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
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or
240.14a-12
AMERICAN ITALIAN PASTA COMPANY
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
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6(i)(1) and 0-11.
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<PAGE>
1000 Italian Way
Excelsior Springs, Missouri 64024
AMERICAN ITALIAN PASTA COMPANY
NOTICE AND PROXY STATEMENT
for
The Annual Meeting of Stockholders
to be held
February 25, 1998
YOUR VOTE IS IMPORTANT!
Please mark, date and sign the enclosed proxy card and promptly
return it to the Company in the enclosed envelope.
Mailing of this Notice and Proxy Statement, the accompanying
Proxy, and the accompanying 1997 Annual Report, commenced on or
about January 2, 1998.
<PAGE>
AMERICAN ITALIAN PASTA COMPANY
1000 Italian Way
Excelsior Springs, Missouri 64024
__________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
__________________
The Annual Meeting of the Stockholders of American Italian
Pasta Company, a Delaware corporation ("AIPC"), will be held at
Adam's Mark Hotel, 1200 Hampton Street, Columbia, South Carolina,
at 1:30 p.m. on February 25, 1998, to consider and vote upon the
following:
(1) Election of three Directors;
(2) Ratification of the Board of Directors' selection of
Ernst & Young LLP to serve as AIPC's independent
auditors for fiscal year 1998; and
(3) Such other matters as may properly be brought before
the Annual Meeting or any adjournment thereof.
Only stockholders of record at the close of business on
December 29, 1997, are entitled to notice of and to vote at this
meeting or any adjournment thereof.
By Order of the Board of Directors,
/s/ David E. Watson
Executive Vice President, Chief
Financial Officer, and Secretary
The date of this Notice is January 2, 1998.
Please date, sign and promptly return the enclosed proxy
card, regardless of the number of shares you may own and whether
or not you plan to attend the meeting in person. You may revoke
your proxy and vote your shares in person if revoked in
accordance with the procedures described in the attached proxy
statement. Please also indicate on your proxy card whether you
plan to attend the Annual Meeting.
<PAGE>
AMERICAN ITALIAN PASTA COMPANY
1000 Italian Way
Excelsior Springs, Missouri 64024
PROXY STATEMENT
TABLE OF CONTENTS
-----------------
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . 5
PROPOSAL 1 - ELECTION OF THREE DIRECTORS . . . . . . . . . . 6
THE BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . 7
STOCK OWNED BENEFICIALLY BY DIRECTORS, NOMINEES
AND CERTAIN EXECUTIVE OFFICERS . . . . . . 9
MANAGEMENT COMPENSATION . . . . . . . . . . . . . . . . . . . 11
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . 20
PROPOSAL 2 - RATIFICATION OF THE BOARD OF DIRECTORS'
SELECTION OF INDEPENDENT AUDITORS . . . . . . 23
VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
PRINCIPAL STOCKHOLDERS . . . . . . . . . . . . . . . . . . . 26
STOCKHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . 27
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE . . . 28
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . 29
<PAGE>
GENERAL INFORMATION
This Proxy Statement is being mailed on or about January 2,
1998 to the holders of record at the close of business on
December 29, 1997 (the "Record Date") of American Italian Pasta
Company's, a Delaware corporation ("AIPC" or the "Company"),
Class A Convertible Common Stock, par value $.001 per share (the
"Class A Common Stock"), in connection with the solicitation of
proxies by its Board of Directors for use at the Annual Meeting
of Stockholders to be held at Adam's Mark Hotel, 1200 Hampton
Street, Columbia, South Carolina, on February 25, 1998, at 1:30
p.m. and any adjournment thereof (the "Annual Meeting"). The
Notice of Annual Meeting of Stockholders, AIPC's 1997 Annual
Report to Stockholders (the "Annual Report"), and the proxy card
accompany this Proxy Statement.
Attendance at the Annual Meeting of Stockholders is limited
to stockholders of record or their proxies, beneficial owners of
AIPC's stock having evidence of such ownership and guests of
AIPC. Any stockholder or stockholder's representative who,
because of a disability, may need special assistance or
accommodation to allow him or her to participate in the Annual
Meeting may request reasonable assistance or accommodation from
AIPC by contacting AIPC's Vice President of Investor Relations at
1000 Italian Way, Excelsior Springs, Missouri 64024, at 816-502-
6000. To provide AIPC sufficient time to arrange for reasonable
assistance please submit all requests by January 30, 1998.
AIPC will bear the cost of the Annual Meeting, including the
cost of mailing the proxy materials and any supplemental
materials. Directors, officers and employees not specifically
engaged or compensated for that purpose may also solicit proxies
by telephone, telegraph or in person. AIPC has not retained any
other person to assist in the solicitation of proxies. In
addition, AIPC may reimburse brokerage firms and other persons
representing beneficial owners of AIPC's shares for their
expenses in forwarding this Proxy Statement, the Annual Report
and other soliciting materials to such beneficial owners.
Brokers, dealers, banks, voting trustees, other custodians,
and their nominees are asked to forward soliciting materials to
the beneficial owners of shares held of record by them and upon
request will be reimbursed for their reasonable expenses in
completing the mailing of soliciting materials to such beneficial
owners.
AIPC changed its fiscal year end from December 31 to the
last Friday of September or the first Friday of October effective
beginning with the nine-month fiscal period ended September 27,
1996 and for all subsequent periods. This change resulted in a
nine-month fiscal year for 1996, and will result in a 53-week
fiscal year for fiscal 1997, and a 52- or 53-week year for all
subsequent fiscal years. The Company's first three fiscal
quarters end on the Friday last preceding December 31, March 31
and June 30 or the first Friday of the following month of each
quarter. For purposes of this Proxy Statement, the 1996 fiscal
year is described as the nine-month fiscal period ended September
30, 1996 and the 1997 fiscal year is described as having ended on
September 30, 1997.
<PAGE>
PROPOSAL 1 - ELECTION OF THREE DIRECTORS
The Board of Directors of AIPC is divided into three
classes. The members of each class serve staggered three year
terms of office, which results in one class standing for election
at each annual meeting of stockholders. The term of office for
the directors elected at the Annual Meeting will expire in 2001
or when their successors are elected and qualified.
Three persons have been nominated by management for election
as directors. Mr. Howe is presently a director of AIPC, all of
the nominees have indicated that they are willing and able to
serve as directors if elected, and all have consented to being
named as nominees in this Proxy Statement. If any nominee should
become unable or unwilling to serve, the Proxy Committee intends
to vote for one or more substitute nominees chosen by them in
their sole discretion. AIPC's Certificate of Incorporation and
Bylaws do not have any eligibility requirements for directors.
As explained further under "Certain Relationships and
Related Transactions," the Morgan Stanley Leveraged Equity Fund,
L.P. (the "MSLEF"), Morgan Stanley Capital Partners III, L.P.
("MSCP") and Citicorp Venture Capital, Ltd., or CCT III
(collectively "Citicorp"), have the right to designate certain
nominees for director depending on their level of ownership of
AIPC's Class A Common Stock and Class B Common Stock. Neither
MSLEF nor MSCP have designated any nominees for this years
election of directors, and David Howe has been designated by
Citicorp pursuant to such rights.
As explained further under "Voting and Proxies," Directors
are elected by the affirmative vote of the plurality of the
shares of Class A Common Stock present at the Annual Meeting that
are entitled to vote on the election of directors, assuming a
quorum.
Nominees for Director to Serve Until the Annual Meeting of
Stockholders in 2001.
DAVID Y. HOWE, age 33, has served as a Director of the
Company since 1995. He is a Vice President of Citicorp Venture
Capital, Ltd., a venture capital firm, where he has been employed
since 1993. From 1990 to 1993, he had been employed by Butler
Capital, a private investment company. He is also a director of
Aetna Industries, Inc., Brake-Pro, Inc., Cable Systems
International, Inc., Copes-Vulcan, Inc., Pen-Tab Industries,
Inc., Sinter Metals, Inc., Milk Specialties Company, and
LifeStyle Furnishings, Ltd.
JOHN P. O'BRIEN, age 56, has been Managing Director of
Inglewood Associates, Inc., a private investment and consulting
firm specializing in turnarounds of financially under-performing
companies since April 1993. Mr. O'Brien has also been Chairman
of the Board of two Inglewood Associates, Inc. portfolio
companies - Jeffery Mining Products, L.P. (a manufacturer and
distributor of underground mining products) since October 1995
and Allied Construction Products, Inc. (a manufacturer and
distributor of hydraulic and pneumatic demolition, compaction,
boring and trench shoring devices) since March 1993. Prior to
joining Inglewood, he was the Southeast Regional Managing Partner
for Price Waterhouse and a member of the firm's Policy Board and
Management Committee from July 1984 to April 1990.
WILLIAM R. PATTERSON, age 55, is currently Vice President of
PSF Holdings, L.L.C., and the Executive Vice President, Chief
Financial Officer and Treasurer of its wholly owned subsidiary,
Premium Standard Farms, Inc. ("PSF, Inc."), a fully-integrated
pork producer and processor. From January to October 1996, Mr.
Patterson was a principal of Patterson Consulting LLC and served
as the Acting Chief Financial Officer of the predecessor company
to PSF, Inc. Prior to joining the predecessor to PSF, Inc. in
1996, Mr. Patterson was a partner in Arthur Andersen LLP from
1976 through 1995. He is also a director of the Paul Mueller
Company.
YOUR BOARD RECOMMENDS THAT YOU VOTE
"FOR"
THE ELECTION OF MANAGEMENT'S NOMINEES
<PAGE>
THE BOARD OF DIRECTORS
The Board of Directors met nine times in fiscal year 1997.
The Board meets regularly to review significant developments
affecting AIPC and to act on matters requiring Board approval.
The Board reserves certain powers and functions to itself. All
directors attended at least seventy-five percent of the meetings
of the Board in fiscal year 1997.
Directors Serving Until the Annual Meeting of Stockholders in
1999
JONATHAN E. BAUM, age 37, has served as a Director of the
Company since 1994 and also currently serves as the Managing
Director of GKB Private Investment Partners, L.L.C. He has been
the Chairman and Chief Executive Officer of George K. Baum &
Company, an investment banking firm, since 1994 and also
currently serves as the Managing Director of GKB Private
Investment Partners, L.L.C. Previously, he had been a Vice
President with Salomon Brothers Inc. He is also a director of
the George K. Baum Equity Fund, L.P.
ROBERT H. NIEHAUS, age 42, has served as a Director of the
Company since 1992. He has been a Managing Director of Morgan
Stanley & Co. Incorporated since 1990. He is Managing Director
and a Director of Morgan Stanley Leveraged Equity Fund II, Inc.
and Morgan Stanley Capital Partners III, Inc. He is also a
director of Fort Howard Corporation, Silgan Corporation, Silgan
Holdings Inc., Waterford Wedgewood UK, plc, of which he is the
Chairman, and Waterford Crystal Ltd.
RICHARD C. THOMPSON, age 46, has served as a Director of the
Company since 1986. Since 1993, he has been President and Chief
Executive Officer of Thompson's Pet Pasta Products Inc., a pet
food producer. He is a co-founder of the Company and served as
its President from May 1986 to June 1991.
Directors Serving Until the Annual Meeting of Stockholders in
2000
HORST W. SCHROEDER, age 56, has served as Chairman of the
Board of Directors of the Company since June 1991, and as a
Director of the Company since August 1990. Since 1990, Mr.
Schroeder has been President of HWS & Associates, Inc., a Hilton
Head, South Carolina management consulting firm owned by Mr.
Schroeder. Prior to founding HWS & Associates, Mr. Schroeder
served the Kellogg Company, a manufacturer and marketer of ready-
to-eat and other convenience food products, in various capacities
for more than 20 years, most recently as President and Chief
Operating Officer. He is a manager of PSF Holdings, L.L.C. and
has served as Chairman of the Board of its wholly-owned
subsidiary, Premium Standard Farms, Inc., a vertically-integrated
pork producer, since 1996.
LAWRENCE B. SORREL, age 38, has served as a Director of the
Company since 1992. Since 1992, he has been a Principal of Morgan
Stanley & Co., Incorporated in the Merchant Banking Division
where he had previously been a Vice President and an Associate.
He is also Managing Director and a Director of Morgan Stanley
Capital Partners III, Inc., the general partner of the general
partner of MSCP and certain affiliated funds, and The Morgan
Stanley Leveraged Equity Fund II, Inc., the general partner of
MSLEF. He is also a director of Emmis Broadcasting Corporation,
Vanguard Health Systems, Inc., LifeTrust America, Inc., and the
Compucare Company.
TIMOTHY S. WEBSTER, age 35, has served as President of the
Company since June 1991, as President and Chief Executive Officer
of the Company since May 1992, and as a Director since June 1989.
Mr. Webster joined the Company in April 1989, and served as Chief
Financial Officer from May 1989 to December 1990 and as Chief
Operating Officer from December 1990 to June 1991. Prior to
joining the Company, Mr. Webster was a manager with the
Entrepreneurial Services Group of Arthur Young and Company (a
predecessor firm to Ernst & Young LLP) from April 1987 to April
1989.
COMMITTEES OF THE BOARD OF DIRECTORS
Under AIPC's Bylaws, the Board of Directors may establish
one or more committee, appoint one or more members of the Board
of Directors to serve on each committee, fix the exact number of
committee members, fill vacancies, change the composition of the
committee, impose or change the duties of the committee and
terminate the committee subject to certain limitations with
respect to an Audit, Compensation or Stock Option Committee. The
Board of Directors has established an Audit Committee and a
Compensation Committee, but has not established a nominating
committee. Each such committee has two or more members who serve
at the pleasure of the Board of Directors. There was one meeting
of the Audit Committee, and one meeting of the Compensation
Committee during fiscal year 1997. All directors attended the
meeting of the committees on which they served during fiscal
1997.
The Audit Committee
The Audit Committee is responsible for reviewing the
Company's financial statements, audit reports, internal financial
controls and the services performed by the Company's independent
public auditors, and for making recommendations with respect to
those matters to the Board of Directors.
The current members of the Audit Committee are: Messrs.
Baum and Schlindwein.
The Compensation Committee
The Compensation Committee is responsible for reviewing and
making recommendations to the Board of Directors with respect to
the salaries, bonuses, and other compensation paid to key
employees and officers of AIPC, including the terms and
conditions of their employment, and administers all stock option
and other benefit plans (except with respect to participation by
executive officers in stock option and other equity incentive
plans of the Company which will be made by the Board of Directors
or a committee comprised solely of outside directors, unless
otherwise specified in the applicable plan documents) affecting
key employees' and officers' direct and indirect remuneration.
The current members of the Compensation Committee are:
Messrs. Niehaus, Schroeder and Sorrel.
The Committee's report on executive compensation is set
forth in the section under "Management Compensation."
Compensation Committee Interlocks and Insider Participation
All compensation decisions during the fiscal year ended
September 30, 1997 for each of the Named Executive Officers were
made by the Compensation Committee of the Board of Directors.
Mr. Schroeder as Chairman of the Board, is an officer of
AIPC.
Messrs. Niehaus and Sorrel are employed by Morgan Stanley &
Co. Incorporated. In 1997, Morgan Stanley Senior Funding, Inc.
("MS Funding"), an affiliate of Morgan Stanley & Co.
Incorporated, served as the documentation agent under the
agreements relating to the April 1997 amendment of the Company's
credit facility, and acted as an arranger for such credit
facility for which MS Funding received a fee in the amount of
$311,875.
Compensation of Directors
Messrs. Schlindwein and Thompson currently are the only
directors who receive fees for serving as directors of the
Company. Messrs. Schlindwein and Thompson each receive a fee of
$3,000 for attendance of each meeting of the Board of Directors,
with no additional amounts payable with respect to separate
committee meetings. None of the other directors of the Company is
paid directors' fees for serving on the Board of Directors or its
committees. All directors are reimbursed for out-of-pocket
expenses incurred in connection with attendance at meetings of
the Board of Directors and meetings of Board committees.
Effective January 1, 1998, all directors who are not
employees of AIPC or employees of significant stockholders
("Outside Directors") will be paid an annual retainer of $15,000,
which is payable in AIPC Class A Common Stock immediately
following AIPC's annual meeting of stockholders, and paid $1,500
in cash for each meeting of the Board of Directors attended.
Additionally, Outsider Directors who are members of a committee
of the Board of Directors will be paid $500 in cash for each
committee meeting attended. An Outside Director who is a chairman
of such a committee will also be paid an annual cash retainer of
$2,500. All directors will continue to be reimbursed for out-of-
pocket expenses incurred in connection with attendance at
meetings of the Board of Directors and meetings of Board
committees.
<PAGE>
STOCK OWNED BENEFICIALLY BY DIRECTORS, NOMINEES
AND CERTAIN EXECUTIVE OFFICERS
The following table sets forth information regarding
beneficial ownership of the Company's Class A Common Stock as of
the Record Date by: (i) each director or nominee for director of
AIPC; (ii) the President and Chief Executive Officer ("CEO") of
AIPC and each of AIPC's four most highly-compensated executive
officers, excluding the CEO, for services rendered during the
fiscal year ended September 30, 1997 (collectively, with the CEO,
the "Named Executive Officers"); and (iii) all directors and
executive officers as a group.
<TABLE>
<CAPTION>
Class A Common Stock
Beneficially Owned
Name of Beneficial Owner Number Percent<FN1>
------------------------ ------ ----------
<S> <C> <C>
Horst W. Schroeder <FN2><FN3> 422,461 2.5%
Jonathan E. Baum <FN4> 376,859 2.3%
David Y. Howe ----- ---
Robert H. Niehaus ----- ---
Amy S. Rosen ----- ---
James A. Schlindwein <FN5> 57,311 *
Lawrence B. Sorrel ----- ---
John P. O'Brien ----- *
William R. Patterson 3,000 *
Timothy S. Webster <FN3><FN6> 326,127 1.9%
David E. Watson <FN3> 95,521 *
Norman F. Abreo <FN3> 70,193 *
Darrel E. Bailey <FN3> 50,093 *
Richard C. Thompson 380,209 2.3%
All directors and executive 1,781,774 10.6%
officers as a group
(14 persons) <FN3>
-----------------------------
* Less than 1% of the outstanding Class A Common Stock.
<PAGE>
<FN>
<FN1> Beneficial ownership is determined in accordance with
the rules of the Commission, but generally refers to either the
sole or shared power to vote or dispose of the shares. In
computing the number of shares beneficially owned by a person and
the percentage ownership of that person, shares of Class A Common
Stock subject to options and warrants held by that person that
are currently exercisable or will become exercisable within 60
days of the Record Date are deemed outstanding. Such shares,
however, are not deemed outstanding for the purposes of computing
the percentage ownership of any other person. Except as
otherwise indicated in a footnote to this table or as to be
provided in the Stockholders Agreement (see "Certain
Relationships and Related Transactions -- Stockholders
Agreement"), the persons in this table have sole voting and
investment power with respect to all shares of Class A Common
Stock shown as beneficially owned by them. An aggregate of
7,691,056 shares of Common Stock (approximately 45.8 percent of
the shares to be outstanding on the Record Date) will be subject
to the Stockholders Agreement.
<FN2> The shares beneficially owned by Mr. Schroeder include
114,565 shares held by The Living Trust of Horst W. Schroeder and
11,406 shares held by The Living Trust of Gisela I. Schroeder for
the benefit of Mr. and Ms. Schroeder, respectively, and members
of their family, as well as 3,066 shares held by each of Bernd
Schroeder and Isabel Lange, children of Mr. and Ms. Schroeder.
Mr. Schroeder has voting power, but not investment power, with
respect to all of these shares.
<FN3> Options that are currently exercisable or will become
exercisable within 60 days of the Record Date to purchase shares
of Class A Common Stock as follows: Mr. Schroeder (290,358
shares), Mr. Webster (290,358 shares) Mr. Watson (44,899 shares),
Mr. Abreo (62,976 shares), and Mr. Bailey (27,116 shares), and
all executive officers and directors as a group (715,707 shares).
<FN4> Includes 355,248 shares held by George K. Baum Capital
Partners, L.P., 21,611 shares held by George K. Baum Employee
Equity Fund, L.P. As an officer and/or equity owner of the
entities holding such shares, Mr. Baum has voting power with
respect to such shares. Except to the extent of his equity
interest in the entities holding such shares, Mr. Baum disclaims
beneficial ownership of such shares.
<FN5> Includes 27,441 shares held by JSS Management Company,
Ltd. of which Mr. Schlindwein is an officer and equity owner and
has voting power with respect to such shares.
<FN6> Includes 14,435 shares beneficially owned by Mr.
Webster which are held in various trusts for the benefit of Mr.
Webster's family members, as well as certain members of Mr.
Webster's extended family. Mr. Webster has voting power, but not
investment power, with respect to all of such shares.
</FN>
</TABLE>
<PAGE>
MANAGEMENT COMPENSATION
Compensation Committee Report on Executive Compensation
Introduction
The Board of Directors' compensation policy is to reward
exceptional performance by the Company's employees while
providing reasonably competitive base compensation. The
Compensation Committee is responsible for implementing this
policy for the executive officers of the Company.
The Committee evaluates the compensation packages of these
executives at least annually. The Committee regularly discusses
with independent compensation consultants both the composition
and level of the compensation packages, and the Committee
regularly informs the Board of the Committee's activities.
In designing the compensation packages for the Company's
executives, the Committee uses surveys, prepared by the
compensation consultants, of the compensation practices for
different job levels of other industrial companies with revenues
of $1 billion or less. The Committee believes that those are the
companies with which the Company most actively competes for
executives. The job level for a position at AIPC and in the
surveys is determined based upon the compensation consultant's
analysis of the position's level of knowledge, accountability and
problem solving (as contrasted to determining the job level based
upon title). The use of job level analysis allows the Committee
to compare more accurately the Company's compensation package for
a particular executive with the market practices within the
comparison market. The compensation consultants do not consider
the financial performance of companies participating in the
survey when comparing the Company's compensation packages to the
market.
The Committee's current compensation program has three
primary components: base salary, annual incentives and long-term
equity based incentives. The Committees process of determining
each of these components for the executives in general and Mr.
Webster in particular is discussed below.
Base Salary. The Committee initially sets an executive's
base salary at the median of the range of base salaries indicated
in the surveys, but may adjust the salary, in the Committee's
discretion, upwards or downwards within a limited range around
that point. The Committee considers the recommendations of the
Chairman of the Board and the Chief Executive Officer when making
any such adjustment. The Committee chooses the median of the
base salary range so the Company's base salaries are competitive
with the base salaries of other industrial companies. The
Committee does not consider the financial performance of the
Company in setting base salaries.
Annual Incentives. The Committee uses annual incentives to
focus executives on accomplishing specific objectives, both
corporate and personal, that the Committee and Board believe are
necessary to enhance the shorter-term performance of the Company.
All executives participate in the annual cash incentive program
administered by the Committee. Each of the various objectives,
goals, targets and proportions related to determining the annual
incentive is established by the Committee or agreed to with the
executive prior to the period in which the performance is to be
measured. The annual incentives are currently paid in cash.
An executive's annual incentive received is the result of a
target annual incentive adjusted for the executive's personal
performance and the financial performance of the Company. The
Committee sets an executive's target annual incentive so that if
earned, the executive's total cash compensation (base salary plus
annual incentive) would be at the seventy-fifth percentile level
of the range of total cash compensation indicated in the
compensation survey for the job level. This level is consistent
with the Company's compensation policy of focusing on
performance-based compensation.
The personal performance component of the annual incentive
is based upon the Committee's assessment of the executive's
actual performance against specific corporate objectives for the
executive and the executive's agreed upon personal goals. These
corporate objectives vary between executives, but generally
relate to corporate performance measures in the executive's area
of responsibility. The executives' personal goals also vary
among executives, but generally focus on the key accountabilities
defined in the job description. Each of these factors is given
special weighting in determining the executive's performance
rating. The Committee may also in its discretion take into
account other factors in determining an executive's overall
personal performance rating. This performance rating is used to
adjust the target annual incentive downward to nothing or upwards
to 150 percent of the target annual incentive to arrive at the
executive's potential annual incentive.
Of the total potential annual incentive, 100 percent is
based upon the executives's personal performance but may be
adjusted upward or downward based upon the actual financial
performance of the Company. There is no further adjustment to
the portion attributable to personal performance.
The financial performance rating of the Company is based
upon the comparison of the Company's actual earnings to a pre-
established earnings target and range of earnings of the Company
for the measurement period. No adjustment is made to the
financial performance portion if the Company's earnings match the
target, and none of the potential annual incentive relating to
the financial performance of the Company is paid if the Company's
earnings fall below the bottom of the range. If the Company's
earnings fall below the earnings target within the range, the
financial performance portion is adjusted to 75 percent of its
initial level. If the Company's earnings exceed the earning
target, the financial performance portion is adjusted up to 125
percent of its initial level depending on how far in excess of
the target actual earnings are.
Long-Term Equity Incentives. Equity incentives are a very
important component of the Company's executive compensation
program. Equity incentives are the most effective means known to
the Committee of aligning an executive's interests with those of
the stockholders and focusing the executive on creating long-term
value for the Company's stockholders. Generally, all executives
participate in the Committee's equity incentives program. The
Committee may, however, determine in its discretion to not award
any equity incentives to certain executives. In making such a
determination, the Committee will generally consider the
executive's past performance and recommendations of the Chairman
of the Board and Chief Executive Officer. No particular
weighting is given to any of these factors.
The Committee uses options to acquire the Company's class A
common stock with an exercise price equal to the value of the
stock on the date of the option award as the Company's equity
incentive because options do not reward the executive until all
stockholders realize an increase in the value of their investment
in the Company. The Committee sets the number of shares to be
covered by any option awarded by equating the present value of
the options (using an assumed appreciation and the cost of funds
rates) to a target equity incentive level for the executive.
The target equity incentive level is determined by setting
target total direct compensation (base salary plus target annual
and equity incentives) for a particular executive at the seventy-
fifth percentile level of the range of values of the total direct
compensation indicated in the compensation surveys for the job
level. As with the annual incentives, this level is consistent
with the Company's compensation policy of focusing on pay for
performance.
The Committee may then, in its discretion, adjust the target
equity incentive level upwards or downwards within a limited
range around the target level. The Committee does not generally
consider any specific factors when making any adjustment to the
target incentive level other than previously awarded equity
incentives, the Committee's perception of the executive's
contribution to the Company and the recommendations of the
Chairman of the Board and the Chief Executive Officer. No
particular weighting is given to these factors. The stock
options awarded the Company's executives are intended to cover a
five-year period. The options, therefore, become exercisable at
a rate of twenty percent per year.
The Committee then recommends the adjusted equity incentive
level to the Board of Directors, which has reserved to itself the
right to grant equity incentives to the executive officers of the
Company. The Board, in its discretion, may adjust the
Committee's recommended award. The Board does not consider any
specific factors in making any adjustment.
Compensation of the Chief Executive Officer
The Committee determines Mr. Webster's salary using the same
approach as for the other executives of the Company. For fiscal
year 1997, however, the Committee increased Mr. Webster's annual
incentive compensation because of his outstanding performance in
connection with the agreement with CPC International and with the
initial public offering of the Company's common stock in addition
to achieving or exceeding all important financial performance
targets for the Company in fiscal year 1997.
Deductibility of Compensation
Section 162(m) of the Internal Revenue Code generally limits
deductions for federal income tax purposes by publicly held
corporations to $1 million dollars of compensation paid each of
the executive officers listed in the corporation's summary
compensation table unless such excess compensation is
"performance based" as defined in Section 162(m). Section 162(m)
provides, however, for a transition period of up to approximately
three years after the Company became public before the
limitations of Section 162(m) become fully applicable to the
Company.
The Committee believes that it should design compensation
packages so that the resulting expenses incurred by the Company
are deductible for federal income tax purposes and has,
therefore, sought outside advice concerning Section 162(m). The
Committee, therefore, expects that the Company will take such
action as is necessary in the future to allow the Company to
deduct all compensation paid to the named executive officers.
The Compensation Committee.
Robert H. Niehaus
Horst W. Schroeder
Lawrence B. Sorrel
<PAGE>
Summary Compensation Table
The Summary Compensation Table below shows certain information concerning
the compensation paid by AIPC to the CEO and the Named Executive Officers
during fiscal 1997 (based upon the total salary and bonus paid during
fiscal 1997).
<TABLE>
<CAPTION>
FISCAL PERIOD LONG-TERM
COMPENSATION COMPENSATION
AWARDS
---------------- -----------------
FISCAL SECURITIES
NAME AND PRINCIPAL POSITION PERIOD<FN1> SALARY($) BONUS($) UNDERLYING ALL OTHER
--------------------------- ----------- --------- -------- OPTIONS(#) COMPENSATION
------------- ------------
<S> <C> <C> <C> <C> <C>
Timothy S. Webster 1997 $282,596 $250,000 84,622 $ 7,151<FN2>
President and 1996 185,615 125,000 --- 4,967<FN2>
Chief Executive Officer
Horst W. Schroeder 1997 183,700 180,000 84,622 ---
Chairman of the Board 1996 98,047 40,000 --- 330,000<FN3>
David E. Watson 1997 159,931 90,000 --- 5,244<FN4>
Executive Vice President 1996 119,510 37,500 --- 4,484<FN4>
and Chief Financial Officer
Norman F. Abreo 1997 137,423 80,000 --- 3,223<FN4>
Executive Vice 1996 99,856 37,500 --- 1,226<FN4>
President - Operations
Darrel E. Bailey 1997 147,249 30,000 --- 4,208<FN4>
Senior Vice 1996 118,024 25,000 --- 2,999<FN4>
President -
Institutional Sales
and Marketing
<FN>
<FN1> For purposes of the foregoing table, the Company's 1996 fiscal year extended from January
1, 1996 until September 30, 1996 and the Company's 1997 fiscal year extended from
October 1, 1996 to September 30, 1997.
<FN2> Includes payments under the American Italian Pasta Company Retirement Savings Plan and
premiums in the amount of $518 paid by the Company on a split-dollar life insurance
policy.
<FN3> Represents a bonus which Mr. Schroeder is required to repay to the extent that he provides
less than 30 days of service during any calendar year ending on or prior to December 31,
1998. Mr. Schroeder's service during the 1996 and 1997 fiscal years resulted in $82,000
and $110,000, respectively, of such bonus being no longer subject to such contingent
repayment obligation.
<FN4> Represents payments under the American Italian Pasta Company Retirement Savings Plan.
</FN>
</TABLE>
<PAGE>
Option Grants in Fiscal Year 1997
The following table sets forth information with respect to the options
granted by AIPC during fiscal 1997 to AIPC's Executive Officers named
in the Summary Compensation Table above.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------
% OF TOTAL POTENTIAL REALIZABLE
OPTIONS VALUE AT ASSUMED ANNUAL
GRANTED TO RATES
SHARES EMPLOYEES OF STOCK PRICE
UNDERLYING IN EXERCISE APPRECIATION FOR
OPTIONS FISCAL PRICE PER EXPIRATION OPTION
NAME GRANTED 1997 SHARE<FN1> DATE TERM<FN2>
--------------- -------- ---------- ----------- ---------- ----------------------
5% 10%
----- -----
<S> <C> <C> <C> <C> <C> <C>
Timothy S. Webster 84,622 32.9% $7.02 4/15/07 $373,593 $946,757
Horst W. Schroeder 84,622 32.9 7.02 4/15/07 373,593 946,757
David. E. Watson --- --- --- --- --- ---
Norman F. Abreo --- --- --- --- --- ---
Darrel E. Bailey --- --- --- --- --- ---
<FN>
<FN1> The exercise price is determined by the Compensation Committee of the Board of Directors.
With respect to the options granted Messrs. Schroeder and Webster, the Committee used an
independent appraiser to determine the value of the underlying common stock on the date of
award of the option.
<FN2> The amounts shown as potential realizable values are based on assumed annualized rates of
appreciation in the price of Common Stock of five percent and ten percent over the term of
the options, as set forth in the rules of the Securities and Exchange Commission. Actual
gains, if any, on stock option exercises are dependent upon the future performance of the
Common Stock. There can be no assurance that the potential realizable values reflected in
this table will be achieved.
</FN>
</TABLE>
<PAGE>
Aggregated Option Exercises in Fiscal Year 1997
and Fiscal Year-End Option Values
The following table sets forth information with respect to the
aggregate option exercises during fiscal 1997 by the named
Executive Officers and the number and value of options held by
such officers as of September 30, 1997.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1997
---------------------------------------------
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS<FN1>
-------------------------- ---------------------------
SHARES ACQUIRED VALUE
NAME UPON EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------ ---------------- -------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Timothy S. Webster --- --- 263,169 136,953 $3,352,903 $1,282,729
Horst W. Schroeder --- --- 263,169 136,953 3,352,903 1,282,729
David E. Watson --- --- 44,899 44,752 457,267 390,339
Norman F. Abreo --- --- 53,937 35,713 575,492 272,114
Darrel E. Bailey --- --- 27,116 18,077 133,411 88,939
<FN>
<FN1> Based on the initial public offering price of $18 per share.
</FN>
</TABLE>
<PAGE>
Employment Agreements and Severance of Employment Agreements
Arrangements with Named Executive Officers
------------------------------------------
EMPLOYMENT AGREEMENTS
Mr. Webster. Mr. Webster entered into an employment
agreement with the Company effective October 8, 1997 and
terminating September 30, 2002. Under the agreement, Mr. Webster
is entitled to an annual base salary of $330,000, subject to
annual adjustment by the Board. Mr. Webster is also eligible to
receive annual bonuses at the discretion of the Board under the
Company's 1996 Salaried Bonus Plan (the "Bonus Plan"). On the
effective date of his employment agreement, Mr. Webster was
granted options to purchase shares of Class A Common Stock equal
to 3 percent of the shares of Common Stock outstanding
immediately prior to AIPC's initial public offering of the Class
A Common Stock on October 8, 1997 (the "Offering"), on a fully
diluted basis, at an exercise price of $18.00 per share. If Mr.
Webster's employment is terminated without cause, due to his
disability or if he resigns for good reason, he is to receive
payments equal to two times his then-current base salary and
bonus. Mr. Webster has agreed not to compete with the Company for
two years after termination of employment, subject to the receipt
by Mr. Webster of certain severance payments, in some cases at
the election of the Company. All stock options awarded to Mr.
Webster will vest (i) immediately upon a termination of his
employment without cause or his resignation for good reason; (ii)
if the employment agreement expires and the Company does not
offer Mr. Webster a new agreement on terms no less favorable than
those in the current agreement; or (iii) upon a change of control
(as defined in the agreement). The Company has agreed to nominate
Mr. Webster for election to its Board of Directors in accordance
with the terms of the Stockholders Agreement (see "Certain
Relationships and Related Transactions -- Stockholder's
Agreement").
Mr. Schroeder. Mr. Schroeder entered into an employment
agreement with the Company effective October 8, 1997 and
terminating October 8, 2000. Under the agreement, Mr. Schroeder
will serve as Chairman of the Board and is entitled to receive
base compensation of $4,000 per day of service to the Company,
subject to a minimum payment of $120,000 per year. Pursuant to a
prior agreement, the Company paid to Mr. Schroeder a signing
bonus of $330,000 on January 1, 1996. In the event Mr. Schroeder
does not render services to the Company through December 31, 1998
because he voluntarily terminates, refuses to provide services
under his current agreement, or is terminated for cause, Mr.
Schroeder is required to repay the portion of the signing bonus
which relates to the period of the original term for which he
does not render services. Mr. Schroeder is also eligible to
participate in the Company's Bonus Plan. If Mr. Schroeder
terminates his agreement for good reason, including a "change of
control" as defined in the Shareholders Agreement, dated October
30, 1992 by and among the Company and its stockholders, he is
entitled to receive payment of all unpaid amounts due for service
rendered, as well as an additional amount equal to the unpaid
balance due for the remainder of the term of the agreement and an
additional payment equal to $2,000 multiplied by the number of
days of service remaining under the term, which in no event shall
be more than 30 days during any calendar year. In addition, upon
termination of employment for good reason, the unvested portion
of Mr. Schroeder's options under the Company's stock option plans
will become immediately vested. Effective October 8, 1997, Mr.
Schroeder was granted options to purchase shares of the Company's
Class A Common Stock equal to at least 2 percent of the Company's
outstanding Common Stock, on a fully-diluted basis, at $18.00 per
share. Mr. Schroeder has agreed not to compete with the Company
for a period of two years after termination of his employment.
Messrs. Watson and Abreo. Messrs. Watson and Abreo have
entered into employment agreements with the Company effective
October 8, 1997 and terminating October 8, 2000. Such agreements
are renewable automatically for successive one-year terms, unless
the Company gives the employee at least six months' prior written
notice of non-renewal. The agreements entitle Messrs. Watson and
Abreo to annual base salaries of $180,000 and $160,000,
respectively (subject to annual merit increase reviews by the
Board of Directors), and annual bonuses at the discretion of the
Board of Directors in accordance with the terms of the Bonus
Plan. Effective October 8, 1997, Messrs. Watson and Abreo each
received options to purchase 61,320 shares, respectively, of
Class A Common Stock at $18.00 per share. In the event of
termination of employment without cause or resignation for good
reason, or in the event their employment is terminated by the
Company without cause within six months after a change in
control, Messrs. Watson and Abreo are each entitled to the
greater of (i) one-year's annual base salary and bonus or (ii)
annual base salary and bonus for the remainder of the initial
employment term under their respective employment agreements. The
employment agreements also contain one-year covenants not to
compete after any termination of employment. All stock options
awarded to each of Messrs. Watson and Abreo will vest immediately
upon (i) resignation for good reason or (ii) a change in control
of the Company.
1996 SALARIED BONUS PLAN
The Company maintains the Bonus Plan for certain salaried
employees of the Company, including the Named Executive Officers.
The Bonus Plan permits these employees to earn cash performance
bonus awards of up to a percentage of their respective salaries
as determined by the Board of Directors, or by management on the
Board's behalf. The amount of any bonus is based upon the
Company's performance and the individual performance of such
participant.
STOCK OPTION PLANS
1992 NON-STATUTORY STOCK OPTION PLAN
On October 29, 1992, the Company's Board of Directors and
stockholders adopted the American Italian Pasta Company
Non-Statutory Stock Option Plan (the "1992 Plan"). The purpose of
the 1992 Plan is to secure for the Company and its stockholders
the benefits of the incentive inherent in stock ownership by
officers and other key employees of the Company.
The 1992 Plan is administered by the Compensation Committee
of the Board of Directors. The Compensation Committee has the
power and sole discretion to determine the persons to whom
options are granted and the number of shares covered by those
options, subject in each case to the limitations set forth in the
1992 Plan. Options may be granted under the 1992 Plan only to
officers and key employees of the Company. The period during
which an option may be exercised (not to exceed 13 years), and
the time at which it becomes exercisable, is fixed by the
Compensation Committee at the time the option is granted. Options
granted under the 1992 Plan are not transferable by the holder
other than by will or the laws of descent and distribution.
The number of shares which may be issued and sold pursuant
to options granted under the 1992 Plan may not exceed 1,201,880
shares (subject to adjustment for stock dividends, stock splits,
combinations or reclassifications of shares, or similar
transactions). No consideration is paid to the Company by any
optionee in exchange for the grant of an option. The per share
exercise price for an option granted under the 1992 Plan is
determined by the Compensation Committee.
Certain provisions of the 1992 Plan may have the effect of
discouraging or delaying possible takeover bids. In the event of
a "Change of Control," all of the outstanding options
automatically and immediately become exercisable in full. A
"Change of Control" is generally defined to take place when
disclosure of such a change would be required by the proxy rules
promulgated by the United States Securities and Exchange
Commission or when (i) certain persons acquire beneficial
ownership of 25 percent or more of the combined voting power of
the Company's voting securities, (ii) less than a majority of the
directors are persons who were either nominated or selected by
the Board of Directors, (iii) a merger involving the Company in
which the Company's stockholders own less than 80 percent of the
voting stock of the surviving corporation; or (iv) a liquidation
of the Company or sale of substantially all the assets of the
Company occurs. In the event that the Company is not the
surviving corporation of any merger, consolidation,
reorganization or acquisition by another corporation, outstanding
options under the 1992 Plan may be assumed, or replaced with new
options of comparable value, by the surviving corporation. If the
surviving corporation does not assume or replace outstanding
options, or in the event the Company is liquidated or dissolved,
then subject to certain limitations, each holder of outstanding
options may exercise all or part of such options (even if the
options would not otherwise have been exercisable in full) during
the period beginning 30 days before the event triggering the
acceleration, and ending on the day before such event.
Generally, the exercise price of an option is at least equal
to the fair market value of the Common Stock on the date of
grant. As of the Record Date, options to purchase 1,132,049
shares of Common Stock at exercise prices ranging from $2.33 to
$12.23 per share (with a weighted average exercise price of $6.68
per share) were issued and outstanding under the 1992 Plan. The
outstanding options under the 1992 Plan expire at dates ranging
from October 2002 to April 2007. None of the executive officers
of the Company have exercised any options prior to the date of
this Proxy Statement.
1993 NON-QUALIFIED STOCK OPTION PLAN
The American Italian Pasta Company 1993 Non-Qualified Stock
Option Plan (the "1993 Plan") was adopted by the Board of
Directors and approved by the stockholders of the Company
effective December 8, 1993. The 1993 Plan was adopted to
compensate and provide incentives for mid-level managers of the
Company.
The 1993 Plan is also administered by the Compensation
Committee. The Compensation Committee has full and final
authority in its discretion, subject to the provisions of the
1993 Plan and applicable law, to determine the individuals to
whom and the time or times at which options shall be granted and
the number of shares of Common Stock covered by each option.
Options may be granted under the 1993 Plan to mid-level
management. The period during which an option may be exercised
(not to exceed ten years), and the time at which it becomes
exercisable is fixed by the Compensation Committee at the time
the option is granted. Options granted under the 1993 Plan are
not transferrable by the holder other than by will or the laws of
decent and distribution.
The number of shares which may be issued and sold pursuant
to options granted under the 1993 Plan may not exceed 82,783
shares (subject to adjustment for stock dividends, stock splits,
combinations or reclassifications of shares or similar
transactions). No consideration is paid to the Company by any
optionee in exchange for the grant of an option. The per share
exercise price for an option granted under the 1993 Plan is
determined by the Compensation Committee.
In the event of any merger, recapitalization, consolidation,
split-up, spin-off, repurchase, distribution or similar
transaction effecting the Common Stock, the Compensation
Committee may take such action as in its sole discretion that
deems appropriate. The Compensation Committee may authorize the
issuance or assumption of options or similar rights in connection
with any such transaction whether or not the Company is a
surviving or continuing corporation, and upon such terms and
conditions as it may deem appropriate.
The exercise price of an option is generally at least equal
to the fair market value of the Common Stock on the date of
grant. As of the Record Date, options to purchase 46,665 shares
of Common Stock at exercise prices ranging from $4.92 to $12.23
per share (with a weighted average exercise price of $10.28 per
share) were issued and outstanding under the 1993 Plan. The
outstanding options under the 1993 Plan expire at dates ranging
from December 2003 to December 2006. None of the executive
officers of the Company have exercised any options prior to the
date of this Proxy Statement.
1997 EQUITY INCENTIVE PLAN
The Company has adopted the American Italian Pasta Company
1997 Equity Incentive Plan (the "Equity Incentive Plan" or "1997
Plan"). Under the 1997 Plan, the Board or a committee designated
by the Board (the Board or committee, as the case may be, the
"Committee") is authorized to grant nonqualified stock options,
incentive stock options, reload options, stock appreciation
rights ("SARs"), shares of restricted Common Stock ("restricted
shares"), performance shares, performance units and shares of
Common Stock awarded as a bonus ("bonus shares") (all of the
foregoing collectively, "Awards"). There are 2,000,000 shares of
Common Stock reserved for issuance under the Equity Incentive
Plan.
Eligibility and Conditions of Grants. All employees
(including officers), directors and consultants of the Company or
any subsidiary are eligible to receive Awards at the discretion
of the Committee. The Committee is authorized, subject to certain
limits specified in the Equity Incentive Plan, to determine to
whom and on what terms and conditions Awards shall be made
including, but not limited to, the vesting and term of options.
Stock Options. The option exercise price must be determined
by the Committee at the time of grant and set forth in the award
agreement, but such exercise price must be at least 100 percent
of the fair market value of a share of Common Stock on the date
of grant. (In the case of options granted in connection with the
Offering, such fair market value equaled the price at which the
Class A Common Stock is offered to the public.) The option
exercise price may be paid by any one or more of the following in
the discretion of the Committee: (i) cash, (ii) check, (iii) wire
transfer, (iv) shares of Common Stock that have been held for at
least 6 months or that were purchased on the open market, or (v)
a "cashless" exercise pursuant to a sale through a broker of all
or a portion of the shares. The Committee also has discretion to
have the Company make or guarantee loans to the grantees for the
exercise price. The Committee will determine the term and vesting
schedule for options at the time of grant. Options can be granted
as either nonstatutory options (pursuant to which grantees would
receive taxable income, and the Company would receive a
compensation expense deduction, when options are exercised) or as
incentive stock options (ISOs) (which, subject to certain
conditions, would offer more favorable tax consequences to
grantees, but not the Company).
Stock Appreciation Rights. Upon exercise of a stock
appreciation right, the grantee shall receive a payment equal to
the appreciation in value of the Common Stock between the grant
date and the exercise date. The benefit will be payable in cash
or Common Stock.
Restricted Shares. Restricted shares will be forfeited
unless the conditions set by the Committee at the time of grant
are satisfied or are waived. The Committee will determine whether
or not a grantee shall be required to pay for such restricted
shares and, if so, what such price shall be.
Performance Shares/Performance Units. To the extent that the
performance goals specified by the Committee in a grant of
performance shares or performance units have been achieved, then
a benefit shall be paid after the end of the
performance-measuring period specified by the Committee. The
amount of the benefit of performance shares is based on the
percentage attainment of the performance goals multiplied by the
value of a share of Common Stock at the end of the performance
period. The value of performance units is based on the
achievement of performance goals multiplied by the unit value
stabilized by the Committee at the time of grant. No benefit is
payable on either performance shares or performance units if the
minimum performance goals have not been met. The benefit will be
payable in cash or Common Stock.
Bonus Shares. Bonus shares can be granted without cost and
without restriction in amounts and subject to such terms and
conditions as the Committee may in its discretion determine.
Other. Options and stock appreciation rights may have a
maximum term of 10 years. The effect of a change of control, the
termination of a grantee's employment or the death or permanent
disability of a grantee will be determined by the Committee at
the time of grant and be set forth in the award agreement. Both
Awards and Shares acquired pursuant to the exercise or vesting of
Awards are subject to transfer restrictions as set forth in the
1997 Plan. The Plan may be amended by the Board without
stockholder approval except: (i) in the event of an increase in
the number of shares available for Awards; or (ii) as otherwise
may be required under stock exchange listing requirements or any
other regulatory or legal requirement. The Equity Incentive Plan
will terminate when shares available for grant under the plan
have been exhausted, except in no event will incentive stock
options be granted on or after the 10th anniversary of the
earlier of (i) the date the Equity Incentive Plan was adopted;
and (ii) the date the Equity Incentive Plan was approved by the
Stockholders of the Company. Shares acquired pursuant to the 1997
Plan by persons who are parties to the Stockholders Agreement
will be subject to certain restrictions under the Stockholders
Agreement. In addition, the Compensation Committee may, in its
discretion, condition the grant of any Award under the 1997 Plan
on the consent of the recipient of such Award to become bound by
the Stockholders Agreement. No Awards were granted under the
1997 Plan during fiscal year 1997.
401(K) PROFIT SHARING PLAN
The Company adopted the American Italian Pasta Company
Retirement Savings Plan (the "401(k) Plan") effective January 1,
1992. In general, employees of the Company who have completed one
year of service (as defined in the 401(k) Plan) are eligible to
participate in the 401(k) Plan. Participants may make contribu-
tions to the 401(k) Plan by voluntarily reducing their salary
from the Company up to a maximum of 12 percent of total
compensation or $9,500 (or such higher amount as is prescribed by
the Secretary of the Treasury for cost of living adjustments),
whichever is less, and the Company matches such contributions to
the extent of 50 percent of the first 6 percent of a
participant's salary reduction. The Company's matching
contributions vest 25 percent per year and are 100 percent vested
after 4 years of service. In addition to matching contributions,
the Company may contribute additional amounts determined by it in
its sole discretion which are allocated to a participant's
account in the proportion that such participant's compensation
bears to the total compensation of all participants for the plan
year. These additional contributions vest in the same manner as
the matching contributions. Subject to certain conditions and
limitations, participants of the 401(k) Plan may elect to invest
up to 50 percent of their matching contribution accounts into
shares of Common Stock of the Company.
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
STOCKHOLDERS AGREEMENT
Effective October 8, 1997, the Company, the "Morgan Stanley
Stockholders" (which are the MSLEF, MSCP and certain funds
affiliated with MSCP), Citicorp, affiliated entities of George K.
Baum & Company ("GKB"), and Messrs. Schroeder, Schlindwein,
Thompson, Webster, Watson, Abreo and Bailey and certain other
existing stockholders of the Company (collectively, the "Existing
Stockholders") have amended their existing Stockholders
Agreement, which sets forth certain rights and obligations of
such Existing Stockholders. The amended Stockholders Agreement
provides that until December 31, 1998, the Existing Stockholders
(other than the Morgan Stanley Stockholders and certain
management stockholders) may not sell or pledge any shares of
Common Stock except through the exercise of their "piggyback"
registration rights, to certain permitted transferees, or
concurrently with certain private sales of Common Stock by the
Morgan Stanley Stockholders. After December 31, 1998, the
Existing Stockholders (other than the Morgan Stanley Stockholders
and certain employee stockholders) will also be entitled to sell
their shares in market transactions and through the exercise of
their "demand" registration rights and Citicorp and Mr. Thompson
will also be permitted to sell shares of Common Stock in private
transactions, subject to the Company's right of first refusal.
The amended Stockholders Agreement will not limit sales by the
Morgan Stanley Stockholders.
The amended Stockholders Agreement grants the Existing
Stockholders certain demand registration rights. In addition, the
Existing Stockholders are entitled, subject to certain
limitations, to register shares of Common Stock in connection
with certain registration statements filed by the Company for its
own account or the account of its stockholders. The amended
Stockholders Agreement will contain customary terms and
provisions with respect to, among other things, registration
procedures and certain rights to indemnification granted by the
parties thereunder in connection with any such registration.
Pursuant to the Stockholders Agreement (as amended and
restated effective October 8, 1997), MSLEF has the right to
designate two director nominees so long as the Morgan Stanley
Stockholders own at least 25 percent of the outstanding Common
Stock or one director nominee so long as the Morgan Stanley
Stockholders own at least 5 percent but less than 25 percent of
the outstanding Common Stock. In addition, MSCP has the right to
designate two director nominees so long as the Morgan Stanley
Stockholders own at least 35 percent of the outstanding Common
Stock or one director nominee so long as the Morgan Stanley
Stockholders own at least 5 percent but less than 35 percent of
the outstanding Common Stock. Whenever the Morgan Stanley
Stockholders own at least 5 percent but less than 10 percent of
the outstanding Common Stock, they will jointly be entitled to
designate one director nominee. The number of directors
designated by the Morgan Stanley Stockholders will increase
proportionately if the size of the Board of Directors is
increased in the future. In addition, the Stockholders Agreement
will provide that the Chairman of the Board and the President and
Chief Executive Officer shall also be designated as director
nominees. The Existing Stockholders will agree to vote all of
their shares of Class A Common Stock in favor of the director
nominees designated pursuant to the Stockholders Agreement. At
least two members of the Board of Directors will be independent
directors. So long as the Morgan Stanley Stockholders own 10
percent of the outstanding shares of Common Stock, the Morgan
Stanley Stockholders may designate one member of each Board
committee.
The amended Stockholders Agreement provides that so long as
the Morgan Stanley Stockholders own at least 25 percent of the
outstanding shares of Common Stock, neither the Company nor its
subsidiaries (if any) will take any of the following significant
actions without the approval of the Board of Directors and the
Morgan Stanley Stockholders: (i) the appointment or removal of
the Chairman of the Board; (ii) any merger, consolidation or
other similar business combination (except for certain
subsidiary-level mergers involving acquisitions valued below $30
million); (iii) any disposition of a majority of the Company's
tangible assets; (iv) subject to certain exceptions, any change
in the authorized capital or recapitalization, or the creation of
any new classes of capital stock, or the sale, distribution,
exchange, redemption of capital stock or capital stock
equivalents; (v) any amendment to the charter or by-laws or any
change in jurisdiction of incorporation; (vi) the approval of any
dissolution or plan of liquidation; (vii) any general assignment
for the benefit of creditors or the institution of any bankruptcy
or insolvency proceeding; (viii) the declaration of any dividend
or any redemption or repurchase of any such capital stock (except
dividends paid-in-kind and repurchases made pursuant to employee
benefit plans or employment agreements); (ix) in certain
circumstances, the creation, issuance, assumption, guarantee or
incurrence of indebtedness that increases the aggregate amount of
indebtedness existing on the date of the amended Stockholders
Agreement by at least $30 million; (x) the termination of Ernst &
Young LLP or the selection of another auditor; (xi) any strategic
acquisition of, or investment in the assets or a business of, a
third party with a fair market value of $30 million or more;
(xii) acquisition or construction of new pasta production
facilities with a cost in excess of $30 million; (xiii) any
adoption of a shareholder rights plan; or (xiv) any commitment to
do any of the foregoing actions. In addition, as long as the
Morgan Stanley Stockholders own at least 25 percent of the
outstanding Common Stock, at least one of the directors
designated by the Morgan Stanley Stockholders must approve the
appointment of the Chief Executive Officer or the Chief Financial
Officer.
The amended Stockholders Agreement provides that certain
transfers of shares by the Existing Stockholders (other than the
Morgan Stanley Stockholders) are subject to the approval of the
Board of Directors and, for so long as the Morgan Stanley
Stockholders own at least 10 percent of the shares of Common
Stock, the Morgan Stanley Stockholders.
As of the Record Date, the Morgan Stanley Stockholders own
approximately 32.5 percent of the Class A Common Stock. The
Company's Charter provides that, if at any time after
consummation of the Offering, the Morgan Stanley Stockholders own
in excess of 49 percent of the outstanding Class A Common Stock,
such excess shares will be automatically converted into an equal
number of shares of Class B Common Stock.
1997 PRIVATE EQUITY FINANCING
In April 1997, the Company sold an aggregate of 3,174,528
shares of Old Class A Common Stock (as defined in "Description of
Capital Stock -- General") to current stockholders of the Company
for an aggregate purchase price of $22,291,947, or $7.02 per
share, determined by an independent valuation firm to be fair
value for the shares. The MSCP Funds purchased a total of
2,563,323 shares for $18,000,000. Affiliated entities of GKB,
including Excelsior Investors, LLC ("Excelsior") in which Mr.
Thompson has a minority interest, purchased 427,219 shares for
$2,999,861. These shares include 330,952 shares purchased by
Excelsior. Mr. Schroeder, a Director of the Company, purchased
49,056 shares for $344,480. Mr. Schlindwein, also a Director of
the Company, and his wife purchased 28,483 shares for $200,000,
individually and indirectly through JSS Management Company, Ltd.,
of which each of Mr. and Mrs. Schlindwein are general partners.
In addition, a group of executive officers of the Company
contributed an aggregate of $729,996 to the Company for 103,957
shares, including $142,159 by Mr. Webster, $298,535 by Mr.
Watson, $36,472 by Mr. Abreo and $136,375 by Mr. Bailey. In
connection with these sales and purchases, the Company loaned an
aggregate of $297,513 to these executive officers to finance
their stock purchases, including $112,159 to Mr. Webster, $48,535
to Mr. Watson, $36,472 to Mr. Abreo and $36,375 to Mr. Bailey.
Each of these loans are evidenced by a promissory note made
payable to the Company and secured by shares of Old Class A
Common Stock. Such loans are to be repaid over a period of three
years commencing upon termination of the transfer restrictions
applicable to such shares under the Stockholders Agreement no
later than December 31, 1998. Such loans bear interest at the
then applicable federal rate.
FINANCIAL ADVISORY SERVICES
Messrs. Niehaus and Sorrel and Ms. Rosen, all Directors of
the Company, are employed by Morgan Stanley & Co. Incorporated.
In 1997, Morgan Stanley Senior Funding, Inc. ("MS Funding"), an
affiliate of Morgan Stanley & Co. Incorporated, one of the U.S.
Underwriters, served as the documentation agent under the
agreements relating to the Company's Credit Facility, and acted
as an arranger for the Credit Facility for which MS Funding
received a fee in the amount of $311,875.
Since 1994, the Company has paid fees to George K. Baum &
Company's Investment Banking Division for investment banking and
financial advisory services and has paid George K. Baum & Company
Professional Investment Advisors Division fees for investment
advice provided with respect to the 401(k) Plan. Jonathan E.
Baum, a Director of the Company, owns all voting shares of George
K. Baum Holdings, Inc., which owns 100 percent of George K. Baum
& Company, one of the U.S. and International Underwriters.
MANAGEMENT INDEBTEDNESS
In April 1995 and April 1997, the Company loaned funds to
Messrs. Webster, Watson, Abreo and Bailey to purchase shares of
Old Common Stock and Old Class A Common Stock at prices ranging
between $4.92 and $7.02 per share, respectively. Each loan was
evidenced by a promissory note bearing interest at the then
applicable federal rate and payable in equal installments over
three years commencing upon termination of the transfer
restrictions applicable to such shares under the Stockholders
Agreement no later than December 31, 1998. The table below sets
forth the aggregate number of shares purchased with funds loaned
by the Company, the original aggregate loan amounts, and the
aggregate loan balances as of September 30, 1997.
<TABLE>
<CAPTION>
Number of Original Loan Balance at
Executive Officer Shares Balance September 30,
1997
----------------- --------- ------------- -------------
<S> <C> <C> <C>
Timothy S. Webster 21,339 $138,559 $120,959
David E. Watson 14,269 84,735 60,602
Norman F. Abreo 7,217 46,422 39,789
Darrel Bailey 8,738 53,875 42,076
</TABLE>
CONSULTING AGREEMENT WITH HWS & ASSOCIATES, INC.
The Company's policy is that all transactions between the
Company and its executive officers, directors and principal
stockholders be on terms no less favorable than could be obtained
from unaffiliated third parties or are subject to the approval of
the Company's disinterested directors.
PRODUCT SALES
The Company sells milling by-products to Thompson's Pet
Pasta Products, Inc., of which Richard C. Thompson, a director of
the Company, is the President and Chief Executive Officer. Such
sales were $357,000 and $648,000 for the nine-month fiscal period
ended September 30, 1996 and the fiscal year ended September 30,
1997, respectively. Such sales were on substantially the same
terms as the Company sells such products to unaffiliated third
parties.
<PAGE>
PROPOSAL 2 - RATIFICATION OF THE BOARD OF DIRECTORS'
SELECTION OF INDEPENDENT AUDITORS
The Audit Committee has recommended, and the Board of
Directors has selected, the firm of Ernst & Young LLP as AIPC's
independent auditors to examine the consolidated financial
statements of AIPC for fiscal year 1998. Ernst & Young served as
AIPC's independent auditors for fiscal year 1997. No relationship
exists between AIPC and Ernst & Young LLP other than that of
independent auditors and client.
AIPC is seeking its stockholders' ratification of the Board
of Directors' selection of AIPC's independent auditors even
though AIPC is not legally required to do so. If AIPC's
stockholders ratify the Board of Directors' selection, the Board
of Directors nonetheless may, in their discretion, retain another
independent auditing firm at any time during the year if the
Board of Directors feels that such change would be in the best
interest of AIPC. Alternatively, in the event that this proposal
is not approved by stockholders, the Audit Committee and the
Board will re-evaluate their decision.
One or more representatives of Ernst & Young LLP will be
present at the Annual Meeting and will have the opportunity to
make a statement, if desired, and to respond to appropriate
questions by stockholders.
As explained further under "Voting," approval of this
proposal requires the affirmative vote of a majority of the
shares of Class A Common Stock present at the Annual Meeting that
are entitled to vote on the proposal, assuming a quorum.
YOUR BOARD RECOMMENDS THAT YOU VOTE
"FOR"
RATIFICATION OF THE BOARD OF DIRECTORS'
SELECTION OF ERNST & YOUNG LLP
<PAGE>
VOTING AND PROXIES
Stockholders at the Annual Meeting will consider and vote
upon: (1) the election of three directors; (2) ratification of
the Board of Directors' selection of Ernst & Young LLP to serve
as AIPC's independent accountants for fiscal year 1998; and (3)
such other matters as may properly come before the Annual Meeting
or any adjournment thereof. Stockholders do not have dissenters'
rights of appraisal in connection with any of these matters. Each
of these matters has been proposed by the Board of Directors and
none of them is related to or contingent on the other.
Only the holders of AIPC's Class A Common Stock of record at
the close of business on the Record Date are entitled to notice
of and to vote at the Annual Meeting. On that date, AIPC had
outstanding 16,776,061 shares of Class A Common Stock (no shares
are held in treasury) eligible to be voted at the Annual Meeting.
The Class A Common Stock constitutes AIPC's only class of
voting securities outstanding and will vote as a single class on
all matters to be considered at the Annual Meeting. Each holder
of Class A Common Stock is entitled to cast one vote for each
share of Class A Common Stock held on the Record Date on all
matters. Stockholders do not have the right to vote cumulatively
in the election of directors.
In order for any of the proposals to be approved at the
Annual Meeting (other than the election of directors) by the
stockholders, a quorum, consisting of the holders of a majority
of the shares of Class A Common Stock entitled to vote, must be
present and a majority of such quorum must be affirmatively voted
for approval. The shares of Class A Common Stock of each
stockholder entitled to vote at the Annual Meeting who is
present, either in person or through a proxy, are counted for
purposes of determining whether there is a quorum, regardless of
whether the stockholder votes such shares. The directors are
elected by an affirmative vote of the plurality of a quorum of
shares of Class A Common Stock present at the Annual Meeting that
are entitled to vote.
Voting ceases when the chairman of the Annual Meeting closes
the polls. The votes are counted and certified by inspectors
appointed by the Board of Directors of AIPC in advance of the
Annual Meeting. In determining the percentage of shares that
have been affirmatively voted for a particular proposal (other
than the election of directors), the affirmative votes are
measured against the votes for and against the proposal plus the
abstentions from voting on the proposal. A stockholder may
abstain from voting on any proposal other than the election of
directors, and shares for which the holders abstain from voting
are not considered to be votes affirmatively cast. Abstaining
will, thus, have the effect of a vote against a proposal. With
regard to the election of directors, a stockholder may cast votes
in favor of a candidate or withhold his or her votes; votes that
are withheld will be excluded entirely from the vote and will
have no effect.
Under the rules of the New York Stock Exchange, Inc. (the
"NYSE"), member stockbrokers who hold shares of Class A Common
Stock in the broker's name for customers are required to solicit
directions from those customers on how to vote such shares. In
the absence of any such instructions, the stockbrokers may vote
shares of Class A Common Stock on certain proposals. The Staff of
the NYSE, prior to the Annual Meeting, informs the brokers of
those proposals upon which the brokers are entitled to vote the
undirected shares.
When a stockbroker does not vote, it is referred to as a
"broker non-vote" (customer directed abstentions are not broker
non-votes). Broker non-votes generally do not affect the
determination of whether a quorum is present at the Annual
Meeting because in most cases some of the shares held in the
broker's name have been voted on at least some proposals, and
therefore, all of such shares are considered present at the
Annual Meeting. Under applicable law, a broker non-vote will have
the same effect as a vote against any proposal other than the
election of directors and will have no effect on the outcome of
the election of directors.
Stockholders who return a properly executed proxy are
appointing the Proxy Committee to vote their shares of Class A
Common Stock covered by the Proxy. That Committee has three
members whose names are listed on the accompanying proxy card,
each of whom is a director or executive officer of AIPC. A
stockholder wishing to name as his or her proxy someone other
than the Proxy Committee designated on the proxy card may do so
by crossing out the names of the designated proxies and inserting
the name of such other person. In that case, it will be
necessary for the stockholder to sign the proxy card and deliver
it directly to the person so named and for that person to be
present in person and vote at the Annual Meeting. Proxy cards so
marked should not be mailed to AIPC.
___
The Proxy Committee will vote the shares of Class A Common
Stock covered by a proxy in accordance with the instructions
given by the stockholders executing such proxies. If a properly
executed and unrevoked proxy solicited hereunder does not specify
how the shares represented thereby are to be voted, the Proxy
Committee intends to vote such shares FOR the election as
directors of the persons nominated by management, FOR
ratification of the Board of Directors' selection of Ernst &
Young LLP to serve as AIPC's independent auditors for fiscal year
1998, and in accordance with their discretion upon such other
matters as may properly come before the Annual Meeting.
A stockholder may revoke a valid proxy with a later-dated,
properly executed proxy or other writing delivered to the
Corporate Secretary of AIPC at any time before the polls for the
Annual Meeting are closed. Attendance at the Annual Meeting will
not have the effect of revoking a valid proxy unless the
stockholder delivers a written revocation to the Corporate
Secretary before the proxy is voted. Stockholders whose shares
are held by a broker will have to contact the broker to determine
how to revoke a proxy solicited through the broker.
Retirement Savings Plan Participants
Participants in the American Italian Pasta Company
Retirement Savings Plan (the "AIPC Retirement Plan") are provided
a separate voting instruction card (accompanying this Proxy
Statement) to instruct the trustee of the AIPC Retirement Plan
how to vote the shares of Class A Common Stock held on behalf of
such participant. The AIPC Retirement Plan trustee is required
under the trust agreement to vote the shares in accordance with
the instructions indicated on the voting instruction card. If
the voting instruction card is not returned, the trustee is
required under the applicable trust agreement to vote such
shares, as well as any unallocated shares, in the manner directed
by a committee designated under the plan. The voting instruction
card should be returned directly to the trustee in the envelope
provided AND SHOULD NOT BE RETURNED TO AIPC. The mailing address
of the trustee is George K. Baum Trust Company, Twelve Wyandotte
Plaza, 120 West Street, Suite 850, Kansas City, Missouri 64105.
AIPC Retirement Plan participants who wish to revoke a voting
instruction card will need to contact the trustee and follow its
procedures.
Confidentiality of Voting of AIPC Retirement Plan
Participants. Under the terms of the AIPC Retirement Plan trust
agreement, the trustee is required to establish procedures to
ensure that the instructions received from participants are held
in confidence and not divulged, released or otherwise utilized in
a manner that might influence the participants' free exercise of
their voting rights.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding
beneficial ownership of the Company's Class A Common Stock as of
the Record Date by each person who is known by the Company to own
beneficially more than 5 percent of the outstanding shares of
Class A Common Stock. Beneficial ownership is generally either
the sole or shared power to vote or dispose of the shares. The
percentage ownership is based on the number of shares outstanding
as of the Record Date. Except as otherwise noted, the holders
have sole voting and dispositive power.
<TABLE>
<CAPTION>
Class A Common Stock
Shares Beneficially Owned
Name of Beneficial Owner Number Percent<FN1>
------------------------ ------ --------------------
<S> <C> <C>
The Morgan Stanley Leveraged 3,830,281<FN3> 22.8%
Equity Fund II, L.P. <FN2>
1221 Avenue of the Americas
New York, NY 10020
Morgan Stanley Capital 1,734,265<FN3> 9.7%
Partners III, L.P. <FN2>
1221 Avenue of the Americas
New York, NY 10020
Citicorp Venture 1,047,298 6.2%
Capital, Ltd. <FN4>
399 Park Avenue
New York, NY 10043
<FN>
<FN1> Beneficial ownership is determined in accordance with
the rules of the Commission. In computing the number and
percentage of shares beneficially owned by a person and the
percentage ownership of that person, shares of Class A Common
Stock subject to options and warrants held by that person that
are currently exercisable or will become exercisable within 60
days of the Record Date are deemed outstanding. Such shares,
however, are not deemed outstanding for the purposes of computing
the percentage ownership of any other person.
<FN2> The general partner of Morgan Stanley Leveraged Equity
Fund (the "MSLEF") and the general partner of the general partner
of the Morgan Stanley Capital Partners III, L.P. (and certain
affiliated funds) (collectively, the "MSCPF") are wholly owned
subsidiaries of Morgan Stanley Dean Witter Discover ("MSDWD"),
the parent of Morgan Stanley & Co., Incorporated.
<FN3> The shares held by the MSLEF and MSCPF are subject to the
Stockholders Agreement.
<FN4> The shares beneficially owned by Citicorp Venture
Capital, Ltd. include 157,103 shares held by an affiliate of
Citicorp.
</FN>
</TABLE>
<PAGE>
STOCKHOLDER PROPOSALS
To be properly brought before the Annual Meeting, a proposal
must be either (i) specified in the notice of the meeting (or any
supplement thereto) given by or at the direction of the Board of
Directors, (ii) otherwise properly brought before the meeting by
or at the direction of the Board of Directors, or (iii) otherwise
properly brought before the meeting by a stockholder.
Director Nominations
With respect to stockholder nominations of candidates for
AIPC's Board of Directors, AIPC's Bylaws provide that not less
than 60 days nor more than 90 days prior to the anniversary date
of immediately preceding the Annual Meeting of Stockholders
(provided, however, that in the event that the annual meeting is
called for a date that is not within 30 days before or after such
anniversary date, the Nomination Notice (as defined below) by the
stockholder in order to be timely must be so received not later
than the close of business on the tenth day following the day on
which such notice of the date of the annual meeting is mailed or
such public disclosure of the date of the annual meeting is made,
whichever first occurs), any stockholder who intends to make a
nomination at the Election Meeting shall deliver a notice in
writing (the "Nomination Notice") to the Secretary of AIPC at its
principal executive offices setting forth (a) as to each nominee
whom the stockholder proposes to nominate for election as a
director, (i) the name, date of birth, business address and
residence address of such individual, (ii) the business
experience during the past five years of such nominee, including
his or her principal occupations and employment during such
period, the name and principal business of any corporation or
other organization in which such occupations and employment were
carried on, and such other information as to the nature of his or
her responsibilities and level of professional competence as may
be sufficient to permit assessment of his or her prior business
experience, (c) whether the nominee is or has ever been at any
time a director, officer or owner of 5 percent or more of any
class of capital stock, partnership interests or other equity
interest of any corporation, partnership or other entity, (d) any
directorships held by such nominee in any company with a class of
securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or subject
to the requirements of Section 15(d) of the Exchange Act or any
company registered as an investment company under the Investment
Company Act of 1940, as amended, (e) whether, in the last five
years, such nominee has been convicted in a criminal proceeding
or has been subject to a judgment, order, finding, decree or
proceeding may be material to an evaluation of the ability or
integrity of the nominee and (f) any other information relating
to the person that would be required to be disclosed in a proxy
statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to
Section 14 of the Exchange Act, and the rules and regulations
promulgated thereunder; and (ii) as to the Person submitting the
Nomination Notice and any Person acting in concert with such
Person, (a) the name and business address of such Person, (b) the
name and addresses of such Person as they appear on the
Corporation's books, (c) the class and number of shares of the
Corporation that are beneficially owned by such Person, (d) a
description of all arrangements or understandings between such
stockholder and each proposed nominee and any other person or
persons (including their names) pursuant to which the
nomination(s) are to be made by such stockholder and (e) any
other information relating to such stockholder that would be
required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies
for election of directors pursuant to Section 14 of the Exchange
Act and the rules and regulations promulgated thereunder. A
written consent to being named in a proxy statement as a nominee,
and to serve as a director if elected, signed by the nominee,
shall be filed with the Nomination Notice.
Matters Other than Director Nominations
AIPC's by-laws provide that, in addition to any other
applicable requirements, for a proposal to be properly brought
before the meeting by a stockholder, (a) the stockholder must
have been a stockholder of record on the date of the giving of
the notice of the Stockholder Proposal (as defined below) and on
the record date for the determination of stockholders entitled to
vote at such meeting; and (b) such stockholder has filed a
written notice (a "Proposal Notice") setting forth with
particularity (i) the names and business addresses of the
proponent and all persons or entities (collectively, the
"persons" and singularly, a "person") acting in concert with the
proponent; (ii) the name and address of the proponent and the
persons identified in clause (i), as they appear on the
Corporation's books (if they so appear); (iii) the class and
number of shares of AIPC beneficially owned by the proponent and
the persons identified in clause (i); (iv) a description of the
Stockholder Proposal containing all material information relating
thereto; and (v) such other information as the Board of Directors
reasonably determines is necessary or appropriate to enable the
Board of Directors and stockholders of AIPC to consider the
Stockholder Proposal; and (c) the Proposal Notices must be
delivered to the Secretary and received at the principal
executive offices of AIPC (1) in the case of an annual meeting,
not less than 60 days nor more than 90 days prior to the
anniversary date of the immediately preceding annual meeting of
stockholders; provided, however, that in the event that the
annual meeting is called for a date that is not within 30 days
before or after such anniversary date, the Proposal Notice by the
stockholder in order to be timely must be so received not later
than the close of business on the tenth day following the day on
which such notice of the date of the annual meeting is mailed or
such public disclosure of the date of the annual meeting is made,
whichever first occurs, or (2) in the case of a special meeting
of stockholders called for the purpose of electing directors, not
later than the close of business on the 10th day following the
day on which notice of the date of the special meeting is mailed
or public disclosure of the date of the special meeting is made,
whichever first occurs.
The presiding officer at any stockholders' meeting may
determine that any Stockholder Proposal was not made in
accordance with the procedures prescribed in AIPC's By-laws or is
otherwise not in accordance with law, and if it is so determined,
such officer shall so declare at the meeting and the Stockholder
Proposal shall be disregarded.
1998 Annual Meeting Proxy Statement
If a holder of AIPC Class A Common Stock wishes to present a
proposal, other than the election of a director, in AIPC's Proxy
Statement for next year's annual meeting of stockholders, such
proposal must be received by AIPC on or before September 5, 1998.
Such proposal must be made in accordance with the applicable laws
and rules of the Securities and Exchange Commission and the
interpretations thereof. Any such proposal should be sent to the
Corporate Secretary of AIPC at 1000 Italian Way, Excelsior
Springs, Missouri 64024.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires AIPC's directors and executive officers, and
other persons, legal or natural, who own more than 10 percent of
AIPC's Class A Common Stock (collectively "Reporting Persons"),
to file reports of their ownership of such stock, and the changes
therein, with the Securities and Exchange Commission, the New
York Stock Exchange and AIPC (the "Section 16 Reports"). No such
reports were due, however, during fiscal year 1997.
OTHER MATTERS
The Board of Directors know of no other matters that are
expected to be presented for consideration at the Annual Meeting.
As of the date of this Proxy Statement, no notice of any matters
has been received in accordance with AIPC's Bylaws, as discussed
above. However, if other matters properly come before the
meeting, it is intended that persons named in the accompanying
proxy will vote on them in accordance with their best judgment.
No Stock Performance Graph has been included in this Proxy
Statement because AIPC's Class A Common Stock did not begin
public trading until after the close of AIPC's 1997 fiscal year.
Notwithstanding anything to the contrary set forth in any of
AIPC's previous filings under the Securities Act of 1933, as
amended, or the Exchange Act that might incorporate future
filings, including this Proxy Statement, in whole or in part, the
Compensation Committee Report on Executive Compensation (included
herein) shall not be incorporated by reference into any such
filings.
By Order of the Board of Directors
/s/ David E. Watson
Executive Vice President,
Chief Financial Officer
and Secretary
Excelsior Springs, Missouri
January 2, 1998
AIPC's Annual Report accompanying this proxy includes AIPC's
Annual Report on Form 10-K for the year ended October 3, 1997
(without exhibits) as filed with the Securities and Exchange
Commission (the "SEC"). The Annual Report on Form 10-K includes a
list of all exhibits thereto. AIPC will furnish copies of such
exhibits upon written request therefor and payment of AIPC's
reasonable expenses in furnishing such exhibits. Each such
request must set forth a good faith representation that, as of
the Record Date, the person making such request was a beneficial
owner of Class A Common Stock entitled to vote at the Annual
Meeting. Such written request should be directed to the Corporate
Secretary of AIPC, 1000 Italian Way, Excelsior Springs, Missouri
64024. The Annual Report on Form 10-K for the year ended October
3, 1997 with exhibits, as well as other filings by AIPC with the
SEC, are also available through the SEC's Internet site on the
World Wide Web at www.sec.gov.
<PAGE>
APPENDIX A - FORMS OF PROXY AND VOTING INSTRUCTION CARD
[FRONT OF PROXY]
AMERICAN ITALIAN PASTA COMPANY
1000 Italian Way
Excelsior Springs, Missouri 64024
This proxy confers discretionary authority as described in
and may be revoked in the manner described in the proxy statement
dated January 2, 1998, receipt of which is hereby acknowledged.
Signature Date ___________, 1998
Signature Date ___________, 1998
Please date and sign exactly as name(s) appear. All joint owners
should sign. Executors, administrators, trustees, guardians,
attorneys-in-fact, and officers of corporate stockholders should
indicate the capacity in which they are signing. Please indicate
whether you plan to attend the Annual Meeting:
[ ] Will attend [ ] Will not attend
(Continued on other side)
<PAGE>
[BACK OF PROXY]
(Continued, and to be signed on reverse side)
AMERICAN ITALIAN PASTA COMPANY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. Horst W.
Schroeder, Timothy S. Webster and David E. Watson, or a majority
of them, are hereby authorized, with full power of substitution,
to vote the shares of stock of American Italian Pasta Company
entitled to vote for the stockholder(s) signing this proxy at the
Annual Meeting of Stockholders to be held on February 25, 1998,
or any adjournment thereof as specified below and in their
discretion on all other matters that are properly brought before
the Annual Meeting. IF NO CHOICE IS SPECIFIED, SUCH PROXIES WILL
VOTE "FOR" THE NOMINEES NAMED HEREON AND "FOR" PROPOSAL 2.
1. Election of three directors: Nominees: David Y. Howe, John
P. O'Brien and William R. Patterson.
[ ] FOR all nominees
[ ] FOR all nominees except those indicated below:
[ ] WITHHOLD AUTHORITY to vote for all nominees.
2. Ratification of the Board of Directors' selection of Ernst &
Young LLP to serve as AIPC's independent auditors for fiscal year
1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The nominees named above and each of the other matters specified
above are proposed by the Board of Directors. None of the matters
is related to or conditioned on the approval of other matters.
[FRONT OF VOTING INSTRUCTION CARD]
AMERICAN ITALIAN PASTA COMPANY
1000 Italian Way
Excelsior Springs, Missouri 64024
PLEASE SEE REVERSE SIDE FOR PROPOSALS TO BE VOTED
(Date, sign and return promptly
in the prepaid envelope enclosed.)
(Tear Here)
CONFIDENTIAL VOTING INSTRUCTIONS TO GEORGE K. BAUM TRUST COMPANY
AS TRUSTEE UNDER THE AMERICAN ITALIAN PASTA COMPANY
RETIREMENT SAVINGS PLAN
Signature Date , 1998
Please sign exactly as name appears.
(Continued on other side.)
This voting instruction card is solicited by the Trustee. I
hereby direct that the voting rights pertaining to shares of
stock of American Italian Pasta Company held by the Trustee and
allocated to my account shall be exercised at the Annual Meeting
of Stockholders to be held on February 25, 1998 or any
adjournment thereof as specified hereon and in their discretion
on all other matters that are properly brought before the Annual
Meeting.
1. Election of three directors: Nominees: David Y. Howe, John
P. O'Brien and William R. Patterson.
[ ] FOR all nominees
[ ] FOR all nominees except those indicated below:
[ ] WITHHOLD AUTHORITY to vote for all nominees.
2. Ratification of the Board of Directors' selection of Ernst &
Young LLP to serve as AIPC's independent accountants for fiscal
year 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
If no choice is specified, the shares held in your ESOP account
will be voted in the same proportion as the shares held by the
Retirement Plan for which the Trustee receives voting
instructions.
