<PAGE> 1
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
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
<TABLE>
<S> <C>
[ ] 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 Section 240.14a-11(c) or Section 240.14a-12
</TABLE>
DEL MONTE FOODS COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE> 2
[DEL MONTE FOODS LOGO]
DEL MONTE FOODS COMPANY
One Market
San Francisco, CA 94105
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held November 11, 1999
------------------------
Dear Stockholders:
On Thursday, November 11, 1999, Del Monte Foods Company will hold its
Annual Meeting of Stockholders at The Mark Hopkins Hotel, One Nob Hill, San
Francisco, California 94108. The meeting will begin at 2:00 p.m.
Only record holders of Del Monte Foods Company Common Stock at the close of
business on September 14, 1999 are entitled to notice of, and to vote at, this
meeting and any adjournments. The purpose of the meeting is to:
1. Elect three (3) Class II directors to hold office for a 3-year
term;
2. Approve the appointment of KPMG LLP as our independent auditors for
fiscal year 2000;
3. Act upon any other matter properly brought before the meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSALS
OUTLINED IN THIS PROXY STATEMENT.
By Order of the Board of Directors,
/s/ William R. Sawyers
-----------------------------------
William R. Sawyers
Vice President, General Counsel and
Secretary
San Francisco, California
September 30, 1999
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
QUESTIONS AND ANSWERS....................................... 1
PROPOSALS YOU MAY VOTE ON................................... 2
NOMINEES AND OTHER MEMBERS OF THE BOARD OF DIRECTORS........ 3
CORPORATE GOVERNANCE AND BOARD COMMITTEES................... 4
DIRECTORS' COMPENSATION..................................... 5
OWNERSHIP OF DEL MONTE FOODS COMPANY STOCK.................. 6
SUMMARY COMPENSATION TABLE.................................. 7
OPTION GRANTS IN FISCAL YEAR 1999........................... 8
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999 AND FISCAL
YEAR-END OPTION VALUES.................................... 8
EMPLOYMENT AND OTHER ARRANGEMENTS........................... 8
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION............................................. 12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 12
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE
COMPENSATION.............................................. 14
STOCK PERFORMANCE GRAPH..................................... 16
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..... 16
</TABLE>
<PAGE> 4
DEL MONTE FOODS COMPANY
PROXY STATEMENT FOR ANNUAL MEETING
THURSDAY, NOVEMBER 11, 1999
------------------------
QUESTIONS AND ANSWERS
<TABLE>
<C> <S> <C>
1. Q: WHO IS SOLICITING MY VOTE?
A: This proxy solicitation is being made and paid for by Del
Monte Foods Company ("Del Monte" or the "Company").
2. Q: WHEN WAS THIS PROXY STATEMENT MAILED TO STOCKHOLDERS?
A: This proxy statement was first mailed to stockholders on or
about September 30, 1999.
3. Q: WHAT MAY I VOTE ON?
A: (1) The election of three (3) Class II directors to hold
office for a 3-year term; AND
(2) The approval of the appointment of KPMG LLP as our
independent auditors for fiscal year 2000.
4. Q: HOW DOES THE BOARD RECOMMEND I VOTE ON THE PROPOSALS?
A: The Board recommends a vote FOR each of the nominees. The
Board recommends a vote FOR the appointment of KPMG LLP as
independent auditors for fiscal 2000.
5. Q: WHO IS ENTITLED TO VOTE?
A: Record holders of Del Monte Foods Company Common Stock as of
the close of business on September 14, 1999 (the "Record
Date") are entitled to vote at the Annual Meeting. On
September 14, 1999, 52,177,416 shares of common stock were
outstanding. Each holder of record of Company Common Stock
on the Record Date will be entitled to one vote for each
share on all matters to be voted on at the Annual Meeting.
6. Q: HOW DO I VOTE?
A: Sign and date your proxy card and return it in the prepaid
envelope. If you return your signed proxy card but do not
mark the boxes showing how you wish to vote, your shares
will be voted FOR the two proposals. You have the right to
revoke your proxy at any time before the meeting by:
(1) notifying the Corporate Secretary, William R. Sawyers,
at the address shown below;
(2) attending the annual meeting and voting in person; OR
(3) returning a later-dated proxy card.
7. Q: WHO WILL COUNT THE VOTE?
A: A representative of our transfer agent, The Bank of New
York, will count the votes and act as the inspector of
election. The inspector of election will separately tabulate
affirmative and negative votes, abstentions and broker
non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the
stockholders and will have the same effect as negative
votes. Broker non-votes are counted towards a quorum, but
are not counted for any purpose in determining whether a
matter has been approved by a majority of the shares
represented in person or by proxy and entitled to vote.
8. Q: HOW MANY VOTES ARE NEEDED TO APPROVE EACH OF THE ITEMS?
A: The election of each director nominee must be by a plurality
of the stockholders entitled to vote and the approval of the
independent auditors must be approved by a majority of
shares entitled to vote and represented at the meeting in
person or by proxy.
</TABLE>
1
<PAGE> 5
<TABLE>
<C> <S> <C>
9. Q: HOW WILL VOTING ON ANY OTHER BUSINESS BE CONDUCTED?
A: We do not know of any business to be considered at the 1999
Annual Meeting other than the proposals described in this
Proxy Statement. If any other business is presented at the
Annual Meeting, your signed proxy card gives authority to
David L. Meyers and William R. Sawyers to vote on such
matters at their discretion.
10. Q: WHO IS THE LARGEST PRINCIPAL STOCKHOLDER?
A: As of September 14, 1999, Texas Pacific Group (TPG) owned
24,341,385 shares of Common Stock (46.7% of the voting
shares).
11. Q: WHERE CAN I FIND DEL MONTE'S FINANCIAL INFORMATION?
A: Del Monte Foods Company's consolidated financial statements
and related information are included with our 1999 Annual
Report to Stockholders, which is enclosed with this Proxy
Statement.
12. Q: WHEN ARE STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
DUE?
A: All stockholder proposals to be considered for inclusion in
next year's proxy statement must be submitted in writing to
the Corporate Secretary prior to June 2, 2000. Under the
Company's Bylaws, a proposal or nomination for the 2000
Annual Meeting of Stockholders that the stockholder does not
seek to include in next year's proxy statement must be
submitted in writing and received by the Corporate Secretary
no earlier than 60 days nor more than 90 days before the
date designated for the 2000 Annual Meeting or, if the date
of the 2000 Annual Meeting has not been publicly disclosed
at least 75 days prior to the meeting, then no later than 15
days after the initial public disclosure of the meeting
date.
Your submission must contain the specific information
required in our Bylaws. If you would like a copy of our
Bylaws, please write to the Corporate Secretary of Del Monte
Foods Company at One Market, P.O. Box 193575, San Francisco,
CA 94119-3575.
</TABLE>
PROPOSALS YOU MAY VOTE ON
1. ELECTION OF DIRECTORS
The Board of Directors of Del Monte is divided into three classes, as
nearly equal in number as possible, with each director serving a three year term
and one class being elected at each year's annual meeting of stockholders. The
nominees, Patrick Foley, Jeffrey A. Shaw and Wesley J. Smith, are in the class
of directors whose term expires at this Annual Meeting. Richard W. Boyce, Al
Carey, Denise O'Leary and Richard G. Wolford are in the class of directors whose
term expires at the 2000 Annual Meeting. Timothy G. Bruer, Brian E. Haycox and
William S. Price III are in the class of directors whose term expires at the
2001 Annual Meeting. At each annual meeting of Del Monte Foods Company,
successors to the class of directors whose term expires at such meeting will be
elected to serve for three year terms and until their successors are elected and
qualified.
YOUR BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE THREE (3) NOMINEES
FOR DIRECTOR.
2. APPROVAL OF THE APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS.
The Audit Committee has recommended, and the Board has approved, the
appointment of KPMG LLP as our independent auditors for fiscal 2000 (July 1,
1999 until June 30, 2000) subject to your approval. KPMG LLP has served as our
independent auditors since 1997. They have unrestricted access to the Audit
Committee to discuss audit findings and other financial matters.
Audit services provided by KPMG LLP during fiscal 1999 included an audit of
our consolidated financial statements. They reviewed our Annual Report on Form
10-K and certain other filings with the SEC. KPMG LLP also provided various
non-audit services to us during fiscal 1999.
2
<PAGE> 6
A representative of KPMG LLP is expected to attend the Annual Meeting. He
or she will have the opportunity to speak at the meeting if he or she wishes. He
or she will also respond to appropriate questions.
YOUR BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE
APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS FOR FISCAL 2000.
NOMINEES AND OTHER MEMBERS OF THE BOARD OF DIRECTORS
THE NOMINEES -- INCUMBENT CLASS II DIRECTORS WHOSE TERM EXPIRES AT THIS ANNUAL
MEETING
Patrick Foley, Age 67, Director since August 1997 -- Mr. Foley became a
director of Del Monte in August 1997. Mr. Foley is Chairman of DHL Airways, Inc.
He served as Chairman and Chief Executive Officer of DHL Airways from 1988 to
1999, and from 1988 to 1996 he held the additional title of President. He was
formerly Chairman and President of Hyatt Hotel Corporation. Mr. Foley also
serves on the Boards of Directors of Continental Airlines, Inc., DHL
International, Flextronics International, Foundation Health Systems, Inc.,
Glenborough Realty Trust, Inc., and Event Source.com.
Jeffrey A. Shaw, Age 35, Director since May 1997 -- Mr. Shaw became a
director of Del Monte in May 1997. Mr. Shaw is a partner of TPG and has been an
executive of TPG since 1993. Prior to joining TPG, Mr. Shaw was a principal of
Oak Hill Partners, L.P. and Acadia Partners, L.P., investment partnerships
affiliated with the Robert M. Bass Group, for three years and an investment
banker with Goldman, Sachs & Co. for two years. Mr. Shaw serves as a director of
America West Airlines, Inc., Favorite Brands International, Inc. and Ryanair
PLC, and previously served as a director of Allied Waste Industries, Inc.,
Continental Micronesia, Inc., Ducati Motor Holding S.p.A. and Ducati North
America, Inc.
Wesley J. Smith, Age 52, Director since April 1997 -- Mr. Smith joined Del
Monte as Chief Operating Officer and a director in April 1997. From 1972 to
1995, he was employed by Dole Foods in a variety of positions, including senior
positions in finance, marketing, operations and general management in
California, Hawaii and Honduras.
INCUMBENT CLASS III DIRECTORS SERVING FOR A TERM EXPIRING IN 2000
Richard W. Boyce, Age 45, Director since August 1997 -- Mr. Boyce became
Chairman of the Board and a director of Del Monte in August 1997. Since 1997 Mr.
Boyce has been President of CAF (SRB, Inc.), which provides management
consulting services to various companies controlled by TPG. He served as Chief
Executive Officer of J. Crew Group, Inc. from October 1997 through March 1998
and from January 1999 through May 1999, and has been a director of that company
since October 1997. He has served as interim CEO and Chairman of Favorite Brands
International Holding Corp., which filed for protection under Chapter 11 of the
Bankruptcy Code on March 30, 1999. He has also been a director of Favorite
Brands since September 1995. He was employed by PepsiCo from 1992 to 1997, most
recently as Senior Vice President, Field Operations for Pepsi-Cola North
America. Mr. Boyce was appointed as a director of ON Semiconductor, L.L.C. in
August 1999.
Al Carey, Age 48, Director since November 1997 -- Mr. Carey became a
director of Del Monte in November 1997. He has served as the Senior Vice
President of Sales and Retailer Strategies of PepsiCo, Inc. since August 1998.
Mr. Carey was the Chief Operating Officer of Frito Lay North America, a PepsiCo
company, from June 1996 to August 1998, and has been employed in various
capacities with the PepsiCo organization since 1981.
Richard G. Wolford, Age 55, Director since April 1997 -- Mr. Wolford joined
Del Monte as Chief Executive Officer and a director in April 1997. From 1967 to
1987, he held a variety of positions at Dole Foods, including President of Dole
Packaged Foods from 1982 to 1987. From 1988 to 1996, he was Chief Executive
Officer of HK Acquisition Corp. where he developed food industry investments
with venture capital investors.
3
<PAGE> 7
Denise M. O'Leary, Age 42, Director since August 1997 -- Ms. O'Leary became
a director of Del Monte in August 1997. Since 1996, Ms. O'Leary has been a
private investor in early stage companies. From 1987 to 1996, she was a General
Partner of Menlo Ventures. Ms. O'Leary serves on the Boards of Directors of ALZA
Corporation, America West Holdings Corp. and several private corporations and
not-for-profit organizations. She is a member of the Board of Trustees of
Stanford University and a director of UCSF Stanford Health Care.
INCUMBENT CLASS I DIRECTORS SERVING FOR A TERM EXPIRING IN 2001
Timothy G. Bruer, Age 42, Director since August 1997 -- Mr. Bruer became a
director of Del Monte in August 1997. Since December 1998, he has served as
Chief Executive Officer of Nonni's Food Co., Inc. Mr. Bruer was President and
Chief Executive Officer and a director of Silverado Foods, Inc. from April 1997
to December 1998. From 1992 until 1997, he was Vice President and General
Manager of the Culinary Division of Nestle. He was a director of Authentic
Specialty Foods Inc. from May 1997 to September 1998.
Brian E. Haycox, Age 57, Director since June 1995 -- Mr. Haycox was elected
to the Board of Directors of Del Monte in June 1995. He was elected as
Co-Chairman and Co-Chief Executive Officer of Del Monte in December 1995, and he
served in those capacities until the consummation of the Company's
recapitalization in April 1997. Mr. Haycox served as President and Chief
Executive Officer of Del Monte Tropical Fruit Company from 1988 until 1993.
Prior to that time Mr. Haycox served in a variety of management positions within
the Del Monte organization.
William S. Price III, Age 43, Director since August 1997 -- Mr. Price
became a director of Del Monte in August 1997. Mr. Price was a founding partner
of TPG in 1992. Prior to forming TPG, he was Vice President of Strategic
Planning and Business Development for G.E. Capital, and from 1985 to 1991 he was
employed by Bain & Company, where he was a partner and co-head of the Financial
Services Practice. Mr. Price serves on the Boards of Directors of AerFi Group
plc, Belden & Blake Corporation, Beringer Wine Estates Holdings, Inc.,
Continental Airlines, Inc., Denbury Resources, Inc., Favorite Brands
International, Inc., Vivra Specialty Partners, Inc. and Zilog, Inc.
CORPORATE GOVERNANCE AND BOARD COMMITTEES
Del Monte's business is managed under the direction of the Board of
Directors. The Board delegates the conduct of business to the Company's senior
management team.
Our Board usually meets four times a year in regularly scheduled meetings.
It may meet more often if necessary. The Board held four meetings in fiscal
1999. The Chief Executive Officer, in consultation with the Board of Directors,
usually determines the agenda for the meetings. Board members receive the agenda
and supporting information in advance of the meetings. Board members may raise
other matters at the meetings. The Chief Executive Officer, Chief Financial
Officer and other members of senior management make presentations to the Board
at the meetings and a substantial portion of the meeting time is devoted to the
Board's discussion of these presentations. Significant matters that require
Board approval are voted on at the meetings.
Board members have complete access to senior management. They may also seek
independent, outside advice.
Del Monte's Board of Directors currently has two committees, the Nominating
and Compensation Committee and the Audit Committee.
The Nominating and Compensation Committee has the authority to determine
executive compensation and approve the terms of stock options and stock purchase
rights pursuant to the Company's plans and arrangements. The Committee also has
the authority to recommend nominees for election to the Company's Board of
Directors. The Committee's current members are Messrs. Price and Shaw and Ms.
O'Leary. During fiscal 1999 the Nominating and Compensation Committee held three
meetings.
4
<PAGE> 8
Stockholders may nominate candidates for election to the Company's Board of
Directors in accordance with the Company's Bylaws, a copy of which can be
obtained by writing to the Corporate Secretary of Del Monte Foods Company, One
Market, San Francisco, CA 94105. In general such nominations must be received in
writing by the Corporate Secretary not less than 60 nor more than 90 days before
the date designated for the annual meeting. The nomination must be accompanied
by the name and address of the nominating stockholder. It must state the number
and class of shares held. It must include information regarding each nominee
that would be required to be included in a proxy statement.
The Audit Committee is responsible for reviewing the activities of the
Company's independent accountants and for monitoring the Company's financial
reporting process. The Audit Committee's members are Messrs. Bruer, Foley and
Haycox. These directors are not affiliated with the Company or TPG, in
accordance with applicable New York Stock Exchange requirements. During fiscal
1999 the Audit Committee held two meetings.
During Fiscal 1999 all directors, except for Messrs. Carey, Foley and
Haycox, attended 75% or more of the total of (i) all meetings of the Board of
Directors and (ii) all meetings of Committees of the Board on which each
director served.
DIRECTORS' COMPENSATION
Under Company policy, Messrs. Bruer, Foley and Haycox and Ms. O'Leary each
receive $25,000 per year to be paid in cash or in Common Stock, at the option of
the director. Each of these directors also receives $2,000 for each committee
meeting of the Board of Directors attended in person. The Company's policy with
respect to director's fees was formalized in a Directors' Fee Plan adopted in
April 1999.
In February 1998, the Company adopted a stock incentive plan for the
benefit of directors and independent contractors of the Company. Pursuant to
that plan, Mr. Boyce received options for 148,828 shares of common stock. These
options have a ten-year term and vest monthly on a proportionate basis over four
years.
5
<PAGE> 9
OWNERSHIP OF DEL MONTE FOODS COMPANY STOCK
The following table sets forth certain information regarding beneficial
ownership of the common stock as of July 31, 1999, (i) by each person who is
known by the Company to own beneficially more than 5% of the common stock; (ii)
by each of the Company's directors; (iii) by each of the officers of the Company
identified in the table set forth under the heading "Summary Compensation
Table"; and (iv) by all executive officers and directors as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED(A)
----------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT(B)
------------------------------------ ------------ ------------
<S> <C> <C>
5% STOCKHOLDERS, DIRECTORS AND NAMED EXECUTIVE OFFICERS:
TPG Partners, L.P. ......................................... 22,135,425(c) 42.4%
201 Main Street, Suite 2420
Fort Worth, TX 76102
TPG Parallel I, L.P. ....................................... 2,205,960(c) 4.2
201 Main Street, Suite 2420
Forth Worth, TX 76102
Richard W. Boyce............................................ 86,816(d) *
Richard G. Wolford.......................................... 406,864(e) 0.8
Wesley J. Smith............................................. 408,964(e) 0.8
Timothy G. Bruer............................................ -- --
Al Carey.................................................... 4,588(f) *
Patrick Foley............................................... 6,082(f) *
Brian E. Haycox............................................. 5,363 *
Denise M. O'Leary........................................... 6,236(f) *
William S. Price, III....................................... --(c) --
Jeffrey A. Shaw............................................. -- --
David L. Meyers............................................. 108,221(g) *
Brent D. Bailey............................................. 52,102(h) *
Glynn M. Phillips........................................... 40,840(i) *
All executive officers and directors as a group (19
persons).................................................. 25,572,683(j) 49.7
</TABLE>
- ---------------
* Less than 1%.
(a) The persons named in the table have sole voting and investment power with
respect to all shares of common stock shown as beneficially owned by them,
subject to community property laws where applicable and the information
contained in this table and these notes.
(b) Calculated excluding all shares issuable pursuant to agreements, options or
warrants of Del Monte, except as to each individual, entity or group, the
shares issuable to such individual, entity or group pursuant to agreements,
options or warrants of Del Monte, as described below in notes (d) through
(i), as the case may be.
(c) TPG Partners, L.P. and TPG Parallel I, L.P. are entities affiliated with
William S. Price, III. Mr. Price disclaims beneficial ownership of all
shares owned by such entities.
(d) Includes 86,816 shares issuable upon exercise of options.
(e) In each case, includes 338,625 shares issuable upon exercise of options.
(f) Represents shares of common stock received in lieu of cash in payment of
directors' fees. See "Directors' Compensation."
(g) Includes 60,336 shares issuable upon exercise of options.
(h) Includes 30,341 shares issuable upon exercise of options.
(i) Includes 11,686 shares issuable upon exercise of options.
(j) Includes all shares held by entities affiliated with a director as described
in note (c) above and all shares issuable by Del Monte pursuant to
arrangements as described in notes (e) through (i) above.
6
<PAGE> 10
SUMMARY COMPENSATION TABLE
The following table sets forth compensation paid by the Company for fiscal
years 1999, 1998 and 1997 to each individual serving as its Chief Executive
Officer during fiscal year 1999 and to each of the four other most highly
compensated executive officers of the Company as of the end of fiscal 1999.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------
SECURITIES
OTHER ANNUAL UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL POSITIONS FISCAL YEAR SALARY(1) BONUS COMP(2) OPTION AWARDS PAYOUTS(3) COMP(4)
- ---------------------------- ----------- --------- -------- ------------ ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard G. Wolford(5)..... 1999 $535,000 $401,300 $1,067,092 301,000 -- $ 10,450
President and 1998 500,000 252,500 -- 569,071 -- 7,995
Chief Executive Officer 1997 100,641 -- -- -- -- 251,196
Wesley J. Smith(6)........ 1999 400,000 200,000 1,054,053 88,000 -- 9,024
Chief Operating Officer 1998 400,000 202,000 -- 569,071 -- 6,896
1997 80,513 -- -- -- -- 251,145
David L. Meyers........... 1999 310,000 155,000 -- 78,000 -- 37,358
Executive Vice President, 1998 298,000 150,500 -- 151,701 -- 12,206
Administration and 1997 286,000 159,400 -- -- $421,000 2,959,771
Chief Financial Officer
Brent D. Bailey(7)........ 1999 275,000 137,500 411,304 55,000 -- 1,848
Executive Vice President, 1998 125,160 63,200 -- 151,701 -- 770
Marketing 1997 -- -- -- -- -- --
Glynn M. Phillips......... 1999 238,811 118,300 -- 42,000 -- 27,530
Executive Vice President, 1998 238,795 119,400 -- 29,497 -- 11,838
Sales 1997 239,118 118,300 -- -- 280,000 1,974,454
</TABLE>
- ---------------
(1) Reflects actual base earnings for the fiscal year specified.
(2) For fiscal 1999: Reflects, for Messrs. Wolford, Smith and Bailey, amounts
deemed to be compensation due to the difference between the purchase price
of Del Monte common stock purchased by each executive and the price deemed
to represent the fair value of such stock for compensation purposes;
reimbursement of estimated tax liability for such deemed compensation; and,
for Messrs. Wolford and Smith, related legal expenses -- Mr. Wolford
$1,044,698; Mr. Smith $1,046,643; and Mr. Bailey $329,811. Also reflects
other miscellaneous perquisites.
(3) Reflects payments under the Company's Old Management Equity Plan (as
described below).
(4) For fiscal 1999: Company contributions to the Del Monte Corporation Savings
Plan -- Mr. Wolford $4,800, Mr. Smith $4,800, Mr. Meyers $4,800, Mr.
Phillips $4,800; Company paid term life premiums -- Mr. Wolford $5,650, Mr.
Smith $4,224, Mr. Meyers $3,274, Mr. Bailey $1,848, Mr. Phillips $6,243;
amount paid under the nonqualified Additional Benefits Plan -- Mr. Meyers
$4,554; amounts released from an escrow created in connection with the
Company's April 1997 recapitalization under the New MEP (as defined
herein) -- Mr. Meyers $24,730, Mr. Phillips $16,487.
For fiscal 1998: Company contributions to the Del Monte Corporation Savings
Plan -- Mr. Wolford $1,875, Mr. Smith $2,000, Mr. Meyers $4,800, Mr.
Phillips $4,800; Company paid term life premiums -- Mr. Wolford $6,120, Mr.
Smith $4,896, Mr. Meyers $3,585, Mr. Bailey $770, Mr. Phillips $7,038;
amount paid under the nonqualified Additional Benefits Plan -- Mr. Meyers
$3,821.
For fiscal 1997: Company contributions to the Del Monte Corporation Savings
Plan -- Mr. Meyers $4,500, Mr. Phillips $4,500; Company paid term life
premiums -- Mr. Wolford $1,196, Mr. Smith $1,145, Mr. Meyers $4,198, Mr.
Phillips $5,325; amount paid under the nonqualified Additional Benefits
Plan -- Mr. Meyers $4,130; amounts under the New MEP (defined herein) paid
April 1997 -- Mr. Meyers $2,946,943, Mr. Phillips $1,964,629. For Messrs.
Wolford and Smith, the fiscal 1997 amount also includes a consulting fee of
$250,000 each paid in December 1997 for the period prior to April 18, 1997.
(5) Mr. Wolford became Chief Executive Officer as of April 18, 1997.
(6) Mr. Smith became Chief Operating Officer as of April 18, 1997.
(7) Mr. Bailey became Executive Vice President, Marketing, as of January 19,
1998.
7
<PAGE> 11
OPTION GRANTS IN FISCAL YEAR 1999
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
----------------------------------------------------- ---------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS GRANTED TO EXERCISE
UNDERLYING OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(1) FISCAL YEAR (PER SHARE) DATE 5% 10%
---- ------------------ ------------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Richard G. Wolford.... 301,000 16.5% $13.00 12/4/08 $2,460,865 $6,236,314
Wesley J. Smith....... 88,000 4.8% 13.00 12/4/08 719,455 1,823,241
David L. Meyers....... 78,000 4.3% 13.00 12/4/08 637,699 1,616,055
Brent D. Bailey....... 55,000 3.0% 13.00 12/4/08 449,660 1,139,526
Glynn M. Phillips..... 42,000 2.3% 13.00 12/4/08 343,376 870,183
</TABLE>
- ---------------
(1) For each of these grants, 50% of the option shares vest annually on a
proportionate basis over a four (4) year period and 50% of the options
shares vest annually on a proportionate basis over a five (5) year period.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999 AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT JUNE 30, 1999 AT JUNE 30, 1999
SHARES -------------------- --------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- -------------------- --------------------
<S> <C> <C> <C> <C>
Richard G. Wolford................... -- $-- 304,256/565,815 $3,508,072/4,182,067
Wesley J. Smith...................... -- -- 304,256/352,815 3,508,072/3,383,317
David L. Meyers...................... -- -- 60,336/169,365 695,674/1,345,938
Brent D. Bailey...................... -- -- 30,341/176,360 349,832/1,605,531
Glynn M. Phillips.................... -- -- 11,686/59,811 134,740/362,861
</TABLE>
EMPLOYMENT AND OTHER ARRANGEMENTS
The Annual Incentive Award Plan
The Annual Incentive Award Plan ("AIAP") provides annual cash bonuses to
certain management employees, including the named senior executives. The target
bonus for each eligible employee is based on a percentage of base salary. Actual
payment amounts are based on the Company's achievement of financial objectives
and individual performance objectives at fiscal year end. For fiscal 1999, the
targeted percentage of base salary was as follows: Mr. Wolford -- 75%, Mr.
Smith -- 50%, Mr. Meyers -- 50%, Mr. Bailey -- 50%, and Mr. Phillips -- 50%.
Messrs. Wolford and Smith were not eligible for bonuses under the AIAP for
fiscal 1997.
Stock Purchase Plan
The Del Monte Foods Company Employee Stock Purchase Plan was approved on
August 4, 1997 and amended on November 4, 1997. Under this plan, key employees
were allowed to purchase up to $5 million in common stock. To date, 454,137
shares of the Company's common stock have been purchased by and issued to
eligible employees under this plan.
8
<PAGE> 12
Stock Incentive Plans
The Del Monte Foods Company 1997 Stock Incentive Plan (the "1997 Plan") was
approved on August 4, 1997 and amended on November 4, 1997. Under the 1997 Stock
Incentive Plan, grants of incentive stock options and nonqualified stock options
representing 1,821,181 shares of common stock may be made to key employees. With
the exception of options for 151,701 shares issued to Mr. Bailey on January 19,
1998, the options were granted at an exercise price equal to the fair market
value of the shares at the time of such grant. Options issued under the 1997
Plan have a ten-year term. The 1997 Plan includes two different vesting
schedules. The first provides for annual vesting on a proportionate basis over
five years and the second provides for monthly vesting on a proportionate basis
over four years. As of June 30, 1999, options for 1,685,565 shares of common
stock were held by eligible employees under the 1997 Plan. The Company does not
anticipate granting any additional options under this plan.
The Del Monte Foods Company 1998 Stock Incentive Plan (the "1998 Plan") was
adopted initially by the Board of Directors on April 24, 1998, was modified by
the Board on September 23, 1998, and was approved by the stockholders on October
28, 1998. Under the 1998 Plan, grants of incentive and nonqualified stock
options ("Options"), stock appreciation rights ("SARs") and stock bonuses
(together with Options and SARs, "Awards") representing 3,195,687 shares of
common stock may be made to employees of the Company. Subject to certain
limitations, the Compensation Committee has authority to grant Awards under the
1998 Plan and to set the terms of any such Awards. The Chief Executive Officer
also has limited authority to grant Awards. For each of these grants, 50% of the
option shares vest annually on a proportionate basis over a four-year period and
50% of the option shares vest annually on a proportionate basis over a five-year
period. On December 4, 1998, Options for 1,824,433 shares were granted under the
1998 Plan at an exercise price of $13.00 per share, which was determined to be
fair value at that time. In between that date and June 30, 1999, an additional
53,425 shares were granted at an exercise price equal to the fair value on the
date of grant. As of June 30, 1999, options for 1,842,344 shares of common stock
were held by eligible employees under the 1998 Plan.
The Del Monte Retirement Plan for Salaried Employees
The Del Monte Corporation Retirement Plan for Salaried Employees (the "Del
Monte Corporation Retirement Plan"), which became effective as of January 1,
1990, is a non-contributory defined benefit retirement plan covering salaried
employees of the Company. Credits are made monthly to each participant's
personal retirement account ("PRA") consisting of a percentage of that month's
eligible compensation, plus interest on his or her account balance. A
participant is fully vested upon completion of five years of service.
The percentage of monthly compensation credited varies according to age as
follows:
<TABLE>
<CAPTION>
ALL MONTHLY MONTHLY COMPENSATION
PARTICIPANT AGE COMPENSATION ABOVE SOCIAL SECURITY BASE
--------------- ------------ --------------------------
<S> <C> <C>
Below 35................................... 4.0% 3.0%
35 but below 45............................ 5.0% 3.0%
45 but below 55............................ 6.0% 3.0%
55 and over................................ 7.0% 3.0%
</TABLE>
The Del Monte Corporation Retirement Plan was amended effective January 1,
1998 to change the interest credit from 110% of the U.S. Pension Benefit
Guaranty Corporation ("PBGC") rate to the yield on the 12-month Treasury Bill
rate plus 1.5%. In addition, the factors for annuity conversions were changed
from specific Company factors to factors based on 30-year Treasury Bond yields
and an Internal Revenue Service ("IRS") specified mortality table. A
participant's annual age 65 annuity benefit will be the greater of an annuity
based on (i) the credit balance as of December 31, 1997 increased by interest
credits (and not compensation credits) of 110% of the December 31, 1997 PBGC
rate divided by 8.2 or (ii) the credit balance at the time of retirement using
an annuity factor based on 30-year Treasury Bond yields and an IRS specified
mortality table. Alternatively, a participant at retirement or other termination
of employment may elect a lump sum distribution of his or her account balance.
9
<PAGE> 13
Participants who, as of January 1, 1988, were at least age 40 with ten or
more years' service, or at least age 55 with five or more years' service, are
eligible to receive an alternative retirement benefit that is based on the terms
of the prior Del Monte Corporation Retirement Plan. For credited service after
December 31, 1981, such participants have accrued an annual benefit of 1.75% of
average final compensation multiplied by years of credited service. Average
final compensation is the participant's highest five years' average compensation
during his or her last ten years of credited service. Compensation generally
includes base salary and awards under the AIAP but not other forms of incentive
compensation. The amount determined by this alternative benefit formula is
reduced by 0.75% of the participant's Social Security benefit, multiplied by
years of credited service. For credited service prior to January 1, 1982, a
similar benefit formula is applied.
The Del Monte Corporation Retirement Plan was amended effective April 30,
1992 to cease recognition of any future credited service or average final
compensation under the alternative retirement benefit. At retirement, a
participant who was eligible for the alternative retirement benefit will receive
an annual retirement benefit equal to the greater of the retirement benefit
determined by his or her PRA, or his or her alternative retirement benefit based
on compensation and credited service to April 30, 1992. Alternatively, a
participant may elect the greater of a lump sum distribution of his or her PRA
account balance or the actuarial equivalent lump sum of the age 65 alternative
benefit.
Nonqualified Retirement Plans
Effective January 1, 1990, the Company established the Del Monte
Corporation Additional Benefits Plan and the Del Monte Corporation Supplemental
Benefits Plan (the "Nonqualified Retirement Plans"). The Nonqualified Retirement
Plans are "top hat" and "excess" benefit plans designed to provide benefits in
excess of those otherwise permitted under the Del Monte Corporation Retirement
Plan and the Del Monte Corporation Savings Plan (which is qualified under
Section 401(k) of the Internal Revenue Code) by Sections 401(a)(17) and 415 of
the Internal Revenue Code. The Nonqualified Retirement Plans also provide
benefits in respect of certain amounts of severance not taken into account under
the Del Monte Corporation Retirement Plan or the Del Monte Corporation Savings
Plan. Employees who participate in the Del Monte Corporation Retirement Plan or
the Del Monte Corporation Savings Plan are generally eligible to participate in
the Nonqualified Retirement Plans. Benefits under the Nonqualified Retirement
Plans are unfunded and paid from the general assets of the Company.
Set forth below are the estimated annual benefits payable at age 65
(assuming lump sum payments are not elected) under the Del Monte Corporation
Retirement Plan and the Nonqualified Retirement Plans:
<TABLE>
<CAPTION>
YEAR ATTAINING ESTIMATED ANNUAL
PARTICIPANT AGE 65 RETIREMENT BENEFIT(A)
----------- -------------- ---------------------
<S> <C> <C>
Mr. Wolford................................. 2009 $144,417
Mr. Smith................................... 2012 120,045
Mr. Meyers.................................. 2010 176,034
Mr. Bailey.................................. 2017 128,034
Mr. Phillips................................ 2002 26,277
</TABLE>
- ---------------
(a) The estimated annual retirement benefits shown assumes no increase in
compensation or AIAP and interest credits (as defined in the plans) of
6.96%.
The Management Equity Plan
Established beginning in fiscal 1995 and modified in March 1996, the
Company's Management Equity Plan ("New MEP") provided awards to certain key
executives upon the sale of the Company or upon the public offering of the
Company's common stock. Under the terms of the New MEP, the "Base Value" of the
Company's preferred and common stock was established at $125 million. To the
extent that proceeds from the sale of the Company to preferred and common
stockholders (after repayment of debt but without reduction for payment to
executives under the New MEP) exceeded the $125 million Base Value, an award
pool of 6% of such excess was set aside for payment to the Company's executive
officers. In connection with the
10
<PAGE> 14
recapitalization, the Company made payments aggregating approximately $19.7
million pursuant to the New MEP. Of this amount, Mr. Meyers received $2,946,943
and Mr. Phillips received $1,964,629. The New MEP was terminated concurrent with
the Company's April 1997 recapitalization.
Messrs. Meyers and Phillips were also participants in the MEP prior to its
modification in March 1996 (the "Old MEP"), and as such became eligible for
awards for fiscal 1995 based on the annual equity growth formula in effect under
the Old MEP for such year. Messrs. Meyers and Phillips remained eligible for
installment payment of the Old MEP awards in the amounts of $421,000 and
$280,000, respectively, for fiscal 1997. The Company was obligated to pay these
fiscal 1997 awards in April 1997 at the time of the recapitalization.
Employment Arrangements
During fiscal 1999, the Company had employment agreements with each of
Messrs. Wolford, Smith, Bailey, Meyers and Phillips. The following summaries of
the material provisions of the employment agreements with Mr. Wolford and Mr.
Smith (the "Wolford/Smith Employment Agreements"), the employment agreement with
Mr. Meyers (the "Meyers Employment Agreement") and the employment agreement with
Messrs. Bailey and Phillips (the "EVP Employment Agreements") do not purport to
be complete and are qualified in their entirety by reference to such agreements.
The Company has filed the employment agreements of Messrs. Wolford, Smith,
Meyers, Bailey and Phillips, as exhibits to the Company's Annual Report on Form
10-K for the year ended June 30, 1999.
On March 16, 1998, Del Monte entered into employment agreements with Mr.
Wolford and Mr. Smith as Chief Executive Officer and Chief Operating Officer,
respectively. The Wolford/Smith Employment Agreements are for an indefinite
term. Under the terms of the Wolford/Smith Employment Agreements, if the
employment of Mr. Wolford or Mr. Smith is terminated by Del Monte for any reason
other than for Cause (as defined) or by such executive for any reason, the
executive would be entitled to continue to receive his base salary and target
award under the AIAP and to participate in certain employee welfare benefit
plans and programs of the Company for up to two years after the date of such
termination of employment, subject to his not competing with the Company, not
soliciting employees of the Company and not disclosing proprietary or
confidential information of the Company, and subject to his signing a general
release and waiver with respect to certain claims he may have against the
Company.
The Meyers Employment Agreement is for an indefinite term. It provides that
if Mr. Meyers' employment terminates for any reason other than for Cause (as
defined) or if he resigns for Good Reason (as defined), he would receive as
severance, subject to the executive's not competing with the Company or
disclosing confidential information or trade secrets of the Company, severance
payments over a three-year period commencing on the date of such termination or
resignation. The aggregate amount of the severance payable to the executive over
such three-year period would equal two times the sum of: (i) Mr. Meyers' highest
annual base salary in effect during the 12-month period prior to such
termination or resignation and (ii) the target award under the AIAP (or
successor thereto) for the year in which such termination or resignation occurs
(or, if greater, the amount of the award for the next preceding year). In
addition, Mr. Meyers would receive a pro rata annual bonus under the AIAP for
the year in which such termination or resignation occurs and would be entitled
to participate in certain employee benefit plans and programs maintained by the
Company in which the executive participates until the earlier of (i) the end of
the three-year period and (ii) such time as the executive is covered by
comparable programs of a subsequent employer.
The EVP Employment Agreements are for an indefinite term. The EVP
Employment Agreements provide that if Mr. Bailey's or Mr. Phillips' employment
terminates for any reason other than for Cause (as defined) or if Mr. Bailey or
Mr. Phillips resigns for Good Reason (as defined), the executive would receive
as severance three months of his then current base pay. In addition, if the
executive executes and delivers to the Company a written agreement confirming
his commitment not to compete with the Company and not to disclose confidential
information or trade secrets of the Company, the Company would then provide the
executive severance payments over an eighteen-month period commencing on the
date of such termination or resignation. The aggregate amount of the severance
payable to the executive over such 18-month period would
11
<PAGE> 15
equal the sum of (i) the executive's highest annual rate of base salary in
effect during the 12-month period prior to such termination or resignation, and
(ii) the target award under the AIAP (or successor thereto) for the year in
which such termination or resignation occurs (or, if greater, the amount of the
award for the next preceding year of employment). In addition, the executive
would receive a pro rata annual bonus under the AIAP for the year in which such
termination or resignation occurs and would be entitled to participate in
certain employee benefit plans and programs maintained by the Company in which
the executive participates until the earlier of (i) the end of the 18-month
period or (ii) such time as the executive is covered by comparable programs of a
subsequent employer.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1999, Messrs. Price and Shaw and Ms. O'Leary served as
members of the Nomination and Compensation Committee of Del Monte Foods
Company's Board of Directors. Both Messrs. Price and Shaw are officers of
TPG -- See "Certain Relationships and Related Transactions".
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In April 1997, the Company was recapitalized with an equity investment from
TPG and other investors. In connection with the recapitalization, the Company
entered into a ten-year agreement dated April 18, 1997 (the "Management Advisory
Agreement") with TPG. Under this agreement, TPG is entitled to receive an annual
fee from the Company for management advisory services equal to the greater of
$500,000 and 0.05% of the budgeted consolidated net sales of the Company. For
Fiscal 1999, TPG or its designee received fees of approximately $800,000 under
this agreement. In addition, the Company has agreed to indemnify TPG, its
affiliates and shareholders, and their respective directors, officers,
controlling persons, agents, employees and affiliates from and against all
claims, actions, proceedings, demands, liabilities, damages, judgments,
assessments, losses and costs, including fees and expenses, arising out of or in
connection with the services rendered by TPG thereunder. This indemnification
may not extend to actions arising under the U.S. federal securities laws. This
agreement makes available TPG's resources concerning a variety of financial and
operational matters, including advice and assistance in reviewing the Company's
business plans and its results of operations and in evaluating possible
strategic acquisitions, as well as providing investment banking services in
identifying and arranging sources of financing. This agreement does not specify
a minimum number of TPG personnel who must provide such services or the
individuals who must provide them. It also does not require that a minimum
amount of time be spent by such personnel on Company matters. The Company cannot
otherwise obtain the services that TPG will provide without the addition of
personnel or the engagement of outside professional advisors.
In connection with the recapitalization, the Company also entered into a
ten-year advisory agreement dated April 18, 1997 (the "Transaction Advisory
Agreement") with TPG. Under this agreement, TPG received a cash financial
advisory fee of approximately $8.4 million upon the closing of the
recapitalization as compensation for its services as financial advisor for the
recapitalization. These services included assistance in connection with the
evaluation of the fairness of the recapitalization and the valuation of the
Company for those purposes. TPG is also entitled to receive a fee of 1.5% of the
"transaction value" for each transaction in which the Company is involved, which
may include acquisitions, refinancings and recapitalizations. The term
"transaction value" means the total value of any transaction, including, without
limitation, the aggregate amount of the funds required to complete the
transaction (excluding any fees payable pursuant to the Transaction Advisory
Agreement and fees, if any paid to any other person or entity for financial
advisory, investment banking, brokerage or any other similar services rendered
in connection with such transaction), including the amount of indebtedness,
preferred stock or similar items assumed (or remaining outstanding). The
Transaction Advisory Agreement includes indemnification provisions similar to
those described above. These indemnification provisions may not extend to
actions arising under the U.S. federal securities laws. Under this Agreement,
TPG or its designee received a fee of approximately $3 million upon the closing
of the acquisition of Contadina in Fiscal 1998. In Fiscal 1999, TPG or its
designee received approximately $500,000
12
<PAGE> 16
in connection with the acquisition of Del Monte South America and approximately
$4 million in connection with the Company's public equity offering.
Under a registration rights agreement between the Company and TPG, the
Company has granted TPG the right to require the Company to register shares of
common stock held by TPG and its affiliates for public sales, often referred to
as demand registration. So long as TPG and its affiliates continue to hold at
least 5% of the outstanding shares of common stock, TPG will have the right to
request one demand registration in each nine-month period. In the event that the
Company registers shares of common stock held by TPG, the Company would also be
required to register shares of common stock held by other stockholders of the
Company upon their request.
The employment of Mr. Haycox pursuant to the CEO Agreement was terminated
effective as of April 18, 1997. Mr. Haycox continued to receive the salary that
he would have earned pursuant to the CEO Agreement until September 1997. In
September 1997, the Company paid to Mr. Haycox a lump sum payment of $250,000,
which was equal to the base salary that Mr. Haycox would have earned pursuant to
the CEO Agreement between the date the lump sum payment was made and December
31, 1997.
During the second and third quarters of fiscal 1998, the Company sold
shares of common stock to certain key employees, including the executive
officers of the Company, pursuant to the Company's Employee Stock Purchase Plan.
See "Management -- Employment and Other Arrangements -- Stock Purchase Plan."
Messrs. Wolford and Smith each paid $175,000 in cash and borrowed an additional
$175,000 from the Company in order to acquire the stock purchased by him
pursuant to such plan. As of August 1, 1999, these loans bore interest at a rate
of 5.36%, which rate is adjusted semi-annually. These loans are evidenced by
promissory notes that are secured by a pledge of the stock purchased with the
proceeds of the loans. The Company extended these loans in accordance with
applicable law governing transactions by a corporation with its officers. The
Company cannot predict whether the terms of such transactions, if made with a
disinterested third party, would be more or less favorable to Messrs. Wolford
and Smith. The Company has no reason to believe that such terms would be less
favorable. The Company's bank financing arrangements limit the ability of the
Company to make loans or advances to employees to a maximum amount outstanding
at any time of $5 million. Aside from the loans to Messrs. Wolford and Smith,
the Company has made no such loans or advances to any of its directors, officers
or employees. Any vote of the shares securing any loan must be made in
accordance with Delaware law.
Certain conflicts of interest could arise as a result of the relationship
between the Company and TPG. Messrs. Price and Shaw, each a partner of TPG, are
also directors of the Company and members of the Nominating and Compensation
Committee. Mr. Boyce, a director of the Company, is also an officer of CAF, a
company that provides management consulting services to companies affiliated
with TPG. None of the Company's management is affiliated with TPG. TPG has the
power to control the management and policies of the Company and matters
requiring stockholder approval. TPG may be subject to a conflict of interest in
allocating acquisition or other business opportunities between the Company and
other entities in which TPG has substantial investments. Although currently TPG
has no investment in any entity that competes directly with the Company, it may
in the future make such an investment.
The Company will address any conflicts of interest and future transactions
it may have with its affiliates, including TPG, or other interested parties in
accordance with applicable law. Delaware law provides that any transaction with
any director or officer or other entity in which any of the Company's directors
or officers are also directors or officers, or have a financial interest, will
not be void or voidable solely due to the fact of the interest or affiliation,
nor because the votes of interested directors are counted in approving the
transaction, so long as (i) the material facts of the relevant party and its
interest are disclosed to the Board of Directors or the stockholders, as
applicable, and the transaction is approved in good faith by a majority of the
disinterested directors or by a specific vote of the stockholders, as
applicable; or (ii) the transaction is fair to the Company at the time it is
authorized, approved or ratified.
13
<PAGE> 17
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The compensation of the Company's executive officers is determined by the
Company's Nominating and Compensation Committee (the "Committee") which consists
entirely of non-employee directors. In developing the executive compensation
program of the Company, the Committee has used the services of a national
recognized compensation consulting firm, which provides information to assist
the Committee.
Compensation Philosophy
The primary components of the Company's executive compensation program are
base salary, an annual cash incentive award based primarily on the Company's
performance, and a long term incentive program which consists of grants of stock
options. It is the philosophy of the Board of Directors of the Company generally
to set base salary and the annual incentive award at the median range of
salaries and bonus paid by a selected peer group of companies in the branded
food industry. Through the use of stock options, executive officers have the
opportunity to receive total compensation, including base salary, annual
incentive award and long term incentives, at the apex of the same peer group of
companies. This opportunity depends, in part, on the performance of the
Company's stock. This emphasis on long term incentives is intended to encourage
the executives to focus on the growth of the Company and the value of its stock.
Base Salary
Base salaries for executives are set at levels consistent with the
compensation philosophy, and that are considered appropriate in view of the
responsibilities of each position. Individual performance is also considered.
The Committee approves all salary increases for executive officers.
Annual Incentive Award
The annual incentive award program provides for cash awards to be
determined shortly after the end of the fiscal year. Prior to the start of the
fiscal year, the Committee establishes financial targets as an incentive for
superior corporate performance. Each executive has a target award based on a
percentage of base salary. The payout of the award to executives is based solely
on the attainment of the financial targets established at the start of the
fiscal year, except for the Chief Executive Officer. In the case of the Chief
Executive Officer, the payout is based 2/3 on the financial performance targets
and 1/3 on individual objectives set annually by the Committee. Payout to the
executives can range from zero to 200% of the target award based on achievement
of the financial targets and, in the case of the CEO, individual performance.
Long Term Incentive Plan Compensation
Long term incentives are addressed through grants of stock options. The
Committee believes that using stock options as a long term incentive aligns the
interests of the officers of the Company with those of the stockholders. The
Committee approves all option grants for executive officers and the guidelines
to be used for option grants for other management employees. Individual grants
of stock options are made based on level of responsibility and individual
performance.
Compensation of Chief Executive Officer
The Committee meets annually to review the performance of Richard G.
Wolford, President and Chief Executive Officer of the Company. In fiscal 1999,
based on the Committee's recommendation, the Board approved a salary increase of
7% and an increase in the target award for the annual incentive award program to
75% from 50% of Mr. Wolford's base salary. In fiscal 1999, the Board also
approved an option grant to Mr. Wolford of 301,000 shares of Common Stock. These
options were granted at the then fair market value of $13.00 per share. These
options vest over a five year period at the rate of 22.5% per year for four
years and 10% in the fifth year. Detailed compensation disclosure is contained
in the Executive Compensation Summary Compensation Table.
14
<PAGE> 18
Tax Treatment of Executive Compensation
Section 162(m) of the Internal Revenue Code imposes a limitation on the
deductibility of nonperformance-based compensation in excess of $1 million paid
to Named Executive Officers. The Committee intends that the Company will
generally manage its executive compensation program so as to preserve the
related federal income tax deductions.
Submitted by the Nominating and Compensation Committee of the Board of
Directors:
William S. Price III, Chairman
Denise M. O'Leary
Jeffrey A. Shaw
15
<PAGE> 19
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return on
Del Monte Foods Company Common Stock with the cumulative total return of the
Russell 2000 and the Standard & Poor's Midcap Food indexes, for the period
commencing February 5, 1999 and ending on June 30, 1999 (the first day of
trading to the fiscal year end). The graph is based on the assumption that $100
was invested on February 5, 1999 in Del Monte's Common Stock and in each index,
and that all dividends were reinvested.
[Stock Performance Graphic]
<TABLE>
<CAPTION>
DLM COMMON STOCK RUSSELL 2000 S&P MIDCAP FOOD
---------------- ------------ ---------------
<S> <C> <C> <C>
2/5/99 100 100 100
2/26/99 88 95 96
3/31/99 84 97 93
4/30/99 86 105 93
5/28/99 80 107 97
6/30/99 107 112 99
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
We believe that during fiscal 1998, all SEC filings of directors, officers
and ten percent stockholders complied with the requirements of Section 16 of the
Securities Exchange Act except that Richard G. Wolford filed a late Form 4 with
respect to the first 100 shares of Common Stock traded on the New York Stock
Exchange on the first day of trading. This belief is based on our review of
forms filed, or written notice that no forms were required.
By Order of the Board of Directors,
/s/ William R. Sawyers
-----------------------------------
William R. Sawyers
Vice President, General Counsel and
Secretary
San Francisco, California
September 30, 1999
16
<PAGE> 20
DEL MONTE FOODS COMPANY
PROXY/VOTING INSTRUCTIONS CARD
This proxy is solicited on behalf of the Board of Directors of Del Monte Foods
Company for the Annual Meeting on November 11, 1999
The undersigned stockholder of Del Monte Foods Company hereby appoints
David L. Meyers and William R. Sawyers and each of them, with full power of
substitution in each, the proxies of the undersigned, to represent the
undersigned and vote all shares of Del Monte Foods Company Common Stock which
the undersigned may be entitled to vote at the Annual Meeting of Stockholders to
be held November 11, 1999 and at any adjournment or postponement thereof, as
indicated on the reverse side.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is given, this proxy will
be voted FOR the nominees set forth in proposal 1 and FOR proposal 2.
(Continued and to be signed on the reverse side)
DEL MONTE FOODS COMPANY
P.O. BOX 11051
NEW YORK, NY 10203-0051
The Board of Directors recommends a vote "FOR" all nominees in proposal 1 and
"FOR" proposal 2.
1. Election of Class FOR all nominees WITHHOLD AUTHORITY *EXCEPTIONS
II Directors listed below to vote for all
nominees listed below
Nominees: Patrick Foley, Jeffrey A. Shaw and Wesley J. Smith
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided
below.)
*Exceptions ____________________________________________________________________
2. To ratify and approve the selection In their discretion the Proxies are
by the Board of Directors of KMPG LLP authorized to vote upon such other
as independent accountants for the matters as may properly come before
Company for the fiscal year ending the meeting or any adjournment or
June 30, 2000. postponement thereof.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Change of address and/
or Comments Mark Here
Please sign exactly as your name
appears on the left.
When signing as attorney, executor,
administrator, trustee or guardian,
please give your full title. If shares
are held jointly, each holder should
sign.
Dated: __________________________, 1999
______________________________________
Signature
_______________________________________
Signature
Votes must be indicated
(x) in Black or Blue Ink.
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
