<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
THE ROBERT MONDAVI CORPORATION
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: (1)
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
---------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 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 2, 1998
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 2, 1998, at 11:30 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 PricewaterhouseCoopers LLP as
the Company's independent auditors for the 1999 fiscal
year; and
3. 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, 1998 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
Mike Beyer, Secretary
Napa, California
September 28, 1998
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.
<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 2, 1998 at
11:30 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 1998, were first mailed to shareholders on or
about September 28, 1998.
The Company's principal executive offices are located at 7801 St.
Helena Highway, Oakville, California 94562, and its telephone number is (707)
226-1395. 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
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.
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, 1998 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 8,055,251 shares of
Class A Common Stock and 7,306,012 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
8,055,251 Class A votes, and each Class B share entitled to ten (10) votes, or a
total of 73,060,120 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 62, 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 69, has been a partner in the law firm of
Farella, Braun & Martel since 1962. He has been a director of the Company since
1992, and is a member of the Audit Committee. He is a graduate of San Francisco
State University and Stanford University Law School.
James L. Barksdale, age 55, 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 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
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director of 3Com Corporation, Network Computers Inc. and @Home Corporation. He
is a graduate of the University of Mississippi.
NOMINEES FOR CLASS B DIRECTORS
Robert G. Mondavi, age 85, 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 55, 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 51, 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 47, 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 60, 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 an independent investor and consultant. 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 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
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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 49, was appointed Executive Vice President and
Chief Operating Officer in July 1998. Prior to that he served for fifteen years
as the Company's Chief Financial Officer. 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 46, 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 49, 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 45, 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 49, 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 47, 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 38, joined the Company in January 1997 as
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.
Stephen A. McCarthy, age 36, was promoted to Senior Vice President
and Chief Financial Officer in July 1998. From 1996 to 1998 he served as Vice
President and Controller. Prior to joining the Company, Mr. McCarthy was a
Senior Manager with Price Waterhouse. Mr. McCarthy graduated from the University
of San Francisco.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held four regular meetings and one special
meeting during fiscal 1998. Mr. Barksdale was unable to attend one regular and
one special meeting. The Board of Directors has a Compensation Committee and an
Audit Committee. Messrs. Greer and Rhoades comprise the Compensation Committee.
They and Mr. Farella sit on the Audit Committee. There is no Nominating
Committee.
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The Compensation Committee adopts and administers compensation plans
for executive officers of the Company, including the Company's Amended and
Restated 1993 Equity Incentive Plan. The Compensation Committee held five
meetings in fiscal 1998.
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 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 five meetings during
fiscal 1998.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information as of September
15, 1998 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
Outstanding days by Exercise of Percent Shares
Shares Options or Conversion of Beneficially Percent
Beneficial Owner Beneficially Owned of Class B Shares Class (2) Owned of Class
- - ----------------- ------------------ --------------------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Robert G. Mondavi - 1,943,777 (3) 19.4 1,943,777 26.6
R. Michael Mondavi 36,000 (4) 1,901,780 (5) 19.4 1,681,780 (8) 23.0
Timothy J. Mondavi - 1,778,690 (6) 18.1 1,691,190 (9) 23.1
Marcia Mondavi Borger - 1,747,985 (7) 17.8 1,726,485 (10) 23.6
Capital Group Cos. 1,556,300 (11) - 19.3 - -
333 So. Hope St, Los Angeles, CA 90071
Zak Capital Inc. 609,260 (11) - 7.6 - -
100 No. Sixth St., Ste 476A,
Minneapolis, MN 55403
Fidelity Management 470,000 (11) - 5.8 - -
82 Devonshire St., Boston, MA 02109
Gregory M. Evans 2,000 169,750 (12) 2.1 - -
Peter Mattei - 51,916 (12) * - -
Frank E. Farella 2,000 21,500 (12) * - -
Philip Greer 3,300 21,500 (12) * - -
Bartlett R. Rhoades 1,000 21,500 (12) * - -
James L. Barksdale - 6,583 (12) * -
All executive officers and directors as a 44,300 7,778,072 (13) 49.3 7,043,232 (14) 96.4
group (16 persons)
</TABLE>
- - ----------------
* 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.
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(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, 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, 1998.
(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 25,000 shares of Class A Common Stock held by a trust for
the benefit of Michael Mondavi's children. Mr. Mondavi disclaims the
beneficial interest in such shares.
(5) Includes 1,681,780 shares of Class A Common Stock which the holder
has the right to acquire upon conversion of Class B Common Stock and
220,000 shares of Class A Common Stock issuable pursuant to options
exercisable within 60 days of September 15, 1998.
(6) Includes 1,691,190 shares of Class A Common Stock which the holder
has the right to acquire upon conversion of Class B Common Stock and
87,500 shares of Class A Common Stock issuable pursuant to options
exercisable within 60 days of September 15, 1998.
(7) Represents 1,628,960 shares of Class A Common Stock which the holder
has the right to acquire upon conversion of Class B Common Stock and
21,500 shares of Class A Common Stock issuable pursuant to options
exercisable within 60 days of September 15, 1998.
(8) 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.
(9) Excludes 97,525 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.
(10) Excludes 149,240 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. Includes 97,525 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.
(11) Based on most recent available filings on Form 13F.
(12) Represents shares of Class A Common Stock issuable pursuant to
outstanding options exercisable within 60 days of September 15, 1998.
(13) Includes an aggregate of 734,840 shares of Class A Common Stock
issuable pursuant to outstanding options exercisable within 60 days
of September 15, 1998.
(14) Excludes an aggregate of 262,780 shares of Class B Common Stock owned
outright by or in trusts for members of the Robert Mondavi family not
otherwise listed above.
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
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issue of Robert and Marjorie Mondavi, (ii) transfers to or in trust for
charitable institutions or (iii) certain other permitted transfers.
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,
1998, 1997 and 1996, 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"):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------- ------------------------------------------------
OTHER # SECURITIES PAYOUTS
FISCAL ANNUAL UNDERLYING LONG-TERM ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS INCENTIVE PLAN COMPENSATION
--------------------------- ---- ------ ----- ------------ ------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
(1) (11) (12)
-
Robert G. Mondavi 1998 $450,000 - - (2) - - -
Chairman of the Board 1997 450,000 - - (2) - - -
1996 450,000 - - (2) - - -
R. Michael Mondavi 1998 400,000 - $ 127,279 (3) 50,000 $ 524,723 $ 64,731
President, 1997 400,000 - 75,500 (4) 50,000 372,270 263,784
Chief Executive Officer 1996 429,016 $ 400,000 81,984 (5) 70,000 181,584 356,785
Timothy J. Mondavi 1998 400,000 - - (2) 22,500 524,723 64,731
Managing Director, 1997 400,000 25,000 58,524 (6) 30,000 372,270 263,784
Winegrower 1996 429,016 150,000 63,697 (7) 35,000 181,584 356,785
Gregory M. Evans 1998 292,065 - 48,514 (8) 22,500 198,760 34,353
Executive Vice 1997 292,065 80,000 - (2) 20,000 145,424 189,503
President, 1996 292,065 150,000 - (2) - 100,027 269,390
Chief Operating Officer
Peter Mattei 1998 212,000 - 35,783 (9) 12,500 214,658 29,866
Sr. Vice President, 1997 212,000 35,000 27,950 (10) 10,000 143,181 139,258
Production & Vineyards 1996 202,000 80,000 - (2) - 61,087 184,161
</TABLE>
- - -------------
(1) Includes perquisites, none of which individually 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 $94,500 in life insurance benefits.
(4) Includes $35,500 in life insurance benefits and $19,500 in financial
planning services.
(5) Includes $35,500 in life insurance benefits and $30,752 in financial
planning services.
(6) Includes $35,500 in life insurance benefits and $20,379 in financial
planning services.
(7) Includes $18,524 in life insurance benefits and $23,588 in financial
planning services.
(8) Includes $25,249 in life insurance benefits and $12,435 in automobile
allowance.
(9) Includes $19,238 in life insurance benefits and $12,435 in automobile
allowance.
(10) Includes $12,435 in automobile allowance.
(11) Represents that portion paid in fiscal 1996, 1997 and 1998
respectively, of the named executive officer's accumulated earnings
on 1991, 1992 and 1993 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.
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(12) 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 1998 were $64,731 for R. Michael Mondavi; $64,731 for
Timothy J. Mondavi; $34,353 for Gregory M. Evans; and $29,866 for
Peter Mattei. Also includes earnings under the E.I.C.P. described at
Note 11 above for fiscal 1997 and 1996. In fiscal 1992, no earnings
were declared 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, 1996, 1997 and 1998, respectively, were
$5,761,179, $5,418,056 and $3,561,487.
OPTION GRANTS
The following table sets forth information with respect to options
granted to the Named Executive Officers during the 1998 fiscal year. The options
were granted at an exercise price equal to 100% of the fair market value of the
Class A Common Stock at the date of grant. Michael Mondavi and Timothy Mondavi's
options vested in full at time of grant. Mr. Evans and Mr. Mattei's options vest
at the rate of 1/60 per month over 60 months. The options expire ten years after
the date of grant, or, if earlier, 180 days after termination of employment:
OPTION GRANTS IN LAST FISCAL YEAR (1)
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Term (2)
--------------------------------------------------------------------------- ------------------------------
Number of Percent of
securities total options
underlying granted to
options employees in Exercise or base
Name granted fiscal year price ($/sh) Expiration date 5% 10%
---- ------- ----------- ------------ --------------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Robert G. Mondavi - - - - - -
R. Michael Mondavi 37,500 19.2 $51 1/8 9/10/07 $1,205,709 $3,055,503
12,500 6.4 $50 1/8 12/10/07 394,042 998,579
Timothy J. Mondavi 17,500 9.0 $51 1/8 9/10/07 562,664 1,425,901
5,000 2.6 $50 1/8 12/10/07 157,617 399,432
Gregory M. Evans 22,500 11.5 $51 1/8 9/10/07 723,425 1,833,302
Peter Mattei 12,500 6.4 $51 1/8 9/10/07 401,903 1,018,501
</TABLE>
(1) All options in this table relate to shares of Class A Common Stock.
(2) Potential realizable value is based on an assumption that the stock
price appreciates at the annual rate shown (compounded annually) from
the date of grant until the end of the option term (ten years). These
numbers are calculated based on the requirements promulgated by the
Securities and Exchange Commission and do not reflect the Company's
estimate of future stock price growth. Actual gains, if any, on stock
option exercises are dependent on the Company's future financial
performance, overall market conditions and the optionee's continued
employment during the prescribed vesting period.
OPTION EXERCISES AND YEAR-END VALUE OF UNEXERCISED OPTIONS
The following table sets forth information regarding each exercise of
stock options during the 1998 fiscal year by a Named Executive Officer and the
number and value of unexercised stock options held by the Named Executive
Officers at June 30, 1998:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES (1)
<TABLE>
<CAPTION>
Number of securities underlying Value of unexercised in-the-money
Shares unexercised options at fiscal year end options at fiscal year end (2)
Acquired on Value -------------------------------------- ---------------------------------
NAME Exercise Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- - ----- ---------------- --------------- ---------------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Mondavi - - - - - -
R. Michael Mondavi - - 220,000 - $796,250 -
Timothy J. Mondavi - - 87,500 - 26,250 -
Gregory M. Evans - - 164,125 38,375 2,608,500 $128,125
Peter Mattei 5,500 $197,675 48,374 22,126 732,575 102,500
</TABLE>
(1) All options in this table relate to shares of Class A Common Stock.
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<PAGE> 11
(2) Represents the fair value of the underlying securities at fiscal
year-end ($28 3/8 per share based on the NASDAQ closing price) minus
the exercise price.
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 were
fully vested as of June 1998 and are exercisable over a ten-year period ending
February 26, 2003. 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. 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 1998, the Compensation Committee considered a variety of factors.
Net revenues increased by 8.1% to $325.2 million in fiscal 1998 from $300.8
million in fiscal 1997. At the same time net income increased by 2.8% to $29.0
million in fiscal 1998 from $28.2 million in fiscal 1997, as sales and marketing
expense increased as a percentage of net revenues. The Company also extended
distribution of its Vichon and Caliterra brands, initiated other product line
extensions, and pursued the expansion of the Woodbridge Winery and Napa Valley
vineyard replantings. The Company's share price declined significantly, due in
large part to a temporary shortage of Woodbridge Chardonnay that also slowed the
rate of growth of other Woodbridge varietals. In reviewing Company performance,
the Compensation Committee considered these factors as a whole without assigning
specific weights to particular factors.
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<PAGE> 12
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 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. No cash bonuses were paid to the
Named Executive Officers for fiscal 1998.
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 9, 1998, the Board of Directors, on recommendation of
the Compensation Committee, awarded an aggregate of 305,000 options at an
exercise price of $22.50 per share to the Company's executive officers,
including 50,000 options for Michael Mondavi, 37,500 options for Timothy
Mondavi, 50,000 options for Mr. Evans and 25,000 options for Mr. Mattei. The
options were structured to create an incentive for senior management to focus on
reversing the recent decline in the Company's share price. Thus, although the
options vest unconditionally eight years from the grant date, vesting is
accelerated, and the value of the options is thereby enhanced, only if the share
price averages at least 125% above the exercise price over a period of 60 days
within 18 months of the grant date.
10
<PAGE> 13
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 Company's
pre-tax net income, as more fully described in footnote 11 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 1998. 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 1998. 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.
IRC Section 162(m)
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), 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. Certain types of compensation, however,
including "performance-based compensation," are disregarded for purposes of the
deduction limitation. Awards of options and other stock-based incentives under
the 1993 Equity Plan are intended by the Compensation Committee to qualify for
the exclusion for performance-based compensation.
The foregoing report is given by the members of the Compensation
Committee, namely:
Philip Greer
Bartlett R. Rhoades
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, 1998, with the cumulative total return in the same period on (i) the NASDAQ
Stock Market Index (U.S.) and (ii) two peer group indices comprised of six
companies whose returns have been weighted based on market capitalization as of
June 30, 1998. The "old" peer group index includes Chalone Wine Group, Ltd.,
Canandaigua Wine Inc., Adolph Coors Company, Anheuser-Busch Companies, Inc.,
Brown-Forman Corporation and Genesee Corporation. The "new" peer group index
substitutes Beringer Wine Estates Holdings, Inc. ("Beringer") in place of
Genesee Corporation. Beringer, a leading fine wine producer admitted to public
trading in October 1997, is a better comparison. The graph assumes an investment
of $100.00 on June 10, 1993 in the Company and in the comparison indices. "Total
return," for purposes of the graph, assumes reinvestment of all dividends.
11
<PAGE> 14
[PERFORMANCE GRAPH]
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 1998
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
Frank 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 $75,000 for grapes during the fiscal year ended June
30, 1998.
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
12
<PAGE> 15
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 PricewaterhouseCoopers 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 1999, subject to ratification by the shareholders at the Annual
Meeting. Representatives of PricewaterhouseCoopers 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 PricewaterhouseCoopers LLP as the Company's
independent auditors.
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 1999 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 June 1, 1999 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 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 28, 1998
13
<PAGE> 16
PROXY
THE ROBERT MONDAVI CORPORATION
CLASS A COMMON STOCK PROXY
FOR ANNUAL MEETING OF SHAREHOLDERS NOVEMBER 2, 1998
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 2, 1998 at 11:30 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 undersigned 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 AND FOR THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP. 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).
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
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 LISTED BELOW.
(continued and to be signed on reverse side)
<PAGE> 17
(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 PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT ACCOUNTANTS FOR THE CURRENT FISCAL YEAR:
[ ] 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 1998 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, 1998.
Dated: , 1998
-----------------------------------
-----------------------------------------------
Signature
