PIEMONTE FOODS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To: Shareholders of Piemonte Foods, Inc.
The Annual Meeting of Shareholders of Piemonte Foods, Inc. (the
"Company") will be held at 8:30 a. m. on Wednesday, October 29, 1997, at The
Commerce Club, One Insignia Financial Plaza, Greenville, South Carolina for the
following purposes:
1. To elect two (2) Class One Directors to a term of three (3)
years. The Board intends that the following persons be nominated
to office for a period of three (3) years: T. Patrick Costello,
Richard J. Stoner.
2. To ratify the appointment of Ernst and Young LLP as the Company's
independent auditors for the fiscal year ending 1998.
3. To consider and transact such other business as may properly come
before the meeting or any adjournment thereof.
The Company's Board of Directors has fixed the close of business on
September 15, 1997 as the record date for the determination of Shareholders
entitled to notice of and to vote at this meeting. Shareholders who do not
expect to attend this meeting are requested to sign, date, and return the
accompanying proxy in the enclosed envelope. Shareholders are encouraged to vote
on all matters to be considered at the meeting. Prompt return of the proxy is
important regardless of the number of shares it represents. This proxy is
solicited on behalf of the Board of Directors of the Company.
David B. Ward, Secretary.
Greenville, South Carolina
September 10, 1997
Important: You are cordially invited to attend the meeting, but whether or not
you plan to attend, PLEASE VOTE, DATE, SIGN, AND MAIL the enclosed Proxy
promptly. If you attend the meeting, you may either vote by your proxy, or
withdraw your proxy and vote in person.
The 1997 Annual Report is furnished herewith.
<PAGE>
PIEMONTE FOODS, INC.
400 AUGUSTA STREET
POST OFFICE BOX 9239
GREENVILLE, SOUTH CAROLINA 29604-9239
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 29, 1997
On behalf of the Board of Directors of Piemonte Foods, Inc., (the
"Company") a proxy is solicited from you to be used at the Company's Annual
Meeting of Shareholders scheduled at 8:30 a.m. on Wednesday, October 29, 1997,
at The Commerce Club, One Insignia Financial Plaza, Greenville, South Carolina
and at all adjournments thereof.
The approximate date on which this Proxy Statement and the accompanying
proxy card are first being sent or given to Shareholders is September 29, 1997.
The Company will bear all costs of the solicitation of proxies, and in
the event sufficient proxies are not received before the meeting, further
solicitation may be made in person or by mail, telephone, telegraph or other
media. The Company regularly engages the services of Robert A. Lentz and
Associates, Inc. to assist in its Shareholder relations and as a part of such
services may assist in the distribution and collection of proxies for no
additional remuneration except reimbursement of out-of-pocket expenses.
VOTING SECURITIES. As of September 15 1997, the record date fixed for
the determination of Shareholders entitled to notice of and to vote at the
meeting or any adjournment thereof, there were outstanding 1,550,428 shares of
Common Stock, which is the only outstanding class of capital stock of the
Company. Each such share is entitled to one (1) vote on all matters properly
coming before the meeting.
VOTING BY PROXY. In voting by proxy with regard to the election of
directors, stockholders may vote in favor of all nominees, withhold their votes
as to all nominees or withhold their votes as to specific nominees. Stockholders
should specify their choices in the accompanying proxy card. All properly
executed proxy cards delivered by stockholders to the Company and not revoked
will be voted at the Annual Meeting in accordance with the directions given. If
no specific instructions are given with regard to the matters to be voted upon,
the shares represented by a signed proxy card will be voted "FOR" the election
of director(s) and to ratify the appointment of Ernst & Young as independent
auditors. If any other matters properly come before the Annual Meeting, the
persons named as proxies will vote upon such matters according to their
judgment.
QUORUM AND VOTE REQUIRED. The presence, in person or by proxy, of a
majority of the outstanding shares of Common Stock of the Company is necessary
to constitute a quorum at the Annual Meeting. The vote of a majority of a quorum
present is required with respect to each item submitted (unless cumulative
voting with respect to the election of directors is required).
CUMULATIVE VOTING. If either (i) notice in writing is given by any
Shareholder to the President or other office of the Company not less than
forty-eight (48) hours before the time affixed for the holding of the Annual
Meeting that such Shareholder desires that the voting with respect to the
election of directors shall be cumulative, and if an announcement of the giving
of such notice is made upon the convening of the Annual Meeting by the Chairman
or Secretary of, by, or on behalf of the Shareholder giving such notice or (ii)
a Shareholder announces his intention at the Annual Meeting before the voting
for directors commences to vote his shares cumulatively, then each shareholder
shall have the right to cumulate such voting power as he possesses at such
election. Under cumulative voting, a Shareholder may cast for any one (1)
nominee as many votes as shall equal the number of directors to be elected
multiplied by the number of his shares. Such votes may be cast all for one
nominee or distributed among any two or more nominees as the Shareholder may
elect, or in the case of proxies, as the proxy may elect. In the event of
cumulative voting, the proxy holders designated by the Board of Directors will
distribute the votes of shares subject to proxies they hold as to elect the
maximum number of nominees for director on the slate intended to be nominated.
<PAGE>
REVOCABILITY OF PROXY. Any Stockholder delivering a proxy has the power
to revoke it any time before it is voted by giving written notice to the
Secretary of the Company, by a valid proxy bearing a later date delivered to the
Company or by attending the meeting and voting in person.
PRINCIPAL SHAREHOLDERS
To the knowledge of the Company, other than as set forth below, no
person owns of record or beneficially more than five (5%) percent of the Company
outstanding Common Stock. To the knowledge of the Board of Directors, there has
been no change in control of the Company since the beginning of its last fiscal
year. The Company is not aware of any contractual arrangements, including any
pledge of securities of the Company, known to the Company's Board of Directors,
the operation of the terms of which may result in a change of control of the
Company in the future.
As of August 25, 1997, all principal stockholders of the Company who
may be deemed to beneficially own more than five (5%) percent of the Common
Stock of the Company are set forth below:
<TABLE>
<CAPTION>
Percent of Common
Name and Address of Amount and Nature of Beneficial Stock and Common
Beneficial Owner Ownership of Common Stock Stock Equivalents
<S> <C> <C>
Virgil L. Clark 91,947 - includes 34,897 shares owned directly; 6.0%
400 Augusta Street options to purchase 57,050 shares; 19,844 shares
Greenville, S. C. 29605 held by three trusts of which he is trustee.
T. Patrick Costello 157,850 - sole direct owner of 105,000 shares and 10.2%
1945 North 15th Street options to purchase 52,850 shares.
Melrose Park, Illinois 60160
Ronald T. Huth 164,301 - includes 80,976 shares owned directly; options 10.6%
10 Thise Court to purchase 3,000; shares 80,325 shares owned by
Lafayette, Indiana 47903 his spouse (1).
Rosalie A. Huth 161,301 - includes 80,325 shares owned directly and 10.4%
10 Thise Court 80,976 shares owned by her spouse (1)
Lafayette, Indiana 47903
</TABLE>
(1) Mr. And Mrs. Huth disclaim any beneficial ownership in shares held by
their spouse.
SHAREHOLDINGS OF DIRECTORS AND OFFICERS
As of August 25, 1997, all directors, nominees for director and
executive officers of the Company, individually and as a group, who may be
deemed to beneficially own Common Stock of the Company are set forth below:
<TABLE>
<CAPTION>
Shares of Common Stock Options Shares of Common Stock
Name Owned (1) Exercisable Beneficially Owned(2) Percent (3)
- ---- --------- ----------- --------------------- -----------
<S> <C> <C> <C> <C>
Virgil L. Clark 34,897 57,050 91,947 (4) 6.0%
T. Parick Costello 105,000 52,850 157,850 10.2%
Steven R. DeGrave 6,000 - 6,000 0.4%
Ronald T. Huth 80,976 3,000 164,301 (5) 10.6%
Myron Lyskanycz 6,000 - 6,000 0.4%
Earl Ritchie 6,000 - 6,000 0.4%
Richard J. Stoner 6,000 3,000 11,529 (6) 0.8%
David B. Ward 8,623 2,000 10,828 (7) 0.7%
All Directors and Executive 244,873 109,900 443,627 29.4%
Officers as a Group
</TABLE>
<PAGE>
(1) Shares listed in this column include all shares held by the named
individuals and all director nominees and executive officers as a group in
their own names and in street named.
(2) Shares listed in this column include all shares listed in the adjacent
columns plus shares held in trust and shares owned by such person's spouse.
Beneficial ownership of shares held by a spouse is disclaimed.
(3) The percentages represent the total of shares listed in the adjacent column
divided by the issued and outstanding shares of Common Stock as of August
25, 1997 plus, where applicable, all stock options granted to the
individual under the Company's stock option plans currently exercisable.
(4) Mr. Clark has sole voting power and sole investment power with respect to
19,844 shares held by three trusts for which he is trustee.
(5) Includes 80,325 shares held by Mr. Huth's spouse.
(6) Includes 2,529 shares held by Mr. Stoner's spouse.
(7) Mr. Ward is a member of the law firm of Horton, Drawdy, Ward and Johnson,
P. A., which provides legal services to the Company.
PROPOSAL 1
To elect two (2) Class One Directors to a term of three (3) years. The
Board intends that the following persons shall be nominated of office for a
period of three (3) years: T. Patrick Costello, Richard J. Stoner. THE BOARD OF
DIRECTORS RECOMMEND A VOTE FOR NOMINEES.
The Board of Directors of the Company intends that the accompanying
proxy will be voted for two (2) Class One directors listed below to serve a
three-year term. It is not anticipated that the nominees will be unable or
unwilling to serve, but in the event the Class Two directors unexpectedly
become(s) unavailable, the accompanying proxy may be voted for such other person
or persons as may be nominated by the Board of Directors.
Set forth below for each nominee for election as a director and for
each director whose term will continue after the Annual Meeting is a brief
statement including the age, year of first election to the Board, principal
occupation and business experience during the past five (5) years, and certain
other directorships, all as of May 31, 1997, unless otherwise indicated.
<TABLE>
<CAPTION>
Position with Company and/or Director
Name and Address Principal Occupation or Employment Since
<S> <C> <C>
CLASS ONE:
TERM EXPIRING IN 2000
T. Patrick Costello President and COO since 1997;. Executive V.P. 1994
Age 54 and COO since 1996; V. P. Operations since 1995;
President of Origena, Inc., from 1990 to 1993.
Richard J. Stoner Investor 1983
Age - 74 Canton, Ohio
CLASS TWO:
TERM EXPIRING IN 1998
Virgil L. Clark Chairman and CEO since 1997; 1986
Age - 58 President and CEO since 1995;
Vice Chairman & CEO from 1992 to 1994.
<PAGE>
Steven R. DeGrave Vice President, The NutraSweet Company 1997
Age - 46 Division of Monsanto
Myron Lyskanycz Managing Partner, Ogilvy & Mather, Chicago 1996
Age - 39
CLASS THREE:
TERM EXPIRING 1999
Ronald T. Huth Senior Partner R. T. Huth & Co., Lafayette, IN., CPA; 1984
Age - 64 Non-Executive Chairman of the Board of
Piemonte Foods, Inc. from 1993 - 1997.
Earl Ritchie Vice President/Operations, Park Foods since 1994 1996
Age - 60 President - The Paxall Group, Inc. - 1992
</TABLE>
To the knowledge of the Company, there is no arrangement or
understanding between any director and any other person or persons pursuant to
which he was to be selected as a director of the Company. To the knowledge of
the Company, there is no family relationship between any of the directors and
executive officers.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The business and affairs of the Company are under the general
management of its Board of Directors as provided by the laws of the State of
South Carolina and the Bylaws of the Company.
The Board of Directors has three (3) standing committees as follows:
EXECUTIVE COMMITTEE. The Executive Committee has the full authority of
the Board in the management of the business and affairs of the Company between
Board meetings. The Executive Committee also serves as the nominating committee
for the Board. Any person recommended by a Shareholder to serve on the Board
will be considered as a potential nominee. Members of the Executive Committee
during the fiscal year ended May 31, 1997 were Messrs. Clark and Huth.. The
Committee met two (2) times during the year. For fiscal 1998 the committee
members are Messrs. Clark, Lyskanycz and Ritchie.
FINANCE AND AUDIT COMMITTEE. The Finance and Audit Committee reviews
the results of the Company's annual audit with its auditors and is responsible
for the scope of the auditors' relationship with the Company as well as
selecting new auditors. Its members for the year ended May 31, 1997, were
Messrs. Costello, Huth, and Lyskanycz and it met one (1) time during the year.
For fiscal 1998 the committee members are Messrs. Costello, Huth and Stoner.
PERSONNEL AND COMPENSATION COMMITTEE. The Personnel and Compensation
Committee annually determines the compensation of the officers and executives of
the Company. Its members for the year ended May 31, 1997, were Messrs. Huth and
Stoner, and it did meet per direction of the full board. For fiscal 1998 the
committee members are Messrs. Degrave, Huth and Stoner.
During the fiscal year 1997, all members of the Board attended at least
seventy-five (75%) percent of the meetings of the Board and of the committees of
the Board on which they serve.
During fiscal year ended May 31, 1997, Directors of the Company were
paid a stipend of Seven Hundred Fifty Dollars ($750) per quarter, and a fee of
One Thousand Dollars ($1,000) per Board meeting, and Seven Hundred Fifty Dollars
($750) per Committee meeting attended, plus their reasonable expenses in
connection with attendance. The Chairman was paid a stipend of Two Thousand Five
($2,500) per quarter, and a fee of One Thousand Dollars ($1,000) per Board
meeting, and Seven Hundred Fifty Dollars ($750) per committee meeting attended,
plus his reasonable expenses in connection with attendance. The Board of
Directors met five (5) times during the year.
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Company's Executive Officer Compensation Program (the "Program")
has been developed over the last several years to reflect the overall
compensation philosophies of the Company. Overall objectives are to motivate
officers to achieve the Company's long and short-term performance goals and to
reward them based in part upon performance of the team and in part upon their
individual contributions to that performance; to motivate the executive officers
to think and act as owners of the Company; to provide levels and forms of
compensation to retain high performing executives; and to reinforce the planning
and budgeting process of the Company for both short and long-term performance.
The Program includes three parts: (1) Base Compensation designed to
reflect the overall level of responsibility, marketplace salary trends and the
performance of the incumbent within the position; (2) Annual Incentive
Compensation, a cash bonus tied to the Company's performance against
predetermined goals; and (3) Long-term Incentive Compensation, based upon grants
of incentive stock options, non-qualified stock options, stock appreciation
rights, restricted stock awards and restricted units, as incorporated in the
1994 Stock Plan.
The Annual Incentive Compensation formula is based in major part on the
Company's financial performance for the year involved. The performance targets
are based on pre-tax earnings and stockholders' return on equity. The targets
are reviewed annually by the Committee and adjusted as necessary to reflect
changes in both market conditions and the Company.
A long-term incentive is also provided to senior managers that links
their interest directly to those of the Company's Shareholders. The 1994 Stock
Plan established various option programs which will reward senior management
participants if the price of the Company's stock increases.
Pursuant to his employment agreement with the Company, Mr. Clark
received base compensation of $185,000 in fiscal year 1997. No Annual Incentive
Compensation was paid to Mr. Clark or other senior managers. There were no
awards under the Long-term Incentive Compensation part of the Plan.
The Committee believes that the incentive programs provided have
contributed and will continue to contribute to the Company's financial
performance. The Committee reviews the compensation of the Company's executive
officers annually and believes that such compensation has been fair to both the
executives and the Company's Shareholders.
The Personnel and Compensation Committee
Ronald T. Huth
Richard Stoner
Common Stock Performance. As part of the executive compensation
information presented in this Proxy Statement, the Securities and Exchange
Commission requires a five-year comparison of stock performance for the Company
with stock performances of a broad equity market index and an index of
appropriate similar companies. The Company has selected as a broad equity market
index comparison the Total Return Index for the NASDAQ Stock Market (US). The
Company has selected as the most appropriate peer group the S&P Food Index which
is an index of companies in the food business.
<PAGE>
REMUNERATION OF OFFICERS
The following table sets forth the cash compensation paid to the
officers of the Company and its subsidiaries whose remuneration for the fiscal
year ended May 31, 1997, was in excess of $100,000, or if less than $100,000, to
certain executive officers of the Company
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
Securities All Other
Underlying Options Compensation
Name and Principal Position Year Salary ($) Bonus($)) (No. Awarded) ($) (2)
--------------------------- ---- ---------- --------- ------------------- -------
<S> <C> <C> <C> <C> <C>
Virgil Clark (1) 1997 185,000 0 35,000 2,273
Chairman/CEO 1996 185,000 0 0 2,722
1995 185,000 0 0 2,505
T. Patrick Costello (1) 1997 148,000 0 35,000 1,465
President/COO 1996 148,000 0 0 2,038
1995 148,000 0 0 2,505
</TABLE>
(1) Mr. Clark has an employment contract through April 22, 1998, renewable for
two-year terms unless otherwise terminated; Mr. Costello has a one year
contract renewable annually unless otherwise terminated. Messrs. Clark and
Costello are entitled to receive base compensation of $185,000 and
$148,000, respectively per year and an annual incentive measured by return
on shareholder equity (ROE).
(2) Includes the Company's matching contribution to the 401(k) Plan. Under this
Plan, full-time employees with at least six months of service may select to
contribute up to ten (10%) percent of annual compensation to the Plan. In
addition, the Company contributes fifty (50%) percent of such employee
contributions up to six (6) percent.
STOCK OPTIONS
Stock options for 70,000 shares were granted to the executive officers
named during the year ending May 31, 1997. Upon review, the Board of Directors
changed the vesting schedule for incentive stock options from annual based
criteria to a three tier schedule determined by Market price. Existing options
granted under the 1994 Stock Option Plan were canceled.
The following table summarizes all option activity by the named executives and
reflect the value of unexercised options held at year-end:
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money Options
Options at Year-end at Year-End(1)
Name Shares Value
Acquired Realized Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Virgil L. Clark 0 $0 22,050 35,000 $0 $0
T. Patrick Costello 0 0 17,850 35,000 0 0
</TABLE>
(1) The "Value of Unexercised in-the-Money Options at Year-End" is equal to the
fair market value of the shares underlying the options at May 31, 1997, the
last trading day of the 1997 fiscal year, less the exercise price, times
the number of options. Exercise prices for options outstanding as of May
31, 1997 range from $1.25 to $8.33. The Market price of Piemonte stock as
of the year-end was $.56 cents.
<PAGE>
PROPOSAL 2
"To ratify the appointment of Ernst and Young LLP as the Company's
independent auditors for the fiscal year ending 1998."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF ERNST AND
YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING 1998.
APPROVAL OF INDEPENDENT AUDITORS
The Board of Directors, at the recommendation of its Finance and Audit
Committee, elected Ernst & Young, Certified Public Accountant, Greenville, South
Carolina, to conduct the annual examination of the financial statements of the
Company and its consolidated subsidiaries for the fiscal year ending May 31,
1997. The selection of this firm for fiscal year ending May 31, 1998 will be
submitted for ratification by the Shareholders at the Annual Meeting. Ernst &
Young has no financial interest, direct or indirect, in the Company or any of
its subsidiaries, and they do not have any connection with the Company or any of
its subsidiaries except in their professional capacity as independent auditors.
As the Company focuses on its future as well as the activities in which
it already is involved, the complexities associated with multi-state and
international operations compelled the Finance and Audit Committee to review the
appropriateness of the size firm that has been engaged and the needs of the
future. Based upon their review of the Company's needs and the subsequent
screening of several audit firms, the Finance and Audit Committee recommended a
change of auditors to Ernst & Young which the Board approved.
The ratification by the Shareholders of the selection of Ernst & Young
as independent auditors is not required by law or by the Bylaws of the Company.
The Board of Directors is, nevertheless, submitting this selection to the
Shareholders to ascertain their views. If this selection is not ratified at the
Annual Meeting, the Board of Directors intends to reconsider its selection of
independent auditors for fiscal year ending May 31, 1998.
The Finance and Audit Committee, which is comprised of Directors who
are not employees of the Company, approves in advance all non-audit services to
be provided by Ernst & Young and believes they have no effect on audit
independence.
STOCKHOLDERS' PROPOSALS FOR THE 1997
ANNUAL MEETING OF SHAREHOLDERS
Stockholders' proposals submitted pursuant to Rule 14a-8 of the
Securities Exchange Act of 1934 intended to be presented at the 1997 Annual
Meeting of Shareholders, tentatively scheduled for October, 1998, must be sent
certified mail, return receipt requested and received at the Company Executive
Offices, Post Office Box 9239, Greenville, South Carolina 29604, addressed to
the attention of the Secretary by May 31, 1998, in order to be included in the
Proxy Statement and form of proxy relating to such meeting.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Directors does not know of any other matters which may
come before the meeting. However, if any other matters do properly come before
the meeting, it is the intention of the persons named as proxies to vote upon
them in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
------------------
ANNUAL REPORT
The Company's Annual Report to Stockholders for the year ended May 31,
1997, accompanies this Proxy Statement and is incorporated by reference herein.
