SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14
Northland Cranberries, 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)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
<PAGE>
[NORTHLAND CRANBERRIES, INC. LETTERHEAD]
Dear Fellow Shareholders:
You will notice that the enclosed proxy statement has been written in a
different style from years past. Recently, the Securities and Exchange
Commission put new rules in place which require certain portions of documents to
be written in "plain English." Plain English is designed to make those publicly
filed documents more user friendly and easier to read so that you and I can more
quickly and easily understand important information.
These new SEC rules do not require proxy statements to be written in
plain English. However, we have decided to write ours that way because we feel
that the idea behind plain English is a good one. We want our shareholders to
have access to information about us and our future in a direct and
understandable way. There is no need to sort through complex legal language
which adds little to an understanding of who were are and what we do. For these
reasons, we are also writing our annual report on Form 10-K in the same plain
English style. We feel the more you understand our company, the more you will
want to participate in our exciting future!
Please read the enclosed proxy statement. We welcome your comments on
our efforts.
Sincerely,
John Swendrowski
Chairman of the Board and
Chief Executive Officer
Wisconsin Rapids, Wisconsin
November 25, 1998
<PAGE>
[PRINTER TO INSERT LOGO]
NORTHLAND CRANBERRIES, INC.
800 First Avenue South, P.O. Box 8020
Wisconsin Rapids, Wisconsin 54495-8020
--------------------
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 6, 1999
--------------------
TO OUR SHAREHOLDERS:
We would like to invite you to attend our 1999 annual meeting of
shareholders on Wednesday, January 6, 1999 at 3:00 p.m. at the Northland
Conference Center, located at 2321 West Grand Avenue, Wisconsin Rapids,
Wisconsin. As we describe in the accompanying proxy statement, which we have
written in "plain English" in the hope that you will find it less technical and
more readable than proxy statements from years past, we will be voting on the
election of seven directors and on other business that may properly come before
the annual meeting.
We have enclosed a proxy card and our 1998 annual report along with
this proxy statement. Your vote is important, no matter how many shares you own.
Even if you plan to attend the annual meeting, please complete, date and sign
the proxy card and mail it as soon as you can in the envelope provided. If you
attend the annual meeting, you can revoke your proxy and vote your shares in
person if you would like.
Thank you for your continued support. We look forward to seeing you at
the annual meeting.
NORTHLAND CRANBERRIES, INC.
[PRINTER TO INSERT SIGNATURE]
David J. Lukas
Vice President Administration,
Corporate Counsel and Secretary
Wisconsin Rapids, Wisconsin
November 25, 1998
<PAGE>
FREQUENTLY ASKED QUESTIONS
Q: Why have I received this proxy Q: What constitutes a quorum?
statement?
A "quorum" refers to the number
Our Board of Directors has sent of shares that must be in
you this proxy statement, attendance at a meeting to
starting around November 25, lawfully conduct business. A
1998, to ask for your vote as a majority of the combined votes of
Northland shareholder on certain the Class A shares and Class B
matters to be voted on at the shares entitled to be cast will
upcoming annual shareholders' represent a quorum. As a result,
meeting. shares representing at least
10,507,546 votes must be present
Q: What am I voting on? at the annual meeting to
constitute a quorum.
You will vote on re-electing
seven directors. Our Board of Q: What happens if I sign and return
Directors is not aware of any my proxy card but do not mark my
other matter which will be vote?
presented for your vote at the
annual meeting. John Swendrowski and John
Pazurek, as proxies, will vote
Q: Do I need to attend the annual your shares to elect the nominees
meeting in order to vote? for director.
No. You can vote either in Q: Who will count the votes?
person by ballot at the annual
meeting or by completing and Harris Trust & Savings Bank, our
mailing the enclosed proxy card. transfer agent and registrar,
will count the votes and act as
Q: Who is entitled to vote? inspector of elections.
If you owned shares as of the Q: What percentage of Northland's
close of business on November votes do directors and officers
19, 1998(the Record Date), you own?
are entitled to vote. You will Approximately 15.3% of our vote as
be entitled to one vote per share of the Record Date is owned by
for each share of our Class A directors and officers. See page
Common Stock you owned on the 5 for more details.
Record Date.
Q: Who are the largest shareholders?
Q: How many shares of Northland's
stock are entitled to vote? The State of Wisconsin Investment
Board owned 2,307,600 Class A
As of the Record Date, 19,106,484 shares, or approximately 12.1% of
Class A shares and 636,202 Class our Class A shares and
B shares were entitled to vote at approximately 11.0% of our voting
the annual meeting. Since Class power, as of July 1, 1998.
B shares are entitled to three Gilder, Gagnon, Howe & Co. owned
votes per share, there were 3,230,380 Class A shares, or
21,015,090 votes represented by approximately 16.9% of our Class
shares entitled to vote as of the A shares and 15.4% of our voting
Record Date. All shares vote power, as of November 10, 1998.
together as one group.
2
<PAGE>
ELECTION OF DIRECTORS
Director Nominees
At the annual meeting, you will elect seven directors to hold office
until our next annual meeting and until their successors are elected. John
Swendrowski and John Pazurek, as proxies, intend to vote for the election of all
of the Board's nominees. They will also vote for another person that the Board
may recommend in place of a nominee if that nominee becomes unable to serve as a
director before the annual meeting. All nominees are currently serving as
shareholder-elected Board members.
Under Wisconsin law, shareholders elect directors by a plurality of the
votes cast by shares which are entitled to vote in the election, assuming a
quorum is present. For this purpose, "plurality" means that the nominees
receiving the largest number of votes will be elected as directors. Any shares
which do not vote, whether by abstention, broker non-vote or otherwise, will not
affect the election of directors.
We have set forth below the Board's nominees to serve as our directors
and have also indicated certain important information regarding each nominee.
John Swendrowski
John Swendrowski, 50, originally founded Northland in 1987 and has been
a director since that time. He has served as our Chief Executive Officer since
our inception in 1987.
Leroy J. Miles
Leroy J. Miles, 63, retired as our Corporate Secretary in August 1995
and as Executive Vice President at the end of 1994. Before retiring, Mr. Miles
held such executive positions since May 1987, and has also been one of our
directors since that time.
Robert E. Hawk
As part of our recent divisional restructuring, in August 1998 Robert
E. Hawk, 43, was appointed Group President-Non-Branded Divisions. Before that,
he served as our Executive Vice President since October 1996; Vice President -
Sales, Marketing and Special Projects since January 1993; and Vice President -
Operations since January 1989. Mr. Hawk has been a director of Northland since
1989.
Patrick F. Brennan
Patrick F. Brennan, 67, has been a Northland director since 1989. He
retired as President and Chief Executive Officer of Consolidated Papers, Inc. in
Wisconsin Rapids, Wisconsin as of December 31, 1996, a position he had held
since October 1993. Before that, he served as Consolidated's President and Chief
Operating Officer for five years, Executive Vice President for over one year and
Corporate Vice President for three years. He has served as a director of
Consolidated Papers, Inc. since February 1987. Mr. Brennan is also a director of
Valassis Communications Inc., Livonia, Michigan, a supplier of newspaper
inserts.
3
<PAGE>
Jeffrey J. Jones
Jeffrey J. Jones, 45, is a partner in the law firm of Foley & Lardner
in Milwaukee, Wisconsin. Foley & Lardner has been Northland's general outside
legal counsel, and Mr. Jones has served as one of our directors, since our
formation in 1987.
Pat Richter
Pat Richter, 57, has been a director of Northland since 1997. Mr.
Richter became the Director of Athletics at the University of Wisconsin-Madison
in February 1990. Before that, he served as Vice President-Personnel of Oscar
Mayer Foods Co. since 1988. Mr. Richter is also a director of the Green Bay
Packers, Inc., Anchor Bancorp Wisconsin Inc., Madison, Wisconsin, a financial
institution, and Outlook Group Corp., Neenah, Wisconsin, a printing company.
John C. Seramur
John C. Seramur, 56, has served as Vice Chairman of Associated
Banc-Corp since October 1997. For over 31 years before that, Mr. Seramur served
as President, Chief Executive Officer and Chief Operating Officer of First
Financial Bank and its parent corporation, First Financial Corporation, a thrift
holding company that merged with Associated Banc-Corp in October 1997. Mr.
Seramur is also a director of Associated Banc-Corp and has been a director of
Northland since 1987.
4
<PAGE>
Board Meetings and Committees
The following table lists the Board committees on which our directors
serve, as well as how many times the Board and each committee met in fiscal
1998.
Board Member Board Audit Executive Compensation
J. Swendrowski x* x *
L. Miles x x
R. Hawk x x
P. Brennan x x* x
J. Seramur x x x*
J. Jones x x
P. Richter x x x
Meetings Held in 1998 4 1 0 2
*Chairman
Executive Committee. The Executive Committee acts on behalf of the
Board between Board meetings, except with respect to matters upon which
Wisconsin law does not allow a committee to act.
Audit Committee. The Audit Committee's principal functions include:
o recommending a firm of independent public accountants to serve
as our independent auditors for the next fiscal year;
o meeting with and reviewing reports of our independent
accountants and auditors;
o overseeing our quarterly and annual financial reporting
process; and
o conducting a post-audit review of our annual financial
reporting and audit process.
Compensation and Stock Option Committee. The Compensation and Stock
Option Committee administers our stock option plans, including granting options
to our key employees, and approves the compensation, bonuses and benefits of our
officers and key employees.
We do not have a nominating committee. Our Board as a whole performs
the functions that such a committee would otherwise perform. If you would like
to propose director nominees for consideration at the annual meeting, you can do
so under our by-laws only by giving our Secretary written notice of your intent
to make a nomination not less than 30 days before the annual meeting. You must
tell us in your notice, among other things, the nominee's name, biographical
data and qualifications.
5
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT AND OTHERS
Share Ownership
Described in the following table is certain information regarding the
beneficial ownership of Class A shares and Class B shares as of the Record Date
held by (i) each of our directors and those of our executive officers who are
named in the Summary Compensation Table below under "Executive
Compensation--Summary Compensation Information;" (ii) all of our directors and
executive officers as a group; and (iii) each person or entity which we know
beneficially owns more than 5% of the Class A shares or Class B shares. We
believe that all of the people listed below have sole voting and investment
power over the listed shares, except as indicated otherwise in the footnotes.
<TABLE>
<CAPTION>
Class A Shares Class B Shares
Beneficially Beneficially Percentage of
Owned and Owned and Aggregate
Name of Individual or Entity Percentage of Percentage of Voting
or Number in Group Class(1) Class(1) Power
Directors and Executive Officers
<S> <C> <C> <C>
John Swendrowski(2) 419,362(3) 601,738(4) 10.4%
(2.2%) (94.6%)
LeRoy J. Miles 72,671(5) 322,462(6) *
* (50.7%)
Robert E. Hawk 470,660(7) __ 2.2%
(2.4%)
David J. Lukas 67,300(8) __ *
*
John A. Pazurek 125,534(9) __ *
*
Jerold D. Kaminski 13,812(10) __ *
*
Patrick F. Brennan 9,558(11) __ *
*
Jeffrey J. Jones 25,400(12) __ *
*
Pat Richter 2,000(13) __ *
*
John C. Seramur 73,770(14) __ *
*
All directors and executive officers 1,423,567 636,202 15.3%
as a group (14 persons)(15) (7.2%) (100.0%)
Other Five Percent Holders
State of Wisconsin Investment Board 2,307,600 -- 11.0%
("SWIB")(16) (12.1%)
Gilder, Gagnon, Howe & Co. ("Gilder")(17) 3,230,380 -- 15.4%
(16.9%)
- --------------------------------
*Denotes less than 1%.
</TABLE>
6
<PAGE>
(1) Class B shares can be converted on a share-for-share basis into Class A
shares at any time. As a result, a holder of Class B shares is deemed
to beneficially own an equal number of Class A shares. However, so that
we don't overstate aggregate beneficial ownership, the listed Class A
shares do not include Class A shares which the holder can acquire by
converting Class B shares into Class A shares. Similarly, the
percentages of listed outstanding Class A shares have been determined
with respect to the total number of Class A shares outstanding on the
Record Date, not including Class A shares which the holder can acquire
by converting Class B shares into Class A shares.
(2) Mr. Swendrowski's address is 800 First Avenue South, P.O. Box 8020,
Wisconsin Rapids, Wisconsin 54495-8020.
(3) The Class A shares listed include (i) 87,084 shares which Mr.
Swendrowski owns directly; (ii) 19,000 shares owned by a charitable
foundation with respect to which he shares voting and investment power;
(iii) 14,278 shares which are owned by members of Mr. Swendrowki's
family and with respect to which he shares voting and investment power;
and (iii) 299,000 shares which Mr. Swendrowski can acquire by
exercising vested stock options.
(4) The Class B shares listed include (i) 313,740 shares which Mr.
Swendrowski owns directly and (ii) 287,998 shares held by Cranberries
Limited, Inc. ("CLI"), a corporation which Messrs. Swendrowski and
Miles own and which Mr. Swendrowski controls, with respect to which he
shares voting and investment power.
(5) The Class A shares listed include (i) 51,677 shares which Mr. Miles
owns directly; (ii) 18,000 shares which Mr. Miles can acquire by
exercising vested stock options; and (iii) 2,994 shares held for the
account of Mr. Miles' wife, with respect to which he shares voting and
investment power.
(6) The Class B shares listed include the 287,998 shares which Mr. Miles is
deemed to beneficially own as an officer and shareholder of CLI and
with respect to which he shares voting and investment power. Those
shares are also included under the number of Class B shares which Mr.
Swendrowski deemed to beneficially own. See note (4) above.
(7) The Class A shares listed include (i) 288,200 shares which Mr. Hawk
owns directly; (ii) 10,514 shares which Mr. Hawk's wife owns or which
are held in his wife's IRA account, with respect to which he shares
voting and investment power; (iii) 19,946 shares held in his IRA
account; and (iv) 152,000 shares which Mr. Hawk can acquire by
exercising vested stock options.
(8) The Class A shares listed include (i) 18,800 shares which Mr. Lukas
owns directly and (ii) 48,500 shares which Mr. Lukas can acquire by
exercising vested stock options
(9) Includes 103,500 Class A shares which Mr. Pazurek can acquire by
exercising vested stock options.
(10) Includes 1,192 Class A shares which Mr. Kaminski can acquire by
exercising vested stock options.
(11) Includes 3,912 Class A shares which Mr. Brennan can acquire by
exercising vested stock options.
(12) Includes 3,912 Class A shares which Mr. Jones can acquire by exercising
vested stock options.
(13) Includes 1,000 Class A shares which Mr. Richter can acquire by
exercising vested stock options.
(14) Includes 1,690 Class A shares which Mr. Seramur can acquire by
exercising vested stock options.
(15) When we determined the aggregate beneficial ownership of Class A shares
and Class B shares for all of our directors and executive officers as a
group, shares which are deemed to be beneficially owned by more than
one person were counted only once to avoid overstatement. The number of
Class A shares listed includes 763,206 shares which certain of our
executive officers and directors can acquire by exercising vested stock
options.
(16) The information given is as of or about July 1, 1998, as reported by
SWIB in its Schedule 13G filed with the Securities and Exchange
Commission ("SEC"). SWIB's address is P.O. Box 7842, Madison, Wisconsin
53707.
(17) The information given is as of or about November 10, 1998, as reported
by Gilder in its Schedule 13G filed with the SEC. Gilder's address is
1775 Broadway, 26th Floor, New York, New York 10019.
7
<PAGE>
EXECUTIVE COMPENSATION
Report on Executive Compensation
Compensation Philosophy. As the Compensation and Stock Option Committee
of the Board, we evaluate and approve the compensation of our executive
officers. We intend our compensation policies and practices to:
o attract, motivate and retain qualified executive officers;
o provide a total compensation package which is based on
corporate and personal performance and which is competitive in
the fruit juice/beverage industry; and
o motivate our executive officers to achieve positive results by
giving them the chance to buy our stock in order to make their
interests more like our shareholders' interests.
Compensation Components. Compensation for our executive officers
consists of:
o base salary;
o potential annual bonuses;
o potential annual stock option grants; and
o the opportunity to participate in our 401(k) plan.
Base Salary. We establish each executive officer's base salary at the
start of each fiscal year. We consider several factors in determining the base
salary of our executive officers, including:
o the Chief Executive Officer's recommendations (except with
respect to his own base salary);
o the compensation of comparable executives at other similar
beverage and consumer products companies, including some of
those companies in our new peer group, which we use to compare
our total shareholder return (see "Stock Performance
Information");
o our performance during the most recent fiscal year, with
special emphasis on our revenues, revenue growth, earnings per
share, cost and expense levels and balance sheet strength;
o how our performance compares to our historical results and our
expectations for that fiscal year;
o whether and to what extent we reached our strategic goals for
the fiscal year; and
o the individual achievements of our executive officers,
including contributions to our financial results for the past
year, and relationships with other Northland personnel.
8
<PAGE>
In particular, for fiscal 1998, we considered:
o our successful entry into the private label juice business
through the acquisition of Minot Food Packers, Inc.
o the planned acquisition of the juice division of Seneca Foods
Corporation;
o our successful sale of 5,715,000 Class A shares in June which
raised $74.5 million;
o the increase in our juice sales and market penetration;
o the increase in our overall size as a result of the
acquisition of Minot and the planned acquisition of Seneca,
and the corresponding increase in the responsibilities of our
executive officers; and
o our recent divisional restructuring and the resulting
promotion of certain officers to positions with more
responsibility.
As a result of our review of these factors, we increased our executive
officers' base salaries by an average of 19% for the upcoming fiscal year, and
increased the base salary of our Chief Executive Officer by 14.3%. Although we
review objective performance criteria, we still consider certain subjective
factors which aren't related directly to our financial results in making these
compensation decisions.
Bonuses. Our 1998 Incentive Bonus Plan provides incentive bonus
opportunities to our employees. The Bonus Plan bases incentive cash bonuses on
achieving specified objective and subjective goals, including certain earnings
goals and various departmental and individual goals. The Bonus Plan, which
applies to all of our employees, provides the chance to receive a bonus of up to
a specified percentage of base salary which varies by the employee's position.
In fiscal 1998, Northland's earnings were below the goals we set at the
end of last year. As a result, we did not pay bonuses under the corporate
performance component of the Bonus Plan. However, we did pay bonuses for
individual performance in connection with the subjective achievements described
in the discussion of base salary above. In most cases, these bonuses were the
maximum we could pay under the individual performance component of the Bonus
Plan. Specifically, in deciding on the bonus paid to our Chief Executive
Officer, we considered his leadership in connection with the acquisition of
Minot, which allowed Northland to greatly enhance its position in the market for
private label juice products, and in connection with the completion of the
public stock sale, which gave Northland the resources to accomplish the Minot
acquisition and to strengthen its balance sheet by paying down debt.
Stock Options. We generally make regular annual stock option grants to
our executive officers under our stock option plans after the end of each fiscal
year. We base our option grants mainly on:
o each executive officer's relative position with Northland;
9
<PAGE>
o his individual initiatives and achievements and their impact
on Northland's performance;
o many of the salary and bonus factors discussed above;
o his historical level of option grants; and
o the size of option grants to other similar executives.
Based on those factors, we decided to award regular annual option
grants to purchase a total of 50,000 Class A shares to our continuing executive
officers in fiscal 1998.
In addition to our regular stock option grants, in fiscal 1998 we also
granted options to purchase a total of 35,000 Class A shares to some of our
continuing executive officers to recognize their hard work and exceptional
performance in connection with the acquisition of Minot and our public stock
offering.
Our stock option grants are intended to motivate key employees to
achieve the best results for the company by giving them the chance to acquire or
increase their current stock ownership in Northland. Since options are only
valuable if our stock price goes up, we believe that stock option grants help
make the financial interests of our management the same as yours. We grant
options with an exercise price equal to the value of the Class A shares on the
date of grant. The options usually expire in 10 years and either become
exercisable in increments of 20% on each of the first, second, third, fourth and
fifth anniversaries of the grant date or are exercisable immediately upon grant.
The options granted to our executive officers in connection with the acquisition
of Minot and our stock offering could be exercised immediately upon grant.
We believe our stock option plans, and the way in which we administer
them, comply with Internal Revenue Code Section 162(m).
By the Compensation and Stock Option Committee:
John C. Seramur, Chairman
Patrick F. Brennan
Pat Richter
10
<PAGE>
Summary Compensation Information
The table below describes the compensation paid for the last three
fiscal years to our Chief Executive Officer and certain of our other executive
officers whose salary and bonuses were more than $100,000 in fiscal 1998. Jerold
D. Kaminski, who served as our President and Chief Operating Officer during
fiscal 1998, resigned on September 11, 1998. We sometimes refer to the people in
the table below as our "named executive officers."
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Compensation
Annual Stock Awards
Name and Fiscal Compensation Option Grants Restricted Other Annual All Other
------------
Principal Positions Year Salary Bonus (shares) Stock Awards Compensation (3) Compensation
- ---------------------- -------- --------- -------- ------------ --------------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John Swendrowski 1998 $350,000 $ 40,000 40,000 $ 0 $ 0 $ 4,917(4)(5)
Chairman of the Board, 1997 $330,000 $ 0 0 $ 0 $ 224,127 $ 4,552
President and Chief 1996 $315,000 $286,200 116,000 $ 0 $ 0 $ 3,365
Executive Officer
Robert E. Hawk 1998 $140,000 $ 20,000 10,000 $ 0 $ 0 $ 4,913(4)
Group President- 1997 $140,000 $ 0 0 $ 0 $ 0 $ 3,160
Non-Branded Divisions 1996 $114,000 $ 89,720 48,000 $ 0 $ 0 $ 0
John A. Pazurek 1998 $130,000 $ 20,000 20,000 $ 0 $ 0 $ 2,600(4)
Vice President-Finance, 1997 $115,000 $ 0 0 $ 0 $ 29,539 $ 3,156
Treasurer and Chief 1996 $ 89,000 $ 63,720 32,000 $ 0 $ 0 $ 1,534
Financial Officer
David J. Lukas 1998 $100,000 $ 20,000 15,000 $ 0 $ 0 $ 4,913(4)
Vice President- 1997 $ 95,000 $ 0 0 $ 0 $ 0 $ 3,960
Administration and 1996 $ 82,000 $ 39,360 8,000 $ 0 $ 0 $ 1,300
Corporate Secretary
Jerold D. Kaminski 1998 $220,000 $ 0 25,000(1) $ 0(2) $ 0 $ 111,667(4) (6)
Former President and 1997 $ 50,164 $ 50,000 10,000(1) $ 155,250(2) $ 0 $ 0
Chief Operating Officer
</TABLE>
(1) These options expired on October 11, 1998, 30 days after Mr. Kaminski
resigned.
(2) On June 2, 1997 we awarded Mr. Kaminski 12,000 restricted Class A
shares. On June 2, 1998, 3,000 of those restricted Class A shares
vested. At August 31, 1998, Mr. Kaminski held 9,000 restricted Class A
shares with a value of $87,750. Upon his resignation on September 11,
1998, he forfeited those remaining 9,000 restricted Class A shares.
(3) Mr. Swendrowski and Mr. Pazurek received these amounts to reimburse
them in part for taxes they paid after exercising stock options in
fiscal 1997.
(4) Includes matching contributions we made under our 401(k) plan to each
person.
(5) We paid $49,066, $49,327 and $49,539 of premiums on a split-dollar
insurance policy on the life of Mr. Swendrowski in fiscal 1998, 1997
and 1996, respectively. We did not include this data in the table
because when the policy is surrendered to us or when Mr. Swendrowski
dies, we will be reimbursed for these premium payments. Assuming Mr.
Swendrowski retires at the age of 65, we estimate the current present
value of the excess cash surrender value of such policy over the
premium payments to be approximately $157,515.
(6) These amounts include $110,000 we paid to Mr. Kaminski upon his
resignation in connection with the voluntary and mutual termination of
his employment and severance agreement, dated as of June 2, 1997.
Stock Options
We have three stock option plans currently in place: the 1987, 1989 and
1995 Stock Option Plans. We are still granting options to our employees under
the 1989 and 1995 Plans. There are no shares remaining available under the 1987
Plan and only a few shares remaining
11
<PAGE>
available under the 1989 Plan. The following table lists the option grants under
the 1995 Plan which we made during fiscal 1998, as well as certain other
information relating to those grants.
<TABLE>
<CAPTION>
Fiscal 1998 Option Grants
Potential Realizable Value
Shares Percentage of At Assumed Annual Rates of
Underlying Total Options Exercise Stock Price Appreciation
Options Granted to all Price (per Expiration For Option Term(5)
------------------------
Name Granted(1) Employees share)(4) Date 5% 10%
- ---------------------- ---------- --------- ------------ -----------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
John Swendrowski 20,000 -- $19.75 9/22/07 $ 248,413 $ 629,528
20,000 $15.625 4/16/08 $ 196,530 $ 498,045
Robert E. Hawk 10,000 -- $19.75 9/22/07 $ 124,207 $ 314,764
John A. Pazurek 10,000 -- $19.75 9/22/07 $ 124,207 $ 314,764
10,000 $15.625 4/16/08 $ 98,265 $ 249,022
David J. Lukas 10,000 -- $19.75 9/22/07 $ 124,207 $ 314,764
5,000 $15.625 4/16/08 $ 49,132 $ 124,511
Jerold D. Kaminski 5,000(2) -- $19.75 9/22/07 $ 62,103 $ 157,382
20,000(2) $15.625 4/16/08 $ 196,530 $ 498,045
All Optionees 185,000(3) 100.0% $ (3) (3) $1,746,540 $4,349,041
All Shareholders(6) N/A N/A N/A N/A $164,056,790 $415,752,117
- ---------------------
</TABLE>
(1) These options are nonqualified stock options under the Internal Revenue
Code.
(2) These options expired on October 11, 1998, 30 days after Mr. Kaminski
resigned.
(3) The Committee granted 119,000 options on September 22, 1997 with an
exercise price of $19.75 and an expiration date of September 22, 2007;
1,000 options on October 21, 1997 with an exercise price of $18.44 and
an expiration date of October 21, 2007; 1,000 options on January 7,
1998 with an exercise price of $14.63 and an expiration date of January
7, 2008; 1,000 options on April 15, 1998 with an exercise price of
$16.94 and an expiration date of April 15, 2008; 55,000 options on
April 16, 1998 with an exercise price of $15.625 and an expiration date
of April 16, 2008; 4,000 options on July 2, 1998 with an exercise price
of $15.63 and an expiration date of July 2, 2008; and 4,000 options on
August 31, 1998 with an exercise price of $9.75 and an expiration date
of August 31, 2008.
(4) A holder can pay the exercise price of options in cash, by delivering
previously issued Class A shares, or a combination of both.
(5) These values represent the difference between the exercise price of the
options and the value of the Class A shares on the date that the
options will be exercised, assuming certain rates of appreciation in
the value of Class A shares and assuming the options will be exercised
on their respective expiration dates. We have not taken into account
taxes or other payments which the holders of options may have to pay
upon exercise. The actual values of the options will depend on the
value of the Class A shares on the date the options are exercised. The
5% and 10% rates we used in these calculations are not our estimates of
our future performance or the future price of Class A shares. Rather,
we are required to use these rates by the rules of the SEC. We cannot
guarantee that these rates of appreciation will actually be achieved.
(6) These values represent the gain to all shareholders as a group,
calculated in the same way as we calculated the values referred to in
footnote (5) to the table. Again, we cannot guarantee that these rates
of appreciation will actually be achieved.
12
<PAGE>
Set forth below is certain information about the number and value of
unexercised stock options held by our named executive officers and by all other
option holders as of the end of fiscal 1998.
<TABLE>
<CAPTION>
Fiscal 1998 Year-End Value Table
Number of Shares Value of Unexercised
Underlying Options In-the-Money Options
at End of Fiscal 1998(1) at End of Fiscal 1998(2)
--------------------------------------- ----------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------------------- ----------- ------------- ----------- -------------
<S> <C> <C>
John Swendrowski 284,000 -- $ 648,600 --
Robert E. Hawk 152,000 -- $ 496,650 --
John A. Pazurek 96,000 -- $ 211,140 --
David J. Lukas 45,000 -- $ 65,730 --
Jerold D. Kaminski 36,192 -- $ 1,226 --
All Optionees 949,636 134,020 $ 2,692,962 $ 36,020
- --------------------------
</TABLE>
(1) These options are nonqualified stock options under the Internal Revenue
Code. Each option has an exercise price equal to the fair market value
(last bid price) of the Class A shares on the date of grant.
(2) We calculated these dollar values by determining the difference between
the value of the Class A shares and the various exercise prices of the
named executive officers' outstanding options at the end of fiscal
1998. The last reported sale price of the Class A shares on The Nasdaq
Stock Market on August 28, 1998 was $10.125 per share.
Director Compensation
Directors of Northland who are also our employees receive no additional
compensation for serving on the Board. We compensate our non-employee directors
for their service on the Board by providing:
o an annual retainer fee of $12,000 (which was increased to
$15,000 for fiscal years after 1998);
o $500 for each Board and committee meeting attended, plus an
additional $250 for each committee chairman per committee
meeting attended;
o reimbursement for directors' transportation, lodging and meal
expenses incurred in attending meetings; and
o annual automatic grants of stock options under the 1995 Plan
which
- are exercisable for 1,000 Class A shares;
- occur automatically (i) upon a director's appointment or
election to the Board and (ii) on each August 31;
13
<PAGE>
- are granted at an exercise price equal to the fair market
value of the Class A shares on the date of grant;
- have a term of ten years;
- vest in full either one year after the date they are granted
or immediately upon the happening of certain events.
Employment and Severance Agreement
We have entered into a severance agreement with John Swendrowski which
provides that, following a "change in control" of the company (as defined in the
severance agreement), we will employ Mr. Swendrowski for three years in the same
position, to perform similar duties, and at the same location as was the case
just before the change of control. During the employment period, Mr. Swendrowski
is entitled to receive a salary based upon his compensation rate in effect at
the date of change of control, and is also entitled to be included in our
benefit plans. If during the employment period (i) we terminate Mr.
Swendrowski's employment, other than for "cause" (as defined in the severance
agreement) or he becomes disabled, or (ii) we change his duties substantially
without his written consent and he terminates his employment as a result, then
he will be entitled to receive a severance payment equal to three times his
average base salary over the five previous years, plus the other benefits due
under the severance agreement.
STOCK PERFORMANCE INFORMATION
The line graph below compares the percentage change during the last
five fiscal years in the total return on our Class A shares with the total
return of:
o companies in the Nasdaq Total Return Index;
o companies in a peer group we selected and used in this
similar chart in last year's proxy statement (including Alico, Inc., Chalone
Wine Group, LTD., J & J Snack Foods Corp., Mauna Loa Macadamia Nut Corp.,
Orange-Co., Inc., John B. Sanfilippo & Son, Inc., Seneca Foods Corp., Stokely
USA, Inc., Sylvan Food Holdings, Inc. and Todhunter International, Inc.); and
o companies in a new peer group we selected for the first time
this year (including American Italian Pasta Co., Beringer Wine Estates,
Celestial Seasonings, J.M. Smucker Company, Robert Mondavi Corp., Triarc
Companies, Chalone Wine Group, LTD, Orange Co., Inc., Seneca Foods Corp. and
Todhunter International, Inc.)
14
<PAGE>
We changed our peer group companies this year mainly because we have
changed our business dramatically in the past two years, from essentially a
cranberry grower to a consumer products company. As a result, we are now larger
than, and no longer engage in the same general business as, some of those former
peer group companies. We believe the companies in our new peer group are more
comparable to our current size and the markets in which we compete. The
shareholder returns of each of the companies in both of our listed peer groups
have been weighted based on each company's relative market capitalization as of
the beginning of each period. To allow for a more meaningful comparison, we have
assumed in the graph below that our fiscal year ended on August 31 (which is our
fiscal year end, but which was not our fiscal year end until 1995).
(GRAPH OMITTED)
<TABLE>
Comparison of Five-Year Total Shareholder Returns
(on a dividend reinvested basis)
<CAPTION>
08/31/93 08/31/94 08/31/95 08/31/96 08/31/97 08/31/98
<S> <C> <C> <C> <C> <C> <C>
Northland Cranberries, Inc. $100 112 87 218 209 121
Old Peer Group Index $100 92 90 86 100 83
New Peer Group Index $100 86 85 79 120 102
Nasdaq Total Return Index $100 104 140 158 221 210
</TABLE>
OTHER MATTERS
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires certain
of our executive officers, directors and persons who beneficially own more than
10% of our common stock to file reports of changes in ownership of our common
stock with the SEC. Those people are required by SEC regulations to furnish us
with copies of all Section 16(a) forms which they file. To our knowledge, all of
those people complied with all Section 16(a) filing requirements in fiscal 1998,
except that Michael Morello, an officer of one of our subsidiaries, did not
timely file one Form 4 with respect to a purchase of 2,000 Class A shares which
he made in August 1998.
15
<PAGE>
Northland's Independent Auditors
The Board has reappointed Deloitte & Touche LLP to serve as our
independent auditors for fiscal 1999. We expect that representatives of Deloitte
& Touche LLP will be at the annual meeting and will have a chance to make a
statement if they would like to do so. They will also be available to respond to
your questions.
Miscellaneous
We will bear the cost of soliciting proxies. We expect to solicit
proxies mainly by mail. Some of our employees may also solicit proxies
personally and by telephone. We do not anticipate that we will retain anyone to
solicit proxies or that we will pay compensation to anyone for that purpose. We
will, however, reimburse brokers and other nominees for their reasonable
expenses in communicating with the persons for whom they hold Class A shares.
If you wish to include a proposal in our proxy statement for the 2000
annual meeting pursuant to Rule 14a-8 under the Securities Exchange Act of 1934,
you should forward the proposal to our Secretary by July 28, 1999. If you submit
a proposal other than pursuant to Rule 14a-8 less than 30 days in advance of the
2000 annual meeting, your proposal will be considered untimely under our by-laws
and we will not be required to present your proposal at the 2000 annual meeting.
If the Board chooses to present your proposal despite its untimeliness, the
people named in the proxies solicited by the Board for the 2000 annual meeting
will have the right to exercise discretionary voting power with respect to your
proposal.
If you would like to receive a copy of our fiscal 1998 annual report on
Form 10-K (without exhibits), please write to our Secretary at 800 First Avenue
South, P.O. Box 8020, Wisconsin Rapids, Wisconsin 54495-8020, and we will
provide you with a copy free of charge.
NORTHLAND CRANBERRIES, INC.
[PRINTER TO INSERT SIGNATURE]
David J. Lukas
Vice President Administration,
Corporate Counsel and Secretary
Wisconsin Rapids, Wisconsin
November 25, 1998
16
<PAGE>
PROXY FOR CLASS A PROXY FOR CLASS A
COMMON STOCK COMMON STOCK
NORTHLAND CRANBERRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS - JANUARY 6, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I hereby appoint either or both of John Swendrowski and John A. Pazurek
as my proxy, and hereby authorize either or both of them to represent and to
vote, as I have indicated below, all my shares of Class A Common Stock of
Northland Cranberries, Inc., which I held of record on November 19, 1998, at the
annual meeting of shareholders scheduled to be held on January 6, 1999, and at
any adjournment thereof. I also authorize either or both of them to appoint his
substitute.
I further acknowledge receipt of the Notice of the Annual Meeting, the
Proxy Statement and the 1998 Annual Report to Shareholders, and I hereby revoke
any other proxy I may have executed previously for the 1999 annual meeting of
shareholders.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD IMMEDIATELY
USING THE ENCLOSED ENVELOPE.
Please do not fold (Continued and to be signed
on reverse side.)
- --------------------------------------------------------------------------------
<PAGE>
NORTHLAND CRANBERRIES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY
1. Election of Directors - FOR WITHHOLD FOR
Nominees: Patrick F. Brennan, ALL ALL ALL
Robert E. Hawk, Jeffrey J.
Jones, LeRoy J. Miles, Pat |_| |_| |_|
Richter, John C. Seramur and
John Swendrowski
(Except Nominee(s) written below)
When properly executed, this proxy will be voted as
you have directed herein. If no direction is made,
this proxy will be voted FOR the seven director
nominees indicated above. It will also be voted in
accordance with the best judgment of the proxies
named herein on any other business that may properly
come before the meeting.
Dated:_______________, 199_
2. In their discretion, upon such
other business as may properly
come before the meeting and at
any adjournment thereof
Signature(s)
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THIS
PROXY CARD. When shares are held by joint tenants,
both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give your
full title as such. If you are a corporation, please
sign in full corporate name by the president or other
authorized officers. If you are a partnership, please
sign in partnership name by an authorized person.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD IMMEDIATELY
USING THE ENCLOSED ENVELOPE.
<PAGE>
PROXY FOR CLASS B PROXY FOR CLASS B
COMMON STOCK COMMON STOCK
NORTHLAND CRANBERRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS - JANUARY 6, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I hereby appoint either or both of John Swendrowski and John A. Pazurek
as my proxy, and hereby authorize either or both of them to represent and to
vote, as I have indicated below, all my shares of Class B Common Stock of
Northland Cranberries, Inc., which I held of record on November 19, 1998, at the
annual meeting of shareholders scheduled to be held on January 6, 1999, and at
any adjournment thereof. I also authorize either or both of them to appoint his
substitute.
I further acknowledge receipt of the Notice of the Annual Meeting, the
Proxy Statement and the 1998 Annual Report to Shareholders, and I hereby revoke
any other proxy I may have executed previously for the 1999 annual meeting of
shareholders.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD IMMEDIATELY
USING THE ENCLOSED ENVELOPE.
Please do not fold (Continued and to be signed
on reverse side.)
- --------------------------------------------------------------------------------
<PAGE>
NORTHLAND CRANBERRIES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY
1. Election of Directors - FOR WITHHOLD FOR
Nominees: Patrick F. Brennan, ALL ALL ALL
Robert E. Hawk, Jeffrey J.
Jones, LeRoy J. Miles, Pat |_| |_| |_|
Richter, John C. Seramur and
John Swendrowski
(Except Nominee(s) written below)
When properly executed, this proxy will be voted as
you have directed herein. If no direction is made,
this proxy will be voted FOR the seven director
nominees indicated above. It will also be voted in
accordance with the best judgment of the proxies
named herein on any other business that may properly
come before the meeting.
Dated:_____________, 199_
2. In their discretion, upon such
other business as may properly
come before the meeting and at
any adjournment thereof
Signature(s)
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THIS
PROXY CARD. When shares are held by joint tenants,
both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give your
full title as such. If you are a corporation, please
sign in full corporate name by the president or other
authorized officers. If you are a partnership, please
sign in partnership name by an authorized person.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD IMMEDIATELY
USING THE ENCLOSED ENVELOPE.
<PAGE>
