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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<C> <S>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
THE ROBERT MONDAVI CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
<TABLE>
<C> <S>
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:1(1)
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(4) Proposed maximum aggregate value of transaction:
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* Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and
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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.
<TABLE>
<C> <S>
(1) Amount previously paid:
*
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
THE ROBERT MONDAVI CORPORATION
7801 ST. HELENA HIGHWAY
OAKVILLE, CALIFORNIA 94562
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF
THE ROBERT MONDAVI CORPORATION
TO BE HELD NOVEMBER 3, 1997
To the Shareholders:
The Annual Meeting of Shareholders of The Robert Mondavi Corporation
(the "Company") will be held at the Robert Mondavi Winery, 7801 St. Helena
Highway, Oakville, California 94562, on Monday, November 3, 1997, at 10:00 a.m.
local time, for the following purposes:
1. To elect three Class A Directors and five Class B Directors;
2. To ratify the appointment of Price Waterhouse as the Company's
independent auditors for the 1998 fiscal year;
3. To ratify proposed amendments to the Company's 1993 Equity
Incentive Plan; and
4. To transact such other business as may properly come before
the meeting and any adjournment thereof.
All of the above matters are more fully described in the accompanying
Proxy Statement. Only shareholders of record at the close of business on
September 15, 1997 are entitled to notice of and to vote at the meeting or any
postponement or adjournment thereof.
By Order of the Board of Directors
/s/ MIKE BEYER
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Mike Beyer, Secretary
Napa, California
September 29, 1997
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WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ENCLOSED REPLY ENVELOPE. THIS WILL NOT LIMIT
YOUR RIGHT TO ATTEND OR VOTE AT THE MEETING.
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<PAGE> 3
THE ROBERT MONDAVI CORPORATION
7801 ST. HELENA HIGHWAY
OAKVILLE, CALIFORNIA 94562
-------------------------------------------
PROXY STATEMENT
-------------------------------------------
Your proxy in the form enclosed is solicited by the Board of
Directors of The Robert Mondavi Corporation (the "Company") for use in voting at
the Annual Meeting of Shareholders to be held on Monday, November 3, 1997 at
10:00 a.m. local time, or at any adjournment thereof. The Annual Meeting will be
held at the Robert Mondavi Winery, 7801 St. Helena Highway, Oakville, California
94562. This Proxy Statement and the enclosed form of proxy, together with the
Company's Annual Report for fiscal 1997, were first mailed to shareholders on or
about September 29, 1997.
The Company's principal executive offices are located at 7801 St.
Helena Highway, Oakville, California 94562, and its telephone number is
(707) 259-9463. D.F. King & Co., Inc., who is assisting with the mechanics of
the return of the proxies, may be contacted at (212) 269-5550.
The shares represented by those proxies received, properly dated and
executed, and not revoked, will be voted at the Annual Meeting. A proxy may be
revoked at any time before it is exercised by delivering to the Secretary of the
Company at the Company's principal executive offices, no later than the start of
the Annual Meeting, a written notice of revocation or a duly executed proxy
relating to the same shares bearing a later date than the revoked proxy, or by
attending the Annual Meeting and voting the shares covered by the proxy in
person. All shares represented by proxies that are properly dated, executed and
returned, and which have not been revoked, will be voted in accordance with the
specifications on the enclosed proxy. If no such specifications are made, shares
of Class A Common Stock will be voted FOR the election of the three nominees for
Class A Directors listed in this Proxy Statement and FOR approval of proposal 2
and proposal 3 set forth in the Notice of Annual Meeting of Shareholders and
described in this Proxy Statement. Similarly, if no specifications are made,
shares of Class B Common Stock will be voted FOR the election of the five Class
B Directors listed in this Proxy Statement and FOR approval of proposal 2 and
proposal 3.
The Company will bear the expense of preparing, printing and mailing
this Proxy Statement and the proxies solicited hereby and will reimburse
brokerage firms and nominees for their reasonable expenses in forwarding
solicitation materials to beneficial owners of shares held of record by such
brokerage firms and nominees. In addition to the solicitation of proxies by
mail, officers and regular employees of the Company may communicate with
shareholders either in person or by telephone or facsimile for the purpose of
soliciting such proxies; no additional compensation will be paid for such
solicitation. The Company has retained D.F. King & Co., Inc., at an estimated
cost of $3,000, plus reimbursement of expenses, to assist in the solicitation of
proxies from brokers, nominees, institutions and individuals.
OUTSTANDING SHARES AND VOTING RIGHTS
September 15, 1997 has been fixed as the record date for determining
the holders of Class A Common Stock and the holders of Class B Common Stock
entitled to notice of and to vote at the Annual Meeting. As of the close of
business on the record date, the Company had outstanding 7,527,174 shares of
Class A Common Stock and 7,676,012 shares of Class B Common Stock. Only holders
of Class A
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Common Stock are entitled to vote in the election of Class A Directors. Only
holders of Class B Common Stock are entitled to vote in the election of Class B
Directors. On all matters other than the election of Directors, the holders of
Class A Common Stock and the holders of Class B Common Stock vote together as a
single class, with each Class A share entitled to one (1) vote, or a total of
7,527,174 Class A votes, and each Class B share entitled to ten (10) votes, or a
total of 76,760,120 Class B votes.
A majority of the outstanding shares of Class A Common Stock,
represented in person or by proxy, will constitute a quorum for purposes of
electing Class A Directors, and a majority of the outstanding shares of Class B
Common Stock, represented in person or by proxy, will constitute a quorum for
purposes of electing Class B Directors. On all other matters that may be
presented at the meeting, the holders of shares entitled to cast a majority of
the votes which could be voted thereon will constitute a quorum.
ELECTION OF DIRECTORS
(PROPOSAL 1 ON PROXY)
The Company's Bylaws provide that the Board of Directors shall
consist of not less than seven nor more than eleven directors. The Board of
Directors, pursuant to the authority conferred on them by the Bylaws, have set
the current number of directors at nine, three of whom are to be elected by
holders of the Company's Class A Common Stock and six of whom are to be elected
by holders of the Class B Common Stock. Three Class A directors and five Class B
directors, named below, have been nominated for election at the Annual Meeting.
Proxies cannot be voted for a greater number of persons than the number of
nominees named. Thus there will be one vacancy on the board, entitled to be
filled by holders of the Class B Common Stock or the Class B directors.
Unless you request on your proxy card that voting of your proxy be
withheld from any one or more of the following nominees for director, each of
whom currently serves as a member of the Board, proxies of Class A Common Stock
will be voted for the election of the three nominees for Class A Directors named
below and proxies of Class B Common Stock will be voted for the election of the
five nominees for Class B Directors named below. In the event any nominee named
below becomes unavailable for election, the proxies in the form solicited will
be voted for an alternative or alternatives designated by the present Board of
Directors. Directors serve until the next Annual Meeting of Shareholders and
until their successors are elected or chosen.
NOMINEES FOR CLASS A DIRECTORS
Philip Greer, age 61, became a director of the Company in 1992.
He is chairman of the Audit Committee and a member of the Compensation
Committee. Mr. Greer is a Senior Managing Principal of Weiss, Peck & Greer,
L.L.C. ("WPG"), an investment company. He was a general partner of WPG's
predecessor, Weiss, Peck & Greer, for over twenty-five years. Mr. Greer
is also a director of Federal Express Corporation and Network Computing
Devices, Inc. He graduated from Princeton University and the Harvard Graduate
School of Business.
Frank E. Farella, age 68, has been a partner in the law firm of
Farella, Braun & Martel since 1962. He has been a director of the Company since
1992. He is a member of the Audit Committee and the Compensation Committee. Mr.
Farella is also a director of Security First Group, Security First Life
Insurance Company and Fidelity Standard Life Insurance Company, members of The
London Insurance Group of Companies, the separate accounts of which are
registered under the Investment Company Act of 1940. He is a graduate of San
Francisco State University and Stanford University Law School.
James L. Barksdale, age 54, became a director in 1996. He is the
President, CEO and a member of the Board of Directors of Netscape
Communications Corporation. From January 1992 to January
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1995 Mr. Barksdale served as President and Chief Operating Officer, and, as
of September 1994, Chief Executive Officer, of AT&T Wireless Services. From
April 1983 to January 1992 he was Executive Vice President and Chief Operating
Officer of Federal Express Corporation. Mr. Barksdale is also a director of
3Com Corporation and @Home Corporation. He is a graduate of the University
of Mississippi.
NOMINEES FOR CLASS B DIRECTORS
Robert G. Mondavi, age 84, founded the Company in 1966 and has been
Chairman of the Board since that time. Robert Mondavi was also Chief Executive
Officer of the Company from its founding to 1990. He began making wine in
California in 1937 and in 1943 his family purchased the Charles Krug winery in
the Napa Valley where he served as General Manager until 1966. He has been
inducted into Fortune Magazine's Business Hall of Fame. He is a member of the
American Institute of Wine and Food, the American Wine Society and the
Commanderie de Bordeaux. He graduated from Stanford University. Robert Mondavi
is the father of Michael and Timothy Mondavi and Marcia Mondavi Borger.
R. Michael Mondavi, age 54, is the Company's President and Chief
Executive Officer. He helped found the Robert Mondavi Winery with his father in
1966 and has been a member of the Board of Directors since that time. Michael
Mondavi has served as Chairman of the Wine Institute and of the Napa Valley
Vintners Association and as a director of the American Vineyard Foundation. Mr.
Mondavi is a director of Premier Package and Label Corporation. He graduated
from Santa Clara University.
Marcia Mondavi Borger, age 50, has been a director of the Company
since 1978. She has worked for the Company in various capacities since 1967.
From 1982 to 1992, she was the Company's Vice President, Eastern Sales. She is a
graduate of Santa Clara University.
Timothy J. Mondavi, age 46, is the Company's Managing Director and
Winegrower. He began working at the Robert Mondavi Winery in 1974 and has been a
member of the Board of Directors since 1978. Timothy Mondavi is a member of the
Napa Valley Wine Technical Group and has served as a director of the Wine
Institute. He graduated from the University of California at Davis, where he
studied viticulture and enology.
Bartlett R. Rhoades, age 59, became a director of the Company in
1989. He is chairman of the Compensation Committee and a member of the Audit
Committee. Mr. Rhoades is the Chief Executive Officer of Medical Data
International, Inc. in Irvine, California. From 1991 to 1994 he was the Chief
Executive Officer, President and a director of Medical SelfCare Inc. He
graduated from Harvard College and the Harvard Graduate School of Business.
RECOMMENDATION
The Board of Directors recommends that Class A shareholders vote FOR
re-election of the above-named Class A Directors and that Class B shareholders
vote FOR re-election of the above-named Class B Directors.
VOTE REQUIRED
The three nominees for Class A Directors and the five nominees for
Class B Directors receiving the highest number of affirmative votes of the
shares entitled to be voted for them shall be elected as Class A Directors and
Class B Directors, respectively. Votes withheld from any director are counted
for purposes of determining the presence or absence of a quorum, but have no
legal effect under California law. While there is no definitive statutory or
case law authority in California as to the proper treatment
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of abstentions and broker non-votes in the election of directors, the Company
believes that both abstentions and broker non-votes should be counted for
purposes of determining whether a quorum is present at the Annual Meeting. In
the absence of precedent to the contrary, the Company intends to treat
abstentions and broker non-votes with respect to the election of directors in
this manner.
OTHER EXECUTIVE OFFICERS
The following are additional executive officers of the Company. All
executive officers serve at the discretion of the Board of Directors, subject to
the terms of any employment agreement.
Gregory M. Evans, age 48, has been the Company's Chief Financial
Officer since 1983. Mr. Evans graduated from the University of California at
Berkeley and holds an M.B.A. degree from the Harvard Graduate School of
Business.
Peter Mattei, age 45, has been the Company's Senior Vice President,
Production and Vineyards since 1991. Mr. Mattei holds a B.S. degree from the
University of California at Davis and an M.B.A. degree from Stanford University.
Michael K. Beyer, age 48, became the Company's Senior Vice President,
General Counsel and Secretary in 1992. From 1978 to 1992, he was a member of the
law firm of Feldman, Waldman and Kline. Mr. Beyer graduated from Harvard College
and Boalt Hall School of Law of the University of California.
Alan E. Schnur, age 44, joined the Company in August 1994 as Senior
Vice President, Human Resources. From 1989 to 1994 he was a principal in
Towers Perrin, a management consulting firm. He has a B.A. and Ph.D.
from the University of California at Berkeley.
Mitchell J. Clark, age 48, began working for the Company in 1979 and
became Senior Vice President, Sales in 1994. He is a graduate of San Diego
State University.
Martin C. Johnson, age 46, joined the Company in 1992 and became
Senior Vice President, Marketing in 1994. Prior to joining the Company, Mr.
Johnson was Vice President, Marketing of Heublein Fine Wine Group. He is a
graduate of Northern Arizona University.
Steven R. Soderberg, age 37, joined the Company in January 1997 as
the Senior Vice President, Information Systems. Prior to joining the Company he
was Director of Information Systems, responsible for both International
Information Systems and Application Development, at Symantec Corporation. Mr.
Soderberg is a graduate of Stanford University.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held a total of four meetings during fiscal
1997. The Board of Directors has a Compensation Committee and an Audit
Committee. Messrs. Greer, Rhoades and Farella sit on those committees.
The Compensation Committee adopts and administers compensation plans
for executive officers of the Company, including the Company's 1993 Equity
Incentive Plan. The Compensation Committee held six meetings in fiscal 1997.
The Audit Committee selects the independent auditors for the Company
(subject to ratification by the shareholders), reviews the scope and results of
the annual audit, approves the services to be
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performed by the independent auditors, and reviews the independence of the
auditors, the performance and fees of the independent auditors, the
effectiveness and adequacy of the system of financial reporting and internal
accounting controls, and the scope and results of internal auditing procedures.
The Audit Committee held 6 meetings during fiscal 1997.
During fiscal 1997, no director attended fewer than 75% of the
aggregate of all meetings of the Board of Directors and the committees, if any,
upon which such director served and which were held during the period of time
that such person served on the Board or such committee.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information as of September
15, 1997 with respect to the beneficial ownership of the outstanding shares of
Class A Common Stock and Class B Common Stock by (i) all persons known by the
Company to own more than five percent of either class of the Company's Common
Stock, (ii) each director and director nominee and the executive officers named
below under "Executive Compensation -- Summary Compensation Table", and (iii)
all directors and executive officers as a group. Except as indicated in the
footnotes to the table, the Company believes that the persons named in the table
have sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them, subject to community property laws where
applicable.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK (1)
-------------------------------------------------------- -----------------------------
SHARES THAT MAY BE
ACQUIRED WITHIN 60 DAYS
OUTSTANDING BY EXERCISE OF OPTIONS PERCENT SHARES
SHARES OR CONVERSIONS OF OF BENEFICIALLY PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED CLASS B SHARES CLASS (2) OWNED OF CLASS
- - ---------------- ------------------ -------------- --------- ----- --------
<S> <C> <C> <C> <C> <C>
Robert G. Mondavi -- 2,328,257(3) 23.6 2,328,257 30.3
7801 St. Helena Hwy
Oakville, CA 94562
R. Michael Mondavi 1,000 1,896,485(4) 20.1 1,688,985(7) 22.0
7801 St. Helena Hwy
Oakville, CA 94562
Timothy J. Mondavi -- 1,772,785(5) 19.1 1,690,285(8) 22.0
7801 St. Helena Hwy
Oakville, CA 94562
Marcia Mondavi Borger -- 1,647,555(6) 18.0 1,628,055(9) 21.2
7801 St. Helena Hwy
Oakville, CA 94562
Capital Group Cos. 1,201,420(10) -- 16.0 -- --
Wellington Management 551,600(10) -- 7.3 -- --
Fidelity Management 551,500(10) -- 7.3 -- --
Clifford S. Adams 33,612(11) 103,034(12) 1.8 -- --
Gregory M. Evans -- 147,250(12) 1.9 -- --
Mitchell J. Clark 328 37,500(12) * -- --
Frank E. Farella -- 18,700(12) * -- --
Philip Greer -- 18,700(12) * -- --
Bartlett R. Rhoades 800 18,700(12) * -- --
James L. Barksdale -- 3,514(12) * --
All executive officers and 35,740 8,130,049(13) 52.0 7,335,582(14) 95.6
directors as a group
(16 persons)
</TABLE>
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* Less than 1%
(1) 214,209 shares of Class B Common Stock held by Robert Mondavi
Properties, Inc., a wholly-owned subsidiary of the Company, are not
considered outstanding for purposes of these calculations.
(2) Under Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, a holder of Class B Common Stock is deemed to own
beneficially the same number of shares of Class A Common Stock since
the holder has the right,
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subject to the terms of the Stock Buy-Sell Agreement among the Company and
the holders of the outstanding shares of Class B Common Stock, to convert
his Class B Common Stock to Class A Common Stock. Pursuant to the same
Rule, for purposes of calculating the percentage of the outstanding shares
of Class A Common Stock owned by each named shareholder, the shares of
Class A Common Stock which a holder of Class B Common Stock may acquire by
conversion are considered outstanding only with respect to that holder.
As a result, the stated percentages of ownership of the Class A Common
Stock do not reflect the beneficial ownership of the Class A Common Stock
which is actually outstanding as of September 15, 1997.
(3) Represents shares of Class A Common Stock which the holder has the right to
acquire upon conversion of Class B Common Stock.
(4) Includes 1,688,985 shares of Class A Common Stock which the holder
has the right to acquire upon conversion of Class B Common Stock and
207,500 shares of Class A Common Stock issuable pursuant to options
exercisable within 60 days of September 15, 1997.
(5) Includes 1,690,285 shares of Class A Common Stock which the holder
has the right to acquire upon conversion of Class B Common Stock and
82,500 shares of Class A Common Stock issuable pursuant to options
exercisable within 60 days of September 15, 1997.
(6) Represents 1,628,055 shares of Class A Common Stock which the holder
has the right to acquire upon conversion of Class B Common Stock and
19,500 shares of Class A Common Stock issuable pursuant to options
exercisable within 60 days of September 15, 1997.
(7) Excludes 80,000 shares of Class B Common Stock held by irrevocable
trusts for the benefit of Michael Mondavi's children. Michael Mondavi
is not the trustee of such trusts and has neither voting nor
dispositive power with respect to such shares.
(8) Excludes 80,000 shares of Class B Common Stock held by irrevocable
trusts for the benefit of Timothy Mondavi's children. Timothy Mondavi
is not the trustee of such trusts and has neither voting nor
dispositive power with respect to such shares.
(9) Excludes 142,230 shares of Class B Common Stock held by irrevocable
trusts for the benefit of Ms. Borger's children. Ms. Borger is not
the trustee of such trusts and has neither voting nor dispositive
power with respect to such shares. Also excludes 80,000 shares of
Class B Common Stock held in trusts for the benefit of Timothy
Mondavi's children, for which Ms. Borger serves as trustee and with
respect to which she disclaims beneficial ownership.
(10) Based on most recent available filings on Form 13F.
(11) Excludes 500 shares owned by Mr. Adams as trustee. Mr. Adams disclaims
any beneficial interest in the shares owned in his capacity as trustee.
(12) Represents shares of Class A Common Stock issuable pursuant to outstanding
options exercisable within 60 days of September 15, 1997.
(13) Includes an aggregate of 794,467 shares of Class A Common Stock issuable
pursuant to outstanding options exercisable within 60 days of September
15, 1997.
(14) Excludes an aggregate of 36,900 shares of Class B Common Stock gifted
by Robert G. Mondavi to his nine grandchildren.
AGREEMENT AMONG HOLDERS OF CLASS B COMMON STOCK
The holders of the outstanding shares of Class B Common Stock and the
Company are parties to a Stock Buy-Sell Agreement (the "Buy-Sell Agreement").
Pursuant to the Buy-Sell Agreement, no holder of shares of Class B Common Stock
may, with limited exceptions, transfer Class B Common Stock or convert Class B
Common Stock into Class A Common Stock without first offering such stock to the
Company and then to the other parties to the Buy-Sell Agreement. The Buy-Sell
Agreement applies to a broad range of transfers and dispositions other than (i)
certain lifetime or testamentary transfers to issue of Robert and Marjorie
Mondavi, (ii) transfers to or in trust for charitable institutions or (iii)
certain other permitted transfers.
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EXECUTIVE COMPENSATION
The following table sets forth all compensation received for services
rendered to the Company in all capacities during the fiscal years ended June 30,
1997, 1996 and 1995, respectively, by (i) the Company's Chief Executive Officer
and (ii) the Company's four other most highly compensated executive officers
(together, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------------------------- ---------------------------------------------
OTHER # SECURITIES PAYOUTS
NAME AND PRINCIPAL FISCAL ANNUAL UNDERLYING LONG-TERM ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION OPTIONS INCENTIVE PLAN COMPENSATION
-------- --------- --------- ------------- --------- --------------- ------------
(1) (10) (11)
<S> <C> <C> <C> <C> <C> <C> <C>
Robert G. Mondavi 1997 $ 450,000 -- --(2) -- -- --
Chairman of the Board 1996 450,000 -- --(2) -- -- --
1995 450,000 $ 50,000 --(2) -- -- --
R. Michael Mondavi 1997 400,000 -- $ 75,500(3) 50,000 $ 372,270 $ 263,784
Chief Executive Officer 1996 429,016 400,000 81,984(4) 70,000 181,584 356,785
1995 444,377 250,000 82,044(5) -- 183,624 287,349
Timothy J. Mondavi 1997 400,000 25,000 58,524(6) 30,000 372,270 263,784
Managing Director, 1996 429,016 150,000 63,697(7) 35,000 181,584 356,785
Winegrower 1995 444,377 100,000 60,200(8) -- 183,624 287,349
Gregory M. Evans 1997 292,065 80,000 --(2) 20,000 145,424 189,503
Chief Financial Officer 1996 292,065 150,000 --(2) -- 100,027 269,390
1995 292,065 120,000 --(2) 25,000 95,138 229,649
Mitchell J. Clark 1997 200,000 65,000 32,488(9) 30,000 -- 14,000
Sr. Vice President Sales 1996 189,615 150,000 --(2) -- -- 13,273
1995 150,000 99,000 --(2) 25,000 -- 10,500
</TABLE>
- - ----------
(1) Includes perquisites, none of which exceeded 25% of total perquisites
for the Named Executive Officer, except as noted.
(2) Individual perquisites do not exceed the lesser of $50,000 or 10% of
salary and bonus.
(3) Includes $35,500 in life insurance benefits and $19,500 in financial
planning services.
(4) Includes $35,500 in life insurance benefits and $30,752 in financial
planning services.
(5) Includes $35,500 in life insurance benefits and $20,379 in financial
planning services.
(6) Includes $18,524 in life insurance benefits and $23,588 in financial
planning services.
(7) Includes $18,524 in life insurance benefits and $24,640 in financial
planning services.
(8) Includes $18,524 in life insurance benefits and $19,630 in financial
planning services.
(9) Includes $12,488 in life insurance benefits and $12,435 in automobile
allowance.
(10) Represents that portion paid in fiscal 1995, 1996 and 1997, respectively,
of the named executive's accumulated earnings on 1990, 1991 and 1992
units granted under the terms of the Company's Executive Incentive
Compensation Plan (the "E.I.C.P."). Under the E.I.C.P., the Compensation
Committee of the Board of Directors may make annual awards of units to
senior management plan participants. Each unit earns a percentage of plan
income, based on the Company's pre-tax earnings as calculated on a FIFO
basis, for a period of five years. The percentage of plan income earned
varies from 0.01% to 0.014%. Unit earnings vest at the rate of 20% per
year over the same five-year period. At the end of five years, a portion
of the earnings is distributed to the participant and any balance is
deferred and earns interest at the Company's average borrowing rate until
distribution under the terms of the E.I.C.P. For units granted prior to
fiscal 1989, up to 30% of the earnings were initially distributed to the
participant. For units granted during and after fiscal 1989, the
participant may elect in the year of grant to receive up to 100% of
earnings in the initial distribution or to defer any portion of such
amount. Upon termination of employment due to death, disability,
retirement or involuntary termination without cause, the participant's
units become fully vested and the participant is entitled to receive all
earnings accumulated on units through the end of the fiscal year in which
the termination occurs. Upon termination of employment for cause or
certain voluntary terminations, the participant is entitled to receive
all earnings accumulated on units through the end of the fiscal year
prior to the year the termination occurs. The Company has the option to
distribute plan balances over a ten-year period.
(11) Includes the Company's contribution on behalf of the Named Executive
Officers to the Company's defined contribution retirement plan and
supplemental executive retirement plan. Retirement plan contributions in
fiscal 1997 were $54,059 for R. Michael Mondavi; $54,059 for Timothy J.
Mondavi; $14,000 for Mitchell J. Clark; and $30,620 for Gregory M. Evans.
Also includes earnings as a percentage of fiscal 1997 plan income under
the E.I.C.P. described at Note 10 above. Fiscal 1997 E.I.C.P. earnings
were $209,725 for R. Michael Mondavi; $209,725 for Timothy J. Mondavi;
and $158,883 for Gregory M. Evans. In fiscal 1992, no earnings were
declared
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<PAGE> 10
on outstanding units under the E.I.C.P. and the plan was amended
to provide participants with higher accrual rates over the 1993 through
1996 fiscal years with respect to outstanding units. Outstanding units
will continue to accrue earnings in future years, but the Board of
Directors has determined that no new unit awards will be made under the
E.I.C.P. subsequent to fiscal 1993. Amounts indicated do not include
interest on plan balances. Amounts reported as E.I.C.P. earnings are
reported again as Long Term Incentive Plan Payouts in the year payment is
made. The accrued but unpaid balances, exclusive of interest earnings,
for all participants as a group under the E.I.C.P. at June 30, 1995, 1996
and 1997, respectively, were $5,189,348, $5,761,179 and $5,418,056.
OPTION GRANTS
The following table sets forth information with respect to options
granted to the Named Executive Officers during the 1997 fiscal year:
OPTION GRANTS IN LAST FISCAL YEAR (1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (2)
---------------------------------------------------------------- --------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS GRANTED EXERCISE OR
UNDERLYING TO EMPLOYEES IN BASE PRICE
NAME OPTIONS GRANTED FISCAL YEAR ($/SH) EXPIRATION DATE 5% 10%
- - ---- --------------- ----------- --------- ----------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Mondavi - - - - - -
R. Michael Mondavi 50,000 24.5 $ 28.50 9/03/06 $ 896,175 $ 2,271,083
Timothy J. Mondavi 30,000 14.7 28.50 9/03/06 537,705 1,362,650
Gregory M. Evans 20,000 9.8 28.50 9/03/06 358,470 908,433
Mitchell J. Clark 30,000 14.7 28.50 9/03/06 537,705 1,362,650
</TABLE>
(1) All options in this table relate to shares of Class A Common Stock.
(2) Potential realizable value is based on an assumption that the stock price
appreciates at the annual rate shown (compounded annually) from the date
of grant until the end of the option term (ten years). These numbers are
calculated based on the requirements promulgated by the Securities and
Exchange Commission and do not reflect the Company's estimate of future
stock price growth. Actual gains, if any, on stock option exercises are
dependent on the Company's future financial performance, overall market
conditions and the optionee's continued employment during the prescribed
vesting period.
OPTION EXERCISES AND YEAR-END VALUE OF UNEXERCISED OPTIONS
The following table sets forth information regarding each exercise of
stock options during the 1997 fiscal year by a Named Executive Officer and the
number and value of unexercised stock options held by the Named Executive
Officers at June 30, 1997:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES (1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS AT FISCAL YEAR END OPTIONS AT FISCAL YEAR END (2)
SHARES ACQUIRED VALUE -------------------------------------- ----------------------------------
NAME ON EXERCISE REALIZED ($) UNEXERCISABLE EXERCISABLE EXERCISABLE UNEXERCISABL
- - ---- --------------- ------------- -------------------- ----------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Mondavi -- -- -- -- -- --
R. Michael Mondavi -- -- 170,000 -- $8,032,500 --
Timothy J. Mondavi 50,000 $1,537,500 65,000 -- 3,071,250 --
Gregory M. Evans -- -- 137,500 42,500 6,496,875 $2,008,125
Mitchell J. Clark -- -- 33,333 36,667 1,574,984 1,732,516
</TABLE>
(1) All options in this table relate to shares of Class A Common Stock.
(2) Represents the fair value of the underlying securities at fiscal year-end
($47.25 per share based on the NASDAQ closing price) minus the exercise
price.
8
<PAGE> 11
BOARD COMPENSATION
Directors who are not employed by the Company are paid a $12,000
annual retainer, $1,000 for each Board meeting attended and $500 for each
committee meeting attended. Non-employee directors are also reimbursed for
expenses incurred in attending meetings. Prior to the Company's initial public
offering in June 1993, Messrs. Greer, Farella and Rhoades were each granted
options under the Company's 1993 Non-Employee Directors' Stock Option Plan to
buy 12,000 shares of Class A Common Stock at $11.90 per share. The options are
exercisable over a ten-year period beginning February 26, 1993, the date of
grant, and vest at the rate of 1.667% per month over a period of five years.
Pursuant to the Company's 1993 Non-Employee Directors' Stock Option Plan, any
non-employee Director of the Company is similarly entitled, on the date of his
or her initial election as a non-employee director, to a grant of options to
acquire shares of Class A Common Stock. On May 29, 1996, Mr. Barksdale was
granted options to buy 5,345 shares of Class A Common Stock at $28.0625 per
share. On November 4, 1996, Mr. Adams was granted options to buy 5,172 shares of
Class A Common Stock at $29.00 per share. The Non-Employee Directors' Stock
Option Plan also provides for additional annual grants to the outside directors
of 2,000 options each year.
REPORT OF THE COMPENSATION COMMITTEE
General
The Compensation Committee of the Board of Directors administers the
Company's executive compensation program. The Compensation Committee is composed
entirely of directors who are not employees of the Company.
The objective of the Company's executive compensation program is to
develop and maintain executive reward programs which (i) contribute to the
enhancement of shareholder value, (ii) are competitive with the pay practices of
other industry-leading companies and (iii) attract, motivate and retain key
executives who are critical to the long-term success of the Company. As
discussed in detail below, the Company's executive compensation program consists
of both fixed (base salary) and variable (incentive) compensation elements.
Variable compensation consists of annual cash incentives, stock option grants
and other stock-based awards under the Company's Amended and Restated 1993
Equity Incentive Plan (the "1993 Equity Plan") and unit awards under the
Company's Executive Incentive Compensation Plan (the "E.I.C.P."). These elements
are designed to operate on an integrated basis and together comprise total
compensation value.
The Compensation Committee reviews executive compensation in light of
the Company's performance during the fiscal year and compensation data at
companies that are considered comparable. In reviewing the Company's performance
during fiscal 1997, the Compensation Committee considered a variety of factors.
Net revenues increased by 25% to $300.8 million in fiscal 1997 from $240.8
million in fiscal 1996. At the same time net income increased by 15% to $28.2
million in fiscal 1997 from $24.4 million in fiscal 1996, and operating expenses
as a percentage of net revenues were reduced. The Company also launched its new
Vichon Mediterranean brand, introduced the Caliterra wines from Chile, initiated
other product line extensions, and pursued the expansion of the Woodbridge
Winery and Napa Valley vineyard replantings. In reviewing Company performance,
the Compensation Committee considered these factors as a whole without assigning
specific weights to particular factors.
Base Salary
Base salary levels for the Company's executives are determined by the
Compensation Committee based on factors such as individual performance (e.g.
leadership, level of responsibility, management
9
<PAGE> 12
skills and industry activities), Company performance (as discussed above) and
competitive pay practices. The base salary level for Mr. Robert Mondavi is
established by his employment agreement described below.
Base compensation for Michael Mondavi, the Company's Chief Executive
Officer, was reviewed by the Compensation Committee in the context of
compensation packages awarded to senior executive officers at comparable
companies selected by an outside compensation consultant. The companies included
in the comparison are not the same as the companies included in the peer group
index in the performance graph included elsewhere herein. The Compensation
Committee believes that the Company's most direct competitors for executive
talent in the San Francisco Bay Area are not necessarily the same companies to
which the Company would be compared for stock performance purposes. The Chief
Executive Officer's base salary was reviewed against the 75th percentile of the
comparative data.
Annual Cash Incentives
The annual cash incentive is designed to provide a short-term
(one-year) incentive to executives, is based on the Company meeting certain
predetermined levels of pre-tax operating income, and is allocated among the
executives based on the Committee's assessment of the performance of each
executive, following consultation with the Chief Executive Officer. In addition,
cash incentive compensation may be granted by the Committee to certain
executives based on their performance of individual goals established in advance
by the Committee. These individual goals may include objective and subjective
factors, such as leadership and management skills, successful acquisitions or
financings and improved performance of assets. Annual cash incentives were
awarded to the Named Executive Officers, as indicated in the above Summary
Compensation Table, based on the Committee's evaluation of each Named Executive
Officer's contribution to the Company's performance in fiscal 1997.
Stock Options
Stock options are designed to provide long-term (ten-year) incentives
and rewards tied to the price of the Company's Class A Common Stock. Given the
fluctuations of the stock market, stock price performance and financial
performance are not always consistent. The Compensation Committee believes that
stock options, which provide value to participants only when the Company's
shareholders benefit from stock price appreciation, are an important component
of the Company's executive compensation program. The Compensation Committee has
not established any target level of ownership of Company Class A Common Stock by
the Company's executives. However, retention of shares of Company stock by
executives is encouraged. On September 3, 1996, the Board of Directors, on
recommendation of the Compensation Committee, awarded an aggregate of 180,000
options to the Company's executive officers, including the options granted to
Named Executive Officers as reported above in the section captioned "Option
Grants."
The Board has adopted, subject to ratification by the Shareholders at
the 1997 Annual Meeting, amendments to the 1993 Incentive Plan to broaden the
types of stock-based awards encompassed within the Plan. These new incentives
include stock appreciation rights, performance grants, stock bonuses and awards
of restricted stock. The Committee believes that such incentives will provide it
with more tools to align compensation with the long term financial interests of
the Company and its Shareholders.
E.I.C.P.
Like the 1993 Equity Plan, the E.I.C.P. is designed to provide
long-term (five-year) incentives and rewards tied to Company performance. Under
the E.I.C.P., the Compensation Committee may make annual awards of units to
executive officers which earn a percentage of plan income based on the
10
<PAGE> 13
Company's pre-tax net income, as more fully described in footnote 10 to the
Summary Compensation Table. The use of the E.I.C.P. as a regular element of
compensation for executive officers was discontinued upon adoption of the 1993
Equity Plan and no awards were made during fiscal 1997. However, pursuant to
the terms of the E.I.C.P., outstanding units will continue to accrue earnings in
future years. The Summary Compensation Table shows under the caption "Payouts -
Long Term Incentive Plan" the cash payments made to the Named Executive Officers
under the E.I.C.P. during fiscal 1997. While use of E.I.C.P. awards will no
longer be a regular element of long-term compensation, the Compensation
Committee believes that the E.I.C.P. has and continues to serve as a valuable
long-term incentive for executive officers and as a strong and direct link
between corporate performance and compensation.
The foregoing report is given by the members of the Compensation
Committee, namely:
Frank E. Farella
Philip Greer
Bartlett R. Rhoades
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors
consists of Frank Farella, Philip Greer and Bartlett Rhoades. Mr. Farella is a
partner in the law firm of Farella, Braun & Martel which provides certain legal
services to the Company. The Company also buys wine grapes from Mr. Farella at
market prices pursuant to a written agreement. The Company paid Mr. Farella
$18,000 for grapes during the fiscal year ended June 30, 1997.
PERFORMANCE GRAPH
The line graph below compares the cumulative total return to holders
of the Company's Common Stock in the period from June 10, 1993 (the date the
Company was admitted to trading on the NASDAQ National Market System) to June
30, 1997, with the cumulative total return in the same period on (i) the NASDAQ
Stock Market Index (U.S.) and (ii) a peer group index comprised of the following
companies whose returns have been weighted based on market capitalization as of
June 30, 1997: Chalone Wine Group, Ltd., Canandaigua Wine Inc., Adolph Coors
Company, Anheuser-Busch Companies, Inc., Brown-Forman Corporation and Genesee
Corporation. The graph assumes an investment of $100.00 on June 10, 1993 in the
Company and in the two comparison indices. "Total return," for purposes of the
graph, assumes reinvestment of all dividends.
[GRAPH]
11
<PAGE> 14
The information contained in the performance graph shall not be
deemed to be "soliciting material" or to be "filed" with the SEC, nor shall such
information be incorporated by reference into any future filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934 (the "Exchange
Act"), except to the extent that the Company specifically incorporates it by
reference into such filing.
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's executive officers, directors and
greater-than-ten-percent beneficial owners are required under Section 16(a) of
the Exchange Act to file reports of ownership and changes in ownership with the
SEC. Copies of those reports must also be furnished to the Company.
Based solely on its review of the copies of such forms received by
it, or written representations from certain reporting persons that no Forms 5
were required for those persons, the Company believes that during fiscal 1997
all filing requirements applicable to the Company's officers, directors and
greater-than-ten-percent beneficial owners under Section 16(a) of the Exchange
Act were complied with.
EMPLOYMENT AGREEMENT
In February 1993, Robert Mondavi entered into an agreement with the
Company which replaced his Personal Services Agreement executed in 1979. The
current agreement provides for a fixed annual salary of up to $500,000.
CERTAIN TRANSACTIONS
The Company buys wine grapes from Frank Farella at market prices
pursuant to a written agreement. See "Executive Compensation--Compensation
Committee Interlocks and Insider Participation."
It is the Company's current policy that all transactions by the
Company with its officers, directors, 5% shareholders and their affiliates will
be entered into only if such transactions are approved by a majority of the
disinterested directors, are on terms no less favorable to the Company than
could be obtained from unaffiliated parties and are reasonably expected to
benefit the Company.
APPOINTMENT OF AUDITORS
(PROPOSAL 2 ON PROXY)
The firm of Price Waterhouse LLP has served as independent auditors
for the Company since fiscal 1978 and has been appointed by the Audit Committee
of the Board of Directors as the Company's independent auditors for the fiscal
year 1998, subject to ratification by the shareholders at the Annual Meeting.
Representatives of Price Waterhouse LLP are expected to be available at the
annual meeting to respond to appropriate questions from shareholders and will
have the opportunity to make a statement if they wish.
RECOMMENDATION
The Board of Directors recommends that shareholders vote FOR
ratification of the appointment of Price Waterhouse LLP as the Company's
independent auditors.
12
<PAGE> 15
RATIFICATION OF AMENDMENTS OF
1993 EQUITY INCENTIVE PLAN
(PROPOSAL 3 ON PROXY)
The Company's 1993 Equity Plan was adapted by the Board of Directors
and the shareholders, and became effective in February 1993. A total of
1,835,294 shares of Class A Common Stock were reserved for issuance under the
1993 Equity Plan at time of its adoption. On September 10, 1997, the Board of
Directors approved, subject to ratification by the shareholders at this Annual
Meeting, amendments to the 1993 Equity Plan to (i) reserve an additional 750,000
shares of Class A Common Stock for issuance under the 1993 Equity Plan; (ii)
expand the types of stock-based awards authorized for issuance; (iii) meet
certain requirements of Section 162(m) of the Code; and (iv) conform the 1993
Equity Plan to recent amendments of Rule 16b-3 of the Securities and Exchange
Commission. Attached as Exhibit A is a copy of the 1993 Equity Plan as restated
to give effect to the proposed amendments. The following summary of the 1993
Equity Plan, as so amended, is qualified in its entirety by reference to Exhibit
A.
SHARES AVAILABLE UNDER PLAN
To date options to purchase an aggregate of 1,834,256 shares of Class
A Common Stock have been granted under the 1993 Equity Plan, net of options that
have been forfeited and become available for regrant. Accordingly there remain
1,038 options available for grant, before increase in the number of shares
reserved for that purpose. If the proposed amendments of the 1993 Equity Plan
are approved by the shareholders, the Board of Directors (or its designated
committee) will have authority to grant up to 751,038 additional options.
PURPOSE
The purpose of the 1993 Equity Plan is to afford participants the
opportunity to buy an equity interest in the Company, so as to attract and
retain the best available personnel for positions of substantial responsibility,
to provide additional incentive for employees and consultants of the Company and
to promote the success of the Company's business.
ADMINISTRATION
The 1993 Equity Plan is administered by the Compensation Committee of
the Board of Directors. The 1993 Equity Plan provides that it shall be
administered so as to satisfy certain requirements under federal securities
laws. The interpretation and construction of any provision of the 1993 Equity
Plan shall be within the sole discretion of the Compensation Committee whose
determination shall be final and binding.
ELIGIBILITY
The 1993 Equity Plan provides that options and other forms of
stock-based awards may be granted to key employees (including officers and
directors who are also employees) and consultants to the Company or any parent
or subsidiary. Incentive stock options may only be granted to employees. The
Compensation Committee selects qualified participants and determines the amount
of the award and pertinent terms and restrictions applicable to each
participant. In making such determination, there is taken into account the
duties and responsibilities of the employee or consultant, the value of his or
her services, his or her present and potential contribution to the success of
the Company and other relevant factors.
13
<PAGE> 16
TYPES OF STOCK-BASED INCENTIVES
As originally adopted, the 1993 Equity Plan authorized stock options
and stock bonuses. The revisions of the plan authorize the Compensation
Committee to grant stock options, stock appreciation rights, performance grants,
stock bonuses and awards of restricted stock.
TERMS OF OPTIONS
Options granted under the 1993 Equity Plan are evidenced by a written
Option Agreement between the Company and the optionee. The Compensation
Committee may determine the specific terms of each Option Agreement within the
limits set forth in the 1993 Equity Plan. Options are designated at the time of
grant as incentive stock options or non-statutory options. Options granted by
the Company are typically subject to the following terms and conditions:
(a) Exercise of the Option. Options generally vest at the rate of
1.67% per month over a 60 month period and terminate ten years after the date of
the grant. An option is exercised by giving written notice of exercise to the
Company, specifying the number of full shares of Class A Common Stock to be
purchased and tendering payment of the purchase price to the Company. Payment
for shares issued upon exercise of an option may be by cash, or, in the
discretion of the Board or its committee, by (i) delivery to the Company of
other Class A Common Stock, (ii) a deferred payment plan with interest payable
at least annually, (iii) various cashless exercise methods, or (iv) any other
form of legal consideration that is acceptable to the Board. Options expire ten
years after the date of grant.
(b) Exercise Price. The exercise price of any incentive stock option
granted under the 1993 Equity Plan must be at least 100% of the fair market
value per share at the time of grant. The exercise price of any non-statutory
stock option granted under the 1993 Equity Plan must be at least 50% of the fair
market value per share at the time of grant. The Compensation Committee may,
with the consent of holders of outstanding options, reprice or grant new options
in substitution for outstanding options.
(c) Termination of Employment. If an optionee's employment or
consulting relationship with the Company is terminated, options which have
vested must generally be exercised within six months after termination. In case
of an optionee's death, disability or retirement, the Compensation Committee, in
its discretion, may extend the option exercise period.
(d) Transferability. Except as may be allowed by the Compensation
Committee in specific cases, options may not be sold, pledged, assigned or
otherwise disposed of other than by will or by the laws of descent and
distribution and may be exercised during the lifetime of the optionee only by
such optionee.
STOCK APPRECIATION RIGHTS
A stock appreciation right or SAR is a right to receive a payment, in
cash, shares of stock or a combination of cash and stock, equal to the excess of
the market price at time of exercise of a specified number of shares over the
exercise price of the SAR. The 1993 Equity Plan authorizes the Compensation
Committee to grant SAR's either separately or in tandem with options.
PERFORMANCE GRANTS
A performance grant is a grant, subject to the attainment of
specified performance goals, of shares of stock or of the right to receive
shares of stock (or their cash equivalent or a combination of both) in the
future. The 1993 Equity Plan authorizes the Compensation Committee to fix the
terms of each performance grant, including the performance goals on whose
attainment the value of the grant is
14
<PAGE> 17
conditioned. Performance goals may include, among other things, return on
assets, operating ratios, cash flow, shareholder return, revenue growth, net
income, earnings per share, debt reduction, return on investment, revenue and
attainment of budgets. The earned portion of a performance grant may be paid
out in restricted or non-restricted shares, cash or a combination of shares
and cash in the discretion of the Compensation Committee.
STOCK BONUSES AND RESTRICTED STOCK
The 1993 Equity Plan authorizes the Compensation Committee to award
shares as a stock bonus, as well as to make shares available to a participant
for purchase, subject to vesting requirements or other restrictions as the
Compensation Committee may impose. Stock may be awarded or sold in consideration
of past services rendered to the Company. Awards may provide that shares will be
issued at the time of award, subject to forfeiture if the restrictions are not
satisfied, or that shares will be issued only upon fulfillment or expiration of
the restrictions.
AMENDMENT AND TERMINATION OF THE PLAN
The Board may amend or terminate the 1993 Equity Plan, except that
such termination may not affect options previously granted nor may any amendment
make any change in an option previously granted, which adversely affects the
rights of any participant. No amendment may be made to the 1993 Equity Plan
without prior approval of the shareholders to the extent necessary to comply
with Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or
Section 422 of the Internal Revenue Code of 1986, as amended. Unless sooner
terminated, the 1993 Equity Plan will expire on February 25, 2003.
RESTRICTIONS ON RESALE
Certain officers and directors of the Company may be deemed to be
"affiliates" of the Company as that term is defined under the Securities Act of
1933. Even though the sale of Class A Common Stock by the Company to affiliates
and other participants under the 1993 Equity Plan is registered under the
Securities Act, such shares may only be reoffered or resold by affiliates
pursuant to an effective registration statement, Rule 144 under the Securities
Act or another exemption from the registration requirements of the Securities
Act. Participants who are not affiliates may resell stock acquired under the
1993 Equity Plan without further registration and free of the restrictions of
Rule 144. Executive officers and directors who participate in the 1993 Equity
Plan may also be subject to the prohibition on short-swing profits contained in
Section 16(b) of the Securities Exchange Act of 1934, although the 1993 Equity
Plan is designed to meet the exemption created by Rule 16 b-3.
TAX CONSEQUENCES OF OPTIONS
Incentive Stock Options
(a) General Rules. If an option granted under the 1993 Equity Plan is
treated as an incentive stock option (an "ISO") under the Code, the optionee
will recognize no income upon grant of the option, and will recognize no income
upon exercise of the option unless the alternative minimum tax rules apply. See
"Alternative Minimum Tax" below. The Company will not be entitled to a deduction
either at the time of the option grant or upon exercise of the option.
(b) Holding Periods. Upon the sale of the shares at least two years
after the grant of an ISO and one year after exercise of an ISO (the "statutory
holding periods"), any gain will be taxed to the optionee as either mid-term or
long-term capital gain. If the statutory holding periods are not satisfied
(i.e., the optionee makes a "disqualifying disposition"), the optionee will
recognize compensation income equal to the difference between the exercise price
and the lower of (i) the fair market value of the stock at
15
<PAGE> 18
the date of the option exercise or (ii) the sale price of the stock, and the
Company will be entitled to a deduction in the same amount. Any additional gain
or loss recognized on a disqualifying disposition of the shares will be
characterized as capital gain or loss.
Different rules may apply if shares are purchased by an optionee who
is subject to the short-swing prohibitions of Section 16(b) of the Securities
Exchange Act of 1934 and the optionee subsequently disposes of such shares prior
to the expiration of statutory holding periods. Vested ISO's which are not
exercised within ninety days after the optionee's termination of employment
automatically become non-statutory options and are taxed in the manner
described below.
(c) Surrendered Shares. If shares of the Company's Class A Common
Stock which were acquired on exercise of an ISO are surrendered ("surrendered
shares") in connection with the exercise of another ISO within the statutory
holding periods, the exchange will be treated as a "disqualifying disposition"
of such surrendered shares and the excess of the fair market value of such
shares on the date they were purchased over the purchase price will be
recognized by the optionee as compensation income, unless the fair market value
of the surrendered shares declined in value since the shares were purchased. In
that event, the optionee's compensation income will be limited to the amount (if
any) by which the fair market value of the surrendered shares at the date of the
exchange exceeds the option price paid for such surrendered shares. Any excess
of the fair market value of the surrendered shares at the date the shares are
surrendered over the purchase price paid for such surrendered shares, which is
not recognized as compensation income as described above, will not be recognized
as taxable gain at the time of the exchange. The Company will be allowed a
deduction in the amount of the ordinary income recognized by the optionee. If
the surrender of shares of the Company's Class A Common Stock in connection with
the exercise of an ISO does not result in a disqualifying disposition of such
surrendered shares, the optionee will not recognize taxable income at the time
of such option exercise (unless the alternative minimum tax rules apply), and
the Company will not be allowed a deduction.
(d) Federal Estate Taxes. Upon the death of an optionee who has not
exercised an ISO, the value of such option (determined under applicable Treasury
regulations) will be includable in the optionee's estate for federal estate tax
purposes. Upon the exercise of such option, the holder's basis in the option
shares will include the value of the option included in the estate plus the
price paid for the option shares. Different rules apply if the option shares are
sold before the expiration of the one-year and two-year holding periods
described above.
Non-statutory Options
(a) General Rules. An optionee will not recognize any taxable income
at the time he is granted a non-statutory option. Upon exercise of the option,
the optionee will generally recognize compensation income for federal tax
purposes measured by the excess, if any, of the then fair market value of the
shares over the exercise price. Taxation may be deferred for a six-month period
after exercise (unless a Section 83(b) election is filed with the Internal
Revenue Service within 30 days after the date of exercise) when shares are
purchased by an optionee who is subject to Section 16(b) of the Exchange Act.
Upon the surrender of shares of the Company's Class A Common Stock in
connection with the exercise of a non-statutory stock option, the optionee
will recognize compensation income as described above. A number of the acquired
shares, equal in number to the surrendered shares, will have a basis equal to
the optionee's basis in the surrendered shares. Any additional shares acquired
in the exchange will have a zero basis, increased by any compensation income
recognized with respect to the exercise of the non-statutory option.
16
<PAGE> 19
The Company will be entitled to a tax deduction in the amount and
generally at the time that the Optionee recognizes ordinary income with respect
to shares acquired upon exercise of a non-statutory option.
(b) Withholding. The compensation income recognized by an optionee
who is also an employee or former employee will be treated as wages and will be
subject to income tax and employment tax withholding by the Company out of the
current compensation paid to the optionee. If such current compensation is
insufficient to pay the withholding tax, the optionee will be required to make
direct payment to the Company for the tax liability.
(c) Gain or Loss on Sale. Upon a resale of such shares by the
optionee, any difference between the sales price and the fair market value of
the shares on the date of exercise of the non-statutory option will be treated
as capital gain or loss.
(d) Federal Estate Tax. Upon the death of an optionee who has not
exercised his or her non-statutory option, the value of such option (determined
under applicable Treasury regulations) will be includable in the optionee's
estate for federal estate tax purposes. Upon the exercise of such option, the
holder will recognize compensation income as described above, and will be
allowed a deduction based upon any estate tax paid with respect to the value of
such option.
Alternative Minimum Tax
The exercise of an ISO may subject the optionee to the alternative
minimum tax ("AMT") under Section 55 of the Code. The AMT is calculated by
applying a tax rate of 26% on the first $175,000 in excess of the exemption
amount and 28% on the excess over $175,000. Alternative minimum taxable income
is equal to (i) taxable income adjusted for certain items, plus (ii) items of
tax preference, less (iii) an exclusion of $45,000 for joint returns and $33,750
for individual returns. These exclusion amounts are reduced by an amount equal
to 25% of the amount by which the alternative minimum taxable income exceeds
$150,000 and $112,500, respectively.
In computing alternative minimum taxable income, shares purchased
upon exercise of an ISO are treated as if they had been acquired by the optionee
pursuant to a non-statutory option. This may be particularly significant with
respect to optionees who are subject to Section 16(b) of the Exchange Act. See
"Non-statutory Options." Under certain circumstances, an optionee may affect the
timing and measurement of AMT by filing an election with the Internal Revenue
Service under Section 83(b) within thirty days after the date of exercise of an
ISO. Therefore, an optionee should consult his own tax advisor prior to
exercising an ISO concerning the advisability of filing an election under
Section 83(b) of the Code.
NEW PLAN BENEFITS
A participant granted a Stock Appreciation Right or SAR will have no
taxable income upon the grant, but will recognize taxable income upon the
exercise of the SAR measured by the difference between the market value of the
underlying Class A Common Stock at exercise and the exercise price. The Company
will be entitled to a corresponding tax deduction at that time. With respect to
Performance Grants, Stock Bonuses and Restricted Stock, a participant will
generally include as ordinary income the excess of the fair market value of the
Class A Common Stock received over any applicable exercise price at the time
that the stock becomes substantially vested. The Company will be entitled to a
corresponding tax deduction at that time.
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PROVISIONS RELATING TO SECTION 162(m) OF THE CODE
Section 162(m), as added to the Code in 1993, denies a deduction to
any publicly held corporation for compensation paid to certain covered employees
in a taxable year to the extent such compensation exceeds $1 million. It is
possible that compensation attributable to awards under the 1993 Equity Plan,
when combined with all other types of compensation received by a covered
employee from the Company, may cause this limitation to be exceeded in any
particular year. Certain types of compensation, however, including so-called
"performance-based compensation," are disregarded for purposes of the deduction
limitation. Compensation attributable to stock options and SARs having an
exercise price not less than the fair market value of the Company's Class A
Common Stock on the grant date should qualify as performance-based compensation
under the 1993 Equity Plan. Compensation attributable to Performance Grants has
also been structured to qualify for the performance-based compensation exclusion
to the $1 million deduction limitation.
RECENT STOCK PRICE
The closing price of the Class A Common Stock on September 15, 1997,
as reported on the NASDAQ Stock Market, was $54.00 per share.
RECOMMENDATION
The Board of Directors recommends that shareholders vote FOR
ratification of the proposed amendments to the 1993 Equity Plan. If this
proposal is not approved, the 1993 Equity Plan will remain in effect as adopted.
OTHER MATTERS
GENERAL
The Board of Directors does not know of any business to be presented
at the Annual Meeting other than the matters described above. If any other
business should properly come before the meeting, it is the intention of the
persons named in the proxies to vote in accordance with the recommendation of
the Board of Directors. Discretionary authority for them to do so is contained
in the proxy cards.
DEADLINE FOR SHAREHOLDER PROPOSALS
Any shareholder proposal intended for presentation at the 1998 Annual
Meeting must be received by the Secretary of the Company at the Company's
principal executive offices located at 7801 St. Helena Highway, Oakville,
California 94562 by May 31, 1998 for inclusion in the Company's proxy materials
related to that meeting.
The Bylaws of the Company provide that in order for a shareholder to
bring business before or propose director nominations at an Annual Meeting, the
shareholder must give written notice to the Secretary of the Company not less
than sixty (60) days nor more than ninety (90) days prior to the date of the
Annual Meeting. The notice must contain specified information about the proposed
business or each nominee and about the shareholder making the proposal or
nomination. In the event that less than 70 days' notice or prior public
disclosure of the date of the Annual Meeting is given or made to
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<PAGE> 21
shareholders, notice by the shareholder in order to be timely must be received
no later than the close of business on the tenth day following the date on which
such notice of the Annual Meeting date was mailed or public disclosure of the
date of the Annual Meeting was made, whichever first occurs.
By Order of the Board of Directors,
/s/ MIKE BEYER
Mike Beyer
Secretary
September 29, 1997
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EXHIBIT A
THE ROBERT MONDAVI CORPORATION
AMENDED AND RESTATED
1993 EQUITY INCENTIVE PLAN
1. PURPOSE.
(a) The purpose of this Plan is to provide a means by which selected
key Employees of and Consultants to the Company and its Affiliates may be given
an opportunity to benefit from increases in value of the stock of the Company
through the granting of Stock Awards including (i) Stock Options, (ii) Stock
Appreciation Rights, (iii) Performance Grants, (iv) Stock Bonuses and (v)
Restricted Stock or Restricted Stock Units, all as defined below.
(b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees of or Consultants to the Company or its
Affiliates, to secure and retain the services of new Employees and Consultants,
and to provide incentives for such persons to exert maximum efforts for the
success of the Company and its Affiliates.
(c) In the discretion of the Committee to which responsibility for
administration of the Plan is delegated pursuant to Section 3, an Employee or
Consultant may be granted any Stock Award permitted under the provisions of the
Plan, and more than one Stock Award may be granted to a participant. Stock
Awards may be granted as alternatives to or replacements of Stock Awards
outstanding under the Plan or any other awards outstanding under another plan or
arrangement of the Company or an Affiliate. All Stock Awards which are granted
as Options shall be separately designated Incentive Stock Options or
Nonstatutory Stock Options at the time of grant, and a separate certificate or
certificates will be issued for shares purchased on exercise of each type of
Option.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation, subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f), respectively, of the Code or a partnership, joint venture or other
entity in which the Company owns a substantial equity interest.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means the Compensation Committee of the Board of
Directors or another committee appointed by the Board in accordance with
subsection 3(c) of the Plan.
(e) "COMPANY" means The Robert Mondavi Corporation, a California
corporation.
(f) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render services and who is compensated for such
services, provided that the term "Consultant" shall not include Directors who
are paid only a director's fee by the Company or who are not compensated by the
Company for their services as Directors.
(g) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means the
employment or the relationship as a Consultant is not interrupted or terminated.
The Committee, in its sole discretion, may determine whether Continuous Status
as an Employee or Consultant shall be considered interrupted in the case of (i)
any approved leave of absence, including sick leave, military leave, or any
other personal
<PAGE> 23
leave, or (ii) transfers between locations of the Company or between the Company
and its Affiliates or their successors.
(h) "DIRECTOR" means a member of the Board.
(i) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(j) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(k) "EXCHANGE ACT" means the Securities and Exchange Act of 1934, as
amended from time to time.
(l) "FAIR MARKET VALUE" means the value of the Company's Class A
Common Stock as determined from time to time in good faith by the Committee.
(m) "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(n) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.
(o) "OFFICER" means a person who is an "executive officer" of the
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(p) "OPTION" means a stock option granted pursuant to the Plan.
(q) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.
(r) "OPTIONED SHARES" means that number of shares of Class A Common
Stock of the Company subject to an Option.
(s) "OPTIONEE" means an Employee or Consultant who holds an
outstanding Option.
(t) "PERFORMANCE CRITERIA" means the various business criteria set
forth in Section 8(b).
(u) "PERFORMANCE GRANT" means a grant of shares of Class A Common
Stock or of a right to receive shares of Class A Common Stock (or their cash
equivalent or a combination of both) based on such performance goals, factors or
other conditions, restrictions or contingencies as may be fixed by the Committee
and as set forth herein.
(v) "PLAN" means this 1993 Equity Incentive Plan.
(w) "RESTRICTED STOCK" AND "RESTRICTED STOCK UNITS" means Optioned
Shares awarded and held subject to the restrictions set forth in Section 9, and
rights to receive Restricted Stock, respectively. In lieu of Restricted Stock,
the Company may grant Restricted Stock Units.
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(x) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3 as in effect when discretion is being exercised with
respect to the Plan.
(y) "STOCK APPRECIATION RIGHT" or "SAR" means the right of a
participant to receive, in cash, Class A Common Stock or Optioned Shares, the
excess of (A) the Fair Market Value of a specified number of shares of Class A
Common Stock at the time of exercise, over (B) an exercise price established by
the Committee.
(z) "STOCK AWARD" means any right granted under the Plan, including
any Option, Stock Appreciation Right, Performance Grant, any Stock Bonus, an
award of Restricted Stock or Restricted Stock Units, and any other
incentive-based awards adopted pursuant to Section 15 of this Plan.
(aa) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.
(bb) "STOCK BONUS" means current or deferred Optioned Shares granted
pursuant to Section 9.
3. ADMINISTRATION.
(a) The Plan shall be administered by a Committee, unless the Board,
in its discretion, assumes administration of the Plan, whereupon the Board shall
have all powers herein conferred on the Committee.
(b) The Committee shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons
eligible under the Plan shall be granted Stock Awards; when and how each Stock
Award shall be granted; the provisions of each such Stock Award (which need not
be identical); and the number of shares with respect to which Stock Awards shall
be granted to each such person. The maximum number of Optioned Shares that may
be covered by Options, Stock Appreciation Rights, Performance Grants, Stock
Bonuses and Restricted Stock granted to any one individual shall be 100,000
shares during any single calendar year.
(2) To construe and interpret the Plan and Stock Awards
granted under it, and to establish, amend and revoke rules and regulations for
its administration. The Committee, in the exercise of this power, may correct
any defect, omission or inconsistency in the Plan or in any Stock Award in a
manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.
(3) Generally, to exercise such powers and to perform such
acts as the Committee deems necessary or expedient to promote the best
interests of the Company.
(c) The Committee shall consist of not fewer than two (2) members of
the Board. The Committee's powers enumerated above shall be subject to such
resolutions, not inconsistent with the provisions of the Plan, as may be adopted
from time to time by the Board.
(d) All judgments, determinations, and actions of every kind and
nature with respect to the Plan and its administration undertaken by the
Committee or the Board shall be made in the sole discretion of the Committee or
Board as the case may be.
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<PAGE> 25
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 14 below, the maximum number
of Optioned Shares that may be issued to participants and their beneficiaries
under the Plan shall not exceed in the aggregate two million five hundred eighty
five thousand two hundred ninety four (2,585,294). If any Stock Award shall for
any reason expire or otherwise terminate, in whole or in part, without having
been exercised in full, the Optioned Shares not acquired shall revert to and
again become available for issuance under the Plan. In the event of payment for
Optioned Shares or settlement of an SAR by delivery to the Company of other
shares of its Class A Common Stock, only the net shares issued shall be
considered toward the maximum number of Optioned Shares. In the event of an
exercise of an SAR for cash, or payment of cash for Restricted Stock Units, no
Optioned Shares shall be deemed to have been utilized.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to key Employees.
Stock Awards other than Incentive Stock Options may be granted only to key
Employees or Consultants.
(b) No person shall be eligible for the grant of an Incentive Stock
Option if, at the time of grant, such person owns (or is deemed to own pursuant
to Section 424(d) of the Code) stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or of any
of its Affiliates, unless the exercise price of such Incentive Stock Option is
at least one hundred ten percent (110%) of the Fair Market Value of such stock
at the date of grant and the Incentive Stock Option is not exercisable after the
expiration of five (5) years from the date of grant.
6. OPTION PROVISIONS.
An Option represents the right to purchase a specified number of
shares during a specified period at a price per share that is no less than that
required by Section 6(b). Each Option shall be in such form and shall contain
such terms and conditions as the Committee shall deem appropriate. The
provisions of separate Options need not be identical, but each Option shall
include (through incorporation of provisions hereof by reference in the Option
Agreement or otherwise) the substance of each of the following provisions:
(a) No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.
(b) The exercise price of each Incentive Stock Option shall be not
less than one hundred percent (100%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted. The exercise price of
each Nonstatutory Stock Option shall be not less than fifty percent (50%) of the
Fair Market Value of the stock subject to the Option on the date the Option is
granted. The foregoing not withstanding, the Committee may provide that the date
of grant of any Nonstatutory Stock Option is the date on which the Optionee was
hired or promoted (or similar event) if the grant of the Option occurs not more
than 90 days after the date of such hiring, promotion or other event. The
exercise price of each Option shall be specified in the Option Agreement.
(c) The purchase price of stock acquired pursuant to an Option shall
be paid, to the extent permitted by applicable statutes and regulations, either
(i) in cash at the time the Option is exercised, or (ii) at the discretion of
the Committee, exercised either at the time of the grant or exercise of the
Option,
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<PAGE> 26
(A) by delivery to the Company (including by attestation) of other Class A
Common Stock of the Company, (B) according to a deferred payment or other
arrangement (which may include, without limiting the generality of the
foregoing, the use of other Class A Common Stock of the Company) with the person
to whom the Option is granted or to whom the Option is transferred pursuant to
subsection 6(d), (C) by cashless exercise methods which are permitted by law,
including, without limitation, methods whereby a broker sells the Optioned
Shares to which the exercise relates or holds them as collateral for a margin
loan, delivers the Option Price to the Company, and delivers the remaining
proceeds to the Optionee (and in connection therewith, the Company may establish
a cashless exercise program including a program where the commissions on the
sale of Optioned Shares to which the exercise relates are paid by the Company),
or (D) in any other form of legal consideration that may be acceptable to the
Committee. In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be charged at the minimum rate of interest
necessary to avoid the treatment as interest, under any applicable provisions of
the Code, of any amounts other than amounts stated to be interest under the
deferred payment arrangement.
(d) Except as may be permitted by the Committee in any particular
Option Agreement, an Option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during the lifetime of
the person to whom the Option is granted only by such person.
(e) The total number of Optioned Shares may, but need not, be allotted
in periodic installments (which may, but need not, be equal). The Option
Agreement may provide that from time to time during each of such installment
periods, the Option may become exercisable ("vest") with respect to some or all
of the shares allotted to that period, and may be exercised with respect to some
or all of the shares allotted to such period and/or any prior period as to which
the Option became vested but was not fully exercised. During the remainder of
the term of the Option (if its term extends beyond the end of the installment
periods), the Option may be exercised from time to time with respect to any
Optioned Shares then remaining subject to the Option. The provisions of this
subsection 6(e) are subject to any Option provisions in the Option Agreement
governing the minimum number of shares as to which an Option may be exercised.
(f) In the event an Optionee's Continuous Status as an Employee or
Consultant terminates (other than upon Disability or death), the Optionee may
exercise his or her Option, but only within such period of time as is determined
by the Committee and specified in the Option Agreement (but in no event later
than the expiration of the term of such Option as set forth in the Option
Agreement).
(g) In the event an Optionee's Continuous Status as an Employee or
Consultant terminates as a result of Disability, the Optionee may exercise his
or her Option, but only within such period of time as is determined by the
Committee and specified in the Option Agreement (but in no event later than the
expiration of the term of such Option as set forth in the Option Agreement).
(h) In the event an Optionee's Continuous Status as an Employee or
Consultant terminates as a result of death, the Option may be exercised, but
only within such period of time as is determined by the Committee and specified
in the Option Agreement (but in no event later than the expiration of the term
of such Option as set forth in the Option Agreement), by the Optionee's estate
or by a person who acquired the right to exercise the Options by bequest or
inheritance, but only to the extent the Optionee was entitled to exercise the
Option at the time of death.
(i) The Option Agreement may, but need not, include a provision whereby
the Optionee may elect at any time while an Employee or Consultant to exercise
the Option as to any part or all of the shares subject to the Option prior to
the full vesting of the Option. Any unvested shares so purchased may be
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<PAGE> 27
subject to a repurchase right in favor of the Company or to any other
restriction the Committee determines to be appropriate.
7. STOCK APPRECIATION RIGHTS ("SARs").
(a) A Stock Appreciation Right or SAR is a right to receive a
payment, in cash, Class A Common Stock, Optioned Shares or a combination of the
foregoing, equal to the excess of the Fair Market Value at time of exercise of a
specified number of shares over the aggregate exercise price of the SARs being
exercised. The aggregate exercise price of SARs shall not be less than fifty
percent (50%) of the Fair Market Value of the specified number of shares subject
to the SARs. Subject to the other applicable provisions of the Plan, the
Committee shall have the authority to grant SARs to a Plan participant either
separately or in tandem with other Stock Awards. The exercise of a tandem Stock
Award shall result in an immediate cancellation of its corresponding SAR, and
the exercise of a tandem SAR shall cause an immediate cancellation of its
corresponding Stock Award. SARs shall be subject to such other terms and
conditions as the Committee may specify.
(b) Upon the exercise of an SAR, the participant shall be entitled to
receive an amount equal to the difference between the Fair Market Value of a
share of Class A Common Stock of the Company on the date of exercise and the
exercise price of the SAR. The Committee shall decide whether such payment shall
be in cash, Class A Common Stock, Optioned Shares or in a combination thereof.
8. PERFORMANCE GRANTS.
(a) A Performance Grant is a grant, subject to the attainment of the
Performance Criteria, of shares of stock or of the right to receive shares of
stock (or their cash equivalent or a combination of both) in the future. Subject
to the other applicable provisions of the Plan, Performance Grants may be
awarded to Employees or Consultants at any time and from time to time as
determined by the Committee. The Committee shall have complete discretion in
determining the size and composition of Performance Grants so issued to a
participant and the appropriate period over which performance is to be measured
("performance cycle").
(b) The value of each Performance Grant may be fixed or it may be
permitted to fluctuate based on the Performance Criteria selected by the
Committee. The Committee shall establish Performance Criteria that, depending on
the extent to which they are met, will determine the ultimate value of the
Performance Grant or the portion of such Performance Grant earned by
participants, or both. The Committee shall establish performance goals and
objectives for each performance cycle and shall identify one or more of the
following business criteria or objectives that is to be monitored during the
performance cycle in determining the Performance Grant: return on assets,
operating ratios, cash flow, shareholder return, revenue growth, net income,
earnings per share, debt reduction, return on investment, revenue and attainment
of budgets.
(c) The Committee shall determine the portion of each Performance
Grant that is earned by a participant on the basis of the achievement of the
Performance Criteria during the performance cycle in relation to the performance
goals for such cycle. The earned portion of a Performance Grant may be paid out
in restricted or non-restricted shares, cash or a combination of both as the
Committee may determine.
(d) A participant must be an Employee or Consultant of the Company at
the end of the performance cycle in order to be entitled to payment of a
Performance Grant issued in respect of such cycle; provided, however, that,
except as otherwise determined by the Committee, if a participant ceases to be
an Employee or Consultant of the Company upon the occurrence of his or her
death, retirement, Disability or other reasons determined by the Committee prior
to the end of the performance cycle, the
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<PAGE> 28
participant shall earn a proportionate portion of the Performance Grant based
upon the elapsed portion of the performance cycle and the Company's performance
over that portion of such cycle.
9. STOCK BONUSES AND RESTRICTED STOCK.
The Committee may at any time and from time to time award a Stock
Bonus, Restricted Stock or Restricted Stock Units to such participants and in
such amounts as it determines. An award of Restricted Stock or Restricted Stock
Units may specify, in the Stock Award Agreement, the applicable restrictions, if
any, on the shares subject thereto, the duration of such restrictions, and the
time or times at which the restrictions shall lapse with respect to all or part
of the shares that are part of the award. Each Stock Bonus or Stock Award
Agreement shall be in such form and shall contain such terms and conditions as
the Committee shall deem appropriate. The terms and conditions of Stock Bonuses
or grants of Restricted Stock or Restricted Stock Units may change from time to
time, and the terms and conditions of separate agreements need not be identical,
but each Stock Bonus or Stock Award Agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions as appropriate:
(a) The Committee may determine that eligible participants in the Plan
may be awarded Optioned Stock pursuant to a Stock Bonus in consideration for
past services actually rendered to the Company or for its benefit.
(b) Except as permitted by the Committee in any particular Stock Award
Agreement, no rights under a Stock Bonus or Stock Award Agreement shall be
transferable except by will or by the laws of descent and distribution so long
as Optioned Shares awarded under such agreement remain subject to the terms of
the agreement.
(c) The purchase price of Optioned Shares acquired pursuant to a Stock
Award Agreement shall be paid either: (i) in cash at the time of purchase; (ii)
at the discretion of the Committee, according to a deferred payment or other
arrangement with the person to whom the stock is sold; or (iii) in any other
form of legal consideration that may be acceptable to the Committee in its
discretion.
10. CANCELLATION AND RE-GRANT OF OPTIONS.
The Committee shall have the authority to effect, at any time and from
time to time, with the consent of the affected holders of Options (i) the
repricing of any outstanding Options under the Plan and/or (ii) the cancellation
of any outstanding Options under the Plan and the grant in substitution therefor
of new Options under the Plan covering the same or different numbers of shares
of stock but having an exercise price per share of not less than fifty percent
(50%) of the Fair Market Value (one hundred percent (100%) of the Fair Market
Value in the case of an Incentive Stock Option or, in the case of a 10%
stockholder (as described in subsection 5(c)), not less than one hundred ten
percent (110%) of the Fair Market Value) per share of stock on the new grant
date.
11. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of stock required to satisfy such
Stock Awards.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of Stock Awards; provided, however,
that this undertaking shall not require the Company to register under the
Securities Act of 1933 (the "Securities Act") either the Plan, any Stock Awards
or any stock
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<PAGE> 29
issued or issuable pursuant to any such Stock Awards. If, after reasonable
efforts, the Company is unable to obtain from any such regulatory commission or
agency the authority which counsel for the Company deems necessary for the
lawful issuance and sale of stock under the Plan, the Company shall be relieved
from any liability for failure to issue and sell stock upon exercise of
Stock Awards unless and until such authority is obtained.
12. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.
13. MISCELLANEOUS.
(a) The Committee shall have the power to accelerate the time at which
a Stock Award may first be exercised, or the time during which a Stock Award or
any part thereof will vest, notwithstanding the vesting conditions of the
original grant.
(b) Neither a Plan participant nor any person to whom a Stock Award may
be transferred under the applicable restrictions of the Plan shall be deemed to
be the holder of, or to have any of the rights of a holder with respect to, any
shares subject to such Stock Award unless and until such person has satisfied
all requirements for exercise of the Option pursuant to its terms or the
reservations, conditions and contingencies applicable to each other form of
Stock Award shall have been satisfied.
(c) Nothing in the Plan or any instrument executed or Stock Award granted
pursuant hereto shall confer upon any Employee, Consultant, Optionee or other
holder of Stock Awards any right to continue in the employ or service of the
Company or any Affiliate or shall affect the right of the Company or any
Affiliate to terminate the employment or relationship as a Consultant of any
Employee, Consultant, Optionee or other holder of Stock Awards with or without
cause.
(d) To the extent that the aggregate Fair Market Value (determined at the
time of grant) of stock with respect to which Incentive Stock Options granted
after 1986 are exercisable for the first time by any Optionee during any
calendar year under all plans of the Company and its Affiliates exceeds one
hundred thousand dollars ($100,000), the Options or portions thereof which
exceed such limit (according to the order in which they were granted) shall be
treated as Nonstatutory Stock Options.
(e) The Company may require any recipient of a Stock Award, or any person to
whom a Stock Award is transferred in accordance with the applicable terms of the
Plan, as a condition of exercising any such Stock Award, (1) to give written
assurances satisfactory to the Company as to such person's knowledge and
experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters, and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Stock Award, and (2) to give written assurances
satisfactory to the Company stating that such person is acquiring the stock
subject to the Stock Award for such person's own account and not with any
present intention of selling or otherwise distributing the stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (i) the issuance of the shares upon the exercise of or
acquisition of stock under the Stock Award has been registered under a then
currently effective registration statement under the Securities Act, or (ii) as
to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under
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<PAGE> 30
the Plan as such counsel deems necessary or appropriate in order to comply
with applicable securities laws, including, but not limited to, legends
restricting the transfer of the stock.
(f) To the extent provided by the terms of a Stock Award Agreement, the
person to whom a Stock Award is granted may satisfy any federal, state or local
tax withholding obligation relating to the exercise of or acquisition of stock
under a Stock Award by any of the following means or by a combination of such
means: (1) withholding from compensation; (2) tendering a cash payment; (3)
authorizing the Company to withhold shares from the shares of Class A Common
Stock otherwise issuable to the participant as a result of the exercise of or
acquisition of stock under the Stock Award; or (4) delivering to the Company
owned and unencumbered shares of the Class A Common Stock of the Company owned
by such person.
14. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan or subject
to any Stock Award (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or otherwise), the Plan and outstanding Stock Awards will
be appropriately adjusted in the class(es) and maximum number of shares subject
to the Plan and the class(es) and number of shares and price per share of stock
subject to outstanding Stock Awards.
(b) In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the company is the surviving
corporation but the shares of the Company's Class A Common Stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise; or (4) any
other capital reorganization in which more than fifty percent (50%) of the
shares of the Company entitled to vote are exchanged, then at the sole
discretion of the Committee and to the extent permitted by applicable law: (i)
any surviving corporation shall assume any Stock Awards outstanding under the
Plan or shall substitute similar Stock Awards for those outstanding under the
Plan, (ii) the time during which such Stock Award may be exercised shall be
accelerated and the Stock Awards terminated if not exercised prior to such
event, or (iii) such Stock Awards shall continue in full force and effect.
15. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan in
any manner. However, except as provided in Section 14 relating to adjustments
upon changes in stock, no amendment shall be effective unless approved by the
shareholders of the Company within twelve (12) months before or after the
adoption of the amendment where the amendment will:
(1) Increase the number of shares reserved for Stock Awards under
the Plan;
(2) Modify the requirements as to eligibility for participation in
the Plan (to the extent such modification requires shareholder approval in
order for the Plan to satisfy the requirements of Section 162(m) or Section 422
of the Code); or
(3) Modify the Plan in any other way if such modification
requires shareholder approval in order for the Plan to satisfy the requirements
of Section 162(m) or Section 422 of the Code, of Rule 16b-3 under the Exchange
Act, or of the Nasdaq National Market or any exchange on which the Company's
shares may be listed.
9
<PAGE> 31
(b) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide eligible Employees
or Consultants with the maximum benefits provided or to be provided under the
provisions of the Code and the regulations promulgated thereunder relating to
Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options
granted under it into compliance therewith; provided, however, shares covered by
any Stock Awards in excess of the maximum number of Optioned Shares provided for
in Section 4(a) above shall be deemed awarded on the date of the Initial Stock
Award if shareholders approve the increase pursuant to this Section 15.
(c) Rights and obligations under any Stock Award granted before
amendment of the Plan shall not be altered or impaired by any amendment of the
Plan unless (i) the Company requests the consent of the person to whom the Stock
Award was granted and (ii) such person consents in writing.
16. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on February 25, 2003. No Stock
Awards may be granted under the Plan while the Plan is suspended or after it is
terminated.
(b) Rights and obligations under any Stock Award granted while the Plan
is in effect shall not be altered or impaired by suspension or termination of
the Plan, except with the consent of the person to whom the Stock Award was
granted.
10
<PAGE> 32
PROXY
THE ROBERT MONDAVI CORPORATION
CLASS A COMMON STOCK PROXY
FOR ANNUAL MEETING OF SHAREHOLDERS NOVEMBER 3, 1997
The undersigned hereby appoints Gregory M. Evans and Michael K. Beyer, or
either of them, each with the power of substitution, as proxies to represent the
undersigned at the Annual Meeting of Shareholders of THE ROBERT MONDAVI
CORPORATION to be held at the Robert Mondavi Winery, 7801 St. Helena Highway,
Oakville, California on November 3, 1997 at 10:00 a.m., and any adjournment
thereof, and to vote the number of shares of the CLASS A COMMON STOCK OF THE
ROBERT MONDAVI CORPORATION that the undesigned would be entitled to vote if
personally present.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE ROBERT
MONDAVI CORPORATION. THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF
DIRECTION, THIS PROXY WILL BE VOTED FOR THE NOMINEES FOR ELECTION, FOR THE
RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE AND FOR THE RATIFICATION OF
THE PROPOSED AMENDMENTS OF THE 1993 EQUITY INCENTIVE PLAN. In their discretion,
the proxy holders are authorized to vote upon such other business as may
properly come before the meeting or any adjournment thereof to the extent
authorized by Rule 14a-4(c) promulgated by the Securities and Exchange
Commission and by applicable state laws (including matters that the proxy
holders do not know, a reasonable time before this solicitation, are to be
presented).
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER(S). IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTORS AND FOR PROPOSAL 2
AND PROPOSAL 3 LISTED BELOW.
(continued and to be signed on reverse side)
<PAGE> 33
(continued from other side)
1. ELECTION OF DIRECTORS TO BE ELECTED BY HOLDERS OF CLASS A COMMON STOCK,
VOTING AS A CLASS
[ ] FOR THE NOMINEES LISTED BELOW (EXCEPT AS MARKED TO THE CONTRARY).
[ ] WITHHOLD AUTHORITY TO VOTE FOR THE NOMINEES LISTED BELOW.
NOMINEES: PHILIP GREER, FRANK E. FARELLA, JAMES L. BARKSDALE.
TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE, WRITE SUCH NOMINEE'S
NAME BELOW:
- - -------------------------------------------------------------------------------
2. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICE WATERHOUSE AS INDEPENDENT
ACCOUNTANTS FOR THE CURRENT FISCAL YEAR:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO RATIFY THE PROPOSED AMENDMENTS OF THE 1993 EQUITY INCENTIVE PLAN:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PROXY INSTRUCTIONS:
1. Please sign exactly as the name or names appear on your stock certificates
(as indicated hereon).
2. If the shares are issued in the name of two or more persons, all of them must
sign the proxy.
3. A proxy executed by a corporation must be signed by its name by an authorized
officer.
4. Executors, administrators, trustees and partners should indicate their
capacity when signing.
The undersigned acknowledges
receipt of (a) the Notice of 1997
Annual Meeting of Shareholders, (b)
the accompanying Proxy Statement
and (c) Company's Annual Report
pursuant to SEC Rule 14a-3 for the
fiscal year ended June 30, 1997.
Dated , 1997
-----------------------------------
Signature
-----------------------------------
Signature
