FLOWERS INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 18, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders
of Flowers Industries, Inc. (the "Company") will be held on October
18, 1996 at 11:00 A.M. Eastern Daylight Time at the Thomasville
Cultural Center, 600 East Washington Street, Thomasville, Georgia, for
the following purposes:
(1) To elect four members to the Board of Directors;
(2) To consider and act upon a proposal to select Price
Waterhouse LLP as independent accountants for the Company for fiscal
year 1997; and
(3) To transact such other business as may properly come
before the meeting or any adjournment thereof;
all as set forth in the Proxy Statement accompanying this Notice.
Only holders of record of issued and outstanding shares of
Common Stock at the close of business on September 3, 1996 are
entitled to notice of, and to vote at, the meeting or any adjournment
thereof. A list of such shareholders will be open for examination by
any shareholder at the time and place of the meeting.
By order of the Board of Directors
G. ANTHONY CAMPBELL
Secretary
P.O. Box 1338
Thomasville, Georgia 31799
September 13, 1996
A PROXY CARD IS CONTAINED IN THE ENVELOPE IN WHICH THIS
PROXY STATEMENT WAS MAILED. SHAREHOLDERS ARE ENCOURAGED TO VOTE ON
THE MATTERS TO BE CONSIDERED AT THE MEETING AND TO SIGN AND DATE THE
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES. YOUR ATTENDANCE AT THE
MEETING IS URGED; IF YOU ATTEND THE MEETING AND DECIDE YOU WANT TO
VOTE IN PERSON, YOU MAY WITHDRAW YOUR PROXY.
<PAGE>
FLOWERS INDUSTRIES, INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 18, 1996
This Proxy Statement is furnished to the holders of the
common stock (the "Common Stock") of Flowers Industries, Inc. (the
"Company") in connection with the solicitation of proxies by the Board
of Directors of the Company to be voted at its Annual Meeting of
Shareholders to be held on October 18, 1996 at 11:00 A.M. Eastern
Daylight Time at the Thomasville Cultural Center, 600 East Washington
Street, Thomasville, Georgia. The business address of the Company's
principal office is P.O. Box 1338, Thomasville, Georgia 31799. It is
anticipated that this Proxy Statement will be mailed to shareholders
on or about September 13, 1996.
A proxy card is enclosed. Any shareholder sending in the
enclosed proxy has the power to revoke it at any time before it is
exercised. Proxies may be revoked by: (1) executing a valid proxy
bearing a later date; (2) sending written notice of revocation to the
Secretary of the Company; or (3) appearing at the meeting and voting
in person. When proxies in the accompanying form are returned
properly executed, the shares represented by effective proxies will be
voted according to instructions noted thereon.
Unless otherwise specified, the proxies will be voted in
favor of the four nominees for election to the Board of Directors of
the Company and in favor of the proposed selection of Price Waterhouse
LLP as independent accountants. The Board of Directors is not aware
at this date of any other matters which will come before the meeting.
If, however, any other matters should properly come before the
meeting, it is the intention of the persons named in the proxy to vote
thereon in accordance with their judgment.
The Company will bear the cost of solicitation of proxies by
the Board of Directors, including the charges and expenses of
brokerage firms and others for forwarding solicitation material to
beneficial owners of Common Stock. Officers, Directors, and employees
of the Company may solicit proxies by telephone, telegram, or personal
interview.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
A majority of the outstanding shares of Common Stock must be
represented in person or by proxy at the meeting in order to
constitute a quorum for the transaction of business. Abstentions and
non-votes will be counted for purposes of determining the existence of
a quorum at the meeting. The four candidates for election as
Directors will be elected by the affirmative vote of a plurality of
the shares of Common Stock present in person or by proxy and actually
voting at the meeting. In order for the proposed selection of Price
Waterhouse LLP as independent accountants for the Company for fiscal
year 1997 to be approved by the shareholders, the votes cast favoring
the proposal must exceed the votes cast opposing the proposal.
Abstentions and non-votes will have no effect on the voting with
respect to any proposal as to which there is an abstention or
non-vote. A non-vote may occur when a nominee holding shares of
Common Stock for a beneficial owner does not vote on a proposal
because such nominee does not have discretionary voting power and has
not received instructions from the beneficial owner.
Only holders of record of issued and outstanding shares of
Common Stock at the close of business on September 3, 1996 are
entitled to notice of, and to vote at, the meeting. The number of
outstanding shares of Common Stock, the holders of which were entitled
to vote on September 3, 1996 was 58,430,989. All common share amounts
shown in this Proxy Statement have been adjusted to reflect the three
for two stock split effected through a stock dividend paid
1
<PAGE>
by the Company on November 17, 1995. Each shareholder is entitled
to one vote for each share of Common Stock held on the record date.
Shareholders are not entitled to cumulative voting in favor of
Directors.
The following table sets forth certain information with
respect to the only persons or groups known by the Company to own
beneficially more than five percent of the Company's outstanding
Common Stock. The determination of "beneficial ownership" is made
pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "1934 Act"). Such Rule provides that shares shall be
deemed "beneficially owned" where a person or group has, either solely
or in conjunction with others, the power to vote or to direct
the voting of shares and/or the power to dispose, or to direct the
disposition of shares; or where a person or group has the right to
acquire any such power within 60 days after the date such "beneficial
ownership" is determined.
<TABLE>
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Outstanding Stock
==================== =================
Voting Dispositive Voting Dispositive
============================= ========= =========== ======== ===========
<C> <C> <C> <C> <C>
Wellington Management Company 1,698,315(a) 5,362,365(a) less than 5% 9.31%
75 State Street
Boston, MA 02109
</TABLE>
(a) Shared voting and shared dispositive power only. According
to a Schedule 13G filed with the Securities and Exchange
Commission ("SEC") on February 14, 1996 by Wellington
Management Company ("WMC"), as of December 31, 1995, shares
of the Company's Common Stock were beneficially owned by
numerous investment advisory clients of WMC, none of which
were known to have a beneficial interest with respect to
more than 5% of the Company's outstanding Common Stock.
ELECTION OF DIRECTORS
Directors of the Company are divided into three classes, so
that only one class is elected each year. Unless authority to vote is
withheld, proxies in the accompanying form will be voted for the
following four nominees to the Board of Directors to serve for three
years or until their successors shall be elected and shall have
qualified. In the event that any nominee is unable to serve, such
proxies will be voted for the remaining nominees and for such other
person or persons, if any, as the proxy holders may determine.
However, the Board of Directors has no reason to believe that
any nominee will be unable to serve if elected. Set forth below is
certain information about the Director-nominees and about the
Directors whose terms expire in 1997 and 1998. Except as otherwise
indicated, all have engaged in their principal occupations for more
than the past five years.
Director-nominees:
JOE E. BEVERLY, age 55, is Vice Chairman of the Board of
Synovus Financial Corp. (NYSE) and Chairman of the Board of Commercial
Bank in Thomasville, Georgia, a wholly-owned subsidiary of Synovus
Financial Corp. He was President and a director of Commercial Bank
from 1973 to 1989. Mr. Beverly was elected as a Director of the
Company by the Board of Directors in August, 1996, and he is a member
of the Audit Committee.
RUSSELL M. FRYAR, age 57, who joined the Company in 1972, is
Vice President and Treasurer of the Company. He has been a Director
of the Company since 1975 and is a member of the Finance, Pension and
Banking Committees.
AMOS R. McMULLIAN, age 59, is Chairman of the Board of
Directors and Chief Executive Officer of the
2
<PAGE>
Company. He joined the Company's predecessor corporation in 1963
and has been a Director of the Company since 1975. Mr. McMullian is
Chairman of the Executive Committee and a member of the Nominating
Committee.
J. V. SHIELDS, JR., age 58, is Managing Director and
Chairman of the Board of Directors of Shields & Company, New York, New
York, a diversified financial services company and member of the New
York Stock Exchange, Inc. Mr. Shields also is the Chairman of the
Board of Capital Management Associates, Inc., a registered investment
advisor, and the Chairman of the Board of Trustees of The 59 Wall
Street Trust, the Brown Brothers Harriman mutual funds group. He has
been a Director of the Company since 1989 and is a member of the
Audit, Pension and Finance Committees.
Directors Whose Terms Expire in 1997:
FRANKLIN L. BURKE, age 55, a private investor since 1991, is
the former Senior Executive Vice President and Chief Operating Officer
of Bank South Corp. (OTC), Atlanta, Georgia, and the former Chairman
and Chief Executive Officer of Bank South, N.A., the principal
subsidiary of Bank South Corp. From June 1993 through February 1994
Mr. Burke was employed as an advisor by the J. B. Fuqua Foundation,
Inc. He has been a Director of the Company since 1994 and is a member
of the Audit and Compensation Committees.
G. ANTHONY CAMPBELL, age 44, who joined the Company in 1983,
is General Counsel and Secretary of the Company. He has been a
Director of the Company since 1991.
ROBERT P. CROZER, age 49, has been Vice Chairman of the
Board of Directors of the Company since 1989. He joined the Company
in 1973, and he has been a Director of the Company since 1979. Mr.
Crozer is a member of the Executive and Finance Committees.
L. S. FLOWERS, age 74, retired as Chairman of the Board of
Directors of the Company in 1985. He has been a Director of the
Company since 1968 and is a member of the Executive and Nominating
Committees. Mr. Flowers also is a Director of American Heritage Life
Insurance Company, the principal subsidiary of American Heritage Life
Investment Corporation (NYSE).
JOSEPH L. LANIER, JR., age 64, has been Chairman of the
Board of Directors and Chief Executive Officer of Dan River Inc.,
Danville, Virginia, a textile company, since 1989. He is a Director
of Dimon, Inc. (NYSE), SunTrust Banks, Inc. (NYSE), and Torchmark
Corp. (NYSE). Mr. Lanier has been a Director of the Company since
1977 and is Chairman of the Compensation Committee.
Directors Whose Terms Expire in 1998:
EDWARD L. BAKER, age 61, is Chairman of the Board and Chief
Executive Officer of Florida Rock Industries, Inc. (AMEX), a
construction materials company based in Jacksonville, Florida, which
produces and markets sand, gravel, crushed stone, concrete blocks and
other building materials throughout the Southeast. He is also a
Director of American Heritage Life Insurance Company, the principal
subsidiary of American Heritage Life Investment Corporation (NYSE),
Regency Realty Corporation (NYSE), and FRP Properties (OTC). Mr.
Baker is Chairman of the Audit Committee, a member of the Compensation
Committee and has been a Director of the Company since 1992.
HEETH VARNEDOE III, age 59, who joined the Company's
predecessor corporation in 1960, is President and Chief Operating
Officer of the Company. Mr. Varnedoe has been a Director of the
Company since 1980 and is a member of the Executive Committee. He
also is a Director of Integrity Music, Inc. (OTC).
3
<PAGE>
C. MARTIN WOOD III, age 53, is Senior Vice President and
Chief Financial Officer of the Company. He joined the Company in 1970
and has been a Director of the Company since 1975. Mr. Wood is
Chairman of the Finance and Banking Committees, and is a member of the
Executive and Pension Committees.
Heeth Varnedoe III is a nephew of L. S. Flowers. The spouses
of Robert P. Crozer, J.V. Shields, Jr. and C. Martin Wood III are
nieces of L.S. Flowers.
John B. Ellis is retiring from the Board of Directors
effective as of the Company's annual meeting on October 18, 1996. Mr.
Ellis has served on the Board since 1968. He served on both the
Compensation and Finance Committees and has been Chairman of the
Pension Committee since April 1983. The Company expresses its sincere
gratitude and appreciation to Mr. Ellis for his distinguished service
and insightful guidance during his long association with the Company.
The following table shows the amount of Common Stock
beneficially owned as of August 16, 1996 by each Director and
Director-nominee, and by all Directors, Director-nominees, and
Executive Officers as a group, consisting of 14 persons. Each
individual has beneficial ownership of the shares which are subject to
any unexercised vested options held by him; and, except as indicated
by footnote, each individual has sole voting power and sole
investment power with respect to the number of shares beneficially
owned by him. Directors and Executive Officers are required to file
reports of their holdings and transactions in the Common Stock of the
Company with the Securities and Exchange Commission under federal
securities laws. All such reports have been timely filed.
<TABLE>
Amount and Nature Percent
of Beneficial of
Name Ownership Class
======================================== ================= =======
<S> <C> <C>
Edward L. Baker 21,775 *
Joe E. Beverly 27,000 (1) *
Franklin L. Burke 2,322 (2) *
G. Anthony Campbell 258,230 (3) *
Robert P. Crozer 1,134,294 (4) 1.93%
L. S. Flowers 260,064 (5) *
Russell M. Fryar 144,978 (6) *
Joseph L. Lanier, Jr. 33,449 (7) *
Amos R. McMullian 703,424 (8) 1.20%
J. V. Shields, Jr. 7,500 (9) *
Heeth Varnedoe III 296,475 (10) *
C. Martin Wood III 409,013 (11) *
All Directors and
Executive Officers
as a group (14 persons) 3,746,841 (12) 6.26%
______________________
</TABLE>
4
<PAGE>
* Less than one percent.
(1) Does not include 30,655 shares owned by the spouse of Mr. Beverly
and 7,443 shares owned by a trust for which his spouse is
co-trustee, as to which shares Mr. Beverly disclaims any
beneficial ownership.
(2) Includes 2,001 shares owned by the spouse of Mr. Burke, over
which shares Mr. Burke has investment authority.
(3) Includes unexercised stock options for 152,593 shares and
restricted stock awards of 64,283 shares, of which 21,427 shares
are subject to forfeiture.
(4) Includes: (i) unexercised stock options for 179,529 shares; (ii)
restricted stock awards of 108,481 shares, of which 50,624 shares
are subject to forfeiture; and (iii) 655,187 shares held by
limited partnerships in which Mr. Crozer and his spouse are the
general partners. Does not include the following shares as to
which Mr. Crozer disclaims any beneficial ownership: (i) 5,062
shares held by Mr. Crozer and his spouse as custodians for their
minor son; (ii) 134,816 shares held by trusts for the benefit of
Mr. Crozer's minor children; and (iii) 1,348,170 shares owned by
the spouse of Mr. Crozer.
(5) Does not include 294,890 shares owned by the spouse of Mr.
Flowers, as to which Mr. Flowers disclaims any beneficial
ownership.
(6) Includes unexercised stock options for 37,500 shares and
restricted stock awards of 29,999 shares, all of which are
subject to forfeiture. Does not include 27,000 shares owned by
the spouse of Mr. Fryar, as to which Mr. Fryar disclaims any
beneficial ownership.
(7) Does not include 15,927 shares owned by the spouse of Mr. Lanier,
as to which Mr. Lanier disclaims any beneficial ownership.
(8) Includes unexercised stock options for 150,000 shares and
restricted stock awards of 96,428 shares, of which 74,999 shares
are subject to forfeiture.
(9) Does not include 2,161,002 shares owned by the spouse of Mr.
Shields, as to which Mr. Shields disclaims any beneficial
ownership.
(10) Includes unexercised stock options for 120,000 shares and
restricted stock awards of 79,552 shares, of which 50,624 shares
are subject to forfeiture. Does not include 2,446 shares owned
by the spouse of Mr. Varnedoe, as to which Mr. Varnedoe disclaims
any beneficial ownership.
(11) Includes: (i) unexercised stock options for 37,500 shares; (ii)
restricted stock awards of 64,283 shares, of which 29,999 shares
are subject to forfeiture; and (iii) 34,200 shares held by a
trust of which Mr. Wood is co-trustee with shared voting and
investment power. Does not include the following shares, as to
which Mr. Wood disclaims any beneficial ownership: 1,939,462
shares owned by the spouse of Mr. Wood and 17,100 shares held by
Mr. Wood as custodian for a minor child.
(12) Includes unexercised stock options for 834,151 shares and
restricted stock awards of 550,512 shares, of which 334,646
shares are subject to forfeiture. Does not include the shares
with respect to which beneficial ownership is disclaimed as
indicated in the preceding footnotes.
5
<PAGE>
Committees of The Board of Directors
The Board of Directors has established certain standing
committees, which include the Audit, Nominating, and Compensation
Committees.
The Board of Directors met six times during the last fiscal
year. Its Audit Committee met twice; its Nominating Committee met
twice; and its Compensation Committee met twice. Each incumbent
Director attended at least 75 percent of the aggregate number of
meetings of the Board of Directors and all committees on which he
served during his respective period of service.
The members of the Audit Committee are Edward L. Baker,
Chairman, Joe E. Beverly, Franklin L. Burke, and J. V. Shields, Jr.;
and the functions of the Audit Committee are: (a) recommending to the
Board of Directors the engagement or discharge of independent
auditors; (b) reviewing investigations into matters relating to audit
functions; (c) reviewing with independent auditors the plan for and
results of the audit engagement; (d) reviewing the scope and results
of the Company's internal auditing procedures; (e) reviewing the
independence of the auditors; (f) considering the range of audit and
non-audit fees; (g) reviewing the adequacy of the Company's system
of internal accounting controls; and (h) reviewing related party
transactions.
The members of the Nominating Committee are L. S. Flowers
and Amos R. McMullian; and the functions of the Nominating Committee
are: (a) selecting or recommending to the Board of Directors selection
of, nominees for election as Directors; and (b) considering the
performance of incumbent Directors in determining whether to nominate
them for reelection. The Nominating Committee will consider
nominations for the next annual meeting which are submitted by
shareholders in writing to the Committee at the Company's principal
office by May 17, 1997.
The members of the Compensation Committee are Joseph L.
Lanier, Jr., Chairman, Edward L. Baker, Franklin L. Burke and John B.
Ellis; and the functions of the Compensation Committee are: (a)
approving, or recommending to the Board of Directors approval of,
compensation plans for officers and Directors; (b) approving, or
recommending to the Board of Directors approval of, remuneration
arrangements for Directors and senior management; and (c) granting
benefits under compensation plans.
Directors' Fees
Each non-employee member of the Board of Directors receives
payments pursuant to a standard arrangement. For fiscal year 1996,
such Directors received: (i) $850 for each meeting of the Board or
committee of the Board attended, with each chairman of a Board
committee receiving an additional $300 per meeting; (ii) $1,800 per
month; and (iii) reimbursement for travel expenses.
During the fiscal year, W. H. Flowers, Chairman Emeritus of
the Board of Directors of the Company through January 12, 1996, and L.
S. Flowers, a Director of the Company, received payments totaling
$159,903 and $61,802, respectively, for consulting services provided
to the Company pursuant to separate, written contracts between the
Company and each individual. The contracts provide that during their
term each of Messrs. Flowers will not compete, directly or indirectly,
with the Company. Unless earlier terminated, each respective contract
will terminate upon the death of each individual.
6
<PAGE>
EXECUTIVE COMPENSATION
Board Compensation Committee Report on Executive Compensation
The executive compensation program of the Company is
administered by the Compensation Committee of the Board of Directors
(the "Committee"), which is comprised of four non-employee Directors.
The Committee periodically evaluates the executive compensation
program to assure that it is reasonable, equitable, and competitive.
The Committee considers the recommendations of outside, independent
compensation specialists in evaluating compensation levels, plan
design, and administration.
Compensation Philosophy
The Committee administers each aspect of the executive
compensation program in a manner that emphasizes the Company's primary
long-term goals, which are the creation of consistent earnings growth
and the enhancement of shareholder value in the Company's Common
Stock. The Committee considers these goals to be attainable by
maintaining continuity within an experienced, professional and
technically proficient executive group. The compensation program is
therefore designed (a) to be competitive with other similarly
situated companies, (b) to be equitable by offering a reasonable level
of base compensation, and (c) to align the interests of the executives
with those of the shareholders. The primary compensation arrangements,
tailored to fulfill this philosophy and utilized by the Committee in
various combinations, are as follows:
Base Salary
Each year, the Committee reviews the contribution made to
the Company's performance by each senior executive and approves the
executive's base salary. The base salary represents the Company's
ongoing compensation commitment and forms the foundation for the
executive compensation program. The Committee ensures that a
competitive base salary is maintained for each executive by
periodically reviewing the results of independent national
survey data for comparable positions in companies with a dollar sales
volume similar to Flowers.
Bonus Plan
The Company's Annual Executive Bonus Plan (the "Bonus
Plan"), which has been in place for a number of years, provides for
an annual incentive bonus, which is expressed as a percentage of base
salary, varying by position with the Company. A bonus is awarded upon
the Company's attainment of a specified earnings per share goal. In
addition, the Bonus Plan is designed to provide the executive an
increased award, limited to an amount determined as twice the bonus
percentage established for the executive's position multiplied by the
executive's base salary, if actual earnings per share significantly
exceed the goal. Correspondingly, the Bonus Plan is designed to
provide the executive a lesser award if actual earnings per share fall
below the goal, and no award at all if actual earnings per share fall
below eighty percent of the goal. This mechanism provides motivation
for the executive to continue to strive for improved earnings per
share in any given year, regardless of the fact that the goal may, or
may not, be obtained.
7
<PAGE>
Stock Incentive Plans
In keeping with the Committee's philosophy that the element
of shareholder risk is an essential compensation tool, stock based
incentives comprise the largest portion of the compensation program
for the persons listed in the executive compensation tables. The
Committee believes that continuation of stock based incentives is
fundamental to the enhancement of shareholder value.
In years prior to fiscal 1993, the Committee granted stock
options under the Company's 1982 Incentive Stock Option Plan (the
"1982 Plan"). The 1982 Plan expired on October 15, 1992, and
therefore no additional grants will be made under the 1982 Plan,
although the individuals in the executive group have available
currently exercisable options with expiration dates up to the year
2001.
The 1989 Executive Stock Incentive Plan (the "1989 Plan")
is the Company's ongoing intermediate and long-term incentive plan.
The 1989 Plan provides the Committee an opportunity to make a variety
of stock based awards while selecting the form that is the most
appropriate for the Company and the executive group. The two types
described below contain elements which focus the executive's attention
on one of the Company's primary goals, the enhancement of shareholder
value.
NON-QUALIFIED STOCK OPTIONS: During fiscal 1996, the
Committee granted non-qualified stock options under the 1989 Plan (the
"1996 Options"). The 1996 Options are exercisable at any time,
commencing on the first anniversary of the grant date, until the year
2005. The executives are required to pay the market value of the
shares, determined as of the grant date, which was $12.67 (the "Option
Price"). The executives have no rights as shareholders with respect
to the shares subject to the 1996 Options until payment of the Option
Price. The 1996 Options are subject to forfeiture in the event of
termination of employment, other than for retirement, disability,
death, termination without cause, or termination for any reason
which the Committee determines should not result in forfeiture.
EQUITY INCENTIVE AWARDS: During fiscal 1992, the Committee
granted an award under the 1989 Plan referred to as the Equity
Incentive Award (the "1992 Award"). The executives are required to pay
one half of the market value of the shares, determined as of the award
date, no later than the termination of the last restrictions on the
1992 Award. The restrictions on the shares of the 1992 Award
terminate ratably over the five-year period ending November 15, 1996.
The unvested shares are subject to forfeiture in the event of
termination of employment, other than for retirement, disability,
death, termination without cause, or termination for any reason
that the Committee determines should not result in forfeiture, prior
to November 15, 1996. The executives are entitled to vote the shares
and receive the Common Stock dividend during the period in which the
shares are subject to forfeiture.
Consistent with the Committee's philosophy of aligning
executive compensation with the shareholders market appreciation goal,
the 1992 Award provided that in the event the per share market value
of the Common Stock reached or exceeded targeted per share market
values of $12 and $15.33 prior to the expiration of the 1992 Award on
November 15, 1996, the recipient would receive additional shares.
During fiscal 1993, the Common Stock targeted market value of $12 per
share was attained and additional shares equal to one-half of the 1992
Award were granted, at a purchase price of $6 per share, subject to
the same terms and conditions as the 1992 Award but with a three
year ratable period during which the restrictions lapsed. During
fiscal 1996, the Common Stock targeted market value of $15.33 per
share was attained and additional shares equal to one-half of the 1992
Award were granted at a purchase price of $7.67 per share, subject to
the same terms and conditions as the 1992 Award but with a three year
ratable period during which the restrictions will lapse.
8
<PAGE>
Compensation of Chief Executive Officer
During fiscal 1996, Mr. McMullian received a base salary of
$481,600, which amount was determined by the Committee to be
appropriate in consideration of the Company's performance, Mr.
McMullian's leadership and contribution to the Company's performance
and market conditions. In accordance with the terms of the Bonus
Plan, he was not awarded a bonus for fiscal 1996 since the actual
earnings per share fell below eighty percent of the earnings per share
goal.
During fiscal 1996, Mr. McMullian was granted the right to
purchase 53,572 shares of the Company's Common Stock under the terms
of the 1992 Award due to the common stock attaining the targeted
market value of $15.33 per share. In addition, he was granted
non-qualified stock options to purchase 150,000 shares of the
Company's Common Stock pursuant to the Company's 1989 Executive Stock
Incentive Plan.
Deductibility of Compensation Expenses
The Company is not allowed a federal income tax deduction
for compensation paid to certain executive officers in excess of $1
million, except to the extent such excess is paid under an "existing
binding contract" or otherwise constitutes "performance based
compensation" as defined by the Internal Revenue Code. The Committee
believes that the provisions of the Bonus Plan and the 1989 Executive
Stock Incentive Plan will result in performance based compensation and
the Company will not lose any federal income tax deduction for
compensation paid under the Company's existing compensation programs.
The Committee will consider this deduction limitation during future
deliberations and will continue to act in the best interests of
the Company.
Summary
The Committee believes the base salary and the Bonus Plan
provide an efficient and effective mechanism to reward the executive
group for the daily leadership required to maximize the Company's
current performance. Additionally, the stock-based awards granted
under the 1989 Executive Stock Incentive Plan serve to align the long
term interests of the executives with those of the shareholders so
that decisions are made as owners of the Company.
The Compensation Committee
of the Board of Directors
Joseph L. Lanier, Jr., Chairman
Edward L. Baker
Franklin L. Burke
John B. Ellis
9
<PAGE>
Flowers Industries, Inc.
Comparison of Five Year Cumulative Total Return
Versus S&P 500 and S&P Food Index
<TABLE>
[GRAPH HERE]
Base
Period
Company/Index Jun 91 Jun 92 Jun 93 Jun 94 Jun 95 Jun 96
=============== ======== ======== ====== ====== ====== ======
<S> <C> <C> <C> <C>
Flowers Industries Inc 100 109.94 107.10 123.48 138.13 178.86
S&P Foods-500 100 111.92 111.63 111.77 144.43 169.90
S&P 500 Index 100 113.41 128.87 130.68 164.75 207.59
</TABLE>
Companies in the S&P Food Index are weighted by market
capitalization and indexed to 100 at June 30, 1991. All dividends are
deemed reinvested over the reported period.
10
<PAGE>
EXECUTIVE COMPENSATION
The following table provides certain summary information
concerning compensation of the Company's Chief Executive Officer and
each of the four other most highly compensated Executive Officers of
the Company for the periods indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
Annual Compensation Long Term Compensation
================================== =======================================
Restricted Long Term All
Other Stock Option Incentive Other
Name and Fiscal Salary Bonus Comp. Awards Awards Payouts Comp.
Principal Position Year $ $ $ $ # $ $
============================== ====== ======= ======= ===== ======== ======== ========= ======
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Amos R. McMullian 1996 481,600 0 0 410,737 150,000 0 0
Chairman of the Board 1995 436,800 299,295 0 0 0 0 0
and Chief Executive Officer 1994 420,000 0 0 0 0 0 0
Robert P. Crozer 1996 370,700 0 0 277,239 90,000 0 0
Vice Chairman of the Board 1995 324,480 177,867 0 0 0 0 0
1994 312,000 0 0 0 0 0 0
Heeth Varnedoe III 1996 370,700 0 0 277,239 90,000 0 0
President and Chief Operating 1995 324,480 177,867 0 0 0 0 0
Officer 1994 312,000 0 0 0 0 0 0
George E. Deese 1996 255,900 0 0 187,297 60,000 0 0
President and Chief Operating 1995 235,900 113,147 0 0 0 0 0
Officer, Baked Products Group 1994 205,900 0 0 0 0 0 0
Gary L. Harrison 1996 255,900 0 0 187,297 60,000 0 0
President and Chief Operating 1995 235,900 188,147 0 0 0 0 0
Officer, Mrs. Smith's Bakeries,
Inc. 1994 205,900 75,000 0 0 0 0 0
</TABLE>
The individuals set forth in the table above held the
following Equity Incentive Award shares granted under the 1989
Executive Stock Incentive Plan, subject to the restrictions of each
grant, and valued at the fiscal year end closing market price of
$16.125, less the price required to be paid by the individual at the
time the restrictions lapse. Messrs. McMullian 96,428 shares,
$944,150; Crozer 108,481 shares, $1,134,495; Varnedoe 79,552 shares,
$803,027; Deese 34,201 shares, $318,582; Harrison 73,285 shares,
$766,407. The shares earn the Common Stock dividend.
11
<PAGE>
Option Grants in Last Fiscal Year
<TABLE>
Number of Percent
Securities of Total
Underlying Options Exercise Grant
Options Granted or Base Date
Granted to Employees Price Expiration Present
Name # in Fiscal Year ($/SH) (1) Date (2) Value ($) (3)
======================== ========== ============== ========== ============== ============
<S> <C> <C> <C> <C> <C>
Amos R. McMullian 150,000 26.67% 12.67 August 3, 2005 443,301
Robert P. Crozer 90,000 16.00% 12.67 August 3, 2005 265,981
Heeth Varnedoe III 90,000 16.00% 12.67 August 3, 2005 265,981
George E. Deese 60,000 10.67% 12.67 August 3, 2005 177,320
Gary L. Harrison 60,000 10.67% 12.67 August 3, 2005 177,320
</TABLE>
NOTES:
(1) The exercise price is equal to the fair market value on the date
of the grant, adjusted to reflect the three for two stock split
effected through a stock dividend paid by the Company on November
17, 1995.
(2) Options have a ten year term and become exercisable on the first
anniversary of the grant date.
(3) In accordance with the Securities and Exchange Commission rules,
the Black-Scholes option pricing model was used to estimate the
Grant Date Present Value assuming: (I) an expected volatility of
21.77%, (ii) an expected dividend yield of 4.31%, (iii) a
risk-free interest rate of 6.70%, (iv) an option term of ten
years, and (v) no discounts for non-transferability or risk of
forfeiture.
The following table provides information on option exercises
during fiscal 1996 by the named executive officer and the value of
unexercised options, at the fiscal year end closing price of $16.125.
Aggregate Option Exercises in the Last Fiscal Year and Year End Option
Values
<TABLE>
Value of
Number of Unexercised
Unexercised in-the-Money
Options at Options at
Year End Year End
=============== =============
Annualized
Shares Acquired Value Value Exercisable/ Exercisable/
On Exercise Realized Realized Unexercisable Unexercisable
Name # $ $ (1) # $
===================== =============== ======== ========== ============= ==============
<S> <C> <C> <C> <C> <C>
Amos R. McMullian 0 0 0 NONE/150,000 NONE/518,700
Robert P. Crozer 0 0 0 89,529/90,000 680,051/311,220
Heeth Varnedoe III 29,529 180,875 18,087 30,000/90,000 211,260/311,220
George E. Deese 0 0 0 NONE/60,000 NONE/207,480
Gary L. Harrison 0 0 0 37,029/60,000 266,613/207,480
</TABLE>
(1) Represents the total value realized divided by the option period
of ten years.
12
<PAGE>
Severance Policy
The Company's Severance Policy (the "Policy") would pay one
year's compensation to any employee (including those who are members
of a collective bargaining unit and bargain to be included in the
Policy) who is actually or constructively terminated, other than for
good cause, following a Change in Control, as defined in the Company's
benefit plans. The Policy reduces the amount payable to any
individual who would be subject to the "golden parachute" excise tax
imposed by the Internal Revenue Code of 1986, as amended, if, and only
to the extent that, the net amount after taxes received by the
individual would be greater than if there had been no reduction.
Separation Agreements
The Company has authorized separation agreements with all
executive officers and certain other key employees. These agreements
serve as memoranda of the Change in Control provisions which have been
authorized by the Company in its benefit plans, and provide additional
benefits, including relocation benefits and certain welfare benefits
in the event of termination of employment following a Change in
Control, except that these benefits are to be reduced to the extent
benefits are received under the Severance Policy described above. The
Compensation Committee may select, in its sole discretion, any
additional executives to be offered such separation agreements.
Retirement Plan
The Flowers Industries, Inc. Retirement Plan No. 1 (the
"Retirement Plan") provides a pension upon retirement on or after age
65 to employees of the Company and its adopting subsidiaries. The
pension is the sum of annual credits earned during employment.
Currently, each annual credit is 1.35 percent of the first $10,000 of
W-2 earnings, subject to certain exclusions, for each year of service
and 2 percent of W-2 earnings, subject to certain exclusions, in
excess of $10,000 each year for each year of service. The table below
includes the estimated amounts which would be payable to the persons
indicated upon their retirement at age 65 under the provisions of the
Retirement Plan as supplemented by the Company's Supplemental
Executive Retirement Plan described immediately below and assuming
that payment is made in the form of a 50% joint and survivor annuity.
DISCLOSURE FOR CERTAIN INDIVIDUALS
<TABLE>
Credited Years Projected
of Service Annual Benefit
============== ==============
<S> <C> <C>
A. R. McMullian 32 $243,534
R. P. Crozer 22 $199,460
H. Varnedoe III 35 $159,317
G. E. Deese 32 $137,519
G. L. Harrison 40 $107,044
</TABLE>
13
<PAGE>
Supplemental Executive Retirement Plan
The Company's 1990 Supplemental Executive Retirement Plan
provides a supplemental retirement income benefit for any executive
who is a participant in the Retirement Plan, if his Retirement Plan
benefit is subject to certain restrictions which apply to
tax-qualified plans. The supplemental benefit is equal to the excess
of (I) the benefit he would have received according to the Retirement
Plan formula had he not been subject to limitations on maximum
benefits or pensionable compensation which may be provided by
tax-qualified plans over (ii) the amount he will receive from the
Retirement Plan as so limited. The 1990 Supplemental Executive
Retirement Plan is not tax-qualified. The purpose of the Plan is to
ensure that each participating executive's total retirement income
benefits will equal the amounts that would have been payable to him
under the Retirement Plan absent said limitations. Payments pursuant
to this Plan will be calculated in the form of a life only annuity,
and the actuarial equivalent thereof will be paid in the form which
the participating executive has elected for purposes of the Retirement
Plan. Payments will be made from the Company's general assets.
Payments will be made at the same time as the participant's
distributions from the Retirement Plan, except in the event of a
Change in Control, in which event the actuarial equivalent of
anticipated payments will be paid immediately in a lump sum. Accruals
under this Plan during fiscal year 1996 amounted to $1,249,278 and
$6,125 was distributed from the Plan during fiscal year 1996.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Under the terms of an agreement between the Company and
Merrily Plantation, Inc. ("Merrily"), the Company is granted the use
of approximately 6,000 acres of land owned by Merrily, together with
the use of lodging, dining, and conference room facilities located
thereon. The facilities are used primarily for seminars, training
sessions, planning sessions, and other meetings involving Company
employees and for the entertainment of customers. During the last
fiscal year, the Company paid Merrily $93,918. The Company
has surveyed facilities comparable to Merrily to assess the relative
quality and cost of such facilities and has determined that the amount
paid to Merrily for the use of its facilities is competitive with that
charged for the use of comparable facilities. The Company has further
determined that the use of the Merrily facilities in the past has been
beneficial to the business of the Company and that its continued use
for employee functions and entertainment of customers is in the
Company's best interest. All of the outstanding capital stock of
Merrily is owned by the three children of W. H. Flowers, the former
Chairman Emeritus of the Board of Directors of the Company, and the
Fontaine Flowers McFadden Merrily Trust, a trust formed for the
benefit of the descendants of a deceased daughter of W. H. Flowers.
One of the shareholders is the spouse of C. Martin Wood III, who is
Senior Vice President and Chief Financial Officer, a Director of the
Company and an Assistant Secretary-Treasurer of Merrily; another of
such shareholders is the spouse of Robert P. Crozer, who is Vice
Chairman of the Board and a Director of the Company; and another of
such shareholders is the spouse of J. V. Shields, Jr., who is a
Director of the Company and a Director-nominee herein.
Pursuant to its previously announced stock repurchase
program, between April 2, 1996 and April 30, 1996, the Company
purchased, through Shields and Company ("Shields"), a total of 52,000
shares of its Common Stock for a total consideration of $674,019, of
which $2,600 represented commissions paid to Shields. J. V. Shields,
Jr., a Director of the Company and a Director-nominee herein, is
Managing Director and Chairman of the Board of Directors of Shields.
14
<PAGE>
As an adjunct to the Company's stock repurchase plan, the
Company from time to time purchases its Common Stock in private
transactions. On August 22, 1995, the Company purchased from Russell
M. Fryar, Vice President and Treasurer, and a Director of the Company
and a Director-nominee herein, 10,000 shares of Common Stock at the
then market value, for a total consideration of $215,000. Of the
10,000 shares, 4,484 shares had been held by Mr. Fryar for more than
two years, 4,566 of the shares were acquired by him pursuant to the
purchase of an Equity Incentive Award on November 17, 1993, at a cost
of $9.00 per share and 950 of the shares were acquired by him pursuant
to the purchase of an Equity Incentive Award on November 17, 1993,
at a cost of $7.00 per share.
In 1990, the Company loaned Gary L. Harrison, President and
Chief Operating Officer of Mrs. Smith's Bakeries, Inc., the sum of
$500,000. Mr. Harrison's note is secured by shares of Flowers Common
Stock owned by him and by a life insurance policy. In August 1996,
the note was amended to provide that principal is to be repaid only in
amounts equal to annual incentive bonuses earned by Mr. Harrison. The
note becomes immediately due and payable upon termination of
employment, disability, or death. The balance due on Mr. Harrison's
note, as of August 16, 1996, is $182,962.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Action is to be taken at the meeting concerning the
selection of the Company's independent accountants for fiscal year
1997. Price Waterhouse LLP, which acted as the Company's independent
accountants during the last fiscal year, is being recommended for
selection as the Company's independent accountants for fiscal year
1997.
Representatives of Price Waterhouse LLP will be present at
the meeting and will be available to respond to appropriate questions.
Such representatives will be offered the opportunity to make a
statement if they desire to do so.
The Board of Directors recommends a vote FOR the selection of
Price Waterhouse LLP as the Company's independent accountants
for fiscal year 1997.
SHAREHOLDERS' PROPOSALS
Any shareholder of the Company who wishes to present a
proposal to be considered at the next annual meeting must deliver such
proposal in writing to the Secretary of the Company by May 17, 1997 in
order for it to be included in the proxy material for the 1997 Annual
Meeting.
FLOWERS INDUSTRIES, INC.
G. ANTHONY CAMPBELL
Secretary
P.O. Box 1338
Thomasville, Georgia 31799
15
[ATTACHMENT -- PROXY CARD]
FLOWERS INDUSTRIES, INC.
P. O. BOX 1338
THOMASVILLE, GEORGIA 31799
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The
undersigned hereby appoints Amos R. McMullian, Robert P. Crozer and G.
Anthony Campbell, and each of them, with power of substitution in
each, proxies to appear and vote, as designated below, all Common
Stock of Flowers Industries, Inc. held of record on September 3, 1996
by the undersigned, at the Annual Meeting of Shareholders to be held
on October 18, 1996, and at all adjournments thereof. Management
recommends a vote in favor of all nominees listed in Item 1 and
in favor of Proposal 2.
1. ELECTION OF DIRECTORS
Nominees: Joe E. Beverly, Russell M. Fryar, Amos R. McMullian,
J.V. Shields Jr.
[box] FOR all nominees listed above [box] WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all
nominees listed
above
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST ABOVE.
2. PROPOSAL TO SELECT PRICE WATERHOUSE LLP AS INDEPENDENT
ACCOUNTANTS FOR THE COMPANY FOR FISCAL YEAR 1997.
[box] FOR [box] AGAINST [box] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS
INDICATED. IF NO INDICATION IS MADE, IT WILL BE VOTED IN FAVOR OF ALL
DIRECTOR-NOMINEES AND IN FAVOR OF PROPOSAL 2.
Dated: __________________________. 1996
________________________________________
________________________________________
(Please sign exactly as name appears on this proxy. When shares are
held by joint tenants, both should sign. When signing in a fiduciary
or representative capacity, give full title as such.)
PLEASE MARK, DATE, AND SIGN THIS PROXY, INDICATING ANY CHANGE OF
ADDRESS, AND RETURN IT PROMPTLY TO WACHOVIA BANK OF NORTH CAROLINA,
N.A., P.O. BOX 3001, WINSTON-SALEM, NORTH CAROLINA 27102-3001. THE
ENCLOSED ENVELOPE ALREADY IS ADDRESSED AND NO POSTAGE IS REQUIRED IF
MAILED IN THE UNITED STATES.
