<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 JULY 11, 1998
----------------------------------------
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 July 11, 1998, at 9:00 A.M., Central
Daylight Savings Time, for the following purposes:
1. To elect one Class A director and three 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 appointment of BDO Seidman, LLP as
independent public accountants of the Company; and
3. 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 May 31, 1998 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 adjournment 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
Daniel B. Tankersley
Dated: June 9, 1998 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 July 11, 1998. This Proxy Statement and the
Company's Annual Report to Stockholders will first be sent or given on or about
June 9, 1998 to all stockholders of record on May 31, 1998. 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 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 2,616,139 shares are Class A shares (the "Class A Common
Stock") and 4,193,790 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 three directors and each share
will be entitled to one vote for each of three 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 appointment of the independent public accountants, the
Class A Common Stock and 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 appointment of the
independent public accountants 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 3, 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 July 11,
1998. Any proxy granting authority to the holder thereof to vote upon matters
under Proposal 3 shall be effective with respect to all such matters, whether
the voting on any such matter is as a single class or as separate classes. Only
stockholders of record May 31, 1998, shall be entitled to vote at the Annual
Meeting on July 11, 1998, or any adjournment or adjournments thereof.
1
<PAGE> 4
SECURITY OWNERSHIP
The following table sets forth as of February 28, 1998 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, by each executive officer of the Company named in the Summary
Compensation Table, all directors and officers of the Company as a group and any
holders of five percent or more of either class of Common Stock:
<TABLE>
<CAPTION>
BENEFICIAL STOCK OWNERSHIP
-----------------------------------------------------------------
PERCENT OF PERCENT OF
NAME OF DIRECTOR OR NOMINEE CLASS A(1) CLASS(2)(3) CLASS B CLASS(3)
- ----------------------------------------------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Darla T. Darnall............................... 440,871 14.4% 440,871 10.5%
W. Donald Dresser.............................. - - - -
B. M. Ennis.................................... 400 * 300 *
Dr. Joseph A. Geary............................ 750 * - -
Carl W. Gruenewald, II......................... - - - -
Thomas A. Hopper, Jr........................... - - - -
Kelle T. Northern.............................. 440,871 14.4% 440,871 10.5%
Daniel B. Tankersley(4)........................ 3,265,591 59.6% 2,866,198 68.3%
James I. Tankersley(4)......................... 3,265,591 59.6% 2,866,198 68.3%
James W. Tankersley............................ 440,871 14.4% 440,871 10.5%
Julia T. Wells................................. 327,770 12.5% - -
John S. Wilder................................. 1,000 * 1,000 *
Tankersley Group(5)............................ 3,265,591 59.6% 2,866,198 68.3%
All Directors and Officers of the Company as a
Group (14 Persons)......................... 3,601,211 65.6% 2,871,998 68.5%
</TABLE>
(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 Daniel B. Tankersley(4)................... 2,866,198
B. M. Ennis........................... 300 James W. Tankersley....................... 440,871
Kelle T. Northern..................... 440,871 All Directors and Officers of the
James I. Tankersley(4)................ 2,866,198 Company as a Group (14 persons)...... 2,871,998
</TABLE>
(2) Total Class A shares used to calculate percent of class includes the
shares of Class A Common Stock which may be acquired by the beneficial
owner upon the conversion of Class B Common Stock. See Note (1).
(3) (*) Indicates less than one percent of class.
(4) Includes shares beneficially owned by other members of the Tankersley
Group.
(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>
PERCENT OF PERCENT OF
NAME CLASS A(1) CLASS(2)(3) CLASS B OF CLASS(3)
- --------------------------------------------- ---------- ---------- --------- -----------
<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. All members of the above group may
be reached at Ten Pictsweet Drive, Bells, Tennessee 38006.
2
<PAGE> 5
PROPOSAL 1
ELECTION OF DIRECTORS
One Class A director and three Class B 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 2001
DR. JOSEPH A. GEARY (2)(3) (AGE 45), CLASS A DIRECTOR
Minister, St. Paul United Methodist Church, Memphis, Tennessee since
1996. He has been a Director of the Company since 1991.
B. M. ENNIS (AGE 60), 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.
DANIEL B. TANKERSLEY (1) (AGE 51), CLASS B 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.
JAMES I. TANKERSLEY (1)(4) (AGE 56), 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.
DIRECTORS WHOSE TERMS EXPIRE 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 Wilder and Johnston, PLC, a law firm 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 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.
3
<PAGE> 6
DARLA T. DARNALL (4) (AGE 35), 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 31), 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
THOMAS A. HOPPER, JR. (2)(3) (AGE 38), CLASS A DIRECTOR
President since 1993 of the Hopper Company, a media and strategic
consulting business. He was a regional director of the Republican National
Committee from 1993 to 1997. He has been a Director of the Company since 1997.
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.
JULIA T. WELLS (1) (AGE 59), 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.
JAMES W. TANKERSLEY (4) (AGE 26), CLASS B DIRECTOR
Purchasing Manager for the Company since 1995 and a Director of the
Company since 1997 and has been associated with the Company since 1987.
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), Dr.
Joseph A. Geary and Thomas A. Hopper, Jr., none 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 systems. 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), Dr. Joseph A. Geary and Thomas A. Hopper, Jr., none 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.
4
<PAGE> 7
The members of the Strategic Planning Committee are James I. Tankersley
(Chairman), Darla T. Darnall, Kelle T. Northern and James W. Tankersley. 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.
MEETING ATTENDANCE
The Board of Directors met six times, the Executive Committee met four
times, the Audit Committee met three 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, 56............... Chairman of the Board since 1986; Chief Executive Officer since 1983.
Chairman of the Board and Chief
Executive Officer
Daniel B. Tankersley, 51.............. Vice Chairman since 1992 and Secretary since 1978.
Vice Chairman and Secretary
B. M. Ennis, 60....................... President since 1989.
President
Carl W. Gruenewald, II, 64............ Senior Vice President and Chief Financial Officer since 1982 and Treasurer
Senior Vice President, Chief since 1977.
Financial Officer and Treasurer
W. Donald Dresser, 50................. Executive Vice President and Director of Development since 1989.
Executive Vice President and
Director of Development and
Assistant Secretary
Mason A. Leonard, 53.................. Division President since 1989.
Division President Pictsweet
Frozen Foods
John D. Haltom, 50.................... Division President since 1990.
Division President Pictsweet
Mushroom Farms
</TABLE>
5
<PAGE> 8
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
and James W. Tankersley is the son 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
There were no reportable transactions or relationships during the last
fiscal year.
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 Exchange Act of 1934, as amended (the "Exchange Act") during the most
recent fiscal year.
6
<PAGE> 9
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 years ended February 28, 1998 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)(2)
- ----------------------------------------------- ---- ---------- ---------- ------------------
<S> <C> <C> <C> <C>
James I. Tankersley............................ 1998 $ 750,000 $ 282,317 $ 335,960
Chairman & CEO 1997 750,000 51,417 220,299
1996 750,000 21,015 234,062
Daniel B. Tankersley........................... 1998 500,000 31,116 179,978
Vice Chairman & Secretary 1997 500,000 33,873 161,010
1996 500,000 13,843 169,843
B. M. Ennis.................................... 1998 250,000 14,847 95,198
President 1997 250,000 16,080 290,709
1996 250,000 6,604 95,057
Carl W. Gruenewald, II......................... 1998 235,000 14,002 96,206
Senior VP, CFO & Treasurer 1997 235,000 15,177 199,821
1996 235,000 6,218 98,571
W. Donald Dresser.............................. 1998 256,600 14,915 54,653
Executive VP & Director of Development & 1997 235,000 14,957 275,502
Assistant Secretary 1996 235,000 6,150 80,919
</TABLE>
- ------------
(1) Represents:
<TABLE>
<CAPTION>
UNFUNDED GROUP LIFE
BOARD COMMITTEE RETIREMENT INSURANCE
NAME AND PRINCIPAL POSITION YEAR FEES FEES PLANS PREMIUMS
- ---------------------------------- ---- --------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
James I. Tankersley............... 1998 $ 52,000 $ 17,500 $ 123,027 $ 23,779
Chairman & CEO 1997 52,000 30,000 118,150 20,149
1996 52,000 30,000 133,627 18,435
Daniel B. Tankersley.............. 1998 52,000 17,500 74,615 8,027
Vice Chairman & Secretary 1997 52,000 30,000 71,931 7,079
1996 52,000 30,000 81,917 5,926
B. M. Ennis....................... 1998 52,000 -- 24,265 18,933
President 1997 52,000 -- 221,499 17,210
1996 52,000 -- 27,381 15,676
Carl W. Gruenewald, II............ 1998 52,000 -- 23,649 20,557
Senior VP, CFO & Treasurer 1997 52,000 -- 127,127 20,694
1996 52,000 -- 26,215 20,356
W. Donald Dresser................. 1998 -- 28,000 18,975 7,678
Executive VP & Director of 1997 -- 52,000 217,549 5,953
Development & Assistant 1996 20,500 31,500 23,296 5,623
Secretary
</TABLE>
- ------------
(2) Includes a non-accountable expense allowance and reimbursement for
related tax effect in the amount of $119,654 and $27,836 for the
Chairman and Vice Chairman, respectively, during fiscal 1998.
7
<PAGE> 10
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.
OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUES
None of the officers named in the Summary Compensation Table exercised
stock options or SARs during the last fiscal year or held unexercised options or
SARs at fiscal year-end.
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). Previously, members of
the Executive Committee received an annual fee of $30,000 for service on the
Committee; however, fees are no longer paid to members of the Executive
Committee. Fees paid to members of the Executive Committee during fiscal 1998
totaled $17,500 per member prior to termination of the fee arrangement. 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.
Mrs. Darnall and Mrs. Northern, non-employee directors, receive additional
compensation in the form of personal travel expense reimbursement and use of a
Company car, but in no case does the value of such compensation exceed $15,000.
8
<PAGE> 11
COMPENSATION REPORT FROM THE COMPENSATION COMMITTEE
The Compensation Committee is composed of three directors, John S.
Wilder, Chairman, Dr. Joseph A. Geary and Thomas A. Hopper, Jr., none 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 senior executive officers of the Company (the
"Named Executives") and to review generally the executive compensation programs
and policies of the Company. During the fiscal year ended February 28, 1998, the
Board of Directors has acted with respect to compensation decisions for
executives 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 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
comparable company data 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 12 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 and strategic goals. Senior management recommended no
changes to compensation levels for senior executives. In the course of its
review and its deliberations to reach its compensation recommendations, the
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;
- 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;
9
<PAGE> 12
- 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 benefits which may be available to senior executives,
including the deferred compensation plan, retirement benefits,
life insurance coverage and expense accounts; 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 executives.
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 Company's 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 1997 and comparable compensation arrangements, which factors
were applied subjectively by the Committee, it was determined that no increases
in base salary for senior executives should be made for fiscal 1998, other than
with respect to one officer in order to offset the loss of certain other
compensation.
ANNUAL INCENTIVE COMPENSATION
Under the Company's current Incentive Compensation Plan (the "New
Plan"), the President reviews the performance of the individual participants in
light of the Company's performance and strategic goals and recommends to the
Chairman the total amount of incentive compensation to be paid for the year and
the allocation of such compensation among the participants in the New Plan. With
respect to Named Executives (other than the Chairman), the Chairman recommends
grants of incentive compensation to the Compensation Committee. The Company's
previous Incentive Compensation Plan (the "Old Plan") used net income, return on
average assets and return on equity (as calculated in accordance with the Old
Plan) to determine the amount of bonus payable to each executive officer. The
formula also incorporated each executive's position and his or her relative
impact on financial performance. The Old Plan was terminated and the New Plan
was adopted by the Compensation Committee during fiscal 1998; however,
consistent with the recommendation of the Chairman, the Committee recommended
that bonuses for fiscal 1998 be determined and paid as though the Old Plan were
still in effect for fiscal 1998 because its termination had not been
communicated to certain of the affected executives during the fiscal year.
LONG-TERM INCENTIVE COMPENSATION
The Company's Incentive Stock Option Plan terminated when all existing
outstanding options expired during December 1997.
10
<PAGE> 13
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 1998. 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 should be based primarily on base salary and
secondarily through incentive compensation pursuant to the Incentive
Compensation Plan for the Chairman of the Board of Directors (the "Chairman's
Plan"). During fiscal 1998, the Compensation Committee approved the Chairman's
Plan, subject to stockholder approval, to provide an annual performance
incentive based on objective criteria, 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 qualify incentive compensation to the Chairman as
performance-based compensation under Section 162(m) of the Internal Revenue Code
of 1986, as amended ("Section 162(m)"). At the Annual Meeting of Stockholders on
September 15, 1997, the Chairman's Plan was approved. The Compensation Committee
also recommended that the Company provide the Chairman with a non-accountable
expense allowance of up to $100,000 and reimbursement for the related tax effect
in view of the Chairman's efforts to create general goodwill for the Company.
After considering all the factors described above, the Compensation Committee
recommended no increase in base salary for Mr. Tankersley in fiscal 1998.
SECTION 162(M)
Section 162(m) 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 million 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 considers the net cost of compensation to the Company and
whether it is consistent with other compensation objectives. Although the
Compensation Committee considers the use of performance-based compensation, the
Compensation 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
Thomas A. Hopper, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
The members of the Compensation Committee during the last fiscal year
were Mr. Wilder (Chairman), Dr. Geary and Thomas A. Hopper, Jr., none 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").
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 and an index of peer
11
<PAGE> 14
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, 1993 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.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD UNITED FOODS, INC. UNITED FOODS, INC.
(FISCAL YEAR COVERED) CLASS A CLASS B S&P 500 PEER GROUP S&P FOODS 500
<S> <C> <C> <C> <C> <C>
1994 107 97 108 109 91
1995 132 137 116 114 106
1996 121 107 157 125 135
1997 107 100 198 143 170
1998 207 193 267 189 227
</TABLE>
12
<PAGE> 15
PROPOSAL 2
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, 1999.
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 at 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 public accountants of the
Company.
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 1999 Annual Meeting is March 12, 1999.
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 1998 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.
June 9, 1998
13
<PAGE> 16
Appendix A
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 May 31, 1998, at the annual meeting of stockholders to be
held on July 11, 1998, 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 Class A Common Stockholders: Dr. Joseph A. Geary
Nominees for election by Class B Common Stockholders: B. M. Ennis, Daniel
B. Tankersley, James I. Tankersley
(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. AUTHORIZATION FOR PROXIES TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING:
<TABLE>
<S> <C>
[ ] GRANT AUTHORITY [ ] WITHHOLD AUTHORITY
</TABLE>
(Continued and to be signed on the other side)
(Continued from other side)
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 and 2 and to "GRANT AUTHORITY" for Proposal 3.
Dated: , 1998
-------------------------
--------------------------------
Signature
--------------------------------
Signature if held jointly
(PLEASE SIGN EXACTLY AS NAME
APPEARS AT LEFT. 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.
