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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE ANDERSONS, INC.
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.
[ ] 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.
THE ANDERSONS,
INC. 480 West
Dussel Drive
Maumee, Ohio 43537
March 31, 1997
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders
which will be held on Thursday, May 22, 1997, at 7:00 p.m., local time, at the
Lucas Auditorium of the Eleanor Dana Center on the campus of the Medical
College of Ohio, Glendale Road entrance, Toledo, Ohio.
A notice of meeting, proxy statement and proxy card are included with
this letter. The matters listed in the notice of meeting are more fully
described in the proxy statement.
It is important that your shares are represented and voted at the annual
meeting, regardless of the size of your holdings. Accordingly, please mark,
sign and date the enclosed proxy card and return it promptly in the enclosed
envelope. If you attend the annual meeting, you may revoke your proxy in
writing and vote your shares in person, if you wish.
Sincerely,
/s/Richard P. Anderson
Richard P. Anderson
Chairman, Board of Directors
THE ANDERSONS, INC.
480 West Dussel Drive
Maumee, Ohio 43537
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 22, 1997
The annual meeting (the "Annual Meeting") of shareholders of The
Andersons, Inc. (the "Corporation") will be held on Thursday, May 22, 1997, at
7:00 p.m., local time, at the Lucas Auditorium of the Eleanor Dana Center on
the campus of the Medical College of Ohio, Glendale Road entrance, Toledo,
Ohio, to consider and take action with respect to the following matters:
1. The election of eleven directors to serve until the next annual
meeting or until their successors are duly elected and qualified.
2. The approval of an amendment to the Corporation's Long-Term
Performance Compensation Plan.
3. The ratification of the appointment of Ernst & Young LLP as
independent public accountants for the year ending December 31, 1997.
4. The transaction of such other business as may properly come before
the Annual Meeting and any adjournments or postponements thereof.
Holders of record of the Corporation's Common Shares at the close of
business on March 1, 1997, are entitled to receive notice of and to vote on all
matters presented at the Annual Meeting and at any adjournments or
postponements thereof.
By order of the Board of Directors
March 31, 1997
/s/Beverly J. McBride
Beverly J. McBride
Secretary
Whether or not you plan to attend the Annual Meeting in person and regardless
of the number of shares you own, please mark, sign and date the enclosed proxy
card and mail it promptly in the envelope provided to ensure that your shares
will be represented. If you attend the Annual Meeting, you may revoke your
proxy in writing and vote your shares in person, if you wish.
THE ANDERSONS, INC.
480 West Dussel Drive
Maumee, Ohio 43537
PROXY STATEMENT
Annual Meeting of Shareholders
May 22, 1997
This proxy statement (the "Proxy Statement") is being furnished to the
holders of common shares, no par value (the "Common Shares"), of The Andersons,
Inc. (the "Corporation") in connection with the solicitation of proxies on
behalf of the Board of Directors of the Corporation (the "Board of Directors"
or "Board") for the annual meeting (the "Annual Meeting") of shareholders to be
held on May 22, 1997 at the Lucas Auditorium of the Eleanor Dana Center on the
campus of the Medical College of Ohio, Glendale Road entrance, Toledo, Ohio,
and at any adjournments or postponements thereof. Proxy Statements and proxy
cards are being mailed to shareholders on or about March 31, 1997.
When you sign and return the enclosed proxy card, the shares represented
thereby will be voted as indicated on the proxy card. If there is no contrary
indication, the shares represented will be voted FOR the slate of directors
described herein, FOR the approval of an amendment to the Corporation's Long-
Term Compensation Plan, FOR the ratification of Ernst & Young LLP as the
Corporation's independent public accountants for the year ending December 31,
1997 and, as to any other business as may properly be brought before the Annual
Meeting and any adjournments or postponements thereof, in accordance with
the judgment of the person or persons voting on such matter or matters.
Returning your completed proxy card will not prevent you from revoking
your proxy in writing and voting in person at the Annual Meeting should you be
present and wish to do so. In addition, you may revoke your proxy any time
before it is voted by written notice to the Secretary of the Corporation prior
to the Annual Meeting or by submission of a later-dated proxy card.
Each outstanding Common Share entitles the holder thereof to one vote. On
March 1, 1997, the record date, there were 8,316,992 Common Shares outstanding.
The presence in person or by proxy of a majority of such Common Shares shall
constitute a quorum. Abstentions and proxies held in street name by brokers
that are not voted on all proposals to come before the Annual Meeting ("broker
non-votes") will be treated as present for purposes of establishing a quorum.
Under the Corporation's Code of Regulations, the nominees for director
receiving the greatest number of votes shall be elected and thus abstentions
and broker non-votes will have no impact on the election, except to the extent
that the failure to cast a vote for a nominee may result in a smaller number of
votes cast for other nominees being able to carry the election. With respect
to the ratification of Ernst & Young LLP as the Corporation's independent
public accountants for the year ending December 31, 1997, such ratification
requires the affirmative vote of a majority of the common shares present
and eligible to vote at the Annual Meeting. Thus, a broker nonvote or
abstention will count as a vote against such proposal.
ELECTION OF DIRECTORS
The Board of Directors is currently comprised of eleven directors. The
Board of Directors has nominated and recommends the election of each of the
nominees set forth below. Directors so elected will serve until the next
annual meeting or until their earlier removal or resignation. Each nominee is
currently a Director of the Corporation. The Board of Directors expects all
nominees named below to be available for election. In case any nominee is not
available, the proxy holders may vote for a substitute, unless the Board of
Directors reduces the number of directors.
Directors will be elected at the Annual Meeting by a plurality of the
votes cast at the Annual Meeting by the holders of shares represented in person
or by proxy. There is no right to cumulate voting as to any matter, including
the election of directors.
The following sets forth information as to each director and nominee for
director, including age, as of March 31, 1997, principal occupation and
employment during the past five years, directorships in other publicly held
companies, membership on committees of the Board of Directors and period of
service as a director of the Corporation.
The Board of Directors recommends a vote "FOR" the election of each of the
nominees set forth below to the Board of Directors.
Nominees for Board of Directors
Thomas H. Anderson, 73, was named Chairman of the Board when the
Corporation was formed in 1987. He formerly held the position of Manager-
Company Services of The Andersons for several years, was named Senior Partner
in 1987 and served as a general partner of The Andersons and a member of its
Managing Committee from 1947 through 1987.
Richard P. Anderson, 67, has been a Director of the Corporation since its
inception in 1987. He is also a director of Centerior Energy Corporation and
First Mississippi Corp. He was named Chief Executive Officer in 1987 and
Chairman of the Board in 1996. He served as Managing Partner of The Andersons
from 1984 to 1987, after serving as a general partner of The Andersons and a
member of its Managing Committee from 1947 through 1987.
Donald E. Anderson, 70, was elected a Director of the Corporation in
1990. Mr. Anderson was in charge of scientific research for the Corporation
from 1980 until his retirement in 1992. He served as a general partner of The
Andersons from 1947 through 1987.
Michael J. Anderson, 45, began his employment with The Andersons in 1978,
serving in several capacities in the Grain Group and holding the position of
Vice President and General Manager Grain Group from 1990 to February 1994. He
served as Vice President and General Manager of the Retail Group from 1994 to
1996 when he was named President and Chief Operating Officer. He has served as
a Director of the Corporation since 1988.
Richard M. Anderson, 40, has served as a Director since 1988. He began
his employment with The Andersons in 1986 as Planning Analyst and was named the
Manager of Technical Development in 1987. Mr. Anderson served as Vice
President and General Manager of the Industrial Products Group from 1990 until
1996 when he was named Vice President and General Manager, Processing Division
of the Processing and Manufacturing Group.
John F. Barrett, 48, was elected a Director of the Corporation in 1992.
He has served in various capacities at The Western and Southern Life Insurance
Company, including Executive Vice President and Chief Financial Officer and
President and Chief Operating Officer, and currently serves as Chief Executive
Officer. Mr. Barrett is also a director of Cincinnati Bell, Inc. and Fifth
Third Bancorp.
Paul M. Kraus, 64, has served as a Director of the Corporation since
1988. He has been a member of the Toledo, Ohio law firm of Marshall & Melhorn
since 1962.
Donald M. Mennel, 78, was elected as a Director in 1990. He is retired
Chairman of the Board and Chief Executive Officer of The Mennel Milling
Company, and began a private law practice in 1986.
David L. Nichols, 55, was elected as a Director of the Corporation in
1995. He has served in various capacities with Mercantile Stores Company, Inc.
and is currently Chairman and Chief Executive Officer, a position he has held
since 1992. He is also a director of the Federal Reserve Bank, Cleveland,
Ohio.
Dr. Sidney A. Ribeau, 49, was named a Director of the Corporation in
February, 1997. He has served as President of Bowling Green State University
since 1995. Prior to that, he served as Vice president for Academic Affairs at
California State Polytechnic University, Pomona.
Charles A. Sullivan, 61, was named a Director of the Corporation in 1996.
He serves as Chairman and Chief Executive Officer of Interstate Bakeries
Corporation. He is also a director of UMB Bank of Kansas City and Sealright
Co. Inc.
Donald E., Richard P. and Thomas H. Anderson are brothers; Paul M. Kraus
is their brother-in-law. Michael J. and Richard M. Anderson are nephews of
Donald E., Richard P. and Thomas H. Anderson.
Board and Committee Meetings
The Board of Directors held six meetings (exclusive of committee
meetings) during the preceding fiscal year. The Board of Directors has
established the following committees, the functions and current members of
which are noted below. Each director attended 75% or more of the number of
meetings of the Board of Directors held during the preceding fiscal year and
any committees on which such director served.
Audit Committee. The Audit Committee of the Board of Directors consists
of Donald M. Mennel (chair), David L. Nichols, Charles A. Sullivan and Richard
M. Anderson. The Audit Committee, among other duties, reviews the internal and
external financial reporting of the Corporation, reviews the scope of the
independent audit and considers comments by the auditors regarding internal
controls and accounting procedures and management's response to those comments.
The Audit Committee met twice during the preceding fiscal year.
Compensation Committee. The Compensation Committee consists of John F.
Barrett (chair), David L. Nichols and Charles A. Sullivan. The Compensation
Committee reviews and makes recommendations to the Board of Directors regarding
salaries, compensation and benefits of executive officers and key employees of
the Corporation and, under the Company's Long Term Performance Plan, grants
options to purchase Common Shares of the Corporation. The Compensation
Committee met twice during the preceding fiscal year.
Nominating Committee. The Nominating Committee consists of Thomas H.
Anderson (chair), Richard P. Anderson, Donald E. Anderson, Michael J.
Anderson, Richard M. Anderson, John F. Barrett, Paul M. Kraus, Donald M.
Mennel, David L. Nichols, Sidney A. Ribeau and Charles A. Sullivan. The
Nominating Committee selects and reviews candidates to be nominated to the
Board, reports to the Board regarding the qualifications of such candidates,
and recommends a slate of directors to be submitted to the shareholders for
approval. The Nominating Committee met three times in 1996 and recommends the
election to the Board of each nominee named in this Proxy Statement. The
Nominating Committee will consider individuals recommended by shareholders as
potential future nominees to the Board. The names of such individuals,
together with a full statement of their qualifications, should be mailed to the
Nominating Committee care of the Secretary of the Corporation at 480 West
Dussel Drive, Maumee, Ohio 43537.
Compensation of Directors
Directors who are not employees of the Corporation and who are not
Anderson family members receive an annual retainer of $15,000. Directors who
are not employees of the Corporation receive a fee of $1,000 for each Board
Meeting attended. There are three committees of the Board of Directors: the
Audit Committee, the Compensation Committee and the Nominating Committee. The
chairperson of these committees receives a retainer of $3,000 provided he or
she is not an employee of the Corporation. Members of the committees,
including the chairpersons, who are not employees of the Corporation
receive $750 for each meeting attended.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Corporation's officers, directors and persons who beneficially own
more than ten percent of a registered class of the Corporation's equity
securities to file reports of securities ownership and changes in such
ownership with the Securities and Exchange Commission (the "SEC"). Officers,
directors and greater-than-ten-percent beneficial owners also are required by
rules promulgated by the SEC to furnish the Corporation with copies of all
Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to the
Corporation, or written representations that all such filings that were
required were filed, the Company believes that during the preceding year all
such filing requirements have been complied with, except that: (a) Richard P.
Anderson, Michael J. Anderson and Christopher J. Anderson each filed a late
Form 4 for the sale of Company Shares from trusts that they beneficially own
and (b) Charles A. Sullivan filed a late Form 3 reporting his ownership of
Company Shares upon appointment to the Board of Directors.
APPROVAL OF AN AMENDMENT TO THE CORPORATION'S LONG-TERM PERFORMANCE
COMPENSATION PLAN
General
In April 1995, the Board of Directors adopted the Long-Term Performance
Compensation Plan (the "Performance Plan"), which was subsequently approved
by the Corporation's shareholders in November 1995. The Performance Plan
enables the Corporation to tailor performance compensation to corporate and
business objectives, and to anticipate and respond to a changing business
environment and competitive compensation practices.
Proposed Amendment
The Performance Plan currently provides for option grants to the
Corporation's non-employee directors under a specific formula set forth in the
Performance Plan. Shareholders are being asked to approve an amendment to the
Performance Plan which would (1) eliminate the requirement that such grants be
made pursuant to such formula and (2) increase the number of Common Shares
issuable under the Performance Plan from 500,000 to 900,000. The Performance
Plan, as amended (the "Amended Performance Plan"), would give the Compensation
Committee of the Board of Directors (the "Compensation Committee") or the full
Board of Directors the flexibility to grant non-employee directors the same
types of performance awards as are available to all other plan participants,
which may include: (i) nonqualified stock options ("NQO's"), (ii) incentive
stock options ("ISO's") and (iii) performance awards, which may be either in
the form of Common Shares or cash. The amendment would also change the terms
of the Performance Plan to delete the requirement that shareholder approval be
received for all amendments which would materially change the benefits accruing
to participants under the plan, or materially modify the requirements as to
eligibility for participation in the plan. Shareholder approval would still
be required to increase the number of Common Shares issuable under the Amended
Performance Plan.
Shareholder Approval
The affirmative vote of the holder of a majority of the Common Shares
present or represented at the Annual Meeting will be required to approve the
amendment to the Performance Plan. After considering the advantages and
disadvantages of the Amended Performance Plan, the Board of Directors believes
that the Amended Performance Plan is in the best interest of the Corporation
and its Shareholders.
The Board of Directors has approved the amendment to the Performance Plan and
recommends that each of its Shareholders vote "FOR" approval of such amendment.
Benefits under the Amended Performance Plan
The following table sets forth the number of options which were granted
under the Performance Plan with respect to the fiscal year ended December 31,
1996 to (i) the Corporation's chief executive officer, (ii) each of the four
other most highly compensated executive officers, (iii) all current executive
officers as a group, (iv) all current directors who are not executive officers
as a group and (v) all employees, including all current officers who are not
executive officers, as a group.
NEW PLAN BENEFITS
Name and Position Dollar Value ($) Units (Common Shares)
Richard P. Anderson
Chairman of the Board and
Chief Executive Officer * 15,890
Thomas H. Anderson
Chairman Emeritus * 10,040
Michael J. Anderson
President and Chief * 9,600
Operating Officer
Joseph L. Braker
President, Agriculture * 9,600
Group
Christopher J. Anderson
President, Processing and
Manufacturing Group * 3,200
Executive Group 70,390
Non-Executive Director Group 4,000
Non-Executive Officer
Employee Group 59,790
*No cash grants were awarded under the Performance Plan in fiscal 1996 or are
contemplated to be awarded by the Board at the present time under the Amended
Performance Plan. See "EXECUTIVE COMPENSATION - Option Grants" for discussion
of the value of the options awarded under the Performance Plan in fiscal 1996.
Terms of the Amended Performance Plan
The following is a summary of the principal features of the Amended
Performance Plan. This summary is qualified in its entirety by the terms and
conditions of the Amended Performance Plan itself, a copy of which is attached
hereto as Appendix A.
The maximum aggregate number of Common Shares with respect to which
options and performance awards may be granted under the Amended Performance
Plan is 900,000.
Under the Amended Performance Plan, directors, officers and other key
employees of the Corporation ("Participants") are eligible to receive NQOs,
ISOs and performance awards, which may be either in the form of Common Shares
or cash, at the option of the Compensation Committee or the full Board of
Directors.
The Compensation Committee and the Board of Directors have the discretion
to select the Participants and to determine the type, size and terms of each
award, to determine when awards will be granted and paid, and to make all other
determinations which it deems necessary or desirable in the interpretation and
administration of the Amended Performance Plan. A Participant may generally
exercise options granted pursuant to the Amended Performance Plan during
employment and thereafter for one year upon the Participant's death, disability
or retirement or for three months thereafter upon termination of employment for
other reasons; provided however, that if terminated for cause, a Participant
immediately forfeits all unexercised options. With limited exceptions,
including termination of employment as a result of death, disability or
retirement, or except as otherwise determined by the Compensation Committee or
the Board of Directors, performance awards received under the Amended
Performance Plan are forfeited if a Participant's rights and interests under
the Amended Performance Plan will not be transferable except by will or by the
laws of descent and distribution by gift to certain persons under certain
conditions.
Options, which include NQOs and ISOs, are rights to purchase a specified
number of Common Shares at a price fixed by the Compensation Committee or the
Board of Directors. The option price may not be less than the fair market value
of the Common Shares subject to such option at the time of grant, or, if
granted to an employee who owns shares representing more than ten percent of
the voting power of the Corporation, the option price may not be less than 110%
of such fair market value. No participant in the Plan may receive options to
purchase more than 150,000 Common Shares in one year. Options will become
exercisable at such times and in such installments as the Compensation
Committee or the Board of Directors will determine. Payment of the option price
must be made in full at the time of exercise in such form (including, but not
limited to, cash and Common Shares) as the Compensation Committee may
determine.
Performance awards are awards whose final value, if any, is determined by
the degree to which specified performance objectives have been achieved during
an award period set by the Compensation Committee. Performance objectives are
based on such specific measures of performance by the Corporation as the
Compensation Committee or the Board of Directors may determine. The
Compensation Committee or the Board of Directors may make such adjustments in
the computation of any performance measure as it may deem appropriate. The
value of an award will be established by the Compensation Committee or the
Board of Directors based on threshold and target objectives. Payment of the
value of a performance award will be made within 60 days following the last day
of the calendar year in which the valuation date for such performance award
occurs.
The Compensation Committee or the Board of Directors may make adjustments
to the maximum number of options and performance awards permitted under the
Amended Performance Plan to prevent dilution or enlargement. The Amended
Performance Plan will remain in effect until such time as it is amended or
terminated by the Board of Directors, except that no ISO may be granted under
the Amended Performance Plan on or after ten years from the effective date
of the Amended Performance Plan. The Amended Performance Plan may be amended
without the approval of the Corporation's shareholders, except that no such
amendment will increase the number of Common Shares issuable under the
Amended Performance Plan without such approval.
Federal Income Tax Consequences
The following discussion is intended only as a general summary of the
federal income tax consequences arising from the receipt of options and
performance awards as based upon the Code as currently in effect. Because
federal income tax consequences will vary as a result of individual
circumstances, each employee participating in the Amended Performance Plan
should consult his or her own tax advisor with respect thereto. Moreover, the
following summary relates only to Participants' federal income tax treatment.
The state, local and foreign tax consequences may be substantially different.
An optionee to whom an NQO is granted will recognize no income at the
time of the grant unless the NQO has a "readily ascertainable fair market
value" at the time of the grant within the meaning of Section 83 of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code" or the
"Code"). When an optionee exercises an NQO, he or she will generally recognize
ordinary compensation income equal to the difference, if any, between the fair
market value of the Common Shares he or she receives at such time and
the exercise price. The tax basis of such shares to the optionee will be equal
to the exercise price paid plus the amount includable in his or her gross
income as compensation, and his or her holding period for such shares
will normally commence on the day following the date on which he or she
recognizes taxable income in respect of such shares.
An optionee to whom an ISO qualifying under Section 422 of the Code, is
granted will generally recognize no income at the time of grant or at the time
of exercise. However, upon the exercise of an ISO, the excess of the fair
market value of the Common Shares over the exercise price thereof may result in
the optionee being subject to an alternative minimum tax ("AMT") under
applicable provisions of the code. In order to obtain ISO treatment for
federal income tax purposes, an optionee (i) must be an employee of the
corporation or a subsidiary continuously from the date of grant until any
termination of employment and (ii) in the event of such a termination, must
exercise an ISO within three months after such termination, except if disabled,
in which case exercise may occur within one year from the date of termination
of employment.
When an optionee sells the Common Shares received upon exercise of an ISO
more than one year after exercise and more than two years after the date of
grant of such ISO, he or she will normally recognize a long-term capital gain
or loss equal to the difference, if any, between the sale price of such shares
at such time and the exercise price. If the employee does not hold such
shares for either period, when he or she sells such shares (a "disqualifying
disposition") he or she will recognize ordinary compensation income equal to
the lesser of (i) the difference, if any, between the fair market value of such
shares on the date of exercise and the exercise price, or (ii) the difference,
if any, between the sale price and the exercise price. Any other gain or loss
on such sale (in addition to the ordinary income mentioned above) will normally
be capital gain or loss. The tax basis of such shares to the employee, for
purposes of computing such other gain or loss, should be equal to the exercise
price paid (plus the amount includable in his or her gross income as
compensation, if any).
In general, a director, officer, employee or other individual to whom a
performance award is made should recognize no taxable income at the time such
award is made. Such person should recognize taxable income, however, at the
time cash is paid to him or her pursuant to such award, and the amount of such
income should be the amount of such cash.
A director, officer, or other individual who receives Common Shares
subject to vesting pursuant to a performance award should not recognize any
taxable income upon the receipt of such award unless he or she files an
election under Section 83(b) of the Code, as described below. Instead, the
recipient should recognize taxable compensation income at the time his or
her interest in such shares is no longer subject to the repurchase option
imposed by the Amended Performance Plan, in an amount equal to the fair market
value of such shares at such time minus the amount, if any, paid for such
shares. The tax basis of such shares to the recipient should be equal to the
amount includable in his or her gross income as compensation plus the amount,
if any, paid for such shares, and his or her holding period for such shares
should normally commence on the day following the date on which such shares are
no longer subject to the repurchase option imposed by the Amended Performance
Plan. Dividends paid on Common Shares subject to vesting should be included
as compensation for federal income tax purposes when received. In lieu of
being taxed under the foregoing rules, the recipient may elect to be taxed on
compensation income equal to the fair market value of the shares on the award
date minus the amount, if any, paid for such shares by filing an election under
Section 83(b) of the Code with the Internal Revenue Service no later than 30
days after the award date. If a recipient makes such an election, his or her
tax basis in his or her shares should be equal to the amount includable in his
or her gross income as compensation plus the amount, if any, paid for such
shares, and his or her holding period in the shares should begin on the day
following the award date.
If the recipient of an award is a 16(b) Person, the tax consequences may
be different than those described above. Generally, a 16(b) Person will not
recognize income on receipt of property such as Common Shares until he or she
is no longer subject to liability with respect to disposition of such Common
Shares. However, by filing an election under Section 83(b) of the Code with
the Internal Revenue Service no later than 30 days after the date of transfer
of property, a 16(b) Person may elect to be taxed at the time of such transfer.
A company for which an individual is performing services will generally
be allowed to deduct amounts that are includable in the income of such person
as ordinary compensation expense at the time such amounts are so includable,
provided that such amounts qualify as reasonable compensation for personal
services actually rendered. However, if an employee's total compensation from
the Corporation exceeds $1 million, compensation in excess of $1 million that
would otherwise be deductible by the Corporation may not be tax deductible
under Code Section 162(m) if such employee is a "covered employee" at the time
the compensation is included in the employee's taxable income. An employee is
a covered employee if he or she is the chief executive officer or one of the
four most highly compensated employees (other than the chief executive officer)
employed by the Corporation at the end of the taxable year, whose compensation
is required to be disclosed under the Exchange Act at the end of the
Corporation's taxable year. Compensation that is "performance-based" within
the meaning of Code Section 162(m) and meets certain other requirements is
excluded from the calculation of taxable income subject to the $1 million
deduction limit. The Code Section 162(m) deduction limit does not apply to
compensation paid by privately held companies. The limitation is also
inapplicable to compensation paid by a publicly held company pursuant to a plan
or agreement that existed while the corporation was privately held, as long as
the plan or agreement was disclosed in the corporation's initial public
offering prospectus in accordance with all applicable securities laws. This
latter exception ceases to apply if the plan or agreement is materially
modified after the initial public offering.
The discussion set forth above is intended only as a summary and does not
purport to be a complete enumeration or analysis of all potential tax effects
relevant to recipients of awards under the Amended Performance Plan. It is
accordingly recommended that all award recipients consult their own tax
advisors concerning federal, state, local and foreign income and other tax
considerations relating to such awards and rights thereunder. In particular,
it is recommended that each award recipient consult his or her own tax advisor
as to the AMT consequences of an award, the special tax considerations for a
16(b) Person and the making of a Section 83(b) election.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation by the Audit Committee, has
appointed Ernst & Young LLP as independent public accountants to examine the
financial statements of the Corporation for the year ending December 31, 1997
and to perform other appropriate accounting services.
A proposal will be presented at the Annual Meeting to ratify the
appointment of Ernst & Young LLP as the Corporation's independent public
accountants. One or more members of that firm are expected to be present at
the Annual Meeting to respond to questions and to make a statement if they
desire to do so. If the shareholders do not ratify this appointment by
the affirmative vote of a majority of the shares represented in person or by
proxy at the Annual Meeting, other independent public accountants will be
considered by the Board of Directors upon recommendation by the Audit
Committee.
The Board of Directors recommends a vote "FOR" ratification of the appointment
of Ernst & Young LLP as the Corporation's independent public accountants.
OTHER BUSINESS
At the date of this Proxy Statement, the Corporation has no knowledge of
any business other than that described above that will be presented at the
Annual Meeting. If any other business should properly come before the Annual
Meeting, the proxies will be voted in the discretion of the proxy holders.
SECURITY OWNERSHIP
The following information with respect to the outstanding Common Shares
beneficially owned by each director and nominee for director of the
Corporation, the chief executive officer and the four other most highly
compensated executive officers, and the directors and executive officers as a
group and all beneficial owners of more than five percent of the Common Shares
is furnished as of February 28, 1997.
Common Shares
Number Percent
Name of Shares(1) of Class(2)
Thomas H. Anderson(3) 248,533 2.99
Richard P. Anderson(4) 392,284 4.68
Donald E. Anderson(5) 151,939 1.83
Michael J. Anderson(6) 139,167 1.67
Christopher J. Anderson(10) 115,108 1.38
Richard M. Anderson(8) 102,670 1.23
John F. Barrett(11) 4,588 *
Joseph L. Braker(9) 29,272 *
Paul M. Kraus(7) 187,443 2.25
Donald M. Mennel(11) 12,681 *
David L. Nichols(11) 2,000 *
Dr. Sidney A. Ribeau - *
Charles A. Sullivan 500 *
All directors and 1,619,672 19.17
executive officers as a
group (21 persons)
(1) "Beneficial owner" generally means any person who, directly or indirectly,
has or shares voting power or investment power with respect to a security.
The Corporation believes that, except as otherwise indicated, each
shareholder has sole voting and investment power with respect to shares
listed as beneficially owned by such shareholder.
(2) Percentages less than one percent are denoted by an asterisk.
(3) Includes 120,711 Common Shares held by Mrs. Mary P. Anderson, trustee, Mr.
Anderson's spouse. Included in the 248,533 Common Shares are 7,028 shares
which Mr. Anderson has the right to acquire from the Company through the
exercise of a stock option from the Company within 60 days.
(4) Includes 154,897 Common Shares held by Mrs. Frances H. Anderson, Mr.
Anderson's spouse; 4,548 Common Shares held by Key Trust Company, trustee
for Richard P. Anderson trust for Michigan State University, a trust for
whom the principal beneficiary is Mrs. Frances H. Anderson; and 4,548 shares
held by Key Trust Company, trustee for Richard P. Anderson trust for The
Ohio State University, a trust for whom the principal beneficiary is Mrs.
Frances H. Anderson. Mr. Anderson disclaims beneficial ownership of such
Common Shares. Included in the 392,284 Common Shares are 62,377 shares
which Mr. Anderson has the right to acquire from the Company through the
exercise of a stock option from the Company within 60 days.
(5) Includes 75,958 Common Shares held by Mrs. Una Anderson, Mr. Anderson's
spouse.
(6) Includes 53,396 Common Shares held by Mrs. Carol H. Anderson; Mr.
Anderson's spouse; 500 Common Shares held by Michael J. Anderson, Jr., Mr.
Anderson's son; 2,000 Common Shares held by Laura J. Anderson, Mr.
Anderson's daughter; 2,000 Common Shares held by Colin J. Anderson, Mr.
Anderson's son; 4,548 Common Shares held by Key Trust Company, trustee for
Michael J. Anderson trust for Michigan State University, a trust for whom
the principal beneficiary is Mrs. Carol H. Anderson; and 4,548 shares held
by Key Trust Company, trustee for Michael J. Anderson trust for University
of Illinois, a trust for whom the principal beneficiary is Mrs. Carol H.
Anderson. Mr. Anderson disclaims beneficial ownership of such Common
Shares. Included in the 139,167 Common Shares are 18,481 shares which Mr.
Anderson has the right to acquire from the Company through the exercise of a
stock option from the Company within 60 days.
(7) Includes 55,983 Common Shares held by Mrs. Carol J. Kraus, Mr. Kraus'
spouse, and 74,684 Common Shares held by Key Trust Company, trustee for
Carol J. Kraus trust for Eric L. Kraus, a trust for whom the principal
beneficiary is Eric L. Kraus, Mr. Kraus' son. Mr. Kraus disclaims beneficial
ownership of such Common Shares. Included in the 187,443 Common Shares are
1,000 shares which Mr. Anderson has the right to acquire from the Company
through the exercise of a stock option from the Company within 60 days.
(8) Included in the 102,670 Common Shares are 3,520 shares which Mr. Anderson
has the right to acquire from the Company through the exercise of a stock
option from the Company within 60 days.
(9) Included in the 29,272 Common Shares are 10,320 shares which Mr. Braker
has the right to acquire from the Company through the exercise of a stock
option from the Company within 60 days.
(10) Includes 4,548 Common Shares held by Key Trust Company, trustee for
Christopher J. Anderson trust for Harvard Business School, a trust for whom
the principal beneficiary is Mrs. Susan Anderson; and 4,548 shares held by
Key Trust Company, trustee for Christopher J. Anderson trust for Ohio State
University, a trust for whom the principal beneficiary is Mrs. Susan
Anderson. Mr. Anderson disclaims beneficial ownership of such Common
Shares. Included in the 115,108 Common Shares are 4,640 shares which Mr.
Anderson has the right to acquire from the Company through the exercise of a
stock option from the Company within 60 days.
(11) Included in the Common Shares balance of Mr. Barrett, Mr. Nichols and Mr.
Mennel are 1,000 shares which each has the right to acquire from the Company
through the exercise of a stock option from the Company within 60 days.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following summary compensation table sets forth the compensation of the
Corporation's chief executive officer and four other most highly compensated
executive officers (the "named executive officers") for the years ended
December 31, 1994, December 31, 1995 and December 31, 1996.
Summary Compensation Table
Long Term All Other
Annual Compensation Compensation Compensation
Name and Position Year Salary Bonus Option Grants (a)
Richard P. 1996 $385,834 $91,000 15,890 $4,500
Anderson 1995 363,333 60,000 4,620
Chairman of the 1994 335,000 202,500 4,620
Board and Chief
Executive Officer
Thomas H. 1996 220,000 50,000 10,040 4,500
Anderson 1995 245,000 35,000 4,620
Chairman Emeritus 1994 226,667 125,000 4,620
Joseph L. Braker 1996 236,376 50,000 9,600 4,500
President 1995 235,876 45,000 4,620
Agriculture Group 1994 224,071 150,000 4,620
Michael J. 1996 224,419 65,000 9,600 4,500
Anderson 1995 211,628 20,000 4,620
President and 1994 200,765 100,000 4,620
Chief Operating
Officer
Christopher J. 1996 141,631 35,000 3,200 4,249
Anderson 1995 119,620 15,000 3,334
President 1994 103,754 35,000 2,864
Processing and
Manufacturing
Group
(a) Corporation's matching contributions to its 401(k) retirement plan.
Option Grants
The following table sets forth information on grants of stock options
during the year ended December 31, 1996 to the executive officers named in the
Summary Compensation Table. No stock appreciation rights were granted in 1996.
1996 Option Grants
Potential Realizable
Value at Assumed Annual
rates of Stock Price
Appreciation for
Individual Grants Option Term (b)
% of
Number Total
of Options
Securities Granted to
Underlying Employees in Exercise
Options Fiscal or Base Expiration
Granted(a) Year Price Date 5% 10%
Richard P. 15,890 12.21% $8.60 2/20/01 $37,754 $83,428
Anderson
Thomas H. 10,040 7.71% $8.60 2/20/01 $23,855 $52,713
Anderson
Joseph L. 9,600 7.37% $8.60 2/20/01 $22,809 $50,403
Braker
Michael J. 9,600 7.37% $8.60 2/20/01 $22,809 $50,403
Anderson
Christopher J. 3,200 2.46% $8.60 2/20/01 $7,603 $16,801
Anderson
(a) These options, granted on February 20, 1996, were 40% vested at the date
of grant, 30% after one year and 30% after two years.
(b) Potential realizable value is based on the assumed annual growth of the
Company's Common Stock for the five-year option term. Annual growth of 5%
results in a stock price of $10.98 per share and 10% results in a price of
$13.85 per share. Actual gains, if any, on stock option exercises are
dependent on the future performance of the stock. There can be no assurance
that the amounts reflected in this table will be achieved.
Pension Plans
The Corporation has a Defined Benefit Pension Plan (the "Pension Plan")
which covers substantially all employees who work greater than 1,000 hours
annually. Benefits are payable annually upon retirement at age 65 or older. A
discount of six percent per year is applied for retirement before age 65. The
annual benefit is equal to the employee's years of service multiplied by (a)
1% of average compensation (for five highest consecutive years out of the last
ten years of service) plus (b) 0.5% of average compensation in excess of the
Social Security covered compensation. The compensation covered by the Pension
Plan is equal to the employee's base pay plus bonus, which in the Summary
Compensation Table is the executive's salary and bonus, but beginning in 1989,
was limited by the Internal Revenue Code to $200,000, adjusted for inflation,
and beginning in 1994 is limited to $150,000, which will also be
adjusted for inflation in future years. Each of the named executives has nine
years of credited service.
In addition, the Corporation has a Supplemental Retirement Plan (the
"Supplemental Plan") which is a non-qualified deferred compensation plan
designed to cover all employees (primarily executives) who are participants in
the Pension Plan and whose salary exceeds the 1994 Internal Revenue Code limit
of $150,000. Benefits under this Supplemental Plan are calculated exactly as in
the Pension Plan but without the Internal Revenue Code limit of $150,000 and
then the Pension Plan benefit is subtracted to determine the Supplemental Plan
benefit.
The table below reflects the total benefits that an employee would receive
under the Pension Plan and the Supplemental Plan for the indicated average
compensation and years of service upon retirement at age 65 and election of a
single life annuity.
Average Approximate Annual Retirement Benefit
Five-Year Based Upon the Indicated Years of Service Compensation
5 10 15 25 30
Years Years Years Years Years
$ 50,000 $ 3,100 $ 6,200 $ 9,300 $15,500 $18,600
100,000 6,900 13,700 20,600 34,300 41,100
150,000 10,600 21,200 31,800 53,000 63,600
200,000 14,400 28,700 43,100 71,800 86,100
250,000 18,100 36,200 54,300 90,500 108,600
300,000 21,900 43,700 65,600 109,300 131,100
350,000 25,600 51,200 76,800 128,000 153,600
400,000 29,400 58,700 88,100 146,800 176,100
450,000 33,100 66,200 99,300 165,500 198,600
500,000 36,900 73,700 110,600 184,300 221,100
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the "Committee") is
pleased to present its report on executive compensation. The Committee reviews
and makes recommendations to the Board of Directors regarding salaries,
compensation and benefits of executive officers and key employees of the
Corporation and grants options to purchase Common Shares of the Corporation.
This Committee report documents the components of the Corporation's executive
officer compensation programs and describes the bases upon which compensation
will be determined by the Committee with respect to the executive officers of
the Corporation, including the executive officers that are named in the
compensation tables (the "Named Executives").
This Committee report shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the Corporation specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts. Compensation Philosophy. The compensation philosophy of the Corporation
is to endeavor to directly link executive compensation to continuous
improvements in corporate performance and increases in shareholder value. The
Committee has adopted the following objectives as guidelines for compensation
decisions.
Display a willingness to pay levels of compensation that are
necessary to attract and retain highly qualified executives.
Be willing to compensate executive officers in recognition of
superior individual performance, new responsibilities or new
positions within the Corporation.
Take into account historical levels of executive compensation and
the overall competitiveness of the market for high quality executive
talent.
Implement a balance between short- and long-term compensation to
complement the Corporation's annual and long-term business objectives
and strategy and encourage executive performance in furtherance of
the fulfillment of those objectives.
Provide variable compensation opportunities based on the performance
of the Corporation, encourage share ownership by executives and align
executive remuneration with the interests of shareholders.
Compensation Program Components. The Committee regularly reviews the
Corporation's compensation program to ensure that pay levels and incentive
opportunities are competitive with the market and reflect the performance of
the Corporation. The particular elements of the compensation program for
executive officers are further explained below.
Base Salary and Bonus. The Corporation's base pay levels are largely
determined by evaluating the responsibilities of the position held and the
experience of the individual and by comparing the salary scale with
companies of similar size and complexity. Actual base salaries are kept
within a competitive salary range for each position that is established
through job evaluation and market comparisons and approved by the Committee
as reasonable and necessary.
Long-Term Compensation Plan. The Corporation sponsors a LongTerm
Performance Compensation Plan that provides certain of the Corporation's
employees with share options and/or performance awards based on the
performance of the Corporation as a whole and of each recipient
individually. The exercise price of such options is the market price of the
Common Shares on the date of the grant. The Long-Term Performance
Compensation Plan has been designed to provide the benefits of equity-based
performance compensation.
Employee Benefit Plans. The Corporation sponsors an Employee Share
Purchase Plan that provides the Corporation's employees with the opportunity
to purchase Common Shares through a payroll deduction plan.
Chief Executive Officer Compensation. The 1996 fiscal year cash
compensation for Mr. Richard P. Anderson, the Corporation's Chairman of the
Board and Chief Executive Officer, was set by the Compensation Committee of the
Board of Directors based on past compensation practices and policies. Taking
these practices and policies into account, Mr. Anderson's annual base salary
was set at $385,834 for 1996, and his bonus was determined to be $91,000 for
1996. In the future, the Committee will undertake responsibility for
establishing Mr. Anderson's annual cash compensation. In doing so, the
Committee will consider a number of factors, including prior compensation
arrangements, corporate performance, individual performance and competitive
standards.
Summary. After its review of all existing programs, the Committee
continues to believe that the total compensation program for executives of the
Corporation is focused on increasing values for shareholders and enhancing
corporate performance. The Committee currently believes that the compensation
of executive officers is properly tied to share appreciation through the Long-
Term Performance Compensation Plan. The Committee believes that executive
compensation levels at the Corporation are competitive with the compensation
programs provided by other corporations with which the Corporation competes.
The foregoing report has been approved by all members of the Committee.
COMPENSATION COMMITTEE
John F. Barrett (chair), David L.
Nichols and Charles A. Sullivan
PERFORMANCE GRAPH
The graph below compares the total shareholder return on Company Common
Stock to the cumulative total return for the NASDAQ U.S. Index and to the
cumulative total return the NASDAQ Non-Financial Index. The indices reflect the
year-end market value of an investment in the stock of each company in the
index, including additional shares assumed to have been acquired with cash
dividends, if any.
The graph assumes a $100 investment in The Andersons, Inc. Common stock
on February 29, 1996 (first month-end after trading began) and also assumes
investments of $100 in each of the NASDAQ U.S. and the NASDAQ Non-Financial
indices, respectively, on February 29, 1996. The value of these investments on
December 31, 1996 is shown in the table below the graph.
The Andersons, Inc. Performance Graph
Base Period Cumulative Returns
February 29, 1996 1996
The Andersons, Inc. $100.00 $79.61
NASDAQ U.S. $100.00 $117.91
NASDAQ Non-Financial $100.00 $117.50
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Proposals of shareholders intended to be presented at the annual meeting
in 1998 must be received by the Secretary of the Corporation, at the address
below, not later than December 1, 1997 to be considered for inclusion in the
Corporation's 1998 proxy materials.
ADDITIONAL INFORMATION
This solicitation is being made by the Corporation. All expenses of the
Corporation in connection with this solicitation will be borne by the
Corporation. In addition to the solicitation by mail, proxies may be solicited
by directors, officers and other employees of the Corporation by telephone,
telex, in person or otherwise, without additional compensation. The
Corporation will request brokerage firms, nominees, custodians and fiduciaries
to forward proxy materials to the beneficial owners of shares held of record by
such persons and will reimburse such persons and the Corporation's transfer
agent for their reasonable out-of-pocket expenses in forwarding such materials.
The Corporation will furnish without charge to each person whose proxy is
being solicited, upon the written request of any such person, a copy of the
Corporation's Annual Reports on Form 10-K for the fiscal year ended December
31, 1996, as filed with the Securities and Exchange Commission, including the
financial statements and schedules thereto. Requests for copies of such Annual
Reports on Form 10-K should be directed to the Secretary of the Corporation at
the address below.
Please complete the enclosed proxy card and mail it in the enclosed
postage-paid envelope as soon as possible.
By order of the Board of Directors
______________________________
Beverly J. McBride
Secretary
THE ANDERSONS, INC.
480 West Dussel Drive
Maumee, Ohio 43537
March 31, 1997
PROXY
Solicited by the Board of Directors
THE ANDERSONS, INC.
480 West Dussel Drive
Maumee, Ohio 43537
The undersigned hereby appoints Matthew C. Anderson, John P. Kraus and
Beverly J. McBride, and each of them, proxies, with power of substitution and
revocation, acting by a majority of those present and voting or if only one is
present and voting then that one, to vote the share(s) of The Andersons, Inc.
which the undersigned is entitled to vote, at the Annual Meeting of
shareholders to be held on May 22, 1997 and at any adjournment or postponements
thereof, with all the powers the undersigned would possess if present, with
respect to the following:
Important - This Proxy must be signed and dated on the reverse side. THE BOARD
OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1, 2 AND 3.
1.Election of directors
FOR all nominees WITHHOLD AUTHORITY
(except as indicated) to vote for all nominees
Nominees: Donald E. Anderson, Michael J. Anderson, Richard M. Anderson,
Richard P. Anderson, Thomas H. Anderson, John F. Barrett, Paul M. Kraus, Donald
M. Mennel, David L. Nichols, Dr. Sidney A. Ribeau, Charles A. Sullivan (To
withhold authority to vote for any nominee, strike out that nominee's name.)
2.Approval of an amendment to the Corporation's Long-Term Performance
Compensation Plan.
FOR AGAINST ABSTAIN
3.Ratification of the appointment of Ernst & Young LLP as the Corporation's
independent public accountants.
FOR AGAINST ABSTAIN
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR ALL NOMINEES LISTED AND FOR THE RATIFICATION OF ERNST & YOUNG LLP AS THE
CORPORATION'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31,
1997.
Please sign exactly as names appear on this
Proxy. Joint owners should each sign.
Trustees, executors, etc. should indicate
the capacity in which they are signing.
[] I plan to attend the meeting.
Signature(s)_________________________
_____________________________________
Dated:___________________, 1997
APPENDIX A
THE ANDERSONS, INC.
AMENDED AND RESTATED
LONG-TERM PERFORMANCE COMPENSATION PLAN
SECTION I
Purpose
1.1 Purpose. The purpose of The Andersons, Inc. Amended and Restated Long-
Term Performance Compensation Plan (the "Amended Plan" or the "Plan") is
to provide competitive Long-Term Compensation to Participants that aligns
their interests with shareholder interests through share ownership and
investment in the Company, and to encourage long-term growth in
shareholder value through the achievement of specified financial
objectives.
1.2 Rule 16b-3 Plan. With respect to persons subject to Section 16 of the Act
("Section 16 Persons"), transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors
promulgated under the Act. To the extent any provision of the Plan or
action by the Committee or the Board fails to so comply, it shall
be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee or the Board. Moreover, in the event the Plan
does not include a provision required by Rule 16b-3 to be stated therein,
such provision (other than one relating to eligibility requirements, or
the price and amount of awards) shall be deemed automatically to be
incorporated by reference into the Plan insofar as Participants who are
Section 16 Persons are concerned.
1.3 Effectiveness of the Plan. The Amended Plan will be effective upon the
approval of the Amended Plan by the Company's shareholders. The Plan, as
so amended, will remain in effect until the earlier of the termination
date set forth in Section 11.2 hereof or such time as it is amended or
terminated by the Board in accordance with the terms of Section 11.2
hereof, except that no Incentive Stock Option may be granted under the
Plan on or after ten years from the effective date of the Plan.
SECTION II
Definitions
Unless the context indicates otherwise, the following terms have the meanings
set forth below.
2.1 "Act" means the Securities and Exchange Act of 1934, as amended.
2.2 "Award" means Options, Performance Awards, or cash granted pursuant to the
Plan.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Cause" means, with respect to any certain Participant:
(a) The willful and continued failure by such Participant to
substantially perform his or her duties with respect to the Company
(other than any such failure resulting from his or her incapacity due
to physical or mental illness), or
(b) the willful engaging by such Participant in conduct which is
demonstrably and materially injurious to the Company, monetarily or
otherwise. For purposes of this definition, no act, or failure to
act shall be deemed "willful" if done or omitted to be done by the
Participant in good faith and in the reasonable belief that such act
or omission was in the best interest of the Company.
2.5 "Change in Control" means the occurrence of any of the following events:
(a) any "person" or "group" (as those terms are used in Sections 13(d)
and 14(d) of the Act) other than an Exempt Person becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 promulgated
under the Act) (a "Beneficial Owner"), directly or indirectly, of
securities of the Company representing 20% or more of the combined
voting power of the Company's then outstanding voting securities;
(b) the Company's shareholders approve a merger or consolidation of the
Company with any other Person (other than a merger or consolidation
which would result in all or a portion of the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation) or the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's
assets;
(c) during any period of two consecutive years, individuals who were
members of the Board at the beginning of such period (together with
any individuals who became members of the Board after the beginning
of such period whose election to the Board or whose nomination for
election by the shareholders of the Company was approved by a vote of
at least a majority of the directors then still in office who were
either members of the Board at the beginning of such period or whose
election as a member of the Board was previously so approved) for any
reason cease to constitute a majority of the Board then in office; or
(d) any other events determined by the Committee or the Board to
constitute a Change in Control.
2.6 "Code" means the Internal Revenue Code of 1986, as amended.
2.7 "Committee" means the Compensation Committee of the Board.
2.8 "Common Shares" means the common shares, no par value per share, of the
Company, or any other class of capital shares which the Company may
authorize and issue from time to time, and as may be made subject to this
Plan in the sole discretion of the Board.
2.9 "Company" means collectively The Andersons, Inc., any successor entity in
a merger or consolidation, and any of its Subsidiaries, which elects to
participate in the Plan with the approval of the Board.
2.10 "Disability" means permanent and total disability as defined under Section
22(e)(3) of the Code.
2.11 "Exempt Person" shall mean (i) any Person that was a holder of Common
Shares on January 2, 1996; (ii) to the extent a Person described in (i)
above is an individual, such Person's spouse, descendants, spouses of
descendants, trustee of trusts established for the benefit of such
Person, spouses and/or descendants (acting in their capacity as trustees
of such trusts), and executors of estates of such Person, spouses and/or
descendants (acting in their capacity as executors of such estates); (iii)
any Person (a) of which Persons described in (i) and/or (ii) above own
more than eighty percent (80%) of the voting shares or other voting
interests thereof and (b) of which Persons described in (i) and/or (ii)
above own shares or other interests representing more than eighty percent
(80%) of the total value of the shares or other interests of such Person;
(iv) each Participant; (v) each employee benefit plan of the Company and
(vi) any Person organized, appointed or established pursuant to the terms
of any benefit plan described in (v) above. For purposes of this
definition, "spouses" shall include widows and widowers until first
remarried and "descendants" shall include descendants by adoption.
2.12 "Fair Market Value" as of a certain date means the fair market value of
the Common Shares as determined by the Committee or the Board, as
applicable, in its sole discretion. In making such determination, the
Committee or the Board, as applicable, may use any of the reasonable
valuation methods defined in Treasury Regulation Section 1.421-7(e)(2).
2.13 "Grant Date" as used with respect to Options, means the date as of which
such Options are granted by the Committee or the Board, as applicable,
pursuant to the Plan.
2.14 "Incentive Stock Option" or "ISO" means an Option conforming to the
requirements of Section 422 of the Code.
2.15 "Independent Director" shall have the meaning set forth in Rule 16b-3 or
its successors promulgated under the Act.
2.16 "Long-Term Compensation" means an annual compensation amount determined by
the Committee or the Board, as applicable, for each Participant and
delivered in the form of Options, Performance Awards and/or cash at the
discretion of the Committee or the Board.
2.17 "Nonqualified Stock Option" or "NQO" means an Option granted pursuant to
the Plan other than an Incentive Stock Option.
2.18 "Option" means an option to purchase Common Shares granted by the
Committee or the Board pursuant to the Plan, which may be designated as
either an "Incentive Stock Option" or a "Nonqualified Stock Option."
2.19 "Participant" has the meaning set forth in Section V hereof.
2.20 "Performance Goals" means specific, objective financial performance
measures set by the Committee or the Board with respect to an individual
Participant or group of Participants.
2.21 "Person" means an individual, a partnership, a limited liability company,
a corporation, an association, a joint stock company, a trust, an
unincorporated organization and any other entity or group.
2.22 "Plan" or "Amended Plan" means The Andersons, Inc. Amended and Restated
Long-Term Performance Compensation Plan as set forth herein and as may be
amended from time to time, subject to Section 11.1 hereof.
2.23 "Retirement" means a Participant's voluntarily leaving the employment of
the Company after his or her Early Retirement Date as defined in the
Company's Retirement Plan, or any predecessor plan, under which the
Participant has a vested right to an accrued benefit or any other
voluntary termination of a Participant's employment with the approval of
the Committee or the Board.
2.24 "Subsidiary" means a subsidiary corporation as defined in Section 424(f)
of the Code.
2.25 "Target Performance Award" means a portion of a Participant's Long-Term
Compensation, as determined by the Committee or the Board, expressed as a
specific dollar amount or as a number of Common Shares based upon the Fair
Market Value of the Common Shares on the first day of the Performance
Period.
SECTION III
Administration of the Plan
3.1 The Committee. The Plan shall be administered by the Committee. The
members of the Committee shall be appointed from time to time by, and
shall serve at the discretion of, the Board of Directors. At all times
during which the Company has a class of securities registered under
Section 12 of the Act, the Committee shall consist of not less than three
Independent Directors and the Committee shall be comprised solely of
Independent Directors who are both "independent directors" under Rule 16b-
3 promulgated under the Act and "outside directors" within the meaning of
Code Section 162(m).
3.2 Authority of the Committee and the Board. The Committee shall have all
powers and discretion necessary or appropriate to administer the Plan and
to control its operation, including, but not limited to, the power (a) to
determine which employees shall be granted Awards, (b) to prescribe the
terms, conditions and vesting schedule, if any, of such Awards, (c) to
determine the amount and form of Awards granted to Participants, (d) to
interpret the Plan and the Awards, (e) to adopt rules for the
administration, interpretation and application of the Plan as are
consistent therewith, and (f) to interpret, amend or revoke any such
rules subject to Section 11.1 hereof. All powers which are vested in the
Committee hereunder may also be exercised by the full Board of Directors,
at its discretion. In the event of a conflict between actions taken by
the Committee and the full Board, the action taken by the full Board shall
control.
The Committee and the Board, in their sole discretion and on such terms
and conditions as they may provide, may delegate their duties in order to
provide for the day-to-day administration of the Plan. The Committee
shall control the general administration of the Plan with all powers
necessary to enable it to carry out its duties in that respect;
provided, however, that neither the Committee nor the Board may delegate
its authority and powers (a) with respect to Section 16 Persons (other
than by the Board to the Committee) or (b) in any way which is
impermissible under Code Section 162(m) or the rules and regulations
promulgated thereunder.
3.3 Decisions Binding. All determinations and decisions made by the Committee
or the Board shall be final, conclusive, and binding on all Persons, and
shall be given the maximum deference permitted by law.
SECTION IV
Shares Subject to the Plan
4.1 Shares Subject to Plan. The Company shall reserve 900,000 Common Shares
(the "Plan Shares") for issuance under this Plan, subject to adjustment
pursuant to Section 4.2 hereof. Plan Shares may be Common Shares now or
hereafter authorized yet unissued or Common Shares already authorized,
issued and owned or purchased by the Company. If and to the extent
that any rights with respect to Plan Shares shall not be exercised by any
Participant for any reason or if such rights shall terminate as provided
herein, Plan Shares that have not been allocated to such Participant under
the Plan shall again become available for allocation to Participants
as provided herein.
4.2 Change in Capitalization. In the event of a change in the capitalization
of the Company due to a share split, share dividend, recapitalization,
merger, consolidation, combination, or similar event or as the Committee
or the Board shall in its sole discretion deem appropriate, the
aggregate number of Plan Shares and the terms of any existing Awards shall
be adjusted by the Committee or the Board to reflect such change.
SECTION V
Eligibility
The Committee and the Board shall each have the discretion to select directors,
officers and employees of the Company for participation in the Plan. The
discretion of the Committee and the Board to select such Participants shall be
absolute and no person otherwise eligible for participation shall have any
right to participate. Only persons so selected shall be deemed "Participants"
for purposes hereof.
SECTION VI
Stock Options
6.1 Grant of Options. Options may be granted to Participants, subject to the
provisions of the Plan, at any time and from time to time, as determined
in the sole discretion of the Committee or the Board. The Committee or
the Board, as applicable, shall in its sole discretion, determine the
number of Options granted to each Participant; provided, however, that in
any one calendar year, no one Participant shall be granted Options to
purchase a number of Common Shares in excess of 150,000. Options granted
may be ISOs, NQOs, or a combination thereof.
6.2 Option Agreement. Each Option shall be evidenced by a written option
agreement (an "Option Agreement") that shall specify the Option price, the
expiration date of the Option, the number of shares to which the Option
pertains, any conditions to exercise of the Option, and such other terms
and conditions as the Committee, in its discretion, shall determine. The
Option Agreement also shall specify whether the Option is intended to be
an ISO or a NQO.
6.3 Option Price. The price for each Common Share deliverable upon the
exercise of an Option (the "Option Price") shall not be less than 100% of
the Fair Market Value of the Company's Common Shares as of the date the
Option is granted; provided, however, that with respect to ISOs, if at
the time that an ISO is granted, the Participant (together with Persons
whose share ownership is attributable to the Participant pursuant to
Section 424(d) of the Code) owns shares possessing more than 10% of the
total combined voting power of all classes of the Company's or any of its
Subsidiaries' capital shares, the Option Price of the ISO shall be not
less than one hundred and ten percent (110%) of the Fair Market Value of a
share on the date that the ISO is granted.
6.4 Exercise of Options. Options granted under the Plan shall be exercisable
at such times, and subject to such restrictions and conditions, as the
Committee or the Board, as applicable, shall determine in its sole
discretion, except that any outstanding Options at the time of a Change
in Control will be immediately exercisable without regard to any vesting
restrictions attached to such Options. A Person electing to exercise an
Option shall give written notice of such election to the Company in such
form as the Committee or the Board, as applicable, may require.
6.5 Expiration of Options. Each Option shall terminate upon the first to
occur of the events listed in this section.
(a) the date for termination of such Option set forth in the Option
Agreement applicable to such Option;
(b) the expiration of ten years from the date such Option was granted;
(c) the expiration of one year from the date of the Optionee's
Termination of Employment for a reason other than the Optionee's
death, Disability or Retirement, or for Cause, it being understood
that the exercise of an Incentive Stock Option at any time after
ninety (90) days from the date of such Termination of Employment
shall result in the loss of favorable tax treatment for the optionee
with respect to such ISO under the Code;
(d) The expiration of one year from the date of the Optionee's death,
Disability or Retirement if such events occur while the Optionee is
in the employ of the Company; or
(e) Termination of employment for Cause.
6.6 Payment. The Option Price upon exercise of any Option shall be payable to
the Company in full in cash. The Committee or the Board also may, in its
sole discretion, permit exercise (a) by tendering previously acquired
Common Shares having an aggregate Fair Market Value at the time of
exercise equal to the total Option Price (provided that the Common Shares
which are tendered must have been held by the Participant or his or her
Permitted Transferees for at least six (6) months prior to their tender to
satisfy the Option Price), or (b) by any other means which the Committee
or the Board determines, in its sole discretion, to both provide legal
consideration for the Common Shares and to be consistent with the purposes
of the Plan.
As soon as practicable after receipt of a written notification of exercise
and full payment for the Common Shares purchased, the Company shall
deliver to the Participant or his or her Permitted Transferees
certificates (in the Participant's or such Permitted Transferee's name)
representing such Common Shares.
6.7 Nontransferability of Options. Options granted under this Section VI
shall not be transferable other than by will or the laws of descent and
distribution and during the Participant's lifetime shall be exercisable
only by the Participant or by his or her guardian or legal
representative; provided, however, that a Participant may (a) in a manner
specified by the Committee or the Board, designate in writing a
beneficiary to exercise his or her Option after the Participant's death,
provided that no such designation shall be effective unless received by
the office of the Company designated for that purpose prior to the
Participant's death, and (b) if the Option Agreement expressly permits,
transfer an Option (other than an Incentive Stock Option) for no
consideration to any (i) member of the Participant's Immediate Family,
(ii) trust solely for the benefit of members of the Participant's
Immediate Family or (iii) partnership whose only partners are members of
the Participant's Immediate Family. Each transferee in a transfer or
designation described in clauses (a) and (b) above is referred to with
respect to a certain Participant as such Participant's "Permitted
Transferee." Each Permitted Transferee shall remain subject to all of the
terms and conditions applicable to such Option prior to such transfer.
For purposes of this Section VI, the term, "Immediate Family" means a
Participant's spouse and lineal ascendants and descendants, and adopted
children.
6.8 Certain Additional Provisions for Incentive Stock Options.
(a) The aggregate Fair Market Value (determined at the time the Option is
granted) of the Common Shares with respect to which ISOs are
exercisable for the first time by any Participant during any calendar
year shall not exceed $100,000.
(b) ISOs may be granted only to persons who are employees of the Company
at the time of grant.
(c) No ISO may be exercised after the expiration of ten years from the
date such ISO was granted; provided, however, that if the ISO is
granted to a Participant who, together with Persons whose stock
ownership is attributed to the Participant pursuant to Section
424(d) of the Code, owns shares possessing more than 10% of the total
combined voting power of all classes of the Company's or any of its
Subsidiaries' capital shares, the ISO may not be exercised after the
expiration of five years from the date that it was granted.
SECTION VII
Compensation Payable in Stock or Options
The Committee or the Board may, at any time and from time to time, at the
request of a Participant, designate that a portion of such Participant's
compensation otherwise payable in cash be payable in Common Shares or Option.
The Committee or the Board, as applicable, shall have the sole discretion to
determine the value of the Common Shares or Options so payable and the terms
and conditions under which such Common Shares shall be issued or such Options
shall be granted.
SECTION VIII
Performance Award
8.1 Establishing Target Performance Awards. The Committee or the Board may,
at any time and from time to time, grant awards of Common Shares, cash, or
both ("Performance Awards"), to Participants on a contingency basis. The
Committee or the Board, as applicable, shall have complete discretion in
determining the size and composition of Performance Awards to be granted
to a Participant or group of Participants and the appropriate period over
which performance is to be measured ("Performance Period"). Prior to each
Performance Period, the Committee or the Board shall determine (a) the
Target Performance Award available for each Participant or group of
Participants, (b) specific Performance Goals to be achieved during the
Performance Period, and (c) the percentage of Performance Awards to be
paid in relation to various Performance Goals achieved during the
Performance Period.
8.2 Must Achieve Threshold Performance. No individual Performance Awards will
be paid under the Plan with respect to any Performance Period unless the
Company as a whole achieves a threshold level of performance during such
Performance Period, as specified by the Committee or the Board, as
applicable.
8.3 Payment of Earned Performance Awards. Performance Awards earned under the
Plan will be delivered to Participants in the form of Common Shares or
cash at the discretion of the Committee or the Board. Where the
Performance Award is expressed as a specific dollar amount, Performance
Awards will be converted to Common Shares based upon the Fair Market Value
of the Common Shares on the date the Performance Award is to be delivered
to such Participant. All portions of Performance Awards earned will be
paid to Participants within 60 days following the conclusion of the
Performance Period.
8.4 Vesting of Performance Awards. Except as set forth in Section 8.6,
Participants in the Plan have no vested rights to Performance Awards
earned under the Plan until the end of the Performance Period. In order
to be eligible to receive a Performance Award, a Participant: (i) must be
actively employed by the Company as of the end of the Performance Period,
(ii) must have terminated employment during the Performance Period due to
death, Retirement, or Disability while an active Participant, or (iii)
must have been an active Participant at the time of a Change in Control.
Exceptions to the conditions set forth in clauses (i) and (ii) above may
be made by Committee or the Board, in their sole discretion.
8.5 Effect of Retirement, Death, or Disability. Participants whose active
employment is terminated by reason of death, Retirement, or Disability
during any Performance Period will receive prorated Performance Awards
earned with respect to such Performance Period proportionate to the number
of days they were actively employed by the Company during such Performance
Period.
8.6 Effect of Change of Control. In the event of a Change of Control, each
Participant who has theretofore been granted a Performance Award shall
receive, within 60 days of such Change in Control, a prorated amount of
such Participant's total Performance Award, proportionate to the number
of
days such Participant was actively employed by the Company during the
applicable Performance Period prior to such Change in Control, provided
such Participant has met his or her Performance Goal applicable to such
Performance Period and the Company as a whole has met its threshold level
of performance pursuant to Section 8.2 applicable to such Performance
Period, each as adjusted on a pro forma basis to reflect the length of the
Performance Period as shortened by such Change in Control. Nothing in
this Section 8.6 shall be construed as limiting a Participant's
opportunity to earn the remainder of his or her Performance Award for such
Performance Period if the Company continues to maintain the Plan after
such Change in Control, or to earn additional Performance Awards in the
event the Company institutes a new performance plan after such Change in
Control.
8.7 Effect of Position Changes. Any Participant whose Performance Goals are
adjusted in connection with a reclassification or change in such
Participant's employment status within the Company (i.e., a promotion or
transfer) will be entitled to receive a prorated amount of his or her
total Performance Award to the extent earned, based on the number of days
served in such Participant's position prior to such reclassification or
change.
8.8 Mid-hires or Transfers. An employee of the Company who becomes a
Participant on or before June 30 of any calendar year will be eligible to
participate in the Plan effective with the Performance Period beginning
immediately prior to the date such employee becomes an active Participant.
Such Participant's award will be prorated to reflect the number of days of
active employment during the initial Performance Period. Employees hired
after June 30 of any year will not be eligible to participate in the Plan
until the commencement of the next Performance Period immediately
following the date such employee begins employment with the Company.
SECTION IX
No Right to Continued Employment
Participation in the Plan shall confer no rights to continued employment with
the Company, nor shall it restrict the rights of the Company to terminate a
Participant's employment relationship at any time for cause or without cause.
SECTION X
Withholding Taxes
As a condition of delivery of cash or Common Shares upon exercise of an Option,
the issuance of Common Shares or the grant of Options in lieu of cash
compensation, or the payment of a Performance Award, the Company shall be
entitled to require that the Participant and/or his or her Permitted
Transferees (without regard to whether the Participant has transferred the
Award in accordance with the Plan) satisfy federal, state and local tax
withholding requirements as follows:
(a) Cash Remittance. Whenever Common Shares are to be issued upon the
exercise of an Option or payment of Award, the Company shall have the
right to require the Participant and/or his or her Permitted
Transferees to remit to the Company in cash an amount sufficient to
satisfy federal, state and local withholding tax requirements, if
any, attributable to such exercise or payment, prior to the delivery
of any certificate or certificates for such shares. In addition, the
Company shall have the right to withhold from any cash payment
required to be made pursuant thereto an amount sufficient to satisfy
the federal, state and local withholding tax requirements.
(b) Share Withholding or Remittance. In lieu of the remittance required
by Section X(a) hereof or, if greater, the Participant's estimated
federal, state and local tax obligations associated with an Award
hereunder, a Participant who is granted an Award may, to the extent
approved by the Committee or the Board, irrevocably elect by written
notice to the Company at the office of the Company designated for
that purpose, to (i) have the Company withhold Common Shares from any
Award hereunder or (ii) deliver other previously owned Common Shares,
the Fair Market Value of which as of the date on which any such tax
is determined shall be equal to the amount to be withheld, if any,
rounded down to the nearest whole share attributable to such
exercise, occurrence or grant; provided, however, that no election to
have Common Shares withheld from any Award shall be effective with
respect to an Award which was transferred by such Participant to a
Permitted Transferee or otherwise.
(c) Participants Subject to Section 16(b). Notwithstanding any other
provision herein, a share withholding election in connection with the
exercise of an Option may be made by a Participant who is subject to
Section 16(b) of the Act subject to the following additional
restrictions: (1) it may not be made within six months after the
grant of such Option (except in the case of the Death or Disability
of the Participant) and (2) it must be made either (a) six months or
more prior to the date as of which the amount of tax to be withheld
is determined (the "Tax Date"), or (b) within a ten day "window
period" preceding the Tax Date beginning on the third business day
following the release of the Company's quarterly or annual summary
statement of sales and earnings.
SECTION XI
Amendment or Termination of the Plan
11.1 Amendment. The Board may, from time to time but not more often than once
every six months (other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974 or the rules and
regulations promulgated thereunder), amend, modify or suspend the Plan,
but no such amendment, modification or suspension without the approval
of the shareholders shall increase the maximum number (determined as
provided in the Plan) of Plan Shares, other than as provided in Section
4.2 hereof. The Committee or the Board shall be authorized to make minor
or administrative modifications to the Plan as well as modifications to
the Plan that may be dictated by requirements of federal or state laws
applicable to the Company or that may be authorized or made desirable by
such laws.
11.2 Termination. The Plan shall terminate on January 2, 2006; provided,
however, that the Plan shall be subject to termination prior to such date
on the date set forth in a resolution of the Board terminating the Plan.
No termination of the Plan shall materially alter or impair the right of
any Participant to receive Awards previously granted hereunder without
such Participant's consent. In the event of a termination of the Plan,
(i) each Participant who has theretofore been granted a Performance Award
shall be entitled to receive, within 60 days of such termination,
a prorated amount of such Participant's total Performance Award,
proportionate to the number of days such Participant was actively employed
by the Company during the applicable Performance Period prior to such
termination, provided such Participant has met his or her Performance Goal
applicable to such Performance Period and the Company as a whole has
met its threshold level of performance pursuant to Section 8.2 applicable
to such Performance Period, each as adjusted on a pro forma basis to
reflect the length of such Performance Period as shortened by such
termination and (ii) all Options granted hereunder shall continue to be
valid and binding obligations of the Company going forward on the same
terms and conditions as set forth herein and in the applicable Option
Agreements.
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, distribution of
assets, or any other change in the corporate structure or shares of the
Company, the Committee or the Board shall make such adjustment as it
deems appropriate in the number and kind of Plan Shares, and in the
exercise price of outstanding Options. In the event of any merger,
consolidation or other reorganization in which the Company is not the
surviving or continuing corporation or in which a Change in Control is to
occur, all of the Company's obligations regarding Options and Performance
Awards that were granted hereunder and that are outstanding on the date of
such event shall, on such terms as may be approved by the Committee or the
Board prior to such event, be assumed by the surviving or continuing
corporation or cancelled in exchange for property (including cash) in
amounts determined by the Committee or the Board.
