LINCOLN SNACKS COMPANY
4 High Ridge Park
Stamford, Connecticut 06905
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
November 20, 1997
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Lincoln
Snacks Company (the "Company") will be held on November 20, 1997 at 10:00 a.m.
Eastern Standard Time at the offices of the Company at 4 High Ridge Park,
Stamford, Connecticut 06905 for the following purposes:
(1) To elect four members of the Board of Directors to serve until the
next annual meeting of stockholders and until their successors are duly
elected and qualified; and
(2) To transact such other business as may properly be brought before
the meeting or any adjournment thereof.
The Board of Directors has fixed October 23, 1997 as the record date for
the determination of the stockholders entitled to notice of and to vote at such
meeting or any adjournment thereof, and only stockholders of record at the
close of business on that date are entitled to notice of and to vote at
such meeting.
A copy of the Company's Annual Report to Stockholders for the fiscal
year ended June 30, 1997 is enclosed herewith.
By Order of the Board of Directors.
/s/ Kristine A. Crabs
Kristine A. Crabs, Secretary
Dated: Stamford, Connecticut
October 28, 1997
YOU ARE REQUESTED TO COMPLETE AND RETURN THE ENCLOSED PROXY IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. IF YOU ATTEND THE MEETING, YOUR PROXY WILL BE RETURNED TO YOU
AT THE MEETING UPON REQUEST TO THE SECRETARY OF THE MEETING.
LINCOLN SNACKS COMPANY
4 High Ridge Park
Stamford, Connecticut 06905
PROXY STATEMENT
Annual Meeting of Stockholders
November 20, 1997
This Proxy Statement and accompanying form of proxy are being furnished
in connection with the solicitation of proxies by the Board of Directors of
Lincoln Snacks Company, a Delaware corporation ("Lincoln" or the "Company"),
for use at the Annual Meeting of Stockholders to be held on November 20, 1997,
at 10:00 a.m. Eastern Standard Time at the offices of the Company at 4 High
Ridge Park, Stamford, Connecticut 06905, or any adjournment thereof (the
"Meeting"). Copies of this Proxy Statement, the attached Notice of Annual
Meeting of Stockholders, and the enclosed form of proxy were first mailed to
stockholders on or about October 28, 1997. The principal executive offices of
Lincoln are located at 4 High Ridge Park, Stamford, Connecticut 06905. The
telephone number of Lincoln's principal executive offices is (203) 329-4545.
A proxy in the accompanying form, which is properly executed, duly
returned to the Board of Directors and not revoked, will be voted in
accordance with the instructions contained in the proxy. If no instructions
are given with respect to any matter specified in the Notice of Annual Meeting
to be acted upon at the Meeting, the proxy will vote the shares represented
thereby FOR the nominees for directors set forth below, and in accordance with
his or her best judgment on any other matters which may properly be brought
before the Meeting. The Board of Directors currently knows of no other
business that will be presented for consideration at the Meeting.
Each stockholder who has executed a proxy and returned it to the Board
of Directors may revoke the proxy by written request to the Secretary of the
Company, or by attending the Meeting in person and requesting the return of
the proxy, in either case at any time prior to the voting of the proxy.
Presence at the Meeting does not itself revoke the proxy. The cost of the
solicitation of proxies will be paid by the Company. In addition to the
solicitation of proxies by the use of the mails, management and regularly
engaged employees of the Company may, without additional compensation
therefor, solicit proxies on behalf of the Company by personal interviews,
telephone or other means, as appropriate. The Company will, upon request,
reimburse brokers and others who are only record holders of the Company's
common stock, par value $.01 per share ("Common Stock"), for their reasonable
expenses in forwarding proxy material to, and obtaining voting instructions
from, the beneficial owners of such stock.
The close of business on October 23, 1997, has been fixed as the record
date (the "Record Date") for determining the stockholders entitled to notice
of and to vote at the Meeting or any adjournment thereof. As of the Record
Date, there were 6,331,790 shares of Common Stock issued and outstanding and
entitled to vote.
Each share of Common Stock entitles the holder thereof to one vote.
A majority of the shares of Common Stock issued, outstanding and entitled to
vote must be present in person or represented by proxy at the Meeting in order
to constitute a quorum for the transaction of business. Abstentions and
broker non-votes (i.e. shares held by brokers or nominees as to which (i) the
broker or nominee does not have discretionary authority to vote on a
particular matter and (ii) instructions have not been received from the
beneficial owners) are counted as present in determining whether the quorum
requirement is satisfied.
The election of directors shall be determined by a plurality of the
shares of Common Stock present in person or represented by proxy at the
Meeting. Only shares that are voted in favor of a particular nominee will
be counted towards such nominee's achievement of a plurality. For the
election of directors, abstentions and broker non-votes shall be treated as
present at the Meeting, but will not be treated as votes cast. Thus for such
purposes, abstentions and broker non-votes will have no effect on the outcome
of the vote.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth certain information as of October 23, 1997
as to the beneficial ownership of the Common Stock and the common stock, par
value $.10 per share, of Noel Group, Inc. ("Noel Common Stock") by (i) each
person known by the Company to own beneficially more than 5% of the issued
and outstanding shares of Common Stock, (ii) each current director, (iii)
each of the Named Executive Officers (as defined in the section entitled
"Executive Compensation"), and (iv) all current directors and executive
officers as a group.
<TABLE>
<CAPTION>
Noel Common Stock Lincoln Common Stock
- ------------------------------------------------------------------- ------------------------------
Name and Address of Number of Percentage Number of Percentage
Beneficial Owner Shares<F1> Owned<F2> Shares<F3> Owned<F4>
- ------------------------------------------------------------------- ------------------------------
<S> <C> <C> <C> <C>
5% Stockholders
Noel Group, Inc. -- -- 3,769,755 59.5%
667 Madison Avenue
New York, New York 10021
Lawrence, Kamin, Saunders -- -- 489,000<F5> 7.7%
& Uhlenhop on behalf of
Gofen & Glossberg, Inc.
208 S. LaSalle St., Suite 1750
Chicago, IL 60604
Directors
Karen Brenner 0 -- 294,167<F6> 4.6%
C. Larry Davis 0 -- 78,000<F7> 1.2%
Alexander P. Lynch 0 * 32,500<F8> *
James G. Niven 22,223 * 32,500<F9> *
Named Executive Officers
Karen Brenner 0 -- 294,167<F6> 4.6%
R. Scott Kirk 0 -- 100,193<F10> 1.6%
Kristine A. Crabs 0 -- 34,014<F11> *
All executive officers and
directors as a group
(includes 6 persons) 22,223 * 571,374<F12> 8.5%
* Less than 1%
<FN>
<F1> Unless otherwise indicated, each of the parties listed has sole voting
and investment power over the shares of Noel Common Stock owned.
<F2> Based on 20,567,757 shares of Noel Common Stock issued and outstanding
on October 22, 1997.
<F3> Unless otherwise indicated, each of the parties listed has sole voting
and investment power over the shares of Common Stock owned. The number
of shares of Common Stock indicated includes in each case the number of
shares of Common Stock issuable upon exercise of outstanding stock
options, to the extent that such options are currently exercisable. For
purposes of this table, options are deemed to be currently exercisable
to the extent that they are exercisable prior to December 30, 1997.
<F4> Based on 6,331,790 shares of Common Stock issued and outstanding on
October 23, 1997. In addition, treated as outstanding for the purpose
of computing the percentage ownership of each director or named
executive officer and of all executive officers and directors as a group
are shares of Common Stock issuable to such individual or group upon
exercise of options to purchase Common Stock to the extent currently
exercisable.
<F5> The information set forth in the table and in this footnote regarding
shares beneficially owned by Gofen & Glossberg, Inc. ("Gofen &
Glossberg") is based on a Schedule 13G dated February 12, 1996 filed
with the Securities and Exchange Commission by Gofen & Glossberg.
<F6> Consists of 9,100 shares held by Ms. Brenner directly, 118,400 shares
issuable upon exercise of options granted by the Company, but does not
include an additional 200,000 shares issuable pursuant to options
granted by the Company which are not currently exercisable. In
addition, consists of 166,667 shares issuable upon exercise of the Noel
Option, but does not include an additional 33,333 shares issuable
pursuant to the Noel Option which are not currently exercisable.
<F7> Consists of 25,500 shares held by Mr. Davis directly, 20,000 shares
held by Mr. Davis' wife as trustee for Mrs. Davis' children, with
respect to which shares Mr. Davis disclaims beneficial ownership, and
32,500 shares issuable upon exercise of options granted by the Company.
<F8> Consists of 32,500 shares issuable upon exercise of options to purchase
Common Stock granted by the Company.
<F9> Consists of 9,100 shares held by Mr. Niven directly and 23,400 shares
issuable upon exercise of options to purchase Common Stock granted by
the Company.
<F10> Consists of 68,250 shares held by Mr. Kirk directly and 31,943 issuable
upon exercise of options to purchase Common Stock granted by the
Company which are currently exercisable. The number indicated does not
include an additional 33,807 shares issuable pursuant to options granted
by the Company which are not currently exercisable.
<F11> Consists of 22,750 shares held by Ms. Crabs directly and 11,264 shares
issuable upon exercise of options to purchase Common Stock granted by
the Company which are currently exercisable. The number indicated does
not include an additional 11,236 shares issuable pursuant to options to
purchase Common Stock granted by the Company which are not currently
exercisable.
<F12> Includes 436,674 shares issuable upon exercise of options granted by
the Company and Noel and certain shares with respect to which beneficial
ownership is disclaimed.
</FN>
</TABLE>
Election of Directors
At the Meeting, four directors are to be elected by the stockholders, each
to hold office until the next Annual Meeting of Stockholders and until their
successors are duly elected and qualified. The four nominees for election
as directors are, Karen Brenner, C. Larry Davis, Alexander P. Lynch and James
G. Niven. The four nominees are presently serving as directors of the
Company. Unless otherwise specified, the enclosed proxy will be voted in
favor of the nominees named herein for election. The proxies cannot be voted
for a greater number of persons than the number of nominees named. Should
any nominee named herein for election become unavailable for any reason, it
is intended that votes will be cast pursuant to the accompanying proxy for
such substitute nominees as the Board of Directors may recommend unless the
Board reduces the number of directors to be elected. Each of the nominees
has consented to serve if elected.
The number of directors which constitutes the full Board of Directors is
currently fixed at four. The By-laws of the Company provide that the number
of directors which shall constitute the full Board may be changed from
time to time by resolution adopted by the Board of Directors or the
stockholders, provided that no decrease made in such manner shall shorten
the term of any incumbent director.
Information Concerning Director Nominees and Executive Officers
The information set forth below, furnished to the Board of Directors by the
respective individuals, shows as to each director, director nominee and each
of the executive officers of the Company (i) his or her name and age; (ii) his
or her principal position with the Company; (iii) his or her principal
occupation or employment, if different, and (iv) the month and year in which
he or she began to serve as a director or executive officer. Directors hold
office until the next annual meeting of stockholders of the Company and until
their successors have been elected and qualified or until their earlier
resignation or removal. Officers serve at the discretion of the Board of
Directors. No family relationship exists among any of the executive officers
and directors of the Company.
<TABLE>
<CAPTION>
Principal
Principal Occupation or Director or
Position Employment, Executive
Name and Age With Lincoln If Different Officer Since
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Karen Brenner (41) Chairman and Managing Director, Director since August,
Chief Executive Noel Group, Inc. 1992; Chairman and Chief
Officer; Chairman, President and Chief Executive Officer since
Director<F1><F2> Executive Officer, Carlyle June 1994
Industries, Inc.
C. Larry Davis (56) Director<F3><F4> Chairman, Chief Executive August, 1992
Officer and Principal of
Farmhouse Foods Company
Alexander P. Lynch( 45) Director<F1><F2> Partner of The Beacon Group November, 1993
James G. Niven (51) Director<F3><F4> Senior Vice President, Sotheby's October, 1992
R. Scott Kirk (45) President and Mr. Kirk was appointed to
Chief Operating this office in August 1997.
Officer Mr. Kirk had served as
Executive Vice President-
Chief Operating Officer
since May, 1995 and
served as Vice President-
General Manager since
September, 1992
Kristine A. Crabs(34) Vice President Ms. Crabs was appointed to
and Chief this office in July 1996.
Financial Ms. Crabs had served as
Officer, Vice President-Finance and
Secretary and Administration, Secretary
Treasurer and Treasurer since
January, 1993
<FN>
<F1> Member of the Executive Committee.
<F2> Member of the Compensation Committee.
<F3> Member of the Long Term Equity Incentive Committee.
<F4> Member of the Audit Committee.
</FN>
</TABLE>
Biographical Information
The following sets forth the principal occupations of each of the Company's
executive officers and director nominees during the previous five years, as
well as the names of any other public or registered investment companies of
which they are directors.
Karen Brenner has served as Chairman and Chief Executive Officer since
June, 1994. Ms. Brenner has also served as a director of Lincoln since its
inception and has served as a director of Noel Group, Inc., a company which
prior to its adoption of a Plan of Complete Liquidation and Distribution in
March 1997, conducted its principal operations through small and medium-sized
operating companies (including Lincoln) in which it holds controlling or
other significant equity interests, from October 1989 until November 1991, and
as a Vice President of Noel from April 1989 until November 1991, when she
became a Managing Director. Prior to joining Noel, Ms. Brenner was a
principal in a management and financial consulting business, specializing in
managing turnaround situations for venture capital and leveraged buyout
companies. In February 1996, Ms. Brenner was elected Vice Chairman and a
director of Carlyle Industries, Inc. (formerly known as Belding Heminway
Company, Inc.) ("Carlyle"). In May, 1996 she was elected Chairman of the
Board and in October, 1996 she was elected President and Chief Executive
Officer. Carlyle packages and distributes an extensive variety of buttons
for home sewing and crafts to mass merchandisers, specialty stores and
independent retailers throughout the United States. Ms. Brenner is a director
of On Assignment, Inc., a leading nationwide provider of science professionals
on temporary assignments to laboratories in the biotechnology, environmental,
chemical, pharmaceutical, food and beverage and petrochemical industries, and
a director of Motorcar Parts and Accessories, Inc., a leading re-manufacturer
and distributor of replacement alternators and starters for both import and
domestic cars and light trucks. Ms. Brenner is currently a member of the Board
of Trustees of Prep for Prep, a charitable organization dedicated to providing
preparatory education to disadvantaged children, and a trustee of the City
Parks Foundation of New York.
C. Larry Davis has served as a director of Lincoln since its inception. He
is Chairman of the Board, Chief Executive Officer and a principal owner of
Farmhouse Foods Company. Mr. Davis has a broad food and beverage industry
background with over 25 years experience at Nestle S.A. (1973-1992) and
PepsiCo, Inc. (1967-1973) in both domestic and international business
operations. During the period from 1984 through 1991, Mr.Davis served as Group
Vice President and President of the $800 million Nestle Specialty Products
Company where he was primarily involved in the successful turnaround of
under-performing businesses, the creation of new business growth divisions,
and acquisitions and divestitures. Mr. Davis is also a member of the Board
of Directors of Cultor Food Science, an international manufacturer of unique
food and beverage ingredients.
Alexander P. Lynch has served as a director of Lincoln since November 1993.
Mr. Lynch has been a partner of The Beacon Group, a financial advisory firm,
since May 1997. From January 1995 to April 1997 he served as Co-President and
Co-Chief Executive Officer of The Bridgeford Group ("Bridgeford"), a financial
advisory firm. From April 1991 to December 1994 he served as a Senior
Managing Director of Bridgeford. From 1985 until April 1991, Mr. Lynch was a
Managing Director of Lehman Brothers, a division of Shearson Lehman Brothers
Inc. Mr. Lynch is also a director of Illinois Central Corporation, a railroad
holding company, and a director of Patina Oil & Gas Corporation, an independent
oil and gas company engaged in exploration and development.
James G. Niven has served as a director of Lincoln since October 1992. He
is currently a Senior Vice President of Sotheby's, and, since 1982, has been
a general partner of Pioneer Associates, a venture capital investment company.
He is also a director of The Lynton Group, Inc., a company engaged in aircraft
charter and maintenance, Noel Group, Inc., Tatham Offshore, Inc., an
independent energy company engaged in the development, exploration and
production of offshore oil and gas reserves, HealthPlan Services Corporation,
a leading managed healthcare service company, CBT Bancshares, Inc., a
multi-financial holding company, and an advisory director of Houston National
Bank, a commercial bank. He is a member of the Board of Managers of
Memorial Sloan-Kettering Cancer Center, and a trustee of the Museum of Modern
Art and the National Center for Learning Disabilities, Inc.
R. Scott Kirk has served as President and Chief Operating Officer since
August, 1997 and prior to that served as Executive Vice President and Chief
Operating Officer from May, 1995, and as Vice President-General Manager of
Lincoln from September, 1992. From 1990 to 1992 Mr. Kirk served as Vice
President-Finance and Chief Financial Officer of Nestle Dairy Systems, a
leader in frozen confection novelties. From 1987 to 1990 he was Business
Controller and from 1985 to 1987 he was General Credit Manager for Nestle
Food Corporation, a major manufacturer and marketer in the food industry.
From 1982 to 1985 he served as Director-Corporate Credit with Continental
Grain Company, a grain trading merchant. From 1979 to 1982 Mr. Kirk
served as Assistant Manager of General Credit and from 1974 to 1979 was
Senior Internal Auditor for Amstar Corporation (Domino Sugar).
Kristine A. Crabs joined Lincoln in January 1993 as Vice President of
Finance and Administration, and in July, 1996 was promoted to Vice President
and Chief Financial Officer. Prior to joining Lincoln, Ms. Crabs was a Senior
Audit Manager with KPMG Peat Marwick, specializing in the food and consumer
products industries.
Meetings and Committees of the Board
The Board of Directors has standing Executive, Audit, Compensation and Long
Term Equity Incentive Committees. There is no formal Nominating Committee;
the Board of Directors or the Executive Committee performs this function.
None of the directors who serve on any of such Committees is an employee or
officer of the Company except that Ms. Brenner, who serves on the Executive
and Compensation Committees is Chairman of the Board and Chief Executive
Officer.
The Executive Committee, consists of Ms. Brenner and Mr. Lynch. The
Executive Committee has all the powers of the Board of Directors in the
management of the business and affairs of the Company, except as such
powers are limited by the Delaware General Corporation Law. The Executive
Committee did not meet during the fiscal year ended June 30, 1997.
The Audit Committee, consists of Messrs. Niven and Davis. The Audit
Committee consults with the auditors of the Company and such other persons
as the members deem appropriate, reviews the preparations for and scope of the
audit of the Company's annual financial statements, reviews drafts of such
statements, recommends to the Board such action, including the engagement and
fees of the independent auditors, as the Committee deems appropriate, and
monitors the functioning of the Company's accounting and internal control
systems by meeting with representatives of management and the independent
auditors, and performs such other duties relating to the financial statements
and other matters of the Company as the Board of Directors may assign from
time to time. The Audit Committee met once during the fiscal year ended
June 30, 1997.
The Compensation Committee, consists of Ms. Brenner and Mr. Lynch. The
Compensation Committee has all of the powers of the Board of Directors,
relating to the compensation of or providing incentives for the officers,
directors, employees and other persons performing substantial services for the
Company, other than those matters delegated by the Board to the Long Term
Equity Incentive Committee. During the fiscal year ended June 30, 1997, the
Compensation Committee met once.
The Long Term Equity Incentive Committee, consists of Messrs. Niven and
Davis. The Long Term Equity Incentive Committee has all of the powers of the
Board of Directors with respect to the administration of the 1993 Stock Option
Plan and the Non-Employee Directors' Plan (collectively, the "Stock Option
Plans"), including with respect to the 1993 Stock Option Plan, the authority
to grant options to qualified persons to purchase shares of Common Stock upon
the terms set forth in such plan and the authority to issue shares of Common
Stock in respect of such issuance. During the fiscal year ended June 30,
1997, the Long Term Equity Incentive Committee met three times.
During the fiscal year ended June 30, 1997, the Board of Directors held
five meetings. All of the directors attended at least 80% of the total number
of meetings held, during the fiscal year ended June 30, 1997, by (i) the Board
and (ii) the Board Committees of which they were members.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC and to furnish the Company with
copies of such reports.
Based solely on its review of the copies of such forms furnished to the
Company by such reporting persons during the fiscal year ended June 30, 1997,
or written representations from such reporting persons that no Forms 5 were
required for those persons with respect to such period, the Company believes
that during the fiscal year ended June 30, 1997 all filing requirements
applicable to its officers, directors, and greater than ten-percent
beneficial owners were complied with.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information regarding compensation
awarded or paid to, or earned by, during each of the last three fiscal years,
the person who served as the Chairman and Chief Executive Officer during the
fiscal year ended June 30, 1997, and the Company's executive officers (other
than the Chairman and Chief Executive Officer) who were serving as executive
officers during the fiscal year ended June 30, 1997 and whose total salary and
bonus during the fiscal year ended June 30, 1997 exceeded $100,000 (the "Named
Executive Officers").
<TABLE>
<CAPTION>
Long Term Compensation
----------------------------------
Annual Compensation Awards Payouts
------------------------------ ----------------------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Annual Restricted All Other
Name and Compen- Stock LTIP Compen-
Principal Bonus sation Award(s) Options/ Payouts sation
Position Year<F1> Salary($) ($) ($)<F2> ($) SARs(#) ($) ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Karen Brenner 1997 50,000 -- -- -- 300,000<F3> -- 175,000<F4>
Chairman and 1996 -- -- -- -- 5,000<F5> -- 175,000<F4>
Chief Executive 1995 -- -- -- -- 2,500<F5> -- 175,000<F4>
Officer
R. Scott Kirk 1997 168,000 45,000 -- -- 58,750<F6> -- 3,080<F7>
President and 1996 160,000 30,000 -- -- -- -- 3,200<F7>
Chief Operating 1995 143,000 4,000 -- -- 7,000<F8> -- 2,860<F7>
Officer
Kristine A. Crabs 1997 115,940 30,000 -- -- 17,500<F6> -- 2,319<F9>
Vice President- 1996 105,400 20,000 -- -- -- -- 2,108<F9>
Chief Financial 1995 95,400 4,000 -- -- 5,000<F8> -- 1,908<F9>
Officer
<FN>
<F1> Reference to 1997, 1996 and 1995 herein means each fiscal year
ending June 30, respectively.
<F2> The dollar value of perquisites and other personal benefits for each
of the Named Executive Officers was less than established reporting
thresholds.
<F3> Awarded on July 18, 1996 and April 29, 1997 pursuant to the Company's
1993 Stock Option Plan.
<F4> Consists of $175,000 paid by Noel. Reference is made to "Employment
Contracts and Termination of Employment and Change in Control
Arrangements" for a description of Ms. Brenner's employment
arrangement with Noel.
<F5> Awarded to Ms. Brenner pursuant to the Company's Non-Employee
Directors' Stock Option Plan.
<F6> Awarded on July 18, 1996 pursuant to the Company's 1993 Stock
Option Plan.
<F7> Consists of amounts contributed by the Company to Mr. Kirk's account
under the Company's 401(k) plan.
<F8> Awarded on December 15, 1994 pursuant to the Company's 1993 Stock
Option Plan.
<F9> Consists of amounts contributed by the Company to Ms. Crabs' account
under the Company's 401(k) plan.
</FN>
</TABLE>
Option/SAR Grants During the Fiscal Year Ended June 30, 1997
The following table sets forth, information regarding individual grants of
stock options made during the fiscal year ended June 30, 1997 to each of the
Named Executive Officers, and their potential realizable values.
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Term
- ---------------------------------------------------------------------------------- --------------------------------
(a) (b) (c) (d) (e) (f) (g)
Number of % of Total
Shares Options/SAR's
Underlying Granted to Exercise or
Options/SAR's Employees in Base Price Expiration
Name Granted Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Karen Brenner 150,000<F1> 36.9% $1.50 7/18/06 $ 51,403<F3> $215,126<F3>
150,000<F2> 36.9% $1.00 4/29/07 $126,403<F3> $290,126<F3>
R. Scott Kirk 58,750<F1> 14.4% $1.50 7/18/06 $ 20,133<F3> $ 84,258<F3>
Kristine A. Crabs 17,500<F1> 4.3% $1.50 7/18/06 $ 5,997<F3> $ 25,098<F3>
<FN>
<F1> Granted on July 18, 1996 pursuant to the Company's 1993 Stock Option
Plan. The options vest over a 36 month period. Options become
exercisable on each full month following the date of grant.
<F2> Granted on April 29, 1997 pursuant to the Company's 1993 Stock Option
Plan. The options vest over a 36 month period. Options become
exercisable on each full month following the date of grant.
<F3> The assumed rates of annual appreciation are calculated from the date
of grant through the assumed expiration date. Actual gains, if any,
on stock option exercises and common stock holdings are dependent on
the future performance of the Common Stock and overall stock market
conditions. There can be no assurance that the value reflected in
the table will be achieved.
</FN>
</TABLE>
Aggregate Option/SAR Exercises During the Fiscal Year and Fiscal Year End
Option/SAR Values
The following table provides information related to options exercised by the
Named Executive Officers during the fiscal year ended June 30, 1997 and the
number and value of unexercised stock options held by the Named Executive
Officers at that date. The Company does not have any outstanding stock
appreciation rights.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money
Options/SARs at Options/SARs
Fiscal Year-End (#) at Fiscal Year-End <F1>($)
------------------------------------------------------------
(a) (b) (c) (d) (e)
Shares Acquired
Name on Exercise (#) Value Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Karen Brenner -- -- 280,901 237,499 $9,115 $37,760
R. Scott Kirk -- -- 30,311 35,439 0 0
Kristine A. Crabs -- -- 10,778 11,722 0 0
<FN>
<F1> Based on a closing price of Common Stock on June 30, 1997 of $1.3125
per share.
Compensation of Directors
Pursuant to the Company's Non-Employee Directors' Stock Option Plan, as
amended, each non-employee director, following initial election to the Board,
automatically receives an option to purchase 20,000 shares of Common Stock at
an exercise price equal to the fair market value per share on the date of
grant, and each non-employee director automatically receives an option to
purchase 5,000 shares of Common Stock immediately following such director's
re-election at an exercise price equal to the fair market value of a share of
Common Stock on the date of grant. Directors of the Company are reimbursed
for their out-of-pocket expenses incurred in connection with their service as
directors, including travel expenses.
Employment Contracts and Termination of Employment and Change in Control
Arrangements
Pursuant to a letter agreement dated March 1, 1996 by and between
Ms. Brenner and Noel, as amended by letter dated March 21, 1996, Ms. Brenner is
employed in an executive capacity by Noel for a period of two years. The term
may be extended by mutual agreement. Pursuant to the agreement, Ms. Brenner
has agreed to perform such executive services in connection with Noel and
entities in which Noel holds interests, including Lincoln, as shall reasonably
be assigned to Ms. Brenner by the Board of Directors or Chief Executive Officer
of Noel. $175,000 of the salary paid to Ms. Brenner pursuant to this agreement
is deemed to be paid for services rendered to Lincoln.
In addition, as evidenced by a letter agreement dated March 22, 1995, in
consideration for Ms. Brenner agreeing to serve as Chairman and Chief Executive
Officer, effective June 20, 1994, Noel granted Ms. Brenner an option to
purchase 200,000 shares of the Company's Common Stock held by Noel at a price
of $1.50 per share. Options to purchase 166,667 of such shares are currently
exercisable. The balance is exercisable on the earlier to occur of (x) the
eighth anniversary of the date of grant, provided that Ms. Brenner shall have
continued to serve as Chief Executive Officer continuously through such date,
and (y) from and after the date the stock price reaches $5.00. The vested
options will terminate on the fourth anniversary of the date Ms. Brenner
ceases to so serve as Chief Executive Officer or the tenth anniversary of the
date of grant whichever is earlier. The shares purchasable by Ms. Brenner
pursuant to the forgoing options have been registered under the Securities Act
of 1933, as amended, permitting the resale of such shares to the public
following exercise of such options by Ms. Brenner.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions regarding compensation of the Company's executive officers are
generally made by the Compensation Committee, formed in February 1993, and the
Long Term Equity Incentive Committee, formed in November 1993. Prior to the
formation of such Committees, decisions regarding executive compensation were
made by the Board of Directors. The current members of the Compensation
Committee are Alexander P.Lynch and Karen Brenner. Except for Ms. Brenner,
none of the members of the Compensation Committee during the fiscal year ended
June 30, 1997 were officers or employees of the Company. The current members
of the Long Term Equity Incentive Committee are James G. Niven and
C. Larry Davis.
Pursuant to rules adopted by the SEC designed to enhance disclosure of
companies regarding executive compensation, set forth below is a joint report
submitted by the members of the Compensation Committee and the Long Term
Equity Incentive Committee (sometimes collectively referred to as the
"Committee") addressing the Company's compensation policies for the fiscal
year ended June 30, 1997 as they affected the Company's executive officers
generally and, in particular, as they affected Ms. Brenner, the Chairman and
Chief Executive Officer of the Company.
Compensation of Chairman
SEC regulations require the Committee to disclose the Committee's bases
for compensation reported for Ms. Brenner during the fiscal year ended June
30, 1997 and to discuss the relationship between such compensation and the
Company's performance during such period.
Compensation paid to Ms. Brenner during the fiscal year ended June 30, 1997
consisted of salary and options. A $50,000 salary was paid to Ms. Brenner by
the Company during the fiscal year ended June 30, 1997. Ms. Brenner's salary
was determined by the Board of Directors. Pursuant to Ms. Brenner's agreement
with Noel, Ms. Brenner has agreed to perform such executive services in
connection with Noel and entities in which Noel holds interests, including
Lincoln, as shall reasonably be assigned to Ms. Brenner by the Board of
Directors or Chief Executive Officer of Noel. $175,000 of the salary paid to
Ms. Brenner pursuant to this agreement is deemed to be paid for services
rendered to Lincoln. In addition, pursuant to the 1993 Stock Option Plan, on
July 18, 1996 the Long Term Equity Incentive Committee awarded Ms. Brenner an
option to purchase 150,000 shares of Common Stock at an exercise price of
$1.50 per share and on April 29, 1997 the Long Term Equity Incentive Committee
awarded Ms. Brenner an option to purchase an additional 150,000 shares of
Common Stock at an exercise price of $1.00 per share. These options vest
over a 36 month period.
Compensation Policies Regarding Executive Officers
Compensation paid to the Named Executive Officers (other than the Chairman
and Chief Executive Officer) during the fiscal year ended June 30, 1997
consisted of salary, bonus and options.
The executive compensation policies of the Company are intended to provide
competitive levels of compensation in order to attract and retain qualified
executives and to align managements' and stockholders' interests in the
enhancement of stockholder value over the long term. In addition, through the
grant to the executive officers of options to purchase a significant amount of
Common Stock, during the fiscal year ended June 30, 1997 the Long Term Equity
Incentive Committee utilized the Company's 1993 Stock Option Plan to provide
long-term incentives to executive officers by enabling them to share in the
future growth of the Company's business. The Company has also established a
401(k) plan to assist in retaining qualified executives.
The Committee and the Board believe that the Company's executive officers
should be compensated comparably with executive officers of other publicly held
companies engaged in the business of manufacturing, distributing and marketing
snack food products. The Compensation Committee and the Board of Directors
believe that the Company competes with such organizations for qualified
executives and is therefore required to adopt competitive salary structures.
In setting compensation, the Committee and the Board consider on an informal
basis compensation paid by other corporations in businesses similar to the
Company, as well as the individual contributions to the Company which each of
the executives has made and could be expected to make in the future and such
other factors as the Committee may deem relevant at the time of making such
determinations.
Base salaries for the Company's executive officers are determined by the
Compensation Committee and the Board of Directors on an annual basis. In
setting such base salaries, the Compensation Committee and the Board of
Directors consider the factors set forth in the preceding paragraph.
While the Compensation Committee and the Board of Directors consider
objectively measurable performance criteria such as profitability, revenue
growth, return on equity, market share and operating budget performance in
determining annual bonuses, the Compensation Committee and the Board of
Directors believe that relying solely on such criteria may tend to stress
short term performance at the cost of long term growth. Instead, the
Compensation Committee's and the Board's decisions as to annual bonuses are
based primarily on the Compensation Committee's and the Board's informal
evaluation of subjective criteria of individual performance. Such subjective
performance criteria encompass evaluation of overall contribution to
achievement of the Company's business objectives, managerial ability, and the
executive officer's performance in any special projects that the officer may
have undertaken. The Board of Directors evaluated performance under these
subjective criteria and determined the amount of the executive officers'
annual bonuses for the fiscal year ended June 30, 1997. The Board considered
primarily the part played by the Company's executive officers in the
accomplishments of the Company during such fiscal year.
The Long Term Equity Incentive Committee believes that stock-based
performance compensation arrangements are beneficial in aligning managements'
and stockholders' interests in the enhancement of stockholder value over the
long-term. Thus, the Long Term Equity Incentive Committee has in the past
utilized the Company's stock option plans as an element in the Company's
compensation packages for its executive officers. Options to purchase Common
Stock granted to executive officers during the fiscal year ended June 30,1997
pursuant to the 1993 Stock Option Plan had exercise prices equal to the market
value on the date of grant, vest over a 36 monthly period, and are exercisable
only during an executive officer's tenure with the Company and for a one year
period thereafter to the extent that the right to exercise such options has
accrued as of the date of termination of such officer's employment with the
Company. Thus, any values which may be realized by an executive officer upon
exercise of options will result directly from appreciation in the Company's
stock price following the grant of such option. The Long Term Equity
Incentive Committee believes that by making option grants to executive
officers, such officers will be motivated to generate potential gains by
working to steadily increase the Common Stock's price over the long term.
The Company's 401(k) Plan is a broad-based employee benefit plan in which
the executive officers are permitted to participate on the same terms as
non-executive employees, subject to any legal limitations on the amounts that
may be contributed or the benefits that may be payable under the plan. The
Company matches the contributions of participating employees, including
executive officers, up to a certain level determined by the Board of
Directors, subject to legal limitations. Benefits under the 401(k) Plan are
not tied to Company performance.
Compensation Deduction Limitation. As part of the 1993 Omnibus Budget
Reconciliation Act, Congress enacted Section 162(m) of the Internal Revenue
Code, effective in 1994, which limited to $1 million per year the federal
income tax deduction available to public companies for compensation paid to its
chief executive officer and its four other highest paid executive officers,
unless that compensation qualifies for certain "performance-based" exceptions
provided for in that section of the Code. The Committee will consider ways to
maximize the deductibility of executive compensation, while retaining the
discretion the Committee deems necessary to compensate executive officers in a
manner commensurate with performance and the competitive environment for
executive talent. Under present employment arrangements, it is not
anticipated that any officer will receive compensation subject to this
limitation during the fiscal year ending June 30, 1998.
SUBMITTED JOINTLY BY THE COMPENSATION COMMITTEE AND LONG TERM EQUITY
INCENTIVE COMMITTEE OF THE BOARD OF DIRECTORS:
Karen Brenner C. Larry Davis Alexander P. Lynch James G. Niven
Compensation Committee Interlocks and Insider Participation
In February 1993, the Board of Directors formed a Compensation Committee,
the current members of which are Alexander P. Lynch and Karen Brenner. Except
for Ms. Brenner, none of the members of the Compensation Committee during the
last completed fiscal year were officers or employees of the Company. In
November 1993, the Board of Directors formed a Long Term Equity Incentive
Committee to administer the 1993 Stock Option Plan and the Non-Employee
Directors' Plan, the current members of which are James G. Niven and
C. Larry Davis. None of the members of the Long Term Equity Incentive
Committee during the fiscal year ended June 30, 1997 were officers or employees
of the Company. During the fiscal year ended June 30, 1997, no executive
officer of the Company served as a director or a member of the Compensation
Committee (or other board committee performing equivalent functions) of
another entity one of whose executive officers served on the Compensation
Committee, the Long Term Equity Incentive Committee, or the Board of Directors
of the Company.
STOCK PERFORMANCE CHART
The Stock Performance Chart set forth below compares the cumulative total
shareholder return (change in stock price plus reinvested dividends) on the
Common Stock for the period beginning January 14, 1994 and ending on June 30,
1997 with the cumulative total return on the NASDAQ Index and the Media General
Confectionery Goods Index over the same period. The comparison assumes $100
was invested on January 14, 1994 in the Common Stock and in each of the
foregoing indices and that all dividends paid by companies included in each
index were reinvested:
</TABLE>
<TABLE>
<CAPTION>
January 14, June 30, June 30, June 30, June 30,
Company 1994 1994 1995 1996 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lincoln Snacks Company $100.00 $ 35.14 $ 67.57 $ 29.73 $ 28.38
Media General Industry Group Index $100.00 $ 96.06 $100.96 $121.70 $156.91
NASDAQ Broad Market Index $100.00 $100.75 $118.17 $148.75 $179.19
AUDITORS
As recommended by the Audit Committee of the Board of Directors, the Board
has selected Arthur Andersen LLP., as independent public accountants to audit
the financial statements of the Company for the fiscal year ending June 30,
1998. A representative of Arthur Andersen LLP is expected to be present at the
Meeting and he or she will have the opportunity to make a statement if he or
she desires to do so and he or she is expected to be available to respond to
appropriate questions.
DEADLINE FOR STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the next annual meeting
of stockholders, to be held in 1998, must be received by the Company at 4 High
Ridge Park, Stamford, Connecticut 06905 by June 30, 1998, to be included in
the proxy statement and form of proxy relating to that meeting.
ANNUAL REPORT ON FORM 10-K
The Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1997, as filed with the SEC, is available to stockholders on request and may
be obtained by writing to: Lincoln Snacks Company, 4 High Ridge Park,
Stamford, Connecticut 06905, Attention: Ms. Kristine A. Crabs, Secretary.
A copy of the Company's Annual Report to Stockholders for the fiscal year ended
June 30, 1997 is enclosed.
OTHER BUSINESS
The Board of Directors does not know of any matters to be brought before the
Meeting for formal action other than the matters specified in the Notice of
Annual Meeting accompanying this Proxy Statement. If, however, any matters not
set forth in the Notice of Annual Meeting are properly brought before the
Meeting or any adjournment thereof, it is the intention of the persons named
in the enclosed form of proxy to vote such proxy in accordance with their
best judgment on such matters.
By Order of the Board of Directors.
/s/ Kristine A. Crabs
Kristine A. Crabs, Secretary
Dated: Stamford, Connecticut
October 28, 1997
</TABLE>
EXHIBIT 99
LINCOLN SNACKS COMPANY
SOLICITED BY BOARD OF DIRECTORS FOR
ANNUAL MEETING OF STOCKHOLDERS
At the offices of the Company at 4 High Ridge Park,
Stamford, Connecticut 06905
November 20, 1997, 10:00 A.M. Eastern Standard Time
The Undersigned hereby appoints Karen Brenner, Kristine A.
Crabs and R. Scott Kirk, and each of them acting alone, with
full power of substitution, proxies to vote the Common Stock
of the undersigned at the 1997 Annual Meeting of Stockholders
of Lincoln Snacks Company, and any adjournment thereof, for
the following purposes:
(1) To elect four members of the Board of Directors to
serve until the next annual meeting of stockholders and
until their successors are duly elected and qualified;
and
(2) To transact such other business as may properly be
brought before the meeting or any adjournment thereof.
Receipt of the Notice of Annual Meeting of Stockholders and
accompanying Proxy Statement of the Board of Directors is
acknowledged.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF DIRECTORS
The Board of Directors recommends a vote FOR all nominees
(Continued, and to be dated and signed on the reverse side)
- ------------------------------------------------------------
1. Election of four (4) directors as described in the
Proxy Statement of the Board of Directors.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to
(except as marked to the vote for all nominees
contrary below) listed below.
(Instruction: To withhold authority to vote for any
individual nominee, cross out that nominee's name from the
list below).
Nominees: KAREN BRENNER, C. LARRY DAVIS, ALEXANDER P. LYNCH, JAMES G. NIVEN
Please sign exactly as your name appears herein. If you are
signing for the stockholder, please sign the stockholder's
name, your name and state the capacity in which you are
signing.
Date:---------------------------------------, 1997
- --------------------------------------------------
Signature
- --------------------------------------------------
Signature
SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE. Votes MUST be indicated (X) in Black or
Blue Ink.
