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:
[ ]Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14-a-6(e)(2))
[X]Definitive Proxy Statement
[ ]Definitive Additional Materials
[ ]Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
WSMP, 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]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ]$500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6)i)(3).
[ ]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which 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:
WSMP, INC.
1 WSMP Drive, P.O. Box 399
Claremont, North Carolina 28610
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of
WSMP, Inc.
The Annual Meeting of Shareholders of WSMP, Inc. will be held at the
Gateway Hotel, 909 Highway 70, S.W., Hickory, North Carolina 28602, on
Thursday, June 26, 1997, at 10:00 am., Eastern Daylight Savings Time, to:
1. Elect three directors to terms of three years.
2. Act upon a proposed WSMP, Inc. 1997 Incentive Stock Option Plan.
3. Transact such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on May 7, 1997, as
the record date for determining shareholders entitled to notice of and to vote
at the meeting. Only shareholders of record at the close of business on that
date are entitled to vote at the meeting.
WSMP, Inc. hopes that as many shareholders as possible will personally
attend the meeting. Whether or not you plan to attend, please complete the
enclosed proxy card and sign, date and return it promptly so that your shares
will be represented. Sending in your proxy will not prevent your voting in
person at the meeting.
By Order of the Board of Directors,
RICHARD F. HOWARD
Secretary
Claremont, North Carolina
June 10, 1997
WSMP, INC.
1 WSMP Drive, P.O. Box 399
Claremont, North Carolina 28610
June 10, 1997
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of WSMP, Inc. (the Company) of proxies to be voted at its
Annual Meeting of Shareholders to be held on Thursday, June 26, 1997, and at any
adjournment thereof.
The Board requests that all shareholders complete the enclosed proxy card
and sign, date and return it as promptly as possible. Since many shareholders
cannot personally attend, it is necessary that a large number be represented by
proxy. The holders of record of a majority of the outstanding shares must be
present in person or represented by proxy at the Annual Meeting in order to hold
the meeting.
Any shareholder returning a proxy may revoke it when attending the Annual
Meeting, by announcing on the floor his intention to personally vote his shares,
or by mailing to the Secretary of the Company a later dated proxy or a written
statement of revocation which must be received by the Secretary no later than
June 23, 1997. Any proxy not revoked will be voted as specified by the
shareholder. If no choice is indicated, a proxy will be voted in accordance
with the Board of Directors' recommendation.
At May 7, 1997, the record date, there were 3,247,074 shares of the
Company's Common Stock outstanding and entitled to one vote each at the Annual
Meeting. These shares were owned by approximately 1400 individuals and
entities, either as record owner or as beneficial owner.
This Proxy Statement is first being mailed on or about June 10, 1997.
Pursuant to the provisions of the North Carolina Business Corporation Act,
Directors will be elected by a plurality of the votes cast. Withheld votes will
have no effect. Approval of the proposal relating to the WSMP, Inc. 1997
Incentive Stock Option Plan will require the affirmative vote of a majority of
the votes cast on the proposal provided that the total votes cast on the
proposal represents over 50% of the shares entitled to vote on the proposal.
Abstentions will not have the effect of "negative" votes with respect to
approval of the Plan and will not be included in determining the number of
shares cast. Approvals of other matters to be presented at the Annual Meeting,
if any, generally will require the affirmative vote of a majority of the shares
voted on such matters. Abstentions from voting and broker non-votes will not
have the effect of a "negative" vote with respect to any such matters.
Principal Shareholders and Management Ownership. The following table sets
-----------------------------------------------
forth, as of the record date, information with respect to the WSMP, Inc. common
stock ownership by (i) each person known to management to own beneficially 5% or
more of the total outstanding shares of Common Stock; (ii) each person who is a
director of the Company or a nominee for director; (iii) each named executive
officer individually; and (iv) all directors and officers of the Company as a
group.
<TABLE>
<CAPTION>
No. of
No. of Percen- Shares Percentage
Shares tage of Benefi- of Out-
Name and Address Directly Outstanding cially standing
Beneficial Owner Owned Shares Owned(1) Shares(1)
- ---------------- -------- ----------- -------- ----------
<S> <C> <C> <C> <C>
RSH Management, Inc.(2) 918,312 28.3 918,312 24.3
P. O. Box 399 (4) (4)
Claremont, NC 28610
HERTH Management,Inc.(3) 175,923 5.4 300,923 8.0
P. O. Box 399 (4) (4)(6)
Claremont, NC 28610
Richard F. Howard 390 * 1,344,625 35.6
P. O. Box 399 (1)(2)(3)
Claremont, NC 28610
James C. Richardson, Jr. 500 * 1,344,735 35.6
P. O. Box 399 (1)(2)(3)
Claremont, NC 28610
David R. Clark 1,250 * 352,173 9.3
P. O. Box 399 (1)(3)
Claremont, NC 28610
Gregory A. Edgell 1,875 * 1,221,110 32.3
3200 Devine Street (5) (2)(3)(5)
Columbia, SC 29205
James M. Templeton 4,237 * 1,285,972 34.0
P O. Box 399 (1)(2)(3)
Claremont, NC 28610
Matthew V. Hollifield -0- * 2,500 *
P. O. Box 399 (1)
Claremont, NC 28610
Lewis C. Lanier -0- * -0- *
Route 5, Box 863
Orangeburg, SC 29115
William R. McDonald, III -0- * -0- *
l004 North Center Street
Hickory, NC 28601
Richard F. Hendrickson 10,000 * 10,000 *
P. O. Box 10007
Raleigh, NC 27605
E. Edwin Bradford 725 * 725 *
361 Tenth Avenue Drive, NE
Hickory, NC 28603
Bobby G. Holman 669 * 38,169 1.0
P. O. Box 399 (1)
Claremont, N.C. 28610
Charles F. Connor, Jr. 300,000 9.2 300,000 7.9
P. O. Box 5l9
Claremont, NC 28610
Cecil R. Hash 231,471 7.1 356,471 9.4
3536 Vest Mill Road (6) (6)(7)
Winston-Salem, NC 27103
All Directors and 17,783 * 1,639,518 43.4
Officers as a
Group (16 persons)
- ----------------
*less than 1% of shares
</TABLE>
(1) Messrs. Howard, Richardson, Clark and Templeton have been granted the
presently exercisable options to purchase 125,000, 125,000, 50,000 and 62,500
shares, respectively, pursuant to the WSMP, Inc. 1987 Special Stock Option Plan,
which shares are attributed to the respective optionee. Other current or
former officers, including Messrs. Clark, Hollifield and Holman have been
granted incentive stock options under the 1987 WSMP, Inc. Incentive Stock Option
Plan to purchase a total of 167,500 shares, options for 40,000 being presently
exercisable and attributed to the optionees. See EXECUTIVE COMPENSATION --
Compensation Plans.
(2) The shares held by RSH Management, Inc. are attributed to each of its
shareholders. RSH Management, Inc. has informed the Company that voting or
disposition of its shares may only be done by the consent of the holders of a
majority of its outstanding shares. The shareholders of RSH, and their
ownership percentages of RSH, are Messrs. Howard (4.0%), Richardson (0.5%),
Templeton (0.3%), Lyerly (4.0%), Hunsucker (1.7%), and HERTH Management, Inc.
(91.9%). Beneficial ownership of other than a pro-rata interest in the shares
is disclaimed by each shareholder of RSH.
(3) The shares held by HERTH Management, Inc. are attributed to each of its
shareholders. HERTH Management, Inc. has informed the Company that voting or
disposition of its shares may only be done by the consent of the holders of a
majority of its outstanding shares. The shareholders of HERTH, and their
ownership percentages of HERTH, are Messrs. Howard (45%), Richardson (22%),
Templeton (11%), and Edgell (22%). Beneficial ownership of other than a pro-
rata interest in the shares is disclaimed by each shareholder of HERTH. Mr.
Clark holds a presently-exercisable option to acquire up to 10% of the out-
standing stock of HERTH, and the shares held by HERTH are attributable to him as
well. Mr. Clark disclaims beneficial ownership of such shares.
(4) The RSH listing includes 148,676 shares held by HERTH for the benefit of
RSH. The HERTH listing excludes these shares.
(5) Includes 625 shares held by spouse as custodian for minor children.
Beneficial ownership of such shares is disclaimed.
(6) Includes 125,000 shares held nominally by Mr. Hash for the benefit of
HERTH. Beneficial ownership of such shares is disclaimed.
(7) Includes a presently exercisable option to purchase 125,000 shares granted
when Mr. Hash was an officer of the Company.
As of May 7, 1997, Cede & Co., the nominee of the Depository Trust Company,
New York, New York, which provides custodial services for various institutions,
such as banks and stock brokerage firms, was the record holder of 1,303,191
shares of Common Stock representing 40% of the outstanding shares of Common
Stock of the Company. The Company believes that none of these shares were
beneficially owned by Cede & Co.
Except as set forth above, management of the Company is not aware of any
other person or group which owns in excess of five percent of the outstanding
Common Stock of the Company.
Compliance with Section 16(a) of the Securities Exchange Act of 1934.
---------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and executive officers, and persons who own more than ten percent of
the Company's stock ("Reporting Persons"), to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of the Company's stock. Reporting Persons are required by Securities
and Exchange Commission regulations to furnish the Company with copies of all
Section 16(a) forms they file. To the Company's knowledge, based upon review of
the copies of such reports furnished to the Company and written representations
that no other reports were required, all Section 16(a) filing requirements
applicable to Reporting Persons were complied with during fiscal 1997, except
that through inadvertent error, Messrs. Edgell, Bradford, Hendrickson, Clark,
Holman and Templeton failed to file timely Form 5s. All applicable reports have
since been filed.
ELECTION OF DIRECTORS (PROXY ITEM NO. 1)
The Company's By-Laws provide for nine directors, classified into three
classes and elected for three year terms, or until their successors are duly
elected and qualified. The Class III directors, whose terms expire at the 1997
annual meeting, are Messrs. David R. Clark, William R. McDonald III and Lewis C.
Lanier. The remaining six directors were elected at prior annual meetings to
serve until the annual meetings to be held in the years set forth below. Three
Class III directors will be elected to serve three year terms expiring in 2000,
upon the election and qualification of their successors. Messrs. Clark,
McDonald and Lanier have been nominated for these terms by the Board of
Directors.
It is the intention of the persons named in the enclosed Proxy to vote the
shares covered thereby for the election of the three nominees set forth below,
for terms expiring as indicated.
- - - - - - - - - - - -
CLASS III - NOMINEES FOR ELECTION AS DIRECTORS FOR A TERM EXPIRING JUNE, 2000.
DAVID R. CLARK is WSMP's President and Chief Operating Officer, a position
he was appointed to in 1996. From 1994 - 1996, he served as Executive Vice
President and Chief Operating Officer of Bank of Granite, located in Granite
Falls, North Carolina. Prior to joining Bank of Granite, Mr. Clark served 13
years with BB&T, a bank and trust company with headquarters in Wilson, North
Carolina, serving in various capacities, including President of BB&T of South
Carolina, and President of the Northwest Region of North Carolina. Mr. Clark,
40, was appointed in 1996 to the Board of Directors to complete the unexpired
term of Miles M. Aldridge, who resigned for business reasons.
WILLIAM R. MCDONALD III, 62, has been a director since 1991, and serves on
the Executive Compensation, Sensitive Transactions and Audit Committees. He is
Branch Manager of American Pharmaceutical Services, a subsidiary of Living
Centers of America, that provides pharmaceutical needs and prescription services
to nursing homes. He has held this position with American or its predecessors
since 1989. Mr. McDonald also serves as Mayor of the City of Hickory, an
elective office he has held since 1981.
LEWIS C. LANIER is a member of the law firm of Horger, Horger, Lanier,
Culclasure & Knight, LLP, of Orangeburg, South Carolina, joining this firm's
predecessor in 1985. Mr. Lanier, who was first elected to the Board in 1988,
serves on the Executive Compensation, Sensitive Transactions and Audit
Committees, and is 48 years old.
- - - - - - - - - - -
CLASS II - DIRECTORS CONTINUING IN OFFICE FOR A TERM EXPIRING JUNE, 1999.
JAMES C. RICHARDSON, JR. became a director in 1987. Mr. Richardson is
WSMP's Chief Executive Officer and Vice Chairman of the Board of Directors,
positions he assumed in 1993 and 1996, respectively. He has served WSMP as an
executive officer since 1987, including Executive Vice President from 1989-1993,
and President from 1993-1996. Since 1993 Mr. Richardson has been President of
HERTH Management, Inc., the Company's management firm, and RSH Management, Inc.
He is 48 years old.
RICHARD F. HENDRICKSON was elected to the Board of Directors in l993, after
having previously served on the Board from 1988-1991. Mr. Hendrickson is Vice-
President of York Properties, Inc. of Raleigh, North Carolina, a real estate
firm which he has served since 1985. Mr. Hendrickson, 56 years old, is a member
of the Executive Compensation, Sensitive Transactions and Audit Committees.
BOBBY G. HOLMAN served as WSMP's Chief Financial Officer and Treasurer from
1994 until his retirement in February, 1997. He now is a consultant to the
Company. Prior to joining WSMP, he had been an Assistant Vice President with
Aetna Life & Casualty Insurance Company in Hartford, Connecticut, and managing
director of the Food Industry segment of Aetna's Bond Investment Department,
since l985. Mr. Holman is 61 years old, and has served as a director since
1994.
- - - - - - - - - - - -
CLASS I -DIRECTORS CONTINUING IN OFFICE FOR A TERM EXPIRING JUNE, 1998.
RICHARD F. HOWARD, 47, became a director in 1987 and has served as Chairman
of the Board of Directors since 1993. He also serves as Secretary to the
corporation. Mr. Howard has served as Executive Vice President of the Company
from 1989-1993, and Chief Financial Officer and Treasurer from 1989-1994. Mr.
Howard has been Secretary and Treasurer of the Company's management firm, HERTH
Management, Inc., and RSH Management, Inc. since 1993.
JAMES M. TEMPLETON, a member of the Board since 1988, is 60 years old and
serves WSMP as Senior Vice President of Real Estate. He served the Company as
Vice President of Real Estate from 1988-1994, when he assumed his present
position. He is presently Vice-President of Administration of HERTH Management,
Inc., a position he has held since 1991, and is Vice-President of RSH
Management, Inc., since 1987.
E. EDWIN BRADFORD was first elected to the WSMP Board in l993. Mr.
Bradford is owner of Bradford Communications, Inc., a Hickory, North Carolina
marketing and advertising firm which he founded in 1977. Mr. Bradford is 54
years old.
-----------------------------
Should any of the foregoing nominees become unavailable for any reason, the
persons named in the enclosed proxy intend to vote for such other persons as the
present Board may nominate.
Board Meetings and Committees of the Board. WSMP's Board held six regular
- -------------------------------------------
meetings and two telephonic meetings during the past fiscal year. The Board has
appointed Audit, Executive Compensation, and Sensitive Transactions Committees,
the members of which are indicated in the foregoing information on nominees.
The full Board nominates candidates for Board membership.
The Audit Committee, established in 1978 and consisting of three outside
directors, met three times during the past fiscal year with the Company's
financial management. The Committee reviews external audit plans and
activities, reviews the Company's financial controls, approves all significant
fees for audit and non-audit services provided by the independent auditors and
recommends to the Board the selection or retention of independent auditors.
The Executive Compensation Committee, established in 1978, which consists
of three outside directors, sets and approves changes in executive compensation,
and recommends to the Board changes in the Company's executive compensation
arrangements. All proposals concerning executive compensation are first brought
before this Committee; upon an affirmative recommendation of the Committee,
proposals proceed to the full Board for consideration. The full Board is free
to accept or reject the recommendation of the Committee. This Committee met two
times during fiscal l997.
The Sensitive Transactions Committee, established in 1983, monitors and
reviews for fairness certain transactions between the Company and its officers
and directors. This Committee reviews all such transactions and recommends
their approval or rejection to the full Board. The full Board is free to accept
or reject the recommendation of this Committee. This Committee, which met three
times during the past fiscal year, consists of three outside directors.
During the past year the incumbent directors attended at least 75% of the
aggregate of the meetings of the Board and committees on which they served,
except for Mr. Aldridge, who, prior to his resignation in August, 1996, was
unable to attend at least 75% of such meetings because of business conflicts.
Directors Compensation.
- -----------------------
During fiscal 1997, outside directors were paid $2,000 per meeting
attended. Directors who are employees of the Company or members of the HERTH
Management, Inc. group, or who have material contracts with the Company receive
no payment for serving as directors.
EXECUTIVE COMPENSATION
CASH COMPENSATION OF EXECUTIVE OFFICERS.
- ----------------------------------------
The following information relates to compensation paid by the Company to
its Chief Executive Officer, and its other four most highly compensated
executive officers of the Company for services in all capacities during the
three fiscal years ended February 28, 1997.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION> Long-Term
Annual Compensation Compensation
------------------------------- ------------------------
Name and Fiscal Other Annual Awards of All other
Principal Position Year Salary(l) Bonus Compensation Options Compensation
- ------------------- ------ --------- ----- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Richard F. Howard 1997 $485,600(2)
Chairman of the Board 1996 $495,000(2) -- -- -- --
and Secretary 1995 $495,000(2) -- -- -- --
James C. Richardson, Jr. 1997 $476,500(2)
Vice Chairman of the 1996 $487,550(2) -- -- -- --
Board, Chief Executive 1995 $487,550(2) -- -- -- --
Officer
James M. Templeton 1997 $221,100(2)
Senior Vice President 1996 $200,000(2) -- -- -- --
of Real Estate 1995 $200,000(2) -- -- -- --
David R. Clark (3) 1997 $251,800(2)(4) $73,500 $50,000 100,000(5)
President, Chief 1996 -- -- -- --
Operating Officer 1995 -- -- -- --
Bobby G. Holman 1997 $128,000 --
Chief Financial Officer 1996 $130,000 -- 17,656(6) -- --
and Treasurer 1995 $104,400(4) -- -- 62,500(5) --
</TABLE>
- ---------------------------
(1) Includes the Company's contribution under the Employee Profit-Sharing and
Salary Deferral Plan. The Company provides this benefit only upon salary
amounts, and not upon amounts paid to HERTH Management, Inc. for management
services. Also includes the Company's matching portion under its Employee
Stock Purchase Plan.
(2) Represents compensation paid to HERTH Management, Inc. for management
services rendered. See CERTAIN TRANSACTIONS. Amounts assigned to Messrs.
Howard, Richardson, and Templeton represent the allocation provided the
Company by HERTH Management, Inc. at the Company's request, and may not
represent any sum actually paid to these persons by HERTH. Mr. Clark's
salary represents $126,800 paid by the Company to him during Fiscal 1997
and reimbursed to it by HERTH, and an additional $125,000 which HERTH has
provided in its allocation.
(3) Mr. Clark was hired as President and Chief Operating Officer as of July 1,
1996, at a base salary of $200,000 per year, and a bonus calculated upon
increases in the Company's stock value during his tenure. Mr. Clark also
received a one-time bonus of $50,000 to compensate him for additional
compensation foregone when he became an officer of WSMP.
HERTH reimburses the Company for Mr. Clark's base salary. The Company is
solely responsible for bonuses.
(4) Represents a partial year.
(5) Mr. Clark was granted during Fiscal 1997 the option to purchase 50,000
shares under the Incentive Stock Option Plan, and 50,000 shares under the
Company's Special Stock Option Plan. Mr. Holman was granted the option to
purchase 62,500 shares (as adjusted for a subsequent stock split), during
Fiscal 1995, under the Company's Incentive Stock Option Plan, exercisable
as to 20% after each year of service after issuance (subsequently modified
to be immediately exercisable).
All options are issued at the closing price of the Company's stock at the
date of issuance, which was $5.875 and $4.00 (as adjusted for a subsequent
stock split), respectively. See EXECUTIVE COMPENSATION - Compensation
Plans.
(6) Reimbursement for moving expenses.
----------------------
The following table presents options exercised during the last fiscal year and
the value of unexercised options at February 28, 1997.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of Value of
Securities Unexercised
Shares Underlying In-the-Money
Acquired Unexercised Options
On Options at At
Exercise Value FY End FY End (1)
--------------------------- ---------------------------
Name (#) Realized Exercisable Unexercisable Exercisable Unexercisable
- ----------------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard F. Howard -0- -0- 125,000 -0- $744,000 -0-
James C. Richardson, Jr. -0- -0- 125,000 -0- $744,000 -0-
James M. Templeton -0- -0- 62,500 -0- $362,500 -0-
David R. Clark -0- -0- 50,000 50,000 $156,000 $156,000
Bobby G. Holman 25,000 $125,000 37,500 -0- $187,500 -0-
(1) The closing price of WSMP common stock on February 28, 1997, was $9.00.
</TABLE>
WSMP, Inc. has not during fiscal 1997 adjusted or amended the exercise
price on stock options previously awarded to these executive officers. The
Executive Compensation Committee did amend Mr. Holman's options to make them
immediately exercisable, rather than exercisable over a period of five years.
COMPENSATION PLANS.
- -------------------
1987 Incentive Stock Option Plan. The Company's 1987 Incentive Stock
---------------------------------
Option Plan (the "Option Plan") provides for the issuance of up to 625,000
shares of Common Stock to key employees, including officers, of the Company.
The Option Plan is administered by a committee of the Board of Directors, none
of which are eligible to participate in the plan, which may grant Incentive
Stock Options ("ISOs") or non-qualified stock options to eligible employees.
The Committee determines who will receive ISOs and non-qualified options,
subject to the limitations contained in the Option Plan, and the terms of such
options, including price, duration, number of shares covered and timing of
exercise.
No options issued under the Option Plan may be granted at an exercise price
of less than 100% of the fair market value of the Common Stock at the date of
the grant. ISOs granted under the Option Plan are intended to qualify as
"incentive stock options" pursuant to Section 422A of the Internal Revenue Code
of 1986 ("the Code"), and are subject to the additional restrictions of issuance
and exercise prescribed by the Code and the Option Plan. No options are
transferable and, with certain exceptions, are exercisable only while the
optionee is employed by the Company or within 3 months thereafter. Payment
shall be made in cash or, at the discretion of the Committee, by the surrender
of shares of Common Stock.
Options to purchase 50,000 shares were issued under the Option Plan during
fiscal 1997, options for 10,000 shares expired, and options for 33,125 shares
were exercised by grantees during fiscal 1997. The Option plan expired by its
own terms on May 22, 1997. At that time, options to purchase 192,500 shares
remained issued and outstanding and are exercisable according to their terms.
The Option Plan is being replaced by the WSMP, Inc. 1997 Incentive Stock Option
Plan.
1997 Incentive Stock Option Plan. This plan is being submitted for
---------------------------------
approval of the shareholders. See PROXY ITEM NO. 2.
1987 Special Stock Option Plan. The Company's 1987 Special Stock Option
-------------------------------
Plan (the "Special Plan") provides for the issuance of up to 625,000 shares of
Common Stock to key management employees, including officers of the Company.
The Special Plan is administered by a committee of the Board of Directors, none
of whom are eligible to participate in the plan, who make recommendations to the
Board of Directors; the Board then authorizes the granting of options. All
options granted under the Special Plan are non-qualified stock options. The
Board, upon recommendation of the Committee, determines the price, duration,
number of shares covered, and timing of exercise, subject to the limitations
contained in the Special Plan. All options must be granted at not less than
100% of the fair market value of the Common Stock at the date of the grant, and
the option price is payable in cash at the time of exercise.
The options are exercisable immediately, and terminate 10 years from the
date of issuance. At the death of a grantee, the option can be exercised by his
executor or personal representative; otherwise, options are not transferable and
may not be assigned, pledged or hypothecated. Shares subject to the option are
to be adjusted in case of any stock split, stock dividend, or recapitalization
of the Company.
Options to purchase 50,000 shares were issued under the Special Plan during
fiscal 1997, and options for 125,000 shares were exercised by grantees during
fiscal 1997. The Special Plan expired by its own terms on May 22, 1997. At
that time, options to purchase 487,500 shares remained issued and outstanding
and are exercisable according to their terms. The Special Plan is being
replaced by the WSMP, Inc. 1997 Special Stock Option Plan.
1997 Special Stock Option Plan. The Company's 1997 Special Stock Option
-------------------------------
Plan (the "1997 Special Plan") was adopted on May 15, 1997, by the Board of
Directors to replace the 1987 Special Stock Option Plan, which is expiring by
its own terms. This plan will be similar in all material respects to the plan
it is replacing, except that it will be limited to 500,000 shares, rather than
625,000 shares under the 1987 plan.
Employee Profit-Sharing and Salary Deferral Plan. In 1987, the Company
-------------------------------------------------
established its Employee Profit-Sharing and Salary Deferral Plan (the "Profit-
Sharing Plan") for employees of the Company. In general, employees who have
attained age 21, and been employed for one year are eligible to participate.
Participants may allocate up to the lesser of 20% of their salary, or $9,500,
to the Profit-Sharing Plan on a pre-tax basis pursuant to Section 401(k) of the
Code. The Company contributes an amount equal to 25% of the first 8% or up to
an additional 2% of salary. Participant and Company contributions are invested
in annuity contracts.
Participant contributions to the Profit-Sharing Plan are vested
immediately; Company contributions vest completely after six years of service.
No withdrawals under the Profit-Sharing Plan during Fiscal 1997 attributable to
the Company's contributions were made by any executive officer.
The executive officers of the Company who are paid pursuant to a management
agreement with HERTH Management, Inc. do not participate in the Profit-Sharing
Plan as to any amount received by HERTH Management, Inc.
1994 Employee Stock Purchase Plan. The Company's l994 Employee Stock
----------------------------------
Purchase Plan allows all eligible Company employees, including all officers and
directors, to participate in purchasing Company stock under advantageous
conditions. Employees who have attained age 18 and been employed by the Company
or its subsidiaries for at least 90 days may elect to participate. Employee
contributions are generally by payroll deductions, and may range from $10.00 per
payroll period up to 10% of base salary. Company officers not compensated by
the Company and Directors may contribute up to $500 per month. The Company
matches 25% of the contribution of a participant on a monthly basis. All
contributions vest when credited to a participant's account. The executive
officers of the Company who are paid pursuant to a management agreement with
HERTH Management, Inc. do not participate in the Stock Purchase Plan as to any
amount received by HERTH Management, Inc.
All contributions are paid over to the Trustee Bank, which purchases shares
of the Company's common stock and allocates to participants their pro rata
shares of such purchases. Participants vote all whole shares of stock credited
to their accounts. The Trustee Bank votes fractional shares.
The Trustee Bank, which serves at the pleasure of the Board of Directors is
Lincoln Bank of North Carolina, in Lincolnton, North Carolina.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
- ----------------------------------------------
It is the responsibility of the Executive Compensation Committee to advise
management and the Board of Directors on matters pertaining to compensation
arrangements for executive employees, as well as for the administration of the
Company's stock option plans. The members of this committee are all
independent, non-employee directors. Following review and approval by the
Executive Compensation Committee, all issues pertaining to executive
compensation are submitted to the full Board of Directors for approval.
Compensation Principles.
- ------------------------
In determining compensation for executive officers, the Company believes
that compensation should be 1) based in part upon the Company's performance, by
the use of bonuses or stock options which do this, 2) based in part upon the
individual contributions and attainment of goals of each officer and the
performance of management as a group, and 3) based in part upon compensation
paid by other companies to similarly situated management.
The Company's executive compensation program consists of salary, bonus,
long-term compensation and other benefits. Specific targets are not utilized by
the Committee in determining the level of any of these individual components of
overall compensation. Rather, the Committee seeks to formulate an overall
compensation package which approximates in value the median range of overall
compensation paid to executives of the comparison group. Overall compensation
paid to the Company's executives in fiscal 1997 was comparable to the median of
overall compensation paid to the comparison group.
Four of the Company's top officers (Messrs. Howard, Richardson, Clark and
Templeton) are compensated pursuant to a Management Services Agreement with
HERTH Management, Inc. (see CERTAIN TRANSACTIONS) entered in 1993, and which was
renewed in 1995, upon ratification by the shareholders, for an additional three-
year term beginning in 1996. Mr. Clark's base salary is paid by the Company and
reimbursed by HERTH; the Company is solely responsible for Mr. Clark's bonuses.
The Committee uses a comparison group of similarly situated companies to
compare its overall compensation. This is the same group that the Company uses
in comparing shareholder returns over the past five years (see PERFORMANCE
GRAPH). Also, the Committee intermittently retains a private economist to
review compensation paid under the Management Services Agreement for its
reasonableness. The Committee believes that these are two appropriate methods
of comparing compensation.
Section 162(m) of the Internal Revenue Code imposes a limit, with certain
exceptions, on the amount a publicly held corporation may deduct for
compensation paid or accrued with respect to its five most highly compensated
officers. The Company does not feel that the fiscal 1997 compensation exceeded
this limit, and the Committee has not established a policy should the limit be
exceeded by future compensation.
Executive Compensation.
- -----------------------
The Committee measures management's performance using longer-term (l 1/2
to 2 years) objectives of the Company, and developing criteria based upon these
longer-term goals. The Committee reviews the Company's business plan, as
approved by the Board of Directors, and determines whether the Company has met
its goals thereunder, as well as whether individual officers have accomplished
the goals assigned to them. Several elements of the performance of an officer
are based upon non-numerical performance criteria, such as level of
responsibility in the Company, comparable compensation of other executives,
individual merit performance or improvements in administration; other elements
are tied to management's performance as a group in achieving corporate goals,
such as financial performance, profit margins, the elimination of waste in
manufacturing, or restoration of working capital. The Committee also compares
the Company's return to shareholders with that for other similarly situated
companies in a peer group approach. No mathematical weights are assigned to
these individual criteria.
The performances of executive officers compensated under the HERTH
Agreement, like those of other executive officers of the Company, are evaluated
by the Committee using the criteria previously set forth. Although the
compensation payable to HERTH is only adjustable every three years, the
Committee feels that the Company has the authority, under principles of contract
law, to re-negotiate or even terminate the Management Services Agreement, should
the officers employed under this agreement fail to substantially comply with the
terms of the agreement.
Performance based-criteria are generally considered as a whole, so that
specific performance targets may be waived or adjusted as long as, on the whole,
performance targets have been met. Concerning this aspect of compensation, the
Committee considered that management has met and surpassed all goals for them by
the Board, including meeting and exceeding budget objectives for the Company's
pre-tax earnings, a substantial restoration of sales in the Company's Food
Manufacturing Division, improved investor communication and relationships,
reduction of non-core properties, refinancing of corporation debt at a
substantial savings and securing a new $6 million working capital line of
credit, and meeting goals for reduction of corporate overhead. The Committee
also considered management's timely actions in addressing and correcting
certain problems which had adversely effected earnings.
In hiring a new president for WSMP during the past fiscal year,
consideration was given to Mr. Clark's compensation arrangements in his previous
employment, compensation averages for chief operating officers in the food
service industry, and to structure a compensation package to create incentives
to achieve individual and corporate goals.
Chief Executive Officer Compensation.
- -------------------------------------
Mr. Richardson's compensation as Chief Executive Officer (subsumed under
the HERTH agreement), and the evaluation of his performance as Chief Executive
Officer, is consistent with the compensation principles described above and
reflected the performance of the Company and Mr. Richardson. Determination of
adequate compensation was qualitative in nature and based upon a variety of
factors, including comparison group compensation data, attainment of various
corporate goals, financial and operating performance, individual performance and
other factors. Specifically, important corporate goal of sales and
profitability were achieved, and his leadership in achieving these goals were
considered by the Committee.
THE EXECUTIVE COMPENSATION COMMITTEE
LEWIS C. LANIER, CHAIRMAN
WILLIAM R. MCDONALD III
RICHARD F. HENDRICKSON
COMPENSATION COMMITTEE INTERLOCKINGS AND INSIDER PARTICIPATION.
- ---------------------------------------------------------------
The Executive Compensation Committee does not include any employee or
former or current officers of the Company. There are no "interlocking"
memberships between WSMP's Executive Compensation Committee and any other
company's compensation committee.
STOCK PRICE PERFORMANCE GRAPH.
- ------------------------------
The following graph presents a five year comparison of cumulative
shareholder returns for the Company, the Standard & Poor's Composite Index and a
Company-constructed peer group that reflects the performance of various
companies that are similar to the Company in industry or line of business, over
the five year period beginning February 28, 1992 and ending February 28, 1997.
The graph assumes that $100 is invested on February 28, 1992, in WSMP, Inc.
common stock, the Standard & Poor's Composite Index and in the Company
constructed peer group.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
FOR THE YEAR ENDED FEBRUARY, 1997
[GRAPH HERE]
Index Year Year Year Year Year
at Ending Ending Ending Ending Ending
2/18/92 2/26/93 2/25/94 2/24/95 2/23/96 2/28/97
------- ------- ------- ------- ------- -------
WSMP, Inc: $100 $130 $ 96 $113 $ 95 $196
S&P Composite
Index: $100 $111 $120 $129 $178 $219
Peer Group: $100 $110 $109 $102 $112 $187
The Company-constructed peer group consists of Family Steakhouses of
Florida, Flagstar Companies, Inc., Flowers Industries, Inc., Interstate Bakeries
Corp., Perkins Family Restaurant LP, Piemonte Foods Corp., Stacey's Buffet,
Inc., and Thorne Apple Valley, Inc. Po' Folks, Inc. had previously been
included in the peer group, but was eliminated when it became a private company
during fiscal 1997. The returns of each group member were weighted according to
the member's stock market capitalization at the beginning of each period for
which a return is indicated.
CERTAIN TRANSACTIONS
HERTH Management, Inc. ("HERTH") provides management services to the
Company, reviews and supervises financing, provides cost analysis services, real
estate services, strategic planning services, and reviews franchisee
relationships. HERTH provides the full time services of Messrs. Howard,
Richardson, Clark and Templeton and reimburses the Company for half of the
salaries of Mr. Holman. (The Company is responsible for payment of any bonuses
awarded Mr. Clark). The Company currently operates under a written contract
with HERTH, which was approved by the Shareholders of the Company at their l995
annual meeting, which provides for an annual compensation rate of $1,500,000 per
year and expires in 1999. Messrs. Howard, Richardson and Templeton are also
paid salaries by the Company of $1.00 each per year. HERTH is a corporation
whose shareholders are Howard, Richardson, Templeton and Edgell, and whose
officers are Howard, Richardson and Templeton. This Contract was assigned from
RSH Management, Inc. to HERTH Management, Inc. with the consent of the Company
in 1993. RSH previously provided management services to WSMP, Inc. from 1988
through 1993. RSH's Shareholders are Howard, Edgell, Richardson, Hunsucker,
Lyerly and Templeton, and its officers are Howard, Richardson and Templeton.
The Company believes that the terms of this Agreement are at least as
favorable as could have been obtained in an arms-length transaction. See
EXECUTIVE COMPENSATION.
The Company maintains fire and general property, automobile liability,
premises liability, product liability, worker's compensation, director and
officer liability, and certain key employee life insurance coverages, which
insurance has been provided since prior to 1979, through County-Wide Insurance
Agency, Inc. ("County-Wide"). County-Wide received payments of $1,113,000
during fiscal l997 in connection with such insurance, of which sums County-Wide
retained approximately ten percent as commissions. Charles F. Connor, Jr., who
is a greater than 5% shareholder, is a principal of County-Wide. The Company
periodically (approximately every 3 years) places its insurance requirements out
to bid in order to insure that its prices paid are as fair and equitable as
could be obtained through unaffiliated parties.
Denver Equipment Company ("Denver") and Howard Furniture Company ("Howard")
are companies which sell restaurant equipment and supplies, and restaurant
furnishings, respectively, to the Company, as well as to affiliated and
unaffiliated franchises and to the public in general. During fiscal 1997,
Denver was paid a total of $522,400, and Howard a total of $39,700, for
purchases made by the Company. These companies have as their major owner
Richard S. Howard, the father of director Richard F. Howard; and Charles F.
Connor, Jr. is a 10% owner of Denver. The Company believes that the furnishings
and equipment purchased from Denver and Howard were purchased on terms as fair
and equitable as could have been obtained from unaffiliated third parties.
Since 1981, the Company has utilized Bradford Communications, Inc. ("BCI")
to provide the Company with certain marketing and advertising services. As a
part of its services to the Company, BCI develops advertising programs for all
segments of the Company, including contracting for media space and time and
placing all advertising for Company-owned and operated restaurants, as well as
developing marketing tools for the food manufacturing divisions. During fiscal
1997, the Company paid BCI a total of $354,700 for packaging, design and
marketing, media plan development and research, development of advertising
concepts and associated services. Of the total received by BCI, it paid out on
behalf of the Company $219,000 for media, printing expenses, mechanical and
consultant costs. BCI renders such services to the public in general. The
owner of BCI, E. Edwin Bradford, has been a director of the Company since l993.
In January, 1996, WSMP received 111,983 shares of common stock of
Sagebrush, Inc. as part of a transaction leading to an initial public offering
of Sagebrush, Inc. common stock. These shares were unregistered and restricted
in the possession of WSMP. They were valued by Sagebrush, Inc. at the offering
price of $7 per share, but in the view of WSMP, Inc. were worth substantially
less because of their restriction from trading in the public market. Columbia
Hill, L.L.C. ("Columbia") is a North Carolina limited liability company whose
equal owners are Messrs. Richardson and Clark. Columbia offered to purchase
these shares at $7 per share, or $783,881, payable 10% in cash and the balance
represented by a promissory note secured by the unconditional guaranties of
Messrs. Richardson and Clark. The promissory note is payable in two years,
with interest accruing at the prime rate, with mandatory pro-rata paydown of
principal if any of the stock is re-sold prior to the due date. WSMP accepted
this offer, having determined that such terms were acceptable and more favorable
than the Company could receive from any third party purchaser of these
restricted shares. At the time of the offer, Sagebrush registered shares
were trading at $7.00 per share, and at closing were trading at $7.25.
Subsequently, these shares have traded in the range of $5.25 - $7.25 per share.
During fiscal 1997, WSMP placed on the market for sale a restaurant
property in Hildebran, North Carolina, that it had been leasing to various
short-term operators since closing the facility as a Company restaurant in 1991.
After failing to receive any offers for the property listed at its appraised
price of $220,000, the Company sold the property, which had a book value of
$52,000, to its officer and director James M. Templeton for the cash price
of $150,000. The Company believes that the price and terms of this transaction
were at least as fair and equitable to the Company, if not more favorable, than
could have been obtained from unaffiliated third parties.
On March 1, 1997, WSMP acquired 14 of its franchised restaurants from six
corporations under the common control of Cecil R. Hash (the "Hash Companies").
These restaurants, located in North Carolina, Virginia and Tennessee, represent
the largest group of franchised restaurants under common control of a
franchisee, and the Hash Companies paid WSMP approximately $535,000 in royalty,
accounting, and advertising fees during fiscal 1997.
The purchase price for these restaurants was $3,767,500, payable as
follows: $500 in cash, $954,500 in assumed liabilities, $2,012,500 in WSMP
common stock (223,611 shares valued at $9 per share), and a total of $800,000 in
promissory notes. The notes are unsecured, are due and payable as to both
principal and interest on March 1, 1999, and bear interest at the rate of 5% per
annum until paid. WSMP arranged for the registration of the WSMP common stock
through an S-3 Registration Statement filed with the Securities and Exchange
Commission on March 10, 1997.
Hash controls the Hash Companies and has been the major contributor to the
success of the Hash Companies' restaurants. He and the Company entered into a
non-competition agreement to preserve the goodwill, proprietary rights, and
"going business" value of the restaurants for the benefit of WSMP as the new
owner.
In consideration for Hash's covenant not to compete, the Company issued to
Hash 98,750 shares of common stock. Such shares are "restricted securities"
within the meaning of Rule 144 under the Securities Act of 1933 and are subject
to recovery by the Company for no consideration upon the death of Hash or upon
his breach of the Noncompetition Agreement. The number of shares subject to
recovery in either of such circumstances declines in a straight line from 98,750
to zero over the 15-year term of the Noncompetition Agreement. Should a
sufficient number of shares no longer be available for recovery at the time of
Hash's death or breach of the Noncompetition Agreement, the Company is entitled
to recover an amount in cash equal to the product of $9 and the number of shares
subject to recovery.
Hash is the former president of WSMP, is a former owner of HERTH
Management, Inc., and remains a major owner of WSMP common stock. Upon Hash's
decision to retire from the active operation of restaurants, WSMP pursued the
opportunity to acquire these restaurants. Management feels that the price and
terms negotiated to have been an arm's-length transaction, and represents as
favorable terms as the Company could have obtained from an unaffiliated third
party.
Messrs. Howard, Connor and Hash (until March 1, 1997), own interests in an
aggregate of 19 of the Company's franchised restaurants. Royalty fees,
accounting fees, and advertising fees to the Company from these restaurants
aggregated $923,000 during fiscal 1997. No receivables from any of these
restaurants were written off during the last fiscal year.
The Company from time to time may enter into restaurant joint ventures, or
sales or leases of vacant restaurant properties, with entities which may include
Messrs. Connor, Richardson, Templeton or Howard upon such terms and conditions
as the Company finds acceptable, and upon terms as fair and equitable as could
be obtained with an unaffiliated third party. Except as otherwise stated
herein, no transactions of this nature were entered into during fiscal l997.
All material transactions with affiliated parties of the Company are first
reviewed by the Sensitive Transactions Committee of the Board, which is made up
of three outside directors. Upon recommendation of this Committee, such
transactions are then presented to the Board, where they must be approved by a
majority of the independent directors. Also, the Company periodically obtains
bids, quotations or appraisals from unaffiliated third parties to ensure that
the products and services received from affiliates are on terms at least as fair
and equitable to the Company as could have been obtained from unaffiliated third
parties.
APPROVAL OF THE WSMP, INC.
1997 INCENTIVE STOCK OPTION PLAN (PROXY ITEM NO. 2)
The Board of Directors on May 15, 1997, adopted the WSMP, Inc. 1997
Incentive Stock Option Plan (the "Plan"), subject to shareholder approval. The
purposes of the Plan are to promote the interests of the Company and its
shareholders by providing a method by which key employees of the Company and its
subsidiaries may be encouraged to invest in the Company's common stock on
reasonable terms by means of stock options and thereby increase their
proprietary interest in the Company's business, to encourage those employees to
remain in the employ of the Company and to increase their personal interests in
its continued success and progress.
The purpose of the Plan will be carried out through the granting of
incentive stock option ("incentive options') and nonqualified stock options
("non-qualified options"), which are referred to herein collectively as
"Options".
Principal Features of the Plan.
- -------------------------------
The Plan is applicable to not more than 500,000 shares of the Company's par
value common stock which are either authorized but unissued or are shares held
in the Company's treasury. The Company has reserved sufficient authorized
shares to meet the exercise of options granted under the Plan.
The Plan is administered by the Executive Compensation Committee of the
Board of Directors (the "Committee"), whose members are ineligible to receive
grants under the Plan. The Committee determines the individuals to receive
options; and the nature of each option as an incentive or nonqualified option;
the times when options shall be granted; the number of shares subject to each
option; and the option period (provided that no stock option may be exercisable
more than ten years after its grant). The Committee also interprets the Plan,
prescribes, amends and rescinds rules and regulations relating to the Plan, and
makes all other determinations necessary or advisable for administration of the
Plan.
The Plan restricts the option price to the fair market value per share of
the shares on the date the option is granted. As of record date, the fair
market value per share of the Company's common stock as determined by the
closing price on the NASDAQ system was $10. The purchase price of each share on
the exercise of any option under the Plan shall be paid in full in cash at the
time, or at the discretion of the Committee may be paid by surrender of other
shares of stock of the Company having a fair market value equal to the purchase
price of the option being exercised.
Options granted under the Plan, subject to provisions relating to death or
termination, are exercisable immediately, or in installments as the Committee
may determine over a period not to exceed 10 years. If so designated when
granted, certain options become immediately exercisable upon certain events of
merger, consolidation, or sale of stock or assets, of the Company.
Under the Plan, options are exercisable during the lifetime of the grantee
only while he is in the employ of the Company or any subsidiary, or within 3
months after termination if termination was not for cause or was voluntary with
the consent of the Company. Also the Company may prescribe longer time periods
and additional requirements with respect to the exercise of options, and may
terminate options which have been issued but not become exercisable, if the
Committee determines that any optionee is not performing his or her duties for
the Company satisfactorily.
The Plan terminates by its own provisions on May 15, 2007. Options
granted under the plan which are outstanding at the time of termination shall
remain in effect until the options have been exercised or shall have expired
according to the terms of the Plan.
The Company may impose such restrictions on any shares purchased under the
plan as it may deem advisable, and may cause a restrictive legend to be placed
on any certificate issued pursuant to the exercise of an option in such form as
may be prescribed from time to time by applicable laws and regulations or as may
be advised by counsel. A Registration Statement with respect to such shares is
intended to be filed with the Securities and Exchange Commission.
Eligibility.
- ------------
The Plan provides that options may be granted to key employees of the
Company or its subsidiaries. The Company estimates that approximately 75
persons are eligible to receive options granted under the Plan. The Committee
shall determine who are "key" employees, from among a group which may include
officers, executives, supervisory personnel, and store managers, among others.
Since the Committee has not given consideration to the grant of any options
under the Plan, it is not possible to state at this time the names of the
employees who may be granted options or the number of shares which may be made
subject to such grants.
Options granted under the Plan are not transferrable except at death. The
Plan may be abandoned or terminated at any time by the Board of Directors,
except with respect to any options then outstanding.
Taxation.
- ---------
NONQUALIFIED OPTIONS. A grantee recognizes no taxable income upon the
grant of a nonqualified option. Generally, upon the exercise of such an option
the grantee will recognize ordinary income in an amount equal to the excess of
the fair market value of the option shares on the date of exercise over the
exercise price. Shares acquired upon the exercise of a nonqualified option have
a basis equal to their fair market value on the date of exercise. Gain or loss
recognized on a disposition of the option shares is recognized as ordinary
income to the optionee.
The Company is generally allowed an income tax deduction for amounts
taxable to a grantee as ordinary income. However, a deduction may be disallowed
with respect to certain payments that are made to officers, shareholders and
highly compensated individuals as a result of a change of control of the
Company.
INCENTIVE OPTIONS. An optionee recognizes no taxable income upon the grant
of an incentive option. Further, there will be no taxable income recognized by
the grantee at the time of exercise provided the grantee has been in the employ
of the Company at all times during the period beginning on the date of grant and
ending on a date three months prior to the date of exercise. However, an amount
equal to the excess of the fair market value of the option shares at the
exercise date over the exercise price is treated as an item of tax preference
for purposes of the alternative minimum tax. Shares acquires upon the exercise
of an incentive option will have a basis equal to the exercise price of the
stock option. Gain recognized upon a disposition of the option shares in an
amount equal to the fair market value of the shares at the exercise date over
the exercise price generally will be taxed as ordinary income.
The Company receives no tax deduction on the exercise of an incentive
option.
The affirmative vote of the holders of at least a majority of all of the
outstanding shares of common stock entitled to vote thereon is required for
approval of the Plan. The Board of Directors recommends that the shareholders
vote FOR the proposal. Proxies, unless indicated to the contrary, will be voted
FOR the proposal.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The firm of Deloitte & Touche LLP has served as independent auditors for
the Company since 1982.
A representative of Deloitte & Touche LLP will attend the annual meeting to
respond to appropriate questions raised by shareholders.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
meeting. If matters other than the foregoing should arise at the meeting, it
is intended that the shares represented by proxies will be voted in accordance
with the judgment of the persons named in the proxy.
1998 SHAREHOLDER PROPOSALS
The Company welcomes comments or suggestions from its shareholders,
including any recommendations shareholders may have as to future directors of
the Company. In the event that a shareholder desires to have a proposal
formally considered at the 1998 Annual Shareholders' Meeting, and included in
the Proxy Statement for that meeting, the proposal must be received in writing
by the Company on or before February 20, 1998.
GENERAL
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, proxies may be solicited by directors, officers and
employees of the Company in person or by telephone (acting without extra
compensation). The Company's regularly retained investor relations firm,
Corporate Communications, Inc., may also be called upon to solicit proxies by
telephone and mail. Brokers, dealers, banks, nominees, fiduciaries and other
custodians will be requested to forward solicitation materials to the beneficial
owners of the Common Stock held of record by such persons and will be reimbursed
for reasonable out-of-pocket expenses incurred by them in so doing.
The Annual Report to Shareholders for the year ending February 28, 1997,
which includes financial statements, has been mailed with this Proxy Statement
and does not form a part of the material for the solicitation of proxies. If,
upon receipt of your proxy material, you have not received the Annual Report,
please write or call the Company's Vice President of Finance, (704) 459-7626,
and a copy will be forwarded to you.
Please complete, sign, and date the enclosed proxy card, which is revocable
as described herein, and mail it promptly in the enclosed postage-paid envelope.
By Order of the Board of Directors,
RICHARD F. HOWARD
Secretary
WSMP, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - June 26, 1997
THIS PROXY IS SOLICITED ON BEHALF OF WSMP INC.'S BOARD OF DIRECTORS
The undersigned hereby appoints James C. Richardson, Jr., Richard F. Howard and
Matthew V. Hollifield, and each of them proxies for the undersigned, with full
power of substitution, to vote all shares of WSMP, Inc. in Hickory, North
Carolina, on Thursday, June 26, 1997, at 10:00 a.m., or at any adjournment
thereof, upon the matters set forth below and described in the accompanying
Proxy Statement and upon such other business as may properly come before the
meeting or any adjournment thereof.
PLEASE MARK THIS PROXY AS INDICATED BELOW TO VOTE ON ANY ITEM. IF YOU WISH TO
VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS, PLEASE SIGN THE
REVERSE SIDE; NO BOXES NEEDED TO BE CHECKED.
1. ELECTION OF DIRECTORS (Item No. 1)
- ----- VOTE FOR three nominees
(Clark, McDonald, Lanier)
to terms of 3 years, as set forth in this Proxy Statement
- ----- VOTE FOR ALL EXCEPT
- ----------------------------
- ----------------------------
- ----- VOTE WITHHELD from all nominees
To vote for all directors, mark the VOTE FOR box in Item 1. To withhold voting
for all nominees, mark the VOTE WITHHELD box. To withhold voting for a
particular nominee, mark the VOTE FOR ALL EXCEPT box and enter name(s) of the
exception(s) in the space provided; your shares will be voted for the remaining
nominees.
(Continued on Other Side)
2. APPROVAL OF WSMP, INC. 1997 INCENTIVE STOCK PLAN (Item No. 2)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
WHERE NO VOTING INSTRUCTIONS ARE GIVEN, THE SHARES REPRESENTED BY THIS PROXY
WILL BE VOTED FOR ITEM NO. 1 and Item No. 2.
Receipt is hereby acknowledged of the WSMP, Inc., Notice of Meeting and Proxy
Statement.
Dated: , 1997
---------------------
---------------------
---------------------
(Signature of Shareholder(s)
Important: Please sign exactly as your name or names appear on this Proxy.
Where shares are held jointly, both holders should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title as such. If the holder is a corporation, execute in full corporate name
by authorized officer.
PLEASE SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
