<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 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)(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:
<PAGE>
PRELIMINARY COPIES
December 15, 1998
Dear Fellow Shareholder:
The Annual Meeting of Shareholders will be held on Friday, January 29, 1999
at 11:00 a.m. at the Sweetwater Country Club, 4400 Palm Royale Boulevard,
Sugar Land, Texas 77479. You are cordially invited to attend.
At the meeting, we will elect five directors; act on a proposal to change
the Company's name to Imperial Sugar Company; and act on the selection of
auditors.
Your Board of Directors joins me in urging you to attend the meeting 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,
<PAGE>
PRELIMINARY COPIES
IMPERIAL HOLLY CORPORATION
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 29, 1999
----------------
To the Shareholders of Imperial Holly Corporation:
The 1999 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 29, 1999, at 11:00
a.m., for the following purposes:
(1) to elect five directors;
(2) to consider and act on a proposal to approve an amendment to the
Company's Restated Articles of Incorporation to change the name of the
Company to "Imperial Sugar Company";
(3) to consider and act on 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, 1999;
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 3, 1998 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
ROY L. CORDES, JR.
Secretary
Sugar Land, Texas
December 15, 1998
<PAGE>
PRELIMINARY COPIES
IMPERIAL HOLLY CORPORATION
8016 HIGHWAY 90A
SUGAR LAND, TEXAS 77478
----------------
PROXY STATEMENT
----------------
1999 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 1999 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 15, 1998.
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 five directors named below;
(b) for approval of the amendment to the Restated Articles of
Incorporation to change the Company's name to Imperial Sugar Company;
and
(c) for ratification of the selection of Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending September
30, 1999.
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
at least two-thirds of the outstanding shares entitled to vote at the meeting
is required for adoption of the proposal referred to in (b), and accordingly
abstentions and broker non-votes will have the same effect as no votes on this
proposal. The affirmative vote of the majority of the shares present and
entitled to vote on the matter is required for adoption of the proposal
referred to in (c), and 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 of this proposal.
1
<PAGE>
Pursuant to an Investor Agreement dated August 29, 1996, as amended, between
the Company and Greencore Group plc and Earlsfort Holdings B.V. (collectively,
the "Investor"), the Investor, who currently holds approximately 15.3% 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. The Investor
previously designated Mr. David J. Dilger and Mr. Kevin C. O'Sullivan for
election as directors.
The Company entered into an Agreement and Plan of Merger (the "Savannah
Merger Agreement") to acquire Savannah Foods & Industries, Inc. ("Savannah
Foods"), which was completed on December 22, 1997 when Savannah Foods merged
with a wholly owned subsidiary of the Company (the "Savannah Merger").
Pursuant to the Savannah Merger Agreement, two nominees of Savannah Foods, Mr.
Robert L. Harrison and Mr. William W. Sprague III, were elected as Class II
Directors. The Savannah Merger Agreement requires that these Savannah Foods'
nominees be nominated for re-election 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 [November 24, 1998], the record date for the
determination of shareholders entitled to vote at the meeting, the Company had
outstanding 32,043,911 shares of Common Stock, which is the only class of
stock of the Company outstanding and entitled to vote at the meeting. Each
shareholder is entitled to one vote for each share of Common Stock held.
Cumulative voting is not allowed in the election of directors.
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 1999 Annual Meeting, the terms of
office of the Class II directors will extend until the Annual Meeting of
Shareholders in 2002 (and until their successors are qualified). The terms of
office of the Class III directors extend until the Annual Meeting of
Shareholders in 2000 and the terms of office of the Class I directors extend
until the Annual Meeting of Shareholders in 2001 (and, in each case, until
their successors are qualified). At the 1999 Annual Meeting, it is proposed to
elect David J. Dilger, Edward O. Gaylord, Gerald Grinstein, Robert L. Harrison
and William W. Sprague III as Class II Directors. All of the nominees are
currently serving as directors of the Company.
NOMINEES
Set forth below is certain information concerning the five nominees for
election as directors at the 1999 Annual Meeting, including the business
experience of each during the past five years and the age of each nominee on
December 3, 1998.
DAVID J. DILGER has been a director of the Company since October 1996. Mr.
Dilger, age 42, has been Chief Executive of Greencore Group plc, an Irish
diversified food products and 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 66, 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.
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 of Delta Air Lines, Inc. 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 in December 1995. Mr.
Grinstein, age 66, is also a director of Browning Ferris Industries, Inc.,
PACCAR, Inc., Sundstrand Corporation and Vans Inc.
2
<PAGE>
ROBERT L. HARRISON has been a director of the Company since December 1997.
Mr. Harrison, age 58, has been President of Stevens Shipping & Terminal Co. in
Savannah, Georgia for more than seventeen years. Mr. Harrison served as a
Director of Savannah Foods from 1990 to 1997.
WILLIAM W. SPRAGUE III has been a director and a Managing Director of the
Company since December 1997 when the Company acquired Savannah Foods. Mr.
Sprague, age 42, has been President and Chief Executive Officer of Savannah
Foods since 1995 and served as President and Chief Operating Officer from 1993
to 1995. He began his career with Savannah Foods in 1983, and has held various
positions since then.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" DAVID J. DILGER, EDWARD O.
GAYLORD, GERALD GRINSTEIN, ROBERT L. HARRISON, AND WILLIAM W. SPRAGUE III AS
DIRECTORS.
CONTINUING DIRECTORS
Set forth below is certain information concerning the nine current directors
of the Company whose present terms of office are scheduled to continue until
2000 or 2001, including the business experience of each during the past five
years and the age of each director on December 3, 1998.
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 December 1995. Mrs.
Hamilton, age 62, 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 58, 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
53, 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. and P&L Coal Holding, Inc.
KEVIN C. O'SULLIVAN has been a director of the Company since October 1996.
Mr. O'Sullivan, age 56, 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 69, is currently a director of Argonaut
Group, Unitrin, Inc. and the Exor Group, S.A.
Directors in Class I
(Terms Expiring at the 2001 Annual Meeting of Shareholders)
JOHN D. CURTIN, JR. has been a director of the Company since 1993. Mr.
Curtin was Chairman and Chief Executive Officer of Aearo Corporation, a
worldwide manufacturer and supplier of personal safety protection equipment,
from May 1994 to March 1998 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 65, is a
director of Aearo Corporation.
3
<PAGE>
I. H. KEMPNER, III, age 66, 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.
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 was
also the Chief Financial Officer of the Company from 1988 until April 1998. 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, age 59,
is a Director of Bouygues Offshore S.A. and the King Ranch.
DANIEL K. THORNE has been a director of the Company since 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 47, is also President of Star Lake Capital, a
venture capital firm.
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 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.
During the twelve-month period ending September 30, 1998, each incumbent
director attended at least 80% of the aggregate number of meetings of the
Board and its committees on which the director served, with the exception of
David Dilger and Fayez Sarofim, who each attended 40% of the meetings. The
Board met five times during the year ended September 30, 1998.
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 year ended September 30, 1998.
AUDIT COMMITTEE
Members: Edward O. Gaylord (Chairman)
Robert L. Harrison
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 accountants and reviews the fees paid for services rendered by such
accountants. During the year ended September 30, 1998, the Audit Committee met
twice.
4
<PAGE>
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 three times during the year ended September 30, 1998.
NOMINATING COMMITTEE
Members: Edward 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. The Nominating Committee did not meet
during the year ended September 30, 1998.
ENVIRONMENTAL COMMITTEE
Members: Robert L. K. Lynch (Chairman; Advisory Director since December 1997)
A. M. Bartolo (Advisory Director since December 1997)
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 Committee members also participated in the environmental
assessment of the Company's facilities. The Environmental Committee met once
during the year ended September 30, 1998.
DIRECTOR REMUNERATION
Pursuant to the Nonemployee Director Compensation Plan directors who are not
employees of the Company receive 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 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.
5
<PAGE>
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 date the director becomes a director of the Company
(or July 27, 1989, if later). 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. Robert L. Harrison during the year
ended September 30, 1998. No options were exercised during the year ended
September 30, 1998.
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 five most highly compensated executive
officers during the year ended September 30, 1998 (collectively, the "named
officers") for services rendered in all capacities. In October 1997, the
Company changed its fiscal year end from March to September. Accordingly,
compensation reported in the following table is for the fiscal year ended
September 30, 1998, the twelve-month transition period ended September 30,
1997 ("1997T"), as well as the fiscal year ended March 31, 1997. As a result,
compensation for the six-month period ending 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 ended March 31, 1997, which were paid in May 1997,
have been double counted by inclusion in both the 1997T amounts and the fiscal
1997 amounts.
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------- ---------------------
RESTRICTED SHARES
NAME AND PRINCIPAL FISCAL OTHER ANNUAL STOCK UNDERLYING ALL OTHER
POSITION PERIOD SALARY BONUS(1) COMPENSATION AWARDS(2) OPTIONS(3) COMPENSATION(4)
------------------ ------ -------- -------- ------------ ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
James C. Kempner....... 1998 $497,502 $ 0 (5) $ 0 200,000 $ 0
President and Chief 1997T 377,016 647,251 (5) 242,046 0 0
Executive Officer 1997 354,024 316,701 (5) 242,046 0 0
William W. Sprague
III................... 1998 431,800 0 (5) 0 135,000 6,074
Managing Director and
President-Savannah
Foods & Industries,
Inc.
Roger W. Hill.......... 1998 291,612 0 (5) 0 65,000 0
Managing Director and 1997T 284,448 281,123 (5) 150,045 0 0
President-Holly 1997 284,448 128,947 (5) 150,045 0 0
Sugar Corporation
William F. Schwer...... 1998 241,253 20,000 (5) 0 65,000 0
Managing Director 1997T 202,512 412,242 (5) 155,316 0 0
and General Counsel 1997 175,008 222,492 (5) 155,316 0 0
James M. Kelley........ 1998 246,800 0 (5) 0 65,000 11,629
Managing Director
David H. Roche......... 1998 246,800 0 (5) 0 65,000 377
Managing Director
</TABLE>
- --------
(1) Bonuses paid were pursuant to the Company's Performance Incentive Plan
and include a relocation bonus of $28,945 for Mr. Hill in both 1997T and
the fiscal year ended March 31, 1997. 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 and $222,492 for Mr. Schwer.
(2) On May 1, 1997, an aggregate of 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
grants are included in both 1997T and the fiscal year ended March 31,
1997. At September 30, 1998, aggregate restricted stock holdings for the
named executive officers and the values of such holdings (based on the
closing price of the Common Stock on September 30, 1998 of $6.75) were:
Mr. Kempner, 23,052 shares ($155,601); Mr. Hill, 14,290 shares ($96,458);
and Mr. Schwer, 14,792 shares ($99,846).
(3) No options granted include SARs.
(4) Represents Company matching contributions to a defined contribution plan
and accrual of above-market earnings on deferred compensation.
(5) Amount is less than $50,000 or 10% of the sum of salary and bonus.
STOCK OPTIONS
The following table reflects information with respect to stock options
granted to the named officers during fiscal 1998 as indicated in the Summary
Compensation Table. All options listed in the table below have an exercise
price equal to the fair market value per share of Common Stock on the date of
grant. The options provide that the optionee may satisfy the exercise price
with cash or shares of Common Stock owned by the optionee. Income tax
withholding obligations may be satisfied by having the Company withhold shares
of Common Stock issuable upon exercise.
7
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------
PERCENT
OF TOTAL
NUMBER OF OPTIONS/SARS EXERCISE
SHARES GRANTED TO OR BASE GRANT
UNDERLYING EMPLOYEES PRICE DATE
OPTIONS/SARS IN FISCAL PER EXPIRATION VALUE
NAME GRANTED YEAR SHARE DATE (3)
- ---- ------------ ------------ -------- ---------- --------
<S> <C> <C> <C> <C> <C>
James C. Kempner........ 200,000(1) 13.4% $9.406 2/4/2008 $889,800
Roger W. Hill........... 65,000(2) 4.4 9.406 2/4/2008 289,185
William W. Sprague III.. 135,000(2) 9.0 9.406 2/4/2008 600,615
William F. Schwer....... 65,000(2) 4.4 9.406 2/4/2008 289,185
James M. Kelley......... 65,000(2) 4.4 9.406 2/4/2008 289,185
David H. Roche.......... 65,000(2) 4.4 9.406 2/4/2008 289,185
</TABLE>
- --------
(1) Incentive stock options vest in four equal annual increments beginning
February 4, 1999.
(2) Non-qualified stock options vest in four equal annual increments
beginning February 4, 1999.
(3) Grant date value is based on the Black-Scholes options pricing model
assuming a seven-year term, volatility of 42%, an annual dividend yield
of 1% and a risk-free interest rate of 5.5%. Actual gains, if any, on
stock option exercises are dependent on future performance of the stock.
There can be no assurance that the amounts reflected in this table will
be achieved.
The following table sets forth certain information with respect to
unexercised options held at September 30, 1998. No options were exercised by
the named officers during the year ended September 30, 1998.
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
AT SEPTEMBER 30, 1998 AT SEPTEMBER 30, 1998(2)
---------------------------- -------------------------
NAME EXERCISABLE(1) UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
James C. Kempner........ 86,975 200,000 $6,862 --
Roger W. Hill........... 46,975 65,000 6,862 --
William W. Sprague III.. -- 135,000 -- --
William F. Schwer....... 28,750 79,000 -- --
James M. Kelley......... -- 65,000 -- --
David H. Roche.......... -- 65,000 -- --
</TABLE>
- --------
(1) The following options include tandem SARs with respect to one-third of
the shares subject to the underlying option: 12,325 for Mr. Kempner;
12,325 for Mr. Hill and 2,583 for Mr. Schwer.
(2) Calculated based on the September 30, 1998 average of the high and low
market price per share of $6.72 (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 non-union employees of the Company and its
subsidiaries, including Mr. Kempner, Mr. Hill and Mr. Schwer, but excluding
non-union employees of Savannah Foods and its subsidiaries. The Company has
also adopted a Benefit Restoration Plan for certain participants (including
Mr. Kempner, Mr. Hill and Mr. Schwer) 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.
8
<PAGE>
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>
YEARS OF SERVICE
-----------------------------------------------------------------------
FINAL
AVERAGE 5 10 15 20 25 30 35 40
------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 150,000.............. $ 11,597 $ 23,194 $ 34,790 $ 46,387 $ 57,984 $ 69,581 $ 81,178 $ 91,678
250,000.............. 19,847 39,694 59,540 79,387 99,234 119,081 138,928 156,428
350,000.............. 28,097 56,194 84,290 112,387 140,484 168,581 196,678 221,178
450,000.............. 36,347 72,694 109,040 145,387 181,734 218,081 254,428 285,928
550,000.............. 44,597 89,194 133,790 178,387 222,984 267,581 312,178 350,678
650,000.............. 52,847 105,694 158,540 211,387 264,234 317,081 369,928 415,428
750,000.............. 61,097 122,194 183,290 244,387 305,484 366,581 427,678 480,178
850,000.............. 69,347 138,694 208,040 277,387 346,734 416,081 485,428 544,928
950,000.............. 77,597 155,194 232,790 310,387 387,984 465,581 543,178 609,678
1,050,000.............. 85,847 171,694 257,540 343,387 429,234 515,081 600,928 674,428
1,150,000.............. 94,097 188,194 282,290 376,387 470,484 564,581 658,678 739,178
1,250,000.............. 102,347 204,694 307,040 409,387 511,734 614,081 716,428 803,928
</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, 1998 for the named officers are as follows: Mr.
James C. Kempner (10), Mr. Hill (35), and Mr. Schwer (10).
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.
The Retirement Income Plan for Employees of Savannah Foods & Industries,
Inc. is a tax qualified benefit plan covering full time (1000 hours of service
per year) non-union employees of Savannah Food and its subsidiaries to whom
the plan has been extended. Savannah Foods has also adopted a Supplemental
Executive Retirement Plan (the "SERP") for certain key employees (including
Messrs. Sprague, Kelley and Roche). The SERP is designed to provide benefits
equal to 65% of a participant's highest 36-month average compensation
9
<PAGE>
less qualified retirement plan benefits less social security, with such net
amount multiplied by a fraction, the numerator of which is service as of June
30, 1996 and the denominator of which is service projected to age 65.
Compensation used in such formula is equal to base pay inclusive of any
deferred compensation amounts. Benefits are payable on a joint and 75%
surviving spouse basis if married at benefit commencement or on a life only
basis if single. Benefits are unreduced at age 62.
The projected total annual benefits payable from the two plans commencing at
age 65 on a joint and 75% survivor basis are as follows: Mr. Sprague:
$132,000; Mr. Kelley: $116,000; and Mr. Roche: $106,000.
Salary Continuation Plan
The Company has agreed to provide lump-sum supplemental retirement and death
benefits to participants (currently Messrs. James C. Kempner, Hill and Schwer)
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 and $598,349 for Mr. Schwer.
Employment Agreements and Related Arrangements
On February 1, 1998, the Company entered into employment agreements with the
following officers at the following annual salaries: Mr. James C. Kempner--
$530,000; Mr. Hill--$290,000; Mr. Kelley--$245,000; Mr. Roche--$245,000; and
Mr. Schwer--$245,000. The employment agreements provide for an initial term of
employment through January 31, 1999. Thereafter, the term of employment under
each agreement automatically extends for additional one-year periods, unless
the Company or the respective executive notifies the other party of its
intention not to extend the term at least 60 days prior to the end of the then
current term. If the executive's employment is terminated by the Company
without Cause (as defined) or by the executive for Good Reason (as defined),
the executive will be entitled to receive as a severance payment a lump sum
equal to the present value of his annual base salary for the greater (a) the
remaining term of employment or (b) one year. In addition, the Company will be
required to pay a lump sum equal to three times the executive's annual salary
if his employment is terminated by the Company without Cause or by the
executive for Good Reason within the two-year period following a Change in
Control (as defined). If it is determined that any payment made under the
employment agreement, or another plan or agreement of the Company, in the
event of a Change of Control would be considered an "excess parachute
payment", as defined in Section 280G of the Internal Revenue Code and subject
to excise tax under Section 4999 of the Code, then the executive would be
entitled to an additional "gross-up payment" that will place him in the same
after-tax economic position as if such payment had not been considered an
excess parachute payment. If the named executive officer had been terminated
without Cause or had resigned with Good Reason after a Change in Control as of
September 30, 1998, payments under the employment agreements would have been
$1,590,000 for Mr. James C. Kempner, $882,000 for Mr. Hill, $735,000 for Mr.
Kelley, $735,000 for Mr. Roche, and $735,000 for Mr. Schwer.
The Company has entered into a five-year employment agreement with William
W. Sprague III effective December 22, 1997. The employment agreement provides
that the Company will employ the executive at an annual base salary not less
than $430,000 per annum. If terminated by the Company for any reason other
than Cause (as defined), the executive will be entitled to receive as
liquidated damages the salary then being paid to him for the remaining term of
employment as if there had been no termination. If the executive had been
terminated as of September 30, 1998, payment under this employment agreement
would have been $1,827,500.
10
<PAGE>
The Company has Severance Pay Agreements with Messrs. James C. Kempner, Hill
and Schwer. 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, 1998 under the
conditions described above, the amounts due under the Severance Pay Agreements
would have been $ for Mr. James C. Kempner, $ for Mr. Hill and
$ for Mr. Schwer.
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 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 currently scheduled to
expire on December 31, 1998 but are expected to be renewed.
----------------
The Executive Compensation Committee Report 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.
11
<PAGE>
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 four fiscal years ending
March 31, 1997, the six-month period ending September 30, 1997 and the fiscal
year ended September 30, 1998. The graph assumes that the value of the
investment in the Common Stock and each index was $1.00 at March 31, 1993 and
that all dividends were reinvested on a quarterly basis.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG IMPERIAL HOLLY CORPORATION, S&P 500 INDEX AND PEER GROUP
<CAPTION>
Measurement Period S&P
(Fiscal Year Covered) IHK 500 S&P FOOD
- ------------------- ------- --- --------
<S> <C> <C> <C>
Measurement Pt-
March 1993 $1.00 $1.00 $1.00
March 1994 $0.71 $0.99 $0.90
March 1995 $0.71 $1.11 $1.04
March 1996 $0.71 $1.43 $1.28
March 1997 $0.91 $1.68 $1.54
September 1997 $1.06 $2.10 $1.83
September 1998 $0.51 $2.25 $1.92
</TABLE>
12
<PAGE>
EXECUTIVE COMPENSATION COMMITTEE REPORT
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 September 30, 1998 were
constructed to provide market average total compensation potential, upon
achievement of targeted operating earnings 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 earnings
were achieved. The bonus plan contains provisions to pay, at the discretion of
the Committee, any bonus payment beyond the target bonus in restricted stock.
The Company's earnings performance for fiscal year ending September 30, 1998
was such that the award level was not attained. The plan also contains
provisions to allow for discretionary bonuses for exemplary activities.
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.
A review was performed in early 1998 comparing stock option holdings by
Company executives to norms of firms in the foods and agriculture industry
segments and of a cross section of public companies of similar revenue and
market capitalization. Consistent with the norms from the study and the
Company's stated philosophy to embed a shareholder perspective among the key
employee group, a plan was initiated to replenish the stock holdings and
create capital accumulation opportunities consistent for a number of key
managers in the newly merged organization. Subsequent to this review, the
Executive Compensation Committee granted options to the named officers in
February 1998.
13
<PAGE>
This ongoing strategy of the Executive Compensation Committee currently
involves reviewing specific long and short term financial performance measures
that can be used to enhance the linkage between shareholders and the key
employees.
During the fiscal year ended September 30, 1998, options were granted to the
named executive officers as described in the option grants table above. 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 other executive officers.
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. Mr. Kempner was granted an increase of
$129,991 to a salary of $530,000, effective February 1, 1998. This base salary
is somewhat below the market average for the top-paid executive in such
similarly capitalized companies; the increase resulted in part from the
increased capitalization of the Company as a result of the Savannah Foods
acquisition. Earnings targets were not met in fiscal 1998 and Mr. Kempner did
not receive a bonus.
Section 162(m) of the Code does not allow the 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, 1999. Therefore, the Committee did
not take any action concerning the limit during the fiscal year ended
September 30, 1998. 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
H. 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.
In connection with the Company's acquisition of Savannah Foods in 1997 and
of DSLT Inc. in 1998 and financing transactions related to the Savannah Foods
acquisition, Lehman Brothers Inc. provided investment banking and other
services to the Company, for which it received customary fees. An affiliate of
Lehman Brothers Inc. acted as an arranger and agent for the Company and the
banks that are parties to certain credit facilities and received customary
fees in connection therewith.
Mr. Lentz, a Managing Director of Lehman Brothers Inc., is a director and a
member of the Executive Compensation Committee.
14
<PAGE>
SECURITY OWNERSHIP
The following table sets forth certain information with respect to the
ownership of Common Stock as of November 24, 1998 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>
John D. Curtin, Jr. (1)........................... 8,948 *
David J. Dilger (3)............................... 4,900,000 15.3%
Elliot & Associates, L.P., ....................... 2,026,825 6.3%
Westgate International, L.P.,
and Martley International, Inc.
712 Fifth Avenue, 36th Floor
New York, New York 10019
Edward O. Gaylord................................. 21,556 *
Greencore Group plc............................... 4,900,000 15.3%
Earlsfort Holdings B.V.
St. Stephen's Green House
Earlsfort Terrace
Dublin 2, Ireland
Gerald Grinstein.................................. 12,022 *
Ann O. Hamilton (5)............................... 239,352 *
Robert L. Harrison................................ 5,052 *
Roger W. Hill (1) (2)............................. 70,830 *
James M. Kelley................................... 2,224 *
Harris L. Kempner, Jr. (6) (7).................... 1,534,510 4.8%
I. H. Kempner, III (1) (4) (6) (8)................ 1,813,245 5.7%
P. O. Box 25
Sugar Land, Texas 77487-0025
James C. Kempner (1) (2) (6) (9).................. 1,634,664 5.1%
P. O. Box 9
Sugar Land, Texas 77487-0009
H. E. Lentz....................................... 25,698 *
Archer-Daniels-Midland Company.................... 1,802,035 5.6%
P. O. Box 1470
Decatur, Illinois 62525
Kevin C. O'Sullivan (3)........................... 4,900,000 15.3%
David H. Roche.................................... 2,548 *
Fayez Sarofim..................................... 1,030,468 3.2%
William F. Schwer (1) (2)......................... 54,176 *
William W. Sprague III............................ 7,396 *
Daniel K. Thorne (4) (10)......................... 710,444 2.2%
United States National Bank (11).................. 1,940,236 6.1%
P. O. Box 179
Galveston, Texas 77553
Harris K. Weston (6) (12)......................... 1,724,921 5.4%
Dinsmore & Shohl
1900 Chemed Center
255 East 5th Street
Cincinnati, Ohio 45202
All directors and executive officers as a group
(28 persons) (1) (2)............................. 9,131,702 28.5%
</TABLE>
15
<PAGE>
- --------
* 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: Mr. I. H. Kempner, III, 96,925 shares; Mr. Hill, 46,975 shares;
Mr. James C. Kempner, 86,975 shares; Mr. Schwer, 35,750 shares; and all
directors and executive officers as a group, 339,988 shares.
(2) Includes restricted shares as follows: Mr. Hill 14,290; Mr. James C.
Kempner, 23,052; Mr. Schwer 14,792 and all executive officers as a group,
86,811 shares.
(3) Includes 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
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 1,408,373 shares of Common Stock owned by the H. Kempner Trust
Association, over which Mr. I. H. Kempner, III, Mr. James C. Kempner, Mr.
Harris L. Kempner, Jr. and Mr. 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 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 which Mr. Thorne is President. Also includes 875 shares
owned by his wife of which Mr. Thorne disclaims beneficial ownership.
(11) 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,
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 information furnished by the
stockholder.
(12) 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
year ended September 30, 1998 and Forms 5 and amendments thereto, or written
representations that no Form 5s were required, the Company believes that
during the year ended September 30, 1998, all Section 16(a) filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with.
16
<PAGE>
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 year ended September 30, 1998, Fayez Sarofim & Co. received
approximately $462,000 for such services. Fayez Sarofim, a director of the
Company, is Chairman of the Board, President and owner of a majority of the
outstanding capital stock of Fayez Sarofim & Co.
PROPOSAL 2: AMENDMENT TO RESTATED ARTICLES OF INCORPORATION TO CHANGE
COMPANY NAME TO "IMPERIAL SUGAR COMPANY"
The Board of Directors has unanimously approved a proposal to amend the
Company's Restated Articles of Incorporation to change the Company's name to
"Imperial Sugar Company". The proposed amendment would replace the first
sentence of Article I of the Restated Articles of Incorporation with the
following: "The name of the corporation is Imperial Sugar Company."
The Company was incorporated in 1924 with the name Imperial Sugar Company.
In connection with Company's acquisition of Holly Sugar Corporation in 1988,
the Company changed its name to Imperial Holly Corporation. Since 1988, the
Company has made several significant acquisitions, including the acquisition
of Savannah Foods and Industries, Inc. in 1997, the acquisition of Spreckels
Sugar Company, Inc. in 1996 and, most recently, the acquisition of the parent
of Diamond Crystal Specialty Foods, Inc. As a result of these acquisitions,
the Board of Directors believes that the name Imperial Holly Corporation is no
longer appropriate for the combined businesses owned by the Company, and
accordingly has proposed to revert to the Company's original name.
Adoption of the proposed amendment to the Restated Articles of Incorporation
will require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Common Stock entitled to vote at the meeting.
Abstentions and broker non-votes will have the same effect as no votes with
respect to this proposal. 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 adoption of the proposed amendment to the
Restated Articles of Incorporation.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE ADOPTION OF THE PROPOSED AMENDMENT TO CHANGE THE COMPANY'S NAME.
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, 1999. 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 1999
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, 1999.
17
<PAGE>
OTHER MATTERS
A copy of each of the Company's Annual Report to Shareholders and the
Company's Annual Report on Form 10-K, including financial statements for the
fiscal year ended September 30, 1998, accompany this Proxy Statement but are
not a part of the proxy soliciting material. In addition, the proxy solicited
by the Board of Directors for the 2000 Annual Meeting of Shareholders will
confer discretionary authority to vote on any shareholder proposal raised at
the 2000 Annual Meeting of Shareholders that is not described in the proxy
statement for that meeting unless the Company has received notice of such
proposal on or before , 1999.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Company's 2000
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 , 1999 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
ROY L. CORDES, JR.
Secretary
18
<PAGE>
- --------------------------------------------------------------------------------
PRELIMINARY COPIES
IMPERIAL HOLLY CORPORATION
1999 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 L.
Cordes, Jr., 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 powers that the undersigned
would possess if personally present, at the 1999 Annual Meeting of Shareholders
of Imperial Holly Corporation to be held on January 29, 1999 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 on 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, FOR AMENDMENT OF THE COMPANY'S
RESTATED ARTICLES OF INCORPORATION TO CHANGE THE COMPANY'S NAME TO "IMPERIAL
SUGAR COMPANY" AND FOR THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE
LLP AS AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 1999. A
majority (or if only one, then that one) of the proxies or substitutes acting
at the meeting, or at any 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
- --------------------------------------------------------------------------------
[ ]
1. Election of FOR all WITHHOLD *EXCEPTIONS
five directors nominees [X] AUTHORITY to [X] [X]
to serve for listed vote for all
the terms set below nominees
forth in the listed below.
proxy
statement.
Nominees: David J. Dilger, Edward O. Gaylord, Gerald Grinstein, Robert L.
Harrison and William W. Sprague III
(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. Proposal to approve an 3. Proposal to ratify the appointment
amendment to the Company's of the firm Deloitte & Touche LLP,
Restated Articles of independent certified public
Incorporation to change the accountants, as auditors of the
name of the company to Company for its fiscal year ending
"Imperial Sugar Company". September 30, 1999.
FOR [X] AGAINST [X] ABSTAIN [X] FOR [X] AGAINST [X] ABSTAIN [X]
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 [X]
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 _____________________________
PLEASE SIGN, DATE AND RETURN THE PROXY VOTES MUST BE INDICATED
CARD PROMPTLY USING THE ENCLOSED ENVELOPE. (X) IN BLACK OR BLUE INK. [X]
- --------------------------------------------------------------------------------
