LINCOLN SNACKS COMPANY
4 High Ridge Park
Stamford, Connecticut 06905
--------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
November 19, 1998
--------------
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Lincoln Snacks Company (the "Company") will be held on November 19, 1998 at
10:00 a.m., Eastern Standard Time, at the offices of Cummings & Lockwood
located at 4 Stamford Plaza, 107 Elm Street, 12th Floor, Stamford,
Connecticut 06904, for the following purposes:
(1) To elect five 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 9, 1998 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, 1998 is enclosed herewith.
By Order of the Board of Directors
/c/ Kristine A. Crabs
-----------------------------
Kristine A. Crabs, Secretary
Stamford, Connecticut
October 23, 1998
--------------
============================================================================
TO ENSURE THAT YOUR SHARES WILL BE REPRESENTED AT THE MEETING, YOU ARE
REQUESTED TO COMPLETE, SIGN, DATE AND RETURN AS PROMPTLY AS POSSIBLE THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES. IF YOU ATTEND THE MEETING, AND WISH TO VOTE IN
PERSON, YOUR PROXY WILL BE RETURNED TO YOU AT THE MEETING UPON REQUEST TO
THE SECRETARY OF THE MEETING.
============================================================================
<PAGE>
LINCOLN SNACKS COMPANY
4 High Ridge Park
Stamford, Connecticut 06905
----------------
PROXY STATEMENT
----------------
Annual Meeting of Stockholders
November 19, 1998
----------------
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 19, 1998, at 10:00 a.m., Eastern Standard Time, at the offices of
Cummings & Lockwood located at 4 Stamford Plaza, 107 Elm Street, 12th Floor,
Stamford, Connecticut 06904, 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 are being mailed or given to
stockholders beginning on or about October 23, 1998. 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, 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 business other than
that specified in the Notice of Annual Meeting 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 from the
secretary of the Meeting 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 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 incurred in forwarding proxy material to the
beneficial owners of such stock.
The close of business on October 9, 1998, 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 entitled to vote must be present in
person or represented by proxy at the Meeting 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
votes cast 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
will 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.
Recent Developments
- -------------------
On June 8, 1998, Brynwood Partners III L.P., a Delaware limited
partnership ("Brynwood III"), acquired 3,569,755 shares of Common Stock (the
"Purchased Shares"), at a price per share of $2.00 pursuant to a Stock
Purchase Agreement, dated June 8, 1998, by and between Brynwood III and Noel
Group, Inc., a Delaware corporation ("Noel"). At such time, the Purchased
Shares constituted approximately 56.4% of the outstanding shares of Common
Stock.
The aggregate consideration paid for the Purchased Shares was
$7,139,510. Of such amount, payment in the amount of $4,500,000 was paid in
cash on June 8, 1998 and the remainder was paid by delivery of a short term
promissory note. The promissory note was paid in full on July 23, 1998.
The partnership capital of Brynwood III was the sole source of the funds for
the Purchased Shares and for the payment of the promissory note.
Subsequent to its acquisition of the Purchased Shares, Brynwood III
acquired 200,000 additional shares of Common Stock from Noel at a price per
share of $2.00 and 1,001,499 additional shares of Common Stock in open
market transactions. The partnership capital of Brynwood III was the sole
source of funds used for the purchase of the additional shares. As a result
of its purchases, Brynwood III currently owns 75.4% of the outstanding
shares of Common Stock.
On June 12, 1998, Karen Brenner, then Chairman and Chief Executive
Officer of the Company and four other members of the Company's Board of
Directors resigned. Hendrik J. Hartong, Jr., John T. Gray and Ian B.
MacTaggart, representatives of Brynwood III, were elected to the Company's
Board of Directors to fill three of the vacancies created by such
resignations. On July 15, 1998, C. Larry Davis resigned as a member of the
Board of Directors and C. Alan MacDonald was elected to the Company's Board
of Directors to fill the one vacancy created by Mr. Davis' resignation.
On October 1, 1998, Hendrik J. Hartong III became the Chief Executive
Officer of the Company. R. Scott Kirk, the President and Chief Operating
Officer of the Company, has recently announced that he will be leaving the
Company after a short transition period to pursue other business
opportunities. Mr. Hartong III is the son of Mr. Hartong, Jr.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
---------------------------------------------------------------
The table below sets forth certain information as of October 9, 1998
regarding the beneficial ownership of the 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 and nominee
for 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>
Name and Address of Number of Percentage
Beneficial Owner Shares<F1> Owned<F2>
- ------------------------------------ ---------- -----------
<S> <C> <C>
5% Stockholders
Brynwood Partners III L.P.<F3>
2 Soundview Drive
Greenwich, CT 06830 4,771,254 75.4%
Directors and Nominees for Director
Hendrik J. Hartong, Jr. 4,771,254<F3> 75.4%
John T. Gray 4,771,254<F3> 75.4%
Ian B. MacTaggart 20,000<F4> -
C. Alan MacDonald 25,000<F5> *
Hendrik J. Hartong III - 0 -<F6> *
Named Executive Officers
Karen Brenner - -
R. Scott Kirk 121,176<F7> 1.9%
Kristine A. Crabs 40,847<F8> *
All executive officers and directors
as a group (includes 8 persons) 4,978,277<F9> 77.3%
* Represents beneficial ownership of less than 1%
<FN>
<F1> 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
exercisable within 60 days from the date of determination which was
October 9, 1998.
<F2> Based on 6,331,790 shares of Common Stock issued and outstanding on
October 9, 1998. In addition, treated as outstanding for the
purpose of computing the percentage ownership of each director,
each nominee for director and each Named Executive Officer and 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 which are exercisable within 60 days from
the date of determination.
<F3> Consists of 4,771,254 shares owned by Brynwood III. Messrs.
Hartong, Jr. and Gray are general partners of Brynwood Management
III L.P., which serves as general partner of Brynwood III. Messrs.
Hartong, Jr. and Gray each have voting and investment power over
the shares owned of record by Brynwood III.
<F4> Consists of 20,000 shares issuable upon exercise of vested options
to purchase Common Stock granted by the Company.
<F5> Consists of 5,000 shares held by Mr. MacDonald directly and 20,000
shares issuable upon exercise of vested options to purchase Common
Stock granted by the Company.
<F6> The number indicated does not include an additional 150,000 shares
issuable pursuant to options granted by the Company which are not
currently exercisable within 60 days of the date of determination.
<F7> Consists of 68,250 shares held by Mr. Kirk directly and 52,926
shares issuable upon exercise of options to purchase Common Stock
granted by the Company which are exercisable within 60 days of the
date of determination. The number indicated does not include an
additional 12,824 shares issuable pursuant to options granted by
the Company which are not currently exercisable within 60 days of
the date of determination.
<F8> Consists of 22,750 shares held by Ms. Crabs directly and 18,097
shares issuable upon exercise of options to purchase Common Stock
granted by the Company which are exercisable within 60 days of the
date of determination. The number indicated does not include an
additional 4,403 shares issuable pursuant to options granted by the
Company which are not currently exercisable within 60 days of the
date of determination.
<F9> Includes 111,024 shares issuable upon exercise of options granted
by the Company which are exercisable within 60 days of the date of
determination and 4,771,254 shares owned by Brynwood III. (see Note
3).
</FN>
</TABLE>
Election of Directors
---------------------
At the Meeting, five directors are to be elected. The five nominees for
election as directors are John T. Gray, Hendrik J. Hartong, Jr., Hendrik J.
Hartong III, C. Alan MacDonald and Ian B. MacTaggart. Each nominee except
for Mr. Hartong III is presently serving as a director of the Company and
each nominee has consented to serve if elected. Unless otherwise specified,
the enclosed proxy will be voted in favor of the nominees named herein for
election. 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. The number of directors which constitutes the full Board of
Directors is currently fixed at five. The By-laws of the Company provide
that the number of directors which constitutes 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 may shorten the term of any
incumbent director.
The Board recommends a vote FOR each of the nominees listed below.
<PAGE>
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 of the director nominees 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 of
the Company. Each director holds office until the next annual meeting of
stockholders of the Company and until his successor has been elected and
qualified or until such director's earlier resignation or removal. Officers
serve at the discretion of the Board of Directors. The age of each of the
director nominees and executive officers is given as of October 9, 1998.
John T. Gray, age 62, has been a member of the Board of Directors of the
Company since June 1998. Mr. Gray has been a general partner since 1996 of
Brynwood Management III, the general partner of Brynwood III L.P., a private
investment partnership. During the period 1984 through 1995, Mr. Gray
served as President and Chief Executive Officer of The Genie Company and was
Executive Vice President from 1982 to 1984. Prior to that, from 1974
through 1982, Mr. Gray served as Vice President and General Manager of the
Norelco Division of North American Philips Corporation. Mr. Gray is a
director of Associated Materials, Incorporated.
Hendrik J. Hartong, Jr., age 59, has been a member of the Board of
Directors of the Company since June 1998. Mr. Hartong, Jr. has been a
general partner since 1985 of Brynwood Management, a general partner since
1988 of Brynwood Management II and a general partner since 1996 of Brynwood
Management III, entities that serve, respectively, as the managing general
partner of Brynwood Partners Limited Partnership, Brynwood Partners II L.P.
and Brynwood Partners III L.P., private investment partnerships. Mr.
Hartong, Jr. is Chairman of the Board of Directors of Air Express
International Corporation and a director of Hurco Companies, Inc.
C. Alan MacDonald, age 65, has been a member of the Board of Directors
of the Company since July 1998. Mr. MacDonald has been Managing Partner of
Directorship, Inc., a full service board governance consulting firm since
October 1997. During the period 1995 through 1997, Mr. MacDonald was a
General Partner of The Marketing Partnership. Prior to that, from 1992 to
1994, Mr. MacDonald was the Chief Executive Officer of Lincoln. Mr.
MacDonald also served as President and Chief Executive Officer of Nestle
Foods Corporation from 1983 to 1991. Mr. MacDonald is a director of Lord,
Abbett & Company and DenAmerica Corporation.
Ian B. MacTaggart, age 32, has been a member of the Board of Directors
of the Company since June 1998. Since 1996, Mr. MacTaggart has been an
associate at Brynwood III, a private investment partnership. Prior to
joining Brynwood III, Mr. MacTaggart served as a Senior Associate in the
Corporate Finance Department at Merrill Lynch & Company from 1993 to 1996.
From 1991 to 1993, Mr. MacTaggart attended the Fuqua School of Business
receiving his MBA.
Hendrik J. Hartong III, age 31, has been Chief Executive Officer of the
Company since October 1, 1998. Prior to joining the Company, Mr. Hartong
served as Vice President of Marketing at Activision, Inc., a developer of
computer and video game software, from April 1998. From March 1996 to March
1998 Mr. Hartong III held various product marketing functions at Activision,
Inc. Prior to joining Activision, Inc., Mr. Hartong held various sales and
marketing positions with Baskin Robbins from 1995 to 1996 and Nestle Food
Corporation from 1989 to 1993. From 1994 to 1995, Mr. Hartong III attended
the Harvard School of Business receiving his MBA. Mr. Hartong III is the
son of Mr. Hartong, Jr.
R. Scott Kirk, age 46, has been President and Chief Operating Officer
since August 1997 and had served as Executive Vice President and Chief
Operating Officer since May 1995. Mr. Kirk served as Vice President-General
Manager of Lincoln from September 1992 to May 1995. 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.
Kristine A. Crabs, age 35, has been Vice President and Chief Financial
Officer of the Company since July 1996, and had served as Vice President of
Finance and Administration since January 1993. Prior to joining Lincoln,
Ms. Crabs was a Senior Audit Manager with KPMG Peat Marwick LLP,
specializing in the food and consumer products industries.
David D. Clarke, age 31, has been Vice President of Sales of the Company
since October 1, 1998. Prior to joining the Company, Mr. Clarke served as
Vice President Sales and Marketing for Preferred Brands, Inc., a
manufacturer of ethnic food products, from October 1996. Prior to joining
Preferred Brands, Mr. Clarke was Vice President of Sales and Marketing for
Clarke Ice Cream Company, a distributor of nationally branded ice cream
products in Florida from October 1994, and was New Business Development
Manager at Pepsi-Cola International from 1992 to October 1994.
Meetings and Committees of the Board
- ------------------------------------
The Board of Directors has standing Executive, Audit and Compensation
Committees. There is no formal Nominating Committee; the Board of Directors
or the Executive Committee performs this function. None of the directors
currently serving on any of such committees is an employee or officer of the
Company. Ms. Brenner, who served on each of the Executive and Compensation
Committee from July 1, 1997 until June 12, 1998, was Chairman of the Board
and Chief Executive Officer until her resignation on June 12, 1998.
The Executive Committee currently consists of Messrs. Hartong, Jr.,
Gray and MacTaggart. Prior to their resignations from the Board of
Directors on June 12, 1998, Ms. Brenner and Alexander P. Lynch served on the
Executive Committee; and prior to his resignation from the Board of
Directors on July 15, 1998, Mr. Davis also served on the Executive
Committee. 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,
1998.
The Audit Committee currently consists of Messrs. MacTaggart and
Hartong, Jr. Messrs. MacTaggart and Hartong, Jr. were elected to such
committee on July 15, 1998. Prior to their resignations from the Board of
Directors on June 12, 1998, James G. Niven and Steven L. Sacks served on the
Audit Committee, Mr. Davis also served on the Audit Committee from November
20, 1997 until February 26, 1998. The Audit Committee consults with the
independent auditors of the Company and such other persons as the committee
deems 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 books,
accounts 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, 1998.
The Compensation Committee currently consists of Messrs. Gray and
MacDonald. Prior to their resignations from the Board of Directors on June
12, 1998, Ms. Brenner and Mr. Lynch served on the Compensation Committee.
The Compensation Committee has all of the powers of the Board of Directors
relating to compensation and incentives for the officers, directors,
employees and other persons performing substantial services for the Company.
During the fiscal year ended June 30, 1998, the Compensation Committee met
once.
The Long Term Equity Incentive Committee of the Board of Directors was
terminated on July 15, 1998. Prior to their resignation from the Board of
Directors on June 12, 1998, Mr. Niven and I. Howard Diener served on the
Long Term Equity Incentive Committee. Mr. Davis also served on the Long
Term Equity Incentive Committee until his resignation from the Board on July
15, 1998. The Long Term Equity Incentive Committee had all of the powers of
the Board of Directors with respect to the administration of the Company's
1993 Stock Option Plan and the Company's Non-Employee Directors' Stock
Option Plan (collectively, the "Stock Option Plans"). During the fiscal
year ended June 30, 1998, the Long Term Equity Incentive Committee met once.
Since the termination of the Long Term Equity Incentive Committee on July
15, 1998, the functions previously performed by such committee have been
delegated to the Compensation Committee.
During the fiscal year ended June 30, 1998, the Board of Directors
held five meetings. Each of the nominees then in office attended at least
60% of the total number of such meetings and the meetings of all committees
of the Board of which he was a member.
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and persons who own
more than ten percent of the Common Stock, to file reports of ownership and
changes in ownership of such equity securities with the Securities and
Exchange Commission ("SEC") and to furnish the Company with copies of such
reports.
Based solely upon its review of the copies of such forms furnished to
the Company by such reporting persons during the fiscal year ended June 30,
1998, and written representations from the Company's directors and executive
officers 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,
1998 all filing requirements under Section 16(a) applicable to its executive
officers, directors and greater than ten percent beneficial owners were
complied with in a timely manner.
<PAGE>
EXECUTIVE COMPENSATION
----------------------
Summary Compensation Table
- --------------------------
The following table sets forth certain information regarding
compensation awarded or paid to, or earned by the persons who served as the
Chief Executive Officer or acted in such capacity during the fiscal year
ended June 30, 1998, and the Company's other executive officers as of June
30, 1998 who received total salary and bonus compensation during the fiscal
year ended June 30, 1998 in excess of $100,000 (collectively, the "Named
Executive Officers").
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
----------------------------------------- ------------
Other Securities All
Annual Underlying Other
Name and Principal Compen- Options Compen-
Position Year<F1> Salary($) Bonus($) sation($) (# of Shares) sation($)
- ------------------- ------- --------- -------- --------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Karen Brenner
Former Chairman 1998 125,000 --- --- 10,900<F2> 755,763<F3>
and Chief Execu- 1997 50,000 --- --- 300,000 175,000<F4>
tive Officer<F5> 1996 --- --- --- 5,000 175,000<F4>
R. Scott Kirk 1998 168,000 33,000 --- --- 3,200<F6>
President and Chief 1997 168,000 45,000 --- 58,750 3,080<F6>
Operating Officer<F7> 1996 160,000 30,000 --- --- 3,200<F6>
Kristine A. Crabs
Vice President and 1998 115,940 22,000 --- --- 3,003<F6>
Chief Financial 1997 115,940 30,000 --- 17,500 2,319<F6>
Officer 1996 105,400 20,000 --- --- 2,108<F6>
<FN>
<F1> Reference to 1998, 1997 and 1996 herein means each fiscal year ending
June 30, respectively.
<F2> Represents options granted to Ms. Brenner in November 1993, pursuant to
the Company's Non-Employee Directors' Stock Option Plan, that were
repriced in 1998.
<F3> Consists of: (i) $175,000 paid by Noel (see "Employment Contracts and
Termination of Employment and Change in Control Arrangements" for a
description of Ms. Brenner's employment arrangement with Noel);
(ii) $100,000 paid by Noel to terminate certain options Noel had
granted Ms. Brenner to purchase shares of Common Stock owned by Noel;
(iii) severance payments of $250,000 made by the Company to Ms.
Brenner upon her resignation in June 1998 as Chairman and Chief
Executive Officer pursuant to the Severance Agreement between the
Company and Ms. Brenner dated February 14, 1998 (see "Employment
Contracts and Termination of Employment and Change in Control
Arrangements"); and (iv) $230,763 paid by the Company in connection
with the cancellation of all options granted under the Stock Option
Plans. Such amount represents the difference between the exercise
price for such options and $2.00 per share. See "Aggregate Option
Exercises in the Fiscal Year and Option Values at June 30, 1998" below.
<F4> Consists of $175,000 paid by Noel. Reference is made to "Employment
Contracts and Termination of Employment and Change in Control
Arrangements" for a description of Ms. Brenner's employment
arrangement with Noel.
<F5> Ms. Brenner resigned as an officer and director of the Company as of
June 12, 1998.
<F6> Consists of amounts contributed by the Company to the Named Executive
Officer's account under the Company's 401(k) plan.
<F7> Mr. Kirk has recently announced that he will be leaving the Company
after a short transition period to pursue other business opportunities.
</FN>
</TABLE>
<PAGE>
Option Grants During the Fiscal Year Ended June 30, 1998
- ---------------------------------------------------------
The following table sets forth information regarding grants of stock
options made during the fiscal year ended June 30, 1998 to the Named
Executive Officers and their potential realizable values.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation
Individual Grants for Option Term
---------------------------------------------------- -----------------------
Number of % of Total
Shares Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted Fiscal Year ($/Sh) Date 5%($) 10%($)
- ------------- ---------- ------------ ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Karen Brenner 10,900<F1> 36.9% $1.50 11/8/03<F2> $10,610<F3> $17,671<F3>
R. Scott Kirk --- --- --- --- --- ---
Kristine A. Crabs --- --- --- --- --- ---
<FN>
<F1> The options were repriced in September 1997 from an original exercise
price per share of $4.50 to an exercise price of $1.50. The options
were granted in November 1993 pursuant to the Company's Non-Employee
Directors' Stock Option Plan. The options vested upon grant.
<F2> In connection with Ms. Brenner's severance arrangement, in exchange
for a payment in the amount of $230,763 by the Company to Ms. Brenner,
all outstanding options granted to Ms. Brenner pursuant to the Stock
Option Plans were cancelled.
<F3> The assumed rates of annual appreciation are calculated from the date
of repricing through the assumed expiration date without giving effect
to the cancellation of such options on June 12, 1998. If the options
had remained outstanding, actual gains, if any, on stock option
exercises and Common Stock holdings would have been dependent on
the future performance of the Common Stock.
</FN>
</TABLE>
<PAGE>
Aggregate Option Exercises in the Fiscal Year ended June 30, 1998 and Option
Values at June 30, 1998
- ----------------------------------------------------------------------------
The following table sets forth information relating to options
exercised by the Named Executive Officers during the fiscal year ended June
30, 1998 and the number and value of unexercised stock options held by each
of the Named Executive Officers at that date. The Company does not have any
outstanding stock appreciation rights.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options at
Year-End(#) Fiscal Year-End<F1>($)
-------------------------- --------------------------
Shares
Acquired Value
on Exer- Realized
Name cise(#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------- --------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Karen Brenner ---<F2> $230,763<F2> --- --- --- ---
R. Scott Kirk --- --- 52,926 12,824 $21,082 $5,092
Kristine A. Crabs --- --- 18,097 4,403 $ 6,426 $1,554
<FN>
<F1> Based on a closing price of the Common Stock on June 30, 1998 as
reported on the NASDAQ National Market of $1.938 per share.
<F2> All options granted to Ms. Brenner under the Stock Option Plans
were cancelled upon her resignation as Chairman and Chief
Executive Officer in exchange for payment by the Company
in the amount of $230,763.
</FN>
</TABLE>
<PAGE>
Ten-Year Option Repricings
- --------------------------
The following table sets forth, information regarding repricings
occurring during the ten-year period ended June 30, 1998 with respect to
options held by each of the Named Executive Officers.
<TABLE>
<CAPTION>
Market Length of
Number of Price of Original
Securities Stock at Exercise Option Term
Underlying Time of Price at Remaining at
Options Repricing Time of New Date of
Repriced or or Amend- Repricing or Exercise Repricing or
Name Date Amended(#) ment($) Amendment Price($) Amendment
- ----------------- ---- ----------- --------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Karen Brenner 9/11/97 10,900 $1.50 $4.50 $1.50 6 years
R. Scott Kirk --- --- --- --- --- ---
Kristine A. Crabs --- --- --- --- --- ---
</TABLE>
<PAGE>
Compensation of Directors
- -------------------------
Directors of the Company who are officers or employees of the Company
receive no additional compensation for service as a member of the Board or
any committee thereof. Messrs. Hartong, Jr. and Gray, general partners of
Brynwood III, have elected not to receive any options for their service as
members of the Board. Pursuant to the Company's Non-Employee Directors'
Stock Option Plan, as amended, each non-employee director, following such
person's 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. On September 11, 1997, options granted to the Company's non-employee
directors on November 8, 1993 were repriced at $1.50 per share. No cash
compensation is paid to non-employee directors for their service as a member
of the Board or any committee thereof. All directors 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 was
employed in an executive capacity by Noel for a period of two years plus an
additional 12 month severance period. Pursuant to the agreement, Ms.
Brenner agreed to perform executive services reasonably assigned to Ms.
Brenner by the Board of Directors or Chief Executive Officer of Noel
including service to entities in which Noel held equity interests, which
entities included Lincoln during the term of the letter agreement. Salary
in the annual amount of $175,000 paid to Ms. Brenner pursuant to this
agreement was deemed to be for services rendered to Lincoln.
In addition, in consideration for Ms. Brenner's agreeing to serve as
Chairman and Chief Executive Officer of Lincoln, effective June 20, 1994,
Noel granted Ms. Brenner an option to purchase 200,000 shares of Common
Stock held by Noel at a price of $1.50 per share. Upon her resignation from
the Company in June 1998, Noel paid Ms. Brenner $100,000 to terminate this
option.
The Company entered into severance agreements with each of Ms.
Brenner, Mr. Kirk and Ms. Crabs on February 24, 1998, providing for
severance in the amounts of $250,000, $168,000 and $115,940, respectively,
in the event that any such person ceased to be employed by the Company for
any reason other than cause (i) within twelve months following a Change in
Control (as such term is defined in the severance agreements), or (ii)
within ninety days prior to a Change in Control. The acquisition by
Brynwood III of the Purchased Shares in June 1998 constituted a Change of
Control. Upon her resignation in June 1998, Ms. Brenner received from the
Company $250,000 in accordance with the severance agreement.
On June 4, 1998, the Company amended the terms of the outstanding
options issued under the Company's 1993 Stock Option Plan to provide for the
immediate vesting of such options upon the occurrence of a change in control
accompanied by a termination of employment (voluntary or involuntary) of the
optionee. Upon Ms. Brenner's resignation in June 1998, the Company paid Ms.
Brenner $230,764 in connection with the cancellation of all options granted
to Ms. Brenner, representing the difference between the exercise price for
such options and $2.00 per share.
Mr. Hartong III has entered into an employment letter with the Company
pursuant to which Mr. Hartong III will be entitled to an annual salary in
the amount of $150,000. Mr. Hartong III will also be eligible for an annual
discretionary bonus and will receive deferred compensation in the amount of
$25,000 upon completion of one year of employment. Mr. Hartong III may be
entitled to up to one year's severance payment in the event of an
involuntary termination of his employment, subject to forfeiture in the
event Mr. Hartong III secures employment with a competitor of the Company.
Mr. Hartong III has also been awarded options to purchase 150,000 shares of
Common Stock at an exercise price equal to the fair market value on the date
of grant, which options vest 20% annually over five years.
Mr. Clarke has entered into an employment letter with the Company
pursuant to which Mr. Clarke will be entitled to an annual salary in the
amount of $85,000. Mr. Clarke will also be eligible for an annual
discretionary bonus and will receive a minimum bonus in the amount of
$15,000 upon completion of one year of employment. Mr. Clarke may be
entitled to up to one year's severance payment in the event of an
involuntary termination of his employment. Mr. Clarke has also been awarded
options to purchase 60,000 shares of Common Stock at an exercise price equal
to the fair market value on the date of grant, which options vest 20%
annually over five years.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
-------------------------------------------------------
Pursuant to rules adopted by the SEC designed to enhance disclosure
regarding executive compensation, set forth below is a report submitted on
behalf of and by the members of the Compensation Committee addressing the
Company's compensation policies for the fiscal year ended June 30, 1998.
Compensation of Chief Executive Officer
- ---------------------------------------
Compensation paid to Ms. Brenner during the fiscal year ended June 30,
1998 consisted of salary and options. Salary in the amount of $125,000 was
paid to Ms. Brenner by the Company during the fiscal year ended June 30,
1998. Pursuant to an agreement with Noel, Ms. Brenner performed executive
services assigned to Ms. Brenner by the Board of Directors or Chief
Executive Officer of Noel. Such services included service to entities in
which Noel held equity interests, which entities included Lincoln during the
fiscal year ended June 30, 1998. Salary in the amount of $175,000 paid to
Ms. Brenner pursuant to the agreement with Noel was deemed to be paid for
services rendered to Lincoln. To encourage ownership of Common Stock by the
Company's directors and executive officers, including its Chief Executive
Officer, while preserving for grant to other eligible participants shares
reserved under the Non-Employee Directors' Stock Option Plan, the Board of
Directors repriced, in September 1997, options to purchase 10,900 shares of
Common Stock originally granted to Ms. Brenner in November 1993. The per
share exercise price of such options was reduced to $1.50, the fair market
value of a share of Common Stock on the date of repricing.
Compensation Policies Regarding Other Executive Officers
- --------------------------------------------------------
Compensation paid to the Named Executive Officers (other than the
Chairman and Chief Executive Officer) during the fiscal year ended June 30,
1998 consisted of salary and bonus.
The executive compensation policies of the Company are intended to
provide competitive levels of compensation to attract and retain qualified
executives and to align managements' and stockholders' interests in the
enhancement of stockholder value over the long term. The Company's 1993
Stock Option Plan is utilized to provide long-term incentives to executive
officers by enabling such officers to share in the future growth of the
Company's business through the grant of options to purchase a significant
amount of Common Stock. The Company has also established a 401(k) plan to
assist in retaining qualified executives.
The Compensation 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 stress short term
performance at the cost of long term growth. To address such concern,
decisions as to annual bonuses include the Compensation Committee's and the
Board's informal evaluation of subjective criteria of individual performance
as well as objective criteria. 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 Compensation
Committee evaluated performance under these criteria and determined the
amount of the executive officers' annual bonuses for the fiscal year ended
June 30, 1998. The determinations of the Compensation Committee and Board
of Directors were based principally on the role played by the Company's
executive officers in the accomplishments of the Company during such fiscal
year.
The Company's 401(k) Plan is a broad-based employee benefit plan in
which the Company's executive officers are permitted to participate on the
same terms as non-executive employees, subject to certain legal limitations
on the amounts that may be contributed and 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
Company's 401(k) Plan are not tied to Company performance.
Compensation Deduction Limitation. Section 162(m) of the Internal
Revenue Code of 1986, as amended, currently limits to $1 million per year
the federal income tax deduction available to public reporting 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 Compensation Committee and Board routinely consider ways to maximize the
deductibility of executive compensation, while retaining the discretion the
Compensation Committee and Board deem necessary to compensate executive
officers in a manner commensurate with performance and the competitive
environment for executive talent. Under present employment arrangements,
the Compensation Committee and Board do not anticipate that any officer will
receive compensation in excess of this limitation during the fiscal year
ending June 30, 1999.
John T. Gray, Chairman C. Alan MacDonald
This report is submitted by Mr. Gray on behalf of the members of the
Compensation Committee in office during the fiscal year ended June 30, 1998
who participated in the adoption and implementation of the compensation
programs discussed above. Messrs. Gray and MacDonald, who were not members
of the Board at such time, participated solely in the approval of bonuses
for 1998.
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
Messrs. Gray and MacDonald are the current members of the Compensation
Committee. Until their resignation as members of the Board of Directors in
June 1998, Ms. Brenner and Mr. Lynch were the members of the Compensation
Committee. The members of the Long Term Equity Incentive Committee, prior
to its termination in July 1998, were Messrs. Niven, Diener and Davis, each
a non-employee director. Ms. Brenner was the sole member of either of the
committees during the last fiscal year who was an officer or employee of the
Company.
<PAGE>
STOCK PERFORMANCE CHART
-----------------------
The chart set forth below compares the cumulative total stockholder
return on the Common Stock for the period beginning January 14, 1994 (the
first day the Common Stock was traded on the NASDAQ National Market) and
ending on June 30, 1998 with the cumulative total return on the NASDAQ Broad
Market 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. The stock price
performance shown on the graph is not necessarily indicative of future stock
price or index performance.
<TABLE>
<CAPTION>
January 14, June 30, June 30, June 30, June 30, June 30,
1994 1994 1995 1996 1997 1998
---------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Lincoln Snacks Company 100.00 35.14 67.57 29.73 28.38 41.89
NASDAQ Broad Market Index 100.00 100.75 118.17 148.75 179.19 237.52
Media General Confectionery
Goods Index 100.00 96.06 100.96 121.70 156.91 178.65
</TABLE>
Source: Media General Financial Services.
<PAGE>
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, 1999. 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. Arthur Andersen LLP has
advised the Company that neither it nor any of its members had any direct
financial interest in the Company as a promoter, underwriter, voting
trustee, director, officer or employee. All professional services rendered
by Arthur Andersen LLP during the fiscal year ended June 30, 1998 were
furnished at customary rates.
DEADLINE FOR STOCKHOLDER PROPOSALS
----------------------------------
Stockholder proposals submitted for inclusion in the proxy statement
relating to the Company's 1999 Annual Meeting of Stockholders must be
received by the Company at 4 High Ridge Park, Stamford, Connecticut 06905 on
or before June 25, 1999. Additionally, unless notice that a stockholder
intends to present a proposal at the Company's 1999 Annual Meeting of
Stockholders is received by the Company at 4 High Ridge Park, Stamford,
Connecticut 06905, Attention: Secretary on or before September 8, 1999, the
Company will have discretionary authority to vote on any stockholder
proposal presented at such annual meeting. The Company has not received
notice of any stockholder proposal intended for presentation at the Meeting.
As a result, the Company will have discretionary authority to vote on any
stockholder proposal presented at the Meeting.
ANNUAL REPORT ON FORM 10-K
--------------------------
The Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1998, as filed with the SEC, is available to beneficial owners 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. Such request must include a representation that the person
making the request was the beneficial owner of securities entitled to vote
at the Meeting. A copy of the Company's Annual Report to Stockholders for
the fiscal year ended June 30, 1998 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 23, 1998
EXHIBIT 99
LINCOLN SNACKS COMPANY
SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS
at the offices of Cummings & Lockwood, 4 Stamford Plaza,
107 Elm Street, 12th floor, Stamford, CT 06904
November 19, 1998, 10:00 A.M. Eastern Standard Time
The undersigned hereby appoints Kristine A. Crabs and Ian B. MacTaggart,
and each of them acting alone, with full power of substitution, proxies
to represent and vote the common stock of Lincoln Snacks Company held of
record by the undersigned on October 9, 1998, at the 1998 Annual Meeting
of Stockholders of Lincoln Snacks Company, and any adjournment or
postponements thereof, for the following purposes:
(1) To elect five 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 annual 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
THE NOMINEES FOR DIRECTOR NAMED HEREIN. THIS PROXY ALSO GRANTS
DISCRETIONARY AUTHORITY TO THE PROXIES TO REPRESENT AND VOTE UPON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
The Board of Directors recommends a vote FOR all nominees for director
named herein.
(Continued, and to be dated and signed on the reverse side)
- ---------------------------------------------------------------------------
1. Election of five (5) 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: JOHN T. GRAY, HENDRIK J. HARTONG, JR., HENDRIK J. HARTONG III,
C. ALAN MACDONALD and IAN B. MACTAGGART
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:---------------------------------------, 1998
- --------------------------------------------------
Signature
- --------------------------------------------------
Signature
SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. Votes MUST be indicated (X) in black or blue ink.
