<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.142-12
Dr Pepper/Seven-Up Companies, Inc.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
(name of Person(s) Filing Proxy Statement) Payment of Filing Fee (Check the
appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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:
------------------------------------------------------------------------
<PAGE>
March 25, 1994
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Dr Pepper/Seven-Up Companies, Inc. to be held at Northpark West Cinemas 1-2,
1100 Northpark Center, Dallas, Texas, on Thursday, April 28, 1994 at 9:00 a.m.,
local time. This Meeting marks the completion of our first full year as a
publicly owned company.
The attached Notice of Annual Meeting and Proxy Statement fully describes the
formal business to be transacted at the Meeting, which includes the election of
three directors of the Company and an amendment to the Dr Pepper/Seven-Up
Companies, Inc. Non-Qualified Stock Option Plan for Non-Employee Directors.
Directors and officers of the Company will be present to host the meeting and to
respond to any questions from our shareholders. I hope you will be able to
attend.
The Company's Board of Directors believes that a favorable vote for each matter
described in the attached Notice of Annual Meeting and Proxy Statement is in the
best interests of the Company and its shareholders and unanimously recommends a
vote "FOR" each such matter. Accordingly, we urge you to review the
accompanying materials carefully and to return the enclosed Proxy promptly.
Please sign, date and return the enclosed Proxy without delay. If you attend
the Meeting, you may vote in person even if you have previously mailed a Proxy.
Sincerely,
/s/ JOHN R. ALBERS
<PAGE>
NOTICE OF ANNUAL SHAREHOLDERS' MEETING
TO BE HELD APRIL 28, 1994
TO THE SHAREHOLDERS OF DR PEPPER/SEVEN-UP COMPANIES, INC.:
NOTICE IS HEREBY GIVEN that the Annual Shareholders' Meeting of
Dr Pepper/Seven-Up Companies, Inc. (the "Company") will be held at Northpark
West Cinemas 1-2, 1100 Northpark Center, Dallas, Texas, on Thursday, April 28,
1994, at 9:00 a.m. local time for the purpose of considering and acting upon:
(1) The election of three directors for terms expiring in 1997.
(2) A proposal to amend the Dr Pepper/Seven-Up Companies, Inc. Non-
Qualified Stock Option Plan for Non-Employee Directors
(3) Such other business as may properly come before the meeting and any
postponements or adjournments thereof.
Shareholders of record at the close of business on March 1, 1994 are the
only persons entitled to notice of and to vote at the meeting or any
postponements or adjournments thereof. A map indicating the location of the
Company's Annual Shareholders' Meeting is provided on the last page of this
Proxy Statement for your convenience.
Your attention is directed to the attached Proxy Statement. Whether or not
you plan to attend the meeting in person, please complete, sign, date and return
the enclosed Proxy as promptly as possible. Enclosed with the Proxy is an
addressed envelope for which no postage is required if mailed in the United
States.
BY ORDER OF THE BOARD OF DIRECTORS
Nelson A. Bangs
Secretary
March 25, 1994
YOUR VOTE IS IMPORTANT
You are cordially invited to attend the meeting. HOWEVER, WHETHER OR NOT
YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN
YOUR PROXY SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND
IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE ASSURED. THE GIVING OF SUCH PROXY
DOES NOT AFFECT YOUR RIGHT TO REVOKE IT LATER OR TO VOTE YOUR SHARES IN PERSON
IN THE EVENT THAT YOU ATTEND THE MEETING.
<PAGE>
DR PEPPER/SEVEN-UP COMPANIES, INC.
8144 WALNUT HILL LANE
DALLAS, TEXAS 75231-4372
PROXY STATEMENT
ANNUAL SHAREHOLDERS' MEETING
TO BE HELD APRIL 28, 1994
The enclosed Proxy is solicited by the Board of Directors of
Dr Pepper/Seven-Up Companies, Inc. (the "Company") in connection with the Annual
Shareholders' Meeting of the Company to be held on April 28, 1994 and at any and
all postponements or adjournments thereof (the "Annual Meeting"). The costs of
solicitation, including the cost of preparing and mailing the Notice of Annual
Shareholders' Meeting and this Proxy Statement, are being paid by the Company.
In addition, the Company will, upon the request of brokers, dealers, banks,
voting trustees and their nominees who are holders of record of shares of the
Company's Common Stock on the record date specified below, bear their reasonable
expenses for mailing copies of this material to the beneficial owners of such
shares. Officers and other regular employees of the Company (who will receive
no extra compensation for their services) may solicit Proxies in person or by
telephone or facsimile. In addition, the Company has retained Corporate
Investor Communications, Inc. to assist in the solicitation of Proxies for a fee
estimated to be $4,725 plus out-of-pocket expenses. This Proxy Statement and
the accompanying form of Proxy are first being mailed to shareholders on or
about March 25, 1994.
Shareholders may revoke their Proxy at any time prior to its exercise by
giving written notice of revocation to the Secretary of the Company, by filing a
new written appointment of a proxy with the Secretary of the Company or by
voting in person at the Annual Meeting. Unless so revoked, properly executed
Proxies will be voted in the manner set forth in this Proxy Statement or as
otherwise specified by the shareholder giving such Proxy.
The presence either in person or by properly executed Proxies of
shareholders holding a majority of the outstanding shares of Common Stock shall
constitute a quorum for the transaction of business at the Annual Meeting. As
to any matter for which no choice has been specified in a duly executed Proxy,
the shares represented thereby will be voted FOR the election as directors of
the nominees listed herein, FOR the amendment of the Company's Non-Qualified
Stock Option Plan for Non-Employee Directors and in the discretion of the
persons named in the Proxy in connection with any other business that may
properly come before the Annual Meeting.
Shareholders of record at the close of business on March 1, 1994 are the
only persons entitled to vote at the Annual Meeting. As of that date, there
were issued and outstanding 60,981,146 shares of Common Stock, which are the
only voting securities of the Company. Each shareholder is entitled to one vote
for each share held. The affirmative vote of a majority of the outstanding
shares of Common Stock, represented in person or by Proxy and entitled to vote
at the Annual Meeting, will be required to approve each proposal, except that
the election of directors will be determined by the plurality vote of shares
voted at the Annual Meeting.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 1, 1994, certain information
with respect to each shareholder known to the Company to beneficially own more
than five percent of its Common Stock and information with respect to the
beneficial ownership of the Company's Common Stock by (i) directors of the
Company, (ii) the executive officers of the Company included in the Summary
Compensation Table set forth under the caption "Executive Compensation" below,
and (iii) all directors and executive officers of the Company as a group.
Except as otherwise indicated, the shareholders listed in the table have sole
voting and dispositive power with respect to the Common Stock owned by them.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF COMMON
OF BENEFICIAL HOLDER BENEFICIAL OWNERSHIP(A) STOCK OUTSTANDING
- - -------------------- ----------------------- -----------------
<S> <C> <C>
Cadbury Beverages Inc .............................. 15,620,746 25.6
High Ridge Park
Stamford, Connecticut 06905
FMR Corp.(b)........................................ 5,038,002 8.3
82 Devonshire St.
Boston, Massachusetts 02109
John R. Albers (c) ................................. 3,629,143 5.8
8144 Walnut Hill Lane
Dallas, Texas 75231-4372
Ira M. Rosenstein(d) ............................... 1,423,649 2.3
Thomas O. Hicks(e) ................................. 883,096 1.4
W. W. Clements ..................................... 33,462 *
Richard G. Merrill.................................. 1,500 *
William E. Winter .................................. 500 *
Malcolm Candlish ................................... 4,000 *
Charles P. Grier(f)................................. 276,878 *
True H. Knowles(g) ................................. 628,697 1.0
Francis I. Mullin(h) ............................... 602,401 *
Directors and executive officers as a group......... 8,274,796 12.7
(14 persons)(i)
<FN>
- - ---------------
* less than 1%
(a) All shares set forth in this column represent shares of Common Stock unless
otherwise indicated.
(b) Information provided on a Schedule 13G filed by FMR Corp. with the
Securities and Exchange Commission on February 11, 1994 indicates that
FMR Corp. has sole voting power with respect to 128,600 shares and
sole dispositive power with respect to 5,038,002 shares of the
Company's Common Stock. Fidelity Management & Research Company, a
wholly owned subsidiary of FMR Corp. ("Fidelity"), is the beneficial
owner of 4,899,702 shares or 8.11% of the Common Stock of the Company
as the result of acting as investment advisor to several investment
companies (collectively, the "Fidelity Funds"). The Chairman of the
Board of FMR Corp., Edward C. Johnson III, FMR Corp. (through its
control of Fidelity), and the Fidelity Funds each have sole power to
dispose of the 4,899,702 shares beneficially owned by the Fidelity
Funds. Neither FMR Corp. or Edward C. Johnson III has the sole power
to vote or direct the voting of the shares of Common Stock owned
directly by the Fidelity Funds, which power resides with the Fidelity
Funds' Boards of Trustees. Fidelity votes these shares under written
guidelines established by the Fidelity Funds' Boards of Trustees.
(c) Includes 1,379,180 shares of Common Stock issuable upon exercise of stock
options granted under the Amended and Restated 1988 Stock Option Plan (the
"1988 Stock Option Plan"), all of which are exercisable within 60 days of
March 1, 1994. See the section entitled "Stock Option Plans."
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
(d) Includes 912,000 shares of Common Stock issuable upon exercise of options
granted under the 1988 Stock Option Plan, all of which are exercisable
within 60 days of March 1, 1994. See the section entitled "Stock Option
Plans."
(e) Includes 399,066 shares of Common Stock owned by five trusts for the
benefit of Mr. Hicks' children (the "Trusts"), for which Mr. Hicks serves
as trustee and with respect to which he holds voting and dispositive
power. Mr. Hicks may be deemed to beneficially own the shares of capital
stock of the Company owned directly by such Trusts.
(f) Includes 156,000 shares of Common Stock issuable upon exercise of options
granted under the 1988 Stock Option Plan, all of which are exercisable
within 60 days of March 1, 1994. See the section entitled "Stock Option
Plans."
(g) Includes 512,000 shares of Common Stock issuable upon exercise of options
granted under the 1988 Stock Option Plan, all of which are exercisable
within 60 days of March 1, 1994. See the section entitled "Stock Option
Plans."
(h) Includes 582,000 shares of Common Stock issuable upon exercise of options
granted under the 1988 Stock Option Plan, all of which are exercisable
within 60 days of March 1, 1994. See the section entitled "Stock Option
Plans."
(i) Includes 4,111,180 shares of Common Stock issuable to executive officers
upon exercise of options granted under the 1988 Stock Option Plan and 8,535
shares of Common Stock issuable upon exercise of options granted to
executive officers under the Amended and Restated 1988 Non-Qualified Stock
Option Plan (the "1988 Non-Qualified Plan"), all of which are exercisable
within 60 days of March 1, 1994. See the section entitled "Stock Option
Plans."
</TABLE>
ELECTION OF DIRECTORS
INFORMATION CONCERNING DIRECTOR NOMINEES
Three Class II directors will be elected at the Annual Meeting to serve for
a three-year term expiring at the 1997 Annual Meeting of Shareholders. Pursuant
to the Company's bylaws, in case of a vacancy on the Board of Directors, a
majority of the remaining directors are empowered to elect a successor, and the
person so elected will hold office for the remainder of the term of the director
whose death, retirement, resignation, disqualification or removal created the
vacancy, and thereafter until the election of a successor director. Each
nominee director is presently a director of the Company and has agreed to
continue to serve if elected.
The following table sets forth for each nominee for election as a Class II
director his name, all positions with the Company or any of its predecessors or
affiliates held by him, his principal occupation, his age and the year in which
he first became a director of the Company.
<TABLE>
<CAPTION>
Director
Nominee Principal Occupation Age Since
------- -------------------- --- -----
<S> <C> <C> <C>
W. W. Clements Director of the Company with term expiring in 1994; Chairman Emeritus 79 1993
of Dr Pepper Company ("Dr Pepper"), a predecessor to Dr Pepper/Seven-Up
Corporation ("DP/7UP"), a subsidiary of the Company, from 1986 to 1992;
Chairman and Chief Executive Officer of Dr Pepper from 1974 to 1986.
Thomas O. Hicks Director of the Company with term expiring in 1994; Chairman of the 48 1988
Board of the Company from 1988 to 1991; Co-Chairman of Dr Pepper and The
Seven-Up Company ("Seven-Up"), a predecessor to DP/7UP, from 1986 to
1988; Chairman of the Board and Chief Executive Officer of Hicks, Muse &
Co. Incorporated from 1989 to 1994; Chairman of the Board and Chief
Executive Officer of Hicks, Muse, Tate & Furst Incorporated since 1994;
Managing General Partner of Hicks & Haas Holdings, Ltd. from 1984 to
present; Co-Chairman and Co-Chief Executive Officer of Hicks & Haas
Incorporated from 1987 to 1989; Chairman of the Board of Chancellor
Communications Corporation, HMW Communications, Inc., and Semi-Tech Inc;
Director of Dr Pepper Bottling Company of Texas, Inc., Sybron
Corporation, Life Partners Group, Inc., Trident NGL, Inc., Berg
Electronics, Inc., G. Heilman Brewing Company, and Neodata Holdings, Inc
William E. Winter Director of the Company with term expiring in 1994; Consultant to 73 1993
Seven-Up from 1982 to 1992; Consultant to DP/7UP since 1992; Chairman of
the Board of Seven-Up from 1979 to 1981.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE ABOVE-NAMED
NOMINEES AS CLASS II DIRECTORS.
3
<PAGE>
INFORMATION CONCERNING CLASS I AND III DIRECTORS
The following table sets forth certain information for those directors
whose present terms will continue after the Annual Meeting. The terms of the
Class III and Class I directors expire at the 1995 and 1996 Annual Meeting of
Shareholders, respectively.
<TABLE>
<CAPTION>
Director
Director Principal Occupation Age Since Class
- - ----------- -------------------- --- --------- -----
<S> <C> <C> <C> <C>
John R. Albers Director of the Company with term expiring in 1995; Chairman 62 1988 III
of the Board since 1991; President and Chief Executive Officer
of the Company since 1988; Chairman of the Board, President
and Chief Executive Officer of DP/7UP since October 1992;
Chairman of the Board and Chief Executive Officer of Dr Pepper
and Seven-Up from 1988 to October 1992; Director, Vice
Chairman and Chief Executive Officer of Seven-Up from 1986 to
1988; Director, Chief Executive Officer and President of Dr
Pepper from 1986 to 1990.
Malcolm Candlish Director of the Company with term expiring in 1996; Chairman 58 1993 I
and Chief Executive Officer of First Alert, Inc. since 1992;
Chief Executive Officer and Chairman of the Board of Sealy,
Inc. from 1989 to 1992; President and Chief Executive Officer
of The Samsonite Corporation from 1983 to 1989; Director of
The Stiffel Company, The Black and Decker Corporation and
Health-O-Meter, Inc.
Richard G. Merrill Director of the Company with term expiring in 1996; Consultant 63 1992 I
to The Prudential Insurance Company of America ("Prudential")
from 1991 to 1993; Executive Vice President of Prudential from
1987 to 1991; Director of Sysco Corp.
Ira M. Rosenstein Director of the Company with term expiring in 1995; Executive 54 1988 III
Vice President and Chief Financial Officer of the Company
since 1988; Director and Executive Vice President of DP/7UP
since October 1992; Director, Executive Vice President and
Chief Financial Officer of Dr Pepper and Seven-Up from 1988 to
October 1992; Senior Vice President of Finance and
Administration and Chief Financial Officer of Dr Pepper and
Seven-Up, and Director of Dr Pepper, from 1986 to 1988.
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 1993, the Board of Directors held
seven meetings and acted twice by written consent. Each director attended at
least 75% of the aggregate of the total number of meetings of the Board of
Directors plus the total number of meetings of all committees of the Board on
which he served. The Board of Directors has an Executive Committee, an Audit
Committee and a Compensation Committee.
The Executive Committee, comprised of Messrs. Albers, Hicks and Rosenstein,
exercises, during the intervals between meetings of the Board of Directors, all
powers of the Board of Directors except to the extent limited by law. The
Executive Committee held two meetings during 1993.
The Audit Committee recommends to the Board of Directors the selection of
independent accountants and reviews the activities and reports of the
independent accountants as well as the internal accounting controls of the
Company. The Audit Committee is comprised of Messrs. Clements, Merrill and
Winter. During fiscal 1993, the Audit Committee held one meeting.
The Compensation Committee determines the compensation for executive
officers of the Company and establishes the Company's compensation policies and
practices. The Compensation Committee is comprised of Messrs. Candlish, Hicks
and Merrill. During fiscal 1993, the Compensation Committee held four meetings.
See the section entitled "Compensation Committee Report."
4
<PAGE>
The Board of Directors does not have a standing nominating committee. The
Board designates nominees for election as directors and will consider
suggestions by shareholders for names of possible future nominees if delivered
in writing to the Secretary of the Company on a timely basis. See the section
entitled "Shareholder Proposals" below for a discussion of certain bylaw
provisions relating to shareholder nominations to the Board of Directors.
DIRECTOR COMPENSATION
Directors of the Company are entitled to reimbursement of their reasonable
out-of-pocket expenses in connection with their travel to and attendance at
meetings of the Board of Directors or committees thereof. The Company maintains
a compensation plan for directors of the Company who are not officers or
employees of the Company (each an "Outside Director"). Pursuant to such plan,
each Outside Director receives an annual retainer of $8,000, payable in cash,
and a $1,000 cash fee for each meeting of the Board of Directors at which such
director is present. As compensation for serving on a committee of the Board of
Directors, each Outside Director also receives an annual retainer of $1,000,
payable in cash, and a $1,000 cash fee for each meeting of such committee at
which such director is present. Any Outside Director who serves as chairman of
a committee receives an additional annual fee of $1,000.
In addition to the cash compensation described above, the Company maintains
a Non-Qualified Stock Option Plan for Non-Employee Directors (the "Directors'
Option Plan"). The Directors' Option Plan presently provides that on December
31 of each calendar year, each Outside Director will be automatically granted an
option to purchase that number of shares of Common Stock computed by dividing:
(i) 50% of the sum of the annual retainer fee for Outside Directors payable for
such calendar year plus the aggregate meeting fees payable for such calendar
year to such Outside Director for attending meetings of the Board of Directors
and any committees on which such Outside Director serves by (ii) 50% of the fair
market value of a share of Common Stock on the date of grant. The purchase
price for the shares of Common Stock subject to each option is 50% of the fair
market value of the shares on the grant date. A total of 194,310 shares of
Common Stock are authorized for issuance pursuant to the Directors' Option Plan.
As of March 1, 1994, options covering a total of 944; 1,277; 1,277; 1,111 and
944 shares of the Company's Common Stock have been granted to Messrs. Clements,
Hicks, Merrill, Candlish and Winter, respectively, at an exercise price of
$12.00 per share.
Each option granted under the Directors' Option Plan will become
exercisable one year after the date of the grant and will not be exercisable
more than ten years after the date of such grant. Under the terms of the
Directors' Option Plan, if an Outside Director is terminated, any unexercised
options held by such Outside Director will be exercisable for a specified period
depending upon the reason for such termination; PROVIDED that if such Outside
Director is terminated due to an act of fraud or intentional misrepresentation
or embezzlement, misappropriation or conversion of assets or opportunities of
the Company, the unexercised options will immediately terminate. The Board of
Directors has proposed certain amendments to the Directors' Option Plan. See
the section entitled "Proposal to Amend the Dr Pepper/Seven-Up Companies, Inc.
Non-Qualified Stock Option Plan for Non-Employee Directors" below.
The Company also maintains the Dr Pepper/Seven-Up Companies, Inc. Deferred
Compensation Plan for Non-Employee Directors (the "Deferred Compensation Plan").
The Deferred Compensation Plan permits Outside Directors to defer receipt of
their cash compensation from the Company until a later date. The Company pays
interest on the deferred compensation based upon the average monthly rate of 30-
year U.S. Treasury bonds, compounded monthly. The Board of Directors may amend
the Deferred Compensation Plan or terminate such plan in whole or in part at any
time.
William E. Winter, in addition to his duties as a member of the Board of
Directors of the Company, is a consultant to DP/7UP pursuant to a Consulting
Agreement dated as of January 25, 1988. The terms of the Consulting Agreement
provide that Mr. Winter will advise DP/7UP with respect to marketing and soft
drink franchising plans and strategies and other assigned projects relating to
the long-term growth of DP/7UP. In consideration of his services, DP/7UP pays
Mr. Winter a retainer of $300.00 per day and has agreed to use Mr. Winter's
services for a minimum of seven days per month. Consulting fees paid to Mr.
Winter in 1993 totalled $25,200.00. The term of the Consulting Agreement renews
every month and is terminable by either party upon not less than 10 days advance
notice.
5
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth the names, ages and business experience of
the executive officers of the Company, other than John R. Albers and Ira M.
Rosenstein, for the last five fiscal years. Messrs. Albers and Rosenstein serve
as executive officers and directors of the Company and their respective ages and
business experience are described above under the caption "Information
Concerning Class I and III Directors."
<TABLE>
<CAPTION>
Name Business Experience Age
---- ------------------- ---
<S> <C> <C>
John G. Clarke Vice President of the Company since 1988; Vice President of DP/7UP and 48
Senior Vice President of Dr Pepper USA, a division of DP/7UP ("Dr Pepper
USA"), since October 1992; Senior Vice President - Marketing of Dr
Pepper from 1986 to October 1992.
Charles P. Grier Senior Vice President of the Company since 1988; Senior Vice President 63
of DP/7UP since October 1992; Senior Vice President - Operations of Dr
Pepper and Seven-Up from 1986 to October 1992.
John M. Kilduff Vice President of the Company since 1988; Vice President of DP/7UP and 47
Senior Vice President of Dr Pepper USA since October 1992; Senior Vice
President - Sales of Dr Pepper from 1988 to October 1992.
Russell B. Klein Vice President of the Company since 1988; Vice President of DP/7UP and 36
Senior Vice President of Seven-Up USA, a division of DP/7UP ("Seven-Up
USA"), since October 1992; Senior Vice President - Marketing of Seven-Up
from 1987 to October 1992.
True E. Knowles Executive Vice President of the Company since 1990; Director and 56
Executive Vice President of DP/7UP since October 1992; President of Dr
Pepper USA since October 1992; Director, President and Chief Operating
Officer of Dr Pepper from 1990 to October 1992; Executive Vice
President and Chief Operating Officer of Dr Pepper from 1988 to 1990;
Senior Vice President -Sales of Dr Pepper from 1986 to 1988.
Francis I. Mullin III Executive Vice President of the Company since 1991; Director and 50
Executive Vice President of DP/7UP since October 1992; President of
Seven-Up USA since October 1992; Director, President and Chief Operating
Officer of Seven-Up from 1991 to October 1992; operated CSM &
Associates, a sales and marketing consulting business, from 1989 to
1991; President and Chief Operating Officer of Tofutti Brands, Inc. from
1986 to 1989.
Robert E. Quirk Vice President of the Company since 1988; Vice President of DP/7UP and 44
Senior Vice President of Seven-Up USA since October 1992; Senior Vice
President - Sales of Seven-Up from 1988 to October 1992.
</TABLE>
6
<PAGE>
COMPENSATION COMMITTEE REPORT
TO OUR SHAREHOLDERS
To preserve objectivity in the achievement of its goals, the Compensation
Committee is comprised of three independent, non-employee directors who have no
"interlocking" relationships as defined by the proxy rules promulgated by the
Securities and Exchange Commission (the "SEC"). It is the Compensation
Committee's overall goal to develop executive compensation policies that are
consistent with, and linked to, strategic business objectives and Company
values. The Compensation Committee approves the design of, assesses the
effectiveness of, and administers executive compensation programs in support of
Company compensation policies. The Compensation Committee also reviews and
approves all salary arrangements and other remuneration for executive officers,
evaluates executive performance and considers related matters.
COMPENSATION PHILOSOPHY
The Company's primary business objective is to maximize shareholder value
over the long term. To accomplish this objective, the Company has developed a
comprehensive business strategy that emphasizes maximizing earnings and stock
price, continuing its leadership in those markets in which the Company
participates, and providing products and services of the highest value.
The following compensation policies are intended to facilitate the
achievement of the Company's business strategies:
- Provide a significant portion of senior executive compensation in
the form of long-term, at-risk compensation to focus management
on the long-term interests of shareholders and balance short-term
and long-term business and financial strategic goals.
- Provide opportunities for a personal equity interest in the
Company in order to align senior executives' interests with those
of shareholders.
- Enhance the Company's ability to attract, retain, and encourage
the development of executives with exceptional knowledge and
experience through compensation opportunities.
- Target compensation levels at rates that are reflective of
current market practices to maintain a stable, successful
management team.
Competitive market data is provided by an independent compensation
consultant. The data provided compares the Company's compensation practices to
a group of similarly situated companies. The group of companies to which the
Company compares its compensation practices is comprised of companies that have
national and international business operations and similar sales volumes, market
capitalizations, employment levels and lines of business as the Company. The
Compensation Committee reviews and approves the selection of companies used for
compensation comparison purposes.
The companies chosen for the comparison group are not necessarily the same
companies that comprise the S&P Beverage Index in the Comparative Stock
Performance Graph included in this Proxy Statement. The Compensation Committee
believes that the Company's most direct competitors for executive talent are not
necessarily all of the companies that would be included in a published industry
index established for comparing shareholder returns.
The key elements of the Company's executive compensation are base salary,
annual incentives, long-term compensation and benefits. These key elements are
addressed separately below. In determining compensation, the Compensation
Committee considers all elements of an executive's total compensation package,
including severance plans, insurance and other benefits.
7
<PAGE>
BASE SALARIES
The Compensation Committee regularly reviews each executive's base salary.
Base salaries are targeted at median levels for public companies of comparable
size. Base salaries for executives are initially determined by evaluating the
executive's level of responsibility, prior experience and breadth of knowledge,
internal equity issues and external pay practices.
Increases to base salaries are driven primarily by individual performance.
Individual performance is evaluated based on business unit performance goals of
the Company. When evaluating individual performance, the Compensation Committee
considers the executive's efforts in promoting Company values, continuing
educational and management training, improving product quality, developing
relationships with customers, suppliers, and employees, demonstrating leadership
abilities among coworkers and other goals.
The base salaries of John R. Albers (Chairman of the Board, Chief Executive
Officer and President of the Company) and other executives of the Company were
reviewed at the October 1993 meeting of the Compensation Committee. At that
meeting, the Compensation Committee approved a merit increase in Mr. Albers'
salary of $19,958, or 3% of his prior base salary, effective November 1, 1993.
His annual base salary at the end of fiscal year 1993 was $685,208. The
Compensation Committee believes Mr. Albers has managed the Company extremely
well in the challenging business climate in which it competes, and has achieved
above average results with respect to corporate and business unit sales volume
and operating profits, in comparison to the Company's competitors and comparable
companies outside the food and beverage industry.
ANNUAL INCENTIVES
The Incentive Compensation Plan promotes the Company's pay-for-performance
philosophy by providing executives with direct financial incentives in the form
of annual cash bonuses to achieve business unit and Company-wide performance
goals. Annual bonus opportunities allow the Company to communicate specific
goals that are of primary importance during the coming year and motivate
executives to achieve these goals.
Each year, the Compensation Committee establishes specific goals relating
to each executive's bonus opportunity. Eligible executives are assigned
threshold, target, and maximum bonus levels based on a percentage of base
salary. The percentages have been established based on bonus practices and
opportunities within companies comparable in size to the Company and/or in the
Company's industry. Executives earn bonuses to the extent that preestablished
goals are achieved.
Corporate goals are approved each year by the Compensation Committee and
are based upon financial objectives of the Company deemed appropriate by the
Compensation Committee. Where executives have strategic business unit ("SBU")
responsibilities, a portion of the goal is based on financial performance
measures that support SBU performance. This portion varies with the position of
each individual; however, no bonus is paid unless predetermined threshold
performance levels are reached.
Target bonus awards are set at a market level, as discussed above. Targets
are considered by the Compensation Committee to be achievable, but require
above-average performance from each of the executives.
The Compensation Committee believes that this annual incentive plan
accomplishes the Company's pay-for-performance objectives. The Incentive
Compensation Plan of the Company for 1993, pursuant to which Mr. Albers was paid
the bonus indicated in the Summary Compensation Table, was identical, in all
material respects, to the Incentive Compensation Plan described above. Mr.
Albers' bonus is based upon the attainment of predetermined thresholds relating
to the Company's case sales volume and operating profit.
LONG-TERM INCENTIVES
Long-term incentives are provided in the form of stock options and
restricted stock grants pursuant to the Company's 1993 Stock Ownership Plan,
which is described in more detail in the section entitled "Stock Option Plans"
below.
8
<PAGE>
In keeping with the Company's commitment to provide a total compensation
package which favors at-risk components of pay, long-term incentives comprise a
substantial portion of an executive's total compensation package. The
Compensation Committee's objective is to provide executives with long-term
incentive award opportunities that are consistent with grants made within the
Company's industry and are reflective of prior performance.
Long-term incentive award guidelines have been developed based on the same
methodology used in establishing bonus award guidelines. Practices of
comparable companies have been adapted for use by the Company. The amount of
option or restricted stock grants varies by position within the Company.
STOCK OPTIONS AND RESTRICTED STOCK
Stock options are granted at an option price not less than the fair market
value of the Common Stock on the date of grant. Accordingly, stock options have
value only if the stock price appreciates from the date the options are granted.
These grants focus executives on the creation of shareholder value over the long
term and encourage equity ownership in the Company.
In 1993, Mr. Albers was granted options to purchase 100,000 shares with an
exercise price of $17.50 per share and 9,600 shares of restricted stock, as
indicated in the Summary Compensation Table below. As of December 31, 1993, Mr.
Albers owned 2,249,963 shares of the Company's Common Stock, and with the grant
in 1993, holds options to purchase an additional 1,479,180 shares.
Each year, the Compensation Committee determines the total amount of
options and restricted stock that will be made available to the Company's
executives. These amounts vary annually based upon what the Compensation
Committee believes is appropriate, taking into account the executive's total
compensation package and the desire of the Compensation Committee to create
shareholder value, to encourage equity ownership by the Company's executives, to
provide an appropriate link to the interests of the shareholders, and to provide
long-term incentive award opportunities on a par with practices within the
Company's industry.
The Company does not presently have a policy that requires or encourages
the Compensation Committee to qualify stock options or restricted stock awarded
to executive officers for deductibility under Section 162 (m) of the Internal
Revenue Code of 1986, as amended. However, the Compensation Committee does
consider the cost to the Company of such option or restricted stock grants in
making all compensation decisions.
SUMMARY
The Compensation Committee believes that the compensation program for the
executives of the Company is comparable with the compensation programs provided
by similarly situated companies and serves the best interests of the
shareholders of the Company. The Compensation Committee also believes that
annual performance pay is appropriately linked to individual performance, the
annual financial performance of the Company and shareholder value.
Thomas O. Hicks (Chairman)
Malcolm Candlish
Richard G. Merrill
9
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the
compensation earned by, awarded to or paid to the Company's Chief Executive
Officer and each of the other four most highly compensated executive officers of
the Company for services rendered to the Company during the years 1991 to 1993.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------------------- ------------------------------------------
Securities Restricted
Underlying Stock All Other
Salary Bonus Other Annual Options Award(s) Compensation
Name and Position Year ($) ($) (1) Compensation (2) (#) ($) (3) ($) (2)
- - ----------------- ---- --- ------ --------------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
John R. Albers, 1993 668,320 424,829 -- 100,000 191,904 --
President and Chief 1992 622,942 607,041 -- 15,580 -- --
Executive Officer 1991 581,350 550,649 1,200,000 --
Ira M. Rosenstein,
Executive Vice 1993 377,816 185,250 -- 75,000 127,936 --
President 1992 354,446 258,225 -- 12,000 -- --
and Chief Financial 1991 332,282 236,655 600,000 --
Officer
True H. Knowles, 1993 288,077 150,000 -- 85,000 127,936 --
Executive Vice 1992 263,077 192,500 -- 12,000 -- --
President 1991 243,154 180,570 -- 500,000 --
Francis I. Mullin, 1993 288,077 136,875 -- 75,000 127,936 --
Executive Vice 1992 262,923 192,500 -- 12,000 -- --
President 1991 149,983 162,000 -- 600,000 --
Charles P. Grier, 1993 202,149 70,568 -- 25,000 63,968 --
Senior Vice President 1992 189,520 92,789 -- 6,000 -- --
1991 180,000 85,313 -- 100,000 --
<FN>
- - -----------------------
(1) Includes bonuses earned in 1991, 1992 and 1993 under the Incentive
Compensation Plan of the Company that were paid in 1992, 1993 and 1994,
respectively. See the section entitled "Executive Compensation - Annual
Incentives" for a discussion of the provisions of the Incentive
Compensation Plan.
(2) In accordance with the transitional provisions applicable to the revised
rules on executive officer and director compensation disclosure adopted by
the SEC, as informally interpreted by the SEC's staff, amounts of Other
Annual Compensation and All Other Compensation are excluded for the
Company's 1991 fiscal year. Amounts under Other Annual Compensation do not
include the value of perquisites and other personal benefits because the
aggregate amount of such compensation, if any, does not exceed the lesser
of $50,000 or 10% of the total amount of annual salary and bonus for any
named individual. No compensation was paid to any of the above-mentioned
executive officers in 1991, 1992 and 1993 that constituted All Other
Compensation.
(3) The amount reported in the table represents the market value of restricted
stock grants as of the date of grant, which was October 27, 1993, less the
purchase price of $.01 per share and without giving effect to the
diminution in value attributable to the restrictions on such stock. Grants
of restricted stock under the 1993 Stock Ownership Plan are subject to
forfeiture upon (a) the termination of the employment of the participating
employee for reasons other than death, disability or retirement, or (b) the
failure by the Company and/or the participating employee, as the case may
be, to meet the specific performance goals set forth in the performance
stock award agreement issued to the participating employee, which sets
forth the terms and conditions relating to the grant of the restricted
stock. In the event that the employment of a participating employee is
terminated by reason of death, disability, retirement or a Change of
Control (as defined), the participating employee may be entitled to receive
all or a portion of such restricted stock, depending upon the timing of the
termination. During the period the restrictions remain in effect, the
participating employee may not sell or otherwise transfer, pledge as
security or otherwise encumber the restricted stock, although the
participating employee does have all other rights of a shareholder of the
Company, including the right to vote such shares and receive dividends and
other distributions paid or made in respect of such restricted stock. As
of December 31, 1993, Messrs. Albers, Rosenstein, Knowles, Mullin and Grier
held 9,600, 6,400, 6,400, 6,400 and 3,200 shares of restricted stock of the
Company, respectively, which, subject to termination of employment due to
death, disability, retirement or a Change of Control will not vest, if at
all, until the first quarter of 1996. See the section entitled "Stock
Option Plans." </TABLE>
10
<PAGE>
STOCK OPTION PLANS
In 1988, the Company adopted two stock option plans, the 1988 Stock Option
Plan and the 1988 Non-Qualified Plan (collectively, the "Stock Option Plans"),
under which stock options may be granted to key officers and salaried employees
of the Company and its subsidiaries. Incentive stock options, as well as non-
qualified stock options, may be granted under the 1988 Stock Option Plan. The
exercise price of an option granted under such plan will be determined by the
Compensation Committee, provided that in the case of an incentive stock option,
the exercise price must be not less than the fair market value (as defined) of
the underlying Common Stock of the Company. In October 1991, the Board of
Directors of the Company amended all option agreements under the 1988 Stock
Option Plan for options that were previously exercisable at a price of $5.00 per
share to provide for an exercise price of $2.29 per share, which was determined
to be the fair market value of the shares at the date of amendment based upon a
valuation opinion from an independent investment banking firm. Such valuation
was based on the Company's capital structure at that time and then-current
market conditions. On July 25, 1991, the Board of Directors of the Company
authorized an amendment to the 1988 Stock Option Plan to authorize the issuance
of options to purchase up to an additional 4,802,000 shares, increasing the
number of options authorized for grant under the plan to 6,842,816. As of
December 31, 1993, options to purchase 6,330,190 shares of Common Stock were
outstanding under the 1988 Stock Option Plan. All but 45,725 of such options
have exercise prices ranging from $2.29 to $6.03 per share. Options for 25,375
shares of Common Stock under the 1988 Stock Option Plan are presently
exercisable at $10.17 per share, and options for 20,350 shares of Common Stock
are exercisable at $16.50 per share, which were the closing sales prices of the
Common Stock on the New York Stock Exchange on the respective grant dates for
such options. Stock options issued under the 1988 Stock Option Plan vest over a
period of three or four years from their date of grant, and optionees are
entitled to exercise only those options that have vested in accordance with the
terms and conditions of the stock option agreement executed by each optionee and
the Company. Pursuant to the terms and conditions of the 1988 Stock Option
Plan, the vesting of all outstanding options was accelerated in connection with
the Company's initial public offering in February 1993. See footnote 1 to the
table entitled "Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values."
Non-Qualified stock options to purchase up to 298,060 shares of Common
Stock may be granted under the 1988 Non-Qualified Plan. As of December 31,
1993, non-qualified stock options to purchase up to 134,969 shares of Common
Stock were outstanding under the 1988 Non-Qualified Plan. Each such option has
an exercise price of $.05 per share. No options granted under the Stock Option
Plans will be exercisable more than 10 years after the date of grant thereof,
and special provisions are included in the Stock Option Plans covering
termination of employment or death of a participant. As of March 1, 1994,
options covering substantially all of the shares of Common Stock reserved under
the Stock Option Plans had been granted.
In 1993, the Company adopted the 1993 Stock Ownership Plan, under which
stock options, restricted stock and stock bonuses may be granted to key officers
and salaried employees of the Company and its subsidiaries. Incentive stock
options, as well as non-qualified stock options, may be granted under the 1993
Stock Ownership Plan. The exercise price of an option granted under such plan
will be determined by the Compensation Committee, provided that in the case of
an incentive stock option, the exercise price may not be less than the fair
market value (as defined) of the underlying Common Stock of the Company. Stock
options issued under the 1993 Stock Ownership Plan vest over a period of three
years from their date of grant, and optionees are entitled to exercise only
those options that have vested in accordance with the terms and conditions of
the stock option agreement executed by each optionee and the Company. Each
option granted under the 1993 Stock Ownership Plan has a ten year term, and is
exercisable in one or more installments commencing not earlier than the first
anniversary of the date of grant of the option. The exercisability of each
option is subject to special provisions following an optionee's termination of
employment, and the period during which an option may be exercised following
termination varies according to the reason for termination and the nature of the
option.
11
<PAGE>
The Compensation Committee, in its discretion, may grant shares of
restricted stock to any individual eligible to receive awards under the 1993
Stock Ownership Plan. Up to 380,000 shares of Common Stock may be granted as
restricted stock under the 1993 Stock Ownership Plan. The amount to be paid for
shares of restricted stock is subject to the Committee's discretion. The
Committee may provide that all or any portion of an award of restricted stock
may be forfeited under certain circumstances, including the employee's
termination of employment within a specified time period after the date of grant
of the restricted stock, failure of the Company or employee to achieve specified
performance goals within a specified period, or failure to satisfy such other
restrictions as the Committee may specify.
Stock bonuses may be granted under the 1993 Stock Ownership Plan for no
consideration to any eligible individual other than executive officers of the
Company. Up to 25,000 bonus shares of Common Stock, in the aggregate, may be
granted under the 1993 Stock Ownership Plan.
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows all individual grants of stock options to the
Company's Chief Executive Officer and the other four most highly compensated
executive officers of the Company in 1993.
<TABLE>
<CAPTION>
Potential Realizable Value at Assumed
Annual Rates of Stock Price
Appreciation for 10 Year Option Term
--------------------------------------
5% 10%
Securities % of Total ------------ -------------
Underlying Options Gain on Gain on
Options Granted to Exercise or Base Price Base Price
Granted Employees Base Price Expiration to $28.51 to $45.39
Name (#) in 1993 Per Share (1) Date Per Share Per Share
----------- ---------- ---------- ------------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
John R. Albers 100,000 8.4% $17.50 July 28, 2003 $ 1,101,000 $ 2,789,000
Ira M. Rosenstein 75,000 6.3% $17.50 July 28, 2003 825,750 2,091,750
True H. Knowles 85,000 7.1% $17.50 July 28, 2003 935,850 2,370,650
Francis I. Mullin 75,000 6.3% $17.50 July 28, 1993 825,750 2,091,750
Charles P. Grier 25,000 2.1% $18.62 July 22, 2003 292,750 (2) 742,000 (2)
All shareholders $753,508,501 (3) $1,908,751,326 (3)
<FN>
- - -------------------
(1) Based on the fair market value of the Company's Common Stock as of July 28,
1993 (July 22, 1993 for Mr. Grier), as reflected by the closing sales price
of the Company's Common Stock on the New York Stock Exchange on such date.
(2) The assumed appreciation rates for Mr. Grier are based upon annual
compounding of the fair market value of one share of the Company's Common
Stock on July 22, 1993, (as reflected by the closing sales price of the
Company's Common Stock on the New York Stock Exchange on such date) through
the expiration date of his options. Because the Compensation Committee
determined that more time was necessary to assemble data regarding the
proposed option grants to Messrs. Albers, Rosenstein, Knowles and Mullin,
their respective option grants were not made until July 28, 1993, at which
time the fair market value of one share of the Company's Common Stock was
$17.50. The potential gains on the base price of Mr. Grier's options
(which was $18.62 per share), as reflected by the 5% and 10% assumed
appreciation rates, are $30.33 and $48.30, respectively. The 5% and 10%
rates of appreciation are set by the SEC and are not intended to forecast
future appreciation, if any, of the Company's Common Stock.
(3) Total potential realizable value in excess of the $17.50 per share price of
the Common Stock on July 28, 1993, based upon the assumed annual rates of
appreciation shown and calculated using 68,438,554 shares of Common Stock
(on a fully diluted basis) as of March 1, 1994. The potential gain related
to these options granted to all of the named executive officers represents
less than .55% of the total potential shareholder gain. If the $18.62 per
share exercise price for the stock options granted to Mr. Grier is used,
total potential realizable value for all shareholders at the 5% and 10%
assumed appreciation rates would be $801,415,491 and $2,031,256,342,
respectively, which would also represent less than .55% of the total
potential shareholder gain.
</TABLE>
12
<PAGE>
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information regarding options exercised
during 1993 by persons named in the Summary Compensation Table and options held
by such persons at December 31, 1993. The values of unexercised in-the-money
stock options at December 31, 1993 shown below are presented pursuant to SEC
rules. The actual amount, if any, realized upon exercise of stock options will
depend upon the market price of the Company's Common Stock relative to the
exercise price per share of the Common Stock underlying the unexercised in-the-
money stock options reflected in this table.
<TABLE>
<CAPTION>
Options Exercised Unexercised Options at December 31, 1993
---------------------------- ----------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Options (1) In-the-Money Options (2)
------------------------------- ----------------------------------
Shares Acquired Value
Name On Exercise Realized Exercisable Not Exercisable Exercisable Not Exercisable
- - --- --------------- ---------- ----------- ---------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
John R. Albers -0- -0- 767,495 711,685 $16,647,671 $13,885,746
Ira M. Rosenstein -0- -0- 603,000 384,000 $13,079,850 $ 7,162,050
True H. Knowles 100,000 $1,858,000 269,666 327,334 $ 5,843,169 $ 5,779,731
Francis I. Mullin 30,000 $ 557,000 306,333 350,667 $ 6,639,209 $ 6,438,391
Charles P. Grier -0- -0- 101,500 79,500 $ 2,197,925 $ 1,300,650
<FN>
- - -----------------------
(1) Pursuant to the provisions of the 1988 Stock Option Plan, upon the
consummation of the Company's initial public offering of its Common Stock,
which occurred on February 2, 1993, the vesting of all options granted
under such plan was accelerated. As a result, all options granted under the
1988 Stock Option Plan, including those granted to the executive officers
named above, vested (and thus became exercisable) one year after the
effective date of the Company's initial public offering of its Common
Stock.
(2) Based on the closing price per share of the Company's Common Stock on the
New York Stock Exchange on December 31, 1993, which was $24.00.
</TABLE>
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholder return on the
Common Stock of the Company with the cumulative total return on the S&P 500
Index and the S&P Beverage Index over the period commencing January 27, 1993,
the date the Company commenced its initial public offering, through December 31,
1993 (assuming the investment of $100 in the S&P Beverage Index, the Company's
Common Stock and the S&P 500 Index on January 27, 1993, and reinvestment of all
dividends).
[Graph]
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY S&P BEVERAGE INDEX AND
S&P 500 INDEX
<TABLE>
<CAPTION>
QTRLY
Fiscal Year Basis: DECEMBER RETURN
1/27/93 QTRLY QTRLY QTRLY
TO RETURN RETURN RETURN
COMPANY/INDEX NAME MAR 93 JUN 93 SEP 93 DEC 93
<S> <C> <C> <C> <C>
BEVERAGES-SOFT DRINKS 2.61 -4.38 1.37 5.62
DR PEPPER/SEVEN UP 11.67 8.96 10.27 19.26
S&P 500 COMP-LTD 3.78 0.49 2.58 2.32
</TABLE>
<TABLE>
<CAPTION>
QTRLY
RETURN
BASE 1/27/93 QTRLY QTRLY QTRLY
PERIOD TO RETURN RETURN RETURN
COMPANY/INDEX NAME 1/27/93 MAR 93 JUN 93 SEP 93 DEC 93
<S> <C> <C> <C> <C> <C>
BEVERAGES-SOFT DRINKS 100.00 102.61 98.12 99.46 105.05
DR PEPPER/SEVEN UP 100.00 111.67 121.67 134.17 160.00
S&P 500 COMP-LTD 100.00 103.78 104.29 106.98 109.46
</TABLE>
13
<PAGE>
PENSION AND SUPPLEMENTAL PENSION PLANS
Employees of DP/7UP and its subsidiaries are covered by a tax-qualified,
funded pension plan (the "Pension Plan"), which provides for defined benefits
upon retirement. Contributions to the Pension Plan for employees and benefits
derived by the participants are calculated on an actuarial basis. In no event
may a participant's benefit exceed the lesser of $118,800 per year (as reduced
for the ten-year certain form of payment provided under the plan) or 100% of a
participant's average compensation for the three consecutive years in the last
ten in which such participant's compensation was highest. Additional limits
apply if participants are also covered under a defined contribution plan, such
as the Profit Sharing Plan (as defined herein). The Pension Plan may be
terminated at any time and any excess assets, after all benefits and
administrative expenses have been paid, will revert to the Company.
Participants' rights to benefits vest after five years of service.
DP/7UP also provides, on a joint basis, a supplemental pension plan (the
"Supplemental Pension Plan") for executive officers and certain senior officers,
generally at the level of vice president or senior vice president and above,
which provides benefits in excess of those payable under the Pension Plan. The
Supplemental Pension Plan is unfunded and payable solely out of the general
assets of DP/7UP. Benefits are payable monthly to the participant or his
beneficiary for ten years after retirement or until the participant's death, if
later, and vary in amount with the length of service. Special provisions in the
Supplemental Pension Plan relate to early retirement, retirement after
disability, death after retirement and surviving spouses' benefits.
Participants' rights to benefits vest after ten years of service.
The following tables set forth the annual retirement benefits payable under
the Pension Plan and the Supplemental Pension Plan upon normal retirement after
December 31, 1993 for the specified remuneration classifications and years of
service. The amounts reflected for the Supplemental Pension Plan aggregate
benefits from both Plans; however, amounts actually payable under the
Supplemental Pension Plan are reduced dollar for dollar by amounts paid pursuant
to the Pension Plan.
<TABLE>
<CAPTION>
YEARS OF SERVICE (2)
PENSION PLAN ------------------------------------------------------------------------
COMPENSATION (1) 10 15 20 25
---------------------------- ------- -------- -------- --------
<S> <C> <C> <C> <C>
$1,000,000 (and above) . . . . . . . . . 118,000 $118,800 $118,800 $118,800
800,000 . . . . . . . . . . . . . . . 118,800 118,800 118,000 118,800
600,000 . . . . . . . . . . . . . . . 118,800 118,800 118,800 118,800
400,000 . . . . . . . . . . . . . . . 100,000 118,800 118,800 118,800
200,000 . . . . . . . . . . . . . . . 50,000 75,000 100,000 105,000
100,000 . . . . . . . . . . . . . . . 25,000 37,500 50,000 52,500
<CAPTION>
YEARS OF SERVICE (2)
SUPPLEMENTAL -------------------------------------------------------------------------
PENSION PLAN COMPENSATION (1) 10 15 20 25
----------------------------- -------- -------- -------- ---------
<S> <C> <C> <C> <C>
$1,000,000 . . . . . . . . . . . . . . . $400,000 $500,000 $550,000 $600,000
800,000 . . . . . . . . . . . . . . . 320,000 400,000 440,000 480,000
600,000 . . . . . . . . . . . . . . . 240,000 300,000 330,000 360,000
400,000 . . . . . . . . . . . . . . . 160,000 200,000 220,000 240,000
200,000 . . . . . . . . . . . . . . . 80,000 100,000 110,000 120,000
100,000 . . . . . . . . . . . . . . . 40,000 50,000 55,000 60,000
<FN>
(1) An employee's compensation for determination of pension benefits under the
Pension Plan and the Supplemental Pension Plan is calculated on
substantially the same basis as his salary and bonus compensation set forth
in the Summary Compensation Table. Benefits are determined on a ten year
certain and life basis. This chart does not take into account the
decreases in future Pension Plan benefit accruals that occurred beginning
in 1994, when an Internal Revenue Service rule became effective that no
more than the first $150,000 in compensation can be considered under the
Pension Plan. Since 1989, benefits under the Pension Plan have been
calculated such that the monthly benefit is not reduced by a percentage of
the employee's primary social security benefit at the date of his
termination of employment.
(2) The following executive officers are credited with the following years of
benefit service under the Pension Plan: Mr. Albers - 22 years;
Mr. Rosenstein - 13 years; Mr. Knowles - 11 years; Mr. Mullin - 2 years;
and Mr. Grier - 34 years. Mr. Albers' employment agreement with the
Company provides that he is currently credited with 30 years of service
under the Supplemental Pension Plan and that he will be entitled to a
Normal Pension, as defined under such plan, regardless of the date of his
termination of employment. Mr. Rosenstein's employment agreement with
</TABLE>
14
<PAGE>
<TABLE>
<S> <C>
the Company provides that he is currently credited with 18 years of service
under the Supplemental Pension Plan. See the section entitled "Employment
Agreements" for a discussion of the terms of the employment agreements for
Messrs. Albers and Rosenstein.
</TABLE>
DISABILITY AND DEATH BENEFIT PLANS
The Company provides a supplemental disability plan and a supplemental
death benefit plan for executive officers and senior executives generally at
the level of vice president or senior vice president and above. The
supplemental disability plan is unfunded and payable solely out of the general
assets of DP/7UP. The Company may provide for these benefits, however, by
purchasing insurance on the participants involved, under which the Company is
the owner and beneficiary of the policies. The supplemental disability plan
provides benefits in excess of those under the Company's regular disability
program. Benefits are payable to participants who become totally and
permanently disabled prior to age 65. Benefits equal to 60% of monthly
compensation less the sum of benefits under the Company's regular disability
program, social security and worker's compensation, are payable monthly until
the earliest of the participant's death, recovery or commencement of benefits
under the Pension Plan. The supplemental disability plan also provides, in the
event of death or disability of a participant, educational assistance benefits
to the participant's children for their actual costs of college (not in excess
of $6,000 per year) for a period of up to four years.
The supplemental death benefit plan provides that, if a participant dies
before retirement, his designated beneficiary will receive monthly benefits for
a period of 10 or 15 years, depending upon the position held by the participant,
which, when added to any death benefits under the Pension Plan, will equal 50%
of his monthly compensation. If a participant dies after retirement, his
designated beneficiary is entitled to a lump sum payment equal to twice his
annual compensation (based on his monthly salary as of his retirement date), but
not to exceed $500,000. Although the supplemental death benefit plan is
technically unfunded, payments thereunder are provided for through life
insurance policies under which the Company is the owner and beneficiary and the
employee is the insured.
The following table shows the annual benefits payable in specific remuneration
classifications for the supplemental disability plan and the supplemental death
benefit plan as in effect on December 31, 1993:
<TABLE>
<CAPTION>
SUPPLEMENTAL PRE-RETIREMENT
COMPENSATION (a) DISABILITY PAYMENTS (b) SURVIVOR BENEFITS (c)
- - ---------------- ----------------------- ---------------------
<S> <C> <C>
$1,000,000 . . . . . . . . . . . . . $600,000 $500,000
800,000 . . . . . . . . . . . . . 480,000 400,000
600,000 . . . . . . . . . . . . . 360,000 300,000
400,000 . . . . . . . . . . . . . 240,000 200,000
200,000 . . . . . . . . . . . . . 120,000 100,000
100,000 . . . . . . . . . . . . . 60,000 50,000
<FN>
- - ---------------------------
(a) An executive officer's compensation for determination of benefits under the
supplemental disability plan is calculated on substantially the same basis
as his salary and bonus compensation. The payments under the supplemental
death benefit plan are calculated on the basis of base salary, excluding
bonuses, incentive compensation, commissions and other similar payments.
(b) The amounts shown have not been reduced by any amounts which may be payable
under the Company's regular disability program, social security or worker's
compensation.
(c) The amounts shown represent annual amounts payable over 10 to 15 years
based on position held and have not been reduced by death benefits under
the Pension Plan. The Pension Plan would generally pay a pre-retirement
death benefit for the life of the surviving spouse equal to 50% of the
benefit the participant would have received if he had retired immediately
before his death.
</TABLE>
15
<PAGE>
EXECUTIVE SEVERANCE AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
On August 27, 1991, the Company entered into executive severance agreements
with John R. Albers, Ira M. Rosenstein and True H. Knowles, and on April 8, 1992
with Francis I. Mullin (the "Severance Agreements"). The Severance Agreements
provide certain benefits to such officers upon the occurrence of a Change in
Control. A "Change in Control" is generally defined in the Severance Agreements
to mean, subject to certain exceptions, a disposition of all, or substantially
all, of the assets of the Company; the liquidation or dissolution of the
Company; the acquisition of beneficial ownership by any person of 50% or more of
the outstanding Common Stock of the Company; certain business combinations
involving the Company pursuant to which the Company will not be the continuing
or surviving corporation; or any acquisition or series of acquisitions within
any period of 12 consecutive months that results in 50% or more of the
beneficial ownership of the outstanding Common Stock of the Company being owned
by persons different than those persons who beneficially owned such Common Stock
prior to such acquisition or series of acquisitions. In general, each Severance
Agreement provides that upon a Change in Control, if within three years of such
Change in Control the employment of the covered officer is terminated either by
the Company without Cause (as defined) or by such officer for Good Reason (as
defined), such officer will receive a lump sum payment equal to three times the
most recent annual salary and bonus paid to such officer prior to the Change in
Control. Each covered officer also will be entitled to have any stock options he
then holds repurchased by the Company for cash in an amount determined in
accordance with the Severance Agreements. Each covered officer also will be
paid by the Company an amount sufficient to reimburse such officer for the full
amount of any income taxes imposed as a result of the payment of any portion of
the severance benefits payable under the Severance Agreements. Pursuant to the
Severance Agreements, the executives will also be entitled to reimbursement by
the Company for all costs and expenses incurred by them in defending or
enforcing the Severance Agreement. Each Severance Agreement had an initial term
until December 31, 1993 (except for the Severance Agreement with Francis I.
Mullin, the initial term of which will continue until August 31, 1994), was
automatically renewed for the one-year period beginning January 1, 1994 and is
subject to automatic renewals for successive one year periods unless the Company
elects to terminate such Severance Agreement, in which case such Severance
Agreement shall terminate two years from the expiration of the then current
term.
Pursuant to a letter agreement dated November 8, 1989 (the "1989 Severance
Agreement"), the Company agreed to provide Charles P. Grier with certain
benefits if, within one year of a "change of control," his employment is
terminated by the Company without Cause (as defined), or a Constructive
Termination (as defined) of his employment occurs. A "change in control" for
purposes of the 1989 Severance Agreement occurs when any person becomes the
beneficial owner of more than 50% of the Company's Common Stock or acquires all
or substantially all of the Company's assets or the Company merges with any
person other than any of its subsidiaries. Mr. Grier will be entitled to
receive a severance payment equal to his compensation for the six months prior
to his termination and will also be paid by the Company an amount sufficient to
reimburse him for the full amount of any income taxes imposed as a result of any
portion of the severance benefit payable under the 1989 Severance Agreement. He
will also be entitled to reimbursement by the Company for all costs and expenses
incurred by him in defending or enforcing the 1989 Severance Agreement. By its
terms, the 1989 Severance Agreement could have expired on December 31, 1993, but
was automatically renewed for a one-year period beginning January 1, 1994 and is
subject to automatic renewals for successive one year periods unless the Company
elects to terminate the agreement.
EMPLOYMENT AGREEMENTS
DP/7UP entered into new four-year employment agreements with Messrs. Albers
and Rosenstein, effective as of January 1, 1993. These employment agreements
(the "Agreements") provide that the Company will pay Messrs. Albers and
Rosenstein salaries of not less than $662,250 and $375,600, respectively,
during the terms of the Agreements. The amount of Messrs. Albers' and
Rosenstein's annual salaries will be reviewed by the Company's Compensation
Committee at the meeting of the Board of Directors held in October of each year.
Each of the Agreements also provides that if the employment of Messrs. Albers or
Rosenstein, as the case may be, is terminated by the Company without Cause (as
defined) or by Messrs. Albers or Rosenstein, as the case may be, for Good Reason
(as defined), such officer (i) will receive a lump sum payment equal to three
times the most recent annual salary and bonus paid to such officer prior to his
termination, (ii) will be entitled to have any stock options he then holds
repurchased by the Company for cash in an amount determined in accordance with
the Agreements, (iii) will be paid by the Company an amount sufficient to
reimburse such officer for the full amount of any income taxes imposed as a
result of the payment
16
<PAGE>
of any portion of the benefits payable upon termination under the Agreements,
and (iv) will be entitled to reimbursement by the Company for all costs and
expenses incurred by him in defending or enforcing the Agreement. Mr. Albers'
employment agreement with the Company also provides that he is currently
credited with 30 years of service under the Supplemental Pension Plan, and that
he will be entitled to a Normal Pension, as defined under such plan, regardless
of the date of his termination of employment. Mr. Rosenstein's employment
agreement with the Company provides that he is currently credited with 18 years
of service under the Supplemental Pension Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Hicks and certain of his affiliates hold significant equity interests
in Dr Pepper Bottling Holdings, Inc. which, through its operating subsidiary,
Dr Pepper Bottling Company of Texas, Inc. ("Dr Pepper Bottling"), engages in the
business of bottling DR PEPPER and 7UP brand products and other soft drink
products in the Dallas, Fort Worth, Houston and Waco, Texas areas. Dr Pepper
Bottling purchased approximately $56.3 million of products from the Company in
1993. Mr. Hicks serves on the board of directors of Dr Pepper Bottling
Holdings, Inc. and Dr Pepper Bottling.
SECTION 16(a) REPORTING
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors and executive officers, and
persons who own more than ten percent of the Company's Common Stock, to file
with the SEC initial reports of beneficial ownership and reports of changes in
beneficial ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten-percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) reports
they file. To the Company's knowledge, based solely on a review of the copies
of such reports furnished to the Company during the period commencing January
27, 1993, the date on which the Company commenced its initial public offering,
and ending December 31, 1993, its officers, directors and greater than ten-
percent shareholders had complied with all applicable Section 16(a) filing
requirements, with the exception of (i) the initial report of beneficial
ownership on Form 3 that was filed on behalf of William E. Winter in February
1993 incorrectly stated that Mr. Winter did not own any shares of Common Stock
of the Company, (ii) the statement of changes in beneficial ownership on Form 4
that was filed on behalf of Thomas O. Hicks in November 1993 incorrectly stated
the number of shares of Common Stock purchased by Mr. Hicks in October 1993, and
(iii) the annual statement of changes in beneficial ownership on Form 5 that was
filed on behalf of John R. Albers incorrectly stated the number of shares
beneficially owned by Mr. Albers as of December 31, 1993. An amended Form 3 was
filed on behalf of Mr. Winter in April 1993 which correctly set forth the number
of shares of Common Stock owned by him, an amended Form 4 was filed on behalf of
Mr. Hicks in November 1993 which correctly stated the number of shares of Common
Stock purchased by him in October 1993, and an amended Form 5 was filed on
behalf of Mr. Albers in March 1994 which correctly stated the number of shares
of Common Stock beneficially owned by him as of December 31, 1993.
PROPOSAL TO AMEND THE DR PEPPER/SEVEN-UP COMPANIES, INC.
NON-QUALIFIED STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
On June 25, 1992, the Board of Directors of the Company adopted, and the
shareholders of the Company approved by majority vote, the Directors' Option
Plan. The Company proposes to amend the Directors' Option Plan in the manner
described below. Such amendment requires the affirmative vote of a majority of
the shares of the Company's outstanding Common Stock present, in person or by
proxy, and entitled to vote at the Annual Meeting. If the amendment is not so
approved, it will not become part of the Directors' Option Plan. Proxies
solicited by the Board of Directors will be voted in favor of the amendment
unless a contrary vote is specified.
The principal provisions of the proposed amendment to the Directors' Option
Plan are summarized below. This summary, however, does not purport to be
complete and is qualified in its entirety by the actual terms of the amendment
to the Directors' Option Plan, the entire text of which is attached hereto as
Exhibit "A" and incorporated herein by reference.
17
<PAGE>
DESCRIPTION OF THE DIRECTORS' OPTION PLAN
The Directors' Option Plan presently provides that on December 31 of each
calendar year, each non-employee director will be automatically granted an
option to purchase that number of shares of Common Stock of the Company computed
by dividing: (i) 50% of the sum of the annual retainer fee for non-employee
directors payable for such calendar year plus the aggregate meeting fees payable
for such calendar year to such non-employee director for attending meetings of
the Board of Directors and any committees on which such non-employee director
serves by (ii) 50% of the fair market value of a share of Common Stock on the
date of grant. The purchase price for the shares of Common Stock subject to
each option is equal to 50% of the fair market value of the shares on the grant
date. A total of 194,310 shares of Common Stock have been reserved for issuance
pursuant to the Directors' Option Plan.
Each option granted under the Directors' Option Plan becomes exercisable
one year after its date of grant and is not exercisable more than ten years
after its date of grant. Under the terms of the Directors' Option Plan, if a
non-employee director is terminated, any unexercised options held by such non-
employee director will be exercisable for a specified period depending upon the
reason for such termination; provided, that if such non-employee director is
terminated due to an act of fraud or intentional misrepresentation or
embezzlement, misappropriation or conversion of assets or opportunities of the
Company, the unexercised option will immediately terminate. The Directors'
Option Plan is administered by a disinterested committee of the Board of
Directors consisting of directors who are not entitled to receive options under
the Plan, subject to such limitations as may be appropriate to satisfy the
provisions of the Exchange Act.
REASONS FOR AMENDMENT OF THE DIRECTORS' OPTION PLAN
The purpose of the Directors' Option Plan is to strengthen the Company by
providing a means of retaining and attracting competent non-employee personnel
to serve on its Board of Directors. In furtherance of this purpose, the Company
has agreed, in Section 1.1 of the Directors' Option Plan, to pay 50% of each
non-employee director's annual compensation in the form of non-qualified stock
options.
However, Section 2.1 of the Directors' Option Plan, as presently drafted,
provides that the net compensation paid to non-employee directors in the form of
non-qualified stock options is only fifty percent of each non-employee
director's annual cash compensation (due to the cost required to exercise the
stock options). Thus, as written, the provisions of the Directors' Option Plan
are in conflict and Section 2.1 is inconsistent with the stated purpose of the
Plan.
PROPOSED AMENDMENT TO THE DIRECTORS' OPTION PLAN
To rectify the inconsistency described above, the Board of Directors of the
Company proposes to amend Section 2.1 of the Directors' Option Plan to provide
that the net compensation paid to non-employee directors in the form of non-
qualified stock options (after deducting the exercise price therefor) will equal
100% of each non-employee director's annual cash compensation. The Board of
Directors believes that the above-described amendment will serve the best
interests of the Company and its shareholders by permitting the Company to
continue to retain qualified individuals to serve on its Board of Directors.
FEDERAL TAX CONSEQUENCES
The stock options granted under the Directors' Option Plan are non-
qualified stock options. As such, a non-employee director will realize no
taxable income at the time a stock option is granted under the Directors' Option
Plan, but ordinary income will be realized by the non-employee director at the
time of his exercise of an option. The amount of income will be equal to the
difference between the exercise price of the option and the fair market value of
the underlying shares on the date of exercise. Tax withholding is required on
such income. When a non-employee director disposes of shares acquired upon the
exercise of the option, any amount received in excess of the fair market value
of the shares on the date of exercise will be treated as long or short term
capital gain, depending upon the holding period of the shares, and if the amount
received is less than the fair market value of the shares on the date of
exercise, the loss will be treated as long or short term capital loss, depending
upon the holding period of the shares.
18
<PAGE>
The discussion set forth above does not purport to be a complete analysis
of the potential tax consequences relevant to recipients of stock options under
the Directors' Option Plan, or to describe tax consequences based on particular
circumstances. It is based on Federal income tax law and interpretational
authorities as of the date of this Proxy Statement, which are subject to change
at any time.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE AMENDMENT
TO THE DIRECTORS' OPTION PLAN.
INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed the firm of KPMG Peat Marwick as the
Company's independent public accountants for 1994. KPMG Peat Marwick has been
the Company's independent public accountants since 1986.
A representative of KPMG Peat Marwick will be in attendance at the Annual
Meeting and will be afforded the opportunity to make a statement. The
representative will also be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 1995 Annual
Meeting of Shareholders must be received by the Company on or before February
27, 1995 in order to be eligible for inclusion in the Company's Proxy Statement
and form of Proxy. Generally, under the Company's Bylaws, a shareholder's notice
must be delivered to or mailed and received by the Secretary of the Company at
its principal executive offices not less than 60 days or more than 90 days prior
to the anniversary date of the previous annual meeting of shareholders of the
Company, in the event the annual meeting has been set for a date that is within
30 days before or after said anniversary date. In the case of an annual meeting
that has been called for a date that is not within 30 days before or after the
anniversary date of the immediately preceding annual meeting, or in the case of
a special meeting of shareholders called for the purpose of electing directors,
the shareholder's notice must be delivered to or mailed and received by the
Secretary of the Company at its principal executive offices not later than the
close of business on the 10th day following the day on which notice of the date
of the meeting was mailed or public disclosure of the meeting was made,
whichever occurs first. As to each person whom a shareholder proposes to
nominate for election or re-election as a director, the shareholder's notice
shall set forth all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or as otherwise
required, in each case pursuant to Regulation 14A under the Exchange Act,
including such person's written consent to being named in the Proxy Statement as
a nominee and to serving as a director if elected. The shareholder's notice
must also set forth (i) the name and address of the shareholder, as it appears
in the Company's books, (ii) the class and number of shares of the Company that
are beneficially owned by such shareholder, (iii) as to the beneficial owner, if
any, on whose behalf the nomination or proposal is made, the name and address of
such person, and the class and number of shares of the Company that are
beneficially owned by such person, and (iv) with respect to any shareholder
proposal, any material interest of such shareholder or the beneficial owner, if
any, on whose behalf the proposal is made, in such business.
No person nominated by a shareholder shall be eligible to serve as a
director of the Company unless nominated in accordance with the procedures set
forth above. The chairman of the meeting shall, if the facts warrant, determine
and declare to the meeting that a nomination or proposal was not made in
accordance with the procedures prescribed by the Bylaws of the Company and, if
he or she should so determine, the chairman may so declare at the meeting and
the defective nomination or proposal shall be disregarded. Notwithstanding the
foregoing, a shareholder must also comply with all applicable requirements of
the Exchange Act and the rules and regulations thereunder with respect to
nominations of persons for election to the Board of Directors of the Company.
19
<PAGE>
ADDITIONAL INFORMATION AVAILABLE
UPON WRITTEN REQUEST OF ANY SHAREHOLDER, THE COMPANY WILL FURNISH, WITHOUT
CHARGE, A COPY OF THE COMPANY'S 1993 ANNUAL REPORT ON FORM 10-K, AS FILED WITH
THE SEC, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO. THE WRITTEN
REQUEST SHOULD BE SENT TO THE SECRETARY AT THE COMPANY'S PRINCIPAL EXECUTIVE
OFFICES. THE WRITTEN REQUEST MUST STATE THAT THE PERSON MAKING THE REQUEST IS A
BENEFICIAL OWNER OF CAPITAL STOCK OF THE COMPANY.
OTHER MATTERS
So far as is now known, there is no business other than that described
above to be presented to the shareholders for action at the Annual Meeting.
Should other business come before the Annual Meeting, votes may be cast pursuant
to proxies in respect to any such business in the discretion of the persons
acting under the proxies.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, YOU ARE URGED TO COMPLETE,
SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED,
WHICH REQUIRES NO ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
Nelson A. Bangs
Secretary
March 25, 1994
20
<PAGE>
EXHIBIT "A"
ARTICLE II, SECTION 2.1, OF THE DIRECTORS' OPTION PLAN IS PROPOSED TO BE AMENDED
SO AS TO READ, IN ITS ENTIRETY, AS FOLLOWS:
ARTICLE II
STOCK OPTIONS
2.1 GRANT AND OPTION PRICE. On December 31 of each calendar year (the "Grant
Date"), each Non-Employee Director on such date shall be granted an option to
purchase that number of shares of Stock computed by dividing: (a) the sum of
the annual retainer fee for Non-Employee Directors payable for such calendar
year plus the aggregate meeting fees payable for such calendar year to such Non-
Employee Director for attending meetings of the Board of Directors and any
committee thereof on which such Non-Employee Director served as a member by (b)
the product of (i) the Discount, multiplied by (ii) the Fair Market Value (as
such term is defined in this Section 2.1) of a share of Stock on the Grant Date.
The purchase price of the Stock covered by each option granted under the Plan
shall be equal to the product of the Fair Market Value of such Stock on the
Grant Date multiplied by the Discount. For purposes of the Plan, the term "Fair
Market Value" on any date shall mean the closing sales price of the Stock on the
New York Stock Exchange on such date, or, if no reported sale of the Stock shall
have occurred on such date, then the closing sales price of the Stock as quoted
on such Exchange on the next preceding date on which there was such a reported
sale.
<PAGE>
DR PEPPER/SEVEN-UP COMPANIES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 28, 1994
The undersigned shareholder hereby appoints Ira M. Rosenstein and Nelson A.
Bangs, jointly and severally, proxies, with full power of substitution, to vote,
as specified below, all shares of Dr Pepper/Seven-Up Companies, Inc. (the
"Company") which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of the Company to be held at the Northpark West Cinemas 1-2, 1100
Northpark Center, Dallas, Texas, at 9:00 a.m. on Thursday, April 28, 1994, or
any adjournment or postponement thereof (the "Meeting"), and directs said
proxies to vote as instructed on the matters set forth below and otherwise at
their discretion. Receipt of a copy of the Notice of said Meeting and the
accompanying Proxy Statement is hereby acknowledged.
1. Election of Board of Directors. The Board of Directors recommends a
vote FOR all nominees.
<TABLE>
<C> <S> <S>
/ / FOR all nominees listed below.
/ / WITHHOLD VOTE for all nominees.
</TABLE>
NOMINEES: W.W. Clements, Thomas O. Hicks, William E. Winter
(To withhold authority for any individual nominee, strike a line through his
name above.)
2. Approve the amendment of the Dr Pepper/Seven-Up Companies, Inc.
Non-Qualified Stock Option Plan for Non-Employee Directors, as described in the
Company's Proxy Statement. The Board of Directors recommends a vote FOR the
amendment of said Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion with respect to such other matters as may properly
come before the Meeting or any postponement or adjournment thereof.
(CONTINUE AND SIGN ON OTHER SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED HEREIN BY THE
SHAREHOLDER. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE
NOMINEES LISTED IN ITEM 1, FOR THE PROPOSAL SET FORTH IN ITEM 2, AND WITH REGARD
TO OTHER MATTERS THAT MAY COME BEFORE THE MEETING OR ANY POSTPONEMENT OR
ADJOURNMENT THEREOF, IN THE DISCRETION OF THE PROXYHOLDERS AS DESCRIBED IN THE
PROXY STATEMENT.
____________________________
Signature
Date ________________ , 1994
Please sign EXACTLY as name
appears hereon, and in
signing as Attorney,
Administrator, Guardian,
Trustee or Corporate
Officer, please add your
title as such.
