UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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
GARDENBURGER, INC.
(Exact Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
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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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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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GARDENBURGER, INC.
1411 SW MORRISON STREET, SUITE 400
PORTLAND, OREGON 97205
April 21, 1999
Dear Shareholders:
Our Annual Meeting of Shareholders will be held on Wednesday, May 12, 1999, at
10:00 a.m. Pacific Daylight Savings Time, at the Oregon Convention Center, 777
N.E. Martin Luther King Jr. Blvd., Portland, Oregon 97212. You are invited to
attend this meeting to give us an opportunity to meet you personally, to allow
us to introduce to you the key management of your Company and its Directors, and
to answer questions you may have.
The formal Notice of Meeting, the Proxy Statement, the proxy card and a copy of
the Annual Report to Shareholders describing the Company's operations for the
year ended December 31, 1998 are enclosed.
I hope that you will be able to attend the meeting in person. Whether or not you
plan to attend the meeting, please sign and return the enclosed proxy card
promptly. A prepaid return envelope is provided for this purpose. Your shares
will be voted at the meeting in accordance with your proxy.
If you have shares in more than one name, or if your stock is registered in more
than one way, you may receive multiple copies of the proxy materials. If so,
please sign and return each proxy card you receive so that all of your shares
may be voted. I look forward to meeting you at the Annual Meeting.
Yours for Better Health,
GARDENBURGER, INC.
E. Kay Stepp
CHAIRMAN OF THE BOARD OF DIRECTORS
<PAGE>
GARDENBURGER, INC.
1411 SW MORRISON STREET, SUITE 400
PORTLAND, OREGON 97205
----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 12, 1999
-----------------------
To the Shareholders of Gardenburger, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of GARDENBURGER,
INC. (the "Company"), an Oregon corporation, will be held at the Oregon
Convention Center, 777 N.E. Martin Luther King Jr. Blvd., Portland, Oregon
97212, on Wednesday, May 12, 1999, at 10:00 a.m. Pacific Daylight Savings Time.
The purposes of the Annual Meeting will be:
1. To elect eight Directors to serve until the next Annual Meeting of
Shareholders (Proposal No. 1); and
2. To consider and act upon any other matter which may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on Friday, March 5, 1999,
as the record date for determining shareholders entitled to notice of and to
vote at the meeting or any adjournment thereof. Only holders of record of Common
Stock of the Company at the close of business on the record date will be
entitled to notice of and to vote at the meeting and any adjournment thereof.
All shareholders are cordially invited to attend the Annual Meeting. A review of
the Company's operations for the year ended December 31, 1998 will be presented.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND PROMPTLY RETURN
THE ENCLOSED PROXY CARD, WHICH YOU MAY REVOKE AT ANY TIME PRIOR TO ITS USE. A
prepaid, self-addressed envelope is enclosed for your convenience. Your shares
will be voted at the meeting in accordance with your proxy. If you attend the
meeting, you may revoke your proxy and vote in person.
By Order of the Board of Directors:
E. KAY STEPP
CHAIRMAN OF THE BOARD OF DIRECTORS
Portland, Oregon
April 21, 1999
<PAGE>
GARDENBURGER, INC.
1411 SW MORRISON STREET, SUITE 400
PORTLAND, OREGON 97205
-----------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 12, 1999
----------------------
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement and the accompanying Annual Report to Shareholders, the
Notice of Annual Meeting and the proxy card are being furnished to the
shareholders of Gardenburger, Inc. (the "Company"), an Oregon corporation, in
connection with the solicitation of proxies by the Company's Board of Directors
for use at the Company's 1999 Annual Meeting of Shareholders (the "Annual
Meeting") to be held at the Oregon Convention Center, 777 N.E. Martin Luther
King Jr. Blvd., Portland, Oregon 97212, on Wednesday, May 12, 1999, at 10:00
a.m. Pacific Daylight Savings Time, and any adjournment thereof. The
solicitation of proxies by mail may be followed by personal solicitation of
certain shareholders by officers or regular employees of the Company without
additional compensation for such services. All expenses of the Company
associated with this solicitation will be borne by the Company. In addition, the
Company reserves the right to utilize the services of an independent proxy
solicitation firm to assist with the solicitation of proxies at an estimated
cost of $5,000.
The two persons named as proxies on the enclosed proxy card, E. Kay Stepp and
Richard C. Dietz, were designated by the Board of Directors. All properly
executed proxies will be voted (except to the extent that authority to vote has
been withheld) and where a choice has been specified by the shareholder as
provided in the proxy card, it will be voted in accordance with the
specification so made. Proxies submitted without specification will be voted FOR
Proposal No. 1 to elect the nominees for Directors proposed by the Board of
Directors.
A proxy may be revoked by a shareholder prior to its exercise by written notice
to the Secretary of the Company, by submission of another proxy bearing a later
date or by voting in person at the Annual Meeting. Such notice or later proxy
will not affect a vote on any matter taken prior to the receipt thereof by the
Company.
These proxy materials and the Company's 1998 Annual Report to Shareholders are
first being mailed on or about April 21, 1999 to shareholders of record of the
Company's Common Stock on March 5, 1999. The address of the principal executive
office as well as the mailing address of the Company is 1411 SW Morrison Street,
Suite 400, Portland, Oregon 97205.
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VOTING AT THE MEETING
In accordance with the Company's Bylaws, the stock transfer records were
compiled on March 5, 1999, the record date set by the Board of Directors for
determining the shareholders entitled to notice of, and to vote at, the Annual
Meeting and any adjournment thereof. On that date, there were 8,783,271 shares
of Common Stock outstanding and entitled to vote, and the Common Stock was the
only class of capital stock of the Company outstanding.
Each share of Common Stock outstanding on the record date is entitled to one
vote per share at the Annual Meeting. If a quorum is present at the Annual
Meeting, the eight persons to be nominated for election as Directors by holders
of the Common Stock who receive the greatest number of votes cast for the
election of Directors by the shares of Common Stock present in person or
represented by proxy at the meeting and entitled to vote shall be elected
Directors.
With respect to the election of Directors, Directors are elected by a plurality
of the votes cast and only votes cast in favor of a nominee will have an effect
on the outcome. Abstention from voting or nonvoting by brokers will have no
effect on the election. A broker "nonvote" occurs when a nominee holding shares
for a beneficial owner votes on one proposal, but does not vote on another
proposal because the nominee does not have discretionary voting power and has
not received instructions from the beneficial owner.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
Eight Directors are to be elected by the holders of the Common Stock at the
Annual Meeting. Directors are elected on an annual basis. Each Director will
serve until the next annual meeting of shareholders and until his successor is
duly elected and qualified.
NOMINEES FOR DIRECTOR TO BE ELECTED BY HOLDERS OF COMMON STOCK
The names and certain information concerning the persons to be nominated by the
Board of Directors for election at the Annual Meeting are set forth below. THE
BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE ELECTION OF EACH OF THE NOMINEES
NAMED BELOW. Shares represented by the proxies will be voted for the election to
the Board of Directors of the persons named below unless authority to vote for a
particular Director or Directors has been withheld in the proxy. All nominees
have consented to serve as Directors for the ensuing year. The Board of
Directors has no reason to believe that any of the nominees will be unable to
serve as a Director. In the event of the death or unavailability of any nominee
or nominees, the proxy holders will have discretionary authority under the proxy
to vote for a suitable substitute nominee as the Board of Directors may
recommend. Proxies may not be voted for more than eight nominees. The Board of
Directors has nominated the persons
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named in the following table to be elected as Directors by the holders of the
Common Stock:
NAME POSITION AGE DIRECTOR SINCE
- ---- -------- --- --------------
Lyle G. Hubbard President, Chief Executive 48 1996
Officer and Director
Alexander P. Coleman Director 32 1998
Ronald C. Kesselman Director 56 1998
Richard L. Mazer Director 53 1998
Mary O. McWilliams Director 50 1995
Michael L. Ray Director 60 1995
E. Kay Stepp Chairman of the Board 54 1995
of Directors
Paul F. Wenner Founder, Chief Creative 51 1985
Officer and Director
LYLE G. HUBBARD joined the Company in April 1996 as President and Chief
Executive Officer. In November 1996, Mr. Hubbard was named as a Director of the
Company. Prior to his employment with the Company, Mr. Hubbard spent 15 years
with The Quaker Oats Company ("Quaker") in Chicago, Illinois. During his tenure
at Quaker, Mr. Hubbard was President of the $500 million Convenience Foods
Retail Division and Senior Vice President and Chief Marketing Officer for the
$1.8 billion Gatorade and Snapple Beverages, North America Division. While at
Quaker, Mr. Hubbard was also credited with turning around several business
units, including Quaker Rice Cakes. Mr. Hubbard holds an M.B.A. with a
specialization in marketing from the University of Chicago and a B.A. degree
with a psychology major from Lake Forest College.
ALEXANDER P. COLEMAN has been an investment partner of Dresdner Kleinwort Benson
Private Equity LLC and a Vice President of Dresdner Kleinwort Benson North
America LLC since January 1996. From 1989 to 1995, Mr. Coleman held various
positions with Citicorp and its subsidiaries, including Citicorp Venture
Capital. Mr. Coleman has been designated as a nominee for election as a director
pursuant to the agreement between the Company and Dresdner Kleinwort Benson
Private Equity Partners LP ("Dresdner") under which Dresdner acquired
$15,000,000 principal amount of the Company's 7% Convertible Senior Subordinated
Notes (the "Convertible Notes") in March 1998. Mr. Coleman received an M.B.A.
from the University of Cambridge and a B.A. in Economics from the University of
Vermont. He is also a director of Gateway HomeCare, Inc., Tritel Communications,
Inc. and Pet's Choice, Inc., all of which Dresdner has significant equity
investments in.
RONALD C. KESSELMAN has been Chairman and Chief Executive Officer of Elmer's
Products and Executive Vice President of Borden Holdings, Inc., since 1996. He
was also Chairman and Chief Executive Officer of Wise Foods from 1996 until May
1998 and was Group Vice President of Borden, Inc. from 1992 to 1996. In addition
to more than 14 years with Borden, Mr. Kesselman managed three entrepreneurial
companies in the food products and toy industries during the period from 1980 to
1987 and then spent five years as Senior Vice President at Mattel Toys. Mr.
Kesselman received an M.B.A. in Marketing from the Kellogg School at
Northwestern University and a B.A. degree in Economics from the University of
Wisconsin.
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RICHARD L. MAZER has been Executive Vice President and Chief Operating Officer
of Ventura Foods, LLC, a food processor, since December 1997. Mr. Mazer has been
involved in the food industry for the past 15 years, including through his
strategic and financial consulting company, The Mazer Group, from 1992 to 1997.
His most recent venture included an advisory role with Wilsey Foods during its
negotiations of a merger with Holsum Foods to form Ventura Foods in 1996. Mr.
Mazer is on the Board of Trustees of Food for All (formerly Food Industry
Crusade Against Hunger). Mr. Mazer received B.S. degrees in Economics and
Management from Massachusetts Institute of Technology.
MARY O. MCWILLIAMS has been Senior Vice President of Health Care Services and
Boeing for Regence BlueShield since 1997. Ms. McWilliams was previously
President and CEO of PacifiCare of Washington beginning in 1994. She also
assumed responsibility for the Northwest Region of PacifiCare Health Systems in
1995 and held these positions through 1996. Prior to joining PacifiCare, she
served as CEO for Sisters of Providence Health Plans in Oregon for 11 years. Ms.
McWilliams currently serves on the Board of Directors for the Seattle Symphony
Orchestra.
MICHAEL L. RAY has been on the faculty at Stanford University since 1967 and is
currently the John G. McCoy-Banc One Corporation Professor of Creativity and
Innovation and of Marketing at Stanford University's Graduate School of
Business. He is a specialist in new paradigm business, creativity, innovation,
marketing communication, advertising and the behavioral science approach to
marketing problems. Mr. Ray is a psychologist with training and extensive
experience in advertising and marketing management and has co-authored several
business oriented books. Mr. Ray is also a director of The Men's Wearhouse and
is a founder, director and Chief Creative Officer of Insight Out Collaborations
Inc., a company that offers training courses in creativity for corporations.
E. KAY STEPP formed and now operates Executive Solutions, Inc., a consulting
firm which provides consulting services to senior executives and boards of
directors. In 1995, Ms. Stepp was appointed Chairman of the Board of the
Company. From 1989 to 1992, Ms. Stepp held the position of President and Chief
Operating Officer of Portland General Electric Company ("PGE"), a Portland,
Oregon, investor owned utilities company. From 1978 to 1989, Ms. Stepp held
various other positions at PGE including President of the Energy Service
Division, Vice President of Marketing and Operations and Vice President of Human
Resources and Administration. Ms. Stepp currently serves on the Boards of
Directors of Standard Insurance Company, Franklin Covey Company and Planar
Systems, Inc. She is a former director of the Federal Reserve Bank of San
Francisco.
PAUL F. WENNER, presently the Company's Chief Creative Officer, founded the
Company in 1985 as a sole proprietorship and acted as its Vice President from
the date of its incorporation until December 1989, when he became the Company's
President, Chief Executive Officer and Chairman of the Board. In 1994, Mr.
Wenner relinquished his duties as President and in 1995 relinquished his duties
as Chairman of the Board, at which time he held the title of Founder, Senior
Chairman of the Board of Directors and Chief Executive Officer. In April 1996,
Mr. Wenner became Founder, Senior Chairman of the Board and Chief Creative
Officer. In 1997, he relinquished the title of Senior Chairman of the Board, but
remains a Director of the Company. From 1980 through 1984, he owned and operated
the Garden House Restaurant and Gourmet Cooking School (the "School"), where he
developed the Gardenburger(R) veggie patty. The School was affiliated with Mt.
Hood Community College's evening educational curriculum. Mr. Wenner graduated
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from Mt. Hood Community College in Portland, Oregon in 1973, with two Associate
of Arts degrees.
OTHER DIRECTORS
On April 14, 1999, the Company issued and sold 2,762,500 shares of its Series A
Convertible Preferred Stock (the "Series A Shares") and 487,500 shares of its
Series B Convertible Preferred Stock (the "Series B Shares" and, together with
the Series A Shares, the "Preferred Shares") to certain investors at a price of
$10.00 per share, or total consideration of $32.5 million. The Preferred Shares
are convertible into Common Stock. Rosewood Capital III, L.P. ("Rosewood"), One
Maritime Plaza, Suite 1330, San Francisco, California 94111, and various
entities affiliated with Farallon Capital Management, L.L.C. (together,
"Farallon")(1), One Maritime Plaza, Suite 1325, San Francisco, California 94111,
each purchased 1,000,000 Preferred Shares in the transaction, as a result of
which each of Rosewood and Farallon is deemed to beneficially own 10.2% of the
outstanding Common Stock as of April 14, 1999, in each case assuming conversion
of its Preferred Shares.
In addition, BT Capital Investors, L.P., and one of its affiliates (together,
"BT Capital"), 130 Liberty Street, New York, New York 10006, acquired 650,000
Preferred Shares, and four affiliates of Gruber & McBaine Capital Management,
LLC (together, "GMCM"), 50 Osgood Place, Penthouse, San Francisco, California
94133, acquired 400,000 Preferred Shares, as a result of which, as of April 14,
1999, BT Capital is deemed to beneficially own 6.8% of the outstanding Common
Stock and GMCM is deemed to beneficially own 10.2% of the outstanding Common
Stock (including the 538,850 shares of Common Stock previously owned by GMCM),
in each case assuming conversion of its Preferred Shares. See also "Security
Ownership of Certain Beneficial Owners and Management."
As long as a majority of the Series A Shares remain outstanding, the holders of
the Series A Shares are entitled to elect two Directors by a majority of the
outstanding shares, voting as a separate voting group. The Preferred Shares
otherwise will have the right to vote together with the Common Shares as a
single voting group at all shareholder meetings after the 1999 Annual Meeting,
except that, as long as specified numbers of each series of Preferred Shares
remain outstanding, the Preferred Shares are entitled to vote together as a
single voting group (that is, without the Common Shares) with regard to the
corporate actions specified in the Articles of Amendment to the Company's
Restated Articles of
- ---------------------
(1) Each of the Farallon entities that acquired Preferred Shares holds such
securities directly in its own name. In addition, two of such entities own an
aggregate of 3,700 shares of Common Stock which they had previously acquired. As
the general partner of certain of such entities, Farallon Partners, L.L.C.
("FPLLC"), may, for purposes of Rule 13d-3 under the Securities Exchange Act of
1934 (the "Exchange Act"), be deemed to own beneficially the 3,700 shares of
Common Stock and the Preferred Shares held by such entities, as well as the
Common Stock into which such Preferred Shares are convertible. By virtue of
investment management agreements between Farallon Capital Management, L.L.C., a
registered investment adviser ("FCMLLC"), and the remaining Farallon entities,
FCMLLC may, for purposes of Rule 13d-3 under the Exchange Act, be deemed the
beneficial owner of the Preferred Shares held by such accounts, as well as the
Common Stock into which such Preferred Shares are convertible. As a managing
member of FPLLC and FCMLLC, Jason M. Fish, together with the other managing
members of FPLLC and FCMLLC, may, for purposes of Rule 13d-3 under the Exchange
Act, be deemed to own beneficially the Preferred Shares and Common Stock
attributed to FPLLC and FCMLLC. Each of FCMLLC and FPLLC, and each managing
member thereof, including Jason M. Fish, disclaims any beneficial ownership of
such shares. All of the above-mentioned entities and persons disclaim group
attribution.
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Incorporation determining the terms of the Preferred Shares. In accordance with
the stock purchase agreement, the two individuals named below were elected by
the existing Board of Directors as Directors effective April 14, 1999, as the
designees of the Series A Shares.
KYLE A. ANDERSON, age 42, is a founding member of Rosewood Capital Associates,
L.L.C., the general partner of Rosewood Capital III, L.P., a consumer oriented
private equity investment fund. Prior to joining Rosewood Capital Associates,
L.L.C., in 1988, Mr. Anderson was a Vice President in the mergers and
acquisitions department at First Boston Corporation. Mr. Anderson serves on the
board of directors of a number of privately held companies, including Rubio's
Restaurants, Inc., a restaurant holding company which filed a registration
statement covering shares of its common stock on March 26, 1999. Mr. Anderson
does not beneficially own any Common Stock.
JASON M. FISH, age 41, has been a managing member of Farallon Capital
Management, L.L.C., and Farallon Partners, L.L.C., since April 1996, when they
were formed to serve as management companies for affiliated investment funds.
Mr. Fish was a managing director of a predecessor entity, Farallon Capital
Management, Inc., from January 1993 through April 1996. Mr. Fish also serves as
a director of Town Sports International, Inc., a health club management company,
and Rubio's Restaurants, Inc., a restaurant holding company. Mr. Fish does not
beneficially own any securities of the Company other than by virtue of the
deemed beneficial ownership of Farallon's Preferred Shares and Common Stock, as
discussed above.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held seven meetings during 1998. The Board of Directors
has three committees: a Finance and Audit Committee, an Executive Personnel and
Compensation Committee, and a Nominating and Governance Committee. No Director
attended fewer than 75 percent of the total of the Board meetings and the
meetings held by all committees of the Board on which he or she served during
1998.
FINANCE AND AUDIT COMMITTEE The Finance and Audit Committee (the "Audit
Committee") is composed of Mr. Mazer (Committee Chair), Mr. Coleman and Ms.
Stepp, who are all outside Directors of the Company. The Audit Committee reviews
the Company's financial and operational activities and seeks to ensure that such
activities are performed in accordance with all internal and external auditing
and accounting requirements. It also evaluates the Company's relationship with
its outside auditors and major financing initiatives proposed by management. The
Audit Committee held four meetings in 1998.
EXECUTIVE PERSONNEL AND COMPENSATION COMMITTEE The Executive Personnel and
Compensation Committee (the "Compensation Committee") is composed of Ms.
McWilliams (Committee Chair), Ms. Stepp, Mr. Coleman and Mr. Mazer, who are
outside Directors of the Company. The Compensation Committee is responsible for
designing and administering the Company's executive and all other employee
compensation plans, including the 1992 First Amended and Restated Combination
Stock Option Plan ("the 1992 Plan"), providing oversight of other compensation
matters, establishing officer salaries and bonuses, monitoring the performance
and outside activities of officers, and overseeing succession planning. The
Compensation Committee held four meetings during 1998.
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NOMINATING AND GOVERNANCE COMMITTEE The Nominating and Governance Committee (the
"Nominating Committee") is composed of Mr. Ray (Committee Chair), Mr. Hubbard,
Mr. Kesselman and Mr. Wenner. The Nominating Committee is responsible for
performing the Board's annual self evaluation, monitoring director performance,
locating potential candidates to fill Board vacancies, and selecting the
nominees to stand for election to the Board of Directors at each annual meeting
of shareholders. The Nominating Committee does not consider nominees recommended
by shareholders. The Nominating Committee held one meeting during 1998.
The Company's bylaws provide that nominations for election to the Board of
Directors may be made only by the Board or a Board committee, or by any
shareholder of record entitled to vote in the election of directors at the
meeting. A shareholder who wishes to make a nomination must give written notice,
by personal delivery or mail, to the Secretary of the Company. In the case of an
annual meeting of shareholders, the notice must be received at the principal
executive offices of the Company at the address specified above not less than 60
days and not more than 90 days prior to the first anniversary of the preceding
year's annual meeting. The notice must include the information listed in the
bylaw provision.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN
COMPENSATION DECISIONS
During 1998, Directors who served on the Compensation Committee included Mses.
Stepp and McWilliams and Messrs. Coleman, Hubbard, Mazer, and Ray.
In March 1998, Dresdner purchased $15,000,000 principal amount of the Company's
Convertible Notes. Mr. Coleman is an officer of the general partner of Dresdner.
Mr. Hubbard is President and Chief Executive Officer of the Company. Information
concerning executive compensation is set forth below under the caption
"Executive Compensation."
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 5, 1999, certain information
furnished to the Company with respect to beneficial ownership of the Company's
Common Stock of (i) each Director and Director nominee, (ii) the "named
executive officers" (as defined under "Executive Compensation"), (iii) all
persons known by the Company to be beneficial owners of more than 5% of its
outstanding Common Stock, and (iv) all executive officers and Directors as a
group. See also "Election of Directors--Other Directors" above for information
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with respect to two new Directors and persons that became 5% beneficial owners
of Common Stock as of April 14, 1999.
<TABLE>
<CAPTION>
COMMON STOCK (A)
--------------------------------------------
NUMBER OF PERCENT OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OUTSTANDING
- ------------------------------------------------------- ------------------ -------------------------
<S> <C> <C>
Paul F. Wenner (B) (C) 1,959,574 20.0%
Dresdner Kleinwort Benson Private Equity
Partners LP (D) 1,213,762 12.2%
HLM Management Co., Inc. (E) 749,800 8.5%
Gruber & McBaine Capital Management, LLC (F) 538,850 6.1%
Lyle G. Hubbard (C) 365,550 4.0%
Richard C. Dietz (C) 77,750 *
E. Kay Stepp (C) (G) 52,035 *
Michael L. Ray (C) 16,000 *
Mary O. McWilliams (C) 13,850 *
Richard L. Mazer (C) 9,000 *
Ronald C. Kesselman (C) 8,100 *
Alexander P. Coleman 3,000 *
All executive officers and Directors as a group (9
persons) (C) 2,503,859 24.3%
</TABLE>
- ------------------------
*Less than one percent
(A) Applicable percentage of ownership is based on 8,783,271 shares of Common
Stock outstanding as of March 5, 1999 together with applicable options held
by each shareholder. Beneficial ownership is determined in accordance with
the rules of the Securities and Exchange Commission (the "SEC"), and
includes voting and investment power with respect to shares. Shares of
Common Stock subject to options or warrants currently exercisable or
exercisable within 60 days after March 5, 1999 are deemed outstanding for
purposes of computing the percentage ownership of the person or group
holding such options or warrants, but are not deemed outstanding for
computing the percentage of any other person. Unless otherwise indicated,
each of the shareholders named above has sole voting and investment power
with respect to all shares shown as being beneficially owned by them.
(B) Mr. Wenner's address is 1411 SW Morrison Street, Suite 400, Portland,
Oregon 97205. Mr. Wenner has shared voting and dispositive power as to
32,654 shares which are held by the Paul F. Wenner Charitable Foundation
Trust.
(C) Includes shares subject to options exercisable within 60 days after March
5, 1999, as follows: Mr. Wenner, 1,036,240 shares; Mr. Hubbard, 327,250
shares; Mr. Dietz, 75,750 shares; Ms. Stepp, 42,000 shares; Mr. Ray, 15,000
shares; Ms. McWilliams, 12,000 shares; Mr. Kesselman, 6,000 shares; Mr.
Mazer, 6,000 shares; and all current executive officers and Directors as a
group, 1,520,240 shares.
(D) The address of Dresdner is 75 Wall Street, New York, New York 10005.
Includes 1,162,790 shares, which Dresdner has the right to acquire upon
conversion of the Convertible Notes.
(E) The address of HLM Management Co., Inc. ("HLM"), is 222 Berkeley St.,
Boston, Massachusetts 02116. HLM, an investment adviser registered under
Section 203 of the Investment Advisers Act of 1940, filed a Schedule 13G
reporting sole voting and dispositive power as to 749,800 shares of Common
Stock at December 31, 1998.
(F) The address of Gruber & McBaine Capital Management, LLC ("GMCM"), Jon D.
Gruber ("Gruber"), J. Patterson McBaine ("McBaine"), Thomas O. Lloyd-Butler
("TLB"), Lagunitas Partners, L.P. ("Lag"), and GMJ Investments, L.P.
("GMJ"), is 50 Osgood Place, Penthouse, San Francisco, California 94133.
Gruber and McBaine are the managers of GMCM, an investment adviser, and TLB
is a member of GMCM. GMCM is the general partner of Lag and GMJ, which are
investment limited partnerships. The foregoing persons filed a Schedule 13D
dated February 26, 1999, reporting shared voting and dispositive power as
to 538,850 shares by GMCM, Gruber, McBaine and TLB; Lag and GMJ also have
shared voting and dispositive power as to a portion of these shares as
described below. The Schedule 13D also indicates that Gruber has sole
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voting and dispositive power as to an additional 69,150 shares (together
with the 538,850 shares shown above, 6.9 percent of the outstanding Common
Stock); McBaine has sole voting and dispositive power as to an additional
41,200 shares (together with the 538,850 shares shown above, 6.6 percent of
the outstanding Common Stock); Lag has shared voting and dispositive power
as to 250,250 shares (2.9 percent of the outstanding Common Stock); and GMJ
has shared voting and dispositive power as to 2,500 shares.
(G) Includes 4,935 shares owned by Ms. Stepp's husband, as to which Ms. Stepp
has indirect ownership. Ms. Stepp disclaims any voting or investment power
with respect to such shares owned by her husband.
EXECUTIVE OFFICERS
The following table identifies the executive officers of the Company as of March
5, 1999, the positions they hold, and the year in which they began serving in
their respective capacities. Officers of the Company are elected by the Board of
Directors at the Annual Meeting to hold office until their successors are
elected and qualified.
POSITION HELD
NAME AGE CURRENT POSITION(S) WITH COMPANY SINCE
- ----------------- --- --------------------------------------- -------------
Lyle G. Hubbard 48 President, Chief Executive Officer and 1996
Director
Richard C. Dietz 37 Executive Vice President, Chief Financial 1996
Officer, Treasurer and Secretary
For information on the business background of Mr. Hubbard see "Nominees for
Director" above.
RICHARD C. DIETZ joined the Company in August 1994 as Executive Vice President,
Treasurer and Chief Financial Officer. In 1996, Mr. Dietz was also appointed
Secretary of the Company. From 1993 to July 1994, Mr. Dietz served as Vice
President and Chief Financial Officer of Fine Arts Graphics Corporation of
Oregon. From 1990 to 1993, Mr. Dietz was the Chief Financial Officer of Wyatt
Software, Inc. Mr. Dietz received his public accounting experience with Arthur
Andersen LLP from 1983 to 1987. He received a B.S. in Business Administration
from Oregon State University in 1984 and an M.B.A. from the University of Oregon
in 1991 and has also attended the Executive Education Series at the Harvard
Business School.
OTHER KEY MANAGEMENT EMPLOYEES
MARY N. DILLON joined the Company in July 1996 as Vice President of Retail
Marketing. Ms. Dillon was most recently a Director of Marketing at Quaker, where
she was employed from 1984 to 1996. During that time, she focused on consumer
marketing and general management across many product categories and was a senior
manager for products such as snacks, pet foods, and beverages. Ms. Dillon
received a B.A. in Marketing and Asian Studies at the University of Illinois at
Chicago.
9
<PAGE>
CARTER S. ELENZ joined the Company in July 1996 as Vice President of Retail
Sales. From 1987 to 1996, Mr. Elenz held positions of increasing responsibility
with Quaker, including sales management, marketing and general management at
Quaker headquarters and multiple field locations. From 1985 to 1987, Mr. Elenz
was an Account Executive with Gaines Foods. He graduated with a B.S. in Business
Administration from Valparaiso University.
DAVID W. GATES joined the Company in July 1996 as Vice President of Sales and
was promoted in 1998 to Senior Vice President. Prior to his employment with the
Company, Mr. Gates spent over 30 years with Quaker, where he held various
leadership positions in sales and served as General Manager of the Pritikin
Foods Unit.
JAMES W. LINFORD joined the Company in March 1997 as Vice President of Supply
Chain. He was Vice President and General Manager of CH2M Hill Food Group from
1995 to 1997, Director of Manufacturing for Ocean Spray Cranberries from 1993 to
1995 and General Manager of Operations for Ore-Ida Foods, a division of the
Heinz Company, from 1987 to 1993. Mr. Linford received his B.S. from the
University of Idaho.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides information for the years indicated concerning
compensation awarded, paid to or earned by the Company's Chief Executive Officer
and two other executive officers of the Company during 1998 whose salary and
bonus during 1998 exceeded $100,000 (collectively referred to as the "named
executive officers").
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
----------------------------- --------------
Securities All Other
Underlying Compen-
Name and Principal Position Year Salary (A) Bonus (B) Options(#) sation(C)
- -------------------------------- ------ ------------ ------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Lyle G. Hubbard, President, 1998 $287,149 $213,000 40,000 $ 14,824
Chief Executive Officer and 1997 239,365 113,896 11,250 3,322
Director (D) 1996 149,909 21,808 450,000 180,692
Richard C. Dietz, Executive 1998 148,207 90,000 20,000 3,788
Vice President, Chief 1997 130,000 39,729 9,750 2,600
Financial Officer, Treasurer 1996 120,473 18,800 10,000 700
and Secretary
Paul F. Wenner, Founder, Chief 1998 171,138 103,000 -- 2,792
Creative Officer and Director (E) 1997 164,800 50,231 11,240 3,169
1996 166,259 15,973 -- 507
</TABLE>
(A) Amounts shown include cash compensation earned in each respective year,
including amounts deferred at the election of the named executive officer
pursuant to the Company's 401(k) Plan.
(B) Bonus amounts shown for 1998 have been accrued, but not paid as of the date
of this proxy statement. Bonus amounts earned in 1997 and 1996 were paid in
the first quarter of the following year.
10
<PAGE>
(C) Amounts included in this column for 1998 are as follows:
LIFE INSURANCE
NAME 401(K) MATCHING PREMIUMS HEALTH CLUB DUES
---- --------------- -------------- ----------------
Mr. Hubbard $1,860 $2,035 $10,929
Mr. Dietz 2,997 791 -
Mr. Wenner 1,394 1,398 -
Amounts in this column for Messrs. Dietz and Wenner for 1996 and 1997 and
for Mr. Hubbard for 1997 relate to 401(k) matching.
(D) Salary for 1996 includes amounts earned beginning April 1996 when Mr.
Hubbard joined the Company. All Other Compensation for 1996 represents a
$180,000 lump-sum payment for relocation expenses and $692 in 401(k)
matching.
(E) As of April 1998, Mr. Wenner was no longer considered an executive officer
of the Company. Compensation is shown for the full year.
STOCK OPTIONS
The following table contains information concerning the grant of stock options
under the Company's 1992 Plan to the named executive officers in 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential
Realizable Value
At Assumed Annual
Rates of Stock Price
Appreciation for
Individual Grants Option Term(B)
------------------------------------------------------------ ----------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted (A) Fiscal Year Price ($/Sh.) Date 5% 10%
- ---------------------- ---------------- --------------- -------------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lyle G. Hubbard 40,000 8.56% $ 8.94 02/09/08 $ 224,830 $ 569,763
Richard C. Dietz 10,000 2.14 8.94 02/09/08 56,207 142,441
10,000 2.14 8.97 02/13/08 49,278 131,592
------
20,000
Paul F. Wenner -- -- -- -- -- --
</TABLE>
(A) Options granted during 1998 to the named executive officers vest as to 33.4
percent on the first anniversary of the grant date and as to an additional
33.3 percent on each of the second and third anniversaries thereof. See
"Change-in-Control Arrangements."
(B) These calculations are based on certain assumed annual rates of
appreciation as required by executive compensation disclosure rules adopted
by the SEC. Under these rules, an assumption is made that the shares
underlying the stock options shown in this table will appreciate at rates
of 5% and 10% per annum on a compounded basis over the ten-year term of the
stock options. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Company's Common Stock and
overall stock market conditions. There is no assurance that amounts
reflected in this table will be achieved.
11
<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table provides information concerning the exercise of options
during 1998 and unexercised options held at December 31, 1998 with respect to
the named executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Unexercised Options In-The-Money Options
Shares Acquired Value At December 31, 1998 (#) At December 31, 1998 (A)
Name On Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
------------------- ----------------- ------------- ----------------------------- ----------------------------
<S> <C> <C> <C> <C>
Lyle G. Hubbard -- -- 229,250 272,000 $ 661,225 $ 756,400
Richard C. Dietz -- -- 71,750 28,000 83,687 60,498
Paul F. Wenner -- -- 1,036,240 -- 10,807,972 --
</TABLE>
(A) Calculated based on the difference between the market value of the
underlying securities at December 31, 1998, $11.50 per share, and the
exercise price of the unexercised options.
DIRECTOR COMPENSATION
During 1998, non-employee Directors of the Company, except for Ms. Stepp,
received an annual retainer of $12,000 paid in equal quarterly installments;
directors who are employees are not paid a retainer. Ms. Stepp is paid an annual
retainer of $20,000 in equal quarterly installments for performing her duties as
Chairman of the Board. The non-employee Directors are also reimbursed for their
expenses incurred in attending meetings of the Company's Board of Directors.
Except for Messrs. Anderson, Coleman, and Fish, each non-employee, eligible
Director also automatically receives an annual stock option grant under the 1992
Plan covering 6,000 shares of the Company's Common Stock on the date of each
Annual Meeting of Shareholders. See also "Compensation Committee Interlocks and
Insider Participation in Compensation Decisions."
EMPLOYMENT CONTRACTS AND SEVERANCE AND CHANGE-IN-CONTROL
ARRANGEMENTS
EMPLOYMENT CONTRACT
In April 1996, Lyle G. Hubbard entered into an employment agreement with the
Company to serve as its Chief Executive Officer for a three-year term. The
employment agreement was amended in November 1998 and again in March 1999. The
agreement and the amendments are together referred to as the "Employment
Agreement."
The Employment Agreement required the Company's Board of Directors to review Mr.
Hubbard's performance within 60 days prior to the end of the second year of Mr.
Hubbard's employment and decide whether to extend the term for an additional
year, and to conduct similar reviews of Mr. Hubbard's performance within 60 days
prior to the end of each successive year of the term of the Employment
Agreement. Pursuant to this provision, the term of the Employment Agreement has
been extended to April 15, 2001.
The Employment Agreement provided for initial base compensation of $225,000 per
year, plus performance-based bonus awards. The Board of Directors periodically
12
<PAGE>
reviews Mr. Hubbard's base compensation and may increase, but not decrease, the
amount of such compensation. Mr. Hubbard's base salary was $280,000 during 1998,
and has been increased to $315,000 for 1999.
The Employment Agreement also provides that, in the event Mr. Hubbard's
employment is terminated by virtue of death or disability or "without cause" (in
the absence of a "change in control" as defined in the Employment Agreement), he
will be entitled to severance pay equal to the greater of 18 months of his
annual base compensation then in effect or the base compensation remaining to be
paid to him for the duration of the term of the Employment Agreement, plus the
monthly average of the annual incentive bonuses that he received for the two
fiscal years ending prior to the fiscal year in which the termination occurs
multiplied by the greater of 18 or the number of months remaining in the
unexpired term of the Employment Agreement. If Mr. Hubbard's employment is
terminated either by Mr. Hubbard with "good reason" or by the Company "without
cause" within two years after a "change in control" of the Company for a share
price greater than certain minimum levels, Mr. Hubbard's severance pay will
consist of an amount equal to 2.99 times the sum of the average annual base
compensation and average annual incentive compensation paid to him for the five
years immediately preceding the change in control (or for such lesser number of
years that Mr. Hubbard has been employed by the Company). The severance pay will
be decreased if Mr. Hubbard would be left in a better position after payment of
applicable taxes, including the excise tax imposed with respect to excess
parachute payments under the Internal Revenue Code.
The Employment Agreement contains a noncompetition covenant that prohibits Mr.
Hubbard, during his employment and for a two-year period after the date of
termination of his employment with the Company, from engaging in or assisting
any business that competes with the Company in the production, marketing or sale
of meat substitute vegetarian food products.
SEVERANCE ARRANGEMENT
The Company has entered into a severance agreement with Mr. Dietz pursuant to
which he is entitled to receive, in connection with involuntary termination of
employment other than for cause, six months' salary and benefits, as well as up
to an additional six months' salary and benefits until new employment is found.
In addition, all unvested options held by Mr. Dietz will become immediately
exercisable and will have a five-year term from the date of involuntary
termination.
CHANGE-IN-CONTROL ARRANGEMENTS
Certain options granted to the named executive officers of the Company after May
24, 1995 contain provisions to the effect that such options will immediately
become exercisable as to shares not previously vested upon (i) termination of
employment by the Company without cause, or as a result of the optionee's death
or disability; or (ii) a change in control of the Company. A change in control
will be deemed to have occurred upon the earlier of:
(a) the date that any person becomes a beneficial owner, directly or
indirectly, of securities of the Company representing 25 percent or more of the
combined voting power of the Company's then outstanding securities; or
(b) the date of any annual or special meeting of shareholders at which
a majority of the Directors then elected are not individuals nominated by the
Company's then incumbent Board; or
13
<PAGE>
(c) the date of approval by the shareholders of the Company of (i) a
plan of merger or consolidation of the Company in which such shareholders will
not hold at least 75 percent of the combined voting power of the resulting
entity immediately following such merger or consolidation, or (ii) a plan of
complete liquidation of the Company or an agreement for the sale of
substantially all of the Company's assets.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors approves all of the
policies under which compensation is paid or awarded to the Company's executive
officers. The Board of Directors is responsible for reviewing executive officer
compensation in accordance with policies approved by the Board. Executive
officers who serve on the Board of Directors do not participate in decisions
concerning their own compensation. Awards to executive officers under the
Company's 1992 First Amended and Restated Combination Stock Option Plan are made
by the Compensation Committee.
COMPENSATION PHILOSOPHY AND POLICIES
The Company's philosophy is to structure executive officer compensation so that
it will attract, motivate and retain senior management by providing an
opportunity for competitive compensation based on the performance of the
Company. Executive officer compensation includes market competitive base
salaries, annual performance-based bonuses, 401(k) contributions and long-term
stock-based incentive opportunities in the form of options exercisable to
purchase the Company's Common Stock. Section 162(m) of the Internal Revenue Code
places a limit on the amount of compensation that may be deducted by the Company
in any year with respect to each of the Company's named executive officers. It
is the policy of the Board of Directors that, to the extent possible,
compensation will be structured so that it meets the "performance-based"
criteria as defined by Section 162(m) and therefore is not subject to federal
income tax deduction limitations. The Board of Directors has the right to waive
pre-established performance criteria in granting awards.
BASE SALARIES
In setting the salaries and bonuses for 1998 of the executive officers listed in
the Summary Compensation Table above, the Company utilized a study prepared by
Towers Perrin. The study surveyed companies within the Company's industry and
looked at factors such as annual revenues and expected growth rates. Some of the
companies included in the above mentioned survey are also included in the
indices used in the Performance Graph included in this Proxy Statement. Base
salaries are targeted to be near the 50th percentile of the comparison
companies. Based on this, Mr. Hubbard's 1998 base salary level was established
at $280,000.
ANNUAL BONUSES
The Company's 1998 Executive Bonus Plan provided for performance-based bonuses
based on achieving certain revenue growth targets while not exceeding certain
operating loss objectives. Target bonus amounts were 55 percent of base salary
for the Chief Executive Officer and 45 percent of base salary for the Company's
other executive officers. The bonus target is based 25 percent on achievement of
key strategic objectives that vary by position and 75 percent on attaining sales
growth targets. An unlimited payout is possible for exceeding the sales growth
14
<PAGE>
targets. Towers Perrin assisted the Compensation Committee in the determination
of bonus criteria and target amounts relative to annual base salary.
Under the bonus plan, the Chief Executive Officer earned a total bonus award for
1998 of $283,498. The total amount that the Chief Executive Officer will
actually be paid as his 1998 bonus has not yet been finally determined, but the
Company's Board of Directors has directed that $213,000 of the bonus award,
representing 76 percent of 1998 base salary, be paid to the Chief Executive
Officer during 1999. In early 2000, the Board of Directors will determine
whether and to what extent the Chief Executive Officer should receive the
remainder of his 1998 bonus. The Board's determination will be based on its
evaluation of the Company's performance of its 1999 business plan.
In addition, the Chief Financial Officer earned a total 1998 bonus award of
$120,171, of which $90,000 will be paid during 1999, and the Chief Creative
Officer earned a total 1998 bonus award of $136,625, of which $103,000 will be
paid during 1999. Each such payment represents approximately 62 percent of 1998
base salary. In early 2000, the Board of Directors will determine whether and to
what extent these two officers should receive the balance of their 1998 bonus
awards, based on its evaluation of the Company's performance of its 1999
business plan.
CAPITAL ACCUMULATION/RETIREMENT PLANS
The Company offers its employees the opportunity to participate in a defined
contribution retirement (401(k)) plan designed to allow employees, including
executive officers, to accumulate retirement funds. The first two percent of
each employee's compensation is eligible for a pro-rata matching contribution by
the Company.
STOCK OPTION AWARDS FOR 1998
The Company's 1992 First Amended and Restated Combination Stock Option Plan
provides for the issuance of stock options to officers and employees of the
Company to purchase shares of the Company's Common Stock. Options are granted at
an exercise price equal to 100% of the fair market value of the Company's Common
Stock on the date of grant. Stock options are granted to aid in attracting and
retaining key employees and to align the interests of key employees with those
of shareholders by providing an economic incentive to maximize shareholder
value. Stock options have value for employees only if the price of the Company's
stock increases above the fair market value on the date the option is granted.
The number of shares subject to stock options granted to an employee is based on
the employee's ability to affect corporate results, which generally depends on
the level and amount of responsibility of the employee's position. Towers Perrin
advised the Compensation Committee as to the appropriate number of stock options
to grant to executive officers of the Company to remain competitive. See the
"Option Grants in Last Fiscal Year" table for a summary of stock options granted
to the executive officers of the Company in 1998. Mr. Hubbard received options
covering 40,000 shares of the Company's Common Stock in the first quarter of
1998 based on the Company's 1997 performance.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS:
Mary O. McWilliams (Chair) Richard L. Mazer
Alexander P. Coleman E. Kay Stepp
15
<PAGE>
STOCK PERFORMANCE GRAPH
The SEC requires that public companies include in their proxy statements a
line-graph presentation comparing cumulative five-year shareholder returns on an
indexed basis, assuming a $100 initial investment and reinvestment of dividends,
of (a) the company, (b) a broad-based equity market index and (c) an
industry-specific index. The broad-based market index used by the Company is the
Nasdaq Stock Market Total Return Index - U.S. and the industry-specific index
used is the Standard & Poors MidCap Foods Index.
[STOCK PERFORMANCE GRAPH DIAGRAM]
<TABLE>
<CAPTION>
Indexed Returns
Base Year Ended
Period -------------------------------------------------------------------
Company/Index 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- ------------------------------ ----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Gardenburger, Inc. $100.00 $ 84.14 $ 55.79 $ 45.73 $ 65.85 $ 84.14
Nasdaq U.S. Index 100.00 97.74 138.23 170.01 208.64 255.04
S&P MidCap Foods Index 100.00 91.83 119.16 131.85 163.23 159.33
</TABLE>
<TABLE>
<CAPTION>
Annual Percentage Return
Year Ended
--------------------------------------------------------------------
Company/Index 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- ------------------------------ ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Gardenburger, Inc. (15.86) (33.70) (18.03) 44.00 27.78
Nasdaq U.S. Index (2.26) 41.43 22.99 22.72 22.24
S&P MidCap Foods Index (8.17) 29.76 10.65 23.79 (2.39)
</TABLE>
16
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has selected Arthur Andersen LLP as its independent public
accountants for the year ended December 31, 1999. Arthur Andersen LLP were the
Company's independent public accountants for the year ended December 31, 1998. A
representative from Arthur Andersen LLP is expected to be present at the
Company's Annual Meeting of Shareholders, will be available to respond to
appropriate questions and will have the opportunity, although is not expected,
to make a statement if he desires to do so.
MANAGEMENT TRANSACTIONS
The Company's Board of Directors has adopted a policy that any transactions
between the Company and its officers, Directors, employees and affiliates will
be on terms no less favorable to the Company than can be obtained from
unaffiliated parties. Any such transactions will be subject to the approval of a
majority of the disinterested members of the Board of Directors. See
"Compensation Committee Interlocks and Insider Participation in Compensation
Decisions" above.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and executive officers and persons who own more than 10 percent of the
outstanding shares of the Company's Common Stock ("10 percent shareholders"), to
file with the SEC initial reports of beneficial ownership and reports of changes
in beneficial ownership of shares of Common Stock and other equity securities of
the Company. To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company or otherwise in its files and on written
representations from its Directors, executive officers and 10 percent
shareholders, the Company's officers, Directors and 10 percent shareholders
complied with all applicable Section 16(a) filing requirements during 1998,
except (i) Ms. McWilliams, a Director of the Company, filed one late report on
Form 4, Statement of Changes in Beneficial Ownership, involving one purchase
transaction and (ii) Messrs. Coleman, Kesselman and Mazer, Directors of the
Company, each filed his initial report of beneficial ownership on Form 3 after
the due date.
SHAREHOLDER PROPOSALS
Any shareholder who wishes to have a proposal included in the Company's proxy
materials for its 2000 Annual Meeting must deliver the proposal to the Company
at its principal executive office no later than December 23, 1999. Any such
proposal must meet the informational and other requirements set forth in the
SEC's rules and regulations in order to be eligible for inclusion in the proxy
materials for that meeting.
The Company's bylaws also provide that a shareholder may not present a matter
for action at a meeting (other than matters included in the notice of the
meeting) unless the shareholder has delivered written notice thereof to the
Secretary not less than 60 days and not more than 90 days prior to the first
anniversary of the preceding year's annual meeting. In the case of the Company's
2000 Annual Meeting, this notice must be received by the Company no later than
March 13, 2000. The notice must include the information listed in the bylaw
provision.
17
<PAGE>
TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors is not aware of
any other matters that may come before this meeting. It is the intention of the
persons named in the enclosed proxy to vote the proxy in accordance with their
best judgment if any other matters do properly come before the meeting.
Please return your proxy as soon as possible. Unless a quorum consisting of a
majority of the outstanding shares entitled to vote is represented at the
meeting, no business can be transacted. Therefore, please be sure to date and
sign your proxy exactly as your name appears on your stock certificate and
return it in the enclosed postage prepaid return envelope. Please act promptly
to ensure that you will be represented at this important meeting.
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, UPON THE WRITTEN REQUEST OF ANY
BENEFICIAL OWNER OF SHARES OF THE COMPANY'S COMMON STOCK ENTITLED TO VOTE AT THE
ANNUAL MEETING OF SHAREHOLDERS, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K AS FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION FOR THE COMPANY'S
FISCAL YEAR ENDED DECEMBER 31, 1998. WRITTEN REQUESTS SHOULD BE MAILED TO THE
SECRETARY, GARDENBURGER, INC., 1411 SW MORRISON STREET, SUITE 400, PORTLAND,
OREGON 97205.
By Order of the Board of Directors:
E. Kay Stepp
Dated: April 21, 1999 CHAIRMAN OF THE BOARD OF DIRECTORS
<PAGE>
Command Financial Press Corp.--New York (212)274-0070 Rev. 7.0 18:00 4/5/99
13936 Proxy,1
First Chicago Trust Company--Regular/Portrait--XXXX
- --------------------------------------------------------------------------------
GARDENBURGER, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 1999 ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints E. Kay Stepp and Richard C. Dietz as proxies,
each with power to act alone and with full power of substitution, to vote all of
the shares that the undersigned is entitled to vote at the Annual Meeting of
Shareholders of Gardenburger, Inc. to be held on May 12, 1999, at 10:00 a.m.
Pacific Daylight Savings Time, and any adjournments thereof, with all the powers
that the under-signed would possess if personally present.
PLEASE MARK, SIGN, AND RETURN THE PROXY CARD PROMPTLY
(Continued and to be signed on reverse side.)
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
Command Financial Press Corp.--New York (212)274-0070 Rev. 9.0 18:00 4/7/99
13936 Proxy,2
First Chicago Trust Company--Regular/Portrait--XXXX
- --------------------------------------------------------------------------------
Please mark your
/X/ votes as in this
example.
THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFIC DIRECTION
IS GIVEN AS TO THE ITEM BELOW, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES
NAMED IN PROPOSAL 1. ---
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR EACH OF THE NOMINEES LISTED BELOW.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of Nominees:
Directors (Check / / / / Alexander P. Coleman, Lyle G. Hubbard,
only one box) Ronald C. Kesselman, Richard L. Mazer,
Mary O. McWilliams, Michael L. Ray,
E. Kay Stepp, Paul F. Wenner
Instructions: To withhold authority to vote for any individual nominee, mark
"For" above and write the individual's name on the line below.
In their discretion, the Proxies are
authorized to consider and act upon any
other matter which may properly come
before the meeting or any adjournment
thereof.
- ------------------------- The undersigned acknowledges receipt of
the 1999 Notice of Annual Meeting and
accompanying Proxy Statement and revokes
all prior proxies for said meeting.
SIGNATURE(S)___________________________ DATE______________________________
NOTE: Please sign exactly as name appears above. Joint owners each should
sign. Fiduciaries should add their full title to their signature.
Corporations should sign in full corporate name by an authorized officer.
Partnerships should sign in partnership name by an authorized person.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOU ARE CORDIALLY INVITED TO ATTEND THE
ANNUAL MEETING OF SHAREHOLDERS OF
GARDENBURGER, INC.
TO BE HELD
WEDNESDAY, MAY 12, 1999
10:00 A.M. PACIFIC DAYLIGHTS SAVINGS TIME,
OREGON CONVENTION CENTER, BALLROOM 201
777 N.E. MARTIN LUTHER KING JR. BLVD.,
PORTLAND, OREGON 97212
