<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>
United Foods, 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
UNITED FOODS, INC.
TEN PICTSWEET DRIVE
BELLS, TENNESSEE 38006-0119
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 15, 1997
To the Stockholders of
UNITED FOODS, INC.
Notice is hereby given that the annual meeting of the stockholders (the
"Annual Meeting") of UNITED FOODS, INC., a Delaware corporation (the "Company")
will be held in the Corporate Conference Room of United Foods, Inc., Ten
Pictsweet Drive, Bells, Tennessee, on September 15, 1997, at 9:00 A.M., Central
Daylight Saving Time, for the following purposes:
1. To elect one Class A director and two Class B directors to serve for
terms of three years each and until the election and qualification of their
successors;
2. To consider and approve the Company's Incentive Compensation Plan
for the Chairman of the Board of Directors (the "1997 Incentive Plan");
3. To consider and approve the appointment of BDO Seidman, LLP as
independent public accountants for the Company; and
4. To transact such other business as may properly come before the
meeting or at any adjournments thereof, although management is not at present
aware of any other business to be considered.
The stock transfer book will not be closed, but the Company's board of
directors (the "Board of Directors") has fixed August 11, 1997 as the record
date (the "Record Date") for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting. Accordingly, only stockholders of
record at the close of business on such date will be entitled to vote at the
Annual Meeting or any adjournments thereof.
RETURN OF PROXIES
It is important that the accompanying proxy be returned promptly in
order to assure a quorum at the Annual Meeting. Stockholders are urged to date,
execute and return the proxy in the envelope enclosed with it, which requires no
postage if mailed in the United States.
UNITED FOODS, INC.
/s/ Daniel B. Tankersley
By: Daniel B. Tankersley
Dated: August 18, 1997 Secretary
<PAGE> 3
UNITED FOODS, INC.
TEN PICTSWEET DRIVE
BELLS, TENNESSEE 38006-0119
PROXY STATEMENT
SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors for use
at the Annual Meeting to be held on September 15, 1997. This Proxy Statement and
the Company's Annual Report to Stockholders will first be sent or given on or
about August 18, 1997 to all stockholders of record on August 11, 1997. The cost
of soliciting the proxies will be borne by the Company, including reimbursement
of banks, brokerage firms, custodians, nominees and fiduciaries for reasonable
expenses incurred by them in sending proxy material to the beneficial owners of
stock. Proxies may be solicited personally, by mail, by telephone, by facsimile
or by telegraph by officers, directors or other employees of the Company,
without remuneration other than their regular compensation. Proxies may also be
solicited by regular employees of the Company at nominal cost. Any stockholder
giving a proxy has the power to revoke it at any time prior to its exercise
either by notifying the Company in writing that a proxy previously granted to
its management is revoked, or by giving a written proxy regarding the matters
discussed herein, appropriately signed and dated, to any other person.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the election inspectors appointed for the meeting and will
determine whether or not a quorum is present. The election inspectors will treat
abstentions as shares that are present and entitled to vote for purposes of
determining the presence of a quorum but as unvoted for purposes of determining
the approval of any matter submitted to the stockholders for a vote. An
abstention will have the effect of a vote against the matter submitted for
stockholder approval. If a broker indicates that it does not have discretionary
authority to vote certain shares, those shares will not be considered as present
and entitled to vote with respect to that matter and will have no impact on the
outcome of the vote. The election of directors, approval of the 1997 Incentive
Plan and approval of outside accountants are matters on which a broker has the
discretion to vote if instructions are not received from the client at least 10
days prior to the Annual Meeting.
The Company has outstanding an aggregate of 6,809,929 shares of stock,
all common stock, par value $1.00 per share (the "Common Stock" or the
"Shares"), of which 2,616,075 shares are Class A shares (the "Class A Common
Stock") and 4,193,854 shares are Class B shares (the "Class B Common Stock"). A
majority of the shares of Common Stock entitled to vote, present in person or
represented by proxy, shall constitute a quorum for the transaction of any
business. The Class A Common Stock and the Class B Common Stock will vote
separately on Proposal 1, which is the election of directors. The Class A Common
Stock will elect one director and each share will be entitled to one vote for
one nominee. The Class B Common Stock will elect two directors and each share
will be entitled to one vote for each of two nominees. Directors shall be
elected by a plurality of the outstanding shares of the respective class present
in person or represented by proxy at the meeting. With respect to Proposal 2,
which is to approve the 1997 Incentive Plan, and with respect to Proposal 3,
which is to approve the appointment of the independent public accountants, the
Class A Common Stock and the Class B Common Stock will vote as a single class,
with each share of Class A Common Stock having one-tenth of a vote and each
share of Class B Common Stock having one vote. The approval of the 1997
Incentive Plan and the approval of the appointment of the independent public
accountants each shall be approved by an affirmative vote of the majority of the
votes of the outstanding shares of Common Stock present in person or represented
by proxy at the meeting. With respect to Proposal 4, which is the transaction of
such other business as may properly come before the meeting, the Class A Common
Stock and the Class B Common Stock will vote as a single class, unless the
Company's certificate of incorporation or the General Corporation Law of
Delaware expressly requires voting as separate classes. When voting as a single
class, each share of Class A Common Stock will have one-tenth of a vote and each
share of Class B Common Stock will have one vote. When voting as separate
classes, each share of Class A Common Stock and each share of Class B Common
Stock will have one vote. Management is not aware, at present, of any other
business to be considered at the Annual Meeting to be held on September 15,
1997. Any proxy granting authority to the holder thereof to vote upon matters
under Proposal 4 shall be effective with respect to all such
1
<PAGE> 4
matters, whether the voting on any such matter is as a single class or as
separate classes. Only stockholders of record August 11, 1997, shall be entitled
to vote at the Annual Meeting on September 15, 1997, or an adjournment or
adjournments thereof.
SECURITY OWNERSHIP
PRINCIPAL STOCKHOLDERS
The following table sets forth as of August 10, 1997 the number of
shares of Common Stock which are, to the best of management's belief, controlled
or beneficially owned, directly or indirectly, by the holders of five percent or
more of the voting stock of the Company.
<TABLE>
<CAPTION>
Beneficial Stock Ownership
---------------------------------------------------------------------------
- ------------------------------------- Class A Percent Class B Percent
Owner's Name and Address Common Stock(1) of Class(2) Common Stock of Class(3)
- ------------------------------------- --------------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
W. Donald Dresser(4)................. 213,130 7.5% 7,309 *
206 Normandy Place
Jackson, Tennessee 38305
B. M. Ennis(4)....................... 200,400 7.1% 300 *
85 Pine Tree Drive
Jackson, Tennessee 38301
Tankersley Group(5).................. 3,265,591 59.6% 2,866,198 68.3%
Ten Pictsweet Drive
Bells, Tennessee 38006
Julia T. Wells(4).................... 337,770 12.9% -- --
100 Henderson Avenue
Bells, Tennessee 38006
</TABLE>
MANAGEMENT
The following table sets forth as of August 10, 1997 the number of
shares of Common Stock which are, to the best of management's belief, controlled
or beneficially owned, directly or indirectly, by each of the present directors
and nominees and by all directors and executive officers of the Company, as a
group.
<TABLE>
<CAPTION>
Beneficial Stock Ownership
-----------------------------------------------------------------------------
Class A Percent of Class B Percent
Name of Director or Nominee Common Stock(1) Class(2)(3) Common Stock of Class(3)
- --------------------------------- --------------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Darla T. Darnall................. 440,871 14.4% 440,871 10.5%
B. M. Ennis(4)................... 200,400 7.1% 300 *
Dr. Joseph A. Geary.............. 750 * -- --
Carl W. Gruenewald II(4)......... 105,884 3.9% -- --
Kelle T. Northern................ 440,871 14.4% 440,871 10.5%
Daniel B. Tankersley(5).......... 3,265,591 59.6% 2,866,198 68.3%
James I. Tankersley(5)........... 3,265,591 59.6% 2,866,198 68.3%
Julia T. Wells(4)................ 337,770 12.9% -- --
John S. Wilder................... 1,000 * 1,000 *
All directors and executive
officers of the Company as a
group (12 persons)(4)............ 4,280,225 69.5% 2,879,307 68.7%
</TABLE>
- ------------
2
<PAGE> 5
(1) The following table shows shares of Class A Common Stock, included in
the number of shares beneficially owned, which may be acquired upon the
conversion of Class B Common Stock.
<TABLE>
<CAPTION>
Number of Number of
Name Shares Name Shares
- ------------------------------------ --------- ---------------------------------- ---------
<S> <C> <C> <C>
Darla T. Darnall.................... 440,871 Kelle T. Northern................. 440,871
W. Donald Dresser................... 7,309 Daniel B. Tankersley.............. 312,783
B. M. Ennis......................... 300 James I. Tankersley............... 2,553,415
All directors and executive
officers of the Company as a
group (12 persons)................ 2,879,307
</TABLE>
(2) Total shares of Class A Common Stock used to calculate percent of class
includes shares of Class A Common Stock underlying incentive stock
options and the shares of Class A Common Stock which may be acquired by
the beneficial owner upon the conversion of Class B Common Stock. See
Notes (1) and (4).
(3) * indicates less than one percent of class.
(4) The following table shows shares of Class A Common Stock, included in
the number of shares beneficially owned, which may be purchased upon
exercise of a stock option within 60 days of the Record Date. However,
each of these directors and officers has agreed to not exercise the
options through the option expiration date in December 1997.
<TABLE>
<CAPTION>
Number of Number of
Name of Option Holder Shares Name of Option Holder Shares
------------------------------------ --------- --------------------------------- ---------
<S> <C> <C> <C>
W. Donald Dresser................... 200,000 Carl W. Gruenewald II............ 105,884
B. M. Ennis......................... 200,000 Julia T. Wells................... 10,000
All directors and executive
officers of the Company as a
group (12 persons).................. 665,884
</TABLE>
(5) The following table sets forth information with respect to
shares of Common Stock beneficially owned by Darla T. Darnall, Kelle T.
Northern, Daniel B. Tankersley, Edna W. Tankersley, James I. Tankersley
and James W. Tankersley (the "Tankersley Group"):
<TABLE>
<CAPTION>
Class A Percent of Class B Percent
Name Common Stock(2) Class(2)(4) Common Stock of Class(4)
----------------------------------- --------------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Darla T. Darnall................... 440,871 14.4% 440,871 10.5%
Kelle T. Northern.................. 440,871 14.4% 440,871 10.5%
Daniel B. Tankersley............... 712,176 24.3% 312,783 7.5%
Edna W. Tankersley................. 9,474 * 9,474 *
James I. Tankersley................ 1,221,328 31.8% 1,221,328 29.1%
James W. Tankersley................ 440,871 14.4% 440,871 10.5%
</TABLE>
James I. Tankersley has no power to vote or dispose of and disclaims
beneficial ownership of the 9,474 shares of Class B Common Stock owned
by his spouse, Edna W. Tankersley. Each of such persons may be reached
at Ten Pictsweet Drive, Bells, Tennessee 38006.
3
<PAGE> 6
PROPOSAL 1
ELECTION OF DIRECTORS
Three directors, comprising one third of the entire membership of the
Board of Directors, are to be elected at the Annual Meeting. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for the
nominees shown below to hold office until their respective terms expire and
until their successors are duly elected and qualified. Although it is not
contemplated that any nominee will decline or be unable to serve as a director,
in either event the proxies will be voted by the proxy holders for such other
person as may be designated by present management.
The names of the nominees and of the directors not standing for
election and certain information about each of them are set forth below.
NOMINEES FOR ELECTION AS DIRECTOR FOR TERMS EXPIRING IN 2000
JOHN S. WILDER(2)(3) (AGE 76), CLASS A DIRECTOR
Speaker of the Senate and Lieutenant Governor of the State of Tennessee
since 1970 and has served continuously in the Tennessee State Legislature since
1968, having served two year terms in 1959 and 1966. Governor Wilder is an
attorney with John S. Wilder and Associates, an Association of Attorneys, in
Somerville, Tennessee and is also Chairman of the Board of Cumberland Bancorp,
Inc., a director of Cumberland Bank of Carthage, Tennessee, Chairman of the
Board of First Federal Bankshares, Inc., a director of First Federal Bank, FSB
of Collierville, Tennessee and a director of the Bank of Green Hills of
Nashville, Tennessee. He is a director and Vice-President of the Longtown Supply
Company, Inc. of Longtown, Tennessee, a farming, cotton-ginning and merchandise
business, a partner in Longtown Farms, a partnership engaged in the business of
farming and a director of Health Management, Inc., a pathological waste disposal
company. He has been a director of the Company since 1979.
DARLA T. DARNALL(4) (AGE 34), CLASS B DIRECTOR
Marketing Analyst for the Company's Pictsweet Frozen Foods Division
from 1985 to 1990. Mrs. Darnall has been associated with the Company since 1981
and has been a director of the Company since 1990.
KELLE T. NORTHERN(4) (AGE 30), CLASS B DIRECTOR
Manager - Human Resources for the Company's Pictsweet Frozen Foods
Division from 1990 to 1996. Mrs. Northern has been associated with the Company
since 1982 and has been a director of the Company since 1991.
DIRECTORS WHOSE TERMS EXPIRE IN 1999
DANIEL B. TANKERSLEY(1) (AGE 50), CLASS A DIRECTOR
Vice Chairman of the Board since 1992 and Secretary of the Company
since 1978. Mr. Tankersley was Executive Vice President and General Counsel of
the Company from 1989 to 1992 and Vice President of the Company from 1979 to
1989. He has been associated with the Company since 1973 and has been a director
of the Company since 1979.
CARL W. GRUENEWALD II (AGE 64), CLASS B DIRECTOR
Senior Vice President-Finance of the Company since 1982 and Treasurer
of the Company since 1977. Mr. Gruenewald has been associated with the Company
since 1966 and has been a director of the Company since 1981.
4
<PAGE> 7
JULIA T. WELLS(1) (AGE 58), CLASS B DIRECTOR
Director of Marketing Services for the Company's Pictsweet Frozen Foods
Division since 1986. Mrs. Wells has been associated with the Company since 1964
and has been a director of the Company since 1990.
DIRECTORS WHOSE TERMS EXPIRE IN 1998
DR. JOSEPH A. GEARY(2)(3) (AGE 44), CLASS A DIRECTOR
Minister, St. Paul Methodist Church, Memphis, Tennessee since 1996. He
has been a director of the Company since 1991.
B. M. ENNIS (AGE 59), CLASS B DIRECTOR
President of the Company since 1989. Mr. Ennis has been associated with
the Company since 1968 and has been a director of the Company since 1978.
JAMES I. TANKERSLEY (1)(4) (AGE 55), CLASS B DIRECTOR
Chairman of the Board of the Company since 1986. Mr. Tankersley has
been the Chief Executive Officer of the Company since 1983 and served as
President of the Company from 1977 to 1989. He has been associated with the
Company since 1964 and has been a director of the Company since 1972.
COMMITTEES
The Company does not have a Nominating Committee, but the Board of
Directors has appointed a standing Audit Committee, Compensation Committee,
Executive Committee and Strategic Planning Committee.
The members of the Audit Committee are John S. Wilder (Chairman) and
Dr. Joseph A. Geary, neither of whom is an employee of the Company. The
Committee recommends to the Board of Directors the firm to be employed as
independent public accountants. The Committee periodically reviews with
management the Company's accounting policies, internal control systems and
public disclosure system. The Committee also consults with the Company's
independent public accountants regarding the plan of audit, the adequacy of
internal controls and the audit report.
The members of the Compensation Committee are John S. Wilder (Chairman)
and Dr. Joseph A. Geary, neither of whom is an employee of the Company. The
Committee has the responsibility to review and recommend to the Board of
Directors for approval the annual salary, bonus, stock options and other
benefits of the five most highly compensated senior executives of the Company
and to review generally the executive compensation programs and policies of the
Company.
The members of the Executive Committee are James I. Tankersley
(Chairman), Daniel B. Tankersley and Julia T. Wells. The Committee acts for the
Board of Directors, within certain limits, when necessary, in managing the
business and affairs of the Company.
The members of the Strategic Planning Committee are James I. Tankersley
(Chairman), Darla T. Darnall and Kelle T. Northern. The Committee examines broad
trends in the food industry and the economy with a view to determine the
validity of the Company's basic corporate objectives.
5
<PAGE> 8
MEETING ATTENDANCE
The Board of Directors met five times, the Executive Committee met 10
times, the Audit Committee met four times, the Compensation Committee met three
times and the Strategic Planning Committee met once during the last fiscal year.
Each director attended all applicable board or committee meetings.
- ------------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
(4) Member of the Strategic Planning Committee.
EXECUTIVE OFFICERS
The names and positions of all the executive officers of the Company
are listed below along with their business experience during the past five
years. Officers are appointed annually by the Board of Directors at the meeting
of directors immediately following the Annual Meeting. There are no arrangements
or understandings between any officer and any other person pursuant to which the
officer was appointed.
<TABLE>
<CAPTION>
NAME, AGE AND POSITION BUSINESS EXPERIENCE DURING PAST FIVE YEARS
- --------------------------------------- ----------------------------------------------------------------------
<S> <C>
James I. Tankersley, 55................ Chairman of the Board since 1986; Chief Executive Officer since 1983;
Chairman of the Board and Chief President from 1977 to 1989; joined the Company in 1964.
Executive Officer
Daniel B. Tankersley, 50............... Vice Chairman since 1992 and Secretary since 1978; Executive Vice
Vice Chairman and Secretary President and General Counsel from 1989 to 1992; Vice President from
1979 to 1989; joined the Company in 1973.
B. M. Ennis, 59........................ President since 1989; Vice Chairman from 1989 to 1990; Senior Vice
President President from 1982 to 1989; joined the Company in 1968.
Carl W. Gruenewald II, 64.............. Senior Vice President and Chief Financial Officer since 1982 and
Senior Vice President, Chief Treasurer since 1977; joined the Company in 1966.
Financial Officer and Treasurer
W. Donald Dresser, 49.................. Executive Vice President and Director of Development since 1989.
Executive Vice President and Vice President-Business Development and General Counsel from
Director of Development and joining the Company in 1985 to 1989.
Assistant Secretary
Mason A. Leonard, 52................... Division President since 1989; Vice President from 1985 to 1989;
Division President Pictsweet joined the Company in 1982.
Frozen Foods
John D. Haltom, 49..................... Division President since 1990; Director-Inventory, Purchasing and
Division President Pictsweet Distribution for the Pictsweet Frozen Foods Division from 1979 to
Mushroom Farms 1990; joined the Company in 1974.
</TABLE>
6
<PAGE> 9
FAMILY RELATIONSHIPS
James I. Tankersley, Daniel B. Tankersley and Julia T. Wells are
brothers and sister. Darla T. Darnall and Kelle T. Northern are the daughters of
James I. Tankersley. These are the only family relationships between any
director or executive officer and any other director or executive officer of the
Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1991 the Company guaranteed a $225,000 bank loan to the Senior Vice
President - Finance of the Company. The purpose of this guarantee was to allow
him to refinance a loan he had with another bank and to meet certain family
financial obligations which he felt obliged to assume. On July 12, 1991 the
Board of Directors determined that the loan guarantee was reasonably expected to
benefit the Company and authorized the guarantee. The largest amount outstanding
of such indebtedness during the year ended February 28, 1997 was $71,387 and the
amount outstanding on July 7, 1997 was $21,690.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of the reports furnished to the Company or
written representations from the Company's directors and executive officers, the
Company believes that none of its directors, officers, or ten percent
shareholders failed to file on a timely basis reports required by Section 16 (a)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") during
the most recent fiscal year, with the exception of Dr. Joseph A. Geary who
failed to file timely one Form 4 reflecting a single securities transaction.
7
<PAGE> 10
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth the total annual compensation paid or
accrued by the Company during the three fiscal years ended February 28, 1997 for
the account of each of the Chief Executive Officer and four most highly
compensated executive officers of the Company whose total cash compensation
exceeded $100,000:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)
---------------------------------------- ---- -------- -------- ---------------
<S> <C> <C> <C> <C>
James I. Tankersley .................... 1997 $750,000 $ 51,417 $220,299
Chairman & CEO .................... 1996 750,000 21,015 234,062
1995 724,817 103,596 339,351
Daniel B. Tankersley ................... 1997 500,000 33,873 161,010
Vice Chairman & Secretary ......... 1996 500,000 13,843 169,843
1995 490,073 68,934 239,265
B. M. Ennis ............................ 1997 250,000 16,080 290,709
President ......................... 1996 250,000 6,604 95,057
1995 245,337 31,649 114,806
Carl W. Gruenewald II .................. 1997 235,000 15,177 199,821
Senior VP, CFO & Treasurer ........ 1996 235,000 6,218 98,571
1995 230,337 29,803 118,193
W. Donald Dresser ...................... 1997 235,000 14,957 275,502
Executive VP & Director of ........ 1996 235,000 6,150 80,919
Development & Assistant ........... 1995 230,337 29,261 98,647
Secretary
</TABLE>
------------
(1) Represents:
<TABLE>
<CAPTION>
UNFUNDED GROUP LIFE
COMMITTEE RETIREMENT INSURANCE
NAME AND PRINCIPAL POSITION YEAR BOARD FEES FEES PLANS PREMIUMS
- -------------------------------------------------- ---- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
James I. Tankersley............................... 1997 $52,000 $30,000 $118,150 $20,149
Chairman & CEO 1996 52,000 30,000 133,627 18,435
1995 50,750 30,000 241,496 17,105
Daniel B. Tankersley.............................. 1997 52,000 30,000 71,931 7,079
Vice Chairman and Secretary 1996 52,000 30,000 81,917 5,926
1995 50,750 30,000 152,918 5,597
B. M. Ennis....................................... 1997 52,000 -- 221,499 17,210
President 1996 52,000 -- 27,381 15,676
1995 50,750 -- 49,874 14,182
Carl W. Gruenewald II............................. 1997 52,000 -- 127,127 20,694
Senior VP, CFO & Treasurer 1996 52,000 -- 26,215 20,356
1995 50,750 -- 47,659 19,784
W. Donald Dresser................................. 1997 -- 52,000 217,549 5,953
Executive VP & Director of 1996 20,500 31,500 23,296 5,623
Development & Assistant Secretary 1995 50,750 -- 42,600 5,297
</TABLE>
8
<PAGE> 11
OPTIONS/SAR GRANTS
The Company did not grant stock options or stock appreciation rights
("SARs") to any of the officers named in the Summary Compensation Table during
the last fiscal year. The following table sets forth the options and/or SARs
exercised during the last fiscal year by each named executive officer, the
aggregate number of options held by each named executive officer, and the value
unexercised in-the-money options at fiscal year end:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs at
at FY-End(#) at FY-End($)
Shares Acquired Value Exercisable/ Exercisable/
Name and Principal Position on Exercise(#) Realized($) Unexercisable(1) Unexercisable
- ------------------------------------- --------------- ----------- ---------------- ---------------
<S> <C> <C> <C> <C>
James I. Tankersley.................. -0- -0- -0-/-0- -0-/-0-
Chairman & CEO
Daniel B. Tankersley................. -0- -0- -0-/-0- -0-/-0-
Vice Chairman & Secretary
B. M. Ennis.......................... -0- -0- 200,000/-0- 125,000/-0-
President
Carl W. Gruenewald II................ -0- -0- 105,884/-0- 66,178/-0-
Senior VP, CFO & Treasurer
W. Donald Dresser.................... -0- -0- 200,000/-0- 125,000/-0-
Executive VP & Director of
Development & Assistant
Secretary
</TABLE>
- ------------
(1) In February 1997, the Company adopted a non-contributory, unqualified
supplemental retirement plan for management employees. The Board of
Directors specified that each management employee currently holding the
Company's stock options be offered the alternative of receiving
deferred compensation under the plan in an amount equal to $1.00 for
each unexercised stock option currently held by such employee. Any
employee electing to participate in such plan was required to agree not
to exercise the related options through the option expiration date in
December 1997. As of February 28, 1997, each of the above named
officers had elected to participate in such plan and, accordingly, had
agreed not to exercise their respective stock options.
COMPENSATION OF DIRECTORS
All directors of the Company receive an annual fee of $45,000 for
service on the Board of Directors and $1,750 for each meeting of the Board of
Directors attended (not including telephone meetings). Each member of the
Executive Committee receives an annual fee of $30,000 for service on the
committee. In addition, any director subject to self-employment tax is
reimbursed for one-half of the self-employment taxes payable with respect to
director or committee fees, plus an amount equal to the additional taxes
resulting from such reimbursement. Dr. Geary, a non-employee director, received
additional compensation in the form of personal travel expense reimbursement
during the fiscal year ended February 28, 1997. Mrs. Darnall and Mrs. Northern,
non-employee directors, received additional compensation in the form of personal
travel expense reimbursement and use of a Company car, but in no case did the
value of such compensation exceed $15,000.
9
<PAGE> 12
COMPENSATION REPORT FROM THE COMPENSATION COMMITTEE
The Compensation Committee is composed of two directors, John S.
Wilder, Chairman and Dr. Joseph A. Geary, neither of whom is a former or current
officer or employee of the Company. The Compensation Committee has the
responsibility to review and recommend to the Board of Directors the annual
salary, bonus, stock options and other benefits offered to the five most highly
compensated executive officers of the Company and to review generally the
executive compensation programs and policies of the Company. During the fiscal
year ended February 28, 1997 the Board of Directors acted with respect to
compensation decisions for executive officers only in accordance with the
recommendations of the Compensation Committee.
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Compensation Committee has adopted a statement of compensation
policies and procedures applicable to executive officers of the Company. The
primary objectives of the Compensation Committee's policies are as follows:
- to attract, retain, and reward management personnel who are key to the
success of the Company by providing a compensation program that is
competitive with or superior to compensation provided to similarly
situated executive officers of companies of comparable size and/or in
comparable lines of business;
- to reward personal contributions in the areas of leadership, strategic
planning and development, management development, and industry
involvement that, in the judgment of the Compensation Committee,
significantly and positively affect the success of the Company;
- to ensure that compensation levels are properly aligned with the
Company's performance and corporate culture by providing appropriate
incentives for executive officers to achieve corporate and personal
goals; and
- to align long-term interests of the Company's executive officers with
policies which will ensure the long-term financial health of the
Company.
The Compensation Committee determined that it would focus on three
primary components of the executive compensation program, each of which would be
structured, to the extent appropriate, to reflect corporate and individual
performance: base salary compensation, annual incentive compensation and
long-term incentive compensation. In determining executive compensation
packages, the Compensation Committee determined that it would consider and such
other information as it, in its subjective judgment, deemed relevant or
appropriate.
REVIEW OF COMPENSATION POLICIES AND RECOMMENDATIONS
The Compensation Committee identified a group of 16 food products
companies to use for purposes of compensation comparisons and reviewed the
compensation policies and programs described in recent proxy statements of these
companies. These 16 companies comprise the "peer companies" for which the five
year comparison of stock performance with the Company is provided in the
performance graph on page 13 of this Proxy Statement. The Compensation Committee
then reviewed the recommendations of senior management in light of the
comparative data for other food products companies and other factors related to
its subjective view of the senior executive officers' performance in light of
the Company's performance. Senior management recommended no changes to
compensation levels for senior executives other than recommending that holders
of stock options, including senior executive officers, be offered the
alternative of receiving $1.00 in deferred compensation for each unexercised
option held if he or she agreed not to exercise the related option through the
option expiration date in December 1997. In the course of its review and its
deliberations to reach its compensation recommendations, the Compensation
Committee took into account a number of factors, including the following:
- the unique, complex nature of the Company's highly competitive
business, which competes with divisions of significantly larger
companies with greater resources than the Company;
10
<PAGE> 13
- the long-term business strategy of the Company to focus on improving
its competitive position by building long-term balance sheet strength
which in the short term may adversely affect short-term operating
results;
- the lack of any directly comparable public companies;
- the compensation information reviewed by the Compensation Committee for
other food products companies;
- the need for total cash compensation offered by the Company to be
greater than the median range of its competitors in order to attract
and keep highly qualified senior management in a circumstance in which,
among other things, the Company is located in a rural area and has an
equity security that is closely held and thinly traded at market prices
and trends that have not historically reflected the potential benefits
of the long-term business strategy of the Company;
- the fact that the incentive portion of cash compensation is based in
part on net profits, return on average assets and return on equity;
- the benefits available to senior executives, including the deferred
compensation plan, retirement benefits and life insurance coverage; and
- the policies included in the Company's revised Policy Manual which
restrict certain benefits available to the senior executive officers.
In light of these factors and other considerations, including those set
forth below, which factors it applied in its subjective judgment, the
Compensation Committee made the following recommendations to the Board with
respect to the compensation of senior executive officers.
BASE SALARY
Primarily due to the long-term business strategy of the Company which
has adversely affected short-term operating results and the relative illiquidity
of the trading market for the Common Stock, the Compensation Committee has
determined that the principal portion of management's compensation should be in
the form of salary. The Compensation Committee believes that its goal of
attracting and retaining the best management available to operate the type of
business in which the Company is engaged, in its rural location, requires a
large element of stability in its compensation policies, with total compensation
weighted towards base salary. However, in light of factors such as operating
results for fiscal 1996 and comparable compensation arrangements, which factors
were applied subjectively by the Compensation Committee, it was determined that
no increases in base salary for senior executives should be made for fiscal
1997.
INCENTIVE COMPENSATION
The Company's Incentive Compensation Plan, which covers senior
executive officers, uses net income, return on average assets and return on
equity (as calculated in accordance with this plan) to determine the amount of
bonus payable to each executive officer. The formula also takes into account
each executive officer's position and his or her relative impact on financial
performance. The resulting bonus award may also be adjusted downward in the
event of poor performance on the part of the executive. The Compensation
Committee believes that the broad measures of the Company's performance
incorporated into the Incentive Compensation Plan provide an appropriate
incentive to achieve the Company's long-term goals. Accordingly, the
Compensation Committee determined that no amendment to the Incentive
Compensation Plan was necessary or appropriate.
INCENTIVE STOCK OPTIONS
The Company's Incentive Stock Option Plan provides for the grant of
stock options to key employees of the Company. To date, the award of options has
been limited to 200,000 shares for any individual. The award of options
11
<PAGE> 14
under the plan is normally made when an employee has become established in a key
management position. The Company adopted this plan to provide additional
incentive to achieve the long-term goals of the Company which should over time
be reflected in a rising market for the Common Stock. There are 21 employees of
the Company who have options currently outstanding under the plan and three of
the five named executive officers have been granted options for an aggregate of
505,884 shares. No options were granted to senior executives during fiscal 1997.
The plan provides that an option may not be granted to any person who owns, as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), stock aggregating more than 10% of the combined voting power or value
of all classes of stock of the Company. As a result, no options have been
granted to James I. Tankersley or Daniel B. Tankersley.
In February 1997, each management employee holding the Company's stock
options was offered the alternative of receiving deferred compensation under a
non-contributory, unqualified supplemental retirement plan in an amount equal to
$1.00 for each unexercised stock option held by such employee. Any employee
electing to participate in this plan was required to agree not to exercise the
related options through the option expiration date in December 1997. Each of the
three named executive officers holding options elected to participate in the
plan.
COMPENSATION OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER
The same philosophies that underlie the Compensation Committee's
policies with respect to compensation of executive officers in general form the
basis for decisions concerning the compensation of James I. Tankersley, the
Company's Chairman and Chief Executive Officer. In addition, the Compensation
Committee considered the significant equity interest held by Mr. Tankersley, as
well as the nature and degree of efforts required of Mr. Tankersley to maintain
and build customer, supplier and industry relationships. Other factors
considered were Mr. Tankersley's individual performance in light of the
long-term business strategy of the Company and the competitive environment in
fiscal 1997. The Compensation Committee also considered the potential negative
impact on the market value of the Common Stock if, on Mr. Tankersley's death,
his estate was forced for liquidity purposes to sell all or a significant
portion of the Shares held by Mr. Tankersley. As a result of those factors,
which were subjectively applied, the Compensation Committee believed that the
compensation of the Chairman and Chief Executive Officer should be based
primarily on base salary and secondarily through incentive compensation
pursuant to the Incentive Compensation Plan. The Compensation Committee
recommended no increase in base salary for Mr. Tankersley in fiscal 1997.
SECTION 162(m)
Section 162(m) of the Code generally limits federal income tax
deductions for compensation paid after 1993 to the Chief Executive Officer and
the four most highly compensated officers of the Company to $1,000,000 per year,
but provides an exception for performance-based compensation that satisfies
certain conditions. The Compensation Committee has not adopted a definitive
policy regarding Section 162(m). However, in making compensation decisions, the
Compensation Committee considered the net cost of compensation to the Company
and whether it is consistent with other compensation objectives. Although the
Compensation Committee intends to consider the use of performance-based
compensation the committee believes that its primary responsibility is to
provide a compensation program that will attract, retain and reward the
executive talent necessary to maximize returns to stockholders, and that the
loss of a tax deduction may be necessary in some instances to achieve this
purpose.
John S. Wilder, Chairman
Dr. Joseph A. Geary
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
The members of the Compensation Committee during the last fiscal year
were Mr. Wilder (Chairman) and Dr. Geary, neither of whom is a former or current
officer or employee of the Company. There were no interlocks or relationships
requiring disclosure under applicable rules of the Securities and Exchange
Commission (the "Commission").
12
<PAGE> 15
COMMON STOCK PERFORMANCE
As part of the executive compensation information disclosures, the
Commission requires a five-year comparison of stock performance for the Company
with stock performance of appropriate similar companies. The following graph
presents a five year comparison of cumulative total return for the Company, the
Standard & Poors 500 Index and an index of peer companies selected by the
Company (the "Peer Group"). In addition, the graph includes the Standard & Poors
Foods 500 Index which the Company used for comparison purposes in previous
years. The comparison shows the cumulative total return for five years, assuming
reinvestment of dividends, on $100 invested on March 1, 1992 in United Foods,
Inc. Class A Common Stock, United Foods, Inc. Class B Common Stock, the Standard
and Poors 500 Index, the Peer Group and the Standard and Poors Foods 500 Index.
The Peer Group consists of Chiquita Brands International, Dean Foods, Co.,
Flowers Industries, Inc., Hanover Foods Corp., Hudson Foods, Inc., McCormick &
Co., Inc., Michael Foods, Inc., Seneca Foods Corp., Smithfield Foods, Inc., J.
M. Smucker Co., Stokely USA, Inc., Sylvan Inc., Tootsie Roll Industries, Inc.,
Tyson Foods, Inc., Universal Foods Corp., and Wm. Wrigley Jr. Co.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL VALUE AMONG UNITED FOODS,
INC., S&P 500, S&P FOODS 500 AND PEER GROUP
<TABLE>
<CAPTION>
United Foods, Inc. United Foods, Inc.
Class A Class B S&P 500 Peer Group S&P Foods 500
<S> <C> <C> <C> <C> <C>
1992 100 100 100 100 100
1993 100 107 107 107 111
1994 107 104 120 117 98
1995 132 146 129 122 114
1996 121 114 173 134 145
1997 107 107 219 153 182
</TABLE>
The Board of Directors recommends a vote FOR each of the nominees.
13
<PAGE> 16
PROPOSAL 2
APPROVAL OF THE 1997 INCENTIVE PLAN
The 1997 Incentive Plan was adopted by the Compensation Committee and
the Board of Directors on August 12, 1997, subject to shareholder approval.
Shareholder approval of the 1997 Incentive Plan is being sought in order to
qualify compensation receivable under the 1997 Incentive Plan as
performance-based compensation exempt from the $1,000,000 limitation under
Section 162(m) of the Code on the deductibility of compensation payable to the
chief executive officer and the four most highly compensated officers. In order
for remuneration paid to top executives to qualify as performance-based
compensation under Section 162(m), it must be payable to the executive solely on
account of the attainment of one or more objective performance goals, but only
if, among other things, (i) these goals are established by the Compensation
Committee, which must be composed of a minimum of two independent directors;
(ii) the material terms of the 1997 Incentive Plan are disclosed to stockholders
and approved by a majority of those voting before the payment of such
remuneration; and (iii) before the payment of any such remuneration, the
Compensation Committee certifies that the performance goals were, in fact,
satisfied. The material terms of the 1997 Incentive Plan that must be approved
by stockholders include the employees eligible to participate in the 1997
Incentive Plan, the performance criterion used to determine the amount of any
award thereunder and the maximum amount payable to any participant in the 1997
Incentive Plan.
SUMMARY OF THE 1997 PROGRAM
Purpose. The purpose of the 1997 Incentive Plan is to provide an annual
performance incentive based on objective criteria to James I. Tankersley, to
establish economic rewards for performance levels which the Compensation
Committee believes will provide financial results which are in the best
interests of the Company and its stockholders and to qualify incentive
compensation as performance-based compensation under Section 162(m) of the Code.
Eligible Employees. James I. Tankersley, the Company's Chairman of the
Board of Directors and Chief Executive Officer (the "Participant"), is the only
eligible employee under the 1997 Incentive Plan.
Performance Criterion. The performance criterion under the 1997
Incentive Plan is earnings before interest, income taxes, depreciation and
amortization ("EBITDA"). EBITDA is defined by the 1997 Incentive Plan as, for
any Plan Year (as defined therein), the sum of (i) pre-income tax operating
income (ii) depreciation and (iii) amortization of intangibles all as reported
in the Company's audited operating statement for such Plan Year or as recorded
in accounts used to prepare such operating statement.
Performance Goals. For the Plan Year ending February 28, 1998 in which
EBITDA exceeds $6,666,667, a grant of incentive compensation shall be made to
Participant as follows:
1. $200,000, plus
2. 5% of such year's EBITDA in excess of $6,666,667 and up
through $10,000,000, plus
3. 7.5% of such year's EBITDA in excess of $10,000,000.
For any Plan Year beginning with the Plan Year ending February 28, 1999
in which EBITDA exceeds $10,000,000, a grant of incentive compensation shall be
made to Participant as follows:
1. $300,000, plus
2. 5% of such year's EBITDA in excess of $10,000,000 and up
through $15,000,000, plus
3. 7.5% of such year's EBITDA in excess of $15,000,000.
14
<PAGE> 17
If EBITDA does not exceed $6,666,667 for the Plan Year ending February 28, 1998
or $10,000,000 for any subsequent Plan Year, the Participant shall receive no
grant of incentive compensation with respect to such Plan Year under the 1997
Incentive Plan.
Maximum Amount Payable. With respect to the Plan Year beginning
February 28, 1997, the maximum payment to the Participant for any performance
measurement period shall not exceed the sum of $200,000, plus 5% of such year's
EBITDA in excess of $6,666,667 and up through $10,000,000, plus 7.5% of such
year's EBITDA in excess of $10,000,000. With respect to any subsequent Plan
Year, the maximum payment to the Participant for any performance measurement
period shall not exceed the sum of $300,000, plus 5% of such year's EBITDA in
excess of $10,000,000 and up through $15,000,000, plus 7.5% of such year's
EBITDA in excess of $15,000,000. There is no prescribed maximum dollar amount
payable under the 1997 Incentive Plan.
1997 Incentive Benefit Plan. The following table shows certain amounts
which could be payable under the 1997 Incentive Plan to the Participant with
respect to the Plan Year ending February 28, 1997, assuming the Company attains
or exceeds the performance criterion established by the terms of the plan:
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
$6,666,667 $10,000,000 $12,500,000 $15,000,000
Participant EBITDA EBITDA EBITDA EBITDA
- --------------------------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
James I. Tankersley $200,000 $366,667 $554,167 $741,667
</TABLE>
Other Features of the 1997 Incentive Plan. The Participant shall
participate in the plan during any Plan Year in which the Participant has been
employed by the Company for a full Plan Year or has terminated employment during
such Plan Year due to disability or death or without cause on or after the
attainment of age 65. If the Participant has terminated employment during the
Plan Year, incentive compensation shall be paid in the same proportion that the
number of days Participant participated in the plan bears to the number of days
in the Plan Year. The 1997 Incentive Plan may be terminated by the Compensation
Committee, acting pursuant to delegated authority from the Board of Directors,
at any time, if in its sole judgment, such termination would be in the best
interests of the Company.
CONCLUSION AND RECOMMENDATION
The Board of Directors believes it is in the best interests of the
Company and its stockholders to adopt the 1997 Incentive Plan to help retain and
incentivize the Participant and to further the identity of the Participant's
interests with those of the Company's stockholders generally and to qualify
incentive compensation under the 1997 Incentive Plan as performance-based
compensation under Section 162(m) of the Code.
The Board of Directors recommends a vote FOR approval of the 1997
Incentive Plan.
PROPOSAL 3
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has recommended the
appointment of BDO Seidman, LLP as the independent public accountants to audit
the financial statements of the Company, for the year ending February 28, 1998.
This recommendation has been approved by the Board of Directors and is being
presented for approval or rejection by our stockholders. A majority vote is
required for approval. A member of that firm will have the opportunity to make a
statement that the Annual Meeting and will be available to respond to any
appropriate question.
The Board of Directors recommends a vote FOR approval of the
appointment of BDO Seidman, LLP as the independent accountants.
15
<PAGE> 18
OTHER INFORMATION
No business other than that set forth in the attached Notice of Annual
Meeting is expected to come before the meeting, but should other matters
requiring a vote of the stockholders arise, including a question of adjourning
the meeting, the persons named in the accompanying proxy will vote thereon
according to their best judgment in the interest of the Company. In the event
that any of the above-named nominees for the office of director shall withdraw
or otherwise become unavailable for reasons not presently known, the persons
named as proxies will vote for other persons in their place in the best interest
of the Company.
STOCKHOLDERS' PROPOSALS
The last day for receipt of resolutions for inclusion in the Company's
proxy material for the 1998 Annual Meeting is April 21, 1998.
ADJOURNMENT OF MEETING
It is intended that the proxies will be voted in favor of adjourning
the meeting from time to time in the event that a quorum is not present at the
scheduled meeting date, until such time as a quorum is present, and if present
or desirable, to recess. A majority constitutes a quorum.
FORM 10-K
Excerpts from the Company's 1997 annual report on Form 10-K, as filed
with the Commission, are included as a part of the Annual Report to
Stockholders. A complete copy of the Annual Report on Form 10-K, including
exhibits and schedules, or additional copies of the annual report will be
forwarded to stockholders without charge, upon written request addressed to
United Foods, Inc., Attention: Secretary, Ten Pictsweet Drive, Bells, Tennessee
38006-0119.
RETURN OF PROXIES
It is important that the proxies be returned promptly so as to assure a
quorum in order that the business meeting may be conducted and accomplished.
Stockholders who do not expect to attend are urged to execute and return their
proxy in the enclosed Business Reply Envelope, which requires no postage if
mailed in the United States.
August 18, 1997 Daniel B. Tankersley
Secretary
16
<PAGE> 19
Appendix A
UNITED FOODS, INC.
INCENTIVE COMPENSATION PLAN
FOR THE CHAIRMAN OF THE BOARD OF DIRECTORS
ARTICLE I
PURPOSE
The purpose of this Incentive Compensation Plan (hereinafter referred
to as the "Plan") is to provide an annual performance incentive based on
objective criteria to James I. Tankersley, the Chairman of the Board and Chief
Executive Officer of Employer. It is intended that the Plan establish economic
rewards for performance levels which the Compensation Committee of the Board of
Directors of Employer believe will provide financial results which are in the
best interests of the Company and its stockholders. The implementation of this
Plan is subject to it being approved by the requisite vote of the stockholders
of Employer.
ARTICLE II
DEFINITIONS
For the purposes of this plan, the following words and phrases shall
have the meanings indicated, unless the context clearly indicates otherwise:
2.1 Board. "Board" means the Board of Directors of Employer.
2.2 EBITDA. "EBITDA" (Earnings Before Interest, Income Taxes, Depreciation
and Amortization) means, for any Plan Year, the sum of (i) pre-income tax
operating income; (ii) depreciation; and (iii) amortization of intangibles all
as reported in the Company's audited operating statement for such Plan Year or
as recorded in accounts used to prepare such operating statement.
2.3 Employer. "Employer" means United Foods, Inc., and/or any successor or
successors to the businesses thereof.
2.4 Employment. "Employment" means the period of time that the Participant
is on the Employer's payroll.
2.5 Incentive Compensation. "Incentive Compensation" means the amount of
compensation directed to be paid hereunder.
2.6 Participant. "Participant" means James I. Tankersley.
2.7 Period of Service. "Period of Service" means Employment for a full Plan
Year.
2.8 Plan Year. "Plan Year" means, for the initial year, the 8 consecutive
month period beginning July 1, 1997 and ending on February 28, 1998 and, for
years thereafter, means the 12
<PAGE> 20
consecutive month period beginning in the first day of March of each year and
ending on the last day of February of the succeeding year.
ARTICLE III
PARTICIPATION
3.1 Eligibility. Eligibility to participate in the Plan shall be limited to
the Participant.
3.2 Participation. The Participant shall participate in the Plan during any
Plan Year in which he (i) completes a Period of Service or (ii) has terminated
Employment during such Plan Year due to disability or death or without cause on
or after the attainment of age 65. If the Participant has terminated Employment
during the Plan Year, the grant of Incentive Compensation provided for in
Section 4.1 or Section 4.2 below shall be in the same proportion that the number
of days the Participant participated in the Plan prior to termination of
employment bears to the number of days in the Plan Year.
ARTICLE IV
GRANT OF INCENTIVE COMPENSATION
4.1 Grant of Incentive Compensation for Initial Plan Year. For the Plan
Year ending February 28, 1998, the Company shall, after the close of the Plan
Year and prior to May 1 next following, determine the EBITDA for the initial
Plan Year. If EBITDA for the initial Plan Year exceeds $6,666,667 a grant of
Incentive Compensation shall be made to the Participant. The amount of such
grant shall be computed as follows:
1. $200,000, plus
2. 5% of such year's EBITDA in excess of $6,666,667 and up through
$10,000,000, plus
3. 7.5% of such year's EBITDA in excess of $10,000,000.
If EBITDA does not exceed $6,667,667 for the initial Plan Year, the Participant
shall receive no grant of Incentive Compensation.
4.2 Grant of Incentive Compensation For Succeeding Years. Beginning with
the Plan Year ending February 28, 1999, the Company shall annually, after the
close of the Plan Year and prior to May 1 next following, determine the EBITDA
for the immediately preceding Plan Year. For any Plan Year in which EBITDA
exceeds $10,000,000 a grant of Incentive Compensation shall be made to the
Participant. The amount of such grant shall be computed as follows:
1. $300,000, plus
2. 5% of such year's EBITDA in excess of $10,000,000 and up through
$15,000,000, plus
<PAGE> 21
3. 7.5% of such year's EBITDA in excess of $15,000,000.
If EBITDA does not exceed $10,000,000 for the Plan Year, the Participant shall
receive no grant of Incentive Compensation.
4.3 Certification by Compensation Committee. Prior to any payment of
remuneration hereunder, the Compensation Committee of the Board, based upon
information provided to it by management of Employer and Employer's independent
accountants, shall certify that the performance goals set forth in paragraphs
4.1 and 4.2 above have been met.
4.4 Form of Payment of Incentive Compensation. The grant of Incentive
Compensation shall be paid in cash on or before May 1 next following the close
of the Plan Year.
4.5 Withholding; Payroll Taxes. The Employer shall withhold from payments
made hereunder any taxes required to be withheld from the Participant's wages or
fees by the federal government or any state or local government.
ARTICLE V
TERMINATION OF PLAN
5.1 Employer's Right to Terminate Future Grants of Incentive Compensation.
The Compensation Committee, acting through its delegation of authority from the
Board, may at any time terminate the Plan, if in its sole judgment, such
termination would be in the best interest of Employer.
ARTICLE VI
MISCELLANEOUS
6.1 Non-assignability. Neither the Participant nor any other person shall
have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage,
or otherwise encumber, transfer, hypothecate, or convey in advance of actual
receipt the amounts, if any, payable hereunder, or any part thereof, which are,
and all rights to which are, expressly declared to be unassignable and
nontransferable. No part of the amounts payable shall, prior to actual payment,
be subject to seizure or sequestration for the payment of any debts, judgments,
alimony, or separate maintenance owed by the Participant or any other person,
nor be transferable by operation of law in the event of the Participant's or any
other person's bankruptcy or insolvency.
6.2 Not a Contract of Employment. The terms and conditions of this Plan
shall not be deemed to constitute a contract of employment between the Employer
and the Participant, and the Participant (or his Beneficiary) shall have not
rights against the Employer except as may otherwise be specifically provided
herein. Moreover, nothing in this Plan shall be deemed to give the Participant
the right to be retained in the service of the Employer or to interfere with the
right of the Employer to discipline or discharge the Participant at any time.
<PAGE> 22
6.3 Protective Provisions. By participating, under the terms of this Plan,
the Participant thereby agrees to cooperate with the Employer by furnishing any
and all information requested by the Employer in order to facilitate the payment
of benefits hereunder, and to take such other action as may be reasonably
requested by the Employer.
6.4 Terms. Whenever any words are used herein in the masculine, they shall
be construed as though they were used in the feminine in all cases where they
would so apply; and wherever any words are used herein in the singular or in the
plural, they shall be construed as though they were used in the plural or the
singular, as the case may be, in all cases where they would so apply.
6.5 Captions. The captions of the articles, sections and paragraphs of this
Plan are for convenience only and shall not control or affect the meaning or
construction of any of its provisions.
6.6 Governing Law. The provisions of this Plan shall be construed and
interpreted according to the laws of the State of Tennessee.
6.7 Validity. In case any provision of this Plan shall be held illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as if such
illegal and invalid provision had never been inserted herein.
6.8 Notice. Any notice or filing required or permitted to be given under
the Plan shall be sufficient if in writing and hand delivered, or sent by
registered or certified mail to the President of the Employer, or the Employer's
Statutory Agent. Such notice shall be deemed given as of the date of delivery
or, if delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.
6.9 Successors. The provisions of this Plan shall bind and inure to the
benefit of the Employer and its successors and assigns. The term successors as
used herein shall include any corporate or other business entity which shall,
whether by merger, consolidation, purchase or otherwise acquire all or
substantially all of the business and assets of the Employer and successors of
any such corporation or other business entity.
<PAGE> 23
IN WITNESS WHEREOF, and subject to the approval of the Plan by the
stockholders of the undersigned corporation, such corporation has caused this
instrument to be executed by its duly authorized officers as of the 12th day of
August, 1997.
UNITED FOODS, INC.
By: /s/ B. M. Ennis
----------------------------------
B. M. Ennis, President
Attest: /s/ Daniel B. Tankersley
-------------------------------
Daniel B. Tankersley, Secretary
<PAGE> 24
Appendix B
PROXY UNITED FOODS, INC.
TEN PICTSWEET DRIVE
BELLS, TENNESSEE 38006-0119
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints James I. Tankersley and B.M. Ennis, or
either of them, as Proxies, each with full power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all the
shares of Class A and Class B Common Stock of United Foods, Inc., held of record
by the undersigned on August 11, 1997, at the annual meeting of stockholders to
be held September 15, 1997, or any adjournments thereof.
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below (except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
Nominee for election by holders of Class A Common Stock: John S. Wilder
Nominees for election by holders of Class B Common Stock: Darla T.
Darnall and Kelle T. Northern
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME IN SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
2. PROPOSAL TO APPROVE THE APPOINTMENT OF BDO SEIDMAN, LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS OF THE COMPANY:
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
3. PROPOSAL TO APPROVE THE INCENTIVE COMPENSATION PLAN FOR THE CHAIRMAN OF THE
BOARD OF DIRECTORS:
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
(Continued and to be signed on the other side)
(Continued from other side)
4. AUTHORIZATION FOR PROXIES TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING:
<TABLE>
<S> <C>
[ ] GRANT AUTHORITY [ ] WITHHOLD AUTHORITY
</TABLE>
- ------------------------------ COMA ------------------------------ COMB
SHARES OF THE COMPANY'S CLASS A COMMON STOCK ARE DESIGNATED ABOVE AS "COMA"
AND SHARES OF THE COMPANY'S CLASS B COMMON STOCK ARE DESIGNATED ABOVE AS "COMB".
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted "FOR" Proposals 1, 2 and 3 and to "GRANT AUTHORITY" for Proposal 4.
Dated , 1997
--------------------
--------------------------------
Signature
--------------------------------
Signature if held jointly
(PLEASE SIGN EXACTLY AS NAME
APPEARS BELOW. WHEN SHARES ARE
HELD BY JOINT TENANTS, BOTH
SHOULD SIGN. WHEN SIGNING AS
ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE
AS SUCH. IF A CORPORATION,
PLEASE SIGN IN FULL CORPORATE
NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED
PERSON.)
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
