<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
SAVANNAH FOODS & INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(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)(1) 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:
(4) Date Filed:
<PAGE> 2
SAVANNAH FOODS & INDUSTRIES, INC.
P. O. BOX 339
SAVANNAH, GEORGIA 31402-0339
January 13, 1997
Dear Fellow Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of
Stockholders of Savannah Foods to be held on Thursday, February 20, 1997
beginning at 9:00 a.m. in the Grand Ballroom located on the main lobby floor of
the DeSoto Hilton Hotel, 15 East Liberty Street, Savannah, Georgia. We look
forward to greeting each of you personally.
Please sign, date, and return the enclosed proxy card in the envelope
provided at your earliest convenience. Whether or not you plan to attend and
regardless of the number of shares you own, your vote is important.
If you plan on attending the meeting, you may vote in person if you wish,
even if you have previously returned your proxy.
Sincerely,
/s/ Eugene Cartledge
---------------------
R. Eugene Cartledge
Chairman of the Board
/s/ William W. Sprague III
--------------------------
William W. Sprague III
President and Chief Executive Officer
<PAGE> 3
SAVANNAH FOODS & INDUSTRIES, INC.
POST OFFICE BOX 339
SAVANNAH, GEORGIA 31402
______________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 20, 1997
______________
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders of
Savannah Foods & Industries, Inc. will be held on Thursday, February 20, 1997,
starting at 9:00 a.m. Eastern Standard Time in the Grand Ballroom on the main
lobby floor of the DeSoto Hilton Hotel, 15 East Liberty Street, Savannah,
Georgia, for the purpose of considering and voting on the following matters:
1. To elect four Directors to hold office for a term
of three years and until their successors are elected and
qualified.
2. To approve an amendment to the By-laws of the
Corporation.
3. To approve the adoption of the 1996 Equity
Incentive Plan for employees of the Company.
4. To ratify the appointment of Arthur Andersen LLP as
independent accountants for the fiscal year ending
September 28, 1997.
5. To transact such other business as may properly
come before the Annual Meeting and any adjournment or
postponement thereof.
The Board of Directors of the Company has fixed the close of business on
December 24, 1996 as the record date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting and any adjournment or
postponement thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
SIGN, AND DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
PREPAID ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF
YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY.
BY ORDER OF THE BOARD OF DIRECTORS
John M. Tatum
Secretary
Savannah, Georgia
January 13, 1997
<PAGE> 4
SAVANNAH FOODS & INDUSTRIES, INC.
POST OFFICE BOX 339
SAVANNAH, GEORGIA 31402
______________
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 20, 1997
______________
This Proxy Statement is being furnished to holders of common stock, par
value $.25 per share ("Common Stock"), of Savannah Foods & Industries, Inc., a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the 1997 Annual
Meeting of Stockholders (the "Annual Meeting") to be held on Thursday, February
20, 1997, starting at 9:00 a.m. Eastern Standard Time, in the Grand Ballroom on
the main lobby floor of the DeSoto Hilton Hotel, 15 East Liberty Street,
Savannah, Georgia, and any adjournment or postponement thereof, for the
purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders.
This Proxy Statement and form of proxy are first being mailed to
stockholders of the Company on or about January 13, 1997.
All proxies duly executed and received prior to or at the Annual Meeting,
and not revoked, will be voted on all matters presented at the meeting in
accordance with the instructions indicated on such proxies. In the absence of
specified instructions, proxies so received will be voted FOR (1) The named
nominees to the Company's Board of Directors, FOR (2) The approval of the
amendment to the By-laws of the Corporation, FOR (3) The approval of the
adoption of the 1996 Equity Incentive Plan for employees of the Company, and
FOR (4) The ratification of the appointment of Arthur Andersen LLP as
independent accountants for the fiscal year ending September 28, 1997.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of the Company before the taking of the vote at the Annual
Meeting, a written notice of revocation bearing a later date than the proxy,
(ii) duly executing a later-dated proxy relating to the same shares and
delivering it to the Secretary of the Company before the taking of the vote at
the Annual Meeting, or (iii) attending the Annual Meeting and voting in person
(although attendance at the Annual Meeting will not in and of itself constitute
the revocation of a proxy). Any written notice of revocation or subsequent
proxy should be sent so as to be delivered to Savannah Foods & Industries,
Inc., Post Office Box 339, Savannah, Georgia 31402, Attention: Secretary, or
hand delivered to the Secretary of the Company before the taking of the vote at
the Annual Meeting.
The cost of the solicitation of proxies will be borne by the Company.
Proxies will be solicited by mail and may be solicited personally, or by
telephone or telegraph by Directors, Officers, and employees of the Company.
The Company has retained the services of Corporate Investor Communications,
Inc. to assist in the solicitation of proxies from banks, brokers and nominees
at a cost not to exceed $3,500 plus reasonable out-of-pocket expenses. The
Company will reimburse custodians, nominees, and fiduciaries for forwarding
proxy material to beneficial owners of shares held of record by such
custodians, nominees, and fiduciaries. The Company has employed Wachovia Bank
of North Carolina, N.A., P. O. Box 3001, Winston-Salem, N.C. 27102, to handle
the mechanics of checking the validity of proxies and tabulating them.
The Board of Directors of the Company has fixed the close of business on
December 24, 1996 as the record date for the determination of the Company
stockholders entitled to notice of and to vote at the Annual Meeting.
Accordingly, only holders of record of Common Stock on the record date will be
entitled to notice of and to vote at the Annual Meeting. As of November 30,
1996, there were 28,738,196 shares of Common Stock outstanding, including the
2,500,000 shares held in the Company's Benefit Trust, each of which is entitled
to one non-cumulative vote.
1
<PAGE> 5
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of November 30, 1996, certain
information with respect to the beneficial ownership of Common Stock of the
Company by Directors, each Non-Director Executive Officer named in the Summary
Compensation Table below, all Directors and Executive Officers of the Company
as a group, and each holder known by the Company to be the beneficial owner of
more than 5% of the Company's issued and outstanding Common Stock. Except as
disclosed in the notes to the table, each person has sole voting and investment
powers with respect to the whole number of shares shown as beneficially owned
by him.
<TABLE>
AMOUNT AND NATURE PERCENT
NAME OF BENEFICIAL OWNERSHIP OF CLASS (1)
- ----------------------------------------- -------------------------- ------------
<S> <C> <C>
Wachovia Bank of North Carolina, N.A. (2) 2,570,637 (3) 8.95%
Archer-Daniels-Midland
Company (4) 1,661,900 (5) 5.78%
W. Waldo Bradley 151,924 (6) *
John D. Carswell 66,000 (7) *
R. Eugene Cartledge 130,000 (8) *
Dale C. Critz 13,100 (9) *
Lee B. Durham, Jr. 3,905 *
F. Sprague Exley 114,546 (10) *
Arthur M. Gignilliat, Jr. 1,376 *
Robert L. Harrison 31,430 (11) *
Robert S. Jepson, Jr. 40,000 *
James M. Reed 1,000 *
William W. Sprague III 179,348 (12) *
Hugh M. Tarbutton 229,888 (13) *
Arnold Tenenbaum 1,700 (14) *
C. Richard Donnelly 42,187 *
James M. Kelley 23,492 *
David H. Roche 3,024 *
Gregory H. Smith 13,151 *
All Directors and Executive
Officers as a group
(18 individuals) 1,059,214 (15) 3.67%
</TABLE>
* Indicates less than 1.00%
(1) Amount is calculated based upon 28,738,196 shares outstanding, which
includes the 2,500,000 shares held in the Company's Benefit Trust.
The percentage for all Directors and Executive Officers as a group assumes
the exercise of the options on 100,000 shares by Mr. Cartledge.
(2) The business address of Wachovia Bank of North Carolina, N.A. is:
100 N. Main Street
Winston-Salem, North Carolina 27150
2
<PAGE> 6
(3) Based upon information received from Wachovia Bank of North Carolina,
N.A. (Wachovia). Such shares include 2,500,000 shares held by Wachovia as
trustee of the Company's Benefit Trust. These shares are voted based upon
the voting results of the shares held in the Company's Employee Stock
Ownership Plan. Subject to certain limitations under the Trust Agreement,
Wachovia may dispose of any shares held by the Trust during its term. The
70,637 share balance constitutes shares held for various fiduciary,
investment and custodial accounts in which Wachovia has no beneficial
interest. Other than the shares held as trustee of the Benefit Trust, the
number of shares held by Wachovia with voting or investment power is as
follows: sole voting power - 22,116; shared voting power - 0; sole
investment power - 22,116; and shared investment power - 0.
(4) The business address of Archer-Daniels-Midland Company is:
4666 Faries Parkway
P.O. Box 1470
Decatur, Illinois 62525
(5) Information is based on a Schedule 13D filed by Archer-Daniels-Midland
Company, dated May 17, 1995 and amended on September 1, 1995, disclosing
voting and investment power held by such person with respect to shares of
Common Stock.
(6) Includes 64,160 shares owned by Bradley Foundation, Inc. of which Mr.
Bradley is President. It also includes the following shares in which Mr.
Bradley disclaims any beneficial ownership: 8,000 shares in a trust for
his children, 50,880 shares owned by a partnership of which his daughters
and trusts for his children are among the partners, and 10,804 shares
owned by his wife.
(7) Includes the following 26,000 shares in which Mr. Carswell has no
investment or voting power and in which he disclaims any beneficial
ownership: 13,000 shares in an irrevocable trust for his wife and
grandchildren, and 13,000 shares in an irrevocable trust with his children
as beneficiaries.
(8) Includes 100,000 shares which Mr. Cartledge may acquire at his discretion
through the exercise of stock options.
(9) Includes 8,000 shares owned by a family partnership of which Mr. Critz is
managing general partner. He disclaims any beneficial ownership in the
shares beneficially owned by other partners.
(10) Includes 33,481 shares in Mr. Exley's mother's estate of which he is a
co-executor and in which he is a residual beneficiary. Includes 2,810
shares held in a trust of which Mr. Exley is a trustee and a beneficiary.
It also includes 863 shares held in a custodial account for his
granddaughter, 2,686 shares owned by his wife, and 1,342 shares owned by
his son in which Mr. Exley disclaims any beneficial ownership.
(11) Includes 1,780 shares owned by Mr. Harrison's wife and 510 shares held as
custodian for his daughter in which Mr. Harrison disclaims any beneficial
ownership. Also includes the 26,000 shares disclosed under Mr. Carswell
above. Mr. Harrison is a trustee with investment and voting power for the
irrevocable trusts, but disclaims any beneficial ownership in those shares.
(12) Includes 157,000 shares held in a trust, of which Mr. Sprague is a
trustee and a beneficiary. Also includes 3,052 shares owned by his wife
and 8,949 shares owned by his children, in which Mr. Sprague disclaims any
beneficial ownership.
(13) Includes 27,392 shares held by Mr. Tarbutton's wife as custodian for
their children, in which he disclaims any beneficial ownership.
(14) Includes 1,100 shares held by Mr. Tenenbaum's wife as custodian for their
children, in which he disclaims any beneficial ownership.
(15) Amount is adjusted for the 26,000 shares held in trust and included under
both Mr. Carswell and Mr. Harrison above.
3
<PAGE> 7
ELECTION OF DIRECTORS
The four Directors whose terms expire in 1997 have been nominated by the
Board of Directors for re-election at the 1997 Annual Meeting. The four
nominees are offered for election to hold office for a three-year term until
the Annual Meeting in 2000, and until their successors are elected and
qualified, or until their death, disability, or resignation. PROXIES RETURNED
BY STOCKHOLDERS WILL BE VOTED "FOR" ELECTION OF DIRECTORS AS AFORESAID UNLESS
OTHERWISE DIRECTED ON THE PROXY. If any nominee shall become unavailable for
election, which is not anticipated, the shares represented by proxies will be
voted for such substitute nominee as may be designated by the Board of
Directors.
The affirmative vote of the holders of a majority of the outstanding
shares present in person or by proxy at the Annual Meeting and entitled to vote
is required to elect the nominees as Directors. Abstentions and broker
non-votes will have the same effect as a vote to withhold authority in the
election of Directors.
Set forth on the following pages is information with respect to the
nominees and standing members of the Board of Directors, current as of November
30, 1996. Mr. James M. Reed was elected to the Board of Directors at the June
20, 1996 Board meeting to complete the unexpired term of a Director who retired
from the Board effective December 31, 1995.
4
<PAGE> 8
DIRECTORS WHO ARE NOMINEES FOR ELECTION FOR A TERM OF THREE YEARS
<TABLE>
<S> <C> <C>
A photograph of Mr. R. EUGENE CARTLEDGE Mr. Eugene Cartledge retired as Chairman
Cartledge appears Director, and Chief Executive Officer of Union
in the paper format Union Camp Corporation Camp Corporation in June 1994, a
version of this Age: 67 position he had held since 1986. He has
document Director since: 1995 been a member of the Union Camp Board of
Present term expires: 1997 Directors since 1983 and continues to
Member: Compensation Committee serve in that capacity. He is also a
Director of The Sun Company, Delta Air
Lines, Inc., Blount, Inc., Chase Brass
Industries, and UCAR International Inc.
A photograph of Mr. LEE B. DURHAM, JR. Mr. Lee B. Durham, Jr. is of counsel to
Durham appears in Attorney, Clark Hill P.L.C., Detroit, Michigan and
the paper format Clark Hill P.L.C. has been a practicing attorney for more
version of this Age: 66 than 30 years. Clark Hill P.L.C. is
document Director since: 1985 general counsel to Michigan Sugar
Present term expires: 1997 Company, a wholly-owned subsidiary of
the Company. He is also a Director of
Michigan Sugar Company and has been
Secretary of that company since 1976.
A photograph of Mr. ROBERT L. HARRISON Mr. Robert L. Harrison is President of
Harrison appears in President, Stevens Shipping & Terminal Co.,
the paper format Stevens Shipping & Terminal Co. Savannah, Georgia. Stevens conducts
version of this Age: 56 steamship agency and stevedoring
document Director since: 1990 services in South Atlantic port areas.
Present term expires: 1997 He is also on the NationsBank, N.A.
Member: Audit and Compensation Committees (South) Savannah Advisory Board; and is
Vice President and a Director of Fairway
Terminal Corporation of Texas.
A photograph of Mr. JAMES M. REED Mr. James M. Reed is Vice Chairman and
Reed appears in the Vice Chairman and Chief Financial Officer of Union Camp
paper format Chief Financial Officer, Corporation. He also serves on the
version of this Union Camp Corporation Board of Directors of Bush Boake Allen,
document Age: 63 Inc., Martin Marietta Materials, Inc.
Director since: 1996 and the Bulgarian-American Enterprise
Present term expires: 1997 Fund, Inc. and is a trustee of Simpson
College in Iowa.
</TABLE>
5
<PAGE> 9
DIRECTORS WHOSE TERMS CONTINUE UNTIL 1998
<TABLE>
<S> <C> <C>
A photograph DALE C. CRITZ Mr. Dale C. Critz is owner and President of Critz,
of Mr. Critz President, Inc., a retail automobile dealership. He has
appears in the Critz, Inc. served on the Board of Directors of SunTrust Bank,
paper format Age: 64 Savannah, N.A. since 1963 and was appointed
version of Director since: 1993 Chairman of the Board in 1992. He is a Trustee of
this document Present Term Expires: 1998 the Georgia Automobile Dealers Association Workers
Member: Compensation Committee Compensation Fund.
A photograph of ARTHUR M. GIGNILLIAT, JR. Mr. Arthur M. Gignilliat, Jr. is President and Chief
of Mr. Gignilliat President and Chief Executive Officer, Executive Officer of Savannah Electric and Power
appears in the Savannah Electric and Power Company Company. He serves on the Board of Directors of
paper format Age: 64 Savannah Electric and Power Company and on the
version of Director since: 1988 NationsBank, N.A. (South) Savannah Advisory Board.
this document Present term expires: 1998 He is a member of the Governor's Development
Member: Compensation Committee Council, and is Chairman of the Georgia
(Chairman) International and Maritime Trade Center Authority.
A photograph ROBERT S. JEPSON, JR. Mr. Robert S. Jepson, Jr. is Chairman of the Board
of Mr. Jepson Chairman and Chief Executive Officer, and Chief Executive Officer of Kuhlman Corporation,
appears in the Kuhlman Corporation Savannah, Georgia. Mr. Jepson is also Chairman and
paper format Age: 54 Chief Executive Officer of Jepson Associates, Inc.
version of Director since: 1995 of Savannah, Georgia, and of Jepson Vineyards Ltd.
this document Present term expires: 1998 of Ukiah, California. In addition, he serves as
Member: Audit Committee Chairman of the Board of Coburn Optical Industries,
Inc., Tulsa, Oklahoma.
A photograph ARNOLD TENENBAUM Mr. Arnold Tenenbaum is President of Chatham Steel
of Mr. President, Corporation. Chatham Steel is a wholesale
Tenenbaum Chatham Steel Corporation distributor of metal products. It has branches in
appears in the Age: 60 five states. Mr. Tenenbaum is on the Board of
paper format Director since: 1989 Directors of First Union Bank of Savannah, First
version of Present term expires: 1998 Union Bank of Georgia, Savannah Electric and Power
this document Member: Audit Committee Company, and the Georgia Lottery Corporation.
</TABLE>
6
<PAGE> 10
DIRECTORS WHOSE TERMS CONTINUE UNTIL 1999
<TABLE>
<S> <C> <C>
A photograph W. WALDO BRADLEY Mr. W. Waldo Bradley is Chairman of the Board of
of Mr. Chairman, Bradley Plywood Corporation, Savannah, Georgia, a
Bradley Bradley Plywood Corporation wholesale distributor of building materials. He also
appears in Age: 62 serves as a Director of First Union Corporation,
the paper Director since: 1979 Charlotte, North Carolina, and Atlanta Gas Light
format Present term expires: 1999 Company.
version of Member: Compensation,
this document Executive, and Nominating
Committees
A photograph JOHN D. CARSWELL Mr. John D. Carswell has been in the general
of Mr. Associated with Sedgwick James, Inc. insurance business all of his business life. He was
Carswell Age: 65 associated with Palmer & Cay/Carswell, Inc. until
appears in Director since: 1985 December 1, 1993 and joined Sedgwick James, Inc. on
the paper Present term expires: 1999 April 1, 1994.
format Member: Audit Committee and
version of Nominating Committee (Chairman)
this document
A photograph F. SPRAGUE EXLEY Mr. F. Sprague Exley, who first joined the Company in
of Mr. Exley Senior Vice President - Human 1965, is Senior Vice President - Human Resources and
appears in Resources and Administration Assistant Secretary. He was elected to his current
the paper and Assistant Secretary, position in 1995. Prior to that he served as Vice
format Savannah Foods & Industries, Inc. President - Distribution of the Company. He is on the
version of Age: 57 NationsBank, N.A. (South) Savannah Advisory Board and is
this document Director since: 1976 a member of the Board of the Georgia Freight Bureau,
Present term expires: 1999 Inc., Atlanta, Georgia.
A photograph WILLIAM W. SPRAGUE III Mr. William W. Sprague III has been President and
of Mr. President and Chief Executive Officer, Chief Executive Officer of Savannah Foods &
Sprague Savannah Foods & Industries, Inc. Industries, Inc. since 1995. He served as President
appears in Age: 40 and Chief Operating Officer from 1993 to 1995. He
the paper Director since: 1990 began his career with the Company in 1983, and his
format Present term expires: 1999 previous position was Vice President - Sales.
version of Member: Executive Committee
this document
A photograph HUGH M. TARBUTTON Mr. Hugh M. Tarbutton is President of Sandersville
of Mr. President, Railroad Company, Sandersville, Georgia. He is also
Tarbutton Sandersville Railroad Company a Director of NationsBank, N.A. (South).
appears in Age: 64
the paper Director since: 1971
format Present term expires: 1999
version of Member: Executive and Nominating
this document Committees, and Audit Committee
(Chairman)
</TABLE>
7
<PAGE> 11
MANAGEMENT OF SAVANNAH FOODS & INDUSTRIES, INC.
In addition to the Executive Officers who also serve as
Directors, as described under Election of Directors, the following individuals
serve as Executive Officers of the Company:
<TABLE>
<S> <C>
David H. Roche Mr. Roche, age 49, first joined Michigan Sugar Company in
Senior Vice President 1976, and assumed his present office in 1996. Prior to that
President - Savannah Foods Industrial, Inc. he served Michigan Sugar Company as President and Chief
President - Michigan Sugar Company Operating Officer, Executive Vice President and Vice President
- Administration.
James M. Kelley Mr. Kelley, age 53, first joined the Company in 1973, and was
Senior Vice President elected to his present office in 1995. Prior to that he
President - Dixie Crystals(R) Brands, Inc. served as President - Dixie Crystals(R) Foodservice, Inc. and as
Assistant Vice President - Foodservice Division.
Gregory H. Smith Mr. Smith, age 47, first joined the Company in 1978, and was
Senior Vice President elected to his present office in 1995. Prior to that he
Chief Financial Officer and Treasurer served as Vice President - Finance and Treasurer, Vice
President - Corporate Development and Chief Information
Officer, and Corporate Controller.
Benjamin A. Oxnard, Jr. Mr. Oxnard, age 62, first joined the Company in 1983 as Vice
Senior Vice President - Raw Sugar President - Raw Sugar. He was elected to his present office
in 1996.
</TABLE>
8
<PAGE> 12
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation awarded to, earned by,
or paid to each person who served as the Company's Chief Executive Officer
during its most recent fiscal year and of its five other most highly compensated
Executive Officers during such year:
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------
Annual Compensation Awards Payouts
---------------------------------------------------------------------------------
Other
Annual Restricted All Other
Compen- Stock Options/ LTIP Compen-
Name and Fiscal Salary Bonus sation Awards SARs Payouts sation
Principal Position Year (1) ($) ($) ($) (2) ($) ($) ($) ($)(3)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
W. W. Sprague III 1996 365,400 0 0 0 0 0 5,704
President & Chief Executive 1995 362,460 0 0 0 0 0 13,131
Officer 1994 228,750 0 0 0 0 0 14,128
C. Richard Donnelly (4) 1996 237,500 0 0 0 0 0 22,404
Senior Vice President 1995 238,062 0 0 0 0 0 16,409
President - Savannah Foods 1994 202,562 0 0 0 0 0 14,081
Industrial, Inc.
James M. Kelley 1996 211,768 0 0 0 0 0 7,095
Senior Vice President 1995 209,396 0 0 0 0 0 6,809
President - Dixie Crystals(R) 1994 172,499 0 0 0 0 0 9,454
Brands, Inc.
David H. Roche 1996 194,230 0 0 0 0 0 3,801
Senior Vice President 1995 195,896 0 0 0 0 0 4,073
President and Chief 1994 158,700 0 0 0 0 0 5,334
Operating Officer -
Michigan Sugar Company
F. Sprague Exley 1996 185,000 0 0 0 0 0 9,911
Senior Vice President- 1995 147,898 0 0 0 0 0 15,570
Human Resources & 1994 143,899 0 0 0 0 0 18,846
Administration
Gregory H. Smith 1996 185,000 0 0 0 0 0 280
Senior Vice President 1995 160,834 0 0 0 0 0 352
Chief Financial Officer
and Treasurer
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Information is only presented for the years in which the individual served
as an Executive Officer of the Company. The Company's fiscal year ends on
the Sunday closest to September 30.
(2) "Perquisites" do not exceed $50,000 or 10% of total salary and bonus.
(3) "All Other Compensation" for fiscal 1996 includes: (i) above market
earnings accrued on deferred compensation (Mr. Sprague III - $2,124; Mr.
Donnelly - $18,801; Mr. Kelley - $6,606; Mr. Roche - $1,005; Mr. Exley -
$6,236; Mr. Smith - $0), (ii) Directors fees (Mr. Sprague III - $600; Mr.
Exley - $600), (iii) amounts contributed to defined contribution retirement
plans (Mr. Sprague III - $2,507; Mr. Donnelly - $3,382; Mr. Kelley - $378;
Mr. Roche - $2,339; Mr. Exley - $3,070; Mr. Smith - $257), and (iv) amounts
accrued as contributions to non-qualified retirement plans (Mr. Sprague III
- $473; Mr. Donnelly - $221; Mr. Kelley - $111; Mr. Roche - $457; Mr. Exley
- $5; Mr. Smith - $23).
(4) C. Richard Donnelly retired from the Company effective December 1, 1996.
9
<PAGE> 13
PENSION PLANS
The Company has in effect a non-contributory pension plan which applies to
substantially all non-bargaining unit employees, including Executive Officers.
The normal retirement age under the plan is 65. When an employee retires,
several forms of benefit payments are available, including an actuarially
reduced benefit to provide a surviving spouse's annuity of 50%, 75%, or 100% of
the employee's reduced pension. The basic payment formula is 1.75% of the
final three-year average of earnings, times credited years of service (up to
30) minus a Social Security allowance. A reduced benefit can be received at
age 55 with 10 or more years of credited service or at age 62 with five or more
years of credited service. The following table shows the estimated annual
pension benefits payable to participants upon normal retirement from the
Company's pension plan in specified remuneration classes and years of credited
service:
PENSION PLAN TABLE
Years of Service
<TABLE>
<CAPTION>
Remuneration 10 15 20 25 30 & above
------------ -- -- -- -- ----------
<S> <C> <C> <C> <C> <C>
$125,000 $19,800 $29,700 $39,600 $49,500 $59,400
$150,000 & above 24,200 36,300 48,400 60,500 72,500
</TABLE>
Covered compensation is defined as base salary, as presented under the
Salary column in the Summary Compensation Table, however, it is subject to
Internal Revenue Code limits. The amounts set forth in the table are
calculated on a straight-life annuity basis payable at age 65 and are offset by
an allowance for Social Security. The estimated credited years of service for
each of the named Executive Officers are: W. W. Sprague III: 13; C. Richard
Donnelly: 30; James M. Kelley: 23; David H. Roche: 20; F. Sprague Exley: 31
and Gregory H. Smith: 18.
In addition to benefits paid under the Company's pension plan for
substantially all employees, all Executive Officers of the Company receive
coordinated benefits from the Supplemental Executive Retirement Plan (the
"SERP"). The SERP includes each of the Executive Officers listed in the
foregoing Summary Compensation Table, and provides a benefit based upon the
following formula: 65% of base salary, less the amount payable from the
pension plan, less a social security allowance, all multiplied by a fraction
the numerator of which is the Executive Officer's years of service as of June
30, 1996 and the denominator of which is the years of potential service at
normal retirement.
The estimated annual benefits payable upon retirement at normal retirement
age, using current earnings, for each of the named Executive Officers from the
Company's non-contributory pension plan and the SERP are as follows: W. W.
Sprague III: $130,441; C. Richard Donnelly: $128,593; James M. Kelley:
$122,694; David H. Roche: $117,205; F. Sprague Exley: $107,195 and Gregory H.
Smith: $106,755.
EMPLOYMENT CONTRACTS
The Company considers the establishment and maintenance of a sound and
vital management to be essential to protecting and enhancing the best interests
of the Company and its stockholders. Thus, the Company has entered into
contracts with all Executive Officers to reduce the risk of their departure or
distraction to the detriment of the Company and its stockholders. If these
Executive Officers are terminated after a change in control of the Company, as
defined therein, the contract provides for a lump sum payment of 2.99 times
average annual taxable compensation for the past five years.
In the event of a change of control which would trigger the lump sum
payment provisions of these contracts in fiscal 1997, the cost to the Company
for the Executive Officers listed in the Summary Compensation Table above would
be $2,656,212. This total does not include any amount for Mr. C. Richard
Donnelly since he retired from the Company on December 1, 1996.
10
<PAGE> 14
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has the responsibility for recommending to the
full Board the compensation arrangements for senior management of the Company,
and also recommends to the Board adoption of and/or modification to any
compensation plans in which Executive Officers and Directors are eligible to
participate, as well as the benefits under such plans. This responsibility
includes reviewing and considering new, or amendments to, compensation plans,
retirement plans and other benefit plans, and monitoring the performance and
compensation of Executive Officers.
The Company maintains compensation and benefit programs designed to
attract, motivate, and retain management and employees. Wherever practical,
the Company attempts to link employee reward to financial performance and
stockholder reward. The Company maintains several benefit and incentive plans.
In addition, employment contracts are currently in place with all Executive
Officers as explained on page 10 of this Proxy Statement. Except for the
Supplemental Executive Retirement Plan and a deferred compensation plan,
substantially all non-bargaining unit employees in the Company participate in
all other plans. The Supplemental Executive Retirement Plan was designed to
eliminate an inequity to managers and officers that exists in companies with a
qualified defined benefit pension plan.
The Company's executive compensation program consists of three main
components: (1) base salary, (2) potential for an annual bonus under a
profit-sharing bonus plan, and (3) potential for a contribution to the Employee
Stock Ownership Plan (ESOP). The second and third components are "at risk" and
are determined by the profitability of the Company for the year. The "at risk"
component of compensation fluctuates significantly with earnings, and as a
result it represented 0% of total compensation of the named Executive Officers
in fiscal 1996, 1995, and 1994. The only manner in which Executive Officers
participate in the profit sharing bonus plan on a basis other than non-officer
employees is that the target award increases as a percent of pay, based on job
grade, from 5% for most employees to a maximum of 50% for the Chief Executive
Officer (CEO). The target award is achieved when return on equity (ROE), as
defined (consolidated net income plus the after-tax charge to income for the
year for the contribution, if any, to the ESOP divided by consolidated
stockholders' equity at the beginning of the year), reaches 16%. If ROE is
less than 13%, there is no profit sharing payment, and if it exceeds 20%, a
maximum of 150% of the target award is paid. ESOP contributions are
recommended by management and approved by the Board of Directors based
primarily upon earnings of the Company. Contributions to the ESOP are made
after considering the Company's earnings for the year and its cash position and
other cash requirements at year end and in the following year. The Committee
has no discretion with respect to the amount of the contribution allocated to
the CEO under the ESOP. Rather, these contributions are allocated to each
participant, including the CEO, based upon his or her earnings for the year as
required by Internal Revenue Service regulations.
The Company did not have a Stock Option or Stock Appreciation Rights Plan
in effect for Executive Officers during the past fiscal year and no options or
appreciation rights are outstanding from former plans. However, see the 1996
Equity Incentive Plan section on page 16 of this Proxy Statement for a
description of the proposed stock option/restricted stock plan.
Annually, the Company evaluates the performance of the Executive Officers
and other key employees and establishes an appropriate compensation level for
each person. Job grades and minimum, normal and maximum compensation levels
have been assigned to every position based upon market compensation data. The
base salary level of each Executive Officer is annually compared to market data
supplied to the Company by an independent compensation consultant. The
independent consultant accumulates data for comparable positions in companies
with similar revenue levels from a wide variety of industries, with emphasis
placed upon companies in the food and kindred products standard industrial
classification code. The Company's philosophy is to pay Executive Officers
competitive compensation which approximates the median of market data. The
independent consultant also provides the Company with compensation information
for the Executive Officers of the companies in the peer group included in the
performance graph on page 13 of this Proxy Statement. However, no particular
weight is given to these specific companies in evaluating compensation, because
the Company does not believe it competes with these companies for executive
talent.
Changes to base salary of all Executive Officers are normally recommended
by the CEO to this Committee in November or December of each year. At this
time, he discusses with the Committee the performance of each Executive Officer
and his or her potential for advancement, and relates proposed pay adjustments
to the salary survey information and
11
<PAGE> 15
the Company's performance. The Committee then decides whether or not to
recommend approval to the Board of Directors of the management recommendations.
If an Executive Officer promotion is requested by management at any other time,
a similar process is followed. The Committee also normally evaluates the
performance of the CEO before recommending approval of a base salary adjustment
for him in November or December of each year. Compensation survey data and
other information, including Company performance, is used by the Committee in
determining his salary adjustment.
However, in recognition of the decreased earnings of the Company in prior
years, effective October 1, 1995, Mr. Sprague III recommended, and the
Compensation Committee accepted, a 10% decrease in base salary for himself and
a 5% decrease in base salary for the other four most highly compensated
Executive Officers at that time. The Committee agreed with Mr. Sprague that by
decreasing these salaries, the Company would reinforce the linkage between
senior management reward and stockholder reward and would emphasize to Company
personnel the need for significant cost reduction programs at the Company.
Additionally, the Executive Officers of the Company have not received any pay
under the "at risk" components of their compensation as discussed above.
The Committee believes that the Company's compensation program is
appropriate, considering those in place at comparable companies and considering
the Company's goal to link employee and management compensation to stockholder
reward. It believes that the total remuneration generated by this compensation
package is reasonable and competitive by the same standard.
COMPENSATION COMMITTEE:
Arthur M. Gignilliat, Jr. (Chairman) Dale C. Critz
W. Waldo Bradley Robert L. Harrison
R. Eugene Cartledge
Mr. Cartledge resigned as a member of the Committee in December 1996 and
was replaced by Mr. James M. Reed.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1996, the five persons listed above, Messrs. Gignilliat,
Bradley, Cartledge, Critz and Harrison, served as members of the Compensation
Committee. No member of this committee is a former or current Executive
Officer or employee of the Company or any of its subsidiaries. Robert L.
Harrison is President of Stevens Shipping & Terminal Company in Savannah,
Georgia. The Company conducts business with this firm related to port
activities associated with the importation of raw sugar. In fiscal 1996, the
Company purchased services from this firm in the amount of approximately
$1,475,000. R. Eugene Cartledge is Chairman of the Board of Directors of the
Company. He has a one-year agreement which stipulates that he receive $182,700
payable in 16,610 shares of Company Common Stock, cash in an amount sufficient
to pay the taxes due on such compensation, and an option to purchase 100,000
shares of Common Stock at the price of $11.00 per share. See "Board of
Directors and Committees of the Board".
12
<PAGE> 16
PERFORMANCE GRAPH
A graph depicting the information in the table below
is displayed on page 13 of this Proxy.
This graph appears in the paper format version of the document
and not in this electronic filing.
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Savannah Foods 100.00 96.21 105.22 81.25 93.79 97.19
S&P 500 100.00 110.42 119.36 123.17 159.81 192.30
Peer Group (old) 100.00 104.17 98.31 103.29 126.74 144.75
Peer Group (new) 100.00 106.23 95.57 96.89 117.56 122.06
</TABLE>
The data presented above assumes $100 was invested on December 27, 1991,
at the closing price in Savannah Foods & Industries, Inc. Common Stock, the
S&P 500 Index, and the two peer group indexes and that all dividends were
reinvested.
The old peer group is a market capitalization weighted combination of (i)
the S&P 400 MidCap Food and Beverages Index, which includes the Company, and
(ii) Valhi, Inc., Imperial Holly Corporation, and Spreckels Industries, which
were the other companies in the 2060 sugar and confectionery products standard
industrial classification code for which sugar represented the sole or a large
portion of their business.
The new peer group is a market capitalization weighted combination of (i)
the S&P 400 MidCap Food Index, which includes the Company, and (ii) Imperial
Holly Corporation which is the only other company in the 2060 sugar and
confectionery products standard industrial classification code for which sugar
represents the sole or a large portion of its business.
The peer group was changed because Standard & Poor's no longer publishes
a MidCap Food and Beverage Index and because the other individual companies
listed sold the sugar portion of their businesses during 1996.
The Company will provide the identity of the component companies of both
peer groups to investors upon written request to the Vice President -
Administration, Savannah Foods & Industries, Inc., P.O. Box 339, Savannah,
Georgia 31402-0339, or by calling the Company at (912) 234-1261.
The Company changed its fiscal year end from the Sunday closest to
December 31 to the Sunday closest to September 30, effective for the fiscal
period ended October 3, 1993. As a result, the above graph reflects, for
1993, the investment return for nine months from January 3, 1993 to October 3,
1993. All other periods presented represent twelve months.
13
<PAGE> 17
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Archer-Daniels-Midland Company reports ownership of 5.78% of the
outstanding Common Stock of the Company. The Company purchases corn syrup and
fructose from this firm. In fiscal 1996, the Company purchased goods from this
firm in the amount of approximately $202,000.
R. Eugene Cartledge is Chairman of the Board of Directors of the Company.
He has a one-year agreement which stipulates that he receive $182,700 payable
in 16,610 shares of Company Common Stock, cash in an amount sufficient to pay
the taxes due on such compensation, and an option to purchase 100,000 shares of
Common Stock at the price of $11.00 per share. See "Board of Directors and
Committees of the Board".
Lee B. Durham, Jr., a Director of the Company, is of counsel to the law
firm of Clark Hill P.L.C., in Detroit, Michigan. Clark Hill P.L.C. is general
counsel to Michigan Sugar Company, which is a wholly-owned subsidiary of the
Company.
James M. Reed, a Director of the Company, is Vice Chairman and Chief
Financial Officer of Union Camp Corporation. The Company purchases packaging
supplies from this firm. During fiscal 1996, the Company purchased goods from
this firm in the amount of approximately $7,703,000.
As listed in the Stock Ownership of Certain Beneficial Owners and
Management table, Wachovia Bank of North Carolina, N.A. is the trustee of the
Company's Benefit Trust. An affiliate of Wachovia Bank of North Carolina,
N.A. (Wachovia) serves as agent for a syndicate of banks for the Company's
$120,000,000 credit facility dated April 1, 1996, of which Wachovia has
committed $37,500,000. The Company also has several standby letters of credit
with Wachovia supporting various commercial and debt transactions totaling
$16,313,000 at September 29, 1996, including $8,203,000 outstanding under the
credit facility dated April 1, 1996. For fiscal 1996, the Company paid Wachovia
$622,000 in interest and $239,000 in fees related these credit instruments. In
the opinion of management, the terms of such arrangements are fair and
reasonable and as favorable to the Company as could have been obtained from a
wholly unrelated party.
William W. Sprague, Jr., the former Chairman of the Board and Chief
Executive Officer of the Company, retired from the Company as of December 31,
1994, at which time he became a consultant for the Company. In fiscal 1996,
Mr. Sprague, Jr. was paid $100,000 for his consulting services. Mr. Sprague,
Jr. is the father of William W. Sprague III, a Director, and the President and
Chief Executive Officer of the Company.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
During the fiscal year ended September 29, 1996, the Board of Directors
met eight times. No Director attended fewer than 75% of the Board and
Committee meetings.
Effective April 23, 1996, the Company entered into a one-year agreement
with R. Eugene Cartledge to serve as the Chairman of the Board of Directors of
the Company. In addition to the compensation paid to all non-employee
directors as described below, the agreement stipulates that Mr. Cartledge
receive $182,700 payable in 16,610 shares of Company Common Stock, plus cash in
an amount sufficient to pay the taxes due on such compensation. The agreement
also grants Mr. Cartledge an option to purchase 100,000 shares of Common Stock
from the Company at the price of $11.00 per share. The option exercise price
equaled the market price of the Company's Common Stock on the date the options
were granted. The options are exercisable at Mr. Cartledge's discretion until
April 24, 2001. As of November 30, 1996, none of the options had been
exercised.
Directors who are also employees of the Company are not compensated for
service as Directors or as members of any Committee of the Board of Directors.
In order to directly link Directors' fees with the interest of stockholders,
the Company will pay a retainer to its non-employee Directors in stock units.
Non-employee Directors were paid a retainer of $4,687.50 from October 1995
through June 30, 1996, a fee of $600 for each Board meeting attended, and $200
for each Committee meeting attended, except that no fees were paid for meetings
of the Committee of Outside Directors, Committee meetings held on the same day
as a Board meeting, or meetings conducted by telephone. At the August 1996
Board of
14
<PAGE> 18
Directors meeting, the Directors adopted a new Non-Employee Directors'
Compensation Plan (the "Plan") as of July 1, 1996 in lieu of the retainer which
had been paid prior to that time and in consideration of participating
Directors' voluntarily relinquishing certain benefits under a deferred
compensation plan. Under the Plan, the annual compensation paid to the
Directors as a retainer was set at $20,000 per year for the 5 1/2 year Plan
term and is payable in Share Units (a Share Unit is the equivalent of one share
of Company Common Stock). The number of Share Units given to each Director was
determined by dividing an annual retainer of $20,000 by $11.00 per share and
multiplying the resultant amount by the 5 1/2 year term of the Plan.
Accordingly, the Plan grants each Director 10,010 Share Units over the Plan
term. Each Director will be vested with 455 Share Units on the last day of
each calendar quarter until December 31, 2001, as long as the Director remains
on the Board of Directors. In the event a Director dies before December 31,
2001, all of such Director's Share Units will vest; and, in the case of
Directors serving on June 1, 1996, all Share Units will vest in the event of a
change in control of the Company as defined in the Plan. Unvested Share Units
are forfeited to the Company. Upon the vesting of Share Units, the Director is
paid, in cash, the value of such Share Units, based upon the fair market value
of the Company's Common Stock at the time of vesting. The fair market value is
defined as the closing price of a share of the Company's Common Stock. The
Plan permits a Director to defer all or a portion of his or her vested Share
Units until after termination of the Director's service on the Board, in which
case the Share Units are valued at the highest closing price of a share during
the twelve months preceding the Director's termination of service. Amounts
deferred under the Plan are restricted in terms of the earliest and latest
dates that payments may begin. Directors are also credited with dividend
equivalents on all Share Units held under the Plan at such time and in such
amount as all holders of Common Stock receive dividends. Dividend equivalents
are reinvested in additional Share Units. Beginning, July 1, 1996,
non-employee Directors are paid $1,000 for each Board meeting attended and $750
for each Committee meeting attended except for meetings of the Committee of
Outside Directors. Directors may elect to defer meeting fees pursuant to an
amended and restated deferred compensation plan.
Effective June 30, 1996 the deferred compensation agreements with all
active non-employee Directors were modified to reduce the guaranteed interest
rate to 8%, and then to the prime rate in effect on each January 1. The effect
of this modification is estimated to have reduced the present value of the
payments which ultimately will be paid to the Directors under the related
deferred compensation agreements by $2,600,000. As consideration for the
reduction in the interest rate credited on the Directors' deferred
compensation, a Supplemental Share Unit Plan (the "Plan") was established for
non-employee Directors. The Plan granted 111,619 Share Units (a Share Unit is
the equivalent of one share of Company Common Stock) to the non-employee
Directors. The number of share units was equal to one-half of the Directors'
deferred compensation account balances as of June 30, 1996 divided by a price
of $11.00 per Share Unit, and at the $11.00 per Share Unit price had a value of
$1,228,000. These Share Units fully vested on June 30, 1996 and the value of
each Share Unit is adjusted upward or downward based on the highest daily
closing price of the Company's Common Stock during the preceding twelve month
period. At retirement from the Board of Directors, each non-employee Director
will receive, in cash, the value of the Share Units in his deferral account.
During fiscal 1996, the Company expensed $1,563,000 related to this Plan.
Future expenses or income related to this Plan will only be incurred as the
price of the Company's Common Stock increases or decreases, respectively.
The Board of Directors has an Executive Committee and four standing
committees -- an Audit Committee, a Compensation Committee, a Nominating
Committee, and a Committee of Outside Directors.
The Executive Committee has the authority of the Board of Directors
between meetings of the Board. The Committee is composed of Messrs. Bradley,
Cartledge (Chairman), Sprague III, and Tarbutton. It met three times during
fiscal 1996.
The Audit Committee serves as the communication link between the Board, as
the representative of stockholders, and the independent accountants. The
Company's internal auditor reports to this Committee. The Committee is
composed of Messrs. Carswell, Harrison, Jepson, Tarbutton (Chairman), and
Tenenbaum. It met three times during fiscal 1996.
The Compensation Committee has the responsibility for recommending to the
full Board the compensation arrangements for senior management of the Company,
and also recommends to the Board adoption of and/or modification to any
compensation plans in which Executive Officers and Directors are eligible to
participate, as well as the benefits under such plans. During fiscal 1996, the
Committee was composed of Messrs. Bradley, Cartledge, Critz, Gignilliat
(Chairman), and Harrison. It met six times during fiscal 1996.
15
<PAGE> 19
The Nominating Committee has the responsibility of nominating new Board
members and will consider qualified nominees for Director recommended by
stockholders. Recommendations should be sent to the Chairman of the Nominating
Committee, in care of the Secretary of the Company. The Committee is composed
of Messrs. Bradley, Carswell (Chairman), and Tarbutton. It met twice during
fiscal 1996.
The Committee of Outside Directors generally meets the evening before
regular meetings of the Board of Directors. The Committee is composed of all
non-employee Directors and its agenda is set by the Committee's Chairman. The
Committee reports matters at its discretion to the Board of Directors. The
officers of the Committee are Mr. Tarbutton (Chairman), Mr. Bradley
(Vice-Chairman), and Mr. Durham (Secretary).
The Audit, Compensation, Nominating, and Outside Directors committees are
composed of non-employee Directors.
AMENDMENT TO THE BY-LAWS OF THE CORPORATION
To enable the Corporation to maintain the valuable expertise of Directors
for an additional two-year period, the Board of Directors recommends extending
the retirement age of Directors from the age of sixty-eight to the age of
seventy.
Article III, Section 2 of the By-laws presently provides that a person
shall be eligible to serve as a Director until December 31 of the year in which
such person reaches the age of sixty-eight. At the Board of Directors meeting
held on August 14, 1996, a motion was passed to recommend that the By-laws be
amended to extend a person's eligibility to serve as a Director to December 31
of the year in which that person reaches the age of seventy. Article III,
Section 2 presently reads in pertinent part:
No person shall be eligible to serve as a Director beyond
December 31 of the year in which he reaches the age of
sixty-eight....
THE FOLLOWING RESOLUTION WILL BE PROPOSED AT THE ANNUAL MEETING, AND
PROXIES RETURNED BY STOCKHOLDERS WILL BE VOTED "FOR" THE RESOLUTION AMENDING
THE BY-LAWS UNLESS OTHERWISE DIRECTED ON THE PROXY:
RESOLVED: That Article III, Section 2 of the By-laws be amended to extend
a person's eligibility to serve as a Director to December 31 of the year in
which such person reaches the age of 70 so that as amended the first clause of
the second sentence of the second paragraph of Article III, Section 2 shall
read as follows:
No person shall be eligible to serve as a Director beyond
December 31 of the year in which he reaches the age of
seventy....
The affirmative vote of the holders of seventy-five percent of the
outstanding shares of the Company's Common Stock entitled to vote, is required
to approve this amendment. Abstentions and broker non-votes will have the same
effect as a vote against the approval of this amendment.
1996 EQUITY INCENTIVE PLAN
On December 16, 1996, the Board of Directors, subject to ratification by
the stockholders at the Annual Meeting on February 20, 1997, adopted a
non-qualified stock option/restricted stock plan providing for the granting of
options and/or restricted stock to employees of the Company and its
subsidiaries. The following is a summary of the 1996 Equity Incentive Plan
(the "Plan"), and a summary of the options granted by the Board of Directors at
their December 16, 1996 meeting. For further information, a copy of the Plan
is attached as Appendix "A" hereto.
The purpose of the Plan is to promote the interests of the Company, its
subsidiaries and its stockholders by enabling the Company and its subsidiaries
to attract, retain and motivate employees or those who will become employees,
and to align the interests of those individuals and the Company's stockholders.
To do this, the Plan offers equity-based opportunities
16
<PAGE> 20
providing such employees with a proprietary interest in maximizing the growth,
profitability and overall success of the Company and its subsidiaries.
Under the provisions of the Plan, the total number of shares that may be
issued as options or restricted stock shall not exceed 1,250,000 shares. Any
shares subject to an award granted under this Plan which remain after the
cancellation, expiration or exchange of such award shall again become available
for use under this Plan. No awards of options or restricted stock shall be
made after the tenth (10th) anniversary date of this Plan.
The Plan shall be administered by a Committee (the "Committee") which
shall be appointed from time to time by the Board of Directors and shall
consist of not less than three (3) of the then members of the Board who are
non-employee directors. The Board has designated the Compensation Committee to
serve as the Committee at this time. No members of the Committee or any
non-employee Director shall be eligible to receive awards under this Plan, only
employees, or those who will become employees, shall be eligible for the grant
of an award under this Plan. The Committee, in its absolute discretion, may
grant awards under this Plan from time to time. Awards shall be granted to
employees selected by the Committee and the Committee shall be under no
obligation to grant awards to all employees, to grant awards uniformly or to
grant all awards subject to the same terms and conditions. Each individual
award shall be governed by an award agreement which shall incorporate the terms
and conditions of the award as the Committee, in its absolute discretion, deems
consistent with the terms of this Plan.
The exercise price for each share subject to such to an option shall not
be less than the fair market value of a share of the Company's stock on the
date such option is granted. No option granted under this Plan shall be
exercisable after the tenth (10th) anniversary of the date the option is
granted. Unless otherwise stated by the Committee in an individual award
agreement, the options shall become exercisable as follows: 33 1/3%, 66 2/3%,
and 100% on the first, second and third anniversary, respectively, of the date
the option is granted. The Plan provides for immediate vesting of the options
upon the employee's death, disability or retirement or upon a change in control
of the Company.
The Committee, in its absolute discretion, may incorporate a provision in
any individual award agreement that allows the employee, in lieu of exercising
his or her options, to surrender the options in whole or in part on any given
date during the exercise period. In exchange for his or her surrender of
shares, the participant shall receive shares equal in amount on the date such
surrender is effected to the excess of the fair market value of the surrendered
shares on such date over the option price for the surrendered shares.
The Committee, in its absolute discretion, may award restricted stock to
any employee or prospective employee, alone or in addition to any other award
under the Plan. During the restriction period, such stock shall be and remain
unvested and a participant may not sell, assign, transfer, pledge, encumber or
otherwise dispose of or hypothecate such award.
If a participant's employment with the Company and/or any subsidiary shall
be terminated for any reason, except death, disability or retirement, the
option and/or restricted stock shall terminate upon the date of such
termination of employment, unless the award agreement for the option or
restricted stock expressly provides otherwise.
Since the proposed Plan is structured as a non-qualified plan, each
participant will be subject to ordinary income tax on the "spread" between the
option price and the fair market value of the Company's stock as of the date of
exercise or on the fair market value of the restricted stock on the date the
restrictions lapse. The Company will be entitled to a corresponding deduction.
Since the number and identity of optionees under the Plan is at the
discretion of the Committee, it is not possible at this time to predict the
number or identity of optionees or the number or type or awards which each
optionee shall be awarded over the life of the Plan. Such optionees may
include all of the Executive Officers of the Company, including those who are
also Directors, and the non-executive officer employees of the Company.
Non-employee Directors are not eligible for awards under this Plan.
At their December 16, 1996 meeting, the Board of Directors granted to
certain individuals, as awards under this Plan, options on the Company's Common
Stock. Each option granted has an exercise price of $13.9375 per share and an
17
<PAGE> 21
expiration date of 10 years from the grant date. The options may be exercised
as follows: 33 1/3%, 66 2/3%, and 100% on the first, second and third
anniversary, respectively, of the grant date. The exercise price of the
options is equal to the average of the high and low prices, $14.125 and $13.75
per share, respectively, of the Company's Common Stock on the December 16, 1996
grant date. Options to acquire 180,268 shares were granted as follows:
<TABLE>
<CAPTION>
NEW PLAN BENEFITS
1996 Equity Incentive Plan
Number of
Name and Principal Position Options Granted
--------------------------- ---------------
<S> <C>
W. W. Sprague III
President & Chief Executive Officer 9,256
David H. Roche
Senior Vice President
President - Savannah Foods Industrial, Inc.
President - Michigan Sugar Company 5,274
James M. Kelley
Senior Vice President
President - Dixie Crystals(R) Brands, Inc. 5,274
Gregory H. Smith
Senior Vice President
Chief Financial Officer and Treasurer 4,197
F. Sprague Exley
Senior Vice President - Human Resources
& Administration 4,111
Executive Officers as a Group (6 individuals) 32,201
Non-Executive Officer Employee Group 148,067
</TABLE>
PROXIES RETURNED BY STOCKHOLDERS WILL BE VOTED "FOR" THE APPROVAL OF THE
1996 EQUITY INCENTIVE PLAN UNLESS STOCKHOLDERS INDICATE IN THEIR PROXIES THEIR
DESIRE TO HAVE THEIR SHARES VOTED "AGAINST" SUCH APPROVAL.
The affirmative vote of the holders of a majority of the outstanding
shares present in person or by proxy at the Annual Meeting and entitled to vote
is required to approve the 1996 Equity Incentive Plan. Abstentions and broker
non-votes will have the same effect as a vote against approval of the Plan.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Company's Audit Committee and Board of Directors believe good business
practices necessitate that the Company periodically change independent
accountants. Accordingly, they have selected Arthur Andersen LLP to serve as
the Company's independent accountants for the current fiscal year, and propose
that the stockholders ratify this selection at the Annual Meeting. Price
Waterhouse LLP served as the independent accountants for the fiscal year ended
September 29, 1996.
Representatives of both Arthur Andersen LLP and Price Waterhouse LLP will
be present at the 1997 Annual Meeting with the opportunity to make a statement,
if they so desire, and will be available to respond to appropriate questions.
See "Board of Directors and Committees of the Board" herein as to members of
the Audit Committee of the Board of Directors.
18
<PAGE> 22
On October 17, 1996, Savannah Foods & Industries, Inc. notified Price
Waterhouse LLP that it would be dismissed as the Company's independent
accountants upon completion of its audit of the consolidated financial
statements as of and for the fiscal year ended September 29, 1996. This audit
was completed on November 18, 1996.
The reports of Price Waterhouse LLP on the consolidated financial
statements of Savannah Foods & Industries, Inc. as of and for the fiscal years
ended September 29, 1996 and October 1, 1995 contained no adverse opinion or
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principle.
In connection with its audits for the fiscal years ended September 29,
1996 and October 1, 1995 and through November 18, 1996, there were no
disagreements with Price Waterhouse LLP on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure,
which disagreements if not resolved to the satisfaction of Price Waterhouse LLP
would have caused them to make reference thereto in their report on the
consolidated financial statements for such years.
During the fiscal years ended September 29, 1996 and October 1, 1995 and
through November 18, 1996 there were no reportable events (as defined in
Regulation S-K Item 304(a)(1)(v)).
The Company requested that Price Waterhouse LLP furnish it with a letter
addressed to the SEC stating whether or not it agrees with the above
statements. Copies of such letters, one dated October 22, 1996 and one dated
November 18, 1996 were filed as Exhibits 16-1 to two Form 8-K's filed with the
Securities Exchange Commission on October 24, 1996 and on November 22, 1996,
respectively.
At its December 16, 1996 meeting, the Company's Board of Directors engaged
Arthur Andersen LLP as its new independent accountants. During the fiscal years
ended September 29, 1996 and October 1, 1995 and through December 16, 1996, the
Company had not consulted with Arthur Andersen LLP on items which (1) were or
should have been subject to Statement on Auditing Standards No. 50, or (2)
concerned the subject matter of a disagreement or reportable event with the
former auditor (as described in Regulation S-K Item 304(a) (2)).
PROXIES RETURNED BY STOCKHOLDERS WILL BE VOTED "FOR" RATIFICATION OF THE
SELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT ACCOUNTANTS UNLESS STOCKHOLDERS
INDICATE IN THEIR PROXIES THEIR DESIRE TO HAVE THEIR SHARES VOTED "AGAINST"
SUCH RATIFICATION.
The affirmative vote of the holders of a majority of the outstanding
shares present in person or by proxy at the Annual Meeting and entitled to vote
is required to ratify the appointment of independent accountants. Abstentions
and broker non-votes will have the same effect as a vote against ratification
of the independent accountants.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Executive Officers and Directors, and persons who own more than 10%
of its Common Stock, to file reports of ownership and changes in ownership with
the Securities and Exchange Commission. Such persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms filed
by such person.
Based solely upon the Company's review of such forms furnished to the
Company and written representations from certain reporting persons, the Company
believes that all filing requirements applicable to the Company's Executive
Officers, Directors and more than 10% stockholders were complied with, except
that (a) in December 1995, Mr. Sprague, the Company's President, reported the
ownership of 157,000 shares held by a trust of which he is a trustee and
beneficiary which should have been reported on his original Form 3, and in
December 1996, he reported 754 shares which his wife received as a gift in
December 1993, and (b) in December 1996, Mr. Exley, the Company's Senior Vice
President - Human Resources & Administration, reported the receipt of 150
shares which, in 1991 and 1992, had been added through a dividend reinvestment
program to a trust account of which Mr. Exley is a trustee and beneficiary.
19
<PAGE> 23
ANNUAL REPORT
The Company's annual report for the fiscal year ended September 29, 1996,
including financial statements, is being mailed with this Proxy Statement on or
about January 13, 1997 to stockholders of record at the close of business on
December 24, 1996 except those stockholders who have requested elimination of
multiple copies of annual reports to the same address.
1998 ANNUAL MEETING STOCKHOLDER PROPOSALS
A stockholder wishing to present a proposal at the 1998 Annual Meeting
must submit the proposal in writing, addressed to the Secretary, Savannah Foods
& Industries, Inc., Post Office Box 339, Savannah, Georgia 31402, not later
than September 15, 1997, in order for such proposal to be considered for
inclusion in the proxy material and agenda of the 1998 Annual Meeting.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters to be
brought before the Annual Meeting. If matters other than those set forth in
this Proxy Statement are properly presented at the Annual Meeting, it is the
intention of the persons named in the enclosed proxy to vote said proxy in
accordance with their best judgment on such other matters.
By Order of the Board of Directors
John M. Tatum
Secretary
Savannah, Georgia
January 13, 1997
20
<PAGE> 24
APPENDIX A
SAVANNAH FOODS & INDUSTRIES, INC.
1996 EQUITY INCENTIVE PLAN
SECTION 1
PURPOSE
The purpose of this Plan is to promote the interests of the Company, its
Subsidiaries and its shareholders by enabling the Company and its Subsidiaries
to attract, retain and motivate employees or those who will become employees,
and to align the interests of those individuals and the Company's shareholders.
To do this, the Plan offers equity-based opportunities providing such employees
with a proprietary interest in maximizing the growth, profitability and overall
success of the Company and its Subsidiaries.
SECTION 2
DEFINITIONS
Each term set forth in this Section shall have the meaning set forth
opposite such term for purposes of this Plan and, for purposes of such
definitions, the singular shall include the plural and the plural shall include
the singular.
2.1 Award means an award or grant of an Option or Restricted Stock made to
a Participant under this Plan.
2.2 Award Agreement means the agreement executed by a Participant pursuant
to this Plan in connection with the granting of an Award.
2.3 Board means the Board of Directors of the Company, as constituted
from time to time.
2.4 Change in Control has the meaning set forth in Section 15.
2.5 Code means the Internal Revenue Code of 1986, as amended.
2.6 Committee means the committee of the Board established to administer
the Plan, as appointed under Section 5 of the Plan.
2.7 Common Stock means the $.25 par value common stock of the Company.
2.8 Company means Savannah Foods & Industries, Inc., a Delaware
corporation, and any successor to such organization.
2.9 Disability means disability as defined in the Participant's then
effective employment agreement, or if the Participant is not then a party to an
effective employment agreement with the Company which defines disability,
"Disability" means disability as determined by the Committee in accordance with
standards and procedures similar to those under the Company's long-term
disability plan, if any. Subject to the first sentence of this Section 2.9, at
any time that the Company does not maintain a long-term disability plan,
"Disability" shall mean any physical or mental disability which is determined
to be total and permanent by a physician selected in good faith by the Company.
2.10 Employee means an employee of the Company, a Subsidiary or a Parent.
2.11 Exchange Act means the Securities Exchange Act of 1934, as amended.
21
<PAGE> 25
2.12 Fair Market Value means on, or with respect to, any given date(s),
the average of the highest and lowest market prices of the Common Stock, as
reported on the consolidated reporting system for the New York Stock Exchange
for such date(s) or, if the Common Stock was not traded on such date(s), on the
next preceding day or days on which the Common Stock was traded. If at any
time the Common Stock is not traded on such exchange, the Fair Market Value of
a share of the Common Stock shall be determined in good faith by the Board.
2.13 Option means an option to purchase Shares granted under this Plan.
2.14 Option Price means the price which shall be paid to purchase one (1)
Share upon the exercise of an Option granted under this Plan.
2.15 Parent means any corporation which is a parent corporation of the
Company within the meaning of Section 424(e) of the Code.
2.16 Participant means any individual who is selected from time to time to
receive an Award under the Plan.
2.17 Plan means the Savannah Foods & Industries, Inc. 1996 Equity
Incentive Plan, as amended from time to time.
2.18 Restricted Stock means Shares granted pursuant to Section 9.
2.19 Retirement means the voluntary retirement by the Participant from
active employment with the Company and its Subsidiaries on or after the
attainment of (i) age 65, or (ii) 60, with the consent of the Board.
2.20 Share means a share of the Common Stock of the Company.
2.21 Subsidiary means any corporation which is a subsidiary corporation of
the Company within the meaning of Section 424(f) of the Code.
2.22 Surrendered Shares means the Shares described in Section 8.7 which
(in lieu of being purchased) are surrendered for cash or Shares, or for a
combination of cash and Shares, in accordance with Section 8.7.
SECTION 3
SHARES SUBJECT TO PLAN
The total number of Shares that may be issued pursuant to Options or
Restricted Stock Grants granted under this Plan shall not exceed One Million
Two Hundred and Fifty Thousand (1,250,000) Shares, as adjusted below and
pursuant to Section 12. Such Shares shall be reserved to the extent that the
Company deems appropriate from authorized but unissued Shares and from Shares
which have been reacquired by the Company. Furthermore, any Shares subject to
an Award granted hereunder which remain after the cancellation, expiration or
exchange of such Award shall again become available for use under this Plan,
but any Surrendered Shares which remain after the surrender of an Option under
Section 8.7 shall not again become available for use under this Plan.
SECTION 4
EFFECTIVE DATE
The effective date of this Plan shall be the date it is adopted by the
Board, provided the shareholders of the Company approve this Plan within twelve
(12) months after such effective date. If such effective date comes before
such shareholder approval, any Awards granted under this Plan before the date
of such approval shall automatically be granted subject to such approval.
22
<PAGE> 26
SECTION 5
ADMINISTRATION
5.1 The Committee. This Plan shall be administered by the Committee. The
Committee shall be appointed from time to time by the Board and shall consist
of not less than three (3) of the then members of the Board who are
Non-Employee Directors (within the meaning of Rule 16b-3(b)(3) promulgated
pursuant to the Exchange Act) of the Company. No member of the Committee shall
be eligible to receive Awards under the Plan. Consistent with the Bylaws of
the Company, members of the Committee shall serve at the pleasure of the Board
and the Board, subject to the immediately preceding sentence, may at any time
and from time to time remove members from, or add members to, the Committee.
5.2 Powers of the Committee. The Committee, acting in its absolute
discretion, shall exercise such powers and take such action as expressly called
for under this Plan. The Committee shall have the power to interpret this Plan
and, subject to Section 14, to take such other action in the administration and
operation of the Plan as it deems equitable under the circumstances. The
Committee's actions shall be binding on the Company, on each affected
Participant, and on each other person directly or indirectly affected by such
action.
5.3 Liability Limitation. Neither the Board nor the Committee, nor any
member of either, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with the Plan
(or any Award Agreement), and the members of the Board and the Committee shall
be entitled to indemnification and reimbursement by the Company in respect of
any claim, loss, damage or expense (including, without limitation, attorneys'
fees) arising or resulting therefrom to the fullest extent permitted by law
and/or under any directors and officers liability insurance coverage which may
be in effect from time to time.
SECTION 6
ELIGIBILITY
Only Employees, or those who will become Employees, shall be eligible for
the grant of an Award under this Plan, but no Employee shall have the right to
be granted an Award under this Plan merely as a result of his or her status as
an Employee.
SECTION 7
GRANT OF AWARDS
7.1 Selection by Committee. The Committee, in its absolute discretion,
may grant Awards under this Plan from time to time and shall have the right to
grant new Awards in exchange for outstanding Awards. Awards shall be granted
to Employees selected by the Committee and the Committee shall be under no
obligation whatsoever to grant Awards to all Employees, to grant Awards
uniformly or to grant all Awards subject to the same terms and conditions. In
determining Employee(s) to whom an Award shall be granted and the number of
Shares to be covered by such Award, the Committee may take into account the
recommendations of the President of the Company and its other officers, the
duties of the Employee, the present and potential contributions of the Employee
to the success of the Company, the anticipated number of years of service
remaining before the attainment by the Employee of retirement age, and other
factors deemed relevant by the Committee, in its sole discretion, in connection
with accomplishing the purpose of this Plan. An Employee who has been granted
an Award, whether under this Plan or otherwise, may be granted one or more
additional Awards.
7.2 Award Agreements. Each grant of an Award shall be evidenced by an
Award Agreement and shall incorporate such terms and conditions as the
Committee, acting in its absolute discretion, deems consistent with the terms
of this Plan.
23
<PAGE> 27
SECTION 8
STOCK OPTIONS
8.1 Terms and Conditions. Options granted under the Plan shall be in
respect of Common Stock. Such Options shall be subject to the terms and
conditions set forth in this Section 8 and any additional terms and conditions,
not inconsistent with the express terms and provisions of the Plan, as the
Committee shall set forth in the relevant Award Agreement. Options granted
hereunder shall not be intended to satisfy the requirements of Section 422 of
the Code as incentive stock options.
8.2 Option Price. The Option Price for each Share subject to such Option
shall be no less than the Fair Market Value of a Share on the date such Option
is granted. The Option Price shall be payable in full upon the exercise of any
Option, and an Award Agreement, at the discretion of the Committee may provide
for the payment of the Option Price either in cash or in Shares acceptable to
the Committee or in any combination of cash and Shares acceptable to the
Committee. Any payment made in Shares shall be treated as equal to the Fair
Market Value of such Shares on the date the properly endorsed certificate for
such Shares is delivered to the Committee (or to its delegate). Notwithstanding
the above, and in the sole discretion of the Committee, an Option may be
exercised as to a portion or all (as determined by the Committee) of the number
of Shares specified in the Award Agreement by delivery to the Company of a
secured promissory note to be executed by the Optionee. The promissory note
shall include, along with such other terms and conditions as the Committee
shall determine, provisions in a form approved by the Committee under which (a)
the balance of the aggregate purchase price shall be payable in equal
installments over such period and shall bear interest at such rate (which shall
not be less than the prime bank loan rate as determined by the Committee) as
the Committee shall approve and (b) the Optionee shall be personally liable for
payment of the unpaid principal balance and all accrued but unpaid interest.
8.3 Option Exercise Period.
(a) Each Option granted under this Plan shall be exercisable in
whole or in part at such time or times as set forth in the related Award
Agreement, but no Award Agreement shall:
(i) make an Option exercisable before the date such Option
is granted or;
(ii) make an Option exercisable after the earlier of the:
(A) the date such Option is exercised in full; or
(B) the date which is the tenth (10th) anniversary
of the date such Option is granted.
(b) If a Participant's employment with the Company and/or any
Parent or Subsidiary shall be terminated for any reason, except death,
Disability or Retirement, the Option shall terminate upon the date of such
termination of employment, unless the Award Agreement for the Option expressly
provides otherwise, except as otherwise provided herein.
(c) If a Participant shall become Disabled while an employee of the
Company or any Parent or Subsidiary or after the date of termination of
employment but prior to the expiration of the Option, or if a Participant shall
Retire, the Retired Participant, the transferee of the Option pursuant to
Section 8.6 or the Disabled Participant shall have the right to exercise the
Option, and the right to exercise the Option shall terminate as provided by the
terms of the Award Agreement for the Option. If a Participant shall die while
an employee of the Company or any Parent or Subsidiary or after the date of
termination of employment but prior to the expiration of the Option, the
executor or administrator of the Participant's estate or a transferee of the
Option pursuant to Section 8.6 shall have the right to exercise the Option, and
the right to exercise the Option shall terminate upon the earliest of (i) the
expiration of twelve (12) months from the date of such termination of
employment, (ii) the expiration of twelve (12) months from the date of the
Participant's death, or (iii) as otherwise provided by the terms of the Award
Agreement for the Option. The occurrence of a Change in Control shall have no
effect on the duration of the exercise period.
24
<PAGE> 28
(d) Whether military or other government or eleemosynary service or
other leave of absence will constitute termination of employment shall be
determined in each case by the Committee in its sole discretion.
(e) Notwithstanding the foregoing termination provisions, the
Committee may, in its sole discretion, establish different terms and conditions
pertaining to the effect of an Participant's termination on the expiration or
exercisability of newly granted options or (with the consent of the affected
Participant) outstanding options. However, no Option can have a term of more
than ten (10) years.
8.4 Vesting. In respect of any Option granted under this Plan, unless
otherwise (a) determined by the Committee (in its sole discretion) at any time
and from time to time in respect of any such Option, or (b) provided in the
Award Agreement or in the Participant's employment agreement in respect of any
such Option, such Option shall become exercisable as to the aggregate number of
shares of Common Stock underlying such Option, as determined on the date of
grant, as follows:
(a) 33 1/3%, on the first anniversary of the date of grant of the
Option, provided the Participant is then employed by the
Company and/or one of its Subsidiaries;
(b) 66 2/3%, on the second anniversary of the date of grant of the
Option, provided the Participant is then employed by the
Company and/or one of its Subsidiaries; and
(c) 100%, on the third anniversary of the date of grant of the
Option, provided the Participant is then employed by the
Company and/or one of its Subsidiaries.
8.5 Acceleration of Vesting upon Death, Disability or Retirement.
Notwithstanding anything to the contrary contained in Section 8.4, such Option
shall become one hundred percent (100%) exercisable as to the aggregate number
of shares of Common Stock underlying such Option upon the death, Disability or
Retirement of the Participant. Death or Disability of the Participant
occurring after termination of employment with the Company and/or any Parent or
Subsidiary shall not cause any Options to become exercisable.
8.6 Non-Transferable. No Option granted under this Plan shall be
transferable by a Participant other than by will or by the laws of descent and
distribution, and such Option shall be exercisable during a Participant's
lifetime only by the Participant. The person or persons to whom an Option is
transferred by will or by the laws of descent and distribution thereafter shall
be treated as the Participant.
8.7 Surrender of Options.
(a) General Rule. The Committee, acting in its absolute discretion,
may incorporate a provision in an Award Agreement to allow a Participant to
surrender his or her Option in whole or in part in lieu of the exercise in
whole or in part of that Option on any date that:
(i) the Fair Market Value of the Shares subject to such
Option exceeds the Option Price for such Shares; and
(ii) the Option to purchase such Shares is otherwise
exercisable.
(b) Procedure. The surrender of an Option in whole or in part
shall be effected by the delivery of the Award Agreement to the Committee (or
to its delegate) together with a statement signed by the Participant which
specifies the number of Shares ("Surrendered Shares") as to which the
Participant surrenders his or her Option and how he or she desires payment be
made for such Surrendered Shares.
25
<PAGE> 29
(c) Payment. A Participant in exchange for his or her Surrendered
Shares shall receive Shares equal in amount on the date such surrender is
effected to the excess of the Fair Market Value of the Surrendered Shares on
such date over the Option Price for the Surrendered Shares. If any exercise
under this Section 8.7 creates a right to acquire a fractional Share, such
fractional Share shall be disregarded and the number of Shares to be issued
shall be the next lower number of Shares, rounding all fractions downward.
(d) Restrictions. Any Award Agreement for an Option which
incorporates a provision to allow a Participant to surrender his or her Option
in whole or in part also shall incorporate such additional restrictions on the
exercise or surrender of such Option as the Committee deems necessary to
satisfy the conditions to the exemption under Rule 16b-3 (or any successor
exemption) to Section 16(b) of the Exchange Act.
SECTION 9
RESTRICTED STOCK
9.1. Terms and Conditions. Awards of Restricted Stock shall be subject to
the terms and conditions set forth in this Section 9 and any additional terms
and conditions, not inconsistent with the express terms and provisions of the
Plan, as the Committee shall set forth in the relevant Award Agreement.
Restricted Stock may be granted alone or in addition to any other Awards under
the Plan. Subject to the terms of the Plan, the Committee shall determine the
number of Shares of Restricted Stock to be granted to a Participant and the
Committee may provide or impose different terms and conditions on any
particular Restricted Stock Award made to any Participant. With respect to
each Participant receiving an Award of Restricted Stock, there shall be issued
a stock certificate (or certificates) in respect of such Restricted Stock.
Such stock certificate(s) shall be registered in the name of such Participant,
shall be accompanied by a stock power duly executed by such Participant, and
shall bear, among other required legends, the following legend:
"The transferability of this certificate and the shares
of stock represented hereby are subject to the terms and
conditions (including, without limitation, forfeiture
events) contained in the Savannah Foods & Industries,
Inc. 1996 Equity Incentive Plan and an Award Agreement
entered into between the registered owner hereof and
Savannah Foods & Industries, Inc. Copies of such Plan
and Award Agreement are on file in the office of the
Secretary of Savannah Foods & Industries, Inc.,
Savannah, Georgia. Savannah Foods & Industries, Inc.
will furnish to the record holder of the certificate,
without charge and upon written request at its principal
place of business, a copy of such Plan and Award
Agreement. Savannah Foods & Industries, Inc. reserves
the right to refuse to record the transfer of this
certificate until all such restrictions are satisfied,
all such terms are complied with and all such conditions
are satisfied."
Such stock certificate evidencing such shares shall, in the sole discretion of
the Committee, be deposited with and held in custody by the Company until the
restrictions thereon shall have lapsed and all of the terms and conditions
applicable to such grant shall have been satisfied.
9.2 Restricted Stock Award. An Award of Restricted Stock is an
Award of shares of Common Stock granted to a Participant, subject to such
restrictions, terms and conditions as the Committee deems appropriate,
including, without limitation, (a) restrictions on the sale, assignment,
transfer, hypothecation or other disposition of such shares, (b) the
requirement that the Participant deposit such shares with the Company while
such shares are subject to such restrictions, and (c) the requirement that such
shares be forfeited upon termination of employment for specified reasons within
a specified period of time or for other reasons (including, without limitation,
the failure to achieve designated performance goals).
26
<PAGE> 30
9.3 Restriction Period. In accordance with Sections 9.1 and 9.2 of
the Plan and unless otherwise determined by the Committee (in its sole
discretion) at any time and from time to time, Restricted Stock shall only
become unrestricted and vested in the Participant in accordance with such
vesting schedule relating to such Restricted Stock, if any, as the Committee
may establish in the relevant Award Agreement (the "Restriction Period").
Notwithstanding the preceding sentence, in no event shall the Restriction
Period be less than six (6) months after the date of grant of the Award. During
the Restriction Period, such stock shall be and remain unvested and a
Participant may not sell, assign, transfer, pledge, encumber or otherwise
dispose of or hypothecate such Award. Upon satisfaction of the vesting
schedule and any other applicable restrictions, terms and conditions, the
Participant shall be entitled to receive payment of the Restricted Stock or a
portion thereof, as the case may be, as provided in Section 9.4 of the Plan.
9.4 Payment of Restricted Stock. After the satisfaction and/or
lapse of the restrictions, terms and conditions established by the Committee in
respect of an Award of Restricted Stock, a new certificate, without the legend
set forth in Section 9.1 of the Plan, for the number of shares of Common Stock
which are no longer subject to such restrictions, terms and conditions shall,
as soon as practicable thereafter, be delivered to the Participant.
9.5 Shareholder Rights. A Participant shall have, with respect to
the shares of Common Stock underlying an Award of Restricted Stock, all of the
rights of a shareholder of such stock (except as such rights are limited or
restricted under the Plan or in the relevant Award Agreement). Any stock
dividends paid in respect of unvested Restricted Stock shall be treated as
additional Restricted Stock and shall be subject to the same restrictions and
other terms and conditions that apply to the unvested Restricted Stock in
respect of which such stock dividends are issued.
SECTION 10
SECURITIES REGISTRATION
Each Award Agreement may provide that, upon the receipt of Shares as a
result of the surrender or exercise of an Award, the Employee shall, if so
requested by the Company, hold such Shares for investment and not with a view
of resale or distribution to the public and, if so requested by the Company,
shall deliver to the Company a written statement satisfactory to the Company to
that effect. Each Award Agreement also may provide that, if so requested by
the Company, the Employee shall make a written representation to the Company
that he or she will not sell or offer to sell any of such Shares unless a
registration statement shall be in effect with respect to such Shares under the
Securities Act of 1933, as amended ("1933 Act") and any applicable state
securities law or unless he or she shall have furnished to the Company an
opinion, in form and substance satisfactory to the Company, of legal counsel
acceptable to the Company, that such registration is not required.
Certificates representing the Shares transferred upon the grant, exercise or
surrender of an Award granted under this Plan may at the discretion of the
Company bear a legend to the effect that such Shares have not been registered
under the 1933 Act or any applicable state securities law and that such Shares
may not be sold or offered for sale in the absence of an effective registration
statement as to such Shares under the 1933 Act and any applicable state
securities law or an opinion, in form and substance satisfactory to the
Company, of legal counsel acceptable to the Company, that such registration is
not required.
SECTION 11
LIFE OF PLAN
No Award shall be granted under this Plan on or after the tenth (10th)
anniversary of the effective date of the Plan, in which case the Plan otherwise
shall continue in effect until the later of (i) all outstanding Options have
been terminated, surrendered or exercised in full or no longer are exercisable
or (ii) all restrictions on Shares transferred as Restricted Stock have lapsed.
27
<PAGE> 31
SECTION 12
ADJUSTMENT
The number of Shares reserved under Section 3 of this Plan and the number
of Shares subject to Awards granted under this Plan and the exercise price or
other price per Share relating to outstanding Awards shall be adjusted by the
Committee in an equitable manner to reflect any change in the capitalization of
the Company, including, but not limited to, such changes as stock dividends or
stock splits. Furthermore, the Committee shall have the right to adjust the
number of Shares reserved under Section 3 of this Plan and the number of Shares
subject to Awards granted under this Plan and the exercise price or other price
per Share relating to outstanding Awards in the event of any merger,
consolidation, division, acquisition, reorganization or liquidation which
provides for the substitution or assumption of such Awards. If any adjustment
under this Section 12 creates a fractional Share or a right to acquire a
fractional Share, such fractional Share shall be disregarded and the number of
Shares reserved under this Plan and the number subject to any Awards granted
under this Plan shall be the next lower number of Shares, rounding all
fractions downward. An adjustment made under this Section 12 by the Committee
shall be conclusive and binding on all affected persons and, further, shall not
constitute an increase in the number of Shares reserved under Section 3 of this
Plan.
SECTION 13
SALE OR MERGER OF THE COMPANY
If the Company agrees to sell substantially all of its assets for cash or
property or for a combination of cash and property or agrees to any merger,
consolidation, reorganization, division or other transaction in which Shares
are converted into another security or into the right to receive securities or
property and such agreement does not provide for the assumption or substitution
of the Options granted under this Plan, each Option, at the direction and
discretion of the Committee, or as is otherwise provided in the Award
Agreements, may be canceled unilaterally by the Company in exchange for the
whole Shares which each Participant otherwise would receive if he or she had
the right to surrender his or her outstanding Option in full under Section 8.7
of this Plan and he or she exercised that right exclusively for Shares on a
date fixed by the Committee which comes before such sale or other corporate
transaction.
SECTION 14
AMENDMENT OR TERMINATION
This Plan may be amended by the Board from time to time to the extent that
the Board deems necessary or appropriate; provided, however, no such amendment
shall be made absent the approval of the shareholders of the Company (1) to
increase the number of Shares reserved under Section 3, except as set forth in
Section 12, (2) to extend the maximum life of the Plan under Section 11 or the
maximum exercise period under Section 8.3, (3) to decrease the Option Price
under Section 8.2, or (4) to change the designation of Employees eligible for
Awards under Section 6. The Board also may suspend the granting of Awards
under this Plan at any time and may terminate this Plan at any time; provided,
however, the Company shall not have the right to modify, amend or cancel any
Award granted before such suspension or termination unless (i) the Participant
consents in writing to such modification, amendment or cancellation or (ii)
there is a dissolution or liquidation of the Company or a transaction described
in Section 12 or Section 13 of this Plan.
SECTION 15
CHANGE IN CONTROL
15.1 Acceleration of Awards Vesting. Anything in the Plan to the contrary
notwithstanding, if a Change in Control of the Company occurs (a) all Options
then unexercised and outstanding shall become fully vested and exercisable as
of the date of the Change in Control, and (b) all restrictions, terms and
conditions applicable to all Restricted Stock then outstanding shall be deemed
lapsed and satisfied as of the date of the Change in Control. The immediately
preceding sentence shall apply to only those Participants (i) who are employed
by the Company and/or one of its Subsidiaries as of the date of the Change in
Control, or (ii) to whom Section 15.3 below is applicable.
28
<PAGE> 32
15.2 Payment After Change in Control. Notwithstanding anything to the
contrary in the Plan, within thirty (30) days after a Change in Control occurs,
(a) the holder of an Award of Restricted Stock vested under Section 15.1(b)
above shall receive a new certificate for such shares without the legend set
forth in Section 9 of the Plan and, in the case only of a Change in Control
under Section 15.4(a) of the Plan, such holder shall have the right, but not
the obligation, to elect, within ten (10) business days after the Participant
has actual or constructive knowledge of the occurrence of such Change in
Control, to require the Company to purchase such shares from the Participant at
their then Fair Market Value, and (b) in the case only of a Change in Control
under Section 15.4(a) of the Plan, the holders of any Options shall have the
right, but not the obligation, to elect, within ten (10) business days after
the Participant has actual or constructive knowledge of the occurrence of such
Change in Control, to require the Company to purchase such Options from the
Participant for an aggregate amount equal to the then aggregate Fair Market
Value of the Common Stock underlying such Awards tendered, less the aggregate
exercise price of such tendered Awards.
15.3 Termination as a Result of a Change in Control. Anything in the
Plan to the contrary notwithstanding, if a Change in Control occurs and if the
Participant's employment is terminated before such Change in Control and it is
reasonably demonstrated by the Participant that such employment termination (a)
was at the request, directly or indirectly, of a third party who has taken
steps reasonably calculated to effect the Change in Control, or (b) otherwise
arose in connection with or in anticipation of the Change in Control, then for
purposes of this Section 15, the Change in Control shall be deemed to have
occurred immediately prior to such Participant's employment termination.
15.4 Change in Control. For purposes of this Plan, a Change in Control
shall be deemed to have occurred when and only when the first of the following
events occurs:
(a) Any "person" (as that term is used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), other
than (1) any employee plan established by the Company, (2) the Company, (3) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (4) a corporation owned, directly or indirectly, by stockholders
of the Company in substantially the same proportions as their ownership of the
Company) is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 20% or more of the combined voting power
of the Company's then outstanding voting securities; or
(b) During any period of two consecutive years, individuals who at the
beginning of such period constituted the Board and any new director (other than
an individual whose nomination for election is in connection with an actual or
threatened election contest relating to the election of the directors of the
Company, as such terms are used in Rule 14a-11 of Regulation 14A under the
Exchange Act) whose appointment, election, or nomination for election by the
Company's shareholders, was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the beginning
of the period or whose appointment, election or nomination for election was
previously so approved, cease for any reason to constitute a majority of the
Board; or
(c) There is consummated a merger or consolidation of the Company or a
subsidiary thereof with or into any other corporation, other than a merger or
consolidation which would result in the holders of the voting securities of the
Company outstanding immediately prior thereto holding securities which
represent immediately after such merger or consolidation more than 80% of the
combined voting power of the voting securities of either the Company or the
other entity which survives such merger or consolidation or the parent of the
entity which survives such merger or consolidation; or
(d) There is consummated a sale or disposition by the Company of all or
substantially all of the Company's assets.
29
<PAGE> 33
SECTION 16
MISCELLANEOUS
16.1 Shareholder Rights. No Participant shall have any rights as a
shareholder of the Company as a result of the grant of an Award to him or to
her under this Plan or his or her exercise or surrender of such Award pending
the actual delivery of Shares subject to such Award to such Participant.
16.2 No Contract of Employment. The grant of an Award to an Employee
under this Plan shall not constitute a contract of employment or other
association with the Company, and shall not confer on an Employee any rights
upon his or her termination of employment or other association with the
Company, in addition to those rights, if any, expressly set forth in the
applicable Award Agreement.
16.3 Withholding. The Company shall have the right to deduct from any
payment or settlement under the Plan, including, without limitation, the
exercise of any Option, or the delivery, transfer or vesting of any Common
Stock or Restricted Stock, any federal, state, local or other taxes of any kind
which the Committee, in its sole discretion, deems necessary to be withheld to
comply with the Code and/or any other applicable law, rule or regulation. If
the Committee, in its sole discretion, permits shares of Common Stock to be
used to satisfy any such tax withholding, such Common Stock shall be valued
based on the Fair Market Value of such stock as of the date the tax withholding
is required to be made, such date to be determined by the Committee. The
Committee may establish rules limiting the use of Common Stock to meet
withholding requirements by Participants who are subject to Section 16 of the
Exchange Act. The exercise or surrender of any Option granted under this Plan
shall constitute an Employee's full and complete consent to whatever action the
Committee directs to satisfy the federal and state tax withholding
requirements, if any, which the Committee in its discretion deems applicable to
such exercise or surrender.
16.4 Transfer. The transfer of an Employee between or among the Company,
a Subsidiary or a Parent shall not be treated as a termination of his or her
employment under this Plan.
16.5 Construction. This Plan shall be construed under the laws of the
State of Georgia.
30
<PAGE> 34
APPENDIX B
SAVANNAH FOODS & INDUSTRIES, INC.
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned acknowledges receipt of a Notice of Meeting and Proxy
Statement dated January 13, 1997, and hereby appoints William W. Sprague III,
David H. Roche, and Gregory H. Smith, and each or any of them with power of
substitution, attorneys and proxies, with powers the undersigned would possess
if personally present, to appear and vote all stock of the undersigned in
Savannah Foods & Industries, Inc., at the Annual Meeting of Stockholders to be
held on February 20, 1997, starting at 9:00 a.m. Eastern Standard Time in the
Grand Ballroom on the main lobby floor of the DeSoto Hilton Hotel, 15 East
Liberty Street, Savannah, Georgia, and at any adjournment or postponement
thereof.
<TABLE>
1. ELECTION OF DIRECTORS: (For Three-year Terms Expiring in 2000)
<S> <C>
[ ] FOR ALL NOMINEES listed below [ ] WITHHOLD AUTHORITY to vote
(except as indicated to the contrary below) for all nominees listed below
R. Eugene Cartledge, Lee B. Durham, Jr., Robert L. Harrison, James M. Reed
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "FOR" BOX ABOVE AND WRITE THAT NOMINEE'S NAME ON
THE SPACE PROVIDED BELOW.
</TABLE>
--------------------------------------------------------------
2. APPROVAL OF THE AMENDMENT TO THE BY-LAWS of the Corporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPROVAL OF THE ADOPTION OF THE 1996 EQUITY INCENTIVE PLAN for employees of
the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP as independent
accountants for the fiscal year ending September 28, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. THE TRANSACTION OF SUCH OTHER BUSINESS as may properly come before the
Annual Meeting.
(Continued and to be signed on the other side)
<PAGE> 35
(Continued from the other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE NOMINEES FOR DIRECTORS (ITEM 1), "FOR" THE APPROVAL OF THE
AMENDMENT TO THE BY-LAWS (ITEM 2), "FOR" THE APPROVAL OF THE ADOPTION OF THE
1996 EQUITY INCENTIVE PLAN (ITEM 3), AND "FOR" THE RATIFICATION OF ARTHUR
ANDERSEN LLP (ITEM 4)
----------------------------------------------------
(Please sign exactly as your name appears hereon and
return promptly in the enclosed envelope.)
Date: , 1997
------------------------------------------
