SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. ___)
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[X] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec.
240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
FLOWERS INDUSTRIES, INC.
(Name of Registrant as Specified in Charter)
- -----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement,
if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
FLOWERS INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 17, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders
of Flowers Industries, Inc. (the "Company") will be held on October
17, 1997 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 five members to the Board of Directors;
(2) To amend the Second Restated Articles of Incorporation
to increase the number of authorized shares of Common
Stock from 100,000,000 shares to 350,000,000 shares;
(3) To ratify and approve an amendment to the Company's
Executive Stock Incentive Plan (the "ESIP") providing
for an increase in the number of shares authorized to
be issued under the ESIP and other related matters;
(4) To ratify and approve an amendment to the Company's
Annual Executive Bonus Plan (the "Bonus Plan")
providing for an increase in the maximum performance
bonus and other related matters;
(5) To ratify and approve the Company's Nonemployee
Directors' Equity Plan providing for the granting of
stock options to Directors;
(6) To consider and act upon a proposal to select Price
Waterhouse LLP as independent accountants for the
Company for fiscal year 1998; and
(7) To transact such other business as may properly come
before the meeting;
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 2, 1997 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
1919 Flowers Circle
Thomasville, Georgia 31757
September 12, 1997
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 17, 1997
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 (the "Meeting") to be held on October 17, 1997 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 1919 Flowers Circle, Thomasville,
Georgia 31757. It is anticipated that this Proxy Statement will be
mailed to shareholders on or about September 12, 1997.
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 five nominees for election to the Board of Directors of the
Company, the proposed amendment of the Second Restated Articles of
Incorporation to increase the number of authorized shares,
ratification and approval of the proposed amendment to the ESIP,
ratification and approval of the proposed amendment to the Bonus Plan,
ratification and approval of the proposed Nonemployee Directors'
Equity Plan and 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.
However, should any such other matters (including shareholder
proposals omitted from this proxy statement in accordance with the
rules and regulations of the Securities and Exchange Commission
("SEC")) properly come before the Meeting, it is the intention of the
persons named in the enclosed proxy to vote the proxy in accordance
with their best 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, facsimile
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. Proposal one, the nomination of five members
to the Board of Directors, requires for approval the affirmative vote
of a plurality of the shares of Common Stock present in person or by
proxy and actually voting at the Meeting. Proposal two, the amendment
of the Second Restated Articles of Incorporation, requires for its
approval the favorable vote of the majority of outstanding shares of
Common Stock entitled to vote thereon. Proposal three, ratification
and approval of an amendment to the ESIP, Proposal four, ratification
and approval of an amendment to the Bonus Plan, Proposal five,
ratification and approval of the Nonemployee Directors' Equity Plan
and Proposal six, the selection of Price Waterhouse LLP as independent
accountants for the Company, each requires for its approval that the
votes cast favoring the proposal must exceed the votes cast opposing
the proposal. An abstention or non-vote on Proposal two has the same
effect as a vote "Against" such Proposal while abstentions and
non-votes will have no effect on the voting with respect to any of the
other proposals. 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 2, 1997 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 2, 1997 was _________________. 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
by the Company on May 2, 1997. 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
<PAGE>
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
<S> <C> <C> <C> <C>
Wellington Management 3,624,007(a) 8,574,517(a) less than 5% 9.90%
Company
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 13, 1997 by
Wellington Management Company ("WMC"), as of December
31, 1996, 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.
PROPOSAL NO.1
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 five 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 1998 and 1999. Except as otherwise
indicated, all have engaged in their principal occupations for more
than the past five years.
Director-nominees:
FRANKLIN L. BURKE, age 56, 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 45, 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 50, has been Vice Chairman of the Board
of Directors of the Company since 1989. He joined the Company in 1973,
and has been a Director of the Company since 1979. Mr. Crozer is
Chairman of the Nominating Committee and a member of the Executive
Committee.
L. S. FLOWERS, age 75, 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 Committee. 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 65, 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 also 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. Mr.
Lanier is Chairman of the Compensation Committee and a member of the
Nominating Committee.
<PAGE>
Directors Whose Terms Expire in 1998:
EDWARD L. BAKER, age 62, 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, and a member of the Compensation
and Nominating Committees. He has been a Director of the Company since
1992.
HEETH VARNEDOE III, age 60, who joined the Company's
predecessor corporation in 1960, retired from the office of President
and Chief Operating Officer on June 28, 1997. Mr. Varnedoe is
currently employed as a consultant by the Company and serves on the
Company's Board of Directors, which he was first elected to in 1980,
and is a member of the Executive Committee. Mr. Varnedoe also is a
Director of Integrity Music, Inc. (OTC).
C. MARTIN WOOD III, age 54, 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 Pension and Finance Committee, and is a member of the Executive
and Banking Committees.
Directors Whose Terms Expire in 1999:
JOE E. BEVERLY, age 56, is Chairman of the Board of Commercial
Bank in Thomasville, Georgia, a wholly-owned subsidiary of Synovus
Financial Corp. (NYSE) and is the former Vice Chairman of the Board 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 is a member of
the Audit Committee.
RUSSELL M. FRYAR, age 58, 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 Pension and Finance, and
Banking Committees.
AMOS R. McMULLIAN, age 60, is Chairman of the Board of
Directors and Chief Executive Officer of the 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 59, 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 Pension and Finance
Committee.
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.
The following table shows the amount of Common Stock
beneficially owned as of September 2, 1997, 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. Based solely on its review of the copies of such forms received
by it, the Company believes that, for the fiscal year ended June 28,
1997, the Section 16(a) filing requirements were complied with by all
incumbent Executive Officers, Directors and Director-nominees during
the year.
<PAGE>
<TABLE>
AMOUNT AND NATURE PERCENT
OF BENEFICIAL OF
NAME OWNERSHIP CLASS
<S> <C> <C>
Edward L. Baker 32,662 *
Joe E. Beverly 41,000 (1) *
Franklin L. Burke 7,397 (2) *
G. Anthony Campbell 397,077 (3) *
Robert P. Crozer 1,665,640 (4) 1.88%
L. S. Flowers 390,096 (5) *
Russell M. Fryar 202,354 (6) *
Joseph L. Lanier, Jr. 51,598 (7) *
Amos R. McMullian 1,048,161 (8) 1.18%
J. V. Shields, Jr. 11,250 (9) *
Heeth Varnedoe III 309,903(10) *
C. Martin Wood III 590,275(11) *
All Directors and
Executive Officers
as a group (14 persons) 5,439,822(12) 6.06%
</TABLE>
*Less than one percent.
(1) Does not include 45,982 shares owned by the spouse of Mr. Beverly
and 11,164 shares owned by a trust for which his spouse is
co-trustee, as to which shares Mr. Beverly disclaims any
beneficial ownership.
(2) Includes 3,750 shares owned by the spouse of Mr. Burke, over
which shares Mr. Burke has investment authority.
(3) Includes restricted stock awards of 41,857 shares, of which
31,144 shares are subject to forfeiture.
(4) Includes: (i) unexercised stock options for 269,294 shares; (ii)
restricted stock awards of 76,034 shares, of which 57,954 shares
are subject to forfeiture; and (iii) 982,780 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) 7,593
shares held by Mr. Crozer and his spouse as custodians for their
minor son; (ii) 204,774 shares held by trusts for the benefit of
Mr. Crozer's minor children; and (iii) 2,014,792 shares owned by
the spouse of Mr. Crozer.
(5) Does not include 432,923 shares owned by the spouse of Mr.
Flowers, as to which Mr. Flowers disclaims any beneficial
ownership.
(6) Includes unexercised stock options for 56,250 shares, and
restricted stock awards of 31,144 shares, of which 31,144 are
subject to forfeiture. Does not include 40,500 shares owned by
the spouse of Mr. Fryar, as to which Mr. Fryar disclaims any
beneficial ownership.
<PAGE>
(7) Does not include 23,890 shares owned by the spouse of Mr. Lanier,
as to which Mr. Lanier disclaims any beneficial ownership.
(8) Includes unexercised stock options for 225,000 shares and
restricted stock awards of 110,554 shares, of which 110,554
shares are subject to forfeiture.
(9) Does not include 3,241,503 shares owned by the spouse of Mr.
Shields, as to which Mr. Shields disclaims any beneficial
ownership.
(10) Includes unexercised stock options for 150,000 shares and
restricted stock awards of 36,160 shares, of which 36,160 shares
are subject to forfeiture. Does not include 21,606 shares owned
by the spouse of Mr. Varnedoe, as to which Mr. Varnedoe disclaims
any beneficial ownership.
(11) Includes: (i) unexercised stock options for 56,250 shares; (ii)
restricted stock awards of 41,857 shares, of which 31,144 shares
are subject to forfeiture; and (iii) 51,300 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: 2,905,774
shares owned by the spouse of Mr. Wood and 25,650 shares held by
Mr. Wood as custodian for a minor child.
(12) Includes unexercised stock options for 992,338 shares and
restricted stock awards of 440,884 shares, of which 376,949
shares are subject to forfeiture. Does not include the shares
with respect to which beneficial ownership is disclaimed as
indicated in the preceding footnotes.
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 five times during the last fiscal
year. Its Audit Committee met twice; its Nominating Committee met
twice; and its Compensation Committee met four times. 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 and Franklin L. Burke; 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 Robert P. Crozer,
Chairman, Edward L. Baker, Joseph L. Lanier, Jr. 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 shareh
olders in writing to the Committee at the Company's principal office
by May 15, 1998.
The members of the Compensation Committee are Joseph L. Lanier,
Jr., Chairman, Edward L. Baker and Franklin L. Burke. 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 nonemployee member of the Board of Directors receives
payments pursuant to a standard arrangement. For fiscal year 1997,
such Directors received: (i) $1,000 for each meeting of the Board or
committee of the Board attended, with each chairman of a Board
committee receiving an additional $200 per meeting; (ii) $1,800 per
month; and (iii) reimbursement for travel expenses.
<PAGE>
During the fiscal year, W. H. Flowers, retired Chairman of the
Board of Directors of the Company and L. S. Flowers, a Director of the
Company, received payments totaling $188,286 and $61,802,
respectively, for consulting services provided to the Company pursuant
to 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.
Heeth Varnedoe III, who retired as President and Chief
Operating Officer on June 28, 1997, is currently employed as a
consultant by the Company pursuant to a consulting agreement dated the
date of his retirement. Pursuant to that agreement, Mr. Varnedoe will
be paid compensation at the annualized rate of $389,235 through
February 7, 1998, and $194,618 through February 10, 1999. The
consulting agreement also provides for Mr. Varnedoe's continued
participation in the Company's employee benefit plans through
February 10, 1999. The agreement provides that, in consideration of an
additional payment of $45,000 per year, Mr. Varnedoe will not compete,
directly, or indirectly, with the Company.
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 three nonemployee 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 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.
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.
<PAGE>
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 "ESIP") is the
Company's ongoing intermediate and long-term incentive plan. The ESIP
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 ESIP (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 $8.44 (the "Option Price").
The executives have no rights as shareholders with respect to the
common 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 ESIP referred to as the Equity Incentive
Award (the "1992 Award"). The executives were 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 terminated ratably
over the five-year period ended November 15, 1996. The unvested shares
were 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 determined
should not result in forfeiture, prior to November 15, 1996. The
executives were entitled to vote the shares and receive the Common
Stock dividend during the period in which the shares were subject to
forfeiture. These shares fully vested in fiscal 1997 and all shares
were purchased by the executives.
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 $8.00 and $10.22 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 $8.00
per share was attained and additional shares equal to one-half of the
1992 Award were granted, subject to the same terms and conditions as
the 1992 Award but with a three year ratable period during which the
restrictions lapsed and at a purchase price of $4.00 per share.
These additional shares fully vested in fiscal 1996 and all shares
were purchased by executives. During fiscal 1996, the Common Stock
targeted market value of $10.22 per share was attained and additional
shares equal to one-half of the 1992 Award were granted, subject to
the same terms and conditions as the 1992 Award but with a three year
ratable period during which the restrictions will lapse and at a
purchase price of $5.11 per share.
Compensation of Chief Executive Officer
During fiscal 1997, Mr. McMullian received a base salary of
$505,680, 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,
Mr. McMullian was awarded a bonus of $505,680 for fiscal 1997 based
upon the actual earnings per share exceeding the earnings per share
goal. During fiscal 1997, Mr. McMullian did not receive an award under
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 additional
grant feature of Restricted Stock Awards made under 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 these compensation programs. The Committee
will consider this deduction limitation during future deliberations
and will continue to act in the best interests of the Company.
<PAGE>
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
STOCK PERFORMANCE GRAPH
[GRAPH GOES HERE]
<TABLE>
INDEXED RETURNS
Years Ending
Base
Period
Company/Index Jun92 Jun93 Jun94 Jun95 Jun96 Jun97
<S> <C> <C> <C> <C> <C> <C>
FLOWERS INDUSTRIES INC 100 97.42 112.31 125.65 162.69 262.80
S&P FOODS-500 100 99.74 99.87 129.05 151.81 212.28
S&P 500 INDEX 100 113.63 115.23 145.27 183.04 246.55
</TABLE>
Companies in the S&P Foods-500 Index are weighted by market
capitalization indexed to $100 at June 30, 1992. All dividends are
deemed reinvested over the reported period.
<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.
<TABLE>
SUMMARY COMPENSATION 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 1997 505,680 505,680 0 0 0 0 0
Chairman of the Board 1996 481,000 0 0 410,737 225,000 0 0
and Chief Executive Officer 1995 436,800 299,295 0 0 0 0 0
Robert P. Crozer 1997 389,235 311,388 0 0 0 0 0
Vice Chairman of the Board 1996 370,700 0 0 277,239 135,000 0 0
1995 324,480 177,867 0 0 0 0 0
Heeth Varnedoe III 1997 389,235 311,388 0 0 0 0 0
President and Chief Operating 1996 370,000 0 0 277,239 135,000 0 0
Officer 1995 324,480 177,867 0 0 0 0 0
George E. Deese 1997 268,695 188,087 0 0 0 0 0
President and Chief Operating 1996 255,900 0 0 187,297 90,000 0 0
Officer, Flowers Bakeries, Inc. 1995 235,900 113,147 0 0 0 0 0
Gary L. Harrison 1997 268,695 263,087 0 0 0 0 0
President and Chief Operating 1996 255,900 0 0 187,297 90,000 0 0
Officer, Mrs. Smith's Bakeries, Inc. 1995 235,900 188,147 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 ($16.75), less the price
required to be paid by the individual at the time the restrictions
lapse. Messrs. McMullian 80,358 shares, $935,367; Crozer 54,240
shares, $631,354; Varnedoe 54,240 shares, $631,354; Deese 36,644
shares, $426,530; Harrison 36,644 shares, $426,530. The shares earn
the Common Stock dividend.
The following table provides information on option exercises
during fiscal 1997 by the named executive officer and the value, at
the fiscal year end closing price ($16.75), of unexercised options.
There were no options granted during fiscal 1997.
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>
Amos R. McMullian 0 0 0 225,000/NONE 1,869,750/NONE
Robert P. Crozer 0 0 0 269,294/NONE 2,607,458/NONE
Heeth Varnedoe III 30,000 328,227 32,823 150,000/NONE 1,282,260/NONE
George E. Deese 0 0 0 90,000/NONE 747,900/NONE
Gary L. Harrison 0 0 0 145,544/NONE 1,347,570/NONE
</TABLE>
(1) Represents the total value realized divided by the option period
of ten years.
<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
CREDITED YEARS PROJECTED
OF SERVICE ANNUAL BENEFIT
A. R. McMullian 33 $263,133
R. P. Crozer 23 $225,256
H. Varnedoe III 36 $170,800
G. E. Deese 33 $148,649
G. L. Harrison 41 $119,924
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 1997 amounted to $695,862 and no
distributions were made from the Plan during fiscal year 1997.
<PAGE>
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 $92,388. 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 retired
Chairman 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 and a Director of the Company;
another of such shareholders is the spouse of Robert P. Crozer, who is
Vice Chairman of the Board and a Director-nominee herein; and another
of such shareholders is the spouse of J. V. Shields, Jr., who is a
Director of the Company.
In 1990, the Company loaned Gary L. Harrison, President and
Chief Operating Officer of Mrs. Smith's Bakeries, Inc., the sum of
$500,000, secured by shares of Flowers Common Stock owned by him and
by a life insurance policy. Mr. Harrison's note was paid in full on
August 15, 1997.
PROPOSAL NO. 2
AMENDMENT TO THE COMPANY'S SECOND RESTATED
ARTICLES OF INCORPORATION
The Company is presently authorized by its Second Restated
Articles of Incorporation to issue 100,000,000 shares of Common Stock,
par value $.625. As of September 2, 1997, the Company had
________________ shares issued and outstanding and _____ shares held
in treasury. The proposed text of this amendment is attached hereto as
ANNEX A. Management of the Company believes the number of shares of
Common Stock available for issuance does not provide adequate
flexibility to meet the future business needs of the Company.
Accordingly, the Directors of the Company recommend to the
shareholders that the Second Restated Articles of Incorporation of the
Company be amended to increase the authorized number of shares of
Common Stock from 100,000,000 to 350,000,000. The Company has no
current plans or proposals for the use of such additional shares nor
does it presently intend to use the additional shares in connection
with opposing any acquisition of the Company that is not approved by
the Board of Directors. However, the effect of the availability of
these additional shares may be to discourage or render more difficult
such an acquisition as a result of the dilutive effect on any
potential acquiring entity of the issuance of any such shares. In
1988, the Company increased its authorized Common Stock from
45,000,000 shares to 100,000,000 shares and since that time has
utilized this increase in authorized shares primarily to effect two
stock splits and for acquisitions. While the Company has no current
plans to declare another stock split, management feels it would be
prudent to be in a position to consider such action if it is
subsequently determined to be in the best interests of the Company.
In order to approve the proposed amendment, the affirmative
vote of holders of a majority of the outstanding shares is needed.
Approval of the proposed amendment will not provide any preemptive
rights to the shareholders with respect to the additional 250,000,000
shares of authorized Common Stock. Except in accordance with
applicable law, said shares may be issued on such terms and conditions
and at any time deemed suitable and prudent in the discretion of the
Board of Directors, and such authority shall not require the further
approval of the shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
PROPOSAL TO AMEND THE SECOND RESTATED ARTICLES OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
FROM 100,000,000 TO 350,000,000.
<PAGE>
PROPOSAL NO. 3
PROPOSAL TO RATIFY AND APPROVE THE SECOND AMENDMENT
TO THE 1989 EXECUTIVE STOCK INCENTIVE PLAN
The Company desires to continue its policy of encouraging
greater ownership of Common Stock by its officers and other employees
in order to align their interests more closely with those of the other
shareholders. For this purpose, subject to ratification and approval
by the shareholders of the Company at the Meeting, the Board of
Directors has adopted the Second Amendment (the "Second Amendment") to
the 1989 Executive Stock Incentive Plan (the "ESIP"). The ESIP was
originally approved by shareholders on October 21, 1989, and
subsequently amended by shareholders on October 20, 1995.
A summary of the proposed amendments is set forth below,
followed by a description of the ESIP. The full text of the Second
Amendment is annexed to this proxy statement as ANNEX B and the
summary is qualified in its entirety by reference thereto and to the
ESIP.
Authorized Shares
The Second Amendment increases the number of shares of Common
Stock that are authorized to be sold or delivered under the ESIP by
3,500,000, to a total number of 12,050,000 shares. At August 1, 1997,
there were approximately 3,300,000 shares remaining available under
the ESIP. These authorized shares may be original issuance shares or
treasury shares.
The Second Amendment also provides, in the event that any such
Common Stock ceases to be subject to an award, such shares of Common
Stock shall again be available for distribution in connection with
future awards under the ESIP. In the event of any merger,
reorganization, consolidation, recapitalization, stock dividend, stock
split or other change in the corporate structure affecting the Common
Stock, the Second Amendment provides that an equivalent substitution
or adjustment shall be made in the number of shares reserved for
issuance under the ESIP; provided, however, that the aggregate number
of shares actually issued or transferred by the Company upon
the exercise of incentive stock options pursuant to the ESIP shall not
exceed 12,050,000 shares of Common Stock.
Term of Plan
The Second Amendment provides that no awards shall be granted
pursuant to the ESIP on or after the tenth anniversary of the date of
shareholder approval of the Second Amendment, the effect of which is
to extend the life of the ESIP by approximately two (2) years.
Criteria for Awards
Any award may specify management objectives associated with the
award. Any award that specifies management objectives shall specify a
minimum acceptable level of achievement in respect of the specified
management objective below which no payment will be made or no benefit
will be conferred. Management objectives may be described in terms of
Company-wide objectives or objectives that are related to the
performance of the individual participant, product group, division,
subsidiary or other management reporting unit in which the participant
is employed. The management objectives may be relative to the
performance of other companies or entities. If any individual is, or
is determined by the Compensation Committee to be reasonably likely to
become, a covered employee within the meaning of Section 162(m) of the
Code, then awards to that individual that specify management
objectives shall be based on specified levels of, or growth in, one or
more of the following criteria: (i) share price, (ii) earnings, (iii)
earnings per share, (iv) revenue and (v) total stockholder return. In
no event shall any individual be granted, in any period of one
calendar year, awards that specify management objectives having an
aggregate value as of their respective dates of grant in excess of
$1,500,000.
<PAGE>
ESIP BENEFITS. The amounts that have been awarded to the
Company's Chief Executive Officer and each of the four other most
highly compensated Executive Officers, and to all eight Executive
Officers who participated in the ESIP for fiscal year 1997 are as
follows:
<TABLE>
NAME AND POSITION NO. OF UNITS DOLLAR VALUE
<S> <C> <C>
Amos R. McMullian 56,982 $ 462,979
Chairman of the Board and
Chief Executive Officer
Robert P. Crozer 21,794 $ 177,076
Vice Chairman of the Board
Heeth Varnedoe III 0 $ 0
President and
Chief Operating Officer
George E. Deese 14,996 $ 121,843
President and Chief Operating Officer
Flowers Bakeries, Inc.
Gary L. Harrison 14,996 $ 121,843
President and Chief Operating Officer
Mrs. Smith's Bakeries, Inc.
All Executive Officers 137,919 $1,120,592
as a group (8 persons)
</TABLE>
Principal Features of the ESIP
The plan provides for the granting of five types of benefits:
1. Stock options, which will enable participants to benefit
from increases in the market value of the Common Stock after
the grant date;
2. Stock appreciation rights, which provide an alternative
means of realizing the benefits provided by options;
3. Shares of Common Stock designated as restricted ("Restricted
Stock"), which are subject to restrictions on transfer and
risk of forfeiture upon the occurrence of certain events;
4. Deferred awards of Common Stock ("Deferred Stock"), which
involve the non-transferable right to receive Common Stock
without payment in cash or property; and
5. Other stock-based awards ("Other Stock-Based Awards"), which
entitle participants to receive cash payments, Common Stock
or a combination thereof.
ADMINISTRATION. The Plan is administered by the Compensation
Committee of the Board of Directors (the "Committee"). The current
members of the Committee are Messrs. Lanier, Baker and Burke.
ELIGIBILITY. Any person who is an officer (including an officer
who is a member of the Board of Directors) or other key employee of
the company or any of its subsidiaries may be selected by the
Committee to participate in the ESIP.
STOCK OPTIONS. The ESIP permits the granting of
non-transferable stock options that either qualify as incentive stock
options or non-qualified stock options. The option price per share of
stock purchasable under a stock option shall be determined by the
Committee at the date of grant, but shall be not less than 100% of the
fair market value of the stock on the date of grant.
<PAGE>
The term of each stock option shall be fixed by the Committee,
but no incentive stock options shall be exercisable more than 10 years
after the date of the grant.
The Committee shall determine at what time or times each stock
option may be exercisable; provided, however, unless otherwise
determined by the Committee, no stock option shall be exercisable
prior to the first anniversary date of the granting of the option. The
stock option may be made exercisable in installments and the
exercisability of options may be accelerated in the event of a Change
in Control, as defined in the ESIP.
At such time as the stock options may be exercised, they may be
exercised in whole or in part at any time during the option period by
giving written notice of the exercise to the Company, specifying the
number of shares to be purchased. The notice must be accompanied by
payment in full of the purchase price, either by check, note or other
instrument which is acceptable to the Committee, or, if the Committee
so determines, by delivery of stock already owned by the optionee
(based on the fair market value of the stock on the date the option is
exercised). An optionee shall generally have the right to dividends or
other rights of a shareholder with respect to shares subject to the
option when the optionee has given written notice of exercise, has
paid in full for the shares and, if requested, has made certain
investment representations.
Under the ESIP, in the event of termination of employment by
reason of normal retirement, approved early retirement, long-term
disability or death, an option may thereafter be exercised, to the
extent such option was then exercisable, for various periods of from
one to three years (or such shorter period if the Committee so
determines at the time of the grant) or until the expiration of the
stated term of the stock option, whichever period is shorter. If an
optionee's employment is terminated by reason of normal retirement,
approved early retirement or long-term disability and the optionee
thereafter dies while the option is still exercisable, the option
will, in general, be exercisable for twelve months following death (or
such shorter period as the Committee shall determine at the time of
the grant), subject to the stated term of the option. The Committee
may at or after the grant date provide for acceleration of the
exercisability of options upon termination of employment by reason of
normal retirement, approved early retirement, disability or death.
Unless otherwise determined by the Committee, on or after the
date of the grant, if an optionee's employment by the Company and any
subsidiary or affiliate terminates for any reason other than for the
reasons described above, the stock option shall terminate, except to
the extent otherwise then exercisable, by the lesser of three months
or the balance of the term of the stock option if the optionee is
involuntarily terminated by the Company, subsidiary or affiliate
without cause. "Involuntary termination" is deemed to be without cause
unless the optionee is terminated because of an act or acts of
dishonesty, moral turpitude or willful misconduct, which act or acts
were intended to result in substantial personal enrichment at the
expense of the Company. If an incentive stock option is exercised
after the expiration of the exercise periods that apply for purposes
of Section 422 of the Code, the option will thereafter be treated as a
non-qualified stock option.
The Committee may at any time offer to buy out for a payment in
cash, stock, Deferred Stock or Restricted Stock, any options
previously granted, based on terms and conditions that may be
established by the Committee and communicated to the optionee at the
time that the offer is made.
If the option agreement so provides, the Committee may require
that all or part of the shares to be issued with respect to the excess
of market value on the date of exercise over the exercise price of an
option shall take the form of Deferred or Restricted Stock, which
shall be valued on the date of exercise on the basis of the fair
market value of such Deferred or Restricted Stock, determined without
regard to deferral limitations and/or forfeiture restrictions
involved.
STOCK APPRECIATION RIGHTS. The Committee may also grant Stock
Appreciation Rights ("SARs") in conjunction with the options granted
under the ESIP. In the case of a non-qualified stock option, SARs may
be granted either at the time or after the time of the grant of such
stock option; whereas SARs may be granted only at the time of the
grant of an incentive stock option. An SAR granted with respect to a
given stock option generally will terminate and no longer be
exercisable upon the termination or exercise of the related stock
option.
Upon the exercise of an SAR, an optionee is entitled to receive
an amount in cash and/or shares of stock equal in value to the excess
of the fair market value of one share of stock on the date of exercise
over the option price per share specified in the related stock option,
multiplied by the number of shares in respect of which the SAR shall
have been exercised. The Committee has the right to determine the form
of payment. When the payment is to be made in shares, the number of
shares to be paid shall be calculated on the basis of the fair market
value of the shares on the date of exercise. When a payment is to be
made in cash, the amount is calculated on the basis of the average of
the highest and lowest quoted selling price, regular way, on the stock
of the New York Stock Exchange during a specified period.
<PAGE>
SARs are transferable only when and to the extent that the
underlying stock option would be transferable under the ESIP. The
Committee may grant "Limited SARs," which are rights that become
exercisable only in the event of a Change in Control as defined in the
ESIP. Such Limited SARs shall be settled solely in cash. The Committee
may also provide that in the event of a Change in Control, the amount
to be paid upon the exercise of an SAR or a Limited SAR shall be based
on the Change in Control Price as defined in the ESIP.
RESTRICTED STOCK. The Committee may also award shares of
Restricted Stock, subject to certain conditions set forth in the ESIP
and such other conditions and restrictions as the Committee may
determine, which may include the attainment of performance goals and
payment of a purchase price which shall be equal to or less than their
fair market value (and may be zero).
Prior to the lapse of restrictions on shares of Restricted
Stock, the participant will have all rights of a shareholder with
respect to such shares, including the right to vote and receive
dividends, subject to the conditions and restrictions generally
applicable to Restricted Stock or specifically set forth in the
participant's Restricted Stock Award Agreement.
A recipient of Restricted Stock must enter into a Restricted
Stock Award Agreement with the Company, setting forth the restrictions
to which such shares are subject and the date or dates on which, or
the conditions under which, the restrictions will lapse. The Committee
may permit such restrictions to lapse in installments within the
restricted period or may accelerate or waive such restrictions at any
time.
Shares of Restricted Stock are non-transferable and the
Committee will have the right to provide, in the event that a
participant who holds shares of Restricted Stock terminates employment
for any reason (including death) prior to the lapse or waiver of the
restrictions, for the forfeiture of all or any portion of such
Restricted Stock in exchange for the amount, if any, which the
participant paid for such shares.
DEFERRED STOCK. The Committee may also make Deferred Stock
awards under the ESIP, which involve the transferable right to receive
common stock without any payment in cash or property in one or more
installments at a future date or dates, as determined by the
Committee. Receipt of Deferred Stock may be conditioned in such manner
as the Committee shall determine, including being conditioned on
continued employment or attainment of performance goals.
A recipient of a Deferred Stock award must enter into an
agreement setting forth the applicable provisions for deferral of the
stock covered by such awards, as determined by the Committee. Except
as otherwise determined by the Committee, all such rights will
terminate upon the participant's termination of employment. Any
deferral restrictions under a Deferred Stock award may be accelerated
or waived by the Committee at any time prior to termination of
employment. The Committee may permit participants to make elections to
defer further the receipt of a Deferred Stock award. Recipients
of Deferred Stock awards will be entitled to receive dividend
equivalents, subject to the terms of the award agreement.
OTHER STOCK-BASED AWARDS. Other awards of stock and other
awards that are valued in whole or in part by reference to, or are
otherwise based on, stock including, without limitation, performance
shares, exchangeable securities and stock awards or options valued by
reference to book value or subsidiary performance, may be granted
either along with, in addition to, or in tandem with stock options,
SARs, Restricted Stock, Deferred Stock or stock purchase rights
granted under the ESIP.
One purpose of the ESIP is to give the Committee the
flexibility to grant different types of awards in light of changing
tax, securities and corporate laws. Thus, the Committee will have the
authority to determine the persons to whom, and the time or times at
which, such awards shall be made, the number of shares of stock to be
awarded pursuant to such awards and all other conditions of the
awards, subject to the conditions of the ESIP. The Committee may also
provide for the grant of stock upon the completion of a specified
performance period.
The shares subject to the awards may not be sold, assigned,
transferred, pledged or otherwise encumbered prior to the date on
which the shares covered by the awards are issued to the recipient,
or, if later, the date on which any applicable restrictions,
performance criteria or deferral period lapses. Each recipient will be
entitled to receive, currently or on a deferred basis, interest or
dividends or the equivalent thereof, as determined by the Committee.
The Committee may also provide that such amounts, if any, shall be
deemed to have been reinvested in additional stock or otherwise
invested. Each participant must execute an agreement approved by
the Committee regarding each award granted.
CHANGE IN CONTROL. The ESIP provides that in the event of a
Change in Control: (i) any SARs, including Limited SARs, (to the
extent outstanding for at least six months), and any stock options not
previously exercisable and vested, shall become fully exercis-
<PAGE>
able and vested; (ii) the restrictions and deferral limitations
applicable to outstanding Restricted Stock, Deferred Stock, stock
purchase rights and other stock awards, to the extent not already
vested under the ESIP, will lapse and the stock in questions will
fully vest; and (iii) the Board or Committee may provide the value of
all outstanding options, SARs, Restricted Stock, Deferred Stock, stock
purchase rights and Other Stock-Based Awards, in each case to the
extent vested, will be cashed out on the basis of the "Change in
Control Price" (as defined in the ESIP), as of the date such
Change in Control is determined to have occurred or such other date as
the Committee may determine prior to the Change in Control. The Board
of Directors has reserved the right to amend the definition of Change
in Control at any time prior to the occurrence of a Change in Control
as then defined.
ADJUSTMENTS FOR STOCK DIVIDENDS, MERGER, ETC. In the event of
any merger, reorganization, consolidation, recapitalization, stock
dividend, stock split, or other change in corporate structure
affecting the stock, a substitution or adjustment shall be made in the
aggregate number of shares reserved for issuance under the ESIP, the
number of shares and option prices of the shares subject to the
outstanding options granted under the ESIP and the number of shares
subject to other outstanding awards granted under the ESIP. The
adjusted option price shall also be used to determine the amount
payable by the Company upon the exercise of any SAR associated with
any stock option.
AMENDMENTS. The Board may amend, alter, or discontinue the
ESIP, except for any amendment which would (i) increase the total
number of shares reserved for the purpose of the ESIP, (ii) decrease
the option price of any stock option to less than 100% of the fair
market value on the date of grant or change the pricing terms, (iii)
change the employees or class of employees eligible to participate in
the ESIP or (iv) extend the maximum option period of the ESIP. The
Committee may amend the terms of any stock option or other award
granted, prospectively or retroactively, but no amendment may impair
the rights of any holder without the holder's consent. The Committee
may also substitute new stock options for previously granted stock
options (on a one-for-one or other basis), including previously
granted stock options having higher option exercise prices. The Board
has the broad authority to amend the ESIP to take into account changes
in applicable securities and tax laws and accounting rules, as well as
other developments.
UNFUNDED STATUS OF ESIP. The ESIP is intended to constitute an
"unfunded" plan of incentive and deferred compensation. A participant
in the ESIP will have no rights under the plan greater than those of a
general creditor of the Company. The Committee may authorize the
creation of trusts and other arrangements to facilitate or ensure
payment of the Company's obligations under the ESIP, provided that
such trusts and arrangements are consistent with the "unfunded" status
of the plan.
OTHER PROVISIONS. No stock option, SAR, restricted stock or
other stock-based award is transferable by a grantee except upon
death, by will or the laws of descent and distribution. Stock options
and SARs shall be exercisable during the grantee's lifetime only by
him or her or by his or her guardian or legal representative.
The maximum number of shares of Common Stock that may be sold
under the ESIP, the number of shares covered by outstanding stock
options and SARs granted thereunder, the prices per share applicable
thereto, and the maximum number of stock options that may be awarded
in any year to one individual are subject to adjustment in the event
of stock dividends, stock splits, combination of shares,
recapitalization, mergers, consolidations, spin-offs, reorganizations,
liquidations, issuances of rights and warrants and similar events.
Federal Income Tax Consequences
The following is a brief summary of certain of the federal
income tax consequences of certain transactions under the ESIP based
upon federal income tax laws in effect on September 1, 1997. This
summary is not intended to be exhaustive and does not describe state
or local tax consequences. Participants in the ESIP should consult
with their own tax advisors.
Tax Consequences to Participants
NON-QUALIFIED STOCK OPTION RIGHTS. In general, (i) no income
will be recognized by an optionee at the time a non-qualified stock
option is granted; (ii) at the time of exercise on a non-qualified
stock option, ordinary income will be recognized by the optionee in an
amount equal to the difference between the option price paid for the
shares and the fair market value of the shares if they are
non-restricted on the date of exercise; and (iii) at the time of sale
of shares acquired pursuant to the exercise of a non-qualified stock
option, any appreciation (or depreciation) in the value of the shares
after the date of exercise will be treated as either short-term or
long-term capital gain (or loss) depending on how long the shares have
been held.
INCENTIVE STOCK OPTIONS. No income generally will be recognized
by an optionee upon the grant or exercise of an incentive stock
option. If Common Stock is issued to an optionee pursuant to the
exercise of an incentive stock option and no disqualifying disposition
of the shares is made by the optionee within two years after the date
of grant or within eighteen months after the transfer of
<PAGE>
the shares to the optionee, then upon the sale of the shares any
amount realized in excess of the option price will be taxed to the
optionee as long-term capital gain and any loss sustained will be a
long-term loss.
If Common Stock acquired upon the exercise of an incentive
stock option is disposed of prior to the expiration of either holding
period described above, the optionee generally will recognize ordinary
income in the year of disposition in an amount equal to any excess of
the fair market value of the shares at the time of exercise (or, if
less, the amount realized on the disposition of the shares in the sale
or exchange) over the option price paid for the shares. Any further
gain (or loss) realized by the optionee generally will be taxed as
short-term capital gain (or loss) depending on the holding period.
STOCK APPRECIATION RIGHTS. No income will be recognized by a
participant in connection with the grant of an SAR. When the SAR is
exercised, the participant normally will be required to include as
taxable ordinary income in the year of exercise an amount equal to the
amount of any cash, and the fair market value of any non-restricted
shares of Common Stock, received pursuant to the exercise.
RESTRICTED STOCK. The recipient of Restricted Stock generally
will be subject to tax at ordinary income rates on the fair market
value of the Restricted Stock (reduced by any amount paid by the
participant for such Restricted Stock) at such time as the shares are
no longer subject to forfeiture or restrictions on transfer for
purposes of Section 83 of the Code ("Restrictions"). However, a
recipient who so elects under Section 83(b) of the Code within 30 days
of the date of transfer of the shares will have taxable ordinary
income on the date of transfer of the shares equal to the excess of
the fair market value of such shares (determined without regard to
the Restrictions) over the purchase price, if any, of such Restricted
Stock. If a Section 83(b) election has not been made, any dividends
received with respect to Restricted Stock generally will be treated as
compensation that is taxable as ordinary income to the participant.
SPECIAL RULE APPLICABLE TO OFFICERS. In limited circumstances
where the sale of stock that is received as the result of a grant of
an award could subject an officer to suit under Section 16(b) of the
1934 Act, the tax consequences to the officer may differ from the tax
consequences described above. In these circumstances, unless a special
election has been made, the principal difference usually will be to
postpone valuation and taxation of the stock received so long as the
sale of the stock received could subject the officer to suit under
Section 16(b) of the 1934 Act, but no longer than six months.
Tax Consequences to the Company
To the extent that a participant recognizes ordinary income in
the circumstances described above, the Company or the subsidiary for
which the participant performs services will be entitled to a
corresponding deduction provided that, among other things the income
meets the test of reasonableness, is an ordinary and necessary
business expense, is not an "excess parachute payment" within the
meaning of Section 280G of the Code and is not disallowed by the $1
million limitation on certain executive compensation.
The ESIP may be amended from time to time by the Board of
Directors or the Committee, but without further approval of the
shareholders no such amendment shall: (i) increase the maximum number
of shares that may be sold under the ESIP; (ii) change the definition
of employees eligible to receive grants; or (iii) cause Rule 16b-3
under the 1934 Act to become inapplicable to the ESIP.
Approval by Shareholders
The ratification and approval of the Second Amendment to the
ESIP requires the affirmative vote of the holders of a majority of the
votes cast on the matter.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL
TO RATIFY AND APPROVE THE SECOND AMENDMENT TO THE ESIP.
PROPOSAL NO. 4
PROPOSAL TO RATIFY AND APPROVE AMENDMENT
TO THE ANNUAL EXECUTIVE BONUS PLAN
The Company desires to continue its policy to provide
"performance-based" compensation to certain key executive employees of
the Company. For this purpose, subject to ratification and approval by
the shareholders of the Company at the Meeting, the Compensation
Committee has adopted an amendment to the Annual Executive Bonus Plan
which was initially approved by the shareholders on October 20, 1995.
<PAGE>
A summary of the proposed amendment to the Bonus Plan (the
"Amendment") is set forth below along with a summary of the principal
features of the Bonus Plan. The full text of the Amendment is annexed
to this proxy statement as ANNEX C and the summary is qualified in its
entirety by reference thereto and to the Bonus Plan.
The Amendment increases the maximum bonus which may be paid in
any year to an individual to $1,500,000. In addition, the Amendment
provides that the Compensation Committee may establish a goal other
than increase in earnings per share for executives whose
responsibilities pertain more specifically to discrete elements of the
Company's business. In such cases the goal may be based on the
performance of a product group, division, subsidiary or other
management reporting unit, or any combination of the above. The
Amendment further acknowledges that an executive may elect to defer
his or her bonus pursuant to any applicable deferred compensation plan
of the Company. Finally, the Amendment clarifies that the Compensation
Committee may not change the elements of the formula described in the
Bonus Plan without the approval of the Company's shareholders.
Principal Features of the Bonus Plan
The Bonus Plan is administered by the Committee. Participation
in the Bonus Plan is limited to those key executive employees of the
Company or any subsidiary of the Company who have been designated as
participants by the Committee. For fiscal year 1998, the Committee has
designated seven individuals as participants in the Bonus Plan.
The Bonus Plan provides for an annual incentive bonus, which is
expressed as a percentage of base salary. The amount of a bonus for a
plan year depends on two factors: (i) a participant's base salary; and
(ii) a bonus percentage established for the participant's salary
grade, multiplied by the participant's base salary, if actual earnings
per share or other goal, as permitted by the above-described
Amendment, significantly exceed the goal. Correspondingly, the Bonus
Plan provides the participant a lesser award if actual earnings per
share or other goal fall below eighty percent of the goal.
In the event a participant's employment is terminated due to
death, disability or retirement, the participant shall receive a
reduced bonus amount to reflect participation prior to such event. In
the event the participant's employment is terminated for reasons other
than death, disability or retirement, all rights to any bonus amount
shall be forfeited. In the event of a Change in Control (as defined in
the Bonus Plan), the participant shall be entitled to the full bonus
(or a portion thereof, if employment terminated during the Bonus Plan
year), regardless of whether he remains employed as of the end of the
Bonus Plan year.
It is intended that the bonus amount paid to a participant
under the Bonus Plan will constitute "performance-based" compensation
as defined in Section 162(m) of the Code. Section 162(m) of the Code
generally disallows a tax deduction to public companies for
compensation over $1 million paid to a corporation's top executives.
Performance-based compensation is not taken into account in
determining whether the $1 million threshold has been exceeded.
BONUS PLAN BENEFITS. The amounts that have been awarded to the
Company's Chief Executive officer and each of the four other most
highly compensated Executive Officers, and to all eight Executive
Officers who participated in the Bonus Plan for fiscal year 1997 are
as follows:
<PAGE>
NAME AND POSITION DOLLAR VALUE
Amos R. McMullian $505,680
Chairman of the Board and
Chief Executive Officer
Robert P. Crozer $311,388
Vice Chairman of the Board
Heeth Varnedoe III $ 311,388
President and
Chief Operating Officer
George E. Deese $ 188,087
President and Chief Operating Officer
Flowers Bakeries, Inc.
Gary L. Harrison $ 188,087
President and Chief Operating Officer
Mrs. Smith's Bakeries, Inc.
All Executive Officers $1,945,630
as a group (8 persons)
Approval by Shareholders
The ratification and approval of the Amendment requires the
affirmative vote of the holders of a majority of the votes cast on the
matter.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL
TO RATIFY AND APPROVE THE AMENDMENT TO THE BONUS PLAN.
PROPOSAL NO. 5
ADOPTION OF NONEMPLOYEE DIRECTORS' EQUITY PLAN
The Company's Nonemployee Directors' Equity Plan (the
"Directors' Plan") was adopted by the Compensation Committee on June
10, 1997, and ratified by the Board of Directors on August 1, 1997.
The principal features of the Directors' Plan are summarized below,
but the summary is qualified in its entirety by the full text of the
Directors' Plan, which is set forth as ANNEX D to this Proxy
Statement.
General
The purposes of the Directors' Plan are to promote the
long-term success of the Company by creating a long-term mutuality of
interests between the Directors and shareholders of the Company, to
provide an additional inducement for such directors to remain with the
Company, to reward such Directors by providing an opportunity to
acquire shares of Common Stock on favorable terms and to provide a
means through which the Company may attract able persons to serve as
directors of the Company.
The aggregate number of shares which may be issued and as to
which grants or awards of stock options may be made under the
Directors' Plan is 300,000 shares of Common Stock, subject to
proportionate adjustment in the event of stock dividends, stock splits
recapitalization and similar events.
<PAGE>
Eligibility
All individuals who are nonemployee Directors on the first day
of the Company's fiscal year (a "Plan Year") are eligible to
participate in the Directors' Plan. Under the Directors' Plan, the
nonemployee Director may designate the amount of his or her annual
compensation payable without regard to the number of Board or
committee meetings attended or committee positions held (the
"Retainer") which he she can invest in stock options (an "Option")
under the Directors' Plan. A Director shall be permitted to invest in
an Option under the Director's Plan only if the total amount invested
by that Director is equal to at least twenty-five percent (25%) of the
Retainer.
Administration
The Directors' Plan will be administered by the Compensation
Committee (the "Committee"). The Committee shall have no power to add
to, subtract from or modify any of the terms of the Directors' Plan,
or to change or add to any benefits provided under the Directors'
Plan, or to waive or fail to apply any requirements of eligibility for
a benefit under the Directors' Plan. No member of the Committee shall
act in respect of his or her own Retainer. All decisions and
determinations by the Committee shall be final and binding on all
parties.
Stock Options
To the extent a Director elects to invest all or a portion of
his or her Retainer for a Plan Year, an Option shall be granted on the
first day of such Plan Year for that number of shares of Common Stock
("Shares") equal to 150% of the amount of the Retainer invested
divided by the value of an Option for one Share on the Valuation Date.
For this purpose, value shall be determined by the Black-Scholes
option pricing model, as applied by the Committee. To the extent that
the application of the foregoing formula would result in an Option
covering a fractional Share, the number of Shares covered by the
Option shall be rounded up.
Subject to the expiration or earlier termination of the Option,
100% of the Option shall become exercisable on the first anniversary
of the date of grant. An Option shall expire ten years from the date
the Option is granted and shall be subject to earlier termination as
hereinafter provided. Once an Option becomes exercisable, it may
thereafter be exercised, wholly or in part, at any time prior to its
expiration or termination. In the event of the Director's termination
from service on the Board, an outstanding Option may be exercised only
to the extent it was exercisable on the date of such termination and
shall expire two years after such termination, or on its stated
expiration date, whichever occurs first. Notwithstanding the above, in
the event of a termination for cause as determined by the Committee,
all unexercised Options shall be forfeited.
The exercise price of an Option granted to a Director shall be
equal to the fair market value of the Common Stock on the date of
grant.
Unless otherwise determined by the Committee, the Option is
neither transferable nor assignable by the Director other than by will
or by the laws of descent and distribution and may be exercised,
during the lifetime of the Director, only by the Director, or in the
event of his or her legal incapacity, by his or her guardian or legal
representative acting on behalf of the Director.
Acceleration of Options and Lapse of Restrictions in Certain Events
Upon the occurrence of any of the following events, the Option
shall become immediately and fully exercisable: the death of the
Director, the disability of the Director, or a Change in Control. The
Option shall expire two years after such event, or on its stated
expiration date, whichever occurs first. The term "Change in Control"
shall mean the first to occur of the following events: (1) the Company
enters into an agreement which provides for the Company becoming a
subsidiary of another corporation or entity or being merged with or
consolidated into another corporation or entity (other than a
corporation wholly owned by the Company) or the sale of substantially
all of the assets of the Company to another corporation or entity; (2)
any person, corporation, partnership or other entity, either alone or
in conjunction with its affiliates, or any other group of persons,
corporations, partnerships or other entities who are not "affiliates"
but who are acting in concert, are determined to own of record or
beneficially securities of the Company which represent twenty-five
percent (25%) or more of the combined voting power of the Company's
then outstanding securities entitled to vote for the election of
Directors, if such ownership was not approved in advance by a vote of
at least three-quarters of the Continuing Directors as defined below;
(3) the first to occur of (x) the Board's actual knowledge of, or (y)
the reporting to the SEC of, the tender, pursuant to a tender offer or
exchange offer, other than by the Company, of shares representing
twenty-five percent (25%) or more of the Company's then outstanding
securities entitled to vote for the election of Directors, whether or
not such percentage of tendered securities is subsequently reduced;
(4) the Board adopts a resolution approving the liquidation or
dissolution of the
<PAGE>
Company; (5) Continuing Directors at any time fail to constitute a
majority of the Board, and the term "Continuing Directors" shall mean
the then current members of the Board who were also members of the
Board on December 7, 1987, plus any new directors whose nominations
were approved by at least three-quarters of the Continuing Directors
in office at the time of the election of any such new directors, other
than a nomination of an individual whose initial assumption of office
is in connection with an actual or threatened solicitation with
respect to the "election or removal of the Board of Directors," as
such terms are used in Rule 14a-11 of the 1934 Act; or (6) any other
event that a majority of the Continuing Directors determines would be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the 1934 Act, or any successor
provision thereof.
Miscellaneous
The Board may alter or amend the Directors' Plan from time to
time or may terminate it in its entirety; provided, however, that no
such action, except for an acceleration of benefits, shall, without
the consent of a Director, impair the rights in any Shares issued or
to be issued to such Director, as a result of a grant of Options under
the Plan; and further provided, that any amendment that must be
approved by the shareholders of the Company in order to comply with
applicable law or the rules of the principal national securities
exchange upon which the Shares are traded or quoted shall not be
effective unless and until such approval has been obtained in
compliance with such applicable law or rules.
Federal Income Tax Consequences
Because the options granted pursuant to the Director Plan are
not subject to the special treatment afforded by Section 422 of the
Code, they are treated as non-qualified stock options for purposes of
federal taxation, and will be taxed in a manner similar to that
described above under the heading "Proposal to Ratify and Approve the
Second Amendment to the 1989 Executive Stock Incentive Plan -- Federal
Income Tax Consequences," for non-qualified stock option rights
granted under the ESIP.
DIRECTOR'S PLAN BENEFITS. The amounts that will be paid
pursuant to the Director's Plan are as follows:
NAME AND POSITION STOCK OPTIONS DOLLAR VALUE
All Nonemployee Directors 40,876 $ 0
as a group (6 persons)
Approval of Shareholders
The ratification and approval of the Directors' Plan requires
the affirmative vote of the holders of a majority of the votes cast on
the matter.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE PROPOSAL TO RATIFY AND APPROVE THE NONEMPLOYEE DIRECTOR EQUITY
PLAN.
PROPOSAL NO. 6
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Action is to be taken at the Meeting concerning the selection
of the Company's independent accountants for fiscal year 1998. 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 1998.
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 1998.
<PAGE>
SHAREHOLDERS' PROPOSALS
Any shareholder of the Company who wishes to present a proposal
to be considered at the 1998 Annual Meeting of Shareholders must
deliver such proposal in writing to the Secretary of the Company by
May 15, 1998 in order for it to be included in the proxy materials for
the 1998 Annual Meeting of Shareholders.
FLOWERS INDUSTRIES, INC.
G. ANTHONY CAMPBELL
Secretary
1919 Flowers Circle
Thomasville, Georgia 31757
<PAGE>
ANNEX A
ARTICLES OF AMENDMENT
TO THE
SECOND RESTATED ARTICLES OF INCORPORATION
OF
FLOWERS INDUSTRIES, INC.
Pursuant to the provisions of the Georgia Business Corporation
Code Section 14-2-1006, the undersigned corporation adopts the
following amendment to its Second Restated Articles of Incorporation:
1. The name of the corporation is Flowers Industries, Inc.
(the "Corporation").
2. The Second Restated Articles of Incorporation of the
Corporation are hereby amended by deleting the first paragraph of the
Second Article in its entirety and substituting in lieu thereof the
following:
SECOND. The total number of shares of stock which the
corporation shall have the authority to issue is Three Hundred
Fifty Million Two Hundred Sixty Thousand (350,260,000) shares; of
which stock Ten Thousand Four Hundred Sixty-Seven (10,467) shares
of the par value of One Hundred Dollars ($100.00) each, amounting
in the aggregate to One Million Forty-Six Thousand Seven Hundred
Dollars ($1,046,700), shall be preferred stock convertible into
common stock; and of which Two Hundred Forty-Nine Thousand Five
Hundred Thirty-Three (249,533) shares of the par value of One
Hundred Dollars ($100.00) each, amounting in the aggregate to
Twenty-Four Million Nine Hundred Fifty-Three Thousand Three
Hundred Dollars ($24,953,000), shall be preferred stock which may
be made convertible or non-convertible in the discretion of the
Board of Directors when such preferred stock is issued; and of
which Three Hundred Fifty Million (350,000,000) shares of the par
value of Sixty-Two and One-Half Cents ($.621/2) each, amounting
in the aggregate to Two Hundred Eighteen Million Seven Hundred
Fifty Thousand Dollars ($218,750,000) shall be common stock. Each
share of common stock shall be entitled to one (1) vote.
3. These Articles of Amendment were adopted by the Board of
Directors of the Corporation on August 1, 1997, which action was duly
approved by the shareholders of the Corporation in the manner
prescribed by Section 14-2-1003 of the Georgia Business Corporation
Code on ___________, 1997.
FLOWERS INDUSTRIES, INC.
By:___________________________
Name:______________________
Title:_____________________
Attest:
_____________________________
Name:
Title:
<PAGE>
ANNEX B
SECOND AMENDMENT TO FLOWERS INDUSTRIES, INC.
1989 EXECUTIVE STOCK INCENTIVE PLAN
THIS AMENDMENT, made this _____ day of________________________,
1997, to the Flowers Industries, Inc. 1989 Executive Stock Incentive
Plan,
WITNESSETH:
WHEREAS, the Company has previously adopted and amended the
Flowers Industries, Inc. 1989 Executive Stock Incentive Plan (the
"Plan") and,
WHEREAS, pursuant to Section 12 of the Plan, the Board of
Directors of the Company may amend the provisions of the Plan, subject
to the approval of the Company's stockholders in certain
circumstances; and
WHEREAS, the Company wishes to amend the provisions of the
Plan as reflected below, which amendment has been authorized by the
Company's Board of Directors and which is further conditioned upon the
approval of a majority of the Company's stockholders present and
entitled to vote at a meeting duly called and held prior to December
31, 1997;
NOW, THEREFORE, the Plan is hereby amended as follows:
I.
Paragraph 3 of the Plan is hereby amended to read as follows
(additions underlined):
SECTION 3. Stock Subject to Plan.
The total number of shares of Stock reserved and available
for distribution under the Plan shall be 12,050,000 shares, subject to
adjustment as hereinafter provided in this Section 3. Such shares may
consist, in whole or in part, of authorized and unissued shares or
treasury shares.
Subject to Section 6(b)(iv) below, if any shares of Stock
that have been optioned cease to be subject to a Stock Option, or if
any such shares of Stock that are subject to any Restricted Stock or
Deferred Stock award, Stock Purchase Right or Other Stock-Based Award
granted hereunder are forfeited or any such award otherwise terminates
without a payment being made to the participant in the form of Stock,
such shares shall again be available for distribution in connection
with future awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, Stock dividend, Stock split or other change in
corporate structure affecting the Stock, such substitution or
adjustment shall be made in the aggregate number of shares reserved
for issuance under the Plan, in the number and option price of shares
subject to outstanding Options granted under the Plan, in the number
and purchase price of shares subject to outstanding Stock Purchase
Rights under the Plan, and in the number of shares subject to other
outstanding awards granted under the Plan as may be determined to be
appropriate by the Committee, in its sole discretion, provided that
the number of shares subject to any award shall always be a whole
number. Such adjusted option price shall also be used to determine the
amount payable by the Company upon the exercise of any Stock
Appreciation Right associated with any Stock Option.
Subject to adjustment as provided in the preceding paragraph,
the aggregate number of shares of Stock actually issued or transferred
by the Company upon the exercise of Incentive Stock Options shall not
exceed 12,050,000 shares of Stock.
Notwithstanding any other provision of this Plan to the
contrary, no participant shall be granted stock options or stock
appreciation rights with respect to more than 250,000 shares of stock
during any fiscal year, subject to adjustment in the manner described
above in the event of any merger, reorganization, consolidation,
recapitalization, Stock dividend, Stock split or other change in
corporate structure affecting the Stock.
<PAGE>
II.
Section 14 of the Plan is hereby amended by adding Section
14(g), which shall read in its entirety as follows:
Any award may specify management objectives associated with
the award. Any award that specifies management objectives shall
specify a minimum acceptable level of achievement in respect of the
specified management objective below which no payment will be made or
no benefit will be conferred. Management objectives may be described
in terms of Company-wide objectives or objectives that are related to
the performance of the individual participant, product group,
division, subsidiary or other management reporting unit in which the
participant is employed. The management objectives may be relative to
the performance of other companies or entities. If any individual is,
or is determined by the Committee to be reasonably likely to become, a
covered employee within the meaning of Section 162(m) of the Code,
then awards to that individual that specify management objectives
shall be based on specified levels of, or growth in, one or more of
the following criteria: (i) share price, (ii) earnings, (iii) earnings
per share, (iv) revenues, and (v) total stockholder return.
Notwithstanding any other provision of this Plan to the contrary, in
no event shall any participant be granted, in any period of one fiscal
year, awards that specify management objectives having an aggregate
value as of their respective dates of grant in excess of $1,500,000.
Except as may be permitted under Section 162(m) of the Code, the
Committee may not adjust management objectives after the grant of any
award that specifies management objectives.
III.
Paragraph 16 of the Plan is hereby amended to read as
follows (addition underlined):
SECTION 16. Term of Plan.
No Stock Option, Stock Appreciation Right, Restricted Stock
award, Deferred Stock award, Stock Purchase Right or Other Stock Based
Award shall be granted pursuant to the Plan on or after the tenth
anniversary of the date of shareholder approval of the 1997 Amendments
to the Plan, but awards granted prior to such tenth anniversary may
extend beyond that date.
IN WITNESS WHEREOF, the Company has executed this Second
Amendment to the Plan, to be effective this ______ day
of______________________________, 1997.
FLOWERS INDUSTRIES, INC.
<PAGE>
ANNEX C
FIRST AMENDMENT
TO THE
FLOWERS INDUSTRIES, INC.
ANNUAL EXECUTIVE BONUS PLAN
THIS AMENDMENT to the Flowers Industries, Inc. Annual
Executive Bonus Plan (the "Plan") is made as of the 29th day of June,
1997, to be effective on said date.
Pursuant to Section 9 of the Plan, the Compensation Committee
hereby amends the Plan as follows, subject to the approval of said
amendment by a majority of the Company's shareholders present or
represented at the next annual meeting thereof.
I.
Section 2(c) of the Plan is hereby amended by inserting the
following provision before the last sentence thereof:
"Notwithstanding the foregoing, the Compensation Committee
may determine that a goal other than EPS is appropriate for certain
executives whose responsibilities pertain more specifically to
discrete elements of the Company's business; in such cases, the
Committee may prescribe a goal based on the performance of a product
group, division, subsidiary or other management reporting unit, or any
combination of the above.
II.
Section 2(c) of the Plan is further amended by changing the
amount "$750,000" to "$1,500,000," in the last line of said section.
III.
Section 3 of the Plan is amended by deleting the first
sentence thereof and replacing it with the following sentence:
"The Bonus shall be paid to all Participants no later than
90 days after the close of the Plan Year, in cash, unless the
Participant has made a valid election to defer said Bonus pursuant to
the terms of any applicable deferred compensation plan maintained by
the Company."
IV.
Section 5 of the Plan is amended by adding the phrase
"without approval of the Company's shareholders" to the end of the
third sentence of said section.
IN WITNESS WHEREOF, the Company has caused the Plan to be
amended as provided above.
FLOWERS INDUSTRIES, INC.
By: ____________________
Title:______________
<PAGE>
ANNEXD
FLOWERS INDUSTRIES, INC. NONEMPLOYEE
DIRECTORS' EQUITY PLAN
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLEI. DEFINITIONS. . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. PURPOSE. . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III. ELECTION TO PARTICIPATE. . . . . . . . . . . . . 2
3.1. Eligibility. . . . . . . . . . . . . . . . . . . . . 2
3.2. Election to Participate. . . . . . . . . . . . . . . 2
3.3. Amount of Participation. . . . . . . . . . . . . . . 2
3.4. Minimum Level of Participation For Investment
in Options . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE IV. OPTIONS . . . . . . . . . . . . . . . . . . . . . 3
4.1. Grant of Options . . . . . . . . . . . . . . . . . . 3
4.2. Written Agreement. . . . . . . . . . . . . . . . . . 3
4.3. Exercisability of Options. . . . . . . . . . . . . . 3
4.4. Term . . . . . . . . . . . . . . . . . . . . . . . . 3
4.5. Early Vesting. . . . . . . . . . . . . . . . . . . . 3
4.6. Exercise Price . . . . . . . . . . . . . . . . . . . 4
4.7. Payment . . . . . . . . . . . . . . . . . . . . . . . 4
4.8. Option Nontransferable. . . . . . . . . . . . . . . . 4
ARTICLE V. CHANGE IN CONTROL. . . . . . . . . . . . . . . . . 4
ARTICLE VI. ADMINISTRATION, AMENDMENT AND TERMINATION. . . . . 6
6.1. Administration . . . . . . . . . . . . . . . . . . . 6
6.2. Amendment and Termination . . . . . . . . . . . . . . 6
6.3. Amendment of Options. . . . . . . . . . . . . . . . . 6
ARTICLE VII. SHARES SUBJECT TO PLAN. . . . . . . . . . . . . . 7
7.1. Shares Subject to Plan. . . . . . . . . . . . . . . . 7
7.2. Adjustments . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE VIII. GENERAL PROVISIONS . . . . . . . . . . . . . . . 8
8.1. Governing Law . . . . . . . . . . . . . . . . . . . . 8
8.2. Miscellaneous . . . . . . . . . . . . . . . . . . . . 8
FLOWERS INDUSTRIES, INC. NONEMPLOYEE
DIRECTORS' EQUITY PLAN
The Flowers Industries, Inc. Nonemployee Directors' Equity
Plan ("Plan") is effective as of June 29, 1997, subject to approval of
shareholders at the 1997 annual meeting.
ARTICLE I. DEFINITIONS
Whenever the following terms are used in this Plan they
shall have the meanings specified below unless the context clearly
indicates to the contrary:
(a) " Administrator": The Compensation Committee of
the Board or any successor committee designated by the
Board.
(b) "Board": The Board of Directors of the Company.
(c) "Change of Control": The meaning set forth in
Article V.
<PAGE>
(d) "Code": The Internal Revenue Code of 1986, as
amended.
(e) "Company": Flowers Industries, Inc. or any
successor or successors thereto.
(f) "Director": An individual duly elected or
chosen as a Director of the Company who is not also an
employee of the Company or any of its subsidiaries.
(g) "Fair Market Value": With respect to a Share,
as of any given date, unless otherwise determined by
the Administrator in good faith, the mean between the
highest and lowest quoted selling price, regular way,
of a Share on the New York Stock Exchange, or if no
such sale of Shares occurs on the New York Stock
Exchange on such date, the fair market value of the
Shares as determined by the Administrator in good
faith.
(h) "Option": An option to purchase Shares granted pursuant
to Section 4.1.
(i) "Participation Agreement": The agreement submitted by a
Director to the Administrator in which a Director may
specify his or her election to invest all or a portion
of his or her Retainer in Options.
(j) "Plan": The Plan set forth in this instrument as it may
from time to time be amended.
(k) "Plan Year": The fiscal year of the Company.
(l) "Retainer": The portion of a Director's annual
compensation that is payable without regard to number
of Board or committee meetings attended or committee
positions.
(m) "Shares": The Company's fully paid, non-assessable
common stock. Shares may be shares of original issuance
or treasury shares or a combination of the foregoing.
(n) "Valuation Date": The date of the meeting of the
Compensation Committee of the Board first preceding the
first day of a Plan Year.
ARTICLE II. PURPOSE
The purpose of this Plan is to provide Directors with
opportunities to invest amounts of their Retainer in Options in order
to further align the interests of Directors with the shareholders of
the Company and thereby promote the long-term success and growth of
the Company.
ARTICLE III. ELECTION TO PARTICIPATE
3.1. ELIGIBILITY. All individuals who are Directors as of
the first day of a Plan Year may participate in the Plan for such Plan
Year. A Director may elect to participate for any Plan Year in
accordance with Section 3.2 of this Article. A Director's entitlement
to participate as to future investments shall cease with respect to
the Plan Year following the Plan Year in which he or she ceases to be
a Director.
3.2. ELECTION TO PARTICIPATE. A Director who desires to
participate in this Plan with respect to the Retainer payable for such
Plan Year must complete and deliver a Participation Agreement to the
Administrator before the first day of the Plan Year for which such
Retainer would otherwise be paid. A Participation Agreement that is
timely delivered shall be effective for the succeeding Plan Year and
in addition, except as otherwise specified by a Director in his or her
Participation Agreement, shall continue to be effective from Plan Year
to Plan Year until revoked or modified by written notice to the
Administrator or until terminated automatically upon the termination
of the Plan. In order to be effective to revoke or modify a
Participation Agreement with respect to the Retainer for a Plan Year,
a revocation or modification must be delivered prior to the first day
of the Plan Year for which such Retainer is payable.
3.3. AMOUNT OF PARTICIPATION. A Director shall designate on
the Participation Agreement the dollar amount of his or her Retainer
that he or she has elected to invest in Options under this Plan.
3.4. MINIMUM LEVEL OF PARTICIPATION FOR INVESTMENT IN
OPTIONS. A Director shall be permitted to invest in Options under this
Plan only if for the Plan Year involved the total amount of the
Retainer for the Director that is invested in Options for the Plan
Year equals at least twenty-five (25) percent of the Retainer of the
Director for such Plan Year.
<PAGE>
ARTICLE IV. OPTIONS
4.1. GRANT OF OPTIONS. To the extent a Director elects to
invest all or a portion of his or her Retainer for a Plan Year in
Options, an Option shall be granted on the first day of such Plan Year
for that number of Shares equal to 150% of the amount of the Retainer
invested divided by the value of an Option for one Share on the
Valuation Date. For this purpose, value shall be determined by the
Black-Scholes option pricing model, as applied by the Administrator.
To the extent that the application of the foregoing formula would
result in an Option covering a fractional Share, the number of
Shares covered by the Option shall be rounded up.
4.2. WRITTEN AGREEMENT. Each grant of Options shall be
evidenced by a written agreement in such form as approved by the
Administrator and shall be subject to the additional terms and
conditions set forth in this Article IV.
4.3. EXERCISABILITY OF OPTIONS. Subject to the expiration or
earlier termination of the Option, 100% of the Option shall become
exercisable on the first anniversary of the date of grant.
4.4. TERM. An Option shall expire ten years from the date
the Option is granted and shall be subject to earlier termination as
hereinafter provided. Once an Option becomes exercisable, it may
thereafter be exercised, wholly or in part, at any time prior to its
expiration or termination. In the event of the Director's termination
from service on the Board, other than as provided in Section 4.5, an
outstanding Option may be exercised only to the extent it was
exercisable on the date of such termination and shall expire two years
after such termination, or on its stated expiration date, whichever
occurs first. Notwithstanding the above, in the event of a termination
for cause as determined by the Administrator, all unexercised Options
shall be forfeited.
4.5. EARLY VESTING. Upon the occurrence of any of the
following events, the Option shall become immediately and fully
exercisable: the death of the Director, the disability of the
Director, or a Change in Control. The Option shall expire two years
after such event, or on its stated expiration date, whichever occurs
first.
4.6. EXERCISE PRICE. The exercise price of an Option granted
to a Director shall be equal to the Fair Market Value per Share on the
date of grant.
4.7. PAYMENT. An Option may be exercised by a Director only
upon payment to the Company in full of the exercise price of the
Option corresponding to the portion of the Option to be exercised.
Such payment shall be made in cash or in Shares previously owned by
the Director for more than six months, or in a combination of cash and
such Shares.
4.8. OPTION NONTRANSFERABLE. Unless otherwise determined by
the Administrator, the Option shall be neither transferable nor
assignable by the Director other than by will or by the laws of
descent and distribution and may be exercised, during the lifetime of
the Director, only by the Director, or in the event of his or her
legal incapacity, by his or her guardian or legal representative
acting on behalf of the Director in a fiduciary capacity under the
state law and court supervision.
ARTICLE V. CHANGE IN CONTROL
For purposes of this Plan, a "Change in Control" means the
first to occur of the following events:
(1) The Company enters into an agreement which provides for
the Company becoming a subsidiary of another
corporation or entity or being merged with or
consolidated into another corporation or entity (other
than a corporation wholly owned by the Company) or the
sale of substantially all of the assets of the Company
to another corporation or entity;
(2) Any person, corporation, partnership or other entity,
either alone or in conjunction with its "affiliates" as
that term is defined in Rule 405 of the General Rules
and Regulations under the Securities Act of 1933, as
amended (the "Act"), or any other group of persons,
corporations, partnerships or other entities who are
not "affiliates" as defined but who are acting in
concert, are determined to own of record or
beneficially securities of the Company which represent
twenty-five percent (25%) or more of the combined
voting power of the Company's then outstanding
securities entitled to vote for the election of
Directors, if such ownership was not approved in
advance by a vote of at least three-quarters of the
Continuing Directors as defined below; PROVIDED,
HOWEVER, that for purposes of determining the ownership
of any group as described above or any member thereof,
no such group or member shall be deemed to be the
beneficial owner of Shares:
a. which were beneficially owned by a member on March
17, 1989 and continue to be beneficially owned by
any member or any affiliate or associate thereof
as of the date of the formation of the group;
<PAGE>
b. initially acquired by a member or an affiliate or
associate thereof after March 17, 1989 by bona
fide gift, inheritance, or as a result of a stock
dividend, split or in a similar transaction in
which no consideration was exchanged;
c. initially acquired by a member or an affiliate or
associate thereof after March 17, 1989 pursuant to
the exercise of any options, rights or warrants
granted to such person by the Company; or
d. beneficially owned by a member or an affiliate or
associate thereof pursuant to any employee benefit
plan of the Company or any subsidiary of the
Company.
(3) The first to occur of (x) the Board's actual knowledge
of, or (y) the reporting to the Commission of, the
tender, pursuant to a tender offer or exchange offer
other than by the Company, of shares representing
twenty-five percent (25%) or more of the Company's then
outstanding securities entitled to vote for the
election of Directors, whether or not such percentage
of tendered securities is subsequently reduced;
(4) The Board adopts a resolution approving the liquidation
or dissolution of the Company;
(5) Continuing Directors at any time fail to constitute a
majority of the Board, and the term "Continuing
Directors" shall mean the then current members of the
Board who were also members of the Board on December 7,
1987, plus any new directors whose nominations were
approved by at least three-quarters of the Continuing
Directors in office at the time of the election of any
such new directors, other than a nomination of an
individual whose initial assumption of office is in
connection with an actual or threatened solicitation
with respect to the "election or removal of the Board
of Directors," as such terms are used in Rule 14a-11 of
the Exchange Act; or
(6) Any other event that a majority of the Continuing
Directors determines would be required to be reported
in response to Item 6(e)[Voting Securities and
Principal Holders Thereof -- change in control] of
Schedule 14A of Regulation 14A promulgated under
Exchange Act, or any successor provision thereof.
ARTICLE VI. ADMINISTRATION, AMENDMENT AND TERMINATION
6.1. ADMINISTRATION. The Plan shall be administered by the
Administrator. The Administrator shall have such powers as may be
necessary to discharge its duties hereunder. The Administrator may,
from time to time, employ, appoint or delegate to an agent or agents
(who may be an officer or officers of the Company) and delegate to
them such administrative duties as it sees fit, and may from time to
time consult with legal counsel who may be counsel to the Company. The
Administrator shall have no power to add to, subtract from or modify
any of the terms of the Plan, or to change or add to any benefits
provided under the Plan, or to waive or fail to apply any
requirements of eligibility for a benefit under the Plan. No member of
the Administrator shall act in respect of his or her own Retainer. All
decisions and determinations by the Administrator shall be final and
binding on all parties. No member of the Administrator shall be liable
for any such action taken or determination made in good faith. All
decisions of the Administrator shall be made by the vote of the
majority, including actions and writing taken without a meeting. All
elections, notices and directions under the Plan by a Director shall
be made on such forms as the Administrator shall prescribe.
6.2. AMENDMENT AND TERMINATION. The Board may alter or amend
this Plan from time to time or may terminate it in its entirety;
provided, however, that no such action, except for an acceleration of
benefits, shall, without the consent of a Director, impair the rights
in any Shares issued or to be issued to such Director, as a result of
a grant of Options under the Plan; and further provided, that any
amendment that must be approved by the shareholders of the Company in
order to comply with applicable law or the rules of the principal
national securities exchange upon which the Shares are traded or
quoted shall not be effective unless and until such approval has been
obtained in compliance with such applicable law or rules. Presentation
of this Plan or any amendment hereof for shareholder approval shall
not be construed to limit the Company's authority to offer similar or
dissimilar benefits through plans that are not subject to shareholder
approval.
6.3. AMENDMENT OF OPTIONS. The Administrator shall not,
without the further approval of the shareholders of the Company,
authorize the amendment of any outstanding Option to reduce the
exercise price of the Option. Furthermore, no Option shall be
cancelled and replaced with awards having a lower exercise price
without further approval of the shareholders of the Company. This
Section 6.3 is intended to prohibit the repricing of "underwater"
Options and shall not be construed to prohibit the adjustments
provided for in Section 7.2 of this Plan.
<PAGE>
ARTICLE VII. SHARES SUBJECT TO PLAN
7.1. SHARES SUBJECT TO PLAN. Subject to adjustment as
provided in this Plan, the total number of Shares which may be issued
under this Plan shall be three hundred thousand (300,000).
7.2. ADJUSTMENTS. The Administrator may make or provide for
such adjustments in the (a) number of Shares covered by outstanding
Options granted or awarded hereunder, (b) prices per share applicable
to such Options, and (c) kind of shares covered thereby, as the
Administrator in its sole discretion may in good faith determine to be
equitably required in order to prevent dilution or enlargement of the
rights of Directors that otherwise would result from (x) any stock
dividend, stock split, combination of shares, recapitalization or
other change in the capital structure of the Company, (y) any merger,
consolidation, spin-off, spin-out, split-off, split-up,
reorganization, partial or complete liquidation of the Company or
other distribution of assets, issuance of rights or warrants to
purchase securities of the Company, or (z) any other corporate
transaction or event having an effect similar to any of the foregoing.
In the event of any such transaction or event, the Administrator may
provide in substitution for any or all outstanding grants or
awardsunder this Plan such alternative consideration as it may in good
faith determine to be equitable under the circumstances and may
require in connection therewith the surrender of all awards so
replaced. Moreover, the Administrator may on or after the date of
grant provide in the agreement evidencing any grant or award under
this Plan that the holder of the grant or award may elect to receive
an equivalent grant or award in respect of securities of the surviving
entity of any merger, consolidation or other transaction or event
having a similar effect, or the Administrator may provide that the
holder will automatically be entitled to receive such an equivalent
grant or award. The Administrator may also make or provide for such
adjustments in the number of shares specified in Section 7.1 of this
Plan as the Administrator in its sole discretion may in good faith
determine to be appropriate in order to reflect any transaction or
event described in this Section 7.2. This Section 7.2 shall not be
construed to permit the re-pricing of any Options in the absence of
any of the circumstances described above in contravention of Section
6.3 of this Plan.
ARTICLE VIII. GENERAL PROVISIONS
8.1. GOVERNING LAW. The provisions of this Plan shall be
governed by and construed in accordance with the laws of the State of
Georgia.
8.2. MISCELLANEOUS. Headings are given to the sections of this
Plan solely as a convenience to facilitate reference. Such headings,
numbering and paragraphing shall not in any case be deemed in any way
material or relevant to the construction of this Plan or any
provisions thereof. The use of the singular shall also include within
its meaning the plural, and vice versa.
<PAGE>
[ATTACHMENT -- PROXY CARD]
Dear Shareholder:
Please take note of the important information enclosed with this
Proxy. There are a number of issues related to the management and
operation of your Company that require immediate attention and
approval. These are discussed in the enclosed Proxy Statement.
Your vote counts, and you are strongly encouraged to exercise your
right to vote your shares. Please mark the boxes on this Proxy card
to indicate how your shares should be voted. Then sign the card,
detach and return it in the enclosed postage-paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders
on October 17, 1997.
Thank you for your prompt consideration of these matters.
Sincerely,
Flowers Industries, Inc.
FLOWERS INDUSTRIES, INC.
P. O. BOX 1338 PROXY
THOMASVILLE, GEORGIA 31799
________________________________________
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 2, 1997
by the undersigned, at the Annual Meeting of Shareholders to be held
on October 17, 1997, and at all adjournments thereof (the "Meeting").
Management recommends a vote in favor of all nominees listed in Item 1
and in favor of Proposals 2 through 6.
1. ELECTION OF DIRECTORS
Nominees: Franklin L. Burke, G. Anthony Campbell, Robert P.
Crozer, L.S. Flowers and Joseph L. Lanier, Jr.
___FOR all nominees listed above ___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 AMEND THE SECOND RESTATED ARTICLES OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES FROM 100,000,000 SHARES TO
350,000,000 SHARES AS DESCRIBED IN THE PROXY STATEMENT FOR THE
MEETING.
___FOR ___AGAINST ___ABSTAIN
3. PROPOSAL TO RATIFY THE SECOND AMENDMENT TO THE COMPANY'S 1989
EXECUTIVE STOCK INCENTIVE PROGRAM AS DESCRIBED IN THE PROXY STATEMENT
FOR THE MEETING.
___FOR ___AGAINST ___ABSTAIN
4. PROPOSAL TO RATIFY THE AMENDMENT TO THE COMPANY'S ANNUAL
EXECUTIVE BONUS PLAN AS DESCRIBED IN THE PROXY STATEMENT FOR THE
MEETING.
___FOR ___AGAINST ___ABSTAIN
5. PROPOSAL TO ADOPT AND RATIFY THE COMPANY'S NONEMPLOYEE DIRECTORS'
EQUITY PLAN AS DESCRIBED IN THE PROXY STATEMENT FOR THE MEETING.
___FOR ___AGAINST ___ABSTAIN
6. PROPOSAL TO SELECT PRICE WATERHOUSE LLP AS INDEPENDENT
ACCOUNTANTS FOR THE COMPANY FOR FISCAL YEAR 1997.
___FOR ___AGAINST ___ABSTAIN
<PAGE>
7. 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 PROPOSALS 2 THROUGH 6.
Dated:_______________________________, 1997
___________________________________________
___________________________________________
Signature(s)
(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.
