<PAGE> 1
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. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
Imperial Holly Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) 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):
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(4) Proposed maximum aggregate value of transaction:
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(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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
[IMPERIAL HOLLY CORPORATION LOGO]
I.H. KEMPNER, III
CHAIRMAN
December 17, 1997
Dear Fellow Shareholder:
The Annual Meeting of Shareholders will be held on Friday, January 30, 1998
at 11:00 a.m. at the Sweetwater Country Club, 4400 Palm Royale Boulevard, Sugar
Land, Texas 77479. You are cordially invited to attend. Your Company has
recently changed its fiscal year end to September 30, and as a result, Annual
Meetings will be held in the first part of the calendar year instead of in July,
as has been past practice.
At the meeting, we will elect four directors; act on a proposal to amend
the Company's Stock Incentive Plan to increase the number of shares covered by
the plan; and act on the selection of auditors.
Your Board of Directors joins me in urging you to attend to hear a report
on the Company's progress and to meet with members of management. However, even
if you plan to attend the meeting in person, I hope you will sign, date and
return your proxy as soon as possible. Your vote is always important.
Sincerely,
/s/ I. H. KEMPNER, III
ONE IMPERIAL SQUARE - P.O. BOX 9 - SUGAR LAND, TEXAS 77487-0009
<PAGE> 3
IMPERIAL HOLLY CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 30, 1998
To the Shareholders of Imperial Holly Corporation:
The 1998 Annual Meeting of Shareholders of Imperial Holly Corporation (the
"Company") will be held at the Sweetwater Country Club, 4400 Palm Royale
Boulevard, Sugar Land, Texas 77479, on Friday, January 30, 1998, at 11:00 a.m.,
for the following purposes:
(1) to elect four directors;
(2) to consider and act on a proposal to approve an amendment to the
Company's Stock Incentive Plan;
(3) to consider and act upon a proposal to ratify the appointment of
the firm Deloitte & Touche LLP, independent certified accountants, as
auditors of the Company for its fiscal year ending September 30, 1998; and
(4) to transact such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on December 10, 1997 are
entitled to notice of and to vote at the meeting.
The By-Laws of the Company require that the holders of a majority of the
outstanding shares of Common Stock entitled to vote be represented in person or
by proxy at the meeting in order to constitute a quorum for the transaction of
business. Therefore, regardless of the number of shares you hold, it is
important that your stock be represented at the meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, WE ASK THAT YOU PLEASE SIGN AND
DATE THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE POSTAGE PREPAID
ENVELOPE PROVIDED.
By Order of the Board of Directors
WILLIAM F. SCHWER
Secretary
Sugar Land, Texas
December 17, 1997
<PAGE> 4
IMPERIAL HOLLY CORPORATION
ONE IMPERIAL SQUARE
SUGAR LAND, TEXAS 77478
PROXY STATEMENT
1998 ANNUAL MEETING OF SHAREHOLDERS
The accompanying proxy is solicited on behalf of the Board of Directors of
Imperial Holly Corporation (the "Company") to be voted at the 1998 Annual
Meeting of Shareholders of the Company to be held at the time and place and for
the purposes set forth in the foregoing notice. In addition to the original
solicitation by mail, certain regular employees of the Company may solicit
proxies by telephone, by facsimile, by telegraph or in person. The Company has
retained D. F. King & Co., Inc. on customary terms and at a fee estimated not to
exceed $4,500, plus reasonable expenses, to assist in soliciting proxies. All
expenses of soliciting proxies, including the cost of preparing and mailing this
Proxy Statement and the reimbursement of brokerage firms and other nominees for
their reasonable expenses in forwarding proxy material to beneficial owners of
stock, will be borne by the Company. If you attend the meeting, you may vote in
person if you wish, even though you have mailed in your proxy. This Proxy
Statement and the accompanying proxy are being mailed to shareholders beginning
on or about December 17, 1997.
All duly executed proxies will be voted in accordance with the instructions
thereon. However, shareholders who execute proxies retain the right to revoke
them at any time before they are voted. The revocation of a proxy shall not be
effective until written notice thereof has been given to the Secretary of the
Company, unless the person granting such proxy votes in person.
Unless otherwise indicated on the proxy, shares will be voted by the
persons named on the accompanying proxy as follows:
(a) for the election of the four directors named below;
(b) for approval of the proposal to amend the Company Stock Incentive
Plan; and
(c) for ratification of the selection of Deloitte & Touche LLP as the
Company's independent auditors.
The majority of the outstanding shares of Common Stock, without par value,
of the Company ("Common Stock") entitled to vote must be present in person or by
proxy at the meeting in order to constitute a quorum for the transaction of
business. Shares underlying a proxy marked "Abstain" on a matter will be
considered to be represented at the meeting for quorum purposes.
Shares registered in the names of brokers or other "street name" nominees
for which proxies are voted on some but not all matters will be considered to be
present at the meeting for quorum purposes, but will be considered to be voted
only as to those matters actually voted, and will not be considered as voting
for any purpose as to the matters with respect to which no vote is indicated
(commonly referred to as "broker non-votes.")
Directors are elected by a plurality of votes cast. The affirmative vote of
the majority of the shares present and entitled to vote on the matter is
required for adoption of the proposals referred to in (b) and (c). Accordingly,
abstentions applicable to shares represented at the meeting will have the same
effect as no votes and broker non-votes will have no effect on the outcome.
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Pursuant to an Investor Agreement dated August 29, 1996 between the
Company, Greencore Group plc, and Earlsfort Holdings B.V. (collectively, the
"Investor"), the Investor, who currently holds approximately 27% of the Common
Stock outstanding, has agreed to vote in the manner recommended by the Board of
Directors with respect to the election of directors. So long as the Investor
owns at least 15% of the outstanding voting stock, the Investor has the right to
designate two nominees for election as directors, currently Mr. Dilger and Mr.
O'Sullivan.
On September 12, 1997, the Company entered into an Agreement and Plan of
Merger (the "Savannah Merger Agreement") to acquire Savannah Foods & Industries,
Inc. ("Savannah Foods") in a two-step transaction. The Company acquired 50.1% of
Savannah Foods' outstanding common stock on October 17, 1997 pursuant to a
tender offer. The Company expects to complete the second step of the acquisition
on December 22, 1997 when Savannah Foods is to merge with a wholly-owned
subsidiary of the Company (the "Savannah Merger"). Pursuant to the Savannah
Merger Agreement, immediately prior to the merger two nominees of Savannah Foods
(Mr. Robert L. Harrison and Mr. William W. Sprague III) are expected to be
elected as Class II Directors, replacing Mr. Roger W. Hill and Mr. Robert L. K.
Lynch, who are expected to resign from the Board. The Savannah Merger Agreement
requires that such Savannah Foods' nominees be nominated for reelection to an
additional three-year term at the expiration of their initial term.
The persons named in the accompanying proxy may act with discretionary
authority should any nominee become unavailable for election, although
management is unaware of any circumstances likely to render any of the nominees
unavailable. Management does not intend to bring any other matters before the
meeting and has not been informed that any other matters are to be presented to
the meeting by others.
At the close of business on December 10, 1997, the record date for the
determination of shareholders entitled to vote at the meeting, the Company had
outstanding 14,286,854 shares of Common Stock, which is the only class of stock
of the Company outstanding and entitled to vote at the meeting. The December 10,
1997 record date is prior to the scheduled effectiveness of the Savannah Merger,
and accordingly shareholders of Savannah Foods that become shareholders of the
Company as a result of the Savannah Merger will not be entitled to vote at the
1998 Annual Meeting. Each shareholder is entitled to one vote for each share of
Common Stock held. Cumulative voting is not allowed.
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes designated
Class I, Class II and Class III, with staggered terms of office. The number of
directors in each of the three classes is to be as nearly equal as possible.
After the election of directors at the 1998 Annual Meeting, the terms of office
of the Class I directors will extend until the Annual Meeting of Shareholders in
2001 (and until their successors are qualified). The terms of office of the
Class II directors extend until the Annual Meeting of Shareholders in 1999 and
the terms of office of the Class III directors extend until the Annual Meeting
of Shareholders in 2000 (and, in each case, until their successors are
qualified). At the 1998 Annual Meeting, it is proposed to elect John D. Curtin,
Jr., I. H. Kempner, III, James C. Kempner and Daniel K. Thorne as Class I
Directors. All of the nominees are currently serving as directors of the
Company.
NOMINEES
Set forth below is certain information concerning the four nominees for
election as directors at the 1998 Annual Meeting, including the business
experience of each during the past five years and the age of each nominee on
December 10, 1997.
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JOHN D. CURTIN, JR. has been a director of the Company since 1993. Mr.
Curtin has been Chairman and Chief Executive Officer of Aearo Corporation, a
worldwide manufacturer and supplier of personal protection equipment, from May
1994 to present and was Executive Vice President and a director of Cabot
Corporation, a specialty chemicals and materials company and manufacturer of
carbon black, from 1989 to 1994. Mr. Curtin, age 64, is a Trustee of Eastern
Enterprises, Inc.
I. H. KEMPNER, III has been Chairman of the Board of Directors of the
Company since 1971 and was first elected a director of the Company in 1967. He
became Chairman of the Executive Committee in 1978. Mr. Kempner joined the
Company in 1964 and served in various executive capacities prior to his election
as Chairman of the Board. Mr. Kempner, age 65, is Chairman of the Board of
Directors of the Houston Branch of the Federal Reserve Bank of Dallas.
JAMES C. KEMPNER has been a director since 1988 and has been President and
Chief Executive Officer of the Company from 1993 to present. Mr. Kempner, age
58, is also the Chief Financial Officer, a position he has held since he joined
the Company in 1988. In 1994, Mr. Kempner was elected President of Imperial
Sugar Company, a division of the Company, a position he had held previously.
From 1988 to 1993, Mr. Kempner was an Executive Vice President of the Company.
Mr. Kempner is also a director of Bouygues Offshore S.A.
DANIEL K. THORNE was elected a director of the Company in 1988. For more
than the past five years, Mr. Thorne has been the President of Star Lake Cattle
Company and Star Lake Properties, Inc., which are engaged in cattle and timber
operations, and Eagle Island Citrus Corporation, a citrus production operation.
Mr. Thorne, age 46, is also President of Star Lake Capital, a venture capital
firm.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" JOHN D. CURTIN, JR., I. H.
KEMPNER, III, JAMES C. KEMPNER, AND DANIEL K. THORNE AS DIRECTORS.
CONTINUING DIRECTORS
Set forth below is certain information concerning (i) the eight current
directors of the Company whose present terms of office are scheduled to continue
until 1999 or 2000, and (ii) the two persons expected to be appointed to the
Board of Directors pursuant to the Savannah Merger Agreement prior to the 1998
Annual Meeting, including the business experience of each during the past five
years and the age of each such person on December 10, 1997.
Directors in Class II
(Terms Expiring at the 1999 Annual Meeting of Shareholders)
DAVID J. DILGER has been a director of the Company since October 1996. Mr.
Dilger, age 41, has been Chief Executive of Greencore Group plc, an Irish
sugarbeet processing company, since 1995 and was Chief Operating Officer of
Greencore Group plc from 1991 to 1995. He has been a director of Greencore since
January 1992.
EDWARD O. GAYLORD, who has been a director of the Company since 1978, has
been the President and a director of Gaylord & Company, Inc., a venture capital
business, since 1988. Since January 1993, he has been Chairman of EOTT Energy
Corporation, an oil trading and transportation company. Mr. Gaylord, age 65, is
also a director of Seneca Foods Corporation, Essex International, Kinder Morgan
Energy Partners, L.P. and The Federal Reserve Bank of Dallas, Houston Branch.
3
<PAGE> 7
GERALD GRINSTEIN has been a director of the Company since October 1996. He
has been a director of Delta Air Lines, Inc. since 1987 and has served as
Chairman of the Board of Directors since August 1997. He served as Chairman and
Chief Executive Officer of Burlington Northern Inc., a diversified
transportation and railroad company, from 1990 until September 1995 and served
as Chairman until his retirement on December 31, 1995. Mr. Grinstein, age 65, is
also a director of Browning Ferris Industries, Inc., Pecar, Inc. and Sundstrand
Corporation.
ROBERT L. HARRISON has served as a director of Savannah Foods since 1990.
Mr. Harrison, age 57, has been President of Stevens Shipping & Terminal Co. in
Savannah, Georgia for more than five years. Mr. Harrison is expected to be
appointed a director pursuant to the Savannah Merger Agreement immediately prior
to the Savannah Merger.
ROBERT W. HILL was appointed a Managing Director of the Company in 1995,
and has been Executive Vice President and a director of the Company and
President and Chief Executive Officer of Holly Sugar Corporation ("Holly Sugar")
since 1988, when Holly Sugar was acquired as a wholly owned subsidiary of the
Company. Mr. Hill, age 58, joined Holly Sugar in 1963 and served in various
capacities throughout his career. Mr. Hill is expected to resign as a director
immediately prior to the Savannah Merger.
ROBERT L. K. LYNCH has been a director of the Company since 1990 and is
Chairman of Yaga, Inc., a clothing manufacturer. Mr. Lynch is also Chairman of
the Harris & Eliza Kempner Fund. Mr. Lynch, age 48, has been in the real estate
restoration, development and management business since 1987 and has been a
member of the City Council of Galveston since 1990. Mr. Lynch is a director of
the United States National Bank, Galveston, Texas. Mr. Lynch is expected to
resign as a director immediately prior to the Savannah Merger.
WILLIAM W. SPRAGUE III has been President and Chief Executive Officer of
Savannah Foods since 1995. He served as President and Chief Operating Officer
from 1993 to 1995. Mr. Sprague, age 41, began his career with Savannah Foods in
1983 and has held various positions since then. Mr. Sprague is expected to be
appointed a director pursuant to the Savannah Merger Agreement immediately prior
to the Savannah Merger.
Directors in Class III
(Terms Expiring at the 2000 Annual Meeting of Shareholders)
ANN O. HAMILTON, a director of the Company since 1974, was with the World
Bank in Washington, D.C. from 1970 until her retirement in 1995. Mrs. Hamilton,
age 60, was Senior Adviser to the Vice President, South Asia Region, in 1995.
She was Director of the Bangladesh, Bhutan & Nepal Department from 1993 to 1994,
and Director of the Population & Human Resources Department from 1987 to 1992.
HARRIS L. KEMPNER, JR., a director of the Company since 1966, has been
President of Kempner Capital Management, Inc., an investment advisory firm,
since 1982 and a trustee of the H. Kempner Trust Association since 1967. He
served as Chairman of the Board of United States National Bank from 1988 to 1993
when he became Chairman Emeritus. Mr. Kempner, age 57, is a director of TNP
Enterprises, Inc. and American Indemnity Financial Corporation and an advisory
director of Cullen/Frost Bankers, Inc.
H. E. LENTZ has been a director of the Company since 1993. Mr. Lentz, age
52, has been a Managing Director of Lehman Brothers Inc., an investment banking
firm, since 1993. Prior thereto, Mr. Lentz served as Vice Chairman of
Wasserstein Perella & Co. from 1988 to 1993 and as Managing Director of Shearson
Lehman Hutton, Inc. from 1984 to 1988. Mr. Lentz serves as a director of the
Rowan Companies, Inc.
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KEVIN C. O'SULLIVAN has been a director of the Company since October 1996.
Mr. O'Sullivan, age 55, is Chief Financial Officer of Greencore Group plc, an
Irish sugarbeet processing company. He has been a director of Greencore since
January 1992. Prior thereto, Mr. O'Sullivan was Group Finance Director of
Hillsdown Holdings plc, having previously held senior financial positions with
other major UK companies.
FAYEZ SAROFIM, a director of the Company since 1991, is President and
Chairman of the Board of Fayez Sarofim & Co., an investment advisory firm he
founded in 1958. Mr. Sarofim, age 68, is currently a director of Allegheny
Teledyne Corporation, Argonaut Group, Unitrin, Inc. and the Exor Group, S.A
Mr. I. H. Kempner, III and Mr. James C. Kempner are brothers and are first
cousins of Mr. Harris L. Kempner, Jr. In addition, Mrs. Hamilton, Mr. Harris L.
Kempner, Jr., Mr. I. H. Kempner, III, Mr. James C. Kempner, Mr. Lynch and Mr.
Thorne are each descendants of H. Kempner, a Galveston entrepreneur who died in
1894.
BOARD COMMITTEES AND MEETINGS
The Company's Board of Directors has five standing committees: Executive,
Audit, Executive Compensation, Nominating and Environmental. Except for the
Executive Committee, the committees are composed of members who are not officers
or employees of the Company or its subsidiaries. The membership and principal
responsibilities of the committees are described below.
At intervals between formal meetings, members of the Board and each
committee are provided with information regarding the operations of the Company
and are consulted on an informal basis with respect to pending business. Such
consultation may lead to Board or committee action between meetings being taken
by unanimous written consent.
The Board met eight times during the twelve-month period ending September
30, 1997. During the twelve-month period ending September 30, 1997, each
incumbent director attended at least 75% of the aggregate number of meetings of
the Board and its committees on which the director served, with the exception of
Mrs. Ann O. Hamilton, who attended 63% of the meetings.
Executive Committee
Members: I. H. Kempner, III (Chairman)
Edward O. Gaylord
James C. Kempner
The Executive Committee exercises the powers of the Board to manage the
Company between meetings of the Board. The Executive Committee did not meet
during the twelve-month period ending September 30, 1997.
Audit Committee
Members: Harris L. Kempner, Jr. (Chairman)
Edward O. Gaylord
Kelvin C. O'Sullivan
Daniel K. Thorne
The Audit Committee reviews with the Company's internal auditor and
independent certified public accountants the scope and results of their audits,
monitors the adequacy of the Company's system of internal controls and
procedures, recommends to the Board the selection of the independent certified
public
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accountants and reviews the fees paid for services rendered by such accountants.
During the twelve-month period ending September 30, 1997, the Audit Committee
met two times.
Executive Compensation Committee
Members: John D. Curtin, Jr. (Chairman)
Edward O. Gaylord
Gerald Grinstein
H.E. Lentz
The Executive Compensation Committee establishes the salaries, bonuses and
other compensation for the Company's directors, executive officers and certain
other managerial and professional personnel. The Committee reviews and approves
or in some cases recommends to the Board the Company's compensation plans. The
Executive Compensation Committee also administers the granting of incentives to
eligible employees under the Company's Stock Incentive Plan and administers the
Company's incentive bonus plans. The Executive Compensation Committee met two
times during the twelve-month period ending September 30, 1997.
Nominating Committee
Members: E. O. Gaylord (Chairman)
John D. Curtin, Jr.
David J. Dilger
H.E. Lentz
The Nominating Committee recommends to the Board persons to be proposed by
the Board for election as directors. The Nominating Committee is also authorized
to address director compensation issues and the terms of service of directors.
The Nominating Committee will consider nominees recommended by shareholders.
Shareholders may submit any such nomination to the Chairman of the Nominating
Committee in care of the Company at the address listed on the first page of this
Proxy Statement.
Environmental Committee
Members: Robert L. K. Lynch (Chairman)
A. M. Bartolo (Emeritus Director since October 1996)
The Environmental Committee oversees all aspects of the Company's
environmental policy and compliance with the policy, including the adequacy of
management's programs for implementing the environmental policy. The Committee
reviews, reports on and makes recommendations to the Board regarding the policy.
The Environmental Committee met two times during the twelve-month period ending
September 30, 1997.
DIRECTOR REMUNERATION
Pursuant to the Nonemployee Director Compensation Plan approved at the 1996
Annual Meeting of Shareholders, directors who are not employees of the Company
are compensated for their annual retainer, currently $18,000, in the form of
shares of Common Stock, rather than cash. The number of shares awarded on the
annual election of directors is equal to 167% of the otherwise applicable cash
annual retainer, divided by the fair market value per share of Common Stock on
the date of such annual election. These shares are subject to restrictions on
sale or other transfer, and cannot be sold or transferred until the earliest of
a
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director's death, disability, cessation of status as a director or the
occurrence of a change in control of the Company.
Additionally, each director of the Company who is not an officer of the
Company receives $1,000 for each Board meeting attended. Each such director who
serves on a committee currently receives $1,000 for each committee meeting
attended if the meeting is not held on the same day as a Board meeting. Each
director is also reimbursed by the Company for travel expenses incurred in
connection with attendance at Board or committee meetings or other business of
the Company.
Under the Company's 1989 Nonemployee Director Stock Option Plan, each
director of the Company who is not an employee of the Company is automatically
granted an option on the later of (i) July 27, 1989 or (ii) the date the
director becomes a director of the Company. Each option permits the optionee to
purchase 1,500 shares of Common Stock at an exercise price per share equal to
50% of the fair market value of a share of Common Stock on the date the option
is granted. Options granted under the Nonemployee Director Stock Option Plan are
not exercisable until the optionee has completed three years of service as a
director of the Company. In the event of a "change in control" of the Company
(as defined in the Nonemployee Director Stock Option Plan), any unvested portion
of the options will immediately become exercisable in full.
An option to purchase 1,500 shares of Common Stock under the Nonemployee
Director Option Plan was granted to Mr. Grinstein during the twelve-months ended
September 30, 1997. Options representing 2,250 shares were exercised during the
twelve-month period ended September 30, 1997.
The Imperial Holly Corporation Retirement Plan for Nonemployee Directors is
a non-qualified retirement plan providing monthly retirement benefits to retired
directors of the Company who never served as employees of the Company. The plan
provides for payments, commencing at the later of age 65 or retirement, equal to
the retainer received by the director (or the cash equivalent thereof) at the
date of the director's retirement for up to ten years after retirement (based on
years of service) to a director who retires after completion of three years of
service. Death benefits equal to 50% of the retirement benefit are paid to a
surviving spouse.
Mr. Dilger and Mr. O'Sullivan have declined to receive any remuneration for
their services as directors.
EXECUTIVE COMPENSATION
The following table and narrative sets forth the compensation of the chief
executive officer and the other four most highly compensated executive officers
during the twelve-month period ending September 30, 1997 (collectively, the
"named officers") for services rendered in all capacities. In October 1997, the
Company changed its fiscal year end from March 31 to September 30. Accordingly,
compensation reported in the following table is for the twelve-month period
ended September 30, 1997 ("1997T"), as well as the fiscal years ended March 31,
1997 and 1996. As a result, compensation for the six-month period ended March
31, 1997 has been included in both the 1997T amounts and the fiscal year ended
March 31, 1997 amounts. Consequently, bonus payments pursuant to the Company's
Performance Incentive Plan for the fiscal year
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ended March 31, 1997, which were paid in May 1977, have been double counted by
inclusion in both the 1997T amounts and the fiscal 1997 amounts.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------
ANNUAL COMPENSATION AWARDS
---------------------------------------- ------------------------
SECURITIES
OTHER UNDERLYING
NAME AND ANNUAL RESTRICTED OPTIONS/
PRINCIPAL FISCAL COMPEN- STOCK SARS
POSITION PERIOD SALARY BONUS(1) SATION(2) AWARD(4) (NUMBER)(5)
--------- ------ -------- -------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
James C. Kempner................... 1997T $377,016 $647,251 $ (3) $242,046 0
President, Chief Executive
Officer 1997 354,024 316,701 (3) $242,046 0
and Chief Financial Officer 1996 354,024 0 57,043 0 0
Roger W. Hill...................... 1997T 284,448 281,123 (3) 150,045 0
Managing Director and President, 1997 284,448 128,947 (3) 150,045 0
Holly Sugar Corporation 1996 284,448 0 58,140 0 0
Peter C. Carrothers................ 1997T 198,408 423,100 (3) 155,316 0
Managing Director 1997 166,800 230,700 (3) 155,316 0
1996 166,800 8,340 28,051 0 20,000
William F. Schwer.................. 1997T 202,512 412,242 (3) 155,316 0
Managing Director, Secretary 1997 175,008 222,492 (3) 155,316 0
and General Counsel 1996 175,008 8,750 24,954 0 28,000
John A. Richmond................... 1997T 168,504 296,500 (3) 109,893 0
Managing Director 1997 158,750 165,500 (3) 109,893 0
1996 134,600 0 25,319 0 8,000
</TABLE>
- ---------------
(1) Bonuses paid were pursuant to the Company's Performance Incentive Plan and
include, in the twelve-month period ended September 30, 1997, a relocation
bonus of $28,945 for Mr. Hill and include in fiscal year ending March 31,
1997, such relocation bonus of $28,945 for Mr. Hill and a relocation bonus
of $15,500 for Mr. Richmond. Annual bonus payments for the fiscal year ended
March 31, 1997, paid in May 1997 and included in both 1997T and fiscal 1997
bonus amounts, were $316,701 for Mr. Kempner, $128,947 for Mr. Hill,
$230,700 for Mr. Carrothers, $222,492 for Mr. Schwer and $150,000 for Mr.
Richmond.
(2) Amounts are primarily payments under the Company's vacation policy and for
taxes due on perquisites. Monetary service awards, which are earned on every
fifth anniversary of employment, are also included when paid. Mr. James C.
Kempner's fiscal year 1996 compensation included $8,361 payment for taxes
due on perquisites, a $8,370 automobile allowance, a $23,465 disability
insurance policy premium and $13,525 for a bargain vehicle purchase. Mr.
Hill's fiscal 1996 other annual compensation included $10,940 in vacation
pay, a $5,325 payment for taxes due on perquisites, a $23,355 disability
insurance premium and $13,525 for a bargain vehicle purchase. Mr.
Carrothers' fiscal year 1996 other annual compensation included a $7,500
automobile allowance and a moving allowance of $11,142. Mr. Schwer's fiscal
year 1996 other annual compensation included $2,019 in vacation pay, a
$3,196 payment for taxes on perquisites, a $2,753 automobile allowance and
$13,525 for a bargain vehicle purchase.
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Mr. Richmond's fiscal 1996 other annual compensation included $3,882 in
vacation pay, a $1,794 payment for taxes on perquisites, an $4,780
automobile allowance and $13,525 for a bargain vehicle purchase.
(3) Amount is less than $50,000 or 10% of the sum of salary and bonus.
(4) On May 1, 1997, 86,811 shares of Restricted Stock valued at $911,516 were
issued to six executive officers including the named officers. Dividends, if
declared, are payable on restricted stock. The grant is included in both
1997T and the fiscal year ended March 31, 1997.
(5) No options granted include SARs.
The following table sets forth certain information with respect to
unexercised options held at September 30, 1997. No options were granted to or
exercised by the named officers during the twelve-month period ending September
30, 1997.
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY
AT SEPTEMBER 30, 1997 OPTIONS/SARS AT
(NUMBER) SEPTEMBER 30, 1997(2)
--------------------- ----------------------
EXER- UNEXER- EXER- UNEXER-
NAME CISABLE(1) CISABLE CISABLE CISABLE
---- ---------- ------- --------- ---------
<S> <C> <C> <C> <C>
James C. Kempner.................................. 71,475 15,500 $371,981 $ 82,344
Roger W. Hill..................................... 44,475 2,500 228,544 13,281
Peter C. Carrothers............................... 16,250 18,750 89,453 112,734
William F. Schwer................................. 20,000 22,750 71,422 139,890
John A. Richmond.................................. 10,700 6,750 54,991 41,297
</TABLE>
- ---------------
(1) The following options include tandem SARs with respect to one-third of the
shares subject to the underlying option: 36,975 for Mr. James C. Kempner;
36,975 for Mr. R. W. Hill and 7,750 for Mr. W. F. Schwer.
(2) Calculated based upon the September 30, 1997 average of the high and low
market price per share of $14.00 (as reported by the American Stock
Exchange) less the exercise price per share, times the number of shares.
RETIREMENT PLAN
The Imperial Holly Corporation Retirement Plan (the "Retirement Plan") is a
tax qualified benefit plan covering salaried (non-union) employees of the
Company and its subsidiaries generally, including executive officers. The
Company has also adopted a Benefit Restoration Plan for certain participants
(including each of the named officers) to supplement the benefits payable under
the Retirement Plan to the extent that the limitations on qualified plan
benefits mandated by the Internal Revenue Code of 1986, as amended (the "Code"),
reduce retirement benefits that would otherwise be payable under the Retirement
Plan.
9
<PAGE> 13
The following table sets forth estimated annual benefits (before giving
effect to Code limits) payable for eligible employees who retire at age 65
(normal retirement age) under the Retirement Plan.
TOTAL ANNUAL BENEFIT AMOUNT
<TABLE>
<CAPTION>
FINAL YEARS OF SERVICE
AVERAGE ------------------------------------------------------------------
COMPENSATION 5 10 15 20 25 30 35
------------ ------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
150,000......... 11,642 23,285 34,927 46,570 58,212 69,854 81,497
250,000......... 19,892 39,785 59,677 79,570 99,462 119,354 139,247
350,000......... 28,142 56,285 84,427 112,570 140,712 168,854 196,997
450,000......... 36,392 72,785 109,177 145,570 181,962 218,354 254,747
550,000......... 44,642 89,285 133,927 178,570 223,212 267,854 312,497
650,000......... 52,892 105,785 158,677 211,570 264,462 317,354 370,247
750,000......... 61,142 122,285 183,427 244,570 305,712 366,854 427,997
850,000......... 69,392 138,785 208,177 277,570 346,962 416,354 485,747
</TABLE>
Effective for periods after January 1, 1997, compensation under the
Retirement Plan is defined as salary, bonus, overtime and commissions as
reported in the Summary Compensation Table above. For periods prior to January
1, 1997 compensation under the Retirement Plan was defined as taxable earnings,
including salary, bonus and other annual compensation reported in the Summary
Compensation Table above, as well as the taxable income realized on exercise of
stock options and the value for federal income tax purposes of certain employee
benefits and other perquisites. Compensation under the Benefit Restoration Plan
for periods after August 1, 1994 is defined as authorized base pay plus bonus as
reported in the Summary Compensation Table. Prior to August 1, 1994,
compensation was defined in the same manner as the Retirement Plan.
Annual benefits under the Retirement Plan are in addition to social
security benefits for employees and are integrated with amounts payable pursuant
to annuities distributed to participants in connection with benefits accrued as
of the spin-off/termination of predecessors of the Retirement Plan. Benefits are
defined in terms of five-year certain and life annuity; several other payment
options are available to employees. Effective January 1, 1997, the Retirement
Plan was amended to provide benefit levels reflected above which are based in
part on social security covered compensation, which varies from year to year.
The covered compensation used in the benefit amounts above reflects the level
for an individual reaching social security retirement age in the current year.
For purposes of the Retirement Plan, the years of service, as of September 30,
1997 for the named officers are as follows: Mr. James C. Kempner (9), Mr. Hill
(34), Mr. Carrothers (3), Mr. Schwer (9), and Mr. Richmond (23).
The amounts shown above do not include benefits based on employee
contributions that were permitted in prior years. The Retirement Plan does not
currently allow employee contributions.
Benefits payable under the Retirement Plan are limited by various
provisions of the Code that restrict the amount of compensation that may be
taken into account to calculate benefits under qualified plans and other limits
on the maximum benefit payable from qualified plans. To the extent the pension
calculated pursuant to the table above would exceed the maximum amount permitted
by the Code, the difference would be payable from the Benefit Restoration Plan
as a discounted lump sum upon the participant's retirement.
10
<PAGE> 14
Salary Continuation Plan
The Company has agreed to provide lump-sum supplemental retirement and
death benefits to participants (currently each of the named officers) in the
Salary Continuation Plan. The plan also provides for monthly salary continuation
payments in the event of disability (as defined). If a participant's employment
is terminated prior to retirement for any reason other than death, disability or
cause (as defined), the participant will be entitled to receive, upon his
attainment of age 55 if his termination is prior thereto, the actuarial
equivalent (as defined) of the payment he would have received had he retired at
age 62 (in certain cases, reduced according to a vesting schedule specified in
the applicable agreement). The Salary Continuation Plan allows participants who
are 100% vested and who have attained the age of 55 to receive their benefits
without termination of employment if approved by the Executive Compensation
Committee. No amounts will be due under the plan to a participant who is
terminated for cause. The estimated amounts payable upon retirement at or after
age 62 for each of the named officers are as follows: $1,562,818 for Mr. James
C. Kempner, $790,372 for Mr. Hill, $157,731 for Mr. Carrothers, $598,349 for Mr.
Schwer and $254,942 for Mr. Richmond.
Employment Agreements and Related Arrangements
The Company has Employment Agreements expiring in July 1998, with each of
Messrs. James C. Kempner, Hill and Schwer. The Employment Agreements provide
that the Company will employ the executive at an annual base salary not less
than an amount specified in the Employment Agreement. If terminated by the
Company for any reason other than a "Non-Salary Event" (cause (as defined),
death or total and permanent disability (as defined)), the executive will be
entitled to receive as liquidated damages the present value of the greater of
his minimum base salary provided for in the Agreement, or the salary then being
paid to him, for the remaining term of employment as if there had been no
termination. If the named officer had been terminated as of September 30, 1997,
payments under the Employment Agreements would have been $324,918 for Mr. James
C. Kempner, $231,051 for Mr. Hill, and $186,837 for Mr. Schwer.
The Company has Change of Control Agreements with eleven of its executive
officers, including Mr. Carrothers. The Change of Control Agreements provide
that in the event of an "Involuntary Termination of Employment" (as defined)
during the period commencing on the effective date of a change in control (as
defined) and ending one year after that date, the Employee shall be entitled to
receive, within 30 days after the Employee's Involuntary Termination of
Employment, a lump sum payment equal to three times the Employee's base amount
(defined under Section 280G of the Code) minus $1.00. If a change of control had
occurred and if there was an Involuntary Termination of Employment at September
30, 1997, the amount due under the Change of Control Agreement would have been
$563,000 for Mr. Carrothers.
The Company has Severance Pay Agreements with Messrs. James C. Kempner,
Hill, Carrothers and Schwer and another executive officer. The Severance Pay
Agreements provide that in the event of the executive officer's death or
involuntary termination of employment (as defined) prior to his attaining age 65
but after a change in control of the Company (as defined), the executive officer
or his beneficiary shall be entitled to receive a payment equal to the greater
of (i) the product of one-fourth of the executive officer's average monthly
salary over the preceding twelve months multiplied by the number of full years
of service with the Company and its affiliates, or (ii) the total of the annual
bonuses received during the 36 months preceding his death or involuntary
termination of employment. If a change of control had occurred and if the
service of the named officers had been terminated as of September 30, 1997 under
the conditions described above, the amounts due under the Severance Pay
Agreements would have been $316,701 for Mr. James C. Kempner, $201,484 for Mr.
Hill, $239,040 for Mr. Carrothers and $231,242 for Mr. Schwer.
11
<PAGE> 15
The Company has understandings with Mr. I. H. Kempner, III providing that
Mr. Kempner will provide consulting services to the Company concerning sugar
industry related matters and that for such services the Company will pay Mr.
Kempner a monthly retainer of $3,500 and a per diem amount for each day of
travel on Company business. These arrangements are scheduled to expire on
December 31, 1998.
The Benefit Restoration Plan and the Salary Continuation Plan provide for
full vesting of benefits in the event of a change in control of the Company (as
defined). Payments may become due under the Severance Pay Agreements only after
a change in control. Such plans and agreements provide that the aggregate
present value of all "parachute payments" (within the meaning of Section 280G of
the Code) shall not exceed one dollar less than three times the executive's
"base amount" (within the meaning of Section 280G).
The Company has established an Executive Benefits Trust which may be used
to fund its obligations under certain otherwise unfunded benefit, retirement and
deferred compensation plans providing benefits to executive officers of the
Company in the event of a change in control.
-------------------------
The Report of the Executive Compensation Committee on Executive
Compensation and the Shareholder Return Performance Graph which follow shall not
be deemed to be incorporated by reference into any filing made by the Company
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, notwithstanding any general statement contained in any such
filing incorporating this proxy statement by reference, except to the extent the
Company incorporates such report and graph by specific reference.
12
<PAGE> 16
Shareholder Return Performance Graph
The following graph compares the cumulative total shareholder return on the
Common Stock to the cumulative total return of the Standard & Poor's 500 Stock
Index and the Standard & Poor's Food Index for the last five fiscal years ending
March 31 and the six-month period ending September 30, 1997. The graph assumes
that the value of the investment in the Common Stock and each index was $1.00 at
March 31, 1992 and that all dividends were reinvested on a quarterly basis.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) IHK . S&P 500 . S&P Food .
<S> <C> <C> <C>
March 93 1.00 1.00 1.00
March 94 0.71 0.99 0.90
March 95 0.71 1.11 1.04
March 96 0.71 1.43 1.28
March 97 0.91 1.66 1.54
Sept 97 1.06 2.10 1.83
</TABLE>
13
<PAGE> 17
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Executive Compensation Committee of the Board of Directors of Imperial
Holly Corporation (the "Committee") bears the responsibility for decisions
pertaining to compensation matters of the Company's Chief Executive Officer and
the other officers of the Corporation. The Committee monitors, with the use of
outside experts, competitive markets and compliance matters, and reviews the
effectiveness of current plans and formalizes plans and recommendations
associated with compensation matters and reports these items to the Board. The
Committee also serves in an advisory capacity for the non-executive positions
with respect to salary administration policy, employee development and related
strategic pay and performance issues. An independent compensation consultant
advises the Committee on market compensation practices, providing both
quantitative and qualitative information on industry peers as well as comparably
sized companies.
In its capacity of monitoring and administering performance management
programs for the executive staff, the Committee reviews and recommends to the
Board the annual plan for possible salary adjustments, promotions, incentive and
stock awards. This role may include any mid-year compensation issues pertaining
to executive staffing or status change issues as may be presented by the Chief
Executive Officer. The Chief Executive Officer works with the Committee and
provides details on recommended salary actions for his subordinates, for annual
incentive plan targets and for specific stock awards for his staff. The
Committee independently reviews the performance of the Chief Executive Officer.
COMPENSATION PROGRAM FOR COMPANY EXECUTIVES
The Company's executive compensation program, as implemented and overseen
by the Committee, reflects a policy which attempts to retain and motivate key
members of management. This objective is enabled by the sum of the compensation
elements of base pay, annual incentive and long-term compensation.
Base salaries: Base salaries are intended to be competitive. The Chief
Executive Officer has developed a flat infrastructure of general management to
run the diverse functions of administration, finance, legal, agricultural
operations, marketing and sales and plant operations. The base pay levels for
the senior management staff are, on the average, at market for jobs of similar
scope among similar capitalized firms in the food products and services
industry.
Annual incentive: Annual bonus plan values from the Company's Executive
Officer Bonus Plan established for fiscal year ending March 31, 1997 and the
six-month period ending September 30, 1997 were constructed to provide market
average total compensation potential upon achievement of targeted financial
criteria established in the beginning of the fiscal period. The bonus plan
provides for second quartile pay opportunities in the event the incentive plan's
stretch target is achieved. The financial objective of the bonus plan is
currently earnings per share. The Committee has the discretion to pay out more
or less than the formula amount based upon individual performance. Using the
formula as a significant guidepost, the annual bonus can be paid in cash or
stock or both, at the Committee's discretion. The plan also contains provisions
to allow for discretionary bonuses for exemplary activities. The Company's
financial performance for the fiscal year ended March 31, 1997 was such that an
award level between target and stretch was attained. Performance for the
six-month period ended September 30, 1997 was at the stretch level, and bonuses
of one-half the maximum annual bonus were paid. The Committee acknowledged the
turnaround accomplished in the Company's financial results for the fiscal year
ending March 31, 1997, which was continued in the six-month period ending
September 30, 1997. Incentive plan earnings beyond target were paid in the
fiscal year
14
<PAGE> 18
ended March 31, 1997 in part by the restricted stock awards enumerated in the
Summary Compensation Table above.
Long-term Incentives: The compensation plans of the Company have
historically and are expected to continue to rely on non-qualified stock options
and other forms of stock based compensation to provide capital accumulation
opportunities commensurate with its shareholders.
During fiscal 1997 and the six-month period ended September 30, 1997, no
options were granted to the named executive officers. The Committee will
continue to monitor the effectiveness of the existing option agreements in light
of available options, previous allocations to the plans and the potential value
of future awards and make recommendations to the Board and shareholders for
additional stock for long term incentives when appropriate.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Committee administers the compensation programs of Mr. James C. Kempner
consistent with the objectives enumerated for the executive group. Mr. Kempner's
compensation is targeted to be at or near the market average for the top-paid
executive in similarly capitalized companies in the foods products and services
industry. As reported in our report in the June 1997 proxy statement, Mr.
Kempner was granted an increase of $45,984 to a salary of $400,008, effective
April 1, 1997.
The fiscal year ending March 31, 1997 and six-month period ended September
30, 1997 plan funded bonuses for the Company's senior executives as described
above, including the Chief Executive Officer, based on the Company's financial
results. The fiscal year ending March 31, 1997 bonus paid Mr. Kempner consisted
of $316,701 in cash plus 23,052 shares of restricted stock. The six-month period
ending September 30, 1997 bonus paid Mr. Kempner was $330,550 in cash.
Section 162(m) of the Code does not allow a federal income tax deduction of
certain compensation to any covered employee in excess of $1 million per year,
unless the compensation meets certain standards for performance-based
compensation. The Committee believes that the Company's stock options currently
qualify as performance-based compensation. The Committee does not anticipate
that any executive officer will receive other compensation in excess of the
limit during the fiscal year ending September 30, 1998. Therefore, the Committee
did not take any action concerning the limit during the six-month fiscal
transition period ended September 30, 1997. The Committee will continue to
monitor this situation and will take appropriate action if warranted in the
future.
THE EXECUTIVE COMPENSATION COMMITTEE
John D. Curtin, Jr., Chairman
Edward O. Gaylord
Gerald Grinstein
Henry E. Lentz
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Gaylord is a member of the Executive Compensation Committee. In 1989,
the Company became one of the limited partners of ChartCo Terminal, L.P.
("ChartCo") upon the formation thereof and made a capital contribution of
$1,000,000 to ChartCo. A company owned by Mr. Gaylord is the general partner of
ChartCo, which owns an interest in a fuel oil terminal in Houston, Texas. The
percentage interests of the partners in ChartCo are in proportion to their
respective capital contributions.
15
<PAGE> 19
In connection with the Company's acquisition of Savannah Foods and related
financing transactions, Lehman Brothers Inc. ("Lehman Brothers") has provided
investment banking and other services to the Company and has acted as financial
advisor to the Company, for which it has received customary fees. Lehman
Brothers is also acting as underwriter for a series of senior subordinated notes
expected to be issued by the Company. An affiliate of Lehman Brothers acted as
an arranger and agent for certain credit facilities entered into by the Company
and received customary fees in connection therewith.
Additionally, in 1991, the Company entered into an interest rate swap with
Lehman Brothers which continued until October 1996. Mr. Lentz, who was elected a
director of the Company in December 1993, became a Managing Director of Lehman
Brothers in March 1993. In 1996, Mr. Lentz became a member of the Executive
Compensation Committee.
16
<PAGE> 20
SECURITY OWNERSHIP
The following table sets forth certain information with respect to the
ownership of Common Stock as of December 10, 1997 of each director of the
Company, each of the named officers, each person known to the Company to be the
beneficial owner of 5% or more of Common Stock and all directors and executive
officers of the Company as a group. Unless otherwise indicated, the beneficial
owners have sole voting and investment power over the shares of Common Stock
listed below.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK
-----------------------
NUMBER PERCENTAGE
NAME OF SHARES OF CLASS
---- --------- ----------
<S> <C> <C>
Peter C. Carrothers(1)(2)................................... 39,309 *
John D. Curtin, Jr.(1)...................................... 8,142 *
David J. Dilger(3).......................................... 3,800,000 26.6%
Edward O. Gaylord........................................... 18,942 *
Greencore Group plc......................................... 3,800,000 26.6%
St. Stephen's Green House
Earlsfort Terrace
Dublin 2, Ireland
Gerald Grinstein............................................ 2,466 *
Ann O. Hamilton(5).......................................... 227,120 1.6%
Roger W. Hill(1)(2)......................................... 70,798 *
Harris L. Kempner, Jr.(6)(7)................................ 456,944 3.2%
I. H. Kempner, III(1)(4)(6)(8).............................. 733,679 5.1%
P. O. Box 25
Sugar Land, Texas 77487-0025
James C. Kempner(1)(2)(6)(9)................................ 554,940 3.9%
H. E. Lentz................................................. 19,142 *
Robert L. K. Lynch(4)(10)................................... 414,304 2.9%
Archer-Daniels-Midland Company.............................. 734,400 5.1%
P. O. Box 1470
Decatur, Illinois 62525
Kevin C. O'Sullivan(3)...................................... 3,800,000 26.6%
John A. Richmond(1)(2)...................................... 31,959 *
Fayez Sarofim............................................... 681,142 4.8%
William F. Schwer(1)(2)..................................... 47,040 *
Daniel K. Thorne(4)(11)..................................... 695,718 4.9%
United States National Bank(12)............................. 1,937,456 13.6%
P. O. Box 179
Galveston, Texas 77553
</TABLE>
17
<PAGE> 21
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK
-----------------------
NUMBER PERCENTAGE
NAME OF SHARES OF CLASS
---- --------- ----------
<S> <C> <C>
Harris K. Weston(6)(13)..................................... 1,347,563 9.4%
Dinsmore & Shohl
1900 Chemed Center
255 East 5th Street
Cincinnati, Ohio 45202
All directors and executive officers as a group (22
persons)(1)(2)............................................ 6,927,161 48.5%
</TABLE>
- ---------------
* Percentage of shares of Common Stock beneficially owned does not exceed 1%
of the class.
(1) Includes shares subject to stock options exercisable within 60 days as
follows: I. H. Kempner, III, 96,925 shares; Peter C. Carrothers, 21,250
shares; John D. Curtin, Jr., 750 shares; Roger W. Hill, 46,975 shares;
James C. Kempner, 86,975 shares; John A. Richmond 13,700 shares; William F.
Schwer, 28,750 shares; and all directors and executive officers as a group,
396,000 shares.
(2) Includes restricted shares as follows: Mr. Carrothers 14,792; Mr. Hill
14,290; Mr. James C. Kempner, 23,052; Mr. Richmond, 10,466; Mr. Schwer
14,792; and all executive officers as a group, 86,811 shares.
(3) Consists of the shares held by Greencore Group plc, of which Mr. Dilger is
the Chief Executive Officer and a director and Mr. O'Sullivan is the Chief
Financial Officer and a director. Messrs. Dilger and O'Sullivan disclaim
beneficial ownership of such shares.
(4) Includes 134,187 shares of Common Stock owned by the Harris and Eliza
Kempner Fund, a charitable foundation, as to which Mr. I. H. Kempner, III,
Mr. Lynch and Mr. Thorne share voting power and investment power as
co-trustees along with other trustees.
(5) Includes 49,072 shares of Common Stock owned by a testamentary trust as to
which Mrs. Hamilton is successor trustee and has voting and investment
power.
(6) Includes 332,363 shares of Common Stock owned by the H. Kempner Trust
Association, over which I. H. Kempner, III, James C. Kempner, Harris L.
Kempner, Jr. and Harris K. Weston share voting power and investment power
as co-trustees with one other co-trustee.
(7) Includes 6,420 shares of Common Stock held by Mr. Kempner's wife, as to
which he shares voting and investment power. Mr. Kempner disclaims
beneficial ownership as to such shares.
(8) Includes 4,443 shares of Common Stock held by Mr. Kempner's wife, as to
which Mr. Kempner disclaims beneficial ownership.
(9) Includes 6,750 shares of Common Stock owned by a trust of which Mr. Kempner
is a beneficiary.
(10) Includes 188,891 shares of Common Stock owned by a testamentary trust as to
which Mr. Lynch is the income beneficiary and has a power of appointment.
Mr. Lynch does not have voting or investment power with respect to such
shares. Also includes 45,367 shares of Common Stock held by a revocable
trust for the benefit of Mr. Lynch's sister of which Mr. Lynch is
co-trustee and shares voting and investment power with two other
co-trustees. Mr. Lynch disclaims beneficial ownership over the shares held
in trust for his sister.
(11) Includes 327,142 shares of Common Stock owned by a testamentary trust as to
which Mr. Thorne is the sole beneficiary and a co-trustee. Also includes
166,947 shares owned by the Alan Pryce-Jones Trust, of which Mr. Thorne is
a co-trustee, and 18,722 shares owned by the Daniel K. Thorne Foundation,
of
18
<PAGE> 22
which Mr. Thorne is President. Also includes 875 shares owned by his wife
of which Mr. Thorne disclaims beneficial ownership.
(12) Consists of 1,937,906 shares of Common Stock which United States National
Bank holds as trustee of various trusts for descendants of H. Kempner,
including the 188,891 shares listed in Note 10 but not including any shares
that are held in nominee form for others. United States National Bank has
sole voting power over 1,937,456 shares. The information given is based on
a Statement on Form 4 filed by the shareholder with the Commission and
other information furnished by the stockholder.
(13) Includes 2,700 shares of Common Stock held by Mr. Weston's wife and 46,800
shares of Common Stock held by Mr. Weston's daughters. Mr. Weston disclaims
beneficial ownership as to such shares. Also includes 106,200 shares of
Common Stock owned by Mr. Weston as trustee for two trusts for the benefit
of Mr. Weston's daughters and 396,000 shares of Common Stock owned by Mr.
Weston as trustee of three charitable annuity lead trusts, as to all of
which shares Mr. Weston disclaims beneficial ownership.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires officers and
directors of the Company and beneficial owners of more than 10% of the Common
Stock to file reports of ownership and changes in ownership with the Securities
and Exchange Commission and the American Stock Exchange. Officers, directors and
greater than 10% shareholders are required to furnish the Company with copies of
all Section 16(a) forms they file.
Based on a review of Forms 3 and 4 and amendments thereto filed during the
twelve-month period ending September 30, 1997 and Forms 5 and amendments
thereto, or written representations that no Form 5s were required, the Company
believes that during the twelve-month period ending September 30, 1997, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were in compliance.
OTHER INFORMATION
Fayez Sarofim & Co. acts as an investment advisor to the Company, the
Retirement Plan and other employee benefit plans maintained by the Company.
During the twelve month period ending September 30, 1997, Fayez Sarofim & Co.
received approximately $379,000 for such services. Fayez Sarofim, a director, is
Chairman of the Board, President and owner of a majority of the outstanding
capital stock of Fayez Sarofim & Co.
PROPOSAL 2: AMENDMENT TO THE STOCK INCENTIVE PLAN
EXISTING STOCK INCENTIVE PLAN
In 1988, the shareholders of the Company approved the adoption of the
Imperial Holly Corporation Stock Incentive Plan, which provides for the granting
to certain officers and key employees of the Company and its participating
subsidiaries (approximately 500 participants at December 10, 1997) of incentive
awards in the form of stock options, stock appreciation rights ("SARs") and
restricted stock. In 1993, the shareholders approved an amendment to the plan
which provided for issuance of performance shares and performance units. The
plan was most recently amended in 1996, when the shareholders approved an
19
<PAGE> 23
amendment to increase the number of shares subject to the plan from 812,500 to
1,062,500 (as amended, the "Stock Incentive Plan"). The Executive Compensation
Committee of the Board of Directors has discretion to select the employees to be
granted awards, to determine the type, size and terms of such awards, to
determine the time when awards will be granted and to prescribe the form of the
instruments evidencing awards made under the Stock Incentive Plan.
Options are rights to purchase a specified number of shares of Common Stock
at a price not less than the fair market value of the shares of Common Stock at
the time the option is granted, with cash or other shares of Common Stock owned
by the optionee or both. Options are exercisable at such time and upon such
terms as are determined by the Executive Compensation Committee and expire no
later than ten years after the date they were granted. Options may constitute
either incentive stock options within the meaning of Section 422 of the Code or
nonqualified options. SARs are rights to receive, without payment to the
Company, cash or shares of Common Stock or both in lieu of the purchase of
shares of Common Stock under the related stock options to which the SARs are
attached. A restricted stock award is an award of shares of Common Stock that
may be subject to a restriction against transfer as well as a repurchase option
exercisable by the Company upon the termination of the participant's employment
during a period set by the Executive Compensation Committee. During such period,
the employee generally has the right to vote and receive any dividends declared
on the shares covered by the restricted stock awards.
Performance shares are contingent awards of Common Stock based upon Company
performance over a period of not less than three years (a "Performance Period")
relative to objective performance criteria (such as return on equity or capital
or any other financial measures) ("Performance Objectives") established by the
Executive Compensation Committee at the time of grant. Performance units are
contingent awards (expressed in a stated dollar amount or a formula) that may be
earned based on Company performance over a Performance Period relative to
Performance Objectives established at the time of grant. Performance shares and
performance units may be paid in cash or Common Stock. The Executive
Compensation Committee determines at the time of grant the portion of a grant of
performance shares or performance units that may be payable if the Company
achieves intermediate levels of the Performance Objectives.
The Stock Incentive Plan currently provides for the issuance of up to a
total of 1,062,500 shares of the Company's Common Stock. No awards may be made
under the Stock Incentive Plan after April 29, 2003. Awards under the Stock
Incentive Plan are subject to adjustment in the event of a stock dividend, stock
split, recapitalization or combination of the Common Stock. In the event of
certain mergers, consolidations, plans of exchange or other reorganizations of
the Company, outstanding awards under the Stock Incentive Plan are subject to
adjustment to reflect the terms of such transaction. In addition, upon the
dissolution or liquidation of the Company or upon any merger or consolidation of
the Company in which the Company is not the surviving corporation, all awards
under the Stock Incentive Plan will become fully vested.
Awards under the Stock Incentive Plan are not transferable except by will
and by the laws of descent and distribution. Except when a participant's
employment terminates as a result of death, disability or retirement under an
approved retirement plan, an option may be exercised only if the participant is
an officer, employee or director of the Company or a subsidiary at the time of
exercise. An option may also be exercised within one year after the death of a
participant or within three months after termination of employment as a result
of disability or retirement under an approved retirement plan, but only to the
extent exercisable at death or termination of employment and only if the term of
the option has not previously expired. The Stock Incentive Plan allows for the
satisfaction of a participant's tax withholding in respect of an award by the
withholding of shares of Common Stock issuable pursuant to the award or the
delivery by the participant of previously owned
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shares of Common Stock, in either case valued at the fair market value thereof.
On December 10, 1997, the last reported sales price of the Common Stock on the
American Stock Exchange was $9.961 per share.
The Stock Incentive Plan may be amended by the Board of Directors, except
that no amendment that increases the number of shares of Common Stock subject to
the Stock Incentive Plan may be made without shareholder approval, and no
amendment that adversely affects any right of a participant with respect to any
award previously granted may be made without the consent of the participant.
PROPOSED AMENDMENT
As noted above, the Stock Incentive Plan currently provides for the
issuance of up to 1,062,500 shares of Common Stock. As of December 10, 1997, a
total of 221,239 shares had been issued under the Stock Incentive Plan and
options to purchase an additional 582,894 shares were outstanding, leaving only
258,367 shares available for future awards. As a result of the Savannah Merger,
the Company's operation and number of employees will be significantly expanded,
and the outstanding Common Stock will be significantly increased. The Board of
Directors believes that the remaining shares authorized for grant under the
Stock Incentive Plan are insufficient to serve the purposes of the plan. On
October 31, 1997, the Board of Directors approved a proposed amendment to the
Stock Incentive Plan that would increase the number of shares of Common Stock
subject to the plan by 2,500,000. Approval of the proposed amendment will also
constitute ratification of the plan as amended thereby, including the
eligibility provisions thereof, with the effect that incentive stock options may
be granted under the plan until the plan's expiration. The Company believes the
amendment will enable the Stock Incentive Plan to continue to advance the
interests of the Company and its shareholders by providing deferred stock
incentives to key employees.
The amount and type of awards to be granted in the future to the named
officers, to all executive officers as a group and to all other employees are
not currently determinable. The Stock Incentive Plan does not permit the grant
of awards to directors who are not employees.
Approval of the amendment to the Stock Incentive Plan will require the
affirmative vote of a majority of the shares of Common Stock present and
entitled to vote on the matter. Accordingly, abstentions will have the same
effect as no votes, and broker non-votes applicable to shares represented at the
meeting will have no effect. The persons named on the accompanying proxy will
vote in accordance with the choice specified thereon, or, if no choice is
properly indicated, in favor of the approval of the amendments to the Stock
Incentive Plan.
CERTAIN TAX CONSEQUENCES
Options granted under the Stock Incentive Plan may constitute either
"incentive stock options" within the meaning of Section 422 of the Code or
non-qualified options. In certain instances, the tax treatment under the Code of
stock options qualifying as incentive stock options is more favorable to
employees than the tax treatment accorded non-qualified options. Generally, upon
the exercise of an incentive stock option, the optionee will recognize no income
for federal income tax purposes. The difference between the exercise price of
the incentive stock option and the fair market value of the Common Stock at the
time of purchase is, however, an adjustment to alternative minimum taxable
income that may require payment of an alternative minimum tax. On the sale of
the shares acquired by exercise of an incentive stock option (assuming that the
sale does not occur within two years from the date of grant of the option or
within one year from the date of exercise), any gain will be taxed to the
optionee as mid-term or long-term capital gain, as applicable. The Company will
not be entitled to a tax deduction upon the grant or exercise of an incentive
stock option, except
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to the extent an optionee recognizes ordinary income as a result of the
disposition of the share prior to the expiration of the required holding period.
Upon the exercise of a non-qualified option, the optionee recognizes
taxable income (subject to withholding) in an amount equal to the difference
between the fair market value on the date of exercise of the Common Stock
purchased and the exercise price. Upon any sale of shares acquired upon exercise
of a non-qualified option, any difference between the sales price and the fair
market value of the shares on the date of exercise of the non-qualified option
will be treated generally as capital gain or loss. Upon the exercise of a non-
qualified option, the Company is entitled to a deduction for federal income tax
purposes in an amount equal to the income recognized by the employee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT TO THE
STOCK INCENTIVE PLAN.
PROPOSAL 3: RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
approved and recommended the appointment of Deloitte & Touche LLP, independent
certified public accountants, as auditors of the Company's financial statements
for the year ending September 30, 1998. Deloitte & Touche LLP has served as
auditors for the Company for over 25 years. Neither such firm nor any of its
associates has any relationship with the Company except in their capacity as
auditors.
A representative of Deloitte & Touche LLP is expected to attend the 1998
Annual Meeting and be available to respond to appropriate questions raised
during the meeting by shareholders. Such representative will also have an
opportunity to make a statement during the meeting if he so desires.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE APPOINTMENT
OF DELOITTE & TOUCHE LLP AS THE COMPANY'S AUDITORS FOR THE FISCAL YEAR ENDING
SEPTEMBER 30, 1998.
OTHER MATTERS
A copy of each of the Company's Annual Report to Shareholders and the
Company's Transition Report on Form 10-K, including financial statements for the
six-month transition period ending September 30, 1997, accompany this Proxy
Statement but are not a part of the proxy soliciting material.
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SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Company's 1999
Annual Meeting of Shareholders, and otherwise eligible, must be received by the
Company (at the address indicated on the first page of this Proxy Statement) no
later than August 20, 1998 to be eligible for inclusion in the Company's proxy
material relating to that meeting.
REGARDLESS OF THE NUMBER OF SHARES OWNED, IT IS IMPORTANT THAT THEY BE
REPRESENTED AT THE MEETING, AND YOU ARE RESPECTFULLY REQUESTED TO SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY AT YOUR EARLIEST CONVENIENCE.
By Order of the Board of Directors
WILLIAM F. SCHWER
Secretary
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FORM OF PROXY CARD
- --------------------------------------------------------------------------------
IMPERIAL HOLLY CORPORATION
1998 ANNUAL MEETING OF SHAREHOLDERS
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James C. Kempner, Karen L. Mercer and
Roy E. Henderson, and each of them, with full power of substitution, the
attorneys and proxies of the undersigned to vote all of the shares of Common
Stock, without par value, of Imperial Holly Corporation (the "Company") that the
undersigned would be entitled to vote, with all power that the undersigned would
possess if personally present, at the 1998 Annual Meeting of Shareholders of
Imperial Holly Corporation to be held on January 30, 1998 and at any adjournment
or postponement thereof, on the matters as designated herein and, in their
discretion, on such other matters as may properly come before the meeting or
adjournments thereof, all as set forth in the accompanying Proxy Statement.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED ON THE
REVERSE. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR ELECTION AS
DIRECTORS OF ALL OF THE NOMINEES LISTED ON THE REVERSE. A majority (or if only
one, then that one) of the proxies or substitutes acting at the meeting, or at
adjournment or postponement, may exercise the powers conferred by this Proxy.
Receipt of the Notice of Meeting and Proxy Statement is hereby acknowledged.
This Proxy revokes all prior proxies given by the undersigned
(Continued, and to be signed and dated, on the reverse side.)
IMPERIAL HOLLY CORPORATION
P.O. BOX 11110
NEW YORK, N.Y. 10203-0110
<PAGE> 28
FORM OF PROXY CARD
(Reverse Side)
<TABLE>
<S> <C> <C> <C> <C> <C>
1. To elect four directors to serve for the FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] *EXCEPTIONS [ ]
terms set forth in the proxy statement. listed below for all nominees listed below.
Nominees: John D. Curtin, Jr., I.H. Kempner III, James C. Kempner and Daniel K. Thorne
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S
NAME IN THE SPACE PROVIDED BELOW).
*Exceptions _______________________________________________________________________________________________________________________
2. To consider and act upon a proposal to approve an Amendment 3. To consider and act upon a proposal to ratify the appointment
to the Company's Stock Incentive Plan. of the firm Deloitte & Touche LLP, independent certified public
accountants, as auditors of the Company for its fiscal year
ending September 30, 1998.
FOR [ ] AGAINST [ ] ABSTAIN [ ] FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Change of Address and [ ]
or Comment Mark Here
Please sign exactly as name or names appear on the proxy.
If stock is held jointly, each holder should sign. If
signing as attorney, trustee, executor, administrator,
custodian, guardian or corporate officer, please give
full title.
DATED: _____________________________________________ 19__
SIGNED __________________________________________________
_________________________________________________________
VOTES MUST BE INDICATED [X]
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE (X) IN BLACK OR BLUE INK.
ENCLOSED ENVELOPE.
</TABLE>
