental retirement
benefits similar to those under their prior Executive Employment Agreements.
Their Severance Agreements provide for supplemental retirement benefits equal to
five times base salary payable over 15 years after retirement or until age 75,
if earlier. They may elect a lump sum equal to present value. There is a death
benefit equal to 75% of the remaining retirement benefit. They are eligible for
retirement benefits at any time after December 31, 2011, or upon death or
Disability, as defined. In the event of a Change in Control, as defined, they
receive a lump sum equal to the present value of the retirement benefit on
termination of employment following a Change in Control. They would also receive
a severance benefit upon involuntary termination without Cause, as defined,
prior to the earlier of a Change in Control or the last day of the Company's
fiscal year in which they reach age 60. Severance benefits for Messrs. Stroup
and Leake consist of accrued compensation and benefits including current year's
bonus; two and one-half times the highest base salary paid to them plus current
year's target bonus, provided that the amount is reduced for severance after age
57 1/2. There is also an immediate commencement of the supplemental retirement
benefit, transfer of his Company car to them, payment for unexercised vested
stock options, health and medical insurance to age 60 and out placement
services.
Mr. Duggan's Severance Agreement and his Benefits Agreement were terminated
pursuant to an Early Retirement Agreement dated June 10, 1998. Under the Early
Retirement Agreement, Mr. Duggan resigned as an officer of the Company on June
10, 1998 and released the Company of its obligations under his Severance
Agreement and his Benefits Agreement. Pursuant to the Early Retirement
Agreement, the Company agreed to pay
14
<PAGE> 16
Mr. Duggan the amounts due under his Severance Agreement and Benefits Agreement
which included his salary through June 26, 1998 and cash, benefits and property
aggregating $483,142. The Company has also agreed to provide Mr. Duggan with
retiree medical insurance after age 60.
The table below shows the individual grants to the named Executive Officers
of stock options during the fiscal year ended December 26, 1998.
Option Grants in the 1998 Fiscal Year
Individual Grants
<TABLE>
<CAPTION>
% of Total Options/
SARs
Granted to Grant Date
Options/SARs Employees in Exercise or Base Expiration Present
Name Granted (#Sh) Fiscal Year Price ($/Sh) Date Value ($)(1)
- ---- ------------- ------------ ----------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Paul A. Stroup, III 13,650 4.3 20.91 4/15/08 83,675
Peter M. Duggan 7,650 2.4 20.91 4/15/08 46,895
B. Clyde Preslar 7,400 2.3 20.91 4/15/08 45,362
Richard G. Tucker 7,400 2.3 20.91 4/15/08 45,362
Gregory M. Venner 5,150 1.6 20.91 4/15/08 31,570
Earl D. Leake 6,000 1.9 20.91 4/15/08 36,780
</TABLE>
(1) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options. The estimated values under the model are based on
arbitrary assumptions as follows: options to be exercised in ten years,
stock price volatility at .260, annual dividend yield of 3.92% and a
risk-free interest rate of 5.77%. No downward adjustments are made to the
resulting grant-date option values to account for potential forfeitures or
non-transferability of the options. The actual value of the options depends
upon the actual performance of the Company's stock during the applicable
period.
15
<PAGE> 17
The table below shows, on an aggregated basis, each exercise of stock
options or tandem SARs during the fiscal year ended December 26, 1998 by each of
the named Executive Officers and the 1998 fiscal year-end value of unexercised
options and SARs.
Aggregated Option/SAR Exercises in the 1998 Fiscal Year
and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised Unexercised
Options/SARs In-the-Money
At FY-End (#) Options/SARs
at FY-End ($)
Shares Acquired Exercisable/ Exercisable/
Name On Exercise (#Sh) Value Realized ($) Unexercisable Unexercisable
- ---- ---------------- ------------------ ------------- -------------
<S> <C> <C> <C> <C>
Paul A. Stroup, III 4,800 102,600 33,275/41,975 67,300/79,900
Peter M. Duggan 3,000 57,469 8,862/0 49,589/0
B. Clyde Preslar 0 0 6,413/18,637 16,619/23,856
Richard G. Tucker 0 0 5,413/17,637 13,369/20,606
Gregory M. Venner 0 0 2,000/11,150 3,000/9,000
Earl D. Leake 1,800 39,938 14,463/11,437 25,556/30,994
</TABLE>
Ratification of Selection of Independent Public Accountants
The Board of Directors has selected KPMG LLP as independent public
accountants to audit the financial statements of the Company and its
subsidiaries for the 1999 fiscal year, ending December 25, 1999. This selection
is being presented to the stockholders for their ratification or rejection at
this Annual Meeting. KPMG LLP has served as the Company's independent certified
public accountants and has audited the financial statements of the Company and
its subsidiaries beginning with the 1991 fiscal year. Representatives of KPMG
LLP are expected to be present at the Annual Meeting of Stockholders and will
have an opportunity to make a statement if they desire to do so and to respond
to appropriate questions.
The Board of Directors recommends a vote FOR the ratification of the
selection of KPMG LLP as independent public accountants to audit the financial
statements of the Company and its subsidiaries for the 1999 fiscal year, and
proxies solicited by the Board of Directors will be so voted unless stockholders
specify a different choice. If the stockholders do not ratify the selection of
KPMG LLP, the selection of independent public accountants will be reconsidered
by the Board of Directors.
16
<PAGE> 18
APPENDIX A
[LOGO] LANCE, INC. PROXY
Proxy solicited by the Board of Directors for the
Annual Meeting to be held April 16, 1999
The undersigned hereby appoints Scott C. Lea and Paul A. Stroup, III, and
each or either of them, proxies, with full power of substitution, with the
powers the undersigned would possess if personally present, to vote, as
designated on the reverse hereof, all shares of the $.83-1/3 par value Common
Stock of the undersigned in Lance, Inc. at the Annual Meeting of Stockholders to
be held on April 16, 1999, and at any adjournment thereof.
This proxy will be voted as specified on the reverse hereof and, unless
otherwise directed, will be voted FOR the election of all nominees as directors
and FOR proposal 2. The Board of Directors recommends voting FOR on each item.
HAS YOUR ADDRESS CHANGED?
(side 2)
1. ELECTION OF DIRECTORS: Nominees are J. W. Disher, Scott C. Lea, Wilbur J.
Prezzano and Robert V. Sisk.
[ ] FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT
(Instruction: To withhold authority for any nominee, mark the "For All
Except" box and write that nominee's name below.)
2. RATIFICATION OF SELECTION OF KPMG LLP AS AUDITORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
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<PAGE> 19
Receipt of Notice of Annual Meeting and accompanying Proxy Statement is
hereby acknowledged.
Please date and sign exactly as printed to the left and return promptly in
the enclosed postage paid envelope. (When signing as attorney, executor,
administrator, trustee, guardian, etc., give title as such. If joint account,
each joint owner should sign.)
Mark box at right if address change has been noted
on the reverse of this card. [ ]
Stockholder sign here Date Co-owner sign here Date
