SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
| | Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
HANOVER FOOD CORPORATION
(Name of Registrant as Specified In Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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<PAGE>
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined.):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[HANOVER FOODS CORPORATION LETTERHEAD]
August 10, 1998
Dear Hanover Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders (the
"Meeting") of Hanover Foods Corporation (the "Company") to be held on September
10, 1998, at 4:00 p.m., at the offices of the Company at 1486 York Street,
Hanover, Pennsylvania.
At this meeting you are being asked to elect one director. Your Board urges
you to support the Company's nominee by voting FOR Cyril T. Noel on the
Company's white proxy card enclosed. Please read the attached proxy materials
carefully to make the best informed decision possible.
Also, enclosed is the Company's Annual Report to Shareholders which
includes the Company's 1998 financial results. Your Company has accomplished a
great deal the past year and we are excited about its prospects for the future.
During fiscal year 1998, the Company achieved record levels of earnings and
sales. We believe that the Company is positioned for continued success.
Whether or not you expect to attend the Meeting in person, it is important
that your shares be voted at the Meeting. I urge you to complete and sign the
enclosed white proxy card and return it promptly in the envelope provided.
Thank you for your continued support and interest in Hanover Foods
Corporation.
Sincerely,
/s/ JOHN A. WAREHIME
John A. Warehime
Chairman, President and Chief Executive Officer
<PAGE>
HANOVER FOODS CORPORATION
1486 YORK STREET
HANOVER, PENNSYLVANIA 17331
----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 10, 1998
----------
To the Shareholders of Hanover Foods Corporation:
The 1998 Annual Meeting of Shareholders (the "Meeting") of Hanover Foods
Corporation (the "Company") will be held on September 10, 1998, at 4:00 p.m.,
prevailing time, at the offices of the Company, 1486 York Street, Hanover,
Pennsylvania, for the purpose of considering and acting upon the following:
1. To elect one Class A director to hold office for a term of four years
and until his successor is duly elected and qualified, as more fully described
in the accompanying Proxy Statement; and
2. To transact such other business as may properly come before the Meeting.
Only shareholders of record at the close of business on July 31, 1998, are
entitled to notice of, and to vote at, the Meeting or any adjournment or
postponement thereof.
If the Meeting is adjourned for one or more periods aggregating at least 15
days because of the absence of a quorum, those shareholders entitled to vote who
attend the reconvened Meeting, if less than a quorum as determined under
applicable law, shall nevertheless constitute a quorum for the purpose of acting
upon any matter set forth in this Notice of Annual Meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT
YOU EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO SIGN, DATE AND
PROMPTLY RETURN THE ENCLOSED WHITE PROXY CARD. A SELF-ADDRESSED ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE; NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
By Order of the Board of Directors
/s/ JOHN A. WAREHIME
John A. Warehime
Chairman, President and Chief Executive Officer
Hanover, Pennsylvania
August 10, 1998
<PAGE>
HANOVER FOODS CORPORATION
1486 YORK STREET
HANOVER, PENNSYLVANIA 17331
(717) 632-6000
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
----------
The accompanying proxy is solicited by the Board of Directors of Hanover
Foods Corporation (the "Company") for use at the 1998 Annual Meeting of
Shareholders (the "Meeting") to be held on September 10, 1998 at 4:00 p.m.,
prevailing time, at the offices of the Company, 1486 York Street, Hanover,
Pennsylvania, and any adjournments or postponements thereof. This Proxy
Statement and accompanying proxy card are first being mailed to shareholders on
or about August 10, 1998.
The only matter to be considered and voted upon at the Meeting is the
election of one Class A director for a term of four years and until his
successor is elected and shall qualify. The Board of Directors has nominated
Cyril T. Noel for election as a director of the Company. Mr. Noel is currently
serving on the Company's Board of Directors. Michael A. Warehime, a shareholder
of the Company, has nominated G. Steven McKonly for election as a director.
The cost of this solicitation will be borne by the Company. In addition to
solicitation by mail, proxies may be solicited in person or by telephone,
telegraph or fax machine by officers, directors or employees of the Company,
without additional compensation. Total expenditures for the solicitation of
proxies (including fees of attorneys, accountants, public relations or financial
advisors, printing, transportation and other costs incidental to the
solicitation) are estimated to be $25,000, and total cash expenditures to date
have been approximately $22,000. Upon request, the Company will pay the
reasonable expenses incurred by record holders of the Company's Class A and
Class B Common Stock who are brokers, dealers, banks or voting trustees, or
their nominees, for mailing proxy material and annual shareholder reports to the
beneficial owners of the shares they hold of record.
Only shareholders of record, as shown on the transfer books of the Company,
at the close of business on July 31, 1998 (the "Record Date") are entitled to
notice of, and to vote at, the Meeting. On the Record Date, there were 290,860
shares of Class A Common Stock outstanding, 426,766 shares of Class B Common
Stock outstanding and 10,000 shares of Series C Convertible Preferred Stock
outstanding. The Class A Common Stock, the Class B Common Stock and the Series C
Convertible Preferred Stock are collectively referred to herein as the "Capital
Stock." On the Record Date, the Company also had 8,496 shares of non-voting
Series A Preferred Stock and 16,268 shares of non-voting Series B Preferred
Stock outstanding, all of which is currently convertible into Class A Common
Stock.
White proxy cards in the form enclosed, if properly executed and received
in time for voting, and not revoked, will be voted as directed on the proxies.
If no directions to the contrary
<PAGE>
are indicated, the persons named in the enclosed white proxy card will vote all
shares of Capital Stock "for" the election of the nominee for director
hereinafter named. Sending in a signed proxy will not affect a shareholder's
right to attend the Meeting and vote in person since the proxy is revocable. Any
shareholder who submits a proxy has the power to revoke it by, among other
methods: (i) giving written notice to the Secretary of the Company at any time
before the proxy is voted; (ii) submitting a duly executed proxy bearing a later
date; or (iii) appearing at the Meeting and giving the Secretary notice of such
shareholder's intention to vote in person.
The presence, in person or represented by proxy, of the holders of a
majority of all votes entitled to be cast with respect to each class of Capital
Stock will constitute a quorum for the transaction of business at the Meeting.
All shares of the Company's Capital Stock present in person or represented by
proxy and entitled to vote at the Meeting, no matter how they are voted or
whether they abstain from voting, will be counted in determining the presence of
a quorum. If the Meeting is adjourned because of the absence of a quorum, those
shareholders entitled to vote who attend the adjourned meeting, although
constituting less than a quorum as provided herein, shall nevertheless
constitute a quorum for the purpose of electing directors. If the Meeting is
adjourned for one or more periods aggregating at least 15 days because of the
absence of a quorum, those shareholders entitled to vote who attend the
reconvened Meeting, if less than a quorum as determined under applicable law,
shall nevertheless constitute a quorum for the purpose of acting upon any matter
set forth in the Notice of Annual Meeting.
With respect to the election of directors, each share of Class A Common
Stock shall be entitled to one-tenth (1/10) of a vote per share, each share of
Class B Common Stock shall be entitled to one vote per share and each share of
Series C Convertible Preferred Stock shall be entitled to thirty-five votes per
share. The shares of Class A Common Stock and the shares of Class B Common Stock
shall vote together with the shares of Series C Convertible Preferred Stock as a
single class of stock, and not as separate classes, in connection with the
election of directors. The election of directors will be determined by a
plurality vote and the nominee receiving the most "for" votes will be elected.
Approval of any other proposal will require the affirmative vote of a majority
of the shares of Class B Common Stock cast on the proposal. Under the
Pennsylvania Business Corporation Law, an abstention, withholding of authority
to vote or broker non-vote will not have the same legal effect as an "against"
vote and will not be counted in determining whether the proposal has received
the required shareholder vote.
As used in this Proxy Statement, fiscal 1998 refers to the fiscal year
ended May 31, 1998, fiscal 1997 refers to the fiscal year ended June 1, 1997,
and fiscal 1996 refers to the 12 months ended June 2, 1996.
BENEFICIAL OWNERSHIP OF CAPITAL STOCK
The following table sets forth as of the Record Date certain information
with respect to the beneficial ownership of the Capital Stock by: (i) each
person who is known by the Company to be the beneficial owner of more than 5% of
any class of the Company's Capital Stock; (ii) each
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<PAGE>
of the Company's directors and the nominee for director; (iii) each of the
executive officers of the Company named in the Summary Compensation Table (the
"Named Officers"); and (iv) the Company's directors, nominee for director and
executive officers as a group. Except as otherwise indicated, the beneficial
owners of the Capital Stock listed below have sole investment and voting power
with respect to such shares.
<TABLE>
<CAPTION>
Shares
FIVE PERCENT SHAREHOLDERS Beneficially Owned (1)
---------------------------------
Class Number % of Class
---------------------------------
Common Stock
- ------------
<S> <C> <C> <C>
J. William Warehime ..................................... Common A 8,284 2.8%
257 Frederick Street Common B 78,408 18.4
Hanover, PA 17331
Elizabeth W. Stick ...................................... Common A 15,002 5.2
35 Peyton Road Common B 44,244 10.4
York, PA 17403
Centre Foods Enterprises, Inc. .......................... Common A 19,607 6.7
120 Paul Street Common B -- --
Hanover, PA 17331
Meta L. Frey ............................................ Common A 3,872 1.3
425 Westminster Avenue, Cottage 22 Common B 27,720 6.5
Hanover, PA 17331
Heartland Advisors, Inc(2) .............................. Common A 50,500 17.4
790 North Milwaukee Street Common B -- --
Milwaukee, WI 53202
Alan A. Warehime Testamentary Trust A(3) ................ Common A -- --
Farmers Bank Common B 39,828 9.3
c/o Dauphin Deposit Bank
13 Baltimore Street
Hanover, PA 17331
Alan A. Warehime Testamentary Trust B(4) ................ Common A -- --
Farmers Bank Common B 76,165 17.8
c/o Dauphin Deposit Bank
13 Baltimore Street
Hanover, PA 17331
Series C Preferred Stock
- ------------------------
Hanover Foods Corporation 401(k) Savings Plan Trust (5).. Common A -- --
1486 York Street Common B -- --
Hanover, PA 17331 Preferred C 10,000 100.0
</TABLE>
(Footnotes begin on the following page.)
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<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Owned (1)
--------------------------------------
Class Number % of Class
--------------------------------------
DIRECTORS AND NAMED OFFICERS (6)(8)
<S> <C> <C> <C>
John A. Warehime(7)(10)................................................ Common A 44 *
Common B 175,748 41.2%
Clayton J. Rohrbach, Jr. (8)(9)........................................ Common A 88 *
Common B -- --
Cyril T. Noel (8)(9)(10)(11)........................................... Common A 301 *
Common B -- --
Preferred A 272 *
Preferred B 360 *
T. Edward Lippy........................................................ Common A 385 *
Common B -- --
Arthur S. Schaier(8)(9)................................................ Common A 500 *
Common B -- --
James G. Sturgill, CPA, CVA............................................ Common A -- --
Common B -- --
James A. Washburn...................................................... Common A -- --
Common B -- --
Gary T. Knisely, Esq.(11).............................................. Common A 1,688 *
Common B -- --
Preferred A 16 *
-
Pietro D. Giraffa, Jr.................................................. Common A -- --
Common B -- --
Edward L. Boeckel, Jr.................................................. Common A -- --
Common B -- --
Alan T. Young.......................................................... Common A -- --
Common B -- --
All directors and executive officers as a group (total of 11)(8)(12)... Common A 3,006 1.0
Common B 175,748 41.2
Preferred A 288 4.4
Preferred B 360 2.2
Preferred C 10,000 100.0
</TABLE>
* Less than one percent.
(1) The securities "beneficially owned" by a person are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the Securities and Exchange Commission and, accordingly,
include securities owned by or for the spouse, children or certain other
relatives of such person as well as other securities as to which the person
has or shares voting or investment power or has the right to acquire within
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<PAGE>
60 days after the Record Date. The same shares may be beneficially owned by
more than one person. Beneficial ownership may be disclaimed as to certain
of the securities.
(2) As reported by Heartland Advisors, Inc. ("Heartland") in Amendment Two to
Schedule 13G dated January 27, 1998. Heartland reported sole voting and
sole dispositive power with respect to the shares held. Such shares are
held in investment advisory accounts of Heartland. The interests of one
such account, Heartland Value Fund, relates to more than 5% of the class.
(3) Includes shares held by the Alan A. Warehime Testamentary Trust A. Voting
and dispositive power with respect to such shares is shared by the five
trustees, each of whom has one vote. A majority vote of such individuals is
required to vote or dispose of such shares. Trustees of such trust include
John A. Warehime, Chairman, President and Chief Executive Officer of the
Company, Cyril T. Noel, a director of the Company, Sally Yelland, Michael
Warehime and the Dauphin Deposit Bank. See also Footnote 10 below.
(4) Includes shares held by the Alan A. Warehime Testamentary Trust B. Voting
and dispositive power with respect to such shares is shared by the five
trustees, each of whom has one vote. A majority vote of such individuals is
required to vote or dispose of such shares. Trustees of such trust include
John A. Warehime, Chairman, President and Chief Executive Officer of the
Company, Cyril T. Noel, a director of the Company, Sally Yelland, Michael
Warehime and the Dauphin Deposit Bank. See also Footnote 10 below.
(5) The Hanover Foods Corporation 401(k) Savings Plan ("401(k) Plan") may be
deemed to beneficially own the shares held by such plan. The Series C
Preferred Stock is currently convertible into shares of the Class A Common
Stock on a one for one basis. The trustees of such plan are Directors Noel,
Rohrbach and Schaier. See Footnote 9 below.
(6) The address of the Directors and Named Officers is that of the Company.
(7) Includes 44,730 shares (10.5% of the Class B Common Stock) held directly as
well as 15,025 shares (3.5% of the Class B Common Stock) held by the Alan
Warehime Trust pursuant to a Voting Trust Agreement dated December 1, 1988
which expires on December 1, 1998. Mr. Warehime has sole voting and no
dispositive power with respect to the shares held by the trust.
(8) Does not include 590 shares of the Company's Class B Common Stock and 3,422
shares of the Company's Class A Common Stock held by John R. Miller, Jr.
which are subject to the April 22, 1997 Voting Agreement. This Voting
Agreement provides that John Miller, Jr. will vote all shares of the
Company's common stock, which he is entitled to vote as directed by the
Board of Directors, provided Clayton J. Rohrbach, Jr., Arthur S. Schaier
and Cyril T. Noel, or a majority of them, vote in favor of the matter.
(9) Excludes 10,000 shares of the Series C Preferred Stock held by the 401(k)
Plan Trust. In their capacity as co-trustees of such plan, Directors Noel,
Rohrbach and Schaier have shared voting and dispositive power over the
10,000 shares held by the 401(k) Plan Trust. Shares held by the 401(k) Plan
Trust are voted by a majority of the plan trustees. Mr. Noel has indicated
his intention to abstain from voting as he is a nominee for election as a
director. The Series C Preferred Stock is convertible into Class A Common
Stock on a one for one basis.
(10) Includes 115,993 (27.0% of the Class B Common Stock) shares held by the
Alan Warehime Testamentary Trusts A and B. These shares are voted by the
five trustees of the Alan A. Warehime Testamentary Trusts. John Warehime
and Cyril T. Noel are two of the trustees of such trust. See Footnotes 3
and 4 above.
(11) Shares of Series A or B Preferred Stock are convertible into Class A Common
Stock on an equitable basis. The current conversion ratio is 3.1 shares of
Series A or B Preferred Stock to one share of Class A Common Stock. Such
conversion ratio is subject to change based upon current book value of the
Class A Common Stock.
(12) Includes 10,000 of Series C Preferred Stock held by the 401(k) Plan Trust
for the benefit of Plan participants. See footnote 5 and 9 above.
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<PAGE>
ELECTION OF DIRECTORS
The Company's Amended and Restated By-laws (the "By-laws") provide that the
Board of Directors shall consist of not less than seven and not more than
fifteen directors, with the exact number fixed by the Board of Directors. The
Board has fixed the number of directors at seven. The Amended and Restated
Articles of Incorporation and amendments thereto (the "Articles of
Incorporation") of the Company provide that the Board of Directors shall be
divided into four classes, having staggered terms of office, which are as equal
in number as possible, and that the members of each class of directors are to be
elected for a term of four years or until their successors are elected and shall
qualify. Holders of Class A and B Common Stock are not permitted to cumulate
their votes for the election of directors. The Company has interpreted the
provisions of its Articles of Incorporation not to permit cumulative voting by
the holders of the Series C Preferred Stock.
At the Meeting, shareholders will elect one Class A director to serve for a
term of four years and until his successor is elected and qualified. Unless
directed otherwise, the person named in the enclosed white proxy card intend to
vote such proxy "for" the election of the listed nominee or, in the event of
inability of the nominee to serve for any reason, for the election of such other
person as the Board of Directors may designate to fill the vacancy. The Board
has no reason to believe that the nominee will not be a candidate or will be
unable to serve.
The following table sets forth information, as of the Record Date,
concerning the Company's directors and nominee for election to the Board of
Directors. Mr. Noel, a current director, was nominated by the Board of Directors
to serve as a director for a four year term. The nominee has consented to being
named in the Proxy Statement and to serve if elected.
<TABLE>
<CAPTION>
Director Term
Name Age(1) Position Since Expires
- ------------------------------------ ------ --------------------- -------- -------
Nominee
-------
<S> <C> <C> <C>
Cyril T. Noel(2).................... 73 Director 1983 2002
Directors Remaining in Office
-----------------------------
Clayton J. Rohrbach, Jr............. 78 Director 1984 1999
James G. Sturgill, CPA, CVA......... 57 Director 1994 1999
Arthur S. Schaier................... 56 Director 1994 2000
T. Edward Lippy .................... 68 Director 1994 2000
John A. Warehime.................... 60 Chairman of the Board 1985 2001
James A. Washburn................... 48 Director 1996 2001
</TABLE>
(1) Age as of Record Date.
(2) Mr. Noel served on the Board from May 1983 until June 1994 and from October
1994 to present.
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<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEE NAMED
IN THIS PROXY STATEMENT FOR DIRECTOR OF THE COMPANY.
The following information about the Company's directors and nominee for
director is based, in part, upon information supplied by such persons.
John A. Warehime has served as Chairman of the Board and Chief Executive
Officer of the Company since 1989 and as a Director of the Company since 1985.
Mr. Warehime has 47 years' experience in the food processing industry.
Clayton J. Rohrbach, Jr. is currently retired. Prior to his retirement, Mr.
Rohrbach was employed at CPC International, a large New York Stock Exchange
traded food company located in Englewood Cliffs, New Jersey, from 1984 through
1985 as Vice President of Marketing.
James G. Sturgill, CPA, CVA, has been the Managing Partner at Sturgill &
Associates, LLP, a public accounting firm headquartered in Westminster,
Maryland, since 1993. Prior to 1993, he was employed at Sturgill, Rager &
Lehman, a firm located in Westminster, Maryland from 1980 to 1993.
Arthur S. Schaier has been a shareholder, Vice President and General
Manager of Earnhardt's Dodge, Inc., a car dealership located in Gilbert,
Arizona, since 1981.
T. Edward Lippy has been the Vice President of Lippy Brothers, Inc., a
family farming company located in Hampstead, Maryland, since 1994. Mr. Lippy
currently serves as a director for the following entities: Vice Chairman &
Director of Farmers & Merchants Bank since 1989 and director of Ag First Farm
Credit Bank since 1988. Additionally, Mr. Lippy, served as the Chairman of
Baltimore Farm Credit Bank from 1990 through 1992 and as Chairman of the Farm
Credit Council, Washington, D.C. from 1993 through 1997.
James A. Washburn has been the Chairman and Chief Executive Officer of Park
100 Foods, a food manufacturing company, located in Tipton, Indiana, since 1991.
Prior thereto, Mr. Washburn was the President and Chief Executive Officer of
Hamilton Medaris Corporation and H.M.C. Transportation located in Fishers,
Indiana.
Cyril T. Noel is currently retired. Mr. Noel was the Vice President of
Finance of the Company from 1985 through 1994. Mr. Noel has served on the Board
from May 1983 until June 15, 1994 and from October 18, 1994 to the present.
Board of Directors, Committees and Attendance at Meetings
The Board of Directors held six meetings during fiscal 1998. Each director
attended 75% or more of the meetings of the Board and committees of which they
were members during fiscal 1998.
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<PAGE>
The Board of Directors has appointed a Compensation Committee to make
recommendations to the Board of Directors concerning compensation for the
Company's executive officers; and take such other actions as may be required in
connection with the Company's compensation and incentive plans. During fiscal
1998, the Compensation Committee held one meeting. Members of the Compensation
Committee include Directors Rohrbach and Schaier. The Report of the Compensation
Committee is contained elsewhere herein.
The Board of Directors also has appointed an Audit Committee to, among
other things, review the Company's financial and accounting practices and
policies and the scope and results of the Company's annual audit. The Audit
Committee also recommends to the Board the selection of the Company's
independent public accountants. Members of the Audit Committee include
Directors, Noel, Lippy and Sturgill. The Audit Committee met twice during fiscal
1998.
During fiscal 1998, the Company formed a Strategic Planning Committee. This
committee is responsible for the evaluation of potential acquisition candidates
and the formulation and implementation of the Company's Strategic Business Plan.
Members of this Committee include Directors Lippy, Washburn and Sturgill. The
Strategic Planning Committee met six times during fiscal 1998.
The Board of Directors has not appointed a standing Nominating Committee.
The function of nominating directors is carried out by the entire Board of
Directors. Pursuant to the By-laws, a shareholder may nominate persons for
election as director, provided that the shareholder (i) is a shareholder of
record at the time of the nomination and is entitled to vote at the meeting of
shareholders for the Board seat to which the nomination relates, and (ii)
complies with the notice procedures of Article III, Section 3 of the By-laws.
That section as currently in effect provides that the nominating shareholder
must deliver notice of the nomination to the Company's Secretary not later than
June 1 of the calendar year in which the meeting to elect the director or
directors is to be held. The required notice must contain certain information
including information about the nominee, as prescribed in the By-laws. The
By-laws are subject to amendment from time to time.
Director Compensation
During fiscal year 1998, each director of the Company was paid an annual
retainer of $12,000 payable in equal monthly installments of $1,000. Board
Members also receive a fee of $1,500 for each quarterly Board meeting attended
in person and $750 for each quarterly Board meeting which the director
participated in by telephone. Directors are paid $1,000 for each special Board
meeting attended in person and $500 for each special Board meeting which the
director participated in by telephone. In addition, an annual fee of $1,000 per
year was paid for service as a committee chairman. Committee members also
received a fee of $1,000 for each committee meeting attended in person and $500
for each committee meeting which the director participated in by telephone.
In addition, the Company has entered into a consulting agreement with James
Sturgill, a director of the Company. See "Certain Relationships and Related
Transactions."
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<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information regarding the
compensation paid to the Chief Executive Officer and each of the four other most
highly compensated executive officers of the Company for services rendered in
all capacities during the past three fiscal years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
--------------------------------------------------------- -----------------
Name and Fiscal Other Annual All Other
Principal Position Year Salary Bonus Compensation Compensation
- ------------------------------------------- ------ -------- -------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
John A. Warehime .......................... 1998 $578,000 $584,000 $39,753(1) $580,888(2)(4)(6)
Chairman and .............................. 1997 633,348 625,000 86,269 389,120
Chief Executive Officer ................... 1996 650,000 -0- 62,146 332,983
Gary T. Knisely ........................... 1998 $192,500 $ 96,250 $ -0- $ 69,500(3)(4)(6)
Executive V. President, ................... 1997 171,250 175,000 -0- 54,729
Secretary & Counsel ....................... 1996 129,900 -0- -0- 7,191
Clement A. Calabrese (5) .................. 1998 $154,000 $154,000 $ -0- $ -0-
V.P. Sales & .............................. 1997 140,969 180,000 -0- -0-
Trade Marketing ........................... 1996 67,346 -0- -0- -0-
Alan T. Young ............................. 1998 $126,764 $ 63,420 $ -0- $ 9,500(4)(6)
V.P. - Purchasing & ....................... 1997 115,240 115,240 -0- 5,762
Transportation ............................ 1996 113,800 -0- -0- 6,424
Pietro D. Giraffa, Jr ..................... 1998 $120,000 $ 60,000 $ -0- $ 9,500(4)(6)
V.P. - Controller ......................... 1997 95,000 95,000 -0- 4,472
1996 89,948 -0- -0- 4,458
</TABLE>
- ----------
(1) Includes legal and accounting fees in the amount of $35,564 and other
perquisites paid pursuant to the June 12, 1995 Employment Agreement
including the value of a company car and country club dues totaling $4,189.
See "Employment Agreements and Change in Control Severance Agreement."
(2) Includes the Company's payment for premiums of $160,388 for split-dollar
life insurance policy for Mr. Warehime and the accrual of $411,000 to
reflect supplemental pension benefits to be paid pursuant to Mr. Warehime's
Employment Agreement dated June 12, 1995, as amended February 13, 1997.
(3) Includes the Company's accrual of $60,000 to reflect supplemental pension
benefits to be paid pursuant to Mr. Knisely's Employment Agreement, dated
January 23, 1997.
(4) Includes the Company's matching contributions pursuant to the 401(k) Plan
made to the accounts of Messrs. Warehime, Knisely, Young and Giraffa in the
amount of $9,500, $9,500, $9,500 and $9,500, respectively.
(5) Mr. Calabrese resigned his position with the Company, effective June 18,
1998.
(6) Excludes payments made to such individuals in connection with the
termination of the Pension Plan. See "Pension Plan" herein.
-9-
<PAGE>
The Company did not grant any options to the Named Officers during fiscal
1998.
Pension Plan
On January 23, 1997, the Board of Directors took action to terminate its
Pension Plan, effective April 15, 1997. The accrued benefits due to the
participants was calculated as of August 31, 1992, due to previous Board action
to cease benefit accruals as of such date. On June 26, 1997, Internal Revenue
Service issued a determination letter indicating that the termination of the
Pension Plan does not adversely affect its qualification for federal tax
purposes. The distribution of the plan assets was completed on September 17,
1997. Amounts distributed to the Named Officers, Messrs. Warehime, Knisely,
Calabrese, Young and Giraffa, in connection with the termination of the Pension
Plan were $414,086, $55,375, $0, $36,397, and $76,128, respectively.
401(k) Plan
On April 2, 1990, the Company adopted a defined contribution benefit plan,
known as the Company's 401(k) Savings Plan (the "401(k) Plan"). The 401(k) Plan
was amended on June 5, 1992, April 4, 1994, April 28, 1995, July 25, 1997 and
December 14, 1997 to read in its present form. Non-union, full-time domestic
employees and those employees who are members of Local 56 of the United Food and
Commercial Workers Union are eligible to participate after completion of one
year of service. Each eligible employee has the option to defer up to 16% of his
or her total annual cash compensation per year. As of December 31st of each
year, the Company, at its discretion, may make matching contributions equal to
one hundred percent of each participating employee's account for the first five
percent of compensation deferred by each employee. These contributions may be
made in cash, Company Stock, or a combination of cash and Company Stock. The
401(k) Plan provides various investment options. The 401(k) Plan provides for
loans to plan participants but does not permit early withdrawals. Matching
contributions made by the Company to the accounts of the Named Officers are
included in the Summary Compensation Table contained previously herein.
Employment Agreements and Change in Control Severance Agreement
On June 12, 1995, the Company entered into a five year employment agreement
with its Chief Executive Officer, John A. Warehime, at an annual base salary of
$650,000 with such compensation payable retroactively from April 1, 1994 (the
"1995 Employment Agreement"). The 1995 Employment Agreement was amended on
February 13, 1997 (the "Amended Employment Agreement") to, among other things,
reduce the annual base salary payable under the agreement to $498,866, which
modification was applied retroactively to April 1, 1994 (the effective date of
the 1995 Employment Agreement) and modified the method of calculating bonuses
payable to the employee under such agreement. As a result of these retroactive
changes, Mr. Warehime is required to reimburse the Company for $83,024 in excess
compensation previously paid to him through the deduction of such amount from
annual base salary increases provided for under the terms of the Amended
Employment Agreement and to waive accrued bonuses payable for fiscal 1997 under
the 1995 Employment Agreement which would have
-10-
<PAGE>
equaled $2,250,000. The principal terms of Mr. Warehime's employment
arrangements with the Company as amended by the Amended Employment Agreement are
set forth below.
The Amended Employment Agreement provides for annual increases (but not
decreases) in the employee's annual salary equal to the greater of 5% of the
prior year's salary or the annual percentage increase in the Consumer Price
Index (CPI). Mr. Warehime's annual base salary for fiscal 1998 and 1997 was
$578,000 and $550,000, respectively. Unless terminated by either party, the
Amended Employment Agreement automatically renews annually on each anniversary
date so that five years always remain on the term of the agreement. In the event
the employee is terminated without cause, or in the event the employee
terminates his employment after a reduction (without his written consent) of his
duties or authority, compensation or similar events, the Amended Employment
Agreement provides for the payment of the salary and bonus (including all other
benefits) over the remaining term of the agreement. In the event of termination
due to death or disability, the Amended Employment Agreement provides for the
same payment to the employee (or in the event of the death of the employee, his
spouse or descendants) for one year and thereafter the payment of supplemental
pension benefits as described below. In addition, the Amended Employment
Agreement provides for the reimbursement by the Company of the employee's legal
and accounting fees up to $75,000 per year and reasonable business expenses
incurred by the employee in connection with the business of the Company. The
Amended Employment Agreement also provides the employee with various other
benefits including the use of an automobile, disability and life insurance and a
club membership.
The annual bonus payable to the employee under the Amended Employment
Agreement is equal to $100,000 plus 10% of the Company's pretax earnings over
$5.0 million provided that no annual bonus is payable if pretax earnings of the
Company are less than $5.0 million. The Amended Employment Agreement limits
salary and the annual bonus payment described above to an aggregate of not more
than $1.0 million annually. Annual bonuses can be paid in cash or Class A Common
Stock at the option of the employee. For the years ended May 31, 1998, and June
1, 1997 and March 31, 1996, the bonus accrued under this agreement was $422,500,
$450,000 and $ -0-, respectively.
The Amended Employment Agreement also provides for the annual payment of a
long-term performance bonus based upon the Company's performance over the prior
five-year period as measured by its average sales growth and average increase in
operating profits as compared to an industry peer group over the same period.
The bonus payable is calculated based upon a formula set forth in the Amended
Employment Agreement, with such calculation performed by an independent
management consulting firm retained by the Company and approved by the
Compensation Committee of the Board of Directors. For the years ended May 31,
1998 and June 1, 1997, the long-term performance bonus accrued under this
agreement was $162,000 and $175,000, respectively.
The Amended Employment Agreement was revised effective as of August 1, 1997
to make certain clarifying changes and to require that bonus payments to Mr.
Warehime in any taxable year in excess of $1.0 million would be subject to
shareholder approval. At a meeting of the holders of the Class B Common Stock
held on August 14, 1997, John A. Warehime, in his
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<PAGE>
capacity as voting trustee of approximately 52% of the Class B Common Stock,
approved such bonus payments.
The Amended Employment Agreement provides for annual supplemental pension
benefits, commencing upon the earlier of (a) five years after termination of the
employee (or one year following his death or disability) or (b) the date of
retirement, payable during the life of the employee and upon his death, for the
life of his spouse. Such annual supplemental pension benefits are equal to 60%
of average total compensation (including bonuses) over the latest three-year
period prior to retirement, assuming retirement at age 65 or later. Supplemental
pension benefits are reduced based upon an established formula to the extent the
employee retires prior to age 65. The net present value of the cost of providing
this future benefit is recognized by the Company over the remaining expected
years of service. The expense recognized under this agreement was approximately
$411,000, $350,000 and $295,000 for the years ended May 31, 1998 June 1, 1997,
and March 31, 1996, respectively, and $67,000 for the nine-week period ended May
31, 1996.
On January 23, 1997, the Company entered into a five-year employment
agreement with Gary T. Knisely, Executive Vice President, Secretary and Counsel
of the Company, at an annual salary of $175,000 with such compensation payable
retroactively from June 1, 1996 (the "Knisely Agreement"). Unless terminated by
either party, the Knisely Agreement automatically renews annually on each
anniversary date so that five years always remain on the term of the agreement.
The Knisely Agreement provides for annual salary increases (but not decreases)
equal to the greater of 5% of the prior year's salary or the annual percentage
increase in the CPI, as well as incentive bonuses and various other benefits. As
of May 31, 1998, the aggregate liability of the Company under this agreement for
the next five years is estimated to be $1,117,000, excluding annual performance
bonuses. In the event the employee is terminated without cause, or in the event
the employee terminates his employment after a reduction (without his written
consent) of his duties or authority, compensation or similar events, the Knisely
Agreement provides for the payment of the salary and bonus (including all other
benefits) over the remaining term of the agreement. In the event of termination
due to death or disability, the Knisely Agreement provides for the payment of
salary and bonus (including all other benefits) to the employee (or his spouse
or other descendants in the event of the employee's death) for the later of one
year from the date of such termination or the death of the employee.
The Knisely Agreement also provides for annual supplemental pension
benefits equal to 60% of the employee's average annual compensation (including
bonuses but excluding other benefits) over the three most recent fiscal years
prior to the employee's termination if the employee is no longer employed by the
Company and the employee has attained the age of 55. Such annual supplemental
pension benefits are payable for the remainder of the lifetime of the employee.
The net present value of the cost of providing this future pension benefit is
recognized by the Company over Mr. Knisely's expected remaining years of
service. The expense recognized for supplemental pension benefits under this
agreement was approximately $60,000 and $47,000 for the years ended May 31, 1998
and June 1, 1997, respectively.
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<PAGE>
The Company also entered into a change in control severance agreement with
Alan T. Young which provides for termination compensation if Mr. Young's
employment is terminated:
(i) involuntarily or (ii) voluntarily, following a reduction in base salary,
duties and responsibilities, within 24 months of a change in control. A "change
in control" shall be deemed to occur if John A. Warehime ceases to be Chief
Executive Officer of the Company or ceases to have the power and authority of
the Chief Executive Officer. Pursuant to the terms of this agreement, any
payment due thereunder shall be made over a two year period no less frequently
than monthly and all payments during any 12 month period shall not in the
aggregate exceed the officer's total cash compensation (salary and bonus)
received from the Company during fiscal 1997. Amounts paid to such officer
during fiscal 1997 are included in the Summary Compensation Table.
All payments made pursuant to this agreement are subject to the further
conditions that: (i) the officer maintain the confidentiality of the Company's
trade secrets, customer lists and other proprietary information of the Company;
(ii) for a period of two years following the termination of the officer, neither
the officer or his employer or business associate shall enter into or attempt to
enter into any business relationship, solicit for employment or employ any
person, employed by the Company or its affiliates at any time within six months
prior to the officer's termination; and (iii) for a period of two years
following the termination, the officer shall not directly or indirectly own,
manage, operate, join or participate in any capacity, any entity which is
primarily engaged in a business which competes with any significant business of
the Company or its affiliates. If Mr. Young was terminated on May 31, 1998 under
circumstances entitling him to severance payments pursuant to this agreement,
the aggregate amount due to Mr. Young under this agreement was $380,368.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who beneficially own more than ten
percent of a registered class of the Company's Common Stock to file with the
Securities and Exchange Commission ("SEC") initial reports of ownership and
reports of changes, in ownership of Common Stock and other equity securities of
the Company. Executive officers, directors and greater than ten percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to the
Company's executive officers, directors and greater than ten percent beneficial
shareholders were complied with during the year ended May 31, 1998.
-13-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal 1998, the Company and its subsidiaries, in the normal course
of business, purchase and sell goods and services to related companies. The
Company believes all of these transactions were completed on terms and
conditions as available at the time for non-affiliates. These transactions are
summarized below.
During fiscal 1998, the Company was indebted to Warehime Enterprises, Inc.,
in connection with its 1988 purchase of a frozen food facility from such entity.
The original purchase price was $7.5 million and was funded with a note from the
Company. Pursuant to the terms of the note, effective March 1, 1993, the Company
was required to make 20 quarterly principal payments of $125,000 and monthly
interest payments. Interest was calculated at the greater of the prime rate or
the applicable federal rate as determined by the Internal Revenue Service. On
December 1, 1997, the Company made final payment on the note and took title to
the property. On May 31, 1998, the Company was not indebted to Warehime
Enterprises, Inc. J. William Warehime, a shareholder of the Company, and John A.
Warehime, Chairman of the Company, own 44.4% and 14.8% of the outstanding stock
of Warehime Enterprises, Inc., respectively.
During fiscal 1998, the Company rented equipment from, ARWCO Company and
Warehime Enterprises, Inc. The rental payments pursuant to such lease agreements
totaled $33,000 during fiscal 1998. John A. Warehime, the Chairman of the
Company, owns 33.3% of the outstanding stock of ARWCO Corporation. J. William
Warehime, a shareholder of the Company, and John A. Warehime own 44.4% and 14.8%
of the outstanding stock of Warehime Enterprises, Inc., respectively.
During fiscal 1998, the Company stored raw potatoes at its Centre Hall,
Pennsylvania plant for Snyder's of Hanover, Inc., Hanover, Pennsylvania,
("Snyder's"), for a total rental of $181,000. The following shareholders of the
Company are over 5% shareholders of Snyder's who are also 5% or greater
shareholders of the Company: J. William Warehime (13.7% shareholder of
Snyder's), Jane Elizabeth Stick (7.0% shareholder of Snyder's) and John A.
and Patricia M. Warehime (7.2% shareholder of Snyder's).
During fiscal 1998, the Company leased a two story farm house, adjoining
one story guest house and adjoining ground located on Trolley Road, R.D. # 3,
Hanover, Heidelberg Township, Pennsylvania, for customer housing and
entertainment and temporary new employee housing from John A. and Patricia M.
Warehime for a total of $56,000.
During fiscal 1998, the Company purchased $304,000 of contracted vegetables
from Lippy Brothers, Inc. T. Edward Lippy, a director of the Company, owns
approximately 37.0% of the outstanding stock of Lippy Brothers, Inc.
During fiscal 1997, the Company retained James G. Sturgill, CPA, CVA a
director of the Company, as a financial consultant to provide financial and
accounting services to the Company. During fiscal 1998, the Company paid Mr.
Sturgill a total of $68,000 in consulting fees, including reimbursable expenses
of $371.
-14-
<PAGE>
During fiscal 1998, the Company sold $4.4 million of frozen food products
to Park 100 Foods, Tipton, Indiana. James A. Washburn, a director of the
Company, owns approximately 80% of the outstanding stock of Park 100 Foods.
During fiscal 1996, the Company repurchased 5,148 shares of Class B Common
Stock from Cyril T. Noel and Frances L. Noel for $367,567. In connection with
this transaction, the Company provided the Noels with a note to fund the
repurchase price. During fiscal 1998, the Company paid $147,000 of principal and
interest on this note.
Compensation Committee Report on Executive Compensation
Hanover Foods has designed its executive compensation program to attract,
motivate and retain talented executives. Toward this end, the executive
compensation program provides:
o A base salary program and benefits to attract and retain talented
executives who demonstrate the qualities required in Hanover Food's
business operations and who meet the Company's established goals and
standards.
o Annual incentive bonus payments that are highly variable based on the
achievement of the Company's pre-tax earnings goals and
pre-established individual goals. These incentive bonuses reward
individuals whose performance contributes to achieving strategic and
financial corporate objectives, which increase shareholder value.
Additionally, the long-term component of the Chief Executive Officer's
bonus is determined pursuant to a formula based on the Company's
performance over the prior five years as compared to an industry peer
group over the same period.
The Company's officer compensation program is comprised of base salary,
annual cash incentive compensation and various benefits generally available to
all full-time employees of the Company, including participation in group medical
and life insurance plans and a 401(k) plan. The Company seeks to be competitive
with compensation programs offered by companies in the food processing industry
and other companies of similar size located in its market area based on formal
and informal surveys conducted by the Company.
Base Salary. The Company has entered into employment agreements with
Messrs. Warehime and Knisely pursuant to which they were entitled to receive
annual base salaries of $578,000 and $192,500 during fiscal 1998, respectively.
Pursuant to the terms of the employment agreements, such salaries are adjusted
each year in accordance with the Consumer Price Index. The Board of Directors
believes that the compensation levels established in the employment agreements
were consistent with competitive practices for executives at this level based
upon an evaluation performed on these employment agreements by an independent
management consulting firm.
-15-
<PAGE>
The Company also entered into change in control severance agreements with
Messrs. Calabrese and Young, which provide for severance payments to these
officers in the event that they are terminated, voluntarily (following a
reduction in base salary, duties and responsibilities) or involuntarily, in
connection with a change in control of the Company. These agreements do not
establish base salaries for such officers.
The Compensation Committee decided on base salaries for Messrs. Calabrese,
Young and Giraffa for fiscal 1998, in the amounts of $154,000, $126,764 and
$120,000, respectively, (representing increases of 10%, 20% and 26%,
respectively) and annual bonus amounts reflected in the Summary Compensation
Table based upon fiscal 1997 performance of the Company and the individual.
In arriving at these decisions, the Compensation Committee considered
individual contributions during fiscal 1997 as well as annual performance
reviews completed by supervising officers.
Annual Incentive Compensation. Under his employment agreement, Mr. Warehime
is entitled to receive an annual bonus if the Company's pre-tax earnings are
$5.0 million or more. Such bonus is equal to $100,000 plus 10% of all pre-tax
earnings over $5.0 million. Such bonus is limited to a maximum of $1.0 million
per year. Mr. Warehime is also entitled to a long-term annual bonus based upon
the Company's performance over the past five years as measured by its average
sales growth percentage ("Sales Performance Index") and average percentage of
operating profits to sales ("Profitability Index") as compared to the
performance of companies in an industry peer group. The bonus amount is
determined by a formula contained in Mr. Warehime's employment agreement as
calculated by an independent management consulting firm retained by the Company.
Annual cash bonuses of up to 50% of an officer's base salary are paid to
the Company's officers, other than the Chief Executive Officer, based upon the
Company's pre-tax earnings, such individual's contribution to the Company's
earnings, and the achievement of certain individual performance goals
established for each officer.
Stock Options. The Company does not currently utilize stock options as a
means of compensating its executive officers and key employees, however, the
Compensation Committee may consider implementing an option plan in the future.
Compensation of Chief Executive Officer. Pursuant to his employment
agreement, Mr. Warehime's annual base salary for fiscal 1998 was $578,000, which
represents an increase of $28,000 from fiscal 1997. The increased amount was not
paid to Mr. Warehime as he is required to reimburse the Company $83,024 for
excess compensation previously paid to him. Mr. Warehime also was paid a bonus
of $162,000 (which represents both short and long term components of Mr.
Warehime's bonus) pursuant to his employment agreement as a result of the
achievement of certain levels of pre-tax income by the Company and increases in
the Company's sales performance index and profitability index as compared to its
peers.
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<PAGE>
Policy with respect to Section 162(m) of the Internal Revenue Code.
Generally, Section 162(m) of the Internal Revenue Code of 1986, and the
regulations promulgated thereunder (collectively, "Section 162(m)"), denies a
deduction to any publicly held Company, such as the Company, for certain
compensation exceeding $1,000,000 paid during a taxable year to the chief
executive officer and the four other highest paid executive officers, excluding,
among other things, certain performance-based compensation. The Compensation
Committee evaluates to what extent Section 162(m) will apply to its compensation
programs. In order to bring bonus payments to Mr. Warehime under his Employment
Agreement in excess of $1,000,000 into compliance with Section 162(m),
shareholders of the Class B Common Stock approved such bonus payments at a
meeting held in August 1997.
Members of the Compensation Committee
Clayton J. Rohrbach, Jr. Arthur S. Schaier
-17-
<PAGE>
Stock Performance Graph
The following graph shows a comparison of the cumulative total return for
the Company's Class A Common Stock, the NASDAQ Stock Market and the Hanover
Composite Index (defined below), assuming an investment of $100 in each on May
20, 1994, the earliest date such information is available, and the reinvestment
of all dividends.
The data points used for the performance graph are listed below.
The following graph is required to be included in these proxy materials by
SEC regulations; however, in reviewing these materials shareholders are advised
that since the Company's Class A Common Stock is not actively traded, it can not
be properly compared to companies whose securities are traded on an exchange or
the NASDAQ Stock Market.
The Hanover Composite Index reflects the performance of the following
publicly traded companies in industries similar to that of the Company: Seneca
Foods Corp., Stokely U.S.A., Inc., United Foods, Inc. and Dean Foods.
[GRAPH]
<TABLE>
<CAPTION>
Performance Graph Data Points 5/20/94 4/2/95 3/31/96 6/2/96 6/1/97 5/31/98
- ----------------------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Hanover Foods Corporation $ 100.0 $100.93 $ 77.78 $ 62.04 $ 63.81 $ 95.26
- ----------------------------- ------- ------- ------- ------- ------- -------
Hanover Composite Index 100.0 103.33 93.22 91.52 140.88 184.24
- ----------------------------- ------- ------- ------- ------- ------- -------
NASDAQ 100.0 112.45 149.30 171.12 193.44 244.95
- ----------------------------- ------- ------- ------- ------- ------- -------
</TABLE>
-18-
<PAGE>
SHAREHOLDER PROPOSALS
Shareholder proposals for the 1999 Annual Meeting of Shareholders must be
submitted to the Company by April 13, 1999 to receive consideration for
inclusion in the Company's Proxy Statement. Such proposals must comply with the
requirements of Rule 14a-8 under the Securities Exchange Act of 1934, as
amended.
INDEPENDENT PUBLIC AUDITORS
The Company's independent public auditors for fiscal 1998 was the firm of
KPMG Peat Marwick LLP, Harrisburg, Pennsylvania. A representative of KPMG Peat
Marwick LLP is expected to be present at the Meeting and to be available to
respond to appropriate questions. The representative will have the opportunity
to make a statement if he so desires.
OTHER MATTERS
The Company is not presently aware of any matters (other than procedural
matters) which will be brought before the Meeting which are not reflected in the
attached Notice of the Meeting. The enclosed proxy confers discretionary
authority to vote with respect to any and all of the following matters that may
come before the Meeting: (i) matters which the Company does not know, a
reasonable time before the proxy solicitation, are to be presented at the
Meeting; (ii) approval of the minutes of a prior meeting of shareholders, if
such approval does not amount to ratification of the action taken at the
Meeting; (iii) the election of any person to any office for which a bona fide
nominee named in this Proxy Statement is unable to serve or for good cause will
not serve; (iv) any proposal omitted from this Proxy Statement and the form of
proxy pursuant to Rules 14a-8 or 14a-9 under the Securities Exchange Act of
1934; and (v) matters incident to the conduct of the Meeting. In connection with
such matters, the persons named in the enclosed proxy will vote in accordance
with their best judgment.
ANNUAL REPORT TO SHAREHOLDERS AND FORM 10-K
This Proxy Statement is accompanied by the Company's Annual Report to
Shareholders for fiscal 1998.
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<PAGE>
EACH PERSON SOLICITED HEREUNDER CAN OBTAIN A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR FISCAL 1998 AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, WITHOUT CHARGE, EXCEPT FOR EXHIBITS TO THE REPORT, BY SENDING A
WRITTEN REQUEST TO:
HANOVER FOODS CORPORATION
P.O. BOX 334
1486 YORK STREET
HANOVER, PENNSYLVANIA 17331
ATTENTION: John A. Warehime, Chairman,
President and Chief Executive Officer
By Order of the Board of Directors
/s/ GARY T. KNISELY
Gary T. Knisely
Executive Vice President, Secretary and Counsel
Hanover, Pennsylvania
August 10, 1998
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<PAGE>
PROXY
HANOVER FOODS CORPORATION
ANNUAL MEETING OF SHAREHOLDERS - SEPTEMBER 10, 1998
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF HANOVER FOODS CORPORATION
The undersigned hereby constitutes and appoints GARY T. KNISLEY and JEFFREY A.
WAREHIME, and each of them, as attorneys and proxies for the undersigned, with
full power of substitution, for and in the name, place and stead of the
undersigned, to appear at the Annual Meeting of Shareholders of Hanover Foods
Corporation (the "Company") to be held on the 10th day of September, 1998, and
at any postponement or adjournment thereof, and to vote all of the shares of the
Company which the undersigned is entitled to vote, with all the powers and
authority the undersigned would possess if personally present.
PROPOSAL 1. FOR |_| the election of Cyril T. Noel as a Class A director of the
Company to hold office for a term of four years and until his successor is duly
elected and qualified.
To withhold authority to vote for Cyril T. Noel as a director, please check this
box. |_|
PROPOSAL 2. To transact such other business as may properly come before the
Annual Meeting.
(continued and to be signed on reverse side.)
<PAGE>
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS TO THE
CONTRARY ARE INDICATED THE PROXY AGENTS INTEND TO VOTE FOR THE ELECTION OF THE
NOMINEE LISTED ABOVE.
BOTH PROXY AGENTS PRESENT AND ACTING IN PERSON OR BY THEIR SUBSTITUTES (OR,
IF ONLY ONE IS PRESENT AND ACTING, THEN THAT ONE) MAY EXERCISE ALL THE POWERS
CONFERRED BY THIS PROXY. DISCRETIONARY AUTHORITY IS CONFERRED BY THIS PROXY AS
TO CERTAIN MATTERS DESCRIBED IN THE COMPANY'S PROXY STATEMENT.
The undersigned hereby acknowledges receipt of the Company's 1998 Annual
Report to Shareholders, Notice of the Company's 1998 Annual Meeting of
Shareholders and the Proxy Statement relating thereto.
DATED 1998
---------------------------------------------
(Please date this Proxy)
------------------------------------------------------
------------------------------------------------------
Signature(s)
Please sign your name exactly as it appears on the
proxy indicating any official position or
representative capacity. If shares are registered in
more than one name, all owners must sign.
PLEASE DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED POSTAGE PAID ENVELOPE.
<PAGE>
EXHIBIT A
INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS
The following table sets forth the name and the present principal
occupation or employment (except with respect to the directors whose principal
occupation is set forth in the Proxy Statement), and the name, principal
business and address of any corporation or other organization in which such
employment is carried on, of the directors and executive officers of the Company
who may assist in soliciting proxies from the Company's stockholders. Unless
otherwise indicated below, the principal business address of each such person is
1486 York Street, P.O. Box 334, Hanover, PA 17331 and such person is an employee
of the Company. Directors are indicated with an asterisk.
NAME AND PRINCIPAL PRESENT OFFICE OR OTHER PRINCIPAL
BUSINESS ADDRESS OCCUPATION OR EMPLOYMENT
- --------------------------------- ----------------------------------------------
John A. Warehime*................ Chairman of the Board of the Company
Clayton J. Rohrbach, Jr.*........ Retired; Formerly Vice President of Marketing
The Barclay, Apt. 724 at CPC International
3546 South Ocean Boulevard
Palm Beach, FL 33480
Cyril T. Noel*................... Retired; Formerly Vice President of Finance
344 1/2 North Street
McSherrystown, PA 17344
T. Edward Lippy*................. Vice President at Lippy Brothers, Inc.
209 Lees Mill Road
Hampstead, MD 21074
Arthur S. Schaier*............... Owner/Vice President at Earnhardts' Gilbert
890 West San Marcos Drive Dodge, Inc.
Chandler, AZ 85224
James G. Sturgill, CPA, CVA*..... Managing Partner at Sturgill & Associates
4833 Wentz Road
Manchester, MD 21102-1243
James A. Washburn*............... Chairman and CEO at Park 100 Foods
12643 Royce Court
Carmel, IN 46033
Gary T. Knisely, Esq............. Executive Vice President, Secretary and
Counsel of the Company
Pietro D. Giraffa, Jr............ Vice President and Controller of the Company
Alan T. Young.................... Vice President of Purchasing & Transportation
of the Company
Edward L. Boeckel, Jr............ Treasurer of the Company
<PAGE>
EXHIBIT B
TRANSACTIONS IN THE SECURITIES OF THE COMPANY WITHIN
THE PAST TWO YEARS AND CERTAIN OTHER TRANSACTIONS
The following table sets forth information with respect to all purchases
and sales of shares of Class A Common Stock, Class B Common Stock, Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock of the
Company by the Company and the directors and executive officers of the Company
during the past two years.
<TABLE>
<CAPTION>
# of Shares of # of Shares of # of Shares of # of Shares of # of Shares of
Class A Class B Series A Series B Series C
Common Stock - Common Stock - Preferred Stock - Preferred Stock - Preferred Stock -
NAME Purchased/Sold Purchased/Sold Purchased/Sold Purchased/Sold Purchased/Sold Date
---- -------------- -------------- -------------- -------------- -------------- ----
<S> <C> <C> <C> <C> <C> <C>
John A. Warehime............. - / - 1,567/ - - / - - / - - / - 8/9/96
Clayton J. Rohrbach, Jr ..... - / - - / - - / - - / - - / - ____
Cyril T. Noel................ - / - - / - - / - - / - - / - ____
T. Edward Lippy.............. - / - - / - - / - - / - - / - ____
Arthur S. Schaier............ 500/ - - / - - / - - / - - / - 4/8/96
James G. Sturgill, CPA, CVA.. - / - - / - - / - - / - - / - ____
James A. Washburn............ - / - - / - - / - - / - - / - ____
Gary T. Knisely, Esq. ....... - / - - / - - / - 16/ - - / - 3/4/96
Pietro D. Giraffa, Jr........ - /300 - / - - / - - / - - / - 1/12/96
Alan T. Young................ - /412 - / - - / - - / - - / - 1/4/96
Edward L. Boeckel, Jr........ - / - - / - - / - - / - - / - ____
</TABLE>
